Earnings per Share

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Earnings per Share

(10) Earnings per Share

Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the year. Diluted earnings per share gives effect to all dilutive potential common shares that were outstanding during the year. The calculations of basic and diluted earnings per share are as follows for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands, except per share data)	2014		2013		2014		2013
Basic earnings per common share:
Net income	$	1,568	$	1,569	$	5,653	$	3,245
Less:
Preferred stock dividends and accretion of discount		0		0		0		615
Net income available to common shareholders	$	1,568	$	1,569	$	5,653	$	2,630
Basic earnings per share	$	0.30	$	0.30	$	1.08	$	0.50
Diluted earnings per common share:
Net income	$	1,568	$	1,569	$	5,653	$	3,245
Less:
Preferred stock dividends and accretion of discount		0		0		0		615
Net income available to common shareholders	$	1,568	$	1,569	$	5,653	$	2,630
Average shares outstanding		5,233,986		5,233,986		5,233,986		5,233,986
Effect of dilutive stock options		0		0		0		0
Average shares outstanding including dilutive stock options		5,233,986		5,233,986		5,233,986		5,233,986
Diluted earnings per share	$	0.30		0.30		1.08	$	0.50

Under the treasury stock method, outstanding stock options are dilutive when the average market price of the Company’s common stock, when combined with the effect of any unamortized compensation expense, exceeds the option price during the period, except when the Company has a loss from continuing operations available to common shareholders. In addition, proceeds from the assumed exercise of dilutive options along with the related tax benefit are assumed to be used to repurchase common shares at the average market price of such stock during the period.

Options to purchase 97,412 shares during the three and nine months ended September 30, 2014, and 195,313 shares during the three and nine months ended September 30, 2013 were not included in the respective computations of diluted earnings per share because the exercise price of the option, when combined with the effect of the unamortized compensation expense, was greater than the average market price of the common shares and were considered anti-dilutive.