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The Week Ahead: Bank of America must prove its worth

BofA must prove its worth

If your New Year's resolution was to take a risk and buy stock in Bank of America, you have been richly rewarded. Shares of Bank of America Corp. have shot up more than 60 percent since the start of the year.

That's the best among the 30 stocks making up the Dow Jones industrial average. In fact, it's been twice as profitable to be a Bank of America shareholder this year when compared to the next best stock in the Dow: JPMorgan Chase & Co.

On Thursday, when Bank of America reports first-quarter earnings, we'll find out if the company has deserved its big stock rally. The bank has been battling against billions of dollars of sour mortgages it inherited when it scooped up Countrywide Financial during the housing collapse.

After spending last year selling assets and raising money to provide it with a bigger cushion against loans going bad, Bank of America now is expected to grow its business.

Already, 13 cents of every dollar Americans have deposited in banks across the country are deposited at Bank of America. Growing its retail banking business would require raising fees. Last November, it floated the idea of charging customers to use their debit cards. That was quickly dropped in the face of consumer revolt.

More recently, Bank of America has turned its sights toward international expansion. Only one-fifth of the company's income comes from outside the U.S., while more than half of JPMorgan's revenue comes from its international business.

Bank of America's sharp stock rally this year comes after shareholders suffered a 60 percent loss last year. This year's stock snapback hasn't made any long-term owner whole. It's up to Bank of America now to show how it plans to earn back their trust.

Tom Hudson, anchor and managing editor of "Nightly Business Report," can be followed@HudsonNBR.