Shareholders Equity

9 Months Ended

Sep. 30, 2011

Notes to Financial Statements

Shareholders Equity

8.  Shareholders’ Equity   

	($000’s omitted except for share data)
	Common Stock						Accumulated
	Number		Capital in				Other	Total
	of shares		excess of	Retained		Treasury	Comprehensive	Shareholders’
	issued	Amount	par value	earnings	ESOP	stock	Loss	Equity
Balance December 31, 2010	2,614,506	$523	$13,491	$11,467	($1,367)	($2,724)	($78)	$21,312
Net income	-	-	-	2,038	-	-	-	2,038
Surrender of unexercised stock
options, net of tax benefit	-	-	156	(517)	-	-	-	(361)
Cash dividend	-	-	-	(336)	-	-	-	(336)
Balance September 30, 2011	2,614,506	$523	$13,647	$12,652	($1,367)	($2,724)	($78)	$22,653

In January of 2006, the Company’s Board of Directors authorized the purchase by the Company of up to 250,000 shares of its common stock in the open market or in privately negotiated transactions. On October 31, 2008, the Company announced that its Board of Directors authorized the purchase of an additional 200,000 shares of the Company’s common stock under the Company’s current purchase program. As of September 30, 2011, the Company has purchased 238,088 shares and there remain 211,912 shares available to purchase under this program. There were no shares purchased by the Company during the nine month periods ended September 30, 2011 and 2010. 

Consistent with the Company’s current policy to reduce the number of outstanding Company shares thereby increasing the reported earnings per share, certain option holders elected on July 12, 2011 to surrender 112,000 unexercised options to the Company in exchange for a cash payment equal to the difference between the exercise price and the average of the high and the low market price of the Company’s common stock on the day of surrender less an administrative charge. Such transactions aggregated $517,000. A tax benefit, to the Company, of approximately $156,000 associated with these transactions reduced taxes payable and was credited directly to capital in excess of par value. 

As previously reported, on April 4, 2011, the Company announced that its Board of Directors declared a $0.15 per share cash dividend. The dividend was paid on May 20, 2011 to shareholders of record on April 29, 2011 and was approximately $336,000 in the aggregate. This fourth consecutive annual dividend does not represent that the Company will pay dividends on a regular or scheduled basis.  

Earnings Per Share 

Basic earnings per share is computed by dividing net earnings by the weighted average number of shares outstanding during the period. Diluted earnings per share is computed by dividing net earnings by the weighted average number of shares outstanding during the period plus the number of shares of common stock that would be issued assuming all contingently issuable shares having a dilutive effect on the earnings per share that were outstanding for the period. Incremental shares from assumed conversions are calculated as the number of shares that would be issued, net of the number of shares that could be purchased in the marketplace with the cash received upon stock option exercise.

	Three Months Ended				Nine Months Ended
	September 30,					September 30,
	2011		2010			2011		2010
	($000’s omitted except per share data)
Net income	$	904	$	205		$	2,038	$	1,606
Weighted average common shares
outstanding (basic)		1,982		1,961			1,982		1,961
Incremental shares from assumed
conversions of stock options		89		167			117		168
Weighted average common
shares outstanding (diluted)		2,071		2,128			2,099		2,129
Basic
Net income per share	$	0.46	$	0.10		$	1.03	$	0.82
Diluted
Net income per share	$	0.44	$	0.10		$	0.97	$	0.75