Note 3 - Earnings Per Common Share

Basic earnings per share was determined by dividing net income allocable to common stockholders for the applicable period by the weighted average number of shares of common stock outstanding during such period. Net income is also allocated to the unvested restricted stock during the applicable period, as the restricted stock is entitled to receive dividends and is therefore considered a participating security. Unvested restricted stock is not allocated net losses and/or any excess of dividends declared over net income; such amounts are allocated entirely to the common stockholders other than the holders of unvested restricted stock. The restricted stock units awarded under the Pay-for-Performance program described in Note 13 are excluded from the basic earnings per share calculation, as these units are not participating securities.

Diluted earnings per share reflects the potential dilution that could occur if securities or other rights exercisable for, or convertible into, common stock were exercised or converted or otherwise resulted in the issuance of common stock that shared in the earnings of the Company. For the three and nine months ended September 30, 2014 and 2013, the diluted weighted average number of shares of common stock includes 100,000 shares (of an aggregate of 200,000 shares) of common stock underlying the restricted stock units awarded pursuant to the Pay-For-Performance program. These 100,000 shares may vest upon satisfaction of the total stockholder return metric. The number of shares that would be issued pursuant to this metric is based on the market price and dividends paid as of the end of each quarterly period assuming the end of that quarterly period was the end of the vesting period. The remaining 100,000 shares of common stock underlying the restricted stock units awarded under the Pay-For-Performance program are not included during the three and nine months ended September 30, 2014 and 2013, as they did not meet the return on capital performance metric during such periods.

There were no options outstanding to purchase shares of common stock or other rights exercisable for, or convertible into, common stock during the nine months ended September 30, 2014 and 2013.

The following table provides a reconciliation of the numerator and denominator of earnings per share calculations (amounts in thousands, except per share amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Numerator for basic and diluted earnings per share:
Income from continuing operations	$	2,647		$	3,084		$	10,596		$	14,004
Less: net income attributable to non-controlling interests	(27		)	(17		)	(76		)	(32		)
Less: earnings allocated to unvested shares	(178		)	(165		)	(534		)	(494		)
Income from continuing operations available for common stockholders	2,442			2,902			9,986			13,478
Discontinued operations	—			144			13			425
Net income available for common stockholders, basic and diluted	$	2,442		$	3,046		$	9,999		$	13,903

Denominator for basic earnings per share:
- weighted average common shares	15,650			15,093			15,508			14,871
- weighted average unvested restricted stock shares	—			—			—			—
	15,650			15,093			15,508			14,871
Effect of diluted securities:
- restricted stock units awarded under Pay-for-Performance program	100			100			100			100
Denominator for diluted earnings per share
- weighted average shares	15,750			15,193			15,608			14,971

Earnings per common share, basic	$	.16		$	.20		$	.64		$	.93
Earnings per common share, diluted	$	.16		$	.20		$	.64		$	.93

Net income attributable to One Liberty Properties, Inc. common stockholders, net of non-controlling interests:
Income from continuing operations	$	2,620		$	3,067		$	10,520		$	13,972
Income from discontinued operations	—			144			13			425
Net income attributable to One Liberty Properties, Inc.	$	2,620		$	3,211		$	10,533		$	14,397