EARNINGS PER 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 years ended December 31 were calculated as follows (in thousands, except share and per share data):



	2019		2018	2017
Net income	$	18,912	14,845	12,972
Less allocation of earnings and dividends to participating securities	31		18	7
Net income allocated to common shareholders	18,881		14,827	12,965

Weighted average common shares outstanding, gross	13,100,161		11,950,360	10,011,358
Less average participating securities	21,241		15,010	5,783
Weighted average number of shares outstanding used in the calculation of basic earnings per common share	13,078,920		11,935,350	10,005,575
Add dilutive effect of:
Stock options	3,973		6,903	6,936
Adjusted weighted average number of shares outstanding used in the calculation of diluted earnings per common share	13,082,893		11,942,253	10,012,511

Earnings per common share:
Basic	$	1.44	1.24	1.30
Diluted	1.44		1.24	1.29