<PAGE>
<TABLE>
<CAPTION>
CONTENTS PAGE
<S> <C>
FINANCIAL HIGHLIGHTS........................................... 1
FINANCIAL SUMMARY.............................................. 2
BUSINESS DISCUSSIONS
- - Earnings Summary............................................. 3
- - Global Consumer.............................................. 4
- - Global Finance............................................... 8
- - North America Commercial Real Estate......................... 10
- - Cross-Border Refinancing Portfolio........................... 13
- - Corporate Items.............................................. 13
MANAGING GLOBAL RISK
- - Liquidity.................................................... 14
- - Price Risk................................................... 14
- - Derivative and Foreign Exchange Activities................... 15
- - Estimated Fair Value of Financial Instruments................ 18
- - Capital...................................................... 19
STATEMENT OF INCOME ANALYSIS
- Net Interest Revenue........................................ 23
- Fee and Commission Revenue.................................. 24
- Trading-Related Revenue..................................... 24
- Securities Transactions..................................... 25
- Other Revenue............................................... 25
- Provision and Allowance for Credit Losses................... 26
- Operating Expense........................................... 28
- Income Taxes................................................ 28
- Effect of Credit Card Receivables Securitization............ 29
CONSOLIDATED FINANCIAL STATEMENTS
- - Statement of Income.......................................... 30
- - Balance Sheet................................................ 31
- - Statement of Changes in Stockholders' Equity................. 32
- - Statement of Cash Flows...................................... 33
- - Citibank, N.A. Balance Sheet................................. 34
OTHER FINANCIAL INFORMATION
- - Securities................................................... 35
- - Long-Term Debt............................................... 36
- - Calculation of Earnings Per Share............................ 37
- - Average Balances and Interest Rates.......................... 38
- - Cash-Basis, Renegotiated, and Past Due Loans................. 42
- - Other Real Estate Owned and Assets Pending Disposition....... 43
- - Cross-Border and Non-Local Currency Outstandings............. 44
- - Cross-Border and Non-Local Currency Claims on Third Parties.. 44
- - Details of Credit Loss Experience............................ 45
FORM 10-Q
- - Cover Page................................................... 46
- - Cross-Reference Index........................................ 47
SIGNATURES..................................................... 49
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------
<TABLE>
<CAPTION>
First Quarter
-----------------
EARNINGS (In Millions) 1995 1994
- ---------------------- ------ ------
<S> <C> <C>
Net Income
Before Accounting Change....................................... $ 829 $ 609
After Accounting Change (A).................................... 829 553
------ ------
PER SHARE
- ---------
Net Income (see page 37)
On Common and Common Equivalent Shares
Before Accounting Change....................................... $ 1.71 $ 1.24
After Accounting Change (A).................................... 1.71 1.11
Assuming Full Dilution
Before Accounting Change....................................... $ 1.53 $ 1.12
After Accounting Change (A).................................... 1.53 1.01
Common Stockholders' Equity...................................... $35.28 $27.90
------ ------
RETURN ON ASSETS AND EQUITY
- ---------------------------
Return on Total Assets
Before Accounting Change....................................... 1.25% .98%
After Accounting Change (A).................................... 1.25 .95
Return on Common Stockholders' Equity
Before Accounting Change....................................... 21.8% 20.1%
After Accounting Change (A).................................... 21.8 19.5
Return on Total Stockholders' Equity
Before Accounting Change....................................... 18.8% 17.1%
After Accounting Change (A).................................... 18.8 16.7
------ ------
<CAPTION>
CAPITAL (Dollars in Billions) (see page 19)
- -------------------------------------------
Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
1995 1994 1994 1994 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Tier 1......................................... $ 17.8 $ 16.9 $ 16.0 $ 15.0 $ 14.0
Tier 1 and 2................................... 26.9 26.1 25.4 24.5 23.5
Tier 1 Ratio................................... 8.01% 7.80% 7.47% 7.09% 6.86%
Tier 1 and 2 Ratio............................. 12.06 12.04 11.86 11.60 11.55
Leverage Ratio................................. 7.00 6.67 6.42 6.22 5.95
Common Equity as a Percentage of Total Assets.. 5.21 5.42 5.04 4.55 4.51
Total Equity as a Percentage of Total Assets... 6.83 7.09 6.70 6.14 6.12
------ ------ ------ ------ ------
OPERATING MARGIN (In Millions)
- ------------------------------
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
1995 1994 1994 1994 1994
------ ------ ------ ------ ------
Total Revenue.................................. $4,443 $4,512 $4,325 $4,050 $3,861
Effect of Credit Card Securitization (B)....... 222 189 213 264 268
Net Cost To Carry (C).......................... - (1) 30 31 29
Capital Building Transactions.................. - 60 - (117) (23)
------ ------ ------ ------ ------
Adjusted Revenue............................... 4,665 4,760 4,568 4,228 4,135
------ ------ ------ ------ ------
Total Operating Expense........................ 2,693 2,723 2,630 2,456 2,447
Net OREO Costs (D)............................. - 5 (5) 19 (28)
------ ------ ------ ------ ------
Adjusted Operating Expense..................... 2,693 2,728 2,625 2,475 2,419
------ ------ ------ ------ ------
OPERATING MARGIN............................... 1,972 2,032 1,943 1,753 1,716
Consumer Credit Costs (E)...................... 536 595 544 585 614
Commercial Credit Costs (F).................... 2 66 40 73 60
------ ------ ------ ------ ------
OPERATING MARGIN LESS CREDIT COSTS............. 1,434 1,371 1,359 1,095 1,042
Additional Provision (G)....................... 75 80 100 90 66
Capital Building Transactions.................. - (60) - 117 23
------ ------ ------ ------ ------
INCOME BEFORE TAXES AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGE............................. $1,359 $1,231 $1,259 $1,122 $ 999
====== ====== ====== ====== ======
</TABLE>
(A) First quarter 1994 reflects the cumulative effect of adopting Statement of
Financial Accounting Standards ("SFAS") No. 112, "Employers' Accounting for
Postemployment Benefits," as of January 1, 1994.
(B) For a description of the effect of credit card receivables securitization,
see page 29.
(C) Principally the net cost to carry commercial cash-basis loans and Other
Real Estate Owned ("OREO").
(D) Principally writedowns, gains and losses on sales, and direct revenue and
expense related to commercial OREO.
(E) Principally consumer net credit write-offs adjusted for the effect of
credit card receivables securitization.
(F) Includes commercial net credit write-offs, net cost to carry, and net OREO
costs.
(G) Represents provision for credit losses in excess of net write-offs. Fourth,
second, and first quarters of 1994 reflect reserve releases of $20 million,
$10 million, and $34 million, respectively, related to the cross-border
refinancing portfolio.
1
<PAGE>
FINANCIAL SUMMARY
Citicorp reported first quarter net income of $829 million, or $1.53 per common
share fully diluted, compared with 1994 first quarter operating earnings of $609
million, or $1.12 per share, and net income of $553 million, or $1.01 per share.
Net income in the first quarter of 1994 reflected the cumulative effect of
adopting the accounting standard for postemployment benefits. The results for
the 1995 first quarter reflected higher trading-related revenue compared with
the weak 1994 first quarter, a reduction in both consumer and commercial credit
costs, and continued business expansion in the Emerging Markets.
Revenue (adjusted for the effect of credit card securitization, credit-related
costs, and capital building transactions) was up 13% from the 1994 first quarter
to $4.7 billion in the first quarter of 1995. Trading-related revenue (which
includes trading account and foreign exchange revenue, as well as net interest
revenue and other revenue associated with trading activities) in the first
quarter amounted to $395 million, up significantly from the $214 million
reported in the first quarter of 1994, reflecting increased customer-driven
foreign exchange activity and improved market-making results compared with the
weak 1994 first quarter. Excluding trading-related revenue, adjusted revenue
increased 9%, largely due to improvement in net interest revenue from higher
asset volumes and spreads.
Operating expense (adjusted for net OREO costs) increased 11% from the 1994
first quarter, but improved slightly from the 1994 fourth quarter. The increase
from last year reflected business expansion throughout the Emerging Markets and
in select businesses in North America, Europe and Japan, as well as continued
investments in operational and technological efficiencies.
The foreign currency translation effect of the weak U.S. dollar in European and
Asian exchange markets resulted in an increase in both adjusted revenue and
expense of approximately 2% from the 1994 first quarter.
Commercial credit costs decreased to $2 million in the first quarter from $66
million in the 1994 fourth quarter and $60 million in the 1994 first quarter.
Commercial cash-basis loans and OREO of $3.1 billion were modestly below 1994
year-end levels, but declined sharply from $5.9 billion at March 31, 1994.
Consumer credit costs declined in the quarter to $536 million from $595 million
in the 1994 fourth quarter and from $614 million in the 1994 first quarter.
Citicorp continues to strengthen its balance sheet. The allowance for credit
losses increased $115 million to reach $5.3 billion at March 31, 1995, compared
with $5.2 billion at 1994 year-end and $4.5 billion a year ago.
The Tier 1 capital ratio increased to 8.01% at March 31, 1995, up from 7.80% at
December 31, 1994 and 6.86% at March 31, 1994. Total capital (Tier 1 and Tier
2) was $26.9 billion at March 31, 1995, compared with $26.1 billion and $23.5
billion at December 31, 1994 and March 31, 1994, respectively.
Return on common equity increased to 21.8% for the quarter compared with 20.1%
in the same 1994 period. Return on total stockholders' equity in the quarter
was 18.8% compared with 17.1% for the first quarter of 1994.
Effective January 1, 1995, Citicorp adopted SFAS No. 114, "Accounting by
Creditors for Impairment of a Loan," which establishes new rules for calculating
certain components of the allowance for credit losses. Adoption of the new
standard had no effect on the level of the overall allowance or on operating
results.
2
<PAGE>
BUSINESS DISCUSSIONS
- --------------------
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.
EARNINGS SUMMARY
<TABLE>
<CAPTION>
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Millions) 1995 1994(A) 1994(A) 1994(A) 1994(A)
- ------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Global Consumer (see page 4):
North America, Europe and Japan................. $274 $ 286 $307 $249 $256
Emerging Markets................................ 189 185 168 160 170
---- ------ ---- ---- ----
Total Global Consumer............................. 463 471 475 409 426
---- ------ ---- ---- ----
Global Finance (see page 8):
North America, Europe and Japan................. 129 209 175 103 94
Emerging Markets................................ 208 212 257 180 167
---- ------ ---- ---- ----
Total Global Finance.............................. 337 421 432 283 261
---- ------ ---- ---- ----
Core Businesses................................... 800 892 907 692 687
North America Commercial Real Estate
(see page 10).................................... - (66) (87) (72) (76)
Cross-Border Refinancing Portfolio (see page 13).. 66 74 45 53 49
Corporate Items (see page 13)..................... (37) 142 29 204 (51)
---- ------ ---- ---- ----
Operating Earnings................................ 829 1,042 894 877 609
Cumulative Effect of Accounting Change (B)........ - - - - (56)
---- ------ ---- ---- ----
Net Income........................................ $829 $1,042 $894 $877 $553
==== ====== ==== ==== ====
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
(B) First quarter 1994 reflects the cumulative effect of adopting SFAS No. 112
as of January 1, 1994.
3
<PAGE>
GLOBAL CONSUMER
- ---------------
Citicorp's Global Consumer business operates a uniquely global, full-service
consumer franchise encompassing branch banking, credit and charge cards, and
private banking.
<TABLE>
<CAPTION>
First Quarter
---------------
(Dollars in Millions) 1995 1994(A) Change %
- --------------------- ----- ------ ------ ---
<S> <C> <C> <C> <C>
Total Revenue...................... $2,702 $2,491 $211 8
Operating Expense.................. 1,635 1,497 138 9
Provision for Credit Losses........ 359 378 (19) (5)
------ ------ ----
Income Before Taxes................ 708 616 92 15
Income Taxes....................... 245 190 55 29
------ ------ ----
Net Income......................... $ 463 $ 426 $ 37 9
====== ====== ====
Average Assets (In Billions)....... $ 116 $ 102 $ 14 14
Return on Assets................... 1.62% 1.69% (7bp) -
OTHER DATA
North America, Europe and Japan
Net Income....................... $ 274 $ 256 $ 18 7
Average Assets (In Billions)..... 83 75 8 11
Return on Assets................. 1.34% 1.38% (4bp) -
Emerging Markets
Net Income....................... $ 189 $ 170 $ 19 11
Average Assets (In Billions)..... 33 27 6 22
Return on Assets................. 2.32% 2.55% (23bp) -
ADJUSTED FOR CREDIT-RELATED ITEMS
Total Revenue (B)
North America, Europe and Japan.. $2,214 $2,148 $ 66 3
Emerging Markets................. 714 613 101 16
------ ------ ----
Total............................ $2,928 $2,761 $167 6
====== ====== ====
Operating Expense (C)
North America, Europe and Japan.. $1,240 $1,148 $ 92 8
Emerging Markets................. 394 333 61 18
------ ------ ----
Total............................ $1,634 $1,481 $153 10
====== ====== ====
Credit Costs (D)
North America, Europe and Japan.. $ 494 $ 575 $(81) (14)
Emerging Markets................. 42 39 3 8
------ ------ ----
Total............................ $ 536 $ 614 $(78) (13)
====== ====== ====
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
(B) Adjusted principally for the effect of credit card receivables
securitization.
(C) Excludes writedowns, gains and losses on sales, and direct expense related
to OREO for certain real estate lending activities.
(D) Principally net credit write-offs adjusted for the effect of credit card
receivables securitization.
4
<PAGE>
The 9% increase in Global Consumer net income compared with the 1994 first
quarter reflected continued business expansion in the Emerging Markets and lower
credit costs in the North America consumer businesses. Earnings from private
banking activities declined however, primarily in Europe, reflecting market
conditions.
The $167 million, or 6%, increase in adjusted revenue compared with the 1994
first quarter was paced by a 16% revenue increase in the Emerging Markets,
reflecting strong volumes, spreads, and fees in Latin America, as well as higher
loan volumes and fees in Asia Pacific. Adjusted revenue in North America,
Europe and Japan rose 3%, benefiting from the foreign currency translation
effect of the weak U.S. dollar in European exchange markets and modestly higher
revenue in the U.S. credit card business, partially offset by lower revenue from
private banking activities.
In the U.S. credit card business, the repositioning strategy for U.S. bankcards
(which excludes the private label business) has contributed during the last 12
months to a $5.8 billion, or 18%, increase to $38.8 billion in managed
receivables, a 3.2 million, or 16%, increase to 23.6 million in accounts, and a
$4.2 billion, or 29%, increase to $18.6 billion in first quarter charge volumes.
Net interest revenue, however, increased only slightly in the first quarter as
spreads were compressed, primarily due to the higher funding rate environment,
but also reflecting growth in introductory rate balances in the portfolio.
Competitive pricing actions taken under the repositioning strategy have led to a
reduction of annual fee income, which has been offset by higher transaction fees
from increased charge volumes.
Adjusted operating expense rose 10% in the first quarter from a year ago,
reflecting the continuing business expansion in the Emerging Markets, foreign
currency translation effects on expenses in Europe and Asia, as well as
increased spending in the U.S. credit card business relating to certain
marketing programs and account maintenance costs in support of business growth
achieved throughout 1994.
Adjusted credit costs declined 13% from the first quarter of 1994, due to
improvements in the U.S. credit card, U.S. branch (including mortgages), and
private banking businesses. Credit costs increased in the European branches,
partially reflecting foreign currency translation effects.
The 14% growth in average assets from a year ago reflects business expansion in
both the Emerging Markets, where assets grew 22%, and in the U.S. credit card
business, where there was underlying volume growth as well as a lower level of
securitized assets. Additionally, the foreign currency translation effect of
the weak U.S. dollar contributed to the growth in assets, particularly in
Europe.
5
<PAGE>
The consumer loan category represents loans managed by Citicorp's Global
Consumer business. Pricing and credit policies reflect the loss experience of
each particular product. 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 according to loan product and country.
The following table summarizes delinquencies in the on-balance sheet consumer
loan portfolio in terms of the dollar amount of loans 90 days past due and as a
percentage of related loans.
CONSUMER LOAN DELINQUENCY AMOUNTS AND RATIOS
<TABLE>
<CAPTION>
Total
Loans (A) 90 Days or More Past Due
--------- -------------------------------------------------
Mar. 31 Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
(Dollars in Billions) 1995 1995 1994 1994 1994 1994
------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
U.S.
Mortgages..................... $16.9 $ 0.6 $ 0.5 $ 0.5 $ 0.6 $ 0.7
Ratio....................... 3.5% 3.3% 3.5% 3.9% 4.0%
Mortgages Purchased Under
Recourse Provisions (B)...... 0.5 0.4 0.5 0.5 0.5 0.5
Credit Cards (C).............. 15.8 0.2 0.3 0.2 0.2 0.2
Ratio....................... 1.6% 1.5% 1.6% 1.8% 3.0%
Other......................... 16.4 0.7 0.6 0.7 0.7 0.7
Ratio....................... 3.8% 3.7% 4.4% 4.2% 4.4%
----- ----- ----- ----- ----- -----
Total U.S......................... 49.6 1.9 1.9 1.9 2.0 2.1
Ratio....................... 3.8% 3.7% 4.2% 4.7% 5.2%
Other North America, Europe
and Japan........................ 21.9 1.4 1.2 1.3 1.2 1.2
Ratio....................... 6.4% 6.4% 6.4% 6.4% 6.4%
---- ----- ----- ----- ----- -----
Total North America, Europe
and Japan........................ 71.5 3.3 3.1 3.2 3.2 3.3
Ratio....................... 4.6% 4.4% 4.9% 5.2% 5.6%
Emerging Markets.................. 26.6 0.2 0.2 0.2 0.2 0.2
Ratio....................... .8% .7% .7% .8% .8%
---- ----- ----- ----- ----- -----
Total Consumer Loans.............. $98.1 $ 3.5 $ 3.3 $ 3.4 $ 3.4 $ 3.5
===== ===== ===== ===== ===== =====
Ratio....................... 3.5% 3.4% 3.8% 4.0% 4.3%
</TABLE>
(A) Loan amounts are net of unearned income.
(B) Mortgages were delinquent 90 days or more when purchased under recourse
provisions of mortgage sales.
(C) Includes bankcards and private label business.
6
<PAGE>
Consumer loans 90 days or more delinquent of $3.5 billion at March 31, 1995 were
up from year-end 1994, but unchanged from a year ago. The increase since year-
end is primarily due to the foreign currency translation effect of the weaker
U.S. dollar. The significant improvement in the delinquency ratio to 3.5% at
March 31, 1995 from 4.3% a year ago is primarily the result of lower U.S. credit
card and other U.S. consumer loans delinquency ratios.
Total consumer loans delinquent 90 days or more on which interest continued to
be accrued were $858 million at March 31, 1995, compared with $828 million at
December 31, 1994. The majority of these loans, which include personal loans in
Germany and U.S. credit card receivables, are written off upon reaching a
stipulated number of days past due.
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, 1995, interest accrual had been suspended on $987 million
of U.S. mortgages and $1.7 billion of other consumer loans. The corresponding
amounts at December 31, 1994 were $989 million of U.S. mortgages and $1.6
billion of other consumer loans.
Consumer loans at March 31, 1995 included $4.0 billion and $2.4 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, 1995, the U.S. portfolios included $300 million of
loans on which the accrual of interest had been suspended, primarily in
California and New York. The portfolio outside the U.S. included $105 million
of loans on which the accrual of interest had been suspended.
In conjunction with the adoption of SFAS No. 114, consumer loans involving the
in-substance repossession of the underlying collateral are reported as assets
pending disposition (for residential mortgage loans with high probability of
foreclosure) or cash-basis loans (for community and private banking loans)
rather than as OREO. On this basis, as of March 31, 1995, consumer OREO was
$601 million, up $32 million from December 31, 1994. Assets pending
disposition totaled $209 million, compared with $195 million as of December 31,
1994.
While the U.S. economy remained stable and the European economy showed signs of
further improvement during the first quarter of 1995, economic prospects are
uncertain. Credit costs, delinquencies, and loans on which the accrual of
interest is suspended could remain at relatively high levels, and further
increases in credit reserves are possible.
7
<PAGE>
GLOBAL FINANCE
- --------------
The Global Finance business serves corporations, financial institutions,
governments, and other participants in capital markets throughout the world.
Excluded from Global Finance is North America Commercial Real Estate, which is
discussed on pages 10 - 12.
<TABLE>
<CAPTION>
First Quarter
----------------
(Dollars in Millions) 1995 1994(A) Change %
- --------------------- ------ ------ ------ ---
<S> <C> <C> <C> <C>
Total Revenue...................... $1,452 $1,203 $249 21
Operating Expense.................. 931 787 144 18
Provision for Credit Losses........ 16 (34) 50 NM
------ ------ ----
Income Before Taxes................ 505 450 55 12
Income Taxes....................... 168 189 (21) (11)
------ ------ ----
Net Income......................... $ 337 $ 261 $ 76 29
====== ====== ====
Average Assets (In Billions)....... $ 140 $ 133 $ 7 5
Return on Assets................... .98% .80% 18bp -
OTHER DATA
North America, Europe and Japan
Net Income....................... $ 129 $ 94 $ 35 37
Average Assets (In Billions)..... 96 92 4 4
Return on Assets................. .54% .41% 13bp -
Emerging Markets
Net Income....................... $ 208 $ 167 $ 41 25
Average Assets (In Billions)..... 44 41 3 7
Return on Assets................. 1.92% 1.65% 27bp -
ADJUSTED FOR CREDIT-RELATED ITEMS
Total Revenue (B)
North America, Europe and Japan.. $ 803 $ 694 $109 16
Emerging Markets................. 639 510 129 25
------ ------ ----
Total............................ $1,442 $1,204 $238 20
====== ====== ====
Operating Expense (C)
North America, Europe and Japan.. $ 623 $ 539 $ 84 16
Emerging Markets................. 309 261 48 18
------ ------ ----
Total............................ $ 932 $ 800 $132 17
====== ====== ====
Credit Costs (D)
North America, Europe and Japan.. $ (28) $ (47) $ 19 40
Emerging Markets................. 8 (11) 19 NM
------ ------ ----
Total............................ $ (20) $ (58) $ 38 66
====== ====== ====
</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 writedowns, gains and losses on sales, and direct revenue and
expense related to OREO.
(D) Includes net write-offs (recoveries), the net cost to carry cash-basis loans
and OREO, as well as writedowns, gains and losses on sales, and direct
revenue and expense related to OREO.
NM Not meaningful, as percentage equals or exceeds 100%.
8
<PAGE>
Global Finance first quarter 1995 net income totaled $337 million, a 29%
improvement compared with the first quarter of 1994. Net income from activities
in the Emerging Markets rose to $208 million, a $41 million increase compared
with the first quarter of 1994, primarily reflecting improved trading-related
results and a gain on the sale of a real estate asset, partially offset by
higher expenses associated with business expansion. Net income from activities
in North America, Europe and Japan was $129 million, a 37% improvement from the
first quarter of 1994, as trading revenue strengthened.
Adjusted revenue climbed to $1.4 billion, a 20% increase compared with the first
quarter of 1994, primarily reflecting improved trading results and a gain on the
sale of a real estate asset in the Emerging Markets.
Revenue from trading-related activities in the foreign exchange, derivatives,
and securities markets contributed $339 million (24%) of adjusted revenue, up
from $163 million in the first quarter of 1994. Trading-related revenue--
including derivatives--reflected continued customer demand for risk management
products and improved trading activities related to Citicorp's market-making
activities. Trading-related revenue included $216 million and $97 million from
the North America, Europe and Japan business in the first quarter of 1995 and
1994, respectively, and $123 million and $66 million from the Emerging Markets
business in the first quarter of 1995 and 1994, respectively. See pages 24 - 25
for a discussion of the income statement effect of trading-related activities.
Adjusted operating expense increased 17% compared with the first quarter of
1994. North America, Europe and Japan adjusted operating expense increased 16%,
reflecting higher volume in transaction banking, selective back office
investment, and the foreign currency translation effect of the weak U.S. dollar,
primarily in the European exchange markets. The Emerging Markets adjusted
operating expense increased 18%, primarily reflecting continued business
expansion.
Credit recoveries contributed to a net positive credit amount in the first
quarter of 1995. The provision for credit losses in the first quarter of 1995
included a charge in excess of net write-offs of $25 million to build the
allowance for credit losses.
In conjunction with the adoption of SFAS No. 114, which is discussed on page 27,
commercial loans involving the in-substance repossession of the underlying
collateral are reported as cash-basis loans rather than OREO. On this basis,
cash-basis loans at March 31, 1995 were $516 million, up from $470 million at
year-end 1994. The OREO portfolio of $149 million at March 31, 1995, which is
principally located in the United Kingdom, was flat to 1994 year end. Total
cash-basis loans and OREO of $665 million declined from $1.2 billion at March
31, 1994.
Average assets in the first quarter of 1995 included $96 billion in North
America, Europe and Japan and $44 billion in the Emerging Markets. The $7
billion increase in average assets from the first quarter of 1994 primarily
reflects the effects of the volatile dollar on revaluation gains related to
foreign exchange contracts coupled with business expansion in the Emerging
Markets.
9
<PAGE>
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'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.
<TABLE>
<CAPTION>
First Quarter
--------------
(Dollars in Millions) 1995 1994(A) Change %
- --------------------- ---- ------- ------ ---
<S> <C> <C> <C> <C>
Total Revenue...................... $53 $ 20 $ 33 NM
Operating Expense.................. 31 62 (31) (50)
Provision for Credit Losses........ 16 106 (90) (85)
--- ----- ----
Income (Loss) Before Taxes......... 6 (148) 154 NM
Income Taxes (Benefit)............. 6 (72) 78 NM
--- ----- ----
Net Loss........................... $ - $ (76) $ 76 NM
=== ===== ====
Average Assets (In Billions)....... $ 6 $ 10 $ (4) (40)
ADJUSTED FOR CREDIT-RELATED ITEMS
Total Revenue (B).................. $59 $ 46 $ 13 28
Operating Expense (C).............. 31 37 (6) (16)
Credit Costs (D)................... 22 119 (97) (82)
</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 writedowns, gains and losses on sales, and direct revenue and
expense related to OREO.
(D) Includes net write-offs, the net cost to carry cash-basis loans and OREO, as
well as writedowns, gains and losses on sales, and direct revenue and
expense related to OREO.
NM Not meaningful, as percentage equals or exceeds 100%.
The North America Commercial Real Estate business reported break-even results in
the first quarter of 1995, compared with a loss of $76 million in the 1994 first
quarter. Improved credit costs and a gain from the sale of an asset were factors
in the first quarter 1995 results. Credit costs in the first quarter of 1995
declined significantly due to improving real estate market conditions (which
resulted in lower net write-offs and writedowns), as well as a lower net cost to
carry cash-basis loans and OREO. The first quarter 1995 provision for credit
losses was $16 million, compared with $106 million in the 1994 first quarter,
which included a $38 million provision in excess of net write-offs.
10
<PAGE>
PORTFOLIO BY REGION AND BY PROJECT
- ----------------------------------
<TABLE>
<CAPTION>
Multi- Mar. 31 Dec. 31
Mid- Other Location 1995 1994
(In Millions) Atlantic California U.S. Canada & Other Total Total
- ------------- -------- ---------- ------ ------ -------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Loans (A) (B)....................... $1,169 $ 972 $2,362 $ 212 $376 $5,091 $5,325
Cash-Basis Loans (A) (C)............ 316 326 571 146 108 1,467 1,543
OREO (C)............................ 109 273 349 114 20 865 806
Letters of Credit and Other......... 267 837 644 98 256 2,102 2,186
------ ------ ------ ----- ---- ------ ------
Total Exposure...................... $1,861 $2,408 $3,926 $ 570 $760 $9,525 $9,860
====== ====== ====== ===== ==== ====== ======
PORTFOLIO BY PROJECT:
Office.............................. $ 919 $ 587 $1,969 $ 232 $ 20 $3,727 $3,818
Residential......................... 323 947 541 38 92 1,941 1,981
Retail.............................. 354 421 681 195 37 1,688 1,845
Other (D)........................... 265 453 735 105 611 2,169 2,216
------ ------ ------ ----- ---- ------ ------
Total Exposure
at March 31, 1995.................. $1,861 $2,408 $3,926 $ 570 $760 $9,525
====== ====== ====== ===== ==== ======
Total Exposure
at December 31, 1994............... $1,853 $2,466 $4,115 $ 599 $827 $9,860
====== ====== ====== ===== ==== ======
NET WRITE-OFFS AND
NET OREO WRITEDOWNS:
Write-Offs.......................... $ - $ (2) $ 14 $ 4 $ - $ 16 $ 68
Writedowns.......................... - 1 4 5 - 10 36
------ ------ ------ ----- ---- ------ ------
First Quarter 1995 - Total.......... $ - $ (1) $ 18 $ 9 $ - $ 26
====== ====== ====== ===== ==== ======
First Quarter 1994 - Total.......... $ 15 $ 45 $ 11 $ 24 $ 9 $ 104
====== ====== ====== ===== ==== ======
</TABLE>
(A) Includes real estate-related loans of $355 million at March 31, 1995 and
$405 million at December 31, 1994, of which $73 million in 1995 and 1994
were on a cash basis. Also includes bankers acceptances (included in
Customers' Acceptance Liability) of $16 million and $17 million at March 31,
1995 and December 31, 1994, respectively.
(B) Loans includes $282 million and $655 million of renegotiated loans at March
31, 1995 and December 31, 1994, respectively, and excludes cash-basis loans.
The weighted-average contractual rate on renegotiated loans approximated 6%
at March 31, 1995. The level of renegotiated loans may increase as a result
of ongoing restructuring activities.
(C) Effective January 1, 1995, Citicorp adopted SFAS No. 114, which eliminated
the concept of "in-substance foreclosure." Under SFAS No. 114, assets are
reported as OREO only when possession of the collateral is obtained. In
conjunction with the adoption of SFAS No. 114, loans involving the in-
substance foreclosure of the underlying collateral were reclassified from
OREO to cash-basis loans in the table above. The reclassification reduced
OREO and increased cash-basis loans by $628 million at December 31, 1994,
but had no impact on total cash-basis loans and OREO.
(D) Includes approximately $198 million and $209 million of land-related loans
at March 31, 1995 and December 31, 1994, respectively.
Total North America Commercial Real Estate exposure of $9.5 billion at March
31, 1995 declined modestly from the 1994 year end but was down 25% from a year
ago. Citicorp continues to reduce its exposure through a series of initiatives
that have resulted in paydowns and negotiated reductions in unfunded
commitments.
Cash-basis loans and OREO totaled $2.3 billion at March 31, 1995, down slightly
from 1994 year end and down sharply from $3.8 billion at March 31, 1994.
Approximately $0.7 billion of the $1.5 billion of cash-basis loans at March 31,
1995 were contractually past due less than 90 days as to principal and interest
(including $374 million of construction and self-funded loans) but were
classified as cash basis because of uncertainty regarding future cash flows. As
noted in the table on page 12, cash receipts (including amounts applied to
principal) on average cash-basis loans and OREO in the first quarter of 1995
were $36 million.
11
<PAGE>
CASH YIELD
<TABLE>
<CAPTION>
First Quarter 1995
----------------------------------------
Average Cash Annualized Cash
(Dollars In Millions) Carrying Value Flows Yield (%)
- --------------------- -------------- ---- ----------------
<S> <C> <C> <C>
Cash-Basis Loans (A)............. $1,415 $ 26 7.3
OREO............................. 827 10 5.1
------ ----
Total Cash-Basis Loans and OREO.. $2,242 $ 36 6.5
====== ====
</TABLE>
(A) Cash flows represent cash interest payments received of which $17 million
was applied as a reduction of principal.
CASH-BASIS LOANS AND OREO ACTIVITY
<TABLE>
<CAPTION>
First Quarter
---------------
(In Millions) 1995 1994
- ------------- ----- ------
<S> <C> <C>
Beginning Balance.................... $2,349 $4,051
New Cash-Basis Loans................. 153 202
Write-offs/Writedowns (A)............ (32) (110)
Loans Returned to Accrual Status..... (85) (30)
Sales, Payments/Paydowns, and Other.. (53) (329)
------ ------
Ending Balance....................... $2,332 $3,784
====== ======
</TABLE>
(A) Represents gross write-offs and writedowns (before recoveries) and
gains/losses on disposition of OREO, and excludes write-offs on letters of
credit and swaps.
Letters of Credit and Other of $2.1 billion at March 31, 1995, was down $0.1
billion from December 31, 1994. Included in Letters of Credit and Other were
unfunded commitments of $0.5 billion that were concentrated in the office (40%)
and residential (21%) markets. At March 31, 1995 and December 31, 1994, $0.2
billion of commitments related to borrowers experiencing financial difficulties.
Citicorp provides standby letters of credit, the majority of which backstop tax-
exempt multi-family housing bonds secured by residential properties.
Approximately $0.6 billion of the $1.4 billion of outstanding letters of credit
at March 31, 1995 related to projects on which debt service is continuing but
the loan-to-value ratios have deteriorated below target levels and/or letter of
credit fees are not being paid.
12
<PAGE>
CROSS-BORDER REFINANCING PORTFOLIO
- ----------------------------------
<TABLE>
<CAPTION>
First Quarter
-------------
(Dollars in Millions) 1995 1994 Change %
- --------------------- ---- ---- ------ ---
<S> <C> <C> <C> <C>
Total Revenue................. $ 80 $ 28 $ 52 NM
Operating Expense............. 6 6 - -
Provision for Credit Losses... - (35) 35 NM
--- ---- ---
Income Before Taxes........... 74 57 17 30
Income Taxes.................. 8 8 - -
--- ---- ---
Net Income.................... $66 $ 49 $17 35
=== ==== ===
Average Assets (In Billions).. $ 3 $ 3 - -
</TABLE>
NM Not meaningful, as percentage equals or exceeds 100%.
The Cross-Border Refinancing Portfolio reported net income of $66 million in the
first quarter of 1995, compared with net income of $49 million in the first
quarter of 1994. The results for the 1995 quarter reflected revenue of $26
million following completion of the Ecuador refinancing agreement, and also
reflected higher revenue compared with the year-ago quarter attributable to the
Brazil refinancing agreement completed in 1994. The 1994 results included a $34
million pretax release from the allowance for credit losses.
Citicorp's cross-border and non-local currency outstandings at March 31, 1995
included $3.4 billion of medium- and long-term outstandings, down $0.5 billion
from December 31, 1994, primarily reflecting a decrease in the fair value of
Brazilian securities (included in the available-for-sale securities portfolio).
The medium- and long-term debt outstandings included $1.5 billion in Brazil,
$0.6 billion in Venezuela, $0.4 billion in the Philippines, $0.3 billion in
South Africa, $0.3 billion in Uruguay, and $0.3 billion in the aggregate in ten
other countries. Additionally, at March 31, 1995, Citicorp had $3.8 billion of
trade and short-term claims, $1.4 billion of investments in and funding of its
local franchises, and $0.7 billion of investments in affiliates and debt-equity
swaps in these countries.
Refer to footnote C on page 35 for an additional discussion related to amounts
classified as Securities.
The amount of Cross-Border Refinancing Portfolio exposure on a cash basis was
$58 million at March 31, 1995, down from $1.0 billion a year ago. The reduction
from the 1994 level is primarily attributable to the completion of the Brazil
refinancing agreement in the second quarter of 1994.
CORPORATE ITEMS
- ---------------
<TABLE>
<CAPTION>
First Quarter
---------------
(Dollars In Millions) 1995 1994(A) Change %
- --------------------- ----- ------- ------ ---
<S> <C> <C> <C> <C>
Total Revenue.......... $ 156 $119 $ 37 31
Operating Expense...... 90 95 (5) (5)
----- ---- ----
Income Before Taxes.... 66 24 42 NM
Income Taxes........... 103 75 28 37
----- ---- ---
Net Loss............... $ (37) $(51) $ 14 27
===== ==== ====
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
NM Not meaningful, as percentage equals or exceeds 100%.
Corporate Items includes revenue derived from charging businesses for funds
employed (based upon a marginal cost of funds concept), unallocated corporate
costs, and other corporate items including net gains related to capital-building
transactions and the offset created by attributing income taxes to business
activities on a local tax-rate basis.
Corporate Items reported a net loss of $37 million in the first quarter of 1995
compared with a net loss of $51 million in the first quarter of 1994, which
included a net gain related to capital-building transactions of $14 million ($23
million pretax). The improvement in 1995 first quarter results principally
reflected higher revenue derived from charging businesses for funds employed.
13
<PAGE>
MANAGING GLOBAL RISK
- --------------------
LIQUIDITY
- ---------
Citicorp manages liquidity through a well-defined process described in the 1994
Annual Report and Form 10-K.
Total deposits of $165.1 billion represent 61% of total funding at March 31,
1995, compared with $155.7 billion (62% of total funding) at year-end 1994, and
are broadly diversified by geography and customer segments.
Stockholders' equity, which grew $0.6 billion during the quarter to $18.4
billion, continues to be an important component of the overall funding
structure.
Long-term debt is issued by Citicorp (the "Parent Company") and its
subsidiaries. A diversity of sources, currencies, and maturities is used to
gain the broadest practical access to the investor base. Total Parent Company
and subsidiary long-term debt, including subordinated capital notes, outstanding
at March 31, 1995 was $17.5 billion, compared with $17.9 billion at year-end
1994.
Securitization of assets remains an important source of liquidity. Total assets
securitized during the quarter were $3.0 billion, including $2.9 billion of U.S.
credit cards and $0.1 billion of U.S. consumer mortgages. 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 remainder of 1995, $3.7 billion of credit card
receivables which were previously securitized are scheduled to amortize.
The Parent Company is a legal entity separate and distinct from Citibank, N.A.
and its other subsidiaries and affiliates. There are various legal limitations
on the extent to which Citicorp's banking subsidiaries may extend credit, pay
dividends, or otherwise supply funds to Citicorp. The approval of the Office of
the Comptroller of the Currency ("OCC") is required if total dividends declared
by a national bank in any calendar year exceed net profits (as defined) for that
year combined with its retained net profits for the preceding two years. In
addition, dividends for such a bank may not be paid in excess of the bank's
undivided profits. State-chartered bank subsidiaries are subject to dividend
limitations imposed by applicable state law.
As of March 31, 1995, 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
$4.8 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, 1995, its
bank subsidiaries could have distributed dividends to Citicorp, directly or
through their parent holding company, of approximately $3.7 billion of the
available $4.8 billion.
Citicorp also receives dividends from its nonbank subsidiaries. These nonbank
subsidiaries are generally not subject to regulatory restrictions on their
payment of dividends except that the approval of the Office of Thrift
Supervision may be required if total dividends declared by a savings association
in any calendar year exceed amounts specified in that agency's regulations.
PRICE RISK
- ----------
Citicorp manages the sensitivity of earnings to changes in interest rates,
foreign exchange rates, and market prices and volatilities through established
procedures described in the 1994 Annual Report and Form 10-K. These include
limits set annually for each major category of risk which are monitored and
managed by the businesses and reviewed monthly at the corporate level. Citicorp
uses a risk management system based on market factors that accommodates the
diversity of balance sheet and derivative product exposures and exposure
management systems of its various businesses. The market factor approach
identifies the variables that cause a change in the value of a financial
instrument. Price risk is then measured using various tools, including the
earnings-at-risk method, which is applied to the non-trading portfolios, and the
potential-loss-amount method, which is applied to the trading portfolios. These
measures are used as indicators to monitor sensitivity of earnings to market
risk rather than as a quantification of aggregate risk amounts.
14
<PAGE>
Earnings at risk measures the potential pretax earnings impact on the non-
trading portfolios of a specified movement in interest rates for a given time
period. The earnings at risk for each currency is calculated by multiplying the
repricing gap between interest sensitive items by the specified rate movement,
and then taking into account the impact of options, both explicit and embedded.
The specific rate movements are statistically derived from a two standard
deviation movement. The potential earnings effect of market rate movements is
managed by modifying the asset and liability mix, either directly or through the
use of derivative instruments. These include interest rate swaps and other
derivative instruments, which are either designated and effective as hedges or
designated and effective in modifying the interest rate characteristics of
specified assets or liabilities.
During the first quarter of 1995, the monthly amount of U.S. dollar earnings at
risk for the following 12 months to a two standard deviation increase in rates
in Citicorp's significant U.S. businesses ranged from approximately $25 million
to $45 million in the aggregate, compared with the range for full year 1994 of
approximately $5 million to $90 million. As of March 31, 1995, the U.S. dollar
interest rate exposure taken in tenors beyond one year results in earnings at
risk of a maximum of $90 million in any single future year.
The price risk of the trading portfolios is measured using the potential-loss-
amount method, which estimates the sensitivity of the value of the trading
positions to changes in the various market factors, such as interest and foreign
exchange rates, over the period necessary to close the position (generally one
day). The method considers the probability of movements of these market factors
(as derived from a two standard deviation movement) adjusted for correlation
among them. The daily price risk process monitors exposures against limits and
triggers specific management actions to ensure that the potential impact on
earnings, due to the many dimensions of price risk, is controlled within
acceptable limits.
During the first quarter of 1995, the potential loss amount in the trading
portfolios based on monthly averages of daily exposures ranged from
approximately $45 million to $55 million in the aggregate for Citicorp's major
trading centers, compared with a range for full year 1994 of approximately $45
million to $85 million. The potential loss amounts decreased each quarter in
1994 reflecting a reduced appetite for risk which carried through to the first
quarter of 1995. The level of exposure taken is a function of the market
environment and expectations of future price and market movements, and will vary
from period to period. Trading-related revenue for the first quarter of 1995
was $395 million compared with quarterly revenue ranging from $214 million to
$490 million during 1994. The increase in trading-related revenue compared with
the 1994 first quarter reflected continued customer demand for risk management
products and improved trading activities related to Citicorp's market-making
activities.
DERIVATIVE AND FOREIGN EXCHANGE ACTIVITIES
- ------------------------------------------
Derivative and foreign exchange products are important risk management tools for
Citicorp and its customers. These contracts typically take the form of futures,
forward, swap, and option contracts, and derive their value from underlying
interest rate, foreign exchange, commodity, or equity instruments. They are
subject to the same types of liquidity, price, credit, and operational risks as
other financial instruments, and Citicorp manages these risks in a consistent
manner. As a dealer, Citicorp offers derivative and foreign exchange
instruments to customers, separately or with other products, to help them to
manage their risk profile, and also trades for its 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 1994 Annual Report and Form 10-K.
Notional principal amounts are frequently used as indicators of derivative and
foreign exchange activity, serving as a point of reference for calculating
payments. Notional principal amounts do not reflect balances subject to credit
or market risk, nor do they reflect the extent to which positions offset one
another. As a result, they do not represent the much smaller amounts that are
actually subject to risk in these transactions. Balance sheet credit exposure
arises from unrealized gains and represents the amount of loss that Citicorp
would suffer if every counterparty to which Citicorp was exposed were to default
at once (i.e., the cost of replacing these contracts), and does not represent
actual or expected loss amounts. The table on page 16 presents the aggregate
notional principal amounts of Citicorp's outstanding derivative and foreign
exchange contracts at March 31, 1995, December 31, 1994, and March 31, 1994,
along with the related balance sheet credit exposure. The table includes all
contracts with third parties, including both dealer and end-user positions.
15
<PAGE>
DERIVATIVE AND FOREIGN EXCHANGE CONTRACTS
- -----------------------------------------
<TABLE>
<CAPTION>
Balance Sheet
Notional Principal Amounts Credit Exposure (A)
------------------------------ ---------------------------
Mar. 31 Dec. 31 Mar. 31 Mar. 31 Dec. 31 Mar. 31
(In Billions) 1995 1994 1994 1995 1994 1994
- ------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
INTEREST RATE PRODUCTS
Futures Contracts......................... $ 214.3 $ 175.2 $ 210.1 $ - $ - $ -
Forward Contracts......................... 561.3 561.3 346.2 0.8 0.6 0.3
Swap Agreements........................... 402.0 367.5 280.6 6.3 6.0 6.5
Purchased Options......................... 104.1 110.2 110.6 1.3 1.7 1.4
Written Options........................... 169.2 105.7 93.8 - - -
FOREIGN EXCHANGE PRODUCTS
Futures Contracts......................... 0.5 0.1 0.1 - - -
Forward Contracts......................... 1,259.6 1,153.0 1,109.4 37.4 14.9 15.7
Cross-Currency Swap Agreements............ 35.7 33.8 32.8 2.8 2.2 1.7
Purchased Options......................... 77.4 63.6 64.4 3.0 1.3 1.3
Written Options........................... 86.0 66.2 55.0 - - -
COMMODITY AND EQUITY PRODUCTS.............. 26.9 28.0 23.9 1.1 0.8 0.9
------ ----- -----
52.7 27.5 27.8
EFFECTS OF MASTER NETTING AGREEMENTS (B) (20.5) (7.0) (6.1)
------ ----- -----
$ 32.2 $20.5 $21.7
====== ===== =====
</TABLE>
(A) There is no balance sheet credit exposure for futures contracts because they
settle daily in cash, and none for written options because they represent
obligations (rather than assets) of Citicorp.
(B) Master netting agreements mitigate credit risk by permitting the offset of
amounts due from and to individual counterparties in the event of
counterparty default.
The overall increase in the notional amounts of derivative and foreign exchange
contracts reflected a higher level of activity and customer demand in response
to interest rate volatility in the European and U.S. markets, and foreign
exchange effects as certain major currencies continued to strengthen against the
U.S. dollar. The balance sheet credit exposure of foreign exchange forward
contracts increased during the quarter as a result of the strengthening of
certain major currencies, particularly the German mark and the Japanese yen,
against the U.S. dollar. The increase was partially offset by the effect of
qualifying master netting agreements entered into with counterparties,
reflecting the translation effects noted above, as well as additional netting
agreements in place.
Citicorp manages its credit exposure on derivative and foreign exchange
instruments as part of the overall extension of credit to individual customer
relationships, subject to the same credit approvals, limits, and monitoring
procedures used for other activities. In managing the aggregate credit
extension to an individual customer, Citicorp measures the amount at risk on a
derivative or foreign exchange instrument as the sum of two factors: the
current replacement cost (i.e., balance sheet credit exposure), and the
potential increase in the replacement cost over the remaining life of the
instrument should market prices change. Citicorp's use of these two risk
measures is discussed further in the 1994 Annual Report and Form 10-K. As shown
in the table above, replacement cost for all contracts in the aggregate was
$32.2 billion at March 31, 1995. The potential increase in replacement cost,
estimated as the amount of loss that Citicorp would suffer if changes in market
rates resulted in additional unrealized gains and every counterparty to which
Citicorp was exposed were to default at once, was approximately $50 billion in
the aggregate for all contracts at March 31, 1995. At year-end 1994,
approximately 96% of the total credit exposure was to investment grade
counterparties and approximately 91% was under three years tenor, and Citicorp
believes the distribution is substantially similar at March 31, 1995. There
were no significant amounts of nonperforming contracts at March 31, 1995 and
gross credit-related losses on derivative contracts totaled $3 million in the
first quarter of 1995.
The calculation of risk-adjusted assets for purposes of the regulatory risk-
based capital ratios includes risk-weighted credit-equivalent amounts for
derivative and foreign exchange contracts. These amounts were $2.5 billion for
interest rate contracts and $11.2 billion for foreign exchange, commodity, and
equity contracts as of March 31, 1995 and $2.9 billion and $7.6 billion,
respectively, as of December 31, 1994, net of bilateral netting arrangements, as
applicable. The risk-weighted credit equivalent amounts were $3.0 billion and
$8.2 billion, respectively, as of March 31, 1994.
Citicorp's management of its derivative and foreign exchange activities,
including the related accounting and operational
16
<PAGE>
controls, is tailored to its dealer and end-user activities.
Citicorp's dealer activities are managed on a market-value basis, which
recognizes in earnings the gains or losses resulting from changes in market
rates. For other than short-term derivative and foreign exchange contracts,
Citicorp defers, at the inception of each contract, an appropriate portion of
the initial market value attributable to ongoing costs such as servicing and
operational activities. This amount is amortized into trading account or
foreign exchange revenue over the life of the contract. The balance of
unamortized revenue was $279 million at March 31, 1995. Information regarding
derivative and foreign exchange trading revenue can be found on page 24.
Citicorp's risk management activities employ interest rate swaps and other
derivatives that are designated and effective as hedges, as well as contracts
that are designated and effective in modifying the interest rate characteristics
of specified assets or liabilities. These contracts are accounted for in a
manner consistent with the related assets or liabilities. Revenue and expense
related to these agreements are generally included in net interest revenue over
the lives of the agreements on an accrual basis, and realized gains and losses,
including any related to terminated contracts, are deferred and amortized.
Through the effective use of derivatives, Citicorp has been able to modify the
volatility of its revenue from asset and liability positions. The table below
illustrates the effect of derivatives on Citicorp's U.S. dollar earnings at risk
for the next 12 months.
TWELVE MONTH U.S. DOLLAR EARNINGS AT RISK
<TABLE>
<CAPTION>
Assuming a Rate Move of
----------------------------
Two Standard Two Standard
Deviation Deviation
(In Millions at March 31, 1995) Increase Decrease
- ------------------------------- ---------- -------------
<S> <C> <C>
Excluding Derivatives...................... $153 $(171)
Including Derivatives...................... (32) 32
</TABLE>
As indicated above, the variability of U.S. dollar earnings at risk for the
following 12 months to a two standard deviation increase in rates was reduced
through risk modification using derivatives.
The notional principal amounts of Citicorp's end-user positions as of March 31,
1995 and December 31, 1994, and their approximate maturities as of March 31,
1995, are reported in the table below. Contract maturities are related to the
underlying risk management strategies.
<TABLE>
<CAPTION>
END-USER DERIVATIVE AND FOREIGN EXCHANGE CONTRACTS
INCLUDING THIRD-PARTY AND INTERCOMPANY CONTRACTS Percentage of March 31, 1995 Amount Maturing
------------------------------------------------
Notional Within 1 to 2 2 to 3 3 to 4 4 to 5 After 5
(Dollars In Billions) Principal Amount 1 Year Years Years Years Years Years
- --------------------- ---------------- ------ ------ ------ ------ ------ --------
Mar. 31 Dec. 31
1995 1994
---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST RATE PRODUCTS
Futures Contracts................................... $33.9 $77.4 72% 22% 5% 1% - -
Forward Contracts................................... 9.0 3.7 98 2 - - - -
Swap Agreements..................................... 79.8 68.5 31 20 11 13 14% 11%
Option Contracts.................................... 26.0 32.5 18 19 33 18 6 6
FOREIGN EXCHANGE PRODUCTS
Futures and Forward Contracts....................... 42.8 40.5(A) 99 1 - - - -
Cross-Currency Swap Agreements...................... 3.2 3.1(A) 36 16 8 9 19 12
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
The decrease in notional amounts of end-user interest rate futures and options
during the first quarter of 1995 reflects lower utilization of these products in
response to stabilizing U.S. interest rates. In order to achieve targeted
levels of earnings at risk, Citicorp's utilization of these instruments is
modified from time to time in response to changing market conditions as well as
changes in the characteristics and mix of the related assets and liabilities.
In this connection, during
17
<PAGE>
the first quarter of 1995 interest rate contracts with a notional principal
amount of $20 billion were closed out resulting in a net deferred loss of
approximately $18 million. Total unamortized net deferred losses, including
those related to prior period close-outs, were approximately $192 million at
March 31, 1995, which will be amortized into earnings over a period reflecting
the original hedging or risk management strategy (48% in 1995, 28% in 1996 and
24% in subsequent years).
End-user derivative positions are components of Citicorp's designated asset and
liability management activities. Derivatives provide an additional tool for
accomplishing risk management objectives, but these same objectives could
alternatively be accomplished using other financial instruments. Therefore,
Citicorp does not believe it is meaningful to analyze the derivatives component
of its risk management activities in isolation from related positions.
Additional information regarding the outstanding notional amounts and weighted
average rates of interest rate swaps and caps at March 31, 1995 is provided in
the table below, with three month LIBOR forward rates included for reference.
The table is intended to provide an overview of these components of the end-user
portfolio, but should be viewed only in the context of Citicorp's related assets
and liabilities.
END-USER INTEREST RATE SWAPS AND CAPS AS OF MARCH 31, 1995
<TABLE>
<CAPTION>
Remaining Contracts Outstanding at March 31
--------------------------------------------
(Dollars in Billions) 1995 1996 1997 1998 1999 2000
- --------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
RECEIVE FIXED SWAPS
Notional Amounts............................................ $55.5 $40.4 $31.9 $25.9 $16.5 $ 6.4
Weighted-Average Fixed Rate................................. 6.5% 6.6% 6.8% 6.8% 7.3% 6.9%
PURCHASED INTEREST RATE CAPS (A)
Notional Amounts............................................ $16.0 $13.9 $10.0 $ 6.2 $ 1.4 $ 0.5
Weighted-Average Cap Rate................................... 6.3% 6.9% 7.0% 7.1% 7.4% 7.4%
PAY FIXED SWAPS
Notional Amounts............................................ $14.3 $ 7.7 $ 5.0 $ 3.8 $ 3.0 $ 2.4
Weighted-Average Fixed Rate................................. 7.1% 7.4% 7.6% 7.4% 7.5% 7.3%
BASIS SWAPS
Notional Amounts............................................ $10.0 $ 6.8 $ 2.1 $ 0.6 $ 0.1 -
THREE-MONTH IMPLIED FORWARD LIBOR RATES (B).................... 6.1% 7.0% 7.3% 7.4% 7.6% 7.7%
</TABLE>
(A) The purchased interest rate caps effectively reduce the risk of the receive
fixed interest rate swaps to rising interest rates by limiting the amount
that is payable under the floating rate legs of such swaps.
(B) The floating rate for a substantial majority of the end-user interest rate
swaps and caps is three-month LIBOR. The three-month LIBOR rates shown
above reflect the implied forward yield curve for that index as of March 31,
1995.
Various proposals have been made in Congress to enact legislation which would
limit or regulate derivatives activities. While Citicorp generally believes
that legislation in this area is unnecessary, Citicorp cannot predict what, if
any, action will be taken by Congress with respect to derivatives activities and
what impact any such action may have on Citicorp's derivatives business. In
addition, the Financial Accounting Standards Board is developing possible new
accounting standards regarding derivatives and hedge accounting which could
significantly affect the accounting treatment of derivative and foreign exchange
contracts by Citicorp and its customers. Such initiatives could affect the
nature and extent of these activities.
ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
- ---------------------------------------------
The table on page 19 provides disclosure of the estimated fair value of
Citicorp's financial instruments as defined in accordance with applicable
requirements, including financial assets and liabilities recorded on the balance
sheet as well as off-balance sheet instruments such as derivative and foreign
exchange contracts, loan commitments, and credit card securitizations. To
better reflect Citicorp's values subject to market risk and to illustrate the
interrelationships that characterize risk management strategies, the following
table also provides estimated fair value data for the expected time period until
runoff of existing deposits with no fixed maturity.
18
<PAGE>
ESTIMATED FAIR VALUE IN EXCESS OF (LESS THAN) CARRYING VALUE
<TABLE>
<CAPTION>
Mar. 31 Dec. 31 Increase
(In Billions) 1995 1994 (Decrease)
- ------------- ------- ------- ----------
<S> <C> <C> <C>
Assets and Liabilities........................................ $ 4.3 $ 4.6 $(0.3)
End-User Derivative and Foreign Exchange Contracts............ (0.7) (1.4) 0.7
Loan Commitments.............................................. (0.2) (0.2) -
Credit Card Securitizations (A)............................... 0.3 0.7 (0.4)
----- ----- -----
Subtotal................................................... 3.7 3.7 -
Deposits with No Fixed Maturity (B)........................... 2.5 2.9 (0.4)
----- ----- -----
Total......................................................... $ 6.2 $ 6.6 $(0.4)
===== ===== =====
</TABLE>
(A) Represents the estimated excess in fair value of the underlying receivables
and investor certificates, which is derived by Citicorp in the form of
excess servicing, and principally arises from fixed rates payable to
certificate holders.
(B) Represents the estimated excess fair value related to the expected time
period until runoff of existing deposits with no fixed maturity on the
balance sheet at March 31, 1995, without assuming any regeneration of
balances, based on the estimated difference between the cost of funds on
these deposits and the cost of funds from alternative sources.
In the aggregate, estimated fair values exceeded carrying values by
approximately $6.2 billion at March 31, 1995 and $6.6 billion at December 31,
1994. The decrease is primarily due to the effects of declining long-term
interest rates on assets, liabilities and credit card securitizations, partially
offset by improvement in the value of derivative contracts due to the same
interest rate environment.
CAPITAL
- -------
Citicorp is subject to risk-based capital guidelines issued by the Federal
Reserve Board ("FRB"). These guidelines are supplemented by a leverage ratio
requirement. The risk-based capital guidelines and the leverage ratio
requirement are detailed in the 1994 Annual Report and Form 10-K.
Common stockholders' equity increased $442 million during the quarter to $14.0
billion, primarily reflecting net income of $829 million, issuance of common
stock under various staff benefit plans and the dividend reinvestment plan of
$100 million, and foreign currency translation of $67 million, partially offset
by cash dividends declared on common and preferred stock of $211 million and an
after-tax reduction in the net unrealized value of securities available for sale
of $336 million. Tier 1 capital at quarter-end was $17.8 billion, up $923
million from year-end 1994. The increase in Tier 1 capital reflects the above
items (excluding the reduction in the net unrealized value of securities
available for sale in accordance with regulatory risk-based capital guidelines)
as well as the issuance of $150 million of perpetual preferred stock.
Citicorp's Tier 1 capital ratio increased to 8.01% at March 31, 1995, up from
7.80% at year-end and 6.86% at March 31, 1994. Total capital (Tier 1 and Tier
2) was $26.9 billion at March 31, 1995, compared with $26.1 billion at December
31, 1994, and $23.5 billion at March 31, 1994.
In October 1992, Citicorp issued 76.9 million depositary shares representing
Conversion Preferred Stock, Series 15 ("PERCS"). The PERCS are redeemable at
Citicorp's option in exchange for shares of common stock having a market value
(determined during a period before the call for redemption is announced) equal
to a set price per share of PERCS. On April 27, 1995, Citicorp announced that
it would redeem 30 million depositary shares, or approximately 39% of the
outstanding depositary shares, by issuing approximately 13.2 million shares of
common stock on June 12, 1995. The redemption will have no effect on Citicorp's
Tier 1 capital but will increase common stockholders' equity by $443 million, or
16 basis points. Citicorp currently expects to retire the remaining depositary
shares before November 30, 1995 (the date when the PERCS would automatically be
converted into common stock) by means of redemption or open market or privately
negotiated transactions.
Because the number of shares of common stock deliverable on redemption of the
PERCS decreases as the common stock price increases, the PERCS have acted since
their issuance to offset the dilutive effects of shares of common stock issued
or issuable under Citicorp's dividend reinvestment plan and various employee
programs. As stated in the 1994 Annual
19
<PAGE>
Report and Form 10-K, Citicorp may utilize options or other financial
instruments in connection with the redemption of the depositary shares. In
order to replace some of this offset benefit provided by shares of PERCS that
are retired, on May 5, 1995, Citicorp entered into a forward contract with
respect to between $160 million and $300 million of Citicorp common stock.
The forward contract is designed to have at settlement a similar effect as the
PERCS, in that it will act to reduce the number of shares of common stock
outstanding if the market price of Citicorp common stock increases (as a result
of delivery of shares of common stock by the counterparty to Citicorp). To the
extent that the market price of the common stock decreases, the contract will
increase the number of common shares outstanding (as a result of the delivery of
shares by Citicorp to the counterparty). The forward contract will be settled
in shares of Citicorp common stock on a net basis in July 1996, or earlier in
certain circumstances, based on the difference between the then current market
price and the forward strike price set in the contract. The forward strike
price is based in part on the common stock price used in the PERCS redemptions.
Citicorp may enter into additional transactions of a similar nature whose timing
and terms will depend on market conditions, Citicorp's liquidity and capital
position, and other considerations.
In accordance with current accounting guidelines, the forward contract will have
no effect on net income or stockholders' equity. Settlement of the forward
contract will result in the issuance or receipt of Citicorp common stock. For
purposes of computing earnings per share, shares deliverable by Citicorp under
the forward contract will be treated like outstanding shares to the extent that
the forward price exceeds the market price of the common stock as of the period-
end reporting date. Shares receivable by Citicorp under the forward contract
will not be deducted from the number of outstanding shares until the final
number of shares to be received has been determined.
<TABLE>
<CAPTION>
CITICORP RATIOS Minimum Mar. 31 Dec. 31 Mar. 31
Required 1995 1994 1994
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Common Stockholders' Equity.. 5.21% 5.42% 4.51%
Tier 1 Capital............... 4.00% 8.01 7.80 6.86
Tier 1 and Tier 2 Capital.... 8.00 12.06 12.04 11.55
Leverage (A)................. 3.00+ 7.00 6.67 5.95
</TABLE>
(A) Citicorp has not been advised by the FRB of a specific minimum leverage
ratio.
20
<PAGE>
COMPONENTS OF RISK-BASED CAPITAL UNDER REGULATORY GUIDELINES
<TABLE>
<CAPTION>
Mar. 31 Dec. 31 Mar. 31
(In Millions) 1995 1994 1994
- ------------- -------- -------- --------
<S> <C> <C> <C>
TIER 1 CAPITAL
Common Stockholders' Equity............................. $ 14,024 $ 13,582 $ 10,862
Perpetual Preferred Stock............................... 4,337 4,187 3,887
Minority Interest....................................... 58 55 50
Less:
Net Unrealized (Losses) Gains - Securities Available
for Sale (A)......................................... (58) 278 227
Intangible Assets (B)................................. 338 344 371
50% Investment in Certain Subsidiaries (C)............ 297 283 247
-------- -------- --------
Total Tier 1 Capital.................................... 17,842 16,919 13,954
-------- -------- --------
TIER 2 CAPITAL
Allowance for Credit Losses (D)......................... 2,814 2,741 2,566
Limited Life Preferred Stock............................ 6 6 16
Qualifying Debt (E)..................................... 6,485 6,736 7,190
Less: 50% Investment in Certain Subsidiaries (C)........ 297 283 246
-------- -------- --------
Total Tier 2 Capital.................................... 9,008 9,200 9,526
-------- -------- --------
Total Capital (Tier 1 and Tier 2)....................... $ 26,850 $ 26,119 $ 23,480
======== ======== ========
Net Risk-Adjusted Assets (F)............................ $222,647 $216,856 $203,337
======== ======== ========
</TABLE>
(A) Tier 1 capital excludes net unrealized (losses) gains on securities
available for sale in accordance with regulatory risk-based capital
guidelines.
(B) Includes goodwill and certain identifiable intangible assets.
(C) Primarily Citicorp Securities, Inc.
(D) Includable up to 1.25% of risk-adjusted assets. Any excess allowance is
deducted from risk-adjusted assets.
(E) Includes qualifying senior and subordinated debt, in an amount not exceeding
50% of Tier 1 capital, plus subordinated capital notes, subject to certain
limitations.
(F) Net risk-adjusted assets include certain off-balance sheet activities and
commitments such as foreign exchange and derivative products and letters of
credit and also reflect deductions for intangible assets and any excess
allowance for credit losses. See page 15 for further discussion of
derivative and foreign exchange activities.
Citicorp's subsidiary depository institutions are subject to the risk-based
capital guidelines issued by their respective primary federal bank regulatory
agencies, which are generally similar to the FRB's guidelines. At March 31,
1995, all of Citicorp's subsidiary depository institutions were "well
capitalized" under the federal bank regulatory agencies' definitions.
<TABLE>
<CAPTION>
CITIBANK, N.A. RATIOS Minimum Mar. 31 Dec. 31 Mar. 31
Required 1995 1994 1994
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Common Stockholder's Equity.. 6.57% 6.91% 6.08%
Tier 1 Capital............... 4.00% 8.14 7.83 6.94
Tier 1 and Tier 2 Capital.... 8.00 12.61 12.44 11.06
Leverage (A)................. 3.00+ 6.53 6.09 5.71
</TABLE>
(A) Citibank, N.A. has not been advised of a specific minimum leverage ratio.
The FRB and the OCC have finalized their capital adequacy guidelines to
establish a limitation on the amount of deferred tax assets that may be included
in Tier 1 capital for risk-based and leverage capital purposes. Under the final
rules, the capital recognition of deferred tax assets whose realization is
dependent on future taxable income is limited to the lesser of (a) an amount
that is expected to be realized within one year based on a projection of future
taxable income (exclusive of tax carryforwards and reversals of existing
temporary differences) for that year, or (b) 10% of Tier 1 capital before
21
<PAGE>
certain adjustments. As of March 31, 1995, the deferred tax assets of Citicorp
and its subsidiaries met the criteria for capital recognition set by the FRB and
OCC and were included in the applicable risk-based and leverage capital ratios.
In April 1995, the Basle Committee on Banking Supervision, with the agreement of
the central bank governors of the Group of Ten Countries, including the FRB,
issued a revised proposal on market risk. The revised proposal would establish
capital requirements for market risks in certain on- and off-balance sheet
positions of banking organizations. The FRB and OCC are expected to issue a
notice of proposed rulemaking modifying their risk-based capital guidelines to
implement these changes. In December 1993, the FRB distributed a memorandum
with respect to a proposal to issue a notice of proposed rulemaking and an
advanced notice of proposed rulemaking relating to sales of assets, including
the capital treatment of recourse arrangements and direct credit substitutes. In
addition, from time to time, the FRB and the Federal Financial Institutions
Examination Council propose amendments to, and issue interpretations of, risk-
based capital guidelines and reporting instructions. Such proposals or
interpretations could, if implemented in the future, affect reported capital
ratios and net risk-adjusted assets.
22
<PAGE>
STATEMENT OF INCOME ANALYSIS
- ----------------------------
NET INTEREST REVENUE (TAXABLE EQUIVALENT BASIS)
- -----------------------------------------------
Net interest revenue increased 12% from the first quarter of last year,
reflecting higher net rate spreads as well as an increase in interest-earning
assets. The improvement in spreads includes funding benefits associated with
higher equity levels.
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, net interest revenue increased 7% from the 1994
first quarter. The related adjusted net rate spread was 4.61% in the first
quarter of 1995 compared with 4.52% in the 1994 first quarter.
The improvement in the adjusted net rate spread in the U.S. in the first quarter
of 1995 compared with the first quarter of 1994 primarily reflected a lower cost
to carry cash-basis loans and OREO. The increase in net interest revenue and
the related net rate spread outside the U.S. primarily reflected higher volumes
and favorable spreads in the consumer businesses in the Emerging Markets, and an
increase in net interest revenue from the cross-border refinancing portfolio,
partially offset by reduced trading-related net interest revenue in the Global
Finance business.
The increase in adjusted average interest-earning assets of $11.2 billion from
the first quarter of 1994 was mainly attributable to higher levels of consumer
loans and securities both in and outside the U.S., and commercial loans outside
the U.S. These increases were partially offset by lower levels of federal funds
sold and resale agreements and trading account assets.
<TABLE>
<CAPTION>
NET INTEREST REVENUE STATISTICS
(TAXABLE EQUIVALENT BASIS) (A)(B) 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
1995 1994 1994 1994 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
NET INTEREST REVENUE:
(In Millions)
U.S................................................... $1,047 $1,025 $1,015 $ 911 $ 945
Outside the U.S....................................... 1,286 1,303 1,337 1,259 1,142
------ ------ ------ ------ ------
Total................................................. $2,333 $2,328 $2,352 $2,170 $2,087
------ ------ ------ ------ ------
AVERAGE INTEREST-EARNING ASSETS:
(In Billions)
U.S................................................... $104.9 $103.9 $ 99.9 $100.8 $102.7
Outside the U.S....................................... 118.8 115.3 113.6 108.9 108.1
------ ------ ------ ------ ------
Total................................................. $223.7 $219.2 $213.5 $209.7 $210.8
====== ------ ------ ------ ------
NET RATE SPREAD (%):
U.S................................................... 4.05 3.91 4.03 3.63 3.73
Outside the U.S....................................... 4.39 4.49 4.67 4.63 4.29
Total................................................. 4.23 4.21 4.37 4.15 4.01
ADJUSTED FOR THE EFFECT OF CREDIT CARD SECURITIZATION
- -----------------------------------------------------
NET INTEREST REVENUE:
(In Millions)
U.S................................................... $1,515 $1,495 $1,525 $1,451 $1,474
Total................................................. 2,801 2,798 2,862 2,710 2,616
AVERAGE INTEREST-EARNING ASSETS:
(In Billions)
U.S................................................... $127.4 $125.5 $123.1 $125.5 $126.9
Total................................................. 246.2 240.8 236.7 234.4 235.0
NET RATE SPREAD (%):
U.S................................................... 4.82 4.73 4.92 4.64 4.71
Total................................................. 4.61 4.61 4.80 4.64 4.52
</TABLE>
(A) Includes appropriate allocations for capital and funding costs based on the
location of the asset.
(B) The taxable equivalent adjustment is based on the U.S. federal statutory tax
rate of 35% for the periods presented.
23
<PAGE>
FEE AND COMMISSION REVENUE
- --------------------------
<TABLE>
<CAPTION>
First Quarter
--------------------
(In Millions) 1995 1994
- ------------- ------ ------
<S> <C> <C>
Global Consumer............. $ 812 $ 819
Global Finance.............. 427 415
Other....................... 23 25
------ ------
Total....................... $1,262 $1,259
====== ======
</TABLE>
Fee and commission revenue earned by the Global Consumer business reflected
lower fees in the U.S. credit card business (reflecting the effect of credit
card securitization--see page 29) and from private banking activities, partially
offset by continued strong growth in the Latin America and Asia Pacific regions.
Adjusted for the effect of credit card securitization, U.S. credit card fees
were flat compared to a year ago as a reduction in annual customer fees were
offset by higher transaction fees from increased charge volumes. The increase
in fee revenue in the Global Finance business was principally attributable to
higher transaction banking activities in the Emerging Markets.
TRADING-RELATED REVENUE
- -----------------------
Trading-related revenue is reported in "Trading Account" and "Foreign Exchange"
on the income statement, but also includes other amounts, principally reflected
in Net Interest Revenue. The table below provides an analysis of trading-
related revenue by income statement line and by trading activity. Trading
activities are primarily conducted in the Global Finance business, but included
$56 million and $51 million conducted outside the Global Finance business
(principally in the Global Consumer business) in the first quarter of 1995 and
1994, respectively. Global Finance trading-related revenue included $216
million and $97 million from the North America, Europe and Japan business in the
first quarter of 1995 and 1994, respectively, and $123 million and $66 million
from the Emerging Markets business in the first quarter of 1995 and 1994,
respectively. Trading-related revenue--including derivatives--reflected
continued customer demand for risk management products and improved trading
activities related to Citicorp's market-making activities.
<TABLE>
<CAPTION>
First Quarter
---------------
(In Millions) 1995 1994
- ------------- ------ -----
<S> <C> <C>
BY INCOME STATEMENT LINE:
Trading Account........... $ 39 $ 5
Foreign Exchange.......... 305 66
Other (A)................. 51 143
----- -----
Total...................... $ 395 $ 214
===== =====
BY TRADING ACTIVITY:
Foreign Exchange (B)...... $ 265 $ 148
Derivative (C)............ 99 57
Fixed Income (D).......... (43) (43)
Other..................... 74 52
----- -----
Total...................... $ 395 $ 214
===== =====
</TABLE>
(A) Primarily net interest revenue.
(B) Includes foreign exchange spot, forward, and option contracts.
(C) Primarily interest rate and currency swaps, options, financial futures, and
equity and commodity contracts.
(D) Principally debt instruments including government and corporate debt as well
as mortgage-backed securities.
Trading-related revenue increased to $395 million in the first quarter of 1995,
up from $214 million in the first quarter of 1994. Higher trading account and
foreign exchange revenue were partially offset by a reduction in other trading-
related revenue, reflecting lower net interest revenue associated with trading-
related activities in North America and Latin America.
TRADING ACCOUNT
Trading account revenue, which included activities in the debt, derivatives, and
other securities markets, was $39 million and $5 million in the first quarter of
1995 and 1994, respectively. While trading account revenue improved from the
first quarter of 1994, uncertainty concerning interest rates and difficult
market conditions continued to depress trading results across all products and
geographies.
24
<PAGE>
FOREIGN EXCHANGE
Foreign exchange revenue was $305 million and $66 million in the first quarter
of 1995 and 1994, respectively, reflecting increased customer-driven activity
and improved market-making results, primarily in North America and Latin
America.
SECURITIES TRANSACTIONS
- -----------------------
Net gains from the sale of securities were $26 million in the first quarter of
1995, compared with $50 million in the first quarter of 1994. The net gain in
the first quarter of 1995 reflected gross realized gains of $41 million and
gross realized losses of $15 million.
The fair value of securities available for sale and the related adjustment to
Stockholders' Equity may fluctuate over time based on market conditions and
changes in market interest rates, as well as events and trends affecting
specific securities.
OTHER REVENUE
- -------------
<TABLE>
<CAPTION>
First Quarter
--------------
(In Millions) 1995 1994(A)
- ------------- ----- -------
<S> <C> <C>
Securitized Credit Card Receivables.. $ 216 $208
Venture Capital...................... 85 79
Affiliate Earnings................... 55 65
Mortgage Pass-Through
Securitization Activity............. 1 (38)
Foreign Currency Translation Gains... 3 -
Net Asset Gains and Other Items...... 126 82
----- ----
Total.............................. $ 486 $396
===== ====
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
The increase in revenue related to securitized credit card receivables reflected
lower net credit losses, partially offset by lower securitization volumes and
net interest spreads. The effect of credit card receivable securitization is
discussed in more detail on page 29.
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.
Mortgage pass-through securities sales revenue of $1 million for the first
quarter of 1995 represented a $39 million improvement compared with the first
quarter of 1994. The improvement reflected lower net adjustments required to
reflect accelerated prepayments of securitized mortgages and lower costs related
to recourse exposure.
The increase in Net Asset Gains and Other Items compared with the year-ago
quarter, primarily reflected gains on the sale of real estate assets and a gain
of $26 million related to the completion of Ecuador's refinancing package.
25
<PAGE>
PROVISION AND ALLOWANCE FOR CREDIT LOSSES
- -----------------------------------------
The 1995 first quarter provision for credit losses included a charge in excess
of consumer and non-refinancing portfolio commercial net write-offs of $75
million to build the allowance for credit losses, compared with a $100 million
charge in the first quarter of 1994.
Details of net write-offs (recoveries) and the provision for credit losses are
included in the following table.
NET WRITE-OFFS (RECOVERIES) AND PROVISION FOR CREDIT LOSSES
<TABLE>
<CAPTION>
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Millions) 1995 1994 1994 1994 1994
- ------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET WRITE-OFFS (RECOVERIES):
Global Consumer............................................ $ 309 $ 399 $ 315 $ 311 $ 328
Global Finance............................................. (9) 28 (41) 9 (46)
North America Commercial Real Estate....................... 16 51 62 63 68
----- ----- ----- ----- -----
Total Non-Refinancing Commercial........................... 7 79 21 72 22
----- ----- ----- ----- -----
Cross-Border Refinancing Portfolio (A)..................... (23) (20) (19) (329) (35)
----- ----- ----- ----- -----
Total...................................................... $ 293 $ 458 $ 317 $ 54 $ 315
===== ===== ===== ===== =====
PROVISION FOR CREDIT LOSSES:
Global Consumer............................................ $ 359 $ 449 $ 365 $ 361 $ 378
Global Finance............................................. 16 41 (28) 21 (34)
North America Commercial Real Estate....................... 16 88 99 101 106
----- ----- ----- ----- -----
Total Non-Refinancing Commercial........................... 32 129 71 122 72
----- ----- ----- ----- -----
Cross-Border Refinancing Portfolio......................... - (20) - (11) (35)
----- ----- ----- ----- -----
Total...................................................... $ 391 $ 558 $ 436 $ 472 $ 415
===== ===== ===== ===== =====
</TABLE>
(A) Includes a credit recovery of $318 million in the second quarter of 1994 as
part of the step-up to market value of instruments received pursuant to the
Brazil refinancing agreement completed in that quarter.
The consumer credit loss provision included a charge in excess of net write-offs
of $50 million in the first quarter of 1995 and 1994, reflecting continued
reserve building in response to the economic environment in certain markets and
higher loan volumes. As a percentage of average consumer loans, net write-offs
declined to 1.30% in the first quarter of 1995, compared with 1.70% and 1.59% in
the fourth and first quarters of 1994, respectively. The significant
improvement in the loss ratio compared with the fourth quarter of 1994 is due to
lower losses in the private banking business and the U.S. branch business,
including mortgages. The improvement compared with the first quarter of 1994 is
due to the improvement in the U.S. credit card business, as well as in other
U.S. consumer businesses.
The non-refinancing commercial credit loss provision included a charge in excess
of net write-offs of $25 million in the first quarter of 1995, compared with $50
million in the first quarter of 1994. The reductions in net write-offs and the
charge in excess of net write-offs primarily reflected improvements in the North
America Commercial Real Estate business as a result of increased liquidity and
improving conditions in most markets. These improvements were partially offset
by results in the Global Finance business, which experienced lower credit
recoveries compared with the 1994 first quarter.
The Cross-Border Refinancing Portfolio reported net recoveries in the first
quarter of 1995, principally from the Ecuador refinancing agreement completed in
the quarter, which increased the allowance attributable to commercial credit
losses. In the first quarter of 1994, the Cross-Border Refinancing Portfolio
provision reflected a release of $34 million from the allowance related to the
portfolio.
26
<PAGE>
All identified credit losses are immediately written off and the entire
allowance is available to absorb all probable credit losses inherent in the
portfolio. However, for analytical purposes, Citicorp views its allowance as
attributable to the following portions of its credit portfolio:
ALLOWANCE FOR CREDIT LOSSES
<TABLE>
<CAPTION>
Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
(Dollars In Millions) 1995 1994 1994 1994 1994
- --------------------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Global Consumer............................ $1,897 $1,834 $1,790 $1,711 $1,639
Commercial (A)............................. 3,373 3,321 3,270 3,201 2,595
Cross-Border Refinancing Portfolio......... - - - - 238
------ ------ ------ ------ ------
Total...................................... $5,270 $5,155 $5,060 $4,912 $4,472
====== ====== ====== ====== ======
Reserve For Global Consumer
Sold Portfolios........................... $ 450 $ 422 $ 467 $ 503 $ 538
====== ====== ====== ====== ======
Allowance As A Percentage of Total Loans:
Global Consumer........................... 1.93% 1.90% 1.97% 2.00% 1.98%
Commercial (A)............................ 5.79 5.95 5.90 5.76 4.88
Total..................................... 3.37 3.38 3.46 3.48 3.26
</TABLE>
(A) Effective second quarter 1994, includes amounts related to the Cross-
Border Refinancing Portfolio.
Continued uncertainty in the economic environment and higher loan volumes may
result in further increases in both the consumer and commercial portions of the
allowance for credit losses.
Effective January 1, 1995, Citicorp adopted SFAS No.114, which establishes new
rules for calculating certain components of the allowance for credit losses.
Adoption of the new standard had no impact on the level of the overall allowance
for credit losses or on operating results, and does not affect Citicorp's
policies regarding charge-offs, recoveries, or income recognition.
SFAS No. 114 requires that impairment of larger-balance, non-homogenous loans
that are individually evaluated be measured by comparing the net carrying amount
of the loan to the present value of the expected future principal and interest
cash flows discounted at the loan's effective rate, the secondary market value
of the loan, or the fair value of the collateral for collateral-dependent loans.
A valuation allowance for any shortfall is established within the overall
allowance for credit losses. The net carrying amount of the loan reflects
credit write-offs, cash receipts applied to reduce the recorded investment in
the loan, and unearned fees. SFAS No. 114 does not apply to smaller-balance
homogenous consumer loans that are collectively evaluated for impairment, such
as credit card receivables, residential mortgages, and consumer installment
loans.
As of March 31, 1995, $2,566 million of loans were impaired within the scope of
SFAS No. 114 and carried on a cash-basis, consisting of $2,041 million of
commercial loans and $525 million of consumer loans (primarily commercial real
estate loans related to community and private banking activities). The
application of SFAS No. 114 measurement principles indicated that approximately
$50 million of these loans required valuation allowances, totaling $7 million,
which are included within the overall allowance for credit losses.
In conjunction with the adoption of SFAS No. 114, in-substance repossessions are
no longer classified as OREO and are instead included in cash-basis loans or
assets pending disposition. See pages 42 and 43 for additional details.
27
<PAGE>
OPERATING EXPENSE
- -----------------
EMPLOYEE EXPENSE
Employee expense was $1.4 billion in the quarter, up $141 million, or 11%, from
the 1994 first quarter. The increase reflected salary increases, higher staff
levels required to support the continuing business expansion in the Global
Consumer and Global Finance businesses in the Emerging Markets, growth in the
U.S. credit card business, and the foreign currency translation effect of the
weaker U.S. dollar in European and Asian exchange markets.
OTHER EXPENSE
Other expense was $1.3 billion in the quarter, up $105 million or 9% from the
1994 first quarter. The increase reflected higher costs required to support the
continuing business expansion in the Global Consumer and Global Finance
businesses in the Emerging Markets, higher marketing and account maintenance
costs in the U.S. credit card business, costs associated with higher volume in
transaction banking, and continued investments in operational and technological
efficiencies, as well as the foreign currency translation effect of the weaker
U.S. dollar. These increases were partially offset by reduced net OREO costs in
the North America Commercial Real Estate and Global Finance businesses.
RESTRUCTURING ACTIVITIES
Citicorp has taken a series of actions in recent years to control costs and
improve productivity. These actions resulted in a $425 million restructuring
charge in 1993, comprised of $319 million related to workforce reductions, $88
million attributable to asset writedowns, and $18 million in other actions. A
total of $297 million of these restructuring charges had been utilized through
March 31, 1995. The $128 million remaining to be utilized relates solely to
workforce reductions. Citicorp anticipates that substantially all of these
amounts will be paid out in 1995. While future changes in estimates may occur,
it is expected that any such changes will be immaterial to Citicorp's
operations.
The $319 million charge related to workforce reductions provided for the
elimination of approximately six thousand positions, which included reductions
of approximately five thousand positions in the Global Consumer business and one
thousand positions in the Global Finance business. Through March 31, 1995,
approximately 4,400 positions had been eliminated through these programs, of
which 4,100 positions were in Global Consumer and 300 positions were in Global
Finance. These actions are directed towards improved efficiency rather than
curtailments of business activity, and help to offset cost increases that
otherwise result from inflation and business expansion.
Of the $425 million in charges, $404 million related to the North America,
Europe and Japan businesses and $21 million to the Emerging Markets.
INCOME TAXES
- ------------
Income taxes were $530 million for the first quarter of 1995 compared with $390
million for the same period last year. The effective tax rate was 39% for both
the first quarter of 1995 and 1994, compared with a 29% effective rate on
current operations in the full year 1994, which included recognition of certain
deferred tax benefits.
28
<PAGE>
EFFECT OF CREDIT CARD RECEIVABLES SECURITIZATION
- ------------------------------------------------
The securitization of credit card receivables does not affect the earnings
reported for each period. Gains on these sales are recorded monthly as realized
over the terms of each of the securitization transactions, which have ranged
from three to twelve years. The revolving nature of the receivables sold and
the monthly recognition of gains result in a pattern of gain recognition that 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 the manner in which
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).
Because credit losses are a component of these cash flows, Citicorp's revenue
over the terms of these transactions may vary depending upon 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 1995, $2.9 billion of credit card receivables were
sold. The total amount of securitized receivables, net of amortization, as of
March 31, 1995, was $22.7 billion, compared with $21.3 billion as of December
31, 1994 and $24.6 billion as of March 31, 1994.
The following table shows the net impact of the securitization of credit card
receivables as an increase or (decrease) to the amounts reported in the
Consolidated Statement of Income and Average Balance Sheet, and under the
captions of Return on Assets and Consumer Net Credit Loss Ratio. See page 25
for further discussion.
<TABLE>
<CAPTION>
First Quarter
----------------
(Dollars In Millions) 1995 1994
- --------------------- ------ -------
<S> <C> <C>
Net Interest Revenue................. $ (468) $ (529)
Fee and Commission Revenue........... 30 53
Other Revenue........................ 216 208
Provision for Credit Losses.......... (222) (268)
------ ------
Net Income Impact of Securitization.. $ - $ -
====== ======
Average Assets (In Billions)......... $ (22) $ (24)
Return on Assets..................... .10 % .08 %
Consumer Net Credit Loss Ratio....... (.52)% (.65)%
</TABLE>
The following table shows average credit card loans, net credit losses, and
related ratios for the managed U.S. credit card portfolio.
<TABLE>
<CAPTION>
U.S. CREDIT CARD MANAGED PORTFOLIO
First Quarter
-----------------
1995 1994
------ -------
<S> <C> <C>
Average Credit Card Loans (In Billions).. $38.1 $33.2
Net Credit Losses (In Millions).......... $ 337 $ 379
As a Percentage of Average
Credit Card Loans................... 3.59% 4.63%
</TABLE>
29
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS
- ---------------------------------
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF INCOME CITICORP and Subsidiaries
First Quarter
--------------------
(In Millions Except Per Share Amounts) 1995 1994
- -------------------------------------- ------- -------
<S> <C> <C>
INTEREST REVENUE
Interest and Fees on Loans...................................... $4,341 $4,125
Interest on Deposits with Banks................................. 181 286
Interest on Federal Funds Sold and Securities
Purchased Under Resale Agreements.............................. 251 1,125
Interest and Dividends on Securities
U. S. Treasury and Federal Agencies............................ 63 56
State and Municipal............................................ 22 12
Other (Principally in offices outside the U.S.)................ 280 195
Interest on Trading Account Assets.............................. 459 659
------ ------
Total Interest Revenue........................................ 5,597 6,458
------ ------
INTEREST EXPENSE
Interest on Deposits............................................ 2,256 2,470
Interest on Trading Account Liabilities......................... 83 63
Interest on Purchased Funds and Other Borrowings................ 584 1,259
Interest on Long-Term Debt and Subordinated Capital Notes....... 349 581
------ ------
Total Interest Expense........................................ 3,272 4,373
------ ------
NET INTEREST REVENUE............................................ 2,325 2,085
------ ------
PROVISION FOR CREDIT LOSSES..................................... 391 415
------ ------
NET INTEREST REVENUE AFTER PROVISION FOR
CREDIT LOSSES.................................................. 1,934 1,670
------ ------
FEES, COMMISSIONS, AND OTHER REVENUE
Fees and Commissions............................................ 1,262 1,259
Trading Account................................................. 39 5
Foreign Exchange................................................ 305 66
Securities Transactions......................................... 26 50
Other Revenue................................................... 486 396
------ ------
Total Fees, Commissions, and Other Revenue.................... 2,118 1,776
------ ------
OPERATING EXPENSE
Salaries........................................................ 1,080 954
Employee Benefits............................................... 298 283
------ ------
Total Employee Expense........................................ 1,378 1,237
Net Premises and Equipment Expense.............................. 410 390
Other Expense................................................... 905 820
------ ------
Total Operating Expense....................................... 2,693 2,447
------ ------
INCOME BEFORE TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE.. 1,359 999
Income Taxes.................................................... 530 390
------ ------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE............ 829 609
Cumulative Effect of Accounting Change (A)...................... - (56)
------ ------
NET INCOME...................................................... $ 829 $ 553
====== ======
INCOME APPLICABLE TO COMMON STOCK............................... $ 735 $ 466
====== ======
EARNINGS PER SHARE:
ON COMMON AND COMMON EQUIVALENT SHARES
Income Before Cumulative Effect of Accounting Change............ $1.71 $1.24
Cumulative Effect of Accounting Change (A)...................... - (.13)
------ ------
Net Income...................................................... $1.71 $1.11
====== ======
ASSUMING FULL DILUTION
Income Before Cumulative Effect of Accounting Change............ $1.53 $1.12
Cumulative Effect of Accounting Change (A)...................... - (.11)
------ ------
Net Income...................................................... $1.53 $1.01
====== ======
</TABLE>
(A) Represents the cumulative effect of adopting SFAS No. 112, "Employers'
Accounting for Postemployment Benefits," as of January 1, 1994.
30
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET CITICORP and Subsidiaries
Mar. 31 Dec. 31
(Dollars In Millions) 1995 1994
- --------------------- -------- --------
<S> <C> <C>
ASSETS
Cash and Due from Banks........................................ $ 6,575 $ 6,470
Deposits at Interest with Banks................................ 7,787 6,862
Securities:
Held to Maturity............................................. 5,132 5,092
Available for Sale........................................... 13,099 13,602
Venture Capital.............................................. 1,669 2,009
Trading Account Assets......................................... 51,771 38,875
Federal Funds Sold and Securities Purchased Under
Resale Agreements............................................ 8,650 6,995
Loans, Net
Consumer..................................................... 98,082 96,600
Commercial................................................... 58,292 55,820
-------- --------
Total Loans, Net of Unearned Income.......................... 156,374 152,420
Allowance for Credit Losses.................................... (5,270) (5,155)
Customers' Acceptance Liability................................ 1,558 1,420
Premises and Equipment, Net.................................... 4,294 4,062
Interest and Fees Receivable................................... 2,740 2,654
Other Assets................................................... 14,634 15,183
-------- --------
TOTAL........................................................ $269,013 $250,489
======== ========
LIABILITIES
Non-Interest-Bearing Deposits in U.S. Offices.................. $ 12,292 $ 13,648
Interest-Bearing Deposits in U.S. Offices...................... 35,891 35,699
Non-Interest-Bearing Deposits in Offices Outside the U.S....... 7,788 7,212
Interest-Bearing Deposits in Offices Outside the U.S........... 109,141 99,167
-------- --------
Total Deposits............................................... 165,112 155,726
Trading Account Liabilities.................................... 33,519 22,382
Purchased Funds and Other Borrowings........................... 19,062 20,907
Acceptances Outstanding........................................ 1,568 1,440
Accrued Taxes and Other Expenses............................... 5,436 5,493
Other Liabilities.............................................. 8,460 8,878
Long-Term Debt................................................. 16,125 16,497
Subordinated Capital Notes..................................... 1,370 1,397
STOCKHOLDERS' EQUITY
Preferred Stock (Without par value)............................ 4,337 4,187
Common Stock ($1.00 par value)................................. 423 421
Issued Shares: 422,924,975 and 420,589,459, respectively
Surplus........................................................ 4,287 4,194
Retained Earnings.............................................. 10,179 9,561
Net Unrealized (Losses) Gains - Securities Available for Sale.. (58) 278
Foreign Currency Translation................................... (404) (471)
Common Stock in Treasury, at Cost.............................. (403) (401)
-------- --------
Shares: 25,457,046 and 25,508,610, respectively
Total Stockholders' Equity................................... 18,361 17,769
-------- --------
TOTAL........................................................ $269,013 $250,489
======== ========
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY CITICORP and Subsidiaries
Three Months Ended
-----------------------
Mar. 31, Mar. 31,
(In Millions) 1995 1994
- ------------- ------- -------
<S> <C> <C>
Balance at Beginning of Period.................................................... $17,769 $13,953
Preferred Stock Issuance, Net of Related Costs.................................... 145 -
Issuance of Common Stock Under Various Staff Benefit Plans (Net of Amortization)
and the Dividend Reinvestment Plan............................................... 100 78
Net Income........................................................................ 829 553
Cash Dividends Declared:
Common........................................................................ (119) -
Preferred..................................................................... (92) (87)
Adoption of SFAS No. 115, Net Unrealized Gains on Securities
Available for Sale............................................................... - 365
Change in Net Unrealized (Losses) Gains on Securities Available for Sale.......... (336) (138)
Foreign Currency Translation...................................................... 67 23
Treasury Stock Transactions, at Cost.............................................. (2) 2
------- -------
Balance at End of Period.......................................................... $18,361 $14,749
======= =======
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS CITICORP and Subsidiaries
Three Months Ended
(In Millions) Mar. 31, 1995 Mar. 31, 1994
- ------------- ------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income....................................................................... $ 829 $ 553
--------- --------
Adjustments to Reconcile Net Income to Net Cash (Used In) Operating Activities:
Provision for Credit Losses..................................................... 391 415
Depreciation and Amortization of Premises and Equipment......................... 152 135
Amortization of Goodwill........................................................ 13 12
Provision for Deferred Taxes.................................................... (94) (329)
Cumulative Effect of Accounting Change.......................................... - 56
Venture Capital Activity........................................................ 340 (33)
Net (Gain) on Sale of Securities................................................ (26) (50)
Changes in Accruals and Other, Net.............................................. (686) (437)
Net (Increase) in Trading Account Assets........................................ (12,896) (18,905)
Net Increase in Trading Account Liabilities..................................... 11,137 16,289
--------- --------
Total Adjustments................................................................ (1,669) (2,847)
--------- --------
NET CASH (USED IN) OPERATING ACTIVITIES.......................................... (840) (2,294)
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Net (Increase) in Deposits at Interest with Banks............................... (925) (472)
Securities - Held to Maturity
Purchases..................................................................... (1,783) (4,745)
Maturities.................................................................... 1,795 4,523
Securities - Available for Sale
Purchases..................................................................... (3,836) (4,213)
Proceeds from Sales........................................................... 1,552 2,423
Maturities.................................................................... 2,594 1,368
Net (Increase) in Federal Funds Sold and Securities
Purchased Under Resale Agreements.............................................. (1,655) (2,769)
Net (Increase) in Loans......................................................... (30,084) (24,036)
Proceeds from Sales of Loans and Credit Card Receivables........................ 26,249 23,449
Capital Expenditures on Premises and Equipment.................................. (272) (303)
Proceeds from Sales of Premises and Equipment................................... 18 131
Proceeds from Sales of Other Real Estate Owned (OREO)........................... 99 336
--------- --------
NET CASH (USED IN) INVESTING ACTIVITIES.......................................... (6,248) (4,308)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase in Deposits........................................................ 9,386 7,909
Net (Decrease) Increase in Federal Funds Purchased and Securities Sold
Under Repurchase Agreements.................................................... (1,602) 1,084
Proceeds from Issuance of Commercial Paper and Funds Borrowed with
Original Maturities of Less Than One Year...................................... 126,833 82,178
Repayment of Commercial Paper and Funds Borrowed with
Original Maturities of Less Than One Year...................................... (127,071) (82,307)
Proceeds from Issuance of Long-Term Debt........................................ 758 359
Repayment of Long-Term Debt..................................................... (1,201) (1,726)
Proceeds from Issuance of Preferred Stock....................................... 145 -
Proceeds from Issuance of Common Stock.......................................... 71 67
Dividends Paid.................................................................. (211) (86)
--------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES........................................ 7,108 7,478
--------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND DUE FROM BANKS....................... 85 (7)
--------- --------
Net Increase in Cash and Due from Banks.......................................... 105 869
Cash and Due from Banks at Beginning of Period................................... 6,470 4,836
--------- --------
CASH AND DUE FROM BANKS AT END OF PERIOD......................................... $ 6,575 $ 5,705
========= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Period for:
Interest........................................................................ $ 2,940 $ 3,988
Income Taxes.................................................................... 199 428
NON-CASH INVESTING ACTIVITIES
Transfer from Loans to OREO and Assets Pending Disposition....................... 196 297
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET CITIBANK, N.A. and Subsidiaries
Mar. 31 Dec. 31
(Dollars In Millions) 1995 1994
- --------------------- -------- --------
<S> <C> <C>
ASSETS
Cash and Due from Banks.................................... $ 5,869 $ 5,562
Deposits at Interest with Banks............................ 8,467 7,201
Securities:
Held to Maturity......................................... 3,981 3,918
Available for Sale....................................... 10,913 11,328
Venture Capital.......................................... 1,258 1,161
Trading Account Assets..................................... 46,711 35,573
Federal Funds Sold and Securities Purchased Under
Resale Agreements......................................... 6,900 7,009
Loans, Net of Unearned Income.............................. 126,397 122,452
Allowance for Credit Losses................................ (4,349) (4,264)
Customers' Acceptance Liability............................ 1,557 1,420
Premises and Equipment, Net................................ 3,325 3,125
Interest and Fees Receivable............................... 1,918 1,803
Other Assets............................................... 8,474 8,383
-------- --------
TOTAL...................................................... $221,421 $204,671
======== ========
LIABILITIES
Non-Interest-Bearing Deposits in U.S. Offices.............. $ 10,204 $ 11,496
Interest-Bearing Deposits in U.S. Offices.................. 22,106 21,919
Non-Interest-Bearing Deposits in Offices Outside the U.S... 7,696 7,115
Interest-Bearing Deposits in Offices Outside the U.S....... 105,073 96,516
-------- --------
Total Deposits........................................... 145,079 137,046
Trading Account Liabilities................................ 33,310 21,458
Purchased Funds and Other Borrowings....................... 10,057 14,027
Acceptances Outstanding.................................... 1,567 1,440
Accrued Taxes and Other Expenses........................... 3,098 3,102
Other Liabilities.......................................... 4,490 4,243
Long-Term Debt............................................. 3,573 3,515
Subordinated Capital Notes................................. 5,700 5,700
STOCKHOLDER'S EQUITY
Capital Stock ($20.00 par value)........................... 751 751
Outstanding Shares: 37,534,553 in each period
Surplus.................................................... 6,649 6,620
Retained Earnings.......................................... 7,739 7,125
Net Unrealized (Losses) Gains - Securities
Available for Sale....................................... (59) 220
Foreign Currency Translation............................... (533) (576)
-------- --------
Total Stockholder's Equity............................... 14,547 14,140
-------- --------
TOTAL...................................................... $221,421 $204,671
======== ========
</TABLE>
34
<PAGE>
OTHER FINANCIAL INFORMATION
- ---------------------------
SECURITIES
- ----------
<TABLE>
<CAPTION>
March 31, 1995 December 31, 1994(A)
----------------------------------------- ------------- -------
Gross Gross
Amortized Unrealized Unrealized Fair Amortized Fair
(In Millions) Cost Gains Losses Value Cost Value
- ------------- --------- ---------- ---------- ------ ---------- -----
<S> <C> <C> <C> <C> <C> <C>
SECURITIES - HELD TO MATURITY
U.S. Treasury and Federal Agency (B).... $ 1,910 $ 10 $ 32 $ 1,888 $ 1,937 $ 1,903
State and Municipal..................... 2 - - 2 2 2
Foreign Government (C).................. 2,932 24 492 2,464 2,836 2,416
U.S. Corporate (B)...................... 29 - - 29 24 24
Other Debt Securities................... 259 - - 259 293 293
------- ---- ---- ------- ------- -------
Total Debt Securities................. $ 5,132 $ 34 $524 $ 4,642 $ 5,092 $ 4,638
------- ---- ---- ------- ------- -------
SECURITIES - AVAILABLE FOR SALE (D)(E)
U.S. Treasury and Federal Agency (B).... $ 2,635 $ 22 $ 30 $ 2,627 $ 2,688 $ 2,645
State and Municipal..................... 1,609 100 46 1,663 1,568 1,576
Foreign Government (C).................. 5,654 44 279 5,419 5,907 6,201
U.S. Corporate.......................... 775 6 22 759 776 725
Other Debt Securities................... 1,320 18 22 1,316 1,048 1,081
------- ---- ---- ------- ------- -------
Total Debt Securities................. 11,993 190 399 11,784 11,987 12,228
Equity Securities (F)................... 1,214 127 26 1,315 1,189 1,374
------- ---- ---- ------- ------- -------
$13,207 $317 $425 $13,099 $13,176 $13,602
------- ---- ---- ------- ------- -------
VENTURE CAPITAL (G)..................... 1,669 - - 1,669 2,009 2,009
------- ---- ---- ------- ------- -------
$20,008 $351 $949 $19,410 $20,277 $20,249
======= ==== ==== ======= ======= =======
</TABLE>
(A) At December 31, 1994, gross unrealized gains and gross unrealized losses on
securities held to maturity totaled $23 million and $477 million,
respectively, and gross unrealized gains and gross unrealized losses on
securities available for sale totaled $825 million and $399 million,
respectively.
(B) Included in Federal Agency and U.S. Corporate Securities held to maturity
are mortgage-backed securities with an amortized cost of $830 million, gross
unrealized losses of $26 million, and fair value of $804 million at March
31, 1995. Included in Federal Agency Securities available for sale are
mortgage-backed securities with an amortized cost of $708 million, gross
unrealized gains of $5 million, gross unrealized losses of $19 million, and
a fair value of $694 million at March 31, 1995.
(C) Included in Foreign Government securities held to maturity at March 31, 1995
are securities issued by the Government of Venezuela with an amortized cost
and fair value of $563 million and $259 million, respectively. Included in
Foreign Government securities available for sale at March 31, 1995 are
securities issued by the Government of Brazil with an amortized cost and
fair value of $1.6 billion and $1.5 billion, respectively.
(D) For the three months ended March 31, 1995 and 1994, gross realized gains on
sales of securities available for sale totaled $41 million and $62 million,
respectively. For the three months ended March 31, 1995 and 1994, gross
realized losses on sales of securities available for sale totaled $15
million and $12 million, respectively.
(E) Not included in the table above are securities available for sale held by
equity-method affiliates. Citicorp's share of gross unrealized gains and
gross unrealized losses related to those securities was $6 million and $13
million, respectively, and are included in the net unrealized (losses)
gains-securities available for sale component of stockholders' equity net of
applicable taxes at March 31, 1995.
(F) Equity securities available for sale include certain non-marketable equity
securities which are excluded from the scope of SFAS No. 115 and are
therefore carried at cost. At March 31, 1995, the carrying amount of those
securities was $756 million (which is reported in both the amortized cost
and fair value columns in the table) and the fair value was $791 million.
(G) For the three months ended March 31, 1995, net gains on investments held by
venture capital subsidiaries totaled $85 million, of which $106 million and
$53 million represented gross unrealized gains and gross unrealized losses,
respectively. 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.
35
<PAGE>
LONG-TERM DEBT (A)
(WITH ORIGINAL MATURITIES OF MORE THAN ONE YEAR) (B)
- ----------------------------------------------------
<TABLE>
<CAPTION>
Maturity Distribution
(In Millions) at March 31, 1995
- ------------- ---------------------
<S> <C>
PARENT COMPANY
Due in 1995........................................... $ 923
Due in 1996........................................... 1,405
Due in 1997........................................... 813
Due in 1998........................................... 1,398
Due in 1999........................................... 1,135
Due in 2000-2004...................................... 3,760
Due in 2005-2009...................................... 1,421
Due in 2010 and Thereafter............................ 714
-------
11,569
-------
SUBSIDIARIES
Due in 1995........................................... 877
Due in 1996........................................... 1,649
Due in 1997........................................... 704
Due in 1998........................................... 496
Due in 1999........................................... 206
Due in 2000-2004...................................... 501
Due in 2005-2009...................................... 49
Due in 2010 and Thereafter............................ 74
-------
4,556
-------
Total................................................. $16,125
=======
</TABLE>
(A) Includes $9 million of redeemable preferred stock issued by the Parent
Company.
(B) Maturity distribution is based upon contractual maturities or earlier dates
at which debt is repayable at the option of the holder, due to required
mandatory sinking fund payments or due to call notices issued.
36
<PAGE>
CALCULATION OF EARNINGS PER SHARE
- ---------------------------------
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
Mar. 31, 1995 Mar. 31, 1994
-------------------- ----------------------
On Common On Common
& Common Assuming & Common Assuming
Equivalent Full Equivalent Full
(In Millions Except Per Share Amounts) Shares Dilution Shares Dilution
- -------------------------------------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C>
INCOME APPLICABLE TO COMMON STOCK
Distributed Portion - Dividends.................................. A $ 119 $ 119 $ - $ -
Undistributed Portion Before Cumulative Effect
of Accounting Change........................................... 616 616 522 522
Dividends on Conversion Preferred Stock,
Series 15...................................................... 24 24 24 24
Dividends on Convertible Preferred Stock,
Series 12 and Series 13........................................ - 34 - 34
------ ------ ------ --------
Income Applicable to Common Stock Before Cumulative
Effect of Accounting Change, Adjusted....................... B 759 793 546 580
Cumulative Effect of Accounting Change........................... C - - (56) (56)
------ ------ ------ --------
Total............................................................. D $ 759 $ 793 $ 490 $ 524
====== ====== ====== ========
SHARES
Weighted-Average Common Shares Outstanding (A).................... 396.2 396.2 388.2 388.2
Common Equivalent Shares:
Conversion Preferred Stock, Series 15............................ 38.5 38.5 42.8 45.6
Other (B)........................................................ 8.1 8.5 9.0 9.0
Convertible Preferred Stock, Series 12 and Series 13.............. - 73.0 - 73.0
------ ------ ------ --------
Shares Applicable to Distributed Portion.......................... E 442.8 516.2 440.0 515.8
Book Value Shares Issuable Under Stock Option and
Executive Incentive Compensation Plans........................... 1.7 1.7 1.9 1.9
------ ------ ------ --------
Shares applicable to Undistributed Portion........................ F 444.5 517.9 441.9 517.7
====== ====== ====== ========
EARNINGS PER SHARE
Distributed Portion............................................... A/E $ 0.27 $ 0.23 $ - $ -
Undistributed Portion Before Cumulative
Effect of Accounting Change......................................(B-A)/F 1.44 1.30 1.24 1.12
------ ------ ------ --------
Income Before Cumulative Effect of Accounting
Change........................................................... 1.71 1.53 1.24 1.12
Cumulative Effect of Accounting Change............................ - - (.13) (.11)
------ ------ ------ --------
Net Income............................................ (A/E)+[ (D-A)/F ] $ 1.71 $ 1.53 $ 1.11 $ 1.01
====== ====== ====== ========
</TABLE>
(A) Includes book value shares of 1.1 million in the first quarter of 1995 and
1994.
(B) Includes shares issuable under deferred stock awards and the dilutive effect
of stock options and stock purchase agreements computed using the treasury
stock method.
37
<PAGE>
<TABLE>
<CAPTION>
AVERAGE BALANCES AND INTEREST RATES CITICORP and Subsidiaries
(TAXABLE EQUIVALENT BASIS) (A) (B)
- ----------------------------------
First Quarter 1995
-------------------------------
Average % Average
(Dollars In Millions) Volume Interest Rate
- --------------------- -------- -------- ----------
<S> <C> <C> <C>
INTEREST REVENUE
LOANS (NET OF UNEARNED INCOME) (C)
Consumer Loans
In U.S. Offices................................. $ 49,026 $1,336 11.05
In Offices Outside the U.S. (D)................. 47,200 1,485 12.76
-------- ------
TOTAL CONSUMER LOANS........................... 96,226 2,821 11.89
-------- ------
Commercial Loans
In U.S. Offices
Commercial and Industrial...................... 10,633 237 9.04
Mortgage and Real Estate....................... 5,922 111 7.60
Loans to Financial Institutions................ 340 3 3.58
Lease Financing................................ 3,241 59 7.38
In Offices Outside the U.S. (D)................. 36,155 1,111 12.46
-------- ------
TOTAL COMMERCIAL LOANS......................... 56,291 1,521 10.96
-------- ------
TOTAL LOANS................................... 152,517 4,342 11.55
-------- ------
FUNDS SOLD AND RESALE AGREEMENTS
In U.S. Offices................................. 13,479 186 5.60
In Offices Outside the U.S. (D)................. 1,966 65 13.41
-------- ------
TOTAL......................................... 15,445 251 6.59
-------- ------
SECURITIES
HELD TO MATURITY
In U.S. Offices
U. S. Treasury and Federal Agencies............ 1,556 25 6.52
State and Municipal............................ - - -
Other Debt Securities.......................... 28 1 14.48
In Offices Outside the U.S. (Principally Local
Government Issues) (D)......................... 3,325 63 7.68
-------- ------
TOTAL......................................... 4,909 89 7.35
-------- ------
AVAILABLE FOR SALE
In U.S. Offices
U.S. Treasury and Federal Agencies............. 2,052 29 5.73
State and Municipal............................ 1,616 26 6.53
Other.......................................... 1,404 21 6.07
In Offices Outside the U.S. (D)................. 8,178 198 9.82
-------- ------
TOTAL......................................... 13,250 274 8.39
-------- ------
VENTURE CAPITAL
In U.S. Offices................................. 1,469 4 1.10
In Offices Outside the U.S...................... 263 4 6.17
-------- ------
TOTAL......................................... 1,732 8 1.87
-------- ------
TOTAL SECURITIES.............................. 19,891 371 7.56
-------- ------
TRADING ACCOUNT ASSETS
In U.S. Offices................................. 14,133 243 6.97
In Offices Outside the U.S. (D)................. 10,864 217 8.10
-------- ------
TOTAL......................................... 24,997 460 7.46
-------- ------
DEPOSITS AT INTEREST WITH BANKS (PRINCIPALLY
IN OFFICES OUTSIDE THE U.S.) (C) (D)........... 10,865 181 6.76
-------- ------
TOTAL INTEREST-EARNING ASSETS................... 223,715 $5,605 10.16
======
Non-Interest-Earning Assets (E)................. 45,338
--------
TOTAL ASSETS.................................... $269,053
========
</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 deposits at interest with banks 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) Includes unrealized gains and losses on off-balance sheet trading positions.
38
<PAGE>
<TABLE>
<CAPTION>
AVERAGE BALANCES AND INTEREST RATES CITICORP and Subsidiaries
(TAXABLE EQUIVALENT BASIS) (A) (B)
- ----------------------------------
Fourth Quarter 1994 First Quarter 1994
----------------------------- -----------------------------
Average % Average Average % Average
(Dollars In Millions) Volume Interest Rate Volume Interest Rate
- --------------------- -------- -------- --------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
INTEREST REVENUE
LOANS (NET OF UNEARNED INCOME) (C)
Consumer Loans
In U.S. Offices................................. $ 47,863 $1,306 10.83 $ 43,527 $1,067 9.94
In Offices Outside the U.S. (D)................. 45,325 1,411 12.35 40,094 1,242 12.56
-------- ------ -------- ------
TOTAL CONSUMER LOANS........................ 93,188 2,717 11.57 83,621 2,309 11.20
-------- ------ -------- ------
Commercial Loans
In U.S. Offices
Commercial and Industrial................... 10,642 204 7.61 9,903 180 7.37
Mortgage and Real Estate.................... 6,038 114 7.49 7,318 93 5.15
Loans to Financial Institutions............. 397 5 5.00 427 3 2.85
Lease Financing............................. 3,440 62 7.15 3,513 60 6.93
In Offices Outside the U.S. (D)................. 35,187 1,012 11.41 32,217 1,480 18.07
-------- ------ -------- ------
TOTAL COMMERCIAL LOANS...................... 55,704 1,397 9.95 54,378 1,816 13.54
-------- ------ -------- ------
TOTAL LOANS................................ 148,892 4,114 10.96 137,999 4,125 12.12
-------- ------ -------- ------
FUNDS SOLD AND RESALE AGREEMENTS
In U.S. Offices................................. 13,701 170 4.92 17,044 127 3.02
In Offices Outside the U.S. (D)................. 2,186 120 21.78 2,767 998 146.28
-------- ------ -------- ------
TOTAL....................................... 15,887 290 7.24 19,811 1,125 23.03
-------- ------ -------- ------
SECURITIES
HELD TO MATURITY
In U.S. Offices
U.S. Treasury and Federal Agencies........... 1,730 27 6.19 1,760 24 5.53
State and Municipal.......................... - - - - - -
Other Debt Securities........................ 33 1 12.02 53 1 7.65
In Offices Outside the U.S. (Principally Local
Government Issues) (D)....................... 3,265 58 7.05 3,342 49 5.95
-------- ------ -------- ------
TOTAL....................................... 5,028 86 6.79 5,155 74 5.82
-------- ------ -------- ------
AVAILABLE FOR SALE
In U.S. Offices
U.S. Treasury and Federal Agencies........... 1,856 27 5.77 1,830 24 5.32
State and Municipal.......................... 1,494 24 6.37 876 12 5.56
Other........................................ 1,421 21 5.86 727 10 5.58
In Offices Outside the U.S. (D)................. 9,073 206 9.01 6,233 135 8.78
-------- ------ -------- ------
TOTAL....................................... 13,844 278 7.97 9,666 181 7.59
-------- ------ -------- ------
VENTURE CAPITAL
In U.S. Offices................................. 1,506 7 1.84 1,287 6 1.89
In Offices Outside the U.S...................... 249 1 1.59 206 3 5.91
-------- ------ -------- ------
TOTAL....................................... 1,755 8 1.81 1,493 9 2.44
-------- ------ -------- ------
TOTAL SECURITIES............................ 20,627 372 7.16 16,314 264 6.56
-------- ------ -------- ------
TRADING ACCOUNT ASSETS
In U.S. Offices................................. 13,816 230 6.60 14,419 194 5.46
In Offices Outside the U.S. (D)................. 10,658 239 8.90 12,140 466 15.57
-------- ------ -------- ------
TOTAL....................................... 24,474 469 7.60 26,559 660 10.08
-------- ------ -------- ------
DEPOSITS AT INTEREST WITH BANKS (PRINCIPALLY
IN OFFICES OUTSIDE THE U.S.) (C) (D)........... 9,290 163 6.96 10,161 286 11.42
-------- ------ -------- ------
TOTAL INTEREST-EARNING ASSETS................... 219,170 $5,408 9.79 210,844 $6,460 12.43
====== ======
Non-Interest-Earning Assets (E)................. 48,107 42,328
-------- --------
TOTAL ASSETS.................................... $267,277 $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 deposits at interest with banks 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) Includes unrealized gains and losses on off-balance sheet trading positions.
39
<PAGE>
<TABLE>
<CAPTION>
AVERAGE BALANCES AND INTEREST RATES CITICORP and Subsidiaries
(TAXABLE EQUIVALENT BASIS) (A) (B)
- ----------------------------------
First Quarter 1995
---------------------------------
Average % Average
(Dollars In Millions) Volume Interest Rate
- --------------------- -------- -------- ----------
<S> <C> <C> <C>
INTEREST EXPENSE
DEPOSITS
In U.S. Offices
Savings Deposits (C)....................... $ 24,438 $ 179 2.97
Negotiable Certificates of Deposit......... 1,369 24 7.11
Other Time Deposits........................ 9,864 165 6.78
-------- ------
Total U.S. Interest-Bearing Deposits...... 35,671 368 4.18
In Offices Outside the U.S. (D)............. 109,243 1,888 7.01
-------- ------
TOTAL..................................... 144,914 2,256 6.31
-------- ------
TRADING ACCOUNT LIABILITIES
In U.S. Offices............................. 3,229 52 6.53
In Offices Outside the U.S. (D)............. 1,242 31 10.12
-------- ------
TOTAL..................................... 4,471 83 7.53
-------- ------
FUNDS BORROWED
In U.S. Offices
Purchased Funds and Other Borrowings
Federal Funds Purchased and Securities
Sold Under Agreements to Repurchase....... 19,216 257 5.42
Commercial Paper........................... 1,961 22 4.55
Other Purchased Funds...................... 3,267 81 10.06
Long-Term Debt and Subordinated
Capital Notes............................. 14,465 265 7.43
-------- ------
Total in U.S. Offices..................... 38,909 625 6.51
In Offices Outside the U.S. (D)............. 9,710 308 12.86
-------- ------
TOTAL..................................... 48,619 933 7.78
-------- ------
Total Interest-Bearing Liabilities.......... 198,004 3,272 6.70
-------- ------
Demand Deposits in U.S. Offices............. 11,607
Other Non-Interest-Bearing Liabilities (E).. 41,527
Total Stockholders' Equity.................. 17,915
--------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY....................... $269,053
========
NET INTEREST REVENUE AS A % OF
AVERAGE INTEREST-EARNING ASSETS............ $2,333 4.23
======
</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) Includes unrealized gains and losses on off-balance sheet trading positions.
40
<PAGE>
<TABLE>
<CAPTION>
AVERAGE BALANCES AND INTEREST RATES CITICORP and Subsidiaries
(TAXABLE EQUIVALENT BASIS) (A) (B)
- ----------------------------------
Fourth Quarter 1994 First Quarter 1994
------------------------ ---------------------------
Average % Average Average % Average
(Dollars In Millions) Volume Interest Rate Volume Interest Rate
- --------------------- -------- --------- ---- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C>
INTEREST EXPENSE
DEPOSITS
In U.S. Offices
Savings Deposits (C).................... $ 25,030 $ 161 2.55 $ 26,374 $ 116 1.78
Negotiable Certificates of Deposit...... 1,300 31 9.46 944 10 4.30
Other Time Deposits..................... 9,564 170 7.05 10,693 163 6.18
-------- ------ -------- ------
Total U.S. Interest-Bearing Deposits... 35,894 362 4.00 38,011 289 3.08
In Offices Outside the U.S. (D)............. 104,218 1,720 6.55 94,516 2,181 9.36
-------- ------ -------- ------
TOTAL.................................. 140,112 2,082 5.90 132,527 2,470 7.56
-------- ------ -------- ------
TRADING ACCOUNT LIABILITIES
In U.S. Offices............................. 2,703 44 6.46 3,449 44 5.17
In Offices Outside the U.S. (D)............. 1,581 26 6.52 1,755 19 4.39
-------- ------ -------- ------
TOTAL.................................. 4,284 70 6.48 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..... 20,330 247 4.82 21,757 164 3.06
Commercial Paper......................... 2,261 30 5.26 1,596 14 3.56
Other Purchased Funds.................... 2,979 81 10.79 2,551 78 12.40
Long-Term Debt and Subordinated
Capital Notes.............................. 14,166 244 6.83 14,934 197 5.35
-------- ------ -------- ------
Total in U.S. Offices................... 39,736 602 6.01 40,838 453 4.50
In Offices Outside the U.S. (D)............. 10,596 326 12.21 10,021 1,387 56.13
-------- ------ -------- ------
TOTAL................................... 50,332 928 7.31 50,859 1,840 14.67
-------- ------ -------- ------
Total Interest-Bearing Liabilities.......... 194,728 3,080 6.28 188,590 4,373 9.40
-------- ------ -------- ------
Demand Deposits in U.S. Offices............. 12,210 12,728
Other Non-Interest-Bearing Liabilities (E).. 43,149 37,405
Total Stockholders' Equity.................. 17,190 14,449
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY....................... $267,277 $253,172
======== ========
NET INTEREST REVENUE AS A % OF
AVERAGE INTEREST-EARNING ASSETS............ $2,328 4.21 $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) Includes unrealized gains and losses on off-balance sheet trading positions.
41
<PAGE>
<TABLE>
<CAPTION>
CASH-BASIS, RENEGOTIATED, AND PAST DUE LOANS (A)
- ------------------------------------------------
Mar. 31 Dec. 31 Mar. 31
(In Millions) 1995 1994 (B) 1994 (B)
- ------------- ------- -------- --------
<S> <C> <C> <C>
COMMERCIAL CASH-BASIS LOANS (C)
Collateral-Dependent (at Lower of Cost or Collateral Value) (D).. $1,329 $1,347 $2,466
Other, Including Refinancing Portfolio........................... 712 770 1,888
------ ------ ------
Total Commercial Cash-Basis Loans................................ $2,041 $2,117 $4,354
====== ====== ======
In U.S. Offices.................................................. $1,460 $1,547 $2,635
In Offices Outside the U.S., Excluding Refinancing Portfolio..... 523 466 728
Refinancing Portfolio (E)........................................ 58 104 991
------ ------ ------
Total Commercial Cash-Basis Loans................................ $2,041 $2,117 $4,354
====== ====== ======
COMMERCIAL RENEGOTIATED LOANS (C)(F)
In U.S. Offices.................................................. $ 278 $ 563 $ 320
In Offices Outside the U.S....................................... 60 155 64
------ ------ ------
Total Commercial Renegotiated Loans.............................. $ 338 $ 718 $ 384
====== ====== ======
CONSUMER LOANS ON WHICH ACCRUAL OF INTEREST
HAS BEEN SUSPENDED (G)
In U.S. Offices.................................................. $1,501 $1,538 $1,945
In Offices Outside the U.S....................................... 1,192 1,066 1,004
------ ------ ------
Total Consumer Loans On Which Accrual
of Interest Has Been Suspended.................................. $2,693 $2,604 $2,949
====== ====== ======
ACCRUING LOANS 90 OR MORE DAYS DELINQUENT (H)
In U.S. Offices.................................................. $ 425 $ 415 $ 482
In Offices Outside the U.S....................................... 512 460 407
------ ------ ------
Total Accruing Loans 90 or More Days Delinquent.................. $ 937 $ 875 $ 889
====== ====== ======
</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 12.
(B) Reclassified to conform to latest quarter's presentation.
(C) Refer to detailed discussion of cash-basis and renegotiated commercial loans
on pages 9 and 11.
(D) This table presents data in a manner that distinguishes cash-basis
collateral-dependent loans from other cash-basis loans. A cash-basis loan
is defined as collateral dependent when repayment is expected to be provided
solely by the underlying collateral and there are no other available and
reliable sources of repayment, in which case the loans are written down to
the lower of cost or collateral value. In conjunction with the adoption of
SFAS No. 114, loans involving the in-substance repossession of the
underlying collateral have been reclassified from commercial OREO to cash-
basis collateral-dependent loans. Under SFAS No. 114, assets are reported
as OREO only when possession of the collateral is obtained. This
reclassification reduced commercial OREO and increased commercial cash-basis
loans by $628 million and $1.0 billion as of December 31, 1994 and March 31,
1994, respectively.
(E) Reflects the exchange of $0.8 billion of Brazil outstandings for securities
(held in available-for-sale portfolio) in the second quarter of 1994
pursuant to the refinancing agreement completed in that quarter.
(F) Amount at December 31, 1994 includes $385 million of loans that were
renegotiated during 1994 at a market rate of interest and are performing,
and accordingly, ceased to be reported as renegotiated loans in 1995.
(G) In conjunction with the adoption of SFAS No. 114, this table reflects the
reclassification of community and private banking loans involving the in-
substance repossession of the underlying collateral from consumer OREO to
cash-basis loans.
(H) Includes consumer loans of $858 million, $828 million and $738 million at
March 31, 1995, December 31, 1994, and March 31, 1994, respectively. Refer
to the detailed discussion of consumer loan portfolio on page 6.
42
<PAGE>
OTHER REAL ESTATE OWNED (OREO) AND ASSETS PENDING DISPOSITION (A)
- -----------------------------------------------------------------
<TABLE>
<CAPTION>
Mar. 31 Dec. 31 Mar. 31
(In Millions) 1995 1994 (B) 1994 (B)
- ------------- ------- ------- -------
<S> <C> <C> <C>
Consumer OREO (C)............... $ 601 $ 569 $ 800
Commercial OREO (D)
North America Real Estate...... 865 806 1,120
Other.......................... 149 152 468
------ ------ -------
Total Commercial............... 1,014 958 1,588
------ ------ -------
Total OREO...................... $1,615 $1,527 $2,388
====== ====== =======
Assets Pending Disposition (C).. $ 209 $ 195 $ 402
====== ====== =======
</TABLE>
(A) Carried at lower of cost or collateral value.
(B) Reclassified to conform to latest quarter's presentation.
(C) In conjunction with the adoption of SFAS No. 114, this table reflects the
reclassification of consumer loans involving the in-substance repossession
of the underlying collateral from consumer OREO to assets pending
disposition (for residential mortgage loans with high probability of
foreclosure) or cash-basis loans (for community and private banking loans).
(D) In conjunction with the adoption of SFAS No. 114, this table reflects the
reclassification from commercial OREO to cash-basis collateral-dependent
loans for loans involving the in-substance repossession of the underlying
collateral. Under SFAS No. 114, assets are reported as OREO only when
possession of the collateral is obtained. This reclassification reduced
commercial OREO and increased commercial cash-basis loans by $628 million
and $1.0 billion as of December 31, 1994 and March 31, 1994, respectively.
43
<PAGE>
CROSS-BORDER AND NON-LOCAL CURRENCY OUTSTANDINGS
IN COUNTRIES WITH OUTSTANDINGS EXCEEDING 1% OF TOTAL ASSETS (A)(B)(C)(D)
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
Cross-Border and Investments
Non-Local Currency Claims on Third Parties in and Total Outstandings
------------------------------------------ Funding of ------------------
Public Private Local Citicorp Mar. 31 Dec. 31
(In Billions) Banks Sector Sector Total Franchises 1995 1994
- ------------- ----- ------ ------- ----- -------------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
United Kingdom.. $0.4 $0.1 $3.5 $4.0 $3.1 $ 7.1 $ 6.7
Brazil.......... 0.3 1.5 1.0 2.8 0.8 (E) 3.6 4.0
Mexico.......... - 2.2 0.7 2.9 0.4 (E) 3.3 4.1
Argentina....... 0.1 0.3 2.0 2.4 0.3 2.7 2.5
</TABLE>
(A) Cross-border and non-local currency outstandings are presented on a
regulatory basis and include cross-border and non-local currency claims on
third parties (including local-dollar claims funded with locally generated
dollar liabilities) as well as investments in and funding of local Citicorp
franchises.
(B) Cross-border and non-local currency claims on third parties (trade, short-
term and medium- and long-term claims) include loans, securities, deposits
at interest with banks, and other monetary assets, as well as investments in
affiliates. Adjustments have been made to assign externally guaranteed
outstandings to the country of the guarantor and outstandings for which
tangible, liquid collateral is held outside of the obligor's country to the
country in which the collateral is held. For securities received as
collateral, outstandings are assigned to the domicile of the issuer of the
securities.
(C) Legally binding cross-border and non-local currency commitments, including
irrevocable letters of credit and commitments to extend credit, after
adjustments to assign externally guaranteed commitments to the country of
the guarantor, amounted to $5.4 billion in the United Kingdom and $0.1
billion in Argentina at March 31, 1995. Commitments were less than $0.1
billion in Brazil and Mexico.
(D) At March 31, 1995, cross-border and non-local currency outstandings in Japan
($2.7 billion), Australia ($2.6 billion), and Germany ($2.3 billion), were
between .75% and 1.0% of total assets. At December 31, 1994, such countries
were Argentina, Australia ($2.2 billion), Singapore ($2.0 billion), and
Japan ($2.0 billion).
(E) Includes local currency claims funded with non-local currency liabilities
where the funds provider agrees that, in the event their claim cannot be
repaid in U.S. dollars or other non-local currency due to a sovereign event,
they will accept payment in local currency or wait to receive the non-local
currency at such time as it becomes available. Such amounts at March 31,
1995 were $0.1 billion each in Brazil and Mexico, down from $0.3 billion in
Brazil and $0.6 billion in Mexico at December 31, 1994.
CROSS-BORDER AND NON-LOCAL CURRENCY CLAIMS ON THIRD PARTIES
<TABLE>
<CAPTION>
Public Private Mar. 31 Dec. 31
(In Billions) Banks Sector Sector 1995 1994
- ------------- ----- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C>
Organization for Economic Cooperation
and Development ("OECD") (A)................. $1.9 $4.1 $11.7 $17.7 $16.2
NON-OECD
Latin America (B)(C)......................... 0.5 3.4 3.9 7.8 7.9
Asia......................................... 0.9 0.6 4.3 5.8 6.2
Other........................................ 0.9 0.9 0.5 2.3 2.3
---- ---- ----- ----- -----
Total (D)..................................... $4.2 $9.0 $20.4 $33.6 $32.6
==== ==== ===== ===== =====
</TABLE>
(A) Includes $2.9 billion and $3.2 billion in Mexico at March 31, 1995 and
December 31, 1994, respectively, of which $2.0 billion (for both periods)
represents medium- and long-term claims on the public sector.
(B) Includes $2.8 billion and $3.3 billion in Brazil at March 31, 1995 and
December 31, 1994, respectively, of which $1.5 billion and $2.0 billion,
respectively, related to marketable securities (held in the available-for-
sale portfolio). Refer to page 35.
(C) Includes $2.4 billion and $2.2 billion in Argentina at March 31, 1995 and
December 31, 1994, respectively, of which $1.3 billion (for both periods)
represents local-dollar claims funded by local-dollar liabilities.
(D) Includes investments in affiliates of $1.2 billion at March 31, 1995 and
$1.1 billion at December 31, 1994.
44
<PAGE>
DETAILS OF CREDIT LOSS EXPERIENCE
- ---------------------------------
<TABLE>
<CAPTION>
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(Dollars In Millions) 1995 1994 1994 1994 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR CREDIT LOSSES
AT BEGINNING OF PERIOD......................... $5,155 $5,060 $4,912 $4,472 $4,379
------ ------ ------ ------ ------
ADDITIONS
Provision for Credit Losses.................... 391 558 436 472 415
DEDUCTIONS
GROSS CREDIT LOSSES
CONSUMER
In U.S. Offices................................ 238 328 242 262 288
In Offices Outside the U.S..................... 163 166 155 141 132
COMMERCIAL
In U.S. Offices................................ 39 77 43 82 55
In Offices Outside the U.S..................... 30 24 40 15 33
------ ------ ------ ------ ------
470 595 480 500 508
------ ------ ------ ------ ------
CREDIT RECOVERIES
CONSUMER
In U.S. Offices................................ 49 55 45 55 59
In Offices Outside the U.S..................... 43 40 37 37 33
COMMERCIAL
In U.S. Offices................................ 30 8 36 7 28
In Offices Outside the U.S. (A)................ 55 34 45 347 73
------ ------ ------ ------ ------
177 137 163 446 193
------ ------ ------ ------ ------
NET CREDIT LOSSES (RECOVERIES)
In U.S. Offices................................ 198 342 204 282 256
In Offices Outside the U.S. (A)................ 95 116 113 (228) 59
------ ------ ------ ------ ------
293 458 317 54 315
------ ------ ------ ------ ------
OTHER, NET (B)................................. 17 (5) 29 22 (7)
------ ------ ------ ------ ------
ALLOWANCE FOR CREDIT LOSSES
AT END OF PERIOD............................... $5,270 $5,155 $5,060 $4,912 $4,472
====== ====== ====== ====== ======
Net Consumer Credit Losses..................... $ 309 $ 399 $ 315 $ 311 $ 328
As a Percentage of Average
Consumer Loans................................ 1.30 1.70 1.43 1.50 1.59
Net Commercial Credit Losses (Recoveries) (A).. $ (16) $ 59 $ 2 $ (257) $ (13)
As a Percentage of Average
Commercial Loans.............................. NM .42 .01 NM NM
</TABLE>
(A) Second quarter 1994 amounts include a $318 million credit recovery added to
the allowance for credit losses reflecting recognition of the fair value of
instruments received pursuant to the Brazil refinancing agreement completed
in that quarter.
(B) Includes foreign exchange effects and net transfers (to) from the reserve
for Global Consumer sold portfolios.
NM Not meaningful, as recoveries result in a negative percentage.
45
<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, 1995 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.................. 397,467,929
($1.00 Par Value) (Shares Outstanding on March 31, 1995)
46
<PAGE>
- --------------------------------------------------------------------------------
FORM 10-Q CROSS-REFERENCE INDEX
This document serves both as an analytical review for analysts, stockholders and
other interested persons and as the quarterly report filed on Form 10-Q with the
Securities and Exchange Commission.
PART I FINANCIAL INFORMATION PAGE
----
Item 1 - Consolidated Financial Statements
Consolidated Financial Statements, Schedules and Statistics
Statement of Income for the Three Months Ended
MARCH 31, 1995 AND MARCH 31, 1994................... 30
Balance Sheet as of
MARCH 31, 1995, AND DECEMBER 31, 1994............... 31
Statement of Cash Flows for the Three Months Ended
MARCH 31, 1995 AND MARCH 31, 1994................... 33
Calculation of Earnings Per Share................... 37
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations ................ 2-29
PART II OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K.................... 48
Signatures.................................................... 49
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, 1995 AND 1994 have been
included.
47
<PAGE>
Item 6 - Exhibits and Reports on Form 8-K
--------------------------------
a) Exhibit 4.1 Certificate of Designations relating to Citicorp 8.5%
Noncumulative Preferred Stock, Series 21 (incorporated herein by
reference to Exhibit 2.2 from Citicorp's Registration Statement on
Form 8-A, File No. 1-5738).
b) Reports on Form 8-K
Citicorp filed a Form 8-K Current Report dated January 19, 1995 (Item
5) which report included a summary of the consolidated operations of
Citicorp for the year ended December 31, 1994 and (Item 7) the
calculation of the ratio of income to fixed charges (Exhibit 12(a)
thereto) and the calculation of the ratio of income to fixed charges
including preferred stock dividends (Exhibit 12(b) thereto).
Citicorp filed a Form 8-K Current Report dated April 24, 1995 (Item
5) which report included a summary of the consolidated operations of
Citicorp for the three month period ended March 31, 1995 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).
48
<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.
CITICORP
Registrant
By: /S/ Thomas E. Jones
-----------------------------
Thomas E. Jones
Executive Vice President
A Principal Financial Officer
/S/ George E. Seegers
--------------------------
George E. Seegers
Assistant Secretary
Date: May 12, 1995
49
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CURRENT REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH
31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS AND ACCOMPANYING DISCLOSURES.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 6,575
<INT-BEARING-DEPOSITS> 7,787
<FED-FUNDS-SOLD> 8,650<F1>
<TRADING-ASSETS> 51,771
<INVESTMENTS-HELD-FOR-SALE> 13,099
<INVESTMENTS-CARRYING> 5,132
<INVESTMENTS-MARKET> 4,642
<LOANS> 156,374
<ALLOWANCE> 5,270
<TOTAL-ASSETS> 269,013
<DEPOSITS> 165,112
<SHORT-TERM> 19,062<F2>
<LIABILITIES-OTHER> 8,460
<LONG-TERM> 16,125
<COMMON> 423
0
4,337
<OTHER-SE> 13,601
<TOTAL-LIABILITIES-AND-EQUITY> 269,013
<INTEREST-LOAN> 4,341
<INTEREST-INVEST> 365
<INTEREST-OTHER> 891
<INTEREST-TOTAL> 5,597
<INTEREST-DEPOSIT> 2,256
<INTEREST-EXPENSE> 3,272
<INTEREST-INCOME-NET> 2,325
<LOAN-LOSSES> 391
<SECURITIES-GAINS> 26
<EXPENSE-OTHER> 905
<INCOME-PRETAX> 1,359
<INCOME-PRE-EXTRAORDINARY> 829
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 829
<EPS-PRIMARY> 1.71
<EPS-DILUTED> 1.53
<YIELD-ACTUAL> 4.23<F3>
<LOANS-NON> 4,734<F4>
<LOANS-PAST> 937<F5>
<LOANS-TROUBLED> 338
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 5,155
<CHARGE-OFFS> 470
<RECOVERIES> 177
<ALLOWANCE-CLOSE> 5,270
<ALLOWANCE-DOMESTIC> 0<F6>
<ALLOWANCE-FOREIGN> 0<F7>
<ALLOWANCE-UNALLOCATED> 0<F8>
<FN>
<F1> Includes Securities Purchased Under Resale Agreements.
<F2> Purchased Funds and Other Borrowings.
<F3> Taxable Equivalent Basis.
<F4> Includes $2,041MM of cash-basis commercial loans and
$2,693MM of consumer loans on which accrual of interest has
been suspended.
<F5> Accruing loans 90 or more days delinquent.
<F6>No portion of Citicorp's credit loss allowance is
specifically allocated to any individual loan or group of loans,
however, $1,800MM of the allowance at December 31, 1994 was
attributed to operations outside the U.S.
(see Note 10 to the 1994 Annual Report).
<F7>See Footnote F6 above.
<F8>See Footnote F6 above.
</FN>
</TABLE>
