Bank of America and Citigroup - Credit Now Giveth

Continuing what is likely to be *the* theme of big bank earnings season, Citigroup (NYSE:C) and Bank of America (NYSE:BAC) both reported "yeah, but" quarters on Friday. As in, "yeah ... they beat the analyst guesses, but they only did so because of big reserve releases." When you look a little deeper at the ongoing run-rate in the businesses, there are still ample reasons to be cautious and concerned. 

The Quarters that Were
In many respects, Citi and B of A had very similar quarters. The operating revenue were down in the double digits for both Citi and B of A. Both companies exceeded the average analyst estimate, but did so almost solely on the back of releases of loan loss reserves (in other words, the companies are now estimating lower future loan losses, so that gets recognized as income). Interestingly, both companies had similar net reserve releases - Citi reported $1.5 billion, while B of A reported $1.45 billion. 


For the full piece, please go to:
http://stocks.investopedia.com/stock-analysis/2010/Bank-Of-America-And-Citigroup---Credit-Now-Giveth-BAC-C-PNC-USB-WFC0720.aspx