After receiving the approval for its new capital plan from the
Bank of America Corporation
) has started the implementation of the same. BofA announced that
it has sent notices to redeem certain preferred stocks.
BANK OF AMER CP (BAC): Free Stock Analysis
CITIGROUP INC (C): Free Stock Analysis Report
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STATE ST CORP (STT): Free Stock Analysis
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BofA will be redeeming 8.20% non-cumulative preferred stock,
Series H, on May 1, while 8.625% non-cumulative preferred stock,
Series 8, will be redeemed on May 28. The preferred stocks will
be redeemed at a redemption price of $25 per depositary.
Further, BofA stated that since the redemption dates for both
Series H and Series 8 are also the dividend payment dates, the
redemption price does not include any declared and unpaid
dividends. Hence, the total redemption price is $2.86 billion for
Series H preferred stock and $2.67 billion for Series 8 preferred
Concurrently, BofA declared that it will be redeeming 11.445%
Preferred Securities of Progress Capital Trust II worth $6
million on May 1. The company will pay an aggregate amount of
$1,078.21 including the accumulated and unpaid distributions per
The redemption of the above-mentioned preferred stocks will not
only lower BofA's interest expenses but at the same time lead to
improvement in its balance sheet. The company, incidentally, has
been striving hard to improve its efficiency by divesting or
closing non-core operations and bringing down expenses.
These initiatives of BofA are now bearing fruits, which were
further authenticated by the Fed, when the company's new capital
plan was approved last month. The plan included redemption of the
aforesaid preferred stocks and a $5 billion stock repurchase
Currently, BofA retains a Zacks Rank #3 (Hold). Other major
regional banks that are worth considering include
JPMorgan Chase & Co.
State Street Corporation
). All these carry a Zacks Rank #2 (Buy).