EARNINGS PER COMMON SHARE

3 Months Ended

Mar. 31, 2012

EARNINGS PER COMMON SHARE

5. EARNINGS PER COMMON SHARE

Basic earnings per common share are computed by dividing net income less dividends on preferred shares, by the weighted average number of common shares outstanding during the period. Diluted earnings per share are computed by dividing net income less dividends on preferred shares, by the weighted average number of common shares outstanding during the period, including any potential dilutive common shares outstanding, such as options and warrants. As of March 31, 2012 and 2011, there were 187,367 and 102,524 shares, respectively, excluded from the diluted net income per share computation because the exercise price of the stock options were greater than the market price, and thus were anti-dilutive. Basic and diluted earnings per share have been computed based on weighted-average common and common equivalent shares outstanding as follows:

	Three Months Ended
	March 31,
	2012			2011
Net Income	$	1,105,253		$	241,498
Less: dividends payable on preferred stock		(50,000	)		(211,733	)
Net income available to common shareholders	$	1,055,253		$	29,764
Average number of common shares outstanding		3,037,380			3,009,516
Effect of dilutive options		8,939			44,361
Average number of shares used to calculate diluted earnings per share		3,046,319			3,053,877