<PAGE>
<TABLE>
<CAPTION>
CONTENTS PAGE
<S> <C>
FINANCIAL HIGHLIGHTS........................................................ 2
FINANCIAL SUMMARY........................................................... 3
BUSINESS DISCUSSION......................................................... 4
GLOBAL CONSUMER............................................................. 5
GLOBAL FINANCE.............................................................. 7
NORTH AMERICA COMMERCIAL REAL ESTATE........................................ 9
CROSS-BORDER REFINANCING PORTFOLIO.......................................... 10
CORPORATE ITEMS............................................................. 11
CONSUMER LOAN PORTFOLIO DATA................................................ 12
COMMERCIAL LOAN PORTFOLIO DATA
- Cash-Basis and Renegotiated Commercial Loans............................. 14
- Commercial Real Estate................................................... 16
CAPITAL, PRICE RISK, LIQUIDITY, DERIVATIVE AND FOREIGN EXCHANGE ACTIVITIES.. 21
STATEMENT OF OPERATIONS ANALYSIS
- Net Interest Revenue (Taxable Equivalent Basis).......................... 29
- Provision and Allowance for Credit Losses................................ 30
- Fee and Commission Revenue............................................... 31
- Revenues from Trading-Related Activities................................. 32
- Securities Transactions.................................................. 33
- Other Revenue............................................................ 33
- Operating Expense........................................................ 34
- Income Taxes............................................................. 35
- Effect of Credit Card Receivables Securitization......................... 36
FINANCIAL STATEMENTS
- Consolidated Statement of Operations..................................... 37
- Consolidated Balance Sheet............................................... 38
- Consolidated Statement of Changes in Stockholders' Equity................ 39
- Consolidated Statement of Cash Flows..................................... 40
CITIBANK, N.A. CONSOLIDATED BALANCE SHEET................................... 41
CALCULATION OF NET INCOME PER SHARE......................................... 42
AVERAGE BALANCES AND INTEREST RATES......................................... 43
FINANCIAL STATISTICS
- Details of Credit Loss Experience........................................ 47
- Cash-Basis, Renegotiated and Past Due Loans.............................. 48
- Other Real Estate Owned.................................................. 48
- Securities............................................................... 49
- Cross-Border and Foreign Currency Outstandings........................... 50
- Long-Term Debt........................................................... 50
FORM 10-Q................................................................... 51
FORM 10-Q CROSS-REFERENCE INDEX............................................. 52
SIGNATURES 55
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS Second Quarter Year-To-Date
------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS (In Millions of Dollars) 1994 1993 1994 1993
------ ------ ------ ------
Net Income
Before Accounting Changes.................... $ 877 $ 446 $1,486 $ 816
After Accounting Changes (A)................. 877 446 1,430 1,116
PER SHARE
Net Income (B)
On Common and Common Equivalent Shares
Before Accounting Changes.................... $ 1.83 $ .88 $ 3.07 $ 1.59
After Accounting Changes (A)................. 1.83 .88 2.94 2.26
Assuming Full Dilution
Before Accounting Changes.................... $ 1.64 $ .82 $ 2.77 $ 1.49
After Accounting Changes (A)................. 1.64 .82 2.66 2.06
Common Stockholders' Equity (C)................ $29.54 $23.96 $29.54 $23.96
RETURN ON ASSETS AND EQUITY
Return on Total Assets (D) (E)
Before Accounting Changes.................... 1.36% .79% 1.17% .73%
After Accounting Changes (A)................. 1.36% .79% 1.15% .86%
Return on Common Stockholders' Equity (C) (F)
Before Accounting Changes.................... 28.7% 16.9% 24.5% 15.7%
After Accounting Changes (A)................. 28.7% 16.9% 24.0% 19.2%
Return on Total Stockholders' Equity (C) (G)
Before Accounting Changes.................... 23.4% 14.8% 20.3% 13.9%
After Accounting Changes (A)................. 23.4% 14.8% 19.9% 16.5%
CAPITAL (In Billions of Dollars)
June 30 Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
1994 1994 1993 1993 1993 1993
------ ------ ------ ------ ------ ------
Tier 1......................................... $ 15.0 $ 14.0 $ 13.4 $ 12.8 $ 11.8 $ 10.9
Tier 1 & 2..................................... 24.5 23.5 23.2 22.3 21.6 21.0
Tier 1 Ratio................................... 7.09% 6.86% 6.62% 6.17% 5.65% 5.23%
Tier 1 & 2 Ratio............................... 11.60% 11.55% 11.45% 10.72% 10.31% 10.01%
Common Equity as a % of Total Assets (C) (E)... 4.55% 4.51% 4.65% 4.29% 4.16% 3.98%
Total Equity as a % of Total Assets (C) (E).... 6.14% 6.12% 6.44% 6.05% 5.80% 5.46%
OPERATING MARGIN (In Millions of Dollars)
2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
1994 1994 1993 1993 1993 1993
------ ------ ------ ------ ------ ------
Total Revenue.................................. $4,050 $3,861 $4,152 $4,070 $3,968 $3,885
Effect of Credit Card Securitization (H)....... 264 268 292 303 328 359
Net Cost To Carry (I).......................... 31 29 43 54 72 83
Capital-Building Transactions.................. (117) (23) 61 (9) 25 (75)
------ ------ ------ ------ ------ ------
Adjusted Revenue............................... $4,228 $4,135 $4,548 $4,418 $4,393 $4,252
------ ------ ------ ------ ------ ------
Total Operating Expense........................ $2,456 $2,447 $3,021 $2,574 $2,494 $2,526
Net OREO Costs (J)............................. 19 (28) 3 (67) (66) (115)
Restructuring Charges.......................... - - (425) - - -
------ ------ ------ ------ ------ ------
Adjusted Operating Expense..................... $2,475 $2,419 $2,599 $2,507 $2,428 $2,411
------ ------ ------ ------ ------ ------
OPERATING MARGIN............................... $1,753 $1,716 $1,949 $1,911 $1,965 $1,841
Consumer Credit Costs (K)...................... 585 614 651 665 708 716
Commercial Credit Costs (L).................... 73 60 126 233 297 380
------ ------ ------ ------ ------ ------
OPERATING MARGIN LESS CREDIT COSTS............. $1,095 $1,042 $1,172 $1,013 $ 960 $ 745
Additional Provision (M)....................... 90 66 126 151 176 150
Capital-Building Transactions.................. 117 23 (61) 9 (25) 75
Restructuring Charges.......................... - - 425 - - -
------ ------ ------ ------ ------ ------
INCOME BEFORE TAXES AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGES............................ $1,122 $ 999 $ 560 $ 871 $ 759 $ 670
====== ====== ====== ====== ====== ======
</TABLE>
(A) Year-to-date amounts for 1994 and 1993 reflect the cumulative effect of
adopting Statement of Financial Accounting Standards No. 112, "Employers'
Accounting for Postemployment Benefits," as of January 1, 1994 and Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes," as
of January 1, 1993, respectively.
(B) Based on net income less preferred stock dividends, except where conversion
is assumed. See page 42 for calculation of net income per share.
(C) The 1994 periods reflect the effect of adopting Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt
and Equity Securities," as of January 1, 1994.
(D) Annualized net income as a percentage of average total assets.
(E) The 1994 periods reflect the effect of adopting FASB Interpretation No. 39,
"Offsetting of Amounts Related to Certain Contracts," as of January 1, 1994.
(F) Annualized earnings applicable to common stock as a percentage of average
common stockholders' equity.
(G) Annualized net income less redeemable preferred stock dividends as a
percentage of average total stockholders' equity.
(H) For a description of the effect of credit card receivables securitization,
see page 36.
(I) Principally the net cost to carry commercial cash-basis loans and Other
Real Estate Owned (OREO).
(J) Principally net writedowns, net gains (losses) on sales and direct revenues
and expenses related to OREO.
(K) Principally consumer net credit write-offs adjusted for the effect of
credit card receivables securitization.
(L) Includes commercial net credit write-offs, net cost to carry and net OREO
costs.
(M) Represents consumer and commercial (excluding refinancing portfolio)
provision for credit losses above net write-offs. Additionally, second
quarter and first quarter of 1994 reflect releases of $10 million and $34
million, respectively, related to the cross-border refinancing portfolio.
2
<PAGE>
FINANCIAL SUMMARY
Citicorp reported net income of $877 million in the 1994 second quarter,
compared with $446 million in the same 1993 quarter. Fully diluted earnings per
common share of $1.64 compared with $0.82 in the year-earlier quarter.
In the first half of 1994, operating earnings were $1,486 million or $2.77 per
common share on a fully diluted basis, compared with $816 million or $1.49 per
fully diluted share in the first half of last year. Including the cumulative
effect of adopting the new accounting standard for post-employment benefits, net
income in the first half of 1994 was $1,430 million or $2.66 per fully diluted
share. Net income in the first half of last year, including the cumulative
effect of adopting the new accounting standard for income taxes, was $1,116
million or $2.06 per fully diluted share.
The results for the second quarter and first half of 1994 reflected continued
credit cost improvement in North America commercial real estate and U.S. credit
cards and solid earnings momentum in the Global Consumer businesses in the
Emerging Economies, along with the recognition of $150 million of deferred tax
benefits in the second quarter and after-tax net asset gains of $74 million and
$88 million in the quarter and first half, respectively. Asset gains in the
quarter included the recognition as other revenue of $173 million, which
represents the fair value of interest bonds received in connection with the
Brazil refinancing agreement concluded in the quarter, and recognition of $71
million as securities transaction gains from the sale of Brazilian interest
bonds (face value $99 million) received in a previous refinancing, offset by
writedowns of $157 million in the value of certain Latin American investments.
Revenues (adjusted for credit-related costs, the effect of credit card
securitization and net asset gains) were $4.2 billion in the 1994 second
quarter, up modestly from $4.1 billion in the 1994 first quarter, but below the
1993 second quarter's $4.4 billion. Securities trading and foreign exchange
revenues in the second quarter and first half of 1994 amounted to $159 million
and $230 million, respectively, down sharply from the $572 million and $1,029
million generated in the comparable 1993 periods. Excluding trading, revenues
were $4.1 billion in the quarter and $8.1 billion in the first half, up 6% and
7%, respectively, from the same 1993 periods.
Operating expenses (excluding OREO costs) were $2.5 billion in the quarter,
slightly higher than the $2.4 billion recorded in both the 1994 first quarter
and 1993 second quarter. Operating expenses in the first half of 1994 were $4.9
billion, compared with $4.8 billion in the first half of 1993.
Credit loss reserves increased to a total of $4.9 billion at June 30, 1994, up
from $4.5 billion at March 31, 1994 and $4.1 billion at June 30, 1993. The
increase in the quarter included a credit recovery of $318 million arising from
the receipt of Brazilian bonds in connection with the Brazil refinancing
agreement and a $90 million provision in excess of other net credit losses.
Citicorp no longer reports a separate portion of the reserves attributable to
the refinancing portfolio, which is now combined with the commercial reserve.
Commercial cash-basis loans and OREO together declined in the quarter by $1.3
billion to $4.7 billion, including a reduction of $0.8 billion from the exchange
of Brazilian loans for marketable securities. Commercial credit costs were $73
million in the quarter, up slightly from $60 million in the 1994 first quarter,
but sharply below the $297 million in the 1993 second quarter. Consumer credit
costs decreased in the quarter to $585 million from $614 million in the 1994
first quarter and $708 million in the 1993 second quarter.
Capital-building efforts continued, with total regulatory capital (Tier 1 and
Tier 2) at June 30, 1994 reaching $24.5 billion or 11.60% of risk-adjusted
assets, and the Tier 1 capital ratio increasing to 7.09% from 6.86% at the end
of the 1994 first quarter. The comparable ratios a year ago were 10.31% and
5.65%, respectively.
3
<PAGE>
BUSINESS DISCUSSION
The table below and the discussions that follow analyze Citicorp's results in
the context of global business areas including its core business franchises of
Global Consumer and Global Finance.
NET INCOME (LOSS)
<TABLE>
<CAPTION>
2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Millions of Dollars) 1994 1994(A) 1993(A) 1993(A) 1993(A) 1993(A)
---- ---- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Global Consumer (see page 5):
North America, Europe and Japan.................. $250 $257 $ 87 $ 218 $ 168 $ 149
Emerging Economies............................... 161 170 142 130 128 142
---- ---- ----- ----- ----- -----
Total Global Consumer (B).......................... $411 $427 $ 229 $ 348 $ 296 $ 291
---- ---- ----- ----- ----- -----
Global Finance (see page 7):
North America, Europe and Japan.................. $102 $ 92 $ 188 $ 220 $ 235 $ 229
Emerging Economies............................... 183 172 226 164 205 151
---- ---- ----- ----- ----- -----
Total Global Finance (B)........................... $285 $264 $ 414 $ 384 $ 440 $ 380
---- ---- ----- ----- ----- -----
North America Commercial Real Estate (see page 9).. (72) (76) (118) (133) (182) (206)
Cross-Border Refinancing Portfolio (see page 10)... 53 48 8 25 12 37
Corporate Items (see page 11) (B).................. 200 (54) 42 (96) (120) (132)
---- ---- ----- ----- ----- -----
$877 $609 $ 575 $ 528 $ 446 $ 370
Cumulative Effect of
Accounting Changes (C)........................... - (56) - - - 300
---- ---- ----- ----- ----- -----
Total Citicorp..................................... $877 $553 $ 575 $ 528 $ 446 $ 670
==== ==== ===== ===== ===== =====
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
(B) Global Consumer results reflect after-tax restructuring charges of $143
million in the fourth quarter of 1993, of which Global Consumer in North
America, Europe and Japan accounted for $139 million. Global Finance
results reflect after-tax restructuring charges of $95 million in the fourth
quarter of 1993, of which Global Finance in North America, Europe and Japan
accounted for $83 million. Corporate Items results reflect an after-tax
amount of $16 million in the fourth quarter of 1993 related to restructuring
charges.
(C) First quarter 1994 includes the cumulative effect of adopting Statement of
Financial Accounting Standards ("SFAS") No. 112, "Employers' Accounting for
Postemployment Benefits," as of January 1, 1994. First quarter 1993 results
include the cumulative effect of adopting SFAS No. 109, "Accounting for
Income Taxes," as of January 1, 1993.
4
<PAGE>
GLOBAL CONSUMER
Citicorp's Global Consumer business serves a full range of consumer financial
needs worldwide through branch banking systems, card products and private
banking activities.
<TABLE>
<CAPTION>
Increase/(Decrease) vs.
---------------------------
2nd Qtr. Y-T-D 2nd Qtr. Y-T-D
(In Millions of Dollars) 1994 1994 1993(A) % 1993(A) %
-------- ------ -------- --- ------- ---
<S> <C> <C> <C> <C> <C> <C>
Total Revenue...................... $2,484 $4,974 $ 135 6 $ 396 9
Operating Expense.................. 1,512 3,005 25 2 91 3
Provision for Credit Losses........ 361 739 (81) (18) (114) (13)
------ ------ ----- -----
Income Before Taxes................ $ 611 $1,230 $ 191 45 $ 419 52
Income Taxes....................... 200 392 76 61 168 75
------ ------ ----- -----
Net Income......................... $ 411 $ 838 $ 115 39 $ 251 43
====== ====== ===== =====
Average Assets ($ Billions)........ 103 103 4 4 4 4
Return on Assets (%)............... 1.60 1.64 .40 - .44 -
ADJUSTED FOR CREDIT-RELATED ITEMS
Total Revenue (B)
North America, Europe and Japan... $2,137 $4,284 $ (24) (1) $ 45 1
Emerging Economies................ 612 1,225 92 18 191 18
------ ------ ----- -----
Total Global Consumer............. $2,749 $5,509 $ 68 3 $ 236 4
====== ====== ===== =====
Other Operating Expense (C)
North America, Europe and Japan... $1,159 $2,304 $ (18) (2) $ (3) -
Emerging Economies................ 344 676 43 14 95 16
------ ------ ----- -----
Total Global Consumer............. $1,503 $2,980 $ 25 2 $ 92 3
====== ====== ===== =====
Credit Costs (D)
North America, Europe and Japan... $ 545 $1,121 $(123) (18) $(228) (17)
Emerging Economies................ 40 78 - - 3 4
------ ------ ----- -----
Total Global Consumer............. $ 585 $1,199 $(123) (17) $(225) (16)
====== ====== ===== =====
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
(B) Adjusted principally for the effect of credit card receivables
securitization.
(C) Excludes net writedowns and net direct expenses related to OREO for certain
real estate lending activities.
(D) Principally net credit write-offs adjusted for the effect of credit card
receivables securitization.
The Global Consumer businesses earned $411 million in the second quarter and
$838 million in the first half of 1994, compared with $296 million and $587
million, respectively, in the same 1993 periods. Earnings in the North America,
Europe and Japan consumer businesses were $250 million for the quarter and $507
million for the first half, up $82 million and $190 million from the respective
1993 periods, as the U.S. credit card business continued to benefit from lower
credit costs. Earnings in the Emerging Economies were $161 million and $331
million for the quarter and first half of 1994, respectively, up $33 million and
$61 million from the comparable 1993 periods, as both the branch and cards
businesses maintained solid revenue momentum.
Global Consumer revenues adjusted for certain credit-related items (principally
the effect of credit card receivables securitization; see page 36 for a further
description) were $2.7 billion in the quarter and $5.5 billion in the first half
of 1994, representing growth of 3% over last year's second quarter and 4% over
last year's first half.
Adjusted revenues in North America, Europe and Japan declined 1% in the quarter
and increased a modest 1% in the first half of 1994 compared with the respective
1993 periods. Lower recourse-related costs of securitized mortgages, improved
spreads in the European branches and higher fee revenues in European private
banking activities were offset by the impact of competitive pricing strategies
on U.S. credit card revenues and by asset reductions in the U.S. mortgage
business. In the 1994 first half, a lower adjustment was required to reflect
accelerated prepayments of securitized mortgages. Trends
5
<PAGE>
in interest rates and mortgage prepayment rates, as well as hedging actions
employed, affect the results related to servicing assets that are subject to
prepayment risk.
Adjusted revenues in the Emerging Economies grew 18% in both the second quarter
and first half of 1994 from the comparable 1993 periods, reflecting increases in
both net interest revenue and also fees and commissions. The revenue
improvement was led by expansion in the Asia Pacific businesses, with Latin
America also contributing double-digit growth.
Adjusted operating expenses rose 2% in the second quarter and 3% in the first
six months compared with the respective 1993 periods. Cost containment efforts,
particularly in the U.S. and Europe, served to balance continued business
expansion efforts in the Emerging Economies and higher expenses related to
account acquisitions in the U.S. credit card business.
Credit costs declined 17% from last year's second quarter and 16% from last
year's first half, primarily reflecting continued improvement in the U.S. credit
card portfolio, as well as lower net write-offs in the U.S. branch and mortgage
businesses. These declines were partially offset by higher losses in the
European branches, particularly Germany. Overall delinquencies in the Global
Consumer businesses continued to improve as loans on the balance sheet that are
past due 90 days or more fell to $3.4 billion at June 30, 1994 from $3.5 billion
at March 31, 1994 and $3.8 billion at June 30, 1993. While the U.S. economy has
improved, economic conditions in Europe remain weak. Credit costs,
delinquencies and cash-basis loans improved from the 1994 first quarter and from
a year ago, but could remain at relatively high levels in these regions with
further increases to credit reserves possible. See the Consumer Loan Portfolio
section on page 12 and the Provision and Allowance for Credit Losses section on
page 30 for further analysis of the consumer portfolio.
Average assets increased $4 billion from the prior year's quarter as the
Emerging Economies experienced volume growth of $5 billion or 21%, partially
offset by the decline in the U.S. mortgage loan portfolio.
6
<PAGE>
GLOBAL FINANCE
The Global Finance business serves corporations, financial institutions,
governments and other participants in capital markets throughout the world.
Excluded from Global Finance in North America, Europe and Japan is North America
Commercial Real Estate, which includes the commercial real estate divisions in
the U.S. and Canada and is discussed on page 9.
<TABLE>
<CAPTION>
Increase/(Decrease) vs.
---------------------------
2nd Qtr. Y-T-D 2nd Qtr. Y-T-D
(In Millions of Dollars) 1994 1994 1993(A) % 1993(A) %
-------- ------ -------- --- ------- ---
<S> <C> <C> <C> <C> <C> <C>
Total Revenue...................... $1,240 $2,444 $(310) (20) $(552) (18)
Operating Expense.................. 796 1,581 - - (52) (3)
Provision for Credit Losses........ 21 (13) (66) (76) (211) nm
------ ------ ----- -----
Income Before Taxes................ $ 423 $ 876 $(244) (37) $(289) (25)
Income Taxes....................... 138 327 (89) (39) (18) (5)
------ ------ ----- -----
Net Income......................... $ 285 $ 549 $(155) (35) $(271) (33)
====== ====== ===== =====
Average Assets ($ Billions) (B).... 139 136 31 29 30 28
Return on Assets (%)............... .82 .81 (.81) - (.75) -
ADJUSTED FOR CREDIT-RELATED ITEMS
Total Revenue (C)
North America, Europe and Japan... $ 702 $1,392 $(310) (31) $(564) (29)
Emerging Economies................ 549 1,064 (3) (1) (13) (1)
------ ------ ----- -----
Total Global Finance.............. $1,251 $2,456 $(313) (20) $(577) (19)
====== ====== ===== =====
Other Operating Expense (D)
North America, Europe and Japan... $ 545 $1,082 $ 5 1 $ 25 2
Emerging Economies................ 279 540 19 7 (30) (5)
------ ------ ----- -----
Total Global Finance.............. $ 824 $1,622 $ 24 3 $ (5) -
====== ====== ===== =====
Credit Costs (E)
North America, Europe and Japan... $ (15) $ (61) $ (53) nm $(153) nm
Emerging Economies................ 7 (5) (1) (13) (28) nm
------ ------ ----- -----
Total Global Finance.............. $ (8) $ (66) $ (54) nm $(181) nm
====== ====== ===== =====
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
(B) The 1994 periods reflect the implementation of FASB Interpretation No. 39,
"Offsetting of Amounts Related to Certain Contracts."
(C) After adding back the net cost to carry cash-basis loans and OREO.
(D) Excludes net writedowns and direct revenues and expenses related to OREO.
(E) Includes net write-offs (recoveries), the net cost to carry cash-basis loans
and OREO, as well as net writedowns, net gains (losses) on sales and direct
revenues and expenses related to OREO.
nm Not meaningful as percentage equals or exceeds 100%.
Global Finance reported net income of $285 million in the second quarter and
$549 million in the first half of 1994, compared with $440 million and $820
million in the comparable 1993 periods. Global Finance net income in North
America, Europe and Japan was $102 million in the quarter and $194 million in
the first half, compared with $235 million and $464 million in the prior year
periods. Emerging Economies net income was $183 million in the second quarter
and $355 million in the first half of 1994, compared with $205 million and $356
million in the year-ago periods. Global Finance earnings in the quarter and
first half of 1994 reflected substantially lower revenues from trading-related
activities in North America, Europe and Japan as well as in the Emerging
Economies. The effect on earnings from lower trading-related activities was
partially offset by credit improvements in North America and Europe and solid
base business performance in the Emerging Economies.
Global Finance reported revenues of $1.2 billion in the quarter and $2.4 billion
in the first half of 1994, compared with $1.6
7
<PAGE>
billion and $3.0 billion in the year-ago periods. Global Finance revenues in
North America, Europe and Japan were $0.7 billion in the quarter and $1.4
billion in the first half, compared with $1.0 billion and $1.9 billion in the
prior-year periods. These results reflected lower revenues from trading-related
activities. Global Finance Emerging Economies revenues were essentially
unchanged from the 1993 second quarter and first half at $0.5 billion and $1.1
billion, respectively, on solid performance across businesses, which offset
reductions in trading-related revenues.
Revenues from trading-related activities contributed $0.5 billion of Global
Finance revenues in the second quarter and $0.8 billion in the first half,
compared with $0.8 billion and $1.5 billion in the year-ago periods. Trading
revenues from activities in the foreign exchange, securities trading and
derivatives products businesses are reflected in foreign exchange and securities
trading revenues but also include other amounts, principally net interest
revenue. Though second quarter and first half revenues from trading-related
activities reflected sustained customer demand for risk management products,
including derivatives, rising interest rates and difficult market conditions
adversely affected trading activities related to Citicorp's own account,
particularly in the first quarter of 1994. See page 32 for a discussion of the
income statement impact of trading activities and see page 26 for a further
discussion of Derivative and Foreign Exchange Activities.
Operating expenses for the second quarter were essentially unchanged from the
prior year quarter, but $52 million lower in the first half. The 1994 results
primarily reflect cost containment measures in North America, Europe and Japan,
offset by business expansion costs in the Emerging Economies, while the prior
year included the previously reported charges related to the withdrawal from
portfolio management activities in India.
On July 25, 1994, the Reserve Bank of India announced amounts which it would
require certain foreign and domestic banks in India to pay pertaining to their
involvement in securities-related activities in India as previously described in
the 1993 Annual Report and Form 10-K. Citibank has been ordered to show cause
why a total amount of approximately $16 million of refunded interest and penal
interest should not be levied against it for alleged irregularities relating to
such activities. As discussed in the 1993 Annual Report and Form 10-K, Citicorp
does not expect any payment that may result from the Reserve Bank's action to
have a material effect on Citicorp's results of operations.
The credit provision in the quarter was $21 million, while the six month period
reflected a net recovery of $13 million, compared with net provisions of $87
million and $198 million in the year-ago periods. Global Finance businesses in
North America, Europe and Japan recorded a net provision of $19 million in the
quarter, while six month amounts reflected a net recovery of $28 million,
partially offset by provision building of $24 million. The prior year's
provisions reflected net write-offs of $31 million in the quarter and $61
million year-to-date and an additional provision of $51 million and $89 million,
respectively. The Emerging Economies portfolio experienced net write-offs of $2
million in the second quarter and net recoveries of $9 million year-to-date,
compared with net write-offs of $5 million and $11 million in the year-ago
periods together with an addition to the provision of $37 million in the prior
year's first quarter.
Average assets increased $31 billion from the prior year's quarter, reflecting
the effect of implementing FASB Interpretation No. 39, "Offsetting of Amounts
Related to Certain Contracts." The Global Finance businesses in North America,
Europe and Japan also reflected higher levels of federal funds sold and resale
agreements, while the Emerging Economies businesses included loan portfolio
growth.
8
<PAGE>
NORTH AMERICA COMMERCIAL REAL ESTATE
<TABLE>
<CAPTION>
Increase/(Decrease) vs.
--------------------------
2nd Qtr. Y-T-D 2nd Qtr. Y-T-D
(In Millions of Dollars) 1994 1994 1993(A) % 1993(A) %
-------- ------ -------- --- ------- ---
<S> <C> <C> <C> <C> <C> <C>
Total Revenue...................... $ 24 $ 43 $ 42 nm $ 85 nm
Operating Expense.................. 33 93 (67) (67) (133) (59)
Provision for Credit Losses........ 101 207 (85) (46) (147) (42)
----- ----- ----- -----
(Loss) Before Taxes................ $(110) $(257) $ 194 64 $ 365 59
Income Taxes....................... (38) (109) 84 69 125 53
----- ----- ----- -----
Net (Loss)......................... $ (72) $(148) $ 110 60 $ 240 62
===== ===== ===== =====
Average Assets ($ Billions)........ 9 9 (3) (25) (4) (31)
ADJUSTED FOR CREDIT-RELATED ITEMS
Total Revenue (B).................. 43 88 7 19 20 29
Total Operating Expense (C)........ 33 68 (6) (15) (9) (12)
Credit Costs (D)................... 82 201 (169) (67) (362) (64)
Additional Provision (E)........... 38 76 (12) (24) 26 52
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
(B) After adding back the net cost to carry cash-basis loans and OREO.
(C) Excludes net writedowns and direct revenues and expenses related to OREO.
(D) Includes net write-offs, the net cost to carry cash-basis loans and OREO, as
well as net writedowns, net gains (losses) on sales and direct revenues and
expenses related to OREO.
(E) Represents provision for credit losses above net write-offs.
nm Not meaningful, as percentage equals or exceeds 100%.
North America Commercial Real Estate, which comprises the commercial real estate
divisions in the U.S. and Canada, reported a net loss of $72 million in the
second quarter and $148 million in the first half of 1994, reflecting an
improvement from net losses of $182 million and $388 million in the year-ago
periods, primarily due to lower levels of credit costs.
Revenues benefited primarily from the lower net cost to carry cash-basis loans
and OREO, while operating expenses included lower net OREO writedowns. The
provision for credit losses was $101 million in the quarter and $207 in the
first half, compared with $186 million and $354 million in the year-ago periods.
Cash-basis loans were $1.5 billion at June 30, 1994, down from $1.7 billion at
March 31, 1994 and $2.5 billion a year ago. The OREO portfolio totaled $1.9
billion at June 30, 1994, down from $2.1 billion at March 31, 1994 and $2.8
billion a year ago. Although credit costs for 1994 are expected to decline from
the prior year, cash-basis loans and OREO are expected to remain at relatively
high levels with further additions to credit reserves possible.
See page 16 for further details with respect to the North America Commercial
Real Estate Portfolio.
9
<PAGE>
CROSS-BORDER REFINANCING PORTFOLIO
<TABLE>
<CAPTION>
Increase/(Decrease) vs.
----------------------------
2nd Qtr. Y-T-D 2nd Qtr. Y-T-D
(In Millions of Dollars) 1994 1994 1993(A) % 1993(A) %
-------- ------ -------- ---- ------- ---
<S> <C> <C> <C> <C> <C> <C>
Total Revenue................ $ 56 $ 84 $ 43 nm $ 25 42
Operating Expense............ 6 12 (1) (14) (1) (8)
Provision for Credit Losses.. (11) (46) (11) - (45) nm
---- ---- ---- ----
Income Before Taxes.......... $ 61 $118 $ 55 nm $ 71 nm
Income Taxes................. 8 17 14 nm 19 nm
---- ---- ---- ----
Net Income................... $ 53 $101 $ 41 nm $ 52 nm
==== ==== ==== ====
Average Assets ($ Billions).. 3 3 - - - -
(A) Reclassified to conform to latest quarter's presentation.
nm Not meaningful, as percentage equals or exceeds 100%.
</TABLE>
Citicorp's cross-border refinancing portfolio activities resulted in net income
of $53 million in the quarter and $101 million year-to-date compared with net
income of $12 million and $49 million, respectively, in the corresponding
periods in 1993. The results included $47 million and $69 million of Brazil
interest on medium- and long-term outstandings recognized during the quarter and
the first six months of 1994, respectively, compared with $6 million and $48
million in the corresponding periods a year ago. The results also included
releases from the allowance for credit losses of $10 million and $34 million in
the second and first quarters of 1994.
Citicorp's medium- and long-term claims on third parties in the refinancing
portfolio at June 30, 1994 totaled $3.6 billion, comprising $2.8 billion and
$0.8 billion classified as Securities and Loans, respectively. Refer to
footnote D on page 49 for additional discussion related to amounts classified as
securities.
The $3.6 billion of medium- and long-term claims at June 30, 1994 was up from
$3.1 billion at March 31, 1994 and $3.0 billion at June 30, 1993. The increase
during the quarter is primarily attributable to new money investments in Brazil
and the recognition of fair value of securities received in connection with the
Brazil refinancing, as described below.
On April 15, 1994, the Government of Brazil completed its external-debt
refinancing package covering essentially all of its medium- and long-term
commercial bank debt. Citicorp exchanged approximately $2.7 billion in face
value of Brazilian debt (which had a carrying value of $818 million) and a new
money investment of $221 million for a combination of debt securities with a
market value of $1.4 billion. Upon receipt of the bonds, Citicorp recorded a
credit recovery of $318 million to the commercial loan loss reserve in
recognition of their fair value, in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." Citicorp also recognized as other revenue
(included as a capital-building transaction in Corporate Items) an amount of
$173 million which represented the fair value of past-due interest bonds
received in connection with the refinancing.
The terms of the instruments received and the impact of the exchange on the
weighted average interest rates and maturities of the portfolio were described
in detail in the Citicorp First Quarter 1994 Report on Form 10Q on pages 20 and
21.
Citicorp's refinancing portfolio outstandings on a cash basis were $0.2 billion
at June 30, 1994, down from $1.0 billion at March 31, 1994 and $1.1 billion at
June 30, 1993. The reduction in the quarter resulted from the exchange of
Brazilian loans for marketable securities, pursuant to the Brazil refinancing
completed in the quarter.
10
<PAGE>
CORPORATE ITEMS
<TABLE>
<CAPTION>
Increase/(Decrease) vs.
---------------------------
2nd Qtr. Y-T-D 2nd Qtr. Y-T-D
(In Millions of Dollars) 1994 1994 1993(A) % 1993(A) %
-------- ------ -------- --- ------- ---
<S> <C> <C> <C> <C> <C> <C>
Total Revenue........ $246 $366 $ 172 nm $ 104 40
Operating Expense.... 109 212 5 5 (22) (9)
---- ---- ----- -----
Income Before Taxes.. $137 $154 $ 167 nm $ 126 nm
Income Taxes......... (63) 8 (153) nm (272) (97)
---- ---- ----- -----
Net Income........... $200 $146 $ 320 nm $ 398 nm
==== ==== ===== =====
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
nm Not Meaningful as percentage equals or exceeds 100%.
Corporate Items consists of unallocated corporate costs and other corporate
items, including net gains related to capital-building transactions and the
offset created by attributing income taxes to business activities on a local
tax-rate basis. The prior year results included a net loss of $6 million for
the quarter and $12 million for the first half attributable to the U.S. market
data services business of Quotron, which was sold in the first quarter of 1994.
Corporate Items reported net income of $200 million in the quarter and $146
million in the first half, compared with a net loss of $120 million in the
second quarter of 1993 and a net loss of $252 million in the first half of 1993.
The Corporate Items results included net gains from capital-building
transactions of $74 million ($117 million before taxes) for the quarter and $88
million ($140 million before taxes) for the first half, compared with a net loss
of $14 million ($25 million net loss before taxes) for the prior-year quarter
and $27 million net gain ($50 million before taxes) for the first half of 1993.
Corporate Items results for the second quarter and the first half of 1994 also
included a $150 million tax benefit related to a reduction of the deferred tax
asset valuation allowance following a reassessment of the expected level and mix
of future earnings.
Excluding capital-building transactions and the deferred tax benefit referred to
above, Corporate Items had a net loss of $24 million in the second quarter and
$92 million in the first half of 1994, compared with a net loss of $106 million
and a net loss of $279 million for the comparable periods in 1993. The
improvement in earnings in both the second quarter and first half of 1994
compared with the respective 1993 periods is primarily attributable to a lower
income tax offset created as a result of income taxes attributed to business
activities on a local tax-rate basis.
11
<PAGE>
CONSUMER LOAN PORTFOLIO DATA
The consumer loan category represents loans managed by Citicorp's Global
Consumer business. Consumer loans are generally written off not later than a
predetermined number of days past due on a contractual basis, with the number of
days set at an appropriate level according to loan product and country.
The following table summarizes delinquencies in the on-balance sheet consumer
loan portfolio and in the total serviced mortgage portfolio in terms of both the
dollar amount of loans 90 days past due and as a percentage of total loans. In
addition, delinquencies in the serviced mortgage portfolio are shown by number
of loans and as a percentage of the total number of loans serviced.
CONSUMER LOAN DELINQUENCY INFORMATION
<TABLE>
<CAPTION>
June 30 Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
1994 1994 1993 1993 1993 1993
------------------------ ------- ------- -------- ------- -------
90 Days
(Dollars in Billions) Total Loans (A) Past Due 90 Days Past Due
--------------- -------- ---------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
U.S Mortgages Held................... $ 16.1 $ 0.6 $ 0.7 $ 0.7 $ 0.7 $ 0.8 $ 0.9
Ratio............................ 3.9% 4.0% 3.8% 4.0% 4.0% 4.5%
Consumer Loans Other Than
U.S. Mortgages...................... 68.8 2.3 2.3 2.4 2.5 2.5 2.5
Ratio............................ 3.3% 3.6% 3.6% 3.9% 4.0% 4.2%
U.S. Mortgages Purchased Under
Recourse Provisions (B)............. 0.6 0.5 0.5 0.5 0.5 0.5 0.5
-------- ------- ------- ------- ------- ------- -------
Total Consumer Loans................. $ 85.5 $ 3.4 $ 3.5 $ 3.6 $ 3.7 $ 3.8 $ 3.9
======== ======= ======= ======= ======= ======= =======
Ratio............................ 4.0% 4.3% 4.2% 4.5% 4.7% 4.8%
Total Dollar Amount of Conventional
First Mortgages Serviced (C)........ $ 35.9 $ 1.6 $ 1.7 $ 1.7 $ 1.7 $ 1.8 $ 1.8
Ratio............................ 4.5% 4.6% 4.4% 4.3% 4.1% 4.0%
Total Number of Conventional First
Mortgages Serviced (C).............. 359,372 12,136 12,655 12,649 12,832 12,781 13,205
Ratio............................ 3.4% 3.4% 3.3% 3.2% 3.0% 2.9%
</TABLE>
(A) Loan amounts are net of unearned income.
(B) Mortgages were delinquent 90 days or more when purchased under recourse
provision of mortgage sales.
(C) Includes both owned and sold mortgages.
At June 30, 1994, consumer loans on the balance sheet that were delinquent 90
days or more declined to $3.4 billion from $3.5 billion at March 31, 1994 and
$3.8 billion at June 30, 1993. The ratio of delinquent loans to total loans was
down to 4.0% from 4.3% at March 31, 1994 as total consumer loans grew $2.9
billion during the quarter. The increase in consumer loans in the quarter
resulted from higher held U.S. credit cards, a continuation of volume growth in
the Emerging Economies and the impact of recent foreign exchange trends on the
portfolio in Europe; these increases more than offset the continuing decline in
the held U.S. mortgage portfolio. Since June 30, 1993, consumer loans
delinquent 90 days or more have declined $0.4 billion and the ratio has fallen
0.7%, reflecting lower delinquencies in U.S. credit cards and mortgages,
partially offset by higher delinquencies in Europe, primarily Germany.
The $0.2 billion improvement in U.S. mortgage delinquencies since June 30, 1993
reflects collection efforts and transfers to OREO. The total dollar amount and
number of serviced U.S. conventional first mortgages that were delinquent have
declined $0.2 billion and 645 loans since the second quarter of last year. The
related delinquency ratios for the serviced portfolio, however, increased, as
refinancings and other repayments exceeded new originations.
Recourse provisions of certain U.S. mortgage sales arrangements allow Citicorp
the option of purchasing delinquent
12
<PAGE>
mortgages underlying the pass-through securities to take advantage of lower
funding costs when market interest rates fall below the coupon rate required to
be paid to the security holder. Mortgages purchased under such recourse
provisions were $0.6 billion at June 30, 1994, unchanged from the prior quarter-
end.
Citicorp's policy for suspending the accrual of interest on consumer loans
varies depending on the terms, security and credit loss experience
characteristics of each product, and in consideration of write-off criteria in
place. At June 30, 1994, interest accrual had been suspended on $1,142 million
of U.S. mortgages and $1,671 million of other consumer loans. The corresponding
amounts at March 31, 1994 and June 30, 1993 were $1,215 million and $1,269
million, respectively, of U.S. mortgages and $1,689 million and $1,833 million,
respectively, of other consumer loans.
Other consumer loans included $4.2 billion and $2.1 billion of commercial real
estate loans related to community and private banking activities conducted by
Global Consumer businesses in the U.S. and outside the U.S., respectively. At
June 30, 1994, the U.S. portfolios included $378 million of loans on which the
accrual of interest had been suspended, primarily in New York and California.
The commercial real estate portfolio outside the U.S. included $68 million of
loans on which the accrual of interest had been suspended, primarily in Europe.
Consumer loans delinquent 90 days or more on which interest continued to be
accrued, primarily loans in Germany and U.S. credit card receivables, were $691
million at June 30, 1994, compared with $738 million at March 31, 1994 and $780
million at June 30, 1993. The majority of these loans are automatically written
off upon reaching a predetermined number of days past due on a contractual
basis. Consumer OREO totaled $1,194 million at June 30, 1994, $1,247 million at
March 31, 1994 and $1,312 million at June 30, 1993.
While the U.S. economy is improving, economic conditions in Europe remain weak.
Credit costs, delinquencies and loans on which the accrual of interest is
suspended in these regions, as well as OREO in the U.S., could remain at
relatively high levels with further increases in credit reserves possible.
13
<PAGE>
COMMERCIAL LOAN PORTFOLIO DATA
CASH-BASIS AND RENEGOTIATED COMMERCIAL LOANS
When it is determined as a result of evaluation procedures that the payment of
interest or principal on a commercial loan is doubtful of collection, the loan
is placed on a cash (non-accrual) basis. Where interest or principal is past
due for 90 days or more, the loan is placed on a cash basis except where the
loan is well secured and in the process of collection. Any interest accrued on
a loan placed on cash-basis is reversed and charged against current earnings.
Interest on cash-basis loans is thereafter included in earnings only to the
extent actually received in cash. Where there is doubt regarding the ultimate
collectibility of the loan principal, cash receipts, whether designated as
principal or interest, are thereafter applied to reduce the recorded investment
in the loan. Cash-basis loans are returned to accrual status when all
contractual principal and interest amounts are reasonably assured of repayment
and there is a sustained period of repayment performance in accordance with the
contractual terms. Renegotiated loans are those loans where a concession has
been granted as a result of the borrower's inability to meet the original terms.
<TABLE>
<CAPTION>
CASH-BASIS AND RENEGOTIATED COMMERCIAL LOANS
June 30 Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
(In Millions of Dollars) 1994 1994 1993 1993 1993 1993
------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
CASH-BASIS LOANS:
North America Commercial Real Estate........... $1,495 $1,654 $1,719 $2,138 $2,474 $2,593
Global Finance................................. 581 699 755 1,063 1,346 1,267
------ ------ ------ ------ ------ ------
Total (excluding Cross-Border Refinancing).. $2,076 $2,353 $2,474 $3,201 $3,820 $3,860
Cross-Border Refinancing....................... 165 991 1,041 1,068 1,082 1,242
------ ------ ------ ------ ------ ------
TOTAL CASH-BASIS COMMERCIAL LOANS.............. $2,241 $3,344 $3,515 $4,269 $4,902 $5,102
====== ====== ====== ====== ====== ======
RENEGOTIATED LOANS............................. $ 417 $ 384 $ 708 $ 377 $ 147 $ 136
====== ====== ====== ====== ====== ======
</TABLE>
Total cash-basis commercial loans were $2.2 billion at June 30, 1994, down $1.1
billion from March 31, 1994 and down $2.7 billion from $4.9 billion at June 30,
1993. Cash-basis loans in the cross-border refinancing portfolio of $0.2
billion at June 30, 1994, declined $826 million from March 31, 1994 and $917
million from June 30, 1993. The reduction in the second quarter reflects the
exchange of $818 million of Brazilian outstandings for securities (held in the
available for sale portfolio) pursuant to the refinancing agreement completed in
the quarter.
Commercial cash-basis loans, excluding those in the cross-border refinancing
portfolio, were $2.1 billion at June 30, 1994, down from $2.4 billion at March
31, 1994 and $3.8 billion at June 30, 1993. Global Finance cash-basis loans
were $0.6 billion at June 30, 1994, down $0.1 billion from March 31, 1994 and
$0.8 billion from June 30, 1993, principally reflecting transfers to accrual as
well as repayments. The North America Commercial Real Estate portfolio,
including cash-basis loans, is discussed on page 16.
Renegotiated loans increased $33 million in the quarter and $270 million from
the year-ago quarter, primarily reflecting restructuring activities in the North
America Commercial Real Estate Portfolio.
14
<PAGE>
<TABLE>
<CAPTION>
CASH-BASIS COMMERCIAL LOAN ACTIVITY (A)
2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Billions of Dollars) 1994 1994 1993 1993 1993 1993
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Beginning Balance......... $ 2.4 $ 2.5 $ 3.2 $ 3.8 $ 3.9 $ 4.1
New Cash-Basis Loans...... 0.3 0.3 0.3 0.4 0.6 0.5
Payments/Loans Returned
to Accrual Status........ (0.3) (0.3) (0.8) (0.7) (0.4) (0.2)
Gross Write-offs (B)...... (0.1) (0.1) (0.1) (0.2) (0.2) (0.1)
Transfers to OREO......... (0.2) - (0.1) (0.1) (0.1) (0.4)
----- ----- ----- ----- ----- -----
Ending Balance............ $ 2.1 $ 2.4 $ 2.5 $ 3.2 $ 3.8 $ 3.9
===== ===== ===== ===== ===== =====
</TABLE>
(A) Excludes cash-basis cross-border refinancing loans.
(B) Excludes write-offs on OREO, letters of credit and swaps.
The net decrease in cash-basis loans in the quarter, excluding those in the
cross-border refinancing portfolio, resulted primarily from payments and returns
to accrual of $0.3 billion and also reflected write-offs and transfers to OREO
(principally in the North America Commercial Real Estate portfolio) of $0.3
billion. These were partially offset by additional loans placed on cash basis
of $0.3 billion, approximately the same as in the first quarter of 1994 and down
from $0.6 billion in the year-ago quarter. The North America Commercial Real
Estate portfolio accounted for $0.2 billion of the new cash-basis loans in the
quarter. A table of activity in cash-basis loans in that portfolio is presented
on page 17.
The amount of new loans placed on a cash basis has declined from the levels
experienced in 1993. However, weak commercial real estate markets in North
America could continue to result in relatively high amounts of new cash-basis
loans. A table of Citicorp's commercial and consumer cash-basis, renegotiated
and past due loans is presented on page 48.
15
<PAGE>
COMMERCIAL REAL ESTATE
NORTH AMERICA COMMERCIAL REAL ESTATE
The North America Commercial Real Estate portfolio comprises relationships
managed by the commercial real estate divisions in the U.S. and Canada.
Citicorp manages the risks associated with the real estate portfolio through a
variety of risk management techniques, which are described in the 1993 Annual
Report and Form 10-K.
<TABLE>
<CAPTION>
NORTH AMERICA COMMERCIAL REAL ESTATE PORTFOLIO SUMMARY
June 30 Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
(In Billions of Dollars) 1994 1994 1993 1993 1993 1993
------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Loans (A).......................... $ 5.0 $ 5.7 $ 5.8 $ 6.5 $ 6.6 $ 7.0
Renegotiated Loans................. 0.4 0.3 0.6 0.3 0.1 0.1
Cash-Basis Loans................... 1.5 1.7 1.7 2.1 2.5 2.6
----- ----- ----- ----- ----- -----
Total Loans....................... $ 6.9 $ 7.7 $ 8.1 $ 8.9 $ 9.2 $ 9.7
OREO (B)........................... 1.9 2.1 2.3 2.6 2.8 3.0
----- ----- ----- ----- ----- -----
Total Loans and OREO.............. $ 8.8 $ 9.8 $10.4 $11.5 $12.0 $12.7
===== ===== ===== ===== ===== =====
Unfunded Commitments............... $ 0.8 $ 0.8 $ 0.8 $ 0.9 $ 1.1 $ 1.2
Letters of Credit.................. 1.7 1.7 1.9 1.9 2.0 2.1
Other.............................. 0.4 0.4 0.5 0.4 0.5 0.5
----- ----- ----- ----- ----- -----
TOTAL EXPOSURE..................... $11.7 $12.7 $13.6 $14.7 $15.6 $16.5
===== ===== ===== ===== ===== =====
2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Millions of Dollars) 1994 1994 1993 1993 1993 1993
------- ------- ------- -------- ------- -------
Net Write-offs (C)................. $ 63 $ 68 $ 78 $ 49 $ 136 $ 168
Net OREO Writedowns................ 12 36 27 73 65 92
</TABLE>
(A) Excludes renegotiated and cash-basis loans.
(B) Includes in-substance foreclosures of $1.1 billion at June 30, 1994 and
March 31, 1994; $1.3 billion at December 31, 1993; $1.4 billion at September
30, 1993; $1.6 billion at June 30, 1993 and $1.7 billion at March 31, 1993.
(C) Includes net write-offs of real estate-related loans of $15 million in the
second quarter of 1994 and $24 million in the second quarter of 1993.
Total North America Commercial Real Estate exposure of $11.7 billion at June 30,
1994 was down $3.9 billion or 25% from the second quarter of 1993 and has
declined 56% from the $26.5 billion of peak exposure in 1989. Citicorp
continues to actively reduce its exposure through a series of initiatives which,
year on year, have resulted in paydowns in addition to write-offs and
writedowns. In addition, asset sales of approximately $360 million were
completed during the second quarter of 1994, compared with $70 million in the
year-ago quarter.
Citicorp's strategy for the North America Commercial Real Estate portfolio is
one of active remedial management to maximize the long term value and
recoverability of the assets. The principal focus continues to be the
restructuring and repayment of existing loans together with managing and
optimizing returns on OREO assets. Citicorp's real estate professionals develop
remedial management strategies for each loan or OREO property, which are
constantly monitored and adjusted as conditions change through an extensive,
ongoing portfolio management process.
Cash-basis loans of $1.5 billion at June 30, 1994 were down from $1.7 billion at
March 31, 1994 and $2.5 billion at June 30, 1993. OREO declined to $1.9 billion
from $2.1 billion at March 31, 1994 and $2.8 billion at June 30, 1993.
Approximately $0.8 billion of the $1.5 billion of cash-basis loans at quarter
end were contractually past due less than 90 days as to interest and principal
(including $0.2 billion of construction and self-funded loans) but were
classified as cash basis due to uncertainty regarding future cash flows. As
noted in the table on page 17, the cash-basis loans and OREO annualized cash
yield was 4.6% for the first half of 1994, up from 3.9% in 1993.
16
<PAGE>
<TABLE>
<CAPTION>
CASH FLOWS
Y-T-D 1994
-----------------------
Average Cash Annualized Cash
(Dollars In Millions) Carrying Value Flows Yield (%)
-------------- ----- ---------------
<S> <C> <C> <C>
Cash-Basis Loans (A):
Yields Over 3%................... $1,067 $ 38 7.2%
Yields Under 3%.................. 264 2 1.1%
No Payments Received............. 302 - -
------ ----
Total............................ $1,633 $ 40 4.9%
------ ----
In-Substance Foreclosures (A):
Yields Over 3%................... $ 567 $ 23 8.4%
Yields Under 3%.................. 107 1 0.5%
No Payments Received............. 447 - -
------ ----
Total............................ $1,121 $ 24 4.3%
------ ----
OREO: (B)........................ $1,005
Revenues......................... $108 21.7%
Expenses......................... (85) (17.0%)
----
Net.............................. $ 23 4.7%
----
Total Cash-Basis Loans and OREO.. $3,759 $ 87 4.6%
====== ====
</TABLE>
(A) Cash flows represent cash interest payments received of which $38 million
were applied as a reduction of principal ($25 million for cash-basis loans
and $13 million for in-substance foreclosures).
(B) Excluding in-substance foreclosures and associated cash flows.
NORTH AMERICA COMMERCIAL REAL ESTATE CASH-BASIS LOANS ACTIVITY
<TABLE>
<CAPTION>
2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Millions of Dollars) 1994 1994 1993 1993 1993 1993
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Beginning Balance................. $1,654 $1,719 $2,138 $2,474 $2,593 $2,734
New Cash-Basis Loans.............. 214 202 199 241 336 403
Write-offs (A).................... (65) (61) (80) (71) (115) (99)
Loans Returned to Accrual Status.. (84) (30) (340) (222) (170) (6)
Payments and Other................ (77) (138) (90) (190) (125) (36)
Transfers to OREO................. (147) (38) (108) (94) (45) (403)
------ ------ ------ ------ ------ ------
Ending Balance.................... $1,495 $1,654 $1,719 $2,138 $2,474 $2,593
====== ====== ====== ====== ====== ======
</TABLE>
(A) Represents gross write-offs, before recoveries, and excludes write-offs on
OREO, letters of credit and swaps.
Renegotiated loans were $358 million at June 30, 1994, up from $325 million at
March 31, 1994 and $101 million at June 30, 1993. The annualized interest rate
on these loans approximated 5.8%.
17
<PAGE>
NORTH AMERICA COMMERCIAL REAL ESTATE OREO ACTIVITY
<TABLE>
<CAPTION>
2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Millions of Dollars) 1994 1994 1993 1993 1993 1993
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Beginning Balance.............. $2,130 $2,332 $2,547 $2,825 $3,032 $2,898
New OREO....................... 169 45 113 94 57 403
Writedowns (A)................. (37) (49) (38) (75) (93) (133)
Sales, Paydowns and Other (B).. (316) (198) (290) (297) (171) (136)
------ ------ ------ ------ ------ ------
Ending Balance................. $1,946 $2,130 $2,332 $2,547 $2,825 $3,032
====== ====== ====== ====== ====== ======
</TABLE>
(A) Includes gross write-offs on assets generally taken within 90 days of their
transfer to OREO.
(B) Includes in-substance foreclosures returned to accrual loan status of $18
million in the second quarter of 1994; $2 million in the fourth quarter of
1993; $210 million in the third quarter of 1993; and $15 million in the
second quarter of 1993.
The OREO portfolio, which is carried at the estimated fair value of the
underlying properties, includes both properties to which Citicorp has taken
title, as well as in-substance foreclosures ($1,067 million at June 30, 1994)
where Citicorp does not have ownership of the property and foreclosure has not
occurred. During the first half of 1994, Citicorp sold OREO properties totaling
approximately $340 million.
Unfunded commitments of $0.8 billion at June 30, 1994 were down $0.3 billion
from a year ago. These commitments are concentrated in the office (30%) and
residential (21%) markets. Office commitments represent obligations to fund
property stabilization and lease-up costs. Residential commitments represent
aggregate commitments to fund construction costs over the life of the various
projects. Generally, predetermined contractual criteria have limited maximum
outstanding loans at any one time to amounts substantially less than the
aggregate obligation. At June 30, 1994, $0.3 billion of commitments related to
borrowers experiencing financial difficulties.
Citicorp also provides standby letters of credit, the majority of which back
stop tax-exempt multi-family housing bonds secured by residential properties.
Approximately $0.5 billion of the $1.7 billion of outstanding letters of credit
at June 30, 1994 related to projects where debt service is continuing but the
loan to value ratios have deteriorated below target levels and/or letter of
credit fees are not being paid.
The North America Real Estate Portfolio is diversified by both project type and
location, with exposures in the office, residential and retail sectors
comprising 39%, 22% and 17%, respectively. Geographically, the largest regions
are the West (including California) at 32% and Mid-Atlantic (including New York)
at 18% at June 30, 1994.
The table on page 19 presents additional information related to the North
America Commercial Real Estate portfolio. Exposures are categorized by location
and project type based on the underlying collateral or source of repayment.
Exposures which are collateralized by (or for which the source of repayment is
from) properties in multiple locations are categorized geographically in "Multi-
location and Other".
18
<PAGE>
NORTH AMERICA COMMERCIAL REAL ESTATE PORTFOLIO BY PROJECT BY REGION
<TABLE>
<CAPTION>
JUNE 30, 1994 Dec. 31, 1993
(In Millions of Dollars) Office Residential Retail Hotel Land Ind'l. Other(A) TOTAL Total
------- ----------- ------ ----- ---- ------ -------- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NEW YORK Loans $ 254 $ 97 $ 35 $ - $ 33 $ - $ 31 $ 450 $ 452
Cash-Basis
Loans 38 3 30 10 - - 9 90 141
OREO 223 28 - 12 - - - 263 301
Letters of
Credit and
Other 107 102 6 - - - 8 223 301
TOTAL
EXPOSURE 622 230 71 22 33 - 48 1,026 1,195
OTHER MID-
ATLANTIC Loans 191 147 206 29 13 5 22 613 697
Cash-Basis
Loans 69 - - 20 39 - 1 129 132
OREO 158 8 3 23 14 1 - 207 218
Letters of
Credit and
Other 4 13 107 1 3 - 10 138 160
TOTAL
EXPOSURE 422 168 316 73 69 6 33 1,087 1,207
MIDWEST Loans 666 10 241 88 1 57 13 1,076 1,214
Cash-Basis
Loans 164 8 - 56 6 - 1 235 256
OREO 179 23 20 - 6 5 - 233 239
Letters of
Credit and
Other 65 136 - - - 9 3 213 280
TOTAL
EXPOSURE 1,074 177 261 144 13 71 17 1,757 1,989
NEW
ENGLAND Loans 109 2 - 19 - - 5 135 177
Cash-Basis
Loans 16 - - - - 18 1 35 50
OREO 78 - 13 - 42 - - 133 132
Letters of
Credit and
Other 26 15 - - - - 1 42 39
TOTAL
EXPOSURE 229 17 13 19 42 18 7 345 398
SOUTHEAST Loans 219 127 68 38 3 3 78 536 751
Cash-Basis
Loans - 18 45 15 4 8 - 90 96
OREO 206 14 75 5 10 4 4 318 491
Letters of
Credit and
Other 81 161 1 7 2 8 48 308 532
TOTAL
EXPOSURE 506 320 189 65 19 23 130 1,252 1,870
SOUTHWEST Loans 328 2 68 22 57 - 4 481 481
Cash-Basis
Loans 9 - 5 25 - 3 15 57 79
OREO 10 - 29 2 7 - - 48 95
Letters of
Credit and
Other 14 - - 3 - - 7 24 25
TOTAL
EXPOSURE 361 2 102 52 64 3 26 610 680
CALIFORNIA Loans 247 194 272 227 27 62 20 1,049 1,246
Cash-Basis
Loans 186 115 67 11 1 53 17 450 487
OREO 151 73 129 - 4 32 10 399 446
Letters of
Credit and
Other 115 709 14 7 - 1 96 942 967
TOTAL
EXPOSURE 699 1,091 482 245 32 148 143 2,840 3,146
OTHER WEST Loans 281 46 186 126 - - - 639 685
Cash-Basis
Loans - - 9 9 5 - 1 24 72
OREO 48 - 10 - 4 18 1 81 173
Letters of
Credit and
Other 12 107 16 - - 6 15 156 194
TOTAL
EXPOSURE 341 153 221 135 9 24 17 900 1,124
CANADA Loans 46 6 49 6 3 - 9 119 272
Cash-Basis
Loans 101 4 161 - 11 7 7 291 293
OREO 68 34 75 - 15 2 3 197 171
Letters of
Credit and
Other 44 3 10 - 3 6 58 124 217
TOTAL
EXPOSURE 259 47 295 6 32 15 77 731 953
MULTI-LOCATION
AND OTHER Loans - 40 33 30 - - 233 336 416
Cash-Basis
Loans - - - - - 3 91 94 113
OREO 19 - - - - 19 29 67 66
Letters of
Credit and
Other - 272 15 - - 1 346 634 395
TOTAL
EXPOSURE 19 312 48 30 - 23 699 1,131 990
TOTALS -
JUNE 30, 1994
LOANS(B)(C) $2,341 $ 671 $1,158 $585 $137 $127 $ 415 $ 5,434
CASH-BASIS
LOANS(B) 583 148 317 146 66 92 143 1,495
OREO 1,140 180 354 42 102 81 47 1,946
LETTERS OF
CREDIT AND
OTHER 468 1,518 169 18 8 31 592 2,804
TOTAL
EXPOSURE 4,532 2,517 1,998 791 313 331 1,197 11,679
Totals -
December 31, 1993
Loans(B)(C) $2,464 $ 798 $1,789 $631 $ 83 $162 $ 464 $ 6,391
Cash-Basis
Loans(B) 732 212 296 142 81 85 171 1,719
OREO 1,180 408 364 107 123 105 45 2,332
Letters of
Credit and
Other 617 1,664 299 17 14 30 469 3,110
Total
Exposure 4,993 3,082 2,748 897 301 382 1,149 13,552
</TABLE>
(A) Includes working capital and multi-project loans.
(B) Includes real estate-related loans of $0.2 billion in 1994 and 1993, of
which $76 million in 1994 and $96 million in 1993 were on a cash basis.
Also includes bankers acceptances (included in customers' acceptance
liability) of $50 million in 1993.
(C) Loans include $358 million and $589 million of renegotiated loans in 1994
and 1993, respectively, and exclude cash-basis loans.
19
<PAGE>
NET WRITE-OFFS AND NET OREO WRITEDOWNS
<TABLE>
<CAPTION>
2nd Qtr. 2nd Qtr.
(In Millions of Dollars) 1994 1993
-------- --------
<S> <C> <C> <C> <C>
Net OREO
By Region: Net Write-Offs Writedowns Total Total
-------------- ---------- ----- -----
New York.................. $ 4 $(16) $ (12) $ 25
Other Mid-Atlantic........ - (4) (4) 4
Midwest................... - 1 1 4
New England............... 1 1 2 2
Southeast................. 1 8 9 33
Southwest................. 2 1 3 5
California................ 35 9 44 81
Other West................ 1 1 2 11
Canada.................... 3 11 14 30
Multi-location/Other...... 16 - 16 6
--- ---- ----- -----
Total.................... $63 $ 12 $ 75 $ 201
=== ==== ===== =====
Net OREO
By Project Type: Net Write-Offs Writedowns Total Total
-------------- ---------- ----- -----
Office.................... $23 $ 14 $ 37 $ 52
Residential............... 17 (11) 6 60
Retail.................... 6 8 14 41
Hotel..................... - (6) (6) 5
Land...................... (1) 4 3 3
Industrial................ 2 3 5 12
Other (A)................. 16 - 16 28
--- ---- ----- -----
Total.................... $63 $ 12 $ 75 $ 201
=== ==== ===== =====
</TABLE>
(A) Includes real estate-related write-offs of $15 million in the second quarter
of 1994 and $24 million in the second quarter of 1993.
Net write-offs aggregated $63 million in the second quarter of 1994, down from
$68 million in the first quarter and $136 million in the second quarter of 1993.
Net OREO writedowns totaled $12 million in the quarter, compared with $36
million in the first quarter of 1994 and $65 million in the second quarter of
1993.
While cash-basis loans and OREO levels have declined, they are expected to
remain at relatively high levels. Although there is improvement and increasing
liquidity in certain commercial real estate markets, weak market conditions,
particularly in California and Canada, and also in the office sector are
expected to continue to adversely affect the portfolio. As a result, credit
provisions (including net write-offs), net OREO writedowns and inflows to cash-
basis loans could remain at relatively high levels in 1994, although down from
the prior year.
OTHER
Citicorp's Global Finance businesses include $2.0 billion of commercial real
estate loans in addition to those managed by Citicorp's U.S. and Canadian
commercial real estate divisions. Substantially all of these loans are in
offices outside of North America.
Cash-basis commercial real estate loans in this portfolio were $45 million at
June 30, 1994, compared with $48 million and $111 million at March 31, 1994 and
June 30, 1993, respectively. Commercial OREO in this portfolio was $0.5 billion
at June 30, 1994, unchanged from March 31, 1994 and down from $0.6 billion at
June 30, 1993.
20
<PAGE>
CAPITAL, PRICE RISK, LIQUIDITY, DERIVATIVE AND FOREIGN EXCHANGE ACTIVITIES
CAPITAL
Citicorp is subject to risk-based capital guidelines issued by the Federal
Reserve Board, which were detailed in the 1993 Annual Report and Form 10-K. The
risk-based capital guidelines require a minimum ratio of Tier 1 capital to risk-
adjusted assets of 4.0% and a minimum ratio of combined Tier 1 and Tier 2
capital to risk-adjusted assets of 8.0%.
The risk-based capital guidelines are supplemented by a leverage ratio
requirement. This requirement establishes a minimum leverage ratio of 3.0% for
the highest rated banking organizations. Other banking organizations are
expected to have ratios of at least 4.0-5.0% depending on their particular
growth plans and conditions (including diversification of risk, asset quality,
earnings, and liquidity). The ratio is defined as Tier 1 capital divided by
adjusted average assets. Citicorp has not been advised by the Federal Reserve
Board of a specific applicable minimum leverage ratio.
Common stockholders' equity increased $698 million during the quarter to $11.6
billion, due principally to net income of $877 million, partially offset by cash
dividends declared on common and preferred stock of $149 million. Tier 1
capital at quarter-end was $15.0 billion, up from $14.0 billion at March 31,
1994 and $13.4 billion at year-end 1993. The increase in Tier 1 capital during
the quarter also reflects the issuance of $175 million of cumulative perpetual
preferred stock. Tier 1 capital excludes the net unrealized gains on securities
available for sale since related amendments to risk-based capital guidelines
have not been adopted by the regulatory agencies. Total capital of $24.5
billion at June 30, 1994 was up from $23.5 billion at March 31, 1994 and $23.2
billion at year-end 1993.
<TABLE>
<CAPTION>
CITICORP RATIOS
Minimum June 30 Dec. 31 June 30
Required 1994 1993 1993
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Common Stockholders' Equity (A).. 4.55% 4.65% 4.16%
Tier 1 Capital................... 4.00% 7.09 6.62 5.65
Tier 1 & Tier 2 Capital.......... 8.00 11.60 11.45 10.31
Leverage (A)..................... 3.00+ 6.22 6.15 5.52
</TABLE>
(A) The increase in total assets resulting from the implementation of FASB
Interpretation No. 39 in 1994 had the effect of reducing the Common
Stockholders' Equity and Leverage Ratios as of June 30, 1994 by 47 bp and 54
bp, respectively.
21
<PAGE>
COMPONENTS OF RISK-BASED CAPITAL UNDER REGULATORY GUIDELINES
<TABLE>
<CAPTION>
June 30 Dec. 31 June 30
(In Millions of Dollars) 1994 1993 1993
-------- -------- --------
<S> <C> <C> <C>
TIER 1 CAPITAL
Common Equity.................................. $ 11,560 $ 10,066 $ 9,003
Qualifying Preferred Stock (A)................. 4,062 3,887 3,456
Minority Interest.............................. 51 59 64
Less:
Net Unrealized Gains - Securities Available
for Sale (B)................................. (90) - -
Intangible Assets (C)........................ (362) (387) (409)
50% Investment in Certain Subsidiaries (D)... (254) (237) (281)
-------- -------- --------
Total Tier 1 Capital........................... $ 14,967 $ 13,388 $ 11,833
-------- -------- --------
TIER 2 CAPITAL
Allowance for Credit Losses (E)................ $ 2,666 $ 2,551 $ 2,637
Preferred Stock (A)............................ 16 16 114
Qualifying Debt (F)............................ 7,079 7,434 7,281
Less:
50% Investment in Certain Subsidiaries (D)... (254) (237) (280)
-------- -------- --------
Total Tier 2 Capital........................... $ 9,507 $ 9,764 $ 9,752
Total Qualifying Capital....................... $ 24,474 $ 23,152 $ 21,585
======== ======== ========
Net Risk-Adjusted Assets (G)................... $211,013 $202,273 $209,384
======== ======== ========
</TABLE>
(A) Cumulative preferred stock is limited within Tier 1 capital to 25% of the
sum of Common Equity, Qualifying Preferred Stock and Minority Interest. At
June 30, 1993, excess cumulative preferred stock of $81 million, which would
otherwise qualify as Tier 1 capital, was included in Tier 2 capital.
(B) Tier 1 capital excludes the net unrealized gains on securities available for
sale since related amendments to risk-based capital guidelines have not been
adopted by the regulatory agencies.
(C) Includes goodwill and certain other identifiable intangible assets.
(D) Primarily Citicorp Securities, Inc.
(E) Includable up to 1.25% of risk-adjusted assets. Any excess allowance is
deducted from risk-adjusted assets.
(F) Includes qualifying senior and subordinated debt, in an amount not exceeding
50% of Tier 1 capital, plus subordinated capital notes, subject to certain
limitations.
(G) Risk-adjusted assets include certain off-balance sheet activities and
commitments such as foreign exchange and derivative products and letters of
credit and also reflect deductions for intangible assets and any excess
allowance for credit losses. See page 26 for further discussion of
Derivative and Foreign Exchange Activities.
22
<PAGE>
Citicorp's subsidiary depository institutions are subject to the risk-based
capital guidelines issued by their respective primary federal bank regulatory
agencies. In addition, as discussed in Citicorp's 1993 Annual Report and Form
10-K, pursuant to the Federal Deposit Insurance Corporation Improvement Act of
1991 ("FDICIA"), federal bank regulatory agencies have defined five capital
tiers for depository institutions for purposes of implementing certain
regulations. Under these definitions, a "well capitalized" depository
institution must have a Tier 1 ratio of at least 6%, a combined Tier 1 and Tier
2 ratio of at least 10% and a leverage ratio of at least 5% and not be subject
to a directive, order or written agreement to meet and maintain specific capital
levels. An "adequately capitalized" depository institution must have a Tier 1
ratio of at least 4%, a combined Tier 1 and Tier 2 ratio of at least 8% and a
leverage ratio of at least 4%, or 3% in some cases. In addition, under the
regulations, the regulators can downgrade the capital status of a depository
institution under certain circumstances. As of June 30, 1994, all of Citicorp's
subsidiary depository institutions met the applicable "well capitalized"
standards.
CITIBANK, N.A. RATIOS
<TABLE>
<CAPTION>
Minimum June 30 Dec. 31 June 30
Required 1994 1993 1993
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Common Stockholders' Equity (A).. 5.90% 6.59% 6.13%
Tier 1 Capital (B)............... 4.00% 6.81 6.93 6.12
Tier 1 & Tier 2 Capital (B)...... 8.00 10.82 11.13 10.21
Leverage (A)..................... 3.00+ 5.62 6.06 5.67
</TABLE>
(A) The increase in total assets resulting from the implementation of FASB
Interpretation No. 39 in 1994 had the effect of reducing the Common
Stockholders' Equity and Leverage Ratios as of June 30, 1994 by 78 bp and 58
bp, respectively.
(B) Tier 1 capital and total regulatory capital (Tier 1 and Tier 2) at June 30,
1994 were up $565 million and $704 million, respectively, from December 31,
1993. The related capital ratios, however, decreased due to an increase in
net risk adjusted assets of approximately $11.0 billion from December 31,
1993.
The Federal Reserve Board and the Office of the Comptroller of the Currency
("OCC") proposed amendments to their capital adequacy guidelines which would
establish a limitation on the amount of deferred tax assets that may be included
in the Tier 1 capital calculation for risk-based and leverage capital purposes.
These proposals would limit capital recognition of deferred tax assets whose
realization is dependent on future taxable income to the lesser of (a) an amount
that is expected to be realized within one year based upon a projection of
future taxable income (exclusive of tax carryforwards and reversals of existing
temporary differences) for that year, including the effect of tax-planning
strategies that are expected to be implemented during that year, and (b) 10% of
Tier 1 capital before certain adjustments. The OCC has issued temporary
guidance for the capital recognition of deferred tax assets by national banks
which could have the effect of imposing stricter limits on such recognition than
those proposed by the Federal Reserve Board. The stricter limits would become
effective when the capital adequacy amendments are finalized, and in the interim
the OCC has indicated that it will not object to other reasonable
interpretations. Although the federal bank regulatory authorities have not
issued final rules, Citicorp believes that its deferred tax assets as recognized
under SFAS No. 109 will meet the criteria for capital recognition finally set by
the bank regulators and has, therefore, included such deferred tax assets in the
calculation of its capital ratios and, except for $300 million at June 30, 1994
for Citibank, N.A., the capital ratios of its subsidiaries. However, there can
be no assurance until final amendments are adopted by the bank regulators.
In April 1993, The Basle Committee on Banking Supervision, with the agreement of
the central bank governors of the Group of Ten countries, including the Federal
Reserve, issued a three-part package of consultative papers which deal with the
supervisory treatment of netting arrangements, market risk and interest rate
risk in evaluating the capital adequacy of banking organizations. U.S.
regulatory agencies have proposed modifications to their risk-based capital
guidelines for netting, market risk and interest rate risk. In addition, from
time to time, the Federal Reserve and the Federal Financial Institutions
Examination Council propose amendments to or issue interpretations of risk-based
capital guidelines and reporting instructions. Certain of the federal
regulators have issued an announcement with respect to a proposal to issue a
notice of proposed rulemaking and an advanced notice of proposed rulemaking
relating to sales of assets, including the capital treatment of recourse
arrangements and direct credit substitutes. In addition, the Federal Reserve
Board has approved for publication a proposed amendment to the risk-based
capital guidelines with regard to the treatment of derivative products. Such
proposals or interpretations could, if implemented in the future, affect
reported capital ratios and net risk-adjusted assets.
23
<PAGE>
PRICE RISK
Citicorp manages the sensitivity of earnings to changes in interest rates,
foreign exchange rates, and market volatilities through established procedures
described in the 1993 Annual Report and Form 10-K. These include limits set for
each major category of risk which are monitored and managed by the businesses
and reviewed periodically at the corporate level. Citicorp uses a risk
management system based on market factors that accommodates the diversity of
balance sheet and derivative product exposures and exposure management systems
of its various businesses. The market factor approach identifies the variables
that cause a change in the value of a financial instrument. Price risk is then
measured using various tools, including the earnings at risk method, which is
applied to the non-trading portfolios, and the potential loss amount method,
which is applied to the trading portfolios. These measures are used as
indicators to monitor sensitivity of earnings to interest rate risk rather than
as a quantification of aggregate risk amounts.
Earnings at risk measures the potential earnings impact on the non-trading
portfolios of a specified movement in interest rates for a given time period.
The earnings at risk for each currency is calculated by multiplying the gap
between interest sensitive items by the specified rate movement, and then taking
into account the impact of options, both explicit and embedded. The specific
rate movements are statistically derived from a two standard deviation movement.
The potential earnings effect of market rate movements is managed by modifying
the asset and liability mix, either directly or through the use of derivative
instruments. These include interest rate swaps which are either designated and
effective as hedges or designated and effective in modifying the interest rate
characteristics of specified assets or liabilities.
During the first half of 1994, U.S. dollar earnings at risk for the next 12
months in Citicorp's significant businesses ranged from approximately $10
million to $90 million in aggregate, compared with the range for full year 1993
of approximately $30 million to $180 million. The interest rate exposure taken
in tenors beyond one year results in similar ranges of earnings at risk in those
future years. Earnings at risk in other currencies also existed at
significantly lower levels. The level of exposure taken is based on the market
environment and will vary from period to period based on rate and economic
expectations.
The price risk of the trading portfolios is measured using the potential loss
amount method, which estimates the sensitivity of the value of the trading
positions to changes in the various market factors, such as interest and foreign
exchange rates, over the period necessary to close the position (generally one
day). The method considers the probability of movements of these market factors
(as derived from a two standard deviation movement), adjusted for correlation
among them. The daily price risk process monitors exposures against limits and
triggers specific management actions to ensure that the potential impact on
earnings, due to the many dimensions of price risk, is controlled within
acceptable limits.
During the first half of 1994, the potential loss amount in the trading
portfolios based on monthly averages of daily exposures ranged from
approximately $50 million to $90 million in Citicorp's major trading centers,
compared with the range for full year 1993 of approximately $40 million to $80
million. The level of exposure taken is a function of the market environment
and expectations of future price and market movements, and will vary from period
to period. See page 26 for additional discussion of Derivative and Foreign
Exchange Activities.
LIQUIDITY
Within Citicorp, the liquidity of each business and legal entity is managed
through a well-defined process described in the 1993 Annual Report and Form 10-
K.
Deposits are sourced globally from consumers, corporations, institutions, and
professional investors. Total deposits at June 30, 1994 were $152.3 billion, or
60% of total funding, compared with $145.1 billion, or 67% of total funding at
December 31, 1993.
The stability of Citicorp's funding is greatly enhanced by its consumer deposit
base. Consumer deposits tend to be small in size, and diversified across a
large base of individuals. Citicorp sources consumer deposits through its
retail branch systems and private bank network in countries around the world.
Consumer deposits are the largest component in Citicorp's funding structure,
accounting for 38% of total liabilities and equity.
24
<PAGE>
<TABLE>
<CAPTION>
TOTAL DEPOSITS
June 30, 1994 December 31, 1993
---------------------- ----------------------
Outside Outside
(In Billions of Dollars) U.S. the U.S. Total U.S. the U.S. Total
----- -------- ------ ----- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Global Consumer (A)....... $41.6 $ 53.9 $ 95.5 $43.1 $48.9 $ 92.0
Global Finance (B)........ 8.7 48.1 56.8 8.7 44.4 53.1
----- ------ ------ ----- ----- ------
Total..................... $50.3 $102.0 $152.3 $51.8 $93.3 $145.1
===== ====== ====== ===== ===== ======
</TABLE>
(A) Deposits accepted from consumers and small businesses, primarily through
branch relationships.
(B) Deposits accepted primarily from corporate customers.
Global Consumer deposits at June 30, 1994 were $95.5 billion, compared with
$92.0 billion at year-end 1993. The increase in consumer deposits outside the
U.S. reflects the continuing growth of the consumer business in non-U.S.
markets, while the slight decline in consumer deposits in the U.S. reflects
continued disintermediation as customers place funds in investments other than
bank deposits.
Citicorp's long-term debt is, by virtue of its maturity profile, also an
important source of funding stability. Parent Company and subsidiary long-term
debt outstanding at June 30, 1994 (including subordinated capital notes)
amounted to $16.8 billion, down $1.4 billion from year-end 1993. The long-term
debt portfolio is diversified across markets, currencies, lenders, maturities,
and instruments.
Parent Company debt issued with a maturity of one year or longer during the
first half of 1994 totaled $0.6 billion, including $0.1 billion issued under the
medium-term note issuance program. Under this program, Citicorp issues small
denomination notes to a wide investor base thereby enhancing the liquidity
profile of the long-term funding portfolio. The proceeds of these obligations
are provided to subsidiaries both as equity investments and advances or are
invested in liquid securities. Citicorp (Parent Company) derives revenues
through interest payments and dividends on its subsidiary advances and
investments and from earnings on its liquid-asset portfolio. These revenues are
used to defray the Parent Company's operating expenses, service its debt, and
pay dividends to its shareholders.
Citicorp also securitizes assets and sells loans to enhance liquidity and to
provide access to new markets that are particularly important in supporting new
business growth. Citicorp is a market leader in asset securitization. During
the first half of 1994, asset securitization activity totaled $5.7 billion,
including $3.1 billion of U.S. mortgages and $2.3 billion of credit card
receivables. During the quarter, $1.1 billion of previously securitized credit
card receivables amortized and $3.6 billion are scheduled to amortize during the
remainder of 1994. Securitization activities have made the subsidiaries less
reliant on Parent Company funding.
With the long-term growth in deposits and securitization, Citicorp's dependence
on short-term funding has remained low. At June 30, 1994, short-term funding
was $20.7 billion or 8% of total funding, compared with $16.8 billion or 8% of
total funding, at year-end 1993.
While Citicorp's overall liquidity strategy relies primarily on the asset
securitization and funding management programs described above, businesses
within Citicorp are additionally subject to limits on their liquidity exposures.
Management also prepares a contingency funding plan which evaluates the ability
of Citicorp and its subsidiaries to withstand reduced access to funding markets
for extended periods.
Citicorp (Parent Company) is a legal entity separate and distinct from Citibank,
N.A. and its other subsidiaries and affiliates. There are various legal
limitations on the extent to which Citicorp's banking subsidiaries may extend
credit, pay dividends or otherwise supply funds to Citicorp. The approval of
the Office of the Comptroller of the Currency ("OCC") is required if total
dividends declared by a national bank in any calendar year exceed net profits
(as defined) for that year combined with its retained net profits for the
preceding two years. In addition, dividends for such a bank may not be paid in
excess of the bank's undivided profits after deducting statutory bad debts in
excess of that bank's allowance for credit losses. State-chartered bank
subsidiaries are subject to dividend limitations imposed by applicable state
law.
25
<PAGE>
As of June 30, 1994, under their applicable dividend limitations, Citicorp's
national and state-chartered bank subsidiaries could have declared dividends to
their respective parent companies without regulatory approval of approximately
$3.1 billion. In determining whether and to what extent to pay dividends, each
bank subsidiary must also consider the effect of dividend payments on applicable
risk-based capital and leverage ratio requirements as well as policy statements
of the federal regulatory agencies that indicate that banking organizations
should generally pay dividends out of current operating earnings. Consistent
with these considerations, Citicorp estimates that as of June 30, 1994, its bank
subsidiaries could have declared approximately $1.6 billion of the available
$3.1 billion in dividends.
Citicorp also receives dividends from its nonbank subsidiaries, including the
holding company which owns many of Citicorp's U.S. banks. These nonbank
subsidiaries are generally not subject to regulatory restrictions on their
payment of dividends except that the approval of the Office of Thrift
Supervision may be required if total dividends declared by a savings association
in any calendar year exceed amounts specified in that agency's regulations.
DERIVATIVE AND FOREIGN EXCHANGE ACTIVITIES
Derivative and foreign exchange products have become important risk management
tools for Citicorp and its customers. These contracts typically take the form
of futures, forward, swap and option contracts, and derive their value from
underlying interest rate, foreign exchange, commodity, or equity instruments.
They are subject to the same types of liquidity, price, credit and operational
risks as other financial instruments, and Citicorp manages these risks in a
consistent manner.
As a dealer, Citicorp offers derivative and foreign exchange instruments to
customers, separately or with other products, to help them manage their risk
profile, and also trades for Citicorp's own account. In addition, Citicorp
employs derivative and foreign exchange contracts among other instruments as an
end-user in connection with its risk management activities. Monitoring
procedures entail objective measurement systems, well-defined market and credit
risk limits at appropriate control levels, and timely reports to line and senior
management according to prescribed policies. Additional information concerning
Citicorp's derivative and foreign exchange activities is provided in the 1993
Annual Report and Form 10-K.
Notional principal amounts are frequently used as indicators of derivative and
foreign exchange activity, serving as a point of reference for calculating
payments. Notional principal amounts do not reflect balances subject to credit
or market risk, nor do they reflect the extent to which positions offset one
another. As a result, they do not represent the much smaller amounts that are
actually subject to risk in these transactions. Balance sheet credit exposure
arises from unrealized gains and represents the amount of loss that Citicorp
would suffer if every counterparty to which Citicorp was exposed were to default
at once (i.e., the cost of replacing these contracts), and does not represent
actual or expected loss amounts. The table below presents the aggregate
notional principal amounts of Citicorp's outstanding derivative and foreign
exchange contracts at June 30, 1994, March 31, 1994 and December 31, 1993, along
with the balance sheet credit exposure. The table includes all contracts with
third parties, including both dealer and end-user positions.
<TABLE>
<CAPTION>
TOTAL DERIVATIVE AND FOREIGN EXCHANGE CONTRACTS
Notional Balance Sheet
Principal Credit Exposure (A)
------------------------- --------------------------
June 30 Mar. 31 Dec. 31 June 30 Mar. 31 Dec. 31
(In Billions of Dollars) 1994 1994 1993 1994 1994 1993
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
INTEREST RATE PRODUCTS
Futures Contracts................................ $ 206.7 $ 210.1 $195.6 $ - $ - $ -
Forward Contracts................................ 468.5 346.2 227.1 0.5 0.3 0.2
Swap Agreements.................................. 312.0 280.6 244.3 6.0 6.5 6.8
Purchased Options................................ 118.9 110.6 103.9 1.8 1.4 1.5
Written Options.................................. 105.8 93.8 87.5 - - -
FOREIGN EXCHANGE PRODUCTS
Futures Contracts................................ $ 0.1 $ 0.1 $ 0.1 $ - $ - $ -
Forward Contracts................................ 1,225.0 1,109.4 976.4 27.8 15.7 11.4
Cross-Currency Swap Agreements................... 33.4 32.8 31.7 2.1 1.7 1.7
Purchased Options................................ 68.7 64.4 44.0 1.6 1.3 1.1
Written Options.................................. 66.4 55.0 43.7 - - -
COMMODITY AND EQUITY PRODUCTS.................... 24.0 23.9 20.7 0.9 0.9 0.8
----- ----- -----
40.7 27.8 23.5
EFFECTS OF MASTER NETTING AGREEMENTS (B) (8.7) (6.1) (4.8)
----- ----- -----
$32.0 $21.7 $18.7
===== ===== =====
</TABLE>
(A) There is no balance sheet credit exposure for futures contracts because they
settle daily in cash, and none for written options because they represent
obligations (rather than assets) of Citicorp.
(B) Master netting agreements mitigate credit risk by permitting the offset of
amounts due from and to individual counterparties in the event of
counterparty default.
26
<PAGE>
The calculation of risk-adjusted assets for purposes of the regulatory risk-
based capital ratios includes risk-weighted credit-equivalent amounts for
derivative and foreign exchange contracts. These amounts as of June 30, 1994
totaled $3.0 billion for interest rate contracts and $11.2 billion for foreign
exchange, commodity and equity contracts. The corresponding amounts were $3.0
billion and $8.2 billion, respectively, as of March 31, 1994 and $3.1 billion
and $6.8 billion, respectively, as of December 31, 1993.
The increase in notional principal amounts in the quarter, primarily in interest
rate and foreign exchange forward contracts, resulted from higher activity and
customer demand in response to interest rate volatility in the European and U.S.
markets, and foreign exchange effects as certain major currencies strengthened
against the U.S. dollar. The increases in balance sheet credit exposure and
risk-weighted credit equivalent amounts during the second quarter are primarily
attributable to foreign exchange forward contracts of short duration, primarily
denominated in Deutsche Marks and Yen.
Citicorp's management of its derivative and foreign exchange activities,
including the related accounting and operational controls, is tailored to both
its dealer and end-user activities.
Citicorp's dealing activities are managed on a market value basis, which
recognizes in earnings the gains or losses resulting from changes in market
rates. For other than short-term derivative and foreign exchange contracts,
Citicorp defers, at the inception of each contract, an appropriate portion of
the initial market value attributable to ongoing costs such as servicing and
operational activities. This amount is amortized into trading account or
foreign exchange revenue over the life of the contract. Information regarding
derivative and foreign exchange trading revenues can be found on page 32.
Citicorp's risk management activities employ interest rate swaps and other
derivatives that are designated and effective as hedges, as well as swaps that
are designated and effective in modifying the interest rate characteristics of
specified assets or liabilities. These contracts are accounted for in a manner
consistent with the related assets or liabilities. Revenues and expenses
related to these agreements are generally included in net interest revenue over
the lives of the agreements on an accrual basis, and realized gains and losses,
including any related to terminated contracts, are deferred and amortized. The
notional principal amounts of Citicorp's end-user positions and their
approximate maturities as of June 30, 1994, March 31, 1994 and December 31, 1993
are reported in the table below. Contract maturities are related to the
underlying risk management strategies.
END-USER INTEREST RATE AND FOREIGN EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
Percentage of June 30 Amount Maturing
-------------------------------------
Notional One to After
Principal Within Five Five
(Dollars In Billions) Amount(A) One Year Years Years
------------------------------ -------- ------- -------
June 30 Mar. 31 Dec. 31
1994 1994 1993
------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
INTEREST RATE PRODUCTS
Futures Contracts............... $58.5 $47.8 $12.5 74 % 26% -
Forward Contracts............... 8.5 8.3 7.9 92 % 8% -
Swap Agreements................. 72.2 62.1 60.1 30 % 60% 10%
Option Contracts................ 37.2 32.3 34.0 26 % 69% 5%
FOREIGN EXCHANGE PRODUCTS
Futures and Forward Contracts... 12.1 15.8 15.1 100 % - -
Cross-Currency Swap Agreements.. 2.7 1.7 1.9 59 % 26% 15%
</TABLE>
(A) Includes third-party and intercompany contracts.
The increase in end-user notional principal amounts in the quarter primarily
reflected the utilization of interest rate futures contracts and swap
agreements, principally in the U.S. and the U.K., in response to changing
interest rates. During the second quarter of 1994, interest rate contracts with
a notional principal amount of $3.9 billion were terminated prior to scheduled
maturity. There was no material gain or loss resulting from terminating these
contracts.
End-user derivative positions are components of Citicorp's designated asset and
liability management activities. Derivatives provide an additional tool for
accomplishing risk management objectives, but these same objectives could
alternatively be accomplished using other financial instruments. Therefore
Citicorp does not believe it is meaningful to analyze the derivatives component
of its risk management activities in isolation from related positions.
27
<PAGE>
The estimated fair value of contracts used to hedge or modify Citicorp's risk
was a net loss of approximately $0.1 billion at June 30, 1994, compared with
estimated net gains of approximately $0.2 billion at March 31, 1994, and $1.1
billion at December 31, 1993, with the decline principally attributable to
rising U.S. interest rates during the first six months of 1994. These amounts
will fluctuate over time and be recognized as adjustments to the yields on the
associated assets and liabilities (whose values also fluctuate). As noted
above, these derivatives are integral components of Citicorp's asset and
liability management activities. The change in the estimated fair value of the
end-user contracts does not reflect related changes in the fair value of on-
balance sheet assets and liabilities. For a more comprehensive discussion of
fair values related to financial instruments, see page 71 of the 1993 Annual
Report and Form 10-K.
Various proposals have been made in Congress to enact legislation which would
limit or regulate derivatives activities. While Citicorp generally believes
that legislation in this area is unnecessary, Citicorp cannot predict what, if
any, action will be taken by Congress with respect to derivatives activities and
what impact any such action may have on Citicorp's derivatives business.
28
<PAGE>
STATEMENT OF OPERATIONS ANALYSIS
NET INTEREST REVENUE (TAXABLE EQUIVALENT BASIS)
Net interest revenue of $2,170 million for the quarter was up $314 million or
17% from the same period last year. Year to date net interest revenue was
$4,257 million compared with $3,707 million for the first half of 1993. The net
rate spread for the second quarter of 1994 was 4.15%, compared with 3.78% in the
second quarter of 1993 and 4.01% in the first quarter of 1994.
Net interest revenue and interest rate spreads for all periods presented were
reduced by the effect of credit card securitization. Adjusted for the effect of
credit card securitization, the net rate spread for the quarter was 4.64%,
compared with similarly adjusted ratios of 4.41% and 4.52% for the prior year
second quarter and first quarter of 1994, respectively. See page 36 for Effect
of Credit Card Receivables Securitization.
Adjusted for the effect of credit card receivables securitization, the net rate
spread in U.S. offices was 4.64%, up from 4.52% in the year-ago second quarter
but down from 4.71% in the first quarter of 1994. The improvement compared with
the year-ago quarter primarily reflected reduced carrying costs for cash-basis
loans and OREO.
The net rate spread in offices outside the U.S. was up sharply compared with
both the second quarter of 1993 and the first quarter of 1994, reflecting
recognition of interest on Brazil's medium- and long-term outstandings of $47
million in the quarter, compared with $22 million in the first quarter of 1994
and $6 million in the second quarter of 1993. Additionally, the improvement in
spreads reflected higher volumes and favorable spreads in both the Global
Consumer and Global Finance businesses in the Emerging Economies.
Average interest earning assets increased $12.8 billion or 6.5% from the second
quarter of 1993, primarily reflecting increased activities in both the Global
Consumer and Global Finance businesses in the Emerging Economies.
At June 30, 1994, there were approximately $4.8 billion of loans held for sale,
primarily residential mortgages, which are carried at the lower of aggregate
cost or market value.
NET INTEREST REVENUE STATISTICS (TAXABLE EQUIVALENT BASIS) (A)
<TABLE>
<CAPTION>
2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
1994 1994 1993 1993 1993 1993
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
NET INTEREST REVENUE:
(In Millions of Dollars)
U.S............................................................. $ 911 $ 945 $ 923 $ 888 $ 796 $ 789
Outside the U.S................................................. 1,259 1,142 1,089 1,098 1,060 1,062
------ ------ ------ ------ ------ ------
TOTAL........................................................... $2,170 $2,087 $2,012 $1,986 $1,856 $1,851
------ ------ ------ ------ ------ ------
AVERAGE EARNING ASSETS:
(In Billions of Dollars)
U.S............................................................. $100.8 $102.7 $ 99.3 $ 96.6 $ 97.3 $ 99.9
Outside the U.S................................................. 108.9 108.1 103.3 102.1 99.6 96.4
------ ------ ------ ------ ------ ------
TOTAL........................................................... $209.7 $210.8 $202.6 $198.7 $196.9 $196.3
------ ------ ------ ------ ------ ------
NET RATE SPREAD (%):
U.S............................................................. 3.63 3.73 3.69 3.65 3.28 3.20
Outside the U.S................................................. 4.63 4.29 4.18 4.27 4.27 4.47
TOTAL........................................................... 4.15 4.01 3.94 3.97 3.78 3.82
ADJUSTED FOR THE EFFECT OF
CREDIT CARD SECURITIZATION:
Net Interest Revenue
(In Millions of Dollars)..................................... $2,710 $2,616 $2,553 $2,567 $2,432 $2,472
Net Rate Spread (%)
Total.......................................................... 4.64 4.52 4.48 4.57 4.41 4.52
U.S............................................................ 4.64 4.71 4.73 4.83 4.52 4.56
</TABLE>
(A) Includes appropriate allocations for capital and funding costs based on the
location of the asset.
29
<PAGE>
PROVISION AND ALLOWANCE FOR CREDIT LOSSES
The 1994 second quarter provision for credit losses included $90 million to
build the consumer and commercial allowance for credit losses. The second
quarter also included a credit recovery of $318 million to the loan loss reserve
pursuant to the Brazil refinancing agreement completed in the quarter.
The consumer credit loss provision included an additional provision above net
write-offs of $50 million for the second quarter and $100 million year-to-date
compared with $75 million and $150 million in the year-ago periods. As a
percentage of average consumer loans, net write-offs declined to 1.50% during
the quarter from 1.59% in the first quarter of 1994 and 1.82% in the 1993 second
quarter. The decrease in the loss ratio compared with the second quarter of
1993 is largely due to lower net credit losses for U.S. credit cards.
The securitization of credit card receivables, which is more fully described on
page 36, lowered reported credit losses by $264 million in the current quarter
and $328 million in the same 1993 quarter.
The commercial credit loss provision, excluding the refinancing portfolio, was
$122 million in the second quarter and $194 million in the first half of 1994,
down $151 million and $358 million from the comparable periods in the prior
year. The commercial provision (excluding the refinancing portfolio) included
an addition to the reserve above net write-offs of $50 million in the quarter
and $100 million in the first half of 1994, compared with $101 million and $176
million in the year-ago periods.
The cross-border refinancing portfolio provision included pretax releases from
the related allowance of $10 million and $34 million in the 1994 second and
first quarters, respectively.
Details of net write-offs (recoveries) and the provision for credit losses are
included in the following table.
<TABLE>
<CAPTION>
2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Millions of Dollars) 1994 1994 1993 1993 1993 1993
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Net Write-offs (Recoveries):
Global Consumer......................... $ 311 $ 328 $ 351 $ 356 $ 367 $ 336
Global Finance.......................... 9 (46) 16 69 36 36
North America Commercial Real Estate.... 63 68 78 49 136 168
----- ----- ----- ----- ----- -----
Total Non-Refinancing Commercial........ $ 72 $ 22 $ 94 $ 118 $ 172 $ 204
----- ----- ----- ----- ----- -----
Cross-Border Refinancing Portfolio (A).. (329) (35) (10) (23) 120 (26)
----- ----- ----- ----- ----- -----
Total................................... $ 54 $ 315 $ 435 $ 451 $ 659 $ 514
===== ===== ===== ===== ===== =====
Provision for Credit Losses:
Global Consumer......................... $ 361 $ 378 $ 414 $ 419 $ 442 $ 411
Global Finance.......................... 21 (34) 16 91 87 111
North America Commercial Real Estate.... 101 106 141 115 186 168
----- ----- ----- ----- ----- -----
Total Non-Refinancing Commercial........ $ 122 $ 72 $ 157 $ 206 $ 273 $ 279
----- ----- ----- ----- ----- -----
Cross-Border Refinancing Portfolio...... (11) (35) - - - (1)
----- ----- ----- ----- ----- -----
Total................................... $ 472 $ 415 $ 571 $ 625 $ 715 $ 689
===== ===== ===== ===== ===== =====
</TABLE>
(A) Includes a credit recovery of $318 million to the loan loss reserve in the
second quarter of 1994 as part of the recognition of fair value of
securities received pursuant to the Brazil refinancing agreement completed
in the quarter.
30
<PAGE>
At June 30, 1994, the allowance for credit losses totaled $4,912 million,
compared with $4,472 million at March 31, 1994, and $4,090 million at June 30,
1993. The entire credit allowance is available to absorb future charges that
are presently unidentified and no part of the allowance is allocated to any
specific credits. However, for analytical purposes, Citicorp views its
allowance as attributable to the following portions of its credit portfolio.
<TABLE>
<CAPTION>
June 30 Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
(In Millions of Dollars) 1994 1994 1993 1993 1993 1993
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Allowance:
Global Consumer..................... $1,711 $1,639 $1,596 $1,550 $1,491 $1,412
Commercial (A)...................... 3,201 2,595 2,545 2,482 2,394 2,296
Cross-Border Refinancing Portfolio.. - 238 238 228 205 325
------ ------ ------ ------ ------ ------
Total............................... $4,912 $4,472 $4,379 $4,260 $4,090 $4,033
====== ====== ====== ====== ====== ======
Reserve For Global Consumer
Sold Portfolios.................... $ 503 $ 538 $ 527 $ 559 $ 557 $ 557
====== ====== ====== ====== ====== ======
</TABLE>
(A) Effective second quarter 1994, includes amounts related to the Cross-Border
Refinancing portfolio.
The total allowance as a percentage of loans was 3.48% at June 30, 1994, up from
2.94% at the same time last year. The consumer portion of the allowance was
2.00% of period-end consumer loans at June 30, 1994, up from 1.83% at June 30,
1993. At June 30, 1994, Citicorp's allowance for commercial credit losses was
5.76% of period-end commercial loans, compared with 4.35% at June 30, 1993.
Commencing June 30, 1994, Citicorp no longer allocates a portion of its reserve
to the cross-border refinancing portfolio, which is now included in the
commercial allowance.
Continued uncertainty in the economic environment could result in further
increases in both the consumer and commercial portions of the allowance for
credit losses and in the reserve for consumer sold portfolios.
FEE AND COMMISSION REVENUE
Fee and commission revenues were $1,239 million in the quarter and $2,498
million in the first half of 1994, down $14 million from the 1993 second
quarter, but up $32 million from the first six months of 1993. The year-ago
periods included fees related to the U.S. market data services business of
Quotron ($0.1 billion in the first half of 1993), which was sold in the first
quarter of 1994. The 1994 periods reflected increased fee revenues in both the
Global Finance and Global Consumer businesses in the Emerging Economies. In
addition, the first half of 1994 benefited from higher fee revenues in European
private banking activities.
31
<PAGE>
REVENUES FROM TRADING-RELATED ACTIVITIES
Revenues from Citicorp's trading-related activities are reported in Trading
Account and Foreign Exchange on the income statement, but also include other
amounts, principally reflected in Net Interest Revenue. The following table
provides an analysis of trading activities revenues by income statement line and
by trading business activity, primarily conducted in the Global Finance
businesses, but including approximately $0.1 billion in the Global Consumer
businesses in the first half of each year.
<TABLE>
<CAPTION>
2nd Qtr. Y-T-D 2nd Qtr. Y-T-D
(In Billions of Dollars) 1994 1994(A) 1993(A) 1993(A)
----- ---- ---- ----
<S> <C> <C> <C> <C>
BY INCOME STATEMENT LINE:
Trading Account............ $ - $ - $0.2 $0.4
Foreign Exchange........... 0.1 0.2 0.4 0.6
Other (B).................. 0.4 0.7 0.3 0.6
----- ---- ---- ----
TOTAL...................... $ 0.5 $0.9 $0.9 $1.6
===== ==== ==== ====
BY TRADING ACTIVITY:
Foreign Exchange (C)....... $ 0.2 $0.4 $0.3 $0.6
Derivative (D)............. 0.1 0.2 0.2 0.4
Fixed Income (E)........... - - 0.1 0.2
Other (F).................. 0.2 0.3 0.3 0.4
----- ---- ---- ----
TOTAL...................... $ 0.5 $0.9 $0.9 $1.6
===== ==== ---- ====
</TABLE>
(A) Includes approximately $0.1 billion in the Global Consumer businesses.
(B) Primarily net interest revenue.
(C) Includes foreign exchange spot, forward and option contracts.
(D) Primarily interest rate and currency swaps, options, financial futures,
equity and commodity contracts.
(E) Principally debt instruments including government and corporate debt as well
as mortgage-backed securities.
(F) Includes money market activities.
Revenues from trading-related activities declined to $0.5 billion in the quarter
and $0.9 billion in the first half of 1994, compared with $0.9 billion and $1.6
billion in the year-ago periods. The quarter and first half revenues from
trading-related activities, including derivatives, reflected continued customer
demand for risk management products, while trading activities related to
Citicorp's own account were adversely affected relative to the year-ago periods,
as interest rates increased and market conditions were challenging and volatile.
TRADING ACCOUNT
Trading revenues were $19 million for the second quarter and $24 million for the
first half of 1994, compared with $220 million and $437 million in the year-ago
periods. Trading revenues in the quarter were affected by rising interest rates
and volatile market conditions, particularly in Europe. Additionally, first
half revenues were affected by the decline in value of Latin American securities
held in the trading portfolio. The prior year's quarter and first half
benefited from a sharp decline in interest rates, primarily in Europe.
FOREIGN EXCHANGE
Foreign exchange revenues were $140 million for the second quarter and $206
million for the first half of 1994, compared with $352 million and $592 million
in the year-ago periods. Sustained revenues in most businesses were partially
offset by the adverse effect of volatile conditions in the European currency
markets.
32
<PAGE>
SECURITIES TRANSACTIONS
Net gains from the sale of securities were $123 million in the second quarter of
1994, up $91 million from the second quarter of 1993. The net gain in the
second quarter of 1994 reflects gross realized gains of $144 million ($206
million year-to-date) and gross realized losses of $21 million ($33 million
year-to-date). The sale of Brazilian interest bonds received in a previous
restructuring resulted in a realized gain of $71 million in the quarter.
Effective January 1, 1994, Citicorp adopted SFAS No. 115. At June 30, 1994, the
net unrealized gain on available for sale securities included in stockholders'
equity totaled $90 million after tax, down from $227 million at March 31, 1994,
as a result of net realized gains on sales during the quarter, as well as a
decline in the market value of securities in the available for sale portfolio at
June 30, 1994.
Securities available for sale are carried at fair value. These values may
fluctuate over time, based on market conditions, changes in market interest
rates as well as events and trends affecting specific securities.
<TABLE>
<CAPTION>
OTHER REVENUE
Increase/(Decrease) vs.
-----------------------
2nd Qtr. Y-T-D 2nd Qtr. Y-T-D
(In Millions of Dollars) 1994 1994 1993(A) 1993(A)
-------- ----- -------- -------
<S> <C> <C> <C> <C>
Securitized Credit Card Receivables...... $ 236 $ 444 $(21) $(57)
Venture Capital Gains.................... 25 104 4 29
Affiliate Earnings....................... 52 117 14 38
Net Asset Gains.......................... 51 81 76 27
Net (Losses) from Mortgage Pass-Through
Securitization Activity................. (9) (47) 8 36
Foreign Currency Translation Gains....... 7 7 11 39
Other Items.............................. 9 61 21 45
----- ----- ---- ----
Total................................. $ 371 $ 767 $113 $157
===== ===== ==== ====
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
The decline in revenue related to securitized credit card receivables primarily
reflects lower net interest spreads following a repricing of the portfolio
during 1993 to a variable rate pricing structure, partially offset by reduced
net credit losses. The effect of credit card receivable securitization is
discussed in more detail on page 36.
Venture capital gains were $25 million for the quarter and $104 million for the
first half of 1994, an increase of $4 million and $29 million from the
comparable periods in 1993. Investments of venture capital subsidiaries are
carried at fair value and earnings volatility can occur in the future, based on
general market conditions as well as events and trends affecting specific
venture capital investments. Affiliate earnings improved by $14 million and $38
million when compared to the second quarter and first half of 1993, largely due
to increased activity in certain Latin American affiliates.
Net asset gains were $51 million for the quarter, compared with a loss of $25
million in the comparable period in 1993. The second quarter's results included
recognition of $173 million representing the fair value of interest bonds
received in connection with the Brazil refinancing agreement, offset in part by
writedowns of $157 million in the value of certain investments in Latin America.
The 1993 second quarter results included writedowns of certain investments,
offset in part by a gain on sale of a portion of Citicorp's investment in the
Brazilian telephone company, Telebras.
Net losses from mortgage pass-through securities sales were lower than the year-
ago quarter, reflecting lower costs related to recourse exposure and a lower net
adjustment for accelerated prepayments of securitized mortgages. Trends in
interest rates and the rate of mortgage prepayments, as well as hedging
transactions employed, affect the results related to servicing assets that are
subject to prepayment risk.
33
<PAGE>
OPERATING EXPENSE
EMPLOYEE EXPENSE
Employee expense was $1.3 billion in the second quarter and $2.5 billion in the
first half of 1994, up $74 million and $133 million from the comparable 1993
periods. The increases reflect the continuing business expansion in the
Emerging Economies, partially offset by the sale of the U.S. market data
services business of Quotron.
OTHER EXPENSE
Other Expense was $1.2 billion in the quarter and $2.4 billion in the first half
of 1994, $112 million and $250 million lower than the comparable 1993 periods.
The improvement in both periods primarily resulted from lower net OREO costs in
the North America Commercial Real Estate and Global Finance businesses. Second
quarter and first half of 1994 expenses also reflected the continuing expansion
in the Global Consumer and Global Finance businesses in the Emerging Economies,
as well as higher marketing and account acquisition costs in the U.S. credit
card business. Prior-year expenses included costs related to Quotron's U.S.
market data services business, which was sold in the first quarter of 1994, and
also included the previously reported charges related to the withdrawal from
portfolio management activities in India.
RESTRUCTURING ACTIVITIES
Citicorp has taken a series of actions in recent years to control costs and
improve productivity. In the past three years, these actions have included
approximately $1.4 billion of restructuring charges, summarized below:
<TABLE>
<CAPTION>
(In Millions of Dollars) 1993 1992 1991 Total
<S> <C> <C> <C> <C>
Workforce Reductions...... $ 319 $ 186 $ 257 $ 762
Quotron................... - - 400 400
Other Asset Writedowns.... 88 31 68 187
Other..................... 18 10 25 53
----- ----- ----- ------
Total..................... $ 425 $ 227 $ 750 $1,402
===== ===== ===== ======
</TABLE>
A total of $1,082 million, including substantially all of the 1992 and 1991
charges, had been utilized through June 30, 1994. The $320 million remaining to
be utilized, substantially all related to workforce reductions, includes $288
million of the 1993 charge, $24 million from 1992 and $8 million from 1991.
Citicorp anticipates that substantially all of these amounts will be paid out in
1994 and 1995. While future changes in estimates may occur, it is expected that
any such changes will be immaterial to Citicorp's operations.
The $762 million total amount of charges related to workforce reductions
provided for the elimination of approximately eight thousand positions from the
1991 and 1992 charges and approximately six thousand positions contemplated from
the 1993 charge. These include 8,700 in the Global Consumer business and 4,400
in Global Finance. Through the second quarter of 1994, approximately ten
thousand positions had been eliminated through these programs, of which 6,200
were in Global Consumer and 3,300 in Global Finance. These actions are directed
towards improved efficiency, rather than curtailments of business activity, and
help to offset cost increases that otherwise result from inflation and business
expansion.
Workforce reductions through these and previous restructuring programs, as well
as through attrition, have been a major factor in the changes in Citicorp's
staff levels. Over the period from 1991 to 1993, the number of employees
declined by approximately 13,000, reaching 81,500 at year-end 1993. This
decrease was net of approximately 6,000 added positions due to franchise
expansion in the Emerging Economies and included reductions of approximately
12,000 in core businesses and 7,000 due to business sales.
The 1991 charge included $400 million for the restructuring of Quotron. Other
asset writedowns included in the charges related to items to be disposed or sold
pursuant to restructuring plans.
As shown in the following table, the charges related primarily to the North
America, Europe and Japan businesses:
34
<PAGE>
<TABLE>
<CAPTION>
(In Millions of Dollars) 1993 1992 1991 Total
----- ----- ----- ------
<S> <C> <C> <C> <C>
North America, Europe and Japan (A).. $ 404 $ 179 $ 722 $1,305
Emerging Economies................... 21 48 28 97
----- ----- ----- ------
Total................................ $ 425 $ 227 $ 750 $1,402
===== ===== ===== ======
</TABLE>
(A) Includes $345 million in 1993, $123 million in 1992, $606 million in 1991,
and $1,084 million in total related to the United States. Amounts attributed
to the United States include amounts related to Corporate Items and Quotron.
INCOME TAXES
Income tax expense of $245 million for the quarter included $395 million related
to current operations, less a $150 million reduction of the deferred tax asset
valuation allowance because of a reassessment of the expected level and mix of
future earnings, as well as the positive impact on the tax outlook from the
Brazil refinancing agreement concluded in the quarter. The taxes of $395
million related to current operations also benefited from a valuation allowance
reduction ($50 million for the quarter, $70 million for the first half),
reflecting the continued strength of current earnings and the corresponding
additional carryback support created for deferred tax assets. The resulting
effective tax rate on current operations for the first six months was 37%,
compared with 39% for the first quarter of 1994 and 43% for the first six months
of 1993.
35
<PAGE>
EFFECT OF CREDIT CARD RECEIVABLES SECURITIZATION
The securitization of credit card receivables does not affect the earnings
reported for each period. Gains on the sales are recorded monthly as realized
over the term of each securitization transaction, the terms of which have ranged
from three to twelve years. Due to the revolving nature of the receivables sold
and the monthly recognition of gains, the pattern of gain recognition is similar
to the pattern that would be experienced if the receivables had not been sold.
However, because securitization changes Citicorp's involvement from that of a
lender to that of a loan servicer, there is a change in how the revenue is
reported in the income statement. For securitized receivables, amounts that
would previously have been reported as net interest revenue, as fee and
commission revenue and as credit losses on loans are instead reported as fee and
commission revenue (for servicing fees) and as other revenue (for the remaining
cash flows to which Citicorp is entitled, net of credit losses). Since credit
losses are absorbed against such cash flows, Citicorp's revenues over the terms
of these transactions may vary depending on the credit performance of the
securitized receivables. However, Citicorp's exposure to credit losses on the
securitized receivables is contractually limited to these cash flows.
During the second quarter of 1994, $0.5 billion of credit card receivables were
sold. The total amount of securitized receivables, net of amortization, at June
30, 1994, was $23.8 billion.
The following table shows the net impact of the securitization of credit card
receivables as an increase or (decrease) in the reported Consolidated Statement
of Operations, Average Balance Sheet, Return on Assets, and Consumer Net Credit
Loss Ratio. See page 33 for a further discussion.
<TABLE>
<CAPTION>
2nd Qtr. 2nd Qtr. Y-T-D Y-T-D
(In Millions of Dollars) 1994 1993 1994 1993
----- ----- ------- -------
<S> <C> <C> <C> <C>
Net Interest Revenue................. $(540) $(576) $(1,069) $(1,197)
Fee and Commission Revenue........... 40 (9) 93 9
Other Revenue........................ 236 257 444 501
Provision for Credit Losses.......... (264) (328) (532) (687)
----- ----- ------- -------
Net Income Impact of Securitization.. $ 0 $ 0 $ 0 $ 0
===== ===== ======= =======
Average Assets ($ Billions).......... (25) (24) (24) (25)
Return on Assets (%)................. .12 .08 .10 .08
Consumer Net Credit Loss Ratio (%)... (.64) (.83) (.65) (.90)
</TABLE>
The following table shows average credit card loans, net credit losses and
related ratios for the managed U.S. and Canada credit card portfolio.
<TABLE>
<S> <C> <C> <C> <C>
Average Credit Card Loans (In Billions
of Dollars)................................ $33.5 $32.7 $33.5 $33.0
Net Credit Losses (In Millions of Dollars).. $ 352 $ 447 $ 733 $ 918
As a Percentage of Average
Credit Card Loans...................... 4.21% 5.48% 4.41% 5.61%
</TABLE>
36
<PAGE>
CONSOLIDATED STATEMENT OF OPERATIONS CITICORP and Subsidiaries
<TABLE>
<CAPTION>
1994 1993 1994 1993
Second Second Six Six
(In Millions of Dollars Except Per Share Amounts) Qtr. Qtr. Months Months
------ ------ ------- -------
<S> <C> <C> <C> <C>
INTEREST REVENUE
Interest and Fees on Loans....................................... $4,242 $3,987 $ 8,367 $ 8,267
Interest on Deposits with Banks.................................. 292 283 578 505
Interest on Federal Funds Sold and Securities
Purchased Under Resale Agreements............................... 1,537 634 2,662 1,128
Interest and Dividends on Securities
U. S. Treasury and Federal Agencies............................. 60 57 116 110
State and Municipal............................................. 20 - 32 1
Other (Principally in offices outside the U.S.)................. 222 170 417 317
Interest on Trading Account Assets............................... 523 549 1,182 1,221
------ ------ ------- -------
Total Interest Revenue......................................... $6,896 $5,680 $13,354 $11,549
------ ------ ------- -------
INTEREST EXPENSE
Interest on Deposits............................................. $2,589 $2,396 $ 5,059 $ 4,821
Interest on Securities Sold, Not Yet Purchased................... 69 41 132 86
Interest on Other Borrowed Money................................. 1,517 890 2,776 1,919
Interest on Long-Term Debt and Subordinated Capital Notes........ 563 500 1,144 1,023
------ ------ ------- -------
Total Interest Expense......................................... $4,738 $3,827 $ 9,111 $ 7,849
------ ------ ------- -------
NET INTEREST REVENUE............................................. $2,158 $1,853 $ 4,243 $ 3,700
------ ------ ------- -------
PROVISION FOR CREDIT LOSSES...................................... $ 472 $ 715 $ 887 $ 1,404
------ ------ ------- -------
NET INTEREST REVENUE AFTER PROVISION FOR
CREDIT LOSSES................................................... $1,686 $1,138 $ 3,356 $ 2,296
------ ------ ------- -------
FEES, COMMISSIONS AND OTHER REVENUE
Fees and Commissions............................................. $1,239 $1,253 $ 2,498 $ 2,466
Trading Account.................................................. 19 220 24 437
Foreign Exchange................................................. 140 352 206 592
Securities Transactions.......................................... 123 32 173 48
Other Revenue.................................................... 371 258 767 610
------ ------ ------- -------
Total Fees, Commissions and Other Revenue....................... $1,892 $2,115 $ 3,668 $ 4,153
------ ------ ------- -------
OTHER OPERATING EXPENSE
Salaries......................................................... $ 974 $ 947 $ 1,928 $ 1,860
Employee Benefits................................................ 285 238 568 503
------ ------ ------- -------
Total Staff Expense............................................ $1,259 $1,185 $ 2,496 $ 2,363
Net Premises and Equipment Expense............................... 370 391 760 787
Other Expense.................................................... 827 918 1,647 1,870
------ ------ ------- -------
Total Other Operating Expense.................................. $2,456 $2,494 $ 4,903 $ 5,020
------ ------ ------- -------
INCOME BEFORE TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES.. $1,122 $ 759 $ 2,121 $ 1,429
Income Taxes..................................................... 245 313 635 613
------ ------ ------- -------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES............ $ 877 $ 446 $ 1,486 $ 816
Cumulative Effect of Accounting Changes (A)...................... - - (56) 300
------ ------ ------- -------
NET INCOME....................................................... $ 877 $ 446 $ 1,430 $ 1,116
====== ====== ======= =======
INCOME APPLICABLE TO COMMON STOCK................................ $ 790 $ 370 $ 1,256 $ 966
====== ====== ======= =======
EARNINGS PER SHARE:
ON COMMON AND COMMON EQUIVALENT SHARES
Income Before Cumulative Effect of Accounting Changes............ $1.83 $0.88 $3.07 $ 1.59
Cumulative Effect of Accounting Changes (A)...................... - - (0.13) 0.67
------ ------ ------- -------
Net Income....................................................... $1.83 $0.88 $2.94 $ 2.26
====== ====== ======= =======
ASSUMING FULL DILUTION
Income Before Cumulative Effect of Accounting Changes............ $1.64 $0.82 $2.77 $ 1.49
Cumulative Effect of Accounting Changes (A)...................... - - (0.11) 0.57
------ ------ ------- -------
Net Income....................................................... $1.64 $0.82 $2.66 $ 2.06
====== ====== ======= =======
</TABLE>
(A) Represents the cumulative effect of adopting SFAS No. 112, "Employers'
Accounting for Postemployment Benefits," as of January 1, 1994. The 1993
results include the cumulative effect of adopting SFAS No. 109, "Accounting
for Income Taxes," as of January 1, 1993.
37
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET CITICORP and Subsidiaries
June 30 Dec. 31
(In Millions of Dollars) 1994 1993(A)
-------- --------
<S> <C> <C>
ASSETS
Cash and Due from Banks..................................... $ 5,542 $ 4,836
Deposits at Interest with Banks............................. 7,720 6,749
Securities (B):
Held to Maturity...................................... 5,099 5,637
Available for Sale.................................... 13,018 8,705
Venture Capital....................................... 1,618 1,489
Trading Account Assets (C).................................. 51,959 23,783
Federal Funds Sold and Securities Purchased Under
Resale Agreements..................................... 9,050 7,339
Loans, Net
Consumer.............................................. $ 85,531 $ 84,354
Commercial (B)........................................ 55,561 54,613
-------- --------
Loans, Net of Unearned Income......................... $141,092 $138,967
Allowance for Credit Losses........................... (4,912) (4,379)
-------- --------
Total Loans, Net.................................... $136,180 $134,588
Customers' Acceptance Liability............................. 1,311 1,512
Premises and Equipment, Net................................. 3,945 3,842
Interest and Fees Receivable................................ 2,716 2,552
Other Assets................................................ 16,088 15,542
-------- --------
TOTAL....................................................... $254,246 $216,574
======== ========
LIABILITIES
Non-Interest-Bearing Deposits in U.S. Offices............... $ 13,322 $ 13,442
Interest-Bearing Deposits in U.S. Offices................... 36,982 38,347
Non-Interest-Bearing Deposits in Offices Outside the U.S.... 7,660 6,644
Interest-Bearing Deposits in Offices Outside the U.S........ 94,328 86,656
-------- --------
Total Deposits...................................... $152,292 $145,089
Trading Account Liabilities (C)............................. 32,817 5,478
Purchased Funds and Other Borrowings........................ 20,748 16,777
Acceptances Outstanding..................................... 1,329 1,531
Accrued Taxes and Other Expenses............................ 6,262 6,452
Other Liabilities........................................... 8,368 9,134
Long-Term Debt.............................................. 15,058 16,010
Subordinated Capital Notes.................................. 1,750 2,150
STOCKHOLDERS' EQUITY
Preferred Stock (Without par value)......................... $ 4,062 $ 3,887
Common Stock ($1.00 par value).............................. 417 412
Issued Shares: 416,633,394 and 412,017,300, respectively
Surplus..................................................... 4,030 3,898
Retained Earnings........................................... 7,922 6,729
Net Unrealized Gains - Securities Available for Sale (B).... 90 -
Foreign Currency Translation................................ (505) (580)
Common Stock in Treasury, at Cost........................... (394) (393)
-------- --------
Shares: 25,351,917 and 25,527,133, respectively
Total Stockholders' Equity............................ $ 15,622 $ 13,953
-------- --------
TOTAL....................................................... $254,246 $216,574
======== ========
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
(B) Balances at June 30, 1994 reflect the effect of implementing SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," in 1994
including the reclassification of "Brady Bonds" from Commercial Loans to
Held to Maturity and Available for Sale Securities. See footnote D on page
49 for additional discussion.
(C) Reflects the implementation in 1994 of FASB Interpretation No. 39,
"Offsetting of Amounts Related to Certain Contracts," related to derivative
and foreign exchange contracts. At June 30, 1994, Trading Account Assets
and Trading Account Liabilities include $32.0 billion and $30.0 billion,
respectively, of unrealized gains and losses, net of master netting
agreements, and other amounts related to these contracts (see page 26 for
additional discussion). In accordance with the FASB Interpretation, the
balance sheet at December 31, 1993 was not restated for this change and
Trading Account Assets and Liabilities at that date included $5.7 billion
and $3.1 billion, respectively, related to these contracts. Other than the
foregoing amounts related to derivative and foreign exchange contracts,
Trading Account Assets included U.S. Government securities and other trading
assets aggregating $20.0 billion at June 30, 1994 and $18.1 billion at
December 31, 1993. Trading Account Liabilities included short sale
liabilities of $2.8 billion at June 30, 1994 and $2.4 billion at December
31, 1993.
38
<PAGE>
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
CITICORP and Subsidiaries
<TABLE>
<CAPTION>
Six Months
-----------------
(In Millions of Dollars) 1994 1993
------- -------
<S> <C> <C>
Balance at Beginning of Period................................................... $13,953 $11,181
Adoption of SFAS No. 115, Net Unrealized Gains on Securities Available for Sale.. 365 -
Preferred Stock Issuance, Net of Related Costs................................... 170 315
Issuance of Common Stock Under Various
Staff Benefit Plans (Net of Amortization),
the Dividend Reinvestment Plan, and
the Conversion of Convertible Notes............................................. 141 148
Net Income....................................................................... 1,430 1,116
Cash Dividends Declared:
Common....................................................................... (58) -
Preferred.................................................................... (178) (148)
Change in Net Unrealized Gains on Securities Available for Sale.................. (275) -
Foreign Currency Translation..................................................... 75 (72)
Treasury Stock Transactions at Cost.............................................. (1) -
------- -------
Balance at End of Period......................................................... $15,622 $12,540
======= =======
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS CITICORP and Subsidiaries
Six Months
-------------------------
(In Millions of Dollars) 1994 1993(A)
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income............................................................................. $ 1,430 $ 1,116
--------- ---------
Adjustments to Reconcile Net Income to Net Cash Provided By (Used In) Operating
Activities:
Provision for Credit Losses........................................................... $ 887 $ 1,404
Depreciation and Amortization of Premises and Equipment............................... 271 279
Amortization of Goodwill.............................................................. 24 27
Provision for Deferred Taxes.......................................................... (636) (127)
Cumulative Effect of Accounting Change................................................ 56 (300)
Venture Capital Activity.............................................................. (129) (84)
(Gain) on Sale of Securities.......................................................... (173) (48)
Net (Gain) on the Sale of Subsidiaries and Affiliates................................. (11) (94)
Changes in Accruals and Other, Net.................................................... (1,993) 1,083
Net (Increase) in Trading Account Assets.............................................. (28,176) (3,355)
Net Increase in Trading Account Liabilities........................................... 27,339 1,924
--------- ---------
Total Adjustments...................................................................... $ (2,541) $ 709
--------- ---------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES.................................... $ (1,111) $ 1,825
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Net (Increase) in Deposits at Interest with Banks..................................... $ (971) $ (173)
SECURITIES - HELD TO MATURITY
Purchases............................................................................. (6,616) (7,518)
Maturities............................................................................ 8,634 8,351
SECURITIES - AVAILABLE FOR SALE
Purchases............................................................................. (10,166) (6,872)
Proceeds from Sales................................................................... 4,963 3,565
Maturities............................................................................ 3,006 2,542
Net (Increase) in Federal Funds Sold and Securities
Purchased Under Resale Agreements..................................................... (1,711) (1,985)
Net (Increase) in Loans................................................................ (50,416) (44,358)
Proceeds from Sales of Loans and Credit Card Receivables............................... 44,726 41,731
Capital Expenditures on Premises and Equipment......................................... (631) (379)
Proceeds from Sales of Premises and Equipment.......................................... 203 71
Proceeds from Sales of Subsidiaries and Affiliates..................................... 21 154
Proceeds from Sales of Other Real Estate Owned (OREO).................................. 762 782
--------- ---------
NET CASH (USED IN) INVESTING ACTIVITIES................................................ $ (8,196) $ (4,089)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase in Deposits.............................................................. $ 7,203 $ 3,105
Net Increase in Federal Funds Purchased and Securities Sold
Under Repurchase Agreements.......................................................... 3,434 34
Proceeds from Issuance of Commercial Paper and Funds Borrowed with
Original Maturities of Less Than One Year............................................ 143,547 175,923
Repayment of Commercial Paper and Funds Borrowed with
Original Maturities of Less Than One Year............................................ (142,736) (176,787)
Proceeds from Issuance of Long-Term Debt.............................................. 996 2,161
Repayment of Long-Term Debt........................................................... (2,478) (2,989)
Proceeds from Issuance of Preferred Stock............................................. 170 315
Proceeds from Issuance of Common Stock................................................ 117 144
Dividends Paid........................................................................ (232) (148)
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES.............................................. $ 10,021 $ 1,758
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND DUE FROM BANKS............................. $ (8) $ (109)
--------- ---------
Net Increase (Decrease) in Cash and Due from Banks..................................... $ 706 $ (615)
Cash and Due from Banks at Beginning of Period......................................... 4,836 5,138
--------- ---------
CASH AND DUE FROM BANKS AT END OF PERIOD............................................... $ 5,542 $ 4,523
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Period for:
Interest.............................................................................. $ 8,141 $ 6,908
Income Taxes.......................................................................... $ 1,016 $ 571
NON-CASH INVESTING ACTIVITIES
Transfer from Loans to OREO............................................................ $ 672 $ 1,059
(A) Reclassified to conform to latest quarter's presentation.
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET CITIBANK, N.A. and Subsidiaries
June 30 Dec. 31(A)
(In Millions of Dollars) 1994 1993
--------- ---------
<S> <C> <C>
ASSETS
Cash and Due from Banks................................................................ $ 4,904 $ 4,005
Deposits at Interest with Banks........................................................ 7,846 7,137
Securities (B):
Held to Maturity..................................................................... 3,669 2,927
Available for Sale................................................................... 9,987 7,670
Venture Capital...................................................................... 965 842
Trading Account Assets (C)............................................................. 47,048 20,786
Federal Funds Sold and Securities Purchased Under
Resale Agreements.................................................................... 5,868 4,392
Loans, Net of Unearned Income (B)...................................................... $ 113,557 $ 109,459
Allowance for Credit Losses.......................................................... (3,993) (3,471)
--------- ---------
Total Loans, Net..................................................................... $ 109,564 $ 105,988
Customers' Acceptance Liability........................................................ 1,311 1,512
Premises and Equipment, Net............................................................ 3,101 2,973
Interest and Fees Receivable........................................................... 1,948 1,803
Other Assets........................................................................... 10,153 9,107
--------- ---------
TOTAL.................................................................................. $ 206,364 $ 169,142
========= =========
LIABILITIES
Non-Interest-Bearing Deposits in U.S. Offices.......................................... $ 10,574 $ 10,207
Interest-Bearing Deposits in U.S. Offices.............................................. 22,637 23,077
Non-Interest-Bearing Deposits in Offices Outside the U.S............................... 7,502 6,439
Interest-Bearing Deposits in Offices Outside the U.S................................... 89,821 83,239
--------- ---------
Total Deposits....................................................................... $ 130,534 $ 122,962
Trading Account Liabilities (C)........................................................ 32,503 4,509
Purchased Funds and Other Borrowings................................................... 13,214 11,742
Acceptances Outstanding................................................................ 1,329 1,530
Accrued Taxes and Other Expenses....................................................... 4,032 3,740
Other Liabilities...................................................................... 4,866 5,722
Long-Term Debt......................................................................... 3,006 3,089
Subordinated Notes..................................................................... 4,700 4,700
STOCKHOLDER'S EQUITY
Capital Stock ($20.00 par)............................................................. $ 751 $ 751
Outstanding Shares: 37,534,553 in each period
Surplus................................................................................ 5,944 5,912
Retained Earnings...................................................................... 6,023 5,146
Net Unrealized Gains - Securities
Available for Sale (B)............................................................... 69 -
Foreign Currency Translation........................................................... (607) (661)
--------- ---------
Total Stockholder's Equity........................................................... $ 12,180 $ 11,148
--------- ---------
TOTAL.................................................................................. $ 206,364 $ 169,142
========= =========
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
(B) Balances at June 30, 1994 reflect the effect of implementing SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," in 1994
including the reclassification of "Brady Bonds" from Commercial Loans to
Held to Maturity and Available for Sale Securities. See footnote D on page
49 for additional discussion.
(C) Reflect the implementation in 1994 of FASB Interpretation No. 39,
"Offsetting of Amounts Related to Certain Contracts," related to derivative
and foreign exchange contracts. At June 30, 1994, Trading Account Assets
and Trading Account Liabilities include $32.8 billion and $30.7 billion,
respectively, of unrealized gains and losses, net of master netting
agreements, and other amounts related to these contracts (see page 26 for
additional discussion). In accordance with the FASB Interpretation, the
balance sheet at December 31, 1993 was not restated for this change and
Trading Account Assets and Liabilities at that date included $5.5 billion
and $3.0 billion, respectively, related to these contracts. Other than the
foregoing amounts related to derivative and foreign exchange contracts,
Trading Account Assets included U.S. government securities and other trading
assets aggregating $14.2 billion at June 30, 1994 and $15.3 billion at
December 31, 1993. Trading Account Liabilities included short sale
liabilities of $1.8 billion at June 30, 1994 and $1.5 billion at December
31, 1993.
41
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF NET INCOME PER SHARE Six Months Ended Six Months Ended
June 30, 1994 June 30, 1993
--------------------------------- -------------------------------
On Common On Common
and Common Assuming Full and Common Assuming Full
(In Millions Except Per Share Amounts) Equivalent Shares Dilution Equivalent Shares Dilution
----------------- ------------- ----------------- -------------
<S> <C> <C> <C> <C>
INCOME APPLICABLE TO COMMON STOCK
a. Distributed Portion - Dividends.................... $ 58 $ 58 $ - $ -
Undistributed Portion Before Cumulative
Effect of Accounting Changes........................ 1,254 1,254 666 666
Dividends on Conversion Preferred Stock, Series 15.... 47 47 47 47
Dividends on Convertible Preferred Stock, Series 12
and Series 13........................................ - 68 - 68
------ ------ ------ ------
b. Income Applicable to Common Stock Before
Cumulative Effect of Accounting Changes, Adjusted... $1,359 $1,427 $ 713 $ 781
c. Cumulative Effect of Accounting Changes............ (56) (56) 300 300
------ ------ ------ ------
TOTAL................................................. $1,303 $1,371 $1,013 $1,081
====== ====== ====== ======
SHARES
Weighted-Average Common Shares Outstanding (A)........ 389.1 389.1 372.0 372.0
Common Equivalent Shares:
Conversion Preferred Stock, Series 15................. 42.8 42.8 65.5 65.5
Other (B)............................................. 8.5 8.7 8.2 10.5
Convertible Preferred Stock, Series 12 and Series 13.. - 73.0 - 73.0
Convertible Notes..................................... - - - .1
------ ------ ------ ------
d. Shares Applicable to Distributed Portion........... 440.4 513.6 445.7 521.1
Book Value Shares Issuable Under Stock Option and
the Executive Incentive Compensation Plans............ 1.9 1.9 2.4 2.4
------ ------ ------ ------
e. Shares Applicable to Undistributed Portion......... 442.3 515.5 448.1 523.5
====== ====== ====== ======
EARNINGS PER SHARE
a/d DISTRIBUTED PORTION............................... $ 0.13 $ 0.11 $ - $ -
(b-a)/e UNDISTRIBUTED PORTION BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGES.......................... 2.94 2.66 1.59 1.49
------ ------ ------ ------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING
CHANGES............................................... 3.07 2.77 1.59 1.49
c/e CUMULATIVE EFFECT OF ACCOUNTING CHANGES........... (.13) (.11) .67 .57
------ ------ ------ ------
NET INCOME............................................ $ 2.94 $ 2.66 $ 2.26 $ 2.06
====== ====== ====== ======
</TABLE>
(A) Includes book value shares of 1.1 million for the six months ended June 30,
1994 and 1993.
(B) Other Common Equivalent Shares represent shares issuable under the Executive
Incentive Compensation Plan and the dilutive effect of market value shares
issuable under Stock Option, Stock Incentive and Stock Purchase Plans
computed using the treasury stock method.
42
<PAGE>
AVERAGE BALANCES AND INTEREST RATES CITICORP and Subsidiaries
(Taxable Equivalent Basis) (A) (B)
<TABLE>
<CAPTION>
Second Quarter 1994 Second Quarter 1993
----------------------------- ------------------------------
% %
Average Average Average Average
(Dollars In Millions) Volume Interest Rate Volume Interest Rate
-------- -------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
INTEREST REVENUE
LOANS (NET OF UNEARNED INCOME) (C)
Consumer Loans
In U.S. Offices.................................... $ 41,923 $1,020 9.76 $ 44,211 $1,068 9.69
In Offices Outside the U.S. (D).................... 41,457 1,323 12.80 36,683 1,198 13.10
-------- ------ -------- ------
TOTAL CONSUMER LOANS............................... $ 83,380 $2,343 11.27 $ 80,894 $2,266 11.24
-------- ------ -------- ------
Commercial Loans
In U.S. Offices
Commercial and Industrial......................... $ 10,386 $ 190 7.34 $ 10,373 $ 175 6.77
Mortgage and Real Estate.......................... 6,695 107 6.41 8,532 100 4.70
Loans to Financial Institutions................... 508 4 3.16 484 4 3.31
Lease Financing................................... 3,498 58 6.65 3,530 69 7.84
In Offices Outside the U.S. (D).................... 34,137 1,540 18.09 35,035 1,374 15.73
-------- ------ -------- ------
TOTAL COMMERCIAL LOANS............................ $ 55,224 $1,899 13.79 $ 57,954 $1,722 11.92
-------- ------ -------- ------
TOTAL LOANS...................................... $138,604 $4,242 12.28 $138,848 $3,988 11.52
-------- ------ -------- ------
FUNDS SOLD AND RESALE AGREEMENTS
In U.S. Offices.................................... $ 15,522 $ 148 3.82 $ 10,982 $ 81 2.96
In Offices Outside the U.S. (D).................... 3,116 1,389 178.80 1,995 553 111.18
-------- ------ -------- ------
TOTAL............................................ $ 18,638 $1,537 33.08 $ 12,977 $ 634 19.60
-------- ------ -------- ------
SECURITIES
HELD TO MATURITY
In U.S. Offices
U. S. Treasury and Federal Agencies............... $ 2,266 $ 30 5.31 $ 2,250 $ 28 4.99
State and Municipal............................... - - - - - -
Other............................................. 42 1 9.55 160 3 7.52
In Offices Outside the U.S. (principally local
government issues) (D)............................ 2,972 44 5.94 2,008 44 8.79
-------- ------ -------- ------
TOTAL............................................ $ 5,280 $ 75 5.70 $ 4,418 $ 75 6.81
-------- ------ -------- ------
AVAILABLE FOR SALE
In U.S. Offices
US. Treasury and Federal Agencies................. $ 1,668 $ 24 5.77 $ 1,695 $ 29 6.86
State and Municipal............................... 1,359 29 8.56 14 - 7.20
Other............................................. 953 9 3.79 472 5 4.25
In Offices Outside the U.S. (D).................... 7,469 172 9.24 4,868 116 9.56
-------- ------ -------- ------
TOTAL............................................ $ 11,449 $ 234 8.20 $ 7,049 $ 150 8.54
-------- ------ -------- ------
VENTURE CAPITAL
In U.S. Offices.................................... $ 1,341 $ 3 .90 $ 1,169 $ 3 1.03
In Offices Outside the U.S......................... 206 1 1.95 230 - .43
-------- ------ -------- ------
TOTAL............................................ $ 1,547 $ 4 1.04 $ 1,399 $ 3 .86
-------- ------ -------- ------
TOTAL SECURITIES................................. $ 18,276 $ 313 6.87 $ 12,866 $ 228 7.11
-------- ------ -------- ------
TRADING ACCOUNT ASSETS
In U.S. Offices.................................... $ 14,457 $ 215 5.97 $ 13,447 $ 182 5.43
In Offices Outside the U.S. (D).................... 10,716 309 11.57 9,787 368 15.08
-------- ------ -------- ------
TOTAL............................................ $ 25,173 $ 524 8.35 $ 23,234 550 9.49
-------- ------ -------- ------
Interest-Bearing Deposits (principally in Offices
Outside the U.S.) (C) (D)......................... $ 9,042 $ 292 12.95 $ 8,955 $ 283 12.68
-------- ------ -------- ------
Total Interest-Earning Assets...................... $209,733 $6,908 13.21 $196,880 $5,683 11.58
====== ======
Non-Interest-Earning Assets (E).................... 48,343 29,846
-------- --------
TOTAL ASSETS....................................... $258,076 $226,726
======== ========
</TABLE>
(A) The Taxable Equivalent Adjustment is based on the U.S. Federal Statutory Tax
Rate.
(B) Interest rates and amounts include the effects of hedge and risk management
activities associated with the respective asset and liability categories.
(C) Loans and interest-bearing deposits in the table above include cash-basis
loans and cash-basis bank placements, respectively.
(D) Average rates in offices outside the U.S. may reflect prevailing local
interest rates, including the effects of inflation and monetary correction
in certain Latin American countries.
(E) Gross unrealized gains and losses on off-balance sheet trading positions
related to the implementation of FASB Interpretation No. 39 in the 1994
periods are reported in non-interest-earning assets and liabilities,
respectively.
43
<PAGE>
AVERAGE BALANCES AND INTEREST RATES (CONTINUED) CITICORP and Subsidiaries
(Taxable Equivalent Basis) (A) (B)
<TABLE>
<CAPTION>
Year-To-Date 1994 Year-To-Date 1993
--------------------------- ---------------------------
% %
Average Average Average Average
(Dollars In Millions) Volume Interest Rate Volume Interest Rate
-------- ------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
INTEREST REVENUE
LOANS (NET OF UNEARNED INCOME) (C)
Consumer Loans
In U.S. Offices.................................... $ 42,725 $ 2,087 9.85 $ 45,062 $ 2,160 9.67
In Offices Outside the U.S. (D).................... 40,776 2,565 12.69 36,254 2,396 13.33
-------- ------- -------- -------
TOTAL CONSUMER LOANS............................... $ 83,501 $ 4,652 11.23 $ 81,316 $ 4,556 11.30
-------- ------- -------- -------
Commercial Loans
In U.S. Offices
Commercial and Industrial......................... $ 10,144 $ 370 7.36 $ 10,573 $ 331 6.31
Mortgage and Real Estate.......................... 7,007 200 5.76 8,804 205 4.70
Loans to Financial Institutions................... 468 7 3.02 454 5 2.22
Lease Financing................................... 3,506 118 6.79 3,525 136 7.78
In Offices Outside the U.S. (D).................... 33,676 3,019 18.08 34,793 3,037 17.60
-------- ------- -------- -------
TOTAL COMMERCIAL LOANS............................ $ 54,801 $ 3,714 13.67 $ 58,149 $ 3,714 12.88
-------- ------- -------- -------
TOTAL LOANS...................................... $138,302 $ 8,366 12.20 $139,465 $ 8,270 11.96
-------- ------- -------- -------
FUNDS SOLD AND RESALE AGREEMENTS
In U.S. Offices.................................... $ 16,283 $ 275 3.41 $ 10,891 $ 163 3.02
In Offices Outside the U.S. (D).................... 2,942 2,387 163.62 1,933 965 100.67
-------- ------- -------- -------
TOTAL............................................ $ 19,225 $ 2,662 27.92 $ 12,824 $ 1,128 17.74
-------- ------- -------- -------
SECURITIES
HELD TO MATURITY
In U.S. Offices
U. S. Treasury and Federal Agencies............... $ 2,013 $ 54 5.41 $ 2,102 $ 49 4.70
State and Municipal............................... - - - - - -
Other............................................. 48 2 8.40 146 6 8.29
In Offices Outside the U.S. (principally local
government issues) (D)............................ 3,157 93 5.94 2,098 95 9.13
-------- ------- -------- -------
TOTAL............................................ $ 5,218 $ 149 5.76 $ 4,346 $ 150 6.96
-------- ------- -------- -------
AVAILABLE FOR SALE
In U.S. Offices
US. Treasury and Federal Agencies................. $ 1,749 $ 49 5.65 $ 1,683 $ 58 6.95
State and Municipal............................... 1,118 41 7.40 14 - 7.49
Other............................................. 840 19 4.56 480 11 4.62
In Offices Outside the U.S. (D).................... 6,850 307 9.04 4,608 202 8.84
-------- ------- -------- -------
TOTAL............................................ $ 10,557 $ 416 7.95 $ 6,785 $ 271 8.05
-------- ------- -------- -------
VENTURE CAPITAL
In U.S. Offices.................................... $ 1,314 $ 9 1.38 $ 1,144 $ 7 1.23
In Offices Outside the U.S......................... 206 4 3.92 225 2 1.80
-------- ------- -------- -------
TOTAL............................................ $ 1,520 $ 13 1.72 $ 1,369 $ 9 1.33
-------- ------- -------- -------
TOTAL SECURITIES................................. $ 17,295 $ 578 6.74 $ 12,500 $ 430 6.94
-------- ------- -------- -------
TRADING ACCOUNT ASSETS
In U.S. Offices.................................... $ 14,438 $ 409 5.71 $ 13,758 $ 367 5.38
In Offices Outside the U.S. (D).................... 11,428 775 13.68 9,436 856 18.29
-------- ------- -------- -------
TOTAL............................................ $ 25,866 $ 1,184 9.23 $ 23,194 1,223 10.63
-------- ------- -------- -------
Interest-Bearing Deposits (principally in Offices
Outside the U.S.) (C) (D)......................... $ 9,601 $ 578 12.14 $ 8,628 $ 505 11.80
-------- ------- -------- -------
Total Interest-Earning Assets...................... $210,289 $13,368 12.82 $196,611 $11,556 11.85
======= =======
Non-Interest-Earning Assets (E).................... 45,335 29,049
-------- --------
TOTAL ASSETS....................................... $255,624 $225,660
======== ========
</TABLE>
(A) The Taxable Equivalent Adjustment is based on the U.S. Federal Statutory Tax
Rate.
(B) Interest rates and amounts include the effects of hedge and risk management
activities associated with the respective asset and liability categories.
(C) Loans and interest-bearing deposits in the table above include cash-basis
loans and cash-basis bank placements, respectively.
(D) Average rates in offices outside the U.S. may reflect prevailing local
interest rates, including the effects of inflation and monetary correction
in certain Latin American countries.
(E) Gross unrealized gains and losses on off-balance sheet trading positions
related to the implementation of FASB Interpretation No. 39 in the 1994
periods are reported in non-interest-earning assets and liabilities,
respectively.
44
<PAGE>
AVERAGE BALANCES AND INTEREST RATES (CONTINUED) CITICORP and Subsidiaries
(Taxable Equivalent Basis) (A) (B)
<TABLE>
<CAPTION>
Second Quarter 1994 Second Quarter 1993
--------------------------- ---------------------------
% %
Average Average Average Average
(Dollars In Millions) Volume Interest Rate Volume Interest Rate
-------- -------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
INTEREST EXPENSE
DEPOSITS
In U.S. Offices
Savings Deposits (C)..................... $ 26,224 $ 130 1.99 $ 26,212 $ 120 1.84
Negotiable Certificates of Deposit....... 973 12 4.95 1,542 25 6.50
Other Time Deposits...................... 10,232 117 4.59 12,900 233 7.24
-------- ------ -------- ------
Total U.S. Interest-Bearing Deposits.. $ 37,429 $ 259 2.78 $ 40,654 $ 378 3.73
In Offices Outside the U.S. (D)............. 96,040 2,330 9.73 88,542 2,018 9.14
-------- ------ -------- ------
TOTAL................................. $133,469 $2,589 7.78 $129,196 $2,396 7.44
-------- ------ -------- ------
TRADING ACCOUNT LIABILITIES
In U.S. Offices............................. $ 3,246 $ 45 5.56 $ 1,873 $ 26 5.57
In Offices Outside the U.S. (D)............. 1,654 24 5.82 1,507 15 3.99
-------- ------ -------- ------
TOTAL................................. $ 4,900 $ 69 5.65 $ 3,380 $ 41 4.87
-------- ------ -------- ------
FUNDS BORROWED
In U.S. Offices
Purchased Funds and Other Borrowings
Federal Funds Purchased and Securities
Sold Under Agreements to Repurchase... $ 20,894 $ 196 3.76 $ 16,601 $ 129 3.12
Commercial Paper......................... 1,957 20 4.10 656 5 3.06
Other Purchased Funds.................... 3,042 88 11.60 1,959 80 16.38
Long-Term Debt, Convertible Notes and
Subordinated Capital Notes................ 14,167 201 5.69 16,715 250 6.00
-------- ------ -------- ------
Total in U.S. Offices................. $ 40,060 $ 505 5.06 $ 35,931 $ 464 5.18
In Offices Outside the U.S. (D)............. 9,099 1,575 69.43 9,311 926 39.89
-------- ------ -------- ------
TOTAL................................. $ 49,159 $2,080 16.97 $ 45,242 $1,390 12.32
-------- ------ -------- ------
Total Interest-Bearing Liabilities.......... $187,528 $4,738 10.13 $177,818 $3,827 8.63
------ ------
Demand Deposits in U.S. Offices............. 12,598 11,822
Other Non-Interest-Bearing Liabilities (E).. 42,926 25,045
Total Stockholders' Equity.................. 15,024 12,041
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY..................................... $258,076 $226,726
======== ========
NET INTEREST REVENUE AS A PERCENTAGE
OF AVERAGE INTEREST-EARNING ASSETS......... $2,170 4.15 $1,856 3.78
====== ======
</TABLE>
(A) The Taxable Equivalent Adjustment is based on the U.S. Federal Statutory Tax
Rate.
(B) Interest rates and amounts include the effects of hedge and risk management
activities associated with the respective asset and liability categories.
(C) Savings Deposits consist of Insured Money Market Rate accounts, NOW accounts
and other Savings Deposits.
(D) Average rates in offices outside the U.S. may reflect prevailing local
interest rates, including the effects of inflation and monetary correction
in certain Latin American countries.
(E) Gross unrealized gains and losses on off-balance sheet trading positions
related to the implementation of FASB Interpretation No. 39 in the 1994
periods are reported in non-interest-earning assets and liabilities,
respectively.
45
<PAGE>
AVERAGE BALANCES AND INTEREST RATES (CONTINUED) CITICORP and Subsidiaries
(Taxable Equivalent Basis) (A) (B)
<TABLE>
<CAPTION>
Year-To-Date 1994 Year-To-Date 1993
--------------------------- -------------------------
% %
Average Average Average Average
(Dollars In Millions) Volume Interest Rate Volume Interest Rate
-------- ------ ------- -------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
INTEREST EXPENSE
DEPOSITS
In U.S. Offices
Savings Deposits (C)..................... $ 26,298 $ 246 1.89 $ 26,455 $ 253 1.93
Negotiable Certificates of Deposit....... 959 22 4.63 1,599 52 6.56
Other Time Deposits...................... 10,463 280 5.40 13,552 435 6.47
-------- ------ -------- ------
Total U.S. Interest-Bearing Deposits.. $ 37,720 $ 548 2.93 $ 41,606 $ 740 3.59
In Offices Outside the U.S. (D)............. 95,278 4,513 9.55 87,309 4,081 9.43
-------- ------ -------- ------
TOTAL................................. $132,998 $5,061 7.67 $128,915 $4,821 7.54
-------- ------ -------- ------
TRADING ACCOUNT LIABILITIES
In U.S. Offices............................. $ 3,347 $ 88 5.30 $ 1,877 $ 54 5.80
In Offices Outside the U.S. (D)............. 1,705 43 5.09 1,411 32 4.58
-------- ------ -------- ------
TOTAL................................. $ 5,052 $ 131 5.23 $ 3,288 $ 86 5.27
-------- ------ -------- ------
FUNDS BORROWED
In U.S. Offices
Purchased Funds and Other Borrowings
Federal Funds Purchased and Securities
Sold Under Agreements to Repurchase... $ 21,325 $ 360 3.40 $ 16,608 $ 258 3.13
Commercial Paper......................... 1,777 34 3.86 708 11 3.13
Other Purchased Funds.................... 2,797 166 11.97 2,046 163 16.07
Long-Term Debt, Convertible Notes and
Subordinated Capital Notes................ 14,550 398 5.52 16,947 522 6.21
-------- ------ -------- ------
Total in U.S. Offices................. $ 40,449 $ 958 4.78 $ 36,309 $ 954 5.30
In Offices Outside the U.S. (D)............. 9,560 2,961 62.46 9,442 1,988 42.46
-------- ------ -------- ------
TOTAL................................. $ 50,009 $3,919 15.80 $ 45,751 $2,942 12.97
-------- ------ -------- ------
Total Interest-Bearing Liabilities.......... $188,059 $9,111 9.77 $177,954 $7,849 8.89
------ ------
Demand Deposits in U.S. Offices............. 12,663 11,723
Other Non-Interest-Bearing Liabilities (E).. 40,166 24,174
Total Stockholders' Equity.................. 14,736 11,809
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY..................................... $255,624 $225,660
======== ========
NET INTEREST REVENUE AS A PERCENTAGE
OF AVERAGE INTEREST-EARNING ASSETS......... $4,257 4.08 $3,707 3.80
====== ======
</TABLE>
(A) The Taxable Equivalent Adjustment is based on the U.S. Federal Statutory Tax
Rate.
(B) Interest rates and amounts include the effects of hedge and risk management
activities associated with the respective asset and liability categories.
(C) Savings Deposits consist of Insured Money Market Rate accounts, NOW accounts
and other Savings Deposits.
(D) Average rates in offices outside the U.S. may reflect prevailing local
interest rates, including the effects of inflation and monetary correction
in certain Latin American countries.
(E) Gross unrealized gains and losses on off-balance sheet trading positions
related to the implementation of FASB Interpretation No. 39 in the 1994
periods are reported in non-interest-earning assets and liabilities,
respectively.
46
<PAGE>
FINANCIAL STATISTICS
DETAILS OF CREDIT LOSS EXPERIENCE
<TABLE>
<CAPTION>
1994 1993
------------------ --------------------------------------
(Dollars In Millions) 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
ALLOWANCE FOR CREDIT LOSSES
AT BEGINNING OF PERIOD......................... $4,472 $4,379 $4,260 $4,090 $4,033 $3,859
------ ------ ------ ------ ------ ------
ADDITIONS
Provision for Credit Losses.................... $ 472 $ 415 $ 571 $ 625 $ 715 $ 689
DEDUCTIONS
GROSS CREDIT LOSSES
CONSUMER
In U.S. Offices................................ $ 262 $ 288 $ 307 $ 320 $ 324 $ 294
In Offices Outside the U.S..................... 141 132 141 118 126 119
COMMERCIAL
In U.S. Offices................................ 82 55 73 88 160 160
In Offices Outside the U.S. (A)................ 15 33 92 77 201 77
------ ------ ------ ------ ------ ------
$ 500 $ 508 $ 613 $ 603 $ 811 $ 650
------ ------ ------ ------ ------ ------
CREDIT RECOVERIES
CONSUMER
In U.S. Offices................................ $ 55 $ 59 $ 59 $ 51 $ 51 $ 46
In Offices Outside the U.S..................... 37 33 38 31 32 31
COMMERCIAL
In U.S. Offices................................ 7 28 30 37 27 8
In Offices Outside the U.S. (A)................ 347 73 51 33 42 51
------ ------ ------ ------ ------ ------
$ 446 $ 193 $ 178 $ 152 $ 152 $ 136
------ ------ ------ ------ ------ ------
NET CREDIT LOSSES
In U.S. Offices................................ $ 282 $ 256 $ 291 $ 320 $ 406 $ 400
In Offices Outside the U.S..................... (228) 59 144 131 253 114
------ ------ ------ ------ ------ ------
$ 54 $ 315 $ 435 $ 451 $ 659 $ 514
------ ------ ------ ------ ------ ------
OTHER, NET (B)................................. 22 (7) (17) (4) 1 (1)
------ ------ ------ ------ ------ ------
ALLOWANCE FOR CREDIT LOSSES
AT END OF PERIOD............................... $4,912 $4,472 $4,379 $4,260 $4,090 $4,033
====== ====== ====== ====== ====== ======
Allowance for Credit Losses as a
Percentage of Period-End Loans................. 3.48% 3.26% 3.15% 3.05% 2.94% 2.92%
Net Consumer Credit Losses..................... $ 311 $ 328 $ 351 $ 356 $ 367 $ 336
------ ------ ------ ------ ------ ------
As a Percentage of Average
Consumer Loans................................ 1.50% 1.59% 1.69% 1.75% 1.82% 1.67%
------ ------ ------ ------ ------ ------
Net Commercial Credit Losses (Recoveries) (A).. $ (257) $ (13) $ 84 $ 95 $ 292 $ 178
------ ------ ------ ------ ------ ------
As a Percentage of Average
Commercial Loans.............................. nm nm 0.59% 0.66% 2.02% 1.24%
</TABLE>
(A) Second quarter 1994 amounts include a $318 million credit recovery added to
the allowance for credit losses reflecting recognition of the fair value of
instruments received pursuant to the Brazil refinancing agreement completed
in the quarter. Second quarter 1993 amounts include $152 million of country
write-offs related to Brazilian medium- and long-term outstandings.
(B) Includes foreign exchange effects as well as amounts related to reserves for
anticipated losses on portfolios of consumer receivables sold with recourse.
nm Not meaningful as recoveries result in a negative percentage.
47
<PAGE>
<TABLE>
<CAPTION>
CASH-BASIS, RENEGOTIATED AND PAST DUE LOANS (A)
June 30 Dec. 31 June 30
------ ------ ------
(In Millions of Dollars) 1994 1993 1993
<S> <C> <C> <C>
COMMERCIAL CASH-BASIS LOANS (B)
In U.S. Offices.................................. $1,419 $1,744 $2,702
In Offices Outside the U.S., Excluding
Refinancing Countries........................... 657 730 1,118
In Refinancing Countries (C)..................... 165 1,041 1,082
------ ------ ------
TOTAL COMMERCIAL CASH-BASIS LOANS................ $2,241 $3,515 $4,902
====== ====== ======
COMMERCIAL RENEGOTIATED LOANS (B)
In U.S. Offices.................................. $ 354 $ 641 $ 96
In Offices Outside the U.S....................... 63 67 51
------ ------ ------
TOTAL COMMERCIAL RENEGOTIATED LOANS.............. $ 417 $ 708 $ 147
====== ====== ======
CONSUMER LOANS ON WHICH ACCRUAL OF INTEREST
HAS BEEN SUSPENDED
In U.S. Offices.................................. $1,746 $1,915 $2,168
In Offices Outside the U.S....................... 1,067 948 934
------ ------ ------
TOTAL CONSUMER LOANS ON WHICH ACCRUAL
OF INTEREST HAS BEEN SUSPENDED.................. $2,813 $2,863 $3,102
====== ====== ======
ACCRUING LOANS 90 OR MORE DAYS DELINQUENT (D)
In U.S. Offices.................................. $ 332 $ 635 $ 532
In Offices Outside the U.S....................... 425 421 431
------ ------ ------
TOTAL ACCRUING LOANS 90 OR MORE DAYS DELINQUENT.. $ 757 $1,056 $ 963
====== ====== ======
</TABLE>
(A) Loan commitments and standby letters of credit to North America Commercial
Real Estate borrowers or projects experiencing financial difficulties are
not included in this table. Refer to detailed discussion on page 18.
(B) Refer to detailed discussion of cash-basis and renegotiated commercial loans
on page 14.
(C) Reflects the exchange of $0.8 billion of Brazil outstandings for securities
(held in the available-for-sale portfolio) in the second quarter of 1994
pursuant to the refinancing agreement completed in the quarter.
(D) Includes consumer loans of $691 million, $802 million and $780 million at
June 30, 1994, December 31, 1993 and June 30, 1993, respectively. Refer to
detailed discussion of Consumer Loan Portfolio on page 12.
OTHER REAL ESTATE OWNED (OREO)
<TABLE>
<CAPTION>
June 30 Dec. 31 June 30
(In Millions of Dollars) 1994 1993 1993
------ ------ -------
<S> <C> <C> <C>
Consumer.................... $1,194 $1,212 $1,312
Commercial:
North America Real Estate.. $1,946 $2,332 $2,825
Other...................... 469 464 654
------ ------ -------
Total Commercial........... $2,415 $2,796 $3,479
Total OREO.................. $3,609 $4,008 $4,791
====== ====== =======
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
SECURITIES
(In Millions of Dollars) June 30, 1994 December 31, 1993 (A)
--------------------------------------------- ---------------------
Gross Gross
Amortized Unrealized Unrealized Fair Amortized Fair
Cost Gains Losses Value Cost Value
--------- ---------- ---------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
SECURITIES - HELD TO MATURITY (B), (C)
U.S. Treasury and Federal Agency.................... $ 2,269 $ 11 $ 94 $ 2,186 $ 3,781 $ 3,808
State and Municipal................................. 1 - - 1 9 10
Foreign Government (D).............................. 2,606 7 442 2,171 1,314 1,310
U.S. Corporate...................................... 26 - - 26 45 45
Other Debt Securities............................... 197 1 - 198 488 493
------- ---- ---- ------- ------- -------
Total Debt Securities............................. $ 5,099 $ 19 $536 $ 4,582 $ 5,637 $ 5,666
======= ==== ==== ======= ======= =======
SECURITIES - AVAILABLE FOR SALE (C), (E), (F), (G)
U.S. Treasury and Federal Agency.................... $ 3,737 $ 53 $ 63 $ 3,727 $ 2,095 $ 2,190
State and Municipal................................. 1,422 96 63 1,455 695 704
Foreign Government (D).............................. 5,185 154 152 5,187 3,278 3,391
U.S. Corporate...................................... 383 5 24 364 192 185
Other Debt Securities............................... 1,067 26 18 1,075 1,431 1,473
------- ---- ---- ------- ------- -------
Total Debt Securities............................. $11,794 $334 $320 $11,808 $ 7,691 $ 7,943
Equity Securities (H)............................... 1,080 142 12 1,210 1,014 1,145
------- ---- ---- ------- ------- -------
$12,874 $476 $332 $13,018 $ 8,705 $ 9,088
======= ==== ==== ======= ======= =======
VENTURE CAPITAL (I)................................. 1,618 - - 1,618 1,489 1,489
------- ---- ---- ------- ------- -------
$19,591 $495 $868 $19,218 $15,831 $16,243
======= ==== ==== ======= ======= =======
</TABLE>
(A) At December 31, 1993, gross unrealized gains and gross unrealized losses on
securities held to maturity totaled $45 million and $16 million,
respectively, and gross unrealized gains and gross unrealized losses on
securities available for sale totaled $427 million and $44 million,
respectively.
(B) For the six months ended June 30, 1994 and 1993, cash proceeds from
maturities of debt securities held to maturity totaled $8.6 billion and $8.4
billion, respectively. There were no sales of debt securities held to
maturity.
(C) Included in Federal Agency and U.S. Corporate Securities held to maturity
are mortgage-backed securities with an amortized cost of $965 million and a
fair value of $871 million. Gross unrealized gains and gross unrealized
losses for these securities were zero and $94 million, respectively.
Included in Federal Agency and U.S. Corporate Securities available for sale
are mortgage-backed securities with an amortized cost of $778 million and
fair value of $760 million, respectively, at June 30, 1994. Gross
unrealized gains were $5 million and gross unrealized losses were $23
million at June 30, 1994.
(D) Foreign Government Securities held to maturity and available for sale
includes restructured debt of foreign countries which meets the technical
definition of a "security" and is accounted for under SFAS No. 115. Within
Foreign Government Securities held to maturity are such securities with an
amortized cost and fair value of $1,516 million and $1,080 million,
respectively, at June 30, 1994. Gross unrealized losses for these
securities were $436 million, of which approximately $285 million related to
Brady Bonds issued by the Government of Venezuela. Within Foreign
Government Securities available for sale are such securities with an
amortized cost and fair value of $1,652 million and $1,629 million,
respectively, at June 30, 1994. Gross unrealized gains and gross unrealized
losses for these securities were $92 million and $115 million, respectively.
(E) According to the provisions of SFAS No. 115, available for sale securities
are carried at their fair values with net unrealized gains and losses
separately reported in stockholders' equity. At December 31, 1993,
available-for-sale securities were carried at the lower of aggregate
amortized cost or fair value.
(F) Cash proceeds from sales and maturities of securities available-for-sale
totaled $8.0 billion and $6.1 billion for the six months ended June 30, 1994
and 1993, respectively. Of these amounts, sales of such securities totaled
$5.0 billion and $3.6 billion, respectively. For the six months ended June
30, 1994 and 1993, gross realized gains on sales of securities available for
sale totaled $206 million and $53 million, respectively, of which $157
million and $48 million, respectively, related to debt securities available-
for-sale. For the six months ended June 30, 1994 and 1993, gross realized
losses on sales of securities available for sale totaled $33 million and $5
million, respectively, of which $32 million and $4 million, respectively,
related to debt securities available for sale.
(G) Not included in the table above are securities available for sale held by
equity-method affiliates at fair value. At June 30, 1994 the amortized cost
and fair value of these securities was $933 million and $935 million,
respectively. The gross unrealized gains and gross unrealized losses related
to these securities were $16 million and $14 million, respectively, and are
included in the net unrealized gains-securities available for sale component
in stockholders' equity at June 30, 1994.
(H) Equity securities available for sale includes certain non-marketable equity
securities which are excluded from the scope of SFAS No. 115 and are
therefore carried at cost. At June 30, 1994, the carrying amount of those
securities was $716 million (which is reported in both the amortized cost
and fair value columns above) and the fair value was $738 million.
(I) For the six months ended June 30, 1994, net gains on investments held by
venture capital subsidiaries totaled $104 million, of which $140 million and
$69 million represented gross unrealized gains and gross unrealized losses,
respectively. For the six months ended June 30, 1993, net gains on
investments held by venture capital subsidiaries totaled $75 million, of
which $115 million and $63 million represented gross unrealized gains and
gross unrealized losses, respectively.
49
<PAGE>
CROSS-BORDER AND FOREIGN CURRENCY OUTSTANDINGS
COUNTRIES WITH OUTSTANDINGS EXCEEDING 1% OF TOTAL ASSETS (A)
<TABLE>
<CAPTION>
Investments
Cross- in and
Border Funding of Total Outstandings
Claims Local ------------------
on Third Citicorp Equity June 30 Dec. 31
(In Billions of Dollars) Parties Franchises Invest. 1994 1993
-------- ----------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
United Kingdom............ $3.8 $3.3 $ - $ 7.1 $ 7.7
Brazil.................... 3.1 0.5 0.1 3.7 2.4
Mexico.................... 2.4 1.2 - 3.6 3.9
Japan..................... 1.5 1.5 - 3.0 2.8
</TABLE>
(A) Outstandings (including loans and other monetary assets) are presented on a
regulatory basis and have been adjusted for external guarantees and
collateral. Cross-border commitments at June 30, 1994 amounted to $5.1
billion in the United Kingdom, $0.1 billion in Brazil and $1.2 billion in
Japan. Commitments were not material in Mexico. At June 30, 1994, cross-
border and foreign currency outstandings in Argentina ($2.2 billion) and
Singapore ($1.9 billion) were between .75% and 1.0% of total assets. At
December 31, 1993, the only such countries were Canada ($2.1 billion),
Germany ($2.1 billion) and Argentina ($2.0 billion).
LONG-TERM DEBT
<TABLE>
<CAPTION>
(With original maturities of more than one year) (A) Maturity Distribution
(In Millions of Dollars) at June 30, 1994
---------------------
<S> <C>
PARENT COMPANY (B)
Due in 1994............................................... $ 952
Due in 1995............................................... 1,683
Due in 1996............................................... 1,265
Due in 1997............................................... 632
Due in 1998............................................... 1,233
Due in 1999-2003.......................................... 2,707
Due in 2004-2008.......................................... 1,785
Due in 2009 and Thereafter................................ 794
-------
$11,051
=======
SUBSIDIARIES
Due in 1994............................................... $ 513
Due in 1995............................................... 829
Due in 1996............................................... 1,462
Due in 1997............................................... 336
Due in 1998............................................... 345
Due in 1999-2003.......................................... 402
Due in 2004-2008.......................................... 52
Due in 2009 and Thereafter................................ 68
-------
$ 4,007
-------
Total..................................................... $15,058
=======
</TABLE>
(A) Maturity distribution is based upon contractual maturities or earlier dates
at which debt is repayable at the option of the holder, due to required
mandatory sinking fund payments or due to call notices issued.
(B) Maturity distribution includes $19 million of redeemable preferred stock.
50
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1994 COMMISSION FILE NUMBER 1-5738
CITICORP
(Exact name of registrant as specified in its charter)
DELAWARE 13-2614988
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
399 PARK AVENUE, NEW YORK, NEW YORK 10043
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 559-1000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No _____________
-------------
Citicorp Common Stock.................. 391,281,477
($1.00 Par Value) (Shares Outstanding on June 30, 1994)
51
<PAGE>
FORM 10-Q CROSS-REFERENCE INDEX
This document serves both as an analytical review for analysts, stockholders and
other interested persons and as the quarterly report filed on Form 10-Q with the
Securities and Exchange Commission.
PART I FINANCIAL INFORMATION PAGE
----
Item 1 - Financial Statements
Financial Statements, Schedules and Statistics
Consolidated Statement of Operations for the Six Months Ended
JUNE 30, 1994 AND 1993......................................... 37
Consolidated Balance Sheet as of
JUNE 30, 1994, AND DECEMBER 31, 1993........................... 38
Consolidated Statement of Cash Flows for the Six Months Ended
JUNE 30, 1994 AND JUNE 30, 1993................................ 40
Calculation of Net Income Per Share............................ 42
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 3-36
PART II OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders..... 53
Item 6 - Exhibits and Reports on Form 8-K........................ 54
Signatures ........................................................ 55
In the opinion of the management of Citicorp, all adjustments, consisting of
normal recurring adjustments, necessary for a fair presentation of the results
of operations for the six months ended JUNE 30, 1994 AND 1993 have been
included.
<PAGE>
Item 4 - Submission of Matters to a Vote of Security Holders
---------------------------------------------------
At the annual meeting of stockholders of Citicorp held on April 19, 1994, the
following matters were voted on by the stockholders:
1. The election of directors of Citicorp to hold office until the 1995
annual meeting and until the election and qualification of their
successors. Each nominee was elected to the Board of Directors of
Citicorp by votes cast as follows:
<TABLE>
<CAPTION>
Against/ Broker
Name For Withheld Non-Votes Abstentions
- --------------------------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C>
D. Wayne Calloway 315,028,814 552,050 0 1,230,983
Colby H. Chandler 314,151,638 1,429,226 0 1,230,983
Pei-yuan Chia 314,957,986 622,878 0 1,230,983
Paul J. Collins 314,945,910 634,954 0 1,230,983
Kenneth T. Derr 315,055,885 524,979 0 1,230,983
H.J. Haynes 314,991,677 589,187 0 1,230,983
John S. Reed 314,708,421 872,443 0 1,230,983
William R. Rhodes 314,689,233 891,631 0 1,230,983
Rozanne L. Ridgway 314,627,883 952,981 0 1,230,983
H. Onno Ruding 314,996,280 584,584 0 1,230,983
Frank A. Shrontz 315,038,687 542,177 0 1,230,983
Mario H. Simonsen 314,706,105 874,759 0 1,230,983
Roger B. Smith 313,470,552 2,110,312 0 1,230,983
Christopher J. Steffen 314,934,837 646,027 0 1,230,983
Franklin A. Thomas 314,998,632 582,232 0 1,230,983
Edgar S. Woolard, Jr. 314,780,171 800,693 0 1,230,983
</TABLE>
2. An amendment and restatement of Citicorp's 1988 Stock Purchase Plan
principally to authorize additional shares of Citicorp stock for issuance
under the Plan and to extend the latest date (until April 20, 1999) on
which agreements may be entered into under the Plan. The amendment and
restatement was ratified by votes of 241,264,756 for, 10,326,011
against/withheld, 0 broker non-votes and 3,080,306 abstentions.
3. The approval of the 1994 Annual Incentive Plan for Selected Executive
Officers which permits Citicorp to make annual incentive awards to
certain executive officers subject to a maximum amount payable under the
plan in any year. The approval of the 1994 Annual Incentive Plan for
Selected Executive Officers was ratified by votes of 267,425,957 for,
48,149,939 against/withheld, 0 broker non-votes and 2,057,303
abstentions.
4. The selection of KPMG Peat Marwick as independent auditors of Citicorp.
The selection of KPMG Peat Marwick was ratified by votes of 313,313,041
for, 2,409,658 against/withheld, 0 broker non-votes and 1,131,642
abstentions.
5. A stockholder proposal relating to cumulative voting for directors.
Such proposal was defeated by votes of 173,646,678 against/withheld,
77,144,046 for, 63,073,539 broker non-votes and 3,768,936 abstentions.
6. A stockholder proposal relating to a term limitation of six years for
each outside director. Such proposal was defeated by votes of
239,951,772 against/withheld, 10,420,451 for, 68,877,207 broker non-votes
and 4,383,769 abstentions.
7. A stockholder proposal relating to the establishment and disclosure of
human rights, social, political and ecological criteria for extending
loans to, continuing or promoting other bank products in, developing
countries and writing off existing loans which place an intolerable
burden on the population of certain countries. Such proposal was
defeated by votes of 231,102,919 against/withheld, 16,967,452 for,
63,770,995 broker non-votes and 6,791,833 abstentions.
8. A stockholder proposal relating to the nomination each year of twice the
number of candidates as there are directorships to be filled. Such
proposal was defeated by votes of 241,494,505 against/withheld, 8,720,852
for, 62,968,635 broker non-votes and 4,449,207 abstentions.
53
<PAGE>
Item 6 - Exhibits and Reports on Form 8-K
--------------------------------
a) Exhibit 4.1 Certificate of Designations relating to Citicorp
Adjustable Rate Cumulative Preferred Stock, Series 18 (incorporated
herein by reference to Exhibit 2.2 from Citicorp's Registration
Statement on Form 8-A, File No. 1-5738).
b) Exhibit 4.2 Certificate of Designations relating to Citicorp
Adjustable Rate Cumulative Preferred Stock, Series 19 (incorporated
herein by reference to Exhibit 2.2 from Citicorp's Registration
Statement on Form 8-A, File No. 1-4041).
c) Reports on Form 8-K
Citicorp filed a Form 8-K Current Report dated April 21, 1994 (Item
5) which report included a summary of the consolidated operations of
Citicorp for the three month period ended March 31, 1994 and (Item 7)
the calculation of the ratio of income to fixed charges (Exhibit
12(a) thereto) and the calculation of the ratio of income to fixed
charges including preferred stock dividends (Exhibit 12(b) thereto).
Citicorp filed a Form 8-K Current Report dated July 19, 1994 (Item 5)
which report included a summary of the consolidated operations of
Citicorp for the six months ended June 30, 1994, and (Item 7) the
calculation of the ratio of income to fixed charges (Exhibit 12(a)
thereto) and the calculation of the ratio of income to fixed charges
including preferred stock dividends (Exhibit 12(b) thereto).
54
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
/S/ Thomas E. Jones
-----------------------------
Thomas E. Jones
Executive Vice President
A Principal Financial Officer
CITICORP By: /S/ George E. Seegers
Registrant ----------------------
George E. Seegers
Assistant Secretary
Date: August 12, 1994
55
