Miller said that his firm remained "comfortable on the sidelines given our concern that possible litigation expenses could largely offset the core earnings power of the company in the near term," and said that "while our estimates include approximately $300 million per quarter in mortgage repurchase provisions, we believe they could materially increase over time as potential putback risks play out." FBR estimates that Bank of America will earn 95 cents a share in 2013.

Guggenheim securities analyst Marty Mosby rates Bank of America a "Buy," with a price target of $11.50, and said on Oct. 17 after the company announced its third-quarter results that the "current discount to tangible book value represents the potential for future losses from outstanding mortgage-related overhang issues."

Mosby said that "going forward, we have calculated a range for potential remaining aftertax losses of $15-40 billion as compared to BAC's estimated current earnings power of around $10 billion a year," and that "while our best case scenario could be funded with about one year's earnings, the worst case scenario could create a haircut to BAC's tangible book value."

"We project BAC's year-end 2013 tangible book value per share to reach $14.50, which possibly could be unfavorably impacted by our worst case loss expectation of $60 billion pre-tax, or approximately a $3 unfavorable impact to tangible book value per share," Mosby said, adding that "BAC's current 30% discount to tangible book value would suggest that BAC is expected to experience close to $90 billion in future pre-tax losses."

Mosby also estimates that Bank of America will earn 95 cents a share in 2013.

BAC Chart BAC data by YCharts

Interested in more on Bank of America? See TheStreet Ratings' report card for this stock.


-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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