Quarterly report pursuant to Section 13 or 15(d)

Equity

v3.7.0.1
Equity
 6 Months Ended
Jun. 30, 2017
Equity [Abstract]  
Equity
Equity
Preferred Stock
On March 14, 2017, the Company issued 5,000,000 shares of 8.125% Series A Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, par value $0.01 per share, in a public offering at a price of $25.00 per share. On March 21, 2017, an additional 750,000 shares were sold by the Company to the underwriters of the offering pursuant to an overallotment option. Holders of the preferred stock are entitled to receive, when and as declared, a dividend at a fixed rate of 8.125% per annum of the $25.00 liquidation preference. On and after April 27, 2027, dividends will accumulate and be payable at a floating rate of three-month LIBOR plus a spread of 5.66% per annum of the $25.00 liquidation preference. The preferred stock ranks senior to the Company’s common stock with respect to the payment of dividends and the distribution of assets upon the voluntary or involuntary liquidation, dissolution or winding up of the Company. Under certain circumstances upon a change of control, the preferred stock is convertible into shares of the Company’s common stock. The preferred stock will not be redeemable before April 27, 2027, except under certain limited circumstances. On or after April 27, 2027, the Company may, at its option, redeem, in whole or in part, at any time or from time to time, the preferred stock at a redemption price of $25.00 per share, plus any accumulated and unpaid dividends thereon (whether or not authorized or declared) up to, but excluding, the redemption date. The net proceeds from the offering were approximately $138.9 million, after deducting underwriting discounts and estimated offering expenses payable by the Company. During the three months ended June 30, 2017, the Company declared dividends to Series A preferred stockholders of $4.3 million or $0.75043 per preferred share.
Common Stock
Distributions to Stockholders
The following table presents cash dividends declared by the Company on its common stock during the three and six months ended June 30, 2017, and the four immediately preceding quarters:
Declaration Date
 
Record Date
 
Payment Date
 
Cash Dividend Per Common Share
June 15, 2017
 
June 30, 2017
 
July 27, 2017
 
$
0.26

March 14, 2017
 
March 31, 2017
 
April 27, 2017
 
$
0.25

December 15, 2016
 
December 30, 2016
 
January 27, 2017
 
$
0.24

September 15, 2016
 
September 30, 2016
 
October 20, 2016
 
$
0.23

June 16, 2016
 
June 30, 2016
 
July 20, 2016
 
$
0.23



Dividend Reinvestment and Direct Stock Purchase Plan
The Company sponsors a dividend reinvestment and direct stock purchase plan through which stockholders may purchase additional shares of the Company’s common stock by reinvesting some or all of the cash dividends received on shares of the Company’s common stock. Stockholders may also make optional cash purchases of shares of the Company’s common stock subject to certain limitations detailed in the plan prospectus. An aggregate of 7.5 million shares of the Company’s common stock were originally reserved for issuance under the plan. As of June 30, 2017, 370,332 shares have been issued under the plan for total proceeds of approximately $3.7 million, of which 15,173 and 26,438 shares were issued for total proceeds of $0.2 million and $0.3 million during the three and six months ended June 30, 2017, respectively. During the three and six months ended June 30, 2016, 14,495 and 29,143 shares were issued for total proceeds of $0.1 million and $0.2 million, respectively.
Share Repurchase Program
The Company’s share repurchase program allows for the repurchase of up to an aggregate of 75,000,000 shares of the Company’s common stock. Shares may be repurchased from time to time through privately negotiated transactions or open market transactions, pursuant to a trading plan in accordance with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, or by any combination of such methods. The manner, price, number and timing of share repurchases are subject to a variety of factors, including market conditions and applicable SEC rules. The share repurchase program does not require the purchase of any minimum number of shares, and, subject to SEC rules, purchases may be commenced or suspended at any time without prior notice. The share repurchase program does not have an expiration date. As of June 30, 2017, a total of 24,135,000 shares had been repurchased by the Company under the program for an aggregate cost of $200.4 million; of these, 8,020,000 shares were repurchased for a total cost of $61.3 million during the six months ended June 30, 2016. No shares were repurchased during the three months ended June 30, 2016, or the three and six months ended June 30, 2017.
At-the-Market Offering
On May 25, 2012, the Company entered into an equity distribution agreement under which the Company may sell up to an aggregate of 20,000,000 shares of its common stock from time to time in any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 under the Securities Act of 1933, as amended, or the Securities Act. On May 22, 2015, the Company entered into an amendment to the equity distribution agreement providing that any subsequent offers or sales of the Company’s common stock under the equity distribution agreement shall be made pursuant to a new prospectus supplement, which was filed on the same date. As of June 30, 2017, 7,585,869 shares of common stock have been sold under the equity distribution agreement for total accumulated net proceeds of approximately $77.6 million; however, no shares were sold during the three and six months ended June 30, 2017 and 2016.
Accumulated Other Comprehensive Income
Accumulated other comprehensive income at June 30, 2017 and December 31, 2016 was as follows:
(in thousands)
June 30,
2017
 
December 31,
2016
Available-for-sale securities
 
 
 
Unrealized gains
$
463,155

 
$
393,555

Unrealized losses
(108,538
)
 
(194,328
)
Accumulated other comprehensive income
$
354,617

 
$
199,227



Reclassifications out of Accumulated Other Comprehensive Income
The following table summarizes reclassifications out of accumulated other comprehensive income for the three and six months ended June 30, 2017 and 2016:
 
 
Affected Line Item in the Condensed Consolidated Statements of Comprehensive Income
 
Amount Reclassified out of Accumulated Other Comprehensive Income
(in thousands)
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
 
 
2017
 
2016
 
2017
 
2016
Other-than-temporary impairments on AFS securities
 
Total other-than-temporary impairment losses
 
$
429

 
$
90

 
$
429

 
$
807

Realized gains on sales of certain AFS securities, net of tax
 
Gain (loss) on investment securities
 
(6,147
)
 
(5,130
)
 
3,166

 
(24,256
)
Total
 
 
 
$
(5,718
)
 
$
(5,040
)
 
$
3,595

 
$
(23,449
)


Noncontrolling Interest
On June 28, 2017, the Company contributed its equity interests in its wholly owned subsidiary, TH Commercial Holdings LLC, to Granite Point and, in exchange for its contribution, received approximately 33.1 million shares of common stock of Granite Point, representing approximately 76.5% of the outstanding stock of Granite Point upon completion of the IPO of its common stock on June 28, 2017. Granite Point issued 10,000,000 shares of its common stock in the IPO at a price of $19.50 per share, for gross proceeds of $195.0 million. Net proceeds were approximately $181.9 million, net of issuance costs of approximately $13.1 million. Due to its controlling ownership interest in Granite Point, the Company consolidates Granite Point on its financial statements and reflects noncontrolling interest for the portion of equity and comprehensive income not attributable to the Company. Should the Company’s ownership interest in Granite Point change during the time it retains controlling interest, the carrying amount of the noncontrolling interest will be adjusted to reflect the change in its ownership interest, with the offset to stockholders’ equity.
The Company’s shares in Granite Point are subject to a 120 day lock-up period, after which the Company anticipates that it will distribute the shares to its stockholders by means of a special pro rata dividend, subject to the discretion and approval of its Board of Directors and in compliance with applicable securities laws. Once the shares are distributed, the Company will no longer have a controlling interest in Granite Point and, therefore, will deconsolidate Granite Point and its subsidiaries from its financial statements.
In connection with the Granite Point IPO, the Company agreed, subject to certain conditions, to purchase up to $20 million of Granite Point common stock in the open market at designated prices below Granite Point’s publicly reported book value pursuant to a share purchase program that will end on the earlier of the date on which all the capital committed to the plan has been exhausted or the date preceding the ex-dividend date associated with the Company’s declaration of a pro rata distribution of Granite Point’s common stock to the Company’s stockholders, but no later than December 31, 2017.