Earnings per Common Share

9 Months Ended

Sep. 30, 2015

Note 9. Earnings per Common Share

The Company applies the two-class method of computing basic and diluted earnings per common share (“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 for the three and nine months ended September 30, 2015 and 2014 is presented in the following table:

	For the three months ended September 30,				For the nine months ended September 30,
(in thousands, except per share amounts) (1)	2015		2014		2015		2014
Basic EPS:
Net income attributable to City National Corporation	$	71,808	$	69,891	$	201,873	$	189,182
Less: Dividends on preferred stock	4,093		4,093		12,281		12,281

Net income available to common shareholders	$	67,715	$	65,798	$	189,592	$	176,901
Less: Earnings allocated to participating securities	576		644		1,664		1,801

Earnings allocated to common shareholders	$	67,139	$	65,154	$	187,928	$	175,100


Weighted-average common shares outstanding	55,829		55,031		55,668		54,893


Basic earnings per common share	$	1.20	$	1.18	$	3.38	$	3.19


Diluted EPS:
Earnings allocated to common shareholders (2)	$	67,143	$	65,160	$	187,943	$	175,116


Weighted-average common shares outstanding	55,829		55,031		55,668		54,893
Dilutive effect of equity awards	858		734		884		723

Weighted-average diluted common shares outstanding	56,687		55,765		56,552		55,616


Diluted earnings per common share	$	1.18	$	1.17	$	3.32	$	3.15

(1)

Certain prior period amounts have been adjusted to reflect the adoption of ASU 2014-01. See Note 1, Summary of Significant Accounting Policies, for further discussion.

(2)

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 diluted EPS. There were 0.4 million and 0.7 million average outstanding stock options that were antidilutive for the three months ended September 30, 2015 and 2014, respectively. There were 0.4 million and 0.7 million average outstanding stock options that were antidilutive for the nine months ended September 30, 2015 and 2014, respectively.