9. Net Income Per Share

Basic and diluted earnings per share are computed pursuant to the two-class method. The two-class method determines earnings per share for each class of common stock and participating security according to their respective participation rights in undistributed earnings. Unvested restricted stock awards granted to employees are considered participating securities as they receive non-forfeitable rights to cash dividends at the same rate as common stock. In accordance with Accounting Standards Codification Topic No. 260, Earnings Per Share, diluted net income per share is calculated using the more dilutive of the following two approaches:

Assume exercise of stock options and vesting of restricted stock using the treasury stock method.

Assume exercise of stock options using the treasury stock method, but assume participating securities (unvested restricted stock) are not vested and allocate earnings to common shares and participating securities using the two-class method.

For the three and six months ended June 30, 2016 and 2015, the two-class method was used in the computation of diluted net income per share as this approach was more dilutive. The following presents a reconciliation of the numerator and denominator used in the calculation of basic and diluted net income per share (in thousands, except share and per share data):


	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Numerator:
Net income, as reported	$	6,653		$	5,904		$	12,011		$	13,261
Less: net income attributable to participating securities		(206	)		(150	)		(343	)		(301	)

Net income available to common shareholders—basic	$	6,447		$	5,754		$	11,668		$	12,960

Denominator:
Basic:
Weighted-average shares of common stock outstanding		40,721,081			39,873,730			40,475,785			39,758,947
Less: weighted-average shares of unvested restricted common stock outstanding		(1,343,136	)		(1,047,545	)		(1,225,488	)		(931,279	)

Weighted-average number of common shares used in computing basic net income per common share		39,377,945			38,826,185			39,250,297			38,827,668

Net income per share applicable to common shareholders—basic	$	0.16		$	0.15		$	0.30		$	0.33


	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Numerator:
Net income available to common shareholders—basic	$	6,447		$	5,754		$	11,668		$	12,960
Add-back: undistributed earnings allocated to unvested shareholders		72			51			95			124
Less: undistributed earnings reallocated to unvested shareholders		(72	)		(50	)		(94	)		(122	)

Net income available to common shareholders—diluted	$	6,447		$	5,755		$	11,669		$	12,962


	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Denominator:
Diluted:
Weighted-average shares of common stock outstanding		40,721,081			39,873,730			40,475,785			39,758,947
Less: weighted-average shares of unvested restricted common stock outstanding		(1,343,136	)		(1,047,545	)		(1,225,488	)		(931,279	)
Weighted-average number of common shares issuable upon exercise of outstanding stock options, based on the treasury stock method		370,960			569,210			384,965			631,090

Weighted-average number of common shares used in computing diluted net income per common share		39,748,905			39,395,395			39,635,262			39,458,758

Net income per share applicable to common shareholders—diluted	$	0.16		$	0.15		$	0.29		$	0.33

The following common share equivalents have been excluded from the computation of diluted weighted-average shares outstanding, as their effect would have been anti-dilutive:


	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Options		643,714		433,463		662,988		370,201
Unvested restricted stock		386,297		405,522		352,900		247,768
Unvested restricted stock units		15,377		14,825		14,085		11,341