Earnings per share. The Company’s basic earnings per share (EPS) attributable to Stewart is calculated by dividing net income attributable to Stewart by the weighted-average number of shares of Common Stock outstanding during the reporting periods. Outstanding shares of Common Stock granted to employees that are not yet vested (restricted shares) are excluded from the calculation of the weighted-average number of shares outstanding for calculating basic EPS. To calculate diluted EPS, the number of shares is adjusted for the effects of any dilutive shares. The treasury stock method is used to calculate the dilutive number of shares related to the Company’s long term incentive and stock option plans. In periods of loss, dilutive shares are excluded from the calculation of the diluted EPS and diluted EPS is computed in the same manner as basic EPS.

The calculation of the basic and diluted EPS is as follows:



	Three Months Ended June 30,			Six Months Ended June 30,
	2017	2016		2017	2016
	($000 omitted, except per share)
Numerator:
Net income attributable to Stewart	18,568	23,599		22,657	12,404
Less: Cash paid on Class B Common Shares conversion (a)	—	(12,000	)	—	(12,000	)
Net income available to common shareholders	18,568	11,599		22,657	404

Denominator (000):
Basic average shares outstanding	23,444	23,365		23,438	23,357
Average number of dilutive shares relating to options	—	1		—	1
Average number of dilutive shares relating to grants of restricted shares	176	193		175	184
Diluted average shares outstanding	23,620	23,559		23,613	23,542

Basic earnings per share attributable to Stewart	0.79	0.50		0.97	0.02

Diluted earnings per share attributable to Stewart	0.79	0.49		0.96	0.02

(a) - During 2016, the Company paid $12.0 million as part of the consideration related to the exchange agreement with the holders of the Class B Common Stock. In accordance with the ASC 260, Earnings Per Share, the $12.0 million payment was treated in a manner similar to the treatment of dividends on preferred stock for the purpose of calculating EPS. Accordingly, the $12.0 million payment was deducted from the 2016 net income to arrive at the net income for calculating basic and diluted EPS.