NOTE 2—EARNINGS PER SHARE

Earnings per share (EPS) have been computed based on the weighted average number of common shares outstanding during the periods presented. There were no anti-dilutive shares in 2017 or 2016. Included in the diluted EPS for September 30, 2017 is the impact of the full conversion of the Company’s depository shares. Based upon the current conversion price of $10.2661, the 1,500,000 outstanding depository shares are convertible into an aggregate of 1,461,115 common shares. The average number of common shares used in the computation of basic and diluted earnings per share were:

	Three Months Ended Sep., 30
($ in thousands - except per share data)	2017		2016

Distributed earnings allocated to common shares	$	340	$	295
Undistributed earnings allocated to common shares		2,136		2,005

Net earnings allocated to common shares		2,476		2,300
Net earnings allocated to participating securities		3		3
Dividends on convertible preferred shares		244		244

Net Income allocated to common shares and participating securities	$	2,723	$	2,547

Weighted average shares outstanding for basic earnings per share		4,797		4,874
Dilutive effect of stock compensation		70		47
Dilutive effect of convertible shares		1,459		1,455

Weighted average shares outstanding for diluted earnings per share		6,326		6,376

Basic earnings per common share	$	0.52	$	0.47

Diluted earnings per common share	$	0.43	$	0.40

	Nine Months Ended Sep., 30
($ in thousands - except per share data)	2017		2016

Distributed earnings allocated to common shares	$	999	$	862
Undistributed earnings allocated to common shares		5,294		4,868

Net earnings allocated to common shares		6,293		5,730
Net earnings allocated to participating securities		9		6
Dividends on convertible preferred shares		731		731

Net Income allocated to common shares and participating securities	$	7,033	$	6,467

Weighted average shares outstanding for basic earnings per share		4,825		4,888
Dilutive effect of stock compensation		73		41
Dilutive effect of convertible shares		1,458		1,455

Weighted average shares outstanding for diluted earnings per share		6,356		6,384

Basic earnings per common share	$	1.31	$	1.17

Diluted earnings per common share	$	1.11	$	1.01