Exhibit 99.1
City National Corporation Reports Record Net Income of
$186.7 Million and EPS of $3.72 For The Year 2003;
Total Assets Reach $13.0 Billion For The First Time
LOS ANGELES--(BUSINESS WIRE)--Jan. 14, 2004--City National
Corporation (NYSE:CYN), parent company of wholly owned City National
Bank, today reported its eighth consecutive year of record net income.
Net income totaled $186.7 million, or $3.72 per share in 2003,
compared with net income of $183.1 million, or $3.56 per share, for
2002. Earnings per share for 2003 grew 4.5 percent from 2002.
Fourth-quarter 2003 net income was $44.4 million, or $0.87 per
share, compared with net income of $44.4 million, or $0.87 per share
for the fourth quarter of 2002 and $52.5 million, or $1.05 per share,
for the third quarter of 2003.
HIGHLIGHTS
-- While income before taxes increased by 12 percent, as
previously announced by the company, certain net state tax
benefits recorded in the first three quarters of 2003 of
approximately $0.16 per share were reversed in the fourth
quarter due to a December 31, 2003 tax announcement by the
California Franchise Tax Board (FTB). No such benefits were
taken in the fourth quarter. As a result of this matter, the
company's income tax rate increased by approximately 3
percentage points for 2003 compared with 2002.
-- The provision for credit losses of $29.0 million for 2003 was
down 57 percent from $67.0 million for the prior year. No
provision for credit losses was recorded for the fourth
quarter of 2003 as a result of improved credit quality and the
strength of our ratio of the allowance for credit losses to
loans of 2.1 percent at December 31, 2003. Nonaccrual loans
fell to $42.3 million, a 41 percent decline from December 31,
2002.
-- Average core deposits for 2003 were up 22 percent from 2002.
Fourth-quarter average core deposits were up 19 percent from
the same period a year ago and 4 percent from the prior
quarter.
-- Average securities for 2003 were up 50 percent from 2002 due
to significantly higher deposit balances. The average duration
of the total available-for-sale securities portfolio at
December 31, 2003 was 3.4 years.
-- Period-end loan balances at December 31, 2003 increased $340.6
million from September 30, 2003, while average loans for all
of 2003 were $93.5 million lower than 2002.
-- Noninterest income excluding gains (losses) on sale of loans,
assets, and debt repurchase and gain on sale of securities
rose 20 percent in 2003 over 2002. This increase was, to a
significant extent, due to the acquisition of Convergent
Capital Management ("CCM") on April 1, 2003. Fourth-quarter
noninterest income, excluding gains (losses) on the sale of
loans, assets, and debt repurchase and gain on the sale of
securities, was 27 percent higher than the fourth quarter of
2002 and 5 percent higher than the third quarter of 2003.
"As City National celebrates its 50th anniversary, it is
noteworthy that for the first time we now have $13 billion in bank
assets, over $28 billion in client investment assets and eight
consecutive years of net income growth," said City National
Corporation Chief Executive Officer Russell Goldsmith. "Income before
taxes grew 12 percent over 2002, thanks to strengthening credit
quality, dynamic deposit growth, and increasing noninterest income,
despite challenging national economic conditions and a low interest
rate environment.
"Another highlight of 2003 was the continuing expansion and
consolidation of our acquisitions in Northern California, where we
invested in new colleagues, offices and banking and wealth management
capabilities. As economic conditions and loan demand have begun to
improve, we believe 2004 will be another year of growth and progress
at City National Bank, California's Premier Private and Business
Bank."
For the
three
months
For the three months ended ended
Dollars in millions, December 31, % Sept. 30,
except per share 2003 2002 Change 2003
- ------------------------------ ---------- ---------- ------ ----------
Earnings Per Share $0.87 $0.87 0 $1.05
Net Income 44.4 44.4 0 52.5
Average Assets 12,756.6 11,312.3 13 12,418.7
Return on Average Assets 1.38 % 1.56 % (12) 1.68 %
Return on Average Equity 14.69 15.90 (8) 18.28
For the twelve months ended
Dollars in millions, December 31, %
except per share 2003 2002 Change
- ----------------------------------------- ---------- ---------- ------
Earnings Per Share $3.72 $3.56 4
Net Income 186.7 183.1 2
Average Assets 12,146.9 10,891.6 12
Return on Average Assets 1.54 % 1.68 % (8)
Return on Average Equity 16.27 17.45 (7)
Return on average assets for the year and fourth quarter of 2003
declined from 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 year 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 were higher, primarily due to an increase in
deposits which were invested in the securities portfolio and, to a
lesser extent, federal funds sold and due from banks-interest bearing.
Total assets at December 31, 2003 increased 10 percent to a record
$13.0 billion from $11.9 billion at December 31, 2002.
REVENUES
Revenues (net interest income plus noninterest income) for the
year, increased 5 percent to $691.8 million compared with $661.5
million for 2002, due to a significant extent to the acquisition of
CCM. Fourth-quarter revenues increased 6 percent to $178.5 million
from $168.9 million in the fourth quarter of 2002. They grew 3 percent
from the third quarter of 2003.
NET INTEREST INCOME
Fully taxable-equivalent net interest income for the year was
$529.0 million, compared with $530.1 million for 2002. Net interest
income for the fourth quarter of 2003 was $134.0 million on a fully
taxable-equivalent basis, a 1 percent decrease from $135.2 million in
the fourth quarter of 2002 due to lower interest rates and lower
commercial loan balances. However, fourth-quarter 2003 net interest
income on a fully taxable-equivalent basis increased 1 percent over
the preceding quarter.
For the three
For the three months months
ended ended
December 31, % Sept. 30,
Dollars in millions 2003 2002 Change 2003
- ----------------------------- ---------- ---------- ------ ----------
Average Loans $7,605.4 $7,970.9 (5) $7,558.8
Average Securities 3,424.3 2,089.2 64 3,114.1
Average Deposits 10,694.0 9,284.3 15 10,320.8
Average Core Deposits 9,737.3 8,175.5 19 9,323.5
Fully Taxable-Equivalent
Net Interest Income 134.0 135.2 (1) 132.4
Net Interest Margin 4.52 % 5.17 % (13) 4.61 %
For the twelve months ended
December 31, %
Dollars in millions 2003 2002 Change
- ---------------------------------------------------- ---------- ------
Average Loans $7,729.2 $7,822.7 (1)
Average Securities 2,976.7 1,977.9 50
Average Deposits 10,045.3 8,639.5 16
Average Core Deposits 9,042.3 7,400.0 22
Fully Taxable-Equivalent
Net Interest Income 529.0 530.1 0
Net Interest Margin 4.74 5.30 % (11)
Average loans for 2003 were slightly lower than 2002.
Fourth-quarter 2003 average loans declined 5 percent from the same
period last year due to continued modest loan demand. However, average
loans increased 1 percent from the prior quarter. Compared with 2002
averages, commercial loans decreased 7 percent; residential first
mortgage loans rose 4 percent, real estate mortgage loans rose 4
percent; and real estate construction loans rose 2 percent. Compared
with the prior-year fourth-quarter averages, commercial loans declined
13 percent; residential first mortgage loans rose 8 percent; real
estate mortgage loans decreased 1 percent; and real estate
construction loans decreased 6 percent. Compared with the prior
quarter, average residential first mortgage loans and real estate
mortgage loans increased while all other loan categories decreased.
Period-end December 31, 2003 loans increased $340.6 million from
September 30, 2003, reflecting growth in all loan categories except
installment loans.
Average securities, principally with low current yields and short
maturities, increased 50 percent for the year and 64 percent for the
fourth quarter of 2003 compared with the same periods of 2002. The
reasons were higher deposit balances and modest loan demand. As of
December 31, 2003, unrealized gains on securities available-for-sale
were $15.0 million. The average duration of total available-for-sale
securities at December 31, 2003 was 3.4 years compared to 3.2 years at
September 30, 2003 and 2.1 years at December 31, 2002.
Average deposits continued to increase. Average core deposits
represented 90 percent and 91 percent of the total average deposit
base for the year and fourth quarter of 2003, respectively. That
compares with 86 percent and 88 percent for the same periods of 2002
and 90 percent for the third 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 continued to narrow, however, at a slower
rate in the fourth quarter, 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 $1.1 billion, added
$31.5 million to net interest income in 2003, compared with $32.2
million in 2002. These amounts included $21.6 million and $14.4
million, respectively, for interest swaps qualifying as fair value
hedges. For the fourth quarter of 2003, interest rate swaps added $8.3
million to net interest income, compared with $7.6 million in the
fourth quarter of 2002 and $8.1 million for the third quarter of 2003.
These net interest income amounts included $6.1 million, $3.8 million
and $5.8 million, respectively, for interest swaps qualifying as
fair-value hedges. Income from swaps qualifying as cash-flow hedges
was $2.2 million for the fourth quarter of 2003, compared with $3.8
million for the fourth quarter of 2002 and $2.3 million for the third
quarter of 2003. 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 $7.0 million.
Interest recovered on nonaccrual and charged off loans included in
net interest income for the year 2003 was $2.7 million compared with
$2.3 million for year 2002. Interest income recovered was $0.3 million
for the fourth quarter of 2003, compared with $0.9 million for the
fourth quarter of 2002 and $1.3 million for the third quarter of 2003.
The Bank's prime rate was 4.00 percent as of December 31, 2003,
compared with 4.25 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 2003, noninterest income including gains (losses) on
the sale of loans, assets and debt repurchase and gains on the sale of
securities increased to $177.2 million, up 21 percent from $146.3
million for 2002, attributable to a significant extent to the CCM
acquisition. Noninterest income increased to $47.9 million for the
fourth quarter of 2003, up 28 percent from $37.4 million for the
fourth quarter of 2002. Over the third quarter of 2003, noninterest
income was up 6 percent.
As a percentage of total revenues, noninterest income for the year
and fourth quarter of 2003 was 26 percent and 27 percent,
respectively, compared with 22 percent for both the year and fourth
quarter of 2002, and 26 percent for the third quarter of 2003.
Trust and Investment Fee Revenue
At or for the At or for For the
three months ended the three months twelve months
Dec. 31, ended ended Dec. 31,
Sept. 30,
% %
Dollars in Change Change
millions 2003 2002 2003 2003 2002
- ----------- ---------- --------- ------ --------- ------ ------ ------
Trust and
Investment
Fee
Revenue $23.3 $16.0 46 $23.4 $83.7 $61.3 37
Assets
Under
Admini-
stration 28,835.3 19,513.3 48 27,485.8
Assets
Under
Management
(1)(2) 13,610.8 7,407.0 84 12,653.0
(1) Included above in assets under administration
(2) Excludes $2,858 and $2,115 million of assets under management
for the CCM minority owned asset managers as of December 31, 2003 and
September 30, 2003, respectively
Assets under management at December 31, 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 year
and fourth 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 2003 grew 5
percent from the preceding year and increased slightly between the
fourth quarters of 2002 and 2003. Strong growth in deposits and higher
sales of cash management products contributed to this growth. Cash
management and deposit transaction fees for the fourth quarter of 2003
decreased 2 percent from the third quarter of 2003.
International services fees in 2003 were 6 percent higher than
2002. International services fees for the fourth quarter of 2003 were
up 2 percent over the same period last year, and increased 6 percent
from the third quarter of 2003. Higher foreign exchange income fueled
the year-over-year revenue growth while trade-finance revenue was down
from 2002.
Included in other income was $4.0 million of participating
mortgage loan ("PML") fees in 2003 compared with $3.0 million in 2002.
Fourth quarter 2003 PML fees were $2.6 million compared with $0.3
million in the fourth quarter of 2002 and $0.9 million in the third
quarter of 2003.
For 2003, the company realized $3.2 million in gains on the sale
of loans, assets and debt repurchase and gains on the sale of
securities compared with $1.4 million in gains for 2002. A gain of
$0.5 million was recorded for the fourth quarter of 2003, compared
with a gain of $0.1 million for the fourth quarter of 2002. There were
essentially no gains for the third quarter of 2003.
NONINTEREST EXPENSE
Noninterest expense for the year 2003 amounted to $364.2 million,
up 10 percent from $332.0 million for 2002. Noninterest expense was
$95.1 million in the fourth quarter of 2003, up 8 percent from $88.2
million for the fourth quarter of 2002 and up 3 percent from $92.3
million for the third quarter of 2003. Expenses grew primarily because
of the acquisition of CCM, the issuance of restricted stock awards to
colleagues in the second quarter of 2003 and, to a lesser extent, the
company's expansion, principally into New York and new regional
centers in Walnut Creek and Palo Alto. Excluding the expenses of CCM
and City National's New York office, 2003 expenses were up 4 percent
over 2002.
For 2003, the company's efficiency ratio was 52.15 percent,
compared with 49.20 percent for 2002. The efficiency ratio for the
fourth quarter of 2003 was 52.77 percent, compared with 51.28 percent
for the fourth quarter of 2002 and 52.92 percent for the third quarter
of 2003. The increase in the efficiency ratio is primarily
attributable to the acquisition of CCM.
INCOME TAXES
The 2003 effective tax rate was 36.6 percent, compared with 30.1
percent for 2002. The higher effective tax rate for 2003 reflects
changes in the mix of tax rates applicable to income before tax and
the absence of certain tax benefits recognized in 2002, including
benefits related to the company's two previously disclosed real estate
investment trusts (REITs). In the fourth quarter, the company reversed
the net state tax benefits recorded in the first three quarters of
2003 and reflected no such benefits in the fourth quarter related to
its REITs in accordance with accounting principles generally accepted
in the United States of America. The absence of these benefits
increased the company's effective tax rate by approximately 3
percentage points.
On December 31, 2003, the California Franchise Tax Board announced
its position that certain transactions related to REITs and regulated
investment companies (RICs) will be disallowed pursuant to California
Senate Bill 614 and Assembly Bill 1601. The company created its two
REITs (one of which was previously formed as a RIC in 2000) to raise
capital for its subsidiary bank. The company does not expect to record
any tax benefits relating to these transactions in 2004. The company
also believes it is appropriately reserved for the benefits previously
recognized in the three prior years. The company and its financial
advisors believe that the company's position has merit and the company
will pursue its claims and defend its use of these entities and
transactions.
CREDIT QUALITY
The provision for credit losses of $29.0 million for 2003 was down
57 percent from $67.0 million for the prior year. The company's
decision to make no provision for credit losses in the fourth quarter
of 2003 was attributable to the improving credit quality of its
portfolio; a decline in nonaccrual loan levels; the payment, charge
off or sale of selected higher-risk credits; a lower level of
charge-offs; higher-than-expected recoveries; 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 December 31,
2003.
At or for the At or for the
three months ended three months ended
Dec. 31, % Sept. 30,
2003 2002 Change 2003
Dollars in
millions
Provision For
Credit Losses $- $17.5 (100) $-
Net Loan Charge
-Offs 0.2 12.2 (98) (4.7)
Annualized
Percentage of
Net Charge-Offs
to Average
Loans 0.01 % 0.61 % (98) 0.25 %
Nonperforming
Assets $42.3 $72.0 (41) $54.7
Percentage of
Nonaccrual
Loans and
ORE to
Total Loans
and ORE 0.54 % 0.90 % (40) 0.72 %
Allowance for
Credit Losses $166.0 $164.5 1 $166.2
Percentage of
Allowance
for Credit
Losses to
Outstanding
Loans 2.11 % 2.06 % 2 2.20 %
Percentage of
Allowance
for Credit
Losses to
Nonaccrual
Loans 392.65 230.53 70 304.08
For the
twelve months ended
December 31, %
---------------
Dollars in millions 2003 2002 Change
- ------------------------------------------------------- ------- ------
Provision For Credit Losses $29.0 $67.0 (57)
Net Loan Charge-Offs 27.5 54.1 (49)
Annualized Percentage of Net
Charge-Offs to Average Loans 0.36 % 0.69 % (48)
For 2003, net charge-offs were $27.5 million, down from $54.1
million for 2002. Net charge-offs for the fourth quarter of 2003 were
$0.2 million, including $1.8 million related to the company's
syndicated non-relationship commercial and purchased media and
telecommunication loan portfolio. This compares with $12.2 million and
$7.7 million, respectively, for the fourth quarter of 2002.
Nonaccrual loans at December 31, 2003 were $42.3 million, down 41
percent from $71.4 million at December 31, 2002. Nonaccrual loans
declined 23 percent in the fourth quarter from the third quarter of
2003, primarily due to payoffs. At December 31, 2003, approximately 33
percent of the nonperforming assets were loans to Northern California
clients. Approximately 12 percent of nonperforming assets were 2
syndicated non-relationship commercial and purchased media and
telecommunication loans totaling $5.0 million, which compared with 3
loans totaling $8.7 million at September 30, 2003. Five percent of the
company's year-end nonperforming assets were 2 dairy credits for $2.3
million. The remaining 50 percent were loans to other borrowers with
no major industry concentrations.
At December 31, 2003, the company's loan portfolio included
approximately $964.0 million of credits to borrowers located in
Northern California, including approximately $496.0 million of loans
managed in Northern California offices. In addition, the portfolio
included approximately $152.0 million in outstanding dairy loans and
$18.7 million of syndicated non-relationship commercial and purchased
media and telecommunication loans, the latter down from $31.2 million
at September 30, 2003.
OUTLOOK
Management currently expects net income per diluted common share
for 2004 to be approximately 7 to 9 percent higher than net income per
diluted common share for 2003, based on current economic conditions
and the business indicators below:
-- Average loan growth 6 to 9 percent
-- Average deposit growth 6 to 9 percent
-- Net interest margin 4.50 to 4.70 percent
-- Provision for credit losses $20 million to $30 million
-- Noninterest income growth 6 to 8 percent
-- Noninterest expense growth 8 to 10 percent
-- Effective tax rate 36 to 38 percent (1)
(1) Quarterly comparisons with the first three quarters of 2003
will be impacted by the REIT state tax benefits which were reversed in
the fourth quarter of 2003.
CAPITAL LEVELS
Total risk-based capital and Tier 1 risk-based capital ratios at
December 31, 2003 were 14.86 percent and 10.81 percent, compared with
the minimum "well-capitalized" capital ratios of 10 percent and 6
percent, respectively. The company's Tier 1 leverage ratio at December
31, 2003 was 7.48 percent. Total risk-based capital, Tier 1 risk-based
capital and the Tier 1 leverage ratios at September 30, 2003 were
14.94 percent, 10.76 percent and 7.37 percent, respectively.
STOCK REPURCHASE
On January 22, 2003, the Board of Directors authorized a
one-million-share stock buyback program. No shares were repurchased
during the fourth 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 January 22, 2003 buyback
initiative. There were 1,225,569 treasury shares at December 31, 2003.
ABOUT CITY NATIONAL
City National Corporation is a financial services company with
$13.0 billion in total assets. Its wholly owned subsidiary, City
National Bank is California's Premier Private and Business Bank(SM).
The bank 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.
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 tax treatment of business transactions,
particularly recently enacted California tax legislation and the
subsequent December 31, 2003 announcement by the FTB regarding the
taxation of REITs and RICs, (8) an expansion of Bovine Spongiform
Encephalopathy (better known as "Mad Cow" disease), and (9) 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
September 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."
NOTE: City National Corporation will host a conference call this
afternoon to discuss results for the year 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.
CITY NATIONAL
CORPORATION
- ----------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET (unaudited)
(Dollars in thousands, except per share amount)
- ----------------------------------------------------------------------
December 31,
------------------------------------
2003 2002 % Change
------------ ------------ ----------
Assets
Cash and due
from banks $461,443 $497,273 (7)
Federal funds
sold 240,000 460,000 (48)
Due from banks
- interest
bearing 405,747 45,412 793
Securities 3,457,189 2,353,455 47
Loans (net of
allowance for
credit
losses of
$165,986 and
$166,209) 7,716,756 7,834,968 (2)
Other assets 737,107 679,284 9
------------ ------------
Total assets $13,018,242 $11,870,392 10
============ ============
Liabilities and
Shareholders' Equity
Noninterest-
bearing
deposits $5,486,668 $4,764,234 15
Interest-
bearing
deposits 5,450,395 5,075,464 7
------------ ------------
Total
deposits 10,937,063 9,839,698 11
Federal funds
purchased and
securities
sold
under
repurchase
agreements 111,713 266,727 (58)
Other short-
term borrowed
funds 15,125 125,125 (88)
Subordinated
debt 295,723 303,795 (3)
Other long-
term debt 280,565 68,682 308
Other
liabilities /
minority
interest 158,797 156,406 2
------------ ------------
Total
liabilities 11,798,986 10,760,433 10
Shareholders'
equity 1,219,256 1,109,959 10
------------ ------------
Total
liabilities
and
shareholders'
equity $13,018,242 $11,870,392 10
============ ============
Book value per
share $24.85 $22.66 10
Number of
shares at
period end 49,060,593 48,983,431 -
CONSOLIDATED STATEMENT OF
INCOME (unaudited)
(Dollars in thousands,
except per share amount)
- ----------------------------------------------------------------------
For the three months For the twelve months
ended ended
December December
31, 31,
-------------------------------- --------------------------------
% %
2003 2002 Change 2003 2002 Change
Interest
income $143,355 $151,215 (5) $575,725 $609,700 (6)
Interest
expense (12,742) (19,752) (35) (61,110) (94,444) (35)
---------------------- ----------- -----------
Net
interest
income 130,613 131,463 (1) 514,615 515,256 -
Provision
for credit
losses - (17,500) (100) (29,000) (67,000) (57)
---------------------- ----------- -----------
Net interest
income
after
provision
for credit
losses 130,613 113,963 15 485,615 448,256 8
Non-
interest
income 47,929 37,434 28 177,225 146,293 21
Noninterest
expense (95,117) (87,916) 8 (364,178) (331,646) 10
Minority
interest (782) (571) 37 (4,039) (945) 327
---------------------- ----------- -----------
Income
before
taxes 82,643 62,910 31 294,623 261,958 12
Income
taxes (38,205) (18,491) 107 (107,946) (78,858) 37
---------------------- ----------- -----------
Net
income $44,438 $44,419 - $186,677 $183,100 2
====================== =========== ===========
Net income
per share,
basic $0.91 $0.90 1 $3.84 $3.69 4
====================== =========== ===========
Net income
per share,
diluted $0.87 $0.87 - $3.72 $3.56 4
====================== =========== ===========
Dividends
paid per
share $0.28 $0.20 40 $0.97 $0.78 24
====================== =========== ===========
Shares used
to compute
per share
net income,
basic 48,949,252 49,489,632 48,643,325 49,562,552
Shares used
to compute
per share
net income,
diluted 50,965,884 50,773,446 50,197,722 51,389,475
CITY NATIONAL CORPORATION
- ----------------------------------------------------------------------
SELECTED FINANCIAL
INFORMATION (unaudited)
(Dollars in thousands)
- ----------------------------------------------------------------------
Period end December 31,
-----------------------------------
2003 2002 % Change
------------ ----------- ----------
Loans
Commercial $3,222,444 $3,609,053 (11)
Residential
first
mortgage 1,937,979 1,738,909 11
Real estate
mortgage 2,002,229 1,934,409 4
Real estate
construction 637,595 640,861 (1)
Installment 82,495 76,238 8
------------ -----------
Total
loans $7,882,742 $7,999,470 (1)
============ ===========
Deposits
Noninterest-
bearing $5,486,668 $4,764,234 15
Interest-
bearing,
core 4,510,194 4,038,497 12
------------ -----------
Total core
deposits 9,996,862 8,802,731 14
Time deposits
- $100,000
and over 940,201 1,036,967 (9)
------------ -----------
Total
deposits $10,937,063 $9,839,698 11
============ ===========
Credit Quality
Nonaccrual
loans and
ORE
Nonaccrual
loans $42,273 $71,357 (41)
ORE - 670 (100)
------------ -----------
Total
nonaccrual
loans and ORE $42,273 $72,027 (41)
============ ===========
Total
nonaccrual
loans and ORE
to total
loans and ORE 0.54 0.90 (40)
Loans past due
90 days or
more on
accrual
status $2,043 $6,156 (67)
============ ===========
For the three For the twelve
months ended months ended
Allowance for December December
Credit 31, 31,
Losses
------------------------------ -----------------------------
2003 2002 % Change 2003 2002 % Change
--------- --------- ---------- --------- --------- ---------
Beginning
balance $166,209 $159,173 4 $164,502 $142,862 15
Additions
from acqui-
sition - - - - 8,787 N/M
Provision
for credit
losses - 17,500 (100) 29,000 67,000 (57)
Charge-offs (3,330) (16,590) (80) (40,022) (64,015) (37)
Recoveries 3,107 4,419 (30) 12,506 9,868 27
--------- --------- --------- ---------
Net charge-
offs (223) (12,171) (98) (27,516) (54,147) (49)
--------- --------- --------- ---------
Ending
Balance $165,986 $164,502 1 $165,986 $164,502 1
========= ========= ========= =========
Total net
charge-offs
to average
loans
(annualized) (0.01) (0.61) (98) (0.36) (0.69) (48)
Allowance for
credit losses
to total
loans 2.11 2.06 2
Allowance for
credit losses
to nonaccrual
loans 392.65 230.53 70
CITY NATIONAL CORPORATION
- ----------------------------------------------------------------------
SELECTED FINANCIAL INFORMATION
(unaudited) (Dollars in
thousands)
- ----------------------------------------------------------------------
For the three months
ended
December
31,
----------------------------------
2003 2002 % Change
----------- ----------- ----------
Average Balances
Loans
Commercial $3,129,296 $3,599,985 (13)
Residential first
mortgage 1,878,248 1,731,487 8
Real estate
mortgage 1,899,634 1,911,839 (1)
Real estate
construction 614,300 651,386 (6)
Installment 83,939 76,177 10
----------- -----------
Total loans $7,605,417 $7,970,874 (5)
=========== ===========
Securities $3,424,291 $2,089,247 64
Interest-earning assets 11,749,593 10,375,595 13
Assets 12,756,557 11,312,332 13
Core deposits 9,737,343 8,175,534 19
Deposits 10,693,959 9,284,335 15
Shareholders' equity 1,200,390 1,108,090 8
Noninterest income
Trust and
investment fee
revenue $23,317 $15,980 46
Cash management and
deposit
transaction fees 10,418 10,399 -
International
services 5,144 5,034 2
Bank owned life
insurance 773 731 6
Other 7,781 5,170 51
----------- -----------
Subtotal - core 47,433 37,314 27
Gain (loss) on sale
of loans and
assets/debt
repurchase (40) (833) (95)
Gain on sale of
securities 536 953 (44)
----------- -----------
Total $47,929 $37,434 28
=========== ===========
Total revenue $178,542 $168,897 6
=========== ===========
Noninterest expense
Salaries and
employee benefits $55,912 $49,431 13
----------- -----------
All Other
Net occupancy of
premises 8,435 8,109 4
Professional 7,204 8,791 (18)
Information
services 4,699 4,991 (6)
Depreciation 3,343 3,195 5
Marketing and
advertising 3,499 3,718 (6)
Office services 2,485 2,692 (8)
Amortization of
intangibles 2,654 1,976 34
Equipment 519 593 (12)
Other operating 6,367 4,420 44
----------- -----------
Total all other 39,205 38,485 2
----------- -----------
Total $95,117 $87,916 8
=========== ===========
Selected Ratios
For the Period
Return on average
assets 1.38 % 1.56 % (12)
Return on average
shareholders'
equity 14.69 15.90 (8)
Net interest
margin 4.52 5.17 (13)
Efficiency ratio
(1) 52.77 51.28 3
Dividend payout
ratio 30.94 21.87 41
Period End
Tier 1 risk-based
capital ratio -- -- --
Total risk-based
capital ratio -- -- --
Tier 1 leverage
ratio -- -- --
CITY NATIONAL CORPORATION
- ----------------------------------------------------------------------
SELECTED FINANCIAL INFORMATION
(unaudited) (Dollars in thousands)
- ----------------------------------------------------------------------
For the twelve months
ended December 31,
---------------------------------
2003 2002 % Change
----------- ----------- ---------
Average Balances
Loans
Commercial $3,319,328 $3,580,293 (7)
Residential first
mortgage 1,781,006 1,704,571 4
Real estate
mortgage 1,901,491 1,831,125 4
Real estate
construction 647,851 634,074 2
Installment 79,474 72,590 9
----------- -----------
Total loans $7,729,150 $7,822,653 (1)
=========== ===========
Securities $2,976,741 $1,977,948 50
Interest-earning assets 11,159,034 9,996,998 12
Assets 12,146,932 10,891,575 12
Core deposits 9,042,255 7,399,970 22
Deposits 10,045,267 8,639,546 16
Shareholders' equity 1,147,477 1,049,393 9
Noninterest income
Trust and
investment fee
revenue $83,714 $61,277 37
Cash management and
deposit
transaction fees 42,656 40,722 5
International
services 19,336 18,291 6
Bank owned life
insurance 2,965 2,860 4
Other 25,402 21,702 17
----------- -----------
Subtotal - core 174,073 144,852 20
Gain (loss) on sale
of loans and
assets/debt
repurchase 78 (1,590) (105)
Gain on sale of
securities 3,074 3,031 1
----------- -----------
Total $177,225 $146,293 21
=========== ===========
Total revenue $691,840 $661,549 5
=========== ===========
Noninterest expense
Salaries and
employee benefits $217,494 $195,652 11
----------- -----------
All Other
Net occupancy of
premises 31,408 27,621 14
Professional 27,230 24,620 11
Information
services 18,003 18,212 (1)
Depreciation 12,796 13,191 (3)
Marketing and
advertising 13,224 13,076 1
Office services 9,957 9,752 2
Amortization of
intangibles 9,222 7,523 23
Equipment 2,351 2,463 (5)
Other operating 22,493 19,536 15
----------- -----------
Total all other 146,684 135,994 8
----------- -----------
Total $364,178 $331,646 10
=========== ===========
Selected Ratios
For the Period
Return on average
assets 1.54 % 1.68 % (8)
Return on average
shareholders'
equity 16.27 17.45 (7)
Net interest
margin 4.74 5.30 (11)
Efficiency ratio
(1) 52.15 49.20 6
Dividend payout
ratio 25.33 21.10 20
Period End
Tier 1 risk-based
capital ratio 10.81 9.87 10
Total risk-based
capital ratio 14.86 14.26 4
Tier 1 leverage
ratio 7.48 7.55 (1)
(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
Frank Pekny, 310-888-6700 (Financial/Investors)
Cary Walker, 213-833-4715 (Media)
or
Abernathy MacGregor Group (Financial/Investors)
Ian Campbell, 213-630-6550