Shareholders’ Equity and Earnings Per Common Share

12 Months Ended

Dec. 31, 2016

Shareholders’ Equity and Earnings Per Common Share

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

NOTE 10: Shareholders’ Equity, Other Comprehensive Income and Earnings Per Common Share

Shareholders’ Equity

Common Shares.On May 14, 2014, the Corporation repurchased the warrant issued in connection with the Corporation’s previous participation in the Capital Purchase Program (Warrant) for $2.30 million.  The repurchase price was based on the fair market value of the Warrant as agreed upon by the Corporation and the U.S. Department of the Treasury.  The funds for this redemption were provided by existing financial resources of the Corporation; therefore, there was no dilution to the Corporation’s common shareholders.

The Corporation repurchased zero and 38,759 shares of its common stock during the years ended December 31, 2016 and 2015, respectively under a share repurchase program authorized by the Corporation’s Board of Directors. During the years ended December 31, 2016, 2015 and 2014, the Corporation withheld 9,169,  8,745 and 1,808 shares of its common stock, respectively, from employees to satisfy tax withholding obligations arising upon the vesting of restricted shares.

Accumulated Other Comprehensive Income (Loss)

The following table presents the cumulative balances of the components of accumulated other comprehensive income (loss), net of deferred taxes of $534,000,  $620,000 and $1.66 million as of December 31, 2016, 2015 and 2014, respectively.

	December 31,
(Dollars in thousands)	2016		2015		2014
Net unrealized gains on securities	$	1,386	$	3,491	$	4,850
Net unrecognized loss on cash flow hedges		(34)		(107)		(64)
Net unrecognized losses on defined benefit plan		(2,336)		(2,213)		(1,700)
Total accumulated other comprehensive (loss) income	$	(984)	$	1,171	$	3,086

Earnings Per Common Share (EPS)

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

	December 31,
(Dollars in thousands)	2016		2015		2014
Net income	$	13,459	$	12,530	$	12,344
Weighted average number of common shares used in earnings per common share—basic		3,454,282		3,401,426		3,404,112
Effect of dilutive securities:
Stock option awards		1,601		408		32,166
Weighted average number of common shares used in earnings per common share—assuming dilution		3,455,883		3,401,834		3,436,278

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, and when it was outstanding in 2014, the Warrant, were determined using the treasury stock method.  Accordingly, anti-dilutive shares are not included in computing diluted earnings per share.  Approximately 3,000,  70,000 and 150,000 shares issuable upon exercise of options for the years ended December 31, 2016, 2015 and 2014, respectively, were not included in computing diluted earnings per common share because they were anti-dilutive.