SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 21, 1998
----------------
Citigroup Inc.
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(Exact name of registrant as specified in charter)
Delaware 1-9924 52-1568099
-------- ------ ----------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
399 Park Avenue, New York, New York 10043
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(Address of principal executive offices) (Zip Code)
(212) 559-1000
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(Registrant's telephone number, including area code)
<PAGE>
CITIGROUP INC.
CURRENT REPORT ON FORM 8-K
Item 5. OTHER EVENTS.
On October 21, 1998, the Company issued a press release. The text of the
press release follows.
CITIGROUP [LOGO]
FOR IMMEDIATE RELEASE
October 21, 1998
Citigroup Inc. [NYSE symbol: CCI]
Citigroup reports pro forma quarterly net income of $729 million,
With Consumer and Insurance businesses strong,
Corporate business sharply down -- Diluted per share was $0.30
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Summary of Results % Change Travelers % Change Citigroup % Change
(In Millions of Dollars) Citicorp From '97 Group From '97 Pro forma (A) From '97
- -----------------------------------------------------------------------------------------------------------------------
1998 Third Quarter
<S> <C> <C> <C> <C> <C> <C>
Revenue (B) ........................ $ 6,071 2 $ 4,928 (28) $10,999 (14)
Net Income ......................... 530 4 199 (81) 729 (53)
Core Income (C) .................... 530 (50) 199 (81) 729 (65)
Return on Common Equity (C) (%) ... 10.0 -- 3.2 -- 6.5 --
- ----------------------------------------===============================================================================
1998 Nine Months
Revenue (B) ........................ $18,928 9 $18,881 (4) $37,809 2
Net Income ......................... 2,692 6 2,433 (11) 5,125 (3)
Core Income (C) .................... 2,692 (13) 2,242 (18) 4,934 (15)
Return on Common Equity (C) (%) .... 17.6 -- 14.2 -- 15.9 --
- ----------------------------------------===============================================================================
1998 Third Quarter
Net Income Per Share (Diluted) ............................................................ 0.30 (52)
Core Income Per Share (Basic) ............................................................. 0.30 (67)
Core Income Per Share (Diluted) ........................................................... 0.30 (65)
- ----------------------------------------------------------------------------------------------------===================
1998 Nine Months
Net Income Per Share (Diluted) ............................................................ 2.14 --
Core Income Per Share (Basic) ............................................................. 2.12 (15)
Core Income Per Share (Diluted) ........................................................... 2.06 (13)
- ----------------------------------------------------------------------------------------------------===================
</TABLE>
(A) Citigroup pro forma results combine those of Citicorp and Travelers Group.
See "Calculation of Earnings Per Share" on page 26.
(B) Revenue is shown net of interest expense. Citicorp's revenue is adjusted
principally for the effect of credit card securitization.
(C) Core income represents net income adjusted to exclude the effects of
restructuring charges. Return on Common Equity is based upon Core Income.
- --------------------------------------------------------------------------------
NEW YORK -- Citigroup (NYSE:CCI) today reported pro forma core income of $729
million ($0.30 per diluted share) in the 1998 third quarter. This compares with
core income of $2.1 billion ($0.86 per diluted share) in the same 1997 quarter.
Pro forma net income in the 1997 third quarter was $1.5 billion ($0.63 per
diluted share) including the effects of a $556 million after-tax restructuring
charge. Revenue was $11.0 billion, down 14% from $12.8 billion in 1997.
In a statement on the earnings, John S. Reed and Sanford I. Weill, who serve as
Chairmen and Co-Chief Executive Officers, commented: "The results were generally
strong across all our consumer businesses, but show the effects of unusually
severe market forces on corporate businesses and portfolios. Looking ahead, we
expect that the consumer businesses will continue to do well, that the corporate
businesses will stabilize around established franchises, and that our
diversified earnings streams and exceptional capital and reserves will prove
their value in the fourth quarter and the year ahead."
They also stated: "As turbulent as these markets have been, we as a company are
in excellent shape to make necessary adjustments, to ride out bad periods and
hold on to fundamentally sound positions, and to search out opportunities that
arise in times of stress. We are already acting to assure that business unit
expenses are consistent with their business expectations, and we expect these
actions to be reflected in future results."
1
<PAGE>
CITIGROUP [LOGO]
Third Quarter 1998 Earnings - October 21, 1998
- --------------------------------------------------------------------------------
Results by Predecessor Company -- 1998 Third Quarter
Citicorp Travelers Group
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Global Consumer ........... $477 Investment Services ........ ($325)
Global Corporate Banking .. (127) Consumer Finance Services .. 83
Investment Activities ..... 71 Life Insurance Services .... 222
Corporate Items ........... 109 Property & Casualty
Insurance ................ 245
Portfolio Gains ............ 25
Corporate and Other ........ (51)
------ ------
Total Citicorp ............ $530 Total Travelers Group ..... $199
- ------------------------------======-------------------------------------======
Explaining the way the third quarter results are presented, Heidi G. Miller,
Chief Financial Officer, said: "Since Citigroup was created after the close of
the third quarter, we show pro forma results, as though the companies were
together in the quarter, as well as the results of each of the predecessor
companies, Citicorp and Travelers Group. Citigroup Segment Income (page 3) is a
transition toward a new, clearer way of presenting the results in 1999 along
Core Business lines: Consumer, Corporate, and Asset Management.
"Certain components of the Core Business lines are still being determined; for
example, Salomon Smith Barney's retail operations are shown this time in the
Corporate segment. Also, the methodology for breaking out the Asset Management
segment results could change.
"In addition to the Core Business lines, there will be a separate breakout of
Investment Activities, which include Citicorp's venture capital activities,
Corporate investments, and certain investments in the former refinancing
countries as well as Travelers' portfolio gains. Citicorp's Investment
Activities are reported separately here for the first time."
Income in Consumer businesses across Citigroup increased by 9% from the 1997
third quarter. Income in the Corporate businesses, which excludes Investment
Activities, fell by $1.4 billion from the 1997 quarter, reflecting the almost
unprecedented instability of fixed income and certain emerging markets. The
Asset Management business increased assets under management 17% to $296 billion,
and income was $78 million in the quarter. Weakness in the global securities
markets reduced Investment Activities net income to $96 million from $341
million a year ago. Total stockholders' equity was $44 billion.
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Contacts
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Press ....... Jack Morris (212) 559-4285 Dick Howe (212) 559-9425
Investor .... Bill Pike (212) 793-8874 Sheri Ptashek (212) 559-4658
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Selected financial statements and tables follow -- results for Citicorp are on
pages 4-14 and those for Travelers are on pages 15-25. Additional financial,
statistical, and business related information, as well as business and segment
trends, is included in a Financial Supplement. Both the earnings release and the
Financial Supplement are available on Citigroup's web site
(http://www.citigroupinfo.com). The documents can also be obtained by fax by
calling 1-800-853-1754 for callers within the United States or 732-935-2771 for
callers outside the United States.
Further details concerning the Citicorp and Travelers Group Inc. financial
results will be available in November in their respective Form 10-Q reports.
2
<PAGE>
CITIGROUP [LOGO]
Third Quarter 1998 Earnings - October 21, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Third Quarter Nine Months
Citigroup Segment Income (A) --------------------- % ------------------------- %
(In Millions of Dollars) 1998 1997 Change 1998 1997 Change
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Citibank Global Consumer (B) ....... $ 461 $ 434 6 $ 1,213 $ 1,334 (9)
Travelers Life & Annuity ........... 123 107 16 372 313 19
Primerica Financial Services ....... 99 85 17 297 245 21
Consumer Finance Services .......... 83 65 27 212 167 27
Personal Lines (C) ................. 68 71 (4) 231 225 3
--------------------- -------------------------
Consumer ........................... 834 762 9 2,325 2,284 2
--------------------- -------------------------
Salomon Smith Barney (B) ........... (395) 449 NM 395 1,221 (68)
Citibank Emerging Markets (B) ...... (18) 280 NM 474 837 (43)
Global Relationship Banking (B) .... (100) 137 NM 175 438 (60)
Commercial Lines (C) ............... 177 171 4 522 467 12
--------------------- -------------------------
Corporate .......................... (336) 1,037 NM 1,566 2,963 (47)
--------------------- -------------------------
Salomon Smith Barney
Asset Management ................. 71 59 19 193 152 27
Citibank Asset Management .......... 7 18 (61) 42 46 (9)
--------------------- -------------------------
Asset Management ................... 78 77 1 235 198 19
--------------------- -------------------------
Core Business Income ............... 576 1,876 (69) 4,126 5,445 (24)
--------------------- -------------------------
Citibank Investment Activities (D) . 71 259 (73) 788 665 18
Travelers Investment Portfolio Gains 25 82 (69) 140 97 45
--------------------- -------------------------
Total Investment Activities ........ 96 341 (72) 928 762 22
--------------------- -------------------------
Corporate/Other .................... 57 (121) NM (120) (394) 70
--------------------- -------------------------
Core Income ........................ 729 2,096 (65) 4,934 5,813 (15)
--------------------- -------------------------
Restructuring ...................... -- (556) NM 191 (556) NM
--------------------- -------------------------
Net Income ......................... $ 729 $ 1,540 (53) $ 5,125 $ 5,257 (3)
- --------------------------------------------=============================================================================
Citicorp ........................... $ 530 $ 1,067 (50) $ 2,692 $ 3,086 (13)
Travelers .......................... 199 1,029 (81) 2,242 2,727 (18)
--------------------- -------------------------
Core Income ........................ $ 729 $ 2,096 (65) $ 4,934 $ 5,813 (15)
- --------------------------------------------=============================================================================
Citicorp ........................... $ 530 $ 511 4 $ 2,692 $ 2,530 6
Travelers .......................... 199 1,029 (81) 2,433 2,727 (11)
--------------------- -------------------------
Net Income ......................... $ 729 $ 1,540 (53) $ 5,125 $ 5,257 (3)
- --------------------------------------------=============================================================================
</TABLE>
(A) Amounts reflect each company's existing policies for revenue, expense, tax
and equity allocations; consequently business results may not be
comparable across companies.
(B) Excludes Asset Management results; consequently amounts differ from those
shown in predecessor company results.
(C) In the aggregate, these represent Citigroup's share of Travelers Property
Casualty Corp. results.
(D) Includes Citicorp's venture capital activities, certain Corporate
investments, and the results of certain investments in the former
refinancing countries.
NM Not meaningful, as percentage equals or exceeds 100%.
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3
<PAGE>
CITICORP [LOGO]
Third Quarter 1998 Earnings - October 21, 1998
CITICORP
Citicorp net income totals $530 million on revenue of $6.1 billion
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Third Quarter Nine Months
Summary of Results -------------------- % ---------------------- %
(In Millions of Dollars) 1998 1997 Change 1998 1997 Change
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Adjusted Revenue (A) ............. $6,071 $5,944 2 $18,928 $17,318 9
-------------------- ----------------------
Adjusted Operating Expense (A) ... 3,923 3,364 17 11,214 9,753 15
Operating Margin ................. 2,148 2,580 (17) 7,714 7,565 2
Credit Costs (A) ................. 1,275 848 50 3,332 2,553 31
-------------------- ----------------------
Operating Margin Less Credit Costs 873 1,732 (50) 4,382 5,012 (13)
Additional Provision ............. 25 25 -- 75 75 --
Restructuring Charge ............. -- 889 NM -- 889 NM
-------------------- ----------------------
Income Before Taxes .............. $ 848 $ 818 4 $ 4,307 $ 4,048 6
=========================================================================
Net Income ....................... $ 530 $ 511 4 $ 2,692 $ 2,530 6
- ------------------------------------------=========================================================================
Return on Common Equity (%) ...... 10.0 9.6 -- 17.6 17.0 --
Return on Assets (%) ............. 0.63 0.68 -- 1.11 1.16 --
Excluding Restructuring Charge
Core Income (B) .................. $ 530 $1,067 (50) $ 2,692 $ 3,086 (13)
Return on Common Equity (%) ...... 10.0 20.8 -- 17.6 20.8 --
Return on Assets (%) ............. 0.63 1.42 -- 1.11 1.41 --
- ------------------------------------------=========================================================================
</TABLE>
(A) Citicorp's revenue is presented on a managed basis, principally adjusting
for the effect of credit card securitization activity. See "Earnings
Analysis" table in the Financial Supplement for further details.
(B) Core income represents net income adjusted to exclude a restructuring
charge of $556 million after-tax ($889 million pretax) in the 1997 third
quarter.
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
Citicorp today reported income for the 1998 third quarter of $530 million, down
$537 million from $1.1 billion (excluding the $556 million after-tax
restructuring charge) in the 1997 third quarter. Generally strong Global
Consumer results were reduced by a sharp decline in Global Corporate Banking
resulting from previously disclosed after-tax losses of $240 million related to
Russia ($384 million pretax), $97 million from marking to market fixed income
inventories, and lower revenue from venture capital and Brady bonds. Net income
in the 1997 third quarter included a $556 million restructuring charge ($889
million pretax).
Adjusted revenue increased $127 million or 2%, reflecting a 19% increase in
Global Consumer, predominately in the developed markets, which was reduced by an
18% decrease in Global Corporate Banking.
Adjusted operating expense increased $559 million or 17% ($320 million or 10%
excluding Universal Card Services -- UCS -- acquired in April 1998). Increased
expense for preparations for the Year 2000 and EMU and the acquisition of
certain assets and liabilities of Confia, as well as for advertising and
marketing programs, and electronic banking initiatives represented approximately
$166 million of the change from the 1997 third quarter. Foreign currency
translation reduced adjusted revenue and operating expense growth by
approximately 4 and 3 percentage points, respectively.
Global Consumer credit costs were $1,044 million ($878 million excluding UCS) in
the quarter, down $42 million from $1,086 million ($910 million excluding UCS)
in the preceding quarter, and compared to $856 million a year ago, reflecting
ratios of net credit losses to average managed loans of 2.69% (2.50% excluding
UCS), 2.88% (2.66% excluding UCS), and 2.50% in the respective quarters.
Commercial credit costs were $231 million, compared with an $8 million benefit
in the
4
<PAGE>
CITICORP [LOGO]
Third Quarter 1998 Earnings - October 21, 1998
year ago quarter, principally reflecting writedowns associated with Russia, as
well as Indonesia and Thailand, all partially offset by real estate recoveries.
Pretax income in Asia Pacific of $204 million for the quarter was down $103
million or 34% from last year -- Global Consumer businesses were down $36
million or 24% while Global Corporate Banking results were down $67 million or
42%.
Global Consumer business earns $477 million on revenue of $4.2 billion,
Cards income up 18% from 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Third Quarter Nine Months
Global Consumer -------------------- % ---------------------- %
(In Millions of Dollars) 1998 1997 (A) Change 1998 (A) 1997 Change
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Adjusted Revenue ...................... $4,199 $3,534 19 $11,748 $10,581 11
Adjusted Operating Expense ............ 2,407 2,011 20 6,779 5,880 15
-------------------- ----------------------
Operating Margin ...................... 1,792 1,523 18 4,969 4,701 6
Credit Costs (B) ...................... 1,044 856 22 3,016 2,672 13
-------------------- ----------------------
Operating Margin Less Credit Costs .... 748 667 12 1,953 2,029 (4)
Additional Provision .................. 25 25 -- 75 75 --
-------------------- ----------------------
Income Before Taxes (C) ............... $ 723 $ 642 13 $ 1,878 $ 1,954 (4)
=======================================================================
Core Business Income (C) .............. $ 477 $ 452 6 $ 1,264 $ 1,384 (9)
=======================================================================
Net Income ............................ $ 477 $ 101 NM $ 1,264 $ 1,033 22
- -----------------------------------------------=======================================================================
Average Assets (In Billions of Dollars) $ 144 $ 134 7 $ 139 $ 132 5
Return on Assets (C) (%) .............. 1.31 1.34 -- 1.22 1.40 --
- -----------------------------------------------=======================================================================
</TABLE>
(A) Reclassified to conform to the latest quarter's presentation.
(B) Includes the effect of credit card securitization activity and the effect
related to credit card receivables held for sale.
(C) Excludes the 1997 third quarter restructuring charge of $580 million
pretax ($351 million after-tax).
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
o Global Consumer income before taxes in the 1998 third quarter was $723
million, up $81 million or 13% from $642 million (excluding the $580
million restructuring charge) in 1997, reflecting outstanding results in
U.S. bankcards and in Japan, partially offset by lower earnings in Asia
Pacific and Latin America. Global Consumer income before taxes increased
$169 million or 31% from the 1998 second quarter, principally due to the
significant improvement in the U.S. bankcards business. In the quarter,
UCS' pretax loss of approximately $51 million ($32 million after-tax)
reflected $107 million of acquisition premium costs (including funding
costs associated with the acquisition purchase premium). The Global
Consumer effective tax rate was 34% in the 1998 third quarter, up from 30%
(excluding the effect of the restructuring charge) in 1997, reflecting
changes in the geographic mix and nature of earnings. Core Business income
was $477 million in the 1998 third quarter, up from $452 million in 1997.
o Worldwide Citibanking accounts totaled 23 million as of September 30,
1998, up 15% from a year ago, reflecting growth across all regions.
Citibanking customer deposits of $105 billion were up 12% from a year-ago,
reflecting account openings and increased deposit levels primarily due to
a "flight-to-quality" in Asia Pacific and Japan, and growth in the U.S.
and Latin America. Asia Pacific and Japan added approximately $5.9 billion
in customer deposits, up 19% -- 36% excluding the effect of foreign
currency translation -- from 1997.
o Card accounts worldwide totaled 50 million as of September 30, 1998, up
from 36 million a year ago, principally reflecting the acquisition of UCS.
Cards in the emerging markets grew 12% from a year ago, primarily in Latin
America. The number of cards in force, including those issued by
affiliates, at quarter-end was 92 million, up from 64 million a year ago.
Cards, including Diners Club, operates in 47 countries and territories.
5
<PAGE>
CITICORP [LOGO]
Third Quarter 1998 Earnings - October 21, 1998
o Adjusted revenue of $4.2 billion was up $665 million or 19% from 1997.
Revenue growth was led by U.S bankcards, up 46% including UCS, and
increases in the Citibanking businesses in North America, Europe, and
Japan. Latin America benefited from the addition of certain assets and
liabilities of Confia, while revenue in Asia Pacific was down due to
economic conditions in the region. The acquisition of UCS contributed
approximately 10 percentage points to Global Consumer revenue growth.
Foreign currency translation reduced revenue growth by approximately 4
percentage points.
o Adjusted operating expense increased $396 million or 20% from a year ago.
The additions of UCS (including the amortization of the acquisition
premium) and certain assets and liabilities of Confia, higher advertising
and marketing, and spending on technology initiatives, primarily related
to electronic banking, represented approximately $315 million of the
expense increase from the 1997 third quarter. Foreign currency translation
reduced expense growth by approximately 4 percentage points.
o Credit costs in the quarter were $1.0 billion, compared with $1.1 billion
in the 1998 second quarter and $856 million a year ago. The increase in
credit costs from a year ago primarily reflects the acquisition of UCS.
Global Consumer continued to build the allowance for credit losses, with
charges of $25 million in excess of net write-offs in the quarter.
o On August 5, 1998, Citicorp completed the previously announced acquisition
of certain assets and liabilities of Confia, a consumer and corporate bank
in Mexico. The acquisition added approximately $4.7 billion in assets.
o The U.S. national launch of Direct Access increased PC Banking users by
30% from 1997. Direct Access was also introduced in Germany.
o Travelers variable annuities and Salomon mutual funds were introduced for
sale through Citicorp Investment Services. Citibank and Primerica
Financial Services joined forces to leverage Citibank's product strengths
with Primerica's distribution capabilities with the introduction of
Citibank Preferred Banking in Atlanta and Las Vegas pilot markets.
o During the quarter, U.S. bankcards introduced the Sony Citibank Card and a
new Drivers Edge card.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Global Consumer Third Quarter Nine Months
in Emerging Markets ---------------- % -------------------- %
(In Millions of Dollars) 1998 1997 (A) Change 1998 1997 (A) Change
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Adjusted Revenue ...................... $982 $970 1 $2,781 $2,905 (4)
Adjusted Operating Expense ............ 638 598 7 1,818 1,728 5
---------------- --------------------
Operating Margin ...................... 344 372 (8) 963 1,177 (18)
Credit Costs .......................... 139 91 53 373 280 33
---------------- --------------------
Operating Margin Less Credit Costs .... 205 281 (27) 590 897 (34)
Additional Provision .................. 11 15 (27) 33 26 27
---------------- --------------------
Income Before Taxes (B) ............... $194 $266 (27) $ 557 $ 871 (36)
===================================================================
Core Business Income (B) .............. $158 $218 (28) $ 457 $ 697 (34)
===================================================================
Net Income ............................ $158 $136 16 $ 457 $ 615 (26)
- -----------------------------------------------===================================================================
Average Assets (In Billions of Dollars) $ 45 $ 43 5 $ 43 $ 42 2
Return on Assets (B) (%) .............. 1.39 2.01 -- 1.43 2.22 --
- -----------------------------------------------===================================================================
</TABLE>
(A) Reclassified to conform to the latest quarter's presentation.
(B) Excludes the 1997 third quarter restructuring charge of $131 million
pretax ($82 million after-tax).
- --------------------------------------------------------------------------------
o Income before taxes in the emerging markets was $194 million in the
quarter, down $72 million from $266 million (excluding the $131 million
restructuring charge) in 1997, reflecting economic conditions, including
weakened currencies, which reduced income before taxes in Asia Pacific by
approximately $36 million. Earnings in Latin America benefited from the
addition of certain assets and liabilities of Confia, that was more than
offset by higher credit costs and a decline in Credicard earnings, a 33%
owned Brazilian Card affiliate. Core Business income for the 1998 third
quarter
6
<PAGE>
CITICORP [LOGO]
Third Quarter 1998 Earnings - October 21, 1998
was $158 million compared to $218 million in 1997. Cards represented 20%
of emerging markets income in the quarter, compared with 33% in the 1997
quarter.
o Revenue in Latin America was up 14% from the 1997 third quarter, primarily
reflecting the acquisition of certain assets and liabilities of Confia.
Asia Pacific (excluding Japan and the Indian subcontinent, but including
Australia and New Zealand) revenue declined 10% in the quarter, primarily
in Cards, reflecting economic conditions in the region including the
effect of foreign currency translation. Foreign currency translation
reduced revenue growth by approximately 13 percentage points.
o Adjusted operating expense grew 7%, reflecting lower expense in Asia
Pacific due to the effect of foreign currency translation, offset by an
increase in Latin America, including the addition of certain assets and
liabilities of Confia. Foreign currency translation reduced expense growth
by approximately 13 percentage points.
o Credit costs in the emerging markets increased $6 million from the 1998
second quarter and $48 million from the 1997 third quarter, reflecting
economic conditions in Latin America and Asia Pacific. The net credit loss
ratio in Asia Pacific was 1.10%, down from 1.16% in the 1998 second
quarter and up from 0.63% a year ago. The net credit loss ratio in Latin
America was 2.82%, up from 2.51% in the 1998 second quarter and 2.09% a
year ago. Emerging markets managed loans delinquent 90 days or more were
$748 million or 2.20% at quarter-end, compared with $647 million or 1.95%
at June 30, 1998 and $453 million or 1.31% a year ago. The emerging
markets businesses built the allowance for loan losses by $11 million.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Global Consumer Third Quarter Nine Months
in Developed Markets --------------------- % -------------------- %
(In Millions of Dollars) 1998 1997 (A) Change 1998 1997 (A) Change
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Adjusted Revenue ...................... $3,217 $ 2,564 25 $8,967 $7,676 17
Adjusted Operating Expense ............ 1,769 1,413 25 4,961 4,152 19
--------------------- --------------------
Operating Margin ...................... 1,448 1,151 26 4,006 3,524 14
Credit Costs .......................... 905 765 18 2,643 2,392 10
--------------------- --------------------
Operating Margin Less Credit Costs .... 543 386 41 1,363 1,132 20
Additional Provision .................. 14 10 40 42 49 (14)
--------------------- --------------------
Income Before Taxes (B) ............... $ 529 $ 376 41 $1,321 $1,083 22
=======================================================================
Core Business Income (B) .............. $ 319 $ 234 36 $ 807 $ 687 17
=======================================================================
Net Income ............................ $ 319 ($ 35) NM $ 807 $ 418 93
- -----------------------------------------------=======================================================================
Average Assets (In Billions of Dollars) $ 99 $ 91 9 $ 96 $ 90 7
Return on Assets (B) (%) .............. 1.28 1.02 -- 1.13 1.02 --
- -----------------------------------------------=======================================================================
</TABLE>
(A) Reclassified to conform to the latest quarter's presentation.
(B) Excludes the 1997 third quarter restructuring charge of $449 million
pretax ($269 million after-tax).
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
o Income before taxes in the developed markets was $529 million in the
quarter, up $153 million or 41%, despite $107 million of UCS acquisition
premium costs, from $376 million (excluding the $449 million restructuring
charge) in 1997, reflecting outstanding performance in U.S. bankcards and
in Japan. Core Business income for the 1998 third quarter was $319 million
compared to $234 million in 1997.
o Adjusted revenue was up 25% in the quarter, reflecting improvements in
U.S. bankcards, including the acquisition of UCS in the 1998 second
quarter, and increases in Citibanking and the Private Bank. Excluding UCS,
U.S. bankcards revenue was up 16% in the quarter, benefiting from
risk-based pricing strategies and higher interchange fee revenue. Charge
volume of $36.4 billion increased $9.8 billion from the 1997 third
quarter, reflecting UCS and 8% overall growth in other U.S. bankcard
portfolios.
7
<PAGE>
CITICORP [LOGO]
Third Quarter 1998 Earnings - October 21, 1998
o Adjusted operating expense grew 25%, reflecting UCS (including the
amortization of the acquisition premium), increased advertising and
marketing, and spending on technology initiatives primarily related to
electronic banking, together with business volume growth.
o Credit costs in the developed markets were down $48 million from the 1998
second quarter, reflecting improvements in U.S bankcards. Credit costs in
U.S. bankcards were $795 million or 5.23% of average managed loans for the
quarter, compared to $842 million or 5.73% in the 1998 second quarter, and
$639 million or 5.58% a year ago. Excluding UCS, the 12-month-lagged loss
ratio was 5.49% in the quarter, compared with 5.98% in the 1998 second
quarter and 5.93% a year ago. U.S. bankcards managed loans delinquent 90
days or more were $924 million or 1.51% at quarter-end, compared with $942
million or 1.58% for the prior quarter and $806 million or 1.76% a
year-ago. The developed markets businesses built the allowance for loan
losses by $14 million.
8
<PAGE>
CITICORP [LOGO]
Third Quarter 1998 Earnings - October 21, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Third Quarter Nine Months
Citibanking ----------------------- % ---------------------- %
(In Millions of Dollars) 1998 1997 (A) Change 1998 1997 (A) Change
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue ............................... $ 1,680 $ 1,532 10 $ 4,803 $4,536 6
Operating Expense ..................... 1,260 1,148 10 3,647 3,318 10
----------------------- ----------------------
Operating Margin ...................... 420 384 9 1,156 1,218 (5)
Credit Costs .......................... 144 135 7 425 428 (1)
----------------------- ----------------------
Operating Margin Less Credit Costs .... 276 249 11 731 790 (7)
Additional Provision .................. (1) -- NM (7) -- NM
----------------------- ----------------------
Income Before Taxes (B) ............... $ 277 $ 249 11 $ 738 $ 790 (7)
===========================================================================
Core Business Income (B) .............. $ 178 $ 168 6 $ 485 $ 535 (9)
- -----------------------------------------------===========================================================================
Net Income ............................ $ 178 ($ 107) NM $ 485 $ 260 87
- -----------------------------------------------===========================================================================
Average Assets (In Billions of Dollars) $ 92 $ 85 8 $ 89 $ 84 6
Return on Assets (B)(%) ............... 0.77 0.78 -- 0.73 0.85 --
- -----------------------------------------------===========================================================================
</TABLE>
(A) Reclassified to conform to the latest quarter's presentation.
(B) Excludes the 1997 third quarter restructuring charge of $457 million
pretax ($275 million after-tax).
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Third Quarter Nine Months
Cards -------------------- % -------------------- %
(In Millions of Dollars) 1998 1997 (A) Change 1998 1997 (A) Change
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Adjusted Revenue ...................... $2,225 $1,707 30 $6,064 $5,200 17
Adjusted Operating Expense ............ 942 673 40 2,529 2,024 25
-------------------- --------------------
Operating Margin ...................... 1,283 1,034 24 3,535 3,176 11
Credit Costs .......................... 907 729 24 2,609 2,254 16
-------------------- --------------------
Operating Margin Less Credit Costs .... 376 305 23 926 922 --
Additional Provision .................. 26 25 4 82 75 9
-------------------- --------------------
Income Before Taxes (B) ............... $ 350 $ 280 25 $ 844 $ 847 --
=====================================================================
Core Business Income (B) .............. $ 227 $ 193 18 $ 557 $ 597 (7)
- -----------------------------------------------=====================================================================
Net Income ............................ $ 227 $ 135 68 $ 557 $ 539 3
- -----------------------------------------------=====================================================================
Average Assets (In Billions of Dollars) $ 35 $ 32 9 $ 33 $ 31 6
Return on Assets (B) (%) .............. 2.57 2.39 -- 2.26 2.57 --
- -----------------------------------------------=====================================================================
</TABLE>
(A) Reclassified to conform to the latest quarter's presentation.
(B) Excludes the 1997 third quarter restructuring charge of $95 million pretax
($58 million after-tax).
- --------------------------------------------------------------------------------
9
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Third Quarter Nine Months
Private Bank ------------------- % ------------------ %
(In Millions of Dollars) 1998 1997 (A) Change 1998 1997 (A) Change
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Adjusted Revenue ...................... $ 294 $ 295 -- $ 881 $ 845 4
Adjusted Operating Expense ............ 205 190 8 603 538 12
------------------- ------------------
Operating Margin ...................... 89 105 (15) 278 307 (9)
Credit Benefits ....................... (7) (8) (13) (18) (10) 80
------------------- ------------------
Income Before Taxes (B) ............... $ 96 $ 113 (15) $ 296 $ 317 (7)
=======================================================================
Core Business Income (B) .............. $ 72 $ 91 (21) $ 222 $ 252 (12)
- -----------------------------------------------=======================================================================
Net Income ............................ $ 72 $ 73 (1) $ 222 $ 234 (5)
- -----------------------------------------------=======================================================================
Average Assets (In Billions of Dollars) $ 17 $ 17 -- $ 17 $ 17 --
Return on Assets (B) (%) .............. 1.68 2.12 -- 1.75 1.98 --
- -----------------------------------------------=======================================================================
</TABLE>
(A) Reclassified to conform to the latest quarter's presentation.
(B) Excludes the 1997 third quarter restructuring charge of $28 million pretax
($18 million after-tax).
- --------------------------------------------------------------------------------
10
<PAGE>
CITICORP [LOGO]
Third Quarter 1998 Earnings - October 21, 1998
Global Corporate Banking net loss was $127 million on revenue of $1.5 billion
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Third Quarter Nine Months
Global Corporate Banking ------------------------ % ---------------------- %
(In Millions of Dollars) 1998 1997 (A) Change 1998 1997 (A) Change
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Adjusted Revenue ...................... $ 1,472 $ 1,785 (18) $5,377 $ 5,204 3
Adjusted Operating Expense ............ 1,424 1,267 12 4,138 3,619 14
----------------------- ---------------------
Operating Margin ...................... 48 518 (91) 1,239 1,585 (22)
Credit Costs (Benefits) ............... 231 (3) NM 326 (55) NM
----------------------- ---------------------
Income (Loss) Before Taxes (B) ........ $ (183) $ 521 NM $ 913 $ 1,640 (44)
==============================================================================
Core Business Income (Loss) (B) ....... $ (127) $ 417 NM $ 640 $ 1,271 (50)
==============================================================================
Net Income (Loss) ..................... $ (127) $ 249 NM $ 640 $ 1,103 (42)
- -----------------------------------------------==============================================================================
Average Assets (In Billions of Dollars) $ (173) $ 151 15 $ 169 $ 145 17
Return on Assets (B) (%) .............. -- 1.10 -- 0.51 1.17 --
- -----------------------------------------------==============================================================================
</TABLE>
(A) Reclassified to conform to the latest quarter's presentation, including
the reclassification of Citicorp's venture capital activities and the
results of certain investments in the former refinancing countries to a
new business segment called "Investment Activities."
(B) Excludes the 1997 third quarter restructuring charge of $281 million
pretax ($168 million after-tax).
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
o Global Corporate Banking reported a loss of $127 million in the 1998 third
quarter, down $544 million from Core Business income of $417 million in
the 1997 third quarter. Loss before taxes totaled $183 million and
declined from $521 million (excluding a restructuring charge of $281
million) in the 1997 third quarter. The 1998 third quarter included a loss
of $384 million attributable to the financial market turmoil in Russia,
which affected both revenue and credit costs, as well as a $138 million
write-down of fixed income inventories.
o Adjusted revenue of $1.5 billion in the quarter declined $313 million or
18% (13% excluding the effect of foreign currency translation) from the
year-ago quarter, reflecting a $170 million decline in the Emerging
Markets business and a $143 million decline in Global Relationship
Banking. Adjusted operating expense of $1.4 billion increased $157 million
or 12% (15% excluding the effect of foreign currency translation) from
1997, with a $32 million increase in the Emerging Markets business and a
$125 million increase in Global Relationship Banking. Credit costs of $231
million in the quarter compared with a net benefit of $3 million in 1997.
o Cash-basis loans of $1.3 billion declined $13 million from the 1998 second
quarter but increased $312 million from the 1997 third quarter. Cash-basis
loans in Global Relationship Banking of $286 million declined $14 million
from the 1998 second quarter and declined $150 million from the year-ago
quarter, primarily in the real estate portfolio. Cash-basis loans in the
Emerging Markets of $982 million were essentially unchanged from the 1998
second quarter, but grew $462 million from a year ago. The increase from
the year-ago quarter is primarily due to the economic turmoil affecting
Indonesia and Thailand. At September 30, 1998 and June 30, 1998, Emerging
Markets cash-basis loans included $44 million of balance sheet credit
exposures related to foreign currency derivative contracts for which the
recognition of revaluation gains has been suspended. The amounts included
a year ago were not material. Commercial OREO of $345 million was
essentially unchanged from the 1998 second quarter and improved $134
million from the year-ago quarter, primarily in the real estate portfolio.
o Exposure to hedge funds under foreign exchange and derivatives contracts
totaled $45 million at September 30, 1998 and was fully collateralized by
cash and U.S. Treasury securities. Other outstandings and commitments to
hedge funds totaled $162 million, of which $129 million was secured and
$33 million was unsecured. The value of foreign exchange and derivatives
contracts, and the value of collateral, will fluctuate with market
conditions. There was no equity investment in hedge funds.
11
<PAGE>
CITICORP [LOGO]
Third Quarter 1998 Earnings - October 21, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Third Quarter Nine Months
Emerging Markets ------------------- % -------------------- %
(In Millions of Dollars) 1998 1997 (A) Change 1998 1997 (A) Change
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Adjusted Revenue ...................... $ 713 $883 (19) $2,536 $2,511 1
Adjusted Operating Expense ............ 531 499 6 1,549 1,415 9
------------------- --------------------
Operating Margin ...................... 182 384 (53) 987 1,096 (10)
Credit Costs .......................... 212 35 NM 378 82 NM
------------------- --------------------
Income (Loss) Before Taxes (B) ........ $ (30) $349 NM $ 609 $1,014 (40)
=====================================================================
Core Business Income (Loss) (B) ....... $ (19) $280 NM $ 473 $ 839 (44)
=====================================================================
Net Income (Loss) ..................... $ (19) $248 NM $ 473 $ 807 (41)
- -----------------------------------------------=====================================================================
Average Assets (In Billions of Dollars) $ 81 $ 68 19 $ 79 $ 64 23
Return on Assets (B) (%) .............. -- 1.63 -- 0.80 1.75 --
- -----------------------------------------------=====================================================================
</TABLE>
(A) Reclassified to conform to the latest quarter's presentation, including
the reclassification of the results of certain investments in the former
refinancing countries to a new business segment called "Investment
Activities."
(B) Excludes the 1997 third quarter restructuring charge of $54 million pretax
($32 million after-tax).
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
o Emerging Markets reported a loss of $19 million in the 1998 third quarter,
down $299 million from Core Business income of $280 million in the 1997
third quarter. Loss before taxes totaled $30 million and declined from
$349 million (excluding a restructuring charge of $54 million) in the 1997
third quarter. The 1998 third quarter included a loss of $301 million
attributable to the financial market turmoil in Russia, which affected
revenue and credit costs. Average assets of $81 billion rose $13 billion
from the 1997 third quarter, reflecting growth in the loan portfolio and
treasury initiatives, together with trade finance products.
o Adjusted revenue in the quarter of $713 million declined $170 million or
19% (10% excluding the effect of foreign currency translation) from the
1997 third quarter. Revenue reflected an $84 million decline in
trading-related revenue attributable to the volatility experienced in the
global capital markets during the quarter (including $57 million
attributable to Russia), a $148 million writedown of impaired Russian
available-for-sale securities, and lower corporate finance revenue,
partially offset by double- digit growth in transaction banking services
and loan product revenue. Trading-related revenue reflects double-digit
growth in foreign exchange products more than offset by lower results in
derivatives and other trading products. Revenue in Asia Pacific (excluding
Japan and the Indian subcontinent, but including Australia and New
Zealand) declined 2% from the 1997 third quarter due primarily to lower
trading-related revenue, partially offset by improved treasury results.
Revenue attributed to the Embedded Bank and Emerging Local Corporate
strategies, together with new franchises, accounted for 9% of Emerging
Markets revenue, up 59% from the comparable 1997 quarter. About 37% of the
revenue in the Emerging Markets business was attributable to business from
multinational companies managed jointly with Global Relationship Banking,
with that revenue having grown 6% from the 1997 third quarter.
o Adjusted operating expense of $531 million in 1998 increased $32 million
or 6% (13% excluding the effect of foreign currency translation) from the
year-ago quarter. The growth reflected investment spending to build the
franchise, including costs associated with Citicorp's plan to gain market
share in selected emerging market countries, and volume-related expense
growth.
o Credit costs totaled $212 million in the quarter, up from $35 million in
the 1997 quarter. Credit costs included $96 million attributable to the
financial market turmoil in Russia, with the balance concentrated in
Indonesia and Thailand.
12
<PAGE>
CITICORP [LOGO]
Third Quarter 1998 Earnings - October 21, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Third Quarter Nine Months
Global Relationship Banking ------------------- % ------------------------ %
(In Millions of Dollars) 1998 1997 (A) Change 1998 1997 (A) Change
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Adjusted Revenue ...................... $ 759 $ 902 (16) $ 2,841 $ 2,693 5
Adjusted Operating Expense ............ 893 768 16 2,589 2,204 17
------------------- ------------------------
Operating Margin ...................... (134) 134 NM 252 489 (48)
Credit Costs (Benefits) ............... 19 (38) NM (52) (137) 62
------------------- ------------------------
Income (Loss) Before Taxes (B) ........ $(153) $ 172 NM $ 304 $ 626 (51)
==========================================================================
Core Business Income (Loss) (B) ....... $(108) $ 137 NM $ 167 $ 432 (61)
==========================================================================
Net Income (Loss) ..................... $(108) $ 1 NM $ 167 $ 296 (44)
- -----------------------------------------------==========================================================================
Average Assets (In Billions of Dollars) $ 92 $ 83 11 $ 90 $ 81 11
Return on Assets (B) (%) .............. -- 0.65 -- 0.25 0.71 --
- -----------------------------------------------==========================================================================
</TABLE>
(A) Reclassified to conform to the latest quarter's presentation, including
the reclassification of Citicorp's venture capital activities to a new
business segment called "Investment Activities."
(B) Excludes the 1997 third quarter restructuring charge of $227 million
pretax ($136 million after-tax).
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
o The Global Relationship Banking business in North America, Europe, and
Japan reported a loss of $108 million in the 1998 third quarter, compared
with Core Business income of $137 million in the 1997 third quarter. Loss
before taxes totaled $153 million and declined from $172 million
(excluding a restructuring charge of $227 million) in the 1997 third
quarter. The 1998 third quarter included a loss of $83 million
attributable to the financial market turmoil in Russia, which affected
revenue and credit costs. Average assets of $92 billion rose $9 billion
from the 1997 third quarter, primarily reflecting an increase in the fair
value of trading assets, including derivative and foreign exchange
contracts.
o Adjusted revenue of $759 million declined $143 million or 16% from the
1997 third quarter. The decline is attributable to a $183 million decline
in trading-related revenue resulting from the volatility experienced in
global capital markets during the quarter (including $30 million
attributable to Russia and a $138 million write-down of fixed income
inventories), partially offset by moderate growth in transaction banking
services revenue. Trading-related revenue reflects double-digit growth in
foreign exchange products more than offset by lower results in fixed
income and other trading products.
o Adjusted operating expense of $893 million grew $125 million or 16%
compared with the 1997 third quarter, primarily from increased spending on
technology, including costs related to the Year 2000 and the European EMU,
volume-related growth in transaction banking services, and increases in
asset management, partially offset by a decline in incentive compensation.
o Credit costs in the quarter of $19 million compared with a net benefit of
$38 million in the 1997 third quarter, and included write-offs of $53
million attributable to the financial market turmoil in Russia, partially
offset by real estate recoveries.
13
<PAGE>
CITICORP [LOGO]
Third Quarter 1998 Earnings - October 21, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Third Quarter Nine Months
Investment Activities(A) ----------------- % --------------------- %
(In Millions of Dollars) 1998 1997 Change 1998 1997 Change
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue ............................... $ 117 $ 348 (66) $ 1,024 $ 802 28
Operating Expense ..................... 11 9 22 34 26 31
----------------- ---------------------
Operating Margin ...................... 106 339 (69) 990 776 28
Credit Benefits ....................... -- (5) NM (10) (64) (84)
----------------- ---------------------
Income Before Taxes ................... 106 344 (69) 1,000 840 19
Income Taxes .......................... 35 85 (59) 212 175 21
----------------- ---------------------
Core Income ........................... $ 71 $ 259 (73) $ 788 $ 665 18
- -----------------------------------------------=======================================================================
Average Assets (In Billions of Dollars) $ 8 $ 9 (11) $ 9 $ 9 --
Return on Assets (%) .................. 3.52 11.42 -- 11.75 9.88 --
- -----------------------------------------------=======================================================================
</TABLE>
(A) Investment Activities comprises Citicorp's venture capital activities,
certain Corporate investments, and the results of certain investments in
the former refinancing countries.
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
o Adjusted revenue from Investment Activities of $117 million declined $231
million or 66% from the 1997 third quarter. The decline reflected a $266
million reduction in venture capital revenue primarily attributable to the
volatility in the U.S. equity markets during the quarter, and a $129
million decline in securities transactions, partially offset by a $165
million net gain on investments in Latin America. Revenue in the 1997
quarter included a $23 million investment writedown in Latin America. The
increase in the effective income tax rate to 33% from 25% reflects changes
in the nature and geographic mix of earnings.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Third Quarter Nine Months
Corporate Items ----------------- % ------------------ %
(In Millions of Dollars) 1998 1997 (A) Change 1998 1997 (A) Change
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue ............................... $283 $ 277 2 $779 $ 731 7
Operating Expense ..................... 81 77 5 263 228 15
----------------- -----------------
Income Before Taxes (B) ............... $202 $ 200 1 $516 $ 503 3
================================================================
Core Income (Loss) (B) ................ $109 $ (61) NM $ -- $(234) NM
================================================================
Net Income (Loss) ..................... $109 $ (98) NM $ -- $(271) NM
- -----------------------------------------------================================================================
Average Assets (In Billions of Dollars) $ 7 $ 5 40 $ 7 $ 6 17
- -----------------------------------------------================================================================
</TABLE>
(A) Reclassified to conform to the latest quarter's presentation, including
the reclassification of certain Corporate investments and the results of
certain investments in the former refinancing countries to a new business
segment called "Investment Activities."
(B) Excludes the 1997 third quarter restructuring charge of $28 million pretax
($37 million after-tax).
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
o 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
core business activities on a local tax-rate basis.
o Income taxes are attributed to businesses on the basis of local tax rates.
Changes in the nature and geographic mix of earnings, resulted in an
unusually high effective business tax rate of 35% in the 1998 quarter, up
from 25% a year ago. The increase in the effective rate charged to the
businesses resulted in a reduction in the tax offset expense held in
Corporate Items. The effective rate allocated to the businesses was 29%
and 25% for the 1998 and 1997 nine month periods, respectively. Citicorp's
effective tax rate was 37.5% in both 1998 and 1997 periods.
14
<PAGE>
CITICORP [LOGO]
Third Quarter 1998 Earnings - October 21, 1998
Other Items
o Of the $889 million restructuring charge recorded in the 1997 third
quarter, approximately $339 million remained in the reserve as of
September 30, 1998. The utilization of the reserve included $245 million
of premises and equipment writedowns and $300 million of primarily
severance and related costs (of which $229 million has been paid in cash
and $71 million is legally obligated), together with translation effects.
o The effects of market fluctuations on the available-for-sale investment
portfolio resulted in net unrealized losses, recorded against stockholders
equity, of $242 million after-tax at September 30, 1998, down from net
unrealized gains of $308 million at June 30, 1998.
o The Tier 1 capital ratio at September 30, 1998 was estimated at 8.0%,
consistent with the traditional 8.0%-8.3% target range. The decline in the
ratio during the quarter was primarily attributable to customer driven
growth in risk-adjusted assets, and the redemption of Graduated Rate
Cumulative Preferred Stock, Series 8A and 7.5% Non-Cumulative Preferred
Stock, Series 17 (for a total of $412 million).
o The amounts shown below for Citibank Global Asset Management are also
included in the results of Global Consumer, Emerging Markets, and Global
Relationship Banking.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Third Quarter Nine Months
Citibank Global Asset Managment ------------------ % ---------------- %
(In Millions of Dollars) 1998 1997 Change 1998 1997 Change
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue ...................... $ 103 $104 (1) $324 $286 13
Operating Expense ............ 98 86 14 280 238 18
------------------ ----------------
Income Before Taxes .......... 5 18 (72) 44 48 (8)
Income Taxes (Benefit) ....... (2) -- NM 2 2 --
------------------ ----------------
Core Business Income ......... $ 7 $ 18 (61) $ 42 $ 46 (9)
- --------------------------------------=================================================================
(In Billions of Dollars)......
Assets Under Management ...... $ 126 $107 18 $126 $107 18
- --------------------------------------=================================================================
</TABLE>
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
o Although included in the results of Global Consumer and Global Corporate
Banking, this division is focused upon as a separate Core Business.
o Citibank Global Asset Management (CGAM) manages $126 billion of assets
worldwide for major institutional clients as well as for high net worth
individuals and other retail mutual fund shareholders. CGAM offers a broad
range of equity, fixed-income, and liquidity products through its
investment centers in twenty countries. CGAM's $126 billion in assets
under management are comprised of 14% in money market funds, 42% in mutual
and institutional commingled funds, and 44% in accounts managed for high
net worth individuals, pension funds, corporations, and other
institutions.
o Declines in market prices depressed third quarter revenue growth. Revenue
of $324 million for the 1998 nine months is up 13% from 1997 reflecting an
18% increase in assets under management since last year. Expense growth
reflects CGAM's continuing build-up of its fundamental research and
quantitative analysis investment teams, as well as incremental technology
costs, including costs associated with Year 2000 and EMU.
o In the 1998 nine months, CGAM raised over $2 billion from 32 new funds
distributed worldwide through the Global Consumer and Global Corporate
Banking channels.
15
<PAGE>
TravelersGroup[LOGO]
Third Quarter 1998 Earnings - October 21, 1998
TRAVELERS
Travelers Group reports third quarter Core Income of $199.2 million
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Summary of Earnings Third Quarter Nine Months
(In Millions of Dollars, -------------------------- % ---------------------------- %
Except Per Share Amounts) 1998 1997 Change 1998 1997 Change
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gross Revenue .................. $ 8,221.9 $ 9,960.1 (17) $ 28,685.5 $ 27,843.6 3
Revenue, Net of Interest Expense 4,927.6 6,880.1 (28) 18,880.9 19,593.9 (4)
Core Income (A) ................ 199.2 1,028.7 (81) 2,242.0 2,727.0 (18)
- ----------------------------------------====================================================================================
</TABLE>
(A) Represents net income for all periods presented, adjusted to exclude the
reversal of $191.2 million after-tax ($324.1 million pretax) of the 1997
restructuring charge in the 1998 second quarter.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Travelers Group Third Quarter Nine Months
Segment Revenues -------------------------- % ---------------------------- %
(In Millions of Dollars) 1998 1997 Change 1998 1997 Change
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment Services
Investment Banking and Brokerage $ 3,690.1 $ 5,660.4 (35) $ 15,104.6 $ 15,467.3 (2)
Asset Management ............... 244.2 213.1 15 695.9 592.8 17
-------------------------- ----------------------------
Total Investment Services ...... 3,934.3 5,873.5 (33) 15,800.5 16,060.1 (2)
-------------------------- ----------------------------
Consumer Finance Services ...... 542.3 448.1 21 1,541.5 1,204.8 28
Life Insurance Services
Travelers Life and Annuity ..... 721.0 716.0 1 2,292.5 1,999.6 15
Primerica Financial Services ... 414.5 384.2 8 1,236.9 1,134.8 9
-------------------------- ----------------------------
Total Life Insurance Services .. 1,135.5 1,100.2 3 3,529.4 3,134.4 13
-------------------------- ----------------------------
Property and Casualty
Insurance Services
Commercial Lines ............... 1,654.9 1,651.1 -- 4,971.5 4,887.5 2
Personal Lines ................. 943.5 852.7 11 2,746.7 2,472.6 11
Other .......................... 2.0 2.9 (31) 8.6 8.8 (2)
-------------------------- ----------------------------
Total Property and
Casualty Insurance Services .. 2,600.4 2,506.7 4 7,726.8 7,368.9 5
-------------------------- ----------------------------
Corporate and Other ............ 9.4 31.6 (70) 87.3 75.4 16
-------------------------- ----------------------------
Total Gross Revenue ............ 8,221.9 9,960.1 (17) 28,685.5 27,843.6 3
Interest Expense ............... 3,294.3 3,080.0 7 9,804.6 8,249.7 19
-------------------------- ----------------------------
Total Revenue,
Net of Interest Expense ...... $ 4,927.6 $ 6,880.1 (28) $ 18,880.9 $ 19,593.9 (4)
- ----------------------------------------=================================================================================
</TABLE>
16
<PAGE>
TravelersGroup[LOGO]
Third Quarter 1998 Earnings - October 21, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Travelers Group Third Quarter Nine Months
Segment Core Income (A) ------------------- % -------------------- %
(In Millions of Dollars) 1998 1997 Change 1998 1997 Change
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment Services
Investment Banking and Brokerage $(395.4) $ 449.0 NM $ 394.7 $1,220.6 (68)
Asset Management ............... 70.5 59.4 19 193.3 152.4 27
------------------- --------------------
Total Investment Services ...... (324.9) 508.4 NM 588.0 1,373.0 (57)
------------------- --------------------
Consumer Finance Services ...... 83.3 65.4 27 211.9 166.8 27
Life Insurance Services
Travelers Life and Annuity ..... 123.3 106.5 16 371.5 312.5 19
Primerica Financial Services ... 98.8 84.7 17 297.0 244.8 21
------------------- --------------------
Total Life Insurance Services .. 222.1 191.2 16 668.5 557.3 20
------------------- --------------------
Property and Casualty
Insurance Services
Commercial Lines ............... 230.6 223.9 3 683.1 626.7 9
Personal Lines ................. 90.3 95.4 (5) 306.0 304.2 1
------------------- --------------------
Total Insurance-Related ...... 320.9 319.3 1 989.1 930.9 6
Financing Costs and Other ...... (26.9) (29.3) 8 (84.9) (92.6) 8
Minority Interest .............. (49.1) (48.0) (2) (151.1) (146.4) (3)
------------------- --------------------
Total Property and
Casualty Insurance Services .. 244.9 242.0 1 753.1 691.9 9
------------------- --------------------
Total Core Business ............ 225.4 1,007.0 (78) 2,221.5 2,789.0 (20)
------------------- --------------------
Investment Portfolio Gains ..... 25.4 82.0 (69) 139.7 96.6 45
Corporate and Other ............ (51.6) (60.3) 14 (119.2) (158.6) 25
------------------- --------------------
Total Core Income .............. $ 199.2 $1,028.7 (81) $2,242.0 $2,727.0 (18)
- -----------------------------------=============================================================
</TABLE>
(A) Represents net income for all periods presented, adjusted to exclude the
reversal of $191.2 million after-tax ($324.1 million pretax) of the 1997
restructuring charge in the 1998 second quarter.
(B) The 1998 third quarter effective tax rate for Travelers Group is
approximately 18%, reflecting the impact of municipal bond interest at
Travelers Property Casualty and Salomon Smith Barney on a lower overall
level of earnings, plus lower state tax expense at Salomon Smith Barney.
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
17
<PAGE>
TravelersGroup[LOGO]
Third Quarter 1998 Earnings - October 21, 1998
Investment Services
Salomon Smith Barney reports net loss of $324.9 million
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Third Quarter Nine Months
Salomon Smith Barney ------------------ % ------------------ %
(In Billions of Dollars) 1998 1997 Change 1998 1997 Change
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue,
Net of Interest Expense
(In Millions) ................ $ 921.0 $3,032.8 (70) $6,797.4 $8,472.5 (20)
Net Income(A) (In Millions) ... (324.9) 508.4 -- 779.2 1,373.0 (43)
Return on Equity(B) % ........... -- 25.3 -- 8.8 24.3 --
Pretax Profit Margin ............ -- 27.4 -- 13.7 26.6 --
Assets Under Fee-Based
Management
Internally Managed
Salomon Smith Barney
Asset Management ............ $ 169.6 $ 146.7 16 $ 169.6 $ 146.7 16
Financial Consultant
Managed Accounts ............ 13.8 11.1 24 13.8 11.1 24
Externally Managed
Consulting Group Managed Assets 63.9 58.4 9 63.9 58.4 9
------------------ ------------------
Total Assets Under Fee-Based
Management .................... $ 247.3 $ 216.2 14 $ 247.3 $ 216.2 14
------------------ ------------------
Total Client Assets ............. $ 697.5 $ 630.4 11 $ 697.5 $ 630.4 11
Annualized Retail Gross
Production per FC (In
Thousands) ................... $ 431 $ 428 1 $ 441 $ 393 12
Underwriting (Full Credit to
Lead Manager)
Global Debt and Equity Rank ..... 3 2 -- 4 2 --
U.S. Debt and Equity Rank ....... 3 2 -- 2 2 --
Municipals Rank ................. 1 2 -- 1 1 --
- -----------------------------------============================================================
</TABLE>
(A) Includes the reversal of $191.2 million after-tax ($324.1 million pretax)
of the 1997 restructuring charge in the 1998 second quarter.
(B) Based on income excluding restructuring charge.
- --------------------------------------------------------------------------------
o Salomon Smith Barney reported a loss of $325 million for the quarter.
Included in this is an after-tax loss of $700 million related to Global
Arbitrage and Russian related credit losses. Extreme volatility in the
global fixed income markets affected trading results negatively for the
quarter, while Private Client and Asset Management performance continued
at high levels.
o Total revenues, net of interest expense, were $921 million in the 1998
quarter and $6.797 billion in the nine months ended September 30, 1998
compared to $3,033 million in the 1997 quarter and $8.473 billion in the
nine months ended September 30, 1997.
o Commission revenues were relatively unchanged from the prior year quarter.
An increase in listed commissions was offset by decreases in other
commissions. In the nine months ended September 30, 1998 commission
revenues increased over the comparable 1997 period due to an increase in
listed, OTC, and mutual fund commissions.
o Investment banking revenues decreased to $531 million in the 1998 quarter
compared with $597 million in the 1997 quarter. Record merger and
acquisition fees were more than offset by declines in equity, high yield,
high grade debt, and unit trust underwritings. Salomon Smith Barney held
its number one rank in municipal underwriting for the third quarter of
1998. For the nine months of 1998, Salomon Smith Barney held its number
two ranking in overall U.S. debt and equity underwriting. For the nine
months ended September 30, 1998, investment banking revenues increased
over the comparable 1997 period primarily due to increased merger and
acquisition fees.
18
<PAGE>
TravelersGroup[LOGO]
Third Quarter 1998 Earnings - October 21, 1998
o Principal transaction revenues decreased in the quarter to a loss of
$1.331 billion. Decreases in fixed income trading results include losses
due to risk reduction of U.S. fixed income arbitrage, losses in other
Global Arbitrage, and losses in the customer business. These were
partially offset by an increase in equity trading results. Fixed income
trading results were adversely impacted by significant dislocations in the
global fixed income markets, including greatly reduced liquidity and
widening credit spreads. Included in these results are Russia-related
credit losses.
o Asset management fees increased to a record $563 million and $1.614
billion in the 1998 quarter and nine months ended September 30, as a
result of increased client assets under management.
o Net interest decreased to $326 million in the 1998 quarter from $366
million in the 1997 quarter. Net interest in the nine months ended
September 30, 1998 was relatively unchanged from the comparable 1997
period.
o Total expenses declined by $758 million, reflecting a reduction in
compensation and benefits of $711 million, largely related to performance
based compensation accruals.
o As of October 1, 1998, Salomon Smith Barney had mark-to-market exposure to
hedge funds of $2.122 billion, collateralized by $2.167 billion of cash
and government securities, resulting in excess collateral of $45 million.
Within these results, a portion of hedge funds have collateral in excess
of the mark-to-market deficit, and a portion of hedge funds have deficits
in excess of collateral held. The total exposure to hedge funds with
mark-to-market deficits in excess of collateral held is $48 million. No
single hedge fund had a mark-to-market deficit which was more than $8
million in excess of collateral held from that hedge fund. Mark-to-market
exposure includes those hedge funds which owe Salomon Smith Barney on
foreign exchange and derivative contracts such as swaps, swap options, and
other over-the-counter options and only the uncollateralized portion of
receivables on reverse repurchase and repurchase agreements. This exposure
can change significantly as a result of extreme market movements.
o In addition, Salomon Smith Barney has no unsecured loans or loan
commitments to hedge funds. Salomon Smith Barney has no investments in
hedge funds other than the previously disclosed investment in Long-Term
Capital Management, LP, made in concert with a consortium of banks and
securities firms.
19
<PAGE>
TravelersGroup[LOGO]
Third Quarter 1998 Earnings - October 21, 1998
Salomon Smith Barney Asset Management earns $70.5 million, Up 19% from year-ago
quarter
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Third Quarter Nine Months
Salomon Smith Barney ----------------- % ----------------- %
Asset Management Division 1998 1997 Change 1998 1997 Change
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue (In Millions) .............. $244.2 $213.1 15 $695.9 $592.8 17
Core Business Income (In Millions) . $ 70.5 $ 59.4 19 $193.3 $152.4 27
Pretax Profit Margin % ............. 47.8 46.2 -- 46.0 42.6 --
SSBAM Assets Under
Management (In Billions)
Money Market Funds ............... $ 55.1 $ 45.3 22 $ 55.1 $ 45.3 22
Mutual Funds ..................... 53.5 46.4 15 53.5 46.4 15
Private Client .................. 17.0 14.8 15 17.0 14.8 15
Institutional ................... 44.0 40.2 9 44.0 40.2 9
----------------- -----------------
Managed Accounts ................. 61.0 55.0 11 61.0 55.0 11
----------------- -----------------
Salomon Smith Barney
Asset Management ................. $169.6 $146.7 16 $169.6 $146.7 16
----------------- -----------------
Number of Morningstar
4- and 5- Star Funds ............. 22 17 29 22 17 29
Cross Marketing Long Term Open-End
Mutual Fund Sales Through
SSB ........................... $1,210 $1,079 12 $3,750 $2,804 34
PFS ........................... 431 184 NM 1,171 525 NM
TL&A .......................... 109 72 51 321 185 74
----------------- -----------------
Proprietary Funds
Distribution through Travelers $1,750 $1,335 31 $5,242 $3,514 49
=======================================================
Proprietary Funds Percent of Total
Sales Throughout Travelers Group % 31 25 -- 28 24 --
- -----------------------------------------=======================================================
</TABLE>
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
o Although included in Salomon Smith Barney's overall results, this division
is being focused upon as a separate Core Business.
o The division's strong recurring revenues reflect continued strength in
mutual funds, retail and institutional managed accounts, and its share of
unit trust revenues. SSBAM's $169.6 billion in assets under management
breaks down as 33% in money market funds, 31% in mutual funds, and 36% in
accounts managed for high net worth individuals, pension funds,
corporations, and other institutions. The slight increase in money market
funds as a percentage of total assets reflects investor reaction to recent
market volatility.
o Investment advisory, administration, and distribution fees rose 16% to
$217.3 million from the prior-year quarter, paralleling a 16% increase in
assets under management. The pretax profit margin from this unit was
47.8%, up from 46.2% in the prior-year period, and among the highest in
the industry.
o During the quarter, SSBAM completed its acquisition of the Australian
asset management business of JP Morgan, which added $4.8 billion in assets
under management and establishes an important franchise in what is
expected to be the sixth largest investment market in the world by 2001.
Included in this projected market growth are the rapid changes taking
place in the retirement market in Australia.
o In the mutual fund sector, there was a significant increase not only in
dollar sales, but also in performance, with the number of Morningstar 4-
and 5-star funds rising to 22, up from 17 in the prior-year period. Sales
of proprietary Smith Barney mutual funds rose 34%, and they account for an
increasing percentage -- 29.3% year-to-date compared to 26.6% for the
prior year-to-date -- of Salomon Smith Barney's total mutual fund sales.
20
<PAGE>
TravelersGroup[LOGO]
Third Quarter 1998 Earnings - October 21, 1998
o New products successfully introduced in the third quarter include the
Smith Barney Mid-Cap Blend Fund which helps to round out the unit's group
of style pure funds.
o During the quarter, the division successfully offered the 1998 Uncommon
Values Unit Investment Trust Series, comprised of three portfolios,
Uncommon Values, Aggressive Growth, and Growth and Income, raising over
$2.1 billion in assets.
o In addition, in mid September, Citicorp Investment Services began
distributing Salomon Brothers mutual funds. This initiative is the
division's first rollout of several planned Citigroup cross-sell
opportunities.
Consumer Finance
Consumer Finance earns $83.3 million in the third quarter, Up 27% from year-ago
quarter
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Third Quarter Nine Months
Consumer Finance Services --------------------- % --------------------- %
(In Millions of Dollars) 1998 1997 Change 1998 1997 Change
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue ............ $ 542.3 $ 448.1 21 $ 1,541.5 $ 1,204.8 28
Core Business Income 83.3 65.4 27 211.9 166.8 27
Receivables Owned .. 12,669.9 10,652.4 19 12,669.9 10,652.4 19
Average Yield % .... 14.21 14.57 -- 14.18 14.55 --
Charge-off Rate % .. 2.39 2.50 -- 2.60 2.74 --
Average Assets ..... $14,350.7 $11,075.5 29 $13,654.7 $ 9,956.8 37
Return on Assets % . 2.32 2.35 -- 2.07 2.24 --
- ---------------------------=============================================================
</TABLE>
o This excellent performance reflects continued internal receivables growth
in all major products, an improved charge-off rate, and the integration of
Security Pacific Financial Services into the Commercial Credit branch
system since July 1997.
o Receivables owned reached a record $12.67 billion, up 19% from the prior
year period, and up $1.62 billion or 15% since year-end 1997. This
excludes $255.1 million in credit card receivables securitized on March 6,
1998. Much of the growth in real estate- secured loans resulted from the
continued strong performance of the $.M.A.R.T. program, as well as solid
sales in the branch network. On a managed basis, including securitized
assets, receivables totaled $13.01 billion, an increase of $1.77 billion
since year-end 1997.
o The average yield on owned receivables at 14.21%, was down from 14.57% in
the 1997 quarter, reflecting the shift in the portfolio mix toward
lower-risk real estate-secured loans, which have lower prices. At
quarter-end, the owned portfolio consisted of 48% real estate-secured
loans, 34% personal loans, 11% credit cards, and 7% sales finance and
other.
o The charge-off rate on owned receivables continued to improve to 2.39%,
down from 2.50% in the 1997 period and from 2.66% in the previous quarter.
Delinquencies over 60 days on owned receivables were 2.27% of receivables,
down from 2.35% at year-end 1997, but up from 2.17% at the end of the
comparable quarter last year, which contained a short-term benefit from
the transition of Security Pacific's portfolio to Commercial Credit's
charge-off policies.
21
<PAGE>
TravelersGroup[LOGO]
Third Quarter 1998 Earnings - October 21, 1998
Life Insurance
Primerica Financial Services earns $98.8 million in the third quarter, Up 17%
from a year-ago
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Third Quarter Nine Months
Primerica Financial Services ------------------- % ------------------- %
(In Millions of Dollars) 1998 1997 Change 1998 1997 Change
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue ...................... $ 414.5 $ 384.2 8 $1,236.9 $1,134.8 9
Core Business Income
Life Insurance ............. 76.8 67.5 14 232.4 200.2 16
Other Financial Products(A) 22.0 17.2 28 64.6 44.6 45
------------------- -------------------
Total Core Business Income ... $ 98.8 $ 84.7 17 $ 297.0 $ 244.8 21
------------------- -------------------
Financial Needs
Analyses (FNA's)
Submitted(B) .............. 132,791 132,141 -- 403,957 331,633 22
Life Insurance Issued
(In Billions of Dollars) ... $ 14.2 $ 13.1 8 $ 43.0 $ 39.2 10
Other Financial Products
Mutual Fund Sales at NAV ... 725.0 635.9 14 2,326.9 2,027.3 15
Cash Advanced on
$.M.A.R.T. and
$.A.F.E. Loans(C) ....... 351.1 315.5 11 1,078.3 943.1 14
Variable Annuity
Net Written Premiums ..... 171.9 100.6 71 473.4 234.6 NM
SECURE Net Written Premiums(D) 60.8 19.5 NM 154.6 44.4 NM
- ---------------------------------=========================================================
</TABLE>
(A) Earnings reflect commissions earned from cross marketing sister company
products and other non-life products.
(B) 1997 FNA's were adjusted to be consistent with 1998.
(C) The $.M.A.R.T. and $.A.F.E. loan products are marketed by PFS, and the
receivables are reflected in the assets of Consumer Finance Services.
(D) The SECURE property casualty insurance products are marketed by PFS, and
the premiums are reflected in the operating earnings of Travelers Property
Casualty Corp.
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
o Core business income for the quarter advanced 17% over last year's period,
reflecting PFS's continued success at cross-selling a range of products,
growth in life insurance in force, favorable mortality experience, and
disciplined expense management.
o New term life insurance sales were $14.2 billion in face value, up from
$13.1 billion in the 1997 quarter. Although the number of policies issued
were basically flat quarter-over-quarter, the average face amount per
policy issued rose 11% to $223,485.
o Life insurance in force reached a record $380.6 billion, up 3% from the
prior year quarter, reflecting good policy persistency and stable sales
growth.
o Cross-selling initiatives continued to enhance the company's earnings.
Distribution of non-life insurance products accounted for $22.0 million or
22% of the company's operating earnings, an increase of 28% from the prior
year quarter.
o Sales of mutual funds rose more than 14% to $725.0 million (at net asset
value), despite significant market volatility in both the U.S. and Canada.
Salomon Smith Barney funds accounted for almost 61% of PFS's U.S. sales
and approximately 53% of total sales.
o Variable annuity sales continued to show momentum, reaching net written
premiums and deposits of $171.9 million, increasing 71% over last year's
period.
22
<PAGE>
TravelersGroup[LOGO]
Third Quarter 1998 Earnings - October 21, 1998
o Cash advanced on $.M.A.R.T. and $.A.F.E. Loans underwritten by Commercial
Credit was up 11% to $351.1 million. The Secure line of property casualty
insurance products showed strong growth, with net written premiums up
almost three-fold to $60.8 million, and the number of policies sold in the
quarter up 60% to 41,483. The number of agents licensed to sell auto and
homeowners insurance jumped 59% to 12,683 people.
o One of the primary factors in PFS's cross-selling success, the Financial
Needs Analysis, continues to help the company's Personal Financial
Analysts define and address their client's needs. They submitted more than
132,000 FNA's in the quarter bringing the nine month total to nearly
404,000, indicating the potential that more than one-half million people
will have an analysis done for them before year-end 1998.
Travelers Life & Annuity earns $123.3 million in the third quarter, Up 16% from
year-ago quarter
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Third Quarter Nine Months
Travelers Life & Annuity --------------- % ------------------- %
(In Millions of Dollars) 1998 1997 Change 1998 1997 Change
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue ......................... $721.0 $716.0 1 $2,292.5 $1,999.6 15
Total Core Business Income ...... $123.3 $106.5 16 $ 371.5 $ 312.5 19
Pretax Contribution by Source
Deferred and Payout Annuities . $ 82.0 $ 74.7 10 $ 263.4 $ 224.4 17
Group Annuities ............... 36.4 26.2 39 96.2 75.5 27
Life and Long Term Care
Insurance 34.6 35.0 (1) 111.8 106.1 5
--------------- -------------------
Subtotal .................... 153.0 135.9 13 471.4 406.0 16
Other (Principally Return on
Excess Capital and Run-off
Business) ................... 37.6 26.9 40 99.3 70.4 41
--------------- -------------------
Total Core Business ............. $190.6 $162.8 17 $ 570.7 $ 476.4 20
--------------- -------------------
Income Pretax
Cross Marketing %
Percent of Deferred Annuities
Sold Through Citigroup
Affiliates ................. 78 78 -- 78 77 --
Percent of New Individual Life
and Long Term Care Sales Sold
Through Citigroup Affiliates . 40 38 -- 43 38 --
- ------------------------------------=====================================================
</TABLE>
o Earnings growth for the quarter reflects strong double-digit business
volume growth in annuity account balances and life and long term care
premiums. A decline in investment income yields for the quarter, which
vary by product line, results primarily from participation in partnership
investment interests being negatively impacted by the downturn in
marketplace conditions. This decline was substantially offset by a
favorable reserve settlement in the runoff group life and health business.
o In deferred annuities, significant sales through established Citigroup
distribution channels, Salomon Smith Barney Financial Consultant's, and
The Copeland Companies, were complemented by the successful third quarter
launches of the Primerica Financial Services and Citibank branch network
cross-selling initiatives. Total premium deposits for the quarter
increased 52% to $872.9 million. Account balances aggregated $17.5 billion
at September 30, 1998, up 12% from a year ago, but down 3% since June 30,
reflecting the downturn in the market value of the variable annuity
account balances.
o Payout and group annuity account balances and benefit reserves reached
$13.3 billion at September 30, 1998, up 14% from a year ago. The
revitalization of this business is reflected in the 208% increase in net
written premiums and deposits (excluding old Travelers Group employee
pension plan deposits) to $1.082 billion for the quarter ended September
30, 1998.
o For individual life insurance, net premiums and deposits were $78.5
million, up 13%. Single deposits rose to $17.1 million, and new periodic
premium sales increased 73%, reflecting a 30% increase in sales at Salomon
Smith Barney.
23
<PAGE>
TravelersGroup[LOGO]
Third Quarter 1998 Earnings - October 21, 1998
For the quarter, Salomon Smith Barney life sales increased to over 33% of
new periodic premium and single deposits. Life insurance in force was
$54.2 billion at September 30, 1998, up $3.3 billion from a year ago.
o Earned premiums for the growing long term care insurance product line
increased 26% to $51.8 million.
o Strong sustained operating performance over the past several quarters was
recognized by Standard & Poor's in their September 1998 upgrade of
Travelers Insurance Company's claims paying rating to AA (Excellent).
Travelers Property Casualty Corp. (83.4% owned by Travelers Group)
Travelers Property Casualty earns $294.0 million before Minority Interest, With
Travelers Group's share $244.9 million
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Property Casualty Insurance Third Quarter Nine Months
Services ------------------- % ------------------- %
(In Millions of Dollars) 1998 1997 Change 1998 1997 Change
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Commercial Lines .......... $1,654.9 $1,651.1 -- $4,971.5 $4,887.5 2
Personal Lines ............ 943.5 852.7 11 2,746.7 2,472.6 11
Other ..................... 2.0 2.9 (31) 8.6 8.8 (2)
------------------- -------------------
Total Revenues ............ $2,600.4 $2,506.7 4 $7,726.8 $7,368.9 5
------------------- -------------------
Core Business Income (Loss)
Commercial Lines .......... $ 230.6 $ 223.9 3 $ 683.1 $ 626.7 9
Personal Lines ............ 90.3 95.4 (5) 306.0 304.2 1
Financing Costs and Other . (26.9) (29.3) 8 (84.9) (92.6) 8
Minority Interest ......... (49.1) (48.0) (2) (151.1) (146.4) (3)
------------------- -------------------
Total Core Business Income .. $ 244.9 $ 242.0 1 $ 753.1 $ 691.9 9
------------------- -------------------
Statutory Combined Ratio,
As Adjusted(A)(B) (%)
Loss and Loss Adjustment
Expense Ratio ............ 74.8 71.8 73.7 72.7
Other Underwriting
Expense Ratio ............ 28.2 30.8 28.7 30.0
------------------- -------------------
Combined Ratio .............. 103.0 102.6 102.4 102.7
------------------- -------------------
Cross-Marketing, Net
Written Premiums
SECURE(C) ............... $ 60.8 $ 19.5 NM $ 154.6 $ 44.4 NM
- -----------------------------------===========================================================
</TABLE>
(A) The 1997 nine month net written premiums include an increase of $142.4
million due to a change to conform Aetna P&C's and Travelers P&C's methods
of recording net written premiums, and an increase of $68.7 million due to
an adjustment associated with a reinsurance transaction in the 1997 first
quarter. The statutory combined ratio, as adjusted, excludes these
transactions.
(B) Before policyholder dividends.
(C) The SECURE property casualty insurance products are marketed by PFS.
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
o Results for the quarter were solid compared to the third quarter of 1997,
especially in view of the current quarter's catastrophe losses, after
taxes and reinsurance, of $36.7 million and unusually high losses from
other weather-related claims. Contributing to earnings were lower expenses
and growth in Personal Lines agency distribution.
24
<PAGE>
TravelersGroup[LOGO]
Third Quarter 1998 Earnings - October 21, 1998
Commercial Lines earns $230.6 million (before Minority Interest), Up 3% from the
1997 third quarter
o The 3% rise in core business income reflects continued expense savings
and, as anticipated, a decline in asbestos and environmental incurred
losses. Catastrophe losses, after taxes and reinsurance, were $14.9
million versus none in the prior-year quarter.
o Pricing remains very soft in Commercial Lines. However, through a
combination of disciplined underwriting and good customer retention, net
written premiums of $1.168 billion stayed level with last year's quarter.
o The statutory combined ratio improved to 108.0% from 109.2% as a result of
continued expense savings, partially offset by higher catastrophes and
weather-related losses.
Personal Lines earns $90.3 million (before Minority Interest), Down 5% from the
year-ago quarter
o Core business income reflects catastrophe losses of $21.8 million, after
taxes and reinsurance, compared with no catastrophe losses in the
prior-year quarter. Excluding catastrophes, core income increased as a
result of expense management, higher net investment income, and increased
production.
o Net written premiums rose 17% to $908.7 million as a result of strong
sales through both the independent agent and alternative distribution
systems.
o The statutory combined ratio rose to 96.3% from 93.0% in the 1997 third
quarter due to higher catastrophe losses, partially offset by expense
efficiencies.
Financing Costs and Other was ($26.9) million, down from ($29.3) million in the
year-ago quarter
o The primary component of Financing Costs and Other operating expense for
the quarter was interest expense of $26.0 million.
Travelers Group Investment Portfolio
o The Investment Portfolio, which consists largely of the fixed income
securities holdings in the Travelers Life & Annuity and Travelers Property
Casualty portfolios, reported gains of $25.4 million in the quarter, down
from $82.0 million in the year-earlier quarter.
o Travelers Group's $67 billion investment portfolio consists primarily of
fixed income investments with average quality ratings of A+/A1. The
effective duration of the fixed income portfolio, including short-term
fixed income investments, is 4.8 years.
25
<PAGE>
TravelersGroup[LOGO]
Third Quarter 1998 Earnings - October 21, 1998
Travelers Group Corporate and Other Operating Expense was ($51.6) million,
versus ($60.3) million in the year-ago quarter
o Corporate expenses include a reduction in incentive compensation accruals
and an increase in net treasury expense.
Other Information
o Travelers Group, which as of September 30, 1998 had assets of $358
billion, was a diversified, integrated financial services company engaged
in investment services, asset management, consumer finance, and life and
property casualty insurance services.
26
<PAGE>
citigroup[LOGO]
Third Quarter 1998 Earnings - October 21, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Calculation of Earnings Per Share
- --------------------------------------------------------------------------------------------------------------
Third Quarter Nine Months
---------------------------------------------------------------------
Travelers Citigroup Travelers Citigroup
(In Millions, except Per Share Amounts) Citicorp Group Pro-Forma(A) Citicorp Group Pro-Forma(A)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Core Income .................. $ 530 $ 199 $ 729 $2,692 $ 2,242 $ 4,934
Dividends on Preferred Stock . (19) (31) (50) (79) (93) (172)
-------------------------------------------------------------------
Core Income Applicable to
Common Stock -- Basic EPS .. 511 168 679 2,613 2,149 4,762
Effect of Dilutive Securities -- 6 6 -- 19 19
-------------------------------------------------------------------
Income Applicable to
Common Stock -- Diluted EPS $ 511 $ 174 $ 685 $2,613 $ 2,168 $ 4,781
- -------------------------------------------===================================================================
Weighted-Average Common Shares
Outstanding -- Basic EPS ... 451.2 1,120.3 2,248.3 450.9 1,118.6 2,245.9
Effect of Dilutive Securities:
Convertible Securities ..... -- 13.2 13.2 -- 13.2 13.2
Options(B) ................. 10.3 13.2 38.9 11.4 15.7 44.1
Warrants ................... -- 0.7 0.7 -- 3.1 3.1
Restricted Stock ........... 0.3 18.8 19.6 0.3 17.4 18.2
-------------------------------------------------------------------
Adjusted -- Diluted EPS ...... 461.8 1,166.2 2,320.7 462.6 1,168.0 2,324.5
- -------------------------------------------===================================================================
Citigroup Core
Earnings Per Share
Basic ........................ -- -- $ 0.30 -- -- $ 2.12
Diluted ...................... -- -- 0.30 -- -- 2.06
- -------------------------------------------===================================================================
</TABLE>
(A) Citigroup pro-forma results combine those of Citicorp and Travelers Group.
Pro-forma core income per share reflects the exchange of 2.5 Citigroup
common shares for each Citicorp common share effective October 8, 1998,
when the merger was completed.
(B) Includes the dilutive effect of stock options and stock purchase
agreements, computed using the treasury stock method, and shares issuable
under deferred stock awards.
- --------------------------------------------------------------------------------
27
<PAGE>
CITICORP[LOGO]
Third Quarter 1998 Earnings - October 21, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
CITICORP and Subsidiaries Consolidated Statement of Income
- ----------------------------------------------------------------------------------
Third Quarter Nine Months
(In Millions of Dollars, --------------- % ---------------- %
Except Per Share Amounts) 1998 1997 Change 1998 1997 Change
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest Revenue ............ $6,976 $6,195 13 $19,937 $18,193 10
Interest Expense ............ 3,878 3,319 17 11,005 9,650 14
--------------- ----------------
Net Interest Revenue ........ 3,098 2,876 8 8,932 8,543 5
Provision for Credit Losses . 736 486 51 1,807 1,421 27
--------------- ----------------
Net Interest Revenue after
Provision for Credit Losses 2,362 2,390 (1) 7,125 7,122 --
--------------- ----------------
Fees, Commissions,
and Other Revenue
Fees and Commissions ........ 1,575 1,478 7 4,569 4,271 7
Foreign Exchange ............ 474 435 9 1,288 1,043 23
Trading Account ............. (159) 134 NM 175 429 (59)
Securities Transactions ..... (56) 186 NM 485 418 16
Other Revenue ............... 562 432 30 1,852 1,344 38
--------------- ----------------
Total Fees, Commissions,
and Other Revenue ......... 2,396 2,665 (10) 8,369 7,505 12
--------------- ----------------
Operating Expense
Salaries .................... 1,505 1,356 11 4,331 3,906 11
Employee Benefits ........... 325 317 3 1,038 1,039 --
--------------- ----------------
Total Employee Expense .... 1,830 1,673 9 5,369 4,945 9
Net Premises &
Equipment Expense ......... 550 496 11 1,577 1,465 8
Restructuring Charge ........ -- 889 NM -- 889 NM
Other Expense ............... 1,530 1,179 30 4,241 3,280 29
--------------- ----------------
Total Operating Expense ..... 3,910 4,237 (8) 11,187 10,579 6
--------------- ----------------
Income Before Taxes ......... 848 818 4 4,307 4,048 6
Income Taxes ................ 318 307 4 1,615 1,518 6
--------------- ----------------
Net Income .................. $ 530 $ 511 4 $ 2,692 $ 2,530 6
- --------------------------------==================================================
</TABLE>
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
28
<PAGE>
CITICORP [LOGO]
Third Quarter 1998 Earnings - October 21, 1998
- --------------------------------------------------------------------------------
CITICORP and Subsidiaries Consolidated Balance Sheet
- --------------------------------------------------------------------------------
Sept. 30, Dec. 31, %
(In Millions of Dollars) 1998 1997 Change
- --------------------------------------------------------------------------------
Assets
Cash and Due from Banks ....................... $ 9,107 $ 8,585 6
Deposits at Interest with Banks ............... 14,085 13,049 8
Securities, at Fair Value:
Available for Sale ......................... 35,552 30,762 16
Venture Capital ............................ 3,285 2,599 26
Trading Account Assets ........................ 40,018 40,356 (1)
Loans Held for Sale ........................... 5,183 3,515 47
Federal Funds Sold and Securities Purchased
Under Resale Agreements .................... 13,412 10,233 31
Loans, Net:
Consumer ................................... 112,103 108,066 4
Commercial ................................. 87,706 75,947 15
----------------------
Loans, Net of Unearned Income ................. 199,809 184,013 9
Allowance for Credit Losses ................ (6,240) (5,816) 7
----------------------
Total Loans, Net .............................. 193,569 178,197 9
----------------------
Customers' Acceptance Liability ............... 1,609 1,726 (7)
Premises and Equipment, Net ................... 5,019 4,474 12
Interest and Fees Receivable .................. 3,549 3,288 8
Other Assets .................................. 18,952 14,113 34
----------------------
Total ......................................... $ 343,340 $ 310,897 10
- -------------------------------------------------===============================
Liabilities
Non-Interest-Bearing Deposits in U.S. Offices . $ 16,315 $ 16,901 (3)
Interest-Bearing Deposits in U.S. Offices ..... 42,318 40,361 5
Non-Interest-Bearing Deposits in Offices
Outside the U.S. ........................... 10,925 9,627 13
Interest-Bearing Deposits in Offices Outside
the U.S. ................................... 152,877 132,232 16
----------------------
Total Deposits ............................. 222,435 199,121 12
----------------------
Trading Account Liabilities ................... 30,692 30,986 (1)
Purchased Funds and Other Borrowings .......... 24,305 21,231 14
Acceptances Outstanding ....................... 1,685 1,826 (8)
Accrued Taxes and Other Expense ............... 7,284 6,464 13
Other Liabilities ............................. 15,811 10,288 54
Long-Term Debt ................................ 19,982 19,785 1
Stockholders' Equity
Preferred Stock (Without par value) ........... 863 1,903 (55)
Common Stock ($1.00 par value) ................ 506 506 --
Issued Shares: 506,298,235 in each period
Surplus ....................................... 6,525 6,501 --
Retained Earnings ............................. 18,621 16,789 11
Accumulated Other Changes in Equity from
Nonowner Sources (A) ....................... (871) (91) NM
Common Stock in Treasury, at Cost ............. (4,498) (4,412) 2
Shares: 53,583,079 and 52,355,947,
respectively
----------------------
Total Stockholders' Equity .................... 21,146 21,196 --
----------------------
Total ........................................ $ 343,340 $ 310,897 10
- -------------------------------------------------===============================
(A) Amounts at September 30, 1998 and December 31, 1997 include the after-tax
amounts for net unrealized gains (losses) on securities available for sale
of ($242) million and $535 million, respectively, and foreign currency
translation of ($629) million and ($626) million, respectively.
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
29
<PAGE>
CITICORP [LOGO]
Third Quarter 1998 Earnings - October 21, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
CITICORP Consumer Loan Delinquency Amounts, Net Credit Losses, and Ratios
- --------------------------------------------------------------------------------------------------------------------
Total Average
Loans 90 Days or More Past Due (A) Loans Net Credit Losses (A)
(In Millions of Dollars, ------------------------------------------------------------------------------------------
except Loan Sept. 30, Sept. 30, June 30, Sept. 30, 3rd Qtr. 3rd Qtr. 2nd Qtr. 3rd Qtr.
Amounts in Billions) 1998 1998 1998 1997 1998 1998 1998 1997
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Citibanking ........... $ 70.1 $ 2,119 $ 1,995 $ 2,082 $ 69.0 $ 144 $ 144 $ 135
Ratio ................. 3.02% 2.93% 3.07% 0.83% 0.85% 0.80%
Cards:
- ---------------------------
U.S. Bankcards (B) .... 61.2 924 942 806 60.3 795 842 639
Ratio ................. 1.51% 1.58% 1.76% 5.23% 5.73% 5.58%
Other (C) ............. 10.0 230 220 182 9.5 112 103 90
Ratio ................. 2.31% 2.30% 1.98% 4.66% 4.42% 3.92%
Private Bank .......... 16.4 195 197 146 16.3 1 -- (4)
Ratio ................. 1.19% 1.23% 0.94% 0.02% NM NM
- --------------------------------------------------------------------------------------------------------------------
Total Managed ......... 157.7 3,468 3,354 3,216 155.1 1,052 1,089 860
Ratio ................. 2.20% 2.19% 2.32% 2.69% 2.88% 2.50%
- --------------------------------------------------------------------------------------------------------------------
Securitization Activity
Credit Card Receivables (40.4) (611) (601) (452) (39.9) (539) (542) (378)
Loans Held for Sale ... (5.2) (38) (40) (34) (5.2) (34) (37) (30)
- --------------------------------------------------------------------------------------------------------------------
Total Loans ........... $112.1 $ 2,819 $ 2,713 $ 2,730 $110.0 $ 479 $ 510 $ 452
Ratio ................. 2.51% 2.53% 2.51% 1.72% 1.86% 1.67%
- --------------------------------------------------------------------------------------------------------------------
Managed Portfolio:
- ---------------------------
Developed ............. $123.7 $ 2,720 $ 2,707 $ 2,763 $121.6 $ 913 $ 956 $ 769
Ratio ................. 2.20% 2.25% 2.66% 2.97% 3.24% 2.98%
Emerging .............. 34.0 748 647 453 33.5 139 133 91
Ratio ................. 2.20% 1.95% 1.31% 1.65% 1.61% 1.06%
- --------------------------------------------------------------------------------------------------------------------
Emerging Portfolio (D):
- ---------------------------
Asia Pacific .......... $ 22.6 $ 448 $ 374 $ 253 $ 22.2 $ 60 $ 63 $ 38
Ratio ................. 1.99% 1.70% 1.04% 1.10% 1.16% 0.63%
Latin America ......... 9.9 254 227 162 9.9 70 61 45
Ratio ................. 2.56% 2.28% 1.83% 2.82% 2.51% 2.09%
CEEMEA (E) ............ 1.5 46 46 38 1.4 9 9 8
Ratio ................. 3.13% 3.40% 2.67% 2.71% 2.86% 2.13%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(A) The ratios of 90 days or more past due and net credit losses are
calculated based on end-of-period and average loans, respectively, both
net of unearned income.
(B) The U.S. bankcards managed ratios of 90 days or more past due and net
credit losses were reduced by 11 basis points and 23 basis points,
respectively, in the current quarter, and by 12 basis points and 24 basis
points in the preceding quarter, due to the addition of the UCS portfolio.
(C) Includes bankcards outside of the U.S., worldwide Diners Club, and private
label cards.
(D) Includes Private Bank and excludes Japan.
(E) Central and Eastern Europe, Middle East, and Africa.
NM Not meaningful.
- --------------------------------------------------------------------------------
30
<PAGE>
CITICORP [LOGO]
Third Quarter 1998 Earnings - October 21, 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
CITICORP Other Revenue Third Quarter Nine Months
----------------- % --------------- %
(In Millions of Dollars) 1998 1997(A) Change 1998 1997(A) Change
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Credit Card Securitization Activity $ 374 $ 134 NM $ 863 $ 417 NM
Venture Capital ................... (31) 235 NM 404 501 (19)
Affiliate Earnings ................ 47 51 (8) 118 222 (47)
Net Asset Gains ................... 142 (6) NM 371 150 NM
Other Items ....................... 30 18 67 96 54 78
---------------- ---------------
Total ............................. $ 562 $ 432 30 $1,852 $1,344 38
- --------------------------------------======================================================
</TABLE>
(A) Reclassified to conform to the latest quarter's presentation.
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
CITICORP
Provision for Credit Losses Third Quarter Nine Months
----------------- % ---------------- %
(In Millions of Dollars) 1998 1997 Change 1998 1997 Change
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Global Consumer Net Write-Offs .... $ 479 $ 452 6 $1,415 $ 1,399 1
Global Corporate Banking .......... 232 9 NM 317 (53) NM
Net Write-Offs (Recoveries)
Additional Provision .............. 25 25 -- 75 75 --
---------------- ---------------
Total ............................. $ 736 $ 486 51 $1,807 $ 1,421 27
- --------------------------------------=======================================================
</TABLE>
NM Not meaningful, as percentage equals or exceeds 100%.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CITICORP Credit Loss Reserves Sept. 30, Dec. 31, Sept. 30,
(In Millions of Dollars) 1998 1997 1997
- --------------------------------------------------------------------------------
Aggregate Allowance for Credit Losses:
Global Consumer (A) .............................. $2,911 $2,487 $2,470
Global Corporate Banking ......................... 3,429 3,429 3,429
---------------------------
Total Aggregate Allowance for Credit Losses (B) .. 6,340 5,916 5,899
Reserves for Securitization Activities (C) ....... 66 85 89
---------------------------
Total Credit Loss Reserves ....................... $6,406 $6,001 $5,988
- -----------------------------------------------------===========================
Allowance As a Percent of Total Loans:
Global Consumer .................................. 2.60% 2.30% 2.27%
Global Corporate Banking (D) ..................... 3.80% 4.38% 4.60%
Total ............................................ 3.12% 3.16% 3.20%
- -----------------------------------------------------===========================
(A) The balance at September 30, 1998 includes $320 million of credit loss
reserves related to the acquisition of UCS.
(B) Includes $6.2 billion attributable to loans and loan commitments as a
deduction from Loans, $50 million attributable to standby letters of
credit and guarantees included in Other Liabilities, and $50 million
attributable to derivative and foreign exchange contracts reported as a
deduction from Trading Account Assets at September 30, 1998.
(C) Attributable to mortgage loans sold with recourse.
(D) Excludes allowance portion attributable to standby letters of credit and
guarantees, and derivative and foreign exchange contracts.
- --------------------------------------------------------------------------------
31
<PAGE>
Certain of the statements contained in the press release that are not
historical facts are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act. The Company's actual results may
differ materially from those included in the forward-looking statements.
Forward-looking statements are typically identified by words or phrases such as
"believe," "expect," "anticipate," "intend," "estimate," "are likely to be," and
similar expressions. These forward-looking statements involve risks and
uncertainties including, but not limited to, the following: changes in general
economic conditions, including the performance of financial markets and interest
rates; customer responsiveness to both new products and distribution channels;
and competitive, regulatory, or tax changes that affect the cost of or demand
for the Company's products.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits:
Exhibit No. Description
99 Citigroup 1998 Third Quarter Financial Supplement
<PAGE>
SIGNATURE
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 hereunto duly authorized.
Dated: October 22, 1998 CITIGROUP INC.
By: /s/ Roger Trupin
----------------------------------
Roger Trupin
Controller
Page No.
--------
CITIGROUP:
Citigroup - Summary of Earnings...................................... 1
CITICORP:
Citicorp Financial Summary........................................... 2
Citicorp Earnings Analysis........................................... 3
Citicorp Segment Revenues ........................................... 4
Citicorp Segment Core Income ........................................ 5
Citicorp Global Consumer ............................................ 6
Citicorp Citibanking ................................................ 7
Citicorp Cards....................................................... 8
Citicorp Private Banking............................................. 9
Citicorp Global Consumer in Emerging Markets ........................ 10
Citicorp Global Consumer in Developed Markets........................ 11
Citicorp Global Corporate Banking.................................... 12
Citicorp Emerging Markets............................................ 13
Citicorp Global Relationship Banking................................. 14
Citicorp Investment Activities....................................... 15
Citicorp Corporate Items............................................. 15
Citicorp Other Revenue and Securities Transactions................... 16
Citicorp Trading-Related Revenue..................................... 16
Citicorp Cash-Basis and Renegotiated Loans........................... 17
Citicorp Other Real Estate Owned (OREO) and Assets Pending
Disposition ....................................................... 17
Citicorp U.S. Bankcards Data Sheet................................... 18
TRAVELERS GROUP:
Travelers Group - Summary of Earnings................................ 19
Travelers Group - Segment Revenues................................... 20
Travelers Group - Segment Core Business Income....................... 21
Travelers Group - Investment Services - (Page 1 of 3)................ 22
Travelers Group - Investment Services - (Page 2 of 3)................ 23
Travelers Group - Investment Services - (Page 3 of 3)................ 24
Travelers Group - Consumer Finance Services.......................... 25
Travelers Group - Life Insurance Services - (Page 1 of 4)............ 26
Travelers Group - Life Insurance Services - (Page 2 of 4)............ 27
Travelers Group - Life Insurance Services - (Page 3 of 4)............ 28
Travelers Group - Life Insurance Services - (Page 4 of 4)............ 29
Travelers Group - Property & Casualty Insurance Services -
(Page 1 of 4) ..................................................... 30
Travelers Group - Property & Casualty Insurance Services -
(Page 2 of 4) ..................................................... 31
Travelers Group - Property & Casualty Insurance Services -
(Page 3 of 4) ..................................................... 32
Travelers Group - Property & Casualty Insurance Services -
(Page 4 of 4) ..................................................... 33
Travelers Group - Selected Other Data................................ 34
<PAGE>
CITIGROUP -- SUMMARY OF EARNINGS
(In millions of dollars, except per share amounts)
<TABLE>
<CAPTION>
1Q 2Q 3Q 4Q 1Q 2Q 3Q
1997 1997 1997 1997 1998 1998 1998
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Income After Tax and Minority Interest:
Core Income $ 1,810 $ 1,907 $ 2,096 $ 1,934 $ 2,158 $ 2,047 $ 729
Restructuring Release (Charge) -- -- (556) (496) -- 191 --
--------- --------- --------- --------- --------- --------- ---------
Net Income $ 1,810 $ 1,907 $ 1,540 $ 1,438 $ 2,158 $ 2,238 $ 729
========= ========= ========= ========= ========= ========= =========
Basic Earnings Per Share:
Core Income $ 0.77 $ 0.82 $ 0.90 $ 0.83 $ 0.93 $ 0.89 $ 0.30
========= ========= ========= ========= ========= ========= =========
Net Income $ 0.77 $ 0.82 $ 0.66 $ 0.61 $ 0.93 $ 0.97 $ 0.30
========= ========= ========= ========= ========= ========= =========
Weighted average common shares
outstanding, applicable to Basic EPS 2,257.4 2,247.4 2,245.7 2,241.2 2,243.5 2,244.2 2,248.3
========= ========= ========= ========= ========= ========= =========
Diluted Earnings Per Share:
Core Income $ 0.74 $ 0.78 $ 0.86 $ 0.80 $ 0.90 $ 0.86 $ 0.30
========= ========= ========= ========= ========= ========= =========
Net Income $ 0.74 $ 0.78 $ 0.63 $ 0.59 $ 0.90 $ 0.94 $ 0.30
========= ========= ========= ========= ========= ========= =========
Adjusted weighted average common shares
outstanding, applicable to Diluted EPS 2,371.3 2,356.3 2,357.3 2,344.9 2,328.9 2,330.9 2,320.7
========= ========= ========= ========= ========= ========= =========
Total Assets, at period end (in billions) $ 658.3 $ 699.9 $ 705.0 $ 697.5 $ 738.9 $ 750.8 $ 701.8
========= ========= ========= ========= ========= ========= =========
Total Equity, at period end (in billions) $ 38.6 $ 40.7 $ 41.8 $ 42.1 $ 43.1 $ 44.1 $ 43.6
========= ========= ========= ========= ========= ========= =========
Book Value Per Share, at period end $ 15.51 $ 16.31 $ 16.92 $ 16.99 $ 17.55 $ 18.16 $ 18.16
========= ========= ========= ========= ========= ========= =========
Book value Per Share, excluding FAS 115 $ 15.27 $ 15.71 $ 16.09 $ 16.25 $ 16.77 $ 17.47 $ 17.48
========= ========= ========= ========= ========= ========= =========
Return on Equity (1) 19.6% 20.3% 21.3% 19.4% 21.3% 19.7% 6.5%
========= ========= ========= ========= ========= ========= =========
Return on Equity, excluding FAS 115 (1) 20.1% 20.8% 22.2% 20.0% 22.3% 20.6% 6.9%
========= ========= ========= ========= ========= ========= =========
<CAPTION>
YTD YTD
3Q 3Q Full Year
1997 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Income After Tax and Minority Interest:
Core Income $ 5,813 $ 4,934 $ 7,747
Restructuring Release (Charge) (556) 191 (1,052)
--------- --------- ---------
Net Income $ 5,257 $ 5,125 $ 6,695
========= ========= =========
Basic Earnings Per Share:
Core Income $ 2.49 $ 2.12 $ 3.32
========= ========= =========
Net Income $ 2.24 $ 2.21 $ 2.85
========= ========= =========
Weighted average common shares
outstanding, applicable to Basic EPS 2,250.4 2,245.9 2,247.9
========= ========= =========
Diluted Earnings Per Share:
Core Income $ 2.38 $ 2.06 $ 3.18
========= ========= =========
Net Income $ 2.15 $ 2.14 $ 2.74
========= ========= =========
Adjusted weighted average common shares
outstanding, applicable to Diluted EPS 2,362.3 2,324.5 2,357.7
========= ========= =========
Total Assets, at period end (in billions) $ 705.0 $ 701.8 $ 697.5
========= ========= =========
Total Equity, at period end (in billions) $ 41.8 $ 43.6 $ 42.1
========= ========= =========
Book Value Per Share, at period end $ 16.92 $ 18.16 $ 16.99
========= ========= =========
Book value Per Share, excluding FAS 115 $ 16.09 $ 17.48 $ 16.25
========= ========= =========
Return on Equity (1) 20.5% 15.9% 20.2%
========= ========= =========
Return on Equity, excluding FAS 115 (1) 21.1% 16.5% 20.8%
========= ========= =========
</TABLE>
(1) Based on Core Income.
Page 1
<PAGE>
CITICORP FINANCIAL SUMMARY
(In millions of dollars)
<TABLE>
<CAPTION>
1Q 2Q 3Q 4Q 1Q 2Q
1997 1997 1997 1997 1998 1998
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net Income $ 995 $ 1,024 $ 511 $ 1,061 $ 1,065 $ 1,097
========= ========= ========= ========= ========= =========
--------- --------- --------- --------- --------- ---------
Core Income Excluding Restructuring $ 995 $ 1,024 $ 1,067 $ 1,061 $ 1,065 $ 1,097
========= ========= ========= ========= ========= =========
Financial Ratios
Return on Assets 1.41% 1.40% 0.68% 1.39% 1.38% 1.35%
Return on Common Stockholders' Equity 20.76% 20.97% 9.64% 21.49% 21.74% 21.51%
Return on Total Stockholders' Equity 19.44% 19.72% 9.42% 20.18% 20.55% 20.46%
Adjusted Net Interest Margin 5.23% 5.00% 4.88% 4.85% 4.85% 5.02%
Financial Ratios Excluding Restructuring
Return on Assets 1.41% 1.40% 1.42% 1.39% 1.38% 1.35%
Return on Common Stockholders' Equity 20.76% 20.97% 20.77% 21.49% 21.74% 21.51%
Return on Total Stockholders' Equity 19.44% 19.72% 19.57% 20.18% 20.55% 20.46%
Capital (Dollars in Billions)
Tier 1 $ 20.3 $ 20.6 $ 20.7 $ 21.1 $ 21.3 $ 21.9
Total (Tier 1 and 2) (A) 29.3 30.1 30.4 31.2 31.2 31.8
Tier 1 Ratio (A) 8.39% 8.18% 8.25% 8.34% 8.26% 8.29%
Total Ratio (Tier 1 and 2) (A) 12.11% 11.96% 12.16% 12.31% 12.13% 12.05%
Common Equity as a Percentage of Total Assets 6.50% 6.41% 6.53% 6.21% 6.01% 6.18%
Total Equity as a Percentage of Total Assets 7.16% 7.04% 7.16% 6.82% 6.50% 6.57%
<CAPTION>
YTD YTD
3Q 3Q 3Q
1998 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
Net Income $ 530 $ 2,530 $ 2,692
========= ========= =========
--------- --------- ---------
Core Income Excluding Restructuring $ 530 $ 3,086 $ 2,692
========= ========= =========
Financial Ratios
Return on Assets 0.63% 1.16% 1.11%
Return on Common Stockholders' Equity 9.98% 16.98% 17.61%
Return on Total Stockholders' Equity 9.79% 16.08% 16.87%
Adjusted Net Interest Margin 5.06% N/A N/A
Financial Ratios Excluding Restructuring
Return on Assets 0.63% 1.41% 1.11%
Return on Common Stockholders' Equity 9.98% 20.84% 17.61%
Return on Total Stockholders' Equity 9.79% 19.58% 16.87%
Capital (Dollars in Billions)
Tier 1 $ 21.8 $ 20.7 $ 21.8
Total (Tier 1 and 2) (A) 31.8 30.4 31.8
Tier 1 Ratio (A) 8.0% 8.25% 8.0%
Total Ratio (Tier 1 and 2) (A) 11.7% 12.16% 11.7%
Common Equity as a Percentage of Total Assets 5.91% 6.53% 5.91%
Total Equity as a Percentage of Total Assets 6.16% 7.16% 6.16%
</TABLE>
(A) Estimated for September 30, 1998.
N/A Not Available.
Page 2
<PAGE>
CITICORP EARNINGS ANALYSIS
(In millions of dollars)
<TABLE>
<CAPTION>
1Q 2Q 3Q 4Q 1Q 2Q 3Q
1997 1997 1997 1997 1998 1998 1998
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Total Revenue $ 5,196 $ 5,311 $ 5,541 $ 5,568 $ 5,605 $ 6,202 $ 5,494
Effect of Credit Card Securitization Activity 434 437 408 434 461 579 573
Net Cost To Carry (A) (3) (1) (5) 4 (1) 11 4
-------- -------- -------- -------- -------- -------- --------
Adjusted Revenue 5,627 5,747 5,944 6,006 6,065 6,792 6,071
-------- -------- -------- -------- -------- -------- --------
Total Operating Expense 3,169 3,173 4,237 3,408 3,394 3,883 3,910
Net OREO Benefits (B) 10 37 16 9 12 2 13
Restructuring Charge -- -- (889) -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Adjusted Operating Expense 3,179 3,210 3,364 3,417 3,406 3,885 3,923
-------- -------- -------- -------- -------- -------- --------
Operating Margin 2,448 2,537 2,580 2,589 2,659 2,907 2,148
-------- -------- -------- -------- -------- -------- --------
Global Consumer Net Write-Offs 459 488 452 432 426 510 479
Effect of Credit Card Securitization Activity 434 437 408 434 461 579 573
Net Cost to Carry and Net
OREO (Benefits) Costs (A) (B) 1 (3) (4) -- (1) (3) (8)
-------- -------- -------- -------- -------- -------- --------
Global Consumer Credit Costs 894 922 856 866 886 1,086 1,044
-------- -------- -------- -------- -------- -------- --------
Global Corporate Banking
Net Write-Offs (Recoveries) (6) 3 14 29 66 29 232
Net Cost to Carry and Net
OREO Costs (Benefits) (A) (B) (14) (35) (17) (5) (12) 12 (1)
Global Corporate Banking
-------- -------- -------- -------- -------- -------- --------
Credit Costs (Benefits) (20) (32) (3) 24 54 41 231
-------- -------- -------- -------- -------- -------- --------
Investment Activities Credit
-------- -------- -------- -------- -------- -------- --------
(Benefits) (55) (4) (5) -- (10) -- --
-------- -------- -------- -------- -------- -------- --------
Operating Margin Less Credit Costs 1,629 1,651 1,732 1,699 1,729 1,780 873
Additional Provision (C) 25 25 25 25 25 25 25
Restructuring Charge -- -- 889 -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Income Before Taxes 1,604 1,626 818 1,674 1,704 1,755 848
Income Taxes 609 602 307 613 639 658 318
-------- -------- -------- -------- -------- -------- --------
Net Income $ 995 $ 1,024 $ 511 $ 1,061 $ 1,065 $ 1,097 $ 530
======== ======== ======== ======== ======== ======== ========
-------- -------- -------- -------- -------- -------- --------
Core Income Excluding Restructuring $ 995 $ 1,024 $ 1,067 $ 1,061 $ 1,065 $ 1,097 $ 530
======== ======== ======== ======== ======== ======== ========
<CAPTION>
YTD YTD
3Q 3Q
1997 1998
-------- --------
Total Revenue $ 16,048 $ 17,301
Effect of Credit Card Securitization Activity 1,279 1,613
Net Cost To Carry (A) (9) 14
-------- --------
Adjusted Revenue 17,318 18,928
-------- --------
Total Operating Expense 10,579 11,187
Net OREO Benefits (B) 63 27
Restructuring Charge (889) --
-------- --------
Adjusted Operating Expense 9,753 11,214
-------- --------
Operating Margin 7,565 7,714
-------- --------
Global Consumer Net Write-Offs 1,399 1,415
Effect of Credit Card Securitization Activity 1,279 1,613
Net Cost to Carry and Net
OREO (Benefits) Costs (A) (B) (6) (12)
-------- --------
Global Consumer Credit Costs 2,672 3,016
-------- --------
Global Corporate Banking
Net Write-Offs (Recoveries) 11 327
Net Cost to Carry and Net
OREO Costs (Benefits) (A) (B) (66) (1)
Global Corporate Banking -------- --------
Credit Costs (Benefits) (55) 326
Investment Activities Credit -------- --------
(Benefits) (64) (10)
-------- --------
Operating Margin Less Credit Costs 5,012 4,382
Additional Provision (C) 75 75
Restructuring Charge 889 --
-------- --------
Income Before Taxes 4,048 4,307
Income Taxes 1,518 1,615
-------- --------
Net Income $ 2,530 $ 2,692
======== ========
-------- --------
Core Income Excluding Restructuring $ 3,086 $ 2,692
======== ========
</TABLE>
(A) Includes the net cost to carry cash-basis loans and other real estate
owned ("OREO").
(B) Includes gains and losses on sales, direct revenue and expense, and
writedowns of OREO.
(C) Represents amounts in excess of net write-offs.
Page 3
<PAGE>
CITICORP SEGMENT REVENUES (A)
(In millions of dollars)
<TABLE>
<CAPTION>
YTD YTD
1Q 2Q 3Q 4Q 1Q 2Q 3Q 3Q 3Q
1997 1997 1997 1997 1998 1998 1998 1997 1998
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Global Consumer $ 3,069 $ 3,107 $ 3,128 $ 3,115 $ 3,046 $ 3,464 $ 3,633 $ 9,304 $10,143
Global Corporate Banking 1,763 1,660 1,788 1,709 1,858 2,036 1,461 5,211 5,355
------- ------- ------- ------- ------- ------- ------- ------- -------
Core Businesses 4,832 4,767 4,916 4,824 4,904 5,500 5,094 14,515 15,498
Investment Activities 146 308 348 493 468 439 117 802 1,024
Corporate Items 218 236 277 251 233 263 283 731 779
------- ------- ------- ------- ------- ------- ------- ------- -------
Total Citicorp $ 5,196 $ 5,311 $ 5,541 $ 5,568 $ 5,605 $ 6,202 $ 5,494 $16,048 $17,301
======= ======= ======= ======= ======= ======= ======= ======= =======
Supplemental Information
Global Consumer
Citibanking $ 1,476 $ 1,528 $ 1,532 $ 1,534 $ 1,510 $ 1,613 $ 1,680 $ 4,536 $ 4,803
Cards 1,322 1,300 1,299 1,291 1,251 1,548 1,652 3,921 4,451
Private Bank 271 279 297 290 285 303 301 847 889
------- ------- ------- ------- ------- ------- ------- ------- -------
Total $ 3,069 $ 3,107 $ 3,128 $ 3,115 $ 3,046 $ 3,464 $ 3,633 $ 9,304 $10,143
======= ======= ======= ======= ======= ======= ======= ======= =======
Global Consumer
Emerging Markets $ 948 $ 987 $ 970 $ 908 $ 877 $ 922 $ 982 $ 2,905 $ 2,781
Developed Markets 2,121 2,120 2,158 2,207 2,169 2,542 2,651 6,399 7,362
------- ------- ------- ------- ------- ------- ------- ------- -------
Total $ 3,069 $ 3,107 $ 3,128 $ 3,115 $ 3,046 $ 3,464 $ 3,633 $ 9,304 $10,143
======= ======= ======= ======= ======= ======= ======= ======= =======
Global Corporate Banking
Emerging Markets $ 832 $ 792 $ 881 $ 729 $ 891 $ 906 $ 697 $ 2,505 $ 2,494
Global Relationship Banking 931 868 907 980 967 1,130 764 2,706 2,861
------- ------- ------- ------- ------- ------- ------- ------- -------
Total $ 1,763 $ 1,660 $ 1,788 $ 1,709 $ 1,858 $ 2,036 $ 1,461 $ 5,211 $ 5,355
======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
(A) Reclassified to conform to the latest quarter's presentation, including
the reclassification of Citicorp's venture capital activities, certain
Corporate investments, and the results of certain investments in the
former refinancing countries to a new business segment called "Investment
Activities."
Page 4
<PAGE>
CITICORP SEGMENT CORE INCOME (A)
(In millions of dollars)
<TABLE>
<CAPTION>
YTD YTD
1Q 2Q 3Q 4Q 1Q 2Q 3Q 3Q 3Q
1997 1997 1997 1997 1998 1998 1998 1997 1998
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Global Consumer $ 475 $ 457 $ 452 $ 411 $ 420 $ 367 $ 477 $ 1,384 $ 1,264
Global Corporate Banking 457 397 417 194 390 377 (127) 1,271 640
------- ------- ------- ------- ------- ------- ------- ------- -------
Core Businesses 932 854 869 605 810 744 350 2,655 1,904
Investment Activities 166 240 259 386 376 341 71 665 788
Corporate Items (103) (70) (61) 70 (121) 12 109 (234) --
------- ------- ------- ------- ------- ------- ------- ------- -------
Total Citicorp $ 995 $ 1,024 $ 1,067 $ 1,061 $ 1,065 $ 1,097 $ 530 $ 3,086 $ 2,692
======= ======= ======= ======= ======= ======= ======= ======= =======
Supplemental Information
Global Consumer
Citibanking $ 175 $ 192 $ 168 $ 130 $ 158 $ 149 $ 178 $ 535 $ 485
Cards 219 185 193 205 189 141 227 597 557
Private Bank 81 80 91 76 73 77 72 252 222
------- ------- ------- ------- ------- ------- ------- ------- -------
Total $ 475 $ 457 $ 452 $ 411 $ 420 $ 367 $ 477 $ 1,384 $ 1,264
======= ======= ======= ======= ======= ======= ======= ======= =======
Global Consumer
Emerging Markets $ 240 $ 239 $ 218 $ 160 $ 159 $ 140 $ 158 $ 697 $ 457
Developed Markets 235 218 234 251 261 227 319 687 807
------- ------- ------- ------- ------- ------- ------- ------- -------
Total $ 475 $ 457 $ 452 $ 411 $ 420 $ 367 $ 477 $ 1,384 $ 1,264
======= ======= ======= ======= ======= ======= ======= ======= =======
Global Corporate Banking
Emerging Markets $ 309 $ 250 $ 280 $ 75 $ 285 $ 207 $ (19) $ 839 $ 473
Global Relationship Banking 148 147 137 119 105 170 (108) 432 167
------- ------- ------- ------- ------- ------- ------- ------- -------
Total $ 457 $ 397 $ 417 $ 194 $ 390 $ 377 $ (127) $ 1,271 $ 640
======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
(A) Reclassified to conform to the latest quarter's presentation, including
the reclassification of Citicorp's venture capital activities, certain
Corporate investments, and the results of certain investments in the
former refinancing countries to a new business segment called "Investment
Activities."
Page 5
<PAGE>
CITICORP GLOBAL CONSUMER (A)
(In millions of dollars)
<TABLE>
<CAPTION>
YTD YTD
1Q 2Q 3Q 4Q 1Q 2Q 3Q 3Q 3Q
1997 1997 1997 1997 1998 1998 1998 1997 1998
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Adjusted Revenue $ 3,503 $ 3,544 $ 3,534 $ 3,549 $ 3,506 $ 4,043 $ 4,199 $10,581 $11,748
Adjusted Operating Expense 1,908 1,961 2,011 2,059 1,994 2,378 2,407 5,880 6,779
------- ------- ------- ------- ------- ------- ------- ------- -------
Operating Margin 1,595 1,583 1,523 1,490 1,512 1,665 1,792 4,701 4,969
Credit Costs (B) 894 922 856 866 886 1,086 1,044 2,672 3,016
------- ------- ------- ------- ------- ------- ------- ------- -------
Operating Margin Less Credit
Costs 701 661 667 624 626 579 748 2,029 1,953
Additional Provision 25 25 25 25 25 25 25 75 75
Restructuring Charge -- -- 580 -- -- -- -- 580 --
------- ------- ------- ------- ------- ------- ------- ------- -------
Income Before Taxes 676 636 62 599 601 554 723 1,374 1,878
Income Taxes 201 179 (39) 188 181 187 246 341 614
------- ------- ------- ------- ------- ------- ------- ------- -------
Net Income $ 475 $ 457 $ 101 $ 411 $ 420 $ 367 $ 477 $ 1,033 $ 1,264
======= ======= ======= ======= ======= ======= ======= ======= =======
Average Assets (In Billions of Dollars) $ 131 $ 133 $ 134 $ 133 $ 131 $ 140 $ 144 $ 132 $ 139
Return on Assets (%) 1.47% 1.38% 0.30% 1.23% 1.30% 1.05% 1.31% 1.05% 1.22%
======= ======= ======= ======= ======= ======= ======= ======= =======
Excluding Restructuring Charge
Core Income $ 475 $ 457 $ 452 $ 411 $ 420 $ 367 $ 477 $ 1,384 $ 1,264
Return on Assets (%) 1.47% 1.38% 1.34% 1.23% 1.30% 1.05% 1.31% 1.40% 1.22%
======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
(A) Reclassified to conform to the latest quarter's presentation.
(B) Includes the effect of credit card securitization activity and the effect
related to credit card receivables held for sale.
Page 6
<PAGE>
CITICORP CITIBANKING (A)
(In millions of dollars)
<TABLE>
<CAPTION>
YTD YTD
1Q 2Q 3Q 4Q 1Q 2Q 3Q 3Q 3Q
1997 1997 1997 1997 1998 1998 1998 1997 1998
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue $ 1,476 $ 1,528 $ 1,532 $ 1,534 $ 1,510 $ 1,613 $ 1,680 $ 4,536 $ 4,803
Operating Expense 1,071 1,099 1,148 1,187 1,154 1,233 1,260 3,318 3,647
------- ------- ------- ------- ------- ------- ------- ------- -------
Operating Margin 405 429 384 347 356 380 420 1,218 1,156
Credit Costs 148 145 135 139 137 144 144 428 425
------- ------- ------- ------- ------- ------- ------- ------- -------
Operating Margin Less Credit
Costs 257 284 249 208 219 236 276 790 731
Additional Provision -- -- -- -- (2) (4) (1) -- (7)
Restructuring Charge -- -- 457 -- -- -- -- 457 --
------- ------- ------- ------- ------- ------- ------- ------- -------
Income Before Taxes 257 284 (208) 208 221 240 277 333 738
Income Taxes 82 92 (101) 78 63 91 99 73 253
------- ------- ------- ------- ------- ------- ------- ------- -------
Net Income (Loss) $ 175 $ 192 $ (107) $ 130 $ 158 $ 149 $ 178 $ 260 $ 485
======= ======= ======= ======= ======= ======= ======= ======= =======
Average Assets (In Billions of Dollars) $ 83 $ 84 $ 85 $ 85 $ 86 $ 88 $ 92 $ 84 $ 89
Return on Assets (%) 0.86% 0.92% -- 0.61% 0.75% 0.68% 0.77% 0.41% 0.73%
======= ======= ======= ======= ======= ======= ======= ======= =======
Excluding Restructuring Charge
Core Income $ 175 $ 192 $ 168 $ 130 $ 158 $ 149 $ 178 $ 535 $ 485
Return on Assets (%) 0.86% 0.92% 0.78% 0.61% 0.75% 0.68% 0.77% 0.85% 0.73%
======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
(A) Reclassified to conform to the latest quarter's presentation.
Page 7
<PAGE>
CITICORP CARDS (A)
(In millions of dollars)
<TABLE>
<CAPTION>
YTD YTD
1Q 2Q 3Q 4Q 1Q 2Q 3Q 3Q 3Q
1997 1997 1997 1997 1998 1998 1998 1997 1998
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Adjusted Revenue $1,756 $1,737 $1,707 $1,725 $1,712 $2,127 $2,225 5,200 6,064
Adjusted Operating Expense 671 680 673 671 645 942 942 2,024 2,529
------ ------ ------ ------ ------ ------ ------ ------ ------
Operating Margin 1,085 1,057 1,034 1,054 1,067 1,185 1,283 3,176 3,535
Credit Costs 747 778 729 736 757 945 907 2,254 2,609
------ ------ ------ ------ ------ ------ ------ ------ ------
Operating Margin Less Credit
Costs 338 279 305 318 310 240 376 922 926
Additional Provision 25 25 25 25 27 29 26 75 82
Restructuring Charge -- -- 95 -- -- -- -- 95 --
------ ------ ------ ------ ------ ------ ------ ------ ------
Income Before Taxes 313 254 185 293 283 211 350 752 844
Income Taxes 94 69 50 88 94 70 123 213 287
------ ------ ------ ------ ------ ------ ------ ------ ------
Net Income $ 219 $ 185 $ 135 $ 205 $ 189 $ 141 $ 227 539 557
====== ====== ====== ====== ====== ====== ====== ====== ======
Average Assets (In Billions of Dollars) $ 31 $ 32 $ 32 $ 31 $ 29 $ 36 $ 35 $ 31 $ 33
Return on Assets (%) 2.87% 2.32% 1.67% 2.62% 2.64% 1.57% 2.57% 2.32% 2.26%
====== ====== ====== ====== ====== ====== ====== ====== ======
Excluding Restructuring Charge
Core Income $ 219 $ 185 $ 193 $ 205 $ 189 $ 141 $ 227 $ 597 $ 557
Return on Assets (%) 2.87% 2.32% 2.39% 2.62% 2.64% 1.57% 2.57% 2.57% 2.26%
====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
(A) Reclassified to conform to the latest quarter's presentation.
Page 8
<PAGE>
CITICORP PRIVATE BANKING (A)
(In millions of dollars)
<TABLE>
<CAPTION>
YTD YTD
1Q 2Q 3Q 4Q 1Q 2Q 3Q 3Q 3Q
1997 1997 1997 1997 1998 1998 1998 1997 1998
----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Adjusted Revenue $ 271 $ 279 $ 295 $ 290 $ 284 $ 303 $ 294 $ 845 $ 881
Adjusted Operating Expense 166 182 190 201 195 203 205 538 603
----- ----- ----- ----- ----- ----- ----- ----- -----
Operating Margin 105 97 105 89 89 100 89 307 278
Credit (Benefits) (1) (1) (8) (9) (8) (3) (7) (10) (18)
----- ----- ----- ----- ----- ----- ----- ----- -----
Operating Margin Less Credit
(Benefits) 106 98 113 98 97 103 96 317 296
Restructuring Charge -- -- 28 -- -- -- -- 28 --
----- ----- ----- ----- ----- ----- ----- ----- -----
Income Before Taxes 106 98 85 98 97 103 96 289 296
Income Taxes 25 18 12 22 24 26 24 55 74
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Income $ 81 $ 80 $ 73 $ 76 $ 73 $ 77 $ 72 $ 234 $ 222
===== ===== ===== ===== ===== ===== ===== ===== =====
Average Assets (In Billions of Dollars) $ 17 $ 17 $ 17 $ 17 $ 16 $ 16 $ 17 $ 17 $ 17
Return on Assets (%) 1.93% 1.89% 1.70% 1.77% 1.85% 1.93% 1.68% 1.84% 1.75%
===== ===== ===== ===== ===== ===== ===== ===== =====
Excluding Restructuring Charge
Core Income $ 81 $ 80 $ 91 $ 76 $ 73 $ 77 $ 72 $ 252 $ 222
Return on Assets (%) 1.93% 1.89% 2.12% 1.77% 1.85% 1.93% 1.68% 1.98% 1.75%
===== ===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
(A) Reclassified to conform to the latest quarter's presentation.
Page 9
<PAGE>
CITICORP GLOBAL CONSUMER IN EMERGING MARKETS (A)
(In millions of dollars)
<TABLE>
<CAPTION>
YTD YTD
1Q 2Q 3Q 4Q 1Q 2Q 3Q 3Q 3Q
1997 1997 1997 1997 1998 1998 1998 1997 1998
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Adjusted Revenue $ 948 $ 987 $ 970 $ 908 $ 877 $ 922 $ 982 $2,905 $2,781
Adjusted Operating Expense 545 585 598 612 570 610 638 1,728 1,818
------ ------ ------ ------ ------ ------ ------ ------ ------
Operating Margin 403 402 372 296 307 312 344 1,177 963
Credit Costs 92 97 91 88 101 133 139 280 373
------ ------ ------ ------ ------ ------ ------ ------ ------
Operating Margin Less Credit
Costs 311 305 281 208 206 179 205 897 590
Additional Provision 4 7 15 25 11 11 11 26 33
Restructuring Charge -- -- 131 -- -- -- -- 131 --
------ ------ ------ ------ ------ ------ ------ ------ ------
Income Before Taxes 307 298 135 183 195 168 194 740 557
Income Taxes 67 59 (1) 23 36 28 36 125 100
------ ------ ------ ------ ------ ------ ------ ------ ------
Net Income $ 240 $ 239 $ 136 $ 160 $ 159 $ 140 $ 158 $ 615 $ 457
====== ====== ====== ====== ====== ====== ====== ====== ======
Average Assets (In Billions of Dollars) $ 42 $ 43 $ 43 $ 42 $ 41 $ 42 $ 45 $ 42 $ 43
Return on Assets (%) 2.32% 2.23% 1.25% 1.51% 1.57% 1.34% 1.39% 1.96% 1.43%
====== ====== ====== ====== ====== ====== ====== ====== ======
Excluding Restructuring Charge
Core Income $ 240 $ 239 $ 218 $ 160 $ 159 $ 140 $ 158 $ 697 $ 457
Return on Assets (%) 2.32% 2.23% 2.01% 1.51% 1.57% 1.34% 1.39% 2.22% 1.43%
====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
(A) Reclassified to conform to the latest quarter's presentation.
Page 10
<PAGE>
CITICORP GLOBAL CONSUMER IN DEVELOPED MARKETS (A)
(In millions of dollars)
<TABLE>
<CAPTION>
YTD YTD
1Q 2Q 3Q 4Q 1Q 2Q 3Q 3Q 3Q
1997 1997 1997 1997 1998 1998 1998 1997 1998
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Adjusted Revenue $ 2,555 $ 2,557 $ 2,564 $ 2,641 $ 2,629 $ 3,121 $ 3,217 $ 7,676 $ 8,967
Adjusted Operating Expense 1,363 1,376 1,413 1,447 1,424 1,768 1,769 4,152 4,961
------- ------- ------- ------- ------- ------- ------- ------- -------
Operating Margin 1,192 1,181 1,151 1,194 1,205 1,353 1,448 3,524 4,006
Credit Costs 802 825 765 778 785 953 905 2,392 2,643
------- ------- ------- ------- ------- ------- ------- ------- -------
Operating Margin Less Credit
Costs 390 356 386 416 420 400 543 1,132 1,363
Additional Provision 21 18 10 -- 14 14 14 49 42
Restructuring Charge -- -- 449 -- -- -- -- 449 --
------- ------- ------- ------- ------- ------- ------- ------- -------
Income Before Taxes 369 338 (73) 416 406 386 529 634 1,321
Income Taxes 134 120 (38) 165 145 159 210 216 514
------- ------- ------- ------- ------- ------- ------- ------- -------
Net Income (Loss) $ 235 $ 218 $ (35) $ 251 $ 261 $ 227 $ 319 $ 418 $ 807
======= ======= ======= ======= ======= ======= ======= ======= =======
Average Assets (In Billions of Dollars) $ 89 $ 90 $ 91 $ 91 $ 90 $ 98 $ 99 $ 90 $ 96
Return on Assets (%) 1.07% 0.97% -- 1.09% 1.18% 0.93% 1.28% 0.62% 1.13%
======= ======= ======= ======= ======= ======= ======= ======= =======
Excluding Restructuring Charge
Core Income $ 235 $ 218 $ 234 $ 251 $ 261 $ 227 $ 319 $ 687 $ 807
Return on Assets (%) 1.07% 0.97% 1.02% 1.09% 1.18% 0.93% 1.28% 1.02% 1.13%
======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
(A) Reclassified to conform to the latest quarter's presentation.
Page 11
<PAGE>
CITICORP GLOBAL CORPORATE BANKING (A)
(In millions of dollars)
<TABLE>
<CAPTION>
YTD YTD
1Q 2Q 3Q 4Q 1Q 2Q 3Q 3Q 3Q
1997 1997 1997 1997 1998 1998 1998 1997 1998
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Adjusted Revenue $ 1,760 $ 1,659 $ 1,785 $ 1,713 $ 1,858 $ 2,047 $ 1,472 $ 5,204 $ 5,377
Adjusted Operating Expense 1,148 1,204 1,267 1,341 1,299 1,415 1,424 3,619 4,138
------- ------- ------- ------- ------- ------- ------- ------- -------
Operating Margin 612 455 518 372 559 632 48 1,585 1,239
Credit Costs (Benefits) (20) (32) (3) 24 54 41 231 (55) 326
------- ------- ------- ------- ------- ------- ------- ------- -------
Operating Margin Less
Credit Costs (Benefits) 632 487 521 348 505 591 (183) 1,640 913
Restructuring Charge -- -- 281 -- -- -- -- 281 --
------- ------- ------- ------- ------- ------- ------- ------- -------
Income Before Taxes 632 487 240 348 505 591 (183) 1,359 913
Income Taxes 175 90 (9) 154 115 214 (56) 256 273
------- ------- ------- ------- ------- ------- ------- ------- -------
Net Income (Loss) $ 457 $ 397 $ 249 $ 194 $ 390 $ 377 $ (127) $ 1,103 $ 640
======= ======= ======= ======= ======= ======= ======= ======= =======
Average Assets (In Billions of Dollars) $ 140 $ 143 $ 151 $ 155 $ 165 $ 170 $ 173 $ 145 $ 169
Return on Assets (%) 1.32% 1.11% 0.65% 0.50% 0.96% 0.89% -- 1.02% 0.51%
======= ======= ======= ======= ======= ======= ======= ======= =======
Excluding Restructuring Charge
Core Income $ 457 $ 397 $ 417 $ 194 $ 390 $ 377 $ (127) $ 1,271 $ 640
Return on Assets (%) 1.32% 1.11% 1.10% 0.50% 0.96% 0.89% -- 1.17% 0.51%
======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
(A) Reclassified to conform to the latest quarter's presentation, including
the reclassification of Citicorp's venture capital activities and the
results of certain investments in the former refinancing countries to a
new business segment called "Investment Activities."
Page 12
<PAGE>
CITICORP EMERGING MARKETS (A)
(In millions of dollars)
<TABLE>
<CAPTION>
YTD YTD
1Q 2Q 3Q 4Q 1Q 2Q 3Q 3Q 3Q
1997 1997 1997 1997 1998 1998 1998 1997 1998
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Adjusted Revenue $ 833 $ 795 $ 883 $ 738 $ 902 $ 921 $ 713 $2,511 $2,536
Adjusted Operating Expense 444 472 499 533 494 524 531 1,415 1,549
------ ------ ------ ------ ------ ------ ------ ------ ------
Operating Margin 389 323 384 205 408 397 182 1,096 987
Credit Costs 19 28 35 53 73 93 212 82 378
------ ------ ------ ------ ------ ------ ------ ------ ------
Operating Margin Less
Credit Costs 370 295 349 152 335 304 (30) 1,014 609
Restructuring Charge -- -- 54 -- -- -- -- 54 --
------ ------ ------ ------ ------ ------ ------ ------ ------
Income Before Taxes 370 295 295 152 335 304 (30) 960 609
Income Taxes 61 45 47 77 50 97 (11) 153 136
------ ------ ------ ------ ------ ------ ------ ------ ------
Net Income (Loss) $ 309 $ 250 $ 248 $ 75 $ 285 $ 207 $ (19) $ 807 $ 473
====== ====== ====== ====== ====== ====== ====== ====== ======
Average Assets (In Billions of Dollars) $ 60 $ 63 $ 68 $ 73 $ 77 $ 79 $ 81 $ 64 $ 79
Return on Assets (%) 2.09% 1.59% 1.45% 0.41% 1.50% 1.05% -- 1.69% 0.80%
====== ====== ====== ====== ====== ====== ====== ====== ======
Excluding Restructuring Charge
Core Income $ 309 $ 250 $ 280 $ 75 $ 285 $ 207 $ (19) $ 839 $ 473
Return on Assets (%) 2.09% 1.59% 1.63% 0.41% 1.50% 1.05% -- 1.75% 0.80%
====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
(A) Reclassified to conform to the latest quarter's presentation, including
the reclassification of the results of certain investments in the former
refinancing countries to a new business segment called "Investment
Activities."
Page 13
<PAGE>
CITICORP GLOBAL RELATIONSHIP BANKING (A)
(In millions of dollars)
<TABLE>
<CAPTION>
YTD YTD
1Q 2Q 3Q 4Q 1Q 2Q 3Q 3Q 3Q
1997 1997 1997 1997 1998 1998 1998 1997 1998
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Adjusted Revenue $ 927 $ 864 $ 902 $ 975 $ 956 $ 1,126 $ 759 $ 2,693 $ 2,841
Adjusted Operating Expense 704 732 768 808 805 891 893 2,204 2,589
------- ------- ------- ------- ------- ------- ------- ------- -------
Operating Margin 223 132 134 167 151 235 (134) 489 252
Credit Costs (Benefits) (39) (60) (38) (29) (19) (52) 19 (137) (52)
------- ------- ------- ------- ------- ------- ------- ------- -------
Operating Margin Less
Credit Costs (Benefits) 262 192 172 196 170 287 (153) 626 304
Restructuring Charge -- -- 227 -- -- -- -- 227 --
------- ------- ------- ------- ------- ------- ------- ------- -------
Income Before Taxes 262 192 (55) 196 170 287 (153) 399 304
Income Taxes 114 45 (56) 77 65 117 (45) 103 137
------- ------- ------- ------- ------- ------- ------- ------- -------
Net Income (Loss) $ 148 $ 147 $ 1 $ 119 $ 105 $ 170 $ (108) $ 296 $ 167
======= ======= ======= ======= ======= ======= ======= ======= =======
Average Assets (In Billions of Dollars) $ 80 $ 80 $ 83 $ 82 $ 88 $ 91 $ 92 $ 81 $ 90
Return on Assets (%) 0.75% 0.74% -- 0.58% 0.48% 0.75% -- 0.49% 0.25%
======= ======= ======= ======= ======= ======= ======= ======= =======
Excluding Restructuring Charge
Core Income $ 148 $ 147 $ 137 $ 119 $ 105 $ 170 $ (108) $ 432 $ 167
Return on Assets (%) 0.75% 0.74% 0.65% 0.58% 0.48% 0.75% -- 0.71% 0.25%
======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
(A) Reclassified to conform to the latest quarter's presentation, including
the reclassification of Citicorp's venture capital activities to a new
business segment called "Investment Activities."
Page 14
<PAGE>
CITICORP INVESTMENT ACTIVITIES (A)
(In millions of dollars)
<TABLE>
<CAPTION>
YTD YTD
1Q 2Q 3Q 4Q 1Q 2Q 3Q 3Q 3Q
1997 1997 1997 1997 1998 1998 1998 1997 1998
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue $ 146 $ 308 $ 348 $ 493 $ 468 $ 439 $ 117 $ 802 $ 1,024
Operating Expense 9 8 9 12 11 12 11 26 34
------- ------- ------- ------- ------- ------- ------- ------- -------
Operating Margin 137 300 339 481 457 427 106 776 990
Credit (Benefits) (55) (4) (5) -- (10) -- -- (64) (10)
------- ------- ------- ------- ------- ------- ------- ------- -------
Income Before Taxes 192 304 344 481 467 427 106 840 1,000
Income Taxes 26 64 85 95 91 86 35 175 212
------- ------- ------- ------- ------- ------- ------- ------- -------
Net Income $ 166 $ 240 $ 259 $ 386 $ 376 $ 341 $ 71 $ 665 $ 788
======= ======= ======= ======= ======= ======= ======= ======= =======
Average Assets (In Billions of Dollars) $ 9 $ 9 $ 9 $ 9 $ 9 $ 9 $ 8 $ 9 $ 9
Return on Assets (%) 7.48% 10.70% 11.42% 17.02% 16.94% 15.20% 3.52% 9.88% 11.75%
======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
(A) Investment Activities comprises Citicorp's venture capital activities,
certain Corporate investments, and the results of certain investments in
the former refinancing countries.
CITICORP CORPORATE ITEMS (A) (B)
(In millions of dollars)
<TABLE>
<CAPTION>
YTD YTD
1Q 2Q 3Q 4Q 1Q 2Q 3Q 3Q 3Q
1997 1997 1997 1997 1998 1998 1998 1997 1998
----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue $ 218 $ 236 $ 277 $ 251 $ 233 $ 263 $ 283 $ 731 $ 779
Operating Expense 114 37 77 5 102 80 81 228 263
----- ----- ----- ----- ----- ----- ----- ----- -----
Operating Margin 104 199 200 246 131 183 202 503 516
Restructuring Charge -- -- 28 -- -- -- -- 28 --
----- ----- ----- ----- ----- ----- ----- ----- -----
Income Before Taxes 104 199 172 246 131 183 202 475 516
Income Taxes 207 269 270 176 252 171 93 746 516
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Income (Loss) $(103) $ (70) $ (98) $ 70 $(121) $ 12 $ 109 $(271) $ --
===== ===== ===== ===== ===== ===== ===== ===== =====
Average Assets (In Billions of Dollars) $ 5 $ 8 $ 5 $ 5 $ 8 $ 8 $ 7 $ 6 $ 7
===== ===== ===== ===== ===== ===== ===== ===== =====
Excluding Restructuring Charge
Core Income $(103) $ (70) $ (61) $ 70 $(121) $ 12 $ 109 $(234) $ --
===== ===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
(A) 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
core business activities on a local tax-rate basis.
(B) Reclassified to conform to the latest quarter's presentation, including
the reclassification of certain Corporate investments and the results of
certain investments in the former refinancing countries to a new business
segment called "Investment Activities."
Page 15
<PAGE>
CITICORP OTHER REVENUE AND SECURITIES TRANSACTIONS
(In millions of dollars)
<TABLE>
<CAPTION>
YTD YTD
1Q 2Q 3Q 4Q 1Q 2Q 3Q 3Q 3Q
1997 1997 1997 1997 1998 1998 1998 1997 1998
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Securities Transactions $ 108 $ 124 $ 186 $ 250 $ 241 $ 300 $ (56) $ 418 $ 485
------ ------ ------ ------ ------ ------ ------ ------ ------
Other Revenue
Credit Card Securitization Activity $ 165 $ 118 $ 134 $ 142 $ 138 $ 351 $ 374 $ 417 $ 863
Venture Capital 93 173 235 248 264 171 (31) 501 404
Affiliate Earnings 59 112 51 33 29 42 47 222 118
Net Asset Gains 92 64 (6) 206 31 198 142 150 371
Other Items 28 8 18 29 37 29 30 54 96
------ ------ ------ ------ ------ ------ ------ ------ ------
Total Other Revenue $ 437 $ 475 $ 432 $ 658 $ 499 $ 791 $ 562 $1,344 $1,852
====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
CITICORP TRADING-RELATED REVENUE
(In millions of dollars)
<TABLE>
<CAPTION>
YTD YTD
1Q 2Q 3Q 4Q 1Q 2Q 3Q 3Q 3Q
1997 1997 1997 1997 1998 1998 1998 1997 1998
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
By Income Statement Line
Foreign Exchange $ 297 $ 311 $ 435 $ 443 $ 349 $ 465 $ 474 $1,043 $1,288
Trading Account 198 97 134 (188) 236 98 (159) 429 175
Other 94 103 91 92 143 167 77 288 387
------ ------ ------ ------ ------ ------ ------ ------ ------
Total $ 589 $ 511 $ 660 $ 347 $ 728 $ 730 $ 392 $1,760 $1,850
====== ====== ====== ====== ====== ====== ====== ====== ======
By Trading Activity
Foreign Exchange $ 237 $ 258 $ 342 $ 327 $ 386 $ 391 $ 386 $ 837 $1,163
Derivative 207 129 170 (49) 236 218 110 506 564
Fixed Income 70 59 75 1 56 31 (36) 204 51
Other 75 65 73 68 50 90 (68) 213 72
------ ------ ------ ------ ------ ------ ------ ------ ------
Total $ 589 $ 511 $ 660 $ 347 $ 728 $ 730 $ 392 $1,760 $1,850
====== ====== ====== ====== ====== ====== ====== ====== ======
By Business Sector
Emerging Markets $ 207 $ 155 $ 268 $ 132 $ 271 $ 259 $ 184 $ 630 $ 714
Global Relationship Banking 330 270 296 134 378 357 113 896 848
------ ------ ------ ------ ------ ------ ------ ------ ------
Total Corporate Banking 537 425 564 266 649 616 297 1,526 1,562
Consumer and Other 52 86 96 81 79 114 95 234 288
------ ------ ------ ------ ------ ------ ------ ------ ------
Total $ 589 $ 511 $ 660 $ 347 $ 728 $ 730 $ 392 $1,760 $1,850
====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
Page 16
<PAGE>
CITICORP CASH-BASIS AND RENEGOTIATED LOANS
(In millions of dollars)
<TABLE>
<CAPTION>
1Q 2Q 3Q 4Q 1Q 2Q 3Q
1997 1997 1997 1997 1998 1998 1998
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Commercial Cash-Basis Loans
Collateral Dependent
(at Lower of Cost or Collateral Value) (A) $ 288 $ 274 $ 271 $ 258 $ 242 $ 193 $ 170
Other (B) 641 643 698 806 1,102 1,100 1,110
------ ------ ------ ------ ------ ------ ------
Total Commercial Cash-Basis Loans $ 929 $ 917 $ 969 $1,064 $1,344 $1,293 $1,280
====== ====== ====== ====== ====== ====== ======
Commercial Cash-Basis Loans
Emerging Markets (B) $ 399 $ 470 $ 520 $ 649 $ 953 $ 981 $ 982
Global Relationship Banking 514 434 436 401 378 300 286
Investment Activities 16 13 13 14 13 12 12
------ ------ ------ ------ ------ ------ ------
Total Commercial Cash-Basis Loans $ 929 $ 917 $ 969 $1,064 $1,344 $1,293 $1,280
====== ====== ====== ====== ====== ====== ======
Commercial Renegotiated Loans $ 296 $ 295 $ 70 $ 59 $ 61 $ 45 $ 48
====== ====== ====== ====== ====== ====== ======
Consumer Loans on which Accrual
of Interest has been Suspended $2,119 $2,036 $1,902 $1,849 $1,850 $1,864 $1,924
====== ====== ====== ====== ====== ====== ======
</TABLE>
(A) 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.
(B) Includes foreign currency derivative contracts with a balance sheet credit
exposure of $44 million, $44 million, $83 million, and $59 million at
September 30, 1998, June 30, 1998, March 31, 1998, and December 31, 1997,
respectively, for which the recognition of revaluation gains has been
suspended.
CITICORP OTHER REAL ESTATE OWNED (OREO) AND ASSETS PENDING DISPOSITION (A)
(In millions of dollars)
<TABLE>
<CAPTION>
1Q 2Q 3Q 4Q 1Q 2Q 3Q
1997 1997 1997 1997 1998 1998 1998
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Consumer OREO $ 408 $ 362 $ 309 $ 263 $ 242 $ 182 $ 238
Emerging Markets 24 22 23 21 21 24 26
Global Relationship Banking 569 460 456 440 329 324 319
------ ------ ------ ------ ------ ------ ------
Commercial OREO 593 482 479 461 350 348 345
====== ====== ====== ====== ====== ====== ======
Total $1,001 $ 844 $ 788 $ 724 $ 592 $ 530 $ 583
====== ====== ====== ====== ====== ====== ======
Assets Pending Disposition (B) $ 174 $ 72 $ 88 $ 96 $ 103 $ 104 $ 103
====== ====== ====== ====== ====== ====== ======
</TABLE>
(A) Carried at lower of cost or collateral value.
(B) Represents consumer residential mortgage loans that have a high
probability of foreclosure.
Page 17
<PAGE>
CITICORP U.S. BANKCARDS DATA SHEET
(In billions of dollars)
<TABLE>
<CAPTION>
1Q 2Q 3Q 4Q 1Q 2Q 3Q
1997 1997 1997 1997 1998 1998 1998
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
End of Period Managed Receivables $ 45.1 $ 45.8 $ 46.5 $ 48.2 $ 45.3 $ 60.3 $ 62.0
Total accounts (In Millions) 25.1 25.1 25.0 24.8 24.5 38.2 38.5
Charge volume $ 23.0 $ 25.3 $ 26.6 $ 27.9 $ 24.1 $ 34.0 $ 36.4
End of Period Loans
On Balance Sheet $ 17.2 $ 19.1 $ 17.9 $ 18.8 $ 15.2 $ 15.8 $ 18.3
Securitized $ 25.4 $ 24.2 $ 26.0 $ 26.8 $ 27.6 $ 41.3 $ 40.4
Held for sale $ 2.0 $ 2.0 $ 2.0 $ 2.0 $ 2.0 $ 2.5 $ 2.5
Total $ 44.6 $ 45.3 $ 45.9 $ 47.6 $ 44.8 $ 59.6 $ 61.2
Average Loans
On Balance Sheet $ 17.9 $ 18.0 $ 18.6 $ 17.7 $ 16.1 $ 19.6 $ 17.9
Securitized $ 25.1 $ 24.7 $ 24.8 $ 26.3 $ 27.4 $ 36.8 $ 39.9
Held for sale $ 2.0 $ 2.0 $ 2.0 $ 2.0 $ 2.0 $ 2.5 $ 2.5
Total $ 45.0 $ 44.7 $ 45.4 $ 46.0 $ 45.5 $ 58.9 $ 60.3
Write-offs (In Millions of Dollars)
On Balance Sheet $ 222 $ 246 $ 231 $ 221 $ 207 $ 263 $ 222
Securitized $ 402 $ 404 $ 378 $ 403 $ 430 $ 542 $ 539
Held for sale $ 32 $ 33 $ 30 $ 31 $ 31 $ 37 $ 34
Total $ 656 $ 683 $ 639 $ 655 $ 668 $ 842 $ 795
Adjusted for Sale of Bankrupt Accounts -- -- 650 -- -- -- --
Coincident Net Credit Loss Rate 5.91% 6.13% 5.58% 5.64% 5.96% 5.73% 5.23%
Adjusted for Sale of Bankrupt Accounts -- -- 5.68% -- -- -- --
12 Month Lagged Net Credit Loss Rate (ex-UCS) 6.21% 6.51% 5.93% 5.86% 6.03% 5.98% 5.49%
Adjusted for Sale of Bankrupt Accounts -- -- 6.03% -- -- -- --
90+ Days Past Due
(In Millions of Dollars) $ 884 $ 843 $ 806 $ 856 $ 842 $ 942 $ 924
(%) 1.98% 1.86% 1.76% 1.80% 1.88% 1.58% 1.51%
% of Gross Write-offs that are Bankruptcies 37% 40% 40% 41% 37% 41% 43%
<CAPTION>
2Q 3Q
1998 1998
EX-UCS EX-UCS
-------- --------
<S> <C> <C>
End of Period Managed Receivables
Total accounts (In Millions)
Charge volume
End of Period Loans
On Balance Sheet
Securitized
Held for sale
Total $ 45.2 $ 46.0
Average Loans
On Balance Sheet
Securitized
Held for sale
Total $ 44.8 $ 45.7
Write-offs (In Millions of Dollars)
On Balance Sheet
Securitized
Held for sale
Total $ 667 $ 629
Adjusted for Sale of Bankrupt Accounts
Coincident Net Credit Loss Rate 5.97% 5.46%
Adjusted for Sale of Bankrupt Accounts
12 Month Lagged Net Credit Loss Rate (ex-UCS)
Adjusted for Sale of Bankrupt Accounts
90+ Days Past Due
(In Millions of Dollars) $ 766 $ 747
(%) 1.70% 1.62%
% of Gross Write-offs that are Bankruptcies 40% 42%
</TABLE>
Page 18
<PAGE>
TRAVELERS GROUP -- SUMMARY OF EARNINGS
(In millions of dollars)
<TABLE>
<CAPTION>
1Q 2Q 3Q 4Q 1Q 2Q 3Q
1997 1997 1997 1997 1998 1998 1998
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue $ 8,699.9 $ 9,183.6 $ 9,960.1 $ 9,765.0 $10,367.6 $10,096.0 $ 8,221.9
========= ========= ========= ========= ========= ========= =========
Revenue, Net of Interest Expense $ 6,322.2 $ 6,391.6 $ 6,880.1 $ 6,572.1 $ 7,190.2 $ 6,763.1 $ 4,927.6
========= ========= ========= ========= ========= ========= =========
Income After Tax and Minority Interest
Core Business Income $ 858.0 $ 924.0 $ 1,007.0 $ 785.3 $ 1,028.0 $ 968.1 $ 225.4
Investment Portfolio Gains (Losses) 8.9 5.7 82.0 144.0 86.5 27.8 25.4
Corporate and Other (51.8) (46.5) (60.3) (56.6) (21.1) (46.5) (51.6)
--------- --------- --------- --------- --------- --------- ---------
Core Income 815.1 883.2 1,028.7 872.7 1,093.4 949.4 199.2
Restructuring Release (Charge) -- -- -- (496.0) -- 191.2 --
--------- --------- --------- --------- --------- --------- ---------
Net Income $ 815.1 $ 883.2 $ 1,028.7 $ 376.7 $ 1,093.4 $ 1,140.6 $ 199.2
========= ========= ========= ========= ========= ========= =========
<CAPTION>
YTD YTD
3Q 3Q
1997 1998
--------- ---------
<S> <C> <C>
Revenue $27,843.6 $28,685.5
========= =========
Revenue, Net of Interest Expense $19,593.9 $18,880.9
========= =========
Income After Tax and Minority Interest
Core Business Income $ 2,789.0 $ 2,221.5
Investment Portfolio Gains (Losses) 96.6 139.7
Corporate and Other (158.6) (119.2)
--------- ---------
Core Income 2,727.0 2,242.0
Restructuring Release (Charge) -- 191.2
--------- ---------
Net Income $ 2,727.0 $ 2,433.2
========= =========
</TABLE>
Page 19
<PAGE>
TRAVELERS GROUP -- SEGMENT REVENUES
(In millions of dollars)
<TABLE>
<CAPTION>
1Q 2Q 3Q 4Q 1Q 2Q 3Q
1997 1997 1997 1997 1998 1998 1998
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Investment Services
Investment banking and brokerage $ 4,691.3 $ 5,115.6 $ 5,660.4 $ 5,247.4 $ 5,831.8 $ 5,582.7 $ 3,690.1
Asset management 186.1 193.6 213.1 199.9 224.9 226.8 244.2
--------- --------- --------- --------- --------- --------- ---------
Total Investment Services 4,877.4 5,309.2 5,873.5 5,447.3 6,056.7 5,809.5 3,934.3
--------- --------- --------- --------- --------- --------- ---------
Consumer Finance Services 377.1 379.6 448.1 483.0 485.0 514.2 542.3
--------- --------- --------- --------- --------- --------- ---------
Life Insurance Services
Travelers Life and Annuity 617.9 665.7 716.0 890.3 771.9 799.6 721.0
Primerica Financial Services 375.2 375.4 384.2 401.4 401.4 421.0 414.5
--------- --------- --------- --------- --------- --------- ---------
Total Life Insurance Services 993.1 1,041.1 1,100.2 1,291.7 1,173.3 1,220.6 1,135.5
--------- --------- --------- --------- --------- --------- ---------
Property and Casualty Insurance Services
Commercial Lines 1,624.1 1,612.3 1,651.1 1,669.4 1,696.7 1,619.9 1,654.9
Personal Lines 805.0 814.9 852.7 868.3 893.0 910.2 943.5
Other 2.2 3.7 2.9 4.3 4.5 2.1 2.0
--------- --------- --------- --------- --------- --------- ---------
Total P&C Insurance Services 2,431.3 2,430.9 2,506.7 2,542.0 2,594.2 2,532.2 2,600.4
--------- --------- --------- --------- --------- --------- ---------
Corporate and Other 21.0 22.8 31.6 1.0 58.4 19.5 9.4
--------- --------- --------- --------- --------- --------- ---------
Total Revenue 8,699.9 9,183.6 9,960.1 9,765.0 10,367.6 10,096.0 8,221.9
--------- --------- --------- --------- --------- --------- ---------
Interest Expense 2,377.7 2,792.0 3,080.0 3,192.9 3,177.4 3,332.9 3,294.3
--------- --------- --------- --------- --------- --------- ---------
Total Revenue, Net of Interest Expense $ 6,322.2 $ 6,391.6 $ 6,880.1 $ 6,572.1 $ 7,190.2 $ 6,763.1 $ 4,927.6
========= ========= ========= ========= ========= ========= =========
<CAPTION>
YTD YTD
3Q 3Q
1997 1998
--------- ---------
<S> <C> <C>
REVENUES
Investment Services
Investment banking and brokerage $15,467.3 $15,104.6
Asset management 592.8 695.9
--------- ---------
Total Investment Services 16,060.1 15,800.5
--------- ---------
Consumer Finance Services 1,204.8 1,541.5
--------- ---------
Life Insurance Services
Travelers Life and Annuity 1,999.6 2,292.5
Primerica Financial Services 1,134.8 1,236.9
--------- ---------
Total Life Insurance Services 3,134.4 3,529.4
--------- ---------
Property and Casualty Insurance Services
Commercial Lines 4,887.5 4,971.5
Personal Lines 2,472.6 2,746.7
Other 8.8 8.6
--------- ---------
Total P&C Insurance Services 7,368.9 7,726.8
--------- ---------
Corporate and Other 75.4 87.3
--------- ---------
Total Revenue 27,843.6 28,685.5
--------- ---------
Interest Expense 8,249.7 9,804.6
--------- ---------
Total Revenue, Net of Interest Expense $19,593.9 $18,880.9
========= =========
</TABLE>
Page 20
<PAGE>
TRAVELERS GROUP -- SEGMENT CORE BUSINESS INCOME
(In millions of dollars)
<TABLE>
<CAPTION>
\ YTD
1Q 2Q 3Q 4Q 1Q 2Q 3Q
1997 1997 1997 1997 1998 1998 1998
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
CORE INCOME
Investment Services
Investment banking and brokerage $ 367.5 $ 404.1 $ 449.0 $ 217.6 $ 442.5 $ 347.6 $ (395.4)
Asset management 44.4 48.6 59.4 55.5 60.3 62.5 70.5
--------- --------- --------- --------- --------- --------- ---------
Total Investment Services 411.9 452.7 508.4 273.1 502.8 410.1 (324.9)
--------- --------- --------- --------- --------- --------- ---------
Consumer Finance Services 47.3 54.1 65.4 70.2 59.4 69.2 83.3
--------- --------- --------- --------- --------- --------- ---------
Life Insurance Services
Travelers Life and Annuity 101.1 104.9 106.5 111.5 118.1 130.1 123.3
Primerica Financial Services 78.1 82.0 84.7 90.3 94.6 103.6 98.8
--------- --------- --------- --------- --------- --------- ---------
Total Life Insurance Services 179.2 186.9 191.2 201.8 212.7 233.7 222.1
--------- --------- --------- --------- --------- --------- ---------
Property and Casualty Insurance Services
Commercial Lines 193.5 209.3 223.9 218.9 224.6 227.9 230.6
Personal Lines 107.5 101.3 95.4 99.6 108.0 107.7 90.3
--------- --------- --------- --------- --------- --------- ---------
301.0 310.6 319.3 318.5 332.6 335.6 320.9
Financing costs and other (33.1) (30.2) (29.3) (30.6) (28.7) (29.3) (26.9)
Minority interest (48.3) (50.1) (48.0) (47.7) (50.8) (51.2) (49.1)
--------- --------- --------- --------- --------- --------- ---------
Total P&C Insurance Services 219.6 230.3 242.0 240.2 253.1 255.1 244.9
--------- --------- --------- --------- --------- --------- ---------
Total Core Business Income 858.0 924.0 1,007.0 785.3 1,028.0 968.1 225.4
--------- --------- --------- --------- --------- --------- ---------
Investment Portfolio Gains 8.9 5.7 82.0 144.0 86.5 27.8 25.4
Corporate and Other (51.8) (46.5) (60.3) (56.6) (21.1) (46.5) (51.6)
--------- --------- --------- --------- --------- --------- ---------
Total Core Income $ 815.1 $ 883.2 $ 1,028.7 $ 872.7 $ 1,093.4 $ 949.4 $ 199.2
========= ========= ========= ========= ========= ========= =========
<CAPTION>
YTD YTD
3Q 3Q
1997 1998
--------- ---------
<S> <C> <C>
CORE INCOME
Investment Services
Investment banking and brokerage $ 1,220.6 $ 394.7
Asset management 152.4 193.3
--------- ---------
Total Investment Services 1,373.0 588.0
--------- ---------
Consumer Finance Services 166.8 211.9
--------- ---------
Life Insurance Services
Travelers Life and Annuity 312.5 371.5
Primerica Financial Services 244.8 297.0
--------- ---------
Total Life Insurance Services 557.3 668.5
--------- ---------
Property and Casualty Insurance Services
Commercial Lines 626.7 683.1
Personal Lines 304.2 306.0
--------- ---------
930.9 989.1
Financing costs and other (92.6) (84.9)
Minority interest (146.4) (151.1)
--------- ---------
Total P&C Insurance Services 691.9 753.1
--------- ---------
Total Core Business Income 2,789.0 2,221.5
--------- ---------
Investment Portfolio Gains 96.6 139.7
Corporate and Other (158.6) (119.2)
--------- ---------
Total Core Income $ 2,727.0 $ 2,242.0
========= =========
</TABLE>
Page 21
<PAGE>
TRAVELERS GROUP -- INVESTMENT SERVICES -- Page 1
(In millions of dollars)
<TABLE>
<CAPTION>
1Q 2Q 3Q 4Q 1Q 2Q
1997 1997 1997 1997 1998 1998
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
SALOMON SMITH BARNEY
Revenues:
Commissions $ 716.3 $ 685.6 $ 783.5 $ 781.5 $ 795.2 $ 783.7
Asset management and administration fees 389.1 398.6 448.2 479.2 497.6 553.8
Investment banking 483.8 475.3 596.7 562.4 628.1 639.9
Principal transactions 762.3 709.2 789.5 243.2 779.5 315.3
Other income 35.1 32.9 48.9 42.9 38.7 48.7
--------- --------- --------- --------- --------- ---------
Total noninterest revenues 2,386.6 2,301.6 2,666.8 2,109.2 2,739.1 2,341.4
--------- --------- --------- --------- --------- ---------
Interest and dividends 2,490.8 3,007.6 3,206.7 3,338.1 3,317.6 3,468.1
Interest expense 2,168.9 2,578.0 2,840.7 2,942.8 2,922.3 3,067.5
--------- --------- --------- --------- --------- ---------
Net interest and dividends 321.9 429.6 366.0 395.3 395.3 400.6
--------- --------- --------- --------- --------- ---------
Total revenues, net of interest expense 2,708.5 2,731.2 3,032.8 2,504.5 3,134.4 2,742.0
--------- --------- --------- --------- --------- ---------
Noninterest expenses:
Compensation and benefits 1,479.2 1,441.9 1,627.3 1,488.8 1,721.9 1,543.7
Communications 120.9 124.2 127.0 122.6 116.9 115.8
Occupancy and equipment 106.4 109.4 108.6 107.9 105.0 105.3
Floor brokerage and other production 85.8 86.7 98.8 117.7 109.6 105.7
Advertising and market development 62.5 69.0 70.9 73.1 69.7 68.3
Professional services 40.8 47.5 52.2 69.7 50.9 45.9
Other operating and administrative expenses 132.4 111.6 117.8 108.3 149.5 111.7
--------- --------- --------- --------- --------- ---------
Total noninterest expenses 2,028.0 1,990.3 2,202.6 2,088.1 2,323.5 2,096.4
--------- --------- --------- --------- --------- ---------
Core business income before income taxes 680.5 740.9 830.2 416.4 810.9 645.6
Provision for income taxes 268.6 288.2 321.8 143.3 308.1 235.5
--------- --------- --------- --------- --------- ---------
Core business income 411.9 452.7 508.4 273.1 502.8 410.1
Restructuring release (charge), net of tax -- -- -- (496.0) -- 191.2
--------- --------- --------- --------- --------- ---------
Net income (loss) $ 411.9 $ 452.7 $ 508.4 $ (222.9) $ 502.8 $ 601.3
========= ========= ========= ========= ========= =========
Total equity (in billions) $ 7.9 $ 8.1 $ 8.4 $ 8.5 $ 8.9 $ 9.3
Return on equity (1) 21.7% 23.2% 25.3% 12.5% 23.1% 18.2%
Pre-tax profit margin (1) 25.1% 27.1% 27.4% 16.6% 25.9% 23.5%
Non-compensation expenses as a percent of
net revenue (1) 20.3% 20.1% 19.0% 23.9% 19.2% 20.2%
<CAPTION>
YTD YTD
3Q 3Q 3Q
1998 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
SALOMON SMITH BARNEY
Revenues:
Commissions $ 796.9 $ 2,185.4 $ 2,375.8
Asset management and administration fees 562.6 1,235.9 1,614.0
Investment banking 530.6 1,555.8 1,798.6
Principal transactions (1,330.9) 2,261.0 (236.1)
Other income 36.3 116.9 123.7
--------- --------- ---------
Total noninterest revenues 595.5 7,355.0 5,676.0
--------- --------- ---------
Interest and dividends 3,338.8 8,705.1 10,124.5
Interest expense 3,013.3 7,587.6 9,003.1
--------- --------- ---------
Net interest and dividends 325.5 1,117.5 1,121.4
--------- --------- ---------
Total revenues, net of interest expense 921.0 8,472.5 6,797.4
--------- --------- ---------
Noninterest expenses:
Compensation and benefits 915.8 4,548.4 4,181.4
Communications 118.5 372.1 351.2
Occupancy and equipment 105.0 324.4 315.3
Floor brokerage and other production 110.3 271.3 325.6
Advertising and market development 79.8 202.4 217.8
Professional services 69.3 140.5 166.1
Other operating and administrative expenses 46.2 361.8 307.4
--------- --------- ---------
Total noninterest expenses 1,444.9 6,220.9 5,864.8
--------- --------- ---------
Core business income before income taxes (523.9) 2,251.6 932.6
Provision for income taxes (199.0) 878.6 344.6
--------- --------- ---------
Core business income (324.9) 1,373.0 588.0
Restructuring release (charge), net of tax -- -- 191.2
--------- --------- ---------
Net income (loss) $ (324.9) $ 1,373.0 $ 779.2
========= ========= =========
Total equity (in billions) $ 8.7 $ 8.4 $ 8.7
Return on equity (1) -14.5% 24.3% 8.8%
Pre-tax profit margin (1) -56.9% 26.6% 13.7%
Non-compensation expenses as a percent of
net revenue (1) 57.4% 19.7% 24.8%
</TABLE>
(1) On core business income before restructuring release (charge).
Page 22
<PAGE>
TRAVELERS GROUP -- INVESTMENT SERVICES -- Page 2
(In millions of dollars)
<TABLE>
<CAPTION>
1Q 2Q 3Q 4Q 1Q 2Q
1997 1997 1997 1997 1998 1998
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
SALOMON SMITH BARNEY (cont'd)
Client Assets
Assets under fee-based management (in billions):
Money market funds $ 43.9 $ 44.3 $ 45.3 $ 46.6 $ 51.6 $ 51.1
Mutual funds 40.5 43.8 46.4 51.8 56.0 57.6
Managed accounts 46.3 52.2 55.0 54.2 57.4 60.9
--------- --------- --------- --------- --------- ---------
Salomon Smith Barney Asset Management 130.7 140.3 146.7 152.6 165.0 169.6
Financial Consultant managed accounts 8.5 9.8 11.1 11.6 13.3 14.3
--------- --------- --------- --------- --------- ---------
Total internally managed accounts 139.2 150.1 157.8 164.2 178.3 183.9
Consulting Group externally managed assets 46.7 53.1 58.4 59.7 67.1 69.3
--------- --------- --------- --------- --------- ---------
Total assets under fee-based management $ 185.9 $ 203.2 $ 216.2 $ 223.9 $ 245.4 $ 253.2
========= ========= ========= ========= ========= =========
Total client assets (in billions) $ 543.5 $ 593.0 $ 630.4 $ 654.0 $ 703.0 $ 724.3
Private Client
Registered Financial Consultants 10,430 10,359 10,288 10,319 10,321 10,494
Annualized retail gross production per FC (000) $ 392 $ 359 $ 428 $ 416 $ 452 $ 441
Domestic retail offices 443 438 434 430 432 439
Investment Banking and Public Finance
Underwriting (full credit to lead mgr.):
Debt and equity
Global volume $42,327.2 $47,639.4 $57,092.3 $43,748.7 $72,799.3 $75,856.0
Global market share 9.1% 9.6% 11.0% 9.8% 9.8% 10.4%
Rank 2 3 2 2 4 3
U.S. volume $37,723.2 $38,865.5 $52,685.3 $39,964.7 $66,263.7 $69,854.6
U.S. market share 13.0% 12.3% 14.1% 11.9% 13.0% 13.5%
Rank 2 2 2 2 2 2
Municipals (1)
Volume $ 5,173.6 $ 6,287.8 $ 6,580.4 $ 6,944.5 $ 8,343.7 $10,656.1
Market share 13.3% 11.4% 11.7% 10.9% 11.9% 13.9%
Rank 1 1 2 2 1 1
Capital Markets/Research
Number of institutional salespeople 907 943 952 878 877 854
Number of stocks in which markets are made 1,595 1,601 1,531 1,554 1,464 1,465
% of S&P groups covered by research 98% 98% 98% 99% 99% 99%
<CAPTION>
YTD YTD
3Q 3Q 3Q
1998 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
SALOMON SMITH BARNEY (cont'd)
Client Assets
Assets under fee-based management (in billions):
Money market funds $ 55.1 $ 45.3 $ 55.1
Mutual funds 53.5 46.4 53.5
Managed accounts 61.0 55.0 61.0
--------- --------- ---------
Salomon Smith Barney Asset Management 169.6 146.7 169.6
Financial Consultant managed accounts 13.8 11.1 13.8
--------- --------- ---------
Total internally managed accounts 183.4 157.8 183.4
Consulting Group externally managed assets 63.9 58.4 63.9
--------- --------- ---------
Total assets under fee-based management $ 247.3 $ 216.2 $ 247.3
========= ========= =========
Total client assets (in billions) $ 697.5 $ 630.4 $ 697.5
Private Client
Registered Financial Consultants 10,573 10,288 10,573
Annualized retail gross production per FC (000) $ 431 $ 393 $ 441
Domestic retail offices 442 434 442
Investment Banking and Public Finance
Underwriting (full credit to lead mgr.):
Debt and equity
Global volume $50,642.3 $147,058.9 $199,297.6
Global market share 9.1% 9.9% 9.8%
Rank 3 2 4
U.S. volume $43,018.7 $129,274.0 $179,137.0
U.S. market share 10.7% 13.2% 12.5%
Rank 3 2 2
Municipals (1)
Volume $ 9,336.1 $18,041.8 $28,335.9
Market share 14.5% 12.0% 13.4%
Rank 1 1 1
Capital Markets/Research
Number of institutional salespeople 869 952 869
Number of stocks in which markets are made 1,418 1,531 1,418
% of S&P groups covered by research 99% 98% 99%
</TABLE>
(1) Total long term excluding private placement.
Page 23
<PAGE>
TRAVELERS GROUP -- INVESTMENT SERVICES -- Page 3
(In millions of dollars)
<TABLE>
<CAPTION>
1Q 2Q 3Q 4Q 1Q 2Q
1997 1997 1997 1997 1998 1998
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
SALOMON SMITH BARNEY
ASSET MANAGEMENT DIVISION (SSBAM)
Revenues:
Investment advisory, admin. & distribution fees $ 168.0 $ 172.7 $ 186.7 $ 190.0 $ 201.7 $ 214.1
Unit Investment Trust revenues - net 8.7 6.8 19.0 4.9 12.6 7.6
Other revenues 9.4 14.1 7.4 5.0 10.6 5.1
--------- --------- --------- --------- --------- ---------
Total revenues 186.1 193.6 213.1 199.9 224.9 226.8
--------- --------- --------- --------- --------- ---------
Expenses:
Employee compensation and benefits 35.4 34.8 38.1 37.3 41.9 44.0
Deferred commission amortization 32.8 31.1 31.9 28.2 34.8 31.5
Other expenses 44.4 47.3 44.7 42.4 48.4 47.8
--------- --------- --------- --------- --------- ---------
Total expenses 112.6 113.2 114.7 107.9 125.1 123.3
--------- --------- --------- --------- --------- ---------
Core business income before income taxes 73.5 80.4 98.4 92.0 99.8 103.5
Provision for income taxes 29.1 31.8 39.0 36.5 39.5 41.0
--------- --------- --------- --------- --------- ---------
Core business income $ 44.4 $ 48.6 $ 59.4 $ 55.5 $ 60.3 $ 62.5
========= ========= ========= ========= ========= =========
Pre-tax profit margin 39.5% 41.5% 46.2% 46.0% 44.4% 45.6%
SSBAM Assets under management (in billions):
Money market funds $ 43.9 $ 44.3 $ 45.3 $ 46.6 $ 51.6 $ 51.1
--------- --------- --------- --------- --------- ---------
Mutual funds:
Equity 18.6 20.6 22.3 27.0 29.9 30.3
Taxable Fixed 11.5 12.1 12.5 12.7 13.3 14.7
Tax Exempt Fixed 8.0 8.3 8.6 9.0 9.2 9.3
Annuities 2.4 2.8 3.0 3.1 3.6 3.3
--------- --------- --------- --------- --------- ---------
Total mutual funds 40.5 43.8 46.4 51.8 56.0 57.6
--------- --------- --------- --------- --------- ---------
Managed accounts
Private client 12.2 14.0 14.8 14.9 17.0 17.9
Institutional 34.1 38.2 40.2 39.3 40.4 43.0
--------- --------- --------- --------- --------- ---------
Total managed accounts 46.3 52.2 55.0 54.2 57.4 60.9
--------- --------- --------- --------- --------- ---------
Salomon Smith Barney Asset Management $ 130.7 $ 140.3 $ 146.7 $ 152.6 $ 165.0 $ 169.6
========= ========= ========= ========= ========= =========
Unit Investment Trusts held in client accounts $ 9.4 $ 9.3 $ 11.6 $ 11.8 $ 13.1 $ 12.9
Number of Morningstar 4- and 5-star funds 15 17 17 21 23 23
Consolidated Travelers Group
Assets Under Management (in billions)
Salomon Smith Barney Asset Management $ 130.7 $ 140.3 $ 146.7 $ 152.6 $ 165.0 $ 169.6
Financial consultant managed accounts 8.5 9.8 11.1 11.6 13.3 14.3
Travelers Life and Annuity (1) 21.4 22.2 22.9 23.8 25.2 24.3
--------- --------- --------- --------- --------- ---------
Total assets managed for third parties $ 160.6 $ 172.3 $ 180.7 $ 188.0 $ 203.5 $ 208.2
========= ========= ========= ========= ========= =========
<CAPTION>
YTD YTD
3Q 3Q 3Q
1998 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
SALOMON SMITH BARNEY
ASSET MANAGEMENT DIVISION (SSBAM)
Revenues:
Investment advisory, admin. & distribution fees $ 217.3 $ 527.4 $ 633.1
Unit Investment Trust revenues - net 17.5 34.5 37.7
Other revenues 9.4 30.9 25.1
--------- --------- ---------
Total revenues 244.2 592.8 695.9
--------- --------- ---------
Expenses:
Employee compensation and benefits 41.0 108.3 126.9
Deferred commission amortization 31.0 95.8 97.3
Other expenses 55.4 136.4 151.6
--------- --------- ---------
Total expenses 127.4 340.5 375.8
--------- --------- ---------
Core business income before income taxes 116.8 252.3 320.1
Provision for income taxes 46.3 99.9 126.8
--------- --------- ---------
Core business income $ 70.5 $ 152.4 $ 193.3
========= ========= =========
Pre-tax profit margin 47.8% 42.6% 46.0%
SSBAM Assets under management (in billions):
Money market funds $ 55.1 $ 45.3 $ 55.1
--------- --------- ---------
Mutual funds:
Equity 26.4 22.3 26.4
Taxable Fixed 14.4 12.5 14.4
Tax Exempt Fixed 9.6 8.6 9.6
Annuities 3.1 3.0 3.1
--------- --------- ---------
Total mutual funds 53.5 46.4 53.5
--------- --------- ---------
Managed accounts
Private client 17.0 14.8 17.0
Institutional 44.0 40.2 44.0
--------- --------- ---------
Total managed accounts 61.0 55.0 61.0
--------- --------- ---------
Salomon Smith Barney Asset Management $ 169.6 $ 146.7 $ 169.6
========= ========= =========
Unit Investment Trusts held in client accounts $ 12.4 $ 11.6 $ 12.4
Number of Morningstar 4- and 5-star funds 22 17 22
Consolidated Travelers Group
Assets Under Management (in billions)
Salomon Smith Barney Asset Management $ 169.6 $ 146.7 $ 169.6
Financial consultant managed accounts 13.8 11.1 13.8
Travelers Life and Annuity (1) 25.7 22.9 25.7
--------- --------- ---------
Total assets managed for third parties $ 209.1 $ 180.7 $ 209.1
========= ========= =========
</TABLE>
(1) Part of the Life Insurance Services segment.
Page 24
<PAGE>
TRAVELERS GROUP -- CONSUMER FINANCE SERVICES
(In millions of dollars)
<TABLE>
<CAPTION>
1Q 2Q 3Q 4Q 1Q
1997 1997 1997 1997 1998
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
REVENUES $ 377.1 $ 379.6 $ 448.1 $ 483.0 $ 485.0
CORE BUSINESS INCOME $ 47.3 $ 54.1 $ 65.4 $ 70.2 $ 59.4
Owned basis:
Net receivables:
Real estate-secured loans (1) $ 3,698.2 $ 3,992.4 $ 4,911.6 $ 5,107.6 $ 5,325.8
Personal loans (2) 3,257.2 3,328.0 3,817.7 3,922.2 3,960.5
Credit cards - owned 972.2 1,166.3 1,163.3 1,164.6 1,225.4
Sales finance and other 519.0 554.7 759.8 857.0 874.8
--------- --------- --------- --------- ---------
Consumer finance receivables,
net of unearned finance charges 8,446.6 9,041.4 10,652.4 11,051.4 11,386.5
Accrued interest receivable 51.7 56.0 74.0 85.6 88.9
Allowance for credit losses (250.9) (263.4) (325.1) (321.4) (331.4)
--------- --------- --------- --------- ---------
Consumer finance receivables, net $ 8,247.4 $ 8,834.0 $10,401.3 $10,815.6 $11,144.0
========= ========= ========= ========= =========
Receivables held for sale (3) $ -- $ -- $ -- $ 186.0 $ --
Number of offices 857 855 1,057 1,026 1,025
Number of credit card accounts 836,400 923,700 905,500 983,600 1,079,200
Average yield 14.65% 14.42% 14.57% 14.68% 14.18%
Average net interest margin 8.17% 7.93% 8.13% 8.31% 7.77%
Charge-off rate 2.95% 2.82% 2.50% 2.42% 2.75%
60+ days past due as % of receivables 2.25% 2.14% 2.17% 2.35% 2.33%
Reserves as % of net receivables 2.97% 2.91% 3.05% 2.91% 2.91%
Managed basis:
Consumer finance receivables, net of unearned
finance charges $ 8,446.6 $ 9,041.4 $10,652.4 $11,051.4 $11,386.5
Receivables held for sale -- -- -- 186.0 --
Credit card receivables securitized (4) -- -- -- -- 255.1
--------- --------- --------- --------- ---------
Managed receivables $ 8,446.6 $ 9,041.4 $10,652.4 $11,237.4 $11,641.6
========= ========= ========= ========= =========
Managed credit card receivables $ 972.2 $ 1,166.3 $ 1,163.3 $ 1,350.6 $ 1,480.5
Average yield 14.65% 14.42% 14.57% 14.68% 14.13%
Average net interest margin 8.17% 7.93% 8.13% 8.31% 7.74%
Charge-off rate 2.95% 2.82% 2.50% 2.42% 2.76%
60+ days past due as % of receivables 2.25% 2.14% 2.17% 2.35% 2.31%
(1) Includes fully secured $.M.A.R.T. receivables,
as follows: $ 1,307.8 $ 1,510.8 $ 1,689.1 $ 1,887.9 $ 2,052.8
(2) Includes $.A.F.E. and partially secured $.M.A.R.T
receivables, as follows: $ 391.3 $ 389.8 $ 381.8 $ 375.8 $ 367.7
<CAPTION>
YTD YTD
2Q 3Q 3Q 3Q
1998 1998 1997 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES $ 514.2 $ 542.3 $ 1,204.8 $ 1,541.5
CORE BUSINESS INCOME $ 69.2 $ 83.3 $ 166.8 $ 211.9
Owned basis:
Net receivables:
Real estate-secured loans (1) $ 5,674.5 $ 6,085.7 $ 4,911.6 $ 6,085.7
Personal loans (2) 4,099.1 4,231.9 3,817.7 4,231.9
Credit cards - owned 1,407.6 1,407.4 1,163.3 1,407.4
Sales finance and other 902.3 944.9 759.8 944.9
--------- --------- --------- ---------
Consumer finance receivables,
net of unearned finance charges 12,083.5 12,669.9 10,652.4 12,669.9
Accrued interest receivable 87.2 96.2 74.0 96.2
Allowance for credit losses (347.1) (363.8) (325.1) (363.8)
--------- --------- --------- ---------
Consumer finance receivables, net $11,823.6 $12,402.3 $10,401.3 $12,402.3
========= ========= ========= =========
Receivables held for sale (3) $ -- $ 84.9 $ -- $ 84.9
Number of offices 1,007 995 1,057 995
Number of credit card accounts 1,155,600 1,198,800 905,500 1,198,800
Average yield 14.15% 14.21% 14.55% 14.18%
Average net interest margin 7.80% 7.91% 8.08% 7.86%
Charge-off rate 2.66% 2.39% 2.74% 2.60%
60+ days past due as % of receivables 2.23% 2.27% 2.17% 2.27%
Reserves as % of net receivables 2.87% 2.87% 3.05% 2.87%
Managed basis:
Consumer finance receivables, net of unearned
finance charges $12,083.5 $12,669.9 $10,652.4 $12,669.9
Receivables held for sale -- 84.9 -- 84.9
Credit card receivables securitized (4) 254.6 254.3 -- 254.3
--------- --------- --------- ---------
Managed receivables $12,338.1 $13,009.1 $10,652.4 $13,009.1
========= ========= ========= =========
Managed credit card receivables $ 1,662.2 $ 1,746.6 $ 1,163.3 $ 1,746.6
Average yield 14.09% 14.15% 14.55% 14.12%
Average net interest margin 7.75% 7.87% 8.08% 7.81%
Charge-off rate 2.67% 2.41% 2.74% 2.61%
60+ days past due as % of receivables 2.21% 2.25% 2.17% 2.25%
(1) Includes fully secured $.M.A.R.T. receivables,
as follows: $ 2,272.8 $ 2,432.1 $ 1,689.1 $ 2,432.1
(2) Includes $.A.F.E. and partially secured $.M.A.R.T
receivables, as follows: $ 358.9 $ 353.1 $ 381.8 $ 353.1
</TABLE>
(3) Consumer Finance Services classifies credit card receivables intended for
sale as loans held for sale, with net credit losses charged to other
revenue. Owned basis average yields and average net interest margin
include receivables held for sale; charge-off rate, 60+ as %, and reserves
as % exclude receivables held for sale.
(4) On March 6, 1998, the company securitized $255.1 million of credit card
receivables.
Note: Financial data for Security Pacific Financial Services is included from
the date of acquisition (July 31, 1997).
Page 25
<PAGE>
TRAVELERS GROUP -- LIFE INSURANCE SERVICES -- Page 1
(In millions of dollars)
<TABLE>
<CAPTION>
1Q 2Q 3Q 4Q 1Q 2Q
1997 1997 1997 1997 1998 1998
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
REVENUES $ 993.1 $ 1,041.1 $ 1,100.2 $ 1,291.7 $ 1,173.3 $ 1,220.6
CORE BUSINESS INCOME
Travelers Life and Annuity $ 101.1 $ 104.9 $ 106.5 $ 111.5 $ 118.1 $ 130.1
Primerica Financial Services 78.1 82.0 84.7 90.3 94.6 103.6
--------- --------- --------- --------- --------- ---------
Total $ 179.2 $ 186.9 $ 191.2 $ 201.8 $ 212.7 $ 233.7
========= ========= ========= ========= ========= =========
Statutory data:
Travelers Insurance Company
Statutory capital and surplus $ 3,555.5 $ 3,625.9 $ 3,808.4 $ 4,117.3 $ 4,142.6 $ 4,370.3
Surplus to liabilities ratio 17.7% 18.0% 18.9% 19.9% 19.4% 20.0%
<CAPTION>
YTD YTD
3Q 3Q 3Q
1998 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
REVENUES $ 1,135.5 $ 3,134.4 $ 3,529.4
CORE BUSINESS INCOME
Travelers Life and Annuity $ 123.3 $ 312.5 $ 371.5
Primerica Financial Services 98.8 244.8 297.0
--------- --------- ---------
Total $ 222.1 $ 557.3 $ 668.5
========= ========= =========
Statutory data:
Travelers Insurance Company
Statutory capital and surplus $ 4,230.5 $ 3,808.4 $ 4,230.5
Surplus to liabilities ratio 18.2% 18.9% 18.2%
</TABLE>
Page 26
<PAGE>
TRAVELERS GROUP -- LIFE INSURANCE SERVICES -- Page 2
(In millions of dollars)
<TABLE>
<CAPTION>
1Q 2Q 3Q 4Q 1Q 2Q
1997 1997 1997 1997 1998 1998
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
TRAVELERS LIFE AND ANNUITY
REVENUES $ 617.9 $ 665.7 $ 716.0 $ 890.3 $ 771.9 $ 799.6
CORE BUSINESS INCOME $ 101.1 $ 104.9 $ 106.5 $ 111.5 $ 118.1 $ 130.1
Pre-tax contribution by source:
Deferred and payout annuities $ 75.8 $ 73.9 $ 74.7 $ 86.2 $ 87.6 $ 93.8
Group annuities 22.7 26.6 26.2 25.0 31.5 28.3
Life and long term care insurance 35.0 36.1 35.0 37.4 37.9 39.3
Other (includes run-off and return on excess capital) 19.7 23.8 26.9 20.2 24.1 37.6
--------- --------- --------- --------- --------- ---------
Total $ 153.2 $ 160.4 $ 162.8 $ 168.8 $ 181.1 $ 199.0
========= ========= ========= ========= ========= =========
Deferred annuities:
Number of annuities in force (000):
Fixed 402.9 415.9 411.8 408.9 404.9 398.2
Variable 293.5 308.7 326.7 381.0 413.1 439.0
--------- --------- --------- --------- --------- ---------
Total 696.4 724.6 738.5 789.9 818.0 837.2
========= ========= ========= ========= ========= =========
Number of annuities issued (000):
Fixed 7.8 10.2 5.2 6.7 5.4 4.4
Variable 29.1 32.4 33.5 34.4 37.7 35.9
--------- --------- --------- --------- --------- ---------
Total 36.9 42.6 38.7 41.1 43.1 40.3
========= ========= ========= ========= ========= =========
Net written premiums & deposits:
Fixed $ 144.1 $ 241.7 $ 142.4 $ 250.7 $ 232.7 $ 187.2
Variable 429.7 386.0 431.9 527.8 587.1 587.1
--------- --------- --------- --------- --------- ---------
Total $ 573.8 $ 627.7 $ 574.3 $ 778.5 $ 819.8 $ 774.3
========= ========= ========= ========= ========= =========
Policyholder account balances & benefit reserves: (1)
Fixed $ 7,240.8 $ 7,340.5 $ 7,310.8 $ 7,358.7 $ 7,411.6 $ 7,361.8
Variable 6,308.7 7,376.0 8,307.9 8,704.9 10,132.8 10,788.7
--------- --------- --------- --------- --------- ---------
Total $13,549.5 $14,716.5 $15,618.7 $16,063.6 $17,544.4 $18,150.5
========= ========= ========= ========= ========= =========
Payout annuities:
Net written premiums & deposits $ 54.7 $ 68.2 $ 49.0 $ 138.0 $ 81.0 $ 106.8
Policyholder account balances & benefit reserves $ 4,403.6 $ 4,426.0 $ 4,429.7 $ 4,522.2 $ 4,558.1 $ 4,602.2
GIC and other annuities:
Net written premiums & deposits (2) $ 592.4 $ 563.8 $ 301.5 $ 651.0 $ 778.9 $ 921.6
Policyholder account balances & benefit reserves: (1)
Guaranteed investment contracts $ 1,697.6 $ 1,976.1 $ 2,026.5 $ 2,367.6 $ 2,633.2 $ 3,018.1
Other group annuities 4,991.3 5,122.0 5,212.4 5,051.4 5,040.1 5,052.9
--------- --------- --------- --------- --------- ---------
Total $ 6,688.9 $ 7,098.1 $ 7,238.9 $ 7,419.0 $ 7,673.3 $ 8,071.0
========= ========= ========= ========= ========= =========
<CAPTION>
YTD YTD
3Q 3Q 3Q
1998 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
TRAVELERS LIFE AND ANNUITY
REVENUES $ 721.0 $ 1,999.6 $ 2,292.5
CORE BUSINESS INCOME $ 123.3 $ 312.5 $ 371.5
Pre-tax contribution by source:
Deferred and payout annuities $ 82.0 $ 224.4 $ 263.4
Group annuities 36.4 75.5 96.2
Life and long term care insurance 34.6 106.1 111.8
Other (includes run-off and return on excess capital) 37.6 70.4 99.3
--------- --------- ---------
Total $ 190.6 $ 476.4 $ 570.7
========= ========= =========
Deferred annuities:
Number of annuities in force (000):
Fixed 392.5 411.8 392.5
Variable 466.4 326.7 466.4
--------- --------- ---------
Total 858.9 738.5 858.9
========= ========= =========
Number of annuities issued (000):
Fixed 3.5 23.2 13.3
Variable 36.4 95.0 110.0
--------- --------- ---------
Total 39.9 118.2 123.3
========= ========= =========
Net written premiums & deposits:
Fixed $ 181.0 $ 528.2 $ 600.9
Variable 691.9 1,247.6 1,866.1
--------- --------- ---------
Total $ 872.9 $ 1,775.8 $ 2,467.0
========= ========= =========
Policyholder account balances & benefit reserves: (1)
Fixed $ 7,339.3 $ 7,310.8 $ 7,339.3
Variable 10,178.9 8,307.9 10,178.9
--------- --------- ---------
Total $17,518.2 $15,618.7 $17,518.2
========= ========= =========
Payout annuities:
Net written premiums & deposits $ 76.1 $ 171.9 $ 263.9
Policyholder account balances & benefit reserves $ 4,626.9 $ 4,429.7 $ 4,626.9
GIC and other annuities:
Net written premiums & deposits (2) $ 1,005.4 $ 1,457.7 $ 2,705.9
Policyholder account balances & benefit reserves: (1)
Guaranteed investment contracts $ 3,748.2 $ 2,026.5 $ 3,748.2
Other group annuities 4,962.6 5,212.4 4,962.6
--------- --------- ---------
Total $ 8,710.8 $ 7,238.9 $ 8,710.8
========= ========= =========
</TABLE>
(1) Includes general account, separate accounts and managed funds.
(2) Excludes deposits of $33.0, $136.0, $182.0 and $2.0 in the 1997 first,
second, third and fourth quarters, respectively, and $13.0, $197.0 and
$14.0 in the 1998 first, second and third quarters, respectively, related
to Travelers plans previously managed externally.
Page 27
<PAGE>
TRAVELERS GROUP -- LIFE INSURANCE SERVICES -- Page 3
(In millions of dollars)
<TABLE>
<CAPTION>
1Q 2Q 3Q 4Q 1Q 2Q
1997 1997 1997 1997 1998 1998
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
TRAVELERS LIFE AND ANNUITY (cont'd)
Individual life insurance:
Life insurance in force (in billions, face amt.):
Term $ 29.5 $ 29.6 $ 29.7 $ 30.1 $ 30.6 $ 30.9
Permanent (universal and whole life) 21.0 21.1 21.2 21.5 21.8 22.3
-------- -------- -------- -------- -------- --------
Total $ 50.5 $ 50.7 $ 50.9 $ 51.6 $ 52.4 $ 53.2
======== ======== ======== ======== ======== ========
Number of life policies in force (000) 540.2 535.3 530.1 528.3 525.2 522.9
Life insurance issued (in billions, face amt.) $ 1.5 $ 1.5 $ 1.5 $ 2.0 $ 2.0 $ 2.1
Number of life policies issued (000) 5.4 5.7 5.2 8.2 7.1 7.9
Net written premiums and deposits:
Direct periodic premiums and deposits $ 71.2 $ 68.5 $ 71.6 $ 79.1 $ 76.2 $ 78.2
Single premium deposits 11.9 13.7 13.6 17.2 23.8 20.5
Reinsurance (13.3) (14.2) (15.7) (15.1) (14.8) (16.0)
-------- -------- -------- -------- -------- --------
Total $ 69.8 $ 68.0 $ 69.5 $ 81.2 $ 85.2 $ 82.7
======== ======== ======== ======== ======== ========
Policyholder account balances & benefit reserves $2,192.8 $2,222.1 $2,257.3 $2,283.4 $2,327.1 $2,360.0
Individual long term care insurance:
Number of policies in force (000) 84.3 90.6 96.2 102.1 107.7 113.6
Net earned premiums $ 34.9 $ 39.1 $ 41.2 $ 44.1 $ 45.6 $ 48.7
Net written premiums $ 42.5 $ 43.3 $ 43.7 $ 54.3 $ 44.5 $ 53.7
All businesses:
Net investment income $ 439.9 $ 459.9 $ 463.2 $ 472.1 $ 480.3 $ 496.4
Interest credited to contractholders $ 197.6 $ 204.6 $ 209.6 $ 217.7 $ 215.0 $ 210.3
<CAPTION>
YTD YTD
3Q 3Q 3Q
1998 1997 1998
-------- -------- --------
<S> <C> <C> <C>
TRAVELERS LIFE AND ANNUITY (cont'd)
Individual life insurance:
Life insurance in force (in billions, face amt.):
Term $ 31.4 $ 29.7 $ 31.4
Permanent (universal and whole life) 22.8 21.2 22.8
-------- -------- --------
Total $ 54.2 $ 50.9 $ 54.2
======== ======== ========
Number of life policies in force (000) 520.0 530.1 520.0
Life insurance issued (in billions, face amt.) $ 2.2 $ 4.5 $ 6.3
Number of life policies issued (000) 6.8 16.3 21.8
Net written premiums and deposits:
Direct periodic premiums and deposits $ 77.9 $ 211.3 $ 232.3
Single premium deposits 17.1 39.2 61.4
Reinsurance (16.5) (43.2) (47.3)
-------- -------- --------
Total $ 78.5 $ 207.3 $ 246.4
======== ======== ========
Policyholder account balances & benefit reserves $2,366.9 $2,257.3 $2,366.9
Individual long term care insurance:
Number of policies in force 118.5 96.2 118.5
Net earned premiums $ 51.8 $ 115.2 $ 146.1
Net written premiums $ 53.3 $ 129.5 $ 151.5
All businesses:
Net investment income $ 474.0 $1,363.0 $1,450.7
Interest credited to contractholders $ 220.3 $ 611.8 $ 645.6
</TABLE>
Page 28
<PAGE>
TRAVELERS GROUP -- LIFE INSURANCE SERVICES -- Page 4
(In millions of dollars)
<TABLE>
<CAPTION>
1Q 2Q 3Q 4Q 1Q 2Q
1997 1997 1997 1997 1998 1998
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
PRIMERICA FINANCIAL SERVICES
REVENUES $ 375.2 $ 375.4 $ 384.2 $ 401.4 $ 401.4 $ 421.0
CORE BUSINESS INCOME
Life insurance $ 64.0 $ 68.7 $ 67.5 $ 71.4 $ 75.0 $ 80.6
Other financial products 14.1 13.3 17.2 18.9 19.6 23.0
---------- ---------- ---------- ---------- ---------- ----------
Total core business income $ 78.1 $ 82.0 $ 84.7 $ 90.3 $ 94.6 $ 103.6
========== ========== ========== ========== ========== ==========
Face value (in billions) of:
Life insurance issued $ 12.0 $ 14.1 $ 13.1 $ 13.4 $ 13.0 $ 15.8
Life insurance in force $ 361.5 $ 365.4 $ 368.1 $ 369.9 $ 372.5 $ 377.5
Number of life policies issued (000) 54.3 62.8 56.7 55.1 51.1 61.2
Number of life policies in force (000) 2,141.0 2,149.8 2,149.7 2,146.2 2,141.6 2,151.1
Annualized issued premiums $ 41.1 $ 47.9 $ 44.5 $ 43.1 $ 40.8 $ 48.7
Direct premiums $ 300.3 $ 303.2 $ 304.4 $ 305.8 $ 306.2 $ 312.3
Earned premiums:
PFS Individual term life $ 241.2 $ 243.5 $ 242.3 $ 240.1 $ 244.7 $ 248.8
Other 17.8 15.8 14.9 19.1 15.5 17.1
---------- ---------- ---------- ---------- ---------- ----------
Total $ 259.0 $ 259.3 $ 257.2 $ 259.2 $ 260.2 $ 265.9
========== ========== ========== ========== ========== ==========
Mutual fund sales at NAV:
Salomon Smith Barney Asset Management funds $ 317.3 $ 332.5 $ 316.5 $ 331.0 $ 335.6 $ 400.7
Other funds 203.8 200.9 197.9 202.0 228.8 308.6
---------- ---------- ---------- ---------- ---------- ----------
Total U.S. mutual fund sales 521.1 533.4 514.4 533.0 564.4 709.3
Mutual fund sales - Canada 200.9 136.0 121.5 129.1 204.3 123.9
---------- ---------- ---------- ---------- ---------- ----------
Total mutual fund sales $ 722.0 $ 669.4 $ 635.9 $ 662.1 $ 768.7 $ 833.2
========== ========== ========== ========== ========== ==========
Cash advanced on $.M.A.R.T. and $.A.F.E. loans (1) $ 289.4 $ 338.2 $ 315.5 $ 354.7 $ 316.6 $ 410.6
Variable annuity net written premiums and deposits $ 54.2 $ 79.8 $ 100.6 $ 111.9 $ 126.3 $ 175.2
SECURE net written premiums (2) $ 9.7 $ 15.2 $ 19.5 $ 28.2 $ 38.0 $ 55.8
Agents licensed for:
Life insurance 83,248 82,447 79,992 79,508 76,835 77,274
Mutual funds 28,736 29,453 29,956 27,464 28,475 28,864
$.M.A.R.T. / $.A.F.E. loans 89,679 94,117 98,847 93,228 96,188 96,422
Variable annuities 8,403 9,653 11,110 12,596 12,924 13,169
Home & auto insurance 6,638 7,228 7,990 8,658 10,051 11,123
Financial Needs Analyses submitted 88,010 111,482 132,141 122,169 140,617 130,549
<CAPTION>
YTD YTD
3Q 3Q 3Q
1998 1997 1998
---------- ---------- ----------
<S> <C> <C> <C>
PRIMERICA FINANCIAL SERVICES
REVENUES $ 414.5 $ 1,134.8 $ 1,236.9
CORE BUSINESS INCOME
Life insurance $ 76.8 $ 200.2 $ 232.4
Other financial products 22.0 44.6 64.6
---------- ---------- ----------
Total core business income $ 98.8 $ 244.8 $ 297.0
========== ========== ==========
Face value (in billions) of:
Life insurance issued $ 14.2 $ 39.2 $ 43.0
Life insurance in force $ 380.6 $ 368.1 $ 380.6
Number of life policies issued (000) 55.6 173.8 167.9
Number of life policies in force (000) 2,153.1 2,149.7 2,153.1
Annualized issued premiums $ 45.0 $ 133.5 $ 134.5
Direct premiums $ 311.6 $ 907.9 $ 930.1
Earned premiums:
PFS Individual term life $ 246.1 $ 727.0 $ 739.6
Other 15.1 48.5 47.7
---------- ---------- ----------
Total $ 261.2 $ 775.5 $ 787.3
========== ========== ==========
Mutual fund sales at NAV:
Salomon Smith Barney Asset Management funds $ 383.9 $ 966.3 $ 1,120.2
Other funds 249.8 602.6 787.2
---------- ---------- ----------
Total U.S. mutual fund sales 633.7 1,568.9 1,907.4
Mutual fund sales - Canada 91.3 458.4 419.5
---------- ---------- ----------
Total mutual fund sales $ 725.0 $ 2,027.3 $ 2,326.9
========== ========== ==========
Cash advanced on $.M.A.R.T. and $.A.F.E. loans (1) $ 351.1 $ 943.1 $ 1,078.3
Variable annuity net written premiums and deposits $ 171.9 $ 234.6 $ 473.4
SECURE net written premiums (2) $ 60.8 $ 44.4 $ 154.6
Agents licensed for:
Life insurance 79,081 79,992 79,081
Mutual funds 29,176 29,956 29,176
$.M.A.R.T. / $.A.F.E. loans 117,704 98,847 117,704
Variable annuities 11,839 11,110 11,839
Home & auto insurance 12,683 7,990 12,683
Financial Needs Analyses submitted 132,791 331,633 403,957
</TABLE>
(1) The $.M.A.R.T. and $.A.F.E. loan products are marketed by PFS; the
receivables are reflected in the assets of Consumer Finance Services.
(2) The SECURE property casualty insurance products are marketed by PFS; the
premiums are reflected in the operating earnings of Travelers Property
Casualty Corp.
Page 29
<PAGE>
TRAVELERS GROUP -- PROPERTY & CASUALTY INSURANCE SERVICES -- Page 1
(In millions of dollars)
<TABLE>
<CAPTION>
1Q 2Q 3Q 4Q 1Q 2Q
1997 1997 1997 1997 1998 1998
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
TOTAL P&C INSURANCE
REVENUES
Commercial Lines $1,624.1 $1,612.3 $1,651.1 $1,669.4 $1,696.7 $1,619.9
Personal Lines 805.0 814.9 852.7 868.3 893.0 910.2
Other 2.2 3.7 2.9 4.3 4.5 2.1
-------- -------- -------- -------- -------- --------
Total $2,431.3 $2,430.9 $2,506.7 $2,542.0 $2,594.2 $2,532.2
======== ======== ======== ======== ======== ========
CORE BUSINESS INCOME
Commercial Lines $ 193.5 $ 209.3 $ 223.9 $ 218.9 $ 224.6 $ 227.9
Personal Lines 107.5 101.3 95.4 99.6 108.0 107.7
-------- -------- -------- -------- -------- --------
301.0 310.6 319.3 318.5 332.6 335.6
Financing costs and other (33.1) (30.2) (29.3) (30.6) (28.7) (29.3)
Minority interest (48.3) (50.1) (48.0) (47.7) (50.8) (51.2)
-------- -------- -------- -------- -------- --------
Total $ 219.6 $ 230.3 $ 242.0 $ 240.2 $ 253.1 $ 255.1
======== ======== ======== ======== ======== ========
GAAP Consolidated Statement of Operations
Revenues:
Premiums $1,799.9 $1,811.8 $1,806.0 $1,807.8 $1,898.2 $1,902.8
Net investment income 499.7 505.3 527.6 515.8 507.9 519.1
Fee income 97.0 91.4 90.4 85.9 82.0 76.9
Realized investment gains (losses) 8.1 (6.8) 56.7 111.0 66.4 9.6
Other revenues 24.4 25.5 23.1 17.2 35.2 21.7
-------- -------- -------- -------- -------- --------
Total revenues 2,429.1 2,427.2 2,503.8 2,537.7 2,589.7 2,530.1
-------- -------- -------- -------- -------- --------
Claims and expenses:
Claims and claim adjustment expenses* 1,366.0 1,365.5 1,344.8 1,357.0 1,427.9 1,430.8
Policyholder dividends 7.1 9.6 17.6 15.9 13.0 13.2
Amortization of deferred acquisition costs 283.1 279.2 286.0 278.7 285.9 303.7
General and administrative expenses 332.0 333.9 343.3 337.0 332.6 311.3
-------- -------- -------- -------- -------- --------
Total expenses 1,988.2 1,988.2 1,991.7 1,988.6 2,059.4 2,059.0
-------- -------- -------- -------- -------- --------
Income before federal income taxes 440.9 439.0 512.1 549.1 530.3 471.1
Federal income taxes 134.7 132.8 156.0 158.0 154.5 129.3
-------- -------- -------- -------- -------- --------
Net income from property casualty operations 306.2 306.2 356.1 391.1 375.8 341.8
Financing costs and other (33.1) (30.2) (29.3) (30.6) (28.7) (29.3)
-------- -------- -------- -------- -------- --------
Total net income** $ 273.1 $ 276.0 $ 326.8 $ 360.5 $ 347.1 $ 312.5
======== ======== ======== ======== ======== ========
* Includes pre-tax:
Catastrophe losses, net of reinsurance $ 7.5 $ 7.3 $ -- $ 8.2 $ 13.2 $ 36.2
Asbestos and environmental losses $ 30.0 $ 29.0 $ 40.0 $ 35.4 $ 31.0 $ 30.0
** Includes, net of taxes:
Net investment income $ 347.3 $ 354.2 $ 369.5 $ 370.1 $ 364.8 $ 375.5
Realized investment gains (losses) $ 5.2 $ (4.4) $ 36.8 $ 72.6 $ 43.2 $ 6.2
<CAPTION>
YTD YTD
3Q 3Q 3Q
1998 1997 1998
-------- -------- --------
<S> <C> <C> <C>
TOTAL P&C INSURANCE
REVENUES
Commercial Lines $1,654.9 $4,887.5 $4,971.5
Personal Lines 943.5 2,472.6 2,746.7
Other 2.0 8.8 8.6
-------- -------- --------
Total $2,600.4 $7,368.9 $7,726.8
======== ======== ========
CORE BUSINESS INCOME
Commercial Lines $ 230.6 $ 626.7 $ 683.1
Personal Lines 90.3 304.2 306.0
-------- -------- --------
320.9 930.9 989.1
Financing costs and other (26.9) (92.6) (84.9)
Minority interest (49.1) (146.4) (151.1)
-------- -------- --------
Total $ 244.9 $ 691.9 $ 753.1
======== ======== ========
GAAP Consolidated Statement of Operations
Revenues:
Premiums $1,974.9 $5,417.7 $5,775.9
Net investment income 500.4 1,532.6 1,527.4
Fee income 74.2 278.8 233.1
Realized investment gains (losses) 32.5 58.0 108.5
Other revenues 16.4 73.0 73.3
-------- -------- --------
Total revenues 2,598.4 7,360.1 7,718.2
-------- -------- --------
Claims and expenses:
Claims and claim adjustment expenses* 1,517.7 4,076.3 4,376.4
Policyholder dividends 13.3 34.3 39.5
Amortization of deferred acquisition costs 304.7 848.3 894.3
General and administrative expenses 297.0 1,009.2 940.9
-------- -------- --------
Total expenses 2,132.7 5,968.1 6,251.1
-------- -------- --------
Income before federal income taxes 465.7 1,392.0 1,467.1
Federal income taxes 123.6 423.5 407.4
-------- -------- --------
Net income from property casualty operations 342.1 968.5 1,059.7
Financing costs and other (26.8) (92.6) (84.8)
-------- -------- --------
Total net income** $ 315.3 $ 875.9 $ 974.9
======== ======== ========
* Includes pre-tax:
Catastrophe losses, net of reinsurance $ 56.5 $ 14.8 $ 105.9
Asbestos and environmental losses $ 28.0 $ 99.0 $ 89.0
** Includes, net of taxes:
Net investment income $ 366.1 $1,071.0 $1,106.4
Realized investment gains (losses) $ 21.3 $ 37.6 $ 70.7
</TABLE>
Page 30
<PAGE>
TRAVELERS GROUP -- PROPERTY & CASUALTY INSURANCE SERVICES -- Page 2
(In millions of dollars)
<TABLE>
<CAPTION>
1Q 2Q 3Q 4Q 1Q 2Q
1997 1997 1997 1997 1998 1998
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
TOTAL P&C INSURANCE (cont'd)
Statutory underwriting
Net written premiums (1) $ 2,113.3 $ 1,885.6 $ 1,951.2 $ 1,881.5 $ 2,017.8 $ 1,994.7
Net earned premiums $ 1,800.0 $ 1,811.5 $ 1,805.4 $ 1,808.8 $ 1,897.0 $ 1,896.1
Losses and loss adjustment expenses 1,325.8 1,316.3 1,295.9 1,292.9 1,383.2 1,387.7
Other underwriting expenses 591.2 571.2 600.9 574.9 572.0 587.7
--------- --------- --------- --------- --------- ---------
Statutory underwriting loss (117.0) (76.0) (91.4) (59.0) (58.2) (79.3)
Policyholder dividends 3.0 18.8 15.2 50.1 13.0 13.2
--------- --------- --------- --------- --------- ---------
Statutory underwriting loss after policyholder
dividends $ (120.0) $ (94.8) $ (106.6) $ (109.1) $ (71.2) $ (92.5)
========= ========= ========= ========= ========= =========
Reserves for losses and loss adjustment expenses $21,728.3 $21,675.1 $21,559.4 $21,396.2 $21,323.2 $21,141.8
Decrease in reserves $ (83.6) $ (53.2) $ (115.7) $ (163.2) $ (73.0) $ (181.4)
Statutory surplus $ 5,552.0 $ 5,773.6 $ 6,004.8 $ 6,188.2 $ 6,409.1 $ 6,640.4
Net written premiums/surplus (2) 1.35:1 1.33:1 1.29:1 1.27:1 1.21:1 1.18:1
Statutory combined ratio: (1), (3)
Loss and loss adjustment expense ratio 73.7% 72.7% 71.8% 71.5% 72.9% 73.2%
Other underwriting expense ratio 28.0% 30.3% 30.8% 30.6% 28.3% 29.5%
--------- --------- --------- --------- --------- ---------
Combined ratio 101.7% 103.0% 102.6% 102.1% 101.2% 102.7%
========= ========= ========= ========= ========= =========
<CAPTION>
YTD YTD
3Q 3Q 3Q
1998 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
TOTAL P&C INSURANCE (cont'd)
Statutory underwriting
Net written premiums (1) $ 2,076.9 $ 5,950.1 $ 6,089.4
Net earned premiums $ 1,974.9 $ 5,416.9 $ 5,768.0
Losses and loss adjustment expenses 1,477.5 3,938.0 4,248.4
Other underwriting expenses 585.2 1,763.3 1,744.9
--------- --------- ---------
Statutory underwriting loss (87.8) (284.4) (225.3)
Policyholder dividends 13.3 37.0 39.5
--------- --------- ---------
Statutory underwriting loss after policyholder
dividends $ (101.1) $ (321.4) $ (264.8)
========= ========= =========
Reserves for losses and loss adjustment expenses $20,958.4 $21,559.4 $20,958.4
Decrease in reserves $ (183.4) $ (252.5) $ (437.8)
Statutory surplus $ 6,754.3 $ 6,004.8 $ 6,754.3
Net written premiums/surplus (2) 1.18:1 1.29:1 1.18:1
Statutory combined ratio: (1), (3)
Loss and loss adjustment expense ratio 74.8% 72.7% 73.7%
Other underwriting expense ratio 28.2% 29.6% 28.7%
--------- --------- ---------
Combined ratio 103.0% 102.3% 102.4%
========= ========= =========
</TABLE>
(1) First quarter 1997 net written premiums include an increase of $142.4
million due to a change to conform Aetna P&C's and Travelers P&C's methods
of recording net written premiums, and an increase of $68.7 million due to
an adjustment associated with a reinsurance transaction. Excluding these
transactions, the statutory loss and loss adjustment expense ratio, other
underwriting expense ratio and combined ratio for the 1997 first quarter
were 73.7%, 28.8% and 102.5%, respectively, and for the 1997 nine months
were 72.7%, 30.0% and 102.7%, respectively.
(2) Based on 12 month rolling net written premiums.
(3) Before policyholder dividends.
Page 31
<PAGE>
TRAVELERS GROUP -- PROPERTY & CASUALTY INSURANCE SERVICES -- Page 3
(In millions of dollars)
<TABLE>
<CAPTION>
1Q 2Q 3Q 4Q 1Q 2Q
1997 1997 1997 1997 1998 1998
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
COMMERCIAL LINES
Net written premiums by market: (1)
National accounts $ 221.6 $ 149.7 $ 151.1 $ 134.6 $ 186.6 $ 121.6
Commercial accounts 560.5 453.0 502.3 470.3 462.6 440.8
Select accounts 363.7 369.6 353.9 345.1 378.6 393.7
Specialty accounts 192.6 168.4 169.1 151.9 184.0 164.7
-------- -------- -------- -------- -------- --------
Total net written premiums $1,338.4 $1,140.7 $1,176.4 $1,101.9 $1,211.8 $1,120.8
======== ======== ======== ======== ======== ========
Statutory ratio development:
Earned premiums $1,090.4 $1,092.6 $1,061.8 $1,063.8 $1,126.2 $1,093.6
Losses and loss adjustment expenses 891.4 849.6 821.0 816.1 880.5 864.2
Other underwriting expenses 367.3 363.7 375.1 349.4 346.0 345.6
-------- -------- -------- -------- -------- --------
Total deductions 1,258.7 1,213.3 1,196.1 1,165.5 1,226.5 1,209.8
-------- -------- -------- -------- -------- --------
Statutory underwriting loss $ (168.3) $ (120.7) $ (134.3) $ (101.7) $ (100.3) $ (116.2)
======== ======== ======== ======== ======== ========
Statutory combined ratio: (1), (2)
Loss and loss adjustment expense ratio 81.7% 77.8% 77.3% 76.7% 78.2% 79.0%
Other underwriting expense ratio 27.4% 31.9% 31.9% 31.7% 28.6% 30.8%
-------- -------- -------- -------- -------- --------
Combined ratio 109.1% 109.7% 109.2% 108.4% 106.8% 109.8%
======== ======== ======== ======== ======== ========
Net investment income (pre-tax) $ 413.7 $ 417.6 $ 441.5 $ 422.6 $ 412.5 $ 424.3
Effective tax rate on net investment income 30.5% 29.9% 29.9% 28.1% 28.0% 27.5%
Catastrophe losses, net of reinsurance (after-tax) $ 4.9 $ 0.2 $ -- $ -- $ -- $ 10.4
<CAPTION>
YTD YTD
3Q 3Q 3Q
1998 1997 1998
-------- -------- --------
<S> <C> <C> <C>
COMMERCIAL LINES
Net written premiums by market: (1)
National accounts $ 175.3 $ 522.4 $ 483.5
Commercial accounts 446.0 1,515.8 1,349.4
Select accounts 365.7 1,087.2 1,138.0
Specialty accounts 181.2 530.1 529.9
-------- -------- --------
Total net written premiums $1,168.2 $3,655.5 $3,500.8
======== ======== ========
Statutory ratio development:
Earned premiums $1,139.2 $3,244.8 $3,359.0
Losses and loss adjustment expenses 896.6 2,562.0 2,641.3
Other underwriting expenses 341.7 1,106.1 1,033.3
-------- -------- --------
Total deductions 1,238.3 3,668.1 3,674.6
-------- -------- --------
Statutory underwriting loss $ (99.1) $ (423.3) $ (315.6)
======== ======== ========
Statutory combined ratio: (1), (2)
Loss and loss adjustment expense ratio 78.7% 79.0% 78.6%
Other underwriting expense ratio 29.3% 30.3% 29.5%
-------- -------- --------
Combined ratio 108.0% 109.3% 108.1%
======== ======== ========
Net investment income (pre-tax) $ 411.8 $1,272.8 $1,248.6
Effective tax rate on net investment income 26.9% 30.1% 27.5%
Catastrophe losses, net of reinsurance (after-tax) $ 14.9 $ 5.1 $ 25.3
</TABLE>
(1) First quarter 1997 net written premiums include an increase of $142.4
million due to a change to conform Aetna P&C's and Travelers P&C's methods
of recording net written premiums. Excluding this transaction, the loss
and loss adjustment expense ratio, other underwriting expense ratio and
combined ratio for the 1997 first quarter were 81.7%, 28.8% and 110.5%,
respectively, and for the 1997 nine months were 79.0%, 30.9% and 109.9%,
respectively.
(2) Before policyholder dividends.
Page 32
<PAGE>
TRAVELERS GROUP -- PROPERTY & CASUALTY INSURANCE SERVICES -- Page 4
(In millions of dollars)
<TABLE>
<CAPTION>
1Q 2Q 3Q 4Q 1Q 2Q
1997 1997 1997 1997 1998 1998
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
PERSONAL LINES
Net written premiums by product line: (1)
Auto $ 478.0 $ 477.9 $ 490.9 $ 503.8 $ 555.7 $ 578.3
Homeowners and other 296.9 267.0 283.9 275.8 250.3 295.6
-------- -------- -------- -------- -------- --------
Total net written premiums $ 774.9 $ 744.9 $ 774.8 $ 779.6 $ 806.0 $ 873.9
======== ======== ======== ======== ======== ========
Net written premiums by distribution channel: (1)
Independent agents $ 707.4 $ 654.0 $ 673.2 $ 668.3 $ 682.5 $ 718.0
Affinity group marketing 36.7 43.9 49.2 50.3 53.4 61.0
SECURE 9.7 15.2 19.5 28.2 38.0 55.8
Joint marketing arrangements 21.1 31.8 32.9 32.8 32.1 39.1
-------- -------- -------- -------- -------- --------
Total net written premiums $ 774.9 $ 744.9 $ 774.8 $ 779.6 $ 806.0 $ 873.9
======== ======== ======== ======== ======== ========
Statutory ratio development:
Earned premiums $ 709.6 $ 718.9 $ 743.6 $ 745.0 $ 770.8 $ 802.5
Total deductions 658.3 674.2 700.7 702.3 728.7 765.6
-------- -------- -------- -------- -------- --------
Statutory underwriting gain $ 51.3 $ 44.7 $ 42.9 $ 42.7 $ 42.1 $ 36.9
======== ======== ======== ======== ======== ========
Statutory combined ratio: (1)
Loss and loss adjustment expense ratio 61.2% 64.9% 63.9% 64.0% 65.2% 65.2%
Other underwriting expense ratio 28.9% 27.9% 29.1% 28.9% 28.0% 27.7%
-------- -------- -------- -------- -------- --------
Combined ratio 90.1% 92.8% 93.0% 92.9% 93.2% 92.9%
======== ======== ======== ======== ======== ========
Net investment income (pre-tax) $ 86.0 $ 87.7 $ 86.1 $ 93.2 $ 95.4 $ 94.8
Effective tax rate on net investment income 31.1% 30.8% 30.4% 29.3% 29.4% 28.5%
Catastrophe losses, net of reinsurance (after-tax) $ -- $ 4.5 $ -- $ 5.3 $ 8.6 $ 13.1
<CAPTION>
YTD YTD
3Q 3Q 3Q
1998 1997 1998
-------- -------- --------
<S> <C> <C> <C>
PERSONAL LINES
Net written premiums by product line: (1)
Auto $ 590.8 $1,446.8 $1,724.8
Homeowners and other 317.9 847.8 863.8
-------- -------- --------
Total net written premiums $ 908.7 $2,294.6 $2,588.6
======== ======== ========
Net written premiums by distribution channel: (1)
Independent agents $ 731.8 $2,034.6 $2,132.3
Affinity group marketing 72.9 129.8 187.3
SECURE 60.8 44.4 154.6
Joint marketing arrangements 43.2 85.8 114.4
-------- -------- --------
Total net written premiums $ 908.7 $2,294.6 $2,588.6
======== ======== ========
Statutory ratio development:
Earned premiums $ 835.7 $2,172.1 $2,409.0
Total deductions 824.4 2,033.2 2,318.7
-------- -------- --------
Statutory underwriting gain $ 11.3 $ 138.9 $ 90.3
======== ======== ========
Statutory combined ratio: (1)
Loss and loss adjustment expense ratio 69.5% 63.3% 66.7%
Other underwriting expense ratio 26.8% 28.6% 27.5%
-------- -------- --------
Combined ratio 96.3% 91.9% 94.2%
======== ======== ========
Net investment income (pre-tax) $ 88.6 $ 259.8 $ 278.8
Effective tax rate on net investment income 27.4% 30.8% 28.4%
Catastrophe losses, net of reinsurance (after-tax) $ 21.8 $ 4.5 $ 43.5
</TABLE>
(1) The 1997 first quarter net written premiums include an adjustment
associated with a reinsurance transaction, which increased premiums by
$68.7 million. Excluding this transaction, the loss and loss adjustment
expense ratio, other underwriting expense ratio and combined ratio for the
1997 first quarter were 61.2%, 28.6% and 89.8%, respectively, and for the
1997 nine months were 63.3%, 28.5% and 91.8%, respectively.
Page 33
<PAGE>
TRAVELERS GROUP -- SELECTED OTHER DATA
(In millions of dollars)
<TABLE>
<CAPTION>
1Q 2Q 3Q 4Q 1Q 2Q 3Q
1997 1997 1997 1997 1998 1998 1998
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT PORTFOLIO (at carrying value) (1)
Fixed-income investments:
Available for sale, at market:
Mortgage-backed securities - principally
obligations of U.S. Government agencies $ 8,842 $ 9,120 $ 9,040 $ 8,998 $ 8,726 $ 8,693 $ 9,663
U.S. Treasury securities and obligations of U.S.
Government corporations and agencies 3,014 3,242 3,571 3,962 3,912 4,281 4,977
Corporates (including redeemable preferreds) 24,714 26,331 27,029 27,025 27,428 27,176 26,796
Obligations of states and political subdivisions 5,337 5,857 6,812 8,110 9,124 10,107 10,854
Debt securities issued by foreign governments 1,236 1,384 1,379 1,326 1,339 1,166 997
Held to maturity, at amortized cost 49 46 43 41 38 36 33
-------- -------- -------- -------- -------- -------- --------
Total fixed income 43,192 45,980 47,874 49,462 50,567 51,459 53,320
Equity securities, at market 1,296 1,377 1,609 1,624 1,541 1,503 1,368
Mortgage loans and real estate held for sale 4,513 4,493 4,153 3,799 3,470 3,436 3,344
Policy loans 1,902 1,873 1,875 1,872 1,869 1,865 1,863
Short-term and other 5,878 5,135 4,159 5,077 6,709 6,179 7,477
-------- -------- -------- -------- -------- -------- --------
Total invested assets $ 56,781 $ 58,858 $ 59,670 $ 61,834 $ 64,156 $ 64,442 $ 67,372
======== ======== ======== ======== ======== ======== ========
After tax unrealized gains (losses) on invested assets $ (131) $ 437 $ 930 $ 1,157 $ 1,121 $ 1,274 $ 1,794
======== ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
RATINGS Moody's S&P Fitch D&P
-------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Senior Debt:
Citigroup (formerly Travelers Group Inc.) Aa2 AA- AA AA-
Commercial Credit Company Aa3 A+ AA A+
Salomon Smith Barney Holdings, Inc. Aa3 A AA A+
Travelers Property Casualty Corp. A1* A+ AA- A+
<CAPTION>
Moody's S&P AM Best D&P
-------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Claims Paying Ability:
Travelers Property & Casualty Pool Aa3* AA- A AA-
Travelers Insurance Company Aa3* AA A+ AA
Primerica Life Insurance Company Aa3* AA A AA
</TABLE>
* Confirmed with positive outlook.
(1) Represents Travelers Group's consolidated investments, which primarily
support the company's insurance operations but also include corporate
investments and investments managed on behalf of Consumer Finance
Services.
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