Exhibit 99.1
City National Corporation Reports Net Income of $46.1 Million and EPS
of $0.93 for the Second Quarter of 2003; Corporation Increases
Quarterly Dividend by 37% to $0.28
LOS ANGELES--(BUSINESS WIRE)--July 15, 2003--
First-half 2003 EPS of $1.80 up 3 percent from last year
City National Corporation (NYSE:CYN), parent company of wholly
owned City National Bank, today reported net income of $46.1 million,
or $0.93 per share, for the second quarter of 2003 compared with net
income of $45.8 million, or $0.88 per share, for the second quarter of
2002 on fewer common shares outstanding this year.
For the first half of 2003, City National Corporation recorded net
income of $89.7 million, or $1.80 per share, compared with net income
of $90.0 million, or $1.75 per share, reported for the first half of
2002.
Also today, the Board of Directors of City National Corporation
approved a 37 percent increase in the company's quarterly common stock
cash dividend. The new quarterly dividend of $0.28 per share is up
from the $0.205 per share currently paid. It is the second time in
seven months that City National has increased its dividend, which is
now 44 percent higher than when the year began. The current payout
ratio of approximately 30 percent is within the 28 to 34 percent range
that the company now intends to maintain going forward. The increased
dividend is payable on August 18, 2003, to shareholders of record on
August 6, 2003.
In light of the fact that through its ongoing stock repurchase
program, the corporation has acquired 750,100 shares of the 1 million
previously authorized by the Board, management requested, and the
Board today authorized, the repurchase of 500,000 additional shares of
City National Corporation stock, following completion of the company's
current buyback initiative. Shares will be repurchased on a selective
basis from time to time in open market transactions. City National
Corporation expects to use them for employee stock options, possible
future acquisitions and other general purposes. The corporation had
48,156,797 shares outstanding on June 30, 2003.
HIGHLIGHTS
-- Average core deposits for the second quarter were up 21
percent from a year ago, up 5 percent from the prior quarter
and up 23 percent for the first six months from the same
period last year.
-- Average loans for the first six months were up 3 percent from
the same period last year. However, average loans for the
second quarter declined 1 percent from a year ago and were 2
percent lower than the prior quarter. These declines reflect
the continued slow demand for commercial loans and the
company's continuing attention to credit quality.
-- Net interest income for the first half of 2003 increased 1
percent over the first half of 2002 but fell 3 percent in the
second quarter compared with the year ago quarter. This
decline is consistent with the compression in the net interest
margin to 4.79 percent during the period.
-- Nonaccrual loans fell by $30.4 million, or 30 percent, from
March 31, 2003 to $69.4 million, contributing to a lower
provision for credit losses of $11.5 million for the second
quarter of 2003.
-- Exposure to syndicated non-relationship commercial and
purchased media and telecommunication loans declined 40
percent from March 31, 2003 to $52.2 million at June 30, 2003.
-- Fueled by the acquisition of Convergent Capital Management
("CCM") in April 2003, noninterest income continued to
increase. It rose 16 percent over both the second quarter of
2002 and the first quarter of this year. For the first six
months, noninterest income was up 13 percent from the same
period last year.
"The strength of our earnings and capital position, coupled with
new, favorable tax rates and renewed investor interest in dividend
yield, warrants, in our judgment, a significant increase in the
dividend paid to our shareholders," said Chief Executive Officer
Russell Goldsmith. "This 37 percent dividend increase (and a 44
percent total increase since the year began), combined with the
disciplined continuation of our stock repurchase program, delivers
meaningfully on our continuing commitment to build shareholder value
while still maintaining a strong balance sheet.
"The solid growth in our deposits, coupled with effective cost
controls and signs of improvement in the quality of our loan
portfolio, produced good results in the second quarter despite lower
interest rates and continuing cautiousness in the nation's economy. In
addition, City National's long-term plan to increase noninterest
income, particularly from our wealth management business, took a step
forward with the second-quarter addition of Convergent Capital
Management. Our assets under management grew 81 percent in one year."
For the three months For the three
$ in millions, ended June 30, months ended
except per share ---------------------- % March 31,
2003 2002 Change 2003
- ------------------------ ----------- ---------- ------ --------------
Earnings Per Share $0.93 $0.88 6 $0.87
Net Income 46.1 45.8 1 43.7
Average Assets 11,914.9 10,934.3 9 11,480.6
Return on Average Assets 1.55% 1.68% (8) 1.54%
Return on Average Equity 16.33 17.53 (7) 15.84
For the six months ended
$ in millions, June 30,
except per share ------------------------- %
2003 2002 Change
- ------------------ -------------- ---------- -------
Earnings Per Share $1.80 $1.75 3
Net Income 89.7 90.0 0
Average Assets 11,698.9 10,640.8 10
Return on Average Assets 1.55% 1.71% (9)
Return on Average Equity 16.09 18.21 (12)
Return on average assets for the second quarter and the first six
months of 2003 declined due to an increase in average assets,
primarily lower-yielding securities. The lower return on average
shareholders' equity was due primarily to a higher level of
shareholders' equity from retained net income, issuance of restricted
shares to colleagues, and from the exercise of stock options, net of
treasury share repurchases.
ASSETS
Average assets increased due to an increase in the securities
portfolio. Total assets at June 30, 2003 increased 12 percent to a
record $12.4 billion from $11.0 billion at June 30, 2002.
REVENUES
Revenues (net interest income plus noninterest income) increased 2
percent to $172.2 million in the second quarter of 2003 from $169.3
million in the second quarter of 2002 and increased 3 percent from the
first quarter of 2003 due in part to the acquisition of CCM in April
2003. For the first half of 2003, revenues increased 4 percent to
$339.4 million compared with $327.0 million for the first half of
2002.
NET INTEREST INCOME
Net interest income for the second quarter of 2003 was $130.8
million on a fully taxable-equivalent basis, a 3 percent decrease from
$134.3 million in the second quarter of 2002 due to lower interest
rates and lower commercial loan demand. Fully taxable-equivalent net
interest income for the first six months of 2003 was $262.6 million
compared with $259.7 million for the first six months of 2002.
For the three months For the three
ended June 30, months ended
$ in millions ----------------------- % March 31,
2003 2002 Change 2003
- ------------------------ ----------- ----------- ------ -------------
Average Loans $7,793.9 $7,889.0 (1) $7,964.3
Average Securities
Available-For-Sale 2,900.8 2,029.7 43 2,441.8
Average Deposits 9,774.9 8,551.2 14 9,373.8
Average Core Deposits(1) 8,763.1 7,238.8 21 8,326.5
Fully Taxable-Equivalent
Net Interest Income 130.8 134.3 (3) 131.9
Net Interest Margin 4.79% 5.35% (10) 5.07%
For the six months ended
June 30,
----------------------- %
$ in millions 2003 2002 Change
- ------------------------- ------------ ---------- ------
Average Loans $7,878.6 $7,678.4 3
Average Securities
Available-For-Sale 2,672.6 1,977.4 35
Average Deposits 9,575.5 8,244.1 16
Average Core Deposits(1) 8,546.0 6,921.5 23
Fully Taxable-Equivalent
Net Interest Income 262.6 259.7 1
Net Interest Margin 4.93% 5.35% (8)
(1) All deposits except time deposits of $100,000 or more
Second-quarter and year-to-date 2003 average deposits continued to
increase over the prior-year periods as well as from the prior
quarter.
Average loans for the second quarter of 2003 declined compared
with the same period last year and the prior quarter due to economic
uncertainties and the emphasis on credit quality. However, average
loans for the first six months of 2003 increased over the same period
last year.
The net interest margin narrowed due to a flattening yield curve,
mortgage prepayment activity and low interest rates.
Compared with the prior-year second-quarter averages, commercial
loans declined 8 percent, residential first mortgage loans rose 1
percent, real estate mortgage loans rose 6 percent, and real estate
construction loans rose 9 percent. Compared with the prior quarter,
average real estate construction loans increased while all other loan
categories fell. Compared with the first six months of 2002,
commercial loans decreased 2 percent, residential first mortgage loans
rose 4 percent, real estate mortgage loans rose 9 percent, and real
estate construction loans rose 9 percent.
Average securities available-for-sale, principally with lower
yields and shorter durations, continued to increase as deposits grew
strongly. As of June 30, 2003 unrealized gains on securities
available-for-sale were $57.3 million.
Average core deposits represented 90 percent of the total average
deposit base for the second quarter of 2003, compared with 85 percent
for the second quarter of 2002 and 89 percent for the first quarter of
2003. New clients and higher client balances maintained as deposits to
pay for services contributed to the continued growth of deposits.
As part of the company's long-standing asset liability management
strategy, its "plain vanilla" interest rate swaps hedging loans,
deposits and borrowings, with a notional value of $976.4 million,
added $7.5 million to net interest income in the second quarter of
2003. That compared with $8.5 million in the second quarter of 2002
and $7.5 million for the first quarter of 2003. These amounts included
$5.2 million, $3.7 million and $4.5 million, respectively, for
interest swaps qualifying as fair-value hedges. Income from swaps
qualifying as cash-flow hedges was $2.3 million for the second quarter
of 2003, compared with $4.8 million for the second quarter of 2002 and
$3.0 million for the first quarter of 2003. For the first half of
2003, interest rate swaps added $15.0 million to net interest income,
compared with $16.4 million for the first half of 2002. These amounts
include $9.7 million and $6.9 million, respectively, for interest
swaps qualifying as fair value hedges. Income from existing swaps
qualifying as cash flow hedges of loans expected to be recorded in net
interest income within the next 12 months is $8.5 million.
Interest income recovered on nonaccrual and charged-off loans
included above was $0.4 million for the second quarter of 2003,
compared with $0.6 million for the second quarter of 2002 and $0.6
million for the first quarter of 2003, respectively.
The Bank's prime rate was 4.00 percent as of June 30, 2003,
compared with 4.75 percent a year earlier.
NONINTEREST INCOME
The company continues to emphasize growth in noninterest income
through both the development of its existing business as well as from
acquisitions. Noninterest income increased 16 percent to $45.1 million
for the second quarter of 2003, compared with $38.7 million for the
second quarter of 2002, primarily attributable to the acquisition of
CCM. Noninterest income increased 16 percent over the first quarter of
2003. For the first half of 2003, noninterest income increased 13
percent to $84.0 million compared with $74.7 million for the first
half of 2002.
Noninterest income as a percentage of total revenues for the
second quarter and first half of 2003 was 26 percent and 25 percent,
respectively, compared with 23 percent for the second quarter and
first half of 2002 and 23 percent for the first quarter of 2003.
Trust and Investment Fee Revenue
At or for For the six
At or for the three the three months ended
months ended June 30, months ended June 30,
$ in millions ------------------- % March 31, --------- %
2003 2002 Change 2003 2003 2002 Change
- --------------- --------- --------- ------ --------- ---- ---- ------
Trust and
Investment Fee
Revenue $21.5 $15.7 37 $15.5 $37.0 $30.0 23
Assets Under
Administration 26,237.3 18,271.1 44 19,840.8
Assets Under
Management
(1)(2) 12,531.3 6,906.2 81 6,978.0
(1) Included above in assets under administration
(2) June 30, 2003 does not include an additional $1,896 million of
assets under management for the CCM minority owned asset managers
Assets under management at June 30, 2003 increased primarily due
to the CCM acquisition in April 2003. New business in all other
categories, aided by strong relative investment performance and higher
market values, also contributed to the increase. The
year-over-prior-year revenue increase for both second quarter and
first six months of 2003 was driven by higher balances under
administration partially attributable to the acquisition of CCM.
Increases in market values are reflected in fee income primarily on a
trailing quarter basis.
Other Noninterest Income
Cash management and deposit transaction fees for both the second
quarter and first half of 2003 increased 6 percent over the same
periods last year. Strong growth in deposits and higher sales of cash
management products contributed to this growth. Cash management and
deposit transaction fees for the second quarter of 2003 were slightly
lower than they were in the first quarter when prior-year annual fees
were recognized.
International services fees for the second quarter 2003 were up 6
percent over the same period last year and increased 16 percent from
the first quarter of 2003. For the first half of 2003, international
services fees were 10 percent higher than the first half of 2002.
Higher foreign exchange fueled the year-over-year and prior quarter
revenue growth while trade-finance revenue was down from 2002.
Gains on the sale of loans and other assets and gains on the sale
of securities for the second quarter of 2003 amounted to $1.3 million
compared with $1.5 million for the second quarter of 2002 and $1.3
million for the first quarter of 2003. For the first half of 2003,
$2.6 million in gains were realized compared with $3.9 million in
gains for the first half of 2002.
NONINTEREST EXPENSE
Noninterest expense was $91.3 million in the second quarter of
2003, up 10 percent from $82.9 million for the second quarter of 2002
and 7 percent from $85.4 million for the first quarter of 2003.
Expenses grew primarily because of the addition of CCM and to a lesser
extent were due to the company's continued modest expansion,
principally in New York.
During the quarter, stock-based compensation performance awards
for 2002 were granted to colleagues of the company. These performance
awards for the first time included restricted stock grants with fewer
stock options, which reduced the total number of shares awarded but
better aligned the interests of shareholders and colleagues. The
company recorded $129,000 in expense for restricted stock awards in
the second quarter, and going forward expects to expense $387,000
quarterly for this stock award.
Noninterest expense for the first half of 2003 increased 9 percent
to $176.7 million compared with $161.6 million for the first half of
2002.
The company's efficiency ratio for the second quarter of 2003 was
52.53 percent, compared with 47.95 percent for the second quarter of
2002 and 50.28 percent for the first quarter of 2003. The higher
efficiency ratio is attributable to the acquisition of CCM. For the
first half of 2003, the efficiency ratio was 51.42 percent compared
with 47.95 percent for the first half of 2002.
INCOME TAXES
The first-half 2003 effective tax rate was 32.1 percent, compared
with 30.1 percent for all of 2002. The higher effective tax rate over
the prior year reflects the absence of certain tax benefits recorded
in the second half of 2002.
CREDIT QUALITY
Net charge-offs were $10.1 million, including $4.8 million
relating to the company's syndicated non-relationship commercial and
purchased media and telecommunication loan portfolio. This compares
with $16.0 million and $9.7 million, respectively, for the second
quarter of 2002. For the first half of 2003, net charge-offs were
$22.6 million, compared with $23.0 million in the same period last
year.
At or for the three months
ended June 30,
---------------------------- %
$ in millions 2003 2002 Change
- -------------------------------- ------------- -------------- -------
Provision For Credit Losses $11.5 $18.0 (36)
Net Loan Charge-Offs (10.1) (16.0) (37)
Annualized Percentage of Net
Charge-Offs to Average Loans 0.52 % 0.81 % (36)
Nonperforming Assets $69.6 $64.9 7
Percentage of Nonaccrual Loans
and ORE to Total Loans and ORE 0.92 % 0.83 % 11
Allowance for Credit Losses $170.9 $157.6 8
Percentage of Allowance for
Credit Losses to Outstanding Loans 2.25 % 2.01 % 12
Percentage of Allowance for
Credit Losses to Nonaccrual Loans 246.37 244.67 1
For the six
At or for the months ended
three June 30,
months ended --------------- %
$ in millions March 31, 2003 2003 2002 Change
- ------------------------------ ---------------- ------- ------- ------
Provision For Credit Losses $17.5 $29.0 $29.0 0
Net Loan Charge-Offs (12.5) (22.6) (23.0) (2)
Annualized Percentage of Net
Charge-Offs to Average Loans 0.64 % 0.58 % 0.60 % (3)
Nonperforming Assets $99.9
Percentage of Nonaccrual Loans
and ORE to Total Loans and ORE 1.28 %
Allowance for Credit Losses $169.5
Percentage of Allowance for
Credit Losses to Outstanding Loans 2.16 %
Percentage of Allowance for
Credit Losses to Nonaccrual Loans 169.93
At June 30, 2003, the Company's loan portfolio included
approximately $1.0 billion of credits to borrowers located in Northern
California, including approximately $600 million of loans managed in
Northern California offices. In addition, the portfolio included $52.2
million of syndicated non-relationship commercial and purchased media
and telecommunication loans, down from $87.1 million at March 31,
2003.
Nonaccrual loans fell this quarter primarily due to payoffs and
sales. Approximately 40 percent of the nonperforming assets were loans
to Northern California clients as of June 30, 2003. Approximately 20
percent were three syndicated non-relationship commercial and
purchased media and telecommunication loans totaling $14.7 million,
which compared with nine loans totaling $34.0 million at March 31,
2003. The remaining 40 percent were loans to other borrowers. Included
in other assets was one $3.6 million loan held-for-sale that would
have been classified as a nonperforming loan had it been included in
loans at June 30, 2003. The loan was sold on July 1, 2003 at its net
book value.
The provision for credit losses primarily reflects declining
nonaccrual loan levels, charge-offs, management's ongoing assessment
of the credit quality of the portfolio and the economic environment,
most notably in Northern California and in California's dairy
industry. The company's dairy portfolio contained $150 million in
outstanding loan balances as of June 30, 2003. All of these dairy
loans are performing. Management believes the allowance for credit
losses is adequate to cover risks in the portfolio at June 30, 2003.
OUTLOOK
Management has updated its guidance in light of current lackluster
economic conditions as of July 15, 2003 and the Federal Reserve
Board's recent rate reduction. The most significant revisions apply to
the company's expectations for average loan growth and the net
interest margin, which have been impacted much the same as other
financial institutions nationwide. Management now expects net income
per diluted common share for 2003 to be approximately 4 to 6 percent
higher than net income per diluted common share for 2002 based on the
business indicators below:
-- Average loan growth flat to 2 percent
-- Average deposit growth 10 to 13 percent
-- Net interest margin 4.75 to 4.90 percent
-- Provision for credit losses $50 million to $65 million
-- Noninterest income growth 18 to 21 percent
-- Noninterest expense growth 9 to 12 percent
-- Effective tax rate 31 to 33 percent
CAPITAL LEVELS
Total risk-based capital and Tier 1 risk-based capital ratios at
June 30, 2003 were 14.45 percent and 10.21 percent, compared with the
minimum "well-capitalized" capital ratios of 10 percent and 6 percent,
respectively. The company's Tier 1 leverage ratio at June 30, 2003 of
7.17 percent exceeded the regulatory minimum of 5 percent required for
a "well-capitalized" institution. Total risk-based capital, Tier 1
risk-based capital and the Tier 1 leverage ratios at March 31, 2003
were 14.46 percent, 10.30 percent and 7.65 percent, respectively.
STOCK REPURCHASE
On January 22, 2003, the Board of Directors authorized a
1-million-share stock buyback program. During the second quarter of
2003, 537,300 shares were repurchased under this program at an average
price of $41.64 per share. A total of 750,100 shares have been
repurchased under this program at an average cost of $42.47 per share,
leaving 249,900 shares available for repurchase. The shares purchased
under the buyback programs will be reissued for acquisitions, upon the
exercise of stock options, and for other general corporate purposes.
There were 2,027,574 treasury shares at June 30, 2003.
NOTE: City National Corporation will host a conference call this
afternoon to discuss results for the second quarter of 2003. 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 877-313-6466. A listen-only live broadcast of the call also will
be available on the investor relations page of the company's website
at www.cnb.com. There, it will be archived and available for 12
months.
ABOUT CITY NATIONAL
City National Corporation is a financial services company with
$12.4 billion in total assets. Its wholly owned subsidiary, City
National Bank, is the second largest independent bank headquartered in
California. As California's Premier Private and Business Bank(SM),
City National provides banking, investment and trust services through
54 offices and 12 full-service regional centers in Southern California
and the San Francisco Bay Area, plus an office in New York City. The
company has more than $26 billion in investment and trust assets under
management or administration at June 30, 2003.
For more information about City National, visit the company's Web
site at http://www.cnb.com/.
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.
Forward-looking statements are based on management's knowledge and
belief as of today and include information concerning the company's
possible or assumed future financial condition, and its results of
operations, business and earnings outlook. These forward-looking
statements are subject to risks and uncertainties. A number of
factors, some 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 interest rates, (2) significant changes in banking laws
or regulations, (3) increased competition in the company's market, (4)
higher-than-expected credit losses, (5) earthquake or other natural
disasters impacting the condition of real estate collateral, (6) the
effect of acquisitions and integration of acquired businesses, (7)
unanticipated changes in regulatory, judicial, or legislative tax
treatment of business transactions, (8) unknown economic impacts
caused by the State of California's budget shortfall, and (9) economic
uncertainty created by worldwide geopolitical unrest, hostilities,
terrorist attacks and related events. Management cannot predict at
this time the severity or duration of the effects of the recent
business slowdown on our specific business activities and
profitability. Weaker or a further decline in capital and consumer
spending, and related recessionary trends could adversely affect our
performance in a number of ways including decreased demand for our
products and services and increased credit losses. Likewise, changes
in deposit interest rates, among other things, could slow the rate of
growth or put pressure on current deposit levels. 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 Quarterly Report on Form 10-Q for the quarter-ended
March 31, 2003, and particularly the section of Management's
Discussion and Analysis therein titled "Cautionary Statement for
Purposes of the 'Safe Harbor' Provisions of the Private Securities
Litigation Reform Act of 1995."
CITY NATIONAL CORPORATION
CONSOLIDATED BALANCE SHEET (unaudited)
(Dollars in thousands, except per share amount)
June 30, %
2003 2002 Change
Assets
Cash and due from banks $451,291 $442,343 2
Federal funds sold 650,000 165,000 294
Securities 3,080,721 1,988,817 55
Loans (net of allowance for credit
losses of $170,927 and $157,647) 7,419,299 7,696,883 (4)
Other assets 753,522 689,377 9
Total assets $12,354,833 $10,982,420 12
Liabilities and Shareholders' Equity
Noninterest-bearing deposits $4,916,678 $3,973,435 24
Interest-bearing deposits 5,250,128 4,823,732 9
Total deposits 10,166,806 8,797,167 16
Federal funds purchased and securities
sold under repurchase agreements 167,084 110,665 51
Other short-term borrowed funds 115,125 421,125 (73)
Subordinated debt 318,282 282,043 13
Other long-term debt 283,954 169,144 68
Other liabilities / minority interest 158,892 128,938 23
Total liabilities 11,210,143 9,909,082 13
Shareholders' equity 1,144,690 1,073,338 7
Total liabilities and shareholders'
equity $12,354,833 $10,982,420 12
Book value per share $23.77 $21.41 11
Number of shares at period end 48,156,797 50,122,921 (4)
CONSOLIDATED STATEMENT OF INCOME (unaudited)
(Dollars in thousands, except per share amount)
For the three months For the six months
ended ended
June 30, % June 30, %
2003 2002 Change 2003 2002 Change
Interest
income $144,333 $155,511 (7) $290,009 $303,869 (5)
Interest
expense (17,209) (24,937) (31) (34,668) (51,600) (33)
Net
interest
income 127,124 130,574 (3) 255,341 252,269 1
Provision
for credit
losses (11,500) (18,000) (36) (29,000) (29,000) -
Net
interest
income
after
provision
for credit
losses 115,624 112,574 3 226,341 223,269 1
Noninterest
income 45,052 38,738 16 84,028 74,681 13
Noninterest
expense (91,316) (82,874) 10 (176,728) (161,575) 9
Minority
interest (1,065) (85) N/M (1,540) (157) N/M
Income
before
taxes 68,295 68,353 - 132,101 136,218 (3)
Income
taxes (22,214) (22,593) (2) (42,365) (46,222) (8)
Net income $46,081 $45,760 1 $89,736 $89,996 -
Net income
per share,
basic $0.95 $0.92 3 $1.85 $1.82 2
Net income
per share,
diluted $0.93 $0.88 6 $1.80 $1.75 3
Dividends
paid per
share $0.21 $0.20 5 $0.41 $0.39 5
Shares used
to compute
per share
net
income,
basic 48,307,675 49,963,388 48,543,331 49,326,706
Shares used
to compute
per share
net
income,
diluted 49,524,367 52,082,511 49,824,223 51,442,779
CITY NATIONAL CORPORATION
SELECTED FINANCIAL INFORMATION (unaudited) (Dollars in thousands)
Period end June 30,
2003 2002 % Change
Loans
Commercial $3,232,780 $3,552,800 (9)
Residential first mortgage 1,736,442 1,730,589 -
Real estate mortgage 1,895,964 1,866,086 2
Real estate construction 653,063 635,218 3
Installment 71,977 69,837 3
Total loans $7,590,226 $7,854,530 (3)
Deposits
Noninterest-bearing $4,916,678 $3,973,435 24
Interest-bearing, core 4,251,204 3,530,798 20
Total core deposits 9,167,882 7,504,233 22
Time deposits - $100,000 and over 998,924 1,292,934 (23)
Total deposits $10,166,806 $8,797,167 16
Credit Quality
Nonaccrual loans and ORE
Nonaccrual loans $69,377 (1) $64,432 8
ORE 173 460 (62)
Total nonaccrual loans and ORE $69,550 $64,892 7
Total nonaccrual loans and ORE to
total loans and ORE 0.92 0.83 11
Loans past due 90 days or more on
accrual status $5,853 $3,257 80
(1) Balance does not include a $3,625 loan held-for-sale in other
assets as of June 30, 2003, which would have been classified as
nonperforming had it been included in loans. The loan was sold on
July 1, 2003 at its June 30, 2003 carrying value.
For the three For the six months
months ended ended
Allowance for June 30, June 30,
Credit Losses % %
2003 2002 Change 2003 2002 Change
Beginning balance $169,480 $155,657 9 $164,502 $142,862 15
Additions from
acquisition - - - - 8,787 N/M
Provision for
credit losses 11,500 18,000 (36) 29,000 29,000 -
Charge-offs (14,211) (17,861) (20) (29,093) (27,157) 7
Recoveries 4,158 1,851 125 6,518 4,155 57
Net charge-offs (10,053) (16,010) (37) (22,575) (23,002) (2)
Ending Balance $170,927 $157,647 8 $170,927 $157,647 8
Total net charge-
offs to average
loans (annualized) (0.52) (0.81) (36) (0.58) (0.60) (3)
Allowance for
credit losses to
total loans 2.25 2.01 12
Allowance for
credit losses to
nonaccrual loans 246.37 244.67 1
CITY NATIONAL CORPORATION
SELECTED FINANCIAL INFORMATION (unaudited) (Dollars in thousands)
For the three months ended
June 30,
2003 2002 % Change
Average Balances
Loans
Commercial $3,402,342 $3,687,873 (8)
Residential first mortgage 1,733,015 1,718,680 1
Real estate mortgage 1,906,995 1,791,314 6
Real estate construction 679,541 622,223 9
Installment 71,970 68,915 4
Total loans $7,793,863 $7,889,005 (1)
Securities $2,900,785 $2,029,742 43
Interest-earning assets 10,941,207 10,068,002 9
Assets 11,914,869 10,934,265 9
Core deposits 8,763,055 7,238,807 21
Deposits 9,774,905 8,551,230 14
Shareholders' equity 1,131,682 1,047,042 8
Noninterest income
Trust and investment fee revenue $21,505 $15,736 37
Cash management and deposit
transaction fees 10,660 10,025 6
International services 5,019 4,719 6
Bank owned life insurance 731 719 2
Other 5,865 6,035 (3)
Subtotal - core 43,780 37,234 18
Gain on sale of loans and
assets - 1,320 (100)
Gain on sale of securities 1,272 184 591
Total $45,052 $38,738 16
Total revenue $172,176 $169,312 2
Noninterest expense
Salaries and employee benefits $54,516 $49,642 10
All Other
Net occupancy of premises 7,862 6,495 21
Professional 6,769 5,182 31
Information services 4,302 4,661 (8)
Depreciation 3,019 3,336 (10)
Marketing and advertising 3,553 3,311 7
Office services 2,398 2,731 (12)
Amortization of intangibles 2,227 2,056 8
Equipment 638 789 (19)
Other operating 6,032 4,671 29
Total all other 36,800 33,232 11
Total $91,316 $82,874 10
Selected Ratios
For the Period
Return on average assets 1.55 % 1.68 % (8)
Return on average shareholders'
equity 16.33 17.53 (7)
Net interest margin 4.79 5.35 (10)
Efficiency ratio (1) 52.53 47.95 10
Dividend payout ratio 21.51 21.34 1
For the six months ended
June 30,
2003 2002 % Change
Average Balances
Loans
Commercial $3,480,938 $3,560,880 (2)
Residential first mortgage 1,744,861 1,676,088 4
Real estate mortgage 1,907,770 1,754,779 9
Real estate construction 671,791 616,582 9
Installment 73,267 70,059 5
Total loans $7,878,627 $7,678,388 3
Securities $2,672,561 $1,977,433 35
Interest-earning assets 10,741,276 9,795,351 10
Assets 11,698,948 10,640,826 10
Core deposits 8,545,977 6,921,521 23
Deposits 9,575,481 8,244,062 16
Shareholders' equity 1,124,667 996,690 13
Noninterest income
Trust and investment fee revenue $36,985 $30,010 23
Cash management and deposit
transaction fees 21,577 20,394 6
International services 9,347 8,510 10
Bank owned life insurance 1,445 1,392 4
Other 12,070 10,504 15
Subtotal - core 81,424 70,810 15
Gain on sale of loans and
assets 102 2,999 (97)
Gain on sale of securities 2,502 872 187
Total $84,028 $74,681 13
Total revenue $339,369 $326,950 4
Noninterest expense
Salaries and employee benefits $106,321 $97,112 9
All Other
Net occupancy of premises 14,831 12,675 17
Professional 13,205 10,411 27
Information services 8,555 9,021 (5)
Depreciation 6,138 6,728 (9)
Marketing and advertising 6,665 6,099 9
Office services 4,968 4,829 3
Amortization of intangibles 4,203 3,571 18
Equipment 1,304 1,271 3
Other operating 10,538 9,858 7
Total all other 70,407 64,463 9
Total $176,728 $161,575 9
Selected Ratios
For the Period
Return on average assets 1.55 % 1.71 % (9)
Return on average shareholders'
equity 16.09 18.21 (12)
Net interest margin 4.93 5.35 (8)
Efficiency ratio (1) 51.42 47.95 7
Dividend payout ratio 22.19 21.30 4
Period End
Tier 1 risk-based capital ratio 10.21 9.74 5
Total risk-based capital ratio 14.45 14.24 1
Tier 1 leverage ratio 7.17 7.44 (4)
(1) The efficiency ratio is defined as noninterest expense excluding
ORE expense divided by total revenue (net interest income on a tax-
equivalent basis and noninterest income).
CONTACT: City National Corporation
Frank Pekny, 310-888-6700 (Financial/Investors)
Cary Walker, 213-833-4715 (Media)
or
Abernathy MacGregor Group
Ian Campbell, 213-630-6550 (Financial/Investors)