Goldman Posts Q109 Profit, Plans TARP Repayment

Goldman Sachs Group (GS) on Monday posted net earnings of $1.81bn — or $3.39 per share — for Q109, up considerably from the $4.97 per share net loss reported in Q408. Strong mortgage performance drove the $6.56bn net revenue at the company’s fixed income and currencies trading unit, contributing to a total $7.15bn net revenue at Goldman’s trading and principal investments business. “Results in mortgages were higher compared with a difficult first quarter of 2008,” Goldman executives said in the earnings statement. “During the quarter…mortgages included a loss of approximately $800m (excluding hedges) on commercial mortgage loans and securities.” The company announced moments after it released its earnings statement that it would offer $5bn in common stock for public sale. Goldman received $10bn from the Treasury Department in an Oct 28, 2008 capital injection through the Troubled Asset Relief Program (TARP) and is subject to a “stress test” to determine the company’s need for further government aid. “After the completion of the stress assessment, if permitted by our supervisors and if supported by the results of the stress assessment, Goldman Sachs would like to use the capital raised [through the common stock sale] plus additional resources to redeem all of the TARP capital,” company executives said in a press release. Goldman would join five financial institutions that, on March 31, repaid a combined $353m to the government through stock repurchases, according to TARP transaction reports from the Treasury. Morgantown, W.V.-based Centra Bank, a private firm, returned $15m; New York, N.Y.-based Signature Bank (SBNY) returned $120m; Evansville, Ind.-based Old National Bancorp (ONB) returned $100m; Novato, Calif.-based Bank of Marin Bancorp (BMRC) returned $28m; and Lafayette, La.-based Iberiabank Corp. (IBKC) repurchased all of the Treasury’s $90m in stocks. Many banks and financial institutions like Bank of America Corp. (BAC) have said they intend to repay TARP funds as quickly as possible, with some professing they will not participate at all, indicating that what began months ago as a flight to government aid has now become a fight against strict compensatory regulations associated with TARP funding. Write to Diana Golobay at [email protected]. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.