(2)	Earnings Per Share

The Company computes earnings per share in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 260, Earnings Per Share (“ASC 260”). TrustCo adopted FASB ASC 260-10 (“ASC 260-10”), Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities, which clarified that unvested share-based payment awards that contain nonforfeitable rights to receive dividends or divided equivalents (whether paid or unpaid) are participating securities, and thus, should be included in the two-class method of computing earnings per share (“EPS”).

Participating securities under this statement include the unvested employees’ and directors’ restricted stock awards with time-based vesting, which receive nonforfeitable dividend payments.

A reconciliation of the component parts of earnings per share for the three months and nine months ended September 30, 2014 and 2013 is as follows:

(dollars in thousands,

except per share data)

	2014		2013
For the three months ended
September 30:
Net income	$	10,714	$	10,252
Less: Net income allocated to participating securities		12		11
Net income allocated to common shareholders	$	10,702	$	10,241
Basic EPS:
Distributed earnings allocated to common stock	$	6,220	$	6,191
Undistributed earnings allocated to common stock		4,482		4,050
Net income allocated to common shareholders	$	10,702	$	10,241
Weighted average common shares outstanding including participating securities		94,734		94,334
Less: Participating securities		106		106
Weighted average common shares		94,628		94,228

Basic EPS		0.113		0.109

Diluted EPS:
Net income allocated to common shareholders	$	10,702	$	10,241
Weighted average common shares for basic EPS		94,628		94,228
Effect of Dilutive Securities:
Stock Options		124		47
Weighted average common shares including potential dilutive shares		94,752		94,275

Diluted EPS		0.113		0.109

(dollars in thousands,

except per share data)

	2014		2013
For the nine months ended
September 30:
Net income	$	33,533	$	29,183
Less: Net income allocated to participating securities		38		33
Net income allocated to common shareholders	$	33,495	$	29,150
Basic EPS:
Distributed earnings allocated to common stock	$	18,639	$	18,546
Undistributed earnings allocated to common stock		14,856		10,604
Net income allocated to common shareholders	$	33,495	$	29,150
Weighted average common shares outstanding including participating securities		94,668		94,202
Less: Participating securities		106		106
Weighted average common shares		94,562		94,096

Basic EPS		0.354		0.310

Diluted EPS:
Net income allocated to common shareholders	$	33,495	$	29,150
Weighted average common shares for basic EPS		94,562		94,096
Effect of Dilutive Securities:
Stock Options		115		19
Weighted average common shares including potential dilutive shares		94,743		94,115

Diluted EPS		0.354		0.310

For the three months ended September 30, 2014 and 2013, the weighted average number of antidilutive stock options excluded from diluted earnings per share was approximately 2.4 million and 2.1 million, respectively. For the nine months ended September 30, 2014 and 2013, the weighted average number of antidilutive stock options excluded from diluted earnings per share was approximately 2.4 million and 2.5 million, respectively. The stock options are antidilutive because the strike price is greater than the average fair value of the Company’s common stock for the periods presented.