Earnings per Share

6 Months Ended

Jun. 30, 2015

(10)

Earnings per Share

Basic earnings per share is computed by dividing income available to shareholders by the weighted average number of shares outstanding during the year. Diluted earnings per share gives effect to all dilutive potential 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,
*(dollars in thousands, except per share data)*	2015		2014		2015		2014
Basic earnings per share:
Net income available to shareholders	$	1,927	$	2,098	$	4,065	$	4,085
Basic earnings per share	$	0.35	$	0.39	$	0.75	$	0.75
Diluted earnings per share:
Net income available to shareholders	$	1,927	$	2,098	$	4,065	$	4,085
Average shares outstanding		5,443,344		5,443,344		5,443,344		5,443,344
Effect of dilutive stock options		0		0		0		0
Average shares outstanding including dilutive stock options		5,443,344		5,443,344		5,443,344		5,443,344
Diluted earnings per share	$	0.35		0.39	$	0.75		0.75

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 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.

Options to purchase 66,432 shares during the three and six months ended June 30, 2015, compared to 101,330 shares during the three and six months ended June 30, 2014 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.