For JPMorgan Chase, legal costs continue to be a millstone.
After striking a series of big settlements, JPMorgan, the nation’s biggest bank reported fourth-quarter earnings on Tuesday that were weighed down by $1.1 billion in legal expenses. The earnings of $5.28 billion, 7.3 percent lower than a year earlier, amounted to $1.30 a share.
To settle a barrage of government legal actions over the last year, JPMorgan has agreed to penalties that now total $20 billion.
The legal costs shaved 27 cents a share from its earnings, the bank said (though there were other one-time gains and charges as well). For JPMorgan shareholders, those expenses are a reminder of the bank’s troubled relationship with Washington last year.
In the fourth quarter alone, JPMorgan felt the effect of a $2 billion penalty for failing to alert authorities to Bernard L. Madoff’s huge Ponzi scheme, a $4.5 billion settlement with a group of investors over mortgage claims and a $13 billion agreement with the government over the bank’s sale of shaky mortgage securities in the years leading to the financial crisis.
“It was in the best interests of our company and shareholders for us to accept responsibility, resolve these issues and move forward,†Jamie Dimon, the bank’s chief executive, said in a statement on Tuesday.
Shareholders greeted the quarterly results with trepidation; the bank’s shares fell about 2 percent in premarket trading.
JPMorgan braced for its legal issues in the third quarter, when it set aside about $9.3 billion for legal payouts, leading to a loss for the three-month period. That legal tab was even larger than the bank’s $7.3 billion compensation expense for the quarter.
In the fourth quarter, JPMorgan set aside $800 million for legal payouts, a decline from the period a year earlier, when it set aside $1.2 billion for legal expenses.
