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STOCKHOLDERS' EQUITY | 3 Months Ended
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Mar. 31, 2012
STOCKHOLDERS' EQUITY |
STOCKHOLDERS' EQUITY |
NOTE 12 — STOCKHOLDERS’ EQUITY 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. The holders of the Series A preferred stock have the right at any time to convert each share of Series A preferred shares into 64.9942 shares of the Company’s common stock, plus cash in lieu of fractional shares. This represents an initial conversion price of approximately $15.39 per share of common stock or a 22.5% conversion premium based on the closing price of the Company’s common stock on April 23, 2008 of $12.56 per share. On or after May 1, 2013, the Company will have the right, under certain circumstances, to cause the Series A preferred shares to be converted into shares of the Company’s common stock. Dividends on the Series A preferred shares, if declared, will accrue and be payable quarterly in arrears at a rate per annum equal to 8% on the liquidation preference of $1,000 per share. The proceeds from this offering were used to augment the Company’s liquidity and capital positions and reduce its borrowings. As of March 31, 2012, 85,710 shares were outstanding. Warrants – During 2008, in conjunction with the Series B preferred stock offering, the Company issued to the U.S. Treasury warrants with an initial price of $15.15 per share of common stock for which the warrants may be exercised, with an allocated fair value of $25.2 million. The warrants could be exercised at any time on or before December 5, 2018. On January 26, 2011 the Company repurchased the 1,517,555 warrants outstanding for $14.5 million. Stock Repurchase Program—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 the first quarter of 2012, the Company repurchased 4,554,827 shares at a weighted average cost of $22.14 per share. The Company did not repurchase any shares during the three months ended March 31, 2011. Quarterly Dividends—On January 19, 2012, the Company’s Board of Directors declared first quarter preferred stock cash dividends of $20.00 per share on its Series A preferred stock payable on or about February 1, 2012 to shareholders on record on January 15, 2012. Total cash dividends paid in conjunction with the Company’s Series A preferred stock amounted to $1.7 million during the three months ended March 31, 2012. On January 19, 2012, the Company’s Board of Directors also declared quarterly common stock cash dividends of $0.10 per share payable on or about February 24, 2012 to shareholders on record on February 10, 2012. Cash dividends totaling $14.8 million were paid to the Company’s common shareholders during the three months ended March 31, 2012. Earnings Per Share (“EPS”)—The number of shares outstanding at March 31, 2012 was 144,870,621. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted average number of shares outstanding during the period. Diluted EPS is calculated on the basis of the weighted average number of shares outstanding during the period plus restricted stock awards and shares issuable upon the assumed exercise of outstanding convertible preferred stock, stock options, and stock warrants, unless they have an antidilutive effect. The following table sets forth earnings per share calculations for the three months ended March 31, 2012 and 2011:
|  | Three Months Ended March 31, |
|  | 2012 |  | 2011 |
|  | Net Income |  |  |  |  |  | Net Income |  |  |  |  |
|  | Available to |  | Number |  | Per |  | Available to |  | Number |  | Per |
|  | Common |  | of |  | Share |  | Common |  | of |  | Share |
|  | Stockholders |  | Shares |  | Amounts |  | Stockholders |  | Shares |  | Amounts |
|  | (In thousands, except per share data) |
Net income |  | $ | 68,083 |  |  |  |  |  | $ | 56,071 |  |  |  |  |
Less: |  |  |  |  |  |  |  |  |  |  |  |  |
Preferred stock dividends |  | (1,714 | ) |  |  |  |  | (1,715 | ) |  |  |  |
Basic EPS – income available to common stockholders |  | $ | 66,369 |  | 145,347 |  | $ | 0.46 |  | $ | 54,356 |  | 146,837 |  | $ | 0.37 |
Effect of dilutive securities: |  |  |  |  |  |  |  |  |  |  |  |  |
Stock options |  | — |  | 48 |  |  |  | — |  | 120 |  |  |
Restricted stock awards |  | 103 |  | 1,030 |  |  |  | 7 |  | 675 |  |  |
Convertible preferred stock |  | 1,714 |  | 5,571 |  |  |  | 1,715 |  | 5,571 |  |  |
Stock warrants |  | — |  | — |  |  |  | — |  | 131 |  |  |
Diluted EPS – income available to common stockholders |  | $ | 68,186 |  |  | 151,996 |  | $ | 0.45 |  | $ | 56,078 |  | 153,334 |  | $ | 0.37 |
The following outstanding stock options, and restricted stock awards for the three months ended March 31, 2012 and 2011, respectively, were excluded from the computation of diluted EPS because including them would have had an antidilutive effect.
|  | Three Months Ended |
|  | March 31, |
|  | 2012 |  | 2011 |
|  | (In thousands) |
Stock options |  | 396 |  | 911 |
Restricted stock awards |  | 3 |  | 118 |
Accumulated Other Comprehensive Income—As of March 31, 2012, total accumulated other comprehensive income was ($16.9) million which includes the following components: net unrealized loss on securities available for sale of ($17.8) million and foreign exchange translation adjustment of $918 thousand. As of March 31, 2011, total accumulated other comprehensive loss was ($10.2) million which includes the following components: net unrealized loss on securities available for sale of ($10.9) million and foreign exchange translation adjustment of $781 thousand. Activity in accumulated other comprehensive income (loss), net of tax, for the three months ended March 31, 2012 and 2011, was as follows:
|  | Unrealized gain (loss) on |  |  |  |  |
|  | investment securities |  | Foreign currency |  |  |
|  | available-for-sale |  | translation adjustments |  | Total |
|  | (In thousands) |
Balance, December 31, 2010 |  | $ | (13,927 | ) | $ | 1,513 |  | $ | (12,414 | )
Period Change |  | 2,991 |  | (732 | ) | 2,259 |
Balance, March 31, 2011 |  | $ | (10,936 | ) | $ | 781 |  | $ | (10,155 | )
Balance, December 31, 2011 |  | $ | (34,848 | ) | $ | 908 |  | $ | (33,940 | )
Period Change |  | 17,052 |  | 10 |  | 17,062 |
Balance, March 31, 2012 |  | $ | (17,796 | ) | $ | 918 |  | $ | (16,878 | )
The following table sets forth the tax effects allocated to each component of other comprehensive income for the three months ended March 31, 2012 and 2011:
|  |  |  | Tax |  |  |
|  | Before-Tax |  | (Expense) |  | Net-of-Tax |
|  | Amount |  | or Benefit |  | Amount |
|  | (In thousands) |
Three months ended March 31, 2012 |  |  |  |  |  |  |
Unrealized gain on investment securities available-for-sale: |  |  |  |  |  |  |
Unrealized gains on holding gains arising during period |  | $ | 28,640 |  | $ | (12,029 | ) | $ | 16,611 |
Less: reclassification adjustment for losses/(gains) included in income |  | 5,826 |  | (2,447 | ) | 3,379 |
Net unrealized gains |  | 34,466 |  | (14,476 | ) | 19,990 |
Noncredit-related impairment loss on securities |  | (5,066 | ) | 2,128 |  | (2,938 | )
Foreign currency translation adjustments |  | 17 |  | (7 | ) | 10 |
Other comprehensive income |  | $ | 29,417 |  | $ | (12,355 | ) | $ | 17,062 |
|  |  |  |  |  | Tax |  |  |  |
|  |  | Before-Tax |  |  | (Expense) |  |  | Net-of-Tax |
|  |  | Amount |  |  | or Benefit |  |  | Amount |
|  | (In thousands) |
Three months ended March 31, 2011 |  |  |  |  |  |  |  |  |  |
Unrealized gain on investment securities available-for-sale: |  |  |  |  |  |  |  |  |  |
Unrealized gains on holding gains arising during period |  | $ | 4,022 |  | $ | (1,689 | ) | $ | 2,333 |
Less: reclassification adjustment for losses/(gains) included in income |  |  | 6,225 |  |  | (2,614 | ) |  | 3,611 |
Net unrealized gains |  |  | 10,247 |  |  | (4,303 | ) |  | 5,944 |
Noncredit-related impairment loss on securities |  |  | (5,091 | ) |  | 2,138 |  |  | (2,953 | )
Foreign currency translation adjustments |  |  | (1,262 | ) |  | 530 |  |  | (732 | )
Other comprehensive income |  | $ | 3,894 |  | $ | (1,635 | ) | $ | 2,259 |

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