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
Now we're waiting to see what
Bank of America
will have to say on Monday.
Hall is the editor of
. Previously, he served as deputy editor and chief innovation officer at
The Orange County Register
and as a news manager at
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
in Fort Wayne, Ind. His work also has been published in a variety of newspapers including
The Wall Street Journal
The New York Times
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.