Banking, finance, and taxes
New Regulatory Communications Slap Citi Earnings and Ratios Lower
Published:
Last Updated:
Citigroup Inc. (NYSE: C) has just used the children’s game excuse of “Do Over!” for the third-quarter earnings. Citi announced after the close that it is lowering its previously reported third-quarter 2014 financial results. What seems to be happening is a rapidly developing regulatory situation, and this would be deemed material information ahead of its formal 10-Q filing.
This effort is not just lowered preliminary earnings. It lowered book value and capital ratios.
Citigroup said the lower earnings are due to a $600 million increase in legal accruals. Citi said, “The increase resulted from rapidly-evolving regulatory inquiries and investigations, including very recent communications with certain regulatory agencies related to previously-disclosed matters.”
The financial impact lowers Citi’s third-quarter 2014 net income from $3.4 billion to $2.8 billion. As this was disclosed in the 10-Q filing, it now takes earnings per share down to $0.88 from $1.07, and it lowers the firm’s Tier 1 Capital Ratio to 10.66% from 10.74%. Also, the firm’s book value was lowered to $67.11 from $67.31 per share.
This is one of those situations that we are calling a restatement, although technically it might be considered a formal restatement only if the company had already filed its 10-Q and then had to go back and adjust that filing.
ALSO READ: 8 Companies That Just Destroyed Investor Prospects
Citigroup shares closed up almost 1% at $53.15, against a 52-week range of $45.18 to $55.28, and shares were down 2% at $52.05 in the after-hours reaction. Stay tuned.
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.