(3) Net Income Per Share

Basic and diluted earnings or loss per share (“EPS”) are computed using the two-class method, which is an earnings allocation that determines EPS for each class of common stock and participating securities according to dividends declared and participation rights in undistributed earnings. Restricted Stock Awards (“RSAs”) are considered participating securities because they are legally issued at the date of grant and holders are entitled to receive non-forfeitable dividends during the vesting term.

The computation of diluted EPS includes additional common shares, such as unvested stock options with exercise prices less than the average market price of the Company’s common stock during the period (“in-the-money options”), which would be considered outstanding under the treasury stock method. The treasury stock method assumes that additional shares would have to be issued in cases where the exercise price of stock options is less than the value of the common stock being acquired because the cash proceeds received from the stock option holder would not be sufficient to acquire that same number of shares. The Company does not compute diluted EPS in cases where the inclusion of such additional shares would be anti-dilutive in effect.

The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2018 and 2017 (in thousands, except for earnings per share):

	Three Months Ended
	March 31,
	2018		2017
Weighted-average shares:
Common shares outstanding		35,486		40,669
RSAs		146		59
Total weighted-average shares		35,632		40,728
Earnings per common share—Basic
Net income	$	14,551	$	8,447
Less: Undistributed earnings allocated to RSAs		60		12
Net income available to common shareholders—Basic	$	14,491	$	8,435

Net income per common share—Basic	$	0.41	$	0.21

Basic weighted-average common shares outstanding		35,486		40,669
Effect of diluted shares		963		839
Diluted weighted-average shares outstanding		36,449		41,508

Net income per common share—Diluted	$	0.40	$	0.20

During the three months ended March 31, 2018, the Company had 35,000 stock options that were excluded due to the exercise price exceeding the average fair value of the Company’s common stock during the period.