C - Citibank

[fareastwarriors]

I tried to open checking and saving accounts online yesterday. I finished the app and received an app ID. I did not receive an email confirmation despite completing and submitting the application. I called their customer service line just earlier to see what's the hold up. They have no record of my application.

 

The rep told me to try the online application again and call back in a hour to see if it's pending in their system...

 

 

Epic fail on simple checking/saving accounts. Come on now...

 

 

 

Okay, I did another application and now a confirmation email was delivered... Let's hope this goes through. I'm surprised it's not instantaneous though.

 

I already have multiple credit cards with Citi.

[topofeaturellc]

He got hired at Bank One after they blew up from the First Chicago deal - mostly from a subprime card biz.

[ourkid8]

Citi was authorized to return $18.908B ($15,600 repurchase) in the last CCAR cycle.  That means they have already returned the $3.108B outstanding which is possible...

 

Q3 2017 - Citigroup repurchased approximately 81 million common shares and returned a total of approximately $6.4 billion to common shareholders in the form of common share repurchases and dividends.

 

Q4 2017 - Citigroup repurchased 74 million common shares and returned a total of $6.3 billion to common shareholders in the form of common share

repurchases and dividends

 

Q1 2018 - Citigroup repurchased 30 million common shares and returned a total of $3.1 billion to common shareholders in the form of

common share repurchases and dividends.

 

 

 

The banks have run out of buy back room can’t buy back until after the stress tests as they have exhausted their approved buy backs...Goldman has not bought back any shares this quarter and their stock has been hit hard as well.

 

Disclosure I bought Citi here it’s still only $6.80...oh yeah I forgot they did a 10 for 1 split.LOL

[John Hjorth]

Citi was authorized to return $18.908B ($15,600 repurchase) in the last CCAR cycle.  That means they have already returned the $3.108B outstanding which is possible...

 

Q3 2017 - Citigroup repurchased approximately 81 million common shares and returned a total of approximately $6.4 billion to common shareholders in the form of common share repurchases and dividends.

 

Q4 2017 - Citigroup repurchased 74 million common shares and returned a total of $6.3 billion to common shareholders in the form of common share

repurchases and dividends

 

Q1 2018 - Citigroup repurchased 30 million common shares and returned a total of $3.1 billion to common shareholders in the form of

common share repurchases and dividends.

 

 

 

The banks have run out of buy back room can’t buy back until after the stress tests as they have exhausted their approved buy backs...Goldman has not bought back any shares this quarter and their stock has been hit hard as well.

 

Disclosure I bought Citi here it’s still only $6.80...oh yeah I forgot they did a 10 for 1 split.LOL

 

Thank you Dazel & ourkid8!,

 

Especially for ourkid8: Are you sure there are no typos with regard to the numbers in your post quoted above? [i haven't checked them out. ... I actually suppose there aren't ... - which also to a wide extent indicates that I've been asleep with this investment, and not doing my own homework properly!]

[ourkid8]

I do not think so.  The authorization I referenced from the RBC PDF and the quarterly numbers I got directly from their quarterly press release.  Citigroup is now my 2nd largest position in my portfolio so I will be adding to this thread pretty consistently...

 

Citi was authorized to return $18.908B ($15,600 repurchase) in the last CCAR cycle.  That means they have already returned the $3.108B outstanding which is possible...

 

Q3 2017 - Citigroup repurchased approximately 81 million common shares and returned a total of approximately $6.4 billion to common shareholders in the form of common share repurchases and dividends.

 

Q4 2017 - Citigroup repurchased 74 million common shares and returned a total of $6.3 billion to common shareholders in the form of common share

repurchases and dividends

 

Q1 2018 - Citigroup repurchased 30 million common shares and returned a total of $3.1 billion to common shareholders in the form of

common share repurchases and dividends.

 

 

 

The banks have run out of buy back room can’t buy back until after the stress tests as they have exhausted their approved buy backs...Goldman has not bought back any shares this quarter and their stock has been hit hard as well.

 

Disclosure I bought Citi here it’s still only $6.80...oh yeah I forgot they did a 10 for 1 split.LOL

 

Thank you Dazel & ourkid8!,

 

Especially for ourkid8: Are you sure there are no typos with regard to the numbers in your post quoted above? [i haven't checked them out. ... I actually suppose there aren't ... - which also to a wide extent indicates that I've been asleep with this investment, and not doing my own homework properly!]

rbc-2018ccar_US_Banks.pdf

[John Hjorth]

Thank you, ourkid8,

 

I simply want to do the math myself, without referring to the RBC report, or any C press releases. My basis is the C CCAR announcement and the 10-Qs only. So I'm firing up Excel now, despite I'm actually too tired right now to do so. ¹. I will share my calculations on here, in this topic, when done.

 

- - - o 0 o - - -

 

How would you characterize this situation for C? -What is it? -Why did C end up in this situation? -Is it it some kind of "buyback-hubris"? [understood as: We'll just start out buying back more than a quarter [of the total quota in USD] by quarter, and then [later] ask FED for more [which we right now think at a later point in time will be approved [like for BAC]], and then it got turned down.]

 

- - - o 0 o - - -

 

1. Short: My father - age one year younger than Mr. Munger - got hit by a stroke last Tuesday. No way, I'm going to let him die alone. Right now it's bad, but certainly a lot better now.  Apologies to all for not getting back here.

[ourkid8]

It really comes down to price IMO.  For the first two quarters, the stock traded well below $76/share so management front loaded the buyback and as the price increased going into Q1 they slowed it down.  What is disappointing is during the current sell-off, we did not have much remaining in the authorization to put the pedal to the metal however this was a smart capital deployment strategy by management to front load the buyback.

 

With the new authorization around the corner, if the stock is trading below book I bet management will do the same and front load the buybacks.

 

How would you characterize this situation for C? -What is it? -Why did C end up in this situation? -Is it it some kind of "buyback-hubris"? [understood as: We'll just start out buying back more than a quarter [of the total quota in USD] by quarter, and then [later] ask FED for more [which we right now think at a later point in time will be approved [like for BAC]], and then it got turned down.]

 

- - - o 0 o - - -

 

1. Short: My father - age one year younger than Mr. Munger - got hit by a stroke last Tuesday. No way, I'm going to let him die alone. Right now it's bad, but certainly a lot better now.  Apologies to all for not getting back here.

[Spekulatius]

Banks should really use a multiple of tangible book as a guide for buybacks, IMO. At 2x tangible book, as is the case with JPM, buybacks don’t make all that much sense, IMO. C should really buy back stock when the shares are below tangible book.

 

I suspect that for management to maximize their stock option earnings, a strategy that enhances volatility (buy back when stock is fairly valued/expensive, issue stocks when its cheap) is more profitable.

[Viking]

Of the big banks, C appears to be the most aggressive in front loading the buybacks (very heavy in Q3and Q4) the past two CCAR cycles. I think part of their goal is to get the share count as low as possible by year end which helps the reported results for that fiscal year. Given their share price has not moved in the past 12 months I hope they are aggressive once again. In the past 12 months earnings per share is up significantly; and we can expect strong growth in EPS the next couple of years. At some point the stock price will reflect the higher earnings.

 

PS: John, I hope your dad is doing ok :-)

[John Hjorth]

FED Announcement [June 7^th 2018]: Federal Reserve Board announces schedule for results from Dodd-Frank Act stress test and Comprehensive Capital Analysis and Review (CCAR).

 

So,

 

Stress test results on this coming Thursday.

CCAR Announcement next Thursday.

 

The rest of this June will be less boring than the past part of the month, I think [ : - ) ].

 

- - - o 0 o - - -

 

Thank you, Viking!

[Gregmal]

I've recently added some YE $50 C calls. I think this is due for a good bounce.

[John Hjorth]

I have been spending a large part of the day today reading DFAST 2018 report from FED, and studying the results for the big four US banks. It has been a very interesting read.

 

If I understand it correctly, the banks subject to DFAST 2018 are supposed & obliged to release firm calculated DFAST 2018 results the same day that FED released its DFAST 2018 report.

 

I can't find that presentation on the C website right now. I would appreciate any help to find it, to this obviously visually impared person. [ : - D]

[sleepydragon]

Just curious, does people on this board thinking which is more undervalued and have better future returns: BRK or C/BAC/WFC/JPM?

 

I am thinking if I shall sell some of my WFC to buy BRK, which is getting quite a good deal now. I am also a little concerned about the general level of the stock mkt.

 

[racemize]

I have been spending a large part of the day today reading DFAST 2018 report from FED, and studying the results for the big four US banks. It has been a very interesting read.

 

If I understand it correctly, the banks subject to DFAST 2018 are supposed & obliged to release firm calculated DFAST 2018 results the same day that FED released its DFAST 2018 report.

 

I can't find that presentation on the C website right now. I would appreciate any help to find it, to this obviously visually impared person. [ : - D]

2018-06_DFAST.pdf

[John Hjorth]

Thanks, Joel!

[Spekulatius]

Just curious, does people on this board thinking which is more undervalued and have better future returns: BRK or C/BAC/WFC/JPM?

 

I am thinking if I shall sell some of my WFC to buy BRK, which is getting quite a good deal now. I am also a little concerned about the general level of the stock mkt.

 

In my opinion, BRK>WFC>BAC/C/JPM right now. I am not even sure that WFC is thr best deal amongst the banks right now. I do think they did decently in the stress test. The banks with investment banking or thr banks that are investment banks did show substantial losses. The biggest surprise was how badly STT did - this is mainly a custody bank! They must hold some real dog$hit paper.

[Viking]

Just curious, does people on this board thinking which is more undervalued and have better future returns: BRK or C/BAC/WFC/JPM?

 

I am thinking if I shall sell some of my WFC to buy BRK, which is getting quite a good deal now. I am also a little concerned about the general level of the stock mkt.

 

Great question. All 5 companies look appealing at current price levels.

- BRK is the safest pick if your looking for a stock to buy and hold for the next 5-10 years. We know a recession is coming and when it hits BRK should decline less than the banks. (The risk for BRK is Buffett’s age... when he is no longer around I expect the shares will sell off perhaps down to the 1.2X BV level where buybacks will kick in).

- in the next couple of years I would expect the banks to outperform BRK. As an example, BAC will be growing EPS in 2018 by 40% and another 15% in 2019.

 

- of the 4 big banks:

- JPM is the best mananged with best in class businesses but also trading at the highest P/TBV. If you wanted to make a purchase and forget about it for the next 10 years this is probably the one.

- C is the cheapest but also has the least attractive businesses. I would rank management as #3 (after JPM and BAC but ahead of WFC). It’s appeal might be as a asset play (where they divest more businesses like Mexico and perhaps Asia).

- WFC continues to be a head scratcher for me. Are they the WFC that dominated for decades? Or are they the bumbling, confused, reactionary bank that we have seen the past couple of years? Their profit growth has been muted for the last couple of years (compared to peers)... is this company becoming a coiled spring where we will see profits jump as they get out from under the Fed’s boot? They also appear to be behind BAC and JPM on mobile which reflects poorly on the management team.

- BAC continues to be my favourite pick. I rank management at #2 behind JPM; Moynihan is not the smooth talker that Dimon is; however, Moynihan has build a strong foundation. He also seems to be quite risk averse which should help the bank when the next recession hits. BAC has many best in class businesses. They are a leader in mobile banking. 2017 was the first year of results showing what BAC is capable of. 2018 is going to be a great year (40% EPS growth) and 2019 is looking solid (15% EPS growth). They still have a runoff portfolio that mutes reported top line loan growth by about 2% per year; this portfolio continues to decline every year.

 

I am still way overweight the big US banks and will continue to be so as long as the US economy continues to grow nicely.

[sleepydragon]

Thanks Viking. I have both BAC and WFC, but I have 2.5x more of WFC than BAC. I have bank accounts at both banks. The reason I like WFC is because when I tried to get a mortgage, I found WFC’s whole process is much better than BAC, in term pricing, efficiency, customer service, and how diligent they were checking my financial assets/income etc. BAC is also great too, but I think the hatred against WFC currently make it a bargain. Also, the stable ROE of WFC will be the highest among all the big banks, if the management execute well.

 

[sleepydragon]

I think I will keep my WFC and sell some of my midcap stocks to buy more BRK instead :)

[sleepydragon]

Viking, I will also recommend looking into BK. It’s up quite a bit recently. It’s currently 5% of my portfolio. They have a ROTE of something like 20%. Their roe is depressed due to the big goodwills on their balance sheet, which hide their true earning powers.

[Viking]

Citi CCAR results are out. Nice increase over last year. I am surprised by the size of the increase in the dividend and the total payout of $22 billion, which is significantly more than net earnings. Dividend at $0.45/share = yield of 2.6% (on stock price of $68) which is competitive (especially important in a rising rate environment). One of the big complains from investors was Citi’s much lower dividend yield compared to peers; this moves them in the right direction.

 

“The planned capital actions include an increase of Citi's quarterly common stock dividend from $0.32 to $0.45 per share (subject to quarterly approval by Citi's Board of Directors), as well as a common stock repurchase program of up to $17.6 billion during the four quarters starting in the third quarter of 2018. These planned capital actions total $22.0 billion over the four quarters covered by the 2018 CCAR cycle, which begins in the third quarter of this year.”

[ourkid8]

Absolutely amazing!!! As Citi is repurchasing a ton of stock, management continues to improve the efficiency ratio so we will have huge operational leverage!

 

Citi CCAR results are out. Nice increase over last year. I am surprised by the size of the increase in the dividend and the total payout of $22 billion, which is significantly more than net earnings. Dividend at $0.45/share = yield of 2.6% (on stock price of $68) which is competitive (especially important in a rising rate environment). One of the big complains from investors was Citi’s much lower dividend yield compared to peers; this moves them in the right direction.

 

“The planned capital actions include an increase of Citi's quarterly common stock dividend from $0.32 to $0.45 per share (subject to quarterly approval by Citi's Board of Directors), as well as a common stock repurchase program of up to $17.6 billion during the four quarters starting in the third quarter of 2018. These planned capital actions total $22.0 billion over the four quarters covered by the 2018 CCAR cycle, which begins in the third quarter of this year.”

[Viking]

At the end of Q1 Citi had 2.550 billion shares outstanding. Shares are currently trading at $68. A stock repurchase program of $17.6 billion will allow C to buy back 259 million shares = 10% of shares outstanding.

 

Dividend of 2.5% + share repurchase of 10% = 12.5% capital return to investors. Simply amazing in today’s environment. Where can you get a 12.5% guaranteed rate of return on your money? And the C franchise will be in a stronger position in 12 months.

 

Yes, C will not be growing top line as much as JPM or BAC; however, they will see some top line growth and when you combine this with the lower expenses (mentioned by ourkids as improving efficiency ratio) and you get a business that will grow total profitability. The big US banks are the gift that keeps on giving.

 

Not to long ago C had more than 3 billion shares outstanding. In 8 more quarters (not that far away) they will have a little over 2 billion outstanding. They will have reduced their shares outstanding by about 30% in a few short years. During this same timeframe they invested and improved their operations. Patient investors have been well rewarded; and we are still early in this game.

[ourkid8]

Let's hope they front load the buyback(as they have done in the past) especially as the stock is selling below book!!!

 

At the end of Q1 Citi had 2.550 billion shares outstanding. Shares are currently trading at $68. A stock repurchase program of $17.6 billion will allow C to buy back 259 million shares = 10% of shares outstanding.

 

Dividend of 2.5% + share repurchase of 10% = 12.5% capital return to investors. Simply amazing in today’s environment. Where can you get a 12.5% guaranteed rate of return on your money? And the C franchise will be in a stronger position in 12 months.

 

Yes, C will not be growing top line as much as JPM or BAC; however, they will see some top line growth and when you combine this with the lower expenses (mentioned by ourkids as improving efficiency ratio) and you get a business that will grow total profitability. The big US banks are the gift that keeps on giving.

 

Not to long ago C had more than 3 billion shares outstanding. In 8 more quarters (not that far away) they will have a little over 2 billion outstanding. They will have reduced their shares outstanding by about 30% in a few short years. During this same timeframe they invested and improved their operations. Patient investors have been well rewarded; and we are still early in this game.

[Viking]

Ourkid, they have front loaded the buyback each of the past 2 CCAR years so I would expect they will do the same again this CCAR year. Starting in July given the large size of the buyback this should be supportive of the stock price.

 

A little crazy to me that C stock is trading about where it was 12 months ago; in the past 12 months we have had many developments that have been very good to Citi’s business and earnings: solid GDP growth, tax reform, 4 Fed rate increases etc. C also has continued to invest in its businesses (making them stronger). Investors were paid a 2% dividend and C repurchased about 8% of shares outstanding. The C story is significantly better than 1 year ago. And my guess is it will be even better in another 12 months. :-)