Michael Jordan once said, "You have to expect things of yourself before you can do them."

If that statement holds true for Citigroup (NYSE: C) shareholders, we could be in for one heck of a slow recovery.

New York-based Citigroup reported a first-quarter loss of $5.11 billion, or $1.02 per share, erasing almost the exact amount it made in the first quarter last year, when it recorded $5 billion, or $1.01 per share, in net income. Revenue fell 48% to $13.22 billion. Reacting to the news, shares skipped ahead nearly 7% Friday morning.

Writedowns topped nearly $16 billion in the quarter, adding to the $18 billion lopped off last quarter. Citigroup's running tab for damage stemming from the credit meltdown is steadily approaching $40 billion, or about the same amount Microsoft bid to purchase Yahoo!. That's quite a big "oops."

The latest round of write-offs includes $6 billion of pre-tax writedowns and credit costs on subprime exposures, $3.1 billion in leveraged loans (often used to fund corporate buyouts), $1.6 billion of alt-A mortgage products, and $1.5 billion in losses linked to bond insurance companies like Ambac (NYSE: ABK) and MBIA (NYSE: MBI).

CEO Vikram Pandit plans to sell tens of billions of dollars worth of leveraged-buyout loans and mortgage securities to free up cash and rebuild Citi's sliding capital cushion. Earlier this week, General Electric (NYSE: GE) took $13.4 billion worth of leasing assets off Citi's hands. Last November, Citi had to pony up a hefty chunk of equity to sovereign wealth funds, which injected it with a much-needed lifeline when the severity of the credit crunch showed its ugly side.

Like so many financial institutions lately, Citi plans on saying goodbye to 9,000 employees this quarter, adding to the 4,200 who were shown the door in the past three months.

What lies ahead for this is not-so-pretty Citi? Like neighbors Merrill Lynch (NYSE: MER), Morgan Stanley (NYSE: MS), and Goldman Sachs (NYSE: GS), among others, investors will need to grapple two forces over the next year: Not knowing how much worse the credit crisis will get, and how much of the bad news is baked into shares. After Citi's dismal-at-best first-quarter performance sent shares soaring, it's safe to say a tremendous amount of the downside has already been priced into investors' expectations.

Is the worst behind us? Unfortunately, that's anyone's guess. Part of the reason behind the dramatic plunge of financial stocks over the past 10 months is attributed to their black-box balance sheets. Citi has an incredibly diverse range of businesses under its roof, which should help mitigate some of the pain.

But only time will tell what lies ahead for banks that, over the past decade, bit off far more than they could chew.

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Fool contributor Morgan Housel thinks bank stocks have a rough road ahead. He doesn't own shares in any of the companies mentioned in this article. The Fool has a disclosure policy.