EXHIBIT 99.1
City National Corporation Grows Second-Quarter 2012 Net Income to $54.8 Million, or $1.01 Per Share, up 15 Percent From Second-Quarter 2011
Period-end loans and deposits grow to record levels
Total assets reach new high of $24.8 billion
LOS ANGELES, July 19, 2012 (GLOBE NEWSWIRE) -- City National Corporation (NYSE:CYN), the parent company of wholly owned City National Bank, today reported second-quarter 2012 net income of $54.8 million, or $1.01 per share, up 15 percent from $47.5 million, or $0.88 per share, in the second quarter of 2011.
Year to date, City National's net income totaled $101.0 million, up 16 percent from $87.2 million in the first half of 2011. Earnings per share were $1.87, up 15 percent from $1.62 in the first half of last year.
City National also announced today that its Board of Directors has maintained and approved a quarterly common stock cash dividend of $0.25 per share. The company's dividend is payable on August 15, 2012 to stockholders of record on August 1, 2012.
SECOND-QUARTER 2012 HIGHLIGHTS
- Average second-quarter loan balances, excluding loans covered by City National's acquisition-related loss‑sharing agreements with the Federal Deposit Insurance Corporation (FDIC), were $13.1 billion, up 14 percent from the second quarter of last year and 6 percent higher than the first quarter of 2012.
- Fully taxable-equivalent net interest income amounted to $221.4 million, up 13 percent from the year-earlier period and up 8 percent from the first quarter of 2012.
- Second-quarter deposit balances averaged $20.9 billion, up 12 percent from the second quarter of 2011 and up 4 percent from the first quarter of 2012. Average core deposits, which equal 97 percent of total balances, were up 13 percent from the second quarter of 2011 and up 4 percent from the first quarter of 2012.
- Excluding FDIC-covered loans, second-quarter 2012 results included a $1 million provision for loan and lease losses. The company recorded no provision, excluding FDIC-covered loans, in the first quarter of 2012.
- On April 30, 2012, City National Bank completed the acquisition of First American Equipment Finance, a privately owned, full-service mid-ticket equipment leasing company with $340 million in assets, which added $306 million to the company's second-quarter period-end loan balances. During the second quarter, the bank also announced the acquisition of Rochdale Investment Management, a New York City-based investment firm that manages $4.9 billion of assets for affluent and high-net-worth clients and their financial advisors across the nation. This transaction closed on July 2, 2012.
- Second-quarter 2012 earnings included income of $5.9 million from the recovery of a previously charged-off loan and $2.8 million of transaction costs related to the acquisitions of Rochdale Investment Management and First American Equipment Finance. Income, net of expense, from FDIC-covered assets, excluding the base yield, totaled $7.3 million in the second quarter, up from $0.9 million in the first quarter of 2012. (The base yield is the yield on covered assets, excluding income related to covered loans that are repaid or charged off.) The aggregate impact of these three items was after-tax income of $6.0 million, or $0.11 per share.
- On June 20, 2012, City National Bank completed a successful offering of $150 million of 10‑year subordinated debt securities with a fixed interest rate of 5.375 percent. The company will use the proceeds for general corporate purposes.
"City National's results for the first half of the year reflect another very solid performance with double-digit growth in income, assets, loans and deposits, as the company continued to add new clients and expand its products, services and technology for all of our clients," said President and CEO Russell Goldsmith. "For the second quarter in a row, loan originations reached a record level. As City National extended its 19 consecutive years of profitability, we also continued to make new investments that will enhance the company's capabilities and contribute to its growth, including two important acquisitions in this quarter: First American Equipment Finance and Rochdale Investment Management. Both Rochdale and First American have national businesses that complement City National's existing businesses. Their talented teams increase our quality assets and interest and noninterest income and provide their considerable capabilities, expertise and experience to enhance both our organization's future and what we can do together for our clients.
"In this quarter, City National also further bolstered the bank's strong capital position with the successful offering of $150 million in subordinated debt, restoring and expanding an element in our capital structure that we've had for many years."
| Dollars in millions, | For the three months ended
June 30, | % | For the three
months ended | % |
| except per share data | 2012 | 2011 | Change | March 31, 2012 | Change |
| Earnings Per Share | $ 1.01 | $ 0.88 | 15 | $ 0.86 | 17 |
| Net Income Attributable to CNC | 54.8 | 47.5 | 15 | 46.3 | 18 |
| | | | | | |
| Average Assets | $ 24,362.5 | $ 22,009.7 | 11 | $ 23,644.9 | 3 |
| Return on Average Assets | 0.90 % | 0.87 % | 3 | 0.79 % | 14 |
| Return on Average Equity | 9.86 % | 9.39 % | 5 | 8.58 % | 15 |
ASSETS
Total assets at June 30, 2012 grew to a record $24.8 billion, up 10 percent from the second quarter of 2011 and 3 percent from the first quarter of this year.
REVENUE
Revenue for the second quarter of 2012 was $291.2 million, up 3 percent from the year-ago period and up 5 percent from the first quarter of 2012. Revenue for the first six months of this year was $567.7 million, up 2 percent from the first half of 2011.
NET INTEREST INCOME
Fully taxable-equivalent net interest income was $221.4 million in the second quarter of 2012, up 13 percent from the second quarter of 2011 and up 8 percent from the first quarter of this year. Fully taxable-equivalent net interest income for the first half of 2012 was $426.8 million, up 12 percent from $380.6 million in the year-ago period.
Average second-quarter deposits were $20.9 billion, up 12 percent from the year-ago period and up 4 percent from the first quarter of 2012. Average deposits for the first half of 2012 totaled $20.6 billion, up 11 percent from the first half of 2011. Period-end deposits grew to a record $21.1 billion, up 10 percent from June 30, 2011 and up 2 percent from March 31, 2012.
Average core deposits were $20.2 billion in the second quarter of 2012, up 13 percent from the same period of 2011 and up 4 percent from the first quarter of this year. First-half 2012 average core deposits grew 13 percent from the year-ago period to $19.9 billion.
Second-quarter 2012 average noninterest-bearing deposits were up 33 percent from the same period of 2011 and up 9 percent from the first quarter of 2012. Average noninterest-bearing balances in the first half of 2012 were up 31 percent from the same period last year.
Treasury Services deposit balances, which consist primarily of title, escrow and property management deposits, averaged $2.1 billion in the second quarter of 2012, up 21 percent from the same period of last year and up 8 percent from the first quarter of 2012. For the first six months of 2012, Treasury Services deposit balances averaged $2.1 billion, up 23 percent from the first half of 2011. The increases were due primarily to the addition of new escrow and property management clients, as well as continued growth in deposit balances by existing clients.
Second-quarter average loan balances, excluding FDIC-covered loans, were $13.1 billion, up 14 percent from the second quarter of 2011 and up 6 percent from the first quarter of this year. Excluding loans acquired from First American Equipment Finance during the quarter, second-quarter average loan balances increased 12 percent from the year-ago period and 4 percent from the first quarter of 2012.
For the first six months of 2012, City National's average loans, excluding FDIC-covered loans, were $12.8 billion, up 12 percent from the year-ago period.
Second-quarter average commercial loans were up 25 percent from the year-ago period and 10 percent higher than the first quarter of 2012, due to organic loan growth and the acquisition of First American. Average balances for commercial real estate mortgages were up 21 percent from the second quarter of 2011, and they increased 6 percent from the first quarter of this year. Average balances for commercial real estate construction loans were down 21 percent from the second quarter of last year, and they declined 1 percent from the first quarter of 2012.
Average balances for single-family residential mortgage loans, nearly all of which are made to City National's private banking and entertainment industry clients, were up 4 percent from the year-ago period and 1 percent higher than the first quarter of 2012.
Average securities for the second quarter of 2012 totaled $7.8 billion, up 25 percent from the second quarter of 2011, as deposit growth outpaced loan growth. Average securities were down 2 percent from the first quarter of this year, reflecting stronger loan growth in the second quarter 2012. The average duration of total securities at June 30, 2012 was 3.0 compared to 2.3 at June 30, 2011 and 3.1 at the end of the first quarter of 2012.
City National's net interest margin in the second quarter of 2012 averaged 3.91 percent, up from 3.74 percent in the first quarter of this year and up from 3.85 percent in the second quarter of 2011. The increases were due primarily to higher interest income related to covered loans that were repaid or charged off in the second quarter of 2012. The higher margin also reflected second-quarter 2012 interest income of $2.3 million from the recovery of a previously charged off loan. For the first six months of 2012, City National's net interest margin averaged 3.83 percent, down slightly from 3.84 percent in the previous year.
Second-quarter net interest income included $27.4 million from FDIC-covered loans that were repaid or charged off during the quarter. This compares with $11.1 million in the second quarter of 2011 and $15.7 million in the first quarter of this year.
At June 30, 2012, City National's prime lending rate was 3.25 percent, unchanged from both June 30, 2011 and March 31, 2012.
| | For the three months ended
June 30, | % | For the three
months ended | % |
| Dollars in millions | 2012 | 2011 | Change | March 31, 2012 | Change |
| | | | | | |
| Average Loans and Leases, excluding Covered Loans | $ 13,125.9 | $ 11,516.0 | 14 | $ 12,432.3 | 6 |
| Average Covered Loans | 1,341.0 | 1,770.4 | (24) | 1,438.7 | (7) |
| Average Total Securities | 7,755.3 | 6,224.3 | 25 | 7,929.3 | (2) |
| Average Earning Assets | 22,769.1 | 20,314.4 | 12 | 22,102.7 | 3 |
| Average Deposits | 20,948.2 | 18,784.4 | 12 | 20,217.4 | 4 |
| Average Core Deposits | 20,215.2 | 17,951.4 | 13 | 19,520.7 | 4 |
| Fully Taxable-Equivalent | | | | | |
| Net Interest Income | 221.4 | 195.1 | 13 | 205.4 | 8 |
| Net Interest Margin | 3.91 % | 3.85 % | 2 | 3.74 % | 5 |
COVERED ASSETS
Loans and other real estate owned (OREO) assets acquired in City National's FDIC‑assisted bank acquisitions totaled $1.3 billion at the end of the second quarter of 2012 compared to $1.8 billion at June 30, 2011 and $1.4 billion at March 31, 2012.
In the second quarter of 2012, the company recorded a $3.9 million non-cash net gain to reflect results of the quarterly update of cash-flow projections for the FDIC-covered loans. The gain reflects a $13.3 million provision for losses on covered loans and an offsetting $17.2 million of noninterest income related to City National's loss-sharing agreements with the FDIC. In addition to the $3.9 million non-cash gain for the quarter, the company recognized $3.4 million of other covered assets income. Income, net of expense, from FDIC-covered assets, excluding the base yield, totaled $7.3 million in the second quarter of 2012, up from $0.9 million in the first quarter of this year. The increase from $0.9 million in the first quarter was due primarily to higher income from loans that were repaid or charged off.
City National will continue to update cash-flow projections for covered loans on a quarterly basis. Due to the uncertainty in the future performance of the covered loans, additional impairments may be recognized in the future.
OREO assets acquired by City National in four FDIC-assisted bank acquisitions and subject to loss-sharing agreements totaled $82.8 million at June 30, 2012, compared to $114.9 million in the second quarter of 2011 and $78.5 million at the end of the first quarter of this year.
NONINTEREST INCOME
Noninterest income was $74.8 million in the second quarter of 2012, down 19 percent from the year-ago quarter and 1 percent lower than the first quarter of 2012. The year-over-year decrease was due largely to lower net gains on both the sale of covered OREO and transfer of covered loans to OREO. Noninterest income for the second quarter of 2011 also included an $8.2 million gain from an FDIC-assisted acquisition.
City National's noninterest income for the first half of 2012 was down 19 percent from the same period of 2011, primarily due to the same factors cited above, as well as lower wealth management fee income in the first half of this year.
In the second quarter of 2012, noninterest income accounted for 26 percent of City National's total revenue compared to 33 percent in the second quarter of 2011 and 27 percent in the first quarter of 2012.
Wealth Management
City National's assets under management totaled $32.1 billion as of June 30, 2012, down 12 percent from the year-earlier period and down 1 percent from the first quarter of 2012.
Trust and investment fees were $34.1 million, down 7 percent from the second quarter of 2011 but up 1 percent from the first quarter of 2012. First-half 2012 trust and investment fee income was down 6 percent from the same period last year.
The year-over-year declines in assets under management and trust and investment fees were due primarily to the third-quarter 2011 divestiture of certain institutional assets by one of the company's investment affiliates.
Money-market mutual fund and brokerage fees totaled $5.3 million, up 9 percent from the year-earlier period and up 5 percent from the first quarter of 2012. Money-market mutual fund and brokerage fee income was $10.3 million in the first six months of this year, down 2 percent from the first half of 2011.
| | At or for the
three months ended
June 30, | % | At or for the
three months
ended | % |
| Dollars in millions | 2012 | 2011 | Change | March 31, 2012 | Change |
| | | | | | |
| Trust and Investment Fee Revenue | $ 34.1 | $ 36.7 | (7) | $ 33.7 | 1 |
| Brokerage and Mutual Fund Fees | 5.3 | 4.9 | 9 | 5.0 | 5 |
| Assets Under Management (1) | 32,105.1 | 36,407.3 | (12) | 32,535.0 | (1) |
| Assets Under Management or Administration (1) | 57,984.4 | 58,502.0 | (1) | 57,837.9 | 0 |
| | | | | | |
| (1) Excludes $18.4 billion, $18.5 billion and $19.5 billion of assets under management for asset managers in which City National held a noncontrolling ownership interest as of June 30, 2012, March 31, 2012 and June 30, 2011, respectively. |
Other Noninterest Income
Second-quarter income from cash management and deposit transaction fees was $11.5 million, up 5 percent from the second quarter of 2011 and 3 percent higher than the first quarter of this year. For the first six months of 2012, cash management and deposit transaction fee income was $22.6 million, virtually unchanged from the first half of 2011.
Fee income from foreign exchange services and letters of credit totaled $10.0 million in the second quarter of 2012, up 11 percent from the second quarter of 2011 and 14 percent higher than the first quarter of this year. First-half 2012 foreign exchange services and letters of credit fee income totaled $18.8 million, up 8 percent from the same period last year. The increases were due primarily to increased client activity and the addition of new clients.
Other income was $17.4 million in the second quarter of 2012, down 25 percent from the year-earlier period but up 28 percent from the first quarter of 2012. Other income in the first half of this year was $30.9 million, down 31 percent from the year-ago period. The declines from the year-ago periods were due primarily to lower gains on the transfer of covered loans to OREO, which was partially offset by an increase in lease income from the First American acquisition.
NONINTEREST EXPENSE
City National's second-quarter 2012 noninterest expense amounted to $194.5 million, down 8 percent from the second quarter of last year and 3 percent from the first quarter of 2012. The year-over-year decline was due largely to lower OREO expenses and FDIC assessments. Legal and professional fees also were down due to the reimbursement of $3.6 million in legal expenses related to the recovery of a previously charged-off loan. This decline was partly offset by $2.8 million of transaction costs related to the acquisition of Rochdale Investment Management and First American Equipment Finance. Noninterest expense for the first six months of 2012 amounted to $395.2 million, down 3 percent from the first half of last year.
Approximately 93 percent of second-quarter 2012 OREO expenses are related to covered assets, and a significant portion of these expenses is reimbursable by the FDIC and reflected in noninterest income.
CREDIT QUALITY
The following credit quality information excludes loans subject to loss-sharing agreements involving City National's FDIC-assisted transactions:
Net recoveries in the second quarter of 2012 totaled $2.7 million, or 0.08 percent of total loans and leases on an annualized basis. The company realized net recoveries of $4.2 million, or 0.15 percent, in the second quarter of 2011 and net recoveries of $4.5 million, or 0.15 percent, in the first quarter of 2012. Net recoveries for the first half of 2012 were $7.2 million, or 0.11 percent of total loans and leases. This compares with net recoveries of $10.7 million, or 0.19 percent, in the first half of last year.
At June 30, 2012, nonperforming assets amounted to $133.3 million, or 0.98 percent of the company's total loans and leases and OREO, compared to $180.4 million, or 1.54 percent, at June 30, 2011 and $141.9 million, or 1.11 percent, at March 31, 2012.
Nonaccrual loans at June 30, 2012 were $98.7 million compared to $132.8 million at June 30, 2011 and $112.8 million at March 31, 2012.
| | As of
June 30, 2012 | As of
March 31, 2012 | As of
June 30, 2011 |
| Period-end Loans (in millions) | Total | Nonaccrual | Total | Nonaccrual | Total | Nonaccrual |
| | | | | | | |
| Commercial | $ 6,087.0 | $ 19.0 | $ 5,573.8 | $ 19.6 | $ 4,800.2 | $ 24.3 |
| Commercial Real Estate Mortgages | 2,424.3 | 28.8 | 2,213.1 | 21.1 | 1,930.3 | 26.7 |
| Residential Mortgages | 3,822.6 | 14.1 | 3,805.8 | 13.6 | 3,710.8 | 14.2 |
| Real Estate Construction | 301.8 | 29.7 | 313.4 | 49.0 | 355.0 | 60.5 |
| Equity Lines of Credit | 741.3 | 6.5 | 716.0 | 8.8 | 735.9 | 6.7 |
| Other Loans | 130.2 | 0.6 | 125.8 | 0.7 | 130.9 | 0.4 |
| Total Loans (1) | $ 13,507.2 | $ 98.7 | $ 12,747.9 | $ 112.8 | $ 11,663.1 | $ 132.8 |
| | | | | | | |
| Other Real Estate Owned (1) | | 34.6 | | 29.1 | | 47.6 |
| Total Nonperforming Assets, excluding | | | | | |
| Covered Assets | | $ 133.3 | | $ 141.9 | | $ 180.4 |
| | | | | | | |
| (1) Excludes covered loans, net of allowance, of $1.2 billion, $1.3 billion and $1.7 billion at June 30, 2012, March 31, 2012 and June 30, 2011, respectively, and covered other real estate owned of $82.8 million, $78.5 million and $114.9 million at June 30, 2012, March 31, 2012 and June 30, 2011, respectively. |
City National recorded a $1 million provision for credit losses in the second quarter of 2012 and no provision in the first quarter of this year. The company recorded no provisions in the first two quarters of 2011.
At June 30, 2012, City National's allowance for loan and lease losses totaled $269.5 million, or 2.00 percent of total loans and leases. That compares to $265.9 million, or 2.28 percent, at June 30, 2011 and $266.1 million, or 2.09 percent, at the end of the first quarter of 2012. The percentage decline is due to growth in the company's loan portfolio and stable credit quality. The company also maintains an additional $24.4 million in reserves for off-balance-sheet credit commitments.
Commercial Loans
Commercial loan net recoveries were $8.1 million in the second quarter of 2012. This compares to net recoveries of $2.6 million in the year-earlier period and $5.3 million in the first quarter of 2012. Net recoveries in the first half of 2012 amounted to $13.4 million, compared to net recoveries of $0.7 million in the first half of last year.
Commercial loans on nonaccrual totaled $19.1 million in the second quarter of 2012 compared to $24.3 million at June 30, 2011 and $19.6 million at March 31, 2012.
Construction Loans
City National's $301.8 million commercial real estate construction portfolio includes secured loans to developers of residential and nonresidential properties. This portfolio now represents just over 2 percent of the company's total loans.
Second-quarter net charge-offs of construction loans were $4.8 million compared to net recoveries of $0.6 million in the second quarter of 2011 and $0.1 million in the first quarter of 2012. Net charge-offs amounted to $4.7 million in the first half of 2011, compared with net recoveries of $4.4 million in the first half of last year.
At June 30, 2012, construction loans on nonaccrual totaled $29.7 million compared to $60.5 million at June 30, 2011 and $49.0 million at March 31, 2012.
Commercial Real Estate Mortgage Loans
Second-quarter net recoveries in the company's $2.4 billion commercial real estate mortgage portfolio were $1.1 million compared to net recoveries of $1.3 million in the second quarter of 2011 and net charge-offs of $0.7 million in the first quarter of 2012. Net recoveries amounted to $0.4 million in the first-half of 2012, compared with net recoveries of $7.5 million in the first half of last year.
Commercial real estate mortgage loans on nonaccrual totaled $28.8 million compared to $26.7 million at June 30, 2011 and $21.1 million at March 31, 2012.
Residential Mortgage Loans and Equity Lines of Credit
City National's $3.8 billion residential mortgage portfolio and $741.3 million home-equity portfolio continued to perform exceptionally well. Together, they accounted for $1.4 million in net charge-offs in the second quarter of 2012 compared to net charge-offs of $0.4 million at June 30, 2011 and $0.6 million at March 31, 2012. Net charge-offs amounted to $2.0 million in the first half of 2012, compared with net charge-offs of $1.7 million in the same period of last year.
Residential mortgage loans and lines of credit on nonaccrual were $20.6 million in the second quarter of 2012 compared to $20.9 million in the second quarter of 2011 and $22.5 million in the first quarter of 2012.
INCOME TAXES
City National's effective tax rate for the second quarter of 2012 was 33.1 percent, up from 29.8 percent in the year-earlier period and 31.8 percent in the first quarter of 2012. For the first half of 2012, City National's effective tax rate was 32.5 percent, compared to 30.1 percent in the prior-year period.
CAPITAL LEVELS
City National remains well-capitalized, ending the second quarter of 2012 with a Tier 1 common shareholders' equity ratio of 9.6 percent compared to 10.5 percent at June 30, 2011 and 10.2 percent at March 31, 2012.1
Total risk-based capital and Tier 1 risk-based capital ratios at June 30, 2012 were 12.9 percent and 9.6 percent, respectively. City National's Tier 1 leverage ratio at June 30, 2012 was 6.7 percent. All of City National's capital ratios are above minimum regulatory standards for "well-capitalized" institutions.
Total risk-based capital, Tier 1 risk-based capital and Tier 1 leverage ratios at March 31, 2012 were 12.7 percent, 10.2 percent and 7.0 percent, respectively.
The period-end ratio of equity to total assets at June 30, 2012 was 9.1 percent compared to 9.3 percent at June 30, 2011 and 9.2 percent at March 31, 2012.
2012 OUTLOOK
City National's management continues to anticipate net income growth throughout 2012, as loans and deposits continue to increase and credit quality remains stable. This outlook reflects management's expectations for modest economic growth and low interest rates for the remainder of the year. Management also anticipates modest loan-loss provisions, driven primarily by loan growth.
CONFERENCE CALL
City National Corporation will host a conference call this afternoon (July 19) to discuss second-quarter 2012 financial results. The call will begin at 2:00 p.m. PDT. Analysts and investors may dial in and participate in the question/answer session. To access the call, please dial (866) 393-6804 and enter Conference ID 87526710. A listen-only live broadcast of the call also will be available on the investor relations page of the company's Website at cnb.com. There, it will be archived and available for 12 months.
ABOUT CITY NATIONAL
City National Corporation's wholly owned subsidiary, City National Bank, provides banking, investment and trust services through 78 offices, including 16 full-service regional centers, in Southern California, the San Francisco Bay Area, Nevada, New York City, Nashville and Atlanta. The corporation and its investment affiliates manage or administer $58.0 billion in client investment assets, including $32.1 billion under direct management.
For more information about City National, visit the company's Website at cnb.com.
The City National Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3142
SAFE-HARBOR LANGUAGE
This news release contains forward-looking statements about the company, for which the company claims the protection of the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995.
A number of factors, many of which are beyond the company's ability to control or predict, could cause future results to differ materially from those contemplated by such forward-looking statements. These factors include (1) changes in general economic, political, or industry conditions and the related credit and market conditions and the impact they have on the company and its customers, (2) the impact on financial markets and the economy of the level of U.S. and European debt, (3) changes in the pace of economic recovery and related changes in employment levels, (4) the effect of the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the new rules and regulations to be promulgated by supervisory and oversight agencies implementing the new legislation, taking into account that the precise timing, extent and nature of such rules and regulations and the impact on the company is uncertain, (5) significant changes in applicable laws and regulations, including those concerning taxes, banking and securities, (6) volatility in the municipal bond market, (7) changes in the level of nonperforming assets, charge-offs, other real estate owned and provision expense, (8) incorrect assumptions in the value of the loans acquired in FDIC-assisted acquisitions resulting in greater than anticipated losses in the acquired loan portfolios exceeding the losses covered by the loss-sharing agreements with the FDIC, (9) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board, (10) changes in inflation, interest rates, and market liquidity which may impact interest margins and impact funding sources, (11) adequacy of the company's enterprise risk management framework, (12) the company's ability to increase market share and control expenses, (13) the company's ability to attract new employees and retain and motivate existing employees, (14) increased competition in the company's markets, (15) changes in the financial performance and/or condition of the company's borrowers, including adverse impact on loan utilization rates, delinquencies, defaults and customers' ability to meet certain credit obligations, changes in customers' suppliers, and other counterparties' performance and creditworthiness, (16) a substantial and permanent loss of either client accounts and/or assets under management at the company's investment advisory affiliates or its wealth management division, (17) changes in consumer spending, borrowing and savings habits, (18) soundness of other financial institutions which could adversely affect the company, (19) protracted labor disputes in the company's markets, (20) earthquake, fire or other natural disasters affecting the condition of real estate collateral, (21) the effect of acquisitions and integration of acquired businesses and de novo branching efforts, (22) the impact of changes in regulatory, judicial or legislative tax treatment of business transactions, (23) changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies, (24) security breaches and disruptions to the company's information systems, and (25) the success of the company at managing the risks involved in the foregoing.
Forward-looking statements speak only as of the date they are made, and the company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the statements are made, or to update earnings guidance, including the factors that influence earnings.
For a more complete discussion of these risks and uncertainties, see the company's Annual Report on Form 10-K for the year ended December 31, 2011 and particularly, Item 1A, titled "Risk Factors."
1For notes on non-GAAP measures, see page 15 of the Selected Financial Information.
| CITY NATIONAL CORPORATION | | | | | | |
| FINANCIAL HIGHLIGHTS | | | | | | |
| (unaudited) | | | | | | |
| | | | | | | |
| | Three Months | Six Months |
| For The Period Ended June 30, | 2012 | 2011 | % Change | 2012 | 2011 | % Change |
| Per Share | | | | | | |
| Net income attributable to City National Corporation | | | | | | |
| Basic | $ 1.02 | $ 0.89 | 15 | $ 1.88 | $ 1.64 | 15 |
| Diluted | 1.01 | 0.88 | 15 | 1.87 | 1.62 | 15 |
| Dividends | 0.25 | 0.20 | 25 | 0.50 | 0.40 | 25 |
| Book value | 42.70 | 39.24 | 9 |
| | | | | | | |
| Results of Operations: (In millions) | | | | | | |
| Interest income | $ 230 | $ 210 | 9 | $ 443 | $ 411 | 8 |
| Interest expense | 14 | 19 | (31) | 26 | 39 | (32) |
| Net interest income | 216 | 191 | 13 | 417 | 372 | 12 |
| | | | | | | |
| Net interest income (Fully taxable-equivalent) | 221 | 195 | 13 | 427 | 381 | 12 |
| Total revenue | 291 | 283 | 3 | 568 | 558 | 2 |
| Provision for credit losses on loans and leases, excluding covered loans | 1 | -- | NM | 1 | -- | NM |
| Provision for losses on covered loans | 13 | 2 | 675 | 21 | 21 | (0) |
| Net income attributable to City National Corporation | 55 | 47 | 15 | 101 | 87 | 16 |
| | | | | | | |
| Financial Ratios: | | | | | | |
| Performance Ratios: | | | | | | |
| Return on average assets | 0.90 % | 0.87 % | | 0.85 % | 0.81 % | |
| Return on average shareholders' equity | 9.86 | 9.39 | | 9.23 | 8.79 | |
| Period-end equity to period-end assets | 9.09 | 9.25 | |
| Net interest margin | 3.91 | 3.85 | | 3.83 | 3.84 | |
| Expense to revenue ratio | 63.28 | 66.24 | | 65.23 | 65.93 | |
| Capital Adequacy Ratios (Period-end): | | | | | | |
| Tier 1 leverage | 6.74 | 7.09 | |
| Tier 1 risk-based capital | 9.58 | 10.66 | |
| Total risk-based capital | 12.91 | 13.34 | |
| | | | | | | |
| Asset Quality Ratios: | | | | | | |
| Allowance for loan and lease losses to: | | | | | | |
| Total loans and leases, excluding covered loans | 2.00 % | 2.28 % | |
| Nonaccrual loans | 273.21 | 200.25 | |
| Nonperforming assets, excluding covered assets, to: | | | | | | |
| Total loans and leases and other real estate owned, excluding covered assets | 0.98 | 1.54 | |
| Total assets | 0.54 | 0.80 | |
| Net recoveries to average total loans and leases, excluding covered loans (annualized) | 0.08 % | 0.15 % | | 0.11 % | 0.19 % | |
| | | | | | | |
| Average Balances: (In millions) | | | | | | |
| Loans and leases, excluding covered loans | $ 13,126 | $ 11,516 | 14 | $ 12,779 | $ 11,387 | 12 |
| Covered loans | 1,341 | 1,770 | (24) | 1,390 | 1,790 | (22) |
| Securities | 7,755 | 6,224 | 25 | 7,842 | 5,960 | 32 |
| Interest-earning assets | 22,769 | 20,314 | 12 | 22,436 | 19,970 | 12 |
| Assets | 24,363 | 22,010 | 11 | 24,004 | 21,696 | 11 |
| Core deposits | 20,215 | 17,951 | 13 | 19,868 | 17,658 | 13 |
| Deposits | 20,948 | 18,785 | 12 | 20,583 | 18,486 | 11 |
| Interest-bearing liabilities | 9,868 | 10,723 | (8) | 9,999 | 10,629 | (6) |
| Shareholders' equity | 2,234 | 2,028 | 10 | 2,202 | 2,001 | 10 |
| Total equity | 2,234 | 2,053 | 9 | 2,202 | 2,026 | 9 |
| | | | | | | |
| Period-End Balances: (In millions) | | | | | | |
| Loans and leases, excluding covered loans | $ 13,507 | $ 11,663 | 16 |
| Covered loans | 1,260 | 1,725 | (27) |
| Securities | 8,029 | 6,474 | 24 |
| Assets | 24,802 | 22,526 | 10 |
| Core deposits | 20,342 | 18,439 | 10 |
| Deposits | 21,109 | 19,265 | 10 |
| Shareholders' equity | 2,255 | 2,059 | 10 |
| Total equity | 2,255 | 2,084 | 8 |
| | | | | | | |
| Wealth Management: (In millions) (1) | | | | | | |
| Assets under management | $ 32,105 | $ 36,407 | (12) |
| Assets under management or administration | 57,984 | 58,502 | (1) |
| | | | | | | |
| (1) Excludes $18.4 billion and $19.5 billion of assets under management for asset managers in which City National held a noncontrolling ownership interest as of June 30, 2012 and June 30, 2011, respectively. | | | | | | |
| | | | | | | |
| CITY NATIONAL CORPORATION | | | | | | |
| CONSOLIDATED STATEMENTS OF INCOME | | | | | | |
| (unaudited) | | | | | | |
| | | | | | | |
| (Dollars in thousands | Three Months Ended
June 30, | Six Months Ended
June 30, |
| except per share data) | 2012 | 2011 | % Change | 2012 | 2011 | % Change |
| Interest income | $ 229,889 | $ 210,136 | 9 | $ 443,481 | $ 410,946 | 8 |
| Interest expense | 13,410 | 19,309 | (31) | 26,289 | 38,829 | (32) |
| Net interest income | 216,479 | 190,827 | 13 | 417,192 | 372,117 | 12 |
| | | | | | | |
| Provision for credit losses on loans and leases, excluding covered loans | 1,000 | -- | NM | 1,000 | -- | NM |
| Provision for losses on covered loans | 13,293 | 1,716 | 675 | 20,759 | 20,832 | (0) |
| | | | | | | |
| Noninterest income | | | | | | |
| Trust and investment fees | 34,067 | 36,687 | (7) | 67,721 | 72,325 | (6) |
| Brokerage and mutual fund fees | 5,293 | 4,864 | 9 | 10,321 | 10,525 | (2) |
| Cash management and deposit transaction fees | 11,475 | 10,905 | 5 | 22,643 | 22,630 | 0 |
| International services | 10,017 | 9,015 | 11 | 18,802 | 17,331 | 8 |
| FDIC loss sharing expense, net | (6,026) | (10,684) | (44) | (5,160) | (2,079) | 148 |
| Gain on disposal of assets | 3,011 | 8,422 | (64) | 5,202 | 10,846 | (52) |
| (Loss) gain on securities | (457) | 1,395 | (133) | (8) | 1,361 | (101) |
| Gain on acquisition | -- | 8,164 | (100) | -- | 8,164 | (100) |
| Other | 17,388 | 23,169 | (25) | 30,947 | 44,727 | (31) |
| Total noninterest income | 74,768 | 91,937 | (19) | 150,468 | 185,830 | (19) |
| | | | | | | |
| Noninterest expense | | | | | | |
| Salaries and employee benefits | 115,035 | 112,139 | 3 | 235,280 | 223,151 | 5 |
| Net occupancy of premises | 14,056 | 13,665 | 3 | 27,742 | 27,011 | 3 |
| Legal and professional fees | 11,359 | 14,790 | (23) | 23,239 | 24,867 | (7) |
| Information services | 8,539 | 8,335 | 2 | 16,688 | 15,832 | 5 |
| Depreciation and amortization | 8,013 | 6,904 | 16 | 15,441 | 13,652 | 13 |
| Amortization of intangibles | 1,518 | 2,104 | (28) | 3,404 | 4,272 | (20) |
| Marketing and advertising | 7,597 | 7,626 | (0) | 14,413 | 14,144 | 2 |
| Office services and equipment | 4,492 | 4,672 | (4) | 8,440 | 9,278 | (9) |
| Other real estate owned | 7,541 | 22,162 | (66) | 19,635 | 36,651 | (46) |
| FDIC assessments | 4,523 | 8,524 | (47) | 9,002 | 18,330 | (51) |
| Other | 11,843 | 10,911 | 9 | 21,952 | 22,041 | (0) |
| Total noninterest expense | 194,516 | 211,832 | (8) | 395,236 | 409,229 | (3) |
| | | | | | | |
| Income before taxes | 82,438 | 69,216 | 19 | 150,665 | 127,886 | 18 |
| | | | | | | |
| Applicable income taxes | 27,271 | 20,650 | 32 | 48,990 | 38,536 | 27 |
| | | | | | | |
| Net income | $ 55,167 | $ 48,566 | 14 | $ 101,675 | $ 89,350 | 14 |
| | | | | | | |
| Less: Net income attributable to noncontrolling interest | 409 | 1,095 | (63) | 652 | 2,187 | (70) |
| | | | | | | |
| Net income attributable to City National Corporation | $ 54,758 | $ 47,471 | 15 | $ 101,023 | $ 87,163 | 16 |
| | | | | | | |
| Other Data: | | | | | | |
| Earnings per share - basic | $ 1.02 | $ 0.89 | 15 | $ 1.88 | $ 1.64 | 15 |
| Earnings per share - diluted | $ 1.01 | $ 0.88 | 15 | $ 1.87 | $ 1.62 | 15 |
| Dividends paid per share | $ 0.25 | $ 0.20 | 25 | $ 0.50 | $ 0.40 | 25 |
| Dividend payout ratio | 24.57 % | 22.40 % | 10 | 26.56 % | 24.34 % | 9 |
| Return on average assets | 0.90 % | 0.87 % | 3 | 0.85 % | 0.81 % | 5 |
| Return on average shareholders' equity | 9.86 % | 9.39 % | 5 | 9.23 % | 8.79 % | 5 |
| Net interest margin (Fully taxable-equivalent) | 3.91 % | 3.85 % | 2 | 3.83 % | 3.84 % | (0) |
| Full-time equivalent employees | 3,330 | 3,328 | 0 | | | |
| | | | |
| CITY NATIONAL CORPORATION | | | |
| CONSOLIDATED QUARTERLY STATEMENTS OF INCOME | | | |
| (unaudited) | | | |
| | | | |
| | 2012 |
| (Dollars in thousands | Second | First | Year to |
| except per share data) | Quarter | Quarter | Date |
| Interest income | $ 229,889 | $ 213,592 | $ 443,481 |
| Interest expense | 13,410 | 12,879 | 26,289 |
| Net interest income | 216,479 | 200,713 | 417,192 |
| | | | |
| Provision for credit losses on loans and leases, excluding covered loans | 1,000 | -- | 1,000 |
| Provision for losses on covered loans | 13,293 | 7,466 | 20,759 |
| | | | |
| Noninterest income | | | |
| Trust and investment fees | 34,067 | 33,654 | 67,721 |
| Brokerage and mutual fund fees | 5,293 | 5,028 | 10,321 |
| Cash management and deposit transaction fees | 11,475 | 11,168 | 22,643 |
| International services | 10,017 | 8,785 | 18,802 |
| FDIC loss sharing (expense) income, net | (6,026) | 866 | (5,160) |
| Gain on disposal of assets | 3,011 | 2,191 | 5,202 |
| (Loss) gain on securities | (457) | 449 | (8) |
| Other | 17,388 | 13,559 | 30,947 |
| Total noninterest income | 74,768 | 75,700 | 150,468 |
| | | | |
| Noninterest expense | | | |
| Salaries and employee benefits | 115,035 | 120,245 | 235,280 |
| Net occupancy of premises | 14,056 | 13,686 | 27,742 |
| Legal and professional fees | 11,359 | 11,880 | 23,239 |
| Information services | 8,539 | 8,149 | 16,688 |
| Depreciation and amortization | 8,013 | 7,428 | 15,441 |
| Amortization of intangibles | 1,518 | 1,886 | 3,404 |
| Marketing and advertising | 7,597 | 6,816 | 14,413 |
| Office services and equipment | 4,492 | 3,948 | 8,440 |
| Other real estate owned | 7,541 | 12,094 | 19,635 |
| FDIC assessments | 4,523 | 4,479 | 9,002 |
| Other | 11,843 | 10,109 | 21,952 |
| Total noninterest expense | 194,516 | 200,720 | 395,236 |
| | | | |
| Income before taxes | 82,438 | 68,227 | 150,665 |
| | | | |
| Applicable income taxes | 27,271 | 21,719 | 48,990 |
| | | | |
| Net income | $ 55,167 | $ 46,508 | $ 101,675 |
| | | | |
| Less: Net income attributable to noncontrolling interest | 409 | 243 | 652 |
| | | | |
| Net income attributable to City National Corporation | $ 54,758 | $ 46,265 | $ 101,023 |
| | | | |
| Other Data: | | | |
| Earnings per share - basic | $ 1.02 | $ 0.86 | $ 1.88 |
| Earnings per share - diluted | $ 1.01 | $ 0.86 | $ 1.87 |
| Dividends paid per share | $ 0.25 | $ 0.25 | $ 0.50 |
| Dividend payout ratio | 24.57 % | 28.91 % | 26.56 % |
| Return on average assets | 0.90 % | 0.79 % | 0.85 % |
| Return on average shareholders' equity | 9.86 % | 8.58 % | 9.23 % |
| Net interest margin (Fully taxable-equivalent) | 3.91 % | 3.74 % | 3.83 % |
| Full-time equivalent employees | 3,330 | 3,235 | |
| | | | | | |
| CITY NATIONAL CORPORATION | | | | | |
| CONSOLIDATED QUARTERLY STATEMENTS OF INCOME | | | | | |
| (unaudited) | | | | | |
| | | | | | |
| | 2011 |
| (Dollars in thousands | Fourth | Third | Second | First | Year to |
| except per share data) | Quarter | Quarter | Quarter | Quarter | Date |
| Interest income | $ 215,252 | $ 216,892 | $ 210,136 | $ 200,810 | $ 843,090 |
| Interest expense | 13,695 | 17,576 | 19,309 | 19,520 | 70,100 |
| Net interest income | 201,557 | 199,316 | 190,827 | 181,290 | 772,990 |
| | | | | | |
| Provision for credit losses on loans and leases, excluding covered loans | 5,000 | 7,500 | -- | -- | 12,500 |
| Provision for losses on covered loans | 17,667 | 5,147 | 1,716 | 19,116 | 43,646 |
| | | | | | |
| Noninterest income | | | | | |
| Trust and investment fees | 32,995 | 35,412 | 36,687 | 35,638 | 140,732 |
| Brokerage and mutual fund fees | 4,836 | 5,079 | 4,864 | 5,661 | 20,440 |
| Cash management and deposit transaction fees | 10,689 | 10,986 | 10,905 | 11,725 | 44,305 |
| International services | 8,783 | 10,352 | 9,015 | 8,316 | 36,466 |
| FDIC loss sharing income (expense), net | 7,633 | (14,191) | (10,684) | 8,605 | (8,637) |
| Gain on disposal of assets | 4,263 | 5,191 | 8,422 | 2,424 | 20,300 |
| (Loss) gain on securities | (273) | 3,327 | 1,395 | (34) | 4,415 |
| Gain on acquisition | -- | -- | 8,164 | -- | 8,164 |
| Other | 17,476 | 13,479 | 23,169 | 21,558 | 75,682 |
| Total noninterest income | 86,402 | 69,635 | 91,937 | 93,893 | 341,867 |
| | | | | | |
| Noninterest expense | | | | | |
| Salaries and employee benefits | 112,822 | 112,729 | 112,139 | 111,012 | 448,702 |
| Net occupancy of premises | 13,616 | 13,713 | 13,665 | 13,346 | 54,340 |
| Legal and professional fees | 10,846 | 14,242 | 14,790 | 10,077 | 49,955 |
| Information services | 8,359 | 7,906 | 8,335 | 7,497 | 32,097 |
| Depreciation and amortization | 7,014 | 6,930 | 6,904 | 6,748 | 27,596 |
| Amortization of intangibles | 1,350 | 2,105 | 2,104 | 2,168 | 7,727 |
| Marketing and advertising | 8,101 | 6,675 | 7,626 | 6,518 | 28,920 |
| Office services and equipment | 4,234 | 4,456 | 4,672 | 4,606 | 17,968 |
| Other real estate owned | 15,233 | 13,160 | 22,162 | 14,489 | 65,044 |
| FDIC assessments | 4,480 | 6,670 | 8,524 | 9,806 | 29,480 |
| Other | 12,174 | 9,051 | 10,911 | 11,130 | 43,266 |
| Total noninterest expense | 198,229 | 197,637 | 211,832 | 197,397 | 805,095 |
| | | | | | |
| Income before taxes | 67,063 | 58,667 | 69,216 | 58,670 | 253,616 |
| | | | | | |
| Applicable income taxes | 22,758 | 16,267 | 20,650 | 17,886 | 77,561 |
| | | | | | |
| Net income | $ 44,305 | $ 42,400 | $ 48,566 | $ 40,784 | $ 176,055 |
| | | | | | |
| Less: Net income attributable to noncontrolling interest | 445 | 1,002 | 1,095 | 1,092 | 3,634 |
| | | | | | |
| Net income attributable to City National Corporation | $ 43,860 | $ 41,398 | $ 47,471 | $ 39,692 | $ 172,421 |
| | | | | | |
| Other Data: | | | | | |
| Earnings per share - basic | $ 0.82 | $ 0.78 | $ 0.89 | $ 0.75 | $ 3.24 |
| Earnings per share - diluted | $ 0.82 | $ 0.77 | $ 0.88 | $ 0.74 | $ 3.21 |
| Dividends paid per share | $ 0.20 | $ 0.20 | $ 0.20 | $ 0.20 | $ 0.80 |
| Dividend payout ratio | 24.25 % | 25.70 % | 22.40 % | 26.65 % | 24.64 % |
| Return on average assets | 0.73 % | 0.71 % | 0.87 % | 0.75 % | 0.77 % |
| Return on average shareholders' equity | 8.15 % | 7.85 % | 9.39 % | 8.16 % | 8.38 % |
| Net interest margin (Fully taxable-equivalent) | 3.70 % | 3.79 % | 3.85 % | 3.84 % | 3.79 % |
| Full-time equivalent employees | 3,256 | 3,287 | 3,328 | 3,258 | |
| | | |
| CITY NATIONAL CORPORATION | | |
| CONSOLIDATED PERIOD END BALANCE SHEET | | |
| (unaudited) | | |
| | | |
| | 2012 |
| (In thousands) | Second
Quarter | First
Quarter |
| Assets | | |
| Cash and due from banks | $ 162,894 | $ 210,799 |
| Due from banks - interest-bearing | 106,109 | 101,375 |
| Federal funds sold | 162,000 | 156,000 |
| Securities available-for-sale | 6,865,881 | 6,838,710 |
| Securities held-to-maturity | 1,100,229 | 996,613 |
| Trading securities | 62,585 | 82,589 |
| Loans and leases: | | |
| Commercial | 6,086,947 | 5,573,782 |
| Commercial real estate mortgages | 2,424,333 | 2,213,114 |
| Residential mortgages | 3,822,630 | 3,805,807 |
| Real estate construction | 301,829 | 313,409 |
| Equity lines of credit | 741,270 | 715,997 |
| Installment | 130,200 | 125,793 |
| Loans and leases, excluding covered loans | 13,507,209 | 12,747,902 |
| Allowance for loan and lease losses | (269,534) | (266,077) |
| Loans and leases, excluding covered loans, net | 13,237,675 | 12,481,825 |
| Covered loans, net (1) | 1,216,988 | 1,335,685 |
| Net loans and leases | 14,454,663 | 13,817,510 |
| Premises and equipment, net | 147,245 | 143,238 |
| Goodwill and other intangibles | 589,114 | 521,717 |
| Other real estate owned (2) | 117,501 | 107,530 |
| FDIC indemnification asset | 170,654 | 185,392 |
| Other assets | 863,098 | 877,016 |
| Total assets | $ 24,801,973 | $ 24,038,489 |
| | | |
| Liabilities | | |
| Deposits: | | |
| Noninterest-bearing | $ 12,187,075 | $ 11,550,000 |
| Interest-bearing | 8,921,977 | 9,237,737 |
| Total deposits | 21,109,052 | 20,787,737 |
| Short-term borrowings | 322,077 | 222,776 |
| Long-term debt | 712,280 | 482,024 |
| Other liabilities | 361,300 | 302,951 |
| Total liabilities | 22,504,709 | 21,795,488 |
| | | |
| Redeemable noncontrolling interest | 41,899 | 43,436 |
| | | |
| Shareholders' equity | | |
| Common stock | 53,886 | 53,886 |
| Additional paid-in capital | 491,439 | 489,717 |
| Accumulated other comprehensive income | 82,807 | 81,342 |
| Retained earnings | 1,686,163 | 1,644,861 |
| Treasury shares | (58,930) | (70,241) |
| Total shareholders' equity | 2,255,365 | 2,199,565 |
| Total liabilities and shareholders' equity | $ 24,801,973 | $ 24,038,489 |
| | | |
| (1) Covered loans are net of $43.1 million and $61.5 million of allowance for loan losses as of June 30, 2012 and March 31, 2012, respectively. | | |
| (2) Other real estate owned includes $82.8 million and $78.5 million covered by FDIC loss share at June 30, 2012 and March 31, 2012, respectively. | | |
| | | | | |
| CITY NATIONAL CORPORATION | | | | |
| CONSOLIDATED PERIOD END BALANCE SHEET | | | | |
| (unaudited) | | | | |
| | | | | |
| | 2011 |
| (In thousands) | Fourth
Quarter | Third
Quarter | Second
Quarter | First
Quarter |
| Assets | | | | |
| Cash and due from banks | $ 168,376 | $ 249,496 | $ 181,203 | $ 203,600 |
| Due from banks - interest-bearing | 76,438 | 144,754 | 725,304 | 743,569 |
| Federal funds sold | -- | 100,000 | 123,000 | 100,000 |
| Securities available-for-sale | 7,571,901 | 7,185,288 | 6,348,055 | 5,849,390 |
| Securities held-to-maturity | 467,680 | -- | -- | -- |
| Trading securities | 61,975 | 93,707 | 125,829 | 81,287 |
| Loans and leases: | | | | |
| Commercial | 5,246,081 | 5,166,802 | 4,800,252 | 4,468,177 |
| Commercial real estate mortgages | 2,110,749 | 2,059,114 | 1,930,269 | 1,902,862 |
| Residential mortgages | 3,763,218 | 3,742,768 | 3,710,765 | 3,603,058 |
| Real estate construction | 315,609 | 335,712 | 355,014 | 415,241 |
| Equity lines of credit | 741,081 | 728,890 | 735,899 | 733,567 |
| Installment | 132,647 | 130,923 | 130,924 | 146,779 |
| Loans and leases, excluding covered loans | 12,309,385 | 12,164,209 | 11,663,123 | 11,269,684 |
| Allowance for loan and lease losses | (262,557) | (263,348) | (265,933) | (263,356) |
| Loans and leases, excluding covered loans, net | 12,046,828 | 11,900,861 | 11,397,190 | 11,006,328 |
| Covered loans, net (1) | 1,417,289 | 1,550,103 | 1,657,004 | 1,684,068 |
| Net loans and leases | 13,464,117 | 13,450,964 | 13,054,194 | 12,690,396 |
| Premises and equipment, net | 143,641 | 140,871 | 134,511 | 131,345 |
| Goodwill and other intangibles | 522,753 | 524,103 | 526,207 | 527,419 |
| Other real estate owned (2) | 129,340 | 147,369 | 162,541 | 178,164 |
| FDIC indemnification asset | 204,259 | 212,809 | 261,734 | 270,576 |
| Other assets | 855,811 | 854,899 | 883,511 | 860,186 |
| Total assets | $ 23,666,291 | $ 23,104,260 | $ 22,526,089 | $ 21,635,932 |
| | | | | |
| Liabilities | | | | |
| Deposits: | | | | |
| Noninterest-bearing | $ 11,146,627 | $ 10,308,547 | $ 9,403,425 | $ 8,756,877 |
| Interest-bearing | 9,240,955 | 9,600,534 | 9,861,695 | 9,721,062 |
| Total deposits | 20,387,582 | 19,909,081 | 19,265,120 | 18,477,939 |
| Short-term borrowings | 50,000 | 30,640 | 149,771 | 151,663 |
| Long-term debt | 697,778 | 699,983 | 701,829 | 703,173 |
| Other liabilities | 341,439 | 301,387 | 281,622 | 246,517 |
| Total liabilities | 21,476,799 | 20,941,091 | 20,398,342 | 19,579,292 |
| | | | | |
| Redeemable noncontrolling interest | 44,643 | 42,704 | 43,737 | 46,013 |
| | | | | |
| Equity | | | | |
| City National Corporation shareholders' equity: | | | | |
| Common stock | 53,886 | 53,886 | 53,886 | 53,886 |
| Additional paid-in capital | 489,200 | 489,037 | 485,064 | 480,918 |
| Accumulated other comprehensive income | 72,372 | 82,467 | 56,293 | 26,535 |
| Retained earnings | 1,611,969 | 1,578,747 | 1,547,989 | 1,511,153 |
| Treasury shares | (82,578) | (83,672) | (84,311) | (86,954) |
| Total shareholders' equity | 2,144,849 | 2,120,465 | 2,058,921 | 1,985,538 |
| Noncontrolling interest | -- | -- | 25,089 | 25,089 |
| Total equity | 2,144,849 | 2,120,465 | 2,084,010 | 2,010,627 |
| Total liabilities and equity | $ 23,666,291 | $ 23,104,260 | $ 22,526,089 | $ 21,635,932 |
| | | | | |
| (1) Covered loans are net of $64.6 million, $61.8 million, $67.6 million and $82.0 million of allowance for loan losses as of December 31, 2011, September 30, 2011, June 30, 2011 and March 31, 2011, respectively. | | | | |
| (2) Other real estate owned includes $98.5 million, $102.8 million, $114.9 million and $121.8 million covered by FDIC loss share at December 31, 2011, September 30, 2011, June 30, 2011 and March 31, 2011, respectively. | | | | |
| | | | | | | | | |
| CITY NATIONAL CORPORATION | | | | | | | | |
| CREDIT LOSS EXPERIENCE | | | | | | | | |
| (unaudited) | | | | | | | | |
| | | | | | | | | |
| | 2012 | 2011 |
| (Dollars in thousands) | Second
Quarter | First
Quarter | Year To
Date | Fourth
Quarter | Third
Quarter | Second
Quarter | First
Quarter | Year To
Date |
| | | | | | | | | |
| Allowance for Loan and Lease Losses, Excluding Covered Loans | | | | | | | |
| | | | | | | | | |
| Balance at beginning of period | $ 266,077 | $ 262,557 | $ 262,557 | $ 263,348 | $ 265,933 | $ 263,356 | $ 257,007 | $ 257,007 |
| | | | | | | | | |
| Net recoveries/(charge-offs): | | | | | | | | |
| Commercial | 8,092 | 5,283 | 13,375 | (12,534) | (2,915) | 2,616 | (1,937) | (14,770) |
| Commercial real estate mortgages | 1,113 | (666) | 447 | (87) | (452) | 1,269 | 6,212 | 6,942 |
| Residential mortgages | (543) | (494) | (1,037) | (52) | (163) | (253) | (615) | (1,083) |
| Real estate construction | (4,839) | 104 | (4,735) | 6,860 | (6,233) | 577 | 3,826 | 5,030 |
| Equity lines of credit | (808) | (154) | (962) | (377) | (512) | (120) | (757) | (1,766) |
| Installment | (274) | 417 | 143 | 670 | (309) | 106 | (202) | 265 |
| Total net recoveries/(charge-offs) | 2,741 | 4,490 | 7,231 | (5,520) | (10,584) | 4,195 | 6,527 | (5,382) |
| | | | | | | | | |
| Provision for credit losses | 1,000 | -- | 1,000 | 5,000 | 7,500 | -- | -- | 12,500 |
| | | | | | | | | |
| Transfers (to) from reserve for off-balance sheet credit commitments | (284) | (970) | (1,254) | (271) | 499 | (1,618) | (178) | (1,568) |
| | | | | | | | | |
| Balance at end of period | $ 269,534 | $ 266,077 | $ 269,534 | $ 262,557 | $ 263,348 | $ 265,933 | $ 263,356 | $ 262,557 |
| | | | | | | | | |
| Net Recoveries/(Charge-Offs) to Average Total Loans and Leases, Excluding Covered Loans (annualized): | | | | |
| | | | | | | | | |
| Commercial | 0.56 % | 0.40 % | 0.48 % | (0.96) % | (0.23) % | 0.22 % | (0.18) % | (0.31) % |
| Commercial real estate mortgages | 0.20 % | (0.12) % | 0.04 % | (0.02) % | (0.09) % | 0.27 % | 1.31 % | 0.35 % |
| Residential mortgages | (0.06) % | (0.05) % | (0.05) % | (0.01) % | (0.02) % | (0.03) % | (0.07) % | (0.03) % |
| Real estate construction | (6.26) % | 0.13 % | (3.05) % | 8.29 % | (7.14) % | 0.59 % | 3.46 % | 1.33 % |
| Equity lines of credit | (0.44) % | (0.09) % | (0.27) % | (0.20) % | (0.28) % | (0.07) % | (0.42) % | (0.24) % |
| Installment | (0.85) % | 1.30 % | 0.22 % | 2.00 % | (0.94) % | 0.32 % | (0.55) % | 0.19 % |
| Total loans and leases, excluding covered loans | 0.08 % | 0.15 % | 0.11% | (0.18) % | (0.36) % | 0.15 % | 0.24 % | (0.05) % |
| | | | | | | | | |
| Reserve for Off-Balance Sheet Credit Commitments | | | | | | | | |
| | | | | | | | | |
| Balance at beginning of period | $ 24,067 | $ 23,097 | $ 23,097 | $ 22,826 | $ 23,325 | $ 21,707 | $ 21,529 | $ 21,529 |
| Transfers from (to) allowance | 284 | 970 | 1,254 | 271 | (499) | 1,618 | 178 | 1,568 |
| Balance at end of period | $ 24,351 | $ 24,067 | $ 24,351 | $ 23,097 | $ 22,826 | $ 23,325 | $ 21,707 | $ 23,097 |
| | | | | | | | | |
| Allowance for Losses on Covered Loans | | | | | | | | |
| | | | | | | | | |
| Balance at beginning of period | $ 61,471 | $ 64,565 | $ 64,565 | $ 61,753 | $ 67,629 | $ 82,016 | $ 67,389 | $ 67,389 |
| Provision for losses | 13,293 | 7,466 | 20,759 | 17,667 | 5,147 | 1,716 | 19,116 | 43,646 |
| Net charge-offs | -- | -- | -- | -- | (325) | -- | -- | (325) |
| Reduction in allowance due to loan removals | (31,617) | (10,560) | (42,177) | (14,855) | (10,698) | (16,103) | (4,489) | (46,145) |
| Balance at end of period | $ 43,147 | $ 61,471 | $ 43,147 | $ 64,565 | $ 61,753 | $ 67,629 | $ 82,016 | $ 64,565 |
| | | | | | | | | |
| Note: Certain prior period balances have been reclassified to conform to current period presentation. | | | | | | | | |
| | | | | | | |
| CITY NATIONAL CORPORATION | | | | | | |
| NONPERFORMING ASSETS | | | | | | |
| (unaudited) | | | | | | |
| | | | | | | |
| | 2012 | 2011 |
| (Dollars in thousands) | Second
Quarter | First
Quarter | Fourth
Quarter | Third
Quarter | Second
Quarter | First
Quarter |
| | | | | | | |
| Nonperforming assets, excluding covered assets | | | | | | |
| Nonaccrual loans, excluding covered loans | | | | | | |
| Commercial | $ 19,056 | $ 19,584 | $ 19,888 | $ 34,937 | $ 24,337 | $ 19,297 |
| Commercial real estate mortgages | 28,780 | 21,071 | 21,948 | 20,746 | 26,676 | 28,028 |
| Residential mortgages | 14,064 | 13,628 | 9,771 | 10,512 | 14,211 | 14,544 |
| Real estate construction | 29,676 | 48,964 | 50,876 | 70,827 | 60,543 | 81,448 |
| Equity lines of credit | 6,505 | 8,831 | 8,669 | 8,401 | 6,668 | 6,676 |
| Installment | 575 | 729 | 874 | 707 | 365 | 7,399 |
| Total nonaccrual loans, excluding covered loans | 98,656 | 112,807 | 112,026 | 146,130 | 132,800 | 157,392 |
| | | | | | | |
| Other real estate owned, excluding covered OREO | 34,667 | 29,074 | 30,790 | 44,521 | 47,634 | 56,342 |
| | | | | | | |
| Total nonperforming assets, excluding covered assets | $ 133,323 | $ 141,881 | $ 142,816 | $ 190,651 | $ 180,434 | $ 213,734 |
| | | | | | | |
| Nonperforming covered assets | | | | | | |
| Nonaccrual loans | $ 422 | $ 422 | $ 422 | $ 1,023 | $ 1,408 | $ 2,343 |
| Other real estate owned | 82,834 | 78,456 | 98,550 | 102,848 | 114,907 | 121,822 |
| Total nonperforming covered assets | $ 83,256 | $ 78,878 | $ 98,972 | $ 103,871 | $ 116,315 | $ 124,165 |
| | | | | | | |
| Loans 90 days or more past due on accrual status, excluding covered loans | $ 2,065 | $ 654 | $ 453 | $ 379 | $ 7,214 | $ 3,679 |
| | | | | | | |
| Covered loans 90 days or more past due on accrual status | $ 190,005 | $ 265,175 | $ 330,169 | $ 336,193 | $ 368,379 | $ 390,267 |
| | | | | | | |
| | | | | | | |
| Allowance for loan and lease losses as a percentage of: | | | | | | |
| Nonaccrual loans | 273.21 % | 235.87 % | 234.37 % | 180.21 % | 200.25 % | 167.32 % |
| Total nonperforming assets, excluding covered assets | 202.17 % | 187.54 % | 183.84 % | 138.13 % | 147.39 % | 123.22 % |
| Total loans and leases, excluding covered loans | 2.00 % | 2.09 % | 2.13 % | 2.16 % | 2.28 % | 2.34 % |
| | | | | | | |
| Nonaccrual loans as a percentage of total loans, excluding covered loans | 0.73 % | 0.88 % | 0.91 % | 1.20 % | 1.14 % | 1.40 % |
| | | | | | | |
| Nonperforming assets, excluding covered assets, as a percentage of: | | | | | | |
| Total loans and other real estate owned, excluding covered assets | 0.98 % | 1.11 % | 1.16 % | 1.56 % | 1.54 % | 1.89 % |
| Total assets | 0.54 % | 0.59 % | 0.60 % | 0.83 % | 0.80 % | 0.99 % |
| | | | | | | |
| Note: Certain prior period balances have been reclassified to conform to current period presentation. | | | | | | |
| | | | | | | |
| CITY NATIONAL CORPORATION | | | | | | |
| AVERAGE BALANCES AND RATES | | | | | | |
| (unaudited) | | | | | | |
| | | | | | | |
| | 2012 |
| | Second Quarter | First Quarter | Year to Date |
| (Dollars in millions) | Average
Balance | Average
Rate | Average
Balance | Average
Rate | Average
Balance | Average
Rate |
| Assets | | | | | | |
| Interest-earning assets | | | | | | |
| Loans and leases | | | | | | |
| Commercial | $ 5,845 | 4.15 % | $ 5,319 | 3.94 % | $ 5,582 | 4.05 % |
| Commercial real estate mortgages | 2,295 | 4.70 | 2,166 | 4.87 | 2,230 | 4.78 |
| Residential mortgages | 3,815 | 4.28 | 3,777 | 4.36 | 3,796 | 4.32 |
| Real estate construction | 311 | 4.31 | 314 | 5.33 | 312 | 4.83 |
| Equity lines of credit | 731 | 3.53 | 727 | 3.58 | 729 | 3.55 |
| Installment | 129 | 4.84 | 129 | 4.91 | 130 | 4.87 |
| Total loans and leases, excluding covered loans | 13,126 | 4.27 | 12,432 | 4.26 | 12,779 | 4.26 |
| Covered loans | 1,341 | 14.51 | 1,439 | 10.63 | 1,390 | 12.50 |
| Total loans and leases | 14,467 | 5.22 | 13,871 | 4.93 | 14,169 | 5.08 |
| Due from banks - interest-bearing | 293 | 0.24 | 167 | 0.22 | 230 | 0.23 |
| Federal funds sold and securities purchased under resale agreements | 137 | 0.28 | 15 | 0.28 | 76 | 0.28 |
| Securities | 7,755 | 2.37 | 7,929 | 2.40 | 7,842 | 2.38 |
| Other interest-earning assets | 117 | 2.39 | 121 | 2.30 | 119 | 2.34 |
| Total interest-earning assets | 22,769 | 4.15 | 22,103 | 3.97 | 22,436 | 4.06 |
| Allowance for loan and lease losses | (331) | | (335) | | (333) | |
| Cash and due from banks | 148 | | 141 | | 145 | |
| Other non-earning assets | 1,777 | | 1,736 | | 1,756 | |
| Total assets | $ 24,363 | | $ 23,645 | | $ 24,004 | |
| | | | | | | |
| Liabilities and Equity | | | | | | |
| Interest-bearing deposits | | | | | | |
| Interest checking accounts | $ 1,890 | 0.10 % | $ 1,952 | 0.11 % | $ 1,921 | 0.10 % |
| Money market accounts | 5,856 | 0.13 | 6,018 | 0.15 | 5,937 | 0.14 |
| Savings deposits | 360 | 0.14 | 358 | 0.14 | 359 | 0.14 |
| Time deposits - under $100,000 | 228 | 0.50 | 242 | 0.49 | 235 | 0.50 |
| Time deposits - $100,000 and over | 733 | 0.45 | 697 | 0.51 | 715 | 0.48 |
| Total interest-bearing deposits | 9,067 | 0.16 | 9,267 | 0.18 | 9,167 | 0.17 |
| | | | | | | |
| Federal funds purchased and securities sold under repurchase agreements | 4 | 0.11 | 166 | 0.08 | 85 | 0.08 |
| Other borrowings | 797 | 4.97 | 697 | 5.09 | 747 | 5.02 |
| Total interest-bearing liabilities | 9,868 | 0.55 | 10,130 | 0.51 | 9,999 | 0.53 |
| Noninterest-bearing deposits | 11,881 | | 10,950 | | 11,416 | |
| Other liabilities | 380 | | 396 | | 387 | |
| Total equity | 2,234 | | 2,169 | | 2,202 | |
| Total liabilities and equity | $ 24,363 | | $ 23,645 | | $ 24,004 | |
| | | | | | | |
| | | | | | | |
| Net interest spread | | 3.60 % | | 3.46 % | | 3.53 % |
| Net interest margin | | 3.91 % | | 3.74 % | | 3.83 % |
| | | | | | | |
| Average prime rate | | 3.25 % | | 3.25 % | | 3.25 % |
| | | | | | | | | | | |
| CITY NATIONAL CORPORATION | | | | | | | | | | |
| AVERAGE BALANCES AND RATES | | | | | | | | | |
| (unaudited) | | | | | | | | | | |
| | | | | | | | | | | |
| | 2011 | | | | | | | | | |
| | Fourth Quarter | Third Quarter | Second Quarter | First Quarter | Year to Date |
| (Dollars in millions) | Average Balance | Average Rate | Average Balance | Average Rate | Average Balance | Average Rate | Average Balance | Average Rate | Average Balance | Average Rate |
| Assets | | | | | | | | | | |
| Interest-earning assets | | | | | | | | | | |
| Loans and leases | | | | | | | | | | |
| Commercial | $ 5,204 | 3.89 % | $ 4,928 | 4.09 % | $ 4,693 | 4.22 % | $ 4,437 | 4.30 % | $ 4,818 | 4.11 % |
| Commercial real estate mortgages | 2,077 | 5.12 | 1,944 | 5.30 | 1,904 | 5.67 | 1,924 | 5.56 | 1,963 | 5.40 |
| Residential mortgages | 3,739 | 4.49 | 3,717 | 4.74 | 3,663 | 4.78 | 3,563 | 4.81 | 3,671 | 4.70 |
| Real estate construction | 328 | 5.08 | 347 | 4.65 | 395 | 5.10 | 448 | 4.56 | 379 | 4.84 |
| Equity lines of credit | 732 | 3.58 | 731 | 3.55 | 730 | 3.59 | 733 | 3.57 | 731 | 3.57 |
| Installment | 133 | 4.87 | 130 | 4.94 | 131 | 4.88 | 151 | 4.81 | 136 | 4.88 |
| Total loans and leases, excluding covered loans | 12,213 | 4.30 | 11,797 | 4.47 | 11,516 | 4.64 | 11,256 | 4.67 | 11,698 | 4.51 |
| Covered loans | 1,554 | 11.06 | 1,664 | 10.65 | 1,770 | 8.70 | 1,811 | 7.78 | 1,699 | 9.48 |
| Total loans and leases | 13,767 | 5.05 | 13,461 | 5.23 | 13,286 | 5.19 | 13,067 | 5.11 | 13,397 | 5.14 |
| Due from banks - interest-bearing | 435 | 0.30 | 642 | 0.29 | 526 | 0.31 | 490 | 0.25 | 524 | 0.29 |
| Federal funds sold and securities purchased under resale agreements | 115 | 0.28 | 130 | 0.28 | 143 | 0.28 | 232 | 0.27 | 154 | 0.27 |
| Securities | 7,642 | 2.27 | 6,954 | 2.45 | 6,224 | 2.66 | 5,693 | 2.75 | 6,635 | 2.51 |
| Other interest-earning assets | 125 | 2.13 | 130 | 2.09 | 135 | 2.09 | 139 | 2.04 | 132 | 2.09 |
| Total interest-earning assets | 22,084 | 3.95 | 21,317 | 4.12 | 20,314 | 4.23 | 19,621 | 4.24 | 20,842 | 4.13 |
| Allowance for loan and lease losses | (331) | | (330) | | (344) | | (329) | | (333) | |
| Cash and due from banks | 199 | | 203 | | 184 | | 201 | | 197 | |
| Other non-earning assets | 1,742 | | 1,809 | | 1,856 | | 1,885 | | 1,822 | |
| Total assets | $ 23,694 | | $ 22,999 | | $ 22,010 | | $ 21,378 | | $ 22,528 | |
| | | | | | | | | | | |
| Liabilities and Equity | | | | | | | | | | |
| Interest-bearing deposits | | | | | | | | | | |
| Interest checking accounts | $ 1,865 | 0.12 % | $ 1,727 | 0.15 % | $ 1,707 | 0.17 % | $ 1,772 | 0.19 % | $ 1,768 | 0.16 % |
| Money market accounts | 6,467 | 0.18 | 6,900 | 0.35 | 6,683 | 0.43 | 6,452 | 0.45 | 6,626 | 0.35 |
| Savings deposits | 344 | 0.17 | 329 | 0.29 | 327 | 0.32 | 303 | 0.34 | 326 | 0.28 |
| Time deposits - under $100,000 | 262 | 0.53 | 280 | 0.48 | 308 | 0.49 | 325 | 0.56 | 294 | 0.52 |
| Time deposits - $100,000 and over | 718 | 0.57 | 801 | 0.61 | 833 | 0.70 | 823 | 0.75 | 793 | 0.66 |
| Total interest-bearing deposits | 9,656 | 0.20 | 10,037 | 0.34 | 9,858 | 0.41 | 9,675 | 0.43 | 9,807 | 0.34 |
| | | | | | | | | | | |
| Federal funds purchased and securities sold under repurchase agreements | 2 | 0.06 | -- | 0.07 | 10 | 0.07 | -- | 0.00 | 3 | 0.07 |
| Other borrowings | 701 | 4.96 | 804 | 4.46 | 855 | 4.36 | 858 | 4.41 | 804 | 4.53 |
| Total interest-bearing liabilities | 10,359 | 0.52 | 10,841 | 0.64 | 10,723 | 0.72 | 10,533 | 0.75 | 10,614 | 0.66 |
| Noninterest-bearing deposits | 10,844 | | 9,688 | | 8,927 | | 8,509 | | 9,499 | |
| Other liabilities | 355 | | 353 | | 307 | | 338 | | 338 | |
| Total equity | 2,136 | | 2,117 | | 2,053 | | 1,998 | | 2,077 | |
| Total liabilities and equity | $ 23,694 | | $ 22,999 | | $ 22,010 | | $ 21,378 | | $ 22,528 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Net interest spread | | 3.43 % | | 3.48 % | | 3.51 % | | 3.49 % | | 3.47 % |
| Net interest margin | | 3.70 % | | 3.79 % | | 3.85 % | | 3.84 % | | 3.79 % |
| | | | | | | | | | | |
| Average prime rate | | 3.25 % | | 3.25 % | | 3.25 % | | 3.25 % | | 3.25 % |
| | | | | | | | | | | |
| Note: Certain prior period balances have been reclassified to conform to current period presentation. | | | | | | | | | | |
| | | | | | | | | |
| CITY NATIONAL CORPORATION | | | | | | | | |
| CAPITAL AND CREDIT RATING DATA | | | | | | | | |
| (unaudited) | | | | | | | | |
| | | | | | | | | |
| | 2012 | 2011 |
| | Second
Quarter | First
Quarter | Year To
Date | Fourth
Quarter | Third
Quarter | Second
Quarter | First
Quarter | Year To
Date |
| Per Common Share: | | | | | | | | |
| Shares Outstanding (in thousands): | | | | | | | | |
| Average - Basic | 53,105 | 52,741 | 52,923 | 52,488 | 52,481 | 52,462 | 52,320 | 52,439 |
| Average - Diluted | 53,373 | 53,021 | 53,217 | 52,750 | 52,720 | 52,977 | 52,894 | 52,849 |
| Period-end | 52,822 | 52,661 | | 52,499 | 52,484 | 52,475 | 52,440 | |
| Book value for shareholders | $ 42.70 | $ 41.77 | | $ 40.86 | $ 40.40 | $ 39.24 | $ 37.86 | |
| Closing price: | | | | | | | | |
| High | $ 54.63 | $ 54.44 | $ 54.63 | $ 45.10 | $ 55.54 | $ 58.75 | $ 62.90 | $ 62.90 |
| Low | 46.39 | 45.39 | 45.39 | 36.01 | 37.76 | 52.02 | 55.65 | 36.01 |
| Period-end | 48.58 | 52.47 | | 44.18 | 37.76 | 54.25 | 57.05 | |
| | | | | | | | | |
| | | | | | | | | |
| Capital Ratios (Dollars in millions): | | | | | | | | |
| Risk-based capital | | | | | | | | |
| Risk-weighted assets (1) | $ 16,723 | $ 15,840 | | $ 15,305 | $ 14,926 | $ 14,286 | $ 13,551 | |
| Tier 1 common shareholders' equity | $ 1,597 | $ 1,611 | | $ 1,565 | $ 1,530 | $ 1,493 | $ 1,449 | |
| Percentage of risk-weighted assets (2) | 9.55 % | 10.17 % | | 10.22 % | 10.25 % | 10.45 % | 10.69 % | |
| Tier 1 capital | $ 1,602 | $ 1,616 | | $ 1,570 | $ 1,535 | $ 1,523 | $ 1,479 | |
| Percentage of risk-weighted assets | 9.58 % | 10.20 % | | 10.26 % | 10.28 % | 10.66 % | 10.91 % | |
| Total capital | $ 2,160 | $ 2,013 | | $ 1,963 | $ 1,923 | $ 1,905 | $ 1,853 | |
| Percentage of risk-weighted assets | 12.91 % | 12.71 % | | 12.83 % | 12.88 % | 13.34 % | 13.68 % | |
| Tier 1 leverage ratio | 6.74 % | 6.98 % | | 6.77 % | 6.82 % | 7.09 % | 7.09 % | |
| | | | | | | | | |
| Period-end equity to period-end assets | 9.09 % | 9.15 % | | 9.06 % | 9.18 % | 9.25 % | 9.29 % | |
| Period-end shareholders' equity to period-end assets | 9.09 % | 9.15 % | | 9.06 % | 9.18 % | 9.14 % | 9.18 % | |
| | | | | | | | | |
| Average equity to average assets | 9.17 % | 9.17 % | 9.17 % | 9.02 % | 9.21 % | 9.33 % | 9.35 % | 9.22 % |
| Average shareholders' equity to average assets | 9.17 % | 9.17 % | 9.17 % | 9.02 % | 9.10 % | 9.22 % | 9.23 % | 9.14 % |
| | | | | | | | | |
| Period-end tangible equity to period-end tangible assets (2) | 6.88 % | 7.13 % | | 7.01 % | 7.07 % | 7.08 % | 7.03 % | |
| | | | | | | | | |
| Average tangible equity to average tangible assets (2) | 7.01 % | 7.12 % | 7.06 % | 6.96 % | 7.08 % | 7.11 % | 7.05 % | 7.05 % |
| | | | | | | | | |
| | | | | | | | | |
| Senior Debt Credit Ratings | | | | | | | | |
| For The Period Ended June 30, 2012 | | | | | | | | |
| | Moody's | Fitch | Standard & Poor's | DBRS | | | | |
| City National Bank | A1 | A- | A- | A (high) | | | | |
| City National Corporation | A2 | A- | BBB+ | A | | | | |
| | | | | | | | | |
| | | | | | | | | |
| (1) In accordance with applicable bank regulatory guidelines, the Company calculates risk-weighted assets by assigning assets and credit equivalent amounts of derivatives and off-balance sheet items to one of several broad risk categories according to the obligor, or, if relevant, the guarantor or the nature of the collateral. The aggregate dollar amount in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are added together for determining risk-weighted assets. | | | | | | | | |
| (2) The Tier 1 common shareholders' equity to risk-weighted assets ratio and tangible equity to tangible assets ratio are non-GAAP financial measures. See page 15 for notes on non-GAAP measures. | | | | | | | | |
| | | | | | | | | |
| CITY NATIONAL CORPORATION | | | | | | | | |
| COMPUTATION OF BASIC AND DILUTED EARNINGS PER SHARE | | | | | |
| (unaudited) | | | | | | | | |
| | | | | | | | | |
| City National Corporation applies the two-class method of computing basic and diluted earnings per share ("EPS"). Under the two-class method, EPS is determined for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. The Company grants restricted stock and restricted stock units under a share-based compensation plan that qualify as participating securities. The computation of basic and diluted EPS is presented in the following table: | | | | | | | | |
| | | | | | | | | |
| | 2012 | 2011 |
| (Dollars in thousands, except per share amounts) | Second
Quarter | First
Quarter | Year to
Date | Fourth
Quarter | Third
Quarter | Second
Quarter | First
Quarter | Year to
Date |
| Basic EPS: | | | | | | | | |
| Net income attributable to City National Corporation | $ 54,758 | $ 46,265 | $ 101,023 | $ 43,860 | $ 41,398 | $ 47,471 | $ 39,692 | $ 172,421 |
| Less: Earnings allocated to participating securities | 788 | 738 | 1,532 | 690 | 655 | 759 | 578 | 2,678 |
| Earnings allocated to shareholders | $ 53,970 | $ 45,527 | $ 99,491 | $ 43,170 | $ 40,743 | $ 46,712 | $ 39,114 | $ 169,743 |
| | | | | | | | | |
| Weighted average shares outstanding | 53,105 | 52,741 | 52,923 | 52,488 | 52,481 | 52,462 | 52,320 | 52,439 |
| | | | | | | | | |
| Basic earnings per share | $ 1.02 | $ 0.86 | $ 1.88 | $ 0.82 | $ 0.78 | $ 0.89 | $ 0.75 | $ 3.24 |
| | | | | | | | | |
| Diluted EPS: | | | | | | | | |
| Earnings allocated to shareholders (1) | $ 53,972 | $ 45,530 | $ 99,496 | $ 43,173 | $ 40,745 | $ 46,718 | $ 39,119 | $ 169,759 |
| | | | | | | | | |
| Weighted average shares outstanding | 53,105 | 52,741 | 52,923 | 52,488 | 52,481 | 52,462 | 52,320 | 52,439 |
| Dilutive effect of equity awards | 268 | 280 | 294 | 262 | 239 | 515 | 574 | 410 |
| Weighted average diluted shares outstanding | 53,373 | 53,021 | 53,217 | 52,750 | 52,720 | 52,977 | 52,894 | 52,849 |
| | | | | | | | | |
| Diluted earnings per share | $ 1.01 | $ 0.86 | $ 1.87 | $ 0.82 | $ 0.77 | $ 0.88 | $ 0.74 | $ 3.21 |
| | | | | | | | | |
| (1) Earnings allocated to shareholders for basic and diluted EPS may differ under the two-class method as a result of adding common stock equivalents for options to dilutive shares outstanding, which alters the ratio used to allocate earnings to shareholders and participating securities for the purposes of calculating diluted EPS. | | | | | | | | |
| | | | | |
| CITY NATIONAL CORPORATION | | | | |
| SELECTED FINANCIAL INFORMATION ON COVERED ASSETS | | | | |
| (unaudited) | | | | |
| | | | | |
| The following table provides selected components of income and expense related to covered assets: | | | | |
| | | | | |
| | | 2012 | 2011 |
| (in thousands) | | Second
Quarter | First
Quarter | Second Quarter |
| | | | | |
| Summary Totals | | | | |
| Net impairment income (expense) (Sum of A) | | $ 3,932 | $ 2,756 | $ (532) |
| Gain on acquisition | | -- | -- | 8,164 |
| Other covered asset income (expense), net | | 3,388 | (1,893) | (1,095) |
| Total income, net | | $ 7,320 | $ 863 | $ 6,537 |
| | | | | |
| Interest income (1) | | | | |
| Income on loans paid-off or fully charged-off | | $ 27,402 | $ 15,699 | $ 11,105 |
| | | | | |
| Provision for losses on covered loans | | | | |
| Provision for losses on covered loans | A | 13,293 | 7,466 | 1,716 |
| | | | | |
| Noninterest income related to covered assets | | | | |
| | | | | |
| FDIC loss sharing (expense) income, net | | | | |
| Gain on indemnification asset | A | $ 17,722 | $ 10,839 | $ 1,687 |
| Indemnification asset accretion | | (4,133) | (4,025) | (4,126) |
| Net FDIC reimbursement for OREO and loan expenses | | 6,724 | 10,441 | 17,852 |
| Removal of indemnification asset for loans paid-off or fully charged-off | | (10,654) | (6,516) | (6,306) |
| Removal of indemnification asset for unfunded loan commitments and loans transferred to OREO | (4,773) | (2,113) | (8,855) |
| Removal of indemnification asset for OREO and net reimbursement to FDIC for OREO sales | | (1,189) | (2,656) | (7,219) |
| Loan recoveries shared with FDIC | | (9,226) | (4,487) | (3,197) |
| Increase in FDIC clawback liability | A | (497) | (617) | (503) |
| Other | | -- | -- | (17) |
| Total FDIC loss sharing (expense) income, net | | (6,026) | 866 | (10,684) |
| | | | | |
| Gain on disposal of assets | | | | |
| Net gain on sale of OREO | | 1,486 | 2,137 | 9,092 |
| | | | | |
| Gain on acquisition | | -- | -- | 8,164 |
| | | | | |
| Other income | | | | |
| Net gain on transfers of covered loans to OREO | | 6,864 | 2,483 | 12,817 |
| Amortization of fair value on acquired unfunded loan commitments | | 413 | 559 | 766 |
| OREO income | | 615 | 905 | 637 |
| Other | | (864) | (1,018) | (690) |
| Total other income | | 7,028 | 2,929 | 13,530 |
| | | | | |
| Total noninterest income related to covered assets | | $ 2,488 | $ 5,932 | $ 20,102 |
| | | | | |
| Noninterest expense related to covered assets (2) | | | | |
| | | | | |
| Other real estate owned | | | | |
| Valuation write-downs | | $ 4,250 | $ 7,808 | $ 15,628 |
| Holding costs and foreclosure expense | | 2,796 | 3,207 | 4,564 |
| Total other real estate owned | | 7,046 | 11,015 | 20,192 |
| | | | | |
| Legal and professional fees | | 2,200 | 2,278 | 2,832 |
| | | | | |
| Other operating expense | | | | |
| Other covered asset expenses | | 31 | 9 | (70) |
| | | | | |
| Total noninterest expense related to covered assets (3) | | $ 9,277 | $ 13,302 | $ 22,954 |
| | | | | |
| Total income, net | | $ 7,320 | $ 863 | $ 6,537 |
| | | | | |
| Note: Certain prior period balances have been reclassified to conform to current period presentation. |
| (1) Excludes base yield in interest income related to covered loans. | | | | |
| (2) OREO, legal and professional fees, and other expenses related to covered assets must meet certain FDIC criteria in order for the expense amounts to be reimbursed. Certain amounts reflected in these categories may not be reimbursed by the FDIC. | | | | |
| (3) Excludes personnel and other corporate overhead expenses that the Company incurs to service covered assets and costs associated with the branches acquired in FDIC-assisted acquisitions. | | | | |
| | | | | | | | |
| CITY NATIONAL CORPORATION | | | | | | | |
| NON-GAAP FINANCIAL MEASURES | | | | | | | |
| (unaudited) | | | | | | | | |
| | | | | | | | | |
| (a) Tangible equity ratios | | | | | | | | |
| | | | | | | | | |
| Tangible equity to tangible assets is a non-GAAP financial measure that represents total equity less identifiable intangible assets and goodwill divided by total assets less identifiable intangible assets and goodwill. Management reviews this measure in evaluating the Company's capital levels and has included the ratio in response to market participants' interest in tangible equity as a measure of capital. A reconciliation of the GAAP to non-GAAP measure is set forth below: | | | | | | | | |
| | | | | | | | | |
| | 2012 | 2011 |
| (Dollars in thousands) | Second Quarter | First Quarter | Year to Date | Fourth Quarter | Third Quarter | Second Quarter | First Quarter | Year to Date |
| Period End: | | | | | | | | |
| Total equity | $ 2,255,365 | $ 2,199,565 | | $ 2,144,849 | $ 2,120,465 | $ 2,084,010 | $ 2,010,627 | |
| Less: Goodwill and other intangibles | (589,114) | (521,717) | | (522,753) | (524,103) | (526,207) | (527,419) | |
| Tangible equity (A) | 1,666,251 | 1,677,848 | | 1,622,096 | 1,596,362 | 1,557,803 | 1,483,208 | |
| | | | | | | | | |
| Total assets | $ 24,801,973 | $ 24,038,489 | | $ 23,666,291 | $ 23,104,260 | $ 22,526,089 | $ 21,635,932 | |
| Less: Goodwill and other intangibles | (589,114) | (521,717) | | (522,753) | (524,103) | (526,207) | (527,419) | |
| Tangible assets (B) | $ 24,212,859 | $ 23,516,772 | | $ 23,143,538 | $ 22,580,157 | $ 21,999,882 | $ 21,108,513 | |
| | | | | | | | | |
| Period-end tangible equity to period-end tangible assets (A)/(B) | 6.88% | 7.13% | | 7.01% | 7.07% | 7.08% | 7.03% | |
| | | | | | | | | |
| Average Balance: | | | | | | | | |
| Total equity | $ 2,234,411 | $ 2,168,748 | $ 2,201,579 | $ 2,136,215 | $ 2,117,249 | $ 2,053,447 | $ 1,998,006 | $ 2,076,721 |
| Less: Goodwill and other intangibles | (566,989) | (522,182) | (544,585) | (523,206) | (525,300) | (527,072) | (528,205) | (525,930) |
| Tangible equity (C) | 1,667,422 | 1,646,566 | 1,656,994 | 1,613,009 | 1,591,949 | 1,526,375 | 1,469,801 | 1,550,791 |
| | | | | | | | | |
| Total assets | $ 24,362,546 | $ 23,644,899 | $ 24,003,722 | $ 23,694,160 | $ 22,998,562 | $ 22,009,749 | $ 21,377,904 | $ 22,527,750 |
| Less: Goodwill and other intangibles | (566,989) | (522,182) | (544,585) | (523,206) | (525,300) | (527,072) | (528,205) | (525,930) |
| Tangible assets (D) | $ 23,795,557 | $ 23,122,717 | $ 23,459,137 | $ 23,170,954 | $ 22,473,262 | $ 21,482,677 | $ 20,849,699 | $ 22,001,820 |
| | | | | | | | | |
| Average tangible equity to average tangible assets (C)/(D) | 7.01% | 7.12% | 7.06% | 6.96% | 7.08% | 7.11% | 7.05% | 7.05% |
| | | | | | | | | |
| (b) Tier 1 common shareholders' equity to risk-based assets | | | | | |
| | | | | | | | | |
| The Tier 1 common shareholders' equity to risk-based assets ratio, also known as Tier 1 common ratio, is calculated by dividing (a) Tier 1 capital less non-common components including qualifying noncontrolling interest in subsidiaries and qualifying trust preferred securities by (b) risk-weighted assets. Tier 1 capital and risk-weighted assets are calculated in accordance with applicable bank regulatory guidelines. This ratio is a non-GAAP measure that is used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews this measure in evaluating the Company's capital levels and has included these ratios in response to market participants' interest in the Tier 1 common shareholders' equity to risk-based assets ratio. |
| | | | | | | | | |
| | 2012 | 2011 | | |
| (Dollars in thousands) | Second
Quarter | First
Quarter | Fourth
Quarter | Third
Quarter | Second
Quarter | First
Quarter | | |
| Tier 1 capital | $ 1,602,398 | $ 1,616,099 | $ 1,570,101 | $ 1,534,831 | $ 1,523,269 | $ 1,478,820 | | |
| Less: Noncontrolling interest | -- | -- | -- | -- | (25,089) | (25,089) | | |
| Less: Trust preferred securities | (5,155) | (5,155) | (5,155) | (5,155) | (5,155) | (5,155) | | |
| Tier 1 common shareholders' equity (A) | $ 1,597,243 | $ 1,610,944 | $ 1,564,946 | $ 1,529,676 | $ 1,493,025 | $ 1,448,576 | | |
| | | | | | | | | |
| Risk-weighted assets (B) | $ 16,722,999 | $ 15,839,944 | $ 15,305,328 | $ 14,925,715 | $ 14,285,572 | $ 13,551,318 | | |
| Tier 1 common shareholders' equity to risk-based assets (A)/(B) | 9.55% | 10.17% | 10.22% | 10.25% | 10.45% | 10.69% | | |
| | | | | | | | | |
CONTACT: Financial/Investors
Christopher J. Carey, City National, 310.888.6777
Chris.Carey@cnb.com
Media
Cary Walker, City National, 213.673.7615
Cary.Walker@cnb.com
Conference Call:
Today 2:00 p.m. PDT
(866) 393-6804
Conference ID: 87526710