Earnings per Common Share

LCNB has granted restricted stock awards with non-forfeitable dividend rights, which are considered participating securities. Accordingly, earnings per share is computed using the two-class method as required by FASB ASC 260-10-45. Basic earnings per common share is calculated by dividing net income allocated to common shareholders by the weighted average number of common shares outstanding during the period, which excludes the participating securities. Diluted earnings per common share is adjusted for the dilutive effects of stock options, warrants, and restricted stock. The diluted average number of common shares outstanding has been increased for the assumed exercise of stock options and warrants with proceeds used to purchase treasury shares at the average market price for the period.

Earnings per share for the three months ended March 31, 2018 and 2017 were calculated as follows (dollars in thousands, except share and per share data):



	For the Three Months Ended March 31,
	2018		2017
Net income	$	2,713	$	3,246
Less allocation of earnings and dividends to participating securities	4		2
Net income allocated to common shareholders	$	2,709	$	3,244

Weighted average common shares outstanding, gross	10,035,871		10,001,087
Less average participating securities	15,260		6,033
Weighted average number of shares outstanding used in the calculation of basic earnings per common share	10,020,611		9,995,054
Add dilutive effect of:
Stock options	7,977		7,824
Stock warrants	—		—
Adjusted weighted average number of shares outstanding used in the calculation of diluted earnings per common share	10,028,588		10,002,878

Earnings per common share:
Basic	$	0.27	$	0.32
Diluted	0.27		0.32

There were no anti-dilutive stock options outstanding at March 31, 2018 or 2017.