3. Earnings Per Common Share

Basic earnings per share is the amount of earnings (adjusted for dividends declared on our preferred stock) available to each common share outstanding during the reporting periods. Diluted earnings per share is the amount of earnings available to each common share outstanding during the reporting periods adjusted to include the effects of potentially dilutive common shares. Potentially dilutive common shares include stock options and other stock-based awards. Potentially dilutive common shares are excluded from the computation of diluted earnings per share in the periods where the effect would be antidilutive.

On March 20, 2017, all outstanding Series A Preferred Stock was converted into KeyCorp common shares. Prior to this conversion, for diluted earnings per share, net income available to common shareholders could have been affected by the conversion of our convertible Series A Preferred Stock. Where the effect of this conversion would have been dilutive, net income available to common shareholders was adjusted by the amount of preferred dividends associated with our Series A Preferred Stock.

Our basic and diluted earnings per common share are calculated as follows:



	Three months ended September 30,				Nine months ended September 30,
dollars in millions, except per share amounts	2017		2016		2017		2016
EARNINGS
Income (loss) from continuing operations	$	363	$	172	$	1,095	$	557
Less: Net income (loss) attributable to noncontrolling interests	—		1		1		—
Income (loss) from continuing operations attributable to Key	363		171		1,094		557
Less: Dividends on Preferred Stock	14		6		56		17
Income (loss) from continuing operations attributable to Key common shareholders	349		165		1,038		540
Income (loss) from discontinued operations, net of taxes ^(a)	1		1		6		5
Net income (loss) attributable to Key common shareholders	$	350	$	166	$	1,044	$	545
WEIGHTED-AVERAGE COMMON SHARES
Weighted-average common shares outstanding (000)	1,073,390		982,080		1,075,296		880,824
Effect of convertible preferred stock	—		—		—		—
Effect of common share options and other stock awards	15,451		12,580		16,359		8,965
Weighted-average common shares and potential common shares outstanding (000) ^(b)	1,088,841		994,660		1,091,655		889,789
EARNINGS PER COMMON SHARE
Income (loss) from continuing operations attributable to Key common shareholders	$	.32	$	.17	$	.96	$	.61
Income (loss) from discontinued operations, net of taxes ^(a)	—		—		.01		.01
Net income (loss) attributable to Key common shareholders ^(c)	.32		.17		.97		.62

Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution	$	.32	$	.16	$	.95	$	.60
Income (loss) from discontinued operations, net of taxes ^(a)	—		—		.01		.01
Net income (loss) attributable to Key common shareholders — assuming dilution ^(c)	.32		.17		.96		.61

(a)

In September 2009, we decided to discontinue the education lending business conducted through Key Education Resources, the education payment and financing unit of KeyBank. As a result of this decision, we have accounted for this business as a discontinued operation. For further discussion regarding the income (loss) from discontinued operations, see Note 12 (“Acquisition, Divestiture, and Discontinued Operations”).


(b)	Assumes conversion of common share options and other stock awards and/or convertible preferred stock, as applicable.


(c)	EPS may not foot due to rounding.