Earnings per share ("EPS")

9 Months Ended

Sep. 30, 2023

Unvested restricted stock awards that contain non-forfeitable rights to dividends are participating securities and are included in the computation of EPS pursuant to the two-class method. The two-class method is an earnings allocation formula that determines EPS for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. The Company’s unvested restricted stock awards qualify as participating securities.

Net income is allocated between the common stock and participating securities pursuant to the two-class method. Basic EPS is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period, excluding participating unvested restricted stock awards.

Diluted EPS is computed in a similar manner, except that the denominator includes the number of additional common shares that would have been outstanding if potentially dilutive common shares were issued using the treasury stock method.

The following table is a reconciliation of earnings available to common shareholders and basic weighted average common shares outstanding to diluted weighted average common shares outstanding, reflecting the application of the two-class method:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(In thousands, except per share data)
Net income	$	9,777	$	9,174	$	28,139	$	29,408
Dividends to participating securities(1)	(41)		(33)		(125)		(101)
Undistributed earnings allocated to participating securities(1)	(209)		(159)		(613)		(529)
Net income for earnings per share calculation	$	9,527	$	8,982	$	27,401	$	28,778

Weighted average shares outstanding, basic	7,598		7,554		7,582		7,582
Effect of dilutive equity-based awards(2)	36		58		65		82
Weighted average shares outstanding, diluted	7,634		7,612		7,647		7,664
Net earnings per common share:
Basic earnings per common share	$	1.25	$	1.19	$	3.61	$	3.80
Diluted earnings per common share	$	1.25	$	1.18	$	3.58	$	3.75

(1) Represents dividends paid and undistributed earnings allocated to unvested stock-based awards that contain non-forfeitable rights to dividends.

(2) Represents the effect of the assumed exercise of stock options and the vesting of restricted shares, as applicable, utilizing the treasury stock method.