Note 15. Earnings per Share

Basic earnings per common share is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per common share includes the dilutive effect of potential common stock that could be issued by the Company. Under the treasury stock method of accounting, potential common stock may be issued for stock options, non-vested restricted stock awards, performance based stock awards, and convertible preferred stock. Diluted earnings per common share is calculated by dividing net income by the weighted average number of common shares outstanding for the period plus the number of dilutive potential common shares. The calculation of diluted earnings per common share excludes potential common shares that have an exercise price greater than the average market value of the Company’s common stock because the effect would be antidilutive.

The following table presents the calculation of basic and diluted earnings per common share for the periods indicated:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Amounts in thousands, except share and per share data)	2016		2015		2016		2015
Net income	$	6,383	$	6,259	$	18,722	$	18,392
Dividends on preferred stock		—		—		—		105

Net income available to common shareholders	$	6,383	$	6,259	$	18,722	$	18,287

Weighted average common shares outstanding, basic		17,031,074		18,470,348		17,433,406		18,644,679
Dilutive effect of potential common shares
Stock options		38,746		26,804		31,856		24,938
Restricted stock		13,706		3,823		9,949		3,091
Convertible preferred stock		—		—		—		223,201

Total dilutive effect of potential common shares		52,452		30,627		41,805		251,230

Weighted average common shares outstanding, diluted		17,083,526		18,500,975		17,475,211		18,895,909

Basic earnings per common share	$	0.37	$	0.34	$	1.07	$	0.98
Diluted earnings per common share		0.37		0.34		1.07		0.97
Antidilutive potential common shares
Stock options		127,789		130,382		127,789		130,382

Total potential antidilutive shares		127,789		130,382		127,789		130,382

During the first quarter of 2015, the Company redeemed all outstanding shares of its 6% Series A Noncumulative Convertible Preferred Stock (“Series A Preferred Stock”). Before redemption, holders converted 12,784 shares of Series A Preferred Stock with each share convertible into 69 shares of the Company’s common stock. The Company redeemed the remaining 2,367 shares for $2.37 million along with accrued and unpaid dividends of $9 thousand.