Dick Bove has bad news on Bank of America earnings

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Bank of America's second-quarter earnings outlook just got a lot worse thanks to a potentially huge litigation bill, according to analyst Dick Bove.

Bove, the vice president of equity research at Rafferty Capital Markets, now expects the second-largest U.S. bank by deposits to suffer a loss of 7 cents a share, down markedly from his initial estimate for a 32-cent profit. (FactSet consensus is 33 cents.)

The reason: Recent press reports indicating that BofA faces a settlement with regulators that will require it to pay between $10 billion and $13 billion. That's because of fallout from the financial crisis, in which the bank, along with Countrywide Financial and Merrill Lynch, both institutions it purchased during the crisis, issued some $640 billion in subprime mortgages.