RBS preferreds erase early losses, end strong as company posts profit; Citigroup eyed

By Stephanie N. Rotondo

Phoenix, Oct. 31 – It was slow going in the preferred stock market Friday, even in Royal Bank of Scotland Group plc paper as the company reported a third-quarter profit.

Initially, that swing to a profit didn’t do much to help the Edinburgh, Scotland-based bank’s preferreds, which were mostly weaker in early trading. However, they finished the day with a firmer tone.

The 5.9% noncumulative guaranteed trust preferred securities (NYSE: RBSPE) closed up 6 cents to $23.90. At mid-morning, the preferreds were off 6 cents at $23.78.

For the quarter, the bank reported a profit of £896 million, which compared to a net loss of £828 million the year before. However, the results were weighed down as the company set aside £780 million to cover any fines and settlements that may result from a currency market investigation.

Citigroup Inc.’s preferreds were also moving higher following the bank’s own amended earnings release late Thursday.

The 5.8% series C noncumulative preferreds (NYSE: CPC) closed up 4 cents to $24.20. The 7.875% fixed-to-floating rate trust preferred securities (NYSE: CPN) improved 2 cents to $26.62.

The7.125% series J fixed-to-floating rate noncumulative preferreds (NYSE: CPJ) gained a penny to end at $27.06.

Citigroup put out numbers on Oct. 14, but amended those figures on Thursday to reflect a $600 million increase in legal costs.

The company initially posted net income of $3.4 billion, but changed that to $2.8 billion. That pushed the earnings per share down to 88 cents from $1.07.

Analysts had predicted earnings per share of $1.05.

Overall, it was a strong day for the preferred space, as the Wells Fargo Hybrid and Preferred Securities index closed up 12 basis points.

American Realty weak again

American Realty Capital Properties Inc.’s 6.7% series F cumulative redeemable preferreds (Nasdaq: ARCPP) fell again on Friday, as investors continued to react to news out Wednesday regarding a Securities and Exchange Commission investigation.

The preferreds fell 32 cents, or 1.43%, to $22.02 on Friday.

On Wednesday, American Realty said in a regulatory filing that its financial statements dating back to 2013 could not be relied upon due to intentional errors and other errors that were intentionally left incorrect.

On the heels of that news, the company also disclosed that chief financial officer Brian Block and chief accounting officer Lisa McAlister had resigned from their posts.

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