Citigroup is once again disappointing investors. Image source: iStock/Thinkstock.

There's a good reason that shares of Citigroup (C -0.16%) are trading for the lowest valuation among the nation's biggest banks. Unlike its counterparts at JPMorgan Chase (JPM 0.65%), Bank of America (BAC -0.77%), and Wells Fargo (WFC 1.72%), Citigroup has refused to disclose a pivotal piece of information about its energy portfolio.

Citigroup's shares seem patently cheap. You can buy them right now for a 34% discount to its tangible book value. Bank of America also trades below its tangible book value, but its discount is only 22%. And shares of JPMorgan Chase and Wells Fargo are selling for meaningful premiums to their tangible books.


Tangible Book Value Per Share (Dec. 31, 2015)

Share Price (Feb. 10, 2016)

Price-to-Tangible Book Value/Share

JPMorgan Chase




Bank of America




Wells Fargo








Data sources: Yahoo! Finance, JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup.

The problem is that Citigroup has given the least amount of insight into potential losses in its energy portfolio. As oil prices have declined and continue to stay around $30 per barrel, borrowers in the energy industry are beginning to have problems servicing their loans. Shares of Chesapeake Energy, for instance, lost a third of their value since the end of last week after reports surfaced that it hired a restructuring specialist.

Most of the nation's biggest banks have gotten out in front of this:

  • Bank of America has reserved $500 million against its $21.2 billion-funded energy portfolio. That equates to 2.4%.
  • JPMorgan Chase upped its reserves last quarter and is targeting a range of roughly $750 million against its $42 billion energy portfolio -- though only $13.8 billion of this consists of funded loans.
  • Wells Fargo has been the most aggressive on this front, setting aside 7% of its $17 billion portfolio of oil and gas loans, or $1.2 billion, in preparation for higher default rates.

Meanwhile, although Citigroup said on its fourth-quarter conference call that it added $300 million to its energy-related loan loss reserves last quarter, CFO John Gerspach refused to go further. Take this exchange between Gerspach and Morgan Stanley bank analyst Betsy Graseck:

Graseck question: Did you give a ratio of your energy reserves to your energy exposure and if you could split it between oil and gas and metals and mining, wondering if you have that handy?

Gerspach answer: I didn't give that ratio and I don't really intend to give that ratio. But obviously, we've taken what we think are the appropriate reserving actions for it.

Later in the conference call, Gerspach persisted in an exchange with CLSA analyst Mike Mayo:

Mayo question: I don't want you being the only bank not disclosing reserves to energy, oil and gas loans. I mean I think most others have disclosed that who have reported so far. And your stock is down 7%, the whole market is down a whole lot. But even if it's a low number, it can't hurt too much more from here. So how much in oil and gas loans do you have and what are the reserves taken against that? I know you were asked this already but I'm going back for a second try.

Gerspach answer: When you take a look at the overall portfolio, Mike, we've reduced the amount of exposure. Our funded exposure to energy related companies this quarter is down 4%. It's about $20.5 billion. The overall exposure also came down about 4%. The overall exposure now is about $58 billion and that includes unfunded.

When you take a look at the composition of the funded portfolio, about 68% of that portfolio would be investment grade. That's up from the 65% that we would have had at the end of the third quarter. And the unfunded book is about 87% investment grade. So while we are taking what we believe to be the appropriate reserves for that, but I'm just not prepared to give you a specific number right now as far as the amount of reserves we have on that particular book of business. It's just not something that we've traditionally done in the past.

The point here is that Citigroup has left investors to fill in the blanks themselves. And when you consider how poorly Citigroup has performed over the past decade -- pre-crisis shareholders are still down more than 90% on their investments -- everyone on the outside is understandably left assuming the worst.