Yes, there's still the residue from the infamous London Whale trade where the bank lost more than $6 billion in complicated maneuvers. There was a link to Bernie Madoff -- JPMorgan had to pay $1.7 billion to settle accusations the bank ignored warning signs of Madoff's Ponzi scheme.
The bank has paid dearly for its aggressiveness. In the January quarter, legal expenses and settlement bills totaled $21 billion. This was more than JPMorgan's GAAP earnings for 2013.
In the process, CEO Jamie Dimon has lost his title as the smartest guy in the room.
Despite all of this, the bank had arguably one of the best quarterly performances anyone could have expected. Investors have not lost sight of what really matters.
And Jamie Dimon never lost track of the importance of a strong balance sheet. Assuming that 2013 was the peak of these sorts of charges and related costs, JPMorgan's future still remains bright. But investors want confirmation.
With first-quarter earnings results due out Friday, JPMorgan will look to build on its strong January performance and continue apologizing with improved earnings. The Street will be looking for $1.41 in earnings per share on revenue of $24.55 billion. Both metrics are expected to decline. Over the past 30 days earnings estimates have dropped 2 cents. There isn't a surprise there.
In January, JPMorgan reported GAAP earnings of $17.9 billion, down from a reported $21.3 billion the year before. Adjusted earnings came in at $23.3 billion. Meanwhile, revenue were essentially unchanged at just below a $100 billion.
In absolute terms, these results wereimpressive. JPMorgan (then) boosted its balance sheet over $2.4 trillion, up more than 2%. On Friday, investors should want to see JPMorgan get back to business. This includes showing strong growth in key areas such as mortgage loan origination and overall loan growth.
This is the surest way to make the Street forget about past shenanigans and give investors the confirmation they want. But investors shouldn't ignore strong signs that have already been issued, including the fact that JPMorgan recently passed the Federal Reserve's Comprehensive Capital Analysis and Review.
Following the Fed's "stress test," JPMorgan subsequently raised its quarterly dividend by 5 cents to 30 cents and announced a $15 billion stock repurchase program. Banks in poor financial health don't enact these types of initiatives. They certainly don't do it if they don't believe in their future.
The way I see it, JPMorgan's reputation can only improve from this point forward. If there was any negativity, it's already priced into the stock. Management has said and has done all of the right things. And with the stock trading at just 9 times 2015 estimates, these shares remain a bargain. On the basis of improved earnings and cash flow fair market value should reach $65 by the second half of the year.
At the time of publication, the author didn't hold any stock in the companies mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.