The top 25 banking companies bought back more than $7.2 billion of their stock in the fourth quarter, to cap a year in which they more than doubled 1998's share repurchases.

Flush with excess capital, these companies spent $22.6 billion on buybacks in 1999, up 116% from the year before, according to data compiled by Keefe, Bruyette & Woods Inc.

Banking companies with excess capital to deploy have relied on periodic buybacks as a way to reduce shares outstanding and boost earnings per share. But in 1999, they did so with gusto.

Besides possessing ample capital, many companies that had been forced to wait on the sidelines after mergers were allowed back in the game. And though only three accounted for 63% of the value of fourth-quarter buybacks, 1999 saw a shopping spree generally.

"There are some real standout numbers in the quarter," said Marni Pont O'Doherty, an analyst at Keefe in New York. "But there is a lot more breadth over the course of the year."

Charlotte, N.C.-based Bank of America Corp., the product of a merger with NationsBank Corp. in 1998, led the top 25 companies in the fourth quarter, with $2.1 billion worth of buybacks. San Francisco-based Wells Fargo & Co., which was bought by Norwest Corp. in 1998, bought back $1 billion worth of its shares. Both companies were freed last year from pooling-of-interests accounting restrictions, which prevent acquirers from buying back shares for six months after the closing of a merger.

"A lot of what you see in the fourth quarter is catch-up activity for the time they had been barred by accounting rules," said Larry Cohn, an analyst at Ryan, Beck Southeast Research in Livingston, N.J.

Adding to buyback fervor may be the falling prices of bank stocks, which hit their 1999 lows in the fourth quarter. The lower valuations make it much easier for banking companies to justify stepping up repurchases, with stock multiples now about half what they were at their peaks in early 1998, said Ms. O'Doherty.

"You get a lot more traction buying at a low valuation than a high one," Ms. O'Doherty said.

"A lot of managements feel that their shares are a good value right now," said Scott Edgar, director of research at the Sife Trust Fund of Walnut Creek, Calif. "The shares are as attractive of an investment to management as they are to some outside investor."

Among the largest fourth-quarter repurchases was J.P. Morgan & Co.'s $1.4 billion worth. In October, it announced a $3 billion share repurchase program.

In other large buybacks, SunTrust Banks Inc. of Atlanta bought $680 million worth; Mellon Financial Corp. of Pittsburgh, $357 million; and National City Corp. of Cleveland, $262 million.

Though some have criticized banks for not finding better uses of their capital - investing in their core businesses, for example - Ms. O'Doherty said that banking companies over the years had been piling up excess capital. These days they average about an 18% return on equity, up from 15% five years ago.

"The best use of capital is to make good investments back in your business," Ms. O'Doherty said. "But you don't always have those opportunities." Buybacks are "a pretty low-risk way to grow your" earnings per share.

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