Why Bank of America (NYSE:BAC) Will Lag Competitors

When Warren Buffett's Berkshire Hathaway (BRK.A) divested of its total holdings in Bank of America (NYSE:BAC) last quarter, it gave investors and analysts pause as to the reasoning, and most gave the company closer scrutiny as a result, and it appears Buffett was right in ridding himself of the giant bank.

Most analysts don't agree with Buffett, seeing the business model of BofA as being healthy.

The question of course is their troubling balance sheet and competitors expanding into their strongest territories, territories they're counting on for growth: Florida, Texas and California.

Bank of America's outlook is the three major markets above are going to bounce back in the near future, which will drive company growth.

But looking at major competitors in those areas, like Wells Fargo (NYSE:WFC) competing strongly in all those regions, and Toronto-Dominion (TD), which is focusing on southern expansion, Bank of America isn't assured of those markets driving the type of growth they expect them to, and Berkshire and Buffett apparently agree with that assessment.

This has the potential to dramatically effect the retail segment of the company, which could produce less growth in consumer deposits than expected.

Buffett chose to vote with Berkshires' dollars for American Express (AXP), JP Morgan (JPM), Suntrust (STI) and M&T (MTB) in the financial sector, rather than Bank of America, which doesn't look like a growth engine at this time.

Bank of America (NYSE:BAC), Comerica (NYSE:CMA), TD (NYSE:TD), Prudential (NYSE:PRU), Axis Capital (NYSE:AXS) Top Banks, Insurers of Morgan Stanley (NYSE:MS)

Morgan Stanley (NYSE:MS) said they see the banking and the insurance industry being the big winners for 2011, with their top names being Bank of America (NYSE:BAC), Comerica (NYSE:CMA), TD (NYSE:TD), Prudential (NYSE:PRU) and Axis Capital (NYSE:AXS).

Their large cap favorite picks are Bank of America and Toronto Dominion and Comerica, with top insurers being Axis Capital, a top insurer in P&C, and Prudential.

Morgan Stanley said they believe property and casualty insurers should get the biggest increase in the current underwriting cycle.

For the bankers, the reasoning is the growing understanding surrounding the regulations imposed on the industry, as well as low valuations. An assumed improving economy and growing capital deployment were other reasons behind the favorable outlook on the sectors.

JPMorgan (NYSE:JPM), BofA (NYSE:BAC), Wells Fargo (NYSE:WFC), AmEx (NYSE:AXP) Top Banking Picks of Morgan Stanley in 2011

Morgan Stanley (NYSE:MS) released its list of top banking picks in the U.S., Europe and Canada for 2011. In the U.S., the top four picks are JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC) and American Express (NYSE:AXP). Following them in fifth and sixth place in the u.S. were PNC Bank (NYSE:PNC) and Zions Bancorp. (Nasdaq:ZION).

Top banking picks in Europe by Morgan Stanley are Societe Generale SA, UBS (NYSE:UBS), Julius Baer Gruppe AG, Danske Bank A/S, DnB NOR ASA, Barclays (NYSE:BCS) and Mediobanca Group.

In Canada, Morgan's top picks were Toronto-Dominion Bank (NYSE:TD)
and Bank of Nova Scotia (NYSE:BNS).

Bank of America closed Friday at $11.86, up by $0.18, or 1.54 percent. JP Morgan Chase closed at $39.61, up by $0.30, or 0.76 percent. Wells Fargo was at $29.05, gaining $0.27, or 0.94 percent. American Express closed at $44.88, dropping 0.10, or 0.22 percent. PNC ended the week at $57.26, up by $0.69 on Friday, or 1.22 percent. Zions Bancorp ended at $21.29, up by $0.20, or 0.95 percent.