1. Calculate the Tier 1 capital ratio. Is the bank adequately capitalized? (Notes: Refer to the Basel tables. Ignore off-balance sheet items. Assume 100% weight in cases where you need a more information about credit quality. Assume 50% weight on mortgages. Trust preferred securities count as Tier 1 capital.)

CONSOLIDATED BALANCE SHEET December 31 2006 n milions of dolars Assets Cash and due from banks (including segregated cash and other deposits Deposits with banks Federal funds sold and securities borrowed or purchased under agreements to resell (ncluding $84,305 at fair value at December 31, 2007) Brokerage receivables Trading account assets (including $157,221 and $125,231 pledged to creditors at December 31, 2007 and December 31,2006, respectively Investments (including $21,449 and $16,355 pledged to creditors at December 31,2007 and December 31, 2006, respectively Loans, net of unearned income $ 38,206 S 26,514 42,522 4.445 93,925 273,591 215,008 512,921 66,271 $ 777,993 S 679,192 3,727 and $384 at December 31, 2007 and December 31, 2006, at fair Loans, net of unearned income Alowance for loan losses $ 761,876 S 670,252 33.415 15,901 100,936 Total loans, net Goodwill 41,204 Intangible assets (including $8,380 at fair value at December 31, 2007) Other assets $9.802 at fair value at Decenber 31 68,875 Total assets 1,884 318 Non-interest-bearing deposits in US. offices Interest-bearing deposits in U.S offices (including $1,337 and $366 at December 31, 2007 and December 31,2006, respectively, at fair value) Non-interest-bearing deposits in offices outside the U.S nterest-bearing deposits in ottices outside the US (ncluding $2 261 and SA72 at December 31,2007 and Decenter 31,2006 respectively,at tair value Total deposits Federal funds purchased and securites loaned or sold under agreements to repurchase enduring $199,864 attar value at December 31.2007) Brokerage payables Trading account liabilities Short-term bcowings (including $13,487 and $2,012 at December 31, 2007 and December 31, 2006, respectively, at fair value) Long-term debt (ncluding $79,312 and $9,439 at December 31, 2007 and December 31, 2006, respectively, at fair value) Oher liabilites $40,859 38,615 95,002 35,149 516,838 443 275 $ 826,230 712,041 304,243 349,235 85,119 45,887 00,833 288,494 82,926 225,198 84,951 427,112 102,927 $1,568 at fair value at December 31, 200 Total liabilities 2,074,033 $1,764,535 Stockholders' equity Preferred stock ($1.00 par value; authorized shares: 30 milicn), at aggregate lquidation value Common stock (S0.01 par value; authorized shares: 15 billion), issued shares: 2007 and 2006-5,477,416,086 shares Additional paid-in capital Retained earnings Treasury stock, at cost: 2007 482,834,568 shares and 2006 565,422,301 shares Accumulated other Total stockholders S1,000 18,007 21,920 8,253 129,267 21,724)25,092) 119 Total liabilities and stockholders' $2,187 631 $1,884 318 ee Nates to the Coraolidated Financial Statermerts CGMHI has a syndicated five-year committed uncollateralized revolving ne of credit facility with unafiiated banks totaling $3.0 billion, which matures in 2011. CGMHI also has three year and one-year bilateral facilities totaling $1.375 billion with unafilated banks with borrowings maturing on various dati! 2008 and 2009. At Dec bilateral facilities were drawn Long-Term Debt Balances Weighted Maturities 2007 2006 mber 31, 2007, s80 million of the lnmill fde sarrarend Citigroup Parent Company Senior notes Subordinated notes Junior subordnated notes relating to trust preferred coupon CMHI also has committed long-term finanang facilities with 2.075 billion available under these facilities, of which $1.08 million i CGMHI prior notice (generally one year). CGMHI also has substantial are available, but where no contractual lending obligation exists These 4.71% 5.60 2008-2008 2008-2036 S 95,940 51,941 $ 91,491 24,084 unaffiliated banks At December 31, 2007, CGMHI had drawn down the full guaranteed by Citigroup. A bank can terminate these facilities by giving borrowing arrangements consisting of facilities that CGMHI has been advised 6.96 2027-2067 23,756 9,775 socurties Other Citigroup Subsidiaries Senior notes Subordinated notes Secured debt Citigroup Global Markets 6.12 2008-2099 180,339 .07 2008-2037 6,551 3,843 .30 2008-2044 arrangements are reviewed on an ongoing basis to ensure flexibility in 433 426 meeting CGMHI's shon-term requirements. The Company issues both fixed and variable rate debt in a range of Holdings Inc. Senior notes Subordinated notes Citigroup Funding Inc. Senior notes 4.72 2008-2097 26,545 28,602 117 currencies. It uses derivative contracts, primarily interest rate swaps, to eectively convert a portion of its fixed rate debt to variable rate debt and 6.21 2009-2030 56 variable rate debt to fixed rate debt. The maturity structure of the derivatives generally corresponds to the maturity structure of the debt being hedged. In dition, the Company uses other derivative contracts to manage the foreign 5.34 2008-2051 36,417 18,847 494 $339,575 S250,249 28,044 exchange impact of certain debt issuances At December 31, 2007, the Company's overall weighted average interest rate for long-tem debt was Senior notes Subordinated notes Junior subordnated notes relating to trust preferred 63,348 5.50% on a antractual basis and 5.12% including the effects of derivative contracts 23,756 433 ocurtos 9,775 Total 427,112 $288,494 Inclues $250 mllion ot notes maturing in 2098 At December 31, 2007 nd 2006, colateralad advances tinte Federal Hne Laan BwIHe 969 bilion and $81.5 bition, respectively Includes Targeted Growlth Ennanced Term Securties (TARGETS with carrying values of S48 millio ssued by TARGETS Trust and $243 milion sued by TARGETS Trats XO Decenter 31, 2007 nd Decemcer 31, 200 owns al of the voting securities of the CGMHI Tnsts. The CGMH Trusts have no assets, cperations revenus or cah flows cther Tan hose rolatd to the saceadminstraon and repayment f the ARGETS and the CGMHI Trusts commmon seouities The CGMH Trusts obigatons under the ARGETS are flully and uncondtionaly guaranteed by CGMHL and CGMH's guarantee bligations are oolectively the CGMHI Trusts.CGMH ndudes T peted Goth Ernanced Term Seortes TAKETS) carryng vales at $15 milion and 556 milion issued by TARGETS Trusts XV and 30M at December 31, 2007 and December 31 008, respectively, poectively, the "OFI Trusts C owns al of the voting seourities of the Trusts The Cl Trusts have ne assens operations, revenues or cash fiows other than those relaned to the issuance. amnitation, and repayment ofthOT TARGETS and the Tuts. co ron secunes. The CF Trusts tigations ner the CFI TARGETS e fuh and uncondaraty gusarteed by ard CTS guantee tigators are fuly and uoondtoaly parameed by Otgrup ncludes Princpal-Protected Tust Seanties Satey Fest That Soutes) with carrying vales of $301 lln issued by Safety First Tirust Serfes 2006-1, 2007-1, 2007-2, 2007-3 and 2007-4 (collectively the "Stety Fit Trut#7 at December 31.2007 and$78mllo, issued by Sam, First Trust Sees 2005-1 at December 31, 2006. CFI owns alil of the voting secuites of te Safety First Trusts The Safety Firt Tnst hae noets, operators. revenues or cash flows oter tan those related to the ssuance, adninistraton, and repayment of the Safety First Trust Securities and the Safuty Fist Trusts common seourties. The Safety First Tusts obigations under the Safety First Trust Securities are fuly and unconditionaly quaranteed by CFL and Crs guarantee otligations are fully and uncondhionaly CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF INCOME Year ended December 31 mitions of dolars, xc per share amount 20062005 124,467 $95,497$75.922 35.676 Interest revenue Interest experse Net interest revenue Commissions and fees Principal transactions 6943 46,93 $39554 $39246 21,132 $19,244 $16,93 dministration and other cuciary fees Realzed gains (lasses) from sales of investments Insurance premiums 12,079)799 693 1,791 9,172 1,168 1,962 34 3.202 3,132 9597 her revenue 10,891 Total non-interest revenues 34,762 $50,061 $44,39 Total revenues, net of interest expense Provisions for credit losses and for benefits and claims Provision for loan losses Policyholder benefits and daims 17,424 6,738 7,929 867 250 Provision for unfunded 250 Total for credit losses and for benefits and claims 7.955 ,046 Operating expenses Compensation and benef Net occupancy expense 34,435 $30277 $25,772 5,141 5,841 3,762 2.563 2,533 Advertising and marketing expense Aestructuring expense 2,935 9578 8.193 Total o 52 021 Income from continuing operations before income taxes, minority interest, and cumulative effect of accounting change Provision (benefit) for income taves 1,701 $2.639 $29 433 (2,201) 1019,078 549 nterest, net of taxes Income from c operations before cumulative effect of 3,617$21,249 $19,806 Discontinued operations ncome from discontinued operations Gain on sale $-27$ 908 6,790 2,866 219 for income taves and net of taves Income from discontinued operations, met of taxes Cumulative effect of $-289 $4,832 net of taxes Net income Basic earnings per share Income from continuing operaticns ncome from discontinued operations, net of taxes Cumulative effect of $ 0.73 433 3.90 0.95 0.06 net of taxeS $ 0.73 4.39 484 4.9058 48873 5.0576 Net income Weighted average common shares Diluted earnings per share come from continuing operations ncome from discontinued operations, net of taxes Cumulative effect of $ 0.72 425 382 0.94 0.06 net of taxeS Net income $ 0.72431 4.75 Adjustedd weighted average common shares 4.995.3 4986 1 5,1604 16. INVESTMENTS Securities avalable-for-sale Non-marketable equity securities carried at fair value Non-marketable equity securities carried at cost Cebt securities hed 193,113 $258,124 13,603 10,662 on-maable equity seurts canied at cost are perioticaly evaluated for other-han teoraty inairment The amortiznd cost and fair value of securities available-for-sale at December 31, 2007 and December 31, 2006 were as Sollows Amortized unrealizedrrealzed losses Fair value $ 971 $63,075 $100264 262 $ 292 $100,234 24,531 15,654 3.783 14,634 U.S. Treasury and federal agencies Foreign government U.S. corporate 14.490 debt securdes Total debt securides availatle-for-sale $190,981 2541 189.347 $253 829 3011 5254,143 Total securities available-for-sale )Redassfed to canfarm to the current period's presentaton Citigroup invests in certain complex investment company structures known as Master-Feeder funds by making dinect investrments in the Feeder funds Each Feeder fund recoris its net investment in the Master fund, which is the sole or principal investment of the Feeder fund, and does not consolidate the Master Fund Citigroup consolidates Feeder funds where it has a controlling interest. At Deaember 31, 2007, the total asses of Ctigroup's consolidated Feeder funds amounted to approximately $0.5 billion. Catigroup has not consolidated approximately $43 bilion of adtitional aswets and liabilities recorded in the related Master Funds' financial statements. At December 31, 2007, the cost of approximately 5,000 investments in equity and fixed income securities exceeded their fair value by $2.599 billion. Of the $2.599 billion, the gross unrealized loss on equity securities was $58 million. Of the remainder, $689 million represents fiued income investments that have been in a gross unnalized loss position for less than a year, and ofthese 86% are rated investment grade $1.852 billion represents fixed income investments that have been in a gross unrealized loss position tot a year or more, and of these95% are rated investment grade. The severity of the impairment The cause of the impairment and the financial condition and near-tem Activity in the mariset of the issuer which may indicate avense creit condisons and ime sufficient to allow for any anticipated recovery The Company's neview for inmpairment generally entails possiale impaiment amortized cost inciuding consideration of the length of time the . The o pany saility and in rio hold the investmentfor aperiod of Management has deternined that the unrealined losses on the - Identification and eraluation of investments that have indications of Deoember 31, 2007 are temporary in nature. The Company conducts periodic reviews to identify and evaluate investments that have indications of possible impaiment. An investment in a debt or equity security is impaired if its fair value falls below its cost and the decline is considered other than temporary. The Company conducts and documents periodic revieas of all securities with unrealized losses to evaluate whethet the impaiment is other than temporary, in line with FAS8 Staff Position FAS No. 115-1, "The Meaning of Other-Than-Temporary Impairnent and Is Application to Certain Investments" (ESP FAS15-1).Any unrealized loss identified as such would be recorded directly in the Consolidated Stateent of Income. Factors considered in determining whether a loss is temporary -Analvsis of individual investments that have fair values less than investment has been in an unrealized loss position and the expected Discussion of eidential mater, including an evaluation of factors or triggers that could cause individual investments to qualiy as having other-than-emporary impaiment and business policies. impairment and those that would not suppor Docuentation of the results of these analyss, as required under The following table presents the amortized cost, fair value, and average ield on amortized cost of debt securities available-Sor-sale by contractual maturity dates as of December 31, 2007: 7. LOANS 2007 Martgage and real estate 251,927 $225,900 40,79713008 U.S. Treasury and federal agencies Oue within 1 year After 1 but within 5 years After 5 but within 10 years S 7.792 $7.778 3.84% Lease 564 3.72 395,875 $361,65 23579 22.880 531noffices tside the US $42.312 $41.620 481% Mortgage and nui 55,152 44,457 39,369 105,393 960 State and municipal Due within 1 year After 1 but within 5 years After 5 but within 10 years $24$246.00% $195,645 $150,80 25 5.38 Net unearmed inco 591,520 $512,461 460 592 307 $512,921 All other Due within 1 year After 1 but within 5 yeans After 5 but within 10 years n U.S office $ 28,911 $ 28,835 4.81% 45,872 2,017 1,614 5.57 48,527 45,560 5. 48.512 5.29 134.521 5.43% Commercial and industrial Lease financing 2,101 168 1,630 and real estate In offices outside the us Total debt securities available-for-sale $116,145 $105,872 ncludes ortgege-backed securitsies ot u.S, ederal agencies Loars to financial institutions Lease financing 20,467 21827 investments wth no stated martes are ncluded as oortractual mannes ofgreater tan 10was tudes toregn govennert, us corporate, ant backed securties ed by us cop rams. and US 143,502 186,222 $166,620 136.914 The following table presents interest and dividends on investments: Net uneamed income milions of dolars Taxable interes Interest exempt from U.S. federal income tax 2006 200 12,233 S9,155 $6,546 660 357 Total interest and dividends $13,487 $10,399 $.338 Included in the previous loan table are lending products whose terms may give rise to audisional cred issues. Credit cards with below-market introductory intenest rates, multiple loans supporied by the same collateral (eg, home equity loans), or interest-only loans are examples of such products. However, these products ane not material to Citigroup's financial position and are closely managed via credit controls that mitigate their aiditional inherent risk The following table represents realized gains and losses from sales of 2007 200s 2005e $1,435 $2,119 $2 275 in mikons of dolars Gross realized investment gains Gross realized investment losserS Net realized gains Impaired loans are those on which Citigroup believes it is probable that it will not colect all amounts due according to the contractual tems of the loan. This excludes smaler-balance homogeneous loans that are evaluated collectively for impaimment, and are carried on a cash basis Valuation allowances for these loans are estimated considering all available evidence including as appropriate, the present value of the expected Suture cash flows discounted at the loan's contractual efective rate, the seoondary market value of the loan and the fair value of collateral less disposal coss The following table shows components of compensation expense relating to the Company's stock-based compensation programs as recorded during 2007, 2006 and 2005 7. PRINCIPAL TRANSACTIONS Principal transactions revenue consists of realized and unrealized gains and losses from trading activities.Not included in the table below is the impact o net interest revenue related to trading activities, which is an integral part of milions of s trading activities profitability. The following table presents principal transactions revenue for the years ended December 31: 2007 2006 2005 2006 awards to netirement-eligble emps -$ 648 _ SFAS 123R chages for estimuted awands to 2007 20062006r miions of dalar Markets&Banking: Fixed income Credt products Equities Foreign exchange retirement-eigble employees through January 2007 and 2008 467 85 18 4,053 $5,593 3.923 Optian expense 129 21805) 45) Amortization of MC LTP awrds 818 870 Amortization of nestricted and oefemed stock awards 1,22269304 585 1,766 885 487 3,299 $3,166 $1,903 otal Markets& Banking Global Consumer Global Wealth Manacement Alternative investments (15,028) 6899 5.566 513 80 519 (138) 165 Total l transactions reenue Redassfed to conform to the current perlods presentaton ncudes evenues from goverment securties and corporate det, municoal securties preferre The Compary,primarily through is Capital Accurmulation Program (CAP) issues shans of Gtigoup common stck in the form of nestricted or deiermed stock nortgage secur es.oner debt nst rents Also i cudes spot and torweraing of to participating officers and emmpioes Ror all stock award programs, during the dicpicahie sing peril te shans sard ahe d orted b oin,tone on ed ncome les and exchangs-ased aind over-e-counter (010 men aptons, and forward contracts on fxed nome securtes Indudes tevus fom strutuned credit products such as North Aerica and Europe coteparticipant, and the aardissubject to cancellation if the paricipant's anknglending and structuing busness and eposures to super sener CCOs dett equhy-inked notes and exchenge-traded and OTC equty aptions and warants erployment isterninated Aher the award wests, the shares becone freely transferable (suje tothestockowneship commitment of semior executives). Fron the date of the awani, the necipient of a restricted stock awani can direct the 4 indudes enues fron common pnefemed and convertibie preterred stock, convertbe corporat Indudes evnues from foregn exchage spt farward, ption and swap contracts, as well a and other conmodtes 8. INCENTIVE PLANS year over four year,ecept for awaris to oertain employees at Smith Barney that Program axards Gurherdescrbed beow) that vest in January 2020. Stack vesting period CAPpaticipants in 2067,2006 and 2005 could eledt to neaeive al progran tables indluce options grantd under CAP.Uneamed compensation The Company has adopted a num era equity compensation plans un er vestinoasad 207 Manquent unit inglan In at e which it administers stock options, restricted or deferned stock and stock purchase programs. The award programs are used to attract, retain and motivate offioers, employees and non-employee directors, to compensate them for their contributions to the Company, and to encourage employe rpartotheir award in stock aptions The Sigunsented in the stock option stock ownership. The plans are administered by the Personnel and Compensation Committee of the Citigroup Board of Directors, which is compased entirely of independent non-employee directors. At Decermber 31, ommon stock at the date of grant andis reooind as a chare to incme 2007, approximately 238 million shares were authorized and available for ratably over the fiulvesting period, ecept for those awanis granted to redinement- grant under Citigroup's stock inoentive and stock purchase plans In accordance with Citigroup practice, shares would be issued out of Treasury incoe for awanis made to netiement digible eplaees is acceleraled basei on stock upon exercise or esting. epense assodald with the stock zars mpresents the market value f Citignoup eligbleempiojees As eplained below,pursuant to SEAS 1230R), the charge to the dates the nirementuilsaremet The following table summarizes the financial structure of each of the Company's subsidiary trusts at December 31, 2007 Junior subordinated debentures owned by trust rust Issuance Securities Liquidation Couponissued date issued value Dec 1996 200,000 uly2001 46.000.000 Sept. 2001 56,000.000 Feb 2003 44000.000 Sept. 2003 20,000.000 Sept. 2004 24.000.000 June 2006 22.600.000 Sept. 2008 47400.000 Nov 2008 64.000.000 Mar. 2007 44000.000 June 2007500,000 Aug 2007 49,000.000 Nov. 2007 31500.000 Dec. 2007 3.500.000 Nov. 2007 875.000 Nov. 2007 1875.000 Nov. 2007 875.000 200 1,150 7.125% 1.422.681 1,186 J43.203| 1.400 6.960% 1.731969 1.443 S 15,2031 1.100 7.625% itgroup Capital Citigroup Capital Vi Citigroup Capital VII itigroup Capital D itgoup Capital X Citigroup Capital X Citigroup Capital XV Citigroup Capital XV Citigroup Capital XV Citigroup Capital XV Citigroup Capital Sept 17, 200 1.360825 1,134 14.2033 Feb 13, 2008 515 Sept. 30, 2033 Sept 30, 2008 619 Sept 27,2034 27,2009 566 June 30,2068 June 30, 2011 0,00018 S 15,206Sept 15, 2011 6.000% 500 6.100% 618.567 600 6.000% M2209 0001,801 50 1.004 1226 Dec31,208 Mar. 15, 2087 June 28, 2067 15,2067 Dec. 15, 2067 Dec. 21, 2077 Mar. 15, 2041 Sapt 15, 204 Mar. 15, 2042 Mar. 15 2012 ne 28, 2017 Au 15, 2012 ec 15, 2012 1225 7250% 20 20,000 Citigroup Capital XX Citigroup Capital XX0 Citigroup Capital XXIX Citigroup Capital XX Citigroup Capital X 00 Citigroup Capital x000 3.500 8.300% 1.875 6320% 1.875 6.466% 1.875 6.700% Dec 21, 203 Mar 15, 2013 Sept 15,2013 Mar 15, 2014 15.2042 15, 2014 0 1,875 10 1.875 Adam Captal Trst 11 Adam Statutory Trust ll Adam Statutory Trust Jan. 07, 2008 26 2007 ept 17, 2008 Mar. 17, 2009 Dec. 2002 +335 to 3 mo LIB 5 +325 to 3 mo. LB +295 to 3 mo LIB 5 +279 to 542 Jan. 07, 2033 Dec26,2032 Sapt 17,2033 Mar. 17, 2034 25.000 Sept. 2003 40.000 1238 Trust V 36 Total obligated $23,535 (T) Represents the proceeds eoeved tom the Trust at the date tuanoe. 2 leaumed by Ctigroup va Cicorp's merger with and nto Ctgroup an August 1,200 in each case, the coupon rate on the the trust securities. Distributions on the trust securities and interest on the debentures are payable quarterly, except for Citigroup Capital III and Citigroup Capital XVII, on which distributions are payable semiannually. debentures is the same as that on On Febnuary 15, 2007, Gitigroup redeemed for cash all of the $300 million Trust Prefermed Securities of Citicorp Capital I, $450 million of Caticorp Capital I, and $400 million of Citignoup Capital II at the edemption price of $1,000 per preferred security plus any accrued During 2007, Citigroup issued $1.1 billion, $1.004 billion, $1.225 billion, distribution up to but ecluing the date of redemption. $788 million, $3.5 billion and $7.5 billion related to the Enhanced Trust Preferred Securities of Citigroup Capital XVIL, XVIIL, XIX, Xx, XX, and XXIX-XXXII (ADIA) respectively On April 23, 2007, Citigroup redeemed for cash all of the $22 million Trust Prefemed Securities of Adam Capital Trust II at the redemption price f $1,000 perprefenmed security plus any accrued distributions up to but On March 18, 2007 and March 26, 2007, Citigroup redeemed Sor cash all of the $23 million and $25 million Trust Preferned Securities of Adam Statutory Trust I and Adam Statutory Trust II, respectively, at the redemption price of $1,000 per preferred security plus any accrued cluding the date of redemption Please note that Capital Securities XXIX-XCXII that are part of the Upper DECS equity units sold in a private placement to Abu Dhabi Investment Authority have been incluced in this table he date of redemption. 422 Part 3 Commercial Banks TABLE 13-2 Specifications of Capital Categories for Prompt Corrective Action Leverage Ratio Total Risk-Based Ratio Tier I Risk-Based Ratio Capital Directive/Other Zone 1. Well capitalized 5% or above an 10% or above and 6% or above and Not subject to a capital directive to meet a specific level for any capital measure 2. Adequately capitalized 4% or above* and 8% or above and 4% or above and Does not meet the definition of well capitalized 3. Undercapitalized 4. Significantly Under 4% Under 3% 2% or less Under 8% Under 6% 2% or less Under 4% Under 4% 2% or less or or undercapitalized 5. Critically or or undercapitalized or or 3 percent or higher for banks and savings associations that are not experiencing or anticipating significant growth. Under 3 percent for composite one-rated banks and savings associations that are not experiencing or anticipating significant growth. Source: Federal Reserve Board of Governors, September 10, 1993. www.federalreserve.gov Regulations on Capital Adequ acy (Leverage) CONSOLIDATED BALANCE SHEET December 31 2006 n milions of dolars Assets Cash and due from banks (including segregated cash and other deposits Deposits with banks Federal funds sold and securities borrowed or purchased under agreements to resell (ncluding $84,305 at fair value at December 31, 2007) Brokerage receivables Trading account assets (including $157,221 and $125,231 pledged to creditors at December 31, 2007 and December 31,2006, respectively Investments (including $21,449 and $16,355 pledged to creditors at December 31,2007 and December 31, 2006, respectively Loans, net of unearned income $ 38,206 S 26,514 42,522 4.445 93,925 273,591 215,008 512,921 66,271 $ 777,993 S 679,192 3,727 and $384 at December 31, 2007 and December 31, 2006, at fair Loans, net of unearned income Alowance for loan losses $ 761,876 S 670,252 33.415 15,901 100,936 Total loans, net Goodwill 41,204 Intangible assets (including $8,380 at fair value at December 31, 2007) Other assets $9.802 at fair value at Decenber 31 68,875 Total assets 1,884 318 Non-interest-bearing deposits in US. offices Interest-bearing deposits in U.S offices (including $1,337 and $366 at December 31, 2007 and December 31,2006, respectively, at fair value) Non-interest-bearing deposits in offices outside the U.S nterest-bearing deposits in ottices outside the US (ncluding $2 261 and SA72 at December 31,2007 and Decenter 31,2006 respectively,at tair value Total deposits Federal funds purchased and securites loaned or sold under agreements to repurchase enduring $199,864 attar value at December 31.2007) Brokerage payables Trading account liabilities Short-term bcowings (including $13,487 and $2,012 at December 31, 2007 and December 31, 2006, respectively, at fair value) Long-term debt (ncluding $79,312 and $9,439 at December 31, 2007 and December 31, 2006, respectively, at fair value) Oher liabilites $40,859 38,615 95,002 35,149 516,838 443 275 $ 826,230 712,041 304,243 349,235 85,119 45,887 00,833 288,494 82,926 225,198 84,951 427,112 102,927 $1,568 at fair value at December 31, 200 Total liabilities 2,074,033 $1,764,535 Stockholders' equity Preferred stock ($1.00 par value; authorized shares: 30 milicn), at aggregate lquidation value Common stock (S0.01 par value; authorized shares: 15 billion), issued shares: 2007 and 2006-5,477,416,086 shares Additional paid-in capital Retained earnings Treasury stock, at cost: 2007 482,834,568 shares and 2006 565,422,301 shares Accumulated other Total stockholders S1,000 18,007 21,920 8,253 129,267 21,724)25,092) 119 Total liabilities and stockholders' $2,187 631 $1,884 318 ee Nates to the Coraolidated Financial Statermerts CGMHI has a syndicated five-year committed uncollateralized revolving ne of credit facility with unafiiated banks totaling $3.0 billion, which matures in 2011. CGMHI also has three year and one-year bilateral facilities totaling $1.375 billion with unafilated banks with borrowings maturing on various dati! 2008 and 2009. At Dec bilateral facilities were drawn Long-Term Debt Balances Weighted Maturities 2007 2006 mber 31, 2007, s80 million of the lnmill fde sarrarend Citigroup Parent Company Senior notes Subordinated notes Junior subordnated notes relating to trust preferred coupon CMHI also has committed long-term finanang facilities with 2.075 billion available under these facilities, of which $1.08 million i CGMHI prior notice (generally one year). CGMHI also has substantial are available, but where no contractual lending obligation exists These 4.71% 5.60 2008-2008 2008-2036 S 95,940 51,941 $ 91,491 24,084 unaffiliated banks At December 31, 2007, CGMHI had drawn down the full guaranteed by Citigroup. A bank can terminate these facilities by giving borrowing arrangements consisting of facilities that CGMHI has been advised 6.96 2027-2067 23,756 9,775 socurties Other Citigroup Subsidiaries Senior notes Subordinated notes Secured debt Citigroup Global Markets 6.12 2008-2099 180,339 .07 2008-2037 6,551 3,843 .30 2008-2044 arrangements are reviewed on an ongoing basis to ensure flexibility in 433 426 meeting CGMHI's shon-term requirements. The Company issues both fixed and variable rate debt in a range of Holdings Inc. Senior notes Subordinated notes Citigroup Funding Inc. Senior notes 4.72 2008-2097 26,545 28,602 117 currencies. It uses derivative contracts, primarily interest rate swaps, to eectively convert a portion of its fixed rate debt to variable rate debt and 6.21 2009-2030 56 variable rate debt to fixed rate debt. The maturity structure of the derivatives generally corresponds to the maturity structure of the debt being hedged. In dition, the Company uses other derivative contracts to manage the foreign 5.34 2008-2051 36,417 18,847 494 $339,575 S250,249 28,044 exchange impact of certain debt issuances At December 31, 2007, the Company's overall weighted average interest rate for long-tem debt was Senior notes Subordinated notes Junior subordnated notes relating to trust preferred 63,348 5.50% on a antractual basis and 5.12% including the effects of derivative contracts 23,756 433 ocurtos 9,775 Total 427,112 $288,494 Inclues $250 mllion ot notes maturing in 2098 At December 31, 2007 nd 2006, colateralad advances tinte Federal Hne Laan BwIHe 969 bilion and $81.5 bition, respectively Includes Targeted Growlth Ennanced Term Securties (TARGETS with carrying values of S48 millio ssued by TARGETS Trust and $243 milion sued by TARGETS Trats XO Decenter 31, 2007 nd Decemcer 31, 200 owns al of the voting securities of the CGMHI Tnsts. The CGMH Trusts have no assets, cperations revenus or cah flows cther Tan hose rolatd to the saceadminstraon and repayment f the ARGETS and the CGMHI Trusts commmon seouities The CGMH Trusts obigatons under the ARGETS are flully and uncondtionaly guaranteed by CGMHL and CGMH's guarantee bligations are oolectively the CGMHI Trusts.CGMH ndudes T peted Goth Ernanced Term Seortes TAKETS) carryng vales at $15 milion and 556 milion issued by TARGETS Trusts XV and 30M at December 31, 2007 and December 31 008, respectively, poectively, the "OFI Trusts C owns al of the voting seourities of the Trusts The Cl Trusts have ne assens operations, revenues or cash fiows other than those relaned to the issuance. amnitation, and repayment ofthOT TARGETS and the Tuts. co ron secunes. The CF Trusts tigations ner the CFI TARGETS e fuh and uncondaraty gusarteed by ard CTS guantee tigators are fuly and uoondtoaly parameed by Otgrup ncludes Princpal-Protected Tust Seanties Satey Fest That Soutes) with carrying vales of $301 lln issued by Safety First Tirust Serfes 2006-1, 2007-1, 2007-2, 2007-3 and 2007-4 (collectively the "Stety Fit Trut#7 at December 31.2007 and$78mllo, issued by Sam, First Trust Sees 2005-1 at December 31, 2006. CFI owns alil of the voting secuites of te Safety First Trusts The Safety Firt Tnst hae noets, operators. revenues or cash flows oter tan those related to the ssuance, adninistraton, and repayment of the Safety First Trust Securities and the Safuty Fist Trusts common seourties. The Safety First Tusts obigations under the Safety First Trust Securities are fuly and unconditionaly quaranteed by CFL and Crs guarantee otligations are fully and uncondhionaly CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF INCOME Year ended December 31 mitions of dolars, xc per share amount 20062005 124,467 $95,497$75.922 35.676 Interest revenue Interest experse Net interest revenue Commissions and fees Principal transactions 6943 46,93 $39554 $39246 21,132 $19,244 $16,93 dministration and other cuciary fees Realzed gains (lasses) from sales of investments Insurance premiums 12,079)799 693 1,791 9,172 1,168 1,962 34 3.202 3,132 9597 her revenue 10,891 Total non-interest revenues 34,762 $50,061 $44,39 Total revenues, net of interest expense Provisions for credit losses and for benefits and claims Provision for loan losses Policyholder benefits and daims 17,424 6,738 7,929 867 250 Provision for unfunded 250 Total for credit losses and for benefits and claims 7.955 ,046 Operating expenses Compensation and benef Net occupancy expense 34,435 $30277 $25,772 5,141 5,841 3,762 2.563 2,533 Advertising and marketing expense Aestructuring expense 2,935 9578 8.193 Total o 52 021 Income from continuing operations before income taxes, minority interest, and cumulative effect of accounting change Provision (benefit) for income taves 1,701 $2.639 $29 433 (2,201) 1019,078 549 nterest, net of taxes Income from c operations before cumulative effect of 3,617$21,249 $19,806 Discontinued operations ncome from discontinued operations Gain on sale $-27$ 908 6,790 2,866 219 for income taves and net of taves Income from discontinued operations, met of taxes Cumulative effect of $-289 $4,832 net of taxes Net income Basic earnings per share Income from continuing operaticns ncome from discontinued operations, net of taxes Cumulative effect of $ 0.73 433 3.90 0.95 0.06 net of taxeS $ 0.73 4.39 484 4.9058 48873 5.0576 Net income Weighted average common shares Diluted earnings per share come from continuing operations ncome from discontinued operations, net of taxes Cumulative effect of $ 0.72 425 382 0.94 0.06 net of taxeS Net income $ 0.72431 4.75 Adjustedd weighted average common shares 4.995.3 4986 1 5,1604 16. INVESTMENTS Securities avalable-for-sale Non-marketable equity securities carried at fair value Non-marketable equity securities carried at cost Cebt securities hed 193,113 $258,124 13,603 10,662 on-maable equity seurts canied at cost are perioticaly evaluated for other-han teoraty inairment The amortiznd cost and fair value of securities available-for-sale at December 31, 2007 and December 31, 2006 were as Sollows Amortized unrealizedrrealzed losses Fair value $ 971 $63,075 $100264 262 $ 292 $100,234 24,531 15,654 3.783 14,634 U.S. Treasury and federal agencies Foreign government U.S. corporate 14.490 debt securdes Total debt securides availatle-for-sale $190,981 2541 189.347 $253 829 3011 5254,143 Total securities available-for-sale )Redassfed to canfarm to the current period's presentaton Citigroup invests in certain complex investment company structures known as Master-Feeder funds by making dinect investrments in the Feeder funds Each Feeder fund recoris its net investment in the Master fund, which is the sole or principal investment of the Feeder fund, and does not consolidate the Master Fund Citigroup consolidates Feeder funds where it has a controlling interest. At Deaember 31, 2007, the total asses of Ctigroup's consolidated Feeder funds amounted to approximately $0.5 billion. Catigroup has not consolidated approximately $43 bilion of adtitional aswets and liabilities recorded in the related Master Funds' financial statements. At December 31, 2007, the cost of approximately 5,000 investments in equity and fixed income securities exceeded their fair value by $2.599 billion. Of the $2.599 billion, the gross unrealized loss on equity securities was $58 million. Of the remainder, $689 million represents fiued income investments that have been in a gross unnalized loss position for less than a year, and ofthese 86% are rated investment grade $1.852 billion represents fixed income investments that have been in a gross unrealized loss position tot a year or more, and of these95% are rated investment grade. The severity of the impairment The cause of the impairment and the financial condition and near-tem Activity in the mariset of the issuer which may indicate avense creit condisons and ime sufficient to allow for any anticipated recovery The Company's neview for inmpairment generally entails possiale impaiment amortized cost inciuding consideration of the length of time the . The o pany saility and in rio hold the investmentfor aperiod of Management has deternined that the unrealined losses on the - Identification and eraluation of investments that have indications of Deoember 31, 2007 are temporary in nature. The Company conducts periodic reviews to identify and evaluate investments that have indications of possible impaiment. An investment in a debt or equity security is impaired if its fair value falls below its cost and the decline is considered other than temporary. The Company conducts and documents periodic revieas of all securities with unrealized losses to evaluate whethet the impaiment is other than temporary, in line with FAS8 Staff Position FAS No. 115-1, "The Meaning of Other-Than-Temporary Impairnent and Is Application to Certain Investments" (ESP FAS15-1).Any unrealized loss identified as such would be recorded directly in the Consolidated Stateent of Income. Factors considered in determining whether a loss is temporary -Analvsis of individual investments that have fair values less than investment has been in an unrealized loss position and the expected Discussion of eidential mater, including an evaluation of factors or triggers that could cause individual investments to qualiy as having other-than-emporary impaiment and business policies. impairment and those that would not suppor Docuentation of the results of these analyss, as required under The following table presents the amortized cost, fair value, and average ield on amortized cost of debt securities available-Sor-sale by contractual maturity dates as of December 31, 2007: 7. LOANS 2007 Martgage and real estate 251,927 $225,900 40,79713008 U.S. Treasury and federal agencies Oue within 1 year After 1 but within 5 years After 5 but within 10 years S 7.792 $7.778 3.84% Lease 564 3.72 395,875 $361,65 23579 22.880 531noffices tside the US $42.312 $41.620 481% Mortgage and nui 55,152 44,457 39,369 105,393 960 State and municipal Due within 1 year After 1 but within 5 years After 5 but within 10 years $24$246.00% $195,645 $150,80 25 5.38 Net unearmed inco 591,520 $512,461 460 592 307 $512,921 All other Due within 1 year After 1 but within 5 yeans After 5 but within 10 years n U.S office $ 28,911 $ 28,835 4.81% 45,872 2,017 1,614 5.57 48,527 45,560 5. 48.512 5.29 134.521 5.43% Commercial and industrial Lease financing 2,101 168 1,630 and real estate In offices outside the us Total debt securities available-for-sale $116,145 $105,872 ncludes ortgege-backed securitsies ot u.S, ederal agencies Loars to financial institutions Lease financing 20,467 21827 investments wth no stated martes are ncluded as oortractual mannes ofgreater tan 10was tudes toregn govennert, us corporate, ant backed securties ed by us cop rams. and US 143,502 186,222 $166,620 136.914 The following table presents interest and dividends on investments: Net uneamed income milions of dolars Taxable interes Interest exempt from U.S. federal income tax 2006 200 12,233 S9,155 $6,546 660 357 Total interest and dividends $13,487 $10,399 $.338 Included in the previous loan table are lending products whose terms may give rise to audisional cred issues. Credit cards with below-market introductory intenest rates, multiple loans supporied by the same collateral (eg, home equity loans), or interest-only loans are examples of such products. However, these products ane not material to Citigroup's financial position and are closely managed via credit controls that mitigate their aiditional inherent risk The following table represents realized gains and losses from sales of 2007 200s 2005e $1,435 $2,119 $2 275 in mikons of dolars Gross realized investment gains Gross realized investment losserS Net realized gains Impaired loans are those on which Citigroup believes it is probable that it will not colect all amounts due according to the contractual tems of the loan. This excludes smaler-balance homogeneous loans that are evaluated collectively for impaimment, and are carried on a cash basis Valuation allowances for these loans are estimated considering all available evidence including as appropriate, the present value of the expected Suture cash flows discounted at the loan's contractual efective rate, the seoondary market value of the loan and the fair value of collateral less disposal coss The following table shows components of compensation expense relating to the Company's stock-based compensation programs as recorded during 2007, 2006 and 2005 7. PRINCIPAL TRANSACTIONS Principal transactions revenue consists of realized and unrealized gains and losses from trading activities.Not included in the table below is the impact o net interest revenue related to trading activities, which is an integral part of milions of s trading activities profitability. The following table presents principal transactions revenue for the years ended December 31: 2007 2006 2005 2006 awards to netirement-eligble emps -$ 648 _ SFAS 123R chages for estimuted awands to 2007 20062006r miions of dalar Markets&Banking: Fixed income Credt products Equities Foreign exchange retirement-eigble employees through January 2007 and 2008 467 85 18 4,053 $5,593 3.923 Optian expense 129 21805) 45) Amortization of MC LTP awrds 818 870 Amortization of nestricted and oefemed stock awards 1,22269304 585 1,766 885 487 3,299 $3,166 $1,903 otal Markets& Banking Global Consumer Global Wealth Manacement Alternative investments (15,028) 6899 5.566 513 80 519 (138) 165 Total l transactions reenue Redassfed to conform to the current perlods presentaton ncudes evenues from goverment securties and corporate det, municoal securties preferre The Compary,primarily through is Capital Accurmulation Program (CAP) issues shans of Gtigoup common stck in the form of nestricted or deiermed stock nortgage secur es.oner debt nst rents Also i cudes spot and torweraing of to participating officers and emmpioes Ror all stock award programs, during the dicpicahie sing peril te shans sard ahe d orted b oin,tone on ed ncome les and exchangs-ased aind over-e-counter (010 men aptons, and forward contracts on fxed nome securtes Indudes tevus fom strutuned credit products such as North Aerica and Europe coteparticipant, and the aardissubject to cancellation if the paricipant's anknglending and structuing busness and eposures to super sener CCOs dett equhy-inked notes and exchenge-traded and OTC equty aptions and warants erployment isterninated Aher the award wests, the shares becone freely transferable (suje tothestockowneship commitment of semior executives). Fron the date of the awani, the necipient of a restricted stock awani can direct the 4 indudes enues fron common pnefemed and convertibie preterred stock, convertbe corporat Indudes evnues from foregn exchage spt farward, ption and swap contracts, as well a and other conmodtes 8. INCENTIVE PLANS year over four year,ecept for awaris to oertain employees at Smith Barney that Program axards Gurherdescrbed beow) that vest in January 2020. Stack vesting period CAPpaticipants in 2067,2006 and 2005 could eledt to neaeive al progran tables indluce options grantd under CAP.Uneamed compensation The Company has adopted a num era equity compensation plans un er vestinoasad 207 Manquent unit inglan In at e which it administers stock options, restricted or deferned stock and stock purchase programs. The award programs are used to attract, retain and motivate offioers, employees and non-employee directors, to compensate them for their contributions to the Company, and to encourage employe rpartotheir award in stock aptions The Sigunsented in the stock option stock ownership. The plans are administered by the Personnel and Compensation Committee of the Citigroup Board of Directors, which is compased entirely of independent non-employee directors. At Decermber 31, ommon stock at the date of grant andis reooind as a chare to incme 2007, approximately 238 million shares were authorized and available for ratably over the fiulvesting period, ecept for those awanis granted to redinement- grant under Citigroup's stock inoentive and stock purchase plans In accordance with Citigroup practice, shares would be issued out of Treasury incoe for awanis made to netiement digible eplaees is acceleraled basei on stock upon exercise or esting. epense assodald with the stock zars mpresents the market value f Citignoup eligbleempiojees As eplained below,pursuant to SEAS 1230R), the charge to the dates the nirementuilsaremet The following table summarizes the financial structure of each of the Company's subsidiary trusts at December 31, 2007 Junior subordinated debentures owned by trust rust Issuance Securities Liquidation Couponissued date issued value Dec 1996 200,000 uly2001 46.000.000 Sept. 2001 56,000.000 Feb 2003 44000.000 Sept. 2003 20,000.000 Sept. 2004 24.000.000 June 2006 22.600.000 Sept. 2008 47400.000 Nov 2008 64.000.000 Mar. 2007 44000.000 June 2007500,000 Aug 2007 49,000.000 Nov. 2007 31500.000 Dec. 2007 3.500.000 Nov. 2007 875.000 Nov. 2007 1875.000 Nov. 2007 875.000 200 1,150 7.125% 1.422.681 1,186 J43.203| 1.400 6.960% 1.731969 1.443 S 15,2031 1.100 7.625% itgroup Capital Citigroup Capital Vi Citigroup Capital VII itigroup Capital D itgoup Capital X Citigroup Capital X Citigroup Capital XV Citigroup Capital XV Citigroup Capital XV Citigroup Capital XV Citigroup Capital Sept 17, 200 1.360825 1,134 14.2033 Feb 13, 2008 515 Sept. 30, 2033 Sept 30, 2008 619 Sept 27,2034 27,2009 566 June 30,2068 June 30, 2011 0,00018 S 15,206Sept 15, 2011 6.000% 500 6.100% 618.567 600 6.000% M2209 0001,801 50 1.004 1226 Dec31,208 Mar. 15, 2087 June 28, 2067 15,2067 Dec. 15, 2067 Dec. 21, 2077 Mar. 15, 2041 Sapt 15, 204 Mar. 15, 2042 Mar. 15 2012 ne 28, 2017 Au 15, 2012 ec 15, 2012 1225 7250% 20 20,000 Citigroup Capital XX Citigroup Capital XX0 Citigroup Capital XXIX Citigroup Capital XX Citigroup Capital X 00 Citigroup Capital x000 3.500 8.300% 1.875 6320% 1.875 6.466% 1.875 6.700% Dec 21, 203 Mar 15, 2013 Sept 15,2013 Mar 15, 2014 15.2042 15, 2014 0 1,875 10 1.875 Adam Captal Trst 11 Adam Statutory Trust ll Adam Statutory Trust Jan. 07, 2008 26 2007 ept 17, 2008 Mar. 17, 2009 Dec. 2002 +335 to 3 mo LIB 5 +325 to 3 mo. LB +295 to 3 mo LIB 5 +279 to 542 Jan. 07, 2033 Dec26,2032 Sapt 17,2033 Mar. 17, 2034 25.000 Sept. 2003 40.000 1238 Trust V 36 Total obligated $23,535 (T) Represents the proceeds eoeved tom the Trust at the date tuanoe. 2 leaumed by Ctigroup va Cicorp's merger with and nto Ctgroup an August 1,200 in each case, the coupon rate on the the trust securities. Distributions on the trust securities and interest on the debentures are payable quarterly, except for Citigroup Capital III and Citigroup Capital XVII, on which distributions are payable semiannually. debentures is the same as that on On Febnuary 15, 2007, Gitigroup redeemed for cash all of the $300 million Trust Prefermed Securities of Citicorp Capital I, $450 million of Caticorp Capital I, and $400 million of Citignoup Capital II at the edemption price of $1,000 per preferred security plus any accrued During 2007, Citigroup issued $1.1 billion, $1.004 billion, $1.225 billion, distribution up to but ecluing the date of redemption. $788 million, $3.5 billion and $7.5 billion related to the Enhanced Trust Preferred Securities of Citigroup Capital XVIL, XVIIL, XIX, Xx, XX, and XXIX-XXXII (ADIA) respectively On April 23, 2007, Citigroup redeemed for cash all of the $22 million Trust Prefemed Securities of Adam Capital Trust II at the redemption price f $1,000 perprefenmed security plus any accrued distributions up to but On March 18, 2007 and March 26, 2007, Citigroup redeemed Sor cash all of the $23 million and $25 million Trust Preferned Securities of Adam Statutory Trust I and Adam Statutory Trust II, respectively, at the redemption price of $1,000 per preferred security plus any accrued cluding the date of redemption Please note that Capital Securities XXIX-XCXII that are part of the Upper DECS equity units sold in a private placement to Abu Dhabi Investment Authority have been incluced in this table he date of redemption. 422 Part 3 Commercial Banks TABLE 13-2 Specifications of Capital Categories for Prompt Corrective Action Leverage Ratio Total Risk-Based Ratio Tier I Risk-Based Ratio Capital Directive/Other Zone 1. Well capitalized 5% or above an 10% or above and 6% or above and Not subject to a capital directive to meet a specific level for any capital measure 2. Adequately capitalized 4% or above* and 8% or above and 4% or above and Does not meet the definition of well capitalized 3. Undercapitalized 4. Significantly Under 4% Under 3% 2% or less Under 8% Under 6% 2% or less Under 4% Under 4% 2% or less or or undercapitalized 5. Critically or or undercapitalized or or 3 percent or higher for banks and savings associations that are not experiencing or anticipating significant growth. Under 3 percent for composite one-rated banks and savings associations that are not experiencing or anticipating significant growth. Source: Federal Reserve Board of Governors, September 10, 1993. www.federalreserve.gov Regulations on Capital Adequ acy (Leverage)