The Goldman Sachs Group Inc. indicated its second quarter was a difficult one that included significantly lower results in mortgages, but it still was able to produce $1.85 diluted earnings per common share.
The company had generated $0.78 diluted earnings per common share under generally accepted accounting principles in the second quarter of last year and $1.56 earnings per common share during the first quarter of this year. But the company noted that when one-time events are excluded, diluted earnings per common share during the second quarter of last year were $2.75 and earnings per common share during the first quarter of this year were $4.38.
Goldman CFO David Viniar said during the company’s earnings call that its mortgage results “reflected the negative impact of asset price decline, reduced market liquidity and greater divergence between our cash positions and corresponding hedges, particularly in nonagency products.”
Goldman, which was trading between $128 and $129 per share late Tuesday afternoon, had come close to regaining the ground lost since its earnings release at press time. Its stock had been lower, between $126 and $127 per share, after earnings were initially released on Tuesday morning. The Dow rallied more than 200 points Tuesday afternoon.
All major banks' credit default swaps spreads had been widening prior to Tuesday's earnings releases, with Goldman's CDS in a relative midrange that was tight of spreads for B of A but well wide of JPMorgan, Diana Allmendinger, director at Fitch Solutions and author of a report on CDS trends, told this publication.
