NEW YORK, Oct. 16 -- Bank of America (NYSE: BAC) pointed investors on Wednesday to adjusted earnings that exclude a $1.2 billion penalty, and even those show profit slipping. Third-quarter net income was $6.9 billion, or 91 cents a share, against $8.3 billion, or $1.04, a year earlier, the bank said in its earnings release.

The charge books the Bank of America Treasury penalty that the Office of the Comptroller of the Currency and the Financial Crimes Enforcement Network announced on Tuesday. It is not tax-deductible and cost 17 cents a share. Exclude it and the bank reports adjusted net income of $8.1 billion and adjusted earnings of $1.08, both non-GAAP figures of management's choosing.

That adjustment flatters less than it sounds. Re...