-----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, P03I/FvKeShgQlTTHKRI2VF7ZqksK8y9GGvwFi9m9uISRS7ogG2rVm0/P257une3 0bie/946G+yZrOgGbj6xHA== 0000950130-96-001714.txt : 19960515 0000950130-96-001714.hdr.sgml : 19960515 ACCESSION NUMBER: 0000950130-96-001714 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: CSX SROS: NYSE SROS: PSE 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: 001-05378 FILM NUMBER: 96564436 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: FIRST NATIONAL CITY CORP DATE OF NAME CHANGE: 19740414 FORMER COMPANY: FORMER CONFORMED NAME: CITY BANK OF NEW YORK NATIONAL ASSOCIATI DATE OF NAME CHANGE: 19680903 10-Q 1 FORM 10-Q FINANCIAL REVIEW AND FORM 10-Q FIRST QUARTER 1996 TABLE OF CONTENTS PAGE FINANCIAL SUMMARY......................................................... 1 BUSINESS DISCUSSIONS...................................................... 3 Earnings Summary......................................................... 3 Consumer................................................................. 4 (Corporate) Banking......................................................10 Corporate Items..........................................................13 MANAGING GLOBAL RISK......................................................14 Liquidity................................................................14 Price Risk...............................................................14 Derivative and Foreign Exchange Contracts................................16 Estimated Fair Value of Financial Instruments............................19 Capital..................................................................20 STATEMENT OF INCOME ANALYSIS..............................................22 Net Interest Revenue.....................................................22 Fee and Commission Revenue...............................................23 Trading-Related Revenue..................................................24 Securities Transactions..................................................25 Other Revenue............................................................25 Provision and Allowance for Credit Losses................................26 Operating Expense........................................................27 Income Taxes.............................................................27 Effect of Credit Card Receivable Securitizations.........................28 CONSOLIDATED FINANCIAL STATEMENTS.........................................29 Consolidated Statement of Income.........................................29 Consolidated Balance Sheet...............................................30 Consolidated Statement of Changes in Stockholders' Equity................31 Consolidated Statement of Cash Flows.....................................32 CITIBANK, N.A. Consolidated Balance Sheet................................33 OTHER FINANCIAL INFORMATION...............................................34 Securities...............................................................34 Trading Account Assets and Liabilities...................................34 Cash-Basis, Renegotiated, and Past Due Loans.............................35 Other Real Estate Owned and Assets Pending Disposition...................35 Details of Credit Loss Experience........................................36 Calculation of Earnings Per Share........................................37 Cross-Border and Non-Local Currency Outstandings.........................38 Average Balances and Interest Rates......................................39 FORM 10-Q.................................................................41 Form 10-Q Cross-Reference Index..........................................42 SIGNATURES................................................................44
FINANCIAL SUMMARY - ----------------------------------------------------------------------------------------------- First Quarter ---------------- 1996 1995 - ----------------------------------------------------------------------------------------------- NET INCOME (In Millions).................................................... $ 914 $ 829 - ----------------------------------------------------------------------------------------------- NET INCOME PER SHARE (see page 37) (A) On Common and Common Equivalent Shares..................................... $ 1.82 $ 1.71 Assuming Full Dilution..................................................... $ 1.75 $ 1.53 COMMON STOCKHOLDERS' EQUITY PER SHARE....................................... $36.79 $35.28 - ----------------------------------------------------------------------------------------------- FINANCIAL RATIOS Return on Total Assets...................................................... 1.37% 1.25% Return on Common Stockholders' Equity....................................... 20.18% 21.84% Return on Total Stockholders' Equity........................................ 18.63% 18.75% - ----------------------------------------------------------------------------------------------- CAPITAL (Dollars in Billions) (see page 20) Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 1996 1995 1995 1995 1995 ------------------------------------------------------- Tier 1..................................... $ 19.0 $ 18.9 $ 18.6 $ 18.6 $ 17.8 Tier 1 and 2............................... 28.0 27.7 27.3 27.3 26.9 Tier 1 Ratio............................... 8.42% 8.41% 8.38% 8.43% 8.01% Tier 1 and 2 Ratio......................... 12.37 12.33 12.31 12.40 12.06 Leverage Ratio............................. 7.44 7.45 7.35 7.19 7.00 Common Equity as a Percentage of Total Assets.................................... 6.71% 6.43% 6.27% 6.02% 5.21% Total Equity as a Percentage of Total Assets.................................... 7.50 7.62 7.57 7.59 6.83 - ----------------------------------------------------------------------------------------------- PRE-TAX EARNINGS ANALYSIS (In Millions) 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. 1996 1995 1995 1995 1995 ------------------------------------------------------- Total Revenue........................... $4,828 $4,789 $4,757 $4,689 $4,443 Effect of Credit Card Securitization (B) 294 250 219 226 222 Net Cost To Carry (C)................... (5) 8 7 8 - ------------------------------------------------------- ADJUSTED REVENUE........................ 5,117 5,047 4,983 4,923 4,665 ------------------------------------------------------- Total Operating Expense................. 2,860 2,818 2,793 2,798 2,693 Net OREO Benefits (D)................... 12 59 33 13 - ------------------------------------------------------- ADJUSTED OPERATING EXPENSE.............. 2,872 2,877 2,826 2,811 2,693 ------------------------------------------------------- OPERATING MARGIN........................ 2,245 2,170 2,157 2,112 1,972 Consumer Credit Costs (E)............... 706 688 633 616 536 Commercial Credit Costs (F)............. 15 (14) 61 23 2 ------------------------------------------------------- OPERATING MARGIN LESS CREDIT COSTS...... 1,524 1,496 1,463 1,473 1,434 ------------------------------------------------------- Additional Provision (G)................ 50 56 75 75 75 ------------------------------------------------------- INCOME BEFORE TAXES..................... $1,474 $1,440 $1,388 $1,398 $1,359 - ----------------------------------------=======================================================
(A) Based on net income less preferred stock dividends, except when conversion is assumed. (B) For a description of the effect of credit card receivable securitizations see page 28. (C) Principally the net cost to carry commercial cash-basis loans and other real estate owned ("OREO"). (D) Principally gains and losses on sales, direct revenue and expense, and writedowns on commercial OREO. (E) Principally consumer net credit write-offs adjusted for the effect of credit card receivable securitizations. (F) Includes commercial net credit write-offs, net cost to carry, and net OREO benefits. (G) Primarily provision for credit losses in excess of net write-offs. See page 26 for discussion. 1 Citicorp reported net income of $914 million, or $1.75 per fully diluted common share, in the 1996 first quarter, up 10% and 14%, respectively, compared with $829 million, or $1.53 per fully diluted common share, in the same 1995 quarter. Return on common equity of 20.2% for the quarter remained strong, but was down from 21.8% in the 1995 first quarter, reflecting higher equity levels. Return on average assets was 1.37% in the 1996 first quarter, compared with 1.25% in the year ago period. The Consumer businesses earned $513 million in the first quarter of 1996, up 11% from the year ago period. Earnings in the (Corporate) Bank of $469 million were up 18% from the first quarter of 1995 reflecting strong growth in the Emerging Markets business and lower income taxes, partially offset by soft trading- related and venture capital results in North America, Europe, and Japan. Adjusted revenue increased $452 million, or 10%, from the 1995 first quarter while adjusted expenses were up $179 million, or 7%, resulting in an incremental revenue to expense ratio of 2.5:1. Operating margin grew 14%, and the efficiency ratio (adjusted operating expense as a percentage of adjusted revenue) improved to 56% from 58% in the comparable 1995 period. The effect of translating various currencies into the U.S. dollar had no significant impact on either revenue or expense. The increase in adjusted revenue from the same 1995 quarter included a 10% increase in the Consumer businesses, broadly spread across Cards, Citibanking, and the Private Bank, and a 4% increase in the (Corporate) Banking businesses as strong growth in the Emerging Markets was partially offset by lower revenues in Global Relationship Banking ("GRB"). Trading-related revenue (which includes trading account and foreign exchange revenue, as well as net interest revenue associated with trading activities) of $392 million was essentially unchanged from the comparable 1995 period as an increase of $56 million in the Emerging Markets was largely offset by a decrease in GRB. The increase in adjusted operating expense from the year ago quarter principally reflected higher business volumes and franchise expansion in the emerging markets, while expense levels related to core business activities in North America, Europe, and Japan were up only 1% from the first quarter of 1995. Consumer credit costs of $706 million in the first quarter of 1996 were up from $688 million in the fourth quarter of 1995 and $536 million in the comparable 1995 period, with the consumer loss ratio in the 1996 first quarter at 2.19% of managed loans, up from 2.14% and 1.82% in the 1995 fourth quarter and first quarter, respectively. The increase in credit costs and in the related loss ratios chiefly reflected a continued rise in U.S. bankcard losses from a cyclical low in the fourth quarter of 1996. Net credit losses on managed U. S. bankcards were $467 million, representing a loss rate of 4.38%, up from 3.89% in the 1995 fourth quarter (adjusted for the fourth quarter sale of certain bankrupt accounts) and 3.58% in the 1995 first quarter. See page 8 for additional discussion of the consumer portfolio. Commercial credit costs remained low at $15 million in the quarter, up from $2 million in the 1995 first quarter. Commercial cash-basis loans and OREO of $2.0 billion at March 31, 1996 were down substantially from $3.1 billion a year earlier, principally reflecting reductions in the North America Commercial Real Estate portfolio. Citicorp's effective tax rate was 38% in the 1996 first quarter compared with 39% in the same 1995 quarter. The 1995 full year effective tax rate was 38%. Citicorp continued to strengthen its balance sheet. The allowance for credit losses was built by $50 million in the quarter to $5.4 billion at March 31, 1996. Total capital (Tier 1 and Tier 2) rose to $28 billion and Tier 1 capital rose to $19 billion, or 8.42% of net risk-adjusted assets, at March 31, 1996. During the first quarter, the company issued 59 million shares of common stock in the redemption of all of its remaining convertible preferred stock totaling $1.0 billion. Pursuant to a stock repurchase program initiated in June 1995, and expanded in January 1996 to a total authorization of $4.5 billion through January 31, 1998, Citicorp acquired 9.6 million shares of common stock at a cost of $721 million during the quarter. With these purchases, the number of shares acquired through March 31, 1996 totaled 32.6 million common shares at a cost of $2.2 billion. 2 BUSINESS DISCUSSIONS - -------------------------------------------------------------------------------- The table below and the discussions that follow analyze Citicorp's results in the context of global business areas including its core business franchises of Consumer and (Corporate) Banking.
- ------------------------------------------------------------------ EARNINGS SUMMARY - ------------------------------------------------------------------ First Quarter % --------------- (Dollars In Millions) 1996 1995(A) Change - ------------------------------------------------------------------ Consumer............................... $ 513 $463 11 (Corporate) Banking (B)................ 469 397 18 ---------------- Core Businesses....................... 982 860 14 Corporate Items (see page 13).......... (68) (31) NM ---------------- TOTAL CITICORP......................... $ 914 $829 10 ================ SUPPLEMENTAL INFORMATION: CONSUMER (see page 4): Citibanking........................... $ 183 $151 21 Cards................................. 265 263 1 Private Banking....................... 65 49 33 ---------------- TOTAL................................. $ 513 $463 11 ================ Developed Markets..................... $ 289 $270 7 Emerging Markets...................... 224 193 16 ---------------- TOTAL................................. $ 513 $463 11 ================ (CORPORATE) BANKING (B) (see page 10): Emerging Markets...................... $ 393 $270 46 Global Relationship Banking........... 76 127 (40) ---------------- TOTAL................................. $ 469 $397 18 - ---------------------------------------===========================
(A) Reclassified to conform to latest quarter's presentation. (B) (Corporate) Banking activities also include the results of the Cross Border Refinancing and the North America Commercial Real Estate portfolios in the Emerging Markets and GRB, respectively, both of which were previously reported separately. NM Not meaningful, as percentage equals or exceeds 100%. - -------------------------------------------------------------------------------- 3 - -------------------------------------------------------------------------------- CONSUMER - -------------------------------------------------------------------------------- Citicorp's Consumer businesses operate uniquely global, full-service consumer franchises encompassing branch banking ("Citibanking"), credit and charge cards ("Cards"), and Private Banking.
- ------------------------------------------------------------------------------------------------------- TOTAL DEVELOPED MARKETS EMERGING MARKETS FIRST QUARTER FIRST QUARTER FIRST QUARTER ----------------- ------------------- ------------------ (In Millions of Dollars) 1996 1995(A) 1996 1995(A) 1996 1995(A) - ------------------------------------------------------------------------------------------------------- Total Revenue........................... $2,960 $2,720 $2,097 $1,983 $ 863 $ 737 Effect of Credit Card Securitization.... 294 222 294 222 - - Net Cost to Carry Cash-Basis Loans & OREO................................... (1) 4 (1) 4 - - -------------------------------------------------------------- ADJUSTED REVENUE........................ 3,253 2,946 2,390 2,209 863 737 -------------------------------------------------------------- Total Operating Expense................. 1,741 1,652 1,265 1,241 476 411 Net OREO Costs.......................... - (1) - (1) - - -------------------------------------------------------------- ADJUSTED OPERATING EXPENSE.............. 1,741 1,651 1,265 1,240 476 411 -------------------------------------------------------------- OPERATING MARGIN........................ 1,512 1,295 1,125 969 387 326 -------------------------------------------------------------- Net Write-offs.......................... 413 309 320 267 93 42 Effect of Credit Card Securitization.... 294 222 294 222 - - Net Cost to Carry and Net OREO Costs.... (1) 5 (1) 5 - - -------------------------------------------------------------- CREDIT COSTS............................ 706 536 613 494 93 42 -------------------------------------------------------------- OPERATING MARGIN LESS CREDIT COSTS...... 806 759 512 475 294 284 Additional Provision.................... 50 50 48 46 2 4 -------------------------------------------------------------- INCOME BEFORE TAXES..................... 756 709 464 429 292 280 Income Taxes............................ 243 246 175 159 68 87 -------------------------------------------------------------- NET INCOME.............................. $ 513 $ 463 $ 289 $ 270 $ 224 $ 193 - ----------------------------------------============================================================== Average Assets (In Billions of Dollars). $ 125 $ 116 $ 88 $ 83 $ 37 $ 33 Return on Assets........................ 1.65% 1.62% 1.32% 1.32% 2.43% 2.37% - ----------------------------------------==============================================================
(A) Reclassified to conform to latest quarter's presentation. FINANCIAL REVIEW Net income from the worldwide Consumer businesses of Citibanking, Cards and Private Banking in the 1996 first quarter of $513 million was up $50 million, or 11%, from the first quarter of 1995. The improvement was led by Citibanking and Private Banking, while Cards earnings were essentially unchanged. Geographically, net income in the emerging markets increased $31 million, or 16%, from the year-ago quarter, principally from continued growth in the Asia Pacific region. Net income in the developed markets improved $19 million, or 7%, reflecting higher earnings in Citibanking and Private Banking. Consumer adjusted revenue was up 10% from the first quarter of 1995, representing growth in each of the three businesses. Adjusted operating expense increased a moderate 5%, reflecting spending on initiatives in worldwide Citibanking and Cards in the emerging markets. Consumer credit costs were $706 million, up from $688 million in the 1995 fourth quarter and from $536 million in the 1995 first quarter, with the annualized net credit loss ratio at 2.19% of managed loans in the first quarter up from 2.14% in the preceding quarter and 1.82% in the year-ago quarter. The increase in credit costs and the related loss ratios chiefly reflected a continued rise in U.S. bankcards losses from a cyclical low in the fourth quarter of 1994 (see further discussion on pages 6, 8, and 9). The provision for credit losses included charges in excess of net write-offs of $50 million in each quarter. 4
- ---------------------------------------------------------------------------------------------- CITIBANKING - ---------------------------------------------------------------------------------------------- 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. (In Millions of Dollars) 1996 1995 1995 1995 1995 - ---------------------------------------------------------------------------------------------- Adjusted Revenue........................ $1,404 $1,393 $1,379 $1,349 $1,288 Adjusted Operating Expense.............. 967 995 942 942 900 ------------------------------------------------------ OPERATING MARGIN........................ 437 398 437 407 388 Credit Costs............................ 158 196 183 178 149 ------------------------------------------------------ OPERATING MARGIN LESS CREDIT COSTS...... 279 202 254 229 239 Additional Provision.................... 1 28 2 10 2 ------------------------------------------------------ INCOME BEFORE TAXES..................... 278 174 252 219 237 Income Taxes............................ 95 48 87 81 86 ------------------------------------------------------ NET INCOME.............................. $ 183 $ 126 $ 165 $ 138 $ 151 - ----------------------------------------====================================================== Average Assets (In Billions of Dollars). $ 81 $ 81 $ 80 $ 79 $ 77 Return on Assets........................ 0.91% 0.62% 0.82% 0.70% 0.80% - ----------------------------------------======================================================
Citibanking activities in the first quarter contributed $183 million of net income, up $32 million, or 21%, from the 1995 first quarter and up $57 million from the 1995 fourth quarter. The improvement from the year-ago quarter reflected improved results across the developed markets and business expansion in Asia Pacific. Revenue, up 9%, was led by double-digit growth in the emerging markets, particularly in Asia Pacific, and by improvements in the U.S. and Europe. Expense was up 7%, reflecting business activity in the emerging markets and investment spending associated with the continued roll-out of the Citibanking branding strategy. Credit costs increased as losses in Latin America, although improved over levels in the second half of 1995, were up from the year-ago quarter. These increases were partially offset by reduced credit losses in the U.S. and Europe. The earnings improvement from the preceding quarter reflected improvements in the developed markets and continued growth in Asia Pacific. In the developed markets, earnings benefited as operating expenses, which included higher marketing costs in the 1995 fourth quarter, were reduced and credit costs improved across the U.S. and Europe. The Federal Deposit Insurance Fund reform legislation currently before Congress includes a proposal to recapitalize the Savings Association Insurance Fund ("SAIF") through a special assessment on current members of the SAIF, including Citicorp's savings bank subsidiary. If adopted as proposed, the savings bank subsidiary would be subject to a special assessment of approximately $80 million pretax, which must be expensed in the quarter when the legislation is enacted. It is expected that following recapitalization of the SAIF, future deposit insurance premiums charged to savings banks would be lowered. 5
- ---------------------------------------------------------------------------------------------- CARDS - ---------------------------------------------------------------------------------------------- 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. (In Millions of Dollars) 1996 1995 1995 1995 1995 - ---------------------------------------------------------------------------------------------- Adjusted Revenue........................ $1,603 $1,586 $1,527 $1,454 $1,434 Adjusted Operating Expense.............. 612 558 599 602 598 ------------------------------------------------------ OPERATING MARGIN........................ 991 1,028 928 852 836 Credit Costs............................ 547 484 448 422 377 ------------------------------------------------------ OPERATING MARGIN LESS CREDIT COSTS...... 444 544 480 430 459 Additional Provision.................... 49 22 48 40 48 ------------------------------------------------------ INCOME BEFORE TAXES..................... 395 522 432 390 411 Income Taxes............................ 130 157 141 134 148 ------------------------------------------------------ NET INCOME.............................. $ 265 $ 365 $ 291 $ 256 $ 263 - ----------------------------------------====================================================== Average Assets (In Billions of Dollars). $ 28 $ 28 $ 27 $ 25 $ 24 Return on Assets........................ 3.81% 5.17% 4.28% 4.11% 4.44% - ----------------------------------------======================================================
Cards worldwide net income of $265 million was essentially unchanged from the 1995 first quarter, but down from $365 million in the fourth quarter. Net income from Cards businesses in the emerging markets grew to 30% of the total from 24% in the year-ago quarter, reflecting significant growth in Asia Pacific, while earnings from U.S. bankcards were down slightly, principally due to higher credit costs. Additionally, earnings benefited in the quarter compared to the year-ago quarter because of lower effective tax rates in the emerging markets. The decrease in worldwide Cards net income from the fourth quarter reflected higher credit costs as well as an increase in operating expense, partially reflecting seasonally lower marketing spending in the fourth quarter of 1995. Adjusted revenue in the quarter was up 12% from the first quarter of 1995, reflecting volume growth in U.S. bankcards and business expansion in Asia Pacific. Expenses increased by only 2% from the year-ago quarter, reflecting continued investment spending in the emerging markets partially offset by lower expense levels in U.S. bankcards. Credit costs for worldwide Cards were $547 million in the quarter, up $51 million from the fourth quarter (adjusted for the fourth quarter sale of certain bankrupt accounts) and up $170 million from the 1995 first quarter. Consistent with broad industry trends, net credit losses in the managed U.S. bankcard portfolio increased to $467 million in the quarter, up an adjusted $53 million from the fourth quarter, and up $135 million from the 1995 first quarter. The loss ratio in the U.S. bankcard portfolio rose to 4.38% in the quarter from an adjusted 3.89% in the preceding quarter and 3.58% in the year-ago quarter. The loss ratio, which is influenced by credit and economic conditions as well as portfolio levels, is expected to increase further from the first quarter of 1996. See pages 8-9 and 26-27 for additional discussion of the U.S. bankcards portfolio. Cards continued to build reserves for possible credit losses, with a provision of $49 million above net write-offs in the 1996 first quarter. The return on assets for worldwide Cards was 3.81% in the quarter, down from 5.17% in the fourth quarter of 1995 and 4.44% in the first quarter of 1995. Adjusted for the effect of credit card securitization, the return on managed assets in the quarter of 1.98% was down from a seasonally high 2.72% in the preceding quarter and also down 31 basis points from 2.29% in the year-ago quarter. U.S. bankcards experienced moderate growth in its portfolio since the first quarter of 1995 with cards in force increasing 8% to 38 million, charge volumes up 15% to $21 billion, and end of period loans increasing 11% to $42 billion. For the worldwide business (including affiliates), the number of cards in force exceeded 58 million as of March 31, 1996, charge volumes in the quarter were $29 billion, and end of period loans were $50 billion. 6
- ---------------------------------------------------------------------------------------------- PRIVATE BANKING - ---------------------------------------------------------------------------------------------- 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. (In Millions of Dollars) 1996 1995 1995 1995 1995 - ---------------------------------------------------------------------------------------------- Adjusted Revenue........................ $ 246 $ 248 $ 239 $ 232 $ 224 Adjusted Operating Expense.............. 162 161 158 161 153 ------------------------------------------------------ OPERATING MARGIN........................ 84 87 81 71 71 Credit Costs............................ 1 8 2 16 10 ------------------------------------------------------ OPERATING MARGIN LESS CREDIT COSTS...... 83 79 79 55 61 Additional Provision.................... - - - - - ------------------------------------------------------ INCOME BEFORE TAXES..................... 83 79 79 55 61 Income Taxes............................ 18 10 16 8 12 ------------------------------------------------------ NET INCOME.............................. $ 65 $ 69 $ 63 $ 47 $ 49 - ----------------------------------------====================================================== Average Assets (In Billions of Dollars). $ 16 $ 15 $ 15 $ 15 $ 15 Return on Assets........................ 1.63% 1.83% 1.67% 1.26% 1.32% - ----------------------------------------======================================================
Private Banking net income of $65 million was up $16 million, or 33%, from the 1995 first quarter. The improvement from the year-ago quarter principally reflected higher spreads and credit volumes in both the developed and emerging markets. Adjusted revenue improved 10% from the year-ago quarter, while adjusted operating expense growth was only 6%, resulting in a margin increase of 18%. Client business volumes rose 12% from a year earlier to $89.9 billion at March 31, 1996. Fee and commission revenue was up only slightly as clients continued to favor low risk products, prompted by shifts in market conditions since mid-1994. Credit costs improved substantially from both the preceding and year-ago quarters. 7 CONSUMER PORTFOLIO REVIEW In the Consumer portfolio, credit loss experience is often expressed in terms of annual net credit losses as a percentage of average consumer loans. Pricing and credit policies reflect the loss experience of each particular product. Consumer loans are generally written off no later than a predetermined number of days past due on a contractual basis, or earlier in the event of bankruptcy. The number of days is set at an appropriate level according to loan product and country. The following table summarizes the Consumer delinquencies and net credit loss experience in both the managed and on-balance sheet consumer loan portfolio in terms of loans 90 days or more past due, net credit losses, and as a percentage of related loans.
- --------------------------------------------------------------------------------------------------------------------------------- CONSUMER LOAN DELINQUENCY AMOUNTS, NET CREDIT LOSSES, AND RATIOS - --------------------------------------------------------------------------------------------------------------------------------- Total Loans (A) 90 Days or More Past Due Net Credit Losses ------------------ --------------------------------- ------------------------------ Mar. 31, Mar. 31, Dec. 31, Mar. 31, 1st Qtr. 4th Qtr. 1st Qtr. 1996 1996 1995 1995 1996 1995 1995 - --------------------------------------------------------------------------------------------------------------------------------- (Dollars in Billions) (Dollars in Millions) (Dollars in Millions) CITIBANKING.................. $ 65.9 $2,755 $2,770 $2,763 $ 158 $ 196 $ 149 Ratio....................... 4.18% 4.23% 4.41% 0.97% 1.20% 0.99% CARDS U.S. Bankcards............... 42.1 759 732 650 467 402 332 Ratio....................... 1.80% 1.66% 1.71% 4.38% 3.77% 3.58% Other........................ 7.6 176 141 117 80 82 45 Ratio..................... 2.31% 1.93% 1.84% 4.40% 4.59% 3.00% PRIVATE BANKING.............. 14.7 260 307 337 2 11 5 Ratio..................... 1.76% 2.15% 2.45% 0.06% 0.32% 0.15% TOTAL MANAGED................ 130.3 3,950 3,950 3,867 707 691 531 RATIO..................... 3.03% 3.01% 3.20% 2.19% 2.14% 1.82% Effect of Credit Card........ (26.2) (479) (440) (410) (294) (250) (222) Securitization TOTAL ON-BALANCE SHEET....... $104.1 $3,471 $3,510 $3,457 $ 413 $ 441 $ 309 -------------------------------------------------------------------------------------------------- Ratio..................... 3.33% 3.32% 3.52% 1.60% 1.70% 1.30% - --------------------------------------------------------------------------------------------------------------------------------- SUPPLEMENTAL INFORMATION (MANAGED PORTFOLIO): DEVELOPED.................... $100.7 $3,603 $3,665 $3,650 $ 614 $ 584 $ 489 Ratio..................... 3.58% 3.58% 3.87% 2.45% 2.32% 2.15% EMERGING..................... 29.6 347 285 217 93 107 42 Ratio..................... 1.17% 0.99% 0.82% 1.29% 1.50% 0.65% - ---------------------------------------------------------------------------------------------------------------------------------- (A) Net of unearned income. - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- CONSUMER LOAN BALANCES - ---------------------------------------------------------------------------------------------------------------------------------- End of Period(A) Average(A) ---------------------------------------------------------------------------- Mar. 31, Dec. 31, Mar. 31, 1st Qtr. 4th Qtr. 1st Qtr. (In Billions of Dollars) 1996 1995 1995 1996 1995 1995 - ---------------------------------------------------------------------------------------------------------------------------------- MANAGED............................................. $130.3 $131.1 $120.8 $129.8 $128.1 $118.7 Securitized Loans................................... (26.2) (25.5) (22.7) (25.9) (25.2) (22.5) ---------------------------------------------------------------------------- ON-BALANCE SHEET.................................... $104.1 $105.6 $ 98.1 $103.9 $102.9 $ 96.2 - ------------------------------------------------------============================================================================
(A) The end of period and average loan amounts are net of unearned income. 8 Total managed delinquent dollars and the related delinquency ratio were essentially unchanged from the 1995 fourth quarter. The increase in managed dollar delinquencies from the 1995 first quarter largely reflected growth in loan volumes, with the overall delinquency ratio reduced slightly. As noted on pages 4 and 26, net credit losses and the related loss ratios have increased from both the preceding and year-ago quarters. In Citibanking, loans delinquent 90 days or more, which included $1.0 billion of U.S. mortgages, were essentially unchanged from both the first and fourth quarters of 1995. Lower delinquencies in the U.S. and Europe were offset by increases in the emerging markets, which reflected portfolio growth in both Asia Pacific and Latin America, as well as economic conditions in Latin America. Net credit losses were up slightly from the year-ago quarter, but declined $38 million from the fourth quarter of 1995 due to improvements in the U.S. and Europe, as well as in Latin America. U.S. bankcards managed loans that were delinquent 90 days or more totaled $759 million, or 1.80% of that portfolio, as of March 31, 1996, up from $732 million, or 1.66%, at December 31, 1995. The net credit loss ratio has risen from its cyclical low in the fourth quarter of 1994. This increase, which reflects a general deterioration in the credit environment as well as the effect of portfolio seasoning, is broadly consistent with industry trends. See pages 6 and 26 for additional discussion. In other Cards, business expansion in Asia Pacific is primarily responsible for the rise in delinquencies and the increase in net credit losses from the first quarter of 1995. While economic conditions in certain Latin American countries have also contributed to these increases, net credit losses have improved in Latin America since the fourth quarter of 1995, resulting in slightly lower losses in other Cards. Private Banking delinquencies and net credit losses have improved from both the first and fourth quarters of 1995, reflecting lower levels of cash-basis loans and higher credit recoveries. The improvement from the fourth quarter also reflected lower gross credit write-offs. Total consumer loans on the balance sheet with delinquencies of 90 days or more on which interest continued to be accrued (which primarily include worldwide bankcard receivables, personal loans in Germany, and student loans) were $915 million at March 31, 1996, down from $951 million at December 31, 1995. The majority of these loans, excluding the government-guaranteed student loan portfolio, are written off upon reaching a stipulated number of days past due. Citicorp's policy for suspending the accrual of interest on consumer loans varies depending on the terms, security and credit loss experience characteristics of each product, as well as write-off criteria in place. At March 31, 1996, interest accrual had been suspended on $2.7 billion of consumer loans, up $59 million from December 31, 1995. Consumer credit costs and the related net credit loss ratios may increase from first quarter 1996 levels as a result of credit factors applicable to the portfolio, economic conditions, and continued portfolio growth. Additionally, delinquencies and loans on which the accrual of interest is suspended could remain at relatively high levels. These factors may result in further increases to the consumer allowance. 9 - -------------------------------------------------------------------------------- (CORPORATE) BANKING - -------------------------------------------------------------------------------- (Corporate) Banking serves corporations, financial institutions, governments, and other participants in capital markets throughout the world. The (Corporate) Banking results presented below include the results of the Cross-Border Refinancing Portfolio (as a component of the Emerging Markets business) and North America Commercial Real Estate (as a component of Global Relationship Banking), both of which previously were reported separately.
- ---------------------------------------------------------------------------------------------------- 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. (In Millions of Dollars) 1996 1995(A) 1995(A) 1995(A) 1995(A) - ---------------------------------------------------------------------------------------------------- Total Revenue........................... $1,620 $1,570 $1,622 $1,770 $1,561 Net Cost to Carry Cash-Basis Loans & OREO................................... (4) 6 4 5 (4) ------------------------------------------------------------ ADJUSTED REVENUE........................ 1,616 1,576 1,626 1,775 1,557 ------------------------------------------------------------ Total Operating Expense................. 998 981 981 1,004 954 Net OREO Benefits....................... 12 54 29 21 1 ------------------------------------------------------------ ADJUSTED OPERATING EXPENSE.............. 1,010 1,035 1,010 1,025 955 ------------------------------------------------------------ OPERATING MARGIN........................ 606 541 616 750 602 ------------------------------------------------------------ Net Write-offs.......................... 31 34 86 39 7 Net Cost to Carry and Net OREO Benefits. (16) (48) (25) (16) (5) ------------------------------------------------------------ CREDIT COSTS............................ 15 (14) 61 23 2 ------------------------------------------------------------ OPERATING MARGIN LESS CREDIT COSTS...... 591 555 555 727 600 Additional Provision.................... - 6 25 25 25 ------------------------------------------------------------ INCOME BEFORE TAXES..................... 591 549 530 702 575 Income Taxes............................ 122 120 141 143 178 ------------------------------------------------------------ NET INCOME.............................. $ 469 $ 429 $ 389 $ 559 $ 397 - ----------------------------------------============================================================ Average Assets (In Billions of Dollars). $ 139 $ 139 $ 140 $ 150 $ 149 Return on Assets........................ 1.36% 1.22% 1.10% 1.49% 1.08% - ----------------------------------------------------------------------------------------------------
(A) Reclassified to conform to latest quarter's presentation. Net income from global corporate banking activities of $469 million in the first quarter of 1996 was up 18% from the first quarter of 1995 as business expansion in the Emerging Markets business more than offset lower results in Global Relationship Banking. Net income in the 1996 quarter also benefited from a lower effective income tax rate that resulted from a change in the geographic mix and nature of earnings. The return on assets increased to 1.36% in the first quarter of 1996 compared with 1.08% in the first quarter of 1995. Adjusted revenue grew 4%, with strong base revenue growth--principally in the Emerging Markets business--partially offset by lower venture capital results. Revenue from transaction banking services was up 7% in the quarter and comprised 32% of adjusted revenue in the first quarters of both 1996 and 1995. Trading- related revenue was essentially unchanged, contributing $342 million, or 21% of total adjusted revenue, in the first quarter of 1996 compared with $336 million, or 22% of total adjusted revenue, in the first quarter of 1995. Lower trading- related revenue in the GRB was offset by improvement in the Emerging Markets business. Adjusted operating expense of $1.0 billion in the first quarter of 1996 was up 6% from the first quarter of 1995. The growth is attributable to higher business volumes and investment spending to build the Emerging Markets banking franchise. Expense in the GRB was essentially unchanged from a year ago. Credit costs, at $15 million in the first quarter of 1996, remained low. At March 31, 1996, cash-basis loans of $1.5 billion were composed of $0.4 billion in the Emerging Markets business and $1.1 billion in the GRB (including $0.9 billion attributable to the North America Commercial Real Estate portfolio). Cash-basis loans declined $0.5 billion from March 31, 1995. The OREO portfolio of $518 million declined from $1.0 billion at March 31, 1995. These declines are primarily attributable to reductions in the North America Commercial Real Estate portfolio. Total commercial cash-basis loans and OREO of $2.0 billion were essentially unchanged from December 31, 1995. See the tables entitled Cash-Basis, Renegotiated, and Past Due Loans and Other Real Estate Owned and Assets Pending Disposition on page 35. 10
- ---------------------------------------------------------------------------------------------------- EMERGING MARKETS - ---------------------------------------------------------------------------------------------------- 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. (In Millions of Dollars) 1996 1995(A) 1995(A) 1995(A) 1995(A) - ---------------------------------------------------------------------------------------------------- Adjusted Revenue....................... $ 867 $ 709 $ 716 $ 760 $ 713 Adjusted Operating Expense............. 371 358 346 355 315 ------------------------------------------------------------ OPERATING MARGIN....................... 496 351 370 405 398 Credit Costs........................... 10 - 16 9 8 ------------------------------------------------------------ OPERATING MARGIN LESS CREDIT COSTS..... 486 351 354 396 390 Additional Provision................... - (19) - - - ------------------------------------------------------------ INCOME BEFORE TAXES.................... 486 370 354 396 390 Income Taxes........................... 93 99 93 55 120 ------------------------------------------------------------ NET INCOME............................. $ 393 $ 271 $ 261 $ 341 $ 270 - ----------------------------------------============================================================ Average Assets (In Billions of Dollars) $ 55 $ 53 $ 50 $ 49 $ 48 Return on Assets....................... 2.87% 2.03% 2.07% 2.79% 2.28% - ----------------------------------------============================================================
(A) Reclassified to conform to latest quarter's presentation. Net income from the Emerging Markets business totaled $393 million in the quarter, up $123 million from the first quarter of 1995, as strong growth in revenue and operating margin was coupled with lower local effective income tax rates. Average assets grew by $7 billion from the first quarter of 1995 reflecting continued business expansion. Revenue growth of $154 million, or 22%, in the first quarter of 1996 compared with the first quarter of 1995 reflected broad business expansion in Latin America and Asia Pacific, and across trading-related activities, loan products, and transaction services. About one-fifth of the revenue in the Emerging Markets was attributable to business with multinational companies that are relationship-managed with the GRB, with that revenue having grown at a double- digit rate from the year-ago quarter. Revenue in the first quarter of 1996 related to net asset gains and securities transactions was up $19 million from the first quarter of 1995. Such revenue included a pretax gain of $52 million in the 1996 first quarter from the sale of Brazil interest bonds, while the 1995 first quarter revenue included gains from the sale of a real estate asset and revenue related to the completion of the refinancing agreement with Ecuador. Operating expense rose 18% in the first quarter of 1996 compared with the first quarter of 1995 primarily because of higher business volumes and investment spending to build the franchise. Since the first quarter of 1995, banking operations were initiated in Slovakia, Romania, Israel, and Lebanon. In addition, operations were expanded by opening additional offices or converting representative offices to branches or subsidiaries in countries such as Tanzania, Russia, China, Poland, Bangladesh, and South Africa. Credit costs were $10 million in the first quarter of 1996 compared with $8 million in the first quarter of 1995. The Emerging Markets business results include the Cross-Border Refinancing Portfolio, which previously was reported separately. It earned $89 million in the first quarter of 1996, up from $65 million in the first quarter of 1995, with average assets unchanged at $3 billion. At March 31, 1996, Citicorp's cross-border and non-local currency outstandings in the Cross-Border Refinancing Portfolio included $2.9 billion of medium- and long-term outstandings, down $0.5 billion from the first quarter of 1995. The medium- and long-term debt outstandings at March 31, 1996 included $2.0 billion in Brazil, $0.4 billion in Venezuela, $0.2 billion in South Africa, and $0.3 billion in the aggregate in eight other countries. Of the $2.9 billion of outstandings in the Cross-Border Refinancing Portfolio, $2.5 billion is in the form of securities carried at fair value in the available-for-sale securities portfolio (with an amortized cost of $2.4 billion), all of which were current as to principal and interest as of March 31, 1996. See the table entitled Securities on page 34. The amount of cash-basis loans in the Cross-Border Refinancing Portfolio was $24 million at March 31, 1996. 11
- ---------------------------------------------------------------------------------------------------- GLOBAL RELATIONSHIP BANKING - ---------------------------------------------------------------------------------------------------- 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. (In Millions of Dollars) 1996 1995(A) 1995(A) 1995(A) 1995(A) - ---------------------------------------------------------------------------------------------------- Adjusted Revenue....................... $ 749 $ 867 $ 910 $1,015 $ 844 Adjusted Operating Expense............. 639 677 664 670 640 ------------------------------------------------------------ OPERATING MARGIN....................... 110 190 246 345 204 Credit Costs........................... 5 (14) 45 14 (6) ------------------------------------------------------------ OPERATING MARGIN LESS CREDIT COSTS..... 105 204 201 331 210 Additional Provision................... - 25 25 25 25 ------------------------------------------------------------ INCOME BEFORE TAXES.................... 105 179 176 306 185 Income Taxes........................... 29 21 48 88 58 ------------------------------------------------------------ NET INCOME............................. $ 76 $ 158 $ 128 $ 218 $ 127 - ----------------------------------------============================================================ Average Assets (In Billions of Dollars) $ 84 $ 86 $ 90 $ 101 $ 101 Return on Assets....................... 0.36% 0.73% 0.56% 0.87% 0.51% - ----------------------------------------============================================================
(A) Reclassified to conform to latest quarter's presentation. - -------------------------------------------------------------------------------- Net income from the GRB in North America, Europe, and Japan totaled $76 million in the first quarter of 1996, down $51 million from the first quarter of 1995. Average assets declined by $17 billion compared with the first quarter of 1995, primarily reflecting a reduction of trading assets and the effects of repositioning the GRB since the second quarter of 1995. Adjusted revenue of $749 million reflected stable base business revenue and a reduction of $103 million in trading-related and venture capital revenue. Volatile U.S. interest rates and directionless foreign exchange markets in the first quarter of 1996 contributed to the decline in trading-related revenue. Expenses were essentially unchanged from the 1995 first quarter, with growth related to areas of increased business volumes offset primarily by lower incentive compensation. Credit costs were $5 million in the first quarter of 1996 compared with a net credit of $6 million in the first quarter of 1995. The GRB results include the North America Commercial Real Estate portfolio, which previously was reported separately. Its average assets of $4 billion earned $4 million in the 1996 first quarter, compared with a break-even quarter a year ago, which included a gain on the sale of an asset. Total North America Commercial Real Estate exposure at March 31, 1996 of $6.7 billion consisted of performing loans ($4.0 billion), cash-basis loans ($0.9 billion), OREO ($0.4 billion), and letters of credit and other ($1.4 billion). Total exposure at March 31, 1996 declined $2.8 billion, or 29%, from the year-earlier quarter, primarily as a result of paydowns, maturities, asset sales, and reductions of commitments. At March 31, 1996, total exposure was spread among office (43%), residential (18%), retail (17%), and other (22%) projects; with the largest concentrations in the mid-Atlantic (23%) and California (22%) regions. Cash- basis loans and OREO were reduced $1.1 billion from a year ago. Letters of credit and other included $0.4 billion related to projects on which debt service is continuing but the loan-to-value ratios have deteriorated or where the borrowers are experiencing financial difficulties. 12
- -------------------------------------------------------------------------- CORPORATE ITEMS - -------------------------------------------------------------------------- First Quarter ------------------- (In Millions of Dollars) 1996 1995(A) - ------------------------ ------------------- Revenue.............................................. $ 248 $162 Operating Expense.................................... 121 87 ------------------- Income Before Taxes.................................. 127 75 Income Taxes......................................... 195 106 ------------------- NET LOSS............................................. $ (68) $(31) - -------------------------------------------------------===================
(A) Reclassified to conform to latest quarter's presentation. - -------------------------------------------------------------------------------- Corporate Items includes revenue derived from charging businesses for funds employed (based upon a marginal cost of funds concept), unallocated corporate costs, and the offset created by attributing income taxes to business activities on a local tax-rate basis. Corporate Items revenue increased reflecting funding benefits associated with higher equity levels while expense levels reflected higher spending related to technology initiatives and costs associated with performance-based incentive plans. Income tax amounts for the 1996 first quarter reflected higher offsets created as a result of taxes attributed to business activities on a local tax- rate basis. 13 MANAGING GLOBAL RISK - -------------------------------------------------------------------------------- LIQUIDITY - -------------------------------------------------------------------------------- Citicorp manages liquidity through a well-defined process described in the 1995 Annual Report and Form 10-K. Total deposits of $172.0 billion represent 65% of total funding at March 31, 1996, compared with $167.1 billion (65% of total funding) at December 31, 1995, and are broadly diversified by geography and customer segments. Stockholders' equity, which was $19.8 billion at March 31, 1996 compared with $19.6 billion at December 31, 1995, is also an important component of the overall funding structure. In addition, long-term debt is issued by Citicorp (the "Parent Company") and its subsidiaries. Total long-term debt and subordinated capital notes outstanding at March 31, 1996, were $19.2 billion, compared with $18.5 billion at year-end 1995. A diversity of sources, currencies, and maturities is used to gain the broadest practical access to the investor base. Securitization of assets remains an important source of liquidity. Total assets securitized during the quarter were $2.0 billion, including $1.6 billion of U.S. credit card receivables. As securitized credit card receivable transactions amortize, newly originated receivables are recorded on Citicorp's balance sheet and become available for asset securitization. During the first quarter of 1996, $0.9 billion of previously securitized credit card receivables amortized and $4.8 billion are scheduled to amortize during the remainder of the year. The Parent Company is a legal entity separate and distinct from Citibank, N.A. and its other subsidiaries and affiliates. As discussed in the 1995 Annual Report and Form 10-K, there are various legal limitations on the extent to which Citicorp's subsidiaries may extend credit, pay dividends, or otherwise supply funds to Citicorp. As of March 31, 1996, under their applicable dividend limitations, Citicorp's national and state-chartered bank subsidiaries could have declared dividends to their respective parent companies without regulatory approval of approximately $4.0 billion. In determining whether and to what extent to pay dividends, each bank subsidiary must also consider the effect of dividend payments on applicable risk-based capital and leverage ratio requirements, as well as policy statements of the federal regulatory agencies that indicate that banking organizations should generally pay dividends out of current operating earnings. Consistent with these considerations, Citicorp estimates that as of March 31, 1996, its bank subsidiaries could have distributed dividends to Citicorp, directly or through their parent holding company, of approximately $3.6 billion of the available $4.0 billion. - -------------------------------------------------------------------------------- PRICE RISK - -------------------------------------------------------------------------------- Citicorp manages the sensitivity of earnings to changes in interest rates, foreign exchange rates, and market prices and volatilities through established procedures described in the 1995 Annual Report and Form 10-K. These include limits set annually for each major category of risk; these limits are monitored and managed by the businesses and reviewed monthly at the corporate level. Citicorp uses a risk management system based on market factors that accommodates the diversity of balance sheet and derivative product exposures and exposure management systems of its various businesses. The market factor approach identifies the variables that cause a change in the value of a financial instrument, including the term structure of interest rates, foreign exchange rates, equity securities and commodities prices and their volatilities. Price risk is then measured using various tools, including the earnings at risk method, which is applied to interest rate risk of the non-trading portfolios, and the potential loss amount method, which is applied to the trading portfolios. These methods are comparable with value at risk measurements employed throughout the industry, and are used as indicators to monitor sensitivity of earnings to market risk rather than as a quantification of aggregate risk amounts. Earnings at risk measures the potential pretax earnings impact on the non- trading activities of a specified movement in interest rates for an assumed defeasance period, which ranges from one to eight weeks depending on the depth of liquidity in the market and the instrument involved. The earnings at risk is calculated separately for each currency by multiplying the repricing gap between interest sensitive items by the specified interest rate movement, and then taking into account the impact of options, both explicit and embedded. The specific rate movements are statistically derived from a two standard deviation movement, which results in a confidence level of 97.5%. Business units manage the 14 potential earnings effect of interest rate movements by modifying the asset and liability mix, either directly or through the use of derivatives. These include interest rate swaps and other derivative instruments which are either designated and effective as hedges or designated and effective in modifying the interest rate characteristics of specified assets or liabilities. The utilization of derivatives is modified from time to time in response to changing market conditions as well as changes in the characteristics and mix of the related assets and liabilities. Citicorp's primary non-trading price risk exposure is to movements in U.S. dollar interest rates. During the first quarter of 1996, the amount of U.S. dollar earnings at risk for the following 12 months to a two standard deviation increase in rates had a potential negative impact which ranged at each month-end from approximately $130 million to $165 million in the aggregate. This is somewhat higher than the range from $30 million to $150 million during the full year 1995. As of March 31, 1996, the U.S. dollar interest rate exposure taken in tenors beyond one year results in earnings at risk of a maximum of $115 million in any single future year. The table below summarizes Citicorp's worldwide earnings at risk at March 31, 1996 over the next 12 months from changes in U.S. dollar interest rates.
- --------------------------------------------------------------------- TWELVE MONTH U.S. DOLLAR EARNINGS AT Assuming a Rate Move of RISK (PRETAX) Two Standard Two Standard Deviation Deviation (In Millions at March 31, 1996) Increase Decrease - --------------------------------------------------------------------- Excluding Derivatives................... $ 119 $(112) Including Derivatives................... (166) 183 - ---------------------------------------------------------------------
The table illustrates that including derivatives, Citicorp's earnings in its non-trading activities would be reduced from an increase in interest rates and benefit from a decrease in interest rates. This primarily reflects the utilization of receive-fixed interest rate swaps and similar instruments to effectively modify the repricing characteristics of certain consumer and commercial loan portfolios, funding, and long-term debt. Earnings at risk in other currencies also existed at significantly lower levels than U.S. dollar earnings at risk. The level of exposure taken is based on the market environment and will vary from period to period based on rate and other economic expectations. The price risk of the trading activities is measured using the potential loss amount method, which estimates the sensitivity of the value of the trading activities to changes in the various market factors, such as interest and foreign exchange rates, over the period necessary to close the position (generally one day). This measurement includes the foreign exchange risks that arise in traditional banking business as well as explicit trading positions. The method considers the probability of movements of these market factors (as derived from a two standard deviation movement), adjusted for correlation among them within each trading center. During the first quarter of 1996, the potential loss amount in the trading portfolios based on monthly averages of daily exposures ranged from approximately $50 million to $60 million pre-tax in the aggregate for Citicorp's major trading centers, compared with a range in 1995 of approximately $40 million to $60 million. The potential loss amounts were relatively stable in 1995 and the first quarter of 1996. The level of exposure taken is a function of the market environment and expectations of future price and market movements, and will vary from period to period. Trading-related revenue for the first quarter of 1996 was $392 million, compared with $483 million in the fourth quarter of 1995. While there was continued customer demand for risk management products, trading-related revenue declined as a result of lower foreign exchange revenue attributable to directionless foreign exchange markets in the major currencies. 15 - -------------------------------------------------------------------------------- DERIVATIVE AND FOREIGN EXCHANGE CONTRACTS - -------------------------------------------------------------------------------- Derivative and foreign exchange products are important risk management tools for Citicorp and its customers. These contracts typically take the form of futures, forward, swap, and option contracts, and derive their value from underlying interest rate, foreign exchange, commodity, or equity instruments. They are subject to the same types of liquidity, price, credit, and operational risks as other financial instruments, and Citicorp manages these risks in a consistent manner. As a dealer, Citicorp enters into derivative and foreign exchange instruments with customers separately or with other products, to help them to manage their risk profile, and also trades for Citicorp's own account. In addition, Citicorp employs derivative and foreign exchange contracts among other instruments as an end-user in connection with its risk management activities. Monitoring procedures entail objective measurement systems, well-defined market and credit risk limits at appropriate control levels, and timely reports to line and senior management according to prescribed policies. Additional information concerning Citicorp's derivative and foreign exchange activities, including a description of accounting policies, is provided in the 1995 Annual Report and Form 10-K. Notional principal amounts are frequently used as indicators of derivative and foreign exchange activity, serving as a point of reference for calculating payments. Notional principal amounts do not reflect balances subject to credit or market risk, nor do they reflect the extent to which positions offset one another. As a result, they do not represent the much smaller amounts that are actually subject to risk in these transactions. Balance sheet credit exposure arises from unrealized gains and represents the amount of loss that Citicorp would suffer if every counterparty to which Citicorp was exposed were to default at once (i.e., the cost of replacing these contracts), and does not represent actual or expected loss amounts. Master netting agreements mitigate credit risk by permitting the offset of amounts due from and to individual counterparties in the event of counterparty default. The table below presents the aggregate notional principal amounts of Citicorp's outstanding derivative and foreign exchange contracts at March 31, 1996 and December 31, 1995, along with the related balance sheet credit exposure. The table includes all contracts with third parties, including both dealer and end-user positions.
- --------------------------------------------------------------------------------------- DERIVATIVE AND FOREIGN EXCHANGE CONTRACTS - --------------------------------------------------------------------------------------- Balance Sheet Notional Principal Amounts Credit Exposure (A) -------------------------- ------------------- Mar. 31, Dec. 31, Mar. 31, Dec. 31, (In Billions of Dollars) 1996 1995 1996 1995 - --------------------------------------------------------------------------------------- INTEREST RATE PRODUCTS Futures Contracts $ 175.1 $145.2 $ - $ - Forward Contracts 199.0 295.2 0.3 0.6 Swap Agreements 443.5 431.9 7.5 9.1 Purchased Options 115.1 105.9 1.2 1.2 Written Options 148.0 158.1 - - FOREIGN EXCHANGE PRODUCTS Futures Contracts 1.2 1.1 - - Forward Contracts 1,061.0 983.5 10.8 12.2 Cross-Currency Swap Agreements 36.2 35.2 1.9 2.0 Purchased Options 99.2 93.7 1.6 1.8 Written Options 92.2 88.2 - - COMMODITY AND EQUITY PRODUCTS 30.5 38.0 0.9 0.9 --------------------- 24.2 27.8 EFFECTS OF MASTER NETTING AGREEMENTS (B) (10.6) (11.7) --------------------- $ 13.6 $ 16.1 - ------------------------------------------------------------------=====================
(A) There is no balance sheet credit exposure for futures contracts because they settle daily in cash, and none for written options because they represent obligations (rather than assets) of Citicorp. (B) Master netting agreements mitigate credit risk by permitting the offset of amounts due from and to individual counterparties in the event of counterparty default. 16 Citicorp manages its credit exposure on derivative and foreign exchange instruments as part of the overall extension of credit to individual customer relationships, subject to the same credit approvals, limits, and monitoring procedures used for other activities. In managing the aggregate credit extension to an individual customer, Citicorp measures the amount at risk on a derivative or foreign exchange instrument as the sum of two factors: the current replacement cost (i.e., balance sheet credit exposure), and the potential increase in the replacement cost over the remaining life of the instrument should market prices change. Citicorp's use of these two risk measures is discussed further in the 1995 Annual Report and Form 10-K. As shown in the table on page 16, the current replacement cost for all contracts in the aggregate was $13.6 billion at March 31, 1996. The potential increase in replacement cost, estimated as the additional loss that Citicorp would suffer if changes in market rates resulted in additional unrealized gains and every counterparty to which Citicorp was exposed were to default at once, was approximately $40.5 billion in the aggregate for all contracts at March 31, 1996 and $42.2 billion at December 31,1995. At year-end 1995, approximately 94% of the total credit exposure was to investment grade counterparties and approximately 88% was under three years tenor, and Citicorp believes the distribution is substantially similar at March 31, 1996. There were no significant amounts of non-performing contracts at March 31, 1996 and there were no credit-related losses on derivative contracts in the first quarter of 1996. Citicorp's management of its derivative and foreign exchange activities, including the related accounting and operational controls, is tailored to its dealer and end-user activities. Citicorp's dealer activities are managed on a market-value basis, which recognizes in earnings the gains or losses resulting from changes in market rates. For other than short-term derivative and foreign exchange contracts, Citicorp defers, at the inception of each contract, an appropriate portion of the initial market value attributable to ongoing costs such as servicing and operational activities. This amount is amortized into trading account or foreign exchange revenue over the life of the contract. The balance of unamortized revenue was $286 million at March 31, 1996. Information regarding derivative and foreign exchange trading-related revenue can be found on page 24. Citicorp's risk management activities employ interest rate swaps and other derivatives that are designated and effective as hedges, as well as contracts that are designated and effective in modifying the interest rate characteristics of specified assets or liabilities. These contracts are accounted for in a manner consistent with the related assets or liabilities. Revenue and expense related to these agreements are generally included in net interest revenue over the lives of the agreements on an accrual basis, and realized gains and losses, including any related to terminated contracts, are deferred and amortized. The tables below and on page 18 provide data on the notional principal amounts and maturities of end-user (non-trading) derivatives, along with additional data on end-user interest rate swaps and net purchased option positions as of March 31, 1996 with three-month LIBOR forward rates included for reference. Contract maturities are related to the underlying risk management strategies.
END-USER DERIVATIVE AND FOREIGN EXCHANGE CONTRACTS (INCLUDING THIRD-PARTY AND INTERCOMPANY CONTRACTS) - -------------------------------------------------------------------------------------------------------------------- Notional Principal Amounts Percentage of March 31, 1996 Amount Maturing --------------------- ------------------------------------------------------------- Mar. 31, Dec. 31, Within 1 1 to 2 2 to 3 3 to 4 4 to 5 After 5 (In Billions of Dollars) 1996 1995 Year Years Years Years Years Years - -------------------------------------------------------------------------------------------------------------------- INTEREST RATE PRODUCTS Futures Contracts............... $17.5 $13.6 80% 14% 5% 1% - - Forward Contracts............... 5.7 5.6 92 7 - - 1% - Swap Agreements................. 97.9 90.9 26 20 19 13 9 13% Option Contracts................ 29.2 45.6 60 21 8 6 3 2 FOREIGN EXCHANGE PRODUCTS Futures and Forward Contracts...................... 56.9 54.8 97 3 - - - - Cross-Currency Swap Agreements..................... 3.1 3.2 22 13 10 16 16 23 - --------------------------------------------------------------------------------------------------------------------
17
- ------------------------------------------------------------------------------------------- END-USER INTEREST RATE SWAPS AND NET PURCHASED OPTIONS AS OF MARCH 31, 1996 - ------------------------------------------------------------------------------------------- Remaining Contracts Outstanding at Mar. 31, --------------------------------------------------- (In Billions of Dollars) 1996 1997 1998 1999 2000 2001 - ------------------------------------------------------------------------------------------- RECEIVE FIXED SWAPS Notional Amounts......................... $74.1 $57.1 $44.8 $29.7 $18.4 $ 9.9 Weighted-Average Fixed Rate.............. 6.4% 6.5% 6.6% 6.9% 6.5% 6.8% PAY FIXED SWAPS Notional Amounts......................... $12.9 $ 8.5 $ 5.9 $ 4.1 $ 3.6 $ 3.2 Weighted-Average Fixed Rate.............. 7.1% 7.1% 7.1% 7.1% 7.1% 7.0% BASIS SWAPS Notional Amounts......................... $10.9 $ 7.1 $ 2.2 $ 0.6 $ 0.1 $ 0.1 PURCHASED CAPS (INCLUDING COLLARS) Notional Amounts......................... $19.2 $ 4.8 $ 2.5 $ 1.5 $ 0.6 - Weighted-Average Cap Rate Purchased...... 6.5% 6.8% 7.5% 7.8% 8.1% - WRITTEN FLOORS RELATED TO PURCHASED CAPS (COLLARS) Notional Amounts......................... $ 1.8 $ 0.2 $ 0.2 $ 0.2 $ 0.1 - Weighted-Average Floor Rate Written...... 5.5% 8.2% 8.2% 8.2% 8.2% - WRITTEN CAPS RELATED TO OTHER PURCHASED CAPS Notional Amounts......................... $ 6.7 $ 6.0 $ 1.4 $ 1.3 $ 0.6 $ 0.5 Weighted-Average Cap Rate Written........ 7.1% 7.2% 9.1% 9.1% 9.5% 9.6% - ------------------------------------------------------------------------------------------- THREE-MONTH IMPLIED FORWARD LIBOR RATES (A)...................................... 5.4% 5.9% 6.4% 6.7% 6.9% 7.1% - -------------------------------------------------------------------------------------------
(A) The floating rate for a substantial majority of the end-user interest rate swaps is three-month LIBOR. The three-month LIBOR rates shown above reflect the implied forward yield curve for that index as of March 31, 1996. Citicorp's utilization of these instruments is modified from time to time in response to changing market conditions as well as changes in the characteristics and mix of the related assets and liabilities. In this connection, during the first quarter of 1996 interest rate contracts with notional principal amounts of approximately $27.4 billion were closed out primarily related to interest rate collars ($13.6 billion of purchased caps and $13.6 billion of written floors related to purchased caps), resulting in a net deferred loss of approximately $11 million. Total unamortized net deferred losses, including those related to prior period close-outs, were approximately $91 million at March 31, 1996, which will be amortized through earnings over the period reflecting the original hedging or risk management strategy (46% in 1996, 37% in 1997, and 17% in subsequent years). End-user derivative positions are components of Citicorp's designated asset and liability management activities. Derivatives provide an additional tool for accomplishing risk management objectives, but these same objectives could alternatively be accomplished using other financial instruments. Therefore, Citicorp does not believe it is meaningful to analyze the derivatives component of its risk management activities in isolation from related positions. The table on page 19 provides information about the estimated fair values of financial instruments. The Financial Accounting Standards Board is developing possible new accounting standards which could significantly affect the accounting treatment of derivative and foreign exchange contracts by Citicorp and its customers. It is not possible at this time to determine how such changes could affect the nature and extent of these activities. 18 - -------------------------------------------------------------------------------- ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS - -------------------------------------------------------------------------------- The table below presents the estimated fair value in excess of (less than) carrying value of Citicorp's financial instruments as defined in accordance with applicable requirements, including financial assets and liabilities recorded on the balance sheet as well as off-balance sheet instruments such as derivative and foreign exchange contracts, loan commitments, and credit card receivable securitizations. To better reflect Citicorp's values subject to market risk and to illustrate the interrelationships that characterize risk management strategies, the table below also provides estimated fair value data for the expected time period until runoff of existing deposits with no fixed maturity.
- ----------------------------------------------------------------------- ESTIMATED FAIR VALUE IN EXCESS OF (LESS THAN) CARRYING VALUE - ----------------------------------------------------------------------- Mar. 31, Dec. 31, Mar. 31, (In Billions of Dollars) 1996 1995 1995 - ----------------------------------------------------------------------- Assets and Liabilities.................. $ 5.4 $ 5.0 $ 4.3 End-User Derivative and Foreign 0.2 1.4 (0.7) Exchange Contracts..................... Loan Commitments........................ - - (0.2) Credit Card Receivable Securitizations 0.3 (0.3) 0.3 (A).................................... ------------------------------- 5.9 6.1 3.7 Deposits with No Fixed Maturity (B)..... 2.7 2.3 2.5 ------------------------------- TOTAL $ 8.6 $ 8.4 $ 6.2 - ----------------------------------------===============================
(A) Represents the estimated excess in fair value of the underlying receivables and investor certificates, which is derived by Citicorp in the form of excess servicing, and principally arises from fixed rates payable to certificate holders. (B) Represents the estimated excess fair value related to the expected time period until runoff of existing deposits with no fixed maturity on the balance sheet at March 31, 1996, without assuming any regeneration of balances, based on the estimated difference between the cost of funds on these deposits and the cost of funds from alternative sources. In the aggregate, estimated fair values exceeded carrying values by approximately $8.6 billion at March 31, 1996, $8.4 billion at December 31, 1995, and $6.2 billion at March 31, 1995. The increase from December 31, 1995 is primarily due to the effect of increasing interest rates on the value of fixed rate liabilities, asset securitizations, and deposits with no fixed maturity, principally offset by decreases related to the value of derivative contracts due to the same interest rate environment. The increase from March 31, 1995 is primarily due to higher fair values for the loan portfolio, the value of derivative contracts as a result of a decrease in the level of interest rates, and the transfer in the fourth quarter of 1995 of securities held to maturity to available for sale, partially offset by decreases in fixed rate liabilities due to the same interest rate environment. 19 - -------------------------------------------------------------------------------- CAPITAL - -------------------------------------------------------------------------------- Citicorp is subject to risk-based capital guidelines issued by the Federal Reserve Board ("FRB"). These guidelines are supplemented by a leverage ratio requirement. The risk-based capital guidelines and the leverage ratio requirement are detailed in the 1995 Annual Report and Form 10-K.
- ---------------------------------------------------------------------------- CITICORP RATIOS Mar. 31, 1996 Dec. 31, 1995 Mar. 31, 1995 - ---------------------------------------------------------------------------- Common Stockholders' Equity.. 6.71% 6.43% 5.21% Tier 1 Capital............... 8.42 8.41 8.01 Tier 1 and Tier 2 Capital.... 12.37 12.33 12.06 Leverage (A)................. 7.44 7.45 7.00 - ----------------------------------------------------------------------------
(A) Tier 1 capital divided by adjusted average assets. Citicorp maintained a strong capital position during the first quarter of 1996. Total capital (Tier 1 and Tier 2) amounted to $28.0 billion at March 31, 1996, representing 12.37% of net risk-adjusted assets. This compares with $27.7 billion and 12.33% at December 31, 1995 and $26.9 billion and 12.06% at March 31, 1995. Tier 1 capital of $19.0 billion at March 31, 1996 represented 8.42% of net risk-adjusted assets, compared with $18.9 billion and 8.41% at December 31, 1995 and $17.8 billion and 8.01% at March 31, 1995. The Tier 1 capital ratio at March 31, 1996 exceeded Citicorp's target range for the Tier 1 ratio of 8.00% to 8.30%. Common stockholders' equity increased a net $3.7 billion from a year ago and $1.2 billion during the quarter to $17.7 billion at March 31, 1996, representing 6.71% of assets, compared with 6.43% at year-end 1995 and 5.21% at March 31, 1995. The increases in common stockholders' equity principally reflected changes in retained earnings and conversions of convertible preferred stock, partially offset by activity under the stock repurchase program. At March 31, 1996, Citicorp had no outstanding convertible preferred stock. The book value per share of $36.79 at March 31, 1996 was up slightly from a year ago, but down from $38.64 at December 31, 1995. The book value per share at March 31, 1996 reflected the effect of conversions of convertible preferred stock and, to a lesser extent, repurchases of common stock since the market price of the repurchased common shares was greater than the book value per share. In June 1995, upon achieving its risk-based capital ratio targets, Citicorp initiated a two-year $3.0 billion common stock repurchase program. In January 1996, the program was expanded to a total of $4.5 billion through January 31, 1998. During the first quarter of 1996, Citicorp repurchased 9.6 million shares of common stock at an aggregate purchase price of $721 million. Since the program was initiated, Citicorp has repurchased 32.6 million shares of common stock at an aggregate cost of $2.2 billion. The amounts available to use for the repurchase of stock under the program are referred to as "free capital." As shown in the table below, free capital represents Tier 1 capital generated during the period, reduced by capital attributed to funding business expansion. During the first quarter of 1996, Citicorp generated $750 million of free capital, of which $721 million was utilized to repurchase 9.6 million shares of common stock at an average price of $75.39 per share.
- ---------------------------------------------------- FREE CAPITAL - ---------------------------------------------------- (In Millions of Dollars) 1st Qtr. 1996 - ---------------------------------------------------- Tier 1 Capital Generated: Net Income.......................... $ 914 Issuances/Other (A)................. 185 Cash Dividends Declared............. (257) --------------- Total Tier 1 Capital Generated....... 842 Capital Attributed to Growth in Net Risk-Adjusted Assets............... (92) --------------- FREE CAPITAL......................... $ 750 - -------------------------------------===============
(A) Primarily includes issuance of common stock under various staff benefits plans and the dividend reinvestment plan. 20
- --------------------------------------------------------------------------------------- COMPONENTS OF RISK-BASED CAPITAL UNDER REGULATORY GUIDELINES (In Millions of Dollars) Mar. 31, 1996 Dec. 31, 1995 Mar. 31, 1995 - --------------------------------------------------------------------------------------- TIER 1 CAPITAL Common Stockholders' Equity............. $ 17,684 $ 16,510 $ 14,024 Perpetual Preferred Stock............... 2,078 3,071 4,337 Minority Interest....................... 81 70 58 Less: Net Unrealized (Gains) Losses -........ (174) (132) 58 Securities Available for Sale (A) Intangible Assets (B).................. (314) (293) (338) 50% Investment in Certain Subsidiaries (C)................................... (319) (311) (297) =============================================== Total Tier 1 Capital.................... 19,036 18,915 17,842 =============================================== TIER 2 CAPITAL Allowance for Credit Losses (D)......... 2,857 2,843 2,814 Qualifying Debt (E)..................... 6,386 6,278 6,491 Less: 50% Investment in Certain Subsidiaries (C)....................... (319) (311) (297) ----------------------------------------------- Total Tier 2 Capital.................... 8,924 8,810 9,008 =============================================== Total Capital (Tier 1 and Tier 2)....... $ 27,960 $ 27,725 $ 26,850 =============================================== Net Risk-Adjusted Assets (F)............ $226,020 $224,915 $222,647 - ---------------------------------------------------------------------------------------
(A) Tier 1 capital excludes unrealized gains and losses on securities available for sale in accordance with regulatory risk-based capital guidelines. (B) Includes goodwill and certain identifiable intangible assets. (C) Primarily Citicorp Securities, Inc. (D) Includable up to 1.25% of risk-adjusted assets. Any excess allowance is deducted from risk-adjusted assets. (E) Includes qualifying senior and subordinated debt in an amount not exceeding 50% of Tier 1 capital and subordinated capital notes subject to certain limitations. (F) Includes risk-weighted credit equivalent amounts net of applicable bilateral netting agreements of $8.8 billion for interest rate, commodity and equity derivative contracts and foreign exchange contracts as of March 31, 1996, compared with $10.0 billion and $13.7 billion at December 31 and March 31, 1995, respectively. Net risk-adjusted assets also includes the effect of other off-balance sheet exposures such as unused loan commitments and letters of credit and reflects deductions for intangible assets and any excess allowance for credit losses. As discussed in the 1995 Annual Report and Form 10-K, Citicorp has entered into forward purchase agreements on its common stock, to be settled in shares of its common stock on a net basis. As of March 31, 1996, agreements were in place covering approximately $900 million of Citicorp common stock (13.0 million shares) with forward prices averaging $68.94 per share. If these agreements were settled based on the March 31, 1996 market price of Citicorp common stock ($80.00 per share), Citicorp would be entitled to receive approximately 1.7 million shares. During the first quarter of 1996, settlements resulted in Citicorp receiving approximately 800,000 shares of its common stock. Citicorp's subsidiary depository institutions are subject to the risk-based capital guidelines issued by their respective primary federal bank regulatory agencies, which are generally similar to the FRB's guidelines. At March 31, 1996 all of Citicorp's subsidiary depository institutions were "well capitalized" under the federal bank regulatory agencies' definitions.
- ---------------------------------------------------------------------------- CITIBANK, N.A. RATIOS Mar. 31, 1996 Dec. 31, 1995 Mar. 31, 1995 - ---------------------------------------------------------------------------- Common Stockholder's Equity 7.18% 7.08% 6.57% Tier 1 Capital 8.42 8.32 8.14 Tier 1 and Tier 2 Capital 12.30 12.24 12.61 Leverage 6.75 6.65 6.53 - ----------------------------------------------------------------------------
From time to time, the FRB and the Federal Financial Institutions Examination Council propose amendments to, and issue interpretations of, risk-based capital guidelines and reporting instructions. Such proposals or interpretations could, if implemented in the future, affect reported capital ratios and net risk- adjusted assets. 21 STATEMENT OF INCOME ANALYSIS - -------------------------------------------------------------------------------- NET INTEREST REVENUE (TAXABLE EQUIVALENT BASIS) - -------------------------------------------------------------------------------- Net interest revenue of $2.7 billion in the first quarter of 1996 increased 15% from the year ago period, reflecting higher net rate spreads, including funding benefits associated with higher equity levels, as well as an increase in interest-earning assets. Net interest revenue and net interest margin for all periods presented were reduced by the effect of credit card securitization. Adjusted for the effect of credit card securitization, net interest revenue for the 1996 first quarter of $3.3 billion increased 16% from the 1995 first quarter and 5% from the 1995 fourth quarter. The adjusted net interest margin increased to 5.15% in the 1996 first quarter from 4.61% in the first quarter of 1995 and 4.91% in the fourth quarter of 1995. The adjusted net interest margin in the U.S. of 5.64% in the 1996 first quarter was up from 4.82% in the 1995 first quarter and 5.17% in the 1995 fourth quarter. The increase from the first quarter of 1995 principally reflected a decrease in the level of lower-yielding trading assets in the GRB, higher volumes and increased spreads in the U.S. bankcards business, lower cost to carry cash-basis loans and OREO, and a reduced deposit insurance assessment rate. The improvement over the 1995 fourth quarter primarily reflected increased spreads in the U.S. bankcards business. Net interest revenue from activities outside the U.S. grew 20% from the first quarter of 1995 and represented 47% of total adjusted net interest revenue in the first quarter of 1996. The net interest margin outside the U.S. of 4.71% in the first quarter of 1996 increased from 4.39% in the 1995 first quarter and 4.66% in the 1995 fourth quarter. The increase in the net interest margin from both the 1995 first and fourth quarters reflected improved spreads related to activities in the (Corporate) Banking business in Latin America and expansion of the Cards business in Asia Pacific. Additionally, the improvement in the net interest margin from the 1995 first quarter reflected an increase in trading- related net interest revenue in Latin America. The $8.4 billion increase in adjusted average interest-earning assets in the 1996 first quarter from the year ago period was mainly attributable to higher levels of consumer loans both in and outside the U.S. and commercial loans outside the U.S., partially offset by a reduction in trading assets in the Global Relationship Bank.
- -------------------------------------------------------------------------------------------------- NET INTEREST REVENUE STATISTICS 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. (TAXABLE EQUIVALENT BASIS) (A) (B) 1996 1995 1995 1995 1995 - -------------------------------------------------------------------------------------------------- NET INTEREST REVENUE: (In Millions of Dollars) U.S.................................. $1,716 $1,607 $1,612 $1,514 $1,515 Outside the U.S...................... 1,547 1,499 1,502 1,459 1,286 ---------------------------------------------------------- TOTAL ADJUSTED (C) ..................... 3,263 3,106 3,114 2,973 2,801 Effect of credit card securitization.... (570) (537) (508) (497) (468) ---------------------------------------------------------- TOTAL................................... $2,693 $2,569 $2,606 $2,476 $2,333 ========================================================== AVERAGE INTEREST-EARNING ASSETS: (In Billions of Dollars) U.S.................................... $122.4 $123.3 $122.3 $126.4 $127.4 Outside the U.S........................ 132.2 127.7 122.8 121.8 118.8 ---------------------------------------------------------- TOTAL ADJUSTED (C)...................... 254.6 251.0 245.1 248.2 246.2 Effect of credit card securitization.... (25.9) (25.2) (23.6) (23.3) (22.5) ---------------------------------------------------------- TOTAL................................... $228.7 $225.8 $221.5 $224.9 $223.7 ========================================================== NET INTEREST MARGIN (%): U.S. (Adjusted)...................... 5.64% 5.17% 5.23% 4.81% 4.82% Outside the U.S. .................... 4.71 4.66 4.85 4.80 4.39 TOTAL ADJUSTED (C)...................... 5.15% 4.91% 5.04% 4.80% 4.61% Effect of credit card securitization.... (.41) (.40) (.37) (.38) (.38) ---------------------------------------------------------- TOTAL................................... 4.74% 4.51% 4.67% 4.42% 4.23% - ----------------------------------------==========================================================
(A) Includes appropriate allocations for capital and funding costs based on the location of the asset. (B) The taxable equivalent adjustment is based on the U.S. federal statutory tax rate of 35%. (C) Adjusted for the effect of credit card securitization. See page 28 for discussion. 22
- ---------------------------------------------------------------------------- FEE AND COMMISSION REVENUE - ---------------------------------------------------------------------------- First Quarter ------------------ (In Millions of Dollars) 1996 1995 - ---------------------------------------------------------------------------- CONSUMER: Developed Markets....................................... $ 532 $ 565 Emerging Markets........................................ 255 219 ------------------ Total Consumer.......................................... 787 784 (CORPORATE) BANKING AND OTHER............................ 482 448 ------------------ TOTAL ADJUSTED (A)....................................... 1,269 1,232 Effect of Credit Card Securitization..................... 43 30 ------------------ TOTAL................................................... $1,312 $1,262 - ----------------------------------------------------------==================
(A) Adjusted for the effect of credit card securitization. See page 28 for discussion. - -------------------------------------------------------------------------------- Total fee and commission revenue of $1.3 billion in the first quarter of 1996 was up 4% from the year-ago level. Fee and commission revenue was increased in both periods presented by the effect of credit card securitization. Adjusted for the effect of credit card securitization, fee and commission revenue in the first quarter of 1996 was up 3% from the comparable year ago period. Within the Consumer businesses, fee and commission revenue was essentially unchanged from the year ago period. Continued double-digit growth in the emerging markets reflected increases across various consumer products offered in these markets, particularly credit card related fees in Asia and trust and investment fee revenue in Latin America, while fees in the developed markets were reduced from levels in the 1995 first quarter. In the (Corporate) Banking business, fee and commission revenue increased 8% in the first quarter of 1996 compared with the year-ago period, primarily reflecting higher business volumes in the emerging markets, particularly in Asia Pacific. Continued growth in transaction banking services, including expanded trust, agency, and custodial activities, contributed to the increase in fees. Additionally, corporate finance fee revenue improved from the year ago period. 23 - -------------------------------------------------------------------------------- TRADING-RELATED REVENUE - -------------------------------------------------------------------------------- Trading-related revenue is reported in "Trading Account" and "Foreign Exchange" in the income statement, but also includes other amounts, principally reflected in net interest revenue. The table below presents trading-related revenue by business sector, by income statement line, and by trading activity.
- ------------------------------------------------ First Quarter -------------- (In Millions of Dollars) 1996 1995 - ------------------------------------------------ BY BUSINESS SECTOR: (Corporate) Banking Emerging Markets............ $ 175 $ 119 Global Relationship Banking. 167 217 Consumer and Other............ 50 59 ---------------- TOTAL......................... $ 392 $ 395 - --------------------------------================ BY TRADING ACTIVITY: Foreign Exchange (A).......... $ 210 $ 265 Derivative (B)................ 146 99 Fixed Income (C).............. (1) (43) Other......................... 37 74 ---------------- TOTAL......................... $ 392 $ 395 - --------------------------------================ BY INCOME STATEMENT LINE: Foreign Exchange.............. $ 205 $ 305 Trading Account............... 90 39 Other (D)..................... 97 51 ---------------- TOTAL......................... $ 392 $ 395 - --------------------------------================
(A) Includes foreign exchange spot, forward, and option contracts. (B) Primarily interest rate and currency swaps, options, financial futures, and equity and commodity contracts. (C) Principally debt instruments including government and corporate debt as well as mortgage-backed securities. (D) Primarily net interest revenue. - -------------------------------------------------------------------------------- Trading-related revenue was essentially unchanged in the first quarter of 1996 compared with the first quarter of 1995. (Corporate) Banking trading-related revenue reflected a decline in the GRB offset by improved results in the Emerging Markets business. Levels of trading-related revenue may fluctuate in the future as a result of market conditions and other factors. On a trading-activity basis, foreign exchange revenue of $210 million in the first quarter of 1996 declined $55 million from the first quarter of 1995 primarily reflecting directionless foreign exchange markets in the major currencies. Additionally, results in the first quarter of 1995 had benefited from volatility in the foreign exchange markets in Latin America. Derivative revenue totaled $146 million in the first quarter of 1996 compared with $99 million in the first quarter of 1995. The increase reflected continued customer demand for risk-management products. Additionally, the year ago period had reflected difficult market conditions, particularly in Latin America. Fixed income revenue in the first quarter of 1996 remained weak, although modestly improved compared with the depressed 1995 results which had reflected difficult market conditions. Trading-related revenue by trading activity as discussed in the paragraphs above includes the net interest revenue associated with the trading positions. Aggregate net interest revenue associated with trading activities in the first quarter of 1996 improved from the first quarter of 1995, particularly in Latin America. 24 - -------------------------------------------------------------------------------- SECURITIES TRANSACTIONS - -------------------------------------------------------------------------------- Net gains from the sale of securities were $102 million in the first quarter of 1996, compared with $26 million in the respective 1995 period. In the first quarter of 1996, gross realized gains on sales of securities available for sale totaled $111 million, including $52 million from the sale of Brazil interest bonds, while gross realized losses on sales of securities available for sale totaled $9 million. In the comparable 1995 period, gross realized gains and losses totaled $41 million and $15 million, respectively. The fair value of securities available for sale and the related adjustment to stockholders' equity may fluctuate over time based on market conditions and changes in market interest rates, as well as events and trends affecting specific securities.
- ----------------------------------------------------------- OTHER REVENUE - ----------------------------------------------------------- First Quarter ------------------- (In Millions of Dollars) 1996 1995(A) - ----------------------------------------------------------- Securitized Credit Card Receivables..... $ 233 $ 216 Venture Capital......................... 38 85 Affiliate Earnings...................... 62 55 Gains on Sale of Residual Value of 18 5 Leased Equipment....................... U.S. Mortgage Pass-Through Securitization Activity................ 4 1 Foreign Currency Translation (Losses) Gains.................................. (4) 3 Net Asset Gains and Other Items......... 83 121 ------------------- TOTAL................................... $ 434 $ 486 - ----------------------------------------===================
(A) Reclassified to conform to latest quarter's presentation. - -------------------------------------------------------------------------------- The increase in revenue related to securitized credit card receivables in the 1996 first quarter reflected higher average securitized volumes and an improved net interest margin, partially offset by a higher net credit loss rate. The effect of credit card receivable securitizations is discussed in more detail on page 28. Investments of venture capital subsidiaries are carried at fair value and earnings volatility can occur in the future, based on general market conditions as well as events and trends affecting specific venture capital investments. Net asset gains and other items in the 1996 first quarter reflected gains related to the sale of assets held by the Consumer and (Corporate) Banking businesses and the partial disposition of Citicorp's holding in an Asian affiliate. Amounts in the year ago period primarily reflected net gains on the sale of real estate assets and a gain related to the completion of Ecuador's refinancing package. 25 - -------------------------------------------------------------------------------- PROVISION AND ALLOWANCE FOR CREDIT LOSSES - -------------------------------------------------------------------------------- The increase in the provision for credit losses in the first quarter of 1996 compared with the first quarter of 1995 reflected increases in both consumer and commercial net write-offs. The first quarter 1996 provision for credit losses included a charge in excess of net write-offs of $50 million compared with a $75 million charge in the first quarter of 1995. Details of net write-offs (recoveries) and the provision for credit losses are included in the following table and are discussed below.
- ------------------------------------------------------------- NET WRITE-OFFS (RECOVERIES) AND PROVISION FOR CREDIT LOSSES - ------------------------------------------------------------- First Quarter ---------------------------- (In Millions of Dollars) 1996 1995 - ------------------------------------------------------------- NET WRITE-OFFS (RECOVERIES): Consumer........................ $ 413 $ 309 Commercial...................... 31 (16) ---------------------------- TOTAL $ 444 $ 293 - ---------------------------------============================ PROVISION FOR CREDIT LOSSES: Consumer........................ $ 463 $ 359 Commercial...................... 31 32 ---------------------------- TOTAL $ 494 $ 391 - ---------------------------------============================
The consumer provision for credit losses included charges in excess of net write-offs of $50 million in the first quarters of both 1996 and 1995. Net write-offs in the consumer on-balance sheet portfolios were $413 million in the quarter, up from $309 million in the year-ago period. Net write-offs were reduced in both periods presented by the effect of credit card securitizations. Adjusted for the effect of credit card securitizations, net write-offs in the 1996 first quarter of $707 million were up from $531 million in the year-ago period. The increase in adjusted net write-offs was primarily due to higher losses in the U. S. bankcards portfolio. Net write-offs have also increased in the emerging markets as a result of portfolio growth, particularly in the cards business in Asia Pacific, and higher credit losses associated with Citibanking activities in Latin America, although such losses in the quarter were reduced from levels in the second half of 1995. Net write-offs from Citibanking and Private Banking activities in the developed markets were reduced from year-ago levels. Consumer adjusted net write-offs may increase from 1996 first quarter levels as a result of credit factors applicable to the portfolio, economic conditions, and portfolio growth. See pages 4-9 for an additional discussion of the consumer portfolio. Commercial net write-offs in the first quarter of 1996 remained low at $31 million compared with a net recovery of $16 million (including a net recovery of $23 million related to the Cross-Border Refinancing Portfolio) in the first quarter of 1995. The increase in net write-offs primarily reflects lower recoveries. Commercial net write-offs may increase moderately from the low first quarter 1996 level. The commercial provision for credit losses included a provision in excess of net write-offs of $25 million (excluding the Cross-Border Refinancing Portfolio) in the first quarter of 1995. 26 All identified losses are immediately written off and the entire allowance is available to absorb all probable credit losses inherent in the portfolio. However, for analytical purposes, Citicorp views its allowance as attributable to the following portions of its credit portfolios:
- ----------------------------------------------------------------------------------------------- ALLOWANCE FOR CREDIT LOSSES - ----------------------------------------------------------------------------------------------- Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, (Dollars In Millions) 1996 1995 1995 1995 1995 - ----------------------------------------------------------------------------------------------- Consumer................................ $1,966 $1,944 $1,931 $1,923 $1,897 Commercial.............................. 3,424 3,424 3,410 3,385 3,373 ------------------------------------------------------- TOTAL................................... $5,390 $5,368 $5,341 $5,308 $5,270 - ----------------------------------------======================================================= Reserve For Consumer Sold Portfolios.... $ 482 $ 486 $ 473 $ 467 $ 450 - ----------------------------------------------------------------------------------------------- Allowance As a Percent of Total Loans: Consumer............................. 1.89% 1.84% 1.88% 1.91% 1.93% Commercial........................... 5.58 5.71 5.89 5.90 5.79 Total................................ 3.26 3.24 3.32 3.36 3.37 - -----------------------------------------------------------------------------------------------
Uncertainty related to the credit and economic environment, as well as higher loan volumes in the worldwide consumer portfolios, may result in further increases in the allowance for credit losses attributable to the Consumer businesses. - -------------------------------------------------------------------------------- OPERATING EXPENSE - -------------------------------------------------------------------------------- Total operating expense increased $167 million, or 6%, in the first quarter of 1996 compared with the year ago period. The expense increase principally related to business activities in the emerging markets while expenses related to Consumer and (Corporate) Banking activities in the developed markets of North America, Europe, and Japan were up only 1% from the year-ago period. Employee expense was $1.5 billion in the 1996 first quarter, up $91 million from the comparable 1995 period. The increase principally reflected salary increases, higher staff levels related to business expansion in the emerging markets, and an increase in costs associated with performance-based stock incentive plans. These increases were partially offset by lower incentive compensation in Global Relationship Banking. Staff levels of 86,700 at March 31, 1996 increased 3,400 from a year ago and 1,700 from 1995 year-end, largely in the emerging markets. Net premises and equipment expense increased $47 million to $457 million in the first quarter of 1996 compared with the first quarter of 1995, while other expense was up $29 million to $934 million. These increases primarily reflected costs related to facilities in support of business expansion initiatives in the emerging markets, the continued roll-out of the Citibanking branding strategy worldwide, and continued investments in operational and technological infrastructure. - -------------------------------------------------------------------------------- INCOME TAXES - -------------------------------------------------------------------------------- Income taxes were $560 million and $530 million in the first quarters of 1996 and 1995, representing effective tax rates of 38% and 39%, respectively. The 1995 full-year effective tax rate was 38%. 27 - -------------------------------------------------------------------------------- EFFECT OF CREDIT CARD RECEIVABLE SECURITIZATIONS - -------------------------------------------------------------------------------- During the first quarter of 1996, $1.6 billion of U.S. credit card receivables were sold. The total amount of securitized receivables, net of amortization, as of March 31, 1996, was $26.2 billion, compared with $25.5 billion as of December 31, 1995 and $22.7 billion as of March 31, 1995. The securitization of credit card receivables, which is fully described in the 1995 Annual Report and Form 10-K, does not affect the earnings reported in a period. However, securitization affects the manner in which the revenue is reported in the income statement. For securitized receivables, amounts that would otherwise be reported as net interest revenue, as fee and commission revenue, and as credit losses on loans are instead reported as fee and commission revenue (for servicing fees) and as other revenue (for the remaining cash flows to which Citicorp is entitled, net of credit losses). The table below shows the net impact of the securitization of credit card receivables as an increase or (decrease) to the amounts reported in the Consolidated Statement of Income and Average Balance Sheet, and under the captions of Return on Assets, Net Interest Margin, and Consumer Net Credit Loss Ratio.
- ------------------------------------------------------ First Quarter ----------------- (In Millions of Dollars) 1996 1995 - ------------------------------------------------------ Net Interest Revenue................. $(570) $(468) Fee and Commission Revenue........... 43 30 Other Revenue........................ 233 216 Provision for Credit Losses.......... (294) (222) ----------------- Net Income Impact of Securitization.. $ - $ - - -------------------------------------================= Average Assets (In Billions)......... $ (26) $ (22) Return on Assets..................... .12% .10% Net Interest Margin.................. (.41) (.38) Consumer Net Credit Loss Ratio....... (.59) (.52) - -------------------------------------=================
28
- ----------------------------------------------------------------------- CONSOLIDATED FINANCIAL STATEMENTS - ----------------------------------------------------------------------- CONSOLIDATED STATEMENT OF INCOME CITICORP AND SUBSIDIARIES First Quarter - ----------------------------------------------------------------------- (In Millions of Dollars Except Per 1996 1995 Share Amounts) - ----------------------------------------------------------------------- INTEREST REVENUE Interest and Fees on Loans............. $ 4,558 $ 4,341 Interest on Deposits with Banks........ 196 181 Interest on Federal Funds Sold and Securities Purchased Under Resale Agreements.......................... 256 251 Interest and Dividends on Securities U.S. Treasury and Federal Agencies.... 56 63 State and Municipal................... 21 22 Other (Principally in offices outside the U.S.)............................ 304 280 Interest on Trading Account Assets.... 385 459 ------------------------------- Total Interest Revenue................ 5,776 5,597 ------------------------------- INTEREST EXPENSE Interest on Deposits................... 2,186 2,256 Interest on Trading Account Liabilities 79 83 Interest on Purchased Funds and Other Borrowings............................ 491 584 Interest on Long-Term Debt and Subordinated Capital Notes............ 335 349 ------------------------------- Total Interest Expense................ 3,091 3,272 ------------------------------- ------------------------------- NET INTEREST REVENUE................... 2,685 2,325 ------------------------------- PROVISION FOR CREDIT LOSSES............ 494 391 ------------------------------- NET INTEREST REVENUE AFTER PROVISION FOR CREDIT LOSSES..................... 2,191 1,934 ------------------------------- FEES, COMMISSIONS, AND OTHER REVENUE Fees and Commissions................... 1,312 1,262 Foreign Exchange....................... 205 305 Trading Account........................ 90 39 Securities Transactions................ 102 26 Other Revenue.......................... 434 486 ------------------------------- Total Fees, Commissions, and Other Revenue.............................. 2,143 2,118 ------------------------------- OPERATING EXPENSE Salaries............................... 1,132 1,080 Employee Benefits...................... 337 298 ------------------------------- Total Employee Expense................ 1,469 1,378 Net Premises and Equipment Expense..... 457 410 Other Expense.......................... 934 905 ------------------------------- Total Operating Expense............... 2,860 2,693 ------------------------------- INCOME BEFORE TAXES.................... 1,474 1,359 INCOME TAXES........................... 560 530 ------------------------------- NET INCOME............................. $ 914 $ 829 - ----------------------------------------=============================== INCOME APPLICABLE TO COMMON STOCK...... $ 871 $ 735 ------------------------------- EARNINGS PER SHARE: ON COMMON AND COMMON EQUIVALENT SHARES $ 1.82 $ 1.71 ASSUMING FULL DILUTION................ $ 1.75 $ 1.53 - -----------------------------------------------------------------------
29
- ----------------------------------------------------------------------- CONSOLIDATED BALANCE SHEET CITICORP AND SUBSIDIARIES (In Millions of Dollars) Mar. 31, 1996 Dec. 31, 1995 - ----------------------------------------------------------------------- ASSETS Cash and Due from Banks................ $ 6,203 $ 5,723 Deposits at Interest with Banks........ 10,559 9,028 Securities Available for Sale, At Fair Value..... 20,460 18,213 Venture Capital, At Fair Value........ 1,938 1,854 Trading Account Assets................. 30,978 32,093 Federal Funds Sold and Securities Purchased Under Resale Agreements..... 10,715 8,113 Loans, Net of Unearned Income Consumer.............................. 104,124 105,643 Commercial............................ 61,327 59,999 ------------------------------- Total Loans........................... 165,451 165,642 Allowance for Credit Losses............ (5,390) (5,368) Customers' Acceptance Liability........ 1,847 1,542 Premises and Equipment, Net............ 4,371 4,339 Interest and Fees Receivable........... 2,926 2,914 Other Assets........................... 13,508 12,760 ------------------------------- TOTAL............................... $263,566 $256,853 - ---------------------------------------================================ LIABILITIES Non-Interest-Bearing Deposits in U.S Offices............................... $ 12,455 $ 13,388 Interest-Bearing Deposits in U.S Offices............................... 38,494 36,700 Non-Interest-Bearing Deposits in Offices Outside the U.S. ............. 8,084 8,164 Interest-Bearing Deposits in Offices Outside the U.S. ..................... 112,971 108,879 ------------------------------- Total Deposits........................ 172,004 167,131 Trading Account Liabilities............ 18,089 18,274 Purchased Funds and Other Borrowings... 16,883 16,334 Acceptances Outstanding................ 1,877 1,559 Accrued Taxes and Other Expenses....... 5,594 5,719 Other Liabilities...................... 10,113 9,767 Long-Term Debt and Subordinated Capital Notes................................. 19,244 18,488 STOCKHOLDERS' EQUITY Preferred Stock (Without par value).... 2,078 3,071 Common Stock ($1.00 par value)......... 502 461 Issued Shares: 501,906,885 and 461,319,265, respectively Surplus................................ 6,415 5,702 Retained Earnings...................... 12,184 12,190 Net Unrealized Gains - Securities Available for Sale.................... 174 132 Foreign Currency Translation........... (448) (437) Common Stock in Treasury, at Cost...... (1,143) (1,538) Shares: 21,249,984 and 34,030,205, respectively ------------------------------- Total Stockholders' Equity.......... 19,762 19,581 ------------------------------- TOTAL............................... $263,566 $256,853 - ----------------------------------------===============================
30
- ----------------------------------------------------------------------- CONSOLIDATED STATEMENT OF CHANGES IN CITICORP AND SUBSIDIARIES STOCKHOLDERS' EQUITY Three Months Ended March 31, ---------------------------- (In Millions of Dollars) 1996 1995 - ----------------------------------------------------------------------- Balance at Beginning of Period........... $19,581 $17,769 Preferred Stock Issuance, Net of Related Costs.......................... - 145 Convertible Preferred Stock, Series 12 Redemption of Series 12................. (590) - Issuance of Common Stock................ 590 - Convertible Preferred Stock, Series 13 Redemption of Series 13................. (403) - Issuance of Common Stock from Treasury Shares................................. 1,066 - Adjustment to Retained Earnings for Treasury Shares Issued................. (663) - Issuance of Common Stock Under Various Staff Benefit Plans (Net of Amortization) and the Dividend Reinvestment Plan............ 164 100 Net Income............................... 914 829 Cash Dividends Declared Common.................................. (210) (119) Preferred............................... (47) (92) Change in Net Unrealized Gains on Securities Available for Sale........... 42 (336) Foreign Currency Translation............. (11) 67 Repurchased Common Shares................ (721) - Other Treasury Stock Transactions, at Cost.................................... 50 (2) ---------------------------- Balance at End of Period................. $19,762 $18,361 - -------------------------------------------============================
31
- -------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF CASH FLOWS CITICORP AND SUBSIDIARIES Three Months Ended March 31, ---------------------------------- (In Millions of Dollars) 1996 1995 - -------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net Income............................. $ 914 $ 829 Adjustments to Reconcile Net Income to Net Cash Provided by (Used in) Operating Activities: Provision for Credit Losses........... 494 391 Depreciation and Amortization of Premises and Equipment............... 170 152 Amortization of Goodwill.............. 11 13 Provision for Deferred Taxes.......... 27 (94) Venture Capital Activity.............. (84) 340 Net Gain on Sale of Securities........ (102) (26) Changes in Accruals and Other, Net.... (729) (684) Net Decrease (Increase) in Trading Account Assets....................... 1,115 (12,896) Net (Decrease) Increase in Trading Account Liabilities.................. (185) 11,137 ---------------------------------- Total Adjustments...................... 717 (1,667) ---------------------------------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES.................. 1,631 (838) ---------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Net Increase in Deposits at Interest with Banks............................ (1,531) (925) Securities - Available for Sale Purchases........................... (9,166) (3,836) Proceeds from Sales................. 3,347 1,552 Maturities.......................... 3,721 2,594 Securities - Held to Maturity Purchases........................... - (1,783) Maturities.......................... - 1,795 Net Increase in Federal Funds Sold and Securities Purchased Under Resale Agreements............................ (2,602) (1,655) Net Increase in Loans.................. (30,982) (30,084) Proceeds from Sales of Loans and Credit Card Receivables...................... 30,745 26,249 Capital Expenditures on Premises and Equipment............................. (298) (272) Proceeds from Sales of Premises and Equipment............................. 41 18 Proceeds from Sales of Subsidiaries and Affiliates............................ 51 - Proceeds from Sales of OREO............ 157 99 ---------------------------------- NET CASH USED IN INVESTING ACTIVITIES.. (6,517) (6,248) ---------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Net Increase in Deposits............... 4,873 9,386 Net Increase (Decrease) in Federal Funds Purchased and Securities Sold Under Repurchase Agreements........... 1,018 (1,602) Proceeds from Issuance of Commercial Paper and Funds Borrowed with Original Maturities of Less Than One Year................................ 174,306 126,833 Repayment of Commercial Paper and Funds Borrowed with Original Maturities of Less Than One Year........................ (174,691) (127,071) Proceeds from Issuance of Long-Term Debt 1,972 758 Repayment of Long-Term Debt............ (1,248) (1,201) Proceeds from Issuance of Preferred Stock................................. - 145 Proceeds from Issuance of Common Stock. 102 71 Treasury Stock Transactions............ (671) (2) Dividends Paid......................... (257) (211) ---------------------------------- NET CASH PROVIDED BY FINANCING ACTIVITIES............................ 5,404 7,106 ---------------------------------- EFFECT OF EXCHANGE RATE CHANGES ON CASH AND DUE FROM BANKS.................... (38) 85 ---------------------------------- Net Increase in Cash and Due from Banks 480 105 Cash and Due from Banks at Beginning of Period................................ 5,723 6,470 ---------------------------------- CASH AND DUE FROM BANKS AT END OF PERIOD $ 6,203 $ 6,575 - ----------------------------------------================================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash Paid During the Period for: Interest.............................. $ 3,112 $ 2,940 Income Taxes.......................... 217 199 NON-CASH INVESTING ACTIVITIES Transfer from Loans to OREO and Assets Pending Disposition.................. $ 116 $ 196 - --------------------------------------------------------------------------
32
- -------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEET CITIBANK, N.A. AND SUBSIDIARIES (In Millions of Dollars) Mar. 31, 1996 Dec. 31, 1995 - -------------------------------------------------------------------------- ASSETS Cash and Due from Banks.................. $ 5,071 $ 4,842 Deposits at Interest with Banks.......... 11,310 9,256 Securities Available for Sale, At Fair Value....... 16,492 14,256 Venture Capital, At Fair Value.......... 1,483 1,457 Trading Account Assets................... 26,109 28,407 Federal Funds Sold and Securities Purchased Under Resale Agreements....... 6,156 6,676 Loans, Net of Unearned Income............ 137,108 136,693 Allowance for Credit Losses.............. (4,381) (4,403) Customers' Acceptance Liability.......... 1,848 1,542 Premises and Equipment, Net.............. 3,399 3,386 Interest and Fees Receivable............. 2,004 1,940 Other Assets............................. 7,605 7,422 ---------------------------------- TOTAL................................... $ 214,204 $ 211,474 - ----------------------------------------================================== LIABILITIES Non-Interest-Bearing Deposits in U.S. Offices................................. $ 10,172 $ 10,959 Interest-Bearing Deposits in U.S. Offices................................. 23,462 22,676 Non-Interest-Bearing Deposits in Offices Outside the U.S................. 7,864 7,955 Interest-Bearing Deposits in Offices Outside the U.S......................... 112,102 108,018 ---------------------------------- Total Deposits.......................... 153,600 149,608 Trading Account Liabilities.............. 16,175 17,544 Purchased Funds and Other Borrowings..... 9,297 10,106 Acceptances Outstanding.................. 1,876 1,559 Accrued Taxes and Other Expenses......... 3,133 3,263 Other Liabilities........................ 5,309 5,300 Long-Term Debt and Subordinated Notes.... 9,433 9,128 STOCKHOLDER'S EQUITY Common Stock ($20.00 par value).......... 751 751 Outstanding Shares: 37,534,553 in each period Surplus.................................. 6,830 6,744 Retained Earnings........................ 8,257 7,972 Net Unrealized Gains - Securities Available for Sale...................... 105 55 Foreign Currency Translation............. (562) (556) ---------------------------------- Total Stockholder's Equity.............. 15,381 14,966 ---------------------------------- TOTAL................................... $ 214,204 $ 211,474 - ----------------------------------------==================================
33
OTHER FINANCIAL INFORMATION - -------------------------------------------------------------------------------------------------------------- SECURITIES (A) - -------------------------------------------------------------------------------------------------------------- March 31, 1996 December 31, 1995 (B) Gross Gross Amortized Unrealized Unrealized Fair Amortized Fair (In Millions of Dollars) Cost Gains Losses Value Cost Value - --------------------------------------------------------------------------------------------------------------- SECURITIES - AVAILABLE FOR SALE (C) U.S. Treasury and Federal Agency (D).. $ 4,187 $ 46 $ 11 $ 4,222 $ 4,285 $ 4,345 State and Municipal................... 1,609 87 41 1,655 1,611 1,631 Foreign Government (E)................ 10,532 505 386 10,651 8,507 8,443 U.S. Corporate (D).................... 1,206 12 22 1,196 1,169 1,221 Other Debt Securities................. 1,261 13 6 1,268 1,112 1,119 ------------------------------------------------------------------------- Total Debt Securities................ 18,795 663 466 18,992 16,684 16,759 Equity Securities (F)................. 1,397 95 24 1,468 1,345 1,454 ------------------------------------------------------------------------- 20,192 758 490 20,460 18,029 18,213 - --------------------------------------------------------------------------------------------------------------- VENTURE CAPITAL (G)................... 1,938 - - 1,938 1,854 1,854 ------------------------------------------------------------------------- $22,130 $758 $490 $22,398 $19,883 $20,067 - --------------------------------------=========================================================================
(A) Refer to the 1995 Annual Report and Form 10-K for a description of accounting policies. (B) At December 31, 1995, gross unrealized gains and gross unrealized losses on securities available for sale totaled $829 million and $645 million, respectively. (C) Securities available for sale held by equity-method affiliates are not included in this table. Citicorp's share of gross unrealized gains and gross unrealized losses related to those securities at March 31, 1996 was $3 million and $1 million, respectively, and is included in the net unrealized gains-securities available for sale component of stockholders' equity, net of applicable taxes. At December 31, 1995, Citicorp's share of gross unrealized gains and gross unrealized losses related to securities available for sale held by equity-method affiliates was $22 million and $2 million, respectively. (D) Included in U.S. Federal Agency and U.S. Corporate securities available for sale at March 31, 1996 are mortgage-backed securities with an amortized cost of $1,299 million, gross unrealized gains of $6 million, gross unrealized losses of $7 million, and fair value of $1,298 million. (E) Included in Foreign Government securities available for sale at March 31, 1996 are Brady bonds issued by the Government of Brazil with an amortized cost and fair value of $1.5 billion and $2.0 billion, respectively. Also included are Brady bonds issued by the Government of Venezuela with an amortized cost and fair value of $563 million and $338 million, respectively. (F) Equity securities available for sale include certain non-marketable equity securities which are carried at cost. At March 31, 1996, the carrying amount of those securities was $865 million (reported in both the amortized cost and fair value columns) and the fair value was $896 million. (G) For the three months ended March 31, 1996, net gains on investments held by venture capital subsidiaries totaled $38 million, of which $44 million and $22 million represented gross unrealized gains and gross unrealized losses, respectively. For the three months ended March 31, 1995, net gains on investments held by venture capital subsidiaries totaled $85 million, of which $106 million and $53 million represented gross unrealized gains and gross unrealized losses, respectively. - --------------------------------------------------------------------------------
- ---------------------------------------------------------------------- TRADING ACCOUNT ASSETS AND LIABILITIES - ---------------------------------------------------------------------- (In Millions of Dollars) Mar. 31, 1996 Dec. 31, 1995 - ---------------------------------------------------------------------- TRADING ACCOUNT ASSETS Trading Account Securities.............. $17,370 $15,997 Revaluation Gains on Derivative and Foreign Exchange Contracts (A)......... 13,608 16,096 ------------------------------ $30,978 $32,093 - ----------------------------------------============================== TRADING ACCOUNT LIABILITIES Securities Sold, Not Yet Purchased...... $ 4,761 $ 3,696 Revaluation Losses on Derivative and Foreign Exchange Contracts (A)......... 13,328 14,578 ------------------------------ $18,089 $18,274 - ----------------------------------------==============================
(A) Net of master netting agreements. - -------------------------------------------------------------------------------- 34
- ------------------------------------------------------------------------------------- CASH-BASIS, RENEGOTIATED, AND PAST DUE LOANS (A) - ------------------------------------------------------------------------------------- (In Millions of Dollars) Mar. 31, 1996 Dec. 31, 1995 Mar. 31, 1995 - ------------------------------------------------------------------------------------- COMMERCIAL CASH-BASIS LOANS (B) Collateral-Dependent (at Lower of Cost or Collateral Value) (C)............... $ 763 $ 779 $1,329 Other................................... 766 755 712 --------------------------------------------- TOTAL COMMERCIAL CASH-BASIS LOANS....... $1,529 $1,534 $2,041 - ----------------------------------------============================================= COMMERCIAL CASH-BASIS LOANS (B) In U.S. Offices......................... $ 943 $ 925 $1,460 In Offices Outside the U.S.............. 586 609 581 --------------------------------------------- TOTAL COMMERCIAL CASH-BASIS LOANS....... $1,529 $1,534 $2,041 - ----------------------------------------============================================= COMMERCIAL RENEGOTIATED LOANS In U.S. Offices......................... $ 267 $ 309 $ 278 In Offices Outside the U.S.............. 71 112 60 --------------------------------------------- TOTAL COMMERCIAL RENEGOTIATED LOANS..... $ 338 $ 421 $ 338 - ----------------------------------------============================================= CONSUMER LOANS ON WHICH ACCRUAL OF INTEREST HAS BEEN SUSPENDED In U.S. Offices......................... $1,464 $1,413 $1,501 In Offices Outside the U.S.............. 1,255 1,247 1,192 --------------------------------------------- TOTAL CONSUMER LOANS ON WHICH ACCRUAL OF INTEREST HAS BEEN SUSPENDED........ $2,719 $2,660 $2,693 - ----------------------------------------============================================= ACCRUING LOANS 90 OR MORE DAYS DELINQUENT (D) In U.S. Offices......................... $ 474 $ 499 $ 425 In Offices Outside the U.S.............. 479 498 512 --------------------------------------------- TOTAL ACCRUING LOANS 90 OR MORE DAYS DELINQUENT............................. $ 953 $ 997 $ 937 - -------------------------------------------------------------------------------------
(A) Loan commitments and standby letters of credit to North America Commercial Real Estate borrowers or projects experiencing financial difficulties are not included in this table. Refer to page 12 for discussion. (B) Refer to the discussion of cash-basis loans on page 10. (C) This table presents data in a manner that distinguishes cash-basis collateral-dependent loans from other cash-basis loans. A cash-basis loan is defined as collateral dependent when repayment is expected to be provided solely by the underlying collateral and there are no other available and reliable sources of repayment, in which case the loans are written down to the lower of cost or collateral value. (D) Includes consumer loans of $915 million, $951 million and $858 million at March 31, 1996, December 31, 1995, and March 31, 1995, respectively, of which $218 million, $208 million and $126 million, respectively, are government-guaranteed student loans. Refer to discussion of the consumer loan portfolio on pages 8-9. - --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------- OTHER REAL ESTATE OWNED AND ASSETS PENDING DISPOSITION (A) - ----------------------------------------------------------------------------- (In Millions of Dollars) Mar. 31, 1996 Dec. 31, 1995 Mar. 31, 1995 - ----------------------------------------------------------------------------- CONSUMER OREO................... $ 530 $ 529 $ 601 COMMERCIAL OREO................. 518 625 1,014 ------------------------------------------- TOTAL OREO...................... $1,048 $1,154 $1,615 - ----------------------------------=========================================== ASSETS PENDING DISPOSITION (B).. $ 192 $ 205 $ 209 - ----------------------------------===========================================
(A) Carried at lower of cost or collateral value. (B) Represents consumer residential mortgage loans that have a high probability of foreclosure. - -------------------------------------------------------------------------------- 35
- ---------------------------------------------------------------------------------------------- DETAILS OF CREDIT LOSS EXPERIENCE - ---------------------------------------------------------------------------------------------- 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. (In Millions of Dollars) 1996 1995 1995 1995 1995 - ---------------------------------------------------------------------------------------------- ALLOWANCE FOR CREDIT LOSSES AT BEGINNING OF PERIOD................ $5,368 $5,341 $5,308 $5,270 $5,155 ------------------------------------------------------ ADDITIONS Provision for Credit Losses............. 494 531 576 493 391 ------------------------------------------------------ DEDUCTIONS GROSS CREDIT LOSSES CONSUMER In U.S. Offices......................... 301 319 301 279 238 In Offices Outside the U.S.............. 216 246 217 199 163 COMMERCIAL In U.S. Offices......................... 20 28 58 41 39 In Offices Outside the U.S.............. 32 72 70 38 30 ------------------------------------------------------ 569 665 646 557 470 ------------------------------------------------------ CREDIT RECOVERIES CONSUMER In U.S. Offices......................... 58 71 55 56 49 In Offices Outside the U.S.............. 46 53 48 43 43 COMMERCIAL In U.S. Offices......................... 13 52 18 8 30 In Offices Outside the U.S.............. 8 22 24 19 55 ------------------------------------------------------ 125 198 145 126 177 ------------------------------------------------------ NET CREDIT LOSSES In U.S. Offices......................... 250 224 286 256 198 In Offices Outside the U.S.............. 194 243 215 175 95 ------------------------------------------------------ 444 467 501 431 293 ------------------------------------------------------ Other, Net (A).......................... (28) (37) (42) (24) 17 ------------------------------------------------------ ALLOWANCE FOR CREDIT LOSSES AT END OF PERIOD...................... $5,390 $5,368 $5,341 $5,308 $5,270 - ----------------------------------------====================================================== Net Consumer Credit Losses.............. $ 413 $ 441 $ 415 $ 379 $ 309 As a Percentage of Average Consumer Loans........................ 1.60% 1.70% 1.63% 1.54% 1.30% Net Commercial Credit Losses $ 31 $ 26 $ 86 $ 52 $ (16) (Recoveries)........................... As a Percentage of Average Commercial Loans...................... 0.21% 0.18% 0.61% 0.37% NM - ----------------------------------------------------------------------------------------------
(A) Includes net transfers (to) from the reserve for Consumer sold portfolios and foreign exchange effects. NM Not meaningful, as recoveries result in a negative percentage. - -------------------------------------------------------------------------------- 36
- ------------------------------------------------------------------------------------------------------------ CALCULATION OF EARNINGS PER SHARE - ------------------------------------------------------------------------------------------------------------ First Quarter 1996 First Quarter 1995 ------------------------- -------------------------- On Common On Common & Common Assuming & Common Assuming Equivalent Full Equivalent Full (In Millions Except Per Share Amounts) Shares Dilution Shares Dilution - ------------------------------------------------------------------------------------------------------------ EARNINGS Income Applicable to Common Stock....... $ 871 $ 871 $ 735 $ 735 Dividends on Conversion Preferred - - 24 24 Stock, Series 15 (A)................... Dividends on Convertible Preferred Stock, Series 12 and Series 13 (B)..... - 5 - 34 ----------------------------------------------------------- INCOME APPLICABLE TO COMMON STOCK, ADJUSTED............................... $ 871 $ 876 $ 759 $ 793 - -------------------------------------------------=========================================================== SHARES Weighted-Average Common Shares Outstanding (A) (B) (C)................ 463.4 463.4 396.2 396.2 Conversion Preferred Stock, Series 15 - - 38.5 38.5 (A).................................... Convertible Preferred Stock, Series 12 - 21.0 - 73.0 and Series 13 (B)...................... Other Common Equivalent Shares (D)...... 15.2 16.4 9.8 10.2 ----------------------------------------------------------- TOTAL................................... 478.6 500.8 444.5 517.9 - -------------------------------------------------=========================================================== EARNINGS PER SHARE NET INCOME $ 1.82 $ 1.75 $ 1.71 $ 1.53 - ------------------------------------------------------------------------------------------------------------
(A) Conversion Preferred Stock, Series 15 was fully redeemed during 1995. (B) During the first quarter of 1996, the remaining Convertible Preferred Stock, Series 12 and 13 were converted to 59.0 million shares of common stock. The shares are included in the fully diluted computation as common equivalent shares up to conversion dates, and from conversion dates forward these shares are included in weighted-average common shares outstanding. (C) Includes 1.0 million and 1.1 million book value shares in the first quarter of 1996 and 1995, respectively. (D) Includes the dilutive effect of stock options and stock purchase agreements computed using the treasury stock method and shares issuable under deferred stock awards. 37 - -------------------------------------------------------------------------------- CROSS-BORDER AND NON-LOCAL CURRENCY OUTSTANDINGS - -------------------------------------------------------------------------------- Cross-border and non-local currency outstandings are presented on a regulatory basis, as discussed in the 1995 Annual Report and Form 10-K. From time to time, the FRB and the Federal Financial Institutions Examination Council propose amendments to, and interpretations of, country exposure reporting guidelines. Such proposals or interpretations could, if implemented in the future, affect reported cross-border and non-local currency outstandings.
- --------------------------------------------------------------------------------------------------------------------------------- COUNTRIES WITH OUTSTANDINGS EXCEEDING 1% OF TOTAL ASSETS (A) (B) - --------------------------------------------------------------------------------------------------------------------------------- Cross-Border Investments and Non-Local Currency Claims in and on Third Parties Funding of Total Outstandings -------------------------------------------------- Local --------------------- Public Private Citicorp Mar. 31, Dec. 31, (In Billions of Dollars) Banks Sector Sector Total Franchises 1996 1995 - --------------------------------------------------------------------------------------------------------------------------------- United Kingdom.................. $0.3 $0.1 $4.3 $4.7 $3.0 $ 7.7 $ 7.6 Brazil (C)...................... 0.3 2.0 2.1 4.4 1.4 5.8 5.1 Germany......................... 0.1 0.8 0.3 1.2 2.8 4.0 2.7 Japan........................... 0.2 0.2 1.9 2.3 1.3 3.6 3.6 Argentina (C)................... 0.1 0.1 2.5 2.7 0.5 3.2 2.9 Mexico.......................... 0.1 2.1 0.6 2.8 0.3 3.1 2.9 - ---------------------------------------------------------------------------------------------------------------------------------
(A) Legally binding cross-border and non-local currency commitments, including irrevocable letters of credit and commitments to extend credit, after adjustments to assign externally guaranteed commitments to the country of the guarantor, amounted to $5.8 billion in the United Kingdom, $1.0 billion in Germany, $1.6 billion in Japan, $0.1 billion in Argentina, and less than $0.1 billion each in Brazil and Mexico at March 31, 1996. (B) At March 31, 1996, cross-border and non-local currency outstandings in Singapore ($2.6 billion) and South Korea ($2.1 billion) were between .75% and 1.0% of total assets. At December 31, 1995, such countries were Singapore ($2.5 billion), Australia ($2.4 billion), and South Korea ($2.1 billion). (C) Includes outstandings funded with non-local currency liabilities where the fund providers agree that, in the event their claims cannot be repaid in U.S. dollars or other non-local currency due to a sovereign event, they will accept payment in local currency or wait to receive the non-local currency at such time as it becomes available. Such amounts at March 31, 1996 and December 31, 1995, respectively, were $1.6 billion and $1.4 billion in Brazil, and $1.9 billion and $1.6 billion in Argentina.
- ---------------------------------------------------------------------------------------------- CROSS-BORDER AND NON-LOCAL CURRENCY CLAIMS ON THIRD PARTIES - ---------------------------------------------------------------------------------------------- (In Billions of Dollars) Banks Public Sector Private Sector Mar. 31, 1996 Dec. 31, 1995 - ---------------------------------------------------------------------------------------------- Developed Markets (A)...... $2.0 $2.6 $12.0 $16.6 $15.2 Emerging Markets (A): Latin America (B)....... 0.7 5.7 6.4 12.8 11.7 Asia.................... 1.0 0.6 6.1 7.7 7.9 Other................... 1.1 0.9 0.8 2.8 2.5 ------------------------------------------------------------------- TOTAL (C).................. $4.8 $9.8 $25.3 $39.9 $37.3 - ---------------------------===================================================================
(A) Developed markets comprise activities in North America, Europe, and Japan. Emerging markets comprise activities in all other geographic areas. (B) Cross-border and non-local currency claims on third parties in Latin America of $12.8 billion at March 31, 1996, compared with $11.7 billion at December 31, 1995. The increase primarily reflects the effect of short-term trade related transactions as well as increases in the value of Brady bonds held in the available-for-sale portfolio (see additional discussion on page 34). (C) Includes investments in affiliates of $1.3 billion at March 31, 1996 and December 31, 1995. 38
AVERAGE BALANCES AND INTEREST RATES (TAXABLE EQUIVALENT BASIS) (A) (B) - ------------------------------------------------------------------------------------------------------------------------- First Quarter 1996 (In Millions of Dollars) Average Volume Interest % Average Rate - ------------------------------------------------------------------------------------------------------------------------- INTEREST REVENUE -CONSUMER LOANS, Net of In U.S. Offices $ 53,378 $1,469 11.07 Unearned Income (C) In Offices Outside the U.S. (D) 50,509 1,603 12.76 ------------------------------------------------------------------------------- TOTAL CONSUMER LOANS 103,887 3,072 11.89 ------------------------------------------- COMMERCIAL LOANS, Net of In U.S. Offices Unearned Income (C) Commercial and Industrial 9,419 212 9.05 Mortgage and Real Estate 4,589 82 7.19 Loans to Financial Institutions 450 5 4.47 Lease Financing 3,219 52 6.50 In Offices Outside the U.S. (D) 41,402 1,136 11.04 ------------------------------------------- TOTAL COMMERCIAL LOANS 59,079 1,487 10.12 ------------------------------------------- TOTAL LOANS 162,966 4,559 11.25 ------------------------------------------- FUNDS SOLD AND RESALE AGREEMENTS In U.S. Offices 9,940 127 5.14 In Offices Outside the U.S. (D) 3,390 129 15.30 ------------------------------------------- TOTAL 13,330 256 7.72 ------------------------------------------- SECURITIES- AVAILABLE FOR SALE In U.S. Offices U.S. Treasury and Federal Agencies 3,305 47 5.72 State and Municipal 1,595 26 6.56 Other 2,038 28 5.53 In Offices Outside the U.S. (D) 11,904 279 9.43 ------------------------------------------- TOTAL 18,842 380 8.11 ------------------------------------------- SECURITIES- HELD TO MATURITY In U.S. Offices U. S. Treasury and Federal Agencies - - - In Offices Outside the U.S. (D) - - - ------------------------------------------- TOTAL - - - ------------------------------------------- VENTURE CAPITAL In U.S. Offices 1,568 3 0.77 In Offices Outside the U.S. 324 4 4.97 ------------------------------------------- TOTAL 1,892 7 1.49 ------------------------------------------- TOTAL SECURITIES 20,734 387 7.51 ------------------------------------------- TRADING ACCOUNT ASSETS In U.S. Offices 6,868 95 5.56 In Offices Outside the U.S. (D) 13,136 291 8.91 ------------------------------------------- TOTAL 20,004 386 7.76 DEPOSITS AT INTEREST WITH BANKS Principally Outside the U.S. (D) 11,619 196 6.78 ------------------------------------------- TOTAL INTEREST-EARNING ASSETS 228,653 $5,784 10.17 Non-Interest-Earning Assets (E) 39,678 ------------------------------------------- TOTAL ASSETS $268,331 =========================================== INTEREST EXPENSE-DEPOSITS In U.S. Offices Savings Deposits $ 25,348 $ 191 3.03 Negotiable Certificates of Deposit 1,916 24 5.04 Other Time Deposits 10,745 130 4.87 ------------------------------------------- Total U.S. Interest-Bearing Deposits 38,009 345 3.65 In Offices Outside the U.S. (D) 113,636 1,841 6.52 ------------------------------------------- TOTAL 151,645 2,186 5.80 ------------------------------------------- TRADING ACCOUNT LIABILITIES In U.S. Offices 2,894 41 5.70 In Offices Outside the U.S. (D) 1,886 38 8.10 ------------------------------------------- TOTAL 4,780 79 6.65 ------------------------------------------- FUNDS BORROWED In U.S. Offices Fed Funds Purchased and Sec. Sold 12,242 146 4.80 Commercial Paper 1,701 23 5.44 Other Purchased Funds 2,367 91 15.46 Long-Term Debt and Sub. Notes 14,535 234 6.48 ------------------------------------------- Total in U.S. Offices 30,845 494 6.44 In Offices Outside the U.S. (D) 9,919 332 13.46 ------------------------------------------- TOTAL 40,764 826 8.15 ------------------------------------------- TOTAL INTEREST-BEARING LIABILITIES 197,189 3,091 6.30 Demand Deposits in U.S. Offices 12,464 Other Non-Interest-Bearing Liab (E) 38,949 Total Stockholders' Equity 19,729 ------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $268,331 =========================================== NET INTEREST REVENUE AS A PERCENTAGE OF AVERAGE INTEREST-EARNING ASSETS $2,693 4.74 - ------------------------------------------------------------------------------===========================================
(A) The taxable equivalent adjustment is based on the U.S. federal statutory tax rate of 35%. (B) Interest rates and amounts include the effects of risk management activities associated with the respective asset and liability categories. (C) Loans in the table above include cash-basis loans. 39
- ---------------------------------------------------------------------------------- CITICORP AND SUBSIDIARIES - ---------------------------------------------------------------------------------- Fourth Quarter 1995 First Quarter 1995 - ---------------------------------------------------------------------------------- Average Volume Interest % Average Rate Average Volume Interest % Average Rate - ---------------------------------------------------------------------------------- $ 53,042 $1,460 10.92 $ 49,026 $1,336 11.05 49,835 1,557 12.40 47,200 1,485 12.76 - ---------------------------------------------------------------------------------- 102,877 3,017 11.63 96,226 2,821 11.89 - ---------------------------------------------------------------------------------- 9,582 217 8.98 10,633 237 9.04 4,826 89 7.32 5,922 111 7.60 513 7 5.41 340 3 3.58 3,176 57 7.12 3,241 59 7.38 40,160 1,205 11.90 36,155 1,111 12.46 - ---------------------------------------------------------------------------------- 58,257 1,575 10.73 56,291 1,521 10.96 - ---------------------------------------------------------------------------------- 161,134 4,592 11.31 152,517 4,342 11.55 - ---------------------------------------------------------------------------------- 10,123 145 5.68 13,479 186 5.60 2,960 141 18.90 1,966 65 13.41 - ---------------------------------------------------------------------------------- 13,083 286 8.67 15,445 251 6.59 - ---------------------------------------------------------------------------------- 2,610 33 5.02 2,052 29 5.73 1,589 27 6.74 1,616 26 6.53 1,867 25 5.31 1,404 21 6.07 9,332 232 9.86 8,178 198 9.82 - ---------------------------------------------------------------------------------- 15,398 317 8.17 13,250 274 8.39 - ---------------------------------------------------------------------------------- 1,167 18 6.12 1,584 26 6.66 2,214 47 8.42 3,325 63 7.68 - ---------------------------------------------------------------------------------- 3,381 65 7.63 4,909 89 7.35 - ---------------------------------------------------------------------------------- 1,568 16 4.05 1,469 4 1.10 288 3 4.13 263 4 6.17 - ---------------------------------------------------------------------------------- 1,856 19 4.06 1,732 8 1.87 - ---------------------------------------------------------------------------------- 20,635 401 7.71 19,891 371 7.56 - ---------------------------------------------------------------------------------- 7,946 122 6.09 14,133 243 6.97 11,564 276 9.47 10,864 217 8.10 - ---------------------------------------------------------------------------------- 19,510 398 8.09 24,997 460 7.46 11,436 190 6.59 10,865 181 6.76 - ---------------------------------------------------------------------------------- 225,798 $5,867 10.31 223,715 $5,605 10.16 40,701 45,338 - ---------------------------------------------------------------------------------- $266,499 $269,053 ================================================================================== $ 24,923 $ 198 3.15 $ 24,438 $ 179 2.97 1,430 21 5.83 1,369 24 7.11 10,626 170 6.35 9,864 165 6.78 - ---------------------------------------------------------------------------------- 36,979 389 4.17 35,671 368 4.18 112,136 1,900 6.72 109,243 1,888 7.01 - ---------------------------------------------------------------------------------- 149,115 2,289 6.09 144,914 2,256 6.31 - ---------------------------------------------------------------------------------- 3,170 47 5.88 3,229 52 6.53 1,658 37 8.85 1,242 31 10.12 - ---------------------------------------------------------------------------------- 4,828 84 6.90 4,471 83 7.53 - ---------------------------------------------------------------------------------- 13,036 175 5.33 19,216 257 5.42 1,731 25 5.73 1,961 22 4.55 2,648 95 14.23 3,267 81 10.06 14,944 261 6.93 14,465 265 7.43 - ---------------------------------------------------------------------------------- 32,359 556 6.82 38,909 625 6.51 9,406 369 15.56 9,710 308 12.86 - ---------------------------------------------------------------------------------- 41,765 925 8.79 48,619 933 7.78 - ---------------------------------------------------------------------------------- 195,708 3,298 6.69 198,004 3,272 6.70 11,966 11,607 39,490 41,527 19,335 17,915 - ---------------------------------------------------------------------------------- $266,499 $269,053 ================================================================================== $2,569 4.51 $2,333 4.23 ==================================================================================
(D) Average rates in offices outside the U.S. may reflect prevailing local interest rates, including the effects of inflation and monetary correction in certain Latin American countries. (E) Gross unrealized gains and losses on off-balance sheet trading positions are reported in non-interest earning assets and non-interest bearing liabilities, respectively. 40 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 1996 COMMISSION FILE NUMBER 1-5738 CITICORP (Exact name of registrant as specified in its charter) DELAWARE 13-2614988 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 399 PARK AVENUE, NEW YORK, NEW YORK 10043 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212) 559-1000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------------- -------------- Citicorp Common Stock.................. 480,656,901 ($1.00 Par Value) (Shares Outstanding on March 31, 1996) 41 - -------------------------------------------------------------------------------- FORM 10-Q CROSS-REFERENCE INDEX This document serves both as an analytical review for analysts, stockholders and other interested persons and as the quarterly report filed on Form 10-Q with the Securities and Exchange Commission. PART I FINANCIAL INFORMATION PAGE ---- Item 1 - Consolidated Financial Statements Consolidated Financial Statements, Schedules, and Statistics Statement of Income for the Quarters Ended MARCH 31, 1996 AND 1995................................... 29 Balance Sheet as of MARCH 31, 1996 AND DECEMBER 31, 1995...................... 30 Statement of Cash Flows for the Three Months Ended MARCH 31, 1996 AND 1995................................... 32 Calculation of Earnings Per Share......................... 37 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations....................... 2-28 PART II OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K........................ 43 Signatures....................................................... 44 In the opinion of the management of Citicorp, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results of operations for the three months ended MARCH 31, 1996 AND 1995 have been included. 42 Item 6 - Exhibits and Reports on Form 8-K -------------------------------- a) Exhibit 10. Citicorp Deferred Compensation Plan (incorporated by reference to Exhibit 10 from Citicorp's Registration Statement on Form S-8, File No. 333-0983). b) Exhibit 27. Financial Data Schedule. c) Reports on Form 8-K: Citicorp filed a Form 8-K Current Report dated January 16, 1996 (Item 5) which report included a summary of the consolidated operations of Citicorp for the year ended December 31, 1995 and (Item 7) the calculation of the ratio of income to fixed charges (Exhibit 12(a) thereto) and the calculation of the ratio of income to fixed charges including preferred stock dividends (Exhibit 12(b) thereto). Citicorp filed a Form 8-K Current Report dated April 16, 1996 (Item 5) which report included a summary of the consolidated operations of Citicorp for the three month period ended March 31, 1996 and (Item 7) the calculation of the ratio of income to fixed charges (Exhibit 12(a) thereto) and the calculation of the ratio of income to fixed charges including preferred stock dividends (Exhibit 12(b) thereto). 43 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CITICORP By: /S/ Thomas E. Jones Registrant --------------------------- Thomas E. Jones Executive Vice President Principal Financial Officer ---------------------------- /S/ George E. Seegers George E. Seegers Assistant Secretary Date: May 14, 1996 44 EX-27 2 FINANCIAL DATA SCHEDULE
9 This schedule contains summary financial information extracted from the current report on Form 10-Q for the quarter ended March 31, 1996 and is qualified in its entirety by reference to such financial statements and accompanying disclosure. 0000020405 CITICORP 1996 1,000,000 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 6,203 10,559 10,715 30,978 20,460 0 0 165,451 5,390 263,566 172,004 16,883 10,113 19,244 0 2,078 502 17,182 263,566 4,558 381 837 5,776 2,186 3,091 2,685 494 102 934 1,474 914 0 0 914 1.82 1.75 4.74 4,248 953 338 0 5,368 569 125 5,390 0 0 0 Includes Securities Purchased Under Resale Agreements Purchased Funds and Other Borrowings Includes Subordinated Capital Notes Taxable Equivalent Basis Includes $1,529 of cash-basis commercial loans and $2,719 of consumer loans on which accrual of interest has been suspended. Accruing loans 90 or more days delinquent. Includes $52MM of commercial credit losses and $517MM of consumer credit losses. Allowance activity for 1996 includes $(28)MM in other changes principally net tansfers (to) from the reserve for Consumer Sold Portfolio and foreign exchange effects. No portion of Citicorp's credit loss allowance is specifically allocated to any individual loan or group of loans, however, $1,809MM of the allowance at December 31, 1995 was attributed to operations outside the U.S. (See note 10 to the 1995 Annual Report). See Footnote F9 above. See Footnote F9 above.
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