Shareholders' Equity and Earnings Per Common Share

6 Months Ended

Jun. 30, 2017

Shareholders’ Equity and Earnings Per Common Share

Shareholders' Equity and Earnings Per Common Share

NOTE 5: Shareholders’ Equity and Earnings Per Common Share

Accumulated Other Comprehensive Loss

The following table presents the cumulative balances of the components of accumulated other comprehensive income, net of deferred taxes of $321,000 and $534,000 as of June 30, 2017 and December 31, 2016, respectively.

	June 30,		December 31,
(Dollars in thousands)	2017		2016
Net unrealized gains on securities	$	1,752	$	1,386
Net unrecognized losses on cash flow hedges		(36)		(34)
Net unrecognized losses on defined benefit plan		(2,306)		(2,336)
Total accumulated other comprehensive loss	$	(590)	$	(984)

Common Shares

The Corporation purchased 4,049 and 3,660 shares of its common stock from employees to satisfy tax withholding obligations arising upon the vesting of restricted shares during the first six months of 2017 and 2016, respectively.  During the first six months of 2017 and 2016, no shares were purchased under the share repurchase program authorized by the Corporation’s Board of Directors.

Earnings Per Common Share (EPS)

The components of the Corporation’s EPS calculations are as follows:

	Three Months Ended June 30,
(Dollars in thousands)	2017		2016
Net income	$	4,139	$	4,706
Weighted average number of common shares used in earnings per common share—basic		3,486,997		3,451,746
Effect of dilutive securities:
Stock option awards		—		1,390
Weighted average number of common shares used in earnings per common share—assuming dilution		3,486,997		3,453,136

	Six Months Ended June 30,
(Dollars in thousands)	2017		2016
Net income	$	6,870	$	7,190
Weighted average number of common shares used in earnings per common share—basic		3,485,002		3,450,188
Effect of dilutive securities:
Stock option awards		158		1,250
Weighted average number of common shares used in earnings per common share—assuming dilution		3,485,160		3,451,438

The Corporation has applied the two-class method of computing basic and diluted EPS for each period presented because the Corporation’s unvested restricted shares outstanding contain rights to nonforfeitable dividends.  Accordingly, the weighted average number of common shares used in the calculation of basic and diluted EPS includes both vested and unvested common shares outstanding.

Potential common shares that may be issued by the Corporation for its stock option awards are determined using the treasury stock method. Accordingly, anti-dilutive shares are not included in computing diluted earnings per share.  No shares issuable upon exercise of options were anti-dilutive for the three months ended June 30, 2017 and 2016. No shares issuable upon exercise of options were anti-dilutive for the six months ended June 30, 2017; whereas, 6,000 shares issuable upon exercise of stock options were anti-dilutive for the six months ended June 30, 2016.