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CONTENTS
CHAIRMAN'S LETTER TO
STOCKHOLDERS 2
AROUND THE WORLD...
AROUND THE CLOCK 4
CONSUMERS 6
COMMERCIAL BANKING 8
UNIQUE GLOBAL FOCUS 10
NEW TECHNOLOGY 12
OUR PEOPLE 14
LOCAL CITIZENSHIP 16
BUILDING THE BRAND 18
FINANCIAL INFORMATION 21
CORPORATE INFORMATION 85
STOCKHOLDER INFORMATION 88
CITICORP ANNUAL REPORT 1995
ON THE COVER 1995 Citibank Events
[PHOTO] Citibanking [LOGO] Citibanking: Introduced in Turkey,
now available in 39 countries.
[PHOTO] Cards
[LOGO] Citibank credit cards: Introduced
[PHOTO] Private Bank in the Dominican Republic, expanding
this business to 30 countries.
[PHOTO] Global Relationship
Banking Diners Club: Introduced in Hungary,
now available in 24 countries.
[PHOTO] Emerging Markets
[LOGO] The Citibank Private Bank: Opened
offices in Colombia, Peru, Greece
and India, expanding service to
35 countries.
[LOGO] Citibank commercial banking: Opened
offices in Slovakia and Romania.
[LOGO] Significant Citibank anniversaries
in 1995:
Brazil - 80 years, Uruguay - 80 years,
Peru - 75 years, Egypt - 40 years,
Saudi Arabia - 40 years, Ecuador - 35
years, Ireland - 30 years, Taiwan - 30
years, Bahrain - 25 years, Luxembourg
- 25 years, Denmark - 20 years, Oman -
20 years
CHAIRMAN'S LETTER TO STOCKHOLDERS
Nineteen ninety-five has been another excellent year. It was also a pivotal
year. We completed our turnaround. Real Estate is now breaking even. We regained
our ratings, achieved our capital ratios and started a stock buy back program.
[GRAPH APPEARS HERE--SEE APPENDIX I, ITEM 2]
We reported earnings of $3.5 billion for the year; up slightly (3%) from
last year but up 21% if 1994 is adjusted for its unusual taxes. Your stock
closed the year at $67.25, up 63% from last year. We have announced a $4.5
billion stock buy back program and increased your dividend to $1.80 per share.
We have embarked on the new set of business priorities I mentioned in last
year's Annual Report. Although it will take a few years to be fully engaged, we
believe they hold great promise.
We are committed to deliver performance. Core earnings are targeted to
grow 10-12% annually. We expect to return better than 18% on your equity. We
expect to generate around $2.0 billion a year of free capital. We expect to
improve our revenue to expense ratio. We expect to lower our vulnerability to
risk. We are operating within these parameters as I write and expect to in the
years ahead.
We see Citicorp as a global company and as a growth company. The bulk of
our growth has and will come from our Consumer businesses. We also own a unique
commercial bank. That bank operates locally and regionally in the world's
emerging markets and also serves the global companies that value our
capabilities (and our ability) to serve them globally. On a stand-alone basis
that bank is uniquely positioned and a top performer.
[HIGHLIGHTED TEXT--SEE APPENDIX I, ITEM 2]
During the coming years, we will continue to pursue the opportunities that
these franchises offer.
We will build our Consumer business around "Citibanking." We will hold
share in the U.S. Card market while expanding overseas. We will continue to
build our Global Private Bank. These Consumer businesses should report
double-digit growth and improving returns, even as credit write-offs move up to
more typical levels.
In the traditional developed markets of North America, Europe and Japan, we
are focusing our commercial banking business. We are targeting those customers
that value our competence, sophistication and responsiveness--and most
importantly, our unique ability to serve them around the world. This is a select
but large and attractive customer set.
We continue to build our banking presence in the Emerging Markets. We are
expanding into new countries. We are investing; deepening our presence in a
selected set of local and regional markets. These investments will be paced but
are at the core of our globality.
We continue to value strong capital ratios, good reserves and balance sheet
strength. We would like to see our ratings continue to improve. We do believe
that we have enough Tier 1 capital and are buying back stock. During 1995, we
converted our PERCS to equity and by the end of the first quarter of 1996, our
convertible preferred issues will also be converted.
[GRAPH APPEARS HERE--SEE APPENDIX I, ITEM 3]
We continue to improve our controls. We still have much to learn in terms
of productivity. We have embraced the goal of continuing to improve our
revenue/expense ratio. We enjoy, as compared to most global growth companies, a
healthy margin between revenue and expense. We have taken it upon ourselves to
maintain a spread between revenue and expense growth rates and, with regard to
incremental expenses, to offset these "two for one" with incremental revenue.
All of this is a stretch...but it is attainable. We are modernizing our back
office, even as we embrace new interactive network technologies as a competitive
tool.
We are changing our organization, broadening and strengthening our
management team. This will continue.
The organization change is moving us from the structure established in
1991-1992, which was designed to achieve very short-term objectives, to a
structure supportive of our performance imperatives and the need to develop our
customer franchises. The broadening and strengthening speaks to the substance of
our business challenges and aspirations and separately to the need to build
depth and experience to feed into the next-generation team.
During 1995, Dr. Mario Simonsen had to resign from our Board for health
reasons. This is a great loss. In fifteen years as a Director, Mario brought us
his considerable intelligence, great common sense, and years of experience as an
educator and Minister of Finance in Brazil. We all join in wishing him and his
family the very best and in thanking him for his distinguished service.
/s/ JOHN S. REED
- -------------------
John S. Reed
[PHOTO APPEARS HERE--SEE APPENDIX I, ITEM 4]
AROUND THE WORLD
Every hour of every day, from New York to Singapore, from Helsinki to Punta
Arenas, million of people bank on Citibank. Consumers and commercial banking
customers depend on us for innovative products and superior service. They come
to us because they know that when their financial well-being is at stake, the
Citi never sleeps.
The sun is always shining somewhere on the Citibank network, but even after
sunset, our customers can still do their banking. At our 24-hour Citicard
Banking Centers, they can withdraw cash, make deposits or review account
activity around the clock. They can transfer money between accounts, check their
balances and pay bills via CitiPhone anytime day or night. Our credit and charge
card customers can report a lost or stolen card or secure a temporary spending-
limit increase 24 hours a day by phoning a Citibank customer service
representative.
Citibank's globally integrated transaction and information systems give
commercial customers the worldwide picture of their company's financial
position. They can easily and efficiently move money, finance trade or
investments, and schedule payments, whether in the home office or a foreign
subsidiary. Citibank trading rooms in London, New York, Tokyo, Singapore, Hong
Kong and Sydney operate both day and night, handling customer transactions.
No other financial institution has our ability to serve customers around
the world and around the clock.
...AROUND THE CLOCK
[PHOTO APPEARS HERE -- SEE APPENDIX I, ITEM 5]
ON FOUR CONTINENTS, CITIBANK TRADERS TRACK LOCAL AND FOREIGN MARKETS AND HANDLE
CUSTOMER ORDERS THROUGH TRADING ROOMS THAT OPERATE 24 HOURS A DAY.
[PHOTO APPEARS HERE -- SEE APPENDIX I, ITEM 6]
MEETING THE NEEDS
For twenty years, Citibank has been building a global Consumer business based on
Citibanking, Cards, and Private Banking, providing increasingly sophisticated
consumers with the ability to do all their banking anytime, anywhere and any way
they choose.
[PHOTO APPEARS HERE -- SEE APPENDIX I, ITEM 6]
[GRAPH APPEARS HERE -- SEE APPENDIX I, ITEM 7]
[GRAPH APPEARS HERE -- SEE APPENDIX I, ITEM 8]
[GRAPH APPEARS HERE -- SEE APPENDIX I, ITEM 9]
OF CONSUMERS...
As economies develop, large new consumer markets are emerging in countries
from Brazil to India, from Taiwan to Hungary.
Citibanking means that through branches, 24-hour Citicard Banking Centers,
CitiPhone or personal computers, we deliver a unique customer experience in 39
countries. Relationship-based rather than product-driven, Citibanking uses
technology to deliver faster, more flexible service. With Cards, we remain the
largest bankcard and charge-card issuer in the world, covering 36 countries. We
process more than 245 million bankcard payments from U.S. customers alone each
year. Cards has a proven product-mix and marketing strategy, with significant
economies of scale as a result of consolidated processing. And with Private
Banking, our clients gain the advantages of an unmatched global network of
professionals in 35 countries.
We are building share in existing markets at the same time we pursue
opportunities in new ones. This positions us to benefit from a steadily
increasing demand for consumer financial services.
With a 16% compound annual growth rate in earnings over the last five
years, our Consumer business has excellent growth prospects.
[GRAPH APPEARS HERE -- SEE APPENDIX I, ITEM 10]
Whether a local business in Malaysia or a U.S. based multinational,
companies can count on Citibank for global delivery of a wide spectrum of
services--from cash management and trade finance to foreign exchange and other
capital markets activities, as well as traditional corporate finance.
AND COMMERCIAL
[PHOTO APPEARS HERE -- SEE APPENDIX I, ITEM 11]
GLOBAL RELATIONSHIP BANKING CREATES FINANCIAL SOLUTIONS FOR COMMERCIAL
CUSTOMERS THAT ARE INCREASINGLY BECOMING TRULY GLOBAL ENTERPRISES. THESE
CUSTOMERS VALUE CITIBANK'S NETWORK AND THE UNIQUE ADVANTAGE OF OUR GLOBAL
RELATIONSHIP MANAGERS. THESE MANAGERS ARE DEDICATED TO EACH CUSTOMER AND
COORDINATE OUR GLOBAL NETWORK OF INDUSTRY AND PRODUCT SPECIALISTS AS WELL AS OUR
KNOWLEDGE OF LOCAL MARKETPLACES. RELATIONSHIP MANAGERS SEE TO IT THAT CUSTOMERS
HAVE COMPLETE ACCESS TO OUR FULL CAPABILITIES WHEREVER THEY NEED THEM.
[GRAPH APPEARS HERE -- SEE APPENDIX I, ITEM 12]
[GRAPH APPEARS HERE -- SEE APPENDIX I, ITEM 13]
When an emerging-market company wants to access the world's capital markets
or a global company needs local expertise in foreign markets, Citibank fills
their needs in ways other financial institutions cannot.
In the developed markets, Citibank focuses on a select group of 2,200
multinational customers who value our ability to meet their needs in markets
around the world. We call our approach to serving these multinational customers
Global Relationship Banking.
In over 70 Emerging Markets, we are a unique resource to both multinational
customers and local businesses who value our combination of local presence and
globally integrated service. In the past 15 years, many financial institutions
reduced their Emerging Markets presence. We stayed, to help countries deal with
their problems. The experience we've gained in managing volatility in these
markets is highly valued by our customers. Emerging Markets now account for
nearly one-quarter of world GDP, and many of our multinational customers are
growing faster in these markets than in industrialized economies.
We are in position to serve commercial customers, whether local or global,
in the markets where their needs are growing fastest.
BANKING CUSTOMERS
[PHOTO APPEARS HERE -- SEE APPENDIX I, ITEM 14]
JIANGLING MOTORS, A STATE-CONTROLLED TRUCK PRODUCER IN CHINA, TURNED TO CITIBANK
WHEN IT NEEDED EXPANSION CAPITAL. CITIBANK STRUCTURED A 174 MILLION SHARE
OFFERING IN TWO TRANCHES AND BROUGHT IN LONG-TIME CLIENT FORD MOTOR CO. AS A
INVESTOR. INSTITUTIONAL INVESTOR NAMED THE JIANGLING/FORD ALLIANCE ONE OF ITS
"DEALS OF THE YEAR."
Citibank today is the only truly global bank, with nearly a century of
international experience. We are dedicated to providing a full range of banking
services everywhere we are needed, from Argentina to Zambia, from Chicago to
Sydney, creating growth opportunities for our customers and our stockholders
alike.
PROVIDING A UNIQUE
Each of our businesses operates with a global focus. Thus, the globalization of
the marketplace plays to our greatest strength.
In 1902, Citibank began developing an international branch system that
was, and is still, unique. Today, Citibank is an integral part of the banking
system in most countries, not just another foreign bank. We will soon celebrate
100th anniversaries in India, Singapore, Panama, Japan, China and the
Philippines.
Our presence in markets builds over time. Transaction banking activities
like cash management and trade finance predominate as Citibank first follows its
customers into a market. Cash management generates local currency deposits,
which allow us to begin providing working-capital loans. Foreign exchange and
hedging are important for dealing with exports and currency fluctuations.
Asset-based finance programs support equipment sales and franchising.
[PHOTO APPEARS HERE--SEE APPENDIX I, ITEM 15]
CITIBANK CELEBRATED ITS 80TH ANNIVERSARY IN BRAZIL DURING 1995. CITIBANK'S
BRANCH IN RIO DE JANEIRO HAS LONG BEEN IMPORTANT FOR CITIBANK IN COMMERCIAL
BANKING. NOW A MAJOR EFFORT IS UNDER WAY TO EXPAND OUR CONSUMER BUSINESS IN
BRAZIL TO ONE MILLION CREDIT CARDS AND 200,000 BRANCH CUSTOMERS BY THE YEAR
2000.
[PHOTO APPEARS HERE--SEE APPENDIX I, ITEM 16]
PHOTOCARD, A CITIBANK INNOVATION THAT BEARS THE CARDHOLDER'S PHOTOGRAPH AND
SIGNATURE DIGITALLY IMPRINTED ON HIS OR HER CREDIT OR CHARGE CARD, SHOWED STRONG
INTERNATIONAL MARKET PENETRATION IN 1995. OVER EIGHT MILLION HAVE BEEN ISSUED
WORLDWIDE SINCE 1992. PHOTOCARD CUSTOMERS TYPICALLY HAVE LOWER ATTRITION, LOWER
NET CREDIT LOSS RATES AND SIGNIFICANTLY HIGHER PURCHASE ACTIVITY. TEN COUNTRIES
IN LATIN AMERICA, FOUR IN EUROPE AND TWELVE IN ASIA NOW OFFER PHOTOCARDS.
GLOBAL FOCUS...
As foreign investment and privatizations occur, corporate finance and
capital markets products come into play. Financial institutions use us for local
clearing and custody, while local corporations come to us for sophisticated
finance and capital markets activities.
Citibank's Consumer business offers significant growth prospects as
populations and wealth continue to expand. Citibanking can develop quickly in
these markets because our commercial bank provides premises, staff, regulatory,
operational and administrative support, along with local knowledge, and even
access to deposits and a ready customer base. Credit card activities follow. In
half of the 10 countries outside the U.S. where we introduced Citibanking 20
years ago, our Consumer business is now larger than our commercial banking
business. Consumer advertising and marketing increase awareness of the Citibank
name and image, which in turn enhances commercial selling efforts.
Our global focus means more than just a presence in many markets. It means
being able to introduce products, services and technology quickly across a broad
range of markets, bringing value to customers.
Good ideas in one market are generally good ideas everywhere.
[PHOTO APPEARS HERE--SEE APPENDIX I, ITEM 17]
CITIBANKING'S MODEL BRANCHES WORLDWIDE ALL HAVE THE SAME LOOK AND FEEL AND ARE
ORGANIZED AND OPERATE THE SAME WAY. FROM THE MOMENT CUSTOMERS COME THROUGH THE
DOOR, THEY FEEL GOOD ABOUT THEIR BANKING RELATIONSHIP WITH CITIBANK. SUPPORTING
THIS IS ADVANCED TECHNOLOGY THAT BOTH SPEEDS AND PERSONALIZES SERVICE.
VESTIBULES HAVE 24-HOUR CITICARD BANKING CENTER MACHINES, ENCOURAGING CUSTOMERS
TO MAKE GREATER USE OF ELECTRONIC BANKING. OVER ONE-THIRD OF CITIBANK'S MORE
THAN 1,200 CONSUMER BRANCHES WORLDWIDE ARE MODEL BRANCHES, WITH MORE CONVERSIONS
SCHEDULED FOR 1996.
LEADING IN APPLYING
Technology is fundamental to our Citibanking strategy. It allows customers to
obtain account information, make investments, pay bills and transfer funds
whether they are at a model branch, a Citicard Banking Center, or communicating
via CitiPhone or by home computer. When customers travel, they can access their
banking relationship in 34 countries because operations are linked from market
to market.
Back-office processing activities for both European and U.S. Cards have
been converted to a single system. When a German consumer uses a Citibank card
at a local restaurant, the transaction transparently travels our global network
across the Atlantic to South Dakota and back.
For corporate customers, we offer globally integrated transaction and
information systems that work seamlessly with the existing systems they already
have in place, and they can access these systems in Thailand or Kazakstan as
well as New York or Tokyo.
Innovations in linking technology globally make Citibank's unmatched
network even more valuable to our customers.
Service innovations give Citibank a competitive edge. Relationships are
strengthened and new customers are attracted by systems that offer them
flexibility, easier access to and greater control over their financial
activities.
NEW TECHNOLOGY...
[PHOTO APPEARS HERE--SEE APPENDIX I, ITEM 18]
IN THE UNITED STATES, THE NUMBER OF CUSTOMERS WHO ENROLLED TO USE ELECTRONIC
BANKING SERVICES, PRIMARILY THROUGH PERSONAL COMPUTERS, INCREASED MORE THAN 200%
IN THE LAST SEVEN MONTHS OF 1995, AFTER FEES WERE ELIMINATED JUNE 1. AN
ESTIMATED 20% OF THESE CUSTOMERS WERE NEW TO CITIBANK.
[PHOTO APPEARS HERE--SEE APPENDIX I, ITEM 19]
CITIGOLD PRIORITY BANKING EPITOMIZES PERSONAL ATTENTION IN BRANCH BANKING.
CUSTOMERS HAVE THEIR OWN ACCOUNT OFFICER AS WELL AS PERSONAL INVESTMENT
COUNSELING AND EVEN AN AREA IN MANY BRANCHES RESERVED FOR THEIR USE. UPON
PRESENTING THEIR GOLD CITICARD, CITIGOLD CUSTOMERS ENJOY IMMEDIATE RECOGNITION
AT ANY BRANCH.
COMMITTED TO
Running the company for performance depends on the 85,000 Citibankers who turn
ideas into action--all for the benefit of our customers. We are committed to
fostering an environment where employees can excel--and where they can deliver
on our commitment to all those who rely on us.
Citibank has always attracted talented and motivated people wherever we
conduct business. We are regarded as the employer of choice in many markets. Our
challenge is not only to find and develop talented individuals but also to make
sure they have the tools, systems and processes they need to succeed.
We have improved the way we evaluate employees to make sure the right
person is in the right job. During 1995, senior management spent over 500 hours
reviewing the performance and potential of a deep cross-section of management
talent around the world.
Our businesses are benchmarking their performance in serving customers
against that of our competitors in financial services and also against other
industries. We are pursuing greater productivity and better expense management
by building continuous performance improvement into our culture.
Talent, training and continuous improvement are our key ingredients in
building an organization that performs up to the expectations of both customers
and stockholders.
OUR PEOPLE...
[PHOTO APPEARS HERE--SEE APPENDIX I, ITEM 20]
OUR BUSINESSES ARE CONTINUALLY ENGAGED IN GROUP ENDEAVORS FOCUSING ON ISSUES
SUCH AS LEADERSHIP, TEAMWORK AND BUILDING EFFECTIVE CONTROL ENVIRONMENTS. THIS
TRAINING HELPS MANAGERS DEVELOP NEW WAYS OF THINKING ABOUT--AND MANAGING--THEIR
BUSINESSES COOPERATIVELY. SOME EXERCISES ARE MORE FUN THAN OTHERS, AS THIS PHOTO
ILLUSTRATES.
Responsible citizenship is good business. As we help improve the quality of life
in our communities, we enhance our own business potential.
DEDICATED TO
Everywhere Citibank does business, responsible corporate citizenship is an
integral component of that business. Every day in countless ways Citibank has an
impact on communities around the world. As an institution and as individuals, we
try to make sure that impact is positive. We know that our contribution to the
economic and social vitality of our communities increases our own ability to
thrive and profit.
First, our normal business operations have obvious and intended economic
results. Local businesses receive crucial credit and other financial services.
We help develop markets and provide links to other parts of the world economy.
The taxes we pay are substantial. Other effects of routine business are more
subtle, such as the influence our policies have on local hiring practices and
standards of business behavior.
[PHOTO APPEARS HERE--SEE APPENDIX I, ITEM 21]
IN A LA PAZ MARKETPLACE, A STREET VENDOR IS ABLE TO STRENGTHEN AND GROW HER
BUSINESS WITH A SMALL LOAN FROM BANCOSOL. THIS BANK SUPPORTS THE HOPES AND
DREAMS OF BOLIVIANS WHO HAVE HAD DIFFICULTY OBTAINING CREDIT. AS PART OF THE
ACCION INTERNATIONAL NETWORK, BANCOSOL BENEFITS FROM THE CITICORP FOUNDATION'S
$10 MILLION "BANKING ON ENTERPRISE" PROGRAM TO SUPPORT MICROBUSINESSES AROUND
THE WORLD.
[PHOTO APPEARS HERE-- SEE APPENDIX I, ITEM 22]
ST. EDMUND'S CORNER IN CHICAGO IS TYPICAL OF THE HOUSING CREATED THROUGH
CITIBANK'S TAX CREDIT INVESTMENTS IN COMMUNITIES WHERE WE DO BUSINESS. ITS 35
UNITS ALL HAVE RENTS AFFORDABLE TO HOUSEHOLDS EARNING LESS THAN 50% OF CHICAGO'S
MEDIAN INCOME. MORE THAN HALF THE UNITS ARE SUITABLE FOR LARGE FAMILIES,
FEATURING FOUR OR FIVE BEDROOMS. THE MAJORITY OF THESE TAX-CREDIT INVESTMENTS
ARE BEING MADE IN FUNDS MANAGED BY THE NATIONAL EQUITY FUND AND THE ENTERPRISE
SOCIAL INVESTMENT CORPORATION.
LOCAL CITIZENSHIP...
As an investor in the U.S. capital markets, Citibank made a major
commitment to purchase $100 million of low-income housing tax credits over four
years. These funds will finance the construction or rehabilitation of up to
3,000 units in low- and middle-income communities. We are working hard to
increase access to bank credit in these areas: In 1995, we extended credit
totaling nearly $1.5 billion to people in modest-income communities, providing
opportunities for home ownership and small-business development.
We extend the influence of our business presence with philanthropic
activities. In 1995, our cash contributions exceeded $26 million. Where we can,
we help to multiply the effects of funds by also contributing expertise and
experience. We emphasize community development and education--areas that have
enduring impact on our neighbors' capacity to control and improve their quality
of life.
[PHOTO APPEARS HERE-- SEE APPENDIX I, ITEM 23]
PAM FLAHERTY, HEAD OF GLOBAL COMMUNITY RELATIONS, VISITS WITH CHILDREN AT A
FAMILY SHELTER IN THE BRONX (ONE OF NEW YORK'S FIVE BOROUGHS). THOUSANDS OF
CITIBANKERS IN 1995 VOLUNTEERED THEIR TIME AND RESOURCES TO HELP PEOPLE HELP
THEMSELVES.
[PHOTO APPEARS HERE--SEE APPENDIX I, ITEM 24]
AND BUILDING THE
Brand names have substantial value in and of themselves. In addition to the
investments we've made in technology and product innovation over the years,
Citibank also benefits from our investments in building brand equity.
Creating and sustaining a global brand requires considerable investment of
work, resources and time. We know the effort is worth it: Customers buy the
brand as much as the product, and the best employees are attracted to companies
who own respected brands. Without question, brand equity translates into
meaningful and measurable value for stockholders. Over the last 10 years, total
Consumer revenues have registered a double-digit compound annual growth rate,
suggesting that the brand identity we are now building around the world will be
an important influence on future returns to investors.
We are making a concentrated effort to build "Citibank" into a brand that
is globally recognized and respected. All of our Consumer businesses, regardless
of location, carry the Citibank name and a common identity. Consistent physical
appearance is just one element of an effort to make every customer contact with
us an experience that is
[PHOTO APPEARS HERE--SEE APPENDIX I, ITEM 24]
BRANDED PROMISE
uniquely and distinctly "Citibank." We are working every day to make that
experience fulfill customers' highest expectations of a financial services
provider.
By keeping our promises to our customers, we earn and maintain trust
in the Citibank name. Ultimately, a brand's equity is built on trust.
When people around the world think about financial services, increasingly they
think "Citibank" first.
...THE CITI NEVER SLEEPS
FINANCIAL INFORMATION
Citicorp in Brief 22
Overview of 1995 Results 23
The Businesses of Citicorp 24
Consumer 25
Commercial Banking 29
North America Commercial Real Estate 31
Cross-Border Refinancing Portfolio 32
Corporate Items 32
Managing Global Risk 33
Summary of Financial Results 40
Statement of Income Analysis 40
Financial Reporting Responsibility 45
Report of Independent Auditors 45
Financial Statements 46
Statement of Accounting Policies 51
Notes to Consolidated Financial Statements 54
Quarterly Financial Information 72
10-K Cross-Reference Index 73
Financial Data Supplement 74
21
CITICORP IN BRIEF
In Millions of Dollars Except Share Data 1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
NET INCOME (LOSS)-Before Accounting Changes $ 3,464 $ 3,422 $ 1,919 $ 722 $ (914)
NET INCOME (LOSS)-After Accounting Changes/(1)/ 3,464 3,366 2,219 722 (457)
NET INCOME (LOSS) PER SHARE/(2)/
On Common and Common Equivalent Shares
Before Accounting Changes $ 7.21 $ 7.15 $ 3.82 $ 1.35 $ (3.22)
After Accounting Changes/(1)/ 7.21 7.03 4.50 1.35 (1.89)
Assuming Full Dilution
Before Accounting Changes 6.48 6.40 3.53 1.35 (3.22)
After Accounting Changes/(1)/ 6.48 6.29 4.11 1.35 (1.89)
DIVIDENDS DECLARED PER COMMON SHARE/(3)/ 1.20 0.45 -- -- 0.75
As a Percentage of Income Per Common Share Assuming
Full Dilution, After Accounting Change/(3)/ 18.52% 7.15% -- -- NM
AT YEAR-END
Total Loans, Net of Unearned Income $165,642 $152,420 $138,967 $139,710 $150,944
Allowance for Credit Losses 5,368 5,155 4,379 3,859 3,308
Total Assets/(4)/ 256,853 250,489 216,574 213,701 216,922
Total Deposits 167,131 155,726 145,089 144,175 146,475
Long-Term Debt and Subordinated Notes 18,488 17,894 18,160 20,172 23,382
Common Stockholders' Equity/(5)/ 16,510 13,582 10,066 7,969 7,349
Total Stockholders' Equity/(5)/ 19,581 17,769 13,953 11,181 9,489
Tier 1 Capital 18,915 16,919 13,388 10,262 8,540
Tier 1+Tier 2 Capital 27,725 26,119 23,152 20,111 17,080
FINANCIAL RATIOS
Net Income to Average Assets/(4)/--Before
Accounting Changes 1.29% 1.31% .84% .32% (.41)%
Net Income to Average Assets/(4)/--After
Accounting Changes/(1)/ 1.29 1.29 .97 .32 (.21)
Return on Common Stockholders' Equity/(5)/--Before
Accounting Changes 20.80 26.30 17.73 6.48 (14.28)
Return on Common Stockholders' Equity/(5)/--After
Accounting Changes/(1)/ 20.80 25.81 21.06 6.48 (7.94)
Return on Total Stockholders' Equity/(5)/--Before
Accounting Changes 18.33 21.79 15.32 7.16 (9.40)
Return on Total Stockholders' Equity/(5)/--After
Accounting Changes/(1)/ 18.33 21.43 17.72 7.16 (4.52)
Average Common Stockholders' Equity to Average
Assets/(4)//(5)/ 5.59 4.47 3.95 3.39 3.68
Average Total Stockholders' Equity to Average
Assets/(4)//(5)/ 7.03 6.02 5.48 4.45 4.59
Common Stockholders' Equity to Assets/(4)//(5)/ 6.43 5.42 4.65 3.73 3.39
Total Stockholders' Equity to Assets/(4)//(5)/ 7.62 7.09 6.44 5.23 4.37
Tier 1 Capital Ratio 8.41 7.80 6.62 4.90 3.73
Tier 1+Tier 2 Capital Ratio 12.33 12.04 11.45 9.60 7.46
Leverage Ratio/(4)/ 7.45 6.67 6.15 4.74 3.94
SHARE DATA
Year End Stock Price/(6)/ $ 67 1/4 $ 41 3/8 $ 36 7/8 $ 22 1/4 $ 10 3/8
Common Equity Per Share/(5)/ 38.64 34.38 26.04 21.74 21.23
PRE-TAX EARNINGS ANALYSIS
Total Revenue $ 18,678 $ 16,748 $ 16,075 $ 15,621 $ 14,750
Effect of Credit Card Securitization/(7)/ 917 934 1,282 1,390 1,155
Net Cost to Carry/(8)/ 23 89 252 421 454
Capital Building Transactions -- (80) 2 (820) (502)
-------- -------- -------- -------- --------
ADJUSTED REVENUE 19,618 17,691 17,611 16,612 15,857
-------- -------- -------- -------- --------
Total Operating Expense 11,102 10,256 10,615 10,057 11,097
Net OREO Benefits (Costs)/(9)/ 105 (9) (245) (347) (285)
Restructuring Charges -- -- (425) (227) (750)
-------- -------- -------- -------- --------
ADJUSTED OPERATING EXPENSE 11,207 10,247 9,945 9,483 10,062
-------- -------- -------- -------- --------
OPERATING MARGIN 8,411 7,444 7,666 7,129 5,795
-------- -------- -------- -------- --------
Consumer Credit Costs/(10)/ 2,473 2,338 2,740 3,309 2,958
Commercial Credit Costs/(11)/ 72 239 1,036 2,458 2,190
-------- -------- -------- -------- --------
OPERATING MARGIN LESS CREDIT COSTS 5,866 4,867 3,890 1,362 647
Additional Provision/(12)/ 281 336 603 537 636
Restructuring Charges -- -- 425 227 750
Capital Building Transactions -- 80 (2) 820 502
-------- -------- -------- -------- --------
INCOME (LOSS) BEFORE TAXES AND CUMULATIVE EFFECTS
OF ACCOUNTING CHANGES $ 5,585 $ 4,611 $ 2,860 $ 1,418 $ (237)
======== ======== ======== ======== ========
(1) Refers to the adoption of Statement of Financial Accounting Standards
("SFAS") No. 112, "Employers' Accounting for Postemployment Benefits," in
1994 and SFAS No. 109, "Accounting for Income Taxes," in 1993, and an
accounting change for venture capital subsidiaries in 1991.
(2) Based on net income (loss) less preferred stock dividends, except when
conversion is assumed.
(3) On October 15, 1991, Citicorp suspended the dividend on its common stock
and resumed paying dividends on April 18, 1994.
(4) Reflects the effects of adopting Financial Accounting Standards Board
("FASB") Interpretation No. 39, "Offsetting of Amounts Related to
Certain Contracts," as of January 1, 1994.
(5) Reflects the effects of adopting SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," as of January 1, 1994.
(6) Based on the New York Stock Exchange Composite Listing.
(7) See page 44 for a description of the effect of credit card securitization.
(8) Principally the net cost to carry commercial cash-basis loans and Other
Real Estate Owned ("OREO").
(9) Principally gains and losses on sales, direct revenue and expense, and
writedowns on Commercial OREO.
(10) Principally consumer net credit write-offs adjusted for the effect of
credit card securitization.
(11) Includes commercial net credit write-offs, net cost to carry, and net OREO
benefits (costs).
(12) Primarily consumer and non-refinancing commercial provision for credit
losses in excess of net write-offs. See page 43 for additional discussion.
NM Not meaningful--loss.
22
OVERVIEW OF 1995 RESULTS
Net income of $3.5 billion in 1995 represented record earnings for Citicorp.
Earnings before income taxes increased 21% to $5.6 billion in 1995, led by
continued momentum in the Core businesses (Consumer and Commercial Banking),
improved trading-related results, and lower credit costs in the North America
Commercial Real Estate portfolio. As a result of the increase in the effective
tax rate to 38% in 1995 from the unusually low rate of 26% in 1994, earnings
were up only slightly in 1995. Fully diluted earnings per share of $6.48 was up
from $6.29 in 1994. Return on total equity of 18.3% remained strong but was down
from 21.4% in 1994, reflecting higher equity levels. Return on average assets
was stable at 1.29%.
Adjusted revenue increased $1.9 billion, or 11%, to $19.6 billion, exceeding the
growth in adjusted operating expense of $960 million (up 9% to $11.2 billion) by
a 2-to-1 ratio. Operating margin increased by $1.0 billion, or 13%, to $8.4
billion, and the efficiency ratio (adjusted operating expense as a percentage of
adjusted revenue) improved slightly to 57%. Excluding the effect of a weaker
dollar, adjusted revenue and adjusted expense increased 9% and 7%, respectively,
in 1995.
The increase in adjusted revenue primarily reflected solid growth in the
Consumer businesses, higher trading-related revenue, and growth in Commercial
Banking activities in the Emerging Markets. The increase in adjusted operating
expense reflected costs associated with increased business volume, investment in
technological infrastructure, and investment spending to grow the Core
franchises. The increase in the operating margin reflected growth in the Core
businesses as well as funding benefits associated with higher equity levels.
Consumer credit costs of $2.5 billion were up 6%, reflecting loan growth,
including an expanded volume of card assets, as well as economic conditions in
Latin America, particularly Argentina and Mexico. Managed consumer write-offs of
1.99% of total managed consumer loans in 1995 were down compared with 2.08% for
1994, but trended up through the year. Credit costs in the Commercial Banking
business remained low at $20 million in 1995; in the prior year there was a
credit benefit of $116 million. Credit costs in North America Commercial Real
Estate improved by $305 million to $52 million in 1995. Commercial cash-basis
loans and OREO of $2.2 billion were reduced $916 million from the end of 1994,
primarily due to improvement in the North America Commercial Real Estate
portfolio. Consumer cash-basis loans were up slightly at $2.7 billion.
Citicorp continued to strengthen its balance sheet in 1995. The allowance for
credit losses was built by $0.3 billion to $5.4 billion. Total capital (Tier 1
and Tier 2) rose to $27.7 billion and Tier 1 capital rose to $18.9 billion, or
8.41% of net risk-adjusted assets, up from 7.80% at the end of 1994. Pursuant to
a stock repurchase program initiated in June 1995, Citicorp acquired 23.1
million shares of common stock at a cost of $1.5 billion during 1995.
[GRAPH APPEARS HERE--SEE APPENDIX I, Item 25]
[GRAPH APPEARS HERE--SEE APPENDIX I, Item 26]
[GRAPH APPEARS HERE--SEE APPENDIX I, Item 27]
[GRAPH APPEARS HERE--SEE APPENDIX I, Item 28]
THE BUSINESSES OF CITICORP
Citicorp, with its subsidiaries and affiliates, is a global financial services
organization. Its staff of 85,300 (including 48,000 outside the U.S.) serves
individuals, businesses, governments, and financial institutions in over 3,400
locations (including branches, representative offices, subsidiary and affiliate
offices) in 96 countries and territories throughout the world as of December
31, 1995.
Citicorp, a U.S. bank holding company, was incorporated in 1967 under the laws
of Delaware and is the sole shareholder of Citibank, N.A. ("Citibank"), its
major subsidiary.
Citicorp is regulated under the Bank Holding Company Act of 1956 and is subject
to examination by the Federal Reserve Board ("FRB"). Citibank is a member of the
Federal Reserve System and is subject to regulation and examination by the
Office of the Comptroller of the Currency ("OCC"). See page 82 for further
discussion of regulation and supervision.
Citicorp's activities are conducted primarily within the Core business
franchises of Consumer and Commercial Banking. The Consumer businesses operate a
uniquely global, full service consumer franchise encompassing branch banking
("Citibanking"), credit and charge cards ("Cards"), and Private Banking. The
Commercial Banking business provides a diversified range of wholesale banking
services, emphasizing global capabilities, to local, regional and multinational
corporate customers, financial institutions, and government entities.
North America Commercial Real Estate comprises relationships managed by the
commercial real estate divisions in the U.S. and Canada. Citicorp's strategy for
the North America Commercial Real Estate portfolio is one of active remedial
management to maximize the long-term value and recoverability of the assets.
The Cross-Border Refinancing Portfolio is centrally managed and has a separate
focus from the Commercial Banking business activities in the refinancing
countries.
Additional data on the business and geographic distribution of revenue, income
(loss), and average assets is disclosed in Note 10 to the consolidated financial
statements.
The table below shows the net income (loss), average assets, and return on
assets for each of Citicorp's businesses for the three years ended December 31,
1995. In addition, the accompanying chart shows that earnings in the Core
businesses increased to $3.6 billion in 1995, led by continued momentum in the
Consumer businesses.
BUSINESS FOCUS
Net Income (Loss) Average Assets/(1)/ Return on Assets/(1)/
$ Millions $ Billions %
---------------------------- ---------------------- ---------------------------
1995 1994/(2)/ 1993/(2)/ 1995 1994/(2)/ 1993/(2)/ 1995 1994/(2)/ 1993/(2)/
------ ------ ------ ---- ---- ---- ---- ---- ----
Consumer(3) $1,981 $1,778 $1,161 $120 $106 $100 1.65% 1.68% 1.16%
Commercial Banking(4) 1,607 1,394 1,602 136 139 109 1.18 1.00 1.47
------ ------ ------ ---- ---- ----
Core Businesses 3,588 3,172 2,763 256 245 209 1.40 1.29 1.32
North America Commercial Real Estate (9) (299) (636) 5 8 12 (.18) (3.74) (5.30)
Cross-Border Refinancing Portfolio 201 222 84 3 3 3 6.70 7.40 2.80
Corporate Items(5) (316) 327 (292) 5 5 4 (6.32) 6.54 (7.30)
------ ------ ------ ---- ---- ----
3,464 3,422 1,919 269 261 228 1.29 1.31 .84
Cumulative Effects of Accounting Changes(6) -- (56) 300 -- -- -- -- -- --
------ ------ ------ ---- ---- ----
Total Citicorp $3,464 $3,366 $2,219 $269 $261 $228 1.29 1.29 .97
====== ====== ====== ==== ==== ==== ==== ==== =====
- ----------
(1) 1995 and 1994 amounts reflect the effect of adopting FASB Interpretation No.
39 as of January 1, 1994.
(2) Reclassified to conform to the 1995 presentation.
(3) Consumer results reflect an after-tax restructuring charge of $143 million
in 1993.
(4) Commercial Banking results reflect an after-tax restructuring charge of $95
million in 1993.
(5) See page 32 for a discussion of Corporate Items.
(6) Represents the cumulative effects of adopting SFAS No. 112 as of January 1,
1994 and SFAS No. 109 as of January 1, 1993. See pages 64 and 53,
respectively, for discussion.
[GRAPH APPEARS HERE--SEE APPENDIX I, Item 29]
24
CONSUMER
Total Developed Markets/(1)/ Emerging Markets/(1)/
--------------------------- ----------------------- -----------------------
In Millions of Dollars 1995 1994/(2)/ 1993/(2)/ 1995 1994/(2)/ 1993/(2)/ 1995 1994/(2)/ 1993/2/
- ---------------------- ------- ------- ------ ------ ------ ------ ------ ----- ------
Total Revenue $11,343 $10,394 $9,498 $8,289 $7,787 $7,336 $3,054 $2,607 $2,162
Effect of Credit Card Securitization/3/ 917 934 1,282 917 934 1,282 -- -- --
Net Cost to Carry/4/ 12 3 10 12 3 10 -- -- --
------- ------- ------ ----- ----- ----- ------ ------ ------
ADJUSTED REVENUE 12,272 11,331 10,790 9,218 8,724 8,628 3,054 2,607 2,162
------- ------- ------ ----- ----- ----- ------ ------ ------
Total Operating Expense 6,700 6,240 6,225 5,015 4,783 4,983 1,685 1,457 1,242
Net OREO Costs/5/ -- (48) (38) -- (48) (38) -- -- --
Restructuring Charges -- -- (233) -- -- (227) -- -- (6)
------- ------- ------ ----- ----- ----- ------ ------ ------
ADJUSTED OPERATING EXPENSE 6,700 6,192 5,954 5,015 4,735 4,718 1,685 1,457 1,236
------- ------- ------ ------ ------ ----- ------ ------- ------
OPERATING MARGIN 5,572 5,139 4,836 4,203 3,989 3,910 1,369 1,150 926
------- ------- ------ ------ ------ ----- ------ ------- ------
Net Write-offs 1,544 1,353 1,410 1,247 1,184 1,256 297 169 154
Effect of Credit Card Securitization 917 934 1,282 917 934 1,282 -- -- --
Net Cost to Carry and Net OREO Costs 12 51 48 12 51 48 -- -- --
------- -------- ------ ------ ------ ----- ------ ------- ------
CREDIT COSTS 2,473 2,338 2,740 2,176 2,169 2,586 297 169 154
------- -------- ------ ------ ------ ----- ------ ------- ------
OPERATING MARGIN LESS CREDIT COSTS 3,099 2,801 2,096 2,027 1,820 1,324 1,072 981 772
------- -------- ------ ------ ------ ----- ------ ------- ------
Additional Provision 200 200 276 170 143 208 30 57 68
Restructuring Charges -- -- 233 -- -- 227 -- -- 6
------- -------- ------ ------ ------ ----- ------ ------- ------
INCOME BEFORE TAXES 2,899 2,601 1,587 1,857 1,677 889 1,042 924 698
Income Taxes 918 823 426 663 582 277 255 241 149
------- -------- ------ ------ ------- ----- ------ ------- ------
NET INCOME $1,981 $1,778 $1,161 $1,194 $1,095 $612 $787 $683 $549
======= ======== ====== ====== ======= ===== ====== ======= ======
Average Assets (In Billions of Dollars) $120 $106 $100 $86 $77 $75 $34 $29 $25
Return on Assets 1.65% 1.68% 1.16% 1.39% 1.42% 0.82% 2.31% 2.36% 2.20%
======= ======== ====== ====== ======= ===== ====== ======= ======
- ----------
(1) Developed Markets comprise activities in North America, Europe, and Japan.
Emerging Markets comprises activities in Asia Pacific, Latin America,
Eastern Europe, the Middle East, and Africa.
(2) Reclassified to conform to the 1995 presentation.
(3) See page 44 for a description.
(4) Certain cash-basis loans and OREO.
(5) Includes amounts related to writedowns, gains and losses on sales, and
direct expense related to OREO for certain real estate lending activities.
Financial Review
The Consumer businesses reported record net income of $2.0 billion in 1995, up
$203 million, or 11%, from 1994 led by increases in both Citibanking and Cards
activities. On a geographic basis, net income increased 15% in the Emerging
Markets and 9% in the Developed Markets.
Citibanking earnings improved by $154 million to $0.6 billion in 1995. The
increase was principally in the Developed Markets, reflecting improvements in
the U.S. Citibanking business, while earnings in the Emerging Markets were up
slightly. Cards earnings increased by $59 million to $1.2 billion, reflecting a
strong performance in Asia Pacific and improvements in U.S. bankcards, partially
offset by the cost of investment spending in Europe bankcards and in Diners
Club. Earnings in the Private Banking business of $0.2 billion were essentially
unchanged from 1994. Compared with 1993 (excluding the $143 million after tax
impact of restructuring charges recorded in that year), earnings in 1994
improved $474 million, primarily reflecting improved results in the U.S.,
Europe, and Asia Pacific Citibanking businesses, as well as in the U.S. and Asia
Pacific Cards businesses.
Adjusted revenue in 1995 increased $941 million, or 8%, from 1994 (6%
excluding the effect of foreign currency translation), reflecting 17% growth in
the Emerging Markets and 6% growth in the Developed Markets. The improvement
was led by Cards in the U.S. and Asia Pacific and by Citibanking in Latin
America, Asia Pacific, and the United States. Revenue from Private Banking
activities declined slightly, despite a 12% increase in assets under
management, reflecting shifts in market conditions since mid-1994 that caused
clients to move to lower-risk products.
The increase in 1995 revenue, led by net interest revenue, reflected higher
loan volumes, partially offset by tightened spreads in most markets. Fee and
commission revenue increased 3%, reflecting strong growth in Cards in Asia
Pacific and
[GRAPH APPEARS HERE--APPENDIX I, [GRAPH APPEARS HERE--SEE APPENDIX I,
Item 30] Item 31]
25
Citibanking in Latin America, while fees in the Developed Markets were
essentially unchanged.
As shown in the following table, the U.S. bankcards business experienced
significant growth in its portfolio in 1995, reflecting marketing and pricing
programs, as well as an expansion of the overall credit card market.
U.S. Bankcards (Managed Basis)
Increase
Dollars in Billions 1995 over 1994
---- ---------
Cards in Force (In Millions) 38 12%
Charge Volumes $86.1 22
End-of-Period Receivables 44.8 16
U.S. bankcards revenue grew 7% in 1995 after declining 3% in 1994, reflecting
higher loan and charge volumes, partially offset by the impact on spreads of the
growth in introductory rate balances in the portfolio and lower annual fees.
Revenue in the Citibanking business in the Developed Markets benefited in 1995
from favorable spreads and a reduced deposit insurance assessment rate in the
U.S. branch business, as well as modest loan growth in several marketplaces.
Revenue in the U.S. mortgage business in 1995 was essentially unchanged from
1994 and 1993. Revenue from U.S. mortgage pass-through securitization activity
was $17 million in 1995, compared with losses of $59 million and $135 million in
1994 and 1993, respectively (see page 42 for additional discussion). The
improvement in pass-through results was offset in both years by lower net
interest revenue, reflecting tightened spreads and, in 1994, lower on-balance
sheet loan volumes.
Within the Emerging Markets, revenue momentum remained strong in 1995,
particularly in Asia Pacific. In the Asia Pacific Cards business, loan volumes
grew 39%. The Asia Pacific Citibanking business also had strong loan growth,
partially offset by tightened spreads. Revenue in the Latin America Citibanking
business benefited from substantial loan volume growth, while revenue in the
Latin America Cards business was essentially unchanged from 1994.
Adjusted revenue in 1994 increased $541 million, or 5%, from 1993, led by the
Citibanking and Cards business expansion efforts in Asia Pacific and Latin
America. Revenue also improved in the Europe Citibanking and Private Banking
businesses. Revenue declined in the U.S. Card business, however, principally
reflecting the bankcards repricing actions. Revenue also declined in the U.S.
Citibanking business, primarily due to lower volumes.
The budget reconciliation package for fiscal year 1996 currently before Congress
includes a proposal to recapitalize the Savings Association Insurance Fund
("SAIF") through a special assessment on current members of the SAIF, including
Citicorp's savings bank subsidiary. If adopted as proposed, Citicorp's savings
bank subsidiary would be subject to a special assessment of approximately $80
million on a pre-tax basis, which must be expensed in the period in which the
related budgetary legislation is enacted. It is expected that following
recapitalization of the SAIF, future deposit insurance premiums charged to
savings banks would be lowered.
Adjusted operating expense increased 8% in 1995 (6% excluding the effect of
foreign currency translation), reflecting increases of 16% in the Emerging
Markets and 6% in the Developed Markets. Within the Emerging Markets, investment
spending continued in support of Citibanking efforts in Latin America and Asia
Pacific, and in support of bankcards expansion in Asia Pacific. In particular,
Asia Pacific increased spending on front- and back-office systems upgrades and
data processing consolidations. Expense levels in the Latin America Cards
business were held essentially unchanged in 1995. Within the Developed Markets,
operating expense increased in the U.S. bankcards business in support of account
growth, in Europe in support of the bankcards expansion and the Diners Club
business, and in Private Banking.
Expense levels declined in both 1995 and 1994 in the U.S. Citibanking business,
reflecting benefits from the 1993 restructuring actions and other cost
management efforts. Expense levels in 1994 also benefited from lower OREO
charges in the mortgage business. The improvement was achieved despite various
marketing and investment spending efforts throughout the branch system,
including the addition of 83 model branches and 190 Customer Activated Terminals
("CATs") in the two years.
Adjusted expense increased 4% in 1994 from 1993 reflecting the Emerging Markets
business expansion, as well as account acquisition strategies and other
marketing initiatives in U.S. bankcards, partially offset by the improvements in
the U.S. Citibanking business.
Consumer credit costs increased 6% in 1995, reflecting higher loan volumes
worldwide and economic conditions in Latin America, partially offset by
significant improvements in the U.S. Citibanking and Private Banking businesses.
The overall managed net credit loss ratio improved to 1.99% in 1995 from 2.08%
in 1994 and 2.54% in 1993. The loss ratio has increased since the first quarter
of 1995, however, reflecting economic conditions in Latin America, particularly
Argentina and Mexico, and the effect of a moderating economy on the U.S.
bankcards portfolio.
Credit costs in 1994 declined 15% from 1993, reflecting significant rate-driven
improvement in the U.S. bankcards business and rate- and volume-driven
improvement in the U.S. Citibanking business, partially offset by higher losses
in Citibanking in Europe, primarily in Germany.
[GRAPH APPEARS HERE--APPENDIX I, Item 32]
26
PORTFOLIO REVIEW
The accompanying chart identifies the components of the Consumer managed loan
portfolio by major business line--Citibanking, Cards, and Private Banking.
The increase in managed Consumer loans since December 31, 1993 is primarily due
to growth in the Cards business, particularly in U.S. bank cards and Asia
Pacific. At December 31, 1993, Cards represented 36% of the overall Consumer
portfolio, growing to 38% and 39%, respectively, at December 31, 1994 and 1995.
Additionally, loan volumes increased since 1993 in the Citibanking business,
reflecting growth in the Emerging Markets, the U.S. government-guaranteed
student loan portfolio, and the impact of foreign currency translation on the
European portfolio.
In the consumer portfolio, credit loss experience is often expressed in terms of
annual net credit losses as a percent 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 Citicorp's consumer delinquencies and net credit
loss experience in both the managed and on-balance sheet consumer loan portfolio
in terms of loans 90 days past due, net credit losses, and as a percentage of
related loans.
CONSUMER PORTFOLIO DELINQUENCY AND LOSS AMOUNTS AND RELATED RATIOS
Total 90 DAYS OR MORE PAST DUE(2) NET CREDIT LOSSES(2)(3)
Loans(1) ------------------------------ ----------------------------
1995 1995 1994 1993 1995 1994 1993
------ ------ ------ -------- ------ ------ -------
U.S. Mortgages(4)(5) $ 18.8 $ 986 $ 994 $ 1,225 $ 176 $ 241 $ 267
Ratio 5.24% 5.81% 6.63% 0.99% 1.39% 1.40%
U.S. Bankcards 44.2 732 625 803 1,476 1,342 1,710
Ratio 1.66% 1.64% 2.38% 3.70% 3.97% 5.26%
Developed Markets--Other(6) 39.4 1,947 1,898 1,896 512 535 561
Ratio 4.93% 5.16% 5.40% 1.33% 1.49% 1.59%
------ ------ ------ -------- ------- ------ -------
Total Developed Markets 102.4 3,665 3,517 3,924 2,164 2,118 2,538
Ratio 3.58% 3.82% 4.49% 2.25% 2.44% 2.92%
Emerging Markets 28.7 285 184 164 297 169 154
Ratio 0.99% 0.71% 0.78% 1.09% 0.73% 0.82%
------ ------ ------ -------- ------- ------ -------
TOTAL MANAGED 131.1 3,950 3,701 4,088 2,461 2,287 2,692
------ ------ ------ -------- ------- ------ -------
RATIO 3.01% 3.14% 3.78% 1.99% 2.08% 2.54%
Effect of Credit Card Securitization(7) (25.5) (440) (380) (508) (917) (934) (1,282)
------ ------ ------ -------- ------- ------ -------
TOTAL ON-BALANCE SHEET $105.6 $3,510 $3,321 $3,580 $1,544 $1,353 $1,410
------ ------ ------ -------- ------- ------ -------
RATIO 3.32% 3.44% 4.24% 1.55% 1.56% 1.73%
- ----------
(1) Loan amounts, in billions of dollars at year end, are net of unearned
income.
(2) In millions of dollars.
(3) Net credit loss ratios are calculated based on average loans.
(4) Includes first and second residential mortgages managed by the Citibanking
and Private Banking businesses.
(5) Includes mortgages purchased under recourse provisions of mortgage
sales.
(6) Delinquency amounts include $210 million, $150 million, and $115 million of
government-guaranteed student loans at December 31, 1995, 1994, and 1993,
respectively.
(7) See page 44 for a description of the impact of credit card receivables
securitization.
Delinquency and net credit loss dollars on a managed basis for the overall
Consumer portfolio increased in 1995, primarily in U.S. bankcards and the
Emerging Markets, after declining in 1994. The related ratios improved, however,
in both years. The improvement from 1994 in the delinquency ratio to 3.01% at
December 31, 1995 principally reflects an increased mix of U.S. bankcards and
the improved performance of the U.S. mortgage and community banking portfolios.
The improvement from 1994 in the net credit loss ratio to 1.99% in 1995,
principally reflects an improvement in the U.S. Citibanking loss rate and an
increased mix of lower-loss rate loans in Asia Pacific, partially offset by
higher losses in Latin America. However, the overall Consumer loss ratio has
increased through the quarters of 1995, reflecting economic conditions in Latin
America and the effect of a moderating U.S. economy on the U.S. bankcards
portfolio.
The U.S. mortgage portfolio's delinquencies and net credit losses remain high,
but continued to improve from 1994 and 1993.
[GRAPH APPEARS HERE--SEE APPENDIX I, Item 33]
27
U.S. managed bankcard delinquent dollars were $732 million as of December 31,
1995, up from $625 million as of December 31, 1994, representing delinquency
ratios of 1.66% and 1.64%, respectively. While the 1995 full year net credit
loss ratio of 3.70% declined from 3.97% in 1994 and 5.26% in 1993, the ratio has
generally increased on a quarterly basis since the 1994 fourth quarter. Further,
the 1995 loss ratio included a three basis point benefit from the sale of
certain bankrupt accounts. Personal bankruptcies accounted for 35% of gross
credit write-offs, up from 32% in 1994. The increase during 1995 in
delinquencies, net credit losses and personal bankruptcies reflects industry-
wide trends.
The increase in dollar delinquencies from December 31, 1994 in Developed
Markets--Other is primarily due to volume increases in the government-guaranteed
student loan portfolio and the effect of foreign currency translation on the
Europe Citibanking portfolio, particularly in Germany, partially offset by
improvements in the U.S. branch business. The decrease in the delinquency ratio
is primarily due to improvements in the U.S. branch business.
Developed Markets--Other net credit loss dollars and ratio decreased from 1994
due to improvements in the U.S. branch business and Private Banking, partially
offset by higher losses in the Europe Citibanking business, particularly in
Germany.
Emerging Market dollar delinquencies and net credit loss amounts, as well as
the related ratios, increased from 1994 as a result of portfolio growth in both
Asia Pacific and Latin America and economic conditions in Latin America,
primarily in Argentina and Mexico.
Total consumer loans on the balance sheet with delinquencies of 90 days or
more on which interest continued to be accrued (which include personal loans in
Germany, U.S. bankcards, and student loans) were $951 million, $828 million, and
$802 million at December 31, 1995, 1994, and 1993, respectively. The majority of
these loans, excluding the government-guaranteed student loan portfolio, are
written off upon reaching a stipulated number of days past due. (See the table
of cash-basis, renegotiated, and past due loans on page 78.) The increase over
1994 is primarily due to portfolio growth, but also reflects higher delinquency
ratios in the student loan portfolio and U.S. bankcards.
Citicorp's policy for suspending 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. As of December 31, 1995,
the accrual of interest had been suspended on $1.0 billion of U.S. mortgages and
$1.7 billion of other consumer loans (primarily consisting of Citibanking loans
in Europe, the Emerging Markets and the U.S. branches, as well as Private
Banking loans) on the balance sheet. See the table of cash-basis, renegotiated,
and past due loans on page 78. The corresponding amounts at December 31, 1994
were $1.0 billion of U.S. mortgages and $1.6 billion of other consumer loans.
The increase in other consumer loans on which the accrual of interest had been
suspended included higher amounts in the Emerging Markets, partially offset by
improvements in the U.S. branch business.
The portion of Citicorp's allowance for credit losses allocated to the
Consumer portfolio is presented in the accompanying chart. This allocation is
made for analytical purposes and the amount attributed to the Consumer
portfolio may change from time to time.
The allowance for credit losses reflected a provision in excess of net write-
offs of $200 million in both 1995 and 1994, and $276 million in 1993. The
allowance as a percentage of loans was 1.84% as of December 31, 1995, compared
with 1.90% and 1.89% at December 31, 1994 and 1993, respectively.
The reserve for Consumer sold portfolios, which is attributable to U.S.
bankcard receivables securitization and mortgage sales with recourse, was $486
million, $422 million, and $527 million as of December 31, 1995, 1994, and
1993, respectively. The increase during 1995 was due to higher U.S. bankcard
securitization activity, partially offset by continuing runoff in the portfolio
of mortgages sold with recourse. Refer to Note 1 to the consolidated financial
statements for further discussion of Citicorp's obligation under recourse
provisions related to sold loans.
Credit costs and the related net credit loss ratios are expected to increase
in 1996 as a result of continued portfolio growth across all regions, the impact
of the moderating U.S. economy on the bankcard portfolio, and uncertainty in the
economic environment in Europe and Latin America. In addition, 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 in 1996.
[GRAPH APPEARS HERE--APPENDIX I, Item 34]
28
COMMERCIAL BANKING
TOTAL DEVELOPED MARKETS/1/ EMERGING MARKETS/1/
------------------------ ----------------------- ----------------------
In Millions of Dollars 1995 1994/2/ 1993/2/ 1995 1994/2/ 1993/2/ 1995 1994/2/ 1993/2/
- ---------------------- ------ ---- ---- ----- ---- ---- ---- ---- ----
Total Revenue $6,240 $5,502 $6,015 $3,587 $3,181 $3,893 $2,653 $2,321 $2,122
Net Cost to Carry Cash-Basis Loans and OREO (18) 11 58 (32) 2 35 14 9 23
------- ------ ------ ------- ------ ------ ------ ------ ------
ADJUSTED REVENUE 6,222 5,513 6,073 3,555 3,183 3,928 2,667 2,330 2,145
------- ------ ------ ------- ------ ------ ------ ------ ------
Total Operating Expense 3,903 3,433 3,452 2,563 2,271 2,360 1,340 1,162 1,092
Net OREO Benefits 26 77 20 19 73 -- 7 4 20
Restructuring Charges -- -- (156) -- -- (142) -- -- (14)
------- ------ ------ ------- ------ ------ ------ ------ ------
ADJUSTED OPERATING EXPENSE 3,929 3,510 3,316 2,582 2,344 2,218 1,347 1,166 1,098
------- ------ ------ ------- ------ ------ ------ ------ ------
OPERATING MARGIN 2,293 2,003 2,757 973 839 1,710 1,320 1,164 1,047
------- ------ ------ ------- ------ ------ ------ ------ ------
Net Write-offs (Recoveries) 64 (50) 157 38 (57) 115 26 7 42
Net Cost to Carry and Net OREO Benefits (44) (66) 38 (51) (71) 35 7 5 3
------- ------ ------ ------- ------ ------ ------ ------ ------
CREDIT COSTS (BENEFITS) 20 (116) 195 (13) (128) 150 33 12 45
------- ------ ------ ------- ------ ------ ------ ------ ------
OPERATING MARGIN LESS CREDIT COSTS (BENEFITS) 2,273 2,119 2,562 986 967 1,560 1,287 1,152 1,002
Additional Provision 100 50 148 100 50 110 -- -- 38
Restructuring Charges -- -- 156 -- -- 142 -- -- 14
------- ------ ------ ------- ------ ------ ------ ------ ------
INCOME BEFORE TAXES 2,173 2,069 2,258 886 917 1,308 1,287 1,152 950
Income Taxes 566 675 656 220 336 435 346 339 221
------- ------ ------ ------- ------ ------ ------ ------ ------
NET INCOME $1,607 $1,394 $1,602 $666 $581 $873 $941 $813 $729
======= ====== ====== ======= ====== ====== ====== ====== ======
Average Assets (In Billions of Dollars)(3) $136 $139 $109 $90 $96 $73 $46 $43 $36
Return on Assets 1.18% 1.00% 1.47% 0.74% 0.61% 1.20% 2.05% 1.89% 2.03%
======= ====== ====== ======= ====== ====== ====== ====== ======
- ----------
(1) Developed Markets represents activities in North America, Europe, and Japan.
Emerging Markets comprises activities in Latin America, Asia Pacific,
Central and Eastern Europe, the Middle East, and Africa.
(2) Reclassified to conform to the 1995 presentation.
(3) 1995 and 1994 amounts reflect the effect of adopting FASB Interpretation No.
39 as of January 1, 1994.
[GRAPH APPEARS HERE--SEE APPENDIX I, Item 35]
Commercial Banking delivered solid performance in 1995, increasing net income
and expanding the global network while reducing assets. Net income of $1.6
billion increased $213 million, or 15%, from 1994 and represented a return on
assets of 1.18%. Higher trading-related revenue and business expansion in the
Emerging Markets drove the improved results. Net income in 1995 also benefited
from a lower effective tax rate that resulted from a change in the geographic
mix of earnings compared with 1994. Net income in 1994 declined 18% from 1993
(excluding a $95 million after-tax restructuring charge in 1993) as improvements
in credit costs, venture capital gains, and other revenue growth were more than
offset by sharply lower trading-related revenue.
The Banking business in the Developed Markets earned $666 million in 1995, up
$85 million, or 15%, from 1994. The improvement was led by higher trading-
related revenue which was partially offset by volume-related expense growth,
technology spending, higher credit costs, and the effects on revenue of a
business repositioning designed to improve overall returns. Return on average
assets rose 13 basis points to 0.74% in 1995, attributable to growth in net
income coupled with a $6 billion decline in average assets. Net income of $581
million in 1994 declined $375 million from 1993 (excluding an $83 million after-
tax restructuring charge in 1993) primarily because of significantly lower
trading-related revenue. The decline in trading-related revenue was mitigated
somewhat by sharply lower credit costs and higher revenue from venture capital
activities.
The Banking business in the Emerging Markets, which encompasses activities in
over 70 countries, earned $941 million in 1995, an increase of $128 million, or
16%, from 1994. The increase reflected broadly-based revenue growth from lending
(period-end loans grew nearly $4 billion, or 16%) and transaction banking
services together with improved trading-related activities. The results also
were characterized by continued investment spending to build the franchise. The
return on average assets of 2.05% represented a 16 basis point improvement over
1994. Net income of $813 million in 1994 increased $72 million compared with
1993 (excluding a $12 million after-tax restructuring charge in 1993) as a
result of increased fee and commission income coupled with higher net interest
revenue, partially offset by depressed trading-related revenue. The increase in
net interest revenue in 1994 was principally attributable to a higher level of
interest-earning assets, an unusually favorable interest rate environment in
Brazil that resulted from the introduction of the Real Plan, as well as the
release of a Brazilian gross-receipts tax reserve.
29
Commercial Banking adjusted revenue of $6.2 billion increased 13% over 1994
(11% excluding the effect of translating foreign curren cies into the weaker
U.S. dollar), led by trading-related activities. Excluding trading-related
revenue, adjusted revenue grew 4%. Strong revenue growth from multinational
clients and transaction banking services in the Emerging Markets was dampened by
the effect of the business repositioning in the Developed Markets. Revenue
declined 9% in 1994 compared with 1993, the result of sharply lower trading-
related revenue. Excluding trading-related revenue, revenue in 1994 increased
13% compared with 1993, led by growth in the Emerging Markets and by higher
venture capital results.
Revenue from trading-related activities in the foreign exchange, derivatives,
and securities markets contributed $1.7 billion, or 28%, of total adjusted
revenue in 1995, up from $1.2 billion, or 22%, in 1994, but down from the
unusually high $2.2 billion, or 37%, in 1993. Trading-related revenue in 1995,
1994, and 1993 reflected continued customer demand for risk-management products.
Citicorp's market-making activities in 1995 improved from the weak 1994 results
which were adversely affected as interest rates increased and market conditions
were challenging. Market-making activities in 1993 were exceptionally strong,
benefiting from favorable economic conditions. Levels of trading-related
revenues may fluctuate in the future as a result of market conditions and other
factors. See page 41 for additional discussion of trading-related activities.
Commercial Banking adjusted expense in 1995 was up 12% (10% excluding the
effect of translating foreign currencies into the weaker U.S. dollar). The
growth in adjusted expense primarily reflected business expansion in the
Emerging Markets and volume-related and technology spending in the Developed
Markets. During 1995, Citicorp expanded its presence in the Emerging Markets by
opening a banking subsidiary in Slovakia and a representative office in Romania.
Activities were expanded in several other countries with additional offices
opened in Poland and China. Citicorp also converted representative offices to
branch status in Bangladesh, South Africa, and Vietnam, and to a subsidiary in
Tanzania. In early 1996 Citicorp opened a representative office in Israel.
Expense growth of 6% in 1994 compared with 1993 related to increases in
personnel, investments in the transaction services business, business expansion
in the Emerging Markets, and marketing activities.
Losses on commercial lending activities can vary widely with respect to timing
and amount, particularly within any narrowly-defined business or loan type.
Total credit costs in 1995 remained low at $20 million and compared with a
credit benefit of $116 million in 1994. The 1995 results compared with 1994
primarily reflected higher gross write-offs coupled with lower gains from the
sale of OREO properties. Credit amounts in 1994 improved $311 million from 1993
due to significantly lower net write-offs, gains from the sale of OREO
properties, and a lower net cost to carry cash-basis loans and OREO. The 1995
provision for credit losses included a provision in excess of net write-offs of
$100 million, compared with $50 million in 1994 and $148 million in 1993. During
1996 the ratio of net write-offs to average loans may increase from the 1995
level but is expected to remain moderate.
Cash-basis loans at December 31, 1995 were $650 million, up from $470 million
at December 31, 1994, mainly because of the cash-basis classification of
exposure to a European debtor. The OREO portfolio of $200 million was
essentially unchanged from December 31, 1994. See the tables of cash-basis,
renegotiated, and past due loans and other real estate owned and assets pending
disposition on page 78.
Commercial Banking average assets declined $3 billion from year-end 1994.
Average assets in the Devel oped Markets declined $6 billion due to the business
repositioning and a lower level of trading assets. Aver-age assets in the
Emerging Markets grew $3 billion reflecting continued business expansion. The
increase in average assets in 1994 compared with 1993 reflected a $23 billion
increase in the Developed Markets, principally reflecting the effect of
implementing FASB Interpretation No. 39, as well as continued business expansion
in the Emerging Markets.
[GRAPH APPEARS HERE--SEE APPENDIX I, Item 36]
[GRAPH APPEARS HERE--SEE APPENDIX I, Item 37]
[GRAPH APPEARS HERE--SEE APPENDIX I, Item 38]
30
NORTH AMERICA COMMERCIAL REAL ESTATE
In Millions of Dollars 1995 1994/(1)/ 1993/(1)/
- ---------------------- ---- ------ -------
Total Revenue $150 $ 81 $ (22)
Net Cost to Carry Cash-Basis Loans and OREO 29 75 184
---- ----- -------
ADJUSTED REVENUE 179 156 162
---- ----- -------
Total Operating Expense 48 180 387
Net OREO Benefits (Costs) 79 (38) (227)
---- ----- -------
ADJUSTED OPERATING EXPENSE 127 142 160
---- ----- -------
Operating Margin 52 14 2
---- ----- -------
Net Write-offs 102 244 431
Net Cost to Carry and Net OREO Benefits (Costs) (50) 113 411
---- ----- -------
CREDIT COSTS 52 357 842
---- ----- -------
OPERATING MARGIN LESS CREDIT COSTS -- (343) (840)
---- ----- -------
Additional Provision -- 150 179
---- ----- -------
LOSS BEFORE TAXES -- (493) (1,019)
Income Taxes (Benefit) 9 (194) (383)
---- ----- -------
NET LOSS $ (9) $(299) $ (636)
---- ----- -------
Average Assets (In Billions of Dollars) $ 5 $ 8 $ 12
==== ===== =======
- ----------
(1) Reclassified to conform to the 1995 presentation.
North America Commercial Real Estate comprises relationships managed by the
commercial real estate divisions in the U.S. and Canada. Citicorp's strategy for
the North America Commercial Real Estate portfolio is one of active remedial
management to maximize the long-term value and recoverability of the assets.
The improvements in results for the North America Commercial Real Estate
business in 1995 and 1994 are due primarily to lower credit costs. Credit costs
in 1995 declined significantly due to improving real estate market conditions,
which resulted in lower net write-offs, as well as a lower net cost to carry
cash-basis loans and OREO, and net gains on the sale of OREO properties. Net
write-offs and net OREO gains (writedowns) aggregated $77 million, $323 million,
and $688 million in 1995, 1994, and 1993, respectively. Credit costs are
expected to continue to decline in 1996.
Total North America Commercial Real Estate exposure at year-end 1995 declined
$2.9 billion, or 30%, from 1994 primarily as a result of paydowns, maturities,
and asset sales. At year-end 1995, total exposure was spread among office (42%),
residential (19%), retail (19%), and other (20%) projects; with the largest
concentrations in the mid-Atlantic (23%) and California (23%) regions.
NORTH AMERICA COMMERCIAL REAL ESTATE PORTFOLIO
In Millions of Dollars 1995 1994
- ---------------------- ------ ------
Loans/(1)//(2)/ $4,150 $5,325
Cash-Basis Loans/(1)//(3)/ 862 1,543
OREO/(3)/ 425 806
Letters of Credit and Other 1,481 2,186
------ ------
TOTAL EXPOSURE $6,918 $9,860
====== ======
(1) Includes real estate-related loans of $240 million and $405 million at
December 31, 1995 and 1994, respectively, of which $83 million in 1995 and
$73 million in 1994 were on a cash basis.
(2) Includes $313 million and $655 million of renegotiated loans at December 31,
1995 and 1994, respectively, and excludes cash-basis loans. The effective
interest rates on $63 million of renegotiated loans at December 31, 1995
were at market rates and, therefore, these loans may be transferred to full
performing status in 1996. The weighted-average contractual rate on loans
that are expected to remain in renegotiated status approximated 6% at
December 31, 1995.
(3) 1994 amounts have been reclassified from OREO to cash-basis loans to reflect
the adoption of SFAS No. 114 as of January 1, 1995.
The reduction in cash-basis loans and OREO included approximately $0.7 billion
of asset sales during 1995. Refer also to the tables of cash-basis,
renegotiated, and past-due loans and other real estate owned and assets pending
disposition on page 78. Approximately $0.3 billion of the $0.9 billion of cash-
basis loans at year-end were contractually past due less than 90 days as to
principal and interest but were classified as cash basis because of uncertainty
regarding future cash flows. Cash flows (cash interest payments and net OREO
operating revenue) on average cash-basis loans and OREO totaled $129 million (of
which $47 million was applied as a reduction of principal) and represented an
annual cash yield of 6.4%.
CASH-BASIS LOANS AND OREO ACTIVITY
In Millions of Dollars 1995 1994
- ---------------------- ------ ------
Beginning Balance $2,349 $4,051
Additions 403 634
Write-offs/Writedowns/(1)/ (181) (406)
Returned to Accrual Status (329) (540)
Sales, Payments, Paydowns, and Other (955) (1,390)
------ ------
ENDING BALANCE $1,287 $2,349
====== ======
(1) Represents gross write-offs and writedowns (before recoveries and gains or
losses on the disposition of OREO) and excludes write-offs on letters of
credit and swaps.
Included in Letters of Credit and Other are standby letters of credit, of
which approximately $0.7 billion backstop tax-exempt multi-family housing bonds
secured by residential properties. Approximately $0.3 billion of the $1.1
billion of outstanding letters of credit at December 31, 1995 were related to
projects on which debt service is continuing but the loan-to-value ratios have
deteriorated below target levels and/or letter of credit fees are not being
paid. Additionally, at December 31, 1995, $0.1 billion of other commitments were
related to borrowers experiencing financial difficulties, down from $0.2 billion
at December 31, 1994.
31
CROSS-BORDER REFINANCING PORTFOLIO
In Millions of Dollars 1995 1994(1) 1993(1)
- -------------------------------------------------------------------------------
Total Revenue $227 $197 $108
Operating Expense 18 16 22
Provision for Credit Losses (19) (66) (1)
- -------------------------------------------------------------------------------
Income Before Taxes 228 247 87
Income Taxes 27 25 3
- -------------------------------------------------------------------------------
NET INCOME $201 $222 $ 84
- -------------------------------------------------------------------------------
Average Assets
(In Billions of Dollars) $ 3 $ 3 $ 3
- -------------------------------------------------------------------------------
(1) Reclassified to conform to the 1995 presentation.
The Cross-Border Refinancing Portfolio reported net income of
$201 million in 1995, compared with $222 million in 1994. The
provision for credit losses reflected benefits of $19 million and
$66 million in 1995 and 1994, respectively. Net income in 1994
increased sharply from the prior year primarily reflecting higher
interest income pursuant to the completion of the Brazil
refinancing agreement in 1994.
Citicorp's cross-border and non-local currency outstandings in
the Refinancing Portfolio at December 31, 1995 included $3.4
billion of medium- and long-term outstandings, down $0.5 billion
from December 31, 1994. The decrease principally reflected the
reduction in the balance sheet carrying value of securities
pursuant to the transfer of such securities from the held-to-
maturity portfolio (carried at amortized cost of $1.2 billion) to the
available-for-sale portfolio (carried at fair value of $0.8 billion).
The resulting unrealized difference of $0.4 billion (primarily
related to securities issued by the Government of Venezuela) was
reflected as a reduction of stockholders' equity, net of tax, in
accordance with SFAS No. 115. These fair value adjustments
would be recognized in earnings of future periods to the extent
of sales or dispositions of these securities or to the extent that
management judged impairment in value to be other than
temporary. Refer to footnote 1 on page 55 for an additional
discussion related to Securities. The medium- and long-term
debt outstandings at December 31, 1995 included $1.9 billion in
Brazil, $0.4 billion in the Philippines, $0.4 billion in Venezuela,
$0.3 billion in South Africa, $0.2 billion in Uruguay, and
$0.2 billion in the aggregate in eight other countries. During 1995,
substantive progress was made toward completing refinancing agreements with
Panama and Peru.
Of the total $3.4 billion of outstandings in the Cross-Border
Refinancing Portfolio, $2.9 billion is in the form of securities
carried at fair value in the available-for-sale portfolio, all of which
were current as to principal and interest as of December 31, 1995.
The amount of Cross-Border Refinancing Portfolio cash-basis
loans was $22 million at December 31, 1995, down from
$104 million at December 31, 1994.
CORPORATE ITEMS
In Millions of Dollars 1995 1994(1) 1993(1)
- -------------------------------------------------------------------------------
Total Revenue $ 718 $ 574 $ 476
Restructuring Charge -- -- 36
Other Operating Expense 433 387 493
- -------------------------------------------------------------------------------
Total Operating Expense 433 387 529
- -------------------------------------------------------------------------------
Income (Loss) Before Taxes 285 187 (53)
Income Taxes (Benefit) 601 (140) 239
- -------------------------------------------------------------------------------
NET (LOSS) INCOME $(316) $ 327 $(292)
- -------------------------------------------------------------------------------
Average Assets
(In Billions of Dollars) $ 5 $ 5 $ 4
- -------------------------------------------------------------------------------
(1) Reclassified to conform to the 1995 presentation.
Corporate Items includes revenue derived from charging
businesses for funds employed (based on a marginal cost of funds
concept), unallocated corporate costs, net gains (losses) related
to capital-building transactions, the recognition of deferred tax
benefits, and income tax expense resulting from the offset
created by attributing income taxes to business activities on a
local tax-rate basis. The 1993 results also included the results of
Quotron, a U.S. market data services business, which was sold in
the first quarter of 1994.
Corporate Items 1995 results reflected deferred tax benefits of
$40 million, compared with $629 million in 1994 and $280 million
in 1993. Additionally, the 1995 results reflected an increase in the
income tax expense offset created as a result of taxes attributed
to business activities, while the 1994 results reflected a reduction
in the offset. See Note 8 to the consolidated financial statements
for further discussion of income taxes.
Corporate Items revenue in 1995 reflected increased funding
benefits associated with higher equity levels, partially offset by
investment writedowns of $95 million in Latin America. Revenue
in 1994 included net gains related to capital-building transactions
of $80 million, compared with a net loss of $2 million in 1993.
Operating expense included corporate employee expense and
other unallocated corporate costs and, in 1993, costs associated
with Quotron.
32
MANAGING GLOBAL RISK
Risk management is the cornerstone of Citicorp's business. Risks
arise from lending, underwriting, trading, and other activities
routinely undertaken on behalf of customers around the world.
Outlined below is the process that management employs to
provide oversight and direction, followed by discussions of the
credit and market risk management processes in place across
the corporation.
The Windows on Risk Committee evaluates and proactively
manages the risk profile of the corporation. The Committee is
chaired by the Vice-Chairman responsible for risk management
and includes inside directors, senior line and staff officers, and
the Chairman of Citicorp. The Committee uses an analytical
framework that Citicorp calls Windows on Risk to control country,
consumer product, industry, and client concentrations; to reduce
portfolio, process, operational, technological, and legal
vulnerabilities; to decide on portfolio actions; and to help create a
balance between Citicorp's risk profile, earnings, and capital.
The Windows on Risk process has three major components: the
Committee develops a near-term outlook for the global external
environment highlighting key risks; examines Citicorp's risk
profile in terms of 16 windows, or risks that impact Citicorp's
businesses and operations; and, in response to perceived risks in
the environment and portfolio, the Committee initiates actions to
strengthen the risk profile.
The review of the external environment encompasses the
outlook for major country and regional economies, significant
consumer markets and global industries; the potential near
term critical economic and geopolitical events; and the implica
tions of potential unfavorable developments as they relate to
specific businesses.
The review of the risk profile covers the following credit-
related and market risks, as well as audit (control) risk, and legal
and technological vulnerabilities.
. Risk ratings, including trends in client creditworthiness
together with a comparison of risk against return;
. Industry concentrations, globally and within regions;
. Limits assigned to relationship concentrations and consumer
programs;
.Product concentrations in consumer managed receivables, by
product and by region;
. Global real estate limits and exposure, including commercial
and consumer portfolios;
. Country risk, encompassing political and cross-border risk;
. Counterparty risk, evaluating presettlement risk on foreign
exchange and derivative products, as well as securities trades;
. Dependency, linking and evaluating specific industry and
consumer product exposure to external environmental factors;
. Distribution and underwriting risk, capturing the risk that
arises when Citicorp commits to purchase an instrument from an
issuer for subsequent sale;
. Business risk review, evaluating by business the risk captured
by portfolio and process ratings;
. Price risk, capturing the earnings risk resulting from changing
levels and volatilities of interest rates, foreign exchange rates,
and commodity and equity prices;
. Liquidity risk, evaluating funding exposure;
. Equity and subordinated debt investment risk, monitored
against portfolio limits;
. Audit, evaluating operations and control risk based on
internal audits;
. Legal, evaluating vulnerability and business implications of
legal issues; and
. Technology, assessing the vulnerability to the electronic
environment.
Based on this coordinated review of major risks impacting the
corporation, the Windows on Risk Committee formulates
recommendations and assigns responsibility for recommended
portfolio actions. The review provides Citicorp with a clear view
of the environment in which it operates and of the risk inherent
in all of its businesses.
THE CREDIT PROCESS
Guided by the overall risk appetite and portfolio targets set by
senior management, line management conducts the day-to-day
credit process in accordance with core policies established by the
Credit Policy Committee.
Line management initiates and approves all extensions of
credit and is responsible for credit quality. Line managers must
also establish supplementary credit policies specific to each
business, deploy the credit talent needed, and monitor portfolio
and process quality. The managers are required to identify
problem credits or programs as they develop, and to correct
deficiencies as needed through remedial management.
Business Risk Review conducts independent periodic
examinations of both portfolio quality and the credit process at
the individual business level.
Citicorp's credit policies are organized around two basic
approaches--Credit Programs and Credit Transactions. Credit
Programs, used primarily for the Consumer businesses, focus on
the decision to extend credit to sets of customers with similar
characteristics and/or product needs. Approvals under this
approach cover the expected level of aggregate exposure, the
terms, risk acceptance criteria, operating systems, and reporting
33
mechanisms. This is a cost-effective way of handling high
volume, small-dollar amount transactions. Credit programs are
reviewed annually, with approvals tiered on the basis of pro-
jected outstandings as well as the maturity and performance of
the product.
The Credit Transaction approach focuses on the decision to
extend credit to an individual customer or customer relationship.
It starts with target market definition and risk acceptance
criteria, and requires detailed customized financial analysis.
Approval requirements for each decision are tiered based on the
transaction amount, the customer's aggregate facilities, credit
risk ratings, and the banking business serving the customer.
Credit Programs and Credit Transactions are approved by three
line credit officers, with one designated as responsible to ensure
that all aspects of the credit process are properly coordinated and
executed. As the size or risk increases, the three approvals may
include one or two Senior Credit or Securities Officers. These
individuals consist of over 500 of Citicorp's most experienced
lenders and underwriters appointed by the Credit Policy
Committee, with their designation reviewed annually. In addition,
approvals from underwriting, product, industry or functional
specialists may be required. At certain higher levels of risk, Credit
Policy members as well as senior management review individual
credit decisions.
THE MARKET RISK MANAGEMENT PROCESS
Market risk encompasses liquidity and price risk, both of which
are fundamental to the business of a financial intermediary.
Liquidity risk is the risk that an entity will be unable to meet a
financial commitment to a customer, creditor, or investor in any
location, in any currency, when due. Price risk is the risk to
earnings that arises from changes in interest rates, market prices,
foreign exchange rates, and from market volatility.
The Market Risk Policy Committee serves an oversight role in
the management of all market risks. The committee is a group of
Citicorp's most senior market risk professionals, chaired by the
Corporate Treasurer, which establishes and oversees corporate
market risk policies and standards to serve as a check and
balance in the business risk management process. Market risk
management is an evolutionary process that integrates changes
in marketplace, product development, and technological
advances into policies and practices. Periodic reviews are
conducted by Corporate Audit to ensure compliance with
institutional policies and procedures for the assessment,
management, and control of market risk.
Within Citicorp, business and corporate oversight groups have
well-defined market risk management responsibilities. Within
each business, a process is in place to control market risk
exposure. Management of this process begins with the
professionals nearest to Citicorp's customers, products, and
markets, and extends up to the senior executives who manage
these businesses and to country Asset/Liability Management
Committees ("ALCO"). Market risk positions are controlled by
limits on exposure based on the size and nature of a business.
Risk limits are approved by the Finance and Capital Committee,
which is composed of senior management and the Corporate
Treasurer, and overseen by the Market Risk Policy Committee.
LIQUIDITY MANAGEMENT
Management of liquidity at Citicorp is the responsibility of the
Corporate Treasurer. The Country Corporate Officer and the
Country Treasurer ensure that all funding obligations in each
country are met when due. The Country Treasurer is appointed by
the Market Risk Policy Committee upon the recommendation of
line management and Regional Treasurers.
The in-country forum for liquidity issues is the ALCO, which
includes senior executives within each country. The ALCO
reviews the current and prospective funding requirements for all
businesses and legal entities within the country, as well as the
capital position and balance sheet. All businesses within the
country are represented on the committee with the focal point
being the Country Treasurer.
Each Country Treasurer must prepare a liquidity plan at least
annually that is approved by the Country Corporate Officer, the
Regional Treasurer, and the Market Risk Policy Committee. The
liquidity profile is monitored on an on-going basis and reported
monthly. Limits are established on the extent to which businesses
in a country can take liquidity risk. The size of the limit depends
on the depth of the market, experience level of local manage-
ment, and liquidity characteristics of the assets.
Regional Treasurers generally have responsibility for
monitoring liquidity risk across a number of countries within a
defined geography. They are also available for consultation and
special approvals, especially in unusual or volatile market
conditions.
Citicorp's assets and liabilities are diversified across many
currencies, geographic areas, and businesses. Particular attention
is paid to those businesses that for tax, sovereign risk, or
regulatory reasons cannot be freely and readily funded in the
international markets.
34
A diversity of funding sources, currencies, and maturities is used
to gain the broadest practical access to the investor base.
Citicorp's deposits, which represent 65% and 62% of total funding
at December 31, 1995 and 1994, respectively, are broadly diver-
sified by both geography and customer segments as indicated by
the charts that follow:
[GRAPHS APPEAR HERE--SEE APPENDIX I--ITEMS 39-40]
Stockholders' equity, which grew $1.8 billion during the year to
$19.6 billion at year-end 1995, continues to be an important
component of the overall funding structure. In addition, long-
term debt is issued by Citicorp (the "Parent Company") and its
subsidiaries. Total long-term debt outstanding, including
subordinated capital notes, at year-end 1995 was $18.5 billion,
compared with $17.9 billion at year-end 1994.
Securitization of assets remains an important source of
liquidity. Total assets securitized during 1995 were $10.8 billion,
including $8.9 billion of U.S. credit cards, $1.3 billion of U.S.
consumer mortgages, and $0.6 billion of non-U.S. consumer
assets. As credit card securitization transactions amortize, newly
originated receivables are recorded on Citicorp's balance sheet
and become available for asset securitization. In 1995, the
amortization of certain credit card securitization transactions
made available $4.7 billion of new receivables.
MANAGEMENT OF PRICE RISK EXPOSURE
Price risk exposure is the sensitivity of earnings to changes in
interest rates, market prices, foreign exchange rates, and market
volatilities. This exposure arises in the normal course of business
of a global financial intermediary.
Citicorp has established procedures for managing price risk
within its business units worldwide. Decentralization is the
essential organizational principle for managing price risk. It is
balanced by strong centralized controls exercised by corporate
oversight bodies. The level of price risk assumed by a business is
based on its objectives and earnings, its capacity to manage risk,
and by the sophistication of its local markets. The nature of the
price risk assumed by a business varies according to the services
it provides and the customers it serves. Limits are established for
each major category of risk, with exposures 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.
NON-TRADING PORTFOLIOS
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 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. Additional information about non-trading derivatives is
located on page 58. Citicorp does not utilize instruments with
leverage features in connection with its risk management
activities. As part of the annual planning process, limits are set
for earnings at risk on a business, country and total Citicorp
basis, with exposures reviewed on a monthly basis by the Finance
and Capital Committee in relation to limits and the current
interest rate environment.
35
Citicorp's primary non-trading price risk exposure is to
movements in U.S. dollar interest rates. During 1995, the monthly
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 from approximately $30 million to
$165 million in the aggregate. This is somewhat higher than the
range from $5 million to $90 million during the full year 1994 and
similar to the range from $30 million to $180 million during 1993.
As of December 31, 1995, the U.S. dollar interest rate exposure
taken in tenors beyond one year results in earnings at risk of a
maximum of $95 million in any single future year. The table below
summarizes Citicorp's worldwide earnings at risk over the next 12
months from changes in U.S. dollar interest rates.
TWELVE MONTH U.S. DOLLAR EARNINGS AT RISK (PRE-TAX)
ASSUMING A RATE MOVE OF
-----------------------------
TWO STANDARD TWO STANDARD
DEVIATION DEVIATION
In Millions of Dollars at December 31, 1995 INCREASE DECREASE
- -----------------------------------------------------------------------------
Excluding Derivatives $ 159 $(124)
Including Derivatives (163) 217
- -----------------------------------------------------------------------------
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.
TRADING PORTFOLIOS
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.
The trading portfolios are subject to a well-defined series of
potential loss amount exposure limits. The daily price risk
process monitors exposures against limits and triggers specific
management actions to ensure that the potential impact on
earnings, due to the many dimensions of price risk, is controlled
within acceptable limits. The Finance and Capital Committee
approves potential loss amount exposure limits annually and
reviews usage of these exposures on a monthly basis. During 1995,
the potential loss amount in the trading portfolios based on
monthly averages of daily exposures ranged from approximately
$40 million to $60 million pre-tax in the aggregate for Citicorp's
major trading centers, compared with a range in 1994 of
approximately $45 million to $85 million and in 1993 from
$40 million to $80 million. The potential loss amounts decreased
each quarter in 1994 and were relatively stable in 1995. The level
of exposure taken is a function of the market environment, and
expectations of future price and market movements; and will vary
from period to period. Quarterly trading-related revenue ranged
from $395 million to $558 million during 1995 compared with
$214 million to $490 million in 1994.
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 rates,
foreign exchange, commodity, or equity instruments. They are
subject to the same types of liquidity, price, credit, and opera-
tional risks as other financial instruments, and Citicorp manages
these risks in a consistent manner.
As a dealer, Citicorp enters into derivative and foreign
exchange transactions with customers separately or with other
products to help them 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
36
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.
The FASB 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.
NOTIONAL AMOUNTS
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. At December 31,
1995 the aggregate absolute value of Citicorp's notional principal
amounts totaled $1,136 billion for interest rate products, $1,202
billion for foreign exchange products, and $38 billion for
commodity and equity products, compared with $1,320 billion,
$1,317 billion, and $28 billion, respectively, at December 31, 1994.
See page 57 for additional details.
CREDIT EXPOSURE
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 following table presents the balance
sheet credit exposure of Citicorp's outstanding derivative and
foreign exchange contracts at December 31, 1995. See page 57 for
additional details.
DERIVATIVE AND FOREIGN EXCHANGE CONTRACTS
BALANCE SHEET
CREDIT EXPOSURE
------------------
In Billions of Dollars at Year-End 1995 1994
- ----------------------------------------------------------------------------
Interest Rate Products $ 10.9 $ 8.3
Foreign Exchange Products 16.0 18.4
Commodity and Equity Products 0.9 0.8
- ----------------------------------------------------------------------------
27.8 27.5
Effects of Master Netting Agreements (11.7) (7.0)
- ----------------------------------------------------------------------------
$ 16.1 $20.5
- ----------------------------------------------------------------------------
The reduction during the year in balance sheet credit expo
sure primarily reflected the increased effects of master
netting agreements.
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 it uses for other
activities, using the Credit Transaction approach discussed on
page 33.
The extension of credit in a derivative or foreign exchange
contract is equal to the loss that could result if the counterparty
were to default. In managing the aggregate credit extension
to individual customers, 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
rates change.
The current replacement cost of a derivative or foreign
exchange contract is equal to the amount, if any, of Citicorp's
unrealized gain on the contract. In the aggregate for all contracts,
this represents a balance sheet exposure of $16.1 billion at
December 31, 1995 as shown in the table at left, which is reflected
in Trading Account Assets.
The potential increase in replacement cost of a contract is
estimated based on a statistical simulation of values that would
result from changing market rates using historical volatilities
calculated generally based on five years of market data and
correlations of market rates. For some larger counterparties,
exposure is estimated using a portfolio methodology that takes
into account all instruments transacted with a single counter
party, whereas the potential increase in replacement cost is
estimated for other counterparties by a method that considers
each instrument independently and does not reflect portfolio
effects. In the aggregate for all contracts, the estimate of the
potential increase in replacement cost ranged from approxi-
mately $40 billion to $50 billion during 1995. As discussed further
below, substantially all of the total exposure was to investment
grade counterparties, 88% was under three years' tenor, and no
significant amounts were nonperforming.
The foregoing total credit exposure amounts are used by
Citicorp in the management of its overall credit relationships
with individual customers and do not represent expected loss
amounts. The amounts are simple aggregates across each
counterparty. The estimated potential increase in replacement
cost for each counterparty is calculated at the two standard
deviations confidence level. Additionally, the amounts do not fully
reflect, for all counterparties, portfolio effects and the effect of
risk reduction agreements such as netting and margining. These
amounts are also subject to change as a result of changes in
interest rates, exchange rates, and other relevant factors.
37
The following table presents total credit exposure, by
remaining tenor, for investment grade and non-investment grade
counterparties, including both the current and the potential
increase in replacement cost as described above. As shown in the
table, most of the exposure is short-dated and with investment
grade counterparties. Overall, approximately 94% of the total
exposure is with investment grade counterparties, and only 2%
represents exposure over one year with non-investment grade
counterparties.
MATURITY PROFILE OF INTEREST RATE AND
FOREIGN EXCHANGE CONTRACTS AT DECEMBER 31, 1995
TENOR OF EXPOSURE IN MONTHS PERCENT OF TOTAL EXPOSURE
- ---------------------------- --------------------------------
INVESTMENT NON-INVESTMENT
GREATER GRADE GRADE
THAN UP TO COUNTERPARTIES COUNTERPARTIES
- --------------------------------------------------------------------------------
0 6 35% 2%
6 12 30 2
12 36 18 1
36 11 1
- --------------------------------------------------------------------------------
Total 94% 6%
- --------------------------------------------------------------------------------
Because the total credit exposure is included within the
aggregate customer exposure amounts, the credit risk related to
derivative and foreign exchange contracts is considered in
assessing the overall adequacy of the allowance for credit losses.
Gross credit-related losses on derivative contracts were $6 million
in 1995 and $2 million in 1994. There were no significant amounts
of nonperforming contracts at December 31, 1995 and 1994.
CAPITAL ANALYSIS
Citicorp is subject to risk-based capital guidelines issued by the
Board of Governors of the FRB. These guidelines are used to
evaluate capital adequacy based primarily on the perceived credit
risk associated with balance sheet assets, as well as certain off-
balance sheet exposures such as unused loan commitments,
letters of credit, and derivative and foreign exchange contracts.
The risk-based capital guidelines are supplemented by a leverage
ratio requirement.
CITICORP RATIOS
At Year-End 1995 1994
- -----------------------------------------------------------------------------
Common Stockholders' Equity 6.43% 5.42%
Tier 1 Capital 8.41 7.80
Tier 1 and Tier 2 Capital 12.33 12.04
Leverage(1) 7.45 6.67
- -----------------------------------------------------------------------------
(1) Tier 1 capital divided by adjusted average assets.
Citicorp continued to strengthen its capital position during
1995. Total capital (Tier 1 and Tier 2) amounted to $27.7 billion at
December 31, 1995, representing 12.33% of net risk-adjusted
assets. This compares with $26.1 billion and 12.04%, respectively,
at December 31, 1994. Tier 1 capital of $18.9 billion at year-end
1995 represented 8.41% of net risk-adjusted assets, compared with
$16.9 billion and 7.80%, respectively, at year-end 1994. The Tier 1
capital ratio at year-end 1995 exceeded Citicorp's target range for
the Tier 1 ratio of 8.00% to 8.30%.
Common stockholders' equity increased a net $2.9 billion
during the year to $16.5 billion at December 31, 1995, representing
6.43% of assets, compared with 5.42% at year-end 1994. The
increase in common stockholders' equity during the year
principally reflected net income, issuance of stock under various
staff benefit plans, the partial conversion of Convertible Preferred
Stock, Series 13, and redemption of Conversion Preferred Stock,
Series 15 ("PERCS"), partially offset by dividends declared on
common and preferred stock, shares repurchased under the stock
repurchase program, and a decrease in net unrealized gains--
securities available for sale.
During 1995, 5.1 million depository shares of Convertible
Preferred Stock, Series 13, were converted into 14.1 million shares
of common stock. In February 1996, the holders of the remaining
8.1 million depository shares converted the $403 million of
preferred shares into 22.1 million shares of common stock after
receiving a notice of redemption from Citicorp.
In January 1996, the holder of the $590 million Convertible
Preferred Stock, Series 12, converted the preferred shares into
36.9 million shares of common stock after receiving a notice of
redemption from Citicorp.
During 1995, Citicorp redeemed all of the $1,134 million of
PERCS (76.9 million PERCS shares) through the issuance of
27.5 million shares of common stock.
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.
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 year and building the Tier 1 ratio
to target levels. During 1995, Citicorp generated $1.8 billion of
free capital, of which $1.5 billion was utilized to repurchase 23.1
million shares of common stock at an average price of $66.17 per
share.
FREE CAPITAL
In Millions of Dollars 1995
- ------------------------------------------------------------------------------
Tier 1 Capital Generated:
Net Income $3,464
Issuances/Other(1) 893
Cash Dividends Declared
Common (492)
Preferred (343)
- ------------------------------------------------------------------------------
Total Tier 1 Capital Generated 3,522
Capital Attributed to:
Growth in Net Risk-Adjusted Assets (669)
Build in Tier 1 Capital Ratio (1,084)
- ------------------------------------------------------------------------------
FREE CAPITAL $ 1,769
- ------------------------------------------------------------------------------
(1) Includes issuance of common stock under various staff benefits plans (net of
amortization) and the dividend reinvestment plan, issuance of preferred
stock (net of related costs), and other net changes in Tier 1 capital
components.
38
In January 1996, Citicorp raised the quarterly dividend on
common stock by 50% to $.45 per share for an annual dividend
rate of $1.80 per share.
COMPONENTS OF CAPITAL UNDER REGULATORY GUIDELINES
In Millions of Dollars at Year-End 1995 1994
- ----------------------------------------------------------------------
TIER 1 CAPITAL
Common Stockholders' Equity $16,510 $13,582
Perpetual Preferred Stock 3,071 4,187
Minority Interest 70 55
Less: Net Unrealized Gains--
Securities Available for Sale(1) (132) (278)
Intangible Assets(2) (293) (344)
50% Investment in Certain Subsidiaries(3) (311) (283)
- ----------------------------------------------------------------------
Total Tier 1 Capital $18,915 $16,919
- ----------------------------------------------------------------------
TIER 2 CAPITAL
Allowance for Credit Losses(4) $2,843 $2,741
Qualifying Debt(5) 6,278 6,742
Less: 50% Investment in Certain Subsidiaries(3) (311) (283)
- ----------------------------------------------------------------------
Total Tier 2 Capital 8,810 9,200
- ----------------------------------------------------------------------
Total Capital (Tier 1 and Tier 2) $27,725 $26,119
- ----------------------------------------------------------------------
Net Risk-Adjusted Assets(6) $224,915 $216,856
- ----------------------------------------------------------------------
(1) Tier 1 capital excludes unrealized gains and losses on securities available
for sale in accordance with regulatory risk-based capital guidelines.
(2) Includes goodwill and certain other identifiable intangible assets.
(3) Primarily Citicorp Securities, Inc.
(4) Includable up to 1.25% of risk-adjusted assets. Any excess allowance is
deducted from risk-adjusted assets.
(5) Includes qualifying senior and subordinated debt, in an amount not exceeding
50% of Tier 1 capital, subordinated capital notes, and limited life preferred
stock, subject to certain limitations.
(6) Includes risk-weighted credit equivalent amounts net of applicable bilateral
netting agreements of $3.3 billion for interest rate derivative contracts and
$6.7 billion for foreign exchange, commodity, and equity contracts as of
December 31, 1995, compared with $2.9 billion and $7.6 billion, respectively, as
of December 31, 1994. 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.
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 guidelines described above.
CITIBANK, N.A. RATIOS
At Year-End 1995 1994
- ----------------------------------------------------------------------
Common Stockholder's Equity 7.08% 6.91%
Tier 1 Capital 8.32 7.83
Tier 1 and Tier 2 Capital 12.24 12.44
Leverage 6.65 6.09
- ----------------------------------------------------------------------
Federal bank regulatory agencies have defined five capital tiers
for depository institutions for purposes of implementing certain
regulations. Under these definitions, a "well capitalized"
depository institution must have a Tier 1 ratio of at least 6%, a
combined Tier 1 and Tier 2 ratio of at least 10% and a leverage
ratio of at least 5% and not be subject to a directive, order or
written agreement to meet and maintain specific capital levels.
As of December 31, 1995, all of Citicorp's subsidiary depository
institutions were "well capitalized."
In January 1996, the Basle Committee on Banking Supervision
issued an amendment to its risk-based capital guidelines to
incorporate a measure for market risk in foreign exchange and
commodity activities and in the trading of debt and equity
instruments. The U.S. bank regulatory agencies, including the
FRB, are expected to issue similar amendments to their risk-
based capital guidelines for U.S. banks. The Basle Committee's
amendment, which is intended to become effective by year-end
1997, is not expected to have a significant impact on Citicorp.
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.
39
SUMMARY OF FINANCIAL RESULTS
In Millions of Dollars 1995 1994 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------
Net Interest Revenue $9,951 $8,911 $7,690 $7,456 $7,265
Fees, Commissions, and Other Revenue 8,727 7,837 8,385 8,165 7,485
- ----------------------------------------------------------------------------------------------------------
TOTAL REVENUE 18,678 16,748 16,075 15,621 14,750
Provision for Credit Losses 1,991 1,881 2,600 4,146 3,890
Operating Expense 11,102 10,256 10,615 10,057 11,097
- ----------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE TAXES
AND CUMULATIVE EFFECTS OF ACCOUNTING CHANGES 5,585 4,611 2,860 1,418 (237)
Income Taxes 2,121 1,189 941 696 677
- ----------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE CUMULATIVE EFFECTS OF ACCOUNTING CHANGES 3,464 3,422 1,919 722 (914)
Cumulative Effects of Accounting Changes(1) -- (56) 300 -- 457
------------------------------------------
NET INCOME (LOSS) $3,464 $3,366 $2,219 $722 $(457)
- ----------------------------------------------------------------------------------------------------------
(1) Refers to the adoption of SFAS No. 112 in 1994; the adoption of SFAS No. 109
in 1993; and an accounting change for venture capital subsidiaries in 1991.
STATEMENT OF INCOME ANALYSIS
NET INTEREST REVENUE (TAXABLE EQUIVALENT BASIS)(1)(2)
1995 1994 1993
- --------------------------------------------------------------------------------------------
NET INTEREST REVENUE
(In Millions of Dollars)
U.S. $6,248 $5,945 $5,715
Outside the U.S. 5,746 5,041 4,309
- --------------------------------------------------------------------------------------------
TOTAL ADJUSTED(3) 11,994 10,986 10,024
Less effect of credit card securitization (2,010) (2,049) (2,319)
- --------------------------------------------------------------------------------------------
TOTAL $9,984 $8,937 $7,705
- --------------------------------------------------------------------------------------------
AVERAGE INTEREST-EARNING ASSETS
(In Billions of Dollars)
U.S. $124.8 $125.2 $122.7
Outside the U.S. 122.8 111.5 100.3
- --------------------------------------------------------------------------------------------
TOTAL ADJUSTED(3) 247.6 236.7 223.0
Less effect of credit card securitization (23.6) (23.4) (24.4)
- --------------------------------------------------------------------------------------------
TOTAL $224.0 $213.3 $198.6
- --------------------------------------------------------------------------------------------
NET INTEREST MARGIN (%)
U.S. 5.01% 4.75% 4.66%
Outside the U.S. 4.68 4.52 4.29
TOTAL ADJUSTED(3) 4.84% 4.64% 4.50%
Less effect of credit card securitization (0.38) (0.45) (0.62)
- --------------------------------------------------------------------------------------------
TOTAL 4.46% 4.19% 3.88%
- --------------------------------------------------------------------------------------------
(1) Includes appropriate allocations for capital and funding costs based on the
location of the asset.
(2) The taxable equivalent adjustment is based on the U.S. federal statutory
rate of 35%.
(3) Adjusted for the effect of credit card securitization. See page 44 for
discussion.
[GRAPH APPEARS HERE--SEE APPENDIX I, ITEM 41]
Total net interest revenue increased 12% to $10.0 billion in 1995
and was up 16% in 1994, 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
increased 9% to $12.0 billion in 1995 and was up 10% in 1994. The
increase in net interest revenue was led by activities outside the
U.S., principally in the Emerging Markets. The adjusted net
interest margin of 4.84% in 1995 was up from 4.64% in 1994.
The improvement in the adjusted net interest margin in the
U.S. in 1995 reflected lower costs to carry cash-basis loans and
OREO, decreases in the level of lower yielding trading assets, as
well as the reduction in deposit insurance assessment rates. The
favorable impact on the net interest margin due to increased
volumes in the U.S. credit card business was offset by tightened
spreads in that business. The increase in 1994 in the U.S.
adjusted net interest margin primarily reflected a lower cost
to carry cash-basis loans and OREO.
40
Net interest revenue from activities outside the U.S. grew 14%
in 1995 and 17% in 1994 and represented 48%, 46%, and 43% of
total adjusted net interest revenue in 1995, 1994, and 1993,
respectively. The increase in the net interest margin outside the
U.S. reflected higher volumes in the Latin America Consumer
business where spreads remained favorable, as well as increased
spreads in Commercial Banking in the Emerging Markets, after
considering the favorable rate environment in Brazil in 1994. The
increase in 1994 in net interest revenue and the related net
interest margin benefited from the unusually favorable interest
rate environment in Brazil, the release of a Brazilian gross-
receipts tax reserve, and higher volumes and favorable spreads in
both the Consumer and Commercial Banking businesses in the
Emerging Markets.
The increase in adjusted average interest-earning assets of
$10.9 billion in 1995 was mainly attributable to increases in
consumer loans, partially offset by decreases in trading account
assets and federal funds sold and resale agreements. The increase
in 1994 primarily reflected higher levels of consumer loans
outside the U.S., as well as increased federal funds sold and resale
agreements and trading account assets, partially offset by lower
levels of commercial loans.
FEES, COMMISSIONS, AND OTHER REVENUE
FEE AND COMMISSION REVENUE
In Millions of Dollars 1995 1994 1993
- -------------------------------------------------------------------------------
CONSUMER:
DEVELOPED MARKETS $2,346 $2,376 $2,492
EMERGING MARKETS 879 747 651
- -------------------------------------------------------------------------------
TOTAL CONSUMER 3,225 3,123 3,143
COMMERCIAL BANKING 1,752 1,784 1,714
OTHER 83 88 246
- -------------------------------------------------------------------------------
TOTAL ADJUSTED(1) 5,060 4,995 5,103
EFFECT OF CREDIT CARD SECURITIZATION 105 160 (46)
- -------------------------------------------------------------------------------
TOTAL $5,165 $5,155 $5,057
- -------------------------------------------------------------------------------
(1) Adjusted for the effect of credit card securitization. See page 44 for
discussion.
Total fee and commission revenue of $5.2 billion in 1995 was
essentially unchanged from 1994. Adjusted for the effect of credit
card securitization, fee and commission revenue in 1995 was up
slightly from 1994, as a $102 million increase in the Consumer
businesses was partially offset by a decline in the Commercial
Banking business.
Within the Consumer businesses, fee and commission revenue
in the Emerging Markets increased by 18% in 1995 reflecting
continued growth across various consumer products, particularly
Cards in Asia Pacific and Citibanking activities in Latin America.
In the Developed Markets, fee and commission revenue was
essentially unchanged in 1995 despite lower Private Banking fee
revenue as a result of shifts in market conditions since mid-1994
that caused clients to move to lower-risk products.
Total adjusted fee and commission revenue was lower in 1994
compared with 1993, primarily reflecting the absence of fees
related to Quotron (which was sold in the first quarter of 1994).
Fee revenue in the Consumer businesses reflected strong growth
in the Emerging Markets offset by reductions in the Developed
Markets caused by the phasing out of annual cardholder fees on
most U.S. credit cards.
REVENUE FROM TRADING-RELATED ACTIVITIES
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.
TRADING-RELATED REVENUE
In Millions of Dollars 1995 1994 1993
- ------------------------------------------------------------------------------
BY BUSINESS SECTOR:
Commercial Banking
Developed Markets $1,079 $648 $1,626
Emerging Markets 658 539 612
Consumer and Other 252 182 207
- ------------------------------------------------------------------------------
TOTAL $1,989 $1,369 $2,445
- ------------------------------------------------------------------------------
BY INCOME STATEMENT LINE:
Foreign Exchange $1,053 $573 $995
Trading Account 559 158 939
Other(1) 377 638 511
- ------------------------------------------------------------------------------
TOTAL $1,989 $1,369 $2,445
- ------------------------------------------------------------------------------
BY TRADING ACTIVITY:
Foreign Exchange(2) $1,124 $689 $928
Derivative(3) 472 395 785
Fixed Income(4) 65 (8) 454
Other 328 293 278
- ------------------------------------------------------------------------------
TOTAL $1,989 $1,369 $2,445
- ------------------------------------------------------------------------------
(1) Primarily net interest revenue.
(2) Includes foreign exchange spot, forward, and option contracts.
(3) Primarily interest rate and currency swaps, options, financial futures,
equity, and commodity contracts.
(4) Principally debt instruments including government and corporate debt as well
as mortgage-backed securities.
Trading-related revenue, which principally reflects activities in
the Commercial Banking business but also includes amounts
generated by the Consumer businesses, improved in 1995 from
the depressed 1994 level. This increase was led by continued
customer demand for risk-management products and improved
market-making activities related to a more favorable trading
environment compared with 1994. Trading-related revenue
declined in 1994 compared with the record 1993 level as interest
rates increased and market conditions were challenging,
41
particularly in derivative and fixed-income products. Levels of
trading-related revenue may fluctuate in the future as a result of
market conditions and other factors.
Foreign exchange revenue of $1.1 billion in 1995 rebounded
from the weak 1994 level, benefiting from growth in customer
volume and improved market conditions. The improvement was
broadly based across most geographies, but was particularly
strong in Europe. The decline in foreign exchange revenue in
1994 compared with 1993 reflected both difficult market
conditions in 1994 and unusually strong results in 1993 resulting
from the volatility in European currencies.
Derivative revenue of $472 million in 1995 compared with $395
million in 1994 and reflected continued customer demand across
most geographies and improvement in Citicorp's market-making
activities in North America. These improvements were partially
offset by lower revenue in Latin America, which benefited in 1994
from a favorable interest rate environment in Brazil. The decline
in derivative revenue in 1994 compared with 1993 reflected
difficult market conditions due to rising interest rates.
Fixed-income revenue in 1995 improved modestly compared
with the depressed 1994 results. The 1995 results primarily reflect
improvements in Europe and Latin America, partially offset by
the effects of exiting the mortgage-trading business in North
America. The results in 1994 compared with 1993 reflect the
effects of rising interest rates in 1994, primarily on the European
and Latin American portfolios.
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 1995 declined from 1994. The
decline was concentrated in North America, where a flatter yield
curve in 1995 compressed net interest margins, and in Latin
America, where an unusually favorable interest rate environment
in Brazil during 1994 benefited trading-related net interest
revenue. Net interest revenue increased in 1994 compared with
1993 primarily due to the favorable rate environment in Brazil
in 1994.
SECURITIES TRANSACTIONS
In 1995, net gains from the sale of securities were $132 million,
compared with $200 million in 1994 and $94 million in 1993.
The 1995 and 1994 amounts included gains of $55 million and
$71 million, respectively, realized on the sale of Brazilian past
due interest bonds.
The net gains for 1995 reflected gross realized gains of
$177 million and gross realized losses of $45 million from
transactions in the available-for-sale portfolio.
As permitted under guidelines issued by the FASB, Citicorp
transferred $4.7 billion of securities from the held-to-maturity
portfolio to the available-for-sale portfolio at fair value as of
November 30, 1995. See Note 1 to the consolidated financial
statements for further details.
OTHER REVENUE
In Millions of Dollars 1995 1994(1) 1993(1)
- -------------------------------------------------------------------------------
Securitized Credit Card Receivables $988 $955 $1,083
Venture Capital 390 365 143
Affiliate Earnings 208 208 211
U.S. Mortgage Pass-Through Securitization 17 (59) (135)
Foreign Currency Translation Losses (2) (8) (50)
Capital Building Transactions -- 9 (2)
Net Asset Gains and Other Items 217 281 50
- -------------------------------------------------------------------------------
TOTAL $1,818 $1,751 $1,300
- -------------------------------------------------------------------------------
(1) Reclassified to conform to the 1995 presentation.
Revenue in 1995 from securitized credit card receivables was
up slightly from the prior year as higher net interchange revenue
and lower net credit loss rates were partially offset by reduced
net interest revenue. The decline in revenue in 1994 resulted
from lower net interest margin (following the repricing of most of
the portfolio during 1993 to a variable rate pricing structure) and
lower securitized volumes, partially offset by reduced net credit
losses. The effect of credit card receivables securitization is
discussed in more detail on page 44.
Venture capital revenue in the three years benefited from
favorable conditions in the U.S. equity markets. Additionally,
venture capital revenue in 1995 and 1994 included gains related to
public offerings of shares of investees. 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.
Affiliate earnings in 1995 were flat to 1994. Excluding the gain
on the sale of Argentine past due interest bonds held by a Latin
American affiliate in 1993, the 1994 affiliate earnings increased
sharply from 1993 mainly due to increases in earnings from
Middle Eastern and Latin American affiliates.
The improved performance since 1993 in U.S. mortgage pass-
through securitization activity reflects lower levels of mortgage
prepayments, lower costs related to recourse exposure, and
higher excess servicing revenue, partially offset by reduced gains
on the sale of mortgages. The adoption of a new accounting
standard on mortgage servicing rights during 1995 did not have a
material effect.
Revenue from capital building transactions in 1994 included
recognition of the fair value of interest bonds received in
connection with the Brazil refinancing agreement, largely offset
by writedowns in the value of certain investments in Latin
America. In 1993, capital building transactions reflected business
writedowns of $179 million, principally related to Quotron.
Excluding these writedowns, capital building transactions in 1993
principally reflected the sale of Brazilian past due interest bonds
and an affiliate in Asia.
Net asset gains and other items in 1995 reflected the
writedown of an investment in Latin America.
42
PROVISION AND ALLOWANCE FOR CREDIT LOSSES
The increase in the provision for credit losses in 1995 reflected
higher net write-offs in the Consumer businesses, partially offset
by a lower provision in excess of net write-offs in the Non-
Refinancing Commercial businesses. The provision for credit
losses declined in 1994 compared with 1993 primarily as a result
of lower net write-offs across each of the businesses.
NET WRITE-OFFS AND PROVISION FOR CREDIT LOSSES
In Millions of Dollars 1995 1994 1993
- -------------------------------------------------------------------------------
NET WRITE-OFFS (RECOVERIES)
Consumer $1,544 $1,353 $1,410
Commercial Banking 64 (50) 157
North America Commercial Real Estate 102 244 431
- -------------------------------------------------------------------------------
Total Non-Refinancing Commercial 166 194 588
Cross-Border Refinancing Portfolio (18) (403) 61
- -------------------------------------------------------------------------------
TOTAL $1,692 $1,144 $2,059
- -------------------------------------------------------------------------------
PROVISION FOR CREDIT LOSSES
Consumer $1,744 $1,553 $1,686
Commercial Banking 164 -- 305
North America Commercial Real Estate 102 394 610
- -------------------------------------------------------------------------------
Total Non-Refinancing Commercial 266 394 915
Cross-Border Refinancing Portfolio (19) (66) (1)
- -------------------------------------------------------------------------------
TOTAL $1,991 $1,881 $2,600
- -------------------------------------------------------------------------------
The increase in Consumer net write-offs is primarily
attributable to the growth in loan volumes, but also reflects
economic conditions in Latin America, particularly in Argentina
and Mexico. The Consumer provision for credit losses included a
provision in excess of net write-offs of $200 million in 1995 and
1994, compared with $276 million in 1993. Consumer credit costs
are expected to increase in 1996 as a result of continued portfolio
growth across all regions, the effects of the moderating U.S.
economy on the bankcard portfolio, and uncertainty in the
economic environment in Europe and Latin America. See pages
25 through 28 for a further discussion of Consumer net credit
losses.
Net write-offs in the Commercial Banking business in 1995
were low at $64 million and followed net recoveries of $50 million
in 1994. The North America Commercial Real Estate portfolio
benefited from lower net write-offs as real estate market
conditions continued to improve. The Non-Refinancing
Commercial provision for credit losses included provisions in
excess of net write-offs of $100 million, $200 million, and $327
million in 1995, 1994, and 1993, respectively. North America
Commercial Real Estate net write-offs are expected to continue
to decline in 1996 while Commercial Banking net write-offs may
increase moderately from the low 1995 level. See pages 29
through 31 for further discussions of the Commercial Banking and
North America Commercial Real Estate portfolios.
The Cross-Border Refinancing Portfolio reported net recoveries
of $18 million in 1995 and a provision for credit losses of a benefit
of $19 million. During 1994, the Cross-Border Refinancing
Portfolio reported net recoveries, principally from the effects of
the Brazil refinancing completed in that year, and a provision for
credit losses of a benefit of $66 million. See page 32 for a further
discussion of the Cross-Border Refinancing Portfolio.
ALLOWANCE FOR CREDIT LOSSES
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 AND AS A
PERCENTAGE OF LOANS
1995 1994 1993
LOANS(1) ALLOWANCE Allowance Allowance
At Year-End $ BILLIONS $ MILLIONS $ Millions $ Millions
- -------------------------------------------------------------------------------
Consumer $105.6 $1,944 $1,834 $1,596
Ratio 1.84% 1.90% 1.89%
Commercial(2) 60.0 3,424 3,321 2,545
Ratio 5.71% 5.95% 4.88%
Cross-Border Refinancing
Portfolio -- -- -- 238
- -------------------------------------------------------------------------------
TOTAL $165.6 $5,368 $5,155 $4,379
Ratio 3.24% 3.38% 3.15%
- -------------------------------------------------------------------------------
Reserve for Sold Consumer
Portfolios $ 486 $ 422 $ 527
- -------------------------------------------------------------------------------
(1) Loans are net of unearned income.
(2) 1995 and 1994 include amounts related to the Cross-Border Refinancing
Portfolio.
The increases in the allowance attributable to Consumer credit
losses since 1993 reflected continued reserve building in response
to loan growth and the changing economic environment in
certain markets.
The increase in 1995 in the reserve for sold Consumer
portfolios reflected higher levels of securitized credit card
receivables while the decrease in 1994 reflected lower levels of
mortgage sales with recourse exposure. Refer to Note 1 to the
consolidated financial statements for a discussion of Citicorp's
obligations under recourse provisions related to sold loans.
The increase in the allowance attributable to Commercial
credit losses during 1995 primarily resulted from a $100 million
provision for credit losses in excess of net write-offs. The increase
in the allowance during 1994 primarily resulted from the
reclassification of the portion of the allowance attributable to the
Cross-Border Refinancing Portfolio to the commercial allowance
and a $200 million provision for credit losses in excess of net
write-offs.
Higher loan volumes, the effects of the moderating U.S.
economy on the bankcard portfolio, and uncertainty in the
economic environment in Europe and Latin America may result
in further increases in the allowance for credit losses attributable
to the Consumer businesses.
OTHER OPERATING EXPENSE
EMPLOYEE EXPENSE
Employee expense was $5.7 billion in 1995, up $561 million from
1994. The expense growth primarily reflected salary increases and
higher staff levels associated with business expansion in both the
Consumer and Commercial Banking activities in the Emerging
43
Markets, costs associated with expansion of cards and transaction
services activities in the Developed Markets, increased
performance-based compensation, and the foreign currency
translation effect of the weaker U.S. dollar.
Employee expense in 1994 was up $320 million reflecting
business expansion initiatives in the Emerging Markets, partially
offset by the sale in the first quarter of 1994 of Quotron and cost
containment actions relating to restructuring activities,
principally in the Consumer businesses in the United States.
NET PREMISES AND EQUIPMENT EXPENSE
Net premises and equipment expense was $1.7 billion in 1995, up
$115 million from 1994. The increase primarily resulted from
growth in the Emerging Markets businesses, the foreign currency
translation effect of the weaker U.S. dollar, and the increase in
the number of model branches during the last two years in the
Developed Markets. Net premises and equipment expense in 1994
was essentially unchanged from 1993.
OTHER EXPENSE
Other expense was $3.7 billion in 1995, up $170 million from 1994.
The increase primarily reflected business expansion in the
Emerging Markets; spending in support of account growth and
higher marketing costs in the U.S. bankcard business; investment
spending in the Europe bankcard business; costs associated with
higher volumes in the transaction services business; continued
investment in operational and technological infrastructure; and
the foreign currency translation effect of the weaker U.S. dollar.
These increases were partially offset by lower net OREO costs.
Other expense of $3.5 billion in 1994 was down $236 million
from 1993, primarily due to lower net OREO costs in the North
America Commercial Real Estate and Commercial Banking
businesses, and the sale in the first quarter of 1994 of Quotron.
These decreases were partially offset by business expansion in
the Emerging Markets, as well as higher marketing costs in the
worldwide Card businesses and continued investments in
operational efficiencies.
RESTRUCTURING ACTIVITIES
Citicorp has taken a series of actions in prior years to control
costs and improve productivity. These actions included a $425
million restructuring charge in 1993, comprising $319 million
related to workforce reductions, $88 million attributable to asset
writedowns, and $18 million in other actions. Substantially all of
this restructuring charge had been utilized through December 31,
1995, and resulted in the elimination of approximately 6,000
positions. These actions were directed toward improved efficiency
rather than curtailments of business activity, and helped to offset
cost increases from inflation and business expansion.
INCOME TAXES
Income tax expense for 1995 was $2.1 billion, compared with
$1.2 billion in 1994, and $941 million in 1993, representing
effective tax rates of 38% in 1995, 26% in 1994, and 33% in 1993.
Income tax expense and the related effective tax rates for each of
these periods reflected the recognition of deferred tax benefits of
$40 million, $629 million, and $280 million, respectively.
As discussed in the statement of accounting policies and in
Note 8 to the consolidated financial statements, Citicorp adopted
SFAS No. 109 as of January 1, 1993. The cumulative effect of this
change in accounting for income taxes, a $300 million benefit,
is reported separately in Citicorp's consolidated statement
of income.
IMPACT OF CREDIT CARD RECEIVABLES SECURITIZATION
The securitization of credit card receivables does not affect the
earnings reported for each period. Gains on these sales are
recorded monthly as realized over the term of each securitization
transaction, which range up to twelve years. The revolving nature
of the receivables sold and the monthly recognition of gains result
in a pattern of gain recognition that is similar to the pattern that
would be experienced if the receivables had not been sold.
However, because securitization changes Citicorp's involvement
from that of a lender to that of a loan servicer, it 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). Because credit losses are a
component of these cash flows, Citicorp's revenues over the terms
of these transactions may vary depending upon the credit
performance of the securitized receivables. However, Citicorp's
exposure to credit losses on the securitized receivables is
contractually limited to these cash flows.
During 1995, $8.9 billion of U.S. credit card receivables were
sold, compared with $3.5 billion and $2.5 billion during 1994 and
1993, respectively. The total credit card receivables securitized,
net of amortization as of December 31, 1995, were $25.5 billion,
compared with $21.3 billion and $23.9 billion as of December 31,
1994 and 1993, respectively. The following table shows the net
effects of securitization by showing the increase (decrease) in the
reported consolidated statement of income line items, average
balance sheet, return on assets, net interest margin, and
consumer net credit loss ratio.
In Millions of Dollars 1995 1994 1993
- -------------------------------------------------------------------------------
Net Interest Revenue $(2,010) $(2,049) $(2,319)
Fee and Commission Revenue 105 160 (46)
Other Revenue 988 955 1,083
Provision for Credit Losses (917) (934) (1,282)
- -------------------------------------------------------------------------------
Net Income Impact of Securitization $ 0 $ 0 $ 0
- -------------------------------------------------------------------------------
Average Assets (In Billions) $ (24) $ (23) $ (24)
Return on Assets .11 % .11 % .09 %
Net Interest Margin (.38)% (.45)% (.62)%
Consumer Net Credit Loss Ratio (.44)% (.51)% (.81)%
- -------------------------------------------------------------------------------
The effects of securitization on the statement of income line
items in 1995 were essentially unchanged from the previous year.
The effect on net interest revenue and the provision for credit
losses in 1995 compared with 1993 reflected tighter spreads and
lower loss ratios, respectively.
44
FINANCIAL REPORTING RESPONSIBILITY
The management of Citicorp is responsible for the preparation
and fair presentation of the financial statements and other
financial information contained in this annual report. The
accompanying financial statements have been prepared in
conformity with generally accepted accounting principles
appropriate in the circumstances. Where amounts must be based
on estimates and judgments, they represent the best estimates
and judgments of management. The financial information
appearing throughout this annual report is consistent with that in
the financial statements.
The management of Citicorp is also responsible for
establishing and maintaining an effective internal control
structure and procedures for financial reporting and safeguarding
of assets. There are inherent limitations in the effectiveness of
any system of internal control, and accordingly, even an effective
internal control system can provide only reasonable assurance
with respect to financial statement preparation. Management
assessed Citicorp's internal control structure and procedures for
financial reporting and safeguarding of assets as of December 31,
1995, based on recognized criteria for effective internal control.
Based on this assessment, management believes that Citicorp
maintained an effective internal control structure and procedures
for financial reporting and safeguarding of assets as of
December 31, 1995.
The accounting policies and internal control structure are
under the general oversight of the Citicorp and Citibank Boards
of Directors, acting through the Audit Committees described on
page 85. The committees are composed entirely of directors who
are not officers or employees of Citicorp. The Chief Auditor of
Citicorp and the Managing Director of Business Risk Review, who
report directly to the Board of Directors, conduct an extensive
program of audits and business risk reviews worldwide. In
addition, KPMG Peat Marwick LLP, independent auditors, are
engaged to audit our financial statements.
KPMG Peat Marwick LLP obtain and maintain an understand-
ing of Citicorp's internal control structure and procedures for
financial reporting and conduct such tests and other auditing
procedures as they consider necessary in the circumstances to
express the opinion in their report that follows. KPMG Peat
Marwick LLP have free access to the Audit Committees, with no
members of management present, to discuss their audit and their
findings as to the integrity of Citicorp's financial reporting and
the adequacy of the internal control structure described above.
[SIGNATURE APPEARS HERE] [SIGNATURE APPEARS HERE]
John S. Reed Thomas E. Jones
Chairman Executive Vice President
REPORT OF INDEPENDENT AUDITORS
[LOGO APPEARS HERE]
Certified Public Accountants
The Board of Directors and Stockholders of Citicorp:
We have audited the accompanying consolidated balance sheets
of Citicorp and subsidiaries as of December 31, 1995 and 1994,
the related consolidated statements of income, changes in
stockholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 1995, and the related
consolidated balance sheets of Citibank, N.A. and subsidiaries
as of December 31, 1995 and 1994. These financial statements are
the responsibility of Citicorp management. Our responsibility is
to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform these audits to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management,
as well as evaluating the overall financial statement presenta-
tion. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of Citicorp and subsidiaries as of December 31, 1995 and
1994, the results of their operations and their cash flows for each
of the years in the three-year period ended December 31, 1995,
and the financial position of Citibank, N.A. and subsidiaries as of
December 31, 1995 and 1994 in conformity with generally
accepted accounting principles.
As discussed in the statement of accounting policies and notes
to the consolidated financial statements, Citicorp and Citibank
adopted Statement of Financial Accounting Standards Nos. 112
and 115 in 1994 and Nos. 106 and 109 in 1993.
/s/ KMPG
New York, New York
January 16, 1996
45
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME Citicorp and Subsidiaries
In Millions of Dollars Except Per Share Amounts 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------
INTEREST REVENUE
Interest and Fees on Loans $17,808 $16,241 $16,408
Interest on Deposits with Banks 770 895 1,016
Interest on Federal Funds Sold and Securities Purchased Under Resale Agreements 1,056 3,318 2,952
Interest and Dividends on Securities (Note 1) 1,544 1,266 950
Interest on Trading Account Assets 1,785 2,093 2,485
- ----------------------------------------------------------------------------------------------------------------------------
22,963 23,813 23,811
- ----------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on Deposits 8,902 8,996 9,797
Interest on Trading Account Liabilities 300 267 195
Interest on Purchased Funds and Other Borrowings (Note 1) 2,379 3,939 4,155
Interest on Long-Term Debt and Subordinated Capital Notes (Note 1) 1,431 1,700 1,974
- ----------------------------------------------------------------------------------------------------------------------------
13,012 14,902 16,121
- ----------------------------------------------------------------------------------------------------------------------------
NET INTEREST REVENUE 9,951 8,911 7,690
- ----------------------------------------------------------------------------------------------------------------------------
PROVISION FOR CREDIT LOSSES (NOTE 1) 1,991 1,881 2,600
- ----------------------------------------------------------------------------------------------------------------------------
Net Interest Revenue After Provision for Credit Losses 7,960 7,030 5,090
- ----------------------------------------------------------------------------------------------------------------------------
FEES, COMMISSIONS, AND OTHER REVENUE
Fees and Commissions (Note 6) 5,165 5,155 5,057
Foreign Exchange 1,053 573 995
Trading Account 559 158 939
Securities Transactions (Notes 1 and 8) 132 200 94
Other Revenue 1,818 1,751 1,300
- ----------------------------------------------------------------------------------------------------------------------------
8,727 7,837 8,385
- ----------------------------------------------------------------------------------------------------------------------------
OTHER OPERATING EXPENSE
Salaries 4,445 4,029 3,817
Employee Benefits (Note 7) 1,281 1,136 1,028
- ----------------------------------------------------------------------------------------------------------------------------
Total Employee Expense 5,726 5,165 4,845
Net Premises and Equipment Expense (Notes 2 and 11) 1,698 1,583 1,601
Restructuring Charges -- -- 425
Other Expense 3,678 3,508 3,744
- ----------------------------------------------------------------------------------------------------------------------------
11,102 10,256 10,615
- ----------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE TAXES AND CUMULATIVE EFFECTS OF ACCOUNTING CHANGES 5,585 4,611 2,860
INCOME TAXES (NOTE 8) 2,121 1,189 941
- ----------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE CUMULATIVE EFFECTS OF ACCOUNTING CHANGES 3,464 3,422 1,919
Cumulative Effects of Accounting Changes:
Employers' Accounting for Postemployment Benefits (Note 7) -- (56) --
Accounting for Income Taxes (Note 8) -- -- 300
- ----------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 3,464 $ 3,366 $ 2,219
- ----------------------------------------------------------------------------------------------------------------------------
INCOME APPLICABLE TO COMMON STOCK $ 3,126 $ 3,010 $ 1,900
- ----------------------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE (NOTE 9)
ON COMMON AND COMMON EQUIVALENT SHARES
Income Before Cumulative Effects of Accounting Changes $ 7.21 $ 7.15 $ 3.82
Cumulative Effects of Accounting Changes -- (0.12) 0.68
- ----------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 7.21 $ 7.03 $ 4.50
- ----------------------------------------------------------------------------------------------------------------------------
ASSUMING FULL DILUTION
Income Before Cumulative Effects of Accounting Changes $ 6.48 $ 6.40 $ 3.53
Cumulative Effects of Accounting Changes -- (0.11) 0.58
- ----------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 6.48 $ 6.29 $ 4.11
- ----------------------------------------------------------------------------------------------------------------------------
Accounting policies and explanatory notes on pages 51 through 71 form an integral part of the financial statements.
46
CONSOLIDATED BALANCE SHEET Citicorp and Subsidiaries
In Millions of Dollars December 31, 1995 December 31, 1994
- -------------------------------------------------------------------------------------------------------------------------------
ASSETS
Cash and Due from Banks $5,723 $6,470
Deposits at Interest with Banks 9,028 6,862
Securities (Note 1)
Available for Sale, At Fair Value 18,213 13,602
Venture Capital, At Fair Value 1,854 2,009
Held to Maturity, At Amortized Cost (Fair Value $4,638 in 1994) -- 5,092
Trading Account Assets (Note 1) 32,093 38,875
Federal Funds Sold and Securities Purchased Under Resale Agreements 8,113 6,995
Loans, Net of Unearned Income (Note 1)
Consumer 105,643 96,600
Commercial 59,999 55,820
- -------------------------------------------------------------------------------------------------------------------------------
Total Loans, Net of Unearned Income 165,642 152,420
Allowance for Credit Losses (Note 1) (5,368) (5,155)
Customers' Acceptance Liability 1,542 1,420
Premises and Equipment, Net (Note 2) 4,339 4,062
Interest and Fees Receivable 2,914 2,654
Other Assets (Notes 1, 3, 7, and 8) 12,760 15,183
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL $256,853 $250,489
- -------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Non-Interest-Bearing Deposits in U.S. Offices $13,388 $13,648
Interest-Bearing Deposits in U.S. Offices 36,700 35,699
Non-Interest-Bearing Deposits in Offices Outside the U.S. 8,164 7,212
Interest-Bearing Deposits in Offices Outside the U.S. 108,879 99,167
- -------------------------------------------------------------------------------------------------------------------------------
Total Deposits 167,131 155,726
Trading Account Liabilities (Note 1) 18,274 22,382
Purchased Funds and Other Borrowings (Note 1) 16,334 20,907
Acceptances Outstanding 1,559 1,440
Accrued Taxes and Other Expenses (Note 8) 5,719 5,493
Other Liabilities 9,767 8,878
Long-Term Debt (Note 1) 17,151 16,497
Subordinated Capital Notes (Note 1) 1,337 1,397
STOCKHOLDERS' EQUITY
Preferred Stock (Note 4) 3,071 4,187
Common Stock ($1.00 par value) (Note 5) 461 421
Issued Shares: 461,319,265 in 1995 and 420,589,459 in 1994
Surplus 5,702 4,194
Retained Earnings 12,190 9,561
Net Unrealized Gains--Securities Available for Sale (Note 1) 132 278
Foreign Currency Translation (437) (471)
Common Stock in Treasury, at Cost (1,538) (401)
Shares: 34,030,205 in 1995 and 25,508,610 in 1994
- -------------------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity 19,581 17,769
- -------------------------------------------------------------------------------------------------------------------------------
Total $256,853 $250,489
- -------------------------------------------------------------------------------------------------------------------------------
Accounting policies and explanatory notes on pages 51 through 71 form an integral part of the financial statements.
47
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY Citicorp and Subsidiaries
In Millions of Dollars 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCK (NOTE 4)
Balance at Beginning of Year $4,187 $3,887 $3,212
Issuance of Stock 400 400 675
Redemptions of Conversion Preferred Stock, Series 15 (1,134) -- --
Conversions of Convertible Preferred Stock, Series 13 (257) -- --
Redemption and Retirement of Other Preferred Stock (125) (100) --
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE AT END OF YEAR $3,071 $4,187 $3,887
- ---------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK ($1.00 PAR VALUE) (NOTE 5)
Balance at Beginning of Year--Shares: 420,589,459 in 1995, 412,017,300 in 1994, and
391,888,124 in 1993 $421 $412 $392
Issuance of 21,146,076 Shares of Common Stock on Redemptions of Conversion
Preferred Stock, Series 15 21 -- --
Issuance of 6,535,926 Shares of Common Stock on Conversions of Convertible
Preferred Stock, Series 13 6 -- --
Issuance of Stock under Dividend Reinvestment and Common Stock Purchase Plan 1 1 2
Shares: 1,138,166 in 1995, 1,214,058 in 1994, and 1,652,797 in 1993
Issuance of Stock under Stock Incentive, Savings Incentive, Stock Option, Stock
Purchase, and Directors Deferred Compensation Plans and Conversion of
Convertible Notes (Note 7) 12 8 18
Shares: 11,909,638 in 1995, 7,358,101 in 1994, and 18,476,379 in 1993
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE AT END OF YEAR--Shares: 461,319,265 in 1995, 420,589,459 in 1994, and
412,017,300 in 1993 $461 $421 $412
- ---------------------------------------------------------------------------------------------------------------------------------
SURPLUS
Balance at Beginning of Year $4,194 $3,898 $3,598
Issuance of Stock on Redemptions of Conversion Preferred Stock, Series 15 855 -- --
Issuance of Stock on Conversions of Convertible Preferred Stock, Series 13 115 -- --
Issuance of Stock under Dividend Reinvestment and Common Stock Purchase Plan 53 49 41
Issuance of Stock under Stock Incentive, Savings Incentive, Stock Option,
Stock Purchase, Executive Incentive Compensation and Directors Deferred
Compensation Plans and Conversion of Convertible Notes (Note 7) 409 206 233
Common Stock Issuable under Executive Incentive Compensation, Stock
Incentive, and Directors Deferred Compensation Plans (Note 7) 92 52 23
Preferred Stock Issuance Cost (10) (12) (21)
Other (6) 1 24
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE AT END OF YEAR $5,702 $4,194 $3,898
- ---------------------------------------------------------------------------------------------------------------------------------
RETAINED EARNINGS
Balance at Beginning of Year $9,561 $6,729 $4,822
Net Income 3,464 3,366 2,219
Cash Dividends Declared
Preferred (Note 4) (343) (358) (312)
Common (Note 5) (492) (176) --
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE AT END OF YEAR $12,190 $9,561 $6,729
- ---------------------------------------------------------------------------------------------------------------------------------
NET UNREALIZED GAINS--SECURITIES AVAILABLE FOR SALE (NOTE 1)
Balance at Beginning of Year $278 $ -- $ --
Net Unrealized Gains Upon Adoption of SFAS No. 115 -- 365 --
Effect of Transfer from Securities Held to Maturity to Securities
Available for Sale (260) -- --
Change in Net Unrealized Gains--Securities Available for Sale 114 (87) --
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE AT END OF YEAR $132 $278 $ --
- ---------------------------------------------------------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION
Balance at Beginning of Year $(471) $(580) $(454)
Change in Foreign Currency Translation 34 109 (126)
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE AT END OF YEAR $(437) $(471) $(580)
- ---------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK IN TREASURY, AT COST
Balance at Beginning of Year--Shares: 25,508,610 in 1995, 25,527,133 in 1994,
and 25,399,438 in 1993 $(401) $(393) $(389)
Repurchase of 23,060,373 Common Shares (1,526) -- --
Delivery of 6,399,064 Shares of Common Stock on Redemptions of
Conversion Preferred Stock, Series 15 258 -- --
Delivery of 7,550,978 Shares of Common Stock on Conversion of
Convertible Preferred Stock, Series 13 136 -- --
Other Treasury Stock Transactions, at Cost (5) (8) (4)
Shares: (588,736) in 1995, (18,523) in 1994, and 127,695 in 1993
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE AT END OF YEAR--Shares: 34,030,205 in 1995, 25,508,610 in 1994, and
25,527,133 in 1993 $(1,538) $(401) $(393)
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY
Balance at Beginning of Year $17,769 $13,953 $11,181
Changes During the Year, Net 1,812 3,816 2,772
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE AT END OF YEAR $19,581 $17,769 $13,953
- ---------------------------------------------------------------------------------------------------------------------------------
Accounting policies and explanatory notes on pages 51 through 71 form an integral part of the financial statements.
48
CONSOLIDATED STATEMENT OF CASH FLOWS Citicorp and Subsidiaries
In Millions of Dollars 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $3,464 $3,366 $2,219
- ------------------------------------------------------------------------------------------------------------------------
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Provision for Credit Losses 1,991 1,881 2,600
Depreciation and Amortization of Premises and Equipment 636 571 568
Amortization of Goodwill 49 47 55
Restructuring Charge -- -- 425
Business Writedowns -- -- 179
Provision for Deferred Taxes (70) (299) (612)
Cumulative Effects of Accounting Changes -- 56 (300)
Venture Capital Activity 155 (520) (161)
Net Gain on Sale of Securities (132) (200) (94)
Net Loss (Gain) on the Sale of Subsidiaries and Affiliates 6 (12) (77)
Changes in Accruals and Other, Net 2,381 (3,159) 996
Net Decrease (Increase) in Trading Account Assets 6,782 (15,092) (3,449)
Net (Decrease) Increase in Trading Account Liabilities (4,108) 16,904 638
- ------------------------------------------------------------------------------------------------------------------------
Total Adjustments 7,690 177 768
- ------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 11,154 3,543 2,987
- ------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net Increase in Deposits at Interest with Banks (2,166) (113) (199)
Securities--Available for Sale
Purchases (21,198) (20,422) (15,636)
Proceeds from Sales 9,495 10,928 7,886
Maturities 11,853 7,185 5,202
Securities--Held to Maturity
Purchases (6,852) (9,645) (15,381)
Maturities 7,149 11,722 16,397
Net (Increase) Decrease in Federal Funds Sold and Securities Purchased Under
Resale Agreements (1,118) 344 (958)
Net Increase in Loans (107,853) (108,473) (86,698)
Proceeds from Sales of Loans and Credit Card Receivables 92,884 90,184 82,961
Capital Expenditures on Premises and Equipment (1,189) (941) (829)
Proceeds from Sales of Premises and Equipment 170 155 175
Proceeds from Sales of Subsidiaries and Affiliates 57 25 230
Proceeds from Sales of Other Real Estate Owned ("OREO") 1,241 2,213 1,740
- ------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (17,527) (16,838) (5,110)
- ------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase in Deposits 11,405 10,637 2,816
Net (Decrease) Increase in Federal Funds Purchased and Securities Sold Under
Repurchase Agreements (4,193) 2,448 (1,336)
Proceeds from Issuance of Commercial Paper and Funds Borrowed with Original
Maturities of Less Than One Year 514,298 402,773 335,235
Repayment of Commercial Paper and Funds Borrowed with Original Maturities of
Less Than One Year (514,656) (400,471) (333,417)
Proceeds from Issuance of Long-Term Debt 4,669 4,576 4,682
Repayment of Long-Term Debt and Subordinated Capital Notes (4,150) (5,039) (6,444)
Proceeds from Issuance of Preferred Stock 390 388 654
Redemption of Preferred Stock (125) (100) --
Proceeds from Issuance of Common Stock 416 226 302
Purchase of Treasury Stock (1,531) (5) (3)
Dividends Paid (835) (533) (313)
- ------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 5,688 14,900 2,176
- ------------------------------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND DUE FROM BANKS (62) 29 (355)
- ------------------------------------------------------------------------------------------------------------------------
Net (Decrease) Increase in Cash and Due from Banks (747) 1,634 (302)
Cash and Due from Banks at Beginning of Year 6,470 4,836 5,138
- ------------------------------------------------------------------------------------------------------------------------
CASH AND DUE FROM BANKS AT END OF YEAR $5,723 $6,470 $4,836
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Year for:
Interest $12,037 $12,977 $14,481
Income Taxes 1,723 1,522 1,197
NON-CASH INVESTING ACTIVITIES
Transfers from Loans to OREO and Assets Pending Disposition 730 1,152 1,644
- ------------------------------------------------------------------------------------------------------------------------
Accounting policies and explanatory notes on pages 51 through 71 form an integral part of the financial statements.
49
CONSOLIDATED BALANCE SHEET Citibank, N.A. and Subsidiaries
In Millions of Dollars December 31, 1995 December 31, 1994
- ---------------------------------------------------------------------------------------------------------------------------------
ASSETS
Cash and Due from Banks $4,842 $5,562
Deposits at Interest with Banks 9,256 7,201
Securities:
Available for Sale, At Fair Value 14,256 11,328
Venture Capital, At Fair Value 1,457 1,161
Held to Maturity, At Amortized Cost (Fair Value $3,521 in 1994) -- 3,918
Trading Account Assets 28,407 35,573
Federal Funds Sold and Securities Purchased Under Resale Agreements 6,676 7,009
Loans (Net of unearned income of $1,122 in 1995, and $1,093 in 1994) 136,693 122,452
Allowance for Credit Losses (4,403) (4,264)
Customers' Acceptance Liability 1,542 1,420
Premises and Equipment, Net 3,386 3,125
Interest and Fees Receivable 1,940 1,803
Other Assets 7,422 8,383
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL $211,474 $204,671
- ---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Non-Interest-Bearing Deposits in U.S. Offices $10,959 $11,496
Interest-Bearing Deposits in U.S. Offices 22,676 21,919
Non-Interest-Bearing Deposits in Offices Outside the U.S. 7,955 7,115
Interest-Bearing Deposits in Offices Outside the U.S. 108,018 96,516
- ---------------------------------------------------------------------------------------------------------------------------------
Total Deposits 149,608 137,046
Trading Account Liabilities 17,544 21,458
Purchased Funds and Other Borrowings 10,106 14,027
Acceptances Outstanding 1,559 1,440
Accrued Taxes and Other Expenses 3,263 3,102
Other Liabilities 5,300 4,243
Long-Term Debt 4,428 3,515
Subordinated Capital Notes 4,700 5,700
STOCKHOLDER'S EQUITY (NOTE 13)
Capital Stock ($20.00 par value) 751 751
Outstanding Shares: 37,534,553 in 1995 and 1994
Surplus 6,744 6,620
Retained Earnings 7,972 7,125
Net Unrealized Gains--Securities Available for Sale 55 220
Foreign Currency Translation (556) (576)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Stockholder's Equity 14,966 14,140
- ---------------------------------------------------------------------------------------------------------------------------------
Total $211,474 $204,671
- ---------------------------------------------------------------------------------------------------------------------------------
Accounting policies and explanatory notes on pages 51 through 71 form an integral part of the financial statements.
50
STATEMENT OF ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of
Citicorp, its wholly owned subsidiary, Citibank, N.A., and their
majority-owned subsidiaries, after the elimination of all material
intercompany transactions. Twenty percent to 50%-owned
affiliates, other than venture capital investments, are accounted
for under the equity method, and the pro rata share of their
income (loss) is included in other revenue. Income from
investments in less than 20%-owned companies is recognized
when dividends are received. Gains and losses on disposition of
branches, subsidiaries, affiliates, and other investments and
charges for management's estimate of impairment in value that is
other than temporary, such that recovery of the carrying amount
is deemed unlikely, are included in other revenue.
Foreign currency translation, which represents the effects of
translating into U.S. dollars, at current exchange rates, financial
statements of operations outside the U.S. with a functional
currency other than the U.S. dollar, is included in stockholders'
equity along with related hedge and tax effects. The effects of
translating non-dollar financial statements of operations with the
U.S. dollar as the functional currency, including those in highly
inflationary environments, are included in other revenue along
with related hedge effects.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
SECURITIES AND TRADING ACCOUNT ACTIVITIES
Effective January 1, 1994, Citicorp adopted Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," and reported the
cumulative effect of the change in stockholders' equity (see Note
1). Under SFAS No. 115, debt securities that are expected to be
held to maturity are carried at cost, adjusted for amortization of
premiums to the earliest call date and accretion of discounts to
maturity. Marketable equity securities and debt securities
available for sale are carried at fair value, with unrealized gains
and losses reported in a separate component of stockholders'
equity net of applicable income taxes. Previously, these securities
were carried at the lower of aggregate cost or market value. In
the 1995 fourth quarter Citicorp elected to transfer securities
previously classified as held to maturity into the available-for-sale
category, in accordance with guidelines issued by the Financial
Accounting Standards Board which permitted such a one-time
election. (See Note 1). Realized gains and losses on sales
of securities are included in earnings on a specific identified
cost basis.
Citicorp's venture capital subsidiaries include subsidiaries
registered as Small Business Investment Companies and those
other subsidiaries that engage exclusively in venture capital
activities. Venture capital investments are carried at fair value,
with changes in fair value recognized in other revenue. The fair
values of publicly-traded securities held by these subsidiaries are
generally based upon quoted market prices. In certain situations,
including thinly-traded securities, large-block holdings, restricted
shares or other special situations, the quoted market price is
adjusted to produce an estimate of the attainable fair value for
the securities. For securities that are not publicly traded,
estimates of fair value are made based upon review of the
investee's financial results, condition, and prospects.
Trading account assets include securities and money market
instruments held in anticipation of short-term market
movements and for resale to customers, and are valued at
market. Gains and losses, both realized and unrealized, are
included in trading account revenue. Obligations to deliver
securities sold but not yet purchased are also valued at market
and included in trading account liabilities.
Trading account activities also include derivative and foreign
exchange products. Derivative trading positions are carried at fair
value, with realized and unrealized gains and losses included in
trading account revenue. Foreign exchange trading positions are
valued at prevailing market rates on a present value basis, and
the resulting gains and losses are included in foreign exchange
revenue. 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, and amortizes this amount into trading account or
foreign exchange revenue over the life of the contract.
Revaluation gains (losses) on derivative and foreign exchange
contracts are reported gross in trading account assets
(liabilities), reduced by the effects of qualifying netting
agreements with counterparties.
RISK MANAGEMENT ACTIVITIES
Citicorp manages its exposures to market rate movements
outside of its trading activities by modifying the asset and liability
mix, either directly or through the use of derivative financial
products including interest rate swaps, futures, forwards, and
purchased option positions such as interest rate caps, floors, and
collars. These end-user derivative contracts include qualifying
hedges and qualifying positions that modify the interest rate
characteristics of specified financial instruments. Derivative
instruments not qualifying as end-user positions are treated as
trading positions and marked-to-market.
To qualify as a hedge, the swap, futures, forward, or purchased
option position must be designated as a hedge and effective in
reducing the market risk of an existing asset, liability, firm
commitment, or identified anticipated transaction which is probable
to occur. Effectiveness of the hedge is evaluated on an initial and
ongoing basis using statistical calculations of correlation.
To qualify as a position modifying the interest rate
characteristics of an instrument, there must be a documented
and approved objective to synthetically alter the market risk
characteristics of specified items or anticipated transactions, and
the swap, forward or purchased option position must be
designated as such a position and effective in accomplishing the
underlying objective.
51
The foregoing criteria are applied on a decentralized basis,
consistent with the level at which market risk is managed, but
are subject to various limits and controls. If a contract is later
found to be ineffective, it no longer qualifies as an end-user
position and subsequent changes in fair value are recognized
in earnings.
End-user contracts are primarily employed in association with
on-balance sheet instruments accounted for at amortized cost,
including loans, deposits, and long-term debt, and with credit
card securitizations. These qualifying end-user contracts are
accounted for consistent with the risk management strategy as
follows. Amounts payable and receivable on interest rate swaps
and options are accrued according to the contractual terms and
included currently in the related revenue and expense category
as an element of the yield on the associated instrument
(including the amortization of option premiums). Amounts paid
or received over the life of futures contracts are deferred until
the contract is closed; accumulated deferred amounts on futures
contracts and amounts paid or received at settlement of forward
contracts are accounted for as elements of the carrying value of
the associated instrument, affecting the resulting yield.
End-user contracts related to instruments that are carried at
fair value are also carried at fair value, with amounts payable and
receivable accounted for as an element of the yield on the
associated instrument. When related to securities available for
sale, fair value adjustments are reported in stockholders' equity,
net of tax.
If an end-user derivative contract is terminated, any resulting
gain or loss is deferred and amortized over the original term of
the agreement provided that the effectiveness criteria have been
met. If the underlying designated items are no longer held, or if
an anticipated transaction is no longer likely to occur, any
previously unrecognized gain or loss on the derivative contract is
recognized in earnings and the contract is subsequently
accounted for at fair value.
Foreign exchange contracts which qualify under applicable
accounting guidelines as hedges of foreign currency exposures,
including net capital investments outside the U.S., are revalued at
the spot rate with any forward premium or discount recognized
over the life of the contract in net interest revenue. Gains and
losses on foreign exchange contracts which qualify as a hedge of a
firm commitment are deferred and recognized as part of the
measurement of the related transaction, unless deferral of a loss would
lead to recognizing losses on the transaction in later periods.
LOANS
The consumer loan category represents loans managed by
Citicorp's Consumer businesses. Consumer loans are generally
written off not 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 by loan product
and by country. The policy for suspending accruals of interest on
consumer loans varies depending on the terms, security and loan
loss experience characteristics of each product, and in
consideration of write-off criteria in place.
The commercial loan category represents loans managed by
Citicorp's Commercial Banking business, the North America
Commercial Real Estate Portfolio, and the Cross-Border
Refinancing Portfolio. Commercial loans are identified as
impaired and placed on a cash (nonaccrual) basis when it is
determined that the payment of interest or principal is doubtful
of collection, or when interest or principal is past due for 90 days
or more, except when the loan is well secured and in the process
of collection. Any interest accrued is reversed and charged
against current earnings, and interest is thereafter included in
earnings only to the extent actually received in cash. When there
is doubt regarding the ultimate collectibility of principal, all cash
receipts are thereafter applied to reduce the recorded investment
in the loan. Impaired commercial loans are written down to the
extent that principal is judged to be uncollectible and, in the case
of impaired collateral-dependent loans where repayment is
expected to be provided solely by the underlying collateral and
there are no other available and reliable sources of repayment,
are written down to the lower of cost or collateral value. Cash-
basis loans are returned to an accrual status when all contractual
principal and interest amounts are reasonably assured of
repayment and there is a sustained period of repayment
performance in accordance with the contractual terms.
Loans include Citicorp's share of aggregate rentals on lease
financing transactions and residual values net of related
unearned income. Lease financing transactions substantially
represent direct financing leases and also include leveraged
leases. Unearned income is amortized under a method which
substantially results in an approximate level rate of return when
related to the unrecovered lease investment. Gains and losses
from sales of residual values of leased equipment are included in
other revenue.
ALLOWANCE FOR CREDIT LOSSES
Additions to the allowance are made by means of the provision for
credit losses charged to expense. Credit losses are deducted from
the allowance, and subsequent recoveries are added. Securities
received in exchange for loan claims in debt restructurings are
initially recorded at fair value, with any gain or loss reflected as a
recovery or charge-off to the allowance, and are subsequently
accounted for in accordance with SFAS No. 115. The amount of
the provision is determined based on management's assessment
of actual past and expected future net credit losses, business and
economic conditions, the character, quality and performance of
the portfolios, and other pertinent indicators. This evaluation
encompasses loans and loan commitments, derivative and foreign
exchange products, and standby letters of credit, and it also
includes an assessment of the ability of borrowers with foreign
currency obligations to obtain the foreign exchange necessary for
orderly debt servicing. The resulting allowance is deemed
adequate to absorb all credit losses inherent in the portfolio.
Effective January 1, 1995, Citicorp adopted SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan" as amended
by SFAS No. 118 (See Note 1), which requires that impairment of
larger-balance, non-homogenous loans be measured by comparing
52
the net carrying amount of the loan to the present value of the
expected future cash flows discounted at the loan's effective rate,
the secondary market value of the loan, or the fair value of the
collateral for collateral-dependent loans. A valuation allowance is
established if necessary within the overall allowance for credit
losses. Smaller balance, homogenous loans, including consumer
mortgage, installment, revolving credit and most other consumer
loans, are collectively evaluated for impairment. Adoption of the
new standard had no impact on the level of the overall allowance
for credit losses or on operating results, and does not affect
Citicorp's policies regarding write-offs, recoveries, or income
recognition.
In addition to the allowance for credit losses, Citicorp
maintains separate reserves for anticipated losses on portfolios of
consumer receivables that have been sold with recourse.
OTHER REAL ESTATE OWNED
Upon repossession, loans are adjusted if necessary to the
estimated fair value of the underlying collateral and transferred
to Other Real Estate Owned ("OREO"), which is reported in other
assets net of a valuation allowance for selling costs and net
declines in value as appropriate. In connection with the adoption
of SFAS No. 114 effective January 1, 1995, in-substance
repossessions are no longer classified as OREO and are instead
included in cash-basis loans or, for residential mortgages with
high probability of foreclosure, in Assets Pending Disposition
which are carried at the lower of cost or estimated fair value.
EMPLOYEE BENEFITS
Employee benefits expense includes prior and current service
costs of pension and other postretirement benefit plans, which
are accrued on a current basis, contributions and unrestricted
awards under other employee plans, the amortization of
restricted stock awards, and costs of other employee benefits.
Citicorp adopted SFAS No. 112, "Employers' Accounting for
Postemployment Benefits," effective January 1, 1994 (see Note 7).
There are no charges to earnings upon the grant or exercise of
fixed stock options or the subscription for or purchase of stock
under stock purchase agreements. Compensation expense related
to performance-based stock options is recorded over the period to
the estimated vesting dates.
Upon issuance of previously unissued shares under employee
plans, proceeds received in excess of par value are credited to
surplus. Upon issuance of treasury shares, the difference between
the proceeds received and the average cost of treasury shares is
recorded in surplus.
INCOME TAXES
Effective January 1, 1993, Citicorp adopted SFAS No. 109,
"Accounting for Income Taxes" (see Note 8). Deferred taxes are
recorded for the future tax consequences of events that have
been recognized in the financial statements or tax returns, based
upon enacted tax laws and rates, including an appropriate
provision for taxes on undistributed income of subsidiaries and
affiliates. Deferred tax assets are recognized subject to
management's judgment that realization is more likely than not.
EARNINGS PER SHARE
Earnings per share on common and common equivalent shares is
based on net income after deducting preferred stock dividends
and reflects any dilutive effects of stock options, stock purchase
agreements, conversion preferred stock, forward purchase
contracts on common stock, and shares issuable under deferred
stock awards. The fully diluted computation also considers the
dilutive effects of convertible preferred stock.
The dilutive effects of stock options and stock purchase
agreements are computed using the treasury-stock method and
included in the computation as common equivalent shares.
Tandem options, granted prior to 1988 giving the employee the
alternative to purchase either unrestricted common stock or book
value shares at fixed prices (see Notes 5 and 9), are included in
the computation based on the economically preferable alternative
to the employee, using the treasury-stock method if unrestricted
common shares and the two-class method if book value shares.
Under the two-class method, book value shares under option are
added to the number of shares used in the computation, but only
as to the undistributed portion of earnings.
Conversion Preferred Stock, Series 15 is included in the
computation as common equivalent shares up to conversion date,
and convertible preferred stock is included in the fully diluted
computation, using the if-converted method, if dilutive. Shares
deliverable under forward purchase contracts on Citicorp
common stock (See Note 5) are included in common equivalent
shares to the extent that the forward price exceeds the market
price of the common stock as of the reporting date. Shares
receivable by Citicorp under forward contracts are not deducted
from the number of shares used in the computation until the final
number of shares to be received has been determined.
Shares issuable under deferred stock awards are included in
the computation, as common equivalent shares if unrestricted
common stock and under the two-class method if book value
shares, and the amount of after-tax dividend equivalents on
shares issuable is added back to income applicable to common
stock.
CASH FLOWS
Cash flows from risk management activities are classified in the
same category as the related assets and liabilities. Cash
equivalents are defined as those amounts included in cash and
due from banks.
53
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. FINANCIAL INSTRUMENTS
As a global financial services institution, Citicorp provides a wide
variety of financial instruments as products to its customers, and
it also uses these instruments in connection with its own
activities. Collateral requirements are made on a case-by-case
evaluation of each customer and product, and may include cash,
securities, receivables, real estate, and other assets. Following are
explanatory notes regarding financial assets and liabilities,
off-balance sheet financial instruments, concentrations of credit
risk, and the estimated fair value of financial instruments.
A. FINANCIAL ASSETS AND LIABILITIES
LOANS
In Millions of Dollars at Year-End 1995 1994
- -------------------------------------------------------------------------------
CONSUMER
In U.S. Offices
Mortgage and Real Estate(1)(2)(3) $ 22,604 $21,089
Installment, Revolving Credit, and Other 32,429 29,523
Lease Financing -- 32
- -------------------------------------------------------------------------------
55,033 50,644
- -------------------------------------------------------------------------------
IN OFFICES OUTSIDE THE U.S.
Mortgage and Real Estate(1)(4) 18,240 16,830
Installment, Revolving Credit, and Other 32,521 29,303
Lease Financing 765 732
- -------------------------------------------------------------------------------
51,526 46,865
- -------------------------------------------------------------------------------
106,559 97,509
Unearned Income (916) (909)
- -------------------------------------------------------------------------------
CONSUMER LOANS--NET $105,643 $96,600
- -------------------------------------------------------------------------------
COMMERCIAL
IN U.S. OFFICES
Commercial and Industrial(5) $ 9,509 $10,236
Mortgage and Real Estate(1) 4,681 5,616
Loans to Financial Institutions 365 297
Lease Financing 3,239 3,271
- -------------------------------------------------------------------------------
17,794 19,420
- -------------------------------------------------------------------------------
IN OFFICES OUTSIDE THE U.S.
Commercial and Industrial(5) 32,966 27,120
Mortgage and Real Estate(1) 1,901 1,995
Loans to Financial Institutions 4,229 3,263
Governments and Official Institutions 2,180 3,265
Lease Financing 1,098 934
- -------------------------------------------------------------------------------
42,374 36,577
- -------------------------------------------------------------------------------
60,168 55,997
Unearned Income (169) (177)
- -------------------------------------------------------------------------------
COMMERCIAL LOANS--NET $ 59,999 $55,820
- -------------------------------------------------------------------------------
(1) Loans secured primarily by real estate.
(2) Includes $3.8 billion in 1995 and $4.0 billion in 1994 of commercial real
estate loans related to community banking and private banking activities.
(3) Includes $3.0 billion and $1.7 billion of residential mortgage loans held
for sale and carried at the lower of aggregate cost or market value as of
December 31, 1995 and 1994, respectively.
(4) Includes $2.5 billion in 1995 and $2.4 billion in 1994 of loans secured by
commercial real estate.
(5) Includes loans not otherwise separately categorized.
CASH-BASIS AND RENEGOTIATED LOANS
In Millions of Dollars 1995 1994(1)
- -------------------------------------------------------------------------------
OUTSTANDING AT YEAR-END
Consumer Loans on Which Accrual of
Interest Has Been Suspended $2,660 $2,604
Cash-Basis Commercial Loans 1,534 2,117
Renegotiated Commercial Loans 421 718
- -------------------------------------------------------------------------------
(1) Reclassified to reflect the adoption of SFAS No. 114 as of January 1, 1995.
CHANGES IN THE ALLOWANCE FOR CREDIT LOSSES
In Millions of Dollars 1995 1994 1993
- -------------------------------------------------------------------------------
Balance at Beginning of Year $5,155 $4,379 $3,859
ADDITIONS
Provision for Credit Losses 1,991 1,881 2,600
DEDUCTIONS
Consumer Credit Losses 1,962 1,714 1,749
Consumer Credit Recoveries (418) (361) (339)
- -------------------------------------------------------------------------------
Net Consumer Credit Losses 1,544 1,353 1,410
Commercial Credit Losses 376 369 928
Commercial Credit Recoveries(1) (228) (578) (279)
- -------------------------------------------------------------------------------
Net Commercial Credit Losses (Recoveries) 148 (209) 649
OTHER--NET(2) (86) 39 (21)
- -------------------------------------------------------------------------------
BALANCE AT END OF YEAR $5,368 $5,155 $4,379
- -------------------------------------------------------------------------------
(1) Includes $318 million in 1994 resulting from the exchange of Brazil
outstandings for marketable securities, pursuant to the refinancing
agreement completed in 1994.
(2) Includes net transfers (to) from the reserve for Consumer sold portfolios
and foreign exchange effects.
Effective January 1, 1995, Citicorp adopted SFAS No. 114, as
amended by SFAS No. 118. As of December 31, 1995, $1,936 million
of loans were impaired within the scope of SFAS No. 114 and were
carried on a cash basis, consisting of $1,512 million of commercial
loans and $424 million of consumer loans (primarily commercial
real estate loans related to community and private banking
activities). Approximately 58% of these loans were measured for
impairment using the fair value of the collateral, with the
remaining 42% measured using the present value of the expected
future cash flows discounted at the loan's effective rate. The
application of SFAS No. 114 measurement principles indicated
that approximately $175 million of these loans required valuation
allowances, totaling $36 million, which are included within the
overall allowance for credit losses at December 31, 1995.
Consumer loans outside the scope of SFAS No. 114 are separately
evaluated for impairment. During 1995 the average amount of
impaired loans within the scope of SFAS No. 114 was
approximately $2,178 million, and the amount of cash basis
interest income recognized on these loans was $112 million.
54
SECURITIES 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
GROSS GROSS Gross Gross
AMORTIZED UNREALIZED UNREALIZED FAIR Amortized Unrealized Unrealized Fair
IN MILLIONS OF DOLLARS AT YEAR-END COST GAINS LOSSES VALUE Cost Gains Losses Value
- ------------------------------------------------------------------------------------------------------------------------------------
SECURITIES--AVAILABLE FOR SALE
U.S. Treasury and Federal Agency(1) $ 4,285 $ 62 $ 2 $ 4,345 $ 2,688 $ 15 $ 58 $ 2,645
State and Municipal 1,611 101 81 1,631 1,568 112 104 1,576
Foreign Government(2) 8,507 396 460 8,443 5,907 446 152 6,201
U.S. Corporate(1) 1,169 126 74 1,221 776 4 55 725
Other Debt Securities 1,112 11 4 1,119 1,048 40 7 1,081
- ------------------------------------------------------------------------------------------------------------------------------------
Total Debt Securities 16,684 696 621 16,759 11,987 617 376 12,228
Equity Securities(3) 1,345 133 24 1,454 1,189 208 23 1,374
- ------------------------------------------------------------------------------------------------------------------------------------
18,029 829 645 18,213 13,176 825 399 13,602
- ------------------------------------------------------------------------------------------------------------------------------------
SECURITIES--HELD TO MATURITY
U.S. Treasury and Federal Agency(1) -- -- -- -- 1,937 7 41 1,903
State and Municipal -- -- -- -- 2 -- -- 2
Foreign Government(4) -- -- -- -- 2,836 16 436 2,416
U.S. Corporate(1) -- -- -- -- 24 -- -- 24
Other Debt Securities -- -- -- -- 293 -- -- 293
- ------------------------------------------------------------------------------------------------------------------------------------
Total Debt Securities -- -- -- -- 5,092 23 477 4,638
- ------------------------------------------------------------------------------------------------------------------------------------
VENTURE CAPITAL 1,854 -- -- 1,854 2,009 -- -- 2,009
- ------------------------------------------------------------------------------------------------------------------------------------
$19,883 $ 829 $ 645 $20,067 $20,277 $ 848 $ 876 $20,249
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Amounts for 1995 include mortgage-backed securities with an amortized cost
of $1,290 million, gross unrealized gains of $8 million and losses of $1
million, and fair value of $1,297 million. Amounts available for sale for
1994 include mortgage-backed securities with an amortized cost of $729
million, gross unrealized gains of $2 million and losses of $34 million, and
fair value of $697 million. Amounts held to maturity for 1994 include
mortgage-backed securities with an amortized cost of $846 million, gross
unrealized losses of $32 million, and fair value of $814 million.
(2) Amounts for 1995 and 1994 include securities issued by the Government of
Brazil with an amortized cost of $1.5 billion and $1.6 billion,
respectively, and fair value of $1.9 billion and $2.0 billion, respectively.
Amounts for 1995 include securities issued by the Government of Venezuela
with an amortized cost of $563 million and fair value of $314 million, which
were previously classified as held to maturity.
(3) Includes non-marketable equity securities that are carried at cost. At
December 31, 1995, the carrying amount of these securities was $860 million
(reported in both the amortized cost and fair value columns) and the fair
value was $898 million. At December 31, 1994, the carrying amount of those
securities was $728 million and the fair value was $764 million.
(4) Amounts for 1994 include securities issued by the Government of Venezuela
with an amortized cost and fair value of $563 million and $273 million,
respectively.
Under SFAS No. 115, which Citicorp adopted effective January 1,
1994, marketable equity securities and debt securities available
for sale are carried at fair value with unrealized gains and losses
reported in a separate component of stockholders' equity net of
applicable taxes. These securities were previously carried at the
lower of aggregate cost or market value. On November 30, 1995,
Citicorp transferred $4,749 million of debt securities from the
held-to-maturity category to the available-for-sale category at fair
value ($4,334 million), as permitted under guidelines issued by
the FASB. As a result, stockholders' equity was reduced $260
million (net of tax).
Not included in the table above are securities available for sale
held by unconsolidated affiliates carried on the equity method of
accounting. At December 31, 1995 and 1994, the gross unrealized
gains related to these securities were $22 million and $36 million,
respectively, and gross unrealized losses were $2 million and $48
million, respectively, and are included in the net unrealized
gains-securities available for sale component of stockholders'
equity net of applicable taxes.
Following are components of interest and dividends on
securities, net gains from sales of securities available for sale, and
net gains on investments held by venture capital subsidiaries.
In Millions of Dollars 1995 1994 1993
- ----------------------------------------------------------------------------------
Taxable Interest $1,391 $1,143 $885
Interest Exempt from U.S. Federal Income Tax 89 74 9
Dividends 64 49 56
- ----------------------------------------------------------------------------------
Gross Realized Securities Gains $ 177 $ 259 $134
Gross Realized Securities Losses 45 59 40
- ----------------------------------------------------------------------------------
Net Realized and Unrealized Venture Capital Gains $ 390 $ 365 $143
Which Included:
Gross Unrealized Gains $ 487 $ 526 $383
Gross Unrealized Losses 300 189 269
- ----------------------------------------------------------------------------------
The following table presents the amortized cost, fair value, and
average yield on amortized cost of debt securities available for
sale by contractual maturity dates as of December 31, 1995.
U.S. TREASURY AND STATE AND FOREIGN GOVERNMENT, U.S. CORPORATE,
FEDERAL AGENCY MUNICIPAL AND OTHER DEBT SECURITIES
------------------------------ ------------------------- -----------------------------------
AMORTIZED FAIR AMORTIZED FAIR AMORTIZED FAIR
In Millions of Dollars COST VALUE YIELD COST VALUE YIELD COST VALUE YIELD/(1)/
- -----------------------------------------------------------------------------------------------------------------------------------
Due Within 1 Year $2,352 $2,354 5.17% $ 2 $ 2 5.12% $ 2,856 $ 2,889 9.41%
After 1 but Within 5 Years 541 546 5.59 47 48 5.23 2,741 2,754 8.55
After 5 but Within 10 Years 320 326 6.83 412 408 5.32 1,077 1,062 7.64
After 10 Years(2) 1,072 1,119 7.49 1,150 1,173 6.29 4,114 4,078 9.26
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL $4,285 $4,345 5.88 $1,611 $1,631 6.01 $10,788 $10,783 8.96
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Yields reflect the impact of local interest rates prevailing in countries
outside the U.S.
(2) Securities with no stated maturities are included as contractual maturities
of greater than 10 years. Actual maturities may differ due to call or
prepayment rights.
55
TRADING ACCOUNT ASSETS AND LIABILITIES
In Millions of Dollars at Year-End 1995 1994
- -------------------------------------------------------------------------------
TRADING ACCOUNT ASSETS
U.S. Treasury and Federal Agency Securities $ 3,159 $ 5,458
State and Municipal Securities 145 190
Foreign Government, Corporate and Other
Securities 12,693 12,683
Revaluation Gains on Derivative and Foreign
Exchange Contracts 16,096 20,544
- -------------------------------------------------------------------------------
$32,093 $38,875
- -------------------------------------------------------------------------------
TRADING ACCOUNT LIABILITIES
Securities Sold, Not Yet Purchased $ 3,696 $ 3,121
Revaluation Losses on Derivative and Foreign
Exchange Contracts 14,578 19,261
- -------------------------------------------------------------------------------
$18,274 $22,382
- -------------------------------------------------------------------------------
The average fair value of trading account assets during 1995
was $43.6 billion, including $21.8 billion relating to derivative and
foreign exchange contracts, compared with $48.4 billion and
$23.0 billion, respectively, during 1994. The average fair value of
trading account liabilities during 1995 was $24.7 billion, including
$20.6 billion relating to derivative and foreign exchange
contracts, compared with $26.2 billion and $21.5 billion,
respectively, during 1994.
Deferred revenue on derivative and foreign exchange
contracts, attributable to ongoing costs such as servicing and
operational activities, totaled $254 million and $267 million at
December 31, 1995 and 1994, respectively, which is reported in
Other Liabilities. Commitments to purchase when-issued
securities were $4.7 billion and $5.0 billion at December 31, 1995
and 1994, respectively.
PURCHASED FUNDS AND OTHER BORROWINGS(1)
In Millions of Dollars at Year-End 1995 1994
- -------------------------------------------------------------------------------
Federal Funds Purchased and Securities Sold under
Repurchase Agreements $ 7,904 $12,097
Commercial Paper Issued by
Parent Company 1,181 1,058
The Student Loan Corporation (80% owned) 452 462
Other Funds Borrowed 6,797 7,290
- -------------------------------------------------------------------------------
TOTAL $16,334 $20,907
- -------------------------------------------------------------------------------
(1) Original maturities of less than one year.
LONG-TERM DEBT(1)
In Millions of Dollars at Year-End 1995 1994
- -------------------------------------------------------------------------------
VARIOUS
VARIOUS FLOATING-
FIXED-RATE RATE
OBLIGATIONS(2) OBLIGATIONS(2) TOTAL TOTAL
- --------------------------------------------------------------------------------
PARENT COMPANY
Due in 1995 $ -- $ -- $ -- $ 1,730
Due in 1996 1,068 593 1,661 1,368
Due in 1997 445 471 916 813
Due in 1998 356 1,352 1,708 1,378
Due in 1999 45 1,073 1,118 1,112
Due in 2000 604 914 1,518 1,253
Due in 2001-2005 2,688 1,113 3,801 3,217
Due in 2006-2010 890 -- 890 423
Due after 2010 269 356 625 694
- -------------------------------------------------------------------------------
6,365 5,872 12,237 11,988
- -------------------------------------------------------------------------------
SUBSIDIARIES(3)
Due in 1995 -- -- -- 1,035
Due in 1996 969 179 1,148 1,605
Due in 1997 891 384 1,275 655
Due in 1998 722 649 1,371 415
Due in 1999 295 36 331 203
Due in 2000 190 178 368 253
Due in 2001-2005 150 113 263 248
Due in 2006-2010 14 48 62 44
Due after 2010 31 65 96 51
- --------------------------------------------------------------------------------
3,262 1,652 4,914 4,509
- --------------------------------------------------------------------------------
TOTAL $9,627 $7,524 $17,151 $16,497
- --------------------------------------------------------------------------------
(1) Original maturities of one year or more. Maturity distribution is based upon
contractual maturities or earlier dates at which debt is repayable at the
option of the holder, due to required mandatory sinking fund payments or due
to call notices issued.
(2) Based on contractual terms. Repricing characteristics may be effectively
modified from time to time using derivative contracts.
(3) Approximately 4% in 1995 and 17% in 1994 of subsidiary long-term debt was
guaranteed by Citicorp, and of the debt not guaranteed by Citicorp,
approximately 38% in 1995 and 36% in 1994 was secured by the assets of the
subsidiary.
Long-term debt is denominated in various currencies with both
fixed and floating interest rates, summarized below. Certain of the
agreements under which long-term debt obligations were issued
prohibit Citicorp, under certain conditions, from paying dividends
in shares of Citibank capital stock and from creating
encumbrances on such shares. Floating rates are determined
periodically by formulas based on certain money market rates or,
in certain instances, by minimum rates as specified in the
governing agreements. A portion of Parent Company and
subsidiary debt represents local currency borrowings where
prevailing rates may vary significantly from rates in the U.S.
1995 1994
- --------------------------------------------------------------------------------
RANGE WEIGHTED RANGE WEIGHTED
FROM TO AVERAGE FROM TO AVERAGE
- --------------------------------------------------------------------------------
PARENT COMPANY
Fixed rate(1) 2.42% 10.75% 7.70% 4.00% 10.75% 7.77%
Floating rate(2) 0.88 6.93 6.04 2.78 7.53 6.06
SUBSIDIARIES(3)
FIXED RATE 0.75 16.50% ) 2.75 16.38 )
) 9.68 ) 9.10
Floating rate 3.35 32.84 ) 3.52 35.30 )
- --------------------------------------------------------------------------------
(1) Predominantly denominated in U.S. dollars (92% in 1995 and 91% in 1994),
Japanese yen, and German marks, and matures over the period to 2035.
(2) Predominantly denominated in U.S. dollars (95%) and matures over the period
to 2035.
(3) Denominated in U.S. dollars (36% in 1995 and 29% in 1994) and various
foreign currencies including Australian dollars, Italian lire, Chilean
pesos, Canadian dollars, German marks, and British pounds sterling. Fixed
and floating rate debt matures over the period to 2025 and 2017,
respectively.
56
SUBORDINATED CAPITAL NOTES
In Millions of Dollars at Year-End Rate 1995 1994
- --------------------------------------------------------------------------------
Due 1997 Floating $ 500 $ 500
Due 1999 9% 300 300
Due 1999 9-3/4% 300 300
No Stated Maturity Floating 237 297
- --------------------------------------------------------------------------------
TOTAL $1,337 $1,397
- --------------------------------------------------------------------------------
The subordinated capital notes require Citicorp to exchange
the notes at maturity or at certain other specified times for
capital securities that have a market value equal to the principal
amounts of the notes or, at Citicorp's option, to pay the principal
of the notes from amounts representing designated proceeds from
the sale of capital securities. At the option of Citicorp, the
exchange or the proceeds from sale, as applicable, may be for or
from common stock, non-redeemable preferred stock, or other
marketable capital securities of Citicorp.
As of December 31, 1995, Citicorp had designated proceeds
from the sale of capital securities in an amount sufficient to
satisfy substantially all the dedication commitments of its
subordinated capital notes. Certain of the agreements under
which the notes are issued prohibit Citicorp, under certain
conditions, from paying dividends in shares of Citibank capital
stock. All of the notes are obligations of Citicorp. Citicorp
received permission from its primary regulator to revoke its
obligation to deliver capital securities for its subordinated capital
notes with no stated maturity, and as a result, Citicorp may
redeem such notes from funds which are not the proceeds of the
sale of capital securities.
The interest rates on the floating-rate issues are determined
periodically by formulas based on certain money-market rates or,
in certain instances, by minimum interest rates, as specified in
the governing agreements. Interest rates on floating-rate issues
ranged from 5.9% to 6.1% at December 31, 1995 and 5.8% to 6.9% at
December 31, 1994. The weighted-average interest rates were 6.1%
and 6.5% at December 31, 1995 and 1994, respectively.
B. OFF-BALANCE SHEET FINANCIAL INSTRUMENTS,
DERIVATIVE AND FOREIGN EXCHANGE PRODUCTS
Citicorp enters into derivative and foreign exchange futures,
forwards, options, and swaps, which enable customers to transfer,
modify, or reduce their interest rate, foreign exchange, and other
market risks, and also trades these products for its own account.
In addition, Citicorp uses derivatives and other instruments,
primarily interest rate products, as part of its own balance sheet
management. Derivatives are used to manage interest rate risk
relating to specific groups of on-balance sheet assets and
liabilities, including commercial and consumer loans, deposit
liabilities, long-term debt, and other interest-sensitive assets and
liabilities, as well as credit card securitizations. In addition,
foreign exchange contracts are used to hedge net capital
exposures and foreign exchange transactions. Through the
effective use of derivatives, Citicorp has been able to modify the
volatility of its revenue from asset and liability positions.
Futures and forward contracts are commitments to buy or
sell at a future date a financial instrument, commodity, or
currency at a contracted price, and may be settled in cash or
through delivery.
Swap contracts are commitments to settle in cash at a future
date or dates, based on differentials between specified financial
indices, as applied to a notional principal amount. Option
contracts give the purchaser, for a fee, the right, but not the
obligation, to buy or sell within a limited time a financial
instrument or currency at a contracted price that may also be
settled in cash, based on differentials between specified indices.
The market and credit risks associated with these products, as
well as the operating risks, are similar to those relating to other
types of financial instruments. Market risk is the exposure
created by potential fluctuations in interest rates, foreign
exchange rates, and other values, and is a function of the type of
product, the volume of transactions, the tenor and terms of the
agreement, and the underlying volatility. Credit risk is the
exposure to loss in the event of nonperformance by the other
party to the transaction. The recognition in earnings of
unrealized gains on these transactions is dependent on
management's assessment as to collectibility.
The following table presents the aggregate notional principal
amounts of Citicorp's outstanding derivative and foreign
exchange contracts at December 31, 1995 and 1994, along with the
related balance sheet credit exposure. The table includes all
contracts with third parties, including both trading and non-
trading positions.
DERIVATIVE AND FOREIGN EXCHANGE CONTRACTS
NOTIONAL
PRINCIPAL BALANCE SHEET
AMOUNTS CREDIT EXPOSURE(1)
In Billions of Dollars at Year-End 1995 1994 1995 1994
- ---------------------------------------------------------------------------------
INTEREST RATE PRODUCTS
Futures Contracts $ 145.2 $ 175.2 $ -- $ --
Forward Contracts 295.2 561.3 0.6 0.6
Swap Agreements 431.9 367.5 9.1 6.0
Purchased Options 105.9 110.2 1.2 1.7
Written Options 158.1 105.7 -- --
FOREIGN EXCHANGE PRODUCTS
Futures Contracts 1.1 0.1 -- --
Forward Contracts 983.5 1,153.0 12.2 14.9
Cross-Currency Swap Agreements 35.2 33.8 2.0 2.2
Purchased Options 93.7 63.6 1.8 1.3
Written Options 88.2 66.2 -- --
COMMODITY AND EQUITY PRODUCTS 38.0 28.0 0.9 0.8
- --------------------------------------------------------------------------------
27.8 27.5
EFFECTS OF MASTER NETTING
AGREEMENTS(2) (11.7) (7.0)
- --------------------------------------------------------------------------------
$16.1 $20.5
- --------------------------------------------------------------------------------
(1) 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.
(2) Master netting agreements mitigate credit risk by permitting the offset of
amounts due from and to individual counterparties in the event of
counterparty default.
57
END-USER INTEREST RATE AND FOREIGN EXCHANGE CONTRACTS
In Billions of Dollars NOTIONAL PRINCIPAL AMOUNTS(1) PERCENTAGE OF 1995 AMOUNT MATURING
- ----------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, December 31, Within 1 to 2 to 3 to 4 to After
1995 1994 1 Year 2 Years 3 Years 4 Years 5 Years 5 Years
- ----------------------------------------------------------------------------------------------------------------------------------
INTEREST RATE PRODUCTS
Futures Contracts $13.6 $77.4 78% 15% 6% 1% -- --
Forward Contracts 5.6 3.7 97 3 -- -- -- --
Swap Agreements 90.9 68.5 28 21 16 11 10% 14%
Option Contracts 45.6 32.5 74 14 3 3 5 1
FOREIGN EXCHANGE PRODUCTS
Futures and Forward Contracts 54.8 40.5 98 2 -- -- -- --
Cross-Currency Swap Agreements 3.2 3.1 19 22 9 14 14 22
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Includes third-party and intercompany contracts. Amounts for 1994 were
reclassified to conform to the 1995 presentation.
END-USER INTEREST RATE SWAPS AND NET PURCHASED OPTION POSITIONS
AS OF DECEMBER 31, 1995
REMAINING CONTRACTS OUTSTANDING
- ----------------------------------------------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000
In Billions of Dollars at Year-End
- ----------------------------------------------------------------------------------------------------------------------------------
RECEIVE FIXED SWAPS
Notional Amounts $68.1 $49.5 $38.3 $26.7 $18.1 $9.6
Weighted-Average Fixed Rate 6.5% 6.7% 6.8% 7.0% 7.0% 6.9%
PAY FIXED SWAPS
Notional Amounts $12.3 $ 8.0 $ 5.7 $ 4.1 $ 3.6 $3.2
Weighted-Average Fixed Rate 7.4% 7.3% 7.1% 7.2% 7.2% 7.1%
BASIS SWAPS
Notional Amounts $10.5 $ 7.9 $ 2.1 $ 0.5 $ 0.1 $0.1
PURCHASED CAPS (INCLUDING COLLARS)
Notional Amounts $25.4 $ 5.4 $ 3.0 $ 2.6 $ 1.2 --
Weighted-Average Cap Rate Purchased 6.5% 6.8% 7.4% 7.4% 8.2% --
WRITTEN FLOORS RELATED TO PURCHASED CAPS (COLLARS)
Notional Amounts $13.5 $ 0.2 $ 0.2 $ 0.2 $ 0.2 --
Weighted-Average Floor Rate Written 4.7% 8.2% 8.2% 8.2% 8.2% --
WRITTEN CAPS RELATED TO OTHER PURCHASED CAPS(1)
Notional Amounts $ 6.7 $ 6.2 $ 2.3 $ 1.2 $ 1.1 $0.5
Weighted-Average Cap Rate Written 7.0% 7.0% 8.2% 9.2% 9.1% 9.7%
- ----------------------------------------------------------------------------------------------------------------------------------
THREE-MONTH FORWARD LIBOR RATES(2) 5.8% 5.1% 5.5% 5.8% 6.1% 6.3%
- ----------------------------------------------------------------------------------------------------------------------------------
(1) Includes written options related to purchased options embedded in other
financial instruments.
(2) Represents the implied forward yield curve for three-month LIBOR as of
December 31, 1995, provided for reference.
The tables above 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 at year-end 1995 with three-month
LIBOR forward rates included for reference.
The majority of derivative positions used in Citicorp's asset and
liability management activities are established via intercompany
transactions with independently managed Citicorp dealer units,
with the dealer acting as a conduit to the marketplace. Contract
maturities are related to the underlying risk management
strategy.
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 1995 interest rate swaps and
options with a notional principal amount of $43.0 billion were
closed out which resulted in a net deferred loss of approximately
$42 million. Total unamortized net deferred losses, including
those from prior year close-outs, were approximately $135 million
at December 31, 1995, which will be amortized into earnings over
the remaining life of the original contracts (approximately 33% in
1996, 47% in 1997, and 20% in subsequent years), consistent with
the risk management strategy.
The above tables are intended to provide an overview of these
components of the end-user portfolio, but should be viewed only
in the context of Citicorp's related assets and liabilities.
LOAN COMMITMENTS
Citicorp and its subsidiaries had outstanding unused
commitments principally to make or purchase loans, to purchase
third-party receivables, and to provide note issuance facilities or
revolving underwriting facilities totaling $82.4 billion at
December 31, 1995 and $73.1 billion at December 31, 1994. The
majority of these commitments are at a floating interest rate. In
addition, there were $98.3 billion and $76.1 billion of unused
credit card commitments at December 31, 1995 and 1994,
respectively. The majority of these commitments are contingent
upon customers maintaining specific credit standards.
Commercial commitments generally have fixed expiration
dates and may require payment of fees. Such fees (net of certain
direct costs) are deferred and, upon exercise of the commitment,
amortized over the life of the loan or, if exercise is deemed
remote, amortized over the commitment period.
58
LOANS SOLD WITH RECOURSE
Citicorp and its subsidiaries are obligated under various recourse
provisions related to the sales of loans or sales of participations in
pools of loans. Total loans sold with recourse, except sales of
participations in pools of credit card receivables and mortgage
loans securitized under Government National Mortgage
Association ("GNMA") agreements, which are described below,
totaled $14.9 billion and $17.1 billion at December 31, 1995 and
1994, respectively. The maximum obligation under recourse
provisions on these sold loans was approximately $5.2 billion and
$5.7 billion at December 31, 1995 and 1994, respectively. Of these
amounts, approximately 93% and 97% at December 31, 1995 and
1994, respectively, related to sales of residential mortgages.
Citicorp also has secondary recourse obligations under sale/
servicing agreements with GNMA covering approximately $2.5
billion of residential mortgages at December 31, 1995 and $2.9
billion at December 31, 1994.
Certain Citicorp subsidiaries have sold participations in pools
of credit card receivables, with outstandings totaling $25.5 billion
at December 31, 1995 and $21.3 billion at December 31, 1994.
Excess servicing fees are recognized over the life of each sale
transaction. The excess servicing fee is based upon the sum of
finance charges and fees received from cardholders and
interchange revenue earned on cardholder transactions, less the
sum of the yield paid to investors, credit losses, transaction costs,
and a normal servicing fee, which is also retained by certain
Citicorp subsidiaries as servicers.
As specified in certain of the sale agreements, the excess
servicing fee collected each month is deposited in an account, up
to a predetermined maximum amount, and is available over the
remaining term of that transaction to make payments of yield,
fees, and transaction costs in the event that net cash flows from
the receivables are not sufficient. When the account reaches the
predetermined amount, excess servicing fees are passed directly
to the Citicorp subsidiary that sold the receivables. The amount
contained in these accounts is included in other assets and was
$461 million at December 31, 1995 and $637 million at December
31, 1994.
Citicorp maintains reserves, outside of the allowance for credit
losses, relating to asset securitization programs discussed above.
These reserves totaled $486 million at December 31, 1995 and
$422 million at December 31, 1994.
STANDBY LETTERS OF CREDIT
Standby letters of credit, summarized at right, are used in various
transactions to enhance the credit standing of Citibank
customers. They represent irrevocable assurances that Citibank
will make payment in the event that the customer fails to fulfill
its obligations to third parties. Financial standby letters of credit
are obligations to pay a third-party beneficiary when a customer
fails to repay an outstanding loan or debt instrument, such as
assuring payments by a foreign reinsurer to a U.S. insurer, to act
as a substitute for an escrow account, to provide a payment
mechanism for a customer's third-party obligations, and to assure
payment of specified financial obligations of a customer.
Performance standby letters of credit are obligations to pay a
third-party beneficiary when a customer fails to perform a
nonfinancial contractual obligation, such as to ensure contract
performance or irrevocably assure payment by the customer
under supply, service and maintenance contracts or construction
projects. Fees are recognized ratably over the term of the standby
letter of credit. The table does not include securities lending
indemnifications issued to customers which totaled $0.9 billion at
December 31, 1995 and $0.7 billion at December 31, 1994.
1995 1994(1)
- -------------------------------------------------------------------------------
EXPIRE EXPIRE TOTAL Total
WITHIN AFTER AMOUNT Amount
In Billions of Dollars at Year-End 1 YEAR 1 YEAR OUTSTANDING Outstanding
- -------------------------------------------------------------------------------
FINANCIAL
Insurance, Surety $1.1 $4.6 $5.7 $6.0
Options, Purchased
Securities, and Escrow 1.6 0.2 1.8 2.3
Clean Payment 1.0 0.5 1.5 1.0
Backstop State, County, and
Municipal Securities 0.5 0.9 1.4 1.5
Other Debt Related 3.2 3.6 6.8 7.9
PERFORMANCE 3.2 2.1 5.3 4.4
- -------------------------------------------------------------------------------
TOTAL(2) $10.6 $11.9 $22.5 $23.1
- -------------------------------------------------------------------------------
(1) Reclassified to conform to the 1995 presentation.
(2) Total is net of cash collateral of $1.8 billion in 1995 and $1.7 billion in
1994. Collateral other than cash covered 25% of the total in 1995 and 22% in
1994.
C. CONCENTRATIONS OF CREDIT RISK
Concentrations of credit risk exist when changes in economic,
industry or geographic factors similarly affect groups of
counterparties whose aggregate credit exposure is material in
relation to Citicorp's total credit exposure. Although Citicorp's
portfolio of financial instruments is broadly diversified along
industry, product, and geographic lines, material transactions are
completed with other financial institutions, particularly in the
securities trading, derivative, and foreign exchange businesses.
Additionally, U.S. credit card receivables, U.S. mortgages,
North America Commercial Real Estate, and the Cross-Border
Refinancing Portfolios represent areas of significant credit
exposures.
D. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The accompanying tables provide disclosure of the estimated fair
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 securitizations.
To better reflect Citicorp's values subject to market risk and
to illustrate the interrelationships that characterize risk
management strategies, the following table also provides
estimated fair value data for the expected time period until
runoff of existing deposits with no fixed maturity.
In the aggregate, estimated fair values exceeded the carrying
values by approximately $8.4 billion at December 31, 1995 and
$6.6 billion at December 31, 1994. The increase from 1994 to 1995
is primarily due to credit quality improvements, a declining
interest rate environment and the reclassification of debt
securities from the held-to-maturity category to the available-for-
sale category.
59
ESTIMATED FAIR VALUE IN EXCESS OF (LESS THAN) CARRYING VALUE
Increase
In Billions of Dollars at Year-End 1995 1994 (Decrease)
- --------------------------------------------------------------------------------
Assets $5.7 $3.9 $1.8
Liabilities (0.7) 0.7 (1.4)
End-User Derivative and Foreign
Exchange Contracts 1.4 (1.4) 2.8
Loan Commitments -- (0.2) 0.2
Credit Card Securitizations (0.3) 0.7 (1.0)
- --------------------------------------------------------------------------------
Subtotal 6.1 3.7 2.4
Deposits with No Fixed Maturity(1) 2.3 2.9 (0.6)
- --------------------------------------------------------------------------------
TOTAL $8.4 $6.6 $1.8
- --------------------------------------------------------------------------------
(1) 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 year-end, 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. The decrease during 1995 was primarily due to a
lower spread between the cost of funds on the deposits and the cost of funds
from alternative sources. Under applicable requirements, excess fair values of
these deposits are excluded from amounts included under the caption Assets and
Liabilities above and in the table on page 61, in which the estimated fair value
is shown as being equal to the carrying value.
Additional detail is provided in the following tables. In
accordance with applicable requirements, the disclosures exclude
leases, affiliate investments, and pension and benefit obligations,
and the disclosures also exclude the effect of taxes and other
expenses that would be incurred in a market transaction. In
addition, the tables exclude the values of nonfinancial assets and
liabilities, as well as a wide range of franchise, relationship, and
intangible values, which are integral to a full assessment of
Citicorp's financial position and the value of its net assets.
The data represents management's best estimates based on a
range of methodologies and assumptions.
Quoted market prices are used for most securities, for loans
where available, and for both trading and end-user derivative
and foreign exchange contracts, as well as for liabilities with
quoted prices.
For performing loans where no quoted market prices are
available, contractual cash flows are discounted at quoted
secondary market rates or estimated market rates if available.
Otherwise, current market origination rates for loans with similar
terms and risk characteristics are used. For loans with doubt as
to collectibility, expected cash flows are discounted using an
appropriate rate considering the time of collection and a
premium for the uncertainty of the flows. The value of collateral
is also considered. Fair values for cash-basis loans within the
North America Commercial Real Estate portfolio are estimated
using the "as is" appraisal methodology. For liabilities without
quoted market prices, market borrowing rates of interest are used
to discount contractual cash flows.
Fair values of loan commitments are based on estimated
market pricing for transactions with similar terms and risk
characteristics. Fair values of credit card securitizations
represent the estimated excess (shortfall) 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.
Fair values vary from period to period based on changes in a
wide range of factors, including interest rates, credit quality, and
market perceptions of value, and as existing assets and liabilities
run off and new items are generated.
SIGNIFICANT ASSETS AND RELATED INSTRUMENTS
1995 1994
- --------------------------------------------------------------------------------
CARRYING ESTIMATED Carrying Estimated
In Billions of Dollars at Year-End VALUE FAIR VALUE Value Fair Value
- --------------------------------------------------------------------------------
Loans(1) $160.3 $165.9 $142.3 $146.5
Related Derivatives 0.2 0.7 0.6 0.2
Loan Commitments -- -- (0.1) (0.3)
Securities 20.1 20.1 20.7 20.2
Trading Account Assets 32.1 32.1 38.9 38.9
Other Financial Assets(2) 29.5 29.6 27.3 27.5
Credit Card Securitizations 0.2 (0.1) 0.5 1.2
Related Derivatives 0.4 0.7 0.1 (0.4)
- --------------------------------------------------------------------------------
(1) The carrying value of loans is net of the allowance for credit losses and
also excludes $5.1 billion and $5.0 billion of lease finance receivables in 1995
and 1994, respectively.
(2) Includes cash and due from banks, deposits at interest with banks, federal
funds sold and securities purchased under resale agreements, and customers'
acceptance liability, for which the carrying value is a reasonable estimate of
fair value, as well as financial instruments included in interest and fees
receivable and other assets on the balance sheet with carrying values of $5.1
billion and $5.6 billion at December 31, 1995 and 1994, respectively, and
estimated fair values of $5.2 billion and $5.8 billion, respectively.
The estimated fair values of loans reflect changes in credit
status since the loans were made, changes in interest rates in the
case of fixed-rate loans, and premium values at origination of
certain loans.
The estimated fair values of Citicorp's loans and loan commitments,
in the aggregate, exceeded carrying values (reduced by
the allowance for credit losses) by $5.6 billion at year-end 1995
compared with $4.0 billion in 1994, an improvement of $1.6 billion.
Within these totals, estimated fair values exceeded carrying
values for consumer loans net of the allowance by $3.0 billion, an
improvement of $0.9 billion from year-end 1994 due primarily to
declines in market interest rates and higher loan volumes.
Estimated fair values were less than carrying values in North
America Commercial Real Estate before considering the
allowance by $0.3 billion, an improvement of $0.3 billion from
1994 reflecting improved credit conditions, and by $0.6 billion in
performing loans to countries that have successfully refinanced
their debt, an improvement of $0.1 billion from 1994 due primarily
to improving secondary market prices.
As a result of the transfer in 1995 of securities from held to
maturity to available for sale discussed on page 55, securities
whose fair values at the time of transfer were less than carrying
values by approximately $0.4 billion are now carried at fair value.
The fair value of credit card securitizations was $0.3 billion
lower than their carrying value at December 31, 1995, compared
to December 31, 1994 when the fair value exceeded the carrying
value by $0.7 billion. This decrease is due to the effects of a lower
interest rate environment on the fixed-rate investor certificates.
60
SIGNIFICANT LIABILITIES AND RELATED INSTRUMENTS
1995 1994
- --------------------------------------------------------------------------------
CARRYING ESTIMATED Carrying Estimated
In Billions of Dollars at Year-End VALUE FAIR VALUE Value Fair Value
- --------------------------------------------------------------------------------
Non-Interest-Bearing Deposits $21.5 $21.5 $20.9 $20.9
Interest-Bearing Deposits 145.6 145.9 134.9 134.6
Related Derivatives (0.2) (0.4) (0.1) 0.1
Trading Account Liabilities 18.3 18.3 22.4 22.4
Other Financial Liabilities(1) 25.9 25.9 30.8 30.7
Related Derivatives -- -- -- (0.1)
Long-Term Debt 17.2 17.6 16.5 16.2
Related Derivatives (0.1) (0.5) (0.1) 0.3
Subordinated Capital Notes 1.3 1.3 1.4 1.4
- --------------------------------------------------------------------------------
(1) Includes federal funds purchased and securities sold under repurchase
agreements and acceptances outstanding, for which the carrying value is a
reasonable estimate of fair value; and commercial paper, other funds borrowed,
and financial instruments included in other liabilities on the balance sheet,
with carrying values of $7.7 billion and $8.5 billion at December 31, 1995 and
1994, respectively and estimated fair values of $7.7 billion and $8.4 billion,
respectively.
Under the applicable requirements, the estimated fair value
of deposits with no fixed maturity in the table above excludes the
premium values available in the market for such deposits, and
the estimated value is shown in the table as being equal to the
carrying value. The estimated fair value of interest-bearing
deposits reflects changes in market rates since the deposits
were taken.
For all derivative and foreign exchange contracts in the tables
above, the gross difference between the carrying amount and fair
value as of December 31, 1995 and 1994 was $2.0 billion and
$0.9 billion, respectively, for contracts whose fair value exceeds
carrying value, and $0.6 billion and $2.3 billion, respectively, for
contracts whose carrying value exceeds fair value.
2. PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less accumulated
depreciation and amortization. Generally, depreciation and
amortization are computed on the straight-line basis over the
estimated useful life of the asset or the lease term. Depreciation
and amortization expense was $636 million in 1995, $571 million
in 1994, and $568 million in 1993.
3. GOODWILL
Goodwill, which is included in other assets, represents the excess
of purchase price over the estimated fair value of net assets
acquired, accounted for under the purchase method of
accounting. At December 31, 1995 and 1994, goodwill amounted to
$267 million and $316 million, respectively. Goodwill is being
amortized, primarily using the straight-line method, over the
periods estimated to be benefited. The remaining period of
amortization, on a weighted-average basis, approximated 11 years
as of December 31, 1995.
4. PREFERRED STOCK
In Millions of Dollars at Year-End Rate 1995 1994
- --------------------------------------------------------------------------------
PERPETUAL PREFERRED STOCK
Second Series, 2,195,636 Shares Adjustable $220 $220
Third Series, 834,867 Shares Adjustable 83 83
Series 8A and 8B, 1,250,000 Shares Graduated 125 125
Series 9, 5,000,000 Shares 9.12% -- 125
Series 14, 700,000 Shares 9.08% 175 175
Series 16, 1,300,000 Shares 8.00% 325 325
Series 17, 1,400,000 Shares 7.50% 350 350
Series 18, 700,000 Shares Adjustable 175 175
Series 19, 400,000 Shares Adjustable 100 100
Series 20, 500,000 Shares 8.30% 125 125
Series 21, 600,000 Shares 8.50% 150 --
Series 22, 500,000 Shares 7.75% 125 --
Series 23, 250,000 Shares Fixed/Adjustable 125 --
- --------------------------------------------------------------------------------
2,078 1,803
- --------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCK
Series 12, 5,900 Shares 11.00% 590 590
Series 13, 4,029 Shares in 1995 and
6,600 Shares in 1994 10.75% 403 660
- --------------------------------------------------------------------------------
993 1,250
- --------------------------------------------------------------------------------
CONVERSION PREFERRED STOCK
Series 15, 6,408,334 Shares 8.25% -- 1,134
- --------------------------------------------------------------------------------
TOTAL $3,071 $4,187
- --------------------------------------------------------------------------------
During 1995, Citicorp issued Series 21, 22, and 23 preferred
stock, redeemed Series 9 for cash, redeemed its Conversion
Preferred Stock, Series 15 in exchange for 27,545,140 shares of
common stock, and converted $257 million of its Convertible
Preferred Stock, Series 13 into 14,086,904 shares of common
stock. In January 1996, Citicorp called for redemption its
remaining convertible preferred stock, which is expected to result
in conversion of Series 12 into 36,875,000 common shares and the
remaining Series 13 into 22,077,479 common shares in the first
quarter of 1996.
Total dividends declared on non-redeemable preferred stock
were $342 million in 1995, $356 million in 1994, and $309 million
in 1993.
Dividends are payable quarterly and, except for Series 16, 17,
20, and 21, are cumulative.
Dividends on the Second and Third Series, as well as on Series
18 and 19, are payable at rates determined quarterly by formulas
based on interest rates of certain U.S. Treasury obligations,
subject to certain minimum and maximum rates as specified in
the certificates of designation. The weighted-average dividend
rates on the Second and Third Series, as well as Series 18 and 19
were 6.0%, 7.0%, 6.1%, and 6.1%, respectively, for 1995.
61
Dividends on Series 8A were payable at 7.0% per annum
through August 15, 1995 and thereafter at the three-year treasury
rate plus an amount initially equal to 1.75% per annum and
increasing every three years by one-half of 1%, to a maximum of
3% per annum for all dividend periods ending after August 15,
2004. Series 8B dividends are payable at 8.25% per annum
through August 15, 1999 and thereafter at a rate equal to the five-
year treasury rate plus an amount initially equal to 1.50% per
annum, and increasing every five years by three-quarters of 1% to
a maximum of 3% per annum for all dividend periods ending after
August 15, 2004. For both Series 8A and 8B, the dividend rate for
any quarterly dividend period ending on or prior to August 15,
2004 cannot be less than 7% per annum or greater than 14% per
annum, and for quarterly dividend periods ending after August 15,
2004 cannot be less than 8% per annum or greater than 16%
per annum.
Dividends on Series 23 are payable at 5.86% per annum
through February 15, 2006 and thereafter at rates determined
quarterly by a formula based on certain interest rate indices, as
defined, subject to a minimum rate of 6% and a maximum rate of
12%. The rate of dividends on the Series 23 is subject to adjustment
based upon the applicable percentage of the dividends received
deduction.
Citicorp may, at its option, redeem the perpetual preferred
stock at stated values plus accrued dividends, as follows: Second
and Third Series, at any time; Series 8A and 8B, on any of the
dividend repricing dates through August 15, 2004, and from time
to time after August 15, 2004; Series 14, on or after March 15, 1997;
Series 16, on or after June 1, 1998; Series 17, on or after
September 1, 1998; Series 18, on or after May 31, 1999; Series 19, on
or after August 31, 1999; Series 20, on or after November 15, 1999;
Series 21, on or after February 15, 2000; Series 22, on or after May
15, 2000; and Series 23, on or after February 15, 2006. Under
various circumstances, Citicorp may redeem certain series of
preferred stock at times other than as described above.
Authorized preferred stock (issuable as either nonredeemable
or redeemable) was 50 million shares at December 31, 1995 and
1994. Total shares of nonredeemable preferred stock issued and
outstanding were 10,640,432 and 20,701,337 at December 31, 1995
and 1994, respectively. At December 31, 1995 and 1994, 80,000 and
170,000 shares, respectively, of redeemable preferred stock were
issued and outstanding, amounting to $8 million and $17 million,
respectively, and included in long-term debt in the balance sheet.
5. COMMON STOCK
At December 31, 1995 and 1994, authorized common stock was
800 million shares. Additionally, Citicorp has authorized, but not
issued, 20 million shares of Class B common stock with a par
value of $1.00 and one vote per share.
Certain of Citicorp's employee benefit plans permit options or
subscriptions to purchase, or elections to invest in, either
unrestricted common shares or book value shares of Citicorp.
Subsequent to December 31, 1987, no further options are granted,
subscription agreements entered into, or new investment
elections permitted for the purchase of book value shares.
Outstanding shares of common stock at December 31, 1995 and
1994 include 1.0 million and 1.1 million, respectively, of book value
shares issued in connection with certain employee benefit plans.
Under the terms of the plans, book value shares sold back to
Citicorp are settled in unrestricted common shares.
Citicorp's Dividend Reinvestment and Common Stock
Purchase Plan allows stockholders of record, without payment of
brokerage fees, commissions, or service charges, to reinvest all or
part of any Common Stock dividends in additional shares of
common stock and make optional cash purchases of such shares.
Shares of Citicorp common stock delivered under the Dividend
Reinvestment and Common Stock Purchase Plan may be sourced
from authorized but unissued shares, treasury shares, or
purchased in the open market.
At December 31, 1995, shares were reserved for issuance as
follows: on conversion of preferred stock, 59.0 million shares;
under the Savings Incentive Plan, 3.7 million market value
shares; under the 1983 Stock Option Plan (including options
which have been granted in tandem), a maximum of 2.1 million
shares, if issued at market value, and a maximum of 2.3 million
shares, if issued at book value; under the 1994 Stock Purchase
Plan, 22.9 million shares; under the Stock Incentive Plan, 55.2
million shares; under the Dividend Reinvestment and Common
Stock Purchase Plan, 10.8 million shares; under the Director's
Deferred Compensation Plan, 0.1 million shares; and under the
Executive Incentive Compensation Plan (under which treasury
shares have been reserved primarily in tandem), a maximum
of 0.7 million shares, if issued at market value, and a maximum
of 0.4 million shares, if issued at book value. Shares of Citicorp
common stock delivered under each of the Savings Incentive,
Stock Incentive, and Stock Purchase Plans are sourced from
authorized but unissued shares or treasury shares. Since January
1, 1995, shares of Citicorp common stock delivered under the
Savings Incentive Plan have been purchased in the open market
to fulfill plan share requirements.
During 1995, Citicorp entered into a series of forward purchase
agreements on its common stock. These agreements are settled
on a net basis in shares of Citicorp common stock, except that
certain of the agreements permit Citicorp to elect to settle in
cash. To the extent that the market price of Citicorp common
stock on a settlement date is higher (lower) than the forward
purchase price, the net differential is received (paid) by Citicorp.
As of December 31, 1995, agreements were in place covering
approximately $900 million of Citicorp common stock, of which
approximately $830 million (12.9 million shares) had forward
prices established averaging $64.80 per share. If the priced
portion of these agreements was settled based on the December
31, 1995 market price of Citicorp common stock ($67.25 per
share), Citicorp would be entitled to receive approximately 0.5
million shares. During 1995, a settlement resulted in Citicorp
paying $6 million (which was recorded as a reduction of surplus).
62
6. FEES AND COMMISSIONS
Trust, agency, and custodial fees included in fees and
commissions were $983 million in 1995, $946 million in 1994, and
$785 million in 1993.
7. EMPLOYEE BENEFITS
PENSION AND POSTRETIREMENT BENEFIT PLANS
Citicorp has several non-contributory defined benefit pension
plans covering substantially all U.S. employees. Retirement
benefits for the U.S. plans are based on years of credited service,
the highest average compensation (as defined), and the primary
social security benefit. While the qualified U.S. plans are
adequately funded, it is Citicorp's policy to fund these plans to
the extent contributions are tax deductible. Non-qualified U.S.
plans are not funded because contributions to these plans are not
tax deductible.
Citicorp has various defined benefit pension and termination
indemnity plans covering employees outside the United States.
The benefit formulas and funding strategies vary reflecting local
practices and legal requirements.
Citicorp offers postretirement health care and life insurance
benefits to all eligible U.S. retired employees. U.S. retirees share
in the cost of their health care benefits through copayments,
service-related contributions and salary-related deductibles.
Retiree life insurance benefits are non-contributory. Since 1994,
it has been Citicorp's policy to fund retiree health care and life
insurance benefits to the extent such contributions are tax
deductible. Prior to 1993, these benefits were funded solely from
the general assets of Citicorp.
Retiree health care and life insurance benefits are also
provided to certain employees outside the United States.
Effective January 1, 1995, Citicorp adopted SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other than
Pensions," for such benefits outside the United States. SFAS No.
106 requires employers to recognize the cost of certain
postretirement benefits during the periods employees render
service, with all such costs being recognized by the full eligibility
date. Citicorp had previously recognized these costs when paid.
SFAS No. 106 previously was adopted on January 1, 1993 for
Citicorp's U.S. postretirement benefit plans.
The following tables summarize the components of net benefit
expense recognized in the consolidated statement of income and
the funded status and amounts recognized in the consolidated
balance sheet for U.S. plans and significant plans outside the U.S.
NET BENEFIT EXPENSE
POSTRETIREMENT
PENSION PLANS BENEFIT PLANS(1)
------------------------------------------------------------------------------------
U.S. PLANS PLANS OUTSIDE U.S. U.S. PLANS
-----------------------------------------------------------------------------------
In Millions of Dollars 1995 1994 1993 1995 1994 1993 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
Benefits Earned During the Year $98 $108 $92 $56 $47 $40 $8 9 8
Interest Cost on Benefit Obligation 165 146 129 68 54 47 32 30 29
Actual Return on Plan Assets (498) 15 (239) (66) (8) (85) (13) -- --
Net Deferral and Amortization 301 (200) 51 19 (33) 56 8 (4) --
Amortization of Transition Obligation (Asset)(2)(3) (20) (20) (20) 7 6 6 20 21 20
--------------------------------------------------------------------------------
NET BENEFIT EXPENSE $46 $49 $13 $84 $66 $64 $55 $56 $57
- -----------------------------------------------------------------------------------------------------------------------------------
(1) For plans outside the U.S., net postretirement benefit expense totaled $6
million in 1995.
(2) U.S. pension transition asset is being amortized over a 14-year period with
4 years remaining at December 31, 1995.
(3) U.S. postretirement transition obligation is being amortized over a period
up to 20 years with 17 years remaining at December 31, 1995.
PREPAID BENEFIT COST (BENEFIT LIABILITY)
PENSION PLANS POSTRETIREMENT
- ---------------------------------------------------------------------------------------------------------------- BENEFIT PLANS(1)
QUALIFIED NON-QUALIFIED FUNDED PLANS OTHER PLANS ----------------
U.S. PLANS U.S. PLANS OUTSIDE U.S. OUTSIDE U.S. U.S. PLANS
-------------------------------------------------------------------------------
In Millions of Dollars at Year-End 1995 1994 1995 1994 1995 1994 1995 1994 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
Plan Assets at Fair Value(2) $2,673 $2,235 $ -- $ -- $656 $548 $ -- $-- $70 $57
Benefit Obligation 2,438 1,702 234 135 710 542 313 264 458 389
----------------------------------------------------------------------------------
Plan Assets in Excess of (Less Than) Benefit
Obligation 235 533 (234) (135) (54) 6 (313) (264) (388) (332)
Unrecognized Prior Service Cost 80 (3) 35 14 14 13 -- -- (2) (2)
Unrecognized Net Actuarial Loss (Gain) 306 129 62 8 44 (26) 7 2 59 12
Unamortized Transition Obligation (Asset) (79) (100) 7 8 50 51 35 35 297 317
Adjustment to Recognize Minimum Liability -- -- (34) (4) -- -- (14) (6) -- --
----------------------------------------------------------------------------------
PREPAID BENEFIT COST (BENEFIT LIABILITY) $542 $559 $(164) $(109) $54 $44 $(285) $(233) $(34) $(5)
- -----------------------------------------------------------------------------------------------------------------------------------
(1) For plans outside the U.S., the accumulated postretirement benefit
obligation was $31 million and the postretirement benefit liability was $2
million at December 31, 1995.
(2) For U.S. plans, plan assets are primarily listed stocks, commingled funds,
and fixed-income securities.
63
The portion of the projected benefit obligation for pension plans representing
the accumulated and vested benefit obligations are shown below.
QUALIFIED NON-QUALIFIED FUNDED PLANS OTHER PLANS
U.S. PLANS U.S. PLANS OUTSIDE U.S. OUTSIDE U.S.
------------------- ------------------- ------------------- -------------------
In Millions of Dollars at Year-End 1995 1994 1995 1994 1995 1994 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
Accumulated $1,943 $1,317 $149 $83 $531 $396 $238 $198
Vested 1,695 1,116 129 78 448 344 208 175
- ----------------------------------------------------------------------------------------------------------------------------------
Details of the accumulated postretirement benefit obligation
for U.S. plans are shown below.
In Millions of Dollars at Year-End 1995 1994
- --------------------------------------------------------------------------------
Retirees $310 $254
Employees Eligible for Full Benefits 30 56
Other Employees 118 79
- --------------------------------------------------------------------------------
$458 $389
- --------------------------------------------------------------------------------
The expected long-term rates of return on assets used in
determining pension and postretirement expense are shown
below.
1995 1994 1993
- ------------------------------------------------------------------------------------
Rate of Return on Assets
U.S. Plans 8.75% 8.75% 9.5%
Plans Outside the U.S.--
Range(1) 6.0% to 13.0% 6.0% to 12.0% 6.0% to 10.0%
- ------------------------------------------------------------------------------------
(1) Excluding highly inflationary countries.
The principal assumptions used in determining pension and
postretirement benefit obligations are shown below.
At Year-End 1995 1994
- --------------------------------------------------------------------------------
Weighted Average Discount Rate
U.S. Plans 7.25% 8.5%
Plans Outside the U.S.--Range(1) 4.5% to 12.0% 5.0% to 11.0%
Future Compensation Increase Rate
U.S. Plans 5.0% 5.5%
Plans Outside the U.S.--Range(1) 2.0% to 10.0% 4.0% to 9.0%
Weighted Average Health Care
Cost Increase Rate--U.S. Plans(2)
Following Year:
For Retirees Younger Than Age 65 12% 12%
For Retirees Age 65 and Older 9% 9%
Decreasing to the Year 2001 to:
For Retirees Younger Than Age 65 6% 6%
For Retirees Age 65 and Older 5% 5%
- --------------------------------------------------------------------------------
(1) Excluding highly inflationary countries.
(2) Separate health care cost trend rates were used for those age 65 and older
to reflect the cost controls imposed by Medicare.
As an indicator of sensitivity, increasing the assumed health
care cost trend rate by 1% in each year would have increased the
accumulated postretirement benefit obligation as of December 31,
1995 by $21 million and the aggregate of the benefits earned and
interest components of 1995 net postretirement benefit expense
by $2 million.
POSTEMPLOYMENT DISABILITY AND SIMILAR BENEFIT PLANS
Effective January 1, 1994, Citicorp adopted SFAS No. 112, under
which Citicorp recognizes the estimated cost of disability and
similar benefits provided to former or inactive employees when
an event occurs indicating payment of benefits is probable. These
costs were previously recognized as paid or funded. The adoption
of the new standard as of January 1, 1994 resulted in a pretax
charge of $95 million ($56 million after tax), which is reported in
the consolidated statement of income as the cumulative effect of
an accounting change.
64
SAVINGS INCENTIVE PLAN
Under the Savings Incentive Plan, eligible employees receive
awards equal to 3% of their covered salary. Employees have the
option of receiving their award in cash or deferring some or all of
it in various investment funds. Citicorp grants an additional
award equal to the amount elected to be deferred by the
employee. Several investment options are available, including
Citicorp common stock. Shares of Citicorp common stock
delivered under the Savings Incentive Plan may be sourced from
authorized but unissued shares, treasury shares, or purchased in
the open market. The expense associated with the plan
amounted to $92 million in 1995, $89 million in 1994, and $86
million in 1993.
STOCK INCENTIVE PLAN
The 1988 Stock Incentive Plan provides for the issuance of
options to purchase shares of Citicorp common stock or shares of
Class B common stock at prices not less than 50% of the market
value at the date of grant, incentive stock options, stock
appreciation rights, restricted stock, or performance unit awards,
any of which may be granted singly, in combination, or in tandem.
Shares of Citicorp common stock delivered under the 1988 Plan
may be sourced from authorized but unissued shares or treasury
shares.
Shares of restricted stock have been awarded to key executives
contingent upon their continued employment over periods of up
to 11 years as summarized in the following table:
Dollars in Millions 1995 1994 1993
- --------------------------------------------------------------------------------
Shares Granted 125,000 225,000 45,000
Aggregate Market Value
at Award Date $6 $9 $1
Expense Recognized for All
Awards 4 5 4
- --------------------------------------------------------------------------------
The value of the restricted shares at the date of grant is
recorded as a reduction of surplus and amortized to expense over
the restriction period.
Under the Stock Incentive Plan and two predecessor plans,
options have been granted to key employees for terms up to 10
years to purchase common stock at not less than the fair market
value of the shares at the date of grant. Generally, 50% of the
options granted prior to 1995 are exercisable beginning on the
first anniversary and 50% beginning on the second anniversary of
the date of grant, and, generally, 50% of the options granted in
1995 are exercisable beginning on the third anniversary and 50%
beginning on the fourth anniversary of the date of grant.
During 1995 Citicorp granted to a group of key employees
five-year performance-based stock options to purchase 4,977,500
shares of Citicorp common stock at prices ranging from $64.875
to $70.125, reflecting the market price of the stock on the
respective grant dates. One-half of these options will vest at such
time as Citicorp's common stock price has reached $100 per share
and the balance will vest upon such price reaching $115 per share,
provided in each case that the price remains at or above the
indicated price level for twenty of thirty consecutive trading days.
During 1995, options covering 75,000 of these shares were
cancelled. Also during 1995, a total of 6,597,500 of the
performance-based options granted in 1993 and 1994 vested as
Citicorp's stock price attained the vesting targets of $50, $55 and
$60. The 1995 grants expire on various dates from August through
December, 2000, and the 1993 and 1994 grants expire on July 20,
1998. Citicorp measures the cost of performance-based options as
the difference between the exercise price and market price
required for vesting, and recognizes this expense over the period
to the estimated vesting dates. The recognition of these costs
totaled $89 million in 1995, $52 million in 1994, and $23 million in
1993. All of the expense related to the vested 1993 and 1994 grants
has been recognized.
CHANGES IN OPTIONS AND SHARES UNDER OPTION(1)
1995 1994 1993
- --------------------------------------------------------------------------------
Granted 7,409,750 8,003,970 14,554,800
Option Price per Share $41 to $73 $39 to $46 $24 to $36
Exercised 9,930,333 6,681,712 6,140,953
Option Price per Share $14 to $44 $14 to $36 $14 to $32
Expired or Terminated 990,817 1,038,469 680,510
Option Price per Share $14 to $65 $14 to $41 $14 to $32
- --------------------------------------------------------------------------------
At Year-End:
Shares Under Option 37,890,266 42,025,687
Option Price per Share $9 to $73 $9 to $46
Exercisable 28,677,293 23,022,142
Granted, Not Yet Exercisable 9,212,973 19,003,545
Available for Grant(2) 18,124,387 24,689,751
- --------------------------------------------------------------------------------
(1) Tandem options, granted prior to 1988, giving the employee the alternative
to purchase either unrestricted common stock at not less than the market
value at the date of grant or a proportionate number of book value shares at
not less than the book value per share at the date of grant, are included on
the basis that represents the economically preferable alternative to the
employee. This basis may change as the market value and book value of the
common stock change. Shares Under Option at December 31, 1995 has been
reduced by 624,021 shares as a result of such changes.
(2) Shares authorized but not issued that are available for the granting of
stock options or other forms of stock-related awards. Additional shares may
become available for grant to the extent that presently outstanding options
under a predecessor plan terminate or expire unexercised.
STOCK PURCHASE PLAN
The 1994 Stock Purchase Plan provides for two types of offerings:
fixed-price offerings and periodic purchase offerings. Under fixed-
price offerings all eligible employees are permitted to enter into
subscription agreements to purchase shares at the fair market
value on the date of the agreements. Such shares can be
purchased from time to time through the expiration date. There
have been no periodic purchase offerings under the Plan. Shares
of Citicorp common stock delivered under the Stock Purchase
Plan may be sourced from authorized but unissued shares,
treasury shares or purchased in the open market.
Following is the share activity under the 1994 fixed-price
offering for the purchase of shares at $39.8125 per share, which
expires September 27, 1996. In addition, under a previous fixed-
price offering at $10.625 which has expired, 2,916 and 11,412,985
shares were purchased in 1994 and 1993, respectively.
1995 1994
- --------------------------------------------------------------------------------
Agreements Entered Into -- 9,177,282
Shares Purchased 2,766,823 211,324
Cancelled or Terminated 388,103 236,026
Outstanding Agreements at
Year-End 5,575,006 8,729,932
- --------------------------------------------------------------------------------
65
ANNUAL INCENTIVE AND PERFORMANCE PLANS
The purpose of the 1994 Citicorp Annual Incentive Plan is
to attract, retain, and motivate executives to promote the
profitability and growth of Citicorp and to permit a federal
income tax deduction for annual awards granted to covered
employees. Currently covered employees include the Chairman
and next four most highly paid executives. Under the Plan,
awards can be granted to covered employees in cash, stock or
any other form of consideration in either one installment or on
a deferred basis. Shares of Citicorp common stock delivered
under the Plan may be sourced from authorized but unissued
shares or treasury shares. The aggregate awards were approx-
imately $6 million for both 1995 and 1994. Prior to 1994, awards to
covered employees were granted under the Annual Performance
Plan.
Under the Citicorp Annual Performance Plan, cash awards may
be granted to key employees who have a significant impact on the
success of Citicorp. Awards may be paid either in one installment
or on a deferred basis. The aggregate awards were approximately
$9 million for 1995, $10 million for 1994, and $15 million for 1993.
Under the Executive Incentive Compensation Plan, awards in
cash or stock may be made to key employees, payable at the
election of the participants, in one installment or on a deferred
basis. Shares of Citicorp common stock delivered under the Plan
may be sourced from authorized but unissued shares or treasury
shares. No awards have been made since 1989.
DEFERRED COMPENSATION PLAN
Under the Deferred Compensation Plan, adopted in 1995,
participants must defer 25% of their variable compensation
awards into mandatory deferral accounts whose return equals
the return on Citicorp common stock. Beginning in 1996,
participants will be allowed to defer from 10% to 85% of the
remainder of their variable compensation awards into voluntary
deferral accounts, which may be allocated among a variety of
investments, including an account whose return equals the
return on Citicorp common stock. The amounts credited to
the mandatory deferral accounts generally are payable to the
participant in cash five years after they are credited. However,
participants may elect to postpone cash distribution of the
amounts in the mandatory deferral account by having such
amount credited to a voluntary deferral account. Accordingly,
25% of the aggregate awards for 1995 granted under the Citicorp
Annual Incentive and Annual Performance Plans, as well as 25%
of the aggregate variable compensation awards for 1995 granted
to certain other eligible executives, will be deferred in mandatory
deferral accounts.
8. INCOME TAXES
In Millions of Dollars 1995 1994 1993
- --------------------------------------------------------------------------------
Provision for Income Taxes(1) $2,121 $1,189 $941
Income Tax Expense (Benefit)
Reported in Stockholders' Equity
related to:
Foreign Currency Translation (24) (15) (13)
Securities Available for Sale (76) 136 --
Employee Stock Plans (51) (41) --
- --------------------------------------------------------------------------------
1,970 1,269 928
Tax Benefit Attributable to Cumulative
Effects of Accounting Changes:
Postemployment Benefits -- (39) --
Accounting for Income Taxes(2) -- -- (300)
- --------------------------------------------------------------------------------
TOTAL INCOME TAXES $1,970 $1,230 $628
- --------------------------------------------------------------------------------
(1) Includes tax effect of securities transactions amounting to a provision of
$46 million in 1995, $70 million in 1994, and $33 million in 1993.
(2) Adoption of SFAS No. 109 as of January 1, 1993.
COMPONENTS OF TOTAL INCOME TAXES
In Millions of Dollars 1995 1994 1993
- --------------------------------------------------------------------------------
U.S.
Current
U.S. Federal $ 819 $ 367 $ 478
State and Local 185 145 206
- --------------------------------------------------------------------------------
1,004 512 684
- --------------------------------------------------------------------------------
Deferred
U.S. Federal (45) (298) (595)
State and Local (25) (1) (17)
- --------------------------------------------------------------------------------
(70) (299) (612)
- --------------------------------------------------------------------------------
Total U.S. 934 213 72
Foreign (substantially current) 1,036 1,056 856
- --------------------------------------------------------------------------------
1,970 1,269 928
Tax Benefit Attributable to
Cumulative Effects of Accounting
Changes:
Postemployment Benefits -- (39) --
Accounting for Income Taxes -- -- (300)
- --------------------------------------------------------------------------------
TOTAL INCOME TAXES $1,970 $1,230 $628
- --------------------------------------------------------------------------------
As a U.S. corporation, Citicorp is subject to U.S. taxation
currently on all of its foreign pre-tax earnings if earned by a
foreign branch or when earnings are effectively repatriated if
earned by a foreign subsidiary or affiliate. In addition, certain
of Citicorp's U.S. income is subject to foreign income tax where
the payor of such income is domiciled outside the United States.
Foreign pre-tax earnings approximated $3.6 billion in 1995,
$3.6 billion in 1994 and $3.0 billion in 1993.
The tax effects of significant temporary differences are
presented on page 67. The net deferred tax asset is included
in Citicorp's consolidated balance sheet in other assets and
represents the sum of the temporary difference components
of those tax jurisdictions with net deductible amounts or tax
carryforwards in future years. The net deferred tax liability is
included in accrued taxes and other expenses and represents
the sum of the temporary difference components of those tax
jurisdictions with net taxable amounts in future years.
66
COMPONENTS OF DEFERRED TAX BALANCES
In Millions of Dollars at Year-End 1995 1994
- --------------------------------------------------------------------------------
NET DEFERRED TAX ASSET
Tax Effects of Deductible Temporary
Differences and Carryforwards:
Credit Loss Deduction $2,056 $1,996
Interest Related Items 495 476
Unremitted Foreign Income 856 946
Foreign and State Loss Carryforwards 353 422
- --------------------------------------------------------------------------------
3,760 3,840
- --------------------------------------------------------------------------------
Tax Effects of Taxable Temporary
Differences:
Lease Financing 702 680
Derivative Products 376 429
Venture Capital 214 322
Mortgage Pass-Through Sales 95 125
Other(1) 311 93
- --------------------------------------------------------------------------------
1,698 1,649
- --------------------------------------------------------------------------------
Net Potential Deferred Tax Assets 2,062 2,191
Valuation Allowance (468) (511)
- --------------------------------------------------------------------------------
NET DEFERRED TAX ASSET $1,594 $1,680
- --------------------------------------------------------------------------------
NET DEFERRED TAX LIABILITY(2) $ 546 $ 724
- --------------------------------------------------------------------------------
(1) Includes deductible temporary differences related to restructuring charges,
depreciation, prepaid items, and other less significant items.
(2) Includes credit losses ($198 million in 1995 and $347 million in 1994),
leasing ($128 million in 1995 and $66 million in 1994), and other less
significant items.
The 1995 net change in the valuation allowance related to
deferred tax assets was a decrease of $43 million primarily
relating to a favorable reassessment of future earnings
expectations in certain state and local jurisdictions. These
amounts are included in the $70 million U.S. deferred benefit
component of total income taxes. The remaining valuation
allowance of $468 million at December 31, 1995 is primarily
reserved for specific U.S. federal, state and local, and foreign tax
carryforwards or tax law restrictions on benefit recognition in
these jurisdictions. Management believes that the realization of
the recognized net deferred tax asset of $1,594 million is more
likely than not, based on existing carryback ability, available tax
planning strategies, and expectations as to future taxable income.
The following table reconciles the statutory U.S. federal tax
rate to the effective tax rate on income before cumulative effects
of accounting changes.
RECONCILIATION OF STATUTORY TAX TO EFFECTIVE RATE
1995 1994 1993
- --------------------------------------------------------------------------------
Statutory U.S. Federal Tax Rate 35.0% 35.0% 35.0%
Increase (Reduction) in Taxes from:
State and Local Income Taxes, Net
of U.S. Federal Income Tax
Benefit 2.9 2.5 4.0
Valuation Allowance Change
Related to Current Year -- (10.4) (2.8)
Taxes on Earnings Outside
the U.S. 1.0 1.9 4.1
Other (0.2) -- (0.4)
- --------------------------------------------------------------------------------
38.7 29.0 39.9
- --------------------------------------------------------------------------------
Valuation Allowance Change Related
to Future Years (0.7) (3.2) (7.0)
- --------------------------------------------------------------------------------
EFFECTIVE TAX RATE 38.0% 25.8% 32.9%
- --------------------------------------------------------------------------------
67
9. EARNINGS PER SHARE(1)
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
ON COMMON On Common On Common
AND COMMON ASSUMING and Common Assuming and Common Assuming
EQUIVALENT FULL Equivalent Full Equivalent Full
In Millions Except Per Share Amounts SHARES(2) DILUTION Shares Dilution Shares Dilution
- ------------------------------------------------------------------------------------------------------------------------------------
EARNINGS
Income Applicable to Common Stock
Before Cumulative Effects of
Accounting Changes(3) $3,126 $3,126 $3,066 $3,066 $1,600 $1,600
Dividends on Conversion Preferred
Stock, Series 15 62 62 93 93 93 93
Dividends on Convertible Preferred Stock -- 127 -- 136 -- 136
-----------------------------------------------------------------------------------------
Income Applicable to Common Stock
Before Cumulative Effects of Accounting
Changes, Adjusted 3,188 3,315 3,159 3,295 1,693 1,829
Cumulative Effects of Accounting
Changes -- -- (56) (56) 300 300
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL $3,188 $3,315 $3,103 $3,239 $1,993 $2,129
- ------------------------------------------------------------------------------------------------------------------------------------
SHARES
Weighted-Average Common Shares
Outstanding(4)(5) 411.5 411.5 391.2 391.2 375.8 375.8
Conversion Preferred Stock, Series 15 16.8 16.8 39.9 39.9 55.8 55.8
Other Common Equivalent Shares(6) 13.8 15.1 10.6 10.9 11.4 13.7
Convertible Preferred Stock -- 68.1 -- 73.1 -- 73.1
Convertible Notes -- -- -- -- -- 0.1
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 442.1 511.5 441.7 515.1 443.0 518.5
- ------------------------------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE
Income Before Cumulative Effects of
Accounting Changes $7.21 $6.48 $7.15 $6.40 $3.82 $3.53
Cumulative Effects of Accounting Changes -- -- (0.12) (0.11) 0.68 0.58
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCOME $7.21 $6.48 $7.03 $6.29 $4.50 $4.11
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Refer to statement of accounting policies for a description of the
calculations.
(2) Assuming the Convertible Preferred Stock Series 12 and 13 had been converted
as of January 1, 1995, earnings per share on common and common equivalent
shares would have approximated earnings per share assuming full dilution for
1995.
(3) For purposes of calculating earnings per share, income applicable to common
stock is reduced for dividends on preferred stock.
(4) Includes book value shares of 1.0 million in 1995 and 1.1 million in 1994
and 1993.
(5) Total shares in 1995 reflected 5.8 million average shares repurchased under
the stock repurchase program (refer to page 38 for additional discussion).
(6) Includes the dilutive effect of stock options and stock purchase agreements
computed using the treasury stock method and shares issuable under deferred
stock awards. Number of shares also includes less than 1 million in 1995 and
approximately 2 million in 1994 and 1993 for book value shares issuable
under stock option and Executive Incentive Compensation plans; use of the
two-class method had no effect on the calculation for any year.
10. BUSINESS AND GEOGRAPHIC DISTRIBUTION OF REVENUE,
INCOME (LOSS), AND AVERAGE ASSETS
Citicorp attributes total revenue, income (loss) before taxes and
cumulative effects of accounting changes, net income (loss), and
average total assets to operations based on the domicile of the
customer. U.S. possessions are included in their respective
geographic areas.
Because of the integration of global activities, it is not
practicable to make a precise separation, and various
assumptions must be made in arriving at allocations and
adjustments used in presenting this data.
The principal allocations and adjustments are: (1) charges for
all funds employed that are not generated locally, calculated on
the amount and nature of the assets and based on a marginal cost
of funds concept; Citicorp stockholders' equity is treated as
generated and earned based on each area's percentage of total
assets; (2) allocation of expenses incurred by one area on behalf
of another, including administrative costs, based on methods
intended to reflect services provided; (3) allocation of tax
expenses and benefits; (4) allocation of the difference between
actual net credit losses and the provision for credit losses; and
(5) allocation of other corporate items, including corporate
staff costs.
The entire allowance for credit losses is available to absorb all
probable credit losses inherent in the portfolio. For the purpose
of calculating the accompanying geographic data, the amounts
attributable to operations outside the U.S. are based upon year-
end allowance amounts of $1,809 million for 1995, $1,800 million
for 1994, and $1,299 million for 1993, and credit loss provision
amounts of $737 million for 1995, $561 million for 1994, and $859
million for 1993.
68
BUSINESS AND GEOGRAPHIC DISTRIBUTION OF REVENUE, INCOME (LOSS), AND
AVERAGE ASSETS
INCOME (LOSS) BEFORE TAXES
AND CUMULATIVE EFFECTS
TOTAL REVENUE(1) OF ACCOUNTING CHANGES NET INCOME (LOSS)
$ MILLIONS $ MILLIONS $ MILLIONS
------------------------------- ----------------------------- -----------------------------------
1995 1994(3) 1993(3) 1995 1994(3) 1993(3) 1995 1994(3) 1993(3)
- -----------------------------------------------------------------------------------------------------------------------------------
BUSINESS DISTRIBUTION
Consumer $11,343 $10,394 $9,498 $2,899 $2,601 $1,587 $1,981 $1,778 $1,161
Commercial Banking 6,240 5,502 6,015 2,173 2,069 2,258 1,607 1,394 1,602
North America Commercial
Real Estate 150 81 (22) -- (493) (1,019) (9) (299) (636)
Cross-Border Refinancing
Portfolio 227 197 108 228 247 87 201 222 84
Corporate Items 718 574 476 285 187 (53) (316) 327 (292)
--------------------------------------------------------------------------------------------------
18,678 16,748 16,075 5,585 4,611 2,860 3,464 3,422 1,919
Cumulative Effects of
Accounting Changes(4) -- -- -- -- -- -- -- (56) 300
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL $18,678 $16,748 $16,075 $5,585 $4,611 $2,860 $3,464 $3,366 $2,219
- -----------------------------------------------------------------------------------------------------------------------------------
GEOGRAPHIC DISTRIBUTION
United States $ 8,841 $ 8,488 $ 8,100 $2,491(5) $1,956(5) $ 405(5) $1,459 $1,710 $ 659
Western Europe 3,547 2,795 3,120 590 452 776 354 258 529
Other(6) 549 450 432 18 (91) (175) 14 (51) (107)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Developed Markets 12,937 11,733 11,652 3,099 2,317 1,006 1,827 1,917 1,081
- -----------------------------------------------------------------------------------------------------------------------------------
Latin America(7) 2,477 2,162 1,913 941 970 819 666 672 519
Asia/Pacific 2,669 2,306 2,002 1,233 979 711 781 582 471
Other(8) 595 547 508 312 345 324 190 195 148
- -----------------------------------------------------------------------------------------------------------------------------------
Total Emerging Markets 5,741 5,015 4,423 2,486 2,294 1,854 1,637 1,449 1,138
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL $18,678 $16,748 $16,075 $5,585 $4,611 $2,860 $3,464 $3,366 $2,219
- -----------------------------------------------------------------------------------------------------------------------------------
AVERAGE ASSETS(2)
$ BILLIONS
---------------------------
1995 1994(2) 1993(3)
- -----------------------------------------------------------
BUSINESS DISTRIBUTION
Consumer $120 $106 $100
Commercial Banking 136 139 109
North America Commercial
Real Estate 5 8 12
Cross-Border Refinancing
Portfolio 3 3 3
Corporate Items 5 5 4
---------------------------
269 261 228
Cumulative Effects of
Accounting Changes(4) -- -- --
- -----------------------------------------------------------
TOTAL $269 $261 $228
- -----------------------------------------------------------
GEOGRAPHIC DISTRIBUTION
United States $114 $119 $111
Western Europe 56 53 42
Other(6) 15 14 13
- -----------------------------------------------------------
Total Developed Markets 185 186 166
- -----------------------------------------------------------
Latin America(7) 30 27 22
Asia/Pacific 45 41 34
Other(8) 9 7 6
- -----------------------------------------------------------
Total Emerging Markets 84 75 62
- -----------------------------------------------------------
TOTAL $269 $261 $228
- -----------------------------------------------------------
(1) Includes net interest revenue and fees, commissions and other revenue.
(2) 1995 and 1994 reflects the effect of adopting FASB Interpretation No. 39, as
of January 1, 1994.
(3) Reclassified to conform to the 1995 presentation.
(4) Represents cumulative effects of adopting SFAS No. 112 as of January 1, 1994
and SFAS No. 109 as of January 1, 1993.
(5) Includes approximately $58 million in 1995, $41 million in 1994, and $22
million in 1993 of tax-exempt income, reducing the federal income tax
provision.
(6) Primarily Japan and Canada.
(7) Primarily Mexico, the Caribbean, Central and South America.
(8) Primarily Central and Eastern Europe, Middle East and Africa.
11. COMMITMENTS AND CONTINGENT LIABILITIES
Citicorp and its subsidiaries are obligated under a number of non-
cancelable leases for premises and equipment. Minimum rental
commitments on non-cancelable leases were in the aggregate
$2.3 billion, and for each of the five years subsequent to
December 31, 1995, were $393 million (1996), $333 million (1997),
$301 million (1998), $263 million (1999), and $215 million (2000).
The minimum rental commitments do not include minimum
sublease rentals under non-cancelable subleases of $168 million.
Most of the leases have renewal or purchase options and
escalation clauses. Rental expense was $547 million in 1995,
excluding $74 million of sublease rental income, $548 million in
1994, excluding $68 million of sublease rental income, and $550
million in 1993, excluding $60 million of sublease rental income.
At December 31, 1995, certain investment securities, trading
account assets, and other assets with a carrying value of $11.7
billion were pledged as collateral for borrowings, to secure public
and trust deposits, and for other purposes.
Various legal proceedings are pending against Citicorp and its
subsidiaries. Citicorp management considers that the aggregate
liability, if any, resulting from these proceedings will not be
material to Citicorp's financial position or results of operations.
12. FUTURE IMPACT OF RECENTLY ISSUED ACCOUNTING
STANDARDS
In March 1995, the FASB issued SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of," which is effective beginning in 1996. SFAS No. 121
does not apply to financial instruments, long-term customer
relationships of a financial institution (for example, core deposit
and credit cardholder intangibles), mortgage and other servicing
rights, deferred policy acquisition costs, or deferred tax assets, all
of which are covered by existing accounting standards. For assets
within its scope, which include premises and equipment, other
real estate owned, certain identifiable intangibles, and goodwill
related to those assets, the new standard is similar to Citicorp's
existing accounting policies. As a result, the new standard is not
expected to have a significant impact on Citicorp.
In October 1995, the FASB issued SFAS No. 123, "Accounting
for Stock-Based Compensation", which is effective beginning in
1996. SFAS No. 123 allows companies either to continue to account
for stock-based employee compensation plans under existing
accounting standards or to adopt a fair-value-based method of
accounting as defined in the new standard. Citicorp will continue
to follow the existing accounting standards for these plans.
69
13. STOCKHOLDER'S EQUITY OF CITIBANK, N.A.
Authorized capital stock of Citibank was 40 million shares at
December 31, 1995 and 1994.
CHANGES IN STOCKHOLDER'S EQUITY
In Millions of Dollars 1995 1994 1993
- ---------------------------------------------------------------------------
Balance at Beginning of Year $14,140 $11,148 $ 9,047
ADDITIONS
Net Income 2,332 1,962 1,564
Contributions from Parent Company -- 651 602
Net Unrealized Gains Upon Adoption of
SFAS No. 115 -- 320 --
Change in Net Unrealized Gains on
Securities Available for Sale 97 (100) --
Other Net Additions 117 61 40
- ---------------------------------------------------------------------------
2,546 2,894 2,206
- ---------------------------------------------------------------------------
DEDUCTIONS
Dividends 1,500 -- --
Foreign Currency Translation (20) (85) 110
Effect of Transfer from Securities Held
to Maturity to Securities Available
for Sale 262 -- --
Net Write-off (Amortization) of
Intangibles Associated with
Acquisition and Disposition of
Subsidiaries and Affiliates (22) (13) (5)
- ---------------------------------------------------------------------------
1,720 (98) 105
- ---------------------------------------------------------------------------
BALANCE AT END OF YEAR $14,966 $14,140 $11,148
- ---------------------------------------------------------------------------
The contributions from the Parent Company were primarily in
the form of cash in 1994 and 1993.
Citibank charges retained earnings with the amount of
goodwill associated with investments by Citibank in subsidiaries
and affiliates to the extent that the investment exceeded the fair
market value of identifiable net assets at the time of acquisition.
Such charges are not reflected in the Citicorp consolidated
financial statements, and the related amounts, net of
amortization, aggregating $85 million, $104 million, and $110
million, at December 31, 1995, 1994, and 1993, respectively, are
included in other assets in the Citicorp consolidated balance
sheet in accordance with generally accepted accounting
principles. Citicorp's equity investment in Citibank amounted to
$15,051 million, $14,244 million, and $11,258 million at December
31, 1995, 1994, and 1993, respectively.
14. CITICORP (PARENT COMPANY ONLY)
The Parent Company is a legal entity separate and distinct from
Citibank, N.A. and its other subsidiaries and affiliates. There are
various legal limitations on the extent to which Citicorp's banking
subsidiaries may extend credit, pay dividends or otherwise supply
funds to Citicorp. The approval of the Office of the Comptroller of
the Currency is required if total dividends declared by a national
bank in any calendar year exceed net profits (as defined) for that
year combined with its retained net profits for the preceding two
years. In addition, dividends for such a bank may not be paid in
excess of the bank's undivided profits. State-chartered bank
subsidiaries are subject to dividend limitations imposed by
applicable state law.
Citicorp's national and state-chartered bank subsidiaries can
declare dividends to their respective parent companies in 1996,
without regulatory approval, of approximately $3.9 billion,
adjusted by the effect of their net income (loss) for 1996 up to the
date of any such dividend declaration. 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 its bank subsidiaries can distribute
dividends to Citicorp of approximately $3.5 billion of the available
$3.9 billion, adjusted by the effect of their net income (loss) up to
the date of any such dividend declaration.
Citicorp also receives dividends from its non-bank subsidiaries.
These nonbank subsidiaries are generally not subject to regula
tory restrictions on their payment of dividends except that the
approval of the Office of Thrift Supervision ("OTS") may be required
if total dividends declared by a savings association in any calendar
year exceed amounts specified by that agency's regulations.
70
Condensed Statement of Income
Citicorp (Parent Company Only)
In Millions of Dollars 1995 1994 1993
- ----------------------------------------------------------------------
REVENUE
Dividends from Subsidiary Banks $1,600 $100 $120
Dividends from Subsidiaries
Other Than Banks 730 900 586
Interest from Subsidiaries 787 579 491
Other Revenue/1/ 72 36 10
----- ----- -----
3,189 1,615 1,207
----- ----- -----
EXPENSE
Interest on Other Borrowed Funds 132 102 80
Interest and Fees Paid to Subsidiaries 137 111 173
Interest on Long-Term Debt and
Subordinated Capital Notes/2/ 947 730 724
Other Expense 14 21 39
----- ----- -----
1,230 964 1,016
----- ----- -----
Income Before Taxes, Cumulative
Effect Of Accounting Change
And Equity in Undistributed
Income of Subsidiaries 1,959 651 191
Income Tax Benefit--Current 102 132 164
Cumulative Effect of
Accounting Change -- -- (20)
EQUITY IN UNDISTRIBUTED INCOME
OF SUBSIDIARIES, BEFORE CUMULATIVE
EFFECTS OF ACCOUNTING CHANGES 1,403 2,639 1,564
----- ----- -----
Income Before Cumulative
Effects of Accounting Changes
of Subsidiaries 3,464 3,422 1,899
Equity in Cumulative Effects of
Accounting Changes of Subsidiaries -- (56) 320
Net Income $3,464 $3,366 $2,219
===== ===== =====
(1) Includes net securities gains (losses) of $1 million, $2 million, and $(9)
million in 1995, 1994, and 1993, respectively.
(2) Includes interest on long-term debt of $829 million, $643 million, and $623
million in 1995, 1994, and 1993, respectively.
CONDENSED BALANCE SHEET
Citicorp (Parent Company Only)
In Millions of Dollars DECEMBER 31, 1995 December 31, 1994
- ------------------------------------------------------------------------------
ASSETS
Deposits with Subsidiary Banks,
Principally Interest-Bearing $2,424 $2,040
Securities--Available for Sale 1,207 759
Investments in and Advances to:
Citibank, N.A. and Other
Subsidiary Banks 23,461 21,074
Subsidiaries Other Than Banks 8,386 9,645
Other Assets 477 546
------- -------
TOTAL $35,955 $34,064
------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
Purchased Funds and Other Borrowings $1,466 $1,626
Advance from Subsidiaries 94 182
Other Liabilities 1,240 1,102
Long-Term Debt and Subordinated
Capital Notes (Note 1) 13,574 13,385
Stockholders' Equity 19,581 17,769
------- -------
TOTAL $35,955 $34,064
------- -------
CONDENSED STATEMENT OF CASH FLOWS
Citicorp (Parent Company Only)
In Millions of Dollars 1995 1994 1993
- ----------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $3,464 $3,366 $2,219
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating
Activities:
Equity in Undistributed Income of
Subsidiaries, Before Cumulative
Effects of Accounting Changes (1,403) (2,639) (1,564)
Equity in Cumulative Effects of
Accounting Changes of
Subsidiaries -- 56 (320)
Other, Net 203 (215) (128)
-------- -------- --------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 2,264 568 207
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Securities:
Purchases (2,394) (5,710) (6,729)
Sales 471 2,602 31
Maturities 1,525 4,059 7,816
Subsidiaries:
Investments and Advances (78,370) (277,810) (235,477)
Repayment of Advances 78,670 275,214 233,124
-------- -------- --------
NET CASH USED IN INVESTING
ACTIVITIES (98) (1,645) (1,235)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Purchased Funds and Other Borrowings:
Proceeds 5,194 35,701 68,734
Repayments (5,354) (35,178) (68,754)
Advances from Subsidiaries:
Proceeds 5 1,419 1,814
Repayments (84) (1,321) (2,038)
Long-Term Debt and Subordinated
Capital Notes:
Proceeds 2,758 3,065 3,933
Repayments (2,616) (2,819) (4,181)
Preferred Stock:
Proceeds from Issuance 390 388 654
Redemption (125) (100) --
Common Stock Issuance Proceeds 416 226 302
Purchase of Treasury Stock (1,531) (5) (3)
Dividends Paid (835) (533) (313)
-------- -------- --------
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES (1,782) 843 148
-------- -------- --------
Net Increase (Decrease) in Deposits
with Subsidiary Banks 384 (234) (880)
Deposits with Subsidiary Banks at
Beginning of Year 2,040 2,274 3,154
-------- -------- --------
DEPOSITS WITH SUBSIDIARY BANKS
AT END OF YEAR $2,424 $2,040 $2,274
- -------------------------------------======== ======== ========
Cash Paid During the Year for:
Interest $980 $779 $999
Income Taxes 783 785 669
-------- -------- --------
71
QUARTERLY FINANCIAL INFORMATION
Citicorp and Subsidiaries
In Millions of Dollars Except Share Data 1995 1994
- -------------------------------------------------------------------------------------- ---------------------------------------
4TH 3RD 2ND 1ST 4th 3rd 2nd 1st
------ ------ ------ ------ ------ ------ ------ ------
Net Interest Revenue $2,560 $2,598 $2,468 $2,325 $2,322 $2,346 $2,158 $2,085
Fees, Commissions, and Other Revenue 2,229 2,159 2,221 2,118 2,190 1,979 1,892 1,776
------ ------ ------ ------ ------ ------ ------ ------
TOTAL REVENUE 4,789 4,757 4,689 4,443 4,512 4,325 4,050 3,861
Provision for Credit Losses 531 576 493 391 558 436 472 415
Operating Expense 2,818 2,793 2,798 2,693 2,723 2,630 2,456 2,447
------ ------ ------ ------ ------ ------ ------ ------
INCOME BEFORE TAXES AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE 1,440 1,388 1,398 1,359 1,231 1,259 1,122 999
Income Taxes/(1)/ 535 511 545 530 189 365 245 390
------ ------ ------ ------ ------ ------ ------ ------
Income Before
Cumulative Effect
of Accounting Changes 905 877 853 829 1,042 894 877 609
Cumulative Effect of Accounting Change/(2)/ -- -- -- -- -- -- -- (56)
------ ------ ------ ------ ------ ------ ------ ------
NET INCOME $ 905 $ 877 $ 853 $ 829 $1,042 $ 894 $ 877 $ 553
- ------------------------------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE/(3)(4)/
On Common and Common Equivalent Shares
Before Accounting Change $ 1.89 $ 1.79 $ 1.76 $ 1.71 $ 2.20 $ 1.87 $ 1.83 $ 1.24
After Accounting Change/(2)/ 1.89 1.79 1.76 1.71 2.20 1.87 1.83 1.11
Assuming Full Dilution
Before Accounting Change $ 1.72 $ 1.62 $ 1.57 $ 1.53 $ 1.95 $ 1.67 $ 1.64 $ 1.12
After Accounting Change/(2)/ 1.72 1.62 1.57 1.53 1.95 1.67 1.64 1.01
- ------------------------------------------------------------------------------------------------------------------------------------
CASH DIVIDENDS DECLARED
Preferred Stock $ 72 $ 83 $ 96 $ 92 $ 91 $ 89 $ 91 $ 87
Common Stock 127 127 119 119 59 59 58 --
Common Stock, Per Share $ 0.30 $ 0.30 $ 0.30 $ 0.30 $ 0.15 $ 0.15 $ 0.15 $ --
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $256,853 $257,536 $256,994 $269,013 $250,489 $253,149 $254,246 $241,096
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock Price Range/(5)/
High $ 73-5/8 $ 71-7/8 $ 59-3/4 $ 45 $ 47-3/4 $ 45 $ 41-7/8 $ 43-3/4
Low 63-5/8 58-3/8 42-5/8 38-7/8 40 40 36-3/4 36-5/8
Close 67-1/4 70-3/4 57-7/8 42-5/8 41-3/8 42-1/2 39-7/8 37-1/2
(1) Includes valuation allowance change related to future years of $10 million
in the fourth quarter and $30 million in the third quarter of 1995, and $150
million in the 1994 second quarter. Results for 1994 include valuation
allowance change related to that year of $285 million in the fourth quarter,
$124 million in the third quarter, $50 million in the second quarter, and
$20 million in the first quarter of 1994.
(2) Refers to adoption of SFAS No. 112 in 1994. See Note 7 to the consolidated
financial statements.
(3) See Note 9 to the consolidated financial statements.
(4) Full year 1995 earnings per share amounts exceed the amounts that would be
derived from adding the quarterly periods, since common equivalent share
amounts in the first three quarters of 1995 related to unredeemed Series 15
preferred shares, computed under applicable accounting guidelines, were
higher based on market prices in those quarters.
(5) Based on the New York Stock Exchange composite listing.
72
10-K CROSS-REFERENCE INDEX
This Annual Report and Form 10-K incorporate into a single
document the requirements of the accounting profession and the
Securities and Exchange Commission, including a comprehensive
explanation of 1995 results.
Certain statistical data required by the Securities and
Exchange Commission is included on pages 22 and 72 through 81.
- -----------------------------------------------------------------
PART I Page
Item 1 Business...................... 4-19, 21-32, 36-38, 82-83
Item 2 Properties........................................... 83
Item 3 Legal Proceedings................................ 69, 82
Item 4 Not Applicable
- -----------------------------------------------------------------
PART II
Item 5 Market for the Registrant's
Common Equity and Related
Stockholder Matters.......................... 70, 72, 88
Item 6 Selected Financial Data ......................... 22, 40
Item 7 Management's Discussion and
Analysis of Financial Condition and
Results of Operations......... 4-19,22-44,70,71,77,80,83
Item 8 Financial Statements and
Supplementary Data................................ 46-81
Item 9 Not Applicable
- ----------------------------------------------------------------
PART III
Item 10 Directors and Executive Officers
of the Registrant..................................... *
Item 11 Executive Compensation................................ *
Item 12 Security Ownership of Certain
Beneficial Owners and Management...................... *
Item 13 Certain Relationships and Related
Transactions.......................................... *
- -----------------------------------------------------------------
PART IV
Item 14 Exhibits, Financial Statement
Schedules, and Reports on Form 8-K................... 84
- -----------------------------------------------------------------
* Citicorp's 1996 Proxy Statement is incorporated herein by reference. Such
incorporation by reference shall not include the information referred to in
Item 402(a)(8) of Regulation S-K.
73
FINANCIAL DATA SUPPLEMENT
AVERAGE BALANCES AND INTEREST RATES, TAXABLE EQUIVALENT BASIS(1)(2)
In Millions of Dollars 1995
- ---------------------------------------------------------------------------------------------------------------------
AVERAGE % AVERAGE
VOLUME INTEREST RATE
------------------------------------------------
INTEREST REVENUE
LOANS Consumer Loans
(NET OF UNEARNED In U.S. Offices $ 50,918 $ 5,607 11.01
INCOME)(3) In Offices Outside the U.S.(4) 48,811 6,251 12.81
------------------------------------------------
Total Consumer Loans 99,729 11,858 11.89
------------------------------------------------
Commercial Loans
In U.S. Offices
Commercial and Industrial 9,982 883 8.85
Mortgage and Real Estate 5,413 413 7.63
Loans to Financial Institutions 426 20 4.69
Lease Financing 3,198 231 7.22
In Offices Outside the U.S.(4) 37,921 4,405 11.62
------------------------------------------------
Total Commercial Loans 56,940 5,952 10.45
------------------------------------------------
Total Loans 156,669 17,810 11.37
------------------------------------------------
FEDERAL FUNDS SOLD AND In U.S. Offices 11,816 675 5.71
RESALE AGREEMENTS In Offices Outside the U.S.(4) 2,408 381 15.82
------------------------------------------------
Total 14,224 1,056 7.42
------------------------------------------------
SECURITIES At Cost/Lower of Cost or Market(5)
In U.S. Offices
Taxable 1,460 96 6.58
Exempt from U.S. Income Tax -- -- --
In Offices Outside the U.S.(4) 3,090 236 7.64
------------------------------------------------
Total 4,550 332 7.30
------------------------------------------------
At Fair Value(5)
In U.S. Offices
Taxable 5,419 254 4.69
Exempt from U.S. Income Tax 1,599 107 6.69
In Offices Outside the U.S.(4) 8,465 879 10.38
------------------------------------------------
Total 15,483 1,240 8.01
------------------------------------------------
Total Securities 20,033 1,572 7.85
------------------------------------------------
TRADING ACCOUNT In U.S. Offices 10,879 713 6.55
ASSETS In Offices Outside the U.S.(4) 10,871 1,075 9.89
------------------------------------------------
Total 21,750 1,788 8.22
------------------------------------------------
DEPOSITS AT INTEREST WITH Principally in Offices Outside the
BANKS U.S.(3)(4) 11,288 770 6.82
------------------------------------------------
Interest-Earning Assets 223,964 $22,996 10.27
Non-Interest-Earning Assets(6) 44,817
------------------------------------------------
TOTAL ASSETS $268,781
----------------------------------------------------------------------------------
INTEREST EXPENSE
DEPOSITS In U.S. Offices
Savings Deposits(7) $ 24,715 $ 758 3.07
Negotiable Certificates of
Deposit 1,429 90 6.30
Other Time Deposits 10,327 651 6.30
In Offices Outside the U.S.(4) 110,236 7,403 6.72
------------------------------------------------
Total 146,707 8,902 6.07
------------------------------------------------
TRADING ACCOUNT In U.S. Offices 2,851 179 6.28
LIABILITIES In Offices Outside the U.S.(4) 1,328 121 9.11
------------------------------------------------
Total 4,179 300 7.18
------------------------------------------------
PURCHASED FUNDS AND In U.S. Offices 20,805 1,306 6.28
OTHER BORROWINGS In Offices Outside the U.S.(4) 6,053 1,073 17.73
------------------------------------------------
Total 26,858 2,379 8.86
------------------------------------------------
LONG-TERM DEBT AND In U.S. Offices 14,736 1,063 7.21
SUBORDINATED CAPITAL NOTES In Offices Outside the U.S.(4) 3,492 368 10.54
------------------------------------------------
Total 18,228 1,431 7.85
------------------------------------------------
Total Interest-Bearing Liabilities 195,972 $13,012 6.64
Demand Deposits in U.S. Offices 11,636
Other Non-Interest-Bearing
Liabilities(6) 42,279
Total Stockholders' Equity 18,894
------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $268,781
-------------------------------------------------------------------------------------
NET INTEREST REVENUE
AS A PERCENTAGE OF In U.S. Offices(8) $101,161 $ 4,238 4.19
AVERAGE INTEREST- In Offices Outside the U.S.(8) 122,803 5,746 4.68
EARNING ASSETS ------------------------------------------------
TOTAL $223,964 $ 9,984 4.46
- ----------------------------------------------------------------------------------------------------------------------
(1) The taxable equivalent adjustment is based on the U.S. federal statutory tax
rate of 35%.
(2) Interest rates and amounts include the effects of risk management activities
associated with the respective asset and liability categories. See Note 1 to
the consolidated financial statements.
(3) Loans and interest-bearing deposits in the table above include cash-basis
loans and cash-basis bank placements, respectively.
(4) 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.
(5) 1995 and 1994 amounts reflect the effect of adopting SFAS No. 115.
(6) Gross unrealized gains and losses on off-balance sheet trading positions
related to the implementation of FASB Interpretation No. 39 in the 1995 and
1994 periods are reported in non-interest-earning assets and non-interest-
bearing liabilities, respectively.
(7) Savings deposits consist of Insured Money Market Rate accounts, NOW
accounts, and other savings deposits.
(8) Includes appropriate allocations for captial and funding costs based on the
location of the asset.
74
1994
-------------------------------------------------
Average Volume Interest % Average Rate
-------------------------------------------------
INTEREST REVENUE
LOANS (NET OF
UNEARNED
INCOME) (3)
Consumer Loans
In U.S. Offices $ 44,290 $ 4,544 10.26
In Offices Outside
the U.S. (4) 42,555 5,309 12.48
-------- ------- -----
Total Consumer
Loans 86,845 9,853 11.35
-------- ------- -----
Commercial Loans
In U.S. Offices
Commercial and Industrial 10,284 770 7.49
Mortgage and Real Estate 6,628 409 6.17
Loans to Financial
Institutions 438 17 3.88
Lease Financing 3,481 238 6.84
In Offices Outside the
U.S. (4) 34,397 4,954 14.40
-------- ------- -----
Total Commercial
Loans 55,228 6,388 11.57
-------- ------- -----
Total Loans 142,073 16,241 11.43
-------- ------- -----
FEDERAL FUNDS SOLD AND
RESALE AGREEMENTS
In U.S. Offices 14,924 593 3.97
In Offices Outside the
U.S. (4) 2,725 2,725 100.00
-------- ------- -----
Total 17,649 3,318 18.80
-------- ------- -----
SECURITIES
At Cost/Lower of Cost
or Market (5)
In U.S. Offices
Taxable 1,962 114 5.81
Exempt from U.S. Income
Tax -- -- --
In Offices Outside
the U.S. (4) 3,173 204 6.43
-------- ------- -----
Total 5,135 318 6.19
-------- ------- -----
At Fair Value (5)
In U.S. Offices
Taxable 4,263 179 4.20
Exempt from U.S. Income
Tax 1,297 90 6.94
In Offices Outside the
U.S. (4) 7,868 702 8.92
-------- ------- -----
Total 13,428 971 7.23
-------- ------- -----
Total Securities 18,563 1,289 6.94
-------- ------- -----
TRADING ACCOUNT
ASSETS
In U.S. Offices 14,210 862 6.07
In Offices Outside the
U.S. (4) 11,214 1,234 11.00
-------- ------- -----
Total 25,424 2,096 8.24
-------- ------- -----
DEPOSITS AT INTEREST
WITH BANKS
Principally in Offices
Outside the U.S. (3)(4) 9,609 895 9.31
-------- ------- -----
Interest-Earning Assets 213,318 $23,839 11.18
Non-Interest-Earning
Assets (4) 47,686
-------- ------- -----
TOTAL ASSETS $261,004
======== ======= =====
INTEREST EXPENSE
DEPOSITS
In U.S. Offices
Savings Deposits (7) $ 25,935 $ 545 2.10
Negotiable Certificates
of Deposit 1,102 88 7.99
Other Time Deposits 10,046 558 5.55
In Offices Outside the
U.S. (4) 98,536 7,805 7.92
-------- ------- -----
Total 135,619 8,996 6.63
-------- ------- -----
TRADING ACCOUNT
LIABILITIES
In U.S. Offices 3,052 174 5.70
In Offices Outside the
U.S. (4) 1,641 93 5.67
-------- ------- -----
Total 4,693 267 5.69
-------- ------- -----
PURCHASED FUNDS AND
OTHER BORROWINGS
In U.S. Offices 25,613 1,238 4.83
In Offices Outside the
U.S. (4) 7,173 2,701 37.66
-------- ------- -----
Total 32,786 3,939 12.01
-------- ------- -----
LONG-TERM DEBT AND
SUBORDINATED CAPITAL
NOTES
In U.S. Offices 14,240 856 6.01
In Offices Outside the
U.S. (4) 2,724 844 30.98
-------- ------- -----
Total 16,964 1,700 10.02
-------- ------- -----
Total Interest-Bearing
Liabilities 190,062 $14,902 7.84
Demand Deposits in
U.S. Offices 12,363
Other Non-Interest-
Bearing Liabilities (6) 42,878
Total Stockholders' Equity 15,701
-------- ------- -----
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $261,004
======== ======= =====
NET INTEREST REVENUE AS A
PERCENTAGE OF AVERAGE
INTEREST-EARNING ASSETS
In U.S. Offices (8) $101,777 $ 3,896 3.83
In Offices Outside the
U.S. (8) 111,541 5,041 4.52
-------- ------- -----
TOTAL $213,318 $ 8,937 4.19
======== ======= =====
Citicorp and Subsidiaries
1993
-------------------------------------------------
Average Volume Interest % Average Rate
-------------------------------------------------
INTEREST REVENUE
LOANS (NET OF
UNEARNED
INCOME) (3)
Consumer Loans
In U.S. Offices $ 44,549 $ 4,325 9.71
In Offices Outside
the U.S. (4) 36,885 4,758 12.90
-------- ------- -----
Total Consumer
Loans 81,434 9,083 11.15
-------- ------- -----
Commercial Loans
In U.S. Offices
Commercial and Industrial 10,279 677 6.59
Mortgage and Real Estate 8,420 405 4.81
Loans to Financial
Institutions 467 12 2.57
Lease Financing 3,537 266 7.52
In Offices Outside the
U.S. (4) 34,871 5,971 17.12
-------- ------- ------
Total Commercial
Loans 57,574 7,331 12.73
-------- ------- ------
Total Loans 139,008 16,414 11.81
-------- ------- ------
FEDERAL FUNDS SOLD AND
RESALE AGREEMENTS
In U.S. Offices 11,733 354 3.02
In Offices Outside the
U.S. (4) 2,105 2,598 123.42
-------- ------- ------
Total 13,838 2,952 21.33
-------- ------- ------
SECURITIES
At Cost/Lower of Cost
or Market (5)
In U.S. Offices
Taxable 4,511 244 5.41
Exempt from U.S. Income
Tax 178 11 6.18
In Offices Outside
the U.S. (4) 7,269 651 8.96
-------- ------- ------
Total 11,958 906 7.58
-------- ------- ------
At Fair Value (5)
In U.S. Offices
Taxable 1,168 46 3.94
Exempt from U.S. Income
Tax -- -- --
In Offices Outside the
U.S. (4) 219 4 1.83
-------- ------- ------
Total 1,387 50 3.60
-------- ------- ------
Total Securities 13,345 956 7.16
-------- ------- ------
TRADING ACCOUNT
ASSETS
In U.S. Offices 13,440 716 5.33
In Offices Outside the
U.S. (4) 9,910 1,772 17.88
-------- ------- ------
Total 23,350 2,488 10.66
-------- ------- ------
DEPOSITS AT INTEREST
WITH BANKS
Principally in Offices
Outside the U.S. (3)(4) 9,075 1,016 11.20
-------- ------- ------
Interest-Earning Assets 198,616 $23,826 12.00
Non-Interest-Earning
Assets (4) 29,624
-------- ------- ------
TOTAL ASSETS $228,240
======== ======= ======
INTEREST EXPENSE
DEPOSITS
In U.S. Offices
Savings Deposits (7) $ 26,349 $ 491 1.86
Negotiable Certificates
of Deposit 1,433 89 6.21
Other Time Deposits 12,569 801 6.37
In Offices Outside the
U.S. (4) 89,064 8,416 9.45
-------- ------- ------
Total 129,415 9,797 7.57
-------- ------- ------
TRADING ACCOUNT
LIABILITIES
In U.S. Offices 2,082 116 5.57
In Offices Outside the
U.S. (4) 1,509 79 5.24
-------- ------- ------
Total 3,591 195 5.43
-------- ------- ------
PURCHASED FUNDS AND
OTHER BORROWINGS
In U.S. Offices 20,074 885 4.41
In Offices Outside the
U.S. (4) 6,602 3,270 49.53
-------- ------- ------
Total 26,676 4,155 15.58
-------- ------- ------
LONG-TERM DEBT AND
SUBORDINATED CAPITAL
NOTES
In U.S. Offices 16,110 952 5.91
In Offices Outside the
U.S. (4) 2,725 1,022 37.50
-------- ------- ------
Total 18,835 1,974 10.48
-------- ------- ------
Total Interest-Bearing
Liabilities 178,517 $16,121 9.03
Demand Deposits in
U.S. Offices 11,992
Other Non-Interest-
Bearing Liabilities (6) 25,220
Total Stockholders' Equity 12,511
-------- ------- ------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $228,240
======== ======= ======
NET INTEREST REVENUE AS A
PERCENTAGE OF AVERAGE
INTEREST-EARNING ASSETS
In U.S. Offices (8) $ 98,282 $ 3,396 3.46
In Offices Outside the
U.S. (8) 100,334 4,309 4.29
-------- ------- ------
TOTAL $198,616 $ 7,705 3.88
======== ======= ======
(1) The taxable equivalent adjustment is based on the U.S. federal statutory tax
rate of 35%.
(2) Interest rates and amounts include the effects of risk management activities
associated with the respective asset and liability categories. See Note 1 to the
consolidated financial statements.
(3) Loans and interest-bearing deposits in the table above include cash-basis
loans and cash-basis bank placements, respectively.
(4) 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.
(5) 1995 and 1994 amounts reflect the effect of adopting SFAS No. 115.
(6) Gross unrealized gains and losses on off-balance sheet trading positions
related to the implementation of FASB Interpretation No. 39 in the 1995 and 1994
periods are reported in non-interest-earning assets and non-interest-bearing
liabilities, respectively.
(7) Savings deposits consist of Insured Money Market Rate accounts, NOW
accounts, and other savings deposits.
(8) Includes appropriate allocations for capital and funding costs based on the
location of the asset.
75
ANALYSIS OF CHANGES IN NET INTEREST REVENUE
Taxable Equivalent Basis (1) 1995 vs 1994 1994 vs 1993
- ------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) Increase (Decrease)
DUE TO CHANGE IN: Due to Change in:
------------------- ----------------------
AVERAGE AVERAGE NET Average Average Net
In Millions of Dollars VOLUME RATE CHANGE (2) Volume Rate Change (2)
- -----------------------------------------------------------------------------------------------------------------
LOANS--CONSUMER
In U.S. Offices $713 $350 $1,063 $(25) $244 $219
In Offices Outside
the U.S. (3) 798 144 942 711 (160) 551
------- -------- ----------- -------- -------- ------------
TOTAL 1,511 494 2,005 686 84 770
------- -------- ----------- -------- -------- ------------
LOANS--COMMERCIAL
In U.S. Offices (132) 245 113 (118) 192 74
In Offices Outside
the U.S. (3) 474 (1,023) (549) (80) (937) (1,017)
------- -------- ----------- -------- -------- ------------
TOTAL 342 (778) (436) (198) (745) (943)
------- -------- ----------- -------- -------- ------------
Total Loans 1,853 (284) 1,569 488 (661) (173)
------- -------- ----------- -------- -------- ------------
FEDERAL FUNDS SOLD AND RESALE
AGREEMENTS
In U.S. Offices (141) 223 82 110 129 239
In Offices Outside
the U.S. (3) (285) (2,059) (2,344) 677 (550) 127
------- -------- ----------- -------- -------- ------------
TOTAL (426) (1,836) (2,262) 787 (421) 366
------- -------- ----------- -------- -------- ------------
SECURITIES
In U.S. Offices 51 23 74 85 (3) 82
In Offices Outside
the U.S. (3) 44 165 209 294 (43) 251
------- -------- ----------- -------- -------- ------------
TOTAL 95 188 283 379 (46) 333
------- -------- ----------- -------- -------- ------------
TRADING ACCOUNT ASSETS
In U.S. Offices (214) 65 (149) 43 103 146
In Offices Outside
the U.S. (3) (37) (122) (159) 210 (748) (538)
------- -------- ----------- -------- -------- ------------
TOTAL (251) (57) (308) 253 (645) (392)
------- -------- ----------- -------- -------- ------------
DEPOSITS AT INTEREST
WITH BANKS
Principally in Offices
Outside the
U.S. (3) 140 (265) (125) 57 (178) (121)
------- -------- ----------- -------- -------- ------------
TOTAL INTEREST
REVENUE $1,411 $(2,254) $(843) $1,964 $(1,951) $13
- ----------------------------------------------------------------------------------------------------------------
DEPOSITS
In U.S. Offices $(20) $328 $308 $(108) $(82) $(190)
In Offices Outside
the U.S. (3) 865 (1,267) (402) 838 (1,449) (611)
------- -------- ----------- -------- -------- ------------
TOTAL 845 (939) (94) 730 (1,531) (801)
------- -------- ----------- -------- -------- ------------
TRADING ACCOUNT
LIABILITIES
In U.S. Offices (12) 17 5 55 3 58
In Offices Outside
the U.S. (3) (20) 48 28 7 7 14
------- -------- ----------- -------- -------- ------------
TOTAL (32) 65 33 62 10 72
------- -------- ----------- -------- -------- ------------
PURCHASED FUNDS AND
OTHER BORROWINGS
In U.S. Offices (259) 327 68 262 91 353
In Offices Outside
the U.S. (3) (371) (1,257) (1,628) 264 (833) (569)
------- -------- ----------- -------- -------- ------------
TOTAL (630) (930) (1,560) 526 (742) (216)
------- -------- ----------- -------- -------- ------------
LONG-TERM DEBT AND
SUBORDINATED
CAPITAL NOTES
In U.S. Offices 31 176 207 (112) 16 (96)
In Offices Outside
the U.S. (3) 191 (667) (476) -- (178) (178)
------- -------- ----------- -------- -------- ------------
TOTAL 222 (491) (269) (112) (162) (274)
------- -------- ----------- -------- -------- ------------
TOTAL INTEREST
EXPENSE $405 $(2,295) $(1,890) $1,206 $(2,425) $(1,219)
- ----------------------------------------------------------------------------------------------------------------
NET INTEREST
REVENUE $1,006 $41 $1,047 $758 $474 $1,232
- ----------------------------------------------------------------------------------------------------------------
(1) The taxable equivalent adjustment is based on the U.S. federal statutory
tax rate of 35%.
(2) Rate/volume variance is allocated based on the percentage relationship of
changes in volume and changes in rate to the total "net change."
(3) Changes in average rates in offices outside the U.S. may reflect changes
in prevailing local interest rates, including the effects of inflation
and monetary correction in certain Latin American countries.
76
LOANS OUTSTANDING
In Millions of Dollars at Year-End 1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------
CONSUMER LOANS
In U.S. Offices
Mortgage and Real Estate $22,604 $21,089 $22,719 $26,140 $30,833
Installment, Revolving Credit, and Other 32,429 29,523 22,490 21,509 26,743
Lease Financing -- 32 152 353 576
------------------------------------------------------------------------
55,033 50,644 45,361 48,002 58,152
------------------------------------------------------------------------
In Offices Outside the U.S.
Mortgage and Real Estate 18,240 16,830 13,908 12,863 13,124
Installment, Revolving Credit, and Other 32,521 29,303 25,355 23,011 21,018
Lease Financing 765 732 672 746 890
------------------------------------------------------------------------
51,526 46,865 39,935 36,620 35,032
------------------------------------------------------------------------
106,559 97,509 85,296 84,622 93,184
Unearned Income (916) (909) (942) (1,169) (1,645)
------------------------------------------------------------------------
Consumer Loans--Net 105,643 96,600 84,354 83,453 91,539
------------------------------------------------------------------------
COMMERCIAL LOANS
In U.S. Offices
Commercial and Industrial 9,509 10,236 8,969 10,168 11,792
Mortgage and Real Estate 4,681 5,616 7,440 9,194 11,452
Loans to Financial Institutions 365 297 269 271 528
Lease Financing 3,239 3,271 3,541 3,547 3,554
------------------------------------------------------------------------
17,794 19,420 20,219 23,180 27,326
------------------------------------------------------------------------
In Offices Outside the U.S.
Commercial and Industrial 32,966 27,120 23,624 21,332 19,015
Mortgage and Real Estate 1,901 1,995 2,201 2,657 4,234
Loans to Financial Institutions 4,229 3,263 3,123 3,300 3,047
Governments and Official Institutions 2,180 3,265 4,807 5,055 4,881
Lease Financing 1,098 934 800 927 1,150
------------------------------------------------------------------------
42,374 36,577 34,555 33,271 32,327
------------------------------------------------------------------------
60,168 55,997 54,774 56,451 59,653
Unearned Income (169) (177) (161) (194) (248)
------------------------------------------------------------------------
Commercial Loans--Net 59,999 55,820 54,613 56,257 59,405
------------------------------------------------------------------------
TOTAL LOANS--NET OF UNEARNED INCOME $165,642 $152,420 $138,967 $139,710 $150,944
------------------------------------------------------------------------
LOAN MATURITIES AND SENSITIVITY TO CHANGES IN INTEREST RATES
MATURITIES OF THE GROSS COMMERCIAL LOAN PORTFOLIO
DUE OVER 1 BUT
WITHIN WITHIN OVER
In Millions of Dollars at Year-End 1 YEAR 5 YEARS 5 YEARS TOTAL
- -----------------------------------------------------------------------------------------------------------------------
In U.S. Offices
Commercial and Industrial Loans $3,226 $4,417 $1,866 $9,509
Mortgage and Real Estate 1,425 2,660 596 4,681
Loans to Financial Institutions 137 159 69 365
Lease Financing 704 1,526 1,009 3,239
In Offices Outside the U.S. 30,528 8,398 3,448 42,374
------------------------------------------------------------------------
TOTAL $36,020 $17,160 $6,988 $60,168
------------------------------------------------------------------------
Sensitivity of Loans Due After One Year to
Changes in Interest Rates(1)
Loans at Predetermined Interest Rates $ 3,933 $2,165
Loans at Floating or Adjustable Interest
Rates 13,227 4,823
-----------------------------
TOTAL $17,160 $6,988
-----------------------------
(1) Based on contractual terms. Repricing characteristics may effectively be
modified from time to time using derivative contracts. See Note 1 to the
consolidated financial statements.
77
CASH-BASIS, RENEGOTIATED, AND PAST DUE LOANS
In Millions of Dollars at Year-End 1995 1994(1) 1993(1) 1992(1) 1991(1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL CASH-BASIS LOANS
Collateral-Dependent (At Lower of Cost or Collateral Value)(2) $ 779 $1,347 $2,704 $4,086 $3,698
Other, Including Refinancing Portfolio 755 770 1,970 2,920 4,652
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL CASH-BASIS LOANS $1,534 $2,117 $4,674 $7,006 $8,350
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL CASH-BASIS LOANS(3)
In U.S. Offices $ 925 $1,547 $2,841 $4,689 $5,199
In Offices Outside the U.S., Excluding Refinancing Countries 587 466 792 1,015 1,417
In Refinancing Countries(4) 22 104 1,041 1,302 1,734
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL CASH-BASIS LOANS $1,534 $2,117 $4,674 $7,006 $8,350
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL RENEGOTIATED LOANS(5)
In U.S. Offices $ 309 $ 563 $ 641 $ 267 $ 67
In Offices Outside the U.S. 112 155 67 56 17
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL RENEGOTIATED LOANS $ 421 $ 718 $ 708 $ 323 $ 84
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER LOANS ON WHICH ACCRUAL OF INTEREST HAD BEEN SUSPENDED(6)
In U.S. Offices $1,413 $1,538 $1,965 $2,323 $2,825
In Offices Outside the U.S. 1,247 1,066 948 849 692
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL CONSUMER LOANS ON WHICH ACCRUAL OF INTEREST
HAD BEEN SUSPENDED $2,660 $2,604 $2,913 $3,172 $3,517
- -----------------------------------------------------------------------------------------------------------------------------------
ACCRUING LOANS 90 OR MORE DAYS DELINQUENT(6)(7)
In U.S. Offices $ 499 $ 415 $ 635 $ 671 $ 755
In Offices Outside the U.S. 498 460 421 382 399
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ACCRUING LOANS 90 OR MORE DAYS DELINQUENT $ 997 $ 875 $1,056 $1,053 $1,154
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Reclassified to reflect the adoption of SFAS No. 114 as of January 1, 1995.
(2) 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.
(3) Refer to discussion of cash-basis commercial loans on pages 30 and 31.
(4) Refer to Cross-Border Refinancing Portfolio discussion on page 32.
(5) The effective interest rates on $97 million of renegotiated loans at
December 31, 1995 are at market rates and, therefore, these loans may be
transferred to full performing status in 1996.
(6) Refer to discussion of consumer loan portfolio on pages 27 and 28.
(7) Includes consumer loans of $951 million, $828 million, $802 million, $857
million, and $955 million at December 31, 1995, 1994, 1993, 1992, and 1991,
respectively, of which $208 million, $150 million, $114 million, $109
million, and $101 million, respectively, are government-guaranteed student
loans.
OTHER REAL ESTATE OWNED (OREO) AND ASSETS PENDING DISPOSITION(1)
In Millions of Dollars at Year-End 1995 1994(2) 1993(2) 1992(2) 1991(2)
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER OREO $ 529 $ 569 $ 733 $ 869 $ 641
COMMERCIAL OREO
North America Commercial Real Estate 425 806 1,173 1,316 1,082
Other 200 152 464 559 213
- -----------------------------------------------------------------------------------------------------------------------------------
Total Commercial 625 958 1,637 1,875 1,295
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL OREO $1,154 $1,527 $2,370 $2,744 $1,936
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS PENDING DISPOSITION(3) $ 205 $ 195 $ 429 $ 346 $ --
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Carried at the lower of cost or estimated fair value.
(2) Reclassified to reflect the adoption of SFAS No. 114 as of January 1, 1995.
(3) Represents consumer residential mortgage loans that have a high probability
of foreclosure.
FOREGONE INTEREST REVENUE ON LOANS(1)
In In Offices
U.S. Outside 1995
In Millions of Dollars Offices the U.S. TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
Interest Revenue that Would Have Been Accrued at Original Contractual Rates(2) $251 $296 $547
Amount Recognized as Interest Revenue(2) 114 118 232
- ------------------------------------------------------------------------------------------------------------------------------------
FOREGONE INTEREST REVENUE $137 $178 $315
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Relates to commercial cash-basis and renegotiated loans and consumer loans
on which accrual of interest had been suspended.
(2) Interest revenue in offices outside the U.S. may reflect prevailing local
interest rates, including the effects of inflation and monetary correction
in certain countries.
78
DETAILS OF CREDIT LOSS EXPERIENCE
In Millions of Dollars at Year-End 1995 1994 1993 1992 1991
------------------------------------------------------------------------------
ALLOWANCE FOR CREDIT LOSSES AT BEGINNING OF YEAR $5,155 $4,379 $3,859 $3,308 $4,451
---------------------------------------------------------------------------
ADDITIONS
Provision for Credit Losses 1,991 1,881 2,600 4,146 3,890
DEDUCTIONS
GROSS CREDIT LOSSES
CONSUMER/1/
In U.S. Offices 1,137 1,120 1,245 1,744 1,670
In Offices Outside the U.S. 825 594 504 494 460
COMMERCIAL
Mortgage and Real Estate:
In U.S. Offices 118 200 333 813 511
In Offices Outside the U.S. 25 48 132 249 314
Governments and Official Institutions
(in Offices Outside the U.S.) 37 -- 131 40 1,212
Loans to Financial Institutions:
In U.S. Offices -- -- -- -- 171
In Offices Outside the U.S. 11 -- 9 2 19
Commercial and Industrial:
In U.S. Offices 48 57 148 408 271
In Offices Outside the U.S. 137 64 175 305 735
---------------------------------------------------------------------------
2,338 2,083 2,677 4,055 5,363
---------------------------------------------------------------------------
CREDIT RECOVERIES
CONSUMER/1/
In U.S. Offices 231 214 207 189 202
In Offices Outside the U.S. 187 147 132 130 125
COMMERCIAL
Mortgage and Real Estate:
In U.S. Offices 26 15 48 4 --
In Offices Outside the U.S. 21 8 8 1 10
Governments and Official Institutions
(in Offices Outside the U.S.) 52 240 42 13 10
Loans to Financial Institutions
(in Offices Outside the U.S.) 1 3 22 10 5
Commercial and Industrial:
In U.S. Offices 82 64 54 37 12
In Offices Outside the U.S. 46 248 105 95 65
---------------------------------------------------------------------------
646 939 618 479 429
---------------------------------------------------------------------------
NET CREDIT LOSSES
In U.S. Offices 964 1,084 1,417 2,735 2,409
In Offices Outside the U.S. 728 60 642 841 2,525
---------------------------------------------------------------------------
1,692 1,144 2,059 3,576 4,934
---------------------------------------------------------------------------
OTHER-NET/2/ (86) 39 (21) (19) (99)
---------------------------------------------------------------------------
ALLOWANCE FOR CREDIT LOSSES AT END OF YEAR $5,368 $5,155 $4,379 $3,859 $3,308
---------------------------------------------------------------------------
Net Consumer Credit Losses $1,544 $1,353 $1,410 $1,919 $1,803
As a Percentage of Average Consumer Loans 1.55 1.56 1.73 2.16 1.97
Net Commercial Credit Losses (Recoveries) 148 (209) 649 1,657 3,131
As a Percentage of Average Commercial Loans 0.26 NM 1.13 2.80 5.13
(1) Consumer credit losses and recoveries primarily relate to revolving credit
and installment loans.
(2) Includes net transfers (to) from the reserve for Consumer sold portfolios
and foreign exchange effects.
NM Not meaningful for 1994 as recoveries result in a negative percentage.
79
AVERAGE DEPOSIT LIABILITIES IN OFFICES OUTSIDE THE U.S.(1)
In Millions of Dollars at Year-End 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
% AVERAGE % Average % Average
AVERAGE INTEREST Average Interest Average Interest
BALANCE RATE Balance Rate Balance Rate
- -----------------------------------------------------------------------------------------------------------------------------------
Banks(2) $ 12,777 8.18 $ 12,890 18.89 $11,978 16.83
Other Demand Deposits 25,569 3.52 25,671 2.31 19,553 2.69
Other Time and Savings Deposits(2) 79,157 6.89 66,695 7.16 63,260 9.28
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL $117,503 6.30 $105,256 7.42 $94,791 8.88
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Interest rates and amounts include the effects of risk management
activities, and also reflect the impact of the local interest rates
prevailing in certain Latin American countries. See Note 1 to the
consolidated financial statements.
(2) Primarily consists of time certificates of deposit and other time deposits
in denominations of $100,000 or more.
TIME DEPOSITS IN U.S. OFFICES
MATURITY PROFILE
UNDER OVER 3 TO OVER 6 TO OVER
In Millions of Dollars ($100,000 or more) at Year-End 1995 3 MONTHS 6 MONTHS 12 MONTHS 12 MONTHS
- -----------------------------------------------------------------------------------------------------------------------------------
Certificates of Deposit $1,699 $530 $366 $557
Other Time Deposits 597 160 45 257
- -----------------------------------------------------------------------------------------------------------------------------------
PURCHASED FUNDS AND OTHER BORROWINGS(1)
FEDERAL FUNDS PURCHASED
AND SECURITIES SOLD UNDER
REPURCHASE AGREEMENTS(2) COMMERCIAL PAPER(3) OTHER FUNDS BORROWED(2)
------------------------------ ----------------------- ------------------------
In Millions of Dollars 1995 1994 1993 1995 1994 1993 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
Amount Outstanding at Year-End $ 7,904 $12,097 $9,649 $1,633 $1,520 $1,005 $6,797 $7,290 $6,123
Average Outstanding During the Year 18,890 24,160 19,806 1,718 1,938 734 6,250 6,688 6,135
Maximum Month-End Outstanding 21,960 26,857 20,706 1,831 2,269 1,005 7,383 8,157 6,995
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted-Average Interest Rate
During the Year 6.25% 4.86% 6.08% 5.88% 4.44% 3.27% 17.57% 40.06% 47.71%
At Year-End 6.51 5.36 3.38 5.94 5.53 3.31 13.63 13.51 470.07
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Original maturities of less than one year. Interest rates and amounts
include the effects of risk management activities. See Note 1 to the
consolidated financial statements.
(2) Rates reflect the impact of the local interest rates prevailing in certain
Latin American countries.
(3) Amounts outstanding at December 31, 1995, 1994, and 1993 include $452
million, $462 million, and $671 million, respectively, issued by The Student
Loan Corporation.
80
CROSS-BORDER AND NON-LOCAL CURRENCY OUTSTANDINGS
Cross-border and non-local currency outstandings are presented
on a regulatory basis and include cross-border and non-local
currency claims on third parties as well as investments in and
funding of local Citicorp franchises. Total outstandings include
claims funded with non-local currency liabilities where the funds
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. Cross-
border and non-local currency claims on third parties (trade,
short-term, and medium- and long-term claims) include loans,
securities, deposits at interest with banks, and other monetary
assets, as well as investments in affiliates. Adjustments have
been made to assign externally guaranteed outstandings to the
country of the guarantor and outstandings for which tangible,
liquid collateral is held outside of the obligor's country to the
country in which the collateral is held. For securities received as
collateral, outstandings are assigned to the domicile of the issuer
of the securities.
COUNTRIES WITH OUTSTANDINGS EXCEEDING 1% OF TOTAL ASSETS(1)(2)
1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
CROSS-BORDER AND
NON-LOCAL
CURRENCY CLAIMS INVESTMENTS
ON THIRD PARTIES IN AND
- --------------------------------------------------------------- FUNDING OF
In Billions of PUBLIC PRIVATE LOCAL CITICORP TOTAL Total Total
Dollars at Year-End BANKS SECTOR SECTOR TOTAL FRANCHISES OUTSTANDINGS Outstandings Outstandings
- -------------------------------------------------------------------------------------------------------------------------------
United Kingdom $0.2 $0.1 $4.3 $4.6 $3.0 $7.6 $6.7 $7.7
Brazil(3) 0.3 1.9 1.7 3.9 1.2 5.1 4.0 2.4
Japan 0.3 0.1 1.9 2.3 1.3 3.6 2.0 2.8
Argentina(3) 0.1 -- 2.3 2.4 0.5 2.9 2.5 2.0
Mexico(3) 0.1 2.1 0.5 2.7 0.2 2.9 4.1 3.9
Germany 0.1 0.5 0.2 0.8 1.9 2.7 1.3 2.1
- -------------------------------------------------------------------------------------------------------------------------------
(1) At December 31, 1995, 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, $0.9 billion in Japan, $1.2 billion in Germany and were less than
$0.1 billion each in Brazil, Argentina, and Mexico.
(2) At December 31, 1995, cross-border and non-local currency outstandings in
Singapore ($2.5 billion), Australia ($2.4 billion), and Korea ($2.1
billion), were between 0.75% and 1.0% of total assets. At December 31, 1994,
such countries were Argentina, Australia ($2.2 billion), Singapore ($2.0
billion), and Japan. At December 31, 1993, such countries were Canada ($2.1
billion), Germany, and Argentina.
(3) Includes outstandings funded with non-local currency liabilities where the
funds 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 December 31, 1995,
1994, and 1993, respectively, were $1.4 billion, $0.8 billion, and $0.5
billion in Brazil; $1.6 billion, $1.3 billion, and $1.0 billion in
Argentina; and less than $0.1 billion, $0.8 billion, and $1.1 billion in
Mexico.
CROSS-BORDER AND NON-LOCAL CURRENCY CLAIMS ON THIRD PARTIES
PUBLIC PRIVATE 1995 1994
In Billions of Dollars at Year-End BANKS SECTOR SECTOR TOTAL TOTAL
- -----------------------------------------------------------------------------------------------------------------------------
ORGANIZATION FOR ECONOMIC COOPERATION AND
DEVELOPMENT ("OECD")1 $1.7 $4.0 $13.3 $19.0 $16.2
NON-OECD
Latin America(2)(3) 0.6 3.3 5.2 9.1 7.9
Asia 0.9 0.5 5.5 6.9 6.2
Other 0.8 0.9 0.6 2.3 2.3
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL(4) $4.0 $8.7 $24.6 $37.3 $32.6
(1) Includes $2.7 billion and $3.2 billion in Mexico at December 31, 1995 and
December 31, 1994, respectively, of which $1.9 billion at December 31, 1995
and $2.0 billion at December 31, 1994 represents medium- and long-term
claims on the public sector.
(2) Includes $3.9 billion (including $1.8 billion of securities held in the
available-for-sale portfolio) in Brazil at December 31, 1995, up $0.6
billion from December 31, 1994, primarily reflecting increases in trade-
related claims funded with non-local currency liabilities where the funds
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.
(3) Includes $2.4 billion and $2.2 billion in Argentina at December 31, 1995 and
December 31, 1994, respectively, of which $1.6 billion and $1.3 billion
represents local-dollar claims funded by local-dollar liabilities.
(4) Includes investments in affiliates of $1.3 billion at December 31, 1995 and
$1.1 billion at December 31, 1994.
81
CONSENT OF INDEPENDENT AUDITORS
[LOGO OF KPMG PEAT MARWICK LLP APPEARS HERE]
Certified Public Accountants
The Board of Directors
Citicorp:
We consent to incorporation by reference of our report dated
January 16, 1996 relating to the consolidated balance sheets of
Citicorp and subsidiaries as of December 31, 1995 and 1994, the
related consolidated statements of income, changes in
stockholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 1995, and the related
consolidated balance sheets of Citibank, N.A. and subsidiaries as
of December 31, 1995 and 1994, which report appears on page 45
of the 1995 Citicorp Annual Report and Form 10-K, in the
following Registration Statements: of Citicorp Nos. 2-47648,
2-58678, 2-82298, 33-21332, 33-21331, 33-41751, 33-52601, 33-53261,
and 333-00983 on Form S-8, and Nos. 33-38589, 33-59791, and
33-66094 on Form S-3; and of Citicorp Mortgage Securities, Inc.,
Citibank, N.A., and other affiliates, No. 33-66222 on Form S-3, and
Nos. 33-6979, 33-6358, 33-36313, and 33-34670 on Form S-11.
/S/ KPMG PEAT MARWICK LLP
New York, New York
February 23, 1996
REGULATION AND SUPERVISION
Citicorp is a bank holding company within the meaning of the
U.S. Bank Holding Company Act of 1956 ("BHC Act") registered
with and subject to examination by the FRB. Citibank, N.A.
("Citibank") is a national bank primarily regulated by the OCC.
The OTS also regulates Citicorp and is the primary regulator of
Citicorp's U.S. savings association subsidiary. The Federal Deposit
Insurance Corporation ("FDIC") insures deposits at Citicorp's
U.S. depository institution subsidiaries and, in that capacity, also
regulates those institutions.
Citicorp's earnings and activities are affected by legislation, by
actions of the FRB, OCC, FDIC, OTS, and other regulators, and by
local legislative and administrative bodies and decisions of courts
in all jurisdictions in which Citicorp, Citibank, and their affiliates
conduct business. For example, these include limitations on the
ability of subsidiaries to pay dividends to Citicorp (see Note 14 to
the consolidated financial statements), numerous federal and
state consumer protection laws imposing requirements on the
making, enforcement, and collection of consumer loans, and
restrictions by regulators on the manner in which Citicorp
engages in derivatives activities and in which it sells mutual
funds and other uninsured investment products to customers.
Legislation may be enacted or regulation imposed in the U.S. or
its political subdivisions, or in any other jurisdiction in which
Citicorp does business, to further regulate banking and financial
services or to limit finance charges or other fees or charges
earned in such activities. There can be no assurance whether any
such legislation or regulation will place additional limitations on
Citicorp's operations or adversely affect its earnings.
In that connection, a number of lawsuits and administrative
actions have been filed in several states against credit card
issuing banks (both national banks and state-chartered banks)
which challenge various fees and charges (such as late fees, over-
the-limit fees, returned check charges and annual membership
fees) assessed against residents of the states in which such suits
were filed, based on restrictions or prohibitions under such states'
laws alleged to be applicable to credit card issuing banks located
in other states. Two state supreme courts (California and
Colorado) and two federal appeals courts have affirmed dismissal
of these cases on the ground that individual state prohibitions on
assessing these fees or charges are pre-empted by federal laws.
On November 28, 1995, the New Jersey Supreme Court ruled that
state prohibitions on late fees are not pre-empted. The issue is
now before the U.S. Supreme Court which has agreed to review
the California late fee case which will resolve the conflict.
Citibank (South Dakota), N.A., Citicorp's primary issuer of bank
credit cards, was involved in the cases in California, New Jersey
and Colorado.
Citicorp believes it has a strong case for federal pre-emption
which is supported by interpretations of the OCC and expects the
U.S. Supreme Court to uphold its position. If the U.S. Supreme
Court resolves this case adversely to Citibank (South Dakota),
N.A., the decision could have the effect of limiting certain fees
and charges that could be assessed on credit card accounts and
could require Citibank (South Dakota), N.A. and other card
issuing banks to pay refunds and civil penalties. It is not
practicable to determine the amount of such refunds and
penalties Citibank (South Dakota), N.A. might be required to pay,
but any such payment could have an adverse impact on Citicorp's
credit card business.
U.S. federal law imposes certain restrictions on transactions
between Citicorp and its nonbank subsidiaries, on the one hand,
and its federally insured depository institutions and their
subsidiaries, including Citibank, on the other. With certain
exceptions, federal law also imposes limitations on, and requires
collateral for, extensions of credit by Citibank and other U.S.
insured depository institutions to their non-bank affiliates,
including Citicorp.
Subject to certain limitations and restrictions, a U.S. bank
holding company, with the prior approval of the FRB, may acquire
an out-of-state bank. Banks in states that do not prohibit out-of-
state mergers may merge, effective June 1997 or sooner if both
states expressly permit such mergers, with the approval of the
appropriate federal bank regulatory agency. A national bank may
establish a de novo branch out of state if such branching is
expressly permitted by the other state.
82
Outside the U.S., subject to certain requirements for prior FRB
consent or notice, Citicorp may acquire banks and Citibank may
establish branches subject to local laws and to U.S. laws
prohibiting companies from doing business in certain countries.
The activities of U.S. bank holding companies are generally
limited to managing or controlling banks. Nonbank acquisitions
in the U.S. are generally limited to 5% of voting shares unless the
FRB determines that the acquisition is so closely related to
banking as to be a proper incident to banking or managing or
controlling banks. Subject to prior FRB consent, a bank holding
company may generally acquire less than 20% of a company that
does not do business in the U.S. and 20% or more if the FRB finds
that the activities are usual in connection with banking or finance
outside the U.S. Citibank's U.S. activities are generally limited to
those that the OCC determines to constitute the business of
banking or to be incidental to banking. In the U.S., Citibank and
its affilitates may underwrite and deal in specific categories of
government-issued securities and may advise and sell as broker,
but may not sponsor or distribute, mutual funds. Citicorp
Securities, Inc., a nonbank subsidiary of Citicorp, is authorized by
the FRB to underwrite and deal in securities, to a limited extent,
subject to certain conditions. Outside the U.S., Citicorp
subsidiaries may sponsor, distribute, and advise mutual funds and
underwrite and deal in debt and, to a limited extent, equity
securities, subject to local country laws.
A financial institution insured by the FDIC that is under
common control with a failed or failing FDIC-insured institution
can be required to indemnify the FDIC for losses resulting from
the insolvency of the failed institution, even if this causes the
affiliated institution also to become insolvent. Any obligations or
liability owed by a subsidiary depository institution to its parent
company is subordinate to the subsidiary's cross-guarantee
liability with respect to commonly controlled insured depository
institutions and to the rights of depositors.
Under longstanding FRB policy, a bank holding company is
expected to act as a source of financial strength for its subsidiary
banks and to commit resources to support such banks. Citicorp
could be required to commit resources to its subsidiary banks in
circumstances where it might not do so, absent such policy.
Citicorp and its U.S. insured depository institution subsidiaries
are subject to risk-based capital and leverage guidelines issued by
U.S. regulators for banks and bank holding companies. The
regulatory agencies are required by law to take specific prompt
actions with respect to institutions that do not meet minimum
capital standards and have defined five capital tiers, the highest
of which is "well-capitalized." As of December 31, 1995, Citicorp's
bank and thrift subsidiaries, including Citibank, were "well
capitalized." See capital analysis on pages 38 and 39.
In the liquidation or other resolution of a failed U.S. insured
depository institution, deposits in U.S. offices and certain claims
for administrative expenses and employee compensation are
afforded a priority over other general unsecured claims, including
deposits in offices outside the U.S., non-deposit claims in all
offices, and claims of a parent such as Citicorp. Such priority
creditors would include the FDIC, which succeeds to the position
of insured depositors.
A bank is not required to repay a deposit at a branch outside
the U.S. if the branch cannot repay the deposit due to an act of
war, civil strife, or action taken by the government in the host
country, unless the bank has expressly agreed in writing to do so.
The earnings of Citicorp, Citibank, and their subsidiaries and
affiliates are affected by general economic conditions and the
conduct of monetary and fiscal policy by the U.S. government and
by governments in other countries in which they do business.
COMPETITION
Citicorp, Citibank, and their subsidiaries and affiliates are subject
to intense competition in all aspects of their businesses from both
bank and non-bank institutions that provide financial services
and, in some of their activities, from government agencies.
PROPERTIES
The principal offices of Citicorp and Citibank are located at 399
Park Avenue, New York, New York, a 39-story building of which
two thirds is owned by Citibank. Citibank also owns one third of
Citicorp Center, a 59-story building located at 153 East 53rd
Street across Lexington Avenue from 399 Park Avenue. Citicorp
occupies all of the space it owns in both buildings. Citibank also
owns Citicorp at Court Square in Long Island City, New York and
111 Wall Street in New York City, which are totally occupied by
Citicorp. In addition, Citicorp has major U.S. real estate holdings
in Chicago; Hagerstown and Silver Springs, Maryland; Los
Angeles; New Castle, Delaware; Rio Piedras, Puerto Rico; Sioux
Falls, South Dakota; Tampa; and The Lakes, Nevada.
Outside the U.S. Citicorp owns major corporate premises in
various cities throughout the world including Buenos Aires;
Caracas; Dusseldorf; Hong Kong; Lewisham and London, United
Kingdom; Madrid; Manila; Mexico City; Paris; Rio de Janeiro; Sao
Paulo; and Tokyo. Approximately 47% of the space Citicorp
occupies worldwide is owned by Citicorp.
EFFECTS OF INFLATION
The impact of inflation on Citicorp and other financial
institutions is significantly different from that on industries that
require a high proportion of investment in fixed assets. The assets
and liabilities of a financial institution are primarily monetary in
nature. During periods of inflation, monetary assets lose value in
terms of purchasing power, and monetary liabilities have
corresponding purchasing power gains. The financial statements
and other data appearing in this annual report, and in particular
the discussion of price risk management on pages 35 and 36,
illustrate how Citicorp operates in an environment of changing
interest rates, foreign exchange rates, and inflationary trends.
83
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
(Registrant)
/s/ Charles E. Long
Charles E. Long
Executive Vice President and Secretary
February 23, 1996
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed on February 23, 1996 by the
following persons in the capacities indicated:
/s/ Victor J. Menezes /s/ Thomas E. Jones
Victor J. Menezes Thomas E. Jones
Executive Vice President Executive Vice President
Chief Financial Officer Principal Financial Officer(1)
(1) Responsible for financial control, tax, accounting, and reporting.
John S. Reed (Citicorp's Principal Executive Officer) and the
Directors of Citicorp (listed below) executed a power of attorney
appointing Charles E. Long their attorney-in-fact, empowering
him to sign this report on their behalf.
D. Wayne Calloway Rozanne L. Ridgway
Colby H. Chandler H. Onno Ruding
Pei-yuan Chia Robert B. Shapiro
Paul J. Collins Frank A. Shrontz
Kenneth T. Derr Roger B. Smith
H.J. Haynes Franklin A. Thomas
William R. Rhodes Edgar S. Woolard, Jr.
EXHIBITS, FINANCIAL STATEMENTS SCHEDULES,
AND REPORTS ON FORM 8-K
Financial Statements filed for Citicorp and Subsidiaries:
Consolidated Statement of Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Stockholders' Equity
Consolidated Statement of Cash Flows
Citicorp filed a Current Report on Form 8-K dated October 17,
1995 (Item 5), which report included a summary of the con-
solidated operations of Citicorp for the three- and nine-month
periods ended September 30, 1995. Citicorp filed a Current Report
on Form 8-K dated January 16, 1996 (Item 5), which report
included a summary of the consolidated operations of Citicorp
for the year ended December 31, 1995.
Calculation of Ratio of Income to Fixed Charges and Financial
Data Schedules are filed herewith.
Citicorp's principal subsidiaries and their place of
incorporation or organization include:
Citibank, N.A. Delaware
Citibank (Nevada), N.A. Nevada
Citibank (South Dakota), N.A. South Dakota
Citibank Overseas Investment
Corporation Delaware
Citicorp Holdings, Inc. Delaware
Citicorp Mortgage, Inc. Delaware
Citicorp Real Estate, Inc. Delaware
Citibank Delaware Delaware
Citibank (New York State) New York
Citibank Privatkunden A.G. Germany
Citibank A.G. Germany
Citibank Canada Canada
Citibank Espana Spain
Citibank, Federal Savings Bank Illinois
Citibank International plc United Kingdom
Citibank Investments, Ltd. United Kingdom
Citibank Limited Australia
Citibank Malaysia Malaysia
Citibank Mexico, S.A. Groupo
Financiero Citibank Mexico
Citibank (Switzerland) Switzerland
Citicorp Banking Corporation Delaware
Citicorp Securities, Inc. Delaware
Citicorp North America, Inc. Delaware
Citicorp Venture Capital Ltd. New York
Court Square Capital Limited Delaware
The Student Loan Corporation Delaware
Citicorp's Restated Certificate of Incorporation, as amended,
By-Laws, Instruments Defining the Rights of Securities Holders,
and certain other material contracts, including employee
benefit plans and indentures and constituent instruments, have
been previously filed with the Securities and Exchange
Commission as exhibits to various Citicorp registration
statements and periodic reports.
Stockholders may obtain copies of such documents by writing
to Citicorp, Corporate Governance Department, 399 Park Avenue,
Mezzanine, New York, New York 10043.
Powers of Attorney of Messrs. Reed, Calloway, Chandler,
Chia, Collins, Derr, Haynes, Rhodes, Ruding, Shapiro, Shrontz,
Smith, Thomas, and Woolard and Amb. Ridgway as Directors and/
or officers of Citicorp are filed herewith.
84
CITICORP AND CITIBANK DIRECTORS' COMMITTEES
AUDIT COMMITTEES: SUPERVISE INDEPENDENT AUDITS AND OVERSEE THE
ESTABLISHMENT OF APPROPRIATE ACCOUNTING POLICIES FOR CITICORP AND
CITIBANK, N.A.
Members Citicorp: D. Wayne Calloway, Chairman; Colby H. Chandler,
H.J. Haynes, Rozanne L. Ridgway, Robert B. Shapiro, and Roger B. Smith.
Members Citibank, N.A.: D. Wayne Calloway, Chairman; H.J. Haynes and
Rozanne L. Ridgway.
The Audit Committees of Citicorp and Citibank, N.A. (the "committee"),
whose members are all independent outside directors, meet with
members of senior management as the committee deems appropriate.
Its principal functions include reviews of: the audit plans, scope of audit
and audit findings of both independent auditors and the corporation's
internal corporate audit group; significant tax and legal matters; reports
on credit portfolios and processes; and internal controls. Further, it is the
responsibility of this committee to recommend to the Board the annual
appointment of the independent auditors. The Board accepted the
recommendation that KPMG Peat Marwick LLP be retained for 1996
and this proposal will be presented to the stockholders for approval at
the Annual Meeting.
The findings of internal and independent auditors, financial controllers
and external regulatory agencies are reviewed. Responses to their
findings and corrective action plans are monitored to ensure that
appropriate follow-up measures are taken in a timely manner. These are
reviewed with and without the presence of management. The committee
also meets privately with KPMG Peat Marwick LLP and the Chief Auditor.
It is also the function of this committee to review the accounting policies
used in preparing the financial statements of Citicorp and Citibank, N.A.
/s/ D. WAYNE CALLOWAY
D. WAYNE CALLOWAY
COMMITTEE ON DIRECTORS: RECOMMENDS QUALIFIED CANDIDATES FOR
MEMBERSHIP ON THE BOARDS OF DIRECTORS OF CITICORP AND CITIBANK, N.A.
Members: John S. Reed, Chairman; Colby H. Chandler, H.J. Haynes,
Frank A. Shrontz, and Franklin A. Thomas.
The Committee on Directors solicits recommendations for prospective
directors and, consistent with the needs of the corporation and
representation of the various services and customers, recommends the
approval of a candidate. The nominees are then presented to the full
Board, which proposes the slate of directors to be submitted to the
stockholders at the Annual Meeting. In addition, the committee is
charged with keeping current and recommending changes in directors'
compensation.
/s/ JOHN S. REED
JOHN S. REED
COMMITTEE ON SUBSIDIARIES AND CAPITAL (CITICORP)
Members: Paul J. Collins, Chairman; D. Wayne Calloway, Colby H.
Chandler, Kenneth T. Derr, H.J. Haynes, Rozanne L. Ridgway, Robert B.
Shapiro, and Franklin A. Thomas.
The Committee is responsible for reviewing 1) the corporation's capital
structure, position and planning; 2) the financial position of the principal
subsidiaries of Citicorp including, but not limited to, Citibank, N.A.;
3) the corporation's subsidiary structure and processes for managing
subsidiaries; 4) the adequacy of corporate insurance coverage; and
5) the conduct of Citicorp's subsidiaries and affiliates in providing
fiduciary and investment services. The Chairman of the committee
reports periodically to the Citicorp and Citibank, N.A. Boards of
Directors.
/s/ PAUL J. COLLINS
PAUL J. COLLINS
CONSULTING COMMITTEE (CITIBANK, N.A.)
Members: Colby H. Chandler, Kenneth T. Derr, H. Onno Ruding, Robert B.
Shapiro, Roger B. Smith, and Edgar S. Woolard, Jr.
This committee, composed of those Citicorp directors who are not also
directors of Citibank, N.A., attends all meetings of the Board of Directors
of Citibank, N.A. and remains available to Citibank's Board as consultants
on an "as needed" basis.
/s/ JOHN S. REED
JOHN S. REED
EXECUTIVE COMMITTEE: PROVIDES BACKUP FOR THE BOARDS OF DIRECTORS OF
CITICORP AND CITIBANK, N.A.
Members Citicorp: H.J. Haynes, Frank A. Shrontz, Roger B. Smith, and
Franklin A. Thomas.
Members Citibank, N.A.: Any three directors in attendance at a regular
meeting of the Board of Directors where a quorum is not present.
These committees act on behalf of the Boards of Directors should an
urgent matter arise that requires a decision before the Board is next
scheduled to meet. The Executive Committee has nearly all the powers
of the Boards, except for certain powers expressly reserved to the Boards.
The Chairman and the Vice Chairmen are ex-officio members.
/s/ JOHN S. REED
JOHN S. REED
PERSONNEL COMMITTEE: OVERSEES EMPLOYEE POLICIES AND PROGRAMS OF
CITICORP AND CITIBANK, N.A.
Members: Frank A. Shrontz, Chairman; Kenneth T. Derr, H.J. Haynes,
Franklin A. Thomas, and Edgar S. Woolard, Jr.
The Personnel Committee reviews and approves compensation policy and
other personnel-related programs to maintain an environment at Citicorp
and Citibank, N.A. that attracts and retains people of high capability,
commitment and integrity. In addition, the committee oversees
succession planning.
/s/ FRANK A. SHRONTZ
FRANK A. SHRONTZ
PUBLIC ISSUES COMMITTEE: REVIEWS CITICORP'S POLICIES AND PERFORMANCE ON
MATTERS OF PUBLIC CONCERN.
Members: Franklin A. Thomas, Chairman; Rozanne L. Ridgway, Frank A.
Shrontz, and Roger B. Smith.
The Public Issues Committee's mission is to assure that the public
interest is maintained in the performance of Citicorp's business roles.
The committee reviews the corporation's policies, postures, practices and
programs relating to public issues of significance to Citicorp and the
public at large.
/s/ FRANKLIN A. THOMAS
FRANKLIN A. THOMAS
85
CITICORP AND CITIBANK DIRECTORS
The Boards of Directors of D. WAYNE CALLOWAY+* JOHN S. REED+* ROGER B. SMITH+
Citicorp and Citibank, N.A. Chairman and Chairman Former Chairman and
meet on the third Tuesday of Chief Executive Officer Citicorp and Citibank, N.A. Chief Executive Officer
the month to administer the PepsiCo, Inc. General Motors Corporation
affairs of the organizations. WILLIAM R. RHODES+*
Certain specific operations COLBY H. CHANDLER+ Vice Chairman FRANKLIN A. THOMAS+*
and areas of the Corporation Former Chairman and Citicorp and Citibank, N.A. President
and the Bank are regularly Chief Executive Officer The Ford Foundation
monitored by the Directors' Eastman Kodak Company ROZANNE L. RIDGWAY+
committees, whose activities Co-Chair EDGAR S. WOOLARD, JR.+
are described on the PEI-YUAN CHIA+* The Atlantic Council Chairman
preceding pages. Vice Chairman of the United States E.I. du Pont de Nemours &
Citicorp and Citibank, N.A. Company
+ Director of Citicorp H. ONNO RUDING+
* Director of Citibank, N.A. PAUL J. COLLINS+* Vice Chairman
Vice Chairman Citicorp and Citibank, N.A.
Citicorp and Citibank, N.A.
ROBERT B. SHAPIRO+*
KENNETH T. DERR+ Chairman and
Chairman and Chief Executive Officer
Chief Executive Officer Monsanto Company
Chevron Corporation
FRANK A. SHRONTZ+*
H.J. HAYNES+* Chairman and
Senior Counselor Chief Executive Officer
Bechtel Group, Inc. The Boeing Company
86
COUNTRY CORPORATE OFFICERS
ALGERIA EGYPT LUXEMBOURG SENEGAL
Kamal B. Driss Ahmed M. El Bardai Thomas Seale Kandolo Kasongo
ARGENTINA EL SALVADOR MALAYSIA SINGAPORE
Jorge A. Bermudez Juan A. Miro Sunil Sreenivasan David P. Conner
ARUBA FINLAND MEXICO SLOVAKIA
Michael A. Contreras Stephen W. McClintock Julio A. de Quesada David C. Francis
AUSTRALIA FRANCE MONACO SOUTH AFRICA
Thomas M. McKeon Claude Jouven Miklos I. Vasarhelyi Terence M. Davidson
AUSTRIA GABON MOROCCO SPAIN
A. Walter Hoellmer Nuhad K. Saliba To be appointed Amador Huertas
BAHAMAS GERMANY NEPAL SRI LANKA
David A. Tremblay Richard J. Srednicki Pravin Batra Nihal Welikala
BAHRAIN GREECE NETHERLANDS SUDAN
Mohammed Al-Shroogi Dimitris P. Krontiras Romeo Van Der Borch Adnan A. Mohamed
BANGLADESH GUAM NEW ZEALAND SWEDEN
Srinivasan Sridhar Rashid M. Habib Bradden Nowland James E. Morrow
BELGIUM GUATEMALA NIGERIA SWITZERLAND
Lode G. Beckers Juan A. Miro Michel A. Accad Philippe G. Holderbeke
BOLIVIA HAITI NORWAY TAIWAN
Fernando Anker Gladys M. Coupet Per Kumle Brian T. Clayton
BRAZIL HONDURAS OMAN TANZANIA
Roberto V. do Valle Sebastian Paredes Ravi Bhatia Emeka Emuwa
BRUNEI HONG KONG PAKISTAN THAILAND
Stephen J. Lawrence Stephen H. Long S. Sajjad Razvi Shaukat Tarin
CANADA HUNGARY PANAMA TRINIDAD AND TOBAGO
Richard E. Lint John D. McGloughlin Eduardo C. Urriola Steve Bideshi
CAYMAN ISLANDS INDIA PARAGUAY TUNISIA
David A. Tremblay Robert S. Eichfeld Antonio Uribe William A. Thomas
CHANNEL ISLANDS (JERSEY) INDONESIA PERU TURKEY
Ronald L. Mitchell Colin G. Woolcock Gustavo C. Marin Anjum Z. Iqbal
CHILE IRELAND PHILIPPINES UNITED ARAB EMIRATES
Rodrigo Trevino Aidan M. Brady Suresh Maharaj Ahmed Saeed S. Bin Brek
CHINA ISRAEL POLAND UNITED KINGDOM
Chung Ping Cheng Ronny F. Strauss Marcel Polk Ian D. Cormack
COLOMBIA ITALY PORTUGAL URUGUAY
Eric R. Mayer Sergio Ungaro David Kyle Douglas L. Peterson
COSTA RICA JAMAICA PUERTO RICO VENEZUELA
Henry Comber Peter H. Moses Arthur P. Zeller Michael A. Contreras
COTE D'IVOIRE JAPAN ROMANIA VIETNAM
Robert Thornton Masamoto Yashiro David F. Garner Bradley C. Lalonde
CZECH REPUBLIC JORDAN RUSSIA VIRGIN ISLANDS (U.S.)
David R. Ansell Suhair Al-Ali Stuart M. Lawson Arthur P. Zeller
DENMARK KAZAKSTAN SAUDI ARABIA ZAIRE
Chris I. Devries George C. Mead James J. Collins Mulongo Masangu
DOMINICAN REPUBLIC KENYA ZAMBIA
Juan de Dianous Paul Fletcher Sanjeev Anand
ECUADOR KOREA
Benjamin Franco John M. Beeman
Note: Representative office in Israel opened February, 1996.
Countries where Citicorp has offices but no designated Country Corporate Officer
are not reflected in the above list.
CORPORATE STATE OFFICERS (U.S.)
CALIFORNIA DELAWARE MARYLAND NEW YORK
J. Eric Daniels Richard T. Collins Michael J. Looney Pamela P. Flaherty
COLORADO FLORIDA MISSOURI SOUTH DAKOTA
Robert A. Gottlieb Carlos Palomares To be appointed Ronald F. Williamson
CONNECTICUT ILLINOIS NEVADA TEXAS
Kenneth O. Danilo Thomas W. Sisson Wilfried Jackson Mark J. Devine
87
STOCKHOLDER INFORMATION
NOTICE OF THE ANNUAL MEETING
The Annual Meeting of stockholders will be held on Tuesday,
April 16, 1996, at 9:00 a.m., in the auditorium of Citicorp
Headquarters at 399 Park Avenue, New York, NY 10043.
A formal notice of this meeting, together with a proxy and a
proxy statement, has been included with this annual report.
Stockholders are urged to sign and return their proxies promptly
to assure that the stock of the corporation will be represented
as fully as possible at the meeting.
Citicorp has approximately 51,000 common stockholders of
record. About 84% of the Citicorp shares entitled to vote were
voted in person or by proxy at the last annual stockholders'
meeting on April 18, 1995.
Additional copies of this annual report are available. Write
to Citicorp, Corporate Affairs, 850 Third Avenue, 13th Floor,
New York, NY 10043.
Copies of the written transcript and tape recordings of the
proceedings at Citicorp stockholders' meetings are available
to Citicorp stockholders at cost from Citicorp, Corporate
Governance Department, 399 Park Avenue, Mezzanine,
New York, NY 10043.
Supplemental financial data are published quarterly and are
available from Citicorp, Corporate Affairs, 850 Third Avenue,
13th Floor, New York, NY 10043.
TRANSFER AGENT AND REGISTRAR
Citibank, N.A., Issuer Services, Box 4855, New York, NY 10043
CO-TRANSFER AGENTS AND CO-REGISTRANTS
First Interstate of California
c/o Chemical Mellon Shareholders Services
85 Challenger Road
Ridgefield Park, New Jersey 07660
Att: Edwin Padilla
First Chicago Trust Company
P.O. Box 2506
Suite 4659
Jersey City, New Jersey 07303-2506
Att: John Ryan
Montreal Trust Company
151 Front Street West
Toronto, Ontario
Canada M5J 2N1
Att: Liz Ko
JAPANESE SHAREHOLDER SERVICE ORGANIZATION
AND PAYING BANK
The Yasuda Trust and Banking Company, Limited
Stock Transfer Department
1-17-7, Saga, Koto-ku,
Tokyo, Japan
CITICORP STOCK LISTED
New York Stock Exchange Zurich Stock Exchange
Chicago Stock Exchange Geneva Stock Exchange
Pacific Stock Exchange Basle Stock Exchange
London Stock Exchange Toronto Stock Exchange
Amsterdam Stock Exchange Dusseldorf Stock Exchange
Tokyo Stock Exchange Frankfurt Stock Exchange
Securities and Exchange Commission
Washington, DC 20549
Form 10-K
Annual Report pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934 for the fiscal year ended December 31, 1995
Commission File Number 1-5738
[LOGO OF CITICORP APPEARS HERE]
Incorporated in the State of Delaware
IRS Employer Identification Number: 13-2614988
Address: 399 Park Avenue, New York, NY 10043
Telephone: (800) 285-3000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) AND (g)
OF THE ACT:
A list of Citicorp securities registered pursuant to Section 12(b)
and (g) of the Securities Exchange Act of 1934 is available from
Citicorp, Corporate Governance Department, 399 Park Avenue,
Mezzanine, New York, NY 10043.
As of December 31, 1995, Citicorp had 427,289,060 shares of
common stock outstanding.
Citicorp (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.
Disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein nor in any amendment to this Form
10-K but is contained in Citicorp's 1996 Proxy Statement
incorporated by reference in Part III of this Form 10-K.
The aggregate market value of Citicorp common stock held by
non-affiliates of Citicorp on January 31, 1996 was approximately
$34.3 billion.
Certain information has been incorporated by reference as
described herein into Part III of this annual report from
Citicorp's 1996 proxy statement.
88
APPENDIX I. GRAPHIC AND IMAGE MATERIAL
1. Graph: CITICORP: A GLOBAL GROWTH COMPANY (BACK OF FRONT COVER)
96 Countries and Territories (3,400 (+) Offices)
Map of the Globe depicting the countries and territories where
Citicorp has a presence.
CONSUMER BUSINESSES
Citibanking
Cards
Private Bank
COMMERCIAL BANKING
Global Relationship Banking
Emerging Markets
Listed: 96 Countries and Territories
2. Graph: Earnings ($ Billions) (Page 2).
91 92 93 94 95
---- ---- ---- ---- ----
Earnings Before Income Tax (0.2) 1.4 2.9 4.6 5.6
Earnings (0.5) 0.7 2.2 3.4 3.5
GRAPHIC TEXT:
GLOBAL GROWTH BUSINESS
CONSUMER BUSINESS
. Citibanking
. Cards
. Private Banking
COMMERCIAL BANKING
. Global Relationship Banking
. Emerging Markets
3. Graph: CCI Quarterly Common Stock Price (12/91 - 12/95)
(in Dollars) (Page 3).
4. Photo: Hamburg, Germany (page 4).
5. Photo: Citibank trading desk. (Page 5).
6. Photo: Hong Kong (Pages 6 & 7).
7. Graph: Consumer Business Income Reaches $2B (Page 7).
$ Billions
93 94 95
--- --- ---
1.2 1.8 2.0
8. Graph: Consumer Business Revenue by Region (page 7).
Latin America 11%
Europe 17%
North America 57%
Asia,Central Europe,
Middle East, Africa 15%
9. Graph: Consumer Business Revenue by Product (page 7).
Citibanking 44%
Cards 48%
Private Banking 8%
10. Graph: Commercial Banking Income ($ Billions) (Page 8).
93 94 95
--- --- ---
1.6 1.4 1.6
11. Photo: Citibanker with customers. (Page 8).
12. Graph: Commercial Banking Revenue by Region (page 9).
Latin America 17%
Europe 20%
Asia 20%
North America 33%
Central/Eastern Europe,
Middle East, Africa 10%
13. Graph: Commercial Banking Revenue by Product (page 9).
Lending 19%
Trading 28%
Transaction Services 32%
Capital Markets/Other 21%
14. Photo: Auto production plant (page 9).
15. Photo: Citibank branch in Rio de Janeiro (page 10).
16. Photo: Citibank Credit Card with multiple i.d. photos (page 11).
17. Photo: Citibank branch in Budapest, Hungary (page 12).
Inset: Citibanker with customer.
18. Photo: Customer using personal computer for banking (page 13).
19. Photo: CitiGold branch interior (page 14).
20. Photo: Citibankers playing tug of war (page 15).
21. Photo: La Paz marketplace (page 16).
22. Photo: St Edmund's Corner in Chicago. (Page 17).
Inset: Citibanker pictured with a participating family.
23. Photo: Citibanker Pam Flaherty visiting children. (Page 17).
24. Photo: Various Citibank branches, products and advertisements
(pages 18 & 19).
25. Graph: Earnings Before Income Tax ($ Billions) (Page 23).
91 92 93 94 95
---------------------------------
Earnings (0.5) 0.7 2.2 3.4 3.5
Total (0.2) 1.4 2.9 4.6 5.6
26. Graph: Adjusted Revenue ($ Billions) (Page 23).
91 92 93 94 95
---- ---- ---- ---- ----
Operating Margin 5.8 7.1 7.7 7.4 8.4
Total 15.9 16.6 17.6 17.7 19.6
27. Graph: Total Credit Costs ($ Billions) (page 23).
91 92 93 94 95
---- ---- ---- ---- ----
Commercial 2.2 2.5 1.1 0.2 0.1
Consumer 2.9 3.3 2.7 2.4 2.4
---- ---- ---- ---- ----
Total 5.1 5.8 3.8 2.6 2.5
28. Graph: Total Capital ($ Billions) (Page 23).
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
Tier 1 8.5% 10.3% 13.4% 16.9% 18.9%
Tier 2 8 9.8 9.8 9.2 8.8
---- ---- ---- ---- ----
Total 17.1 20.1 23.2 26.1 27.7
Tier 1 Ratio 3.7% 4.9% 6.6% 7.8% 8.4%
29. Graph: Core Business Earnings ($ Billions) (page 24).
93 94 95
--- --- ---
Commercial Banking 1.7 1.4 1.6
Consumer 1.3 1.8 2.0
--- --- ---
Total 3.0* 3.2 3.6
---------
* Excludes Restructuring Charges.
30. Graph: Consumer Net Income ($ Billions) (page 25).
93 94 95
--- --- ---
Private Banking 0.2 0.2 0.2
Citibanking 0.1 0.5 0.6
Cards 1.0 1.1 1.2
--- --- ---
Total 1.3* 1.8 2.0
---------
* Excludes Restructuring Charges.
31. Graph: Consumer Adjusted Revenue ($ Billions) (page 25).
93 94 95
---- ---- ----
Operating Margin 4.8 5.1 5.6
Total 10.8 11.3 12.3
32. Graph: Consumer Credit Costs ($ Billions) (page 26).
93 94 95
--- --- ---
Emerging Markets 0.1 0.1 0.3
Developed Markets 2.6 2.2 2.2
--- --- ---
Total 2.7 2.3 2.5
Managed Net Credit
Loss Ratio 2.54% 2.08% 1.99%
33. Graph: Consumer Managed Loans ($ Billions) (page 27).
93 94 95
--- --- ---
Private Banking 13 14 14
Citibanking 56 60 65
Cards 39 44 52
--- --- ---
Total 108 118 131
34. Graph: Consumer Allowance for Credit Losses ($ Billions) (page 28).
93 94 95
--- --- ---
Allowance 1.6 1.8 1.9
Allowance as
a % of Loans 1.89% 1.90% 1.84%
35. Graph: Commercial Banking Net Income ($ Billions) (page 29).
93 94 95
--- --- ---
Developed Markets 1.0 0.6 0.7
Emerging Markets 0.7 0.8 0.9
--- --- ---
Total 1.7* 1.4 1.6
---------
* Excludes Restructuring Charges.
36. Graph: Commercial Banking Adjusted Revenue ($ Billions) (page 30).
93 94 95
--- --- ---
Developed Markets 3.9 3.2 3.6
Emerging Markets 2.2 2.3 2.6
--- --- ---
Total 6.1 5.5 6.2
37. Graph: Commercial Banking Adjusted Expense ($ Billions) (page 30).
93 94 95
--- --- ---
Developed Markets 2.2 2.3 2.6
Emerging Markets 1.1 1.2 1.3
--- --- ---
Total 3.3 3.5 3.9
38. Graph: Commercial Banking Average Assets ($ Billions) (page 30).
93 94 95
--- --- ---
Average Loans 44 46 50
Total Average Assets 109 139 136
39. Graph: Consumer Deposits by Region (December 31, 1995) (page 35).
Latin America 7%
Europe 21%
North America 42%
Asia 30%
TOTAL $107.0 BILLION
40. Graph: Commercial Banking Deposits by Region (December 31, 1995)
(page 35).
Latin America 17%
Europe 26%
Asia 25%
North America 22%
Central/Eastern Europe,
Middle East, Africa 10%
TOTAL $60.1 BILLION
41. Graph: Net Interest Revenue (Adjusted For Credit Card Securitization)
($ Billions) (Page 40).
93 94 95
--- --- ---
Outside U.S. 4.3 5.0 5.7
U.S. 5.7 6.0 6.3
Net Interest Margin %
U.S. 4.7 4.7 5.0
Total 4.5 4.6 4.8
Outside U.S. 4.3 4.5 4.7