Shareholders' Equity

12 Months Ended

Dec. 31, 2022

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, 2022, and December 31, 2021:

(dollars in thousands)	Well Capitalized Minimum Ratio			Company			Bank
As of December 31, 2022
Common Shareholders’ Equity				$	1,141,507		$	1,279,736
Common Equity Tier 1 Capital					1,554,741			1,704,570
Tier 1 Capital					1,730,228			1,704,570
Total Capital					1,875,430			1,849,772
Common Equity Tier 1 Capital Ratio		6.5	%		10.92	%		11.98	%
Tier 1 Capital Ratio		8.0	%		12.15	%		11.98	%
Total Capital Ratio		10.0	%		13.17	%		13.00	%
Tier 1 Leverage Ratio		5.0	%		7.37	%		7.27	%
As of December 31, 2021
Common Shareholders’ Equity				$	1,436,124		$	1,586,473
Common Equity Tier 1 Capital					1,483,455			1,645,405
Tier 1 Capital					1,658,942			1,645,405
Total Capital					1,811,943			1,798,190
Common Equity Tier 1 Capital Ratio		6.5	%		12.12	%		13.47	%
Tier 1 Capital Ratio		8.0	%		13.56	%		13.47	%
Total Capital Ratio		10.0	%		14.81	%		14.72	%
Tier 1 Leverage Ratio		5.0	%		7.32	%		7.26	%

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, 2022, 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, 2022, 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, the regulatory capital impact of the Day 1 adjustment to the allowance for credit losses (after-tax), upon the January 1, 2020, CECL adoption date, was deferred, and was phased-in to regulatory capital at 25% per year commencing January 1, 2022. For the ongoing impact of CECL, the Company is allowed to defer the regulatory capital impact of the allowance for credit losses in an amount equal to 25% of the change in the allowance for credit losses (pre-tax) recognized through earnings for each period between January 1, 2020, and December 31, 2021. The cumulative adjustment to the allowance for credit losses between January 1, 2020, and December 31, 2021, was also phased-in to regulatory capital at 25% per year commencing January 1, 2022.

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, 2022, the Parent repurchased 627,629 shares of common stock under its share repurchase program at an average cost per share of $79.41 and total cost of $49.8 million.  From the beginning of the stock repurchase program in July 2001 through December 31, 2022, the Parent repurchased a total of 58.0 million shares of common stock at an average cost of $41.17 per share and total cost of $2.4 billion. 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

On June 15, 2021, the Company issued and sold 7,200,000 depositary shares (the “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 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.

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, 2022
Net Unrealized Gains (Losses) on Investment Securities:
Net Unrealized Gains (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 (Gains) Losses on Held-to-Maturity Securities 1		10,680			2,831			7,849
Net Unrealized Gains (Losses) on Investment Securities		(512,541	)		(135,847	)		(376,694	)
Defined Benefit Plans:
Net Actuarial Gains (Losses) Arising During the Period		9,525			2,525			7,000
Amortization of Net Actuarial Losses (Gains)		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 Income (Loss)	$	(501,087	)	$	(132,811	)	$	(368,276	)
Year Ended December 31, 2021
Net Unrealized Gains (Losses) on Investment Securities:
Net Unrealized Gains (Losses) Arising During the Period	$	(111,084	)	$	(29,440	)	$	(81,644	)
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) that (Increase) Decrease Net Income:
(Gain) Loss on Sale		(3,798	)		(1,007	)		(2,791	)
Amortization of Unrealized Holding (Gains) Losses on Held-to-Maturity Securities 1		648			171			477
Net Unrealized Gains (Losses) on Investment Securities		(114,234	)		(30,276	)		(83,958	)
Defined Benefit Plans:
Net Actuarial Gains (Losses) Arising During the Period		10,842			2,874			7,968
Amortization of Net Actuarial Losses (Gains)		2,676			709			1,967
Amortization of Prior Service Credit		(246	)		(65	)		(181	)
Defined Benefit Plans, Net		13,272			3,518			9,754
Other Comprehensive Income (Loss)	$	(100,962	)	$	(26,758	)	$	(74,204	)
Year Ended December 31, 2020
Net Unrealized Gains (Losses) on Investment Securities:
Net Unrealized Gains (Losses) Arising During the Period	$	58,763		$	15,600		$	43,163
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) that (Increase) Decrease Net Income:
(Gain) Loss on Sale		(77	)		(50	)		(27	)
Amortization of Unrealized Holding (Gains) Losses on Held-to-Maturity Securities 1		397			105			292
Net Unrealized Gains (Losses) on Investment Securities		59,083			15,655			43,428
Defined Benefit Plans:
Net Actuarial Gains (Losses) Arising During the Period		(8,187	)		(2,170	)		(6,017	)
Amortization of Net Actuarial Losses (Gains)		2,318			614			1,704
Amortization of Prior Service Credit		(246	)		(65	)		(181	)
Defined Benefit Plans, Net		(6,115	)		(1,621	)		(4,494	)
Other Comprehensive Income (Loss)	$	52,968		$	14,034		$	38,934

¹   The amount relates to the amortization/accretion of unrealized gains and losses related to the Company's reclassification of available-for-sale investment securities to the held-to-maturity category.  The unrealized net gains/losses will be amortized/accreted 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- Maturities			Defined Benefit Plans			Accumulated Other Comprehensive Income (Loss)
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	)
Year Ended December 31, 2021
Balance at Beginning of Period	$	51,495		$	(423	)	$	(43,250	)	$	7,822
Other Comprehensive Income (Loss) Before Reclassifications		(81,644	)		—			7,968			(73,676	)
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)		(2,791	)		477			1,786			(528	)
Total Other Comprehensive Income (Loss)		(84,435	)		477			9,754			(74,204	)
Balance at End of Period	$	(32,940	)	$	54		$	(33,496	)	$	(66,382	)
Year Ended December 31, 2020
Balance at Beginning of Period	$	8,359		$	(715	)	$	(38,756	)	$	(31,112	)
Other Comprehensive Income (Loss) Before Reclassifications		43,163			—			(6,017	)		37,146
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)		(27	)		292			1,523			1,788
Total Other Comprehensive Income (Loss)		43,136			292			(4,494	)		38,934
Balance at End of Period	$	51,495		$	(423	)	$	(43,250	)	$	7,822

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

Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)1									Affected Line Item in the Statement Where Net Income Is Presented
(dollars in thousands)	Year Ended December 31,
	2022			2021			2020
Amortization of Unrealized Holding Gains (Losses) on    Investment Securities Held-to-Maturity	$	(10,680	)	$	(648	)	$	(397	)	Interest Income
		2,831			171			105		Provision for Income Tax
		(7,849	)		(477	)		(292	)	Net of Tax
Sales of Investment Securities Available-for-Sale		—			3,798			77		Investment Securities Gains (Losses), Net
		—			(1,007	)		(50	)	Provision for Income Tax
		—			2,791			27		Net of Tax
Amortization of Defined Benefit Plans Items
Prior Service Credit 2		246			246			246
Net Actuarial Losses 2		(2,175	)		(2,676	)		(2,318	)
		(1,929	)		(2,430	)		(2,072	)	Total Before Tax
		511			644			549		Provision for Income Tax
		(1,418	)		(1,786	)		(1,523	)	Net of Tax
Total Reclassifications for the Period	$	(9,267	)	$	528		$	(1,788	)	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 on the consolidated statements of income (see Note 14 Pension Plans and Postretirement Benefit Plan for additional details).}