Lake Shore Bancorp, Inc. /MD/ Earnings Per Share Disclosure
Note 15 – Earnings per Share
Earnings per share was calculated for the years ended December 31, 2025 and 2024, in accordance with ASC 260 - Earnings Per Share, which provides that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. Basic earnings per share is based upon the weighted average number of common shares outstanding, exclusive of unearned shares held by the ESOP. Unvested shares of restricted stock which have voting rights and are eligible to receive dividends are included in the calculation of the weighted average number of common shares outstanding. Diluted earnings per share is based upon the weighted average number of common shares outstanding and common share equivalents that would arise from the exercise of dilutive securities. Stock options are regarded as potential common stock and are considered in the diluted earnings per share calculations to the extent they would be dilutive and computed using the treasury stock method.
The calculated basic and diluted earnings per share are as follows. Share and per share amounts related to periods prior to the date of Conversion (July 18, 2025) have been adjusted to give the retroactive recognition to the exchange ratio applied in the Conversion (1.3549).
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Years Ended December 31, |
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2025 |
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2024 |
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Numerator – net income |
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$ |
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7,269,000 |
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$ |
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4,931,000 |
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Denominator: |
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Basic weighted average shares outstanding |
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7,510,235 |
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7,617,009 |
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Increase in weighted average shares outstanding due to: |
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Stock options(1) |
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9,180 |
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— |
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Diluted weighted average shares outstanding(1) |
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7,519,415 |
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7,617,009 |
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Earnings per share: |
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Basic |
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$ |
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0.97 |
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$ |
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0.65 |
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Diluted |
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$ |
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0.97 |
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$ |
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0.65 |
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About Earnings Per Share Disclosures
The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.
Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.