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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2011

Commission file number 1-9924

Citigroup Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)
  52-1568099
(I.R.S. Employer Identification No.)

399 Park Avenue, New York, NY
(Address of principal executive offices)

 

10043
(Zip code)

(212) 559-1000
(Registrant's telephone number, including area code)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

        Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý    No o

        Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý   Accelerated filer o   Non-accelerated filer o
(Do not check if a smaller
reporting company)
  Smaller reporting company o

        Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No ý

        Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date:

Common stock outstanding as of March 31, 2011: 29,206,440,560

Available on the web at www.citigroup.com

1


CITIGROUP INC.

FIRST QUARTER 2011—FORM 10-Q

OVERVIEW

    3  

CITIGROUP SEGMENTS AND REGIONS

   
4
 

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

   
5
 

EXECUTIVE SUMMARY

   
5
 

RESULTS OF OPERATIONS

   
7
 

SUMMARY OF SELECTED FINANCIAL DATA

   
7
 

SEGMENT, BUSINESS AND PRODUCT—INCOME (LOSS) AND REVENUES

   
8
 

CITICORP

   
10
 
 

Regional Consumer Banking

   
11
 
     

North America Regional Consumer Banking

   
12
 
     

EMEA Regional Consumer Banking

   
13
 
     

Latin America Regional Consumer Banking

   
14
 
     

Asia Regional Consumer Banking

   
15
 
 

Institutional Clients Group

   
16
 
     

Securities and Banking

   
17
 
     

Transaction Services

   
19
 

CITI HOLDINGS

   
20
 
 

Brokerage and Asset Management

   
21
 
 

Local Consumer Lending

   
22
 
 

Special Asset Pool

   
23
 

CORPORATE/OTHER

   
25
 
 

Segment Balance Sheet at March 31, 2011

   
26
 

CAPITAL RESOURCES AND LIQUIDITY

   
27
 
 

Capital Resources

   
27
 
 

Funding and Liquidity

   
32
 

MANAGING GLOBAL RISK

   
36
 
 

Credit Risk

   
36
 
       

Loan and Credit Overview

   
36
 
       

Loans Outstanding

   
37
 
       

Details of Credit Loss Experience

   
38
 
       

Impaired Loans, Non-Accrual Loans and Assets, and Renegotiated Loans

   
40
 
       

North America Consumer Mortgage Lending

   
44
 
       

North America Cards

   
50
 
       

Consumer Loan Details

   
53
 
       

Consumer Loan Modification Programs

   
55
 
       

Consumer Mortgage Representations and Warranties

   
59
 
       

Securities and Banking—Sponsored Private Label Residential Mortgage Securitizations—Representations and Warranties

   
62
 
       

Corporate Loan Details

   
63
 
       

Exposure to Commercial Real Estate

   
65
 
   

Market Risk

   
66
 
   

Country and Cross-Border Risk

   
73
 

DERIVATIVES

   
74
 

INCOME TAXES

   
77
 

DISCLOSURE CONTROLS AND PROCEDURES

   
78
 

FORWARD-LOOKING STATEMENTS

   
78
 

FINANCIAL STATEMENTS AND NOTES—TABLE OF CONTENTS

   
80
 

CONSOLIDATED FINANCIAL STATEMENTS

   
81
 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

   
87
 

LEGAL PROCEEDINGS

   
180
 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

   
180
 

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OVERVIEW

Introduction

        Citigroup operates, for management reporting purposes, via two primary business segments: Citicorp, consisting of Citi's Regional Consumer Banking businesses and Institutional Clients Group; and Citi Holdings, consisting of Citi's Brokerage and Asset Management and Local Consumer Lending businesses, and a Special Asset Pool. There is also a third segment, Corporate/Other. For a further description of the business segments and the products and services they provide, see "Citigroup Segments" below, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 3 to the Consolidated Financial Statements.

        Throughout this report, "Citigroup", "Citi" and "the Company" refer to Citigroup Inc. and its consolidated subsidiaries.

        This Quarterly Report on Form 10-Q should be read in conjunction with Citigroup's Annual Report on Form 10-K for the year ended December 31, 2010 (2010 Annual Report on Form 10-K). Additional information about Citigroup is available on the company's Web site at www.citigroup.com. Citigroup's recent annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, as well as its other filings with the SEC are available free of charge through the company's Web site by clicking on the "Investors" page and selecting "All SEC Filings." The SEC's Web site also contains periodic and current reports, proxy and information statements, and other information regarding Citi at www.sec.gov.

        Certain reclassifications have been made to the prior periods' financial statements to conform to the current period's presentation.

        Within this Form 10-Q, please refer to the tables of contents on pages 2 and 80 for page references to Management's Discussion and Analysis of Financial Condition and Results of Operations and Notes to Consolidated Financial Statements, respectively.

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As described above, Citigroup is managed pursuant to the following segments:

GRAPHIC

        The following are the four regions in which Citigroup operates. The regional results are fully reflected in the segment results above.

GRAPHIC


(1)
Asia includes Japan, Latin America includes Mexico, and North America comprises the U.S., Canada and Puerto Rico.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FIRST QUARTER 2011 EXECUTIVE SUMMARY

Citigroup

        Citigroup reported first quarter of 2011 net income of $3.0 billion, or $0.10 per diluted share. Citigroup's income declined $1.4 billion from the first quarter of 2010, but more than doubled from the prior quarter.

        Citigroup revenues, net of interest expense, were $19.7 billion, down $5.7 billion, or 22%, from the first quarter of 2010. Net interest revenues of $12.2 billion were 16% lower than the prior-year period, largely due to declining loan balances in Local Consumer Lending within Citi Holdings. Net interest revenues also included a $245 million pre-tax charge during the first quarter 2011 to increase reserves related to customer refunds in Japan Consumer Finance. Non-interest revenues were $7.5 billion, down 31% from the prior-year period, principally driven by lower Securities and Banking revenues, negative credit valuation adjustments (CVA), and a $709 million net charge resulting from the transfer of certain assets in the Special Asset Pool from held-to-maturity to trading assets (see "—Citi Holdings—Special Asset Pool—Reclassification of HTM Securities to Trading" and Note 11 to the Consolidated Financial Statements).

Citicorp

        Citicorp net income of $4.1 billion declined 19% from the prior-year period, but was up 69% from the prior quarter. Year-over-year, lower revenues and increased expenses were partially offset by improvement in credit costs. Citicorp's international operations accounted for 72% of first quarter 2011 net income.

        Citicorp revenues were $16.5 billion, down $2.0 billion, or 11%, from the first quarter of 2010. Net interest revenues of $9.5 billion declined 4% from the prior-year period, principally driven by North America Regional Consumer Banking and Securities and Banking. Non-interest revenues declined 19% to $7.0 billion, largely due to the decline in Securities and Banking revenues, including negative CVA.

        Regional Consumer Banking revenues of $7.9 billion were 2% lower year-over-year, mostly due to lower cards balances in North America, the impact of The Credit Card Accountability Responsibility and Disclosure Act (CARD Act), and continued spread compression in Asia and Latin America. Average retail banking loans increased 11% year-over-year to $121.4 billion, and average deposits increased 6% to $307.0 billion, both driven by Latin America and Asia. Citi-branded cards average loans declined 2% year-over-year to $110.3 billion, as growth in Latin America and Asia was offset by lower balances in North America. Cards purchase sales grew 8% from the prior-year period to $64.9 billion, and international investment sales increased 5% to $25.4 billion.

        Securities and Banking revenues declined 25% year-over-year, driven principally by lower revenues in fixed income markets and CVA of negative $229 million in the current quarter (compared to positive $285 million in the prior-year period). Excluding CVA, fixed income markets revenues decreased 22% year-over-year, largely due to declines in revenues from rates and currencies and credit and securitized products, and equity markets revenues were 9% lower mainly driven by lower trading revenues related to principal positions. Investment banking revenues were down 19% from the prior-year period, primarily reflecting lower revenues from municipal and investment grade debt underwriting.

        Transaction Services revenues were $2.6 billion, up 5% from the prior-year period, driven by growth in Latin America and Asia. Average deposits and other customer liabilities grew 11% year-over-year to $355 billion, with growth in every region. Strong growth in business volumes was partially offset by continued spread compression.

        Citicorp end of period loans increased 10% year-over-year to $418 billion, with 6% growth in consumer loans and 16% growth in corporate loans.

Citi Holdings

        Citi Holdings net loss of $608 million was 31% less than the net loss of $886 million in the first quarter of 2010, and down 40% from the net loss of $1.0 billion in the prior quarter, as continued improvement in credit costs and lower expenses more than offset the decline in revenues, as discussed below.

        Citi Holdings revenues declined 50% to $3.3 billion from the prior-year period. Net interest revenues declined 40% year-over-year to $2.6 billion, largely driven by lower loan balances in Local Consumer Lending and the higher reserve build related to customer refunds in Japan Consumer Finance during the current quarter. Non-interest revenues declined 70% to $653 million from the prior-year period, reflecting the $709 million net pre-tax charge related to the asset transfer in Special Asset Pool, lower positive marks on subprime related direct exposures, and a repurchase reserve build of $122 million related to North America residential real estate in Local Consumer Lending, partially offset by gains on private equity investments.

        Citi Holdings assets declined 33% from the first quarter of 2010 to $337 billion at the end of the first quarter of 2011. The decline reflected $106 billion in asset sales and business dispositions, $49 billion in net run-off and amortization, and $10 billion in net cost of credit and net asset marks. Sequentially, Citi Holdings assets declined 6% from $359 billion in the fourth quarter of 2010. At the end of the first quarter of 2011, Citi Holdings assets comprised approximately 17% of total Citigroup GAAP assets and 31% of risk-weighted assets.

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Credit Costs

        Citigroup total provisions for credit losses and for benefits and claims of $3.2 billion declined $5.4 billion, or 63%, from the prior-year period. Net credit losses of $6.3 billion were down $2.1 billion, or 25%, from the first quarter of 2010. Consumer net credit losses declined $2.6 billion, or 32%, to $5.4 billion, driven by continued improvement in credit in North America Citi-branded cards in Citicorp, and retail partner cards and residential real estate lending in Citi Holdings. Corporate net credit losses increased $485 million to $849 million year-over-year, primarily due to higher cost of loan sales as well as losses from loans to specific counterparties for which reserves had previously been established and were released in the current quarter.

        The net release of allowance for loan losses and unfunded lending commitments was $3.3 billion in the first quarter of 2011, compared to $53 million in the first quarter of 2010. The $2.0 billion net Consumer reserve release was mainly driven by retail partner cards and North America Citi-branded cards. The $1.4 billion net Corporate reserve release reflected releases for the overall portfolio, as credit trends continued to improve, as well as the release of previously established reserves for specific loans that offset charge-offs taken in the current quarter.

Operating Expenses

        Citigroup expenses increased $808 million, or 7%, year-over-year to $12.3 billion, reflecting higher legal and related costs, the impact of foreign exchange and inflation, continued investment spending and increased business volumes, partially offset by a decline in Citi Holdings as well as productivity saves across the firm.

        Citicorp expenses of $9.6 billion grew 12% from the prior-year period. More than half of the increase in Citicorp expenses was due to higher investment spending, with the remainder roughly split between the impact of foreign exchange in the translation of local currency results into U.S. dollars for reporting purposes (as used throughout this Form 10-Q, FX translation) and inflation and higher legal and related costs. Higher expenses from increased business volumes were generally offset by continued productivity saves.

        Citi Holdings expenses were down 22% year-over-year to $2.0 billion, principally due to the continued decline in assets and therefore lower operating costs.

        Citigroup continues to expect variability in its operating expenses during the remaining quarters of 2011 as it continues investing in Citicorp while rationalizing Citi Holdings. Certain expenses, particularly legal costs and the impact of foreign exchange, will remain difficult to predict.

Capital and Loan Loss Reserve Positions

        Citigroup's Tier 1 Capital ratio was 13.3% at quarter-end, and its Tier 1 Common ratio was 11.3%.

        Citigroup's total allowance for loan losses was $36.6 billion at quarter-end, or 5.79%, of total loans, down from $48.7 billion, or 6.80%, in the prior-year period. The decline in the total allowance for loan losses reflected asset sales, lower non-accrual loans, and overall improvement in the credit quality of the loan portfolio.

        The Consumer allowance for loan losses was $32.7 billion, or 7.47%, of total Consumer loans, at quarter-end, compared to $41.4 billion, or 7.84%, at March 31, 2010.

        Citigroup's non-accrual loans of $14.8 billion declined 48% from the prior-year period. At the end of the first quarter of 2011, the allowance for loan losses was 247% of non-accrual loans.

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RESULTS OF OPERATIONS

SUMMARY OF SELECTED FINANCIAL DATA

Citigroup Inc. and Consolidated Subsidiaries

 
  First Quarter    
 
In millions of dollars, except per-share amounts, ratios and direct staff   2011   2010   % Change  

Net interest revenue

  $ 12,224   $ 14,561     (16 )%

Non-interest revenue

    7,502     10,860     (31 )
               

Revenues, net of interest expense

  $ 19,726   $ 25,421     (22 )%

Operating expenses

    12,326     11,518     7  

Provisions for credit losses and for benefits and claims

    3,184     8,618     (63 )
               

Income from continuing operations before income taxes

  $ 4,216   $ 5,285     (20 )%

Income taxes

    1,185     1,036     14  
               

Income from continuing operations

  $ 3,031   $ 4,249     (29 )%

Income from discontinued operations, net of taxes(1)

    40     211     (81 )
               

Net income before attribution of noncontrolling interests

  $ 3,071   $ 4,460     (31 )%

Net income attributable to noncontrolling interests

    72     32     NM  
               

Citigroup's net income

  $ 2,999   $ 4,428     (32 )%
               

Less: Preferred dividends—Basic

  $ 4   $        

Less: Dividends and undistributed earnings allocated to participating securities, applicable to Basic EPS

    35     28        
               

Income allocated to unrestricted common shareholders for basic EPS

  $ 2,960   $ 4,400     (33 )%

Add: Incremental dividends and undistributed earnings allocated to participating securities, applicable to Diluted EPS

    1            
               

Income allocated to unrestricted common shareholders for diluted EPS

  $ 2,961   $ 4,400     (33 )%

Earnings per share

                   

Basic

                   

Income from continuing operations

  $ 0.10   $ 0.15     (33 )%

Net income

    0.10     0.15     (33 )
               

Diluted

                   

Income from continuing operations

  $ 0.10   $ 0.14     (29 )%

Net income

    0.10     0.15     (33 )
               

At March 31:

                   

Total assets

  $ 1,947,815   $ 2,002,213     (3 )%

Total deposits

    865,863     827,914     5  

Long-term debt

    376,541     439,274     (14 )

Mandatorily redeemable securities of subsidiary trusts (included in long-term debt)

    17,940     21,682     (17 )

Common stockholders' equity

    170,725     151,109     13  

Total stockholders' equity

    171,037     151,421     13  

Direct staff (in thousands)

    260     263     (1 )
               

Ratios:

                   

Return on average common stockholders' equity(2)

    7.3 %   12.0 %      

Return on average total stockholders' equity(2)

    7.3     12.0        
               

Tier 1 Common(3)

    11.34 %   9.11 %      

Tier 1 Capital

    13.26     11.28        

Total Capital

    16.98     14.88        

Leverage(4)

    7.00     6.16        
               

Common stockholders' equity to assets

    8.76 %   7.55 %      

Total stockholders' equity to assets

    8.78     7.56        

Book value per common share

  $ 5.85   $ 5.28        

Tangible book value per share(5)

  $ 4.69   $ 4.09        

Ratio of earnings to fixed charges and preferred stock dividends

    1.70x     1.82x        
               

(1)
Discontinued operations primarily reflects the sale of Nikko Cordial Securities, the sale of Citigroup's German retail banking operations, the sale of CitiCapital's equipment finance unit to General Electric, and the announced sale of the Egg Banking PLC credit card business. See Note 2 to the Consolidated Financial Statements.

(2)
The return on average common stockholders' equity is calculated using net income less preferred stock dividends divided by average common stockholders' equity. The return on total stockholders' equity is calculated using net income divided by average stockholders' equity.

(3)
As defined by the banking regulators, the Tier 1 Common ratio represents Tier 1 Capital less qualifying perpetual preferred stock, qualifying noncontrolling interests in subsidiaries and qualifying mandatorily redeemable securities of subsidiary trusts divided by risk-weighted assets.

(4)
The Leverage ratio represents Tier 1 Capital divided by adjusted average total assets.

(5)
Tangible book value per share is a non-GAAP financial measure for SEC purposes. For additional information and a reconciliation of this measure to the most directly comparable GAAP measure, see "Capital Resources and Liquidity—Capital Resources—Tangible Common Equity" below.

NM Not meaningful

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SEGMENT, BUSINESS AND PRODUCT—INCOME (LOSS) AND REVENUES

        The following tables show the income (loss) and revenues for Citigroup on a segment, business and product view:

CITIGROUP INCOME (LOSS)

 
  First Quarter    
 
In millions of dollars   2011   2010   % Change  

Income (loss) from continuing operations

                   

CITICORP

                   

Regional Consumer Banking

                   
 

North America

  $ 551   $ 15     NM  
 

EMEA

    49     24     NM  
 

Latin America

    484     367     32 %
 

Asia

    461     567     (19 )
               
   

Total

  $ 1,545   $ 973     59 %
               

Securities and Banking

                   
 

North America

  $ 458   $ 1,422     (68 )%
 

EMEA

    765     1,021     (25 )
 

Latin America

    272     269     1  
 

Asia

    210     469     (55 )
               
   

Total

  $ 1,705   $ 3,181     (46 )%
               

Transaction Services

                   
 

North America

  $ 113   $ 161     (30 )%
 

EMEA

    278     303     (8 )
 

Latin America

    170     152     12  
 

Asia

    284     319     (11 )
               
   

Total

  $ 845   $ 935     (10 )%
               
 

Institutional Clients Group

  $ 2,550   $ 4,116     (38 )%
               

Total Citicorp

  $ 4,095   $ 5,089     (20 )%
               

CITI HOLDINGS

                   

Brokerage and Asset Management

  $ (10 ) $ 76     NM  

Local Consumer Lending

    (599 )   (1,829 )   67 %

Special Asset Pool

    62     878     (93 )
               

Total Citi Holdings

  $ (547 ) $ (875 )   37 %
               

Corporate/Other

  $ (517 ) $ 35     NM  
               

Income from continuing operations

  $ 3,031   $ 4,249     (29 )%
               

Discontinued operations

  $ 40   $ 211     NM  

Net income attributable to noncontrolling interests

    72     32     NM  
               

Citigroup's net income

  $ 2,999   $ 4,428     (32 )%
               

NM Not meaningful

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CITIGROUP REVENUES

 
  First Quarter    
 
In millions of dollars   2011   2010   % Change  

CITICORP

                   

Regional Consumer Banking

                   
 

North America

  $ 3,334   $ 3,801     (12 )%
 

EMEA

    398     405     (2 )
 

Latin America

    2,309     2,076     11  
 

Asia

    1,901     1,800     6  
               
   

Total

  $ 7,942   $ 8,082     (2 )%
               

Securities and Banking

                   
 

North America

  $ 2,328   $ 3,553     (34 )%
 

EMEA

    2,059     2,515     (18 )
 

Latin America

    582     607     (4 )
 

Asia

    1,043     1,328     (21 )
               
   

Total

  $ 6,012   $ 8,003     (25 )%
               

Transaction Services

                   
 

North America

  $ 610   $ 639     (5 )%
 

EMEA

    836     833      
 

Latin America

    408     344     19  
 

Asia

    696     621     12  
               
   

Total

  $ 2,550   $ 2,437     5 %
               
 

Institutional Clients Group

  $ 8,562   $ 10,440     (18 )%
               
   

Total Citicorp

  $ 16,504   $ 18,522     (11 )%
               

CITI HOLDINGS

                   

Brokerage and Asset Management

  $ 137   $ 340     (60 )%

Local Consumer Lending

    3,153     4,670     (32 )

Special Asset Pool

    (7 )   1,540     NM  
               

Total Citi Holdings

  $ 3,283   $ 6,550     (50 )
               

Corporate/Other

  $ (61 ) $ 349     NM  
               

Total net revenues

  $ 19,726   $ 25,421     (22 )%
               

NM Not meaningful

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CITICORP

        Citicorp is the Company's global bank for consumers and businesses and represents Citi's core franchise. Citicorp is focused on providing best-in-class products and services to customers and leveraging Citigroup's unparalleled global network. Citicorp is physically present in approximately 100 countries, many for over 100 years, and offers services in over 160 countries and jurisdictions. Citi believes this global network provides a strong foundation for servicing the broad financial services needs of large multinational clients and for meeting the needs of retail, private banking, commercial, public sector and institutional clients around the world. Citigroup's global footprint provides coverage of the world's emerging economies, which Citi believes represent a strong area of growth. At March 31, 2011, Citicorp had approximately $1.3 trillion of assets and $784 billion of deposits, representing approximately 68% of Citi's total assets and approximately 91% of its deposits.

        Citicorp consists of the following businesses: Regional Consumer Banking (which includes retail banking and Citi-branded cards in four regions—North America, EMEA, Latin America and Asia) and Institutional Clients Group (which includes Securities and Banking and Transaction Services).

 
  First Quarter    
 
In millions of dollars   2011   2010   % Change  
 

Net interest revenue

  $ 9,506   $ 9,870     (4 )%
 

Non-interest revenue

    6,998     8,652     (19 )
               

Total revenues, net of interest expense

  $ 16,504   $ 18,522     (11 )%
               

Provisions for credit losses and for benefits and claims

                   
 

Net credit losses

  $ 2,318   $ 3,142     (26 )%
 

Credit reserve build (release)

    (1,258 )   (360 )   NM  
               
 

Provision for loan losses

  $ 1,060   $ 2,782     (62 )%
 

Provision for benefits and claims

    44     44      
 

Provision for unfunded lending commitments

    4     (7 )   NM  
               
   

Total provisions for credit losses and for benefits and claims

  $ 1,108   $ 2,819     (61 )%
               

Total operating expenses

  $ 9,601   $ 8,595     12 %
               

Income from continuing operations before taxes

  $ 5,795   $ 7,108     (18 )%

Provisions for income taxes

    1,700     2,019     (16 )
               

Income from continuing operations

  $ 4,095   $ 5,089     (20 )%

Net income attributable to noncontrolling interests

    11     21     (48 )
               

Citicorp's net income

  $ 4,084   $ 5,068     (19 )
               

Balance sheet data (in billions of dollars)

                   

Total EOP assets

  $ 1,330   $ 1,236     8 %

EOP Loans:

                   
 

Consumer

    235     221     6  
 

Corporate

    183     158     16  

Average assets

    1,323     1,233     7  

Total EOP deposits

    784     730     7  
               

NM Not meaningful

10


Table of Contents


REGIONAL CONSUMER BANKING

        Regional Consumer Banking (RCB) consists of Citigroup's four RCB businesses that provide traditional banking services to retail customers. RCB also contains Citigroup's branded cards business and Citi's local commercial banking business. RCB is a globally diversified business with over 4,200 branches in 39 countries around the world. At March 31, 2011, RCB had $333 billion of assets and $314 billion of deposits.

 
  First Quarter    
 
In millions of dollars   2011   2010   % Change  

Net interest revenue

  $ 5,752   $ 5,917     (3 )%

Non-interest revenue

    2,190     2,165     1  
               

Total revenues, net of interest expense

  $ 7,942   $ 8,082     (2 )%
               

Total operating expenses

  $ 4,482   $ 3,998     12 %
               
 

Net credit losses

  $ 2,108   $ 3,040     (31 )%
 

Credit reserve build (release)

    (862 )   (180 )   NM  
 

Provisions for unfunded lending commitments

             
 

Provision for benefits and claims

    44     44      
               

Provisions for credit losses and for benefits and claims

  $ 1,290   $ 2,904     (56 )%
               

Income from continuing operations before taxes

  $ 2,170   $ 1,180     84 %

Income taxes

    625     207     NM  
               

Income from continuing operations

  $ 1,545   $ 973     59 %

Net income (loss) attributable to noncontrolling interests

    (2 )   (5 )   60  
               

Net income

  $ 1,547   $ 978     58 %
               

Average assets (in billions of dollars)

  $ 327   $ 308     6 %

Return on assets

    1.92 %   1.29 %      

Total EOP assets

  $ 333   $ 313     6  

Average deposits (in billions of dollars)

    307.0     289.2     6  
               

Net credit losses as a percentage of average loans

    3.69 %   5.57 %      
               

Revenue by business

                   
 

Retail banking

  $ 3,907   $ 3,814     2 %
 

Citi-branded cards

    4,035     4,268     (5 )
               
   

Total

  $ 7,942   $ 8,082     (2 )%
               

Income from continuing operations by business

                   
 

Retail banking

  $ 681   $ 799     (15 )%
 

Citi-branded cards

    864     174     NM  
               
   

Total

  $ 1,545   $ 973     59 %
               

NM
Not meaningful

11


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NORTH AMERICA REGIONAL CONSUMER BANKING

        North America Regional Consumer Banking (NA RCB) provides traditional banking and Citi-branded card services to retail customers and small to mid-size businesses in the U.S. NA RCB's approximate 1,000 retail bank branches and 13.0 million retail customer accounts are largely concentrated in the greater metropolitan areas of New York, Los Angeles, San Francisco, Chicago, Miami, Washington, D.C., Boston, Philadelphia, and certain larger cities in Texas. At March 31, 2011, NA RCB had $33.0 billion of retail banking and residential real estate loans and $143.6 billion of average deposits. In addition, NA RCB had 21.1 million Citi-branded credit card accounts, with $73.2 billion in outstanding card loan balances.

 
  First Quarter    
 
In millions of dollars   2011   2010   % Change  

Net interest revenue

  $ 2,624   $ 2,954     (11 )%

Non-interest revenue

    710     847     (16 )
               

Total revenues, net of interest expense

  $ 3,334   $ 3,801     (12 )%
               

Total operating expenses

  $ 1,689   $ 1,621     4 %
               
 

Net credit losses

  $ 1,440   $ 2,157     (33 )%
 

Credit reserve build (release)

    (649 )   4     NM  
 

Provisions for benefits and claims

    6     8     (25 )
               

Provisions for loan losses and for benefits and claims

  $ 797   $ 2,169     (63 )%
               

Income from continuing operations before taxes

  $ 848   $ 11     NM  

Income taxes (benefits)

    297     (4 )   NM  
               

Income from continuing operations

  $ 551   $ 15     NM  

Net income attributable to noncontrolling interests

             
               

Net income

  $ 551   $ 15     NM  
               

Average assets (in billions of dollars)

  $ 120   $ 121     (1 )%

Average deposits (in billions of dollars)

    144     144      
               

Net credit losses as a percentage of average loans

    5.52 %   7.85 %      
               

Revenue by business

                   
 

Retail banking

  $ 1,187   $ 1,280     (7 )%
 

Citi-branded cards

    2,147     2,521     (15 )
               
   

Total

  $ 3,334   $ 3,801     (12 )%
               

Income (loss) from continuing operations by business

                   
 

Retail banking

  $ 91   $ 165     (45 )%
 

Citi-branded cards

    460     (150 )   NM  
               
   

Total

  $ 551   $ 15     NM  
               

NM
Not meaningful

1Q11 vs. 1Q10

        NA RCB revenues, net of interest expense, decreased 12% to $3.3 billion mainly due to lower volumes in branded cards and the net impact of the Credit Card Accountability Responsibility and Disclosure Act (CARD Act) on cards revenues, as well as lower mortgage-related revenues.

        Net interest revenue was down 11% to $2.6 billion driven primarily by lower volumes in cards, with average loans down 7% from the prior-year quarter. In addition, cards net interest revenue was negatively impacted by the CARD Act.

        Non-interest revenue decreased 16% to $710 million from the prior-year quarter mainly due to lower gains from mortgage loan sales and lower net mortgage servicing revenues.

        Operating expenses increased 4% to $1.7 billion from the prior-year quarter, primarily driven by higher marketing costs and technology spending. Management currently anticipates that, assuming credit continues to improve in NA RCB (see below), it will further increase investment spending in its NA RCB businesses.

        Provisions for loan losses and for benefits and claims decreased $1.4 billion, or 63%, primarily due to a net loan loss reserve release of $649 million in the current quarter and lower net credit losses in the Citi-branded cards portfolio. Cards net credit losses were down $732 million, or 35%, from the prior-year quarter, and the net credit loss ratio decreased 325 basis points to 7.42%.

12


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EMEA REGIONAL CONSUMER BANKING

        EMEA Regional Consumer Banking (EMEA RCB) provides traditional banking and Citi-branded card services to retail customers and small to mid-size businesses, primarily in Central and Eastern Europe, the Middle East and Africa. Remaining activities in respect of Western Europe retail banking and cards are included in Citi Holdings. The countries in which EMEA RCB has the largest presence are Poland, Turkey, Russia and the United Arab Emirates. At March 31, 2011, EMEA RCB had 297 retail bank branches with 3.6 million customer accounts, $4.7 billion in retail banking loans and $9.7 billion in average deposits. In addition, the business had 2.5 million Citi-branded card accounts with $2.9 billion in outstanding card loan balances.

 
  First Quarter    
 
In millions of dollars   2011   2010   % Change  

Net interest revenue

  $ 228   $ 248     (8 )%

Non-interest revenue

    170     157     8  
               

Total revenues, net of interest expense

  $ 398   $ 405     (2 )%
               

Total operating expenses

  $ 308   $ 282     9 %
               
 

Net credit losses

  $ 49   $ 97     (49 )%
 

Provision for unfunded lending commitments

             
 

Credit reserve build (release)

    (33 )   (10 )   NM  
               

Provisions for loan losses

  $ 16   $ 87     (82 )%
               

Income from continuing operations before taxes

  $ 74   $ 36     NM  

Income taxes

    25     12      
               

Income from continuing operations

  $ 49   $ 24     NM  

Net income attributable to noncontrolling interests

             
               

Net income

  $ 49   $ 24     NM  
               

Average assets (in billions of dollars)

  $ 10   $ 10      

Return on assets

    1.99 %   0.97 %      

Average deposits (in billions of dollars)

  $ 10   $ 10      
               

Net credit losses as a percentage of average loans

    2.69 %   4.98 %      
               

Revenue by business

                   
 

Retail banking

  $ 219   $ 222     (1 )%
 

Citi-branded cards

    179     183     (2 )
               
   

Total

  $ 398   $ 405     (2 )%
               

Income (loss) from continuing operations by business

                   
 

Retail banking

  $ 4   $ (9 )   NM  
 

Citi-branded cards

    45     33     36 %
               
   

Total

  $ 49   $ 24     NM  
               

NM
Not meaningful

1Q11 vs. 1Q10

        Revenues, net of interest expense declined 2% to $398 million from the prior-year period due to lower lending revenues on the continued liquidation of non-strategic customer portfolios, unrest in Middle East markets and lower contribution from an equity investment in Turkey.

        Net interest revenue was $228 million, or 8%, lower than the prior-year period due to the continued decline in the non-strategic portfolio, lower retail bank average loans and spread compression in the cards portfolio.

        Non-interest revenue increased by 8% to $170 million, reflecting higher investment sales and cards fees offset by a lower contribution from an equity investment in Turkey. Investment sales grew 43% year-over-year and assets under management grew 20%.

        Operating expenses increased 9% to $308 million, reflecting account acquisition-focused investment spending, expansion of the sales force and higher regulatory expenses.

        Provisions for loan losses decreased 82% to $16 million. Net credit losses decreased 49% to $49 million, while the loan loss reserve release increased from $10 million in the first quarter of 2010 to $33 million in the first quarter of 2011, reflecting the ongoing improvement in credit quality during the period.

13


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LATIN AMERICA REGIONAL CONSUMER BANKING

        Latin America Regional Consumer Banking (LATAM RCB) provides traditional banking and Citi-branded card services to retail customers and small to mid-size businesses, with the largest presence in Mexico and Brazil. LATAM RCB includes branch networks throughout Latin America as well as Banco Nacional de Mexico, or Banamex, Mexico's second largest bank, with over 1,700 branches. At March 31, 2011, LATAM RCB had 2,196 retail branches, with 26.6 million customer accounts, $23.5 billion in retail banking loan balances and $45.6 billion in average deposits. In addition, the business had 12.7 million Citi-branded card accounts with $13.5 billion in outstanding loan balances.

 
  First Quarter    
 
In millions of dollars   2011   2010   % Change  

Net interest revenue

  $ 1,574   $ 1,458     8 %

Non-interest revenue

    735     618     19  
               

Total revenues, net of interest expense

  $ 2,309   $ 2,076     11 %
               

Total operating expenses

  $ 1,365   $ 1,175     16 %
               
 

Net credit losses

  $ 407   $ 509     (20 )%
 

Credit reserve build (release)

    (146 )   (136 )   (7 )
 

Provision for benefits and claims

    38     36     6  
               

Provisions for loan losses and for benefits and claims

  $ 299   $ 409     (27 )%
               

Income from continuing operations before taxes

  $ 645   $ 492     31 %

Income taxes

    161     125     29  
               

Income from continuing operations

  $ 484   $ 367     32 %

Net (loss) attributable to noncontrolling interests

    (2 )   (5 )   60  
               

Net income

  $ 486   $ 372     31 %
               

Average assets (in billions of dollars)

  $ 79   $ 72     10 %

Return on assets

    2.49 %   2.10 %      

Average deposits (in billions of dollars)

  $ 46   $ 40     15  
               

Net credit losses as a percentage of average loans

    4.60 %   6.75 %      
               

Revenue by business

                   
 

Retail banking

  $ 1,348   $ 1,196     13 %
 

Citi-branded cards

    961     880     9  
               
   

Total

  $ 2,309   $ 2,076     11 %
               

Income from continuing operations by business

                   
 

Retail banking

  $ 305   $ 234     30 %
 

Citi-branded cards

    179     133     35  
               
   

Total

  $ 484   $ 367     32 %
               

1Q11 vs. 1Q10

        Revenues, net of interest expense increased 11% to $2.3 billion, driven by higher loan and deposit volumes as well as the impact of FX translation.

        Net interest revenue increased 8% to $1.6 billion, driven by higher loan volumes, primarily in the retail business, and the impact of FX translation, which was partially offset by spread compression.

        Non-interest revenue increased 19% to $735 million, driven by higher cards fee income from increased customer activity as purchase sales increased by 25%.

        Operating expenses increased 16% to $1.4 billion as compared to the prior-year period, primarily driven by new investments and the impact of FX translation. Higher operating expenses also reflected an increase in business volumes, partially offset by productivity saves.

        Provisions for loan losses and for benefits and claims decreased 27% to $299 million, reflecting a $102 million, or 20%, decrease in net credit losses in spite of the incremental $5.3 billion loan volumes and changes in FX rates. This progress was driven mainly by improved portfolio quality in Mexico cards. Additionally, loan loss reserve releases of $146 million were $10 million higher than the previous year, driven by retail banking loan losses.

14


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ASIA REGIONAL CONSUMER BANKING

        Asia Regional Consumer Banking (Asia RCB) provides traditional banking and Citi-branded card services to retail customers and small to mid-size businesses, with the largest Citi presence in South Korea, Japan, Taiwan, Singapore, Australia, Hong Kong, India and Indonesia. At March 31, 2011, Asia RCB had 707 retail branches, 16.2 million retail banking accounts, $108.1 billion in average customer deposits, and $64.1 billion in retail banking loans. In addition, the business had 15.4 million Citi-branded card accounts with $20.0 billion in outstanding loan balances.

 
  First Quarter    
 
In millions of dollars   2011   2010   % Change  

Net interest revenue

  $ 1,326   $ 1,257     5 %

Non-interest revenue

    575     543     6  
               

Total revenues, net of interest expense

  $ 1,901   $ 1,800     6 %
               

Total operating expenses

  $ 1,120   $ 920     22 %
               
 

Net credit losses

  $ 212   $ 277     (23 )%
 

Credit reserve build (release)

    (34 )   (38 )   11  
               

Provisions for loan losses and for benefits and claims

  $ 178   $ 239     (26 )%
               

Income from continuing operations before taxes

  $ 603   $ 641     (6 )%

Income taxes

    142     74     92  
               

Income from continuing operations

  $ 461   $ 567     (19 )%

Net income attributable to noncontrolling interests

             
               

Net income

  $ 461   $ 567     (19 )%
               

Average assets (in billions of dollars)

  $ 118   $ 105     12 %

Return on assets

    1.58 %   2.19 %      

Average deposits (in billions of dollars)

  $ 108   $ 96     13  
               

Net credit losses as a percentage of average loans

    1.04 %   1.57 %      
               

Revenue by business

                   
 

Retail banking

  $ 1,153   $ 1,116     3 %
 

Citi-branded cards

    748     684     9  
               
   

Total

  $ 1,901   $ 1,800     6 %
               

Income from continuing operations by business

                   
 

Retail banking

  $ 281   $ 409     (31 )%
 

Citi-branded cards

    180     158     14  
               
   

Total

  $ 461   $ 567     (19 )%
               

1Q11 vs. 1Q10

        Revenues, net of interest expense increased 6% to $1.9 billion, driven by higher cards purchase sales, investment sales, loan and deposit volumes, and the impact of FX translation. This was partially offset by lower spreads and a $70 million charge for the anticipated repurchase of certain securities.

        Net interest revenue increased 5% to $1.3 billion, mainly due to higher lending and deposit volumes and the impact of FX translation, partially offset by lower spreads.

        Non-interest revenue increased 6% to $575 million, primarily due to higher investment revenues, higher cards purchase sales, and the impact of FX translation, partially offset by the charge for the anticipated repurchase of certain securities and cards partnership payments.

        Operating expenses increased 22% to $1.1 billion, due to continued investment spending, incremental legal and related expenses, and the impact of FX translation. Higher operating expenses also reflected an increase in business volumes, partially offset by productivity saves.

        Provisions for loan losses and for benefits and claims decreased 26% to $178 million, mainly due to a 23% decline in net credit losses. These declines were partially offset by the impact of FX translation. The decrease in provision for loan losses and for benefits and claims also reflected continued credit quality improvement across the region, particularly in India, partially offset by increasing volumes.

15


Table of Contents


INSTITUTIONAL CLIENTS GROUP

        Institutional Clients Group (ICG) includes Securities and Banking and Transaction Services. ICG provides corporate, institutional, public sector and high-net-worth clients with a full range of products and services, including cash management, trade finance and services, securities services, trading, underwriting, lending and advisory services, around the world. ICG's international presence is supported by trading floors in approximately 75 countries and a proprietary network within Transaction Services in over 95 countries. At March 31, 2011, ICG had $997 billion of assets and $470 billion of deposits.

 
  First Quarter    
 
In millions of dollars   2011   2010   % Change  

Commissions and fees

  $ 1,132   $ 1,108     2 %

Administration and other fiduciary fees

    744     721     3  

Investment banking

    793     953     (17 )

Principal transactions

    2,260     3,307     (32 )

Other

    (121 )   398     NM  
               
 

Total non-interest revenue

  $ 4,808   $ 6,487     (26 )%
 

Net interest revenue (including dividends)

    3,754     3,953     (5 )
               

Total revenues, net of interest expense

  $ 8,562   $ 10,440     (18 )%

Total operating expenses

    5,119     4,597     11  
 

Net credit losses

    210     102     NM  
 

Provision (release) for unfunded lending commitments

    4     (7 )   NM  
 

Credit reserve build (release)

    (396 )   (180 )   NM  
               

Provisions for loan losses and benefits and claims

  $ (182 ) $ (85 )   NM  
               

Income from continuing operations before taxes

  $ 3,625   $ 5,928     (39 )%

Income taxes

    1,075     1,812     (41 )
               

Income from continuing operations

  $ 2,550   $ 4,116     (38 )%

Net income attributable to noncontrolling interests

    13     26     (50 )
               

Net income

  $ 2,537   $ 4,090     (38 )%
               

Average assets (in billions of dollars)

  $ 996   $ 925     8 %

Return on assets

    1.03 %   1.79 %      
               

Revenues by region

                   
 

North America

  $ 2,938   $ 4,192     (30 )%
 

EMEA

    2,895     3,348     (14 )
 

Latin America

    990     951     4  
 

Asia

    1,739     1,949     (11 )
               

Total

  $ 8,562   $ 10,440     (18 )%
               

Income from continuing operations by region

                   
 

North America

  $ 571   $ 1,583     (64 )%
 

EMEA

    1,043     1,324     (21 )
 

Latin America

    442     421     5  
 

Asia

    494     788     (37 )
               

Total

  $ 2,550   $ 4,116     (38 )%
               

Average loans by region (in billions of dollars)

                   
 

North America

  $ 66   $ 68     (3 )%
 

EMEA

    42     37     14  
 

Latin America

    24     22     9  
 

Asia

    44     30     47  
               

Total

  $ 176   $ 157     12 %
               

NM
Not meaningful

16


Table of Contents


SECURITIES AND BANKING

        Securities and Banking (S&B) offers a wide array of investment and commercial banking services and products for corporations, governments, institutional and retail investors, and high-net-worth individuals. S&B includes investment banking and advisory services, lending, debt and equity sales and trading, institutional brokerage, foreign exchange, structured products, cash instruments and related derivatives, and private banking. S&B revenue is generated primarily from fees for investment banking and advisory services, fees and interest on loans, fees and spread on foreign exchange, structured products, cash instruments and related derivatives, income earned on principal transactions, and fees and spreads on private banking services.

 
  First Quarter    
 
In millions of dollars   2011   2010   % Change  

Net interest revenue

  $ 2,324   $ 2,565     (9 )%

Non-interest revenue

    3,688     5,438     (32 )
               

Revenues, net of interest expense

  $ 6,012   $ 8,003     (25 )%

Total operating expenses

    3,802     3,437     11  
 

Net credit losses

    204     101     NM  
 

Provisions for unfunded lending commitments

    4     (7 )   NM  
 

Credit reserve build (release)

    (397 )   (162 )   NM  
               
 

Provisions for loan losses and benefits and claims

  $ (189 ) $ (68 )   NM  
               

Income before taxes and noncontrolling interests

  $ 2,399   $ 4,634     (48 )%

Income taxes

    694     1,453     (52 )

Income from continuing operations

    1,705     3,181     (46 )

Net income attributable to noncontrolling interests

    9     21     (57 )
               

Net income

  $ 1,696   $ 3,160     (46 )%
               

Average assets (in billions of dollars)

  $ 875   $ 827     6 %

Return on assets

    0.79 %   1.55 %      
               

Revenues by region

                   
 

North America

  $ 2,328   $ 3,553     (34 )%
 

EMEA

    2,059     2,515     (18 )
 

Latin America

    582     607     (4 )
 

Asia

    1,043     1,328     (21 )
               

Total revenues

  $ 6,012   $ 8,003     (25 )%
               

Net income from continuing operations by region

                   
 

North America

  $ 458   $ 1,422     (68 )%
 

EMEA

    765     1,021     (25 )
 

Latin America

    272     269     1  
 

Asia

    210     469     (55 )
               

Total net income from continuing operations

  $ 1,705   $ 3,181     (46 )%
               

Securities and Banking revenue details

                   
 

Total investment banking

  $ 851   $ 1,057     (19 )%
 

Lending

    244     243      
 

Equity markets

    1,070     1,213     (12 )
 

Fixed income markets

    3,795     5,380     (29 )
 

Private bank

    515     494     4  
 

Other Securities and Banking

    (463 )   (384 )   (21 )
               

Total Securities and Banking revenues

  $ 6,012   $ 8,003     (25 )%
               

NM    Not meaningful

1Q11 vs. 1Q10

        Revenues, net of interest expense of $6.0 billion decreased 25% as compared to the prior-year period, primarily driven by lower fixed income markets revenues and negative CVA. CVA decreased $0.5 billion to negative $0.2 billion, mainly due to a greater narrowing of Citigroup spreads in the first quarter of 2011 compared to the first quarter of 2010. Fixed income markets revenues decreased 22% to $4.0 billion (excluding CVA, net of hedges, of negative $0.2 billion and positive $0.3 billion in the current quarter and prior-year period, respectively), reflecting weaker results in rates and currencies, credit products, and securitized products. Investment banking revenues declined 19% to $851 million, primarily reflecting lower revenues from municipal and investment grade debt underwriting. Equity markets declined 9% to $1.1 billion (excluding CVA, net of hedges, of negative $34 million and negative $5 million in the current quarter and prior-year period, respectively), driven by lower trading revenues related to principal positions, partially offset by growth in cash equities. The declines in these businesses were

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slightly offset by a 5% growth in private bank revenues, to $520 million (excluding CVA, net of hedges, of negative $5 million and negative $2 million in the current quarter and prior-year period, respectively).

        Operating expenses increased 11% to $3.8 billion. Excluding a litigation reserve release in the prior-year period, operating expenses increased 5%, mainly due to continued investment spending, higher business volumes and the impact of FX translation, partially offset by productivity savings.

        Provisions for loan losses and for benefits and claims decreased by $121 million to negative $189 million, mainly due to continued improvement in the corporate credit portfolio and net releases for specific counterparties.

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TRANSACTION SERVICES

        Transaction Services is composed of Treasury and Trade Solutions (TTS) and Securities and Fund Services (SFS). TTS provides comprehensive cash management and trade finance and services for corporations, financial institutions and public sector entities worldwide. SFS provides securities services to investors, such as global asset managers, custody and clearing services to intermediaries such as broker-dealers, and depository and agency/trust services to multinational corporations and governments globally. Revenue is generated from net interest revenue on deposits in TTS and SFS, as well as from trade loans and fees for transaction processing and fees on assets under custody and administration in SFS.

 
  First Quarter    
 
In millions of dollars   2011   2010   % Change  

Net interest revenue

  $ 1,430   $ 1,388     3 %

Non-interest revenue

    1,120     1,049     7  
               

Total revenues, net of interest expense

  $ 2,550   $ 2,437     5 %

Total operating expenses

    1,317     1,160     14  

Provisions (releases) for credit losses and for benefits and claims

    7     (17 )   NM  
               

Income before taxes and noncontrolling interests

  $ 1,226   $ 1,294     (5 )%

Income taxes

    381     359     6  

Income from continuing operations

    845     935     (10 )

Net income attributable to noncontrolling interests

    4     5     (20 )
               

Net income

  $ 841   $ 930     (10 )%
               

Average assets (in billions of dollars)

  $ 121   $ 98     23 %

Return on assets

    2.82 %   3.85 %      
               

Revenues by region

                   
 

North America

  $ 610   $ 639     (5 )%
 

EMEA

    836     833      
 

Latin America

    408     344     19  
 

Asia

    696     621     12  
               

Total revenues

  $ 2,550   $ 2,437     5 %
               

Income from continuing operations by region

                   
 

North America

  $ 113   $ 161     (30 )%
 

EMEA

    278     303     (8 )
 

Latin America

    170     152     12  
 

Asia

    284     319     (11 )
               

Total net income from continuing operations

  $ 845   $ 935     (10 )%
               

Key indicators (in billions of dollars)

                   

Average deposits and other customer liability balances

  $ 355   $ 319     11 %

EOP assets under custody (in trillions of dollars)

    13.0     11.8     10  
               

NM    Not meaningful

1Q11 vs. 1Q10

        Revenues, net of interest expense, grew 5% to $2.6 billion compared to the prior-year period, as strong growth in both TTS and SFS, driven by Latin America and Asia, more than offset spread compression. Average customer liability balances and assets under custody were up 11% and 10%, to $355 million and $13 trillion, respectively, from the first quarter of 2010.

        Treasury and Trade Solutions revenue increased 3%, driven by stronger performances in the trade and cards businesses as well as increased balances, partially offset by spread compression.

        Securities and Fund Services revenues increased 9%, driven by higher asset valuations, inflows, and business volumes.

        Operating expenses increased 14% to $1.3 billion, due to continued investment spending primarily in operations and technology to support business expansion.

        Provisions for loan losses and for benefits and claims increased $24 million from the prior-year period, primarily reflecting a reserve release in the prior-year period.

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CITI HOLDINGS

        Citi Holdings contains businesses and portfolios of assets that Citigroup has determined are not central to its core Citicorp businesses. Consistent with its strategy, Citi intends to exit these businesses as quickly as practicable in an economically rational manner through business divestitures, portfolio run-offs and asset sales. Citi Holdings' GAAP assets of $337 billion have been reduced by $166 billion from March 31, 2010, and $490 billion from the peak in the first quarter of 2008, and represented approximately 17% of Citi's assets as of March 31, 2011. Citi Holdings' risk-weighted assets of approximately $305 billion represented approximately 31% of Citi's risk-weighted assets as of March 31, 2011.

        Citi Holdings consists of the following: Brokerage and Asset Management, Local Consumer Lending, and Special Asset Pool.

 
  First Quarter    
 
In millions of dollars   2011   2010   % Change  

Net interest revenue

  $ 2,630   $ 4,375     (40 )%

Non-interest revenue

    653     2,175     (70 )
               

Total revenues, net of interest expense

  $ 3,283   $ 6,550     (50 )%
               

Provisions for credit losses and for benefits and claims

                   

Net credit losses

  $ 3,950   $ 5,241     (25 )%

Credit reserve build (release)

    (2,112 )   340     NM  
               

Provision for loan losses

  $ 1,838   $ 5,581     (67 )%

Provision for benefits and claims

    216     243     (11 )

Provision (release) for unfunded lending commitments

    21     (26 )   NM  
               

Total provisions for credit losses and for benefits and claims

  $ 2,075   $ 5,798     (64 )%
               

Total operating expenses

  $ 2,019   $ 2,573     (22 )
               

Loss from continuing operations before taxes

  $ (811 ) $ (1,821 )   55 %

Benefits for income taxes

    (264 )   (946 )   72  
               

Loss from continuing operations

  $ (547 ) $ (875 )   37 %

Net income attributable to noncontrolling interests

    61     11     NM  
               

Citi Holdings net loss

  $ (608 ) $ (886 )   31 %
               

Balance sheet data (in billions of dollars)

                   

Total EOP assets

  $ 337   $ 503     (33 )%
               

Total EOP deposits

  $ 77   $ 86     (10 )%
               

NM    Not meaningful

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BROKERAGE AND ASSET MANAGEMENT

        Brokerage and Asset Management (BAM), which constituted approximately 8% of Citi Holdings by assets as of March 31, 2011, consists of Citi's global retail brokerage and asset management businesses. At March 31, 2011, BAM had approximately $27 billion of assets, primarily consisting of Citi's investment in, and assets related to, the Morgan Stanley Smith Barney joint venture (MSSB JV). As more fully described in Forms 8-K, filed with the SEC on January 14, 2009 and June 3, 2009, Morgan Stanley has options to purchase Citi's remaining stake in the MSSB JV over three years starting in 2012.

 
  First Quarter    
 
In millions of dollars   2011   2010   % Change  

Net interest revenue

  $ (46 ) $ (65 )    

Non-interest revenue

    183     405     (55 )%
               

Total revenues, net of interest expense

  $ 137   $ 340     (60 )%
               

Total operating expenses

  $ 174   $ 237     (36 )%
               
 

Net credit losses

  $ 1   $ 11     (91 )%
 

Credit reserve build (release)

    (1 )   (7 )   86  
 

Provision for unfunded lending commitments

             
 

Provision for benefits and claims

    8     9     (11 )
               

Provisions for credit losses and for benefits and claims

  $ 8   $ 13     (38 )%
               

Income (loss) from continuing operations before taxes

  $ (45 ) $ 54     NM  

Income taxes (benefits)

    (35 )   (22 )   (59 )%
               

Income (loss) from continuing operations

  $ (10 ) $ 76     NM  

Net income (loss) attributable to noncontrolling interests

    2     (5 )   NM  
               

Net income (loss)

  $ (12 ) $ 81     NM  
               

EOP assets (in billions of dollars)

  $ 27   $ 31     (13 )%

EOP deposits (in billions of dollars)

    58     59     (2 )
               

NM    Not meaningful

1Q11 vs. 1Q10

        Revenues, net of interest expense decreased 60% to $137 million versus the prior-year period, mainly driven by the absence of the $78 million pretax gains on sales related to the Habitat and Colfondos businesses (LATAM asset management businesses) in the first quarter of 2010, and lower revenues from the MSSB JV.

        Operating expenses decreased 36% to $174 million from the prior-year period, mainly driven by lower legal settlements and reserves associated with Smith Barney.

        Provisions for credit losses and for benefits and claims decreased 38% to $8 million, mainly due to lower net credit losses.

        Assets decreased 13% versus the prior year, to $27 million, mostly driven by the sales of the Citi private equity business and the run-off of tailored loan portfolios.

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LOCAL CONSUMER LENDING

        Local Consumer Lending (LCL), which constituted approximately 70% of Citi Holdings assets as of March 31, 2011, includes a portion of Citigroup's North American mortgage business, retail partner cards, Western European cards and retail banking, CitiFinancial North America and other local Consumer finance businesses globally. At March 31, 2011, LCL had $237 billion of assets ($212 billion in North America). Approximately $120 billion of assets in LCL as of March 31, 2011 consisted of U.S. mortgages in the Company's CitiMortgage and CitiFinancial operations. The North American assets consist of residential mortgages (residential first mortgages and home equity loans), retail partner card loans, personal loans, commercial real estate (CRE), and other consumer loans and assets.

 
  First Quarter    
 
In millions of dollars   2011   2010   % Change  

Net interest revenue

  $ 2,617   $ 4,020     (35 )%

Non-interest revenue

    536     650     (18 )
               

Total revenues, net of interest expense

  $ 3,153   $ 4,670     (32 )%
               

Total operating expenses

  $ 1,763   $ 2,165     (19 )%
               
 

Net credit losses

  $ 3,279   $ 4,938     (34 )%
 

Credit reserve build (release)

    (1,110 )   386     NM  
 

Provision for benefits and claims

    208     234     (11 )
 

Provision for unfunded lending commitments

             
               

Provisions for credit losses and for benefits and claims

  $ 2,377   $ 5,558     (57 )%
               

Loss from continuing operations before taxes

  $ (987 ) $ (3,053 )   68 %

Benefits for income taxes

    (388 )   (1,224 )   68  
               

Loss from continuing operations

  $ (599 ) $ (1,829 )   67 %

Net income attributable to noncontrolling interests

             
               

Net loss

  $ (599 ) $ (1,829 )   67 %
               

Average assets (in billions of dollars)

  $ 246   $ 355     (31 )%
               

Net credit losses as a percentage of average loans

    6.15 %   6.30 %      
               

NM    Not meaningful

1Q11 vs. 1Q10

        Revenues, net of interest expense decreased 32% to $3.2 billion from the prior-year period. Net interest revenue decreased 35% to $2.6 billion, primarily due to the impact of lower loan balances from portfolio run-off and continued asset sales, as well as the increase in reserves related to Japan Consumer Finance described below. Non-interest revenue declined 18% to $536 million, primarily due to the higher mortgage repurchase reserve charge ($122 million) in the current quarter.

        Operating expenses decreased 19% to $1.8 billion, primarily due to the impact of divestitures, lower volumes and productivity saves.

        Provisions for credit losses and for benefits and claims decreased 57% to $2.4 billion, reflecting a net $1.1 billion credit reserve release in the current quarter compared to a $400 million build in the prior-year quarter. Net credit losses were also lower year-over-year, driven by improvement in retail partner cards, U.S. mortgages and international portfolios.

        Assets declined 32% from the prior-year period, to $237 million, primarily driven by portfolio run-off and the impact of asset sales and divestitures.

Japan Consumer Finance

        During the first quarter of 2011, LCL recorded an additional charge of approximately $245 million (pretax) to increase its reserves related to customer refunds for the charging of gray zone interest in the Japan Consumer Finance business. For additional information on gray zone interest and Citi's Japan Consumer Finance business, see "Management's Discussion and Analysis—Citi Holdings—Local Consumer Lending" in Citigroup's 2010 Annual Report on Form 10-K. The increase in reserves during the first quarter reflected the recent trends in the market, including the previously disclosed bankruptcy of Takefuji, one of Japan's largest consumer finance companies.

        Citi continues to monitor and evaluate these developments and the potential impact to both currently and previously outstanding loans in this business, and its reserves related thereto. However, as previously disclosed, the trend in the type, number and amount of refund claims remains volatile, and accordingly, the potential full amount of losses and their impact on Citi, including its reserves related thereto, is subject to significant uncertainties and continues to be difficult to predict.

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SPECIAL ASSET POOL

        Special Asset Pool (SAP), which constituted approximately 22% of Citi Holdings by assets as of March 31, 2011, consists of a portfolio of securities, loans and other assets that Citigroup intends to actively reduce over time through asset sales and portfolio run-off. At March 31, 2011, SAP had $73 billion of assets. SAP assets have declined by $255 billion, or 78%, from peak levels in 2007, reflecting cumulative write-downs, asset sales and portfolio run-off.

 
  First Quarter    
 
In millions of dollars   2011   2010   % Change  

Net interest revenue

  $ 59   $ 420     (86 )%

Non-interest revenue

    (66 )   1,120     NM  
               

Revenues, net of interest expense

  $ (7 ) $ 1,540     NM  
               

Total operating expenses

  $ 82   $ 135     (39 )%
               
 

Net credit losses

  $ 670   $ 292     NM  
 

Provision (releases) for unfunded lending commitments

    21     (26 )   NM  
 

Credit reserve builds (releases)

    (1,001 )   (39 )   NM  
               

Provisions for credit losses and for benefits and claims

  $ (310 ) $ 227     NM  
               

Income from continuing operations before taxes

  $ 221   $ 1,178     (81 )%

Income taxes

    159     300     (47 )
               

Net income from continuing operations

  $ 62   $ 878     (93 )%

Net income attributable to noncontrolling interests

    59     16     NM  
               

Net income

  $ 3   $ 862     (100 )%
               

EOP assets (in billions of dollars)

  $ 73   $ 126     (42 )%
               

NM    Not meaningful

1Q11 vs. 1Q10

        Revenues, net of interest expense decreased $1.5 billion versus the prior-year period, driven by a $709 million pretax, net loss from the movement of $12.7 billion of securities out of Investments held-to-maturity (HTM) during the first quarter of 2011, composed of the transfer of $10.0 billion of HTM securities to Trading account assets and the sale of $2.7 billion of HTM securities (Citi recognized a corresponding receivable from these unsettled sales as of March 31, 2011). See "Reclassification of HTM Securities to Trading" below. This loss was partially offset by positive marks of $501 million on private equity investments in the first quarter of 2011. First quarter of 2010 revenues included positive marks of $804 million on sub-prime related direct exposures.

        Operating expenses decreased 39% to $82 million, mainly driven by a decrease in transaction expenses and lower volumes.

        Provisions for credit losses and for benefits and claims decreased $537 million from the prior-year period, driven by increased releases of loan loss reserves of $962 million, partially offset by higher net credit losses of $378 million. Net credit losses more than doubled year-over-year, reflecting higher costs of loan sales and higher net credit losses on loans for which specific FAS 114 reserves had previously been established, which were released during the current quarter.

        Assets declined 42% to $73 million versus the prior-year period, primarily due to asset sales and amortization and prepayments.

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Reclassification of HTM Securities to Trading

        As discussed further in Note 11 to the Consolidated Financial Statements, during the first quarter of 2011, the Company determined that it no longer had the intent to hold $12.7 billion of HTM securities to maturity. Accordingly, the Company reclassified $10.0 billion carrying value of mortgage-backed, other asset-backed, state and municipal, and corporate debt securities from Investments held-to-maturity to Trading account assets. The Company also sold an additional $2.7 billion of such HTM securities, recognizing a corresponding receivable from the unsettled sales as of March 31, 2011. As a result of these actions, the Company recorded a pretax net loss of $709 million ($427 million after tax) in the Consolidated Statement of Income for the three months ended March 31, 2011. Through April 29, 2011, the Company has sold $10.6 billion of the $12.7 billion of HTM securities.

        Citigroup reclassified and sold these securities as part of its overall efforts to mitigate the risk-weighted asset implications arising from significant new regulatory capital requirements which, although not yet fully implemented or formally adopted, are nonetheless currently being used to assess the regulatory capital status of the Company and other large U.S. banking organizations. If retained, the $12.7 billion of securities would have had an overall disproportionately higher risk-weighting under these new requirements compared to the remainder of Citi Holdings assets.

        The following table provides details of the composition of SAP assets as of March 31, 2011.

 
  Assets within Special Asset Pool as of
March 31, 2011
 
In billions of dollars   Carrying
value
of assets
  Face value   Carrying value
as % of
face value
 

Securities in available-for-sale (AFS)

                   
 

Corporates

  $ 5.0   $ 5.0     99 %
 

Prime and non-U.S. mortgage-backed securities (MBS)

    1.4     1.6     83  
 

Auction rate securities (ARS)

    1.8     2.2     81  
 

Other securities

    0.1     0.2     79  
               

Total securities in AFS

  $ 8.3   $ 9.0     91 %
               

Securities in held-to-maturity (HTM)

                   
 

Prime and non-U.S. MBS

  $ 4.8   $ 5.8     83 %
 

Alt-A mortgages

    4.2     7.9     53  
 

Corporates

    2.6     2.7     97  
 

Other securities(1)

    2.3     2.7     82  
               

Total securities in HTM

  $ 13.9   $ 19.1     73 %
               

Loans, leases and letters of credit (LCs) in held-for-investment (HFI)/held-for-sale (HFS)(2)

                   
 

Corporates

  $ 5.0   $ 5.2     96 %
 

Commercial real estate (CRE)

    2.8     2.9     97  
 

Other(3)

    1.3     1.2     107  
 

Loan loss reserves

    (1.0 )       NM  
               

Total loans, leases and LCs in HFI/HFS

  $ 8.1   $ 9.3     87 %
               

Mark to market (trading)

                   
 

Subprime securities

  $ 0.2   $ 2.2     9 %
 

Other securities(4)

    18.8     37.4     50  
 

Derivatives

    4.0     NM     NM  
 

Loans, leases and LCs

    2.3     3.2     73  
 

Repurchase agreements

    3.3     NM     NM  
               

Total mark to market (trading)

  $ 28.6     NM     NM  
               

Highly leveraged finance commitments

  $ 0.8   $ 1.2     67 %

Equities (excludes ARS in AFS)

    8.4     NM     NM  

Consumer and other(5)

    4.7     NM     NM  
               

Total

  $ 72.8              
               

(1)
Includes assets previously held by structured investment vehicles (SIVs) ($1.6 billion of asset-backed securities, collateralized debt obligations (CDOs)/collateralized loan obligations (CLOs) and government bonds).

(2)
HFS accounts for approximately $1.0 billion of the total.

(3)
Includes $0.2 billion of subprime and $0.4 billion of leases.

(4)
Includes $4.6 billion of Alt-A, $4.4 billion of Corporate securities, $4.1 billion of ARS and $3.2 billion of Prime MBS.

(5)
Includes $1.2 billion of small business banking and finance loans and $0.8 billion of personal loans.

Excludes Discontinued Operations.

Totals may not sum due to rounding.

NM    Not meaningful

Note: Assets previously held by the Citi-advised SIVs have been allocated to the corresponding asset categories above. SAP had total CRE exposures of $5.6 billion at March 31, 2011, which included unfunded commitments of $1.8 billion. SAP had total subprime assets of $1.5 billion at March 31, 2011, including assets of $0.8 billion of subprime-related direct exposures and $0.7 billion of trading account positions, which includes securities purchased from CDO liquidations.

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CORPORATE/OTHER

        Corporate/Other includes global staff functions (including finance, risk, human resources, legal and compliance) and other corporate expense, global operations and technology, residual Corporate Treasury and Corporate items. At March 31, 2011, this segment had approximately $281 billion of assets, or 14% of Citigroup's total assets, consisting primarily of Citi's liquidity portfolio, including $80 billion of cash and deposits with banks, and $153 billion of liquid available-for-sale securities.

 
  First Quarter  
In millions of dollars   2011   2010  

Net interest revenue

  $ 88   $ 316  

Non-interest revenue

    (149 )   33  
           

Total revenues, net of interest expense

  $ (61 ) $ 349  
           

Total operating expenses

  $ 706   $ 350  

Provisions for loan losses and for benefits and claims

    1     1  
           

Loss from continuing operations before taxes

  $ (768 ) $ (2 )

Benefits for income taxes

    (251 )   (37 )
           

Income loss from continuing operations

  $ (517 ) $ 35  

Income (loss) from discontinued operations, net of taxes

    40     211  
           

Net income (loss) before attribution of noncontrolling interests

  $ (477 ) $ 246  

Net income (loss) attributable to noncontrolling interests

         
           

Net loss

  $ (477 ) $ 246  
           

1Q11 vs. 1Q10

        Revenues, net of interest expense declined $410 million to a negative $61 million, primarily due to lower investment yields in Treasury and net losses on hedging activities.

        Operating Expenses increased $356 million to $706 million, primarily due to legal and related expenses.

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SEGMENT BALANCE SHEET AT MARCH 31, 2011

In millions of dollars   Regional
Consumer
Banking
  Institutional
Clients
Group
  Subtotal
Citicorp
  Citi
Holdings
  Corporate/Other,
Discontinued
Operations
and
Consolidating
Eliminations
  Total Citigroup
Consolidated
 

Assets

                                     
 

Cash and due from banks

  $ 7,769   $ 17,717   $ 25,486   $ 1,845   $ 511   $ 27,842  
 

Deposits with banks

    9,870     71,075     80,945     3,403     79,255     163,603  
 

Federal funds sold and securities borrowed or purchased under agreements to resell

    90     257,347     257,437     3,683         261,120  
 

Brokerage receivables

    3     28,984     28,987     10,607     1,307     40,901  
 

Trading account assets

    11,790     284,014     295,804     27,306         323,110  
 

Investments

    35,063     99,886     134,949     39,067     153,241     327,257  
 

Loans, net of unearned income

                                     
 

Consumer

    234,908         234,908     206,305         441,213  
 

Corporate

        183,401     183,401     12,522         195,923  
                           
 

Loans, net of unearned income

  $ 234,908   $ 183,401   $ 418,309   $ 218,827       $ 637,136  
 

Allowance for loan losses

    (12,592 )   (3,005 )   (15,597 )   (20,971 )       (36,568 )
                           
 

Total loans, net

  $ 222,316   $ 180,396   $ 402,712   $ 197,856       $ 600,568  
 

Goodwill

    10,884     10,976     21,860     4,479         26,339  
 

Intangible assets (other than MSRs)

    2,198     928     3,126     4,154         7,280  
 

Mortgage servicing rights (MSRs)

    2,232     80     2,312     2,378         4,690  
 

Other assets

    30,331     45,737     76,068     39,634     46,731     162,433  
 

Assets of discontinued operations

                2,672         2,672  
                           

Total assets

  $ 332,546   $ 997,140   $ 1,329,686   $ 337,084   $ 281,045   $ 1,947,815  
                           

Liabilities and equity

                                     
 

Total deposits

  $ 313,727   $ 470,262   $ 783,989   $ 77,066   $ 4,808   $ 865,863  
 

Federal funds purchased and securities loaned or sold under agreements to repurchase

    5,620     182,118     187,738     1     86     187,825  
 

Brokerage payables

    152     50,168     50,320     1     73     50,394  
 

Trading account liabilities

    43     144,501     144,544     1,802         146,346  
 

Short-term borrowings

    421     57,320     57,741     1,652     19,229     78,622  
 

Long-term debt

    2,340     77,373     79,713     14,214     282,614     376,541  
 

Other liabilities

    17,572     28,078     45,650     9,785     13,357     68,792  
 

Liabilities of discontinued operations

                39         39  
 

Net inter-segment funding (lending)

    (7,329 )   (12,680 )   (20,009 )   232,524     (212,515 )    
 

Total Citigroup stockholders' equity

                    171,037     171,037  
 

Noncontrolling interest

                    2,356     2,356  
                           

Total equity

                    173,393     173,393  
                           

Total liabilities and equity

  $ 332,546   $ 997,140   $ 1,329,686   $ 337,084   $ 281,045   $ 1,947,815  
                           

        The supplemental information presented above reflects Citigroup's consolidated GAAP balance sheet by reporting segment as of March 31, 2011. The respective segment information depicts the assets and liabilities managed by each segment as of such date. While this presentation is not defined by GAAP, Citi believes that these non-GAAP financial measures enhance investors' understanding of the balance sheet components managed by the underlying business segments, as well as the beneficial inter-relationship of the asset and liability dynamics of the balance sheet components among Citi's business segments.

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CAPITAL RESOURCES AND LIQUIDITY

CAPITAL RESOURCES

Overview

        Citi generates capital through earnings from its operating businesses. However, Citi may augment, and during the financial crisis did augment, its capital through issuances of common stock, convertible preferred stock, preferred stock and equity issued through awards under employee benefit plans. Citi also augmented its regulatory capital through the issuance of subordinated debt underlying trust preferred securities, although the treatment of such instruments as regulatory capital will be phased out under Basel III and the Financial Reform Act (see "Capital Resources and Liquidity—Capital Resources—Regulatory Capital Standards Developments" and the "Risk Factors" section of Citi's 2010 Annual Report on Form 10-K). Further, the impact of future events on Citi's business results, such as corporate and asset dispositions, as well as changes in regulatory and accounting standards, also affects Citi's capital levels.

        Capital is used primarily to support assets in Citi's businesses and to absorb market, credit or operational losses. Capital may be used for other purposes, such as to pay dividends or repurchase common stock. However, Citi's ability to pay regular quarterly cash dividends of more than $0.01 per share, or to redeem or repurchase equity securities or trust preferred securities, is currently restricted (which such restriction may be waived) due to Citi's agreements with certain U.S. government entities, generally for so long as the U.S. government continues to hold any Citi trust preferred securities acquired in connection with the exchange offers consummated in 2009.

        For an overview of Citigroup's capital management framework, including Citi's Finance and Asset and Liability Committee (FinALCO), see "Capital Resources and Liquidity—Capital Resources—Overview" in Citigroup's 2010 Annual Report on Form 10-K.

Capital Ratios

        Citigroup is subject to the risk-based capital guidelines issued by the Federal Reserve Board. Historically, capital adequacy has been measured, in part, based on two risk-based capital ratios, the Tier 1 Capital and Total Capital (Tier 1 Capital + Tier 2 Capital) ratios. Tier 1 Capital consists of the sum of "core capital elements," such as qualifying common stockholders' equity, as adjusted, qualifying noncontrolling interests, and qualifying mandatorily redeemable securities of subsidiary trusts, principally reduced by goodwill, other disallowed intangible assets, and disallowed deferred tax assets. Total Capital also includes "supplementary" Tier 2 Capital elements, such as qualifying subordinated debt and a limited portion of the allowance for credit losses. Both measures of capital adequacy are stated as a percentage of risk-weighted assets.

        In 2009, the U.S. banking regulators developed a new measure of capital termed "Tier 1 Common," which is defined as Tier 1 Capital less non-common elements, including qualifying perpetual preferred stock, qualifying noncontrolling interests, and qualifying mandatorily redeemable securities of subsidiary trusts. For more detail on all of these capital metrics, see "Components of Capital Under Regulatory Guidelines" below.

        Citigroup's risk-weighted assets are principally derived from application of the risk-based capital guidelines related to the measurement of credit risk. Pursuant to these guidelines, on-balance-sheet assets and the credit equivalent amount of certain off-balance-sheet exposures (such as financial guarantees, unfunded lending commitments and letters of credit and derivatives) are assigned to one of several prescribed risk-weight categories based upon the perceived credit risk associated with the obligor, or if relevant, the guarantor, the nature of the collateral, or external credit ratings. Risk-weighted assets also incorporate a measure for market risk on covered trading account positions and all foreign exchange and commodity positions whether or not carried in the trading account. Excluded from risk-weighted assets are any assets, such as goodwill and deferred tax assets, to the extent required to be deducted from regulatory capital. See "Components of Capital Under Regulatory Guidelines" below.

        Citigroup is also subject to a Leverage ratio requirement, a non-risk-based measure of capital adequacy, which is defined as Tier 1 Capital as a percentage of quarterly adjusted average total assets.

        To be "well capitalized" under current federal bank regulatory agency definitions, a bank holding company must have a Tier 1 Capital ratio of at least 6%, a Total Capital ratio of at least 10%, and a Leverage ratio of at least 3%, and not be subject to a Federal Reserve Board directive to maintain higher capital levels. The following table sets forth Citigroup's regulatory capital ratios as of March 31, 2011 and December 31, 2010:

Citigroup Regulatory Capital Ratios

At period end   Mar. 31,
2011
  Dec. 31,
2010
 

Tier 1 Common

    11.34 %   10.75 %

Tier 1 Capital

    13.26     12.91  

Total Capital (Tier 1 Capital + Tier 2 Capital)

    16.98     16.59  

Leverage ratio

    7.00     6.60  
           

        As noted in the table above, Citigroup was "well capitalized" under the current federal bank regulatory agency definitions as of March 31, 2011 and December 31, 2010.

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Components of Capital Under Regulatory Guidelines

In millions of dollars   March 31,
2011
  December 31,
2010
 

Tier 1 Common

             

Citigroup common stockholders' equity

  $ 170,725   $ 163,156  

Less: Net unrealized losses on securities available-for-sale, net of tax(1)

    (1,655 )   (2,395 )

Less: Accumulated net losses on cash flow hedges, net of tax

    (2,498 )   (2,650 )

Less: Pension liability adjustment, net of tax(2)

    (4,068 )   (4,105 )

Less: Cumulative effect included in fair value of financial liabilities attributable to the change in own credit worthiness, net of tax(3)

    94     164  

Less: Disallowed deferred tax assets(4)

    34,093     34,946  
 

Less: Intangible assets:

             
 

Goodwill

    26,486     26,152  
 

Other disallowed intangible assets

    5,128     5,211  

Other

    (686 )   (698 )
           

Total Tier 1 Common

  $ 112,459   $ 105,135  
           

Qualifying perpetual preferred stock

  $ 312   $ 312  

Qualifying mandatorily redeemable securities of subsidiary trusts

    17,813     18,003  

Qualifying noncontrolling interests

    926     868  

Other

        1,875  
           

Total Tier 1 Capital

  $ 131,510   $ 126,193  
           

Tier 2 Capital

             

Allowance for credit losses(5)

  $ 12,740   $ 12,627  

Qualifying subordinated debt(6)

    23,155     22,423  

Net unrealized pretax gains on available-for-sale equity securities(1)

    983     976  
           

Total Tier 2 Capital

  $ 36,878   $ 36,026  
           

Total Capital (Tier 1 Capital and Tier 2 Capital)

  $ 168,388   $ 162,219  
           

Risk-weighted assets (RWA)(7)

  $ 991,607   $ 977,629  
           

(1)
Tier 1 Capital excludes net unrealized gains (losses) on available-for-sale debt securities and net unrealized gains on available-for-sale equity securities with readily determinable fair values, in accordance with risk-based capital guidelines. In arriving at Tier 1 Capital, banking organizations are required to deduct net unrealized losses on available-for-sale equity securities with readily determinable fair values, net of tax. Banking organizations are permitted to include in Tier 2 Capital up to 45% of net unrealized pretax gains on available-for-sale equity securities with readily determinable fair values.

(2)
The Federal Reserve Board granted interim capital relief for the impact of ASC 715-20, Compensation—Retirement Benefits—Defined Benefits Plans (formerly SFAS 158).

(3)
The impact of including Citigroup's own credit rating in valuing financial liabilities for which the fair value option has been elected is excluded from Tier 1 Capital, in accordance with risk-based capital guidelines.

(4)
Of Citi's approximately $51 billion of net deferred tax assets at March 31, 2011, approximately $13 billion of such assets were includable without limitation in regulatory capital pursuant to risk-based capital guidelines, while approximately $34 billion of such assets exceeded the limitation imposed by these guidelines and, as "disallowed deferred tax assets," were deducted in arriving at Tier 1 Capital. Citigroup's approximately $4 billion of other net deferred tax assets primarily represented approximately $1 billion of deferred tax effects of unrealized gains and losses on available-for-sale debt securities and approximately $3 billion of deferred tax effects of the pension liability adjustment, which are permitted to be excluded prior to deriving the amount of net deferred tax assets subject to limitation under the guidelines.

(5)
Includable up to 1.25% of risk-weighted assets. Any excess allowance for credit losses is deducted in arriving at risk-weighted assets.

(6)
Includes qualifying subordinated debt in an amount not exceeding 50% of Tier 1 Capital.

(7)
Includes risk-weighted credit equivalent amounts, net of applicable bilateral netting agreements, of $64.2 billion for interest rate, commodity and equity derivative contracts, foreign exchange contracts, and credit derivatives as of March 31, 2011, compared with $62.1 billion as of December 31, 2010. Market risk equivalent assets included in risk-weighted assets amounted to $60.9 billion at March 31, 2011 and $51.4 billion at December 31, 2010. Risk-weighted assets also include the effect of certain other off-balance-sheet exposures, such as unused lending commitments and letters of credit, and reflect deductions such as certain intangible assets and any excess allowance for credit losses.

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Common Stockholders' Equity

        Citigroup's common stockholders' equity increased during the three months ended March 31, 2011 by $7.5 billion to $170.7 billion, and represented 8.8% of total assets as of March 31, 2011. The table below summarizes the change in Citigroup's common stockholders' equity during the first quarter of 2011:

In billions of dollars    
 

Common stockholders' equity, December 31, 2010

  $ 163.2  

Net income(1)

    3.0  

Employee benefit plans and other activities(2)

    0.3  

Conversion of ADIA Upper DECs equity units purchase contract to common stock

    1.9  

Net change in accumulated other comprehensive income (loss), net of tax(1)

    2.3  
       

Common stockholders' equity, March 31, 2011

  $ 170.7  
       

(1)
Numbers reflect the net impact of the transfer of certain assets in SAP from Investments held-to-maturity to Trading account assets during the first quarter of 2011. See "Citi Holdings—Special Asset Pool" above and Note 11 to the Consolidated Financial Statements.

(2)
As of March 31, 2011, $6.7 billion of stock repurchases remained under Citi's authorized repurchase programs. No material repurchases were made in the first quarter of 2011 and the year ended December 31, 2010.

Tangible Common Equity and Tangible Book Value Per Share

        Tangible common equity (TCE), as defined by Citigroup, represents Common equity less Goodwill and Intangible assets (other than Mortgage Servicing Rights (MSRs)), and related net deferred tax assets. Other companies may calculate TCE in a manner different from that of Citigroup. Citi's TCE was $136.9 billion at March 31, 2011 and $129.4 billion at December 31, 2010.

        The TCE ratio (TCE divided by risk-weighted assets) was 13.8% at March 31, 2011 and 13.2% at December 31, 2010.

        TCE and tangible book value per share, as well as related ratios, are capital adequacy metrics used and relied upon by investors and industry analysts; however, they are non-GAAP financial measures for SEC purposes. A reconciliation of Citigroup's total stockholders' equity to TCE and book value per share to tangible book value per share, follows:

In millions at period end, except ratios and per share data   Mar. 31, 2011   Dec. 31, 2010  

Total Citigroup stockholders' equity

  $ 171,037   $ 163,468  

Less:

             
 

Preferred stock

    312     312  
           

Common equity

  $ 170,725   $ 163,156  

Less:

             
 

Goodwill

    26,339     26,152  
 

Intangible assets (other than MSRs)

    7,280     7,504  
 

Goodwill related to Assets for Disc Ops held for sale

    147      
 

Intangible assets (other than MSRs) related to Assets for Disc Ops held for sale

    18      
 

Related net deferred tax assets

    53     56  
           

Tangible common equity (TCE)

  $ 136,888   $ 129,444  
           

Tangible assets

             

GAAP assets

  $ 1,947,815   $ 1,913,902  
 

Less:

             
   

Goodwill

    26,339     26,152  
   

Intangible assets (other than MSRs)

    7,280     7,504  
   

Goodwill related to Assets for Disc Ops held for sale

    147      
   

Intangible assets (other than MSRs) related to Assets for Disc Ops held for sale

    18      
   

Related deferred tax assets

    358     359  
           

Tangible assets (TA)

  $ 1,913,673   $ 1,879,887  
           

Risk-weighted assets (RWA)

  $ 991,607   $ 977,629  
           

TCE/TA ratio

    7.15 %   6.89 %
           

TCE/RWA ratio

    13.80 %   13.24 %
           

Common shares outstanding (CSO)

   
29,206.4
   
29,058.4
 

Book value per share (common equity/CSO)

  $ 5.85   $ 5.61  

Tangible book value per share (TCE/CSO)

  $ 4.69   $ 4.45  

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Capital Resources of Citigroup's Depository Institutions

        Citigroup's U.S. subsidiary depository institutions are also subject to risk-based capital guidelines issued by their respective primary federal bank regulatory agencies, which are similar to the guidelines of the Federal Reserve Board.

        The following table sets forth the capital ratios of Citibank, N.A., Citi's primary subsidiary depository institution, as of March 31, 2011 and December 31, 2010.

Citibank, N.A. Components of Capital and Ratios Under Regulatory Guidelines

In billions of dollars at period end, except ratios   Mar. 31,
2011
  Dec. 31,
2010
 

Tier 1 Common

  $ 106.4   $ 103.9  

Tier 1 Capital

    107.1     104.6  

Total Capital (Tier 1 Capital + Tier 2 Capital)

    120.3     117.7  
           

Tier 1 Common ratio

    15.13 %   15.07 %

Tier 1 Capital ratio

    15.23     15.17  

Total Capital ratio

    17.11     17.06  

Leverage ratio

    9.36     8.88  
           

        There are various legal and regulatory limitations on the ability of Citigroup's subsidiary depository institutions to pay dividends to Citigroup and its non-bank subsidiaries. In determining the declaration of dividends, each depository institution must also consider its effect 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. Citigroup did not receive any dividends from its subsidiary depository institutions during the first quarter of 2011. See also "Funding and Liquidity—Liquidity Transfer Between Entities" below.

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Table of Contents

Impact of Changes on Capital Ratios

        The following table presents the estimated sensitivity of Citigroup's and Citibank, N.A.'s capital ratios to changes of $100 million in Tier 1 Common, Tier 1 Capital or Total Capital (numerator), or changes of $1 billion in risk-weighted assets or adjusted average total assets (denominator), based on financial information as of March 31, 2011. This information is provided for the purpose of analyzing the impact that a change in Citigroup's or Citibank, N.A.'s financial position or results of operations could have on these ratios. These sensitivities only consider a single change to either a component of capital, risk-weighted assets, or adjusted average total assets. Accordingly, an event that affects more than one factor may have a larger basis point impact than is reflected in this table.

 
  Tier 1 Common ratio   Tier 1 Capital ratio   Total Capital ratio   Leverage ratio  
 
  Impact of $100
million change in
Tier 1 Common
  Impact of $1
billion change in
risk-weighted
assets
  Impact of $100
million change in
Tier 1 Capital
  Impact of $1
billion change in
risk-weighted
assets
  Impact of $100
million change in
Total Capital
  Impact of $1
billion change in
risk-weighted
assets
  Impact of $100
million change in
Tier 1 Capital
  Impact of $1
billion change in
adjusted average
total assets
 

Citigroup

    1.0 bps     1.1 bps     1.0 bps     1.3 bps     1.0 bps     1.7 bps     0.5 bps     0.4 bps  
                                   

Citibank, N.A. 

    1.4 bps     2.2 bps     1.4 bps     2.2 bps     1.4 bps     2.4 bps     0.9 bps     0.8 bps  
                                   

Broker-Dealer Subsidiaries

        At March 31, 2011, Citigroup Global Markets Inc., a broker-dealer registered with the SEC that is an indirect wholly owned subsidiary of Citigroup Global Markets Holdings Inc., had net capital, computed in accordance with the SEC's net capital rule, of $7.9 billion, which exceeded the minimum requirement by $7.2 billion.

        In addition, certain of Citi's other broker-dealer subsidiaries are subject to regulation in the countries in which they do business, including requirements to maintain specified levels of net capital or its equivalent. Citigroup's broker-dealer subsidiaries were in compliance with their capital requirements at March 31, 2011.

Regulatory Capital Standards Developments

        The prospective regulatory capital standards for financial institutions are currently subject to significant debate, rulemaking activity and uncertainty, both in the U.S. and internationally. For a discussion of these developments, see "Capital Resources and Liquidity—Capital Resources—Regulatory Capital Standards Developments" in Citi's 2010 Annual Report on Form 10-K.

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FUNDING AND LIQUIDITY

Overview

        Citi's funding and liquidity objectives generally are to maintain ample liquidity to fund its existing asset base as well as grow its core businesses in Citicorp, while at the same time maintain sufficient excess liquidity, structured appropriately, so that it can operate under a wide variety of market conditions, including market disruptions for both short- and long-term periods.

        Due to various constraints that limit the free transfer of liquidity or capital between Citi-affiliated entities (as discussed below), Citigroup's primary liquidity objectives are established by entity, and in aggregate, across:

        At an aggregate level, Citigroup's goal is to ensure that there is sufficient funding in amount and tenor to ensure that aggregate liquidity resources are available for these entities. The liquidity framework requires that entities be self-sufficient or net providers of liquidity in their designated stress tests and have excess cash capital. For additional information on Citigroup's liquidity management and stress testing, see "Capital Resources and Liquidity—Funding and Liquidity" in Citi's 2010 Annual Report on Form 10-K.

        Citi's primary sources of funding include (i) deposits via Citi's bank subsidiaries, which are Citi's most stable and lowest-cost source of long-term funding, (ii) long-term debt (including trust preferred securities and other long-term collateralized financing) issued at the non-bank level and certain bank subsidiaries, and (iii) stockholders' equity. These sources are supplemented by short-term borrowings, primarily in the form of commercial paper and secured financing (securities loaned or sold under agreements to repurchase) at the non-bank level.

        As referenced above, Citigroup works to ensure that the structural tenor of these funding sources is sufficiently long in relation to the tenor of its asset base. In fact, the key goal of Citi's asset-liability management is to ensure that there is excess tenor in the liability structure so as to provide excess liquidity to fund the assets. The excess liquidity resulting from a longer-term tenor profile can effectively offset potential downward pressures on liquidity that may occur under stress. This excess funding is held in the form of aggregate liquidity resources, as described below.

Aggregate Liquidity Resources

 
  Non-bank   Significant bank entities   Total  
In billions of dollars   Mar. 31,
2011
  Dec.31,
2010
  Mar. 31,
2010
  Mar. 31,
2011
  Dec. 31,
2010
  Mar. 31,
2010
  Mar. 31,
2011
  Dec.31,
2010
  Mar. 31,
2010
 

Cash at major central banks

  $ 12.1   $ 22.7   $ 9.5   $ 85.5   $ 82.1   $ 108.9   $ 97.6   $ 104.8   $ 118.4  

Unencumbered liquid securities

    83.4     71.8     72.8     167.6     145.3     128.7     251.0     217.1     201.5  
                                       

Total

  $ 95.5   $ 94.5   $ 82.3   $ 253.1   $ 227.4   $ 237.6   $ 348.6   $ 321.9   $ 319.9  
                                       

        As noted in the table above, Citigroup's aggregate liquidity resources totaled $348.6 billion at March 31, 2011, compared with $321.9 billion at December 31, 2010 and $319.9 billion at March 31, 2010. These amounts are as of period-end, and may increase or decrease intra-period in the ordinary course of business. During the quarter ended March 31, 2011, the intra-quarter amounts did not fluctuate materially from the quarter-end amounts noted above.

        At March 31, 2011, Citigroup's non-bank "cash box" totaled $95.5 billion, compared with $94.5 billion at December 31, 2010 and $82.3 billion at March 31, 2010. This amount includes the liquidity portfolio and "cash box" held in the United States as well as government bonds and cash held by Citigroup's broker-dealer entities in the United Kingdom and Japan.

        Citigroup's bank subsidiaries had an aggregate of approximately $85.5 billion of cash on deposit with major central banks (including the U.S. Federal Reserve Bank, European Central Bank, Bank of England, Swiss National Bank, Bank of Japan, the Monetary Authority of Singapore, and the Hong Kong Monetary Authority) at March 31, 2011, compared with $82.1 billion at December 31, 2010 and $108.9 billion at March 31, 2010.

        Citigroup's bank subsidiaries also have significant additional liquidity resources through unencumbered highly liquid government and government-backed securities. These securities are available for sale or secured funding through private markets or by pledging to the major central banks. The liquidity value of these liquid securities was $167.6 billion at March 31, 2011, compared with $145.3 billion at December 31, 2010 and $128.7 billion at March 31, 2010. Significant amounts of cash and liquid securities are also available in other Citigroup entities.

        In addition to the highly liquid securities noted above, Citigroup's bank subsidiaries also maintain additional unencumbered securities and loans, which are currently pledged to the U.S. Federal Home Loan Banks (FHLB) and the U.S. Federal Reserve Bank's discount window.

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Deposits

        Citi's deposit base stood at $866 billion at March 31, 2011, as compared with $845 billion at December 31, 2010 and $828 billion at March 31, 2010. Deposits can be interest bearing or non-interest bearing. Of the $866 billion of deposits at March 31, 2011, $144 billion were non-interest bearing, compared to $133 billion at December 31, 2010 and $112 billion at March 31, 2010. The remainder, or $722 billion, were interest-bearing, compared to $712 billion at December 31, 2010 and $716 billion at March 31, 2010.

        Year-over-year, deposits grew by $38 billion, or 5%, largely due to FX translation and higher deposit volumes in Transaction Services and Regional Consumer Banking. The $21 billion, or 3%, increase in deposits from the fourth quarter of 2010 was primarily due to increased balances in Transaction Services and FX translation.

        Citigroup continued to focus on maintaining a geographically diverse retail and corporate deposit base during the first quarter of 2011. At March 31, 2011, approximately 65% of deposits were located outside of the United States. In addition, as of March 31, 2011, interest-bearing deposits payable by Citigroup's foreign and domestic banking subsidiaries constituted 58% and 26% of total deposits, respectively, while non-interest-bearing deposits constituted 7% and 9%, respectively.

Long-Term Debt

        Long-term debt is an important funding source because of its multi-year maturity structure. At March 31, 2011, long-term debt outstanding for Citigroup was as follows:

In billions of dollars   Non-bank   Bank   Total
Citigroup(1)
 

Long-term debt(2)(3)

  $ 267.4   $ 109.1 (4) $ 376.5  
               

(1)
Total long-term debt at March 31, 2011 included $67.6 billion of long-term debt related to consolidated VIEs.

(2)
Original maturities of one year or more.

(3)
Of this amount, approximately $56.5 billion is guaranteed by the FDIC under the Temporary Liquidity Guarantee Program (TLGP) with $18.5 billion maturing in 2011 and $38.0 billion maturing in 2012.

(4)
At March 31, 2011, collateralized advances from the FHLB were $17.5 billion.

        The table below details the long-term debt issuances of Citigroup during the past five quarters:

In billions of dollars   1Q10   2Q10   3Q10   4Q10   1Q11  

Unsecured long-term debt issued

  $ 1.3   $ 5.3 (1) $ 7.6   $ 5.9 (2) $ 6.8 (3)

Unsecured long-term debt issued on a local country level

    1.7     0.9     2.1     2.2     1.3  

Trust preferred securities

    2.3                  

Secured debt and securitizations

    2.0             2.5      
                       

Total

  $ 7.3   $ 6.2   $ 9.7   $ 10.6   $ 8.1  
                       

(1)
Includes issuance of $1.9 billion of senior debt during the second quarter of 2010 pursuant to the remarketing of $1.9 billion of Citigroup Capital XXX trust preferred securities held by ADIA to enable the execution of a forward stock purchase contract in September 2010.

(2)
Includes the issuance of $1.9 billion of senior debt during the fourth quarter of 2010 pursuant to the remarketing of $1.9 billion of Citigroup Capital XXXI trust preferred securities held by ADIA to enable the execution of a forward stock purchase contract in March 2011.

(3)
Includes $0.5 billion of long-term FHLB issuance.

        During the first quarter of 2011, Citi issued approximately $6.3 billion of long-term debt, excluding FHLB issuances. Citi continues to expect to refinance an aggregate of approximately $20 billion of its maturing long-term debt during 2011, meaning it currently anticipates approximately $14 billion of issuance during the remainder of 2011. However, Citi continually reviews its funding and liquidity needs, and may adjust its expected issuances due to market conditions or regulatory requirements, among other factors.

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The table below shows the aggregate annual maturities of Citi's long-term debt obligations:

 
  Expected Long-Term Debt Maturities as of March 31, 2011  
In billions of dollars   2011(1)   2012   2013   2014   2015   Thereafter   Total  

Senior/subordinated debt

  $ 41.3   $ 63.3   $ 29.2   $ 24.5   $ 15.9   $ 88.4   $ 262.6  

Local country maturities

    6.2     5.2     3.8     2.3     1.7     5.0     24.2  

Trust preferred securities

                        17.9     17.9  

Securitized debt and securitizations

    11.2     23.1     6.4     8.1     5.4     12.9     67.1  

FHLB borrowings

    12.5     0.5     2.5             3.0     18.5  
                               

Total long-term debt

  $ 71.2   $ 92.1   $ 41.9   $ 34.9   $ 23.0   $ 127.2   $ 390.3  
                               

(1)
Includes $13.8 billion of first quarter 2011 maturities.

Structural Liquidity and Cash Capital

        The structural liquidity ratio, which is defined as the sum of deposits, long-term debt and stockholders' equity as a percentage of total assets, measures whether Citi's asset base is funded by sufficiently long-dated liabilities. Citi's structural liquidity ratio was 73% at March 31, 2011, 73% at December 31, 2010, and 71% at March 31, 2010.

        Another measure of Citi's structural liquidity is cash capital. Cash capital is a more detailed measure of the ability to fund the structurally illiquid portion of Citigroup's balance sheet. Cash capital measures the amount of long-term funding—or core customer deposits, long-term debt and equity—available to fund illiquid assets. Illiquid assets generally include loans (net of securitization adjustments), securities haircuts and other assets (i.e., goodwill, intangibles, fixed assets). At March 31, 2011, both the non-bank and the aggregate bank subsidiaries had cash capital in excess of Citi's liquidity requirements. In addition, as of March 31, 2011, the non-bank maintained liquidity to meet all maturing obligations in excess of a one-year period without access to the unsecured wholesale markets.

Short-Term Borrowings

        As referenced above, Citi supplements its primary sources of funding with short-term borrowings. Short-term borrowings generally include (i) secured financing (securities loaned or sold under agreements to repurchase) and (ii) short-term borrowings consisting of commercial paper and borrowings from banks and other market participants.

Secured Financing

        Secured financing is primarily conducted through Citi's broker-dealer subsidiaries to facilitate customer matched-book activity and to efficiently fund a portion of the trading inventory. Secured financing appears as a liability on Citi's Consolidated Balance Sheet ("Securities Loaned or Sold Under Agreements to Repurchase"). As of March 31, 2011, secured financing was $187.8 billion and averaged approximately $214 billion during the quarter. Secured financing at March 31, 2011 decreased by $20.1 billion from $207.9 billion at March 31, 2010 and by $1.8 billion from $189.6 billion at December 31, 2010. Year over year, reverse repos and securities borrowing increased by $26.8 billion, and increased by $14.5 billion as compared to the fourth quarter of 2010.

        For additional information on Citi's secured financing activities, including the collateralization of such activity, see "Capital Resources and Liquidity—Funding and Liquidity" in Citigroup's 2010 Annual Report on Form 10-K.

Commercial Paper

        At March 31, 2011 and December 31, 2010, commercial paper outstanding for Citigroup's non-bank entities and bank subsidiaries, respectively, was as follows:

In millions of dollars   March 31,
2011
  December 31,
2010
 

Commercial paper

             

Bank

  $ 15,096   $ 14,987  

Non-bank

    9,481     9,670  
           

Total

  $ 24,577   $ 24,657  
           

(1)
At March 31, 2011 and December 31, 2010, collateralized advances from the FHLBs were $9 billion and $10 billion, respectively.

Other Short-Term Borrowings

        At March 31, 2011, Citi's other short-term borrowings were $54.0 billion, compared with $54.1 billion at December 31, 2010 and $78.5 billion at March 31, 2010. This amount included $41.7 billion of borrowings from banks and other market participants, which includes borrowings from the FHLB. The average balance of borrowings from banks and other market participants for the quarter ended March 31, 2011 was approximately $42 billion. Other short-term borrowings also included $11.8 billion of broker borrowings at March 31, 2011, which averaged approximately $12 billion during the first quarter of 2011.

        See Note 15 to the Consolidated Financial Statements for further information on Citigroup's and its affiliates' outstanding long-term debt and short-term borrowings.

Liquidity Transfer Between Entities

        Liquidity is generally transferable within the non-bank, subject to regulatory restrictions (if any) and standard legal terms. Similarly, the non-bank can generally