Friday morning headlines

Relief at Citi: The trend of better-than-expected bank results continues this morning as Citigroup posts first-quarter earnings of $1.6 billion, compared with a loss of $5.11 billion a year earlier. But the profit was helped by an accounting change that allowed the bank to record any declines in the market value of their debt as an unrealized gain. From Bloomberg:

"We've seen good trading results from JPMorgan, from Goldman Sachs and now from Citi," said Gary Townsend, chief executive officer of Hill-Townsend Capital LLC. "There is a question about sustainability, but it's clearly a good sign for the sector."

21st Century joins Farmers: The Woodland Hills-based auto insurer, part of the AIG empire, is being purchased by Farmers Insurance Group of Los Angeles, itself a unit of Zurich Financial Services in a $1.9 billion deal. From the LAT:

The combined company -- announced Thursday and expected to be approved by state regulators this summer -- would cover about 1 in 6 of the state's 22.8 million registered private passenger vehicles. Nationally, the expanded company would rank third nationwide behind State Farm and Allstate Corp., Farmers said. The two parts are expected to do business separately under their current names, with Farmers relying on its vast network of agents and 21st Century emphasizing telephone and Internet sales.

Wider loss at Mattel: Weak sales overseas and cautious retail orders were cited in a first-quarter loss of $51 million, compared with a loss of $46.6 million a year earlier. (AP)

Studios deal with YouTube: The Google-owned video service will provide full-length movies and TV shows from Sony, CBS, Lionsgate, Starz and the BBC. Premium content is seen as essential in drawing advertisers; despite its popularity, YouTube is expected to lose $470 million this year. From the NYT:

Overall hundreds of films and thousands of TV shows will be offered. In Sony's case, some 15 films initially will be made available to YouTube, which is redesigning to segregate so-called user-generated content from premium content, hopefully to attract advertisers who have shied away from the site because of its free-wheeling subject matter. The films will all be free, and they will be library films, not recent releases. They will not be hosted by YouTube; instead, users will be redirected to studio sites that would serve up the films as well as ads. By hosting the films themselves and serving the ads, studios retain control, collect traffic and avoid sticky copyright problems.

Danny Pang update: The OC-based money manager is stepping aside as head of his investment firm while federal civil and criminal officials began to look into allegations of impropriety. The most serious allegation was that PEMGroup was part of a Ponzi scheme. (WSJ)

Gas prices settle down: An average gallon in the L.A. area is $2.325, which is half a cent less than last week, according to the Auto Club. Prices had been on the rise for some time.

Chateau Marmont stars: Director Sophia Coppola will be shooting her next film at the iconic hotel. In recent years, it's been a popular address for out-of-town celebrities. (Variety)