<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 March 31, 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.................. 389,280,028
($1.00 Par Value) (Shares Outstanding on March 31, 1994)
<PAGE>
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<TABLE>
<CAPTION>
CONTENTS PAGE
<S> <C>
FINANCIAL HIGHLIGHTS........................................................ 2
FINANCIAL SUMMARY........................................................... 3
BUSINESS DISCUSSION......................................................... 4
GLOBAL CONSUMER............................................................. 5
GLOBAL FINANCE.............................................................. 7
NORTH AMERICA COMMERCIAL REAL ESTATE........................................ 9
CROSS-BORDER REFINANCING PORTFOLIO.......................................... 10
CORPORATE ITEMS............................................................. 10
CONSUMER LOAN PORTFOLIO DATA................................................ 11
COMMERCIAL LOAN PORTFOLIO DATA
- Cash-Basis and Renegotiated Commercial Loans............................. 13
- Commercial Real Estate................................................... 15
REFINANCING PORTFOLIO....................................................... 20
CAPITAL, PRICE RISK, LIQUIDITY, DERIVATIVE AND FOREIGN EXCHANGE ACTIVITIES.. 23
STATEMENT OF OPERATIONS ANALYSIS
- Net Interest Revenue (Taxable Equivalent Basis).......................... 31
- Provision and Allowance for Credit Losses................................ 32
- Fee and Commission Revenue............................................... 33
- Revenues from Trading Related Activities................................. 33
- Securities Transactions.................................................. 35
- Other Revenue............................................................ 35
- Operating Expense........................................................ 36
- Income Taxes............................................................. 37
- Effect of Credit Card Receivables Securitization......................... 37
- Adoption of New Accounting Standards..................................... 38
FINANCIAL STATEMENTS
- Consolidated Statement of Operations..................................... 39
- Consolidated Balance Sheet............................................... 40
- Consolidated Statement of Changes in Stockholders' Equity................ 41
- Consolidated Statement of Cash Flows..................................... 42
CITIBANK, N.A. CONSOLIDATED BALANCE SHEET................................... 43
CALCULATION OF NET INCOME PER SHARE......................................... 44
AVERAGE BALANCES AND INTEREST RATES......................................... 45
FINANCIAL STATISTICS
- Details of Credit Loss Experience........................................ 49
- Cash-Basis, Renegotiated and Past Due Loans.............................. 50
- Other Real Estate Owned.................................................. 50
- Securities............................................................... 51
- Long-Term Debt........................................................... 52
FORM 10-Q CROSS-REFERENCE INDEX............................................. 53
SIGNATURES.................................................................. 55
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS First Quarter
---------------
EARNINGS (In Millions of Dollars) 1994 1993
------ ------
<S> <C> <C>
Net Income
Before Accounting Changes.................... $ 609 $ 370
After Accounting Changes (A)................. 553 670
------ ------
PER SHARE
Net Income (B)
On Common and Common Equivalent Shares
Before Accounting Changes.................... $ 1.24 $ .71
After Accounting Changes (A)................. 1.11 1.38
Assuming Full Dilution
Before Accounting Changes.................... $ 1.12 $ .67
After Accounting Changes (A)................. 1.01 1.24
Common Stockholders' Equity (C)................ $27.90 $23.21
------ ------
RETURN ON ASSETS AND EQUITY
Return on Total Assets (D) (E)
Before Accounting Changes.................... .98% .67%
After Accounting Changes (A)................. .95% .80%
Return on Common Stockholders' Equity (C) (F)
Before Accounting Changes.................... 20.1% 14.3%
After Accounting Changes (A)................. 19.5% 17.9%
Return on Total Stockholders' Equity (C) (G)
Before Accounting Changes.................... 17.1% 12.9%
After Accounting Changes (A)................. 16.7% 15.5%
------ ------
</TABLE>
<TABLE>
<CAPTION>
CAPITAL (In Billions of Dollars)
Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
1994 1993 1993 1993 1993
------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Tier 1......................................... $ 14.0 $ 13.4 $ 12.8 $ 11.8 $ 10.9
Tier 1 & 2..................................... 23.5 23.2 22.3 21.6 21.0
Tier 1 Ratio................................... 6.86% 6.62% 6.17% 5.65% 5.23%
Tier 1 & 2 Ratio............................... 11.55% 11.45% 10.72% 10.31% 10.01%
Common Equity as a % of Total Assets (C) (E)... 4.51% 4.65% 4.29% 4.16% 3.98%
Total Equity as a % of Total Assets (C) (E).... 6.12% 6.44% 6.05% 5.80% 5.46%
------ ------ ------ ------ ------
<CAPTION>
OPERATING MARGIN (In Millions of Dollars)
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
1994 1993 1993 1993 1993
------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Total Revenue.................................. $3,861 $4,152 $4,070 $3,968 $3,885
Effect of Credit Card Securitization (H)....... 268 292 303 328 359
Net Cost To Carry (I).......................... 29 43 54 72 83
Capital Building Transactions.................. (23) 61 (9) 25 (75)
------ ------ ------ ------ ------
Adjusted Revenue............................... $4,135 $4,548 $4,418 $4,393 $4,252
------ ------ ------ ------ ------
Total Operating Expense........................ $2,447 $3,021 $2,574 $2,494 $2,526
Net OREO Costs (J)............................. (28) 3 (67) (66) (115)
Restructuring Charges.......................... - (425) - - -
------ ------ ------ ------ ------
Adjusted Operating Expense..................... $2,419 $2,599 $2,507 $2,428 $2,411
------ ------ ------ ------ ------
OPERATING MARGIN............................... $1,716 $1,949 $1,911 $1,965 $1,841
Consumer Credit Costs (K)...................... 614 651 665 708 716
Commercial Credit Costs (L).................... 60 126 233 297 380
------ ------ ------ ------ ------
OPERATING MARGIN LESS CREDIT COSTS............. $1,042 $1,172 $1,013 $ 960 $ 745
Additional Provision (M)....................... 66 126 151 176 150
Capital Building Transactions.................. 23 (61) 9 (25) 75
Restructuring Charges.......................... - 425 - - -
------ ------ ------ ------ ------
INCOME BEFORE TAXES AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGES............................ $ 999 $ 560 $ 871 $ 759 $ 670
====== ====== ====== ====== ======
</TABLE>
(A) Includes the cumulative effect of adopting Statement of Financial Accounting
Standards No. 112, "Employers' Accounting for Postemployment Benefits," as
of January 1, 1994. See page 38. The 1993 results include the cumulative
effect of adopting Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," as of January 1, 1993.
(B) Based on net income less preferred stock dividends, except where conversion
is assumed. See page 44 for calculation of net income per share.
(C) First quarter 1994 reflects the effect of adopting Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt
and Equity Securities," as of January 1, 1994. See page 38.
(D) Annualized net income as a percentage of average total assets.
(E) First quarter 1994 reflects the effect of adopting FASB Interpretation No.
39, "Offsetting of Amounts Related to Certain Contracts," as of January 1,
1994. See page 38.
(F) Annualized earnings applicable to common stock as a percentage of average
common stockholders' equity.
(G) Annualized net income less redeemable preferred stock dividends as a
percentage of average total stockholders' equity.
(H) For a description of the effect of credit card receivables securitization,
see page 37.
(I) Principally the net cost to carry commercial cash-basis loans and Other
Real Estate Owned (OREO).
(J) Principally net write-downs and direct revenues and expenses related to
OREO.
(K) Principally consumer net credit write-offs adjusted for the effect of
credit card receivables securitization.
(L) Includes commercial net credit write-offs, net cost to carry, net OREO
write-downs and direct revenues and expenses related to OREO.
(M) Represents provision for credit losses above net write-offs. First quarter
1994 amount reflects a $34 million release from the cross-border refinancing
portfolio allowance.
2
<PAGE>
FINANCIAL SUMMARY
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Citicorp reported first quarter operating earnings of $609 million, or $1.12 per
common share fully diluted, up from $370 million, or $0.67 per share, a year
earlier. Including the cumulative effect of adopting the new accounting
standard for postemployment benefits, net income was $553 million, or $1.01 per
common share fully diluted. In the year-earlier quarter, including the
cumulative effect of adopting the new accounting standard for income taxes, net
income was $670 million, or $1.24 per common share fully diluted. The results
for the quarter reflected strong Emerging Economies businesses, continued
operating expense management and significant improvement in credit costs, which
together more than offset weak trading results.
Revenues, adjusted for credit-related costs, the effect of credit card
securitization and nonrecurring asset sales, declined by $117 million from the
1993 first quarter to $4.1 billion for the quarter. Securities trading and
foreign exchange revenues declined by $386 million to $71 million while all
other revenues increased by $269 million or 7%, primarily in the Emerging
Economies. Adjusted operating expenses of $2.4 billion were essentially even
with the 1993 first quarter despite increased spending for continued business
expansion in the Emerging Economies, and represented an improvement of $180
million from the 1993 fourth quarter.
Commercial credit costs decreased to $60 million in the quarter from $126
million in the 1993 fourth quarter and from $380 million in the 1993 first
quarter. Commercial cash-basis loans (excluding those in the cross-border
refinancing portfolio) and Other Real Estate Owned together dropped by $319
million in the quarter to $5.0 billion at March 31, 1994. Consumer credit costs
declined to $614 million in the quarter from $651 million in the 1993 fourth
quarter and from $716 million in the 1993 first quarter.
Citicorp added $50 million to both the consumer and commercial reserves
(excluding the cross-border refinancing portfolio allowance) in the quarter,
which totaled $1.6 billion and $2.6 billion at March 31, 1994, respectively,
compared with $1.4 billion and $2.3 billion, respectively, a year ago. The
cross-border refinancing portfolio reserve of $238 million, unchanged from year-
end 1993, reflected a pretax release of $34 million to income in the quarter.
First quarter earnings included net pretax gains from asset sales of $23 million
($14 million after tax). Net gains on asset sales for the same 1993 quarter
were $75 million pretax ($41 million after tax).
Total regulatory capital increased to $23.5 billion, up $2.5 billion from $21.0
billion a year ago. The Tier 1 capital ratio increased to 6.86% at quarter-end
from 6.62% at December 31, 1993, and the combined Tier 1 and Tier 2 capital
ratio increased to 11.55% from 11.45% at year-end 1993. A year ago the Tier 1
ratio was 5.23% and the combined Tier 1 and Tier 2 capital ratio was 10.01%.
Also in the quarter, Citicorp adopted SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," (SFAS No. 115) which increased
stockholders' equity by $227 million after tax at March 31, 1994, and FASB
Interpretation No. 39, "Offsetting of Amounts Related to Certain Contracts,"
which increased assets and liabilities by $14.7 billion at March 31, 1994.
Neither of these two accounting changes affected the company's earnings or the
Tier 1 and Tier 2 capital ratios, but did affect the common and total equity
ratios as well as asset and equity return ratios.
3
<PAGE>
BUSINESS DISCUSSION
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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.
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NET INCOME (LOSS)
<TABLE>
<CAPTION>
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Millions of Dollars) 1994 1993(A) 1993(A) 1993(A) 1993(A)
-------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Global Consumer:
North America, Europe and Japan..... $256 $ 92 $ 221 $ 177 $ 154
Emerging Economies.................. 171 143 131 125 142
---- ----- ----- ----- -----
Total Global Consumer (B)............. $427 $ 235 $ 352 $ 302 $ 296
---- ----- ----- ----- -----
Global Finance:
North America, Europe and Japan..... $ 86 $ 183 $ 218 $ 232 $ 233
Emerging Economies.................. 178 231 166 207 147
---- ----- ----- ----- -----
Total Global Finance (C).............. $264 $ 414 $ 384 $ 439 $ 380
---- ----- ----- ----- -----
North America Commercial Real Estate.. (76) (117) (132) (180) (204)
Cross-Border Refinancing Portfolio.... 49 9 26 12 37
Corporate Items (D)................... (55) 34 (102) (127) (139)
---- ----- ----- ----- -----
$609 $ 575 $ 528 $ 446 $ 370
Cumulative Effect of
Accounting Changes (E).............. (56) - - - 300
---- ----- ----- ----- -----
Total Citicorp........................ $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.
(C) 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.
(D) Corporate Items results reflect an after-tax amount of $16 million in the
fourth quarter of 1993 related to restructuring charges.
(E) First quarter 1994 includes the cumulative effect of adopting SFAS No. 112,
"Employers' Accounting for Postemployment Benefits," (SFAS No. 112) as of
January 1, 1994. First quarter 1993 results include the cumulative effect
of adopting SFAS No. 109, "Accounting for Income Taxes," (SFAS No. 109) as
of January 1, 1993.
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4
<PAGE>
GLOBAL CONSUMER
- --------------------------------------------------------------------------------
Citicorp's Global Consumer business serves a full range of consumer financial
needs worldwide through branch banking, card products and private banking
activities.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1st Qtr. 1st Qtr.
(In Millions of Dollars) 1994 1993(A) Change %
-------- -------- ------ ---
<S> <C> <C> <C> <C>
Total Revenue........................ $2,490 $2,238 $ 252 11
Operating Expense.................... 1,493 1,427 66 5
Provision for Credit Losses.......... 378 411 (33) (8)
------ ------ -----
Income Before Taxes.................. $ 619 $ 400 $ 219 55
Income Taxes......................... 192 104 88 85
------ ------ -----
Net Income........................... $ 427 $ 296 $ 131 44
====== ====== =====
Average Assets ($ Billions).......... 102 99 3 3
Return on Assets (%)................. 1.70 1.21 .49 -
ADJUSTED FOR CREDIT-RELATED ITEMS
Total Revenue (B)
North America, Europe and Japan.. $2,147 $2,086 $ 61 3
Emerging Economies............... 613 515 98 19
------ ------ -----
Total Global Consumer............ $2,760 $2,601 $ 159 6
====== ====== =====
Other Operating Expense (C)
North America, Europe and Japan.. $1,146 $1,130 $ 16 1
Emerging Economies............... 331 280 51 18
------ ------ -----
Total Global Consumer............ $1,477 $1,410 $ 67 5
====== ====== =====
Credit Costs (D)
North America, Europe and Japan.. $ 575 $ 681 $(106) (16)
Emerging Economies............... 39 35 4 11
------ ------ -----
Total Global Consumer............ $ 614 $ 716 $(102) (14)
====== ====== =====
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
(B) Adjusted principally for the effect of credit card receivables
securitization.
(C) Excludes net write-downs 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.
- --------------------------------------------------------------------------------
First quarter net income in the Global Consumer businesses increased 44% to a
record $427 million, compared with $296 million in the 1993 first quarter. Net
income from the consumer businesses in North America, Europe and Japan was $256
million, 66% above the year-earlier quarter, while net income in the Emerging
Economies was $171 million, up 20% from a year ago. The improvement reflected
significantly lower credit costs, primarily in U.S. credit cards, as well as
continued strong revenues in the Emerging Economies (particularly Asia) and the
European private bank.
Global Consumer adjusted revenues were $2.8 billion for the first quarter, an
increase of 6% from last year's first quarter. Revenues are adjusted for
certain credit-related items (primarily the effect of credit card receivables
securitization) which do not affect net income but do affect the income
statement lines in which revenue and credit losses are reported. See page 37
for a further description of the effect of credit card receivables
securitization.
Adjusted revenues in North America, Europe and Japan grew 3% compared with the
first quarter of last year, reflecting higher revenues from European private
banking activities, a lower net loss from mortgage pass-through securitization
activity in U.S. mortgages and the benefit to funding costs of effective
interest rate management. These improvements were partially offset by reduced
loan volumes in U.S. branches, including mortgages. Lower recourse-related
costs on securitized mortgages and a reduced adjustment required to reflect
accelerated prepayments of securitized mortgages contributed to the improvement
in U.S. mortgage results compared with last year's first quarter. Depending on
the level of interest rates, mortgage prepayment rates and hedging actions
employed, further adjustments could be required to the carrying amount of
servicing assets that are subject to prepayment risk. U.S. credit card revenues
reflected a reduction in fee revenues due to pricing strategies in a highly
competitive environment.
5
<PAGE>
Global Consumer adjusted operating expenses were 5% above the 1993 first
quarter, primarily in support of revenue momentum and business expansion efforts
in the Emerging Economies. Expenses in North America, Europe and Japan rose
only slightly as increased marketing costs in the U.S. credit card business were
partially offset by lower origination and collection costs in the U.S. branches
and lower U.S. credit card fraud costs.
Global Consumer credit costs in the first quarter improved 14% from the 1993
first quarter due to significantly lower U.S. credit card losses, slightly
offset by higher losses in the European branch business. Delinquencies
continued to improve with loans on the balance sheet that are past due 90 days
or more falling to $3.5 billion at March 31, 1994 from $3.6 billion at December
31, 1993 and $3.9 billion a year ago. See the Consumer Loan Portfolio section
on page 11 and the Provision and Allowance for Credit Losses section on page 32
for a further discussion of the consumer portfolio. While the U.S. economy is
improving, economic conditions in Europe remain weak. Credit costs,
delinquencies and cash-basis loans could remain at relatively high levels in
these regions with further increases in credit reserves possible.
Average Global Consumer assets grew by $3 billion from last year. Adjusted for
the effect of credit card receivables securitization, average consumer assets
grew by $2 billion or 2%. Average assets in the Emerging Economies were up 18%
from the year-ago quarter to $28 billion, reflecting continued strong loan
growth in the Asian and Latin American consumer businesses. This increase in
volume was partially offset by lower U.S. branch and mortgage volumes.
6
<PAGE>
GLOBAL FINANCE
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The Global Finance business serves corporations, financial institutions,
governments and other participants in capital markets throughout the world.
Excluded from Global Finance in North America, Europe and Japan is North America
Commercial Real Estate which includes the commercial real estate divisions in
the U.S. and Canada and is discussed on page 15.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1st Qtr. 1st Qtr.
(In Millions of Dollars) 1994 1993(A) Change %
-------- -------- ------ ---
<S> <C> <C> <C> <C>
Total Revenue......................... $1,204 $1,445 $(241) (17)
Operating Expense..................... 786 838 (52) (6)
Provision for Credit Losses........... (34) 111 (145) NM
------ ------ -----
Income Before Taxes................... $ 452 $ 496 $ (44) (9)
Income Taxes.......................... 188 116 72 62
------ ------ -----
Net Income............................ $ 264 $ 380 $(116) (31)
====== ====== =====
Average Assets ($ Billions) (B)....... 134 104 30 29
Return on Assets (%).................. .80 1.48 (.68) -
ADJUSTED FOR CREDIT-RELATED ITEMS
Total Revenue (C)
North America, Europe and Japan... $ 677 $ 950 $(273) (29)
Emerging Economies................ 528 518 10 2
------ ------ -----
Total Global Finance.............. $1,205 $1,468 $(263) (18)
====== ====== =====
Other Operating Expense (D)
North America, Europe and Japan... $ 535 $ 518 $ 17 3
Emerging Economies................ 264 310 (46) (15)
------ ------ -----
Total Global Finance.............. $ 799 $ 828 $ (29) (4)
====== ====== =====
Credit Costs (E)
North America, Europe and Japan... $ (47) $ 54 $(101) NM
Emerging Economies................ (11) 15 (26) NM
------ ------ -----
Total Global Finance.............. $ (58) $ 69 $(127) NM
====== ====== =====
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
(B) First quarter 1994 includes the effect of adopting FASB Interpretation No.
39, "Offsetting of Amounts Related to Certain Contracts," as of January 1,
1994.
(C) After adding back the net cost to carry cash-basis loans and OREO.
(D) Excludes net write-downs (recoveries) 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 write-downs (recoveries) and direct revenues and
expenses related to OREO.
NM Not meaningful as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
Global Finance reported net income of $264 million in the first quarter,
compared with $380 million in the comparable 1993 period. The quarter's
earnings reflected substantially lower revenues from trading related activities
but benefited from net credit recoveries in the quarter as compared with a
credit provision in the prior year's quarter. Global Finance net income from
North America, Europe and Japan was $86 million in the quarter, compared with
$233 million in the prior year's quarter. These results primarily reflected
lower revenues from trading related activities in the foreign exchange,
securities trading and derivatives markets but benefited from net recoveries,
compared with a provision for credit losses in the first quarter of 1993.
Emerging Economies net income was $178 million in the current quarter, up from
$147 million a year ago. The prior year's first quarter included $64 million of
pretax charges taken in connection with the withdrawal from the business of
portfolio management for customers in India.
Global Finance reported revenues of $1.2 billion in the current quarter compared
with $1.4 billion a year ago. Global Finance revenues in North America, Europe
and Japan for the quarter were $0.7 billion compared with $0.9 billion in the
prior year. These
7
<PAGE>
results reflected lower revenues from trading related activities. Interest rate
and currency markets were volatile in the quarter, while the prior year period
benefited from the declining interest rate environment in European markets.
Global Finance Emerging Economies revenues were up 4% from the 1993 first
quarter to $0.5 billion on solid performance across businesses despite the
adverse effect of declining values of Latin American debt securities.
Global Finance revenues from trading related activities contributed $0.3 billion
or approximately 26% of Global Finance revenues in the current quarter compared
with $0.7 billion or 46% in the first quarter of 1993. Trading activities in
the foreign exchange, securities trading and derivatives products businesses are
primarily reflected in the foreign exchange and securities trading revenues but
also include other amounts, principally net interest revenue. Trading
activities in the foreign exchange markets contributed $0.1 billion in the
current quarter, down from $0.2 billion in the year-ago quarter. Derivative
products, which include interest rate and currency swaps, options, financial
futures, equity and commodity contracts, reported revenues of $0.1 billion down
from $0.2 billion in the year-ago quarter. These revenues are primarily
attributable to interest rate and currency derivatives. Revenues from trading
in other markets, including the fixed income, funding and money markets,
decreased to $0.1 billion from $0.3 billion in the prior year's quarter
primarily due to declining values in the European and Latin American debt
markets. Though first quarter revenues from trading related activities
reflected sustained customer demand for risk management products, rising
interest rates and volatile market conditions adversely affected trading
activities related to Citicorp's own account. The prior year's first quarter
benefited from declining interest rates, particularly in the European markets.
Since trading related revenues are subject to many factors, and in view of
market volatility, there can be no assurance that trading related revenues will
return to prior year levels. See page 33 for a discussion of the income
statement impact of trading activities and see page 28 for a further discussion
of Derivative and Foreign Exchange Activities.
Operating expenses for the quarter were down $52 million, primarily reflecting
previously reported expenses relating to India in the year-ago period offset by
business related expense growth in the Emerging Economies.
The credit provision in the quarter reflected a net recovery of $34 million,
compared with a net provision of $111 million in the year-ago quarter. Global
Finance businesses in North America, Europe and Japan recorded net recoveries of
$35 million partially offset by provision-building of $12 million. The prior
year's provision reflected net write-offs of $30 million and an additional
provision of $38 million. The Emerging Economies portfolio experienced net
recoveries of $11 million in the current year's quarter, compared with net
write-offs of $6 million and an addition to the provision of $37 million in the
prior year's quarter.
Average assets increased $30 billion from the prior year's quarter, including
the effect of adopting FASB Interpretation No. 39, "Offsetting of Amounts
Related to Certain Contracts," (see page 38) as well as increased trading
account assets. The Global Finance businesses in North America, Europe and
Japan also reflected higher levels of federal funds sold and resale agreements,
while the Emerging Economies businesses included loan portfolio growth.
8
<PAGE>
NORTH AMERICA COMMERCIAL REAL ESTATE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1st Qtr. 1st Qtr.
(In Millions of Dollars) 1994 1993(A) Change %
-------- -------- ------ ---
<S> <C> <C> <C> <C>
Total Revenue...................... $ 19 $ (20) $ 39 NM
Operating Expense.................. 60 127 (67) (53)
Provision for Credit Losses........ 106 168 (62) (37)
----- ----- -----
(Loss) Before Taxes................ $(147) $(315) $ 168 53
Income Taxes....................... (71) (111) 40 36
----- ----- -----
Net (Loss)......................... $ (76) $(204) $ 128 63
===== ===== =====
Average Assets ($ Billions)........ 10 13 (3) (23)
ADJUSTED FOR CREDIT-RELATED ITEMS
Total Revenue (B).................. $ 45 $ 36 $ 9 25
Total Operating Expense (C)........ 35 39 (4) (10)
Credit Costs (D)................... 119 312 (193) (62)
Additional Provision (E)........... 38 - 38 NM
</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 write-downs 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 write-downs and direct revenues and expenses related to OREO.
(E) Represents provision for credit losses above net write-offs.
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
North America Commercial Real Estate, which comprises the commercial real estate
divisions in the U.S. and Canada, reported a net loss of $76 million for the
first quarter of 1994, reflecting an improvement from a loss of $204 million a
year ago, primarily due to lower levels of credit costs.
Revenues benefited primarily from the lower net cost to carry cash-basis loans
and OREO, while operating expenses included lower net OREO write-downs. The
provision for credit losses was $106 million in the quarter, compared with $168
million in the year-ago quarter.
Cash-basis loans were $1.7 billion at March 31, 1994, unchanged from year-end
1993 but down from $2.6 billion a year ago. The OREO portfolio totaled $2.1
billion at March 31, 1994, down from $2.3 billion at December 31, 1993 and $3.0
billion a year ago. Although credit costs for 1994 are expected to decline from
the prior year, cash-basis loans and OREO are expected to remain at relatively
high levels with further additions to credit reserves possible.
Further details with respect to the North America Commercial Real Estate
Portfolio are provided on pages 15 - 19.
9
<PAGE>
CROSS-BORDER REFINANCING PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1st Qtr. 1st Qtr.
(In Millions of Dollars) 1994 1993(A) Change %
-------- -------- ------ ---
<S> <C> <C> <C> <C>
Total Revenue................ $ 28 $47 $(19) (40)
Operating Expense............ 6 6 - -
Provision for Credit Losses.. (35) (1) (34) NM
---- --- ----
Income Before Taxes.......... $ 57 $42 $ 15 36
Income Taxes................. 8 5 3 60
---- --- ----
Net Income................... $ 49 $37 $ 12 32
==== === ====
Average Assets ($ Billions).. 3 3 -
</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 $49 million in the quarter compared with net income of $37 million in the
first quarter of 1993. The revenues reflected $22 million of Brazil interest on
medium- and long-term outstandings recognized during the quarter compared with
$42 million a year ago. The 1994 results also included a $34 million pretax
release from the allowance for credit losses while there was no such release in
1993.
Medium- and long-term exposure to refinancing countries was $3.1 billion at
March 31, 1994, up from $2.9 billion at year-end 1993 and down from $3.2 billion
a year ago. The increase from year-end 1993 was primarily due to the revaluation
of Brazil past-due interest bonds previously received as part of formal country
debt restructurings (Brady Bonds) and classified as securities available for
sale upon the adoption of SFAS No. 115. See Adoption of New Accounting
Standards on page 38. Further details on the refinancing portfolio are provided
on page 20.
CORPORATE ITEMS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1st Qtr. 1st Qtr.
(In Millions of Dollars) 1994 1993(A) Change %
-------- -------- ------ ---
<S> <C> <C> <C> <C>
Total Revenue............. $ 120 $ 175 $ (55) (31)
Operating Expense......... 102 128 (26) (20)
----- ----- -----
Income Before Taxes....... $ 18 $ 47 $ (29) (62)
Income Taxes.............. 73 186 (113) (61)
----- ----- -----
Net (Loss)................ $ (55) $(139) $ 84 60
===== ===== =====
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
- --------------------------------------------------------------------------------
Corporate Items consists of unallocated corporate costs and other corporate
items, including net gains related to capital-building transactions and the
offset created by attributing income taxes to business activities on a local
tax-rate basis. Additionally, the 1993 results included a net loss of $6
million attributable to the U.S. market data services business of Quotron, which
was sold in the first quarter of 1994.
Corporate Items reported a net loss of $55 million in the first quarter of 1994,
compared with a net loss of $139 million in the year-ago quarter. The Corporate
Items results included net gains on capital-building transactions of $14 million
($23 million pretax) in the quarter, compared with $41 million ($75 million
pretax) in the 1993 first quarter.
Excluding capital-building transactions, Corporate Items had a net loss of $69
million in the quarter, compared with a net loss of $180 million in the
corresponding 1993 quarter, with the lower net loss primarily related to the
effect of the offset created by attributing income taxes to business activities
on a local tax-rate basis. Additionally, the previously reported sale of the
U.S. market data services business of Quotron contributed to the reduction in
total revenue and operating expense compared with the year-ago quarter.
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. The number of
days is set at an appropriate level by loan product and by country.
The following table summarizes delinquencies in the on-balance sheet consumer
loan portfolio and in the total serviced 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>
Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
1994 1993 1993 1993 1993
------------------------ -------- -------- -------- --------
90 Days
(In Billions of Dollars) Total Loans (A) Past Due 90 Days Past Due
------------------------ ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
U.S Mortgages Held..................... $ 16.9 $ 0.7 $ 0.7 $ 0.7 $ 0.8 $ 0.9
Ratio.............................. 4.0% 3.8% 4.0% 4.0% 4.5%
Consumer Loans Other Than
U.S. Mortgages........................ 65.2 2.3 2.4 2.5 2.5 2.5
Ratio.............................. 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
-------- ------- ------- ------- ------- -------
Total Consumer Loans................... $ 82.7 $ 3.5 $ 3.6 $ 3.7 $ 3.8 $ 3.9
======== ======= ======= ======= ======= =======
Ratio.............................. 4.3% 4.2% 4.5% 4.7% 4.8%
Total Dollar Amount of Conventional
First Mortgages Serviced (C).......... $ 37.0 $ 1.7 $ 1.7 $ 1.7 $ 1.8 $ 1.8
Ratio.............................. 4.6% 4.4% 4.3% 4.1% 4.0%
Total Number of Conventional First
Mortgages Serviced (C)................ 370,937 12,655 12,649 12,832 12,781 13,205
Ratio.............................. 3.4% 3.3% 3.2% 3.0% 2.9%
</TABLE>
(A) Loan amounts are net of unearned income.
(B) Mortgages were delinquent 90 days or more when purchased under recourse
provision of mortgage sales.
(C) Includes both owned and sold mortgages.
- --------------------------------------------------------------------------------
At March 31, 1994, consumer loans on the balance sheet that were delinquent 90
days or more improved to $3.5 billion from $3.6 billion at December 31, 1993 and
$3.9 billion a year ago. The ratio of delinquent loans to total loans was up
slightly to 4.3% from 4.2% at December 31, 1993 as total consumer loans declined
$1.7 billion during the quarter. Paydowns of seasonal charge volumes and
continued securitization of U.S. credit cards, as well as sales of mortgage
pass-throughs more than offset growth in the Emerging Economies and worldwide
private banking portfolios. Since March 31, 1993, consumer loans delinquent 90
days or more have declined $0.4 billion and the ratio has fallen 0.5%,
reflecting lower delinquencies in U.S. credit cards and mortgages, partially
offset by higher delinquencies in Europe, primarily Germany.
U.S. mortgages held that were delinquent 90 days or more were unchanged from
year-end 1993. However, the ratio of delinquent mortgages to total mortgages
increased reflecting a $1.0 billion decline in the loan portfolio from mortgage
pass-through sales and repayments. The $0.2 billion improvement in U.S.
mortgage delinquencies since March 31, 1993 reflected collection efforts and
transfers to OREO. The total dollar amount and number of serviced U.S.
conventional first mortgages that were delinquent were unchanged from year-end
and have declined $0.1 billion and 550 loans since the first quarter of
11
<PAGE>
last year. The related delinquency ratios for the serviced portfolio, however,
increased, as refinancings and other repayments exceeded new originations.
Recourse provisions of certain U.S. mortgage sales arrangements allow Citicorp
the option of purchasing delinquent 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 March
31, 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 March 31, 1994, interest accrual had been suspended on $1,215 million
of U.S. mortgages and $1,689 million of other consumer loans. The corresponding
amounts at December 31, 1993 were $1,216 million of U.S. mortgages and $1,647
million of other consumer loans.
Other consumer loans included $4.2 billion and $2.0 billion of commercial real
estate loans related to community and private banking activities conducted in
the U.S. and outside the U.S., respectively, by Global Consumer businesses. At
March 31, 1994, the U.S. portfolios included $398 million of loans on which the
accrual of interest had been suspended, primarily in California and New York.
The commercial real estate portfolio outside the U.S. included $81 million of
loans on which the accrual of interest had been suspended, primarily in Europe.
Consumer loans delinquent 90 days or more on which interest continued to be
accrued were $738 million at March 31, 1994, compared with $802 million at
December 31, 1993. The majority of these loans, which include U.S. credit card
receivables and personal loans in Germany, are automatically written off upon
reaching a stipulated number of days past due. Consumer OREO totaled $1,247
million at March 31, 1994 and $1,212 million at December 31, 1993.
While the U.S. economy is improving, economic conditions in Europe remain weak.
Credit costs, delinquencies, loans on which the accrual of interest is
suspended, and OREO could remain at relatively high levels in these regions 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. Where interest or principal is past
due for 90 days or more, the loan is placed on a cash basis except where the
loan is well secured and in the process of collection. Any interest accrued on
a loan placed on cash basis is reversed and charged against current earnings.
Interest on cash-basis loans is thereafter included in earnings only to the
extent actually received in cash. Where there is doubt regarding the ultimate
collectibility of the loan principal, cash receipts, whether designated as
principal or interest, are thereafter applied to reduce the recorded investment
in the loan. Cash-basis loans are returned to accrual status when all
contractual principal and interest amounts are reasonably assured of repayment
and there is a sustained period of repayment performance in accordance with the
contractual terms. Renegotiated loans are those loans where a concession has
been granted as a result of the borrower's inability to meet the original terms.
CASH-BASIS AND RENEGOTIATED COMMERCIAL LOANS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
(In Millions of Dollars) 1994 1993 1993 1993 1993
------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
CASH-BASIS LOANS:
North America Commercial Real Estate.......... $1,654 $1,719 $2,138 $2,474 $2,593
Global Finance................................ 699 755 1,063 1,346 1,267
------ ------ ------ ------ ------
Total....................................... $2,353 $2,474 $3,201 $3,820 $3,860
Cross-Border Refinancing (A).................. 991 1,041 1,068 1,082 1,242
------ ------ ------ ------ ------
TOTAL CASH-BASIS COMMERCIAL LOANS............. $3,344 $3,515 $4,269 $4,902 $5,102
====== ====== ====== ====== ======
RENEGOTIATED LOANS (B)........................ $ 384 $ 708 $ 377 $ 147 $ 136
====== ====== ====== ====== ======
</TABLE>
(A) Represents cross-border cash-basis loans and also includes cash-basis bank
placements in Brazil of $467 million at March 31, 1994, and December 31,
1993, $468 million at September 30 and June 30, 1993; and $543 million at
March 31, 1993.
(B) Not included in these amounts are holdings of Brady Bonds issued by the
governments of Nigeria and the Philippines. The principal on these bonds are
secured by zero coupon U.S. Treasury securities which will have a value at
maturity equal to the face amount of the bonds. Refer to footnote D on page
50 for a further discussion.
- --------------------------------------------------------------------------------
Total cash-basis commercial loans were $3.3 billion at March 31, 1994, down $0.2
billion from year-end 1993 and down $1.8 billion from $5.1 billion a year ago.
Cash-basis loans in the cross-border refinancing portfolio of $1.0 billion at
March 31, 1994, declined $50 million from the prior quarter and $251 million
from the comparable period in 1993. The decrease from a year ago was primarily
due to country write-offs in Brazil.
Commercial cash-basis loans, excluding those in the cross-border refinancing
portfolio, were $2.4 billion at March 31, 1994, down from $2.5 billion at
December 31, 1993 and $3.9 billion a year ago. Global Finance cash-basis loans
were $0.7 billion at March 31, 1994, down $0.1 billion from the prior quarter
and $0.6 billion from a year ago principally reflecting repayments. The North
America Commercial Real Estate portfolio, including cash-basis loans, is
discussed on page 15.
The net decrease in cash-basis loans in the quarter, excluding those in the
cross-border refinancing portfolio, resulted primarily from payments and returns
to accrual of $0.3 billion and also reflected write-offs and transfers to OREO
(principally in the North America Commercial Real Estate portfolio) of $0.1
billion. These were partially offset by additional loans placed on cash basis of
$0.3 billion, flat to the fourth quarter of 1993 and down from $0.5 billion in
the year-ago quarter. The North America Commercial Real Estate portfolio
accounted for $0.2 billion of the new cash-basis loans in the quarter. A table
of activity in cash-basis loans in that portfolio is presented on page 16.
Renegotiated loans declined $324 million in the quarter primarily due to the
transfer of certain loans to full performing status in the North America
Commercial Real Estate portfolio.
The amount of new loans placed on a cash basis have declined from the levels
experienced in 1993. However, the slow economy in certain markets is expected
to result in new cash-basis loans, particularly in the North America Commercial
Real Estate portfolio, remaining at relatively high levels. A table of
Citicorp's commercial and consumer cash-basis, renegotiated and past due loans
is presented on page 50.
13
<PAGE>
- --------------------------------------------------------------------------------
CASH-BASIS COMMERCIAL LOAN ACTIVITY (A)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Billions of Dollars) 1994 1993 1993 1993 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Beginning Balance......... $ 2.5 $ 3.2 $ 3.8 $ 3.9 $ 4.1
New Cash-Basis Loans...... 0.3 0.3 0.4 0.6 0.5
Payments/Loans Returned
to Accrual Status........ (0.3) (0.8) (0.7) (0.4) (0.2)
Gross Write-offs (B)...... (0.1) (0.1) (0.2) (0.2) (0.1)
Transfers to OREO......... - (0.1) (0.1) (0.1) (0.4)
----- ----- ----- ----- -----
Ending Balance............ $ 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.
- --------------------------------------------------------------------------------
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>
Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
(In Billions of Dollars) 1994 1993 1993 1993 1993
------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Loans (A).................... $ 5.7 $ 5.8 $ 6.5 $ 6.6 $ 7.0
Renegotiated Loans........... 0.3 0.6 0.3 0.1 0.1
Cash-Basis Loans............. 1.7 1.7 2.1 2.5 2.6
----- ----- ----- ----- -----
Total Loans $ 7.7 $ 8.1 $ 8.9 $ 9.2 $ 9.7
OREO (B)..................... 2.1 2.3 2.6 2.8 3.0
----- ----- ----- ----- -----
Total Loans and OREO........ $ 9.8 $10.4 $11.5 $12.0 $12.7
===== ===== ===== ----- -----
Unfunded Commitments......... $ 0.8 $ 0.8 $ 0.9 $ 1.1 $ 1.2
Letters of Credit............ 1.7 1.9 1.9 2.0 2.1
Other........................ 0.4 0.5 0.4 0.5 0.5
----- ----- ----- ----- -----
TOTAL EXPOSURE............... $12.7 $13.6 $14.7 $15.6 $16.5
===== ===== ===== ===== =====
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Millions of Dollars) 1994 1993 1993 1993 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Write-offs (C)........... $68 $78 $49 $136 $168
Net OREO Write-downs......... 36 27 73 65 92
</TABLE>
(A) Excludes renegotiated and cash-basis loans.
(B) Includes in-substance foreclosures of $1.1 billion at March 31, 1994, $1.3
billion at December 31, 1993, $1.4 billion at September 30, 1993; $1.6
billion at June 30, 1993 and $1.7 billion at March 31, 1993.
(C) Includes net write-offs of real estate-related loans of $24 million in the
second quarter of 1993.
- --------------------------------------------------------------------------------
Total North America Commercial Real Estate exposure of $12.7 billion at March
31, 1994 was down $3.8 billion or 23% from the first quarter of 1993 and has
declined over 50% from the $26.5 billion of peak exposure in 1989. Citicorp
continues to actively reduce its exposure through a series of initiatives which
have resulted in paydowns and write-offs and write-downs. In addition,
approximately $60 million and $125 million of assets were sold during the first
quarter of 1994 and 1993, respectively.
Citicorp's strategy for the North America Commercial Real Estate portfolio is
one of active remedial management to maximize the long term value and
recoverability of the assets. The principal focus continues to be the
restructuring and repayment of existing loans together with managing and
optimizing returns on OREO assets. Citicorp's real estate professionals develop
remedial management strategies for each loan or OREO property which are
constantly monitored and adjusted as conditions change through an extensive,
ongoing portfolio management process.
Cash-basis loans were $1.7 billion at March 31, 1994 and December 31, 1993, down
from $2.6 billion a year ago, while OREO declined to $2.1 billion from $2.3
billion at year-end 1993 and $3.0 billion a year ago. Approximately $0.9
billion of the $1.7 billion of cash-basis loans at quarter end were
contractually past due less than 90 days as to interest and principal (including
$0.3 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, cash receipts on average cash-basis loans and OREO in the first quarter
of 1994 were in excess of $40 million.
15
<PAGE>
- --------------------------------------------------------------------------------
CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1st Qtr. 1994
-----------------------
Average Cash Annualized Cash
(In Millions of Dollars) Carrying Value Flows Yield (%)
-------------- ----- ---------------
<S> <C> <C> <C>
Cash-Basis Loans (A):
Yields Over 3%................. $ 999 $ 17 6.9%
Yields Under 3%................ 251 1 1.4%
No Payments Received........... 438 - -
------ ----
Total.......................... $1,688 $ 18 4.3%
------ ----
In-Substance Foreclosures (A):
Yields Over 3%................. $ 539 $ 13 10.2%
Yields Under 3%................ 87 1 1.4%
No Payments Received........... 558 - -
------ ----
Total.......................... $1,184 $ 14 4.8%
------ ----
OREO: (B)........................ $1,039
Revenues....................... 43 16.9%
Expenses....................... (32) (12.7%)
----
Net............................ 11 4.2%
------ ----
Total Cash-Basis Loans and OREO.. $3,911 $ 43 4.4%
====== ====
</TABLE>
(A) Cash flows represent cash interest payments received of which $17 million
were applied as a reduction of principal ($11 million for cash-basis loans
and $6 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>
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Millions of Dollars) 1994 1993 1993 1993 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Beginning Balance................. $1,719 $2,138 $2,474 $2,593 $2,734
New Cash-Basis Loans.............. 202 199 241 336 403
Write-offs (A).................... (61) (80) (71) (115) (99)
Loans Returned to Accrual Status.. (30) (340) (222) (170) (6)
Payments and Other................ (138) (90) (190) (125) (36)
Transfers to OREO................. (38) (108) (94) (45) (403)
------ ------ ------ ------ ------
Ending Balance.................... $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.
- --------------------------------------------------------------------------------
The level of new cash-basis loans as well as transfers to OREO have declined
from those experienced in 1993. Payments and loans returned to accrual status
reflect the result of ongoing workout initiatives.
Renegotiated loans were $325 million at March 31, 1994, down from $589 million
at year-end 1993 as a result of transfers of loans which carry a market rate of
interest to full performing status. The annualized interest rate on the
remaining loans, the majority of which are expected to remain in the
renegotiated portfolio, approximated 5.4%. The level of renegotiated loans may
increase during 1994 as a result of ongoing restructuring activities.
16
<PAGE>
- --------------------------------------------------------------------------------
NORTH AMERICA COMMERCIAL REAL ESTATE OREO ACTIVITY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Millions of Dollars) 1994 1993 1993 1993 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Beginning Balance.............. $2,332 $2,547 $2,825 $3,032 $2,898
New OREO....................... 45 113 94 57 403
Write-downs (A)................ (49) (38) (75) (93) (133)
Sales, Paydowns and Other (B).. (198) (290) (297) (171) (136)
------ ------ ------ ------ ------
Ending Balance................. $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 $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 property to which Citicorp has taken title
as well as in-substance foreclosures ($1,086 million at March 31, 1994) where
Citicorp does not have ownership of the property and foreclosure has not
occurred. During the first quarter of 1994, Citicorp sold OREO properties
totaling approximately $60 million.
Unfunded commitments of $0.8 billion at March 31, 1994, were down $0.4 billion
from a year ago. These commitments are concentrated in the office (37%) and
residential (26%) markets. Office commitments represent obligations to fund
property stabilization and lease-up costs, with less than 1% for construction of
office buildings. Residential commitments represent aggregate commitments to
fund construction costs over the life of the various projects. Generally, pre-
determined contractual criteria have limited maximum outstanding loans at any
one time to amounts substantially less than the aggregate obligation. At March
31, 1994, $0.3 billion of commitments related to borrowers experiencing
financial difficulties.
Citicorp also provides standby letters of credit, the majority of which back
stop tax-exempt multi-family housing bonds secured by residential properties.
Approximately $0.6 billion of the $1.7 billion of outstanding letters of credit
at March 31, 1994 related to projects where debt service is continuing but the
loan to value ratios have deteriorated below target levels and/or letter of
credit fees are not being paid.
The North America Real Estate Portfolio is diversified by both project type and
location with exposures in the office, residential and retail sectors comprising
37%, 21% and 20%, respectively. Geographically, the largest regions are the
West (including California) at 31% and Mid-Atlantic (including New York) at 18%
at March 31, 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 which are collateralized by (or for which the source of repayment is
from) properties in multiple locations are categorized geographically in "Multi-
location and Other".
17
<PAGE>
- --------------------------------------------------------------------------------
NORTH AMERICA COMMERCIAL REAL ESTATE PORTFOLIO BY PROJECT BY REGION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAR. 31, 1994 Dec. 31, 1993
(In Millions of Dollars) Office Residential Retail Hotel Land Ind'l. Other(A) TOTAL Total
------ ----------- ------ ----- ----- ------ -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NEW YORK Loans $ 254 $ 75 $ 64 $ 1 $ 33 $ - $ 30 $ 457 $ 452
Cash-Basis Loans 78 3 31 10 - - 11 133 141
OREO 229 72 - 29 - - - 330 301
Letters of Credit
and Other 128 110 7 - - - 33 278 301
TOTAL EXPOSURE 689 260 102 40 33 - 74 1,198 1,195
------ ------ ------ ---- ---- ---- ------ ------- -------
OTHER MID-
ATLANTIC Loans 192 167 211 29 11 5 24 639 697
Cash-Basis Loans 68 6 2 20 39 - 2 137 132
OREO 138 9 3 40 14 4 1 209 218
Letters of Credit
and Other 6 14 114 1 3 - 11 149 160
TOTAL EXPOSURE 404 196 330 90 67 9 38 1,134 1,207
------ ------ ------ ---- ---- ---- ------ ------- -------
MIDWEST Loans 705 15 337 88 1 57 15 1,218 1,214
Cash-Basis Loans 128 9 - 46 6 - - 189 256
OREO 181 37 20 12 6 5 - 261 239
Letters of Credit
and Other 76 138 6 - - 9 4 233 280
TOTAL EXPOSURE 1,090 199 363 146 13 71 19 1,901 1,989
------ ------ ------ ---- ---- ---- ------ ------- -------
NEW
ENGLAND Loans 147 2 26 19 - - 5 199 177
Cash-Basis Loans 16 - 14 - - 19 - 49 50
OREO 78 15 - - 43 1 - 137 132
Letters of Credit
and Other 31 - 12 - - - 1 44 39
TOTAL EXPOSURE 272 17 52 19 43 20 6 429 398
------ ------ ------ ---- ---- ---- ------ ------- -------
SOUTHEAST Loans 219 137 151 69 3 3 141 723 751
Cash-Basis Loans - 41 46 15 4 8 - 114 96
OREO 217 126 74 5 15 4 5 446 491
Letters of Credit
and Other 93 166 9 - 2 8 52 330 532
TOTAL EXPOSURE 529 470 280 89 24 23 198 1,613 1,870
------ ------ ------ ---- ---- ---- ------ ------- -------
SOUTHWEST Loans 341 1 95 23 1 - 5 466 481
Cash-Basis Loans 10 - 5 25 - 13 15 68 79
OREO 10 - 30 2 11 - 1 54 95
Letters of Credit
and Other 15 1 - 3 - 1 6 26 25
TOTAL EXPOSURE 376 2 130 53 12 14 27 614 680
------ ------ ------ ---- ---- ---- ------ ------- -------
CALIFORNIA Loans 266 225 290 227 27 67 29 1,131 1,246
Cash-Basis Loans 191 131 71 11 6 58 16 484 487
OREO 159 58 114 16 4 39 10 400 446
Letters of Credit
and Other 122 702 16 10 - 2 94 946 967
TOTAL EXPOSURE 738 1,116 491 264 37 166 149 2,961 3,146
------ ------ ------ ---- ---- ---- ------ ------- -------
OTHER WEST Loans 260 48 215 127 - 2 1 653 685
Cash-Basis Loans 31 - - 9 6 - 2 48 72
OREO 47 - 10 - 9 18 - 84 173
Letters of Credit
and Other 13 107 16 - - 6 17 159 194
TOTAL EXPOSURE 351 155 241 136 15 26 20 944 1,124
------ ------ ------ ---- ---- ---- ------ ------- -------
CANADA Loans 68 6 137 6 3 - 7 227 272
Cash-Basis Loans 101 6 148 - 16 6 7 284 293
OREO 50 39 39 - 12 2 3 145 171
Letters of Credit
and Other 37 3 33 - 8 - 107 188 217
TOTAL EXPOSURE 256 54 357 6 39 8 124 844 953
------ ------ ------ ---- ---- ---- ------ ------- -------
MULTI-LOCATION
AND OTHER Loans - 40 52 31 - - 220 343 416
Cash-Basis Loans - - 32 - - 3 113 148 113
OREO 19 - - - - 20 25 64 66
Letters of Credit
and Other 13 191 50 - - 1 225 480 395
TOTAL EXPOSURE 32 231 134 31 - 24 583 1,035 990
------ ------ ------ ---- ---- ---- ------ ------- -------
TOTALS -
MARCH 31,
1994
LOANS(B)(C) $2,452 $ 716 $1,578 $620 $ 79 $134 $ 477 $ 6,056
CASH-BASIS LOANS(B) 623 196 349 136 77 107 166 1,654
OREO 1,128 356 290 104 114 93 45 2,130
LETTERS OF CREDIT
AND OTHER 534 1,432 263 14 13 27 550 2,833
TOTAL EXPOSURE 4,737 2,700 2,480 874 283 361 1,238 12,673
------ ------ ------ ---- ---- ---- ------ ------- -------
Totals -
December 31,
1993
Loans(B)(C) $2,464 $ 798 $1,789 $631 $ 83 $162 $ 464 $ 6,391
Cash-Basis Loans(B) 732 212 296 142 81 85 171 1,719
OREO 1,180 408 364 107 123 105 45 2,332
Letters of Credit
and Other 617 1,664 299 17 14 30 469 3,110
Total Exposure 4,993 3,082 2,748 897 301 382 1,149 13,552
</TABLE>
(A) Includes working capital and multi-project loans.
(B) Includes real estate-related loans of $0.2 billion in 1994 and 1993, of
which $92 million in 1994 and $96 million in 1993 were on a cash basis.
Also includes bankers acceptances (included in customers' acceptance
liability) of $25 million in 1994 (all of which were on a cash basis) and
$50 million in 1993.
(C) Loans include $325 million and $589 million of renegotiated loans in 1994
and 1993, respectively, and exclude cash-basis loans.
18
<PAGE>
- --------------------------------------------------------------------------------
NET WRITE-OFFS AND NET OREO WRITE-DOWNS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1st Qtr. 1st Qtr.
(In Millions of Dollars) 1994 1993
-------- --------
Net OREO
By Region: Net Write-Offs Write-Downs Total Total
-------------- ----------- -------- --------
<S> <C> <C> <C> <C>
New York.................. $15 $ - $ 15 $ 3
Other Mid-Atlantic........ (1) 1 - 4
Midwest................... - 2 2 19
New England............... - - - 8
Southeast................. 9 (2) 7 69
Southwest................. - (3) (3) 8
California................ 13 32 45 95
Other West................ - 5 5 11
Canada.................... 23 1 24 40
Multi-location/Other...... 9 - 9 3
--- --- ---- ----
Total.................... $68 $36 $104 $260
=== === ==== ====
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net OREO
By Project Type: Net Write-Offs Write-Downs Total Total
-------------- ----------- -------- --------
<S> <C> <C> <C> <C>
Office.................... $35 $15 $ 50 $167
Residential............... 11 4 15 31
Retail.................... 16 14 30 40
Hotel..................... 2 1 3 1
Land...................... - 1 1 5
Industrial................ 4 - 4 3
Other..................... - 1 1 13
--- --- ---- ----
Total.................... $68 $36 $104 $260
=== === ==== ====
</TABLE>
- --------------------------------------------------------------------------------
Net write-offs aggregated $68 million in the first quarter of 1994, down from
$168 million in the prior year's first quarter. Net OREO write-downs totaled
$36 million in the quarter, compared with $92 million in the first quarter of
1993.
While cash-basis loans and OREO levels have declined, they are expected to
remain at relatively high levels. Although there is improvement and increasing
liquidity in certain commercial real estate markets, weak market conditions,
particularly in California and Canada, and also in the office sector are
expected to continue to adversely affect the portfolio. As a result, credit
provisions (including net write-offs), net OREO write-downs and inflows to cash-
basis loans could remain at moderately high levels in 1994, although down from
the prior year.
OTHER
Citicorp's Global Finance businesses include $1.9 billion of commercial real
estate loans in addition to those managed by Citicorp's U.S. and Canadian
commercial real estate divisions. Substantially all of these loans are in
offices outside of North America.
Cash-basis commercial real estate loans in this portfolio were $48 million at
March 31, 1994 compared with $87 million and $61 million at December 31 and
March 31, 1993, respectively, while net recoveries totaled $1 million compared
with net write-offs of $1 million in the same period a year ago. Commercial
OREO in this portfolio was $0.5 billion at March 31, 1994, unchanged from year-
end 1993 and down from $0.7 billion in the year-ago quarter.
19
<PAGE>
REFINANCING PORTFOLIO
- --------------------------------------------------------------------------------
The refinancing portfolio includes cross-border outstandings to countries that
are currently in the process of refinancing their external debt or have recently
completed such refinancings. Refinancing activities are discussed in Citicorp's
1993 Annual Report and Form 10-K.
- --------------------------------------------------------------------------------
CROSS-BORDER CLAIMS ON THIRD PARTIES IN THE REFINANCING PORTFOLIO (A)(B)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Mar. 31 Dec. 31 Mar. 31
(In Billions of Dollars) 1994 1993 1993
------- ------- -------
<S> <C> <C> <C>
Medium- and Long-Term (C) (D).. $3.1 $2.9 $3.2
Trade and Short-Term........... 3.0 2.7 2.5
</TABLE>
(A) In addition to the cross-border claims on third parties shown in the table
above, cross-border outstandings at March 31, 1994 included investments in
and funding of local Citicorp franchises totaling $1.6 billion, and equity
investments obtained in debt-for-equity swaps totaling $0.2 billion.
(B) Cross-border commitments amounted to $0.2 billion each in Brazil and the
Philippines and $0.1 billion in Argentina at March 31, 1994. Commitments
were not material in any other refinancing country.
(C) Not included in medium- and long-term claims are holdings of Brady Bonds
issued by the governments of Nigeria and the Philippines. The principal on
these bonds are secured by zero coupon U.S. Treasury securities which will
have a value at maturity equal to the face amount of the bonds. Refer to
footnote D on page 50 for an additional discussion.
(D) Medium- and long-term claims at March 31, 1994 included $467 million of bank
placements in Brazil.
- --------------------------------------------------------------------------------
The $3.1 billion of medium- and long-term claims in the refinancing portfolio at
March 31, 1994 reflected $1.4 billion of Brady Bonds classified as Securities,
including $0.6 billion in Venezuela, $0.3 billion in the Philippines, $0.3
billion in Uruguay, and $0.2 billion in Brazil. In addition, the portfolio
included $1.7 billion of medium- and long-term loans and placements, principally
$0.9 billion in Brazil and $0.5 billion in South Africa. The amount of
Citicorp's refinancing portfolio outstandings on a cash basis was $1.0 billion,
primarily in Brazil ($0.8 billion).
The $3.0 billion of trade and short-term obligations at March 31, 1994 included
$1.6 billion in Argentina (including assets of $1.0 billion supported by local
U.S. dollar deposits), $1.0 billion in Brazil and $0.4 billion in other
refinancing countries.
The cross-border refinancing portfolio portion of the allowance for credit
losses was unchanged during the quarter at $238 million.
BRAZIL
As of March 31, 1994, Citicorp continued to carry substantially all of its $0.9
billion of medium- and long-term Brazilian loans and placements on a cash basis.
During the first quarter of 1994, Brazil continued paying 50% of all interest
amounts due on the par value of medium- and long-term public sector
outstandings. For the quarter, contractual interest due on Citicorp's medium-
and long-term outstandings to Brazil was $16 million, of which Citicorp has
collected $15 million and recognized $10 million in interest income, with $5
million recorded as a recovery of country write-offs previously taken. In
addition, Citicorp has recorded as income $4 million related to prior-year
contractual interest. Also included was a scheduled coupon payment on 1989-90
Past Due Interest Bonds of $10 million which was recognized as interest income
and a 1% principal amortization payment which was included in other revenue.
On April 15, 1994 the Government of Brazil completed its external-debt financing
package covering essentially all of its medium- and long-term commercial-bank
debt. Citicorp exchanged approximately $2.7 billion in face value of Brazilian
debt for $1.3 billion of Debt Conversion Bonds ("DCB"), $1.2 billion of Front
Loaded Interest Reduction Bonds ("FLIRB"), $122 million of New Money Bonds
("NMB") and $60 million of Investment Feature Cruzeiro Bonds ("IFCB"). In
addition, Citicorp purchased $221 million of NMBs and has received $274 million
of an expected total of approximately $325 million in bonds covering past due
interest.
The DCBs have an 18-year tenor, 10-year grace period and an interest rate of
LIBOR + 7/8%. The NMBs and the IFCBs have a 15-year tenor, 7-year grace period
and bear interest at LIBOR + 7/8%. The 15 year FLIRBs bear interest ranging
20
<PAGE>
from 4% to 5% with a 12 month rolling interest guarantee in the first six years
and uncollateralized at LIBOR + 13/16% thereafter.
Citicorp's share of the restructured amounts and terms thereof are as follows:
<TABLE>
<CAPTION>
WEIGHTED-AVERAGE WEIGHTED-AVERAGE
In Millions of Dollars INTEREST RATE YEAR OF MATURITY
---------------------- ----------------
FACE BOOK
VALUE VALUE BEFORE (A) AFTER BEFORE AFTER
------ ----- ------ ---------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
DCB $1,211 $363 4.0% 0.875% 2003 2008
Over LIBOR
DCB 124 37 4.0% 0.875% 1996 2008
Over LIBOR
NMB 122 37 4.0% 0.875% 1997 2005
Over LIBOR
FLIRB 1,211 363 4.0% 0.8125% 2003 2006
Over LIBOR(B)
IFCB 60 18 4.0% 0.875% 1996 2005
------ ---- Over LIBOR
$2,728 $818
</TABLE>
(A) 4% rate commenced in 1992; had been LIBOR + 13/16% prior to 1992.
(B) During the first 6 years, interest will be at fixed rates ranging from 4% to
5%.
- --------------------------------------------------------------------------------
Based upon secondary market quotations upon completion of the restructuring, the
fair value of securities received pursuant to the restructuring was
approximately $1.4 billion, with a corresponding book value of $1.0 billion (in
both cases including the new money bonds purchased). In addition, the fair value
of the expected total of interest bonds to be received under the restructuring
was approximately $182 million.
21
<PAGE>
- --------------------------------------------------------------------------------
CROSS-BORDER AND FOREIGN CURRENCY OUTSTANDINGS
COUNTRIES WITH OUTSTANDINGS EXCEEDING 1% OF TOTAL ASSETS (A)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Investments
Cross- in and
Border Funding of Total Outstandings
Claims Local -------------------------
on Third Citicorp Equity Mar. 31 Dec. 31 Dec. 31
(In Billions of Dollars) Parties Franchises Invest. 1994 1993 1992
-------- ----------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
United Kingdom.......... $4.2 $3.1 $ - $7.3 $7.7 $6.2
Mexico.................. 2.7 0.9 - 3.6 3.9 3.4
Brazil.................. 2.1 0.5 .1 2.7 2.4 2.2
Japan................... 1.8 0.4 - 2.2 2.8 2.7
Canada.................. 1.0 1.0 - 2.0 2.1 2.8
</TABLE>
(A) Outstandings (including loans and other monetary assets) are presented on a
regulatory basis and have been adjusted for external guarantees and
collateral. Cross-border commitments amounted to $4.8 billion in the United
Kingdom, $0.2 billion in Brazil, $1.9 billion in Japan, and $0.9 billion in
Canada at March 31, 1994. Commitments were not material in Mexico. At
March 31, 1994, cross-border and foreign currency outstandings in Japan,
Argentina ($2.2 billion), Germany ($2.2 billion), and Canada were between
.75% and 1.0% of total assets. At December 31, 1993, the only such
countries were Canada, Germany ($2.1 billion) and Argentina ($2.0 billion).
At December 31, 1992, the only such countries were Germany ($2.1 billion)
and Argentina ($1.7 billion).
- --------------------------------------------------------------------------------
22
<PAGE>
CAPITAL, PRICE RISK, LIQUIDITY, DERIVATIVE AND FOREIGN EXCHANGE ACTIVITIES
- --------------------------------------------------------------------------------
CAPITAL
Citicorp is subject to risk-based capital guidelines issued by the Federal
Reserve Board which were detailed in the 1993 Annual Report and Form 10-K. The
risk-based capital guidelines require a minimum ratio of Tier 1 capital to risk-
adjusted assets of 4.0% and a minimum ratio of combined Tier 1 and Tier 2
capital to risk-adjusted assets of 8.0%.
The risk-based capital guidelines are supplemented by a leverage ratio
requirement. This requirement establishes a minimum leverage ratio of 3.0% for
the highest rated banking organizations. Other banking organizations are
expected to have ratios of at least 4.0-5.0% depending on their particular
growth plans and conditions (including diversification of risk, asset quality,
earnings, and liquidity). The ratio is defined as Tier 1 capital divided by
adjusted average assets. Citicorp has not been advised by the Federal Reserve
Board of a specific applicable minimum leverage ratio.
Common stockholders' equity increased $796 million during the quarter to $10.9
billion at March 31, 1994, due principally to net income of $553 million and the
inclusion of $227 million of net unrealized gains on securities available for
sale pursuant to the adoption of SFAS No. 115 (see page 38 for Adoption of New
Accounting Standards). Tier 1 capital at quarter-end was $14.0 billion, up from
$13.4 billion at year-end 1993. Tier 1 capital excludes the net unrealized
gains on securities available for sale since related risk-based capital
guidelines have not been adopted by the regulatory agencies. Total capital of
$23.5 billion at March 31, 1994 was up from $23.2 billion at year-end 1993 and
$21.0 billion at the end of the 1993 first quarter.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Minimum Mar. 31 Dec. 31 Mar. 31
Citicorp Ratios Required 1994 1993 1993
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Common Stockholders' Equity (A).. 4.51% 4.65% 3.98%
Tier 1 Capital................... 4.00% 6.86 6.62 5.23
Tier 1 & Tier 2 Capital.......... 8.00 11.55 11.45 10.01
Leverage (A)..................... 3.00+ 5.95 6.15 5.17
</TABLE>
(A) The increase in total assets resulting from the adoption of FASB
Interpretation No. 39 had the effect of reducing the Common Stockholders'
Equity and Leverage Ratios as of March 31, 1994 by 29 bp and 38 bp,
respectively. See page 38.
- --------------------------------------------------------------------------------
23
<PAGE>
- --------------------------------------------------------------------------------
COMPONENTS OF RISK-BASED CAPITAL UNDER REGULATORY GUIDELINES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Mar. 31 Dec. 31 Mar. 31
(In Millions of Dollars) 1994 1993 1993
-------- -------- --------
<S> <C> <C> <C>
TIER 1 CAPITAL
Common Equity.................................. $ 10,862 $ 10,066 $ 8,651
Qualifying Preferred Stock (A)................. 3,887 3,887 2,904
Minority Interest.............................. 50 59 61
Less:
Net Unrealized Gains - Securities Available
for Sale (B)................................. (227) - -
Intangible Assets (C)........................ (371) (387) (419)
50% Investment in Certain Subsidiaries (D)... (247) (237) (254)
-------- -------- --------
Total Tier 1 Capital........................... $ 13,954 $ 13,388 $ 10,943
-------- -------- --------
TIER 2 CAPITAL
Allowance for Credit Losses (E)................ $ 2,566 $ 2,551 $ 2,636
Preferred Stock (A)............................ 16 16 341
Qualifying Debt (F)............................ 7,190 7,434 7,288
Less:
50% Investment in Certain Subsidiaries (D)... (246) (237) (253)
-------- -------- --------
Total Tier 2 Capital........................... $ 9,526 $ 9,764 $ 10,012
Total Qualifying Capital....................... $ 23,480 $ 23,152 $ 20,955
======== ======== ========
Net Risk-Adjusted Assets (G)................... $203,337 $202,273 $209,428
======== ======== ========
</TABLE>
(A) Cumulative preferred stock is limited within Tier 1 capital to 25% of the
sum of Common Equity, Qualifying Preferred Stock and Minority Interest. At
March 31, 1993, excess cumulative preferred stock of $308 million, which
would otherwise qualify as Tier 1 capital, was included in Tier 2 capital.
(B) Tier 1 capital excludes the net unrealized gains on securities available for
sale since related risk-based capital guidelines have not been adopted by
the regulatory agencies.
(C) Includes goodwill and certain other identifiable intangible assets.
(D) Primarily Citicorp Securities, Inc.
(E) Includable up to 1.25% of risk-adjusted assets. Any excess allowance is
deducted from risk-adjusted assets.
(F) Includes qualifying senior and subordinated debt, in an amount not exceeding
50% of Tier 1 capital, plus subordinated capital notes, subject to certain
limitations.
(G) Risk-adjusted assets include certain off-balance sheet activities and
commitments such as foreign exchange and derivative products and letters of
credit and also reflect deductions for intangible assets and any excess
allowance for credit losses. See page 28 for further discussion of
Derivative and Foreign Exchange Activities.
24
<PAGE>
Citicorp's subsidiary depository institutions are subject to the risk-based
capital guidelines issued by their respective primary federal bank regulatory
agencies. In addition, as discussed in Citicorp's 1993 Annual Report and Form
10-K, pursuant to the Federal Deposit Insurance Corporation Improvement Act of
1991 ("FDICIA"), federal bank regulatory agencies have defined five capital
tiers for depository institutions for purposes of implementing certain
regulations. Under these definitions, a "well capitalized" depository
institution must have a Tier 1 ratio of at least 6%, a combined Tier 1 and Tier
2 ratio of at least 10% and a leverage ratio of at least 5% and not be subject
to a directive, order or written agreement to meet and maintain specific capital
levels. An "adequately capitalized" depository institution must have a Tier 1
ratio of at least 4%, a combined Tier 1 and Tier 2 ratio of at least 8% and a
leverage ratio of at least 4%, or 3% in some cases. In addition, under the
regulations, the regulators can downgrade the capital status of a depository
institution under certain circumstances. As of March 31, 1994, all of
Citicorp's subsidiary depository institutions meet the applicable "well
capitalized" standards.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Minimum Mar. 31 Dec. 31 Mar. 31
Citibank, N.A. Ratios Required 1994 1993 1993
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Common Stockholders' Equity (A).. 6.08% 6.59% 5.93%
Tier 1 Capital................... 4.00% 6.94 6.93 5.96
Tier 1 & Tier 2 Capital.......... 8.00 11.06 11.13 9.41
Leverage (A)..................... 3.00+ 5.71 6.06 5.63
</TABLE>
(A) The increase in total assets resulting from the adoption of FASB
Interpretation No. 39 had the effect of reducing the Common Stockholders'
Equity and Leverage Ratios as of March 31, 1994 by 51 bp and 42 bp,
respectively. See page 38.
- --------------------------------------------------------------------------------
The Federal Reserve Board and the Office of the Comptroller of the Currency
("OCC") proposed amendments to their capital adequacy guidelines which would
establish a limitation on the amount of deferred tax assets that may be included
in the Tier 1 capital calculation for risk-based and leverage capital purposes.
These proposals would limit capital recognition of deferred tax assets whose
realization is dependent on future taxable income to the lesser of (a) an amount
that is expected to be realized within one year based upon a projection of
future taxable income (exclusive of tax carryforwards and reversals of existing
temporary differences) for that year, including the effect of tax-planning
strategies that are expected to be implemented during that year, and (b) ten
percent of Tier 1 capital before certain adjustments. The OCC has recently
issued temporary guidance for the capital recognition of deferred tax assets by
national banks which could have the effect of imposing stricter limits on such
recognition than those proposed by the Federal Reserve Board. The stricter
limits would become effective when the capital adequacy amendments are
finalized, and in the interim the OCC has indicated that it will not object to
other reasonable interpretations. Although the federal bank regulatory
authorities have not issued final rules, Citicorp believes that its deferred tax
assets as recognized under SFAS No. 109 will meet the criteria for capital
recognition finally set by the bank regulators and has therefore included such
deferred tax assets in the calculation of its capital ratios and the capital
ratios of its subsidiaries. However, there can be no assurance until final
amendments are adopted by the bank regulators.
In April 1993, The Basle Committee on Banking Supervision, with the agreement of
the central bank governors of the Group of Ten countries, including the Federal
Reserve, issued a three-part package of consultative papers which deal with the
supervisory treatment of netting arrangements, market risk and interest rate
risk in evaluating the capital adequacy of banking organizations. U.S.
regulatory agencies have proposed modifications to their risk-based capital
guidelines for netting, market risk and interest rate risk. In addition, from
time to time, the Federal Reserve and the Federal Financial Institutions
Examination Council propose amendments to or issue interpretations of risk-based
capital guidelines and reporting instructions. Certain of the federal
regulators have issued an announcement with respect to a proposal to issue a
notice of proposed rulemaking and an advanced notice of proposed rulemaking
relating to sales of assets, including the capital treatment of recourse
arrangements and direct credit substitutes. Such proposals or interpretations
could, if implemented, in the future, affect reported capital ratios and net
risk-adjusted assets.
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.
25
<PAGE>
Citicorp uses a risk management system that accommodates the diversity of
balance sheet and derivative product exposures and exposure management systems
of its various businesses to provide a meaningful measure of aggregate risk.
For example, trading portfolios are subject to a well-defined series of exposure
limits that trigger specific management action to ensure that the potential
earnings impact is controlled within acceptable limits. For non-trading
portfolios, earnings at risk (EAR) measures the potential earnings impact on the
interest earning portfolio of a specified shift in the yield curve. Limits are
set for EAR on a business group, country and total Citicorp basis, with
exposures reviewed monthly in relation to such limits and to the current
interest rate environment.
The potential EAR effect of market rate movements is managed by modifying the
asset and liability mix, either directly or through the use of derivative
financial products. These include interest rate swaps and other derivatives
that are designated and effective as hedges, as well as swaps that are
designated and effective in modifying the interest rate characteristics of
specified assets or liabilities. See page 28 for additional discussion of
Derivative and Foreign Exchange Activities.
26
<PAGE>
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 March 31, 1994 were $153.0 billion,
or 63% of total funding, compared with $145.1 billion, or 67% of total funding
at December 31, 1993 and $144.1 billion, or 66% of total funding at March 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 39% of total liabilities and equity.
- --------------------------------------------------------------------------------
TOTAL DEPOSITS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
March 31, 1994 December 31, 1993 March 31, 1993(A)
----------------------- ----------------------- -----------------------
Outside Outside Outside
(In Billions of Dollars) U.S. the U.S. Total U.S. the U.S. Total U.S. the U.S. Total
----- -------- ------ ----- -------- ------ ----- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Global Consumer (B)...... $42.5 $ 51.8 $ 94.3 $43.1 $48.9 $ 92.0 $43.7 $47.8 $ 91.5
Global Finance (C)....... 9.3 49.4 58.7 8.7 44.4 53.1 8.8 43.8 52.6
----- ------ ------ ----- ----- ------ ----- ----- ------
Total..................... $51.8 $101.2 $153.0 $51.8 $93.3 $145.1 $52.5 $91.6 $144.1
===== ====== ====== ===== ===== ====== ===== ===== ======
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
(B) Deposits accepted from consumers and small businesses, primarily through
branch relationships.
(C) Deposits accepted primarily from corporate customers.
- --------------------------------------------------------------------------------
Global Consumer deposits at March 31, 1994 were $94.3 billion compared with
$92.0 billion at year-end 1993 and $91.5 billion at March 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 slight decline in consumer
deposits in the U.S. reflects the effect of the relatively low U.S. interest
rate environment on customers' asset allocations during the past year.
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 March 31, 1994 (including subordinated capital notes)
amounted to $17.0 billion, down $1.1 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
quarter totaled $300 million, including $100 million 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 quarter, asset securitization activity totaled $3.7 billion, including $1.9
billion of U.S. mortgages and $1.8 billion of credit card receivables. As
securitized credit card receivables transactions amortize, newly originated
receivables are recorded on Citicorp's balance sheet and become available for
asset securitization. During the quarter, $1.0 billion of previously
securitized credit card receivables amortized and $4.7 billion are scheduled to
amortize during the remainder of 1994. Over time, the increase in
securitization activities has made the subsidiaries less reliant on Parent
Company funding.
27
<PAGE>
With the long-term growth in deposits and securitization, Citicorp's dependence
on short-term funding has remained low. At March 31, 1994, short-term funding
was $17.5 billion, or 7% of total funding compared with $16.8 billion, or 8% of
total funding, at year-end 1993.
Citicorp's overall liquidity strategy relies primarily on the asset
securitization and funding management programs set forth above. In addition,
businesses within Citicorp are subject to limits on their liquidity exposures.
Management also prepares a contingency funding plan which evaluates the ability
of Citicorp and its subsidiaries to withstand reduced access to funding markets
for extended periods.
Citicorp (Parent Company) is a legal entity separate and distinct from Citibank,
N.A. and its other subsidiaries and affiliates. There are various legal
limitations on the extent to which Citicorp's banking subsidiaries may extend
credit, pay dividends or otherwise supply funds to Citicorp. The approval of
the Office of the Comptroller of the Currency ("OCC") is required if total
dividends declared by a national bank in any calendar year exceed net profits
(as defined) for that year combined with its retained net profits for the
preceding two years. In addition, dividends for such a bank may not be paid in
excess of the bank's undivided profits after deducting statutory bad debts in
excess of that bank's allowance for credit losses. State-chartered bank
subsidiaries are subject to dividend limitations imposed by applicable state
law.
As of March 31, 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
$2.5 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 March 31, 1994, its
bank subsidiaries could have declared approximately $1.6 billion of the
available $2.5 billion in dividends.
Citicorp also receives dividends from its nonbank subsidiaries, including the
holding company which owns many of Citicorp's U.S. banks. These nonbank
subsidiaries are generally not subject to regulatory restrictions on their
payment of dividends except that the approval of the Office of Thrift
Supervision may be required if total dividends declared by a savings association
in any calendar year exceed amounts specified in that agency's regulations.
DERIVATIVE AND FOREIGN EXCHANGE ACTIVITIES
Derivative and foreign exchange products have become important risk management
tools for our customers and for Citicorp. 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 to manage their risk
profile, and also trades for Citicorp's own account. In addition, Citicorp
employs derivative and foreign exchange contracts among other instruments as an
end-user in connection with its risk management activities. Monitoring
procedures entail objective measurement systems, well-defined market and credit
risk limits at appropriate control levels, and timely reports to line and senior
management according to prescribed policies. Additional information concerning
Citicorp's derivative and foreign exchange activities is provided in the 1993
Annual Report and Form 10-K.
Notional principal amounts are frequently used as indicators of derivative and
foreign exchange activity, serving as a point of reference for calculating
payments. Notional principal amounts do not reflect balances subject to credit
or market risk, nor do they reflect the extent to which positions offset one
another. As a result, they do not represent the much smaller amounts that are
actually subject to risk in these transactions. Gross unrealized gains
represent 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 they do not represent actual or expected loss amounts.
The table on the following page presents the aggregate notional principal
amounts of Citicorp's outstanding derivative and foreign exchange contracts at
March 31, 1994 and December 31, 1993, along with the gross aggregate unrealized
gains. The table includes all contracts with third parties, including both
dealer and end-user positions.
Additionally, the calculation of risk-adjusted assets for purposes of the
regulatory risk-based capital ratios include risk-weighted credit equivalent
amounts for derivative and foreign exchange contracts. These amounts as of
March 31, 1994 totaled $3.0 billion for interest rate contracts and $8.2 billion
for foreign exchange, commodity and equity contracts. The corresponding amounts
as of December 31, 1993 were $3.1 billion and $6.8 billion, respectively.
28
<PAGE>
- --------------------------------------------------------------------------------
TOTAL DERIVATIVE AND FOREIGN EXCHANGE CONTRACTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Gross
Notional Unrealized
Principal Gains (A)
------------------- -----------------
Mar. 31 Dec. 31 Mar. 31 Dec. 31
(In Billions of Dollars) 1994 1993 1994 1993
------- ------- ------- --------
<S> <C> <C> <C> <C>
INTEREST RATE PRODUCTS
Futures Contracts................. $ 210.1 $195.6 $ - $ -
Forward Contracts................. 346.2 227.1 0.3 0.2
Swap Agreements................... 280.6 244.3 6.5 6.8
Purchased Options................. 110.6 103.9 1.4 1.5
Written Options................... 93.8 87.5 - -
FOREIGN EXCHANGE PRODUCTS
Futures Contracts................. $ 0.1 $ 0.1 $ - $ -
Forward Contracts................. 1,109.4 976.4 15.7 11.4
Cross-Currency Swap Agreements.... 32.8 31.7 1.7 1.7
Purchased Options................. 64.4 44.0 1.3 1.1
Written Options................... 55.0 43.7 - -
COMMODITY AND EQUITY PRODUCTS....... 23.9 20.7 0.9 0.8
----- -----
$27.8 $23.5
===== =====
</TABLE>
(A) Amounts are presented before the effects of master netting agreements, which
mitigate credit risk by permitting the offset of amounts due from and to
individual counterparties in the event of counterparty default. Master
netting agreements in place would reduce gross unrealized gains by
approximately $6.1 billion as of March 31, 1994 and $4.8 billion as of
December 31, 1993. There are no unrealized gains for futures contracts
because they settle daily in cash, and none for written options because they
represent obligations (rather than assets) of Citicorp.
- --------------------------------------------------------------------------------
The quarter-to-quarter increase in notional principal amounts, primarily in
interest rate and foreign exchange forward contracts, resulted from higher
activity and customer demand in response to interest rate volatility in the
European and U.S. markets, and foreign exchange volatility as certain major
currencies strengthened against the U.S. dollar. The increase in gross
unrealized gains was primarily attributable to foreign exchange forward
contracts of short duration.
Citicorp's management of its derivative and foreign exchange activities,
including the related accounting and operational controls, is tailored to its
dealer and end-user activities.
Citicorp's dealing activities are managed on a market value basis, which
recognizes in earnings the gains or losses resulting from changes in market
rates. For other than short-term derivative and foreign exchange contracts,
Citicorp defers, at the inception of each contract, an appropriate portion of
the initial market value attributable to ongoing costs such as servicing and
operational activities. This amount is amortized into trading account or
foreign exchange revenue over the life of the contract. Information regarding
derivative and foreign exchange trading revenues can be found on page 33.
Citicorp's risk management activities employ interest rate swaps and other
derivatives that are designated and effective as hedges, as well as swaps that
are designated and effective in modifying the interest rate characteristics of
specified assets or liabilities. These contracts are accounted for in a manner
consistent with the related assets or liabilities. Revenues and expenses
related to these agreements are generally included in net interest revenue over
the lives of the agreements on an accrual basis, and realized gains and losses
are deferred and amortized including any related to terminated contracts. As of
March 31, 1994 and December 31, 1993, the notional principal amounts of
Citicorp's end-user positions and their approximate maturities were as follows.
Contract maturities are related to the underlying risk management strategies.
29
<PAGE>
- --------------------------------------------------------------------------------
END-USER INTEREST RATE AND FOREIGN EXCHANGE CONTRACTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percentage of March 31 Amount Maturing
--------------------------------------
Notional One to After
Principal Within Five Five
(In Billions of Dollars) Amount(A) One Year Years Years
------------------- -------- ------ -----
Mar. 31 Dec. 31
1994 1993
------- -------
<S> <C> <C> <C> <C> <C>
INTEREST RATE PRODUCTS
Futures Contracts............... $47.8 $12.5 72% 28% -
Forward Contracts............... 8.3 7.9 99% 1% -
Swap Agreements................. 62.1 60.1 23% 65% 12%
Option Contracts................ 32.3 34.0 27% 67% 6%
FOREIGN EXCHANGE PRODUCTS
Futures and Forward Contracts... 15.8 15.1 94% 6% -
Cross-Currency Swap Agreements.. 1.7 1.9 33% 48% 19%
</TABLE>
(A) Includes third-party and intercompany contracts.
- ------------------------------------------------------------------------------
The increase in end-user notional principal amounts primarily reflected the
utilization of interest rate futures contracts, principally in the U.S. and the
U.K., in response to changing interest rates. There were no material
terminations of 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 separately analyze the derivatives
component of its risk management activities in isolation from related positions.
The estimated fair values of contracts used to hedge or modify Citicorp's risk
were approximately $0.2 billion at March 31, 1994, compared with $1.1 billion at
December 31, 1993, with the decline principally attributable to rising U.S.
interest rates during the quarter. These amounts will fluctuate over time and be
recognized as adjustments to the yields on the associated assets and liabilities
(whose values also fluctuate). As noted above, these derivatives are integral
components of Citicorp's asset and liability management activities. The change
in the estimated fair value of the end-user contracts does not reflect related
changes in the fair value of on-balance sheet assets and liabilities. For a more
comprehensive discussion of fair values related to financial instruments, see
page 71 of the 1993 Annual Report and Form 10-K.
30
<PAGE>
STATEMENT OF OPERATIONS ANALYSIS
- --------------------------------------------------------------------------------
NET INTEREST REVENUE (TAXABLE EQUIVALENT BASIS)
- --------------------------------------------------------------------------------
Net interest revenue of $2,087 million for the quarter was up $236 million or
13%, from the same period last year. The net rate spread for the first quarter
of 1994 was 4.01%, compared with 3.82% in the first quarter of 1993 and 3.94% in
the fourth 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 both the first quarter of
1994 and 1993 was 4.52%. The similarly adjusted ratio for the fourth quarter of
1993 was 4.48%. See page 37 for Effect of Credit Card Receivables
Securitization.
Adjusted for the effect of credit card securitization, the net rate spread in
U.S. offices was 4.71%, compared with 4.56% and 4.73% in the first and fourth
quarters of 1993, respectively. The improvement in the quarter from a year ago
reflected a lower cost to carry cash-basis loans and OREO and the effective
management of the exposure to interest rate movements. The net rate spread in
offices outside the U.S. was 4.29% in the quarter, a decline from 4.47% a year
ago on lower Brazil interest on medium- and long-term outstandings and an
increase in trading-related assets which have generally lower yields.
Average interest earning assets increased $14.5 billion or 7% from the first
quarter of 1993 and $8.2 billion or 4% above the fourth quarter of last year,
reflecting higher balances in funds sold and resale agreements, trading account
assets and securities partially offset by lower levels of commercial loans.
At March 31, 1994, there were approximately $6.0 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>
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
1994 1993 1993 1993 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET INTEREST REVENUE:
(In Millions of Dollars)
U.S............................................................. $ 945 $ 923 $ 888 $ 796 $ 789
Outside the U.S................................................. 1,142 1,089 1,098 1,060 1,062
------ ------ ------ ------ ------
TOTAL........................................................... $2,087 $2,012 $1,986 $1,856 $1,851
------ ------ ------ ------ ------
AVERAGE EARNING ASSETS:
(In Billions of Dollars)
U.S............................................................. $102.7 $ 99.3 $ 96.6 $ 97.3 $ 99.9
Outside the U.S................................................. 108.1 103.3 102.1 99.6 96.4
------ ------ ------ ------ ------
TOTAL........................................................... $210.8 $202.6 $198.7 $196.9 $196.3
------ ------ ------ ------ ------
NET RATE SPREAD (%):
U.S............................................................. 3.73 3.69 3.65 3.28 3.20
Outside the U.S................................................. 4.29 4.18 4.27 4.27 4.47
TOTAL........................................................... 4.01 3.94 3.97 3.78 3.82
ADJUSTED FOR THE EFFECT OF
CREDIT CARD SECURITIZATION:
Net Interest Revenue
(In Millions of Dollars)..................................... $2,616 $2,553 $2,567 $2,432 $2,472
Net Rate Spread (%)
- Total........................................................ 4.52 4.48 4.57 4.41 4.52
- U.S.......................................................... 4.71 4.73 4.83 4.52 4.56
</TABLE>
(A) Includes appropriate allocations for capital and funding costs based on the
location of the asset.
31
<PAGE>
- --------------------------------------------------------------------------------
PROVISION AND ALLOWANCE FOR CREDIT LOSSES
- --------------------------------------------------------------------------------
The 1994 first quarter provision for credit losses included $100 million to
build the consumer and commercial allowance for credit losses excluding the
refinancing portfolio.
The first quarter consumer provision for credit losses included an additional
provision above net write-offs of $50 million, compared with $63 million and $75
million in the fourth and first quarters of 1993, respectively. As a percentage
of average consumer loans, net write-offs were 1.59% in the first quarter of
1994, compared with 1.69% and 1.67% in the fourth and first quarters of 1993,
respectively.
The securitization of credit card receivables, which is more fully described on
page 37, lowered reported credit losses by $268 million, $292 million and $359
million in the first quarter of 1994, fourth quarter of 1993 and first quarter
of 1993, respectively.
The commercial credit loss provision, excluding the refinancing portfolio, was
$72 million in the first quarter of 1994, down $85 million from the fourth
quarter of 1993 and $207 million from the comparable period in the prior year.
The current quarter's provision includes net recoveries of $46 million in the
Global Finance portfolio primarily relating to the North American and European
portfolios. The commercial provision included an addition to the reserve above
net write-offs of $50 million in the quarter compared with $63 million and $75
million in the fourth and first quarters of 1993, respectively. Net write-offs
in the North America Commercial Real Estate portfolio have declined from the
year-ago quarter.
The first quarter 1994 cross-border refinancing portfolio provision included a
pretax release of $34 million from the related allowance.
Details of net write-offs (recoveries) and the provision for credit losses are
included in the following table.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Millions of Dollars) 1994 1993 1993 1993 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Write-offs (Recoveries):
Global Consumer......................... $ 328 $ 351 $ 356 $ 367 $ 336
Global Finance.......................... (46) 16 69 36 36
North America Commercial Real Estate.... 68 78 49 136 168
----- ----- ----- ----- -----
Total Non-Refinancing Commercial........ $ 22 $ 94 $ 118 $ 172 $ 204
----- ----- ----- ----- -----
Cross-Border Refinancing Portfolio (A).. (35) (10) (23) 120 (26)
----- ----- ----- ----- -----
Total................................... $ 315 $ 435 $ 451 $ 659 $ 514
===== ===== ===== ===== =====
Provision for Credit Losses:
Global Consumer......................... $ 378 $ 414 $ 419 $ 442 $ 411
Global Finance.......................... (34) 16 91 87 111
North America Commercial Real Estate.... 106 141 115 186 168
----- ----- ----- ----- -----
Total Non-Refinancing Commercial........ $ 72 $ 157 $ 206 $ 273 $ 279
----- ----- ----- ----- -----
Cross-Border Refinancing Portfolio...... (35) - - - (1)
----- ----- ----- ----- -----
Total................................... $ 415 $ 571 $ 625 $ 715 $ 689
===== ===== ===== ===== =====
</TABLE>
(A) Includes gross write-offs of $152 million in the second quarter of 1993
related to Citicorp's medium- and long-term outstandings to Brazil.
32
<PAGE>
At March 31, 1994, the allowance for credit losses totaled $4,472 million,
compared with $4,379 million at December 31, 1993, and $4,033 million at March
31, 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>
Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
(In Millions of Dollars) 1994 1993 1993 1993 1993
------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Allowance:
Global Consumer..................... $1,639 $1,596 $1,550 $1,491 $1,412
Commercial.......................... 2,595 2,545 2,482 2,394 2,296
Cross-Border Refinancing Portfolio.. 238 238 228 205 325
------ ------ ------ ------ ------
Total............................... $4,472 $4,379 $4,260 $4,090 $4,033
====== ====== ====== ====== ======
Reserve For Global Consumer
Sold Portfolios.................... $ 538 $ 527 $ 559 $ 557 $ 557
====== ====== ====== ====== ======
</TABLE>
- --------------------------------------------------------------------------------
The total allowance as a percentage of loans was 3.26% at March 31, 1994, up
from 2.92% at the same time last year. The consumer portion of the allowance
was 1.98% of period-end consumer loans at March 31, 1994, up from 1.75% at March
31, 1993. At March 31, 1994, Citicorp's allowance for commercial credit losses
(excluding the refinancing portfolio) was 4.88% of period-end commercial loans,
compared with 4.25% at March 31, 1993. Continued uncertainty in the economic
environment could result in further increases in both the consumer and
commercial portions of the allowance for credit losses and in the reserve for
consumer sold portfolios.
The cross-border refinancing portfolio allowance was $238 million at March 31,
1994, compared with $325 million in the year-ago quarter. The decrease in the
cross-border refinancing portfolio portion of the allowance since March 31, 1993
primarily reflected a write-off of $152 million related to Citicorp's medium-
and long-term outstandings to Brazil and the $34 million release in the first
quarter of 1994, partially offset by net recoveries.
- --------------------------------------------------------------------------------
FEE AND COMMISSION REVENUE
- --------------------------------------------------------------------------------
Fee and commission revenue of $1.3 billion in the first quarter of 1994 was up
from $1.2 billion in the same year-ago quarter. The improvement reflected
increased activity in the Global Consumer businesses, specifically the European
Private Bank and the Emerging Economies partially offset by repricing strategies
in the U.S. credit card business. The quarter-on-quarter revenues were also
affected by credit card receivables securitization, which is more fully
described on page 37.
- --------------------------------------------------------------------------------
REVENUES FROM TRADING RELATED ACTIVITIES
- --------------------------------------------------------------------------------
Revenues from Citicorp's trading related activities are primarily reported in
Trading Account and Foreign Exchange on the income statement, but also include
other amounts, principally reflected in Net Interest Revenue. Net interest
revenue reflects net revenues from on-balance sheet trading positions. The
following table provides an analysis of trading activities revenues by income
statement line and by trading business activity which are primarily conducted in
the Global Finance businesses, but include approximately $0.1 billion in the
first quarter of 1994 in the Global Consumer businesses.
33
<PAGE>
- --------------------------------------------------------------------------------
REVENUES FROM TRADING RELATED ACTIVITIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1st Qtr. 1st Qtr.
(In Billions of Dollars) 1994(A) 1993
------- --------
<S> <C> <C>
BY INCOME STATEMENT LINE:
Trading Account............ $ - $ 0.2
Foreign Exchange........... 0.1 0.2
Other (B).................. 0.3 0.3
---- -----
TOTAL...................... $0.4 $ 0.7
==== =====
BY TRADING ACTIVITY:
Foreign Exchange (C)....... $0.2 $ 0.2
Derivative (D)............. 0.1 0.2
Fixed Income (E)........... - 0.1
Other (F).................. 0.1 0.2
---- -----
TOTAL...................... $0.4 $ 0.7
==== =====
</TABLE>
(A) Includes approximately $0.1 billion in the Global Consumer businesses.
(B) Primarily net interest revenue.
(C) Includes foreign exchange spot, forward and option contracts.
(D) Primarily interest rate and currency swaps, options, financial futures,
equity and commodity contracts.
(E) Principally debt instruments including government and corporate debt as well
as mortgage-backed securities.
(F) Includes funding and money market activities.
- --------------------------------------------------------------------------------
Revenues from trading related activities declined to $0.4 billion in the quarter
compared with $0.7 billion in the year-ago quarter. First quarter 1994
revenues from trading related activities reflected sustained customer demand for
risk management products, while trading activities related to Citicorp's own
account were adversely affected as interest rates increased and market
conditions were challenging and volatile. In view of the factors affecting
revenues from these activities, there can be no assurance that these revenues
will return to the levels experienced in 1993.
TRADING ACCOUNT
Trading revenues were $5 million for the 1994 first quarter, compared with $217
million a year ago and down from the record level of $269 million in the fourth
quarter of 1993. Trading revenues were adversely affected by the impact of
rising interest rates and volatile market conditions, particularly in Europe and
the Latin American debt markets. The prior year's first quarter benefited from
a sharp decline in interest rates, primarily in Europe.
FOREIGN EXCHANGE
Foreign exchange revenues were $66 million for the 1994 first quarter compared
with $240 million in the first quarter of 1993. Sustained revenues in most
businesses were partially offset by the adverse effect of volatile conditions in
the European currency markets.
34
<PAGE>
- --------------------------------------------------------------------------------
SECURITIES TRANSACTIONS
- --------------------------------------------------------------------------------
Net gains from the sale of securities were $50 million in the first quarter of
1994, up $34 million from the first quarter of 1993. The net gain in the first
quarter of 1994 reflects gross realized gains of $62 million and gross realized
losses of $12 million.
Effective January 1, 1994, Citicorp adopted SFAS No. 115. See Adoption of New
Accounting Standards on page 38. The initial impact of adoption was an increase
in stockholders' equity of $365 million after-tax. This amount declined to $227
million as of March 31, 1994, principally reflecting a decrease in the market
value of securities available for sale.
Securities available for sale are carried at fair value. These values may
fluctuate over time, based on general market conditions as well as events and
trends affecting specific securities.
- --------------------------------------------------------------------------------
OTHER REVENUE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
First Qtr. First Qtr.
(In Millions of Dollars) 1994 1993(A) Change
---------- ---------- ------
<S> <C> <C> <C>
Securitized Credit Card Receivables...... $208 $244 $(36)
Venture Capital Gains.................... 79 54 25
Affiliate Earnings....................... 65 41 24
Other Net Gains on the Sale/Disposition
of Assets............................... 30 79 (49)
Net (Losses) from Mortgage Pass-Through
Securitization Activity................. (38) (66) 28
Foreign Currency Translation (Losses).... - (28) 28
Other Items.............................. 52 28 24
---- ---- ----
Total................................. $396 $352 $ 44
==== ==== ====
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
- --------------------------------------------------------------------------------
The decline in revenue related to securitized credit card receivables primarily
reflects lower net interest spreads following a repricing of the portfolio
during 1993 to a variable rate pricing structure, partially offset by reduced
net credit losses. The effect of credit card receivable securitization is
discussed in more detail on page 37.
Venture capital gains were $25 million higher than in the corresponding quarter
a year ago. 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 $24 million largely due to
increased activity in certain Latin American affiliates. Net gains on the
sale/disposition of assets for the quarter were $30 million, compared with $79
million in the corresponding period in 1993. The 1993 first quarter included
the sale of Citicorp's minority interest in Taiwan First Investment and Trust.
Net losses from mortgage pass-through securities sales were lower than the year-
ago quarter, reflecting lower costs related to recourse exposure and a lower net
adjustment for accelerated prepayments of securitized mortgages. Depending on
the level of interest rates, the rate of mortgage prepayments and hedging
transactions employed, further adjustments to the carrying amount of servicing
assets that are subject to prepayment risk could be required in 1994.
35
<PAGE>
- --------------------------------------------------------------------------------
OPERATING EXPENSE
- --------------------------------------------------------------------------------
EMPLOYEE EXPENSE
Employee expense was $1,237 million in the quarter, up $59 million from the
prior year first quarter, primarily reflecting higher staffing levels supporting
expansion in both the Global Consumer and Global Finance businesses in the
Emerging Economies, partially offset by reduced staff levels in the Global
Consumer businesses in North America.
OTHER EXPENSE
Other expense totaled $1,210 million for the quarter, compared with $1,348
million for the first quarter of 1993, which included the previously reported
$64 million charge associated with the withdrawal from portfolio management
activities in India. Contributing to the improvement in expense were lower
commercial and consumer OREO costs and the effect of the sale of the U.S. market
data services business of Quotron, partially offset by higher marketing expenses
in the U.S. credit card business.
RESTRUCTURING ACTIVITIES
During the first quarter of 1994, Citicorp continued to implement its previously
announced restructuring plan. Of the $425 million reserve that was established
in the fourth quarter of 1993, approximately $113 million has been utilized,
principally relating to asset write-offs in North America (arising from the
consolidation of data processing and servicing activities), and also including
severance obligations in North America and Europe where individual employees
have been notified of job discontinuance. The remaining reserve will be
utilized as the restructuring activities are implemented and completed in 1994
and 1995.
36
<PAGE>
- --------------------------------------------------------------------------------
INCOME TAXES
- --------------------------------------------------------------------------------
Income taxes were $390 million for the first quarter of 1994 compared with $300
million for the same period last year. The effective tax rate was 39% for the
first quarter of 1994 and 45% for the first quarter of 1993. The lower
effective tax rate in 1994 reflects an improvement in the level and mix of
earnings.
- --------------------------------------------------------------------------------
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 first quarter of 1994, $1.8 billion of credit card receivables were
sold. The total amount of securitized receivables, net of amortization, was
$24.6 billion at both March 31, 1994 and March 31, 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 Operations, Average Balance Sheet, Return on Assets, and Consumer Net Credit
Loss Ratio. See page 35 for a further discussion.
<TABLE>
<CAPTION>
1st Qtr. 1st Qtr.
(In Millions of Dollars) 1994 1993
-------- --------
<S> <C> <C>
Net Interest Revenue................. $(529) $(621)
Fee and Commission Revenue........... 53 18
Other Revenue........................ 208 244
Provision for Credit Losses.......... (268) (359)
----- -----
Net Income Impact of Securitization.. $ 0 $ 0
===== =====
Average Assets ($ Billions).......... (24) (25)
Return on Assets (%)................. .08 .08
Consumer Net Credit Loss Ratio (%)... (.65) (.96)
</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>
<CAPTION>
1st Qtr. 1st Qtr.
1994 1993
-------- --------
<S> <C> <C>
U.S. Credit Card Managed Portfolio
Average Credit Card Loans (In Billions
of Dollars)................................ $33.5 $33.3
Net Credit Losses (In Millions of Dollars).. $ 381 $ 471
As a Percentage of Average
Credit Card Loans...................... 4.61% 5.74%
</TABLE>
37
<PAGE>
ADOPTION OF NEW ACCOUNTING STANDARDS
- --------------------------------------------------------------------------------
POSTEMPLOYMENT BENEFITS
Effective January 1, 1994, Citicorp adopted Statement of Financial Accounting
Standards No. 112, "Employers' Accounting for Postemployment Benefits" (SFAS No.
112). Under SFAS No. 112, Citicorp recognizes the estimated cost of disability
and similar benefits provided to former or inactive employees when an event
occurs indicating payment of benefits is probable. These costs were previously
recognized as paid or funded. The adoption of the new standard as of January 1,
1994 resulted in an after-tax charge of $56 million, which is reported on the
Statement of Operations as the cumulative effect of an accounting change.
SECURITIES
Effective January 1, 1994, Citicorp adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" (SFAS No. 115). SFAS No. 115 addresses the accounting and reporting
for investments in equity securities that have readily determinable fair values
and for all investments in debt securities. The principal effect of the new
standard relates to such securities that are "available for sale", which are
carried at fair value with unrealized holding gains and losses reported in a
separate component of stockholders' equity. These securities were previously
carried at the lower of aggregate cost or market value. In connection with SFAS
115, at January 1, 1994, Citicorp reclassified approximately $1.7 billion ($1.6
billion at Citibank) of securities previously received in formal country debt
restructurings (Brady Bonds) from Commercial Loans to Held to Maturity and
Available for Sale Securities categories.
BALANCE SHEET REPORTING OF CERTAIN CONTRACTS
Effective January 1, 1994, Citicorp adopted FASB Interpretation No. 39,
"Offsetting of Amounts Related to Certain Contracts." This accounting rule
changes the balance sheet reporting of trading gains and losses on derivative
and foreign exchange contracts to require that gross unrealized gains be
reported as assets and gross unrealized losses as liabilities, except where
there is a qualifying netting agreement in place. Citicorp previously followed
industry practice and reported the unrealized gains and losses on a net
portfolio basis. The effect of the new standard was an increase in assets and
liabilities of approximately $14.7 billion as of March 31, 1994. Amounts
presented for Trading Account Assets and Trading Account Liabilities as of
December 31, 1993 include the reclassification of $5.7 billion and $3.1 billion,
respectively, to provide for consistent presentation of amounts previously
recorded in Other Assets and Other Liabilities representing revaluation gains
and losses and other balances related to these contracts.
38
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF OPERATIONS CITICORP and Subsidiaries
1994 1993
First First
(In Millions of Dollars Except Per Share Amounts) Qtr. Qtr.
------ ------
<S> <C> <C>
INTEREST REVENUE
Interest and Fees on Loans....................................... $4,125 $4,280
Interest on Deposits with Banks.................................. 286 222
Interest on Federal Funds Sold and Securities
Purchased Under Resale Agreements.............................. 1,125 494
Interest and Dividends on Securities
U. S. Treasury and Federal Agencies.......................... 56 53
State and Municipal.......................................... 12 1
Other (Principally in offices outside the U.S.).............. 195 147
Interest on Trading Account Assets............................... 659 672
------ ------
Total Interest Revenue..................................... $6,458 $5,869
------ ------
INTEREST EXPENSE
Interest on Deposits............................................. $2,470 $2,425
Interest on Securities Sold, Not Yet Purchased................... 63 45
Interest on Other Borrowed Money................................. 1,259 1,029
Interest on Long-Term Debt and Subordinated Capital Notes........ 581 523
------ ------
Total Interest Expense....................................... $4,373 $4,022
------ ------
NET INTEREST REVENUE............................................. $2,085 $1,847
------ ------
PROVISION FOR CREDIT LOSSES...................................... $ 415 $ 689
------ ------
NET INTEREST REVENUE AFTER PROVISION FOR
CREDIT LOSSES................................................... $1,670 $1,158
------ ------
FEES, COMMISSIONS AND OTHER REVENUE
Fees and Commissions............................................. $1,259 $1,213
Trading Account.................................................. 5 217
Foreign Exchange................................................. 66 240
Securities Transactions.......................................... 50 16
Other Revenue.................................................... 396 352
------ ------
Total Fees, Commissions and Other Revenue.................... $1,776 $2,038
------ ------
OTHER OPERATING EXPENSE
Salaries......................................................... $ 954 $ 913
Staff Benefits................................................... 283 265
------ ------
Total Staff Expense.......................................... $1,237 $1,178
Net Premises and Equipment Expense............................... 390 396
Other Expense.................................................... 820 952
------ ------
Total Other Operating Expense................................ $2,447 $2,526
------ ------
INCOME BEFORE TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES.. $ 999 $ 670
Income Taxes..................................................... 390 300
------ ------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES............ $ 609 $ 370
Cumulative Effect of Accounting Changes (A)...................... (56) 300
------ ------
NET INCOME....................................................... $ 553 $ 670
====== ======
INCOME APPLICABLE TO COMMON STOCK................................ $ 466 $ 595
====== ======
EARNINGS PER SHARE:
ON COMMON AND COMMON EQUIVALENT SHARES
Income Before Cumulative Effect of Accounting Changes............ $1.24 $ 0.71
Cumulative Effect of Accounting Changes (A)...................... (0.13) 0.67
------ ------
Net Income....................................................... $1.11 $ 1.38
====== ======
ASSUMING FULL DILUTION
Income Before Cumulative Effect of Accounting Changes............ $1.12 $ 0.67
Cumulative Effect of Accounting Changes (A)...................... (0.11) 0.57
------ ------
Net Income....................................................... $1.01 $ 1.24
====== ======
</TABLE>
(A) First quarter 1994 includes 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.
39
<PAGE>
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET CITICORP and Subsidiaries
<TABLE>
<CAPTION>
1994 1993(A)
(In Millions of Dollars) Mar. 31 Dec. 31
-------- --------
<S> <C> <C>
ASSETS
Cash and Due from Banks..................................... $ 5,705 $ 4,836
Deposits at Interest with Banks............................. 7,221 6,749
Securities (B):
Held to Maturity........................................ 7,292 5,637
Available for Sale...................................... 9,876 8,705
Venture Capital......................................... 1,522 1,489
Trading Account Assets (C).................................. 42,688 23,783
Federal Funds Sold and Securities Purchased Under
Resale Agreements....................................... 10,108 7,339
Loans, Net
Consumer................................................ $ 82,654 $ 84,354
Commercial (B).......................................... 54,619 54,613
-------- --------
Loans, Net of Unearned Income........................... $137,273 $138,967
Allowance for Credit Losses............................. (4,472) (4,379)
-------- --------
Total Loans, Net...................................... $132,801 $134,588
Customers' Acceptance Liability............................. $ 1,368 $ 1,512
Premises and Equipment, Net................................. 3,811 3,842
Interest and Fees Receivable................................ 2,603 2,552
Other Assets................................................ 16,101 15,542
-------- --------
TOTAL....................................................... $241,096 $216,574
======== ========
LIABILITIES
Non-Interest-Bearing Deposits in U.S. Offices............... $ 13,925 $ 13,442
Interest-Bearing Deposits in U.S. Offices................... 37,905 38,347
Non-Interest-Bearing Deposits in Offices Outside the U.S.... 7,191 6,644
Interest-Bearing Deposits in Offices Outside the U.S........ 93,977 86,656
-------- --------
Total Deposits....................................... $152,998 $145,089
Trading Account Liabilities (C)............................. 21,767 5,478
Purchased Funds and Other Borrowings........................ 17,527 16,777
Acceptances Outstanding..................................... 1,386 1,531
Accrued Taxes and Other Expenses............................ 6,290 6,452
Other Liabilities........................................... 9,364 9,134
Long-Term Debt.............................................. 15,265 16,010
Subordinated Capital Notes.................................. 1,750 2,150
STOCKHOLDERS' EQUITY
Preferred Stock (Without par value)......................... $ 3,887 $ 3,887
Common Stock ($1.00 par value).............................. 415 412
Issued Shares: 414,575,066 and 412,017,300, respectively
Surplus..................................................... 3,973 3,898
Retained Earnings........................................... 7,195 6,729
Net Unrealized Gains - Securities Available for Sale (B).... 227 -
Foreign Currency Translation................................ (557) (580)
Common Stock in Treasury, at Cost........................... (391) (393)
-------- --------
Shares: 25,295,038 and 25,527,133, respectively
Total Stockholders' Equity.............................. $ 14,749 $ 13,953
-------- --------
TOTAL....................................................... $241,096 $216,574
======== ========
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
(B) Balances at March 31, 1994 reflect the effect of adopting SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities,"
including the reclassification of "Brady Bonds" from Commercial Loans to
Held to Maturity and Available for Sale Securities. See page 38 and footnote
D on page 51 for additional discussion.
(C) Trading Account Assets and Trading Account Liabilities at March 31, 1994
include approximately $14.7 billion pursuant to the adoption of FASB
Interpretation No. 39, "Offsetting of Amounts Related to Certain Contracts,"
effective January 1, 1994. See page 38.
40
<PAGE>
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN CITICORP and Subsidiaries
STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Three 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 Gain on Securities Available for Sale (A)... 365 -
Issuance of Common Stock Under Various
Staff Benefit Plans (Net of Amortization),
the Dividend Reinvestment Plan, and
the Conversion of Convertible Notes................................................. 78 96
Net Income........................................................................... 553 670
Cash Dividends Declared:
Preferred......................................................................... (87) (73)
Change in Net Unrealized Gain on Securities Available for Sale....................... (138) -
Foreign Currency Translation......................................................... 23 (11)
Treasury Stock Transactions at Cost.................................................. 2 -
------- -------
Balance at End of Period............................................................. $14,749 $11,863
======= =======
</TABLE>
(A) See page 38.
- --------------------------------------------------------------------------------
41
<PAGE>
- --------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
CITICORP and Subsidiaries
Three Months
-------------------------
(In Millions of Dollars) 1994 1993(A)
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income................................................................................... $ 553 $ 670
-------- --------
Adjustments to Reconcile Net Income to Net Cash Provided By (Used In) Operating Activities:
Provision for Credit Losses................................................................ $ 415 $ 689
Depreciation and Amortization of Premises and Equipment.................................... 135 139
Amortization of Goodwill................................................................... 12 17
Provision for Deferred Taxes............................................................... (329) 25
Cumulative Effect of Accounting Change..................................................... 56 (300)
Venture Capital Activity................................................................... (33) (69)
(Gain) on Sale of Securities............................................................... (50) (16)
Net (Gain) on the Sale of Subsidiaries and Affiliates...................................... - (89)
Changes in Accruals and Other, Net......................................................... (437) 1,065
Net (Increase) in Trading Account Assets................................................... (18,905) (2,287)
Net Increase in Trading Account Liabilities................................................ 16,289 264
-------- --------
Total Adjustments............................................................................ $ (2,847) $ (562)
-------- --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES.......................................... $ (2,294) $ 108
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Net (Increase) in Deposits at Interest with Banks.......................................... $ (472) $ (789)
SECURITIES - HELD TO MATURITY
Purchases.................................................................................. (4,745) (4,343)
Maturities................................................................................. 4,523 4,702
SECURITIES - AVAILABLE FOR SALE
Purchases.................................................................................. (4,213) (3,284)
Proceeds from Sales........................................................................ 2,423 2,235
Maturities................................................................................. 1,368 1,394
Net (Increase) in Federal Funds Sold and Securities
Purchased Under Resale Agreements........................................................... (2,769) (2,918)
Net (Increase) in Loans...................................................................... (24,036) (21,928)
Proceeds from Sales of Loans and Credit Card Receivables..................................... 23,449 21,335
Capital Expenditures on Premises and Equipment............................................... (303) (184)
Proceeds from Sales of Premises and Equipment................................................ 131 47
Proceeds from Sales of Subsidiaries and Affiliates........................................... - 148
Proceeds from Sales of Other Real Estate Owned (OREO)........................................ 336 422
-------- --------
NET CASH (USED IN) INVESTING ACTIVITIES...................................................... $ (4,308) $ (3,163)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase in Deposits................................................................... $ 7,909 $ 1,824
Net Increase in Federal Funds Purchased and Securities Sold
Under Repurchase Agreements............................................................... 1,084 822
Proceeds from Issuance of Commercial Paper and Funds Borrowed with
Original Maturities of Less Than One Year................................................. 82,178 89,617
Repayment of Commercial Paper and Funds Borrowed with
Original Maturities of Less Than One Year................................................. (82,307) (89,049)
Proceeds from Issuance of Long-Term Debt................................................... 359 1,240
Repayment of Long-Term Debt................................................................ (1,726) (1,347)
Proceeds from Issuance of Common Stock..................................................... 67 95
Dividends Paid............................................................................. (86) (73)
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES.................................................... $ 7,478 $ 3,129
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND DUE FROM BANKS................................... $ (7) $ (48)
-------- --------
Net Increase in Cash and Due from Banks...................................................... $ 869 $ 26
Cash and Due from Banks at Beginning of Period............................................... 4,836 5,138
-------- --------
CASH AND DUE FROM BANKS AT END OF PERIOD..................................................... $ 5,705 $ 5,164
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Period for:
Interest................................................................................... $ 3,988 $ 3,456
Income Taxes............................................................................... $ 428 $ 212
NON-CASH INVESTING ACTIVITIES
Transfer from Loans to OREO.................................................................. $ 297 $ 859
</TABLE>
- --------------------------------------------------------------------------------
(A) Reclassified to conform to latest quarter's presentation.
42
<PAGE>
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET CITIBANK, N.A. and Subsidiaries
<TABLE>
<CAPTION>
1994 1993
-------- ---------
(In Millions of Dollars) Mar. 31 Dec. 31(A)
<S> <C> <C>
ASSETS
Cash and Due from Banks.................................... $ 4,663 $ 4,005
Deposits at Interest with Banks............................ 7,339 7,137
Securities (B):
Held to Maturity......................................... 3,923 2,927
Available for Sale....................................... 8,701 7,670
Venture Capital.......................................... 903 842
Trading Account Assets (C)................................. 38,412 20,786
Federal Funds Sold and Securities Purchased Under
Resale Agreements.......................................... 6,457 4,392
Loans, Net of Unearned Income (B).......................... $108,889 $109,459
Allowance for Credit Losses.............................. (3,578) (3,471)
-------- --------
Total Loans, Net......................................... $105,311 $105,988
Customers' Acceptance Liability............................ 1,368 1,512
Premises and Equipment, Net................................ 3,039 2,973
Interest and Fees Receivable............................... 1,877 1,803
Other Assets............................................... 9,894 9,107
-------- --------
TOTAL...................................................... $191,887 $169,142
======== ========
LIABILITIES
Non-Interest-Bearing Deposits in U.S. Offices.............. $ 11,041 $ 10,207
Interest-Bearing Deposits in U.S. Offices.................. 23,093 23,077
Non-Interest-Bearing Deposits in Offices Outside the U.S... 6,855 6,439
Interest-Bearing Deposits in Offices Outside the U.S....... 88,762 83,239
-------- --------
Total Deposits........................................... $129,751 $122,962
Trading Account Liabilities (C)............................ 21,074 4,509
Purchased Funds and Other Borrowings....................... 11,059 11,742
Acceptances Outstanding.................................... 1,386 1,530
Accrued Taxes and Other Expenses........................... 3,929 3,740
Other Liabilities.......................................... 5,226 5,722
Long-Term Debt............................................. 3,088 3,089
Subordinated Notes......................................... 4,700 4,700
STOCKHOLDER'S EQUITY
Capital Stock ($20.00 par)................................. $ 751 $ 751
Outstanding Shares: 37,534,553 in each period
Surplus.................................................... 5,928 5,912
Retained Earnings.......................................... 5,452 5,146
Net Unrealized Gains - Securities
Available for Sale (B)................................... 191 -
Foreign Currency Translation............................... (648) (661)
-------- --------
Total Stockholder's Equity............................... $ 11,674 $ 11,148
-------- --------
TOTAL...................................................... $191,887 $169,142
======== ========
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
(B) Balances at March 31, 1994 reflect the effect of adopting SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities,"
including the reclassification of "Brady Bonds" from Commercial Loans to
Held to Maturity and Available for Sale Securities. See page 38 and footnote
D on page 51 for additional discussion.
(C) Trading Account Assets and Trading Account Liabilities at March 31, 1994
include approximately $14.7 billion pursuant to the adoption of FASB
Interpretation No. 39, "Offsetting of Amounts Related to Certain Contracts,"
effective January 1, 1994. See page 38.
43
<PAGE>
- --------------------------------------------------------------------------------
CALCULATION OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, 1994 March 31, 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
Income Applicable to Common Stock Before
Cumulative Effect of Accounting Changes.................. $ 522 $ 522 $ 295 $ 295
Dividends on Conversion Preferred Stock, Series 15....... 24 24 23 23
Dividends on Convertible Preferred Stock, Series 12
and Series 13........................................... - 34 - 34
------ ------ ------ -------
a. Income Applicable to Common Stock Before
Cumulative Effect of Accounting Changes, Adjusted.... $ 546 $ 580 $ 318 $ 352
b. Cumulative Effect of Accounting Changes............... (56) (56) 300 300
------ ------ ------ ------
TOTAL...................................................... $ 490 $ 524 $ 618 $ 652
====== ====== ====== ======
SHARES
Weighted-Average Common Shares Outstanding (A)............. 388.2 388.2 370.2 370.2
Common Equivalent Shares:
Conversion Preferred Stock, Series 15..................... 42.8 45.6 69.2 69.2
Other (B)................................................. 9.0 9.0 8.1 11.1
Convertible Preferred Stock, Series 12 and Series 13....... - 73.0 - 73.0
Convertible Notes.......................................... - - - .1
Book Value Shares Issuable Under Stock Option and
the Executive Incentive Compensation Plans................ 1.9 1.9 2.4 2.4
------ ------ ------ ------
c. Total Shares........................................... 441.9 517.7 449.9 526.0
====== ====== ====== ======
EARNINGS PER SHARE
A/C INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING
CHANGES................................................ $ 1.24 $ 1.12 $ .71 $ .67
b/c Cumulative Effect of Accounting Changes................ (.13) (.11) .67 .57
------ ------ ------ ------
NET INCOME................................................. $ 1.11 $ 1.01 $ 1.38 $ 1.24
====== ====== ====== ======
</TABLE>
(A) Includes book value shares of 1.1 million in the first quarter of 1994 and
1.2 million in the first quarter of 1993.
(B) Other Common Equivalent Shares represent shares issuable under the Executive
Incentive Compensation Plan and the dilutive effect of market value shares
issuable under Stock Option, Stock Incentive and Stock Purchase Plans
computed using the treasury stock method.
- --------------------------------------------------------------------------------
44
<PAGE>
- --------------------------------------------------------------------------------
AVERAGE BALANCES AND INTEREST RATES
(Taxable Equivalent Basis) (A) (B)
<TABLE>
<CAPTION>
First Quarter 1994
------------------
%
Average Average
(In Millions of Dollars) Volume Interest Rate
-------- -------- -------
<S> <C> <C> <C>
INTEREST REVENUE
LOANS (NET OF UNEARNED INCOME) (C)
Consumer Loans
In U.S. Offices.................................... $ 43,527 $1,067 9.94
In Offices Outside the U.S. (D).................... 40,094 1,242 12.56
-------- ------
TOTAL CONSUMER LOANS............................. $ 83,621 $2,309 11.20
-------- ------
Commercial Loans
In U.S. Offices
Commercial and Industrial......................... $ 9,903 $ 180 7.37
Mortgage and Real Estate.......................... 7,318 93 5.15
Loans to Financial Institutions................... 427 3 2.85
Lease Financing................................... 3,513 60 6.93
In Offices Outside the U.S. (D)..................... 33,217 1,480 18.07
-------- ------
TOTAL COMMERCIAL LOANS........................... $ 54,378 $1,816 13.54
-------- ------
TOTAL LOANS...................................... $137,999 $4,125 12.12
-------- ------
FUNDS SOLD AND RESALE AGREEMENTS
In U.S. Offices.................................... $ 17,044 $ 127 3.02
In Offices Outside the U.S. (D).................... 2,767 998 146.28
-------- ------
TOTAL........................................... $ 19,811 $1,125 23.03
-------- ------
SECURITIES
HELD TO MATURITY
In U.S. Offices
U. S. Treasury and Federal Agencies.............. $ 1,760 $ 24 5.53
State and Municipal.............................. - - -
Other............................................ 53 1 7.65
In Offices Outside the U.S. (principally local
government issues) (D) (E)........................ 3,342 49 5.95
-------- ------
TOTAL........................................... $ 5,155 $ 74 5.82
-------- ------
AVAILABLE FOR SALE
In U.S. Offices
US. Treasury and Federal Agencies................ $ 1,830 $ 24 5.32
State and Municipal.............................. 876 12 5.56
Other (D)........................................ 727 10 5.58
In Offices Outside the U.S. (D) (E)................ 6,233 135 8.78
-------- ------
TOTAL........................................... $ 9,666 $ 181 7.59
-------- ------
VENTURE CAPITAL
In U.S. Offices.................................... $ 1,287 $ 6 1.89
In Offices Outside the U.S......................... 206 3 5.91
-------- ------
TOTAL........................................... $ 1,493 $ 9 2.44
-------- ------
TOTAL SECURITIES................................ $ 16,314 $ 264 6.56
-------- ------
Trading Account Assets
In U.S. Offices.................................... $ 14,419 $ 194 5.46
In Offices Outside the U.S. (D).................... 12,140 466 15.57
-------- ------
TOTAL........................................... $ 26,559 $ 660 10.08
-------- ------
Interest-Bearing Deposits (principally in offices
outside the U.S.) (C) (D)......................... $ 10,161 $ 286 11.42
-------- ------
Total Interest-Earning Assets...................... $210,844 $6,460 12.43
======
Non-Interest-Earning Assets (F).................... 42,328
--------
TOTAL ASSETS....................................... $253,172
========
</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) Prior quarters' amounts and rates have been reclassified to conform to
latest quarter's presentation.
(F) Gross unrealized gains and losses on off-balance sheet trading positions
related to the adoption of FASB Interpretation No. 39 in the first quarter
1994 are reported in non-interest-earning assets and liabilities,
respectively.
45
<PAGE>
- --------------------------------------------------------------------------------
AVERAGE BALANCES AND INTEREST RATES (CONTINUED) CITICORP and Subsidiaries
(Taxable Equivalent Basis) (A) (B)
<TABLE>
<CAPTION>
Fourth Quarter 1993 First Quarter 1993
----------------------------- ---------------------------
% %
Average Average Average Average
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.................................... $ 44,165 $1,102 9.90 $ 45,913 $1,092 9.65
In Offices Outside the U.S. (D).................... 38,246 1,193 12.38 35,825 1,198 13.56
-------- ------ -------- ------
TOTAL CONSUMER LOANS............................. $ 82,411 $2,295 11.05 $ 81,738 $2,290 11.36
-------- ------ -------- ------
Commercial Loans
In U.S. Offices
Commercial and Industrial......................... $ 10,095 $ 174 6.84 $ 10,774 $ 156 5.87
Mortgage and Real Estate.......................... 7,953 100 4.99 9,075 105 4.69
Loans to Financial Institutions................... 459 3 2.59 423 1 0.96
Lease Financing................................... 3,528 51 5.74 3,520 67 7.72
In Offices Outside the U.S. (D)..................... 34,911 1,455 16.54 34,552 1,663 19.52
-------- ------ -------- ------
TOTAL COMMERCIAL LOANS........................... $ 56,946 $1,783 12.42 $ 58,344 $1,992 13.85
-------- ------ -------- ------
TOTAL LOANS...................................... $139,357 $4,078 11.61 $140,082 $4,282 12.40
-------- ------ -------- ------
FUNDS SOLD AND RESALE AGREEMENTS
In U.S. Offices.................................... $ 13,580 $ 100 2.92 $ 10,800 $ 82 3.08
In Offices Outside the U.S. (D).................... 1,999 960 190.53 1,871 412 89.30
-------- ------ -------- ------
TOTAL........................................... $ 15,579 $1,060 26.99 $ 12,671 $ 494 15.81
-------- ------ -------- ------
SECURITIES
HELD TO MATURITY
In U.S. Offices
U. S. Treasury and Federal Agencies.............. $ 2,213 $ 19 3.41 $ 1,954 $ 21 4.36
State and Municipal.............................. - - - - - -
Other............................................ 200 4 7.93 132 3 9.22
In Offices Outside the U.S. (principally local
government issues) (D) (E)........................ 1,804 43 9.46 2,187 51 9.46
-------- ------ -------- ------
TOTAL........................................... $ 4,217 $ 66 6.21 $ 4,273 $ 75 7.12
-------- ------ -------- ------
AVAILABLE FOR SALE
In U.S. Offices
US. Treasury and Federal Agencies................ $ 1,719 $ 28 6.46 $ 1,671 $ 29 7.04
State and Municipal.............................. 483 8 6.57 13 - 7.80
Other (D)........................................ 506 7 5.49 488 6 4.99
In Offices Outside the U.S. (D) (E)................ 5,856 133 9.01 4,349 86 8.02
-------- ------ -------- ------
TOTAL........................................... $ 8,564 $ 176 8.15 $ 6,521 $ 121 7.53
-------- ------ -------- ------
VENTURE CAPITAL
In U.S. Offices.................................... $ 1,217 $ 2 0.65 $ 1,120 $ 4 1.45
In Offices Outside the U.S......................... 212 1 1.87 219 2 3.70
-------- ------ -------- ------
TOTAL........................................... $ 1,429 $ 3 0.83 $ 1,339 $ 6 1.82
-------- ------ -------- ------
TOTAL SECURITIES................................ $ 14,210 $ 245 6.84 $ 12,133 $ 202 6.75
-------- ------ -------- ------
Trading Account Assets
In U.S. Offices.................................... $ 13,135 $ 170 5.13 $ 14,071 $ 185 5.33
In Offices Outside the U.S. (D).................... 10,799 483 17.74 9,084 488 21.79
-------- ------ -------- ------
TOTAL........................................... $ 23,934 $ 653 10.82 $ 23,155 $ 673 11.79
-------- ------ -------- ------
Interest-Bearing Deposits (principally in offices
outside the U.S.) (C) (D)......................... $ 9,511 $ 223 9.30 $ 8,300 $ 222 10.85
-------- ------ -------- ------
Total Interest-Earning Assets...................... $202,591 $6,259 12.26 $196,341 $5,873 12.13
------ ------
Non-Interest-Earning Assets (F).................... 30,215 28,254
-------- --------
TOTAL ASSETS....................................... $232,806 $224,595
======== ========
</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) Prior quarters' amounts and rates have been reclassified to conform to
latest quarter's presentation.
(F) Gross unrealized gains and losses on off-balance sheet trading positions
related to the adoption of FASB Interpretation No. 39 in the first quarter
1994 are reported in non-interest-earning assets and liabilities,
respectively.
46
<PAGE>
- --------------------------------------------------------------------------------
AVERAGE BALANCES AND INTEREST RATES (CONTINUED)
<TABLE>
<CAPTION>
(Taxable Equivalent Basis) (A) (B) First Quarter 1994
------------------
%
Average Average
(In Millions of Dollars) Volume Interest Rate
-------- -------- -------
<S> <C> <C> <C>
INTEREST EXPENSE
DEPOSITS
In U.S. Offices
Savings Deposits (C)............................ $ 26,374 $ 116 1.78
Negotiable Certificates of Deposit.............. 944 10 4.30
Other Time Deposits............................. 10,693 163 6.18
-------- ------
Total U.S. Interest-Bearing Deposits........... $ 38,011 $ 289 3.08
In Offices Outside the U.S. (D).................. 94,516 2,181 9.36
-------- ------
TOTAL.......................................... $132,527 $2,470 7.56
-------- ------
TRADING ACCOUNT LIABILITIES
In U.S. Offices.................................. $ 3,449 $ 44 5.17
In Offices Outside the U.S. (D).................. 1,755 19 4.39
-------- ------
TOTAL.......................................... $ 5,204 $ 63 4.91
-------- ------
FUNDS BORROWED
In U.S. Offices
Purchased Funds and Other Borrowings
Federal Funds Purchased and Securities
Sold Under Agreements to Repurchase........... $ 21,757 $ 164 3.06
Commercial Paper............................... 1,596 14 3.56
Other Purchased Funds.......................... 2,551 78 12.40
Long-Term Debt, Convertible Notes and
Subordinated Capital Notes..................... 14,934 197 5.35
-------- ------
Total in U.S. Offices......................... $ 40,838 $ 453 4.50
In Offices Outside the U.S. (D).................. 10,021 1,387 56.13
-------- ------
TOTAL......................................... $ 50,859 $1,840 14.67
-------- ------
Total Interest-Bearing Liabilities............... $188,590 $4,373 9.40
------
Demand Deposits in U.S. Offices.................. 12,728
Other Non-Interest-Bearing Liabilities (E)....... 37,405
Total Stockholders' Equity....................... 14,449
--------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY....... $253,172
========
NET INTEREST REVENUE AS A PERCENTAGE OF
AVERAGE INTEREST-EARNING ASSETS................. $2,087 4.01
======
</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 adoption of FASB Interpretation No. 39 in the first quarter
of 1994 are reported in non-interest-earning assets and liabilities,
respectively.
47
<PAGE>
- --------------------------------------------------------------------------------
AVERAGE BALANCES AND INTEREST RATES (CONTINUED) CITICORP and Subsidiaries
<TABLE>
<CAPTION>
(Taxable Equivalent Basis) (A) (B) Fourth Quarter 1993 First Quarter 1993
--------------------------- ---------------------------
% %
Average Average Average Average
(In Millions of Dollars) Volume Interest Rate Volume Interest Rate
-------- -------- ------- -------- -------- -------
<S> <S> <C> <C> <C> <C> <C>
INTEREST EXPENSE
DEPOSITS
In U.S. Offices
Savings Deposits (C)............................ $ 26,310 $ 120 1.81 $ 26,699 $ 133 2.02
Negotiable Certificates of Deposit.............. 1,170 15 5.09 1,655 27 6.62
Other Time Deposits............................. 11,109 157 5.61 14,204 202 5.77
-------- ------- -------- -------
Total U.S. Interest-Bearing Deposits........... $ 38,589 $ 292 3.00 $ 42,558 $ 362 3.45
In Offices Outside the U.S. (D).................. 92,437 2,290 9.83 86,076 2,063 9.72
-------- ------- -------- -------
TOTAL.......................................... $131,026 $ 2,582 7.82 $128,634 $ 2,425 7.65
-------- ------- -------- -------
TRADING ACCOUNT LIABILITIES
In U.S. Offices.................................. $ 2,482 $ 33 5.27 $ 1,882 $ 28 6.03
In Offices Outside the U.S. (D).................. 1,476 22 5.91 1,314 17 5.25
-------- ------- -------- -------
TOTAL.......................................... $ 3,958 $ 55 5.51 $ 3,196 $ 45 5.71
-------- ------- -------- -------
FUNDS BORROWED
In U.S. Offices
Purchased Funds and Other Borrowings
Federal Funds Purchased and Securities
Sold Under Agreements to Repurchase........... $ 18,527 $ 148 3.17 $ 16,615 $ 129 3.15
Commercial Paper............................... 762 7 3.64 760 6 3.20
Other Purchased Funds.......................... 1,986 75 14.98 2,133 83 15.78
Long-Term Debt, Convertible Notes and
Subordinated Capital Notes..................... 15,077 206 5.42 17,179 272 6.42
-------- ------- -------- -------
Total in U.S. Offices......................... $ 36,352 $ 436 4.76 $ 36,687 $ 490 5.42
In Offices Outside the U.S. (D).................. 8,824 1,174 52.78 9,573 1,062 44.99
-------- ------- -------- -------
TOTAL......................................... $ 45,176 $ 1,610 14.14 $ 46,260 $ 1,552 13.61
-------- ------- -------- -------
Total Interest-Bearing Liabilities............... $180,160 $ 4,247 9.35 $178,090 $ 4,022 9.16
------- -------
Demand Deposits in U.S. Offices.................. 12,619 11,625
Other Non-Interest-Bearing Liabilities (E)....... 26,412 23,304
Total Stockholders' Equity....................... 13,615 11,576
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY....... $232,806 $224,595
======== ========
NET INTEREST REVENUE AS A PERCENTAGE OF
AVERAGE INTEREST-EARNING ASSETS................. $ 2,012 3.94 $ 1,851 3.82
======= =======
</TABLE>
(A) The Taxable Equivalent Adjustment is based on the U.S. Federal Statutory Tax
Rate.
(B) Interest rates and amounts included 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 adoption of FASB Interpretation No. 39 in the first quarter
of 1994 are reported in non-interest-earning assets and liabilities,
respectively.
48
<PAGE>
- --------------------------------------------------------------------------------
DETAILS OF CREDIT LOSS EXPERIENCE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1994 1993
-------- --------------------------------------
(In Millions of Dollars) 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR CREDIT LOSSES
AT BEGINNING OF PERIOD......................... $4,379 $4,260 $4,090 $4,033 $3,859
------ ------ ------ ------ ------
ADDITIONS
Provision for Credit Losses.................... $ 415 $ 571 $ 625 $ 715 $ 689
DEDUCTIONS
GROSS CREDIT LOSSES
CONSUMER
In U.S. Offices................................ $ 288 $ 307 $ 320 $ 324 $ 294
In Offices Outside the U.S..................... 132 141 118 126 119
COMMERCIAL
In U.S. Offices................................ 55 73 88 160 160
In Offices Outside the U.S. (A)................ 33 92 77 201 77
------ ------ ------ ------ ------
$ 508 $ 613 $ 603 $ 811 $ 650
------ ------ ------ ------ ------
CREDIT RECOVERIES
CONSUMER
In U.S. Offices................................ $ 59 $ 59 $ 51 $ 51 $ 46
In Offices Outside the U.S..................... 33 38 31 32 31
COMMERCIAL
In U.S. Offices................................ 28 30 37 27 8
In Offices Outside the U.S..................... 73 51 33 42 51
------ ------ ------ ------ ------
$ 193 $ 178 $ 152 $ 152 $ 136
------ ------ ------ ------ ------
NET CREDIT LOSSES
In U.S. Offices................................ 256 $ 291 $ 320 $ 406 $ 400
In Offices Outside the U.S..................... 59 144 131 253 114
------ ------ ------ ------ ------
$ 315 $ 435 $ 451 $ 659 $ 514
------ ------ ------ ------ ------
OTHER, NET (B)................................. (7) (17) (4) 1 (1)
------ ------ ------ ------ ------
ALLOWANCE FOR CREDIT LOSSES
AT END OF PERIOD............................... $4,472 $4,379 $4,260 $4,090 $4,033
====== ====== ====== ====== ======
Allowance for Credit Losses as a
Percentage of Period-End Loans................. 3.26% 3.15% 3.05% 2.94% 2.92%
Net Consumer Credit Losses..................... $ 328 $ 351 $ 356 $ 367 $ 336
------ ------ ------ ------ ------
As a Percentage of Average
Consumer Loans............................... 1.59% 1.69% 1.75% 1.82% 1.67%
------ ------ ------ ------ ------
Net Commercial Credit Losses (Recoveries) (A).. $ (13) $ 84 $ 95 $ 292 $ 178
------ ------ ------ ------ ------
As a Percentage of Average
Commercial Loans............................. 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) Principally reflects transfer relating to reserves for anticipated losses on
portfolios of consumer receivables that have been sold with recourse.
NM Not meaningful as recoveries result in a negative percentage.
49
<PAGE>
- --------------------------------------------------------------------------------
CASH-BASIS, RENEGOTIATED AND PAST DUE LOANS (A)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Mar. 31 Dec. 31 Mar. 31
(In Millions of Dollars) 1994 1993 1993
------- ------- -------
<S> <C> <C> <C>
COMMERCIAL CASH-BASIS LOANS
In U.S. Offices (B).............................. $1,673 $1,744 $2,873
In Offices Outside the U.S., Excluding
Refinancing Countries (B)....................... 680 730 987
In Refinancing Countries (C)..................... 991 1,041 1,242
------ ------ ------
TOTAL COMMERCIAL CASH-BASIS LOANS................ $3,344 $3,515 $5,102
====== ====== ======
COMMERCIAL RENEGOTIATED LOANS (B)(D)
In U.S. Offices.................................. $ 320 $ 641 $ 82
In Offices Outside the U.S....................... 64 67 54
------ ------ ------
TOTAL COMMERCIAL RENEGOTIATED LOANS.............. $ 384 $ 708 $ 136
====== ====== ======
CONSUMER LOANS ON WHICH ACCRUAL OF INTEREST
HAS BEEN SUSPENDED
In U.S. Offices.................................. $1,900 $1,915 $2,190
In Offices Outside the U.S....................... 1,004 948 923
------ ------ ------
TOTAL CONSUMER LOANS ON WHICH ACCRUAL
OF INTEREST HAS BEEN SUSPENDED.................. $2,904 $2,863 $3,113
====== ====== ======
ACCRUING LOANS 90 OR MORE DAYS DELINQUENT (E)
In U.S. Offices.................................. $ 482 $ 635 $ 598
In Offices Outside the U.S....................... 407 421 381
------ ------ ------
TOTAL ACCRUING LOANS 90 OR MORE DAYS DELINQUENT.. $ 889 $1,056 $ 979
====== ====== ======
</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) Refer to detailed discussion of Refinancing Portfolio on page 20.
(D) Not included in these amounts are holdings of Brady Bonds issued by the
governments of Nigeria and the Philippines. The Nigerian debt is reported
in Securities Available for Sale commencing in 1994 at a carrying value of
$54 million, which reflects the market value of the debt (face amount of
$130 million which was previously reported as a Loan). The carrying value
(at cost) of the Philippine debt, which is reported in Securities Held to
Maturity commencing in 1994, was $38 million at March 31, 1994 (market value
of $27 million). The principal on these Brady Bonds is secured by zero
coupon U.S. Treasury securities which will have a value at maturity equal to
the face amount of the bonds. The fair value of this collateral at March
31, 1994 was approximately $17 million and $6 million for the Nigeria and
the Philippine debt, respectively.
(E) Includes consumer loans of $738 million, $802 million and $811 million at
March 31, 1994, December 31, 1993 and March 31, 1993, respectively. Refer
to detailed discussion of Consumer Loan Portfolio on page 11.
- --------------------------------------------------------------------------------
OTHER REAL ESTATE OWNED (OREO)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Mar. 31 Dec. 31 Mar. 31
(In Millions of Dollars) 1994 1993 1993
------- ------- -------
<S> <C> <C> <C>
Consumer.......................................... $1,247 $1,212 $1,314
Commercial:
North America Real Estate....................... $2,130 $2,332 $3,032
Other........................................... 468 464 689
------ ------ -------
Total Commercial................................ $2,598 $2,796 $3,721
Total OREO........................................ $3,845 $4,008 $5,035
====== ====== =======
</TABLE>
50
<PAGE>
- --------------------------------------------------------------------------------
SECURITIES
- --------------------------------------------------------------------------------
Effective January 1, 1994, Citicorp adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities." See page 38 for Adoption of New Accounting Standards.
<TABLE>
<CAPTION>
(In Millions of Dollars) March 31, 1994 December 31, 1993(A)
------------------------------------------ --------------------
Gross Gross
Amortized Unrealized Unrealized Fair Amortized Fair
Cost Gains Losses Value Cost Value
--------- ---------- ---------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
SECURITIES - HELD TO MATURITY (B), (C)
U.S. Treasury and Federal Agency.................... $ 4,393 $ 17 $ 17 $ 4,393 $ 3,781 $ 3,808
State and Municipal................................. - - - - 9 10
Foreign Government (D).............................. 2,557 10 438 2,129 1,314 1,310
U.S. Corporate...................................... 36 - 1 35 45 45
Other Debt Securities (D)........................... 306 1 5 302 488 493
------- ---- ---- ------- ------- -------
Total Debt Securities............................. $ 7,292 $ 28 $461 $ 6,859 $ 5,637 $ 5,666
======= ==== ==== ======= ======= =======
SECURITIES - AVAILABLE FOR SALE (C), (E), (F), (G)
U.S. Treasury and Federal Agency.................... $ 2,114 $ 93 $ 40 $ 2,167 $ 2,095 $ 2,190
State and Municipal................................. 1,131 65 46 1,150 695 704
Foreign Government (D).............................. 3,855 254 104 4,005 3,278 3,391
U.S. Corporate...................................... 285 - 15 270 192 185
Other Debt Securities............................... 1,086 25 14 1,097 1,431 1,473
------- ---- ---- ------- ------- -------
Total Debt Securities............................. $ 8,471 $437 $219 $ 8,689 $ 7,691 $ 7,943
Equity Securities (H)............................... 1,053 143 9 1,187 1,014 1,145
------- ---- ---- ------- ------- -------
$ 9,524 $580 $228 $ 9,876 $ 8,705 $ 9,088
======= ==== ==== ======= ======= =======
FAIR VALUE (I)
Venture Capital..................................... 1,522 - - 1,522 1,489 1,489
------- ---- ---- ------- ------- -------
$18,338 $608 $689 $18,257 $15,831 $16,243
======= ==== ==== ======= ======= =======
</TABLE>
(A) At December 31, 1993, gross unrealized gains and gross unrealized losses on
securities held to maturity totaled $45 million and $16 million,
respectively and gross unrealized gains and gross unrealized losses on
securities available for sale totaled $427 million and $44 million,
respectively.
(B) For the three months ended March 31, 1994 and 1993, cash proceeds from
maturities of debt securities held to maturity totaled $4.5 billion and $4.7
billion, respectively. There were no sales of debt securities held to
maturity.
(C) Included in Federal Agency and U.S. Corporate Securities available for sale
are mortgage-backed securities with an amortized cost of $773 million and
fair value of $770 million, respectively, at March 31, 1994. Gross
unrealized gains were $7 million and gross unrealized losses were $10
million at March 31, 1994. Included in Federal Agency and U.S. Corporate
Securities held to maturity are mortgage-backed securities with an amortized
cost of $895 million and a fair value of $877 million. Gross unrealized
gains and gross unrealized losses for these securities were zero and $18
million, respectively.
(D) Certain debt of foreign countries meets the technical definition in SFAS No.
115 of a "security" and, accordingly, was reclassified on January 1, 1994
from Loans to Securities and is accounted for according to the provisions of
SFAS No. 115. Included in Foreign Government securities held to maturity
are such securities with an amortized cost and fair value of $1,430 million
and $1,002 million, respectively, at March 31, 1994. Gross unrealized
losses for these securities were $428 million. Included in Other Debt
Securities held to maturity are such securities with an amortized cost of
$65 million and fair value of $60 million, respectively, at March 31, 1994.
Included in Foreign Government securities available for sale are such
securities with an amortized cost and fair value of $177 million and $290
million, respectively, at March 31, 1994. Gross unrealized gains and gross
unrealized losses for these securities were $180 million and $67 million,
respectively.
(E) At March 31, 1994, available for sale securities are carried at their fair
values with net unrealized gains and losses separately reported in
stockholders' equity according to the provisions of SFAS No. 115. At
December 31, 1993, available for sale securities were carried at the lower
of aggregate amortized cost or fair value.
(F) Cash proceeds from sales and maturities of available-for-sale securities
totaled $3.8 billion during the first quarter of 1994 and $3.6 billion
during the first quarter of 1993. Of these amounts, sales of debt
securities available for sale totaled $2.3 billion during the first quarter
of 1994 and $2.2 billion during the first quarter of 1993. For the three
months ended March 31, 1994 and 1993, gross realized gains on sales of
securities available for sale totaled $62 million and $17 million,
respectively, of which $28 million and $16 million related to debt
securities available for sale for 1994 and 1993, respectively. For the
three months ended March 31, 1994 and 1993, gross realized losses on sales
of securities available for sale totaled $12 million and $1 million for 1994
and 1993, respectively, which related to debt securities in 1994 and equity
securities in 1993.
(G) Not included in the table above are securities available for sale held by
equity-method affiliates at fair value. At March 31, 1994 the amortized
cost and fair value of these securities were $955 million and $973 million,
respectively. The unrealized gains and unrealized losses related to those
securities were $33 million and $15 million, respectively, and are included
in the net unrealized gains-securities available for sale in stockholders'
equity at March 31, 1994.
(H) Equity securities available for sale includes certain non-marketable equity
securities which are excluded from the scope of SFAS No. 115 and are
therefore carried at cost. At March 31, 1994, the carrying amount of those
securities was $739 million (which is reported in both the amortized cost
and fair value columns above) and the fair value was $774 million.
(I) For the three months ended March 31, 1994, net gains on investments held by
venture capital subsidiaries totaled $79 million, of which $77 million and
$23 million represented gross unrealized gains and gross unrealized losses,
respectively. For the three months ended March 31, 1993, net gains on
investments held by venture capital subsidiaries totaled $54 million, of
which $81 million and $30 million represented gross unrealized gains and
gross unrealized losses, respectively.
51
<PAGE>
- --------------------------------------------------------------------------------
LONG-TERM DEBT
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(With original maturities of more than one year) (A)
(In Millions of Dollars) Maturity Distributions at March 31, 1994
<S> <C>
PARENT COMPANY (B)
Due in 1994............................................... $ 1,418
Due in 1995............................................... 1,677
Due in 1996............................................... 1,254
Due in 1997............................................... 632
Due in 1998............................................... 1,233
Due in 1999-2003.......................................... 2,686
Due in 2004-2008.......................................... 1,531
Due in 2009 and Thereafter................................ 794
-------
$11,225
=======
SUBSIDIARIES
Due in 1994............................................... $ 585
Due in 1995............................................... 774
Due in 1996............................................... 1,370
Due in 1997............................................... 283
Due in 1998............................................... 315
Due in 1999-2003.......................................... 496
Due in 2004-2008.......................................... 167
Due in 2009 and Thereafter................................ 50
-------
$ 4,040
-------
Total..................................................... $15,265
=======
</TABLE>
(A) Maturity distribution is based upon contractual maturities or earlier dates
at which debt is repayable at the option of the holder, due to required
mandatory sinking fund payments or due to call notices issued.
(B) Maturity distribution includes $19 million of redeemable preferred stock.
- --------------------------------------------------------------------------------
52
<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 Operations for the Three Months Ended
MARCH 31, 1994 AND 1993.......................................... 39
Consolidated Balance Sheet as of
MARCH 31, 1994, AND DECEMBER 31, 1993............................ 40
Consolidated Statement of Cash Flows for the Three Months Ended
MARCH 31, 1994 AND MARCH 31, 1993................................ 42
Calculation of Net Income Per Share.............................. 44
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................. 3-38
PART II OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K................................. 54
Signatures ................................................................. 55
</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 three months ended MARCH 31, 1994 AND 1993 have been
included.
- --------------------------------------------------------------------------------
53
<PAGE>
- --------------------------------------------------------------------------------
Item 6 - Exhibits and Reports on Form 8-K
--------------------------------
a) Exhibit 3.2 By-Laws of Citicorp (incorporated herein by reference
to Exhibit 4.1 from Citicorp's Registration Statement on Form S-8,
File No. 33-53261).
b) Exhibit 10.1 1994 Annual Incentive Plan for Selected Executive
Officers.
c) Reports on Form 8-K.
Citicorp filed a Form 8-K Current Report dated January 19, 1994 (Item
5) which report included a summary of the consolidated operations of
Citicorp for the year ended December 31, 1993 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 April 21, 1994 (Item
5) which report included a summary of the consolidated operations of
Citicorp for the three month period ended March 31, 1994 and (Item 7)
the calculation of the ratio of income to fixed charges (Exhibit
12(a) thereto) and the calculation of the ratio of income to fixed
charges including preferred stock dividends (Exhibit 12(b) thereto).
54
<PAGE>
- --------------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
/S/ Thomas E. Jones
------------------------------
Thomas E. Jones
Executive Vice President
A Principal Financial Officer
CITICORP By: /S/ George E. Seegers
Registrant ------------------------------
George E. Seegers
Assistant Secretary
Date: May 16, 1994
- --------------------------------------------------------------------------------
55
1994 CITICORP ANNUAL INCENTIVE PLAN FOR SELECTED EXECUTIVE OFFICERS
1. Purpose
The purpose of the Plan is to permit the Company, through
awards of annual incentive compensation qualifying for federal
income tax deductions, to attract and retain executives and to
motivate these executives to promote the profitability and
growth of the Company.
2. Definitions
- "Award" shall mean the amount granted to a Participant by
the Committee for a Performance Period under the Plan.
- "Award Payment Date" shall mean, for each Performance
Period, the date that the amount of the Award for that
Performance Period shall be paid to the Participant under
Section 6 of the Plan, without regard to any election to
defer receipt of the Award made by the Participant under
Section 7 of the Plan.
- "Board of Directors" shall mean the Board of Directors of
the Company.
- "Carryforward Amount," for any Performance Period, means
the sum of all amounts included in the Pool Amounts for
all prior Performance Periods but not actually paid as
Awards, provided that the Carryforward Amount shall never
be more than $3 million.
- "Code" shall mean the Internal Revenue Code of 1986, as
amended, and references to particular provisions of the
Code shall include any amendments thereto or successor
provisions and any rules and regulations promulgated
thereunder.
- "Committee" shall mean the Personnel Committee of the
Board of Directors or any other duly established
committee or subcommittee meeting the requirements of
Section 162(m)(4)(c) of the Code that the Personnel
Committee of the Board of Directors determines shall act
as the Committee for purposes of the Plan.
- "Company" shall mean Citicorp.
- "Disability" shall mean a disability as defined under the
Company's Disability Benefits Plan.
- "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations
promulgated thereunder.
- "Executive" shall mean any executive officer of the
Company.
- "Net Income," for any Performance Period, shall mean
Citicorp's consolidated net income for the period before
extraordinary items and the cumulative effect of
accounting changes, determined in accordance with
generally accepted accounting principles consistently
applied and as reported by management of Citicorp to the
Board of Directors following the end of the Performance
Period, provided that Net Income shall never be less than
zero.
- "Participant," for a Performance Period, shall mean each
Executive who is a "covered employee" (as defined in
Section 162(m) of the Code) for that Performance Period.
- "Performance Period" shall mean the taxable year of the
Company or any other period designated by the Committee
with respect to which an Award may be granted.
- "Plan" shall mean this 1994 Citicorp Annual Incentive
Plan for Selected Executive Officers, as it may be
amended from time to time.
- "Pool Amount," for any Performance Period, shall mean (a)
0.5% of Net Income plus (b) the Carryforward Amount.
- "Retirement" shall mean retirement under any retirement
plan maintained by the Company.
3. Administration
The Plan shall be administered by the Committee, which shall
have full authority to interpret the Plan, to establish rules
and regulations relating to the operation of the Plan, to
determine the amount of any Awards (subject to the limitations
of Section 4) and the type of consideration in which they
shall be paid and to make all other determinations and take
all other actions necessary or appropriate for the proper
administration of the Plan. The Committee's interpretation of
the Plan, and all actions taken within the scope of its
authority, shall be final and binding on the Company, its
stockholders and Participants, Executives, former Executives
and beneficiaries. No member of the Committee shall be
eligible to participate in the Plan.
4. Eligibility and Participation; Determination of Awards
(a) Prior to the beginning of each Performance Period, or at
such later time as may be permitted by applicable
provisions of the Code, the Committee shall establish for
each Participant a maximum Award, expressed as a
percentage of the Pool Amount for that Performance
Period, provided that the total of all such maximum
percentages shall not exceed 100% (except to the extent
permitted by Section 162(m) of the Code), and the maximum
percentage for any single Participant shall not exceed
35%. For the 1994 Performance Period, the Committee
shall make the determinations referred to in this
paragraph before April 1, 1994.
(b) Following the end of each Performance Period, the
Committee may determine to grant to any Participant an
Award, which may not exceed that Participant's maximum
Award. The aggregate amount of all Awards under the Plan
for any Performance Period shall not exceed the
applicable Pool Amount.
5. Payment of Awards
Subject to the limitations of Section 6, each Participant
shall be eligible to receive, as soon as practicable after the
amount of such Participant's Award for a Performance Period
has been determined, all or a portion of that Award. Awards
may be paid in cash, stock (which may have such restrictions
as to transferability or vesting as the Committee shall
determine), any other form of consideration determined by the
Committee or any combination thereof, provided that for
purposes of the Plan the value of any stock so granted shall
be the average of the highest and lowest quoted selling prices
on the New York Stock Exchange on the date of grant and the
value of any other non-cash Award shall be determined by the
Committee at the time it is granted. Any stock so granted
shall be awarded pursuant to, and subject to the limits on
aggregate amounts of stock issuable under, the 1988 Citicorp
Stock Incentive Plan, as it may be amended from time to time.
In the event a partial amount is paid, the Committee may
determine, in its sole discretion, the date when the remaining
portion will be paid to the Participant for that Performance
Period.
6. Limitation on Right to Payment of Award
(a) No Participant shall have any right to receive payment of
any Award under the Plan for a Performance Period unless
the Participant remains in the employ of the Company
through the end of the Performance Period. However, in
the event that, prior to the end of the Performance
Period, a Participant's employment with the Company or
any of its affiliates is terminated due to the
Participant's death, Disability or Retirement, the
Participant (or the Participant's beneficiary) shall
remain eligible to receive a portion of the Award, on the
Award Payment Date, based on the amount of time the
Participant was employed during this Performance Period.
Notwithstanding the preceding two sentences, the
Committee may approve payment of an Award to a
Participant whose employment terminates prior to the
Award Payment Date for reasons other than death,
Disability or Retirement.
(b) Furthermore, no Participant shall have any right to
receive payment of an Award under the Plan if, subsequent
to the commencement of the Performance Period and prior
to the Award Payment Date, the Participant either (i)
engaged directly or indirectly, either personally or as
an employee, agent, partner, stockholder, officer or
director of, or consultant to, any entity or person
engaged in any business in which the Company or its
affiliates is engaged, and, in the opinion of the
Committee, such entity or person has engaged in
competition with the Company or any of its affiliates or
(ii) at any time divulged to any person or entity other
than the Company or any of its affiliates, any of the
trade secrets, methods, processes or the proprietary or
confidential information of the Company or any of its
affiliates. For the purpose of this paragraph, a
Participant shall not be deemed a stockholder of a
competing entity if the Participant's record and
beneficial ownership amount to not more than one percent
of the outstanding capital stock of any company subject
to the periodic and other reporting requirements of the
Securities Exchange Act of 1934, as amended.
7. Deferral of Payment of Awards
Notwithstanding the provisions of Section 5 hereof, and at the
discretion of the Committee, a Participant may, subject to
such terms and conditions as the Committee may determine,
elect to defer payment of all or part of any Award which the
Participant might earn with respect to a Performance Period
(together with interest thereon from the Award Payment Date at
the rate, if any, fixed by the Committee) by complying with
such procedures as the Committee may prescribe.
8. Designation of Beneficiary
A Participant may designate a beneficiary or beneficiaries
who, in the event of the Participant's death prior to full
payment of any Award hereunder, shall receive payment of any
Award due under the Plan. Such designation shall be made by
the Participant on a form prescribed by the Committee. The
Participant may at any time change or revoke such designation.
A beneficiary designation, or revocation of a prior
beneficiary designation, will be effective only if it is made
in writing on a form provided by the Company, signed by the
Participant and received by the Company. If the Participant
does not designate a beneficiary or the beneficiary dies prior
to receiving any payment of any Award, Awards payable under
the Plan shall be paid to the Participant's estate. If the
beneficiary dies after receiving any payment of an Award, any
amounts remaining to be paid shall be paid to the
beneficiary's estate.
9. Corporate Change
In the event of a corporate change (e.g. an extraordinary
dividend, a merger or other reorganization, or a sale or lease
of substantially all the assets of the Company) which
substantially affects the determination of the Company's
performance, the Committee may, if it determines such action
is in the best interest of the Company and obtains prior
approval of the Board of Directors, equitably adjust the
Awards to be made under the Plan, subject to the limits set
forth in Section 4 and any other restrictions imposed by the
Code.
10. Amendments
The Committee may at any time amend this Plan, provided that
no such amendment that would require the vote of the
stockholders of the Company pursuant to Section 162(m) of the
Code or Section 16 of the Exchange Act shall be effective
without such consent. No such amendment which adversely
affects a Participant's rights to or interest in an Award
granted prior to the date of the amendment shall be effective
unless the Participant shall have agreed thereto.
11. Termination
(a) The Board of Directors may terminate this Plan at any
time, and in the case of such termination, the following
provisions of this Section 11 shall apply notwithstanding
any other provisions of the Plan to the contrary.
(b) Each Award payable under Section 5 shall be paid as soon
as practicable, but in no event later than 30 days after
the termination date of the Plan.
(c) Payment of deferred amounts plus any earnings may be
accelerated with respect to any affected Participant in
the discretion of the Board of Directors and paid as soon
as practicable, but in no event shall the termination of
the Plan adversely affect the rights of any Participant
to deferred amounts plus any earnings thereon previously
awarded such Participant.
12. Miscellaneous Provisions
(a) This Plan is not a contract between the Company and its
Executives. No Executive or other person shall have any
claim or right to be granted an Award under this Plan
until such Award is actually granted. Neither the
establishment of this Plan, nor any action taken
hereunder, shall be construed as giving any Executive any
right to be retained in the employ of the Company.
Nothing contained in this Plan shall limit the ability of
the Company to make payments or awards to Executives
under any other plan, agreement or arrangement.
(b) A Participant's right and interest under the Plan may not
be assigned or transferred, except as provided in Section
8 hereof, and any attempted assignment or transfer shall
be null and void and shall extinguish, in the Company's
sole discretion, the Company's obligation under the Plan
to pay Awards with respect to the Participant.
(c) The Plan shall be unfunded. The Company shall not be
required to establish any special segregation of assets
to assure payment of Awards.
(d) The Company shall have the right to deduct from Awards
paid any taxes or other amounts required by law to be
withheld. If the Committee so determines, a Participant
may elect, subject to any restrictions which may be
imposed by the Committee or by applicable law, that any
such deduction, with respect to Awards paid in stock or
other non-cash consideration, shall be made by
withholding a portion of such stock or other
consideration.
(e) All questions pertaining to the construction, regulation,
validity and effect of the provisions of the Plan shall
be determined in accordance with the laws of the State of
New York.
(f) If any provision of this Plan would cause Awards not to
constitute "qualified performance-based compensation"
under Section 162(m) of the Code, that provision shall be
severed from, and shall be deemed not to be a part of,
this Plan, but the other provisions hereof shall remain
in full force and effect.
(g) No member of the Board of Directors of the Company or an
affiliate or the Committee, and no officer, employee or
agent of the Company or a subsidiary shall be liable for
any act or action hereunder, whether of commission or
omission, taken by any other member, or by any officer,
agent, or employee, or, except in circumstances involving
bad faith, for anything done or omitted to be done in the
administration of the Plan.
13. Effective Date
The Plan shall be effective for the Performance Period
beginning on January 1, 1994, subject to approval by the
stockholders of the Company in accordance with Section 162(m)
of the Code.
