NEW YORK — Despite strong growth in revenue, profit at Citigroup Inc. fell 11 percent in the first quarter as the nation's largest financial institution took a charge to cover a massive restructuring aimed at improving earnings.

Still, it beat Wall Street expectations, sending its shares up strongly on the New York Stock Exchange.

Meanwhile, the nation's fourth-largest bank, Wachovia Corp., reported that its first-quarter profit rose 33 percent on higher lending income and the acquisition of Golden West Financial Corp.

The reports released Monday were the first in a week packed with bank and brokerage earnings results that were expected to set the tone for the year. Profits were anticipated to be harder to come by as rising interest rates make it more difficult for some of the banks' corporate and consumer customers to pay back loans, including mortgages.

While some lenders who provide mortgages to people with poor credit have been failing, there are no signs of a significant spillover to money center banks. Even the big banks are bracing for growing credit problems, however.

Citigroup, which is headquartered in New York, and Wachovia, of Charlotte, N.C., increased their provisions for loan losses in the first quarter. Both held down the growth of expenses — a typical strategy in a weakening credit environment.

PRIVATE INVESTORS BUY SALLIE MAE

WASHINGTON — A group of investors announced plans Monday to buy Sallie Mae, taking the nation's largest student lender private in a $25 billion deal that comes as some regulators call for tougher standards and lower federal subsidies for the $85 billion college loan industry.

Private-equity firm J.C. Flowers & Co. and three other investors will pay $60 per share for the Reston, Va.-based SLM Corp., commonly referred to as Sallie Mae.

The sale price represents a nearly 50 percent premium for Sallie Mae's stock, which had been sagging before takeover rumors emerged late last week.

SLM shares traded up more than 17 percent on the New York Stock Exchange after the buyout was announced Monday.

J.C. Flowers and private-equity firm Friedman Fleischer & Lowe will invest $4.4 billion and own 50.2 percent of the company. Bank of America and JPMorgan Chase each will invest $2.2 billion and each will own 24.9 percent. The buyers will also provide Sallie Mae with $200 billion in backup financing.

John Oros, a managing director at J.C. Flowers, said the firm was drawn by Sallie Mae's stock price, which had fallen to around $40 per share before takeover talks began.

STUDENT LENDING COMPANY AGREES TO SETTLEMENT

ALBANY, N.Y. — A third lending company agreed to a multimillion dollar settlement in an expanding probe of the student loan industry, New York Attorney General Andrew Cuomo said Monday, as he announced that 13 additional lenders have been hit with subpoenas or letters from his office.

The investigation has now touched companies that issue 80 percent of all student loans in the United States, according to Cuomo spokesman John Milgrim. Five subpoenas and eight letters seeking lending data were sent Friday.

The lenders that received subpoenas include: College Loan Corp., Access Group, Sun Trust, Edfinancial, and Regions Bank. The companies sent letters seeking documents include: National City of West Palm Beach, Fla.; Citizens Bank, PNC of Pittsburgh, US Bank, Bank of America, Wells Fargo of California, JP Morgan Chase of New York, and Wachovia Corp. of Charlotte, N.C.

In the letters, Cuomo is asking the companies to retain records and turn over data about their practices.

On Monday, Cuomo announced a $2.5 million settlement with San Francisco-based Education Finance Partners, the third lending company to settle with the attorney general this month.

Education Finance Partners, in addition to paying the largest loan-related settlement yet, also agreed to adopt Cuomo's code of conduct regarding the student loan business.

ALLSTATE MUST PAY KATRINA VICTIM $2.8M

NEW ORLEANS — Allstate Insurance Co. must pay a Louisiana man who lost his home to Hurricane Katrina more than $2.8 million in damages and penalties, a federal jury decided Monday in a case that hinged largely on whether it was wind or storm surge that wiped out his house.

The jury found Allstate — which claimed most of the damage was due to storm surge, an event not covered in its policy — did not pay Robert Weiss enough money to cover wind damage to his home. The verdict included a $1.5 million penalty for the company's failure to pay the claim quickly enough.

Allstate lawyer Judy Barrasso said in closing arguments that Katrina's winds were not strong enough to do the damage. She said Weiss already had received more than $400,000 in insurance payments — including $350,000 in federal flood insurance.

The lawyer for the Weisses, whose home was in the Slidell area on the north shore of Lake Pontchartrain, told the jury in closing arguments that the house was too high above sea level to have been destroyed by Katrina's storm surge.

EX-DOW CHEMICAL ADVISER DENIES INVOLVEMENT

A 37-year veteran of Dow Chemical Co. who spent 10 years as chief financial officer before being fired as a senior adviser denied the company's accusation that he was involved in a clandestine buyout effort directed at the chemical giant.

Andrew Liveris, Dow Chemical's chairman and chief executive officer, said Thursday that J. Pedro Reinhard, who retired as the Midland, Mich.-based company's CFO in October 2005, and Romeo Kreinberg, a divisional executive vice president, were dismissed with the board of directors' approval.

They were accused of holding buyout talks without the board's knowledge.

Reinhard still is involved with the company as a director because only shareholders, not management, can remove a director from the board, but a step was taken in that direction on Monday.

STRONG SALES FOR MATTEL

LOS ANGELES — Mattel Inc. reported lower first-quarter profit Monday but beat Wall Street revenue expectations with strong sales, despite a decline in demand for Barbie dolls in the U.S. The world's largest toy maker said earnings fell to $12 million, or 3 cents per share, from $30.2 million, or 8 cents per share, during the same period of 2006.

Analysts surveyed by Thomson Financial were expecting a loss of 5 cents per share.

Revenue, meanwhile, climbed 19 percent to $940.3 million, including a 3 percent benefit from currency exchange rates, compared with $793.3 million in the year-ago period.

Domestic sales rose 10 percent, while international sales jumped 29 percent, the company said.