Keefe Bruyette & Woods

report aided large-cap banks Monday, though the brokerage sounded a negative note on

Bank of America

(BAC) - Get Report


KBW raised its ratings for 12 banks even as it trimmed some earnings estimates to reflect expected weakness in trading and advisory businesses. For instance,

Northern Trust

(NTRS) - Get Report

saw its rating rise to buy from outperform, though KBW slashed the stock's price target along with the bank's first-quarter and full-year earnings estimates. Northern Trust rose 75 cents Monday to $60.12.

Analyst Thomas Therkauf said in the report that selling throughout the sector has been overdone. Using Northern Trust as an example, he said the bank's "superior business mix" and "modest credit risk" means the stock has "26% upside in the coming year -- upside potential that in our view deserves a buy rating."

Similarly, KBW maintained a buy rating on


(C) - Get Report

while trimming its 2001 earnings estimate to $3.05 from $3.15, to "reflect a more cautious outlook for Citi's Salomon Smith Barney/Global Relationship Banking unit." Citigroup was up 77 cents to $43.62.

But KBW doubts Bank of America is strong enough to withstand pressures including "excessive earnings risk" from credit-related expenses. KBW cut the stock to underperform from market perform and maintained its 2001 EPS view at $4.55, well below the bank's guidance of $5. Therkauf called Bank of America "effectively a call on an economic recovery," saying that banks with credit problems have benefited from a belief that recent


easings will produce a rapid recovery for the slowing economy. "Frankly, we feel unqualified to engage in the debate as to how quickly the economy will rebound," said Therkauf. Bank of America was lately off 27 cents to $52.51, making it one of the few decliners among financial stocks.


Philadelphia Stock Exchange/KBW Bank Index

, which tracks 24 of the nation's largest banks, was lately up 1.8%.