Citigroup's Strong Earnings Make Life Harder for Corbat

NEW YORK ( TheStreet) -- Life may just have gotten a lot harder for Citigroup ( C) CEO Michael Corbat after the bank beat first-quarter earnings on rising revenue and profit. Judged against restructuring Wall Street peers like Morgan Stanley ( MS), Citigroup's strong earnings indicate the bank may be losing ground in Corbat's second year on the job.

On the heels of strong earnings, the most basic value of Citigroup's business, its theoretical liquidation value per share, is rising far faster than the bank's share price.

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Corbat entered the year within reach of bringing Citigroup shares to a premium of its tangible book value (TBV) per share, or what investors and stock analysts characterize as the bank's liquidation value were all assets sold and all liabilities immediately covered. At one point in the first quarter, Citigroup shares traded as high as $55.28, or just 3 cents lower than the bank's tangible book value per share as of the fourth quarter.

However, a set of stumbles like a fraud at the bank's Banamex unit and failed Federal Reserve-administered stress test in March have weighed on Citigroup's shares, pushing them 9% lower year to date. Meanwhile, Citigroup's rising earnings mean there is a widening disconnect between the company's share price and its liquidation value.

Citigroup's tangible book value per share increased 8% in the first quarter to $56.40 a share, as a result of earnings that included a near $4 billion profit on $20.1 billion in revenue, a surprising rise from year-ago levels. Those earnings mean that Citigroup trades at an about 15% discount to its tangible book value, given an over 4% rise in the bank's shares to $47.67 on Monday.

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