BankAmerica's Share Repurchase Program Affirmed by Fitch

Strategic Insights -

BankAmerica Corp.'s recent announcement to implement a common and preferred share repurchase program has been met with a stable credit trend affirmation from Fitch. This decision reflects the corporation's strong growth trend in retained earnings and moderate expectations for earning assets. As part of the program, BankAmerica plans to repurchase up to $800 million of common stock and up to $500 million of preferred stock in 1995 and 1996, while maintaining its risk-adjusted capital ratios.

Key Takeaways:

  • Fitch affirms BankAmerica's 'AA-' senior debt following the announcement of a share repurchase program.
  • The program allows BankAmerica to maintain its risk-adjusted capital ratios, with Tier I capital at 7.3%.
  • Up to $800 million of common stock and up to $500 million of preferred stock can be repurchased in 1995 and 1996.
  • Quarterly, BankAmerica can offset the growth in tangible equity by buying back up to $90 million of common shares.
  • The program offers flexibility to alter or rescind the repurchase plan if needed to boost equity retention.
  • BankAmerica's core profitability is growing, with ample liquidity at the parent company and operating subsidiaries, and increased loan loss reserve coverage.

Statistics:

  • Tier I capital ratio: 7.3%
  • Repurchase amount for common stock: up to $800 million
  • Repurchase amount for preferred stock: up to $500 million
  • Quarterly common share buyback: up to $90 million
  • 1995-1996 repurchase period: 2 years

Sources:

  • PRNewswire, "BankAmerica Corp.'s 'AA-' senior debt is affirmed following the announcement of plans to implement a common and preferred share repurchase program" (no date)
  • Fitch, (212) 908-0521, Fred W. DeBussey