Today's Outrage: Zilch for Citi's Common Shares

Citi's $1.6 billion first-quarter profit is meaningless for common shareholders, who are left with a loss of 18 cents a share after all the money went to preferred shareholders like the government.
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Citigroup

(C) - Get Report

posted first-quarter profit of $1.6 billion versus a loss the year before, but before you celebrate you should check what kind of stock you own.

If you're a preferred shareholder, say like the U.S. government, then you're in the money!

If you're a common shareholder, then you get nothing. Actually, you get less than nothing. You get a loss of 18 cents a share.

After cutting out $1.3 billion to reset the conversion price of preferred stock issued in January 2008, paying another $1.3 billion in preferred dividends and booking a cost of $53 million related to participation in the government's Troubled Asset Relief Program, Citigroup's profit turned into a net loss of $966 million.

That's not the headline number, but it's the real number. Citi can talk all it wants about posting a net income, but the reality for ordinary shareholders is the company lost money. That is the bottom line.

Now I'm not saying there's nothing to like about Citi's earnings. The $9.5 billion in revenue and $2.8 billion in profit from the institutional clients group in the first quarter is encouraging, especially considering the bank posted a $6.4 billion loss from those operations the year before. That's the bright spot.

There are also some dark spots, such as the $13.1 billion in write downs, which include almost $7 billion related to bad subprime and Alt-A mortgages and $3 billion for "highly leveraged finance commitments."

All in all, Citi is still a long way from the record net income of $5.9 billion it posted in 2007. So common shareholders will have to keep waiting to get their reward for sticking with the bank.

But if you're a desperate optimist looking for good news about the health of the financial sector, there are glimmers of hope in Citi's earnings, which follow positive profit news yesterday from

JPMorgan Chase

(JPM) - Get Report

and from

Wells Fargo

(WFC) - Get Report

last week.

Now we're waiting to see what

Bank of America

(BAC) - Get Report

will have to say on Monday.

Hall is the editor of

TheStreet.com

. Previously, he served as deputy editor and chief innovation officer at

The Orange County Register

and as a news manager at

Bloomberg News

in Frankfurt, Amsterdam and Washington, D.C. As a reporter, he covered business and financial markets, worked in both print and television in the U.S. and Europe, and conducted in-depth investigative coverage at

The Journal-Gazette

in Fort Wayne, Ind. His work also has been published in a variety of newspapers including

The Wall Street Journal

,

The New York Times

and

International Herald Tribune

. Hall received a bachelor�s degree in journalism and political science from The Ohio State University and has taken graduate management science courses at Boston University.