Note 9 - Basic and Diluted Earnings Per Common Share

9 Months Ended

Sep. 30, 2016

9. Basic and diluted earnings per common share:

Basic earnings per common share has been calculated by dividing net income for the period by the weighted average number of common shares outstanding during each period. Diluted earnings per share has been calculated by dividing net income for the period by the weighted average number of common shares and potentially dilutive common shares outstanding during the period. In computing diluted earnings per share, the treasury stock method is used to determine the number of shares assumed to be purchased from the conversion of common share equivalents or the proceeds of option exercises.

The following table is a summary of the basic and diluted earnings per common share:

	Three months ended September 30,				Nine months ended September 30,
	2016		2015		2016		2015

Numerator for basic and diluted earnings per common share:
Net income for the period	$	4,741,279	$	3,159,457	$	13,250,303	$	8,278,395

Denominator for basic and diluted earnings per scommon share:
Basic weighted average number of common shares outstanding		10,432,763		10,984,869		10,549,056		11,057,634
Effect of outstanding stock options		186,242		387,813		187,719		412,023
Diluted weighted average number of shares outstanding		10,619,005		11,372,682		10,736,775		11,469,657

Basic earnings per common share	$	0.45	$	0.29	$	1.26	$	0.75

Diluted earnings per common share	$	0.45	$	0.28	$	1.23	$	0.72

For the three months ended September 30, 2016, outstanding options to purchase 76,750 common shares were not included in the computation of diluted income per common share because all such options had exercise prices greater than the average market price of the common shares.

For the nine months ended September 30, 2016, outstanding options to purchase 95,950 common shares were not included in the computation of diluted income per common share because all such options had exercise prices greater than the average market price of the common shares.

During the three months ended September 30, 2016, no common shares were repurchased and for the nine months ended September 30, 2016, 308,416 common shares were repurchased and cancelled under the terms of our stock repurchase program announced in February 2016.

During the three and nine months ended September 30, 2015, 398,000 and 637,502 common shares were repurchased and cancelled under the terms of our stock repurchase program announced in February 2015.

During the nine months ended September 30, 2015, 193,907 common shares were repurchased and cancelled under the terms of a modified Dutch auction tender offer announced in December 2014 and concluded in January 2015.

The computation of earnings per share and diluted earnings per share for the three and nine months ended September 30, 2016 and 2015 include reductions in the number of shares outstanding due to these repurchases.