Earnings per Share

6 Months Ended

Jun. 30, 2013

(11) Earnings per Share

Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the year. Diluted earnings per share gives effect to all dilutive potential common shares that were outstanding during the year. The calculations of basic and diluted earnings per share are as follows for the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Basic earnings per common share:
Net income	$	1,812,283	$	740,031	$	1,675,734	$	2,190,766
Less:
Preferred stock dividends	114,093		295,723		337,210		665,506
Accretion of discount on preferred stock	206,166		396,380		278,039		515,499
Net income available to common shareholders	$	1,492,024	$	47,928	$	1,060,485	$	1,009,761
Basic earnings per share	$	0.30	$	0.01	$	0.21	$	0.20
Diluted earnings per common share:
Net income	$	1,812,283	$	740,031	$	1,675,734	$	2,190,766
Less:
Preferred stock dividends	114,093		295,723		337,210		665,506
Accretion of discount on preferred stock	206,166		396,380		278,039		515,499
Net income available to common shareholders	$	1,492,024	$	47,928	$	1,060,485	$	1,009,761
Average shares outstanding	5,032,679		5,032,679		5,032,679		5,032,679
Effect of dilutive stock options	0		0		0		0
Average shares outstanding including dilutive stock options	5,032,679		5,032,679		5,032,679		5,032,679
Diluted earnings per share	$	0.30	$	0.01	$	0.21	$	0.20

Under the treasury stock method, outstanding stock options are dilutive when the average market price of the Company’s common stock, when combined with the effect of any unamortized compensation expense, exceeds the option price during the period, except when the Company has a loss from continuing operations available to common shareholders. In addition, proceeds from the assumed exercise of dilutive options along with the related tax benefit are assumed to be used to repurchase common shares at the average market price of such stock during the period.

The following options to purchase shares during the three and six months ended June 30, 2013 and 2012 were not included in the respective computations of diluted earnings per share because the exercise price of the option, when combined with the effect of the unamortized compensation expense, was greater than the average market price of the common shares and were considered anti-dilutive. The warrant to purchase common stock was repurchased by the Company on June 11, 2013. See Note 10 for additional information.

	Three Months Ended June 30,		Six Months Ended June 30,
	2013	2012	2013	2012
Anti-dilutive shares - option shares	188,491	230,030	188,491	230,030
Anti-dilutive shares - warrant shares	0	298,618	0	298,618
Total anti-dilutive shares	188,491	528,648	188,491	528,648

- Definition

The entire disclosure for earnings per share.

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