Exhibit 99.1
City National Corporation Reports Second-Quarter Net Income of
$52.2 Million or $1.03 Per Share for the Second Quarter of 2004
LOS ANGELES--(BUSINESS WIRE)--July 14, 2004--
Net Income Grew 13 Percent or 11 Percent Per Share
from Second Quarter 2003
City National Corporation (NYSE:CYN), parent company of wholly
owned City National Bank, today reported net income of $52.2 million,
or $1.03 per share, for the second quarter of 2004 compared with $46.1
million, or $0.93 per share, for the second quarter of 2003 and $50.9
million, or $1.00 per share, for the first quarter of 2004.
For the first half of 2004, City National Corporation recorded net
income of $103.1 million, or $2.03 per share, compared with $89.7
million, or $1.80 per share, reported for the first half of 2003.
HIGHLIGHTS
-- Average deposits were up 14 percent with average core deposits
up 18 percent for the second quarter of 2004 from the second
quarter a year ago due to growth throughout the bank.
-- Second quarter average loans surpassed $8.0 billion for the
first time, up 3 percent from the same period last year.
Period-end loan balances at June 30, 2004 of $8.1 billion
increased $242.8 million, or 3 percent from $7.9 billion at
December 31, 2003 net of payoffs of $98.7 million in dairy
loans as a result of the company exiting this industry as
previously announced.
-- No provision for credit losses was recorded for the second
quarter of 2004, a result of continued strong credit quality
and an adequate current level of allowance for credit losses.
Recoveries slightly exceeded charge-offs for the quarter.
Nonaccrual loans as of June 30, 2004, were $41.8 million, down
40 percent from June 30, 2003, and down 2 percent from March
31, 2004.
-- Average securities for the second quarter of 2004 were up 25
percent from the same period a year ago due to deposit growth
outpacing loan growth. Second-quarter average securities were
up 4 percent from the first quarter of 2004 but period-end
securities declined $104.1 million from March 31, 2004 to June
30, 2004.
-- Noninterest income for the second quarter of 2004 rose 7
percent over the same period a year ago due primarily to
higher trust and investment fees.
"Continued very good credit quality, coupled with strong growth in
deposits and wealth management revenue, again helped produce solid
double-digit earnings growth in the first half of 2004 over 2003,"
said Chief Executive Officer Russell Goldsmith. "In addition we are
seeing some increase in the pace of loan growth, a trend which should
continue in the second half of the year as the California economy and
business confidence continue to improve."
For the three months For the
ended three
June 30, months
Dollars in millions, % ended %
---------------------
except per share Change March 31, Change
2004 2003 2004
- ----------------------- ---------- ---------- ------ ---------- ------
Earnings Per Share $1.03 $0.93 11 $1.00 3
Net Income 52.2 46.1 13 50.9 3
Average Assets 13,211.6 11,914.9 11 12,606.8 5
Return on Average
Assets 1.59 % 1.55 % 3 1.62 % (2)
Return on Average
Equity 17.07 16.33 4 16.75 2
As previously disclosed, in 2004 the company is continuing its
practice, adopted in the fourth quarter of 2003, of not recognizing
tax benefits associated with its real estate investment trusts
("REITS"). Second-quarter 2003 results included $2.7 million in net
income, or $0.05 per share, from tax benefits of the company's two
REITS.
The Bank's prime rate was 4.25 percent as of June 30, 2004, an
increase of 25 basis points over last year. However, the increase
became effective on June 30, 2004 and did not impact 2004 second
quarter results.
ASSETS
Average assets for the second quarter of 2004 were higher than the
second quarter of 2003, primarily due to an increase in average
securities, loans, and federal funds sold. Total assets at June 30,
2004 increased 9 percent to $13.5 billion from $12.4 billion at June
30, 2003, and increased 2 percent from $13.2 billion at March 31,
2004.
REVENUES
Revenues (net interest income plus noninterest income) for the
second quarter of 2004 increased 5 percent to $180.5 million compared
with $172.2 million for the second quarter of 2003 due to higher net
interest income and trust and investment fees. Revenues were up 2
percent from the first quarter of 2004.
NET INTEREST INCOME
Fully taxable-equivalent net interest income for the second
quarter of 2004 was $135.6 million, compared with $130.8 million for
the second quarter of 2003 and $134.3 million for the first quarter of 2004.
The net interest margin was 17 basis points lower than the first
quarter of 2004 due primarily to investing in lower yielding, shorter
term securities.
For the three months For the
ended three
June 30, months
% ended %
---------------------
Dollars in millions Change March 31, Change
2004 2003 2004
- ----------------------- ---------- ---------- ------ ---------- ------
Average Loans $8,053.9 $7,793.9 3 $7,886.3 2
Average Securities 3,601.0 2,873.8 25 3,462.5 4
Average Deposits 11,121.5 9,774.9 14 10,533.5 6
Average Core Deposits 10,310.7 8,763.1 18 9,621.2 7
Fully Taxable-
Equivalent
Net Interest Income 135.6 130.8 4 134.3 1
Net Interest Margin 4.49 % 4.79 % (6) 4.66 % (4)
Compared with the prior-year second-quarter averages, residential
first mortgage loans rose 18 percent, commercial real estate mortgage
loans rose 6 percent, real estate construction loans rose 15 percent,
and commercial loans decreased 8 percent partially due to payoffs of
dairy loans. Compared with the prior quarter, all categories increased
except commercial loans.
Period-end June 30, 2004 loans increased $157.9 million from March
31, 2004, reflecting growth in residential first mortgage, commercial
real estate mortgage, and real estate construction loans.
Average core deposits represented 93 percent of the total average
deposit base for the second quarter of 2004, compared with 90 percent
for the second quarter of 2003 and 91 percent for the first quarter of
2004. New clients and higher client balances maintained as deposits to
pay for services contributed to the year-over-year 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 remained at the same $1.1 billion notional
value at March 31, 2004. Notional value as of June 30, 2003 was $1.0
billion.
NONINTEREST INCOME
Second-quarter 2004 noninterest income was 7 percent higher than
the second quarter of 2003 and 4 percent higher than the first quarter
of 2004 due primarily to higher trust and investment fees. As a
percentage of total revenues, noninterest income was 27 percent for
the second quarter of 2004, compared with 26 percent for both the
second quarter of 2003 and the first quarter of 2004.
Wealth Management
At or for the At or for
the
three months ended three
June 30, months
% ended %
-------------------
Dollars in millions Change March 31, Change
2004 2003 2004
- ------------------------- --------- --------- ------ --------- ------
Trust and Investment Fee
Revenue $16.7 $12.2 37 $15.6 7
Brokerage and Mutual Fund
Fees 9.4 9.3 1 8.7 7
Assets Under
Administration 31,749.9 26,237.3 21 30,532.3 4
Assets Under Management
(1)(2) 14,567.2 12,531.3 16 14,339.3 2
(1) Included above in assets under administration
(2) Excludes $3,275 and $3,591 million of assets under management for
the CCM minority owned asset managers as of June 30, 2004 and March
31, 2004, respectively
Assets under management at June 30, 2004 increased from the same
period last year primarily due to new business, aided by strong
relative investment performance and higher market values. Trust and
investment fees increased over the second quarter of 2003 primarily
due to higher balances under management or administration. Increases
in market values are reflected in fee income primarily on a
trailing-quarter basis. Brokerage and mutual fund fees in the second
quarter increased over the first quarter of 2004 due in part to fees
recognized as a co-manager of the California Economic Recovery Bond
and a participant in the Puerto Rico Commonwealth General Obligation
Bond issues.
Other Noninterest Income
Cash management and deposit transaction fees increased 1 percent
for the second quarter of 2004 over the same quarter last year.
Compared with the first quarter of 2004, second-quarter 2004 cash
management and deposit transaction fees decreased 1 percent due to
annual fees recognized in arrears having been recorded in the first
quarter of 2004.
International service fees for the second quarter of 2004 were
essentially unchanged over the prior year quarter and decreased 2
percent from the first quarter of 2004 primarily due to lower import
letters of credit fees.
Second-quarter 2004 other income was 17 percent lower than the
second quarter of 2003 primarily due to the lower loan product fees
and 2 percent higher than the first quarter of 2004.
For the second quarter of 2004, $0.9 million in gains on the sale
of loans, assets and debt repurchase and gains on the sale of
securities were realized, compared to $1.3 million for the second
quarter of 2003 and $0.6 million for the first quarter of 2004.
NONINTEREST EXPENSE
Second-quarter 2004 noninterest expense of $95.7 million was up 5
percent compared to $91.3 million for the second quarter of 2003 and
up 1 percent from $94.5 million for the first quarter of 2004. The
year-over-year increase primarily relates to higher staff cost
including base salaries, incentives, and benefit costs including
restricted stock costs. Restricted stock awards continue to replace a
portion of the stock option grants that are part of the company's
equity compensation program.
For the second quarter of 2004, the efficiency ratio was 52.72
percent compared with 52.53 percent for the second quarter of 2003,
and 53.39 percent for the first quarter of 2004.
INCOME TAXES
The second-quarter 2004 effective tax rate was 37.5 percent,
compared with 36.6 percent for all of 2003. The effective tax rate
reflects changes in the mix of tax rates applicable to income before
tax. Quarterly comparisons with the first three quarters of 2003 were
impacted by the real estate investment trust ("REIT") state tax
benefits which were included in net income in the first three quarters
of 2003 and were reversed in the fourth quarter of 2003.
As previously reported, the California Franchise Tax Board ("FTB")
has taken the position that certain REIT and registered investment
company ("RIC") tax deductions will be disallowed under new California
law adopted in the fourth quarter of 2003. While management continues
to believe that the tax benefits realized in previous years were
appropriate, the company deemed it prudent to participate in the
statutory Voluntary Compliance Initiative-Option 2, requiring payment
of all California taxes and interest on these disputed 2000 through
2002 tax benefits, and permitting the company to claim a refund for
these years while avoiding certain potential penalties. The company
retains potential exposure for assertion of an accuracy-rated penalty
should the FTB prevail in its position, in addition to the risk of not
being successful in its refund claims for taxes and interest. As of
June 30, 2004, the company reflected a $36.4 million net state tax
receivable for the years 2000, 2001 and 2002 after giving effect to
reserves for loss contingencies on the refund claims, or an equivalent
of $23.7 million after giving effect to Federal tax benefits. Although
management intends to aggressively pursue its claims for REIT and RIC
refunds for the 2000 to 2003 tax years, no outcome can be predicted
with certainty and an adverse outcome on the refund claims could
result in a loss of all or a portion of the $23.7 million net state
tax receivable after giving effect to Federal tax benefits.
FIRST-HALF RESULTS
First-half 2004 results of $103.1 million, or $2.03 per share,
rose from $89.7 million, or $1.80 per share in the first half of 2003
attributable to the following:
-- Average deposits grew 13 percent and core deposits went up 17
percent.
-- Average loans increased by $91.5 million, or 1 percent.
Residential first mortgage loans rose 14 percent, commercial
real estate mortgage loans rose 5 percent, real estate
construction loans rose 9 percent and commercial loans
decreased 9 percent partially due to the payoff of dairy
loans.
-- Revenues increased 6 percent attributable to the rise of both
net interest income and noninterest income. Noninterest income
as a percentage of total revenues was 26 percent for the first
half of 2004 compared with 25 percent for the first half of
2003.
-- No provision for credit losses was recorded on continued
strong credit quality.
-- Noninterest income grew 13 percent from $84.0 million to $94.8
million. This increase is attributable to increased trust and
investment fees from higher assets under management or
administration and the operations of Convergent Capital
Management, LLC ("CCM"). CCM results were included for the
entire first half of 2004 while the acquisition affected only
the second quarter of 2003. The acquisition was completed on
April 1, 2003.
-- Noninterest expense was up 8 percent from $176.7 million to
$190.2 million partly because of the acquisition of CCM.
-- First-half results included no tax benefits of the company's
two REITS. First-half 2003 results included $5.5 million in
net income, or $0.11 per share, from tax benefits of the
company's two REITS.
CREDIT QUALITY
The company made no provision for credit losses in the first half
of 2004. This was attributable to the continued strong credit quality
of its portfolio, low level of net charge-offs, and management's
ongoing assessment of the credit quality of the portfolio, modest loan
growth and an improving economic environment. Management believes the
allowance for credit losses is adequate to cover risks in the
portfolio at June 30, 2004.
At or for the
three months At or
ended for the
three
June 30, months
% ended %
-----------------
Dollars in millions Change March Change
31,
2004 2003 2004
- ----------------------------- -------- -------- ------ -------- ------
Provision For Credit Losses $- $11.5 (100) $- 0
Net Loan Charge-Offs - 10.1 (100) 0.9 (100)
Annualized Percentage of Net
Charge-offs
to Average Loans - % 0.52 % (100) 0.05 % (100)
Nonperforming Assets $41.8 $69.6 (40) $42.7 (2)
Percentage of Nonaccrual
Loans
and ORE to Total Loans and
ORE 0.51 % 0.92 % (45) 0.54 % (6)
Allowance for Credit Losses $165.1 $170.9 (3) $165.1 0
Percentage of Allowance for
Credit
Losses to Outstanding
Loans 2.03 % 2.25 % (10) 2.07 % (2)
Percentage of Allowance for
Credit
Losses to Nonaccrual Loans 394.71 246.37 60 386.29 2
At June 30, 2004, approximately 25 percent of the nonperforming
assets were loans to Northern California clients, and 25 percent were
five dairy credits. The remaining 50 percent were loans to other
borrowers with no major industry concentrations.
At June 30, 2004, the company's loan portfolio included
approximately $453.1 million of loans managed in Northern California
offices. In addition, the portfolio included approximately $53.0
million in outstanding dairy loans, an industry which as previously
announced, the company expects to exit. It is now anticipated that the
company can do so at minimal cost over the next six months, a shorter
period than previously anticipated, due to higher milk prices.
OUTLOOK
Management has increased its expectations of the growth of net
income per share for 2004 from approximately 7 to 9 percent to
approximately 8 to 10 percent higher than net income per share for
2003. This is based on current economic conditions and the current
outlook for the remainder of 2004, the 25 basis point increase in
interest rates effective June 30, 2004, and the updated business
indicators below:
-- Average loan growth 4 to 6 percent
-- Average deposit growth 7 to 10 percent
-- Net interest margin 4.50 to 4.70 percent
-- Provision for credit losses $0 million to $10 million
-- Noninterest income growth 6 to 8 percent
-- Noninterest expense growth 6 to 8 percent
-- Effective tax rate 36 to 38 percent
CAPITAL LEVELS
Total risk-based capital and Tier 1 risk-based capital ratios at
June 30, 2004 were 14.81 percent and 11.11 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, 2004 was
7.69 percent. Total risk-based capital, Tier 1 risk-based capital and
the Tier 1 leverage ratios at March 31, 2004 were 14.43 percent, 10.67
percent and 7.61 percent, respectively.
Average shareholders' equity to average assets at June 30, 2004
was 9.3 percent compared to 9.5 percent at June 30, 2003 and 9.7
percent at March 31, 2004.
Accumulated other comprehensive income was a loss of $38.4 million
compared to income of $39.8 million and $32.2 million as of June 30,
2003 and March 31, 2004, respectively. The decline related primarily
to the impact of the increase in long and medium term interest rates
on the securities portfolio during the period. The increase in
interest rates also contributed to the average duration of total
available-for-sale securities at June 30, 2004 increasing to 3.8 years
compared to 3.1 years at March 31, 2004 and 2.3 years at June 30,
2003.
STOCK REPURCHASE
The company has authorization to repurchase 1,009,500 of its
outstanding shares as of June 30, 2004. On March 24, 2004, City
National Corporation's Board of Directors authorized the repurchase of
one million additional shares of City National Corporation stock,
following completion of the company's previous buyback initiatives. On
January 22, 2003, the Board of Directors had authorized a
one-million-share stock buyback program. This program was completed
during the first quarter of 2004 with the repurchase of 249,900 shares
at an average cost of $58.23. The average cost for the entire
one-million-share buyback program was $46.41 per share. 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. Under
this plan, 490,500 shares have been repurchased at an average cost of
$59.68 per share including 7,400 shares that were repurchased during
the second quarter of 2004 at an average cost of $59.91 per share,
leaving 9,500 shares remaining for repurchase before the initiation of
the new one-million-share program. 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
1,268,452 treasury shares at June 30, 2004.
CONFERENCE CALL
City National Corporation will host a conference call this
afternoon to discuss results for the second quarter of 2004. 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 (888) 482-0024 and enter pass code 36903977. 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 (NYSE: CYN) is a financial services
company with $13.5 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(R), City National provides banking, investment and trust
services through 53 offices, including 12 full-service regional
centers, in Southern California, the San Francisco Bay Area and New
York City. The company and its affiliates manage or administer more
than $31 billion of client trust and investment assets.
For more information about City National, visit the company's
Website at 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) the unknown economic impact of state, county and city budget
issues, (2) changes in interest rates, (3) significant changes in
banking laws or regulations, (4) increased competition in the
company's market, (5) other-than-expected credit losses, (6)
earthquake or other natural disasters impacting the condition of real
estate collateral, (7) the effect of acquisitions and integration of
acquired businesses, and (8) the impact of changes in regulatory,
judicial, or legislative tax treatment of business transactions,
particularly California tax legislation enacted last year and the
December 31, 2003 announcement by the FTB regarding the taxation of
REITs and RICs. Management cannot predict at this time the extent of
the economic recovery, and a slowing or reversal 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 year-ended
March 31, 2004, 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."
Conference Call
Today 2:00 p.m. PDT
(888) 482-0024
Pass code 36903977
CITY NATIONAL CORPORATION
- ----------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET (unaudited)
(Dollars in thousands, except per share amount)
- ----------------------------------------------------------------------
June 30, March 31,
-----------------------------------
2004 2003 % Change 2004
------------ ------------ --------- ------------
Assets
Cash and due from
banks $485,208 $451,291 8 $472,541
Federal funds sold 595,000 650,000 (8) 519,000
Due from banks -
interest bearing 76,890 30,402 153 34,570
Securities 3,547,650 3,050,319 16 3,651,722
Loans (net of
allowance for
credit losses of
$165,117; $170,927
and $165,072) 7,960,379 7,419,299 7 7,802,567
Other assets 808,773 753,522 7 740,124
------------ ------------ ------------
Total assets $13,473,900 $12,354,833 9 $13,220,524
============ ============ ============
Liabilities and
Shareholders' Equity
Noninterest-bearing
deposits $5,809,241 $4,916,678 18 $5,525,627
Interest-bearing
deposits 5,645,678 5,250,128 8 5,609,050
------------ ------------ ------------
Total deposits 11,454,919 10,166,806 13 11,134,677
Federal funds
purchased and
securities sold
under repurchase
agreements 94,898 167,084 (43) 88,063
Other short-term
borrowed funds 50,125 115,125 (56) 50,125
Subordinated debt 286,896 318,282 (10) 300,758
Other long-term debt 224,488 283,954 (21) 239,804
Other liabilities /
minority interest 134,765 158,892 (15) 167,167
------------ ------------ ------------
Total liabilities 12,246,091 11,210,143 9 11,980,594
Shareholders' equity
Common stock,
paid-in capital,
retained
earnings,
treasury shares
and deferred
equity
compensation 1,266,227 1,104,909 15 1,207,693
Accumulated other
comprehensive
income (loss) (38,418) 39,781 N/M 32,237
------------ ------------ ------------
Total
shareholders'
equity 1,227,809 1,144,690 7 1,239,930
------------ ------------ ------------
Total liabilities
and shareholders'
equity $13,473,900 $12,354,833 9 $13,220,524
============ ============ ============
Book value per share $25.05 $23.77 5 $25.54
Number of shares at
period end 49,015,117 48,156,797 2 48,553,409
CONSOLIDATED STATEMENT OF INCOME (unaudited)
(Dollars in thousands, except per share amount)
- ----------------------------------------------------------------------
For the three months ended
June 30,
---------------------------------
2004 2003 % Change
----------- ----------- ---------
Interest income $145,178 $144,333 1
Interest expense (12,903) (17,209) (25)
----------- -----------
Net interest income 132,275 127,124 4
Provision for credit losses - (11,500) (100)
----------- -----------
Net interest income after provision
for credit losses 132,275 115,624 14
Noninterest income 48,266 45,052 7
Noninterest expense (95,655) (91,316) 5
Minority interest (1,306) (1,065) 23
----------- -----------
Income before taxes 83,580 68,295 22
Income taxes (31,380) (22,214) 41
----------- -----------
Net income $52,200 $46,081 13
=========== ===========
Net income per share, basic $1.07 $0.95 13
=========== ===========
Net income per share, diluted $1.03 $0.93 11
=========== ===========
Dividends paid per share $0.320 $0.205 56
=========== ===========
Shares used to compute per share net
income, basic 48,795,998 48,307,675
Shares used to compute per share net
income, diluted 50,924,581 49,524,367
For the six months ended
June 30,
---------------------------------
2004 2003 % Change
----------- ----------- ---------
Interest income $288,975 $290,009 -
Interest expense (25,728) (34,668) (26)
----------- -----------
Net interest income 263,247 255,341 3
Provision for credit losses - (29,000) (100)
----------- -----------
Net interest income after provision
for credit losses 263,247 226,341 16
Noninterest income 94,836 84,028 13
Noninterest expense (190,186) (176,728) 8
Minority interest (2,906) (1,540) 89
----------- -----------
Income before taxes 164,991 132,101 25
Income taxes (61,893) (42,365) 46
----------- -----------
Net income $103,098 $89,736 15
=========== ===========
Net income per share, basic $2.11 $1.85 14
=========== ===========
Net income per share, diluted $2.03 $1.80 13
=========== ===========
Dividends paid per share $0.640 $0.410 56
=========== ===========
Shares used to compute per share net
income, basic 48,763,761 48,543,331
Shares used to compute per share net
income, diluted 50,863,824 49,824,223
CITY NATIONAL CORPORATION
- ----------------------------------------------------------------------
SELECTED FINANCIAL INFORMATION (unaudited) (Dollars in thousands)
- ----------------------------------------------------------------------
Period end June 30, March 31,
-----------------------------------
2004 2003 % Change 2004
------------ ------------ --------- ------------
Loans
Commercial $3,077,689 $3,232,780 (5) $3,163,312
Residential first
mortgage 2,114,335 1,736,442 22 1,977,952
Commercial real
estate mortgage 2,057,489 1,895,964 9 2,004,860
Real estate
construction 782,435 653,063 20 741,637
Installment 93,548 71,977 30 79,878
------------ ------------ ------------
Total loans $8,125,496 $7,590,226 7 $7,967,639
============ ============ ============
Deposits
Noninterest-bearing $5,809,241 $4,916,678 18 $5,525,627
Interest-bearing,
core 4,854,545 4,251,204 14 4,760,018
------------ ------------ ------------
Total core
deposits 10,663,786 9,167,882 16 10,285,645
Time deposits -
$100,000 and over 791,133 998,924 (21) 849,032
------------ ------------ ------------
Total deposits $11,454,919 $10,166,806 13 $11,134,677
============ ============ ============
Credit Quality
Nonaccrual loans and
ORE
Nonaccrual loans $41,833 $69,377 (40) $42,733
ORE - 173 (100) -
------------ ------------ ------------
Total nonaccrual
loans and ORE $41,833 $69,550 (40) $42,733
============ ============ ============
Total nonaccrual
loans and ORE to
total loans and ORE 0.51 0.92 (45) 0.54
Loans past due 90
days or more on
accrual status $153 $5,853 (97) $5,057
============ ============ ============
For the three months ended For the six months
ended
Allowance for June 30, June 30,
Credit
Losses
---------------------------- ----------------------------
% %
2004 2003 Change 2004 2003 Change
--------- --------- -------- --------- --------- --------
Beginning
balance $165,072 $169,480 (3) $165,986 $164,502 1
Provision
for credit
losses - 11,500 (100) - 29,000 (100)
Charge-offs (9,600) (14,211) (32) (13,949) (29,093) (52)
Recoveries 9,645 4,158 132 13,080 6,518 101
--------- --------- --------- ---------
Net (charge-
offs) /
recoveries 45 (10,053) (100) (869) (22,575) (96)
--------- --------- --------- ---------
Ending
Balance $165,117 $170,927 (3) $165,117 $170,927 (3)
========= ========= ========= =========
Total net
charge-offs
to average
loans
(annualized) 0.00 (0.52) (100) (0.02) (0.58) (97)
Allowance for
credit
losses to
total loans 2.03 2.25 (10)
Allowance for
credit
losses to
nonaccrual
loans 394.71 246.37 60
For the three months For the six months
ended ended
June 30, June 30,
--------------------- ---------------------
2004 2003 % Change 2004 2003 % Change
----- ----- --------- ----- ----- ---------
Yields and Rates for the
Period
Loans 5.37 %5.80 % (7) 5.42 %5.89 % (8)
Securities 4.44 4.82 (8) 4.51 5.03 (10)
Interest-earning assets 4.92 5.42 (9) 5.01 5.58 (10)
Interest-bearing deposits0.70 0.96 (27) 0.70 1.01 (31)
Other borrowings 1.91 2.40 (20) 1.94 2.31 (16)
Total interest bearing
liabilites 0.81 1.13 (28) 0.82 1.16 (29)
Net interest margin 4.49 4.79 (6) 4.57 4.93 (7)
CITY NATIONAL CORPORATION
- ----------------------------------------------------------------------
SELECTED FINANCIAL INFORMATION (unaudited) (Dollars in thousands)
- ----------------------------------------------------------------------
For the three months ended
June 30,
--------------------------------
%
2004 2003 Change
----------- ----------- --------
Average Balances
Loans
Commercial $3,130,129 $3,402,342 (8)
Residential first mortgage 2,036,426 1,733,015 18
Commercial real estate mortgage 2,016,773 1,906,995 6
Real estate construction 779,349 679,541 15
Installment 91,239 71,970 27
----------- -----------
Total loans $8,053,916 $7,793,863 3
=========== ===========
Securities $3,600,997 $2,873,831 25
Due from banks - interest bearing 42,961 26,954 59
Interest-earning assets 12,137,276 10,941,207 11
Assets 13,211,551 11,914,869 11
Core deposits 10,310,711 8,763,055 18
Deposits 11,121,541 9,774,905 14
Shareholders' equity 1,230,167 1,131,682 9
Noninterest income
Trust and investment fees $16,664 $12,192 37
Brokerage and mutual fund fees 9,367 9,313 1
Cash management and deposit
transaction fees 10,942 10,876 1
International services 5,042 5,019 -
Bank owned life insurance 715 731 (2)
Other 4,665 5,649 (17)
----------- -----------
Subtotal - core 47,395 43,780 8
Gain on sale of loans and
assets/debt repurchase - - NM
Gain on sale of securities 871 1,272 (32)
----------- -----------
Total $48,266 $45,052 7
=========== ===========
Total revenue $180,541 $172,176 5
=========== ===========
Noninterest expense
Salaries and employee benefits $59,306 $54,516 9
----------- -----------
All Other
Net occupancy of premises 7,649 7,862 (3)
Professional 6,730 6,769 (1)
Information services 4,588 4,302 7
Depreciation 3,274 3,019 8
Marketing and advertising 3,812 3,553 7
Office services 2,487 2,398 4
Amortization of intangibles 1,760 2,227 (21)
Equipment 636 638 -
Other operating 5,413 6,032 (10)
----------- -----------
Total all other 36,349 36,800 (1)
----------- -----------
Total $95,655 $91,316 5
=========== ===========
Selected Ratios
For the Period
Return on average assets 1.59 % 1.55 % 3
Return on average shareholders'
equity 17.07 16.33 5
Efficiency ratio (1) 52.72 52.53 -
Dividend payout ratio 30.06 21.51 40
For the six months ended
June 30,
--------------------------------
%
2004 2003 Change
----------- ----------- --------
Average Balances
Loans
Commercial $3,151,138 $3,480,938 (9)
Residential first mortgage 1,994,365 1,744,861 14
Commercial real estate mortgage 2,009,253 1,907,770 5
Real estate construction 728,914 671,791 9
Installment 86,453 73,267 18
----------- -----------
Total loans $7,970,123 $7,878,627 1
=========== ===========
Securities $3,531,772 $2,645,670 33
Due from banks - interest bearing 60,655 26,891 126
Interest-earning assets 11,869,575 10,741,276 11
Assets 12,909,151 11,698,948 10
Core deposits 9,965,935 8,545,977 17
Deposits 10,827,508 9,575,481 13
Shareholders' equity 1,226,092 1,124,667 9
Noninterest income
Trust and investment fees $32,252 $18,730 72
Brokerage and mutual fund fees $18,093 $18,255 (1)
Cash management and deposit
transaction fees 22,040 21,983 -
International services 10,168 9,347 9
Bank owned life insurance 1,546 1,445 7
Other 9,237 11,664 (21)
----------- -----------
Subtotal - core 93,336 81,424 15
Gain on sale of loans and
assets/debt repurchase - 102 (100)
Gain on sale of securities 1,500 2,502 (40)
----------- -----------
Total $94,836 $84,028 13
=========== ===========
Total revenue $358,083 $339,369 6
=========== ===========
Noninterest expense
Salaries and employee benefits $118,982 $106,321 12
----------- -----------
All Other
Net occupancy of premises 14,957 14,831 1
Professional 12,836 13,205 (3)
Information services 9,110 8,555 6
Depreciation 6,502 6,138 6
Marketing and advertising 7,319 6,665 10
Office services 4,906 4,968 (1)
Amortization of intangibles 3,519 4,203 (16)
Equipment 1,401 1,304 7
Other operating 10,654 10,538 1
----------- -----------
Total all other 71,204 70,407 1
----------- -----------
Total $190,186 $176,728 8
=========== ===========
Selected Ratios
For the Period
Return on average assets 1.61 % 1.55 % 4
Return on average shareholders'
equity 16.91 16.09 5
Efficiency ratio (1) 53.05 51.42 3
Dividend payout ratio 30.38 22.19 37
Period End
Tier 1 risk-based capital ratio 11.11 10.21 9
Total risk-based capital ratio 14.81 14.45 2
Tier 1 leverage ratio 7.69 7.17 7
(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
Financial/Investors:
Christopher Carey, 310-888-6777
Stephen McAvoy, 213-347-2653
Media:
Cary Walker, 213-833-4715