Net Income Per Common Share

9 Months Ended

Jun. 30, 2016

NET INCOME PER COMMON SHARE

Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period, without considering any dilutive items. Diluted net income per common share is computed by dividing net income by the weighted average number of common shares and common stock equivalents for items that are dilutive, net of shares assumed to be repurchased using the treasury stock method at the average share price for the Company’s common stock during the period. Common stock equivalents arise from the assumed conversion of outstanding stock options and the outstanding warrant to purchase common stock. Shares owned by the Bank’s ESOP that have not been allocated are not considered to be outstanding for the purpose of computing basic and diluted net income per common share. At June 30, 2016 and 2015, there were 111,500 and 149,734 shares, respectively, that had not been allocated under the Bank’s ESOP.

Information regarding the calculation of basic and diluted net income per common share for the three and nine months ended June 30, 2016 and 2015 is as follows (dollars in thousands, except per share amounts):



	Three Months Ended June 30,				Nine Months Ended June 30,
	2016		2015		2016		2015
Basic net income per common share computation
Numerator – net income	$	2,547	$	2,159	$	7,455	$	5,337

Denominator – weighted average common shares outstanding	6,822,608		6,902,067		6,846,373		6,897,381

Basic net income per common share	$	0.37	$	0.31	$	1.09	$	0.77

Diluted net income per common share computation
Numerator – net income	$	2,547	$	2,159	$	7,455	$	5,337

Denominator – weighted average shares outstanding	6,822,608		6,902,067		6,846,373		6,897,381
Effect of dilutive stock options (1)	93,041		36,490		69,291		36,680
Effect of dilutive stock warrant (2)	195,550		132,664		175,997		134,760
Weighted average common shares and common stock equivalents	7,111,199		7,071,221		7,091,661		7,068,821

Diluted net income per common share	$	0.36	$	0.31	$	1.05	$	0.76

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(1) For the nine months ended June 30, 2016, average options to purchase 56,358 shares of common stock were outstanding but not included in the computation of diluted net income per share because their effect would have been anti-dilutive. For the three months ended June 30, 2016 all outstanding options were included in the computation of diluted net income per share. For the three and nine months ended June 30, 2015, average options to purchase 172,945 and 138,982 shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per common share because their effect would have been anti-dilutive.

(2) Represents a warrant to purchase 370,899 shares of the Company's common stock at an exercise price of $6.73 per share (subject to anti-dilution adjustments) at any time through December 23, 2018 (the "Warrant"). The Warrant was granted on December 23, 2008 to the U.S. Treasury Department ("Treasury") as part of the Company's participation in the Treasury's Troubled Asset Relief Program ("TARP"). On June 12, 2013, the Treasury sold the Warrant to private investors.