CONTENTS PAGE
FINANCIAL SUMMARY...................................................... 1
BUSINESS DISCUSSIONS
- Earnings Summary................................................... 3
- Global Consumer.................................................... 4
- Global Finance..................................................... 8
- North America Commercial Real Estate............................... 10
- Cross-Border Refinancing Portfolio................................. 12
- Corporate Items.................................................... 13
MANAGING GLOBAL RISK
- Liquidity.......................................................... 14
- Price Risk......................................................... 14
- Derivative and Foreign Exchange Contracts.......................... 15
- Estimated Fair Value of Financial Instruments...................... 19
- Capital............................................................ 20
STATEMENT OF INCOME ANALYSIS
- Net Interest Revenue................................................ 23
- Fee and Commission Revenue.......................................... 24
- Trading-Related Revenue............................................. 25
- Securities Transactions............................................. 26
- Other Revenue....................................................... 26
- Provision and Allowance for Credit Losses........................... 27
- Operating Expense................................................... 28
- Income Taxes........................................................ 29
- Effect of Credit Card Receivable Securitizations.................... 30
CONSOLIDATED FINANCIAL STATEMENTS
- Statement of Income................................................ 31
- Balance Sheet...................................................... 32
- Statement of Changes in Stockholders' Equity....................... 33
- Statement of Cash Flows............................................ 34
- Citibank, N.A. Balance Sheet....................................... 35
OTHER FINANCIAL INFORMATION
- Securities......................................................... 36
- Cross-Border and Non-Local Currency Outstandings................... 37
- Cash-Basis, Renegotiated, and Past Due Loans....................... 38
- Other Real Estate Owned and Assets Pending Disposition............. 39
- Trading Account Assets and Liabilities............................. 39
- Calculation of Earnings Per Share.................................. 40
- Average Balances and Interest Rates................................ 42
- Details of Credit Loss Experience.................................. 46
FORM 10-Q
- Cover Page......................................................... 47
- Cross-Reference Index.............................................. 48
SIGNATURES............................................................. 50
<PAGE>
<TABLE>
FINANCIAL SUMMARY
- ------------------------------------------------------------------------------------------
<CAPTION>
EARNINGS (In Millions) Third Quarter Nine Months
1995 1994 1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Income
Before Accounting Change ............. $ 877 $ 894 $ 2,559 $ 2,380
After Accounting Change (A) .......... 877 894 2,559 2,324
- ------------------------------------------------------------------------------------------
PER SHARE
- ------------------------------------------------------------------------------------------
Net Income (see pages 40 and 41)
On Common and Common Equivalent Shares
Before Accounting Change .......... $ 1.79 $ 1.87 $ 5.29 $ 4.95
After Accounting Change (A) ....... 1.79 1.87 5.29 4.82
Assuming Full Dilution
Before Accounting Change .......... $ 1.62 $ 1.67 $ 4.72 $ 4.44
After Accounting Change (A) ....... 1.62 1.67 4.72 4.33
Common Stockholders' Equity .............. $ 37.99 $ 32.43 $ 37.99 $ 32.43
- ------------------------------------------------------------------------------------------
RETURN ON ASSETS AND EQUITY
- ------------------------------------------------------------------------------------------
Return on Total Assets
Before Accounting Change ............. 1.31% 1.34% 1.27% 1.23%
After Accounting Change (A) .......... 1.31 1.34 1.27 1.21
Return on Common Stockholders' Equity
Before Accounting Change ............. 20.12% 26.54% 20.90% 25.24%
After Accounting Change (A) .......... 20.12 26.54 20.90 24.73
Return on Total Stockholders' Equity
Before Accounting Change ............. 17.91% 21.98% 18.25% 20.93%
After Accounting Change (A) .......... 17.91 21.98 18.25 20.56
</TABLE>
<TABLE>
- -----------------------------------------------------------------------------------------------
CAPITAL (Dollars in Billions) (see page 20)
- -----------------------------------------------------------------------------------------------
<CAPTION>
Sept. 30 June 30 Mar. 31 Dec. 31 Sept. 30
1995 1995 1995 1994 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Tier 1 ...................................... $18.6 $18.6 $17.8 $16.9 $16.0
Tier 1 and 2 ................................ 27.3 27.3 26.9 26.1 25.4
Tier 1 Ratio ................................ 8.38% 8.43% 8.01% 7.80% 7.47%
Tier 1 and 2 Ratio .......................... 12.31 12.40 12.06 12.04 11.86
Leverage Ratio .............................. 7.35 7.19 7.00 6.67 6.42
Common Equity as a Percentage of Total Assets 6.27% 6.02% 5.21% 5.42% 5.04%
Total Equity as a Percentage of Total Assets 7.57 7.59 6.83 7.09 6.70
</TABLE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING MARGIN (In Millions)
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
1995 1995 1995 1994 1994 1994 1994
------ ------ ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Total Revenue ........................................ $4,757 $4,689 $4,443 $ 4,512 $ 4,325 $ 4,050 $ 3,861
Effect of Credit Card Securitization (B) ............. 219 226 222 189 213 264 268
Net Cost To Carry (C) ................................ 7 8 - (1) 30 31 29
Capital Building Transactions ........................ - - - 60 - (117) (23)
------ ------ ------ ------- ------- ------- -------
ADJUSTED REVENUE ..................................... 4,983 4,923 4,665 4,760 4,568 4,228 4,135
------ ------ ------ ------- ------- ------- -------
Total Operating Expense .............................. 2,793 2,798 2,693 2,723 2,630 2,456 2,447
Net OREO Costs (D) ................................... 33 13 - 5 (5) 19 (28)
------ ------ ------ ------- ------- ------- -------
ADJUSTED OPERATING EXPENSE ........................... 2,826 2,811 2,693 2,728 2,625 2,475 2,419
------ ------ ------ ------- ------- ------- -------
OPERATING MARGIN ..................................... 2,157 2,112 1,972 2,032 1,943 1,753 1,716
Consumer Credit Costs (E) ............................ 633 616 536 595 544 585 614
Commercial Credit Costs (F) .......................... 61 23 2 66 40 73 60
------ ------ ------ ------- ------- ------- -------
OPERATING MARGIN LESS CREDIT COSTS ................... 1,463 1,473 1,434 1,371 1,359 1,095 1,042
Additional Provision (G) ............................. 75 75 75 80 100 90 66
Capital Building Transactions ........................ - - - (60) - 117 23
------ ------ ------ ------- ------- ------- -------
INCOME BEFORE TAXES AND CUMULATIVE EFFECT
OF ACCOUNTING CHANGE ................................ $1,388 $1,398 $1,359 $ 1,231 $ 1,259 $ 1,122 $ 999
====== ====== ====== ======= ======= ======= =======
</TABLE>
(A) 1994 nine month results reflect 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 receivable securitizations,
see page 30.
(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 receivable securitizations.
(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>
Citicorp reported net income of $877 million or $1.62 per fully diluted common
share in the 1995 third quarter, compared with $894 million or $1.67 per fully
diluted share in the same 1994 quarter, which included a higher level of tax
benefits. The effective tax rate was 37% in the 1995 third quarter compared with
29% in the same 1994 quarter. Earnings before income taxes were 10% higher when
compared with the 1994 third quarter.
In the nine months of 1995, operating earnings were $2.6 billion or $4.72 per
fully diluted share, compared with $2.4 billion or $4.44 per fully diluted share
in the nine months of 1994. Including the cumulative effect of adopting the
accounting standard for post-employment benefits, net income in the nine months
of 1994 was $2.3 billion or $4.33 per fully diluted share.
Operating margin of $2.2 billion and $6.2 billion in the 1995 third quarter and
nine months, respectively, was 11% and 15% higher than the comparable 1994
periods. The effect of translating various currencies into the weaker U.S.
dollar affected both revenue and operating expense, as noted below, and had no
significant impact on operating margin.
Adjusted revenue increased 9% from the 1994 third quarter and 13% from the nine
months of 1994, including an increase of 1% and 2%, respectively, related to
foreign currency translation. The improvement in revenue compared with the same
1994 quarter included a 9% increase in the Global Consumer business, led by
credit cards and branch banking ("Citibanking") services, and a 4% increase in
the Global Finance businesses, led by trading activities and venture capital.
Trading-related revenue (which includes trading account and foreign exchange
revenue, as well as net interest revenue associated with trading activities)
amounted to $558 million and $1.5 billion in the third quarter and nine months
of 1995, respectively, up from the $490 million and $1.0 billion reported in the
comparable 1994 periods. Excluding trading-related revenue, adjusted revenue was
up 9% from the 1994 third quarter and 10% from the nine months of 1994.
Adjusted operating expense, essentially unchanged from the 1995 second quarter,
was up 8% and 11% from the 1994 third quarter and nine months, respectively,
which included a 2% and 3% increase, respectively, related to foreign currency
translation. Business expansion in the Emerging Markets and in select businesses
in the Developed Markets was the primary driver of the increase. Additionally,
performance-based compensation, continued marketing programs, as well as
investments in operational and technological efficiencies all contributed to the
increases from the comparable 1994 periods. The expense to revenue ratio
improved to 56.7% in the third quarter of 1995.
Consumer credit costs in the third quarter and nine months of 1995 were up from
the comparable 1994 periods, principally reflecting loan portfolio growth.
Global Consumer's loss rate in the third quarter of 2.02% of managed loans
remained at the low end of a normal loss range, up slightly from 1.98% in the
1995 second quarter and 1.90% in the 1994 third quarter, reflecting growth in
the proportion of credit card receivables in the consumer portfolio and economic
conditions in certain Latin American markets. Commercial credit costs of $61
million in the third quarter were up from $40 million in the 1994 third quarter.
Commercial cash-basis loans and OREO of $2.6 billion at September 30, 1995 were
down substantially from $4.3 billion a year earlier, principally reflecting
reductions in the North America Commercial Real Estate portfolio.
Citicorp continued to strengthen its balance sheet. Consumer and commercial
credit loss reserves were built by $75 million in the quarter and $225 million
in the nine months of 1995 to $5.3 billion at September 30, 1995. Total
regulatory capital at September 30, 1995 was $27.3 billion, or 12.31% of
risk-adjusted assets. The Tier 1 capital ratio was 8.38% at September 30, 1995,
which compares with 8.43% at June 30, 1995 and 7.80% at December 31, 1994.
Return on total equity was 17.91% for the quarter and 18.25% for the nine
months, compared with 21.98% and 20.56% for the same 1994 periods.
Citicorp, continuing the $3 billion stock repurchase program announced in June
1995, repurchased 11.4 million common shares in the third quarter for $750
million. Through September 30, 1995, 12.3 million common shares had been
repurchased for $800 million.
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.
<TABLE>
- ---------------------------------------------------------------------------------------------------
EARNINGS SUMMARY
<CAPTION>
Third Quarter Nine Months
--------------- % ----------------- %
(Dollars In Millions) 1995 1994(A) Change 1995 1994(A) Change
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Global Consumer (see page 4):
Developed Markets .................... $ 321 $ 307 5 $ 847 $ 810 5
Emerging Markets ..................... 201 168 20 579 498 16
----- ----- ------- -------
Total ................................ 522 475 10 1,426 1,308 9
----- ----- ------- -------
Global Finance (see page 8):
Developed Markets .................... 133 175 (24) 497 371 34
Emerging Markets ..................... 218 256 (15) 727 602 21
----- ----- ------- -------
Total ................................ 351 431 (19) 1,224 973 26
----- ----- ------- -------
Total Core Businesses .................... 873 906 (4) 2,650 2,281 16
North America Commercial Real Estate
(see page 10) ......................... (6) (86) 93 (18) (233) 92
Cross-Border Refinancing Portfolio
(see page 12) ............................ 43 45 (4) 143 148 (3)
Corporate Items (see page 13) ............ (33) 29 NM (216) 184 NM
----- ----- ------- -------
Operating Earnings ....................... 877 894 (2) 2,559 2,380 8
Cumulative Effect of Accounting Change (B) - - - - (56) NM
----- ----- ------- -------
Net Income ............................... $ 877 $ 894 (2) $ 2,559 $ 2,324 10
===== ===== ======= =======
(A) Reclassified to conform to latest quarter's presentation.
(B) The 1994 nine month results reflect the cumulative effect of adopting SFAS
No. 112 as of January 1, 1994.
NM Not meaningful, as percentage equals or exceeds 100%.
- ---------------------------------------------------------------------------------------------------
</TABLE>
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>
Third Quarter Nine Months
------------------- % ------------------- %
(Dollars in Millions) 1995 1994(A) Change 1995 1994(A) Change
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total Revenue .................................... $2,906 $2,647 10 $8,400 $7,625 10
Operating Expense ................................ 1,675 1,577 6 5,011 4,594 9
Provision for Credit Losses ...................... 465 365 27 1,253 1,104 13
------ ------ ------ ------
Income Before Taxes .............................. 766 705 9 2,136 1,927 11
Income Taxes ..................................... 244 230 6 710 619 15
------ ------ ------ ------
Net Income ....................................... $ 522 $ 475 10 $1,426 $1,308 9
====== ====== ====== ======
Average Assets (In Billions) ..................... $ 121 $ 107 13 $ 119 $ 104 14
Return on Assets ................................. 1.71% 1.76% - 1.60% 1.68% -
OTHER DATA
Developed Markets
Net Income .................................. $ 321 $ 307 5 $ 847 $ 810 5
Average Assets (In Billions) ................ 86 77 12 85 75 13
Return on Assets ............................ 1.48% 1.58% - 1.33% 1.44% -
Emerging Markets
Net Income .................................. $ 201 $ 168 20 $ 579 $ 498 16
Average Assets (In Billions) ................ 35 30 17 34 29 17
Return on Assets ............................ 2.28% 2.22% - 2.28% 2.30% -
ADJUSTED FOR CREDIT-RELATED ITEMS
Total Revenue
Developed Markets ........................... $2,354 $2,202 7 $6,836 $6,487 5
Emerging Markets ............................ 774 661 17 2,241 1,889 19
------ ------ ------ ------
Total ....................................... $3,128 $2,863 9 $9,077 $8,376 8
====== ====== ====== ======
Operating Expense
Developed Markets ........................... $1,253 $1,189 5 $3,764 $3,500 8
Emerging Markets ............................ 426 375 14 1,242 1,056 18
------ ------ ------ ------
Total ....................................... $1,679 $1,564 7 $5,006 $4,556 10
====== ====== ====== ======
Operating Margin
Developed Markets ........................... $1,101 $1,013 9 $3,072 $2,987 3
Emerging Markets ............................ 348 286 22 999 833 20
------ ------ ------ ------
Total ....................................... $1,449 $1,299 12 $4,071 $3,820 7
====== ====== ====== ======
Credit Costs
Developed Markets ........................... $ 548 $ 499 10 $1,594 $1,620 (2)
Emerging Markets ............................ 85 45 89 191 123 55
------ ------ ------ ------
Total ....................................... $ 633 $ 544 16 $1,785 $1,743 2
====== ====== ====== ======
(A) Reclassified to conform to latest quarter's presentation.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
Earnings in the Global Consumer business exceeded $500 million for the first
time in a quarter, reaching $522 million, up 10% from the 1994 third quarter.
Earnings in the nine months of 1995 were $1.4 billion, up 9% from the comparable
1994 period. The earnings improvement in the third quarter and nine months was
led by Citibanking worldwide and cards in Asia Pacific. Earnings from private
banking activities were up in the quarter from the 1994 third quarter, but
declined in the nine month period.
Adjusted revenue increased by 9% in the quarter and 8% in the nine months of
1995 from the respective 1994 periods, reflecting expansion in card receivable
volumes in the U.S. and Asia Pacific, growth in Citibanking volumes worldwide,
the effect of foreign currency translation, and a reduced deposit insurance
assessment rate in the U.S. The revenue improvement in the U.S. credit card
business was achieved despite a tightening of spreads, and the improvement in
the Asia Pacific cards business reflected both higher net interest revenue and
fees. The growth in Citibanking revenue was led by volume growth in Latin
America. Citibanking revenues in Asia Pacific reflected sharp increases in
volume, partially offset by tightened spreads. Revenue from private banking
activities declined in the nine month period, reflecting shifts in market
conditions since mid-1994 that caused clients to reduce their investment
activities and move to lower-risk products. Private banking revenue has grown
steadily through the quarters of 1995 and was up slightly in the 1995 third
quarter from the year-ago quarter.
The number of credit and charge cards in force worldwide, including those issued
by affiliates, increased 9% from a year ago to 56 million at September 30, 1995.
Charge volume in the third quarter on Citicorp-issued cards in Asia Pacific was
up 41% from the 1994 third quarter and on U.S. bankcards was up 23%.
Citicorp-managed bankcard receivables as of September 30, 1995 grew 19% from a
year ago to $42 billion in the U.S., and also grew 40% in Asia Pacific and 44%
in Europe.
The 7% increase in adjusted operating expense in the third quarter from the
year-ago quarter reflected Citibanking expansion throughout the Emerging
Markets, cards expansion in Asia Pacific and Europe, the effect of foreign
currency translation, spending in support of account growth in the U.S. credit
card business, and private banking activities. The 10% increase in operating
expense in the nine months of 1995 from the year-ago period reflected the
above-noted factors as well as spending on certain marketing and advertising
programs earlier in the year for the U.S. credit card business. Operating
expense in the U.S. Citibanking business declined from 1994 levels, reflecting
restructuring benefits.
Adjusted credit costs in the third quarter and nine months of 1995 were up from
the comparable 1994 periods, principally reflecting loan portfolio growth.
Global Consumer's annualized loss rate in the third quarter of 2.02% of managed
loans remained at the low end of a normal loss range, up slightly from 1.98% in
the 1995 second quarter and 1.90% in the 1994 third quarter, reflecting growth
in the proportion of credit card receivables in the consumer portfolio and
economic conditions in certain Latin American markets. Credit costs improved in
the U.S. Citibanking business, reflecting the continuing workout of the mortgage
portfolio and a shift in loan mix to lower-risk portfolios. Credit costs also
improved in private banking.
The worldwide cards annualized loss rate of 3.78% was up from 3.59% in the 1994
third quarter, but was essentially unchanged from 3.76% in the 1995 second
quarter. The U.S. managed credit card loss rate of 3.72% was up from 3.57% in
last year's third quarter, but improved slightly from 3.74% in this year's
second quarter. Personal bankruptcies accounted for 36% of the U.S. credit card
business' gross credit write-offs in the 1995 third quarter, unchanged from the
1995 second quarter, but up from 33% in the 1994 third quarter, reflecting
industry-wide trends. The worldwide Citibanking loss rate of 1.14% was
essentially unchanged from both the third quarter of last year and the second
quarter of this year.
The provision for credit losses included charges in excess of net write-offs of
$50 million and $150 million, respectively, in the third quarter and nine months
of both 1995 and 1994.
Average assets increased by 13% in the quarter and 14% in the nine months from
the respective 1994 periods, primarily due to the growth in the U.S. credit card
and Emerging Markets (particularly Asia Pacific) portfolios, as well as the
effect of foreign currency translation.
The budget reconciliation package for fiscal year 1996 currently before Congress
includes a proposal to recapitalize the Savings Association Insurance Fund
("SAIF") through a special assessment on current members of the SAIF, including
5
<PAGE>
Citicorp's savings bank subsidiary. If adopted as proposed, Citicorp's savings
bank subsidiary would be subject to a special assessment of approximately $80
million on a pretax basis, which must be expensed in the quarter in which the
related budgetary legislation is enacted. It is expected that following
recapitalization of the SAIF, future deposit insurance premiums charged to
savings banks would be lowered.
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.
<TABLE>
- -----------------------------------------------------------------------------------------------------
CONSUMER LOAN DELINQUENCY AMOUNTS AND RATIOS
<CAPTION>
Total Loans (A) 90 Days or More Past Due
----------------- ------------------------------------------------
Sept. 30 Dec. 31 Sept. 30 June 30 Mar. 31 Dec. 31 Sept. 30
1995 1994 1995 1995 1995 1994 1994
- -----------------------------------------------------------------------------------------------------
(Dollars in Billions) (Dollars in Millions)
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. Mortgages ................ $ 17.8 $ 16.5 $ 570 $ 557 $ 543 $ 539 $ 569
Ratio ................... 3.20% 3.28% 3.23% 3.26% 3.49%
U.S. Mortgages Purchased Under
Recourse Provisions (B) . 0.5 0.6 422 430 425 455 478
U.S. Credit Cards ............. 17.5 17.3 270 258 249 255 214
Ratio .................... 1.54% 1.52% 1.58% 1.47% 1.62%
Other Developed Markets ....... 39.0 36.3 1,950 2,013 2,023 1,888 2,009
Ratio .................... 5.00% 5.17% 5.28% 5.20% 5.50%
------ ------ ------ ------ ------ ------ ------
Total Developed Markets ....... 74.8 70.7 3,212 3,258 3,240 3,137 3,270
Ratio .................... 4.29% 4.44% 4.53% 4.44% 4.91%
Emerging Markets .............. 28.0 25.9 274 277 217 184 172
Ratio .................... 0.98% 1.01% 0.82% 0.71% 0.71%
------ ------ ------ ------ ------ ------ ------
Total 90 Days or More
Past Due .................. $3,486 $3,535 $3,457 $3,321 $3,442
====== ====== ====== ====== ======
Total Consumer Loans
(In Billions) ............. $102.8 $ 96.6 $100.9 $ 98.1 $ 96.6 $ 90.9
====== ====== ====== ====== ====== ======
Ratio .................... 3.39% 3.51% 3.52% 3.44% 3.79%
(A) Loan amounts are net of unearned income.
(B) Mortgages were delinquent 90 days or more when purchased under recourse
provisions of mortgage sales.
- -----------------------------------------------------------------------------------------------------
</TABLE>
Consumer loans 90 days or more delinquent were $3.5 billion at September 30,
1995, representing a delinquency ratio of 3.39%, an improvement from 3.51% and
3.44% as of June 30, 1995 and December 31, 1994, respectively. The increase in
total dollar delinquencies since December 31, 1994 principally reflected higher
delinquencies in the Emerging Markets due to portfolio growth in Asia Pacific
and economic conditions in Latin America, the impact of foreign currency
translation on the European portfolio, particularly Germany, as well as volume
and seasonal increases in the government-guaranteed student loan portfolio.
6
<PAGE>
The improvement in the delinquency ratio from December 31, 1994 is primarily due
to improved ratios in the U. S. branch and mortgage businesses, partially offset
by higher delinquency ratios in certain Latin American countries. The
improvement in the U. S. mortgage delinquency ratio is primarily due to
portfolio growth. Adjusted for the effect of credit card receivable
securitizations, the delinquency ratio at September 30, 1995 was 3.04%, compared
with 3.14% at both June 30, 1995 and December 31, 1994.
Total consumer loans delinquent 90 days or more on which interest continued to
be accrued (which include personal loans in Germany, U. S. credit card
receivables and student loans) were $910 million at September 30, 1995, up from
$828 million at December 31, 1994. The majority of these loans, excluding the
government-guaranteed student loan portfolio, are written off upon reaching a
stipulated number of days past due. The increase was primarily due to volume and
seasonal increases in the student loan portfolio, and the impact of foreign
currency translation on the portfolio in Germany.
Citicorp's policy for suspending the accrual of interest on consumer loans
varies depending on the terms, security and credit loss experience
characteristics of each product, and in consideration of write-off criteria in
place. At September 30, 1995, interest accrual had been suspended on $1.0
billion of U.S. mortgages and $1.7 billion of other consumer loans. The
corresponding amounts at December 31, 1994 were $1.0 billion of U.S. mortgages
and $1.6 billion of other consumer loans. The increase in other consumer loans
on which the accrual of interest had been suspended is primarily due to higher
balances in the Emerging Markets, partially offset by improvements in the U.S.
branch business.
Consumer loans at September 30, 1995 included $4.1 billion and $2.2 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 September 30, 1995, the U.S. portfolios included $247 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 $71 million of
loans on which the accrual of interest had been suspended.
At September 30, 1995, consumer OREO was $561 million and assets pending
disposition totaled $195 million, both essentially unchanged from December 31,
1994.
While the U.S. economy remained stable and the European economy showed signs of
further improvement during the nine months of 1995, economic and political
conditions in Latin America remain uncertain. Asia Pacific economies continue to
grow at attractive rates, albeit modestly lower than the past few years. Credit
costs and the related net credit loss ratio may increase as a result of the
conditions in Latin America and continued portfolio growth in the U.S. credit
card business. Additionally, delinquencies and loans on which the accrual of
interest is suspended could remain at relatively high levels. These factors may
result in further increases to credit reserves.
MANAGED U.S. CREDIT CARD PORTFOLIO
As more fully described on page 30 and in the 1994 Annual Report and Form 10-K,
the securitization of credit card receivables has no effect on earnings reported
in a period, but certain income statement and balance sheet lines, as well as
credit-related ratios, are impacted. The table below presents certain
information for the managed U.S. credit card portfolio.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr.
1995 1995 1995 1994 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
End of Period Loans (In Billions).... $41.9 $40.3 $38.5 $38.6 $35.1
90 Days or More Past
Due (In Millions).................... 657 625 659 635 570
Ratio......................... 1.57% 1.55% 1.71% 1.64% 1.62%
Average Loans (In Billions).......... 41.0 39.2 38.1 36.4 34.5
Net Credit Losses (In Millions)...... 384 366 337 321 310
Ratio......................... 3.72% 3.74% 3.59% 3.50% 3.57%
- -----------------------------------------------------------------------------------------------
</TABLE>
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 and 11.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Third Quarter Nine Months
----------------- % ------------------- %
(Dollars in Millions) 1995 1994(A) Change 1995 1994(A) Change
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total Revenue ................... $1,548 $ 1,474 5 $ 4,714 $ 3,919 20
Operating Expense ............... 986 889 11 2,912 2,481 17
Provision for Credit Losses ..... 74 (28) NM 132 (41) NM
------ ------- ------- -------
Income Before Taxes ............. 488 613 (20) 1,670 1,479 13
Income Taxes .................... 137 182 (25) 446 506 (12)
------ ------- ------- -------
Net Income ...................... $ 351 $ 431 (19) $ 1,224 $ 973 26
====== ======= ======= =======
Average Assets (In Billions) .... $ 133 $ 144 (8) $ 138 $ 138 -
Return on Assets ................ 1.05% 1.19% - 1.19% 0.94% -
OTHER DATA
Developed Markets
Net Income ................. $ 133 $ 175 (24) $ 497 $ 371 34
Average Assets (In Billions) 86 100 (14) 92 96 (4)
Return on Assets ........... 0.61% 0.69% - 0.72% 0.52% -
Emerging Markets
Net Income ................. $ 218 $ 256 (15) $ 727 $ 602 21
Average Assets (In Billions) 47 44 7 46 42 10
Return on Assets ........... 1.84% 2.31% - 2.11% 1.92% -
ADJUSTED FOR CREDIT-RELATED ITEMS
Total Revenue
Developed Markets ......... $ 881 $ 813 8 $ 2,690 $ 2,213 22
Emerging Markets .......... 662 664 - 2,008 1,721 17
------ ------- ------- -------
Total ..................... $1,543 $ 1,477 4 $ 4,698 $ 3,934 19
====== ======= ======= =======
Operating Expense
Developed Markets .......... $ 653 $ 608 7 $ 1,930 $ 1,697 14
Emerging Markets ........... 341 303 13 1,000 847 18
------ ------- ------- -------
Total ...................... $ 994 $ 911 9 $ 2,930 $ 2,544 15
====== ======= ======= =======
Operating Margin
Developed Markets .......... $ 228 $ 205 11 $ 760 $ 516 47
Emerging Markets ........... 321 361 (11) 1,008 874 15
------ ------- ------- -------
Total ...................... $ 549 $ 566 (3) $ 1,768 $ 1,390 27
====== ======= ======= =======
Credit Costs
Developed Markets .......... $ 20 $ (71) NM $ (10) $ (132) 92
Emerging Markets ........... 16 11 45 33 6 NM
------ ------- ------- -------
Total ...................... $ 36 $ (60) NM $ 23 $ (126) NM
====== ======= ======= =======
(A) Reclassified to conform to latest quarter's presentation.
NM Not meaningful, as percentage equals or exceeds 100%.
- ---------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
Global Finance reported net income of $351 million and $1.2 billion in the third
quarter and nine months of 1995 and returns on assets of 1.05% and 1.19%,
respectively.
Global Finance activities in the Developed Markets earned $133 million in the
quarter, which was down $42 million from the 1994 third quarter, and earned $497
million in the nine months, which was up $126 million. Adjusted revenue in the
Developed Markets in the third quarter and nine months of 1995 increased 8% and
22%, respectively, from the comparable 1994 periods, led by trading and venture
capital results, which were partially offset by lower fee revenue (although the
pipeline of deals remains strong) and the effects of business restructurings
undertaken to improve overall returns. Developed Markets adjusted expense in the
1995 periods increased from the respective 1994 periods primarily due to the
foreign currency translation effect of the weaker U.S. dollar, higher costs
associated with volume growth in the transaction services business, increased
investment in operational and technological efficiencies and, in the nine-month
period, higher incentive compensation associated with improved trading results.
Credit cost amounts in the third quarter and nine months of 1995 increased
compared with the respective 1994 periods, reflecting higher net write-offs and
lower gains on the sale of OREO properties, partially offset by lower cost to
carry cash-basis loans and OREO. Net income in the nine months of 1995 benefited
from a lower effective tax rate that resulted from a change in the geographic
mix of earnings compared with the respective period in 1994. Average assets
declined 14% in the third quarter and 4% in the nine months of 1995 compared
with the respective 1994 periods primarily reflecting lower levels of
trading-related assets and the effect of business restructurings.
In the Emerging Markets, Global Finance net income of $218 million was down $38
million from the year-earlier quarter. In the nine months net income was $727
million, up $125 million from the comparable 1994 period. Adjusted revenue in
the Emerging Markets in the third quarter of 1995 compared with the third
quarter of 1994 reflected higher transaction services and other
non-trading-related revenue offset by a decline in trading-related revenue.
Adjusted revenue in the nine-month periods reflected growth in both
trading-related and non-trading-related revenue. The growth in Emerging Markets
non-trading-related revenue in both the third quarter and nine-month periods is
not fully evident in the reported amounts due to events in Brazil in the third
quarter of 1994, when an unusually favorable rate environment and the release of
a reserve related to a gross receipts tax boosted revenue. Adjusted expense in
the 1995 periods increased from the respective 1994 periods primarily due to
business expansion and the foreign currency translation effect of the weaker
U.S. dollar. Average assets increased 7% and 10% in the third quarter and nine
months of 1995 compared with the respective 1994 periods due to business
expansion and higher revaluation gains related to derivatives and foreign
exchange contracts.
Trading-related revenue totaled $498 million and $1.3 billion in the third
quarter and nine months of 1995, up from $443 million and $900 million in the
respective 1994 periods. Trading-related revenue -- including derivatives --
reflected continued customer demand for risk management products and improved
results from Citicorp's market-making activities. See page 25 for a discussion
of the income statement effects and business-sector sources of trading-related
revenue.
The provision for credit losses in the third quarter and nine months of 1995
included charges in excess of net write-offs of $25 million and $75 million to
build the allowance for credit losses, compared with charges of $13 million and
$37 million in the respective 1994 periods.
Cash-basis loans at September 30, 1995 were $640 million, up from $470 million
at December 31, 1994, mainly due to the cash-basis classification during the
quarter of the exposure to a European creditor. The OREO portfolio totaled $182
million at September 30, 1995, up slightly from December 31, 1994.
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.
- --------------------------------------------------------------------------------
Third Quarter % Nine Months %
(Dollars in Millions) 1995 1994 Change 1995 1994(A) Change
---- ----- ----- -----
- --------------------------------------------------------------------------------
Total Revenue ..................... $ 39 $ 10 NM $ 118 $ 56 NM
Operating Expense ................. 10 49 (80) 61 146 (58)
Provision for Credit Losses ....... 37 99 (63) 75 306 (75)
---- ----- ----- -----
Loss Before Taxes ................. (8) (138) 94 (18) (396) 95
Income Tax Benefit ................ (2) (52) 96 - (163) NM
---- ----- ----- -----
Net Loss .......................... $ (6) $ (86) 93 $ (18) $(233) 92
==== ===== ===== =====
Average Assets (In Billions) ...... $ 5 $ 8 (38) $ 5 $ 9 (44)
ADJUSTED FOR CREDIT-RELATED ITEMS
Total Revenue ..................... $ 48 $ 34 41 $ 139 $ 125 11
Operating Expense ................. 31 35 (11) 94 107 (12)
Operating Margin .................. 17 (1) NM 45 18 NM
Credit Costs ...................... 25 100 (75) 63 301 (79)
(A) Reclassified to conform to latest quarter's presentation.
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
The North America Commercial Real Estate business reported net losses of $6
million and $18 million in the third quarter and nine months of 1995,
respectively, compared with net losses of $86 million and $233 million in the
respective 1994 periods. Lower credit costs were the primary factor in the
improved 1995 results. Credit costs in both the third quarter and nine months of
1995 declined significantly compared with the respective 1994 periods due to
improving real estate market conditions. Net write-offs and net OREO writedowns
aggregated $31 million and $88 million in the third quarter and nine months of
1995, respectively, compared with $86 million and $265 million in the respective
1994 periods. The provision for credit losses in the third quarter and nine
months of 1994 included charges in excess of net write-offs of $37 million and
$113 million, respectively.
10
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
Sept. 30 Dec. 31
(In Millions) 1995 1994
- --------------------------------------------------------------------------------
Loans (A) (B)................... $4,345 $5,325
Cash-Basis Loans (A)............ 1,010 1,543
OREO............................ 778 806
Letters of Credit and Other..... 1,665 2,186
----- -----
Total Exposure.................. $7,798 $9,860
====== ======
PORTFOLIO BY PROJECT:
Office.......................... $3,260 $3,818
Residential..................... 1,537 1,981
Retail.......................... 1,463 1,845
Other........................... 1,538 2,216
------ ------
Total Exposure.................. $7,798 $9,860
====== ======
(A) Includes real estate-related loans of $259 million at September 30, 1995
and $405 million at December 31, 1994, of which $73 million at both dates
was on a cash basis.
(B) Includes $314 million and $655 million of renegotiated loans at September
30, 1995 and December 31, 1994, respectively, and excludes cash-basis
loans. The weighted-average contractual rate on renegotiated loans
approximated 6% at September 30, 1995. The level of renegotiated loans may
increase as a result of ongoing restructuring activities.
- --------------------------------------------------------------------------------
Total North America Commercial Real Estate exposure of $7.8 billion at September
30, 1995 declined from $9.9 billion at December 31, 1994, primarily as a result
of paydowns, maturities, and asset sales. Cash-basis loans and OREO totaled $1.8
billion at September 30, 1995, down from $2.3 billion at December 31, 1994 and
$3.1 billion a year ago. Approximately $0.3 billion of the $1.0 billion of
cash-basis loans at September 30, 1995 were contractually past due less than 90
days as to principal and interest but were classified as cash basis because of
uncertainty regarding future cash flows. Cash flows (cash interest payments and
net OREO operating revenue) on average cash-basis loans and OREO for the nine
months of 1995 totaled $111 million (of which $39 million was applied as a
reduction of principal) and represented an annualized cash yield of 6.85%.
- --------------------------------------------------------------------------------
CASH-BASIS LOANS AND OREO ACTIVITY
Third Quarter Nine Months
--------------- ---------------
(In Millions) 1995 1994 1995 1994
- --------------------------------------------------------------------------------
Beginning Balance................... $2,048 $3,441 $2,349 $4,051
Additions........................... 34 62 346 507
Write-offs/Writedowns (A)........... (63) (99) (133) (311)
Returned to Accrual Status.......... (60) (141) (284) (273)
Sales, Payments/Paydowns and Other.. (171) (126) (490) (837)
------ ------ ------ ------
Ending Balance...................... $1,788 $3,137 $1,788 $3,137
====== ====== ====== ======
(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.
- --------------------------------------------------------------------------------
Included in Letters of Credit and Other are standby letters of credit,
approximately $0.8 billion of which backstop tax-exempt multi-family housing
bonds secured by residential properties. Approximately $0.4 billion of the $1.2
billion of outstanding letters of credit at September 30, 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. Additionally, at September 30, 1995, $0.1 billion of other commitments
related to borrowers experiencing financial difficulties.
11
<PAGE>
- --------------------------------------------------------------------------------
CROSS-BORDER REFINANCING PORTFOLIO
- --------------------------------------------------------------------------------
Third Quarter Nine Months
-------------- % --------------- %
(Dollars in Millions) 1995 1994(A) Change 1995 1994(A) Change
- --------------------------------------------------------------------------------
Total Revenue .................. $55 $53 4 $178 $135 32
Operating Expense .............. 4 4 - 12 12 -
Provision for Credit Losses .... - - - - (46) NM
--- --- ---- ----
Income Before Taxes ............ 51 49 4 166 169 (2)
Income Taxes ................... 8 4 NM 23 21 10
--- --- ---- ----
Net Income ..................... $43 $45 (4) $143 $148 (3)
=== === ==== ====
Average Assets (In Billions) ... $ 3 $ 3 - $ 3 $ 3 -
(A) Reclassified to conform to latest quarter's presentation.
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
The Cross-Border Refinancing Portfolio reported net income of $43 million in the
third quarter and $143 million in the nine months of 1995, compared with $45
million and $148 million in the respective periods of 1994. The 1994 results
included a pretax release from the allowance for credit losses of $44 million
in the first half of 1994.
Citicorp's cross-border and non-local currency outstandings in the Refinancing
Portfolio at September 30, 1995 included $3.8 billion of medium- and long-term
outstandings, up $0.2 billion from June 30, 1995 and down $0.1 billion from
December 31, 1994, primarily reflecting changes in the fair value of Brazilian
securities (included in the available-for-sale securities portfolio). The
medium- and long-term debt outstandings at September 30, 1995 included $1.9
billion in Brazil, $0.6 billion in Venezuela, $0.4 billion in the Philippines,
$0.3 billion in Uruguay, $0.3 billion in South Africa and $0.3 billion in the
aggregate in nine other countries. Refer to footnote D on page 36 for an
additional discussion related to amounts classified as Securities.
The amount of Cross-Border Refinancing Portfolio cash basis loans was $24
million at September 30, 1995, down from $104 million at December 31, 1994.
In addition to Citicorp's cross-border and non-local currency outstandings
managed in the Cross-Border Refinancing Portfolio, at September 30, 1995,
Citicorp had $4.2 billion of trade and short-term claims, $2.1 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
page 37 for additional information on cross-border and non-local currency
outstandings.
12
<PAGE>
- --------------------------------------------------------------------------------
CORPORATE ITEMS
- --------------------------------------------------------------------------------
Third Quarter Nine Months
-------------- % --------------- %
(Dollars in Millions) 1995 1994(A) Change 1995 1994(A) Change
- --------------------------------------------------------------------------------
Total Revenue ................. $ 209 $141 48 $ 479 $501 (4)
Operating Expense ............. 118 111 6 288 300 (4)
----- ---- ----- ----
Income Before Taxes ........... 91 30 NM 191 201 (5)
Income Taxes .................. 124 1 NM 407 17 NM
----- ---- ----- ----
Net (Loss) Income ............. $ (33) $ 29 NM $(216) $184 NM
===== ==== ===== ====
(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 net losses of $33 million in the third quarter and $216
million in the nine months of 1995, compared with net income of $29 million and
$184 million in the respective periods of 1994.
Results for the third quarter and nine months of 1995 included a $30 million
deferred tax benefit, while the 1994 third quarter and nine month results
included $124 million and $344 million, respectively, of deferred tax benefits
(see Income Taxes discussion on page 29 for additional details). The results for
the nine months of 1995 also reflected a $43 million ($70 million pretax)
investment writedown in Latin America while the nine months of 1994 results
included net gains related to capital building transactions of $88 million ($140
million pretax).
Excluding the items noted above, Corporate Items revenue increased reflecting
funding benefits associated with higher equity levels while income tax amounts
for the 1995 nine month period reflected higher offsets created as a result of
taxes attributed to business activities.
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 $163.8 billion represent 64% of total funding at September 30,
1995, compared with $155.7 billion (62% of total funding) at December 31, 1994,
and are broadly diversified by geography and customer segments. Stockholders'
equity, which was $19.5 billion at September 30, 1995 compared with $17.8
billion at December 31, 1994, is also an important component of the overall
funding structure. In addition, long-term debt is issued by Citicorp (the
"Parent Company") and its subsidiaries. Total long-term debt outstanding at
September 30, 1995, including subordinated capital notes, was $19.0 billion,
compared with $17.9 billion at year-end 1994. A diversity of sources,
currencies, and maturities is used to gain the broadest practical access to the
investor base.
Securitization of assets remains an important source of liquidity. Total assets
securitized during the quarter were $2.4 billion, including $2.1 billion of U.S.
credit card receivables and $0.3 billion of U.S. consumer mortgages. Total
assets securitized during the nine months of 1995 were $7.8 billion, including
$6.9 billion of U.S. credit card receivables. As securitized credit card
receivables transactions amortize, newly originated receivables are recorded on
Citicorp's balance sheet and become available for asset securitization. During
the nine months of 1995, $3.8 billion of previously securitized credit card
receivables amortized and $0.9 billion are scheduled to amortize during the
remainder of the year.
The Parent Company is a legal entity separate and distinct from Citibank, N.A.
and its other subsidiaries and affiliates. As discussed in the 1994 Annual
Report and Form 10-K, there are various legal limitations on the extent to which
Citicorp's subsidiaries may extend credit, pay dividends, or otherwise supply
funds to Citicorp. As of September 30, 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 $5.3 billion. In determining whether and to what
extent to pay dividends, each bank subsidiary must also consider the effect of
dividend payments on applicable risk-based capital and leverage ratio
requirements, as well as policy statements of the federal regulatory agencies
that indicate that banking organizations should generally pay dividends out of
current operating earnings. Consistent with these considerations, Citicorp
estimates that as of September 30, 1995, its bank subsidiaries could have
distributed dividends to Citicorp, directly or through their parent holding
company, of approximately $4.2 billion of the available $5.3 billion.
- --------------------------------------------------------------------------------
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 measured using various tools, including the earnings
at risk method, which is applied to non-trading activities, and the potential
loss amount method, which is applied to trading activities. These measures are
used as indicators to monitor sensitivity of earnings to market risk rather than
as a quantification of aggregate risk amounts.
Earnings at risk measures the potential pretax earnings impact on non-trading
activities of a specified movement in interest rates for an assumed defeasance
period which ranges from one to eight weeks depending on the market liquidity
and depth of the instrument involved. 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 which results in a confidence
level of 97.5%. 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.
14
<PAGE>
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 (PRETAX)
Assuming a Rate Move of
-------------------------------
Two Standard Two Standard
Deviation Deviation
(In Millions at September 30, 1995) Increase Decrease
- --------------------------------------------------------------------------------
Excluding Derivatives....... $ 134 $(146)
Including Derivatives....... (155) 172
- --------------------------------------------------------------------------------
The risk profile related to non-trading activities has been modified through the
use of derivatives. The table illustrates that including derivatives, Citicorp's
earnings in its non-trading activities would be reduced from an increase in
interest rates and benefit from a decrease in interest rates.
During the third 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 had a potential negative impact which
ranged from approximately $90 million to $155 million in the aggregate. This is
somewhat higher than the range from $5 million to $90 million during the full
year 1994 and similar to the range from $30 million to $180 million during 1993.
As of September 30, 1995, the U.S. dollar interest rate exposure taken in tenors
beyond one year results in earnings at risk of a maximum of $85 million in any
single future year.
The price risk of trading activities is measured using the potential loss amount
method, which estimates the sensitivity of the value of trading activities 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 within each trading center. 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 third quarter of 1995, the potential loss amount in the trading
portfolios based on monthly averages of daily exposures ranged from
approximately $40 million to $50 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 the nine
months 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 third quarter of 1995 was
$558 million, compared with $553 million in the second quarter of 1995 and
quarterly revenue ranging from $214 million to $490 million during 1994. The
increase in trading-related revenue reflected continued customer demand for risk
management products and improved trading activities related to Citicorp's
market-making activities.
- --------------------------------------------------------------------------------
DERIVATIVE AND FOREIGN EXCHANGE CONTRACTS
- --------------------------------------------------------------------------------
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, including a description of
accounting policies, is provided in the 1994 Annual Report and Form 10-K.
15
<PAGE>
Notional principal amounts are frequently used as indicators of derivative and
foreign exchange activity, serving as a point of reference for calculating
payments. Notional principal amounts do not reflect balances subject to credit
or market risk, nor do they reflect the extent to which positions offset one
another. As a result, they do not represent the much smaller amounts that are
actually subject to risk in these transactions. Balance sheet credit exposure
arises from unrealized gains and represents the amount of loss that Citicorp
would suffer if every counterparty to which Citicorp was exposed were to default
at once (i.e., the cost of replacing these contracts), and does not represent
actual or expected loss amounts. The table below presents the aggregate notional
principal amounts of Citicorp's outstanding derivative and foreign exchange
contracts at September 30, 1995, June 30, 1995, and December 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.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
DERIVATIVE AND FOREIGN EXCHANGE CONTRACTS
Balance Sheet
Notional Principal Amounts Credit Exposure (A)
------------------------------ --------------------------
Sept. 30 June 30 Dec. 31 Sept. 30 June 30 Dec. 31
(In Billions) 1995 1995 1994 1995 1995 1994
- ----------------------------------------------------------------- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST RATE PRODUCTS
Futures Contracts................... $ 196.2 $ 216.6 $ 175.2 $ - $ - $ -
Forward Contracts................... 401.6 444.1 561.3 0.8 0.9 0.6
Swap Agreements..................... 423.5 430.3 367.5 7.6 7.3 6.0
Purchased Options................... 122.5 137.8 110.2 1.2 1.2 1.7
Written Options..................... 159.8 170.5 105.7 - - -
FOREIGN EXCHANGE PRODUCTS
Futures Contracts................... 0.8 0.5 0.1 - - -
Forward Contracts................... 1,100.7 1,141.5 1,153.0 16.1 19.5 14.9
Cross-Currency Swap Agreements...... 33.5 35.2 33.8 2.1 2.5 2.2
Purchased Options................... 109.5 85.6 63.6 2.3 2.1 1.3
Written Options..................... 118.6 92.3 66.2 - - -
COMMODITY AND EQUITY PRODUCTS............ 30.2 29.9 28.0 0.8 1.1 0.8
----- ----- -----
30.9 34.6 27.5
EFFECTS OF MASTER NETTING AGREEMENTS (B) (11.7) (13.5) (7.0)
----- ----- -----
$19.2 $21.1 $20.5
===== ===== =====
(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.
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
The aggregate notional principal amount of derivative and foreign exchange
contracts remained relatively unchanged from June 30, 1995. The overall
reduction in the balance sheet credit exposure at September 30, 1995 compared to
June 30, 1995 reflected reduced volatility in the foreign exchange markets.
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 $19.2 billion at
September 30, 1995. The potential increase in replacement cost, estimated as the
additional 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 $38.9 billion in the
aggregate for all contracts at September 30, 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 September 30, 1995. There
were no significant amounts of non-performing contracts at September 30, 1995
16
<PAGE>
and there were no substantial credit-related losses on derivative contracts in
the third 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, net of bilateral netting
arrangements, as applicable. These amounts at September 30, 1995, June 30, 1995,
and December 31, 1994 were $2.8 billion, $2.8 billion, and $2.9 billion,
respectively, for interest rates contracts and $8.0 billion, $8.3 billion, and
$7.6 billion, respectively, for foreign exchange, commodity, and equity
contracts.
Citicorp's management of its derivative and foreign exchange activities,
including the related accounting and operational controls, is tailored to its
dealer and end-user activities.
Citicorp's 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 $269 million at September 30, 1995. Information regarding derivative
and foreign exchange trading-related revenue can be found on page 25.
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.
The notional principal amounts of Citicorp's end-user positions as of September
30, 1995, June 30, 1995, and December 31, 1994, and approximate maturities as of
September 30, 1995, are reported 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)
Notional Principal Amounts Percentage of September 30, 1995 Amount Maturing
----------------------------- -------------------------------------------------
Sept. 30 June 30 Dec. 31 Within 1 1 to 2 2 to 3 3 to 4 4 to 5 After 5
(Dollars in Billions) 1995 1995 1994 Year Years Years Years Years Years
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INTEREST RATE PRODUCTS
Futures Contracts ................. $ 14.4 $ 18.5 $ 77.4 82% 14% 3% 1% - -
Forward Contracts ................. 6.5 10.6 3.7 99 1 - - - -
Swap Agreements ................... 83.9 82.9 68.5 29 21 14 12 11% 13%
Option Contracts .................. 54.1 41.7 32.5 65 23 5 3 3 1
FOREIGN EXCHANGE PRODUCTS
Futures and Forward Contracts ..... 57.3 57.4 40.5 99 1 - - - -
Cross-Currency Swap
Agreements ........................ 3.4 3.5 3.1 23 20 7 9 18 23
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
The changes in notional amounts of end-user interest rate futures and option
contracts from December 31, 1994 reflect modified risk management strategies in
response to lower U.S. interest rates. The increase in notional amounts of
foreign exchange futures and forwards from year-end is due to higher utilization
as a result of cross-currency borrowing and lending activity in Europe. 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 the third quarter of 1995
interest rate contracts with notional principal amounts of approximately $10.6
billion were closed out, resulting in a net deferred loss of approximately $16.0
million. Total unamortized net deferred losses, including those related to prior
17
<PAGE>
period close-outs, were approximately $156.0 million at September 30, 1995,
which will be amortized through earnings over the period reflecting the original
hedging or risk management strategy (17% in the remainder of 1995, 54% in 1996
and 29% 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. The table on page 19 provides information about the estimated
fair values of financial instruments.
Additional information regarding the outstanding notional amounts and weighted
average rates of interest rate swaps at September 30, 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 the swap component of the end-user
portfolio but should be viewed only in the context of Citicorp's related assets
and liabilities.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
END-USER INTEREST RATE SWAPS AS OF SEPTEMBER 30, 1995
Remaining Contracts Outstanding at Sept.30
----------------------------------------------------------------
(Dollars in Billions) 1995 1996 1997 1998 1999 2000
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RECEIVE FIXED SWAPS
Notional Amounts ......................... $60.8 $44.9 $34.4 $25.5 $16.7 $8.0
Weighted-Average Fixed Rate .............. 6.6% 6.8% 6.9% 7.1% 7.1% 6.9%
PAY FIXED SWAPS
Notional Amounts ......................... $12.5 $ 7.4 $ 5.2 $ 3.5 $ 3.1 $2.7
Weighted-Average Fixed Rate .............. 7.4% 7.2% 7.1% 7.3% 7.2% 7.1%
BASIS SWAPS
Notional Amounts ......................... $10.6 $ 7.3 $ 2.2 $ 0.9 $ 0.1 $0.1
THREE-MONTH IMPLIED FORWARD LIBOR RATES (A) ... 6.0% 5.8% 6.2% 6.4% 6.6% 6.8%
(A) The floating rate for a substantial majority of the end-user interest rate
swaps is three-month LIBOR. The three-month LIBOR rates shown above reflect
the implied forward yield curve for that index as of September 30, 1995.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
The Financial Accounting Standards Board is developing possible new accounting
standards regarding derivatives and hedge accounting that could significantly
affect the accounting treatment of derivative and foreign exchange contracts by
Citicorp and its customers. The effects of these changes cannot be determined at
present.
18
<PAGE>
- --------------------------------------------------------------------------------
ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
- --------------------------------------------------------------------------------
The table below presents the estimated fair value in excess of (less than)
carrying 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 receivable
securitizations. To better reflect Citicorp's values subject to market risk and
to illustrate the interrelationships that characterize risk management
strategies, the table below also provides estimated fair value data for the
expected time period until runoff of existing deposits with no fixed maturity.
- --------------------------------------------------------------------------------
ESTIMATED FAIR VALUE IN EXCESS OF (LESS THAN) CARRYING VALUE
Sept. 30 June 30 Dec. 31
(In Billions) 1995 1995 1994
- --------------------------------------------------------------------------------
Assets and Liabilities.............................. $ 4.4 $ 4.3 $ 4.6
End-User Derivative and Foreign Exchange Contracts.. 0.5 0.4 (1.4)
Loan Commitments.................................... (0.1) (0.1) (0.2)
Credit Card Receivable Securitizations (A).......... (0.1) (0.1) 0.7
----- ----- -----
4.7 4.5 3.7
Deposits with No Fixed Maturity (B)................. 2.4 2.4 2.9
----- ----- -----
Total............................................... $ 7.1 $ 6.9 $ 6.6
===== ===== =====
(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 September 30, 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 $7.1 billion at September 30, 1995, $6.9 billion at June 30, 1995,
and $6.6 billion at December 31, 1994. The increase from December 31, 1994 is
primarily due to the effect of declining interest rates on the value of
derivative contracts which was partially offset by decreases related to the
value of fixed rate liabilities, asset securitizations, and deposits with no
fixed maturity due to the same interest rate environment.
19
<PAGE>
- --------------------------------------------------------------------------------
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 a net $668 million during the quarter,
principally reflecting earnings for the quarter, dividends declared on common
and preferred stock, the effect of the stock repurchase program, and increases
of $547 million related to the partial conversions of Preferred Stock, Series 13
and 15. Common stockholders' equity at September 30, 1995 totaled $16.1 billion
and represented 6.27% of assets. Tier 1 capital at quarter-end was $18.6
billion. Citicorp's Tier 1 capital ratio was 8.38% at September 30, 1995,
compared with 8.43% at June 30, 1995, and 7.80% at December 31, 1994. Total
capital (Tier 1 and Tier 2) was $27.3 billion at September 30, 1995, compared
with $27.3 billion at June 30, 1995 and $26.1 billion at December 31, 1994.
During the third quarter of 1995, Citicorp repurchased 11,403,100 shares of
common stock, under the previously reported $3 billion stock repurchase program,
at an aggregate purchase price of $750 million. Through September 30, 1995,
Citicorp had repurchased 12,253,100 shares of common stock at an aggregate cost
of $800 million.
On September 1, 1995, Citicorp redeemed 24 million depositary shares of
Conversion Preferred Stock, Series 15 ("PERCS"), by issuing approximately 8
million shares of common stock. On October 12, 1995, Citicorp announced that it
would redeem the final 22.9 million depositary shares of PERCS prior to their
mandatory conversion date of November 30, 1995, by issuing approximately 6.4
million shares of common stock on November 13, 1995. In total, for the three
PERCS calls, 27.5 million shares of common stock will have been issued to
convert $1.1 billion of originally outstanding PERCS (76.9 million PERCS
shares).
In the third quarter of 1995, Citicorp issued approximately 10.6 million shares
of common stock for the conversion of 3.9 million depositary shares, or 29%, of
its Conversion Preferred Stock, Series 13.
Citicorp has entered into forward purchase agreements on its common stock, to be
settled in shares of its common stock on a net basis. The agreements are
designed to have an effect at settlement similar to that of the PERCS, in that
they will 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 Citicorp common stock decreases, the agreements will increase the
number of common shares outstanding. Certain of the agreements permit Citicorp
to elect to settle in cash in lieu of delivery of shares of its common stock.
The number of common shares and the forward strike prices are based in part on
the common stock prices applicable to the redemption of the PERCS. The
accounting for these contracts is described in Citicorp's Financial Review and
Form 10-Q for the quarter ended March 31, 1995. As of September 30, 1995,
agreements were in place covering approximately $550 million of Citicorp common
stock, of which approximately 48% had forward prices established. As a result of
the final PERCS call on October 12, 1995, substantially all of the forward
prices had been established. If the priced portion of these agreements was
settled based on the September 30, 1995 market price of Citicorp common stock
($70.75 per share), Citicorp would be entitled to receive approximately 1.0
million shares.
- --------------------------------------------------------------------------------
CITICORP RATIOS
Minimum Sept.30 June 30 Dec. 31
Required 1995 1995 1994
- --------------------------------------------------------------------------------
Common Stockholders' Equity .... 6.27% 6.02% 5.42%
Tier 1 Capital ................. 4.00% 8.38 8.43 7.80
Tier 1 and Tier 2 Capital ...... 8.00 12.31 12.40 12.04
Leverage (A) ................... 3.00+ 7.35 7.19 6.67
(A) Citicorp has not been advised by the FRB of a specific minimum leverage
ratio.
- --------------------------------------------------------------------------------
20
<PAGE>
As of August 3, 1995, the five-year performance-based stock options granted to a
key group of employees in July 1993 had vested in full. To further focus
management's efforts to increase the company's return to shareholders, Citicorp
decided to grant new five-year performance-based stock options to a broader
group of key employees, exercisable for up to 5.75 million common shares at the
prices prevailing on the grant dates. During the third quarter, approximately
4.6 million of these options were granted. One-half of these options will vest
at such time as Citicorp's common stock price has reached $100 per share and the
balance will vest upon such price reaching $115 per share, in each case assuming
the price remains at or above the indicated price level for twenty of thirty
consecutive trading days. These options have been awarded pursuant to the Stock
Incentive Plan approved by shareholders in 1988.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
COMPONENTS OF RISK-BASED CAPITAL UNDER REGULATORY GUIDELINES
Sept. 30 June 30 Dec. 31
(In Millions) 1995 1995 1994
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TIER 1 CAPITAL
Common Stockholders' Equity............................... $16,147 $15,479 $13,582
Perpetual Preferred Stock (A)............................. 3,348 3,895 4,187
Minority Interest......................................... 63 61 55
Less:
Net Unrealized Gains - Securities Available for Sale...... 319 204 278
Intangible Assets (B)..................................... 311 327 344
50% Investment in Certain Subsidiaries (C)................ 315 307 283
------- ------- -------
Total Tier 1 Capital...................................... 18,613 18,597 16,919
------- ------- -------
TIER 2 CAPITAL
Allowance for Credit Losses (D) .......................... 2,811 2,788 2,741
Qualifying Debt (E)....................................... 6,232 6,264 6,742
Less: 50% Investment in Certain Subsidiaries (C).......... 315 307 283
------- ------- -------
Total Tier 2 Capital...................................... 8,728 8,745 9,200
------- ------- -------
Total Capital (Tier 1 and Tier 2)......................... $27,341 $27,342 $26,119
======== ======== ========
Net Risk-Adjusted Assets (F).............................. $222,192 $220,487 $216,856
======== ======== ========
(A) At June 30, 1995, excludes $125 million of Perpetual Preferred Stock,
Series 9, which was called for redemption on June 21, 1995 and was redeemed
for cash on July 21, 1995.
(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, subordinated capital notes, and limited
life preferred stock, 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 pages 15 through 19 for further discussion
of derivative and foreign exchange activities.
- -------------------------------------------------------------------------------------------
</TABLE>
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 September 30,
1995, all of Citicorp's subsidiary depository institutions were "well
capitalized" under the federal bank regulatory agencies' definitions.
21
<PAGE>
- --------------------------------------------------------------------------------
CITIBANK, N.A. RATIOS
Minimum Sept. 30 June 30 Dec. 31
Required 1995 1995 1994
- --------------------------------------------------------------------------------
Common Stockholder's Equity..... 7.19% 7.15% 6.91%
Tier 1 Capital.................. 4.00% 8.42 8.43 7.83
Tier 1 and Tier 2 Capital....... 8.00 12.93 12.95 12.44
Leverage (A).................... 3.00+ 6.74 6.51 6.09
(A) Citibank, N.A. has not been advised of a specific minimum leverage ratio.
- --------------------------------------------------------------------------------
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 5% from the second quarter of 1995 and 11% from
the third quarter of 1994, primarily reflecting higher net rate spreads,
including funding benefits associated with higher equity levels. Additionally,
net interest revenue in the third quarter of 1995 compared with the year-ago
quarter reflected an increase in interest-earning assets. Net interest revenue
and interest rate spreads for all periods presented were reduced by the effect
of credit card receivable securitizations. Adjusted for the effect of credit
card receivable securitizations, net interest revenue increased 5% from the 1995
second quarter and 9% from the 1994 third quarter. The adjusted net rate spread
increased to 5.04% in the third quarter from 4.80% in both the second quarter of
1995 and the third quarter of 1994.
The adjusted net rate spread in the U.S. of 5.23% in the 1995 third quarter was
up from 4.81% in the 1995 second quarter and 4.92% in the 1994 third quarter.
The increase in the adjusted net rate spread in the U.S. from the second quarter
of 1995 principally reflected increased volumes in the U.S. credit card
business, a $25 million benefit as a result of a reduced deposit insurance
assessment rate, and a decrease in the level of lower yielding trading-related
assets in the Global Finance business in North America. The deposit insurance
assessment rate reduction, which primarily benefited the Global Consumer
businesses, included a refund of approximately $6 million related to the second
quarter of 1995 and will benefit net interest revenue on an annualized basis by
approximately $70 million at current deposit levels. The improvement over the
1994 third quarter reflected the above noted items as well as a lower cost to
carry cash-basis loans and OREO, partially offset by lower trading-related net
interest revenue in the Global Finance businesses and a decrease in spreads in
the U.S. credit card business.
The net rate spread outside the U.S. of 4.85% in the third quarter of 1995
increased slightly from the 1995 second quarter and was up from 4.67% in the
1994 third quarter. The increase in the net rate spread from the third quarter
of last year reflected higher spreads on Global Finance activities in the
Emerging Markets partially offset by lower spreads in Brazil, which had
benefited from an unusually favorable rate environment and a revenue-related tax
reserve release in the third quarter of 1994.
The $8.4 billion increase in adjusted average interest-earning assets from the
third quarter of 1994 was mainly attributable to higher levels of credit card
loan volumes in the U.S. and Asia Pacific regions, and the growth in loan
volumes in the Global Finance Emerging Markets, partially offset by a reduction
in trading-related assets in Global Finance North America.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
NET INTEREST REVENUE STATISTICS 3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(TAXABLE EQUIVALENT BASIS) (A) (B) 1995 1995 1995 1994 1994 1994 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET INTEREST REVENUE:
(In Millions)
U.S............................................ $1,104 $1,017 $1,047 $1,025 $1,015 $ 911 $ 945
Outside the U.S................................ 1,502 1,459 1,286 1,303 1,337 1,259 1,142
------ ------ ------ ------ ------ ------ ------
Total.......................................... $2,606 $2,476 $2,333 $2,328 $2,352 $2,170 $2,087
====== ====== ====== ====== ====== ====== ======
AVERAGE INTEREST-EARNING ASSETS:
(In Billions)
U.S............................................ $98.7 $103.1 $104.9 $103.9 $ 99.9 $100.8 $102.7
Outside the U.S................................ 122.8 121.8 118.8 115.3 113.6 108.9 108.1
----- ----- ----- ----- ----- ----- -----
Total.......................................... $221.5 $224.9 $223.7 $219.2 $213.5 $209.7 $210.8
====== ====== ====== ====== ====== ====== ======
NET RATE SPREAD:
U.S............................................ 4.44% 3.96% 4.05% 3.91% 4.03% 3.63% 3.73%
Outside the U.S................................ 4.85 4.80 4.39 4.49 4.67 4.63 4.29
Total.......................................... 4.67 4.42 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.......................................... $1,612 $1,514 $1,515 $1,495 $1,525 $1,451 $1,474
Total........................................ 3,114 2,973 2,801 2,798 2,862 2,710 2,616
AVERAGE INTEREST-EARNING ASSETS:
(In Billions)
U.S.......................................... $122.3 $126.4 $127.4 $125.5 $123.1 $125.5 $126.9
Total........................................ 245.1 248.2 246.2 240.8 236.7 234.4 235.0
NET RATE SPREAD:
U.S.......................................... 5.23% 4.81% 4.82% 4.73% 4.92% 4.64% 4.71%
Total........................................ 5.04 4.80 4.61 4.61 4.80 4.64 4.52
(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.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
- --------------------------------------------------------------------------------
FEE AND COMMISSION REVENUE
- --------------------------------------------------------------------------------
Third Quarter Nine Months
-------------- --------------
(In Millions) 1995 1994 1995 1994
- --------------------------------------------------------------------------------
Global Consumer:
Developed Markets .......................... $ 607 $ 645 $1,823 $1,915
Emerging Markets ........................... 228 182 643 541
------ ------ ------ ------
Total ...................................... 835 827 2,466 2,456
Global Finance and Other ....................... 433 453 1,327 1,322
------ ------ ------ ------
Total Fee and Commission Revenue ............... $1,268 $1,280 $3,793 $3,778
====== ====== ====== ======
ADJUSTED FOR THE EFFECT OF CREDIT
CARD SECURITIZATION (A)
Global Consumer - Developed Markets......... $ 592 $ 599 $1,751 $1,776
Total ...................................... 1,253 1,234 3,721 3,639
(A) Refer to page 30 for additional discussion.
- --------------------------------------------------------------------------------
Total fee and commission revenue of approximately $1.3 billion and $3.8 billion
in the third quarter and nine months of 1995, respectively, was essentially
unchanged from the year-ago levels. Adjusted for the effect of credit card
receivable securitizations, fee and commission revenue in the third quarter and
nine months of 1995 was up slightly from the comparable year-ago periods.
In the Global Consumer Emerging Markets, fee and commission revenue showed
continued double-digit growth, with increases of 25% and 19%, respectively, in
the third quarter and nine months of 1995 from the comparable 1994 periods. The
increases reflected growth across various consumer products offered in these
markets, particularly credit card related fees in Asia.
In the Global Consumer Developed Markets, adjusted fee and commission revenue
was up 2% from the second quarter of 1995 but down 1% from both the respective
third quarter and nine months of 1994. Credit card fees were up slightly from
the second quarter of 1995 due to higher seasonal charge volumes, but were
essentially unchanged from the year-ago levels, reflecting higher charge volumes
offset by the phasing out of annual cardholder fees on most credit cards.
Additionally, fee revenue for the third quarter and nine months of 1995 compared
to the respective 1994 periods reflected lower private banking fee revenue as a
result of shifts in market conditions since mid-1994 that caused clients to
reduce their investment activities and move to lower-risk products.
In the Global Finance business, continued growth in transaction banking fee
revenue, particularly in the Emerging Markets, was offset by weaker corporate
finance and credit related fee revenue during the quarter.
24
<PAGE>
- --------------------------------------------------------------------------------
TRADING-RELATED REVENUE
- --------------------------------------------------------------------------------
Trading-related revenue is reported in the "Trading Account" and "Foreign
Exchange" captions on the income statement, but also includes other amounts,
principally reflected in "Net Interest Revenue." The table below presents
trading-related revenue by income statement caption, by trading activity, and by
business-sector source.
- --------------------------------------------------------------------------------
Third Quarter Nine Months
--------------- ------------------
(In Millions) 1995 1994 1995 1994
- --------------------------------------------------------------------------------
BY INCOME STATEMENT LINE:
Trading Account ................. $ 182 $ 105 $ 363 $ 129
Foreign Exchange ................ 250 182 878 388
Other (A) ....................... 126 203 265 521
------- ------- ------- -------
Total ........................... $ 558 $ 490 $ 1,506 $ 1,038
======= ======= ======= =======
BY TRADING ACTIVITY:
Foreign Exchange (B) ............ $ 294 $ 183 $ 862 $ 495
Derivative (C) .................. 137 166 356 336
Fixed Income (D) ................ 46 46 55 (21)
Other ........................... 81 95 233 228
------- ------- ------- -------
Total ........................... $ 558 $ 490 $ 1,506 $ 1,038
======= ======= ======= =======
BY BUSINESS SECTOR:
Global Finance
Developed Markets ......... $ 317 $ 226 $ 816 $ 470
Emerging Markets .......... 181 217 508 430
Global Consumer and Other ....... 60 47 182 138
------- ------- ------- -------
Total ........................... $ 558 $ 490 $ 1,506 $ 1,038
======= ======= ======= =======
(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 of $558 million and $1.5 billion in the third quarter
and nine months of 1995 reflected continued demand for risk management products
and a more favorable trading environment than that which existed in 1994.
Trading-related revenue in the 1995 third quarter was essentially unchanged from
the strong 1995 second quarter level but grew $68 million from the 1994 third
quarter reflecting strong foreign exchange activities across most regions,
partially offset by a decline in revenue in Latin America, where volatility
decreased through the quarter.
Trading-related revenue of $1.5 billion in the nine months of 1995 was up
sharply from the comparable 1994 period, which reflected a difficult market
environment in the first half of the year. The increase was led by the Europe
and Asia Pacific regions and reflected higher revenue from all products, with
particularly strong results in foreign exchange.
25
<PAGE>
- --------------------------------------------------------------------------------
SECURITIES TRANSACTIONS
- --------------------------------------------------------------------------------
Net gains from the sale of securities were $21 million in the third quarter and
$65 million in the nine months of 1995, compared with $5 million and $178
million in the respective 1994 periods. In the third quarter and nine months of
1995, gross realized gains on sales of securities available for sale totaled $38
million and $102 million, respectively ($27 million and $233 million in the
comparable 1994 periods). In the third quarter and nine months of 1995, gross
realized losses on sales of securities available for sale totaled $17 million
and $37 million, respectively ($22 million and $55 million in the comparable
1994 periods). Results for the nine months of 1994 included a realized gain of
$71 million (reported as a capital building transaction) on the sale of
Brazilian interest bonds received in a previous restructuring.
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.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
OTHER REVENUE
- ------------------------------------------------------------------------------------
Third Quarter Nine Months
---------------- --------------
(In Millions) 1995 1994(A) 1995 1994(A)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Securitized Credit Card Receivables ......... $ 274 $ 251 $ 734 $ 695
Venture Capital ............................. 89 48 362 152
Affiliate Earnings .......................... 50 45 157 162
Mortgage Pass-Through Securitization Activity 4 (13) 11 (60)
Foreign Currency Translation (Losses)/Gains . (3) (9) 2 (2)
Capital Building Transactions ............... - - - 69
Net Asset Gains and Other Items ............. 24 85 133 158
------ ------ ------ ------
Total ....................................... $ 438 $ 407 $1,399 $1,174
====== ====== ====== ======
(A) Reclassified to conform to latest quarter's presentation.
- ------------------------------------------------------------------------------------
</TABLE>
The increase in revenue related to securitized credit card receivables in the
1995 third quarter principally reflected higher net interchange revenue as a
result of higher charge volumes. The increase in revenue in the nine months of
1995 reflected lower net credit loss rates and higher net interchange revenue,
partially offset by reduced net interest spreads and lower average
securitization volumes. The effect of credit card receivable securitizations is
discussed in more detail on page 30.
Venture capital revenue in the third quarter and nine months of 1995 was up from
the respective 1994 periods, including, in the second quarter of 1995, a gain
related to a public offering of shares of a corporation in which Citicorp has an
ownership interest. 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.
Revenue from mortgage pass-through securitization activity in the 1995 third
quarter reflected improved pass-through gains and higher excess servicing
revenue. The improvement in revenue in the nine months of 1995 reflected higher
excess servicing revenue in 1995 and net adjustments in 1994 for accelerated
prepayments of securitized mortgages.
Net asset gains and other items in the 1995 third quarter and nine months were
lower than the amounts in the comparable 1994 periods, which included higher net
gains on assets held in the Global Finance business. Additionally, revenue in
the nine months of 1995 reflected the writedown of an investment in Latin
America.
Revenue from capital building transactions in the nine months of 1994 included
recognition of the fair value of bonds received in connection with the Brazil
refinancing agreement, partially offset by writedowns in the value of certain
investments in Latin America.
26
<PAGE>
- --------------------------------------------------------------------------------
PROVISION AND ALLOWANCE FOR CREDIT LOSSES
- --------------------------------------------------------------------------------
The provision for credit losses in the third quarter and nine months of 1995
included charges in excess of consumer and non-refinancing portfolio commercial
net write-offs of $75 million and $225 million, respectively, to build the
allowance for credit losses, compared with charges of $100 million in the third
quarter of 1994 and $300 million in the nine months of 1994.
Details of net write-offs (recoveries) and the provision for credit losses are
included in the following table.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
NET WRITE-OFFS (RECOVERIES) AND PROVISION FOR CREDIT LOSSES
Third Quarter Nine Months
------------------ --------------------
(In Millions) 1995 1994 1995 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET WRITE-OFFS (RECOVERIES):
Global Consumer ............................. $ 415 $ 315 $ 1,103 $ 954
Global Finance .............................. 49 (41) 57 (78)
North America Commercial Real Estate ........ 37 62 75 193
------- ------- ------- -------
Total Non-Refinancing Commercial ............ 86 21 132 115
------- ------- ------- -------
Cross-Border Refinancing Portfolio (A) ...... - (19) (10) (383)
------- ------- ------- -------
Total ....................................... $ 501 $ 317 $ 1,225 $ 686
======= ======= ======= =======
PROVISION FOR CREDIT LOSSES:
Global Consumer ............................. $ 465 $ 365 $ 1,253 $ 1,104
Global Finance .............................. 74 (28) 132 (41)
North America Commercial Real Estate ........ 37 99 75 306
------- ------- ------- -------
Total Non-Refinancing Commercial ............ 111 71 207 265
------- ------- ------- -------
Cross-Border Refinancing Portfolio .......... - - - (46)
------- ------- ------- -------
Total ....................................... $ 576 $ 436 $ 1,460 $ 1,323
======= ======= ======= =======
(A) Includes a credit recovery of $318 million in the nine months of 1994 as
part of the step-up to market value of instruments received pursuant to the
Brazil refinancing agreement completed in 1994.
- --------------------------------------------------------------------------------------------------
</TABLE>
The consumer credit loss provision included a charge in excess of net write-offs
of $50 million in the third quarter and $150 million for the first nine months
of both 1995 and 1994. The increase in Global Consumer net write-offs was
primarily due to loan portfolio growth, particularly in on-balance sheet credit
card receivables. Adjusted for credit card receivable securitizations, net
write-offs as a percentage of average consumer loans rose to 2.02% during the
quarter from 1.98% in the second quarter of 1995 and from 1.90% in the third
quarter of 1994. The increase in the loss ratio from the prior periods reflected
the impact of a larger proportion of U.S. credit card receivables in the
consumer portfolio, as well as increased loss rates in certain countries in
Latin America. Improvements in the U.S. branch and mortgage businesses, along
with the effect of higher loan volumes in Asia Pacific, partially offset the
increase in the overall ratio since the third quarter of last year. The net
credit loss ratio may increase as a result of the economic and political
conditions in Latin America as well as continued portfolio growth in the U.S.
credit card business.
The non-refinancing portfolio commercial credit loss provisions included charges
in excess of net write-offs of $25 million and $75 million in the third quarter
and nine months of 1995, compared with charges of $50 million and $150 million
in the respective 1994 periods. The North America Commercial Real Estate
business benefited from lower write-offs and higher recoveries in the 1995
periods as a result of increased liquidity and improving conditions in most
markets. Global Finance net write-offs in the third quarter and nine months of
1995 reflected both higher write-offs as well as lower recoveries; however,
annualized net write-offs on the Global Finance portfolio remained low at 0.15%
of average loans.
27
<PAGE>
For analytical purposes, Citicorp views its allowance as attributable to
portions of its credit portfolio as shown in the following table. However, all
identified credit losses are immediately written off, and the allowance is
available to absorb all probable credit losses. Additionally, the attribution of
the allowance among portions of the portfolio may change from time to time.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
ALLOWANCE FOR CREDIT LOSSES
Sept. 30 June 30 Mar. 31 Dec. 31 Sept. 30
(Dollars In Millions) 1995 1995 1995 1994 1994
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Global Consumer ....................... $1,931 $1,923 $1,897 $1,834 $1,790
Commercial ............................ 3,410 3,385 3,373 3,321 3,270
------ ------ ------ ------ ------
Total ................................. $5,341 $5,308 $5,270 $5,155 $5,060
====== ====== ====== ====== ======
Reserve For Global Consumer
Sold Portfolios .................. $ 473 $ 467 $ 450 $ 422 $ 467
====== ====== ====== ====== ======
Allowance As a Percentage of Total
Loans:
Global Consumer .................. 1.88% 1.91% 1.93% 1.90% 1.97%
Commercial ....................... 5.89 5.90 5.79 5.95 5.90
Total ............................ 3.32 3.36 3.37 3.38 3.46
- --------------------------------------------------------------------------------------------------------
</TABLE>
Continued uncertainty in the economic environment and higher loan volumes may
result in further increases in the allowance for credit losses.
- --------------------------------------------------------------------------------
OPERATING EXPENSE
- --------------------------------------------------------------------------------
EMPLOYEE EXPENSE
Employee expense was $1.5 billion in the third quarter and $4.3 billion in the
nine months of 1995, up $126 million and $470 million from the comparable 1994
periods. These increases principally reflected higher staff levels related to
business expansion in the Emerging Markets, growth in the U.S. and Europe credit
card business, an increase of $18 million in the third quarter of 1995 ($81
million in the 1995 nine month period) related to performance-based
compensation, as well as the foreign currency translation effect of the weaker
U.S. dollar.
OTHER EXPENSE
Other expense was $1.3 billion in the third quarter and $4.0 billion in the nine
months of 1995, up $37 million and $281 million from the comparable periods of
1994. These increases primarily reflected business expansion in the Emerging
Markets; the introduction of the co-branded railway card in Germany; spending in
support of account growth (and, in the 1995 nine month period, higher marketing
and advertising costs) in the U.S. credit card business; costs associated with
higher volume in the transaction services business; continued investments in
operational and technological efficiencies; and the foreign currency translation
effect of the weaker U.S. dollar. These increases were partially offset by lower
net OREO costs.
28
<PAGE>
RESTRUCTURING ACTIVITIES
Citicorp has taken a series of actions in prior years to control costs and
improve productivity. These actions included a $425 million restructuring charge
in 1993, comprising $319 million related to workforce reductions, $88 million
attributable to asset writedowns, and $18 million in other actions.
Substantially all of these amounts will have been utilized by year-end 1995. A
total of $359 million of these restructuring charges had been utilized through
September 30, 1995. The $66 million remaining relates solely to workforce
reductions. 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 6,000 positions of which approximately 5,500 have
been eliminated to date. The remaining workforce reductions are anticipated to
be substantially completed in the fourth quarter of 1995. These actions are
directed toward improved efficiency rather than curtailments of business
activity, and help to offset cost increases that otherwise result from inflation
and business expansion.
- --------------------------------------------------------------------------------
INCOME TAXES
- --------------------------------------------------------------------------------
Income taxes were $511 million in the third quarter and $1.6 billion in the nine
months of 1995 after reflecting a $30 million tax benefit related to a reduction
in the deferred tax asset valuation allowance resulting from a reassessment of
the expected level and mix of future earnings. The effective tax rates in the
1995 third quarter and nine months were 37% and 38%, respectively. The 1994
third quarter and nine months effective tax rates were 29% and 30%,
respectively, and included the recognition of $124 million of deferred tax
benefits in the third quarter ($194 million for the nine months of 1994) related
to current operations and a $150 million reduction of the deferred tax asset
valuation allowance in the nine months of 1994, resulting from a reassessment of
the expected level and mix of future earnings. The effective tax rates on
current operations for the nine month periods were 39% in 1995 and 34% in 1994.
29
<PAGE>
- --------------------------------------------------------------------------------
EFFECT OF CREDIT CARD RECEIVABLE SECURITIZATIONS
- --------------------------------------------------------------------------------
During the nine months of 1995, $6.9 billion of credit card receivables were
sold. The total amount of securitized receivables, net of amortization, as of
September 30, 1995, was $24.4 billion, compared with $21.3 billion as of
December 31, 1994.
The securitization of credit card receivables, which is fully described in the
1994 Annual Report and Form 10-K, does not affect the earnings reported in a
period. However, securitization affects the manner in which the revenue is
reported in the income statement. For securitized receivables, amounts that
would otherwise be 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). The table below
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. Refer to page 7 for further discussion.
- --------------------------------------------------------------------------------
Third Quarter Nine Months
------------------- --------------------
(Dollars In Millions) 1995 1994 1995 1994
- --------------------------------------------------------------------------------
Net Interest Revenue ............... $ (508) $ (510) $(1,473) $(1,579)
Fee and Commission Revenue ......... 15 46 72 139
Other Revenue ...................... 274 251 734 695
Provision for Credit Losses ........ (219) (213) (667) (745)
------- ------- ------- -------
Net Income Impact of Securitization $ - $ - $ - $ -
======= ======= ======= =======
Average Assets (In Billions) ....... $ (24) $ (23) $ (23) $ (24)
Return on Assets ................... .11% .11% .10% .10%
Consumer Net Credit Loss Ratio ..... (.39) (.47) (.45) (.59)
- --------------------------------------------------------------------------------
30
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF INCOME CITICORP AND SUBSIDIARIES
Third Quarter Nine Months
--------------------- ----------------------
(In Millions Except Per Share Amounts) 1995 1994 1995 1994
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST REVENUE
Interest and Fees on Loans ................................... $ 4,508 $ 3,760 $ 13,217 $ 12,127
Interest on Deposits with Banks .............................. 198 154 580 732
Interest on Federal Funds Sold and Securities
Purchased Under Resale Agreements ........................... 261 366 770 3,028
Interest and Dividends on Securities
U. S. Treasury and Federal Agencies ...................... 66 59 191 175
State and Municipal ...................................... 22 21 67 53
Other (Principally in offices outside the U.S.) ......... 312 253 893 670
Interest on Trading Account Assets ........................... 428 444 1,387 1,626
-------- -------- -------- --------
Total Interest Revenue .................................. 5,795 5,057 17,105 18,411
-------- -------- -------- --------
INTEREST EXPENSE
Interest on Deposits ......................................... 2,179 1,855 6,613 6,914
Interest on Trading Account Liabilities ...................... 71 65 216 197
Interest on Purchased Funds and Other Borrowings ............. 579 544 1,816 3,320
Interest on Long-Term Debt and Subordinated Capital Notes .... 368 247 1,069 1,391
-------- -------- -------- --------
Total Interest Expenses ................................. 3,197 2,711 9,714 11,822
-------- -------- -------- --------
NET INTEREST REVENUE ......................................... 2,598 2,346 7,391 6,589
-------- -------- -------- --------
PROVISION FOR CREDIT LOSSES .................................. 576 436 1,460 1,323
-------- -------- -------- --------
NET INTEREST REVENUE AFTER PROVISION FOR CREDIT LOSSES ....... 2,022 1,910 5,931 5,266
-------- -------- -------- --------
FEES, COMMISSIONS, AND OTHER REVENUE
Fees and Commissions ......................................... 1,268 1,280 3,793 3,778
Trading Account .............................................. 182 105 363 129
Foreign Exchange ............................................. 250 182 878 388
Securities Transactions ...................................... 21 5 65 178
Other Revenue ................................................ 438 407 1,399 1,174
-------- -------- -------- --------
Total Fees, Commissions, and Other Revenue .............. 2,159 1,979 6,498 5,647
-------- -------- -------- --------
OPERATING EXPENSE
Salaries ..................................................... 1,122 1,050 3,321 2,978
Employee Benefits ............................................ 338 284 979 852
-------- -------- -------- --------
Total Employee Expense .................................. 1,460 1,334 4,300 3,830
Net Premises and Equipment Expense ........................... 433 396 1,260 1,156
Other Expense ................................................ 900 900 2,724 2,547
-------- -------- -------- --------
Total Operating Expense ................................. 2,793 2,630 8,284 7,533
-------- -------- -------- --------
INCOME BEFORE TAXES AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGE .......................................... 1,388 1,259 4,145 3,380
Income Taxes ................................................. 511 365 1,586 1,000
-------- -------- -------- --------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE ......... 877 894 2,559 2,380
Cumulative Effect of Accounting Change (A) ................... - - - (56)
-------- -------- -------- --------
NET INCOME ................................................... $ 877 $ 894 $ 2,559 $ 2,324
======== ======== ======== ========
INCOME APPLICABLE TO COMMON STOCK ............................ $ 798 $ 804 $ 2,290 $ 2,060
======== ======== ======== ========
EARNINGS PER SHARE:
ON COMMON AND COMMON EQUIVALENT SHARES
Income Before Cumulative Effect of Accounting Change ......... $ 1.79 $ 1.87 $ 5.29 $ 4.95
Cumulative Effect of Accounting Change ....................... - - - (0.13)
-------- -------- -------- --------
Net Income ................................................... $ 1.79 $ 1.87 $ 5.29 $ 4.82
======== ======== ======== ========
ASSUMING FULL DILUTION
Income Before Cumulative Effect of Accounting Change ......... $ 1.62 $ 1.67 $ 4.72 $ 4.44
Cumulative Effect of Accounting Change ....................... - - - (0.11)
-------- -------- -------- --------
Net Income ................................................... $ 1.62 $ 1.67 $ 4.72 $ 4.33
======== ======== ======== ========
(A) Represents the cumulative effect of adopting SFAS No. 112, "Employers'
Accounting for Postemployment Benefits," as of January 1, 1994.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET CITICORP AND SUBSIDIARIES
(Dollars In Millions) Sept. 30, 1995 Dec. 31, 1994
- -------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and Due from Banks ................................... $ 5,719 $ 6,470
Deposits at Interest with Banks ........................... 8,158 6,862
Securities
Held to Maturity .................................. 4,966 5,092
Available for Sale ................................. 13,941 13,602
Venture Capital .................................... 1,813 2,009
Trading Account Assets .................................... 35,682 38,875
Federal Funds Sold and Securities Purchased Under
Resale Agreements ..................................... 9,765 6,995
Loans, Net of Unearned Income
Consumer .............................................. 102,834 96,600
Commercial ............................................ 57,861 55,820
-------- --------
Total Loans ....................................... 160,695 152,420
Allowance for Credit Losses ............................... (5,341) (5,155)
Customers' Acceptance Liability ........................... 1,649 1,420
Premises and Equipment, Net ............................... 4,310 4,062
Interest and Fees Receivable .............................. 2,912 2,654
Other Assets .............................................. 13,267 15,183
-------- --------
Total .............................................. $257,536 $250,489
======== ========
LIABILITIES
Non-Interest-Bearing Deposits in U.S. Offices ............. $ 12,199 $ 13,648
Interest-Bearing Deposits in U.S. Offices ................. 36,754 35,699
Non-Interest-Bearing Deposits in Offices Outside the U.S. . 8,049 7,212
Interest-Bearing Deposits in Offices Outside the U.S. ..... 106,825 99,167
-------- --------
Total Deposits .................................. 163,827 155,726
Trading Account Liabilities ............................... 21,485 22,382
Purchased Funds and Other Borrowings ...................... 17,255 20,907
Acceptances Outstanding ................................... 1,660 1,440
Accrued Taxes and Other Expenses .......................... 5,740 5,493
Other Liabilities ......................................... 9,118 8,878
Long-Term Debt ............................................ 17,619 16,497
Subordinated Capital Notes ................................ 1,337 1,397
STOCKHOLDERS' EQUITY
Preferred Stock (Without par value) ....................... 3,348 4,187
Common Stock ($1.00 par value) ............................ 454 421
Issued Shares: 454,332,544 and 420,589,459, respectively
Surplus ................................................... 5,394 4,194
Retained Earnings ......................................... 11,484 9,561
Net Unrealized Gains - Securities Available for Sale ...... 319 278
Foreign Currency Translation .............................. (427) (471)
Common Stock in Treasury, at Cost ......................... (1,077) (401)
Shares: 29,270,097 and 25,508,610, respectively
-------- --------
Total Stockholders' Equity ......................... 19,495 17,769
-------- --------
Total .............................................. $257,536 $250,489
======== ========
- -------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY CITICORP AND SUBSIDIARIES
<CAPTION>
Nine Months Ended September 30,
----------------------------------
(Dollars In Millions) 1995 1994
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Balance at Beginning of Period ............................. $ 17,769 $ 13,953
Preferred Stock Issuance, Net of Related Costs ............. 267 388
Conversion Preferred Stock, Series 15 ("PERCS")
Redemption of PERCS ..................................... (797) -
Issuance of Common Stock ................................ 797 -
Convertible Preferred Stock, Series 13
Redemption of Series 13 ................................. (193) -
Issuance of Common Stock ................................ 193 -
Redemption of Perpetual Preferred Stock, Series 9 .......... (125) -
Redemption of Price Adjusted Rate
Preferred Stock (Fourth Series) ....................... - (100)
Issuance of Common Stock Under Various Staff Benefit Plans
(Net of Amortization) and the Dividend Reinvestment Plan . 386 257
Net Income ................................................. 2,559 2,324
Cash Dividends Declared
Common .............................................. (365) (117)
Preferred ........................................... (271) (267)
Adoption of SFAS No. 115, Net Unrealized Gains on Securities
Available for Sale ...................................... - 365
Change in Net Unrealized Gains on Securities
Available for Sale ...................................... 41 46
Foreign Currency Translation ............................... 44 112
Repurchased Common Shares .................................. (800) -
Other Activity ............................................. (10) (6)
======== ========
Balance at End of Period ................................... $ 19,495 $ 16,955
======== ========
- ------------------------------------------------------------------------------------------------
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS CITICORP AND SUBSIDIARIES
Nine Months Ended September 30
------------------------------
(In Millions) 1995 1994
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income .............................................................. $ 2,559 $ 2,324
--------- ---------
Adjustments to Reconcile Net Income to Net Cash Provided By
Operating Activities:
Provision for Credit Losses .......................................... 1,460 1,323
Depreciation and Amortization of Premises and Equipment .............. 473 416
Amortization of Goodwill ............................................. 37 36
Provision for Deferred Taxes ......................................... (97) (249)
Cumulative Effect of Accounting Change ............................... - 56
Venture Capital Activity ............................................. 196 (257)
Net (Gain) on Sale of Securities ..................................... (65) (178)
Net (Gain) on Sale of Subsidiaries and Affiliates .................... - (12)
Changes in Accruals and Other, Net ................................... 967 (1,891)
Net Decrease (Increase) in Trading Account Assets .................... 3,193 (20,577)
Net (Decrease) Increase in Trading Account Liabilities ............... (897) 20,791
--------- ---------
Total Adjustments ....................................................... 5,267 (542)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES .............................. 7,826 1,782
--------- ---------
Cash Flows from Investing Activities
Net (Increase) in Deposits at Interest with Banks .................... (1,296) (638)
Securities - Held to Maturity
Purchases .......................................................... (4,406) (8,346)
Maturities ......................................................... 4,610 10,303
Securities - Available for Sale
Purchases ............................................................... (14,998) (16,034)
Proceeds from Sales ................................................ 7,222 7,427
Maturities .............................................................. 7,944 5,151
Net (Increase) in Federal Funds Sold and Securities
Purchased Under Resale Agreements ................................... (2,770) (1,943)
Net (Increase) in Loans .............................................. (73,066) (79,425)
Proceeds from Sales of Loans and Credit Card Receivables ............. 63,674 67,903
Capital Expenditures on Premises and Equipment ....................... (948) (957)
Proceeds from Sales of Premises and Equipment ........................ 198 319
Proceeds from Sales of Subsidiaries and Affiliates ................. 1 25
Proceeds from Sales of Other Real Estate Owned (OREO) ................ 642 1,533
--------- ---------
NET CASH (USED IN) INVESTING ACTIVITIES ................................. (13,193) (14,682)
--------- ---------
Cash Flows from Financing Activities
Net Increase in Deposits ............................................. 8,101 9,202
Net (Decrease) Increase in Federal Funds Purchased and Securities Sold
Under Repurchase Agreements ........................................ (2,773) 4,341
Proceeds from Issuance of Commercial Paper and Funds Borrowed with
Original Maturities of Less Than One Year ........................... 370,988 205,145
Repayment of Commercial Paper and Funds Borrowed with
Original Maturities of Less Than One Year ........................... (371,702) (203,615)
Proceeds from Issuance of Long-Term Debt ............................. 3,777 1,621
Repayment of Long-Term Debt .......................................... (2,871) (3,472)
Proceeds from Issuance of Preferred Stock ............................ 267 388
Redemption of Preferred Stock ........................................ (125) (100)
Proceeds from Issuance of Common Stock ............................... 317 182
Purchase of Treasury Stock ........................................... (756) (5)
Dividends Paid ....................................................... (638) (381)
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES ............................... 4,585 13,306
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND DUE FROM BANKS .............. 31 25
--------- ---------
Net (Decrease) Increase in Cash and Due from Banks ...................... (751) 431
Cash and Due from Banks at Beginning of Period .......................... 6,470 4,836
--------- ---------
CASH AND DUE FROM BANKS AT END OF PERIOD ................................ $ 5,719 $ 5,267
========= =========
- --------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Period for:
Interest................................................................ $ 9,047 $ 10,405
Income Taxes............................................................ 1,264 1,228
NON-CASH INVESTING ACTIVITIES
Transfer from Loans to OREO and Assets Pending Disposition.............. $ 560 $ 948
- --------------------------------------------------------------------------------------------------------------
</TABLE>
34
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET CITIBANK, N.A. AND SUBSIDIARIES
<CAPTION>
(Dollars In Millions) Sept. 30, 1995 Dec. 31, 1994
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and Due from Banks ........................................... $ 5,119 $ 5,562
Deposits at Interest with Banks ................................... 8,779 7,201
Securities
Held to Maturity ........................................... 3,975 3,918
Available for Sale ......................................... 11,132 11,328
Venture Capital ............................................ 1,393 1,161
Trading Account Assets ............................................ 30,767 35,573
Federal Funds Sold and Securities Purchased Under Resale Agreements 8,266 7,009
Loans, Net of Unearned Income ..................................... 131,402 122,452
Allowance for Credit Losses ....................................... (4,431) (4,264)
Customers' Acceptance Liability ................................... 1,650 1,420
Premises and Equipment, Net ....................................... 3,345 3,125
Interest and Fees Receivable ...................................... 2,027 1,803
Other Assets ...................................................... 7,740 8,383
--------- ---------
TOTAL ............................................................. $ 211,164 $ 204,671
========= =========
LIABILITIES
Non-Interest-Bearing Deposits in U.S. Offices ..................... $ 10,240 $ 11,496
Interest-Bearing Deposits in U.S. Offices ......................... 22,397 21,919
Non-Interest-Bearing Deposits in Offices Outside the U.S. ......... 7,904 7,115
Interest-Bearing Deposits in Offices Outside the U.S. ............. 105,871 96,516
--------- ---------
Total Deposits .......................................... 146,412 137,046
Trading Account Liabilities ....................................... 20,592 21,458
Purchased Funds and Other Borrowings .............................. 9,500 14,027
Acceptances Outstanding ........................................... 1,659 1,440
Accrued Taxes and Other Expenses .................................. 3,144 3,102
Other Liabilities ................................................. 4,734 4,243
Long-Term Debt .................................................... 4,250 3,515
Subordinated Capital Notes ........................................ 5,700 5,700
STOCKHOLDER'S EQUITY
Common Stock ($20.00 par value) ................................... 751 751
Outstanding Shares: 37,534,553 in each period
Surplus ........................................................... 6,718 6,620
Retained Earnings ................................................. 8,009 7,125
Net Unrealized Gains - Securities Available for Sale .............. 239 220
Foreign Currency Translation ...................................... (544) (576)
--------- ---------
Total Stockholder's Equity ................................ 15,173 14,140
--------- ---------
Total ............................................................. $ 211,164 $ 204,671
========= =========
- -------------------------------------------------------------------------------------------------
</TABLE>
35
<PAGE>
OTHER FINANCIAL INFORMATION
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
SECURITIES (A)
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
September 30, 1995 December 31, 1994(B)
------------------------------------------------- ----------------------
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 (C) ........ $ 1,711 $ 18 $ 2 $ 1,727 $ 1,937 $ 1,903
State and Municipal ......................... 2 - - 2 2 2
Foreign Government (D) ...................... 2,995 23 429 2,589 2,836 2,416
U.S. Corporate (C) .......................... 37 - 1 36 24 24
Other Debt Securities ....................... 221 1 2 220 293 293
------- ------- ------- ------- ------- -------
Total Debt Securities .................... $ 4,966 $ 42 $ 434 $ 4,574 $ 5,092 $ 4,638
------- ------- ------- ------- ------- -------
SECURITIES - AVAILABLE FOR SALE (E)
U.S. Treasury and Federal Agency (C) ........ $ 2,577 $ 38 $ 4 $ 2,611 $ 2,688 $ 2,645
State and Municipal ......................... 1,616 77 51 1,642 1,568 1,576
Foreign Government (D) ...................... 5,834 381 100 6,115 5,907 6,201
U.S. Corporate .............................. 1,046 62 46 1,062 776 725
Other Debt Securities ....................... 1,056 18 6 1,068 1,048 1,081
------- ------- ------- ------- ------- -------
Total Debt Securities .................... 12,129 576 207 12,498 11,987 12,228
Equity Securities (F) ....................... 1,302 159 18 1,443 1,189 1,374
------- ------- ------- ------- ------- -------
$13,431 $ 735 $ 225 $13,941 $13,176 $13,602
------- ------- ------- ------- ------- -------
VENTURE CAPITAL (G) ......................... 1,813 - - 1,813 2,009 2,009
------- ------- ------- ------- ------- -------
$20,210 $ 777 $ 659 $20,328 $20,277 $20,249
======= ======= ======= ======= ======= =======
(A) Refer to the 1994 Annual Report and Form 10-K for a description of
accounting policies. In October 1995, the Financial Accounting Standards
Board announced its intention to permit companies a one-time election in
the fourth quarter of 1995 to sell or transfer debt securities classified
as held to maturity. Citicorp is in the process of evaluating this
election.
(B) 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.
(C) Included in Federal Agency and U.S. Corporate Securities held to maturity
are mortgage-backed securities with an amortized cost of $794 million,
gross unrealized gains of $1 million, and a fair value of $795 million at
September 30, 1995. Included in Federal Agency Securities available for
sale are mortgage-backed securities with an amortized cost of $354 million,
gross unrealized gains of $7 million, gross unrealized losses of $2
million, and a fair value of $359 million at September 30, 1995.
(D) Included in Foreign Government Securities held to maturity at September 30,
1995 are securities issued by the Government of Venezuela with an amortized
cost and fair value of $563 million and $295 million, respectively.
Included in Foreign Government Securities available for sale at September
30, 1995 are securities issued by the Government of Brazil with an
amortized cost and fair value of $1.5 billion and $1.8 billion,
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 at September 30, 1995
was $5 million and $1 million, respectively, and are included in the net
unrealized gains-securities available-for-sale component of stockholders'
equity, net of applicable taxes. At December 31, 1994, Citicorp's share of
gross unrealized gains and gross unrealized losses related to securities
available for sale held by equity-method affiliates was $36 million and $48
million, respectively.
(F) Equity securities available for sale include certain non-marketable equity
securities which are carried at cost. At September 30, 1995, the carrying
amount of those securities was $861 million (which is reported in both the
amortized cost and fair value columns in the table) and the fair value was
$915 million.
(G) For the nine months ended September 30, 1995, net gains on investments held
by venture capital subsidiaries totaled $362 million, of which $373 million
and $199 million represented gross unrealized gains and gross unrealized
losses, respectively. For the nine months ended September 30, 1994, net
gains on investments held by venture capital subsidiaries totaled $152
million, of which $238 million and $131 million represented gross
unrealized gains and gross unrealized losses, respectively.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
36
<PAGE>
- --------------------------------------------------------------------------------
CROSS-BORDER AND NON-LOCAL CURRENCY OUTSTANDINGS
- --------------------------------------------------------------------------------
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.
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.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
COUNTRIES WITH OUTSTANDINGS EXCEEDING 1% OF TOTAL ASSETS (A)(B)
Cross-Border and Investments in
Non-Local Currency Claims on Third Parties and Total Outstandings
----------------------------------------------- Funding of ----------------------
Local
Public Private Citicorp Sept. 30 Dec. 31
(In Billions) Banks Sector Sector Total Franchises 1995 1994
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
United Kingdom ....... $ 0.3 $ 0.1 $ 3.9 $ 4.3 3.4 $ 7.7 $ 6.7
Brazil (C) ........... 0.3 1.9 1.4 3.6 1.1 4.7 4.0
Mexico (C) ........... - 2.3 0.5 2.8 0.3 3.1 4.1
Argentina (C) ........ 0.1 0.1 2.2 2.4 0.4 2.8 2.5
(A) 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 $5.0 billion in the United Kingdom at September
30, 1995. Commitments were less than $0.1 billion each in Brazil, Mexico,
and Argentina.
(B) At September 30, 1995, cross-border and non-local currency outstandings in
Japan ($2.4 billion), Australia ($2.4 billion), Germany ($2.1 billion) and
Korea ($2.0 billion), were between 0.75% 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).
(C) Includes outstandings funded with non-local currency liabilities where the
fund providers agree that, in the event their claims 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 September
30, 1995 were $1.3 billion in Brazil, less than $0.1 billion in Mexico and
$1.5 billion in Argentina, compared with $0.8 billion, $0.8 billion, and
$1.3 billion, respectively, at December 31, 1994.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- ------------------------------------------------------------------------------------------
CROSS-BORDER AND NON-LOCAL CURRENCY CLAIMS ON THIRD PARTIES
<CAPTION>
Public Private Sept. 30 Dec. 31
(In Billions) Banks Sector Sector 1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Organization for Economic Cooperation
and Development ("OECD") (A) ....... $1.8 $4.2 $11.9 $17.9 $16.2
Non-OECD
Latin America (B)(C) ........... 0.6 3.6 4.8 9.0 7.9
Asia ........................... 0.9 0.6 5.0 6.5 6.2
Other .......................... 0.9 0.9 0.6 2.4 2.3
---- ---- ----- ----- -----
Total (D) ........................... $4.2 $9.3 $22.3 $35.8 $32.6
==== ==== ===== ===== =====
(A) Includes $2.8 billion and $3.2 billion in Mexico at September 30, 1995 and
December 31, 1994, respectively, of which $1.9 billion at September 30,
1995 and $2.0 billion at December 31, 1994 represents medium- and long-term
claims on the public sector.
(B) Includes $3.6 billion and $3.3 billion in Brazil at September 30, 1995 and
December 31, 1994, respectively, of which $1.8 billion and $2.0 billion,
respectively, related to marketable securities (held in the
available-for-sale portfolio).
(C) Includes $2.4 billion and $2.2 billion in Argentina at September 30, 1995
and December 31, 1994, respectively, of which $1.5 billion and $1.3 billion
represents local-dollar claims funded by local-dollar liabilities.
(D) Includes investments in affiliates of $1.2 billion at September 30, 1995
and $1.1 billion at December 31, 1994.
- ------------------------------------------------------------------------------------------
</TABLE>
37
<PAGE>
<TABLE>
- ---------------------------------------------------------------------------------------------
CASH-BASIS, RENEGOTIATED, AND PAST DUE LOANS (A)
- ---------------------------------------------------------------------------------------------
<CAPTION>
Sept. 30 Dec. 31 Sept. 30
(In Millions) 1995 1994 1994 (B)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL CASH-BASIS LOANS (C)
Collateral-Dependent (at Lower of Cost or Collateral Value) (D) $ 899 $1,347 $1,993
Other, Including Refinancing Portfolio ........................ 775 770 876
------ ------ ------
Total Commercial Cash-Basis Loans ............................. $1,674 $2,117 $2,869
====== ====== ======
In U.S. Offices ............................................... $1,038 $1,547 $2,079
In Offices Outside the U.S., Excluding Refinancing Portfolio .. 612 466 650
Refinancing Portfolio ......................................... 24 104 140
------ ------ ------
Total Commercial Cash-Basis Loans ............................. $1,674 $2,117 $2,869
====== ====== ======
COMMERCIAL RENEGOTIATED LOANS (C)(E)
In U.S. Offices ............................................... $ 310 $ 563 $ 386
In Offices Outside the U.S. ................................... 85 155 138
------ ------ ------
Total Commercial Renegotiated Loans ........................... $ 395 $ 718 $ 524
====== ====== ======
CONSUMER LOANS ON WHICH ACCRUAL OF INTEREST
HAS BEEN SUSPENDED
In U.S. Offices ............................................... $1,423 $1,538 $1,689
In Offices Outside the U.S. ................................... 1,242 1,066 1,083
------ ------ ------
Total Consumer Loans On Which Accrual
of Interest Has Been Suspended ............................... $2,665 $2,604 $2,772
====== ====== ======
ACCRUING LOANS 90 OR MORE DAYS DELINQUENT (F)
In U.S. Offices ............................................... $ 542 $ 415 $ 398
In Offices Outside the U.S. ................................... 496 460 442
------ ------ ------
Total Accruing Loans 90 or More Days Delinquent ............... $1,038 $ 875 $ 840
====== ====== ======
(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 the detailed discussion on page 10.
(B) Reclassified to conform to latest quarter's presentation.
(C) Refer to the 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.
(E) Amount at December 31, 1994 includes $385 million of loans that were
renegotiated during 1994 at a market rate of interest and accordingly,
ceased to be reported as renegotiated loans in 1995.
(F) Includes consumer loans of $910 million, $828 million and $788 million at
September 30, 1995, December 31, 1994, and September 30, 1994,
respectively, of which $196 million, $150 million and $146 million,
respectively, are government-guaranteed student loans. Refer to detailed
discussion of the consumer loan portfolio on pages 6 and 7.
- ---------------------------------------------------------------------------------------------
</TABLE>
38
<PAGE>
- --------------------------------------------------------------------------------
OTHER REAL ESTATE OWNED (OREO) AND ASSETS PENDING DISPOSITION (A)
- --------------------------------------------------------------------------------
Sept. 30 Dec. 31 Sept. 30
(In Millions) 1995 1994 1994(B)
- --------------------------------------------------------------------------------
Consumer OREO..................... $ 561 $ 569 $ 565
Commercial OREO
North America Real Estate.... 778 806 942
Other........................ 182 152 485
------ ------ ------
Total Commercial............. 960 958 1,427
------ ------ ------
Total OREO........................ $1,521 $1,527 $1,992
====== ====== ======
Assets Pending Disposition (C).... $ 195 $ 195 $ 163
====== ====== ======
(A) Carried at lower of cost or collateral value.
(B) Reclassified to conform to latest quarter's presentation.
(C) Represents consumer residential mortgage loans that have a high probability
of foreclosure.
- --------------------------------------------------------------------------------
TRADING ACCOUNT ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
Sept. 30 June 30 Dec. 31
(In Millions) 1995 1995 1994
- --------------------------------------------------------------------------------
TRADING ACCOUNT ASSETS
Trading Account Securities......................... $16,447 $16,730 $18,331
Revaluation Gains on
Derivative and Foreign Exchange Contracts (A).... 19,235 21,145 20,544
------- ------- -------
$35,682 $37,875 $38,875
======= ======= =======
TRADING ACCOUNT LIABILITIES
Securities Sold, Not Yet Purchased................. $ 3,130 $ 3,119 $ 3,121
Revaluation Losses on
Derivative and Foreign Exchange Contracts (A)... 18,355 19,992 19,261
------- ------- -------
$21,485 $23,111 $22,382
======= ======= =======
(A) Net of master netting agreements.
- --------------------------------------------------------------------------------
39
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
CALCULATION OF EARNINGS PER SHARE
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Three Months Ended Three Months Ended
September 30, 1995 September 30, 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 $ 127 $ 127 $ 59 $ 59
Undistributed Portion Before Cumulative Effect
of Accounting Change................................................. 671 671 745 745
Dividends on Conversion Preferred Stock,
Series 15............................................................ 11 11 23 23
Dividends on Convertible Preferred Stock,
Series 12 and Series 13.............................................. - 31 - 34
----- ----- ------ -----
Income Applicable to Common Stock Before Cumulative
Effect of Accounting Change, Adjusted...............................B 809 840 827 861
Cumulative Effect of Accounting Change...............................C - - - -
----- ----- ------ -----
Total................................................................D $ 809 $ 840 $ 827 $ 861
===== ===== ====== =====
SHARES
Weighted-Average Common Shares Outstanding (A) (B).................... 422.0 422.0 392.5 392.5
Common Equivalent Shares:
Conversion Preferred Stock, Series 15................................ 12.5 12.5 39.2 39.2
Other (C)............................................................ 16.2 17.8 8.9 8.9
Convertible Preferred Stock, Series 12 and Series 13.................. - 65.7 - 73.0
------ ------ ------- ------
Shares Applicable to Distributed Portion.............................E 450.7 518.0 440.6 513.6
------ ------ ------- ------
Book Value Shares Issuable Under Stock Option and
Executive Incentive Compensation Plans........................... - - 1.8 1.8
------ ------ ------- ------
Shares Applicable to Undistributed Portion...........................F 450.7 518.0 442.4 515.4
====== ====== ======= ======
EARNINGS PER SHARE
Distributed Portion................................................A/E $ 0.28 $ 0.24 $ 0.13 $ 0.11
Undistributed Portion Before Cumulative
Effect of Accounting Change...................................(B-A)/F 1.51 1.38 1.74 1.56
------ ------ ------- ------
Income Before Cumulative Effect of Accounting
Change............................................................... 1.79 1.62 1.87 1.67
Cumulative Effect of Accounting Change................................ - - - -
------ ------ ------- ------
Net Income............................................(A/E)+[(D-A) /F] $ 1.79 $ 1.62 $ 1.87 $ 1.67
====== ====== ======= ======
(A) Includes 1.1 million book value shares in all periods.
(B) Total shares in the third quarter and nine months of 1995 reflected
approximately 6.6 million and 1.8 million average shares, respectively,
repurchased under the stock repurchase program (refer to page 20 for
additional discussion).
(C) Includes the dilutive effect of stock options and stock purchase agreements
computed using the treasury stock method and shares issuable under deferred
stock awards.Such amounts for stock options in the third quarter and nine
months of 1995 reflected full vesting of the 1993 performance-based stock
options.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
40
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
CALCULATION OF EARNINGS PER SHARE
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Nine Months Ended Nine Months Ended
September 30, 1995 September 30, 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 $ 365 $ 365 $ 117 $ 117
Undistributed Portion Before Cumulative Effect
of Accounting Change................................................. 1,925 1,925 1,999 1,999
Dividends on Conversion Preferred Stock,
Series 15............................................................ 58 58 70 70
Dividends on Convertible Preferred Stock,
Series 12 and Series 13.............................................. - 99 - 102
------ ------ ------ ------
Income Applicable to Common Stock Before Cumulative
Effect of Accounting Change, Adjusted...............................B 2,348 2,447 2,186 2,288
Cumulative Effect of Accounting Change...............................C - - (56) (56)
------ ------ ------ ------
Total................................................................D $2,348 $2,447 $2,130 $2,232
====== ====== ====== ======
SHARES
Weighted-Average Common Shares Outstanding (A)(B)..................... 406.6 406.6 390.2 390.2
Common Equivalent Shares:
Conversion Preferred Stock, Series 15................................ 24.1 24.1 41.1 41.1
Other (C)............................................................ 12.1 16.3 8.7 8.9
Convertible Preferred Stock, Series 12 and Series 13.................. - 70.6 - 73.0
------ ------ ------ ------
Shares Applicable to Distributed Portion.............................E 442.8 517.6 440.0 513.2
Book Value Shares Issuable Under Stock Option and
Executive Incentive Compensation Plans........................... 1.1 0.5 1.9 1.9
------ ------ ------ ------
Shares Applicable to Undistributed Portion...........................F 443.9 518.1 441.9 515.1
====== ====== ====== ======
EARNINGS PER SHARE
Distributed Portion................................................A/E $ 0.82 $ 0.70 $ 0.27 $ 0.23
Undistributed Portion Before Cumulative
Effect of Accounting Change...................................(B-A)/F 4.47 4.02 4.68 4.21
------ ------ ------ ------
Income Before Cumulative Effect of Accounting
Change............................................................... 5.29 4.72 4.95 4.44
Cumulative Effect of Accounting Change................................ - - (0.13) (0.11)
------ ------ ------ ------
Net Income............................................(A/E)+[(D-A) /F] $ 5.29 $ 4.72 $ 4.82 $ 4.33
====== ====== ====== ======
(A) Includes 1.1 million book value shares in all periods.
(B) Total shares in the third quarter and nine months of 1995 reflected
approximately 6.6 million and 1.8 million average shares, respectively,
repurchased under the stock repurchase program (refer to page 20 for
additional discussion).
(C) Includes the dilutive effect of stock options and stock purchase agreements
computed using the treasury stock method and shares issuable under deferred
stock awards. Such amounts for stock options in the third quarter and nine
months of 1995 reflected full vesting of the 1993 performance-based stock
options.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE BALANCES AND INTEREST RATES
(TAXABLE EQUIVALENT BASIS) (A) (B)
- ------------------------------------------------------------------------------------------------------------------------------------
Third Quarter 1995 Third 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 ............................. $ 51,856 $ 1,443 11.04 $ 43,847 $ 1,151 10.41
In Offices Outside the U.S. (D) ............. 49,274 1,604 12.91 43,345 1,333 12.20
-------- -------- -------- --------
TOTAL CONSUMER LOANS ........................ 101,130 3,047 11.95 87,192 2,484 11.30
-------- -------- -------- --------
Commercial Loans
In U.S. Offices
Commercial and Industrial ............. 9,487 209 8.74 10,208 196 7.62
Mortgage and Real Estate .............. 5,220 104 7.90 6,459 95 5.84
Loans to Financial Institutions ....... 461 6 5.16 420 5 4.72
Lease Financing ....................... 3,166 56 7.02 3,472 58 6.63
In Offices Outside the U.S. (D) ............. 37,810 1,086 11.40 35,047 922 10.44
-------- -------- -------- --------
TOTAL COMMERCIAL LOANS ...................... 56,144 1,461 10.32 55,606 1,276 9.10
-------- -------- -------- --------
TOTAL LOANS ........................... 157,274 4,508 11.37 142,798 3,760 10.45
-------- -------- -------- --------
FUNDS SOLD AND RESALE AGREEMENTS
In U.S. Offices ............................. 10,475 147 5.57 13,430 148 4.37
In Offices Outside the U.S. (D) ............. 2,630 114 17.20 2,829 218 30.57
-------- -------- -------- --------
TOTAL ................................. 13,105 261 7.90 16,259 366 8.93
-------- -------- -------- --------
SECURITIES
HELD TO MATURITY
In U.S. Offices
U. S. Treasury and Federal Agencies ... 1,501 25 6.61 1,933 29 5.95
State and Municipal ................... - - - - - -
Other Debt Securities ................. 59 2 13.45 31 1 12.80
In Offices Outside the U.S. (Principally
Local Government Issues) (D) ............... 3,379 65 7.63 3,112 53 6.76
-------- -------- -------- --------
TOTAL ................................. 4,939 92 7.39 5,076 83 6.49
-------- -------- -------- --------
AVAILABLE FOR SALE
In U.S. Offices
U.S. Treasury and Federal Agencies .... 2,624 33 4.99 1,697 24 5.61
State and Municipal ................... 1,602 28 6.93 1,459 25 6.80
Other ................................. 1,644 24 5.79 1,291 20 6.15
In Offices Outside the U.S. (D) ............. 7,670 224 11.59 7,796 180 9.16
-------- -------- -------- --------
TOTAL ................................. 13,540 309 9.05 12,243 249 8.07
-------- -------- -------- --------
VENTURE CAPITAL
In U.S. Offices ............................. 1,449 4 1.10 1,476 4 1.08
In Offices Outside the U.S. ................. 295 3 4.03 238 3 5.00
-------- -------- -------- --------
TOTAL ................................. 1,744 7 1.59 1,714 7 1.62
-------- -------- -------- --------
TOTAL SECURITIES ...................... 20,223 408 8.00 19,033 339 7.07
-------- -------- -------- --------
TRADING ACCOUNT ASSETS
In U.S. Offices ............................. 9,014 141 6.21 14,148 224 6.28
In Offices Outside the U.S. (D) ............. 10,554 287 10.79 11,341 220 7.70
-------- -------- -------- --------
TOTAL ................................. 19,568 428 8.68 25,489 444 6.91
-------- -------- -------- --------
DEPOSITS AT INTEREST WITH BANKS
(PRINCIPALLY IN OFFICES
OUTSIDE THE U.S.) (C) (D) .................. 11,286 198 6.96 9,943 154 6.14
-------- -------- -------- --------
TOTAL INTEREST-EARNING ASSETS ............... 221,456 $ 5,803 10.40 213,522 $ 5,063 9.41
======== ========
Non-Interest-Earning Assets (E) ............. 44,990 51,967
-------- --------
TOTAL ASSETS ................................ $266,446 $265,489
======== ========
(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 revaluation gains on derivative and foreign exchange contracts.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE BALANCES AND INTEREST RATES CITICORP AND SUBSIDIARIES
(TAXABLE EQUIVALENT BASIS) (A) (B)
- ------------------------------------------------------------------------------------------------------------------------------------
Nine Months 1995 Nine Months 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 ................................ $ 50,210 $ 4,147 11.04 $ 43,099 $ 3,238 10.04
In Offices Outside the U.S. (D) ................ 48,469 4,694 12.95 41,632 3,898 12.52
-------- -------- -------- --------
TOTAL CONSUMER LOANS ........................... 98,679 8,841 11.98 84,731 7,136 11.26
-------- -------- -------- --------
Commercial Loans
In U.S. Offices
Commercial and Industrial ................ 10,115 666 8.80 10,166 566 7.44
Mortgage and Real Estate ................. 5,609 324 7.72 6,824 295 5.78
Loans to Financial Institutions .......... 398 13 4.37 452 12 3.55
Lease Financing .......................... 3,205 174 7.26 3,494 176 6.73
In Offices Outside the U.S. (D) ................ 37,174 3,200 11.51 34,133 3,942 15.44
-------- -------- -------- --------
TOTAL COMMERCIAL LOANS ......................... 56,501 4,377 10.36 55,069 4,991 12.12
-------- -------- -------- --------
TOTAL LOANS .............................. 155,180 13,218 11.39 139,800 12,127 11.60
-------- -------- -------- --------
FUNDS SOLD AND RESALE AGREEMENTS
In U.S. Offices ................................ 12,380 530 5.72 15,333 423 3.69
In Offices Outside the U.S. (D) ................ 2,224 240 14.43 2,904 2,605 119.93
-------- -------- -------- --------
TOTAL .................................... 14,604 770 7.05 18,237 3,028 22.20
-------- -------- -------- --------
SECURITIES
HELD TO MATURITY
In U.S. Offices
U. S. Treasury and Federal Agencies ...... 1,517 74 6.52 1,986 83 5.59
State and Municipal ...................... - - - - - -
Other Debt Securities .................... 41 4 13.04 42 3 9.55
In Offices Outside the U.S. (Principally
Local Government Issues) (D) .................. 3,382 189 7.47 3,142 146 6.21
-------- -------- -------- --------
TOTAL .................................... 4,940 267 7.23 5,170 232 6.00
-------- -------- -------- --------
AVAILABLE FOR SALE
In U.S. Offices
U.S. Treasury and Federal Agencies ....... 2,251 91 5.41 1,732 72 5.56
State and Municipal ...................... 1,603 80 6.67 1,231 66 7.17
Other .................................... 1,516 69 6.09 990 39 5.27
In Offices Outside the U.S. (D) ................ 7,800 633 10.85 7,166 487 9.09
-------- -------- -------- --------
TOTAL .................................... 13,170 873 8.86 11,119 664 7.98
-------- -------- -------- --------
VENTURE CAPITAL
In U.S. Offices ................................ 1,442 20 1.85 1,368 13 1.27
In Offices Outside the U.S. .................... 280 11 5.25 217 7 4.31
-------- -------- -------- --------
TOTAL .................................... 1,722 31 2.41 1,585 20 1.69
-------- -------- -------- --------
TOTAL SECURITIES ......................... 19,832 1,171 7.89 17,874 916 6.85
-------- -------- -------- --------
TRADING ACCOUNT ASSETS
In U.S. Offices ................................ 11,857 591 6.66 14,342 633 5.90
In Offices Outside the U.S. (D) ................ 10,640 799 10.04 11,399 995 11.67
-------- -------- -------- --------
TOTAL .................................... 22,497 1,390 8.26 25,741 1,628 8.46
-------- -------- -------- --------
DEPOSITS AT INTEREST WITH BANKS
(PRINCIPALLY IN OFFICES
OUTSIDE THE U.S.) (C) (D) ..................... 11,239 580 6.90 9,715 732 10.07
-------- -------- -------- --------
TOTAL INTEREST-EARNING ASSETS .................. 223,352 $ 17,129 10.25 211,367 $ 18,431 11.66
======== ======== ======== ========
Non-Interest-Earning Assets (E) ................ 46,189 47,546
======== ========
TOTAL ASSETS ................................... $269,541 $258,913
======== ========
(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 revaluation gains on derivative and foreign exchange contracts.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE BALANCES AND INTEREST RATES
(TAXABLE EQUIVALENT BASIS) (A) (B)
- ------------------------------------------------------------------------------------------------------------------------------------
Third Quarter 1995 Third 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) .......................... $ 24,941 $ 192 3.05 $ 26,113 $ 138 2.10
Negotiable Certificates of Deposit ............ 1,417 22 6.16 1,189 35 11.68
Other Time Deposits ........................... 10,524 128 4.83 9,697 108 4.42
-------- -------- -------- --------
Total U.S. Interest-Bearing Deposits .......... 36,882 342 3.68 36,999 281 3.01
In Offices Outside the U.S. (D) ..................... 108,033 1,837 6.75 99,370 1,574 6.28
-------- -------- -------- --------
TOTAL ......................................... 144,915 2,179 5.97 136,369 1,855 5.40
-------- -------- -------- --------
TRADING ACCOUNT LIABILITIES
In U.S. Offices ..................................... 2,590 42 6.43 2,810 41 5.79
In Offices Outside the U.S. (D) ..................... 1,300 29 8.85 1,573 24 6.05
-------- -------- -------- --------
TOTAL ......................................... 3,890 71 7.24 4,383 65 5.88
-------- -------- -------- --------
FUNDS BORROWED
In U.S. Offices
Purchased Funds and Other Borrowings
Federal Funds Purchased and Securities
Sold Under Agreements to Repurchase ........... 14,374 190 5.24 20,245 219 4.29
Commercial Paper .............................. 1,634 24 5.83 1,940 22 4.50
Other Purchased Funds ......................... 2,884 78 10.73 2,899 79 10.81
Long-Term Debt and Subordinated
Capital Notes ................................. 15,095 270 7.10 13,694 214 6.20
-------- -------- -------- --------
Total in U.S. Offices ......................... 33,987 562 6.56 38,778 534 5.46
In Offices Outside the U.S. (D) ..................... 9,747 385 15.67 9,873 257 10.33
-------- -------- -------- --------
TOTAL ......................................... 43,734 947 8.59 48,651 791 6.45
-------- -------- -------- --------
Total Interest-Bearing Liabilities ................. 192,539 3,197 6.59 189,403 2,711 5.68
-------- -------- -------- --------
Demand Deposits in U.S. Offices ..................... 11,493 11,914
Other Non-Interest-Bearing Liabilities (E) .......... 42,981 48,033
Total Stockholders' Equity .......................... 19,433 16,139
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY .............................. $266,446 $265,489
======== ========
NET INTEREST REVENUE AS A PERCENTAGE
OF AVERAGE INTEREST-EARNING ASSETS .................. $ 2,606 4.67 $ 2,352 4.37
======== ========
(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 revaluation losses on derivative and foreign exchange contracts.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
44
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE BALANCES AND INTEREST RATES CITICORP AND SUBSIDIARIES
(TAXABLE EQUIVALENT BASIS) (A) (B)
- ------------------------------------------------------------------------------------------------------------------------------------
Nine Months 1995 Nine Months 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) ..................... $ 24,645 $ 560 3.04 $ 26,238 $ 384 1.96
Negotiable Certificates of Deposit ....... 1,429 69 6.46 1,035 57 7.36
Other Time Deposits ...................... 10,227 481 6.29 10,207 388 5.08
-------- -------- -------- --------
Total U.S. Interest-Bearing Deposits ..... 36,301 1,110 4.09 37,480 829 2.96
In Offices Outside the U.S. (D) ................ 109,604 5,503 6.71 96,642 6,085 8.42
-------- -------- -------- --------
TOTAL .................................... 145,905 6,613 6.06 134,122 6,914 6.89
-------- -------- -------- --------
TRADING ACCOUNT LIABILITIES
In U.S. Offices ................................ 2,744 132 6.43 3,168 130 5.49
In Offices Outside the U.S. (D) ................ 1,218 84 9.22 1,661 67 5.39
-------- -------- -------- --------
TOTAL .................................... 3,962 216 7.29 4,829 197 5.45
-------- -------- -------- --------
FUNDS BORROWED
In U.S. Offices
Purchased Funds and Other Borrowings
Federal Funds Purchased and Securities
Sold Under Agreements to Repurchase ...... 17,026 692 5.43 20,965 579 3.69
Commercial Paper ......................... 1,713 76 5.93 1,831 56 4.09
Other Purchased Funds .................... 3,196 242 10.12 2,831 245 11.57
Long-Term Debt and Subordinated
Capital Notes ............................ 14,667 802 7.31 14,265 612 5.74
-------- -------- -------- --------
Total in U.S. Offices ....................... 36,602 1,812 6.62 39,892 1,492 5.00
In Offices Outside the U.S. (D) ................ 9,590 1,073 14.96 9,664 3,219 44.53
-------- -------- -------- --------
TOTAL .................................... 46,192 2,885 8.35 49,556 4,711 12.71
-------- -------- -------- --------
Total Interest-Bearing Liabilities ............. 196,059 9,714 6.62 188,507 11,822 8.38
-------- -------- -------- --------
Demand Deposits in U.S. Offices ................ 11,526 12,413
Other Non-Interest-Bearing Liabilities (E) ..... 43,209 42,789
Total Stockholders' Equity ..................... 18,747 15,204
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY ......................... $269,541 $258,913
======== ========
NET INTEREST REVENUE AS A PERCENTAGE
OF AVERAGE INTEREST-EARNING ASSETS ............. $ 7,415 4.44 $ 6,609 4.18
======== ========
(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 revaluation losses on derivative and foreign exchange contracts.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------------
DETAILS OF CREDIT LOSS EXPERIENCE
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr.
(Dollars in Millions) 1995 1995 1995 1994 1994
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR CREDIT LOSSES
AT BEGINNING OF PERIOD ....................... $ 5,308 $ 5,270 $ 5,155 $ 5,060 $ 4,912
------- ------- ------- ------- -------
ADDITIONS
Provision for Credit Losses .................. 576 493 391 558 436
DEDUCTIONS
GROSS CREDIT LOSSES
CONSUMER
In U.S. Offices .............................. 301 279 238 328 242
In Offices Outside the U.S. .................. 217 199 163 166 155
COMMERCIAL
In U.S. Offices .............................. 58 41 39 77 43
In Offices Outside the U.S. .................. 70 38 30 24 40
------- ------- ------- ------- -------
646 557 470 595 480
------- ------- ------- ------- -------
CREDIT RECOVERIES
CONSUMER
In U.S. Offices .............................. 55 56 49 55 45
In Offices Outside the U.S. .................. 48 43 43 40 37
COMMERCIAL
In U.S. Offices .............................. 18 8 30 8 36
In Offices Outside the U.S. .................. 24 19 55 34 45
------- ------- ------- ------- -------
145 126 177 137 163
------- ------- ------- ------- -------
NET CREDIT LOSSES
In U.S. Offices .............................. 286 256 198 342 204
In Offices Outside the U.S. .................. 215 175 95 116 113
------- ------- ------- ------- -------
501 431 293 458 317
------- ------- ------- ------- -------
Other Net (A) ................................ (42) (24) 17 (5) 29
------- ------- ------- ------- -------
ALLOWANCE FOR CREDIT LOSSES
AT END OF PERIOD ............................. $ 5,341 $ 5,308 $ 5,270 $ 5,155 $ 5,060
======= ======= ======= ======= =======
Net Consumer Credit Losses ................... $ 415 $ 379 $ 309 $ 399 $ 315
As a Percentage of Average
Consumer Loans .............................. 1.63% 1.54% 1.30% 1.70% 1.43%
Net Commercial Credit Losses (Recoveries) .... $ 86 $ 52 $ (16) $ 59 $ 2
As a Percentage of Average
Commercial Loans ............................ 0.61% 0.37% NM 0.42% 0.01%
(A) 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.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
46
<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 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............. 425,062,447
($1.00 Par Value) (Shares Outstanding on September 30, 1995)
47
<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 Quarters and Nine Months Ended
SEPTEMBER 30, 1995 AND 1994...................................... 31
Balance Sheet as of
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994......................... 32
Statement of Cash Flows for the Nine Months Ended
SEPTEMBER 30, 1995 AND 1994...................................... 34
Calculation of Earnings Per Share................................ 40-41
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................ 2-30
PART II OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K.............................. 49
Signatures .............................................................. 50
In the opinion of the management of Citicorp, all adjustments, consisting of
normal recurring adjustments, necessary for a fair presentation of the results
of operations for the nine months ended SEPTEMBER 30, 1995 AND 1994 have been
included.
48
<PAGE>
Item 6 - Exhibits and Reports on Form 8-K
--------------------------------
a) Exhibit 27. Financial Data Schedule
b) Reports on Form 8-K
Citicorp filed a Form 8-K Current Report dated July 18, 1995 (Item 5)
which report included a summary of the consolidated operations of
Citicorp for the six month period ended June 30, 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).
Citicorp filed a Form 8-K Current Report dated October 17, 1995 (Item
5) which report included a summary of the consolidated operations of
Citicorp for the nine month period ended September 30, 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).
49
<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 By: /S/ Thomas E. Jones
Registrant
------------------------
Thomas E. Jones
Executive Vice President
A Principal Financial Officer
/S/ George E. Seegers
------------------------
George E. Seegers
Assistant Secretary
Date:November 13, 1995
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CURRENT
REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND ACCOMPANYING
DISCLOSURES.
</LEGEND>
<CIK> 0000020405
<NAME> CITICORP 3RD QTR 1995
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 5,719
<INT-BEARING-DEPOSITS> 8,158
<FED-FUNDS-SOLD> 9,765<F1>
<TRADING-ASSETS> 35,682
<INVESTMENTS-HELD-FOR-SALE> 13,941
<INVESTMENTS-CARRYING> 4,966
<INVESTMENTS-MARKET> 4,574
<LOANS> 160,695
<ALLOWANCE> 5,341
<TOTAL-ASSETS> 257,536
<DEPOSITS> 163,827
<SHORT-TERM> 17,255<F2>
<LIABILITIES-OTHER> 9,118
<LONG-TERM> 17,619
<COMMON> 454
0
3,348
<OTHER-SE> 15,693
<TOTAL-LIABILITIES-AND-EQUITY> 257,536
<INTEREST-LOAN> 13,217
<INTEREST-INVEST> 1,151
<INTEREST-OTHER> 2,737
<INTEREST-TOTAL> 17,105
<INTEREST-DEPOSIT> 6,613
<INTEREST-EXPENSE> 9,714
<INTEREST-INCOME-NET> 7,391
<LOAN-LOSSES> 1,460
<SECURITIES-GAINS> 65
<EXPENSE-OTHER> 2,724
<INCOME-PRETAX> 4,145
<INCOME-PRE-EXTRAORDINARY> 2,559
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,559
<EPS-PRIMARY> 5.29
<EPS-DILUTED> 4.72
<YIELD-ACTUAL> 4.44<F3>
<LOANS-NON> 4,339<F4>
<LOANS-PAST> 1,038<F5>
<LOANS-TROUBLED> 395
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 5,155
<CHARGE-OFFS> 1,673
<RECOVERIES> 448
<ALLOWANCE-CLOSE> 5,341<F6>
<ALLOWANCE-DOMESTIC> 0<F7>
<ALLOWANCE-FOREIGN> 0<F8>
<ALLOWANCE-UNALLOCATED> 0<F9>
<FN>
<F1> Includes Securities Purchased Under Resale Agreements.
<F2> Purchased Funds and Other Borrowings.
<F3> Taxable Equivalent Basis.
<F4> Includes $1,674MM of cash-basis commercial loans and
$2,665MM of consumer loans on which accrual of interest has
been suspended.
<F5> Accruing loans 90 or more days delinquent.
<F6>Allowance activity for the nine months of 1995 includes $49MM
in other changes, principally foreign exchange.
<F7>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).
<F8>See Footnote F7 above.
<F9>See Footnote F7 above.
</FN>
</TABLE>
