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 September 30,		Nine Months Ended September 30,
	2017	2016	2017	2016
	($000 omitted, except per share)
Numerator:
Net income attributable to Stewart	10,944	26,375	33,601	38,778
Less: Cash paid on Class B Common Shares conversion (a)	—	—	—	(12,000	)
Net income available to common shareholders	10,944	26,375	33,601	26,778

Denominator (000):
Basic average shares outstanding	23,448	23,371	23,442	23,362
Average number of dilutive shares relating to options	—	1	—	1
Average number of dilutive shares relating to grants of restricted shares	116	239	129	233
Diluted average shares outstanding	23,564	23,611	23,571	23,596

Basic earnings per share attributable to Stewart	0.47	1.13	1.43	1.15

Diluted earnings per share attributable to Stewart	0.46	1.12	1.43	1.13

(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.