Part of the problem for Bank of America compared with peers like JPMorgan Chase ( JPM) is that the bank as consistently surprised investors and analysts to the downside, reporting a string of negative earnings hits.

"One thing that I don't think Moynihan has done well which the best managers do well is under promise and over deliver," says Sinegal of Morninstar. "I think that's something that Jamie Dimon has done a good job of, that's why he gets so much credit," he adds.

Seen in that light, Friday's settlement represents just another negative earnings surprise on the heels of quarter after quarter of one-time charges related to the bank's activities prior to the financial crisis. Those losses include shareholder lawsuits against Bank of America on a litany of disclosures, settlements with state attorney generals on underwriting at its Countrywide unit - another hotly contested acquisition -- and legal battles with Fannie Mae and Freddie Mac on whether it misrepresented the quality of mortgage bonds it sold both government-sponsored agencies.

Moody's highlights in a Monday note that the shareholder settlement on Merrill Lynch may "be a step in the right direction" for Bank of America, but the ratings agency also notes a litany of liabilities remain for the bank to work through.

" We believe the bank's earnings are under pressure on a variety of fronts, and are likely to remain weak until more of these matters are resolved," writes Moody's credit bank analyst David Fanger, in a Monday report, noting that mortgage repurchase costs may exceed the $15.9 billion that Bank of America has provisioned for as of June 30. Still, Fanger downplays concerns that future writedowns will significantly erode Bank of America's capital base.

Excluding the balance sheet and cash costs that Bank of America may continue to accrue as it tries to resolve crisis-time liabilities, Nancy Bush, the head of research firm NAB Research highlights that it's earnings outlook and competitive positioning remain cloudy.

While Bush says Friday's charge will create a "lost quarter" for the bank, she says future writedowns aren't the biggest issue for Bank of America. "The biggest issue is for Bank of America to get into an interest rate environment where it is not detrimental to be operating one of the largest branch network in the nation," says Bush. Currently, deposit-taking banks are facing pressure on interest rate earnings as the Federal Reserve maintains a policy of near zero interest rates, now expected until 2015.

"When the interest rate environment normalizes, it is extremely important that they have their retail strategy set in place and ready to go. That's the biggest challenge facing them right now without a doubt," says Bush.

For more on why interest rates will color normal bank earnings in coming quarters, see Fed-based earnings destruction may hit hard in 2013.

-- Written by Antoine Gara in New York

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