Earnings Per Share

9 Months Ended

Sep. 30, 2011

2. Earnings Per Share

Basic earnings per share represents income available to common stockholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate solely to outstanding stock options and are determined using the treasury stock method.

The following table sets forth the weighted average shares outstanding used in the computations of basic and diluted earnings per share:

(in thousands)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010

Basic EPS weighted average shares outstanding		3,292		2,760		3,001		2,762
Dilutive effect of stock options		1		4		1		5
Diluted EPS weighted average shares outstanding		3,293		2,764		3,002		2,767

Stock options which had no intrinsic value, because their effect would be anti-dilutive and therefore would not be included in the diluted EPS calculation were 165,150 and 113,150 as of September 30, 2011 and 2010, respectively, based upon the closing price of Norwood common stock of $24.02 and $28.00 per share on September 30, 2011 and 2010, respectively.