DIME COMMUNITY BANCSHARES INC (Form: 10-Q, Received: 08/09/2013 11:00:59)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-27782

Dime Community Bancshares, Inc.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		11-3297463 (I.R.S. employer identification number)
209 Havemeyer Street, Brooklyn, NY ( Address of principal executive offices)		11211 (Zip Code)

(718) 782-6200

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all the reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES x NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES x NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

LARGE ACCELERATED FILER o

ACCELERATED FILER x

NON -ACCELERATED FILER o

SMALLER REPORTING COMPANY o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES o NO x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Classes of Common Stock		Number of Shares Outstanding at August 7, 2013
$.01 Par Value		36,462,076

		Page
	PART I – FINANCIAL INFORMATION
Item 1.	Unaudited Condensed Consolidated Financial Statements
	Consolidated Statements of Financial Condition at June 30, 2013 and December 31, 2012	3
	Consolidated Statements of Income for the Three-Month and Six-Month Periods Ended June 30, 2013 and 2012	4
	Consolidated Statements of Comprehensive Income for the Three-Month and Six-Month Periods Ended June 30, 2013 and 2012	4
	Consolidated Statements of Changes in Stockholders' Equity for the Six Months Ended June 30, 2013 and 2012	5
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2013 and 2012	6
	Notes to Condensed Consolidated Financial Statements	7-31
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	31-48
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48-49
Item 4.	Controls and Procedures	49
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 3.	Defaults Upon Senior Securities	50
Item 5.	Other Information	50
Item 6.	Exhibits	50
	Signatures	52

This Quarterly Report on Form 10-Q contains a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These statements may be identified by use of words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "seek," "may," "outlook," "plan," "potential," "predict," "project," "should," "will," "would" and similar terms and phrases, including references to assumptions.

Forward-looking statements are based upon various assumptions and analyses made by Dime Community Bancshares, Inc. (the "Holding Company," and together with its direct and indirect subsidiaries, the "Company") in light of management's experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes appropriate under the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond the Company's control) that could cause actual conditions or results to differ materially from those expressed or implied by such forward-looking statements. These factors include, without limitation, the following:

·	the timing and occurrence or non-occurrence of events may be subject to circumstances beyond the Company's control;

·	there may be increases in competitive pressure among financial institutions or from non-financial institutions;

·	changes in the interest rate environment may reduce interest margins;

·	changes in deposit flows, loan demand or real estate values may adversely affect the business of The Dime Savings Bank of Williamsburgh (the "Bank");

·	changes in accounting principles, policies or guidelines may cause the Company's financial condition to be perceived differently;

·	changes in corporate and/or individual income tax laws may adversely affect the Company's business or financial condition;

·	general economic conditions, either nationally or locally in some or all areas in which the Company conducts business, or conditions in the securities markets or the banking industry may be less favorable than the Company currently anticipates;

·	legislation or regulatory changes may adversely affect the Company's business;

·	technological changes may be more difficult or expensive than the Company anticipates;

·	success or consummation of new business initiatives may be more difficult or expensive than the Company anticipates;

·	litigation or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than the Company anticipates; and

·	The risks referred to in the section entitled "Risk Factors."

The Company has no obligation to update any forward-looking statements to reflect events or circumstances after the date of this document.

Item 1. Condensed Consolidated Financial Statements

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)

(Dollars in thousands except share amounts)

	June 30, 2013			December 31, 2012
ASSETS:
Cash and due from banks	$	61,291		$	79,076
Total cash and cash equivalents		61,291			79,076
Investment securities held-to-maturity (estimated fair value of $5,541 and $6,267 at June 30, 2013 and December 31, 2012, respectively)(fully unencumbered)		5,617			5,927
Investment securities available-for-sale, at fair value (fully unencumbered):		18,309			32,950
Mortgage-backed securities available-for-sale, at fair value (fully unencumbered):		38,193			49,021
Trading securities		5,127			4,874
Loans:
Real estate, net		3,604,247			3,503,385
Other loans		2,517			2,423
Less allowance for loan losses		(20,502	)		(20,550	)
Total loans, net		3,586,262			3,485,258
Loans held for sale		232			560
Premises and fixed assets, net		29,894			30,518
Federal Home Loan Bank of New York ("FHLBNY") capital stock		40,288			45,011
Other real estate owned ("OREO")		585			-
Goodwill		55,638			55,638
Other assets		109,807			116,566
Total Assets	$	3,951,243		$	3,905,399
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Due to depositors:
Interest bearing deposits	$	2,437,227		$	2,320,285
Non-interest bearing deposits		170,432			159,144
Total deposits		2,607,659			2,479,429
Escrow and other deposits		86,028			82,753
FHLBNY advances		737,500			842,500
Trust Preferred securities payable		70,680			70,680
Other liabilities		40,471			38,463
Total Liabilities		3,542,338			3,513,825
Commitments and Contingencies
Stockholders' Equity:
Preferred stock ($0.01 par, 9,000,000 shares authorized, none issued or outstanding at June 30, 2013 and December 31, 2012)		-			-
Common stock ($0.01 par, 125,000,000 shares authorized, 52,198,771 shares and 52,021,149 shares issued at June 30, 2013 and December 31, 2012, respectively, and 36,054,813 shares and 35,714,269 shares outstanding at June 30, 2013 and December 31, 2012, respectively)		522			520
Additional paid-in capital		242,605			239,041
Retained earnings		391,989			379,166
Accumulated other comprehensive loss, net of deferred taxes		(9,564	)		(9,640	)
Unallocated common stock of Employee Stock Ownership Plan ("ESOP")		(2,892	)		(3,007	)
Unearned Restricted Stock Award common stock		(4,192	)		(3,122	)
Common stock held by Benefit Maintenance Plan ("BMP")		(9,013	)		(8,800	)
Treasury stock, at cost (16,143,958 shares and 16,306,880 shares at June 30, 2013 and December 31, 2012, respectively)		(200,550	)		(202,584	)
Total Stockholders' Equity		408,905			391,574
Total Liabilities And Stockholders' Equity	$	3,951,243		$	3,905,399

See notes to condensed consolidated financial statements.

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Dollars in thousands except per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Interest income:
Loans secured by real estate	$	44,692		$	47,259		$	87,840		$	97,772
Other loans		25			28			50			48
Mortgage-backed securities		354			832			813			1,779
Investment securities		103			505			232			820
Federal funds sold and other short-term investments		462			639			1,006			1,313
Total interest income		45,636			49,263			89,941			101,732
Interest expense:
Deposits and escrow		5,132			5,422			10,332			11,148
Borrowed funds		6,752			9,343			13,542			22,692
Total interest expense		11,884			14,765			23,874			33,840
Net interest income		33,752			34,498			66,067			67,892
Provision for loan losses		28			2,275			185			3,732
Net interest income after provision for loan losses		33,724			32,223			65,882			64,160
Non-interest income:
Other than temporary impairment ("OTTI") losses:		-			-			-			(187	)
Less: Non-credit portion of OTTI recorded in other comprehensive income (before taxes)		-			-			-			6
Net OTTI recognized in earnings		-			-			-			(181	)
Service charges and other fees		827			802			1,539			1,596
Net mortgage banking income		112			1,095			273			1,216
Net (loss) gain on sales of securities		(17	)		8			193			114
Income from bank owned life insurance		417			420			830			841
Other		382			663			783			1,192
Total non-interest income		1,721			2,988			3,618			4,778
Non-interest expense:
Salaries and employee benefits		8,338			8,519			17,271			17,507
Stock benefit plan amortization expense		960			958			1,978			1,909
Occupancy and equipment		2,506			2,434			5,038			4,905
Federal deposit insurance premiums		445			457			956			1,055
Data processing costs		863			742			1,675			1,476
Other		2,235			2,566			4,738			5,232
Total non-interest expense		15,347			15,676			31,656			32,084
Income before income taxes		20,098			19,535			37,844			36,854
Income tax expense		8,059			8,004			15,235			15,076
Net income	$	12,039		$	11,531		$	22,609		$	21,778
Earnings per Share:
Basic	$	0.34		$	0.34		$	0.65		$	0.64
Diluted	$	0.34		$	0.34		$	0.65		$	0.64
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
Net Income	$	12,039		$	11,531		$	22,609		$	21,778
Amortization and reversal of net unrealized loss on securities transferred from available-for-sale to held-to-maturity, net of taxes of $23 and $43 during the three months ended June 30, 2013 and 2012, respectively, and $50 and $64 during the six months ended June 30, 2013 and 2012, respectively		28			53			62			78
Reduction in non-credit component of OTTI charge, net of taxes of $4 and $122 during the three months ended June 30, 2013 and 2012, respectively, and $8 and $127 during the six months ended June 30, 2013 and 2012, respectively		4			149			8			154
Non-credit component of OTTI charge recognized during the period, net of tax benefit of $(3) during the six months ended June 30, 2012		-			-			-			(3	)
Reclassification adjustment for securities sold during the period, net of taxes of $(20) during the three months ended June 30, 2012, and $(50) and $(20) during the six months ended June 30, 2013 and 2012, respectively		-			(24	)		(60	)		(24	)
Net unrealized securities gains (losses) arising during the period, net of ( tax benefits) taxes of $(145) and $(245) during the three months ended June 30, 2013 and 2012, respectively and $51 and $(218) during the six months ended June 30, 2013 and 2012, respectively		(175	)		(252	)		66			(217	)
Defined benefit plan adjustments, net of taxes of $256 during the six months ended June 30, 2012		-			-			-			312
Comprehensive Income	$	11,896		$	11,457		$	22,685		$	22,078

See notes to condensed consolidated financial statements.

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)

(Dollars in thousands)

	Six Months Ended June 30,
	2013	2012
Common Stock (Par Value $0.01):
Balance at beginning of period	$520	$516
Shares issued in exercise of options	2	1
Balance at end of period	522	517
Additional Paid-in Capital:
Balance at beginning of period	239,041	231,521
Stock options exercised	2,283	812
Forfeited restricted stock award shares returned to treasury stock	-	(3)
Tax benefit of stock plans	201	189
Release from treasury stock for equity awards	514	217
Amortization of excess fair value over cost – ESOP stock and stock options expense	566	733
Balance at end of period	242,605	233,469
Retained Earnings:
Balance at beginning of period	379,166	358,079
Net income for the period	22,609	21,778
Cash dividends declared and paid	(9,786)	(9,563)
Balance at end of period	391,989	370,294
Accumulated Other Comprehensive Loss, net of tax:
Balance at beginning of period	(9,640)	(9,709)
Amortization and reversal of net unrealized loss on securities transferred from available-for-sale to held-to-maturity, net of tax	62	78
Reduction in non-credit component of OTTI charge, net of tax	8	154
Non-credit component of OTTI charge recognized during the period, net of tax	-	(3)
Decrease (Increase) in unrealized loss on available-for-sale securities during the period	6	(241)
Adjustments related to defined benefit plans, net of tax	-	312
Balance at end of period	(9,564)	(9,409)
ESOP:
Balance at beginning of period	(3,007)	(3,239)
Amortization of earned portion of ESOP stock	115	116
Balance at end of period	(2,892)	(3,123)
Unearned Restricted Stock Award Common Stock:
Balance at beginning of period	(3,122)	(3,037)
Amortization of earned portion of restricted stock awards	1,012	899
Release from treasury stock for equity awards	(2,082)	(1,959)
Forfeited restricted stock award shares returned to treasury stock	-	32
Balance at end of period	(4,192)	(4,065)
Treasury Stock, at cost:
Balance at beginning of period	(202,584)	(204,442)
Forfeited restricted stock award shares returned to treasury stock	-	(29)
Release from treasury stock for equity awards	2,034	1,887
Balance at end of period	(200,550)	(202,584)
Common Stock Held by BMP:
Balance at beginning of period	(8,800)	(8,655)
BMP award distribution	-	-
Release from treasury stock for equity awards	(213)	(145)
Balance at end of period	(9,013)	(8,800)

Total Stockholders' Equity	$408,905	$376,299

See notes to condensed consolidated financial statements .

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in thousands)

	Six Months Ended June 30,
	2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	22,609		$	21,778
Adjustments to reconcile net income to net cash provided by operating activities:
Net gain on sale of loans originated for sale		(11	)		(8	)
Net gain on sale of investment securities available-for-sale		(110	)		(44	)
Net gain on trading securities		(83	)		(70	)
Net depreciation and amortization		1,391			678
ESOP compensation expense		844			542
Stock plan compensation (excluding ESOP)		849			1,206
Write down of OREO		180			-
Provision for loan losses		185			3,732
Credit to reduce the liability for loans sold with recourse		(194	)		(967	)
OTTI charge for investment securities recognized in earnings		-			181
Increase in cash surrender value of Bank Owned Life Insurance		(830	)		(841	)
Deferred income tax provision (credit)		55			(137	)
Excess tax benefit of stock plans		(201	)		(189	)
Changes in assets and liabilities:
Origination of loans held for sale		(1,962	)		(2,061	)
Proceeds from sale of loans held for sale		2,301			5,748
Decrease in other assets		7,673			1,009
Increase in other liabilities		2,202			1,952
Net cash provided by operating activities		34,898			32,509
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from principal repayments of investment securities held-to-maturity		487			818
Proceeds from calls and principal repayments of investment securities available-for-sale		14,750			150,320
Proceeds from sales of investment securities available-for-sale		366			313
Proceeds from sales of trading securities		131			171
Purchases of investment securities available-for-sale		(382	)		(80,086	)
Purchases of mortgage backed securities available-for-sale		-			(23,186	)
Purchases of trading securities		(301	)		(1,681	)
Principal collected on mortgage backed securities available-for-sale		10,782			21,513
Purchases of loans		(34,373	)		(8,968	)
Proceeds from the sale of loans		6,331			19,244
Net (increase) decrease in loans		(73,912	)		93,398
Purchases of fixed assets, net		(743	)		(938	)
Redemption of FHLBNY capital stock		4,723			7,403
Net cash (used in) provided by investing activities		(72,141	)		178,321
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in due to depositors		128,230			11,997
Net increase in escrow and other deposits		3,275			33,333
Repayment of Securities Sold Under Agreement to Repurchase ("REPOs")		-			(40,000	)
Repayment of FHLBNY advances		(105,000	)		(162,275	)
Cash dividends paid		(9,786	)		(9,563	)
Exercise of stock options		2,285			813
Release of stock for benefit plan awards		253			-
Excess tax benefit of stock plans		201			189
Net cash provided by (used in) financing activities		19,458			(165,506	)
(DECREASE) INCREASE IN CASH AND DUE FROM BANKS		(17,785	)		45,324
CASH AND DUE FROM BANKS, BEGINNING OF PERIOD		79,076			44,260
CASH AND DUE FROM BANKS, END OF PERIOD	$	61,291		$	89,584
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes	$	15,608		$	15,216
Cash paid for interest		23,839			34,366
Loans transferred to held for sale		-			1,000
Loans transferred to OREO		765			-
Amortization of unrealized loss on securities transferred from available-for-sale to held-to-maturity		112			142
Net decrease in non-credit component of OTTI		(16	)		(3	)
Adjustments to other comprehensive income from defined benefit plans, net of tax		-			312

See notes to condensed consolidated financial statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Dollars in Thousands Except Per Share Amounts)

1. NATURE OF OPERATIONS

The Holding Company is a Delaware corporation and parent company of the Bank, a New York State chartered stock savings bank. The Holding Company's direct subsidiaries are the Bank, Dime Community Capital Trust 1 and 842 Manhattan Avenue Corp. The Bank's direct subsidiaries are Boulevard Funding Corp., Dime Insurance Agency Inc. ( f/k/a Havemeyer Investments, Inc.), DSBW Preferred Funding Corporation, DSBW Residential Preferred Funding Corp., Dime Reinvestment Corp. and 195 Havemeyer Corp.

The Bank maintains its headquarters in the Williamsburg section of Brooklyn, New York and operates twenty-six full service retail banking offices located in the New York City ("NYC") boroughs of Brooklyn, Queens, and the Bronx, and in Nassau County, New York. The Bank's principal business is gathering deposits from customers within its market area and via the internet, and investing them primarily in multifamily residential, commercial real estate and mixed used loans, as well as mortgage-backed securities ("MBS"), obligations of the U.S. Government and Government Sponsored Enterprises ("GSEs"), and corporate debt and equity securities. All of the Bank's lending occurs in the greater NYC metropolitan area.

2. SUMMARY OF ACCOUNTING POLICIES

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary for a fair presentation of the Company's financial condition as of June 30, 2013 and December 31, 2012, the results of operations and statements of comprehensive income for the three-month and six-month periods ended June 30, 2013 and 2012, and the changes in stockholders' equity and cash flows for the six months ended June 30, 2013 and 2012. The results of operations for the three-month and six-month periods ended June 30, 2013 are not necessarily indicative of the results of operations for the remainder of the year ending December 31, 2013. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been omitted pursuant to the rules and regulations of the U. S. Securities and Exchange Commission ("SEC').

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Please see "Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies" for a discussion of areas in the accompanying condensed consolidated financial statements utilizing significant estimates.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2012 and notes thereto.

3. RECENT ACCOUNTING PRONOUNCEMENTS

In February 2013, The Financial Accounting Standards Board issued Accounting Standards Update No. 2013-02, "Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income" ("ASU 2013-02"), which seeks to improve the transparency of reporting reclassifications out of accumulated other comprehensive income. The provisions of ASU 2013-02 are applicable to all companies that report items of other comprehensive income, such as the Company. ASU 2013-02 requires a presentation (either on the face of the statement where net income is presented or in the notes to the financial statements) of the effects on the line items of net income of significant amounts that have been reclassified in their entirety and in accordance with GAAP from accumulated other comprehensive income to net income in the same reporting period. ASU 2013-02 additionally requires a cross-reference to any other disclosures currently required under GAAP related to other reclassification items that, under GAAP, are not required to be reclassified in their entirety from accumulated other comprehensive income to net income in the same reporting period. ASU 2013-02 does not change the current requirements for reporting net income or other comprehensive income in the Company's financial statements. All information required to be presented or cross-referenced under ASU 2013-02 is currently required to be disclosed, in some capacity, in the financial statements under GAAP. The Company adopted ASU 2013-02 effective January 1, 2013. Adoption of ASU 2013-02 had no impact on the Company's consolidated financial condition or results of operations.

4. TREASURY STOCK

The Holding Company did not repurchase any of its common stock into treasury during the six months ended June 30, 2013 or 2012.

On April 30, 2013, 145,925 shares of the Holding Company's common stock were released from treasury in order to fulfill benefit obligations under the 2004 Stock Incentive Plan and 15,049 shares of treasury stock were released in order to fulfill benefit obligations under the BMP. The closing price of the Holding Company's common stock on that date was $14.27, and the shares were released utilizing the average historical cost method.

On April 30, 2012, 141,289 shares of the Holding Company's common stock were released from treasury in order to fulfill benefit obligations under the 2004 Stock Incentive Plan. The closing price of the Holding Company's common stock on that date was $13.86, and the shares were released utilizing the average historical cost method. On May 1, 2012, 10,729 shares of treasury stock were released in order to fulfill benefit obligations under the BMP. The closing price of the Holding Company's common stock on that date was $13.55, and the shares were released utilizing the average historical cost method.

5. OTHER COMPREHENSIVE INCOME (LOSS)

The before and after tax amounts allocated to each component of other comprehensive income (loss) are presented in the table below. Reclassification adjustments related to securities available for sale are included in the line entitled net (loss) gain on sales of securities in the accompanying consolidated statements of income.

	Pre-tax Amount			Tax Expense (Benefit)			After tax Amount
Three Months Ended June 30, 2013
Securities held-to maturity and transferred securities:
Change in non-credit component of OTTI	$	8		$	4		$	4
Change in unrealized loss on securities transferred to held to maturity		51			23			28
Total securities held-to-maturity and transferred securities		59			27			32
Securities available-for-sale:
Reclassification adjustment for net gains included in net income		-			-			-
Change in net unrealized gain during the period		(320	)		(145	)		(175	)
Total securities available-for-sale		(320	)		(145	)		(175	)
Total other comprehensive income	$	(261	)	$	(118	)	$	(143	)
Three Months Ended June 30, 2012
Securities held-to-maturity and transferred securities:
Change in non-credit component of OTTI	$	271		$	122		$	149
Change in unrealized loss on securities transferred to held to maturity		96			43			53
Total securities held-to-maturity and transferred securities		367			165			202
Securities available-for-sale:
Reclassification adjustment for net gains included in net income		(44	)		(20	)		(24	)
Change in net unrealized gain during the period		(457	)		(205	)		(252	)
Total securities available-for-sale		(501	)		(225	)		(276	)
Defined benefit plans:
Change in the net actuarial gain or loss		-			-			-
Total defined benefit plans		-			-			-
Total other comprehensive income	$	(134	)	$	(60	)	$	(74	)

	Pre-tax Amount			Tax Expense (Benefit)			After tax Amount
Six Months Ended June 30, 2013
Securities held-to-maturity and transferred securities
Change in non-credit component of OTTI	$	16		$	8		$	8
Change in unrealized loss on securities transferred to held to maturity		112			50			62
Total securities held-to-maturity and transferred securities		128			58			70
Securities available-for-sale
Reclassification adjustment for net gains included in net income		(110	)		(50	)		(60	)
Change in net unrealized gain during the period		117			51			66
Total securities available-for-sale		7			1			6
Total other comprehensive income	$	135		$	59		$	76
Six Months Ended June 30, 2012
Securities held-to-maturity and transferred securities:
Change in non-credit component of OTTI	$	275		$	124		$	151
Change in unrealized loss on securities transferred to held to maturity		142			64			78
Total securities held-to-maturity and transferred securities		417			188			229
Securities available-for-sale:
Reclassification adjustment for net gains included in net income		(44	)		(20	)		(24	)
Change in net unrealized gain during the period		(395	)		(178	)		(217	)
Total securities available-for-sale		(439	)		(198	)		(241	)
Defined benefit plans:
Change in the net actuarial gain or loss		568			256			312
Total defined benefit plans		568			256			312
Total other comprehensive income	$	546		$	246		$	300

Activity in accumulated other comprehensive gain (loss), net of tax, was as follows:

	Securities Held-to-Maturity and Transferred Securities	Securities Available-for-Sale	Defined Benefit Plans	Total Accumulated Other Comprehensive Gain (Loss)
Balance as of January 1, 2013	$(1,043)	$1,178	$(9,775)	$(9,640)
Other comprehensive income before reclassifications	70	66	-	136
Amounts reclassified from accumulated other comprehensive loss	-	(60)	-	(60)
Net other comprehensive income during the period	70	6	-	76
Balance as of June 30, 2013	$(973)	$1,184	$(9,775)	$(9,564)

Balance as of January 1, 2012	$(1,316)	$3,078	$(11,471)	$(9,709)
Other comprehensive income before reclassifications	229	(217)	312	324
Amounts reclassified from accumulated other comprehensive loss	-	(24)	-	(24)
Net other comprehensive income during the period	229	(241)	312	300
Balance as of June 30, 2012	$(1,087)	$2,837	$(11,159)	$(9,409)

6. EARNINGS PER SHARE ("EPS")

Basic EPS is computed by dividing income attributable to common stock by the weighted-average common shares outstanding during the reporting period. Diluted EPS is computed using the same method as basic EPS, but reflects the potential dilution that would occur if "in the money" stock options were exercised and converted into common stock. In determining the weighted average shares outstanding for basic and diluted EPS, treasury stock and unallocated ESOP shares are excluded. Vested restricted stock award shares are included in the calculation of the weighted average shares outstanding for basic and diluted EPS. Unvested restricted stock award shares are recognized as a special class of securities under ASC 260.

The following is a reconciliation of the numerators and denominators of basic EPS and diluted EPS for the periods presented:

	Three Months Ended June 30,		Six Months Ended June 30,
	2013	2012	2013	2012
Net income per the Consolidated Statements of Income	$12,039	$11,531	$22,609	$21,778
Less: Dividends paid and earnings allocated to participating securities	(45)	(46)	(91)	(91)
Income attributable to common stock	$11,994	$11,485	$22,518	$21,687
Weighted average common shares outstanding, including participating securities	34,975,395	34,181,312	34,899,766	34,113,495
Less: weighted average participating securities	(321)	(329)	(323)	(327)
Weighted average common shares outstanding	34,975,074	34,180,983	34,899,443	34,113,168
Basic EPS	$0.34	$0.34	$0.65	$0.64
Income attributable to common stock	$11,994	$11,485	$22,518	$21,687
Weighted average common shares outstanding	34,975,074	34,180,983	34,899,443	34,113,168
Weighted average common equivalent shares outstanding	72,989	48,219	64,806	66,928
Weighted average common and equivalent shares outstanding	35,048,063	34,229,202	34,964,249	34,180,096
Diluted EPS	$0.34	$0.34	$0.65	$0.64

Common equivalent shares resulting from the dilutive effect of "in-the-money" outstanding stock options are calculated based upon the excess of the average market value of the Holding Company's common stock over the exercise price of outstanding in-the-money stock options during the period.

There were 1,275,586 and 2,203,024 weighted-average stock options outstanding for the three-month periods ended June 30, 2013 and 2012, respectively, which were not considered in the calculation of diluted EPS since their exercise prices exceeded the average market price during the period. There were 1,300,026 and 1,331,331 weighted-average stock options outstanding for the six-month periods ended June 30, 2013 and 2012, respectively, which were not considered in the calculation of diluted EPS since their exercise prices exceeded the average market price during the period.

7. ACCOUNTING FOR STOCK BASED COMPENSATION

During the three-month and six-month periods ended June 30, 2013 and 2012, 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, 2012, 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 June 30,						At or for the Six Months Ended June 30,
	2013			2012			2013			2012
Options outstanding – beginning of period		2,295,372			2,832,513			2,456,137			2,893,760
Options granted		-			24,440			-			24,440
Options exercised		(19,952	)		(25,264	)		(177,622	)		(86,511	)
Options forfeited		(1,687	)		(1,387	)		(4,782	)		(1,387	)
Options outstanding – end of period		2,273,733			2,830,302			2,273,733			2,830,302
Intrinsic value of options exercised	$	67		$	320		$	217		$	599
Compensation expense recognized		48			77			122			162
Remaining unrecognized compensation expense		213			482			213			482
Intrinsic value of outstanding options at period end		2,050			518			2,050			518
Intrinsic value of vested options at period end		2,015			362			2,015			362
Weighted average exercise price of vested options – end of period		15.87			15.41			15.87			15.41

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

	Three Months Ended June 30,		Six Months Ended June 30,
	2013	2012	2013	2012
Total options granted	-	24,440	-	24,440
Estimated fair value on date of grant	-	$4.09	-	$4.09
Pricing methodology utilized	-	Black- Scholes	-	Black- Scholes
Expected life (in years)	-	6.53	-	6.53
Interest rate	-	1.21%	-	1.21%
Volatility	-	45.17	-	45.17
Dividend yield	-	4.04	-	4.04

Restricted Stock Awards

The Company, from time to time, issues restricted stock awards to outside directors and certain 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-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 June 30,						At or for the Six Months Ended June 30,
	2013			2012			2013			2012
Unvested allocated shares – beginning of period		321,148			324,454			328,003			324,454
Shares granted		145,925			141,289			145,925			141,289
Shares vested		(148,759	)		(135,369	)		(155,614	)		(135,369	)
Shares forfeited		-			(2,371	)		-			(2,371	)
Unvested allocated shares – end of period		318,314			328,003			318,314			328,003
Compensation recorded to expense	$	487		$	461		$	1,012		$	899

8. LOANS RECEIVABLE AND CREDIT QUALITY

Loans are reported at the principal amount outstanding, net of unearned fees or costs and the allowance for loan losses. Interest income on loans is recorded using the level yield method. Under this method, discount accretion and premium amortization are included in interest income. Loan origination fees and certain direct loan origination costs are deferred and amortized as yield adjustments over the contractual loan terms.

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying them as to credit risk. This analysis includes all non-homogeneous loans, such as multifamily residential, mixed use residential ( i.e., loans in which the aggregate rental income of the underlying collateral property is generated from both residential and commercial units, but the majority of such income is generated from the residential units), mixed use commercial real estate ( i.e. , loans in which the aggregate rental income of the underlying collateral property is generated from both residential and commercial units, but the majority of such income is generated from the commercial units), commercial real estate and construction and land acquisition loans, as well as one-to four family residential and cooperative apartment loans with balances in excess of the Fannie Mae ("FNMA") conforming loan limits for high-cost areas such as the Bank's primary lending area ("FNMA Limits"). This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Bank's credit position at some future date.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of then existing facts, conditions, and values, highly questionable and improbable.

The Bank had no loans classified as Doubtful at both June 30, 2013 and December 31, 2012. All loans not classified as Special Mention or Substandard were deemed pass loans at both June 30, 2013 and December 31, 2012.

The following is a summary of the credit risk profile of real estate loans (including deferred costs) by internally assigned grade as of the dates indicated:

	Balance at June 30, 2013
Grade	One- to Four-Family Residential and Cooperative Unit		Multifamily Residential and Residential Mixed Use		Mixed Use Commercial Real Estate		Commercial Real Estate		Construction		Total
Not Graded(1)	$	12,738	$	-	$	-	$	-	$	-	$	12,738
Pass		59,409		2,772,701		328,177		370,138		-		3,530,425
Special Mention		6,750		9,155		5,681		4,320		-		25,906
Substandard		2,213		3,350		7,199		22,078		338		35,178
Total real estate loans	$	81,110	$	2,785,206	$	341,057	$	396,536	$	338	$	3,604,247

⁽¹⁾ Amount comprised of fully performing one- to four-family residential and cooperative unit loans with balances equal to or less than the FNMA Limits.

	Balance at December 31, 2012
Grade	One- to Four-Family Residential and Cooperative Unit		Multifamily Residential and Residential Mixed Use		Mixed Use Commercial Real Estate		Commercial Real Estate		Construction		Total
Not Graded(1)	$	16,141	$	-	$	-	$	-	$	-	$	16,141
Pass		66,415		2,665,410		326,053		363,299		-		3,421,177
Special Mention		6,333		7,711		5,547		2,639		-		22,230
Substandard		2,987		3,248		8,533		28,593		476		43,837
Total real estate loans	$	91,876	$	2,676,369	$	340,133	$	394,531	$	476	$	3,503,385

⁽¹⁾ Amount comprised of fully performing one- to four-family residential and cooperative unit loans with balances equal to or less than the FNMA Limits.

For consumer loans, the Company evaluates credit quality based on payment activity. Consumer loans that are 90 days or more past due are placed on non-accrual status, while all remaining consumer loans are classified and evaluated as performing.

The following is a summary of the credit risk profile of consumer loans by internally assigned grade:

Grade	Balance at June 30, 2013		Balance at December 31, 2012
Performing	$	2,512	$	2,415
Non-accrual		5		8
Total	$	2,517	$	2,423

The following is a breakdown of the past due status of the Company's investment in loans (excluding accrued interest and loans held for sale) as of the dates indicated:

At June 30, 2013
	30 to 59 Days Past Due	60 to 89 Days Past Due	Loans 90 Days or More Past Due and Still Accruing Interest	Non-accrual ⁽¹⁾	Total Past Due	Current	Total Loans
Real Estate:
One- to four-family residential and cooperative unit	$4	$149	$-	$1,164	$1,317	$79,793	$81,110
Multifamily residential and residential mixed use	-	-	974	1,688	2,662	2,782,544	2,785,206
Mixed use commercial real estate	-	-	-	1,150	1,150	339,907	341,057
Commercial real estate	-	-	-	5,500	5,500	391,036	396,536
Construction	-	-	-	-	-	338	338
Total real estate	$4	$149	$974	$9,502	$10,629	$3,593,618	$3,604,247
Consumer	$1	$5	$-	$5	$11	$2,506	$2,517

⁽¹⁾ Includes all loans on non-accrual status regardless of the number of days such loans were delinquent as of June 30, 2013.

At December 31, 2012
	30 to 59 Days Past Due	60 to 89 Days Past Due	Loans 90 Days or More Past Due and Still Accruing Interest	Non-accrual ⁽¹⁾	Total Past Due	Current	Total Loans
Real Estate:
One- to four-family residential and cooperative unit	$336	$155	$-	$938	$1,429	$90,447	$91,876
Multifamily residential and residential mixed use	6,451	-	190	507	7,148	2,669,221	2,676,369
Mixed use commercial real estate	-	-	-	1,170	1,170	338,963	340,133
Commercial real estate	207	-	-	6,265	6,472	388,059	394,531
Construction	-	-	-	-	-	476	476
Total real estate	$6,994	$155	$190	$8,880	$16,219	$3,487,166	$3,503,385
Consumer	$2	$5	$-	$8	$15	$2,408	$2,423

⁽¹⁾ Includes all loans on non-accrual status regardless of the number of days such loans were delinquent as of December 31, 2012.

Accruing Loans 90 Days or More Past Due:

The Bank continued accruing interest on three real estate loans with an outstanding balance of $974 at June 30, 2013, and one loan with an outstanding balance of $190 at December 31, 2012, all of which were 90 days or more past due on their respective contractual balloon principal payments. The three loans at June 30, 2013, one of which was the $190 loan outstanding at December 31, 2012, continued to make monthly payments consistent with their initial contractual amortization schedule exclusive of the balloon payments. These loans are both well secured and expected to be refinanced during the year ending December 31, 2013, and therefore remained on accrual status at both June 30, 2013 and December 31, 2012, and thus were deemed performing assets at both June 30, 2013 and December 31, 2012.

Troubled Debt Restructured Loans ("TDRs").

The following table summarizes outstanding TDRs by underlying collateral type as of the dates indicated:

	As of June 30, 2013				As of December 31, 2012
	No. of Loans		Balance		No. of Loans		Balance
One- to four-family residential and cooperative unit		3	$	941		3	$	948
Multifamily residential and residential mixed use		5		1,917		5		1,953
Mixed use commercial real estate		1		718		1		729
Commercial real estate		10		41,016		13		47,493
Total real estate		19	$	44,592		22	$	51,123

The following table summarizes outstanding TDRs by accrual status as of the dates indicated:

	As of June 30, 2013				As of December 31, 2012
	No. of Loans		Balance		No. of Loans		Balance
Outstanding principal balance at period end		19	$	44,592		22	$	51,123
TDRs on accrual status at period end		17		38,699		20		44,858
TDRs on non-accrual status at period end		2		5,893		2		6,265

Accrual status for TDRs is determined separately for each TDR in accordance with the Bank's policies for determining accrual or non-accrual status. At the time an agreement is entered into between the Bank and the borrower that results in the Bank's determination that a TDR has been created, the loan can be either on accrual or non-accrual status. If a loan is on non-accrual status at the time it is restructured, it continues to be classified as non-accrual until the borrower has demonstrated compliance with the modified loan terms for a period of at least six months. Conversely, if at the time of restructuring the loan is performing (and accruing), it will remain accruing throughout its restructured period, unless the loan subsequently meets any of the criteria for non-accrual status under either the Bank's policy and/or the criteria related to accrual of interest established by agency regulations.

The Company has not restructured troubled consumer loans, as its consumer loan portfolio has not experienced any problem issues warranting restructuring. Therefore, all TDRs were collateralized by real estate at both June 30, 2013 and December 31, 2012.

There were no loan modifications during the three months ended June 30, 2013 and 2012 that met the definition of a TDR. The following table summarizes activity related to TDRs for the periods indicated:

	For the Six Months Ended June 30, 2013			For the Six Months Ended June 30, 2012
	Number of Loans	Pre-Modification Outstanding Recorded Investment	Post-Modification Outstanding Recorded Investment	Number of Loans	Pre-Modification Outstanding Recorded Investment	Post-Modification Outstanding Recorded Investment
Loan modifications during the period that met the definition of a TDR:
Multifamily residential and residential mixed use	-	-	-	1	$459	$459
Commercial real estate	-	-	-	2	4,430	4,430
TOTAL	-	-	-	3	$4,889	$4,889

During the three- month and six- month periods ended June 30, 2013 and 2012, the Company made modifications to other existing loans that were deemed both insignificant and sufficiently temporary in nature, thus not warranting classification as TDRs. Such activity was immaterial.

The Bank's allowance for loan losses at June 30, 2013 reflected $522 of allocated reserve associated with TDRs. The Bank's allowance for loan losses at December 31, 2012 reflected $520 of allocated reserve associated with TDRs. Activity related to reserves associated with TDRs was immaterial during the three-month and six-month periods ended June 30, 2013. During the six months ended June 30, 2012, allocated reserves totaling $1,034 associated with nine TDRs were removed, as improvement in the underlying conditions of these loans resulted in the determination that the allocated reserve was no longer warranted. In addition, during the six months ended June 30, 2012, $154 of reserves were charged-off upon the disposal of two TDRs.

As of June 30, 2013 and December 31, 2012, the Bank had no loan commitments to borrowers with outstanding TDRs.

A TDR is considered to be in payment default once it is 90 days contractually past due under the modified terms. All TDRs are considered impaired loans and are evaluated individually for measurable impairment, if any.

There were no TDRs which defaulted within twelve months following the modification during the three or six-month periods ended June 30, 2013 or 2012 (thus no significant impact to the allowance for loan losses during those periods).

Impaired Loans

A loan is considered impaired when, based on current information and events, it is probable that all contractual amounts due will not be collected in accordance with the terms of the loan. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays or shortfalls generally are not classified as impaired. Management determines the significance of payment delays and shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

Generally, the Bank considers TDRs and non-accrual multifamily residential and commercial real estate loans, along with non-accrual one- to four-family loans in excess of the FNMA Limits, to be impaired. Non-accrual one-to four-family loans equal to or less than the FNMA Limits, as well as all consumer loans, are considered homogeneous loan pools and are not required to be evaluated individually for impairment unless considered a TDR.

Impairment is typically measured using the difference between the outstanding loan principal balance and either: 1) the likely realizable value of a note sale; 2) the fair value of the underlying collateral, net of likely disposal costs, if repayment is expected solely from liquidation of the collateral; or 3) the present value of estimated future cash flows using the loan's existing rate. If a TDR is substantially performing in accordance with its restructured terms, management will look to either the present value of the expected cash flows from the debt service or the potential net liquidation proceeds of the underlying collateral property in measuring impairment (whichever is deemed most appropriate under the circumstances). If a TDR has re-defaulted, generally the likely realizable net proceeds from either a note sale or the liquidation of the collateral is considered when measuring impairment. Measured impairment is either charged off immediately or, in limited instances, recognized as an allocated reserve within the allowance for loan losses.

Please refer to Note 9 for tabular information related to impaired loans.

Delinquent Serviced Loans Subject to a Recourse Obligation

As of June 30, 2013 and December 31, 2012, the Bank serviced a pool of multifamily loans sold to FNMA, and retained an obligation (off-balance sheet contingent liability) to absorb a portion of any losses (as defined in the seller/servicer agreement) incurred by FNMA in connection with the loans sold (the "First Loss Position").

Under the terms of its seller/servicer agreement with FNMA, the Bank is obligated to fund FNMA all monthly principal and interest payments under the original terms of the sold loans until the earlier of the following events: (i) the Bank re-acquires the loan from FNMA or it enters OREO status; (ii) the entire pool of loans sold to FNMA have either been fully satisfied or enter OREO status; or (iii) the First Loss Position is fully exhausted.

At June 30, 2013, within the pool of multifamily loans sold to FNMA, there was one $474 loan 90 days or more delinquent and one $226 loan delinquent between 30 and 89 days. At December 31, 2012, within the pool of multifamily loans sold to FNMA, there was one $474 loan 90 days or more delinquent and one $229 loan delinquent between 30 and 89 days.

9. ALLOWANCE FOR LOAN LOSSES AND LIABILITY FOR FIRST LOSS POSITION

The allowance for loan losses may consist of specific and general components. The Bank's periodic evaluation of its allowance for loan losses (specific or general) is comprised of four primary components: (1) impaired loans; (2) non-impaired substandard loans; (3) non-impaired special mention loans; and (4) pass graded loans. Within these components, the Company has identified the following portfolio segments for purposes of assessing its allowance for loan losses (specific or general): 1) real estate loans; and 2) consumer loans. Within the segments, the Bank analyzes the allowance based upon the underlying collateral type (classes). Consumer loans represent a nominal portion of the Company's loan portfolio, and were thus evaluated in aggregate as of both June 30, 2013 and December 31, 2012.

Impaired Loan Component

All multifamily residential, mixed use, commercial real estate and construction loans that are deemed to meet the definition of impaired are individually evaluated for impairment. In addition, all cooperative unit and one- to four-family residential real estate loans in excess of the FNMA Limits are individually evaluated for impairment. Impairment is typically measured using the difference between the outstanding loan principal balance and either: 1) the likely realizable value of a note sale; 2) the fair value of the underlying collateral, net of likely disposal costs, if repayment is expected solely from liquidation of the collateral; or 3) the present value of estimated future cash flows using the loan's existing rate. For impaired loans on non-accrual status, either of the initial two measurements is utilized.

All TDRs are considered impaired loans and are evaluated individually for measurable impairment, if any. If a TDR is substantially performing in accordance with its restructured terms, management will look to either the present value of the expected cash flows from the debt service or the potential net liquidation proceeds of the underlying collateral property in measuring impairment (whichever is deemed most appropriate under the circumstances). If a TDR has re-defaulted, the likely realizable net proceeds from either a note sale or the liquidation of the collateral is generally considered when measuring impairment. While measured impairment is charged off immediately, impairment measured from a reduction in the present value of expected cash flows of a performing TDR was reflected as an allocated reserve within the allowance for loan losses at both June 30, 2013 and December 31, 2012.

Large groups of smaller balance homogeneous real estate loans, such as cooperative unit and one-to four-family residential real estate loans with balances equal to or less than the FNMA Limits, are collectively evaluated for impairment, and accordingly, are not separately identified for impairment disclosures.

Non-Impaired Substandard Loan Component

At both June 30, 2013 and December 31, 2012, the reserve allocated within the allowance for loan losses associated with loans internally classified as Substandard (excluding impaired loans internally designated as Substandard) reflected expected loss percentages on the Bank's pool of such loans that were derived based upon an analysis of historical losses over a measurement timeframe. The loss percentage resulting from this analysis was then applied to the aggregate pool of non-impaired Substandard loans at June 30, 2013 and December 31, 2012. Based upon this methodology, increases or decreases in the amount of either non-impaired Substandard loans or charge-offs associated with such loans, or a change in the measurement timeframe utilized to derive the expected loss percentage, would impact the level of reserves determined on non-impaired Substandard loans. As a result, the allowance for loan losses associated with non-impaired Substandard loans is subject to volatility.

The portion of the allowance for loan losses attributable to non-impaired Substandard loans was $375 at June 30, 2013 and $795 at December 31, 2012. The decline resulted primarily from a reduction of $4,936 in the balance of such loans from December 31, 2012 to June 30, 2013.

All non-impaired Substandard loans were deemed sufficiently well secured and performing to have remained on accrual status both prior and subsequent to their downgrade to the Substandard internal loan grade.

Non-Impaired Special Mention Loan Component

At both June 30, 2013 and December 31, 2012, the reserve allocated within the allowance for loan losses associated with loans internally classified as Special Mention (excluding impaired loans internally designated as Special Mention) reflected an expected loss percentage on the Bank's pool of such loans that was derived based upon an analysis of historical losses over a measurement timeframe. The loss percentage resulting from this analysis was then applied to the aggregate pool of non-impaired Special Mention loans at June 30, 2013 and December 31, 2012. Based upon this methodology, increases or decreases in the amount of either non-impaired Special Mention loans or charge-offs associated with such loans, or a change in the measurement timeframe utilized to derive the expected loss percentage, would impact the level of reserves determined on non-impaired Special Mention loans. As a result, the allowance for loan losses associated with non-impaired Special Mention loans is subject to volatility.

The portion of the allowance for loan losses attributable to non-impaired Special Mention loans increased from $145 at December 31, 2012 to $235 at June 30, 2013, due to an increase of $5,631 in the balance of such loans, as well as an increase in the estimated loss percentage determined to be applied to such loans, from December 31, 2012 to June 30, 2013.

Pass Graded Loan Component

The Bank initially looks to the underlying collateral type when determining the allowance for loan losses associated with pass graded real estate loans. The following underlying collateral types are analyzed separately: 1) one- to four family residential and cooperative unit; 2) multifamily residential and residential mixed use; 3) mixed use commercial real estate, 4) commercial real estate; and 5) construction and land acquisition. Within the analysis of each underlying collateral type, the following elements are additionally considered and provided weighting in determining the allowance for loan losses for pass graded real estate loans:

(i)	Charge-off experience (including peer charge-off experience)

(ii)	Economic conditions

(iii)

Underwriting standards or experience

(iv)	Loan concentrations

(v)	Loan seasoning

(vi)	Nature and volume of the portfolio

(vii)

Changes in the quality and scope of the loan review function

The following is a brief synopsis of the manner in which each element is considered:

(i) Charge-off experience - Loans within the pass graded loan portfolio are segmented by significant common characteristics, against which historical loss rates are applied. The Bank also reviews and considers the charge-off experience of peer banks in its lending marketplace in order to determine whether there may be potential losses that have taken a longer or shorter period to flow through its allowance for loan losses.

(ii) Economic conditions - At both June 30, 2013 and December 31, 2012, the Bank assigned a loss allocation to its entire pass graded real estate loan portfolio based, in part, upon a review of economic conditions affecting the local real estate market. Specifically, the Bank considered both the level of, and recent trends in: 1) the local and national unemployment rate, 2) residential and commercial vacancy rates, 3) real estate sales and pricing, and 4) delinquencies in the Bank's loan portfolio.

(iii) Underwriting standards or experience - Underwriting standards are reviewed to ensure that changes in the Bank's lending policies and practices are adequately evaluated for risk and reflected in its analysis of potential credit losses. Different loss expectations are then incorporated into the methodology.

(iv) Concentrations of credit - The Bank regularly reviews its loan concentrations (borrower, collateral type and location) in order to ensure that heightened risk has not evolved that has not been captured through other factors. The risk component of loan concentrations is regularly evaluated for reserve adequacy.

(v) Loan Seasoning - The Bank analyzes its charge-off history in order to determine whether loans that are over three years past their origination date (referred to as seasoned loans) have experienced lower loss levels, and would thus warrant a lower expected loss percentage. This element was given minimal consideration in the June 30, 2013 and December 31, 2012 evaluations. The minimal consideration resulted from an analysis of the loss experience recognized during the recent recessionary period, which concluded that the age or seasoning of a loan did not inversely correlate to the Bank's loss experience.

(vi) Nature and volume of the portfolio – The Bank considers any significant changes in the overall nature and volume of its loan portfolio.

(vii) Changes in the quality and scope of the loan review function – The Bank considers the potential impact upon its allowance for loan losses of any adverse change in the quality and scope of the loan review function.

Consumer Loans

Due to their small individual balances, the Bank does not evaluate individual consumer loans for impairment. Loss percentages are applied to aggregate consumer loans based upon both their delinquency status and loan type. These loss percentages are derived from a combination of the Company's historical loss experience and/or nationally published loss data on such loans. Consumer loans in excess of 120 days delinquent are typically fully charged off against the allowance for loan losses.

The following table presents data regarding the allowance for loan losses and loans evaluated for impairment by class of loan within the real estate loan segment as well as for the aggregate consumer loan segment:

At or for the Three Months Ended June 30, 2013
	Real Estate Loans						Consumer Loans
	One- to Four Family Residential and Cooperative Unit	Multifamily Residential and Residential Mixed Use	Mixed Use Commercial Real Estate	Commercial Real Estate	Construction	Total Real Estate
Beginning balance	$350	$13,890	$2,590	$3,652	$22	$20,504	$26
Provision (credit) for loan losses	12	755	(360)	(374)	(10)	23	5
Charge-offs	(11)	(46)	(15)	-	-	(72)	(7)
Recoveries	1	21	-	1	-	23	-
Ending balance	$352	$14,620	$2,215	$3,279	$12	$20,478	$24

Ending balance – loans individually evaluated for impairment	$1,206	$3,212	$1,868	$41,016	$-	$47,302	$-
Ending balance – loans collectively evaluated for impairment	79,904	2,781,994	339,189	355,520	338	3,556,945	2,517
Allowance balance associated with loans individually evaluated for impairment	6	-	-	516	-	522	-
Allowance balance associated with loans collectively evaluated for impairment	346	14,620	2,215	2,763	12	19,956	24

At December 31, 2012
Ending balance – loans individually evaluated for impairment	$1,291	$2,460	$1,900	$47,493	$-	$53,144	$-
Ending balance – loans collectively evaluated for impairment	90,585	2,673,909	338,233	347,038	476	3,450,241	2,423
Allowance balance associated with loans individually evaluated for impairment	7	-	-	513	-	520	-
Allowance balance associated with loans collectively evaluated for impairment	337	14,299	2,474	2,869	24	20,003	27
Total Ending balance	$344	$14,299	$2,474	$3,382	$24	$20,523	$27

At or for the Three Months Ended June 30, 2012
	Real Estate Loans						Consumer Loans
	One- to Four Family Residential and Cooperative Unit	Multifamily Residential and Residential Mixed Use	Mixed Use Commercial Real Estate	Commercial Real Estate	Construction	Total Real Estate
Beginning balance	$313	$13,871	$2,249	$3,011	$-	$19,444	$24
Provision	40	1,840	47	347	-	2,274	1
Charge-offs	(110)	(1,241)	(136)	(163)	-	(1,650)	(2)
Recoveries	15	63	11	1	-	90	-
Transfer from the reserve for loan commitments	-	18	10	34	-	62	-
Ending balance	$258	$14,551	$2,181	$3,230	$-	$20,220	$23

At or for the Six Months Ended June 30, 2013
	Real Estate Loans						Consumer Loans
	One- to Four Family Residential and Cooperative Unit	Multifamily Residential and Residential Mixed Use	Mixed Use Commercial Real Estate	Commercial Real Estate	Construction	Total Real Estate
Beginning balance	$344	$14,299	$2,474	$3,382	$24	$20,523	$27
Provision (credit) for loan losses	104	456	(273)	(101)	(12)	174	10
Charge-offs	(99)	(156)	(15)	(4)	-	(274)	(13)
Recoveries	3	21	29	2	-	55	-

Ending balance	$352	$14,620	$2,215	$3,279	$12	$20,478	$24

At or for the Six Months Ended June 30, 2012
	Real Estate Loans						Consumer Loans
	One- to Four Family Residential and Cooperative Unit	Multifamily Residential and Residential Mixed Use	Mixed Use Commercial Real Estate	Commercial Real Estate	Construction	Total Real Estate
Beginning balance	$480	$14,313	$1,528	$3,783	$124	$20,228	$26
Provision (reduction)	403	2,237	1,300	(94)	(121)	3,725	7
Charge-offs	(640)	(2,138)	(663)	(485)	(3)	(3,929)	(10)
Recoveries	15	87	11	1	-	114	-
Transfer from the reserve for loan commitments	-	52	5	25	-	82	-
Ending balance	$258	$14,551	$2,181	$3,230	$-	$20,220	$23

The following tables summarize impaired real estate loans as of or for the periods indicated (by collateral type within the real estate loan segment):

	At June 30, 2013
	Unpaid Principal Balance at Period End	Recorded Investment at Period End(1)	Reserve Balance Allocated within the Allowance for Loan Losses at Period End
One- to Four Family Residential and Cooperative Unit
With no allocated reserve	$1,073	$995	$-
With an allocated reserve	257	212	6
Multifamily Residential and Residential Mixed Use
With no allocated reserve	3,212	3,212	-
With an allocated reserve	-	-	-
Mixed Use Commercial Real Estate
With no allocated reserve	1,867	1,867	-
With an allocated reserve	-	-	-
Commercial Real Estate
With no allocated reserve	26,938	25,825	-
With an allocated reserve	15,191	15,191	516
Construction
With no allocated reserve	-	-	-
With an allocated reserve	-	-	-
Total
With no allocated reserve	$33,090	$31,899	$-
With an allocated reserve	$15,448	$15,403	$522

(1)	The recorded investment excludes accrued interest receivable and loan origination fees, net, due to immateriality.

	At December 31, 2012
	Unpaid Principal Balance at Period End	Recorded Investment at Period End(1)	Reserve Balance Allocated within the Allowance for Loan Losses at Period End
One- to Four Family Residential and Cooperative Unit
With no allocated reserve	$1,079	$1,079	$-
With an allocated reserve	258	212	7
Multifamily Residential and Residential Mixed Use
With no allocated reserve	2,767	2,460	-
With an allocated reserve	-	-	-
Mixed Use Commercial Real Estate
With no allocated reserve	1,900	1,900	-
With an allocated reserve	-	-	-
Commercial Real Estate
With no allocated reserve	33,416	32,217	-
With an allocated reserve	15,276	15,276	513
Construction
With no allocated reserve	-	-	-
With an allocated reserve	-	-	-
Total
With no allocated reserve	$39,162	$37,656	$-
With an allocated reserve	$15,534	$15,488	$520

(1)	The recorded investment excludes accrued interest receivable and loan origination fees, net, due to immateriality.

	Three Months Ended June 30, 2013				Three Months Ended June 30, 2012				Six Months Ended June 30, 2013				Six Months Ended June 30, 2012
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
One- to Four Family Residential and Cooperative Unit
With no allocated reserve	$	996	$	6	$	855	$	25	$	1,024	$	17	$	948	$	33
With an allocated reserve		212		5		212		5		211		9		612		9
Multifamily Residential and Residential Mixed Use
With no allocated reserve		2,779		32		6,733		124		2,673		80		7,131		255
With an allocated reserve		-		-		-		-		-		-		700		-
Mixed Use Commercial Real Estate
With no allocated reserve		1,875		40		1,721		19		1,883		92		3,074		44
With an allocated reserve		-		-		-		-		-		-		320		-
Commercial Real Estate
With no allocated reserve		27,179		364		35,226		417		28,858		762		27,421		914
With an allocated reserve		15,198		138		15,322		189		15,225		396		23,301		379
Construction
With no allocated reserve		-		-		-		-		-		-		-		-
With an allocated reserve		-		-		-		-		-		-		-		-
Total
With no allocated reserve	$	32,829	$	442	$	44,535	$	585	$	34,438	$	951	$	38,574	$	1,246
With an allocated reserve	$	15,410	$	143	$	15,534	$	194	$	15,436	$	405	$	24,933	$	388

Reserve Liability for First Loss Position

At both June 30, 2013 and December 31, 2012, the Bank serviced a pool of loans that it sold to FNMA and was subject to the First Loss Position. The Bank maintains a reserve liability in relation to the First Loss Position that reflects estimated losses on this loan pool at each period end. For performing loans within the FNMA serviced pool, the reserve recognized is based upon the historical loss experience on this loan pool. For problem loans within the pool, the estimated losses are determined in a manner consistent with impaired loans within the Bank's loan portfolio.

The following is a summary of the aggregate balance of multifamily loans serviced for FNMA, the period-end First Loss Position associated with these loans and activity in the related liability:

	At or for the Three Months Ended June 30,						At or for the Six Months Ended June 30,
	2013			2012			2013			2012
Outstanding balance of multifamily loans serviced for FNMA at period end	$	229,165		$	291,733		$	229,165		$	291,733
Total First Loss Position at end of period		15,428			16,356			15,428			16,356
Liability on the First Loss Position
Balance at beginning of period	$	1,291		$	2,958		$	1,383		$	2,993
Transfer of specific reserve for serviced loans re-acquired by the Bank		-			-			-			-
Credit for losses on problem loans ⁽¹⁾		(102	)		(967	)		(194	)		(967	)
Charge-offs and other net reductions in balance		(1	)		(307	)		(1	)		(342	)
Balance at period end	$	1,188		$	1,684		$	1,188		$	1,684
⁽¹⁾ Amount recognized as a component of mortgage banking income during the period.

10. INVESTMENT AND MORTGAGE-BACKED SECURITIES

The following is a summary of major categories of securities owned by the Company, excluding trading securities, at June 30, 2013:

			Unrealized Gains or Losses Recognized in Accumulated Other Comprehensive Loss
	Purchase Amortized / Historical Cost	Recorded Amortized/ Historical Cost ⁽¹⁾	Non-Credit OTTI	Unrealized Gains	Unrealized Losses	Book Value	Other Unrecognized Losses	Fair Value
Investment securities held-to-maturity:
Pooled bank trust preferred securities ("TRUPS")	$16,337	$7,390	$(617)	-	$(1,156) ⁽²⁾	$5,617	$(76)	$5,541
Investment securities available for sale:
Registered Mutual Funds	2,790	2,684	-	502	-	3,175	-	3,175
Agency notes	15,070	15,070	-	64	-	15,134	-	15,134
Pass-through MBS issued by GSEs	34,183	34,183	-	1,557	-	35,740	-	35,740
Collateralized mortgage obligations ("CMOs") issued by GSEs	922	922	-	9	-	931	-	931
Private issuer pass through MBS	763	763	-	21	-	784	-	784
Private issuer CMOs	726	726	-	12	-	738	-	738

(1) Amount represents the purchase amortized / historical cost less any credit-related OTTI charges recognized through earnings.

(2) Amount represents the unamortized portion of the unrealized loss that was recognized in accumulated other comprehensive loss on September 1, 2008 (the day on which these securities were transferred from available-for-sale to held-to-maturity).

The following is a summary of major categories of securities owned by the Company at December 31, 2012:

			Unrealized Gains or Losses Recognized in Accumulated Other Comprehensive Loss
	Purchase Amortized / Historical Cost	Recorded Amortized/ Historical Cost ⁽¹⁾	Non-Credit OTTI	Unrealized Gains	Unrealized Losses	Book Value	Other Unrecognized Gains	Fair Value
Investment securities held-to-maturity:
TRUPS	$16,774	$7,829	$(634)	-	$(1,268) ⁽²⁾	$5,927	$340	$6,267
Investment securities available for sale:
Registered Mutual Funds	2,904	2,556	-	449	-	3,005	-	3,005
Agency notes	29,820	29,820	-	125	-	29,945	-	29,945
Pass-through MBS issued by GSEs	43,142	43,142	-	1,561	(25)	44,678	-	44,678
CMOs issued by GSEs	2,436	2,436	-	26	-	2,462	-	2,462
Private issuer pass through MBS	962	962	-	-	(7)	955	-	955
Private issuer CMOs	908	908	-	18	-	926	-	926

(1) Amount represents the purchase amortized / historical cost less any credit-related OTTI charges recognized through earnings.

At June 30, 2013, the agency note investments in the table above had contractual maturities as follows:

	Amortized Cost		Estimated Fair Value
Due after one year through three years	$	15,000	$	15,064
Due after three years through five years		70		70
TOTAL	$	15,070	$	15,134

The held-to-maturity TRUPS had a weighted average term to maturity of 21.4 years at June 30, 2013. At June 30, 2013, MBS available-for-sale (which included pass-through MBS issued by GSEs, CMOs issued by GSEs, one private issuer pass through MBS and one private issuer CMO) possessed a weighted average contractual maturity of 17.0 years and a weighted average estimated duration of 1.5 years. There were no sales of investment securities either held-to-maturity or available-for-sale or sales of MBS available-for-sale during the three-months ended June 30, 2013 or 2012.

As of each reporting period through June 30, 2013, the Company has applied the protocol established by ASC 320-10-65 ("ASC 320-10-65") in order to determine whether OTTI existed for its TRUPS and/or to measure, for TRUPS that have been determined to be other than temporarily impaired, the credit related and non-credit related components of OTTI. As of June 30, 2013, five TRUPS were determined to meet the criteria for OTTI based upon this analysis. At June 30, 2013, these five securities had credit ratings ranging from "C" to "Caa3."

The following table provides a reconciliation of the pre-tax OTTI charges recognized on the Company's TRUPS:

	At or for the Three Months Ended June 30, 2013								At or for the Three Months Ended June 30, 2012
	Credit Related OTTI Recognized in Earnings		Non-Credit OTTI Recognized in Accumulated Other Comprehensive Loss			Total OTTI			Credit Related OTTI Recognized in Earnings			Non-Credit OTTI Recognized in Accumulated Other Comprehensive Loss			Total OTTI
Cumulative balance at the beginning of the period	$	8,946	$	625		$	9,571		$	9,155		$	926		$	10,081
OTTI recognized on securities with previous OTTI		-		-			-			-			-			-
Reductions and transfers to credit-related OTTI		-		-			-			-			(181	)		(181	)
Amortization of previously recognized OTTI		1		(8	)		(7	)		(210	)		(90	)		(300	)
Cumulative balance at end of the period	$	8,947	$	617		$	9,564		$	8,945		$	655		$	9,600

	At or for the Six Months Ended June 30, 2013								At or for the Six Months Ended June 30, 2012
	Credit Related OTTI Recognized in Earnings		Non-Credit OTTI Recognized in Accumulated Other Comprehensive Loss			Total OTTI			Credit Related OTTI Recognized in Earnings			Non-Credit OTTI Recognized in Accumulated Other Comprehensive Loss			Total OTTI
Cumulative balance at the beginning of the period	$	8,945	$	634		$	9,579		$	8,974		$	930		$	9,904
OTTI recognized on securities with previous OTTI		-		-			-			181			6			187
Reductions and transfers to credit-related OTTI		-		-			-			-			(181	)		(181	)
Amortization of previously recognized OTTI		2		(17	)		(15	)		(210	)		(100	)		(310	)
Cumulative balance at end of the period	$	8,947	$	617		$	9,564		$	8,945		$	655		$	9,600

The following table summarizes the gross unrealized losses and fair value of investment securities as of June 30, 2013, aggregated by investment category and the length of time the securities were in a continuous unrealized loss position:

	Less than 12 Months Consecutive Unrealized Losses				12 Months or More Consecutive Unrealized Losses				Total
	Fair Value		Gross Unrecognized/ Unrealized Losses		Fair Value		Gross Unrecognized/ Unrealized Losses		Fair Value		Gross Unrecognized/ Unrealized Losses
Held-to-Maturity Securities:
TRUPS ⁽¹⁾	$	-	$	-	$	3,685	$	1,315	$	3,685	$	1,315
Available for Sale Securities
Registered Mutual Funds		901		11		-		-		901		11

(1) At June 30, 2013, the recorded balance of these securities was $3,844. This balance reflected the remaining unrealized loss of $1,156 that was recognized in accumulated other comprehensive loss on September 1, 2008 (the day on which these securities were transferred from available-for-sale to held-to-maturity). In accordance with both ASC 320-10-35-17 and 320-10-65, this unrealized loss is currently being amortized over the remaining estimated life of these securities.

TRUPS That Have Maintained an Unrealized Holding Loss for 12 or More Consecutive Months

At June 30, 2013, impairment of two of the TRUPS, with an amortized cost of $5,000, was deemed temporary. These securities remained in an unrealized loss position for 12 or more consecutive months, and their cumulative unrealized loss was $1,315 at June 30, 2013, reflecting both illiquidity in the marketplace and concerns over future bank failures. At June 30, 2013, both of these securities had ratings ranging from "BB-" to "Ba1." Despite both the significant decline in market value and the duration of their impairment, management believed that the unrealized losses on these securities at June 30, 2013 were temporary, and that the full value of the investments would be realized once the market dislocations have been removed, or as the securities continued to make their contractual payments of principal and interest. In making this determination, management considered the following:

·	Based upon an internal review of the collateral backing the TRUPS portfolio, which accounted for current and prospective deferrals, the securities could reasonably be expected to continue making all contractual payments

·	The Company had the intent and ability to hold these securities until they fully recover their impairment, evidenced by the election to reclassify them as held-to-maturity in 2008

·	There were no cash or working capital requirements nor contractual or regulatory obligations that would compel the Company to sell these securities prior to their forecasted recovery or maturity

·	Each security has a pool of underlying issuers comprised primarily of banks

·	Neither of the securities have exposure to real estate investment trust issued debt (which has experienced high default

rates)

·	Each security featured either a mandatory auction or a de-leveraging mechanism that could result in principal repayments to the Bank prior to the stated maturity of the security

·	Each security is characterized by some level of over-collateralization

The following table summarizes the gross unrealized losses and fair value of investment securities and MBS as of December 31, 2012, aggregated by investment category and the length of time that the securities were in a continuous unrealized loss position:

	Less than 12 Months Consecutive Unrealized Losses				12 Months or More Consecutive Unrealized Losses				Total
	Fair Value		Gross Unrecognized/ Unrealized Losses		Fair Value		Gross Unrecognized/ Unrealized Losses		Fair Value		Gross Unrecognized/ Unrealized Losses
Held-to-Maturity Securities:
TRUPS ⁽¹⁾	$	-	$	-	$	3,705	$	1,732	$	3,705	$	1,732
Available-for-Sale Securities:
Federal Home Loan Mortgage Corporation pass-through certificates	$	5,867	$	25	$	-	$	-	$	5,867	$	25
Private label MBS		-		-		955		7		955		7

(1) At December 31, 2012, the recorded balance of these securities was $4,170. This balance reflected the remaining unrealized loss of $1,268 that was recognized in accumulated other comprehensive loss on September 1, 2008 (the day on which these securities were transferred from available-for-sale to held-to-maturity). In accordance with both ASC 320-10-35-17 and 320-10-65, this unrealized loss is currently being amortized over the remaining estimated life of these securities.

11. FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value hierarchy established under ASC 820-10 is summarized as follows:

Level 1 Inputs – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the reporting entity has the ability to access at the measurement date.

Level 2 Inputs – Significant other observable inputs such as any of the following: (1) quoted prices for similar assets or liabilities in active markets, (2) quoted prices for identical or similar assets or liabilities in markets that are not active, (3) inputs other than quoted prices that are observable for the asset or liability ( e.g. , interest rates and yield curves observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default rates), or (4) inputs that are derived principally from or corroborated by observable market data by correlation or other means (market-corroborated inputs).

Level 3 Inputs – Significant unobservable inputs for the asset or liability. Significant unobservable inputs reflect the reporting entity's own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). Significant unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

The following tables present the assets that are reported on the consolidated statements of financial condition at fair value as of the date indicated by level within the fair value hierarchy. Financial assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Assets Measured at Fair Value on a Recurring Basis at June 30, 2013
			Fair Value Measurements Using
Description	Total		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
Trading securities (Registered Mutual Funds):
Domestic Equity Mutual Funds	$	1,105	$	1,105	$	-	$	-
International Equity Mutual Funds		139		139		-		-
Fixed Income Mutual Funds		3,883		3,883		-		-
Investment securities available-for-sale:
Agency notes		15,134		-		15,134		-
Registered Mutual Funds:
Domestic Equity Mutual Funds		1,701		1,701		-		-
International Equity Mutual Funds		363		363		-		-
Fixed Income Mutual Funds		1,111		1,111		-		-
Pass-through MBS issued by GSEs		35,740		-		35,740		-
CMOs issued by GSEs		931		-		931		-
Private issuer pass through MBS		784		-		784		-
Private issuer CMOs		738		-		738		-

Assets Measured at Fair Value on a Recurring Basis at December 31, 2012
			Fair Value Measurements Using
Description	Total		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
Trading securities (Registered Mutual Funds):
Domestic Equity Mutual Funds	$	930	$	930	$	-	$	-
International Equity Mutual Funds		129		129		-		-
Fixed Income Mutual Funds		3,815		3,815		-		-
Investment securities available-for-sale:
Agency notes		29,945		-		29,945		-
Registered Mutual Funds:
Domestic Equity Mutual Funds		1,502		1,502		-		-
International Equity Mutual Funds		358		358		-		-
Fixed Income Mutual Funds		1,145		1,145		-		-
Pass-through MBS issued by GSEs		44,678		-		44,678		-
CMOs issued by GSEs		2,462		-		2,462		-
Private issuer pass through MBS		955		-		955		-
Private issuer CMOs		926		-		926		-

The Company's available-for-sale investment securities and MBS are reported at fair value, which were determined utilizing prices obtained from independent parties. The valuations obtained are based upon market data, and often utilize evaluated pricing models that vary by asset and incorporate available trade, bid and other market information. For securities that do not trade on a daily basis, pricing applications apply available information such as benchmarking and matrix pricing. The market inputs normally sought in the evaluation of securities include benchmark yields, reported trades, broker/dealer quotes (obtained only from market makers or broker/dealers recognized as market participants), issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. For certain securities, additional inputs may be used or some market inputs may not be applicable. Prioritization of inputs may vary on any given day based on market conditions.

The agency notes owned by the Company possessed the highest possible credit rating published by at least one established credit rating agency as of both June 30, 2013 and December 31, 2012. Obtaining market values as of June 30, 2013 and December 31, 2012 for these securities utilizing significant observable inputs was not difficult due to their continued marketplace demand. The pass-through MBS and CMOs issued by GSEs all possessed the highest possible credit rating published by at least one established credit rating agency as of both June 30, 2013 and December 31, 2012. Obtaining market values as of June 30, 2013 and December 31, 2012 for these securities utilizing significant observable inputs was not difficult due to their considerable demand.

Assets Measured at Fair Value on a Non-Recurring Basis at June 30, 2013
			Fair Value Measurements Using
Description	Total		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
Impaired loans:
One- to Four Family Residential and Cooperative Unit	$	477		-		-	$	477
Commercial Real Estate		5,707		-		-		5,707
OREO		585		-		-		585

Assets Measured at Fair Value on a Non-Recurring Basis at December 31, 2012
		Fair Value Measurements Using
Description	Total	Level 1 Inputs	Level 2 Inputs	Level 3 Inputs
Impaired loans:
Multifamily Residential and Residential Mixed Use Real Estate	$450	-	-	$450
Commercial Real Estate	6,472	-	-	6,472

Impaired Loans - Loans with certain characteristics are evaluated individually for impairment. A loan is considered impaired under ASC 310-10-35 when, based upon existing information and events, it is probable that the Bank will be unable to collect all amounts due, including principal and interest, according to the contractual terms of the loan agreement. The Bank's impaired loans at June 30, 2013 and December 31, 2012 were collateralized by real estate and were thus carried at the lower of the outstanding principal balance or the estimated fair value of the collateral. Fair value is estimated through either a negotiated note sale value (Level 2 input), or, more commonly, a recent real estate appraisal (Level 3 input). These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

An appraisal is generally ordered for all impaired multifamily residential, mixed use or commercial real estate loans for which the most recent appraisal is more than one year old. The Bank never adjusts independent appraisal data upward. Occasionally, management will adjust independent appraisal data downward based upon its own lending expertise and/or experience with the subject property, utilizing such factors as potential note sale values, or a more refined estimate of costs to repair and time to lease the property. Adjustments for potential disposal costs are also considered when determining the final appraised value.

As of June 30, 2013, impaired loans measured for impairment using the estimated fair value of the collateral had an aggregate principal balance of $6,184, and no valuation allowance within the allowance for loan losses. As of December 31, 2012, impaired loans measured for impairment using the estimated fair value of the collateral had an aggregate principal balance of $6,922, and no valuation allowance within the allowance for loan losses. Such loans had no impact upon the provision for loan losses during either the three months ended June 30, 2013 or the year ended December 31, 2012.

The following table presents quantitative information about Level 3 fair value measurements for impaired loans measured at fair value on a non-recurring basis at June 30, 2013:

Fair Value Derived	Valuation Technique Utilized	Significant Unobservable Input(s)	Range of Values	Weighted Average Value
$207	Income approach only	Capitalization rate	N/A*	7.5%
		Reduction for planned expedited disposal	N/A*	10%

477	Blended income and sales comparison approaches	Reduction to the sales comparison value to reconcile differences between comparable sales	0.0%-15.0%	8.3%
		Capitalization rate (income approach component)	7.8%-8.5%	8.1%
		Reduction for planned expedited disposal	20.0%-27.5%	23.3%
5,500	Previously negotiated note sales	Discount to unpaid principal balance from likely realizable value of a note sale negotiated on terms deemed acceptable	N/A*	17%

*Only one loan in this population.

The following table presents quantitative information about Level 3 fair value measurements for impaired loans measured at fair value on a non-recurring basis at December 31, 2012:

Fair Value Derived	Valuation Technique Utilized	Significant Unobservable Input(s)	Range of Values	Weighted Average Value
$207	Income approach only	Capitalization rate	N/A*	7.5%
		Reduction for planned expedited disposal	N/A*	10%

1,215	Blended income and sales comparison approaches	Reduction to the sales comparison value to reconcile differences between comparable sales	0.0%-6.0%	3.8%
		Capitalization rate (income approach component)	7.3%-7.5%	7.4%
		Reduction for planned expedited disposal	10.0%-25.0%	15.6%
5,500	Previously negotiated note sales	Discount to unpaid principal balance from likely realizable value of a note sale negotiated on terms deemed acceptable	N/A*	17%

*Only one loan in this population.

OREO. OREO represents real estate acquired as a result of foreclosure or by deed in lieu of foreclosure. OREO is carried, net of allowances for losses, at the lower of its recorded historical cost or the fair value of the property as adjusted for any estimated disposal costs. The fair value of OREO is estimated through current appraisals, by a licensed appraiser. Since OREO properties are actively marketed, estimated fair values could periodically be adjusted to reflect current market conditions and, as such, are classified as Level 3. There was one OREO property held at December 31, 2012, and two OREO properties held at June 30, 2013. Due to the immaterial nature of OREO, quantitative information about Level 3 fair value measurements for the OREO measured at fair value has not been disclosed.

The carrying amounts and estimated fair values of financial instruments at June 30, 2013 and December 31, 2012 were as follows:

			Fair Value at June 30, 2013 Using
At June 30, 2013	Carrying Amount		Level 1 Inputs			Level 2 Inputs			Level 3 Inputs			Total
Assets:
Cash and due from banks	$	61,291	$	61,291		$	-		$	-		$	61,291
Investment securities held to maturity (TRUPS)		5,617		-			-			5,541			5,541
Loans, net		3,586,262		-			-			3,665,525			3,665,525
Loans held for sale		232		-			234			-			234
Accrued interest receivable		12,477		9			234			12,234			12,477
Mortgage Servicing Rights ("MSR")		832		-			1,195			-			1,195
FHLBNY capital stock		40,288		N/	A		N/	A		N/	A		N/	A
Liabilities:
Savings, money market and checking accounts	$	1,732,576	$	1,732,576		$	-		$	-		$	1,732,576
Certificates of Deposit ("CDs")		875,083		-			888,638			-			888,638
Escrow and other deposits		86,028		86,028			-			-			86,028
FHLBNY Advances		737,500		-			770,108			-			770,108
Trust Preferred securities payable		70,680		-			70,680			-			70,680
Accrued interest payable		2,864		-			2,864			-			2,864

			Fair Value at December 31, 2012 Using
At December 31, 2012	Carrying Amount		Level 1 Inputs			Level 2 Inputs			Level 3 Inputs			Total
Assets:
Cash and due from banks	$	79,076	$	79,076		$	-		$	-		$	79,076
Investment securities held to maturity (TRUPS)		5,927		-			-			6,267			6,267
Loans, net		3,485,258		-			-			3,609,505			3,610,065
Loans held for sale		560		-			560			-			560
Accrued interest receivable		13,518		-			359			13,159			13,518
MSR		1,115		-			1,511			-			1,511
FHLBNY capital stock		45,011		N/	A		N/	A		N/	A		N/	A
Liabilities:
Savings, money market and checking accounts	$	1,587,454	$	1,587,454		$	-		$	-		$	1,587,454
CDs		891,975		-			907,657			-			907,657
Escrow and other deposits		82,753		82,753			-			-			82,753
FHLBNY Advances		842,500		-			885,774			-			885,774
Trust Preferred securities payable		70,680		-			70,680			-			70,680
Accrued interest payable		2,827		-			2,827			-			2,827

Methods and assumptions used to estimate fair values for financial assets and liabilities other than those previously discussed are summarized as follows:

Cash and Due From Banks - The fair value is assumed to be equal to their carrying value as these amounts are due upon demand (deemed a Level 1 valuation).

Federal Funds Sold and Other Short Term Investments – As a result of their short duration to maturity, the fair value of these assets, principally overnight deposits, is assumed to be equal to their carrying value due (deemed a Level 1 valuation).

TRUPS Held to Maturity – At both June 30, 2013 and December 31, 2012, the Company owned seven TRUPS classified as held-to-maturity. Late in 2008, the market for these securities became illiquid, and continued to be deemed illiquid as of June 30, 2013. As a result, at both June 30, 2013 and December 31, 2012, their estimated fair value was obtained utilizing a blended valuation approach (Level 3 pricing). Under the blended valuation approach, the Bank utilized the following valuation sources: 1) broker quotations, which were deemed to meet the criteria of "distressed sale" pricing under the guidance of ASC 820-10-65-4, were given a minor 10% weighting (deemed to be a Level 2 valuation); 2) an internally created cash flow valuation model that considered the creditworthiness of each individual issuer underlying the collateral pools, and utilized default, cash flow and discount rate assumptions determined by the Company's management (the "Internal Cash Flow Valuation"), was given a 45% weighting (deemed to be a Level 3 valuation); and 3) a minimum of two of three available independent cash flow valuation models were averaged and given a 45% weighting (deemed to be a Level 3 valuation for which the Company is not provided detailed information regarding the significant unobservable inputs utilized by the third party).

The major assumptions utilized in the Internal Cash Flow Valuation (each of which represents a significant unobservable input as defined by ASC 820-10) were as follows:

(i) Discount Rate - Pursuant to ASC 320-10-65, the Company utilized two different discount rates for discounting the cash flows for each of the seven TRUPS, as follows:

(1)	Purchase discount rate – the rate used to determine the "credit" based valuation of the security. The purchase discount rates utilized to compute fair value as of June 30, 2013 ranged from 1.7% to 2.5%, with a weighted average value of 2.2%.

(2) Current discount rate - the current discount rate utilized was derived from the Bloomberg fair market value curve for debt offerings of similar credit rating. In the event that a security had a split credit rating, separate cash flow valuations were made utilizing the appropriate discount rate and were averaged in order to determine the Internal Cash Flow Valuation. In addition, the discount rate was interpolated from the Bloomberg fair market value curve for securities possessing a credit rating below "B." The existing discount rates utilized to compute fair value as of June 30, 2013 ranged from 5.3% to 5.4%, with a weighted average value of 5.3%.

(ii) Defaults – The Company utilized the most recently published measures of capital adequacy and/or problematic assets to estimate potential defaults in the collateral pool of performing issuers underlying the seven securities. In instances where problematic assets equaled or exceeded the issuer's regulatory capital, or the issuer's capital level fell below the limits established by the regulatory agencies, defaults were deemed probable to occur. Based upon the application of this methodology, the computed default rates utilized in the determination of the fair value of the TRUPS as of June 30, 2013 ranged from 0% to 4.0% of the performing security pool balance, with a weighted average rate of 1.1%. The Company additionally utilized a standard default rate of 1.2% every three years, which was applied uniformly.

(iii) Cash Flows - The expected payments for the tranche of each security owned by the Company, as adjusted to assume that all estimated defaults occur immediately. The cash flows further assumed an estimated recovery rate of 10% per annum to occur one year after initial default, which was applied uniformly.

As discussed above, in addition to the Internal Cash Flow Valuation and broker quotations, at June 30, 2013 and December 31, 2012, the Company utilized a minimum of two additional cash flow valuation models in order to estimate the fair value of TRUPS. Two of the three independent cash flow valuation models utilized a methodology similar to the Internal Cash Flow Valuation, differing only in the underlying assumptions deriving estimated cash flows, individual bank defaults and discount rate. At December 31, 2012, a third independent cash flow valuation model was utilized which was derived from a different methodology in which the actual cash flow estimate based upon the underlying collateral of the securities (including default estimates) was not considered. Instead, this cash flow valuation model utilized a discount rate determined from the Bloomberg fair market value curve for similar assets that continued to trade actively, with adjustments made for the illiquidity of the TRUPS market. This valuation model was not utilized as of June 30, 2013 as it was deemed too anomalous. Because of the significant judgment underlying each of the pricing assumptions, management elected to recognize each of the independent valuations and apply a weighting system to all of the valuations, including the Internal Cash Flow Valuation, as all of these valuations were determined utilizing a valid and objective pricing methodology.

Loans, Net - The fair value of impaired loans that are measured at fair value is determined in the manner described commencing on page 26. The fair value of all remaining loans receivable is determined by discounting anticipated future cash flows of the loans, net of anticipated prepayments, using a discount rate reflecting current market rates for loans with similar terms to borrowers of similar credit quality. For adjustable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. The valuation method used for loans does not necessarily represent an exit price valuation methodology as defined under ASC 820. However, since the valuation methodology is deemed to be akin to a Level 3 valuation methodology, the fair value of loans receivable other than impaired loans measured at fair value, is shown under the Level 3 valuation column.

Loans Held For Sale - The fair value of held-for-sale loans is primarily determined utilizing quoted market prices for securities backed by similar types of loans. Changes in the fair value of loans held for sale result primarily from changes in interest rates subsequent to funding but prior to sale, and changes in the fair value of the associated servicing of the loan. Loans held for sale are deemed a Level 2 valuation.

Accrued Interest Receivable - The estimated fair value of accrued interest receivable approximates its carrying amount, and is deemed to be valued at an input level comparable to its underlying financial asset.

MSR - On a quarterly basis, the aggregate balance of the MSR is evaluated for impairment based upon the fair value of the rights as compared to their carrying amount. If the aggregate carrying amount of the MSR exceeds fair value, impairment is recorded on the MSR so that they are carried at fair value. Fair value is determined based on a valuation model that calculates the present value of

estimated future net servicing income. The valuation model utilizes assumptions that market participants would use in estimating future net servicing income and that can be validated against available market data (Level 2 input).

FHLBNY Capital Stock – It is not practicable to determine the fair value of FHLBNY capital stock due to restrictions placed on transferability.

Deposits - The fair value of savings, money market, and checking accounts is, by definition, equal to the amount payable on demand at the reporting date ( i.e ., their carrying amount), which has been deemed a Level 1 valuation. The fair value of CDs is based upon the present value of contractual cash flows using current interest rates for instruments of the same remaining maturity (deemed a Level 2 valuation).

Escrow and Other Deposits – The fair value of escrow and other deposits is, by definition, equal to the amount payable on demand at the reporting date (i.e. , their carrying amount), which has been deemed a Level 1 valuation.

FHLBNY Advances – The fair value of FHLBNY advances is measured by the discounted anticipated cash flows through contractual maturity or next interest repricing date, or an earlier call date if, as of the valuation date, the borrowing is expected to be called (deemed a Level 2 valuation). The carrying amount of accrued interest payable on FHLBNY advances is its fair value.

Trust Preferred Securities Payable - The fair value of trust preferred securities payable is estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements (deemed a Level 2 valuation), and is provided to the Company quarterly independently by a market maker in the underlying security.

Accrued Interest Payable - The estimated fair value of accrued interest payable approximates its carrying amount, and is deemed to be valued at an input level comparable to its underlying financial liability.

Commitments to Extend Credit - Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties' credit standing. The fair value of commitments is not material.

12. RETIREMENT AND POSTRETIREMENT PLANS

The Holding Company or the Bank maintains the Retirement Plan of The Dime Savings Bank of Williamsburgh (the "Employee Retirement Plan"), the Retirement Plan for Board Members of Dime Community Bancshares, Inc. (the "Outside Director Retirement Plan"), the BMP, and the Postretirement Welfare Plan of The Dime Savings Bank of Williamsburgh ("Postretirement Plan"). Net expenses associated with these plans were comprised of the following components:

	Three Months Ended June 30, 2013					Three Months Ended June 30, 2012
	BMP, Employee and Outside Director Retirement Plans			Postretirement Plan		BMP, Employee and Outside Director Retirement Plans			Postretirement Plan

Service cost	$	-		$	15	$	-		$	39
Interest cost		290			57		306			90
Expected return on assets		(380	)		-		(363	)		-
Amortization of unrealized loss		587			12		541			75
Net periodic cost	$	497		$	84	$	484		$	204

	Six Months Ended June 30, 2013					Six Months Ended June 30, 2012
	BMP, Employee and Outside Director Retirement Plans			Postretirement Plan		BMP, Employee and Outside Director Retirement Plans			Postretirement Plan

Service cost	$	-		$	30	$	-		$	78
Interest cost		579			114		612			180
Expected return on assets		(759	)		-		(726	)		-
Amortization of unrealized loss		1,174			24		1,082			150
Net periodic cost	$	994		$	168	$	968		$	408

The Company disclosed in its consolidated financial statements for the year ended December 31, 2012 that it expected to make contributions to, or benefit payments on behalf of, benefit plans during 2013 as follows: Employee Retirement Plan - $53, BMP - $483, Outside Director Retirement Plan - $186, and Postretirement Plan - $187. The Company made contributions of $22 to the Employee Retirement Plan during the six months ended June 30, 2013, and expects to make the remainder of the estimated $53 of net contributions during 2013. The Company made benefit payments of $91 on behalf of the Outside Director Retirement Plan during the six months ended June 30, 2013, and expects to make the remainder of the estimated $186 of net contributions or benefit payments during 2013. The Company made benefit payments totaling $50 on behalf of the Postretirement Plan during the six months ended June 30, 2013, and expects to make the remainder of the estimated $187 of contributions or benefit payments during 2013. The Company did not make any defined benefit contributions to, or benefit payments on behalf of, the BMP during the six months ended June 30, 2013, and does not currently expect to make the $483 of benefit payments on behalf of the BMP during 2013, since anticipated retirements that formed the basis for these expected benefit payments in 2013 are presently not expected to occur.

13. INCOME TAXES

During the three months ended June 30, 2013 and 2012, the Company's consolidated effective tax rates were 40.1% and 41.0%, respectively. During the six months ended June 30, 2013 and 2012, the Company's consolidated effective tax rates were 40.3% and 40.9%, respectively, approximating the expected 41% normalized rate for each period. There were no significant unusual income tax items during either the three-month or six-month periods ended June 30, 2013 and 2012.

14. NET MORTGAGE BANKING INCOME

Net mortgage banking income presented in the consolidated statements of income was comprised of the following items:

	Three Months Ended June 30,		Six Months Ended June 30,
	2013	2012	2013	2012
Gain (loss) on the sale of loans originated for sale	$(1)	$6	$11	$8
Credit to the liability for First Loss Position	102	967	194	967
Mortgage banking fees	11	122	68	241
Net mortgage banking income	$112	$1,095	$273	$1,216

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

General

The Holding Company is a Delaware corporation and parent company of the Bank, a New York State chartered stock savings bank. The Bank maintains its headquarters in the Williamsburg section of Brooklyn, New York and operates twenty-six full service retail banking offices located in the NYC boroughs of Brooklyn, Queens, and the Bronx, and in Nassau County, New York. The Bank's principal business is gathering deposits from customers within its market area and via the internet, and investing them primarily in multifamily residential, commercial real estate and mixed use loans, MBS, obligations of the U.S. government and GSEs, and corporate debt and equity securities. All of the Bank's lending occurs in the greater NYC metropolitan area.

Executive Summary

The Holding Company's primary business is the ownership of the Bank. The Company's consolidated results of operations are dependent primarily on net interest income, which is the difference between the interest income earned on interest-earning assets, such as loans and securities, and the interest expense paid on interest-bearing liabilities, such as deposits and borrowings. The Bank additionally generates non-interest income such as service charges and other fees, mortgage banking related income, and income associated with Bank Owned Life Insurance. Non-interest expense primarily consists of employee compensation and benefits, federal deposit insurance premiums, data processing costs, and occupancy and equipment, marketing and other operating expenses. The Company's consolidated results of operations are also significantly affected by general economic and competitive conditions (particularly fluctuations in market interest rates), government policies, changes in accounting standards and actions of regulatory agencies.

The Bank's primary strategy is generally to seek to increase its product and service utilization for each individual depositor, and increase its household and deposit market shares in the communities that it serves. In addition, the Bank's primary strategy includes the origination of, and investment in, mortgage loans, with an emphasis on NYC multifamily residential and mixed-use real estate loans. The Company believes that multifamily residential and mixed-use loans in and around NYC provide several advantages as investment assets. Initially, they offer a higher yield than investment securities of comparable maturities or terms to repricing. In addition, origination and processing costs for the Bank's multifamily residential and mixed use loans are lower per thousand dollars of originations than comparable one-to four-family loan costs. Further, the Bank's market area has generally provided a stable flow of new and refinanced multifamily residential and mixed-use loan originations. In order to address the credit risk associated with multifamily

residential and mixed use lending, the Bank has developed underwriting standards that it believes are reliable in order to maintain consistent credit quality for its loans.

The Bank also strives to provide a stable source of liquidity and earnings through the purchase of investment grade securities, seeks to maintain the asset quality of its loans and other investments, and uses appropriate portfolio and asset/liability management techniques in an effort to manage the effects of interest rate volatility on its profitability and capital.

The most recent recession in the United States officially began in December 2007, but became evident in 2008. The recession in the housing market was clearly underway by late 2008, and the economic crisis was in full stride, marked by the September 15, 2008 bankruptcy filing of Lehman Brothers Holdings, Inc. Although statistically the recession ended in 2009, subsequent years have been marked by anemic gross domestic product growth in the United States, and prolonged high rates of unemployment. The Federal Reserve Bank, in order to address one of its two primary mandates ( i.e. , stable employment), has pursued a monetary policy known as "quantitative easing", which has had the outcome of keeping the long end of the yield curve at historically low rates. Initially, financial intermediaries, like the Bank, benefited from low short term rates, through lower funding costs. Now, as quantitative easing enters its fifth year, borrowers are taking advantage of historically low intermediate- and long-term interest rates. This has put downward pressure on the Bank's asset yields, and net interest margin. At the same time, real estate conditions in the Bank's primary geographic market, and loan type (multifamily loans), have rebounded strongly. Credit costs, which characterized the 2009 through 2011 period, have abated.

During the years ended December 31, 2011 and 2012 and the six months ended June 30, 2013, the Company experienced a steadily increasing level of both prepayment and refinance activity. In the early portion of this cycle, the Company did not pursue loan portfolio growth. However, a combination of strong and growing Bank capital levels, strong demand for multifamily housing and financing, improved economic conditions in NYC, and a Federal Reserve policy explicitly stating that rates will remain low until unemployment declines markedly, led to a change in investment posture on the part of management. As a result, for the past six quarters, the Company has been a more active lender, growing both the loan portfolio and total assets.

During the year ended December 31, 2012, the Company elected to prepay its entire $195.0 million of REPO borrowings with a weighted average cost of 4.3% and a weighted average term to maturity exceeding 4.0 years, incurring a prepayment cost of $28.8 million as a component of interest expense during the year ended December 31, 2012. The short-term securities that were pledged against these borrowings had yields that had steadily declined over the past several years, and approximated 0.5% throughout 2012. This prepayment transaction has a breakeven of 3.5 years, and contributed positively to net interest margin during the three-month and six-month periods ended June 30, 2013.

For a further discussion of recent market developments, please refer to Exhibit 99 of the Holding Company's Current Report on Form 8-K filed on July 25, 2013.

Recent Regulatory Developments

Basel III Capital Rules. In July 2013, the Bank's primary federal regulator, the Federal Deposit Insurance Corporation, and the Holding Company's primary regulator, the Federal Reserve Bank published final rules (the "Basel III Capital Rules") that revised their risk-based and leverage capital requirements and their method for calculating risk-weighted assets to make them consistent with the agreements reached by the Basel Committee on Banking Supervision in "Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems" and certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Basel III Capital Rules apply to depository institutions and ultimate parent savings and loan holding companies, such as the Bank and Holding Company, respectively.

The new Basel III Capital Rules: a) introduce a new capital measure entitled "Common Equity Tier 1" ("CET1"); b) specify that tier 1 capital consist of CET1 and additional financial instruments satisfying specified requirements that permit inclusion in tier 1 capital; c) define CET1 narrowly by requiring that most deductions or adjustments to regulatory capital measures be made to CET1 and not to the other components of capital; and d) expand the scope of the deductions or adjustments from capital as compared to the existing regulations.

Under the new Basel III Capital Rules, banking organizations are provided a one-time option in their initial regulatory financial report filed after January 1, 2015 to remove certain components of accumulated other comprehensive income from the computation of common equity regulatory capital. Currently these components are considered in such computation.

The Basel III Capital Rules also provide a permanent exemption from the proposed phase out of existing trust preferred securities and cumulative perpetual preferred stock from tier 1 capital for banking organizations with less than $15 billion in total assets, while also implementing stricter eligibility requirements for regulatory capital instruments that should serve to disallow the inclusion of all non-exempt issuances of trust preferred securities and cumulative perpetual preferred stock from tier 1 capital. The Basel III Capital Rules also provide additional constraints on the inclusion of minority interests, mortgage servicing assets, deferred tax assets and certain

investments in the capital of unconsolidated financial institutions in tier 1 capital, as well as providing stricter risk weighting rules to these assets.

The Basel III Capital Rules provide for the following minimum capital to risk-weighted assets ratios: a) 4.5% based upon CET1; b) 6.0% based upon tier 1 capital; and c) 8.0% based upon total regulatory capital. A minimum leverage ratio (tier 1 capital as a percentage of total assets) of 4.0% is also required under the Basel III Capital Rules. The Basel III Capital Rules additionally require institutions to retain a capital conservation buffer of 2.5% above these required minimum capital ratio levels. Banking organizations that fail to maintain the minimum 2.5% capital conservation buffer could face restrictions on either proposed capital distributions or discretionary bonus payments, with discretionary bonus payments being completely prohibited in the event of the following: a) the banking organization's capital conservation buffer was below 2.5% at the beginning of a quarter; and b) its cumulative net income for the most recent quarterly period plus the preceding four calendar quarters is less than its cumulative capital distributions (as well as associated tax effects not already reflected in net income) during the same measurement period.

The Basel III Capital Rules also provide stricter rules related to the risk weighting of past due and certain commercial real estate loans, as well as on some equity investment exposures, and replaces the existing credit rating approach for determining the risk weighting of securitization exposures with an alternative approach in which senior securitization tranches are assigned a risk weight associated with the underlying exposure and a banking organization must hold capital for the senior tranche based on the risk weight of the underlying exposures. Under the revised approach, for subordinate securitization tranches, a banking organization must hold capital for the subordinate tranche, as well as all more senior tranches for which the subordinate tranche provides credit support.

The Basel III Capital Rules become initially effective on January 1, 2015, with a phase in period from January 1, 2015 through January 1, 2019. The enactment of the Basel III Capital Rules could increase the required capital levels of the Bank, and the Holding Company will become subject to consolidated capital rules.

The Basel III Capital Rules adopted in July 2013 do not address the proposed Liquidity Coverage Ratio Test called for by the proposed Basel III framework which, if implemented, will require the Bank to hold sufficient high-quality liquid assets to cover its total net cash outflows over 30 days. Management believes that, as of June 30, 2013, the Holding Company and the Bank would have satisfied all capital adequacy requirements under the Basel III Capital Rules on a fully phased-in basis if such requirements were then in effect.

Selected Financial Highlights and Other Data

(Dollars in Thousands Except Per Share Amounts)

	At or For the Three Months Ended June 30,						At or For the Six Months Ended June 30,
	2013			2012			2013			2012
Performance and Other Selected Ratios:
Return on Average Assets		1.20	%		1.17	%		1.14	%		1.09	%
Return on Average Stockholders' Equity		11.93			12.39			11.29			11.81
Stockholders' Equity to Total Assets		10.35			9.70			10.35			9.70
Loans to Deposits at End of Period		138.32			142.33			138.32			142.33
Loans to Earning Assets at End of Period		96.60			91.23			96.60			91.23
Net Interest Spread		3.34			3.37			3.28			3.29
Net Interest Margin		3.55			3.63			3.49			3.55
Average Interest Earning Assets to Average Interest Bearing Liabilities		116.89			115.75			116.34			114.37
Non-Interest Expense to Average Assets		1.53			1.59			1.59			1.60
Efficiency Ratio		43.24			41.83			45.55			44.11
Effective Tax Rate		40.10			40.97			40.26			40.91
Dividend Payout Ratio		41.18			41.18			43.08			43.75
Per Share Data:
Reported EPS (Diluted)	$	0.34		$	0.34		$	0.65		$	0.64
Cash Dividends Paid Per Share		0.14			0.14			0.28			0.28
Stated Book Value		11.34			10.65			11.34			10.65
Asset Quality Summary:
Net Charge-offs	$	56		$	1,562		$	232		$	3,825
Non-performing Loans		9,507			13,318			9,507			13,318
Non-performing Loans/Total Loans		0.26	%		0.40	%		0.26	%		0.40	%
Non-performing Assets	$	10,987		$	14,233		$	10,987		$	14,233
Non-performing Assets/Total Assets		0.28	%		0.37	%		0.28	%		0.37	%
Allowance for Loan Loss/Total Loans		0.57			0.60			0.57			0.60
Allowance for Loan Loss/Non-performing Loans		215.65			152.00			215.65			152.00
Earnings to Fixed Charges Ratios (1)
Including Interest on Deposits		2.65	x		2.30	x		2.55	x		2.07	x
Excluding Interest on Deposits		3.86			3.04			3.68			2.59

(1) Please refer to Exhibit 12.1 for further detail on the calculation of these ratios.

Critical Accounting Policies

Various elements of the Company's accounting policies are inherently subject to estimation techniques, valuation assumptions and other subjective assessments. The Company's policies with respect to the methodologies it uses to determine the allowance for loan losses (including reserves for loan commitments), the liability for the First Loss Position, the valuation of MSR, asset impairments (including the assessment of impairment of goodwill and other than temporary declines in the valuation of securities), the recognition of deferred tax assets and unrecognized tax positions, the recognition of loan income, the valuation of financial instruments, and accounting for defined benefit plans are its most critical accounting policies because they are important to the presentation of the Company's consolidated financial condition and results of operations, involve a significant degree of complexity and require management to make difficult and subjective judgments which often necessitate assumptions or estimates about highly uncertain matters. The use of different judgments, assumptions or estimates could result in material variations in the Company's consolidated results of operations or financial condition.

The following are descriptions of the Company's critical accounting policies and explanations of the methods and assumptions underlying their application.

Allowance for Loan Losses and Reserve for Loan Commitments. The Bank's methods and assumptions utilized to periodically determine its allowance for loan losses are summarized in Note 9 to the Company's condensed consolidated financial statements. The reserve for loan commitments is determined based upon the historical loss experience of similar loans owned by the Bank at each period end. Any increases in this reserve are achieved via a transfer of reserves from the Bank's allowance for loan losses, with any

subsequent resulting shortfall in the allowance for loan losses satisfied through the quarterly provision for loan losses. Any increase or decrease in the loan commitment reserve is recognized as a component of non-interest expense.

Liability for the First Loss Position. The Bank's methods and assumptions utilized to periodically determine its liability for the First Loss Position are summarized in Note 9 to the condensed consolidated financial statements.

Valuation of MSR. The proceeds received on mortgage loans sold with servicing rights retained by the Bank are allocated between the loans and the servicing rights based on their estimated fair values at the time of the loan sale. In accordance with GAAP, MSR are carried at the lower of cost or fair value and are amortized in proportion to, and over the period of, anticipated net servicing income. In accordance with ASC 860-50-35, all separately recognized MSR are required to be initially measured at fair value, if practicable. The estimated fair value of MSR is determined by calculating the present value of estimated future net servicing cash flows, using estimated prepayment, default, servicing cost and discount rate assumptions. All estimates and assumptions utilized in the valuation of MSR are derived based upon actual historical results for the Bank, or, in the absence of such data, from historical results for the Bank's peers.

The fair value of MSR is sensitive to changes in assumptions. Fluctuations in prepayment speed assumptions have the most significant impact on the estimated fair value of MSR. In the event that actual loan prepayments exceed the assumed amount, the fair value of MSR would likely decline. In the event that actual loan prepayments fall below the assumed amount, the fair value of MSR would likely increase. Any measurement of the value of MSR is limited by the existing conditions and assumptions utilized at a particular point in time, and would not necessarily be appropriate if applied at a different point in time.

Assumptions utilized in measuring the fair value of MSR additionally include the stratification based on predominant risk characteristics of the underlying loans. Increases in the risk characteristics of the underlying loans from the assumptions would result in a decline in the fair value of the MSR. A valuation allowance is established in the event the recorded value of an individual stratum exceeds its fair value for the full amount of the difference.

To the extent that the valuation of the MSR (as determined in the manner indicated above) falls below its recorded balance, an impairment charge is recognized through a valuation allowance, with any adjustments to such allowance reflected in periodic earnings.

Asset Impairment Adjustments. Certain assets are carried in the Company's consolidated statements of financial condition at fair value or at the lower of cost or fair value:

(i) Goodwill Impairment Analysis . Goodwill is accounted for in accordance with ASC 805-10. ASC 805-10 requires performance of an annual impairment test at the reporting unit level. Management quarterly performs analyses to test for impairment of goodwill. In the event an impairment of goodwill is determined to exist, it is recognized as a charge to earnings.

The Company identified a single reporting unit for purposes of its goodwill impairment testing, and thus performs its impairment test on a consolidated basis. The impairment test has two potential stages. In the initial stage, the Holding Company's market capitalization (reporting unit fair value) is compared to its outstanding equity (reporting unit carrying value). The Company utilizes closing price data for the Holding Company's common stock as reported on the Nasdaq National Market in order to compute market capitalization. The second stage is only utilized in the event that the initial stage indicates potential impairment. To date, the Company has not been required to utilize the second stage. The Company performed an impairment test as of June 30, 2013 and concluded that no potential impairment of goodwill existed since the fair value of the Company's reporting unit exceeded its carrying value. No events or circumstances have occurred subsequent to June 30, 2013 that would reduce the fair value of the Company's reporting unit below its carrying value. Such events or circumstances would require the immediate performance of an impairment test in accordance with ASC 805-10.

(ii) Valuation of Financial Instruments and Analysis of OTTI Related to Investment Securities and MBS . Debt securities are classified as held-to-maturity, and carried at amortized cost, only if the Company has a positive intent and ability to hold them to maturity.

At June 30, 2013, the Company owned seven TRUPS classified as held-to-maturity. Late in 2008, the market for these securities became highly illiquid, and continued to be deemed as such as of June 30, 2013. As a result, at both June 30, 2013 and December 31, 2012, their estimated fair value was obtained utilizing a blended valuation approach (Level 3 pricing as described in Note 11 to the Company's condensed consolidated financial statements).

At June 30, 2013 and December 31, 2012, the Company had investments in nine mutual funds totaling $5.1 million and $4.9 million, respectively, which were classified as trading. All changes in valuation of these securities are recognized in the Company's results of operations.

Debt securities that are not classified as either held-to-maturity or trading are classified as available-for-sale.

Available-for-sale debt and equity securities that have readily determinable fair values are carried at fair value. All of the Company's available-for-sale securities at June 30, 2013 and December 31, 2012 had readily determinable fair values, which were based on published or securities dealers' market values.

The Company conducts a periodic review and evaluation of its securities portfolio, taking into account the severity and duration of each unrealized loss, as well as management's intent and ability to hold the security until the unrealized loss is substantially eliminated, in order to determine if a decline in fair value of any security below its carrying value is either temporary or other than temporary. Unrealized losses on held-to-maturity securities that are deemed temporary are disclosed but not recognized. Unrealized losses on debt or equity securities available-for-sale that are deemed temporary are excluded from net income and reported net of deferred taxes as other comprehensive income or loss. All unrealized losses that are deemed other than temporary on either available-for-sale or held-to-maturity securities are recognized immediately as a reduction of the carrying amount of the security, with a corresponding decline in either net income or accumulated other comprehensive income or loss in accordance with ASC 320-10-65. See Note 10 to the Company's condensed consolidated financial statements for a reconciliation of OTTI on securities during the three-month periods ended June 30, 2013 and 2012.

Recognition of Deferred Tax Assets. Management reviews all deferred tax assets periodically. Upon such review, in the event that there is a greater than 50% likelihood that the deferred tax asset will not be fully realized, a valuation allowance is recognized against the deferred tax asset in the amount for which realization is determined to be more unlikely than likely to occur.

Unrecognized Tax Positions. Under current accounting rules, all tax positions adopted are subjected to two levels of evaluation. Initially, a determination is made, based on the technical merits of the position, as to whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes. In conducting this evaluation, management is required to presume that the position will be examined by the appropriate taxing authority possessing full knowledge of all relevant information. The second level of evaluation is the measurement of a tax position that satisfies the more-likely-than-not recognition threshold. This measurement is performed in order to determine the amount of benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50 percent likely to be realized upon ultimate settlement. The Company had no material uncertain tax positions as of June 30, 2013 or December 31, 2012.

Loan Income Recognition . Interest income on loans is recorded using the level yield method. Loan origination fees and certain direct loan origination costs are deferred and amortized as yield adjustments over the contractual loan terms.

Please refer to "Part I – Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations - Asset Quality - Monitoring and Collection of Delinquent Loans" for a discussion of management's policies for determining whether a loan is maintained on accrual or non-accrual status.

Accounting for Defined Benefit Plans. Defined benefit plans are accounted for in accordance with ASC 715, which requires an employer sponsoring a single employer defined benefit plan to recognize the funded status of such benefit plan in its statements of financial condition, measured as the difference between plan assets at fair value (with limited exceptions) and the benefit obligation. The Company utilizes the services of trained actuaries employed at an independent benefits plan administration entity in order to assist in measuring the funded status of its defined benefit plans.

Liquidity and Capital Resources

The Board of Directors of the Bank has approved a liquidity policy that it reviews and updates at least annually. Senior management is responsible for implementing the policy. The Bank's Asset Liability Committee ("ALCO") is responsible for general oversight and strategic implementation of the policy, and management of the appropriate departments are designated responsibility for implementing any strategies established by ALCO. On a daily basis, senior management receives a current cash position report and one-week forecast to ensure that all short-term obligations are timely satisfied and that adequate liquidity exists to fund future activities. On a monthly basis, reports detailing the Bank's liquidity reserves and forecasted cash flows are presented to both senior management and the Board of Directors. In addition, on a monthly basis, a twelve-month liquidity forecast is presented to ALCO in order to assess potential future liquidity concerns. A forecast of cash flow data for the upcoming 12 months is presented to the Board of Directors on an annual basis.

The Bank's primary sources of funding for its lending and investment activities include deposits, loan and MBS payments, investment security principal and interest payments, advances from the FHLBNY, and REPOS entered into with various financial institutions, including the FHLBNY. The Bank may also sell selected multifamily residential and mixed use real estate loans to private sector secondary market purchasers and has in the past sold such loans, as well as one to four family residential loans, to FNMA. The Company may additionally issue debt under appropriate circumstances. Although maturities and scheduled amortization of loans and investments are predictable sources of funds, deposit flows and prepayments on mortgage loans and MBS are influenced by interest rates, economic conditions and competition.

The Bank gathers deposits in direct competition with commercial banks, savings banks and brokerage firms, many among the largest in the nation. It must additionally compete for deposit monies against the stock and bond markets, especially during periods of strong performance in those arenas. The Bank's deposit flows are affected primarily by the pricing and marketing of its deposit products compared to its competitors, as well as the market performance of depositor investment alternatives such as the U.S. bond or equity markets. To the extent that the Bank is responsive to general market increases or declines in interest rates, its deposit flows should not be materially impacted. However, favorable performance of the equity or bond markets could adversely impact the Bank's deposit flows.

Retail branch and Internet banking deposits increased $128.2 million during the six months ended June 30, 2013, compared to an increase of $12.0 million during the six months ended June 30, 2012. Within deposits, core deposits ( i.e., non-CDs) increased $145.1 million during the six months ended June 30, 2013 and $44.5 million during the six months ended June 30, 2012. These increases were due to both successful gathering efforts tied to promotional money market offerings as well as increased commercial checking balances. CDs decreased $16.9 million during the six months ended June 30, 2013 and declined by $32.5 million during the six months ended June 30, 2012. The reduction during the six months ended June 30, 2013 resulted primarily from the attrition of maturing CDs from prior period promotional activities and the customer preference for deposit types other than CDs. The reduction during the six months ended June 30, 2012 was due to the attrition of maturing CDs from prior period promotional activities

The Bank did not prepay any borrowings during the six months ended June 30, 2013, and elected not to replace $105.0 million of FHLBNY advances that matured during the same period. During the six months ended June 30, 2012, the Bank prepaid $40.0 million of borrowings secured by REPOS and $55.0 million of FHLBNY advances, removing a negative carrying cost associated with this $95.0 million of funding liabilities. The Bank also elected not to replace $107.3 million of FHLBNY advances that matured during the six months ended June 30, 2012.

During the six months ended June 30, 2013, principal repayments totaled $496.7 million on real estate loans (including refinanced loans) and $10.8 million on MBS. During the six months ended June 30, 2012, principal repayments totaled $485.3 million on real estate loans (including refinanced loans) and $23.2 million on MBS. The increase in principal repayments on real estate loans reflected heightened loan refinancing activity during the three months ended June 30, 2013. The decline in principal repayments on MBS resulted from a reduction of $48.1 million in their average balance from the six months ended June 30, 2012 to the six months ended June 30, 2013.

In the event that the Bank should require funds beyond its ability or desire to generate them internally, an additional source of funds is available through its borrowing line at the FHLBNY. At June 30, 2013, the Bank had an additional potential borrowing capacity of $444.1 million through the FHLBNY, subject to customary minimum FHLBNY common stock ownership requirements ( i.e. , 4.5% of the Bank's outstanding FHLBNY borrowings).

The Bank is subject to minimum regulatory capital requirements imposed by its primary federal regulator. As a general matter, these capital requirements are based on the amount and composition of an institution's assets. At June 30, 2013, the Bank was in compliance with all applicable regulatory capital requirements and was considered "well-capitalized" for all regulatory purposes.

The Company generally utilizes its liquidity and capital resources primarily to fund the origination of real estate loans, the purchase of mortgage-backed and other securities, the repurchase of Holding Company common stock into treasury, the payment of quarterly cash dividends to holders of the Holding Company's common stock and the payment of quarterly interest to holders of its outstanding trust preferred debt. During the six months ended June 30, 2013 and 2012, real estate loan originations totaled $570.0 million and $387.6 million, respectively. The increase from the six months ended June 30, 2012 to the six months ended June 30, 2013 reflected the Company's transition, in late 2012 and during the six months ended June 30, 2013, from a non-growth, to a measured loan and balance sheet growth, strategy, which necessitated higher real estate loan origination levels. Purchases of investment securities (excluding trading securities, federal funds sold and short-term investments) were negligible during the six months ended June 30, 2013, and $103.3 million during the six months ended June 30, 2012. Security purchases were de-emphasized during the six months ended June 30, 2013 due to the removal of required securities for collateral on REPO borrowings. The purchases made during the six months ended June 30, 2012 were comprised of $80.1 million of medium-term agency notes aimed at providing additional yield on liquid funds, and $23.2 million of adjustable rate Government National Mortgage Association MBS, which sought to provide additional yield on liquid assets, ongoing cash flows from principal repayments and protection against potential increases in interest rates.

The Holding Company did not repurchase any shares of its common stock during the six months ended June 30, 2013 and 2012. As of June 30, 2013, up to 1,124,549 shares remained available for purchase under authorized share purchase programs. Based upon the $15.32 per share closing price of its common stock as of June 28, 2013, the Holding Company would utilize $17.2 million in order to purchase all of the remaining authorized shares. For the Holding Company to complete these share purchases, it would likely require dividend distributions from the Bank.

The Holding Company paid $9.8 million in cash dividends on its common stock during the six months ended June 30, 2013, and $9.6 million during the six months ended June 30, 2012. The increase in payment resulted from a net increase of 709,799 shares outstanding from June 30, 2012 to June 30, 2013.

Contractual Obligations

The Bank is obligated for rental payments under leases on certain of its branches and equipment. In addition, the Bank generally has outstanding at any time significant borrowings in the form of FHLBNY advances, as well as customer CDs with fixed contractual interest rates. The Holding Company also has $70.7 million of callable trust preferred borrowings from third parties due to mature in April 2034, which became callable at any time commencing in April 2009. The Holding Company does not currently intend to call this debt. The facts and circumstances surrounding these obligations have not changed materially since December 31, 2012.

Off-Balance Sheet Arrangements

From December 2002 through February 2009, the Bank originated and sold multifamily residential mortgage loans in the secondary market to FNMA while retaining servicing. The Bank is required to retain the First Loss Position related to all loans sold under this program, which will remain in effect until the earlier of the following events: (1) all of the loans have been fully satisfied or enter OREO status; or (2) the First Loss Position is fully exhausted.

In addition, as part of its loan origination business, the Bank generally has outstanding commitments to extend credit to third parties, which are granted pursuant to its regular underwriting standards. Since these loan commitments may expire prior to funding, in whole or in part, the contract amounts are not estimates of future cash flows.

The following table presents off-balance sheet arrangements as of June 30, 2013:

	Less than One Year		One Year to Three Years		Over Three Years to Five Years		Over Five Years		Total
	(Dollars in thousands)
Credit Commitments:
Available lines of credit	$	40,227	$	-	$	-	$	-	$	40,227
Other loan commitments (1)		118,384		-		-		-		118,384
Other Commitments:
First Loss Position on loans sold to FNMA (1)		15,428		-		-		-		15,428
Total Commitments	$	174,039	$	-	$	-	$	-	$	174,039

(1) In accordance with the requirements of both ASC 450-20-25 and 460-10-25, as of June 30, 2013, reserves on loan commitments and the liability for the First Loss Position on loans sold to FNMA were $184 and $1,188, respectively, and were recorded in other liabilities in the Company's consolidated statements of financial condition.

Asset Quality

General

At both June 30, 2013 and December 31, 2012, the Company had neither whole loans nor loans underlying MBS that would have been considered subprime loans at origination, i.e. , mortgage loans advanced to borrowers who did not qualify for market interest rates because of problems with their income or credit history. See Note 10 to the condensed consolidated financial statements for a discussion of impaired investment securities and MBS.

Monitoring and Collection of Delinquent Loans

Management of the Bank reviews delinquent loans on a monthly basis and reports to its Board of Directors regarding the status of all non-performing and otherwise delinquent loans in the Bank's portfolio.

The Bank's loan servicing policies and procedures require that an automated late notice be sent to a delinquent borrower as soon as possible after a payment is ten days late in the case of multifamily residential or commercial real estate loans, or fifteen days late in connection with one- to four-family or consumer loans. A second letter is sent to the borrower if payment has not been received within 30 days of the due date. Thereafter, periodic letters are mailed and phone calls placed to the borrower until payment is received. When contact is made with the borrower at any time prior to foreclosure, the Bank will attempt to obtain the full payment due or negotiate a repayment schedule with the borrower to avoid foreclosure.

Accrual of interest is generally discontinued on a loan that meets any of the following three criteria: (i) full payment of principal or interest is not expected; (ii) principal or interest has been in default for a period of 90 days or more (unless the loan is both deemed to be well secured and in the process of collection); or (iii) an election has otherwise been made to maintain the loan on a cash basis due to deterioration in the financial condition of the borrower. Such non-accrual determination practices are applied consistently to all loans regardless of their internal classification or designation. Upon entering non-accrual status, the Bank reverses all outstanding accrued interest receivable.

The Bank generally initiates foreclosure proceedings when a loan enters non-accrual status based upon non-payment, and typically does not accept partial payments once foreclosure proceedings have commenced. At some point during foreclosure proceedings, the Bank procures current appraisal information in order to prepare an estimate of the fair value of the underlying collateral. If a foreclosure action is instituted and the loan is not brought current, paid in full, or refinanced before the foreclosure action is completed, the property securing the loan is transferred to OREO status. The Bank generally utilizes all available remedies, such as note sales in lieu of foreclosure, in an effort to resolve non-accrual loans and OREO properties as quickly and prudently as possible in consideration of market conditions, the physical condition of the property and any other mitigating circumstances. In the event that a non-accrual loan is subsequently brought current, it is returned to accrual status once the doubt concerning collectability has been removed and the borrower has demonstrated performance in accordance with the loan terms and conditions for a period of at least six months.

Non-accrual Loans

Within the Bank's permanent portfolio, non-accrual loans totaled $9.5 million and $8.9 million at June 30, 2013 and December 31, 2012, respectively, representing 0.26% and 0.25% of total loans at June 30, 2013 and December 31, 2012, respectively. During the six months ended June 30, 2013, two non-accrual loans totaling $507,000 were either satisfied or disposed of at a value at or below their recorded balance, a $765,000 non-accrual loan was transferred to OREO, a $153,000 non-accrual loan was returned to accrual status, $78,000 of principal charge-offs were recognized on one non-accrual loan and principal amortization totaling $36,000 was recognized on five non-accrual loans. Offsetting these declines were eight loans totaling $2.2 million that were added to non-accrual status during the six months ended June 30, 2013.

Impaired Loans

The recorded investment in loans deemed impaired (as defined in Note 8 to the condensed consolidated financial statements) was approximately $47.3 million, consisting of twenty-four loans, at June 30, 2013, compared to $53.1 million, consisting of twenty-six loans, at December 31, 2012. The Bank disposed of a $450,000 impaired loan during the six months ended June 30, 2013, received full repayment on three additional impaired loans totaling $5.5 million, and transferred a $765,000 impaired loan to OREO. Additionally during the six months ended June 30, 2013, principal charge-offs of $78,000 were recognized on one impaired loan, and principal amortization totaling $295,000 was recognized on seventeen impaired loans. Partially offsetting these declines were three loans totaling $1.3 million that were added to impaired status during the six months ended June 30, 2013.

The following is a reconciliation of non-accrual and impaired loans at June 30, 2013:

	(Dollars in Thousands)
Non-accrual loans	$9,507
Non-accrual one- to four-family and consumer loans deemed homogeneous loans	(904)
TDRs retained on accrual status	38,699
Impaired loans	$47,302

TDRs

Under ASC 310-40-15, the Bank is required to recognize loans for which certain modifications or concessions have been made as TDRs. A TDR has been created in the event that any of the following criteria is met:

·	For economic or legal reasons related to the debtor's financial difficulties, a concession has been granted that would not have otherwise been considered

·	A reduction of interest rate has been made for the remaining term of the loan

·	The maturity date of the loan has been extended with a stated interest rate lower than the current market rate for new debt with similar risk

·	The outstanding principal amount and/or accrued interest have been reduced

I n instances in which the interest rate has been reduced, management would not deem the modification a TDR in the event that the reduction in interest rate reflected either a general decline in market interest rates or an effort to maintain a relationship with a borrower who could readily obtain funds from other sources at the current market interest rate, and the terms of the restructured loan are

comparable to the terms offered by the Bank to non-troubled debtors. The Bank has not modified any loans in a manner that met the criteria for a TDR since the quarterly period ended March 31, 2012.

Accrual status for TDRs is determined separately for each TDR in accordance with the policies for determining accrual or non-accrual status that are outlined on page 39. At the time an agreement is entered into between the Bank and the borrower that results in the Bank's determination that a TDR has been created, the loan can be either on accrual or non-accrual status. If a loan is on non-accrual status at the time it is restructured, it continues to be classified as non-accrual until the borrower has demonstrated compliance with the modified loan terms for a period of at least six months. Conversely, if at the time of restructuring the loan is performing (and accruing), it will remain accruing throughout its restructured period, unless the loan subsequently meets any of the criteria for non-accrual status under either the Bank's policy, as disclosed on page 39 and/or the criteria related to accrual of interest established by agency regulations.

The Bank never accepts receivables or equity interests in satisfaction of TDRs.

At both June 30, 2013 and 2012, the great majority of TDRs were collateralized by real estate that generated rental income. For TDRs that demonstrated conditions sufficient to warrant accrual status, the present value of the expected net cash flows of the underlying property was utilized as the primary means of determining impairment. Any shortfall in the present value of the expected cash flows calculated at each measurement period (typically quarter-end) compared to the present value of the expected cash flows at the time of the original loan agreement was recognized as either an allocated reserve (in the event that it related to lower expected interest payments) or a charge-off (if related to lower expected principal payments). For TDRs on non-accrual status, an appraisal of the underlying real estate collateral is deemed the most appropriate measure to utilize when evaluating impairment, and any shortfall in valuation from the recorded balance is accounted for through a charge-off. In the event that either an allocated reserve or a charge-off is recognized on TDRs, the periodic loan loss provision is impacted.

Please refer to Note 8 to the condensed consolidated financial statements for a further discussion of TDRs.

OREO

Property acquired by the Bank, or a subsidiary, as a result of foreclosure on a mortgage loan or a deed in lieu of foreclosure is classified as OREO. Upon entering OREO status, the Bank obtains a current appraisal on the property and reassesses the likely realizable value of the property quarterly thereafter. OREO is carried at the lower of the likely realizable or book balance, with any write downs recognized through a provision recorded in non-interest expense. Only the appraised value, or either contractual or formal marketed values that fall below the appraised value are used when determining the likely realizable value of OREO at each reporting period. The Bank typically seeks to dispose of OREO properties in a timely manner. As a result, OREO properties have generally not warranted subsequent independent appraisals.

During the six months ended June 30, 2013, a write down of principal of $180,000 was recognized on an OREO property acquired during the period, reducing its recorded balance to $585,000 as of June 30, 2013. The Bank owned no OREO properties with a recorded balance at December 31, 2012.

The following table sets forth information regarding non-accrual loans, and certain other non-performing assets (including OREO) at the dates indicated:

	At June 30 2013			At December 31, 2012
	(Dollars in Thousands)
One- to four-family residential and cooperative apartment	$	1,164		$	938
Multifamily residential and residential mixed use		1,688			507
Commercial real estate and mixed use commercial real estate		6,150			7,435
Consumer		5			8
Sub-total		9,507			8,888
Non-accrual loans held for sale		-			560
Total non-accrual loans		9,507			9,448
Non-performing TRUPS		895			892
OREO		585		‑
Total non-performing assets		10,987			10,340
Ratios:
Total non-accrual loans to total loans		0.26	%		0.27	%
Total non-performing assets to total assets		0.28			0.26

TDRs and Impaired Loans
TDRs	$	44,592		$	51,123
Impaired loans (1)		47,302			53,144

(1) Amount includes all TDRs at both June 30, 2013 and December 31, 2012. See the discussion entitled "Impaired Loans" commencing on page 39 for a reconciliation of non-accrual and impaired loans.

Other Potential Problem Loans

(i) Loans Delinquent 30 to 89 Days

The Bank had 2 real estate loans, totaling $154,000, that were delinquent between 30 and 89 days at June 30, 2013, a net reduction of $6.9 million compared to 13 such loans totaling $7.1 million at December 31, 2012. The 30 to 89 day delinquent levels fluctuate monthly, and are generally considered a less accurate indicator of near-term credit quality trends than non-accrual loans.

(ii) Temporary Loan Modifications

At June 30, 2013, the Bank had 3 loans totaling $1.9 million that were either current or less than 30 days delinquent, and were mutually modified with the borrowers in a manner that: (i) did not involve a full re-underwriting of the loan; and (ii) did not meet the criteria for TDR. At December 31, 2012, there were 4 such loans totaling $2.4 million. These modifications, which have a typical term of 12 months, were granted by the Bank to borrowers who requested cash flow relief in order to assist them through periods of sub-optimal occupancy. The key features of these modified loans were: 1) they permitted only minor reductions in the cash flow requirements of debt service; and 2) there was no forgiveness of contractual principal and interest amounts due to the Bank. The terms of modification were generally in the form of either: (1) temporary suspension of monthly principal amortization, which, given the balloon repayment feature of these loans, typically constitutes a minor concession; or (2) a temporary reduction in interest rate, or a permanent reduction to an interest rate higher than that offered a prime borrower and generally reflective of the credit condition of the loan at the time of modification. In consideration of paragraph 12c of ASC 310-40-15, the interest rate on these temporary modifications was consistent with a "market rate" that: 1) the Bank would have offered a different borrower with comparable loan-to-value and debt service coverage ratios; and 2) the borrower could have received from another financial institution at the time of modification. To date, none of these temporarily modified loans have had their maturities extended, nor would this be a typical negotiable item for the Bank. Although all of the temporarily modified loans at June 30, 2013 and December 31, 2012 were secured by real estate, none of them were reliant upon liquidation of the underlying collateral for repayment of the outstanding loan. In the rare instance in which the Bank also held a second lien on a first mortgage that was temporarily modified, it would consider the combined debt obligations of both liens in determining potential impairment. Any impairment determined based upon this combined debt would result in a charge-off of the second lien initially, and the first loan only after the full second lien has been eliminated.

Any temporary modification that either: 1) reduced the contractual rate below market as defined in the previous paragraph; 2) forgave principal owed; or 3) satisfied any of the other criteria designated in ASC 310-40-15 was deemed a TDR at both June 30, 2013 and December 31, 2012. Any adjustments to interest rates for loans experiencing sub-optimal underwriting conditions would be authorized under the loan approval and underwriting polices that are summarized beginning on page F-8 in the Company's Annual Report on Form 10-K for the year ended December 31, 2012. Based upon the criteria established by the Bank to review its potential problem loans for impairment, designation of the temporarily modified loans as TDRs would not have had a material impact upon the determination of the adequacy of the Bank's allowance for loan losses at either June 30, 2013 or December 31, 2012.

The Bank's lending function performs a formal review process that serves as an effective re-underwriting of all temporarily modified loans.

There were no temporary modifications entered into during the three-month and six-month periods ended June 30, 2013 and 2012.

Problem Loans Serviced for FNMA Subject to the First Loss Position

The Bank services a pool of multifamily loans sold to FNMA that had an outstanding principal balance of $229.2 million at June 30, 2013. Pursuant to the sale agreement with FNMA, the Bank retained the First Loss Position. The First Loss Position totaled $15.4 million at both June 30, 2013 and December 31, 2012. Against this contingent liability, the Bank has charged through earnings a recorded liability (reserve liability for First Loss Position) of $1.2 million as of June 30, 2013 and $1.4 million as of December 31, 2012, leaving approximately $14.2 million of potential charges to earnings for future losses (if any) as of June 30, 2013. At June 30, 2013, within the pool of multifamily loans sold to FNMA, a $226,000 loan was delinquent between 30 and 89 days, and one $474,000 loan was 90 days or more delinquent. At December 31, 2012, within the pool of multifamily loans sold to FNMA, a $229,000 loan was delinquent between 30 and 89 days, and one $474,000 loan was 90 days or more delinquent. The Bank manages the collection of these loans in the same manner as portfolio loans. Under the terms of the servicing agreement with FNMA, the Bank is obligated to fund FNMA all monthly principal and interest payments under the original terms of the loans, and to indemnify FNMA for any further losses (as defined in the sale agreement) until the earlier of the following events: (i) the Bank re-acquires the loan from FNMA or it enters OREO status; or (ii) the entire pool of loans sold to FNMA has either been fully satisfied or enters OREO status. However, the aggregate losses incurred by the Bank on this pool of serviced loans cannot exceed the total First Loss Position. The Bank has previously repurchased, and may opt to continue to repurchase, loans sold to FNMA with recourse exposure that become 90 or more days delinquent. Such repurchased

loans are reported as non-performing portfolio loans and are typically purchased from FNMA in order to control losses and expedite resolution of the loan via restructure, note sale or enforcement of legal remedies.

Reserve Liability on Loan Origination Commitments

The Bank also maintains a reserve liability related to loan origination commitments (recorded in other liabilities) that totaled $184,000 at June 30, 2013 and $103,000 at December 31, 2012. The expected loss rates applied to these commitments are consistent with those applied to comparable loans held within the Bank's portfolio. This amount fluctuates based upon the amount and composition of the Bank's loan commitment pipeline.

Allowance for Loan Losses

The methodology utilized to determine the Company's allowance for loan losses on real estate and consumer loans, along with periodic associated activity, remained constant during the periods ended June 30, 2013, March 31, 2013 and December 31, 2012. The following is a summary of the components of the allowance for loan losses as of the following dates:

	At June 30, 2013		At March 31, 2013		At December 31, 2012
	(Dollars in Thousands)
Real Estate Loans:
Impaired loans	$	522	$	490	$	520
Substandard loans not deemed impaired		375		697		795
Special Mention loans		234		242		145
Pass graded loans		19,347		19,075		19,063
Sub-total real estate loans		20,478		20,504		20,523
Consumer loans		24		26		27
TOTAL	$	20,502	$	20,530	$	20,550

Activity related to the allowance for loan losses is summarized for the periods indicated as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(Dollars in Thousands)
Net charge-offs	$	(57	)	$	(1,562	)	$	(233	)	$	(3,825	)
Provision		28			2,275			185			3,732
Transfer from reserve for loan commitments		-			62			-			82

The allowance for loan losses decreased $48,000 from December 31, 2012 to June 30, 2013, due primarily to the reduction of $420,000 in the component related to loans classified as Substandard but not individually evaluated for impairment (mainly due to a reduction of $4.9 million in the balance of such loans from December 31, 2012 to June 30, 2013), that was partially offset by increases of $283,000 in the component related to pass loans (reflecting growth of $109.2 million in such loans from December 31, 2012 to June 30, 2013), and $89,000 in the component related to loans classified as Special Mention but not individually evaluated for impairment (reflecting growth of $5.6 million in such loans from December 31, 2012 to June 30, 2013).

The provisions for loan losses recorded during the three-month and six-month periods ended June 30, 2013 were significantly lower than during the comparable periods of 2012. These reductions reflected both lower charge-off activity during the three-month and six-month periods ended June 30, 2013 compared to the same periods in 2012, as well as a $30.5 million decline in loans rated Substandard from June 30, 2012 to June 30, 2013.

For a further discussion of the allowance for loan losses and related activity during the three-month and six-month periods ended June 30, 2013 and 2012, please see Note 9 to the condensed consolidated financial statements. Period-end balances of Special Mention and pass graded real estate loans are summarized in Note 8 to the condensed consolidated financial statements, and period-end balances of impaired loans are summarized in Note 9 to the condensed consolidated financial statements.

Comparison of Financial Condition at June 30, 2013 and December 31, 2012

Assets. Assets totaled $3.95 billion at June 30, 2013, $45.8 million above their level at December 31, 2012.

Real estate loans increased $100.8 million during the six months ended June 30, 2013. During the six months ended June 30, 2013, the Bank originated $570.0 million of real estate loans (including refinancing of existing loans) and purchased $34.4 million of real estate loans, which exceeded the $496.7 million aggregate amortization on such loans (also including refinancing of existing loans).

Cash and due from banks decreased by $17.8 million due to the utilization of cash balances to meet funding obligations. Investment securities available for sale declined $14.6 million during the six months ended June 30, 2013, as $14.8 million of agency securities that were called during the period were not replaced. MBS also declined $10.8 million during the six months ended June 30, 2013, primarily due to principal amortization during the period. The Company also reduced its investment in FHLBNY common stock by $4.7 million during the six months ended June 30, 2013 as a result of a $105.0 million decline in its outstanding FHLBNY borrowings during the period.

Liabilities. Total liabilities increased $28.5 million during the six months ended June 30, 2013. Retail deposits (due to depositors) increased $128.2 million during the period. Please refer to "Part I – Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" for a discussion of the increase in retail deposits during the six months ended June 30, 2013. The Company elected not to replace $105 million of FHLBNY advances that matured during the six months ended June 30, 2013 as a result of the additional liquidity gathered from retail deposits during the period.

Stockholders' Equity. Stockholders' equity increased $17.3 million during the six months ended June 30, 2013, due primarily to net income of $22.6 million, $2.3 million of common stock issued for the exercise of stock options and a $1.9 million aggregate increase related to either expense amortization or income tax benefits associated with stock benefit plans that added to the cumulative balance of stockholders' equity. Partially offsetting these items were $9.8 million in cash dividends paid during the period.

Comparison of Operating Results for the Three Months Ended June 30, 2013 and 2012

General. Net income was $12.0 million during the three months ended June 30, 2013, an increase of $508,000 from net income of $11.5 million during the three months ended June 30, 2012. During the comparative period, the provision for loan losses declined $2.2 million, and non-interest expense declined by $329,000. Partially offsetting these additions to pre-tax income were reductions of $746,000 in net interest income and $1.3 million in non-interest income during the comparative period. Income tax expense increased $55,000 during the comparative period due to the growth of $563,000 in pre-tax earnings.

Net Interest Income. The discussion of net interest income for the three months ended June 30, 2013 and 2012 presented below should be read in conjunction with the following tables, which set forth certain information related to the consolidated statements of income for those periods, and which also present the average yield on assets and average cost of liabilities for the periods indicated. The average yields and costs were derived by dividing income or expense by the average balance of their related assets or liabilities during the periods represented. Average balances were derived from average daily balances. The yields include fees that are considered adjustments to yields.

Analysis of Net Interest Income

	Three Months Ended June 30,
			2013							2012
					Average							Average
	Average				Yield/			Average				Yield/
	Balance		Interest		Cost			Balance		Interest		Cost
Assets:	(Dollars In Thousands)
Interest-earning assets:
Real estate loans	$	3,600,154	$	44,692		4.97	%	$	3,391,986	$	47,259		5.57	%
Other loans		2,095		25		4.77			2,114		28		5.30
MBS		39,669		354		3.57			97,719		832		3.41
Investment securities		29,101		103		1.42			108,939		505		1.85
Federal funds sold and other short-term investments		132,507		462		1.39			200,391		639		1.28
Total interest-earning assets		3,803,526	$	45,636		4.80	%		3,801,149	$	49,263		5.18	%
Non-interest earning assets		205,711							143,458
Total assets	$	4,009,237						$	3,944,607

Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest bearing checking accounts	$	92,502	$	70		0.30	%	$	96,453	$	43		0.18	%
Money Market accounts		1,082,789		1,406		0.52			797,802		1,046		0.53
Savings accounts		381,137		64		0.07			363,941		139		0.15
CDs		883,881		3,592		1.63			967,503		4,194		1.74
Borrowed Funds		813,565		6,752		3.33			1,058,271		9,343		3.55
Total interest-bearing liabilities		3,253,874	$	11,884		1.46	%		3,283,970	$	14,765		1.81	%
Non-interest bearing checking accounts		174,904							151,380
Other non-interest-bearing liabilities		176,855							136,974
Total liabilities		3,605,633							3,572,324
Stockholders' equity		403,604							372,283
Total liabilities and stockholders' equity		4,009,237							3,944,607
Net interest income			$	33,752						$	34,498
Net interest spread						3.34	%						3.37	%
Net interest-earning assets	$	549,652						$	517,179
Net interest margin						3.55	%						3.63	%
Ratio of interest-earning assets to interest-bearing liabilities						116.89	%						115.75	%

Rate/Volume Analysis

	Three Months Ended June 30, 2013
	Compared to Three Months Ended June 30, 2012
	Increase/ (Decrease) Due to:
	Volume			Rate			Total
	(Dollars In thousands)
Interest-earning assets:
Real Estate Loans	$	2,711		$	(5,278	)	$	(2,567	)
Other loans		-			(3	)		(3	)
MBS		(506	)		28			(478	)
Investment securities		(327	)		(75	)		(402	)
Federal funds sold and other short-term investments		(224	)		47			(177	)
Total	$	1,654		$	(5,281	)	$	(3,627	)

Interest-bearing liabilities:
Interest bearing checking accounts	$	(2	)	$	29		$	27
Money market accounts		378			(18	)		360
Savings accounts		3			(78	)		(75	)
CDs		(350	)		(252	)		(602	)
Borrowed funds		(2,088	)		(503	)		(2,591	)
Total	$	(2,059	)	$	(822	)	$	(2,881	)
Net change in net interest income	$	3,713		$	(4,459	)	$	(746	)

During the period January 1, 2009 through June 30, 2013, Federal Open Market Committee monetary policies resulted in the maintenance of the overnight federal funds rate in a range of 0.0% to 0.25%. As a result, beginning in early 2009, the Company was

able to commence an orderly reduction of both its deposit and borrowing costs that continued through June 2013. In addition, both marketplace competition and refinancing activity related to loans secured by multifamily and commercial real estate increased considerably during both the year ended December 31, 2012 and the three months ended June 30, 2013, resulting in a reduction in the average yield on real estate loans. Both of these factors impacted the Company's net interest margin during the three months ended June 30, 2013 compared to the three months ended June 30, 2012.

Interest Income. Interest income was $45.6 million during the three months ended June 30, 2013, a reduction of $3.6 million from the three months ended June 30, 2012, primarily reflecting reductions of $2.6 million, $478,000 and $402,000 in interest income on real estate loans, MBS and investment securities, respectively. High volumes of prepayment and refinancing on real estate loans reduced the Company's average yield on real estate loans by 60 basis points during the three months ended June 30, 2013 compared to the three months ended June 30, 2012. Partially offsetting the decline in interest income on real estate loans during the three months ended June 30, 2013 compared to the three months ended June 30, 2012 that was attributable to the 60 basis point reduction in their average yield, was an increase of $208.2 million in their average balance during the comparative period, as the Company increased its loan origination volumes late in 2012, and during the six months ended June 30, 2013, as part of a measured balance sheet growth strategy. The decline in interest income on MBS resulted from a reduction of $58.1 million in their average balance from the three months ended June 30, 2012 to the three months ended June 30, 2013. During the period July 1, 2012 through June 30, 2013, purchases of MBS were limited and were exceeded by principal repayments of existing MBS. The decline in interest income on investment securities during the three months ended June 30, 2013 compared to the three months ended June 30, 2012, resulted from both a reduction of $79.8 million in their average balance, as well as a decline of 43 basis points in their average yield. Similar to MBS, purchases of investment securities were limited during the period July 1, 2012 through June 30, 2013 and were exceeded by their calls and/or maturity activity.

Interest Expense. Interest expense decreased $2.9 million, to $11.9 million, during the three months ended June 30, 2013, from $14.8 million during the three months ended June 30, 2012. This decline resulted primarily from reductions of $2.6 million and $602,000 in interest expense on borrowed funds and CDs, respectively, during the comparative period. The reduction in interest expense on borrowed funds resulted from declines of both $244.7 million in their average balance and 22 basis points in their average cost from the three months ended June 30, 2012 to the three months ended June 30, 2013, as the Company, during the 12-month period ended June 30, 2013, elected to utilize liquidity generated from either deposit growth or increased loan amortization activity to restructure and/or reduce its aggregate level of borrowed funds. The reduction in interest expense on CDs also reflected declines of both $83.6 million in their average balance and 11 basis points in their average cost during the three months ended June 30, 2013 compared to the three months ended June 30, 2012. Since the Company did not elect to compete aggressively for CDs during the period July 1, 2012 through June 30, 2013, it experienced attrition in the higher cost CDs that matured during the period. The reduction in the average cost of CDs also resulted from ongoing reductions in offering rates on new CDs that occurred from July 1, 2012 through June 30, 2013.

Provision for Loan Losses. The provision for loan losses was $28,000 during the three months ended June 30, 2013, compared to $2.3 million during the three months ended June 30, 2012. The reduction reflected the improvement in the overall credit quality of the loan portfolio from July 1, 2012 through June 30, 2013. During the period July 1, 2012 through June 30, 2013, the Company experienced declines in both non-accrual and delinquent loans, as well as minimal net charge-off activity.

Non-Interest Income. Total non-interest income decreased $1.3 million from the three months ended June 30, 2012 to the three months ended June 30, 2013, due primarily to a reduction of $943,000 in mortgage banking income, as the Company recognized a credit of $967,000 to reduce the liability in relation to the First Loss Position during the three months ended June 30, 2012, while recognizing a similar recovery of only $102,000 during the three months ended June 30, 2013. The servicing fee income component of mortgage banking income also declined as a result of the ongoing reduction in the aggregate balance of serviced loans. Other non-interest income declined $281,000 from the three months ended June 30, 2012 to the three months ended June 30, 2013 primarily due to the elimination of rental income on real estate properties that were disposed of in December 2012.

Non-Interest Expense. Non-interest expense was $15.3 million during the three months ended June 30, 2013, a reduction of $329,000 from $15.7 million during the three months ended June 30, 2012, primarily due to lower legal expenses of $170,000 and regulatory examination costs of $151,000.

Non-interest expense was 1.53% of average assets during the three months ended June 30, 2013, compared to 1.59% during the three months ended June 30, 2012, reflecting both the reduction in non-interest expense and an increase of $2.4 million in average assets from the three months ended June 30, 2012 to the three months ended June 30, 2013.

Income Tax Expense. Income tax expense increased $55,000 during the three months ended June 30, 2013 compared to the three months ended June 30, 2012, due primarily to the growth of $563,000 in pre-tax earnings. The Company's consolidated tax rate was 40.1% during the three months ended June 30, 2013, down slightly from 41.0% during the three months ended June 30, 2012.

Comparison of Operating Results for the Six Months Ended June 30, 2013 and 2012

General. Net income was $22.6 million during the six months ended June 30, 2013, an increase of $831,000 from net income of $21.8 million during the six months ended June 30, 2012. During the comparative period, the provision for loan losses declined $3.5 million and non-interest expense declined by $428,000. Partially offsetting these additions to pre-tax income were reductions of $1.8 million in net interest income and $1.2 million in non-interest income, respectively. Income tax expense increased $159,000 during the comparative period due to growth of $990,000 in pre-tax earnings.

Net Interest Income. The discussion of net interest income for the six months ended June 30, 2013 and 2012 presented below should be read in conjunction with the following tables, which set forth certain information related to the consolidated statements of income for those periods, and which also present the average yield on assets and average cost of liabilities for the periods indicated. The average yields and costs were derived by dividing income or expense by the average balance of their related assets or liabilities during the periods represented. Average balances were derived from average daily balances. The yields include fees that are considered adjustments to yields.

Analysis of Net Interest Income

	Six Months Ended June 30
			2013							2012
					Average							Average
	Average				Yield/			Average				Yield/
	Balance		Interest		Cost			Balance		Interest		Cost
Assets:	(Dollars In Thousands)
Interest-earning assets:
Real estate loans	$	3,552,900	$	87,840		4.94	%	$	3,416,304	$	97,772		5.72	%
Other loans		2,140		50		4.67			1,595		48		6.02
MBS		42,573		813		3.82			90,712		1,779		3.92
Investment securities		35,954		232		1.29			134,865		820		1.22
Federal funds sold and other short-term investments		148,085		1,006		1.36			179,340		1,313		1.46
Total interest-earning assets		3,781,652	$	89,941		4.76	%		3,822,816	$	101,732		5.32	%
Non-interest earning assets		195,627							176,045
Total assets	$	3,977,279						$	3,998,861

Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest bearing checking accounts	$	92,861	$	140		0.30	%	$	93,192	$	93		0.20	%
Money Market accounts		1,071,012		2,896		0.55			790,124		2,172		0.55
Savings accounts		378,256		165		0.09			360,656		301		0.17
CDs		882,882		7,131		1.63			972,800		8,582		1.77
Borrowed Funds		825,484		13,542		3.31			1,125,627		22,692		4.05
Total interest-bearing liabilities		3,250,495	$	23,874		1.48	%		3,342,399	$	33,840		2.04	%
Non-interest bearing checking accounts		168,481							150,868
Other non-interest-bearing liabilities		157,704							136,772
Total liabilities		3,576,680							3,630,039
Stockholders' equity		400,599							368,822
Total liabilities and stockholders' equity	$	3,977,279						$	3,998,861
Net interest income			$	66,067						$	67,892
Net interest spread						3.28	%						3.28	%
Net interest-earning assets	$	531,157						$	480,417
Net interest margin						3.49	%						3.55	%
Ratio of interest-earning assets to interest-bearing liabilities						116.34	%						114.37	%

Rate/Volume Analysis

	Six Months Ended June 30, 2013
	Compared to Six Months Ended June 30, 2012
	Increase/ (Decrease) Due to:
	Volume			Rate			Total
	(Dollars In thousands)
Interest-earning assets:
Real Estate Loans	$	3,651		$	(13,583	)	$	(9,932	)
Other loans		15			(13	)		2
MBS		(932	)		(34	)		(966	)
Investment securities		(618	)		30			(588	)
Federal funds sold and other short-term investments		(223	)		(84	)		(307	)
Total	$	1,893		$	(13,684	)	$	(11,791	)

Interest-bearing liabilities:
Interest bearing checking accounts	$	1		$	46		$	47
Money market accounts		747			(23	)		724
Savings accounts		11			(147	)		(136	)
CDs		(783	)		(668	)		(1,451	)
Borrowed funds		(5,526	)		(3,624	)		(9,150	)
Total	$	(5,550	)	$	(4,416	)	$	(9,966	)
Net change in net interest income	$	7,442		$	(9,267	)	$	(1,825	)

During the period January 1, 2009 through June 30, 2013, FOMC monetary policies resulted in the maintenance of the overnight federal funds rate in a range of 0.0% to 0.25%. As a result, beginning in early 2009, the Company was able to commence an orderly reduction of both its deposit and borrowing costs that continued through June 2013. In addition, both marketplace competition and refinancing activity related to loans secured by multifamily and commercial real estate increased considerably during both the year ended December 31, 2012 and the six months ended June 30, 2013, resulting in a reduction in the average yield on real estate loans. Both of these factors impacted the Company's net interest margin during the six months ended June 30, 2013 compared to the six months ended June 30, 2012.

Interest Income. Interest income was $89.9 million during the six months ended June 30, 2013, a reduction of $11.8 million from the six months ended June 30, 2012, primarily reflecting reductions of $9.9 million, $966,000 and $588,000 in interest income on real estate loans, MBS and investment securities, respectively. High volumes of prepayment and refinancing on real estate loans reduced the Company's average yield on real estate loans and MBS by 78 basis points and 10 basis points, respectively, during the six months ended June 30, 2013 compared to the six months ended June 30, 2012. The decline in interest income on MBS also reflected a reduction of $48.1 million in their average balance from the six months ended June 30, 2012 to the six months ended June 30, 2013. During the period July 1, 2012 through June 30, 2013, purchases of MBS were limited and were exceeded by principal repayments of existing MBS. Partially offsetting the decline in interest income on real estate loans during the six months ended June 30, 2013 compared to the six months ended June 30, 2012 that was attributable to the 78 basis point reduction in their average yield, was an increase of $136.6 million in their average balance during the comparative period, as the Company increased its loan origination volumes late in 2012 and during the six months ended June 30, 2013, as part of a measured balance sheet growth strategy. The decline in interest income on investment securities during the six months ended June 30, 2013 compared to the six months ended June 30, 2012, resulted from a reduction of $98.9 million in their average balance, which was partially offset by an increase of 7 basis points in their average yield. Similar to MBS, purchases of investment securities were limited during the period July 1, 2012 through June 30, 2013 and were exceeded by their calls and/or maturity activity. Since the great majority of the investment securities that either were called or matured during the period July 1, 2012 through June 30, 2013 possessed yields between 0.50% to 1.0%, their removal served to improve the average yield on the aggregate portfolio of investment securities during the six months ended June 30, 2013 compared to the six months ended June 30, 2012.

Interest Expense. Interest expense decreased $10.0 million, to $23.8 million, during the six months ended June 30, 2013, from $33.8 million during the six months ended June 30, 2012. This decline resulted primarily from reductions of $9.2 million and $1.5 million in interest expense on borrowed funds and CDs, respectively, during the comparative period. The reduction in interest expense on borrowed funds resulted from declines of both $300.1 million in their average balance and 74 basis points in their average cost from the six months ended June 30, 2012 to the six months ended June 30, 2013, as the Company, during the 12-month period ended June 30, 2013, elected to utilize liquidity generated from either deposit growth or increased loan amortization activity to restructure and/or reduce its aggregate level of borrowed funds. The reduction in interest expense on CDs also reflected declines of both $89.9 million in their average balance and 14 basis points in their average cost during the six months ended June 30, 2013 compared to the six months ended June 30, 2012. Since the Company did not elect to compete aggressively for CDs during the period July 1, 2012 through June 30, 2013, it experienced attrition in the higher cost CDs that matured during the period. The reduction in the average cost of CDs also resulted from ongoing reductions in offering rates on new CDs that occurred from July 1, 2012 through June 30, 2013.

Provision for Loan Losses. The provision for loan losses was $185,000 during the six months ended June 30, 2013, compared to $3.7 million during the six months ended June 30, 2012. The reduction reflected the improvement in the overall credit quality of the loan portfolio from July 1, 2012 through June 30, 2013. During the period July 1, 2012 through June 30, 2013, the Company experienced declines in both non-accrual and delinquent loans, as well as minimal net charge-off activity.

Non-Interest Income. Total non-interest income decreased $1.2 million from the six months ended June 30, 2012 to the six months ended June 30, 2013, due primarily to a reduction of $983,000 in mortgage banking income, as the Company recognized a credit of $967,000 to reduce the liability in relation to the First Loss Position during the six months ended June 30, 2012, while recognizing a similar recovery of only $194,000 during the six months ended June 30, 2013. The servicing fee income component of mortgage banking income also declined $173,000 during the six months ended June 30, 2013 compared to the six months ended June 30, 2012 as a result of the ongoing reduction in the aggregate balance of serviced loans. Other non-interest income declined $409,000 from the six months ended June 30, 2012 to the six months ended June 30, 2013 primarily due to the elimination of rental income on real estate properties that were disposed of in December 2012.

Non-Interest Expense. Non-interest expense was $31.7 million during the six months ended June 30, 2013, a reduction of $428,000 from $32.1 million during the six months ended June 30, 2012, primarily due to lower legal expenses of $239,000 and regulatory examination costs of $294,000, that were partially offset by an increase of $180,000 in the provision for losses on OREO during the comparative period.

Non-interest expense was 1.59% of average assets during the six months ended June 30, 2013, relatively unchanged from the six months ended June 30, 2012.

Income Tax Expense. Income tax expense increased $159,000 during the six months ended June 30, 2013 compared to the six months ended June 30, 2012, due primarily to growth of $990,000 in pre-tax earnings. The Company's consolidated tax rate was 40.3% during the six months ended June 30, 2013, down slightly from 40.9% during the six months ended June 30, 2012.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Quantitative and qualitative disclosures about market risk were presented at December 31, 2012 in Item 7A of the Company's Annual Report on Form 10-K, filed with the SEC on March 15, 2013. The following is an update of the discussion provided therein.

General . Virtually all of the Company's market risk continues to reside at the Bank level. The Bank's largest component of market risk remains interest rate risk. The Company is not subject to foreign currency exchange or commodity price risk. At June 30, 2013, the Company owned nine mutual fund investments totaling $5.1 million that were designated as trading. At June 30, 2013, the Company did not conduct transactions involving derivative instruments requiring bifurcation in order to hedge interest rate or market risk.

Assets, Deposit Liabilities and Wholesale Funds . There was no material change in the composition of assets, deposit liabilities or wholesale funds from December 31, 2012 to June 30, 2013. See "Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" for a discussion of deposit and borrowing activity during the period.

Interest Rate Risk Exposure Analysis

Economic Value of Equity ("EVE") Analysis . At June 30, 2013, the Bank continued to monitor the impact of interest rate volatility upon EVE in the same manner as at December 31, 2012.

The analysis that follows presents the estimated EVE resulting from market interest rates prevailing at a given quarter-end ("Pre-Shock Scenario"), and under other interest rate scenarios (each a "Rate Shock Scenario") represented by immediate, permanent, parallel shifts in interest rates from those observed at June 30, 2013 and December 31, 2012. The analysis additionally presents a measurement of the interest rate sensitivity at June 30, 2013 and December 31, 2012. Prior to June 30, 2013, interest rate sensitivity was measured by the basis point changes in the various ratios of EVE as a percentage of the aggregate fair value of assets. The basis point changes in conjunction with the respective "Rate Shock Scenario" would show the Bank's interest rate exposure. Commencing as of June 30, 2013, the Bank changed its primary measure of interest rate sensitivity to the percentage change in the various EVE values ("EVE Dollar Amount") from the Pre-Shock Scenario to the Rate Shock Scenarios. EVE Dollar Amounts represent the difference between the market value of the Bank's assets and liabilities plus the value of any off-balance sheet items, such as firm commitments to originate, purchase or sell derivatives, if applicable. EVE Dollar Amounts are computed under each respective Pre- and Rate Shock Scenario. An increase in the EVE Dollar Amount is considered favorable, while a decline is considered unfavorable.

The EVEs presented in the following table incorporate some asset and liability values derived from the Bank's valuation model, such as those for mortgage loans and time deposits, and some asset and liability values provided by reputable independent sources, such as values for the Bank's MBS and CMO portfolios, as well as its putable borrowings. The Bank's valuation model makes various estimates regarding cash flows from principal repayments on loans and deposit decay rates at each level of interest rate change. The Bank's estimates for loan repayment levels are influenced by the recent history of prepayment activity in its loan portfolio, as well as the

interest rate composition of the existing portfolio, especially in relation to the existing interest rate environment. In addition, the Bank considers the amount of fee protection inherent in the loan portfolio when estimating future repayment cash flows. Regarding deposit decay rates, the Bank tracks and analyzes the decay rate of its deposits over time and over various interest rate scenarios and then makes estimates of its deposit decay rate for use in the valuation model. The Bank also generates a series of spot discount rates that are integral to the valuation of the projected monthly cash flows of its assets and liabilities. The Bank's valuation model employs discount rates that it considers representative of prevailing market rates of interest, with appropriate adjustments it believes are suited to the heterogeneous characteristics of the Bank's various asset and liability portfolios. No matter the care and precision with which the estimates are derived, however, actual cash flows could differ significantly from the Bank's estimates, resulting in significantly different EVE calculations.

	At June 30, 2103				At December 31, 2012
	EVE Dollar Amount	Dollar Change	Percentage Change	Board Approved Percentage Change Limit	EVE Dollar Amount	Dollar Change	Percentage Change	Board Approved Percentage Change Limit
Rate Shock Scenario
+ 200 Basis Points	$445,923	$(51,431)	-10.3%	-18.5%	$431,313	$(12,896)	-2.9%	n/a
Pre-Shock Scenario	497,354	-	-	-	444,209	-	-	-

The Pre-Shock Scenario EVE was $497.4 million at June 30, 2013, compared to $444.2 million at December 31, 2012. The increase in the Pre-Shock Scenario EVE at June 30, 2013 compared to December 31, 2012 resulted primarily from a more favorable valuation of both borrowings and CDs that reflected reductions in the average costs of these liabilities from December 31, 2012 to June 30, 2013.

The Bank's +200 basis point Rate Shock Scenario EVE increased from its $431.3 million balance at December 31, 2012 to $445.9 million at June 30, 2013, reflecting the more favorable valuation of both borrowings and CDs that resulted from reductions in the average costs of these liabilities from December 31, 2012 to June 30, 2013 The percentage change in the EVE Dollar Amount from the Pre-Shock Scenario to the +200 basis point Rate Shock Scenario increased from 2.9% at December 31, 2012 to 10.3% at June 30, 2013. The increase in sensitivity resulted from a reduced benefit in the valuation of both CDs and borrowings in the +200 basis point Rate Shock Scenario EVE as of June 30, 2013 compared to December 31, 2012.

Income Simulation Analysis . As of the end of each quarterly period, the Bank also monitors the impact of interest rate changes through a net interest income simulation model. This model estimates the impact of interest rate changes on the Bank's net interest income over forward-looking periods typically not exceeding 24 months (a considerably shorter period than measured through the EVE analysis). The following table discloses the estimated changes to the Bank's net interest income over the 12-month period ending June 30, 2014 assuming instantaneous changes in interest rates for the given Rate Shock Scenarios:

Instantaneous Change in Interest rate of:		Percentage Change in Aggregate Net Interest Income
+ 200 Basis Points		(5.5)%
+ 100 Basis Points		(2.9)
-100 Basis Points		1.4

Item 4. Controls and Procedures

Management of the Company, with the participation of its Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness as of June 30, 2013, of the Company's disclosure controls and procedures, as defined in Rules 13a-15(e) and 15(d)-15(e) under the Exchange Act. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2013 in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management of the Company as appropriate to allow timely decisions regarding required disclosures.

Changes in Internal Control Over Financial Reporting

There was no change in the Company's internal control over financial reporting that occurred during the Company's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, such controls.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

In the ordinary course of business, the Company is routinely named as a defendant in or party to various pending or threatened legal actions or proceedings. Certain of these matters may seek substantial monetary damages. In the opinion of management, the Company is involved in no actions or proceedings that will have a material adverse impact on its financial condition and results of operations.

Item 1A. Risk Factors

There were no material changes from the risks disclosed in the Risk Factors section of the Company's Annual Report on Form 10-K for the year ended December 31, 2012.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(c) The Holding Company did not repurchase any shares of its common stock into treasury during the three months ended June 30, 2013. No existing repurchase programs expired during the three months ended June 30, 2013, nor did the Company terminate any repurchase programs prior to expiration during the period. As of June 30, 2013, the Holding Company had an additional 1,124,549 shares remaining eligible for repurchase under its twelfth stock repurchase program, which was publicly announced in June 2007.

Item 3. Defaults Upon Senior Securities

None.

Item 4. (Removed and Reserved)

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit Number

3(i)		Amended and Restated Certificate of Incorporation of Dime Community Bancshares, Inc. (1)
3(ii)		Amended and Restated Bylaws of Dime Community Bancshares, Inc. (16)
4.1		Amended and Restated Certificate of Incorporation of Dime Community Bancshares, Inc. [See Exhibit 3(i) hereto]
4.2		Amended and Restated Bylaws of Dime Community Bancshares, Inc. [See Exhibit 3(ii) hereto]
4.3		Draft Stock Certificate of Dime Community Bancshares, Inc. (2)
4.4		Second Amended and Restated Declaration of Trust, dated as of July 29, 2004, by and among Wilmington Trust Company, as Delaware Trustee, Wilmington Trust Company as Institutional Trustee, Dime Community Bancshares, Inc., as Sponsor, the Administrators of Dime Community Capital Trust I and the holders from time to time of undivided beneficial interests in the assets of Dime Community Capital Trust I (5)
4.5		Indenture, dated as of March 19, 2004, between Dime Community Bancshares, Inc. and Wilmington Trust Company, as trustee (5)
4.6		Series B Guarantee Agreement, dated as of July 29, 2004, executed and delivered by Dime Community Bancshares, Inc., as Guarantor and Wilmington Trust Company, as Guarantee Trustee, for the benefit of the holders from time to time of the Series B Capital Securities of Dime Community Capital Trust I (5)
10.1		Amended and Restated Employment Agreement between The Dime Savings Bank of Williamsburgh and Vincent F. Palagiano (12)
10.2		Amended and Restated Employment Agreement between The Dime Savings Bank of Williamsburgh and Michael P. Devine (12)
10.3		Amended and Restated Employment Agreement between The Dime Savings Bank of Williamsburgh and Kenneth J. Mahon (12)
10.4		Employment Agreement between Dime Community Bancshares, Inc. and Vincent F. Palagiano (12)
10.5		Employment Agreement between Dime Community Bancshares, Inc. and Michael P. Devine (12)
10.6		Employment Agreement between Dime Community Bancshares, Inc. and Kenneth J. Mahon (12)
10.7		Form of Employee Retention Agreement by and among The Dime Savings Bank of Williamsburgh, Dime Community Bancorp, Inc. and certain officers (14)

10.8		The Benefit Maintenance Plan of Dime Community Bancorp, Inc. (11)
10.9		Severance Pay Plan of The Dime Savings Bank of Williamsburgh (9)
10.10		Retirement Plan for Board Members of Dime Community Bancorp, Inc. (9)
10.12		Recognition and Retention Plan for Outside Directors, Officers and Employees of Dime Community Bancorp, Inc., as amended by amendments number 1 and 2 (3)
10.13		Form of stock option agreement for Outside Directors under Dime Community Bancshares, Inc. 1996 and 2001 Stock Option Plans for Outside Directors, Officers and Employees and the 2004 Stock Incentive Plan. (3)
10.14		Form of stock option agreement for officers and employees under Dime Community Bancshares, Inc. 1996 and 2001 Stock Option Plans for Outside Directors, Officers and Employees and the 2004 Stock Incentive Plan (3)
10.20		Dime Community Bancshares, Inc. 2001 Stock Option Plan for Outside Directors, Officers and Employees (13)
10.21		Dime Community Bancshares, Inc. 2004 Stock Incentive Plan for Outside Directors, Officers and Employees (8)
10.22		Waiver executed by Vincent F. Palagiano (7)
10.23		Waiver executed by Michael P. Devine (7)
10.24		Waiver executed by Kenneth J. Mahon (7)
10.25		Form of restricted stock award notice for officers and employees under the 2004 Stock Incentive Plan (6)
10.27		Form of restricted stock award notice for outside directors under the 2004 Stock Incentive Plan (6)
10.28		Employee Retention Agreement between The Dime Savings Bank of Williamsburgh, Dime Community Bancshares, Inc. and Daniel Harris (9)
10.29		Dime Community Bancshares, Inc. Annual Incentive Plan (9)
10.30		The Dime Savings Bank of Williamsburgh 401(K) Savings Plan (Amended and Restated Effective January 1, 2010) (10)
10.31		Employee Stock Ownership Plan of Dime Community Bancshares, Inc. and Certain Affiliates (9)
10.32		Amendment to the Benefit Maintenance Plan (15)
10.33		Amendments to the Employee Stock Ownership Plan of Dime Community Bancshares, Inc. and Certain Affiliates (16)
10.34		Dime Community Bancshares, Inc. 2013 Equity and Incentive Plan
12.1		Computation of ratio of earnings to fixed charges
31(i).1		Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a)
31(i).2		Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a)
32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350
32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350
101**		Pursuant to Rule 405 of Regulation S-T, the following financial information from the Company's Annual Report on Form 10-K for the period ended December 31, 2012 is formatted in XBRL (Extensible Business Reporting Language) interactive data files: (i) the Consolidated Balance Sheets as of December 31, 2012 and 2011, (ii) the Consolidated Statements of Income, Comprehensive Income, Changes in Stockholders' Equity and Cash Flows for the years ended December 31, 2012, 2011 and 2010, and (iv) the Notes to Consolidated Financial Statements.

**	Furnished, not filed, herewith.
(1)	Incorporated by reference to the registrant's Transition Report on Form 10-K for the transition period ended December 31, 2002 filed on March 28, 2003.
(2)	Incorporated by reference to the registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1998 filed on September 28, 1998.
(3)	Incorporated by reference to the registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1997 filed on September 26, 1997, and the Current Reports on Form 8-K filed on March 22, 2004 and March 29, 2005.
(4)	Incorporated by reference to the registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 2000 filed on September 28, 2000.
(5)	Incorporated by reference to Exhibits to the registrant's Registration Statement No. 333-117743 on Form S-4 filed on July 29, 2004.
(6)	Incorporated by reference to the registrant's Current Report on Form 8-K filed on March 22, 2005.
(7)	Incorporated by reference to the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 filed on May 10, 2005.
(8)	Incorporated by reference to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 filed on August 8, 2008.
(9)	Incorporated by reference to the registrant's Annual Report on Form 10-K for the year ended December 31, 2008 filed on March 16, 2009.
(10)	Incorporated by reference to the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 filed on May 10, 2010
(11)	Incorporated by reference to the registrant's Current Report on Form 8-K filed on April 4, 2011.
(12)	Incorporated by reference to the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 filed on May 10, 2011

(13)	Incorporated by reference to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 filed on August 9, 2011
(14)	Incorporated by reference to the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 filed on May 9, 2012
(15)	Incorporated by reference to the registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 filed on November 13, 2012
(16)	Incorporated by reference to the registrant's Annual Report on Form 10-K for the year ended December 31, 2012 filed on March 15, 2013

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dime Community Bancshares, Inc.

Dated: August 9, 2013		By: /s/ VINCENT F. PALAGIANO
		Vincent F. Palagiano
		Chairman of the Board and Chief Executive Officer

Dated: August 9, 2013		By: /s/ KENNETH J. MAHON
		Kenneth J. Mahon
		Senior Executive Vice President and Chief Financial Officer (Principal Accounting Officer)

Dime Community Bancshares, Inc.

2013 Equity and Incentive Plan

Adopted March 28, 2013

Effective as of May 23, 2013

DIME COMMUNITY BANCSHARES, INC.

2013 EQUITY AND INCENTIVE PLAN

Article I

Purpose

Section 1.1 General Purpose of the Plan. The purpose of the Plan is to promote the growth and profitability of Dime Community Bancshares, Inc., by providing certain directors, key officers and employees of Dime Community Bancshares, Inc. and its Subsidiaries with an incentive to achieve corporate objectives and by attracting and retaining individuals of outstanding competence through a participation interest in the performance of Common Stock of Dime Community Bancshares, Inc. or other incentive vehicles.

Article II

Definitions

The following definitions shall apply for the purposes of this Plan, unless a different meaning is plainly indicated by the context:

Section 2.1 Award means a compensation opportunity that is made available under the Plan, whether denominated in Shares, Stock Units or cash.

Section 2.2 Award Agreement means, with respect to any Award, a written instrument evidencing the Award and establishing the terms and conditions thereof.

Section 2.3 Bank means The Dime Savings Bank of Williamsburgh, a New York state chartered savings bank, and any successor thereto.

Section 2.4 Beneficiary means the Person designated by an Eligible Individual to receive any compensation or exercise any right relating to Awards made to that Eligible Individual that may be available following the Eligible Individual's death.

Section 2.5 Board means the Board of Directors of the Company.

Section 2.6 Change in Control means any of the following events:

(a) the occurrence of any event (other than an event described in section 2.6(c)(i)) upon which any "person" (as such term is used in sections 13(d) and 14(d) of the Exchange Act), other than (A) a trustee or other fiduciary holding securities under an employee benefit plan maintained for the benefit of employees of the Company; (B) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company; or (C) any group constituting a person in which employees of the Company are substantial members, becomes the "beneficial owner" (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities issued by the Company representing 25% or more of the combined voting power of all of the Company's then outstanding securities; or

(b) the occurrence of any event upon which the individuals who on the date the Plan is adopted are members of the Board, together with individuals whose election by the Board or nomination for election by the Company's stockholders was approved by the affirmative vote of at least two-thirds of the members of the Board then in office who were either members of the Board on the date this Plan is adopted or whose nomination or election was previously so approved, cease for any reason to

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constitute a majority of the members of the Board, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of directors of the Company; or

(i) a merger or consolidation of the Company with any other corporation, other than a merger or consolidation following which both of the following conditions are satisfied:

(A) either (I) the members of the Board of the Company immediately prior to such merger or consolidation constitute at least a majority of the members of the governing body of the institution resulting from such merger or consolidation; or (II) the shareholders of the Company own securities of the institution resulting from such merger or consolidation representing 80% or more of the combined voting power of all such securities of the resulting institution then outstanding in substantially the same proportions as their ownership of voting securities of the Company immediately before such merger or consolidation; and

(B) if the entity which results from such merger or consolidation is not the Company, such entity expressly agrees in writing to assume and perform the Company's obligations under the Plan; or

(ii) a plan of complete liquidation of the Company or the sale or disposition by the Company of all or substantially all of its assets; and

(d) any event that would be described in section 2.6(a), (b) or (c) if the "Bank" were substituted for the "Company" therein.

Section 2.7 Change in Control Event means a Change in Control that is also a change in ownership or effective control (within the meaning of section 409A of the Code and the regulations thereunder) with respect the Recipient of an Award that constitutes a non-qualified deferred compensation plan for purposes of section 409A of the Code.

Section 2.8 Code means the Internal Revenue Code of 1986 (including the corresponding provisions of any succeeding law).

Section 2.9 Committee means the Committee described in section 4.1.

Section 2.10 Company means Dime Community Bancshares, Inc., a corporation organized and existing under the laws of the State of Delaware, and any successor thereto.

Section 2.11 Covered Employee means, for any taxable year of the Company, a person who is, or who the Committee determines is reasonably likely to be, a "covered employee" (within the meaning of section 162(m) of the Code).

Section 2.12 Disability means a condition of incapacity, mental or physical, for the performance of services which the Committee determines, on the basis of competent medical evidence, is likely to be permanent, to continue for an indefinite period of at least one hundred eighty (180) days, or to result in death. In the case of an Award that constitutes a non-qualified deferred compensation plan, the existence of a "Disability" shall be determined in accordance with section 409A of the Code and the regulations thereunder.

Section 2.13 Disinterested Board Member means a member of the Board who: (a) is not a current employee of the Company or a subsidiary, (b) is not a former employee of the Company who receives compensation for prior services (other than benefits under a tax-qualified retirement plan) during the taxable year, (c) has not been an officer of the Company, (d) does not receive remuneration from the Company or a subsidiary, either directly or indirectly, in any capacity other than as a director except in an amount for which disclosure would not be required pursuant to Item 404(a) of the

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proxy solicitation rules of the Securities and Exchange Commission and (e) does not possess an interest in any other transaction, and is not engaged in a business relationship, for which disclosure would be required pursuant to Items 404(a) or (b) of the proxy solicitation rules of the Securities and Exchange Commission. The term Disinterested Board Member shall be interpreted in such manner as shall be necessary to conform to the requirements of section 162(m) of the Code, Rule 16b-3 promulgated under the Exchange Act and the corporate governance standards imposed on compensation committees under the listing requirements imposed by any national securities exchange on which the Company lists or seeks to list Shares.

Section 2.14 Earliest Exercise Date means, with respect to an Option, the earliest date on which the Option may be exercised. The Earliest Exercise Date may, but need not, be the same as the Option's Vesting Date.

Section 2.15 Effective Date means [date of stockholder approval].

Section 2.16 Eligible Employee means any employee of the Company, or of a Parent or Subsidiary, whom the Committee may determine to be a key officer or employee and select to receive an Award.

Section 2.17 Eligible Individual means: (a) any Eligible Employee; and (b) any non-employee director of the Company or a Parent or Subsidiary.

Section 2.18 Employer means the Company, the Bank and any successor thereto and, with the prior approval of the Board, and subject to such terms and conditions as may be imposed by the Board, any other Parent or Subsidiary.

Section 2.19 Equity Award means an Award that is both denominated and settled in Shares.

Section 2.20 Exchange Act means the Securities Exchange Act of 1934, as amended.

Section 2.21 Exercise Period means the period during which an Option or Stock Appreciation Right may be exercised.

Section 2.22 Exercise Price means the price per Share at which Shares subject to an Option may be purchased upon exercise of the Option and on the basis of which the cash payment due upon exercise of a Stock Appreciation Right is computed.

Section 2.23 Fair Market Value means, with respect to a Share on a specified date:

(a) the final reported sales price on the date in question (or if there is no reported sale on such date, on the last preceding date on which any reported sale occurred) as reported in the principal consolidated reporting system with respect to securities listed or admitted to trading on the principal United States securities exchange on which the Shares are listed or admitted to trading, as of the close of the market in New York City and without regard to after-hours trading activity; or

(b) if the Shares are not listed or admitted to trading on any such exchange, the closing bid quotation with respect to a Share on such date, as of the close of the market in New York City and without regard to after-hours trading activity, on the National Association of Securities Dealers Automated Quotations System, or, if no such quotation is provided, on another similar system, selected by the Committee, then in use; or

(c) if sections 2.23(a) and (b) are not applicable, the fair market value of a Share as the Committee may determine such determination to be made, in the case an Award that is intended to constitute a "stock right" for purposes of section 4090A of the Code and the regulations thereunder, in a manner consistent with the requirements of section 409A of the Code and the regulations thereunder.

Section 2.24 Family Member means, with respect to any Eligible Individual: (a) any of the Eligible Individual's children, stepchildren, grandchildren, parents, stepparents, grandparents, spouses, former spouses, siblings, nieces, nephews, mothers-in-law, fathers-in-law, sons-in-law, daughters-in-law, brothers-in-law or sisters-in-law, including relationships created by adoption; (b) any natural person sharing the Eligible Individual's household (other than as a tenant

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or employee, directly or indirectly, of the Eligible Individual); (c) a trust in which any combination of the Eligible Individual and Persons described in section 2.24(a) and (b) own more than fifty percent (50%) of the beneficial interests; (d) a foundation in which any combination of the Eligible Individual and Persons described in sections 2.24(a) and (b) control management of the assets; or (e) any other corporation, partnership, limited liability company or other entity in which any combination of the Eligible Individual and Persons described in sections 2.24(a) and (b) control more than fifty percent (50%) of the voting interests.

Section 2.25 Incentive Stock Option means a right to purchase Shares that is granted to an Eligible Employee pursuant to section 5.1, that is designated by the Committee to be an Incentive Stock Option and that is intended to satisfy the requirements of section 422 of the Code.

Section 2.26 Non-Equity Award means an Award is either denominated or settled in a medium other than Shares.

Section 2.27 Non-Qualified Stock Option means a right to purchase Shares that is either (a) granted to an Eligible Individual who is not an Eligible Employee or (b) granted to an Eligible Employee and either (i) is not designated by the Committee to be an Incentive Stock Option, or (ii) does not satisfy the requirements of section 422 of the Code.

Section 2.28 Option means either an Incentive Stock Option or a Non-Qualified Stock Option.

Section 2.29 Option Holder means, at any relevant time with respect to an Option, the person having the right to exercise the Option.

Section 2.30 Parent means any entity, whether or not incorporated, in an unbroken chain of entities ending with the Company where each entity other than the first entity in the unbroken chain owns stock or other equity interests in one of the other entities in the unbroken chain possessing fifty percent (50%) or more of the combined voting power of all of the other entity's outstanding stock or other interests that vote generally in the election of the other entity's directors or other governing body.

Section 2.31 Performance-Based Award means an Award the vesting of which is contingent, in whole or in part, on the achievement of one or more Performance Goals.

Section 2.32 Performance Goal means, with respect to any Performance-Based Award, the performance goal or performance goal(s) established pursuant to section 9.1(a), the attainment of which is a condition of vesting of the Performance-Based Award.

Section 2.33 Performance Measurement Period means, with respect to any Performance Goal, the period of time over which attainment of the Performance Goal is measured.

Section 2.34 Permitted Transferee means, with respect any Recipient, a Family Member of the Recipient to whom an Option has been transferred in accordance with section 5.8.

Section 2.35 Person means an individual, a corporation, a partnership, a limited liability company, an association, a joint-stock company, a trust, an estate, an unincorporated organization and any other business organization or institution.

Section 2.36 Plan means the Dime Community Bancshares, Inc. 2013 Equity and Incentive Plan, as amended from time to time.

Section 2.37 Qualifying Termination means a Recipient's termination of service that occurs upon or following a Change in Control that is either (a) an involuntary discharge or removal from office that is not a Termination for Cause or (ii) a voluntary resignation within ninety (90) days following: (A) the failure of the Recipient's employer or its stockholders to appoint or re-appoint or elect or re-elect the him to serve in the same position in he was serving on the day before the Change in Control; (B) the expiration of a thirty (30) day period following the date on which the Recipient gives written notice to his employer of its material failure, whether by amendment of its charter or by-laws, action of its board of directors or stockholders or otherwise, to vest in the Recipient the functions, duties, or responsibilities vested in

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the Recipient on the day before Change in Control (or the functions, duties and responsibilities of a more senior office to which the Recipient may subsequently be appointed), unless during such thirty (30) day period, the Recipient's employer fully cures such failure; (C) the failure of the Recipient's employer to cure a material breach of any employment agreement in effect with him, within thirty (30) days following written notice from the Recipient of such material breach; (D) a reduction in the compensation provided to the Recipient, or a material reduction in the benefits provided to the Recipient under his employer's program of employee benefits, compared with the compensation and benefits that were provided to the Recipient on the day before the Change in Control; or (E) a change in the Recipient's principal place of employment that would result in a one-way commuting time in excess of the greater of (I) 30 minutes or (II) the Recipient's commuting time immediately prior to such change.

Section 2.38 Recipient means the person to whom an Award is made.

Section 2.39 Restricted Stock Award means an Award made under Article VII of the Plan.

Section 2.40 Retirement means termination of service with the Employer at or after attainment of age 65 or at or after attaining age 55 and completing at least 10 years of Service; provided, however, that in no event shall a Termination for Cause constitute a Retirement.

Section 2.41 Service means, unless the Committee provides otherwise in an Award Agreement, service in any capacity as a common-law employee, consultant or non-employee director to the Company or a Parent or Subsidiary.

Section 2.42 Share means a share of Common Stock, par value $.01 per share, of the Dime Community Bancshares, Inc.

Section 2.43 Stock Appreciation Right means the right upon exercise to receive, in cash or Shares, the amount equal to the excess (if any) of (a) the Fair Market Value of a Share on the date of exercise over (b) the Exercise Price.

Section 2.44 Stock Unit means an economic right under the Plan the value of which is equal to the Fair Market Value of a Share. A Stock Unit may represent a future right to receive a cash payment or Shares in settlement thereof, as specified in the applicable Award Agreement.

Section 2.45 Subsidiary means any entity, whether or not incorporated, in an unbroken chain of entities beginning with the Company where each entity other than the last entity in the unbroken chain owns stock or other equity interests in one of the other entities in the unbroken chain possessing fifty percent (50%) or more of the combined voting power of all of the other entity's outstanding stock or other interests that vote generally in the election of the other entity's directors or other governing body.

Section 2.46 Termination for Cause means one of the following:

(a) for an Eligible Individual who is an officer or employee of the Bank, the Company or any Parent or Subsidiary, termination of employment with the Employer upon the occurrence of any of the following:

(i) the employee intentionally engages in dishonest conduct in connection with his performance of services for the Employer resulting in his conviction of or plea of guilty or nolo contendere to a felony;

(ii) the employee is convicted of, or pleads guilty or nolo contendere to, a felony or any crime involving moral turpitude;

(iii) the employee willfully fails or refuses to perform his duties under any employment or retention agreement and fails to cure such breach within sixty (60) days following written notice thereof from the Employer;

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(iv) the employee breaches his fiduciary duties to the Employer for personal profit; or

(v) the employee's willful breach or violation of any law, rule or regulation (other than traffic violations or similar offenses), or final cease and desist order in connection with his performance of services for the Employer; and

(b) for an Eligible Individual who is a non-employee director, removal for cause under the terms of the charter or by-laws or any law, rule or regulation applicable to the entity upon whose board of directors the individual serves as a non-employee director.

Section 2.46 Vesting Date means the date on which an Award ceases to be forfeitable.

Article III

Available Shares and Award Limits

Section 3.1 Shares Available .

The maximum number of Shares that may be issued under the Plan is One Million (1,000,000). The number of shares available under the Plan shall be:

(a) reduced by the number of Shares underlying Equity Awards made under the Plan;

(b) increased by the number of Shares underlying Equity Awards made under the Plan that expire or are canceled or otherwise cease to exist without the issuance of Shares or are forfeited and result in a return of issued Shares; and

For avoidance of doubt, if and to the extent that Shares are retained by or returned to the Company for satisfaction of tax withholding obligations or the payment of Exercise Price or other acquisition costs in connection with the vesting, settlement or exercise of an Equity Award, the Shares so retained or returned will not increase the number of Shares available under the Plan. The number of available Shares shall be subject to further adjustment as provided in section 12.3.

Section 3.2 Limits on Equity Awards .

The maximum number of Shares that may be awarded in any calendar year to an Eligible Individual in the form of Equity Awards shall be (i) in the case of an Eligible Individual who is also an Eligible Employee, 60,000 Shares and (ii) in all other cases, 25,000 Shares. The limits established under this section 3.2 are subject to adjustment as provided in section 12.3.

Section 3.3 Limits on Non-Equity Awards .

(a) In the case of a Non-Equity Award that is denominated in Shares, the maximum Non Equity Award that may be made to an Eligible Individual in any calendar year shall be (i) in the case of an Eligible Individual who is also an Eligible Employee, 60,000 Shares and (ii) in all other cases, 25,000 Shares.

(b) In the case of a Non-Equity Award that is not denominated in Shares (whether or not settled in Shares), the maximum Non-Equity Award that may be made to an Eligible Individual in any calendar year shall be (i) in the case of an individual who is also an Eligible Employee, Two Million Dollars ($2,000,000.00), and (ii) in all other cases, $-0-.

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Article IV

Administration

Section 4.1 Committee .

(a) Subject to section 4.1(b), the Plan shall be administered by the members of the Compensation Committee of Dime Community Bancshares, Inc. who are Disinterested Board Members. If the Committee consists of fewer than two Disinterested Board Members, then the Board shall appoint to the Committee such additional Disinterested Board Members as shall be necessary to provide for a Committee consisting of at least two Disinterested Board Members.

(b) The Board may, in its discretion, take any action and exercise any power, privilege or discretion conferred on the Committee under the Plan with the same force and effect under the Plan as if done or exercised by the Committee.

(c) No member of the Committee or the Board shall participate in any action taken by such body under the Plan if he or she is personally affected thereby, unless all members of the Committee or Board, as applicable, are similarly affected.

Section 4.2 Committee Action .

The Committee shall hold such meetings, and may make such administrative rules and regulations, as it may deem proper. A majority of the members of the Committee shall constitute a quorum, and the action of a majority of the members of the Committee present at a meeting at which a quorum is present, as well as actions taken pursuant to the unanimous written consent of all of the members of the Committee without holding a meeting, shall be deemed to be actions of the Committee. All actions of the Committee shall be final and conclusive and shall be binding upon the Company and all other interested parties. Any Person dealing with the Committee shall be fully protected in relying upon any written notice, instruction, direction or other communication signed by the Secretary of the Committee and one member of the Committee, by two members of the Committee or by a representative of the Committee authorized to sign the same in its behalf.

Section 4.3 Committee Responsibilities .

Subject to the terms and conditions of the Plan and such limitations as may be imposed by the Board, the Committee shall be responsible for the overall management and administration of the Plan and shall have such authority as shall be necessary or appropriate in order to carry out its responsibilities, including, without limitation, the authority:

(a) to interpret and construe the Plan, and to determine all questions that may arise under the Plan as to eligibility for participation in the Plan, the number of Shares and/or dollar amounts subject to the Awards, if any, to be granted, and the terms and conditions thereof;

(b) with the consent of the Recipient or Beneficiary, as applicable, amend or modify the terms of any outstanding Award or accelerate or defer the Vesting Date or Earliest Exercise Date thereof, but any such amendment or modification to an Award that constitutes a non-qualified deferred compensation plan within the meaning of section 409A of the Code and the regulations thereunder shall conform to the requirements of section 409A of the Code and the regulations thereunder;

(d) to take any other action not inconsistent with the provisions of the Plan that it may deem necessary or appropriate.

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All decisions, determinations and other actions of the Committee made or taken in accordance with the terms of the Plan shall be final and conclusive and binding upon all parties having an interest therein.

Section 4.4 Delegation .

(a) To the extent permitted under Delaware law, the Committee may delegate to an executive officer, or committee of executive officers, of the Company all or any portion of its power and discretion to grant Awards to any Eligible Employee who is not an executive officer and to establish and modify the terms and conditions of such Awards; provided, however, that such delegation shall impose a limit on the aggregate number of Shares which may be issued in settlement of Awards made under such delegated authority and shall establish, specifically or by formula or reference to an established index or other objective means, the Exercise Price for any Option or Stock Appreciation Right granted under such delegated authority. The Committee may revoke any delegation made at any time, but such revocation shall not affect actions previously taken in good faith in reliance on delegated authority.

(b) Subject to such limits as it may in its discretion impose, the Committee may delegate to any officer of the Company the power and discretion to establish administrative rules, regulations and procedures for the administration of the Plan and Awards made under the Plan that are of general application to all parties similarly situated and to perform administrative functions. In no event shall such delegated authority extend to the establishment of the material terms of Awards to executive officers, including but not limited to the application or enforcement of service-based or performance-based vesting conditions, the acceptance of Shares or withholding of Shares from exercised Awards in satisfaction of withholding taxes or payment of Exercise Price or any other matter required under applicable law, rule or regulation of any governmental authority, or of any self-regulatory body to which the Company chooses to be subject, to be determined by the Board, the independent members of the Board, or a committee consisting exclusively of independent members of the Board.

(c) For the purposes of this section 4.4, the Company's "executive officers" at any relevant time shall be the officers of the Company who, by virtue of their positions as officers, are required to file, or actually do file, beneficial ownership reports with the Securities and Exchange Commission pursuant to section 16 of the Exchange Act.

Article V

Options

Section 5.1 Grant of Options .

(a) Subject to the limitations of the Plan, the Committee may, in its discretion, grant to an Eligible Individual an Option to purchase Shares. An Option for an Eligible Employee must be designated as either an Incentive Stock Option or a Non-Qualified Stock Option and, if not designated as either, shall be a Non-Qualified Stock Option. An Option for an Eligible Individual who is not an Eligible Employee shall be a Non-Qualified Stock Option.

(b) Any Option granted under this section 5.1 shall be evidenced by a written Award Agreement which shall:

(i) specify the number of Shares covered by the Option determined in accordance with section 5.2;

(ii) specify the Exercise Price, determined in accordance with section 5.3, for the Shares subject to the Option;

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(iii) specify the Earliest Exercise Date and the Exercise Period determined in accordance with section 5.4;

(iv) specify the Vesting Date determined in accordance with section 5.5;

(v) set forth specifically or incorporate by reference the applicable provisions of the Plan; and

(vi) contain such other terms and conditions not inconsistent with the Plan as the Committee may, in its discretion, prescribe with respect to an Option granted to an Eligible Individual.

Section 5.2 Size of Option Award .

Subject to Article III and such limitations as the Board may from time to time impose, the number of Shares as to which an Eligible Individual may be granted Options shall be determined by the Committee, in its discretion.

Section 5.3 Exercise Price .

The price per Share at which an Option may be exercised shall be determined by the Committee, in its discretion, provided, however , that the Exercise Price shall not be less than the Fair Market Value of a Share on the date on which the Option is granted.

Section 5.4 Exercise Period; Earliest Exercise Date .

(a) Subject to section 5.4(b), the Exercise Period during which an Option may be exercised shall commence on the Earliest Exercise Date specified by the Committee in the Award Agreement (or, if no Earliest Exercise Date is specified in the Award Agreement, on the Vesting Date). It shall expire on the date specified in the Award Agreement (and in any event no later than the tenth anniversary of the date of grant) or, if no date is specified, on the earliest of:

(i) the date and time when the Recipient terminates Service for any reason other than the Recipient's death, Disability or discharge that is not a Termination for Cause; and

(ii) the last day of the three-month period that begins on the date and time when the Recipient terminates Service due to discharge that is not a Termination for Cause;

(iii) the last day of the one-year period that begins on the date and time when the Recipient terminates Service due to the Recipient's death or Disability; and

(iv) the last day of the ten-year period commencing on the date on which the Option was granted.

A Recipient's termination of Service prior to the Earliest Exercise Date of an Option shall, unless otherwise provided in the Award Agreement, result in the Option being canceled without consideration at the close of business on the last day of Service. An Option that remains unexercised at the close of business on the last day of the Exercise Period (including but not limited to an Option whose Earliest Exercise Date has not occurred) shall be canceled without consideration at the close of business on the last day of the Exercise Period.

(b) Unless otherwise determined by the Committee and specified in the Award Agreement:

(i) if a Change in Control occurs while an Option is outstanding and on or before its scheduled expiration date, then for purposes of exercising vested Options, the date on which the Exercise Period expires shall be extended to the earliest to occur of: (A) the tenth (10 ^th ) anniversary of the date the Option was granted; and (B) the third (3 ^rd ) anniversary of the date of the Change in Control; or any later date determined under section 5.4(b)(ii) or (iii);

(ii) if a Change in Control occurs while an Option is outstanding and on or before its Earliest Exercise Date, then solely for the purpose of measuring the Exercise Period (but not for

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purposes of vesting), the Recipient of the Option shall be deemed to continue in Service through the applicable Earliest Exercise Date, and the date on which the Exercise Period expires shall be extended to the earliest to occur of: (A) the tenth (10 ^th ) anniversary of the date the Option was granted; (B) the third (3 ^rd ) anniversary of the date of the Change in Control; and (C) ninety (90) days after the Earliest Exercise Date; or any later date determined under section 5.4(b)(i) or (iii);

(iii) if, on the date an Option is otherwise scheduled to expire, the holder of the Option may not then exercise the Option or sell Shares on a national securities exchange without violating applicable federal, state or local securities laws or the terms of a securities trading blackout (including but not limited to a blackout period established under the Company's securities trading policy or a contractual lockup in connection with a securities offering or other transaction involving the Company), the date on which the Exercise Period expires shall be extended to the earliest to occur of: (A) the tenth (10 ^th ) anniversary of the date the Option was granted; and (B) ninety (90) days after the last day of the securities trading blackout; or any later date determined under section 5.4(b)(i) or (ii); and

(iv) the Earliest Exercise Date (but not the Vesting Date) of any Option outstanding on the date of the Recipient's termination of Service due to death or Disability shall be accelerated to the date of such termination of Service provided that the Recipient of such Option remained in continuous Service during the period beginning on the date the Option is granted and ending on the date of termination of Service.

Section 5.5 Vesting Date .

(a) Subject to section 5.5(b), the Vesting Date for each Option granted under the Plan shall be the date determined by the Committee and specified in the Award Agreement. If no provision for vesting is made in the Award Agreement, the Vesting Date shall be:

(i) the first anniversary of the date of grant, as to 25% of the Shares subject to the Option as of the date of grant;

(ii) the second anniversary of the date of grant, as to an additional 25% of the Shares subject to the Option as of the date of grant;

(iii) the third anniversary of the date of grant, as to an additional 25% of the Shares subject to the Option as of the date of grant;

(iv) the fourth anniversary of the date of grant, as to any remaining balance of the Shares subject to the Option as of the date of grant;

(vi) in the event of the Recipient's termination of Service due to the Recipient's Retirement, Death or Disability, the date of termination of Service, as to a pro-rated portion of the unvested Options computed to correspond to the portion of such unvested Options for which expense has been accrued on the Company's financial statements.

Failure of a Recipient to remain in continuous Service during the period beginning on the date an Option is granted and ending on the Option's Vesting Date shall result in a cancellation of the Option without consideration at the earliest date and time at which the Recipient is not in continuous Service.

(b) Except to the extent that an applicable Award Agreement expressly provides otherwise: (i) each Option granted to an Eligible Individual who is not an Eligible Employee that is outstanding under the Plan on the date on which a Change in Control occurs shall be 100% vested and non-forfeitable as of the date of the Change in Control; and (ii) each Option that is outstanding to an Eligible Employee on the date such Eligible Employee experiences a Qualifying Termination shall be 100% vested and nonforfeitable on the date of such Qualifying Termination.

Section 5.6 Additional Restrictions on Incentive Stock Options .

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An Option granted to an Eligible Employee designated by the Committee to be an Incentive Stock Option shall be subject to the following provisions:

(a) If, for any calendar year, the sum of (i) plus (ii) exceeds $100,000, where (i) equals the Fair Market Value (determined as of the date of the grant) of Shares subject to an Option intended to be an Incentive Stock Option which first become available for purchase during such calendar year, and (ii) equals the Fair Market Value (determined as of the date of grant) of Shares subject to any other options intended to be Incentive Stock Options and previously granted to the same Eligible Employee which first become exercisable in such calendar year, then that number of Shares optioned which causes the sum of (i) and (ii) to exceed $100,000 shall be deemed to be Shares optioned pursuant to a Non-Qualified Stock Option or Non-Qualified Stock Options, with the same terms as the Option or Options intended to be an Incentive Stock Option;

(b) The Exercise Price of an Incentive Stock Option granted to an Eligible Employee who, at the time the Option is granted, owns Shares comprising more than 10% of the total combined voting power of all classes of stock of the Company shall not be less than 110% of the Fair Market Value of a Share, and if an Option designated as an Incentive Stock Option shall be granted at an Exercise Price that does not satisfy this requirement, the designated Exercise Price shall be observed and the Option shall be treated as a Non-Qualified Stock Option;

(c) The Exercise Period of an Incentive Stock Option granted to an Eligible Employee who, at the time the Option is granted, owns Shares comprising more than 10% of the total combined voting power of all classes of stock of the Company, shall expire no later than the fifth anniversary of the date on which the Option was granted, and if an Option designated as an Incentive Stock Option shall be granted for an Exercise Period that does not satisfy this requirement, the designated Exercise Period shall be observed and the Option shall be treated as a Non-Qualified Stock Option;

(d) An Incentive Stock Option that is exercised during its designated Exercise Period but more than:

(i) three (3) months after the termination of employment with the Company and all of its Parents and Subsidiaries (other than on account of disability within the meaning of section 22(e)(3) of the Code or death of the Eligible Employee to whom it was granted); or

(ii) one (1) year after such individual's termination of employment with the Company, a parent or a subsidiary due to disability (within the meaning of section 22(e)(3) of the Code) or death;

may be exercised in accordance with the terms of the Option but shall at the time of exercise be treated as a Non-Qualified Stock Option; and

(e) Except with the prior written approval of the Committee, no individual shall dispose of Shares acquired pursuant to the exercise of an Incentive Stock Option until after the later of (i) the second anniversary of the date on which the Incentive Stock Option was granted, or (ii) the first anniversary of the date on which the Shares were acquired.

Section 5.7 Method of Exercise .

(a) Subject to the limitations of the Plan and the Award Agreement, an Option Holder may, at any time after the Earliest Exercise Date and during the Exercise Period, exercise his or her right to purchase all or any part of the Shares to which the Option relates; provided, however, that the minimum number of Shares which may be purchased at any time shall be 100, or, if less, the total number of Shares relating to the Option which remain unpurchased. An Option Holder shall exercise an Option to purchase Shares by:

(i) givingnotice, in such form and manner as the Committee may prescribe, of his intent to exercise the Option;

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(ii) delivering full payment, consistent with section 5.7(b), for the Shares as to which the Option is to be exercised; and

(iii) satisfying such other conditions as may be prescribed in the Award Agreement.

(b) The Exercise Price of Shares to be purchased upon exercise of any Option shall be paid in full:

(i) in cash (by certified or bank check or such other instrument as the Company may accept); or

(ii) if and to the extent not prohibited by the Committee, either (A) in the form of Shares already owned by the Option holder as of the exercise date and having an aggregate Fair Market Value on the date the Option is exercised equal to the aggregate Exercise Price to be paid or (B) by withholding from delivery upon exercise of the Option that number of Shares having an aggregate Fair Market Value on the date the Option is exercised equal to the aggregate Exercise Price to be paid; or

(iii) such other method of payment as the Committee may permit; or

(iv) by a combination thereof.

Unless prohibited by the Committee, payment for any Shares to be purchased upon exercise of an Option may also be made by delivering a properly executed exercise notice to the Company, together with a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds to pay the purchase price and applicable tax withholding amounts (if any), in which event the Shares acquired shall be delivered to the broker promptly following receipt of payment.

(c) When the requirements of section 5.7(a) and (b) have been satisfied, the Committee shall take such action as is necessary to cause the issuance of a stock certificate evidencing the Option holder's ownership of such Shares. The Person exercising the Option shall have no right to vote or to receive dividends, nor have any other rights with respect to the Shares, prior to the date as of which such Shares are transferred to such Person on the stock transfer records of the Company, and no adjustments shall be made for any dividends or other rights for which the record date is prior to the date as of which such transfer is effected, except as may be required under section 8.3.

Section 5.8 Limitations on Options

(a) An Option by its terms shall not be transferable by any Option Holder, except that (i) a Recipient may transfer a Non-Qualified Stock Option to the Recipient's Family Members during his lifetime; and (b) any Option Holder may transfer Options remaining unexercised at his death to a Beneficiary or by will or by the laws of descent and distribution. Any permitted transfer to Family Members shall be effected by written notice to the Company given in such form and manner as the Committee may prescribe and shall be recognized only if such notice is received by the Company prior to the death of the person giving it. Thereafter, the Permitted Transferee shall have, with respect to such Option, all of the rights, privileges and obligations which would attach thereunder to the Recipient except the right to transfer the Option to Family Members. If a privilege of the Option depends on the life, Service, employment or other status of the transferor, such privilege of the Option for the transferee shall continue to depend on the life, Service, employment or other status of the transferor. The Committee shall have full and exclusive authority to interpret and apply the provisions of this Plan to transferees to the extent not specifically described herein.

(b) The Company's obligation to deliver Shares with respect to an Option shall, if the Committee so requests, be conditioned upon the receipt of a representation as to the investment intention of the Option holder to whom such Shares are to be delivered, in such form as the Committee shall determine to be necessary or advisable to comply with the provisions of applicable federal, state or local law. It may be provided that any such representation shall become inoperative upon a registration of the Shares or upon the occurrence of any other event eliminating the necessity of such representation. The Company shall not be required to deliver any Shares under the Plan prior to (i) the admission of such Shares to listing on any stock exchange on which Shares may then be listed, or (ii) the completion of such registration or other qualification under any state or federal law, rule or regulation as the Committee shall determine to be necessary or advisable.

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Article VI

Stock Appreciation Rights

Section 6.1 Grant of Stock Appreciation Rights .

(a) Subject to the limitations of the Plan, the Committee may, in its discretion, grant to an Eligible Individual a Stock Appreciation Right. A Stock Appreciation Right must be designated as either a tandem Stock Appreciation Right or a stand-alone Stock Appreciation Right and, if not so designated, shall be deemed to be a stand-alone Stock Appreciation Right. A tandem Stock Appreciation Right may only be granted at the same time as the Option to which it relates.

(b) Any Stock Appreciation Right granted under this section 6.1 shall be evidenced by a written Award Agreement which shall:

(i) in the case of a tandem Stock Appreciation Right, relate to the same number of Shares; be settled only in Shares; have the same Exercise Price, Exercise Period, Vesting Date and other terms and conditions as the Option to which it relates and provide that the exercise of the related Option shall be deemed to cancel the Stock Appreciation Right for a like number of Shares and that the exercise of the Stock Appreciation Right shall be deemed to cancel the related Option for a like number of Shares;

(ii) in the case of a stand-alone Stock Appreciation Right:

(A) specify the number of Shares covered by the Stock Appreciation Right;

(B) specify the Exercise Price, determined in accordance with section 7.3;

(D) specify the Vesting Date;

(E) specify whether the Stock Appreciation will be settled in cash or in Shares;

(F) set forth specifically or incorporate by reference the applicable provisions of the Plan; and

(G) contain such other terms and conditions not inconsistent with the Plan as the Committee may, in its discretion, prescribe with respect to a Stock Appreciation Right granted to an Eligible Individual.

Section 6.2 Size of Stock Appreciation Right .

Subject to Article III and such limitations as the Board may from time to time impose, the number of Shares as to which an Eligible Individual may be granted stand-alone Stock Appreciation Rights shall be determined by the Committee, in its discretion; provided, however, that a tandem Stock Appreciation Right shall be granted for a number of Shares no greater than the number of Shares subject to the related Option.

Section 6.3 Exercise Price .

The price per Share at which a stand-alone Stock Appreciation Right may be exercised shall be determined by the Committee, in its discretion, provided, however , that the Exercise Price shall not be less than the Fair Market Value of a Share on the date on which the Option is granted.

Section 6.4 Exercise Period .

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(a) Subject to section 6.4(b), the Exercise Period during which a stand-alone Stock Appreciation Right may be exercised shall commence on the Vesting Date and shall expire on the date specified in the Award Agreement (and in any event no later than the tenth anniversary of the date of grant) or, if no date is specified, on the earliest of:

(i) the date and time when the Recipient terminates Service for any reason; and

(ii) the last day of the ten-year period commencing on the date on which the Option was granted.

A Recipient's termination of Service prior to the Vesting Date of a Stock Appreciation Right shall, unless otherwise provided in the Award Agreement, result in the Stock Appreciation Right being canceled without consideration at the close of business on the last day of Service. A Stock Appreciation Right that is vested and remains unexercised at the close of business on the last day of the Exercise Period shall be deemed automatically exercised on such date.

Section 6.5 Vesting Date .

(a) Subject to section 6.5(b), the Vesting Date for each stand-alone Stock Appreciation Right granted under the Plan shall be the date determined by the Committee and specified in the Award Agreement or, if no provision for vesting is made in the Award Agreement, the Vesting Date shall be:

(i) the first anniversary of the date of grant, as to 25% of the Shares subject to the Stock Appreciation Right as of the date of grant;

(ii) the second anniversary of the date of grant, as to an additional 25% of the Shares subject to the Stock Appreciation Right as of the date of grant;

(iii) the third anniversary of the date of grant, as to an additional 25% of the Shares subject to the Stock Appreciation Right as of the date of grant;

(iv) the fourth anniversary of the date of grant, as to any remaining balance of the Shares subject to the Stock Appreciation Right as of the date of grant;

(v) in the event of the Recipient's termination of Service due to the Recipient's Retirement, Death or Disability, the date of termination of Service, as to a pro-rated portion of the unvested Stock Appreciation Right computed to correspond to the portion of such unvested Stock Appreciation Right for which expense has been accrued on the Company's financial statements.

Failure of a Recipient to remain in continuous Service during the period beginning on the date a Stock Appreciation Right is granted and ending on the Stock Appreciation Right's Vesting Date shall result in a cancellation of the Stock Appreciation Right without consideration at the earliest date and time at which the Recipient is not in continuous Service.

(b) Except to the extent that an applicable Award Agreement expressly provides otherwise: (i) each Stock Appreciation Right granted to an Eligible Individual who is not an Eligible Employee that is outstanding under the Plan on the date on which a Change in Control occurs shall be 100% vested and non-forfeitable as of the date of the Change in Control; and (ii) each Stock Appreciation Right that is outstanding to an Eligible Employee on the date such Eligible Employee experiences a Qualifying Termination shall be 100% vested and nonforfeitable on the date of such Qualifying Termination.

Section 6.6 Method of Exercise .

(a) Subject to the limitations of the Plan and the Award Agreement, a Recipient may, at any time after the Vesting Date and during the Exercise Period, exercise his or her Stock Appreciation Right as to all or any part of the Shares to which the Stock Appreciation Right relates; provided, however, that the minimum number of Shares as to which

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a Stock Appreciation Right may be exercised shall be 100, or, if less, the total number of Shares relating to the Stock Appreciation Right which remain unexercised. A Recipient shall exercise a Stock Appreciation Right by:

(i) giving written notice, in such form and manner as the Committee may prescribe, of his intent to exercise the Stock Appreciation Right; and

(ii) satisfying such other conditions as may be prescribed in the Award Agreement.

Any stand-alone Stock Appreciation Rights that are vested and remain unexercised at the expiration date of the relevant Exercise Period shall be deemed automatically exercised on such date without the requirement of notice or any other action on the part of the Recipient.

(b) When the requirements of section 6.6(a) have been satisfied, the Committee shall take such action as is necessary to cause the remittance to the Recipient (or, in the event of his death, his Beneficiary) of a payment in an amount per Share equal to the excess (if any) of (i) the Fair Market Value of a Share on the date of exercise over (ii) the Exercise Price per Share, or, if applicable Shares with an aggregate Fair Market Value of a like amount.

Article VII

Restricted Stock Awards

Section 7.1 In General .

(a) Each Restricted Stock Award shall be evidenced by an Award Agreement issued by the Committee to the Eligible Individual, which Award Agreement shall:

(i) specify the number of Shares or Stock Units covered by the Restricted Stock Award;

(ii) specify the amount (if any) which the Recipient shall be required to pay to the Company in consideration for the issuance of such Shares (which shall in no event be less than the minimum amount required for such Shares to be validly issued, fully paid and nonassessable under applicable law);

(iii) specify whether the Restricted Stock Award is a Performance-Based Award and, if it is, the applicable Performance Goal or Performance Goals;

(iv) specify the date of grant of the Restricted Stock Award; and

(v) specify the Vesting Date for the Restricted Stock Award;

(vi) if the restricted is denominated in Stock Units, specify whether settlement of the Award shall be in cash or Shares and the settlement date, which may but need not be the Vesting Date.

and contain such other terms and conditions not inconsistent with the Plan as the Committee may, in its discretion, prescribe.

(b) All Restricted Stock Awards shall be in the form of issued and outstanding Shares or Stock Units. Restricted Stock Awards in the form of issued and outstanding Shares shall be in Shares that are either:

(i) registered in the name of the Committee or other trustee or custodian for the benefit of the Recipient and held by the Committee pending the vesting or forfeiture of the Restricted Stock Award;

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(ii) registered in the name of Recipient and held by the Committee, together with a stock power executed by the Recipient in favor of the Committee, pending the vesting or forfeiture of the Restricted Stock Award; or

(iii) registered in the name of and delivered to the Recipient.

In any event, the certificates evidencing the Shares shall at all times prior to the applicable Vesting date bear the following legend:

The Common Stock evidenced hereby is subject to the terms of an Award Agreement between Dime Community Bancshares, Inc. and [Name of Recipient] dated [Date] made pursuant to the terms of the Dime Community Bancshares, Inc. 2013 Equity and Incentive Plan, copies of which are on file at the executive offices of Dime Community Bancshares, Inc., and may not be sold, encumbered, hypothecated or otherwise transferred except in accordance with the terms of such Plan and Agreement.

or such other restrictive legend as the Committee, in its discretion, may specify.

(c) An Award by its terms shall not be transferable by the Eligible Individual other than by will or by the laws of descent and distribution, and the Shares granted pursuant to such Award shall be distributable, during the lifetime of the Recipient, only to the Recipient.

(d) An Award that is denominated in Stock Units shall be settled as soon as practicable, and in any event, within 2-1/2 months, after its Vesting Date unless a later settlement date is specified in the Award Agreement.

Section 7.2 Vesting Date .

(a) The Vesting Date for each Restricted Stock Award shall be determined by the Committee and specified in the Award Agreement and, if no date is specified in the Award Agreement, shall be the first anniversary of the date of grant as to 25% of the Shares; the second anniversary of the date of grant as to an additional 25% of the Shares; the third anniversary of the date of grant as to an additional 25% of the Shares; and the fourth anniversary of the date of grant as to the remaining balance of the Shares. Failure of a Recipient to remain in continuous Service during the period beginning on the date an Award is granted and ending on the Award's Vesting Date shall result in (i) in the case of an Award that is not in the form of outstanding Shares, a cancellation of the Award without consideration at the earliest date and time at which the Recipient is not in Service; and (ii) in the case of an Award that is in the form of issued and outstanding Shares for which the Recipient has paid monetary consideration, a return of the Shares forfeited to the Company, and the Committee shall cause the Company to pay to the Recipient, an amount equal to the lesser of (A) the amount of monetary consideration paid for the Shares that are forfeited and (B) the Fair Market Value of the Shares forfeited determined on the date of the forfeiture.

(b) Except to the extent that an applicable Award Agreement expressly provides otherwise, in the event of the Recipient's termination of Service due to the Recipient's Retirement, Death or Disability, an outstanding Restricted Stock Award will vest, as of the date of termination of Service, as to a pro-rated portion of the unvested Restricted Stock Award computed to correspond to the portion of which unvested Options for which expense has been accrued on the Company's financial statements. Except to the extent that an applicable Award Agreement expressly provides otherwise: (i) each Restricted Stock Award granted to an Eligible Individual who is not an Eligible Employee that is outstanding under the Plan on the date on which a Change in Control occurs shall be 100% vested and non-forfeitable as of the date of the Change in Control; and (ii) each Restricted Stock Award that is outstanding to an Eligible Employee on the date such Eligible Employee experiences a Qualifying Termination shall be 100% vested and nonforfeitable on the date of such Qualifying Termination.

Article VIII

Other Awards

Section 8.1 Other Equity Awards .

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Subject to the terms of the Plan and such other limits and the Board may impose, the Committee may award any other type of Equity Award that is both denominated and settled in Shares and establish the terms and conditions thereof, which shall be set forth in an Award Agreement. Any Award under this section 8.1 that is the functional equivalent of an Option, Stock Appreciation Right or Restricted Stock Award shall conform to the requirements of Article V, VI or VII, as applicable.

Section 8.2 Other Non-Equity Awards .

Subject to the terms of the Plan and such other limits as the Board may impose, the Committee may award any type of Non-Equity Award that is either denominated or settled in a medium other than Shares and establish the terms and conditions thereof, which shall be set forth in an Award Agreement; provided, however, that any Non-Equity Award other than a Stock Appreciation Right shall be a Performance-Based Award, and any Award under this section 8.2 that is the functional equivalent of an Option, Stock Appreciation Right or Restricted Stock Award shall conform to the requirements of Article V, VI or VII, as applicable.

Article IX

Performance-Based Awards

Section 9.1 Performance-Based Awards; Performance Goals .

The Committee may designate any Award made under the Plan as a Performance-Based Award. At the time it grants a Performance-Based Award, the Committee shall establish one or more Performance Goals, the attainment of which shall be a condition of the Recipient's right to retain or receive payment in respect of the Award. The Performance Goals shall be selected from among the following:

(a)	Earnings per common share
(b)	Net income
(c)	Return on average equity
(d)	Return on average assets
(e)	Earnings
(f)	Stock price
(g)	Strategic business objectives, consisting of one or more objectives based upon satisfying specified cost targets, business expansion goals, and goals relating to acquisitions or divestitures
(h)	Operating income
(i)	Operating efficiency ratio
(j)	Net interest spread
(k)	Loan production volumes
(l)	Non-performing loans
(m)	Cash flow
(n)	Total shareholder return
(o)	Net revenue
(p)	Gross revenue
(q)	Operating expense
(r)	Fee income
(s)	Deposit growth
(t)	Capital levels
(u)	Net interest margin
(v)	Net charge-offs
(w)	Non-performing assets

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(x)	Except for Performance-Based Awards intended to comply with section 162(m) of the Code, any other criteria established by the Committee
(y)	Any combination of (a) through (w) above

Performance Goals may be established on the basis of reported earnings, core earnings or cash earnings, tangible, intangible or risk-weighted assets or capital levels, and consolidated results or individual business units and may, in the discretion of the Committee, include or exclude extraordinary items and/or the results of discontinued operations. Each Performance Goal may be expressed on an absolute and/or relative basis, may be based on or otherwise employ comparisons based on internal targets, the past performance of the Company (or individual business units) and/or the past or current performance of other companies. Unless otherwise provided at the time an Award is made or as otherwise permitted under section 162(m) of the Code, any Performance Goal that is determined or expressed on the basis of Generally Accepted Accounting Principles shall be determined or expressed on the basis of Generally Accepted Accounting Principles applied as of the date the Award is made in the preparation of the Company's audited financial statements.

Section 9.2 Performance Measurement Period .

At the time it grants a Performance-Based Award, the Committee shall establish a Performance Measurement Period for each Performance Goal. The Performance Measurement Period shall be the period over which the Performance Goal is measured and its attainment is determined. In no event shall the Performance Measurement Period begin earlier than 90 days prior to the date on which the Performance-Based Award is made or extend for a period of less than twelve (12) months.

Section 9.3 Certification and Payment or Settlement .

(a) As promptly as practicable following the end of each Performance Measurement Period, the Committee shall determine, on the basis of such evidence as it deems appropriate, whether the Performance Goals for such Performance Measurement Period have been attained and, if they have been attained, shall certify such fact in writing. Payment or settlement shall be made as promptly as practicable, and in any event within 2-1//2 months, after the end of the Performance Measurement Period. Unless otherwise specified in the Plan or the Award Agreement, the recipient must be in continuous Service through the first day after the end of the Performance Period in order to be vested in the Award.

(b) If the Performance Goals for a Performance-Based Award have been attained and certified, the Committee shall either:

(i) if the relevant Vesting Date has occurred, cause the Award to be paid or otherwise settled in accordance with its terms; or

(ii) if the relevant Vesting Date has not occurred, cause the unvested Award to be continued pending vesting or forfeiture in accordance with its terms.

To the extent that any one or more of the relevant Performance Goals have not been attained, the Performance-Based Award shall be forfeited without consideration (other than a refund to the Recipient or his estate of an amount equal to the lesser of the amount (if any) paid by the Recipient for any Shares being forfeited upon their issuance and the Fair Market Value of such Shares on the date of forfeiture).

(c) If the Performance Goals for any Performance Measurement Period shall have been affected by special factors (including material changes in accounting policies or practices, material acquisitions or dispositions of property, or other unusual items) that in the Committee's judgment should or should not be taken into account, in whole or in part, in the equitable administration of the Plan, the Committee shall, for any purpose of the Plan, adjust such Performance Goals and make payments accordingly under the Plan; provided, however, that, to the extent required to comply with the requirements of section 162(m) of the Code, any adjustments made in accordance with or for the purposes of this section shall be disregarded for purposes of calculating the Performance Goals for a Performance-Based Award to a Covered Employee if and to the extent that such adjustments would have the effect of increasing the amount of the Award to such Covered Employee.

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(d) If provided by the Committee when a Performance-Based Award is granted, to the extent that the relevant Performance Goals are achieved prior to the end of the Performance Measurement Period and certified by the Committee, a vested Performance-Based Award may be paid or otherwise settled at any time following such certification; provided, however, that, early payment to a recipient who is a Covered Employee shall conform to the requirements of section 162(m) of the Code.

Section 9.4 Accelerated Vesting and Payment.

Unless otherwise determined by the Committee and specified in the Award Agreement for a Performance-Based Award:

(a) in the event of the Recipient's termination of Service due to the Recipient's death or Disability, an outstanding Award will vest, as of the date of termination of Service, as to a pro-rated portion of the unvested Award computed to correspond to the portion of the Award for which expense has been accrued on the Company's financial statements; without adjustment up or down for actual achievement relative to the relevant Performance Goals; and

(b) in the event of the Recipient's termination of Service due to the Recipient's Retirement, an outstanding Award will vest, as of the date of termination of Service, as to a pro-rated portion of the unvested Award computed to correspond to the portion of the Award for which expense has been accrued on the Company's financial statements or if less the pro-rated portion of the full Award (based on the portion of the Performance Measurement Period that has elapsed prior to retirement) that is earned based on actual achievement of the Performance Goals and will in any event be paid or settled only after the extent of achievement of the Performance Goals has been determined and certified; and

(b) each Award that is outstanding to an Eligible Individual on the date a Change in Control occurs shall vest in full based on (i) the level of actual performance relative to the established Performance Goals as of the date of the Change in Control; or (ii) if actual performance cannot be determined, an assumption that actual performance is at the target level for each Performance Goal; and

(c) unless otherwise specifically provided to the contrary in this section 9.4, each Award that vests in accordance with this section 9.4 shall be paid or settled, as applicable, as of the accelerated vesting date; provided however, that in the case of an Award that is a non-qualified deferred compensation plan for purposes of section 409A of the Code and the regulations thereunder, the payment acceleration is a permissible acceleration under section 409A of the Code and the regulations thereunder.

Article X

Other Provisions

Section 10.1 Dividends and Dividend Equivalents .

(a) Unless the Committee determines otherwise with respect to any Award (other than a Performance-Based Award) that is made in the form of issued and outstanding Shares, and specifies such determination in the relevant Award Agreement, any cash dividends or distributions declared and paid with respect to Shares subject to the Award shall be paid over to the Recipient if, as and when such dividends or distributions are paid to holders of record of Shares, and any other dividend or distribution shall be held and accumulated pending vesting.

(b) The Committee may award dividend equivalents with respect to any Award that is denominated in Stock Units. In such event, unless the Committee determines otherwise and specifies such determination in the relevant Award Agreement, dividend equivalents shall be paid as follows:

(i) in the case of a Performance-Based Award, dividend equivalents with respect to dividends having a record date that is prior to the date on which applicable Performance Goals are

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satisfied shall be accumulated and held, pending certification of attainment of the relevant Performance Goals and shall be paid only if, when, as and to the extent of attainment of the Performance Goals; and

(ii) dividend equivalents with respect to dividends having a record date that is prior to the date on which the Stock Units are settled shall be accumulated and paid if, as and when the related Stock Units are settled.

Section 10.2 Voting Rights .

Unless the Committee determines otherwise with respect to any Award that is in the form of issued and outstanding Shares and specifies such determination in the relevant Award Agreement, voting rights appurtenant to the Shares subject to the Award, shall be exercised consistent with the Board's recommendation to shareholders in each matter for which a recommendation is made and by the Committee in its discretion in all other cases.

Section 10.3 Tender Offers .

Each Recipient to whom an Award in the form of issued and outstanding Shares is made is outstanding shall have the right to respond, or to direct the response, with respect to the related Shares, to any tender offer, exchange offer or other offer made to the holders of Shares. Such a direction for any such Shares shall be given by proxy or ballot (if the Recipient is the beneficial owner of the Shares for voting purposes) or by completing and filing, with such person who shall be independent of the Company as the Committee shall designate in its discretion (if the Recipient is not such a beneficial owner), a written direction in the form and manner prescribed by the Committee. If no such direction is given, then the Shares shall not be tendered.

Section 10.4 Designation of Beneficiary .

An Eligible Individual may designate a Beneficiary to exercise any right or receive the proceeds of any Award to the Eligible Individual that may be exercisable or payable, as applicable upon or following the death of the Eligible Individual. In the event that the Beneficiary designated by an Eligible Individual dies prior to the Eligible Individual, or in the event that no Beneficiary has been designated, any such rights or proceeds shall convey to the executor or administrator of the Eligible Individual's estate, or if no such executor or administrator is appointed within such time as the Committee, in its sole discretion, shall deem reasonable, to such one or more of the spouse and descendants and blood relatives of such deceased person as the Committee may select.

Section 10.5 Conditions to Issuance of Shares .

The Company's obligation to deliver Shares with respect to an Award shall, if the Committee so requests, be conditioned upon the receipt of a representation as to the investment intention of the Eligible Individual or Beneficiary to whom such Shares are to be delivered, in such form as the Committee shall determine to be necessary or advisable to comply with the provisions of applicable federal, state or local law. It may be provided that any such representation shall become inoperative upon a registration of the Shares or upon the occurrence of any other event eliminating the necessity of such representation. The Company shall not be required to deliver any Shares under the Plan prior to (i) the admission of such Shares to listing on any stock exchange on which Shares may then be listed, or (ii) the completion of such registration or other qualification under any state or federal law, rule or regulation as the Committee shall determine to be necessary or advisable.

Article XI

Special Provisions

Section 11.1 Tax Withholding Rights .

The Company shall have the right to deduct from all amounts paid by the Company in cash with respect to an Award any taxes required by law to be withheld with respect to such Award. Where any Person is entitled to receive

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Shares, the Company shall have the right to require such Person to pay to the Company the amount of any tax which the Company is required to withhold with respect to such Shares, or, in lieu thereof, to retain, or to sell without notice, a sufficient number of Shares to cover the minimum amount required to be withheld. To the extent determined by the Committee and specified in the Award Agreement, a Recipient shall have the right to direct the Company to satisfy the minimum required federal, state and local tax withholding by reducing the number of Shares subject to the Award by a number equal to the quotient of (a) the total minimum amount of required tax withholding divided by (b) (i) in the case of an Option or Stock Appreciation Right, the excess of the Fair Market Value of a Share on the Exercise Date over the Exercise Price per Share and (ii) in all other cases, the Fair Market Value of a Share on the relevant date.

Section 11.2 Code Section 83(b) Elections .

If and to the extent permitted by the Committee and specified in an Award Agreement for an Award other than an Incentive Stock Option or a Performance-Based Restricted Stock Award, a Recipient may be permitted or required to make an election under section 83(b) of the Code to include the compensation related thereto in income for federal income tax purposes at the time of issuance of the Shares to such Recipient instead of at a subsequent Vesting Date. In such event, the Shares issued prior to their Vesting Date shall be issued in certificated form only, and the certificates therefore shall bear the legend set forth in section 7.1(b) or such other restrictive legend as the Committee, in its discretion, may specify. In the event of the Recipient's termination of Service prior to the relevant Vesting Date or forfeiture of the Shares for any other reason, the Recipient shall be required to return all forfeited Shares to the Company without consideration therefore (other than a refund to the Recipient or his estate of an amount equal to the lesser of the amount paid by the Recipient for the Shares upon their issuance or the Fair Market Value of the Shares on the date of forfeiture).

Section 11.3 409A Compliance .

To the extent that any Award under the Plan (other than an Option or Stock Appreciation Rights) is not paid or settled no later than 2-1/2 months after the end of the calendar year in which the Recipient's right to such payment or settlement becomes vested but is paid or settled upon termination of service, payment or settlement in the case of a Recipient who is a "specified employee" shall, to the extent required for compliance with section 409A of the Code, be deferred until and paid or settled on the first day of the sixth month to begin after "separation from service" The terms "specified employee" and "separation from service" shall have the meanings assigned to them under section 409A of the Code and the regulations thereunder. In no event shall any provision of the Plan or an Award Agreement applicable to an Award that is non-qualified deferred compensation plan for purposes of section 409A of the Code and the regulations thereunder be interpreted or applied to cause an impermissible acceleration of the payment date of an Award, when in the event of a Change in Control, the early achievement of performance goals or otherwise. Each Award under the Plan that is a non-qualified deferred compensation plan for purposes of section 409A of the Code shall be administered in such manner as shall be necessary to comply with the applicable provisions of section 409A of the Code and the regulations thereunder.

Section 11.4 Claw back and Deferral Policies .

The exercise, payment and/or settlement of any Award under the Plan shall be subject to the terms of any claw back, mandatory deferral or other policy of the Company, however denominated, established and in effect at the time of such exercise, payment or settlement. The acceptance of an Award shall constitute the Recipient's agreement to the terms of all such policies.

Section 11.5 Repricing Prohibited . In no event shall the Plan or any Award made under the Plan be amended, nor shall any other action be taken or omitted (whether by cancellation and re-issuance of Awards, exchange of Awards, or cash payments in settlement of Awards or otherwise) that has the effect of reducing the Exercise Price of any Option or Stock Appreciation Right below the Exercise Price established when the Option or Stock Appreciation Right was granted unless such amendment or other action shall have been approved by the Company's shareholders. For this purpose, a change in the Exercise Price of an Option or Stock Appreciation pursuant to section 12.3 shall not be regarded as a reduction in Exercise Price.

Section 11.6 Consideration for Issuance of Shares .

Notwithstanding anything in the Plan to the contrary, if any Award made hereunder contemplates or provides for the issuance of Shares in consideration of, and in advance of, the performance of future services, the consideration for the issuance of such Shares shall be deemed to have been paid and received in the form of services already rendered having an

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aggregate value equal to the aggregate par value of such Shares and the performance of future services shall be deemed to be a condition of the Participant's right to retain the Shares so issued.

Article XII

Amendment and Termination

Section 12.1 Termination .

The Board may suspend or terminate the Plan in whole or in part at any time prior to the tenth anniversary of the Effective Date by giving written notice of such suspension or termination to the Committee. Unless sooner terminated, the Plan shall terminate automatically on the day preceding the tenth anniversary of the Effective Date. In the event of any suspension or termination of the Plan, all Awards theretofore granted under the Plan that are outstanding on the date of such suspension or termination of the Plan shall remain outstanding and exercisable for the period and on the terms and conditions set forth in the Award Agreements.

Section 12.2 Amendment .

The Board may amend or revise the Plan in whole or in part at any time; provided, however, that, to the extent required to comply with section 162(m) of the Code or the corporate governance standards imposed under the listing requirements imposed by any national securities exchange on which the Company lists or seeks to list Shares, no such amendment or revision shall be effective if it amends a material term of the Plan unless approved by the holders of a majority of the votes cast on a proposal to approve such amendment or revision. No amendment to the Plan shall adversely affect the rights of any individual under an Award outstanding at the time the amendment is adopted.

Section 12.3 Adjustments in the Event of Business Reorganization .

(a) In the event any recapitalization, forward or reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase, or exchange of Shares or other securities, stock dividend or other special and nonrecurring dividend or distribution (whether in the form of cash, securities or other property), liquidation, dissolution, or other similar corporate transaction or event, affects the Shares such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of Recipients under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and kind of securities deemed to be available thereafter for grants or settlements of Awards in the aggregate to all Eligible Individuals and individually to any one Eligible Individual, (ii) the number and kind of securities that may be delivered or deliverable in respect of outstanding Awards, and (iii) the Exercise Price of Options and Stock Appreciation Rights. In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards (including, without limitation, cancellation of Options, Stock Appreciation Rights and Restricted Stock Awards in exchange for the in-the-money value, if any, of the vested portion thereof, or substitution of Options, Stock Appreciation Rights or Restricted Stock Awards using stock of a successor or other entity) in recognition of unusual or nonrecurring events (including, without limitation, events described in the preceding sentence) affecting the Company or any Parent or Subsidiary or the financial statements of the Company or any Parent or Subsidiary, or in response to changes in applicable laws, regulations, or accounting principles; provided, however , that any such adjustment to an Option, Stock Appreciation Right or Performance-Based Award granted to a Recipient who is a Covered Employee shall conform to the requirements of section 162(m) of the Code and the regulations thereunder then in effect, to the extent such requirements are intended to apply under the circumstances.

(b) In the event of any merger, consolidation, or other business reorganization (including but not limited to a Change in Control) in which the Company is not the surviving entity, any Equity Award and any Non-Equity Award that is denominated in or to be settled in Shares that remains outstanding shall be converted into an Award with respect to options to purchase voting common equity securities of the business entity which survives such merger, consolidation or other business reorganization or stock appreciation rights having substantially the same terms and conditions as the outstanding Awards under this Plan and reflecting the same economic benefit, all as determined by the Committee prior to the consummation of such merger; provided, however, that the Committee may, at any time prior to the consummation of such merger, consolidation or other business reorganization, direct that all, but not less than all, such outstanding Awards be canceled as of the effective date of such merger, consolidation or other business combination in exchange for a cash

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payment reflecting the economic value of the Award determined in such manner as may be necessary to reflect the requirements of section 409A of the Code and the regulations thereunder.

Article XIII

Miscellaneous

Section 13.1 Status as an Employee Benefit Plan .

This Plan is not intended to satisfy the requirements for qualification under section 401(a) of the Code or to satisfy the definitional requirements for an "employee benefit plan" under section 3(3) of the Employee Retirement Income Security Act of 1974, as amended. It is intended to be a non-qualified incentive compensation program that is exempt from the regulatory requirements of the Employee Retirement Income Security Act of 1974, as amended. The Plan shall be construed and administered so as to effectuate this intent.

Section 13.2 No Right to Continued Employment .

Neither the establishment of the Plan nor any provisions of the Plan nor any action of the Board or the Committee with respect to the Plan shall be held or construed to confer upon any Eligible Individual any right to a continuation of his or her position as a director or employee of the Company. The Employers reserve the right to remove any participating member of the Board or dismiss any Eligible Employee or otherwise deal with any Eligible Individual to the same extent as though the Plan had not been adopted.

Section 13.3 Construction of Language .

Whenever appropriate in the Plan, words used in the singular may be read in the plural, words used in the plural may be read in the singular, and words importing the masculine gender may be read as referring equally to the feminine or the neuter. Any reference to an Article or section number shall refer to an Article or section of this Plan unless otherwise indicated.

Section 13.4 Governing Law .

The Plan shall be construed, administered and enforced according to the laws of the State of New York without giving effect to the conflict of laws principles thereof, except to the extent that such laws are preempted by federal law. The federal and state courts located in the County of Kings shall have exclusive jurisdiction over any claim, action, complaint or lawsuit brought under the terms of the Plan. By accepting any Award granted under this Plan, the Eligible Individual, and any other person claiming any rights under the Plan, agrees to submit himself, and any such legal action as he shall bring under the Plan, to the sole jurisdiction of such courts for the adjudication and resolution of any such disputes.

Section 13.5 Headings .

The headings of Articles and sections are included solely for convenience of reference. If there is any conflict between such headings and the text of the Plan, the text shall control.

Section 13.6 Non-Alienation of Benefits .

The right to receive a benefit under the Plan shall not be subject in any manner to anticipation, alienation or assignment, nor shall such right be liable for or subject to debts, contracts, liabilities, engagements or torts.

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Section 13.7 Notices .

Any communication required or permitted to be given under the Plan, including any notice, direction, designation, comment, instruction, objection or waiver, shall be in writing and shall be deemed to have been given at such time as it is delivered personally or five (5) days after mailing if mailed, postage prepaid, by registered or certified mail, return receipt requested, addressed to such party at the address listed below, or at such other address as one such party may by written notice specify to the other party:

(a) If to the Committee:

Dime Community Bancshares, Inc.

c/o The Dime Savings Bank of Williamsburgh

209 Havemeyer Street

Brooklyn, New York 11211

Attention: Corporate Secretary

(b) If to a Recipient, or Beneficiary to the Recipient's or Beneficiary's address as shown in the Employer's records.

Section 13.8 No Contract Rights in the Absence of an Award Agreement .

Neither the establishment of the Plan nor any provision in the Plan shall be held or construed to confer on any person the right to receive any Award under the Plan or, if any Award is made, the right to any particular terms, conditions or privileges in respect thereof.

Section 13.9 Approval of Shareholders .

The Plan shall be subject to approval by the Company's shareholders within twelve (12) months before or after the Effective Date. Any Award granted prior to the date such approval is obtained shall be granted contingent on such approval and shall be void ab initio in the event such approval is not obtained. No Performance-Based Awards shall be granted after the fifth (5 ^th ) anniversary of the Effective Date unless, prior to such date, the listing of permissible Performance Goals set forth in section 9.1 shall have been re-approved by the stockholders of the Company in the manner required by section 162(m) of the Code and the regulations thereunder.

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	Three Months Ended				Six Months Ended
	June 30, 2013		June 30, 2012		June 30, 2013		June 30, 2012
Ratio of Earnings to Fixed Charges (Including Deposits)
Earnings:
Income before income taxes	$20,098		$19,535		$37,844		$36,854
Add: Fixed charges, net	12,165		15,016		24,430		34,341
Income before income taxes and fixed charges, net	32,263		34,551		62,274		71,195
Fixed charges
Interest expense	$11,884		$14,765		$23,875		$33,840
One-third of rental expense	281		251		555		501
Interest on unrecognized tax benefits	0		0		0		0
Total fixed charges	$ 12,165		$ 15,016		$ 24,430		$ 34,341
Ratio of Earnings to Fixed Charges	2.65	x	2.30	x	2.55	x	2.07	x




Ratio of Earnings to Fixed Charges (Excluding Deposits)
Earnings:
Income before income taxes	$20,098		$19,535		$37,844		$36,854
Add: Fixed charges, net	7,033		9,594		14,097		23,193
Income before income taxes and fixed charges, net	27,131		29,129		51,941		60,047
Fixed charges
Interest expense (excluding deposits)	6,752		9,343		13,542		22,692
One-third of rental expense	281		251		555		501
Interest on unrecognized tax benefits	-				-
Total fixed charges	$ 7,033		$ 9,594		$ 14,097		$ 23,193
Ratio of Earnings to Fixed Charges	3.86	x	3.04	x	3.68	x	2.59	x