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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2019

NOTE 7 – EARNINGS PER SHARE

Salisbury defines unvested share-based payment awards that contain non-forfeitable rights to dividends as participating securities that are included in computing earnings per share (EPS) using the two-class method.

The two-class method is an earnings allocation formula that determines earnings per share for each share of common stock and participating securities according to dividends declared and participation rights in undistributed earnings. Under this method, all earnings (distributed and undistributed) are allocated to common shares and participating securities based on their respective rights to receive dividends. Basic EPS excludes dilution and is computed by dividing income allocated to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.

The following table sets forth the computation of earnings per share (basic and diluted) for the periods indicated:

	Three months ended						Nine months ended
Periods ended September 30, (in thousands, except per share data)	2019			2018			2019			2018
Net income	$	2,988		$	2,344		$	8,126		$	6,259
Less: Undistributed earnings allocated to participating securities		(48	)		(33	)		(110	)		(74	)
Net income allocated to common stock	$	2,940		$	2,311		$	8,016		$	6,185
Weighted average common shares issued		2,823			2,804			2,815			2,795
Less: Unvested restricted stock awards		(40	)		(40	)		(34	)		(33	)
Weighted average common shares outstanding used to calculate basic earnings per common share		2,783			2,764			2,781			2,762
Add: Dilutive effect of stock options, unvested restricted stock awards and units		12			15			12			18
Weighted average common shares outstanding used to calculate diluted earnings per common share		2,795			2,779			2,793			2,780
Earnings per common share (basic)	$	1.06		$	0.84		$	2.88		$	2.24
Earnings per common share (diluted)	$	1.05		$	0.83		$	2.87		$	2.23