Important disclosures appear on the last page of this report.

The Henry Fund

Henry B. Tippie School of Management

Bernardo Daza [Bernardo-daza@uiowa.edu]

Citi Group, Inc. (C) October 18, 2015

Financial Services – Diversified Financials Stock Rating Sell

Investment Thesis Target Price $55-$60 Citi Group delivered above market consensus earnings levels for the last three quarters after a challenging 2014 that showed extraordinary operating costs proceeding from distressed assets, legal fees and settlements from last financial crisis. Citi is struggling with ROE below cost of equity levels while attempting to divest assets from non-core businesses and markets. Revenues will increase in the next business periods, but are not expected to exceed market expectations. These estimations, analysis and portfolio strategy discussed with the team lead to recommend a sell rating. Drivers of Thesis

Low interest rates are still originating reasonable deposit costs which will maintain or slightly increase current net interest margin, but it will not exceed pre-crises performance.

Targeted emerging market exposure will drive revenue and earnings growth.

Institutional Clients Group revenue will continue growing and Citi will maintain and increase its market share in the segment.

Improvement in asset quality and reduction in loan loss provisions as forecasted in model.

Risks to Thesis

Below expectations earnings, especially from the Global Consumer Banking segment.

Unexpected increasing operating costs accompanied with large legal fees and settlements.

Slowdown in emerging markets economy and performance.

Henry Fund EDCF $56.00 Henry Fund DDM $53.70 Relative Multiple P/E $59.50 Relative Multiple P/B $79.00 Price Data Current Price $52.70 52wk Range $46.60 – 60.95 Consensus 1yr Target $63.96 Key Statistics Market Cap (B) $159.90 Shares Outstanding (M) $3,034 Institutional Ownership 74.9% Beta 1.41 Dividend Yield 0.4% Est. 5yr Growth 23.5% Price/Earnings (TTM) 10.62 Price/Earnings (FY1) 10.40 Price/Book (mrq) 0.70 Price/Tangible Book 0.90 Profitability Net Interest Margin 2.95% Net Interest Spread 2.78% Return on Assets (TTM) 0.97% Return on Equity (TTM) 10.04% Source: FactSet

Earnings Estimates Year 2012 2013 2014 2015E 2016E 2017E

EPS $2.57 $4.44 $2.24 $5.16 $5.42 $5.75

growth -32.35% 72.55% -49.50% 129.99% 4.95% 6.20%

12 Month Performance Company Description

Source: FactSet

Citi Group is a global, diversified financial services companyi with operations in over 35 countries. The corporation has approximately 243,000 employees and operates over 3,300 branches worldwide. Citi Group develops its operations among four main business segments: Global Consumer Banking (GCB), Institutional Clients Group (ICG), Corporate/Other and Citi Holdings.

10.2 10.0

0.9

16.2

10.0

0.9

15.8

9.0

1.0 0.0

5.0

10.0

15.0

20.0

P/E ROE ROA

C Fin. Conglomerates Sector

-20%

0%

20%

O N D J F M A M J J A S

C S&P 500

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EXECUTIVE SUMMARY Citi Group delivered above estimates earnings levels for the last three quarters in 2015 after a challenging 2014 which brought extraordinary operating costs dragged from the 2008-2009 financial crisis lowering earnings to below expectation levels. Citi is struggling with ROE below cost of equity levels while attempting to divest assets from non-core businesses and markets in order to focus on others with higher potential growth. The company also faces the challenge of a low interest rate environment, specifically in its Global Consumer Banking segment, which leads to decreasing revenue. Focus in its Institutional Client Group business segment will be essential to aim for growth in investment banking fees, wealth management and other corporate products and services. Among some of the company’s challenges and keys to monitor are: increased competition, lower prices on mortgage loans, strategic emerging markets economy growth, asset quality and more rigorous regulation from the Federal Reserve and other states regulatory agencies.

COMPANY DESCRIPTION Citi Group is a global, diversified financial services company. The corporation has approximately 243,000 employees and operates over 3,300 branches worldwide. Citi Group develops its operations among four main business segments: Global Consumer Banking (GCB), Institutional Clients Group (ICG), Corporate/Other and Citi Holdings. Citi Group is the third largest bank in the United States, and the world's thirteenth largest bank by total assets; with total assets of $1.85 trillion. It is a major provider of financial services, and according to Relbanks, it is the world’s eighth largest bank by market capitalization with a value of $159.9 billion. (See graphic below) Citi is a leading global bank with approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.ii

List of Largest World Banks by Assets

iii

Business Segment Overview Segments

iv

The Global Consumer Banking Segment (GCB) represents the largest revenue share with 49.1%, followed by the Institutional Client Group Segment (ICG) with 43.3%, Citi Holdings (CH) with 12.8% and finally Corporate/Other with 0.06%. Corporate/Other consists primarily of Citi’s liquidity portfolio (Cash & Cash equivalents). Citi Holdings contains business and portfolios of assets that Citigroup has determined are not central to its core business.

v

Global Consumer

Banking 49%

Institutional Clients Group

43%

Corporate /Other 0.1%

Citi Holdings 7.9%

Revenue by Business Segment

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Global Consumer Banking revenue growth has been slow and slightly decreasing for the last two periods (-1.5% average). We forecast this trend continuing or showing a small increase given the fragmented industry, slowdown in emerging economies’ growth and a high competitive environment. In addition, Citi decided to exit operations in 11 markets as well as its consumer finance business in Korea which could be a large factor affecting the segment’s growth . The company will focus on 24 markets with the greatest scale and growth potential.vi Business Segment Revenue Growth

vii

Institutional Clients Group growth was significant in 2013 (10%) and slightly decreased in 2014 (0.9%). We forecast an interesting growth in the segment for the next years, driven by larger fees in investment banking, corporate loans and asset management fees. Citi Holdings growth has increased given the allocation of assets considered non-core to Citi’s business. These assets include the total assets of the 11 markets to be divested and sold. Corporate/Other growth has constantly decreased given the low interest rate environment. Assets in this segment consist only of cash and cash equivalents accounts.

Revenue by Geography

viii

Citi is really an international bank, with about 56% of revenue coming from outside the U.S. Citi has large

exposure to some of the world’s largest growing economies and part of its strategy derives from growth from such markets. Something that could be a problem for Citi’s growth and for our forecast assumptions is slowing growth in emergent economies followed by recession. Citi is also largely dependent on the U.S., which represents about 44% of the company’s revenues. We forecast a stable growth in the U.S. economy (2.5%) for the years to come along with an increase on interest rates since 2016. On the other hand, Mexico represents 10% of Citi’s revenue and 80.3% of this country’s exports go to U.S. This is another indicator that U.S. economy is an important factor for Citi’s revenue growth and performance.

Global Consumer Banking (GCB) This business segment comprises four geographical Business lines: Branded Cards, Retail Services, Retail Banking and Commercial Banking in Citi’s four regions: Asia; Europe, Middle East and Africa (EMEA); Latin America; and North America. Citi’s GCB is a client-centric, urban focused bank serving approximately 59 million clients in 34 countriesix (only 24 countries in the years to come). This segment offers the most traditional banking services and products mainly to individual customers and small businesses. Citi operates over 3,300 branches worldwide. The number of branches is directly associated with the GCB business segment. We forecast the number of branches being reduced to about 2,900 by 2020 given the divestiture in some actual markets and the increasing trend in online and digital banking. Operating costs have been forecasted to decrease accordingly. Credit Cards Citi is the world’s largest credit card issuer with 139 million accounts, $375 billion in annual purchase sales and $142 billion in receivables. We foresee this trend continuing in the forecast model and accompanying the loan and yield growth. Citi Branded Cards This business segment provides payment and credit solutions to consumers and small businesses. There are over 50 million accounts, purchase sales of $294 billion and an average loan portfolio of $99 billion. x

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Retail Services This business provides consumer and commercial credit card products. This business serves 88 million accounts for a number of iconic brands including Best Buy, ExxonMobil, Macy’s, Sears, Shell and The Home Depot. Citi Retail Services had purchase sales of $80 billion with and average loan portfolio of $43 billion. xi Retail Banking This segment serves a broad number of banking needs including checking and savings accounts, loans, wealth management advice and small business services. Citi is also focusing on wealth management through Citigold, which offers personalized service and global capabilities to clients worldwide. This is an interesting effort to increase its wealth management fees especially in emerging markets where the number of wealthier individuals is growing. We forecast an average growth of 2.15% in this line of business given last years’ trends Citi’s increasing focus in the business unit. Citi’s Mortgage business originated $25.2 billion in new loans in 2014. We forecast a challenging environment in the Mortgage business given the still low interest environment and fierce competition from other large Money Center Banks and Regional Banks. Commercial Banking This business unit provides trade-oriented mid-size companies with access to loans and lines of credits. Citi attempts to leverage its global presence with these fast growing customers by offering them financing options as these clients also grow their presence internationally and expand to other markets where Citi Bank is also present. We believe that this is an interesting opportunity for revenue growth given the relational nature of the business with time. Global Consumer Banking Loan Growth

xii

We forecast a decrease in total consumer loans for 2015- 2017 being coherent with the divestment of assets in the 11 mentioned countries. After 2017 we forecast an average growth of about 2.2% yearly in GCB loans. This is

coherent with Citi’s strategy of focusing on certain target markets and leveraging its potential for growth. Historically, about 63% of total Citi’s loans have been allocated into this business segment and we forecast this trend decreasing to about 55% given 2013-2014 trends and the challenging low interest yields. This could change in a rising interest rate environment in the future. Citi has showed an average deposit growth rate of 1% in 2014. We forecast an increase in deposits growth to an average 2.3% yearly for 2015-2020. The plan is to reduce the number of branches in determined locations by 180 in 2015 and to continue decreasing branches yearly after that until reaching to 2,900. Consistently, we forecast a reduction in number of employees until reaching 236,000 in 2020. This is an effort to increase efficiency between the business segment that is also possible because of the clients’ tendency to do business transactions online and to leverage on technology. We also forecast the number of workers periodically decreasing from 243,000 in 2014 to 236,000 in 2020. Allowances for loan losses have been decreasing at an average rate of 14% for the past 5 years and after the financial crisis. We forecast an increase of 7% yearly growth on average in the allowance for loan losses in order to be

Institutional Clients Group (ICG) The Institutional Clients Group is present in over 100 countries. It helps multinational companies to grow, hire and deliver products and services through lending, cash management, advisory services and other services. Capital Markets Origination This business unit is focused on capital-raising needs of institutional clients, from inaugural issuances and exchanges to cross-border transactions. Citi is attempting to grow revenues from this business unit. For instance, in 2014, Citi was the underwriter for one of the most expected IPOs, Alibaba Group ($25 billion). We forecast Citi growing revenue from this business unit at a yearly growth of approximately 1.5%. Corporate and Investment Banking Corporate and Investment Banking client teams are organized by industry and by country. Citi divides teams into two: Strategic Coverage Officers, who focus on

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M&As and equity and related financing solutions, while Corporate Bankers deliver corporate banking and finance services to global, regional and local clients. M&A Global Activity

xiii

M&A activity has been stronger during 2012-2014 and we forecast CAGR of 1.5% until 2020. M&A activity has not come back to pre-crisis numbers but it is showing a growing tendency. Citi had a current market share on Global Investment Banking fees of 4.85% and we forecast a continuous growing market share for Citi until reaching 5.40% of global market share in 2020. This means a YOY investment banking fees growth of 3.4%. Private Banking Citi operates one of the world’s leading global private banks. Citi counts with over 800 private bankers and product specialists, located in 51 offices across 16 countries.xiv We forecast an average YOY growth on Administration and Other Fiduciary fees of 2.17% for our model. Private Banking and Wealth Management are one of the most competitive segments among large banks. We believe that Citi is well positioned in this business unit. Private banker International awarded Citi Outstanding Global Bank in North America and Asia Pacific as well as Best Next-Generation Offering and Best Discretionary & Advisory Service Offering. xv Treasury and Trade Solutions Treasury and Trade Solutions provides integrated cash management and trade finance services to multinational corporations, financial institutions and public sector organizations across the world. Offerings include cash management, payments, receivables, liquidity management and investment services, working capital

solutions, commercial and prepaid card programs and trade finance. We forecast an average yearly growth of 1.5% for revenue in this business unit. Citi is investing and developing more software solutions such as Integrated Payables Solutions, Treasury and Trade Solutions, Liquidity Manager, Working Capital Analytics, etc. Corporate Loan Growth

xvi

We forecast an increasing growth in total consumer loans for 2015- 2020 of 5.85% annually. This is coherent with Citi’s strategy growing corporate loans. Average loan growth in this segment for the last four periods was 7.15% approximately. Historically, about 37% of total Citi’s loans have been allocated into this business segment and we forecast this trend increasing to about 45% of total loans.

Citi Holdings (CH) This segment contains business and portfolios of assets that Citigroup has determined are not central to its core Citigroup business. Consistently with this determination, beginning in Q1 2015, Citi’s consumer operations in 11 countries, as well as the consumer finance business in Korea, and certain business in ICG, will be reported as part of Citi Holdings. Citi Holdings assets are approximately $87 billion. These assets will be decreasing given divestitures and run-offs. Assets in this Business Segment represent approximately 5% of Citi’s total assets.

Corporate/Other (C/O) Corporate/Other includes certain unallocated costs of global staff functions, other corporate expenses and unallocated global operations and technology expenses, corporate treasury and discontinued operations. Corporate/Other represents approximately 18% of Citi Groups total assets, consisting primarily of Citi’s liquidity portfolio (cash and cash equivalents & investment securities).

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We forecasted revenues on investment securities in 2015 with an interest yield similar to 2014, 2.33% approximately. We forecast an increasing yield until 2020, reaching around 3% but we do not foresee interest yields in this business segment exceeding pre-crisis yields.

Company Analysis EPS Actual vs. Estimates

xvii

For Q1, Q2 and Q3 2015, Citi’s earnings per share exceeded estimate expectationsxviii with $1.52, $1.45 and $1.31 compared to $1.39, $1.35 and $1.29 respectively. The stock price been has developed an increasing trend since the starting of the economy recovery.

Citi’s dividend payout and share repurchase decisions depend on the approval of the Federal Reserve after analyzing stress test results which measure the capability of the company to achieve minimum Equity/Assets ratios imposed by regulators and specifically the Basel III requirements.

For example, in Q1 2015 Citigroup Inc. increased its dividend for the first time since 2008, a milestone in the bank’s long recovery from the financial crisis. The Federal Reserve approved Citigroup’s request to raise its quarterly dividend to 5 cents a share, up from 1 cent a share, and to buy back up to $7.8 billion of its own shares, up from last year’s approval for $1.2 billion. Citigroup and other big banks had been forced to pay shareholders only a 1-cent quarterly dividend since they took bailout loans in the financial crisis. Citigroup was the last of the biggest U.S. banks still confined to paying the token penny dividend. The regulator released the results of its annual stress test on Wednesday, March 11th, a much-needed vote of confidence for the bank after the Fed rejected Citigroup’s request last year. xix

Our forecast assumes that Citi Group will pass the Federal Reserve stress test and will have approval on its capital plan. We also forecast a share repurchase policy taking

into account the approved $7.8 billion and an increase its dividend pay-out policy similar to other big banks (up to 35%).

Citi Stock Price

xx

The price downturn in August-September 2015 can be explained by the recent Chinese market collapse, a market correction and most recently the Federal Reserve not taking measures that would increase interest rates on the Board of Governors’ meeting on September 17th. Citi Group Interest Income

xxi

As shown in the interest income breakdown graph, most of the interest income (73%) comes from consumer and corporate loans related to the GCB and ICG business segments. The performance and growth of these loans depend largely on macroeconomic factors and consumers sentiment of economy, consumptions and investing. Interest income on investments and interest income on trading assets are second and third in volume respectively. Given the low interest rate environment, investment securities and trading assets showed a decreasing yield and revenue volume. This revenue was forecasted with a similar yield for 2015 given the maintaining low interest rate environment, 2.33% and 2.05% respectively, and then periodically increased to 3% and 2.5% respectively.

Loan interest73%

Deposits with banks1%

Fede funds & securities

4%

Investments12%

Trading account assets

9%Other interest

revenue1%

Interest Income 2014

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Consumer Satisfaction Score

xxii

This consumer satisfaction perception is especially important in the GCB business segment which represents the majority of Citi’s net revenues (49.1%).

According to the American Customer Satisfaction Index rank presented above, Citi is ranked second from the list of U.S. largest commercial banks in customer satisfaction.

Financial Performance Returns

xxiii

Citi’s return on equity is below industry average. This tendency is explained essentially by 2 factors, the first one being a constant increment in capital (equity) given Federal Reserve requirements with restrictions on higher dividend pay-out and stock repurchases; and the second is lower earnings given performance and spending on extraordinary items such as settlements from the financial crisis years, legal fees and other extraordinary items. Our forecast shows that average ROE is below cost of equity. This means that investor’ expectations are not being met. Credit quality has continued to improve. Allowance for loan losses have been steadily declining from 6.3% of total loans in 2010 to 2.4% in 2014. This is attributed to the positive economy environment, low unemployment and also to the company’s disciplined and standardized customer and risk credit analysis.

We took a conservative approach in forecasting allowance for loans and increased its average to a 3.16% of total loans for the upcoming years in order to be on the safe side with stronger allowance for loan losses. This number compares to early post-crisis levels.

xxiv

Citi’s return on assets is below industry average. This can also be explained by decreasing earnings on spending on extraordinary items. Citi is under the process of selling non-core assets and restructuring its balance sheet. We forecast an increasing ROA trend for the next upcoming periods, taking into consideration increasing Net Income attributable to better company performance and increasing interest rates after 2015.

RECENT DEVELOPMENTS

U.S. Banks, in a majority have reported stronger credit and borrowings quality trends post financial crisis (2011-2014). Banks reported stronger loan growth in 2014 than in any of the past 5 years and expect continued growth in 2015. Consumer confidence in particular has improved, with very strong spending in the fourth quarter of 2014. Consumer borrowing demand, with the exception of auto lending, has not fully reflected this increased confidence. Overall credit structures continue to loosen and credit spreads continue to tighten, as competition for good loans intensifies. Supply of credit continues to outpace

demand. xxv Write-offs of nonperforming loans have continued to fall. This is explained by decreasing non-performing loans. These facts have allowed banks to reduce its reserves to

cover the losses from nonperforming loans. xxvi

2014 Industry Earnings The industry reported slightly higher earnings in 2014 compared to the previous year, but with a slower growth

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

2011 2012 2013 2014 2015E 2016E 2017E

Return on Average Equity

Citi Industry

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

2011 2012 2013 2014 2015E 2016E 2017E

Return on Average Assets

Citi Industry

Page 8

rate because of maintaining lower Net Interest Margins and fierce competition which is still driving interest spreads lower than pre-crisis times. According to S&P Capital IQ, “Q4 banking earnings, in total are down about 3% from a year ago. However, we keep a positive outlook for these shares, as we see their loan growth and capital levels benefiting from an improving U.S. economy.”xxvii This report supports the stated theory behind lower interest rates with the consensus of the analysts in the industry. Earnings Growth

xxviii

In the industry, earnings growth decreased in 2014 compared with the previous year, but revenue growth increased in the same period; meaning that the overall industry expectations for earnings growth have not been met once again because of competition, costs and low interest margins. It can be analyzed from the data in the table above, that economic recovery from the 2008 financial crisis has been slow but steady and that no aggressive growth trend like in pre-crisis times can be expected in the future.

Low Interest rates in the U.S. On Thursday, September 17th, the Federal Reserve Board of Governors decided to keep the benchmark interest rates pegged at 0%-0.25%. This interest rate has not been modified since December 2008 as reaction to the Financial Crisis. The Federal Reserve Committee stated that this decision is to support continued progress toward maximum employment and price stability. In determining how long to maintain this target range, the Committee will assess progress both realized and expected toward its objectives of maximum employment and 2 percent inflation.xxix

The current low interest environment can be still expected until major macroeconomic changes happen in the U.S. This means that the industry dynamics will remain as they have been on recent years. In one hand, low cost of funding can be expected, but also, low interest yield in loans and securities will prevail. We do not forecast increasing interest rates until after December 2014.

Citi Earnings Q1, Q2 & Q3 2015 Earnings Estimates

xxx

These results were driven by solid performance on Citi’s business segments and a by dropping legal costs and cutting expenses. Citi has sold assets and closed branches to shave costs and focus on affluent consumers and multinational corporations. That helped the firm weather the third quarter’s global market turmoil, which hurt revenue and profits at peers. xxxi We forecast a decrease in number of branches and employees following management guidance and reduced operating costs based on per branch & per employee numbers. We forecast increasing EPS for the 2015-2020 business periods with an average YOY growth of 7%.

Extraordinary Operating Costs 2014 Citigroup full year 2014 results also included a charge of $3.8 billion ($3.7 billion after-tax) to settle RMBS and CDO-related claims. Full year 2014 results also included the benefit related to the impact of the credit Card divestiture and the net fraud loss from company affiliated company, Banamex in Mexico. Legal and related expenses and repositioning charges totaled $3.5 billion in the current quarter, compared to $1.0 billion in the prior year period. This is related to distressed assets and claims from the 2008-2009 financial crises. xxxii We do not forecast any other extraordinary operating costs for the periods 2015-2020. This is also justified by the previous management discussion of Citi divesting

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non-core and riskier assets from its balance sheet as company strategy.

INDUSTRY TRENDS

Industry Revenue Growth

xxxiii

Revenues in the industry have been showing growth as economy improves and demand on credits, especially from real estate and consumption increases. The GCB business segment may benefit from this. The Financial Conglomerate industry revenues will likely increase 1.1% in 2016 and 4.8% in 2017 due to a stable U.S. economy, improving housing and employment markets. Net interests margins will likely increase above 3.2% in 2015. We forecast a Net Interest Margin of approximately 3% for Citi in 2015 which is an increase from 2.87% NIM in 2014. Capital levels are high and growing, spurred on by Basel III requirements. The largest banks are stockpiling cash and marketable securities to meet their liquidity coverage requirements, at a cost to their net interest margins. M&A activity in the banking segment is still in hibernation, as regulators frown on large banks mergers. xxxiv Commercial and residential real estate fundamental trends continue to be positive for most major property types, and credit quality remains stable. On the other hand, low interest rates on mortgages are hurting the segment. The intensity of competition to finance high-quality projects has accelerated, as lender demand is exceeding market supply. Multiple sources of financing continue to be available to absorb demand, including domestic and foreign banks, commercial mortgage backed securities, and specialty finance companies.

Industrial assets have experienced a moderate recovery to this point. Federal Advisory Council and Board of Governors members are increasingly optimistic about this

sector xxxv

Investment Banking fees are forecasted to increase given larger capital requirements of governments and corporations. We forecast a 1.5% YOY increase in the global investment banking fees market. Special attention must the set on developing and growing economies where Citi has a strong presence. Continuing growth is foreseen accompanying the positive forecasts of the U.S. economy.

Industry Profitability

xxxvi

Profitability is forecasted to stabilize in the upcoming years and is likely to grow during 2015 and 2016 due to increasing long duration interest rates and due to still possible reductions on interest expenses because of low the interest rates. Net margins stabilize in the long term in response of larger competition, low interest rates and price war. Net margins are defined by earnings as a percentage of total revenues. We forecast Citi’s Net Margin stabilizing at about 18.5%-19% by the end of 2020. Interest income in the industry represents approximately an average 80% of total revenue but this tends to decrease against larger non-interest income fees such as cards and other services. We forecast this number at 71% for Citi given the increase on Investment Banking and Private Banking fees.

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MARKETS AND COMPETITION U.S. Banking Industry Market Share

xxxvii

This is a very fragmented and highly competitive industry. The 4 largest banks hold over 74.4% of revenue market share. Market share is distributed with JPM holding 20.8%, Wells Fargo & Co. 18.8%, Bank of America 18.6% and Citi Group Inc. 16.2%. Competition is fierce especially among these 4 Money Center Banks. An approximate value for Banking total market size in the U.S. is $443 Billion.xxxviii Other smaller players in the market and their market share are: SunTrust Banks (1.96%), Fifth Third Bancorp (1.5%), Citizens Financial Group (1.25%), MT Bank (1.1%), Northern Trust (1.05%) and Cadence Bancorp (1.05%). The basis for market segmentation in the consumer and commercial banking businesses is mostly geographic competition given the bank presence in the region. Due to acquisitions of competition, banks have been able to expand its geographic presence across different states. Citi Global Locations

xxxix Citi Group has a large global presence with offices and branches located in over 35 countries across these 4

geographical areas: North America, EMEA, Latin America, and Asia Pacific. As part of its strategy, Citi decided to downsize it global presence to 24 strategic countries with high potential growth. A common space for competition in the banking industry in general is Consumer and Commercial. The Consumer segment is specially a service-oriented business and banks are competing to attract individual consumers investing in large ATM networks, online banking, etc. Citi competes with other money center banks, regional banks, savings and loans, credit unions, finance, insurance and other non-depository companies operating in its market areas. The Bank is subject to substantial competition for loans and deposits from other financial institutions. Some of its competitors are not subject to the same degree of regulation and restriction as the Bank. If the Bank is unable to effectively compete in its market areas, the Bank’s business, results of operations and prospects could be adversely affected. Competition is also increasing for deposit and lending services from internet-based competitors. Non-depository financial service institutions, primarily in the securities, insurance and retail industries, have also become competitors for retail savings, investment funds and lending activities. The primary factors in competing for loans are interest rates and rate adjustment provisions, loan maturities, loan fees, and the quality of service to borrowers and brokers.

Peer Comparisons

xl

As noted in the peer comparison table above, Citi is trading at a lower P/B multiple (0.7x) than its peers (1.0x).

Ticker Company Market Cap (B) Price 2015 EPS 2016 EPS P/E 15 P/E 16 P/B 15 P/B 16

P/Tangible

Book Value

15

P/Tangible

Book Value

16

BAC-US Bank of America 167.4 16.0 1.4 1.6 11.1 10.0 0.7 0.7 1.0 0.9

BMO-CA Bank of Montreal (BMO) 60.01 (79.56) 79.6 6.6 7.1 12.0 11.2 1.2 1.2 1.6 1.6

BARC-GB BARCLAYS PLC 66.97 (43.36) 2.6 0.2 0.3 11.2 9.2 0.8 0.7 0.9 0.9

C-US Citi Group 155.0 51.1 5.6 6.0 9.1 8.5 0.7 0.7 0.8 0.8

DBK-DE DEUTSCHE BANK AG- 40.13 (35.36) 25.6 2.3 2.9 11.1 8.9 0.5 0.5 0.6 0.6

GS Goldman Sachs 80.2 185.3 17.7 19.9 10.5 9.3 1.0 1.0 1.1 1.0

JPM-US JPMorgan Chase 228.0 61.6 5.8 6.4 10.6 9.7 1.0 0.9 1.3 1.2

MS-US MORGAN STANLEY 66.4 34.0 3.0 3.4 11.2 9.9 0.9 0.9 1.1 1.0

PNC-US PNC 46.4 90.4 7.3 7.8 12.4 11.7 1.1 1.0 1.4 1.3

STI-US SUNTRUST BANKS INC 31.8 39.5 3.3 3.5 11.8 11.2 0.9 0.9 1.3 1.2

UBSSG-CH UBS 79.67 (77.17) 20.1 1.5 1.7 13.5 12.1 1.4 1.3 1.6 1.6

USB-US U.S. Bancorp 72.3 41.1 3.2 3.5 12.8 11.7 1.8 1.6 2.4 2.1

WFC-US Wells Fargo 270.1 52.6 4.2 4.5 12.6 11.6 1.6 1.5 1.8 1.7

Average 11.5 10.4 1.0 1.0 1.3 1.2

C Citigroup, Inc 154 $52.60 $5.16 $5.42 10.2 9.7 0.70 0.67 0.8 0.8

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This assumes that the market values its assets at a lower than book value. A probable cause is the uncertainty on asset quality after the last financial crisis. The company shows similar EPS and P/E (9.7x) than its peers and industry average (10.4X). Price to Tangible book is also lower than the industry average with no significant M&A activity since 2000. Citi shows lower ROE than its peers because of higher equity levels. Citi’s Equity to Assets ratio is on average 11.8% compared to 9.7% from close competitors as JPMorgan Chase. We forecast an increasing Equity to Assets ratio for Citi from 11.6% in 2014 to approximately 13% in 2020 given Federal Reserve requirements and close control after the financial crisis. Since the financial crisis period, it was normal for the industry to show ROA below 1%. We forecast an increase from 0.4% ROA in 2014 to 1.1% by the end of 2020 for Citi Group with an increasing Net Interest Margin. Regulation The Basel Committee has suggested different measures in order to harmonize global bank regulation. For example, Basel II is based on 3 pillars: minimum capital requirements, supervisory review process and market discipline. After the 2008 crisis, the Basel Committee made changes again resulting in Basel III. It is focused on capital definitions, capital conservation buffers, leverage ratios and global liquidity standards. Basel III Requirements

xli

It is inferred that the implementation of these rules will require modifying the type of assets that banks will hold. As a consequence, the length of the liabilities’ maturity

will raise and the costs relating to this will have a similar effect, creating a drop in profitability. With banks facing tighter regulation, adjusting business models and attempting to engage into new drivers for revenue and higher earnings will be unlikely to happen as it was more usual the pre-2008 crisis. Citi shows Minimum Tier 1 capital of 9.05%, 11.25% and 11.5%, for the 2012, 2013 and 2014 periods

respectivelyxlii. This numbers comply with Basel III

requirements. We forecast Tier 1 Capital ratios for Citi above 13% from 2015 to 2020.

ECONOMIC OUTLOOK Interest Rates Maintain Low

xliii

It was expected that Fed Funds rates would rise in September 2015, but this did not happen. It is seen for example that the 1-Yr Treasury bill maintains at a low 0.25% and it is also noticed that the 30 Year Bond interest slightly increased from 2.75% at the end of December 2014 to 2.92% at mid-October 2015. This is not a significant change. The Henry Fund consensus is that interest rates of the 1-Yr Treasury bill will maintain low level of 0.28% for the next 6 months. This trend is to keep affecting the Net Margin of the financial services institutions (19.6% - 5Yr Average) with a

slow growth tendency.xliv Low interest rates in short maturities, help banks with low cost funding from deposits. This trend might not be the case for Citi due to the offsetting effect of investment in securities developing low interest returns for the money center bank in the mid to long term. Fed funds have maintained at a low 0.25% and have not showed sign of increasing.

2015 2016 2017 2018 2019

Minimum Liquidity Coverage Ratio 60% 70% 80% 90% 100%

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Better Unemployment Outlook

xlv

Unemployment has continued to improve and dropped from 6.6% in January 2014 to 5.0% in October 2015. This is aligned with the Henry Fund Consensus of unemployment averaging 5.14% for the next 6 months. This stat is positive for the development of new loans especially for the consumer loan segment in automobile, personal loans, credit cards and mortgage loans. It is also a good sign for default and delinquencies rate dropping. This trend has been proved during the 2014 period with Citi decreasing its non-performing assets and allowances for loan losses.

GDP Growth

xlvi

The Henry Fund consensus for GDP growth during 2015 is 2.31%, which is similar to GDP growth in 2014. GDP growth for Q2 2015 was 2.3%. This is a favorable and stable trend for the development of economic activities and hence, for the increase of deposits and loans, confirming that recession has come to an end and those years of economic growth are expected.

Consumer Confidence The Conference Board Consumer Confidence Index®, which had increased in December 2014, rose sharply in January 2015. The latest Index data for October 2015

stands at 103 (1985=100), up from 93.1 in December 2014. With this data, we infer that consumers are likely to start spending more and relying more on credit. This trend is interesting for Citi’s CGB segment and specifically for financial products like personal credits. It is Henry Fund Consensus that the Consumer Confidence is expected to increase for the next months of 2015, which is in line with a moderate positive economic environment that is surrounding the U.S.

CATALYSTS FOR GROWTH

Growing U.S. economy, increase in personal spending through credit cards and increase in housing mortgage market.

Growing economic environment in strategic emerging markets with Citi Group presence.

Increase in M&A activity, corporate and sovereign capital raising.

Lower provision for loan losses because of improved credit quality.

Low unemployment and increment in the consumer confidence index.

Continued organic deposit and loan growth accompanied by cost saving efforts.

Improvement of the housing market given new regulation given by the Consumer Financial Protection Bureau (CPFB).

INVESTMENT POSITIVES

Increasing earnings growth for the last three quarters, accompanied by Federal Reserve approval for increasing dividend pay-out policy.

Solid deposits and loan growth originated from a combination of organic growth and market share from competitors.

Continuous growth in assets under custody and administration along with growth in asset management fees and product development.

Continued market share gain and holding position in Investment Banking fees.

High asset quality and solid credit risk assessment.

Better position on investment and trading securities when increasing interest rate environment.

Lower operating costs associated with decreasing number of branches and employees.

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INVESTMENT NEGATIVES

Increased competition in the consumer and commercial loan segment which would bring yields down.

Tougher regulation regarding capital requirements, quality of assets, restrictive scope of operations and restriction on dividend paying policy.

Lower or stagnant interest rates in long term maturities could affect the Net Interest Spread and Net Interest Margin in the long term.

Earnings expectations not being met and earnings decreasing due to high competition.

Focusing on short-term growth could prove to be misleading without taking into account for example the quality of the loans its long-term consequences due to risk.

Low current yields on investment securities.

Economic recession accompanied by real estate market crash and investment decrease.

Increasing operational costs.

Increase in legal fees and credit fraud issues.

VALUATION

Discounted Cash Flow Model Assumptions The most important assumptions for the valuation model among others are interest rates for interest bearing revenues and expenses, salaries and employee benefits, assets and liabilities growth, provision for loan losses, market risk premium, Beta and thus cost of equity and CV Growth rate Beta was calculated as an average of 1, 2, 3 and 5 year weekly and monthly data. Citi’s beta was calculated as 1.41. The bank displays certain increased risk levels than industry average due to its international nature and operations. The market risk premium used was the Henry Fund consensus for 2015 (4.85%), resulting in a Cost of Equity equal to 9.72%. Provision for loan losses is calculated by taking an historic average as a percentage of total loans. Since 2009, Citi has showed a decrease trend from 6.8% of total loans to 1.16% in 2014. The allowance for loan losses growth used is calculated as a percentage of total loans and increased by a factor of 3% yearly compared to the previous year because a higher than historical average, reflects a slowing economy and riskier assets from higher growth. We preferred to be conservative with this number. We forecast a provision for loan losses up to approximately 2% of total loans.

We forecasted growth in loans by taking an historical yearly average by type of loan and adjusted it according to business segment trends. Total loans are forecasted at an average 6% yearly growth rate. Long-term and short-term borrowings are calculated as percentages of the previous years’ total liabilities. These liabilities maintain, grow or decrease according to historical values since 2008. Salaries and employee benefits are the largest portion of the non-interest expense. This is calculated as a per employee average. The historical growth in number of employees is calculated and forecasted. Inflation rate of 2.5% is used in order to grow the expense. The number of employees is decreased during 2015 and 2016 given divestments made by Citi Group. Interest rates Interest rates are the most sensitive variables in the model because they determine the revenues, expenses and hence the earnings of the model along with the volume of loans and deposits. Interest income on loans during 2015 and 2016 are forecasted at the same rate as 2014, due to the same low interest rate environment. After 2016, interest rate on loans increases gradually from an average of 6.75% to 7.7%. Interest expense in interest-bearing deposits, interest expense on short-term and other liabilities and interest expense on long-term debt and other interest expense are periodically increased from 2016 to 2020. We forecast Net Interest Margin to increase from 2.87% in 2014 to 3.31% in 2020 with increasing interest rates. The EDCF valuation method results in a per share value of $56. The terminal value accounts for 87% of the total value. The EDCF value is similar the current market price. Dividend Discount Valuation (DDM) The DDM valuation gives a per share value of $53.80. This is assuming that Citi will be approved to increase its dividend payout policy by the Fed at peer levels (30%-35%)

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Relative Valuation (RV) The relative valuation gives a share value of $ 59.50, $79 and $86.30 for P/E, P/BV and P/TB respectively. Citi trades below its peers in the multiples approaches. Shares Repurchases Share repurchases are forecasted at a value up to $7.8 billion as approved by the Federal Reserve.

KEYS TO MONITOR

Asset quality and non-performing loan metrics increasing. A severe increase to 7% of allowance for loan losses to total loan could drive earning to negative numbers.

Economic development of Citi’s geographical markets.

Interest rates rising in a position where the increase in longer-term lending rates does not exceed the increase in short-term funding costs.

Tighter and more aggressive regulation which would let to the bank failing stress tests.

Large decrease in deposits and sources of cheap funding.

IMPORTANT DISCLAIMER

Henry Fund reports are created by student enrolled in the Applied Securities Management (Henry Fund) program at the University of Iowa’s Tippie School of Management. These reports are intended to provide potential employers and other interested parties an example of the analytical skills, investment knowledge, and communication abilities of Henry Fund students. Henry Fund analysts are not registered investment advisors, brokers or officially licensed financial professionals. The investment opinion contained in this report does not represent an offer or solicitation to buy or sell any of the aforementioned securities. Unless otherwise noted, facts and figures included in this report are from publicly available sources. This report is not a complete compilation of data, and its accuracy is not guaranteed. From time to time, the University of Iowa, its faculty, staff, students, or the Henry Fund may hold a financial interest in the companies mentioned in this report.

Page 15

REFERENCES

i Forbes Magazine; “The World’s Most Valuable Brands 2015”; http://www.forbes.com/companies/citigroup/ ii Citi Group Website; http://www.citigroup.com/citi/about/citi_at_a_glance.html.

iii “Top Banks in the World 2014";Relbanks; www.relbanks.com; 2014

iv Citi Group 2014 Annual report.

v Graph built with data from Citi Group 2014 Annual Report.

vi Management Discussion and Guidance; Citi Group Annual Report 2014

vii FactSet

viii Citi Group Investor Day Presentation Q4 2014

ix Citi Group 2014 Annual Report.

x Citi Group 2014 Annual Report.

xi Citi Group 2014 Annual Report.

xii Valuation Model Forecasts and Assumptions

xiii Dealogic; M&A StatShot; http://www.dealogic.com/media/market-insights/ma-statshot/

xiv Citi Group Annual Report 2014

xv Letter to Shareholders; Citi Group Annual Report 014.

xvi Valuation Model Forecasts and Assumptions

xvii Citi Group’s EPS estimates; https://www.estimize.com/c

xviii http://www.nasdaq.com/earnings/report/c

xix Citi Group to raise Dividend, Buyback Shares as Fed Approves Capital Plan; WSJ, http://www.wsj.com/articles/federal-reserve-

approves-citigroups-capital-plan-1426105882 xx

FactSet xxi

Chart constructed with Citi Group 10-K Financial information xxii

American Customer Satisfaction Index; http://www.theacsi.org/index.php?option=com_content&view=article&id=149&catid=&Itemid=214&c=Citigroup+ xxiii

FactSet – Industry comparison data xxiv

FactSet – Industry comparison data xxv

Federal Reserve; Record of Meeting, Federal Advisory Council and Board of Governors; February 6th, 2015; http://www.federalreserve.gov/aboutthefed/fac-20150206.pdf xxvi

http://www.netadvantage.standardandpoors.com.proxy.lib.uiowa.edu/NASApp/NetAdvantage/simpleSearchRun.do?ControlName=IndustriesSurveySearch xxvii

http://www.netadvantage.standardandpoors.com.proxy.lib.uiowa.edu/NASApp/NetAdvantage/i/displayIndustryFocusEditorialStory.do?subtype=INDI&pc=NET&tracking=NET&context=IndustryFocus&prefix=i xxviii

FactSet Market Aggregates

xxix Business Insider; FED DOES NOTHING, KEEPS THE WORLD WAITING FOR THE END OF 0% INTEREST RATES

http://www.businessinsider.com/federal-reserve-announcement-september-17-2015-9 xxx

http://www.nasdaq.com/earnings/report/c xxxi

Citigroup Beats Estimates as Cost Cuts Outpace Revenue Drop; Dakin Campbell; October 2015; Bloomberg; http://www.bloomberg.com/news/articles/2015-10-15/citigroup-beats-estimates-as-cost-cuts-outpace-revenue-declines

xxxii Citi Group Investors Presentation 2014; http://www.citigroup.com/citi/news/2015/150115a.htm

xxxiii Factet – Industry Sales Growth Outlook

xxxiv Industry Surveys- Banks; Erik Oja; S&P Capital IQ; February 2015.

xxxv Federal Reserve; Record of Meeting, Federal Advisory Council and Board of Governors; February 6th, 2015;

http://www.federalreserve.gov/aboutthefed/fac-20150206.pdf xxxvi

FactSet xxxvii

S&P Capital IQ xxxviii

Commercial Banking in the U.S.: Market Research Report. http://www.ibisworld.com/industry/default.aspx?indid=1288 xxxix

Citi Group official web site; www.online.citi.com xl Table constructed with data from FactSet

xli Ken Fisher; Fisher Investments on Financials, page 53; Basel III: Implementation Timeline xlii

Citi 2014 10-K; Selected Ratios and other Data xliii

Source: U.S. Department of Treasury; http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/Historic-Yield-Data-Visualization.aspx

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xliv

FactSet, Industry Estimates xlv

Federal Reserve Data Base; xlvi

Tending Economics; http://www.tradingeconomics.com/united-states/gdp-growth

Citigroup, Inc 2015 2016 2017 2018 2019 CV (2020)

2008-

Present

Key Assumptions of Valuation Model Investment Banking Growth 54.84 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00%

Global Investment Banking Revenue Growth 1.50% 1.50% 1.50% 1.50% 1.50% 1.60% -0.26% 0.50% 82.43 75.87 70.17 65.18 60.76 56.83 53.32 50.16 47.30 44.71Ticker Symbol C Citi Market Share 5.00% 5.10% 5.20% 5.20% 5.30% 5.40% 4.20% 1.00% 83.11 76.12 70.11 64.88 60.29 56.24 52.64 49.41 46.51 43.89Current Share Price $52.60 1.50% 83.91 76.41 70.04 64.54 59.77 55.58 51.88 48.59 45.64 42.99Current Model Date 10/15./015 2.00% 84.85 76.75 69.95 64.16 59.17 54.84 51.03 47.67 44.67 41.99Fiscal Year End Dec. 31 Interest Income: 2.50% 85.99 77.16 69.85 63.71 58.49 53.99 50.07 46.64 43.60 40.90

Interest revenue on loan interest, including fees 7.10% 7.20% 7.30% 7.30% 7.50% 7.70% 7.51% 3.00% 87.40 77.64 69.73 63.19 57.70 53.02 48.99 45.48 42.40 39.67

Beta 1.41 Interest revenue on deposits with banks 0.57% 0.60% 0.65% 0.69% 0.74% 0.80% 0.85% 3.50% 89.18 78.24 69.59 62.57 56.77 51.89 47.74 44.16 41.04 38.30

Market Risk Free Rate 2.90%

Interest revenue on federal funds sold & securities

borrowed or purchased under agreements to resell 0.92% 0.98% 1.05% 1.12% 1.19% 1.25% 1.28%

Market Rate (S&P500) 7.75% Interest revenue on investments, including dividends 2.33% 2.40% 2.46% 2.53% 2.65% 2.77% 3.09%Market Risk Premium 4.85% Interest on trading account assets 2.06% 2.12% 2.18% 2.24% 2.30% 2.35% 2.35% 54.84 4.00% 4.50% 5.00% 5.50% 6.00% 6.50% 7.00% 7.50% 8.00% 8.50%

Cost of Equity 9.72% Other interest revenue 1.97% 2.00% 2.03% 2.09% 2.12% 2.20% 2.05% 0.90 105.20 93.73 84.37 76.61 70.06 64.46 59.62 55.40 51.69 48.401.00 94.89 84.37 75.83 68.74 62.77 57.68 53.29 49.46 46.10 43.12

Interest Expense: 1.10 86.30 76.61 68.74 62.23 56.75 52.09 48.06 44.56 41.49 38.77CV Growth Rate 2.50% Interest expense on deposits 0.81% 0.84% 0.88% 0.93% 0.96% 1.02% 1.08% 1.20 79.05 70.06 62.77 56.75 51.70 47.39 43.69 40.47 37.64 35.14Current Dividend Yield 0.40% Interest expense on Fed funds & securities 1.09% 1.12% 1.16% 1.22% 1.25% 1.30% 2.06% 1.30 72.84 64.46 57.68 52.09 47.40 43.41 39.97 36.99 34.38 32.07

Interest expense on trading account liabilities 0.12% 0.13% 0.15% 0.15% 0.17% 0.18% 0.21% 1.40 67.47 59.63 53.29 48.07 43.69 39.97 36.78 34.01 31.58 29.43Interest expense on short term borrowings 0.99% 1.00% 1.03% 1.07% 1.10% 1.14% 1.31% 1.50 62.78 55.41 49.47 44.57 40.47 36.99 34.01 31.42 29.15 27.15

Effective Tax Rate 27.08% Interest expenses on long-term debt 2.40% 2.45% 2.49% 2.56% 2.60% 2.60% 3.22%

Expected Inflation rate 2.50% Asset Growth Rates: 54.84 1.10 1.15 1.20 1.25 1.30 1.35 1.40 1.45 1.50 1.55

Trading Account Assets 2.00% 2.20% 2.20% 2.40% 2.50% 2.40% -3.64% 1.50% 71.00 68.17 65.53 63.07 60.77 58.61 56.59 54.68 52.88 51.18Target to maintain Investments 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 4.84% 2.00% 70.97 67.98 65.20 62.62 60.22 57.97 55.87 53.91 52.06 50.32Total Equity / Total Assets8% above 2.50% 70.94 67.75 64.81 62.09 59.58 57.24 55.06 53.03 51.13 49.34

Loans Receivable: 3.00% 70.90 67.48 64.35 61.48 58.84 56.39 54.13 52.02 50.07 48.24Total consumer loans in U.S. offices -3.00% -2.50% -1.01% 1.40% 2.00% 2.30% -3.36% 3.50% 70.86 67.16 63.81 60.76 57.97 55.40 53.04 50.87 48.85 46.97Total consumer loans in offices outside U.S. -2.50% -1.30% 1.20% 1.50% 1.80% 2.00% -1.87% 4.00% 70.80 66.77 63.15 59.88 56.93 54.23 51.77 49.51 47.43 45.51Total corporate loans in U.S. offices 8.50% 8.50% 8.00% 7.00% 7.00% 4.00% 16.10% 4.50% 70.73 66.28 62.33 58.82 55.67 52.83 50.25 47.91 45.76 43.79

Total corporate loans in offices outside U.S. 1.40% 3.50% 4.00% 6.00% 8.00% 4.00% 2.22%

Allowance for loan losses increase 2.60% 2.70% 2.81% 2.92% 3.04% 3.16% -8.05%54.84 5.00% 5.50% 6.00% 6.50% 7.00% 7.50% 8.00% 8.50% 9.00% 9.50%

7.50% 10.04 23.47 36.89 50.31 63.73 77.16 90.58 104.00 117.42 130.85 Liability Growth Rates: 8.00% 9.69 21.65 33.62 45.59 57.55 69.52 81.48 93.45 105.42 117.38 U.S. non-interest bearing deposits 3.00% 2.50% 2.50% 2.50% 2.50% 2.80% 14.85% 8.50% 9.38 20.14 30.89 41.65 52.41 63.16 73.92 84.68 95.44 106.19 U.S. interest-bearing deposits 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.84% 9.00% 9.10 18.84 28.58 38.32 48.06 57.80 67.54 77.28 87.01 96.75 Non-U.S. non-interest bearing deposits 4.00% 3.50% 3.00% 2.50% 2.50% 2.20% 11.52% 9.50% 8.85 17.73 26.60 35.47 44.34 53.21 62.08 70.95 79.82 88.69 Non-U.S. interest bearing deposits 4.50% 4.00% 3.50% 3.50% 3.00% 2.70% -0.95% 10.00% 8.63 16.75 24.87 32.99 41.12 49.24 57.36 65.48 73.60 81.72

10.50% 8.42 15.89 23.36 30.83 38.30 45.77 53.24 60.71 68.18 75.65

54.84 1.15 1.20 1.25 1.30 1.35 1.40 1.45 1.50 1.55 1.60

20.0% 76.77 73.44 70.35 67.50 64.84 62.37 60.07 57.91 55.88 53.98 22.5% 73.59 70.39 67.44 64.70 62.16 59.79 57.58 55.51 53.57 51.75 25.0% 70.40 67.35 64.52 61.91 59.48 57.21 55.10 53.12 51.27 49.52 27.5% 67.22 64.30 61.61 59.11 56.79 54.63 52.62 50.73 48.96 47.30 30.0% 64.04 61.26 58.70 56.32 54.11 52.06 50.13 48.34 46.65 45.07 32.5% 60.86 58.22 55.79 53.53 51.43 49.48 47.65 45.95 44.35 42.84 35.0% 57.68 55.18 52.88 50.74 48.75 46.90 45.17 43.56 42.04 40.62

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Citigroup, IncIncome Statement (In Thousands)

Fiscal Years Ending Dec. 31 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E

Interest revenue on loan interest, including fees 48,544,000 45,580,000 44,776,000 45,995,114 47,365,278 49,335,998 51,249,544 55,101,718 58,325,086

Interest revenue on deposits with banks 1,269,000 1,026,000 959,000 730,107 783,905 866,215 937,911 1,025,993 1,131,365 Interest revenue on federal funds sold & securities borrowed or purchased under agreements to resell 3,418,000 2,566,000 2,366,000 2,231,644 2,436,616 2,675,926 2,925,679 3,186,248 3,430,571

Interest revenue on investments, including dividends 7,525,000 6,919,000 7,195,000 7,769,222 8,202,698 8,617,959 9,084,766 9,753,555 10,450,106

Interest on trading account assets 6,802,000 6,277,000 5,880,000 6,113,792 6,417,700 6,744,519 7,082,611 7,446,860 7,798,967

Other interest revenue 580,000 602,000 507,000 541,803 559,188 581,563 615,038 640,795 682,525

Total interest revenue 68,138,000 62,970,000 61,683,000 63,381,682 65,765,384 68,822,179 71,895,549 77,155,168 81,818,620 Interest expense on deposits 7,613,000 6,236,000 5,692,000 5,885,861 6,323,354 6,843,020 7,470,461 7,942,787 8,677,180

Interest expense on Federal funds purchased & securities loaned or sold under agreements to repurchase 2,817,000 2,339,000 1,895,000 2,042,874 2,120,091 2,217,767 2,355,803 2,437,870 2,560,739

Interest expense on trading account liabilities 190,000 169,000 168,000 151,199 163,799 188,999 188,999 214,199 226,799

Interest expense on short term borrowings 727,000 597,000 580,000 582,573 593,448 625,110 665,418 701,205 744,044

Interest expenses on long-term debt 9,188,000 6,836,000 5,355,000 5,213,971 5,367,738 5,579,058 5,877,505 6,118,829 6,264,829

Interest expense 20,535,000 16,177,000 13,690,000 13,876,478 14,568,430 15,453,953 16,558,187 17,414,891 18,473,589

Net interest revenue 47,603,000 46,793,000 47,993,000 49,505,203 51,196,955 53,368,226 55,337,362 59,740,277 63,345,030

Investment banking 2,991,000 3,315,000 3,687,000 3,860,553 3,996,830 4,136,327 4,198,372 4,343,297 4,496,050

Trading-related 2,296,000 2,532,000 2,503,000 2,443,667 2,492,540.00 2,542,390.80 2,593,238.62 2,645,103.39 2,698,005.46

Credit cards & bank cards 3,526,000 2,472,000 2,227,000 2,249,270 2,366,861 2,390,529 2,414,434 2,438,579 2,493,752 Trade & securities services 1,441,000 1,847,000 1,871,000 1,859,000 1,886,885 1,915,188 1,943,916 1,973,075 2,002,671

-5.20% -0.64% 1.50% 1.50% 1.50% 1.50% 1.50%

Other consumer 878,000 911,000 885,000 901,250 893,813 897,766 894,457 896,821 895,714

Checking-related 907,000 551,000 531,000 541,620 552,452 563,501 574,771 586,267 597,992

Corporate finance 516,000 516,000 531,000 520,500 520,875 522,094 523,617 521,771 522,089 Loan servicing 313,000 500,000 380,000 361,000 388,500 407,375 384,219 385,273 391,342

Other commisions & fees 58,000 469,000 417,000 443,000 430,000 436,500 433,250 434,875 434,063

Total commissions & fees 12,926,000 13,113,000 13,032,000 13,179,859 13,528,755 13,811,671 13,960,276 14,225,062 14,531,678

Principal transactions 4,781,000 7,121,000 6,698,000 6,831,960 6,982,263 7,135,873 7,307,134 7,489,812 7,669,568

Adminstration & other fiduciary fees 4,012,000 4,089,000 4,013,000 4,053,566 4,120,876 4,222,429 4,337,283 4,454,975 4,572,543 0.43%

Realized gains (losses) from sales of investments, net 3,251,000 748,000 570,000 581,400 593,028 604,889 616,986 629,326 641,913

Net impairment losses recognized in earnings (4,971,000) (535,000) (424,000) (445,200) (467,460) (490,833) (515,375) (541,143) (568,201)

Insurance premiums 2,476,000 2,280,000 2,110,000 2,378,250 2,378,250 2,324,500 2,294,200 2,297,040 2,334,448

Other revenues 95,000 2,757,000 2,890,000 2,947,800 3,006,756 3,066,891 3,128,229 3,190,794 3,254,609

Total non-interest revenues 22,570,000 29,573,000 28,889,000 29,527,635 30,142,469 30,675,420 31,128,733 31,745,865 32,436,557

Total revenues, net of interest expense 70,173,000 76,366,000 76,882,000 79,032,838 81,339,424 84,043,645 86,466,094 91,486,142 95,781,588

Total provisions for credit losses & for benefits & claims 11,719,000 8,514,000 7,467,000 7,503,875 7,772,488 8,144,673 8,629,784 9,211,637 9,687,189

1.79%

Compensation & benefits expenses 25,204,000 23,967,000 23,959,000 24,254,790 24,757,572 25,270,333 25,847,675 26,438,091 26,984,701

Premises & equipment expenses 3,282,000 3,165,000 3,178,000 3,078,688 3,104,757 3,182,376 3,101,512 3,179,050 3,258,526

Technology/communication expenses 5,914,000 6,136,000 6,436,000 6,693,440 6,961,178 7,239,625 7,529,210 7,830,378 8,143,593

Advertising & marketing expenses 2,224,000 1,888,000 1,844,000 1,880,880 1,918,498 1,956,868 1,996,005 2,035,925 2,076,644

Other operating expenses 13,894,000 13,199,000 19,634,000 13,264,995 13,463,970 13,665,929 13,870,918 14,078,982 14,290,167 Total operating expenses 50,518,000 48,355,000 55,051,000 49,172,793 50,205,974 51,315,131 52,345,321 53,562,426 54,753,631

Income (loss) from continuing operations before income taxes 7,936,000 19,497,000 14,364,000 22,356,170 23,360,962 24,583,841 25,490,990 28,712,079 31,340,768

Provision (benefit) for income taxes 27,000 5,867,000 6,864,000 6,055,020 6,327,161 6,658,370 6,904,065 7,776,475 8,488,438

Income (loss) from continuing operations 7,909,000 13,630,000 7,500,000 16,301,150 17,033,801 17,925,472 18,586,925 20,935,603 22,852,329

Net income (loss) before attribution of noncontrolling interests 7,760,000 13,900,000 7,498,000 16,301,150 17,033,801 17,925,472 18,586,925 20,935,603 22,852,329 Noncontrolling interests (219,000) (227,000) (185,000) (192,500) (208,750) (196,708) (204,826) (202,464) (198,375)

Citigroup's net income (loss) 7,541,000 13,673,000 7,313,000 16,108,650 16,825,051 17,728,763 18,382,098 20,733,139 22,653,954

Less: preferred dividends - 194,000 511,000 511,000 511,000 511,000 511,000 511,000 511,000

Net income available to common shareholders 7,541,000 13,479,000 6,802,000 15,597,650 16,314,051 17,217,763 17,871,098 20,222,139 22,142,954

Weighted average shares outstanding-basic 2,930,600 3,035,800 3,031,600 3,028,786 3,030,233 3,021,678 3,011,867 3,002,925 2,994,774

Year end shares outstanding 3,028,884 3,029,243 3,023,918 3,033,655 3,026,811 3,016,545 3,007,189 2,998,661 2,990,888

Net income (loss) per share - basic / Earnings per share 2.57 4.44 2.24 5.15 5.38 5.70 5.93 6.73 7.39Dividends declared per common share 0.05 0.10 0.21 1.54 1.88 1.99 2.08 2.69 2.96

Dividend paid 143,000 314,000 633,000 4,679,295 5,709,918 6,026,217 6,254,884 8,088,856 8,857,182 Pay-Out Ratio 1.90% 2.33% 9.31% 30.00% 35.00% 35.00% 35.00% 40.00% 40.00%

Retention Ratio 98.10% 97.67% 90.69% 70.00% 65.00% 65.00% 65.00% 60.00% 60.00%

Citigroup, Inc

Common Size Income Statement

Fiscal Years Ending Dec. 31 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E

Interest revenue on loan interest, including fees 2.60% 2.42% 2.43% 2.46% 2.47% 2.50% 2.53% 2.65% 2.73%

Interest revenue on deposits with banks 0.07% 0.05% 0.05% 0.04% 0.04% 0.04% 0.05% 0.05% 0.05%Interest revenue on federal funds sold & securities borrowed or purchased under

agreements to resell 0.18% 0.14% 0.13% 0.12% 0.13% 0.14% 0.14% 0.15% 0.16%

Interest revenue on investments, including dividends 0.40% 0.37% 0.39% 0.41% 0.43% 0.44% 0.45% 0.47% 0.49%

Interest on trading account assets 0.36% 0.33% 0.32% 0.33% 0.33% 0.34% 0.35% 0.36% 0.37%

Other interest revenue 0.03% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03%

Total interest revenue 3.65% 3.35% 3.35% 3.38% 3.43% 3.49% 3.55% 3.71% 3.84%

Interest expense on deposits 0.41% 0.33% 0.31% 0.31% 0.33% 0.35% 0.37% 0.38% 0.41%

Interest expense on Federal funds purchased & securities loaned or sold under

agreements to repurchase 0.15% 0.12% 0.10% 0.11% 0.11% 0.11% 0.12% 0.12% 0.12%

Interest expense on trading account liabilities 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01%

Interest expense on short term borrowings 0.04% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03%

Interest expenses on long-term debt 0.49% 0.36% 0.29% 0.28% 0.28% 0.28% 0.29% 0.29% 0.29%

Interest expense 1.10% 0.86% 0.74% 0.74% 0.76% 0.78% 0.82% 0.84% 0.87%

Net interest revenue 2.55% 2.49% 2.60% 2.64% 2.67% 2.71% 2.73% 2.87% 2.97%

Investment banking 0.16% 0.18% 0.20% 0.21% 0.21% 0.21% 0.21% 0.21% 0.21%

Trading-related 0.12% 0.13% 0.14% 0.13% 0.13% 0.13% 0.13% 0.13% 0.13%

Credit cards & bank cards 0.19% 0.13% 0.12% 0.12% 0.12% 0.12% 0.12% 0.12% 0.12%

Trade & securities services 0.08% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.09% 0.09%

Other consumer 0.05% 0.05% 0.05% 0.05% 0.05% 0.05% 0.04% 0.04% 0.04%

Checking-related 0.05% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03%

Corporate finance 0.03% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03% 0.02%

Loan servicing 0.02% 0.03% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02%

Other commisions & fees 0.00% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02%

Total commissions & fees 0.69% 0.70% 0.71% 0.70% 0.70% 0.70% 0.69% 0.68% 0.68%

Principal transactions 0.26% 0.38% 0.36% 0.36% 0.36% 0.36% 0.36% 0.36% 0.36%

Adminstration & other fiduciary fees 0.22% 0.22% 0.22% 0.22% 0.21% 0.21% 0.21% 0.21% 0.21%

Realized gains (losses) from sales of investments, net 0.17% 0.04% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03%

Net impairment losses recognized in earnings -0.27% -0.03% -0.02% -0.02% -0.02% -0.02% -0.03% -0.03% -0.03%

Insurance premiums 0.13% 0.12% 0.11% 0.13% 0.12% 0.12% 0.11% 0.11% 0.11%

Other revenues 0.01% 0.15% 0.16% 0.16% 0.16% 0.16% 0.15% 0.15% 0.15%

Total non-interest revenues 1.21% 1.57% 1.57% 1.58% 1.57% 1.56% 1.54% 1.53% 1.52%

Total revenues, net of interest expense 3.76% 4.06% 4.17% 4.22% 4.24% 4.26% 4.27% 4.40% 4.49%

Total provisions for credit losses & for benefits & claims 0.63% 0.45% 0.41% 0.40% 0.40% 0.41% 0.43% 0.44% 0.45%

Compensation & benefits expenses 1.35% 1.27% 1.30% 1.29% 1.29% 1.28% 1.28% 1.27% 1.26%

Premises & equipment expenses 0.18% 0.17% 0.17% 0.16% 0.16% 0.16% 0.15% 0.15% 0.15%

Technology/communication expenses 0.32% 0.33% 0.35% 0.36% 0.36% 0.37% 0.37% 0.38% 0.38%

Advertising & marketing expenses 0.12% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10%

Other operating expenses 0.75% 0.70% 1.07% 0.71% 0.70% 0.69% 0.68% 0.68% 0.67%

Total operating expenses 2.71% 2.57% 2.99% 2.63% 2.62% 2.60% 2.58% 2.58% 2.57%

Income (loss) from continuing operations before income taxes 0.43% 1.04% 0.78% 1.19% 1.22% 1.25% 1.26% 1.38% 1.47%

Provision (benefit) for income taxes 0.00% 0.31% 0.37% 0.32% 0.33% 0.34% 0.34% 0.37% 0.40%

Income (loss) from continuing operations 0.42% 0.72% 0.41% 0.87% 0.89% 0.91% 0.92% 1.01% 1.07%

Net income (loss) before attribution of noncontrolling interests 0.42% 0.74% 0.41% 0.87% 0.89% 0.91% 0.92% 1.01% 1.07%

Noncontrolling interests -0.01% -0.01% -0.01% -0.01% -0.01% -0.01% -0.01% -0.01% -0.01%

Citigroup's net income (loss) 0.40% 0.73% 0.40% 0.86% 0.88% 0.90% 0.91% 1.00% 1.06%

Less: preferred dividends 0.00% 0.01% 0.03% 0.03% 0.03% 0.03% 0.03% 0.02% 0.02%

Net income available to common shareholders 0.40% 0.72% 0.37% 0.83% 0.85% 0.87% 0.88% 0.97% 1.04%

Citigroup, Inc

Balance Sheet (Thousands)

Fiscal Years Ending Dec. 31 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E

Cash & due from banks (including segregated cash & other deposits)36,453,000 29,885,000 32,108,000 36,070,083 46,190,820 53,773,323 53,313,819 45,582,555 48,530,997

Deposits with banks 102,134,000 169,005,000 128,089,000 130,650,780 133,263,796 135,929,072 138,647,653 141,420,606 144,249,018

Federal funds sold & securities borrowed or purchased under agreements to resell261,311,000 257,037,000 242,570,000 248,634,250 254,850,106 261,221,359 267,751,893 274,445,690 281,306,832 Brokerage receivables 22,490,000 25,674,000 28,419,000 27,502,700 27,959,389 28,648,403 29,427,666 30,226,184 31,023,862

Trading account assets 320,929,000 285,928,000 296,786,000 302,721,720 309,381,598 316,187,993 323,776,505 331,870,917 339,835,819

Investments 312,326,000 308,980,000 333,443,000 341,779,075 350,323,552 359,081,641 368,058,682 377,260,149 386,691,652

Total consumer loans in U.S. offices 256,763,000 244,094,000 229,860,000 222,964,200 217,390,095 215,194,455 218,207,177 222,571,321 227,690,461

Total consumer loans in offices outside U.S. 152,326,000 150,309,000 140,792,000 137,272,200 135,487,661 137,113,513 139,170,216 141,675,280 144,508,786

Total consumer loans 409,089,000 394,403,000 370,652,000 360,236,400 352,877,756 352,307,968 357,377,393 364,246,601 372,199,247 Growth -3.59% -6.02% -2.81% -2.04% -0.16% 1.44% 1.92% 2.18%

Less: net unearned income 418,000 572,000 682,000 474,338 464,648 463,898 470,573 479,618 490,090

Consumer loans, net of unearned income 408,671,000 393,831,000 369,970,000 359,762,062 352,413,108 351,844,070 356,906,820 363,766,983 371,709,157

Total corporate loans in U.S. offices 103,705,000 123,312,000 134,829,000 146,289,465 158,724,070 171,421,995 183,421,535 196,261,042 204,111,484

Total corporate loans in offices outside U.S. 143,885,000 148,891,000 140,390,000 142,355,460 147,337,901 153,231,417 162,425,302 175,419,326 182,436,099 Total corporate loans 247,590,000 272,203,000 275,219,000 288,644,925 306,061,971 324,653,412 345,846,837 371,680,369 386,547,583

Growth 10.42% 9.94% 1.11% 4.88% 6.03% 6.07% 6.53% 7.47% 4.00%

Less: net unearned income 797,000 562,000 554,000 588,486 623,996 661,900 705,109 757,778 788,089 Corporate loans, net of unearned income 246,793,000 271,641,000 274,665,000 288,056,439 305,437,975 323,991,512 345,141,728 370,922,591 385,759,494

Loans, net of unearned income 655,464,000 665,472,000 644,635,000 647,818,501 657,851,083 675,835,583 702,048,549 734,689,574 757,468,652

Allowance for loan losses 25,455,000 19,648,000 15,994,000 16,843,281 17,788,293 19,005,578 20,532,438 22,346,555 23,960,987

Total loans, net 630,009,000 645,824,000 628,641,000 630,975,220 640,062,790 656,830,005 681,516,111 712,343,019 733,507,664

Goodwill 25,673,000 25,009,000 23,592,000 23,592,000 23,592,000 23,592,000 23,592,000 23,592,000 23,592,000

Intangible assets (other than MSRs) 5,697,000 5,056,000 4,566,000 3,816,000 3,066,000 2,316,000 1,566,000 816,000 -

Mortgage servicing rights ("MSRs") 1,942,000 2,718,000 1,845,000 1,851,052 1,924,655 2,024,450 2,153,050 2,306,699 2,434,615

Other assets 145,696,000 125,266,000 122,471,000 125,532,775 128,671,094 131,887,872 135,185,069 138,564,695 142,028,813

Total assets 1,864,660,000 1,880,382,000 1,842,530,000 1,873,125,656 1,919,285,800 1,971,492,117 2,024,988,447 2,078,428,515 2,133,201,273

Non-interest bearing deposits in U.S. offices 129,657,000 128,399,000 128,958,000 132,826,740 136,147,409 139,551,094 143,039,871 146,615,868 150,721,112

Interest-bearing deposits in U.S. offices 247,716,000 284,164,000 284,978,000 293,527,340 302,333,160 311,403,155 320,745,250 330,367,607 340,278,635

Non-interest-bearing deposits in offices outside the U.S.65,024,000 69,406,000 70,925,000 73,762,000 76,343,670 78,633,980 80,599,830 82,614,825 84,432,352

Interest bearing deps in offices outside the U.S. 488,163,000 486,304,000 414,471,000 433,122,195 450,447,083 466,212,731 482,530,176 497,006,082 510,425,246

Total deposits 930,560,000 968,273,000 899,332,000 933,238,275 965,271,322 995,800,960 1,026,915,127 1,056,604,382 1,085,857,345

Federal funds purchased & securities loaned or sold under agreements to repurchase211,236,000 203,512,000 173,438,000 187,419,637 189,293,834 191,186,772 193,098,640 195,029,626 196,979,923

Total brokerage payables 57,013,000 53,707,000 52,180,000 52,613,474 53,059,698 54,262,666 55,602,287 56,994,709 58,354,646

Trading account liabilities 115,549,000 108,762,000 139,036,000 125,999,167 125,999,167 125,999,167 125,999,167 125,999,167 125,999,167

Short-term borrowings 52,027,000 58,944,000 58,335,000 58,845,741 59,344,822 60,690,286 62,188,591 63,745,951 65,266,977

Total long-term debt 239,463,000 221,116,000 223,080,000 217,248,805 219,091,330 224,058,563 229,590,057 235,339,573 240,954,953

Other liabilities 67,815,000 59,935,000 85,084,000 68,948,329 69,533,092 71,109,545 72,865,077 74,689,803 76,471,958

Total liabilities 1,673,663,000 1,674,249,000 1,630,485,000 1,644,313,428 1,681,593,264 1,723,107,959 1,766,258,945 1,808,403,211 1,849,884,967

Preferred stock 2,562,000 6,738,000 10,468,000 10,468,000 10,468,000 10,468,000 10,468,000 10,468,000 10,468,000

Common stock 30,000 31,000 31,000 31,000 31,000 31,000 31,000 31,000 31,000

Additional paid-in capital 106,391,000 107,193,000 107,979,000 109,040,007 109,252,208 109,252,208 109,252,208 109,252,208 109,252,208

Total Common Stock & APIC 106,421,000 107,224,000 108,010,000 109,071,007 109,283,208 109,283,208 109,283,208 109,283,208 109,283,208

Retained earnings 97,809,000 111,168,000 118,201,000 129,119,355 139,723,488 150,915,035 162,531,248 174,664,532 187,950,305

Treasury stock, at cost 847,000 1,658,000 2,929,000 3,579,000 4,229,000 4,879,000 5,529,000 6,179,000 6,829,000

Accumulated other comprehensive income (loss) (16,896,000) (19,133,000) (23,216,000) (18,135,333) (19,330,800) (19,182,853) (19,770,077) (19,947,982) (19,337,862)

Total Citigroup stockholders' equity 189,049,000 204,339,000 210,534,000 226,944,029 235,914,896 246,604,390 256,983,380 268,288,758 281,534,651

Noncontrolling interest 1,948,000 1,794,000 1,511,000 1,868,200 1,777,640 1,779,768 1,746,122 1,736,546 1,781,655

Total equity 190,997,000 206,133,000 212,045,000 228,812,229 237,692,536 248,384,158 258,729,501 270,025,303 283,316,306

Citigroup, IncCommon Size Balance Sheet (Thpusands)

Fiscal Years Ending Dec. 31 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E

Cash & due from banks (including segregated cash & other deposits) 1.95% 1.59% 1.74% 1.93% 2.41% 2.73% 2.63% 2.19% 2.28%Deposits with banks 5.48% 8.99% 6.95% 6.98% 6.94% 6.89% 6.85% 6.80% 6.76%Federal funds sold & securities borrowed or purchased under agreements to resell 14.01% 13.67% 13.17% 13.27% 13.28% 13.25% 13.22% 13.20% 13.19%Brokerage receivables 1.21% 1.37% 1.54% 1.47% 1.46% 1.45% 1.45% 1.45% 1.45%Trading account assets 17.21% 15.21% 16.11% 16.16% 16.12% 16.04% 15.99% 15.97% 15.93%Investments 16.75% 16.43% 18.10% 18.25% 18.25% 18.21% 18.18% 18.15% 18.13%Total consumer loans in U.S. offices 13.77% 12.98% 12.48% 11.90% 11.33% 10.92% 10.78% 10.71% 10.67%Total consumer loans in offices outside U.S. 8.17% 7.99% 7.64% 7.33% 7.06% 6.95% 6.87% 6.82% 6.77%Total consumer loans 21.94% 20.97% 20.12% 19.23% 18.39% 17.87% 17.65% 17.53% 17.45%Less: net unearned income 0.02% 0.03% 0.04% 0.03% 0.02% 0.02% 0.02% 0.02% 0.02%Consumer loans, net of unearned income 21.92% 20.94% 20.08% 19.21% 18.36% 17.85% 17.63% 17.50% 17.42%Total corporate loans in U.S. offices 5.56% 6.56% 7.32% 7.81% 8.27% 8.70% 9.06% 9.44% 9.57%Total corporate loans in offices outside U.S. 7.72% 7.92% 7.62% 7.60% 7.68% 7.77% 8.02% 8.44% 8.55%Total corporate loans 13.28% 14.48% 14.94% 15.41% 15.95% 16.47% 17.08% 17.88% 18.12%Less: net unearned income 0.04% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03% 0.04% 0.04%Corporate loans, net of unearned income 13.24% 14.45% 14.91% 15.38% 15.91% 16.43% 17.04% 17.85% 18.08%Loans, net of unearned income 35.15% 35.39% 34.99% 34.58% 34.28% 34.28% 34.67% 35.35% 35.51%Allowance for loan losses 1.37% 1.04% 0.87% 0.90% 0.93% 0.96% 1.01% 1.08% 1.12%Total loans, net 33.79% 34.35% 34.12% 33.69% 33.35% 33.32% 33.66% 34.27% 34.39%Goodwill 1.38% 1.33% 1.28% 1.26% 1.23% 1.20% 1.17% 1.14% 1.11%Intangible assets (other than MSRs) 0.31% 0.27% 0.25% 0.20% 0.16% 0.12% 0.08% 0.04% 0.00%Mortgage servicing rights ("MSRs") 0.10% 0.14% 0.10% 0.10% 0.10% 0.10% 0.11% 0.11% 0.11%Other assets 7.81% 6.66% 6.65% 6.70% 6.70% 6.69% 6.68% 6.67% 6.66%Total assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Non-interest bearing deposits in U.S. offices 6.95% 6.83% 7.00% 7.09% 7.09% 7.08% 7.06% 7.05% 7.07%Interest-bearing deposits in U.S. offices 13.28% 15.11% 15.47% 15.67% 15.75% 15.80% 15.84% 15.90% 15.95%Non-interest-bearing deposits in offices outside the U.S. 3.49% 3.69% 3.85% 3.94% 3.98% 3.99% 3.98% 3.97% 3.96%Interest bearing deps in offices outside the U.S. 26.18% 25.86% 22.49% 23.12% 23.47% 23.65% 23.83% 23.91% 23.93%Total deposits 49.91% 51.49% 48.81% 49.82% 50.29% 50.51% 50.71% 50.84% 50.90%Federal funds purchased & securities loaned or sold under agreements to repurchase 11.33% 10.82% 9.41% 10.01% 9.86% 9.70% 9.54% 9.38% 9.23%Total brokerage payables 3.06% 2.86% 2.83% 2.81% 2.76% 2.75% 2.75% 2.74% 2.74%Trading account liabilities 6.20% 5.78% 7.55% 6.73% 6.56% 6.39% 6.22% 6.06% 5.91%Short-term borrowings 2.79% 3.13% 3.17% 3.14% 3.09% 3.08% 3.07% 3.07% 3.06%Total long-term debt 12.84% 11.76% 12.11% 11.60% 11.42% 11.36% 11.34% 11.32% 11.30%Other liabilities 3.64% 3.19% 4.62% 3.68% 3.62% 3.61% 3.60% 3.59% 3.58%Total liabilities 89.76% 89.04% 88.49% 87.78% 87.62% 87.40% 87.22% 87.01% 86.72%

Preferred stock 0.14% 0.36% 0.57% 0.56% 0.55% 0.53% 0.52% 0.50% 0.49%Common stock 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Additional paid-in capital 5.71% 5.70% 5.86% 5.82% 5.69% 5.54% 5.40% 5.26% 5.12%Total Common Stock & APIC 5.71% 5.70% 5.86% 5.82% 5.69% 5.54% 5.40% 5.26% 5.12%Retained earnings 5.25% 5.91% 6.42% 6.89% 7.28% 7.65% 8.03% 8.40% 8.81%Treasury stock, at cost 0.05% 0.09% 0.16% 0.19% 0.22% 0.25% 0.27% 0.30% 0.32%Net unrealized gains (losses) on investment securities 0.03% -0.09% 0.00% -0.02% -0.04% -0.02% -0.02% -0.02% -0.02%Cash flow hedges -0.12% -0.07% -0.05% -0.11% -0.10% -0.08% -0.08% -0.08% -0.08%Benefit plans -0.28% -0.21% -0.28% -0.23% -0.24% -0.23% -0.23% -0.22% -0.22%Foreign currency translation adjustment, net of hedges -0.53% -0.65% -0.93% -0.61% -0.64% -0.64% -0.65% -0.64% -0.59%Accumulated other comprehensive income (loss) -0.91% -1.02% -1.26% -0.97% -1.01% -0.97% -0.98% -0.96% -0.91%Total Citigroup stockholders' equity 10.14% 10.87% 11.43% 12.12% 12.29% 12.51% 12.69% 12.91% 13.20%Noncontrolling interest 0.10% 0.10% 0.08% 0.10% 0.09% 0.09% 0.09% 0.08% 0.08%Total equity 10.24% 10.96% 11.51% 12.22% 12.38% 12.60% 12.78% 12.99% 13.28%

Citigroup, IncCash Flow Statement (In Thousands)

Fiscal Years Ending Dec. 31 2015E 2016E 2017E 2018E 2019E 2020E

Cash From Operating Activities + Net Income 15,597,650 16,314,051 17,217,763 17,871,098 20,222,139 22,142,954 Change in Premises and Equipment Net (Capex and Deprec)Interest Payable 433,474 446,224 1,202,968 1,339,621 1,392,422 1,359,937 Interest Receivable 916,300 (456,689) (689,014) (779,263) (798,518) (797,678)

Total Cash From Operations 16,947,424 16,303,586 17,731,718 18,431,457 20,816,043 22,705,213

Cash from Investing ActivitiesChange in Deposits with Banks (2,561,780) (2,613,016) (2,665,276) (2,718,581) (2,772,953) (2,828,412) Change in Fed funds sold (6,064,250) (6,215,856) (6,371,253) (6,530,534) (6,693,797) (6,861,142) Change in investments (8,336,075) (8,544,477) (8,758,089) (8,977,041) (9,201,467) (9,431,504) Change in trading assets (5,935,720) (6,659,878) (6,806,395) (7,588,512) (8,094,413) (7,964,902) Change in Loans (2,334,220) (9,087,570) (16,767,215) (24,686,106) (30,826,908) (21,164,646) MSRs (6,052) (73,602) (99,795) (128,600) (153,650) (127,916) Other Assets (2,311,775) (2,388,319) (2,466,777) (2,547,197) (2,629,627) (2,648,117) Total Cash From Investing Activities (27,549,872) (35,582,718) (43,934,801) (53,176,571) (60,372,814) (51,026,639)

Cash from Financing ActivitiesDividends Paid (4,679,295) (5,709,918) (6,026,217) (6,254,884) (8,088,856) (8,857,182) Change in Capital Stocks 1,061,007 212,201 - - - - Change in Deposits 33,906,275 32,033,047 30,529,638 31,114,167 29,689,255 29,252,963 Change in Long Term Debt (5,831,195) 1,842,525 4,967,234 5,531,494 5,749,516 5,615,379 Change in Fed Funds Purchased 13,981,637 1,874,196 1,892,938 1,911,868 1,930,986 1,950,296 Change in Short-Term Borrowings 510,741 499,081 1,345,464 1,498,304 1,557,360 1,521,026 Change in Trading Liabilities (13,036,833) - - - - - Change in Other Liabilities (16,135,671) 584,763 1,576,453 1,755,532 1,824,726 1,782,155 Change in Treasury Stock (650,000) (650,000) (650,000) (650,000) (650,000) (650,000) Other equity changes 5,080,667 (1,195,467) 147,947 (587,224) (177,906) 610,121 Non-Controlling Interest 357,200 (90,560) 2,128 (33,646) (9,576) 45,109 Total Cash from Financing Activities 14,564,532 29,399,868 33,785,585 34,285,610 31,825,507 31,269,868

Net Changes in Cash 3,962,083 10,120,737 7,582,502 (459,503) (7,731,264) 2,948,441

Beginning Cash 32,108,000 36,070,083 46,190,820 53,773,323 53,313,819 45,582,555 Ending Cash 36,070,083 46,190,820 53,773,323 53,313,819 45,582,555 48,530,997

Citigroup, Inc

Revenue Decomposition (In Thousandas)

Fiscal Years Ending Dec. 31 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E

Interest revenue on loan interest, including fees 48,544,000 45,580,000 44,776,000 43,412,795 45,100,184 47,015,712 50,242,135 54,031,097 57,151,722

Interest revenue on deposits with banks 1,269,000 1,026,000 959,000 730,107 783,905 866,215 937,911 1,025,993 1,131,365

Interest revenue on federal funds sold & securities

borrowed or purchased under agreements to resell 3,418,000 2,566,000 2,366,000 2,231,644 2,436,616 2,675,926 2,925,679 3,186,248 3,430,571

Interest revenue on investments, including dividends 7,525,000 6,919,000 7,195,000 7,769,222 8,162,685 8,534,087 8,952,465 9,564,630 10,197,700

Interest on trading account assets 6,802,000 6,277,000 5,880,000 6,113,792 6,417,700 6,744,519 7,082,611 7,446,860 7,798,967

Other interest revenue 580,000 602,000 507,000 541,803 551,773 571,044 603,277 629,047 672,297

Total interest revenue 68,138,000 62,970,000 61,683,000 60,799,363 63,452,862 66,407,502 70,744,078 75,883,873 80,382,622

Investment banking 2,991,000 3,315,000 3,687,000 3,783,341 3,918,461 4,017,010 4,117,634 4,261,348 4,371,159

Trading-related 2,296,000 2,532,000 2,503,000 2,443,667 2,492,540 2,542,391 2,593,239 2,645,103 2,698,005

Credit cards & bank cards 3,526,000 2,472,000 2,227,000 2,249,270 2,366,861 2,390,529 2,414,434 2,438,579 2,493,752

Trade & securities services 1,441,000 1,847,000 1,871,000 1,859,000 1,886,885 1,915,188 1,943,916 1,973,075 2,002,671

Other consumer 878,000 911,000 885,000 901,250 893,813 897,766 894,457 896,821 895,714

Checking-related 907,000 551,000 531,000 541,620 552,452 563,501 574,771 586,267 597,992

Corporate finance 516,000 516,000 531,000 520,500 520,875 522,094 523,617 521,771 522,089

Loan servicing 313,000 500,000 380,000 361,000 388,500 407,375 384,219 385,273 391,342

Other commisions & fees 58,000 469,000 417,000 443,000 430,000 436,500 433,250 434,875 434,063

Total commissions & fees 12,926,000 13,113,000 13,032,000 13,102,648 13,450,386 13,692,354 13,879,538 14,143,113 14,406,787

Principal transactions 4,781,000 7,121,000 6,698,000 6,831,960 6,982,263 7,135,873 7,307,134 7,489,812 7,669,568

Adminstration & other fiduciary fees 4,012,000 4,089,000 4,013,000 4,053,566 4,066,236 4,146,059 4,254,341 4,373,296 4,504,021

Realized gains (losses) from sales of investments, net 3,251,000 748,000 570,000 581,400 593,028 604,889 616,986 629,326 641,913

Net impairment losses recognized in earnings (4,971,000) (535,000) (424,000) (445,200) (467,460) (490,833) (515,375) (541,143) (568,201)

Insurance premiums 2,476,000 2,280,000 2,110,000 2,378,250 2,378,250 2,324,500 2,294,200 2,297,040 2,334,448

Other revenues 95,000 2,757,000 2,890,000 2,947,800 3,006,756 3,066,891 3,128,229 3,190,794 3,254,609

Total non-interest revenues 22,570,000 29,573,000 28,889,000 29,450,424 30,009,459 30,479,733 30,965,053 31,582,237 32,243,145

Total Revenue 68,138,000 62,970,000 61,683,000 60,799,363 63,452,862 66,407,502 70,744,078 75,883,873 80,382,622

Interest expense on deposits 7,613,000 6,236,000 5,692,000 5,885,861 6,341,545 6,882,659 7,535,708 8,059,155 8,819,738

Interest expense on Federal funds purchased & securities loaned or sold under agreements to repurchase2,817,000 2,339,000 1,895,000 1,841,058 1,884,366 1,989,690 2,147,509 2,263,324 2,424,353

Interest expense on trading account liabilities 190,000 169,000 168,000 151,199 163,799 188,999 188,999 214,199 226,799

Interest expense on short term borrowings 727,000 597,000 580,000 562,421 565,890 594,223 633,496 669,907 715,060

Interest expenses on long-term debt 9,188,000 6,836,000 5,355,000 5,213,971 5,301,878 5,493,425 5,796,043 6,055,171 6,236,519

Interest expense 20,535,000 16,177,000 13,690,000 13,654,510 14,257,479 15,148,996 16,301,755 17,261,755 18,422,468

Compensation & benefits expenses 25,204,000 23,967,000 23,959,000 24,355,852 24,861,160 25,376,511 25,902,091 26,549,644 27,213,385

Premises & equipment expenses 3,282,000 3,165,000 3,178,000 3,128,344 3,155,655 3,234,546 3,101,512 3,179,050 3,483,252

Technology/communication expenses 5,914,000 6,136,000 6,436,000 6,693,440 6,961,178 7,239,625 7,529,210 7,830,378 8,143,593

Advertising & marketing expenses 2,224,000 1,888,000 1,844,000 1,880,880 1,918,498 1,956,868 1,996,005 2,035,925 2,076,644

Restructuring expenses - - - - - - - -

Other operating expenses 13,894,000 13,199,000 19,634,000 20,124,850 20,627,971 21,143,671 21,672,262 22,214,069 22,769,421

Total operating expenses 50,518,000 48,355,000 55,051,000 56,183,365 57,524,461 58,951,220 60,201,081 61,809,066 63,686,294

Total Expenses 71,053,000 64,532,000 68,741,000 69,837,876 71,781,940 74,100,216 76,502,836 79,070,821 82,108,763

Net interest income 47,603,000 46,793,000 47,993,000 47,144,852 49,195,384 51,258,506 54,442,323 58,622,118 61,960,154

Provision for credit losses 11,719,000 8,514,000 7,467,000 7,503,875 7,772,488 8,144,673 8,629,784 9,211,637 9,687,189

Provision for loan losses as percentage of Total Loans 1.79% 1.28% 1.16% 1.16% 1.18% 1.21% 1.23% 1.25% 1.28%

Net interest income after provision for loan losses 35,884,000 38,279,000 40,526,000 39,640,977 41,422,896 43,113,833 45,812,539 49,410,481 52,272,964

Net Interest Margin 2.85% 2.82% 2.87% 2.95% 2.97% 3.00% 3.04% 3.20% 3.31%

Interest Margin Growth 0.64% -0.81% 1.69% 2.62% 0.91% 1.01% 1.18% 5.43% 3.31%

Citigroup, Inc

Value Driver Estimation (Thousands)

2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E

Net Income 7,541,000 13,479,000 6,802,000 15,597,650 16,314,051 17,217,763 17,871,098 20,222,139 22,142,954

Total Stockholders Equity 190,997,000 206,133,000 212,045,000 228,812,229 237,692,536 248,384,158 258,729,501 270,025,303 283,316,306

ROE = (Net Income / Beg. TSE) 4.20% 7.06% 3.30% 7.36% 7.13% 7.24% 7.19% 7.82% 8.20%

Equity Economic Profit (EEP) = Beg. TSE * (ROE – Cost of equity) (9,906,073) (5,078,014) (13,225,607) (5,004,359) (5,917,040) (5,876,127) (6,261,575) (4,915,674) (4,092,344)

Total Assets 1,864,660,000 1,880,382,000 1,842,530,000 1,873,125,656 1,919,285,800 1,971,492,117 2,024,988,447 2,078,428,515 2,133,201,273

Change in Total Assets (9,218,000) 15,722,000 (37,852,000) 30,595,656 46,160,144 52,206,317 53,496,330 53,440,068 54,772,759

Total Liabilities 1,673,663,000 1,674,249,000 1,630,485,000 1,644,313,428 1,681,593,264 1,723,107,959 1,766,258,945 1,808,403,211 1,849,884,967

Change in Total Liabilities (20,642,000) 586,000 (43,764,000) 13,828,428 37,279,836 41,514,695 43,150,987 42,144,266 41,481,756

Equity Free Cash Flow (FCFE) Simple Approach= NI – (change in total assets)

+ (change in total liabilities) (3,883,000) (1,657,000) 890,000 (1,169,578) 7,433,743 6,526,142 7,525,755 8,926,337 8,851,952

Net income 7,541,000 13,479,000 6,802,000 15,597,650 16,314,051 17,217,763 17,871,098 20,222,139 22,142,954

Change in Depreciation and Capex 1,097,000.00 (187,000.00) 203,000.00 (250,000) (256,250) (262,656) (269,223) (275,953) (282,852)

Cash from Operations 8,638,000 13,292,000 7,005,000 15,347,650 16,057,801 16,955,107 17,601,876 19,946,186 21,860,102

Sources of Cash

Deposits 64,624,000 37,713,000 (68,941,000) 33,906,275 32,033,047 30,529,638 31,114,167 29,689,255 29,252,963

Borrowings and others (1,541,000) (15,474,000) 24,740,000 (14,680,126) 2,958,040 4,814,855 5,165,704 5,313,072 5,253,477

Accounts Payable 317,000 (3,306,000) (1,527,000) 433,474 446,224 1,202,968 1,339,621 1,392,422 1,359,937

Long Term Debt (84,042,000) (18,347,000) 1,964,000 (5,831,195) 1,842,525 4,967,234 5,531,494 5,749,516 5,615,379

Total Sources of Cash (20,642,000) 586,000 (43,764,000) 13,828,428 37,279,836 41,514,695 43,150,987 42,144,266 41,481,756

Uses of Cash

Securities, investments & other held 4,375,000 (7,620,000) 9,996,000 14,400,325 14,760,333 15,129,341 15,507,575 15,895,264 16,292,646

Cash and cash equivalents (45,898,000) 60,303,000 (38,693,000) 6,523,863 12,733,752 10,247,778 2,259,078 (4,958,311) 5,776,853

New Loans 12,882,000 15,815,000 (17,183,000) 2,334,220 9,087,570 16,767,215 24,686,106 30,826,908 21,164,646

Trading Assets 29,195,000 (35,001,000) 10,858,000 5,935,720 6,659,878 6,806,395 7,588,512 8,094,413 7,964,902

Accrued interest receivable (5,287,000) 3,184,000 2,745,000 (916,300) 456,689 689,014 779,263 798,518 797,678

Other Assets (3,842,000) (19,654,000) (3,668,000) 3,067,827 3,211,922 3,316,573 3,425,797 3,533,276 3,592,033

Total Uses of Cash (7,478,000) 16,840,000 (35,742,000) 31,095,656 46,653,894 52,693,660 53,977,107 53,914,115 55,305,907

Equity Free Cash Flow (FCFE) Formal Approach (4,526,000) (2,962,000) (1,017,000) (1,919,578) 6,683,743 5,776,142 6,775,755 8,176,337 8,035,952

Citigroup, IncWeighted Average Cost of Capital (WACC) Estimation

1 Year Weekly 1.002 Year Weekly 1.19

Beta 1.41 3 Year Weekly 1.31Market Risk Free Rate 2.90% 5 Year Weekly 1.82Market Rate (S&P500) 7.75% 1 Year Monthly 1.85Market Risk Premium 4.85% 2 Year Monthly 1.52Cost of Equity 9.72% 3 Year Monthly 1.56

5 Year Monthly 2.05Beta calculated doing the average of different time Beta values from Bloomberg Total Average 1.41Market Risk Premium established by using Henry Fund ConsensusRf equal to T-30 year Bond

Bloomberg Beta

Citigroup, IncEquity Discounted Cash Flow (DCF) and Economic Profit (EP) Valuation Models

Key Inputs:

CV Growth 2.50% CV ROE 8.20% Cost of Equity 9.72%Net Income in CV 22,142,954 Dividend Yield 0.40%

Fiscal Years Ending Dec. 31 2015E 2016E 2017E 2018E 2019E 2020E

Period 1 2 3 4 5 6DCF ModelEquity Free Cash Flow (FCFE) Formal

Approach (1,919,578) 6,683,743 5,776,142 6,775,755 8,176,337 8,035,952 CV 213,312,171 Discounted FCFE (1,749,590) 5,552,402 4,373,504 4,676,059 5,142,942 134,174,024

V Equity 152,169,340 Less PV (ESOP) 346,788 Present Values (Equity) 151,822,552 Shares Outstanding end of the year 3,023,918

Intrinsic Value as 01/01/2015 50.21 Target Price as today 53.82

EP ModelBeg TSE (2014) 212,045,000

Fiscal Year endinf Dec. 31 2015E 2016E 2017E 2018E 2019 2020(CV)

Equity EP (5,004,359) (5,917,040) (5,876,127) (6,261,575) (4,915,674) (4,092,344) CV (56,713,133) Discounted EEP (4,561,199) (4,915,477) (4,449,209) (4,321,215) (3,091,975) (35,672,738)

V Equity 155,033,188 Less PV (ESOP) 346,788$ Present Values (Equity) 154,686,400$ Shares Outstanding end of the year 3,023,918

Intrinsic Value as 01/01/2015 51.15Target Price as today 54.84

Citigroup, IncDividend Discount Model (DDM) or Fundamental P/E Valuation Model

`Fiscal Years Ending Dec. 31 2015E 2016E 2017E 2018E 2019E 2020E

Period 1 2 3 4 5 6EPS 5.15$ 5.38$ 5.70$ 5.93$ 6.73$ 7.39$ Dividend per share 1.54$ 1.88$ 1.99$ 2.08$ 2.69$ 2.96$ CV 61.67Discounted Values 1.41 1.88 1.99 2.08 2.69 38.79

DDM Value 48.85 Target Price as today 52.37

Key Assumptions CV Growth 4.92% CV ROE 8.20% Cost of Equity 9.72%

Citigroup, Inc

Relative Valuation Models

Ticker Company Market Cap (B) Price 2015 EPS 2016 EPS P/E 15 P/E 16 P/B 15 P/B 16

P/Tangible

Book Value

15

P/Tangible

Book Value

16

BAC-US Bank of America 167.4 16.0 1.4 1.6 11.1 10.0 0.7 0.7 1.0 0.9

BMO-CA Bank of Montreal (BMO) 60.01 (79.56) 79.6 6.6 7.1 12.0 11.2 1.2 1.2 1.6 1.6

BARC-GB BARCLAYS PLC 66.97 (43.36) 2.6 0.2 0.3 11.2 9.2 0.8 0.7 0.9 0.9

C-US Citi Group 155.0 51.1 5.6 6.0 9.1 8.5 0.7 0.7 0.8 0.8

DBK-DE DEUTSCHE BANK AG- 40.13 (35.36) 25.6 2.3 2.9 11.1 8.9 0.5 0.5 0.6 0.6

GS Goldman Sachs 80.2 185.3 17.7 19.9 10.5 9.3 1.0 1.0 1.1 1.0

JPM-US JPMorgan Chase 228.0 61.6 5.8 6.4 10.6 9.7 1.0 0.9 1.3 1.2

MS-US MORGAN STANLEY 66.4 34.0 3.0 3.4 11.2 9.9 0.9 0.9 1.1 1.0

PNC-US PNC 46.4 90.4 7.3 7.8 12.4 11.7 1.1 1.0 1.4 1.3

STI-US SUNTRUST BANKS INC 31.8 39.5 3.3 3.5 11.8 11.2 0.9 0.9 1.3 1.2

UBSSG-CH UBS 79.67 (77.17) 20.1 1.5 1.7 13.5 12.1 1.4 1.3 1.6 1.6

USB-US U.S. Bancorp 72.3 41.1 3.2 3.5 12.8 11.7 1.8 1.6 2.4 2.1

WFC-US Wells Fargo 270.1 52.6 4.2 4.5 12.6 11.6 1.6 1.5 1.8 1.7

Average 11.5 10.4 1.0 1.0 1.3 1.2

C Citigroup, Inc 154 $52.60 $5.15 $5.38 10.2 9.8 0.70 0.67 0.8 0.8

Implied Value:

Relative P/E (EPS15) $ 59.42

Relative P/E (EPS16) 55.89$

C BV 2015 (per share) 75.42

C BV 2016 (per share) 78.53

Relative P/B 2015 78.91$

Relative P/B 2016 77.92$

C TBV 2015 (per share) 66.39

C TBV 2016 (per share) 69.72

Relative P/TB 2015 86.31$

Relative P/TB 2016 85.28$

Citigroup, IncKey Management Ratios

Fiscal Years Ending Dec. 31 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E

IncomeNet Interest Margin (Net Interest Income / Earning Assets) 2.85% 2.82% 2.87% 2.95% 2.97% 3.00% 3.04% 3.20% 3.31%Net Interest Spread (Interest Income/Avrg Earning Assets - Interest expense/Interest Paying Liabilities) 2.58% 2.64% 2.71% 2.78% 2.84% 2.87% 2.88% 3.04% 3.14%Interest Income/Average Earning Assets 4.02% 3.78% 3.70% 3.78% 3.86% 3.93% 3.99% 4.19% 4.33%Interest Income/Total Assets (Interest Income / Average Total Assets) 3.65% 3.36% 3.31% 3.41% 3.47% 3.54% 3.60% 3.76% 3.89%Interest Expense/Int Pay Liabilities 1.44% 1.14% 0.99% 1.00% 1.03% 1.07% 1.11% 1.14% 1.19%Interest Expense/Total Liabilities 1.23% 0.97% 0.84% 0.84% 0.87% 0.90% 0.94% 0.96% 1.00%Efficiency Ratio (Non-Interest Expense / Net Interest Income + Non-Interest Income) 71.99% 63.32% 71.60% 62.22% 61.72% 61.06% 60.54% 58.55% 57.17%Loan Loss Provision/Loans Outstanding 1.80% 1.29% 1.14% 1.16% 1.19% 1.22% 1.25% 1.28% 1.30%

B/S RatiosLoan to Asset Ratio (Total Loans / Total Assets) 35.15% 35.39% 34.99% 34.58% 34.28% 34.28% 34.67% 35.35% 35.51%Total Equity to Total Assets (Equity / Total Assets) 10.24% 10.96% 11.51% 12.22% 12.38% 12.60% 12.78% 12.99% 13.28%Provision Loan Losses/Total Loans 1.79% 1.28% 1.16% 1.16% 1.18% 1.21% 1.23% 1.25% 1.28%Loan Growth (Loan t / Loan t-1) -1 1.27% 1.53% -3.13% 0.49% 1.55% 2.73% 3.88% 4.65% 3.10%Total Asset Growth (Assets t / Aseets t-1) - 1 -0.49% 0.84% -2.01% 1.66% 2.46% 2.72% 2.71% 2.64% 2.64%Asset turnover (Total operating income / Average Assets) 4.85% 4.94% 4.87% 5.00% 5.06% 5.11% 5.16% 5.31% 5.43%Interest Earning Assets/Total Assets 89.71% 88.17% 90.76% 89.74% 89.75% 90.17% 89.96% 89.75% 89.76%Deposit Growth (Deposits t / Deposits t-1) - 1 7.46% 4.05% -7.12% 3.77% 3.43% 3.16% 3.12% 2.89% 2.77%Deposit Asset Ratio (Total Deposits / Total Assets) 49.91% 51.49% 48.81% 49.82% 50.29% 50.51% 50.71% 50.84% 50.90%Total Liabilities to Equity (Total Liabilities / Total Equity) 876.28% 812.22% 768.93% 718.63% 707.47% 693.73% 682.67% 669.72% 652.94%Total Liabilities to Assets (Total Liabilities / Total Assets) 89.76% 89.04% 88.49% 87.78% 87.62% 87.40% 87.22% 87.01% 86.72%Total Debt to Equity (Total Debt / Total Equity) 744.50% 690.20% 650.06% 605.35% 595.75% 584.04% 574.74% 563.72% 549.34%Total Debt to Assets (Total Debt / Total Assets) 76.26% 75.66% 74.81% 73.95% 73.78% 73.58% 73.43% 73.24% 72.96%

Return MetricsReturn On Average Assets (ROA) (NI / Average Assets) 0.40% 0.72% 0.37% 0.84% 0.86% 0.89% 0.89% 0.99% 1.05%Retun On Average Equity (ROE) (NI / Average Equity) 4.07% 6.79% 3.25% 7.08% 6.99% 7.08% 7.05% 7.65% 8.00%Book Value Per Share (Equity / Number of Shares outstanding) 63.06 68.05 70.12 75.42 78.53 82.34 86.04 90.05 94.73 Tangible Book Value per Share (Tangible equity/Number of Shares outstanding) 52.7 58.1 60.8 66.4 69.7 73.8 77.7 81.9 86.8