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Earnings Per Common Share

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Earnings Per Common Share

Note 2—Earnings Per Common Share

The following reconciles the numerator and denominator of the basic and diluted earnings per common share computation:

(In thousands except average market price)


		Six months								Three months
		Ended June 30,								Ended June 30,
		2020				2019				2020				2019

Numerator (Net income available to common shareholders)		$	4,011			$	5,376			$	2,217			$	2,881
Denominator
Weighted average common shares outstanding for:
Basic shares			7,432				7,629				7,436				7,627
Dilutive securities:
Deferred compensation			26				43				18				41

Warrants/Restricted stock – Treasury stock method			10				36				11				36
Diluted shares			7,468				7,708				7,465				7,704
Earnings per common share:
Basic			0.54				0.70				0.30				0.38
Diluted			0.54				0.70				0.30				0.37
The average market price used in calculating assumed number of shares		$	16.98			$	19.12			$	14.97			$	18.35

In the fourth quarter of 2011, we issued $2.5 million in 8.75% subordinated notes maturing December 16, 2019. On November 15, 2012, the subordinated notes were redeemed in full at par. In connection with the issuance of the subordinated debt, the Company issued warrants for 107,500 shares of common stock at $5.90 per share. There were 32,250 warrants outstanding at June 30, 2019 and these warrants are included in dilutive securities in the table above. All warrants were exercised by their expiration date of December 16, 2019.

In 2006, the Company established a Non-Employee Director Deferred Compensation Plan, whereby a director may elect to defer all or any part of annual retainer and monthly meeting fees payable with respect to service on the board of directors or a committee of the board. Units of common stock are credited to the director’s account at the time compensation is earned and are included in dilutive securities in the table above. The non-employee director’s account balance is distributed by issuance of common stock at the time of retirement or resignation from the board of directors. At June 30, 2020 and December 31, 2019, there were 84,643 and 97,104 units in the plan, respectively. The accrued liability at June 30, 2020 and December 31, 2019 amounted to $1.0 million and $1.1 million, respectively, and is included in “Other liabilities” on the balance sheet.

The Company has adopted a stock option plan whereby shares have been reserved for issuance by the Company upon the grant of stock options or restricted stock awards. At June 30, 2020 and December 31, 2019 the Company had 111,049 and 96,729 shares, respectively, reserved for future grants. The 350,000 shares reserved were approved by shareholders at the 2011 annual meeting. The plan provides for the grant of options to key employees and directors as determined by a stock option committee made up of at least two members of the board of directors. Options are exercisable for a period of ten years from date of grant. There were no stock options outstanding and exercisable at June 30, 2020 and December 31, 2019.

The employee restricted shares and units cliff vest over a three-year period; the non-employee director shares vest one year after issuance. The unrecognized compensation cost at June 30, 2020 and December 31, 2019 for non-vested shares amounts to $396.0 thousand and $219.7 thousand, respectively. Each unit is convertible into one share of common stock at the time the unit vests. The related compensation cost is accrued over the vesting period and was $79.2 thousand and $61.0 thousand at June 30, 2020, and December 31, 2019, respectively.