Earnings Per Common Share (EPS)

9 Months Ended

Sep. 30, 2015

15. Earnings Per Common Share (EPS); Preferred Shares

EPS

The computations of basic and diluted EPS were as follows:

			Three Months Ended				Nine Months Ended
			September 30,				September 30,
(Millions, except per share amounts)			2015			2014	2015			2014
Numerator:
	Basic and diluted:
		Net income	$	1,266	$	1,477	$	4,264	$	4,438
		Preferred dividends		(22)		―		(42)		―
		Net income available to common shareholders		1,244		1,477		4,222		4,438
		Earnings allocated to participating share awards^(a)		(10)		(11)		(32)		(35)
		Net income attributable to common shareholders	$	1,234	$	1,466	$	4,190	$	4,403
Denominator:^(a)
	Basic: Weighted-average common stock			994		1,041		1,007		1,051
	Add: Weighted-average stock options ^(b)			3		6		4		6
	Diluted			997		1,047		1,011		1,057

Basic EPS			$	1.24	$	1.41	$	4.16	$	4.19
Diluted EPS			$	1.24	$	1.40	$	4.15	$	4.17

The Company’s unvested restricted stock awards, which include the right to receive non-forfeitable dividends or dividend equivalents, are considered participating securities. Calculations of EPS under the two-class method exclude from the numerator any dividends paid or owed on participating securities and any undistributed earnings considered to be attributable to participating securities. The related participating securities are similarly excluded from the denominator.
The dilutive effect of unexercised stock options excludes from the computation of EPS 0.6 million and 0.2 million of options for the three months ended September 30, 2015 and 2014, respectively, and 0.5 million and 0.2 million of options for the nine months ended September 30, 2015 and 2014, respectively, because inclusion of the options would have been anti-dilutive.

For the three and nine months ended September 30, 2015 and 2014, the Company met specified performance measures related to the $750 million of Subordinated Debentures issued in 2006, and maturing in 2036. If the performance measures were not achieved in any given quarter, the Company would be required to issue common shares and apply the proceeds to make interest payments.

Preferred Shares

The Board of Directors is authorized to permit the Company to issue up to 20 million Preferred Shares at a par value of $1.66^2/3 without further shareholder approval. The Company has the following perpetual Fixed Rate/Floating Rate Noncumulative Preferred Share series issued and outstanding as of September 30, 2015:

	Series B	Series C
Issuance date	November 10, 2014	March 2, 2015
Securities issued	750 Preferred Shares; represented by 750,000 depositary shares	850 Preferred Shares; represented by 850,000 depositary shares
Aggregate liquidation preference	$750 million	$850 million
Fixed dividend rate per annum	5.20%	4.90%
Semi-annual fixed dividend payment dates	Beginning May 15, 2015	Beginning September 15, 2015
Floating dividend rate per annum	3 month LIBOR+ 3.428%	3 month LIBOR+ 3.285%
Quarterly floating dividend payment dates	Beginning February 15, 2020	Beginning June 15, 2020
Fixed to floating rate conversion date^(a)	November 15, 2019	March 15, 2020

The date on which dividends convert from a fixed rate calculation to a floating rate calculation.

The Company may redeem these Preferred Shares at $1 million per Preferred Share (equivalent to $1,000 per depositary share) plus any declared but unpaid dividends in whole or in part, from time to time, on any dividend payment date on or after the respective fixed to floating rate conversion date, or in whole, but not in part, within 90 days of certain bank regulatory changes.