Note

Earnings

per share

The Company is required to present basic earnings per share and diluted earnings per share in its Consolidated Statements of Income. Basic earnings per share amounts are computed by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share reflects additional common shares that would have been outstanding if potentially dilutive 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 to outstanding unvested RSAs granted to directors and employees. The dilutive effect resulting from these potential shares is determined using the treasury stock method. The Company is also required to provide a reconciliation of the numerator and denominator used in the computation of both basic and diluted earnings per share.

The following table summarizes the computation of basic and diluted earnings per share for the

three

and

six

months ended

June

30,

2018

and

2017:

(Net income in thousands)	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Basic earnings per share:
Net income attributable to Common shareholders	$	1,036		804		2,101		2,534

Divided by:
Weighted average shares outstanding		3,903,858		3,894,128		3,902,195		3,893,431

Basic earnings per common share	$	0.27		0.21		0.54		0.65


Diluted earnings per share:
Net income attributable to Common shareholders	$	1,036		804		2,101		2,534

Weighted average shares outstanding		3,903,858		3,894,128		3,902,195		3,893,431

Effect of potentially dilutive restricted common shares		13,603		7,400		17,943		5,289

Divided by:
Weighted average diluted shares outstanding		3,917,461		3,901,528		3,920,138		3,898,720

Diluted earnings per common share	$	0.26		0.21		0.54		0.65