Citi Beats Third-Quarter EPS Estimates

Citi earned $2.2 billion, or 7 cents a share, in the third quarter.
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Additional information added regarding Citi's dividend policy and a statement from executives regarding the foreclosure crisis.

NEW YORK (

TheStreet

) --

Citigroup

(C) - Get Report

shares were steadily rising during morning trading hours as third-quarter earnings came in better-than-expected.

Citi reported $2.16 billion, or 7 cents a share, for the third quarter compared to $101 million, or a loss of 27 cents a share in the year-earlier quarter, related to the completion of exchange offers that made the U.S. Treasury Department its largest stakeholder. The government has since sold off a significant portion of that stake and plans to exit Citi's stock completely by the end of the year.

On a continuing operations basis, third-quarter earnings were 8 cents a share. Revenue came in at $20.7 billion. Analysts, on average, were expecting earnings of 6 cents a share on revenue of $21.15 billion.

"Achieving our third straight quarter of positive operating earnings is continued evidence that we are successfully executing our strategy and we believe we have put in place all the elements for continued profitability," CEO Vikram Pandit said in a statement. "We remain completely focused on serving our clients with excellence and capturing the growth potential inherent in the core businesses within Citicorp, while reducing the size of Citi Holdings as quickly as economically practical."

Pandit added during an investor conference call that the bank will begin returning capital to shareholders in 2012, with the approval of regulators.

Citi exectives also to the opportunity on the conference call to argue that the bank's foreclosure process was sound and that a review of its mortgage systems found no "systemic issues."

"As we have been saying publicly, we continuously view our document handling procedures and we believe the integrity of Citi's foreclosures process is sound," said CFO John Gerspach.

Citi took an after-tax charge of $435 million ($800 million before taxes) on the September-announced sale of

Student Loan Corp.

(SLC)

to

Discover Financial

(DFS) - Get Report

.

Citicorp's net income was $3.5 billion and revenue was $16.3 billion. Citi Holdings revenue was $3.9 billion, with a net loss of $1.1 billion. Citi Holdings assets totaled $421 billion, down 9% sequentially. Including the Student Loan Corp. sale, which has not yet been completed, Citi Holdings assets would have declined $75 billion, or 16% to $390 billion. The unit represents 20% of Citi's firmwide assets.

Similar to

JPMorgan Chase

(JPM) - Get Report

, Citi's earnings were helped by credit improvement.

Citi's net credit losses inched lower by 4% to $7.7 billion, the five consecutive quarter of declines, the bank said. Citi also recorded $2 billion of reserve releases for loan losses and unfunded lending commitments, it added.

Still, revenue was somewhat off for the quarter. One area where Citi experienced lower revenue was in its securities and banking arm, where revenue fell 6% from the prior quarter to $5.6 billion. The bank attributed it to "sharply" lower lending revenue due to losses on its credit default swap hedges compared to gains in the prior quarter as well as weaker fixed income markets revenue. However, Citi experienced growth in equity markets revenue and investment banking, it noted.

Separately, Citi said its book value per share was $5.60, up from $5.33 in the prior quarter. Tangible book value per share was $4.44, up from $4.19 per share.

Citi will hold a conference call with analysts at 11am EST.

Shares were most recently rising 3.3% to $4.08 on 242 million shares traded.

--Written by Laurie Kulikowski in New York.

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Laurie Kulikowski

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