NOTE 13 — STOCKHOLDERS’ EQUITY AND EARNINGS PER SHARE

MetroCorp Warrant — The Company completed the acquisition of MetroCorp on January 17, 2014. Prior to the acquisition, MetroCorp had an outstanding warrant to purchase 771,429 shares of its common stock. Upon the acquisition, the rights of the warrant holder were converted into the right to acquire 230,282 shares of East West’s common stock until January 16, 2019. The warrant has not been exercised as of June 30, 2015.

Stock Repurchase Program — 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 six months ended June 30, 2015 and 2014.

Quarterly Dividends — On April 21, 2015, dividends for the Company’s common stock were declared for the three months ended June 30, 2015 in the amount of $0.20 per share and paid on May 15, 2015 to stockholders of record on May 1, 2015. Cash dividends totaling $29.0 million and $26.0 million were paid to the Company’s common shareholders during the three months ended June 30, 2015 and 2014, respectively. Cash dividends totaling $58.0 million and $52.0 million were paid to the Company’s common shareholders during the six months ended June 30, 2015 and 2014, respectively.

Earnings Per Share (“EPS”) — EPS is calculated using the two-class method. Certain Company 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 to compute basic and diluted EPS.

The following tables present EPS calculations for the three and six months ended June 30, 2015 and 2014:




	Three Months Ended June 30, 2015
(In thousands, except per share data)	Net Income		Number of Shares	Per Share Amounts
Net income	$	98,748
Less:
Earnings allocated to participating securities	—
Basic EPS — income allocated to common stockholders	$	98,748	143,846	$	0.69
Effect of dilutive securities:
Stock options	—		1
Restricted stock units	93		470
Warrants	—		163
Diluted EPS — income allocated to common stockholders	$	98,841	144,480	$	0.68




	Three Months Ended June 30, 2014
(In thousands, except per share data)	Net Income			Number of Shares	Per Share Amounts
Net income ⁽¹⁾	$	84,305
Less:
Earnings allocated to participating securities	(120		)
Basic EPS — income allocated to common stockholders ⁽¹⁾	$	84,185		143,187	$	0.59
Effect of dilutive securities:
Stock options	—			75
Restricted stock units	51			284
Warrants	—			143
Diluted EPS — income allocated to common stockholders⁽¹⁾	$	84,236		143,689	$	0.59




	Six Months Ended June 30, 2015
(In thousands, except per share data)	Net Income			Number of Shares	Per Share Amounts
Net income	$	198,775
Less:
Earnings allocated to participating securities	(3		)
Basic EPS — income allocated to common stockholders	$	198,772		143,751	$	1.38
Effect of dilutive securities:
Stock options	—			4
Restricted stock units	197			494
Warrants	—			159
Diluted EPS — income allocated to common stockholders	$	198,969		144,408	$	1.38




	Six Months Ended June 30, 2014
(In thousands, except per share data)	Net Income			Number of Shares	Per Share Amounts
Net income ⁽¹⁾	$	158,476
Less:
Earnings allocated to participating securities	(283		)
Basic EPS — income allocated to common stockholders ⁽¹⁾	$	158,193		142,578	$	1.11
Effect of dilutive securities:
Stock options	—			77
Restricted stock units	129			359
Warrants	—			144
Diluted EPS — income allocated to common stockholders⁽¹⁾	$	158,322		143,158	$	1.11

(1) Prior periods were restated to reflect the retrospective application of adopting the new accounting guidance related to the Company’s investments in qualified affordable housing projects ASU 2014-01. See Note 10 of the Notes to Consolidated Financial Statements for additional information.

Anti-dilutive stock options and restricted stock units are not included in the count of weighted average shares outstanding used to compute diluted EPS. Approximately three thousand and two thousand weighted average anti-dilutive restricted stock units were excluded from the diluted EPS computation for the three months ended June 30, 2015 and 2014, respectively. Approximately three thousand and 61 thousand weighted average anti-dilutive restricted stock units were not included in the diluted EPS computation for the six months ended June 30, 2015 and 2014, respectively. Approximately, 40 thousand weighted average anti-dilutive stock options were excluded from the diluted EPS computation for the six months ended June 30, 2014.

Accumulated Other Comprehensive Income (Loss) — The balance of total accumulated other comprehensive income increased $1.2 million to $5.4 million as of June 30, 2015 from $4.2 million as of December 31, 2014. Presented in the following tables are the changes in the components of accumulated other comprehensive income (loss) balances for the three and six months ended June 30, 2015 and 2014:



	Three Months Ended June 30,
	2015								2014
($ in thousands)	Available-for-Sale Investment Securities			Other Investments		Accumulated Other Comprehensive Income			Available-for-Sale Investment Securities			Other Investments			Accumulated Other Comprehensive (Loss) Income
Balance, beginning of the period	$	13,501		$	54	$	13,555		$	(17,099	)	$	62		$	(17,037	)
Net unrealized (losses) gains arising during the period	(4,914		)	10		(4,904		)	14,895			(4		)	14,891
Reclassification adjustment for gains included in net income	(3,221		)	—		(3,221		)	(389		)	—			(389		)
Net change	(8,135		)	10		(8,125		)	14,506			(4		)	14,502
Balance, end of the period	$	5,366		$	64	$	5,430		$	(2,593	)	$	58		$	(2,535	)


	Six Months Ended June 30,
	2015								2014
($ in thousands)	Available-for-Sale Investment Securities			Other Investments		Accumulated Other Comprehensive Income			Available-for-Sale Investment Securities			Other Investments			Accumulated Other Comprehensive (Loss) Income
Balance, beginning of the period	$	4,176		$	61	$	4,237		$	(30,538	)	$	79		$	(30,459	)
Net unrealized gains (losses) arising during the period	6,966			3		6,969			30,317			(21		)	30,296
Reclassification adjustment for gains included in net income	(5,776		)	—		(5,776		)	(2,372		)	—			(2,372		)
Net change	1,190			3		1,193			27,945			(21		)	27,924
Balance, end of the period	$	5,366		$	64	$	5,430		$	(2,593	)	$	58		$	(2,535	)

For each component of other comprehensive income (loss), the reclassifications to net income by income statement line item and the related tax effects are as follows:



	Three Months Ended June 30,
	2015									2014
($ in thousands)	Before-Tax Amount			Tax Expense or Benefit			Net-of-Tax Amount			Before-Tax Amount			Tax Expense or Benefit			Net-of-Tax Amount
Unrealized (losses) gains on available-for-sale investment securities :
Net unrealized (losses) gains arising during the period	$	(8,473	)	$	3,559		$	(4,914	)	$	25,681		$	(10,786	)	$	14,895
Reclassification adjustment for gains included in net income⁽¹⁾	(5,554		)	2,333			(3,221		)	(671		)	282			(389		)
Net change	(14,027		)	5,892			(8,135		)	25,010			(10,504		)	14,506
Unrealized gains (losses) on other investments:
Net unrealized gains (losses) arising during the period	18			(8		)	10			(7		)	3			(4		)
Reclassification adjustment for (gains) losses included in income	—			—			—			—			—			—
Net change	18			(8		)	10			(7		)	3			(4		)
Other comprehensive (loss) income	$	(14,009	)	$	5,884		$	(8,125	)	$	25,003		$	(10,501	)	$	14,502


	Six Months Ended June 30,
	2015									2014
($ in thousands)	Before-Tax Amount			Tax Expense or Benefit			Net-of-Tax Amount			Before-Tax Amount			Tax Expense or Benefit			Net-of-Tax Amount
Unrealized gains on available-for-sale investment securities :
Net unrealized gains arising during the period	$	12,009		$	(5,043	)	$	6,966		$	52,271		$	(21,954	)	$	30,317
Reclassification adjustment for gains included in net income⁽¹⁾	(9,958		)	4,182			(5,776		)	(4,089		)	1,717			(2,372		)
Net change	2,051			(861		)	1,190			48,182			(20,237		)	27,945
Unrealized gains (losses) on other investments:
Net unrealized gains (losses) arising during the period	5			(2		)	3			(36		)	15			(21		)
Reclassification adjustment for (gains) losses included in income	—			—			—			—			—			—
Net change	5			(2		)	3			(36		)	15			(21		)
Other comprehensive income	$	2,056		$	(863	)	$	1,193		$	48,146		$	(20,222	)	$	27,924


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