Analyst Mayo downgrades BofA, seeks bolder action

* Veteran analyst calls for breaking up the No. 2 U.S. bank

* Downgrade comes day after better-than-expected earnings

By Rick Rothacker

April 20 (Reuters) - Despite reporting better-than-expected first-quarter earnings, Bank of America Corp's management needs to take "bolder action," including breaking up the company or selling more assets, CLSA analyst Mike Mayo wrote in a report on Friday.

Bank of America's first-quarter net income fell 68 percent to $653 million, when including a $4.8 billion accounting charge related to the value of the bank's debt. But the results issued on Thursday beat analysts' estimates as the second-largest U.S. bank set aside less money for bad loans.

In downgrading the bank's stock to "Sell" from "Underperform," Mayo cited the company's reduced earnings power, as well as concerns about its mortgage liabilities and lost market share in mortgages and credit cards.

"This weak performance begs the question if shareholders would be better off with a more downsized company," wrote Mayo, a veteran analyst who has long been critical of big banks. He's the author of "Exile on Wall Street: One Analyst's Fight to Save Big Banks from Themselves."

The bank, according to Mayo, needs bolder action than an ongoing cost-cutting initiative called Project New BAC, which in its first phase aims to eliminate 30,000 jobs over the next few years. Mayo did not specify how he would break up the company or list any particular assets he would shed.

A Bank of America spokesman declined to comment.

The Charlotte, North Carolina-based bank's shares fell 4.7 percent on Friday to $8.36 on a mixed day for bank stocks and a positive day for the broader market.

Not all analysts panned the results. Sterne Agee analyst Todd Hagerman, for example, boosted his stock price target to $10 from $9 and increased his 2013 earnings estimate to $1.05 from $1.

"Management continues to make progress restructuring the company, strengthening the balance sheet, and reducing the risk profile," Hagerman, who has a "Neutral" rating on the stock, wrote in a report Friday.

Mayo's price target remained at $8, but he lowered earnings estimates for 2012 and 2013. CLSA's major shareholder is France's Credit Agricole.