-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S20WMeulI/MGu1q9CWLn7uvi4BvVRHvZRwFi2vi/70eFI5O3haCnE97QVNsrLwRi tnF7pzX0WJgA+mSF3QRfug== 0000912057-01-528690.txt : 20010815 0000912057-01-528690.hdr.sgml : 20010815 ACCESSION NUMBER: 0000912057-01-528690 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CITICORP CENTRAL INDEX KEY: 0000020405 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 132614988 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05738 FILM NUMBER: 1713164 BUSINESS ADDRESS: STREET 1: 399 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10043 BUSINESS PHONE: 2125591000 MAIL ADDRESS: STREET 1: 425 PARK AVE- 2ND F STREET 2: ATTN: LEGAL AFFAIRS OFFICE CITY: NEW YORK STATE: NY ZIP: 10043 FORMER COMPANY: FORMER CONFORMED NAME: CITY BANK OF NEW YORK NATIONAL ASSOCIATI DATE OF NAME CHANGE: 19680903 FORMER COMPANY: FORMER CONFORMED NAME: FIRST NATIONAL CITY CORP DATE OF NAME CHANGE: 19740414 10-Q 1 a2056694z10-q.txt 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001 OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO _______ COMMISSION FILE NUMBER 1-5738 CITICORP (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 06-1515595 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 399 PARK AVENUE, NEW YORK, NEW YORK 10043 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (800) 285-3000 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) ---------- INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES |X| NO |_| BECAUSE THE REGISTRANT IS AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF CITIGROUP INC., NONE OF ITS OUTSTANDING VOTING STOCK IS HELD BY NONAFFILIATES. AS OF THE DATE HEREOF, 1,000 SHARES OF THE REGISTRANT'S COMMON STOCK, $0.01 PAR VALUE PER SHARE, WERE ISSUED AND OUTSTANDING. REDUCED DISCLOSURE FORMAT THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT. CITICORP TABLE OF CONTENTS Part I - FINANCIAL INFORMATION Item 1. Financial Statements: PAGE NO. -------- Consolidated Statements of Income (Unaudited) - Three and Six Months Ended June 30, 2001 and 2000 29 Consolidated Balance Sheets - June 30, 2001 (Unaudited) and December 31, 2000 30 Consolidated Statements of Changes in Stockholder's Equity (Unaudited) - Six Months Ended June 30, 2001 and 2000 31 Consolidated Statements of Cash Flows (Unaudited) - Six Months Ended June 30, 2001 and 2000 32 Consolidated Balance Sheets of Citibank, N.A. and Subsidiaries - June 30, 2001 (Unaudited) and December 31, 2000 33 Notes to Consolidated Financial Statements (Unaudited) 34 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 1-28 Item 3. Quantitative and Qualitative Disclosures about Market Risk 23-25 36-37 Part II - Other Information Item 6. Exhibits and Reports on Form 8-K 52 Signatures 53 Exhibit Index 54 CITICORP AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ACQUISITION OF BANACCI On August 6, 2001, Citicorp, an indirect wholly-owned subsidiary of Citigroup Inc. (Citigroup), completed its acquisition of 99.86% of the issued and outstanding ordinary shares of Grupo Financiero Banamex-Accival (Banacci), a leading Mexican financial institution, for approximately $12.5 billion in cash and Citigroup stock. Citicorp completed the acquisition by settling transactions that were conducted on the Mexican Stock Exchange on Friday, August 3, 2001. Those transactions comprised both the acquisition of Banacci shares tendered in response to Citicorp's offer to acquire all of Banacci's outstanding shares and the simultaneous sale of 126,705,281 Citigroup shares to the tendering Banacci shareholders. Banacci's and Citigroup's operations in Mexico will be integrated and will conduct business under the "Banamex" brand name. The transaction will be accounted for under the purchase method of accounting. BUSINESS FOCUS The table below shows the core income (loss) for each of Citicorp's businesses:
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, --------------------------------------------------------------------- IN MILLIONS OF DOLLARS 2001 2000(1) 2001 2000(1) - ------------------------------------------------------------------------------------------------------------------------------------ GLOBAL CONSUMER Citibanking North America $ 157 $ 134 $ 314 $ 265 Mortgage Banking 88 71 165 137 North America Cards 455 388 922 768 CitiFinancial 286 205 498 384 --------------------------------------------------------------------- Total North America 986 798 1,899 1,554 --------------------------------------------------------------------- Japan 229 173 427 323 Western Europe 106 91 216 187 Asia 147 139 294 280 Latin America 45 39 75 103 Central & Eastern Europe, Middle East and Africa 21 15 39 30 --------------------------------------------------------------------- Total Emerging Markets Consumer Banking 213 193 408 413 --------------------------------------------------------------------- Total International 548 457 1,051 923 --------------------------------------------------------------------- e-Consumer (32) (46) (67) (114) Other (7) (29) (4) (60) --------------------------------------------------------------------- TOTAL GLOBAL CONSUMER 1,495 1,180 2,879 2,303 --------------------------------------------------------------------- GLOBAL CORPORATE Corporate and Investment Bank 271 263 578 583 Emerging Markets Corporate Banking and Global Transaction Services 467 345 923 685 --------------------------------------------------------------------- TOTAL GLOBAL CORPORATE 738 608 1,501 1,268 --------------------------------------------------------------------- GLOBAL INVESTMENT MANAGEMENT AND PRIVATE BANKING Citibank Asset Management (4) 6 7 9 The Citigroup Private Bank 93 79 190 159 --------------------------------------------------------------------- TOTAL GLOBAL INVESTMENT MANAGEMENT AND PRIVATE BANKING 89 85 197 168 --------------------------------------------------------------------- INVESTMENT ACTIVITIES 188 238 135 1,021 CORPORATE/OTHER (38) (107) (71) (262) --------------------------------------------------------------------- CORE INCOME 2,472 2,004 4,641 4,498 Restructuring-Related Items, after-tax (2) (105) (3) (144) (86) Cumulative Effect of Accounting Changes (3) (111) -- (144) -- --------------------------------------------------------------------- NET INCOME $2,256 $2,001 $4,353 $4,412 - ---------------------------------------------------------------=====================================================================
(1) Reclassified to conform to the current period's presentation. (2) Restructuring-related items in the 2001 first quarter related principally to severance and costs associated with the reduction of staff in the Global Corporate businesses and in the 2001 second quarter related principally to severance and costs associated with the reduction of staff primarily in the Global Corporate and Global Consumer businesses. See Note 8 of Notes to Consolidated Financial Statements. The 2000 six-month period includes a $71 million (after-tax) charge associated with the discontinuation of the loan origination operations of Associates Housing Finance unit. (3) Accounting changes refer to the 2001 first quarter adoption of Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended (SFAS 133) and the 2001 second quarter adoption of EITF Issue No. 99-20, "Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets" (EITF 99-20). See Notes 3 and 7 of Notes to Consolidated Financial Statements. - -------------------------------------------------------------------------------- 1 RESULTS OF OPERATIONS MANAGED BASIS REPORTING The discussion that follows includes amounts reported in the financial statements (owned basis) adjusted to include certain effects of securitization activity, receivables held for securitization, and receivables sold with servicing retained (managed basis). On a managed basis, these earnings are reclassified and presented as if the receivables had neither been held for securitization nor sold. The income analysis below reconciles amounts shown in the Consolidated Statements of Income on page 29 to the basis presented in the business segment discussions.
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, --------------------------------------------------------------------- IN MILLIONS OF DOLLARS 2001 2000 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL REVENUES, NET OF INTEREST EXPENSE $11,223 $10,167 $22,262 $21,013 Effect of securitization activities 930 574 1,696 1,236 Housing Finance unit charge -- -- -- 47 --------------------------------------------------------------------- ADJUSTED REVENUES, NET OF INTEREST EXPENSE 12,153 10,741 23,958 22,296 --------------------------------------------------------------------- Total operating expenses 5,739 5,481 11,661 11,074 Restructuring-related items (168) (4) (230) (24) Housing Finance unit charge -- -- -- (25) --------------------------------------------------------------------- ADJUSTED OPERATING EXPENSES 5,571 5,477 11,431 11,025 --------------------------------------------------------------------- Benefits, claims, and credit losses 1,742 1,481 3,456 2,950 Effect of securitization activities 930 574 1,696 1,236 Housing Finance unit charge -- -- -- (40) --------------------------------------------------------------------- ADJUSTED BENEFITS, CLAIMS, AND CREDIT LOSSES 2,672 2,055 5,152 4,146 --------------------------------------------------------------------- CORE INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 3,910 3,209 7,375 7,125 Taxes on core income 1,424 1,196 2,712 2,613 Minority interest, net of income tax 14 9 22 14 --------------------------------------------------------------------- CORE INCOME 2,472 2,004 4,641 4,498 Restructuring-related items, after-tax (105) (3) (144) (86) --------------------------------------------------------------------- INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES 2,367 2,001 4,497 4,412 Cumulative effect of accounting changes (111) -- (144) -- --------------------------------------------------------------------- NET INCOME $ 2,256 $ 2,001 $ 4,353 $ 4,412 - ---------------------------------------------------------------=====================================================================
INCOME Citicorp reported core income of $2.472 billion in the 2001 second quarter, up 23% from $2.004 billion in the 2000 second quarter. Core income in the 2001 second quarter excluded an after-tax charge of $105 million for restructuring-related items and an after-tax charge of $111 million, reflecting the cumulative effect of adopting EITF 99-20 (as described in Notes 3, 7 and 8 of Notes to Consolidated Financial Statements). Net income for the quarter was $2.256 billion, up 13% from $2.001 billion in the year-ago quarter. Core income return on common equity was 20.5% compared to 21.3% a year ago. Core income for the 2001 six months of $4.641 billion was up 3% from $4.498 billion in the 2000 six months. Net income in the 2001 six months was $4.353 billion, down 1% from $4.412 billion. Core income return on common equity was 19.3% and 24.3% in the six months of 2001 and 2000, respectively. Global Consumer core income increased $315 million or 27% and $576 or 25% in the 2001 second quarter and six months compared to the 2000 periods, including second quarter and six-month comparative increases of 40% and 30% in CitiFinancial, 17% and 20% in North America Cards, and 32% for both periods in Japan. Global Corporate increased $130 million or 21% and $233 million or 18% from the 2000 second quarter and six-month periods. Global Investment Management and Private Banking grew $4 million or 5% and $29 million or 17%, while Investment Activities decreased $50 million or 21% and $886 million or 87% from the 2000 second quarter and six-month periods. REVENUES, NET OF INTEREST EXPENSE Adjusted revenues, net of interest expense, of $12.2 billion and $24.0 billion in the 2001 second quarter and six months were up $1.4 billion or 13% and $1.7 billion or 7%, respectively, from the 2000 periods. Global Consumer revenues were up $1.2 billion or 16% in the 2001 second quarter to $8.3 billion, and were up $2.1 billion or 14% in the 2001 six months to $16.4 billion, led by 2001 second quarter and six-month increases in North America of $801 million or 17% and $1.4 billion or 15% from the 2000 second quarter and six months. Compared to the 2000 periods, North America Cards was up $542 million or 21% in the 2001 second quarter and $995 million or 19% in the 2001 six months, while CitiFinancial experienced growth of $121 million or 10% in the 2001 second quarter and $238 million or 10% in the 2001 six months, both businesses reflecting strong growth in receivables. 2 International Consumer revenues were up $221 million or 9% in the 2001 second quarter and $448 million or 10% in the 2001 six months, reflecting strong growth in Japan's consumer finance business. Compared to the 2000 periods, Global Corporate revenues were up $198 million or 7% in the 2001 second quarter and $708 million or 13% in the 2001 six months, led by double-digit growth in Emerging Markets Corporate Banking & Global Transaction Services, reflecting growth and acquisitions. Corporate and Investment Bank revenues were down $25 million or 2% in the 2001 second quarter and were up $165 million or 7% in the 2001 six-month period, reflecting strong Fixed Income results and the impact of Copelco in the six-month comparison. Global Investment Management and Private Banking revenues of $523 million in the 2001 second quarter and $1.092 billion in the 2001 six months were up $20 million or 4% and $107 million or 11% from the comparable 2000 periods, primarily due to growth in asset-based fee revenues and the impact of acquisitions in the six-month comparison. Revenues in Investment Activities decreased $96 million and $1.405 billion from the 2000 second quarter and six months, respectively, primarily reflecting lower venture capital results. SELECTED REVENUE ITEMS Net interest revenue as calculated from the Consolidated Statements of Income rose $1.1 billion or 21% from the 2000 second quarter to $6.5 billion and increased $2.1 billion or 19% from the 2000 six months to $12.7 billion, reflecting business volume growth in most markets as well as the changing rate environment. Net interest revenue, including the effect of securitization activities, increased $1.3 billion or 20% from the 2000 second quarter and $2.4 billion or 18% from the 2000 six months. Fees and commissions revenue of $2.6 billion was down $245 million or 9% from the 2000 second quarter, primarily as a result of lower transactional activity, partially offset by volume-related growth in customer activities and assets under fee-based management. Aggregate trading and foreign exchange revenues of $858 million and $1.9 billion for the 2001 second quarter and six months were up $149 million or 21% from the 2000 second quarter and up $449 million or 30% from the 2000 six-month period, reflecting strong Fixed Income and Foreign Exchange growth. Realized gains from sales of investments were down $234 million and $178 million from the 2000 second quarter and six-month periods, reflecting lower realized gains in certain proprietary investments and the refinancing portfolio. Other income as shown in the Consolidated Statements of Income of $1.2 billion in the 2001 second quarter was up $264 million from the year-ago quarter, and was down $1.1 billion from the 2000 six months, primarily reflecting venture capital activity. OPERATING EXPENSES Adjusted operating expenses of $5.6 billion and $11.4 billion in the 2001 second quarter and six months, respectively, which exclude restructuring-related items, were up $94 million or 2% in the 2001 second quarter and $406 million or 4% in the 2001 six months, compared to year-ago levels. Global Corporate expenses were down 2% in the 2001 second quarter, reflecting lower compensation and benefits, and were up 8% in the 2001 six months, primarily attributable to increased compensation and benefits in the first quarter of 2001, investment spending to expand product platforms and the impact of the acquisitions of Schroders and Copelco. Compared to the 2000 periods, Global Consumer expenses increased 3% in the 2001 second quarter and 4% in the 2001 six months, reflecting the effect of foreign currency translation and expense management initiatives (including CitiFinancial branch consolidations) which were partially offset by volume-related increases. Global Investment Management and Private Banking expenses increased 5% and 12% from the year-ago quarter and six-month periods, primarily reflecting increased compensation and benefits and investments in sales and marketing initiatives, as well as the impact of acquisitions in the six-month comparison. Corporate/Other expenses decreased $164 million in the 2001 six months, which primarily reflected a 2000 first quarter $108 million pretax expense for the contribution of appreciated venture capital securities to Citigroup's Foundation. RESTRUCTURING-RELATED ITEMS Restructuring-related items of $168 million ($105 million after-tax) in the 2001 second quarter and $230 million ($144 million after-tax) in the 2001 six months related principally to severance and costs associated with the reduction of staff primarily in the Global Corporate and Global Consumer businesses. Restructuring-related items of $4 million ($3 million after-tax) in the 2000 second quarter and $24 million ($15 million after-tax) in the 2000 six months primarily represented charges for accelerated depreciation. Included in other operating expenses for the 2000 six-month period is a $71 million (after-tax) charge associated with the discontinuation of the loan origination operations of Associates Housing Finance unit. BENEFITS, CLAIMS, AND CREDIT LOSSES Adjusted benefits, claims, and credit losses were $2.7 billion and $5.2 billion in the 2001 second quarter and six months, up $617 million and $1.0 billion from the 2000 second quarter and six months, respectively. Policyholder benefits and claims in the 2001 second quarter increased 44% from the 2000 second quarter to $257 million, and were up 50% to $507 million for the 2001 six 3 months, primarily as a result of increases in CitiFinancial and Other Consumer. The adjusted provision for credit losses increased 29% from the 2000 second quarter to $2.4 billion in the 2001 second quarter and increased 21% from the 2000 six months to $4.6 billion in the 2001 six months, primarily reflecting increases in Cards. Global Consumer adjusted provisions for benefits, claims and credit losses of $2.4 billion in the 2001 second quarter were up 31% from the 2000 second quarter, primarily reflecting increases in North America Cards and CitiFinancial. Total managed net credit losses were $2.154 billion and the related loss ratio was 2.85% in the 2001 second quarter, as compared to $1.931 billion and 2.61% in the preceding quarter and $1.606 billion and 2.42% in the year-ago quarter. The managed consumer loan delinquency ratio (90 days or more past due) increased to 2.10% at June 30, 2001 from 2.04% at March 31, 2001 and 1.74% a year ago. Global Corporate provisions for benefits, claims, and credit losses of $289 million in the 2001 second quarter increased 20% from a year ago, primarily due to higher expected loss rates in the transportation portfolio in the Corporate and Investment Bank. Emerging Markets Corporate Banking & Global Transaction Services provision for credit losses improved in most regions compared to year-ago levels. Commercial cash-basis loans at June 30, 2001 and 2000 were $2.605 billion and $1.746 billion, respectively, while the commercial Other Real Estate Owned (OREO) portfolio totaled $194 million and $203 million, respectively. The increase in cash-basis loans from the 2000 second quarter was primarily related to the transportation portfolio, the addition of Copelco and increases attributable to borrowers in the retail, telecommunication and utility industries. Commercial cash-basis loans at June 30, 2001 increased $243 million from March 31, 2001. The improvements in OREO were primarily related to the North America real estate portfolio. CAPITAL Total capital (Tier 1 and Tier 2) was $60.1 billion or 12.58% of net risk-adjusted assets, and Tier 1 capital was $40.3 billion or 8.43% at June 30, 2001, compared to $59.6 billion or 12.51% and $39.7 billion or 8.34% at March 31, 2001. - -------------------------------------------------------------------------------- The Income line in each of the following business segment discussions excludes the cumulative effect of adopting EITF 99-20 and SFAS 133. See Notes 3 and 7 of Notes to Consolidated Financial Statements. GLOBAL CONSUMER
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN MILLIONS OF DOLLARS 2001 2000(1) Change 2001 2000(1) Change - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL REVENUES, NET OF INTEREST EXPENSE $7,392 $6,588 12 $14,699 $13,098 12 Effect of securitization activities 930 574 62 1,696 1,236 37 ------------------------------- ------------------------------- ADJUSTED REVENUES, NET OF INTEREST EXPENSE 8,322 7,162 16 16,395 14,334 14 ------------------------------- ------------------------------- Adjusted operating expenses (2) 3,564 3,466 3 7,213 6,955 4 ------------------------------- ------------------------------- Provisions for benefits, claims, and credit losses 1,452 1,238 17 2,897 2,468 17 Effect of securitization activities 930 574 62 1,696 1,236 37 ------------------------------- ------------------------------- Adjusted provisions for benefits, claims, and credit losses 2,382 1,812 31 4,593 3,704 24 ------------------------------- ------------------------------- CORE INCOME BEFORE TAXES AND MINORITY INTEREST 2,376 1,884 26 4,589 3,675 25 Income taxes 874 698 25 1,698 1,361 25 Minority interest, after-tax 7 6 17 12 11 9 ------------------------------- ------------------------------- CORE INCOME 1,495 1,180 27 2,879 2,303 25 Restructuring-related items, after-tax (58) 10 NM (70) 6 NM ------------------------------- ------------------------------- INCOME $1,437 $1,190 21 $ 2,809 $2,309 22 - ------------------------------------------==========================================================================================
(1) Reclassified to conform to the current period's presentation. (2) Excludes restructuring-related items. NM Not meaningful - -------------------------------------------------------------------------------- Global Consumer -- which provides banking, consumer lending, including credit and charge cards, investment and personal insurance products and services, to customers around the world -- reported core income of $1.495 billion and $2.879 billion in the 2001 second quarter and six months, up $315 million or 27% and $576 million or 25% from the comparable 2000 periods, reflecting growth in most businesses. Banking/Lending core income increased $188 million or 24% in the 2001 second quarter and $345 million or 22% in the 2001 six months from the prior-year periods, reflecting strong performance across all businesses. In the International businesses, core income increased $91 million or 20% in the 2001 second quarter and $128 million or 14% in the 2001 six months, marked by growth in all regions except Latin America, where core income increased $6 million or 15% in the 2001 second quarter but 4 decreased $28 million or 27% in the 2001 six months primarily due to lower earnings from Confia. Income of $1.437 billion and $2.809 billion in the 2001 second quarter and six months included restructuring-related items of $58 million ($93 million pretax) and $70 million ($112 million pretax), respectively. Income of $1.190 billion and $2.309 billion in the 2000 second quarter and six months included restructuring-related credits of $10 million ($18 million pretax) and $6 million ($12 million pretax), respectively. See Note 8 of Notes to Consolidated Financial Statements for a discussion of the restructuring-related items. BANKING/LENDING CITIBANKING NORTH AMERICA
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN MILLIONS OF DOLLARS 2001 2000(1) Change 2001 2000(1) Change - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL REVENUES, NET OF INTEREST EXPENSE $662 $566 17 $1,273 $1,145 11 Adjusted operating expenses (2) 394 334 18 740 685 8 Provision for credit losses 13 7 86 20 16 25 ------------------------------- ------------------------------- CORE INCOME BEFORE TAXES 255 225 13 513 444 16 Income taxes 98 91 8 199 179 11 ------------------------------- ------------------------------- CORE INCOME 157 134 17 314 265 18 Restructuring-related items, after-tax (3) 8 NM (3) 8 NM ------------------------------- ------------------------------- INCOME $154 $142 8 $311 $273 14 - ------------------------------------------========================================================================================== Average assets (IN BILLIONS OF DOLLARS) 9 9 -- 9 9 -- Return on assets 6.86% 6.35% 6.97% 6.10% - ------------------------------------------========================================================================================== EXCLUDING RESTRUCTURING-RELATED ITEMS Return on assets 7.00% 5.99% 7.04% 5.92% - ------------------------------------------==========================================================================================
(1) Reclassified to conform to the current period's presentation. (2) Excludes restructuring-related items. NM Not meaningful - -------------------------------------------------------------------------------- Citibanking North America -- which delivers banking, lending and investment services to customers through Citibank's branches and electronic delivery systems -- reported core income of $157 million and $314 million in the 2001 second quarter and six months, respectively, up $23 million or 17% and $49 million or 18% from the 2000 periods, as revenue growth and a realized investment gain were partially offset by increased expenses. Income of $154 million in the 2001 second quarter included restructuring-related items of $3 million ($5 million pretax). Income of $142 million in the 2000 second quarter included restructuring-related credits of $8 million ($14 million pretax). On July 17, 2001, Citibanking North America completed the acquisition of European American Bank (EAB), a state-chartered bank with $10.7 billion in deposits, $15.0 billion in assets and 97 branches in the New York area as of June 30, 2001. As shown in the following table, Citibanking grew customer deposits and accounts from 2000, while loans were unchanged from a year ago.
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN BILLIONS OF DOLLARS 2001 2000 Change 2001 2000 Change - ------------------------------------------------------------------------------------------------------------------------------------ Accounts (IN MILLIONS) 6.8 6.4 6 6.8 6.4 6 Average customer deposits $48.1 $44.5 8 $48.0 $44.1 9 Average loans $7.0 $7.0 -- $7.0 $7.0 -- - ------------------------------------------==========================================================================================
Revenues, net of interest expense, of $662 million and $1.273 billion in the 2001 second quarter and six months, respectively, increased $96 million or 17% and $128 million or 11% from the 2000 periods. Revenue growth in the 2001 second quarter and six months was driven by higher treasury results, growth in customer deposits and debit card fees and was partially offset by reduced investment product fees that reflect current market conditions. Revenues in the 2001 periods include a realized investment gain resulting from the disposition of an equity investment. Adjusted operating expenses for the 2001 second quarter and six months increased $60 million or 18% and $55 million or 8% compared to the 2000 second quarter and six months, reflecting investments in technology and higher advertising and marketing. The provision for credit losses increased to $13 million and $20 million in the 2001 second quarter and six months from $7 million and $16 million in the 2000 periods. The net credit loss ratio was 1.03% in the 2001 second quarter, up from 0.85% in the 2001 first quarter and 0.88% in the prior-year quarter. Loans delinquent 90 days or more were $41 million or 0.58% of loans at June 30, 2001, compared to $41 million or 0.59% at March 31, 2001 and $33 million or 0.47% a year ago. 5 MORTGAGE BANKING
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN MILLIONS OF DOLLARS 2001 2000(1) Change 2001 2000(1) Change - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL REVENUES, NET OF INTEREST EXPENSE $268 $226 19 $510 $449 14 Adjusted operating expenses(2) 116 102 14 225 201 12 (Benefit) provision for credit losses (3) (1) NM (3) 8 NM ------------------------------- ------------------------------- CORE INCOME BEFORE TAXES AND MINORITY INTEREST 155 125 24 288 240 20 Income taxes 60 48 25 111 92 21 Minority interest, after-tax 7 6 17 12 11 9 ------------------------------- ------------------------------- Core income 88 71 24 165 137 20 Restructuring-related items, after-tax (2) -- NM (2) -- NM ------------------------------- ------------------------------- INCOME $ 86 $ 71 21 $163 $137 19 - ------------------------------------------========================================================================================== Average assets (IN BILLIONS OF DOLLARS) $48 $37 30 $48 $36 33 Return on assets 0.72% 0.77% 0.68% 0.77% - ------------------------------------------==========================================================================================
(1) Reclassified to conform to the current period's presentation. (2) Excludes restructuring-related items. NM Not meaningful - -------------------------------------------------------------------------------- Mortgage Banking -- which originates and services mortgages and student loans for customers across the United States -- reported core income of $88 million and $165 million in the 2001 second quarter and six months, respectively, up $17 million or 24% and $28 million or 20% from the 2000 periods, reflecting higher loan and origination volumes and increased securitization activity which were partially offset by lower servicing revenue. Income of $86 million in the 2001 second quarter included restructuring-related items of $2 million ($3 million pretax). As shown in the following table, accounts in the 2001 second quarter increased 13% while average managed loans increased 33% from the 2000 second quarter, reflecting strong growth in mortgage loans held for sale and student loans. Mortgage originations were up significantly from the 2000 periods, reflecting increased refinancing activity due to lower interest rates.
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN BILLIONS OF DOLLARS 2001 2000 Change 2001 2000 Change - ------------------------------------------------------------------------------------------------------------------------------------ Accounts (IN MILLIONS)(1) 4.5 4.0 13 4.5 4.0 13 Average managed loans(1) $45.7 $34.4 33 $45.2 $33.4 35 Mortgage originations $8.8 $5.1 73 $14.7 $8.8 67 - ------------------------------------------==========================================================================================
(1) Includes student loans. - -------------------------------------------------------------------------------- Revenues, net of interest expense, of $268 million and $510 million in the 2001 second quarter and six months, respectively, grew $42 million or 19% and $61 million or 14% from the 2000 second quarter and six months, mainly due to higher securitization income and growth in on-balance sheet loans, partially offset by lower servicing revenue, primarily reflecting increased prepayment activity driven by lower interest rates. Adjusted operating expenses increased $14 million or 14% and $24 million or 12% in the 2001 second quarter and six months, reflecting volume-related increases. The (benefit) provision for credit losses was ($3) million in both the 2001 second quarter and six months compared to ($1) million and $8 million in the 2000 second quarter and six months, respectively. The net credit loss ratio was 0.08% in the 2001 second quarter compared to 0.06% in the 2001 first quarter and 0.08% in the 2000 second quarter. Loans delinquent 90 days or more were $1.191 billion or 2.61% of loans at June 30, 2001, up from $957 million or 2.14% at March 31, 2001 and $722 million or 2.10% a year ago. The increase in delinquencies from the prior quarter and prior year reflects an increase in mortgage and student loans guaranteed by the U.S. government. 6 NORTH AMERICA CARDS
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN MILLIONS OF DOLLARS 2001 2000(1) Change 2001 2000(1) Change - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL REVENUES, NET OF INTEREST EXPENSE $2,197 $1,983 11 $4,470 $3,894 15 Effect of securitization activities 902 574 57 1,633 1,214 35 ------------------------------- ------------------------------- ADJUSTED REVENUES, NET OF INTEREST EXPENSE 3,099 2,557 21 6,103 5,108 19 ------------------------------- ------------------------------- Adjusted operating expenses(2) 1,003 975 3 2,044 1,932 6 Adjusted provision for credit losses(3) 1,371 961 43 2,592 1,951 33 ------------------------------- ------------------------------- CORE INCOME BEFORE TAXES 725 621 17 1,467 1,225 20 Income taxes 270 233 16 545 457 19 ------------------------------- ------------------------------- CORE INCOME 455 388 17 922 768 20 Restructuring-related items, after-tax -- 4 (100) -- 4 (100) ------------------------------- ------------------------------- INCOME $ 455 $ 392 16 $ 922 $ 772 19 - ------------------------------------------========================================================================================== Average assets (IN BILLIONS OF DOLLARS)(4) $39 $38 3 $40 $35 14 Return on assets(5) 4.68% 4.15% 4.65% 4.44% - ------------------------------------------==========================================================================================
(1) Reclassified to conform to the current period's presentation. (2) Excludes restructuring-related items. (3) Adjusted for the effect of securitization activities. (4) Adjusted for the effect of securitization activities, managed average assets for North America Cards were $106 billion in both the 2001 second quarter and six months, compared to $94 billion and $92 billion in the 2000 second quarter and six months, respectively. (5) Adjusted for the effect of securitization activities, the return on managed assets, excluding restructuring-related items, for North America Cards was 1.72% and 1.75% in the 2001 second quarter and six months and 1.66% and 1.68% in the 2000 second quarter and six months. - -------------------------------------------------------------------------------- North America Cards -- which includes Citi Cards (bankcards and private-label cards) and Diners Club -- reported core income of $455 million and $922 million in the 2001 second quarter and six months, respectively, up $67 million or 17% and $154 million or 20% from the 2000 periods, driven by strong revenue growth that was partially offset by higher credit costs. Income of $392 million in the 2000 second quarter included restructuring-related credits of $4 million ($5 million pretax). Adjusted revenues, net of interest expense, of $3.099 billion and $6.103 billion in the 2001 second quarter and six months, respectively, were up $542 million or 21% and $995 million or 19% from the 2000 periods, reflecting receivable growth and spread improvements that resulted from repricing actions and lower interest rates. Adjusted operating expenses increased $28 million or 3% in the 2001 second quarter and $112 million or 6% in the 2001 six months from the comparable 2000 periods, reflecting increased business volumes that were partially offset by disciplined expense management. As shown in the following table, on a managed basis, the Citi Cards portfolio experienced strong growth in receivables and accounts in the 2001 second quarter and six months, reflecting base business momentum as well as portfolio acquisitions. Total sales were up marginally compared to the 2000 periods as growth in purchase sales volumes was partially offset by lower balance consolidation activity.
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN BILLIONS OF DOLLARS 2001 2000 Change 2001 2000 Change - ------------------------------------------------------------------------------------------------------------------------------------ Accounts (IN MILLIONS) 94.1 83.9 12 94.1 83.9 12 Total sales $ 55.6 $55.3 1 $106.8 $103.7 3 End-of-period managed receivables $103.9 $92.3 13 $103.9 $ 92.3 13 - ------------------------------------------==========================================================================================
Risk adjusted margin is a measure of profitability calculated as adjusted revenues less managed net credit losses as a percentage of average managed loans and is consistent with the goal of matching the revenues generated by the loan portfolio with the credit risk undertaken. As shown in the following table, the Citi Cards risk adjusted margin of 6.49% and 6.70% in the 2001 second quarter and six months declined 42 and 25 basis points, respectively, from the 2000 periods, as higher spreads were more than offset by higher net credit losses and lower non-interest revenue.
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, --------------------------------------------------------------------- IN BILLIONS OF DOLLARS 2001 2000 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Risk adjusted revenues(1) $1.627 $1.516 $3.336 $2.987 Risk adjusted margin %(2) 6.49% 6.91% 6.70% 6.95% - ---------------------------------------------------------------=====================================================================
(1) Citi Cards adjusted revenues less managed net credit losses. (2) Risk adjusted revenues as a percentage of average managed loans. - -------------------------------------------------------------------------------- The adjusted provision for credit losses was $1.371 billion and $2.592 billion in the 2001 second quarter and six months, up from $961 million and $1.951 billion in the comparable 2000 periods. Citi Cards managed net credit losses in the 2001 second quarter were $1.383 billion and the related loss ratio was 5.51% up from $1.196 billion and 4.84% in the 2001 first quarter and $948 million and 7 4.32% in the 2000 second quarter. Net credit losses in the 2001 second quarter include a recovery of $55 million from the sale of certain bankrupt accounts which resulted in a 22 basis point reduction of the managed net credit loss ratio. The increase in net credit losses reflects current U.S. economic conditions and an industry-wide rise in bankruptcy filings. Citi Cards managed loans delinquent 90 days or more were $1.775 billion or 1.72% of loans at June 30, 2001, up from $1.156 billion or 1.26% at June 30, 2000 but down $61 million or 12 basis points compared to $1.836 billion or 1.84% at March 31, 2001. CITIFINANCIAL
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN MILLIONS OF DOLLARS 2001 2000(1) Change 2001 2000(1) Change - ------------------------------------------------------------------------------------------------------------------------------------ ADJUSTED REVENUES, NET OF INTEREST EXPENSE(2) $1,390 $1,269 10 $2,729 $2,491 10 Adjusted operating expenses(3) 502 571 (12) 1,071 1,107 (3) Adjusted provisions for benefits, claims, and credit losses(2) 434 373 16 862 777 11 ------------------------------- ------------------------------- CORE INCOME BEFORE TAXES 454 325 40 796 607 31 Income taxes 168 120 40 298 223 34 ------------------------------- ------------------------------- CORE INCOME 286 205 40 498 384 30 Restructuring-related items, after-tax (14) -- NM (22) -- NM ------------------------------- ------------------------------- INCOME $ 272 $ 205 33 $ 476 $ 384 24 - ------------------------------------------========================================================================================== Average assets (IN BILLIONS OF DOLLARS) $65 $55 18 $64 $53 21 Return on assets 1.68% 1.50% 1.50% 1.46% - ------------------------------------------========================================================================================== EXCLUDING RESTRUCTURING-RELATED ITEMS Return on assets 1.76% 1.50% 1.57% 1.46% - ------------------------------------------==========================================================================================
(1) Reclassified to conform to the current period's presentation. (2) Adjusted for the effect of securitization activities of $28 million and $63 million in the 2001 second quarter and six months, respectively, and $22 million in the 2000 six-month period. (3) Excludes restructuring-related items. NM Not meaningful - -------------------------------------------------------------------------------- CitiFinancial - which provides community-based lending services, through its branch network and regional sales offices and through cross-selling initiatives with other Citigroup businesses, and originates real estate-secured loans through centralized and distributed platforms - reported core income of $286 million in the 2001 second quarter, up $81 million or 40% from 2000, principally reflecting operating expense savings, lower cost of funds and strong growth in receivables. For the six months ending June 30, 2001, core income was $498 million, up $114 million or 30% from 2000, principally reflecting operating expense savings and strong growth in receivables. Income of $272 million and $476 million in the 2001 second quarter and six months included restructuring-related items of $14 million ($23 million pretax) and $22 million ($36 million pretax), respectively. As shown in the following table, receivables in the 2001 second quarter grew 13% compared to the 2000 second quarter due to higher volumes at CitiFinancial branches and the cross selling of products through other Citigroup distribution channels. At June 30, 2001, the portfolio consisted of 69% real estate-secured loans, 17% personal loans, 10% auto loans and 4% sales finance and other loans compared with 69%, 19%, 7% and 5%, respectively, in 2000. The average net interest margin on receivables of 7.85% and 7.78% in the 2001 second quarter and six months, respectively, increased 1 basis point and decreased 24 basis points compared to the 2000 periods, reflecting growth in lower-risk real estate loans that have lower yields, offset in the 2001 second quarter by lower cost of funds.
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- Increase/ --------------------------- Increase/ 2001 2000 Decrease 2001 2000 Decrease - ---------------------------------------------------------------------------------------------------------------------------------- End-of-period managed receivables (IN BILLIONS) $58.5 $51.6 13% $58.5 $51.6 13% Average net interest margin % 7.85% 7.84% 1 bp 7.78% 8.02% (24) bp - ----------------------------------------------------------------------------------------------------------------------------------
Adjusted revenues, net of interest expense, of $1.390 billion and $2.729 billion in the 2001 second quarter and six months, respectively, increased $121 million or 10% and $238 million or 10% from the comparable 2000 periods, reflecting strong growth in receivables. Revenues in the 2001 second quarter also benefited from a lower cost of funds. Adjusted operating expenses of $502 million and $1.071 billion in the 2001 second quarter and six months decreased $69 million or 12% and $36 million or 3% from the prior-year periods, mainly reflecting efficiencies resulting from the consolidation of Associates branches, partially offset by volume-related increases. Adjusted provisions for benefits, claims and credit losses were $434 million and $862 million in the 2001 second quarter and six months, respectively, up from $373 million and $777 million in the comparable 2000 periods. The net credit loss ratio was 2.55% in the 2001 second quarter, down from 2.57% in the 2001 first quarter and up from 2.49% in the 2000 second quarter. Loans delinquent 90 days or more were $1.757 billion or 3.00% of loans at June 30, 2001, up from $1.599 billion or 2.77% at March 31, 2001 and 8 $1.033 billion or 1.98% a year ago, primarily due to the alignment of credit and collection policies in the Associates real estate portfolio to those of CitiFinancial and, to a lesser extent, current U.S. economic conditions. INTERNATIONAL CONSUMER JAPAN
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN MILLIONS OF DOLLARS 2001 2000(1) Change 2001 2000(1) Change - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL REVENUES, NET OF INTEREST EXPENSE $818 $662 24 $1,643 $1,253 31 Adjusted operating expenses (2) 313 267 17 666 516 29 Provision for credit losses 147 121 21 309 226 37 ------------------------------- ------------------------------- CORE INCOME BEFORE TAXES 358 274 31 668 511 31 Income taxes 129 101 28 241 188 28 ------------------------------- ------------------------------- CORE INCOME 229 173 32 427 323 32 Restructuring-related items, after-tax (6) -- NM (6) -- NM ------------------------------- ------------------------------- INCOME $223 $173 29 $ 421 $ 323 30 - ------------------------------------------========================================================================================== Average assets (IN BILLIONS OF DOLLARS) $20 $16 25 $20 $16 25 Return on assets 4.47% 4.35% 4.24% 4.06% - ------------------------------------------========================================================================================== EXCLUDING RESTRUCTURING-RELATED ITEMS Return on assets 4.59% 4.35% 4.31% 4.06% - ------------------------------------------==========================================================================================
(1) Reclassified to conform to the current period's presentation. (2) Excludes restructuring-related items. NM Not meaningful - -------------------------------------------------------------------------------- Japan - which provides banking, community-based lending, including credit and charge cards, and investment products and services - reported core income of $229 million and $427 million in the 2001 second quarter and six months, respectively, up $56 million or 32% and $104 million or 32% from 2000, reflecting growth in the consumer finance business, including the impact of the acquisitions of Unimat in September 2000 and the Chiyoda Trust portfolio in June 2000. Income of $223 million in the 2001 second quarter included restructuring-related items of $6 million ($12 million pretax). The net effect of foreign currency translation in the 2001 second quarter reduced revenue, expense and provision for credit losses growth rates by 6, 7 and 13 percentage points, respectively, compared to the 2000 second quarter. For the six months ended June 30, 2001, the net effect of foreign currency translation reduced revenue, expense and provision for credit losses growth rates by 8, 8 and 12 percentage points, respectively, compared to the prior-year period. As shown in the following table, the Japan business experienced strong growth in accounts, customer deposits and loans from 2000, including the Unimat acquisition which added approximately $1.5 billion to average loans and 0.4 million to accounts in the 2001 second quarter.
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN BILLIONS OF DOLLARS 2001 2000 Change 2001 2000 Change - ------------------------------------------------------------------------------------------------------------------------------------ Accounts (IN MILLIONS) 5.0 4.1 22 5.0 4.1 22 Average customer deposits $14.7 $13.5 9 $14.5 $13.3 9 Average loans $14.0 $10.9 28 $13.8 $10.3 34 - ------------------------------------------==========================================================================================
Revenues, net of interest expense, of $818 million and $1.643 billion in the 2001 second quarter and six months increased $156 million or 24% and $390 million or 31% from the respective 2000 periods, primarily reflecting growth in consumer finance revenues and customer deposits along with the impact of acquisitions, partially offset by the effect of foreign currency translation. Adjusted operating expenses in the 2001 second quarter and six months increased 17% and 29%, respectively, from the 2000 periods, reflecting volume-related increases and the impact of acquisitions, partially offset by the effect of foreign currency translation. The provision for credit losses was $147 million and $309 million for the 2001 second quarter and six months, up $26 million and $83 million from the comparable 2000 periods, primarily due to higher loan volumes, including the impact of acquisitions. Net credit losses in the 2001 second quarter were $131 million and the related loss ratio was 3.74%, compared to $135 million and 4.06% in the 2001 first quarter and $88 million and 3.19% in the 2000 second quarter. The increase in net credit losses was primarily due to higher bankruptcy filings. Loans delinquent 90 days or more were $129 million or 0.91% of loans at June 30, 2001, compared to $107 million or 0.81% at March 31, 2001 and $100 million or 0.83% a year ago. 9 WESTERN EUROPE
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN MILLIONS OF DOLLARS 2001 2000(1) Change 2001 2000(1) Change - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL REVENUES, NET OF INTEREST EXPENSE $602 $600 -- $1,224 $1,218 -- Adjusted operating expenses(2) 332 365 (9) 682 728 (6) Provisions for benefits, claims, and credit losses 101 92 10 200 196 2 ------------------------------- ------------------------------- CORE INCOME BEFORE TAXES 169 143 18 342 294 16 Income taxes 63 52 21 126 107 18 ------------------------------- ------------------------------- CORE INCOME 106 91 16 216 187 16 Restructuring-related items, after-tax (2) -- NM (2) -- NM ------------------------------- ------------------------------- INCOME $104 $ 91 14 $ 214 $ 187 14 - ------------------------------------------========================================================================================== Average assets (IN BILLIONS OF DOLLARS) $22 $21 5 $22 $22 -- Return on assets 1.90% 1.74% 1.96% 1.71% - ------------------------------------------==========================================================================================
(1) Reclassified to conform to the current period's presentation. (2) Excludes restructuring-related items. NM Not meaningful - -------------------------------------------------------------------------------- Western Europe -- which provides banking, community-based lending, including credit and charge cards, and investment products and services -- reported core income of $106 million and $216 million in the 2001 second quarter and six months, respectively, up $15 million or 16% and $29 million or 16% from the 2000 periods, mainly reflecting growth in the branch and consumer finance businesses across the region, particularly in Germany, and in the six-month comparison reflecting a gain related to the sale of the Diners Club franchises in the region. Income of $104 million in the 2001 second quarter included restructuring-related items of $2 million ($3 million pretax). The net effect of foreign currency translation reduced income growth by approximately $9 million and $24 million in the 2001 second quarter and six months and reduced revenue growth by approximately 7% and 8%, reduced expense growth by approximately 6% in both periods and reduced provisions for benefits, claims, and credit losses growth by approximately 7% and 6%, respectively from the comparable prior-year periods. As shown in the following table, Western Europe accounts were up slightly from a year ago. Growth in both deposit and loan volumes was reduced by foreign currency translation effects.
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN BILLIONS OF DOLLARS 2001 2000 Change 2001 2000 Change - ------------------------------------------------------------------------------------------------------------------------------------ Accounts (IN MILLIONS) 10.0 9.9 1 10.0 9.9 1 Average customer deposits $13.0 $12.5 4 $13.0 $12.8 2 Average loans $17.1 $16.8 2 $17.2 $16.9 2 - ------------------------------------------==========================================================================================
Revenues, net of interest expense, of $602 million and $1.224 billion in the 2001 second quarter and six months increased $2 million and $6 million from the 2000 periods, principally due to growth in consumer finance and branch lending revenues, partially offset by the adverse effects of foreign currency translation and reduced investment product fees. Additionally, the benefit of deposit volume growth was offset by reduced spreads due to lower interest rates. Adjusted operating expenses of $332 million and $682 million in the 2001 second quarter and six months declined $33 million or 9% and $46 million or 6% from the comparable 2000 periods as costs associated with higher business volumes were more than offset by the effect of foreign currency translation and lower expenses due to expense management initiatives. The provisions for benefits, claims, and credit losses were $101 million and $200 million in the 2001 second quarter and six months, up from $92 million and $196 million in the respective 2000 periods. The net credit loss ratio was 1.98% in the 2001 second quarter, up from 1.92% in the 2001 first quarter and 1.84% in the 2000 second quarter. Loans delinquent 90 days or more were $740 million or 4.34% of loans at June 30, 2001 decreased from $785 million or 4.68% at March 31, 2001 and $892 million or 5.18% a year ago. The decline in the dollar amount of delinquent loans from a year ago reflects the effect of foreign currency translation and portfolio improvements. 10 ASIA
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN MILLIONS OF DOLLARS 2001 2000(1) Change 2001 2000(1) Change - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL REVENUES, NET OF INTEREST EXPENSE $539 $519 4 $1,079 $1,058 2 Adjusted operating expenses(2) 242 241 -- 486 487 -- Provisions for benefits, claims, and credit losses 67 62 8 129 136 (5) ------------------------------- -------------------------------------------- CORE INCOME BEFORE TAXES 230 216 6 464 435 7 Income taxes 83 77 8 170 155 10 ------------------------------- -------------------------------------------- CORE INCOME 147 139 6 294 280 5 Restructuring-related items, after-tax (3) (1) NM (3) (4) 25 ------------------------------- -------------------------------------------- INCOME $144 $138 4 $ 291 $ 276 5 - ------------------------------------------========================================================================================== Average assets (IN BILLIONS OF DOLLARS) $25 $26 (4) $25 $27 (7) Return on assets 2.31% 2.13% 2.35% 2.06% - ------------------------------------------========================================================================================== EXCLUDING RESTRUCTURING-RELATED ITEMS Return on assets 2.36% 2.15% 2.37% 2.09% - ------------------------------------------==========================================================================================
(1) Reclassified to conform to the current period's presentation. (2) Excludes restructuring-related items. NM Not meaningful - -------------------------------------------------------------------------------- Asia (excluding Japan) -- which provides banking, lending, including credit and charge cards, and investment products and services -- reported core income of $147 million and $294 million in the 2001 second quarter and six months, respectively, up $8 million or 6% and $14 million or 5% from the 2000 periods, as volume growth across most countries and products was partially offset by the net effects of foreign currency translation. Core income in the 2001 second quarter and six months also includes gains on the contribution of Citicorp's insurance operations in Taiwan to its joint venture with Fubon. Income of $144 million in the 2001 second quarter and $291 million in the 2001 six months included restructuring-related charges of $3 million ($4 million pretax) in both periods. Income of $138 million in the 2000 second quarter and $276 million in the 2000 six months included restructuring-related charges of $1 million ($2 million pretax) and $4 million ($6 million pretax), respectively. The net effect of foreign currency translation reduced income growth by approximately $13 million and $26 million in the 2001 second quarter and six months from the 2000 periods and reduced revenue growth by 9 and 8 percentage points, reduced expense growth by 8 percentage points in both periods, and reduced the provisions for benefits, claims, and credit losses growth rates by 8 and 7 percentage points, respectively, from the 2000 periods. As shown in the following table, Asia experienced strong growth in accounts, however, both loan and deposit volumes were reduced by foreign currency translation effects.
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN BILLIONS OF DOLLARS 2001 2000 Change 2001 2000 Change - ------------------------------------------------------------------------------------------------------------------------------------ Accounts (IN MILLIONS) 8.8 7.5 17 8.8 7.5 17 Average customer deposits $35.5 $34.4 3 $35.8 $34.3 4 Average loans $21.2 $22.2 (5) $21.4 $22.4 (4) - ------------------------------------------==========================================================================================
Revenues, net of interest expense, of $539 million and $1.079 billion in the 2001 second quarter and six months, respectively, were up $20 million or 4% and $21 million or 2% from the 2000 periods, reflecting improvements in most countries driven by growth in deposits and cards, and Fubon-related gains, partially offset by foreign currency translation effects, and in the six months lower investment product fees. Adjusted operating expenses increased $1 million in the 2001 second quarter and declined $1 million in the 2001 six months as costs associated with new branch initiatives and increased advertising and marketing were offset by foreign currency translation effects. The provisions for benefits, claims, and credit losses were $67 million in the 2001 second quarter and $129 million in the 2001 six months compared with $62 million and $136 million in the 2000 periods. Net credit losses in the 2001 second quarter were $65 million and the related loss ratio was 1.23%, up from $61 million and 1.14% in the 2001 first quarter and $59 million and 1.07% a year ago, reflecting economic conditions in the region. Loans delinquent 90 days or more were $338 million or 1.59% of loans at June 30, 2001, compared to $334 million or 1.58% at March 31, 2001 and $396 million or 1.75% a year ago. 11 LATIN AMERICA
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN MILLIONS OF DOLLARS 2001 2000(1) Change 2001 2000(1) Change - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL REVENUES, NET OF INTEREST EXPENSE $480 $466 3 $951 $979 (3) Adjusted operating expenses(2) 328 330 (1) 667 655 2 Provisions for benefits, claims, and credit losses 87 76 14 176 166 6 ------------------------------- -------------------------------------------- CORE INCOME BEFORE TAXES 65 60 8 108 158 (32) Income taxes 20 21 (5) 33 55 (40) ------------------------------- -------------------------------------------- CORE INCOME 45 39 15 75 103 (27) Restructuring-related items, after-tax (19) (10) (90) (19) (11) (73) ------------------------------- -------------------------------------------- INCOME $ 26 $ 29 (10) $ 56 $ 92 (39) - ------------------------------------------========================================================================================== Average assets (IN BILLIONS OF DOLLARS) $13 $12 8 $13 $13 -- Return on assets 0.80% 0.97% 0.87% 1.42% - ------------------------------------------========================================================================================== EXCLUDING RESTRUCTURING-RELATED ITEMS Return on assets 1.39% 1.31% 1.16% 1.59% - ------------------------------------------==========================================================================================
(1) Reclassified to conform to the current period's presentation. (2) Excludes restructuring-related items. - -------------------------------------------------------------------------------- Latin America -- which provides banking, lending, including credit and charge cards, and insurance and investment services -- reported core income of $45 million and $75 million in the 2001 second quarter and six months, respectively, compared with $39 million and $103 million in the 2000 periods. Income of $26 million and $56 million in the 2001 second quarter and six months included restructuring related charges of $19 million ($28 million pretax) in both periods. Income of $29 million and $92 million in the 2000 second quarter and six months included restructuring related charges of $10 million ($12 million pretax) and $11 million ($14 million pretax), respectively. The net effects of foreign currency translation reduced income by approximately $7 million and $11 million, reduced revenue growth by approximately 5 and 4 percentage points, reduced expense growth by 3 and 4 percentage points, and reduced the provisions for benefits, claims and credit losses by 3 and 2 percentage points in the 2001 second quarter and six months, respectively, from the 2000 periods. As shown in the following table, Latin America accounts grew only slightly as growth in banking-related insurance products and increases in cards were partially offset by declines in deposit accounts and other loan products. Average customer deposits were unchanged, reflecting weak economic conditions in the region and strategy changes in certain countries. Average loans declined 8% in the 2001 second quarter and 9% in the 2001 six months, reflecting continued credit risk management initiatives and, for the 2001 six months, the effect of the 2000 first quarter auto loan portfolio sale in Puerto Rico.
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN BILLIONS OF DOLLARS 2001 2000 Change 2001 2000 Change - ------------------------------------------------------------------------------------------------------------------------------------ Accounts (IN MILLIONS) 9.4 9.3 1 9.4 9.3 1 Average customer deposits $13.6 $13.6 -- $13.7 $13.7 -- Average loans $6.6 $7.2 (8) $6.7 $7.4 (9) - ------------------------------------------==========================================================================================
Revenues, net of interest expense, of $480 million in the 2001 second quarter were up $14 million or 3% from 2000, reflecting higher revenues in Mexico (primarily higher cards revenues partially offset by reduced revenues related to Confia), Puerto Rico, and Brazil, partially offset by foreign currency translation effects. Revenues of $951 million in the 2001 six months declined $28 million or 3% from 2000, reflecting reduced earnings related to Confia, foreign currency translation effects, and the 2000 first quarter gain related to the sale of the Puerto Rico auto loan portfolio, offset by business volume increases in certain countries. Adjusted operating expenses in the 2001 second quarter declined $2 million or 1% from 2000 and increased $12 million or 2% in the 2001 six months, as costs associated with business repositioning initiatives, strategy changes in certain countries and increased technology costs were offset by foreign currency translation effects. The provisions for benefits, claims, and credit losses were $87 million and $176 million in the 2001 second quarter and six months, up from $76 million and $166 million in the 2000 periods, reflecting increases in policyholder benefits and claims. Net credit losses in the 2001 second quarter were $69 million with a related loss ratio of 4.22%, down from $71 million and 4.24% in the 2001 first quarter and $76 million or 4.25% a year ago. The decline in net credit losses from a year ago reflects improvements in Panama and Chile, partially offset by higher losses in Argentina. Loans delinquent 90 days or more were $310 million or 4.80% of loans at June 30, 2001 compared with $318 million or 4.76% at March 31, 2001 and $323 million or 4.52% a year ago. 12 CENTRAL & EASTERN EUROPE, MIDDLE EAST & AFRICA
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN MILLIONS OF DOLLARS 2001 2000(1) Change 2001 2000(1) Change - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL REVENUES, NET OF INTEREST EXPENSE $135 $106 27 $265 $206 29 Total operating expenses(2) 94 76 24 187 143 31 Provision for credit losses 10 8 25 19 18 6 ------------------------------- ------------------------------- CORE INCOME BEFORE TAXES 31 22 41 59 45 31 Income taxes 10 7 43 20 15 33 ------------------------------- ------------------------------- CORE INCOME 21 15 40 39 30 30 Restructuring-related items, after-tax (1) 7 NM (1) 7 NM ------------------------------- ------------------------------- INCOME $ 20 $ 22 (9) $ 38 $ 37 3 - ------------------------------------------========================================================================================== Average assets (IN BILLIONS OF DOLLARS) $4 $3 33 $4 $3 33 Return on assets 2.01% 2.95% 1.92% 2.48% - ------------------------------------------========================================================================================== EXCLUDING RESTRUCTURING-RELATED ITEMS Return on Assets 2.11% 2.01% 1.97% 2.01% - ------------------------------------------==========================================================================================
(1) Reclassified to conform to the current period's presentation. (2) Excludes restructuring-related items. NM Not meaningful - -------------------------------------------------------------------------------- Central & Eastern Europe, Middle East & Africa (CEEMEA -- including India and Pakistan) -- which provides banking, lending, including credit and charge cards, and investment services -- reported core income of $21 million and $39 million in the 2001 second quarter and six months, respectively, up $6 million or 40% and $9 million or 30% from the 2000 periods, reflecting continued growth in loans and deposits across the region, partially offset by investments in new initiatives. Income of $20 million in the 2001 second quarter and $38 million in the 2001 six months included restructuring-related charges of $1 million ($1 million pretax) in both periods. Income of $22 million in the 2000 second quarter and $37 million in the 2000 six months included restructuring-related credits of $7 million ($11 million pretax) in both periods. As shown in the following table, CEEMEA reported 35% account growth from a year ago, primarily reflecting growth in customer deposits, cards, and other lending as franchise growth efforts continued across the region, including the effect of Bank Handlowy, a Polish bank in which Citicorp acquired a majority interest in June 2000, which added approximately $1.0 billion and $0.9 billion to average customer deposits in the 2001 second quarter and six months, respectively.
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN BILLIONS OF DOLLARS 2001 2000 Change 2001 2000 Change - ------------------------------------------------------------------------------------------------------------------------------------ Accounts (IN MILLIONS) 3.5 2.6 35 3.5 2.6 35 Average customer deposits $5.8 $3.9 49 $5.7 $3.9 46 Average loans $2.3 $1.9 21 $2.3 $1.9 21 - ------------------------------------------==========================================================================================
Revenues, net of interest expense, of $135 million and $265 million in the 2001 second quarter and six months increased $29 million or 27% and $59 million or 29% from the comparable 2000 periods, and total operating expenses increased $18 million or 24% in the 2001 second quarter and $44 million or 31% in the 2001 six months, both reflecting franchise growth in the region, particularly deposits and cards, and the Bank Handlowy acquisition. The provision for credit losses of $10 million and $19 million in the 2001 second quarter and six months was up from $8 million and $18 million in the 2000 periods primarily due to loan growth. The net credit loss ratio was 1.70% in the 2001 second quarter, up slightly from 1.66% in both the 2001 first quarter and a year ago. Loans delinquent 90 days or more were $32 million or 1.31% of loans at June 30, 2001, down from $33 million or 1.40% at March 31, 2001 and $38 million or 1.95% at June 30, 2000. 13 E-CONSUMER
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN MILLIONS OF DOLLARS 2001 2000(1) Change 2001 2000(1) Change - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL REVENUES, NET OF INTEREST EXPENSE $ 35 $ 28 25 $ 82 $ 59 39 Adjusted operating expenses(2) 91 103 (12) 194 246 (21) ------------------------------- ------------------------------- CORE LOSS BEFORE TAX BENEFITS (56) (75) 25 (112) (187) 40 Income tax benefits (24) (29) 17 (45) (73) 38 ------------------------------- ------------------------------- CORE INCOME (LOSS) (32) (46) 30 (67) (114) 41 Restructuring-related items, after-tax (8) -- NM (8) -- NM ------------------------------- ------------------------------- LOSS ($ 40) ($ 46) 13 ($ 75) ($114) 34 - ------------------------------------------==========================================================================================
(1) Reclassified to conform to the current period's presentation. (2) Excludes restructuring-related items. NM Not meaningful - -------------------------------------------------------------------------------- e-Consumer -- the business responsible for developing and implementing Global Consumer Internet financial services products and e-commerce solutions -- reported losses before restructuring-related items of $32 million and $67 million in the 2001 second quarter and six months, down from losses of $46 million and $114 million in the 2000 second quarter and six months. The loss of $40 million in the 2001 second quarter included restructuring-related items of $8 million ($13 million pretax). Revenues, net of interest expense, in the 2001 second quarter and six months increased $7 million and $23 million from the comparable 2000 periods, reflecting higher revenues associated with both new and established product offerings and, in the six-month comparison, gains related to the sale of internet/e-commerce investments. Adjusted operating expenses declined $12 million or 12% and $52 million or 21% from the 2000 second quarter and six months, reflecting the effect of initiatives discontinued in 2000, partially offset by continued investment spending on Internet financial services and products. OTHER CONSUMER
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN MILLIONS OF DOLLARS 2001 2000(1) Change 2001 2000(1) Change - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL REVENUES, NET OF INTEREST EXPENSE $294 $163 80 $536 $368 46 Adjusted operating expenses(2) 149 102 46 251 255 (2) Provisions for benefits, claims, and credit losses 155 113 37 289 210 38 ------------------------------- ------------------------------- CORE LOSS BEFORE TAX BENEFITS (10) (52) 81 (4) (97) 96 Income tax benefits (3) (23) 87 -- (37) 100 ------------------------------- ------------------------------- CORE INCOME (LOSS) (7) (29) 76 (4) (60) 93 Restructuring-related items, after tax -- 2 (100) (4) 2 NM ------------------------------- ------------------------------- LOSS ($ 7) ($ 27) 74 ($ 8) ($ 58) 86 - ------------------------------------------==========================================================================================
(1) Reclassified to conform to the current period's presentation. (2) Excludes restructuring-related items. NM Not meaningful - -------------------------------------------------------------------------------- Other Consumer -- which includes insurance operations, certain treasury and other unallocated staff functions, global marketing and other programs -- reported losses before restructuring-related items of $7 million and $4 million for the 2001 second quarter and six months compared to losses of $29 million and $60 million in the 2000 second quarter and six months. The improvement compared to the prior-year quarter and six months was primarily due to higher treasury earnings. Losses of $8 million and $58 million in the 2001 and 2000 six months, respectively, included restructuring-related items of $4 million ($6 million pretax) in 2001 and a restructuring-related credit of $2 million ($3 million pretax) in 2000. Revenues, expenses and the provisions for benefits, claims and credit losses reflect offsets to certain line-item reclassifications reported in other Global Consumer operating segments. CONSUMER PORTFOLIO REVIEW In the consumer portfolio, credit loss experience is often expressed in terms of annualized net credit losses as a percentage of average loans. Pricing and credit policies reflect the loss experience of each particular product. Consumer loans are generally written off no later than a predetermined number of days past due on a contractual basis, or earlier in the event of bankruptcy. The number of days is set at an appropriate level according to loan product and country. 14 The following table summarizes delinquency and net credit loss experience in both the managed and on-balance sheet loan portfolios in terms of loans 90 days or more past due, net credit losses, and as a percentage of related loans. CONSUMER LOAN DELINQUENCY AMOUNTS, NET CREDIT LOSSES, AND RATIOS
TOTAL AVERAGE LOANS 90 DAYS OR MORE PAST DUE(1) LOANS NET CREDIT LOSSES(1) ------------------------------------------------------------------------------------------------- IN MILLIONS OF DOLLARS, JUNE 30, JUNE 30, MAR. 31, JUNE 30, 2ND QTR. 2ND QTR. 1ST QTR. 2ND QTR. EXCEPT LOAN AMOUNTS IN BILLIONS 2001 2001 2001(2) 2000(2) 2001 2001 2001(2) 2000(2) - ------------------------------------------------------------------------------------------------------------------------------------ Citibanking North America $ 7.0 $ 41 $ 41 $ 33 $ 7.0 $ 18 $ 15 $ 15 RATIO 0.58% 0.59% 0.47% 1.03% 0.85% 0.88% Mortgage Banking 45.4 1,191 957 722 45.7 9 6 7 RATIO 2.61% 2.14% 2.10% 0.08% 0.06% 0.08% Citi Cards 103.0 1,775 1,836 1,156 100.6 1,383 1,196 948 RATIO 1.72% 1.84% 1.26% 5.51% 4.84% 4.32% Other North America Cards 1.7 5 6 24 1.7 12 12 12 RATIO 0.29% 0.32% 1.17% 2.92% 2.90% 2.84% CitiFinancial 58.6 1,757 1,599 1,033 58.2 370 363 314 RATIO 3.00% 2.77% 1.98% 2.55% 2.57% 2.49% Japan 14.1 129 107 100 14.0 131 135 88 RATIO 0.91% 0.81% 0.83% 3.74% 4.06% 3.19% Western Europe 17.1 740 785 892 17.1 84 82 77 RATIO 4.34% 4.68% 5.18% 1.98% 1.92% 1.84% Asia (excluding Japan) 21.3 338 334 396 21.2 65 61 59 RATIO 1.59% 1.58% 1.75% 1.23% 1.14% 1.07% Latin America 6.4 310 318 323 6.6 69 71 76 RATIO 4.80% 4.76% 4.52% 4.22% 4.24% 4.25% CEEMEA 2.4 32 33 38 2.3 10 9 8 RATIO 1.31% 1.40% 1.95% 1.70% 1.66% 1.66% The Citigroup Private Bank 24.6 64 65 78 24.8 3 (1) 3 RATIO 0.26% 0.27% 0.32% 0.04% (0.01%) 0.05% Other 3.5 22 24 24 3.4 -- (18) (1) - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL MANAGED $305.1 $6,404 $6,105 $4,819 $302.6 $2,154 $1,931 $1,606 RATIO 2.10% 2.04% 1.74% 2.85% 2.61% 2.42% - -----------------------------------================================================================================================= Securitized receivables (63.6) (1,115) (1,243) (761) (62.3) (838) (691) (517) Loans held for sale (16.6) (144) (148) (83) (16.5) (92) (75) (45) - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER LOANS $224.9 $5,145 $4,714 $3,975 $223.8 $1,224 $1,165 $1,044 RATIO 2.29% 2.14% 1.88% 2.19% 2.10% 2.07% - -----------------------------------=================================================================================================
(1) 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. (2) Reclassified to conform to current period's presentation. - -------------------------------------------------------------------------------- CONSUMER LOAN BALANCES, NET OF UNEARNED INCOME
END OF PERIOD AVERAGE -------------------------------- ------------------------------ JUNE 30, MAR. 31, JUNE 30, 2ND QTR. 1ST QTR. 2ND QTR. IN BILLIONS OF DOLLARS 2001 2001 2000 2001 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL MANAGED $305.1 $299.6 $277.4 $302.6 $300.0 $266.4 Securitized receivables (63.6) (63.7) (56.0) (62.3) (62.2) (55.8) Loans held for sale (16.6) (15.3) (10.0) (16.5) (13.4) (8.1) -------------------------------- ------------------------------ CONSUMER LOANS $224.9 $220.6 $211.4 $223.8 $224.4 $202.5 - -----------------------------------------------------------=========================================================================
Total delinquencies 90 days or more past due in the managed portfolio were $6.404 billion or 2.10% of loans at June 30, 2001, compared with $6.105 billion or 2.04% at March 31, 2001 and $4.819 billion or 1.74% at June 30, 2000. Total managed net credit losses in the 2001 second quarter were $2.154 billion and the related loss ratio was 2.85%, compared with $1.931 billion and 2.61% in the 2001 first quarter and $1.606 billion and 2.42% in the 2000 second quarter. For a discussion on trends by business, see business discussions on pages 4 - 14. Citicorp's allowance for credit losses of $8.917 billion is available to absorb probable credit losses inherent in the entire portfolio. For analytical purposes only, the portion of Citicorp's allowance for credit losses attributed to the consumer portfolio was $4.914 billion at June 30, 2001, $4.956 billion at March 31, 2001 and $5.062 billion at June 30, 2000. The allowance as a percentage of loans on the balance sheet was 2.18% at June 30, 2001, down from 2.24% at March 31, 2001 and 2.39% at June 30, 2000. The decline in the allowance as a percentage of loans primarily reflects the growth in consumer loans. On-balance sheet consumer loans of $224.9 billion grew 6% from a year ago, primarily driven by growth in Mortgage Banking, mainly student loans and mortgages, and in CitiFinancial, mostly real-estate secured loans. In addition, loans increased in Japan, mainly in consumer finance, and Citi Cards, 15 where managed receivable growth was partially offset by increased securitization activity, and decreased in Asia and Latin America. The attribution of the allowance is made for analytical purposes only and may change from time to time. Consumer net credit losses and loans 90 days or more past due may increase from 2001 second quarter levels as a result of portfolio growth, seasonal factors and as uncertain economic conditions persist, mainly in the U.S., Japan and the Latin American region. This statement is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 23. GLOBAL CORPORATE
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN MILLIONS OF DOLLARS 2001 2000(1) Change 2001 2000(1) Change - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL REVENUES, NET OF INTEREST EXPENSE $2,934 $2,736 7 $6,109 $5,401 13 Adjusted operating expenses(2) 1,495 1,528 (2) 3,201 2,976 8 Provisions for benefits, claims, and credit losses 289 240 20 556 417 33 ------------------------------- ------------------------------- CORE INCOME BEFORE TAXES AND MINORITY INTEREST 1,150 968 19 2,352 2,008 17 Income taxes 404 357 13 839 737 14 Minority interest, after-tax 8 3 NM 12 3 NM ------------------------------- ------------------------------- CORE INCOME 738 608 21 1,501 1,268 18 Restructuring-related items, after-tax (42) 3 NM (69) 3 NM ------------------------------- ------------------------------- INCOME $ 696 $ 611 14 $1,432 $1,271 13 - ------------------------------------------==========================================================================================
(1) Reclassified to conform to the current period's presentation. (2) Excludes restructuring-related items. NM Not meaningful - -------------------------------------------------------------------------------- The Global Corporate Bank business serves corporations, financial institutions, governments, investors, and other participants in capital markets throughout the world and consists of the Corporate and Investment Bank and Emerging Markets Corporate Banking & Global Transaction Services (EM Corporate & GTS). Global Corporate core income was $738 million and $1.501 billion in the 2001 second quarter and six months, up $130 million or 21% and $233 million or 18% from the comparable 2000 periods. The 2001 second quarter reflects core income growth from the comparable 2000 quarter of $122 million or 35% in EM Corporate & GTS and $8 million or 3% in the Corporate and Investment Bank. The 2001 six months reflects core income growth of $238 million or 35% in EM Corporate & GTS partially offset by a decrease of $5 million or 1% in the Corporate and Investment Bank. EM Corporate & GTS core income growth reflects broad-based growth in trading-related revenues, the contribution of Bank Handlowy, the impact of net investment hedging, disciplined expense management, lower credit costs and a building sale in Asia. The Corporate and Investment Bank increase in the 2001 second quarter reflects strong results from Fixed Income and lower compensation and benefits, partially offset by declines in Global Equities and higher credit losses. The Corporate and Investment Bank decrease in the 2001 six months reflects weakness in Global Equities and higher credit losses, partially offset by strong Fixed Income results. Income of $696 million in the 2001 second quarter and $1.432 billion in the 2001 six months included net restructuring-related charges of $42 million ($64 million pretax) and $69 million ($107 million pretax), respectively. Income of $611 million in the 2000 second quarter and $1.271 billion in the 2000 six months included restructuring-related credits of $3 million ($4 million pretax) and $3 million ($3 million pretax), respectively. See Note 8 of Notes to Consolidated Financial Statements for a discussion of the restructuring-related items. The businesses of Global Corporate are significantly affected by the levels of activity in the global capital markets which, in turn, are influenced by macro-economic and political policies and developments, among other factors, in the 100 countries in which the businesses operate. Global economic and market events can have both positive and negative effects on the revenue performance of the businesses and can affect credit performance. Losses on commercial lending activities and the level of cash-basis loans can vary widely with respect to timing and amount, particularly within any narrowly-defined business or loan type. The slowdown in the U.S. economy and weakening global economic conditions are affecting the businesses of Global Corporate. This paragraph contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 23. 16 CORPORATE AND INVESTMENT BANK
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN MILLIONS OF DOLLARS 2001 2000(1) Change 2001 2000(1) Change - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL REVENUES, NET OF INTEREST EXPENSE $1,082 $1,107 (2) $2,366 $2,201 7 Adjusted operating expenses(2) 443 528 (16) 1,029 1,027 -- Provision for credit losses 230 160 44 450 250 80 ------------------------------- ------------------------------- CORE INCOME BEFORE TAXES 409 419 (2) 887 924 (4) Income taxes 138 156 (12) 309 341 (9) ------------------------------- ------------------------------- CORE INCOME 271 263 3 578 583 (1) Restructuring-related items, after tax (15) -- NM (40) -- NM ------------------------------- ------------------------------- INCOME $ 256 $ 263 (3) $ 538 $ 583 (8) - ------------------------------------------==========================================================================================
(1) Reclassified to conform to the current period's presentation. (2) Excludes restructuring-related items. NM Not meaningful - -------------------------------------------------------------------------------- The Corporate and Investment Bank, through the Global Relationship Bank (excluding Transaction Services), provides products and services that include foreign exchange, structured products, derivatives, and loans. Through CitiCapital, the Corporate and Investment Bank provides leasing and commercial finance products. During the second quarter of 2000, CitiCapital strengthened its position in the U.S. leasing market through the purchase of Copelco. The Corporate and Investment Bank core income of $271 million and $578 million in the 2001 second quarter and six months, respectively, was up $8 million or 3% from the 2000 second quarter, but down $5 million or 1% from the 2000 six months. The increase in the 2001 second quarter reflects strong results from Fixed Income and lower compensation and benefits, partially offset by declines in Global Equities and higher credit losses. The decrease in the 2001 six months reflects weakness in Global Equities and higher credit losses, partially offset by strong Fixed Income results. Income of $256 million in the 2001 second quarter and $538 million in the 2001 six months, include net restructuring-related charges of $15 million ($25 million pretax) and $40 million ($65 million pretax), respectively. Revenues, net of interest expense, of $1.082 billion in the 2001 second quarter and $2.366 billion in the 2001 six months decreased $25 million or 2% from the 2000 second quarter, but increased $165 million or 7% from the 2000 six months. The decrease in the 2001 second quarter reflects declines in Global Equities, partially offset by increases in Fixed Income. The increase in the 2001 six months primarily reflects strong Fixed Income results and the impact of the acquisition of Copelco in the second quarter of 2000, partially offset by declines in Global Equities. Adjusted operating expenses were $443 million in the 2001 second quarter, down $85 million or 16% compared to the prior-year quarter, primarily due to decreases in compensation and benefits and saves from restructuring actions initiated in the first quarter of 2001. Expenses were up $2 million to $1.029 billion for the 2001 six months primarily due to increased compensation, partially offset by saves in the first quarter of 2001. The provision for credit losses was $230 million in the 2001 second quarter and $450 million in the 2001 six months, up $70 million and $200 million from the respective 2000 periods, reflecting increases in CitiCapital and Corporate Finance. Net credit losses increased in CitiCapital principally due to higher write-offs in the transportation portfolio. Net credit losses increased in Corporate Finance primarily due to a write-down on a loan in the retail industry. Cash-basis loans were $1.149 billion at June 30, 2001, $776 million at December 31, 2000 and $611 million at June 30, 2000, reflecting increases in CitiCapital and Corporate Finance. The increase in CitiCapital was primarily related to the transportation portfolio. The increase in Corporate Finance was primarily attributable to borrowers in the retail and telecommunication industries and asbestos-related bankruptcies. The OREO portfolio totaled $107 million, down $8 million from December 31, 2000 and $28 million from June 30, 2000. The improvements in OREO were primarily related to the North America real estate portfolio. Other Repossessed Assets at June 30, 2001 were $382 million, up $111 million from December 31, 2000 and $143 million from June 30, 2000. The increase in Other Repossessed Assets was primarily due to increased repossessed transportation equipment in CitiCapital. Losses on commercial lending activities and the level of cash-basis loans can vary widely with respect to timing and amount, particularly within any narrowly-defined business or loan type. Net credit losses and cash-basis loans may increase from the 2001 second quarter levels due to weakening U.S. economic conditions and stress in the telecommunications industry. This statement is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 23. 17 EMERGING MARKETS CORPORATE BANKING AND GLOBAL TRANSACTION SERVICES
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN MILLIONS OF DOLLARS 2001 2000(1) Change 2001 2000(1) Change - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL REVENUES, NET OF INTEREST EXPENSE $1,852 $1,629 14 $3,743 $3,200 17 Adjusted operating expenses(2) 1,052 1,000 5 2,172 1,949 11 Provision for credit losses 59 80 (26) 106 167 (37) ------------------------------- ------------------------------- CORE INCOME BEFORE TAXES AND MINORITY INTEREST 741 549 35 1,465 1,084 35 Income taxes 266 201 32 530 396 34 Minority interest, after-tax 8 3 NM 12 3 NM ------------------------------- ------------------------------- CORE INCOME 467 345 35 923 685 35 Restructuring-related items, after-tax (27) 3 NM (29) 3 NM ------------------------------- ------------------------------- INCOME $ 440 $ 348 26 $ 894 $ 688 30 - ------------------------------------------========================================================================================== Average assets (IN BILLIONS OF DOLLARS) $118 $101 17 $116 $99 17 Return on assets 1.50% 1.39% 1.55% 1.40% - ------------------------------------------========================================================================================== EXCLUDING RESTRUCTURING-RELATED ITEMS Return on assets 1.59% 1.37% 1.60% 1.39% - ------------------------------------------==========================================================================================
(1) Reclassified to conform to the current period's presentation. (2) Excludes restructuring-related items. NM Not meaningful. - -------------------------------------------------------------------------------- Citicorp's EM Corporate & GTS business offers a wide array of banking and financial services products in the emerging markets and also includes the global operations of Transaction Services. In June 2000, EM Corporate & GTS completed the acquisition of a majority interest in Bank Handlowy, a leading bank in Poland. EM Corporate & GTS core income was $467 million and $923 million in the 2001 second quarter and six months, up $122 million or 35% and $238 million or 35% from the comparable 2000 periods. The improvements reflect broad-based growth in trading-related revenues, the contribution of Bank Handlowy, the impact of net investment hedging, disciplined expense management, lower credit costs and a building sale in Asia. Income of $440 million in the 2001 second quarter and $894 million for the 2001 six months included restructuring-related charges of $27 million ($39 million pretax) and $29 million ($42 million pretax), respectively. Income of $348 million in the 2000 second quarter and $688 million in the 2000 six months included restructuring-related credits of $3 million ($4 million pretax) and $3 million ($3 million pretax), respectively. Revenues, net of interest expense, were $1.852 billion and $3.743 billion in the 2001 second quarter and six months, up $223 million or 14% and $543 million or 17% from the respective 2000 periods. Revenue growth primarily reflects increased trading-related revenues across all regions, the impact of the acquisition of Bank Handlowy in CEEMEA, benefits from net investment hedging in CEEMEA and Latin America and a building sale in Asia. Adjusted operating expenses increased $52 million or 5% to $1.052 billion in the 2001 second quarter and $223 million or 11% to $2.172 billion in the 2001 six months compared to the respective 2000 periods. The increases reflect the impact of the acquisition of Bank Handlowy and volume-related increases, partially offset by cost controls in all regions and benefits from foreign currency translation effects. The provision for credit losses totaled $59 million and $106 million in the 2001 second quarter and six months, down $21 million or 26% and $61 million or 37% from the respective 2000 periods. The decrease reflects lower net credit write-offs in Asia and the impact of 2000 second quarter write-offs taken in Bolivia. Cash-basis loans at June 30, 2001 were $1.443 billion, up $311 million from June 30, 2000 primarily due to increases in Latin America (specifically in Argentina and Mexico) and CEEMEA. Cash basis loans increased $295 million from December 31, 2000 primarily due to increases in Latin America (specifically in Argentina and Mexico) and Asia, partially offset by decreases in CEEMEA. Losses on commercial lending activities and the level of cash-basis loans can vary widely with respect to timing and amount, particularly within any narrowly-defined business or loan type. Net credit losses and cash-basis loans may increase from the 2001 second quarter levels due to weakening global economic conditions, sovereign or regulatory actions and other factors. This statement is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 23. 18 COMMERCIAL PORTFOLIO REVIEW Commercial loans are identified as impaired and placed on a nonaccrual basis when it is determined that the payment of interest or principal is doubtful of collection or when interest or principal is past due for 90 days or more, except when the loan is well-secured and in the process of collection. Impaired commercial loans are written down to the extent that principal is judged to be uncollectible. Impaired collateral-dependent loans are written down to the lower of cost or collateral value. The following table summarizes commercial cash-basis loans at period-end and net credit losses for the three months ended.
JUNE 30, Mar. 31, Dec. 31, June 30, IN MILLIONS OF DOLLARS 2001 2001 2000 2000 - ------------------------------------------------------------------------------------------------------------------------------------ COMMERCIAL CASH-BASIS LOANS Corporate and Investment Bank $1,149 $1,149 $ 776 $ 611 EM Corporate & GTS 1,443 1,205 1,148 1,132 --------------------------------------------------------------------- Total Global Corporate 2,592 2,354 1,924 1,743 Investment Activities 13 8 2 3 --------------------------------------------------------------------- TOTAL COMMERCIAL CASH-BASIS LOANS(1) $2,605 $2,362 $1,926 $1,746 - ---------------------------------------------------------------===================================================================== NET CREDIT LOSSES Corporate and Investment Bank $230 $219 $201 $144 EM Corporate & GTS 57 48 37 81 --------------------------------------------------------------------- TOTAL NET CREDIT LOSSES $287 $267 $238 $225 - ---------------------------------------------------------------=====================================================================
(1) Prior period cash-basis loans were restated to change the policy of the Associates Commercial Leasing business for suspending accrual of interest on past due loans to conform with other leasing businesses in the Corporate & Investment Bank. The prior policy of placing loans that are 60 days or more past due into cash-basis, was changed to 90 days or more past due. - -------------------------------------------------------------------------------- Total commercial cash-basis loans were $2.605 billion, $2.362 billion, $1.926 billion, and $1.746 billion at June 30, 2001, March 31, 2001, December 31, 2000 and June 30, 2000, respectively. Cash-basis loans in the Corporate and Investment Bank were $1.149 billion at June 30, 2001 and March 31, 2001, $776 million at December 31, 2000 and $611 million at June 30, 2000, reflecting increases in CitiCapital and Corporate Finance. The increase in CitiCapital was primarily related to the transportation portfolio. The increase in Corporate Finance was primarily attributable to borrowers in the retail and telecommunication industries and asbestos-related bankruptcies. EM Corporate & GTS cash-basis loans at June 30, 2001 were $1.443 billion, up $311 million from June 30, 2000 primarily due to increases in Latin America (specifically in Argentina and Mexico) and CEEMEA. Cash basis loans increased $295 million from December 31, 2000 primarily due to increases in Latin America (specifically in Argentina and Mexico) and Asia, partially offset by decreases in CEEMEA. Other Repossessed Assets at June 30, 2001 were $382 million, up $111 million from December 31, 2000 and up $143 million from June 30, 2000. The increase in Other Repossessed Assets was primarily due to increased repossessed transportation equipment in CitiCapital. Total commercial net credit losses of $287 million in the second quarter of 2001 increased $62 million compared to the second quarter of 2000, reflecting increases in the Corporate and Investment Bank partially offset by a decline in EM Corporate & GTS. Corporate and Investment Bank net credit losses of $230 million in the 2001 second quarter were up $86 million compared to the second quarter of 2000, reflecting increases in CitiCapital and Corporate Finance. Net credit losses increased in CitiCapital principally due to higher write-offs in the transportation portfolio. Net credit losses increased in Corporate Finance primarily due to a write-down on a loan in the retail industry. EM Corporate & GTS net credit losses of $57 million in the 2001 second quarter were down $24 million from the respective 2000 period. The reduction in net credit losses reflects improvements in Asia and the impact of 2000 second quarter write-offs taken in Bolivia. For a further discussion of trends by business, see the business discussions on pages 17 - 18. Citicorp's allowance for credit losses of $8.917 billion is available to absorb probable credit losses inherent in the entire portfolio. For analytical purposes only, the portion of Citicorp's allowance for credit losses attributed to the commercial portfolio was $4.003 billion at June 30, 2001 compared to $4.001 billion, $4.015 billion and $3.790 billion at March 31, 2001, December 31, 2000 and June 30, 2000, respectively. The increase in the allowance in 2000 primarily reflects additional provisions related to the transportation portfolio and the impact of acquisitions. The decrease in the allowance as a percentage of total commercial loans compared to December 31, 2000 was primarily due to growth in the commercial loan portfolio. Losses on commercial lending activities and the level of cash-basis loans can vary widely with respect to timing and amount, particularly within any narrowly-defined business or loan type. Commercial net credit losses and cash-basis loans may increase from 2001 second quarter levels due to the slowdown in the U.S. economy, weakening global economic conditions, stress in the telecommunications industry, sovereign or regulatory actions and other factors. This statement is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 23.
June 30, Mar. 31, Dec. 31, June 30, IN BILLIONS OF DOLLARS 2001 2001 2000 2000 - ------------------------------------------------------------------------------------------------------------------------------------ COMMERCIAL ALLOWANCE FOR CREDIT LOSSES $4.003 $4.001 $4.015 $3.790 As a percentage of total commercial loans 2.79% 2.75% 2.92% 2.85% - ---------------------------------------------------------------=====================================================================
19 GLOBAL INVESTMENT MANAGEMENT AND PRIVATE BANKING
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN MILLIONS OF DOLLARS 2001 2000(1) Change 2001 2000(1) Change - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL REVENUES, NET OF INTEREST EXPENSE $523 $503 4 $1,092 $985 11 Total operating expenses(2) 380 363 5 774 691 12 Provision for credit losses 1 3 (67) 3 25 (88) ------------------------------- ------------------------------- CORE INCOME BEFORE TAXES AND MINORITY INTEREST 142 137 4 315 269 17 Income taxes 53 52 2 117 101 16 Minority interest, after-tax -- -- -- 1 -- NM ------------------------------- ------------------------------- CORE INCOME 89 85 5 197 168 17 Restructuring-related items, after-tax (6) 1 NM (6) 1 NM ------------------------------- ------------------------------- INCOME $ 83 $ 86 (3) $ 191 $169 13 - ------------------------------------------==========================================================================================
(1) Reclassified to conform to the current period's presentation. (2) Excludes restructuring-related items. NM Not meaningful - -------------------------------------------------------------------------------- Global Investment Management and Private Banking is composed of Citibank Asset Management and The Citigroup Private Bank. These businesses offer a broad range of asset management products and services including mutual funds, closed-end funds, managed accounts, unit investment trusts, pension administration, and personalized wealth management services distributed to institutional, high net worth, and retail clients. Global Investment Management and Private Banking core income was $89 million and $197 million in the 2001 second quarter and six months, respectively, up $4 million or 5% and $29 million or 17% from the comparable 2000 periods. The 2001 second quarter reflects core income growth from the comparable 2000 quarter of $14 million or 18% in The Citigroup Private Bank, partially offset by a decrease of $10 million or 167% in Citibank Asset Management. The 2001 six months reflects core income growth of $31 million or 19% in The Citigroup Private Bank, partially offset by a decrease of $2 million or 22% in Citibank Asset Management. The Citigroup Private Bank core income growth primarily reflects increased customer activity across most products and lower provision for credit losses. The Citibank Asset Management decrease in the 2001 second quarter primarily reflects decreased revenues due to the transfer of funds to Citigroup Mutual Fund Management, a Salomon Smith Barney (SSB) entity. For the 2001 six months comparison, the decrease in Citibank Asset Management core income reflects the transfer of funds to Citigroup Mutual Fund Management, partially offset by the impact of acquisitions in the Global Retirement Services business. Income of $83 million in the 2001 second quarter and $191 million in the 2001 six months included a restructuring-related charge of $6 million ($12 million pretax). Income of $86 million in the 2000 second quarter and $169 million in the 2000 six months included a restructuring-related credit of $1 million ($2 million pretax). See Note 8 of Notes to Consolidated Financial Statements for a discussion of the restructuring-related items. CITIBANK ASSET MANAGEMENT
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN MILLIONS OF DOLLARS 2001 2000(1) Change 2001 2000(1) Change - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL REVENUES, NET OF INTEREST EXPENSE $148 $164 (10) $327 $283 16 Total operating expenses(2) 154 152 1 313 266 18 ------------------------------- ------------------------------- CORE INCOME BEFORE TAXES AND MINORITY INTEREST (6) 12 NM 14 17 (18) Income taxes (2) 6 NM 6 8 (25) Minority interest, after-tax -- -- -- 1 -- NM ------------------------------- ------------------------------- CORE INCOME (4) 6 NM 7 9 (22) Restructuring-related items, after-tax (2) -- NM (2) -- NM ------------------------------- ------------------------------- INCOME ($ 6) $ 6 NM $ 5 $ 9 (44) - ------------------------------------------========================================================================================== Assets under management (IN BILLIONS OF DOLLARS)(3)(4) $141 $155 (9) $141 $155 (9) - ------------------------------------------==========================================================================================
(1) Reclassified to conform to the current period's presentation. (2) Excludes restructuring-related items. (3) Includes $29 billion and $31 billion in 2001 and 2000, respectively, for The Citigroup Private Bank clients. (4) Includes Emerging Markets Pension Administration assets under management of $7 billion and $5 billion in 2001 and 2000, respectively. NM Not meaningful - -------------------------------------------------------------------------------- 20 Citibank Asset Management offers institutional, high net worth, and retail clients a broad range of investment alternatives from investment centers located around the world and also includes the pension administration businesses of Global Retirement Services. Products and services offered include mutual funds, closed-end funds, separately managed accounts, and pension administration. Citibank Asset Management reported a loss of $4 million in the 2001 second quarter, down $10 million from the 2000 second quarter, primarily reflecting decreased revenues due to the transfer of funds to Citigroup Mutual Fund Management, an SSB entity. Core income of $7 million in the 2001 six months was down $2 million from the comparable 2000 period, primarily due to the transfer of funds to Citigroup Mutual Fund Management, partially offset by the impact of the acquisitions in the Global Retirement Services business. Assets under management for the 2001 second quarter declined $14 billion or 9% from the year-ago quarter to $141 billion, primarily reflecting the transfer of funds to Citigroup Mutual Fund Management to address the requirements of the effect of the Gramm-Leach-Bliley Act. This Act would have obligated Citibank to register as an investment advisor. Revenues, net of interest expense, of $148 million and $327 million in the 2001 second quarter and six months were down $16 million or 10% from the 2000 second quarter, but up $44 million or 16% from the 2000 six months, respectively. The decrease in the 2001 second quarter primarily reflects the impact of the transfer of funds to Citigroup Mutual Fund Management. The increase in the 2001 six months reflects the impact of acquisitions in the Global Retirement Services business in 2000, partially offset by the impact of the transfer of funds to Citigroup Mutual Fund Management. Operating expenses of $154 million and $313 million in the 2001 second quarter and six months, respectively, increased $2 million or 1% and $47 million or 18% from the comparable 2000 periods. The increase in the 2001 second quarter primarily reflects higher compensation and benefits. For the 2001 six months, the acquisitions in the Global Retirement Services business in 2000 also contributed to the increase. THE CITIGROUP PRIVATE BANK
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN MILLIONS OF DOLLARS 2001 2000(1) Change 2001 2000(1) Change - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL REVENUES, NET OF INTEREST EXPENSE $375 $339 11 $765 $702 9 Total operating expenses(2) 226 211 7 461 425 8 Provision for credit losses 1 3 (67) 3 25 (88) ------------------------------- ------------------------------- CORE INCOME BEFORE TAXES 148 125 18 301 252 19 Income taxes 55 46 20 111 93 19 ------------------------------- ------------------------------- CORE INCOME 93 79 18 190 159 19 Restructuring-related items, after-tax (4) 1 NM (4) 1 NM ------------------------------- ------------------------------- INCOME $ 89 $ 80 11 $186 $160 16 - ------------------------------------------========================================================================================== Average assets (IN BILLIONS OF DOLLARS) $26 $25 4 $26 $24 8 Return on assets 1.37% 1.29% 1.44% 1.34% - ------------------------------------------========================================================================================== EXCLUDING RESTRUCTURING-RELATED ITEMS Return on assets 1.43% 1.27% 1.47% 1.33% - ------------------------------------------========================================================================================== Client business volumes under management (IN BILLIONS OF DOLLARS) 150 149 1 150 149 1 - ------------------------------------------==========================================================================================
(1) Reclassified to conform to the current period's presentation. (2) Excludes restructuring-related items. NM Not meaningful - -------------------------------------------------------------------------------- The Citigroup Private Bank provides personalized wealth management services for high net worth clients around the world. The Citigroup Private Bank core income was $93 million in the 2001 second quarter and $190 million in the 2001 six months, up $14 million or 18% and $31 million or 19% from the 2000 periods, primarily reflecting increased customer activity across most products and lower provision for credit losses. Income of $89 million in the 2001 second quarter and $186 million for the 2001 six months included a restructuring-related charge of $4 million ($7 million pretax). Income of $80 million in the 2000 second quarter and $160 million in the 2000 six months included a restructuring-related credit of $1 million ($2 million pretax). Client business volumes under management, which include custody accounts, client assets under fee-based management, deposits, and loans, were $150 billion at the end of the 2001 second quarter, up $1 billion or 1% from $149 billion at the end of the year-ago quarter. The increase primarily reflects growth in Asia, partially offset by decreases in CEEMEA and Europe. Revenues, net of interest expense, were $375 million in the 2001 second quarter and $765 million in the six months, up $36 million or 11% and $63 million or 9% from the 2000 periods. Revenue growth was driven by the impact of lower interest rates, higher placement fees, increased client trading activity and higher loan spreads. In the 2001 second quarter and six months, the increase in revenues reflects continued favorable trends in the U.S., up $17 million or 14% and $26 million or 11%, respectively, from the 21 comparable 2000 periods. International revenues increased $19 million or 9% from the 2000 second quarter and $37 million or 8% from the 2000 six months primarily due to growth in Asia and Japan. Operating expenses of $226 million and $461 million in the 2001 second quarter and six months were up $15 million or 7% and $36 million or 8% from the respective 2000 periods, primarily reflecting higher levels of revenues and investment spending in front-end sales and servicing capabilities. The provision for credit losses was $1 million in the 2001 second quarter and $3 million in the 2001 six months, down $2 million and $22 million from the respective 2000 periods. The decline was primarily related to a provision taken in the 2000 periods for a loan in Europe. Loans 90 days or more past due at the 2001 quarter-end were $64 million or 0.26% of total loans outstanding, compared with $78 million or 0.32% at the end of the 2000 second quarter. CORPORATE/OTHER
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN MILLIONS OF DOLLARS 2001 2000(1) Change 2001 2000(1) Change - ------------------------------------------------------------------------------------------------------------------------------------ ADJUSTED REVENUES, NET OF INTEREST EXPENSE(2) $ 72 ($ 58) NM $112 ($ 79) NM Adjusted operating expenses(2) 110 97 13 190 354 (46) ------------------------------- ------------------------------- CORE INCOME (LOSS) BEFORE TAX BENEFITS (38) (155) 75 (78) (433) 82 Income tax benefits -- (48) NM (7) (171) 96 ------------------------------- ------------------------------- CORE INCOME (LOSS) (38) (107) 64 (71) (262) 73 Restructuring-related items, after-tax(3) 1 (17) NM 1 (96) NM ------------------------------- ------------------------------- LOSS ($37) ($124) 70 ($ 70) ($358) 80 - ------------------------------------------==========================================================================================
(1) Reclassified to conform to the current period's presentation. (2) Excludes Housing Finance unit charge and restructuring-related items. (3) The 2000 six-month period includes a $71 million (after-tax) charge associated with the discontinuation of the loan origination operations of Associates Housing Finance unit. NM Not meaningful - -------------------------------------------------------------------------------- Corporate/Other includes net corporate treasury results, corporate staff and other corporate expenses, certain intersegment eliminations, and the remainder of Internet-related development activities not allocated to the individual businesses. Adjusted revenues, net of interest expense, in the 2001 second quarter and six months increased by $130 million and $191 million from the 2000 second quarter and six months, respectively, primarily reflecting lower treasury costs and intersegment eliminations. Adjusted operating expenses in the 2001 second quarter increased $13 million over the prior-year period, reflecting increases in certain unallocated corporate costs and inter-segment eliminations. Adjusted operating expenses in the 2001 six months decreased $164 million from the 2000 six months, primarily reflecting a 2000 first quarter $108 million pretax expense for the contribution of appreciated venture capital securities to the Citigroup Foundation, which had minimal impact on Citicorp's earnings after related tax benefits and investment gains. Results in the 2001 six months also reflect lower technology expenses due to costs associated with year 2000 remediation in the 2001 first quarter, and lower intersegment eliminations. INVESTMENT ACTIVITIES
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------- % ------------------------------- % IN MILLIONS OF DOLLARS 2001 2000(1) Change 2001 2000(1) Change - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL REVENUES, NET OF INTEREST EXPENSE $302 $398 (24) $250 $1,655 (85) Total operating expenses 22 23 (4) 53 49 8 ------------------------------- ------------------------------- INCOME BEFORE TAXES AND MINORITY INTEREST 280 375 (25) 197 1,606 (88) Income taxes 93 137 (32) 65 585 (89) Minority interest, after-tax (1) -- NM (3) -- NM ------------------------------- ------------------------------- INCOME $188 $238 (21) $135 $1,021 (87) - ------------------------------------------==========================================================================================
(1) Reclassified to conform to the current period's presentation. NM Not meaningful - -------------------------------------------------------------------------------- Investment Activities primarily consists of Citicorp's venture capital activities, securities transactions related to certain corporate investments, and the results of certain investments in countries that refinanced debt under the 1989 Brady Plan or plans of a similar nature. Revenues, net of interest expense, of $302 million for the 2001 second quarter decreased $96 million or 24% from the 2000 second quarter, primarily reflecting lower realized gains in the refinancing portfolio and in certain proprietary investments. The 2001 second 22 quarter also included impairment write-downs in certain proprietary investments. Partially offsetting the decrease was an increase in venture capital results. For the 2001 six months, revenues, net of interest expense, of $250 million decreased $1.405 billion or 85% from 2000, primarily reflecting lower venture capital results compared to the exceptionally strong equity markets in the 2000 first quarter. The 2000 first quarter included write-downs in the refinancing portfolio. Investment Activities results may fluctuate in the future as a result of market and asset-specific factors. This statement is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" below. FORWARD-LOOKING STATEMENTS Certain of the statements contained herein 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," "may increase," "may fluctuate," and similar expressions or future or conditional verbs such as "will," "should," "would," and "could." These forward-looking statements involve risks and uncertainties including, but not limited to, global economic and political conditions, levels of activity in the global capital markets, portfolio growth, the credit performance of the portfolios, including bankruptcies, and seasonal factors; changes in general economic conditions including uncertainty in the U.S., Japan and the Latin American region, the performance of global financial markets, prevailing inflation and interest rates and stress in the telecommunications industry; the impact of proposed rules that would govern the regulatory treatment of merchant banking investments and certain similar equity investments in nonfinancial companies; possible amendments to, and interpretations of, risk-based capital guidelines and reporting instructions; the resolution of legal proceedings and related matters; and the Company's success in managing the costs associated with the expansion of existing distribution channels and developing new ones, and in realizing increased revenues from such distribution channels, including cross-selling initiatives and electronic commerce-based efforts. MANAGING GLOBAL RISK The Citicorp Risk Management framework recognizes the wide range and diversity of global business activities by balancing strong corporate oversight with defined independent risk management functions at the business level. The Citicorp Risk Management Framework is described in detail in Citicorp's 2000 Form 10-K. THE CREDIT RISK MANAGEMENT PROCESS The credit risk management process at Citicorp relies on corporate-wide standards to ensure consistency and integrity, with business-specific policies and practices to ensure applicability and ownership. Citicorp's credit risk management process is described in detail in Citicorp's 2000 Form 10-K. THE MARKET RISK MANAGEMENT PROCESS Market risk encompasses liquidity risk and price risk, both of which arise in the normal course of business of a global financial intermediary. Liquidity risk is the risk that some entity, in some location and in some currency, may be unable to meet a financial commitment to a customer, creditor, or investor when due. Price risk is the risk to earnings that arises from changes in interest rates, foreign exchange rates, equity and commodity prices, and in their implied volatilities. Price risk arises in Non-Trading Portfolios, as well as in Trading Portfolios. Market risk at Citicorp is managed through corporate-wide standards and business-specific policies and procedures which are described more fully in the Citicorp 2000 Form 10-K. NON-TRADING PORTFOLIOS Price risk in non-trading portfolios is measured predominantly through Earnings-at-Risk and Factor Sensitivity techniques. These measurement techniques are supplemented with additional tools, including stress testing and cost-to-close analysis. Business units manage the potential earnings effect of interest rate movements by managing the asset and liability mix, either directly or through the use of derivative financial products. These include interest rate swaps and other derivative instruments which are either designated and effective as hedges or designated and effective in modifying the interest rate characteristics of specified assets or liabilities. The utilization of derivatives is managed in response to changing market conditions as well as to changes in the characteristics and mix of the related assets and liabilities. Citicorp does not utilize instruments with leverage features in connection with its non-trading risk management activities. Earnings-at-Risk is the primary method for measuring price risk in Citicorp's non-trading portfolios. Earnings-at-Risk measures the pretax earnings impact of a specified upward and downward shift in the yield curve for the appropriate currency. Earnings-at-Risk is 23 calculated separately for each currency and reflects the repricing gaps in the position as well as option positions, both explicit and embedded. U.S. dollar exposures are calculated by multiplying the gap between interest-sensitive items, including assets, liabilities, derivative instruments, and other off-balance sheet instruments, by 100 basis points. Non-U.S. dollar exposures are calculated utilizing the statistical equivalent of a 100 basis point change in interest rates and assumes no correlation between exposures in different currencies. Citicorp's primary non-trading price risk exposure is to movements in U.S. dollar interest rates. Citicorp also has Earnings-at-Risk in various other currencies; however, there are no significant risk concentrations in any individual non-U.S. dollar currency. The following table illustrates the impact to Citicorp pretax earnings from a 100 basis point increase or decrease in the U.S. dollar yield curve. As of June 30, 2001, a 100 basis point increase in U.S. dollar interest rates would have a potential negative impact on pretax earnings within the next twelve months of $203 million and the negative impact ranged from $183 million to $249 million at each month-end during the 2001 second quarter. A 100 basis point decrease in U.S. dollar interest rates would have a potential positive impact on pretax earnings over the next 12 months of $271 million and the positive impact ranged from $225 million to $271 million at each month-end during the quarter. The potential impact on pretax earnings for periods beyond the first 12 months was an increase of $1,196 million from a 100 basis point increase in U.S. dollar interest rates and a decrease of $1,240 million from a 100 basis point decrease in U.S. dollar interest rates. The change in Earnings-at-Risk from the prior year reflects the growth in Citicorp's fixed funding as well as the reduction in the use of derivatives in managing our risk portfolio. The change in Earnings-at-Risk from the prior year-end reflects the cancellation of receive fixed swaps, the growth in Citicorp's fixed funding, and the change in mortgage prepayment characteristics in our portfolio. As of June 30, 2001, the statistical equivalent of a 100 basis point increase in non-U.S. dollar interest rates would have a potential negative impact on Citicorp's pretax earnings over the next 12 months of $269 million and the negative impact ranged from $215 million to $269 million at each month-end during the 2001 second quarter. The statistical equivalent of a 100 basis point decrease in non-U.S. dollar interest rates would have a potential positive impact on Citicorp's pretax earnings over the next 12 months of $272 million and the positive impact ranged from $218 million to $272 million at each month-end during the quarter. The potential impact on pretax earnings for periods beyond the first 12 months was a decrease of $387 million for the statistical equivalent of a 100 basis point increase in non-U.S. dollar interest rates and an increase of $399 million for the statistical equivalent of a 100 basis point decrease in non-U.S. dollar interest rates. The sensitivity to rising rates in the non-U.S. dollar Earnings-at-Risk from the prior year and from the prior year-end reflects the change in the use of derivatives in managing the risk portfolio and a change in the asset/liability mix to reflect Citicorp's current view of interest rates. EARNINGS-AT-RISK (IMPACT ON PRETAX EARNINGS)(1)
IN MILLIONS JUNE 30, 2001 DECEMBER 31, 2000 JUNE 30, 2000 OF DOLLARS U.S. DOLLAR NON-U.S. DOLLAR(2) U.S. DOLLAR NON-U.S. DOLLAR U.S. DOLLAR NON-U.S. DOLLAR - ------------------------------------------------------------------------------------------------------------------------------------ INCREASE DECREASE INCREASE DECREASE Increase Decrease Increase Decrease Increase Decrease Increase Decrease ---------------------------------------------------------------------------------------------------------------- Twelve months and ($ 203) $ 271 ($269) $272 ($443) $460 ($198) $201 ($321) $339 ($211) $212 less Thereafter 1,196 (1,240) (387) 399 217 (320) (105) 121 87 (125) (140) 143 ---------------------------------------------------------------------------------------------------------------- Total $ 993 ($ 969) ($656) $671 ($216) ($140) ($303) $322 ($234) $214 ($351) $355 - --------------------================================================================================================================
(1) Prior-year information has been restated to reflect reorganizations and a change in assumptions (specifically revising the measurement of Earnings-at-Risk from a two standard deviation change in interest rates to a 100 basis point change). These changes were made to reflect a more consistent view for managing price risk throughout the organization. (2) Primarily results from Earnings-at-Risk in the Japanese Yen, the Mexican Peso and the Euro. - -------------------------------------------------------------------------------- TRADING PORTFOLIOS Price risk in trading portfolios is measured through a complementary set of tools, including Factor Sensitivities, Value-at-Risk, and Stress Testing. Each trading portfolio has its own market risk limit framework, encompassing these measures and other controls, including permitted product lists and a new product approval process for complex products established by the business and approved by independent market risk management. Factor Sensitivities are defined as the change in the value of a position for a defined change in a market risk factor (e.g., the change in the value of a Treasury bill for a 1 basis point change in interest rates). It is the responsibility of independent market risk management to ensure that factor sensitivities are calculated, monitored, and, in some cases, limited for all relevant risks taken in a trading portfolio. Value-at-Risk estimates the potential decline in the value of a position or a portfolio, under normal market conditions, over a one-day holding period, at a 99% confidence level. The Value-at-Risk method incorporates the Factor Sensitivities of the trading portfolio with the volatilities and correlations of those factors. Stress Testing is performed on trading portfolios on a regular basis, to estimate the impact of extreme market movements. Stress Testing is performed on individual trading portfolios, as well as on aggregations of portfolios and businesses, as appropriate. It is the responsibility of independent market risk management, in conjunction with the businesses, to develop stress scenarios, review the 24 output of periodic stress testing exercises, and utilize the information to make judgments as to the ongoing appropriateness of exposure levels and limits. New and/or complex products in trading portfolios are required to be reviewed and approved by the Global Corporate Capital Markets Approval Committee (CMAC). The CMAC is responsible for ensuring that all relevant risks are identified and understood, and can be measured, managed, and reported in accordance with applicable Global Corporate policies and practices. The CMAC is made up of senior representatives from market and credit risk management, legal, accounting, operations, and other support areas, as required. The level of price risk exposure at any given point in time depends on the market environment and expectations of future price and market movements, and will vary from period to period. For Citicorp's major trading centers, the aggregate pretax Value-at-Risk in the trading portfolios was $23 million at June 30, 2001. Daily exposures averaged $26 million during the 2001 second quarter and ranged from $17 million to $46 million. The following table summarizes Value-at-Risk in the trading portfolios as of June 30, 2001 and December 31, 2000, along with the averages.
2001 Full Second Year JUNE 30, Quarter December 31, 2000 IN MILLIONS OF DOLLARS 2001 Average 2001 Average(1) - ------------------------------------------------------------------------------------------------------------------------------------ Interest rate $16 $21 $18 $17 Foreign exchange 8 10 9 9 Equity 11 11 20 14 All other (primarily commodity) 7 6 9 5 Covariance adjustment (19) (22) (27) (21) --------------------------------------------------------------------- Total $23 $26 $29 $24 - ---------------------------------------------------------------=====================================================================
(1) Prior-year information has been restated from that previously presented to reflect reorganizations and to a more consistent view for managing price risk throughout the organization. - -------------------------------------------------------------------------------- The table below provides the range of Value-at-Risk in the trading portfolios that was experienced during the second quarter of 2001 and all of 2000.
2001 2000(1) --------------------------------------------------------------------- IN MILLIONS OF DOLLARS LOW HIGH Low High - ------------------------------------------------------------------------------------------------------------------------------------ Interest rate $14 $45 $13 $29 Foreign exchange 6 16 5 18 Equity 7 19 9 31 All other (primarily commodity) 5 8 1 18 - ---------------------------------------------------------------=====================================================================
(1) Prior-year information has been restated from that previously presented to reflect reorganizations and to a more consistent view for managing price risk throughout the organization. - -------------------------------------------------------------------------------- 25 MANAGEMENT OF CROSS-BORDER RISK Cross-border risk is the risk that Citicorp will be unable to obtain payment from customers on their contractual obligations as a result of actions taken by foreign governments such as exchange controls, debt moratoria, and restrictions on the remittance of funds. Citicorp manages cross-border risk as part of the Citigroup Risk Management framework described in Citicorp's 2000 Form 10-K. The following table presents total cross-border outstandings and commitments on a regulatory basis in accordance with Federal Financial Institutions Examination Council (FFIEC) guidelines. Total cross-border outstandings include cross-border claims on third parties as well as investments in and funding of local franchises, as described in Citicorp's 2000 Form 10-K. Countries with outstandings greater than 0.75% of Citicorp assets at June 30, 2001 and December 31, 2000 include:
JUNE 30, 2001 December 31, 2000 ------------------------------------------------------------------------------- ------------------ CROSS-BORDER CLAIMS ON THIRD PARTIES -------------------------------------------- TOTAL Total TRADING INVESTMENTS CROSS- Cross- AND IN AND BORDER Border SHORT- FUNDING OUT- Out- TERM OF LOCAL STAND- COMMIT- Stand- Commit- IN BILLIONS OF DOLLARS BANKS PUBLIC PRIVATE TOTAL CLAIMS(1) FRANCHISES INGS MENTS(2) ings ments(2) - ------------------------------------------------------------------------------------------------------------------------------------ Brazil $1.0 $0.5 $3.6 $5.1 $2.9 $4.9 $10.0 $0.2 $7.9 $0.2 Italy 1.9 3.8 0.7 6.4 4.7 1.8 8.2 4.1 7.4 5.7 Germany 3.5 0.3 2.0 5.8 4.0 2.6 8.4 5.3 6.6 6.8 Canada 1.7 -- 1.9 3.6 2.2 2.8 6.4 5.0 7.1 4.9 Japan 0.8 -- 0.5 1.3 1.2 4.3 5.6 0.6 2.7 0.7 Netherlands 1.1 1.2 3.0 5.3 4.0 -- 5.3 2.1 4.5 1.8 France 2.7 0.6 1.8 5.1 3.6 -- 5.1 7.5 5.4 8.3 Mexico 0.1 1.5 2.8 4.4 2.8 0.6 5.0 0.4 3.4 1.7 United Kingdom 1.5 0.1 2.4 4.0 3.1 -- 4.0 14.9 4.2 14.9 - --------------------------------====================================================================================================
(1) Included in total cross-border claims on third parties. (2) Commitments (not included in total cross-border outstandings) include legally binding cross-border letters of credit and other commitments and contingencies as defined by the FFIEC. - -------------------------------------------------------------------------------- LIQUIDITY AND CAPITAL RESOURCES Citicorp manages liquidity through a well-defined process described in Citicorp's 2000 Form 10-K. A diversity of funding sources, currencies, and maturities is used to gain a broad access to the investor base. Citicorp's deposits, which represented 56% of its total funding at June 30, 2001 and 55% of its total funding at December 31, 2000, are broadly diversified by both geography and customer segments. Stockholder's equity, which grew $705 million during the first six months of 2001 to $48.6 billion at June 30, 2001, continues to be an important component of the overall funding structure. In addition, long-term debt is issued by Citicorp and its subsidiaries. Total Citicorp long-term debt outstanding at the end of the 2001 second quarter was $86.6 billion, up from $80.3 billion at 2000 year-end. Asset securitization programs remain an important source of liquidity. Loans securitized during the first six months of 2001 included $11.8 billion of U.S. credit cards and $11.1 billion of U.S. consumer mortgages. As previous credit card securitizations amortize, newly-originated receivables are recorded on Citicorp's balance sheet and become available for asset securitization. During the second quarter of 2001, the scheduled amortization of certain credit card securitization transactions made available $7.5 billion of new receivables. In addition, at least $5.7 billion of credit card securitization transactions are scheduled to amortize during the rest of 2001. Citicorp is a legal entity separate and distinct from Citibank, N.A. and its other subsidiaries and affiliates. As discussed in Citicorp's 2000 Form 10-K, there are various legal limitations on the extent to which Citicorp's subsidiaries may extend credit, pay dividends, or otherwise supply funds to Citicorp. As of June 30, 2001, under their applicable dividend limitations, Citicorp's national and state-chartered bank subsidiaries could have declared dividends to their respective parent companies without regulatory approval of approximately $8.0 billion. In determining whether and to what extent to pay dividends, each bank subsidiary must also consider the effect of dividend payments on applicable risk-based capital and leverage ratio requirements, as well as policy statements of the federal regulatory agencies that indicate that banking organizations should generally pay dividends out of current operating earnings. Consistent with these considerations, Citicorp estimates that, as of June 30, 2001, its bank subsidiaries could have distributed dividends to Citicorp, directly or through their parent holding company, of approximately $6.6 billion of the available $8.0 billion. Citicorp also receives dividends from its nonbank subsidiaries. These nonbank subsidiaries are generally not subject to regulatory restrictions on their payment of dividends except that the approval of the Office of Thrift Supervision may be required if total dividends declared by a savings association in any calendar year exceed amounts specified by that agency's regulations. 26 Citicorp is subject to risk-based capital guidelines issued by the Board of Governors of the Federal Reserve System (FRB). These guidelines are used to evaluate capital adequacy based primarily on the perceived credit risk associated with balance sheet assets, as well as certain off-balance sheet exposures such as unused loan commitments, letters of credit, and derivative and foreign exchange contracts. The risk-based capital guidelines are supplemented by a leverage ratio requirement. CITICORP RATIOS
JUNE 30, Mar. 31, Dec. 31, 2001 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Tier 1 Capital 8.43% 8.34% 8.41% Total Capital (Tier 1 and Tier 2) 12.58 12.51 12.29 Leverage(1) 7.41 7.32 7.54 Common Stockholder's Equity 8.66 8.47 8.68 - --------------------------------------------------------------------------------====================================================
(1) Tier 1 capital divided by adjusted average assets. - -------------------------------------------------------------------------------- Citicorp maintained a strong capital position during the 2001 second quarter. Total capital (Tier 1 and Tier 2) amounted to $60.1 billion at June 30, 2001, representing 12.58% of net risk adjusted assets. This compares with $59.6 billion and 12.51% at March 31, 2001, and $58.0 billion and 12.29% at December 31, 2000. Tier 1 capital of $40.3 billion at June 30, 2001 represented 8.43% of net risk adjusted assets, compared with $39.7 billion and 8.34% at March 31, 2001, and $39.7 billion and 8.41% at December 31, 2000. The Tier 1 capital ratio at June 30, 2001 was above Citicorp's target range of 8.00% to 8.30%. COMPONENTS OF CAPITAL UNDER REGULATORY GUIDELINES
JUNE 30, Mar. 31, Dec. 31, IN MILLIONS OF DOLLARS 2001 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ TIER 1 CAPITAL Common Stockholder's Equity $ 48,570 $47,912 $47,865 Mandatorily Redeemable Securities of Subsidiary Trusts 975 975 975 Minority Interest 347 339 334 Accumulated Net (Gains)/Losses on Cash Flow Hedges, net of tax (1) 6 -- Net Unrealized (Gains)/Losses on Securities Available for Sale(1) (140) (43) 14 Less: Intangible Assets(2) (9,386) (9,348) (9,442) Net unrealized losses on Available-for-Sale Equity Securities, net of tax(1) (66) (92) (15) 50% Investment in Certain Subsidiaries(3) (33) (34) (29) --------------------------------------------------- TOTAL TIER 1 CAPITAL 40,266 39,715 39,702 - ------------------------------------------------------------------------------------------------------------------------------------ TIER 2 CAPITAL Allowance for Credit Losses(4) 6,008 5,992 5,938 Qualifying Debt(5) 13,840 13,911 12,399 Less: 50% Investment in Certain Subsidiaries(3) (32) (33) (29) --------------------------------------------------- TOTAL TIER 2 CAPITAL 19,816 19,870 18,308 --------------------------------------------------- TOTAL CAPITAL (TIER 1 AND TIER 2) 60,082 $59,585 $58,010 - ---------------------------------------------------------------------------------=================================================== NET RISK-ADJUSTED ASSETS(6) $477,665 $476,324 $471,936 - ---------------------------------------------------------------------------------===================================================
(1) Tier 1 capital excludes unrealized gains and losses on debt securities available for sale in accordance with regulatory risk-based capital guidelines. The federal bank regulatory agencies permit institutions to include in Tier 2 capital up to 45% of pretax net unrealized holding gains on available-for-sale equity securities with readily determinable fair values. Institutions are required to deduct from Tier 1 capital net unrealized holding losses on available-for-sale equity securities with readily determinable fair values, net of tax. (2) Includes goodwill and certain other identifiable intangible assets. (3) Represents investment in certain overseas insurance activities and unconsolidated banking and finance subsidiaries. (4) Includable up to 1.25% of risk-adjusted assets. Any excess allowance is deducted from risk-adjusted assets. (5) Includes qualifying senior and subordinated debt in an amount not exceeding 50% of Tier 1 capital, and subordinated capital notes subject to certain limitations. Tier 2 capital included $8.7 billion of subordinated debt issued to Citigroup (Parent Company) at June 30, 2001. (6) Includes risk-weighted credit equivalent amounts, net of applicable bilateral netting agreements, of $19.3 billion for interest rate, commodity, and equity derivative contracts and foreign exchange contracts as of June 30, 2001, compared to $21.6 billion as of March 31, 2001 and $20.4 billion as of December 31, 2000. Net risk-adjusted assets also includes the effect of other off-balance sheet exposures such as unused loan commitments and letters of credit and reflects deductions for intangible assets and any excess allowance for credit losses. - -------------------------------------------------------------------------------- Common stockholder's equity increased $658 million during the 2001 second quarter to $48.6 billion at June 30, 2001, representing 8.66% of assets, compared to 8.47% at March 31, 2001, and 8.68% at December 31, 2000. The net increase in common stockholder's equity during the quarter principally reflected net income of $2.3 billion, offset by cash dividends declared of $1.5 billion. The mandatorily redeemable securities of subsidiary trusts (trust securities) outstanding at June 30, 2001 of $975 million qualify as Tier 1 capital and are included in long-term debt on the balance sheet. For the six months ended June 30, 2001 and 2000, interest expense on the trust securities amounted to $38 million. 27 Citicorp's subsidiary depository institutions are subject to the risk-based capital guidelines issued by their respective primary federal bank regulatory agencies, which are generally similar to the FRB's guidelines. At June 30, 2001, all of Citicorp's subsidiary depository institutions were "well capitalized" under the federal bank regulatory agencies' definitions. CITIBANK, N.A. RATIOS
JUNE 30, Mar. 31, Dec. 31, 2001 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Tier 1 Capital 8.28% 8.24% 8.46% Total Capital (Tier 1 and Tier 2) 12.40 12.40 12.64 Leverage 6.61 6.52 6.66 Common Stockholder's Equity 7.14 6.93 7.12 - --------------------------------------------------------------------------------====================================================
Citibank's net income for the second quarter of 2001 amounted to $1.2 billion. During the quarter, Citibank paid a dividend of $611 million to Citicorp (parent company). Citibank had $8.7 billion of subordinated notes outstanding at both June 30, 2001 and March 31, 2001, and $8.5 billion at December 31, 2000, that were issued to Citicorp (parent company) and included in Citibank's Tier 2 capital. On January 18, 2001, the FRB issued new proposed rules that would govern the regulatory treatment of merchant banking investments and certain similar equity investments, including investments made by venture capital subsidiaries, in nonfinancial companies held by bank holding companies. The new proposal generally would impose a capital charge that would increase in steps as the banking organization's level of concentration in equity investments increased. An 8 percent Tier 1 capital deduction would apply on covered investments that in the aggregate represent up to 15 percent of an organization's Tier 1 capital. For covered investments that aggregate more than 25 percent of the organization's Tier 1 capital, a top marginal charge of 25 percent would be set. The Company is monitoring the status and progress of the proposed rule, which, at the present time, is not expected to have a significant impact on Citicorp. This statement is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 23. In June 2001, the Basel Committee on Banking Supervision (Committee) announced that it would issue a new consultative package on the new Basel Capital Accord (new Accord) in early 2002. The new Accord, which will apply to all "significant" banks, as well as to holding companies that are parents of banking groups, is intended to be finalized by year-end 2002, with implementation of the new framework beginning in 2005. The Company is monitoring the status and progress of the proposed rule. Additionally, from time to time, the FRB and the FFIEC propose amendments to, and issue interpretations of, risk-based capital guidelines and reporting instructions. Such proposals or interpretations could, if implemented in the future, affect reported capital ratios and net risk-adjusted assets. This statement is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 23. 28 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) CITICORP AND SUBSIDIARIES
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, --------------------------------------------------------------------- IN MILLIONS OF DOLLARS 2001 2000 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ INTEREST REVENUE Loans, including fees $ 9,712 $ 9,070 $19,679 $17,465 Deposits with banks 290 276 643 532 Federal funds sold and securities purchased under resale agreements 100 99 231 171 Securities, including dividends 886 854 1,837 1,776 Trading account assets 216 256 452 470 Loans held for sale 439 189 831 327 --------------------------------------------------------------------- 11,643 10,744 23,673 20,741 --------------------------------------------------------------------- INTEREST EXPENSE Deposits 3,079 3,205 6,569 6,015 Trading account liabilities 10 14 24 33 Purchased funds and other borrowings 691 1,030 1,652 1,829 Long-term debt 1,339 1,093 2,687 2,187 --------------------------------------------------------------------- 5,119 5,342 10,932 10,064 --------------------------------------------------------------------- NET INTEREST REVENUE 6,524 5,402 12,741 10,677 BENEFITS, CLAIMS, AND CREDIT LOSSES Policyholder benefits and claims expense 257 179 507 339 Provision for credit losses 1,485 1,302 2,949 2,611 --------------------------------------------------------------------- TOTAL BENEFITS, CLAIMS, AND CREDIT LOSSES 1,742 1,481 3,456 2,950 --------------------------------------------------------------------- NET INTEREST REVENUE AFTER BENEFITS, CLAIMS, AND CREDIT LOSSES 4,782 3,921 9,285 7,727 --------------------------------------------------------------------- FEES, COMMISSIONS, AND OTHER REVENUE Fees and commissions 2,586 2,831 5,363 5,389 Foreign exchange 533 398 1,021 820 Trading account 325 311 928 680 Securities transactions 18 252 115 293 Other revenue 1,237 973 2,094 3,154 --------------------------------------------------------------------- 4,699 4,765 9,521 10,336 --------------------------------------------------------------------- OPERATING EXPENSE Salaries 2,146 2,117 4,416 4,177 Employee benefits 434 390 875 824 --------------------------------------------------------------------- Total employee 2,580 2,507 5,291 5,001 Net premises and equipment 663 801 1,451 1,616 Restructuring - related items 168 4 230 24 Other expense 2,328 2,169 4,689 4,433 --------------------------------------------------------------------- 5,739 5,481 11,661 11,074 --------------------------------------------------------------------- INCOME BEFORE INCOME TAXES, MINORITY INTEREST AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES 3,742 3,205 7,145 6,989 Income taxes 1,361 1,195 2,626 2,563 Minority interest, net of income taxes 14 9 22 14 --------------------------------------------------------------------- INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES 2,367 2,001 4,497 4,412 Cumulative effect of accounting changes(1) (111) -- (144) -- --------------------------------------------------------------------- NET INCOME $ 2,256 $ 2,001 $ 4,353 $ 4,412 - ---------------------------------------------------------------=====================================================================
(1) Refers to the 2001 first quarter adoption of SFAS 133 and the 2001 second quarter adoption of EITF 99-20. - -------------------------------------------------------------------------------- See Notes to Consolidated Financial Statements. 29 CONSOLIDATED BALANCE SHEETS CITICORP AND SUBSIDIARIES
JUNE 30, 2001 December 31, IN MILLIONS OF DOLLARS (UNAUDITED) 2000 - ------------------------------------------------------------------------------------------------------------------------------------ ASSETS Cash and due from banks $ 11,058 $ 11,658 Deposits at interest with banks 15,190 16,160 Securities, at fair value Available for sale and short-term and other (including $777 and $1,158 pledged to creditors at June 30, 2001 and December 31, 2000, respectively) 52,333 52,458 Venture capital 5,059 5,204 Trading account assets (including $419 and $1,671 pledged to creditors at June 30, 2001 and December 31, 2000, respectively) 35,071 39,311 Loans held for sale 16,582 13,327 Federal funds sold and securities purchased under resale agreements 12,089 4,704 Loans, net Consumer 224,923 228,879 Commercial 143,555 137,709 ---------------------------------- Loans, net of unearned income 368,478 366,588 Allowance for credit losses (8,917) (8,961) ---------------------------------- Total loans, net 359,561 357,627 Premises and equipment, net 5,615 5,904 Interest and fees receivable 5,333 5,438 Other assets 42,712 39,816 ---------------------------------- TOTAL ASSETS $560,603 $551,607 - --------------------------------------------------------------------------------------------------================================== LIABILITIES Non-interest-bearing deposits in U.S. offices $ 18,060 $ 21,702 Interest-bearing deposits in U.S. offices 87,021 61,544 Non-interest-bearing deposits in offices outside the U.S. 14,225 13,905 Interest-bearing deposits in offices outside the U.S. 196,261 205,564 ---------------------------------- Total deposits 315,567 302,715 Trading account liabilities 21,329 27,778 Purchased funds and other borrowings 53,578 60,834 Accrued taxes and other expense 10,717 10,434 Other liabilities 24,259 21,646 Long-term debt 86,583 80,335 STOCKHOLDER'S EQUITY Common stock: ($0.01 par value) issued shares: 1,000 in each period -- -- Surplus 21,311 21,148 Retained earnings 28,195 27,486 Accumulated other changes in equity from nonowner sources(1) (936) (769) ---------------------------------- TOTAL STOCKHOLDER'S EQUITY 48,570 47,865 ---------------------------------- TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $560,603 $551,607 - --------------------------------------------------------------------------------------------------==================================
(1) Amounts at June 30, 2001 and December 31, 2000 include the after-tax amounts for net unrealized gains (losses) on securities available for sale of $140 million and ($14) million, respectively, and foreign currency translation of ($1.077) billion and ($755) million, respectively. Amount at June 30, 2001 also includes the after-tax amount for cash flow hedges of $1 million. - -------------------------------------------------------------------------------- See Notes to Consolidated Financial Statements. 30 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY (UNAUDITED) CITICORP AND SUBSIDIARIES
SIX MONTHS ENDED JUNE 30, ---------------------------------- IN MILLIONS OF DOLLARS 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ BALANCE AT BEGINNING OF PERIOD $47,865 $35,475 Net income 4,353 4,412 Cumulative effect of accounting changes(1) 170 -- Net change in unrealized gains and losses on securities available for sale, net of tax 68 1 Foreign currency translation adjustment, net of tax (341) (179) Net change for cash flow hedges, net of tax (64) -- ---------------------------------- Total changes in equity from nonowner sources 4,186 4,234 Common dividends declared (3,644) (1,092) Capital contribution from Parent 148 1,202 Employee benefit plans and other activity 15 18 ---------------------------------- BALANCE AT END OF PERIOD $48,570 $39,837 - --------------------------------------------------------------------------------------------------================================== SUMMARY OF CHANGES IN EQUITY FROM NONOWNER SOURCES Net income $4,353 $4,412 Other changes in equity from nonowner sources (167) (178) ---------------------------------- TOTAL CHANGES IN EQUITY FROM NONOWNER SOURCES $4,186 $4,234 - --------------------------------------------------------------------------------------------------==================================
(1) Refers to the adoption of SFAS 133 in the first quarter of 2001 and the adoption of EITF 99-20 in the second quarter of 2001, resulting in increases to equity from nonowner sources of $82 million and $88 million, respectively. - -------------------------------------------------------------------------------- See Notes to Consolidated Financial Statements. 31 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) CITICORP AND SUBSIDIARIES
SIX MONTHS ENDED JUNE 30, ---------------------------------- IN MILLIONS OF DOLLARS 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 4,353 $ 4,412 Adjustments to reconcile net income to net cash provided by (used in) operating activities Provision for credit losses 2,949 2,611 Depreciation and amortization of premises and equipment 696 658 Amortization of goodwill and acquisition premium costs 366 312 Restructuring-related items 230 24 Cumulative effect of accounting changes, net of tax 144 -- Venture capital activity 145 (1,096) Net gain on sale of securities (115) (297) Changes in accruals and other, net 1,216 (2,859) Net increase in loans held for sale (4,990) (5,456) Net decrease (increase) in trading account assets 4,240 (841) Net decrease in trading account liabilities (6,449) (4,788) ---------------------------------- Total adjustments (1,568) (11,732) ---------------------------------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 2,785 (7,320) - ------------------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM INVESTING ACTIVITIES Net decrease (increase) in deposits at interest with banks 970 (471) Securities -- available for sale and short-term and other Purchases (45,566) (27,465) Proceeds from sales 32,316 13,035 Maturities 11,546 16,065 Net (increase) decrease in federal funds sold and securities purchased under resale agreements (7,385) 555 Net increase in loans (17,412) (46,781) Proceeds from sales of loans 12,550 17,711 Business acquisitions -- (2,154) Capital expenditures on premises and equipment (654) (672) Proceeds from sales of premises and equipment, subsidiaries and affiliates, and repossessed assets 815 295 ---------------------------------- NET CASH USED IN INVESTING ACTIVITIES (12,820) (29,882) - ------------------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM FINANCING ACTIVITIES Net increase in deposits 12,852 25,134 Net (decrease) increase in federal funds purchased and securities sold under repurchase agreements (646) 1,385 Net (decrease) increase in commercial paper and funds borrowed (6,170) 9,078 Proceeds from issuance of long-term debt 15,767 10,072 Repayment of long-term debt (8,409) (9,857) Contribution from Citigroup -- 1,100 Dividends paid (3,639) (1,092) ---------------------------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 9,755 35,820 - ------------------------------------------------------------------------------------------------------------------------------------ EFFECT OF EXCHANGE RATE CHANGES ON CASH AND DUE FROM BANKS (320) (284) - ------------------------------------------------------------------------------------------------------------------------------------ Net decrease in cash and due from banks (600) (1,666) Cash and due from banks at beginning of period 11,658 11,877 ---------------------------------- CASH AND DUE FROM BANKS AT END OF PERIOD $ 11,058 $ 10,211 - --------------------------------------------------------------------------------------------------================================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for: Interest $10,234 $9,114 Income taxes 2,106 2,111 Non-cash investing activities: Transfers to repossessed assets $ 271 $ 269 - --------------------------------------------------------------------------------------------------==================================
See Notes to Consolidated Financial Statements. 32 CONSOLIDATED BALANCE SHEETS CITIBANK, N.A. AND SUBSIDIARIES
JUNE 30, 2001 December 31, IN MILLIONS OF DOLLARS (UNAUDITED) 2000 - ------------------------------------------------------------------------------------------------------------------------------------ ASSETS Cash and due from banks $ 9,584 $ 9,321 Deposits at interest with banks 17,387 17,968 Securities, at fair value Available for sale (including $748 and $1,111 pledged to creditors at June 30, 2001 and December 31, 2000, respectively) 39,606 38,762 Venture capital 2,751 3,293 Trading account assets (including $419 and $1,671 pledged to creditors at June 30, 2001 and December 31, 2000, respectively) 35,100 37,616 Loans held for sale 10,171 2,010 Federal funds sold and securities purchased under resale agreements 14,143 4,408 Loans, net of unearned income 238,620 245,381 Allowance for credit losses (4,532) (4,590) ---------------------------------- Loans, net 234,088 240,791 Premises and equipment, net 3,911 4,063 Interest and fees receivable 3,254 4,369 Other assets 22,186 19,505 ---------------------------------- TOTAL ASSETS $392,181 $382,106 - --------------------------------------------------------------------------------------------------================================== LIABILITIES Non-interest-bearing deposits in U.S. offices $ 14,690 $ 17,703 Interest-bearing deposits in U.S. offices 60,706 41,223 Non-interest-bearing deposits in offices outside the U.S. 14,177 13,758 Interest-bearing deposits in offices outside the U.S. 192,578 199,680 ---------------------------------- Total deposits 282,151 272,364 Trading account liabilities 20,654 26,803 Purchased funds and other borrowings 25,156 20,197 Accrued taxes and other expense 6,161 6,395 Other liabilities 13,408 11,797 Long-term debt and subordinated notes 16,667 17,339 STOCKHOLDER'S EQUITY Capital stock ($20.00 par value) 751 751 outstanding shares: 37,534,553 in each period Surplus 11,584 11,354 Retained earnings 16,506 15,903 Accumulated other changes in equity from nonowner sources(1) (857) (797) ---------------------------------- TOTAL STOCKHOLDER'S EQUITY 27,984 27,211 ---------------------------------- TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $392,181 $382,106 - --------------------------------------------------------------------------------------------------==================================
(1) Amounts at June 30, 2001 and December 31, 2000 include the after-tax amounts for net unrealized gains on securities available for sale of $125 million and $70 million, respectively, and foreign currency translation of ($1.094) billion and ($867) million, respectively. Amount at June 30, 2001 also includes the after-tax amount for cash flow hedges of $112 million. - -------------------------------------------------------------------------------- See Notes to Consolidated Financial Statements. 33 CITICORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION The accompanying consolidated financial statements as of June 30, 2001 and for the three- and six-month periods ended June 30, 2001 and 2000 are unaudited and include the accounts of Citicorp and its subsidiaries (collectively, the Company). In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation have been reflected. The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2000. Certain financial information that is normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America, but is not required for interim reporting purposes, has been condensed or omitted. Certain reclassifications have been made to the prior year's financial statements to conform to the current year's presentation. 2. BUSINESS DEVELOPMENTS ACQUISITION OF BANACCI On August 6, 2001, Citicorp completed its acquisition of 99.86% of the issued and outstanding ordinary shares of Grupo Financiero Banamex-Accival (Banacci), a leading Mexican financial institution, for approximately $12.5 billion in cash and Citigroup stock. Citicorp completed the acquisition by settling transactions that were conducted on the Mexican Stock Exchange on Friday, August 3, 2001. Those transactions comprised both the acquisition of Banacci shares tendered in response to Citicorp's offer to acquire all of Banacci's outstanding shares and the simultaneous sale of 126,705,281 Citigroup shares to the tendering Banacci shareholders. Banacci's and Citigroup's operations in Mexico will be integrated and will conduct business under the "Banamex" brand name. The transaction will be accounted for under the purchase method of accounting. ACQUISITION OF EAB On July 17, 2001, Citicorp completed its acquisition of European American Bank (EAB), a state-chartered bank with 97 branches in the New York area, for $1.6 billion plus the assumption of $350 million in EAB preferred stock. The transaction will be accounted for under the purchase method of accounting. The Company is in the process of integrating these acquisitions. The Company is anticipating incurring a restructuring charge in the third quarter of 2001, related to these integrations. 3. ACCOUNTING CHANGES ADOPTION OF EITF 99-20 During the second quarter of 2001, the Company adopted Emerging Issues Task Force (EITF) Issue No. 99-20, "Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Asset" (EITF 99-20). EITF 99-20 provides new guidance regarding income recognition and identification and determination of impairment on certain asset-backed securities. The initial adoption resulted in a cumulative adjustment of $111 million after-tax, recorded as a charge to earnings. FUTURE APPLICATION OF ACCOUNTING STANDARDS TRANSFERS AND SERVICING OF FINANCIAL ASSETS. In September 2000, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, a replacement of FASB Statement No. 125" (SFAS 140). In July 2000, FASB issued Technical Bulletin No. 01-1, "Effective Date for Certain Financial Institutions of Certain Provisions of Statement 140 Related to the Isolation of Transferred Assets." Certain provisions of SFAS 140 require that the structure for transfers of financial assets to certain securitization vehicles be modified to comply with revised isolation guidance for institutions subject to receivership by the Federal Deposit Insurance Corporation. These provisions will become effective for transfers taking place after December 31, 2001, with an additional transition period ending no later than June 30, 2006 for transfers to certain master trusts. SFAS 140 also provides revised guidance for an entity to be considered a qualifying special purpose entity. It is not expected that SFAS 140 will materially affect the financial statements. 34 BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS. In July 2001, the FASB issued Statement of Financial Accounting Standards (SFAS) 141, "Business Combinations" (SFAS 141) and SFAS 142, "Goodwill and Other Intangible Assets" (SFAS 142), effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to annual impairment tests in accordance with the new standards. Other intangible assets will continue to be amortized over their useful lives. The Company will apply the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of 2002. Application of the nonamortization provisions of the new standards is expected to result in an increase in net income; however, the Company is still assessing the impact of the new standard. During 2002, the Company will perform the required impairment tests of goodwill and indefinite lived intangible assets as of January 1, 2002 and has not yet determined what the effect of these tests will be on the earnings and financial position of the Company. SFAS 142 stipulates that goodwill will no longer be amortized for all business combinations completed after June 30, 2001. This will impact the goodwill associated with the Company's acquisitions of EAB and Banacci. The beneficial impact of this change on 2001 earnings is not anticipated to be significant. 4. BUSINESS SEGMENT INFORMATION The following table presents certain information regarding the Company's industry segments:
INCOME (LOSS) BEFORE CUMULATIVE TOTAL REVENUES, NET EFFECT OF ACCOUNTING OF INTEREST EXPENSE INCOME TAXES CHANGES(1)(2) IDENTIFIABLE ASSETS ----------------------------------------------------------------------------------- THREE MONTHS ENDED JUNE 30, IN MILLIONS OF DOLLARS -------------------------------------------------------------- JUNE 30, Dec. 31, EXCEPT IDENTIFIABLE ASSETS IN BILLIONS 2001 2000(3) 2001 2000(3) 2001 2000(3) 2001 2000(3) - ------------------------------------------------------------------------------------------------------------------------------------ Global Consumer $ 7,392 $ 6,588 $839 $706 $1,437 $1,190 $265 $262 Global Corporate 2,934 2,736 382 358 696 611 248 233 Global Investment Management and Private Banking 523 503 47 53 83 86 28 30 Investment Activities 302 398 93 137 188 238 10 11 Corporate/Other 72 (58) -- (59) (37) (124) 10 16 ----------------------------------------------------------------------------------- TOTAL $11,223 $10,167 $1,361 $1,195 $2,367 $2,001 $561 $552 - -------------------------------------------------===================================================================================
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF TOTAL REVENUES, NET ACCOUNTING CHANGES OF INTEREST EXPENSE INCOME TAXES (1)(2) -------------------------------------------------------------- SIX MONTHS ENDED JUNE 30, -------------------------------------------------------------- IN MILLIONS OF DOLLARS 2001 2000(3) 2001 2000(3) 2001 2000(3) - ------------------------------------------------------------------------------------------------------------------------------------ Global Consumer $14,699 $13,098 $1,656 $1,367 $2,809 $2,309 Global Corporate 6,109 5,401 801 737 1,432 1,271 Global Investment Management and Private Banking 1,092 985 111 102 191 169 Investment Activities 250 1,655 65 585 135 1,021 Corporate/Other 112 (126) (7) (228) (70) (358) -------------------------------------------------------------- TOTAL $22,262 $21,013 $2,626 $2,563 $4,497 $4,412 - ----------------------------------------------------------------------==============================================================
(1) Results in the 2001 second quarter and six-month periods reflect after-tax restructuring-related charges (credits) of $58 million and $70 million in Global Consumer, $42 million and $69 million in Global Corporate, respectively, $6 million in both periods in Global Investment Management and Private Banking, and ($1) million in both periods in Corporate/Other. The 2000 second quarter and six-month results reflect after-tax restructuring-related (credits) charges of ($10) million and ($6) million in Global Consumer, respectively, ($3) million in both periods in Global Corporate, and ($1) million in both periods in Global Investment Management and Private Banking. The 2000 second quarter and six-month results reflect after-tax restructuring-related charges (and after-tax housing finance unit charges in the 2000 six-month results only) of $17 million and $96 million in Corporate/Other, respectively. (2) Results in the 2001 second quarter and six-month periods include pretax provisions for benefits, claims, and credit losses in Global Consumer of $1.5 billion and $2.9 billion, in Global Corporate of $289 million and $556 million, and in Global Investment Management and Private Banking of $1 million and $3 million, respectively. The 2000 second quarter and six-month period results reflect pretax provisions for benefits, claims, and credit losses in Global Consumer of $1.2 billion and $2.5 billion, in Global Corporate of $240 million and $417 million, and in Global Investment Management and Private Banking of $3 million and $25 million, respectively. (3) Reclassified to conform to the current period's presentation. - -------------------------------------------------------------------------------- 35 5. SECURITIES
JUNE 30, December 31, IN MILLIONS OF DOLLARS 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Securities Available for Sale, at Fair Value $51,896 $51,531 Short-term and Other 437 927 ---------------------------------- Available for Sale and Short-term and Other $52,333 $52,458 ================================== Venture Capital, at Fair Value(1) $5,059 $5,204 - --------------------------------------------------------------------------------------------------==================================
(1) For the six months ended June 30, 2001, net gains on investments held by venture capital subsidiaries totaled $323 million, of which $722 million and $493 million represented gross unrealized gains and losses, respectively. For the six months ended June 30, 2000, net gains on investments held by venture capital subsidiaries totaled $1.59 billion, of which $1.50 billion and $274 million represented gross unrealized gains and losses, respectively. - --------------------------------------------------------------------------------
JUNE 30, 2001 December 31, 2000(1) ----------------------------------------------------------------------------------- GROSS GROSS AMORTIZED UNREALIZED UNREALIZED AMORTIZED IN MILLIONS OF DOLLARS COST GAINS LOSSES FAIR VALUE COST FAIR VALUE - ------------------------------------------------------------------------------------------------------------------------------------ SECURITIES AVAILABLE FOR SALE U.S. Treasury and Federal Agency $ 6,410 $ 75 $ 16 $ 6,469 $ 7,926 $ 7,950 State and Municipal 5,989 236 19 6,206 5,383 5,522 Foreign Government 25,761 200 150 25,811 24,463 24,446 U.S. Corporate 5,367 211 166 5,412 5,603 5,507 Other Debt Securities 3,697 46 22 3,721 3,489 3,491 Equity Securities(2) 4,381 128 232 4,277 4,638 4,615 ----------------------------------------------------------------------------------- $51,605 $896 $605 $51,896 $51,502 $51,531 - -------------------------------------------------=================================================================================== Securities Available for Sale Include -- Mortgage-Backed Securities $6,000 $88 $14 $6,074 $6,498 $6,368 - -------------------------------------------------===================================================================================
(1) At December 31, 2000, gross unrealized gains and losses on securities available for sale totaled $940 million and $911 million, respectively. (2) Includes non-marketable equity securities carried at cost, which are reported in both the amortized cost and fair value columns. - -------------------------------------------------------------------------------- 6. TRADING ACCOUNT ASSETS AND LIABILITIES
JUNE 30, Dec. 31, IN MILLIONS OF DOLLARS 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ TRADING ACCOUNT ASSETS U.S. Treasury and Federal Agency Securities $ 146 $ 721 Foreign Government, Corporate and Other Securities 14,414 15,043 Derivative and Foreign Exchange Contracts(1) 20,511 23,547 ---------------------------------- $35,071 $39,311 - --------------------------------------------------------------------------------------------------================================== TRADING ACCOUNT LIABILITIES Securities Sold, Not Yet Purchased $ 2,891 $ 3,915 Derivative and Foreign Exchange Contracts(1) 18,438 23,863 ---------------------------------- $21,329 $27,778 - --------------------------------------------------------------------------------------------------==================================
(1) Net of master netting agreements and securitization. - -------------------------------------------------------------------------------- 7. DERIVATIVES ACTIVITIES On January 1, 2001, Citicorp adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended (SFAS 133). These new rules changed the accounting treatment of derivative contracts (including foreign exchange contracts) that are employed to manage risk outside of Citicorp's trading activities, as well as certain derivative-like instruments embedded in other contracts. SFAS 133 requires that all derivatives be recorded on the balance sheet at their fair value. The treatment of changes in the fair value of derivatives depends on the character of the transaction, including whether it has been designated and qualifies as part of a hedging relationship, as discussed below. The cumulative effect of adopting SFAS 133 at January 1, 2001 was an after-tax charge of $33 million included in net income and an increase of $82 million included in other changes in stockholder's equity from nonowner sources. To qualify as a hedge, the hedge relationship is designated and formally documented at inception detailing the particular risk management objective and strategy for the hedge which includes the item and risk that is being hedged, the derivative that is being used, as well as how effectiveness is being assessed. A derivative must be highly effective in accomplishing the objective of offsetting either changes in fair value or cash flows for the risk being hedged. The effectiveness of these hedging relationships is evaluated on a retrospective and prospective basis using quantitative measures of correlation. If a hedge relationship is found to be 36 ineffective, it no longer qualifies as a hedge and any excess gains or losses attributable to such ineffectiveness, as well as subsequent changes in fair value, are recognized in other income. The foregoing criteria are applied on a decentralized basis, consistent with the level at which market risk is managed, but are subject to various limits and controls. The underlying asset, liability, firm commitment or forecasted transaction may be an individual item or a portfolio of similar items. For fair value hedges, in which derivatives hedge the fair value of assets and liabilities, changes in the fair value of derivatives are reflected in other income, together with changes in the fair value of the related hedged item. The net amount, representing hedge ineffectiveness, is reflected in current earnings. Citicorp's fair value hedges are primarily the hedges of fixed-rate long-term debt, loans and available-for-sale securities. During the 2001 second quarter and six months, the amount of hedge ineffectiveness recognized in other income related to fair value hedges was $54 million and $109 million, respectively. The amount of gains or losses on derivatives designated as fair value hedges that were excluded from the assessment of effectiveness during the 2001 second quarter and six months was $24 million and $71 million, respectively. For cash flow hedges, in which derivatives hedge the variability of cash flows related to floating rate assets, liabilities or forecasted transactions, the accounting treatment depends on the effectiveness of the hedge. To the extent these derivatives are effective in offsetting the variability of the hedged cash flows, changes in the derivatives' fair value will not be included in current earnings but are reported as other changes in stockholders' equity from nonowner sources. These changes in fair value will be included in earnings of future periods when earnings are also affected by the variability of the hedged cash flows. To the extent these derivatives are not effective, changes in their fair values are immediately included in other income. Citicorp's cash flow hedges primarily include hedges of floating rate credit card receivables and loans, rollovers of commercial paper and foreign currency denominated funding. Cash flow hedges also include hedges of certain forecasted transactions up to a maximum tenor of 30 years, although a substantial majority of the tenor is under 5 years. During the 2001 second quarter and six months, the amount of hedge ineffectiveness recognized in other income related to cash flow hedges was $6 million and $11 million, respectively. No amounts have been excluded from the assessment of effectiveness for derivatives designated as cash flow hedges. For net investment hedges, in which derivatives hedge the foreign currency exposure of a net investment in a foreign operation, the accounting treatment will similarly depend on the effectiveness of the hedge. The effective portion of the change in fair value of the derivative, including any forward premium or discount, is reflected in other changes in stockholders' equity from nonowner sources as part of the foreign currency translation adjustment. During the 2001 second quarter and six months, the amounts included in other changes from stockholder's equity from nonowner sources from these hedges were ($8) million and $163 million, respectively. Non-trading derivatives that are either hedging instruments that are carried at fair value or do not qualify as hedges under the new rules are also carried at fair value with changes in value included either as an element of the yield or return on the hedged item or in other income. For those hedge relationships that are terminated, hedge designations that are removed, or forecasted transactions that are no longer expected to occur, the hedge accounting treatment described in the paragraphs above is no longer applied. The end-user derivative is terminated or transferred to the trading account. For fair value hedges, any changes to the hedged item remain as part of the basis of the asset or liability and are ultimately reflected as an element of the yield. For cash flow hedges, any changes in fair value of the end-user derivative remain in other changes in stockholders' equity from nonowner sources and are included in earnings of future periods when earnings are also affected by the variability of the hedged cash flow. If the hedged relationship was discontinued or a forecasted transaction is not expected to occur when scheduled, any changes in fair value of the end-user derivative are immediately reflected in other income. The accumulated other changes in equity from nonowner sources from cash flow hedges for the 2001 six months can be summarized as follows (net of taxes):
IN MILLIONS OF DOLLARS SIX MONTHS ENDED JUNE 30, 2001 - ------------------------------------------------------------------------------------------------------------------------------------ BEGINNING BALANCE(1) $65 Net gains and (losses) from cash flow hedges (5) Net amounts reclassified to earnings (57) Discontinuation of cash flow hedge accounting (2) ------------------------------------------ ENDING BALANCE $ 1 - ------------------------------------------------------------------------------------------==========================================
(1) Results from the cumulative effect of accounting change for cash flow hedges. - -------------------------------------------------------------------------------- Additional information concerning Citicorp's derivative and foreign exchange products and activities, including a further description of accounting policies, and the credit and market risk management process is provided in the Managing Global Risk section in Citicorp's 2000 Form 10-K. 37 8. RESTRUCTURING-RELATED ITEMS
RESTRUCTURING INITIATIVES --------------------------------------------------------------------- 2ND QTR. 1ST Qtr. IN MILLIONS OF DOLLARS 2001 2001 2000 TOTAL - ------------------------------------------------------------------------------------------------------------------------------------ Restructuring Charges $146 $40 $576 $762 Acquisitions(1) -- -- 23 23 Utilization(2) (26) (21) (377) (424) --------------------------------------------------------------------- BALANCE AT JUNE 30, 2001 $120 $19 $222 $361 - ---------------------------------------------------------------=====================================================================
(1) Represents additions to restructuring liabilities arising from acquisitions. (2) Utilization amounts include translation effects on the restructuring reserve. - -------------------------------------------------------------------------------- During the second quarter of 2001, Citicorp recorded restructuring charges of $146 million, primarily related to the downsizing of various functions in the Global Corporate and Global Consumer businesses. These new initiatives are expected to be implemented over the next 12 months. The charge consisted of $114 million related to employee severance, $17 million related to asset impairment charges and $15 million related to exiting leasehold and other contractual obligations. The $114 million portion of the charge related to employee severance reflects the costs of eliminating approximately 2,000 positions. Approximately 950 of these positions relate to the United States. The 2001 second quarter restructuring utilization included $17 million of asset impairment charges as well as $9 million of severance and other exit costs (of which $1 million related to employee severance has been paid in cash and $8 million is legally obligated), together with translation effects. Through June 30, 2001, approximately 100 gross staff positions have been eliminated under these programs. During the first quarter of 2001, Citicorp recorded restructuring charges of $40 million, primarily consisting of the downsizing of certain front office and back office functions at the Corporate and Investment Bank in order to align its cost structure with current market conditions. These initiatives are expected to be implemented over the next year. The charge is all related to employee severance and reflects the cost of eliminating approximately 360 positions. Approximately 220 of these positions relate to the United States. The 2001 first quarter restructuring reserve utilization, all of which occurred in the 2001 second quarter, included $21 million of severance, of which $5 million was paid in cash and $16 million is legally obligated. Through June 30, 2001, approximately 100 gross staff positions have been eliminated under these programs, all during the second quarter. During 2000, Citicorp recorded restructuring charges of $576 million ($17 million of which occurred in the 2000 second quarter), primarily consisting of exit costs related to the acquisition of Associates. These initiatives are expected to be implemented this year. The charges included $238 million related to employee severance, $154 million related to exiting leasehold and other contractual obligations and $184 million of asset impairment charges. Of the $576 million charge, $474 million related to the acquisition of Associates (primarily in the Global Consumer business) includes the reconfiguration of certain branch operations, the exit from non-strategic businesses and from activities as mandated by Federal bank regulations and the consolidation and integration of Corporate and middle and back office functions. In the Global Consumer business, $51 million includes the reconfiguration of certain branch operations outside the U.S. and the downsizing and consolidation of certain back office functions in the U.S. Approximately $440 million of the $576 million charge related to operations in the United States. The $238 million portion of the charge related to employee severance reflects the costs of eliminating approximately 7,200 positions, including approximately 4,600 related to the acquisition of Associates and 700 in the Global Consumer business. Approximately 4,900 of these positions related to the United States. In 2000, a reserve for $23 million was recorded, $20 million of which related to the elimination of 1,600 non-U.S. positions of an acquired entity. The implementation of these restructuring initiatives also caused certain related premises and equipment assets to become redundant. The remaining depreciable lives of these assets were shortened, and accelerated depreciation charges (in addition to normal scheduled depreciation on these assets) are being recognized over these shortened lives, $22 million and $44 million of which were recorded in the 2001 second quarter and six-month periods, respectively, and $29 million and $49 million of which were recorded in the 2000 second quarter and six-month periods, respectively. The 2000 restructuring reserve utilization included $184 million of asset impairment charges and $193 million of severance and other exit costs (of which $106 million related to employee severance and $69 million related to leasehold and other exit costs have been paid in cash and of which $18 million is legally obligated), together with translation effects. Utilization of the 2000 restructuring reserve in the 2001 second quarter and six months was $50 million and $122 million, respectively. Through June 30, 2001, 38 approximately 3,100 gross staff positions have been eliminated under these programs, including approximately 600 in the 2001 second quarter. Changes in estimates are attributable to facts and circumstances arising subsequent to an original restructuring charge. During the 2000 second quarter, changes in estimates resulted in reductions of $42 million of reserves related to prior restructuring initiatives. Additional information about restructuring-related items, including the business segments affected, may be found in Citicorp's 2000 Form 10-K. 9. CONTINGENCIES In the ordinary course of business, Citicorp and its subsidiaries are defendants or co-defendants in various litigation matters incidental to and typical of the businesses in which they are engaged. In the opinion of the Company's management, the ultimate resolution of these legal proceedings would not be likely to have a material adverse effect on the results of the Company and its subsidiaries' operations, financial condition, or liquidity. 10. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS ASSOCIATES FIRST CAPITAL CORPORATION (ASSOCIATES) In connection with Citigroup's November 30, 2000 acquisition of Associates in which Associates became a wholly-owned subsidiary of Citicorp, Citicorp issued a full and unconditional guarantee of the outstanding long-term debt securities and commercial paper of Associates and Associates Corporation of North America, a subsidiary of Associates (ACONA). Associates maintains a combination of unutilized bilateral and syndicated credit facilities to support its short-term borrowings. These facilities, which have maturities ranging from 2001 to 2005, are all guaranteed by Citicorp. CITIFINANCIAL CREDIT COMPANY (CCC) On August 4, 1999, CCC, an indirect wholly-owned subsidiary of Citigroup, was contributed to and became a subsidiary of Citicorp Banking Corporation, a wholly-owned subsidiary of Citicorp. Citicorp issued a full and unconditional guarantee of the outstanding long-term debt securities and commercial paper of CCC. On August 10, 2001, 100% of the stock of CitiFinancial Credit Company was contributed to AFCC in exchange for 24.5% of the stock in AFCC, making CFCC a wholly-owned subsidiary of AFCC. CCC has five-year revolving credit facilities in the amount of $3.4 billion that expire in 2002. Citicorp's guarantee of various debt obligations of CCC includes those arising under these facilities. In connection with the facilities for both Associates and CCC, Citicorp is required to maintain a certain level of consolidated stockholder's equity (as defined in the agreement). At June 30, 2001, this requirement was exceeded by $33.6 billion. Citicorp has also guaranteed various other debt obligations of Associates and CCC. 39 CONDENSED CONSOLIDATING INCOME STATEMENTS (UNAUDITED)
THREE MONTHS ENDED JUNE 30, 2001 - ------------------------------------------------------------------------------------------------------------------------------------ CITICORP OTHER CITICORP PARENT ASSOCIATES SUBSIDIARIES AND CONSOLIDATING CITICORP IN MILLIONS OF DOLLARS COMPANY CCC ACONA CONSOLIDATED ELIMINATIONS(1) ADJUSTMENTS(2) CONSOLIDATED - ------------------------------------------------------------------------------------------------------------------------------------ REVENUE Dividends from subsidiary banks and bank holding companies $1,236 $ -- $ -- $ -- $ -- ($1,236) $ -- Interest from subsidiaries 730 -- -- -- (730) -- -- Interest on loans, including fees -- 754 3,092 3,082 5,876 (3,092) 9,712 Other interest revenue 10 66 85 82 1,773 (85) 1,931 Fees, commissions and other revenues 31 108 546 558 4,002 (546) 4,699 --------------------------------------------------------------------------------------------------- 2,007 928 3,723 3,722 10,921 (4,959) 16,342 --------------------------------------------------------------------------------------------------- EXPENSE Interest on other borrowed funds - third party 692 -- 108 71 (62) (108) 701 Interest on other borrowed funds - intercompany -- 137 296 164 (301) (296) -- Interest and fees paid to subsidiaries 37 -- -- -- (37) -- -- Interest on long-term debt - third party -- 85 554 563 691 (554) 1,339 Interest on long-term debt - intercompany -- 82 -- 255 (337) -- -- Interest on deposits -- 5 -- 4 3,070 -- 3,079 Benefits, claims, and credit losses -- 172 896 908 662 (896) 1,742 Other expense -- 218 1,021 1,117 4,404 (1,021) 5,739 --------------------------------------------------------------------------------------------------- 729 699 2,875 3,082 8,090 (2,875) 12,600 --------------------------------------------------------------------------------------------------- INCOME BEFORE TAXES, MINORITY INTEREST, CUMULATIVE EFFECT OF ACCOUNTING CHANGE, AND EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARIES 1,278 229 848 640 2,831 (2,084) 3,742 Income tax (benefit) (7) 82 306 236 1,050 (306) 1,361 Minority interest, net of income taxes -- -- -- -- 14 -- 14 Cumulative effect of accounting change -- -- (22) (111) -- 22 (111) Equity in undistributed income of subsidiaries 971 -- -- -- -- (971) -- --------------------------------------------------------------------------------------------------- NET INCOME $2,256 $ 147 $ 520 $ 293 $ 1,767 ($2,727) $ 2,256 - ---------------------------------===================================================================================================
(1) Includes all other subsidiaries of Citicorp and intercompany eliminations. (2) Includes Citicorp Parent Company elimination of distributed and undistributed income of subsidiaries and the elimination of ACONA, included in the Associates Consolidated column. - -------------------------------------------------------------------------------- 40 CONDENSED CONSOLIDATING INCOME STATEMENTS (UNAUDITED)
THREE MONTHS ENDED JUNE 30, 2000 - ------------------------------------------------------------------------------------------------------------------------------------ CITICORP OTHER CITICORP PARENT ASSOCIATES SUBSIDIARIES AND CONSOLIDATING CITICORP IN MILLIONS OF DOLLARS COMPANY CCC ACONA CONSOLIDATED ELIMINATIONS(1) ADJUSTMENTS(2) CONSOLIDATED - ------------------------------------------------------------------------------------------------------------------------------------ REVENUE Dividends from subsidiary banks and bank holding companies $ -- $ -- $ -- $ -- $ -- $ -- $ -- Dividends from other subsidiaries 48 -- -- -- -- (48) -- Interest from subsidiaries 322 -- -- -- (322) -- -- Interest on loans, including fees -- 634 2,549 2,565 5,871 (2,549) 9,070 Other interest revenue -- 39 84 85 1,550 (84) 1,674 Fees, commissions and other revenues 115 107 798 715 3,828 (798) 4,765 --------------------------------------------------------------------------------------------------- 485 780 3,431 3,365 10,927 (3,479) 15,509 --------------------------------------------------------------------------------------------------- EXPENSE Interest on other borrowed funds - third party 418 -- 353 404 222 (353) 1,044 Interest on other borrowed funds - intercompany -- 162 -- -- (162) -- -- Interest and fees paid to subsidiaries 42 -- -- -- (42) -- -- Interest on long-term debt - third party -- 93 621 637 363 (621) 1,093 Interest on long-term debt - intercompany -- 46 -- -- (46) -- -- Interest on deposits -- 1 -- 7 3,197 -- 3,205 Benefits, claims, and credit losses -- 130 745 735 616 (745) 1,481 Other expense 25 194 1,016 1,048 4,214 (1,016) 5,481 --------------------------------------------------------------------------------------------------- 485 626 2,735 2,831 8,362 (2,735) 12,304 --------------------------------------------------------------------------------------------------- INCOME BEFORE TAXES, MINORITY INTEREST, AND EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARIES -- 154 696 534 2,565 (744) 3,205 Income tax (benefit) - current (6) 56 254 199 946 (254) 1,195 Minority interest, net of income taxes -- -- -- -- 9 -- 9 Equity in undistributed income of subsidiaries 1,995 -- -- -- -- (1,995) -- --------------------------------------------------------------------------------------------------- NET INCOME $2,001 $ 98 $ 442 $ 335 $ 1,610 ($2,485) $ 2,001 - ---------------------------------===================================================================================================
(1) Includes all other subsidiaries of Citicorp and intercompany eliminations. (2) Includes Citicorp Parent Company elimination of distributed and undistributed income of subsidiaries and the elimination of ACONA, included in the Associates Consolidated column. - -------------------------------------------------------------------------------- 41 CONDENSED CONSOLIDATING INCOME STATEMENTS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2001 - ------------------------------------------------------------------------------------------------------------------------------------ CITICORP OTHER CITICORP PARENT ASSOCIATES SUBSIDIARIES AND CONSOLIDATING CITICORP IN MILLIONS OF DOLLARS COMPANY CCC ACONA CONSOLIDATED ELIMINATIONS(1) ADJUSTMENTS(2) CONSOLIDATED - ------------------------------------------------------------------------------------------------------------------------------------ REVENUE Dividends from subsidiary banks and bank holding companies $2,937 $ -- $ -- $ -- $ -- ($2,937) $ -- Interest from subsidiaries 1,387 -- -- -- (1,387) -- -- Interest on loans, including fees -- 1,488 6,105 6,083 12,108 (6,105) 19,679 Other interest revenue 10 138 183 184 3,662 (183) 3,994 Fees, commissions and other revenues 62 213 1,130 1,176 8,070 (1,130) 9,521 --------------------------------------------------------------------------------------------------- 4,396 1,839 7,418 7,443 22,453 (10,355) 33,194 --------------------------------------------------------------------------------------------------- EXPENSE Interest on other borrowed funds - third party 1,309 -- 331 280 87 (331) 1,676 Interest on other borrowed funds - intercompany -- 322 526 227 (549) (526) -- Interest and fees paid to subsidiaries 74 -- -- -- (74) -- -- Interest on long-term debt - third party -- 172 1,186 1,203 1,312 (1,186) 2,687 Interest on long-term debt - intercompany -- 157 -- 481 (638) -- -- Interest on deposits -- 8 -- 9 6,552 -- 6,569 Benefits, claims, and credit losses -- 337 1,750 1,788 1,331 (1,750) 3,456 Other expense 46 438 2,342 2,270 8,907 (2,342) 11,661 --------------------------------------------------------------------------------------------------- 1,429 1,434 6,135 6,258 16,928 (6,135) 26,049 --------------------------------------------------------------------------------------------------- INCOME BEFORE TAXES, MINORITY INTEREST, CUMULATIVE EFFECT OF ACCOUNTING CHANGES, AND EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARIES 2,967 405 1,283 1,185 5,525 (4,220) 7,145 Income taxes 7 147 472 437 2,035 (472) 2,626 Minority interest, net of income taxes -- -- -- -- 22 -- 22 Cumulative effect of accounting changes -- -- (36) (126) (18) 36 (144) Equity in undistributed income of subsidiaries 1,393 -- -- -- -- (1,393) -- --------------------------------------------------------------------------------------------------- NET INCOME $4,353 $ 258 $ 775 $ 622 $ 3,450 ($5,105) $ 4,353 - ---------------------------------===================================================================================================
(1) Includes all other subsidiaries of Citicorp and intercompany eliminations. (2) Includes Citicorp Parent Company elimination of distributed and undistributed income of subsidiaries and the elimination of ACONA, included in the Associates Consolidated column. - -------------------------------------------------------------------------------- 42 CONDENSED CONSOLIDATING INCOME STATEMENTS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2000 - ------------------------------------------------------------------------------------------------------------------------------------ CITICORP OTHER CITICORP PARENT ASSOCIATES SUBSIDIARIES AND CONSOLIDATING CITICORP IN MILLIONS OF DOLLARS COMPANY CCC ACONA CONSOLIDATED ELIMINATIONS(1) ADJUSTMENTS(2) CONSOLIDATED - ------------------------------------------------------------------------------------------------------------------------------------ REVENUE Dividends from subsidiary banks and bank holding companies $ 700 $ -- $ -- $ -- $ -- ($ 700) $ -- Dividends from other subsidiaries 120 -- -- -- -- (120) -- Interest from subsidiaries 595 -- -- -- (595) -- -- Interest on loans, including fees -- 1,246 4,961 4,992 11,227 (4,961) 17,465 Other interest revenue -- 66 199 201 3,009 (199) 3,276 Fees, commissions and other revenues 224 205 1,463 1,281 8,626 (1,463) 10,336 --------------------------------------------------------------------------------------------------- 1,639 1,517 6,623 6,474 22,267 (7,443) 31,077 --------------------------------------------------------------------------------------------------- EXPENSE Interest on other borrowed funds - third party 744 -- 643 739 379 (643) 1,862 Interest on other borrowed funds - intercompany -- 309 -- -- (309) -- -- Interest and fees paid to subsidiaries 74 -- -- -- (74) -- -- Interest on long-term debt - third party -- 193 1,219 1,256 738 (1,219) 2,187 Interest on long-term debt - intercompany -- 78 -- -- (78) -- -- Interest on deposits -- 2 -- 14 5,999 -- 6,015 Benefits, claims, and credit losses -- 238 1,381 1,418 1,294 (1,381) 2,950 Other expense 50 388 1,989 2,089 8,547 (1,989) 11,074 --------------------------------------------------------------------------------------------------- 868 1,208 5,232 5,516 16,496 (5,232) 24,088 --------------------------------------------------------------------------------------------------- INCOME BEFORE TAXES, MINORITY INTEREST, AND EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARIES 771 309 1,391 958 5,771 (2,211) 6,989 Income tax (benefit) (5) 113 510 356 2,099 (510) 2,563 Minority interest, net of income taxes -- -- -- -- 14 -- 14 Equity in undistributed income of subsidiaries 3,636 -- -- -- -- (3,636) -- --------------------------------------------------------------------------------------------------- NET INCOME $4,412 $ 196 $ 881 $ 602 $ 3,658 ($5,337) $ 4,412 - ---------------------------------===================================================================================================
(1) Includes all other subsidiaries of Citicorp and intercompany eliminations. (2) Includes Citicorp Parent Company elimination of distributed and undistributed income of subsidiaries and the elimination of ACONA, included in the Associates Consolidated column. - -------------------------------------------------------------------------------- 43 CONDENSED CONSOLIDATING BALANCE SHEETS (UNAUDITED)
JUNE 30, 2001 - ------------------------------------------------------------------------------------------------------------------------------------ CITICORP OTHER CITICORP PARENT ASSOCIATES SUBSIDIARIES AND CONSOLIDATING CITICORP IN MILLIONS OF DOLLARS COMPANY CCC ACONA CONSOLIDATED ELIMINATIONS(1) ADJUSTMENTS(2) CONSOLIDATED - ------------------------------------------------------------------------------------------------------------------------------------ ASSETS Cash and due from banks - third party $ 3 $ 197 ($ 209) $ 303 $ 10,555 $ 209 $ 11,058 Cash and due from banks - intercompany 8 56 -- -- (64) -- -- Deposits at interest with banks - third party 4 -- 97 97 15,089 (97) 15,190 Deposits at interest with banks - intercompany 4,173 -- 10 -- (4,173) (10) -- Securities 347 1,832 4,155 4,912 50,301 (4,155) 57,392 Loans, net of unearned income 1,669 24,511 76,491 78,114 264,184 (76,491) 368,478 Allowance for credit losses -- (463) (2,214) (2,370) (6,084) 2,214 (8,917) --------------------------------------------------------------------------------------------------- Loans, net 1,669 24,048 74,277 75,744 258,100 (74,277) 359,561 Advances to subsidiaries 49,947 -- 5,378 -- (49,947) (5,378) -- Investments in subsidiaries 44,361 -- -- -- -- (44,361) -- Other assets - third party 198 2,084 11,858 13,867 101,253 (11,858) 117,402 Other assets - intercompany 264 -- 12,245 -- (264) (12,245) -- --------------------------------------------------------------------------------------------------- Total $100,974 $28,217 $107,811 $94,923 $380,850 ($152,172) $560,603 =================================================================================================== LIABILITIES AND STOCKHOLDER'S EQUITY Deposits $ -- $ 540 $ 8 $ 234 $314,793 ($ 8) $315,567 Purchased funds and other borrowings - third party 19,697 31 14,358 14,360 19,490 (14,358) 53,578 Purchased funds and other borrowings - intercompany -- 9,193 21,395 14,187 (23,380) (21,395) -- Long-term debt - third party 30,700 4,750 37,494 37,850 13,283 (37,494) 86,583 Long-term debt - intercompany -- 8,235 -- 17,007 (25,242) -- -- Advances from subsidiaries 1,231 -- -- -- (1,231) -- -- Other liabilities - third party 776 2,010 5,232 4,805 48,714 (5,232) 56,305 Other liabilities - intercompany -- 1,670 17,139 5 (1,675) (17,139) -- Stockholder's equity 48,570 1,788 12,185 6,475 36,098 (56,546) 48,570 =================================================================================================== Total $100,974 $28,217 $107,811 $94,923 $380,850 ($152,172) $560,603 - ---------------------------------===================================================================================================
(1) Includes all other subsidiaries of Citicorp and intercompany eliminations. (2) Includes Citicorp Parent Company elimination of investments in subsidiaries and the elimination of ACONA, included in the Associates Consolidated column. - -------------------------------------------------------------------------------- 44 CONDENSED CONSOLIDATING BALANCE SHEETS (UNAUDITED)
DECEMBER 31, 2000 - ------------------------------------------------------------------------------------------------------------------------------------ CITICORP OTHER CITICORP PARENT ASSOCIATES SUBSIDIARIES AND CONSOLIDATING CITICORP IN MILLIONS OF DOLLARS COMPANY CCC ACONA CONSOLIDATED ELIMINATIONS(1) ADJUSTMENTS(2) CONSOLIDATED - ------------------------------------------------------------------------------------------------------------------------------------ ASSETS Cash and due from banks - third party $ 3 $ 198 $ 1,403 $ 1,641 $ 9,816 ($ 1,403) $ 11,658 Cash and due from banks - intercompany 25 34 -- -- (59) -- -- Deposits at interest with banks - third party 76 3 254 254 15,827 (254) 16,160 Deposits at interest with banks - intercompany 1,214 -- -- -- (1,214) -- -- Securities 768 1,685 4,828 5,490 49,719 (4,828) 57,662 Loans, net of unearned income 1,868 21,089 75,584 77,408 266,223 (75,584) 366,588 Allowance for credit losses -- (448) (2,322) (2,367) (6,146) 2,322 (8,961) --------------------------------------------------------------------------------------------------- Loans, net 1,868 20,641 73,262 75,041 260,077 (73,262) 357,627 Advances to subsidiaries 29,205 -- 7,317 -- (29,205) (7,317) -- Investments in subsidiaries 42,855 -- -- -- -- (42,855) -- Other assets 630 3,386 12,272 14,312 90,172 (12,272) 108,500 --------------------------------------------------------------------------------------------------- Total $76,644 $25,947 $99,336 $96,738 $395,133 ($142,191) $551,607 =================================================================================================== LIABILITIES AND STOCKHOLDER'S EQUITY Deposits $ -- $ 247 $ 1 $ 331 $302,137 ($ 1) $302,715 Purchased funds and other borrowings - third party 9,022 54 31,587 31,624 20,134 (31,587) 60,834 Purchased funds and other borrowings - intercompany -- 13,416 -- -- (13,416) -- -- Long-term debt - third party 18,805 4,950 42,832 43,492 13,088 (42,832) 80,335 Long-term debt - intercompany -- 3,985 -- 8,250 (12,235) -- -- Advances from subsidiaries 375 -- -- -- (375) -- -- Other liabilities - third party 577 1,609 6,781 7,095 50,577 (6,781) 59,858 Other liabilities - intercompany -- 150 6,515 -- (150) (6,515) -- Stockholder's equity 47,865 1,536 11,620 5,946 35,373 (54,475) 47,865 =================================================================================================== Total $76,644 $25,947 $99,336 $96,738 $395,133 ($142,191) $551,607 - ---------------------------------===================================================================================================
(1) Includes all other subsidiaries of Citicorp and intercompany eliminations. (2) Includes Citicorp Parent Company elimination of investments in subsidiaries and the elimination of ACONA, included in the Associates Consolidated column. - -------------------------------------------------------------------------------- 45 CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2001 - ------------------------------------------------------------------------------------------------------------------------------------ CITICORP OTHER CITICORP PARENT ASSOCIATES SUBSIDIARIES AND CONSOLIDATING CITICORP IN MILLIONS OF DOLLARS COMPANY CCC ACONA CONSOLIDATED ELIMINATIONS(1) ADJUSTMENTS(2) CONSOLIDATED - ------------------------------------------------------------------------------------------------------------------------------------ NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 2,599 $ 1,764 $ 2,077 $ 669 ($ 2,247) ($ 2,077) $ 2,785 - ------------------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM INVESTING ACTIVITIES Securities - available for sale and short-term and other Purchases (3,957) (623) (1,245) (1,285) (39,701) 1,245 (45,566) Proceeds from sales 4,378 484 1,285 1,290 26,164 (1,285) 32,316 Maturities -- -- 231 231 11,315 (231) 11,546 Changes in investments and advances - intercompany (23,111) -- -- -- 23,111 -- -- Net increase in loans -- (2,198) (3,665) (3,511) (11,703) 3,665 (17,412) Proceeds from sales of loans -- -- -- -- 12,550 -- 12,550 Other investing activities (191) (8) (180) 238 (6,293) 180 (6,254) --------------------------------------------------------------------------------------------------- NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (22,881) (2,345) (3,574) (3,037) 15,443 3,574 (12,820) - ------------------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM FINANCING ACTIVITIES Net increase in deposits -- 293 7 (97) 12,656 (7) 12,852 Net change in purchased funds and other borrowings - third party 10,675 (23) (16,673) (16,708) (760) 16,673 (6,816) Net change in purchased funds, other borrowings and advances - intercompany 1,355 (3,718) 21,395 14,187 (11,824) (21,395) -- Proceeds from issuance of long-term debt - third party 13,500 -- -- -- 2,267 -- 15,767 Repayment of long-term debt - third party (1,626) (200) (4,811) (5,071) (1,512) 4,811 (8,409) Proceeds from issuance of long-term debt - intercompany -- 4,875 -- 8,752 (13,627) -- -- Repayment of long-term debt - intercompany -- (625) -- -- 625 -- -- Dividends paid (3,639) -- -- -- -- -- (3,639) --------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 20,265 602 (82) 1,063 (12,175) 82 9,755 - ------------------------------------------------------------------------------------------------------------------------------------ EFFECT OF EXCHANGE RATE CHANGES ON CASH AND DUE FROM BANKS -- -- (33) (33) (287) 33 (320) --------------------------------------------------------------------------------------------------- Net (decrease) increase in cash and due from banks (17) 21 (1,612) (1,338) 734 1,612 (600) Cash and due from banks at beginning of period 28 232 1,403 1,641 9,757 (1,403) 11,658 --------------------------------------------------------------------------------------------------- CASH AND DUE FROM BANKS AT END OF PERIOD $ 11 $ 253 ($ 209) $ 303 $10,491 $ 209 $11,058 - ------------------------------------------------------------------------------------------------------------------------------------ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for: Interest $ 608 $ 732 $ 2,029 $ 2,200 $ 6,694 ($ 2,029) $10,234 Income taxes 998 117 690 690 301 (690) 2,106 NON-CASH INVESTING ACTIVITIES: Transfers to repossessed assets -- 82 145 145 44 (145) 271 - ---------------------------------===================================================================================================
(1) Includes all other subsidiaries of Citicorp and intercompany eliminations. (2) Includes Citicorp Parent Company elimination of distributed and undistributed income of subsidiaries and the elimination of ACONA, included in the Associates Consolidated column. - -------------------------------------------------------------------------------- 46 CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2000 - ------------------------------------------------------------------------------------------------------------------------------------ CITICORP OTHER CITICORP PARENT ASSOCIATES SUBSIDIARIES AND CONSOLIDATING CITICORP IN MILLIONS OF DOLLARS COMPANY CCC ACONA CONSOLIDATED ELIMINATIONS (1) ADJUSTMENTS (2) CONSOLIDATED - ------------------------------------------------------------------------------------------------------------------------------------ NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 124 $ 642 $ 15 $ 940 ($ 9,026) ($ 15) ($7,320) - ------------------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM INVESTING ACTIVITIES Securities - available for sale and short-term and other Purchases (184) (454) (671) (671) (26,156) 671 (27,465) Proceeds from sales 1,134 395 860 860 10,646 (860) 13,035 Maturities -- -- 211 211 15,854 (211) 16,065 Changes in investments and advances - intercompany (3,887) -- -- -- 3,887 -- -- Net (increase) decrease in loans (1,692) (2,005) (7,208) (7,528) (35,556) 7,208 (46,781) Proceeds from sales of loans -- -- 2,328 2,328 15,383 (2,328) 17,711 Business acquisitions -- -- -- (195) (1,959) -- (2,154) Other investing activities -- (26) (3,088) (50) (217) 3,088 (293) --------------------------------------------------------------------------------------------------- NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (4,629) (2,090) (7,568) (5,045) (18,118) 7,568 (29,882) - ------------------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM FINANCING ACTIVITIES Net (decrease) increase in deposits -- (305) 17 (101) 25,540 (17) 25,134 Net change in purchased funds and other borrowings - third party 4,421 (7) 4,167 3,698 2,351 (4,167) 10,463 Net change in purchased funds, other borrowings and advances - intercompany 1,022 1,096 -- -- (2,118) -- -- Proceeds from issuance of long-term debt - third party 1,200 -- 7,798 8,457 418 (7,798) 10,072 Repayment of long-term debt - third party (2,100) (550) (6,999) (7,492) 285 6,999 (9,857) Proceeds from issuance of long-term debt - intercompany -- 1,200 -- -- (1,200) -- -- Dividends paid (1,000) -- (47) (92) -- 47 (1,092) Contributions from parent company 1,100 -- 2,502 -- -- (2,502) 1,100 --------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 4,643 1,434 7,438 4,470 25,273 (7,438) 35,820 - ------------------------------------------------------------------------------------------------------------------------------------ EFFECT OF EXCHANGE RATE CHANGES ON CASH AND DUE FROM BANKS -- -- (4) (4) (280) 4 (284) --------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and due from banks 138 (14) (119) (361) (2,151) 119 (1,666) Cash and due from banks at beginning of period 107 318 604 492 10,960 (604) 11,877 --------------------------------------------------------------------------------------------------- CASH AND DUE FROM BANKS AT END OF PERIOD $ 245 $ 304 $ 485 $ 853 $ 8,809 ($ 485) $10,211 - ------------------------------------------------------------------------------------------------------------------------------------ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for: Interest $ 542 $ 637 $1,788 $ 1,981 $ 5,954 ($1,788) $ 9,114 Income taxes 1,086 108 329 329 588 (329) 2,111 NON-CASH INVESTING ACTIVITIES: Transfers to repossessed assets -- 65 114 114 90 (114) 269 - ---------------------------------===================================================================================================
(1) Includes all other subsidiaries of Citicorp and intercompany eliminations. (2) Includes Citicorp Parent Company elimination of distributed and undistributed income of subsidiaries and the elimination of ACONA, included in the Associates Consolidated column. - -------------------------------------------------------------------------------- 47 - -------------------------------------------------------------------------------- FINANCIAL DATA SUPPLEMENT - -------------------------------------------------------------------------------- CITICORP AND SUBSIDIARIES AVERAGE BALANCES AND INTEREST RATES, TAXABLE EQUIVALENT BASIS--QUARTERLY(1)(2)(3)
AVERAGE VOLUME INTEREST REVENUE/EXPENSE % AVERAGE RATE -------------------------------------------------------------------------------------- 2ND 1ST 2ND 2ND 1ST 2ND 2ND 1ST 2ND QTR. QTR. QTR. QTR. QTR. QTR. QTR. QTR. QTR. IN MILLIONS OF DOLLARS 2001 2001 2000 2001 2001 2000 2001 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ LOANS(NET OF UNEARNED INCOME)(4) Consumer loans In U.S. offices $147,189 $ 146,633 $128,618 $ 4,251 $ 4,319 $ 3,791 11.58 11.95 11.85 In offices outside the U.S.(5) 76,643 77,790 73,858 2,472 2,490 2,379 12.94 12.98 12.95 --------------------------------------------------------------- Total consumer loans 223,832 224,423 202,476 6,723 6,809 6,170 12.05 12.30 12.26 --------------------------------------------------------------- Commercial loans In U.S. offices Commercial and industrial 38,598 38,237 34,052 771 772 708 8.01 8.19 8.36 Lease financing 13,452 13,667 11,171 300 318 235 8.95 9.44 8.46 Mortgage and real estate 776 981 916 6 18 21 3.10 7.44 9.22 In offices outside the U.S.(5) 87,799 85,147 78,649 1,913 2,050 1,937 8.74 9.76 9.91 --------------------------------------------------------------- Total commercial loans 140,625 138,032 124,788 2,990 3,158 2,901 8.53 9.28 9.35 --------------------------------------------------------------- Total loans 364,457 362,455 327,264 9,713 9,967 9,071 10.69 11.15 11.15 --------------------------------------------------------------- FEDERAL FUNDS SOLD AND RESALE AGREEMENTS In U.S. offices 5,828 6,666 2,706 66 93 41 4.54 5.66 6.09 In offices outside the U.S.(5) 3,291 2,234 2,792 34 38 58 4.14 6.90 8.36 --------------------------------------------------------------- Total 9,119 8,900 5,498 100 131 99 4.40 5.97 7.24 --------------------------------------------------------------- SECURITIES, AT FAIR VALUE In U.S. offices Taxable 20,175 21,603 21,776 209 232 231 4.16 4.36 4.27 Exempt from U.S. income tax 5,995 5,874 4,927 91 103 69 6.09 7.11 5.63 In offices outside the U.S.(5) 30,835 31,268 29,558 606 651 564 7.88 8.44 7.67 --------------------------------------------------------------- Total 57,005 58,745 56,261 906 986 864 6.37 6.81 6.18 --------------------------------------------------------------- TRADING ACCOUNT ASSETS(6) In U.S. offices 3,505 4,619 4,262 55 61 56 6.29 5.36 5.28 In offices outside the U.S.(5) 10,605 11,419 10,056 161 175 200 6.09 6.22 8.00 --------------------------------------------------------------- Total 14,110 16,038 14,318 216 236 256 6.14 5.97 7.19 --------------------------------------------------------------- LOANS HELD FOR SALE, IN U.S. OFFICES 16,513 13,386 8,165 439 392 189 10.66 11.88 9.31 DEPOSITS AT INTEREST WITH BANKS(5) 16,420 17,568 12,443 290 353 276 7.08 8.15 8.92 --------------------------------------------------------------- Total interest-earning assets 477,624 477,092 423,949 $11,664 $12,065 $10,755 9.80 10.26 10.20 =================================================== Non-interest-earning assets(6) 75,429 75,328 70,809 ----------------------------------- TOTAL ASSETS $553,053 $552,420 $494,758 - ----------------------------------------------===================================--------------------------------------------------- DEPOSITS In U.S. offices Savings deposits(7) $ 65,008 $ 48,481 $ 36,530 $ 505 $ 409 $ 286 3.12 3.42 3.15 Other time deposits 20,191 20,590 16,296 223 301 233 4.43 5.93 5.75 In offices outside the U.S.(5) 195,457 202,179 188,323 2,351 2,780 2,686 4.82 5.58 5.74 --------------------------------------------------------------- Total 280,656 271,250 241,149 3,079 3,490 3,205 4.40 5.22 5.35 --------------------------------------------------------------- TRADING ACCOUNT LIABILITIES(6) In U.S. offices 1,828 2,931 1,389 7 10 7 1.54 1.38 2.03 In offices outside the U.S.(5) 856 1,444 1,512 3 4 7 1.41 1.12 1.86 --------------------------------------------------------------- Total 2,684 4,375 2,901 10 14 14 1.49 1.30 1.94 --------------------------------------------------------------- PURCHASED FUNDS AND OTHER BORROWINGS In U.S. offices 39,454 44,706 50,363 355 546 689 3.61 4.95 5.50 In offices outside the U.S.(5) 13,545 14,043 11,327 336 415 341 9.95 11.99 12.11 --------------------------------------------------------------- Total 52,999 58,749 61,690 691 961 1,030 5.23 6.63 6.72 --------------------------------------------------------------- LONG-TERM DEBT In U.S. offices 77,284 73,531 58,322 1,204 1,181 935 6.25 6.51 6.45 In offices outside the U.S.(5) 8,886 9,849 9,784 135 167 158 6.09 6.88 6.50 --------------------------------------------------------------- Total 86,170 83,380 68,106 1,339 1,348 1,093 6.23 6.56 6.45 --------------------------------------------------------------- Total interest-bearing liabilities 422,509 417,754 373,846 $5,119 $5,813 $5,342 4.86 5.64 5.75 =================================================== Demand deposits in U.S. offices 6,799 9,040 10,559 Other non-interest-bearing liabilities(6) 75,280 76,924 72,461 Total stockholder's equity 48,465 48,702 37,892 ----------------------------------- TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $553,053 $552,420 $494,758 - ----------------------------------------------===================================--------------------------------------------------- NET INTEREST REVENUE AS A PERCENTAGE OF AVERAGE INTEREST-EARNING ASSETS In U.S. offices(8) $252,168 $251,761 $216,631 $3,712 $3,422 $2,797 5.90 5.51 5.19 In offices outside the U.S.(8) 225,456 225,331 207,318 2,833 2,830 2,616 5.04 5.09 5.08 --------------------------------------------------------------- TOTAL $477,624 $477,092 $423,949 $6,545 $6,252 $5,413 5.50 5.31 5.14 - ----------------------------------------------======================================================================================
(1) The taxable equivalent adjustment is based on the U.S. federal statutory tax rate of 35%. (2) Interest rates and amounts include the effects of risk management activities associated with the respective asset and liability categories. See Note 7 of Notes to Consolidated Financial Statements. (3) Monthly or quarterly averages have been used by certain subsidiaries, where daily averages are unavailable. (4) Includes cash-basis loans. (5) Average rates reflect prevailing local interest rates including inflationary effects and monetary correction in certain countries. (6) The fair value carrying amounts of derivative and foreign exchange contracts are reported in non-interest-earning assets and other non-interest-bearing liabilities. (7) Savings deposits consist of Insured Money Market Rate accounts, NOW accounts, and other savings deposits. (8) Includes allocations for capital and funding costs based on the location of the asset. - -------------------------------------------------------------------------------- 48 AVERAGE BALANCES AND INTEREST RATES, TAXABLE EQUIVALENT BASIS - SIX MONTHS(1)(2) CITICORP AND SUBSIDIARIES
AVERAGE VOLUME INTEREST REVENUE/EXPENSE % AVERAGE RATE ----------------------------------------------------------------------------------- SIX MONTHS SIX Months SIX MONTHS SIX Months SIX MONTHS SIX Months IN MILLIONS OF DOLLARS 2001 2000 2001 2000 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ LOANS(NET OF UNEARNED INCOME)(3) Consumer loans In U.S. offices $146,911 $124,808 $ 8,570 $ 7,282 11.76 11.73 In offices outside the U.S.(4) 77,217 73,440 4,962 4,703 12.96 12.88 -------------------------------------------------------- Total consumer loans 224,128 198,248 13,532 11,985 12.18 12.16 -------------------------------------------------------- Commercial loans In U.S. offices Commercial and industrial 38,417 32,111 1,543 1,333 8.10 8.35 Mortgage and real estate 13,559 10,241 618 423 9.19 8.31 Lease financing 879 919 24 39 5.51 8.53 In offices outside the U.S.(4) 86,473 76,842 3,963 3,687 9.24 9.65 -------------------------------------------------------- Total commercial loans 139,328 120,113 6,148 5,482 8.90 9.18 -------------------------------------------------------- Total loans 363,456 318,361 19,680 17,467 10.92 11.03 -------------------------------------------------------- FEDERAL FUNDS SOLD AND RESALE AGREEMENTS In U.S. offices 6,247 2,453 159 69 5.13 5.66 In offices outside the U.S.(4) 2,763 2,664 72 102 5.25 7.70 -------------------------------------------------------- Total 9,010 5,117 231 171 5.17 6.72 -------------------------------------------------------- SECURITIES, AT FAIR VALUE In U.S. offices Taxable 20,889 20,613 441 499 4.26 4.87 Exempt from U.S. income tax 5,934 4,836 194 141 6.59 5.86 In offices outside the U.S.(4) 31,052 30,129 1,257 1,174 8.16 7.84 -------------------------------------------------------- Total 57,875 55,578 1,892 1,814 6.59 6.56 -------------------------------------------------------- TRADING ACCOUNT ASSETS(5) In U.S. offices 4,062 3,651 116 107 5.76 5.89 In offices outside the U.S.(4) 11,012 9,618 336 363 6.15 7.59 -------------------------------------------------------- Total 15,074 13,269 452 470 6.05 7.12 -------------------------------------------------------- LOANS HELD FOR SALE, IN U.S. OFFICES 14,949 6,991 831 327 11.21 9.41 DEPOSITS AT INTEREST WITH BANKS(4) 16,994 12,044 643 532 7.63 8.88 -------------------------------------------------------- Total interest-earning assets 477,358 411,360 $23,729 $20,781 10.02 10.16 ======================================================= Non-interest-earning assets(5) 75,379 69,007 ---------------------------- TOTAL ASSETS $552,737 $480,367 - -------------------------------------------------============================------------------------------------------------------- DEPOSITS In U.S. offices Savings deposits(6) $ 56,744 $ 35,752 $ 914 $ 555 3.25 3.12 Other time deposits 20,391 15,032 524 390 5.18 5.22 In offices outside the U.S.(4) 198,818 184,938 5,131 5,070 5.20 5.51 -------------------------------------------------------- Total 275,953 235,722 6,569 6,015 4.80 5.13 -------------------------------------------------------- TRADING ACCOUNT LIABILITIES(5) In U.S. offices 2,380 1,694 17 19 1.44 2.26 In offices outside the U.S.(4) 1,150 1,460 7 14 1.23 1.93 -------------------------------------------------------- Total 3,530 3,154 24 33 1.37 2.10 -------------------------------------------------------- PURCHASED FUNDS AND OTHER BORROWINGS In U.S. offices 42,080 45,101 901 1,163 4.32 5.19 In offices outside the U.S.(4) 13,794 11,281 751 666 10.98 11.87 -------------------------------------------------------- Total 55,874 56,382 1,652 1,829 5.96 6.52 -------------------------------------------------------- LONG-TERM DEBT In U.S. offices 75,407 57,638 2,385 1,852 6.38 6.46 In offices outside the U.S.(4) 9,368 9,827 302 335 6.50 6.86 -------------------------------------------------------- Total 84,775 67,465 2,687 2,187 6.39 6.52 -------------------------------------------------------- Total interest-bearing liabilities 420,132 362,723 $10,932 $10,064 5.25 5.58 ======================================================= Demand deposits in U.S. offices 7,919 10,199 Other non-interest-bearing liabilities(5) 76,102 70,151 Total stockholder's equity 48,584 37,294 ---------------------------- TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $552,737 $480,367 - -------------------------------------------------============================------------------------------------------------------- NET INTEREST REVENUE AS A PERCENTAGE OF AVERAGE INTEREST-EARNING ASSETS In U.S. offices(7) $251,964 $206,597 $ 7,134 $ 5,525 5.71 5.38 In offices outside the U.S.(7) 225,394 204,763 5,663 5,192 5.07 5.10 -------------------------------------------------------- TOTAL $477,358 $411,360 $12,797 $10,717 5.41 5.24 - -------------------------------------------------===================================================================================
(1) The taxable equivalent adjustment is based on the U.S. federal statutory tax rate of 35%. (2) Interest rates and amounts include the effects of risk management activities associated with the respective asset and liability categories. See Note 7 of Notes to Consolidated Financial Statements. (3) Includes cash-basis loans. (4) Average rates reflect prevailing local interest rates including inflationary effects and monetary correction in certain countries. (5) The fair value carrying amounts of derivative and foreign exchange contracts are reported in non-interest-earning assets and other non-interest-bearing liabilities. (6) Savings deposits consist of Insured Money Market Rate accounts, NOW accounts, and other savings deposits. (7) Includes allocations for capital and funding costs based on the location of the asset. - -------------------------------------------------------------------------------- 49 CASH-BASIS, RENEGOTIATED, AND PAST DUE LOANS
JUNE 30, Mar. 31, Dec. 31, June 30, IN MILLIONS OF DOLLARS 2001 2001 2000 2000 - ------------------------------------------------------------------------------------------------------------------------------------ COMMERCIAL CASH-BASIS LOANS Collateral dependent(at lower of cost or collateral value)(1) $ 503 $ 473 $ 346 $ 318 Other 2,102 1,889 1,580 1,428 --------------------------------------------------------------------- TOTAL(2) $2,605 $2,362 $1,926 $1,746 - ---------------------------------------------------------------===================================================================== COMMERCIAL CASH-BASIS LOANS In U.S. offices $1,084 $ 997 $ 656 $ 439 In offices outside the U.S. 1,521 1,365 1,270 1,307 --------------------------------------------------------------------- TOTAL(2) $2,605 $2,362 $1,926 $1,746 - ---------------------------------------------------------------===================================================================== COMMERCIAL RENEGOTIATED LOANS In U.S. offices $ 700 $ 740 $ 634 $ 622 In offices outside the U.S. 164 169 151 98 --------------------------------------------------------------------- TOTAL(3) $ 864 $ 909 $ 785 $ 720 - ---------------------------------------------------------------===================================================================== CONSUMER LOANS ON WHICH ACCRUAL OF INTEREST HAD BEEN SUSPENDED(4) In U.S. offices $2,480 $2,146 $2,182 $1,870 In offices outside the U.S. 1,631 1,658 1,626 1,808 --------------------------------------------------------------------- TOTAL $4,111 $3,804 $3,808 $3,678 - ---------------------------------------------------------------===================================================================== ACCRUING LOANS 90 OR MORE DAYS DELINQUENT(4)(5) In U.S. offices $1,690 $1,475 $1,090 $ 847 In offices outside the U.S. 433 393 385 397 --------------------------------------------------------------------- TOTAL $2,123 $1,868 $1,475 $1,244 - ---------------------------------------------------------------=====================================================================
(1) 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. (2) Prior period cash-basis loans were restated to change the policy of the Associates Commercial Leasing business for suspending accrual of interest on past due loans to conform with other leasing businesses in the Corporate & Investment Bank. The prior policy of placing loans that are 60 days or more past due into cash-basis, was changed to 90 days or more past due. (3) Prior period commercial renegotiated loans were restated to remove Associates cash-basis loans already included above. (4) Prior periods have been restated to conform Associates cash-basis and accruing loans 90 or more days delinquent. (5) Substantially all consumer loans, of which $973 million, $755 million, $503 million, and $423 million are government-guaranteed student loans and mortgages at June 30, 2001, March 31, 2001, December 31, 2000, and June 30, 2000, respectively. - -------------------------------------------------------------------------------- OTHER REAL ESTATE OWNED AND OTHER REPOSSESSED ASSETS
JUNE 30, Mar. 31, Dec. 31, June 30, IN MILLIONS OF DOLLARS 2001 2001 2000 2000 - ------------------------------------------------------------------------------------------------------------------------------------ OTHER REAL ESTATE OWNED Consumer(1) $289 $268 $366 $380 Commercial(1) 194 197 214 203 --------------------------------------------------------------------- TOTAL OTHER REAL ESTATE OWNED $483 $465 $580 $583 - ---------------------------------------------------------------===================================================================== OTHER REPOSSESSED ASSETS(2) $409 $419 $292 $263 - ---------------------------------------------------------------=====================================================================
(1) Represents repossessed real estate, carried at lower of cost or fair value, less costs to sell. (2) Primarily commercial transportation equipment and manufactured housing, carried at lower of cost or fair value, less costs to sell. - -------------------------------------------------------------------------------- 50 DETAILS OF CREDIT LOSS EXPERIENCE
2ND QTR. 1ST Qtr. 4TH Qtr. 3RD Qtr. 2ND Qtr. IN MILLIONS OF DOLLARS 2001 2001 2000 2000 2000 - ------------------------------------------------------------------------------------------------------------------------------------ ALLOWANCE FOR CREDIT LOSSES AT BEGINNING OF PERIOD $8,957 $8,961 $8,900 $8,852 $8,713 --------------------------------------------------------------------------------------- PROVISION FOR CREDIT LOSSES Consumer 1,196 1,197 1,113 1,078 1,062 Commercial 289 267 394 143 240 --------------------------------------------------------------------------------------- 1,485 1,464 1,507 1,221 1,302 --------------------------------------------------------------------------------------- GROSS CREDIT LOSSES CONSUMER In U.S. offices 945 915 946 812 844 In offices outside the U.S. 462 449 566 454 446 COMMERCIAL In U.S. offices 285 231 204 120 149 In offices outside the U.S. 84 90 83 49 103 --------------------------------------------------------------------------------------- 1,776 1,685 1,799 1,435 1,542 --------------------------------------------------------------------------------------- CREDIT RECOVERIES CONSUMER In U.S. offices 81 101 140 128 143 In offices outside the U.S. 102 98 105 101 103 COMMERCIAL In U.S. offices 56 35 26 9 6 In offices outside the U.S. 26 19 23 26 21 --------------------------------------------------------------------------------------- 265 253 294 264 273 --------------------------------------------------------------------------------------- NET CREDIT LOSSES In U.S. offices 1,093 1,010 984 795 844 In offices outside the U.S. 418 422 521 376 425 --------------------------------------------------------------------------------------- 1,511 1,432 1,505 1,171 1,269 --------------------------------------------------------------------------------------- Other-net(1) (14) (36) 59 (2) 106 --------------------------------------------------------------------------------------- ALLOWANCE FOR CREDIT LOSSES AT END OF PERIOD $8,917 $8,957 $8,961 $8,900 $8,852 - ---------------------------------------------======================================================================================= Net consumer credit losses $1,224 $1,165 $1,267 $1,037 $1,044 As a percentage of average consumer loans 2.19% 2.10% 2.25% 1.89% 2.07% - ------------------------------------------------------------------------------------------------------------------------------------ Net commercial credit losses $ 287 $ 267 $ 238 $ 134 $ 225 As a percentage of average commercial loans 0.82% 0.78% 0.69% 0.40% 0.72% - ---------------------------------------------=======================================================================================
(1) Primarily includes foreign currency translation effects and the addition of allowance for credit losses related to acquisitions. - -------------------------------------------------------------------------------- 51 Part II - Other Information Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits See Exhibit Index. (b) Reports on Form 8-K On April 18, 2001, the Company filed a Current Report on Form 8-K, dated April 16, 2001, reporting under Item 5 thereof the summarized results of operations of Citicorp and its subsidiaries for the quarter ended March 31, 2001. No other reports on Form 8-K were filed during the second quarter of 2001; however, on July 18, 2001, the Company filed a Current Report on Form 8-K, dated July 16, 2001, reporting under Item 5 thereof the summarized results of operations of Citicorp and its subsidiaries for the quarter ended June 30, 2001. 52 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 14th day of August, 2001. CITICORP (Registrant) BY: /s/ Todd S. Thomson ---------------------------------------- Name: Todd S. Thomson Title: Chief Financial Officer Principal Financial Officer BY: /s/ Roger W. Trupin ---------------------------------------- Name: Roger W. Trupin Title: Vice President and Controller 53 EXHIBIT INDEX Exhibit NUMBER DESCRIPTION OF EXHIBIT 3.01 Citicorp's Certificate of Incorporation (incorporated by reference to Exhibit 3(i) to Citicorp's Post-Effective Amendment No. 1 to Registration Statement on Form S-3, File No. 333-21143, filed on October 8, 1998). 3.02+ Citicorp's By-Laws. 12.01+ Calculation of Ratio of Income to Fixed Charges. 12.02+ Calculation of Ratio of Income to Fixed Charges (including preferred stock dividends). 99.01+ Residual Value Obligation Certificate. - ---------- The total amount of securities authorized pursuant to any instrument defining rights of holders of long-term debt of Citicorp does not exceed 10% of the total assets of Citicorp and its consolidated subsidiaries. Citicorp will furnish copies of any such instrument to the Securities and Exchange Commission upon request. - ---------- + Filed herewith 54 EX-3.02 3 a2056694zex-3_02.txt EXHIBIT 3.02 EXHIBIT 3.02 CITICORP ================================================================================ BY-LAWS AS AMENDED EFFECTIVE MAY 18, 2001 INDEX TO BY-LAWS OF CITICORP INDEX TO BY-LAWS OF CITICORP Article I - Offices Section 1. Principal Office Section 2. Other Offices Article II - Meetings of Stockholders Section 1. Annual Meeting Section 2. Special Meetings Section 3. Place of Meetings Section 4. Notice of Meetings Section 5. Organization Section 6. Inspectors of Election Section 7. Quorum and Adjournment Section 8. Order of Business Section 9. Vote of Stockholders Article III - Board of Directors Section 1. Number Section 2. General Powers Section 3. Place of Meetings Section 4. Organization Meeting Section 5. Regular Meetings Section 6. Special Meetings: Notice and Waiver of Notice Section 7. Organization Section 8. Quorum and Manner of Acting Section 9. Voting Section 10. Resignations Section 11. Vacancies Article IV - Executive Committee Section 1. Constitution and Powers Section 2. Executive Committee: Membership; Meetings; Quorum Section 3. Records Article V - Other Committees Section 1. Other Committees Section 2. Place of Meetings: Notice and Waiver of Notice Article VI - The Officers Section 1. Officers Section 2. Term of Office Section 3. Resignations Section 4. The Chairman Section 5. The President Section 6. The Vice Chairmen Section 7. The Corporate Executive Vice Presidents Section 8. The Executive Vice Presidents / Senior Corporate Officers Section 9. The Chairman Credit Policy Committee Section 10. The Senior Vice Presidents Section 11. The Vice Presidents Section 12. The Secretary Section 13. The Treasurer Section 14. The Chief Auditor Article VII - Stock and Transfers of Stock Section 1. Stock Certificates Section 2. Transfer Agents and Registrars Section 3. Transfers of Stock Section 4. Lost Certificates Article VIII - Corporate Seal Section 1. Seal Section 2. Affixing and Attesting Article IX - Miscellaneous Section 1. Fiscal Year Section 2. Signatures on Negotiable Instruments Section 3. Execution of Contracts and Other Instruments Section 4. Shares of Other Corporations Section 5. References to Article and Section Numbers and to the Certificate of Incorporation Section 6. Reference to Gender Article X - Amendments ARTICLE I OFFICES Section 1. PRINCIPAL OFFICE. The principal office and place of business of Citicorp shall be 399 Park Avenue in the City and State of New York. Section 2. OTHER OFFICES. Citicorp may establish or discontinue, from time to time, such other offices and places of business as may be deemed proper for the conduct of Citicorp's business. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. ANNUAL MEETING. The annual meeting of stockholders shall be held on such date and at such time as may be fixed by resolution of the Board of Directors, for the election of directors and the transaction of such other business as may properly come before the meeting. Section 2. SPECIAL MEETINGS. Special meetings of the stockholders may be called at any time by the Board of Directors and shall be called by the Secretary upon the written request, stating the purpose or purposes of any such meeting, of the holders of common stock who hold of record collectively at least one-third of the outstanding shares of common stock. Unless limited by law, the Certificate of Incorporation, the By-Laws, or by the terms of the notice thereof, any and all business may be transacted at any special meeting of stockholders. Section 3. PLACE OF MEETINGS. Each meeting of stockholders shall be held at such place either within or outside the State of Delaware as may be designated by the Board of Directors for a particular meeting prior to the time when notice thereof is given to the stockholders entitled to vote thereat. Section 4. NOTICE OF MEETINGS. Except as otherwise provided or permitted by law, the Certificate of Incorporation, or the By-Laws, notice of each meeting of stockholders shall be given to each stockholder of record entitled to vote thereat either by delivering such notice to him personally or by mailing the same to him. If mailed, the notice shall be directed to the stockholder in a postage-prepaid envelope at his address as it appears on the records of Citicorp unless, prior to the time of mailing, he shall have filed with the Secretary a written request that notices intended for him be mailed to some other address, in which case it shall be mailed to the address designated in such request. Notice of each meeting of stockholders shall state the place, date and hour of the meeting, and if for a special meeting the purpose or purposes for which the meeting is called, and shall be given not less than ten nor more than fifty days before the date of the meeting. Such notice may be waived in writing before, after, or at, such meeting. Section 5. ORGANIZATION. The Chairman shall act as such chairman at all meetings of stockholders, shall call all meetings of stockholders to order and preside thereat. In the absence of the Chairman, the President shall act as such chairman and, in the absence of the Chairman and the President, the Vice Chairman, or if there be more than one Vice Chairman present, the one of them first appointed to such office shall act as such chairman. The Board of Directors may designate an alternate chairman for any meeting of stockholders, and if the Chairman, the President and such Vice Chairman are absent from a meeting and such an alternate chairman has been designated therefor, he shall act as chairman of the meeting. In the absence of the Chairman, the President, such Vice Chairman and such an alternate chairman, or if no such alternate chairman has been designated for a meeting and the Chairman, the President and such Vice Chairman are absent therefrom, any stockholder or the proxy of any stockholder entitled to vote at the meeting may call the meeting to order and a chairman shall be elected, who shall preside thereat. The Secretary of Citicorp shall act as secretary at all meetings of the stockholders, but in his absence the chairman of the meeting may appoint any person present to act as secretary of the meeting. Section 6. INSPECTORS OF ELECTION. If the Board of Directors shall so determine, any election of directors by vote by ballot at a meeting of stockholders shall be conducted by three inspectors of election appointed for that purpose by the chairman of the meeting, who, before entering upon the discharge of their duties, shall be duly sworn faithfully to 1 execute the duties of inspectors of election at such meeting with strict impartiality, and according to the best of their ability. If any such inspector appointed to act at any meeting shall not be present or shall fail to act, the chairman of the meeting shall appoint some other person present to act as inspector in his place. The inspectors of election at the request of the chairman of the meeting shall conduct any other vote by ballot taken at such meeting. Inspectors of election may also be appointed to act at meetings of stockholders at which directors are not to be elected, and at the request of the chairman of the meeting shall conduct any vote by ballot at such meeting. Section 7. QUORUM AND ADJOURNMENT. Except as otherwise provided by law or by the Certificate of Incorporation, the holders of a majority of the shares of stock entitled to vote at the meeting shall constitute a quorum at all meetings of the stockholders. In the absence of a quorum, the holders of a majority of the shares of stock present in person or by proxy and entitled to vote may adjourn any meeting, from time to time, until a quorum shall attend. At any such adjourned meeting at which a quorum may be present, any business may be transacted which might have been transacted at the meeting as originally called. Section 8. ORDER OF BUSINESS. The order of business at all meetings of stockholders shall be as determined by the chairman of the meeting or as is otherwise determined by the vote of the holders of a majority of the shares of stock present in person or by proxy and entitled to vote. Section 9. VOTE OF STOCKHOLDERS. Except as otherwise required by law or the Certificate of Incorporation, all action by stockholders may be taken by written consent in lieu of a meeting. The vote in the election of directors at a meeting of stockholders shall be by ballot unless the Board of Directors determines otherwise, and the vote upon any question before a meeting of stockholders shall be ballot if so directed by the chairman of the meeting. In a vote by ballot, each ballot shall state the number of shares voted and the name of the stockholder or proxy voting. Except as otherwise required by law or by the Certificate of Incorporation, directors to be elected at a meeting of stockholders shall be elected by a plurality of the votes cast at such meeting by the holders of shares entitled to vote in the election and whenever any corporate action, other than the election of directors, is to be taken by vote of the stockholders at a meeting thereof, it shall be authorized by a majority of the votes cast at such meeting by the holders of stock entitled to vote thereon. ARTICLE III BOARD OF DIRECTORS Section 1. NUMBER. The number of directors constituting the Board of Directors of Citicorp shall be such number as is fixed from time to time by resolution adopted by the Board of Directors or by the stockholders. Section 2. GENERAL POWERS. The business, properties and affairs of Citicorp shall be managed by the Board of Directors, which, without limiting the generality of the foregoing, shall have power to appoint the officers of Citicorp, to appoint and direct agents, and to grant general or limited authority to officers, employees and agents of Citicorp to make, execute and deliver contracts and other instruments and documents in the name and on behalf of Citicorp and over its seal, without specific authority in each case. In addition, the Board of Directors may exercise all the powers of Citicorp and do all lawful acts and things which are not reserved to the stockholders by law or the Certificate of Incorporation. Section 3. PLACE OF MEETINGS. Meetings of the Board of Directors, whether regular or special, shall be held at the principal office of Citicorp or such other place within or without the State of Delaware as may, from time to time, be fixed by resolution of the Board of Directors, provided that the place so determined for any meeting may be changed to some other place, in the case of a regular meeting, by order of the Chairman, the President or any Vice Chairman, and in the case of a special meeting, by order of the person or persons at whose request the meeting is called if in either such case the place so changed is specified in a notice given as provided in Section 6 of this Article III or in a waiver of notice thereof. Section 4. ORGANIZATION MEETING. A newly elected Board of Directors shall meet and organize, as soon as practicable, after each annual meeting of stockholders, at the principal office of Citicorp, without notice of such meeting, provided a majority of the whole Board of Directors is present. If such a majority is not present, such organization meeting may be held at any other time or place which may be specified in a notice given as provided in Section 6 of this Article III for special meetings of the Board of Directors, or in a waiver of notice thereof. Any business which may properly be transacted by the Board of Directors may be transacted at any organization meeting thereof. 2 Section 5. REGULAR MEETINGS. A regular meeting of the Board of Directors shall be held quarterly, unless the Board of Directors shall otherwise determine, with notice to the directors of the date and time of such meeting, or, may be held at such other time and place as the Board shall have ordered at any previous meeting. Section 6. SPECIAL MEETINGS: NOTICE AND WAIVER OF NOTICE. Special meetings of the Board of Directors shall be called by the Secretary on the request of the Chairman, or in the absence of the Chairman, the President, or in the absence of the Chairman and the President, any Vice Chairman, or on the request in writing of any three directors stating the purpose or purposes of such meeting. Notice of any special meeting, specifying the time and place of such meeting, shall be in form approved by the Chairman, or in the absence of the Chairman, the President, or in the absence of the Chairman and the President, such Vice Chairman, or if the meeting is called pursuant to the request of some other directors and there shall be a failure to approve the form of notice as aforesaid, then in form approved by such directors. Notice of special meetings shall be mailed to each director, addressed to him at his residence or usual place of business, not later than two days before the day on which the meeting is to be held, or shall be sent to him at such place by telegraph, or be delivered personally or by telephone, not later than the day before such day of meeting. Whenever notice of any meeting of the Board of Directors is required to be given under any provision of law, the Certificate of Incorporation or the By-Laws, a written waiver thereof signed by the director entitled to notice, whether before, at, or after the time of such meeting, shall be deemed equivalent to notice. Attendance of a director at any meeting of the Board of Directors shall constitute a waiver of notice of such meeting, except when the director attends such meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because such meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any meeting of the Board of Directors or any committee thereof need be specified in any written waiver of notice. Section 7. ORGANIZATION. The Chairman shall preside at all meetings of the Board of Directors and the Executive Committee of the Board of Directors (which Committee is provided for in Article IV and is hereinafter referred to as the "Executive Committee"). In the absence of the Chairman, the President or, in the absence of the Chairman and the President, the Vice Chairman, or if there be more than one Vice Chairman present, the one of them first appointed to such office, shall preside at all meetings of the Board of Directors and the Executive Committee. In the absence of the Chairman, the President and such Vice Chairman, a temporary chairman may be chosen by the members of the Board of Directors or of the Executive Committee present to preside at a meeting of the Board of Directors or of the Executive Committee, respectively. The Secretary of Citicorp shall act as the secretary at all meetings of the Board of Directors and of the Executive Committee and in his absence a temporary secretary shall be appointed by the chairman of the meeting. Section 8. QUORUM AND MANNER OF ACTING. At every meeting of the Board of Directors, a majority shall constitute a quorum, of which a majority must be U.S. citizens; and, except as otherwise provided by law, or by Section 1 of Article IV, the vote of a majority of the directors present at any such meeting at which a quorum is present shall be the act of the Board of Directors. In the absence of a quorum, a majority of the directors present may adjourn any meeting from time to time, until a quorum is present. No notice of any adjourned meeting need be given other than by announcement at the meeting that is being adjourned. Members of the Board of Directors may participate in meetings through use of conference telephone or similar communications equipment, so long as all members participating in such meetings can hear one another. Section 9. VOTING. On any question on which the Board of Directors or the Executive Committee shall vote, the names of those voting and their votes shall be entered in the minutes of the meeting when any member of the Board of Directors or the Executive Committee so requests. Section 10. RESIGNATIONS. Any director may resign at any time either by oral tender of resignation at any meeting of the Board of Directors or by such tender to the Chairman, the President or any Vice Chairman, or by giving written notice thereof to Citicorp. Any resignation shall be effective immediately unless a date certain is specified for it to take effect. Section 11. VACANCIES. When any vacancy occurs among the directors, the remaining members of the Board may appoint a director to fill such vacancy at any regular meeting of the Board, or at a special meeting called for that purpose. 3 ARTICLE IV EXECUTIVE COMMITTEE Section 1. CONSTITUTION AND POWERS. There shall be an Executive Committee of the Board of Directors which shall be constituted as provided in Section 2 of this Article. The Executive Committee shall have and may exercise, when the Board is not in session, all the powers of the Board that may lawfully be delegated. Section 2. EXECUTIVE COMMITTEE: MEMBERSHIP; MEETINGS; QUORUM. The Executive Committee shall hold a regular meeting without notice at the time and place appointed for each regular meeting of the Board of Directors at which a quorum of the Board shall not be in attendance at said time and place, unless such regular meeting of the Board is cancelled upon notice. The directors present at such time and place, if there be not less than three, shall constitute the Executive Committee for such regular meeting, and the vote of a majority of the Committee as so constituted shall suffice for the transaction of business. A special meeting of the Executive Committee may be called at any time by the Chairman, or in the absence of the Chairman, the President, or in the absence of the Chairman and the President, any Vice Chairman or on the written request of any three members of the Board such meeting shall be called by one of said officers or by the Secretary. Notice of any such special meeting shall be given to each director in the manner provided in Article III, Section 6, for the giving of notice, or the waiver thereof, of a special meeting of the Board of Directors and shall be sufficient even though such notice refers only to a meeting of the Board of Directors. The directors who shall attend at the time and place fixed in such notice, if there be not less than three, shall constitute the Executive Committee for such special meeting, and the vote of a majority of the Committee as so constituted shall suffice for the transaction of business. Executive Committee meetings may be held through use of conference telephone or similar communications equipment, so long as all members participating in such meetings can hear one another. Section 3. RECORDS. The Executive Committee shall keep minutes of its acts and proceedings, which shall be submitted at the next regular meeting of the Board of Directors at which a quorum is present, and any action taken by the Board of Directors with respect thereto shall be entered in the minutes of the Board of Directors. All acts done and powers conferred by the Executive Committee from time to time shall be deemed to be, and may be certified as being, done or conferred under authority of the Board. ARTICLE V OTHER COMMITTEES Section 1. OTHER COMMITTEES. The Board of Directors may, from time to time, appoint other committees which shall have such powers and duties as the Board of Directors may properly determine, and may appoint one of the members of any such other committee to be its chairman. A majority of the members of such other committees shall constitute a quorum, unless otherwise specified by the Board of Directors. Section 2. PLACE OF MEETINGS: NOTICE AND WAIVER OF NOTICE. Meetings of committees of the Board of Directors shall be held at the principal office of Citicorp or at such other places as the committee in question may, from time to time, determine, subject to the provisions of Section 2 of Article IV with respect to meetings of the Executive Committee. Meetings of any committee of the Board of Directors other than the Executive Committee may be called by the Chairman of such committee or by the Secretary at the request of any other member thereof. Notice of any meeting of any committee of the Board of Directors other than the Executive Committee shall be in form approved by the chairman of such committee, or if the meeting is called pursuant to the request of some other member of such committee and there is a failure to approve the form of notice as aforesaid, then in the form approved by such member. The provisions of Section 6 of Article III with respect to the giving and waiver of notice of special meetings of the Board of Directors shall also apply to all meetings of such other committee. 4 ARTICLE VI THE OFFICERS Section 1. OFFICERS. Citicorp shall have a Chairman or a President or both, may have one or more Vice Chairmen, one or more Corporate Executive Vice Presidents, one or more Executive Vice Presidents/Senior Corporate Officers, a Chairman Credit Policy Committee, one or more Senior Vice Presidents, and one or more Vice Presidents, and shall have a Secretary and a Chief Auditor; and such officers shall be appointed by the Board of Directors, which may establish senior officer positions equivalent to and having duties and powers the same as these officers. The Board of Directors may also appoint one or more Assistant Secretaries and such other officers and agents as in their judgment the business of Citicorp may require, and any such officers may be appointed, subject to the authority of the Board of Directors, by the Chairman, the President, or any Vice Chairman. Section 2. TERM OF OFFICE. All officers shall hold office during the pleasure of and until removed by the Board of Directors, or, in the case of officers who may be appointed by the Chairman, the President, or any Vice Chairman, until removed by one of them or by the Board of Directors. Section 3. RESIGNATIONS. Any officer may resign at any time, either by oral tender of resignation to the Chairman, the President, or any Vice Chairman or by giving written notice thereof to Citicorp. Any resignation shall be effective immediately unless a date certain is specified for it to take effect. Section 4. THE CHAIRMAN. The Chairman shall be the Chief Executive Officer of Citicorp, and shall have general executive powers as well as the specific powers conferred by these By-Laws. He shall preside at meetings of the Board of Directors and the Executive Committee and at meetings of the stockholders. Section 5. THE PRESIDENT. In the absence of a Chairman, the President shall be the Chief Executive Officer of Citicorp, and shall have general executive powers as well as the specific powers conferred by these By-Laws. In the absence of the Chairman, the President shall exercise the powers and duties of the Chairman related to meetings of the Board of Directors and the Executive Committee and meetings of the stockholders. Section 6. THE VICE CHAIRMEN. In the absence of the Chairman and the President, and in the order of their appointment to the office, the Vice Chairmen shall exercise the powers and duties of the Chairman related to meetings of the Board of Directors and the Executive Committee and meetings of the stockholders. The Vice Chairmen shall have general executive powers as well as the specific powers conferred by these By-Laws. Each of them shall also have such powers and duties as may from time to time be assigned by the Board of Directors, the Chairman, or the President. Section 7. THE CORPORATE EXECUTIVE VICE PRESIDENTS. Each Corporate Executive Vice President shall have general executive powers as well as the specific powers conferred by these By-Laws. Each Corporate Executive Vice president shall also have such further powers and duties as may from time to time be assigned to him by the Board of Directors, the Chairman, the President, or any Vice Chairman. Section 8. THE EXECUTIVE VICE PRESIDENTS/SENIOR CORPORATE OFFICERS. Each Executive Vice President/Senior Corporate Officer shall have general executive powers as well as the specific powers conferred by these By-Laws. Each Executive Vice President/Senior Corporate Officer shall also have such further powers and duties as may from time to time be assigned to him by the Board of Directors, the Chairman, the President, or any Vice Chairman. Section 9. THE CHAIRMAN CREDIT POLICY COMMITTEE. The Board of Directors may appoint a Chairman Credit Policy Committee, who shall have general responsibilities in connection with the formation and administration of the credit policies of Citicorp. He shall have general executive powers, as well as the specific powers conferred by these By-Laws. He shall also have such further powers and duties as may from time to time be assigned to him by the Board of Directors, the Chairman, or the President. Section 10. THE SENIOR VICE PRESIDENTS. Each Senior Vice President shall have general executive powers as well as the specific powers conferred by these By-Laws. Each Senior Vice President shall also have such further powers and 5 duties as may from time to time be assigned to him by the Board of Directors, the Chairman, the President, or any Vice Chairman. Section 11. THE VICE PRESIDENTS. The several Vice Presidents shall perform such duties and have such powers as may from time to time be assigned to them by the Board of Directors, the Chairman, the President, or any Vice Chairman. Section 12. THE SECRETARY. The Secretary shall attend to the giving of notice of all meetings of stockholders and of the Board of Directors and committees thereof, as provided in Section 4 of Article II and Section 6 of Article III, and shall keep minutes of all proceedings at meetings of the stockholders, of the Board of Directors and of the Executive Committee, as well as of all proceedings at all meetings of other regular committees of the Board of Directors. He shall have charge of the corporate seal and shall have authority to attest any and all instruments or writings to which the same may be affixed. He shall have charge of the stock ledger and shall keep and account for all books, documents, papers and records of Citicorp, except those for which some other officer or agent is properly accountable. He shall generally perform all the duties usually appertaining to the office of Secretary of a corporation. The Secretary may appoint one or more Assistant Secretaries with such powers and duties as the Board of Directors, the Chairman, the President, any Vice Chairman, or the Secretary shall, from time to time, determine. In the absence of the Secretary, such person as shall be designated by the Chairman, the President or any Vice Chairman shall perform his duties. Section 13. THE TREASURER. The Treasurer shall have the powers attendant to the office of Treasurer. The Treasurer shall also have such further powers and duties as may from time to time be assigned by the Board of Directors, the Chairman, the President, or any Vice Chairman. Section 14. THE CHIEF AUDITOR. The Board of Directors shall appoint a Chief Auditor, who shall be the chief auditing officer of Citicorp. He shall continuously examine the affairs of Citicorp, and shall report to the Board of Directors. He shall have and may exercise the powers and duties as from time to time may be conferred upon, or assigned to him by the Board of Directors. ARTICLE VII STOCK AND TRANSFERS OF STOCK Section 1. STOCK CERTIFICATES. The stock of Citicorp shall be represented by certificates signed by the Chairman or the President and the Secretary or an Assistant Secretary. Where any such certificate is countersigned by a Transfer Agent, other than Citicorp or its employee, or by a Registrar, other than Citicorp or its employee, any other signature on such certificate may be a facsimile, engraved, stamped or printed. In case any such officer, Transfer Agent or Registrar who has signed or whose facsimile signature has been placed upon any such certificate shall have ceased to be such officer, Transfer Agent or Registrar before such certificate is issued, it may be issued by Citicorp with the same effect as if such officer, Transfer Agent or Registrar were such officer, Transfer Agent or Registrar at the date of its issue. The certificates representing the stock of Citicorp shall be in such form as shall be approved by the Board of Directors. Section 2. TRANSFER AGENTS AND REGISTRARS. The Board of Directors may, in its discretion, appoint one or more banks or trust companies in the Borough of Manhattan, City, County and State of New York, and in such other city or cities as the Board of Directors may deem advisable, including any banking subsidiaries of Citicorp, from time to time, to act as Transfer Agents and Registrars of the stock of Citicorp; and upon such appointments being made, no stock certificate shall be valid until countersigned by one of such Transfer Agents and registered by one of such Registrars. Section 3. TRANSFERS OF STOCK. Transfers of stock shall be made on the books of Citicorp only by the person named in the certificate, or by attorney lawfully constituted in writing, and upon surrender and cancellation of a certificate or certificates for a like number of shares of the same class of stock, with duly executed assignment and power of transfer endorsed thereon or attached hereto, and with such proof of the authenticity of the signatures as Citicorp or its agents may reasonably require. No transfer of stock other than on the records of Citicorp shall affect the right of Citicorp to pay any dividend upon the stock to the holder of record thereof or to treat the holder of record as the holder in fact thereof for all purposes, and no transfer shall be valid, except between the parties thereto, until such transfer shall have been made upon the records of Citicorp. Section 4. LOST CERTIFICATES. In case any certificate of stock shall be lost, stolen or destroyed, the Board of Directors, in its discretion, or any officer or officers or any agent or agents thereunto duly authorized by the Board of 6 Directors, may authorize the issue of a substitute certificate in place of the certificate so lost, stolen or destroyed, and may cause or authorize such substitute certificate to be countersigned by the appropriate Transfer Agent (or where such duly authorized agent is the Transfer Agent may itself countersign) and registered by the appropriate Registrar; provided, however, that, in each such case, the applicant for a substitute certificate shall furnish to Citicorp and to such of its Transfer Agents and Registrars as may require the same, evidence to their satisfaction, in their discretion, of the loss, theft or destruction of such certificate and of the ownership thereof, and also such security or indemnity as may by them be required. ARTICLE VIII CORPORATE SEAL Section 1. SEAL. The seal of Citicorp shall be in such form as may be approved, from time to time, by the Board of Directors. Section 2. AFFIXING AND ATTESTING. The seal of Citicorp shall be in the custody of the Secretary, who shall have power to affix it to the proper corporate instruments and documents, and who shall attest it. In his absence, it may be affixed and attested by an Assistant Secretary or by any other person or persons as may be designated by the Board of Directors or the Secretary. ARTICLE IX MISCELLANEOUS Section 1. FISCAL YEAR. The fiscal year of Citicorp shall be the calendar year. Section 2. SIGNATURES ON NEGOTIABLE INSTRUMENTS. All bills, notes, checks or other instruments for the payment of money shall be signed or countersigned by such officers or agents and in such manner as, from time to time, may be prescribed by resolution (whether general or special) of the Board of Directors, or may be prescribed by any officer or officers, or any officer and agent jointly, thereunto duly authorized by the Board of Directors. Section 3. EXECUTION OF CONTRACTS AND OTHER INSTRUMENTS. The Chairman, the President, any Vice Chairman, any Corporate Executive Vice President, any Executive Vice President/Senior Corporate Officer, the Chairman Credit Policy Committee, any Senior Vice President, any Vice President, the Secretary, and the Chief Auditor, or anyone holding a position equivalent to the foregoing pursuant to provisions of these By-Laws, shall each have general authority to execute contracts, bonds, deeds and powers of attorney in the name of and on behalf of Citicorp. Any contract, bond, deed or power of attorney may also be executed in the name of and on behalf of Citicorp by such other officer or such other agent as the Board of Directors may from time to time direct. The provisions of this Section 3 are supplementary to any other provisions of these By-Laws. Section 4. SHARES OF OTHER CORPORATIONS. The Chairman, the President, any Vice Chairman, any Corporate Executive Vice President, any Executive Vice President/Senior Corporate Officer, the Chairman Credit Policy Committee, any Senior Vice President, any Vice President, and the Secretary, or anyone holding a position equivalent to the foregoing pursuant to provisions of these By-Laws, is each authorized to vote, represent and exercise on behalf of Citicorp, all rights incident to any and all shares of any other corporation or corporations standing in the name of Citicorp. The authority herein granted to said officer to vote or represent on behalf of Citicorp any and all shares held by Citicorp in any other corporation or corporations may be exercised by said officer in person or by any person authorized so to do by proxy or power of attorney duly executed by said officer. Notwithstanding the above, however, the Board of Directors, in its discretion, may designate by resolution the person to vote or represent said shares of other corporations. Section 5. REFERENCES TO ARTICLE AND SECTION NUMBERS AND TO THE CERTIFICATE OF INCORPORATION. Whenever in the By-Laws reference is made to an Article or Section number, such reference is to the number of an Article or Section of the By-Laws. Whenever in the By-Laws reference is made to the Certificate of Incorporation, such reference is to the Certificate of Incorporation of Citicorp, as amended. Section 6. REFERENCE TO GENDER. A reference in these By-Laws to one gender, masculine, feminine, or neuter, includes the other two; and the singular includes the plural and vice versa unless the context otherwise requires. 7 ARTICLE X AMENDMENTS The By-Laws may be altered, amended or repealed, and new By-Laws adopted, from time to time, by the Board of Directors at any regular or special meeting. 8 The undersigned, duly qualified and acting Secretary/Assistant Secretary of Citicorp, a Delaware corporation, hereby certifies the foregoing to be a true and complete copy of the By-Laws of the said Citicorp, as at present in force and effect. WITNESS, the hand of the undersigned and the seal of the said Citicorp, this 18th day of May, 2001. /s/ ----------------------------- 9 EX-12.01 4 a2056694zex-12_01.txt EXHIBIT 12.01 Ex 12.01 CITICORP CALCULATION OF RATIO OF INCOME TO FIXED CHARGES (In Millions)
YEAR ENDED DECEMBER 31, Six Months Ended June 30, EXCLUDING INTEREST ON DEPOSITS: 2000 1999 1998 1997 1996 2001 2000 --------- --------- --------- --------- --------- --------- --------- FIXED CHARGES: INTEREST EXPENSE (OTHER THAN INTEREST ON DEPOSITS) 8,722 7,795 7,308 6,776 6,325 4,363 4,049 INTEREST FACTOR IN RENT EXPENSE 283 235 213 189 176 128 142 --------- --------- --------- --------- --------- --------- --------- TOTAL FIXED CHARGES 9,005 8,030 7,521 6,965 6,501 4,491 4,191 --------- --------- --------- --------- --------- --------- --------- INCOME: INCOME BEFORE TAXES, MINORITY INTEREST AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES 12,876 10,496 6,732 7,664 7,734 7,145 6,989 FIXED CHARGES 9,005 8,030 7,521 6,965 6,501 4,491 4,191 --------- --------- --------- --------- --------- --------- --------- TOTAL INCOME 21,881 18,526 14,253 14,629 14,235 11,636 11,180 ========= ========= ========= ========= ========= ========= ========= RATIO OF INCOME TO FIXED CHARGES EXCLUDING INTEREST ON DEPOSITS 2.43 2.31 1.90 2.10 2.19 2.59 2.67 ========= ========= ========= ========= ========= ========= ========= INCLUDING INTEREST ON DEPOSITS: FIXED CHARGES: INTEREST EXPENSE 22,045 18,606 18,868 16,430 15,341 10,932 10,064 INTEREST FACTOR IN RENT EXPENSE 283 235 213 189 176 128 142 --------- --------- --------- --------- --------- --------- --------- TOTAL FIXED CHARGES 22,328 18,841 19,081 16,619 15,517 11,060 10,206 --------- --------- --------- --------- --------- --------- --------- INCOME: INCOME BEFORE TAXES, MINORITY INTEREST AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES 12,876 10,496 6,732 7,664 7,734 7,145 6,989 FIXED CHARGES 22,328 18,841 19,081 16,619 15,517 11,060 10,206 --------- --------- --------- --------- --------- --------- --------- TOTAL INCOME 35,204 29,337 25,813 24,283 23,251 18,205 17,195 ========= ========= ========= ========= ========= ========= ========= RATIO OF INCOME TO FIXED CHARGES INCLUDING INTEREST ON DEPOSITS 1.58 1.56 1.35 1.46 1.50 1.65 1.68 ========= ========= ========= ========= ========= ========= =========
Note> On November 30, 2000, Citigroup Inc. completed its acquisition of Associates First Capital Corporation (Associates) in a transaction accounted for as a pooling of interests. Subsequent to the acquisition, Associates was contributed to and became a wholly owned subsidiary of Citicorp and Citicorp issued a full and unconditional guarantee of the outstanding long-term debt securities and commercial paper of Associates and Associates Corporation of North America (ACONA), a subsidiary of Associates. EX-12.02 5 a2056694zex-12_02.txt EXHIBIT 12.02 Ex-12.02 CITICORP CALCULATION OF RATIO OF INCOME TO FIXED CHARGES INCLUDING PREFERRED STOCK DIVIDENDS
(In Millions) YEAR ENDED DECEMBER 31, Six Months Ended June 30, EXCLUDING INTEREST ON DEPOSITS: 2000 1999 1998 1997 1996 2001 2000 --------- --------- --------- --------- --------- --------- --------- FIXED CHARGES: INTEREST EXPENSE (OTHER THAN INTEREST ON DEPOSITS) 8,722 7,795 7,308 6,776 6,325 4,363 4,049 INTEREST FACTOR IN RENT EXPENSE 283 235 213 189 176 128 142 DIVIDENDS--PREFERRED STOCK -- -- 126 223 261 -- -- (A) --------- --------- --------- --------- --------- --------- --------- TOTAL FIXED CHARGES 9,005 8,030 7,647 7,188 6,762 4,491 4,191 --------- --------- --------- --------- --------- --------- --------- INCOME: INCOME BEFORE TAXES, MINORITY INTEREST AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES 12,876 10,496 6,732 7,664 7,734 7,145 6,989 FIXED CHARGES (EXCLUDING PREFERRED STOCK DIVIDENDS) 9,005 8,030 7,521 6,965 6,501 4,491 4,191 --------- --------- --------- --------- --------- --------- --------- TOTAL INCOME 21,881 18,526 14,253 14,629 14,235 11,636 11,180 ========= ========= ========= ========= ========= ========= ========= RATIO OF INCOME TO FIXED CHARGES EXCLUDING INTEREST ON DEPOSITS 2.43 2.31 1.86 2.04 2.11 2.59 2.67 ========= ========= ========= ========= ========= ========= ========= INCLUDING INTEREST ON DEPOSITS: FIXED CHARGES: INTEREST EXPENSE 22,045 18,606 18,868 16,430 15,341 10,932 10,064 INTEREST FACTOR IN RENT EXPENSE 283 235 213 189 176 128 142 DIVIDENDS--PREFERRED STOCK -- -- 126 223 261 -- -- (A) --------- --------- --------- --------- --------- --------- --------- TOTAL FIXED CHARGES 22,328 18,841 19,207 16,842 15,778 11,060 10,206 --------- --------- --------- --------- --------- --------- --------- INCOME: INCOME BEFORE TAXES, MINORITY INTEREST AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES 12,876 10,496 6,732 7,664 7,734 7,145 6,989 FIXED CHARGES (EXCLUDING PREFERRED STOCK DIVIDENDS) 22,328 18,841 19,081 16,619 15,517 11,060 10,206 --------- --------- --------- --------- --------- --------- --------- TOTAL INCOME 35,204 29,337 25,813 24,283 23,251 18,205 17,195 ========= ========= ========= ========= ========= ========= ========= RATIO OF INCOME TO FIXED CHARGES INCLUDING INTEREST ON DEPOSITS 1.58 1.56 1.34 1.44 1.47 1.65 1.68 ========= ========= ========= ========= ========= ========= =========
Note> On November 30, 2000, Citigroup Inc. completed its acquisition of Associates First Capital Corporation (Associates) in a transaction accounted for as a pooling of interests. Subsequent to the acquisition, Associates was contributed to and became a wholly owned subsidiary of Citicorp and Citicorp issued a full and unconditional guarantee of the outstanding long-term debt securities and commercial paper of Associates and Associates Corporation of North America (ACONA), a subsidiary of Associates. (A) On October 8, 1998, Citicorp merged with and into a newly formed, wholly owned subsidiary of Travelers Group Inc. ("TRV") (the "Merger"). Following the Merger, TRV changed its name to Citigroup. Under the terms of the Merger, Citicorp common and preferred stock were exchanged for Citigroup common stock and preferred stock. As such there were no Citicorp preferred dividends subsequent to 1998. EX-99.01 6 a2056694zex-99_01.txt EXHIBIT 99.01 Ex 99-01 RESIDUAL VALUE OBLIGATION QUARTERLY CERTIFICATE FOR THE QUARTER ENDED JUNE 30, 2001 The information below is being disclosed pursuant to the Residual Value Obligation Agreement dated as of April 3, 2000 between Associates First Capital Corporation and the Chase Manhattan Bank, as Trustee. Terms used and not otherwise defined herein have the meaning assigned to them in the Residual Value Agreement. Securitization Distribution Dates during quarter: April 16, 2001 May 15, 2001 June 15, 2001 Allocation Dates during quarter: April 17, 2001 May 16, 2001 June 16, 2001 Payment Date during quarter: NA AFCC Amount at beginning of quarter: $ 495,427,674 AFCC Amount at end of quarter: $ 514,239,412 ========================================================================================================================= ON THE PAYMENT DATE DURING THE QUARTER: Accrued RVO Payment Amount as of the immediately preceding Allocation Date: $ -- Interest accrued on Accrued RVO Payment Amount since immediately preceding Allocation Date: $ -- Accrued RVO Payment Amount as of such Payment Date: $ -- Number of RVO's outstanding as of the applicable record date N/A Payment per RVO: $ -- ========================================================================================================================= AS OF THE FIRST ALLOCATION DATE DURING THE QUARTER: RESIDUAL CASH FLOW: Residual Cash Flow Allocated for current period -- Cumulative Residual Cash Flow not covered by allocation (to be carried forward) $ (15,386,539) Excess Litigation Reserve allocated: $ -- RVO EXPENSES: Residual Cash Flow allocated to RVO Expenses: $ -- Cumulative RVO Expenses not covered by allocation (to be carried forward): $ -- LITIGATION EXPENSES: Residual Cash Flow allocated to Litigation Expenses: $ -- Cumulative Litigation Expenses not covered by allocation (to be carried forward): $ 416,826
AFCC AMOUNT: AFCC Amount at end of immediately preceding Allocation Date: $ 495,427,674 plus: AFCC Interest added on immediately preceding Securitization Distribution Date: $ 6,192,846 less: Residual Cash Flow allocated to AFCC Amount: $ -- AFCC Amount after allocation: $ 501,620,520 ACCRUED RVO PAYMENT AMOUNT: Residual Cash Flow allocated to Accrued RVO Payment Amount on such Allocation Date: $ -- plus: cumulative Residual Cash Flow allocated to, and cumulative interest accrued on, Accrued RVO Payment Amount since most recent Payment Date on which RVO Payments were made: $ -- Accrued RVO Payment Amount on such Allocation Date: $ -- ========================================================================================================================= AS OF THE SECOND ALLOCATION DATE DURING THE QUARTER: RESIDUAL CASH FLOW: Residual Cash Flow allocated for current period -- Cumulative Residual Cash Flow not covered by allocation (to be carried forward) $ (17,941,471) Excess Litigation Reserve allocated: $ -- RVO EXPENSES: Residual Cash Flow allocated to RVO Expenses: $ -- Cumulative RVO Expenses not covered by allocation (to be carried forward): $ -- LITIGATION EXPENSES: Residual Cash Flow allocated to Litigation Expenses: $ -- Cumulative Litigation Expenses not covered by allocation (to be carried forward): $ 430,142 AFCC AMOUNT: AFCC Amount at end of immediately preceding Allocation Date: $ 501,620,520 plus: AFCC Interest added on immediately preceding Securitization Distribution Date: $ 6,270,257 less: Residual Cash Flow allocated to AFCC Amount: $ -- AFCC Amount after allocation: $ 507,890,777 ACCRUED RVO PAYMENT AMOUNT: Residual Cash Flow allocated to Accrued RVO Payment Amount on such Allocation Date: $ -- plus: cumulative Residual Cash Flow allocated to, and cumulative interest accrued on, Accrued RVO Payment Amount since most recent Payment Date on which RVO Payments were made: $ -- Accrued RVO Payment Amount on such Allocation Date: $ -- =========================================================================================================================
AS OF THE THIRD ALLOCATION DATE DURING THE QUARTER: RESIDUAL CASH FLOW: Residual Cash Flow allocated for current period -- Cumulative Residual Cash Flow not covered by allocation (to be carried forward) $ (20,720,876) Excess Litigation Reserve allocated: $ -- RVO EXPENSES: Residual Cash Flow allocated to RVO Expenses: $ -- Cumulative RVO Expenses not covered by allocation (to be carried forward): $ -- LITIGATION EXPENSES: Residual Cash Flow allocated to Litigation Expenses: $ -- Cumulative Litigation Expenses not covered by allocation (to be carried forward): $ 441,030 AFCC AMOUNT: AFCC Amount at end of immediately preceding Allocation Date: $ 507,890,777 plus: AFCC Interest added on immediately preceding Securitization Distribution Date: $ 6,348,635 less: Residual Cash Flow allocated to AFCC Amount: $ -- AFCC Amount after allocation: $ 514,239,412 ACCRUED RVO PAYMENT AMOUNT: Residual Cash Flow allocated to Accrued RVO Payment Amount on such Allocation Date: $ -- plus: cumulative Residual Cash Flow allocated to, and cumulative interest accrued on, Accrued RVO Payment Amount since most recent Payment Date on which RVO Payments were made: $ -- Accrued RVO Payment Amount on such Allocation Date: $ -- =========================================================================================================================
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