Banks' Loan Loss Reserves. BW online has a commentary about how banks adjust their loan-loss estimates to manage earnings.

Last year the banks had an easy way to juice their profits. All they had to do was allocate a little less money to loan-loss reserves -- the money they set aside to cover bad debt. As the economy has improved and defaults have slowed, many decided they didn't need as much in reserve as they did in 2003, and presto, their earnings per share would rise a few cents.

Do a little digging, and the current numbers don't look so great. Detroit's Comerica Inc. (CMA ) had one of the largest drops in its loan-loss reserves relative to total assets, according to a study of large banks' fourth-quarter earnings done by SNL for BusinessWeek. Not only did Comerica fail to add money in the fourth quarter, it also extracted $21 million from the pot. That gave it an extra $98 million in income, or 57 cents a share, that it didn't have last year. The bank beat analysts' earnings estimates by 10 cents. Comerica Chief Credit Officer Dale Greene says muted loan growth, coupled with major improvement in credit quality, justify the move.

Leaking the News. MSNBC reports that there was increased volume in the traded options of P&G and Gillette just prior to the announcement of the merger.

Well before the investing public learned of the $57 billion takeover of Gillette by Procter & Gamble, traders apparently got wind of the deal: Options-trading volume in both companies spiked more than fourfold on Jan. 27, before news of the marriage was announced.

The action, which led to one-day profits of more than 500% on some of those trades, has raised more than a few eyebrows on Wall Street.

On Jan. 28, the day after the merger news hit the wires, prices on the Gillette call options jumped 510% to 620%, rewarding buyers with phenomenal one-day gains, says Johnson. Traders who bought the Procter & Gamble puts didn't do as well, but those puts still doubled in value in the two trading days after the deal was announced.