Earnings per Common Share

6 Months Ended

Jun. 30, 2013

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)	2013		2012		2013		2012
Basic EPS:
Net income attributable to City National Corporation	$	59,741	$	54,758	$	111,264	$	101,023
Less: Dividends on preferred stock	2,406		—		4,812		—
Net income available to common shareholders	$	57,335	$	54,758	$	106,452	$	101,023
Less: Earnings allocated to participating securities	656		788		1,287		1,532
Earnings allocated to common shareholders	$	56,679	$	53,970	$	105,165	$	99,491
Weighted average common shares outstanding	54,105		53,105		53,919		52,923
Basic earnings per common share	$	1.05	$	1.02	$	1.95	$	1.88
Diluted EPS:
Earnings allocated to common shareholders (1)	$	56,682	$	53,972	$	105,173	$	99,496
Weighted average common shares outstanding	54,105		53,105		53,919		52,923
Dilutive effect of equity awards	372		268		361		294
Weighted average diluted common shares outstanding	54,477		53,373		54,280		53,217
Diluted earnings per common share	$	1.04	$	1.01	$	1.94	$	1.87

(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 2.4 million and 2.7 million average outstanding stock options that were antidilutive for the three months ended June 30, 2013 and 2012, respectively. There were 2.3 million and 2.8 million average outstanding stock options that were antidilutive for the six months ended June 30, 2013 and 2012, respectively.