The bank needed to gain approval from the Fed as part of its Comprehensive Capital Analysis and Review (CCAR), an annual vetting process of the industry to ensure too-big-to-fail banks are able to weather economic stress.
By midmorning, shares had slid 4.3% to $47.99.
Citigroup planned to buyback $6.4 million worth of common stock and boost its quarterly dividends to 5 cents. Its proposed buybacks were more than fivefold the size of 2013's approved repurchase program.
"We are deeply disappointed by the Fed's decision regarding the additional capital actions we requested. The additional capital actions represented a modest level of capital return and still allowed Citi to exceed the required threshold on a quantitative basis," said CEO Michael Corbat in a statement.
The bank will now be required to submit a revised capital plan for review. The company said it has yet to determine when it will resubmit its plan.
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TheStreet Ratings team rates CITIGROUP INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate CITIGROUP INC (C) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, attractive valuation levels, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CITIGROUP INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CITIGROUP INC increased its bottom line by earning $4.25 versus $2.46 in the prior year. This year, the market expects an improvement in earnings ($4.85 versus $4.25).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 105.3% when compared to the same quarter one year prior, rising from $1,196.00 million to $2,456.00 million.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 11.7%. Since the same quarter one year prior, revenues slightly dropped by 4.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full analysis from the report here: C Ratings Report