BMO throws another curve

Earnings season begins again for banks, and first up on the docket is the one I own. Bank of Montreal.

You remember BMO, don't you? They're the bank that announced, at the end of April, they expected to lose $450-million thanks to some dodgy natural gas trades. The stock got hammered. Then it turned into $680-million. The stock got hammered further still.

Today's number? $671-million. Only, that's not a commodities loss. That's a quarterly profit.

It seems the bank's other divisions did so well that they were more than able to shoulder BMO Capital Markets' loss, and actually increase quarterly profit by 17% overall.

The net result? BMO's stock goes from about $72 before the fiasco to under $70 today, despite the fact that quarterly profits turned out to be higher than they were when everyone thought they were a quiet, boring little risk-averse bank.

BMO essentially created their own headache, cleaned it up and took the hit in public perception, despite the fact that they actually ended up looking better, on paper, than they were before. There's a lesson in there somewhere about how efficient our market really is. But I'm not sure what.