Net Income Per Common Share and Other Comprehensive Income

The Corporation’s basic net income per common share is calculated as net income available to common shareholders divided by the weighted average number of common shares outstanding. Net income available to common shareholders is calculated as net income less accrued dividends and discount accretion related to preferred stock.

For diluted net income per common share, net income available to common shareholders is divided by the weighted average number of common shares outstanding plus the incremental number of shares added as a result of converting common stock equivalents, calculated using the treasury stock method. The Corporation’s common stock equivalents consist of outstanding stock options, restricted stock and common stock warrants. As of September 30, 2011 and September 30, 2010, there were no outstanding common stock warrants.

A reconciliation of weighted average common shares outstanding used to calculate basic net income per common share and diluted net income per common share follows.



	Three Months Ended September 30		Nine Months Ended September 30
	2011	2010	2011	2010
		(in thousands)
Weighted average shares outstanding (basic)	199,028	198,282	198,801	188,306
Effect of dilutive securities	786	510	743	529
Weighted average shares outstanding (diluted)	199,814	198,792	199,544	188,835

For the three and nine months ended September 30, 2011, 5.8 million and 5.0 million stock options, respectively, were excluded from the diluted net income per share computation as their effect would have been anti-dilutive. For the three and nine months ended September 30, 2010, 5.8 million and 5.4 million stock options, respectively, were excluded from the diluted net income per share computation as their effects would have been anti-dilutive.

The following table presents the components of other comprehensive income:



	Nine Months Ended September 30
	2011			2010
	(in thousands)
Unrealized gain on securities (net of an $8.2 million and $16.4 million tax effect in 2011 and 2010, respectively)	$	15,143		$	30,390
Non-credit related unrealized gain (loss) on other-than-temporarily impaired debt securities (net of a $100,000 and $1.0 million tax effect in 2011 and 2010, respectively)	187			(1,886		)
Unrealized gain on derivative financial instruments (net of a $55,000 tax effect in 2011 and 2010) (1)	102			102
(Accretion) amortization of net unrecognized pension and postretirement items (net of a $19,000 and $30,000 tax effect in 2011 and 2010, respectively)	(37		)	55
Reclassification adjustment for securities gains included in net income (net of a $527,000 and $177,000 tax effect in 2011 and 2010, respectively)	(979		)	(329		)
Other comprehensive income	$	14,416		$	28,332

(1)

Amounts represent the amortization of the effective portions of losses on forward-starting interest rate swaps, designated as cash flow hedges and entered into in prior years in connection with the issuance of fixed-rate debt. The total amount recorded as a reduction to accumulated other comprehensive income upon settlement of these derivatives is being amortized to interest expense over the life of the related securities using the effective interest method. The amount of net losses in accumulated other comprehensive income that will be reclassified into earnings during the next twelve months is expected to be approximately $135,000.