Bank of America execs blew $93.6 billion. Here’s how they did it.

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.

The idea behind repurchasing shares on the open market is that they reduce a company’s share count and therefore boost earnings per share and support higher share prices over time. This doesn’t seem to be a bad idea, especially for a company such as Apple Inc.
which has generated excess capital and has appeared to be firing on all cylinders for a long time. For a company that is continuing to expand its product and service offerings while maintaining high profitability, buybacks can be a blessing to shareholders.

But for banks, for which capital is the main ingredient of earnings power, a more careful approach might be in order. The data below show how 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.

Before showing data for the 20 companies among the S&P 500 that have spent the most money on buybacks over the past five years, let’s take a look at how share repurchases are described in a misleading way by corporate executives — and by many analysts, for that matter. During Bank of America’s

first-quarter earnings call on April 18, Chief Financial Officer Alastair Borthwick said the bank had “returned $12 billion in capital to shareholders” over the previous 12 months, according to a transcript provided by FactSet.

Borthwick was referring to buybacks and dividends combined. Neither item was a return of capital. In fact, Bove summed up the buybacks elegantly in a client note on June 9: “The money that the company uses to buy back the stock is simply given away to people who do not want to own the bank’s stock.”

It is also worth pointing out that the term “return of capital” actually means the return of investors’ own capital to them, which is commonly done by closed-end mutual funds, business-development companies and some real-estate investment trusts, for various reasons. Those distributions aren’t taxed and they lower an investor’s cost basis.

Dividends aren’t a return of capital, either, if they are sourced from a company’s earnings, as they have been for Bank of America.

One more thing for investors to think about is that large companies typically award newly issued shares to executives as part of their compensation. This dilutes the ownership stakes of nonexecutive shareholders. So some of the buybacks merely mitigate this dilution. An investor hopes to see the buybacks lower the share count, but there are some instances in which the count still increases.

How buybacks can hurt banks

Banks’ management teams and boards of directors have engaged in buybacks because they wish to boost earnings per share and returns on equity by shedding excess capital. But Bove made another industry-specific point in his June 9 note: “If the bank buys back stock it must sell assets that offer a return to do so; it lowers current earnings.” Buybacks can also hurt future earnings. Less capital can slow expansion, loan growth and profits.

According to Bove, Bank of America CEO Brian Moynihan, who took the top slot in 2010 and saw the bank through the difficult aftermath of its acquisition of Countrywide and Merrill Lynch in 2008, “is one of the brightest, most capable executives for operating a banking enterprise.”

But he questions Moynihan’s ability to manage the bank’s balance sheet. Bove expects that Bank of America will need to issue new common shares, in part because rising interest rates have reduced the value of its bond investments.

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.

Top 20 companies by dollars spent on buybacks

To look beyond banking, we sorted companies in the S&P 500

by total dollars spent on buybacks over the past five years (the past 40 reported fiscal quarters) through June 9, using data suppled by FactSet. It turns out 11 have seen prices increase more quickly than the index. With reinvested dividends, 12 have outperformed the index.



Dollars spent on buybacks over the past 5 years ($Bil)

5-year price change

5-year total return with dividends reinvested

Apple Inc.




Alphabet Inc. Class A




Microsoft Corporation




Meta Platforms Inc.




Oracle Corp.




Bank of America Corp.




JPMorgan Chase & Co.




Wells Fargo & Co.




Berkshire Hathaway Inc. Class B




Citigroup Inc.




Charter Communications Inc. Class A




Cisco Systems Inc.




Visa Inc. Class A




Procter & Gamble Co.




Home Depot Inc.




Lowe’s Cos. Inc.




Intel Corp.




Morgan Stanley




Walmart Inc.




Qualcomm Inc.




S&P 500



Source: FactSet

Click on the tickers for more about each company or index.

Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

The four listed companies with negative five-year returns are three banks — Citigroup Inc.
Wells Fargo & Co.

and Bank of America — and Intel Inc.

Don’t miss: As tech companies take over the market again, don’t forget these bargain dividend stocks

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A Complete Guide to Digital Marketing for Modern Businesses | Wealth of Geeks

Building a business has never been easy, but growing a modern brand without the aid of digital media is next to impossible. Digital marketing, an expansive field with many sub-disciplines, has quickly become necessary for organizations of any scale.

For growing businesses already limited on time, money, and other resources, digital marketing may seem like a luxury they can ill afford. However, in the current landscape, a basic digital strategy is something brands can’t afford to ignore.

The good news is that internet marketing offers many accessible, low-cost inroads to growing a business online.

What Is Digital Marketing?

Digital marketing is a field that employs various online media to expand a business’s reach to a broader audience. Combining the effectiveness of online communication with the global reach of modern web platforms gives businesses of all sizes bountiful opportunities to stand out and grow.

Digital marketing can help an organization achieve multiple goals, including attracting potential customers, selling products and services directly, and building authority as a trusted brand.

Advancements in the digital age have radically transformed how businesses operate and succeed. Tools like a company website, social media, and email are no longer elective strategies for already-established global companies. Instead, an active online presence is a fundamental building block of a thriving 21st-century business of any scale.

Building an Audience in The Online Era

Digital marketing offers multiple advantages and unique opportunities not available to businesses and marketers of the pre-internet era.

One of the most groundbreaking advancements is the low barrier to entry. Traditional marketing, such as print advertising, can be prohibitively expensive, require dedicated and experienced staff, and requires a publisher’s discretion.

While the expenses of building a global digital marketing strategy can scale up significantly for large businesses, starting with the basics is nearly free and available to anyone. Even a brand-new company with only one employee can create a website, email list, and social media profiles for little to no cost.

Digital marketing also distinguishes itself through the inherently global nature of the web. Under the right circumstances, even a small local business can attract the attention of a massive worldwide audience and drive explosive growth. In the past, this type of reach would have been possible only for the largest global organizations with staggering marketing budgets.

For organizations looking to improve their marketing over time, digital marketing also offers the gift of analytics. Numerous tools provide direct, actionable metrics on the performance of various marketing efforts and campaigns. Companies that are serious about growth can leverage this data to see what works, what doesn’t, and what to try next.

New Media, New Challenges

Marketing a business online also brings new challenges.

For instance, the web is an incredibly noisy place, and global reach also means global competition.

It houses innumerable organizations, brands, and individuals vying for the limited attention of the masses. Finding authority within a niche is entirely plausible but requires patience, continuous learning, and readiness to adapt repeatedly to changing conditions.

Advertising and marketing efforts in the past generally only had to catch the intrigue of potential customers. But for online content to reach a broad audience, marketers have a new stakeholder to impress: the almighty algorithm.

Before an article or social media post can gain significant reach, it must satisfy the discretion of the platforms and search engines that filter and distribute that information. Unfortunately, these platforms can be opaque and unpredictable in their expectations.

Types of Digital Marketing

Given how young the field of digital marketing is, industry conditions are still rapidly evolving and taking shape. However, even in just the last 20 years or so, it has quickly matured into a diverse field containing many distinct disciplines and specialties.

Before building your business’ online media strategy, consider some of the core pillars of digital marketing today.

Content Marketing

A massive and diverse sub-field of marketing in its own right, content marketing focuses on positioning your company as an authoritative presence in its industry. The goal of content marketing is to publish high-quality content to inform and educate audiences about key topics in your industry. This content can take many forms, including:

  • Blog posts
  • News articles
  • Videos
  • Infographics
  • eBooks
  • Whitepapers

Producing valuable content that teaches people about relevant topics positions your company as knowledgeable and helpful.

Later, when those same consumers decide to buy products or services like the ones you sell, your brand will be one they already know and trust, opening the door to customer conversions.

Search Engine Optimization

Similarly to content marketing, search engine optimization (SEO) involves publishing content online to establish your brand’s relevance and authority within its space. With SEO, the primary goal is to draw traffic to your company’s web pages through search engine results pages, (or SERPs).

There are many fields of expertise within SEO, but generally, the goal is twofold. Optimized content should do two things:

  1. Help or entertain your prospective audience in some way
  2. Demonstrate to search engines that it is the best content to serve this purpose

When people search Google or Bing for terms related to your business, you want to be one of the first results they see. This authority attracts more eyes to your website and widens the funnel for potential future customers.

Social Media

Social media is one of the fastest-moving and most volatile fields of digital marketing. Having active accounts on platforms like Facebook, Instagram, Twitter, and TikTok, your brand can achieve several beneficial goals:

  • Reaching a wider audience and growing your customer base
  • Opening direct, two-way lines of communication with current and potential customers
  • Staying in the know on the latest news, developments, and conversations going on in your industry
  • Keeping your brand at the forefront of people’s minds for when they are ready to make a purchase
  • Having a public platform for PR and other forms of widespread outreach

Social media is a powerful tool, but it has its challenges. Standing out on social media can be difficult amid the noise.

It is also important to note that tides can turn quickly, and sometimes even a well-meaning or innocuous post can bring negative attention to your organization. Therefore, it is always advisable to be clear and intentional with a social media strategy.


Insofar as there is an “older” component of an industry that didn’t exist 30 years ago, email marketing is probably it.

Since it may not be as cutting-edge as social media, email is an area of digital marketing strategy that many businesses neglect. However, this would be a mistake, as email remains one of the most powerful tools for growing an audience and building ongoing relationships with them.

Building an email list and staying in regular contact through newsletters and promotions has a high success rate. Effective email outreach can drive sales, improve customer relationships, and convert one-time customers into loyal fans and brand advocates.

Online Advertising

As one of the closest analogs to traditional marketing, online advertising has long been a mainstay of digital marketing.

One of the most popular forms of online advertising is pay-per-click, (or PPC) advertising. With PPC ads, your business works with publishers, including search engines, social media platforms, or third-party sites, to highlight promotional material for your brand.

Unlike traditional television or print ads, for which you would pay an upfront rate, businesses pay for PPC ads based on results. Instead of paying to display your ad somewhere, you only pay for each time a user clicks on one of your ads and follows through to one of your web pages or resources. Overall, PPC advertising can be much more cost-effective than traditional alternatives.

Affiliate Marketing

Affiliate marketing is a popular, relatively lightweight and low-cost way of proliferating your products and services. It enables your business to deputize online creators and influencers as ambassadors of your brand.

The way affiliate marketing works is relatively straightforward. Whether through an in-house program or third-party service, individuals and brands can apply to become affiliates of your products and services. Approved affiliates will then spread the word about your offerings to their audiences using special affiliate links. When someone buys from you using an affiliate link, the affiliate earns a small commission for the referral.

Affiliates are typically not employees of a business but rather independent contractors. Since affiliates generally only earn pay when they convert sales, even cash-strapped companies can build a low-cost affiliate marketing strategy rather than hiring an entire sales team. The commission-based pay incentivizes them to market your products as effectively as possible, reducing your upfront cost.

How Different Industries Can Employ Digital Marketing

Digital marketing is a growing necessity for nearly every type of business, but that doesn’t mean it will work the same way for every brand.

For instance, restaurants and other food-focused businesses will likely want to invest heavily in visual-focused social media platforms that highlight their eye-opening and mouth-watering offerings. The same is true for travel and other luxury experiences.

Businesses that offer knowledge-based services, such as law offices and financial advisors, can use digital marketing to build authority and trust with their audiences. For example, blog posts and other informative content can share informative education while highlighting the value of services from an experienced professional.

Selling physical products can take a brand’s digital marketing strategy in many directions, but email, advertising, and social media often prove highly effective for driving product sales.

Every company’s digital marketing strategy will be unique. But as long as your organization is ready to test things out, see what works best, and adapt on the go, the potential is massive and continues to grow.

Making The Leap Into Digital Marketing

Digital marketing is a young and rapidly-evolving industry. In just over two decades, it has developed from an internet curiosity to an essential pillar of any successful business. Like accounting, legal support, and human resource management, it has become a core component that no growing organization can reasonably ignore.

As a large and diverse field, there are countless ways for a company to build its digital marketing strategy. While its many unique components can seem overwhelming to a small business with a limited budget, it doesn’t have to be. One of the best things about digital marketing is that you can start small with the most critical areas for your business and then build from there.

The web has democratized access to marketing efforts once reserved for only the most prominent global businesses, meaning there’s never been a better time to get started.

This article was produced by Wealth of Geeks.

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