Earnings per Common Share

12 Months Ended

Dec. 31, 2012

Earnings per Common Share

Earnings per Common Share

Note 14. Earnings per Common Share

        The Company applies the two-class method of computing basic and diluted EPS. Under the two-class method, EPS is determined for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. The Company grants restricted stock and restricted stock units under a share-based compensation plan that qualify as participating securities.

        The computation of basic and diluted EPS is presented in the following table:

	For the year ended December 31,
(in thousands, except per share amounts)	2012		2011		2010
Basic EPS:
Net income attributable to City National Corporation	$	208,049	$	172,421	$	131,177
Less: Dividends and accretion on preferred stock		—		—		5,702
Net income available to common shareholders	$	208,049	$	172,421	$	125,475
Less: Earnings allocated to participating securities		3,008		2,678		1,605
Earnings allocated to common shareholders	$	205,041	$	169,743	$	123,870
Weighted average common shares outstanding		53,211		52,439		51,992
Basic earnings per common share	$	3.85	$	3.24	$	2.38
Diluted EPS:
Earnings allocated to common shareholders (1)	$	205,050	$	169,759	$	123,882
Weighted average common shares outstanding		53,211		52,439		51,992
Dilutive effect of equity awards		264		410		463
Weighted average diluted common shares outstanding		53,475		52,849		52,455
Diluted earnings per common share	$	3.83	$	3.21	$	2.36

(1)

Earnings allocated to common shareholders for basic and diluted EPS may differ under the two-class method as a result of adding common stock equivalents for options and warrants to dilutive shares outstanding, which alters the ratio used to allocate earnings to common shareholders and participating securities for the purposes of calculating diluted EPS.

        The average price of the Company's common stock for the period is used to determine the dilutive effect of outstanding stock options and common stock warrant. Antidilutive stock options and common stock warrant are not included in the calculation of basic or diluted EPS. There were 2.8 million average outstanding stock options that were antidilutive for 2012, compared to 2.9 million average outstanding stock options for 2011 and 1.9 million average outstanding stock options and a 0.3 million average outstanding common stock warrant for 2010.