CITY NATIONAL CORPORATION
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ACQUIRES
THE PACIFIC BANK
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September 22, 1999
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FORWARD LOOKING INFORMATION
This presentation contains forward looking statements with respect to the
financial condition, results of operations and business of City National
Corporation (CYN) and The Pacific Bank, N.A. (PBSF) assuming the consummation
of the merger, including statements relating to: (i) the cost savings and
accretion to reported earnings that will be realized from the merger; and
(ii) the integration costs expected to be incurred in connection with the
merger. These forward looking statements involve certain risks and
uncertainties. Factors that may cause actual results to differ materially
from those contemplated by such forward looking statements include, among
other things, the following possibilities: (i) expected cost savings from the
merger cannot be fully realized or realized within the expected time; (ii)
revenues following the merger are lower than expected; (iii) competitive
pressure among depository institutions increase significantly; (iv) costs of
the difficulties related to the integration of the business of The Pacific
Bank and City National Bank are greater than expected; (v) changes in the
interest rate environment reduces interest margins; (vi) general economic
conditions, either nationally or in California, are less favorable than
expected; (vii) legislation or regulatory requirements or changes adversely
affect the business in which the combined company will be engaged; and (viii)
changes may occur in the securities market.
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STRATEGIC RATIONALE
- - Extension of CYN's core business to a new, but fundamentally similar market
is the logical next step in evolving CYN's strategy
- - In looking for fundamentally similar geographic markets, Northern
California offers the following positive characteristics:
- attractive market of entrepreneurs and growing young businesses
- significant & growing high net worth individual market
- very active real estate market
- - 9 of top 20 "richest" cities are in Northern California (as ranked by
median home price by Worth magazine)
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STRATEGIC RATIONAL (CONT.)
- - Northern California provides for diversification of CYN's portfolio risk
- - Excellent opportunity to extend CYN's relationship banking approach to
Northern California
- - The disruptions in the California banking market create a key opportunity
for CYN to expand into Northern California at this time
- - PBSF has customers in Northern California with whom we can do additional
business
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TRANSACTION SUMMARY
NAME: The Pacific Bank, N.A.
HEADQUARTERS: San Francisco, CA
STRUCTURE: Purchase, 50% stock/50% cash
PRICE: $29.00 per share
$152.9 million Aggregate Transaction Value
COLLARS: Exchange ratio floats between $28.05 and $37.95, is fixed
at .7642 from $37.95 to $41.25 and floats above $41.25
based on $31.52 divided by the final CYN stock price
LOCK UP ARRANGEMENT: Pacific Bank to grant CYN an option at $19.00 for 19.9%
of its stock
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TRANSACTION SUMMARY (CONT.)
TIMING: Subject to regulatory and Pacific shareholder
approvals. Targeted to close early 2000
DUE DILIGENCE: Completed, including year 2000 review
WALKAWAY: Permitted if final CYN stock price is less than $24.75
and has declined by more than 15 percentage points, in
relation to the decline in the NASDAQ Bank Index
COST SAVINGS: Approximately 30%
ACCRETION: Approximately 1--2% to consensus 2000 GAAP earnings
for CYN,over 5--6% to consensus 2000 cash earnings for
CYN
INTEGRATION COST: $1.5 million pre-tax
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BALANCE SHEET IMPACT - AS OF JUNE 30, 1999
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ACQUISITION
CYN APSB(1) PACIFIC ADJUSTMENTS PRO FORMA
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Assets $6,302 $442 $729 ($82) $7,391
Loans 4,723 243 503 5,469
Intangibles 70 0 8 115 193
Deposits 4,684 407 638 5,729
Equity 561 32 74 (33) 634
Equity/Assets 8.90% 7.24% 10.15% 8.58%
Tangible Equity/Assets 8.19 7.24 9.05 6.22
Loans/Deposits 100.83 59.71 78.84 95.46
NPLs/Loans 0.56 0.32 0.50 0.56
NPAs/Assets 0.45 0.36 0.34 0.44
Reserves/NPLs 528.34 239.86 480.66 512.75
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(1) The American Pacific State Bank (APSB) acquisition closed on August 27,
1999.
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HISTORICAL FINANCIAL PROFILE OF PACIFIC ($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
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FYE DECEMBER 31, 6 MOS. ENDED
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1996 1997 1998 1998 1999
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Loans $330.1 $396.3 $484.5 $418.8 $502.7
Loan Loss Reserve 10.8 10.8 12.3 10.1 12.1
Deposits 392.5 506.7 611.9 488.1 637.8
Common Equity 72.8 80.0 80.3 83.0 73.6
Total Assets 476.7 603.4 713.3 586.5 728.6
Equity/Assets 15.3% 13.3% 11.3% 14.1% 10.1%
Tier 1/Assets 19.40 16.70 12.70 16.83 11.73
Loans/Assets 67.30 64.00 61.70 69.60 67.30
Net Income $7.1 $7.3 $3.3 $3.6 $3.9
Net Income/Share 1.25 1.28 0.57 0.62 0.74
ROAA 1.56% 1.35% 0.51% 1.22% 1.12%
ROAE 10.00 9.47 3.92 8.77 10.40
Net Interest Margin 6.20 5.86 5.75 5.76 5.61
Efficiency Ratio 74.33 70.01 65.28 69.26 72.00
NPAs/Assets 0.36 0.23 0.41 0.40 0.35
Reserves/NPAs 604.47 787.13 418.85 386.40 480.66
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LOAN PORTFOLIO COMPOSITION
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6 MONTHS ENDED, 1999
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PBSF CYN
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Commercial 52.8% 53.7%
Construction 9.8 6.1
Real Estate 33.4 17.0
Residential Mortgage 0.0 22.1
Other 4.0 1.1
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Total 100.0% 100.0%
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PACIFIC'S CORE LINES OF BUSINESS ($ IN MILLIONS)
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SIX MONTHS ENDED 6/30,
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1999 1998
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Domestic Commercial Banking
Revenues $13.9 $10.5
Pretax Income 6.7 5.1
International / Trade Finance
Revenues 4.9 6.1
Pretax Income 1.4 2.5
Wealth Management Services
Revenues 1.6 1.9
Pretax Income 0.8 0.6
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