Goldman Sachs (GS) reported Tuesday first-quarter 2011 profits of $2.74 billion, down 21% from the same time a year ago, after it bought back Warren Buffett’s preferred stock in the investment bank and bought back $1.47 billion of its own shares.
Net revenues totaled $11.89 billion as of March 31 compared with $12.78 billion in a year ago and $8.64 billion last quarter. Earnings per share of $1.56 were well below the $5.59 EPS earned in Q1 2010 and $3.79 in Q4 2010, but nearly double the $0.81 of earnings that analysts had expected.
However, Goldman’s EPS would have totaled $4.38 if the bank hadn’t paid off its $1.64 billion redemption of preferred stock. Buffett’s Berkshire Hathaway bailed out Goldman to the tune of $5 billion during the worst of the financial crisis in 2008, and this quarter’s one-time hit reflects part of the cost of the loan. In addition, Goldman last month said it would pay back $5.64 billion to Berkshire Hathaway.
Goldman’s Q1 2011 earnings statement shows that the bank has left the worst of the financial crisis behind and is positioning itself to get back in the business of making money without having to deal with any overhanging debt. Overall, the bank’s results were mixed for the quarter.
“We are pleased with our first-quarter results,” said Chairman and CEO Lloyd Blankfein (left) in a statement. “Generally improving market and economic conditions, coupled with our strong client franchise, produced solid results. Looking ahead, we continue to see encouraging indications for economic activity globally.”