Note 13 — 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, 2017.

Earnings Per Share — 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 warrants and RSUs outstanding using the treasury stock method. With the adoption of ASU 2016-09 during the first quarter of 2017, the impact of excess tax benefits and deficiencies is no longer included in the calculation of diluted EPS. As a result of applying ASU 2016-09, the Company recorded income tax benefits of $151 thousand or $0 per common share, and $4.6 million or $0.03 per common share for the three and nine months ended September 30, 2017, respectively, related to the vesting of the RSUs. See Note 2 — Current Accounting Developments to the Consolidated Financial Statements for additional information.

The following table presents the EPS calculations for the three and nine months ended September 30, 2017 and 2016:




	Three Months Ended September 30,				Nine Months Ended September 30,
($ and shares in thousands, except per share data)	2017		2016		2017		2016
Basic
Net income	$	132,660	$	110,143	$	420,726	$	320,943

Basic weighted average number of shares outstanding	144,498		144,122		144,412		144,061
Basic EPS	$	0.92	$	0.76	$	2.91	$	2.23

Diluted
Net income	$	132,660	$	110,143	$	420,726	$	320,943

Basic weighted average number of shares outstanding	144,498		144,122		144,412		144,061
Diluted potential common shares ⁽¹⁾	1,384		1,116		1,437		1,025
Diluted weighted average number of shares outstanding	145,882		145,238		145,849		145,086
Diluted EPS	$	0.91	$	0.76	$	2.88	$	2.21


(1)	Includes dilutive shares from RSUs and warrants for the three and nine months ended September 30, 2017 and 2016.

For the three and nine months ended September 30, 2017, 4 thousand and 6 thousand weighted average anti-dilutive shares from RSUs, respectively, were excluded from the diluted EPS computation. For the three and nine months ended September 30, 2016, 2 thousand and 7 thousand weighted average anti-dilutive shares from RSUs, respectively, were excluded from the diluted EPS computation.