(3) Net Income Per Share

Basic and diluted earnings or loss per share (“EPS”) are computed using the two-class method, which is an earnings allocation that determines EPS for each class of common stock and participating securities according to dividends declared and participation rights in undistributed earnings. Restricted Stock Awards (“RSAs”) are considered participating securities because they are legally issued at the date of grant and holders are entitled to receive non-forfeitable dividends during the vesting term.

The computation of diluted EPS includes additional common shares, such as unvested stock options with exercise prices less than the average market price of the Company’s common stock during the period (“in-the-money options”), which would be considered outstanding under the treasury stock method. The treasury stock method assumes that additional shares would have to be issued in cases where the exercise price of stock options is less than the value of the common stock being acquired because the cash proceeds received from the stock option holder would not be sufficient to acquire that same number of shares. The Company does not compute diluted EPS in cases where the inclusion of such additional shares would be anti-dilutive in effect.

The following table sets forth the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2017 and 2016, (in thousands, except for earnings per share):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Weighted-average shares:
Common shares outstanding		38,579		37,118		39,803		34,138
RSAs		62		-		60		-
Total weighted-average shares		38,641		37,118		39,863		34,138
Earnings per common share—Basic
Net income	$	9,831	$	5,036	$	27,831	$	13,446
Less: Undistributed earnings allocated to RSAs		16		-		42		-
Net income available to common shareholders—Basic	$	9,815	$	5,036	$	27,789	$	13,446

Net income per common share—Basic	$	0.25	$	0.14	$	0.70	$	0.39

Basic weighted-average common shares outstanding		38,579		37,118		39,803		34,138
Effect of diluted shares		750		505		734		227
Diluted weighted-average shares outstanding		39,329		37,623		40,537		34,365

Net income per common share—Diluted	$	0.25	$	0.13	$	0.69	$	0.39

During the three months ended September 30, 2017 and 2016, respectively, there were 158,034 and 61,896 shares excluded from the computation of EPS because they were anti-dilutive under the treasury method calculation of diluted weighted average shares outstanding. During the nine months ended September 30, 2017 and 2016, respectively, there were 90,553 and 25,699 shares excluded from the computation of EPS because they were anti-dilutive under the treasury method calculation of diluted weighted average shares outstanding.

During the three months ended September 30, 2017, there were 27,500 stock options that were excluded from the computation of EPS due to the exercise price exceeding the average fair value of the Company’s common stock during the period. During the nine months ended September 30, 2017 and 2016, respectively, there were 27,500 and 643,680 stock options that were excluded from the computation of EPS due to the exercise price exceeding the average fair value of the Company’s common stock during the period.