Bank of America, 11 Others Cut by Morgan Stanley

Bank of America (BAC) and 11 other banks saw earnings estimates slashed by Morgan Stanley analysts Friday. The cuts come just over a month after the last round of estimate cuts by Morgan Stanley's bank analysts.

As the accompanying chart shows, Morgan Stanley cut 2012 Bank of America earnings estimates by 7% to $1.38 from $1.47. Other banks that saw estimates cut by 7% -- the most of any bank -- were State Street Corp. (STT) and Regions Financial (RF). Regions also saw its price target lowered to $7 from $8. The 14% cut was more than that for any other large cap bank followed by Morgan Stanley's analysts. PNC Financial (PNC) and Discover Financial Services (DFS), on the other hand, saw no change to either estimates or target price.

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The main reason for the reduced estimates is the impact of lower yields on two to five year Treasuries, which negatively impacts the banks' net interest margins (NIM), the report states.

"We expect continued NIM compression over the next 12 months as Fed flattens the curve," Morgan Stanley's analysts write.