4.	Earnings Per Share

ASC

260

requires a company that has participating security holders (for example, holders of unvested restricted stock that have non-forfeitable dividend rights) to utilize the

two

-class method for calculating earnings per share (“EPS”) unless the treasury stock method results in lower EPS. The

two

-class method is an allocation of earnings/(loss) between the holders of common stock and a company’s participating security holders. Under the

two

-class method, earnings/(loss) for the reporting period are allocated between common shareholders and other security holders based on their respective rights to receive distributed earnings (i.e., dividends) and undistributed earnings (i.e., net income/(loss)). Our common shares outstanding are comprised of shareholder owned common stock and shares of unvested restricted stock held by participating security holders. Basic EPS is calculated by dividing income or loss attributable to common stockholders by the weighted average number of shares of common stock outstanding, excluding participating shares in accordance with ASC

260.

To calculate diluted EPS, basic EPS is adjusted to include the effect of potentially dilutive stock options outstanding. The table below shows our basic and diluted EPS calculations.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
	(Dollars in thousands, except per share amounts)
Numerator
Net income	$	53,392		$	61,163		$	156,055		$	117,283
Less: distributed earnings allocated to participating securities		(106	)		(68	)		(307	)		(196	)
Less: undistributed earnings allocated to participating securities		(222	)		(244	)		(613	)		(375	)
Net income attributable to common stockholders (numerator for basic earnings per share)		53,064			60,851			155,135			116,712
Add back: undistributed earnings allocated to participating securities		222			244			613			375
Less: undistributed earnings reallocated to participating securities		(218	)		(240	)		(602	)		(369	)
Numerator for diluted earnings per share under two class method	$	53,068		$	60,855		$	155,146		$	116,718

Denominator
Weighted-average common shares outstanding		56,171,619			55,782,389			56,023,996			55,623,225
Add: dilutive effect of stock options		1,055,040			1,026,819			1,005,719			805,022
Denominator for diluted earnings per share under two class method		57,226,659			56,809,208			57,029,715			56,428,247

Basic Earnings Per Common Share	$	0.94		$	1.09		$	2.77		$	2.10
Diluted Earnings Per Common Share	$	0.93		$	1.07		$	2.72		$	2.07

Diluted EPS for the

three

and

nine

months ended

September 30, 2018

excluded options to purchase approximately

0.6

and

0.6

million shares of common stock, respectively, because the effect of their inclusion would be anti-dilutive. For the same periods in

2017,

diluted EPS excluded options to purchase approximately

0.7

and

1.1

million shares, respectively.