EARNINGS (LOSS) PER SHARE

9 Months Ended

Sep. 30, 2011

6. EARNINGS PER SHARE

The earnings per share is calculated under the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. A participating security is an instrument that may participate in undistributed earnings with common stock. The Company has issued restricted stock and preferred stock that qualifies as a participating security. Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of shares of common stock outstanding during the period.

Diluted earnings per share is computed in the same manner as basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if certain shares issuable upon exercise of options and warrants, conversion of preferred stock, and non-vested restricted stock were included, unless those additional shares would have been anti-dilutive. For the diluted earnings per share computation, the treasury stock method is applied and compared to the two-class method and whichever method results in a more dilutive impact is utilized to calculate diluted earnings per share. The two-class method was utilized to calculate diluted earnings per share for the quarter ended September 30, 2011.

On May 19, 2011, Bancorp implemented the Reverse Stock Split. All share and per share related amounts have been restated to reflect the Reverse Stock Split. The following table reconciles the numerator and denominator of the basic and diluted earnings per share computations for the quarters ended September 30, 2011, and 2010:

(Dollars and shares in thousands, except per share amounts)	Three months ended
	September 30, 2011		September 30, 2010
Net income	$	6,276	$	6,050
Less: Net income allocated to participating securities-basic:
Preferred stock		371		358
Non-vested restricted stock		87		97
Net income available to common stock holders-basic		5,818		5,595
Add: Net income allocated per two-class method-diluted:
Stock options and Class C warrants		18		10
Net income available to common stockholders-diluted	$	5,836	$	5,605

Weighted average common shares outstanding -basic		19,029		18,955
Common stock equivalents from:
Stock options		18		3
Class C warrants		833		443
Weighted average common shares outstanding -diluted		19,880		19,401

Basic earnings per share	$	0.31	$	0.30
Diluted earnings per share	$	0.29	$	0.29

Common stock equivalent shares excluded due to anti-dilutive effect		233		591

(Dollars and shares in thousands, except per share amounts)	Nine months ended
	September 30, 2011		September 30, 2010
Net income	$	16,015	$	1,313
Less: Net income allocated to participating securities-basic:
Preferred stock		947		175
Non-vested restricted stock		232		13
Net income available to common stock holders-basic		14,836		1,125
Add: Net income allocated per two-class method-diluted:
Stock options and Class C warrants		52		6
Net income available to common stockholders-diluted	$	14,888	$	1,131

Weighted average common shares outstanding -basic		18,999		16,955
Common stock equivalents from:
Stock options		21		5
Class C warrants		931		596
Weighted average common shares outstanding -diluted		19,951		17,556

Basic earnings per share	$	0.78	$	0.07
Diluted earnings per share	$	0.75	$	0.06

Common stock equivalent shares excluded due to anti-dilutive effect		203		418