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STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE | 3 Months Ended
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Mar. 31, 2015
STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE |
STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE | NOTE 13 — STOCKHOLDERS’ EQUITY AND EARNINGS PER SHARE 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 March 31, 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 three months ended March 31, 2015 and 2014. Quarterly Dividends — On January 21, 2015, dividends for the Company’s common stock were declared for the first quarter of 2015 in the amount of $0.20 per share and paid on February 17, 2015 to stockholders of record on February 2, 2015. This represents an increase of $0.02 per share, or an 11% increase from the prior quarterly dividend of $0.18 per share. Cash dividends totaling $28.9 million and $25.9 million were paid to the Company’s common shareholders during the three months ended March 31, 2015 and 2014, respectively. Earnings Per Share (“EPS”) — Certain of the Company’s instruments containing rights to nonforfeitable dividends granted in stock-based payment transactions are considered participating securities prior to vesting and, therefore, have been included in the earnings allocations in computing basic and diluted EPS under the two-class method. Basic EPS was computed by dividing net income, net of income allocated to participating securities, by the weighted-average number of common shares outstanding during each period. The computation of diluted EPS reflects the additional dilutive effect of common stock equivalents such as stock options, unvested restricted stock units and warrants. The following tables present earnings per share calculations for the three months ended March 31, 2015 and 2014:
|  | Three Months Ended March 31, 2015 |
($ in thousands, except per share data) |  | Net Income |  | Number of Shares |  | Per Share Amounts |
Net income |  | $ | 100,027 |  |  |  |  |  |  |
Less: |  |  |  |  |  |  |  |  |
Earnings allocated to participating securities |  | (3 | ) |  |  |  |  |  |
Basic EPS — income allocated to common stockholders |  | $ | 100,024 |  |  | 143,655 |  |  | $ | 0.70 |
Effect of dilutive securities: |  |  |  |  |  |  |  |  |
Stock options |  | — |  |  | 6 |  |  |  |
Restricted stock units |  | 106 |  |  | 533 |  |  |  |
Warrants |  | — |  |  | 155 |  |  |  |
Diluted EPS — income allocated to common stockholders |  | $ | 100,130 |  |  | 144,349 |  |  | $ | 0.69 |
|  | Three Months Ended March 31, 2014 |
($ in thousands, except per share data) |  | Net Income |  | Number of Shares |  | Per Share Amounts |
Net income (1) |  | $ | 74,171 |  |  |  |  |  |  |
Less: |  |  |  |  |  |  |  |  |
Earnings allocated to participating securities |  | (160 | ) |  |  |  |  |  |
Basic EPS — income allocated to common stockholders (1) |  | $ | 74,011 |  |  | 141,962 |  |  | $ | 0.52 |
Effect of dilutive securities: |  |  |  |  |  |  |  |  |
Stock options |  | — |  |  | 79 |  |  |  |
Restricted stock units |  | 80 |  |  | 447 |  |  |  |
Warrants |  | — |  |  | 144 |  |  |  |
Diluted EPS — income allocated to common stockholders(1) |  | $ | 74,091 |  |  | 142,632 |  |  | $ | 0.52 |
| (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.
The following table presents the weighted-average stock options outstanding and restricted stock units for the three months ended March 31, 2015 and 2014, respectively, that were anti-dilutive, and therefore not included in the computation of diluted EPS:
|  | Three Months Ended March 31, |
(In thousands) |  | 2015 |  | 2014 |
Stock options |  | — |  | 81 |
Restricted stock units |  | 170 |  | 168 |
Accumulated Other Comprehensive Income (Loss) — As of March 31, 2015, total accumulated other comprehensive income was $13.6 million which included net unrealized gains on available-for-sale securities of $13.5 million and net unrealized gains on other investments of $54 thousand. As of December 31, 2014, total accumulated other comprehensive income was $4.2 million which consisted of net unrealized gains on available-for-sale securities of $4.2 million and unrealized gains on other investments of $61 thousand. The accumulated other comprehensive income (loss) balances were as follows:
|  | Three Months Ended March 31, |
|  | 2015 |  | 2014 |
($ 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 period |  | 11,879 |  |  | (7 | ) |  | 11,872 |  |  | 15,422 |  |  | (17 | ) |  | 15,405 |
Less: reclassification adjustment for gains included in net income |  | (2,554 | ) |  | — |  |  | (2,554 | ) |  | (1,983 | ) |  | — |  |  | (1,983 | )
Net unrealized gains (losses) |  | 9,325 |  |  | (7 | ) |  | 9,318 |  |  | 13,439 |  |  | (17 | ) |  | 13,422 |
Balance, end of the period |  | $ | 13,501 |  |  | $ | 54 |  |  | $ | 13,555 |  |  | $ | (17,099 | ) |  | $ | 62 |  |  | $ | (17,037 | )
The components of other comprehensive income (loss), reclassifications to net income by income statement line item and the related tax effects were as follows:
|  | Three Months Ended March 31, |
|  | 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 period |  | $ | 20,482 |  |  | $ | (8,603 | ) |  | $ | 11,879 |  |  | $ | 26,590 |  |  | $ | (11,168 | ) |  | $ | 15,422 |
Less: reclassification adjustment for gains included in net income (1) |  | (4,404 | ) |  | 1,850 |  |  | (2,554 | ) |  | (3,418 | ) |  | 1,435 |  |  | (1,983 | )
Net unrealized gains |  | 16,078 |  |  | (6,753 | ) |  | 9,325 |  |  | 23,172 |  |  | (9,733 | ) |  | 13,439 |
Unrealized losses on other investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net unrealized losses arising during period |  | (12 | ) |  | 5 |  |  | (7 | ) |  | (29 | ) |  | 12 |  |  | (17 | )
Less: reclassification adjustment for (gains) losses included in income |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Net unrealized losses |  | (12 | ) |  | 5 |  |  | (7 | ) |  | (29 | ) |  | 12 |  |  | (17 | )
Other comprehensive income |  | $ | 16,066 |  |  | $ | (6,748 | ) |  | $ | 9,318 |  |  | $ | 23,143 |  |  | $ | (9,721 | ) |  | $ | 13,422 |
| (1) |  | The pretax amount is reported in net gains on sales of available-for-sale investment securities in the consolidated statements of income.

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