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Citigroup: Financial Loser

Bank of America (BAC - Get Report), for example, calls its massive multistep cost cutting program "Project New BAC," and the expected savings are a big part of the increase in earnings that analysts expect the company to realize in 2014. Analysts on average expect Bank of America to earn 97 cents a share in 2013, increasing to $1.27 in 2014. This is by far the largest estimated percentage increase for any of the "big four" U.S. banks.

Schorr said that "while Citi takes heat for not having a named cost save program similar to many peers, we'd note that a) Citi's efficiency saves for the past two years as a percentage of total expenses are actually in line to better than many of the named programs out there, b) Citi actually has a better efficiency ratio than many peers, and c) Citi actually has some growth elements to the story that maybe make operating leverage a better lens to judge by rather than the "stubborn" $48bn-$50bn of expenses the company continues to manage to," on an annual basis.

The efficiency ratio is, essentially, the number of pennies of overhead expenses a bank incurs for each dollar of revenue. Citigroup's third-quarter tax-adjusted efficiency ratio was 73.94, according to Thomson Reuters Bank Insight, while Bank of America's efficiency ratio was 81.32. Then again, JPMorgan Chase's (JPM) efficiency ratio was a much lower 60.44, and Wells Fargo (WFC) had an even better efficiency ratio of 57.55.

Schorr rates Citigroup a "Buy," with a $41 price target, and he trails the consensus, estimating that the company will earn $4.50 a share in 2013.

C Chart C data by YCharts

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


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

>Contact by Email.

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 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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