FORTUNE -- If it wasn't for Citigroup's bad bank, Citi's results wouldn't look so good.
On Monday, Citi (C) announced that its earnings in the first quarter were up 3.5% from a year ago to $3.9 billion. Take out one-time items, and the bottom line was $4.1 billion. Citi's investors have been feeling pretty down recently, battered by the one-two punch of fraud in its Mexican unit and then the Fed.
So it's not surprising that those investors, who were expecting earnings to be down 13%, would be more than a little relieved by the better-than-expected earnings. Shares of Citi were up nearly 4% on Monday. But investors may have been cheering too soon.
Back in early 2009, Citi's then CEO Vikram Pandit unofficially split the bank in two, Citicorp and Citi Holdings. The companies would remain combined, but Pandit made it clear that he would like shareholders to view the divisions separately. Citicorp was part of the company that mattered, made up of all the businesses that Citi still wanted to be in, i.e. the "good bank." Citi Holdings was made up of all the leftover junk from the financial crisis -- subprime mortgages and other derivatives that Citi now wanted to be rid of. Pandit told investors to focus on Citicorp, and ignore the bad bank.
Michael Corbat, who took over as Citi's CEO a year and a half ago, has adopted Pandit's hey-don't-look-over-here approach to financial reporting and the "two" banks.
Oddly, though, while Citi's woes overall have been growing, things over at the bad bank have been getting better. In the first three months of the year, Citi Holdings' bottom line was up 65% from a year ago.
Citi Holdings is small and has shrunk since it was first set up, as Pandit originally promised. It accounted for just $1.5 billion of Citi's $20 billion revenue in the first three months of the year. But it can make a big impact when it comes to Citi's bottom line.
In fact, it appears all of Citi's earnings growth in the first quarter came from its bad bank. Strip out Citi Holdings, and Citi's earnings in the first quarter actually fell by a little more than 8%, instead of rising nearly 4%.
Shortly after the financial crisis, it was assumed that the banks would get a big boost over the next year or so from things being less bad than they were during the financial crisis. But in a few years, earnings would have to come from actual growth, and improvements in their core business of lending. Five and a half years later, it appears Citi is still just doing less worse. That ain't good.
Michael Corbat is shifting from running Citi's bad bank, to running one that is still in not great shape.
FORTUNE -- Citigroup's new CEO Michael Corbat was an ivy league football star, who turned heads in the Harvard cafeteria.
"He was extremely well rounded," says Andrew Doctoroff, a fellow Harvard student, who wrote about the then All-Ivy offensive lineman in The Harvard Crimson in 1982. "He kept his athletic prowess in perspective."
Even MOREStephen Gandel, senior editor - Oct 16, 2012 4:34 PM ET
Vikram Pandit's surprise departure from Citigroup.
FORTUNE -- Here's the lead from today's NY Post story on Citigroup's third quarter earnings:
After five years of languishing in the doghouse, Citigroup's boss, Vikram Pandit, may be enjoying a stint in the sun.
Maybe they meant he would be riding into the sunset...
Citi (C) this morning announced that Pandit has stepped down as CEO and a member of the Citi board, effective immediately. He will MOREDan Primack - Oct 16, 2012 8:23 AM ET
Revenue in a number of Citi's I-banking businesses plunge 40% and the possibility of layoffs is growing.
UPDATE 7/18 10:30 AM
FORTUNE -- Wall Streeters are probably happy to have the second quarter behind them. The question is whether the third will be any better.
More evidence for just how bad the investment banking business is emerged from Citigroup (C). Overall, the bank's profits, which Citi reported Monday morning, were better than expected. MOREStephen Gandel, senior editor - Jul 16, 2012 1:33 PM ET
In a first, a major bank may be forced by shareholders to cut the pay of its CEO.
FORTUNE - It took a 14,999,999% pay increase to finally put the "say on pay" regulations in the Dodd-Frank bank reform to the test on Wall Street.
Shareholders at Citigroup (C) on Tuesday voted against giving CEO Vikram Pandit a $15 million raise for 2011. He had made $1 the year before. It's the MOREStephen Gandel, senior editor - Apr 17, 2012 3:13 PM ET
Wall Street's bad bonus year did not extend to Citigroup's c-suite.
FORTUNE -- Vikram Pandit is officially no longer Citi's $1 man. Whether he should be a $15 million one is the question.
Yesterday, the bank disclosed that it paid its CEO nearly $14.9 million in cash and options in 2011. That was up from a dollar the year before. Back in 2009, Pandit said he would take a salary of $1 until MOREStephen Gandel, senior editor - Mar 9, 2012 4:58 PM ET
The message from our nation's financial elite is pretty clear: They just don't get it.
By John Cassidy, contributor
FORTUNE -- Just two months after taking over Zuccotti Park in lower Manhattan, Occupy Wall Street has mushroomed into a national movement, with offshoots in cities from Miami to Seattle. With winter coming on and some local police departments moving to clear out the demonstrators, it isn't clear where the protest goes from MORENov 4, 2011 5:00 AM ET
CEO Vikram Pandit discusses potential in emerging markets, the dark days of 2009 -- and his willingness to talk with Occupy Wall Street.
FORTUNE -- Next year, Citigroup will reach a historic milestone: its 200th birthday. That makes it one of the oldest banks in the country and, fittingly for an enterprise established two days before Congress declared war against the British in 1812, one that has survived many a crisis. In MOREOct 24, 2011 5:00 AM ET
Vikram Pandit believes the country is not headed back into a recession and he also has a message for Occupy Wall Street: I see your point.
FORTUNE -- Citigroup CEO Vikram Pandit says we're not headed back into a downturn.
"I don't expect the U.S. to go into a recession," Pandit said Wednesday morning during a wide-ranging interview with Fortune managing editor Andy Serwer. "It may not grow as much as we MOREScott Cendrowski, writer - Oct 12, 2011 10:34 AM ET
Citi's CEO says he'd meet with Occupy Wall Street protesters.
Fortune this morning hosted a breakfast interview with Citigroup (C) CEO Vikram Pandit, who said that the bank will report continued profitability for Q3 and that it is on track to hit its own metrics for future success (shocking, I know). He also claims to have not watched the HBO adaptation of Too Big To Fail.
Near the end, Pandit was asked for MOREDan Primack - Oct 12, 2011 10:27 AM ET
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