NOTE 12 — STOCKHOLDERS’ EQUITY AND EARNINGS PER SHARE

Warrant —The Company acquired MetroCorp Bancshares, Inc., (“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 September 30, 2016.

EPS — Basic EPS is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during each period. Diluted EPS is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during each period, plus common share equivalents calculated for stock options, warrants and RSUs outstanding using the treasury stock method. The Company has issued RSAs, which are unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents. These RSAs are considered participating securities. Accordingly, the Company applied the two-class method in the computation of basic and diluted EPS in periods where RSAs are outstanding. RSUs do not contain nonforfeitable rights to dividends when granted. As of September 30, 2016, there were no RSAs outstanding.

The following table presents EPS calculations for the three and nine months ended September 30, 2016 and 2015:




	Three Months Ended September 30,				Nine Months Ended September 30,
($ in thousands, except per share data, shares in thousands)	2016		2015		2016		2015
Basic
Net income	$	110,143	$	94,097	$	320,943	$	292,872
Less: Earnings allocated to participating securities	—		—		—		3
Net income allocated to common stockholders	$	110,143	$	94,097	$	320,943	$	292,869

Basic weighted average number of shares outstanding	144,122		143,861		144,061		143,788
Basic EPS	$	0.76	$	0.65	$	2.23	$	2.04

Diluted
Net income allocated to diluted common stockholders	$	110,143	$	94,097	$	320,943	$	292,869

Basic weighted average number of shares outstanding	144,122		143,861		144,061		143,788
Diluted potential common shares ⁽¹⁾	1,116		729		1,025		680
Diluted weighted average number of shares outstanding	145,238		144,590		145,086		144,468
Diluted EPS	$	0.76	$	0.65	$	2.21	$	2.03


(1)	Includes dilutive shares from RSUs and warrants for the three and nine months ended September 30, 2016 and 2015. Also includes dilutive shares from stock options for the three and nine months ended September 30, 2015.

For the three months ended September 30, 2016 and 2015, approximately 2 thousand and 23 thousand weighted average anti-dilutive shares from RSUs, respectively, were excluded from the diluted EPS computation. For the nine months ended September 30, 2016 and 2015, approximately 7 thousand and 13 thousand weighted average anti-dilutive shares from RSUs, respectively, were excluded from the diluted EPS computation.