Note 3. Earnings Per Share

The Company computes earnings per share (“EPS”) in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 260, Earnings Per Share. Additionally, during 2013, the Company applied the “two-class method” in computing basic and diluted earnings per share as a result of the participating unvested common shares which contained nonforfeitable rights to dividends during this period. As of January 1, 2014, the Company no longer has participating unvested common shares which contain nonforfeitable rights to dividends and now applies the treasury stock method in computing basic and diluted earnings per share.

Under the two-class method, net income available to common and participating common shareholders is reduced by the amount of dividends declared in the current period and by the contractual amount of dividends that must be paid for the current period related to the Company’s common and participating common shares. Participating common shares include unvested share-based payment awards that contain nonforfeitable rights to dividends, whether paid or unpaid. Any remaining undistributed earnings are allocated to the common and participating common shareholders to the extent that each security shares in earnings as if all of the earnings for the period had been distributed. The amount of earnings allocable to each security is divided by the number of outstanding shares of the security to which the earnings are allocated to determine the EPS for the security. In a period of loss, no losses are allocated to the participating common shareholders. Instead, all such losses are allocated to the common shareholders.

Basic EPS is calculated by dividing income available to common shareholders by the weighted-average number of common shares outstanding during the period. The diluted EPS calculation includes potential common shares assumed issued under the treasury stock method, which reflects the potential dilution that would occur if any outstanding options or warrants were exercised or restricted stock becomes vested, and includes the “if converted” method for participating securities if the effect is dilutive. We determine diluted EPS as the more dilutive result of either the treasury method or the two-class method.


	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
	(in thousands, except share and per share amounts)
Basic EPS:
Net income, as reported	$	12,773	$	7,644	$	23,322	$	16,495
Less allocated income to unvested shares		—		26		—		41

Net income available to common shareholders—basic	$	12,773	$	7,618	$	23,322	$	16,454

Basic weighted average common shares		18,600,186		18,353,174		18,566,235		18,317,452
Basic earnings per common share	$	0.69	$	0.42	$	1.26	$	0.90
Diluted EPS:
Net income available to common shareholders—diluted	$	12,773	$	7,619	$	23,322	$	16,455

Diluted weighted average common shares:
Weighted average common shares		18,600,186		18,353,174		18,566,235		18,317,452
Stock options and performance shares		294,699		359,125		319,149		396,324

Diluted weighted average common shares		18,894,885		18,712,299		18,885,384		18,713,776

Diluted earnings per common share	$	0.68	$	0.41	$	1.23	$	0.88