This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Banks Have Not 'Turned a Corner'

NEW YORK (TheStreet) -- Wall Street was upbeat in mid-April because the country's four largest banks (Bank of America (BAC), JPMorgan Chase (JPM), Citibank (C), and Wells Fargo (WFC)) all reported what Wall Street considered "turning the corner" earnings and all the CEOs except Bank of America's Moynihan were positive on the immediate future. The data, however, do not lead to such conclusions.

Profits rose at two of the big four. Citibank's profit rose to $4.43 billion in the first quarter of 2010 from $1.59 million in the first quarter of 2009. Believe it or not, Citibank's profits were the highest reported among the group despite the fact that they have been selling off many of their most lucrative businesses, like the Smith Barney brokerage unit. At JPMorgan, profits rose to $3.33 billion from $2.14 billion in the first quarter of 2009. At Bank of America and Wells Fargo, profits fell. The $2.5 billion profit at Wells Fargo was 16% lower while Bank of America's $3.2 billion profit was lower by 25%.

Sources of Profit

The basic source of profits at all four of the institutions was their proprietary trading operations (75% at JPMorgan, more than 50% at Bank of America, and 40% at Wells Fargo). No wonder there is such a furor over the proposed Volcker rule (restrictions on proprietary trading) in the financial reform legislation.

The health of the industry is often measured by top line revenue growth. Using this measure would not lead to the conclusion that the industry is "healthy," as at three of the four, top line revenue fell from year earlier levels. At Citibank, top line was down 5.8%. It was the lowest in four quarters at Wells Fargo, and it fell 11% at Bank of America. Only at JPMorgan did top line rise (5.0%).

Asset Quality

As measured by asset quality, the basic banking function was still in the doldrums. Citibank said its charge-offs were higher. At JPMorgan, defaults were at an all time high and mortgage defaults continued to rise. The $131 million loss in JPMorgan's retail banking unit was much lower than the $474 million profit a year earlier. Only credit card losses of $303 million showed improvement over the $547 million loss of the first quarter of 2009. That's not a lot of evidence to indicate that "this would be the makings of a good recovery" as suggested by Jamie Dimon, JPMorgan's CEO.

> > Bull or Bear? Vote in Our Poll

Stock quotes in this article: BAC, JPM, C, WFC 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,501.65 -12.72 -0.08%
S&P 500 1,875.39 -4.16 -0.22%
NASDAQ 4,126.9670 -34.4910 -0.83%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs