More than 20 US banks announce share buyback plans in July

The number of U.S. bank share repurchase announcements jumped in July as several management teams said they would target "opportunistic" buybacks.

In total, 22 banks revealed new repurchase plans in July, up from nine that announced new programs in June and 14 in May, according to a S&P Global Market Intelligence analysis. Near the onset of the pandemic, regulators banned large banks from buying back stock and many smaller banks voluntarily pulled back to build capital buffers in case of a downturn. Now more than a year into the pandemic, credit quality has only improved. With some analysts noting that bank stock valuations remain attractive and a surplus of capital on many bank balance sheets, several banks are jumping back into buybacks.

Bank OZK announced its first buyback program in the company's history in July when its board authorized a repurchase program for up to $300 million of common stock. Chief Credit and Administrative Officer Tim Hicks said on the company's second-quarter earnings call that the company will repurchase shares at a "moderate pace" and will be "opportunistic," ramping up repurchases when the bank's stock price dips. Hicks also said the bank is interested in M&A as a means of deploying capital.

"We still believe our stock price is undervalued compared to some of the peers," Hicks said.

Executives at BankUnited Inc. similarly said they expect to be "more opportunistic" with their buyback program. The Miami Lakes, Fla.-based bank's board authorized the repurchase of up to an additional $150 million in shares of its outstanding common stock. Chairman, President and CEO Raj Singh said the bank will buy based on market movements rather than a steady, daily repurchase program.

"And the reason for that is we expect this to be a very volatile market," Singh said on an earnings call. "Even a little bit of bad news or good news can really move stock prices a lot, which is what we're seeing right now. So we're going to use that to our advantage and be opportunistic."

KeyCorp was the largest bank by total assets to announce a new repurchase program in July with a program to buy up to $1.5 billion of shares. Huntington Bancshares Inc., another large regional bank, also announced an authorization to repurchase shares, with its program targeting up to $800 million of shares. The Columbus, Ohio-based bank's common equity Tier 1 ended the second quarter at 9.98%, near the top of its 9% to 10% target.

"These strong capital levels, coupled with the ongoing economic recovery and our merger integration proceeding as planned, gave us confidence to relaunch our share buyback program earlier than previously expected," said Huntington CFO Zachary Wasserman on the bank's earnings call.

A handful of other regional banks also announced buyback plans in July. Salt Lake City-based Zions Bancorp. NA's board approved a share repurchase program of up to $125 million for the third quarter, announced after the bank reported earnings. But Chairman and CEO Harris Simmons hinted at more buybacks during the bank's earnings call.

"I think that we've got quite a lot of room right now" to deploy capital, Simmons said. At the same time, he said there was still some reason for concern about credit performance in the commercial real estate space. "I think there's a whole lot of risk in the world despite the fact that we're not seeing it emerging as losses today. ... We're going to want to be a little bit conservative relative to the crowd. But there is, indeed, a fair amount of room there."

Portland, Ore.-based Umpqua Holdings Corp.'s board approved a new buyback program of up to $400 million of common stock over the next year. On the bank's second-quarter earnings call, management similarly pointed to the bank's robust capital levels as enabling a more proactive share buyback program.

"The real key with this is the buildup of excess capital really over the last year. Strong mortgage results, as rates decline, pushed our excess capital from the $150 million to $200 million range, up close to $600 million over the last quarter," said CFO Ronald Farnsworth.

In addition to new programs, four banks expanded share buyback plans in July, including Pine Bluff, Ark.-based Simmons First National Corp., whose board approved an amendment to its stock repurchase program that increases the amount of common stock that may be repurchased to a maximum of $276.5 million from a maximum of $180 million while also extending the term of the program.