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Citi Fortifies Its Foundation

NEW YORK (TheStreet) -- Since shares of Citigroup (C - Get Report) reached a low of $25.15 in July of 2012, the stock has been one of the best performers in any industry, soaring 120%. And this was while the company has been in what many analysts consider to be a mode of perpetual restructuring.

Be that as it may, with the likes of Bank of America (BAC) and JPMorgan Chase (JPM) having had their own issues with internal controls, astute investors were dissuaded by the perceived dim lights in Citi's businesses. But new CEO Michael Corbat has just completed his first full year at the helm, and I believe the Street should acknowledge that Citi is no longer under siege.

[Read: There's No Shame in Loving Bank of America]

Don't, however, misinterpret this for an "all is clear" signal. As with Bank of America, which I happen to like, Citi still presents some operational risks. Citi has been losing share to both Wells Fargo (WFC) and Bank of America in overall loan growth. Severe damage was done to Citi's brand here in the U.S., and the bank's global presence remains under attack by JPMorgan Chase.

These deficits notwithstanding, the pace of Citi's recovery is well ahead of management's schedule. This would be an incredible turnaround even from a longer-tenured CEO, much less from one that has only four full quarters under his belt.

With Citi due to report its fourth-quarter earnings results on Thursday, management will look to convince investors that the bank can maintain the pace of its recovery. Equally important will be the new strategies management outlines to get Citi back to operating more like the large money-center bank that it is. And with the housing recovery in full swing, I don't see any potential drawbacks.

The Street will be looking for 96 cents in earnings per share on revenue of $18.19 billion, which would represent a year-over-year revenue decline of 2.5%. By now, declining revenue seems to be a recurring theme for banks during this earnings season -- at least that's the case among the large money centers.

Citi's projected 2.5% revenue decline matches expectations for Bank of America and falls in line with projections for JPMorgan Chase. Interestingly, though, investors ought to be encouraged by the fact that Citi is expected to outperform Wells Fargo, an arguably better-run bank, for which the Street projected a 6% decline in revenue.

As I've said on more than one occasion, this is not an industry that is driven by the revenue results -- at least not in the post credit-crisis era. After the struggles that have plagued this industry, and specifically Citi, investors should focus on the results for things like the debt and credit valuation adjustments.

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