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Bank of America, Wells Fargo, Citi all beat on reserve release

Yahoo Finance's Brian Cheung, Brian Sozzi, and Julie Hyman break down the earnings reports for the major banks.

Video Transcript

JULIE HYMAN: And of course, our Brian Cheung is helping us break down the numbers as well. As you know, again, this sort of thematic stuff that seems to be emerging from the banks, Brian Cheung, is that we are getting loan growth that isn't really recovering, even as investment banking is going gangbusters at a lot of these guys. Give us a tour, would you.

BRIAN CHEUNG: Well, all four of these large banks are reporting today. And they all beat earnings estimates on both the top and bottom line, so I guess that's it, right? But I guess you guys give me the big bucks to dive in a little bit deeper. So let me give you a little bit of a tour. Kicking things off in Charlotte, North Carolina with Bank of America, revenues coming in $22.8 billion earnings per share on the bottom line of $0.85.

The big story here is really wealth management. They had record client balances in their Merrill Lynch business. And in fact, cheaper costs helped it bring in a record $1.2 billion in net income. Expense control also a big story, they actually had 2,200 fewer people on the headcount on a quarter over quarter basis. That saves them money. And that also-- they also got a boost from a $1.1 billion release in reserves that they had set aside for the pandemic. Shares up about 2 and 1/2 percent in pre-market trading.

But let's hop on a plane over to San Francisco, California, where Wells Fargo also reported earnings before the bell this morning. And on the top line, revenue coming in for the bank, $18.8 billion. On the bottom line, $1.17, again, beating on both the top and bottom line. They also released a lot of money when it came to the allowance for credit losses that they worried they were going to have to use in the depths of the pandemic. They released about $1.7 billion of that.

The loan pipeline for Wells Fargo essentially unchanged quarter over quarter. But it's really been a tough situation. Keep in mind, Wells Fargo is still under that Fed's asset cap. And their margins were impacted this quarter by a $250 million civil money penalty. That came from the bank regulator, the OCC, for being too slow on resolving those reputational issues that you'll recall bubbled up in 2016 and 2017.

But let's head back East to New York City down in Greenwich Street in the financial district, where Citigroup also reported earnings this morning. They had revenues of $17.1 billion earnings per share on the bottom line of $2.15. They really went sideways quarter over quarter when it came to revenue. And it's not that good when you consider expenses actually ticked up by 3% on a quarter over quarter basis. Shares of Citi, though, up about 1% as the CFO Mark Mason telling reporters, just a few minutes ago, that they did have the best quarter for M&A in a decade. And they also released some reserves. They had about $1.5 billion in reduction in their allowance for credit loss.