Stockholders' Equity and EPS

6 Months Ended

Jun. 30, 2020

Equity and Earnings Per Share [Abstract]

Accumulated Other Comprehensive Income

The following table summarizes the items reclassified out of accumulated other comprehensive income into the Consolidated Statements of Income (unaudited) for the three and six months ended June 30, 2020 and 2019:



		Three months ended June 30,						Six months ended June 30,
(Dollars in thousands)	Income Statement Location	2020			2019			2020			2019
Reclassification adjustment for losses (gains) on available-for-sale securities included in net income	Gains on investment securities, net	$	—		$	275		$	(61,165	)	$	3,905
Related tax (benefit) expense	Income tax expense	—			(77		)	16,953			(1,087		)
Reclassification adjustment for (gains) losses on cash flow hedges included in net income	Net interest income	(15,831		)	508			(17,920		)	511
Related tax expense (benefit)	Income tax expense	4,388			(141		)	4,967			(142		)
Total reclassification adjustment for (gains) losses included in net income, net of tax		$	(11,443	)	$	565		$	(57,165	)	$	3,187

The table below summarizes the activity relating to net gains and losses on our cash flow hedges included in accumulated other comprehensive income for the three and six months ended June 30, 2020 and 2019. Refer to Note 11 — “Derivative Financial Instruments” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional information regarding the termination of our cash flow hedges during the three months ended March 31, 2020. Over the next 12 months, we expect that approximately $63.5 million in accumulated other comprehensive income ("AOCI") at June 30, 2020, related to unrealized gains will be reclassified out of AOCI and recognized in net income.



	Three months ended June 30,					Six months ended June 30,
(Dollars in thousands)	2020			2019		2020			2019
Balance, beginning of period, net of tax	$	163,999		$	797	$	(2,130	)	$	—
Net increase in fair value, net of tax	—			12,664		167,639			13,459
Net realized (gain) loss reclassified to net income, net of tax	(11,443		)	367		(12,953		)	369
Balance, end of period, net of tax	$	152,556		$	13,828	$	152,556		$	13,828

EPS

Basic EPS is the amount of earnings available to each share of common stock outstanding during the reporting period. Diluted EPS is the amount of earnings available to each share of common stock outstanding during the reporting period adjusted to include the effect of potentially dilutive common shares. Potentially dilutive common shares include incremental shares issuable for stock options and restricted stock unit awards outstanding under our 2006 Equity Incentive Plan and our ESPP. Potentially dilutive common shares are excluded from the computation of dilutive EPS in periods in which the effect would be antidilutive.

The following is a reconciliation of basic EPS to diluted EPS for the three and six months ended June 30, 2020 and 2019:



	Three months ended June 30,				Six months ended June 30,
(Dollars and shares in thousands, except per share amounts)	2020		2019		2020		2019
Numerator:
Net income available to common stockholders	$	228,935	$	317,987	$	361,188	$	606,719
Denominator:
Weighted average common shares outstanding—basic	51,581		51,955		51,573		52,269
Weighted average effect of dilutive securities:
Stock options and ESPP	114		235		140		254
Restricted stock units and awards	100		146		135		192
Weighted average common shares outstanding—diluted	51,795		52,336		51,848		52,715
Earnings per common share:
Basic	$	4.44	$	6.12	$	7.00	$	11.61
Diluted	4.42		6.08		6.97		11.51

The following table summarizes the weighted-average common shares excluded from the diluted EPS calculation due to the antidilutive effect for the three and six months ended June 30, 2020 and 2019:



	Three months ended June 30,		Six months ended June 30,
(Shares in thousands)	2020	2019	2020	2019
Stock options	288	166	247	128
Restricted stock units	312	333	310	228
Total	600	499	557	356

Stock Repurchase Program

On October 24, 2019, our Board of Directors authorized a new stock repurchase program that enables us to repurchase up to $350 million of our outstanding common stock. This program expires on October 29, 2020. We have temporarily paused our stock repurchase program and will reassess this decision once the economic environment becomes more stable. For the three months ended June 30, 2020, we did not repurchase any shares of our outstanding common stock under the new stock repurchase program. For the six months ended June 30, 2020, we had repurchased 244,223 shares of our outstanding common stock for $60.0 million under the stock repurchase program.

Preferred Stock

On December 9, 2019, the Company issued depositary shares representing an ownership interest in 350,000 shares of Series A Preferred Stock with $0.001 par value and liquidation preference of $1,000 per share, or $25 per depositary share. All preferred shares were issued in the form of depositary shares, with each depositary share representing a 1/40th ownership interest in a share of the preferred stock. The Series A Preferred Stock has no stated maturity and is not subject to any sinking fund or other obligation of the Company. Dividends are approved by the Board of Directors and, if declared, are payable quarterly, in arrears, at a rate per annum equal to 5.25 percent. The Series A Preferred Stock is redeemable at the Company’s option, in whole or in part, on or after February 15, 2025. Prior to February 15, 2025, the Series A Preferred Stock is redeemable at the Company’s option, in whole and not in part, following any change in laws or regulations that would not allow the Company to treat the full liquidation value of the Series A Preferred Stock as Tier 1 capital for purposes of the capital adequacy guidelines of the Board of Governors of the Federal Reserve System ("the Federal Reserve"). The redemption amount is computed at the per share liquidation preference plus any declared but unpaid dividends. Redemptions are subject to certain regulatory provisions, including approval of the Federal Reserve.

As of June 30, 2020, there were 350,000 shares issued and outstanding of Series A Preferred Shares, which had a carrying value of $340.1 million and liquidation preference of $350.0 million.

The following table summarizes our preferred stock at June 30, 2020:



Series	Description	Amount outstanding (in millions)		Carrying value (in millions)		Shares issued and outstanding	Par Value		Ownership interest per depository share	Liquidation preference per depository share		2020 dividends paid per depository share
Series A	5.250% Fixed-Rate Non-Cumulative Perpetual Preferred Stock	$	350	$	340.1	350,000	$	0.001	1/40th	$	25	$	0.57