Citigroup Inc.

Impaired Loans, Non-Accrual Loans and Assets andRenegotiated LoansThe following pages include information on Citi’s impaired loans, nonaccrualloans and assets and renegotiated loans. There is a certain amount ofoverlap between these categories. The following general summary provides abasic description of each category:Impaired loans:• Corporate loans are determined to be impaired when they are placed onnon-accrual status; that is, when it is determined that the payment ofinterest or principal is doubtful.• Consumer impaired loans include: (i) Consumer loans modified introubled debt restructurings (TDRs) where a long-term concession hasbeen granted to a borrower in financial difficulty; and (ii) non-accrualConsumer (commercial market) loans.Non-accrual loans and assets:• Corporate and Consumer (commercial market) non-accrual statusis based on the determination that payment of interest or principal isdoubtful. These loans are also included in impaired loans.• Consumer non-accrual status is based on aging, i.e., the borrower hasfallen behind in payments.• North America branded and retail partner cards are not included in nonaccrualloans and assets as, under industry standards, they accrue interestuntil charge-off.Renegotiated loans:• Includes both Corporate and Consumer loans whose terms have beenmodified in a TDR.• Includes both accrual and non-accrual TDRs.Impaired LoansImpaired loans are those where Citigroup believes it is probable that it willnot collect all amounts due according to the original contractual terms of theloan. Impaired loans include Corporate and Consumer (commercial market)non-accrual loans as well as smaller-balance homogeneous loans whoseterms have been modified due to the borrower’s financial difficulties andCitigroup having granted a concession to the borrower. Such modificationsmay include interest rate reductions and/or principal forgiveness.Valuation allowances for impaired loans are determined in accordancewith ASC 310-10-35 and estimated considering all available evidenceincluding, as appropriate, the present value of the expected future cash flowsdiscounted at the loan’s original effective rate, the secondary market value ofthe loan and the fair value of collateral less disposal costs.Consumer impaired loans exclude smaller-balance homogeneous loansthat have not been modified and are carried on a non-accrual basis, as wellas substantially all loans modified for periods of 12 months or less. As ofDecember 31, 2010, loans included in these short-term programs amountedto approximately $5.7 billion. The allowance for loan losses for these loans ismaterially consistent with the requirements of ASC 310-10-35.The following table presents information about impaired loans:In millions of dollarsDec. 31,2010Dec. 31,2009Non-accrual Corporate loansCommercial and industrial $ 5,125 $ 6,347Loans to financial institutions 1,258 1,794Mortgage and real estate 1,782 4,051Lease financing 45 —Other 400 1,287Total non-accrual corporate loans $ 8,610 $13,479Impaired Consumer loans (1)(2)Mortgage and real estate $17,677 $10,629Installment and other 3,745 3,853Cards 5,906 2,453Total impaired Consumer loans $27,328 $16,935Total (3) $35,938 $30,414Non-accrual Corporate loans withvaluation allowances $ 6,324 $ 8,578Impaired Consumer loans withvaluation allowances 25,949 16,453Non-accrual Corporate valuation allowance $ 1,689 $ 2,480Impaired Consumer valuation allowance 7,735 4,977Total valuation allowances (4) $ 9,424 $ 7,457(1) Prior to 2008, Citi’s financial accounting systems did not separately track impaired smaller-balance,homogeneous Consumer loans whose terms were modified due to the borrowers’ financial difficultiesand it was determined that a concession be granted to the borrower. Smaller-balance Consumer loansmodified since January 1, 2008 amounted to $26.6 billion and $15.9 billion at December 31, 2010 andDecember 31, 2009, respectively. However, information derived from Citi’s risk management systemsindicates that the amounts of outstanding modified loans, including those modified prior to 2008,approximated $28.2 billion and $18.1 billion at December 31, 2010 and December 31, 2009, respectively.(2) Excludes deferred fees/costs.(3) Excludes loans purchased for investment purposes.(4) Included in the Allowance for loan losses.88