2) Shareholders’ Equity and Earnings Per Share

On September 12, 2016, the Company, entered into Exchange Agreements with Castle Creek Capital Partners IV, LP, Patriot Financial Partners, L.P. and Patriot Financial Partners Parallel, L.P. (collectively “Preferred Stockholders”) providing for the exchange of 21,004 shares of the Company’s Series C convertible perpetual preferred stock, no par value (“ Series C Preferred Stock”) for 5,601,000 shares of the Company’s common stock, no par value. The exchange ratio was equal to the equivalent number of shares the Preferred Stockholders would have received upon conversion of the Series C Preferred Stock.

Earnings Per Share -- Basic earnings per common share is computed by dividing net income, less dividends and discount accretion on preferred stock, by the weighted average common shares outstanding. The Series C Preferred Stock participated in the earnings of the Company prior to the exchange for common stock and, therefore, the shares issued on the conversion of the Series C Preferred Stock were considered outstanding under the two class method of computing basic earnings per common share during periods of earnings. Diluted earnings per share reflect potential dilution from outstanding stock options using the treasury stock method. A reconciliation of these factors used in computing basic and diluted earnings per common share is as follows:


	March 31,
	2017		2016
	(Dollars in thousands, except per share amounts)
Net income available to common shareholders	$	6,538	$	5,602
Less: undistributed earnings allocated to Series C Preferred Stock		—		(403)
Distributed and undistributed earnings allocated to common shareholders	$	6,538	$	5,199

Weighted average common shares outstanding for basic earnings per common share		37,957,999		32,125,716
Dilutive effect of stock options oustanding, using the the treasury stock method		536,108		251,777
Shares used in computing diluted earnings per common share		38,494,107		32,377,493

Basic earnings per share	$	0.17	$	0.16
Diluted earnings per share	$	0.17	$	0.16