NationsBank Corp. Wednesday announced a 2-for-1 stock split, saying it would encourage wider ownership of its shares.

The split, effective Feb. 27, for shareholders of record Feb. 7, will double the total of shares outstanding, to 770 million.

The move could foreshadow splits by othermajor banking companies whose shares have cleared the $100 price level during the sectorwide rally.

News of the split boosted shares of the $227 billion-asset company by $2.75, to $109.50.

Keeping the per share price lower would encourage retail investment, said analyst R. Harold Schroeder of Keefe, Bruyette & Woods Inc. Individual investors, typically less fickle than institutional investors, tend to buy and hold a stock he said. "We like to have a good mix of retail and institutional investors," said Susan Carr, senior vice president for investor relations at the Charlotte, N.C., banking company. "Their investment goals are very different, and this reduces the volatility of the stock."

The possibility of a split first arose at a shareholders meeting last April, when NationsBank chairman Hugh McColl said the board would consider such a move once the stock price reached $100 per share. "I think this illustrates our confidence in the stock and our outlook for its performance," Ms. Carr said.

The stock has climbed steadily in recent years. The shares rose 54% in 1995 and 40% last year. The stock price has increased 8% so far this year.

Analysts were generally pleased with the bank's fourth-quarter earnings of $2.19 per share, which were slightly above the $2.14 consensus of analysts surveyed by First Call Corp. Still, observers are anxious to see how well NationsBank absorbs its acquisition of Boatmen's Bancshares of St. Louis.

This is the bank's second split; its first came in 1986 when the stock traded in the $50 range.

In Wednesday trading, the S&P Bank Index rose 1.46%, and the Nasdaq bank index, 0.56%. The Dow Jones industrial average fell 0.49%.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.