After nearly two years in the financial wilderness, what was once America’s largest bank is making a profit again, reporting its “best overall quarter” since the financial crisis began, with a net income of $1.6 billion for the first three months of 2009, Chief executive Vikram Pandit said in a company report released Friday.

Pandit said “we are pleased with our performance,” also noting revenues of nearly $25 billion.

In the boom times of early 2007, Citigroup's then chief executive Charles Prince said the bank had been “executing on all” of its priorities, generating $6.23 billion for the second quarter of that year on revenues of $26.6 billion.

As the year progressed, however, Prince said the third quarter turned “disappointing” as the bottom fell out of the subprime mortgage and credit markets. Citi's income fell to $2.2 billion for the quarter while revenue was at $22.4 billion.

Prince retired in November, taking the “honorable course” as he acknowledged the “size of recent losses” in Citi’s mortgage-backed securities business. For the rest of 2007 and deep into 2008, losses mounted while revenue continued to languish.

The U.S. government has been pumping billions of dollars into Citigroup since late 2008 in the form of loans and investments to stabilize the company, leading to nationalization fears which devalued the company’s stock to less than $1 per share, from the mid $50 range it had held before the crisis.

Shareholders have yet to see any profit from recent restructurings, however, as the company’s earnings per share were still negative in the latest quarter, though improved from three months ago at the end of 2008 when Citi reported a net loss of $8.29 billion with $5.6 billion in revenue.

“Despite the challenges of the past year, I remain confident that Citi will emerge from the financial crisis as one of the strongest franchises in financial services, Pandit said.

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