NEW YORK ( TheStreet) -- For long-term investors, Citigroup ( C - Get Report) remains a beautiful play.

Of course, a lot depends on how you define "long-term." With the media space dominated by screaming daily headlines and a focus on quarterly results, a securities industry focused on profitable day trading and analysts setting 12-month price targets, it's easy to forget that you might need to hold a long-term position for several years to make a solid gain.
Citigroup CEO Vikram S. Pandit

Investors are bound to be frustrated by the 35% drop in Citigroup's share price since the shares underwent a 1-for-10 reverse split on May 6. The KBW Bank Index ( I:BKX) declined 23% over the same period.

Analysts have been cutting their earnings and revenue estimates for the largest U.S. banks, projecting sharp declines in third-quarter trading and capital markets revenue, along with lower fee income as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

But Citigroup is a much less risky play than the similarly valued Bank of America ( BAC - Get Report), which is facing an uncertain ride through the remaining mortgage mess.

Right now you're looking at a golden opportunity to start a position in Citigroup's shares on the cheap, or add to a long-term position. The shares have been thrown out with the bathwater, as you'll see below.

Here are 5 reasons to buy Citi now:

5. The shares have been thrown out with the bathwater.

The shares trade for six times the consensus 2012 EPS estimate of $4.63, and for just over half the company's June 30 tangible book value of $49.64, according to SNL Financial.

This is a similar valuation to Bank of America, which faces mortgage putback risks that several analysts have said are impossible to quantify at this point, mainly resulting from its disastrous acquisition of Countrywide in 2008. Citigroup faces much lower mortgage repurchase demands from investors in mortgage-backed securities than the remaining "big four" U.S. banks, as highlighted by June 30 data from Federal Reserve filings, supplied by SNL Financial.

Bank of America was servicing $148.8 billion in one-to-four family mortgages loans (excluding home equity lines) for others that were past due over 90 or more days, plus another $22.6 billion in "early-stage delinquency" of 30 to 80 days.

JPMorgan Chase ( JPM - Get Report) serviced $52.4 billion in one-to-four family mortgage loans for others that were past due 90+ days, plus another $9.0 billion past due 30 to 90 days.

For Wells Fargo ( WFC - Get Report), one-to-fours serviced for others that were past due 90+ days totaled $5.9 billion, while those past due 30 to 89 days totaled $14.8 billion.

For Citigroup, one-to-four family mortgages serviced for others that were past due 90 or more days totaled $1.7 billion as of June 30, while earlier-stage delinquencies within the portfolio serviced for others totaled $5.0 billion.

JPMorgan and Wells Fargo trade at much higher multiples to book value than Citigroup and Bank of America, but on the mortgage front, it's obvious that Citigroup has the lowest putback risk among the big four.

UBS analyst Brennan Hawken on Monday reiterated his "Buy" rating for Citi, with a $43 price target, saying that the company's fundamentals "support Citi shares trading at a premium multiple to BofA", and that the company is not "facing questions about its capital position."

4. Capital is building, pointing to buybacks and dividends.

Richard Staite of Atlantic Equities said in a August report that among the largest U.S. bank holding companies, Citigroup saw the "biggest improvement" in capital levels, with its Basel I Tier 1 common equity ratio more than doubling from 2009 to 11.7% in June.

After the Basel Committee announced the enhanced capital requirements for the largest banks in June, Staite said that Citigroup could "pay a $2bn dividend and up to a $4bn buyback in 2012 and still meet the 2.5% buffer by end of 2013, well ahead of the 2019 deadline."

Staite estimated that if Citigroup were to wait on returning additional capital to investors beyond its current quarterly dividend of a penny a share, its "Basel III Tier 1 common ratio would be 8% at end 2011 and would increase to 9.5% at end 2012." With a "modest" $2 billion in dividends and $4 billion in common share buybacks in 2012, the analyst estimated the "Basel III ratio would be 9% at end 2012 and would still increase to reach 9.5% in 2013."

3. The international story is a long-term winner for Citi.

During the second quarter, Citigroup's consumer banking revenue for its markets outside North America totaled $4.8 billion, or 59% of total revenue in the Regional Consumer Banking unit, and increased 12% from a year earlier.

While the market continues to oscillate, as Europe tries to solve its financial crisis and the U.S. continues trying to spur economic growth, there's no question that Asia and Latin America represent amazing long-term growth opportunities, and Citigroup has an expanding consumer presence in both regions.

2. Analysts will pump the stock.

The consensus among analysts polled by FactSet is for Citigroup to report third-quarter earnings of 83 cents a share, following EPS of $1.09 in the second quarter and 72 cents in the third quarter of 2010.

Out of 22 analysts covering Citigroup, 16 rate the shares a buy, while four analysts have neutral ratings and two analysts recommend selling the shares.

The consensus price target among analysts polled by FactSet is $44.20, implying 60% upside for the shares.

1. Pandit's strategy is working.

Despite the pounding he has taken over the past several years, CEO Vikram Pandit's "good bank/bad bank" strategy has been a winner for Citigroup.

Total assets in the "bad bank" Citi Holdings unit were $308 billion as of June 30, which was a 34% decline from a year earlier, and "over half a trillion dollars lower" than in the first quarter of 2008, according to Citigroup.

Oppenheimer analyst Chris Kotowski on Sunday that "Citi remains our favorite stock with a valuation that looks more like BAC (55% of tangible book vs. BAC at 50%) but with a capital position, diversity of business and earnings stability that look more and more like JPMorgan every quarter."

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

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

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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.