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STOCKHOLDERS' EQUITY | 3 Months Ended
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Mar. 31, 2013
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 March 31, 2013, 85,710 shares were outstanding. 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. As of March 31, 2013, the Company repurchased 3,543,100 shares at a weighted average price of $24.53 per share and a total cost of $87.0 million, in comparison, the Company repurchased 4,554,827 shares at a weighted average price of $22.14 per share and a total cost of $101.0 million during the three months ended March 31, 2012. Quarterly Dividends — In January 2013, the Company declared the payment of first quarter dividends of $20.00 per share on the Company’s Series A preferred stock, payable on or about February 1, 2013 to shareholders of record as of January 15, 2013. 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, 2013, respectively. In January 2013, the Company’s Board of Directors also declared quarterly common stock cash dividends of $0.15 per share payable on or about February 22, 2013 to shareholders on record on February 8, 2013. Cash dividends totaling $21.1 million were paid to the Company’s common shareholders during the three months ended March 31, 2013. Earnings Per Share (“EPS”) — The number of shares outstanding at March 31, 2013 was 136,578,350. 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 months ended March 31, 2013 and 2012:
|  | Three Months Ended March 31, 2013 |
|  | Net Income |  | Number of Shares |  | Per Share Amounts |
|  | (In thousands, except per share data) |
Net income |  | $ | 72,091 |  |  |  |  |
Less: |  |  |  |  |  |  |
Preferred stock dividends |  | (1,714 | ) |  |  |  |
Earnings allocated to participating securities |  | (584 | ) |  |  |  |
Basic EPS — income allocated to common stockholders(1) |  | $ | 69,793 |  | 137,648 |  | $ | 0.51 |
Effect of dilutive securities: |  |  |  |  |  |  |
Stock options |  | — |  | 51 |  |  |
Restricted stock units |  | 36 |  | 242 |  |  |
Convertible preferred stock |  | 1,714 |  | 5,578 |  |  |
Diluted EPS — income allocated to common stockholders (1) |  | $ | 71,543 |  | 143,519 |  | $ | 0.50 |
|  | Three Months Ended March 31, 2012 |
|  | Net Income |  | Number of Shares |  | Per Share Amounts |
|  | (In thousands, except per share data) |
Net income |  | $ | 68,083 |  |  |  |  |
Less: |  |  |  |  |  |  |
Preferred stock dividends |  | (1,714 | ) |  |  |  |
Basic EPS — income available to common stockholders |  | $ | 66,369 |  | 145,347 |  | $ | 0.46 |
Effect of dilutive securities: |  |  |  |  |  |  |
Stock options |  | — |  | 48 |  |  |
Restricted stock awards |  | 103 |  | 1,030 |  |  |
Convertible preferred stock |  | 1,714 |  | 5,571 |  |  |
Diluted EPS — income available to common stockholders |  | $ | 68,186 |  | 151,996 |  | $ | 0.45 |
The following outstanding stock options, and restricted stock awards for the three months ended March 31, 2013 and 2012, respectively, were excluded from the computation of diluted EPS because including them would have had an antidilutive effect.
|  | Three Months Ended |
|  | March 31, |
|  | 2013 |  | 2012 |
|  | (In thousands) |
Stock options |  | 270 |  | 396 |
Restricted stock awards (1) |  | 133 |  | 3 |
(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 Income (Loss) — As of March 31, 2013, total accumulated other comprehensive income was $6.2 million which includes the following components: net unrealized gain on securities available for sale of $6.1 million and unrealized gain on other asset investment of $36 thousand. As of December 31, 2012, total accumulated other comprehensive income was $4.7 million which includes the following components: net unrealized gain on securities available for sale of $4.6 million and unrealized gain on other asset investment of $26 thousand. Activity in accumulated other comprehensive income (loss), net of tax, for the three months ended March 31, 2013 and 2012, was as follows:
|  | Unrealized (loss) gain on |  |  |  |  |  |  |
|  | investment securities |  | Foreign currency |  | Unrealized gain on |  |  |
|  | available-for-sale |  | translation adjustments |  | other asset investment |  | Total |
|  | (In thousands) |
Balance, December 31, 2011 |  | $ | (34,848 | ) | $ | 900 |  | $ | 8 |  | $ | (33,940 | )
Period Change |  | 17,052 |  | — |  | 10 |  | 17,062 |
Balance, March 31, 2012 |  | $ | (17,796 | ) | $ | 900 |  | $ | 18 |  | $ | (16,878 | )
Balance, December 31, 2012 |  | $ | 4,643 |  | $ | — |  | $ | 26 |  | $ | 4,669 |
Other comprehensive income before reclassifications |  | 4,741 |  | — |  | 10 |  | 4,751 |
Amounts reclassified from AOCI |  | (3,235 | ) | — |  | — |  | (3,235 | )
Net current period other comprehensive income |  | 1,506 |  | — |  | 10 |  | 1,516 |
Balance, March 31, 2013 |  | $ | 6,149 |  | $ | — |  | $ | 36 |  | $ | 6,185 |
Reclassifications out of accumulated other comprehensive income for the three months ended March 31, 2013 were as follows:
|  | Amount Reclassified from |  |  |
Details about Accumulated Other |  | Accumulated Other |  | Affected Line Item in the Statement |
Comprehensive Income Components |  | Comprehensive Income |  | Where Net Income is Presented |
|  | (In thousands) |  |  |
Three Months Ended March 31, 2013 |  |  |  |  |
Investment securities available for sale |  |  |  |  |
Realized net gains on sale of securities |  | $ | 5,577 |  | Net gain on sales of investment securities |
|  | 5,577 |  |  |
|  | (2,342 | ) | Tax expense |
Total reclassifications |  | $ | 3,235 |  |  |
The following table sets forth the tax effects allocated to each component of other comprehensive income for the three months ended March 31, 2013 and 2012:
|  |  |  | Tax |  |  |
|  | Before-Tax |  | (Expense) |  | Net-of-Tax |
|  | Amount |  | or Benefit |  | Amount |
|  |  |  | (In thousands) |  |  |
Three Months Ended March 31, 2013 |  |  |  |  |  |  |
Unrealized gain on investment securities available-for-sale: |  |  |  |  |  |  |
Unrealized holding gains arising during period |  | $ | 8,174 |  | $ | (3,433 | ) | $ | 4,741 |
Less: reclassification adjustment for gains included in income |  | (5,577 | ) | 2,342 |  | (3,235 | )
Net unrealized gains |  | 2,597 |  | (1,091 | ) | 1,506 |
Noncredit-related impairment loss on securities |  | — |  | — |  | — |
Unrealized gain on other asset investment |  | 17 |  | (7 | ) | 10 |
Less: reclassification adjustment for gains included in income |  | — |  | — |  | — |
Other comprehensive income |  | $ | 2,614 |  | $ | (1,098 | ) | $ | 1,516 |
|  |  |  | Tax |  |  |
|  | Before-Tax |  | (Expense) |  | Net-of-Tax |
|  | Amount |  | or Benefit |  | Amount |
|  |  |  | (In thousands) |  |  |
Three Months Ended March 31, 2012 |  |  |  |  |  |  |
Unrealized loss on investment securities available-for-sale: |  |  |  |  |  |  |
Unrealized holding gains arising during period |  | $ | 34,948 |  | $ | (14,678 | ) | $ | 20,270 |
Less: reclassification adjustment for gains included in income |  | (483 | ) | 203 |  | (280 | )
Net unrealized loss |  | 34,465 |  | (14,475 | ) | 19,990 |
Noncredit-related impairment loss on securities |  | (5,066 | ) | 2,128 |  | (2,938 | )
Foreign currency translation adjustments |  | — |  | — |  | — |
Unrealized gain on other asset investment |  | 17 |  | (7 | ) | 10 |
Less: reclassification adjustment for gains included in income |  | — |  | — |  | — |
Other comprehensive income |  | $ | 29,416 |  | $ | (12,354 | ) | $ | 17,062 |

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