Stock Alert for Citigroup Inc. (C)

Citigroup Inc. (C) is a global diversified financial services holding company. The Company provides consumers, corporations, governments and institutions with a range of financial products and services. As of December 31, 2009, Citigroup had approximately 200 million customer accounts and did business in more than 140 countries. Citigroup operates through two primary business segments: Citicorp, consisting of its Regional Consumer Banking (RCB) businesses and Institutional Clients Group (ICG), and Citi Holdings, consisting of its Brokerage and Asset Management (BAM), Local Consumer Lending (LCL), and Special Asset Pool (SAP). In April 2010, Barclays PLC acquired Italian credit card business of Citibank International Bank plc.

The Company was founded in 1812 and is based in New York, New York.

Share Statistics (Aug-6-10)			FY 2007	FY 2008	% Chg	Q4 2008	Q4 2009	% Chg
Symbol	C	Revenue, $Mn	159.2B	105.8B	33.5%	16.3B	11.9B	27.0%
Current price	$4.10	Gross marg.	n/a	n/a	n/a	n/a	n/a	n/a
52wk Range:	$5.43-02.56	Oper. margin	23.5%	18.8%	20.0%	n/a	n/a	n/a
Avg Vol (3m):	662,559,000	Net margin	-2.3%	-26.2%	2156%	-105.9%	-63.7&	39.8%
Market Cap.	118.80B
Shares Outst.	29.0B	EPS, $	-0.72	-4.72	755.6%	-4.12	-0.34	91.7%

Source: Reuters.com, SEC Filings.

Financial Summary

C recently reported second quarter 2010 net income of $2.7 billion or $0.09 per diluted share, on revenues of $22.1 billion, marking a second consecutive profitable quarter. C earned $7.1 billion of net income in the first six months of 2010.

Revenues declined $3.4 billion and net income was down $1.7 billion from the first quarter of 2010, largely as a result of lower Securities and Banking and Special Asset Pool revenues. Other core businesses showed consistent strength, including Transaction Services with $929 million in net income and sequential revenue growth across all international regions.

Provisions for credit losses and for benefits and claims declined $2.0 billion sequentially to $6.7 billion, the lowest level since the third quarter of 2007, reflecting continued improvement in credit quality. This helped increase Regional Consumer Banking‘s net income by 16% sequentially to $1.2 billion.

Although C maintained expense discipline, expenses were up 3% sequentially, reflecting the impact of the U.K. bonus tax.

C has been focusing on its core businesses in Citicorp – Securities and Banking, Transaction Services and Regional Consumer Banking – while continuing to divest non-core businesses in Citi Holdings. In the second quarter of 2010, Citicorp earned $3.8 billion while Citi Holdings had a loss of $1.2 billion. Citi Holdings reduced its assets by $38 billion in the second quarter and by a total of $362 billion since the peak in the first quarter of 2008, for a 44% reduction. Citi Holdings now represents less than 25% of Citigroup’s assets compared to 38% at its peak.

C continues to increase its financial strength and is one of the best capitalized banks in the world, as indicated by $122.9 billion in Tier 1 Capital and a Tier 1 Common ratio of 9.7%. In addition, it has common equity of $154.5 billion and $46.2 billion in loan loss reserves.

Key Items

• C revenues were $22.1 billion, down $3.4 billion sequentially, on lower Securities and Banking and Special Asset Pool revenues.
• C expenses increased $348 million, or 3%, sequentially to $11.9 billion, primarily driven by the U.K. bonus tax of $404 million, most of which was recorded in Securities and Banking, as well the impact of continued investments in Citicorp businesses, partially offset by expense reduction in Citi Holdings.
• C net credit losses declined $422 million, or 5%, sequentially to $8.0 billion, reflecting improvement across most consumer portfolios. Net credit losses have declined for four consecutive quarters since reaching $11.5 billion in the second quarter of 2009.²
• C recorded a net release of reserves for loan losses and unfunded lending commitments of $1.5 billion in the second quarter of 2010, versus a $53 million net reserve release in the prior quarter. The reserve release in the quarter consisted of $827 million for consumer loans and $683 million for corporate loans and unfunded lending commitments.
• C’s total allowance for loan losses was $46.2 billion, or 6.72% of loans, down from $48.7 billion, or 6.80% of loans in the first quarter of 2010.
• C’s allowance for consumer loan losses was $39.6 billion, or 7.87% of total consumer loans, which is approximately flat compared to the prior quarter. Coincident months of coverage on the consumer portfolio increased sequentially to 15.9 months from 15.5 months.
• C’s non-accrual loans declined 13% from $28.6 billion in the prior quarter to $24.8 billion.
• C’s Tier 1 Capital ratio was 12.0% compared to 11.3% in the prior quarter.
• C’s Tier 1 Common ratio was 9.7%, up from 9.1% in the first quarter of 2010.
• Book Value per share was $5.33, up from $5.28 in the prior quarter. Tangible Book Value³ per share was $4.19, up from $4.09 in the prior quarter.
• C end of period assets declined 3% sequentially to $1.9 trillion at the end of the second quarter. Citi Holdings end of period assets declined $38 billion sequentially to $465 billion and were down $362 billion from the peak in the first quarter of 2008. C average assets were $2.0 trillion, essentially flat to the prior quarter, as growth in Citicorp was offset by declines in Citi Holdings.
• Continued support for U.S. economy and consumers. From January 1, 2007 through June 30, 2010, C has helped more than 990,000 homeowners in their efforts to avoid potential foreclosure. C also announced a three month foreclosure suspension program in the Gulf of Mexico region to allow eligible borrowers to remain in their homes as Gulf communities respond to the oil spill and its economic repercussions. As of June 30, 2010, C was also helping more than 1.6 million credit card members manage their card debt through a variety of forbearance programs.
• Transaction Services net income of $929 million was down $7 million, or 1%, sequentially, due to higher taxes. Growth in revenues and lower credit costs were partially offset by higher expenses, resulting in a $63 million, or 5%, increase in earnings before taxes.
• C assets were $1.9 trillion at quarter end, down 3% sequentially.
• Cash and deposits with banks were $185 billion, or 9.6% of total assets, compared to $189 billion, or 9.4% of total assets in the prior quarter.
• Citi Holdings assets declined $38 billion sequentially to $465 billion and were down $362 billion, or 44%, from the peak in the first quarter of 2008.
• C deposits were $814 billion, down 2% sequentially.
• C’s net interest margin was 3.15%, down from 3.32% in the first quarter of 2010, mainly reflecting continued de-risking of the loan portfolios.

BALANCE SHEET

Financial Strength (Aug-6-2010)	Company	Industry	Sector	S&P 500
Quick Ratio (MRQ)	–	0.00	3.61	0.73
Current Ratio (MRQ)	–	0.00	6.41	0.86
Long-Term Debt to Equity(MRQ)	266.98	72.57	88.16	115.99
Total Debt to Equity (MRQ)	453.57	247.08	221.93	174.26

Source: Reuters.com, SEC Filings.

Analyst Consensus

This is the consensus forecast amongst 18 polled investment analysts. Against the Citigroup Inc company.

Analyst Detail	Buy	Outperform	Hold	Underperform	Sell	No Opinion
Latest	7	3	6	1	1	0
4 weeks ago	7	3	5	1	1	0
2 months ago	7	3	5	1	1	0
3 months ago	5	2	9	1	1	0
Last year	0	2	7	2	1	1

The 17 analysts offering 12 month price targets for C have a median target of 5.50, with a high estimate of 6.90 and a low estimate of 3.50. The median estimate represents a 34.15% increase from the last price of 4.10.

Source: www.ft.com

Consensus Estimates Analysis

	# of Estimates	Mean	High	Low	1 Year Ago
SALES (in millions)
Quarter Ending Sep-10	11	21,624.50	23,158.00	20,516.00	18,195.00
Quarter Ending Dec-10	8	21,314.20	22,483.00	19,854.00	19,155.00
Year Ending Dec-10	13	90,184.30	95,334.00	86,793.00	87,306.70
Year Ending Dec-11	11	87,786.50	96,943.00	79,199.70	90,478.70
EARNINGS (per share)
Quarter Ending Sep-10	18	0.07	0.11	0.04	0.01
Quarter Ending Dec-10	17	0.07	0.12	0.04	0.04
Year Ending Dec-10	20	0.37	0.46	0.27	0.14
Year Ending Dec-11	20	0.45	0.60	0.25	0.40
LT Growth Rate (%)	2	1.50	11.00	-8.00	7.00

Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=C

Investment Highlights

C sold $3 billion of notes earlier last week, conducted in two parts. The first tranche was $2.25 billion of new notes due on August 9, 2020, with a coupon rate of 5.375%. The second tranche was of $750 million, consisting of the reopening of notes due May 19, 2015, and carrying a coupon rate of 4.75%. This second tranche exceeded the initial planned size of $500 million.

C will use the proceeds for general corporate purposes. These include the financing of its operating units and subsidiaries, acquisitions and refinancing or extending the maturity of existing debt obligations. A part of it may also be used for hedging its exposure to payments. The sole bookrunning manager for the sale was Citigroup Global Markets.

Last month, C reported its second-quarter earnings of 9 cents per share. Results reflect an improvement in the credit quality and lower loan loss provisions. Yet, the market declines negatively impacted the revenues from its trading business in the quarter. C continues to strengthen its balance sheet and initiates certain restructuring measures.

Source: http://www.citigroup.com/citi/homepage/

Technical Analysis

Source: http://stockcharts.com

C is trading above its 13 day moving average. This is considered to be the sign of a bullish trend. There is added weight to this indication because the moving average is rising and suggests that there has been buying interest in this stock.

C has been relatively stable recently. This is evidenced by the width of its Bollinger Bands which are tighter than normal. Additionally, C is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.

The MACD for C currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9day moving average. Second, the MACD is above 0 which implies that the underlying moving averages are trending higher.

Comparative Analysis

Company Name	Ticker	Price per	Mrkt. Cap.	P/E		P/S
Aug-6-2010	symbol	Share, $	$ Mn	2010	2011	2010	2011
Wells Fargo & Company	WFC	27.88	145.85B	16.96	n/a	1.69	n/a
Goldman Sachs Group Inc.	GS	155.92	80.27B	7.87	n/a	1.52	n/a
Bank of America Corp.	BAC	14.02	140.66B	n/a	n/a	1.21	n/a
Money Center Banks Median			122.26B	12.41	n/a	1.47	n/a
Citigroup Inc.	C	4.10	118.80B	45.06	n/a	1.51	n/a

Source: Thomson Financial

Insider Trading Activity

NET SHARES PURCHSE ACTIVITY Inside Purchases – Last 6 Months
	Shares	Transaction
Purchases	n/a	0
Sales	790,199	6
Net Shares Purchased (Sold)	(790,199)	6
Total Insider Shares Held	1.16B	n/a
% Net Shares Purchased (Sold)	(0.1%)	n/a

Net Institutional Purchases — Prior Qtr to Latest Qtr
	Shares
Net Shares Purchased (Sold)	(488,275,000)
% Change in Institutional Shares Held	(5.23%)

Source: Yahoo Finance

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