If you're an investor in Citigroup (NYSE:C), the Federal Reserve's most recent round of stress tests should come as a relief. Released yesterday, the nation's third largest bank by assets emerged from the central bank's gauntlet in markedly better shape than it did last year. The charts and discussion below examine how the company's capital and earnings held up under the Fed's "severely adverse" economic scenario.

The purpose of the stress tests is to gauge how the capital bases of the nation's largest financial institutions hold up in the face of economic and financial turmoil. Among other things, the most extreme case assumes that real GDP declines an average of 4% this year, unemployment ratchets up to 12.1% by the second quarter of next year, and that home prices plummet by 20% over the next 24 months.

As you can see in the chart below, Citigroup's Tier 1 common capital ratio held up respectably in light of these assumptions. Starting from 12.7% at the end of last September, it bottomed out at 8.3% over the hypothetical time period extending from the fourth quarter of last year through the end of 2014. While that equates to a 35% decline, the ending figure nevertheless exceeded the Fed's 5% reference rate. By comparison, the average Tier 1 common capital ratio of the 18 institutions tested fell by a third, down to 7.4%.

Source: Federal Reserve.

With respect to net income, Citigroup didn't fare as well. Its hypothetical pre-tax loss for the nine-quarter time period came in at $28.6 billion. This was nearly triple the 18-institution average loss of $10.8 billion, and made Citigroup the worst performer in this regard after only Bank of America and JPMorgan Chase. Conversely, the Bank of New York Mellon fared the best, with $5.5 billion in positive earnings despite the assumed economic Armageddon.

Source: Federal Reserve.

Breaking this down a bit further, as you can see in the figure above, Citigroup's $44 billion in pre-provision net revenue was more than consumed by loan loss provisions -- that is, money set aside to cover future losses from soured loans. These accounted for $49.4 billion in losses. In addition, estimated losses from trading added up to $15.9 billion, and other losses ate up an additional $7.1 billion.

And digging into the loan losses specifically, Citigroup's were anchored in its credit card division, which accounted for 43% of the losses. This was followed by residential real estate loans at 24%, and commercial loans of 16%.

Source: Federal Reserve.

At the end of the day, the stress tests are meant to do exactly what the name implies: stress you out. And while this year is no exception, investors in Citigroup, like those at Bank of America and others, should take comfort in the increasingly massive capital hoard sitting on the bank's balance sheet. The difference being, we already know Citigroup won't raise its dividend payout, while investors in other banks are still hoping for a different outcome.