What happened

Shares of Citigroup (C -0.74%) had fallen nearly 3.5% as of 2:30 p.m. ET today after other major U.S. banks reported earnings results for the second quarter of the year that disappointed investors.

So what

Earlier this morning, JPMorgan Chase (JPM -0.82%) and Morgan Stanley (MS 0.25%) reported earnings results, and both missed analyst estimates for the quarter.

Both banks saw softer investment banking revenue than expected. Morgan Stanley's investment banking unit generated $1.07 billion of revenue in the second quarter, $400 million below analysts' estimate. Investment banking revenue of roughly $1.35 billion at JPMorgan is down close to $2.1 billion from the second quarter of 2021.

"The volatile market resulted in muted issuance in our underwriting businesses," JPMorgan's chief financial officer Jeremy Barnum said on the company's earnings call this morning. "In terms of outlook, while our existing pipeline remains healthy, conversion of the deal backlog may be challenging if the current headwinds continue."

Citigroup has a significant investment banking business, which is likely why shares are down today, as the company will report earnings tomorrow morning.

"Obviously, with the geopolitical situation, the macro situation, the issuance is lower, [merger and acquisition] activity is lower," Andy Morton, Citigroup's global head of markets, said at a conference last month.

Morton added: "So, our belief is that the wallet is down 50% to 55% in investment banking. And our assessment is that we're going to come in right around ... those kinds of levels."

Now what

Citigroup is in the midst of a transformation that involves modernizing the bank, selling international consumer-banking units, and doubling down on areas of strength. While it hasn't exactly been smooth sailing so far, I do believe the transformation efforts put Citigroup on the right path.

The bank also trades at a significant discount and offers a high dividend yield. I am not sure how earnings will come in tomorrow, but I believe this will be a good long-term stock.