Bank of America: Manufacturing Numbers Loser

NEW YORK (TheStreet) -- Bank of America (BAC) was the loser among the largest U.S. financial names on Monday, with shares pulling back 2% to close at $8.05.

The broad indexes ended mixed, after the Institute for Supply Management reported that its manufacturing index declined to 49.7% during June from May's reading of 53.5%. A reading above 50% indicates manufacturing sector expansion, while a reading of less than 50% indicates contraction. June was the first month for which the index read below 50% since July 2009.

The Institute for Supply Management also said that its New Orders Index dropped "dropped 12.3 percentage points in June, registering 47.8 percent and indicating contraction in new orders for the first time since April 2009, when the New Orders Index registered 46.8 percent."

In rosier economic news, the Commerce Department reported that total U.S. construction spending increased to a an estimated seasonally adjusted annual pace of $830.0 billion during May, increasing from a revised April estimate of $822.5 billion. A year earlier, estimated construction spending was at an annual pace of $775.8 billion.

The KBW Bank Index (I:BKX) rose 1% to close at 46.08, with all but three of the index components rising for the session.

Bank of America's shares have now returned 45% year-to-date, after dropping 58% during 2011.

The shares trade for 0.6 times their reported March 31 tangible book value of $12.87, and for eight times the consensus 2013 earnings estimate of 98 cents a share, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is 56 cents.

Bank of America is set to report its first-quarter results on July 18, and investors are eager for Brian Moynihan to shed further light on the company's plans to settle its legacy expenses from the disastrous acquisition of Countrywide Financial in 2008.

The company is in the midst of a dispute with Fannie Mae (FNMA) over the government-sponsored mortgage giant's mortgage loan repurchase demands, and FBR analyst Paul Miller said on June 22 that the company "is currently not paying claims from [Fannie Mae and Freddie Mac (FMCC)] per our sources," with the dispute centering on "whether the agencies can push back loans if the borrower remained current for two-plus years" before defaulting.

The consensus among analysts is for Bank of America to post second-quarter earnings of 16 cents a share.

Credit Suisse analyst Moshe Orenbuch rates Bank of America "Outperform," with a price target of $11, saying on Monday that he expects the company to post second-quarter operating earnings of 14 cents a share, excluding one-time adjustments, litigation expenses, trading and debt marks, and "gains related to debt exchanges as well as securities." The analyst also lowered his 2012 EPS estimate by a nickel to 70 cents, "as we lowered our expectations for capital markets activity, as well as adjusting spread income forecasts to include expected negative hedge results in 2Q."

Credit Suisse left its 2013 EPS estimate for Bank of America unchanged at $1.20.

Interested in more on Bank of America? See TheStreet Ratings' report card for this stock.

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-- Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.