Moving ahead with its strategy to remove high-cost debt,
Bank of America Corp
) announced the redemption of certain non-cumulative preferred
stocks. BofA will be redeeming approximately $76 million worth of
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BofA submitted the redemption notices for 2.38 million shares of
6.70% non-cumulative perpetual preferred stock, Series 6 and
663,815 shares of 6.25% non-cumulative perpetual preferred stock,
Series 7. All these stocks will be redeemed at a price of $25 per
share on Jun 28.
The company has already received all the essential approvals for
the transaction. BofA will be utilizing the proceeds from the
issue of non-cumulative perpetual preferred stock, Series U to
fund the redemption. The Series U preferred stock offerings were
announced on May 21.
Further, BofA stated that since the redemption dates for both
Series 6 and Series 7 are also the dividend payment dates, the
redemption price does not include any declared and unpaid
dividends. Hence, the total redemption price is $59.4 million for
Series 6 and $16.6 million for Series 7 preferred stocks.
In April, BofA had announced sending notices to redeem roughly
$12 billion worth referred stocks. The company redeemed 8.20%
non-cumulative preferred stock, Series H, on May 1, and 8.625%
non-cumulative preferred stock, Series 8, on May 28. It also
redeemed 11.445% Preferred Securities of Progress Capital Trust
II worth $6 million on May 1.
The redemption of the above-mentioned preferred stocks will not
only lower BofA's interest expenses but lead to an improvement in
its balance sheet as well. Notably, the company has been striving
to enhance its efficiency by divesting or closing non-core
operations and reducing expenses.
Currently, BofA carries a Zacks Rank #3 (Hold). Better performing
JPMorgan Chase & Co.
The Goldman Sachs Group, Inc.
), all of which carry a Zacks Rank #2 (Buy).