There's No Shame in Loving Bank of America

NEW YORK (TheStreet) -- With 35% stock gains over the past twelve months, which exceeded the 29% gains of the S&P 500, Bank of America (BAC) isn't a "reclamation project" anymore-- at least not in the figurative sense.

The bank has fought a long battle toward recovery, including a pretty significant restructuring plan that reduced its workforce by 10% over the past 18 months. This took place as management fixed concerns surrounding the bank's debt. Those hard moves have bolstered BofA's balance sheet. It seems, however, that despite the ample positive signs of progress, some analysts still have a hard time giving management the credit they deserve.

The Street is also discounting that management has shed some, if not most, of BofA's low-performing assets and loans. Not only have these decisions improved management's ability to return value to shareholders, some analysts overlook the fact that the bank scores extremely well on its stress tests, or what is known in the industry as Basel 3, a global regulatory standard on bank capital ratio requirements to prevent further "too big to fail" situations.

[Read: Wells Fargo Looks to Stay Ahead of the Curve]

This is another reason to believe that -- despite 35% gains in the trailing 12 months -- the shares should no longer be perceived as high risk. That doesn't mean I'm blinded to the fact that Bank of America,  relative to (arguably) better-run money centers like Wells Fargo (WFC), still has plenty of legacy operational issues it needs to resolve. It's nonetheless pointless to continue to nitpick about what I believe to be meaningless details.

On Wednesday, the bank will report its fourth-quarter and year-end results. And management will have another opportunity to earn some much-deserved respect. The Street will be looking for 26 cents in earnings per share on revenue of $21.15 billion. While this does represent a year-over-year revenue decline of 2.3%, it's worth noting that not only does this match expectations for JPMorgan Chase (JPM), but the expected 2.3% decline is also (relatively) more optimistic than the 6% decline that was projected for Wells Fargo.

That said, given the deficits this bank has had to overcome, I wouldn't put so much weight on the revenue metric. I've said this same thing regarding Wells Fargo and JPMorgan. What investors should instead focus on are things like fee income growth, which has been relatively unimpressive over the past couple of quarters. The bank's profits and market share rely on its ability to grow fee income.

The good news is that management is aware of this situation. Despite BofA having posted a decline in global fee pools in the October quarter, the bank was still able to rake in a record $1.3 billion in fees, which was still good enough to grow share against JPMorgan Chase (JPM) and Citigroup (C), two titans that at one point surpassed BofA's investment banking business.

To the extent that management can maintain this sort of momentum, investors should be encouraged that BofA's profit growth has only just begun. This is even with the expected decline in revenue.

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