Earnings Per Share

3 Months Ended

Jun. 30, 2016

3. Earnings Per Share

The Company has granted stock compensation awards with nonforfeitable dividend rights which are considered participating securities. As such, earnings per share is calculated using the two-class method. Basic earnings per share is calculated by dividing net income allocated to common shareholders by the weighted average number of common shares outstanding during the period, which excludes the participating securities. Diluted earnings per share includes the dilutive effect of additional potential common shares from stock compensation awards. Earnings per share have been computed based on the following weighted average number of common shares outstanding:


	Three months ended June 30, (In thousands, except per share amounts)
	2016			2015
Numerator:
Net income per consolidated statements of income	$	2,903		$	3,670
Less: Allocation of earnings to participating securities		(30	)		—

Net income allocated to common stock		2,873		$	3,670

Basic earnings per share computation:
Net income allocated to common stock	$	2,873		$	3,670

Weighted average common shares outstanding, including shares considered participating securities		7,753			7,616
Less: Weighted average participating securities outstanding		(81	)		—

Weighted average shares of common stock		7,672			7,616

Basic earnings per share	$	0.37			0.48

Diluted earnings per share computation:
Net income allocated to common stock	$	2,873		$	3,670
Undistributed earnings re-allocated to participating securities		0			—

Net income allocated to common stock	$	2,873		$	3,670
Weighted average common shares outstanding for basic earnings per share		7,672			7,616
Incremental shares from stock options		60			127

Weighted average shares and dilutive potential common shares		7,732			7,743

Diluted earnings per share	$	0.37		$	0.47

Diluted earnings per share do not include the effect of certain stock options as their impact would be anti-dilutive. For the three months ended June 30, 2016 and 2015, potential shares of common stock from stock options totaling 165,000 and 155,000, respectively, were not included in the diluted earnings per share calculation because their effect is anti-dilutive.