BankAmerica Corporation Increases Dividend and Announces Stock Repurchase Program

Strategic Insights -

BankAmerica Corporation, one of the largest financial institutions in the US, has announced a significant increase in its quarterly dividend and the authorization of a substantial stock repurchase program. The corporation's Board of Directors has decided to elevate the quarterly dividend on its common stock to $0.46 per share from $0.40 per share, reflecting the company's strong financial performance and commitment to returning value to its shareholders. Furthermore, the Board has authorized a stock repurchase program enabling the corporation to buy back approximately $1.9 billion of its common stock and redeem around $500 million of its preferred stock by the end of 1997.

Key Takeaways:

  • The quarterly dividend on BankAmerica's common stock has been increased to $0.46 per share from $0.40 per share, reflecting the company's strong financial performance.
  • The Board of Directors has authorized a stock repurchase program to buy back approximately $1.9 billion of the corporation's common stock.
  • The program also enables the corporation to redeem approximately $500 million of its preferred stock by the end of 1997.
  • BankAmerica will purchase up to $800 million of its common stock during 1995 and 1996.
  • The corporation will also purchase additional amounts of common stock based on the amortization of goodwill and core deposit intangible assets, currently approximately $90 million per quarter.
  • Any unused repurchase authority based on the amortization level may be rolled forward for up to four quarters until used.
  • The market value of BankAmerica's outstanding common stock, based on its closing price on February 3, exceeded $17 billion.
  • Repurchased common stock will be added to the corporation's treasury shares and will be available for general corporate purposes.

Statistics:

  • Increased dividend per share: $0.46
  • Previous dividend per share: $0.40
  • Total dividend increase: $0.06
  • Dollar value of common stock to be repurchased: $1.9 billion
  • Dollar value of preferred stock to be redeemed: $500 million
  • Market value of outstanding common stock (February 3, 1995): $17 billion
  • Quarterly amortization of goodwill and core deposit intangible assets: $90 million
  • Rolling forward period for unused repurchase authority: up to 4 quarters

Sources:

  • Business Wire. (1995, February 6). BankAmerica Corporation Increases Dividend and Announces Stock Repurchase Program. Business Wire.
  • BankAmerica Corp. Press Release. (1995, February 6).