(4) Earnings per Share

The Company reports its earnings per share under the two-class method. Under this method, potentially dilutive securities are excluded from the calculation of diluted earnings per share (as well as their related impact on the net income available to common shareholders) when their impact on net income available to common shareholders is anti-dilutive. Potentially dilutive securities for the years ended December 31, 2016, 2015, and 2014 included all outstanding stock options, RSAs, and RSUs, which were included in the calculation of diluted earnings per share for these periods. The potentially dilutive effect of outstanding warrants and the underlying shares exercisable under the Company’s Convertible Notes were excluded from diluted shares outstanding because the exercise price exceeded the average market price of the Company’s common shares in the periods presented. The effect of the note hedge the Company purchased to offset the underlying conversion option embedded in its Convertible Notes was also excluded, as the effect is anti-dilutive.

Additionally, the restricted shares issued by the Company under RSAs have a non-forfeitable right to cash dividends, if and when declared by the Company. Accordingly, restricted shares issued under RSAs are considered to be participating securities and, as such, the Company has allocated the undistributed earnings for the years ended December 31, 2016, 2015, and 2014 among the Company’s outstanding common shares and issued but unvested restricted shares, as follows:

Earnings per Share (in thousands, excluding share and per share amounts)


	2016
	Income		Weighted Average Shares Outstanding	Earnings per Share
Basic:
Net income attributable to controlling interests and available to common shareholders	$	87,991
Less: Undistributed earnings allocated to unvested RSAs		(42)
Net income available to common shareholders	$	87,949	45,206,119	$	1.95

Diluted:
Effect of dilutive securities:
Add: Undistributed earnings allocated to restricted shares	$	42
Stock options added to the denominator under the treasury stock method			24,509
RSUs added to the denominator under the treasury stock method			590,899
Less: Undistributed earnings reallocated to RSAs		(41)
Net income available to common shareholders and assumed conversions	$	87,950	45,821,527	$	1.92


	2015					2014
	Income		Weighted Average Shares Outstanding	Earnings per Share		Income		Weighted Average Shares Outstanding	Earnings per Share
Basic:
Net income attributable to controlling interests and available to common shareholders	$	67,080				$	37,140
Less: Undistributed earnings allocated to unvested RSAs		(94)					(126)
Net income available to common shareholders	$	66,986	44,796,701	$	1.50	$	37,014	44,338,408	$	0.83

Diluted:
Effect of dilutive securities:
Add: Undistributed earnings allocated to restricted shares	$	94				$	126
Stock options added to the denominator under the treasury stock method			63,657					117,777
RSUs added to the denominator under the treasury stock method			508,329					411,119
Less: Undistributed earnings reallocated to RSAs		(93)					(125)
Net income available to common shareholders and assumed conversions	$	66,987	45,368,687	$	1.48	$	37,015	44,867,304	$	0.82

The computation of diluted earnings per share excluded potentially dilutive common shares related to restricted shares issued by the Company under RSAs of 12,316, 31,005, and 59,301 shares for the years ended December 31, 2016, 2015, and 2014, respectively, because the effect of including these shares in the computation would have been anti-dilutive.