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Comerica: Financial Loser

Shares of Citigroup (C) were down 3% to close at 32.36.

The shares have now returned 23% year-to-date, following a decline of 44% in 20111.

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At a presentation by Citigroup at the Credit Suisse Financial Services Forum, CFO John Gerspach said that the company's long-term return of capital to investors through dividends and share buybacks would be supported by $40 billion in deferred tax assets not included in the company's Tier 1 capital, as well as "about $24 billion of our regulatory capital [that] should be eventually released as Citi Holdings winds down."

Citi Holdings is the subsidiary in which Citigroup has placed noncore assets to wind down, as part of CEO Vikram Pandit's "good bank/bad bank" strategy to trim the company's balance sheet.

Bank of America Merrill Lynch analyst Guy Moszkowski still sees plenty of potential for Citigroup's shares, despite the run-up this yar. He rates the shares a "Buy," with a $44 price objective, and said on Feb. 8 that although the deferred tax asset "realization will take time (contingent on generating higher U.S. taxable earnings) and Holdings wind-down will not be completed for years,:" he expects the company "to be well positioned to support significantly higher payouts" by 2014.

On Wednesday Wall Street Journal reported that Citi valued its 49% portion of the joint Morgan Stanley Smith Barney venture by $5 billion more than Morgan Stanley (MS) did, and could be forced to take a large write-down, is an example of a news item that could cause a bump in the road for the shares.

The shares trade for 0.7 times their Dec. 30 tangible book value of $50.43, and for eight times the consensus 2012 EPS estimate of $3.98. The 2013 EPS estimate is $4.76, underlining Citigroup's attractive multiple to forward earnings.

Interested in more on Citigroup? See TheStreet Ratings' report card for this stock.

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-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.

To follow the writer on Twitter, go to http://twitter.com/PhilipvanDoorn.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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