NOTE 18 — STOCKHOLDERS’ EQUITY AND EARNINGS PER SHARE

Series A Preferred Stock Offering — In April 2008, the Company issued 200,000 shares of 8% Non-Cumulative Perpetual Convertible Preferred Stock, Series A (“Series A”), with a liquidation preference of $1,000 per share. The Company received $194.1 million of additional Tier 1 qualifying capital, after deducting stock issuance costs. On May 1, 2013, the Company exercised its mandatory conversion right related to all the outstanding shares of its Series A preferred stock. At the conversion date, the remaining 85,710 shares of outstanding Series A Preferred Stock were converted to 5,594,080 shares of common stock.

MetroCorp Acquisition — On January 17, 2014, the Company completed the acquisition of MetroCorp. The final consideration included 5,583,093 shares of East West common stock, $89.4 million of cash, $2.4 million of additional cash to MetroCorp stock option holders and a MetroCorp warrant, fair valued at $8.8 million, assumed by the Company. Prior to the acquisition, MetroCorp had an outstanding warrant to purchase 771,429 shares of its common stock. At acquisition, the rights of the warrant holder were converted into the right to acquire 230,282 shares of East West’s common stock. The warrant has not been exercised as of December 31, 2014.

Stock Repurchase Program — On January 23, 2013, the Company's Board of Directors authorized a stock repurchase program to buy back up to $200.0 million of the Company's common stock. During 2013, the Company completed the authorized repurchased program, repurchasing 8,026,807 shares at a weighted average price of $24.89 per share for a total cost of $200.0 million.

On July 17, 2013, the Company’s Board of Directors authorized a stock repurchase program to buy back up to $100.0 million of the Company’s common stock. The Company did not repurchase any shares under this program during the years ended December 31, 2014 and 2013.

On January 19, 2012, the Company’s Board of Directors authorized a stock repurchase program to buy back up to $200.0 million of the Company’s common stock. During 2012, the Company completed the authorized repurchase program, repurchasing 9,068,105 shares at a weighted average price of $22.02 per share and a total cost of $199.9 million.

Quarterly Dividends — The Company paid quarterly dividends on its common stock of $0.18 per share for each quarter of 2014. In comparison, the Company paid quarterly dividends on its common stock of $0.15 and $0.10 per share for each quarter of 2013 and 2012. Total dividends amounting to $104.0 million, $83.3 million and $57.6 million were paid to the Company’s common stockholders during the years ended December 31, 2014, 2013 and 2012, respectively.

The Company’s Board of Directors declared and paid quarterly preferred stock cash dividends of $20.00 per share on its Series A preferred stock in 2013 and 2012. Cash dividends totaling $3.4 million and $6.9 million were paid to the Company’s Series A preferred stock stockholders during the years ended December 31, 2013 and 2012. The Series A preferred stock were converted into common stock on May 1, 2013.

Earnings Per Share (“EPS”) — Certain of the Company’s instruments containing rights to nonforfeitable dividends granted in stock-based payment transactions are considered participating securities prior to vesting and, therefore, have been included in the earnings allocations in computing basic and diluted EPS under the two-class method. Basic EPS was computed by dividing net income, net of income allocated to participating securities, by the weighted-average number of common shares outstanding during each period, net of treasury shares and including vested but unissued shares and share units. The computation of diluted EPS reflects the additional dilutive effect of common stock equivalents such as unvested stock awards and stock options.

The following tables present earnings per share calculations for the years ended December 31, 2014, 2013 and 2012:



	Year Ended December 31, 2014
	Net Income			Number of Shares	Per Share Amounts
	(In thousands, except per share data)
Net income	$	342,483
Less:
Preferred stock dividends	—
Earnings allocated to participating securities	(502		)
Basic EPS — income allocated to common stockholders	$	341,981		142,952	$	2.39
Effect of dilutive securities:
Stock options	—			67
Restricted stock units	287			398
Convertible preferred stock	—			—
Warrants	—			146
Diluted EPS — income allocated to common stockholders	$	342,268		143,563	$	2.38



	Year Ended December 31, 2013
	Net Income			Number of Shares	Per Share Amounts
	(In thousands, except per share data)
Net income	$	295,045
Less:
Preferred stock dividends	(3,428		)
Earnings allocated to participating securities	(1,692		)
Basic EPS — income allocated to common stockholders	$	289,925		137,342	$	2.11
Effect of dilutive securities:
Stock options	—			71
Restricted stock units	196			327
Convertible preferred stock	3,428			1,834
Diluted EPS — income allocated to common stockholders	$	293,549		139,574	$	2.10



	Year Ended December 31, 2012
	Net Income			Number of Shares	Per Share Amounts
	(In thousands, except per share data)
Net income	$	281,650
Less:
Preferred stock dividends	(6,857		)
Earnings allocated to participating securities	(3,279		)
Basic EPS — income allocated to common stockholders	$	271,514		141,457	$	1.92
Effect of dilutive securities:
Stock options	—			29
Restricted stock units	47			118
Convertible preferred stock	6,857			5,571
Diluted EPS — income allocated to common stockholders	$	278,418		147,175	$	1.89

The following table presents the weighted-average stock options outstanding and restricted stock units for the years ended December 31, 2014, 2013, and 2012, respectively, that were anti-dilutive, and therefore not included in the computation of diluted EPS:



	Year Ended December 31,
	2014	2013	2012
	(In thousands)
Stock options	20	177	340
Restricted stock units	7	10	5

Accumulated Other Comprehensive Income (Loss) — As of December 31, 2014, total accumulated other comprehensive income was $4.2 million which includes the following components: net unrealized gains on securities available for sale of $4.2 million and net unrealized losses on other investments of $61 thousand. As of December 31, 2013, total accumulated other comprehensive loss was $(30.5) million which includes the following components: net unrealized losses on securities available for sale of $(30.5) million and unrealized gains on other investments of $79 thousand. As of December 31, 2012, total accumulated other comprehensive income was $4.7 million which includes the following components: net unrealized gains on securities available for sale of $4.6 million, and unrealized gains on other investments of $26 thousand.

The accumulated other comprehensive income (loss) balances were as follows:



	2014									2013									2012
Year Ended December 31,	Investment Securities Available-for-Sale			Other Investments			Accumulative Other Comprehensive (Loss) Income			Investment Securities Available-for-Sale			Other Investments			Accumulative Other Comprehensive Income (Loss)			Investment Securities Available-for-Sale			Other Investments			Foreign Currency Translation Adjustments			Accumulative Other Comprehensive (Loss) Income
										(In thousands)
Balance, beginning of the period	$	(30,538	)	$	79		$	(30,459	)	$	4,643		$	26		$	4,669		$	(34,848	)	$	8		$	900		$	(33,940	)
Net unrealized gains (losses) arising during period	41,008			(97		)	40,911			(28,169		)	336			(27,833		)	42,868			31			—			42,899
Less: reclassification adjustment for (gains) losses included in net income	(6,294		)	79			(6,215		)	(7,012		)	(283		)	(7,295		)	(439		)	(13		)	—			(452		)
Net unrealized gains (losses)	34,714			(18		)	34,696			(35,181		)	53			(35,128		)	42,429			18			—			42,447
Noncredit-related impairment loss on securities	—			—			—			—			—			—			(2,938		)	—			—			(2,938		)
Foreign currency translation adjustments	—			—			—			—			—			—			—			—			(900		)	(900		)
Balance, end of the period	$	4,176		$	61		$	4,237		$	(30,538	)	$	79		$	(30,459	)	$	4,643		$	26		$	—		$	4,669

The components of other comprehensive income (loss), reclassifications to net income by income statement line item and the related tax effects were as follows:



	2014									2013									2012
Year Ended December 31,	Before-Tax Amount			Tax Expense or Benefit			Net-of-Tax Amount			Before-Tax Amount			Tax Expense or Benefit			Net-of-Tax Amount			Before-Tax Amount			Tax Expense or Benefit			Net-of-Tax Amount
										(In thousands)
Unrealized gains (losses) on investment securities available-for-sale:
Net unrealized gains (losses) arising during period	$	70,704		$	(29,696	)	$	41,008		$	(48,567	)	$	20,398		$	(28,169	)	$	73,910		$	(31,042	)	$	42,868
Less: reclassification adjustment for gains included in net income ⁽¹⁾	(10,851		)	4,557			(6,294		)	(12,089		)	5,077			(7,012		)	(757		)	318			(439		)
Net unrealized gains (losses)	59,853			(25,139		)	34,714			(60,656		)	25,475			(35,181		)	73,153			(30,724		)	42,429
Noncredit-related impairment loss on securities	—			—			—			—			—			—			(5,066		)	2,128			(2,938		)
Foreign currency translation adjustments	—			—			—			—			—			—			(1,552		)	652			(900		)
Unrealized (losses) gains on other investments:
Net unrealized (losses) gains arising during period	(167		)	70			(97		)	579			(243		)	336			53			(22		)	31
Less: reclassification adjustment for losses (gains) included in income ⁽²⁾	136			(57		)	79			(488		)	205			(283		)	(23		)	10			(13		)
Net unrealized (losses) gains	(31		)	13			(18		)	91			(38		)	53			30			(12		)	18
Other comprehensive income (loss)	$	59,822		$	(25,126	)	$	34,696		$	(60,565	)	$	25,437		$	(35,128	)	$	66,565		$	(27,956	)	$	38,609


(1)	The pretax amount is reported in net gains on sales of investment securities in the consolidated statements of income.


(2)	The pretax income is reported in dividend and other investment income in the consolidated statements of income.