Note 12 - Material Transactions Affecting Stockholders' Equity

12 Months Ended

Dec. 31, 2011

Stockholders' Equity Note Disclosure [Text Block]

12.   MATERIAL TRANSACTIONS AFFECTING STOCKHOLDERS’ EQUITY

Redemption of Preferred Shares

In 2008, in response to the financial crises affecting the financial markets and the banking system, the Treasury announced several initiatives under the Troubled Asset Relief Program (“TARP”) intended to help stabilize the banking industry. One of these initiatives was the voluntary CPP designed to encourage qualifying financial institutions to build capital. Under the CPP, the Company received $193.0 million from the sale of preferred shares to the Treasury.

In exchange for the $193.0 million, the Company issued to the Treasury a total of 193,000 Preferred Shares and a Warrant to purchase up to 1,305,230 shares of Common Stock. Both the Preferred Shares and the Warrant were accounted for as components of the Company’s regulatory Tier 1 capital.

In November 2011, the Company redeemed all of the $193.0 million of Preferred Shares issued to the Treasury. The redemption was funded through a combination of existing liquid assets and the proceeds from the senior debt issuance.

In connection with the redemption, the Company accelerated the accretion of the remaining issuance discount on the Preferred Shares and recorded a corresponding reduction to retained earnings of $1.5 million. This resulted in a one-time, non-cash reduction in net income available to common shareholders and related basic and diluted earnings per share.

Dividends of $214,000 were paid to the Treasury on November 23, 2011 when the Preferred Shares were redeemed. The Company paid total dividends on Preferred Shares of $8.7 million in 2011 and $9.7 million in 2010 and 2009.

In December 2011, the Company redeemed the Treasury’s Warrant for $900,000, which concluded the Company’s participation in the CPP.

Common Shares Issued

On January 13, 2010, the Company sold 18,818,183 shares of Common Stock in an underwritten public offering. The price to the public was $11.00 per share, and the proceeds to the Company, net of the underwriters’ discount, were $196.0 million, or $10.45 per share, net of related expenses. The net proceeds were used to improve the quality of the Company’s capital composition and for general operating purposes.

The Company had 85,787,354 shares issued as of December 31, 2011 and 2010. There were 74,435,004 and 74,095,695 shares outstanding as of December 31, 2011 and December 31, 2010, respectively.

Quarterly Dividend on Common Shares

The Board declared quarterly stock dividends of $0.01 per share for the past twelve quarters.

Transactions with the Bank

In January 2010, the Company made a $100.0 million capital contribution to the Bank. In addition, the Bank sold $168.1 million of non-performing assets to the Company in March 2010. On the date of the sale, the Company recorded the assets at fair value and transferred them to Catalyst in the form of a capital injection. Since the majority of the assets were collateral-dependent loans, fair value was determined based on the lower of the recorded book value of the loan or the estimated fair value of the underlying collateral less costs to sell. No allowance for credit losses was recorded at the Company on the date of the purchase of these assets. Catalyst had non-performing assets totaling $45.2 million as of December 31, 2011 and $93.1 million as of December 31, 2010. This transaction did not change the presentation of these non-performing assets in the consolidated financial statements and did not impact the consolidated financial position, results of operations, or regulatory ratios. However, these two transactions improved the Bank’s asset quality, capital ratios, and liquidity.

There were no additional material transactions that affected stockholders’ equity during the years ended December 31, 2011 and December 31, 2010.