Bank of America (NYSE: BAC) wrapped up this round of big-bank earnings on Friday, reporting losses of $0.16 per share for the quarter and $0.37 per share for the full year. Those losses would have been gains if not for goodwill impairment charges.

Goodwill impairment? Who is Will, and if he's good, why is he impairing Bank of America's earnings? As it turns out, accounting rules allow a company to carry the amount paid in excess of an acquisition's asset value on the books as goodwill. Each year, the goodwill needs to be tested for impairment. There's a lot of flexibility in valuing acquired operations. Typical factors would be things such as cash flow or savings compared to expectations or fair market value for the acquired operation. If the valuation doesn't hold up -- if the acquisition's no longer worth as much as it originally seemed to be -- the goodwill is impaired, and earnings take a hit from the markdown.

In addition to the goodwill impairment, Bank of America had one-time (hopefully) charges of $3 billion to settle mortgage put-backs with Fannie Mae and Freddie Mac, plus another $1.1 billion of reserves for possible future mortgage put-backs.

The earnings report wasn't all bad news. The bank reported declines in 30-day consumer loan delinquencies, a trend that's been continuing for seven quarters. Both consumer and commercial charge-offs are also showing signs of improvement. My Foolish colleagues Morgan Housel and Alex Dumortier found similar improving credit trends at Citigroup, JPMorgan, Wells Fargo and US Bancorp.

In short, there's still good news in this ugly quarter, and most of the bad news is from one-time or short-term problems. Combine that with cheap valuation and improving credit quality, and Bank of America should be a buy, right? Before answering, let's see how the valuation compares to some big-bank peers.

Bank

PE
(TTM)

PE
(2011 estimate)

Price-to-Tangible Book Ratio

Bank of America NM 9.82 1.15
Citigroup (NYSE: C) 14.05 10.43 1.07
JPMorgan Chase (NYSE: JPM) 11.44 9.69 1.52
Wells Fargo (NYSE: WFC) 18.97 11.47 1.81

Source: Yahoo! Finance, The Motley Fool, and Capital IQ, a division of Standard & Poor's. TTM = trailing 12 months. NM == not meaningful.

If we can be sure that Bank of America's goodwill impairment and mortgage put-back issues are over, the bank looks attractive. Bank of America may be an appealing investment, but the other big banks don't have the combination of last year's losses, further mortgage risk, and a relatively new CEO at the helm. I think the market should be discounting those risks, but it isn't. Foolish investors interested in adding a big bank should take a close look at others in the group before jumping in to Bank of America.

More banking Foolishness: