EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2013

EARNINGS PER SHARE [Abstract]

EARNINGS PER SHARE

NOTE 2 - EARNINGS PER SHARE

The following is an analysis of basic and diluted earnings per share ("EPS"), reflecting the application of the two-class method, as described below:

	Three Months Ended March 31,
	2013			2012
Net income	$	5,662		$	6,583
Dividends and undistributed earnings allocated to participating securities (1)		(10	)		(11	)
Net income available to common shareholders	$	5,652		$	6,572
Weighted-average common shares outstanding for basic EPS		7,627,691			7,672,039
Dilutive effect of stock-based awards (2)		15,576			14,894
Weighted-average common and potential common shares for diluted EPS		7,643,267			7,686,933
Earnings per common share:
Basic EPS	$	0.74		$	0.86
Diluted EPS	$	0.74		$	0.86

(1) Represents dividends paid and undistributed earnings allocated to nonvested restricted stock awards.

(2) Represents the effect of the assumed exercise of stock options, vesting of restricted shares, and vesting of restricted stock units, based on the treasury stock method.

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

Net income, less any preferred dividends accumulated for the period (whether or not declared), 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 nonvested restricted shares. 

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

For the three-month periods ended March 31, 2013 and 2012, options to purchase 53,500 and 48,400 shares, respectively, of common stock were not considered in the computation of potential common shares for purposes of diluted EPS, since the exercise prices of the options were greater than the average market price of the common stock for the respective periods.