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Note 10 - Capital Resources | 12 Months Ended
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Dec. 31, 2016
Notes to Financial Statements |
Stockholders' Equity Note Disclosure [Text Block] |
| 10. | Capital Resources
Total equity was $1.83 billion at December 31, 2016, an increase of $80.8 million, or 4.6%, from $1.75 billion at December 31, 2015, primarily due to increases in net income of $175.1 million, and in other comprehensive income of $4.7 million, proceeds from exercise of stock options of $7.7 million, from dividend reinvestment of $2.3 million which were offset by purchases of treasury stock of $54.4 million and common stock cash dividends of $59.3 million. The Company paid cash dividends of $0.75 per common share in 2016 and $0.56 per common share in 2015 . In August 2015, the Company resumed stock repurchases under the November 2007 repurchase program and repurchased the remaining 622,500 shares for $18.1 million, or an average price of $29.08 per share. Also, in August 2015, the Board of Directors approved a stock repurchase program for the Company to buy back up to two million shares of our common stock, and 1,366,750 shares were repurchased during 2015. In January and February of 2016, the Company repurchased the remaining 633,250 shares under the August 2015 repurchase program for $17.0 million, or an average price of $26.82 per share. On February 1, 2016, the Board of Directors approved a new stock repurchase program to buy back up to $45.0 million of our common stock. In 2016, the Company repurchased 1,380,578 shares for $37.5 million, or $27.13 per share under the February 2016 repurchase program. As of December 31, 2016, the Company may repurchase up to $7.5 million of its common stock under the February 2016 repurchase program. The U.S. Treasury received warrants to purchase common stock of 1,846,374 shares at an exercise price of $20.96 as part of the Company’s participation in the U.S. Treasury Troubled Asset Relief Program Capital Purchase Program. As a result of the anti-dilution adjustments under the warrant, the exercise price at December 31, 2016 has been adjusted to $20.65 and the number of warrants increased by 1.5%. During 2016, 930,113 warrants were exercised on a cashless basis and 388,001 common shares were issued. At December 31, 2016, 943,345 warrants remain exercisable. The Bancorp established three special purpose trusts in 2003 and two in 2007 for the purpose of issuing trust preferred securities to outside investors (“Capital Securities”). The trusts exist for the purpose of issuing the Capital Securities and investing the proceeds thereof, together with proceeds from the purchase of the common securities of the trusts by the Bancorp, in Junior Subordinated Notes issued by the Bancorp. Subject to some limitations, payment of distributions out of the monies held by the trusts and payments on liquidation of the trusts or the redemption of the Capital Securities are guaranteed by the Bancorp to the extent the trusts have funds on hand at such time. The obligations of the Bancorp under the guarantees and the Junior Subordinated Notes are subordinate and junior in right of payment to all indebtedness of the Bancorp and will be structurally subordinated to all liabilities and obligations of the Bancorp’s subsidiaries. The Bancorp has the right to defer payments of interest on the Junior Subordinated Notes at any time or from time to time for a period of up to twenty consecutive quarterly periods with respect to each deferral period. Under the terms of the Junior Subordinated Notes, the Bancorp may not, with certain exceptions, declare or pay any dividends or distributions on its capital stock or purchase or acquire any of its capital stock if the Bancorp has deferred payment of interest on the Junior Subordinated Notes. The five special purpose trusts are considered variable interest entities. Because the Bancorp is not the primary beneficiary of the trusts, the financial statements of the trusts are not included in the Consolidated Financial Statements of the Company. The Junior Subordinated Notes, all of which were issued before May 19, 2010, are currently included in the Tier 1 capital of the Bancorp for regulatory capital purposes. Under the Dodd-Frank Act, trust preferred securities issued before May 19, 2010 by the Bancorp and other bank holding companies with assets of less than $15 billion as of December 31, 2019 continue to qualify for Tier 1 capital treatment. Interest expense, excluding impact of cash flow interest rate swaps entered into during June 2014, on the Junior Subordinated Notes was $3.5 million for 2016, $3.0 million for 2015, and $2.9 million for 2014. The table below summarizes the outstanding Junior Subordinated Notes issued by the Company to each trust as of December 31, 2016:
|  |  |  | Principal |  | Not |  |  |  |  |  | Current |  | Date of |  | Payable/
|  | Issuance |  | Balance of |  | Redeemable |  | Stated |  | Annualized |  | Interest |  | Rate |  | Distribution
Trust Name |  | Date |  | Notes |  | Until |  | Maturity |  | Coupon Rate |  | Rate |  | Change |  | Date
(Dollars in thousands)
Cathay Capital |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trust I |  | June 26, |  | $ | 20,619 |  | June 30, |  | June 30, |  | 3-month |  |  | 4.15 | % | December 30, |  | March 30
|  | 2003 |  |  |  |  | 2008 |  | 2033 |  | LIBOR |  |  |  |  | 2016 |  | June 30
|  |  |  |  |  |  |  |  |  |  | + 3.15% |  |  |  |  |  |  | September 30
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | December 30
Cathay Statutory |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trust I |  | September 17, |  |  | 20,619 |  | September 17, |  | September 17, |  | 3-month |  |  | 3.99 | % | December 19, |  | March 17
|  | 2003 |  |  |  |  | 2008 |  | 2033 |  | LIBOR |  |  |  |  | 2016 |  | June 17
|  |  |  |  |  |  |  |  |  |  | + 3.00% |  |  |  |  |  |  | September 17
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | December 17
Cathay Capital |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trust II |  | December 30, |  |  | 12,887 |  | March 30, |  | March 30, |  | 3-month |  |  | 3.90 | % | December 30, |  | March 30
|  | 2003 |  |  |  |  | 2009 |  | 2034 |  | LIBOR |  |  |  |  | 2016 |  | June 30
|  |  |  |  |  |  |  |  |  |  | + 2.90% |  |  |  |  |  |  | September 30
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | December 30
Cathay Capital |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trust III |  | March 28, |  |  | 46,392 |  | June 15, |  | June 15, |  | 3-month |  |  | 2.44 | % | December 15, |  | March 15
|  | 2007 |  |  |  |  | 2012 |  | 2037 |  | LIBOR |  |  |  |  | 2016 |  | June 15
|  |  |  |  |  |  |  |  |  |  | + 1.48% |  |  |  |  |  |  | September 15
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | December 15
Cathay Capital |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trust IV |  | May 31, |  |  | 18,619 |  | September 6, |  | September 6, |  | 3-month |  |  | 2.35 | % | December 6, |  | March 6
|  | 2007 |  |  |  |  | 2012 |  | 2037 |  | LIBOR |  |  |  |  | 2016 |  | June 6
|  |  |  |  |  |  |  |  |  |  | + 1.4% |  |  |  |  |  |  | September 6
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | December 6
Total Junior Subordinated Notes |  | $ | 119,136 |  |  |  |  |  |  |  |  |  |  |  |  |

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