NOTE 12 — LOSS PER SHARE

Basic loss per share is computed by dividing net loss attributable to Signature Group Holdings, Inc. by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. The calculation of diluted earnings per share is determined using the treasury stock method, whereby the basic weighted average number of shares is increased by the dilutive effect of unvested restricted common stock awards, common stock options and the Warrants.

Unvested restricted common stock, common stock options and the Warrants are anti-dilutive and excluded from the computation of diluted earnings per share if the assumed proceeds upon exercise of common stock options or Warrants, or the unamortized share-based compensation of unvested restricted common stock are greater than the cost to reacquire the same number of shares at the average market price of Signature common stock during the period. The dilutive impact of these securities could be included in future computations of diluted earnings per share if the average market price of the Company’s common stock for the periods presented increases sufficiently. As a result of the net loss for the three and nine months ended September 30, 2013 and 2012, the impact of all outstanding unvested restricted common stock, common stock options and the Warrants are excluded from diluted loss per share as their impact would be anti-dilutive.

The following table sets forth the computation of basic and diluted loss per share for the periods indicated as if the Reverse Split occurred on December 31, 2011:

	Three Months Ended September 30,							Nine Months Ended September 30,
(Dollars in thousands, except per share amounts)	2013			2012				2013				2012
Loss from continuing operations	$	(5,687	)	$	(2,166	)	$		(9,721	)	$		(4,683	)
Loss from discontinued operations, net of income taxes		(172	)		(462	)			(827	)			(3,082	)
Net loss		(5,859	)		(2,628	)			(10,548	)			(7,765	)
Loss attributable to noncontrolling interest		—			—				—				—
Net loss attributable to Signature Group Holdings, Inc.	$	(5,859	)	$	(2,628	)	$		(10,548	)	$		(7,765	)
Weighted average basic and diluted shares outstanding		11,883,605			11,632,828				11,843,526				11,545,766
Basic and diluted loss per share:
Continuing operations	$	(0.48	)	$	(0.19	)	$		(0.82	)	$		(0.40	)
Discontinued operations		(0.01	)		(0.04	)			(0.07	)			(0.27	)
Basic and diluted loss per share	$	(0.49	)	$	(0.23	)	$		(0.89	)	$		(0.67	)

The following table provides details on the average market price of Signature common stock and the incremental shares that would have been included in the diluted shares outstanding computation for the three and nine months ended September 30, 2013 and 2012, as if the Reverse Split occurred on December 31, 2011, had they not been anti-dilutive:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2013		2012			2013			2012
Average market price of Signature common stock	$	11.89	$	3.56	$		7.76	$		3.18
Anti-dilutive common stock equivalents:
Unvested restricted stock		275,151		99,421			233,483			67,640
Common stock options		514,924		2,718			215,406			400
Warrants		636,628		—			175,925			—
Total anti-dilutive common stock equivalents		1,426,703		102,139			624,814			68,040