Jeremy Hobson: We’re about to get quarterly earnings reports from two big banks — Citigroup and Wells Fargo. At Citi, analysts are going to be watching
for weakness in investment banking because of the volatile stock market. At Wells, the focus will be on its portfolio of mortgages.

But as our New York bureau chief Heidi Moore reports, it may be better to look at other indicators to get a good reading on the strength of the financial system.

Heidi Moore: When JPMorgan reported lower earnings last week, the bank told investors it would have trouble making money all the way into 2012.

Chris Whalen: The banks are facing a similar situation to many businesses, which is that revenues are down and profitability as a result is also down.

That’s bank analyst Chris Whalen. He said banks have boosted profits through a neat trick: They moved some of the money that was supposed to cover bad loans into their coffers and called it income.

Whalen: Which is how they made profits and earnings look so good in the first two quarters of this year.

But now the jig is up. The worse the economy gets, the more banks have to protect themselves against loans that may not get repaid.

Big banks are also being hurt by the problems in Europe. So to get the true sense of how America is doing, look at the little banks. Here’s Fred Cannon at Keefe Bruyette & Woods.

Fred Cannon: There’s a lot of regional banks — small community banks — that are doing OK.

The reason: Those banks are lending more money to local businesses and don’t depend on volatile markets.

In New York, I’m Heidi Moore for Marketplace.