NOTE

COMMON STOCK OUTSTANDING AND EARNINGS PER SHARE

January 31, 2019,

we issued

1,834,142

shares of common stock, and paid

$15.3

million in cash for our acquisition of Merchants Holding Company (“Merchants”) at which point Merchants shareholders held, in the aggregate, approximately

10%

of our outstanding common stock. See Note

Acquisition

in these

Notes to Consolidated Financial Statements

for additional information on the acquisition

Basic earnings per share excludes dilution and is computed by dividing income by the weighted-average number of common shares outstanding for the period, excluding unvested restricted stock awards which do

not

have voting rights or share in dividends. Diluted earnings per share reflects the potential dilution that would 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 Holding Company. The computation of diluted earnings per share does

not

assume conversion, exercise, or contingent issuance of securities that would have an anti-dilutive effect on earnings per share.

The following is a computation of basic and diluted earnings per share for the

three

and

nine

months ended

September 30, 2019

and

2018.

	For the Three Months Ended				For the Nine Months Ended
(Amounts in thousands, except per share information)	September 30,				September 30,
Earnings Per Share	2019		2018		2019		2018
Numerators:
Net income	$	4,642	$	4,032	$	10,592	$	10,891
Denominators:
Weighted average number of common shares outstanding - basic (1)		18,130		16,252		17,918		16,242
Effect of potentially dilutive common shares (2)		66		90		63		85
Weighted average number of common shares outstanding - diluted		18,196		16,342		17,981		16,327
Earnings per common share:
Basic	$	0.26	$	0.25	$	0.59	$	0.67
Diluted	$	0.26	$	0.25	$	0.59	$	0.67
Anti-dilutive options not included in diluted earnings per share calculation		—		—		—		—
Anti-dilutive restricted shares not included in diluted earnings per share calculation		—		—		—		—

(

)

Excludes unvested restricted shares because they do

not

have dividend or voting rights

(

)

Represents the effects of the assumed exercise of stock options and vesting of non-participating restricted shares.

September 18, 2019,

we announced that our Board of Directors had authorized a stock repurchase program. The stock repurchase program authorizes the Company to purchase up to

one million

shares of its common stock over a period ending

March 31, 2020

and is effective immediately. Purchases

may

be made in the open market, including in block trades, or through privately negotiated transactions, from time to time when management determines that market conditions and other factors warrant such purchases. There is

guarantee as to the exact number of shares to be purchased, and the stock repurchase program

may

be modified, suspended, or terminated without prior notice. There were

repurchases during the

third

quarter of

2019.