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Earnings per Share

9 Months Ended

Sep. 30, 2017

(11)	Earnings per Share

Stock Dividend On July 1, 2017, the Company paid a special stock dividend of 4% to common shareholders of record at the close of business on June 15, 2017. For all periods presented, share information, including basic and diluted earnings per share, has been adjusted retroactively to reflect this change.

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 September 30,				Nine Months Ended September 30,
(dollars in thousands, except per share data)	2017		2016		2017		2016
Basic earnings per share:
Net income available to shareholders	$	1,766	$	1,884	$	5,786	$	5,294
Basic earnings per share	$	0.30	$	0.32	$	0.99	$	0.90
Diluted earnings per share:
Net income available to shareholders	$	1,766	$	1,884	$	5,786	$	5,294
Average shares outstanding		5,825,825		5,859,415		5,834,679		5,869,569
Effect of dilutive stock options		5,561		0		5,198		0
Average shares outstanding including dilutive stock options		5,831,386		5,859,415		5,839,877		5,869,569
Diluted earnings per share	$	0.30	$	0.32	$	0.99	$	0.90

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 46,244 shares during the three and nine months ended September 30, 2016, respectively, 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. There were no anti-dilutive shares for the three and nine months ended September 30, 2017.

Repurchase Program On August 6, 2015, the Board of Directors authorized a share repurchase plan to purchase through open market transactions $2.0 million market value of the Company’s common stock. On August 8, 2017 the Board authorized the repurchase of an additional $1.5 million market value of the Company’s common stock. As of September 30, 2017, the Company had repurchased a total of 74,608 shares of common stock pursuant to the plan at an average price of $17.15 per share, including 30,715 shares of common stock repurchased pursuant to the plan during the nine months ended September 30, 2017 at an average price of $20.30 per share. At September 30, 2017, approximately $2.2 million remained available for the purchase of shares under the plan.