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Notes to Consolidated Financial Statements

Note 11. Net Income per Common Share

Basic net income per common share is net income available to common shareholders divided by the weighted average of common shares outstanding during the period. Diluted net income per common share is calculated using the weighted average of common shares outstanding adjusted to include the effect that would occur if in-the-money employee stock options were exercised and RSUs and preferred shares were converted into common shares. Options to purchase 9.8 million shares in 2008, 2.7 million shares in 2007 and 0.1 million shares in 2006 were not included in the calculation of diluted earnings per common share because these options were out-of-the-money. Out-of-the-money options had average exercise prices of $67.59 in 2008, $65.18 in 2007 and $65.24 in 2006.

The computations of basic and diluted net income per common share are as follows:

                                   
   
2008
   
2007
   
2006
 
 
Income
   
Shares
(a)
Income
   
Shares
(a)
Income
   
Shares
(a)
Net income
$
5,142
       
$
5,658
       
$
5,642
       
Preferred shares:
                                   
Dividends
 
(2
)
       
(2
)
       
(2
)
     
Redemption premium
 
(6
)
       
(10
)
       
(9
)
     
Net income available for common shareholders
$
5,134
   
1,573
 
$
5,646
   
1,621
 
$
5,631
   
1,649
 
Basic net income per common share
$
3.26
       
$
3.48
       
$
3.42
       
Net income available for common shareholders
$
5,134
   
1,573
 
$
5,646
   
1,621
 
$
5,631
   
1,649
 
Dilutive securities:
                                   
Stock options and RSUs
 
   
27
   
   
35
   
   
36
 
ESOP convertible preferred stock
 
8
   
2
   
12
   
2
   
11
   
2
 
Diluted
$
5,142
   
1,602
 
$
5,658
   
1,658
 
$
5,642
   
1,687
 
Diluted net income per common share
$
3.21
       
$
3.41
       
$
3.34
       
(a) Weighted-average common shares outstanding.