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STOCKHOLDERS' EQUITY | 6 Months Ended
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Jun. 30, 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. On May 1, 2013, the Company exercised its mandatory conversion right related to all the outstanding shares of its Series A preferred stock. At the conversion date, the remaining 85,710 shares of outstanding Series A Preferred Stock were converted to 5,594,080 shares of common stock. 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 June 30, 2013, the Company completed the authorized repurchase program, repurchasing 8,026,807 shares at a weighted average price of $24.89 per share and a total cost of $200.0 million. In comparison, the Company repurchased 6,784,227 shares at a weighted average price of $22.08 per share and a total cost of $150.0 million during the six months ended June 30, 2012. Quarterly Dividends — In April 2013, 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, 2013 to shareholders of record as of April 15, 2013. 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, 2013, respectively. In April 2013, the Company’s Board of Directors also declared quarterly common stock cash dividends of $0.15 per share payable on or about May 13, 2013 to shareholders on record on April 26, 2013. Cash dividends totaling $20.6 million and $41.7 million were paid to the Company’s common shareholders during the three and six months ended June 30, 2013. Earnings Per Share (“EPS”) — The number of shares outstanding at June 30, 2013 was 137,705,407. 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, 2013 and 2012:
|  | Three Months Ended June 30, 2013 |
|  | Net Income |  | Number of Shares |  | Per Share Amounts |
|  | (In thousands, except per share data) |
Net income |  | $ | 74,015 |  |  |  |  |
Less: |  |  |  |  |  |  |
Preferred stock dividends |  | (1,714 | ) |  |  |  |
Earnings allocated to participating securities |  | (400 | ) |  |  |  |
Basic EPS — income allocated to common stockholders |  | $ | 71,901 |  | 137,536 |  | $ | 0.52 |
Effect of dilutive securities: |  |  |  |  |  |  |
Stock options |  | — |  | 59 |  |  |
Restricted stock units |  | 33 |  | 221 |  |  |
Convertible preferred stock |  | — |  | — |  |  |
Diluted EPS — income allocated to common stockholders |  | $ | 71,934 |  | 137,816 |  | $ | 0.52 |
|  | 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 available to common stockholders |  | $ | 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 available to common stockholders |  | $ | 69,705 |  | 147,786 |  | $ | 0.47 |
|  | Six Months Ended June 30, 2013 |
|  | Net Income |  | Number of Shares |  | Per Share Amounts |
|  | (In thousands, except per share data) |
Net income |  | $ | 146,106 |  |  |  |  |
Less: |  |  |  |  |  |  |
Preferred stock dividends |  | (3,428 | ) |  |  |  |
Earnings allocated to participating securities |  | (988 | ) |  |  |  |
Basic EPS — income allocated to common stockholders |  | $ | 141,690 |  | 137,592 |  | $ | 1.03 |
Effect of dilutive securities: |  |  |  |  |  |  |
Stock options |  | — |  | 55 |  |  |
Restricted stock units |  | 68 |  | 227 |  |  |
Convertible preferred stock |  | 3,428 |  | 3,699 |  |  |
Diluted EPS — income allocated to common stockholders |  | $ | 145,186 |  | 141,573 |  | $ | 1.03 |
|  | 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 available to common stockholders |  | $ | 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 available to common stockholders |  | $ | 136,937 |  | 149,414 |  | $ | 0.92 |
The following average convertible preferred stock, outstanding stock options, and restricted stock units for the three and six months ended June 30, 2013 and 2012, 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, |
|  | 2013 |  | 2012 |  | 2013 |  | 2012 |
|  | (In thousands) |
Convertible preferred stock |  | 1,841 |  | — |  | — |  | — |
Stock options |  | 159 |  | 334 |  | 214 |  | 365 |
Restricted stock units |  | 6 |  | 1 |  | 4 |  | 2 |
Accumulated Other Comprehensive Income (Loss) — As of June 30, 2013, total accumulated other comprehensive loss was $21.7 million which includes the following components: net unrealized loss on securities available for sale of $21.7 million and unrealized gain on other investments of $43 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 six months ended June 30, 2013 and 2012, was as follows:
|  | Unrealized (loss) gain on |  |  |  |  |  |  |
|  | investment securities |  | Foreign currency |  | Unrealized gain on |  |  |
|  | available-for-sale |  | translation adjustments |  | other investments |  | Total |
|  | (In thousands) |
Balance, December 31, 2011 |  | $ | (34,848 | ) | $ | 900 |  | $ | 8 |  | $ | (33,940 | )
Period Change |  | 18,013 |  | — |  | 4 |  | 18,017 |
Balance, June 30, 2012 |  | $ | (16,835 | ) | $ | 900 |  | $ | 12 |  | $ | (15,923 | )
Balance, December 31, 2012 |  | $ | 4,643 |  | $ | — |  | $ | 26 |  | $ | 4,669 |
Other comprehensive income before reclassifications |  | (20,029 | ) | — |  | 17 |  | (20,012 | )
Amounts reclassified from AOCI |  | (6,335 | ) | — |  | — |  | (6,335 | )
Net current period other comprehensive loss |  | (26,364 | ) | — |  | 17 |  | (26,347 | )
Balance, June 30, 2013 |  | $ | (21,721 | ) | $ | — |  | $ | 43 |  | $ | (21,678 | )
Reclassifications out of accumulated other comprehensive income for the three and six months ended June 30, 2013 was 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 June 30, 2013 |  |  |  |  |
Investment securities available for sale Realized net gains on sale of securities |  | $ | 5,345 |  | Net gain on sales of investment securities |
|  | 5,345 |  |  |
|  | (2,245 | ) | Tax expense |
Total reclassifications |  | $ | 3,100 |  |  |
Six Months Ended June 30, 2013 |  |  |  |  |
Investment securities available for sale Realized net gains on sale of securities |  | $ | 10,922 |  | Net gain on sales of investment securities |
|  | 10,922 |  |  |
|  | (4,587 | ) | Tax expense |
Total reclassifications |  | $ | 6,335 |  |  |
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, 2013 and 2012:
|  |  |  | Tax |  |  |
|  | Before-Tax |  | (Expense) |  | Net-of-Tax |
|  | Amount |  | or Benefit |  | Amount |
|  | (In thousands) |
Three Months Ended June 30, 2013 |  |  |  |  |  |  |
Unrealized loss on investment securities available-for-sale: |  |  |  |  |  |  |
Unrealized holding losses arising during period |  | $ | (42,707 | ) | $ | 17,937 |  | $ | (24,770 | )
Less: reclassification adjustment for gains included in income |  | (5,345 | ) | 2,245 |  | (3,100 | )
Net unrealized loss |  | (48,052 | ) | 20,182 |  | (27,870 | )
Noncredit-related impairment loss on securities |  | — |  | — |  | — |
Unrealized gain on other investments |  | 12 |  | (5 | ) | 7 |
Less: reclassification adjustment for gains included in income |  | — |  | — |  | — |
Other comprehensive loss |  | $ | (48,040 | ) | $ | 20,177 |  | $ | (27,863 | )
|  |  |  | 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 holding gains arising during period |  | $ | 1,728 |  | $ | (726 | ) | $ | 1,002 |
Less: reclassification adjustment for gains included in income |  | (71 | ) | 30 |  | (41 | )
Net unrealized gain |  | 1,657 |  | (696 | ) | 961 |
Noncredit-related impairment loss on securities |  | — |  | — |  | — |
Unrealized gain on other investments |  | (10 | ) | 4 |  | (6 | )
Less: reclassification adjustment for gains included in income |  | — |  | — |  | — |
Other comprehensive income |  | $ | 1,647 |  | $ | (692 | ) | $ | 955 |
|  |  |  | Tax |  |  |
|  | Before-Tax |  | (Expense) |  | Net-of-Tax |
|  | Amount |  | or Benefit |  | Amount |
|  | (In thousands) |
Six Months Ended June 30, 2013 |  |  |  |  |  |  |
Unrealized loss on investment securities available-for-sale: |  |  |  |  |  |  |
Unrealized holding losses arising during period |  | $ | (34,533 | ) | $ | 14,504 |  | $ | (20,029 | )
Less: reclassification adjustment for gains included in income |  | (10,922 | ) | 4,587 |  | (6,335 | )
Net unrealized loss |  | (45,455 | ) | 19,091 |  | (26,364 | )
Noncredit-related impairment loss on securities |  | — |  | — |  | — |
Unrealized gain on other investments |  | 29 |  | (12 | ) | 17 |
Less: reclassification adjustment for gains included in income |  | — |  | — |  | — |
Other comprehensive loss |  | $ | (45,426 | ) | $ | 19,079 |  | $ | (26,347 | )
|  |  |  | 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 gain 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 | )
Unrealized gains on other investments |  | 7 |  | (3 | ) | 4 |
Less: reclassification adjustment for gains included in income |  | — |  | — |  | — |
Other comprehensive income |  | $ | 31,063 |  | $ | (13,046 | ) | $ | 18,017 |

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