NEW YORK ( TheStreet) -- Bank of America ( BAC) was the winner among the largest U.S. banking names on Wednesday, with shares rising 4% to close at $8.00. The broad indexes all saw gains after ADP reported that the U.S. economy added 216,000 private sector jobs during February, increasing from a revised 173,000 gain in private sector employment in January. Small businesses accounted for 108,000 of the new full-time positions in February. ADP said that "manufacturing employment increased 21,000, while construction employment advanced 16,000 and the financial services sector added 14,000 jobs during that period."
The The KBW Bank Index ( I:BKX) was up 2% to 44.55, following Tuesday's 3% decline. All 24 index components saw midday gains, except for Commerce Bancshares of Kansas City, Mo., which was down slightly to $37.87. Bank of America's shares have now returned 44% year-to-date, following a 58%% decline in 2011. Bank of America has already announced that it has not included any plans for an increased dividend or for share buybacks this year in the capital plan submitted to the Federal Reserve for the regulator's annual stress tests.
RBC Capital Markets analyst Joe Morford rates Bank of America "Outperform," with a $10 price target, saying in his review of the company's annual 10-K filing on Feb. 29 that the company "remains focused on building capital with a target Basel III Tier 1 common ratio of 7.25-7.50% by year end 2012," and that the company has been "opportunistic in repurchasing its own debt (at a discount) as a means to boosting capital." Of course, the company's "mortgage-related issues remain an overhang," according to Morford, with repurchase demands by Fannie Mae and Freddie Mac rising "22% sequentially in 4Q11 to $14.3B, partly because GSE standards and resolution processes have become increasingly inconsistent with past precedent and BofA's interpretation of its contractual liabilities." For private mortgage putback claims, Bank of America "reiterated its projection that the total losses on its non-GSE representations and warranties exposure may ultimately exceed existing accruals by up to $5 billion (unchanged from 3Q11)," which assumes the company's June 2011 $8.5 billion settlement of private investors' putback claims for Countrywide loans is approved, which now seems likely, since "BofA won a favorable ruling in an appeals court confirming that the proposed settlement will be reviewed in a state court and not a federal one where investors could potentially 'opt out' of the final pact to pursue their claims individually." Morford estimates the company will earn 75 cents a share in 2012, followed by EPS of $1.15 in 2013. Bank of America's shares trade for just 0.6 times tangible book value, according to HighlineFI, and for 11 times the consensus 2012 earnings estimate of 71 cents, among analysts polled by Thomson Reuters. Interested in more Bank of America? See TheStreet Ratings' report card for this stock.