OUTSTANDING SHARES AND EARNINGS PER SHARE

9 Months Ended

Sep. 30, 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 and nine months ended September 30, 2016 and 2015 (dollars in thousands except per share amounts):

	Three months ended September 30,					Nine months ended September 30,
	2016		2015			2016		2015
Basic earnings per share:
Net income	$	2,019	$	1,819		$	5,785	$	5,106
Preferred stock dividend	$	—	$	(32	)	$	—	$	(96	)
Net income available to common stockholders	$	2,019	$	1,787		$	5,785	$	5,010
Weighted average common shares outstanding		10,611,772		10,578,103			10,605,534		10,566,374
Basic EPS	$	0.19	$	0.17		$	0.55	$	0.47
Diluted earnings per share:
Net income	$	2,019	$	1,819		$	5,785	$	5,106
Preferred stock dividend	$	—	$	(32	)	$	—	$	(96	)
Net income available to common stockholders	$	2,019	$	1,787		$	5,785	$	5,010
Weighted average common shares outstanding		10,611,772		10,578,103			10,605,534		10,566,374
Effect of dilutive shares		69,834		59,317			68,196		58,552
Adjusted weighted average common shares outstanding		10,681,606		10,637,420			10,673,730		10,624,926
Diluted EPS	$	0.19	$	0.17		$	0.54	$	0.47

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 142,499 shares and 163,789 shares for the three months ended September 30, 2016 and 2015, respectively.  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 156,122 shares and 175,054 shares for the nine months ended September 30, 2016 and 2015, respectively.