Earnings Per Share

9 Months Ended

Sep. 30, 2011

Note 7 – Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (EPS) for the nine months ended September 30, 2011 and 2010:

	Income		Shares		Per-Share
	(Numerator)		(Denominator)		Amount
For the nine months ended September 30, 2011
Net income as reported	$	9,341,000
Less dividends and amortization of premium on preferred stock		1,027,000
Basic EPS: Income available to common shareholders		8,314,000		9,785,063	$	0.85
Effect of dilutive securities: incentive stock options and restricted stock				10,888
Diluted EPS: Income available to common shareholders plus assumed conversions	$	8,314,000		9,795,951	$	0.85
For the nine months ended September 30, 2010
Net income as reported	$	9,039,000
Less dividends and amortization of premium on preferred stock		1,011,000
Basic EPS: Income available to common shareholders		8,028,000		9,757,074	$	0.82
Effect of dilutive securities: incentive stock options				4,707
Diluted EPS: Income available to common shareholders plus assumed conversions	$	8,028,000		9,761,781	$	0.82

The following table sets forth the computation of basic and diluted earnings per share (EPS) for the quarters ended September 30, 2011 and 2010:

	Income		Shares		Per-Share
	(Numerator)		(Denominator)		Amount
For the quarter ended September 30, 2011
Net income as reported	$	3,006,000
Less dividends and amortization of premium on preferred stock		353,000
Basic EPS: Income available to common shareholders		2,653,000		9,791,550	$	0.27
Effect of dilutive securities: incentive stock options and restricted stock				11,843
Diluted EPS: Income available to common shareholders plus assumed conversions	$	2,653,000		9,803,393	$	0.27
For the quarter ended September 30, 2010
Net income as reported	$	3,195,000
Less dividends and amortization of premium on preferred stock		337,000
Basic EPS: Income available to common shareholders		2,858,000		9,764,184	$	0.29
Effect of dilutive securities: incentive stock options				4,062
Diluted EPS: Income available to common shareholders plus assumed conversions	$	2,858,000		9,768,246	$	0.29

All earnings per share calculations have been made using the weighted average number of shares outstanding during the period. The potentially dilutive securities are incentive stock options and unvested shares of restricted stock granted to certain key members of Management and warrants granted to the U.S. Treasury under the CPP. The number of dilutive shares is calculated using the treasury method, assuming that all options and warrants were exercisable at the end of each period. Options and warrants that are out-of-the-money are not considered in the calculation of dilutive earnings per share as the effect would be anti-dilutive.

The following table presents the number of options and warrants outstanding as of September 30, 2011 and 2010 and the amount which are above or below the strike price:

	Outstanding	In-the-Money	Out-of-the-Money
As of September 30, 2011
Incentive stock options	55,500	13,500	42,000
Warrants issued to U.S. Treasury	225,904	-	225,904
Total	281,404	13,500	267,904
As of September 30, 2010
Incentive stock options	55,500	13,500	42,000
Warrants issued to U.S. Treasury	225,904	-	225,904
Total	281,404	13,500	267,904