Finance & Investment Club

1. Finance & Investment Club Presented by: Charles Chen Steven Pitchford Gary Chan John Pelissier Woo Young Jung

2. Corporate History • Industry Analysis • Major Products • Government • Charts • Trading Comparables • Conclusion & Questions • Citigroup was incorporated in 1988 • Originated from the City Bank of New York in 1812 • Currently, Citi serves more than 200 million customers in more than 100 countries • Mergers & Acquisitions: • Bank Handlowy (1879) • Smith Barney (1873) • Banamex (1884) • Solomon Brothers (1910) • Travelers Group (1998)

3. Corporate History • Industry Analysis • Major Products • Government • Charts • Trading Comparables • Conclusion & Questions

4. Corporate History • Industry Analysis • Major Products • Government • Charts • Trading Comparables • Conclusion & Questions Growth throughout the 90’s

5. Corporate History • Industry Analysis • Major Products • Government • Charts • Trading Comparables • Conclusion & Questions

6. Corporate History • Industry Analysis • Major Products • Government • Charts • Trading Comparables • Conclusion & Questions • Joint Venture with Morgan Stanley • 1/13/2009 • Citi offers 100% of Smith Barney for a 49% stake in a joint venture and a $2.7 billion cash payment • Morgan Stanley will exchange 100% of Global Wealth Management for a 51% stake in a joint venture • After year 3, Morgan Stanley and Citi will have various purchase and sales rights for the joint venture • Citi is promised a significant stake for at least 5 years • Depending on how strong Citi is in 2014, the landscape of financial services can change drastically

7. Major Products • Industry Analysis • Major Products • Government • Charts • Trading Comparables • Conclusion & Questions • Citi is known as a “one-stop shop”, because it provides every financial service imaginable • Major products: • Consumer Banking • Consumer finance, retail, and commercial banking • Institutional Clients Group (ICG) • S&T, investment banking, corporate and commercial banking • Global Wealth Management (Smith Barney) • Ultra-high net worth, high net worth, etc. • Global Cards • MasterCard, VISA, Diners Club, Private Label, Amex

8. Down-fall of the Giant • Industry Analysis • Major Products • Government • Charts • Trading Comparables • Conclusion & Questions

10. M&A Revenues • Industry Analysis • Major Products • Government • Charts • Trading Comparables • Conclusion & Questions

11. Debt Revenues • Industry Analysis • Major Products • Government • Charts • Trading Comparables • Conclusion & Questions

12. Down-fall of the Giant • Industry Analysis • Major Products • Government • Charts • Trading Comparables • Conclusion & Questions

13. Government issued $45b to Citi in TARP plan in two payments • With TARP funds, Citi’s actions are limited • The loan volume Citi generated so far is less than expected Government • Industry Analysis • Major Products • Government • Charts • Trading Comparables • Conclusion & Questions

14. Stress tests indicated Citi needed $5.5b in additional funds (less than BofA and WFC) • Risk as most insolvent via lowest common capital ratio • Citi not yet ready to repay TARP Government • Industry Analysis • Major Products • Government • Charts • Trading Comparables • Conclusion & Questions

15. TALF – program developed to startup ABS • Citi has created $3b credit card ABS • PPIP – plan to bring in public valuation for stocks – still in planning phase Government • Industry Analysis • Major Products • Government • Charts • Trading Comparables • Conclusion & Questions

16. Charts • Industry Analysis • Major Products • Government • Charts • Trading Comparables • Conclusion & Questions

17. Trading Comparables • Industry Analysis • Major Products • Government • Charts • Trading Comparables • Conclusion & Questions

18. Trading Comparables • Industry Analysis • Major Products • Government • Charts • Trading Comparables • Conclusion & Questions • Negative P/E due to negative EPS • Negative TEV/Sale Due to negative TEV • TEV = Market Cap + Debt – Cash • If Cash is significant, can lead to neg. TEV • Overall, Citigroup has negative comps throughout. • Analysts expect most of the financial companies to rebound in 2010 and receive positive earnings.

19. Conclusion and Questions • Industry Analysis • Major Products • Government • Charts • Trading Comparables • Conclusion & Questions • Value varies over several key points: • How long are you looking to hold (days, months, years) • How well will the economy recover during that holding period (GDP is predicted to contract this year, and slowly recover in 2010) • What are the consequences of the new accounting regulations (toxic assets) • How will the financial services landscape look like once the dust settles (JPM, C, MS, BAC) • How much will share price be diluted after convertibles are exercised

20. Conclusion and Questions • Industry Analysis • Major Products • Government • Charts • Trading Comparables • Conclusion & Questions • At the moment: • All analysts predict that Citi will have negative earnings in 2009, and a majority state that the losses will stay into 2010 • Real GDP is predicted to be (-3.2% in 2009, 0.6% in 2010, 1.5% in 2011) • Profitable financial institutions are being valued at a PE of about 12– 15

21. Conclusion and Questions • Industry Analysis • Major Products • Government • Charts • Trading Comparables • Conclusion & Questions • Short term: hold (Range: $3 – 4) • Government will not let it fail, so there is no real fear that the price will drop too much • Medium term: sell • Citi does not have a good outlook until after 2010 • Even if the sector recovers, Citi will still have to deal with the government • Your money will be better served else where • Long term: buy • Assuming the government will do everything it can to help Citi survive, Citi should become profitable past 2010 • Citi will remain as a global power (smaller than before) • Therefore, it should see a PE of at least 15