NOTE 2 – EARNINGS PER SHARE

Basic earnings per common share is based only on the average number of shares of Common Stock outstanding for the periods.

Diluted earnings per common share reflects the effect of shares of Common Stock issuable upon the exercise of options, unless the effect on earnings is antidilutive. Diluted earnings per common share is computed using the treasury stock method. Under this method, the aggregate number of shares of Common Stock outstanding reflects the assumed use of proceeds from the hypothetical exercise of any outstanding options to purchase shares of Common Stock. The average market value for the period is used as the assumed purchase price.

The following table sets forth the elements of basic and diluted earnings per common share:


	Three months ended				Six months ended
	June 30,				June 30,
	2019		2018		2019		2018
Numerator for basic and diluted earnings per common share:

Net income	$	5,688,000	$	305,000	$	5,662,000	$	370,000

Denominator:
Denominator for basic earnings per share - weighted average common shares outstanding		3,163,000		3,592,000		3,271,000		3,588,000
Dilutive securities (1)		67,000		90,000		66,000		126,000
Denominator for diluted earnings per share - weighted average common shares outstanding		3,230,000		3,682,000		3,337,000		3,714,000

(1)Dilutive securities consist of “in the money” stock options.

At June 30, 2019 and 2018, there were outstanding stock options whose exercise prices were higher than the average market values of the underlying Common Stock for the period. The weighted average of anti-dilutive stock options outstanding was as follows:


	Three months ended		Six months ended
	June 30,		June 30,
	2019	2018	2019	2018
Weighted average antidilutive stock options outstanding	8,000	—	8,000	25,000