Shareholders' Equity and Earnings Per Common Share

9 Months Ended

Sep. 30, 2016

Shareholders’ Equity and Earnings Per Common Share

Shareholders’ Equity, Other Comprehensive Income and Earnings Per Common Share

NOTE 5: Shareholders’ Equity and Earnings Per Common Share

Accumulated Other Comprehensive Income

The following table presents the cumulative balances of the components of accumulated other comprehensive income, net of deferred taxes of $900,000 and $620,000 as of September 30, 2016 and December 31, 2015, respectively.

	September 30,		December 31,
(Dollars in thousands)	2016		2015
Net unrealized gains on securities	$	4,260	$	3,491
Net unrecognized loss on cash flow hedges		(390)		(107)
Net unrecognized losses on defined benefit plan		(2,168)		(2,213)
Total accumulated other comprehensive income	$	1,702	$	1,171

Common Shares

The Corporation purchased 3,990 and 3,281 shares of its common stock from employees to satisfy tax withholding obligations arising upon the vesting of restricted shares during the first nine months of 2016 and 2015, respectively.  During the first nine months of 2015, 38,759 shares were purchased under a share repurchase program authorized by the Corporation’s Board of Directors; whereas, no such shares were purchased under this program during the first nine months of 2016. 

Earnings Per Common Share (EPS)

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

	Three Months Ended September 30,
(Dollars in thousands)	2016		2015
Net income	$	3,144	$	3,477
Weighted average number of common shares used in earnings per common share—basic		3,456,901		3,392,480
Effect of dilutive securities:
Stock option awards		1,898		—
Weighted average number of common shares used in earnings per common share—assuming dilution		3,458,799		3,392,480

	Nine Months Ended September 30,
(Dollars in thousands)	2016		2015
Net income	$	10,311	$	10,223
Weighted average number of common shares used in earnings per common share—basic		3,452,426		3,400,296
Effect of dilutive securities:
Stock option awards		1,465		141
Weighted average number of common shares used in earnings per common share—assuming dilution		3,453,891		3,400,437

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 September 30, 2016; whereas, 4,000 shares issuable upon exercise of options were anti-dilutive for the nine months ended September 30, 2016. For both the three and nine months ended September, 2015,  88,762 shares issuable upon exercise of options were anti-dilutive.