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) --

Bank of America's

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$8.5 billion settlement with investors on mortgage related securities is beginning to look like a template for other large banks such as

JPMorgan Chase

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Wells Fargo

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Morgan Stanley

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-- but it won't put the crisis behind the nation's second largest bank.

A New York State court ruling on the $8.5 billion settlement may pave the way for Bank of America to compel investors into a resolution of loss-making residential mortgage securities that its Countyrwide Financial division issued.

But while a settlement may put some of BoA's legal liabilities to rest, it's not a cure all for the hapless stock which trades at a discount to its book value even after a 2012 rally.

Bank of America still faces billions in housing crisis related lawsuits and won't be boosting its dividend or buying back shares anytime soon. Meanwhile, after a string of legal settlements and headway in the Greek debt crisis, the muted share reaction to the positive turn in the settlement signals that investors are expecting far more from the bank's underlying earnings.

In June, Bank of America, the issuer of hundreds of covered trusts though its

Countrywide Financial

unit, settled an investor lawsuit on the real-estate tied assets with their trustee

Bank of New York Mellon

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, in an $8.5 billion settlement that removed one of its biggest headwinds. Monday's ruling that the dispute between investors and Bank of America will return to New York state courts stems a tide of negative momentum.

Monday's ruling in a U.S. appeals court that put the dispute back to state courts is a positive step for Bank of America in getting full investors commitment to a settlement. Such an agreement may also dictate how U.S. banks can quickly resolve legal wrangles on covered trusts and other residential mortgage backed securities that have weighed on shares.

Bank of America shares are the best performer in the

Dow Jones Industrial Average

in 2012, posting an over 45% gain, after a near 60% 2011 loss. Even with a 2012 surge, Bank of America shares are over 40% below where they traded at this time in 2012. In Tuesday trading, Bank of America shares posted a muted gain of under 1% to $8.07.

That stock gain gives Bank of America only a just over 12% stock gain, relative to a consensus price target of $9.08 a share, according to consensus estimates compiled by


. Twelve analysts rate Bank of America a "buy," while 23 rate the company a "hold," an additional two analysts put out a "sell" rating on the bank.

Analysts generally see the bank earning flattish 2012 revenues on pressure on net interest margins. Overall, Bank of America revenue is expected to fall roughly 2% to $92 billion in 2012.

"The decision to send the proceeding to New York state court is a positive for Bank of America in that the settlement is more likely to be finalized according to its original terms," wrote Credit Suisse analyst Moshe Orenbuch in a note reacting to Monday's ruling.

"This court decision is a positive for Bank of America. Shares are trading at 35% discount to tangible book value attributable, in part, to the uncertainty surrounding mortgage issues and liability for putback claims. Approval of the $8.5 billion settlement will provide some certainty around private label mortgage putback liabilities," Orenbuch adds.

Barclays Capital analyst Jason Goldberg estimates that the 530 covered trusts involved in the settlement had an original principal balance of $409 billion on securities issued by Countrywide Financial between 2004 and 2008. Among those securities, the outstanding balance of loans in default was $217 billion, leading to the $8.5 billion settlement between a 22 institutional investors.

Even if a settlement were agreed, fraud and disclosure claims could persist, notes Goldberg. He expects a settlement to be approved, with cash payments by the first half of 2013.

Billions in legal costs and disputes remain for Bank of America, which has $14.3 billion in outstanding putback claims as of the fourth quarter and a reserve balance of almost $16 billion. To boot, Bank of America also saw its claims on private label securitizations rise $2.1 billion in 2011, while future non-GSE losses could reach $5 billion, according to Goldberg of Barclays Capital.

Meanwhile, Bank of America has stopped selling mortgages to Fannie Mae on a standstill over residential security-tied legal disputes. Goldberg rates Bank of America shares "equal weight" with a price target of $10 on little asset growth and lower capital levels, relative to its peers.

Evercore Partners analyst Andrew Marquardt notes that in 2012, Bank of America's mortgage issues are "moving in

the right direction," in a Feb. 27 note that accounts for Monday's court ruling and a $25 billion Feb. 9 settlement between Bank of America, Wells Fargo, Citigroup, JPMorgan and

Ally Financial

and a consortium of state attorney generals on their foreclosure practices. Nevertheless, he expects margin pressures to remain, with the bank showing flat to declining revenue.

"That said, several mortgage issues linger including remaining GSE and private label repurchase risk, securities litigation (private parties and regulators), and recent lawsuit against MERS and the largest mortgage servicers by NY Attorney General," notes Marquardt, who holds an $8 per share price target and an "overweight" rating on shares.

Those risks signal that Bank of America still faces a legal hole when it comes to mortgage liabilities from the housing boom and bust. It has recognized or reserved against a total of $35 billion in losses, and even in a worst case would not see more than $32 billion more, according a


from to Citigroup analyst Keith Horowitz.

Horowitz sees $32 billion as a worst case, with $12 billion as a more likely scenario, in summarizing his 53-page analysis of the mortgage problems that have plagued Bank of America. Bank of America itself has indicated it may need another $5 billion above existing reserves.

Those liabilities, in addition to upcoming bank stress tests make it so that a dividend boost or share buybacks are a way off, even if Bank of America finalizes its $8.5 billion settlement by 2013. "Ultimately, we think the settlement will prevail and we guesstimate this takes 6-12 months from here," writes Betsy Graseck of Morgan Stanley.

Graseck notes that while Bank of America is likely to pass the Federal Reserve's comprehensive Capital analysis and review due this spring, it will boost its quarterly dividend from 1 cent to 4 cents by 2013 and will only initiate buybacks in 2014, after issuing billions worth of shares to raise capital during the financial crisis.

A non-U.S. boost to Bank of America may be a resolution of the Greek debt crisis, which Wells Fargo analyst Matt Brunnell notes would benefit

Bank of America and Citigroup the most

among large cap banks if Greece avoids a default. Greece has until Mar. 9 to get 95% of private bondholders to exchange their debt in a

second bailout

that may avoid a default when billions in debt comes due later that month.

For more on Bank of America, see why

Bank of America Hedge Fund plays are all about timing

and the most memorable quotes from Warren Buffett's

annual letter


-- Written by Antoine Gara in New York