We previously analyzed and reported on Citigroup Inc.‘s (C) Q1 results. Overall, we were pleased that the company is making steady progress in its recovery. When investing in companies, we believe that investors should view their potential investments as a collection of exposures. We agree that investors should view Citigroup Inc. as two companies consisting of the following exposures:

  • Citicorp: Consists of the businesses that Citigroup has decided to retain. These businesses include Consumer Banking, Corporate and Institutional Banking and Transaction Services. Citicorp generates 96% of its revenue from Citicorp operations.
  • Citi Holdings: Consists of assets that Citigroup is willing to let run-off or try to sell. The goal with Citi Holdings assets is to minimize losses and expenses with these operations.

This analytical framework we believe allows us to have a prudent and rational opinion of our investment in Citigroup . We have no illusions that the company has gone from being one of the bluest of the blue chips to a turnaround project. We believe that while it has not caught up to the big bank leaders JPMorgan Chase & Co. (JPM) and Wells Fargo & Co.(WFC), we believe that it is taking positive steps to catch up. We believe that a rational, dispassionate investor should be able to see the changes going on with Citigroup and that this isn’t Charlie Prince’s Citigroup anymore. We also believe that investors should either take the time to periodically review their holdings or hire a professional to do so.

Evaluation of Citigroup’s Corporate and Administrative Performance

We were pleased to see that Citigroup’s $1 of adjusted EPS was able to meet the expectations of the analyst community before those estimates were lowered in the last 30 days. The analysts reduced their consensus EPS estimates from $1 to $.88 over the last 30 days. Citigroup not only beat the revised estimates on a GAAP Reported basis ($.95 versus $.88), but the adjusted recurring EPS of $1 met the previous consensus estimates before the analysts collectively reduced their estimates.

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