New York Citigroup today reported net income for the third quarter 2009 of $101 million, and a $0.27 loss per share, based on an average 12.1 billion shares outstanding2. Third quarter revenues were $20.4 billion. Results included $8.0 billion in net credit losses and an $802 million net loan loss reserve build.
During the third quarter, Citigroup completed its previously announced exchange offers. This resulted in an $851 million after-tax gain, but also in a $3.1 billion reduction in income available to common shareholders, resulting in an incremental net $0.18 loss per share. The reported loss per share also reflected preferred stock dividends, which did not affect net income but reduced income available to common shareholders by $288 million or $0.02 per share.
"This was an important quarter for us. The completion of the exchange offers and the significant actions taken during the last few quarters have created a strong foundation. With strong capital, strong liquidity and a strong franchise, we are looking forward. We continue to execute steadily against our plan, and sustainable profitability remains our primary goal in the near term. While consumer credit trends are improving in international markets, the U.S. consumer credit environment remains challenging," said Vikram Pandit, Chief Executive Officer of Citigroup.
"Our Tier 1 and Tier 1 Common ratios ended the quarter at 12.7% and 9.1% respectively. Our client franchise continues to perform well. Customer deposits grew $28 billion during the quarter, Securities and Banking has produced record year-to-date revenues and Global Transaction Services has produced record year-to-date net income and both had a solid third quarter. We are also seeing increased customer activity in our Global Consumer business."
"Looking forward, we will continue to focus on sustainable profitability and growth, repaying TARP and helping support America's economic recovery."
Citigroup revenues were $20.4 billion, down from $30.0 billion in the prior quarter, which included an $11.1 billion gain from the Smith Barney transaction. Managed revenues3 were $23.1 billion, down from $33.1 billion in the prior quarter. Third quarter managed revenues included a $1.4 billion gain from the extinguishment of debt associated with the exchange offers. Excluding the impact of this gain and the Smith Barney transaction from the prior quarter, managed revenues were down 1% sequentially.
Citicorp revenues were $13.0 billion, down from $15.0 billion in the prior quarter. Managed revenues3 were $14.8 billion, down from $16.6 billion in the prior quarter. Excluding the impact of negative net revenue marks in each quarter, managed revenues were down approximately 6% sequentially due primarily to declines in Securities and Banking revenue.
Citi Holdings revenues were $6.7 billion versus $15.8 billion in the prior quarter, which included the $11.1 billion gain from the Smith Barney transaction. Managed revenues3 were $7.6 billion during the quarter, up 25% from the prior quarter excluding the Smith Barney gain, driven primarily by positive net revenue marks within the Special Asset Pool (see Appendix A). The current quarter's results include a $320 million pre-tax gain on the sale of Citigroup's managed futures business to the Smith Barney JV.
Corporate/Other revenues were $671 million versus a $741 million loss in the prior quarter, primarily due to the $1.4 billion gain on debt extinguishment associated with the exchange offers.
Citigroup's credit costs of $9.1 billion included net credit losses of $8.0 billion, a $0.8 billion net loan loss reserve build and $0.3 billion of policyholder benefits and claims. Total credit costs were down 28% sequentially from $12.7 billion in the prior quarter.
Citigroup's operating expenses were $11.8 billion, down from $12.0 billion in the prior quarter. Quarterly operating expenses were down $3.8 billion from the fourth quarter of 2007, reflecting ongoing reengineering efforts and divestitures of noncore businesses.
Citigroup's tax provision for the quarter was a $1.1 billion benefit reflecting a higher proportion of income earned and indefinitely reinvested in countries with relatively lower tax rates as well as a higher proportion of income from tax advantaged sources.
Discontinued operations net loss was $418 million versus a net loss of $142 million in the prior quarter.
Citigroup's net income was $101 million versus $4.3 billion in the second quarter. Excluding the Smith Barney gain on sale, net income was up $2.5 billion sequentially, benefitting from lower credit costs and the gain on debt extinguishment associated with the exchange offers
Vikram Pandit, Chief Executive Officer, and John Gerspach, Chief Financial Officer, will host a conference call today at 11:00 AM (EDT). A live webcast of the presentation, as well as financial results and presentation materials, will be available at http://www.citigroup.com/citi/fin. A replay of the webcast will be available at http://www.citigroup.com/citi/fin/pres.htm. Dial-in numbers for the conference call are as follows: (877) 700-4194 in the U.S.; (706) 679-8401 outside of the U.S. The passcode for all numbers is 28581886.
Citi, the leading global financial services company, has approximately 200 million customer accounts and does business in more than 140 countries. Through Citicorp and Citi Holdings, Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, and wealth management. Additional information may be found at www.citigroup.com or www.citi.com.
Additional financial, statistical, and business-related information, as well as business and segment trends, is included in a Financial Supplement. Both the earnings release and the Financial Supplement are available on Citigroup's website at www.citigroup.com or www.citi.com.
Certain statements in this document are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors. More information about these factors is contained in Citigroup's filings with the Securities and Exchange Commission.
1 Impact of exchange offers defined as: (Gain on Extinguishment of Debt + Impact of Exchange Offer on Retained Earnings)/Average Common Shares Outstanding = ($851 million + $(3,055) million)/12.1 billion average shares = $(0.18).
2 At September 30, 2009, there were 22.9 billion common shares outstanding, reflecting completion of all stages of the exchange offers.
3 Managed metrics are non-GAAP measures. See Appendix C for additional information on these metrics.
4 Tier 1 Common, Tangible Common Equity and related ratios are non-GAAP measures. See Appendix C for additional information on these metrics.