Citi Posts Surprise Profit

Common Citigroup shareholders  took a loss of $0.18 per share this quarter, which is narrower than estimates. However the company said it was actually profitable in the quarter to the tune of $1.6 billion and that the loss was due to the conversion of preferred shares to common.

Here’s how it explains what happened:

“The $0.18 loss per share reflected the reset in January 2009 of the conversion price of the $12.5 billion convertible preferred stock issued in a private offering in January 2008. This did not have an impact on net income but resulted in a reduction to income available to common shareholders of $1.3 billion or $0.24 per share. Without this reduction, earnings per share were positive. The loss per share also reflected preferred stock dividends, which did not impact net income but reduced income available to common shareholders by $1.3 billion.”

The following key items come straight from the release:

  • Total revenues of $24.8 billion were up 99% compared to the first quarter of 2008, with sequential improvement across all regions.
  • Net interest margin of 3.30% increased 50 and 8 basis points versus the first and fourth quarter 2008, respectively.
  • Operating expenses were down $3.7 billion, or 23%, since the first quarter 2008.
  • Headcount reduced by approximately 13,000 since the fourth quarter 2008 to 309,000 and approximately 65,000 since peak levels.
  • Tier 1 capital ratio was approximately 11.8% versus 7.7% in the first quarter 2008.
  • Deposit base remained relatively stable at $763 billion compared to the fourth quarter 2008, despite the challenging environment. Deposits declined 8% since the first quarter 2008, due to the sale of the German retail banking operations and the impact of foreign exchange. U.S. deposits increased $8 billion sequentially and $28 billion year-over-year.

Like the other banks, the company saw a huge win in its trading profit, though it continues to show real weakness in basic areas like credit cards and retail banking.

Investors the news. Shares are up over 10% pre-market.

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