In several notes to clients this month, Odeon Capital Group analyst Dick Bove has pointed out that Bank of America's big spending on stock buybacks over the past five years has been a waste for its shareholders, with the bank's stock price declining slightly during that period.

In a June 5 note, Bove wrote: 'Mr. Moynihan indicated twice [during a recent presentation] that the bank has excess cash that apparently could not be invested profitably. Possibly he is unaware that the cost of deposits at the bank in [the first quarter of] 2023 was 1.38% while the yield in the Fed Funds market can be as high as 5.25%.' In other words, the bank could earn a high spread at little risk with overnight deposits with the Federal Reserve.

That is a very simple example, but if Bank of America had grown its loan book more quickly over recent years while focusing less on buybacks, it might not face the prospect of a near-term capital raise, which would dilute current shareholders' stakes in the company and reduce earnings per share.

'buybacks haven't helped the largest banks outperform the broad stock market over the past five years. And now, banks face the prospect of regulators raising their capital requirements by 20%, according to a Wall Street Journal report.

marketwatch.com - Bank of america execs blew billion heres how they did it