When I first started buying shares of Income Investor recommendation JPMorgan Chase (NYSE:JPM) around the start of the year, it was with the understanding that it was a work in progress. I didn't think the present business was being run particularly well, but I had confidence that the new CEO would eventually straighten things out.

So far, I'm encouraged. The first quarter wasn't all that great, but I'm starting to see some of the initial signs of improvement that I was hoping for. Revenue in the quarter rose 8%, as good results in investment banking, wealth management, and treasury services offset less robust top-line performance in retail banking and credit cards. On the investment banking front, I wish that JPMorgan had been able to post GoldmanSachs-esque (NYSE:GS) results, but you have to be realistic -- JPMorgan isn't Goldman.

Earnings comparisons between the quarters are a fair bit foggier. Even factoring in a charge last year for WorldCom litigation, earnings were better. And while some of that improvement was due to benefits from lower bankruptcies in the credit card business, there was also offsetting costs for things like stock compensation. All in all, I'd say that the performance was a little better than I'd hoped, but there's certainly more work to be done.

Looking ahead, I expect JPMorgan to largely be a play on improving return on equity. As it stands today, the company's ROE is pretty pathetic, and I view that as a clear exhibit that the company hasn't been well run in the recent past. But if new efforts work out as planned, and the company can close the gap between itself and other firms like Citigroup (NYSE:C), Bank of America (NYSE:BAC), and Wachovia (NYSE:WB), the rewards will be pretty significant (as will the cash flow generated).

That's exactly what I'm banking on, so I'm holding onto these shares. And I certainly don't mind collecting a decent dividend while I wait. There will probably be fits and starts along the way, as well as debatable decisions like the recent acquisition of some retail branches from Bank of New York (NYSE:BK), but the advantage of buying a stock that you think is cheap is that you can take a long-term view and wait for things to develop.

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Bank of America is a Motley Fool Income Investor recommendation.

Fool contributor Stephen Simpson owns shares of JPMorgan Chase but has no financial interest in any other stocks mentioned (that means he's neither long nor short the shares).