Citigroup (C)

·      U.S. Consumer Lending

·                  Revenues increased 19%, primarily driven by higher net servicing revenues, increased gains on sale of loans and securities, and 11% growth in average loans.  Higher net servicing revenues were driven by a 68% increase in mortgage servicing assets.  Results include the acquisition of ABN AMRO Mortgage Group in March 2007.

·                  Real estate loan originations declined 16% reflecting modified loan approval criteria and a significant curtailment of activity with third-party loan originators.

·                  Expenses grew 34%, primarily driven by the acquisition of the ABN AMRO business, increased business volumes, and higher staffing costs related to collections.

·                  Credit costs increased substantially, driven by higher net credit losses and a $2.42 billion pre-tax charge to increase loan loss reserves.  Higher credit costs were primarily driven by a weakening of leading credit indicators, including higher delinquencies in 1st and 2nd mortgages and auto loans.  Credit costs increased also due to trends in the macro economic environment, including the housing market downturn.

·                  The net loss reflected higher credit costs and expenses.

·                  U.S. Commercial Business

·                  Revenues declined as increased average loan and deposit balances, up 10% and 18%, respectively, were offset by lower net interest margins.  The revenue decline also reflects business divestitures during 2007 and an increase in the mix of tax-advantaged revenues.

·                  Credit costs increased due to higher expected losses on specific loans and trends in the macro economic environment.

·                  Net income declined as lower revenues and higher credit costs offset increased tax benefits.

U.S. Consumer Lending

        U.S. Consumer Lending provides home mortgages and home equity loans to prime and non-prime customers, auto financing to non-prime consumers and educational loans to students. Loans are originated throughout the United States and Canada through the Citibank, CitiFinancial and Smith Barney branch networks, Primerica Financial Services agents, third-party brokers, direct mail, the Internet and telesales. Loans are also purchased in the wholesale markets. U.S. Consumer Lending also provides mortgage servicing to a portfolio of mortgage loans owned by third parties. Revenues are composed of loan fees, net interest revenue and mortgage servicing fees.

(1)

See footnote 3 to the table on page 4.

(2)

As a percentage of average loans.

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1Q06 vs. 1Q05

        Revenues, net of interest expense, declined as an 18% increase in average loan volumes was offset by net interest margin compression, lower gains on securitizations of real estate loans, and lower net mortgage servicing revenues. Average loan growth reflected a strong increase in originations across all businesses, driven by a 17% increase in prime mortgage originations and home equity loans.

        Operating expenses increased primarily due to higher loan origination volumes, the continued integration of the real estate businesses, and the impact of SFAS 123(R) charges of $8 million.

        Provisions for loan losses and for benefits and claims decreased due to a continued favorable credit environment. The 90 days-past-due ratio declined across all product categories.

        Net income also reflected a $31 million tax reserve release resulting from the resolution of the Federal Tax Audit.

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U.S. Consumer Lending

        U.S. Consumer Lending provides consumer loans through various distribution channels. Loan products are grouped into three categories:

•

Real Estate Lending—Provides mortgage and home equity lending. Loans are originated directly with consumers via the telephone, internet, Smith Barney, Citibank branches and Primerica agents, and indirectly through mortgage brokers, banks and mortgage companies.



•

Student Loans—Provides educational loans to students. Loans are typically sourced through financial aid offices at educational institutions. Also provides government loan origination and servicing capabilities to student loan providers, including academic and financial institutions.



•

Auto—Provides automobile financing through franchised and independent auto dealers, auto manufacturers, and the internet.

U.S. Consumer Lending

        U.S. Consumer Lending provides consumer loans through various distribution channels. Loan products are grouped into three categories:

•

Real Estate Lending—Provides mortgage and home equity lending. Loans are originated directly with consumers via the telephone, internet, Smith Barney, Citibank branches and Primerica agents, and indirectly through mortgage brokers, banks and mortgage companies.



•

Student Loans—Provides educational loans to students. Loans are typically sourced through financial aid offices at educational institutions. Also provides government loan origination and servicing capabilities to student loan providers, including academic and financial institutions.



•

Auto—Provides automobile financing through franchised and independent auto dealers, auto manufacturers, and the internet.