JPMorgan Chase reported a $5.4 billion profit in the first quarter of 2012, or $1.31 per share, beating the $1.18 estimates by analysts surveyed by Bloomberg.

It's great news for the first quarter of the year for the investment banking beheamoth. But the good news seems unlikely to last, at least on one front.

Looking at the letter to investors, litigation regarding legacy securities remains a large concern  (that includes Bear Stearns and Washington Mutual for those of you keeping score). Securities claims continue to come at the bank from soured investors. The $2.7 billion in litigation cost realized this quarter is more than double what was seen this time last year.

CEO Jamie Dimon appears nonplussed. "These plaintiffs face a long and difficult road, and, as a result, litigation over these issues could take many years," the investor letter states. "Nonetheless, we have set aside significant reserves to handle these exposures."

This really ought to be considered the Kelly defense, in reference to the former Bank of New York Mellon CEO Robert Kelly who left the bank back in September 2011. At the time of his departure, his reason for leaving was left to conjecture. Today, it's considered directly related to Kelly's underestimation of costs facing the custodial bank.

So will the cost of litigation end up becoming materially important to JPM investors, too? Well, Tangent Capital analyst Christopher Whalen said he would have liked to ask this question to Dimon during Friday's investor presentation, but was not allowed to do any more than listen.

Whalen used to rate the strength of banks while he was at Institutional Risk Analytics, a firm he co-founded, but now that he's back to being an investment banker the logic behind barring his questions seems somewhat counterintuitive. Unless, of course, JPMorgan has something to hide. You know, maybe, something about that pesky growing cost of litigation?

At this point, though, it's all pretty much conjecture.

jgaffney@housingwire.com