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Pamela P. FIaherty Comments for 

the Federal Reserve Public Meeting 

Thursday, June 25,199s 

Thank you. My name is PameIa Flaherty. As John Reed explained, I 

am responsible for Citibank’s community involvement. 

This merger breaks new ground in its combination of insurance and 

banking services. While many of our community partners are excited by the 

opportunities this suggests, some are concerned that this will somehow 

diminish Citibank’s community commitment. Nothing could be further from 

the truth. 

I want to make three points this morning: 

1. Our lending record is good and improved dramatically in 1997, 

particularly in terms of lending to low and moderate income consumers and 

to minorities. 

2. We provide a broad range of products and services and access to 

consumers of all income levels. And, 

3. We intend to do even more in the future, as evidenced by our 

community commitment. 

Let me first address lending. & the eight areas around the countfy 

where we serve the local retail banking market, we have a strong record of 

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lending to all segments of the community. In 1997 in those markets, we 

provided $9 billion of credit to low and moderate income consumers, to 

small businesses and to organizations engaged in community economic 

development. 

We are particularly proud of our commitment to our local 

neighborhoods. Since their emergence thii years ago, we have partnered 

with local community development organizations, combining their 

knowledge of local community needs with our human and financial 

resources. 

Today our program is significantly expanded and Citibank’s 

community development lending supports affordable and speciai needs 

housing, small business and economic 

services, as well as the educational 

development, health and human 

and cultural activities in LMI 

communities. New community development lendingoriginations in 1997 in 

all US Citibank markets totaled $238 million versus $146 million the year 

before - up 63%. Of the 1997 lending, 42% was in metropolitan New York, 

Citiba&‘s largest US marketplace. Here in NY our lending commitments 

have doubled over the last two years to $100 million in 1997. 

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We employ a comprehensive strategy based on building strategic 

partnerships with nonprofit, government and other financial partners to 

respond to the specific needs of local communities. In addition to lending, 

Citibank employs a range of investment tools. In 1997, our Community 

Investment portfolio totaled $67MM, while we made S26MM in grants to 

communi~ and educational programs. 

Citibank haa also long provided the financing that addresses small 

business credit needs. In 1997, nationwide, Citibank lent approximately $1.9 

billion to small businesses, a total of more than 13,000 loans. We are 

especiahy proud that 10,000 of these loans were for less than %lOO,OO~e 

loan size most often needed by small businesses. What’s more, 29% of the 

doIlars lent were in LMI census tracts. In New York we provided $768 

million in credit to small businesses. 35% of our loans were for less than 

$25,000. And 30% of the doIlars lent were in LMI census tracts 

Communities are also stabilized through home ownership. As early as 

1978, Citibank began to reach out to LMI families eager to purchase homes 

through our Stretch Mortgage piloted in Brooklyn - the first 10% downpayment product in New York Until 1991, Citibank was a leader in 

mortgage financing, but the economic downturn in the early 90’s and the 

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coIlapse of the real estate market forced us to restructure and cut back on our 

lending. We regained momentum in 1996 and 1997. 

In 1997, Citibank made 53,000 HMDA-reportable loans for a total of 

$9.5 billion - almost a 50% increase from the prior year. Our lending to 

LMI consumers and communities grew even faster, at $l.ZB - nearly 

doubling. 

During 1997, Citibank also dramatically increased its lending to 

minorities with $1.5 Billion in HMDA-reportable lending. Lending to 

tican-Americans doubled as did lending to Hispanics. 

Let me now turn to access to financial services. Citibank has made a 

deep commitment to the use of technology to increase choice and 

convenience for all customers. We introduced the first ATMS in 1977. 

Since then, we have expanded the use of telephone access as well as PC 

banking. 

Our data on customer usage patterns show that across all income 

levels, customers increasingly perform their financial transactions outside a 

branch - on the phone, through a PC or at an ATM. Customers who live in 

low- and moderate-income census tracts do not differ significantly in their 

usage t?om the rest of our customers. Our data show that these customers 

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perform 76% of their transactions 

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outside a branch (versus 80% for all 

customers) and 25% on the phone or the PC (versus 30% for all customers). 

Because consumers use the branch less frequently, the quality has to 

be uniformly great. Cur branches have been recently upgraded with better 

training for our people, better and more user tiendly technology and longer 

hours. 

Two years ago, in New York we closed a number of branches and 

converted several to Citicard Banking Centers, while renovating and 

upgrading the remaining branches When we started this process, 16% of 

our branches were located in LMI census tracts. Today, 22% of our 

branches are located in LMI tracts. 

And we continue to open different kinds of specialized ?stores” like 

our new manned Electronic Banking Facility on Bumside Avenue in the 

Bronx, a loan store in Harlem, both of which will open this summer, and a 

Retirement store in Oakland, California. 

Electronic Benefits Transfer is another innovation which has opened a 

new opportunity for us to serve low-income people. The most important 

benefit for EBT recipients may well be the ability to participate in the 

mainstream world ofelectronic banking and payments systems. 

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We’re encouraging customers to use technology and alternative access 

points in two ways - pricing and education. In NY, we eliminated fees for 

our ATMs, PC banking, and telephone bilI payment. 

With regard to education, we have multi- lingual hosts to assist mbranch customers and a unit of full-time educators who give seminars on 

banking, credit and technology. Each year we conduct roughly 400 seminars 

onsite, with nonprofits and at schools across New York 

We also support a number of nonprofit organizations dedicated to 

improving education and job skills training through technology in our 

schools i.ncIuding Classroom, Inc.; CitiTech; and Junior Achievement. 

Finally, let me talk about our 10 year % 115 Billion lending and 

investment commitment_ Our Citigroup Commibnent is a national pledge 

that responds to our community partners by focusing on Iending and 

investing, financial literacy and insurance. We will execute the commitment 

by working with our community partners, We will also aggressively market 

these products ourseIves. We seek to increase tbis lending in all our markets, 

being responsive to each of them individually. We will report publicly on 

how we’re doing on annual basis. 

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Citigroup built its pledge through conversations with some 300 

communi~ organizations across the country. They told us thky wanted to 

ensure that we would remain an active partner through community 

development lending and investing; increasing our small business and 

mortgage lending; expanding our work in financial literacy; and offering 

greater access to insurance. 

Our pledge was also designed as a challenge to our business. To meet 

our targets, we must grow the areas our community partners are particularly 

concerned about - mortgages, small business and community development 

lending- at an average annual rate of S-10% over the ten year period, and 

social investing must average over 12% growth per year. We believe this 

pledge is a very aggressive commitment. 

The commitment is more than numbers and growth rates; it includes 

insurance for the first time, as Chuck Prince described. It also addresses 

Financial Literacy, a critical need of consumers of all income levels. 

Let me close by saying that we believe we have done a great job of 

meeting the credit and convenience needs of the communities where we 

accept deposits, as required by CRA. And beyond that, we also believe we 

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have met the test of being an excellent corporate citizen in &l the 

communities where we do business. 

But we intend to do more. We intend to use the resources of the 

combined company to improve the financial lives of all customers as well as 

the communities in which we operate. We will do this primarily through our 

business - offering quality banking services, loans, insurance and 

investments - and participating in the financing of community 

improvements. We wiil also continue to innovate to expand access to 

financial services and information so individuals and families of even 

modest means can improve their economic well being. 

We have listened to our community partners - those organimtions 

with which we work every day in our communities. Many of them are 

speaking at this meeting and we thank them. We intend to continue to listen 

to them and to work with them. 

Thank you for your time this morning. 

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