Earnings Per Share

6 Months Ended

Jun. 30, 2012

Note 7 - Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (EPS) for the six months ended June 30, 2012 and 2011:

	Income		Shares		Per-Share
	(Numerator)		(Denominator)		Amount
For the six months ended June 30, 2012
Net income as reported	$	6,236,000
Less dividends and amortization of premium on preferred stock		362,000
Basic EPS: Income available to common shareholders		5,874,000		9,822,437	$	0.60
Effect of dilutive securities: restricted stock				15,461
Diluted EPS: Income available to common shareholders plus assumed conversions	$	5,874,000		9,837,898	$	0.60
For the six months ended June 30, 2011
Net income as reported	$	6,336,000
Less dividends and amortization of premium on preferred stock		674,000
Basic EPS: Income available to common shareholders		5,662,000		9,781,766	$	0.58
Effect of dilutive securities: incentive stock options and restricted stock				10,399
Diluted EPS: Income available to common shareholders plus assumed conversions	$	5,662,000		9,792,165	$	0.58

The following table sets forth the computation of basic and diluted earnings per share (EPS) for the quarters ended June 30, 2012 and 2011:

	Income		Shares		Per-Share
	(Numerator)		(Denominator)		Amount
For the quarter ended June 30, 2012
Net income as reported	$	3,323,000
Less dividends and amortization of premium on preferred stock		181,000
Basic EPS: Income available to common shareholders		3,142,000		9,824,568	$	0.32
Effect of dilutive securities: restricted stock				19,727
Diluted EPS: Income available to common shareholders plus assumed conversions	$	3,142,000		9,844,295	$	0.32
For the quarter ended June 30, 2011
Net income as reported	$	3,193,000
Less dividends and amortization of premium on preferred stock		337,000
Basic EPS: Income available to common shareholders		2,856,000		9,784,743	$	0.29
Effect of dilutive securities: incentive stock options and restricted stock				12,238
Diluted EPS: Income available to common shareholders plus assumed conversions	$	2,856,000		9,796,981	$	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 June 30, 2012 and 2011 and the amount which are above or below the strike price:

	Outstanding	In-the-Money	Out-of-the-Money
As of June 30, 2012
Incentive stock options	42,000	-	42,000
Warrants issued to U.S. Treasury	225,904	-	225,904
Total	267,904	-	267,904
As of June 30, 2011
Incentive stock options	55,500	13,500	42,000
Warrants issued to U.S. Treasury	225,904	-	225,904
Total dilutive securities	281,404	13,500	267,904

- Definition

The entire disclosure for earnings per share.

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