By Stephen Gandel
April 15, 2014

FORTUNE — If it wasn’t for Citigroup’s bad bank, Citi’s results wouldn’t look so good.

On Monday, Citi (C) announced that its earnings in the first quarter were up 3.5% from a year ago to $3.9 billion. Take out one-time items, and the bottom line was $4.1 billion. Citi’s investors have been feeling pretty down recently, battered by the one-two punch of fraud in its Mexican unit and then the Fed.

So it’s not surprising that those investors, who were expecting earnings to be down 13%, would be more than a little relieved by the better-than-expected earnings. Shares of Citi were up nearly 4% on Monday. But investors may have been cheering too soon.

Back in early 2009, Citi’s then CEO Vikram Pandit unofficially split the bank in two, Citicorp and Citi Holdings. The companies would remain combined, but Pandit made it clear that he would like shareholders to view the divisions separately. Citicorp was part of the company that mattered, made up of all the businesses that Citi still wanted to be in, i.e. the “good bank.” Citi Holdings was made up of all the leftover junk from the financial crisis — subprime mortgages and other derivatives that Citi now wanted to be rid of. Pandit told investors to focus on Citicorp, and ignore the bad bank.

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Michael Corbat, who took over as Citi’s CEO a year and a half ago, has adopted Pandit’s hey-don’t-look-over-here approach to financial reporting and the “two” banks.

Oddly, though, while Citi’s woes overall have been growing, things over at the bad bank have been getting better. In the first three months of the year, Citi Holdings’ bottom line was up 65% from a year ago.

Citi Holdings is small and has shrunk since it was first set up, as Pandit originally promised. It accounted for just $1.5 billion of Citi’s $20 billion revenue in the first three months of the year. But it can make a big impact when it comes to Citi’s bottom line.

In fact, it appears all of Citi’s earnings growth in the first quarter came from its bad bank. Strip out Citi Holdings, and Citi’s earnings in the first quarter actually fell by a little more than 8%, instead of rising nearly 4%.

Shortly after the financial crisis, it was assumed that the banks would get a big boost over the next year or so from things being less bad than they were during the financial crisis. But in a few years, earnings would have to come from actual growth, and improvements in their core business of lending. Five and a half years later, it appears Citi is still just doing less worse. That ain’t good.

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