Thank you, Mr. Chairman. And thanks to all of my fellow shareholders who joined us today. It's a pleasure to be in Dallas. As Chairman Parsons said, we employ nearly 8,000 people in the Dallas area and more than 12,000 in the state of Texas. That makes us one of the largest employers in the state and we are proud of it. We are also proud of our longstanding relationships with small and large businesses in the area.
This is a very meaningful year for Citi—our 200th year. Few institutions—much less companies—ever reach such a milestone. In those two centuries our bank has built an impressive record of achievement. We've helped our clients create some of the world's most transformative projects, from the trans-Atlantic Cable to the Panama Canal. We have a proud record of innovation in our industry, from creating the negotiable certificate of deposit to pioneering the ATM.
And we've steadily built our franchise into America's global bank, the first American bank to expand abroad, and today a bank that is uniquely positioned to connect the world for our clients and our clients to the world.
We're proud of our heritage. We draw inspiration from it. More importantly, we continue on the same path that built Citi over the past 200 years. Our basic strategy—to serve clients and customers' core banking needs—has not changed. It's just been updated and adjusted to reflect these new times.
One way we are commemorating our 200th year is by sponsoring the 2012 U.S. Olympic and Paralympic teams. You've all just seen a video about our Olympic commitment. We are proud to support America's athletes as they compete for the gold and realize their dreams in London this summer, and we will be with them every step of the way
Yesterday, Citi announced first quarter 2012 earnings. We earned $2.9 billion—$3.4 billion excluding credit valuation adjustments and a net gain from minority stakes in international financial institutions. That's up sharply from both the prior quarter and the first quarter of 2011. These earnings follow two full years of profitability. In 2011, we earned $11.1 billion, up from $10.6 billion in 2010.
In the first quarter of this year, excluding credit valuation adjustments, revenues increased in all three of our core businesses in total by 6% while expenses were essentially flat. Importantly, we achieved positive operating leverage in all of those businesses, indicating our investments are beginning to pay off.
We also reduced our legacy assets in Citi Holdings by 7% during the first quarter and those assets now stand at $209 billion, or just 11% of our total assets.
In 2011, throughout Citicorp, we grew our loans across the board, including a 24% increase in corporate loans. And Global Transaction Services (GTS) continued to show positive momentum, with full-year revenues up 5% over 2010. Revenues in international consumer banking grew by 8%, as we opened three million new customer accounts while increasing average loans and deposits.
Here in the U.S., we logged a number of achievements in our consumer bank in 2011. We increased our small business lending to $7.9 billion in 2011, up 72% since 2009. Last summer we launched the Citi Simplicity card, which offers a single rate across all purchases, balance transfers and cash advances, no late fees and no penalty rate. We opened new branches in all of our key markets, including a digitalized smart banking flagship in Washington, D.C.
To keep up with—and stay ahead of—our tech-savvy customers' high expectations, we unveiled critically acclaimed consumer banking apps in the U.S. designed individually for the iPad as well as the Kindle Fire. The apps provide clients with an engaging, visually rich tool to track, analyze and plan their finances. We also launched a new mobile-banking platform and the new Citibank Online website in the U.S. And Citi was the lead bank on the Google Wallet launch, offering the latest smartphone tap-and-pay technology.
On the institutional side, we worked with a number of states, counties and cities to build schools, preserve affordable housing, and restore historic buildings. Here in Texas, since 2010 Citi has provided nearly $200 million in financing for eleven affordable housing apartment communities. We've also worked with some of the companies that are creating jobs and fueling the Texas economy, such as CenterPoint Energy in Houston, Freescale Semiconductor in Austin and Kosmos Energy here in Dallas.
And in New York, our historic headquarters, Citi is the lead underwriter on $2.6 billion of Bonds for the Port Authority of New York and New Jersey dedicated to rebuilding the World Trade Center.
But above all, 2011 was a year of investments. After years of belt-tightening during and after the financial crisis as we regained our footing, it was imperative for our company to make key investments in the long-term health of our businesses. Thus, in keeping with our strategy, we invested $3.9 billion in our franchise. Nearly half of that, $1.9 billion, was self-funded through re-engineering savings.
We made much-needed investments in our technology infrastructure. Our institutional and consumer businesses were burdened with a patchwork of outdated, often overlapping and even redundant technology systems that needed to be replaced. These upgrades are intended to improve the customer experience and make our bank more efficient and nimble. We also invested nearly $1 billion to bring our systems into compliance with regulatory requirements.
Our investments are starting to pay off. For instance, customer satisfaction with the experience in our consumer bank is rising, as measured by net promoter scores. Also, as our first quarter results indicate, revenues increased in our three core businesses.
As I said in my letter to shareholders in this year's annual report, there is no more solemn duty for any bank than to ensure the institution's safety and soundness. Safety and soundness are primarily measured by capital strength and liquidity. On these two fronts, our bank is in excellent shape.
In the first quarter we once again added to our capital base. We ended the quarter with $122 billion of Tier 1 Common capital and an estimated ratio of 12.4% under Basel I, up from 11.8% at the end of the fourth quarter. On a Basel III basis, our Tier 1 Common ratio stood at an estimated 7.2% at the end of the quarter. We still expect to exceed 8% by the end of this year and there are various paths for us to reach that point.
Regarding liquidity, at the end of the first quarter more than one-quarter of our balance sheet was in cash and liquid securities. Even though the Basel III Liquidity Coverage Ratio doesn't come into effect until 2015, we have already exceeded the proposed rule with an estimated LCR ratio in excess of 125%.
As you can see, our capital and liquidity numbers are among the strongest in our industry globally.
That leads me to the recent stress test and the CCAR process. While parts of our 2012 capital plan were approved by the Federal Reserve—for instance, redeeming certain Trust Preferred Securities—one aspect, returning meaningful capital to shareholders, will require a resubmission.
We understand there may be new factors to be taken into account in the re-submission and we need to understand the process going forward to determine how to proceed. We are required to submit our revised plan by mid-June. The Fed then has 75 days to review the plan. That timeframe stretches toward the end of the third quarter.
As we consider our resubmission for this year, we also have to keep in mind that we will be submitting the 2013 capital plan to the Fed a short time later.
We are having conversations with the Fed that will inform the content of our next submission. Our options range from re-submitting what we asked for last time to waiting until the 2013 submission.
We—management and the board—will make a decision which takes all of these factors into account and we will have more to say later in the process.
What I can promise you is that we expect to keep building our capital, we will keep executing our strategy, and we will take every step we can to generate strong returns for you, our shareholders.
Finally, I want to address our share price and the performance of the whole financial sector in 2011, a volatile year marred by uncertainty. A number of events impacted our industry.
First was the devastating earthquake and tsunami more than a year ago in Japan that shocked the entire global economy and all the financial markets. Second was the persistent fear of a double-dip recession. And third was the sovereign debt crisis in Europe that fueled fears of a possible second financial crisis and contagion from the European banks to America and beyond—doubts that still overhang not just the financial sector but the entire world economy. As a result, financial institutions, including Citi, were negatively affected.
One step we took last year, the reverse split, was intended to encourage institutional and other long-only buyers of the stock to invest in our company and also to discourage high-frequency trading that fuels volatility. On both counts, we've made significant progress. Investment in our company by the top 50 institutional investors has risen in every quarter since the split—in nearly all cases at a rate higher than investment in our peers. Volatility and high frequency trading is down, with more and more investors in our company taking the long view.
I think we all can and should take pride in how well our company weathered those three serious storms of 2011. Despite the difficult environment, we earned $11.1 billion. And we did so while serving our clients and customers and helping the real economy.
As you know, this is Dick's last annual meeting. Before I close, I want to thank him for being with us when we needed him the most. I thank him for his support, his wisdom and his strength as he guided us through the crisis. I also want to thank Alain Belda, who served as a Citi board member for 15 years, and Tim Collins for their guidance and service. And of course, I look forward to welcoming Joan Spero and Franz Humer to our board.
In honor of our 200th anniversary, we're showing some terrific ads in key markets across the world. I think they capture the essence of our culture and our history. Before we continue, I'd like to show you one of them.