Bank of America (BAC) Approves $5B Buyback; Hikes Qtr. Dividend 50%

(Updated - June 29, 2016 4:42 PM EDT)

Bank of America (NYSE: BAC) announced that the company’s Board of Directors plans to increase its quarterly common stock dividend by 50 percent to $0.075 per share, beginning in the third quarter of 2016. Also, the Board authorized the repurchase of $5 billion in common stock from July 1, 2016 through June 30, 2017. On a quarterly basis, this authorization represents an increase of more than 50 percent from the prior year’s authorization.

The Federal Reserve Board has informed the company that it completed its 2016 Comprehensive Capital Analysis and Review and that it did not object to Bank of America’s capital plan, including the proposed dividend increase and repurchase plan.

“Over the last few years, we have significantly strengthened our company and increased our earnings as we execute a straightforward strategy focused on responsible growth,” said Chief Executive Officer Brian Moynihan. “This improvement has allowed us to take a significant step toward returning more capital to shareholders.”

The common stock repurchase authorization, which covers both common stock and warrants, replaces the Board’s prior authorization that expires on June 30. The authorization is net of shares awarded under the company’s equity-based compensation plans. Dividends will continue to be subject to the Board’s approval at the customary times those dividends are declared. The company has historically paid its third quarter common stock dividend in late September. The timing and exact amount of common stock or warrant repurchases will be consistent with the company’s capital plan and will be subject to various factors, including the company’s capital position, liquidity, financial performance and alternative uses of capital, stock trading price, and general market conditions, and may be suspended at any time. The common stock or warrant repurchases may be effected through open market purchases or privately negotiated transactions, including Rule 10b5-1 plans, over the four quarters beginning with the third quarter of 2016.

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