Earnings Per Common Share

6 Months Ended

Jun. 30, 2015

The Corporation calculates earnings per common share (EPS) using the two-class method. The two-class method allocates net income to each class of Common Stock and participating security according to the common dividends declared and participation rights in undistributed earnings. Participating securities consist of unvested stock-based payment awards that contain nonforfeitable rights to dividends. The Corporation also uses the treasury stock method to calculate dilutive EPS. The treasury stock method assumes that the Corporation uses the proceeds from a hypothetical exercise of options to repurchase Common Stock at the average market price during the period. The reconciliation between basic and diluted earnings per share is presented as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Basic EPS	(Dollars in thousands, except per share data)
Net income	$	2,261	$	2,023	$	4,108	$	3,629
Less:
Preferred stock dividend and accretion	—		—		—		35
Income allocated to participating securities	2		8		6		16
Net income allocated to common shareholders	$	2,259	$	2,015	$	4,102	$	3,578

Average common shares outstanding	9,660,490		9,664,972		9,659,789		9,666,626
Less: participating shares included in average common shares outstanding	10,000		38,552		14,574		45,820
Average common shares outstanding used in basic EPS	9,650,490		9,626,420		9,645,215		9,620,806
Basic net income per common share	$	0.23	$	0.21	$	0.43	$	0.37

Diluted EPS:
Income used in diluted earnings per share calculation	$	2,259	$	2,015	$	4,102	$	3,578

Average common shares outstanding	9,650,490		9,626,420		9,645,215		9,620,806
Add: Common Stock equivalents
Stock Options	101,335		17,472		96,345		17,008
Average common stock shares outstanding	9,751,825		9,643,892		9,741,560		9,637,814
Diluted earnings per common share	$	0.23	$	0.21	$	0.42	$	0.37

For the three month period ended June 30, 2015, options to purchase approximately 30,000 shares of common stock were not included in the computation of diluted earnings per share because the effect would be antidilutive. For the six month periods ended June 30, 2015, approximately 30,000 shares of common stock were not included in the computation of diluted earnings per share because the effect would be antidilutive. Options to purchase 337,696 common shares were considered in computing diluted earnings per common share for the three and six month periods ended June 30, 2014. For the three month and six month periods ended June 30, 2014, approximately 300,196 of options to purchase shares of common stock were not included in the computation of diluted earnings per share because the effect would be antidilutive.