NOTE 14 — 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 and $89.4 million of cash. Under the terms of the merger, the Company assumed the obligation of MetroCorp’s unexercised warrant, which is equivalent to 230,282 units of East West common stock.

Stock Repurchase Program — On July 17, 2013, the Company’s Board of Directors authorized a new stock repurchase program to buy back up to $100.0 million of its common stock. The Company did not repurchase any shares under this program during the period ended March 31, 2014. In comparison, the Company repurchased 3,543,100 shares at a weighted average price of $24.53 per share and a total cost of $87.0 million during the three months ended March 31, 2013.

Quarterly Dividends — In January 2014, the Company’s Board of Directors declared quarterly common stock cash dividends of $0.18 per share payable on or about February 18, 2014 to shareholders of record on February 3, 2014. Cash dividends totaling $25.9 million were paid to the Company’s common shareholders during the three months ended March 31, 2014.

Earnings Per Share (“EPS”) — The number of shares outstanding at March 31, 2014 was 143,367,652. The Company applies the two-class method of computing basic EPS. Under the two-class method, EPS is determined for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. The Company’s restricted stocks, which receive dividends as declared, qualify as participating securities. Restricted stock units granted by the Company are not considered participating securities, as they do not have dividend distribution rights during the vesting period. Diluted EPS is calculated on the basis of the weighted average number of shares outstanding during the period plus potential dilutive shares.

The following table sets forth earnings per share calculations for the three months ended March 31, 2014 and 2013:

	Three Months Ended March 31, 2014
	Net Income			Number of Shares	Per Share Amounts
	(In thousands, except per share data)
Net income	$	76,741
Less:
Preferred stock dividends	—
Earnings allocated to participating securities	(166		)
Basic EPS — income allocated to common stockholders	$	76,575		141,962	$	0.54
Effect of dilutive securities:
Stock options	—			79
Restricted stock units	80			447
Warrants	—			144
Diluted EPS — income allocated to common stockholders	$	76,655		142,632	$	0.54

	Three Months Ended March 31, 2013
	Net Income			Number of Shares	Per Share Amounts
	(In thousands, except per share data)
Net income	$	72,091
Less:
Preferred stock dividends	(1,714		)
Earnings allocated to participating securities	(584		)
Basic EPS — income allocated to common stockholders	$	69,793		137,648	$	0.51
Effect of dilutive securities:
Stock options	—			51
Restricted stock units	36			242
Convertible preferred stock	1,714			5,578
Diluted EPS — income allocated to common stockholders	$	71,543		143,519	$	0.50

The following average outstanding stock options and restricted stock units for the three months ended March 31, 2014 and 2013, respectively, were excluded from the computation of diluted EPS because including them would have had an antidilutive effect.

	Three Months Ended
	March 31,
	2014	2013
	(In thousands)
Stock options	81	270
Restricted stock units	168	133

Accumulated Other Comprehensive (Loss) Income — As of March 31, 2014, total accumulated other comprehensive loss was ($17.0) million which includes the following components: net unrealized loss on securities available for sale of ($17.1) million and unrealized gain on other investments of $62 thousand. As of December 31, 2013, total accumulated other comprehensive loss was ($30.5) million which includes the following components: net unrealized loss on securities available for sale of ($30.5) million and unrealized gain on other asset investment of $79 thousand.

Activity in accumulated other comprehensive (loss) income, net of tax, for the three months ended March 31, 2014 and 2013, was as follows:

	Unrealized gain (loss) on
	investment securities			Unrealized gain on
	available-for-sale			other investments			Total
	(In thousands)
Balance, December 31, 2012	$	4,643		$	26		$	4,669
Other comprehensive income before reclassifications	4,741			10			4,751
Amounts reclassified from AOCI	(3,235		)	—			(3,235		)
Net current period other comprehensive income	1,506			10			1,516
Balance, March 31, 2013	$	6,149		$	36		$	6,185
Balance, December 31, 2013	$	(30,538	)	$	79		$	(30,459	)
Other comprehensive income before reclassifications	15,422			(17		)	15,405
Amounts reclassified from AOCI	(1,983		)	—			(1,983		)
Net current period other comprehensive income	13,439			(17		)	13,422
Balance, March 31, 2014	$	(17,099	)	$	62		$	(17,037	)

Reclassifications out of accumulated other comprehensive income for the three months ended March 31, 2014 was as follows:

	Amount Reclassified from
Details about Accumulated Other	Accumulated Other			Affected Line Item in the Statement
Comprehensive Income Components	Comprehensive Income			Where Net Income is Presented
	(In thousands)
Three Month Ended March 31, 2014
Investment securities available for sale
Realized net gains on sale of securities	$	3,418		Net gain on sales of investment securities
	3,418
	(1,435		)	Tax expense
Total reclassifications	$	1,983		Net of tax
Three Months Ended March 31, 2013
Investment securities available for sale
Realized net gains on sale of securities	$	5,577		Net gain on sales of investment securities
	5,577
	(2,342		)	Tax expense
Total reclassifications	$	3,235		Net of tax

The following table sets forth the tax effects allocated to each component of other comprehensive income for the three months ended March 31, 2014 and 2013:

				Tax
	Before-Tax			Expense			Net-of-Tax
	Amount			or Benefit			Amount
	(In thousands)
Three Months Ended March 31, 2014
Unrealized gain on investment securities available-for-sale:
Unrealized holding gains arising during period	$	26,590		$	(11,168	)	$	15,422
Less: reclassification adjustment for gains included in income	(3,418		)	1,435			(1,983		)
Net unrealized gain	23,172			(9,733		)	13,439
Unrealized loss on other investments	(29		)	12			(17		)
Less: reclassification adjustment for gains included in income	—			—			—
Other comprehensive income	$	23,143		$	(9,721	)	$	13,422

				Tax
	Before-Tax			Expense			Net-of-Tax
	Amount			or Benefit			Amount
	(In thousands)
Three Months Ended March 31, 2013
Unrealized gain on investment securities available-for-sale:
Unrealized holding gains arising during period	$	8,174		$	(3,433	)	$	4,741
Less: reclassification adjustment for gains included in income	(5,577		)	2,342			(3,235		)
Net unrealized gain	2,597			(1,091		)	1,506
Unrealized gain on other investments	17			(7		)	10
Less: reclassification adjustment for gains included in income	—			—			—
Other comprehensive income	$	2,614		$	(1,098	)	$	1,516