and lower private equity marks. The Special Asset Pool revenues
grew versus the prior year period due to lower funding costs as well as
an improvement in asset marks. Total Citi Holdings assets of $171
billion declined $76 billion, or 31%, from the third quarter 2011. Citi
Holdings assets at the end of the third quarter 2012 represented
approximately 9% of total Citigroup assets.
Citigroup's net income declined to $468 million in the third quarter 2012 from $3.8 billion in the prior year period. Excluding the impact of CVA/DVA, the loss on MSSB and the tax benefit in the third quarter 2012, Citigroup net income was $3.3 billion, 27% higher than the third quarter 2011. Operating expenses of $12.2 billion were 2% lower than the prior year period. Citigroup's cost of credit in the third quarter 2012 was $2.7 billion, 20% below the prior year period, reflecting a $0.5 billion improvement in net credit losses and an $87 million increase in net loan loss reserve releases. Citigroup's net credit losses in the third quarter 2012 included approximately $635 million of incremental mortgage charge-offs in Citi Holdings required by new OCC guidance regarding the treatment of mortgage loans where the borrower has gone through Chapter 7 bankruptcy. The vast majority of the charge-offs were related to loans which were current. The incremental $635 million of charge-offs was substantially offset by a related reserve release of approximately $600 million, and thus did not have a significant impact on reported net earnings. Citigroup's provision for income taxes was a benefit of $1.5 billion in the third quarter 2012 (including the $582 million tax benefit), compared to an expense of $1.3 billion in the prior year period.
Citigroup's allowance for loan losses was $25.9 billion at quarter end, or 4.0% of total loans, compared to $32.1 billion, or 5.1%, in the prior year period. The $1.5 billion net release of loan loss reserves in the quarter increased 6% versus the prior year period. Reserve releases in Citicorp of $696 million were 22% lower than the third quarter 2011, predominantly reflecting lower releases in North America GCB partially offset by a net reserve release in Securities and Banking. Reserve releases in Citi Holdings of $813 million were 52% higher than the prior year period, primarily reflecting approximately $600 million of reserve releases in Local Consumer Lending specifically related to the incremental charge-offs resulting from the OCC guidance mentioned above, partially offset by lower loan loss reserve releases in the Special Asset Pool. Citigroup asset quality continued to improve as total non-accrual assets fell 5% to $12.7 billion compared to the third quarter 2011. Corporate non-accrual loans fell 42% to $2.4 billion, while consumer non-accrual loans grew 25% to $9.8 billion, predominantly reflecting the new OCC guidance mentioned above which added $1.5 billion to consumer non-accrual loans. Consumer loans that were 90+ days delinquent, excluding the Special Asset Pool, fell 13% versus the prior year period to $8.0 billion, or 2.0% of consumer loans.
Citigroup's capital levels and book value continued to increase versus the prior year period. At the end of the third quarter 2012, book value per share was $63.59 and tangible book value per share was $52.70, 5% and 6% increases respectively versus the prior year period end. Citigroup's Tier 1 Capital Ratio was 13.9%, its Basel I Tier 1 Common Ratio was 12.7%, and its Basel III Tier 1 Common Ratio was estimated at 8.6%.
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