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Bank of America: When Will It Hit $10: Poll

Stocks in this article: BAC WFC

NEW YORK ( TheStreet) -- Bank of America (BAC)'s stock price has had a tremendous run of late.

Since bottoming at $4.92 in December, the shares are up 33% through Thursday's close.

No question there is a lot to be bullish about. The stock trades at just a fraction of book value, so even allowing that a rival like Wells Fargo (WFC) runs circles around it, you're paying roughly one third the price.

The bank still has a trillion dollars in deposits. In a normal environment--let's say a 6% 10-year bond and a 3% fed funds rate -- Bank of America can make super safe loans at 7% interest while paying just 3% for the privilege. When you've got a trillion dollars in deposits, that's a lot of free money. And don't forget all the annoying fees it brings in on top of that. Even if the bank decided to be super nice and cut those fees in half--tons more free money flowing into the operation.

Then take something like its U.S. credit card operation. Every credit or debit card transaction involving a Bank of America-branded card--Bank of America takes a nice cut. On credit cards, its 2%.

Bank of America still has a world class investment banking and brokerage operation following its acquisition of Merrill Lynch in 2008. And it remains one of the four biggest lenders in the U.S., so it can still use its balance sheet to get in on a large corporate merger, leading to advisory and underwriting fees.

So you're worried about mortgage exposure? And well you should be. Countrywide, which Bank of America acquired in 2008, was probably the single-most aggressive mortgage lender during the boom years. Even if they hadn't played fast and loose with the rules, that would be bad news. Think of all those cookie--cutter houses sitting out there in the California desert, in Arizona, in Florida. Bank of America owns an awful lot of them.

But did Angelo Mozilo and the gang at Countrywide play fast and loose with the rules? You bet they did. Bank of America has already paid out or set aside $35 billion to deal with the legal fallout, according to Citigroup analyst Keith Horowitz.

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