Bank of America Corp (NYSE:BAC) reported plans to repurchase another $5 billion in common stock by the close of June 30, 2018. The firm previously reported plans on in June to repurchase common stock worth $12 billion from July 1, 2017 through June 30, 2018, and repurchases to offset equities given under equity-based compensation programs during the same period, projected to be around $0.9 billion.
The Board of Directors permitted the additional repurchases. Bank of America reported that the increased capital distribution offsets the jump in regulatory capital coming from the previously reported issuance of shares, upon Berkshire Hathaway’s use of due warrants, and sale of the non-U.S. customer credit card operations earlier in 2017. The Federal Reserve Board has apprised the firm that it has permitted the additional repurchases.
Bank of America’s repurchase plan, which covers warrants as well as common stock, will be subject to several factors, including the firm’s capital position, financial performance, liquidity and alternative applications of capital, general market conditions and stock trading price, and may be terminated at any time. The warrant or common stock repurchases may be done through privately negotiated transactions or open market purchases, including Rule 10b5-1 programs.
Bank of America is purchasing back the stock, after receiving nod from the Federal Reserve for the proposed program, after generating extra funds by selling a U.K. cards operations and after Berkshire Hathaway changed warrants to shares.
The banks in U.S. have been mandated to get Fed nod for dividend payments and share buybacks since the central bank started stress testing them post the financial crisis to ensure they had adequate capital on hand to face a severe downturn.
In the last trading session, the stock price of Bank of America gained 0.49% to close the day at $28.78. The gains came at a share volume of 80.70 million compared to average share volume of 69.91 million.