OUTSTANDING SHARES AND EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2016

OUTSTANDING SHARES AND EARNINGS PER SHARE [Abstract]

OUTSTANDING SHARES AND EARNINGS PER SHARE

4. OUTSTANDING SHARES AND EARNINGS PER SHARE

On January 28, 2016, the Board of Directors of the Company declared a 4% stock dividend payable as of March 31, 2016.  All income per share amounts have been adjusted to give retroactive effect to stock dividends.

Earnings Per Share (EPS)

Basic EPS includes no dilution and is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for the respective period.  Diluted EPS is computed by dividing net income available to common shareholders by the weighted average number of shares outstanding plus dilutive shares for the quarter.  Diluted shares include all common stock equivalents ("in-the-money" stock options, unvested restricted stock, stock units, warrants and rights, convertible bonds and preferred stock), which reflects the potential dilution of securities that could share in the earnings of the Company.

The following table presents a reconciliation of basic and diluted EPS for the three months ended March 31, 2016 and 2015 (dollars in thousands except per share amounts):

	Three months ended March 31,
	2016		2015
Basic earnings per share:
Net income	$	1,731	$	1,517
Preferred stock dividend	$	—	$	(32	)
Net income available to common stockholders	$	1,731	$	1,485
Weighted average common shares outstanding		10,589,190		10,542,500
Basic EPS	$	0.16	$	0.14
Diluted earnings per share:
Net income	$	1,731	$	1,517
Preferred stock dividend	$	—	$	(32	)
Net income available to common stockholders	$	1,731	$	1,485
Weighted average common shares outstanding		10,589,190		10,542,500
Effect of dilutive shares		67,134		64,060
Adjusted weighted average common shares outstanding		10,656,324		10,606,560
Diluted EPS	$	0.16	$	0.14

Stock options which were not included in the computation of diluted earnings per share because they would have had an anti-dilutive effect amounted to 163,010 shares and 190,774 shares for the three months ended March 31, 2016 and March 31, 2015, respectively.  Non-vested shares of restricted stock not included in the computation of diluted earnings per share because they would have an anti-dilutive effect amounted to zero shares for the three months ended March 31, 2016 and March 31, 2015.