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18 EARNINGS SEASON THE SECOND QUARTER REPORT CARD CITI AND GOLDMAN SACHS REPORT SUBSTANTIAL YEAR-OVER-YEAR GROWTH IN Q2 Goldman Sachs reported its highest first-half net revenues in five years at $9.07 billion, according to the firm's Q2 2015 earning statement released in mid-July. Citigroup also experienced significant year- over-year growth in net income with revenue reaching $4.8 billion for the bank, compared to $181 million for the same quarter last year, according to the bank's earnings statement, also released in mid-July. e net income high at Goldman Sachs is mostly credited to the record first-half results in investment banking and investment management. Net revenues for investment banking reached $2.02 billion for Q2, a 13 percent increase from Q2 2014 and 6 percent higher than Q1 2015. Net earnings were $1.05 billion, while diluted earnings per common share were $1.98 for Q2. e bank experienced its highest performance in six years in equities net revenues, which reached $4.32 billion for the first half of 2015. "We are pleased with our performance for the quarter," said Lloyd C. Blankfein, chairman and CEO of Goldman Sachs. "While uncertainty in the EU weighed on investors' level of conviction, many of our businesses continued to benefit from generally improving economic conditions and healthy client activity." e firm recorded $1.45 billion in net provisions for mortgage-related litigation and regulatory matters. ese provisions reduced diluted earnings per common share for of 2015 by $2.77, and reduced annualized ROE for the second quarter of 2015 and the first half of 2015 by 6.7 and 3.4 percentage points, respectively. Goldman also reported net revenues in investing and lending of $1.80 billion for Q2 2015, 13 percent lower than Q2 2014 and 8 percent higher than Q1 2015. e drop in net decline in net revenues compared with Q2 2014 was primarily due to lower net revenues from investments in equities, as a decrease in net gains from private equities was partially offset by an increase in net gains from public equities. e firm also noted it ranked first in worldwide announced and completed mergers and acquisitions for the year to date, and also ranked first in worldwide equity and equity- related offerings and common stock offerings for the year so far. Citigroup's net income of $4.8 billion, or $1.51 per diluted share also consisted of revenues of $19.5 billion, compared to the banks $181 million, or $0.03 per diluted share, on revenues of 19.4 billion Q2 2014 results. e bank also reported a net interest margin of 2.95 percent. e bank's allowance for loan losses was $14.1 billion at the end of Q2, or 2.25 percent of total loans, compared to $17.9 billion, or 2.70 percent of total loans, at the end of the prior year period, Citigroup reported. Excluding the impact of the mortgage settlement, net loan loss reserve releases decreased 35 percent from the prior year period to $453 million. Loans were $632 billion as of quarter end, down 5 percent from the prior year period, and down 1 percent on a constant dollar basis. "Our results for the quarter show very balanced performance across our business lines," said Michael Corbat, CEO of Citigroup. "We grew loans and deposits in constant dollars in Global Consumer Banking, while also gaining wallet share among target clients in our Institutional Clients Group. Citi Holdings remained profitable and we again reduced its assets, having completed the sales of additional consumer businesses. As we increased our capital return, we still continued to grow our regulatory capital, raising our Common Equity Tier 1 Capital ratio to 11.4 percent. rough active expense and balance sheet discipline, we are on track to reach our financial targets for the year." The number of consecutive months of year-over-year declines in foreclosure inventory nationwide, as of April 2015. In April, 1.4 percent of all homes with a mortgage (about 521,000 homes) were in some state of foreclosure, down by 29 percent year- over-year. Source: CoreLogic STAT INSIGHT 42

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