Citigroup Inc. (C)  Chief Executive Officer Vikram Pandit said in an internal memo obtained Tuesday, he is “disappointed” with Citi’s current stock price — as well as the “broad-based misperceptions” about the company and its financial position — as it doesn’t reflect the bank’s capital strength or earnings potential. Thursday, the bank took a historic slide in stock price: shares in the once most-valuable bank by both market cap and assets slipped below the $1 mark during morning trading. Despite market behavior, Pandit said he is “most encouraged” with the strength of Citi’s business so far in 2009. The bank was profitable through the first two months of 2009, marking its best quarter-to-date performance since the third quarter of 2007, he said. And during that time, revenues – excluding asset write downs — rang in at $19 billion. In coming weeks, the Fed will conduct “stress tests” for all large banks, but Pandit said Citi already conducted its own stress test using assumptions that are “more pessimistic” than the Fed has outlined. The result? “We are confident about our capital strength,” he said, adding that the preferred exchange transaction announced two weeks ago is expected to make Citi the strongest capitalized U.S. bank, as measured by tangible common equity. “[O]ver time, the markets will recognize the many strengths of Citi,” Pandit wrote to his employees, thanking them for their efforts. But Critics have been quick to question the CEO’s seemingly positive perception of the the New York-based bank’s financial position. Citi has seen more than 85 percent of its market value disappear this year, as investors likely came to grips with a mountain of bad mortgage and other related bad debt that has pushed the troubled bank into needing some of the Federal government’s largest amount of financial assistance. And just how far has the former banking giant fallen? Consider that in Jan. 2007, market cap at Citi was just north of $270 billion; it’s now $5.61 billion. Read that again. Write to Kelly Curran at [email protected]. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.