4. Earnings per share

9 Months Ended

Sep. 30, 2015

4. Earnings per share

The following table sets forth the reconciliation of basic weighted average shares outstanding and diluted weighted average shares outstanding:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
	(In thousands, except per share data)

Net income	$	1,028	$	50	$	2,560	$	619

Shares:
Basic: Weighted average common shares outstanding		7,800		8,337		7,818		8,362
Add: Dilutive effect of outstanding options as determined by the treasury stock method		48		66		26		125
Diluted: Weighted average common and common equivalent shares outstanding		7,848		8,403		7,844		8,487

Net income per common share:
Basic	$	0.13	$	0.01	$	0.33	$	0.07
Diluted	$	0.13	$	0.01	$	0.33	$	0.07

The computation of diluted earnings per share excludes the effect of the potential exercise of stock options, when the average market price of the common stock is lower than the exercise price of the related stock option during the period. These outstanding stock options are not included in the computation of diluted earnings per share because the effect would be anti-dilutive. For the three months ended September 30, 2015 and 2014, there were 700,000 and 505,000, respectively, potentially dilutive shares consisting of stock options that were excluded from the calculation of earnings per diluted share. For the nine months ended September 30, 2015 and 2014, there were 844,000 and 268,500, respectively, potentially dilutive shares consisting of stock options that were excluded from the calculation of earnings per diluted share.