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STOCKHOLDERS' EQUITY | 6 Months Ended
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Jun. 30, 2012
STOCKHOLDERS' EQUITY |
STOCKHOLDERS' EQUITY |
NOTE 13 — 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 June 30, 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 half of 2012, the Company repurchased 6,784,227 shares at a weighted average price of $22.08 per share. The Company did not repurchase any shares during the six months ended June 30, 2011. Quarterly Dividends—In April 2012, the Company declared the payment of second quarter dividends of $20.00 per share on the Company’s Series A preferred stock, payable on or about May 1, 2012 to shareholders of record as of April 15, 2012. Total cash dividends paid in conjunction with the Company’s Series A preferred stock amounted to $1.7 million and $3.4 million during the three and six months ended June 30, 2012. In April 2012, the Company’s Board of Directors also declared quarterly common stock cash dividends of $0.10 per share payable on or about May 24, 2012 to shareholders on record on May 10, 2012. Cash dividends totaling $14.5 million and $29.3 million were paid to the Company’s common shareholders during the three and six months ended June 30, 2012. Earnings Per Share (“EPS”)—The number of shares outstanding at June 30, 2012 was 142,645,812. 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 issued 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 and six months ended June 30, 2012 and 2011:
|  | Three Months Ended June 30, 2012
|  | Net Income |  | Number of Shares |  | Per Share Amounts |
|  | (In thousands, except per share data) |
Net income |  | $ | 70,557 |  |  |  |  |
Less: |  |  |  |  |  |  |
Preferred stock dividends |  | (1,714 | ) |  |  |  |
Earnings allocated to participating securities |  | (859 | ) |  |  |  |
Basic EPS – income allocated to common stockholders (1) |  | $ | 67,984 |  | 142,107 |  | $ | 0.48 |
Effect of dilutive securities: |  |  |  |  |  |  |
Stock options |  | — |  | 36 |  |  |
Restricted stock units |  | 7 |  | 72 |  |  |
Convertible preferred stock |  | 1,714 |  | 5,571 |  |  |
Diluted EPS – income allocated to common stockholders (1) |  | $ | 69,705 |  | 147,786 |  | $ | 0.47 |
|  | Three Months Ended June 30, 2011
|  | Net Income |  | Number of Shares |  | Per Share Amounts |
|  | (In thousands, except per share data) |
Net income |  | $ | 60,525 |  |  |  |  |
Less: |  |  |  |  |  |  |
Preferred stock dividends |  | (1,714 | ) |  |  |  |
Basic EPS – income available to common stockholders |  | $ | 58,811 |  | 147,011 |  | $ | 0.40 |
Effect of dilutive securities: |  |  |  |  |  |  |
Stock options |  | — |  | 73 |  |  |
Restricted stock awards |  | 35 |  | 692 |  |  |
Convertible preferred stock |  | 1,714 |  | 5,571 |  |  |
Diluted EPS – income available to common stockholders |  | $ | 60,560 |  | 153,347 |  | $ | 0.39 |
|  | Six Months Ended June 30, 2012
|  | Net Income |  | Number of Shares |  | Per Share Amounts |
|  | (In thousands, except per share data) |
Net income |  | $ | 138,640 |  |  |  |  |
Less: |  |  |  |  |  |  |
Preferred stock dividends |  | (3,428 | ) |  |  |  |
Earnings allocated to participating securities |  | (1,718 | ) |  |  |  |
Basic EPS – income allocated to common stockholders (1) |  | $ | 133,494 |  | 143,727 |  | $ | 0.93 |
Effect of dilutive securities: |  |  |  |  |  |  |
Stock options |  | — |  | 41 |  |  |
Restricted stock units |  | 15 |  | 75 |  |  |
Convertible preferred stock |  | 3,428 |  | 5,571 |  |  |
Diluted EPS – income allocated to common stockholders (1) |  | $ | 136,937 |  | 149,414 |  | $ | 0.92 |
|  | Six Months Ended June 30, 2011
|  | Net Income |  | Number of Shares |  | Per Share Amounts |
|  | (In thousands, except per share data) |
Net income |  | $ | 116,596 |  |  |  |  |
Less: |  |  |  |  |  |  |
Preferred stock dividends |  | (3,429 | ) |  |  |  |
Basic EPS – income available to common stockholders |  | $ | 113,167 |  | 146,937 |  | $ | 0.77 |
Effect of dilutive securities: |  |  |  |  |  |  |
Stock options |  | — |  | 96 |  |  |
Restricted stock awards |  | 41 |  | 685 |  |  |
Convertible preferred stock |  | 3,429 |  | 5,571 |  |  |
Stock warrants |  | — |  | 60 |  |  |
Diluted EPS – income available to common stockholders |  | $ | 116,637 |  | 153,349 |  | $ | 0.76 |
The following outstanding stock options, and restricted stock awards for the three and six months ended June 30, 2012 and 2011, respectively, were excluded from the computation of diluted EPS because including them would have had an antidilutive effect.
|  | Three Months Ended |  | Six Months Ended |
|  | June 30, |  | June 30, |
|  | 2012 |  | 2011 |  | 2012 |  | 2011 |
|  | (In thousands) |
Stock options |  | 334 |  | 864 |  | 365 |  | 861 |
Restricted stock awards |  | 1 | (1) | 395 |  | 2 | (1) | 257 |
(1) On April 1, 2012, the Company revised its calculation of earnings per share to account for participating securities under the two-class method. This revision to the earnings per share calculation does not have an impact to previous periods as the amounts are immaterial. Accumulated Other Comprehensive (Loss) Income—As of June 30, 2012, total accumulated other comprehensive loss was ($15.9) million which includes the following components: net unrealized loss on securities available for sale of ($16.8) million and foreign exchange translation adjustment of $912 thousand. As of June 30, 2011, total accumulated other comprehensive income was $4.4 million which includes the following components: net unrealized gain on securities available for sale of $3.6 million and foreign exchange translation adjustment of $848 thousand. Activity in accumulated other comprehensive (loss) income, net of tax, for the six months ended June 30, 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 |  | 17,509 |  | (665) |  | 16,844 |
Balance, June 30, 2011 |  | $ | 3,582 |  | $ | 848 |  | $ | 4,430 |
Balance, December 31, 2011 |  | $ | (34,848) |  | $ | 908 |  | $ | (33,940) |
Period Change |  | 18,013 |  | 4 |  | 18,017 |
Balance, June 30, 2012 |  | $ | (16,835) |  | $ | 912 |  | $ | (15,923) |
The following table sets forth the tax effects allocated to each component of other comprehensive income for the three and six months ended June 30, 2012 and 2011:
|  |  |  | Tax |  |  |
|  | Before-Tax |  | (Expense) |  | Net-of-Tax |
|  | Amount |  | or Benefit |  | Amount |
|  |  |  | (In thousands) |  |  |
Three Months Ended June 30, 2012 |  |  |  |  |  |  |
Unrealized gain on investment securities available-for-sale: |  |  |  |  |  |  |
Unrealized gains on holding gains arising during period |  | $ | 1,728 |  | $ | (726) |  | $ | 1,002 |
Less: reclassification adjustment for gains included in income |  | (71) |  | 30 |  | (41) |
Net unrealized gains |  | 1,657 |  | (696) |  | 961 |
Noncredit-related impairment loss on securities |  | — |  | — |  | — |
Foreign currency translation adjustments |  | (10) |  | 4 |  | (6) |
Other comprehensive income |  | $ | 1,647 |  | $ | (692) |  | $ | 955 |
|  |  |  | Tax |  |  |
|  | Before-Tax |  | (Expense) |  | Net-of-Tax |
|  | Amount |  | or Benefit |  | Amount |
|  |  |  | (In thousands) |  |  |
Three Months Ended June 30, 2011 |  |  |  |  |  |  |
Unrealized gain on investment securities available-for-sale: |  |  |  |  |  |  |
Unrealized gains on holding gains arising during period |  | $ | 26,148 |  | $ | (10,982) |  | $ | 15,166 |
Less: reclassification adjustment for gains included in income |  | (1,117) |  | 469 |  | (648) |
Net unrealized gains |  | 25,031 |  | (10,513) |  | 14,518 |
Noncredit-related impairment loss on securities |  | — |  | — |  | — |
Foreign currency translation adjustments |  | 116 |  | (49) |  | 67 |
Other comprehensive income |  | $ | 25,147 |  | $ | (10,562) |  | $ | 14,585 |
|  |  |  | Tax |  |  |
|  | Before-Tax |  | (Expense) |  | Net-of-Tax |
|  | Amount |  | or Benefit |  | Amount |
|  |  |  | (In thousands) |  |  |
Six Months Ended June 30, 2012 |  |  |  |  |  |  |
Unrealized gain on investment securities available-for-sale: |  |  |  |  |  |  |
Unrealized gains on holding gains arising during period |  | $ | 36,676 |  | $ | (15,404) |  | $ | 21,272 |
Less: reclassification adjustment for gains included in income |  | (554) |  | 233 |  | (321) |
Net unrealized gains |  | 36,122 |  | (15,171) |  | 20,951 |
Noncredit-related impairment loss on securities |  | (5,066) |  | 2,128 |  | (2,938) |
Foreign currency translation adjustments |  | 7 |  | (3) |  | 4 |
Other comprehensive income |  | $ | 31,063 |  | $ | (13,046) |  | $ | 18,017 |
|  |  |  | Tax |  |  |
|  | Before-Tax |  | (Expense) |  | Net-of-Tax |
|  | Amount |  | or Benefit |  | Amount |
|  |  |  | (In thousands) |  |  |
Six months ended June 30, 2011 |  |  |  |  |  |  |
Unrealized gain on investment securities available-for-sale: |  |  |  |  |  |  |
Unrealized gains on holding gains arising during period |  | $ | 38,911 |  | $ | (16,342) |  | $ | 22,569 |
Less: reclassification adjustment for gains included in income |  | (3,632) |  | 1,526 |  | (2,107) |
Net unrealized gains |  | 35,279 |  | (14,816) |  | 20,462 |
Noncredit-related impairment loss on securities |  | (5,091) |  | 2,138 |  | (2,953) |
Foreign currency translation adjustments |  | (1,147) |  | 482 |  | (665) |
Other comprehensive income |  | $ | 29,041 |  | $ | (12,196) |  | $ | 16,844

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