NET INCOME PER COMMON SHARE

Basic net income per common share is computed by dividing net income to common shareholders 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 to common shareholders 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, 2018 and 2017, there were 45,999 and 79,032 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, 2018 and 2017 is as follows (dollars in thousands, except share and per share amounts):



	Three Months Ended June 30,				Nine Months Ended June 30,
	2018		2017		2018		2017
Basic net income per common share computation
Numerator – net income	$	4,416	$	4,277	$	12,299	$	10,552

Denominator – weighted average common shares outstanding	7,345,618		7,269,564		7,328,702		7,088,134

Basic net income per common share	$	0.60	$	0.59	$	1.68	$	1.49

Diluted net income per common share computation
Numerator – net income	$	4,416	$	4,277	$	12,299	$	10,552

Denominator – weighted average common shares outstanding	7,345,618		7,269,564		7,328,702		7,088,134
Effect of dilutive stock options (1)	189,539		162,607		189,745		153,941
Effect of dilutive stock warrant (2)	—		—		—		106,411
Weighted average common shares outstanding - assuming dilution	7,535,157		7,432,171		7,518,447		7,348,486

Diluted net income per common share	$	0.59	$	0.58	$	1.64	$	1.44

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(1) For the three months ended June 30, 2018, all outstanding options were included in the computation of diluted net income per share. For the nine months ended June 30, 2018, average options to purchase 38,709 shares of common stock were outstanding but not included in the computation of diluted net income per common share because their effect would have been anti-dilutive. For the three and nine months ended June 30, 2017, all outstanding options were included in the computation of diluted net income per share.

(2) Represented 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"). On January 31, 2017, the Warrant was exercised and 370,899 shares of the Company's common stock were issued in exchange for $2.50 million.