Earnings per Share

Basic earnings per share are computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.

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



	For the Year Ended December 31,
	2019		2018
	(In thousands, except share data)
Numerator:
Net income	$	9,014	$	7,105

Denominator:
Basic weighted average common shares outstanding	9,845,021		10,331,902
Dilutive restricted stock grants	78,089		102,535
Diluted weighted average common shares outstanding	9,923,110		10,434,437

Basic earnings	$	0.92	$	0.69

Diluted earnings	$	0.91	$	0.68

Potential dilutive shares are excluded from the computation of EPS if their effect is anti-dilutive. For the years ended December 31, 2019 and 2018, anti-dilutive shares outstanding related to restricted stock awards totaled 66,659 and 48,040, respectively, because the incremental shares under the treasury stock method of calculation resulted in them being anti-dilutive.

As of December 15, 2015, the ESOP had purchased 1,048,029 shares of First Northwest Bancorp in the open market. Unallocated ESOP shares are not included as outstanding shares for basic or diluted earnings per share calculations.