Bank of America: Financial Winners & Losers

( Updated with stock price moves.)

NEW YORK ( TheStreet) -- Bank of America ( BAC) shares reversed course and were one of the losers of the financial sector Tuesday, giving up early gains that came after an analyst said the bank's shares could double in price.

Bank of America slumped after Rochdale Securities analyst Dick Bove said in a research note Monday that the bank's business model is "deeply flawed but this should not stop the stock from potentially doubling in price."

Bove argues that in a normal economy, Bank of America would have a reported a loan loss provision of about $10 billion in 2009, compared to the $48.6 billion the bank actually reported for last year. The difference would be worth approximately $2.95 to $3 per share, Bove argues, and the stock could more than double from its current level assuming it could sell at 12 times those earnings.

However, Bove says that Bank of America "has not demonstrated that it can run itself effectively through cycles. What shareholders need is Bank of America's point of view backed by solid analysis of the markets it participates in. This has not been forthcoming and statements that no changes are necessary only deepen investors' belief that they should rent this stock for the earnings recovery and not own it."

After trading higher for most of the session, Bank of America shares were down 14 cents, or 0.8%, to $16.57. Through the first two months of 2010, the stock has gained more than 10%.

Other U.S. bank stocks pared gains after reports that key senators were nearing a deal on legislation to overhaul banking regulations which includes creating a new consumer-protection division within the Federal Reserve.

The Wall Street Journal reported that Democratic Sen. Christopher Dodd, chairman of the banking Committee, and Republican Sen. Bob Corker of Tennessee are selling the agreement to other members of their parties, citing comments from Senate aides. Dodd is likely to introduce the bill in the Senate later this week, but it remains uncertain whether the White House will accept the proposal.

Among U.S. bank stocks trading to the upside Tuesday, Morgan Stanley ( MS) added 1.7% to $28.68, Goldman Sachs ( GS) was up 1.3% to $158.52, and Citigroup ( C) rose 0.3% to $3.40. JPMorgan Chase ( JPM) slipped 0.5% to $41.64.

On the earnings front, MBIA ( MBI) reported a fourth-quarter loss of $1.16 a share, which shrank considerably from a year-ago loss of $5.21 a share but was still wider than the Thomson Reuters average estimate for a loss of $1.11 a share. In the quarter, MBIA said it recorded $661 million in losses stemming from insurance of second-lien mortgage loan securitizations.

Despite the wider-than-expected loss, MBIA shares were climbing by 1.7% to $4.88. Fellow bond insurer Ambac Financial ( ABK) was up 1% to 69 cents.

In other insurer news, both American International Group ( AIG) and Prudential PLC ( PUK) lost ground Tuesday, a day after Prudential PLC said it will pay $25 billion in cash and $10.5 billion in new shares and other securities for AIG's American International Assurance subsidiary.

Following the deal's announcement, Standard & Poor's said it put Prudential PLC's ratings on watch negative, arguing that "the transaction likely will have a material adverse impact on Prudential's key credit metrics, such as capitalization and fixed-charge coverage."

Prudential PLC shares trading in New York were down 9.4% to $14.62, bringing it's two-day decline to 21%. AIG shares, which rallied 4% Monday, were down 2.7% to $25.09.

CIT Group ( CIT) was also among the decliners of the day after the commercial lender, which recently emerged from bankruptcy, said in a regulatory filing late Monday that it expects to report a fourth-quarter loss of $900 million and a loss of $4 billion for the year.

CIT said the loss for the year is "expected to be essentially offset by the impact of reorganization," primarily the cancelation of debt. CIT was expected to issue its results on Monday but said they would be delayed until March 16 because the company didn't have enough time since it emerged from bankruptcy to complete them.

CIT shares were lately down 0.3% to $36.44.

-- Written by Robert Holmes in Boston.

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