Financial Stock Winners and Losers: Citigroup

(Updated with final stock price moves throughout.)

Bank stocks ended Friday's session mixed, with Citigroup ( C) and Bank of America ( BAC) among the losers after both reported quarterly results.

Citi, soon to be 34% owned by the government, reported a surprising second-quarter profit of $4.27 billion, or 49 cents a share, swinging from a year-ago loss of $2.5 billion, or 55 cents a share. The current quarter's results benefitted from an $11.1 billion pre-tax gain, or $6.7 billion after-tax, associated with the joint venture to combine its Smith Barney wealth management unit with Morgan Stanley's ( MS) brokerage operations.

Citi's second-quarter profit number of 49 cents a share was not comparable to the Thomson Reuters average estimate of a loss of 37 cents a share, as analysts typically do not include the gain, and the bank didn't provide quarterly results excluding the gain from the Smith Barney transaction.

BofA, meanwhile, reported second-quarter earnings of $3.2 billion, or 33 cents a share after deducting preferred dividends, down from the year-ago quarter but ahead of the Thomson Reuters average estimate of 28 cents a share. However, revenue of $32.77 billion was slightly below Wall Street's forecast of $33.1 billion.

In a research note Friday, FBR Capital Markets analyst Paul Miller questioned what BofA considers as core pre-tax, pre-provision earnings. Miller said the bank provided a slide for its investor presentation that derived core pre-tax, pre-provision earnings of $14.2 billion, although he said that estimate excludes two charges he included in his estimate of core earnings.

The two charges Miller refers to are $1.6 billion for counterparty valuation adjustment on derivative liabilities and $1.3 billion for a capital markets disruption.

" We believe that excluding these charges could be giving BofA too much credit," Miller said. "Ultimately, we believe the true earnings power of the business is arguably somewhere in between our $11 billion estimate and the $14 billion BofA estimate."

Citi shares were a penny lower to close at $3.02. The stock is up more than 16% this week, although it is down 55% in 2009 and more than 83% in the last year. Meanwhile, BofA lost 28 cents, or 2.1%, to $12.89. Those shares have climbed 8.5% this week and are only down 8.5% in 2009. However, BofA is down roughly 50% over the last 12 months.

Goldman Sachs ( GS) and JPMorgan Chase ( JPM) both reported strong earnings earlier in the week. Goldman shares were unchanged for the day while JPMorgan advanced 2.1%.

JPMorgan shares benefitted from a research note from Keefe, Bruyette and Woods analyst David Konrad, who upped his earnings estimates for 2009 and 2010 following the bank's "solid" second-quarter report. Konrad increased his 2009 estimate to $1.72 a share from $1.19 and his 2010 estimate to $2.70 a share from $2.55.

"Overall we view this as a strong quarter characterized by record operating revenues, partly offset by continued credit headwinds," Konrad wrote. "Although we believe credit may continue to deteriorate, given JPMorgan's strong reserve and capital position we anticipate less of a need to build reserves going forward."

In other earnings news, BB&T ( BBT) reported second-quarter net income of $121 million, or 20 cents a share, which was slightly below the Thomson Reuters consensus estimate of 21 cents.

BB&T's earnings were impacted by a $47 million writedown associated with the company's repayment of $3.1 billion to the Treasury Department, along with $14 million in accrued dividends on June 17, when the company exited the Troubled Asset Relief Program, or TARP.

Following the report, Fitch Ratings downgraded the long-term and short-term issuer default ratings of BB&T. Analysts lowered the long-term rating to A+ from AA- and the short-term rating to F1 from F1+. Shares of BB&T slid by $1.39, or 6.2%, to close at $20.94.

Away from earnings, embattled lender CIT Group ( CIT), teetering on the brink of bankruptcy, said it is in discussions with potential lenders to secure financing.

It was reported Thursday that regulators weren't going to bail out CIT. The lender needs about $5.6 billion to avoid a bankruptcy filing, according to a report Thursday by bond research firm CreditSights.

Reuters reported Friday that CIT was in talks with JPMorgan and Goldman Sachs for short-term financing, citing a source close to company. CIT shares surged 29 cents, or 70.7%, to 70 cents. On Thursday, shares plummeted 75% on bankruptcy worries.