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STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE | 12 Months Ended
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Dec. 31, 2014
STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE |
STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE | 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, t he 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, t he C ompany 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 w ere paid to the Company’s Series A preferred stock stockholders during the year s 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.

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