Exhibit 99.1
City National Corp.'s Second-Quarter 2006 Earnings Grow To $58.7 Million, or
$1.16 per Share; Earnings Per Share up 3 Percent from the Same Period Last Year
LOS ANGELES--(BUSINESS WIRE)--July 19, 2006--City National Corporation
(NYSE: CYN), the parent company of wholly owned City National Bank, today
reported second-quarter 2006 net income of $58.7 million, or $1.16 per share, up
from $57.7 million, or $1.13 per share, for the second quarter of 2005.
Year to date, City National has earned $116 million, or $2.28 per share, on
revenue of $419.9 million. In the first half of 2005, the company earned net
income of $113.2 million, or $2.22 per share, on revenue of $397.8 million.
SECOND-QUARTER HIGHLIGHTS
-- Second-quarter revenue totaled $212.6 million, a 6 percent increase
from the same period last year.
-- Average loans grew to $9.9 billion, up 13 percent from the second
quarter of 2005. This growth was led by increases in commercial loans
and residential mortgages.
-- Loan recoveries exceeded charge-offs, and nonaccrual loans amounted to
$15 million, down $7.2 million, or 32 percent, from the second quarter
of 2005 but up $0.4 million from the first quarter of this year.
-- Average deposits of $11.9 billion were 2 percent higher than the
second quarter of 2005 and 3 percent higher than the first quarter of
this year.
-- Noninterest income grew to $58.6 million, 14 percent higher than the
second quarter of 2005 and 7 percent higher than the first quarter of
this year, due primarily to the continuing growth of City National's
wealth management and international services fee revenue.
"City National made good progress in the second quarter, continuing to add
clients, invest for the future and build shareholder value," said President and
Chief Executive Officer Russell Goldsmith. "We're pleased that both average
loans and fee income grew at double-digit rates and that credit quality was
excellent.
"In the second quarter we completed the acquisition of Independence
Investments, which brings client investment assets held by City National and its
affiliates to more than $47 billion. We also formed a strategic alliance with
the Bank of East Asia, the largest independent bank in Hong Kong, to provide
clients of both companies with greater financial capabilities and expertise on
the ground in our respective countries. City National again demonstrated its
commitment to growing shareholder value and its willingness to deploy capital
productively by repurchasing 1.5 million shares and obtaining the authorization
to buy back an additional 1.5 million shares."
For the three months For the
ended three
Dollars in millions, June 30, months
except per share --------------------- % ended %
Change March 31, Change
2006 2005 2006
- ----------------------- ---------- ---------- ------ --------- ------
Earnings Per Share $1.16 $1.13 3 $1.12 4
Net Income 58.7 57.7 2 57.2 3
Average Assets 14,782.5 14,040.6 5 14,826.5 (0)
Return on Average
Assets 1.59 % 1.65 % (4) 1.57 % 2
Return on Average
Equity 16.20 17.03 (5) 15.68 3
ASSETS
Total assets at June 30, 2006 were $14.5 billion, up slightly from one year
ago but down 2 percent from March 31 of this year. The decrease from the first
quarter reflects a 15 percent reduction in the company's investment securities
portfolio.
REVENUE
Strong loan growth and solid growth in fees drove revenue higher.
Second-quarter revenue (net interest income plus noninterest income) totaled
$212.6 million, up 6 percent from the second quarter of 2005 and 3 percent from
the first quarter of this year.
NET INTEREST INCOME
Fully taxable-equivalent net interest income reached $157.5 million in the
second quarter of 2006, up 3 percent from $152.7 million for the same period
last year. Fully taxable-equivalent net interest income in the first quarter of
2006 was $155.5 million.
Lending activity continued to grow in the second quarter. Average loan
balances reached $9.9 billion, up 13 percent from one year ago and 3 percent
from the first quarter of 2006. Commercial loans increased 23 percent from the
second quarter of 2005 and 4 percent from the first quarter of this year.
Residential mortgage lending rose 12 percent from one year ago and 3 percent
from the first quarter. Commercial real estate lending was up 3 percent from the
second quarter of 2005 and 2 percent from the first quarter. Real estate
construction loans increased 2 percent from one year ago, but were unchanged
from the first quarter of this year.
City National's yield on earning assets reached 6.19 percent, up from 5.50
percent in the second quarter of 2005. At June 30, 2006, the bank's prime rate
was 8.25 percent, 200 basis points higher than it was at the same time last
year.
Average deposits totaled $11.9 billion, an increase of 2 percent from the
second quarter of 2005 and 3 percent from the first quarter of this year.
Average noninterest-bearing deposits fell 3 percent from the second quarter
of 2005 but increased 1 percent from the first quarter of this year.
Second-quarter title and escrow balances averaged $1.30 billion, up from $1.25
billion in the first quarter of 2006. Interest-bearing savings and checking
account balances were down from both the second quarter of last year and the
first quarter of this year. Time deposits, including certificates of deposit,
were significantly higher. Total interest expense grew 112 percent from the
second quarter of 2005 and 14 percent from the first quarter of this year.
Responding to the steady rise in short-term interest rates over the last
two years, some of the company's business clients have shifted funds from core
deposit accounts into higher-yielding deposit and investment accounts. In the
first half of 2006, the increase in City National's wealth management money
market and brokerage account balances substantially exceeded the decline of
low-cost deposits.
The company's second-quarter net interest margin was 4.65 percent, compared
with 4.73 percent during the same period last year and 4.62 percent in the first
quarter of 2006.
Average securities totaled $3.6 billion in the second quarter of 2006, down
$490 million from one year ago and $390 million from the first quarter of 2006.
The average duration of total available-for-sale securities at June 30, 2006 was
3.5 years, compared with 3.2 years at March 31, 2006.
For the
three
For the three months months
ended % ended %
Dollars in millions June 30, Change March 31, Change
2006 2005 2006
- ----------------------- ---------- ---------- ------ --------- ------
Average Loans $9,902.9 $8,747.7 13 $9,625.0 3
Average Securities 3,581.2 4,071.5 (12) 3,970.4 (10)
Average Earning Assets 13,581.2 12,935.6 5 13,652.2 (1)
Average Deposits 11,930.8 11,678.7 2 11,587.6 3
Average Core Deposits 10,278.7 10,781.6 (5) 10,334.0 (1)
Fully Taxable-
Equivalent
Net Interest Income 157.5 152.7 3 155.5 1
Net Interest Margin 4.65 % 4.73 % (2) 4.62 % 1
NONINTEREST INCOME
Second-quarter 2006 noninterest income was $58.6 million, 14 percent higher
than the second quarter of 2005, due primarily to the continuing growth of City
National's wealth management and international services fee revenue.
Wealth Management
City National's assets under management or administration surpassed $47
billion in the second quarter. As a result, trust and investment fees increased
24 percent over the same time last year. Second-quarter brokerage and mutual
fund fees also grew 24 percent from the second quarter of 2005.
On May 31, 2006, City National completed its acquisition of Independence
Investment LLC, a Boston-based firm that manages $8 billion in assets for
corporate, public and Taft-Hartley pension plans, as well as foundations and
endowments. This acquisition is expected to become modestly accretive to
earnings in the second half of 2006.
Not including the acquisition of Independence, City National's trust and
investment fee income in the second quarter of 2006 grew 13 percent from the
same period last year. Second-quarter noninterest income grew 10 percent from
last year, excluding the acquisition of Independence.
Other Noninterest Income
Second-quarter cash management and deposit transaction fee income fell 13
percent from the same period last year and 5 percent from the first quarter of
2006, as many clients continued to pay for services with compensating deposit
balances.
International services fee income grew 16 percent from the second quarter
of 2005 and 15 percent from the first quarter of this year, largely because of
an increase in foreign exchange transaction revenue.
Other noninterest income for the second quarter of 2006 amounted to $6.9
million, up $2 million from one year ago. The increase was due largely to a $0.9
million gain on the exercise of warrants obtained as the result of a credit
restructuring agreement negotiated several years ago.
At or for
the
At or for the three
three months ended months
June 30, ended
------------------- % March 31, %
Dollars in millions 2006 2005 Change 2006 Change
- --------------------------- --------- --------- ------ ---------------
Trust and Investment Fee
Revenue $24.9 $20.1 24 $21.8 14
Brokerage and Mutual Fund
Fees 12.3 9.9 24 11.7 5
Assets Under Management (1) 26,852.9 17,257.5 56 19,246.3 40
Total Assets Under
Management
or Administration (1) 47,199.0 36,972.9 28 40,435.6 17
(1) Excludes $9.3 billion, $5.5 billion, and $9.4 billion of assets
under management for the investment affiliates in which City
National held minority ownership interests as of June 30, 2006,
June 30, 2005, and March 31, 2006, respectively
NONINTEREST EXPENSE
Second-quarter 2006 noninterest expense amounted to $119.2 million, up 9
percent from the second quarter of 2005 and 3 percent from the first quarter of
this year. Excluding both the acquisition of Independence and the expensing of
stock options, noninterest expense grew 6 percent from the second quarter of
last year.
City National's efficiency ratio for the second quarter of 2006 was 55.20
percent, compared with 53.39 percent one year ago and 54.80 percent for the
first quarter of this year.
INCOME TAXES
The company's second-quarter 2006 effective tax rate was 37.5 percent,
compared with 37.3 percent in the second quarter of last year.
CREDIT QUALITY
Asset quality remains strong. At June 30, 2006, nonaccrual loans were $15
million, compared with $22.2 million at the same time last year and $14.6
million in the first quarter of 2006. Recoveries exceeded charge-offs for the
sixth consecutive quarter, this time by $1.2 million. City National recorded
$0.6 million in income through its provision for credit losses, based on the
bank's well-established loan-loss allowance methodology, which calculates the
allowance by taking into account several factors, including asset quality,
credit risk, loan growth and economic conditions.
At June 30, 2006, the allowance for loan losses was $157.6 million, or 1.60
percent of outstanding loans. The reserve for unfunded credit commitments was an
additional $15.2 million.
OUTLOOK
As previously disclosed, City National's management expects earnings per
share this year to grow at a rate of between 1 percent and 4 percent as compared
with 2005.
CAPITAL RATIOS
Total risk-based capital and Tier 1 risk-based capital ratios at June 30,
2006 were 14.36 percent and 11.29 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, 2006 was 8.45 percent. Total
risk-based capital, Tier 1 risk-based capital and the Tier 1 leverage ratios at
March 31, 2006 were 15.51 percent, 12.36 percent and 8.92 percent, respectively.
The period-end ratio of shareholders' equity to total assets at June 30,
2006 was 9.73 percent, compared to 9.68 percent at the same time last year, and
10.04 percent at March 31, 2006.
STOCK REPURCHASE
During the second quarter of 2006, City National repurchased 1.5 million of
its outstanding shares at an average cost per share of $70.34. The company is
currently authorized to repurchase as many as 1.8 million shares, including 1.5
million that the board of directors approved on July 6 of this year. City
National held 2.2 million shares in treasury as of June 30, 2006.
CONFERENCE CALL
City National Corporation will host a conference call this afternoon to
discuss results for the second quarter of 2006. 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 (866) 383-8009 and enter pass code
44034885. A listen-only live broadcast of the call also will be available on the
investor relations page of the company's Website at cnb.com. There, it will be
archived and available for 12 months.
ABOUT CITY NATIONAL
City National Corporation's wholly owned subsidiary, City National Bank, is
California's Premier Private and Business Bank(R). It provides banking,
investment and trust services through 55 offices, including 12 full-service
regional centers, in Southern California, the San Francisco Bay Area and New
York City. The corporation also holds majority ownership interests in 11
investment affiliates.
FORWARD-LOOKING STATEMENTS
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 markets, (4)
other-than-expected credit losses due to real estate cycles or other economic
events, (5) earthquake or other natural disasters affecting the condition of
real estate collateral, (6) the effect of acquisitions and integration of
acquired businesses, and (7) the impact of changes in regulatory, judicial or
legislative tax treatment of business transactions. Management cannot predict at
this time the strength of the economy, 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 Annual Report on Form 10-K for the year ended December 31, 2005 and
particularly Part I, Item 1A, titled "Risk Factors."
CITY NATIONAL CORPORATION
FINANCIAL HIGHLIGHTS
(unaudited)
Three Months Six Months
------------------------ ---------------------------
For The Period % %
Ended June 30, 2006 2005 Change 2006 2005 Change
- ----------------- ------------------------ ---------------------------
Per Common Share
Net Income
Basic $1.20 $1.18 2 $2.36 $2.30 2
Diluted 1.16 1.13 3 2.28 2.22 2
Dividends 0.41 0.36 14 0.82 0.72 14
Book value 29.26 28.51 3
Results of Operations:
(In millions)
Interest income $206 $174 18 $404 $342 18
Interest
expense 52 24 112 98 46 114
------- ------- --------- --------
Net interest
income 154 150 3 306 296 3
Net interest
income (Fully
tax-
equivalent) 157 153 3 313 303 3
Total revenue 213 201 6 420 398 6
Provision for
credit losses (1) - NM (1) - NM
Net income 59 58 2 116 113 2
Financial Ratios:
Performance Ratios:
Return on
average
assets 1.59 % 1.65 % 1.58 % 1.64 %
Return on
average
shareholders'
equity 16.20 17.03 15.94 16.83
Period-end
shareholders'
equity to
period-end assets 9.73 9.68
Net interest
margin 4.65 4.73 4.63 4.74
Efficiency
ratio 55.20 53.39 55.00 53.74
Capital Adequacy
Ratios (Period end):
Tier 1 leverage 8.45 8.39
Tier 1 risk-based capital 11.29 11.91
Total risk-based capital 14.36 15.45
Asset Quality
Ratios:
Allowance for loan and lease
losses to:
Total loans 1.60 % 1.67 %
Nonaccrual loans 1,050.47 667.52
Nonperforming
assets to:
Total loans and nonperforming assets 0.15 0.25
Total assets 0.10 0.15
Net (charge-
offs)/
recoveries to
Average total
loans
(annualized) 0.05 % 0.05 % 0.08 % 0.03 %
Average Balances:
(In millions)
Loans $9,903 $8,748 13 $9,765 $8,660 13
Interest-
earning assets 13,581 12,936 5 13,617 12,861 6
Assets 14,782 14,041 5 14,804 13,957 6
Core deposits 10,279 10,782 (5) 10,306 10,706 (4)
Deposits 11,931 11,679 2 11,760 11,626 1
Interest-
bearing
liabilities 7,309 6,527 12 7,338 6,589 11
Shareholders'
equity 1,454 1,359 7 1,467 1,356 8
Period-End Balances:
(In millions)
Loans $9,822 $8,870 11
Assets 14,477 14,476 -
Core deposits 10,152 11,141 (9)
Deposits 11,979 12,152 (1)
Shareholders' equity 1,408 1,401 1
Wealth Management:
(In millions) (1)
Assets under management $26,853 $17,258 56
Assets under management or
administration 47,199 36,973 28
(1) Excludes 9,255 and $5,539 million of assets under management
for the Convergent Capital Management asset managers in which City
National holds minority ownership interests as of June 30, 2006 and
June 30, 2005, respectively.
CITY NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended Six Months Ended
(Dollars in June 30, June 30,
thousands except % %
per share data) 2006 2005 Change 2006 2005 Change
- -------------- -------------------------------------------------------
Interest
income $206,204 $174,265 18 $404,396 $341,915 18
Interest
expense 52,206 24,619 112 97,992 45,843 114
--------- --------- --------- ---------
Net Interest
Income 153,998 149,646 3 306,404 296,072 3
Provision for
Credit Losses (610) - - (610) - -
Noninterest
Income
Trust and
investment
fees 24,909 20,119 24 46,683 39,963 17
Brokerage and
mutual fund
fees 12,269 9,931 24 23,953 19,807 21
Cash
management
and
deposit
transaction
fees 7,691 8,874 (13) 15,755 17,884 (12)
International
services 6,870 5,908 16 12,859 10,796 19
Bank-owned
life
insurance 677 652 4 1,611 1,516 6
Other service
charges and
fees 6,888 4,869 41 12,665 10,467 21
Gain (loss)
on sale of
assets - 162 (100) - 185 (100)
Gain (loss)
on sale of
securities (716) 844 (185) (8) 1,099 (100)
--------- --------- --------- ---------
Total
noninterest
income 58,588 51,359 14 113,518 101,717 12
Noninterest
Expense
Salaries and
employee
benefits 73,718 63,839 15 145,334 130,471 11
Net occupancy
of premises 9,460 8,727 8 18,472 16,343 13
Legal and
professional
fees 9,169 10,791 (15) 18,586 19,505 (5)
Information
services 4,571 4,015 14 9,027 8,226 10
Depreciation 4,662 4,535 3 9,322 9,105 2
Amortization
of
intangibles 1,974 1,441 37 3,865 2,882 34
Marketing and
advertising 4,990 3,943 27 9,006 7,517 20
Office
services 2,549 2,688 (5) 5,240 5,177 1
Equipment 623 646 (3) 1,255 1,195 5
Minority
interest
expense 1,213 1,532 (21) 2,441 3,343 (27)
Other 6,243 6,796 (8) 11,947 13,504 (12)
--------- --------- --------- ---------
Total
noninterest
expense 119,172 108,953 9 234,495 217,268 8
--------- --------- --------- ---------
Income Before
Taxes 94,024 92,052 2 186,037 180,521 3
Applicable
Income Taxes 35,283 34,345 3 70,063 67,353 4
--------- --------- --------- ---------
Net Income $58,741 $57,707 2 $115,974 $113,168 2
========= ========= ========= =========
Other Data:
Earnings per
common share
- basic $1.20 $1.18 2 $2.36 $2.30 2
Earnings per
common share
- diluted $1.16 $1.13 3 $2.28 $2.22 2
Dividends
paid per
common share $0.41 $0.36 14 $0.82 $0.72 14
Dividend
payout ratio 34.43 % 30.86 % 12 35.03 % 31.43 % 11
Return on
average
assets 1.59 % 1.65 % (4) 1.58 % 1.64 % (3)
Return on
average
share-
holders'
equity 16.20 % 17.03 % (5) 15.94 % 16.83 % (5)
Net interest
margin (Fully
taxable-
equivalent) 4.65 % 4.73 % (2) 4.63 % 4.74 % (2)
CITY NATIONAL CORPORATION
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
(unaudited)
2006
-----------------------------
(Dollars in thousands Second First Year to
except per share data) Quarter Quarter Date
- --------------------------------------- --------- --------- ---------
Interest Income $206,204 $198,192 $404,396
Interest Expense 52,206 45,786 97,992
--------- --------- ---------
Net Interest Income 153,998 152,406 306,404
Provision for Credit Losses (610) - (610)
Noninterest Income
Trust and investment fees 24,909 21,774 46,683
Brokerage and mutual fund fees 12,269 11,684 23,953
Cash management and
deposit transaction fees 7,691 8,064 15,755
International services 6,870 5,989 12,859
Bank-owned life insurance 677 934 1,611
Other service charges and fees 6,888 5,777 12,665
Gain (loss) on sale of assets - - -
Gain (loss) on sale of securities (716) 708 (8)
--------- --------- ---------
Total noninterest income 58,588 54,930 113,518
Noninterest Expense
Salaries and employee benefits 73,718 71,616 145,334
Net occupancy of premises 9,460 9,012 18,472
Legal and professional fees 9,169 9,417 18,586
Information services 4,571 4,456 9,027
Depreciation 4,662 4,660 9,322
Amortization of intangibles 1,974 1,891 3,865
Marketing and advertising 4,990 4,016 9,006
Office services 2,549 2,691 5,240
Equipment 623 632 1,255
Minority interest expense 1,213 1,228 2,441
Other 6,243 5,704 11,947
--------- --------- ---------
Total noninterest expense 119,172 115,323 234,495
--------- --------- ---------
Income Before Taxes 94,024 92,013 186,037
Applicable Income Taxes 35,283 34,781 70,063
--------- --------- ---------
Net Income $58,741 $57,232 $115,974
========= ========= =========
Other Data:
Earnings per common share - basic $1.20 $1.16 $2.36
Earnings per common share - diluted $1.16 $1.12 $2.28
Dividends paid per common share $0.41 $0.41 $0.82
Dividend payout ratio 34.43 % 35.65 % 35.03 %
Return on average assets 1.59 % 1.57 % 1.58 %
Return on average shareholders'
equity 16.20 % 15.68 % 15.94 %
Net interest margin (Fully taxable-
equivalent) 4.65 % 4.62 % 4.63 %
Full-time equivalent employees 2,648 2,570
CITY NATIONAL CORPORATION
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
(unaudited)
2005
-------------------------------------------------
(Dollars in Fourth Third Second First Full
thousands except Quarter Quarter Quarter Quarter Year
per share data)
- ------------------- --------- --------- --------- --------- ---------
Interest Income $191,927 $184,710 $174,265 $167,650 $718,552
Interest Expense 31,886 28,396 24,619 21,224 106,125
--------- --------- --------- --------- ---------
Net Interest
Income 160,041 156,314 149,646 146,426 612,427
Provision for
Credit Losses - - - - -
Noninterest Income
Trust and
investment
fees 20,362 20,494 20,119 19,844 80,818
Brokerage and
mutual fund
fees 11,174 10,946 9,931 9,877 41,927
Cash
management
and
deposit
transaction
fees 7,842 8,370 8,874 9,010 34,096
International
services 6,256 6,107 5,908 4,888 23,159
Bank-owned
life
insurance 670 1,017 652 864 3,203
Other service
charges and
fees 6,591 5,573 4,869 5,597 22,632
Gain on sale
of assets 81 801 162 23 1,067
Gain (loss)
on sale of
securities (53) 241 844 255 1,287
--------- --------- --------- --------- ---------
Total
noninterest
income 52,923 53,549 51,359 50,358 208,189
Noninterest Expense
Salaries and
employee
benefits 66,460 66,467 63,839 66,632 263,398
Net occupancy
of premises 10,074 8,666 8,727 7,616 35,083
Legal and
professional
fees 11,419 10,672 10,791 8,714 41,596
Information
services 4,299 4,471 4,015 4,211 16,996
Depreciation 4,778 4,551 4,535 4,570 18,434
Amortization
of
intangibles 1,865 1,852 1,441 1,441 6,595
Marketing and
advertising 4,472 4,182 3,943 3,574 16,171
Office
services 2,942 2,578 2,688 2,489 10,697
Equipment 582 578 646 549 2,355
Minority
interest
expense 571 1,761 1,532 1,811 5,675
Other 6,690 6,862 6,796 6,708 27,060
--------- --------- --------- --------- ---------
Total
noninterest
expense 114,152 112,640 108,953 108,315 444,060
--------- --------- --------- --------- ---------
Income Before Taxes 98,812 97,223 92,052 88,469 376,556
Applicable Income
Taxes 37,055 37,413 34,345 33,008 141,821
--------- --------- --------- --------- ---------
Net Income $61,757 $59,810 $57,707 $55,461 $234,735
========= ========= ========= ========= =========
Other Data:
Earnings per
common share
- basic $1.25 $1.22 $1.18 $1.13 $4.77
Earnings per
common share
- diluted $1.21 $1.17 $1.13 $1.09 $4.60
Dividends
paid per
common share $0.36 $0.36 $0.36 $0.36 $1.44
Dividend
payout ratio 28.89 % 29.82 % 30.86 % 32.02 % 30.35 %
Return on
average
assets 1.69 % 1.66 % 1.65 % 1.62 % 1.66 %
Return on
average
shareholders'
equity 17.15 % 16.74 % 17.03 % 16.63 % 16.89 %
Net interest
margin (Fully
taxable-
equivalent) 4.85 % 4.80 % 4.72 % 4.75 % 4.79 %
Full-time
equivalent
employees 2,539 2,516 2,477 2,445
CITY NATIONAL CORPORATION
CONSOLIDATED PERIOD END BALANCE SHEET
(unaudited)
2006
-------------------------
Second First
(In thousands) Quarter Quarter
- -------------------------------------------- ------------ ------------
Assets
Cash and due from banks $467,076 $457,156
Federal funds sold 1,900 -
Due from banks - interest-bearing 50,416 48,890
Securities-available-for-sale 3,211,590 3,850,173
Trading account securities 123,418 57,353
Loans:
Commercial 3,738,361 3,698,614
Commercial real estate mortgages 2,032,698 1,891,517
Residential mortgages 2,769,340 2,700,966
Real estate construction 723,570 748,696
Equity lines of credit 364,312 339,348
Installment 193,474 188,262
------------ ------------
Total loans 9,821,755 9,567,403
Allowance for loan and lease
losses (157,580) (156,482)
------------ ------------
Net loans 9,664,175 9,410,921
Premises and equipment, net 84,802 84,884
Goodwill and other intangibles 298,004 283,642
Other assets 575,686 546,365
------------ ------------
Total assets $14,477,067 $14,739,384
============ ============
Liabilities:
Deposits:
Noninterest-bearing $5,880,630 $5,945,485
Interest-bearing 6,098,200 5,963,044
------------ ------------
Total deposits 11,978,830 11,908,529
Federal funds purchased and securities
sold under repurchase agreements 234,995 526,920
Other short-term borrowed funds 143,724 151,522
Subordinated debt 266,675 269,785
Other long-term debt 209,864 213,819
Minority interest 27,985 25,225
Other liabilities 206,929 164,020
------------ ------------
Total liabilities 13,069,002 13,259,820
Shareholders' Equity
Common stock 50,735 50,693
Additional paid-in capital 402,476 399,976
Retained earnings 1,196,812 1,158,290
Accumulated other
comprehensive loss (86,931) (73,250)
Treasury shares (155,027) (56,145)
-------------------------
Total shareholders' equity 1,408,065 1,479,564
-------------------------
Total liabilities and shareholders'
equity $14,477,067 $14,739,384
============ ============
CITY NATIONAL CORPORATION
CONSOLIDATED PERIOD END BALANCE SHEET
(unaudited)
2005
---------------------------------------------------
Fourth Third Second First
(In thousands) Quarter Quarter Quarter Quarter
- ------------------ ------------ ------------ ------------ ------------
Assets
Cash and due
from banks $365,217 $438,786 $406,709 $386,999
Federal funds
sold 157,000 185,000 400,000 190,000
Due from banks
- interest-
bearing 40,803 39,485 34,676 36,982
Securities-
available-for-
sale 3,999,261 4,030,296 4,057,267 4,018,969
Trading account
securities 59,344 42,634 22,337 37,490
Loans:
Commercial 3,505,576 3,367,607 3,311,059 3,082,663
Commercial
real estate
mortgages 1,860,262 1,841,111 1,826,379 1,848,512
Residential
mortgages 2,644,030 2,571,537 2,485,177 2,405,732
Real estate
construction 721,890 711,755 724,895 759,090
Equity lines
of credit 333,548 317,703 310,101 274,735
Installment 200,296 195,168 212,064 201,821
------------ ------------ ------------ ------------
Total
loans 9,265,602 9,004,881 8,869,675 8,572,553
Allowance
for loan
and
lease
losses (153,983) (152,920) (147,930) (147,607)
------------ ------------ ------------ ------------
Net loans 9,111,619 8,851,961 8,721,745 8,424,946
Premises and
equipment, net 82,868 76,754 73,169 68,354
Goodwill and
other
intangibles 284,124 285,553 289,675 291,116
Other assets 481,624 478,975 470,020 463,182
------------ ------------------------- ------------
Total assets $14,581,860 $14,429,444 $14,475,598 $13,918,038
============ ========================= ============
Liabilities:
Deposits:
Noninterest-
bearing $6,562,038 $6,345,907 $6,468,339 $6,069,061
Interest-
bearing 5,576,434 5,769,807 5,683,869 5,693,563
------------ ------------ ------------ ------------
Total
deposits 12,138,472 12,115,714 12,152,208 11,762,624
Federal funds
purchased and
securities
sold under
repurchase
agreements 190,190 191,036 204,052 155,645
Other short-
term borrowed
funds 100,000 26,197 27,678 125
Subordinated
debt 275,682 278,076 285,771 280,068
Other long-term
debt 219,445 221,168 233,290 224,829
Minority
interest 24,351 24,856 25,400 25,525
Other
liabilities 175,712 155,220 146,311 149,039
------------ ------------ ------------ ------------
Total
liabilities 13,123,852 13,012,267 13,074,710 12,597,855
Shareholders' Equity
Common stock 50,601 50,601 50,640 50,712
Additional
paid-in
capital 396,659 398,289 398,981 399,612
Retained
earnings 1,121,474 1,077,561 1,035,589 995,688
Accumulated
other
comprehensive
(loss) (51,551) (36,879) (12,948) (43,288)
Treasury shares (59,175) (72,395) (71,374) (82,541)
------------ ------------ ------------ ------------
Total
shareholders'
equity 1,458,008 1,417,177 1,400,888 1,320,183
------------ ------------ ------------ ------------
Total
liabilities
and
shareholders'
equity $14,581,860 $14,429,444 $14,475,598 $13,918,038
============ ============ ============ ============
CITY NATIONAL CORPORATION
CREDIT LOSS EXPERIENCE
(unaudited)
2006
-----------------------------
Second First Year To
(Dollars in Quarter Quarter Date
thousands)
- ------------------ --------- --------- ---------
Allowance for Loan and Lease Losses
Balance at beginning of period $156,482 $153,983 $153,983
Net (charge-
offs)/recoveries:
Commercial 1,122 1,792 2,914
Commercial real estate mortgages 11 844 855
Residential
mortgages - - -
Real estate
construction 17 16 33
Equity lines of
credit - - -
Installment 11 4 15
--------- --------- ---------
Total net (charge-offs)/recoveries 1,161 2,656 3,817
Provision for
credit losses (63) (157) (220)
--------- --------- ---------
Balance at end of
period $157,580 $156,482 $157,580
========= ========= =========
Net (Charge-Offs)/Recoveries to
Average Total Loans: (annualized)
Commercial 0.11 % 0.19 % 0.15 %
Commercial real estate mortgages 0.00 % 0.18 % 0.09 %
Residential
mortgage 0.00 % 0.00 % 0.00 %
Real estate
construction 0.01 % 0.01 % 0.01 %
Equity lines of
credit 0.00 % 0.00 % 0.00 %
Installment 0.02 % 0.01 % 0.02 %
Total loans 0.05 % 0.11 % 0.08 %
Reserve for Off-Balance Sheet Credit Commitments
Balance at beginning of period $15,753 $15,596 $15,596
Provision for
credit losses (547) 157 (390)
--------- --------- ---------
Balance at end of
period $15,206 $15,753 $15,206
========= ========= =========
2005
-------------------------------------------------
Fourth Third Second First Full
(Dollars in Quarter Quarter Quarter Quarter Year
thousands)
- ------------------ --------- --------- --------- --------- ---------
Allowance for Loan
and Lease Losses
Balance at beginning
of period $152,920 $147,930 $147,607 $148,568 $148,568
Net (charge-
offs)/recoveries:
Commercial 2,085 4,213 1,067 2,117 9,482
Commercial real
estate mortgages 7 324 7 (1,893) (1,555)
Residential
mortgages - - 1 2 3
Real estate
construction 15 1,192 71 23 1,301
Equity lines of
credit - - 39 1 40
Installment (11) 13 5 (18) (11)
--------- --------- --------- --------- ---------
Total net (charge-
offs)/recoveries 2,096 5,742 1,190 232 9,260
Provision for
credit losses (1,033) (752) (867) (1,193) (3,845)
--------- --------- --------- --------- ---------
Balance at end of
period $153,983 $152,920 $147,930 $147,607 $153,983
========= ========= ========= ========= =========
Net (Charge-Offs)/
Recoveries to Average
Total Loans: (annualized)
Commercial 0.24 % 0.50 % 0.13 % 0.28 % 0.29 %
Commercial real
estate mortgages 0.00 % 0.07 % 0.00 % (0.41)% (0.09)%
Residential
mortgage 0.00 % 0.00 % 0.00 % 0.00 % 0.00 %
Real estate
construction 0.01 % 0.65 % 0.04 % 0.01 % 0.17 %
Equity lines of
credit 0.00 % 0.00 % 0.05 % 0.00 % 0.01 %
Installment (0.02)% 0.02 % 0.01 % (0.03)% (0.01)%
Total loans 0.09 % 0.25 % 0.05 % 0.01 % 0.10 %
Reserve for Off-Balance
Sheet Credit Commitments
Balance at beginning
of period $14,563 $13,811 $12,944 $11,751 $11,751
Provision for
credit losses 1,033 752 867 1,193 3,845
--------- --------- --------- --------- ---------
Balance at end of
period $15,596 $14,563 $13,811 $12,944 $15,596
========= ========= ========= ========= =========
CITY NATIONAL CORPORATION
NONPERFORMING ASSETS
(unaudited)
2006 2005
------------------- ----------------------------------
Second First Fourth Third Second First
(Dollars in Quarter Quarter Quarter Quarter Quarter Quarter
thousands)
- --------------- --------- --------- --------- -------- -------- ------
Nonaccrual Loans
Commercial $6,691 $5,642 $5,141 $14,917 $17,982 $25,117
Commercial
real estate
mortgages 3,644 923 923 955 1,543 1,945
Residential
mortgages - - 294 2,259 1,990 1,990
Real estate
construction 4,617 7,492 7,650 - - -
Equity lines
of credit - - 21 22 22 212
Installment 49 498 371 401 624 654
--------- --------- --------- -------- -------- ------
Total
nonaccrual
loans 15,001 14,555 14,400 18,554 22,161 29,918
Other
Nonperforming
Assets - - - - - -
--------- --------- --------- -------- -------- ------
Total
nonperforming
assets $15,001 $14,555 $14,400 $18,554 $22,161 $29,918
========= ========= ========= ======== ======== ======
Loans 90 Days
or More Past
Due
on Accrual
Status $18 $- $- $- $103 $807
Allowance for loan
and lease losses
as a percentage
of:
Nonaccrual
loans 1,050.47 %1,075.11 %1,069.33 % 824.19 % 667.52 % 493.37 %
Total
nonperforming
assets 1,050.47 %1,075.11 %1,069.33 % 824.19 % 667.52 % 493.37 %
Total loans 1.60 % 1.64 % 1.66 % 1.70 % 1.67 % 1.72 %
Nonaccrual loans
as a percentage
of total loans 0.15 % 0.15 % 0.16 % 0.21 % 0.25 % 0.35 %
Nonperforming
assets as a
percentage of:
Total loans and
other
nonperforming
assets 0.15 % 0.15 % 0.16 % 0.21 % 0.25 % 0.35 %
Total assets 0.10 % 0.10 % 0.10 % 0.13 % 0.15 % 0.21 %
CITY NATIONAL CORPORATION
AVERAGE BALANCES AND RATES
(unaudited)
2006
------------------------------------------------
Second Quarter First Quarter Year to Date
--------------- --------------- ----------------
Average Average Average Average Average Average
(Dollars in millions) Balance Rate Balance Rate Balance Rate
- --------------------- -------- ------ -------- ------ -------- -------
Assets
Interest-earning
assets
Loans
Commercial $3,968 6.84 % $3,813 6.62 % $3,890 6.74 %
Commercial
real estate
mortgages 1,909 7.60 1,875 7.35 1,892 7.47
Residential
mortgages 2,737 5.31 2,663 5.27 2,701 5.29
Real estate
construction 743 9.14 743 8.58 743 8.86
Equity lines
of credit 352 7.63 334 7.17 343 7.41
Installment 195 7.72 197 7.41 196 7.57
-------- -------- --------
Total loans 9,903 6.79 9,625 6.59 9,765 6.69
Due from banks
- interest-
bearing 46 2.31 44 1.98 45 2.15
Federal funds
sold and
securities
purchased
under resale
agreements 51 4.77 13 4.32 32 4.68
Securities
available-for-
sale 3,529 4.55 3,926 4.47 3,727 4.51
Trading account
securities 52 6.61 44 5.26 48 5.97
-------- -------- --------
Total
interest-
earning
assets 13,581 6.19 13,652 5.98 13,617 6.08
Allowance for
loan and lease
losses (157) (155) (156)
Cash and due
from banks 443 439 441
Other assets 915 891 902
-------- -------- --------
Total assets $14,782 $14,827 $14,804
======== ======== ========
Liabilities and
Shareholders' Equity
Interest-bearing
deposits
Interest checking
accounts $757 0.27 % $808 0.23 % $783 0.25 %
Money market
accounts 3,352 2.13 3,388 1.81 3,370 1.97
Savings
deposits 174 0.37 179 0.37 176 0.37
Time deposits -
under $100,000 176 3.00 180 2.59 178 2.79
Time deposits -
$100,000 and
over 1,652 4.07 1,254 3.42 1,454 3.79
-------- -------- --------
Total
interest-
bearing
deposits 6,111 2.40 5,809 1.92 5,961 2.16
Federal funds
purchased and
securities
sold under
repurchase
agreements 546 4.93 809 4.48 677 4.66
Other
borrowings 652 5.51 749 5.09 700 5.29
-------- -------- --------
Total
interest-
bearing
liabilities 7,309 2.86 7,367 2.52 7,338 2.69
Noninterest-
bearing deposits 5,820 5,779 5,800
Other liabilities 199 200 199
Shareholders'
equity 1,454 1,481 1,467
-------- -------- --------
Total
liabilities
and
shareholders'
equity $14,782 $14,827 $14,804
======== ======== ========
Net interest spread 3.33 % 3.46 % 3.39 %
===== ===== ======
Net interest margin 4.65 % 4.62 % 4.63 %
===== ===== ======
Average prime rate 7.90 % 7.43 % 7.66 %
===== ===== ======
CITY NATIONAL CORPORATION
AVERAGE BALANCES AND RATES
(unaudited)
2005
------------------------------------------------
Fourth Quarter Third Quarter Second Quarter
------------------------------- ----------------
Average Average Average Average Average Average
(Dollars in millions) Balance Rate Balance Rate Balance Rate
- ------------------------------ ------ -------- ------ -------- ------
Assets
Loans
Commercial $3,517 6.48 % $3,376 6.21 % $3,215 6.01 %
Commercial real
estate mortgages 1,849 7.28 1,829 7.47 1,856 7.01
Residential
mortgages 2,603 5.23 2,519 5.25 2,444 5.19
Real estate
construction 727 8.36 725 7.98 728 7.37
Equity lines of
credit 322 6.77 310 6.10 297 5.70
Installment 192 7.19 204 7.05 208 7.12
-------- -------- --------
Total loans 9,210 6.45 8,963 6.34 8,748 6.13
Due from banks -
interest-bearing 44 1.63 41 1.45 37 1.24
Federal funds sold and
securities
purchased under
resale agreements 23 4.23 65 3.70 80 2.76
Securities available-
for-sale 4,012 4.37 4,030 4.26 4,034 4.25
Trading account
securities 39 5.13 37 3.95 37 3.25
-------- -------- --------
Total interest-
earning assets 13,328 5.80 13,136 5.67 12,936 5.50
Allowance for loan
and lease losses (153) (151) (148)
Cash and due from
banks 451 441 443
Other assets 842 830 810
-------- -------- --------
Total assets $14,468 $14,256 $14,041
======== ======== ========
Liabilities and Shareholders' Equity
Interest checking
accounts $813 0.21 % $795 0.14 % $849 0.08 %
Money market
accounts 3,471 1.49 3,507 1.30 3,568 1.15
Savings deposits 186 0.29 196 0.29 199 0.28
Time deposits - under
$100,000 189 2.62 183 2.03 181 0.98
Time deposits -
$100,000 and over 1,136 2.78 1,074 2.87 897 2.84
-------- -------- --------
Total interest-
bearing deposits 5,795 1.56 5,755 1.42 5,694 1.22
Federal funds purchased
and securities sold
under repurchase
agreements 289 3.79 256 3.25 315 2.88
Other borrowings 552 4.55 545 4.13 518 3.85
-------- -------- --------
Total interest-
bearing liabilities 6,636 1.91 6,556 1.72 6,527 1.51
6,205 6,104 5,985
198 178 170
1,429 1,418 1,359
-------- -------- --------
Total liabilities
and shareholders'
equity $14,468 $14,256 $14,041
======== ======== ========
Net interest spread 3.89 % 3.95 % 3.99 %
===== ===== =====
Net interest margin 4.85 % 4.80 % 4.73 %
===== ===== =====
Average prime rate 6.97 % 6.42 % 5.91 %
===== ===== =====
2005
--------------------------------
First Quarter Full Year
--------------- ----------------
Average Average Average Average
(Dollars in millions) Balance Rate Balance Rate
- ---------------------------------------------- ------ -------- -------
Assets
Loans
Commercial $3,112 5.75 % $3,305 6.13 %
Commercial real estate mortgages 1,818 7.02 1,838 7.20
Residential mortgages 2,354 5.18 2,481 5.21
Real estate construction 817 6.74 749 7.59
Equity lines of credit 265 5.42 299 6.03
Installment 206 6.28 202 6.93
-------- --------
Total loans 8,572 5.98 8,875 6.23
Due from banks - interest-bearing 65 1.34 47 1.42
Federal funds sold and securities
purchased under resale agreements 33 2.59 50 3.22
Securities available-for-sale 4,078 4.38 4,038 4.32
Trading account securities 38 2.40 38 3.71
-------- --------
Total interest-earning assets 12,786 5.43 13,048 5.60
Allowance for loan and lease losses (149) (150)
Cash and due from banks 441 444
Other assets 795 819
-------- --------
Total assets $13,873 $14,161
======== ========
Liabilities and Shareholders' Equity
Interest checking accounts $858 0.09 % $828 0.13 %
Money market accounts 3,690 1.00 3,558 1.23
Savings deposits 205 0.24 197 0.27
Time deposits - under $100,000 182 1.69 184 1.65
Time deposits - $100,000 and over 944 2.19 1,013 2.72
-------- --------
Total interest-bearing deposits 5,879 1.05 5,780 1.32
Federal funds purchased and securities
sold under repurchase agreements 254 2.33 278 3.08
Other borrowings 519 3.53 534 4.03
-------- --------
Total interest-bearing liabilities 6,652 1.29 6,592 1.61
5,694 5,999
175 180
1,352 1,390
-------- --------
Total liabilities and shareholders'
equity $13,873 $14,161
======== ========
Net interest spread 4.14 % 3.99 %
===== ======
Net interest margin 4.75 % 4.79 %
===== ======
Average prime rate 5.44 % 5.68 %
===== ======
CITY NATIONAL CORPORATION
CAPITAL AND CREDIT RATING DATA
(unaudited)
2006
-------------------------
Second First Year To
Quarter Quarter Date
-------- -------- -------
Per Common Share:
- -------------------------------------------
Shares Outstanding (in thousands):
Average - Basic 48,957 49,484 49,220
Average - Diluted 50,654 51,309 50,977
Period-End 48,115 49,535
Book Value $29.26 $29.87
Price:
High $78.25 $78.25 $78.25
Low 60.02 71.95 60.02
Period-end 65.09 76.79
Capital Ratios (Dollars in millions):
- ---------------------------------------------------------------------
Risk-based capital
Risk-adjusted assets $10,811 $10,473
Tier I capital $1,221 $1,295
Percentage of risk adjusted assets 11.29 % 12.36 %
Total capital $1,552 $1,624
Percentage of risk adjusted assets 14.36 % 15.51 %
Tier I leverage ratio 8.45 % 8.92 %
Period-end shareholders' equity
to total period-end assets 9.73 % 10.04 %
Period-end tangible shareholders' equity
to total period-end tangible assets 7.83 % 8.27 %
Average shareholders' equity
to total average assets 9.84 % 9.99 % 9.91 %
Average tangible shareholders' equity
to total average tangible assets 8.04 % 8.23 % 8.13 %
2005
----------------------------------------
Fourth Third Second First Full
Quarter Quarter Quarter Quarter Year
-------- ------- ------- ------- --------
Per Common Share:
- ----------------------------
Shares Outstanding (in
thousands):
Average - Basic 49,238 49,198 49,090 49,162 49,159
Average - Diluted 51,053 51,123 51,043 51,030 51,062
Period-End 49,347 49,117 49,145 48,958
Book Value $29.55 $28.85 $28.51 $26.97
Price:
High $75.12 $76.10 $72.90 $71.35 $76.10
Low 66.39 68.42 66.84 67.49 66.39
Period-end 72.44 70.09 71.71 69.82
Capital Ratios (Dollars in
millions):
- ------------------------------------
Risk-based capital
Risk-adjusted assets $10,148 $9,802 $9,663 $9,410
Tier I capital $1,251 $1,195 $1,151 $1,100
Percentage of risk
adjusted assets 12.33 % 12.19 % 11.91 % 11.69 %
Total capital $1,576 $1,539 $1,493 $1,437
Percentage of risk
adjusted assets 15.53 % 15.70 % 15.45 % 15.27 %
Tier I leverage ratio 8.82 % 8.58 % 8.39 % 8.12 %
Period-end shareholders' equity
to total period-end
assets 10.00 % 9.82 % 9.68 % 9.49 %
Period-end tangible shareholders'
equity
to total period-end
tangible assets 8.21 % 8.00 % 7.83 % 7.55 %
Average shareholders'
equity
to total average
assets 9.88 % 9.94 % 9.68 % 9.75 % 9.81 %
Average tangible shareholders'
equity
to total average
tangible assets 8.07 % 8.08 % 7.77 % 7.80 % 7.93 %
Senior Debt Credit Ratings
- -------------------------
For The Period Ended June 30, 2006 Standard
&
Fitch Poor's DBRS
--------- -------- ----------
City National Bank A- A A
City National A- A- A(low)
Corporation
CONTACT: City National
Financial/Investors:
Christopher J. Carey, 310-888-6777
Chris.Carey@cnb.com
or
Media:
Cary Walker, 213-673-7615
Cary.Walker@cnb.com
or
Conference Call:
Today 2:00 p.m. PDT
866-383-8009
Pass Code: 44034885