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Shareholders' Equity
 12 Months Ended
Dec. 31, 2024
Stockholders' Equity Note [Abstract]  
Shareholders' Equity

Note 11. Shareholders’ Equity

Regulatory Capital

The table below sets forth the minimum required capital amounts and ratios for well capitalized institutions and the actual capital amounts and ratios for the Company and the Bank as of December 31, 2024 and 2023:

 

(dollars in thousands)

 

Well Capitalized Minimum Ratio

 

 

Company

 

 

Bank

 

As of December 31, 2024

 

 

 

 

 

 

 

 

 

Common Shareholders’ Equity

 

 

 

 

$

1,322,774

 

 

$

1,540,431

 

Common Equity Tier 1 Capital

 

 

 

 

 

1,648,889

 

 

 

1,869,247

 

Tier 1 Capital

 

 

 

 

 

1,984,990

 

 

 

1,869,247

 

Total Capital

 

 

 

 

 

2,133,624

 

 

 

2,017,881

 

Common Equity Tier 1 Capital Ratio

 

 

6.5

%

 

 

11.59

%

 

 

13.16

%

Tier 1 Capital Ratio

 

 

8.0

%

 

 

13.95

%

 

 

13.16

%

Total Capital Ratio

 

 

10.0

%

 

 

15.00

%

 

 

14.20

%

Tier 1 Leverage Ratio

 

 

5.0

%

 

 

8.31

%

 

 

7.83

%

 

 

 

 

 

 

 

 

 

As of December 31, 2023

 

 

 

 

 

 

 

 

 

Common Shareholders’ Equity

 

 

 

 

$

1,238,756

 

 

$

1,369,733

 

Common Equity Tier 1 Capital

 

 

 

 

 

1,611,645

 

 

 

1,754,222

 

Tier 1 Capital

 

 

 

 

 

1,787,132

 

 

 

1,754,222

 

Total Capital

 

 

 

 

 

1,935,532

 

 

 

1,902,622

 

Common Equity Tier 1 Capital Ratio

 

 

6.5

%

 

 

11.33

%

 

 

12.33

%

Tier 1 Capital Ratio

 

 

8.0

%

 

 

12.56

%

 

 

12.33

%

Total Capital Ratio

 

 

10.0

%

 

 

13.60

%

 

 

13.38

%

Tier 1 Leverage Ratio

 

 

5.0

%

 

 

7.51

%

 

 

7.38

%

 

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can result in certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classifications are also subject to qualitative judgments by regulators about the components of regulatory capital, risk weightings, and other factors.

 

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of Common Equity Tier 1, Tier 1 and Total Capital. Common Equity Tier 1 Capital is common shareholders’ equity, reduced by certain intangible assets, postretirement benefit liability adjustments, and unrealized gains and losses on investment securities. Tier 1 Capital consists of Common Equity Tier 1 Capital and additional tier 1 capital instruments meeting specified requirements. Total Capital is Tier 1 Capital plus an allowable amount of the reserve for credit losses. Risk-weighted assets are calculated by taking assets and credit equivalent amounts of off-balance-sheet items and assigning them to one of several broad risk categories. Four capital ratios are used to measure capital adequacy: Common Equity Tier 1 Capital divided by risk-weighted assets, as defined; Tier 1 Capital divided by risk-weighted assets; Total Capital divided by risk-weighted assets; and the Tier 1 Leverage ratio, which is Tier 1 Capital divided by quarterly adjusted average total assets.

 

In addition to the minimum risk-based capital requirements, all banks must hold additional capital, referred to as the capital conservation buffer (which is in the form of common equity) under the U.S. Basel III capital framework, to avoid being subject to limits on capital distributions and certain discretionary bonus payments to officers. The capital conservation buffer is a minimum of 2.5% of additional capital in addition to the minimum risk-based capital ratios.

 

As of December 31, 2024, the Company and the Bank were well capitalized as defined in the regulatory framework for prompt corrective action. The capital conservation buffer requirements do not currently result in any limitations on distributions or discretionary bonuses for the Company or the Bank. There were no conditions or events since December 31, 2024, that management believes have changed the Company or the Bank’s capital classifications.

 

The Company elected to apply the modified transition provision related to the impact of the CECL accounting standard on regulatory capital, as provided by the U.S. banking agencies’ March 2020 interim final rule that was finalized on September 30, 2020. Under the modified CECL transition provision, capital ratios were calculated using the regulatory capital rule that allows a five-year transition period related to the adoption of CECL, which was completed as of December 31, 2024.

 

Dividends

 

Dividends paid by the Parent are substantially funded from dividends received from the Bank. The Bank is subject to federal and state regulatory restrictions that limit cash dividends and loans to the Parent. These restrictions generally require advance approval from the Bank’s regulator for payment of dividends in excess of the sum of net income for the current calendar year and the retained net income of the prior two calendar years.

 

Common Stock Repurchase Program

 

The Parent has a common stock repurchase program in which shares repurchased are held in treasury stock for reissuance in connection with share-based compensation plans and for general corporate purposes. For the year ended December 31, 2024, the Parent repurchased no shares of common stock under its share repurchase program. From the beginning of the stock repurchase program in July 2001 through December 31, 2024, the Parent repurchased a total of 58.2 million shares of common stock at an average cost of $41.24 per share and total cost of $2.4 billion. Remaining buyback authority was $126.0 million as of December 31, 2024. The actual amount and timing of future share repurchases, if any, will depend on market conditions, applicable SEC rules and various other factors.

 

Preferred Stock Issuance

 

The Company issued and sold 7,200,000 depositary shares, each representing a 1/40th ownership interest in a share of 4.375% Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series A, par value $0.01 per share (the “Series A Preferred Stock”). The Company issued a total of 180,000 shares of Series A Preferred Stock underlying the depositary shares. The Series A Preferred Stock has a liquidation preference of $1,000 per share. Net proceeds, after underwriting discounts and expenses, totaled $175.5 million. Dividends on the Series A Preferred Stock are not cumulative and will be paid when declared by the Parent’s Board of Directors to the extent that the Company have legally available funds to pay dividends. If declared, dividends will accrue and be payable quarterly, in arrears, on the liquidation preference amount, on a non-cumulative basis, at a rate of 4.375% per annum. Holders of the Series A Preferred Stock will not have voting rights, except with respect to certain changes in the terms of the preferred stock, certain dividend non-payments and as otherwise required by applicable law. The Company may redeem the Series A Preferred Stock at its option, (i) in whole or in part, from time to time, on any dividend payment date on or after August 1, 2026 or (ii) in whole but not in part, at any time within 90 days following a regulatory capital treatment event, in either case at a redemption price equal to $1,000 per share (equivalent to $25 per depositary share), plus any declared and unpaid dividends.

In June 2024, the Company issued and sold 6,600,000 depositary shares, each representing a 1/40th ownership interest in a share of 8.000% Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series B, par value $0.01 per share (the “Series B Preferred Stock”). The Company issued a total of 165,000 shares of Series B Preferred Stock underlying the depositary shares. The Series B Preferred Stock has a liquidation preference of $1,000 per share. Net proceeds, after underwriting discounts and expenses, totaled $160.6 million. Dividends on the Series B Preferred Stock are not cumulative and will be paid when declared by the Parent’s Board of Directors to the extent that we have legally available funds to pay dividends. If declared, dividends will accrue and be payable quarterly, in arrears, on the liquidation preference amount, on a non-cumulative basis, at a rate of 8.000% per annum. Holders of the Series B Preferred Stock will not have voting rights, except with respect to certain changes in the terms of the preferred stock, certain dividend non-payments and as otherwise required by applicable law. The Company may redeem the Series B Preferred Stock at its option, (i) in whole or in part, from time to time, on any dividend payment date on or after August 1, 2029 or (ii) in whole but not in part, at any time within 90 days following a regulatory capital treatment event, in either case at a redemption price equal to $1,000 per share (equivalent to $25 per depositary share), plus any declared and unpaid dividends.

 

Accumulated Other Comprehensive Income

 

The following table presents the components of other comprehensive income (loss), net of tax:

 

(dollars in thousands)

 

Before Tax

 

 

Tax Effect

 

 

Net of Tax

 

Year Ended December 31, 2024

 

 

 

 

 

 

 

 

 

Net Unrealized Gains on Investment Securities:

 

 

 

 

 

 

 

 

 

Net Unrealized Gains Arising During the Period

 

$

47,860

 

 

$

12,683

 

 

$

35,177

 

Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) that (Increase) Decrease Net Income:

 

 

 

 

 

 

 

 

 

Amortization of Unrealized Holding Losses on Held-to-Maturity Securities

 

 

24,844

 

 

 

6,586

 

 

 

18,258

 

Net Unrealized Gains on Investment Securities

 

 

72,704

 

 

 

19,269

 

 

 

53,435

 

Defined Benefit Plans:

 

 

 

 

 

 

 

 

 

Net Actuarial Losses Arising During the Period

 

 

(1,101

)

 

 

(291

)

 

 

(810

)

Amortization of Net Actuarial Losses

 

 

1,163

 

 

 

308

 

 

 

855

 

Amortization of Prior Service Credit

 

 

(246

)

 

 

(65

)

 

 

(181

)

Defined Benefit Plans, Net

 

 

(184

)

 

 

(48

)

 

 

(136

)

Other Comprehensive Income

 

$

72,520

 

 

$

19,221

 

 

$

53,299

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2023

 

 

 

 

 

 

 

 

 

Net Unrealized Gains on Investment Securities:

 

 

 

 

 

 

 

 

 

Net Unrealized Gains Arising During the Period

 

$

17,692

 

 

$

4,661

 

 

$

13,031

 

Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) that (Increase) Decrease Net Income:

 

 

 

 

 

 

 

 

 

Loss on Sale

 

 

4,582

 

 

 

1,237

 

 

 

3,345

 

Amortization of Unrealized Holding Losses on Held-to-Maturity Securities

 

 

26,909

 

 

 

7,133

 

 

 

19,776

 

Net Unrealized Gains on Investment Securities

 

 

49,183

 

 

 

13,031

 

 

 

36,152

 

Defined Benefit Plans:

 

 

 

 

 

 

 

 

 

Net Actuarial Gains Arising During the Period

 

 

1,968

 

 

 

521

 

 

 

1,447

 

Amortization of Net Actuarial Losses

 

 

751

 

 

 

199

 

 

 

552

 

Amortization of Prior Service Credit

 

 

(246

)

 

 

(65

)

 

 

(181

)

Defined Benefit Plans, Net

 

 

2,473

 

 

 

655

 

 

 

1,818

 

Other Comprehensive Income

 

$

51,656

 

 

$

13,686

 

 

$

37,970

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2022

 

 

 

 

 

 

 

 

 

Net Unrealized Losses on Investment Securities:

 

 

 

 

 

 

 

 

 

Net Unrealized Losses Arising During the Period

 

$

(523,221

)

 

$

(138,678

)

 

$

(384,543

)

Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) that (Increase) Decrease Net Income:

 

 

 

 

 

 

 

 

 

Amortization of Unrealized Holding Losses on Held-to-Maturity Securities

 

 

10,680

 

 

 

2,831

 

 

 

7,849

 

Net Unrealized Losses on Investment Securities

 

 

(512,541

)

 

 

(135,847

)

 

 

(376,694

)

Defined Benefit Plans:

 

 

 

 

 

 

 

 

 

Net Actuarial Gains Arising During the Period

 

 

9,525

 

 

 

2,525

 

 

 

7,000

 

Amortization of Net Actuarial Losses

 

 

2,175

 

 

 

576

 

 

 

1,599

 

Amortization of Prior Service Credit

 

 

(246

)

 

 

(65

)

 

 

(181

)

Defined Benefit Plans, Net

 

 

11,454

 

 

 

3,036

 

 

 

8,418

 

Other Comprehensive Loss

 

$

(501,087

)

 

$

(132,811

)

 

$

(368,276

)

 

The amortization of unrealized holding losses on HTM securities amounts relate to the amortization/accretion of unrealized losses related to the Company’s reclassification of AFS investment securities to the HTM category. The unrealized losses will be amortized over the remaining life of the investment securities as an adjustment of yield.

 

The following table presents the changes in each component of accumulated other comprehensive income (loss), net of tax:

 

(dollars in thousands)

 

 

Investment Securities- Available-For-Sale

 

 

Investment Securities-Held-To-Maturity

 

 

Defined Benefit Plans

 

 

Accumulated Other Comprehensive Income (Loss)

Year Ended December 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Balance at Beginning of Period

 

$

(224,407)

 

$

(149,021)

 

$

(23,260)

 

$

(396,688)

Other Comprehensive Income (Loss) Before Reclassifications

 

 

35,177

 

 

—

 

 

(810)

 

 

34,367

Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)

 

 

—

 

 

18,258

 

 

674

 

 

18,932

Total Other Comprehensive Income (Loss)

 

 

35,177

 

 

18,258

 

 

(136)

 

 

53,299

Balance at End of Period

 

$

(189,230)

 

$

(130,763)

 

$

(23,396)

 

$

(343,389)

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

Balance at Beginning of Period

 

$

(240,783)

 

$

(168,797)

 

$

(25,078)

 

$

(434,658)

Other Comprehensive Income (Loss) Before Reclassifications

 

 

13,031

 

 

—

 

 

1,447

 

 

14,478

Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)

 

 

3,345

 

 

19,776

 

 

371

 

 

23,492

Total Other Comprehensive Income (Loss)

 

 

16,376

 

 

19,776

 

 

1,818

 

 

37,970

Balance at End of Period

 

$

(224,407)

 

$

(149,021)

 

$

(23,260)

 

$

(396,688)

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

Balance at Beginning of Period

 

$

(32,940)

 

$

54

 

$

(33,496)

 

$

(66,382)

Other Comprehensive Income (Loss) Before Reclassifications

 

 

(384,543)

 

 

—

 

 

7,000

 

 

(377,543)

Unrealized Net Losses Related to the Transfer of Securities from Available-for-Sale to Held-to-Maturity

 

 

176,700

 

 

(176,700)

 

 

—

 

 

—

Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)

 

 

—

 

 

7,849

 

 

1,418

 

 

9,267

Total Other Comprehensive Income (Loss)

 

 

(207,843)

 

 

(168,851)

 

 

8,418

 

 

(368,276)

Balance at End of Period

 

$

(240,783)

 

$

(168,797)

 

$

(25,078)

 

$

(434,658)

 

The following table presents the amounts reclassified out of each component of accumulated other comprehensive income (loss):

 

 

 

Amount Reclassified from Accumulated Other

 

 

 

 

 

Comprehensive Income (Loss) 1

 

 

Affected Line Item in the

 

 

Year Ended December 31,

 

 

Statement Where

(dollars in thousands)

 

2024

 

 

2023

 

 

2022

 

 

Net Income is Presented

Amortization of Unrealized Holding Gains (Losses) on
   Investment Securities Held-to-Maturity

 

$

(24,844

)

 

$

(26,909

)

 

$

(10,680

)

 

Interest Income

 

 

6,586

 

 

 

7,133

 

 

 

2,831

 

 

Provision for Income Tax

 

 

(18,258

)

 

 

(19,776

)

 

 

(7,849

)

 

Net of Tax

Sales of Investment Securities Available-for-Sale

 

 

—

 

 

 

(4,582

)

 

 

—

 

 

Investment Securities Gains (Losses), Net

 

 

—

 

 

 

1,237

 

 

 

—

 

 

Provision for Income Tax

 

 

—

 

 

 

(3,345

)

 

 

—

 

 

Net of Tax

Amortization of Defined Benefit Plans Items

 

 

 

 

 

 

 

 

 

 

 

Prior Service Credit 2

 

 

246

 

 

 

246

 

 

 

246

 

 

 

Net Actuarial Losses 2

 

 

(1,163

)

 

 

(751

)

 

 

(2,175

)

 

 

 

 

(917

)

 

 

(505

)

 

 

(1,929

)

 

Total Before Tax

 

 

243

 

 

 

134

 

 

 

511

 

 

Provision for Income Tax

 

 

(674

)

 

 

(371

)

 

 

(1,418

)

 

Net of Tax

Total Reclassifications for the Period

 

$

(18,932

)

 

$

(23,492

)

 

$

(9,267

)

 

Net of Tax
1.
Amounts in parentheses indicate reductions to net income.
2.
These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit cost and are included in other noninterest expense in the consolidated statements of income.