Bank of America Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Earnings Per Common Share

Earnings Per Common Share

9 Months Ended

Sep. 30, 2017

The calculation of earnings per common share (EPS) and diluted EPS for the three and nine months ended September 30, 2017 and 2016 is presented below. For more information on the calculation of EPS, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation's 2016 Annual Report on Form 10-K.




	Three Months Ended September 30						Nine Months Ended September 30
(Dollars in millions, except per share information; shares in thousands)	2017			2016			2017			2016
Earnings per common share
Net income	$	5,587		$	4,955		$	15,712		$	13,210
Preferred stock dividends	(465		)	(503		)	(1,328		)	(1,321		)
Net income applicable to common shareholders	$	5,122		$	4,452		$	14,384		$	11,889
Average common shares issued and outstanding	10,197,891			10,250,124			10,103,386			10,312,878
Earnings per common share	$	0.50		$	0.43		$	1.42		$	1.15

Diluted earnings per common share
Net income applicable to common shareholders	$	5,122		$	4,452		$	14,384		$	11,889
Add preferred stock dividends due to assumed conversions ⁽¹⁾	36			75			186			225
Net income allocated to common shareholders	$	5,158		$	4,527		$	14,570		$	12,114
Average common shares issued and outstanding	10,197,891			10,250,124			10,103,386			10,312,878
Dilutive potential common shares ⁽²⁾	527,591			750,349			717,039			733,929
Total diluted average common shares issued and outstanding	10,725,482			11,000,473			10,820,425			11,046,807
Diluted earnings per common share	$	0.48		$	0.41		$	1.35		$	1.10


⁽¹⁾	Represents the Series T dividends under the "if-converted" method prior to conversion.


⁽²⁾	Includes incremental dilutive shares from restricted stock units, restricted stock and warrants.

In connection with an investment in the Corporation’s Series T preferred stock in 2011, the Series T holders also received warrants to purchase 700 million shares of the Corporation’s common stock at an exercise price of $7.142857 per share. On August 24, 2017, the Series T holders exercised the warrants and acquired the 700 million shares of the Corporation’s common stock using the Series T preferred stock as consideration for the exercise price, which increased common shares outstanding, but had no effect on diluted earnings per share as this conversion had been included in the Corporation’s diluted earnings per share calculation under the applicable accounting guidance. The use of the Series T preferred stock as consideration represents a non-cash financing activity and, accordingly, is not reflected in the Consolidated Statement of Cash Flows. For the three and nine months ended September 30, 2016, the 700 million average dilutive potential common shares were included in the diluted share count under the “if-converted” method.

For both the three and nine months ended September 30, 2017 and 2016, 62 million average dilutive potential common shares associated with the Series L preferred stock were not included in the diluted share count because the result would have been antidilutive under the “if-converted” method. For the three and nine months ended September 30, 2017, average options to purchase 18 million and 22 million shares of common stock were outstanding but not included in the computation of EPS because the result would have been antidilutive under the treasury stock method compared to 42 million and 46 million for the same periods in 2016. For both the three and nine months ended September 30, 2017 and 2016, average warrants to purchase 122 million shares of common stock were outstanding but not included in the computation of EPS because the result would have been antidilutive under the treasury stock method, and average warrants to purchase 150 million shares of common stock were included in the diluted EPS calculation under the treasury stock method.