Earnings per Common Share

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Earnings per Common Share

(7) Earnings per Common Share

Basic earnings per share are net income available to common shareholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share include the dilutive effect, if any, of additional potential common shares issuable under stock options, computed using the treasury stock method and the impact of the Company’s convertible preferred shares using the “if converted” method.

	Three months ended September 30,				Nine months ended September 30,
	2014		2013		2014		2013
Basic
Net income	$	2,306	$	1,566	$	7,257	$	5,136
Preferred stock dividends		406		289		1,467		869
Net income available to common shareholders - basic	$	1,900	$	1,277	$	5,790	$	4,267
Weighted average common shares outstanding - basic		7,707,917		7,707,917		7,707,917		7,707,917
Basic earnings per common share	$	0.25	$	0.17	$	0.75	$	0.55
Diluted
Net income available to common shareholders - basic	$	1,900	$	1,277	$	5,790	$	4,267
Preferred stock dividends on convertible preferred stock		406		—		1,201		—
Net income available to common shareholders - diluted	$	2,306	$	1,277	$	6,991	$	4,267
Weighted average common shares outstanding for earnings per common share basic		7,707,917		7,707,917		7,707,917		7,707,917
Add: Dilutive effects of convertible preferred shares		3,196,931		—		3,196,931		—
Average shares and dilutive potential common shares outstanding - diluted		10,904,848		7,707,917		10,904,848		7,707,917
Diluted earnings per common share	$	0.21	$	0.17	$	0.64	$	0.55

Stock options for 10,000 common shares that have an exercise price of $35.00 were not considered in computing diluted earnings per common share for the three- and nine-month periods ended September 30, 2013 because they were anti-dilutive. There were no stock options outstanding during the three- and nine-month periods ended September 30, 2014.

For the three- and nine-month periods ended September 30, 2014 there were 3,196,931 dilutive shares related to the Company’s convertible preferred shares. Under the “if converted” method, all convertible preferred shares are assumed to be converted into common shares at the corresponding conversion rate. These additional shares are then added to the common shares outstanding to calculate diluted earnings per share. Additionally, the dividends paid on the convertible preferred shares are added back to net income under this method.