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Investing.com – Bank of America stock (NYSE:BAC) traded 1.5% higher Wednesday as the lender renewed its $25 billion share repurchase program it had first announced in April.
During April to September, the bank spent a little over $14 billion on buying back its own shares. The fresh approval by the bank’s board replaces the previous program.
The repurchases may be made through open market transactions or privately negotiated deals, the bank said.
The timing and amount of repurchases are subject to the company’s capital position, liquidity, financial performance and alternative uses of capital, stock trading price, regulatory requirements and general market conditions. Also, it may be suspended at any time.
Bank of America’s ability to make capital distributions depends, in part, on its ability to maintain regulatory capital levels above the 9.5% CET1 or core capital requirement. As of September 30, the bank’s CET1 ratio was 11.1%.
A buyback helps to increase earnings per share as the company’s stock count goes down. It thus boosts shareholder returns. A share buyback usually happens when the company has no better use for the cash on its books or when investors press the company to return their money.
