Some banks buying back their own stock

Last updated on May 13th, 2019 at 02:46 pm

Three of the largest banks based in Wisconsin – Associated Ban-Corp., Marshall & Ilsley Corp. and Anchor Bancorp Wisconsin Inc. – have started stock buyback programs this year.

Madison-based Anchor Bancorp purchased 276,600 of its shares in late March. The bank believes its stock, bought at a predetermined price, was an attractive way to use some of its money, said Doug Timmerman, chairman of the board and president of Anchor Bancorp.

“First of all, it is a viable alternative to what we should do with our capital,” he said. “Secondly, at these prices, Anchor Bancorp Wisconsin Inc. is a great buy.”

Banks generally have four ways to employ their capital: increasing their net worth, supporting growth, paying dividends or buying back stock, Timmerman said. The bank’s stock will not be retired, but set aside for future use.

“They are available to do an acquisition that stock would be part of,” Timmerman said. “They’re available for management stock awards, or simply find their way into our treasury or are available for future use.”

In early May, Milwaukee-based Marshall & Ilsley Corp. announced a $138.5 million stock buyback program. The total number of shares purchased will be determined on the adjusted volume-weighted average price of M&I’s stock through a contractually specified averaging period expected to conclude by the end of the second quarter of 2007.

M&I officials could not be reached for comment for this report.

Associated Ban-Corp., the Green Bay holding company of Associated Bank, repurchased 2 million shares of its outstanding stock in early May. The total cost of the buyback was about $65.6 million.

The bank has been repurchasing its own stock for several years now, and believes doing so is an effective use of capital, said David Baumgarten, southeast region president and director of commercial banking.

“Our stock has been a strong earner and we’ve tried to look at how to most effectively redeploy the earnings we’ve been making,” he said. “With multiples as high as they’ve been, rather than taking some of our dollars and making an acquisition, we’re buying back some of our own.”

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