2. 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 incremental shares issued for the conversion of our convertible Series A Preferred Stock, 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. For diluted earnings per share, net income available to common shareholders can be affected by the conversion of our convertible Series A Preferred Stock. Where the effect of this conversion would be dilutive, net income available to common shareholders is 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 June 30,					Six months ended June 30,
dollars in millions, except per share amounts	2016			2015		2016			2015
EARNINGS
Income (loss) from continuing operations	$	198		$	236	$	385		$	466
Less: Net income (loss) attributable to noncontrolling interests		(1	)		1		(1	)		3

Income (loss) from continuing operations attributable to Key		199			235		386			463
Less: Dividends on Series A Preferred Stock		6			5		11			11

Income (loss) from continuing operations attributable to Key common shareholders		193			230		375			452
Income (loss) from discontinued operations, net of taxes^(a)		3			3		4			8

Net income (loss) attributable to Key common shareholders	$	196		$	233	$	379		$	460

WEIGHTED-AVERAGE COMMON SHARES
Weighted-average common shares outstanding (000)		831,899			839,454		829,640			843,992
Effect of convertible preferred stock		—			—		—			—
Effect of common share options and other stock awards		6,597			6,858		7,138			7,695

Weighted-average common shares and potential common shares outstanding (000)^(b)		838,496			846,312		836,778			851,687

EARNINGS PER COMMON SHARE

Income (loss) from continuing operations attributable to Key common shareholders	$	.23		$	.27	$	.45		$	.53
Income (loss) from discontinued operations, net of taxes^(a)		—			—		—			.01
Net income (loss) attributable to Key common shareholders^(c)		.23			.28		.45			.54

Income (loss) from continuing operations attributable to Key common shareholders — assuming dilution	$	.23		$	.27	$	.44		$	.52
Income (loss) from discontinued operations, net of taxes^(a)		—			—		—			.01
Net income (loss) attributable to Key common shareholders — assuming dilution^(c)		.23			.27		.45			.53

(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 11 (“Acquisitions 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.