Earnings per Common Share

6 Months Ended

Jun. 30, 2012

Earnings per Common Share

Earnings per Common Share

Note 10. 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 three months ended June 30,				For the six months ended June 30,
(in thousands, except per share amounts)	2012		2011		2012		2011
Basic EPS:
Net income attributable to City National Corporation	$	54,758	$	47,471	$	101,023	$	87,163
Less: Earnings allocated to participating securities	788		759		1,532		1,333
Earnings allocated to common shareholders	$	53,970	$	46,712	$	99,491	$	85,830
Weighted average common shares outstanding	53,105		52,462		52,923		52,392
Basic earnings per common share	$	1.02	$	0.89	$	1.88	$	1.64
Diluted EPS:
Earnings allocated to common shareholders (1)	$	53,972	$	46,718	$	99,496	$	85,841
Weighted average common shares outstanding	53,105		52,462		52,923		52,392
Dilutive effect of equity awards	268		515		294		539
Weighted average diluted common shares outstanding	53,373		52,977		53,217		52,931
Diluted earnings per common share	$	1.01	$	0.88	$	1.87	$	1.62

(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 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. Antidilutive stock options are not included in the calculation of basic or diluted EPS. There were 2.7 million and 2.0 million average outstanding stock options that were antidilutive for the three months ended June 30, 2012 and 2011, respectively. There were 2.8 million and 1.8 million average outstanding stock options that were antidilutive for the six months ended June 30, 2012 and 2011, respectively.