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 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, 2020 and 2019 were calculated as follows (dollars in thousands, except share and per share data):



	Three Months Ended March 31,
	2020		2019
Net income	$	5,026	4,627
Less allocation of earnings and dividends to participating securities	11		8
Net income allocated to common shareholders	$	5,015	4,619

Weighted average common shares outstanding, gross	12,955,672		13,307,865
Less average participating securities	29,595		24,231
Weighted average number of shares outstanding used in the calculation of basic earnings per common share	12,926,077		13,283,634
Add dilutive effect of:
Stock options	1,589		3,704
Adjusted weighted average number of shares outstanding used in the calculation of diluted earnings per common share	12,927,666		13,287,338

Earnings per common share:
Basic	$	0.39	0.35
Diluted	0.39		0.35

There were no anti-dilutive stock options outstanding at March 31, 2020 or 2019.