Note 4 - Earnings per Common Share

6 Months Ended

Jun. 30, 2012

Earnings Per Share [Text Block]

Note 4 – Earnings per Common Share

The Company has presented both basic and diluted earnings per common share (“EPS”).  Basic EPS is calculated by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding for the period, without considering any dilutive items.  Diluted EPS is calculated by dividing net income (loss) available to common shareholders by the sum of the weighted average number of common shares outstanding for the period and common stock equivalents for items that are dilutive, net of shares assumed to be repurchased using the treasury method.

The potential common stock of the Company includes stock options and unvested shares issued for the Recognition and Retention Plan (“RRP”) granted to various directors and officers of the Bank and unexercised warrants issued to the U.S. Treasury. The Company excluded 659,794 outstanding options for the three- and six-month periods ended June 30, 2012, and 745,602 outstanding options for the three- and six-month periods ended June 30, 2011.  In addition, the exercise price of all of these options exceeded the average closing price of the shares of common stock during the three and six month periods ended June 30, 2012 and 2011 and, accordingly would have been anti-dilutive and therefore excluded from the diluted EPS calculation. At June 30, 2011, all of the 450,314 warrants had an exercise price which was in excess of the market value of the stock, so no warrants were included in the calculation of diluted earnings per share for this period since they would have also been anti-dilutive.  There were no warrants outstanding at June 30, 2012.

The following is a reconciliation of the diluted earnings per share calculation for the three- and six-month periods ended June 30, 2012 and 2011:

	Three Months Ended June 30,					Six Months Ended June 30,
	2012			2011		2012			2011
	(Dollars in thousands, except per share amounts)
Net income (loss) allocable to common shareholders	$	(716	)	$	2,040	$	(2,978	)	$	893
Weighted average number of shares outstanding		11,463,396			11,455,642		11,460,110			11,451,619
Basic net income (loss) per common share	$	(0.06	)	$	0.18	$	(0.26	)	$	0.08
Net income (loss) allocable to common shareholders	$	(716	)	$	2,040	$	(2,978	)	$	893
Weighted average number of shares outstanding		11,463,396			11,455,642		11,460,110			11,451,619
Incremental shares from assumed exercise of stock options and warrants		-			-		-			-
Weighted average number of shares outstanding - diluted		11,463,396			11,455,642		11,460,110			11,451,619
Diluted net income (loss) per common share	$	(0.06	)	$	0.18	$	(0.26	)	$	0.08