Logos for Wachovia, Bank of America, SunTrust and Citibank
Logos for Wachovia, Bank of America, SunTrust and Citibank - 
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Kai Ryssdal: It's tempting. We know that. You hear the earnings statement and you say...oh, that's pretty good. Or...wow, they lost how much? It's called...the number. And on it can ride huge swings in share value. But the fact of the matter is that it's a trick. A misdirection. Because the things you really need to know take some digging. Big banks are a case in point. Citigroup reported second quarter earnings today. Up 18 percent. Wachovia celebrated a 24-percent jump in profits. Yesterday we heard bullish news from Bank of America and SunTrust. But Marketplace's Amy Scott reports a closer look shows some cracks in the system.

Amy Scott: Citigroup, Bank of America, Washington Mutual, J.P. Morgan Chase. All of these banks said this week they've had to set aside more money to cover losses from things like mortgage delinquencies and unpaid credit card bills. Soaring trading profits and investment banking fees have compensated for the big banks' losses.

But analyst Frank Braden with Standard and Poors says smaller banks are feeling the pinch. Profits at Columbus, Ohio-based Huntington Bank are down 28 percent from this time last year.

Frank Braden: Several years ago these companies took the opportunity to get in on the mortgage business and reap the rewards of that, and now because they don't have the diversified revenue base that a company like J.P. Morgan and Citigroup has, theya€™re getting hit the hardest, and dona€™t have any place to hide from that.

The big banks won't escape unscathed. Some of them have also invested in complicated bonds that are backed by subprime mortgages. In the past few weeks many of these securities have turned out to be worth far less than people thought.

Christopher Whalen follows banks for the research firm Institutional Risk Analytics. He says the industry as a whole is in for a rough ride.

Christopher Whalen: You're gonna have a lot of banks caught in between two immovable objects. One is the rising cost of dealing with delinquencies. And on the other hand they're not gonna have a lot of great growth opportunities, the way they did with the mortgage boom.

Investors seem worried enough about credit losses to overlook Citigroup's and Wachovia's overall profits. Shares in both banks fell today.

In New York, I'm Amy Scott for Marketplace.

Follow Amy Scott at @amyreports