Fifth Third Completes Buyback - Analyst Blog
March 01 2013 - 12:50PM
Zacks
Fifth Third Bancorp (FITB) has concluded the
repurchase of $100 million shares and is on the verge of completing
the sale of $1.3 billion worth of bank notes.
On Dec 14, 2012, Fifth Third Bancorp entered into an accelerated
share repurchase agreement with Credit Suisse International – a
division of Credit Suisse Group (CS). The
agreement was a part of its previously announced capital plan that
got the Federal Reserve’s nod in August last year and encompassed
the repurchase of $100 million worth of shares.
On Feb 25, 2013, Fifth Third was notified by Credit Suisse that on
Feb 22, 2013, it has completed purchasing shares under the
aforementioned agreement. A total of 6,267,410 shares were
repurchased upon implementation of the deal and an additional
127,760 shares were bought back upon completion.
Overall, 6,395,170 shares were repurchased, at an average price
of $15.6368, under the deal. Since Oct 2012, the company has bought
back $575 million worth of shares.
In the same SEC filing, the company declared that it was raising
$1.3 billion in debt by selling notes. The selling of these notes
began on Jan 25 and is anticipated to close in March. The sale
includes $600 million notes due Feb 28, 2018 carrying an interest
rate of 1.45%, $400 million of 0.90% senior fixed rate notes
maturing on Feb 26, 2016, and $300 million of senior floating rate
notes with an interest of 3-month LIBOR plus 0.41% and due date of
Feb 26, 2016.
These bank notes will be redeemable by Fifth Third Bank, in whole
or in part, on or after the date – 30 days prior to the maturity
date. The redemption price will be 100% of the principal amount
plus accrued and unpaid interest through the redemption date.
Upon the issuance of these notes, Fifth Third’s borrowing under its
global bank note program will amount to $2.3 billion. Fifth Third
also increased its borrowing capacity in the program from $20
billion to $25 billion under the amended global bank note
program.
The Fed’s objection to a number of elements in Fifth Third's
capital plan, including increases in its quarterly common dividend
and the initiation of common share repurchases, had put the company
on the back foot and deteriorated its competitive position to some
extent. Therefore, a positive development on that front is
encouraging and this is expected to inspire investors’ confidence
in the stock.
Fifth Third currently retains its Zacks Rank #2 (Buy). Other major
regional banks that are performing well include BankUnited,
Inc. (BKU) and State Street Corporation
(STT), carrying Rank #1 (Strong Buy) and #2, respectively.
BANKUNITED INC (BKU): Free Stock Analysis Report
CREDIT SUISSE (CS): Free Stock Analysis Report
FIFTH THIRD BK (FITB): Free Stock Analysis Report
STATE ST CORP (STT): Free Stock Analysis Report
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