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Bank of America Is Halfway Home

With home prices continuing to rise and with so much progress being made working through nonperforming mortgage loans, Bank of America expects its annual Legacy Asset Servicing (LAS) expenses to decline by $7.2 billion through the end of 2015, from second-quarter levels.

Because of the expected normalization of Bank of America's earnings, analysts polled by Thomson Reuters on average expect to see the company's earnings grow from a consensus estimate of 92 cents a share this year, to $1.38 in 2014 and to $1.62 in 2015.

The consensus estimates don't show anywhere near that sort of earnings growth potential for the rest of the "big four" U.S. banks, which also include Wells Fargo, JPMorgan Chase and Citigroup (C - Get Report).

Based on 2014 earnings estimates, it would seem that Bank of America's expected earnings improvement is "baked-in." At Wednesday's market close, the shares traded for 10.5 times the consensus 2014 EPS estimate of $1.36. Shares of Wells Fargo -- the strongest earnings performer among the "big four in the aftermath of the credit crisis -- closed at $41.50 Wednesday and traded for 10.3 times the consensus 2014 EPS estimate of $4.02.

Shares of Citigroup closed at $49.60 Wednesday and traded for 9.1 times the consensus 2014 EPS estimate of $5.46. The cheapest name among the "big four" is JPMorgan, with shares trading for just 8.5 times the consensus 2014 EPS estimate of $6.11, when they closed Wednesday at $51.87.

There's no question that investors are applauding Brian Moynihan for a job well done, and after expenses are finally normalized, Bank of America can once again focus on growing its business.

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 TheStreet.com 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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