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Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:

Citigroup 3Q Net Income Falls 23 Percent and Bank of America 3Q Profit Up 41 Percent [AP]

Summary: Citigroup suffered a 23% fall in Q3 net income to $5.51 billion, or $1.10/share, due to a one-off gain last year, and its revenue missed analysts' estimates, hurt by weakness in its capital market business. Citi's operating income still grew 6% to $5.3 billion, and earnings from continuing operations actually grew 6% to $1.06/share -- compared to $0.97 last year -- beating analysts' estimate of $1.03/share. CEO Charles Prince commented, "Our third-quarter results were driven by strength in several businesses, including international revenues, up 11 percent. (However,) results from our capital markets related businesses fell short of my expectations, and I expect improved results from these businesses going forward." Its shares lost 0.64% to close at $49.87. Meanwhile, Bank of America reported a 41% rise in Q3 earnings on a 32% increase in revenue (comparative results for Q305 do not include MBNA), but its shares still faced selling pressure, closing down 1% at $53.26. Net income was $5.42 billion or $1.18/share and would have been $1.22/share excluding merger and restructuring costs, versus $0.95 last year. Both figures beat analysts' estimates of $1.15 polled by Thomson Financial. CEO Ken Lewis commented, "While margins continue to be under pressure due to the continuing flat yield curve and intense competition, we are benefiting from our ability to provide unmatched convenience and innovative financial solutions to our customers and clients." The WSJ reports BofA could surpass Citigroup in stock-market value with about $5.5 billion currently separating them in the number one ($246.6b) and two positions. J.P. Morgan Chase is third at $162.7 billion.
Related links: Citigroup Q3 2006 Earnings Call TranscriptBank of America: Good, Bad and Ugly on Earnings • Jim Cramer was bearish on BofA on yesterday's Real Money Radio show; earlier this month he had bullish comments on Citigroup • BofA Free Online Trade Announcement Crushes Online Brokerage Stocks • Reaction to BofA's free online trade commissions announcement: [1, 2, 3, 4, 5, 6] • Banking on Bank of America
Potentially impacted stocks and ETFs: Bank of America (NYSE:BAC), Citigroup (NYSE:C) • ETFs: iShares Dow Jones US Financial Svcs (NYSEARCA:IYG), iShares Dow Jones US Financial Sector (NYSEARCA:IYF), iShares Morningstar Large Value Index (NYSEARCA:JKF), streetTRACKS KBW Bank ETF (NYSEARCA:KBE), Financial Select Sector SPDR (NYSEARCA:XLF), Vanguard Financials ETF (NYSEARCA:VFH), First Trust Morningstar Div Leaders Idx (NYSEARCA:FDL), WisdomTree High-Yielding Equity (NYSEARCA:DHS)

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Source: BofA, Citi Trade Lower after Q3 Earnings -- Despite BofA's Strong Numbers