Earnings Per Share

3 Months Ended

Mar. 31, 2017

14. Earnings Per Share

We use the two-class method of calculating earnings per share (which we refer to as “EPS”) as our non-vested restricted stock awards have non-forfeitable rights to dividends and, accordingly, represent a participating security. The two-class method is an earnings allocation method under which EPS is calculated for each class of common stock and participating security considering both dividends declared (or accumulated) and participation rights in undistributed earnings as if all such earnings had been distributed during the period. We use the treasury stock method to calculate the dilutive effect of our restricted stock units as the restricted stock units do not have participating rights.

The following table sets forth the computation of basic and diluted EPS for the three months ended March 31, 2017 and 2016 (in thousands, except share and per share information):


	Three Months Ended
	March 31,
	2017		2016
Numerator
Net income	$	8,799	$	7,983
Less: Undistributed earnings allocated to participating securities		(117)		(232)
Net income allocable to common stockholders	$	8,682	$	7,751
Denominator
Weighted average common shares outstanding - basic		21,512,289		20,626,451
Dilutive effect of restricted stock units		210,251		18,796
Weighted average common shares outstanding - diluted		21,722,540		20,645,247
Earnings per share:
Basic	$	0.40	$	0.38
Diluted	$	0.40	$	0.38

We have excluded from diluted earnings per share the common unit equivalents related to 500 restricted stock units for the three months ended March 31, 2017, because their effect would be anti-dilutive.