Stock repurchase programs are all the rage in banking these days, because they provide a way for companies to deploy excess capital for the benefit of shareholders. But sometimes the announced buybacks can be less than they appear.
The board of First Union Corp. said Tuesday that it had renewed its existing authorization to repurchase as many as 15 million shares of the company's common stock. First Union, the nation's sixth-largest bank, repurchased 20 million shares last year and currently has 280 million shares outstanding.
But First Union treasurer Kenneth R. Stancliff said Tuesday that the Charlotte, N.C.-based bank is likely to repurchase only a couple million shares this year, not the entire 15 million authorized by the board.
"At this point, it's a very minor amount," Mr. Stancliff said, adding that First Union's total of shares outstanding will probably remain at the 280 million level at yearend.
"I would put it in the 'no big deal' category," said Merrill Lynch analyst Sandra J. Flannigan. "This is a company that typically likes to have a lot of flexibility in buying back their stock for small acquisitions and for funding employee benefit programs."
First Union had announced a 15 million-share buyback program last April. It authorized the purchase of another 7.5 million shares in June in connection with its acquisition of New Jersey's First Fidelity Bancorp.
Repurchasing a total of 20 million shares under the two authorizations left First Union with an authorization of just over two million shares going into 1996.
"The vast majority of our stock repurchases have been associated with some of the smaller acquisitions we've done, where we've issued shares to an entity so they can have a tax-free exchange," Mr. Stancliff said.
"We don't have any acquisitions announced at this point that would require any purchases and, as a matter of fact, don't have any on the drawing boards," he added.
Meanwhile, two other major banking companies announced buyback programs this week. The board of First Bank System Inc., Minneapolis, on Wednesday authorized the repurchase of as many as 25 million shares between now and the end of 1997.
On the same day, Wayne, N.J.-based Valley National Corp. said it would repurchase up to one million shares.
