Remember when banks said to ignore "one-time, non-recurring" legal fees because they are going away? Well, JPM yesterday showed they aren't. But it was Bank of America today which was slammed with the latest whopping $5.3 billion pretax litigation charge, which pushed its EPS once again into the red.
But wait, there's great news: the loss of $0.01 is really a $0.42 non-GAAP adjusted profit if one "adds back" the $0.43 in litigation charges.
Which is great for ostriches who like having their heads shoved in the sand. The only problem is that addbacks usually require charges to be one-time, non-recurring. Instead as the chart below shows Bank of America's litigation and legal charges are not only very much recurring, but as a cost of doing business, they keep increasing quarter after quarter:
And imagine how bad it would be if BofA hadn't taken out yet another $407MM in loan loss reserve releases, bringing BofA's total reserve releases in the past three years to a massive $13.6 billion:
So whether one treats BofA as a criminal, racketeering organization or not aside, the bigger problem is that the bank's already deplorable trading results from Q2 declined even more in the 3rd quarter as volumes crashed, showing that banks desperately need volume to make money since they clearly can't rely on rising rates to boost their Net Interest Margin:
Not surprisingly, BofA is hardly betting on a "recovery" - its full time employees declined yet again, hitting a multi-year low ofonly 212,400. Somehow we doubt those terminated will ever see the BLS rolls.
Finally, see if you can spot the real-estate recovery in the following chart.
Stick a fork in US banks.
Here is the full presentation