Earnings Per Share

6 Months Ended

Jun. 30, 2016

NOTE 5 - EARNINGS PER SHARE (“EPS”)

Basic earnings per common share represent income available to common shareholders, divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued. Potential common shares that may be issued by the Company relate to outstanding stock options and are determined using the treasury stock method. At June 30, 2016 and 2015, there were 21,011 and 87,436 options, respectively, which were excluded from the calculation as their effect would be anti-dilutive, because the exercise price of the options were greater than the average market price of the common shares. The Company has not granted any stock options since 2007 and all options outstanding at June 30, 2016 were anti-dilutive. Unvested restricted stock is excluded from the calculation of basic earnings per share. At June 30, 2016 and 2015 there were 42,881 and 37,048 unvested shares of restricted stock.

Basic and diluted earnings per share have been computed based on weighted-average common and common equivalent shares outstanding as follows:


	Three Months Ended		Six Months Ended
	June 30,		June 30,
(dollars in thousands)	2016	2015	2016	2015
Net Income	$ 1,738	$ 1,711	$ 3,346	$ 3,532
Less: dividends paid and accrued on preferred stock	-	-	-	(23)
Net income available to common shareholders	$ 1,738	$ 1,711	$ 3,346	$ 3,509

Average number of common shares outstanding	4,590,444	4,650,153	4,592,563	4,653,763
Dilutive effect of common stock equivalents	27,350	37,048	28,636	37,048
Average number of shares used to calculate diluted EPS	4,617,794	4,687,201	4,621,199	4,690,811