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STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE | 6 Months Ended
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Jun. 30, 2015
STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE |
STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE | NOTE 13 — STOCKHOLDERS’ EQUITY AND EARNINGS PER SHARE MetroCorp Warrant — The Company completed the acquisition of 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 June 30, 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 six months ended June 30, 2015 and 2014. Quarterly Dividends — On April 21, 2015, dividends for the Company’s common stock were declared for the three months ended June 30, 2015 in the amount of $0.20 per share and paid on May 15, 2015 to stockholders of record on May 1, 2015. Cash dividends totaling $29.0 million and $26.0 million were paid to the Company’s common shareholders during the three months ended June 30, 2015 and 2014, respectively. Cash dividends totaling $58.0 million and $52.0 million were paid to the Company’s common shareholders during the six months ended June 30, 2015 and 2014, respectively. Earnings Per Share (“EPS”) — EPS is calculated using the two-class method. Certain Company 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 to compute basic and diluted EPS. The following tables present EPS calculations for the three and six months ended June 30, 2015 and 2014:
|  | Three Months Ended June 30, 2015
(In thousands, except per share data) |  | Net Income |  | Number of Shares |  | Per Share Amounts
Net income |  | $ | 98,748 |  |  |  |  |  |  |
Less: |  |  |  |  |  |  |  |  |
Earnings allocated to participating securities |  | — |  |  |  |  |  |  |
Basic EPS — income allocated to common stockholders |  | $ | 98,748 |  |  | 143,846 |  |  | $ | 0.69 |
Effect of dilutive securities: |  |  |  |  |  |  |  |  |
Stock options |  | — |  |  | 1 |  |  |  |
Restricted stock units |  | 93 |  |  | 470 |  |  |  |
Warrants |  | — |  |  | 163 |  |  |  |
Diluted EPS — income allocated to common stockholders |  | $ | 98,841 |  |  | 144,480 |  |  | $ | 0.68 |
|  | Three Months Ended June 30, 2014
(In thousands, except per share data) |  | Net Income |  | Number of Shares |  | Per Share Amounts
Net income (1) |  | $ | 84,305 |  |  |  |  |  |  |
Less: |  |  |  |  |  |  |  |  |
Earnings allocated to participating securities |  | (120 | ) |  |  |  |  |  |
Basic EPS — income allocated to common stockholders (1) |  | $ | 84,185 |  |  | 143,187 |  |  | $ | 0.59 |
Effect of dilutive securities: |  |  |  |  |  |  |  |  |
Stock options |  | — |  |  | 75 |  |  |  |
Restricted stock units |  | 51 |  |  | 284 |  |  |  |
Warrants |  | — |  |  | 143 |  |  |  |
Diluted EPS — income allocated to common stockholders(1) |  | $ | 84,236 |  |  | 143,689 |  |  | $ | 0.59 |
|  | Six Months Ended June 30, 2015
(In thousands, except per share data) |  | Net Income |  | Number of Shares |  | Per Share Amounts
Net income |  | $ | 198,775 |  |  |  |  |  |  |
Less: |  |  |  |  |  |  |  |  |
Earnings allocated to participating securities |  | (3 | ) |  |  |  |  |  |
Basic EPS — income allocated to common stockholders |  | $ | 198,772 |  |  | 143,751 |  |  | $ | 1.38 |
Effect of dilutive securities: |  |  |  |  |  |  |  |  |
Stock options |  | — |  |  | 4 |  |  |  |
Restricted stock units |  | 197 |  |  | 494 |  |  |  |
Warrants |  | — |  |  | 159 |  |  |  |
Diluted EPS — income allocated to common stockholders |  | $ | 198,969 |  |  | 144,408 |  |  | $ | 1.38 |
|  | Six Months Ended June 30, 2014
(In thousands, except per share data) |  | Net Income |  | Number of Shares |  | Per Share Amounts
Net income (1) |  | $ | 158,476 |  |  |  |  |  |  |
Less: |  |  |  |  |  |  |  |  |
Earnings allocated to participating securities |  | (283 | ) |  |  |  |  |  |
Basic EPS — income allocated to common stockholders (1) |  | $ | 158,193 |  |  | 142,578 |  |  | $ | 1.11 |
Effect of dilutive securities: |  |  |  |  |  |  |  |  |
Stock options |  | — |  |  | 77 |  |  |  |
Restricted stock units |  | 129 |  |  | 359 |  |  |  |
Warrants |  | — |  |  | 144 |  |  |  |
Diluted EPS — income allocated to common stockholders(1) |  | $ | 158,322 |  |  | 143,158 |  |  | $ | 1.11 |
(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. Anti-dilutive stock options and restricted stock units are not included in the count of weighted average shares outstanding used to compute diluted EPS. Approximately three thousand and two thousand weighted average anti-dilutive restricted stock units were excluded from the diluted EPS computation for the three months ended June 30, 2015 and 2014, respectively. Approximately three thousand and 61 thousand weighted average anti-dilutive restricted stock units were not included in the diluted EPS computation for the six months ended June 30, 2015 and 2014, respectively. Approximately, 40 thousand weighted average anti-dilutive stock options were excluded from the diluted EPS computation for the six months ended June 30, 2014. Accumulated Other Comprehensive Income (Loss) — The balance of total accumulated other comprehensive income increase d $1.2 million to $5.4 million as of June 30, 2015 from $4.2 million as of December 31, 2014. Presented in the following tables are the changes in the components of accumulated other comprehensive income (loss) balances for the three and six months ended June 30, 2015 and 2014:
|  | Three Months Ended June 30,
|  | 2015 |  | 2014
($ 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 |  | $ | 13,501 |  |  | $ | 54 |  |  | $ | 13,555 |  |  | $ | (17,099 | ) |  | $ | 62 |  |  | $ | (17,037 | )
Net unrealized (losses) gains arising during the period |  | (4,914 | ) |  | 10 |  |  | (4,904 | ) |  | 14,895 |  |  | (4 | ) |  | 14,891 |
Reclassification adjustment for gains included in net income |  | (3,221 | ) |  | — |  |  | (3,221 | ) |  | (389 | ) |  | — |  |  | (389 | )
Net change |  | (8,135 | ) |  | 10 |  |  | (8,125 | ) |  | 14,506 |  |  | (4 | ) |  | 14,502 |
Balance, end of the period |  | $ | 5,366 |  |  | $ | 64 |  |  | $ | 5,430 |  |  | $ | (2,593 | ) |  | $ | 58 |  |  | $ | (2,535 | )
|  | Six Months Ended June 30,
|  | 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 the period |  | 6,966 |  |  | 3 |  |  | 6,969 |  |  | 30,317 |  |  | (21 | ) |  | 30,296 |
Reclassification adjustment for gains included in net income |  | (5,776 | ) |  | — |  |  | (5,776 | ) |  | (2,372 | ) |  | — |  |  | (2,372 | )
Net change |  | 1,190 |  |  | 3 |  |  | 1,193 |  |  | 27,945 |  |  | (21 | ) |  | 27,924 |
Balance, end of the period |  | $ | 5,366 |  |  | $ | 64 |  |  | $ | 5,430 |  |  | $ | (2,593 | ) |  | $ | 58 |  |  | $ | (2,535 | )
For each component of other comprehensive income (loss), the reclassifications to net income by income statement line item and the related tax effects are as follows:
|  | Three Months Ended June 30,
|  | 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 (losses) gains on available-for-sale investment securities : |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net unrealized (losses) gains arising during the period |  | $ | (8,473 | ) |  | $ | 3,559 |  |  | $ | (4,914 | ) |  | $ | 25,681 |  |  | $ | (10,786 | ) |  | $ | 14,895 |
Reclassification adjustment for gains included in net income (1) |  | (5,554 | ) |  | 2,333 |  |  | (3,221 | ) |  | (671 | ) |  | 282 |  |  | (389 | )
Net change |  | (14,027 | ) |  | 5,892 |  |  | (8,135 | ) |  | 25,010 |  |  | (10,504 | ) |  | 14,506 |
Unrealized gains (losses) on other investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net unrealized gains (losses) arising during the period |  | 18 |  |  | (8 | ) |  | 10 |  |  | (7 | ) |  | 3 |  |  | (4 | )
Reclassification adjustment for (gains) losses included in income |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Net change |  | 18 |  |  | (8 | ) |  | 10 |  |  | (7 | ) |  | 3 |  |  | (4 | )
Other comprehensive (loss) income |  | $ | (14,009 | ) |  | $ | 5,884 |  |  | $ | (8,125 | ) |  | $ | 25,003 |  |  | $ | (10,501 | ) |  | $ | 14,502 |
|  | Six Months Ended June 30,
|  | 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 the period |  | $ | 12,009 |  |  | $ | (5,043 | ) |  | $ | 6,966 |  |  | $ | 52,271 |  |  | $ | (21,954 | ) |  | $ | 30,317 |
Reclassification adjustment for gains included in net income (1) |  | (9,958 | ) |  | 4,182 |  |  | (5,776 | ) |  | (4,089 | ) |  | 1,717 |  |  | (2,372 | )
Net change |  | 2,051 |  |  | (861 | ) |  | 1,190 |  |  | 48,182 |  |  | (20,237 | ) |  | 27,945 |
Unrealized gains (losses) on other investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net unrealized gains (losses) arising during the period |  | 5 |  |  | (2 | ) |  | 3 |  |  | (36 | ) |  | 15 |  |  | (21 | )
Reclassification adjustment for (gains) losses included in income |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Net change |  | 5 |  |  | (2 | ) |  | 3 |  |  | (36 | ) |  | 15 |  |  | (21 | )
Other comprehensive income |  | $ | 2,056 |  |  | $ | (863 | ) |  | $ | 1,193 |  |  | $ | 48,146 |  |  | $ | (20,222 | ) |  | $ | 27,924 |
(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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