<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
CONTENTS PAGE
<S> <C>
FINANCIAL HIGHLIGHTS........................................................ 1
FINANCIAL SUMMARY........................................................... 2
BUSINESS DISCUSSION......................................................... 3
GLOBAL CONSUMER............................................................. 4
GLOBAL FINANCE.............................................................. 6
NORTH AMERICA COMMERCIAL REAL ESTATE........................................ 8
CROSS-BORDER REFINANCING PORTFOLIO.......................................... 9
CORPORATE ITEMS............................................................. 10
CONSUMER LOAN PORTFOLIO DATA................................................ 11
COMMERCIAL LOAN PORTFOLIO DATA
Cash-Basis and Renegotiated Commercial Loans............................. 13
Commercial Real Estate................................................... 15
CAPITAL, PRICE RISK, LIQUIDITY, DERIVATIVE AND FOREIGN EXCHANGE ACTIVITIES.. 20
STATEMENT OF INCOME ANALYSIS
Net Interest Revenue (Taxable Equivalent Basis).......................... 28
Provision and Allowance for Credit Losses................................ 29
Fee and Commission Revenue............................................... 30
Revenues from Trading-Related Activities................................. 31
Securities Transactions.................................................. 32
Other Revenue............................................................ 32
Operating Expense........................................................ 33
Income Taxes............................................................. 34
Effect of Credit Card Receivables Securitization......................... 35
FINANCIAL STATEMENTS
Consolidated Statement of Income......................................... 36
Consolidated Balance Sheet............................................... 37
Consolidated Statement of Changes in Stockholders' Equity................ 38
Consolidated Statement of Cash Flows..................................... 39
CITIBANK, N.A. CONSOLIDATED BALANCE SHEET................................... 40
CALCULATION OF NET INCOME PER SHARE......................................... 41
AVERAGE BALANCES AND INTEREST RATES......................................... 42
FINANCIAL STATISTICS
Details of Credit Loss Experience........................................ 46
Cash-Basis, Renegotiated and Past Due Loans.............................. 47
Other Real Estate Owned.................................................. 47
Securities............................................................... 48
Cross-Border and Foreign Currency Outstandings........................... 50
Long-Term Debt........................................................... 50
FORM 10-Q................................................................... 51
FORM 10-Q CROSS-REFERENCE INDEX............................................. 52
SIGNATURES.................................................................. 54
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS Third Quarter Nine Months
------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS (IN MILLIONS OF DOLLARS) 1994 1993 1994 1993
---- ---- ---- ----
Net Income
Before Accounting Changes..................... $ 894 $ 528 $2,380 $1,344
After Accounting Changes (A).................. 894 528 2,324 1,644
PER SHARE
Net Income (see page 41)
On Common and Common Equivalent Shares
Before Accounting Changes..................... $ 1.87 $ 1.06 $ 4.95 $ 2.66
After Accounting Changes (A).................. 1.87 1.06 4.82 3.34
Assuming Full Dilution
Before Accounting Changes..................... $ 1.67 $ 0.97 $ 4.44 $ 2.47
After Accounting Changes (A).................. 1.67 0.97 4.33 3.05
Common Stockholders' Equity (B)................. $32.43 $25.05 $32.43 $25.05
------ ------ ------ ------
RETURN ON ASSETS AND EQUITY (ANNUALIZED)
Return on Total Assets (C)
Before Accounting Changes..................... 1.34% .91% 1.23% .79%
After Accounting Changes (A).................. 1.34% .91% 1.21% .92%
Return on Common Stockholders' Equity (B)
Before Accounting Changes..................... 26.5% 19.2% 25.2% 16.9%
After Accounting Changes (A).................. 26.5% 19.2% 24.7% 20.3%
Return on Total Stockholders' Equity (B)
Before Accounting Changes..................... 22.0% 16.3% 20.9% 14.8%
After Accounting Changes (A).................. 22.0% 16.3% 20.6% 17.2%
------ ------ ------ ------
CAPITAL (IN BILLIONS OF DOLLARS) (SEE PAGE 20)
Sept. 30 June 30 Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
1994 1994 1994 1993 1993 1993 1993
-------- ------- ------- ------- -------- ------- -------
Tier 1.......................................... $ 16.0 $ 15.0 $ 14.0 $ 13.4 $ 12.8 $ 11.8 $ 10.9
Tier 1 & 2...................................... 25.4 24.5 23.5 23.2 22.3 21.6 21.0
Tier 1 Ratio.................................... 7.47% 7.09% 6.86% 6.62% 6.17% 5.65% 5.23%
Tier 1 & 2 Ratio................................ 11.86% 11.60% 11.55% 11.45% 10.72% 10.31% 10.01%
Common Equity as a % of Total Assets (B) (C).... 5.04% 4.55% 4.51% 4.65% 4.29% 4.16% 3.98%
Total Equity as a % of Total Assets (B) (C)..... 6.70% 6.14% 6.12% 6.44% 6.05% 5.80% 5.46%
Leverage Ratio (C).............................. 6.42% 6.22% 5.95% 6.15% 5.95% 5.52% 5.17%
OPERATING MARGIN (IN MILLIONS OF DOLLARS)
3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
1994 1994 1994 1993 1993 1993 1993
-------- -------- -------- -------- -------- -------- --------
Total Revenue................................... $4,325 $4,050 $3,861 $4,152 $4,070 $3,968 $3,885
Effect of Credit Card Securitization (D)........ 213 264 268 292 303 328 359
Net Cost To Carry (E)........................... 30 31 29 43 54 72 83
Capital-Building Transactions................... - (117) (23) 61 (9) 25 (75)
------ ------ ------ ------ ------ ------ ------
Adjusted Revenue................................ $4,568 $4,228 $4,135 $4,548 $4,418 $4,393 $4,252
------ ------ ------ ------ ------ ------ ------
Total Operating Expense......................... $2,630 $2,456 $2,447 $3,021 $2,574 $2,494 $2,526
Net OREO Costs (F).............................. (5) 19 (28) 3 (67) (66) (115)
Restructuring Charges........................... - - - (425) - - -
------ ------ ------ ------ ------ ------ ------
Adjusted Operating Expense...................... $2,625 $2,475 $2,419 $2,599 $2,507 $2,428 $2,411
------ ------ ------ ------ ------ ------ ------
OPERATING MARGIN................................ $1,943 $1,753 $1,716 $1,949 $1,911 $1,965 $1,841
Consumer Credit Costs (G)....................... 544 585 614 651 665 708 716
Commercial Credit Costs (H)..................... 40 73 60 126 233 297 380
------ ------ ------ ------ ------ ------ ------
OPERATING MARGIN LESS CREDIT COSTS.............. $1,359 $1,095 $1,042 $1,172 $1,013 $ 960 $ 745
Additional Provision (I)........................ 100 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............................. $1,259 $1,122 $ 999 $ 560 $ 871 $ 759 $ 670
====== ====== ====== ====== ====== ====== ======
</TABLE>
(A) Nine month amounts for 1994 and 1993 reflect the cumulative effect of
adopting Statement of Financial Accounting Standards ("SFAS") No. 112,
"Employers' Accounting for Postemployment Benefits," as of January 1, 1994
and SFAS No. 109, "Accounting for Income Taxes," as of January 1, 1993,
respectively.
(B) The 1994 periods reflect the effect of adopting SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities," as of January 1,
1994.
(C) The 1994 periods reflect the effect of adopting Financial Accounting
Standards Board ("FASB") Interpretation No. 39, "Offsetting of Amounts
Related to Certain Contracts," as of January 1, 1994.
(D) For a description of the effect of credit card receivables securitization,
see page 35.
(E) Principally the net cost to carry commercial cash-basis loans and Other
Real Estate Owned (OREO).
(F) Principally net writedowns, net gains (losses) on sales and direct revenues
and expenses related to commercial OREO.
(G) Principally consumer net credit write-offs adjusted for the effect of
credit card receivables securitization.
(H) Includes commercial net credit write-offs, net cost to carry and net OREO
costs.
(I) 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.
1
<PAGE>
FINANCIAL SUMMARY
- --------------------------------------------------------------------------------
Citicorp reported record net income of $894 million in the 1994 third quarter,
compared with $528 million in the same 1993 quarter. Fully diluted earnings per
common share of $1.67 compared with $0.97 in the year earlier quarter. The
results for the quarter reflected record revenues and continued credit cost
improvement, as well as a reduction in the effective tax rate.
In the first nine months of 1994, operating earnings were $2,380 million or
$4.44 per common share on a fully diluted basis, compared with $1,344 million or
$2.47 per fully diluted share in the first nine months of 1993. Including the
cumulative effect of adopting the new accounting standard for post-employment
benefits, net income for the nine months of 1994 was $2,324 million or $4.33 per
fully diluted share. Net income in the comparable 1993 period, including the
cumulative effect of adopting the new accounting standard for income taxes was
$1,644 million or $3.05 per fully diluted share.
Revenues (adjusted for credit-related costs, the effect of credit card
securitization and net asset gains) were a record $4.6 billion in the 1994 third
quarter, up 8% from the 1994 second quarter and 3% from the 1993 third quarter.
Trading revenues (trading account and foreign exchange) in the third quarter
amounted to $287 million, up from $159 million in the 1994 second quarter, but
below the strong 1993 third quarter revenues of $478 million. Trading revenues
in the first nine months of 1994 amounted to $517 million, down sharply from
$1.5 billion in the comparable 1993 period. Excluding trading, adjusted
revenues were $4.3 billion in the quarter and $12.4 billion in the first nine
months of 1994, up 9% and 7%, respectively, from the same 1993 periods.
Operating expenses (excluding net OREO costs) were $2.6 billion in the third
quarter, up 6% from the 1994 second quarter and 5% from the same 1993 quarter,
primarily due to continued business expansion in the Emerging Economies, higher
marketing spending in card businesses around the world and investments in
operational efficiencies. Operating expenses in the nine months of 1994 were
$7.5 billion, up 2% from the comparable 1993 period.
Commercial credit costs decreased to $40 million in the third quarter from $73
million in the 1994 second quarter and from $233 million in the 1993 third
quarter. Commercial cash-basis loans and OREO together decreased by $360
million in the quarter to $4.3 billion. Consumer credit costs declined to $544
million in the third quarter from $585 million in the 1994 second quarter and
$665 million in the 1993 third quarter.
Citicorp continues to strengthen its balance sheet. Credit loss reserves were
built by $100 million in the quarter to $5.1 billion at September 30, 1994,
compared with $4.3 billion at September 30, 1993. Total regulatory capital at
September 30, 1994 was $25.4 billion, or 11.86% of risk-adjusted assets. The
Tier 1 capital ratio was 7.47%, up from 7.09% at the 1994 second quarter-end. A
year earlier the total capital ratio was 10.72% and the Tier 1 ratio was 6.17%.
Return on common equity (excluding accounting changes) increased to 26.5% for
the quarter and 25.2% for the nine months, compared with 19.2% and 16.9% for the
same 1993 periods. Return on total stockholders' equity in the quarter was
22.0%.
The effective tax rate on current operations for the first nine months was
reduced to 34% from the 37% reported in the first six months of 1994 and from
42% in the first nine months of 1993, reflecting an improved level and mix of
earnings in the current year (see page 34 for additional discussion).
2
<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>
3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Millions of Dollars) 1994 1994(A) 1994(A) 1993(A) 1993(A) 1993(A) 1993(A)
-------- -------- -------- -------- -------- -------- --------
Global Consumer (see page 4):
<S> <C> <C> <C> <C> <C> <C> <C>
North America, Europe and Japan..... $308 $250 $257 $ 83 $ 216 $ 169 $ 149
Emerging Economies.................. 169 161 170 146 133 127 142
---- ---- ---- ----- ----- ----- -----
Total Global Consumer (B)............. $477 $411 $427 $ 229 $ 349 $ 296 $ 291
---- ---- ---- ----- ----- ----- -----
Global Finance (see page 6):
North America, Europe and Japan..... $181 $103 $ 92 $ 186 $ 220 $ 234 $ 228
Emerging Economies.................. 252 181 171 227 163 204 150
---- ---- ---- ----- ----- ----- -----
Total Global Finance (B).............. $433 $284 $263 $ 413 $ 383 $ 438 $ 378
---- ---- ---- ----- ----- ----- -----
North America Commercial Real Estate
(see page 8)......................... (86) (71) (75) (117) (132) (181) (206)
Cross-Border Refinancing Portfolio
(see page 9)......................... 45 53 49 8 26 13 38
Corporate Items (see page 10) (B)..... 25 200 (55) 42 (98) (120) (131)
---- ---- ---- ----- ----- ----- -----
$894 $877 $609 $ 575 $ 528 $ 446 $ 370
Cumulative Effect of
Accounting Changes (C).............. - - (56) - - - 300
---- ---- ---- ----- ----- ----- -----
Total Citicorp........................ $894 $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. See page 33 for additional discussion of restructuring activities.
(C) First quarter 1994 includes the cumulative effect of adopting 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.
- --------------------------------------------------------------------------------
3
<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>
Third Quarter Nine Months
------------------ % ------------------ %
(In Millions of Dollars) 1994 1993(A) Change 1994 1993(A) Change
---- ------- ------ ---- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Total Revenue........................ $2,645 $2,431 9 $7,619 $7,009 9
Operating Expense.................... 1,571 1,510 4 4,576 4,424 3
Provision for Credit Losses.......... 365 419 (13) 1,104 1,272 (13)
------ ------ ------ ------
Income Before Taxes.................. $ 709 $ 502 41 $1,939 $1,313 48
Income Taxes......................... 232 153 52 624 377 66
------ ------ ------ ------
Net Income........................... $ 477 $ 349 37 $1,315 $ 936 40
====== ====== ====== ======
Average Assets ($ Billions).......... 107 99 8 104 99 5
Return on Assets (%)................. 1.77 1.40 - 1.69 1.26 -
ADJUSTED FOR CREDIT-RELATED ITEMS
Total Revenue (B)
North America, Europe and Japan.. $2,202 $2,200 - $6,486 $6,439 1
Emerging Economies............... 659 537 23 1,884 1,571 20
------ ------ ------ ------
Total Global Consumer............ $2,861 $2,737 5 $8,370 $8,010 4
====== ====== ====== ======
Operating Expense (C)
North America, Europe and Japan.. $1,187 $1,191 - $3,491 $3,497 -
Emerging Economies............... 371 316 17 1,047 898 17
------ ------ ------ ------
Total Global Consumer............ $1,558 $1,507 3 $4,538 $4,395 3
====== ====== ====== ======
Credit Costs (D)
North America, Europe and Japan.. $ 499 $ 628 (21) $1,620 $1,976 (18)
Emerging Economies............... 45 37 22 123 113 9
------ ------ ------ ------
Total Global Consumer............ $ 544 $ 665 (18) $1,743 $2,089 (17)
====== ====== ====== ======
</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 $477 million in the third quarter and
$1,315 million in the first nine months of 1994, compared with $349 million and
$936 million, respectively, in the same 1993 periods. Earnings in the North
America, Europe and Japan consumer businesses were $308 million for the quarter
and $815 million for the nine months, up $92 million and $281 million from the
respective 1993 periods, as credit costs in North America continued to improve,
particularly in the U.S. credit card business. Earnings in the Emerging
Economies were $169 million and $500 million for the quarter and nine months,
respectively, up $36 million and $98 million from the comparable 1993 periods,
primarily reflecting continued revenue momentum.
Revenues adjusted for certain credit-related items (principally the effect of
credit card receivables securitizations, see page 35 for a further description)
were $2.9 billion in the quarter and $8.4 billion in the first nine months of
1994, representing growth of 4% over the 1994 second quarter and growth of 5%
and 4%, respectively, over the comparable 1993 periods.
Adjusted revenues in North America, Europe and Japan were essentially unchanged
from the 1993 third quarter as improved revenues in the European branches were
offset by the impact of competitive pricing strategies on fee revenues in the
U.S. credit card business and lower revenues in the U.S. mortgage business.
Adjusted revenues increased 3% over the 1994 second quarter, reflecting higher
net interest revenue in the U.S. credit card business as the new pricing
strategies for credit cards contributed to increases in managed U.S. receivables
to $35 billion at September 30, 1994, up $2.4 billion or 7%, from September 30,
1993; total accounts to 22 million, up 2.6 million or 14%, from September 30,
1993; and total charge volumes in the 1994 third quarter to $18 billion, up $3.5
billion or 24%, from the same 1993 quarter.
4
<PAGE>
Adjusted revenues in North America, Europe and Japan for the first nine months
of 1994 grew 1% as the improvements in the European branches, along with
improved results in the U.S. mortgage pass-through program and higher fee
revenues from European private banking activities, offset the impact of lower
fee revenues in the U.S. card businesses, lower spreads and loan volumes in the
U.S. mortgage business and lower loan volumes in the U.S. branch business.
Adjusted revenues in the Emerging Economies grew 23% and 20%, respectively, in
the third quarter and first nine months of 1994 from the comparable 1993
periods, reflecting higher net interest revenue and fees. These increases
reflected broad-based business expansion across the Asia Pacific and Latin
America consumer businesses.
Adjusted operating expenses rose 3% in both the third quarter and first nine
months of 1994 from the comparable 1993 periods as lower OREO charges in the
U.S. mortgage business and other cost containment efforts 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 18% from the 1993 third quarter and 17% from the first
nine months of 1993, 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. Consumer delinquencies, defined as
loans on the balance sheet that are past due 90 days or more, were $3.4 billion
at September 30, 1994, compared with $3.7 billion at September 30, 1993.
Delinquencies were unchanged from June 30, 1994 as lower levels of U.S. mortgage
delinquencies were offset by the effect of the amortization of credit card
securitization transactions, seasonal increases in delinquencies in the
government guaranteed student loan portfolio and higher delinquencies in
Germany. While the U.S. economy has improved, economic conditions in Europe
remain weak. Although improved from year-ago levels, credit costs,
delinquencies and cash-basis loans remain relatively high in these regions and
further increases to credit reserves are possible. See the Consumer Loan
Portfolio section on page 11 and the Provision and Allowance for Credit Losses
section on page 29 for further analysis of the consumer portfolio.
Average assets in the Emerging Economies of $30.2 billion in the 1994 third
quarter were up 23% from the comparable 1993 period, reflecting continued
business expansion. In North America, Europe and Japan, average assets of $76.9
billion in the quarter were up 4% from the 1994 second quarter and 3% from the
1993 third quarter. The increase from the second quarter is mainly due to the
amortization of U.S. credit card securitization transactions (as well as growth
in the overall U.S. credit card portfolio), while the increase from the 1993
third quarter is also due to U.S. credit cards, as well as increases in the
European branch and private banking portfolios, offset by reduced loan volumes
in the U.S. mortgage business.
5
<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 is North America Commercial Real Estate, which is
discussed on page 8.
<TABLE>
<CAPTION>
Third Quarter Nine Months
------------------- % ------------------- %
(In Millions of Dollars) 1994 1993(A) Change 1994 1993(A) Change
---- ------- ------ ---- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Total Revenue........................ $1,472 $1,467 - $3,914 $4,455 (12)
Operating Expense.................... 883 825 7 2,462 2,455 -
Provision for Credit Losses.......... (28) 91 NM (41) 289 NM
------ ------ ------ ------
Income Before Taxes.................. $ 617 $ 551 12 $1,493 $1,711 (13)
Income Taxes......................... 184 168 10 513 512 -
------ ------ ------ ------
Net Income........................... $ 433 $ 383 13 $ 980 $1,199 (18)
====== ====== ====== ======
Average Assets ($ Billions) (B)...... 144 111 30 139 107 30
Return on Assets (%)................. 1.19 1.37 - .94 1.50 -
ADJUSTED FOR CREDIT-RELATED ITEMS
Total Revenue (C)
North America, Europe and Japan.. $ 819 $ 974 (16) $2,213 $2,926 (24)
Emerging Economies............... 656 503 30 1,716 1,576 9
------ ------ ------ ------
Total Global Finance............. $1,475 $1,477 - $3,929 $4,502 (13)
====== ====== ====== ======
Operating Expense (D)
North America, Europe and Japan.. $ 605 $ 561 8 $1,686 $1,619 4
Emerging Economies............... 300 255 18 839 821 2
------ ------ ------ ------
Total Global Finance............. $ 905 $ 816 11 $2,525 $2,440 3
====== ====== ====== ======
Credit Costs (E)
North America, Europe and Japan.. $ (71) $ 62 NM $ (132) $ 154 NM
Emerging Economies............... 11 26 (58) 6 49 (88)
------ ------ ------ ------
Total Global Finance............. $ (60) $ 88 NM $ (126) $ 203 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, net gains (losses) on sales 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 $433 million and $980 million in the three
and nine months ended September 30, 1994, compared with $383 million and $1,199
million in the respective 1993 periods. North America, Europe and Japan net
income was $181 million and $376 million in the three and nine months ended
September 30, 1994, compared with $220 million and $682 million in the
respective 1993 periods. Emerging Economies net income was $252 million and $604
million in the three and nine months ended September 30, 1994, compared with
$163 million and $517 million in the respective 1993 periods.
Global Finance earnings in the third quarter and first nine months of 1994
reflected substantially lower trading-related revenues relative to the strong
corresponding periods of 1993. In the Emerging Economies, the decline in
trading-related revenues was more than offset by solid business performance,
including higher net interest revenues and fees. In the North America, Europe
and Japan businesses, positive net credit amounts in the 1994 periods (compared
with charges in the 1993 periods) partially offset the decrease in
trading-related revenues.
6
<PAGE>
Global Finance reported adjusted revenues of $1.5 billion and $3.9 billion in
the three and nine months ended September 30, 1994, compared with $1.5 billion
and $4.5 billion in the respective 1993 periods. North America, Europe and Japan
adjusted revenues were $0.8 billion and $2.2 billion in the three and nine
months ended September 30, 1994, compared with $1.0 billion and $2.9 billion in
the respective 1993 periods. These results reflect lower revenues from trading-
related activities. The Emerging Economies adjusted revenues were $0.7 billion
and $1.7 billion in the three and nine months ended September 30, 1994, compared
with $0.5 billion and $1.6 billion in the respective 1993 periods. These revenue
improvements reflect solid performance across businesses, which offset declines
in trading-related revenues. Also contributing to the improvement in the third
quarter of 1994 were a favorable rate environment during the quarter in Brazil
and the release of a reserve related to a gross receipts tax on revenues in
Brazil.
Revenues from trading-related activities were $0.5 billion and $0.9 billion in
the three and nine months ended September 30, 1994, compared with $0.5 billion
and $1.7 billion in the respective 1993 periods. Although 1994 third quarter and
nine month trading-related revenues reflect 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 in the first half of 1994. See page 31 for a discussion of the
income statement effect of trading-related activities and see page 25 for a
discussion of derivative and foreign exchange activities.
Adjusted operating expenses were $0.9 billion and $2.5 billion in the three and
nine months ended September 30, 1994, compared with $0.8 billion and $2.4
billion in the respective 1993 periods. The increases in the 1994 periods
primarily reflect continued business expansion in the Emerging Economies and
selective investment spending in North America, Europe and Japan. Additionally,
the 1993 year-to-date period included charges related to withdrawing from
portfolio-management activities in India.
Credit recoveries and gains from the sale of OREO resulted in net positive
credit amounts in the three and nine months ended September 30, 1994, compared
with charges in the 1993 periods. Reserve building in the three and nine months
ended September 30, 1994 declined from the comparable 1993 periods reflecting
improved portfolio quality.
Average assets in the third quarter of 1994 included $99.6 billion in North
America, Europe and Japan and $44.1 billion in the Emerging Economies. The
increase in average assets from the comparable 1993 period primarily reflects
the effect of implementing FASB Interpretation No. 39, "Offsetting of Amounts
Related to Certain Contracts," in 1994, as well as continued business expansion
in the Emerging Economies.
7
<PAGE>
NORTH AMERICA COMMERCIAL REAL ESTATE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Third Quarter Nine Months
------------------- % ------------------ %
(In Millions of Dollars) 1994 1993(A) Change 1994 1993(A) Change
---- ------- ------ ---- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Total Revenue...................... $ 10 $ 8 25 $ 56 $ (29) NM
Operating Expense.................. 49 95 (48) 144 324 (56)
Provision for Credit Losses........ 99 115 (14) 306 469 (35)
----- ----- ----- -----
Loss Before Taxes.................. $(138) $(202) 32 $(394) $(822) 52
Income Taxes....................... (52) (70) 26 (162) (303) 47
----- ----- ----- -----
Net Loss........................... $ (86) $(132) 35 $(232) $(519) 55
===== ===== ===== =====
Average Assets ($ Billions)........ 8 11 (27) 9 12 (25)
ADJUSTED FOR CREDIT-RELATED ITEMS
Total Revenue (B).................. $ 34 $ 49 (31) $ 125 $ 122 2
Operating Expense (C).............. 35 40 (13) 105 120 (13)
Credit Costs (D)................... 100 145 (31) 301 708 (57)
Additional Provision (E)........... 37 66 (44) 113 116 (3)
</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, net gains (losses) on sales 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 net losses of $86 million and $232
million in the three and nine months ended September 30, 1994, an improvement
from net losses of $132 million and $519 million in the respective 1993 periods,
primarily due to lower levels of credit costs.
Cash-basis loans were $1.3 billion at September 30, 1994, down from $1.5 billion
at June 30, 1994, and $2.1 billion at September 30, 1993. The OREO portfolio
totaled $1.8 billion at September 30, 1994, down from $1.9 billion at June 30,
1994 and $2.6 billion at September 30, 1993. The decreases resulted from
restructurings, sales, write-offs, writedowns, and paydowns. Although credit
costs, cash-basis loans and OREO declined in 1994 compared with 1993, they are
expected to remain relatively high and further additions to credit reserves are
possible.
See page 15 for further details with respect to the North America Commercial
Real Estate portfolio.
8
<PAGE>
CROSS-BORDER REFINANCING PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Third Quarter Nine Months
------------------ % ----------------- %
(In Millions of Dollars) 1994 1993(A) Change 1994 1993(A) Change
---- ------- ------ ---- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Total Revenue................ $ 55 $33 67 $ 141 $94 50
Operating Expense............ 7 7 - 19 20 (5)
Provision for Credit Losses.. - - - (46) (1) NM
----- --- ----- ---
Income Before Taxes.......... $ 48 $26 85 $ 168 $75 NM
Income Taxes................. 3 - - 21 (2) NM
----- --- ----- ---
Net Income................... $ 45 $26 73 $ 147 $77 91
===== === ===== ===
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
Citicorp's cross-border refinancing portfolio activities resulted in net income
of $45 million for the quarter and $147 million for the nine months compared
with net income of $26 million and $77 million, respectively, in the
corresponding periods in 1993. The results included $44 million and $113
million of Brazil interest on medium- and long-term outstandings recognized
during the quarter and the first nine months of 1994, respectively, compared
with $33 million and $81 million in the corresponding periods a year ago. The
results also reflected a release of $44 million from the allowance for credit
losses in the first half of 1994.
Citicorp's medium- and long-term claims on third parties in the cross-border
refinancing portfolio at September 30, 1994 totaled $4.1 billion, comprising
$3.3 billion and $0.8 billion classified as Securities and Loans, respectively.
Refer to footnote C on page 48 for additional discussion related to amounts
classified as Securities.
The $4.1 billion of medium- and long-term claims at September 30, 1994 was up
from $3.6 billion at June 30, 1994 and $3.0 billion at September 30, 1993.
These increases primarily reflect the effect of completing the Brazil
refinancing agreement in the second quarter of 1994 and subsequent increases in
the values of securities received pursuant to the agreement. Refer to
Citicorp's First and Second Quarter Reports on Form 10-Q for discussions of the
agreement.
Citicorp's cross-border refinancing portfolio outstandings on a cash basis were
$140 million at September 30, 1994, down from $165 million at June 30, 1994 and
$1.1 billion at September 30, 1993. The reduction from the 1993 level resulted
primarily from the exchange of Brazilian outstandings for marketable securities
during the second quarter of 1994, pursuant to the Brazil refinancing agreement.
9
<PAGE>
CORPORATE ITEMS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Third Quarter Nine Months
------------------ % ----------------- %
(In Millions of Dollars) 1994 1993(A) Change 1994 1993(A) Change
---- ------- ------ ---- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Total Revenue............... $ 143 $131 9 $ 506 $ 394 28
Operating Expense........... 120 137 (12) 332 371 (11)
----- ---- ----- -----
Income (Loss) Before Taxes.. $ 23 $ (6) NM $ 174 $ 23 NM
Income Taxes................ (2) 92 NM 4 372 (99)
----- ---- ----- -----
Net Income (Loss)........... $ 25 $(98) NM $ 170 $(349) NM
===== ==== ===== =====
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
Corporate Items includes revenues derived from charging businesses for funds
employed (based on a marginal cost of funds concept), 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 1993 results included a net loss of
$15 million for the third quarter and $27 million for the nine months
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 $25 million in the third quarter of 1994
and $170 million for the nine months, compared with net losses of $98 million
and $349 million for the corresponding periods of 1993. Corporate Items results
included net gains from capital building transactions of $88 million ($140
million before taxes) for the nine months of 1994 compared with net gains of $33
million ($59 million before taxes) for the comparable period of 1993.
Additionally, Corporate Items results for the nine months of 1994 included a
$150 million tax benefit recognized in the second quarter 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 $68 million for the nine months of
1994, compared with a net loss of $382 million for the respective 1993 period.
The reduction in the net loss is primarily due to a lower income tax offset
created as a result of income taxes attributed to business activities on a local
tax basis.
10
<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>
Sept. 30 June 30 Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
1994 1994 1994 1993 1993 1993 1993
------------------ -----------------------------------------------------------
Total 90 Days
(Dollars in Billions) Loans (A) Past Due 90 Days Past Due
--------- -------- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Mortgages Held....................... $ 16.3 $ 0.5 $ 0.6 $ 0.7 $ 0.7 $ 0.7 $ 0.8 $ 0.9
Ratio................................. 3.5% 3.9% 4.0% 3.8% 4.0% 4.0% 4.5%
Consumer Loans Other Than
U.S. Mortgages........................... 74.0 2.4 2.3 2.3 2.4 2.5 2.5 2.5
Ratio................................. 3.2% 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 0.5
-------- ------- ------- ------- ------- ------- ------- -------
Total Consumer Loans...................... $ 90.9 $ 3.4 $ 3.4 $ 3.5 $ 3.6 $ 3.7 $ 3.8 $ 3.9
======== ======= ======= ======= ======= ======= ======= =======
Ratio................................. 3.8% 4.0% 4.3% 4.2% 4.5% 4.7% 4.8%
Total Dollar Amount of U.S. Conventional
First Mortgages Serviced (C)............. $ 35.6 $ 1.5 $ 1.6 $ 1.7 $ 1.7 $ 1.7 $ 1.8 $ 1.8
Ratio................................. 4.3% 4.5% 4.6% 4.4% 4.3% 4.1% 4.0%
Total Number of U.S. Conventional First
Mortgages Serviced (C)................... 353,714 11,662 12,136 12,655 12,649 12,832 12,781 13,205
Ratio................................. 3.3% 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
provisions of mortgage sales.
(C) Includes both owned and sold mortgages.
- --------------------------------------------------------------------------------
At September 30, 1994, consumer loans on the balance sheet that were delinquent
90 days or more remained unchanged at $3.4 billion compared with June 30, 1994
but were down from $3.7 billion at September 30, 1993. The ratio of delinquent
loans to total loans improved to 3.8% from 4.0% at June 30, 1994 due to an
increase in total consumer loans of $5.3 billion during the quarter. The growth
in consumer loans reflects the amortization of credit card securitization
transactions, continued efforts to increase the customer base in the U.S. credit
card business, as well as continued volume growth in the Emerging Economies.
U.S. mortgages held that were delinquent 90 days or more decreased $65 million
during the quarter and the ratio of delinquent mortgages to total mortgages
decreased to 3.5% from 3.9% at June 30, 1994 as U.S. mortgages held increased by
$0.2 billion during the quarter. The improvement in U.S. mortgage delinquencies
from 1993 levels reflects transfers to OREO and collection efforts. The total
dollar amount and number of serviced delinquent U.S. conventional first
mortgages also declined from the second quarter of this year and the third
quarter of 1993.
11
<PAGE>
Consumer loans other than U.S. mortgages that were delinquent 90 days or more
increased $0.1 billion during the quarter. This increase in delinquencies was
principally due to the amortization of U.S. credit card securitization
transactions, the seasonal nature of delinquencies in the government guaranteed
student loan portfolio in the U.S., and higher delinquencies in Germany.
Recourse provisions of certain U.S. mortgage sales arrangements allow Citicorp
the option of purchasing delinquent 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
September 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 September 30, 1994, interest accrual had been suspended on $1.0
billion of U.S. mortgages and $1.7 billion of other consumer loans. The
corresponding amounts at June 30, 1994 were $1.1 billion and $1.7 billion,
respectively, and $1.2 billion and $1.8 billion, respectively, at September 30,
1993.
Consumer loans at September 30, 1994 included $4.1 billion and $2.3 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 September 30, 1994, the U.S. portfolios included $361 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 $95 million of loans on which the accrual of interest had been
suspended.
Consumer loans delinquent 90 days or more on which interest continued to be
accrued were $788 million at September 30, 1994 compared with $691 million at
June 30, 1994 and $786 million at September 30, 1993. The increase during the
quarter was primarily due to U.S. credit card receivables, government-guaranteed
student loans and the German loan portfolio. Loans in Germany and U.S. credit
card receivables represent the majority of these delinquencies, and are
automatically written off upon reaching a predetermined number of days past due
on a contractual basis. Consumer OREO declined to $787 million at September 30,
1994 from $1,194 million at June 30, 1994 and $1,283 million at September 30,
1993. The decrease during the quarter is principally due to a portfolio sale at
approximately book value.
While the U.S. economy has improved, 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.
12
<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. When interest or principal is past due
for 90 days or more, the loan is placed on a cash basis except when 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 thereafter is included in earnings only to the extent
actually received in cash. When 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 for which a concession has
been granted as a result of the borrower's inability to meet the original terms.
- --------------------------------------------------------------------------------
CASH-BASIS AND RENEGOTIATED COMMERCIAL LOANS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Sept. 30 June 30 Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
(In Millions of Dollars) 1994 1994 1994 1993 1993 1993 1993
-------- ------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
CASH-BASIS LOANS:
North America Commercial Real Estate........... $1,321 $1,495 $1,654 $1,719 $2,138 $2,474 $2,593
Global Finance................................. 534 581 699 755 1,063 1,346 1,267
------ ------ ------ ------ ------ ------ ------
Total (excluding Cross-Border Refinancing).. $1,855 $2,076 $2,353 $2,474 $3,201 $3,820 $3,860
Cross-Border Refinancing....................... 140 165 991 1,041 1,068 1,082 1,242
------ ------ ------ ------ ------ ------ ------
TOTAL CASH-BASIS COMMERCIAL LOANS.............. $1,995 $2,241 $3,344 $3,515 $4,269 $4,902 $5,102
====== ====== ====== ====== ====== ====== ======
RENEGOTIATED LOANS............................. $ 524 $ 417 $ 384 $ 708 $ 377 $ 147 $ 136
====== ====== ====== ====== ====== ====== ======
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Total cash-basis commercial loans were $2.0 billion at September 30, 1994, down
$0.2 billion from June 30, 1994 and down $2.3 billion from $4.3 billion at
September 30, 1993.
Commercial cash-basis loans, excluding those in the cross-border refinancing
portfolio, were $1.9 billion at September 30, 1994, down from $2.1 billion at
June 30, 1994 and $3.2 billion at September 30, 1993. Global Finance cash-basis
loans were $534 million at September 30, 1994, down $47 million from June 30,
1994 and $529 million from September 30, 1993, principally reflecting payments
and transfers to accrual status. The North America Commercial Real Estate
portfolio, including cash-basis loans, is discussed on page 15.
Cash-basis loans in the cross-border refinancing portfolio of $140 million at
September 30, 1994 declined $25 million from June 30, 1994 and $928 million from
September 30, 1993. The reduction from September 30, 1993 primarily reflects the
exchange of Brazilian outstandings for securities (held in the available-for-
sale portfolio) pursuant to the refinancing agreement completed in the second
quarter of 1994.
Renegotiated loans increased $107 million from June 30, 1994 and $147 million
from September 30, 1993, primarily reflecting restructuring activities in the
North America Commercial Real Estate portfolio.
13
<PAGE>
- --------------------------------------------------------------------------------
CASH-BASIS COMMERCIAL LOAN ACTIVITY (A)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Billions of Dollars) 1994 1994 1994 1993 1993 1993 1993
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Beginning Balance......... $ 2.1 $ 2.4 $ 2.5 $ 3.2 $ 3.8 $ 3.9 $ 4.1
New Cash-Basis Loans...... 0.2 0.3 0.3 0.3 0.4 0.6 0.5
Payments/Loans Returned
to Accrual Status........ (0.3) (0.3) (0.3) (0.8) (0.7) (0.4) (0.2)
Gross Write-offs (B)...... (0.1) (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............ $ 1.9 $ 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 of $0.2 billion in cash-basis loans in the third quarter of
1994, excluding those in the cross-border refinancing portfolio, resulted
primarily from payments and returns to accrual status, in addition to write-
offs. These reductions were partially offset by additional loans placed on cash
basis of $0.2 billion in the quarter. Although the amount of new loans placed
on a cash basis has declined from 1993 levels, such inflows remain relatively
high. A table of activity in cash-basis loans in the North America Commercial
Real Estate portfolio is presented on page 16. A table of Citicorp's commercial
and consumer cash-basis, renegotiated and past-due loans is presented on page
47.
14
<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.
- --------------------------------------------------------------------------------
NORTH AMERICA COMMERCIAL REAL ESTATE PORTFOLIO SUMMARY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Sept. 30 June 30 Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
(In Billions of Dollars) 1994 1994 1994 1993 1993 1993 1993
-------- ------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Loans (A)................. $ 5.0 $ 5.0 $ 5.7 $ 5.8 $ 6.5 $ 6.6 $ 7.0
Renegotiated Loans (B).... 0.5 0.4 0.3 0.6 0.3 0.1 0.1
Cash-Basis Loans.......... 1.3 1.5 1.7 1.7 2.1 2.5 2.6
----- ----- ----- ----- ----- ----- -----
Total Loans.............. $ 6.8 $ 6.9 $ 7.7 $ 8.1 $ 8.9 $ 9.2 $ 9.7
OREO (C).................. 1.8 1.9 2.1 2.3 2.6 2.8 3.0
----- ----- ----- ----- ----- ----- -----
Total Loans and OREO..... $ 8.6 $ 8.8 $ 9.8 $10.4 $11.5 $12.0 $12.7
----- ----- ----- ----- ----- ----- -----
Unfunded Commitments...... $ 0.7 $ 0.8 $ 0.8 $ 0.8 $ 0.9 $ 1.1 $ 1.2
Letters of Credit......... 1.7 1.7 1.7 1.9 1.9 2.0 2.1
Other..................... 0.2 0.4 0.4 0.5 0.4 0.5 0.5
----- ----- ----- ----- ----- ----- -----
TOTAL EXPOSURE............ $11.2 $11.7 $12.7 $13.6 $14.7 $15.6 $16.5
===== ===== ===== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Millions of Dollars) 1994 1994 1994 1993 1993 1993 1993
-------- ------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Write-offs (D)........ $ 62 $ 63 $ 68 $ 78 $ 49 $ 136 $ 168
Net OREO Writedowns....... 24 12 36 27 73 65 92
</TABLE>
(A) Excludes renegotiated and cash-basis loans.
(B) The weighted average interest rate on renegotiated loans as of September 30,
1994 approximated 6.5%.
(C) Includes in-substance foreclosures of $1.0 billion at September 30, 1994;
$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.
(D) 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 $11.2 billion at
September 30, 1994 was down $3.5 billion (24%) from a year ago and has declined
58% from the $26.5 billion of peak exposure in 1989. The reduction in the third
quarter of 1994 reflected paydowns and maturities, and included sales of OREO
and other assets of $70 million ($491 million in the first nine months of 1994).
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 (which are constantly monitored and adjusted as
conditions change) for each loan or OREO property through an extensive, ongoing
portfolio-management process.
Cash-basis loans of $1.3 billion at September 30, 1994 were down from $1.5
billion at June 30, 1994 and $2.1 billion at September 30, 1993. OREO declined
to $1.8 billion at September 30, 1994 from $1.9 billion at June 30, 1994 and
$2.6 billion at September 30, 1993. Approximately $0.8 billion of the $1.3
billion of cash-basis loans at September 30, 1994 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 16, the
cash-basis loans and OREO annualized cash yield was 4.7% in the nine months
ended September 30, 1994, up from 4.1% in the comparable 1993 period.
15
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CASH FLOWS
- --------------------------------------------------------------------------------
Nine Months 1994
---------------------------------------------
Average Cash Annualized Cash
(Dollars In Millions) Carrying Value Flows Yield (%)
-------------- ------ ---------------
<S> <C> <C> <C>
Cash-Basis Loans (A):
Yields Over 3%................... $1,034 $ 57 7.4%
Yields Under 3%.................. 291 2 0.9%
No Payments Received............. 231 - -
------ -----
Total............................ $1,556 $ 59 5.1%
------ -----
In-Substance Foreclosures (A):
Yields Over 3%................... $ 567 $ 37 8.9%
Yields Under 3%.................. 95 1 0.7%
No Payments Received............. 419 - -
------ -----
Total............................ $1,081 $ 38 4.7%
------ -----
OREO: (B)........................ $ 967
Revenues......................... $ 150 20.7%
Expenses......................... (119) (16.5%)
-----
Net.............................. $ 31 4.3%
------ -----
Total Cash-Basis Loans and OREO.. $3,604 $ 128 4.7%
====== =====
</TABLE>
(A) Cash flows represent cash interest payments received of which $59 million
was applied as a reduction of principal ($36 million for cash-basis loans
and $23 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>
3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
In Millions of Dollars) 1994 1994 1994 1993 1993 1993 1993
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Beginning Balance................. $1,495 $1,654 $1,719 $2,138 $2,474 $2,593 $2,734
New Cash-Basis Loans.............. 56 214 202 199 241 336 403
Write-offs (A).................... (58) (65) (61) (80) (71) (115) (99)
Loans Returned to Accrual Status.. (135) (84) (30) (340) (222) (170) (6)
Payments and Other................ (32) (77) (138) (90) (190) (125) (36)
Transfers to OREO................. (5) (147) (38) (108) (94) (45) (403)
------ ------ ------ ------ ------ ------ ------
Ending Balance.................... $1,321 $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.
- --------------------------------------------------------------------------------
16
<PAGE>
- --------------------------------------------------------------------------------
NORTH AMERICA COMMERCIAL REAL ESTATE OREO ACTIVITY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Millions of Dollars) 1994 1994 1994 1993 1993 1993 1993
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Beginning Balance.............. $1,946 $2,130 $2,332 $2,547 $2,825 $3,032 $2,898
New OREO....................... 11 169 45 113 94 57 403
Writedowns (A)................. (41) (37) (49) (38) (75) (93) (133)
Sales, Paydowns and Other (B).. (100) (316) (198) (290) (297) (171) (136)
------ ------ ------ ------ ------ ------ ------
Ending Balance................. $1,816 $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 $6
million in the third quarter of 1994; $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 ($951 million at September 30, 1994)
for which Citicorp does not have ownership of the property and foreclosure has
not occurred. During the first nine months of 1994, Citicorp sold OREO
properties totaling approximately $412 million.
Unfunded commitments of $0.7 billion at September 30, 1994 were down $0.2
billion from September 30, 1993. These commitments are concentrated in the
office (38%) and residential (27%) 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
limit the maximum outstanding residential loans at any one time to amounts
substantially less than the aggregate commitment. At September 30, 1994, $0.2
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 outstanding letters of credit at
September 30, 1994 related to projects on which 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 Commercial 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 19% at September 30, 1994.
The table on page 18 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 collateralized by (or for which the source of repayment is from)
properties in multiple locations are categorized geographically in "Multi-
location and Other."
17
<PAGE>
- --------------------------------------------------------------------------------
NORTH AMERICA COMMERCIAL REAL ESTATE PORTFOLIO BY PROJECT BY REGION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SEPT. 30, DEC. 31,
1994 1993
(In Millions of Dollars) Office Residential Retail Hotel Land Industrial Other(A) TOTAL Total
------ ----------- ------ ----- ---- ---------- -------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NEW YORK Loans $ 254 $ 88 $ 55 $ - $ 33 $ - $ 33 $ 463 $ 452
Cash-Basis Loans 37 - 30 10 - - 12 89 141
OREO 218 26 - 12 - - 1 257 301
Letters
of Credit
and Other 94 101 23 - - - 5 223 301
TOTAL
EXPOSURE 603 215 108 22 33 - 51 1,032 1,195
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER MID-
ATLANTIC Loans 198 146 206 29 12 5 22 618 697
Cash-Basis Loans 62 - - 20 36 - - 118 132
OREO 144 - 3 26 9 - - 182 218
Letters
of Credit
and Other 2 12 107 1 3 - 12 137 160
TOTAL
EXPOSURE 406 158 316 76 60 5 34 1,055 1,207
- ------------------------------------------------------------------------------------------------------------------------------------
MIDWEST Loans 695 - 240 87 5 51 6 1,084 1,214
Cash-Basis Loans 124 5 - 55 6 - 1 191 256
OREO 176 21 20 - 6 5 1 229 239
Letters
of Credit
and Other 62 147 - - - 7 3 219 280
TOTAL
EXPOSURE 1,057 173 260 142 17 63 11 1,723 1,989
- ------------------------------------------------------------------------------------------------------------------------------------
NEW
ENGLAND Loans 93 2 - 19 - - 5 119 177
Cash-Basis Loans 32 - - - - 18 - 50 50
OREO 78 - 13 - 36 - - 127 132
Letters
of Credit
and Other 24 15 - - - - - 39 39
TOTAL
EXPOSURE 227 17 13 19 36 18 5 335 398
- ------------------------------------------------------------------------------------------------------------------------------------
SOUTHEAST Loans 218 114 72 39 3 3 134 583 751
Cash-Basis Loans - 10 15 15 4 8 - 52 96
OREO 207 13 77 5 9 4 5 320 491
Letters
of Credit
and Other 71 160 - 6 - 6 49 292 532
TOTAL
EXPOSURE 496 297 164 65 16 21 188 1,247 1,870
- ------------------------------------------------------------------------------------------------------------------------------------
SOUTHWEST Loans 324 2 67 22 2 - 4 421 481
Cash-Basis Loans 12 - 3 25 - 3 13 56 79
OREO 10 - 19 2 5 - 1 37 95
Letters
of Credit
and Other 9 - - 2 - - 6 17 25
TOTAL
EXPOSURE 355 2 89 51 7 3 24 531 680
- ------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA Loans 237 164 271 272 27 61 30 1,062 1,246
Cash-Basis Loans 167 104 64 10 1 52 18 416 487
OREO 151 49 124 - 4 31 9 368 446
Letters
of Credit
and Other 108 751 12 7 - 1 22 901 967
TOTAL
EXPOSURE 663 1,068 471 289 32 145 79 2,747 3,146
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER WEST Loans 280 46 185 125 1 - - 637 685
Cash-Basis Loans - - 9 9 4 - 1 23 72
OREO 48 - 9 - 4 16 - 77 173
Letters
of Credit
and Other 11 106 15 - - 6 15 153 194
TOTAL
EXPOSURE 339 152 218 134 9 22 16 890 1,124
- ------------------------------------------------------------------------------------------------------------------------------------
CANADA Loans 112 6 61 6 3 - 8 196 272
Cash-Basis Loans 39 4 154 - 11 7 11 226 293
OREO 70 34 56 - 15 2 - 177 171
Letters
of Credit
and Other 41 1 6 - 3 6 58 115 217
TOTAL
EXPOSURE 262 45 277 6 32 15 77 714 953
- ------------------------------------------------------------------------------------------------------------------------------------
MULTI-LOCATION
AND OTHER Loans - 40 35 23 - - 192 290 416
Cash-Basis Loans - - - - - - 100 100 113
OREO 20 - - - - 1 21 42 66
Letters
of Credit
and Other - 255 6 - - - 270 531 395
TOTAL
EXPOSURE 20 295 41 23 - 1 583 963 990
- ------------------------------------------------------------------------------------------------------------------------------------
TOTALS - SEPTEMBER 30, 1994
LOANS(B)(C) $2,411 $ 608 $1,192 $622 $ 86 $120 $ 434 $ 5,473
CASH-BASIS 473 123 275 144 62 88 156 1,321
LOANS(B)
OREO 1,122 143 321 45 88 59 38 1,816
LETTERS
OF CREDIT
AND OTHER 422 1,548 169 16 6 26 440 2,627
TOTAL
EXPOSURE 4,428 2,422 1,957 827 242 293 1,068 11,237
- ------------------------------------------------------------------------------------------------------------------------------------
Totals - December 31, 1993
Loans(B)(C) $2,464 $ 798 $1,789 $631 $ 83 $162 $ 464 $ 6,391
Cash-Basis 732 212 296 142 81 85 171 1,719
Loans(B)
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 $85 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 $457 million and $589 million of renegotiated loans at
September 30, 1994 and December 31, 1993, respectively, and exclude cash-
basis loans.
18
<PAGE>
- --------------------------------------------------------------------------------
NET WRITE-OFFS AND NET OREO WRITEDOWNS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Third Quarter Nine Months
------------------------------------------------------- ----------------------
1994 Net 1994 Net OREO 1994 1993 1994 1993
(In Millions of Dollars) Write-Offs Writedowns Total Total Total Total
---------- ------------- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
BY REGION
New York.................. $ - $ - $ - $ 13 $ 3 $ 41
Other Mid-Atlantic........ - - - 12 (4) 20
Midwest................... 8 4 12 16 15 39
New England............... 1 5 6 3 8 13
Southeast................. 8 (2) 6 4 22 106
Southwest................. - - - (2) - 11
California................ 29 9 38 60 127 236
Other West................ - 2 2 9 9 31
Canada.................... 17 6 23 20 61 90
Multi-location/Other...... (1) - (1) (13) 24 (4)
--- ----- ----- ----- ----- ----
Total.................... $62 $ 24 $ 86 $ 122 $ 265 $583
=== ===== ===== ===== ===== ====
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Third Quarter Nine Months
------------------------------------------------------- ----------------------
1994 Net 1994 Net OREO 1994 1993 1994 1993
(In Millions of Dollars) Write-Offs Writedowns Total Total Total Total
---------- ------------- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
BY PROJECT TYPE
Office.................... $30 $ 4 $ 34 $ 75 $ 121 $294
Residential............... 5 2 7 (2) 28 89
Retail.................... 25 12 37 11 81 92
Hotel..................... - - - 13 (3) 19
Land...................... - 6 6 12 10 20
Industrial................ 4 - 4 9 13 24
Other..................... (2) - (2) 4 15 45
--- ----- ----- ----- ----- ----
Total.................... $62 $ 24 $ 86 $ 122 $ 265 $583
=== ===== ===== ===== ===== ====
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Net write-offs and OREO writedowns aggregated $86 million in the third quarter
of 1994, up slightly from $75 million in the second quarter of 1994 but down
from $122 million in the third quarter of 1993.
While cash-basis loans and OREO levels have declined, they are expected to
remain relatively high. 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 affect the portfolio adversely. As a result, credit provisions (including net
write-offs), net OREO writedowns, and inflows to cash-basis loans could remain
at relatively high levels, although down from 1993.
OTHER
Citicorp's Global Finance businesses include $2.0 billion of commercial real
estate loans in addition to those managed by North America Commercial Real
Estate. Substantially all of these loans are held in offices outside of North
America.
Cash-basis commercial real estate loans in this portfolio were $89 million at
September 30, 1994, compared with $45 million at June 30, 1994 and $104 million
at September 30, 1993. Commercial OREO in this portfolio was $0.5 billion at
September 30, 1994, $0.5 billion at June 30, 1994, and $0.6 billion at September
30, 1993.
19
<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 discussed 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 $1.2 billion during the quarter to $12.8
billion, primarily reflecting net income of $894 million, an increase in net
unrealized gains on securities available for sale of $321 million, and common
stock issued under various staff benefit plans of $116 million, partially offset
by cash dividends declared on common and preferred stock of $148 million. Tier
1 capital at quarter-end was $16.0 billion, up from $15.0 billion at June 30,
1994 and $13.4 billion at year-end 1993. The increase in Tier 1 capital during
the quarter reflects the above items (excluding the net unrealized gains on
securities available for sale in accordance with current regulatory risk-based
capital guidelines) as well as issuance of $225 million of perpetual preferred
stock, partially offset by the redemption of $100 million of Price Adjusted Rate
Preferred Stock Fourth Series. Total capital of $25.4 billion at September 30,
1994 was up from $24.5 billion at June 30, 1994 and $23.2 billion at year-end
1993.
- --------------------------------------------------------------------------------
CITICORP RATIOS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Minimum Sept. 30 June 30 Dec. 31
Required 1994 1994 1993
-------- -------- ------- -------
<S> <C> <C> <C> <C>
Common Stockholders' Equity (A).. 5.04% 4.55% 4.65%
Tier 1 Capital................... 4.00% 7.47 7.09 6.62
Tier 1 & Tier 2 Capital.......... 8.00 11.86 11.60 11.45
Leverage (A)..................... 3.00+ 6.42 6.22 6.15
</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 September 30, 1994 by 38 bp
and 59 bp, respectively.
- --------------------------------------------------------------------------------
20
<PAGE>
- --------------------------------------------------------------------------------
COMPONENTS OF RISK-BASED CAPITAL UNDER REGULATORY GUIDELINES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Sept. 30 June 30 Dec. 31
(In Millions of Dollars) 1994 1994 1993
-------- ------- -------
TIER 1 CAPITAL
<S> <C> <C> <C>
Common Equity.................................. $ 12,768 $ 11,560 $ 10,066
Perpetual Preferred Stock...................... 4,187 4,062 3,887
Minority Interest.............................. 54 51 59
Less:
Net Unrealized Gains - Securities Available
for Sale (A)................................. (411) (90) -
Intangible Assets (B)........................ (359) (362) (387)
50% Investment in Certain Subsidiaries (C)... (266) (254) (237)
-------- -------- --------
Total Tier 1 Capital........................... $ 15,973 $ 14,967 $ 13,388
-------- -------- --------
TIER 2 CAPITAL
Allowance for Credit Losses (D)................ $ 2,701 $ 2,666 $ 2,551
Limited Life Preferred Stock................... 16 16 16
Qualifying Debt (E)............................ 6,931 7,079 7,434
Less:
50% Investment in Certain Subsidiaries (C)... (265) (254) (237)
-------- -------- --------
Total Tier 2 Capital........................... $ 9,383 $ 9,507 $ 9,764
-------- -------- --------
Total Capital (Tier 1 & Tier 2)................ $ 25,356 $ 24,474 $ 23,152
======== ======== ========
Net Risk-Adjusted Assets (F)................... $213,722 $211,013 $202,273
======== ======== ========
</TABLE>
(A) Tier 1 capital excludes the net unrealized gains on securities available for
sale in accordance with current regulatory risk-based capital guidelines.
(B) Includes goodwill and certain other identifiable intangible assets.
(C) Primarily Citicorp Securities, Inc.
(D) Includable up to 1.25% of risk-adjusted assets. Any excess allowance is
deducted from risk-adjusted assets.
(E) Includes qualifying senior and subordinated debt, in an amount not exceeding
50% of Tier 1 capital, plus subordinated capital notes, subject to certain
limitations.
(F) Net 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 25 for further discussion of
Derivative and Foreign Exchange Activities.
- --------------------------------------------------------------------------------
21
<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, all of Citicorp's subsidiary depository
institutions met the applicable "well capitalized" standard as of September 30,
1994.
- --------------------------------------------------------------------------------
CITIBANK, N.A. RATIOS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Minimum Sept. 30 June 30 Dec. 31
Required 1994 1994 1993
-------- -------- ------- -------
<S> <C> <C> <C> <C>
Common Stockholder's Equity (A).. 6.42% 5.90% 6.59%
Tier 1 Capital................... 4.00% 7.15 6.81 6.93
Tier 1 & Tier 2 Capital.......... 8.00 11.43 10.82 11.13
Leverage (A)..................... 3.00+ 5.70 5.62 6.06
</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
Stockholder's Equity and Leverage Ratios as of September 30, 1994 by 60 bp
each.
- --------------------------------------------------------------------------------
The Federal Reserve Board and the Office of the Comptroller of the Currency
("OCC") have 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 there can be no assurance until
final amendments are adopted by the bank regulators, 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 $250 million at September 30, 1994 for Citibank, N.A.) the capital
ratios of its subsidiaries.
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 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 proposed an 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.
22
<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 pre-tax 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 nine months 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 the 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 earnings at risk of up to $150
million annually in 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 nine months 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 25 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 September 30, 1994 were $154.3
billion, or 61% 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.
23
<PAGE>
- --------------------------------------------------------------------------------
TOTAL DEPOSITS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Sept. 30, 1994 Dec. 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)....... $40.5 $ 55.6 $ 96.1 $43.1 $48.9 $ 92.0
Global Finance (B)........ 7.7 50.5 58.2 8.7 44.4 53.1
----- ------ ------ ----- ----- ------
Total..................... $48.2 $106.1 $154.3 $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 September 30, 1994 were $96.1 billion, compared with
$92.0 billion at December 31, 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 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 September 30, 1994 (including subordinated capital notes)
amounted to $16.5 billion, down $1.7 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 nine months of 1994 totaled $0.7 billion, including $0.2 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 three quarters of 1994, asset securitization activity totaled $6.4
billion, including $3.7 billion of U.S. mortgages and $2.3 billion of credit
card receivables. As credit card securitization transactions amortize, newly
originated receivables are recorded on Citicorp's balance sheet and become
available for asset securitization. During the quarter, $1.9 billion of
previously securitized credit card receivables amortized and $1.7 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 September 30, 1994, short-term
funding was $22.5 billion or 9% of total funding, compared with $16.8 billion or
8% of total funding at December 31, 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. State-chartered bank subsidiaries are
subject to dividend limitations imposed by applicable state law.
24
<PAGE>
As of September 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 $3.9 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
September 30, 1994, its bank subsidiaries could have distributed dividends to
Citicorp, directly or through their parent holding company of approximately $2.0
billion of the available $3.9 billion in dividends.
Citicorp also receives dividends from its nonbank subsidiaries. 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 include 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 September 30, 1994, June 30, 1994 and December 31, 1993,
along with the related balance sheet credit exposure. The table includes all
contracts with third parties, including both dealer and end-user positions.
- --------------------------------------------------------------------------------
TOTAL DERIVATIVE AND FOREIGN EXCHANGE CONTRACTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Notional Balance Sheet
Principal Credit Exposure (A)
--------------------------------- ----------------------------
Sept. 30 June 30 Dec. 31 Sept. 30 June 30 Dec. 31
(In Billions of Dollars) 1994 1994 1993 1994 1994 1993
-------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
INTEREST RATE PRODUCTS
Futures Contracts......................... $ 201.6 $ 206.7 $195.6 $ - $ - $ -
Forward Contracts......................... 523.2 468.5 227.1 0.6 0.5 0.2
Swap Agreements........................... 339.8 312.0 244.3 5.9 6.0 6.8
Purchased Options......................... 129.8 118.9 103.9 1.5 1.8 1.5
Written Options........................... 101.2 105.8 87.5 - - -
FOREIGN EXCHANGE PRODUCTS
Futures Contracts......................... $ - $ 0.1 $ 0.1 $ - $ - $ -
Forward Contracts......................... 1,182.0 1,225.0 976.4 20.8 27.8 11.4
Cross-Currency Swap Agreements............ 33.0 33.4 31.7 1.9 2.1 1.7
Purchased Options......................... 69.2 68.7 44.0 1.5 1.6 1.1
Written Options........................... 67.4 66.4 43.7 - - -
COMMODITY AND EQUITY PRODUCTS............. 24.4 24.0 20.7 0.8 0.9 0.8
----- ----- -----
33.0 40.7 23.5
EFFECTS OF MASTER NETTING AGREEMENTS (B) (8.4) (8.7) (4.8)
----- ----- -----
$24.6 $32.0 $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.
25
<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 September 30,
1994 totaled $2.9 billion for interest rate contracts and $9.6 billion for
foreign exchange, commodity and equity contracts. The corresponding amounts
were $3.0 billion and $11.2 billion, respectively, as of June 30, 1994 and $3.1
billion and $6.8 billion, respectively, as of December 31, 1993.
The significant increase in notional amounts during 1994, primarily in interest
rate forwards and interest rate swaps, is attributable to higher activity and
customer demand in response to interest rate volatility in the European and U.S.
economies. The changes during the year in balance sheet credit exposure and
risk-weighted credit equivalent amounts of foreign exchange contracts reflect
fluctuations in exchange rates and the level of outstanding contracts,
particularly those involving 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 dealer 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 31.
Citicorp's risk management activities employ interest rate swaps and other
derivatives that are designated and effective as hedges, as well as contracts
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 September 30, 1994, June 30, 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 Sept. 30 Amount Maturing
----------------------------------------------------
Notional
Principal Within 1 to 2 2 to 3 3 to 4 4 to 5 After 5
(Dollars In Billions) Amount(A) 1 Year Years Years Years Years Years
------------------------------- ------ ------ ------ ------ ------ -------
Sept. 30 June 30 Dec. 31
1994 1994 1993
----------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST RATE PRODUCTS
Futures Contracts............... $52.5 $58.5 $12.5 72% 21% 6% 1% - -
Forward Contracts............... 6.0 8.5 7.9 98% 2% - - - -
Swap Agreements................. 74.4 72.2 60.1 27% 19% 20% 10% 12% 12%
Option Contracts................ 31.8 37.2 34.0 32% 13% 18% 23% 9% 5%
FOREIGN EXCHANGE PRODUCTS
Futures and Forward Contracts... 24.8 12.1 15.1 100%
Cross-Currency Swap Agreements.. 2.8 2.7 1.9 46% 28% 3% 1% - 22%
</TABLE>
(A) Includes third-party and intercompany contracts.
- --------------------------------------------------------------------------------
The increase in notional amounts of end-user interest rate futures and swaps
during 1994 reflected a higher utilization of these contracts in response to
changing interest rates, primarily in the U.S. and U.K. The increase in notional
amounts of end-user foreign exchange futures and forwards in the third quarter
reflects both higher utilization of contracts and translation effects on the
reported notional amounts. During the third quarter, interest rate contracts
with a notional principal amount of $2.5 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.
26
<PAGE>
The estimated fair value of contracts used to hedge or modify Citicorp's risk
was less than the carrying amount of those contracts by approximately $1.1
billion and $0.1 billion at September 30, 1994 and June 30, 1994, respectively.
At December 31, 1993, the fair value of contracts exceeded the carrying amount
by approximately $1.1 billion. The decline is principally attributable to
rising U.S. interest rates during the first nine 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 may also fluctuate). As noted
above, these derivatives are integral components of Citicorp's asset and
liability management activities. The total fair value of financial instruments,
which is discussed on page 71 of the 1993 Annual Report and Form 10-K, includes
the fair values of on-balance sheet assets and liabilities, as well as
derivative contracts and other off-balance sheet instruments. Citicorp
estimates that the total fair value of financial instruments, in the aggregate,
continues to exceed the carrying value by a substantial amount at September 30,
1994.
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.
27
<PAGE>
STATEMENT OF INCOME ANALYSIS
- --------------------------------------------------------------------------------
NET INTEREST REVENUE (TAXABLE EQUIVALENT BASIS)
- --------------------------------------------------------------------------------
Net interest revenue of $2,352 million for the quarter was up $182 million from
the second quarter of 1994 and up $366 million from the same period last year.
The improvement over the 1994 second quarter reflects higher net interest
revenue in the U.S. credit card business, the release of a $37 million reserve
related to a gross receipts tax on revenues in Brazil and increases in the
Global Consumer and Global Finance businesses in the Emerging Economies,
including benefits to the Global Finance business from a favorable rate
environment in Brazil during the 1994 third quarter. The improvement over the
1993 third quarter reflects the growth in assets in the Emerging Economies, as
well as the effect on reported revenues of a lower level of securitized credit
card receivables. Net interest revenue for the nine months of 1994 was $6.6
billion, up 16% from $5.7 billion for the first nine months of 1993.
The net rate spread for the third quarter of 1994 was 4.37%, compared with 4.15%
in the second quarter of 1994 and 3.97% in the third quarter of 1993. 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 4.80%,
compared with similarly adjusted ratios of 4.64% and 4.57% for the 1994 second
quarter and 1993 third quarter, respectively. See page 35 for Effect of Credit
Card Receivables Securitization.
The adjusted net rate spread for the quarter in the U.S. was 4.92%, up from
4.64% in the second quarter, largely due to an increase in managed U.S. credit
card loan volumes. The improvement compared with the third quarter of 1993
(which included higher levels of interest received from certain venture capital
investments) reflected a lower cost to carry cash-basis loans and OREO, as well
as funding benefits associated with higher equity levels and the effective
management of interest rate exposure. The 1994 third quarter net rate spread in
offices outside the U.S. reflected both the favorable Brazil rate environment
and reserve release noted above.
Average interest-earning assets increased $14.8 billion or 7% from the third
quarter of 1993, primarily reflecting increased activities in both the Global
Consumer and Global Finance businesses in the Emerging Economies.
At September 30, 1994, there were approximately $4.3 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>
3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
1994 1994 1994 1993 1993 1993 1993
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
NET INTEREST REVENUE:
(In Millions of Dollars)
U.S.......................................................... $1,015 $ 911 $ 945 $ 923 $ 888 $ 796 $ 789
Outside the U.S.............................................. 1,337 1,259 1,142 1,089 1,098 1,060 1,062
------ ------ ------ ------ ------ ------ ------
Total....................................................... $2,352 $2,170 $2,087 $2,012 $1,986 $1,856 $1,851
------ ------ ------ ------ ------ ------ ------
AVERAGE INTEREST-EARNING ASSETS:
(In Billions of Dollars)
U.S.......................................................... $ 99.9 $100.8 $102.7 $ 99.3 $ 96.6 $ 97.3 $ 99.9
Outside the U.S.............................................. 113.6 108.9 108.1 103.3 102.1 99.6 96.4
------ ------ ------ ------ ------ ------ ------
Total....................................................... $213.5 $209.7 $210.8 $202.6 $198.7 $196.9 $196.3
------ ------ ------ ------ ------ ------ ------
NET RATE SPREAD (%):
U.S.......................................................... 4.03 3.63 3.73 3.69 3.65 3.28 3.20
Outside the U.S.............................................. 4.67 4.63 4.29 4.18 4.27 4.27 4.47
Total....................................................... 4.37 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)
U.S.......................................................... $1,525 $1,451 $1,474 $1,464 $1,469 $1,372 $1,410
Total....................................................... 2,862 2,710 2,616 2,553 2,567 2,432 2,472
AVERAGE INTEREST-EARNING ASSETS:
(In Billions of Dollars)
U.S.......................................................... $123.1 $125.5 $126.9 $122.9 $120.6 $121.6 $125.3
Total....................................................... 236.7 234.4 235.0 226.2 222.7 221.2 221.7
NET RATE SPREAD (%):
U.S....................................................... 4.92 4.64 4.71 4.73 4.83 4.52 4.56
Total....................................................... 4.80 4.64 4.52 4.48 4.57 4.41 4.52
</TABLE>
(A) Includes appropriate allocations for capital and funding costs based on the
location of the asset.
28
<PAGE>
- --------------------------------------------------------------------------------
PROVISION AND ALLOWANCE FOR CREDIT LOSSES
- --------------------------------------------------------------------------------
The provision for credit losses included $100 million for the third quarter of
1994 and $256 million for the first nine months to build the consumer and
commercial allowance for credit losses, after reflecting $44 million of releases
in the 1994 first half related to the cross-border refinancing portfolio.
The consumer credit loss provision included an additional provision above net
write-offs of $50 million for the third quarter and $150 million for the first
nine months compared with $63 million and $213 million in the respective year-
ago periods. As a percentage of average consumer loans, net write-offs declined
to 1.43% during the quarter from 1.50% in the second quarter of 1994 and 1.75%
in the 1993 third quarter. The decrease in the loss ratio compared with the
third quarter of 1993 is largely due to an improvement in the net credit loss
rate for U.S. credit cards.
The securitization of credit card receivables, which is more fully described on
page 35, lowered reported credit losses by $213 million in the 1994 third
quarter and $303 million in the same 1993 quarter.
The commercial credit loss provision, excluding the refinancing portfolio, was
$71 million for the third quarter and $265 million for the nine months of 1994,
down $135 million and $493 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 for the quarter
and $150 million for the nine months of 1994, compared with $88 million and $264
million in the respective 1993 periods.
Details of net write-offs (recoveries) and the provision for credit losses are
included in the following table.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Millions of Dollars) 1994 1994 1994 1993 1993 1993 1993
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Write-offs (Recoveries):
Global Consumer......................... $ 315 $ 311 $ 328 $ 351 $ 356 $ 367 $ 336
Global Finance.......................... (41) 9 (46) 16 69 36 36
North America Commercial Real Estate.... 62 63 68 78 49 136 168
----- ----- ----- ----- ----- ----- -----
Total Non-Refinancing Commercial........ $ 21 $ 72 $ 22 $ 94 $ 118 $ 172 $ 204
----- ----- ----- ----- ----- ----- -----
Cross-Border Refinancing Portfolio (A).. (19) (329) (35) (10) (23) 120 (26)
----- ----- ----- ----- ----- ----- -----
Total................................... $ 317 $ 54 $ 315 $ 435 $ 451 $ 659 $ 514
===== ===== ===== ===== ===== ===== =====
Provision for Credit Losses:
Global Consumer......................... $ 365 $ 361 $ 378 $ 414 $ 419 $ 442 $ 411
Global Finance.......................... (28) 21 (34) 16 91 87 111
North America Commercial Real Estate.... 99 101 106 141 115 186 168
----- ----- ----- ----- ----- ----- -----
Total Non-Refinancing Commercial........ $ 71 $ 122 $ 72 $ 157 $ 206 $ 273 $ 279
----- ----- ----- ----- ----- ----- -----
Cross-Border Refinancing Portfolio...... - (11) (35) - - - (1)
----- ----- ----- ----- ----- ----- -----
Total................................... $ 436 $ 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 that quarter.
- --------------------------------------------------------------------------------
29
<PAGE>
At September 30, 1994, the allowance for credit losses totaled $5,060 million,
compared with $4,912 million at June 30, 1994, and $4,260 million at September
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>
- -------------------------------------------------------------------------------------------------------------------
Sept. 30 June 30 Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
(In Millions of Dollars) 1994 1994 1994 1993 1993 1993 1993
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLOWANCE FOR CREDIT LOSSES:
Global Consumer............................ $1,790 $1,711 $1,639 $1,596 $1,550 $1,491 $1,412
Commercial (A)............................. 3,270 3,201 2,595 2,545 2,482 2,394 2,296
Cross-Border Refinancing Portfolio......... - - 238 238 228 205 325
------ ------ ------ ------ ------ ------ ------
TOTAL...................................... $5,060 $4,912 $4,472 $4,379 $4,260 $4,090 $4,033
====== ====== ====== ====== ====== ====== ======
Reserve For Global Consumer
Sold Portfolios........................... $ 467 $ 503 $ 538 $ 527 $ 559 $ 557 $ 557
====== ====== ====== ====== ====== ====== ======
ALLOWANCE AS A PERCENTAGE OF TOTAL LOANS:
Global Consumer............................ 1.97% 2.00% 1.98% 1.89% 1.89% 1.83% 1.75%
Commercial (A)............................. 5.90% 5.76% 4.88% 4.88% 4.49% 4.35% 4.25%
Total...................................... 3.46% 3.48% 3.26% 3.15% 3.05% 2.94% 2.92%
</TABLE>
(A) Effective second quarter 1994, includes amounts related to the Cross-Border
Refinancing portfolio.
- --------------------------------------------------------------------------------
Continued uncertainty in the economic environment could result in further
increases in both the consumer and commercial portions of the allowance for
credit losses.
- --------------------------------------------------------------------------------
FEE AND COMMISSION REVENUE
- --------------------------------------------------------------------------------
Fee and commission revenues were $1,280 million in the quarter and $3,778
million in the first nine months of 1994, up $46 million and $78 million from
the comparable 1993 periods. The year-ago periods included fees related to the
U.S. market data services business of Quotron ($0.1 billion in the nine months
of 1993), which was sold in the first quarter of 1994. The increase in fee
revenues in the 1994 periods primarily resulted from strong growth in both the
Global Finance and Global Consumer businesses in the Emerging Economies. The
first nine months of 1994 also benefited from higher fee revenues in European
private banking activities, but reflected a reduction in fee revenues related to
the U.S. credit card business as a result of competitive pricing strategies.
30
<PAGE>
- --------------------------------------------------------------------------------
REVENUES FROM TRADING-RELATED ACTIVITIES
- --------------------------------------------------------------------------------
Revenues from trading-related activities are reported in Trading Account and
Foreign Exchange in the income statement, but also include other amounts,
principally reflected in Net Interest Revenue. The following table provides an
analysis of revenues from trading-related activities by Consolidated Statement
of Income caption and by trading activity. Citicorp's trading-related activities
are conducted primarily in the Global Finance businesses, but include revenues
of approximately $0.1 billion related to activities conducted by the Global
Consumer businesses in the first nine months of 1994, as well as $0.1 billion
and $0.2 billion in the three and nine months ended September 30, 1993,
respectively.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Third Quarter Nine Months
----------------- ------------------
(In Billions of Dollars) 1994 1993(A) 1994 1993(A)
----- ---- ----- ----
<S> <C> <C> <C> <C>
BY INCOME STATEMENT LINE:
Trading Account............ $ 0.1 $0.2 $ 0.1 $0.7
Foreign Exchange........... 0.2 0.2 0.4 0.8
Other (B).................. 0.2 0.2 0.5 0.4
----- ---- ----- ----
TOTAL...................... $ 0.5 $0.6 $ 1.0 $1.9
===== ==== ===== ====
BY TRADING ACTIVITY:
Foreign Exchange (C)....... $ 0.2 $0.2 $ 0.5 $0.8
Derivative (D)............. 0.2 0.3 0.3 0.6
Fixed Income (E)........... - 0.1 - 0.3
Other...................... 0.1 - 0.2 0.2
----- ---- ----- ----
TOTAL...................... $ 0.5 $0.6 $ 1.0 $1.9
===== ==== ----- ====
</TABLE>
(A) Adjusted to conform to latest quarter's presentation, which reflects a
revised definition of trading-related activities.
(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.
- --------------------------------------------------------------------------------
Revenues from trading-related activities were adjusted to conform more closely
to industry practice and disclosure guidance recently issued by the FASB. This
adjustment did not affect the trends in trading-related revenues compared with
the 1993 periods. On an adjusted basis, these revenues aggregated $0.5 billion
and $1.0 billion in the three and nine months ended September 30, 1994, compared
with $0.6 billion and $1.9 billion in the respective 1993 periods. The 1994
revenues from trading-related activities, including derivatives, reflected
continued customer demand for risk management products, while trading activities
related to Citicorp's own account in the first half of 1994 were adversely
affected as interest rates increased and market conditions were challenging and
volatile.
TRADING ACCOUNT
Trading account revenues were $0.1 billion in both the three and nine months
ended September 30, 1994, compared with $0.2 billion and $0.7 billion in the
respective 1993 periods. The 1993 periods included especially strong results
reported by the Global Finance businesses in Europe, North America, and Latin
America. Revenues in the 1994 periods were adversely affected by rising interest
rates and volatile market conditions, particularly in the first half of 1994.
FOREIGN EXCHANGE
Foreign exchange revenues were $0.2 billion and $0.4 billion in the three and
nine months ended September 30, 1994, compared with $0.2 billion and $0.8
billion in the respective 1993 periods. The decline in foreign exchange
revenues in the nine months ended September 30, 1994 compared with the same
period in 1993 resulted primarily from the adverse effect of volatile conditions
in the European currency markets in the first half of 1994.
31
<PAGE>
- --------------------------------------------------------------------------------
SECURITIES TRANSACTIONS
- --------------------------------------------------------------------------------
Net gains from the sale of securities were $5 million in the third quarter of
1994, compared with $43 million in the third quarter of 1993. The net gain in
the third quarter of 1994 reflects gross realized gains of $27 million ($233
million for the nine months) and gross realized losses of $22 million ($55
million for the nine months).
Effective January 1, 1994, Citicorp adopted SFAS No. 115. At September 30,
1994, the net unrealized gain on available for sale securities included in
stockholders' equity totaled $411 million after tax, up from $90 million at June
30, 1994, due primarily to a significant increase during the quarter in the
market prices of Brazilian securities in the portfolio.
The fair value of securities available for sale, and the related adjustment to
stockholders' equity, may fluctuate over time based on market conditions and
changes in market interest rates, as well as events and trends affecting
specific securities.
- --------------------------------------------------------------------------------
OTHER REVENUE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Third Quarter Nine Months
----------------- ---------------
(In Millions of Dollars) 1994 1993(A) 1994 1993(A)
----- ---- ------ -------
<S> <C> <C> <C> <C>
Securitized Credit Card Receivables.... $ 251 $297 $ 695 $ 798
Venture Capital Gains.................. 48 9 152 84
Affiliate Earnings..................... 45 33 162 112
Net Asset Gains........................ 32 8 113 62
Net Losses from Mortgage Pass-Through
Securitization Activity............... (13) (20) (60) (103)
Foreign Currency Translation Losses.... (9) (3) (2) (35)
Other Items............................ 53 8 114 24
----- ---- ------ -----
Total............................... $ 407 $332 $1,174 $ 942
===== ==== ====== =====
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
- --------------------------------------------------------------------------------
The decline in revenue related to securitized credit card receivables primarily
reflects lower securitized volumes, partially offset by reduced net credit
losses. The effect of credit card receivable securitization is discussed in
more detail on page 35.
Venture capital gains were $48 million for the third quarter of 1994 and $152
million for the nine months, compared with $9 million and $84 million in the
respective 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 $12 million and $50
million when compared with the comparable periods in 1993, largely due to
increases in certain Latin American affiliates.
Net asset gains were $32 million for the third quarter and $113 million for the
first nine months of 1994. First half 1994 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 in the value
of certain investments in Latin America. Net asset gains in the nine months of
1993 included the sale of Citicorp's minority interest in Taiwan First
Investment and Trust.
Net losses from mortgage pass-through securities sales for the third quarter and
the nine months were lower than the comparable periods in 1993, reflecting lower
costs related to recourse exposure and lower net adjustments in the nine months
of 1994 for accelerated prepayments of securitized mortgages, partially offset
by the recognition of losses in 1994 on sales of pass-through securities, due to
the rising rate environment and competitive pricing pressures.
32
<PAGE>
OPERATING EXPENSE
EMPLOYEE EXPENSE
Employee expense was $1.3 billion in the third quarter and $3.8 billion for the
nine months of 1994, up $94 million and $227 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 and reduced staff levels in the Global Consumer
businesses in North America.
OTHER EXPENSE
Other expense was $1.3 billion in the quarter and $3.7 billion for the nine
months of 1994, $38 million and $288 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.
Third quarter and nine months 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 spending in card businesses around the
world and continued investments in operational efficiencies. 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 $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 $1,120 million, including substantially all of the 1992 and 1991
charges, had been utilized through September 30, 1994. The $282 million
remaining to be utilized, substantially all related to workforce reductions,
includes $259 million of the 1993 charge, $16 million from 1992 and $7 million
from 1991. Citicorp anticipates that substantially all of these amounts will be
paid out in the remainder of 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 third quarter of 1994, approximately 10,400
positions had been eliminated through these programs, of which 6,700 were in
Global Consumer and 3,700 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, which
was sold in the first quarter of 1994. Other asset writedowns included in the
charges related to items to be disposed or sold pursuant to restructuring plans.
33
<PAGE>
As shown in the following table, the charges related primarily to the North
America, Europe and Japan businesses.
<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 U.S. include amounts related to Corporate Items and Quotron.
- --------------------------------------------------------------------------------
INCOME TAXES
- --------------------------------------------------------------------------------
Income tax expense in the third quarter was $365 million, bringing the effective
tax rate on current operations for the first nine months of 1994 to 34%, down
from a comparable 37% reported in the first six months of 1994 and 42% for the
first nine months of 1993, reflecting the improved level and mix of current
earnings and related additional carryback support created for deferred tax
assets. The corresponding valuation allowance reduction, which totaled $194
million for the first nine months of 1994, is reflected in the effective tax
rate on current operations. Additionally, income taxes for the first nine
months of 1994 reflected a $150 million reduction of the deferred tax asset
valuation allowance in the second quarter following a reassessment of the
expected level and mix of future earnings.
34
<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 third quarter of 1994, there were no credit card receivables sold.
The total amount of securitized receivables, net of amortization, at September
30, 1994, was $21.9 billion, compared with $23.8 billion at June 30, 1994 and
$24.1 billion at September 30, 1993.
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 Income, Average Balance Sheet, Return on Assets, and Consumer Net Credit Loss
Ratio. See page 32 for a further discussion.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Third Quarter Nine Months
--------------- ------------------
(In Millions of Dollars) 1994 1993 1994 1993
----- ------ ------- --------
<S> <C> <C> <C> <C>
Net Interest Revenue................. $(510) $(581) $(1,579) $(1,778)
Fee and Commission Revenue........... 46 (19) 139 (10)
Other Revenue........................ 251 297 695 798
Provision for Credit Losses.......... (213) (303) (745) (990)
----- ----- ------- -------
Net Income Impact of Securitization.. $ 0 $ 0 $ 0 $ 0
===== ===== ======= =======
Average Assets ($ Billions).......... (23) (24) (24) (25)
Return on Assets (%)................. .11 .08 .10 .09
Consumer Net Credit Loss Ratio (%)... (.47) (.74) (.59) (.84)
- --------------------------------------------------------------------------
</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)................................ $34.7 $32.8 $ 33.9 $ 32.9
Net Credit Losses (In Millions of Dollars).. $ 314 $ 416 $1,047 $1,334
As a Percentage of Average
Credit Card Loans...................... 3.59% 5.03% 4.13% 5.42%
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF INCOME CITICORP and Subsidiaries
Third Quarter Nine Months
---------------- ---------------------
(In Millions of Dollars) 1994 1993 1994 1993
------ ------ ------- -------
<S> <C> <C> <C> <C>
INTEREST REVENUE
Interest and Fees on Loans....................................... $3,760 $4,065 $12,127 $12,332
Interest on Deposits with Banks.................................. 154 288 732 793
Interest on Federal Funds Sold and Securities
Purchased Under Resale Agreements............................... 366 764 3,028 1,892
Interest and Dividends on Securities
U. S. Treasury and Federal Agencies............................. 59 58 175 168
State and Municipal............................................. 21 3 53 4
Other (Principally in offices outside the U.S.)................. 253 219 670 536
Interest on Trading Account Assets............................... 444 611 1,626 1,832
------ ------ ------- -------
Total Interest Revenue......................................... $5,057 $6,008 $18,411 $17,557
------ ------ ------- -------
INTEREST EXPENSE
Interest on Deposits............................................. $1,855 $2,394 $ 6,914 $ 7,215
Interest on Trading Account Liabilities.......................... 65 54 197 140
Interest on Other Borrowed Money................................. 544 1,096 3,320 3,015
Interest on Long-Term Debt and Subordinated Capital Notes........ 247 481 1,391 1,504
------ ------ ------- -------
Total Interest Expense......................................... $2,711 $4,025 $11,822 $11,874
------ ------ ------- -------
NET INTEREST REVENUE............................................. $2,346 $1,983 $ 6,589 $ 5,683
------ ------ ------- -------
PROVISION FOR CREDIT LOSSES...................................... $ 436 $ 625 $ 1,323 $ 2,029
------ ------ ------- -------
NET INTEREST REVENUE AFTER PROVISION FOR
CREDIT LOSSES................................................... $1,910 $1,358 $ 5,266 $ 3,654
------ ------ ------- -------
FEES, COMMISSIONS AND OTHER REVENUE
Fees and Commissions............................................. $1,280 $1,234 $ 3,778 $ 3,700
Trading Account.................................................. 105 233 129 670
Foreign Exchange................................................. 182 245 388 837
Securities Transactions.......................................... 5 43 178 91
Other Revenue.................................................... 407 332 1,174 942
------ ------ ------- -------
Total Fees, Commissions and Other Revenue....................... $1,979 $2,087 $ 5,647 $ 6,240
------ ------ ------- -------
OTHER OPERATING EXPENSE
Salaries......................................................... $1,050 $ 979 $ 2,978 $ 2,839
Employee Benefits................................................ 284 261 852 764
------ ------ ------- -------
Total Staff Expense............................................ $1,334 $1,240 $ 3,830 $ 3,603
Net Premises and Equipment Expense............................... 396 413 1,156 1,200
Other Expense.................................................... 900 921 2,547 2,791
------ ------ ------- -------
Total Other Operating Expense.................................. $2,630 $2,574 $ 7,533 $ 7,594
------ ------ ------- -------
INCOME BEFORE TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES.. $1,259 $ 871 $ 3,380 $ 2,300
Income Taxes..................................................... 365 343 1,000 956
------ ------ ------- -------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES............ $ 894 $ 528 $ 2,380 $ 1,344
Cumulative Effect of Accounting Changes (A)...................... - - (56) 300
------ ------ ------- -------
NET INCOME....................................................... $ 894 $ 528 $ 2,324 $ 1,644
====== ====== ======= =======
INCOME APPLICABLE TO COMMON STOCK................................ $ 804 $ 446 $ 2,060 $ 1,412
====== ====== ======= =======
EARNINGS PER SHARE:
ON COMMON AND COMMON EQUIVALENT SHARES
Income Before Cumulative Effect of Accounting Changes............ $1.87 $1.06 $4.95 $2.66
Cumulative Effect of Accounting Changes (A)...................... - - (0.13) 0.68
------ ------ ------- -------
Net Income....................................................... $1.87 $1.06 $4.82 $3.34
====== ====== ======= =======
ASSUMING FULL DILUTION
Income Before Cumulative Effect of Accounting Changes............ $1.67 $0.97 $4.44 $2.47
Cumulative Effect of Accounting Changes (A)...................... - - (0.11) 0.58
------ ------ ------- -------
Net Income....................................................... $1.67 $0.97 $4.33 $3.05
====== ====== ======= =======
</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.
36
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET CITICORP and Subsidiaries
Sept. 30 Dec. 31
(In Millions of Dollars) 1994 1993(A)
-------- --------
<S> <C> <C>
ASSETS
Cash and Due from Banks..................................... $ 5,267 $ 4,836
Deposits at Interest with Banks............................. 7,387 6,749
Securities (B):
Held to Maturity.......................................... 5,192 5,637
Available for Sale........................................ 14,927 8,705
Venture Capital........................................... 1,746 1,489
Trading Account Assets (C).................................. 44,360 23,783
Federal Funds Sold and Securities Purchased Under
Resale Agreements......................................... 9,282 7,339
Loans, Net
Consumer.................................................. $ 90,880 $ 84,354
Commercial (B)............................................ 55,443 54,613
-------- --------
Loans, Net of Unearned Income............................. $146,323 $138,967
Allowance for Credit Losses............................... (5,060) (4,379)
-------- --------
Total Loans, Net.......................................... $141,263 $134,588
Customers' Acceptance Liability............................. 1,404 1,512
Premises and Equipment, Net................................. 3,996 3,842
Interest and Fees Receivable................................ 2,605 2,552
Other Assets................................................ 15,720 15,542
-------- --------
TOTAL..................................................... $253,149 $216,574
======== ========
LIABILITIES
Non-Interest-Bearing Deposits in U.S. Offices............... $ 12,280 $ 13,442
Interest-Bearing Deposits in U.S. Offices................... 35,910 38,347
Non-Interest-Bearing Deposits in Offices Outside the U.S.... 7,699 6,644
Interest-Bearing Deposits in Offices Outside the U.S........ 98,402 86,656
-------- --------
Total Deposits............................................ $154,291 $145,089
Trading Account Liabilities (C)............................. 26,269 5,478
Purchased Funds and Other Borrowings........................ 22,535 16,777
Acceptances Outstanding..................................... 1,425 1,531
Accrued Taxes and Other Expenses............................ 5,653 6,452
Other Liabilities........................................... 9,545 9,134
Long-Term Debt.............................................. 15,038 16,010
Subordinated Capital Notes.................................. 1,438 2,150
STOCKHOLDERS' EQUITY
Preferred Stock (Without par value)......................... $ 4,187 $ 3,887
Common Stock ($1.00 par value).............................. 419 412
Issued Shares: 419,123,755 and 412,017,300, respectively
Surplus..................................................... 4,136 3,898
Retained Earnings........................................... 8,669 6,729
Net Unrealized Gains - Securities Available for Sale (B).... 411 -
Foreign Currency Translation................................ (468) (580)
Common Stock in Treasury, at Cost........................... (399) (393)
Shares: 25,469,812 and 25,527,133, respectively
Total Stockholders' Equity................................ $ 16,955 $ 13,953
-------- --------
TOTAL..................................................... $253,149 $216,574
======== ========
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
(B) Balances at September 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 certain commercial loans to Held-to-
Maturity and Available-for-Sale Securities. See footnote C on page 48 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 September 30, 1994, Trading Account
Assets include $24.6 billion of unrealized gains and Trading Account
Liabilities include $22.9 billion of unrealized losses, net of master
netting agreements, and other amounts related to these contracts (see page
25 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 $19.8 billion at September 30, 1994 and $18.1 billion at
December 31, 1993. Trading Account Liabilities included short sale
liabilities of $3.4 billion at September 30, 1994 and $2.4 billion at
December 31, 1993.
37
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY CITICORP and Subsidiaries
Nine 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 -
Change in Net Unrealized Gains on Securities Available for Sale.................. 46 -
Preferred Stock Issuance, Net of Related Costs................................... 388 654
Redemption of Price Adjusted Rate
Preferred Stock (Fourth Series)................................................. (100) -
Issuance of Common Stock Under Various
Staff Benefit Plans (Net of Amortization),
the Dividend Reinvestment Plan, and
the Conversion of Convertible Notes............................................. 257 223
Net Income....................................................................... 2,324 1,644
Cash Dividends Declared:
Common....................................................................... (117) -
Preferred.................................................................... (267) (226)
Foreign Currency Translation..................................................... 112 (90)
Treasury Stock Transactions at Cost.............................................. (6) (3)
------- -------
Balance at End of Period......................................................... $16,955 $13,383
======= =======
- --------------------------------------------------------------------------------------------------------
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS CITICORP and Subsidiaries
Nine Months
---------------------------
(In Millions of Dollars) 1994 1993(A)
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income............................................................................. $ 2,324 $ 1,644
--------- ---------
Adjustments to Reconcile Net Income to Net Cash Provided By (Used In) Operating
Activities:
Provision for Credit Losses........................................................... $ 1,323 $ 2,029
Depreciation and Amortization of Premises and Equipment............................... 416 420
Amortization of Goodwill.............................................................. 36 40
Provision for Deferred Taxes.......................................................... (249) (266)
Cumulative Effect of Accounting Change................................................ 56 (300)
Venture Capital Activity.............................................................. (257) (88)
Net (Gain) on Sale of Securities...................................................... (178) (91)
Net (Gain) on the Sale of Subsidiaries and Affiliates................................. (12) (77)
Changes in Accruals and Other, Net.................................................... (1,896) 2,119
Net (Increase) in Trading Account Assets.............................................. (20,577) (2,434)
Net Increase in Trading Account Liabilities........................................... 20,791 2,849
--------- ---------
Total Adjustments...................................................................... $ (547) $ 4,201
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES.............................................. $ 1,777 $ 5,845
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Net (Increase) in Deposits at Interest with Banks..................................... $ (638) $ (278)
Securities - Held to Maturity
Purchases............................................................................ (8,346) (11,673)
Maturities........................................................................... 10,303 12,799
Securities - Available for Sale
Purchases............................................................................ (16,034) (12,057)
Proceeds from Sales.................................................................. 7,427 6,203
Maturities........................................................................... 5,151 3,746
Net (Increase) in Federal Funds Sold and Securities
Purchased Under Resale Agreements.................................................... (1,943) (5,121)
Net (Increase) in Loans............................................................... (79,425) (67,305)
Proceeds from Sales of Loans and Credit Card Receivables.............................. 67,903 63,581
Capital Expenditures on Premises and Equipment........................................ (957) (584)
Proceeds from Sales of Premises and Equipment......................................... 319 104
Proceeds from Sales of Subsidiaries and Affiliates.................................... 25 223
Proceeds from Sales of Other Real Estate Owned (OREO)................................. 1,533 1,142
--------- ---------
NET CASH (USED IN) INVESTING ACTIVITIES................................................ $ (14,682) $ (9,220)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase in Deposits.............................................................. $ 9,202 $ 6,273
Net Increase (Decrease) in Federal Funds Purchased and Securities Sold
Under Repurchase Agreements.......................................................... 4,341 (715)
Proceeds from Issuance of Commercial Paper and Funds Borrowed with
Original Maturities of Less Than One Year............................................ 205,145 257,276
Repayment of Commercial Paper and Funds Borrowed with
Original Maturities of Less Than One Year............................................ (203,615) (257,432)
Proceeds from Issuance of Long-Term Debt.............................................. 1,621 2,560
Repayment of Long-Term Debt........................................................... (3,472) (4,968)
Proceeds from Issuance of Preferred Stock............................................. 388 654
Redemption of Preferred Stock......................................................... (100) -
Proceeds from Issuance of Common Stock................................................ 182 203
Dividends Paid........................................................................ (381) (226)
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES.............................................. $ 13,311 $ 3,625
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND DUE FROM BANKS............................. $ 25 $ (247)
--------- ---------
Net Increase in Cash and Due from Banks................................................ $ 431 $ 3
Cash and Due from Banks at Beginning of Period......................................... 4,836 5,138
--------- ---------
CASH AND DUE FROM BANKS AT END OF PERIOD............................................... $ 5,267 $ 5,141
========= =========
- ---------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Period for:
Interest.............................................................................. $ 10,405 $ 10,574
Income Taxes.......................................................................... $ 1,228 $ 901
NON-CASH INVESTING ACTIVITIES
Transfer from Loans to OREO............................................................ $ 948 $ 1,334
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
39
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET CITIBANK, N.A. and Subsidiaries
Sept. 30 Dec. 31(A)
(In Millions of Dollars) 1994 1993
--------- ---------
<S> <C> <C>
ASSETS
Cash and Due from Banks................................................................ $ 4,681 $ 4,005
Deposits at Interest with Banks........................................................ 7,724 7,137
Securities (B):
Held to Maturity..................................................................... 3,836 2,927
Available for Sale................................................................... 11,789 7,670
Venture Capital...................................................................... 1,095 842
Trading Account Assets (C)............................................................. 39,855 20,786
Federal Funds Sold and Securities Purchased Under
Resale Agreements.................................................................... 5,607 4,392
Loans, Net of Unearned Income (B)...................................................... $ 117,957 $ 109,459
Allowance for Credit Losses.......................................................... (4,149) (3,471)
--------- ---------
Total Loans, Net..................................................................... $ 113,808 $ 105,988
Customers' Acceptance Liability........................................................ 1,404 1,512
Premises and Equipment, Net............................................................ 3,106 2,973
Interest and Fees Receivable........................................................... 1,810 1,803
Other Assets........................................................................... 9,544 9,107
--------- ---------
TOTAL.................................................................................. $ 204,259 $ 169,142
========= =========
LIABILITIES
Non-Interest-Bearing Deposits in U.S. Offices.......................................... $ 9,693 $ 10,207
Interest-Bearing Deposits in U.S. Offices.............................................. 21,917 23,077
Non-Interest-Bearing Deposits in Offices Outside the U.S............................... 7,504 6,439
Interest-Bearing Deposits in Offices Outside the U.S................................... 93,450 83,239
--------- ---------
Total Deposits....................................................................... $ 132,564 $ 122,962
Trading Account Liabilities (C)........................................................ 25,140 4,509
Purchased Funds and Other Borrowings................................................... 14,705 11,742
Acceptances Outstanding................................................................ 1,425 1,530
Accrued Taxes and Other Expenses....................................................... 3,281 3,740
Other Liabilities...................................................................... 5,677 5,722
Long-Term Debt......................................................................... 3,159 3,089
Subordinated Notes..................................................................... 5,200 4,700
STOCKHOLDER'S EQUITY
Capital Stock ($20.00 par)............................................................. $ 751 $ 751
Outstanding Shares: 37,534,553 in each period
Surplus................................................................................ 6,006 5,912
Retained Earnings...................................................................... 6,581 5,146
Net Unrealized Gains - Securities
Available for Sale (B)............................................................... 346 -
Foreign Currency Translation........................................................... (576) (661)
--------- ---------
Total Stockholder's Equity........................................................... $ 13,108 $ 11,148
--------- ---------
TOTAL.................................................................................. $ 204,259 $ 169,142
========= =========
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
(B) Balances at September 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 certain commercial loans to Held-to-
Maturity and Available-for-Sale Securities. See footnote C on page 48 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 September 30, 1994, Trading Account
Assets include $25.5 billion of unrealized gains and Trading Account
Liabilities include $23.5 billion of unrealized losses, net of master
netting agreements, and other amounts related to these contracts (see page
25 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 $14.4 billion at September 30, 1994 and $15.3 billion at
December 31, 1993. Trading Account Liabilities included short sale
liabilities of $1.6 billion at September 30, 1994 and $1.5 billion at
December 31, 1993.
40
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
CALCULATION OF NET INCOME PER SHARE Nine Months Ended Nine Months Ended
September 30, 1994 September 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................... $ 117 $ 117 $ - $ -
Undistributed Portion Before Cumulative
Effect of Accounting Changes....................... 1,999 1,999 1,112 1,112
Dividends on Conversion Preferred Stock, Series 15... 70 70 70 70
Dividends on Convertible Preferred Stock, Series 12
and Series 13....................................... - 102 - 102
------ ------ ------ ------
b. Income Applicable to Common Stock Before
Cumulative Effect of Accounting Changes, Adjusted. $2,186 $2,288 $1,182 $1,284
c. Cumulative Effect of Accounting Changes........... (56) (56) 300 300
------ ------ ------ ------
TOTAL................................................. $2,130 $2,232 $1,482 $1,584
====== ====== ====== ------
SHARES
Weighted-Average Common Shares Outstanding (A)........ 390.2 390.2 373.9 373.9
Common Equivalent Shares:
Conversion Preferred Stock, Series 15................ 41.1 41.1 60.0 60.0
Other (B)............................................ 8.7 8.9 8.8 11.5
Convertible Preferred Stock, Series 12 and Series 13.. - 73.0 - 73.0
Convertible Notes..................................... - - - .1
------ ------ ------ ------
d. Shares Applicable to Distributed Portion.......... 440.0 513.2 442.7 518.5
Book Value Shares Issuable Under Stock Option and
the Executive Incentive Compensation Plans........... 1.9 1.9 2.3 1.6
------ ------ ------ ------
e. Shares Applicable to Undistributed Portion........ 441.9 515.1 445.0 520.1
====== ====== ====== ======
EARNINGS PER SHARE
a [DIVIDED BY] d Distributed Portion.................. $ 0.27 $ 0.23 $ - $ -
(b-a) [DIVIDED BY] e Undistributed Portion Before
Cumulative Effect of Accounting Changes............... 4.68 4.21 2.66 2.47
------ ------ ------ ------
Income Before Cumulative Effect of Accounting
Changes.............................................. 4.95 4.44 2.66 2.47
c [DIVIDED BY] e Cumulative Effect of Accounting
Changes.............................................. (.13) (.11) .68 .58
------ ------ ------ ------
NET INCOME............................................ $ 4.82 $ 4.33 $ 3.34 $ 3.05
====== ====== ====== ======
</TABLE>
(A) Includes book value shares of 1.1 million and 1.2 million for the nine
months ended September 30, 1994 and 1993, respectively.
(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.
- -------------------------------------------------------------------------------
41
<PAGE>
CITICORP AND SUBSIDIARIES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
AVERAGE BALANCES AND INTEREST RATES
(Taxable Equivalent Basis) (A) (B) Third Quarter 1994 Third 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.................................... $ 43,847 $1,151 10.41 $ 43,905 $1,063 9.61
In Offices Outside the U.S. (D).................... 43,345 1,333 12.20 36,786 1,169 12.61
-------- ------ -------- ------
TOTAL CONSUMER LOANS............................... $ 87,192 $2,484 11.30 $ 80,691 $2,232 10.97
-------- ------ -------- ------
Commercial Loans
In U.S. Offices
Commercial and Industrial......................... $ 10,208 $ 196 7.62 $ 9,874 $ 172 6.91
Mortgage and Real Estate.......................... 6,459 95 5.84 8,121 100 4.89
Loans to Financial Institutions................... 420 5 4.72 502 4 3.16
Lease Financing................................... 3,472 58 6.63 3,570 79 8.78
In Offices Outside the U.S. (D).................... 35,047 922 10.44 34,984 1,479 16.77
-------- ------ -------- ------
TOTAL COMMERCIAL LOANS............................ $ 55,606 $1,276 9.10 $ 57,051 $1,834 12.75
-------- ------ -------- ------
TOTAL LOANS...................................... $142,798 $3,760 10.45 $137,742 $4,066 11.71
-------- ------ -------- ------
FUNDS SOLD AND RESALE AGREEMENTS
In U.S. Offices.................................... $ 13,430 $ 148 4.37 $ 11,571 $ 91 3.12
In Offices Outside the U.S. (D).................... 2,829 218 30.57 2,556 673 104.46
-------- ------ -------- ------
TOTAL............................................ $ 16,259 $ 366 8.93 $ 14,127 $ 764 21.46
-------- ------ -------- ------
SECURITIES
HELD TO MATURITY
In U.S. Offices
U. S. Treasury and Federal Agencies............... $ 1,933 $ 29 5.95 $ 2,179 $ 27 4.92
State and Municipal............................... - - - - - -
Other............................................. 31 1 12.80 162 3 7.35
In Offices Outside the U.S. (principally local
government issues) (D)............................ 3,112 53 6.76 1,862 42 8.95
-------- ------ -------- ------
TOTAL............................................ $ 5,076 $ 83 6.49 $ 4,203 $ 72 6.80
-------- ------ -------- ------
AVAILABLE FOR SALE
In U.S. Offices
U.S. Treasury and Federal Agencies................ $ 1,697 $ 24 5.61 $ 1,758 $ 28 6.32
State and Municipal............................... 1,459 25 6.80 201 3 5.92
Other............................................. 1,291 20 6.15 481 4 3.30
In Offices Outside the U.S. (D).................... 7,796 180 9.16 6,145 136 8.78
-------- ------ -------- ------
TOTAL............................................ $ 12,243 $ 249 8.07 $ 8,585 $ 171 7.90
-------- ------ -------- ------
VENTURE CAPITAL
In U.S. Offices.................................... $ 1,476 $ 4 1.08 $ 1,168 $ 37 12.57
In Offices Outside the U.S. ....................... 238 3 5.00 214 1 1.85
-------- ------ -------- ------
TOTAL............................................ $ 1,714 $ 7 1.62 $ 1,382 $ 38 10.91
-------- ------ -------- ------
TOTAL SECURITIES................................. $ 19,033 $ 339 7.07 $ 14,170 $ 281 7.87
-------- ------ -------- ------
TRADING ACCOUNT ASSETS
In U.S. Offices.................................... $ 14,148 $ 224 6.28 $ 13,111 $ 179 5.42
In Offices Outside the U.S. (D).................... 11,341 220 7.70 9,968 433 17.23
-------- ------ -------- ------
TOTAL............................................ $ 25,489 $ 444 6.91 $ 23,079 612 10.52
-------- ------ -------- ------
Interest-Bearing Deposits (principally in Offices
Outside the U.S.) (C) (D)......................... $ 9,943 $ 154 6.14 $ 9,533 $ 288 11.99
-------- ------ -------- ------
Total Interest-Earning Assets...................... $213,522 $5,063 9.41 $198,651 $6,011 12.00
====== ======
Non-Interest-Earning Assets (E).................... 51,967 30,181
-------- --------
TOTAL ASSETS....................................... $265,489 $228,832
======== ========
</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.
42
<PAGE>
CITICORP AND SUBSIDIARIES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
AVERAGE BALANCES AND INTEREST RATES
(Taxable Equivalent Basis) (A) (B) Nine Months 1994 Nine Months 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.................................... $ 43,099 $ 3,238 10.04 $ 44,677 $ 3,223 9.65
In Offices Outside the U.S. (D).................... 41,632 3,898 12.52 36,431 3,565 13.08
-------- ------- -------- -------
TOTAL CONSUMER LOANS............................... $ 84,731 $ 7,136 11.26 $ 81,108 $ 6,788 11.19
-------- ------- -------- -------
Commercial Loans
In U.S. Offices
Commercial and Industrial......................... $ 10,166 $ 566 7.44 $ 10,340 $ 503 6.50
Mortgage and Real Estate.......................... 6,824 295 5.78 8,576 305 4.75
Loans to Financial Institutions................... 452 12 3.55 470 9 2.56
Lease Financing................................... 3,494 176 6.73 3,540 215 8.12
In Offices Outside the U.S. (D).................... 34,133 3,942 15.44 34,857 4,516 17.32
-------- ------- -------- -------
TOTAL COMMERCIAL LOANS............................ $ 55,069 $ 4,991 12.12 $ 57,783 $ 5,548 12.84
-------- ------- -------- -------
TOTAL LOANS...................................... $139,800 $12,127 11.60 $138,891 $12,336 11.87
-------- ------- -------- -------
FUNDS SOLD AND RESALE AGREEMENTS
In U.S. Offices.................................... $ 15,333 $ 423 3.69 $ 11,118 $ 254 3.05
In Offices Outside the U.S. (D).................... 2,904 2,605 119.93 2,141 1,638 102.29
-------- ------- -------- -------
TOTAL............................................ $ 18,237 $ 3,028 22.20 $ 13,259 $ 1,892 19.08
-------- ------- -------- -------
SECURITIES
HELD TO MATURITY
In U.S. Offices
U. S. Treasury and Federal Agencies............... $ 1,986 $ 83 5.59 $ 2,128 $ 76 4.77
State and Municipal............................... - - - - - -
Other............................................. 42 3 9.55 151 9 7.97
In Offices Outside the U.S. (principally local
government issues) (D)............................ 3,142 146 6.21 2,019 137 9.07
-------- ------- -------- -------
TOTAL............................................ $ 5,170 $ 232 6.00 $ 4,298 $ 222 6.91
-------- ------- -------- -------
AVAILABLE FOR SALE
In U.S. Offices
U.S. Treasury and Federal Agencies................ $ 1,732 $ 72 5.56 $ 1,708 $ 86 6.73
State and Municipal............................... 1,231 66 7.17 76 3 5.28
Other............................................. 990 39 5.27 480 15 4.18
In Offices Outside the U.S. (D).................... 7,166 487 9.09 5,121 338 8.82
-------- ------- -------- -------
TOTAL............................................ $ 11,119 $ 664 7.98 $ 7,385 $ 442 8.00
-------- ------- -------- -------
VENTURE CAPITAL
In U.S. Offices.................................... $ 1,368 $ 13 1.27 $ 1,152 $ 44 5.11
In Offices Outside the U.S. ....................... 217 7 4.31 221 3 1.81
-------- ------- -------- -------
TOTAL............................................ $ 1,585 $ 20 1.69 $ 1,373 $ 47 4.58
-------- ------- -------- -------
TOTAL SECURITIES................................. $ 17,874 $ 916 6.85 $ 13,056 $ 711 7.28
-------- ------- -------- -------
TRADING ACCOUNT ASSETS
In U.S. Offices.................................... $ 14,342 $ 633 5.90 $ 13,543 $ 546 5.39
In Offices Outside the U.S. (D).................... 11,399 995 11.67 9,613 1,289 17.93
-------- ------- -------- -------
TOTAL............................................ $ 25,741 $ 1,628 8.46 $ 23,156 1,835 10.60
-------- ------- -------- -------
Interest-Bearing Deposits (principally in Offices
Outside the U.S.) (C) (D)......................... $ 9,715 $ 732 10.07 $ 8,929 $ 793 11.87
-------- ------- -------- -------
Total Interest-Earning Assets...................... $211,367 $18,431 11.66 $197,291 $17,567 11.90
======= =======
Non-Interest-Earning Assets (E).................... 47,546 29,426
-------- --------
TOTAL ASSETS....................................... $258,913 $226,717
======== ========
</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>
CITICORP AND SUBSIDIARIES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
AVERAGE BALANCES AND INTEREST RATES (CONTINUED)
(Taxable Equivalent Basis) (A) (B) Third Quarter 1994 Third 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)..................... $ 26,113 $ 138 2.10 $ 26,175 $ 118 1.79
Negotiable Certificates of Deposit....... 1,189 35 11.68 1,365 22 6.39
Other Time Deposits...................... 9,697 108 4.42 12,061 209 6.87
-------- ------ -------- ------
Total U.S. Interest-Bearing Deposits.. $ 36,999 $ 281 3.01 $ 39,601 $ 349 3.50
In Offices Outside the U.S. (D)............. 99,370 1,574 6.28 89,204 2,045 9.10
-------- ------ -------- ------
TOTAL................................. $136,369 $1,855 5.40 $128,805 $2,394 7.37
-------- ------ -------- ------
TRADING ACCOUNT LIABILITIES
In U.S. Offices............................. $ 2,810 $ 41 5.79 $ 2,089 $ 29 5.51
In Offices Outside the U.S. (D)............. 1,573 24 6.05 1,739 25 5.70
-------- ------ -------- ------
TOTAL................................. $ 4,383 $ 65 5.88 $ 3,828 $ 54 5.60
-------- ------ -------- ------
FUNDS BORROWED
In U.S. Offices
Purchased Funds and Other Borrowings
Federal Funds Purchased and Securities
Sold Under Agreements to Repurchase... $ 20,245 $ 219 4.29 $ 17,733 $ 142 3.18
Commercial Paper......................... 1,940 22 4.50 758 6 3.14
Other Purchased Funds.................... 2,899 79 10.81 1,810 75 16.44
Long-Term Debt, Convertible Notes and
Subordinated Capital Notes................ 13,694 214 6.20 15,467 224 5.75
-------- ------ -------- ------
Total in U.S. Offices................. $ 38,778 $ 534 5.46 $ 35,768 $ 447 4.96
In Offices Outside the U.S. (D)............. 9,873 257 10.33 9,598 1,130 46.71
-------- ------ -------- ------
TOTAL................................. $ 48,651 $ 791 6.45 $ 45,366 $1,577 13.79
-------- ------ -------- ------
Total Interest-Bearing Liabilities.......... $189,403 $2,711 5.68 $177,999 $4,025 8.97
------ ------
Demand Deposits in U.S. Offices............. 11,914 11,902
Other Non-Interest-Bearing Liabilities (E).. 48,033 26,121
Total Stockholders' Equity.................. 16,139 12,810
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY..................................... $265,489 $228,832
======== ========
NET INTEREST REVENUE AS A PERCENTAGE
OF AVERAGE INTEREST-EARNING ASSETS......... $2,352 4.37 $1,986 3.97
====== ======
</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.
44
<PAGE>
CITICORP AND SUBSIDIARIES
<TABLE>
<CAPTION>
AVERAGE BALANCES AND INTEREST RATES (CONTINUED)
- -------------------------------------------------------------------------------------------------------
(Taxable Equivalent Basis) (A) (B) Nine Months 1994 Nine Months 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)..................... $ 26,238 $ 384 1.96 $ 26,362 $ 371 1.88
Negotiable Certificates of Deposit....... 1,035 57 7.36 1,521 74 6.50
Other Time Deposits...................... 10,207 388 5.08 13,055 644 6.60
-------- ------- -------- -------
Total U.S. Interest-Bearing Deposits.. $ 37,480 $ 829 2.96 $ 40,938 $ 1,089 3.56
In Offices Outside the U.S. (D)............. 96,642 6,085 8.42 87,941 6,126 9.31
-------- ------- -------- -------
TOTAL................................. $134,122 $ 6,914 6.89 $128,879 $ 7,215 7.48
-------- ------- -------- -------
TRADING ACCOUNT LIABILITIES
In U.S. Offices............................. $ 3,168 $ 130 5.49 $ 1,948 $ 83 5.70
In Offices Outside the U.S. (D)............. 1,661 67 5.39 1,520 57 5.01
-------- ------- -------- -------
TOTAL................................. $ 4,829 $ 197 5.45 $ 3,468 $ 140 5.40
-------- ------- -------- -------
FUNDS BORROWED
In U.S. Offices
Purchased Funds and Other Borrowings
Federal Funds Purchased and Securities
Sold Under Agreements to Repurchase... $ 20,965 $ 579 3.69 $ 16,983 $ 400 3.15
Commercial Paper......................... 1,831 56 4.09 725 17 3.14
Other Purchased Funds.................... 2,831 245 11.57 1,967 238 16.18
Long-Term Debt, Convertible Notes and
Subordinated Capital Notes................ 14,265 612 5.74 16,454 746 6.06
-------- ------- -------- -------
Total in U.S. Offices................. $ 39,892 $ 1,492 5.00 $ 36,129 $ 1,401 5.18
In Offices Outside the U.S. (D)............. 9,664 3,219 44.53 9,494 3,118 43.91
-------- ------- -------- -------
TOTAL................................. $ 49,556 $ 4,711 12.71 $ 45,623 $ 4,519 13.24
-------- ------- -------- -------
Total Interest-Bearing Liabilities.......... $188,507 $11,822 8.38 $177,970 $11,874 8.92
------- -------
Demand Deposits in U.S. Offices............. 12,413 11,783
Other Non-Interest-Bearing Liabilities (E).. 42,789 24,822
Total Stockholders' Equity.................. 15,204 12,142
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY..................................... $258,913 $226,717
======== ========
NET INTEREST REVENUE AS A PERCENTAGE
OF AVERAGE INTEREST-EARNING ASSETS......... $ 6,609 4.18 $ 5,693 3.86
======= =======
</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.
x
45
<PAGE>
FINANCIAL STATISTICS
- --------------------------------------------------------------------------------
DETAILS OF CREDIT LOSS EXPERIENCE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(Dollars In Millions) 1994 1994 1994 1993 1993 1993 1993
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLOWANCE FOR CREDIT LOSSES
AT BEGINNING OF PERIOD.............. $4,912 $4,472 $4,379 $4,260 $4,090 $4,033 $3,859
------ ------ ------ ------ ------ ------ ------
ADDITIONS
Provision for Credit Losses......... $ 436 $ 472 $ 415 $ 571 $ 625 $ 715 $ 689
DEDUCTIONS
GROSS CREDIT LOSSES
CONSUMER
In U.S. Offices..................... $ 242 $ 262 $ 288 $ 307 $ 320 $ 324 $ 294
In Offices Outside the U.S.......... 155 141 132 141 118 126 119
COMMERCIAL
In U.S. Offices..................... 43 82 55 73 88 160 160
In Offices Outside the U.S. (A)..... 40 15 33 92 77 201 77
------ ------ ------ ------ ------ ------ ------
$ 480 $ 500 $ 508 $ 613 $ 603 $ 811 $ 650
------ ------ ------ ------ ------ ------ ------
CREDIT RECOVERIES
CONSUMER
In U.S. Offices..................... $ 45 $ 55 $ 59 $ 59 $ 51 $ 51 $ 46
In Offices Outside the U.S.......... 37 37 33 38 31 32 31
COMMERCIAL
In U.S. Offices..................... 36 7 28 30 37 27 8
In Offices Outside the U.S. (B)..... 45 347 73 51 33 42 51
------ ------ ------ ------ ------ ------ ------
$ 163 $ 446 $ 193 $ 178 $ 152 $ 152 $ 136
------ ------ ------ ------ ------ ------ ------
NET CREDIT LOSSES
In U.S. Offices..................... $ 204 $ 282 $ 256 $ 291 $ 320 $ 406 $ 400
In Offices Outside the U.S (A) (B).. 113 (228) 59 144 131 253 114
------ ------ ------ ------ ------ ------ ------
$ 317 $ 54 $ 315 $ 435 $ 451 $ 659 $ 514
------ ------ ------ ------ ------ ------ ------
OTHER, NET (C)...................... 29 22 (7) (17) (4) 1 (1)
------ ------ ------ ------ ------ ------ ------
ALLOWANCE FOR CREDIT LOSSES
AT END OF PERIOD.................... $5,060 $4,912 $4,472 $4,379 $4,260 $4,090 $4,033
====== ====== ====== ====== ====== ====== ======
Allowance for Credit Losses as a
Percentage of Period-End Loans...... 3.46% 3.48% 3.26% 3.15% 3.05% 2.94% 2.92%
- ----------------------------------------------------------------------------------------------------
Net Consumer Credit Losses.......... $ 315 $ 311 $ 328 $ 351 $ 356 $ 367 $ 336
------ ------ ------ ------ ------ ------ ------
As a Percentage of Average
Consumer Loans..................... 1.43% 1.50% 1.59% 1.69% 1.75% 1.82% 1.67%
------ ------ ------ ------ ------ ------ ------
Net Commercial Credit Losses
(Recoveries) (A) (B)............... $ 2 $ (257) $ (13) $ 84 $ 95 $ 292 $ 178
------ ------ ------ ------ ------ ------ ------
As a Percentage of Average
Commercial Loans................... 0.01% NM NM 0.59% 0.66% 2.02% 1.24%
- ----------------------------------------------------------------------------------------------------
</TABLE>
(A) Second quarter 1993 amounts include $152 million of country write-offs
related to Brazilian medium- and long-term outstandings.
(B) 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 that quarter.
(C) Includes foreign exchange effects as well as net transfers between the
allowance for credit losses and the reserve for loans sold with recourse
related to credit card securitization transactions.
NM Not meaningful as recoveries result in a negative percentage.
46
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
CASH-BASIS, RENEGOTIATED AND PAST DUE LOANS (A)
- ---------------------------------------------------------------------------------------
Sept. 30 June 30 Dec. 31 Sept. 30
(In Millions of Dollars) 1994 1994 1993 1993
-------- ------- ------- --------
<S> <C> <C> <C> <C>
COMMERCIAL CASH-BASIS LOANS (B)
In U.S. Offices.................................. $1,295 $1,419 $1,744 $2,212
In Offices Outside the U.S., Excluding
Refinancing Countries........................... 560 657 730 989
In Refinancing Countries (C)..................... 140 165 1,041 1,068
------ ------ ------ ------
TOTAL COMMERCIAL CASH-BASIS LOANS................ $1,995 $2,241 $3,515 $4,269
====== ====== ====== ======
COMMERCIAL RENEGOTIATED LOANS (B)
In U.S. Offices.................................. $ 386 $ 354 $ 641 $ 326
In Offices Outside the U.S....................... 138 63 67 51
------ ------ ------ ------
TOTAL COMMERCIAL RENEGOTIATED LOANS.............. $ 524 $ 417 $ 708 $ 377
====== ====== ====== ======
CONSUMER LOANS ON WHICH ACCRUAL OF INTEREST
HAS BEEN SUSPENDED
In U.S. Offices.................................. $1,630 $1,746 $1,915 $2,044
In Offices Outside the U.S....................... 1,083 1,067 948 960
------ ------ ------ ------
TOTAL CONSUMER LOANS ON WHICH ACCRUAL
OF INTEREST HAS BEEN SUSPENDED.................. $2,713 $2,813 $2,863 $3,004
====== ====== ====== ======
ACCRUING LOANS 90 OR MORE DAYS DELINQUENT (D)
In U.S. Offices.................................. $ 398 $ 332 $ 635 $ 722
In Offices Outside the U.S....................... 442 425 421 431
------ ------ ------ ------
TOTAL ACCRUING LOANS 90 OR MORE DAYS DELINQUENT.. $ 840 $ 757 $1,056 $1,153
====== ====== ====== ======
</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 17.
(B) Refer to detailed discussion of cash-basis and renegotiated commercial loans
on page 13.
(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 that quarter.
(D) Includes consumer loans of $788 million, $691 million, $802 million and $786
million at September 30, 1994, June 30, 1994, December 31, 1993 and
September 30, 1993, respectively. Refer to detailed discussion of Consumer
Loan Portfolio on page 11.
- ------------------------------------------------------------------
OTHER REAL ESTATE OWNED (OREO)
- ------------------------------------------------------------------
<TABLE>
<CAPTION>
Sept. 30 June 30 Dec. 31 Sept. 30
(In Millions of Dollars) 1994 1994 1993 1993
-------- ------- ------- --------
<S> <C> <C> <C> <C>
Consumer.................... $ 787 $1,194 $1,212 $1,283
Commercial:
North America Real Estate.. $1,816 $1,946 $2,332 $2,547
Other...................... 485 469 464 575
------ ------ ------ ------
Total Commercial........... $2,301 $2,415 $2,796 $3,122
------ ------ ------ ------
Total OREO.................. $3,088 $3,609 $4,008 $4,405
====== ====== ====== ======
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SECURITIES
- --------------------------------------------------------------------------------------------------------------------------------
(In Millions of Dollars) September 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) (E)
U.S. Treasury and Federal Agency................. $ 2,249 $ 10 $ 38 $ 2,221 $ 3,781 $ 3,808
State and Municipal.............................. 2 - - 2 9 10
Foreign Government (C)........................... 2,642 13 417 2,238 1,314 1,310
U.S. Corporate................................... 2 - - 2 45 45
Other Debt Securities............................ 297 - - 297 488 493
------- ---- ---- ------- ------- -------
Total Debt Securities.......................... $ 5,192 $ 23 $455 $ 4,760 $ 5,637 $ 5,666
======= ==== ==== ======= ======= =======
SECURITIES - AVAILABLE FOR SALE (B) (D) (E) (F)
U.S. Treasury and Federal Agency................. $ 3,655 $ 19 $ 42 $ 3,632 $ 2,095 $ 2,190
State and Municipal.............................. 1,469 105 73 1,501 695 704
Foreign Government (C)........................... 5,903 544 128 6,319 3,278 3,391
U.S. Corporate................................... 766 7 46 727 192 185
Other Debt Securities............................ 1,391 33 5 1,419 1,431 1,473
------- ---- ---- ------- ------- -------
Total Debt Securities.......................... $13,184 $708 $294 $13,598 $ 7,691 $ 7,943
Equity Securities (G)............................ 1,116 226 13 1,329 1,014 1,145
------- ---- ---- ------- ------- -------
$14,300 $934 $307 $14,927 $ 8,705 $ 9,088
======= ==== ==== ======= ======= =======
VENTURE CAPITAL (H).............................. 1,746 - - 1,746 1,489 1,489
------- ---- ---- ------- ------- -------
$21,238 $957 $762 $21,433 $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) Included in Federal Agency and U.S. Corporate Securities held to maturity
are mortgage-backed securities with an amortized cost of $849 million and a
fair value of $813 million at September 30, 1994. Gross unrealized gains
and gross unrealized losses for these securities were zero and $36 million,
respectively. Included in Federal Agency and U.S. Corporate Securities
available for sale are mortgage-backed securities with an amortized cost of
$737 million and fair value of $716 million at September 30, 1994. Gross
unrealized gains were $4 million and gross unrealized losses on these
securities were $25 million at September 30, 1994.
(C) Foreign Government Securities held to maturity and available for sale
include 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 $1,103 million,
respectively, at September 30, 1994. Gross unrealized losses for these
securities were $413 million, of which approximately $270 million related to
securities issued by the Government of Venezuela. Within Foreign Government
Securities available for sale are such securities with an amortized cost and
fair value of $1,695 million and $2,119 million, respectively, at September
30, 1994. Gross unrealized gains and gross unrealized losses for these
securities were $500 million and $76 million, respectively. Substantially
all of the gross unrealized gains relate to securities issued by the
Government of Brazil.
(D) According to the provisions of SFAS No. 115, available-for-sale securities
are carried at their fair values with net unrealized gains 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.
48
<PAGE>
SECURITIES
- --------------------------------------------------------------------------------
(Continued)
(E) There were no sales of debt securities held to maturity. For the nine
months ended September 30, 1994 and 1993, gross realized gains on sales of
securities available for sale totaled $233 million and $113 million,
respectively. For the nine months ended September 30, 1994 and 1993, gross
realized losses on sales of securities available for sale totaled $55
million and $22 million, respectively.
(F) Not included in the table on page 48 are securities available for sale held
by equity-method affiliates. At September 30, 1994 the amortized cost and
fair value of these securities was $893 million and $891 million,
respectively. The gross unrealized gains and gross unrealized losses
related to these securities were $37 million and $39 million, respectively,
and are included in the net unrealized gains-securities available for sale
component in stockholders' equity at September 30, 1994.
(G) Equity securities available for sale include certain non-marketable equity
securities which are excluded from the scope of SFAS No. 115 and are
therefore carried at cost. At September 30, 1994, the carrying amount of
those securities was $719 million (which is reported in both the amortized
cost and fair value columns on page 48) and the fair value was $744 million.
(H) For the nine months ended September 30, 1994, net gains on investments held
by venture capital subsidiaries totaled $152 million, of which gross
unrealized gains and gross unrealized losses were $238 million and $131
million, respectively. For the nine months ended September 30, 1993, net
gains on investments held by venture capital subsidiaries totaled $84
million, of which gross unrealized gains and gross unrealized losses were
$275 million and $214 million, respectively.
49
<PAGE>
- --------------------------------------------------------------------------------
CROSS-BORDER AND FOREIGN CURRENCY OUTSTANDINGS
COUNTRIES WITH OUTSTANDINGS EXCEEDING 1% OF TOTAL ASSETS (A)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Cross-
Border Investments
and Non-Local in and
Currency Funding of Total Outstandings
Claims Local ------------------
on Third Citicorp Equity Sept. 30 Dec. 31
(In Billions of Dollars) Parties(B) Franchises Invest. 1994 1993
---------- ---------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
United Kingdom............ $3.8 $3.2 $ - $ 7.0 $ 7.7
Brazil.................... 3.5 0.8 0.1 4.4 2.4
Mexico.................... 2.9 1.4 - 4.3 3.9
Japan..................... 1.7 1.1 - 2.8 2.8
Argentina................. 1.8 0.8 - 2.6 2.0
</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 September 30, 1994 amounted to $5.5
billion in the United Kingdom, $1.2 billion in Japan and $0.1 billion in
Argentina. Commitments were not material in Brazil and Mexico. At
September 30, 1994, there were no countries with cross-border and foreign
currency outstandings 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).
(B) Total Cross-Border and non-local currency claims on third parties at
September 30, 1994 were $32.5 billion, including $16.3 billion in the OECD
countries and $16.2 billion in non-OECD countries. The amounts in the non-
OECD countries included $7.9 billion in Latin America and the Caribbean (of
which $5.3 billion related to Brazil and Argentina) and $6.0 billion in
Asia.
- --------------------------------------------------------------------------------
LONG-TERM DEBT (A)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(With original maturities of more than one year) (B) Maturity Distribution
(In Millions of Dollars) at September 30, 1994
---------------------
<S> <C>
PARENT COMPANY (B)
Due in 1994................................................................... $ 689
Due in 1995................................................................... 1,713
Due in 1996................................................................... 1,271
Due in 1997................................................................... 632
Due in 1998................................................................... 1,233
Due in 1999-2003.............................................................. 2,742
Due in 2004-2008.............................................................. 1,821
Due in 2009 and Thereafter.................................................... 789
-------
$10,890
-------
SUBSIDIARIES
Due in 1994................................................................... $ 220
Due in 1995................................................................... 882
Due in 1996................................................................... 1,467
Due in 1997................................................................... 558
Due in 1998................................................................... 390
Due in 1999-2003.............................................................. 506
Due in 2004-2008.............................................................. 57
Due in 2009 and Thereafter.................................................... 68
-------
$ 4,148
-------
Total......................................................................... $15,038
=======
</TABLE>
(A) Includes $19 million of redeemable preferred stock issued by the Parent
Company.
(B) 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.
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 September 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.................. 393,653,943
($1.00 Par Value) (Shares Outstanding on September 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.
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE
----
<S> <C>
Item 1 - Financial Statements
Financial Statements, Schedules and Statistics
Consolidated Statement of Income for the Nine Months Ended
SEPTEMBER 30, 1994 AND 1993......................................... 36
Consolidated Balance Sheet as of
SEPTEMBER 30, 1994, AND DECEMBER 31, 1993........................... 37
Consolidated Statement of Cash Flows for the Nine Months Ended
SEPTEMBER 30, 1994 AND SEPTEMBER 30, 1993........................... 39
Calculation of Net Income Per Share................................. 41
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations.............................................. 2-35
PART II OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K.................................... 53
Signatures.......................................................... 54
</TABLE>
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 nine months ended SEPTEMBER 30, 1994 AND 1993 have been
included.
- --------------------------------------------------------------------------------
52
<PAGE>
Item 6 - Exhibits and Reports on Form 8-K
--------------------------------
a) Exhibit 4.1 Certificate of Designations relating to Citicorp 8.30 %
Noncumulative Preferred Stock, Series 20 (incorporated herein by
reference to Exhibit 2.2 from Citicorp's Registration Statement on
Form 8-A, File No. 1-5738).
b) Exhibit 27 Financial Data Schedule for the nine months ended
September 30, 1994.
c) Reports on Form 8-K
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).
Citicorp filed a Form 8-K Current Report dated October 18, 1994 (Item
5) which report included a summary of the consolidated operations of
Citicorp for the nine months ended September 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).
53
<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: November 11, 1994
- --------------------------------------------------------------------------------
54
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CURRENT REPORT ON FORM 10-Q FOR THE THIRD QUARTER OF
1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS AND ACCOMPANYING DISCLOSURES.
</LEGEND>
<CIK> 0000020405
<NAME> CITICORP 3RD QTR 1994
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> QTR-3
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 5,267
<INT-BEARING-DEPOSITS> 7,387
<FED-FUNDS-SOLD> 9,282
<TRADING-ASSETS> 44,360
<INVESTMENTS-HELD-FOR-SALE> 14,927
<INVESTMENTS-CARRYING> 5,192
<INVESTMENTS-MARKET> 4,760
<LOANS> 146,323
<ALLOWANCE> 5,060
<TOTAL-ASSETS> 253,149
<DEPOSITS> 154,291
<SHORT-TERM> 22,535<F1>
<LIABILITIES-OTHER> 9,545
<LONG-TERM> 15,038
<COMMON> 419
0
4,187
<OTHER-SE> 12,349
<TOTAL-LIABILITIES-AND-EQUITY> 253,149
<INTEREST-LOAN> 12,127
<INTEREST-INVEST> 898
<INTEREST-OTHER> 5,386
<INTEREST-TOTAL> 18,411
<INTEREST-DEPOSIT> 6,914
<INTEREST-EXPENSE> 11,822
<INTEREST-INCOME-NET> 6,589
<LOAN-LOSSES> 1,323
<SECURITIES-GAINS> 178
<EXPENSE-OTHER> 2,547
<INCOME-PRETAX> 3,380
<INCOME-PRE-EXTRAORDINARY> 2,380
<EXTRAORDINARY> 0
<CHANGES> (56)
<NET-INCOME> 2,324
<EPS-PRIMARY> 4.82
<EPS-DILUTED> 4.33
<YIELD-ACTUAL> 0<F2>
<LOANS-NON> 4,708<F3>
<LOANS-PAST> 840
<LOANS-TROUBLED> 524
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,379
<CHARGE-OFFS> 1,488
<RECOVERIES> 802<F4>
<ALLOWANCE-CLOSE> 5,060
<ALLOWANCE-DOMESTIC> 0<F5>
<ALLOWANCE-FOREIGN> 0<F6>
<ALLOWANCE-UNALLOCATED> 0<F7>
<FN>
<F1>Purchased Funds and Other Borrowings.
<F2>Year-to-date yields not disclosed (quarters only).
<F3>Includes $1,995MM of cash-basis commercial loans and $2,713MM
of consumer loans on which accrual of interest has been suspended.
<F4>Includes a $318MM 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 during the year.
<F5>No portion of Citicorp's credit loss allowance is specifically allocated
to any individual loan or group of loans, however, $1,299MM of the allowance
was attributed to operations outside the U.S. (see Note 10 to the 1993
Annual Report).
<F6>See Footnote F5 above.
<F7>See Footnote F5 above.
</FN>
</TABLE>
