First we will create some text and place each letter on a different layer.

Select the text tool

Make sure that static text is selected in the properties panel.

Select a font, size and colour in the properties panel.
Type 3 letters on the stage.  
Select the arrow tool

While your text is still highlighted, from the menus choose Window > Align

This will open the Alignment Panel

 
Click To Stage

Click the align horizontal centre button

Click the align vertical centre button

This puts your text exactly in the middle of the stage.
From the menus choose

Modify > Break Apart
The text is now highlighted as 3 separate letters.

Using the arrow tool, Deselect (by clicking on another part of the stage) then select the first letter.

  
Press F8 to convert to symbol

(or choose Insert > Convert to Symbol from the menus)

Make sure it is set to Graphic

Repeat for each letter.
Highlight all 3 letters by dragging a box around them.

Your letters must each be individual symbols. (See how each has its own box)
From the menus choose

Modify> Distribute to Layers

This will put each letter on a different layer

Layer 1 is now empty—select then Delete it

Rearrange your layers so that your first letter is on the top layer and the third letter is on the bottom layer.
Save your file.  

 

Now we will animate the text

Select the 12th frames for each layer and insert keyframes (F6)

Select each layer and create a motion tween.
Select the 6th frames and insert keyframes (F6)

 
Select one keyframe

From the menus choose Window > Transform
 
In the transform panel, change the width and height to 300%

Hit Enter and the transform will be applied.
Notice the properties panel is set to frame.
Click on the large letter on the stage.

The properties panel changes and we can access the alpha settings.
Set the alpha to 10%

The letter should fade.
Repeat these steps for the other two letters.
Highlight the first 12 frames for layer 2 and drag them along the timeline about 3 frames
Shift the frames on the 3rd layer further along so you timeline looks like this.
Play your movie to see what it looks like.

To make it play repeatedly from the menus choose
Control > Loop Playback  (Press Esc to end it)

  
Experiment with copying and pasting frames further along your timeline.

To copy and paste, highlight the frames, then hold your ALT key as you drag.

  

 

Create a text animation of your own, and also include colour changing with it.

You can change colour by using the Tint Option in the Properties Panel