Bank Investors, This Is Going to Hurt

The Fox-Pitt analysts perceive the third quarter as "an inflection point" for Citi as the "focus shifts from writedowns to credit costs," according to the industry note. Still "[w]e would continue to recommend patience as both Citi's issues and the macro environment will surely take some time to turn around."

WaMu

WaMu, before it was seized by regulators, ironically said in early September that it expected its third-quarter provision for credit losses to be $4.5 billion -- $1.4 billion less than the provision it took in the prior quarter. The company expected total loan-loss reserves to rise from $8.5 billion at June 30 to approximately $10.3 billion at the end of the third quarter.

But while the thrift had added less to its reserves for losses on residential mortgages, WaMu was still beefing up its reserve levels for credit card losses.

JPMorgan Chase

Analysts expect JPMorgan Chase to post a loss this quarter on the heels of the WaMu and Bear Stearns acquisitions.

JPMorgan Chase has been one of the few banks that have managed to keep its head above water in these difficult times. The stalwart bank agreed in September to pay the Federal Deposit Insurance Corp. $1.9 billion for WaMu's deposits, assets and other liabilities, after completing a deal to buy Bear Stearns this spring in yet another government-backed deal.

The New York-based bank said it will take writedowns of $31 billion against WaMu's $242 billion average loan portfolio. The writedowns "primarily represents our estimate of remaining credit losses related to the impaired loans," it said.