Exhibit 99.1
City National Corporation Reports Record Net Income of
$52.5 Million and EPS of $1.05 for the Third Quarter of 2003;
Third Quarter EPS up 12 Percent Over Prior Year
LOS ANGELES--(BUSINESS WIRE)--Oct. 15, 2003--City National
Corporation (NYSE: CYN), parent company of wholly owned City National
Bank, today reported record net income of $52.5 million, or $1.05 per
share, for the third quarter of 2003 compared with net income of $48.7
million, or $0.94 per share, for the third quarter of 2002 on fewer
common shares outstanding this year.
For the first nine months of 2003, City National Corporation
reported net income of $142.2 million, or $2.85 per share, compared
with net income of $138.7 million, or $2.69 per share for the first
nine months of 2002.
HIGHLIGHTS
-- In light of improved credit quality, no provision for credit
losses was recorded in the third quarter of 2003 compared with
$20.5 million in the prior year as nonaccrual loans declined
21 percent; selected higher-risk credits were paid, charged
off or sold; charge-offs were lower and recoveries were higher
than expected; and loans declined by 1 percent from the end of
the prior quarter. The year-to-date provision for credit
losses was $29.0 million compared with $49.5 million for the
first nine months of 2002. The allowance for credit losses to
total loans was 2.20 percent at September 30, 2003.
-- Average core deposits for the first nine months were up 23
percent from the same period last year. Third-quarter average
core deposits were up 23 percent from a year ago and 6 percent
from the prior quarter.
-- Average securities for the first nine months were up 46
percent from the same period last year due to significantly
higher deposit balances and modest loan demand. The average
duration of total available-for-sale securities at September
30, 2003 was 3.2 years. Average loans for the first nine
months were essentially unchanged from the same period last
year and period-end loan balances were down $48.1 million from
the last quarter.
-- Net interest income for the first nine months of 2003
increased slightly over the first nine months of 2002, but was
2 percent lower in the third quarter compared with the same
period last year. This decline is consistent with the
18-basis-point compression in the net interest margin to 4.61
percent during the third quarter of 2003.
-- Noninterest income excluding gains on sale of loans, assets
and securities rose 18 percent for the first nine months over
the same period last year. This continued increase was
primarily due to the acquisition of Convergent Capital
Management ("CCM") on April 1, 2003. Third-quarter noninterest
income, excluding gains on the sale of loans, assets and
securities, was 23 percent higher than the third quarter of
2002 and 3 percent higher than the second quarter of 2003.
-- Exposure to syndicated non-relationship commercial and
purchased media and telecommunication loans declined 40
percent from June 30, 2003 to $31.2 million at September 30,
2003 out of a total loan portfolio of $7.5 billion.
"City National's third-quarter earnings growth reflects
significant improvements in our credit quality and the solid
performance of our business overall, especially the increase in
noninterest income and deposits," said Chief Executive Officer Russell
Goldsmith. "Nonaccrual loan levels, net charge-offs and the quality of
our loan portfolio also improved markedly in this quarter. These and
other factors, such as our strong reserves, combined to preclude the
need for a provision for credit losses at this time.
"As the economy improves further and business confidence gains
more momentum, City National is particularly well-positioned as
California's premier private and business bank to grow revenues,
earnings, assets and shareholder value. This was underscored to a
degree by Moody's recent upgrade of the company's senior debt."
For the
three
For the three months months
ended % ended
$ in millions, September 30, Change June 30,
except per share 2003 2002 2003
- ---------- ---------- ---------- ------ ----------
Earnings Per Share $1.05 $0.94 12 $0.93
Net Income 52.5 48.7 8 46.1
Average Assets 12,418.7 10,964.1 13 11,914.9
Return on Average Assets 1.68 % 1.76 % (5) 1.55 %
Return on Average Equity 18.28 17.65 4 16.33
$ in millions, For the nine months %
except per share ended September 30, Change
2003 2002
- ---------- ---------- ---------- ------
Earnings Per Share $2.85 $2.69 6
Net Income 142.2 138.7 3
Average Assets 11,941.5 10,749.8 11
Return on Average Assets 1.59 % 1.72 % (8)
Return on Average Equity 16.83 18.01 (7)
Return on average assets for the third quarter and the first nine
months of 2003 declined compared with the same periods last year due
to an increase in average assets, primarily lower-yielding securities.
The lower return on average shareholders' equity for the first nine
months was due primarily to a higher level of shareholders' equity
from retained net income and from the exercise of stock options, net
of treasury share repurchases.
ASSETS
Average assets are higher, primarily due to an increase in
deposits which were invested in the securities portfolio and to a
lesser extent, Federal funds sold. Total assets at September 30, 2003
increased 14 percent to a record $12.8 billion from $11.3 billion at
September 30, 2002.
REVENUES
Revenues (net interest income plus noninterest income) for the
first nine months of 2003, increased 4 percent to $513.3 million
compared with $492.7 million for the first nine months of 2002,
primarily due to the acquisition of CCM. Third-quarter revenues
increased 5 percent to $173.9 million from $165.7 million in the third
quarter of 2002. Revenues increased 1 percent from the second quarter
of 2003.
NET INTEREST INCOME
Fully taxable-equivalent net interest income for the first nine
months of 2003 was $395.0 million compared with $394.9 million for the
first nine months of 2002. Net interest income for the third quarter
of 2003 was $132.4 million on a fully taxable-equivalent basis, a 2
percent decrease from $135.2 million in the third quarter of 2002 due
to lower interest rates and lower commercial loan demand.
For the
three
For the three months months
ended % ended
September 30, Change June 30,
$ in millions 2003 2002 2003
- ---------------------------------------- ---------- ------ ----------
Average Loans $7,558.8 $7,958.3 (5) $7,793.9
Average Securities 3,247.0 1,936.6 68 2,900.8
Average Deposits 10,320.8 8,772.8 18 9,774.9
Average Core Deposits 9,323.5 7,565.7 23 8,763.1
Fully Taxable-Equivalent
Net Interest Incom 132.4 135.2 (2) 130.8
Net Interest Margin 4.61 % 5.35 % (14) 4.79 %
For the nine months
ended
September 30, %
$ in millions 2003 2002 Change
- ---------------------------------------------------- ---------- ------
Average Loans $7,770.8 $7,772.7 0
Average Securities 2,866.2 1,963.7 46
Average Deposits 9,826.7 8,422.3 17
Average Core Deposits 8,808.0 7,138.6 23
Fully Taxable-Equivalent
Net Interest Income 395.0 394.9 0
Net Interest Margin 4.82 % 5.35 % (10)
Average loans for the first nine months of 2003 were just slightly
lower than the same period last year. However, average loans for the
third quarter of 2003 declined 5 percent compared with the same period
last year and 3 percent from the prior quarter, due to continued
modest loan demand. Compared with the first nine months of 2002
averages, commercial loans decreased 5 percent, residential first
mortgage loans rose 3 percent, real estate mortgage loans rose 5
percent, and real estate construction loans rose 5 percent. Compared
with the prior-year third-quarter averages, commercial loans declined
11 percent, residential first mortgage loans rose 1 percent, real
estate mortgage loans declined 1 percent, and real estate construction
loans declined 3 percent due to payoffs on completed construction
projects. Compared with the prior quarter, average residential first
mortgage loans and installment loans increased while all other loan
categories decreased.
Period-end September 30, 2003 loans declined $48.1 million from
June 30, 2003, representing a slowing in the decline in the total loan
portfolio and the modest growth seen in certain areas, compared with
the $242.6 million decline between June 30, 2003 and March 31, 2003.
Average securities, principally with low current yields and short
maturities, for the first nine months and third quarter of 2003
increased 46 percent and 68 percent over the same periods last year
due to higher deposit balances and modest loan demand. As of September
30, 2003, unrealized gains on securities available-for-sale were $27.7
million. In addition, the average duration of total available-for-sale
securities at September 30, 2003 was 3.2 years compared to 2.3 years
at June 30, 2003, consistent with our expectations given the change in
interest rates from June to September.
Average deposits continued to increase over the prior-year periods
as well as from the prior quarter. Average core deposits represented
90 percent of the total average deposit base for the third quarter of
2003, compared with 86 percent for the third quarter of 2002 and 90
percent for the second quarter of 2003. New clients and higher client
balances maintained as deposits to pay for services contributed to the
continued growth of deposits.
The net interest margin narrowed due to prepayment and refinancing
activity and low interest rates.
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 $1,051.4 million,
added $8.1 million to net interest income in the third quarter of
2003. That compared with $8.2 million in the third quarter of 2002 and
$7.5 million for the second quarter of 2003. These net interest income
amounts included $5.8 million, $3.7 million and $5.2 million,
respectively, for interest swaps qualifying as fair-value hedges.
Income from swaps qualifying as cash-flow hedges was $2.3 million for
the third quarter of 2003, compared with $4.5 million for the third
quarter of 2002 and $2.3 million for the second quarter of 2003. For
the first nine months of 2003, interest rate swaps added $23.1 million
to net interest income, compared with $24.6 million for the first nine
months of 2002. These amounts included $15.5 million and $10.6
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 $7.8 million.
Interest recovered on nonaccrual and charged-off loans included in
net interest income for the first nine months of 2003 was $2.3 million
compared with $1.4 million for the first nine months of 2002. Interest
income recovered was $1.3 million for the third quarter of 2003,
compared with $0.4 million for the third quarter of 2002 and $0.4
million for the second quarter of 2003, respectively.
The Bank's prime rate was 4.00 percent as of September 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 and
acquisitions. For the first nine months of 2003, noninterest income
including gains on the sale of loans, assets and securities increased
19 percent to $129.3 million, up from $108.9 million for the first
nine months of 2002 primarily as a result of the acquisition of CCM.
Noninterest income increased 32 percent to $45.3 million for the third
quarter of 2003, up from $34.2 million for the third quarter of 2002.
Noninterest income increased slightly over the second quarter of 2003.
Noninterest income as a percentage of total revenues for the first
nine months and third quarter of 2003 was 25 percent and 26 percent,
respectively, compared with 22 percent and 21 percent for the first
nine months and third quarter of 2002 and 26 percent for the second
quarter of 2003.
Trust and Investment Fee Revenue
At or for
the
three
At or for the months
three months ended % ended
September 30, Change June 30,
$ in millions 2003 2002 2003
- -------------------------------- --------- --------- ------ ---------
Trust and Investment Fee Revenue $23.4 $15.3 53 $21.5
Assets Under Administration 27,485.8 19,067.2 44 26,237.3
Assets Under Management (1)(2) 12,653.0 7,022.0 80 12,531.3
For the
nine months ended
September 30, %
$ in millions 2003 2002 Change
- -------------------------------------------------------- ------ ------
Trust and Investment Fee Revenue $60.4 $45.3 33
Assets Under Administration
Assets Under Management (1)(2)
(1) Included above in assets under administration
(2) Excludes $2,115 and $1,896 million of assets under management
for the CCM minority owned asset managers as of September 30,
2003 and June 30, 2003, respectively
Assets under management at September 30, 2003 increased primarily
due to the CCM acquisition in April. New business, aided by strong
relative investment performance and higher market values, also
contributed to the increase. The revenue increases for both the first
nine months and third quarter of 2003 were driven by higher balances
under management or administration. 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 the first nine
months and third quarter of 2003 increased 6 percent and 7 percent
over the same periods last year, respectively. Strong growth in
deposits and higher sales of cash management products contributed to
this growth. Cash management and deposit transaction fees for the
third quarter of 2003 were essentially unchanged from the previous
quarter.
For the first nine months of 2003, international services fees
were 7 percent higher than the first nine months of 2002.
International services fees for the third quarter 2003 were up 2
percent over the same period last year and decreased 3 percent from
the second quarter of 2003. Higher foreign exchange income fueled the
year-over-year revenue growth while trade-finance revenue was down
from 2002.
For the first nine months of 2003, $2.7 million in gains on the
sale of loans and other assets and gains on the sale of securities
were realized compared with $1.3 million in gains for the first nine
months of 2002. There were essentially no gains for the third quarter
of 2003 compared with a loss of $2.6 million for the third quarter of
2002 and a gain of $1.3 million for the second quarter of 2003.
NONINTEREST EXPENSE
Noninterest expense for the first nine months of 2003 increased 10
percent to $269.1 million, up from $243.7 million for the first nine
months of 2002. Noninterest expense was $92.3 million in the third
quarter of 2003, up 12 percent from $82.2 million for the third
quarter of 2002 and up 1 percent from $91.3 million for the second
quarter of 2003. Expenses grew primarily because of the addition of
CCM, the issuance of restricted stock awards in the second quarter of
2003 and to a lesser extent the company's expansion, principally into
New York. Excluding the expenses of CCM and the New York office,
expenses were up less than 5 percent for the first nine months of 2003
over 2002.
For the first nine months of 2003, the company's efficiency ratio
was 51.93 percent compared with the more favorable 48.49 percent for
the same period last year. The efficiency ratio for the third quarter
of 2003 was 52.92 percent, compared with 48.65 percent for the third
quarter of 2002 and 52.53 percent for the second quarter of 2003. The
increase in the efficiency ratio is primarily attributable to the
acquisition of CCM.
INCOME TAXES
The effective tax rate for the first nine months of 2003 was 32.9
percent, compared with 30.1 percent for all of 2002. The higher
effective tax rate for this year reflects the absence of certain tax
benefits recognized in 2002. The third quarter of 2002 included $4.6
million of such benefits that contributed to an effective tax rate of
22.5 percent for that quarter.
CREDIT QUALITY
The company's decision to make no provision for credit losses in
the third quarter of 2003 was attributable to the improving credit
quality of the portfolio; nonaccrual loan levels declining by 21%;
selected higher risk credits being paid, charged off or sold; a lower
level of charge-offs; higher-than-expected recoveries; loans declining
by 1 percent from the prior quarter end; management's ongoing
assessment of the credit quality of the portfolio and a more stable
economic environment. Management believes the allowance for credit
losses is adequate to cover risks in the portfolio at September 30,
2003.
At or for
the three
months
At or for the % ended
three months ended Change June
September 30, 30,
$ in millions 2003 2002 2003
- --------------------------------- ---------- -------- ------ --------
Provision For Credit Losses $- $20.5 (100) $11.5
Net Loan Charge-Offs (4.7) (19.0) (75) (10.1)
Annualized Percentage of Net
Charge-Offs to Average Loans 0.25 % 0.95 % (74) 0.52 %
Nonperforming Assets $54.7 (1) $50.6 8 $69.6
Percentage of Nonaccrual Loans
and ORE to Total Loans and ORE 0.72 % 0.64 % 13 0.92 %
Allowance for Credit Losses $166.2 $159.2 4 $170.9
Percentage of Allowance for
Credit Losses to Outstanding Loans 2.20 % 2.00 % 10 2.25 %
Percentage of Allowance for
Credit Losses to Nonaccrual
Loans 304.08 317.25 (4) 246.37
For the
nine months
ended
September 30, %
$ in millions 2003 2002 Change
- ------------------------------------------------------- ------- ------
Provision For Credit Losses $29.0 $49.5 (41)
Net Loan Charge-Offs (27.3) (42.0) (35)
Annualized Percentage of Net
Charge-Offs to Average Loans 0.47 % 0.72 % (35)
Nonperforming Assets
Percentage of Nonaccrual Loans
and ORE to Total Loans and ORE
Allowance for Credit Losses
Percentage of Allowance for Credit
Losses to Outstanding Loans
Percentage of Allowance for Credit
Losses to Nonaccrual Loans
(1) An additional $6.7 million loan was paid in full on October 1,
2003
For the first nine months of 2003, net charge-offs were $27.3
million, down from $42.0 million for the same period last year. Net
charge-offs for the third quarter of 2003 were $4.7 million, including
$4.5 million relating to the company's syndicated non-relationship
commercial and purchased media and telecommunication loan portfolio.
This compares with $19.0 million and $2.0 million, respectively, for
the third quarter of 2002.
Nonaccrual loans fell this quarter primarily due to payoffs.
Approximately 27 percent of the nonperforming assets were loans to
Northern California clients as of September 30, 2003. Approximately 16
percent were three syndicated non-relationship commercial and
purchased media and telecommunication loans totaling $8.7 million,
which compared with four loans totaling $14.7 million at June 30, 2003
and 4 percent was one dairy loan for $2.2 million. The remaining 53
percent were loans to other borrowers with no major industry
concentrations.
At September 30, 2003, the Company's loan portfolio included
approximately $950 million of credits to borrowers located in Northern
California, including approximately $500 million of loans managed in
Northern California offices. In addition, the portfolio included
approximately $150 million in outstanding dairy loans and $31.2
million of syndicated non-relationship commercial and purchased media
and telecommunication loans, the latter down from $52.2 million at
June 30, 2003.
OUTLOOK
Management currently expects net income per diluted common share
for 2003 to be approximately 8 to 10 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 13 to 16 percent
-- Net interest margin 4.75 to 4.85 percent
-- Provision for credit losses $29 million to $35 million
-- Noninterest income growth 18 to 21 percent
-- Noninterest expense growth 9 to 12 percent
-- Effective tax rate 32 to 34 percent
CAPITAL LEVELS
Total risk-based capital and Tier 1 risk-based capital ratios at
September 30, 2003 were 14.94 percent and 10.76 percent, compared with
the minimum "well-capitalized" capital ratios of 10 percent and 6
percent, respectively. The company's Tier 1 leverage ratio at
September 30, 2003 of 7.37 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 June 30, 2003 were 14.45 percent, 10.21 percent and 7.17
percent, respectively.
On September 25, 2003, Moody's Investors Service upgraded the
ratings of City National Corporation senior debt to A3 from Baa1.
Moody's also upgraded City National Bank's deposits to A2 from A3. The
rating service cited City National's strengthening core profitability,
broadening business franchise, improving risk management and
liquidity.
STOCK REPURCHASE
On January 22, 2003, the Board of Directors authorized a
one-million-share stock buyback program. No shares were repurchased
during the third quarter of 2003. 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.
On July 15, 2003, the Board of Directors authorized the repurchase of
500,000 additional shares of City National Corporation stock,
following completion of the Company's current buyback initiative.
There were 1,545,450 treasury shares at September 30, 2003.
ABOUT CITY NATIONAL
City National Corporation is a financial services company with
$12.8 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, including 12 full-service regional centers, in Southern
California, the San Francisco Bay Area, and New York City. The company
also has $27.5 billion in investment and trust assets under management
or administration at September 30, 2003.
For more information about City National, visit the company's Web
site at cnb.com 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)
other-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) the
impact of proposed and/or recently adopted changes in regulatory,
judicial, or legislative matters, including recent changes in
California legislative tax treatment of business transactions, and (8)
unknown economic impacts caused by the State of California's budget
issues. 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
June 30, 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)
- ----------------------------------------------------------------------
September 30,
---------------------------------
2003 2002 % Change
---------------------------------
Assets
Cash and due from banks $497,392 $480,884 3
Federal funds sold 717,200 268,000 168
Securities 3,501,398 2,046,020 71
Loans (net of allowance for credit
losses of $166,209 and $159,173) 7,375,938 7,807,628 (6)
Other assets 738,600 671,235 10
------------------------
Total assets $12,830,528 $11,273,767 14
========================
Liabilities and Shareholders' Equity
Noninterest-bearing deposits $5,365,335 $4,200,997 28
Interest-bearing deposits 5,420,366 4,925,725 10
------------------------
Total deposits 10,785,701 9,126,722 18
Federal funds purchased and
securities sold
under repurchase agreements 103,346 231,389 (55)
Other short-term borrowed funds 15,125 294,125 (95)
Subordinated debt 303,393 301,917 -
Other long-term debt 278,664 68,897 304
Other liabilities/minority interest 160,500 124,862 29
------------------------
Total liabilities 11,646,729 10,147,912 15
Shareholders' equity 1,183,799 1,125,855 5
------------------------
Total liabilities and
shareholders' equity $12,830,528 $11,273,767 14
========================
Book value per share $24.29 $22.44 8
Number of shares at period end 48,740,418 50,163,305 (3)
CONSOLIDATED STATEMENT OF INCOME (unaudited)
(Dollars in thousands, except per share amount)
- ----------------------------------------------------------------------
For the three months For the nine months
ended ended
September 30, September 30,
------------------------------------------------------------
% %
2003 2002 Change 2003 2002 Change
------------------------------------------------------------
Interest
income $142,361 $154,616 (8) $432,370 $458,485 (6)
Interest
expense (13,700) (23,092) (41) (48,368) (74,692) (35)
---------------------- ----------------------
Net
interest
income 128,661 131,524 (2) 384,002 383,793 -
Provision
for credit
losses - (20,500) (100) (29,000) (49,500) (41)
---------------------- ----------------------
Net
interest
income
after
provision
for credit
losses 128,661 111,024 16 355,002 334,293 6
Noninterest
income 45,268 34,178 32 129,296 108,859 19
Noninterest
expense (92,333) (82,155) 12 (269,061) (243,730) 10
Minority
interest (1,717) (217) 691 (3,257) (374) 771
---------------------- ----------------------
Income
before
taxes 79,879 62,830 27 211,980 199,048 6
Income
taxes (27,376) (14,145) 94 (69,741) (60,367) 16
---------------------- ----------------------
Net income $52,503 $48,685 8 $142,239 $138,681 3
====================== ======================
Net income
per share,
basic $1.08 $0.97 11 $2.93 $2.80 5
====================== ======================
Net income
per share,
diluted $1.05 $0.94 12 $2.85 $2.69 6
====================== ======================
Dividends
paid per
share $0.28 $0.20 40 $0.69 $0.59 17
====================== ======================
Shares used
to compute
per share
net
income,
basic 48,537,386 50,107,163 48,541,349 49,586,859
Shares used
to compute
per share
net
income,
diluted 50,176,559 51,898,897 49,941,668 51,594,818
CITY NATIONAL CORPORATION
- ----------------------------------------------------------------------
SELECTED FINANCIAL INFORMATION (unaudited) (Dollars in thousands)
- ----------------------------------------------------------------------
Period end September 30,
------------------------------------
2003 2002 % Change
------------ ----------- ---------
Loans
Commercial $3,143,489 $3,572,267 (12)
Residential first mortgage 1,803,424 1,746,649 3
Real estate mortgage 1,887,423 1,910,277 (1)
Real estate construction 622,941 661,698 (6)
Installment 84,870 75,910 12
------------ -----------
Total loans $7,542,147 $7,966,801 (5)
============ ===========
Deposits
Noninterest-bearing $5,365,335 $4,200,997 28
Interest-bearing, core 4,451,820 3,826,919 16
------------ -----------
Total core deposits 9,817,155 8,027,916 22
Time deposits - $100,000 and
over 968,546 1,098,806 (12)
------------ -----------
Total deposits $10,785,701 $9,126,722 18
============ ===========
Credit Quality
Nonaccrual loans and ORE
Nonaccrual loans $54,659 $50,173 9
ORE - 460 (100)
------------ -----------
Total nonaccrual loans and ORE $54,659 (1) $50,633 8
============ ===========
Total nonaccrual loans and ORE
to total loans and ORE 0.72 0.64 13
Loans past due 90 days or more
on accrual status $3,023 $8,906 (66)
============ ===========
(1) An additional $6.7 million loan was paid in full on October 1,
2003
For the three For the nine
months ended months ended
Allowance for September 30, September 30,
Credit Losses
------------------------------------------------------
2003 2002 % Change 2003 2002 % Change
------------------------------------------------------
Beginning
balance $170,927 $157,647 8 $164,502 $142,862 15
Additions from
acquisition - - - - 8,787 N/M
Provision for
credit losses - 20,500 (100) 29,000 49,500 (41)
Charge-offs (7,599) (20,268) (63) (36,692) (47,425) (23)
Recoveries 2,881 1,294 123 9,399 5,449 72
------------------ ------------------
Net charge-offs (4,718) (18,974) (75) (27,293) (41,976) (35)
------------------ ------------------
Ending Balance $166,209 $159,173 4 $166,209 $159,173 4
================== ==================
Total net
charge-offs to
average loans
(annualized) (0.25) (0.95) (74) (0.47) (0.72) (35)
Allowance for
credit losses
to total loans 2.20 2.00 10
Allowance for
credit losses
to nonaccrual
loans 304.08 317.25 (4)
CITY NATIONAL CORPORATION
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SELECTED FINANCIAL INFORMATION (unaudited) (Dollars in thousands)
- ----------------------------------------------------------------------
For the three months
ended
September 30,
---------------------------------
2003 2002 % Change
----------- ----------- ---------
Average Balances
Loans
Commercial $3,191,405 $3,598,795 (11)
Residential first mortgage 1,754,877 1,733,693 1
Real estate mortgage 1,890,996 1,900,612 (1)
Real estate construction 634,300 651,174 (3)
Installment 87,221 73,984 18
----------- -----------
Total loans $7,558,799 $7,958,258 (5)
=========== ===========
Securities $3,247,019 $1,936,582 68
Interest-earning assets 11,390,370 10,015,119 14
Assets 12,418,660 10,964,142 13
Core deposits 9,323,541 7,565,699 23
Deposits 10,320,828 8,772,826 18
Shareholders' equity 1,139,440 1,094,381 4
Noninterest income
Trust and investment fee revenue $23,412 $15,287 53
Cash management and deposit
transaction fees 10,661 9,929 7
International services 4,845 4,747 2
Bank owned life insurance 747 737 1
Other 5,551 6,028 (8)
----------- -----------
Subtotal - core 45,216 36,728 23
Gain (loss) on sale of loans and
assets 16 (3,756) (100)
Gain on sale of securities 36 1,206 (97)
----------- -----------
Total $45,268 $34,178 32
=========== ===========
Total revenue $173,929 $165,702 5
=========== ===========
Noninterest expense
Salaries and employee benefits $55,261 $49,109 13
----------- -----------
All Other
Net occupancy of premises 8,142 6,837 19
Professional 6,821 5,418 26
Information services 4,749 4,200 13
Depreciation 3,315 3,268 1
Marketing and advertising 3,060 3,259 (6)
Office services 2,504 2,231 12
Amortization of intangibles 2,365 1,976 20
Equipment 528 599 (12)
Other operating 5,588 5,258 6
----------- -----------
Total all other 37,072 33,046 12
----------- -----------
Total $92,333 $82,155 12
=========== ===========
Selected Ratios
For the Period
Return on average assets 1.68 % 1.76 % (5)
Return on average shareholders'
equity 18.28 17.65 4
Net interest margin 4.61 5.35 (14)
Efficiency ratio (1) 52.92 48.65 9
Dividend payout ratio 25.94 20.03 30
For the nine months
ended
September 30,
---------------------------------
2003 2002 % Change
----------- ----------- ---------
Average Balances
Loans
Commercial $3,383,367 $3,573,657 (5)
Residential first mortgage 1,748,237 1,695,501 3
Real estate mortgage 1,902,117 1,803,924 5
Real estate construction 659,157 628,239 5
Installment 77,970 71,382 9
----------- -----------
Total loans $7,770,848 $7,772,703 -
=========== ===========
Securities $2,866,150 $1,963,666 46
Interest-earning assets 10,960,019 9,869,411 11
Assets 11,941,489 10,749,782 11
Core deposits 8,808,012 7,138,607 23
Deposits 9,826,659 8,422,254 17
Shareholders' equity 1,129,645 1,029,611 10
Noninterest income
Trust and investment fee revenue $60,397 $45,297 33
Cash management and deposit
transaction fees 32,238 30,323 6
International services 14,192 13,257 7
Bank owned life insurance 2,192 2,129 3
Other 17,621 16,532 7
----------- -----------
Subtotal - core 126,640 107,538 18
Gain (loss) on sale of loans and
assets 118 (757) (116)
Gain on sale of securities 2,538 2,078 22
----------- -----------
Total $129,296 $108,859 19
=========== ===========
Total revenue $513,298 $492,652 4
=========== ===========
Noninterest expense
Salaries and employee benefits $161,582 $146,221 11
----------- -----------
All Other
Net occupancy of premises 22,973 19,512 18
Professional 20,026 15,829 27
Information services 13,304 13,221 1
Depreciation 9,453 9,996 (5)
Marketing and advertising 9,725 9,358 4
Office services 7,472 7,060 6
Amortization of intangibles 6,568 5,547 18
Equipment 1,832 1,870 (2)
Other operating 16,126 15,116 7
----------- -----------
Total all other 107,479 97,509 10
----------- -----------
Total $269,061 $243,730 10
=========== ===========
Selected Ratios
For the Period
Return on average assets 1.59 % 1.72 % (8)
Return on average shareholders'
equity 16.83 18.01 (7)
Net interest margin 4.82 5.35 (10)
Efficiency ratio (1) 51.93 48.49 7
Dividend payout ratio 23.58 20.86 13
Period End
Tier 1 risk-based capital ratio 10.76 10.16 6
Total risk-based capital ratio 14.94 14.61 2
Tier 1 leverage ratio 7.37 7.88 (6)
(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).
NOTE: City National Corporation will host a conference call this
afternoon to discuss results for the third 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.
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)