<PAGE>
FINANCIAL REVIEW
AND FORM 10-Q
FIRST QUARTER
1996
<PAGE>
TABLE OF CONTENTS PAGE
FINANCIAL SUMMARY......................................................... 1
BUSINESS DISCUSSIONS...................................................... 3
Earnings Summary......................................................... 3
Consumer................................................................. 4
(Corporate) Banking......................................................10
Corporate Items..........................................................13
MANAGING GLOBAL RISK......................................................14
Liquidity................................................................14
Price Risk...............................................................14
Derivative and Foreign Exchange Contracts................................16
Estimated Fair Value of Financial Instruments............................19
Capital..................................................................20
STATEMENT OF INCOME ANALYSIS..............................................22
Net Interest Revenue.....................................................22
Fee and Commission Revenue...............................................23
Trading-Related Revenue..................................................24
Securities Transactions..................................................25
Other Revenue............................................................25
Provision and Allowance for Credit Losses................................26
Operating Expense........................................................27
Income Taxes.............................................................27
Effect of Credit Card Receivable Securitizations.........................28
CONSOLIDATED FINANCIAL STATEMENTS.........................................29
Consolidated Statement of Income.........................................29
Consolidated Balance Sheet...............................................30
Consolidated Statement of Changes in Stockholders' Equity................31
Consolidated Statement of Cash Flows.....................................32
CITIBANK, N.A. Consolidated Balance Sheet................................33
OTHER FINANCIAL INFORMATION...............................................34
Securities...............................................................34
Trading Account Assets and Liabilities...................................34
Cash-Basis, Renegotiated, and Past Due Loans.............................35
Other Real Estate Owned and Assets Pending Disposition...................35
Details of Credit Loss Experience........................................36
Calculation of Earnings Per Share........................................37
Cross-Border and Non-Local Currency Outstandings.........................38
Average Balances and Interest Rates......................................39
FORM 10-Q.................................................................41
Form 10-Q Cross-Reference Index..........................................42
SIGNATURES................................................................44
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL SUMMARY
- -----------------------------------------------------------------------------------------------
First Quarter
----------------
1996 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
NET INCOME (In Millions).................................................... $ 914 $ 829
- -----------------------------------------------------------------------------------------------
NET INCOME PER SHARE (see page 37) (A)
On Common and Common Equivalent Shares..................................... $ 1.82 $ 1.71
Assuming Full Dilution..................................................... $ 1.75 $ 1.53
COMMON STOCKHOLDERS' EQUITY PER SHARE....................................... $36.79 $35.28
- -----------------------------------------------------------------------------------------------
FINANCIAL RATIOS
Return on Total Assets...................................................... 1.37% 1.25%
Return on Common Stockholders' Equity....................................... 20.18% 21.84%
Return on Total Stockholders' Equity........................................ 18.63% 18.75%
- -----------------------------------------------------------------------------------------------
<CAPTION>
CAPITAL (Dollars in Billions) (see page 20)
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
1996 1995 1995 1995 1995
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Tier 1..................................... $ 19.0 $ 18.9 $ 18.6 $ 18.6 $ 17.8
Tier 1 and 2............................... 28.0 27.7 27.3 27.3 26.9
Tier 1 Ratio............................... 8.42% 8.41% 8.38% 8.43% 8.01%
Tier 1 and 2 Ratio......................... 12.37 12.33 12.31 12.40 12.06
Leverage Ratio............................. 7.44 7.45 7.35 7.19 7.00
Common Equity as a Percentage of Total
Assets.................................... 6.71% 6.43% 6.27% 6.02% 5.21%
Total Equity as a Percentage of Total
Assets.................................... 7.50 7.62 7.57 7.59 6.83
- -----------------------------------------------------------------------------------------------
<CAPTION>
PRE-TAX EARNINGS ANALYSIS (In Millions) 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
1996 1995 1995 1995 1995
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total Revenue........................... $4,828 $4,789 $4,757 $4,689 $4,443
Effect of Credit Card Securitization (B) 294 250 219 226 222
Net Cost To Carry (C)................... (5) 8 7 8 -
-------------------------------------------------------
ADJUSTED REVENUE........................ 5,117 5,047 4,983 4,923 4,665
-------------------------------------------------------
Total Operating Expense................. 2,860 2,818 2,793 2,798 2,693
Net OREO Benefits (D)................... 12 59 33 13 -
-------------------------------------------------------
ADJUSTED OPERATING EXPENSE.............. 2,872 2,877 2,826 2,811 2,693
-------------------------------------------------------
OPERATING MARGIN........................ 2,245 2,170 2,157 2,112 1,972
Consumer Credit Costs (E)............... 706 688 633 616 536
Commercial Credit Costs (F)............. 15 (14) 61 23 2
-------------------------------------------------------
OPERATING MARGIN LESS CREDIT COSTS...... 1,524 1,496 1,463 1,473 1,434
-------------------------------------------------------
Additional Provision (G)................ 50 56 75 75 75
-------------------------------------------------------
INCOME BEFORE TAXES..................... $1,474 $1,440 $1,388 $1,398 $1,359
- ----------------------------------------=======================================================
</TABLE>
(A) Based on net income less preferred stock dividends, except when conversion
is assumed.
(B) For a description of the effect of credit card receivable securitizations
see page 28.
(C) Principally the net cost to carry commercial cash-basis loans and other real
estate owned ("OREO").
(D) Principally gains and losses on sales, direct revenue and expense, and
writedowns on 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
benefits.
(G) Primarily provision for credit losses in excess of net write-offs. See page
26 for discussion.
1
<PAGE>
Citicorp reported net income of $914 million, or $1.75 per fully diluted common
share, in the 1996 first quarter, up 10% and 14%, respectively, compared with
$829 million, or $1.53 per fully diluted common share, in the same 1995 quarter.
Return on common equity of 20.2% for the quarter remained strong, but was down
from 21.8% in the 1995 first quarter, reflecting higher equity levels. Return
on average assets was 1.37% in the 1996 first quarter, compared with 1.25% in
the year ago period.
The Consumer businesses earned $513 million in the first quarter of 1996, up 11%
from the year ago period. Earnings in the (Corporate) Bank of $469 million were
up 18% from the first quarter of 1995 reflecting strong growth in the Emerging
Markets business and lower income taxes, partially offset by soft trading-
related and venture capital results in North America, Europe, and Japan.
Adjusted revenue increased $452 million, or 10%, from the 1995 first quarter
while adjusted expenses were up $179 million, or 7%, resulting in an incremental
revenue to expense ratio of 2.5:1. Operating margin grew 14%, and the
efficiency ratio (adjusted operating expense as a percentage of adjusted
revenue) improved to 56% from 58% in the comparable 1995 period. The effect of
translating various currencies into the U.S. dollar had no significant impact on
either revenue or expense.
The increase in adjusted revenue from the same 1995 quarter included a 10%
increase in the Consumer businesses, broadly spread across Cards, Citibanking,
and the Private Bank, and a 4% increase in the (Corporate) Banking businesses as
strong growth in the Emerging Markets was partially offset by lower revenues in
Global Relationship Banking ("GRB"). Trading-related revenue (which includes
trading account and foreign exchange revenue, as well as net interest revenue
associated with trading activities) of $392 million was essentially unchanged
from the comparable 1995 period as an increase of $56 million in the Emerging
Markets was largely offset by a decrease in GRB.
The increase in adjusted operating expense from the year ago quarter principally
reflected higher business volumes and franchise expansion in the emerging
markets, while expense levels related to core business activities in North
America, Europe, and Japan were up only 1% from the first quarter of 1995.
Consumer credit costs of $706 million in the first quarter of 1996 were up from
$688 million in the fourth quarter of 1995 and $536 million in the comparable
1995 period, with the consumer loss ratio in the 1996 first quarter at 2.19% of
managed loans, up from 2.14% and 1.82% in the 1995 fourth quarter and first
quarter, respectively. The increase in credit costs and in the related loss
ratios chiefly reflected a continued rise in U.S. bankcard losses from a
cyclical low in the fourth quarter of 1996. Net credit losses on managed U. S.
bankcards were $467 million, representing a loss rate of 4.38%, up from 3.89% in
the 1995 fourth quarter (adjusted for the fourth quarter sale of certain
bankrupt accounts) and 3.58% in the 1995 first quarter. See page 8 for
additional discussion of the consumer portfolio. Commercial credit costs
remained low at $15 million in the quarter, up from $2 million in the 1995 first
quarter. Commercial cash-basis loans and OREO of $2.0 billion at March 31, 1996
were down substantially from $3.1 billion a year earlier, principally reflecting
reductions in the North America Commercial Real Estate portfolio.
Citicorp's effective tax rate was 38% in the 1996 first quarter compared with
39% in the same 1995 quarter. The 1995 full year effective tax rate was 38%.
Citicorp continued to strengthen its balance sheet. The allowance for credit
losses was built by $50 million in the quarter to $5.4 billion at March 31,
1996. Total capital (Tier 1 and Tier 2) rose to $28 billion and Tier 1 capital
rose to $19 billion, or 8.42% of net risk-adjusted assets, at March 31, 1996.
During the first quarter, the company issued 59 million shares of common stock
in the redemption of all of its remaining convertible preferred stock totaling
$1.0 billion. Pursuant to a stock repurchase program initiated in June 1995,
and expanded in January 1996 to a total authorization of $4.5 billion through
January 31, 1998, Citicorp acquired 9.6 million shares of common stock at a cost
of $721 million during the quarter. With these purchases, the number of shares
acquired through March 31, 1996 totaled 32.6 million common shares at a cost of
$2.2 billion.
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
Consumer and (Corporate) Banking.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
EARNINGS SUMMARY
- ------------------------------------------------------------------
First Quarter %
---------------
(Dollars In Millions) 1996 1995(A) Change
- ------------------------------------------------------------------
<S> <C> <C> <C>
Consumer............................... $ 513 $463 11
(Corporate) Banking (B)................ 469 397 18
----------------
Core Businesses....................... 982 860 14
Corporate Items (see page 13).......... (68) (31) NM
----------------
TOTAL CITICORP......................... $ 914 $829 10
================
SUPPLEMENTAL INFORMATION:
CONSUMER (see page 4):
Citibanking........................... $ 183 $151 21
Cards................................. 265 263 1
Private Banking....................... 65 49 33
----------------
TOTAL................................. $ 513 $463 11
================
Developed Markets..................... $ 289 $270 7
Emerging Markets...................... 224 193 16
----------------
TOTAL................................. $ 513 $463 11
================
(CORPORATE) BANKING (B) (see page 10):
Emerging Markets...................... $ 393 $270 46
Global Relationship Banking........... 76 127 (40)
----------------
TOTAL................................. $ 469 $397 18
- ---------------------------------------===========================
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
(B) (Corporate) Banking activities also include the results of the Cross Border
Refinancing and the North America Commercial Real Estate portfolios in the
Emerging Markets and GRB, respectively, both of which were previously
reported separately.
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
CONSUMER
- --------------------------------------------------------------------------------
Citicorp's Consumer businesses operate uniquely global, full-service consumer
franchises encompassing branch banking ("Citibanking"), credit and charge
cards ("Cards"), and Private Banking.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
TOTAL DEVELOPED MARKETS EMERGING MARKETS
FIRST QUARTER FIRST QUARTER FIRST QUARTER
----------------- ------------------- ------------------
(In Millions of Dollars) 1996 1995(A) 1996 1995(A) 1996 1995(A)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total Revenue........................... $2,960 $2,720 $2,097 $1,983 $ 863 $ 737
Effect of Credit Card Securitization.... 294 222 294 222 - -
Net Cost to Carry Cash-Basis Loans &
OREO................................... (1) 4 (1) 4 - -
--------------------------------------------------------------
ADJUSTED REVENUE........................ 3,253 2,946 2,390 2,209 863 737
--------------------------------------------------------------
Total Operating Expense................. 1,741 1,652 1,265 1,241 476 411
Net OREO Costs.......................... - (1) - (1) - -
--------------------------------------------------------------
ADJUSTED OPERATING EXPENSE.............. 1,741 1,651 1,265 1,240 476 411
--------------------------------------------------------------
OPERATING MARGIN........................ 1,512 1,295 1,125 969 387 326
--------------------------------------------------------------
Net Write-offs.......................... 413 309 320 267 93 42
Effect of Credit Card Securitization.... 294 222 294 222 - -
Net Cost to Carry and Net OREO Costs.... (1) 5 (1) 5 - -
--------------------------------------------------------------
CREDIT COSTS............................ 706 536 613 494 93 42
--------------------------------------------------------------
OPERATING MARGIN LESS CREDIT COSTS...... 806 759 512 475 294 284
Additional Provision.................... 50 50 48 46 2 4
--------------------------------------------------------------
INCOME BEFORE TAXES..................... 756 709 464 429 292 280
Income Taxes............................ 243 246 175 159 68 87
--------------------------------------------------------------
NET INCOME.............................. $ 513 $ 463 $ 289 $ 270 $ 224 $ 193
- ----------------------------------------==============================================================
Average Assets (In Billions of Dollars). $ 125 $ 116 $ 88 $ 83 $ 37 $ 33
Return on Assets........................ 1.65% 1.62% 1.32% 1.32% 2.43% 2.37%
- ----------------------------------------==============================================================
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
FINANCIAL REVIEW
Net income from the worldwide Consumer businesses of Citibanking, Cards and
Private Banking in the 1996 first quarter of $513 million was up $50 million, or
11%, from the first quarter of 1995. The improvement was led by Citibanking and
Private Banking, while Cards earnings were essentially unchanged.
Geographically, net income in the emerging markets increased $31 million, or
16%, from the year-ago quarter, principally from continued growth in the Asia
Pacific region. Net income in the developed markets improved $19 million, or
7%, reflecting higher earnings in Citibanking and Private Banking.
Consumer adjusted revenue was up 10% from the first quarter of 1995,
representing growth in each of the three businesses. Adjusted operating expense
increased a moderate 5%, reflecting spending on initiatives in worldwide
Citibanking and Cards in the emerging markets.
Consumer credit costs were $706 million, up from $688 million in the 1995 fourth
quarter and from $536 million in the 1995 first quarter, with the annualized net
credit loss ratio at 2.19% of managed loans in the first quarter up from 2.14%
in the preceding quarter and 1.82% in the year-ago quarter. The increase in
credit costs and the related loss ratios chiefly reflected a continued rise in
U.S. bankcards losses from a cyclical low in the fourth quarter of 1994 (see
further discussion on pages 6, 8, and 9). The provision for credit losses
included charges in excess of net write-offs of $50 million in each quarter.
4
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
CITIBANKING
- ----------------------------------------------------------------------------------------------
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Millions of Dollars) 1996 1995 1995 1995 1995
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Adjusted Revenue........................ $1,404 $1,393 $1,379 $1,349 $1,288
Adjusted Operating Expense.............. 967 995 942 942 900
------------------------------------------------------
OPERATING MARGIN........................ 437 398 437 407 388
Credit Costs............................ 158 196 183 178 149
------------------------------------------------------
OPERATING MARGIN LESS CREDIT COSTS...... 279 202 254 229 239
Additional Provision.................... 1 28 2 10 2
------------------------------------------------------
INCOME BEFORE TAXES..................... 278 174 252 219 237
Income Taxes............................ 95 48 87 81 86
------------------------------------------------------
NET INCOME.............................. $ 183 $ 126 $ 165 $ 138 $ 151
- ----------------------------------------======================================================
Average Assets (In Billions of Dollars). $ 81 $ 81 $ 80 $ 79 $ 77
Return on Assets........................ 0.91% 0.62% 0.82% 0.70% 0.80%
- ----------------------------------------======================================================
</TABLE>
Citibanking activities in the first quarter contributed $183 million of net
income, up $32 million, or 21%, from the 1995 first quarter and up $57 million
from the 1995 fourth quarter.
The improvement from the year-ago quarter reflected improved results across the
developed markets and business expansion in Asia Pacific. Revenue, up 9%, was
led by double-digit growth in the emerging markets, particularly in Asia
Pacific, and by improvements in the U.S. and Europe. Expense was up 7%,
reflecting business activity in the emerging markets and investment spending
associated with the continued roll-out of the Citibanking branding strategy.
Credit costs increased as losses in Latin America, although improved over levels
in the second half of 1995, were up from the year-ago quarter. These increases
were partially offset by reduced credit losses in the U.S. and Europe.
The earnings improvement from the preceding quarter reflected improvements in
the developed markets and continued growth in Asia Pacific. In the developed
markets, earnings benefited as operating expenses, which included higher
marketing costs in the 1995 fourth quarter, were reduced and credit costs
improved across the U.S. and Europe.
The Federal Deposit Insurance Fund reform legislation 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
Citicorp's savings bank subsidiary. If adopted as proposed, the savings bank
subsidiary would be subject to a special assessment of approximately $80 million
pretax, which must be expensed in the quarter when the legislation is enacted.
It is expected that following recapitalization of the SAIF, future deposit
insurance premiums charged to savings banks would be lowered.
5
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
CARDS
- ----------------------------------------------------------------------------------------------
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Millions of Dollars) 1996 1995 1995 1995 1995
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Adjusted Revenue........................ $1,603 $1,586 $1,527 $1,454 $1,434
Adjusted Operating Expense.............. 612 558 599 602 598
------------------------------------------------------
OPERATING MARGIN........................ 991 1,028 928 852 836
Credit Costs............................ 547 484 448 422 377
------------------------------------------------------
OPERATING MARGIN LESS CREDIT COSTS...... 444 544 480 430 459
Additional Provision.................... 49 22 48 40 48
------------------------------------------------------
INCOME BEFORE TAXES..................... 395 522 432 390 411
Income Taxes............................ 130 157 141 134 148
------------------------------------------------------
NET INCOME.............................. $ 265 $ 365 $ 291 $ 256 $ 263
- ----------------------------------------======================================================
Average Assets (In Billions of Dollars). $ 28 $ 28 $ 27 $ 25 $ 24
Return on Assets........................ 3.81% 5.17% 4.28% 4.11% 4.44%
- ----------------------------------------======================================================
</TABLE>
Cards worldwide net income of $265 million was essentially unchanged from the
1995 first quarter, but down from $365 million in the fourth quarter. Net
income from Cards businesses in the emerging markets grew to 30% of the total
from 24% in the year-ago quarter, reflecting significant growth in Asia Pacific,
while earnings from U.S. bankcards were down slightly, principally due to higher
credit costs. Additionally, earnings benefited in the quarter compared to the
year-ago quarter because of lower effective tax rates in the emerging markets.
The decrease in worldwide Cards net income from the fourth quarter reflected
higher credit costs as well as an increase in operating expense, partially
reflecting seasonally lower marketing spending in the fourth quarter of 1995.
Adjusted revenue in the quarter was up 12% from the first quarter of 1995,
reflecting volume growth in U.S. bankcards and business expansion in Asia
Pacific. Expenses increased by only 2% from the year-ago quarter, reflecting
continued investment spending in the emerging markets partially offset by lower
expense levels in U.S. bankcards.
Credit costs for worldwide Cards were $547 million in the quarter, up $51
million from the fourth quarter (adjusted for the fourth quarter sale of certain
bankrupt accounts) and up $170 million from the 1995 first quarter. Consistent
with broad industry trends, net credit losses in the managed U.S. bankcard
portfolio increased to $467 million in the quarter, up an adjusted $53 million
from the fourth quarter, and up $135 million from the 1995 first quarter. The
loss ratio in the U.S. bankcard portfolio rose to 4.38% in the quarter from an
adjusted 3.89% in the preceding quarter and 3.58% in the year-ago quarter. The
loss ratio, which is influenced by credit and economic conditions as well as
portfolio levels, is expected to increase further from the first quarter of
1996. See pages 8-9 and 26-27 for additional discussion of the U.S. bankcards
portfolio.
Cards continued to build reserves for possible credit losses, with a provision
of $49 million above net write-offs in the 1996 first quarter.
The return on assets for worldwide Cards was 3.81% in the quarter, down from
5.17% in the fourth quarter of 1995 and 4.44% in the first quarter of 1995.
Adjusted for the effect of credit card securitization, the return on managed
assets in the quarter of 1.98% was down from a seasonally high 2.72% in the
preceding quarter and also down 31 basis points from 2.29% in the year-ago
quarter.
U.S. bankcards experienced moderate growth in its portfolio since the first
quarter of 1995 with cards in force increasing 8% to 38 million, charge volumes
up 15% to $21 billion, and end of period loans increasing 11% to $42 billion.
For the worldwide business (including affiliates), the number of cards in force
exceeded 58 million as of March 31, 1996, charge volumes in the quarter were $29
billion, and end of period loans were $50 billion.
6
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
PRIVATE BANKING
- ----------------------------------------------------------------------------------------------
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Millions of Dollars) 1996 1995 1995 1995 1995
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Adjusted Revenue........................ $ 246 $ 248 $ 239 $ 232 $ 224
Adjusted Operating Expense.............. 162 161 158 161 153
------------------------------------------------------
OPERATING MARGIN........................ 84 87 81 71 71
Credit Costs............................ 1 8 2 16 10
------------------------------------------------------
OPERATING MARGIN LESS CREDIT COSTS...... 83 79 79 55 61
Additional Provision.................... - - - - -
------------------------------------------------------
INCOME BEFORE TAXES..................... 83 79 79 55 61
Income Taxes............................ 18 10 16 8 12
------------------------------------------------------
NET INCOME.............................. $ 65 $ 69 $ 63 $ 47 $ 49
- ----------------------------------------======================================================
Average Assets (In Billions of Dollars). $ 16 $ 15 $ 15 $ 15 $ 15
Return on Assets........................ 1.63% 1.83% 1.67% 1.26% 1.32%
- ----------------------------------------======================================================
</TABLE>
Private Banking net income of $65 million was up $16 million, or 33%, from the
1995 first quarter.
The improvement from the year-ago quarter principally reflected higher spreads
and credit volumes in both the developed and emerging markets. Adjusted revenue
improved 10% from the year-ago quarter, while adjusted operating expense growth
was only 6%, resulting in a margin increase of 18%. Client business volumes
rose 12% from a year earlier to $89.9 billion at March 31, 1996. Fee and
commission revenue was up only slightly as clients continued to favor low risk
products, prompted by shifts in market conditions since mid-1994. Credit costs
improved substantially from both the preceding and year-ago quarters.
7
<PAGE>
CONSUMER PORTFOLIO REVIEW
In the Consumer portfolio, credit loss experience is often expressed in terms of
annual net credit losses as a percentage of average consumer loans. Pricing and
credit policies reflect the loss experience of each particular product.
Consumer loans are generally written off no later than a predetermined number of
days past due on a contractual basis, or earlier in the event of bankruptcy.
The number of days is set at an appropriate level according to loan product and
country.
The following table summarizes the Consumer delinquencies and net credit loss
experience in both the managed and on-balance sheet consumer loan portfolio in
terms of loans 90 days or more past due, net credit losses, and as a percentage
of related loans.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
CONSUMER LOAN DELINQUENCY AMOUNTS, NET CREDIT LOSSES, AND RATIOS
- ---------------------------------------------------------------------------------------------------------------------------------
Total Loans (A) 90 Days or More Past Due Net Credit Losses
------------------ --------------------------------- ------------------------------
Mar. 31, Mar. 31, Dec. 31, Mar. 31, 1st Qtr. 4th Qtr. 1st Qtr.
1996 1996 1995 1995 1996 1995 1995
- ---------------------------------------------------------------------------------------------------------------------------------
(Dollars in Billions) (Dollars in Millions) (Dollars in Millions)
<S> <C> <C> <C> <C> <C> <C> <C>
CITIBANKING.................. $ 65.9 $2,755 $2,770 $2,763 $ 158 $ 196 $ 149
Ratio....................... 4.18% 4.23% 4.41% 0.97% 1.20% 0.99%
CARDS
U.S. Bankcards............... 42.1 759 732 650 467 402 332
Ratio....................... 1.80% 1.66% 1.71% 4.38% 3.77% 3.58%
Other........................ 7.6 176 141 117 80 82 45
Ratio..................... 2.31% 1.93% 1.84% 4.40% 4.59% 3.00%
PRIVATE BANKING.............. 14.7 260 307 337 2 11 5
Ratio..................... 1.76% 2.15% 2.45% 0.06% 0.32% 0.15%
TOTAL MANAGED................ 130.3 3,950 3,950 3,867 707 691 531
RATIO..................... 3.03% 3.01% 3.20% 2.19% 2.14% 1.82%
Effect of Credit Card........ (26.2) (479) (440) (410) (294) (250) (222)
Securitization
TOTAL ON-BALANCE SHEET....... $104.1 $3,471 $3,510 $3,457 $ 413 $ 441 $ 309
--------------------------------------------------------------------------------------------------
Ratio..................... 3.33% 3.32% 3.52% 1.60% 1.70% 1.30%
- ---------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION (MANAGED PORTFOLIO):
DEVELOPED.................... $100.7 $3,603 $3,665 $3,650 $ 614 $ 584 $ 489
Ratio..................... 3.58% 3.58% 3.87% 2.45% 2.32% 2.15%
EMERGING..................... 29.6 347 285 217 93 107 42
Ratio..................... 1.17% 0.99% 0.82% 1.29% 1.50% 0.65%
- ----------------------------------------------------------------------------------------------------------------------------------
(A) Net of unearned income.
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
CONSUMER LOAN BALANCES
- ----------------------------------------------------------------------------------------------------------------------------------
End of Period(A) Average(A)
----------------------------------------------------------------------------
Mar. 31, Dec. 31, Mar. 31, 1st Qtr. 4th Qtr. 1st Qtr.
(In Billions of Dollars) 1996 1995 1995 1996 1995 1995
- ----------------------------------------------------------------------------------------------------------------------------------
MANAGED............................................. $130.3 $131.1 $120.8 $129.8 $128.1 $118.7
Securitized Loans................................... (26.2) (25.5) (22.7) (25.9) (25.2) (22.5)
----------------------------------------------------------------------------
ON-BALANCE SHEET.................................... $104.1 $105.6 $ 98.1 $103.9 $102.9 $ 96.2
- ------------------------------------------------------============================================================================
</TABLE>
(A) The end of period and average loan amounts are net of unearned income.
8
<PAGE>
Total managed delinquent dollars and the related delinquency ratio were
essentially unchanged from the 1995 fourth quarter. The increase in managed
dollar delinquencies from the 1995 first quarter largely reflected growth in
loan volumes, with the overall delinquency ratio reduced slightly. As noted on
pages 4 and 26, net credit losses and the related loss ratios have increased
from both the preceding and year-ago quarters.
In Citibanking, loans delinquent 90 days or more, which included $1.0 billion of
U.S. mortgages, were essentially unchanged from both the first and fourth
quarters of 1995. Lower delinquencies in the U.S. and Europe were offset by
increases in the emerging markets, which reflected portfolio growth in both Asia
Pacific and Latin America, as well as economic conditions in Latin America. Net
credit losses were up slightly from the year-ago quarter, but declined $38
million from the fourth quarter of 1995 due to improvements in the U.S. and
Europe, as well as in Latin America.
U.S. bankcards managed loans that were delinquent 90 days or more totaled $759
million, or 1.80% of that portfolio, as of March 31, 1996, up from $732 million,
or 1.66%, at December 31, 1995. The net credit loss ratio has risen from its
cyclical low in the fourth quarter of 1994. This increase, which reflects a
general deterioration in the credit environment as well as the effect of
portfolio seasoning, is broadly consistent with industry trends. See pages 6
and 26 for additional discussion.
In other Cards, business expansion in Asia Pacific is primarily responsible for
the rise in delinquencies and the increase in net credit losses from the first
quarter of 1995. While economic conditions in certain Latin American countries
have also contributed to these increases, net credit losses have improved in
Latin America since the fourth quarter of 1995, resulting in slightly lower
losses in other Cards.
Private Banking delinquencies and net credit losses have improved from both the
first and fourth quarters of 1995, reflecting lower levels of cash-basis loans
and higher credit recoveries. The improvement from the fourth quarter also
reflected lower gross credit write-offs.
Total consumer loans on the balance sheet with delinquencies of 90 days or more
on which interest continued to be accrued (which primarily include worldwide
bankcard receivables, personal loans in Germany, and student loans) were $915
million at March 31, 1996, down from $951 million at December 31, 1995. The
majority of these loans, excluding the government-guaranteed student loan
portfolio, are written off upon reaching a stipulated number of days past due.
Citicorp's policy for suspending the accrual of interest on consumer loans
varies depending on the terms, security and credit loss experience
characteristics of each product, as well as write-off criteria in place. At
March 31, 1996, interest accrual had been suspended on $2.7 billion of consumer
loans, up $59 million from December 31, 1995.
Consumer credit costs and the related net credit loss ratios may increase from
first quarter 1996 levels as a result of credit factors applicable to the
portfolio, economic conditions, and continued portfolio growth. 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 the consumer allowance.
9
<PAGE>
- --------------------------------------------------------------------------------
(CORPORATE) BANKING
- --------------------------------------------------------------------------------
(Corporate) Banking serves corporations, financial institutions, governments,
and other participants in capital markets throughout the world. The (Corporate)
Banking results presented below include the results of the Cross-Border
Refinancing Portfolio (as a component of the Emerging Markets business) and
North America Commercial Real Estate (as a component of Global Relationship
Banking), both of which previously were reported separately.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Millions of Dollars) 1996 1995(A) 1995(A) 1995(A) 1995(A)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total Revenue........................... $1,620 $1,570 $1,622 $1,770 $1,561
Net Cost to Carry Cash-Basis Loans &
OREO................................... (4) 6 4 5 (4)
------------------------------------------------------------
ADJUSTED REVENUE........................ 1,616 1,576 1,626 1,775 1,557
------------------------------------------------------------
Total Operating Expense................. 998 981 981 1,004 954
Net OREO Benefits....................... 12 54 29 21 1
------------------------------------------------------------
ADJUSTED OPERATING EXPENSE.............. 1,010 1,035 1,010 1,025 955
------------------------------------------------------------
OPERATING MARGIN........................ 606 541 616 750 602
------------------------------------------------------------
Net Write-offs.......................... 31 34 86 39 7
Net Cost to Carry and Net OREO Benefits. (16) (48) (25) (16) (5)
------------------------------------------------------------
CREDIT COSTS............................ 15 (14) 61 23 2
------------------------------------------------------------
OPERATING MARGIN LESS CREDIT COSTS...... 591 555 555 727 600
Additional Provision.................... - 6 25 25 25
------------------------------------------------------------
INCOME BEFORE TAXES..................... 591 549 530 702 575
Income Taxes............................ 122 120 141 143 178
------------------------------------------------------------
NET INCOME.............................. $ 469 $ 429 $ 389 $ 559 $ 397
- ----------------------------------------============================================================
Average Assets (In Billions of Dollars). $ 139 $ 139 $ 140 $ 150 $ 149
Return on Assets........................ 1.36% 1.22% 1.10% 1.49% 1.08%
- ----------------------------------------------------------------------------------------------------
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
Net income from global corporate banking activities of $469 million in the first
quarter of 1996 was up 18% from the first quarter of 1995 as business expansion
in the Emerging Markets business more than offset lower results in Global
Relationship Banking. Net income in the 1996 quarter also benefited from a
lower effective income tax rate that resulted from a change in the geographic
mix and nature of earnings. The return on assets increased to 1.36% in the
first quarter of 1996 compared with 1.08% in the first quarter of 1995.
Adjusted revenue grew 4%, with strong base revenue growth--principally in the
Emerging Markets business--partially offset by lower venture capital results.
Revenue from transaction banking services was up 7% in the quarter and comprised
32% of adjusted revenue in the first quarters of both 1996 and 1995. Trading-
related revenue was essentially unchanged, contributing $342 million, or 21% of
total adjusted revenue, in the first quarter of 1996 compared with $336 million,
or 22% of total adjusted revenue, in the first quarter of 1995. Lower trading-
related revenue in the GRB was offset by improvement in the Emerging Markets
business.
Adjusted operating expense of $1.0 billion in the first quarter of 1996 was up
6% from the first quarter of 1995. The growth is attributable to higher
business volumes and investment spending to build the Emerging Markets banking
franchise. Expense in the GRB was essentially unchanged from a year ago.
Credit costs, at $15 million in the first quarter of 1996, remained low.
At March 31, 1996, cash-basis loans of $1.5 billion were composed of $0.4
billion in the Emerging Markets business and $1.1 billion in the GRB (including
$0.9 billion attributable to the North America Commercial Real Estate
portfolio). Cash-basis loans declined $0.5 billion from March 31, 1995. The
OREO portfolio of $518 million declined from $1.0 billion at March 31, 1995.
These declines are primarily attributable to reductions in the North America
Commercial Real Estate portfolio. Total commercial cash-basis loans and OREO of
$2.0 billion were essentially unchanged from December 31, 1995. See the tables
entitled Cash-Basis, Renegotiated, and Past Due Loans and Other Real Estate
Owned and Assets Pending Disposition on page 35.
10
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
EMERGING MARKETS
- ----------------------------------------------------------------------------------------------------
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Millions of Dollars) 1996 1995(A) 1995(A) 1995(A) 1995(A)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Adjusted Revenue....................... $ 867 $ 709 $ 716 $ 760 $ 713
Adjusted Operating Expense............. 371 358 346 355 315
------------------------------------------------------------
OPERATING MARGIN....................... 496 351 370 405 398
Credit Costs........................... 10 - 16 9 8
------------------------------------------------------------
OPERATING MARGIN LESS CREDIT COSTS..... 486 351 354 396 390
Additional Provision................... - (19) - - -
------------------------------------------------------------
INCOME BEFORE TAXES.................... 486 370 354 396 390
Income Taxes........................... 93 99 93 55 120
------------------------------------------------------------
NET INCOME............................. $ 393 $ 271 $ 261 $ 341 $ 270
- ----------------------------------------============================================================
Average Assets (In Billions of Dollars) $ 55 $ 53 $ 50 $ 49 $ 48
Return on Assets....................... 2.87% 2.03% 2.07% 2.79% 2.28%
- ----------------------------------------============================================================
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
Net income from the Emerging Markets business totaled $393 million in the
quarter, up $123 million from the first quarter of 1995, as strong growth in
revenue and operating margin was coupled with lower local effective income tax
rates. Average assets grew by $7 billion from the first quarter of 1995
reflecting continued business expansion.
Revenue growth of $154 million, or 22%, in the first quarter of 1996 compared
with the first quarter of 1995 reflected broad business expansion in Latin
America and Asia Pacific, and across trading-related activities, loan products,
and transaction services. About one-fifth of the revenue in the Emerging
Markets was attributable to business with multinational companies that are
relationship-managed with the GRB, with that revenue having grown at a double-
digit rate from the year-ago quarter. Revenue in the first quarter of 1996
related to net asset gains and securities transactions was up $19 million from
the first quarter of 1995. Such revenue included a pretax gain of $52 million
in the 1996 first quarter from the sale of Brazil interest bonds, while the 1995
first quarter revenue included gains from the sale of a real estate asset and
revenue related to the completion of the refinancing agreement with Ecuador.
Operating expense rose 18% in the first quarter of 1996 compared with the first
quarter of 1995 primarily because of higher business volumes and investment
spending to build the franchise. Since the first quarter of 1995, banking
operations were initiated in Slovakia, Romania, Israel, and Lebanon. In
addition, operations were expanded by opening additional offices or converting
representative offices to branches or subsidiaries in countries such as
Tanzania, Russia, China, Poland, Bangladesh, and South Africa.
Credit costs were $10 million in the first quarter of 1996 compared with $8
million in the first quarter of 1995.
The Emerging Markets business results include the Cross-Border Refinancing
Portfolio, which previously was reported separately. It earned $89 million in
the first quarter of 1996, up from $65 million in the first quarter of 1995,
with average assets unchanged at $3 billion. At March 31, 1996, Citicorp's
cross-border and non-local currency outstandings in the Cross-Border Refinancing
Portfolio included $2.9 billion of medium- and long-term outstandings, down $0.5
billion from the first quarter of 1995. The medium- and long-term debt
outstandings at March 31, 1996 included $2.0 billion in Brazil, $0.4 billion in
Venezuela, $0.2 billion in South Africa, and $0.3 billion in the aggregate in
eight other countries. Of the $2.9 billion of outstandings in the Cross-Border
Refinancing Portfolio, $2.5 billion is in the form of securities carried at fair
value in the available-for-sale securities portfolio (with an amortized cost of
$2.4 billion), all of which were current as to principal and interest as of
March 31, 1996. See the table entitled Securities on page 34. The amount of
cash-basis loans in the Cross-Border Refinancing Portfolio was $24 million at
March 31, 1996.
11
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
GLOBAL RELATIONSHIP BANKING
- ----------------------------------------------------------------------------------------------------
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Millions of Dollars) 1996 1995(A) 1995(A) 1995(A) 1995(A)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Adjusted Revenue....................... $ 749 $ 867 $ 910 $1,015 $ 844
Adjusted Operating Expense............. 639 677 664 670 640
------------------------------------------------------------
OPERATING MARGIN....................... 110 190 246 345 204
Credit Costs........................... 5 (14) 45 14 (6)
------------------------------------------------------------
OPERATING MARGIN LESS CREDIT COSTS..... 105 204 201 331 210
Additional Provision................... - 25 25 25 25
------------------------------------------------------------
INCOME BEFORE TAXES.................... 105 179 176 306 185
Income Taxes........................... 29 21 48 88 58
------------------------------------------------------------
NET INCOME............................. $ 76 $ 158 $ 128 $ 218 $ 127
- ----------------------------------------============================================================
Average Assets (In Billions of Dollars) $ 84 $ 86 $ 90 $ 101 $ 101
Return on Assets....................... 0.36% 0.73% 0.56% 0.87% 0.51%
- ----------------------------------------============================================================
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
- --------------------------------------------------------------------------------
Net income from the GRB in North America, Europe, and Japan totaled $76 million
in the first quarter of 1996, down $51 million from the first quarter of 1995.
Average assets declined by $17 billion compared with the first quarter of 1995,
primarily reflecting a reduction of trading assets and the effects of
repositioning the GRB since the second quarter of 1995.
Adjusted revenue of $749 million reflected stable base business revenue and a
reduction of $103 million in trading-related and venture capital revenue.
Volatile U.S. interest rates and directionless foreign exchange markets in the
first quarter of 1996 contributed to the decline in trading-related revenue.
Expenses were essentially unchanged from the 1995 first quarter, with growth
related to areas of increased business volumes offset primarily by lower
incentive compensation. Credit costs were $5 million in the first quarter of
1996 compared with a net credit of $6 million in the first quarter of 1995.
The GRB results include the North America Commercial Real Estate portfolio,
which previously was reported separately. Its average assets of $4 billion
earned $4 million in the 1996 first quarter, compared with a break-even quarter
a year ago, which included a gain on the sale of an asset. Total North America
Commercial Real Estate exposure at March 31, 1996 of $6.7 billion consisted of
performing loans ($4.0 billion), cash-basis loans ($0.9 billion), OREO ($0.4
billion), and letters of credit and other ($1.4 billion). Total exposure at
March 31, 1996 declined $2.8 billion, or 29%, from the year-earlier quarter,
primarily as a result of paydowns, maturities, asset sales, and reductions of
commitments. At March 31, 1996, total exposure was spread among office (43%),
residential (18%), retail (17%), and other (22%) projects; with the largest
concentrations in the mid-Atlantic (23%) and California (22%) regions. Cash-
basis loans and OREO were reduced $1.1 billion from a year ago. Letters of
credit and other included $0.4 billion related to projects on which debt service
is continuing but the loan-to-value ratios have deteriorated or where the
borrowers are experiencing financial difficulties.
12
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
CORPORATE ITEMS
- --------------------------------------------------------------------------
First Quarter
-------------------
(In Millions of Dollars) 1996 1995(A)
- ------------------------ -------------------
<S> <C> <C>
Revenue.............................................. $ 248 $162
Operating Expense.................................... 121 87
-------------------
Income Before Taxes.................................. 127 75
Income Taxes......................................... 195 106
-------------------
NET LOSS............................................. $ (68) $(31)
- -------------------------------------------------------===================
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
- --------------------------------------------------------------------------------
Corporate Items includes revenue derived from charging businesses for funds
employed (based upon a marginal cost of funds concept), unallocated corporate
costs, and the offset created by attributing income taxes to business activities
on a local tax-rate basis.
Corporate Items revenue increased reflecting funding benefits associated with
higher equity levels while expense levels reflected higher spending related to
technology initiatives and costs associated with performance-based incentive
plans. Income tax amounts for the 1996 first quarter reflected higher offsets
created as a result of taxes attributed to business activities on a local tax-
rate basis.
13
<PAGE>
MANAGING GLOBAL RISK
- --------------------------------------------------------------------------------
LIQUIDITY
- --------------------------------------------------------------------------------
Citicorp manages liquidity through a well-defined process described in the 1995
Annual Report and Form 10-K.
Total deposits of $172.0 billion represent 65% of total funding at March 31,
1996, compared with $167.1 billion (65% of total funding) at December 31, 1995,
and are broadly diversified by geography and customer segments. Stockholders'
equity, which was $19.8 billion at March 31, 1996 compared with $19.6 billion at
December 31, 1995, 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 and subordinated capital
notes outstanding at March 31, 1996, were $19.2 billion, compared with $18.5
billion at year-end 1995. 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 $2.0 billion, including $1.6 billion of U.S.
credit card receivables. As securitized credit card receivable transactions
amortize, newly originated receivables are recorded on Citicorp's balance sheet
and become available for asset securitization. During the first quarter of
1996, $0.9 billion of previously securitized credit card receivables amortized
and $4.8 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 1995 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 March 31, 1996, under their applicable dividend
limitations, Citicorp's national and state-chartered bank subsidiaries could
have declared dividends to their respective parent companies without regulatory
approval of approximately $4.0 billion. In determining whether and to what
extent to pay dividends, each bank subsidiary must also consider the effect of
dividend payments on applicable risk-based capital and leverage ratio
requirements, as well as policy statements of the federal regulatory agencies
that indicate that banking organizations should generally pay dividends out of
current operating earnings. Consistent with these considerations, Citicorp
estimates that as of March 31, 1996, its bank subsidiaries could have
distributed dividends to Citicorp, directly or through their parent holding
company, of approximately $3.6 billion of the available $4.0 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 1995 Annual Report and Form 10-K. These include
limits set annually for each major category of risk; these limits 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, including the term structure of interest rates, foreign exchange
rates, equity securities and commodities prices and their volatilities. Price
risk is then measured using various tools, including the earnings at risk
method, which is applied to interest rate risk of the non-trading portfolios,
and the potential loss amount method, which is applied to the trading
portfolios. These methods are comparable with value at risk measurements
employed throughout the industry, and 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 the 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 depth
of liquidity in the market and the instrument involved. The earnings at risk is
calculated separately for each currency by multiplying the repricing gap between
interest sensitive items by the specified interest 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%. Business units manage
the
14
<PAGE>
potential earnings effect of interest rate movements by modifying the asset and
liability mix, either directly or through the use of derivatives. 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. The utilization of
derivatives 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.
Citicorp's primary non-trading price risk exposure is to movements in U.S.
dollar interest rates. During the first quarter of 1996, the amount of U.S.
dollar earnings at risk for the following 12 months to a two standard deviation
increase in rates had a potential negative impact which ranged at each month-end
from approximately $130 million to $165 million in the aggregate. This is
somewhat higher than the range from $30 million to $150 million during the full
year 1995. As of March 31, 1996, the U.S. dollar interest rate exposure taken
in tenors beyond one year results in earnings at risk of a maximum of $115
million in any single future year. The table below summarizes Citicorp's
worldwide earnings at risk at March 31, 1996 over the next 12 months from
changes in U.S. dollar interest rates.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
TWELVE MONTH U.S. DOLLAR EARNINGS AT Assuming a Rate Move of
RISK (PRETAX) Two Standard Two Standard
Deviation Deviation
(In Millions at March 31, 1996) Increase Decrease
- ---------------------------------------------------------------------
<S> <C> <C>
Excluding Derivatives................... $ 119 $(112)
Including Derivatives................... (166) 183
- ---------------------------------------------------------------------
</TABLE>
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. This primarily reflects the
utilization of receive-fixed interest rate swaps and similar instruments to
effectively modify the repricing characteristics of certain consumer and
commercial loan portfolios, funding, and long-term debt.
Earnings at risk in other currencies also existed at significantly lower levels
than U.S. dollar earnings at risk. The level of exposure taken is based on the
market environment and will vary from period to period based on rate and other
economic expectations.
The price risk of the trading activities is measured using the potential loss
amount method, which estimates the sensitivity of the value of the 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). This measurement includes the foreign exchange risks that
arise in traditional banking business as well as explicit trading positions.
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.
During the first quarter of 1996, the potential loss amount in the trading
portfolios based on monthly averages of daily exposures ranged from
approximately $50 million to $60 million pre-tax in the aggregate for Citicorp's
major trading centers, compared with a range in 1995 of approximately $40
million to $60 million. The potential loss amounts were relatively stable in
1995 and the first quarter of 1996. The level of exposure taken is a function
of the market environment and expectations of future price and market movements,
and will vary from period to period. Trading-related revenue for the first
quarter of 1996 was $392 million, compared with $483 million in the fourth
quarter of 1995. While there was continued customer demand for risk management
products, trading-related revenue declined as a result of lower foreign exchange
revenue attributable to directionless foreign exchange markets in the major
currencies.
15
<PAGE>
- --------------------------------------------------------------------------------
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 enters into derivative and foreign exchange instruments
with customers separately or with other products, to help them to manage their
risk profile, and also trades for Citicorp's own account. In addition, Citicorp
employs derivative and foreign exchange contracts among other instruments as an
end-user in connection with its risk management activities. Monitoring
procedures entail objective measurement systems, well-defined market and credit
risk limits at appropriate control levels, and timely reports to line and senior
management according to prescribed policies. Additional information concerning
Citicorp's derivative and foreign exchange activities, including a description
of accounting policies, is provided in the 1995 Annual Report and Form 10-K.
Notional principal amounts are frequently used as indicators of derivative and
foreign exchange activity, serving as a point of reference for calculating
payments. Notional principal amounts do not reflect balances subject to credit
or market risk, nor do they reflect the extent to which positions offset one
another. As a result, they do not represent the much smaller amounts that are
actually subject to risk in these transactions. Balance sheet credit exposure
arises from unrealized gains and represents the amount of loss that Citicorp
would suffer if every counterparty to which Citicorp was exposed were to default
at once (i.e., the cost of replacing these contracts), and does not represent
actual or expected loss amounts. Master netting agreements mitigate credit risk
by permitting the offset of amounts due from and to individual counterparties in
the event of counterparty default. The table below presents the aggregate
notional principal amounts of Citicorp's outstanding derivative and foreign
exchange contracts at March 31, 1996 and December 31, 1995, 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)
-------------------------- -------------------
Mar. 31, Dec. 31, Mar. 31, Dec. 31,
(In Billions of Dollars) 1996 1995 1996 1995
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST RATE PRODUCTS
Futures Contracts $ 175.1 $145.2 $ - $ -
Forward Contracts 199.0 295.2 0.3 0.6
Swap Agreements 443.5 431.9 7.5 9.1
Purchased Options 115.1 105.9 1.2 1.2
Written Options 148.0 158.1 - -
FOREIGN EXCHANGE PRODUCTS
Futures Contracts 1.2 1.1 - -
Forward Contracts 1,061.0 983.5 10.8 12.2
Cross-Currency Swap Agreements 36.2 35.2 1.9 2.0
Purchased Options 99.2 93.7 1.6 1.8
Written Options 92.2 88.2 - -
COMMODITY AND EQUITY PRODUCTS 30.5 38.0 0.9 0.9
---------------------
24.2 27.8
EFFECTS OF MASTER NETTING
AGREEMENTS (B) (10.6) (11.7)
---------------------
$ 13.6 $ 16.1
- ------------------------------------------------------------------=====================
</TABLE>
(A) There is no balance sheet credit exposure for futures contracts because
they settle daily in cash, and none for written options because they
represent obligations (rather than assets) of Citicorp.
(B) Master netting agreements mitigate credit risk by permitting the offset of
amounts due from and to individual counterparties in the event of
counterparty default.
16
<PAGE>
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 1995 Annual Report and Form 10-K. As shown in the
table on page 16, the current replacement cost for all contracts in the
aggregate was $13.6 billion at March 31, 1996. 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 $40.5 billion in the aggregate for all contracts at March 31, 1996
and $42.2 billion at December 31,1995. At year-end 1995, approximately 94% of
the total credit exposure was to investment grade counterparties and
approximately 88% was under three years tenor, and Citicorp believes the
distribution is substantially similar at March 31, 1996. There were no
significant amounts of non-performing contracts at March 31, 1996 and there were
no credit-related losses on derivative contracts in the first quarter of 1996.
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 $286 million at March 31, 1996. Information regarding
derivative and foreign exchange trading-related revenue can be found on page 24.
Citicorp's risk management activities employ interest rate swaps and other
derivatives that are designated and effective as hedges, as well as contracts
that are designated and effective in modifying the interest rate characteristics
of specified assets or liabilities. These contracts are accounted for in a
manner consistent with the related assets or liabilities. Revenue and expense
related to these agreements are generally included in net interest revenue over
the lives of the agreements on an accrual basis, and realized gains and losses,
including any related to terminated contracts, are deferred and amortized.
The tables below and on page 18 provide data on the notional principal amounts
and maturities of end-user (non-trading) derivatives, along with additional data
on end-user interest rate swaps and net purchased option positions as of March
31, 1996 with three-month LIBOR forward rates included for reference. 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 March 31, 1996 Amount Maturing
--------------------- -------------------------------------------------------------
Mar. 31, Dec. 31, Within 1 1 to 2 2 to 3 3 to 4 4 to 5 After 5
(In Billions of Dollars) 1996 1995 Year Years Years Years Years Years
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST RATE PRODUCTS
Futures Contracts............... $17.5 $13.6 80% 14% 5% 1% - -
Forward Contracts............... 5.7 5.6 92 7 - - 1% -
Swap Agreements................. 97.9 90.9 26 20 19 13 9 13%
Option Contracts................ 29.2 45.6 60 21 8 6 3 2
FOREIGN EXCHANGE PRODUCTS
Futures and Forward
Contracts...................... 56.9 54.8 97 3 - - - -
Cross-Currency Swap
Agreements..................... 3.1 3.2 22 13 10 16 16 23
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
END-USER INTEREST RATE SWAPS AND NET PURCHASED OPTIONS AS OF MARCH 31, 1996
- -------------------------------------------------------------------------------------------
Remaining Contracts Outstanding at Mar. 31,
---------------------------------------------------
(In Billions of Dollars) 1996 1997 1998 1999 2000 2001
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RECEIVE FIXED SWAPS
Notional Amounts......................... $74.1 $57.1 $44.8 $29.7 $18.4 $ 9.9
Weighted-Average Fixed Rate.............. 6.4% 6.5% 6.6% 6.9% 6.5% 6.8%
PAY FIXED SWAPS
Notional Amounts......................... $12.9 $ 8.5 $ 5.9 $ 4.1 $ 3.6 $ 3.2
Weighted-Average Fixed Rate.............. 7.1% 7.1% 7.1% 7.1% 7.1% 7.0%
BASIS SWAPS
Notional Amounts......................... $10.9 $ 7.1 $ 2.2 $ 0.6 $ 0.1 $ 0.1
PURCHASED CAPS (INCLUDING COLLARS)
Notional Amounts......................... $19.2 $ 4.8 $ 2.5 $ 1.5 $ 0.6 -
Weighted-Average Cap Rate Purchased...... 6.5% 6.8% 7.5% 7.8% 8.1% -
WRITTEN FLOORS RELATED TO PURCHASED
CAPS (COLLARS)
Notional Amounts......................... $ 1.8 $ 0.2 $ 0.2 $ 0.2 $ 0.1 -
Weighted-Average Floor Rate Written...... 5.5% 8.2% 8.2% 8.2% 8.2% -
WRITTEN CAPS RELATED TO OTHER PURCHASED
CAPS
Notional Amounts......................... $ 6.7 $ 6.0 $ 1.4 $ 1.3 $ 0.6 $ 0.5
Weighted-Average Cap Rate Written........ 7.1% 7.2% 9.1% 9.1% 9.5% 9.6%
- -------------------------------------------------------------------------------------------
THREE-MONTH IMPLIED FORWARD LIBOR RATES
(A)...................................... 5.4% 5.9% 6.4% 6.7% 6.9% 7.1%
- -------------------------------------------------------------------------------------------
</TABLE>
(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 March 31,
1996.
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
first quarter of 1996 interest rate contracts with notional principal amounts of
approximately $27.4 billion were closed out primarily related to interest rate
collars ($13.6 billion of purchased caps and $13.6 billion of written floors
related to purchased caps), resulting in a net deferred loss of approximately
$11 million. Total unamortized net deferred losses, including those related to
prior period close-outs, were approximately $91 million at March 31, 1996, which
will be amortized through earnings over the period reflecting the original
hedging or risk management strategy (46% in 1996, 37% in 1997, and 17% 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.
The Financial Accounting Standards Board is developing possible new accounting
standards which could significantly affect the accounting treatment of
derivative and foreign exchange contracts by Citicorp and its customers. It is
not possible at this time to determine how such changes could affect the nature
and extent of these activities.
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.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
ESTIMATED FAIR VALUE IN EXCESS OF (LESS THAN) CARRYING VALUE
- -----------------------------------------------------------------------
Mar. 31, Dec. 31, Mar. 31,
(In Billions of Dollars) 1996 1995 1995
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Assets and Liabilities.................. $ 5.4 $ 5.0 $ 4.3
End-User Derivative and Foreign 0.2 1.4 (0.7)
Exchange Contracts.....................
Loan Commitments........................ - - (0.2)
Credit Card Receivable Securitizations 0.3 (0.3) 0.3
(A)....................................
-------------------------------
5.9 6.1 3.7
Deposits with No Fixed Maturity (B)..... 2.7 2.3 2.5
-------------------------------
TOTAL $ 8.6 $ 8.4 $ 6.2
- ----------------------------------------===============================
</TABLE>
(A) Represents the estimated excess in fair value of the underlying receivables
and investor certificates, which is derived by Citicorp in the form of
excess servicing, and principally arises from fixed rates payable to
certificate holders.
(B) Represents the estimated excess fair value related to the expected time
period until runoff of existing deposits with no fixed maturity on the
balance sheet at March 31, 1996, 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 $8.6 billion at March 31, 1996, $8.4 billion at December 31, 1995,
and $6.2 billion at March 31, 1995. The increase from December 31, 1995 is
primarily due to the effect of increasing interest rates on the value of fixed
rate liabilities, asset securitizations, and deposits with no fixed maturity,
principally offset by decreases related to the value of derivative contracts due
to the same interest rate environment. The increase from March 31, 1995 is
primarily due to higher fair values for the loan portfolio, the value of
derivative contracts as a result of a decrease in the level of interest rates,
and the transfer in the fourth quarter of 1995 of securities held to maturity to
available for sale, partially offset by decreases in fixed rate liabilities 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 1995 Annual Report and Form 10-K.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
CITICORP RATIOS Mar. 31, 1996 Dec. 31, 1995 Mar. 31, 1995
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stockholders' Equity.. 6.71% 6.43% 5.21%
Tier 1 Capital............... 8.42 8.41 8.01
Tier 1 and Tier 2 Capital.... 12.37 12.33 12.06
Leverage (A)................. 7.44 7.45 7.00
- ----------------------------------------------------------------------------
</TABLE>
(A) Tier 1 capital divided by adjusted average assets.
Citicorp maintained a strong capital position during the first quarter of 1996.
Total capital (Tier 1 and Tier 2) amounted to $28.0 billion at March 31, 1996,
representing 12.37% of net risk-adjusted assets. This compares with $27.7
billion and 12.33% at December 31, 1995 and $26.9 billion and 12.06% at March
31, 1995. Tier 1 capital of $19.0 billion at March 31, 1996 represented 8.42%
of net risk-adjusted assets, compared with $18.9 billion and 8.41% at December
31, 1995 and $17.8 billion and 8.01% at March 31, 1995. The Tier 1 capital
ratio at March 31, 1996 exceeded Citicorp's target range for the Tier 1 ratio of
8.00% to 8.30%.
Common stockholders' equity increased a net $3.7 billion from a year ago and
$1.2 billion during the quarter to $17.7 billion at March 31, 1996, representing
6.71% of assets, compared with 6.43% at year-end 1995 and 5.21% at March 31,
1995. The increases in common stockholders' equity principally reflected
changes in retained earnings and conversions of convertible preferred stock,
partially offset by activity under the stock repurchase program. At March 31,
1996, Citicorp had no outstanding convertible preferred stock. The book value
per share of $36.79 at March 31, 1996 was up slightly from a year ago, but down
from $38.64 at December 31, 1995. The book value per share at March 31, 1996
reflected the effect of conversions of convertible preferred stock and, to a
lesser extent, repurchases of common stock since the market price of the
repurchased common shares was greater than the book value per share.
In June 1995, upon achieving its risk-based capital ratio targets, Citicorp
initiated a two-year $3.0 billion common stock repurchase program. In January
1996, the program was expanded to a total of $4.5 billion through January 31,
1998. During the first quarter of 1996, Citicorp repurchased 9.6 million shares
of common stock at an aggregate purchase price of $721 million. Since the
program was initiated, Citicorp has repurchased 32.6 million shares of common
stock at an aggregate cost of $2.2 billion.
The amounts available to use for the repurchase of stock under the program are
referred to as "free capital." As shown in the table below, free capital
represents Tier 1 capital generated during the period, reduced by capital
attributed to funding business expansion. During the first quarter of 1996,
Citicorp generated $750 million of free capital, of which $721 million was
utilized to repurchase 9.6 million shares of common stock at an average price of
$75.39 per share.
<TABLE>
<CAPTION>
- ----------------------------------------------------
FREE CAPITAL
- ----------------------------------------------------
(In Millions of Dollars) 1st Qtr. 1996
- ----------------------------------------------------
<S> <C>
Tier 1 Capital Generated:
Net Income.......................... $ 914
Issuances/Other (A)................. 185
Cash Dividends Declared............. (257)
---------------
Total Tier 1 Capital Generated....... 842
Capital Attributed to Growth in Net
Risk-Adjusted Assets............... (92)
---------------
FREE CAPITAL......................... $ 750
- -------------------------------------===============
</TABLE>
(A) Primarily includes issuance of common stock under various staff benefits
plans and the dividend reinvestment plan.
20
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
COMPONENTS OF RISK-BASED CAPITAL UNDER REGULATORY GUIDELINES
(In Millions of Dollars) Mar. 31, 1996 Dec. 31, 1995 Mar. 31, 1995
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
TIER 1 CAPITAL
Common Stockholders' Equity............. $ 17,684 $ 16,510 $ 14,024
Perpetual Preferred Stock............... 2,078 3,071 4,337
Minority Interest....................... 81 70 58
Less:
Net Unrealized (Gains) Losses -........ (174) (132) 58
Securities Available for Sale (A)
Intangible Assets (B).................. (314) (293) (338)
50% Investment in Certain Subsidiaries
(C)................................... (319) (311) (297)
===============================================
Total Tier 1 Capital.................... 19,036 18,915 17,842
===============================================
TIER 2 CAPITAL
Allowance for Credit Losses (D)......... 2,857 2,843 2,814
Qualifying Debt (E)..................... 6,386 6,278 6,491
Less: 50% Investment in Certain
Subsidiaries (C)....................... (319) (311) (297)
-----------------------------------------------
Total Tier 2 Capital.................... 8,924 8,810 9,008
===============================================
Total Capital (Tier 1 and Tier 2)....... $ 27,960 $ 27,725 $ 26,850
===============================================
Net Risk-Adjusted Assets (F)............ $226,020 $224,915 $222,647
- ---------------------------------------------------------------------------------------
</TABLE>
(A) Tier 1 capital excludes unrealized gains and losses on securities available
for sale in accordance with regulatory risk-based capital guidelines.
(B) Includes goodwill and certain identifiable intangible assets.
(C) Primarily Citicorp Securities, Inc.
(D) Includable up to 1.25% of risk-adjusted assets. Any excess allowance is
deducted from risk-adjusted assets.
(E) Includes qualifying senior and subordinated debt in an amount not exceeding
50% of Tier 1 capital and subordinated capital notes subject to certain
limitations.
(F) Includes risk-weighted credit equivalent amounts net of applicable bilateral
netting agreements of $8.8 billion for interest rate, commodity and equity
derivative contracts and foreign exchange contracts as of March 31, 1996,
compared with $10.0 billion and $13.7 billion at December 31 and March 31,
1995, respectively. Net risk-adjusted assets also includes the effect of
other off-balance sheet exposures such as unused loan commitments and
letters of credit and reflects deductions for intangible assets and any
excess allowance for credit losses.
As discussed in the 1995 Annual Report and Form 10-K, Citicorp has entered into
forward purchase agreements on its common stock, to be settled in shares of its
common stock on a net basis. As of March 31, 1996, agreements were in place
covering approximately $900 million of Citicorp common stock (13.0 million
shares) with forward prices averaging $68.94 per share. If these agreements
were settled based on the March 31, 1996 market price of Citicorp common stock
($80.00 per share), Citicorp would be entitled to receive approximately 1.7
million shares. During the first quarter of 1996, settlements resulted in
Citicorp receiving approximately 800,000 shares of its common stock.
Citicorp's subsidiary depository institutions are subject to the risk-based
capital guidelines issued by their respective primary federal bank regulatory
agencies, which are generally similar to the FRB's guidelines. At March 31,
1996 all of Citicorp's subsidiary depository institutions were "well
capitalized" under the federal bank regulatory agencies' definitions.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
CITIBANK, N.A. RATIOS Mar. 31, 1996 Dec. 31, 1995 Mar. 31, 1995
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stockholder's Equity 7.18% 7.08% 6.57%
Tier 1 Capital 8.42 8.32 8.14
Tier 1 and Tier 2 Capital 12.30 12.24 12.61
Leverage 6.75 6.65 6.53
- ----------------------------------------------------------------------------
</TABLE>
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.
21
<PAGE>
STATEMENT OF INCOME ANALYSIS
- --------------------------------------------------------------------------------
NET INTEREST REVENUE (TAXABLE EQUIVALENT BASIS)
- --------------------------------------------------------------------------------
Net interest revenue of $2.7 billion in the first quarter of 1996 increased 15%
from the year ago period, reflecting higher net rate spreads, including funding
benefits associated with higher equity levels, as well as an increase in
interest-earning assets. Net interest revenue and net interest margin for all
periods presented were reduced by the effect of credit card securitization.
Adjusted for the effect of credit card securitization, net interest revenue for
the 1996 first quarter of $3.3 billion increased 16% from the 1995 first quarter
and 5% from the 1995 fourth quarter. The adjusted net interest margin increased
to 5.15% in the 1996 first quarter from 4.61% in the first quarter of 1995 and
4.91% in the fourth quarter of 1995.
The adjusted net interest margin in the U.S. of 5.64% in the 1996 first quarter
was up from 4.82% in the 1995 first quarter and 5.17% in the 1995 fourth
quarter. The increase from the first quarter of 1995 principally reflected a
decrease in the level of lower-yielding trading assets in the GRB, higher
volumes and increased spreads in the U.S. bankcards business, lower cost to
carry cash-basis loans and OREO, and a reduced deposit insurance assessment
rate. The improvement over the 1995 fourth quarter primarily reflected
increased spreads in the U.S. bankcards business.
Net interest revenue from activities outside the U.S. grew 20% from the first
quarter of 1995 and represented 47% of total adjusted net interest revenue in
the first quarter of 1996. The net interest margin outside the U.S. of 4.71% in
the first quarter of 1996 increased from 4.39% in the 1995 first quarter and
4.66% in the 1995 fourth quarter. The increase in the net interest margin from
both the 1995 first and fourth quarters reflected improved spreads related to
activities in the (Corporate) Banking business in Latin America and expansion of
the Cards business in Asia Pacific. Additionally, the improvement in the net
interest margin from the 1995 first quarter reflected an increase in trading-
related net interest revenue in Latin America.
The $8.4 billion increase in adjusted average interest-earning assets in the
1996 first quarter from the year ago period was mainly attributable to higher
levels of consumer loans both in and outside the U.S. and commercial loans
outside the U.S., partially offset by a reduction in trading assets in the
Global Relationship Bank.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
NET INTEREST REVENUE STATISTICS 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(TAXABLE EQUIVALENT BASIS) (A) (B) 1996 1995 1995 1995 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET INTEREST REVENUE: (In Millions of Dollars)
U.S.................................. $1,716 $1,607 $1,612 $1,514 $1,515
Outside the U.S...................... 1,547 1,499 1,502 1,459 1,286
----------------------------------------------------------
TOTAL ADJUSTED (C) ..................... 3,263 3,106 3,114 2,973 2,801
Effect of credit card securitization.... (570) (537) (508) (497) (468)
----------------------------------------------------------
TOTAL................................... $2,693 $2,569 $2,606 $2,476 $2,333
==========================================================
AVERAGE INTEREST-EARNING ASSETS: (In Billions of
Dollars)
U.S.................................... $122.4 $123.3 $122.3 $126.4 $127.4
Outside the U.S........................ 132.2 127.7 122.8 121.8 118.8
----------------------------------------------------------
TOTAL ADJUSTED (C)...................... 254.6 251.0 245.1 248.2 246.2
Effect of credit card securitization.... (25.9) (25.2) (23.6) (23.3) (22.5)
----------------------------------------------------------
TOTAL................................... $228.7 $225.8 $221.5 $224.9 $223.7
==========================================================
NET INTEREST MARGIN (%):
U.S. (Adjusted)...................... 5.64% 5.17% 5.23% 4.81% 4.82%
Outside the U.S. .................... 4.71 4.66 4.85 4.80 4.39
TOTAL ADJUSTED (C)...................... 5.15% 4.91% 5.04% 4.80% 4.61%
Effect of credit card securitization.... (.41) (.40) (.37) (.38) (.38)
----------------------------------------------------------
TOTAL................................... 4.74% 4.51% 4.67% 4.42% 4.23%
- ----------------------------------------==========================================================
</TABLE>
(A) Includes appropriate allocations for capital and funding costs based on the
location of the asset.
(B) The taxable equivalent adjustment is based on the U.S. federal statutory tax
rate of 35%.
(C) Adjusted for the effect of credit card securitization. See page 28 for
discussion.
22
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
FEE AND COMMISSION REVENUE
- ----------------------------------------------------------------------------
First Quarter
------------------
(In Millions of Dollars) 1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C>
CONSUMER:
Developed Markets....................................... $ 532 $ 565
Emerging Markets........................................ 255 219
------------------
Total Consumer.......................................... 787 784
(CORPORATE) BANKING AND OTHER............................ 482 448
------------------
TOTAL ADJUSTED (A)....................................... 1,269 1,232
Effect of Credit Card Securitization..................... 43 30
------------------
TOTAL................................................... $1,312 $1,262
- ----------------------------------------------------------==================
</TABLE>
(A) Adjusted for the effect of credit card securitization. See page 28 for
discussion.
- --------------------------------------------------------------------------------
Total fee and commission revenue of $1.3 billion in the first quarter of 1996
was up 4% from the year-ago level. Fee and commission revenue was increased in
both periods presented by the effect of credit card securitization. Adjusted
for the effect of credit card securitization, fee and commission revenue in the
first quarter of 1996 was up 3% from the comparable year ago period.
Within the Consumer businesses, fee and commission revenue was essentially
unchanged from the year ago period. Continued double-digit growth in the
emerging markets reflected increases across various consumer products offered in
these markets, particularly credit card related fees in Asia and trust and
investment fee revenue in Latin America, while fees in the developed markets
were reduced from levels in the 1995 first quarter.
In the (Corporate) Banking business, fee and commission revenue increased 8% in
the first quarter of 1996 compared with the year-ago period, primarily
reflecting higher business volumes in the emerging markets, particularly in Asia
Pacific. Continued growth in transaction banking services, including expanded
trust, agency, and custodial activities, contributed to the increase in fees.
Additionally, corporate finance fee revenue improved from the year ago period.
23
<PAGE>
- --------------------------------------------------------------------------------
TRADING-RELATED REVENUE
- --------------------------------------------------------------------------------
Trading-related revenue is reported in "Trading Account" and "Foreign Exchange"
in the income statement, but also includes other amounts, principally reflected
in net interest revenue. The table below presents trading-related revenue by
business sector, by income statement line, and by trading activity.
<TABLE>
<CAPTION>
- ------------------------------------------------
First Quarter
--------------
(In Millions of Dollars) 1996 1995
- ------------------------------------------------
<S> <C> <C>
BY BUSINESS SECTOR:
(Corporate) Banking
Emerging Markets............ $ 175 $ 119
Global Relationship Banking. 167 217
Consumer and Other............ 50 59
----------------
TOTAL......................... $ 392 $ 395
- --------------------------------================
BY TRADING ACTIVITY:
Foreign Exchange (A).......... $ 210 $ 265
Derivative (B)................ 146 99
Fixed Income (C).............. (1) (43)
Other......................... 37 74
----------------
TOTAL......................... $ 392 $ 395
- --------------------------------================
BY INCOME STATEMENT LINE:
Foreign Exchange.............. $ 205 $ 305
Trading Account............... 90 39
Other (D)..................... 97 51
----------------
TOTAL......................... $ 392 $ 395
- --------------------------------================
</TABLE>
(A) Includes foreign exchange spot, forward, and option contracts.
(B) Primarily interest rate and currency swaps, options, financial futures, and
equity and commodity contracts.
(C) Principally debt instruments including government and corporate debt as well
as mortgage-backed securities.
(D) Primarily net interest revenue.
- --------------------------------------------------------------------------------
Trading-related revenue was essentially unchanged in the first quarter of 1996
compared with the first quarter of 1995. (Corporate) Banking trading-related
revenue reflected a decline in the GRB offset by improved results in the
Emerging Markets business. Levels of trading-related revenue may fluctuate in
the future as a result of market conditions and other factors.
On a trading-activity basis, foreign exchange revenue of $210 million in the
first quarter of 1996 declined $55 million from the first quarter of 1995
primarily reflecting directionless foreign exchange markets in the major
currencies. Additionally, results in the first quarter of 1995 had benefited
from volatility in the foreign exchange markets in Latin America.
Derivative revenue totaled $146 million in the first quarter of 1996 compared
with $99 million in the first quarter of 1995. The increase reflected continued
customer demand for risk-management products. Additionally, the year ago period
had reflected difficult market conditions, particularly in Latin America.
Fixed income revenue in the first quarter of 1996 remained weak, although
modestly improved compared with the depressed 1995 results which had reflected
difficult market conditions.
Trading-related revenue by trading activity as discussed in the paragraphs above
includes the net interest revenue associated with the trading positions.
Aggregate net interest revenue associated with trading activities in the first
quarter of 1996 improved from the first quarter of 1995, particularly in Latin
America.
24
<PAGE>
- --------------------------------------------------------------------------------
SECURITIES TRANSACTIONS
- --------------------------------------------------------------------------------
Net gains from the sale of securities were $102 million in the first quarter of
1996, compared with $26 million in the respective 1995 period. In the first
quarter of 1996, gross realized gains on sales of securities available for sale
totaled $111 million, including $52 million from the sale of Brazil interest
bonds, while gross realized losses on sales of securities available for sale
totaled $9 million. In the comparable 1995 period, gross realized gains and
losses totaled $41 million and $15 million, respectively.
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
- -----------------------------------------------------------
First Quarter
-------------------
(In Millions of Dollars) 1996 1995(A)
- -----------------------------------------------------------
<S> <C> <C>
Securitized Credit Card Receivables..... $ 233 $ 216
Venture Capital......................... 38 85
Affiliate Earnings...................... 62 55
Gains on Sale of Residual Value of 18 5
Leased Equipment.......................
U.S. Mortgage Pass-Through
Securitization Activity................ 4 1
Foreign Currency Translation (Losses)
Gains.................................. (4) 3
Net Asset Gains and Other Items......... 83 121
-------------------
TOTAL................................... $ 434 $ 486
- ----------------------------------------===================
</TABLE>
(A) Reclassified to conform to latest quarter's presentation.
- --------------------------------------------------------------------------------
The increase in revenue related to securitized credit card receivables in the
1996 first quarter reflected higher average securitized volumes and an improved
net interest margin, partially offset by a higher net credit loss rate. The
effect of credit card receivable securitizations is discussed in more detail on
page 28.
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.
Net asset gains and other items in the 1996 first quarter reflected gains
related to the sale of assets held by the Consumer and (Corporate) Banking
businesses and the partial disposition of Citicorp's holding in an Asian
affiliate. Amounts in the year ago period primarily reflected net gains on the
sale of real estate assets and a gain related to the completion of Ecuador's
refinancing package.
25
<PAGE>
- --------------------------------------------------------------------------------
PROVISION AND ALLOWANCE FOR CREDIT LOSSES
- --------------------------------------------------------------------------------
The increase in the provision for credit losses in the first quarter of 1996
compared with the first quarter of 1995 reflected increases in both consumer and
commercial net write-offs. The first quarter 1996 provision for credit losses
included a charge in excess of net write-offs of $50 million compared with a $75
million charge in the first quarter of 1995. Details of net write-offs
(recoveries) and the provision for credit losses are included in the following
table and are discussed below.
<TABLE>
<CAPTION>
- -------------------------------------------------------------
NET WRITE-OFFS (RECOVERIES) AND PROVISION FOR CREDIT LOSSES
- -------------------------------------------------------------
<S> <C> <C>
First Quarter
----------------------------
(In Millions of Dollars) 1996 1995
- -------------------------------------------------------------
NET WRITE-OFFS (RECOVERIES):
Consumer........................ $ 413 $ 309
Commercial...................... 31 (16)
----------------------------
TOTAL $ 444 $ 293
- ---------------------------------============================
PROVISION FOR CREDIT LOSSES:
Consumer........................ $ 463 $ 359
Commercial...................... 31 32
----------------------------
TOTAL $ 494 $ 391
- ---------------------------------============================
</TABLE>
The consumer provision for credit losses included charges in excess of net
write-offs of $50 million in the first quarters of both 1996 and 1995. Net
write-offs in the consumer on-balance sheet portfolios were $413 million in the
quarter, up from $309 million in the year-ago period. Net write-offs were
reduced in both periods presented by the effect of credit card securitizations.
Adjusted for the effect of credit card securitizations, net write-offs in the
1996 first quarter of $707 million were up from $531 million in the year-ago
period. The increase in adjusted net write-offs was primarily due to higher
losses in the U. S. bankcards portfolio. Net write-offs have also increased in
the emerging markets as a result of portfolio growth, particularly in the cards
business in Asia Pacific, and higher credit losses associated with Citibanking
activities in Latin America, although such losses in the quarter were reduced
from levels in the second half of 1995. Net write-offs from Citibanking and
Private Banking activities in the developed markets were reduced from year-ago
levels. Consumer adjusted net write-offs may increase from 1996 first quarter
levels as a result of credit factors applicable to the portfolio, economic
conditions, and portfolio growth. See pages 4-9 for an additional discussion of
the consumer portfolio.
Commercial net write-offs in the first quarter of 1996 remained low at $31
million compared with a net recovery of $16 million (including a net recovery of
$23 million related to the Cross-Border Refinancing Portfolio) in the first
quarter of 1995. The increase in net write-offs primarily reflects lower
recoveries. Commercial net write-offs may increase moderately from the low
first quarter 1996 level. The commercial provision for credit losses included a
provision in excess of net write-offs of $25 million (excluding the Cross-Border
Refinancing Portfolio) in the first quarter of 1995.
26
<PAGE>
All identified losses are immediately written off and the entire allowance is
available to absorb all probable credit losses inherent in the portfolio.
However, for analytical purposes, Citicorp views its allowance as attributable
to the following portions of its credit portfolios:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
ALLOWANCE FOR CREDIT LOSSES
- -----------------------------------------------------------------------------------------------
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
(Dollars In Millions) 1996 1995 1995 1995 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Consumer................................ $1,966 $1,944 $1,931 $1,923 $1,897
Commercial.............................. 3,424 3,424 3,410 3,385 3,373
-------------------------------------------------------
TOTAL................................... $5,390 $5,368 $5,341 $5,308 $5,270
- ----------------------------------------=======================================================
Reserve For Consumer Sold Portfolios.... $ 482 $ 486 $ 473 $ 467 $ 450
- -----------------------------------------------------------------------------------------------
Allowance As a Percent of Total Loans:
Consumer............................. 1.89% 1.84% 1.88% 1.91% 1.93%
Commercial........................... 5.58 5.71 5.89 5.90 5.79
Total................................ 3.26 3.24 3.32 3.36 3.37
- -----------------------------------------------------------------------------------------------
</TABLE>
Uncertainty related to the credit and economic environment, as well as higher
loan volumes in the worldwide consumer portfolios, may result in further
increases in the allowance for credit losses attributable to the Consumer
businesses.
- --------------------------------------------------------------------------------
OPERATING EXPENSE
- --------------------------------------------------------------------------------
Total operating expense increased $167 million, or 6%, in the first quarter of
1996 compared with the year ago period. The expense increase principally
related to business activities in the emerging markets while expenses related to
Consumer and (Corporate) Banking activities in the developed markets of North
America, Europe, and Japan were up only 1% from the year-ago period.
Employee expense was $1.5 billion in the 1996 first quarter, up $91 million from
the comparable 1995 period. The increase principally reflected salary increases,
higher staff levels related to business expansion in the emerging markets, and
an increase in costs associated with performance-based stock incentive plans.
These increases were partially offset by lower incentive compensation in Global
Relationship Banking. Staff levels of 86,700 at March 31, 1996 increased 3,400
from a year ago and 1,700 from 1995 year-end, largely in the emerging markets.
Net premises and equipment expense increased $47 million to $457 million in the
first quarter of 1996 compared with the first quarter of 1995, while other
expense was up $29 million to $934 million. These increases primarily reflected
costs related to facilities in support of business expansion initiatives in the
emerging markets, the continued roll-out of the Citibanking branding strategy
worldwide, and continued investments in operational and technological
infrastructure.
- --------------------------------------------------------------------------------
INCOME TAXES
- --------------------------------------------------------------------------------
Income taxes were $560 million and $530 million in the first quarters of 1996
and 1995, representing effective tax rates of 38% and 39%, respectively. The
1995 full-year effective tax rate was 38%.
27
<PAGE>
- --------------------------------------------------------------------------------
EFFECT OF CREDIT CARD RECEIVABLE SECURITIZATIONS
- --------------------------------------------------------------------------------
During the first quarter of 1996, $1.6 billion of U.S. credit card receivables
were sold. The total amount of securitized receivables, net of amortization, as
of March 31, 1996, was $26.2 billion, compared with $25.5 billion as of December
31, 1995 and $22.7 billion as of March 31, 1995.
The securitization of credit card receivables, which is fully described in the
1995 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,
Net Interest Margin, and Consumer Net Credit Loss Ratio.
<TABLE>
<CAPTION>
- ------------------------------------------------------
First Quarter
-----------------
(In Millions of Dollars) 1996 1995
- ------------------------------------------------------
<S> <C> <C>
Net Interest Revenue................. $(570) $(468)
Fee and Commission Revenue........... 43 30
Other Revenue........................ 233 216
Provision for Credit Losses.......... (294) (222)
-----------------
Net Income Impact of Securitization.. $ - $ -
- -------------------------------------=================
Average Assets (In Billions)......... $ (26) $ (22)
Return on Assets..................... .12% .10%
Net Interest Margin.................. (.41) (.38)
Consumer Net Credit Loss Ratio....... (.59) (.52)
- -------------------------------------=================
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
CONSOLIDATED FINANCIAL STATEMENTS
- -----------------------------------------------------------------------
CONSOLIDATED STATEMENT OF INCOME CITICORP AND SUBSIDIARIES
First Quarter
- -----------------------------------------------------------------------
(In Millions of Dollars Except Per 1996 1995
Share Amounts)
- -----------------------------------------------------------------------
<S> <C> <C>
INTEREST REVENUE
Interest and Fees on Loans............. $ 4,558 $ 4,341
Interest on Deposits with Banks........ 196 181
Interest on Federal Funds Sold and
Securities Purchased Under Resale
Agreements.......................... 256 251
Interest and Dividends on Securities
U.S. Treasury and Federal Agencies.... 56 63
State and Municipal................... 21 22
Other (Principally in offices outside
the U.S.)............................ 304 280
Interest on Trading Account Assets.... 385 459
-------------------------------
Total Interest Revenue................ 5,776 5,597
-------------------------------
INTEREST EXPENSE
Interest on Deposits................... 2,186 2,256
Interest on Trading Account Liabilities 79 83
Interest on Purchased Funds and Other
Borrowings............................ 491 584
Interest on Long-Term Debt and
Subordinated Capital Notes............ 335 349
-------------------------------
Total Interest Expense................ 3,091 3,272
-------------------------------
-------------------------------
NET INTEREST REVENUE................... 2,685 2,325
-------------------------------
PROVISION FOR CREDIT LOSSES............ 494 391
-------------------------------
NET INTEREST REVENUE AFTER PROVISION
FOR CREDIT LOSSES..................... 2,191 1,934
-------------------------------
FEES, COMMISSIONS, AND OTHER REVENUE
Fees and Commissions................... 1,312 1,262
Foreign Exchange....................... 205 305
Trading Account........................ 90 39
Securities Transactions................ 102 26
Other Revenue.......................... 434 486
-------------------------------
Total Fees, Commissions, and Other
Revenue.............................. 2,143 2,118
-------------------------------
OPERATING EXPENSE
Salaries............................... 1,132 1,080
Employee Benefits...................... 337 298
-------------------------------
Total Employee Expense................ 1,469 1,378
Net Premises and Equipment Expense..... 457 410
Other Expense.......................... 934 905
-------------------------------
Total Operating Expense............... 2,860 2,693
-------------------------------
INCOME BEFORE TAXES.................... 1,474 1,359
INCOME TAXES........................... 560 530
-------------------------------
NET INCOME............................. $ 914 $ 829
- ----------------------------------------===============================
INCOME APPLICABLE TO COMMON STOCK...... $ 871 $ 735
-------------------------------
EARNINGS PER SHARE:
ON COMMON AND COMMON EQUIVALENT SHARES $ 1.82 $ 1.71
ASSUMING FULL DILUTION................ $ 1.75 $ 1.53
- -----------------------------------------------------------------------
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET CITICORP AND SUBSIDIARIES
(In Millions of Dollars) Mar. 31, 1996 Dec. 31, 1995
- -----------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and Due from Banks................ $ 6,203 $ 5,723
Deposits at Interest with Banks........ 10,559 9,028
Securities
Available for Sale, At Fair Value..... 20,460 18,213
Venture Capital, At Fair Value........ 1,938 1,854
Trading Account Assets................. 30,978 32,093
Federal Funds Sold and Securities
Purchased Under Resale Agreements..... 10,715 8,113
Loans, Net of Unearned Income
Consumer.............................. 104,124 105,643
Commercial............................ 61,327 59,999
-------------------------------
Total Loans........................... 165,451 165,642
Allowance for Credit Losses............ (5,390) (5,368)
Customers' Acceptance Liability........ 1,847 1,542
Premises and Equipment, Net............ 4,371 4,339
Interest and Fees Receivable........... 2,926 2,914
Other Assets........................... 13,508 12,760
-------------------------------
TOTAL............................... $263,566 $256,853
- ---------------------------------------================================
LIABILITIES
Non-Interest-Bearing Deposits in U.S
Offices............................... $ 12,455 $ 13,388
Interest-Bearing Deposits in U.S
Offices............................... 38,494 36,700
Non-Interest-Bearing Deposits in
Offices Outside the U.S. ............. 8,084 8,164
Interest-Bearing Deposits in Offices
Outside the U.S. ..................... 112,971 108,879
-------------------------------
Total Deposits........................ 172,004 167,131
Trading Account Liabilities............ 18,089 18,274
Purchased Funds and Other Borrowings... 16,883 16,334
Acceptances Outstanding................ 1,877 1,559
Accrued Taxes and Other Expenses....... 5,594 5,719
Other Liabilities...................... 10,113 9,767
Long-Term Debt and Subordinated Capital
Notes................................. 19,244 18,488
STOCKHOLDERS' EQUITY
Preferred Stock (Without par value).... 2,078 3,071
Common Stock ($1.00 par value)......... 502 461
Issued Shares: 501,906,885 and
461,319,265, respectively
Surplus................................ 6,415 5,702
Retained Earnings...................... 12,184 12,190
Net Unrealized Gains - Securities
Available for Sale.................... 174 132
Foreign Currency Translation........... (448) (437)
Common Stock in Treasury, at Cost...... (1,143) (1,538)
Shares: 21,249,984 and 34,030,205,
respectively
-------------------------------
Total Stockholders' Equity.......... 19,762 19,581
-------------------------------
TOTAL............................... $263,566 $256,853
- ----------------------------------------===============================
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN CITICORP AND SUBSIDIARIES
STOCKHOLDERS' EQUITY
Three Months Ended March 31,
----------------------------
(In Millions of Dollars) 1996 1995
- -----------------------------------------------------------------------
<S> <C> <C>
Balance at Beginning of Period........... $19,581 $17,769
Preferred Stock Issuance, Net of
Related Costs.......................... - 145
Convertible Preferred Stock, Series 12
Redemption of Series 12................. (590) -
Issuance of Common Stock................ 590 -
Convertible Preferred Stock, Series 13
Redemption of Series 13................. (403) -
Issuance of Common Stock from Treasury
Shares................................. 1,066 -
Adjustment to Retained Earnings for
Treasury Shares Issued................. (663) -
Issuance of Common Stock Under Various
Staff Benefit Plans
(Net of Amortization) and the
Dividend Reinvestment Plan............ 164 100
Net Income............................... 914 829
Cash Dividends Declared
Common.................................. (210) (119)
Preferred............................... (47) (92)
Change in Net Unrealized Gains on
Securities Available for Sale........... 42 (336)
Foreign Currency Translation............. (11) 67
Repurchased Common Shares................ (721) -
Other Treasury Stock Transactions, at
Cost.................................... 50 (2)
----------------------------
Balance at End of Period................. $19,762 $18,361
- -------------------------------------------============================
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS CITICORP AND SUBSIDIARIES
Three Months Ended March 31,
----------------------------------
(In Millions of Dollars) 1996 1995
- --------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income............................. $ 914 $ 829
Adjustments to Reconcile Net Income to
Net Cash Provided by (Used in)
Operating Activities:
Provision for Credit Losses........... 494 391
Depreciation and Amortization of
Premises and Equipment............... 170 152
Amortization of Goodwill.............. 11 13
Provision for Deferred Taxes.......... 27 (94)
Venture Capital Activity.............. (84) 340
Net Gain on Sale of Securities........ (102) (26)
Changes in Accruals and Other, Net.... (729) (684)
Net Decrease (Increase) in Trading
Account Assets....................... 1,115 (12,896)
Net (Decrease) Increase in Trading
Account Liabilities.................. (185) 11,137
----------------------------------
Total Adjustments...................... 717 (1,667)
----------------------------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES.................. 1,631 (838)
----------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net Increase in Deposits at Interest
with Banks............................ (1,531) (925)
Securities - Available for Sale
Purchases........................... (9,166) (3,836)
Proceeds from Sales................. 3,347 1,552
Maturities.......................... 3,721 2,594
Securities - Held to Maturity
Purchases........................... - (1,783)
Maturities.......................... - 1,795
Net Increase in Federal Funds Sold and
Securities Purchased Under Resale
Agreements............................ (2,602) (1,655)
Net Increase in Loans.................. (30,982) (30,084)
Proceeds from Sales of Loans and Credit
Card Receivables...................... 30,745 26,249
Capital Expenditures on Premises and
Equipment............................. (298) (272)
Proceeds from Sales of Premises and
Equipment............................. 41 18
Proceeds from Sales of Subsidiaries and
Affiliates............................ 51 -
Proceeds from Sales of OREO............ 157 99
----------------------------------
NET CASH USED IN INVESTING ACTIVITIES.. (6,517) (6,248)
----------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase in Deposits............... 4,873 9,386
Net Increase (Decrease) in Federal
Funds Purchased and Securities Sold
Under Repurchase Agreements........... 1,018 (1,602)
Proceeds from Issuance of Commercial
Paper and Funds Borrowed with
Original Maturities of Less Than One
Year................................ 174,306 126,833
Repayment of Commercial Paper and Funds
Borrowed with Original Maturities of Less
Than One Year........................ (174,691) (127,071)
Proceeds from Issuance of Long-Term Debt 1,972 758
Repayment of Long-Term Debt............ (1,248) (1,201)
Proceeds from Issuance of Preferred
Stock................................. - 145
Proceeds from Issuance of Common Stock. 102 71
Treasury Stock Transactions............ (671) (2)
Dividends Paid......................... (257) (211)
----------------------------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES............................ 5,404 7,106
----------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND DUE FROM BANKS.................... (38) 85
----------------------------------
Net Increase in Cash and Due from Banks 480 105
Cash and Due from Banks at Beginning of
Period................................ 5,723 6,470
----------------------------------
CASH AND DUE FROM BANKS AT END OF PERIOD $ 6,203 $ 6,575
- ----------------------------------------==================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash Paid During the Period for:
Interest.............................. $ 3,112 $ 2,940
Income Taxes.......................... 217 199
NON-CASH INVESTING ACTIVITIES
Transfer from Loans to OREO and Assets
Pending Disposition.................. $ 116 $ 196
- --------------------------------------------------------------------------
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET CITIBANK, N.A. AND SUBSIDIARIES
(In Millions of Dollars) Mar. 31, 1996 Dec. 31, 1995
- --------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and Due from Banks.................. $ 5,071 $ 4,842
Deposits at Interest with Banks.......... 11,310 9,256
Securities
Available for Sale, At Fair Value....... 16,492 14,256
Venture Capital, At Fair Value.......... 1,483 1,457
Trading Account Assets................... 26,109 28,407
Federal Funds Sold and Securities
Purchased Under Resale Agreements....... 6,156 6,676
Loans, Net of Unearned Income............ 137,108 136,693
Allowance for Credit Losses.............. (4,381) (4,403)
Customers' Acceptance Liability.......... 1,848 1,542
Premises and Equipment, Net.............. 3,399 3,386
Interest and Fees Receivable............. 2,004 1,940
Other Assets............................. 7,605 7,422
----------------------------------
TOTAL................................... $ 214,204 $ 211,474
- ----------------------------------------==================================
LIABILITIES
Non-Interest-Bearing Deposits in U.S.
Offices................................. $ 10,172 $ 10,959
Interest-Bearing Deposits in U.S.
Offices................................. 23,462 22,676
Non-Interest-Bearing Deposits in
Offices Outside the U.S................. 7,864 7,955
Interest-Bearing Deposits in Offices
Outside the U.S......................... 112,102 108,018
----------------------------------
Total Deposits.......................... 153,600 149,608
Trading Account Liabilities.............. 16,175 17,544
Purchased Funds and Other Borrowings..... 9,297 10,106
Acceptances Outstanding.................. 1,876 1,559
Accrued Taxes and Other Expenses......... 3,133 3,263
Other Liabilities........................ 5,309 5,300
Long-Term Debt and Subordinated Notes.... 9,433 9,128
STOCKHOLDER'S EQUITY
Common Stock ($20.00 par value).......... 751 751
Outstanding Shares: 37,534,553 in each
period
Surplus.................................. 6,830 6,744
Retained Earnings........................ 8,257 7,972
Net Unrealized Gains - Securities
Available for Sale...................... 105 55
Foreign Currency Translation............. (562) (556)
----------------------------------
Total Stockholder's Equity.............. 15,381 14,966
----------------------------------
TOTAL................................... $ 214,204 $ 211,474
- ----------------------------------------==================================
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
OTHER FINANCIAL INFORMATION
- --------------------------------------------------------------------------------------------------------------
SECURITIES (A)
- --------------------------------------------------------------------------------------------------------------
March 31, 1996 December 31, 1995 (B)
Gross Gross
Amortized Unrealized Unrealized Fair Amortized Fair
(In Millions of Dollars) Cost Gains Losses Value Cost Value
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SECURITIES - AVAILABLE FOR SALE (C)
U.S. Treasury and Federal Agency (D).. $ 4,187 $ 46 $ 11 $ 4,222 $ 4,285 $ 4,345
State and Municipal................... 1,609 87 41 1,655 1,611 1,631
Foreign Government (E)................ 10,532 505 386 10,651 8,507 8,443
U.S. Corporate (D).................... 1,206 12 22 1,196 1,169 1,221
Other Debt Securities................. 1,261 13 6 1,268 1,112 1,119
-------------------------------------------------------------------------
Total Debt Securities................ 18,795 663 466 18,992 16,684 16,759
Equity Securities (F)................. 1,397 95 24 1,468 1,345 1,454
-------------------------------------------------------------------------
20,192 758 490 20,460 18,029 18,213
- ---------------------------------------------------------------------------------------------------------------
VENTURE CAPITAL (G)................... 1,938 - - 1,938 1,854 1,854
-------------------------------------------------------------------------
$22,130 $758 $490 $22,398 $19,883 $20,067
- --------------------------------------=========================================================================
</TABLE>
(A) Refer to the 1995 Annual Report and Form 10-K for a description of
accounting policies.
(B) At December 31, 1995, gross unrealized gains and gross unrealized losses on
securities available for sale totaled $829 million and $645 million,
respectively.
(C) Securities available for sale held by equity-method affiliates are not
included in this table. Citicorp's share of gross unrealized gains and gross
unrealized losses related to those securities at March 31, 1996 was $3
million and $1 million, respectively, and is included in the net unrealized
gains-securities available for sale component of stockholders' equity, net
of applicable taxes. At December 31, 1995, Citicorp's share of gross
unrealized gains and gross unrealized losses related to securities available
for sale held by equity-method affiliates was $22 million and $2 million,
respectively.
(D) Included in U.S. Federal Agency and U.S. Corporate securities available for
sale at March 31, 1996 are mortgage-backed securities with an amortized cost
of $1,299 million, gross unrealized gains of $6 million, gross unrealized
losses of $7 million, and fair value of $1,298 million.
(E) Included in Foreign Government securities available for sale at March 31,
1996 are Brady bonds issued by the Government of Brazil with an amortized
cost and fair value of $1.5 billion and $2.0 billion, respectively. Also
included are Brady bonds issued by the Government of Venezuela with an
amortized cost and fair value of $563 million and $338 million,
respectively.
(F) Equity securities available for sale include certain non-marketable equity
securities which are carried at cost. At March 31, 1996, the carrying
amount of those securities was $865 million (reported in both the amortized
cost and fair value columns) and the fair value was $896 million.
(G) For the three months ended March 31, 1996, net gains on investments held by
venture capital subsidiaries totaled $38 million, of which $44 million and
$22 million represented gross unrealized gains and gross unrealized losses,
respectively. For the three months ended March 31, 1995, net gains on
investments held by venture capital subsidiaries totaled $85 million, of
which $106 million and $53 million represented gross unrealized gains and
gross unrealized losses, respectively.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
TRADING ACCOUNT ASSETS AND LIABILITIES
- ----------------------------------------------------------------------
(In Millions of Dollars) Mar. 31, 1996 Dec. 31, 1995
- ----------------------------------------------------------------------
<S> <C> <C>
TRADING ACCOUNT ASSETS
Trading Account Securities.............. $17,370 $15,997
Revaluation Gains on Derivative and
Foreign Exchange Contracts (A)......... 13,608 16,096
------------------------------
$30,978 $32,093
- ----------------------------------------==============================
TRADING ACCOUNT LIABILITIES
Securities Sold, Not Yet Purchased...... $ 4,761 $ 3,696
Revaluation Losses on Derivative and
Foreign Exchange Contracts (A)......... 13,328 14,578
------------------------------
$18,089 $18,274
- ----------------------------------------==============================
</TABLE>
(A) Net of master netting agreements.
- --------------------------------------------------------------------------------
34
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
CASH-BASIS, RENEGOTIATED, AND PAST DUE LOANS (A)
- -------------------------------------------------------------------------------------
(In Millions of Dollars) Mar. 31, 1996 Dec. 31, 1995 Mar. 31, 1995
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL CASH-BASIS LOANS (B)
Collateral-Dependent (at Lower of Cost
or Collateral Value) (C)............... $ 763 $ 779 $1,329
Other................................... 766 755 712
---------------------------------------------
TOTAL COMMERCIAL CASH-BASIS LOANS....... $1,529 $1,534 $2,041
- ----------------------------------------=============================================
COMMERCIAL CASH-BASIS LOANS (B)
In U.S. Offices......................... $ 943 $ 925 $1,460
In Offices Outside the U.S.............. 586 609 581
---------------------------------------------
TOTAL COMMERCIAL CASH-BASIS LOANS....... $1,529 $1,534 $2,041
- ----------------------------------------=============================================
COMMERCIAL RENEGOTIATED LOANS
In U.S. Offices......................... $ 267 $ 309 $ 278
In Offices Outside the U.S.............. 71 112 60
---------------------------------------------
TOTAL COMMERCIAL RENEGOTIATED LOANS..... $ 338 $ 421 $ 338
- ----------------------------------------=============================================
CONSUMER LOANS ON WHICH ACCRUAL OF INTEREST
HAS BEEN SUSPENDED
In U.S. Offices......................... $1,464 $1,413 $1,501
In Offices Outside the U.S.............. 1,255 1,247 1,192
---------------------------------------------
TOTAL CONSUMER LOANS ON WHICH ACCRUAL
OF INTEREST HAS BEEN SUSPENDED........ $2,719 $2,660 $2,693
- ----------------------------------------=============================================
ACCRUING LOANS 90 OR MORE DAYS
DELINQUENT (D)
In U.S. Offices......................... $ 474 $ 499 $ 425
In Offices Outside the U.S.............. 479 498 512
---------------------------------------------
TOTAL ACCRUING LOANS 90 OR MORE DAYS
DELINQUENT............................. $ 953 $ 997 $ 937
- -------------------------------------------------------------------------------------
</TABLE>
(A) Loan commitments and standby letters of credit to North America Commercial
Real Estate borrowers or projects experiencing financial difficulties are
not included in this table. Refer to page 12 for discussion.
(B) Refer to the discussion of cash-basis loans on page 10.
(C) 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.
(D) Includes consumer loans of $915 million, $951 million and $858 million at
March 31, 1996, December 31, 1995, and March 31, 1995, respectively, of
which $218 million, $208 million and $126 million, respectively, are
government-guaranteed student loans. Refer to discussion of the consumer
loan portfolio on pages 8-9.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
OTHER REAL ESTATE OWNED AND ASSETS PENDING DISPOSITION (A)
- -----------------------------------------------------------------------------
(In Millions of Dollars) Mar. 31, 1996 Dec. 31, 1995 Mar. 31, 1995
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
CONSUMER OREO................... $ 530 $ 529 $ 601
COMMERCIAL OREO................. 518 625 1,014
-------------------------------------------
TOTAL OREO...................... $1,048 $1,154 $1,615
- ----------------------------------===========================================
ASSETS PENDING DISPOSITION (B).. $ 192 $ 205 $ 209
- ----------------------------------===========================================
</TABLE>
(A) Carried at lower of cost or collateral value.
(B) Represents consumer residential mortgage loans that have a high probability
of foreclosure.
- --------------------------------------------------------------------------------
35
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
DETAILS OF CREDIT LOSS EXPERIENCE
- ----------------------------------------------------------------------------------------------
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(In Millions of Dollars) 1996 1995 1995 1995 1995
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR CREDIT LOSSES
AT BEGINNING OF PERIOD................ $5,368 $5,341 $5,308 $5,270 $5,155
------------------------------------------------------
ADDITIONS
Provision for Credit Losses............. 494 531 576 493 391
------------------------------------------------------
DEDUCTIONS
GROSS CREDIT LOSSES
CONSUMER
In U.S. Offices......................... 301 319 301 279 238
In Offices Outside the U.S.............. 216 246 217 199 163
COMMERCIAL
In U.S. Offices......................... 20 28 58 41 39
In Offices Outside the U.S.............. 32 72 70 38 30
------------------------------------------------------
569 665 646 557 470
------------------------------------------------------
CREDIT RECOVERIES
CONSUMER
In U.S. Offices......................... 58 71 55 56 49
In Offices Outside the U.S.............. 46 53 48 43 43
COMMERCIAL
In U.S. Offices......................... 13 52 18 8 30
In Offices Outside the U.S.............. 8 22 24 19 55
------------------------------------------------------
125 198 145 126 177
------------------------------------------------------
NET CREDIT LOSSES
In U.S. Offices......................... 250 224 286 256 198
In Offices Outside the U.S.............. 194 243 215 175 95
------------------------------------------------------
444 467 501 431 293
------------------------------------------------------
Other, Net (A).......................... (28) (37) (42) (24) 17
------------------------------------------------------
ALLOWANCE FOR CREDIT LOSSES
AT END OF PERIOD...................... $5,390 $5,368 $5,341 $5,308 $5,270
- ----------------------------------------======================================================
Net Consumer Credit Losses.............. $ 413 $ 441 $ 415 $ 379 $ 309
As a Percentage of Average
Consumer Loans........................ 1.60% 1.70% 1.63% 1.54% 1.30%
Net Commercial Credit Losses $ 31 $ 26 $ 86 $ 52 $ (16)
(Recoveries)...........................
As a Percentage of Average
Commercial Loans...................... 0.21% 0.18% 0.61% 0.37% NM
- ----------------------------------------------------------------------------------------------
</TABLE>
(A) Includes net transfers (to) from the reserve for Consumer sold portfolios
and foreign exchange effects.
NM Not meaningful, as recoveries result in a negative percentage.
- --------------------------------------------------------------------------------
36
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
CALCULATION OF EARNINGS PER SHARE
- ------------------------------------------------------------------------------------------------------------
First Quarter 1996 First Quarter 1995
------------------------- --------------------------
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>
EARNINGS
Income Applicable to Common Stock....... $ 871 $ 871 $ 735 $ 735
Dividends on Conversion Preferred - - 24 24
Stock, Series 15 (A)...................
Dividends on Convertible Preferred
Stock, Series 12 and Series 13 (B)..... - 5 - 34
-----------------------------------------------------------
INCOME APPLICABLE TO COMMON STOCK,
ADJUSTED............................... $ 871 $ 876 $ 759 $ 793
- -------------------------------------------------===========================================================
SHARES
Weighted-Average Common Shares
Outstanding (A) (B) (C)................ 463.4 463.4 396.2 396.2
Conversion Preferred Stock, Series 15 - - 38.5 38.5
(A)....................................
Convertible Preferred Stock, Series 12 - 21.0 - 73.0
and Series 13 (B)......................
Other Common Equivalent Shares (D)...... 15.2 16.4 9.8 10.2
-----------------------------------------------------------
TOTAL................................... 478.6 500.8 444.5 517.9
- -------------------------------------------------===========================================================
EARNINGS PER SHARE
NET INCOME $ 1.82 $ 1.75 $ 1.71 $ 1.53
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(A) Conversion Preferred Stock, Series 15 was fully redeemed during 1995.
(B) During the first quarter of 1996, the remaining Convertible Preferred Stock,
Series 12 and 13 were converted to 59.0 million shares of common stock. The
shares are included in the fully diluted computation as common equivalent
shares up to conversion dates, and from conversion dates forward these
shares are included in weighted-average common shares outstanding.
(C) Includes 1.0 million and 1.1 million book value shares in the first quarter
of 1996 and 1995, respectively.
(D) Includes the dilutive effect of stock options and stock purchase agreements
computed using the treasury stock method and shares issuable under deferred
stock awards.
37
<PAGE>
- --------------------------------------------------------------------------------
CROSS-BORDER AND NON-LOCAL CURRENCY OUTSTANDINGS
- --------------------------------------------------------------------------------
Cross-border and non-local currency outstandings are presented on a regulatory
basis, as discussed in the 1995 Annual Report and Form 10-K. From time to time,
the FRB and the Federal Financial Institutions Examination Council propose
amendments to, and interpretations of, country exposure reporting guidelines.
Such proposals or interpretations could, if implemented in the future, affect
reported cross-border and non-local currency outstandings.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
COUNTRIES WITH OUTSTANDINGS EXCEEDING 1% OF TOTAL ASSETS (A) (B)
- ---------------------------------------------------------------------------------------------------------------------------------
Cross-Border Investments
and Non-Local Currency Claims in and
on Third Parties Funding of Total Outstandings
-------------------------------------------------- Local ---------------------
Public Private Citicorp Mar. 31, Dec. 31,
(In Billions of Dollars) Banks Sector Sector Total Franchises 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
United Kingdom.................. $0.3 $0.1 $4.3 $4.7 $3.0 $ 7.7 $ 7.6
Brazil (C)...................... 0.3 2.0 2.1 4.4 1.4 5.8 5.1
Germany......................... 0.1 0.8 0.3 1.2 2.8 4.0 2.7
Japan........................... 0.2 0.2 1.9 2.3 1.3 3.6 3.6
Argentina (C)................... 0.1 0.1 2.5 2.7 0.5 3.2 2.9
Mexico.......................... 0.1 2.1 0.6 2.8 0.3 3.1 2.9
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(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 $5.8 billion in the United Kingdom, $1.0 billion
in Germany, $1.6 billion in Japan, $0.1 billion in Argentina, and less than
$0.1 billion each in Brazil and Mexico at March 31, 1996.
(B) At March 31, 1996, cross-border and non-local currency outstandings in
Singapore ($2.6 billion) and South Korea ($2.1 billion) were between .75%
and 1.0% of total assets. At December 31, 1995, such countries were
Singapore ($2.5 billion), Australia ($2.4 billion), and South Korea ($2.1
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 March 31, 1996 and
December 31, 1995, respectively, were $1.6 billion and $1.4 billion in
Brazil, and $1.9 billion and $1.6 billion in Argentina.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
CROSS-BORDER AND NON-LOCAL CURRENCY CLAIMS ON THIRD PARTIES
- ----------------------------------------------------------------------------------------------
(In Billions of Dollars) Banks Public Sector Private Sector Mar. 31, 1996 Dec. 31, 1995
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Developed Markets (A)...... $2.0 $2.6 $12.0 $16.6 $15.2
Emerging Markets (A):
Latin America (B)....... 0.7 5.7 6.4 12.8 11.7
Asia.................... 1.0 0.6 6.1 7.7 7.9
Other................... 1.1 0.9 0.8 2.8 2.5
-------------------------------------------------------------------
TOTAL (C).................. $4.8 $9.8 $25.3 $39.9 $37.3
- ---------------------------===================================================================
</TABLE>
(A) Developed markets comprise activities in North America, Europe, and Japan.
Emerging markets comprise activities in all other geographic areas.
(B) Cross-border and non-local currency claims on third parties in Latin America
of $12.8 billion at March 31, 1996, compared with $11.7 billion at December
31, 1995. The increase primarily reflects the effect of short-term trade
related transactions as well as increases in the value of Brady bonds held
in the available-for-sale portfolio (see additional discussion on page 34).
(C) Includes investments in affiliates of $1.3 billion at March 31, 1996 and
December 31, 1995.
38
<PAGE>
<TABLE>
<CAPTION>
AVERAGE BALANCES AND INTEREST RATES (TAXABLE EQUIVALENT BASIS) (A) (B)
- -------------------------------------------------------------------------------------------------------------------------
First Quarter 1996
(In Millions of Dollars) Average Volume Interest % Average Rate
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST REVENUE -CONSUMER LOANS, Net of In U.S. Offices $ 53,378 $1,469 11.07
Unearned Income (C) In Offices Outside the U.S. (D) 50,509 1,603 12.76
-------------------------------------------------------------------------------
TOTAL CONSUMER LOANS 103,887 3,072 11.89
-------------------------------------------
COMMERCIAL LOANS, Net of In U.S. Offices
Unearned Income (C) Commercial and Industrial 9,419 212 9.05
Mortgage and Real Estate 4,589 82 7.19
Loans to Financial Institutions 450 5 4.47
Lease Financing 3,219 52 6.50
In Offices Outside the U.S. (D) 41,402 1,136 11.04
-------------------------------------------
TOTAL COMMERCIAL LOANS 59,079 1,487 10.12
-------------------------------------------
TOTAL LOANS 162,966 4,559 11.25
-------------------------------------------
FUNDS SOLD AND RESALE AGREEMENTS In U.S. Offices 9,940 127 5.14
In Offices Outside the U.S. (D) 3,390 129 15.30
-------------------------------------------
TOTAL 13,330 256 7.72
-------------------------------------------
SECURITIES- AVAILABLE FOR SALE In U.S. Offices
U.S. Treasury and Federal Agencies 3,305 47 5.72
State and Municipal 1,595 26 6.56
Other 2,038 28 5.53
In Offices Outside the U.S. (D) 11,904 279 9.43
-------------------------------------------
TOTAL 18,842 380 8.11
-------------------------------------------
SECURITIES- HELD TO MATURITY In U.S. Offices
U. S. Treasury and Federal Agencies - - -
In Offices Outside the U.S. (D) - - -
-------------------------------------------
TOTAL - - -
-------------------------------------------
VENTURE CAPITAL In U.S. Offices 1,568 3 0.77
In Offices Outside the U.S. 324 4 4.97
-------------------------------------------
TOTAL 1,892 7 1.49
-------------------------------------------
TOTAL SECURITIES 20,734 387 7.51
-------------------------------------------
TRADING ACCOUNT ASSETS In U.S. Offices 6,868 95 5.56
In Offices Outside the U.S. (D) 13,136 291 8.91
-------------------------------------------
TOTAL 20,004 386 7.76
DEPOSITS AT INTEREST WITH BANKS Principally Outside the U.S. (D) 11,619 196 6.78
-------------------------------------------
TOTAL INTEREST-EARNING ASSETS 228,653 $5,784 10.17
Non-Interest-Earning Assets (E) 39,678
-------------------------------------------
TOTAL ASSETS $268,331
===========================================
INTEREST EXPENSE-DEPOSITS In U.S. Offices
Savings Deposits $ 25,348 $ 191 3.03
Negotiable Certificates of Deposit 1,916 24 5.04
Other Time Deposits 10,745 130 4.87
-------------------------------------------
Total U.S. Interest-Bearing Deposits 38,009 345 3.65
In Offices Outside the U.S. (D) 113,636 1,841 6.52
-------------------------------------------
TOTAL 151,645 2,186 5.80
-------------------------------------------
TRADING ACCOUNT LIABILITIES In U.S. Offices 2,894 41 5.70
In Offices Outside the U.S. (D) 1,886 38 8.10
-------------------------------------------
TOTAL 4,780 79 6.65
-------------------------------------------
FUNDS BORROWED In U.S. Offices
Fed Funds Purchased and Sec. Sold 12,242 146 4.80
Commercial Paper 1,701 23 5.44
Other Purchased Funds 2,367 91 15.46
Long-Term Debt and Sub. Notes 14,535 234 6.48
-------------------------------------------
Total in U.S. Offices 30,845 494 6.44
In Offices Outside the U.S. (D) 9,919 332 13.46
-------------------------------------------
TOTAL 40,764 826 8.15
-------------------------------------------
TOTAL INTEREST-BEARING LIABILITIES 197,189 3,091 6.30
Demand Deposits in U.S. Offices 12,464
Other Non-Interest-Bearing Liab (E) 38,949
Total Stockholders' Equity 19,729
-------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $268,331
===========================================
NET INTEREST REVENUE AS A PERCENTAGE OF AVERAGE INTEREST-EARNING ASSETS $2,693 4.74
- ------------------------------------------------------------------------------===========================================
</TABLE>
(A) The taxable equivalent adjustment is based on the U.S. federal statutory tax
rate of 35%.
(B) Interest rates and amounts include the effects of risk management activities
associated with the respective asset and liability categories.
(C) Loans in the table above include cash-basis loans.
39
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
CITICORP AND SUBSIDIARIES
- ----------------------------------------------------------------------------------
Fourth Quarter 1995 First Quarter 1995
- ----------------------------------------------------------------------------------
Average Volume Interest % Average Rate Average Volume Interest % Average Rate
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 53,042 $1,460 10.92 $ 49,026 $1,336 11.05
49,835 1,557 12.40 47,200 1,485 12.76
- ----------------------------------------------------------------------------------
102,877 3,017 11.63 96,226 2,821 11.89
- ----------------------------------------------------------------------------------
9,582 217 8.98 10,633 237 9.04
4,826 89 7.32 5,922 111 7.60
513 7 5.41 340 3 3.58
3,176 57 7.12 3,241 59 7.38
40,160 1,205 11.90 36,155 1,111 12.46
- ----------------------------------------------------------------------------------
58,257 1,575 10.73 56,291 1,521 10.96
- ----------------------------------------------------------------------------------
161,134 4,592 11.31 152,517 4,342 11.55
- ----------------------------------------------------------------------------------
10,123 145 5.68 13,479 186 5.60
2,960 141 18.90 1,966 65 13.41
- ----------------------------------------------------------------------------------
13,083 286 8.67 15,445 251 6.59
- ----------------------------------------------------------------------------------
2,610 33 5.02 2,052 29 5.73
1,589 27 6.74 1,616 26 6.53
1,867 25 5.31 1,404 21 6.07
9,332 232 9.86 8,178 198 9.82
- ----------------------------------------------------------------------------------
15,398 317 8.17 13,250 274 8.39
- ----------------------------------------------------------------------------------
1,167 18 6.12 1,584 26 6.66
2,214 47 8.42 3,325 63 7.68
- ----------------------------------------------------------------------------------
3,381 65 7.63 4,909 89 7.35
- ----------------------------------------------------------------------------------
1,568 16 4.05 1,469 4 1.10
288 3 4.13 263 4 6.17
- ----------------------------------------------------------------------------------
1,856 19 4.06 1,732 8 1.87
- ----------------------------------------------------------------------------------
20,635 401 7.71 19,891 371 7.56
- ----------------------------------------------------------------------------------
7,946 122 6.09 14,133 243 6.97
11,564 276 9.47 10,864 217 8.10
- ----------------------------------------------------------------------------------
19,510 398 8.09 24,997 460 7.46
11,436 190 6.59 10,865 181 6.76
- ----------------------------------------------------------------------------------
225,798 $5,867 10.31 223,715 $5,605 10.16
40,701 45,338
- ----------------------------------------------------------------------------------
$266,499 $269,053
==================================================================================
$ 24,923 $ 198 3.15 $ 24,438 $ 179 2.97
1,430 21 5.83 1,369 24 7.11
10,626 170 6.35 9,864 165 6.78
- ----------------------------------------------------------------------------------
36,979 389 4.17 35,671 368 4.18
112,136 1,900 6.72 109,243 1,888 7.01
- ----------------------------------------------------------------------------------
149,115 2,289 6.09 144,914 2,256 6.31
- ----------------------------------------------------------------------------------
3,170 47 5.88 3,229 52 6.53
1,658 37 8.85 1,242 31 10.12
- ----------------------------------------------------------------------------------
4,828 84 6.90 4,471 83 7.53
- ----------------------------------------------------------------------------------
13,036 175 5.33 19,216 257 5.42
1,731 25 5.73 1,961 22 4.55
2,648 95 14.23 3,267 81 10.06
14,944 261 6.93 14,465 265 7.43
- ----------------------------------------------------------------------------------
32,359 556 6.82 38,909 625 6.51
9,406 369 15.56 9,710 308 12.86
- ----------------------------------------------------------------------------------
41,765 925 8.79 48,619 933 7.78
- ----------------------------------------------------------------------------------
195,708 3,298 6.69 198,004 3,272 6.70
11,966 11,607
39,490 41,527
19,335 17,915
- ----------------------------------------------------------------------------------
$266,499 $269,053
==================================================================================
$2,569 4.51 $2,333 4.23
==================================================================================
</TABLE>
(D) Average rates in offices outside the U.S. may reflect prevailing local
interest rates, including the effects of inflation and monetary correction
in certain Latin American countries.
(E) Gross unrealized gains and losses on off-balance sheet trading positions are
reported in non-interest earning assets and non-interest bearing
liabilities, respectively.
40
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1996 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.................. 480,656,901
($1.00 Par Value) (Shares Outstanding on March 31, 1996)
41
<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 Ended
MARCH 31, 1996 AND 1995................................... 29
Balance Sheet as of
MARCH 31, 1996 AND DECEMBER 31, 1995...................... 30
Statement of Cash Flows for the Three Months Ended
MARCH 31, 1996 AND 1995................................... 32
Calculation of Earnings Per Share......................... 37
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 2-28
PART II OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K........................ 43
Signatures....................................................... 44
In the opinion of the management of Citicorp, all adjustments, consisting of
normal recurring adjustments, necessary for a fair presentation of the results
of operations for the three months ended MARCH 31, 1996 AND 1995 have been
included.
42
<PAGE>
Item 6 - Exhibits and Reports on Form 8-K
--------------------------------
a) Exhibit 10. Citicorp Deferred Compensation Plan (incorporated by
reference to Exhibit 10 from Citicorp's Registration Statement on
Form S-8, File No. 333-0983).
b) Exhibit 27. Financial Data Schedule.
c) Reports on Form 8-K:
Citicorp filed a Form 8-K Current Report dated January 16, 1996
(Item 5) which report included a summary of the consolidated
operations of Citicorp for the year ended December 31, 1995 and
(Item 7) the calculation of the ratio of income to fixed charges
(Exhibit 12(a) thereto) and the calculation of the ratio of income
to fixed charges including preferred stock dividends (Exhibit
12(b) thereto).
Citicorp filed a Form 8-K Current Report dated April 16, 1996
(Item 5) which report included a summary of the consolidated
operations of Citicorp for the three month period ended March 31,
1996 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).
43
<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
Principal Financial Officer
----------------------------
/S/ George E. Seegers
George E. Seegers
Assistant Secretary
Date: May 14, 1996
44
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the current
report on Form 10-Q for the quarter ended March 31, 1996 and is qualified in its
entirety by reference to such financial statements and accompanying disclosure.
</LEGEND>
<CIK> 0000020405
<NAME> CITICORP 1996
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 6,203
<INT-BEARING-DEPOSITS> 10,559
<FED-FUNDS-SOLD> 10,715<F1>
<TRADING-ASSETS> 30,978
<INVESTMENTS-HELD-FOR-SALE> 20,460
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 165,451
<ALLOWANCE> 5,390
<TOTAL-ASSETS> 263,566
<DEPOSITS> 172,004
<SHORT-TERM> 16,883<F2>
<LIABILITIES-OTHER> 10,113
<LONG-TERM> 19,244<F3>
0
2,078
<COMMON> 502
<OTHER-SE> 17,182
<TOTAL-LIABILITIES-AND-EQUITY> 263,566
<INTEREST-LOAN> 4,558
<INTEREST-INVEST> 381
<INTEREST-OTHER> 837
<INTEREST-TOTAL> 5,776
<INTEREST-DEPOSIT> 2,186
<INTEREST-EXPENSE> 3,091
<INTEREST-INCOME-NET> 2,685
<LOAN-LOSSES> 494
<SECURITIES-GAINS> 102
<EXPENSE-OTHER> 934
<INCOME-PRETAX> 1,474
<INCOME-PRE-EXTRAORDINARY> 914
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 914
<EPS-PRIMARY> 1.82
<EPS-DILUTED> 1.75
<YIELD-ACTUAL> 4.74<F4>
<LOANS-NON> 4,248<F5>
<LOANS-PAST> 953<F6>
<LOANS-TROUBLED> 338
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 5,368
<CHARGE-OFFS> 569<F7>
<RECOVERIES> 125
<ALLOWANCE-CLOSE> 5,390<F8>
<ALLOWANCE-DOMESTIC> 0<F9>
<ALLOWANCE-FOREIGN> 0<F10>
<ALLOWANCE-UNALLOCATED> 0<F11>
<FN>
<F1>Includes Securities Purchased Under Resale Agreements
<F2>Purchased Funds and Other Borrowings
<F3>Includes Subordinated Capital Notes
<F4>Taxable Equivalent Basis
<F5>Includes $1,529 of cash-basis commercial loans and $2,719 of consumer loans on
which accrual of interest has been suspended.
<F6>Accruing loans 90 or more days delinquent.
<F7>Includes $52MM of commercial credit losses and $517MM of consumer credit
losses.
<F8>Allowance activity for 1996 includes $(28)MM in other changes principally net
tansfers (to) from the reserve for Consumer Sold Portfolio and foreign exchange
effects.
<F9>No portion of Citicorp's credit loss allowance is specifically allocated to any
individual loan or group of loans, however, $1,809MM of the allowance at
December 31, 1995 was attributed to operations outside the U.S. (See note 10 to
the 1995 Annual Report).
<F10>See Footnote F9 above.
<F11>See Footnote F9 above.
</FN>
</TABLE>
