Bank of America Earnings Seen Muted

NEW YORK ( TheStreet) -- Bank of America ( BAC) faces dim expectations ahead of Wednesday's release of its first-quarter earnings, following relative weakness from other banks.

Most of Bank of America's turnaround depends upon the U.S. housing recovery, which has lately shown some signs of slowing.

Results from other banks so far have been "lackluster," according to FBR Capital Markets analyst Paul Miller, who expects the same thing from Bank of America on Wednesday.

In a brief email exchange Tuesday, the analyst noted loan growth has been flat and margins have tightened, though trading revenues have been a bright spot for Bank of America competitors.

Indeed, Bank of America CFO Bruce Thompson told analysts on the bank's fourth-quarter earnings call that Bank of America took more trading risk in the fourth quarter, as measured by a metric known as Value at Risk. He predicted that strategy would pay off with higher revenue in the first quarter.

Nonetheless, a housing turnaround is more important to Bank of America's prospects and it appears unlikely the lender will fare much better than its peers in the quarter.

Wells Fargo ( WFC), for example , saw first-quarter mortgage originations down 13% from the fourth quarter, while its pipeline of new mortgages fell 9%. Earnings in its mortgage business fell by $274 million, or 9% vs. the previous quarter and 3% vs. the first quarter of 2012.

JPMorgan Chase ( JPM) also saw a drop in mortgage earnings, which CFO Marianne Lake attributed to increased competition from other lenders among other factors.

For Bank of America, Evercore analyst Andrew Marquardt expects an 8.5% decline in mortgage fees vs. the previous quarter on tighter margins and reduced origination volumes, as well as increased costs tied to legal disputes over mortgage backed securities -- an issue that has dogged Bank of America far more than any other large lender since the crisis.

Nonetheless, Marquardt believes Bank of America will show market share gains in originating new mortgages. He also expects the bank to take fewer write-downs related to the selloff of much of its mortgage servicing business.

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