Exhibit 99.1
City National Corporation Reports Third-Quarter 2004 Net Income
of $53.5 Million or $1.04 Per Share;
Total assets reach $14.0 billion at September 30, 2004
LOS ANGELES--(BUSINESS WIRE)--Oct. 19, 2004--City National
Corporation (NYSE:CYN), parent company of wholly owned City National
Bank, today reported net income of $53.5 million, or $1.04 per share,
for the third quarter of 2004 compared with $52.5 million, or $1.05
per share, for the third quarter of 2003 and $52.2 million, or $1.03
per share, for the second quarter of 2004 on a greater number of
shares outstanding. Third-quarter 2003 results included $2.6 million
in net income, or $0.05 per share, from tax benefits of the company's
two real estate investment trusts ("REITS"). 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
REITS.
For the first nine months of 2004, City National Corporation
recorded net income of $156.6 million, or $3.07 per share, compared
with $142.2 million, or $2.85 per share, reported for the first nine
months of 2003. First-nine-months 2003 results included $8.1 million
in net income, or $0.16 per share, from tax benefits of the company's
two REITS.
The following table shows the growth of earnings per share with
and without the 2003 REITS tax benefits:
For the three For the nine
months ended months ended
September 30, September 30,
----------------- % ----------------- %
2004 2003 Change 2004 2003 Change
- -------------------- --------- ------- ------ --------- ------- ------
Without REIT tax
benefits $1.04 $1.00 4 $3.07 $2.69 14
With REIT tax
benefits 1.04 1.05 (1) 3.07 2.85 8
HIGHLIGHTS
-- Average deposits were up 11 percent with average core deposits
up 15 percent for the third quarter of 2004 from the third
quarter a year ago due to continued bank-wide growth. Average
core deposits represented 93 percent of the total average
deposit base for the third quarter of 2004, compared with 90
percent for the third quarter of 2003 and 93 percent for the
second quarter of 2004. New clients contributed to the
year-over-year growth of deposits.
-- Third-quarter average loans were up 8 percent from the same
period last year. Period-end loan balances at September 30,
2004 of $8.2 billion increased $291.4 million, or 4 percent
from $7.9 billion at December 31, 2003 primarily due to an
increase in real estate-related loans.
-- No provision for credit losses was recorded for the third
quarter of 2004, a result of continued strong credit quality
and an adequate current level of allowance for credit losses.
There was no provision for credit losses in the year-ago
quarter. Nonaccrual loans as of September 30, 2004 were $35.3
million, down 35 percent from September 30, 2003, and down 16
percent from June 30, 2004.
-- Average securities for the third quarter of 2004 were up 16
percent from the same period a year ago as deposit growth
outpaced loan growth. Third-quarter average securities
increased 2 percent from the second quarter of 2004, and
period-end securities increased $282.9 million from June 30,
2004 to September 30, 2004 due partially to a $72.7 million
improvement in the mark-to-market adjustment.
-- Revenue for the third quarter of 2004 rose 6 percent over the
same period a year ago and 2 percent over the second quarter
of 2004.
"Higher revenues, sound credit quality and strong growth in
deposits continued to produce double-digit net income growth for the
first nine months of this year and enabled City National to reach
total assets of $14 billion for the first time, a milestone that
underscores the bank's position as California's Premier Private and
Business Bank," said Chief Executive Officer Russell Goldsmith.
For the
three
For the three months months
ended ended
Dollars in millions, September 30, % June 30, %
except per share 2004 2003 Change 2004 Change
- ----------------------- ---------- ---------- ------ ---------- ------
Earnings Per Share $1.04 $1.05 (1) $1.03 1
Net Income 53.5 52.5 2 52.2 2
Average Assets (1) 13,612.4 12,428.3 10 13,223.4 3
Return on Average
Assets (1) 1.56 % 1.68 % (7) 1.59 % (2)
Return on Average
Equity 16.80 18.28 (8) 17.07 (2)
(1) As of September 30, 2004, the company has reclassified the
reserve for unfunded credit commitments from the allowance for loan
losses to other liabilities. Amounts presented prior to the third
quarter of 2004 have been reclassified to conform to the presentation
in the third quarter of 2004.
The Bank's prime rate was 4.75 percent as of September 30, 2004,
an increase of 75 basis points over last year.
ASSETS
Average assets for the third quarter of 2004 were higher than the
third quarter of 2003, primarily due to an increase in average federal
funds sold, securities, and loans. Total assets at September 30, 2004
increased 9 percent to $14.0 billion from $12.8 billion at September
30, 2003, and 4 percent from $13.5 billion at June 30, 2004.
REVENUES
Revenues (net interest income plus noninterest income) for the
third quarter of 2004 increased 6 percent to $185.0 million compared
with $173.9 million for the third quarter of 2003 due to higher net
interest income and wealth management fees. Revenues were up 2 percent
from the second quarter of 2004, or 10 percent annualized.
NET INTEREST INCOME
Fully taxable-equivalent net interest income for the third quarter
of 2004 of $140.8 million was up 6 percent from $132.4 million for the
third quarter of 2003. Compared to the second quarter of 2004, net
interest income was up 4 percent or 15 percent annualized from $135.6
million. This was due to an increase in loan yields of 17 basis
points, and increased holdings of liquid assets. The net interest
margin was 3 basis points lower than the second quarter of 2004. The
decline was due to increased holdings of lower yielding federal funds
sold and securities as strong deposit growth continued to exceed the
demand for loans, and a 4-basis-point increase in the average cost of
total deposits. The change from the third quarter of 2004 compared to
the same quarter a year ago was also due to the holding of lower
yielding federal funds sold and securities as strong deposit growth
continued to exceed the demand for loans.
For the
three
For the three months months
ended ended
September 30, % June 30, %
Dollars in millions 2004 2003 Change 2004 Change
- ----------------------- ---------- ---------- ------ ---------- ------
Average Loans $8,173.9 $7,558.8 8 $8,053.9 1
Average Securities 3,677.0 3,180.5 16 3,601.0 2
Average Deposits 11,496.7 10,320.8 11 11,121.5 3
Average Core Deposits 10,685.8 9,323.5 15 10,310.7 4
Fully Taxable-
Equivalent
Net Interest Income 140.8 132.4 6 135.6 4
Net Interest Margin 4.46 % 4.61 % (3) 4.49 % (1)
Period-end September 30, 2004 loans increased $48.6 million from
June 30, 2004, reflecting modest growth in real estate-related loans.
Compared with the prior-year third-quarter averages, residential
mortgage loans rose 22 percent, real estate construction loans rose 24
percent, commercial real estate mortgage loans rose 7 percent, and
commercial loans decreased 3 percent partially due to the payoff of
several dairy loans. Compared with the prior quarter, commercial loans
decreased slightly while all other categories increased.
The company's "plain vanilla" interest rate swaps which are part
of its long-standing asset-liability management strategy of hedging
loans, deposits and borrowings were $1.0 billion in notional value,
which was down $0.1 billion from the notional value at June 30, 2004
and September 30, 2003.
NONINTEREST INCOME
Third-quarter 2004 noninterest income was 5 percent higher than
the third quarter of 2003 due primarily to higher wealth management
income. However, it fell 1 percent from the second quarter of 2004. As
a percentage of total revenues, noninterest income was 26 percent for
the third quarter of 2004, compared with 26 percent and 27 percent for
the third quarter of 2003 and the second quarter of 2004,
respectively.
Wealth Management
Trust and investment fees increased 19 percent over the third
quarter of 2003 primarily due to higher balances under management or
administration. Assets under management at September 30, 2004 also
increased 19 percent from the same period last year primarily due to
new business, strong relative investment performance and higher market
values. Increases in market values are reflected in fee income
primarily on a trailing-quarter basis.
At or for
the
At or for three
the months
three months ended ended
September 30, % June 30, %
Dollars in millions 2004 2003 Change 2004 Change
- -------------------------- --------- --------- ------ --------- ------
Trust and Investment Fee
Revenue $16.9 $14.1 19 $16.7 1
Brokerage and Mutual Fund
Fees 9.7 9.3 4 9.4 3
Assets Under
Administration 33,171.1 27,485.8 21 31,749.9 4
Assets Under Management
(1)(2) 15,101.1 12,653.0 19 14,567.2 4
(1) Included above in assets under administration
(2) Excludes $3,603 and $3,275 million of assets under management
for the CCM minority owned asset managers as of September 30, 2004 and
June 30, 2004, respectively
Other Noninterest Income
Cash management and deposit transaction fees decreased 5 percent
for the third quarter of 2004 from the same quarter last year.
Compared with the second quarter of 2004, third-quarter 2004 cash
management and deposit transaction fees decreased 6 percent due
primarily to an increase in the earnings credit for deposits under
analysis.
International service fees for the third quarter of 2004 were 7
percent higher over the prior-year quarter and increased 3 percent
from the second quarter of 2004 primarily due to higher letter of
credit fees.
Other income for the third-quarter of 2004 was 12 percent lower
than the third quarter of 2003 primarily due to the absence of
participating mortgage loan fees in the current quarter and was
essentially unchanged from the second quarter of 2004. Participating
mortgage loan fees are earned upon completion and repayment of debt of
certain real estate construction projects. In these cases, City
National participates in the profits of the project by funding a
portion of the equity requirement.
For the third quarter of 2004, the company recorded $0.3 million
in gains on the sale of loans, assets and debt repurchase and gains on
the sale of securities, compared to essentially no gain or loss for
the third quarter of 2003 and $0.9 million in gains for the second
quarter of 2004.
NONINTEREST EXPENSE
Third-quarter 2004 noninterest expense of $97.8 million was up 6
percent compared to $92.3 million for the third quarter of 2003 and up
2 percent from $95.7 million for the second quarter of 2004. The
year-over-year increase primarily related to higher staff costs.
Compared with the prior quarter, the increase was due primarily to
higher net occupancy of premises and higher professional fees.
For the third quarter of 2004, the efficiency ratio was 52.68
percent compared with 52.92 percent for the third quarter of 2003, and
52.72 percent for the second quarter of 2004.
INCOME TAXES
The third-quarter 2004 effective tax rate was 37.6 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
affected 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's
strategic and financial positions remain unchanged from the previously
reported period.
FIRST-NINE-MONTHS NET INCOME
First-nine-months 2004 net income of $156.6 million, or $3.07 per
share, rose from $142.2 million, or $2.85 per share, in the first nine
months of 2003 attributable to the following:
-- Average deposits grew 12 percent and core deposits went up 16
percent.
-- Average loans increased by $267.7 million, or 3 percent.
Residential mortgage loans rose 17 percent, commercial real
estate mortgage loans rose 5 percent, real estate construction
loans rose 14 percent and commercial loans decreased 7 percent
partially due to the payoff of dairy loans previously
announced.
-- Revenues increased 6 percent attributable to the rise of both
net interest income and noninterest income. The margin for the
first nine months of 2004 declined to 4.54 percent from 4.82
percent for the same period a year ago due to the holding of
lower yielding federal funds sold and securities as strong
deposit growth continues to exceed the demand for loans.
-- No provision for credit losses was recorded for the first nine
months of 2004 due to continued strong credit quality compared
with $29.0 million for the first nine months of 2003.
-- Noninterest income grew 10 percent from $129.3 million to
$142.5 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"). Results for 2004 include CCM's
operation for the entire nine months while 2003 results only
include the operations of CCM beginning April 1, 2003, the
date the acquisition was completed. Noninterest income as a
percentage of total revenues was 26 percent for the first nine
months of 2004 compared with 25 percent for the first nine
months of 2003.
-- Noninterest expense was up 7 percent from $269.1 million to
$287.9 million partly because of the acquisition of CCM.
CREDIT QUALITY
The company made no provision for credit losses in the first nine
months of 2004. This was attributable to the continued strong credit
quality of its portfolio, low level of net charge-offs, management's
ongoing assessment of the credit quality of the portfolio, modest loan
growth and an improving economic environment. Nonaccrual loans as of
September 30, 2004 were $35.3 million, down 35 percent from September
30, 2003, and down 16 percent from June 30, 2004.
At September 30, 2004, the allowance for loan losses was $148.1
million or 1.81 percent of outstanding loans. This was after the
company reclassified $12.3 million for $4.3 billion of unfunded credit
commitments from the allowance for loan losses to other liabilities.
Unfunded credit commitments increased by approximately $234 million
during the third quarter of 2004. The process used in the
determination of the adequacy of the reserve for unfunded credit
commitments is consistent with the process for the allowance for loan
losses. Prior to the reclassification, the allowance for loan losses
was $160.4 million or 1.96 percent of outstanding loans. This
presentation does not lower the total reserve for credit losses.
Management believes the allowance for credit losses is adequate to
cover risks in the loan portfolio at September 30, 2004.
At or
for the
At or for three
the months
three months ended
ended June
September 30 % 30, %
Dollars in millions 2004 2003 Change 2004 Change
- ---------------------------- --------- -------- ------ -------- ------
Provision For Credit Losses $- $- 0 $- 0
Net Loan Charge-Offs 4.8 4.7 1 - N/M
Annualized Percentage of
Net Charge-offs
to Average Loans 0.23 % 0.25 % (8) - % N/M
Nonperforming Assets $35.3 $54.7 (35) $41.8 (16)
Percentage of Nonaccrual
Loans
and ORE to Total Loans and
ORE 0.43 % 0.72 % (40) 0.51 % (16)
Allowance for Loan Losses
(1) $148.1 $156.6 (5) $153.3 (3)
Reserve for Off-Balance
Sheet
Credit Commitments (1) $12.3 $9.6 27 $11.8 4
Percentage of Allowance for
Loan
Losses to Outstanding
Loans (1) 1.81 % 2.08 % (13) 1.89 % (4)
Percentage of Allowance for
Loan
Losses to Nonaccrual
Loans (1) 419.79 286.44 47 366.39 15
Percentage of Allowance for
Credit
Losses to Nonaccrual Loans
(2) 454.65 304.08 50 394.71 15
(1) As of September 30, 2004, the company has reclassified the
reserve for unfunded credit commitments from the allowance for loan
losses to other liabilities. Amounts presented prior to the third
quarter of 2004 have been reclassified to conform to the presentation
in the third quarter of 2004.
(2) Allowance for credit losses equals allowance for loan losses and
reserves for off-balance sheet credit commitments.
At September 30, 2004, approximately 29.4 percent of the
nonperforming assets were loans to Northern California clients, and
15.1 percent were 4 dairy credits. At September 30, 2004, the
company's loan portfolio included approximately $460.7 million of
loans managed in Northern California offices. In addition, the
portfolio included approximately $26.7 million in outstanding dairy
loans, an industry which, as previously announced, the company expects
to exit, at relatively minimal cost, over the next three months.
OUTLOOK
Management now expects the growth of net income per share for 2004
to be approximately 9 to 11 percent higher than net income per share
for 2003 compared to its earlier guidance of 8 to 10 percent. This is
based on current economic conditions and the outlook for the remainder
of 2004, the 25-basis-point increase in interest rates effective
September 21, 2004, and the updated business indicators below:
-- Average loan growth 4 to 6 percent
-- Average deposit growth 9 to 11 percent
-- Net interest margin 4.50 to 4.60 percent
-- Provision for credit losses $0 million to $5 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
September 30, 2004 were 14.99 percent and 11.35 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, 2004 was 7.80 percent. Total risk-based capital, Tier 1
risk-based capital and the Tier 1 leverage ratios at June 30, 2004
were 14.77 percent, 11.08 percent and 7.68 percent, respectively which
reflect the reclassification of the off-balance sheet credit
commitments.
Average shareholders' equity to average assets for the third
quarter of 2004 was 9.3 percent compared to 9.2 percent for the third
quarter of 2003 and 9.3 percent for the second quarter of 2004.
Accumulated other comprehensive income at September 30, 2004 was
$3.7 million compared with income of $21.4 million at September 30,
2003 and a loss of $38.4 million at June 30, 2004. The increase during
the third quarter related primarily to the impact of the decrease in
long and medium-term interest rates on the securities portfolio during
the period. A decrease in long-term securities also contributed to the
average duration of total available-for-sale securities at September
30, 2004 decreasing to 3.1 years compared to 3.8 years at June 30,
2004 and 3.2 years at September 30, 2003.
STOCK REPURCHASE
The company has authorization to repurchase 1,009,500 of its
outstanding shares as of September 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 per share. 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 leaving 9,500 shares remaining for repurchase before
the initiation of the new one-million-share program. There were no
shares repurchased during the third quarter of 2004. 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 1,157,468 treasury shares at
September 30, 2004.
CONFERENCE CALL
City National Corporation will host a conference call this
afternoon to discuss results for the third 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 800-599-9816 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 is a financial services company with
$14.0 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 52
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 $33 billion in
client trust and investment assets, including more than $15 billion
under management.
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) 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) the costs associated with the
requirements to address Sarbanes-Oxley 404 and Bank Secrecy Act
regulatory compliance principles including Anti-Money Laundering, USA
Patriot Act and Know Your Client, (5) increased competition in the
company's market, (6) other-than-expected credit losses, (7)
earthquake or other natural disasters impacting the condition of real
estate collateral, (8) the effect of acquisitions and integration of
acquired businesses, and (9) the impact of changes in regulatory,
judicial, or legislative tax treatment of business transactions.
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 quarter-ended
June 30, 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."
CITY NATIONAL CORPORATION
- ----------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET (unaudited)
(Dollars in thousands, except per share amount)
- ----------------------------------------------------------------------
September 30, June 30,
---------------------------------
2004 2003 % Change 2004
---------------------------------------------
Assets
Cash and due from banks $410,694 $497,392 (17) $485,208
Federal funds sold 890,000 717,200 24 595,000
Due from banks - interest
bearing 37,890 33,646 13 76,890
Securities 3,830,502 3,467,752 10 3,547,650
Loans (net of allowance
for loan losses of
$148,056; $156,563 and
$153,271) (1) 8,026,081 7,385,584 9 7,972,225
Other assets 786,233 738,600 6 808,773
------------------------ ------------
Total assets (1) $13,981,400 $12,840,174 9 $13,485,746
======================== ============
Liabilities and
Shareholders' Equity
Noninterest-bearing
deposits $5,922,689 $5,365,335 10 $5,809,241
Interest-bearing deposits 5,942,864 5,420,366 10 5,645,678
------------------------ ------------
Total deposits 11,865,553 10,785,701 10 11,454,919
Federal funds purchased
and securities sold
under repurchase
agreements 71,570 103,346 (31) 94,898
Other short-term borrowed
funds 50,125 15,125 231 50,125
Subordinated debt 291,073 303,393 (4) 286,896
Other long-term debt 231,882 278,664 (17) 224,488
Reserve for off-balance
sheet credit commitments
(1) 12,295 9,646 27 11,846
Other liabilities /
minority interest 145,675 160,500 (9) 134,765
------------------------ ------------
Total liabilities (1) 12,668,173 11,656,375 9 12,257,937
Shareholders' equity
Common stock, paid-in
capital, retained
earnings, treasury
shares and deferred
equity compensation 1,309,544 1,162,353 13 1,266,227
Accumulated other
comprehensive income
(loss) 3,683 21,446 (83) (38,418)
------------------------ ------------
Total shareholders'
equity 1,313,227 1,183,799 11 1,227,809
------------------------ ------------
Total liabilities and
shareholders' equity
(1) $13,981,400 $12,840,174 9 $13,485,746
======================== ============
Book value per share $26.73 $24.29 10 $25.05
Number of shares at
period end 49,127,167 48,740,418 1 49,015,117
(1) As of September 30, 2004, the company has reclassified the reserve
for unfunded credit commitments from the allowance for loan losses
to other liabilities. Amounts presented prior to the third
quarter of 2004 have been reclassified to conform to the
presentation in the third quarter of 2004.
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,
------------------------------------------------------------
% %
2004 2003 Change 2004 2003 Change
------------------------------------------------------------
Interest
income $152,431 $142,361 7 $441,406 $432,370 2
Interest
expense (15,090) (13,700) 10 (40,818) (48,368) (16)
---------------------- ----------------------
Net
interest
income 137,341 128,661 7 400,588 384,002 4
Provision
for credit
losses - - - - (29,000) (100)
---------------------- ----------------------
Net
interest
income
after
provision
for credit
losses 137,341 128,661 7 400,588 355,002 13
Noninterest
income 47,640 45,268 5 142,476 129,296 10
Noninterest
expense (97,761) (92,333) 6 (287,947) (269,061) 7
Minority
interest (1,502) (1,717) (13) (4,408) (3,257) 35
---------------------- ----------------------
Income
before
taxes 85,718 79,879 7 250,709 211,980 18
Income
taxes (32,240) (27,376) 18 (94,133) (69,741) 35
---------------------- ----------------------
Net income $53,478 $52,503 2 $156,576 $142,239 10
====================== ======================
Net income
per share,
diluted $1.04 $1.05 (1) $3.07 $2.85 8
====================== ======================
Dividends
paid per
share $0.32 $0.28 14 $0.96 $0.69 39
====================== ======================
Shares used
to compute
per share
net
income,
diluted 51,182,083 50,176,559 50,969,910 49,941,668
CITY NATIONAL CORPORATION
- ----------------------------------------------------------------------
SELECTED FINANCIAL INFORMATION (unaudited) (Dollars in thousands)
- ----------------------------------------------------------------------
For the three months For the nine months
ended ended
September 30, September 30,
--------------------------------------------------------
% %
2004 2003 Change 2004 2003 Change
----------- ----------- ------ --------- --------- -----
Average
Balances
Loans
Commercial $3,100,553 $3,191,405 (3)$3,134,153 $3,383,367 (7)
Commercial
real estate
mortgage 1,837,590 1,715,400 7 1,819,488 1,730,310 5
Residential
mortgage 2,135,972 1,754,877 22 2,041,912 1,748,237 17
Real estate
construction 786,576 634,300 24 748,275 659,157 14
Equity lines
of credit 221,105 175,596 26 206,366 171,807 20
Installment 92,086 87,221 6 88,344 77,970 13
----------- ----------- ----------- -----------
Total loans $8,173,882 $7,558,799 8 $8,038,538 $7,770,848 3
=========== =========== =========== ===========
Securities $3,676,953 $3,180,542 16 $3,580,520 $2,825,919 27
Due from banks
- interest
bearing 38,992 66,477 (41) 53,381 40,231 33
Interest-
earning
assets 12,549,195 11,390,370 10 12,097,769 10,960,019 10
Assets (1) 13,612,389 12,428,306 10 13,152,721 11,950,447 10
Core deposits 10,685,832 9,323,541 15 10,207,652 8,808,012 16
Deposits 11,496,659 10,320,828 11 11,052,186 9,826,659 12
Shareholders'
equity 1,266,651 1,139,440 11 1,239,710 1,129,645 10
Noninterest
income
Trust and
investment
fees $16,850 $14,148 19 $49,102 $32,878 49
Brokerage and
mutual fund
fees 9,675 9,264 4 $27,768 $27,519 1
Cash
management
and deposit
transaction
fees 10,322 10,885 (5) 32,362 32,868 (2)
International
services 5,191 4,845 7 15,359 14,192 8
Bank owned
life
insurance 588 747 (21) 2,134 2,192 (3)
Other 4,678 5,327 (12) 13,915 16,991 (18)
----------- ----------- ----------- -----------
Subtotal
- core 47,304 45,216 5 140,640 126,640 11
Gain on sale
of loans and
assets/debt
repurchase 9 16 NM 9 118 (92)
Gain on sale
of securities 327 36 808 1,827 2,538 (28)
----------- ----------- ----------- -----------
Total $47,640 $45,268 5 $142,476 $129,296 10
=========== =========== =========== ===========
Total revenue $184,981 $173,929 6 $543,064 $513,298 6
=========== =========== =========== ===========
Noninterest
expense
Salaries and
employee
benefits $59,675 $55,261 8 $178,657 $161,582 11
----------- ----------- ----------- -----------
All Other
Net occupancy
of premises 8,124 8,142 - 23,081 22,973 -
Professional 7,582 6,821 11 20,418 20,026 2
Information
services 4,522 4,749 (5) 13,632 13,304 2
Depreciation 3,614 3,315 9 10,116 9,453 7
Marketing and
advertising 3,666 3,060 20 10,985 9,725 13
Office
services 2,444 2,504 (2) 7,350 7,472 (2)
Amortization
of
intangibles 1,763 2,365 (25) 5,282 6,568 (20)
Equipment 478 528 (9) 1,879 1,832 3
Other
operating 5,893 5,588 5 16,547 16,126 3
----------- ----------- ----------- -----------
Total all
other 38,086 37,072 3 109,290 107,479 2
----------- ----------- ----------- -----------
Total $97,761 $92,333 6 $287,947 $269,061 7
=========== =========== =========== ===========
Selected
Ratios
For the Period
Return on
average
assets (1) 1.56 % 1.68 % (7) 1.59 % 1.59 % -
Return on
average
shareholders'
equity 16.80 18.28 (8) 16.87 16.83 -
Efficiency
ratio (2) 52.68 52.92 - 52.92 51.93 2
Dividend
payout ratio 29.51 25.94 14 30.08 23.58 28
Period End
(1)
Tier 1 risk-
based capital
ratio 11.35 10.75 6
Total risk-
based capital
ratio 14.99 14.92 -
Tier 1
leverage
ratio 7.80 7.36 6
(1) As of September 30, 2004, the company has reclassified the reserve
for unfunded credit commitments from the allowance for loan losses
to other liabilities. Amounts presented prior to the third quarter
of 2004 have been reclassified to conform to the presentation in
the third quarter of 2004.
(2) 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).
CITY NATIONAL CORPORATION
- ----------------------------------------------------------------------
SELECTED FINANCIAL INFORMATION (unaudited) (Dollars in thousands)
- ----------------------------------------------------------------------
Period end September 30, June 30,
---------------------------------
2004 2003 % Change 2004
---------------------------------------------
Loans
Commercial $3,020,235 $3,143,489 (4) $3,077,689
Commercial real estate
mortgage 1,852,472 1,707,822 8 1,842,956
Residential mortgage 2,167,623 1,803,424 20 2,114,335
Real estate construction 797,109 622,941 28 782,435
Equity lines of credit 242,050 179,601 35 214,533
Installment 94,648 84,870 12 93,548
------------------------ ------------
Total loans $8,174,137 $7,542,147 8 $8,125,496
======================== ============
Deposits
Noninterest-bearing $5,922,689 $5,365,335 10 $5,809,241
Interest-bearing, core 5,083,550 4,451,820 14 4,854,545
------------------------ ------------
Total core deposits 11,006,239 9,817,155 12 10,663,786
Time deposits - $100,000
and over 859,314 968,546 (11) 791,133
------------------------ ------------
Total deposits $11,865,553 $10,785,701 10 $11,454,919
======================== ============
For the three months For the nine months
ended ended
September 30, September 30,
----------------------------------------------------
2004 2003 % Change 2004 2003 % Change
--------- -------- ------- -------- ------- -------
Yields and Rates
for the Period
Loans 5.54 % 5.73 % (3) 5.46 % 5.83 % (6)
Securities 4.27 4.41 (3) 4.43 4.79 (8)
Interest-
earning assets 4.94 5.09 (3) 4.99 5.41 (8)
Interest-
bearing
deposits 0.77 0.73 5 0.72 0.91 (20)
Other
borrowings 2.30 2.02 14 2.06 2.22 (7)
Total interest
bearing
liabilities 0.91 0.87 5 0.85 1.06 (20)
Net interest
margin 4.46 4.61 (3) 4.54 4.82 (6)
September 30, June 30,
------------------------------------
2004 2003 % Change 2004
------------ ------------ ---------- ------------
Credit Quality
Nonaccrual loans
and ORE
Nonaccrual
loans $35,269 $54,659 (35) $41,833
ORE - - - -
------------ ------------ ------------
Total nonaccrual
loans and ORE $35,269 $54,659 (35) $41,833
============ ============ ============
Total nonaccrual
loans and ORE
to total
loans and ORE 0.43 0.72 (40) 0.51
Loans past due
90 days or more
on accrual status $3,586 $3,023 19 $153
============ ============ ============
For three months For the nine months
ended ended
September 30, September 30,
-------- ----------------- ---------- -----------------
% %
2004 2003 Change 2004 2003 Change
-------- ---------------- ---------- ----------------
Allowance for
Loan
Losses
Beginning
balance $153,271 $161,947 (5)$ 156,015 $156,598 -
Provision
for credit
losses (449) (666) (33) (2,324) 27,258 (109)
Charge-offs (8,238) (7,599) 8 (22,187) (36,692) (40)
Recoveries 3,472 2,881 21 16,552 9,399 76
-------- -------- ---------- --------
Net charge-
offs (4,766) (4,718) 1 (5,635) (27,293) (79)
-------- -------- ---------- --------
Ending Balance$148,056 $156,563 (5)$ 148,056 $156,563 (5)
======== ======== ========== ========
Reserve for
Off-Balance
Sheet
Credit
Commitments
Beginning
balance $ 11,846 $ 8,980 32 $ 9,971 $ 7,904 26
Provision 449 666 (33) 2,324 1,742 33
-------- -------- ---------- --------
Ending Balance$ 12,295 $ 9,646 27 $ 12,295 $ 9,646 27
======== ======== ========== ========
Total net
charge-offs
to average
loans
(annualized) (0.23) (0.25) (8) (0.09) (0.47) (81)
Allowance for
loan losses
to total loans 1.81 2.08 (13)
Allowance for
loan losses
to nonaccrual
loans 419.79 286.44 47
Allowance for
credit losses
to nonaccrual
loans (1) 454.65 304.08 50
As of September 30, 2004, the company has reclassified the reserve for
unfunded credit commitments from the allowance for loan losses to
other liabilities. Amounts presented prior to the third quarter of
2004 have been reclassified to conform to the presentation in the
third quarter of 2004.
(1) Allowance for credit losses equals allowance for loan losses and
reserves off-balance sheet credit commitments.
CITY NATIONAL CORPORATION
- ----------------------------------------------------------------------
Reclassification of Off-Balance Sheet Credit Commitments
- ----------------------------------------------------------------------
Reserve for
Off-Balance
Allowance Sheet Credit Combined
for
Loan Losses Commitments Total
------------ ------------ ------------
Balances, December 31, 2002 $156,598 $7,904 $164,502
Net Charge-offs (12,522) - (12,522)
Provision 17,172 328 17,500
------------ ------------ ------------
Balances, March
31, 2003 161,248 8,232 169,480
Net Charge-offs (10,053) - (10,053)
Provision 10,752 748 11,500
------------ ------------ ------------
Balances June 30,
2003 161,947 8,980 170,927
Net Charge-offs (4,718) - (4,718)
Provision (666) 666 -
------------ ------------ ------------
Balances, September 30, 2003 156,563 9,646 166,209
Net Charge-offs (223) - (223)
Provision (325) 325 -
------------ ------------ ------------
Balances, December 31, 2003 156,015 9,971 165,986
Net Charge-offs (914) - (914)
Provision (603) 603 -
------------ ------------ ------------
Balances, March
31, 2004 154,498 10,574 165,072
Net Charge-offs 45 - 45
Provision (1,272) 1,272 -
------------ ------------ ------------
Balances, June 30,
2004 153,271 11,846 165,117
Net Charge-offs (4,766) - (4,766)
Provision (449) 449 -
------------ ------------ ------------
Balances, September 30, 2004 $148,056 $12,295 $160,351
============ ============ ============
CONTACT: City National Corporation
Christopher J. Carey, 310-888-6777 (IR)
Cary Walker, 213-447-8269 (Media)