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AIG: Buyback and Dividend Winner

NEW YORK (TheStreet) -- AIG (AIG) was the big winner among large cap financial stocks Friday after second quarter earnings beat estimates by 30% and the insurer surprised investors with a share buyback and its first dividend increase since the financial crisis.

"With progress in P&C, Life, and the news that AIG's capital has satisfied the ratings agencies and the Fed, the reasons 'not to own' AIG are slipping away," wrote Bernstein Research analyst Josh Stirling.

AIG shares were higher all day and closed up 2.68% to $48.33.

Financial stocks more broadly were mixed, as evidenced by the Financial Select Sector SPDR (XLF), a popular exchange traded fund focusing exclusively on financial stocks. The fund was down 0.02% to $20.81 at Friday's close on just over half its average daily volumes over the past three months.

Part of the reason for weakness may have been the July nonfarm payrolls figure, which was softer than expected with 162,000 jobs being added vs. an expectation of 185,000.

"The report was weak, but not weak enough to delay our expectations of a September tapering of quantitative easing" by the Federal Reserve, wrote economists at Deutsche Bank. Ten-year Treasury yields rose by 4.44% to 2,60%

Bank of America (BAC) was another financial name in the news Friday after it announced several pending actions by regulators against the bank. Bank of America said it "received a number of subpoenas and other requests for information from regulators and governmental authorities" related to mortgage backed securities "and other mortgage-related matters." Chief among these, the bank stated in its quarterly filing it had been informed by the U.S. Justice Department it would face civil charges against the bank "arising from one or two jumbo prime securitizations." Separately the Securities and Exchange Commission told the bank it would recommend civil charges "related to Merrill Lynch's risk control, valuation, structuring, marketing and purchase of CDOs."

Bank of America shares finished lower by 0.87% to close at $14.82

-- Written by Dan Freed in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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