Note 10. Stockholders’ Equity

Stock Repurchase Program

On August 28, 2015, the Company’s Board of Directors approved a stock repurchase plan that authorizes the repurchase of up to 5%, or approximately 3.9 million shares of its outstanding common stock. The approved plan allows the Company to repurchase its common shares either in the open market in compliance with Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended, or in privately negotiated transactions with non-affiliated sellers or as otherwise determined by the Company from time to time until September 30, 2016. Under this plan, the Company has repurchased 741,393 shares of its common stock at an average price of $27.44 per share through December 31, 2015.

In March 2015, the Company completed the prior stock repurchase program that had been approved by the Company’s Board of Directors on July 16, 2014 which authorized the repurchase of up to 5%, or approximately 4.1 million shares, of its outstanding common stock. Under this plan, the Company repurchased a total of 4.1 million shares of its common stock at an average price of $30.02 per share.

Accumulated Other Comprehensive Income (Loss)

A roll forward of the components of AOCI is included as follows:


(in thousands)	Available for Sale Securities			HTM Securities Transferred from AFS			Employee Benefit Plans			Cash Flow Hedges			Total
Balance, December 31, 2012	$	38,854		$	19,090		$	(80,688	)	$	(181	)	$	(22,925	)
Net change in unrealized loss		(105,270	)		—			—			(4	)		(105,274	)
Transfer of net unrealized loss from AFS to HTM, net of cumulative tax effect		36,208			(36,208	)		—			—			—
Reclassification of net (gain) loss realized and included in earnings		(105	)		—			8,331			301			8,527
Valuation adjustment for employee benefit plans		—			—			82,653			—			82,653
Amortization of unrealized net gain on securities transferred to held to maturity		—			(6,371	)		—			—			(6,371	)
Income tax expense (benefit)		(38,576	)		(2,300	)		32,749			116			(8,011	)

Balance, December 31, 2013	$	8,263		$	(21,189	)	$	(22,453	)	$	—		$	(35,379	)
Net change in unrealized gain (loss)		15,413			—			—			(592	)		14,821
Reclassification of net loss realized and included in earnings		—			—			390			—			390
Valuation adjustment for employee benefit plans		—			—			(41,244	)		—			(41,244	)
Amortization of unrealized net loss on securities transferred to held to maturity		—			3,297			—			—			3,297
Income tax expense (benefit)		5,675			1,182			(14,681	)		(217	)		(8,041	)

Balance, December 31, 2014	$	18,001		$	(19,074	)	$	(48,626	)	$	(375	)	$	(50,074	)
Net change in unrealized (loss) gain		(21,581	)		—			—			311			(21,270	)
Reclassification of net (gain) loss realized and included in earnings		(165	)		—			3,175			—			3,010
Valuation adjustment for employee benefit plans		—			—			(33,971	)		—			(33,971	)
Amortization of unrealized net loss on securities transferred to held to maturity		—			3,530			—			—			3,530
Income tax expense (benefit)		(8,013	)		1,251			(11,532	)		114			(18,180	)

Balance, December 31, 2015	$	4,268		$	(16,795	)	$	(67,890	)	$	(178	)	$	(80,595	)

AOCI is reported as a component of stockholders’ equity. AOCI includes unrealized gains and losses on available for sale (“AFS”) securities and unrealized gains (losses) on AFS securities that were transferred to held to maturity (“HTM”) securities in the first quarter of 2012 and the third quarter of 2013. Such amounts on the transferred securities will be amortized over the estimated remaining life of the security as an adjustment to yield, offsetting the related amortization of the net premium created in the transfer. Subject to certain thresholds, unrealized losses on employee benefit plans will be reclassified into income as pension and post retirement costs are recognized over the remaining service period of plan participants. Accumulated gains/losses on the cash flow hedge of the variable-rate loans described in Note 9 will be reclassified into income over the life of the hedge. Gains (losses) in AOCI are net of deferred income taxes.

The following table shows the line items in the consolidated income statements affected by amounts reclassified from AOCI:


Year Ended December 31,
Amount reclassified from AOCI (a) (in thousands)	2015			2014			Increase (decrease) in affected line item in the income statement
Gain on sale of AFS securities	$	165		$	—		Securities gains (losses)
Tax effect		(58	)		—		Income taxes

Net of tax		107			—		Net income

Amortization of unrealized net loss on securities transferred to HTM	$	(3,530	)	$	(3,297	)	Interest income
Tax effect		1,236			1,154		Income taxes

Net of tax		(2,294	)		(2,143	)	Net income

Amortization of defined benefit pension and post-retirement items (b)	$	(3,175	)	$	(390	)	Employee benefits expense
Tax effect		1,111			137		Income taxes

Net of tax		(2,064	)		(253	)	Net income

Total reclassifications, net of tax	$	(4,251	)	$	2,396		Net income

(a)	Amounts in parenthesis indicate reduction in net income.

(b)	These AOCI components are included in the computation of net periodic pension and post-retirement cost that is reported with employee benefits expense (see footnote 15 for additional details).

Note: Tax effect calculated using 35% rate.

Regulatory Capital

Measures of regulatory capital are an important tool used by regulators to monitor the financial health of financial institutions. The primary quantitative measures used to gauge capital adequacy are Common equity tier 1, Tier 1 and Total regulatory capital to risk-weighted assets (risk-based capital ratios) and the Tier 1 capital to average total assets (leverage ratio). Both the Company and the Bank subsidiary are required to maintain minimum risk-based capital ratios of 8.0% total capital, 4.5% Tier 1 Common Equity, and 6.0% Tier 1 capital. The minimum leverage ratio is 3.0% for bank holding companies and banks that meet certain specified criteria, including having the highest supervisory rating. All others are required to maintain a leverage ratio of at least 4.0%.

To evaluate capital adequacy, regulators compare an institution’s regulatory capital ratios with their agency guidelines, as well as with the guidelines established as part of the uniform regulatory framework for prompt corrective supervisory action toward financial institutions. The framework for prompt corrective action categorizes capital levels into one of five classifications rating from well-capitalized to critically under-capitalized. For an institution to be eligible to be classified as well capitalized its total risk-based capital ratios must be at least 10.0% for total capital, 6.5% for Tier 1 Common Equity and 8.0% for Tier 1 capital, and its leverage ratio must be at least 5.0%. In reaching an overall conclusion on capital adequacy or assigning a classification under the uniform framework, regulators also consider other subjective and quantitative measures of risk associated with an institution. The Bank was deemed to be well capitalized based upon the most recent notifications from their regulators. There are no conditions or events since those notifications that management believes would change the classifications. At December 31, 2015 and 2014, the Company and the Bank were in compliance with all of their respective minimum regulatory capital requirements.

Following is a summary of the actual regulatory capital amounts and ratios for the Company and the Bank together with corresponding regulatory capital requirements at December 31, 2015 and 2014:


	Actual				Required for Minimum Capital Adequacy				Required To Be Well Capitalized
($ in thousands)	Amount		Ratio %		Amount		Ratio %		Amount		Ratio %
At December 31, 2015
Tier 1 leverage capital
Company	$	1,844,992		8.55	$	863,289		4.00	$	1,079,111		5.00
Whitney Bank		1,965,332		9.16		858,551		4.00		1,073,189		5.00
Common equity tier 1 (to risk weighted assets)
Company	$	1,844,992		9.96	$	833,216		4.50	$	1,203,534		6.50
Whitney Bank		1,965,332		10.64		830,985		4.50		1,200,312		6.50
Tier 1 capital (to risk weighted assets)
Company	$	1,844,992		9.96	$	1,110,954		6.00	$	1,481,272		8.00
Whitney Bank		1,965,332		10.64		1,107,980		6.00		1,477,306		8.00
Total capital (to risk weighted assets)
Company	$	2,195,913		11.86	$	1,481,272		8.00	$	1,851,590		10.00
Whitney Bank		2,166,253		11.73		1,477,306		8.00		1,846,633		10.00
At December 31, 2014
Tier 1 leverage capital
Company	$	1,777,348		9.17	$	581,263		3.00		n/a		n/a
Whitney Bank		1,756,813		9.13		577,493		3.00	$	962,488		5.00
Tier 1 capital (to risk weighted assets)
Company	$	1,777,348		11.23	$	632,898		4.00		n/a		n/a
Whitney Bank		1,756,813		11.13		631,220		4.00	$	946,829		6.00
Total capital (to risk weighted assets)
Company	$	1,945,710		12.30	$	1,265,796		8.00		n/a		n/a
Whitney Bank		1,925,175		12.20		1,262,439		8.00	$	1,578,049		10.00

Regulatory Restrictions on Dividends

Regulatory policy statements provide that generally bank holding companies should pay dividends only out of current operating earnings and that the level of dividends must be consistent with current and expected capital requirements. Dividends received from its subsidiary banks have been the primary source of funds available to the Company for the payment of dividends to Hancock’s stockholders. Federal and state banking laws and regulations restrict the amount of dividends the Bank may distribute to Hancock without prior regulatory approval, as well as the amount of loans it may make to the Company. Dividends paid by the Bank are subject to approval by the Commissioner of Banking and Consumer Finance of the State of Mississippi.