Why Bank Of America Buying $800 Million Worth Of Stock In Q2 Is 'A Very Positive Signal'

Bank of America Corp BAC reported better than expected second-quarter numbers earlier on Wednesday. David Hilder, Drexel Hamilton banking analyst, was on CNBC recently to break down the company's quarterly numbers.

The Numbers

"Certainly it's a good quarter for Bank of America," They reported $0.45 versus a consensus estimate of $0.36. there is about $0.07 of non recurring gains in there which are very positive of course for capital. So, the operating number is around $0.38 better than the $0.36 consensus. Core expense were down about 3 percent year-over-year which is good.

"Mortgage servicing expenses came down again. […] investment bank to compare it to yesterday's JP Morgan , Bank of America Merrill Lynch wasn't quite as positive. Bank of America's investment banking fees were down about 7 percent year-over-year, their trading revenues were down 2 percent versus a 1 percent adjusted at JP Morgan."

He continued, "Fixed income trading was down about 9 percent year-over-year. Equities trading at Bank of America was up 13 percent year-over-year, obviously JP Morgan had a somewhat better quarter [of] 27 percent."

Stock Buy Back A Good Sign

"One other thing I point out is that Bank of America bought back almost $800 million worth of stock during the quarter. I take that as a very positive signal because the Fed has asked Bank of America to resubmit its capital plan, has said that Bank of America can buy back stock in the interim until its resubmitted in September and they went ahead and did that. So, I think they have a lot of confidence that they are going to be able to get their new capital plan approved," Hilder concluded.