Earnings Per Share

Per the provisions of FASB ASC 260, Earnings Per Share, nonvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents are participating securities and are included in the computation of EPS pursuant to the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. Certain of the Company’s nonvested restricted stock awards qualify as participating securities.

Net income is allocated between the common stock and participating securities pursuant to the two-class method, based on their rights to receive dividends, participate in earnings, or absorb losses. Basic earnings per common shares is computed by dividing net earnings available to common shareholders by the weighted-average number of common shares outstanding during the period, excluding participating nonvested restricted shares.

The following table presents a reconciliation of the components used to compute basic and diluted earnings per share for the periods indicated:



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars in thousands, except share data)
Net income	$	3,304		$	3,102		$	5,249		$	9,944
Less: Earnings allocated to participating securities	(5		)	(7		)	(8		)	(23		)
Earnings allocated to common shareholders	$	3,299		$	3,095		$	5,241		$	9,921

Basic weighted average common shares outstanding	9,952,419			10,271,432			10,034,895			10,241,297
Dilutive stock options	91,000			125,578			90,372			125,140
Dilutive restricted stock grants	2,936			8,939			6,840			6,037
Diluted weighted average common shares outstanding	10,046,355			10,405,949			10,132,107			10,372,474

Basic earnings per share	$	0.33		$	0.30		$	0.52		$	0.97
Diluted earnings per share	$	0.33		$	0.30		$	0.52		$	0.96

Potential dilutive shares are excluded from the computation of earnings per share if their effect is anti-dilutive. For the three and six months ended June 30, 2019, there were 50,000 options to purchase shares of common stock that were omitted from the computation of diluted earnings per share because their effect would be anti-dilutive. For the three and six months ended June 30, 2018, there no options to purchase shares of common stock that were omitted from the computation of diluted earnings per share because their effect would be anti-dilutive.