Are we out of the woods yet? Some of the biggest banks have posted surprisingly good first-quarter earnings, leading to speculation that economic recovery may be just around the corner. While it’s too soon to tell if this will help put the economy on a more solid footing,
1. Bank of America shocked the Street with a better-than-expected net income of $4.2 billion, but was helped in part by its sale of China Construction Bank shares and the creative accounting of assets acquired in its takeover of Merrill Lynch. It also revealed higher loan losses, credit-card charge-offs, and nonperforming assets.
2. Wells Fargo’s company-record $2.58 billion quarterly profit was overshadowed by the money it set aside to cover future loan defaults, which increased by more than a third.
4. Goldman Sachs trumpeted a $1.8 billion gain, but moving the company’s fiscal year end from November to December enabled it to magically erase $1.5 billion off its books.
5. Citigroup was in the black for the first time in more than a year, but its $1.6 billion profit was dwarfed by credit write offs that exceeded 4.5 times that amount.
6. PNC, suddenly the fifth largest US bank after its takeover of National City, beat expectations with its second-best quarter ever ($460 million profit), but was buoyed by slashed dividends and saw its commercial loan portfolio deteriorate.