Revenue, loans and deposits grow to record levels
Period-end assets surpass $26 billion for the first time
LOS ANGELES, Oct. 18, 2012 (GLOBE NEWSWIRE) -- City National Corporation (NYSE:CYN), the parent company of wholly owned City National Bank, today reported third-quarter 2012 net income of $59.8 million, or $1.10 per share, up 44 percent from $41.4 million, or $0.77 per share, in the third quarter of 2011.
Year to date, City National's net income totaled $160.8 million, up 25 percent from $128.6 million in the first nine months of 2011. Earnings per share were $2.97, up 24 percent from $2.39 in the first nine months of last year.
City National also announced today that its Board of Directors has maintained and approved a quarterly common stock cash dividend of $0.25 per share. The company's dividend is payable on November 21, 2012 to stockholders of record on November 7, 2012.
THIRD-QUARTER 2012 HIGHLIGHTS
- Average third-quarter loan and lease balances, excluding loans covered by City National's acquisition-related loss-sharing agreements with the Federal Deposit Insurance Corporation (FDIC), were $13.6 billion, up 15 percent from the third quarter of last year and 4 percent higher than the second quarter of 2012.
- Fully taxable-equivalent net interest income amounted to $214.8 million, up 6 percent from the year-earlier period and down 3 percent from the second quarter of 2012.
- Third-quarter deposit balances averaged $21.9 billion, up 11 percent from the third quarter of 2011 and up 5 percent from the second quarter of 2012. Average core deposits, which equal 97 percent of total balances, were up 12 percent from the third quarter of 2011 and up 5 percent from the second quarter of 2012. Period-end deposits reached a record of $22.5 billion.
- Excluding FDIC-covered loans, third-quarter 2012 results included a $2.0 million provision for loan and lease losses. The company recorded a $1 million provision, excluding FDIC-covered loans, in the second quarter of 2012.
- Third-quarter 2012 earnings included pretax gains of $4.8 million related to investments. Income, net of expense, from FDIC-covered assets, excluding the base yield, totaled $1.8 million in the third quarter. The aggregate impact of these items was after-tax income of $3.8 million, or $0.07 per share.
- On July 2, 2012, City National Bank completed its acquisition of Rochdale Investment Management, a New York City-based investment firm that manages $5.1 billion of assets for affluent and high-net-worth clients and their financial advisors across the nation.
"City National delivered another solid performance in the third quarter, and the company is well on the way to achieving its 20th consecutive year of profitability," said President and CEO Russell Goldsmith. "Net income, earnings per share, revenue, loans and deposits all continued to grow at double-digit rates, and for the first time assets exceeded $26 billion. New loan production reached a record level for the third quarter in a row. Credit quality was sound, and expenses remained in check. At the same time, we continued to selectively invest in new people, products and technologies, new companies and capabilities.
"During the third quarter, strong organic growth, especially from new clients, drove income growth, along with the acquisitions of Rochdale Investment Management and First American Equipment Finance. City National also successfully launched its personal mobile banking in the quarter, and it will be followed by business mobile banking in the fourth quarter."
| For the three months ended | For the three | |||||
| Dollars in millions, | September 30, | % | months ended | % | ||
| except per share data | 2012 | 2011 | Change | June 30, 2012 | Change | |
| Earnings Per Share | $ 1.10 | $ 0.77 | 43 | $ 1.01 | 9 | |
| Net Income Attributable to CNC | 59.8 | 41.4 | 44 | 54.8 | 9 | |
| Average Assets | $ 25,654.6 | $ 22,998.6 | 12 | $ 24,362.5 | 5 | |
| Return on Average Assets | 0.93 % | 0.71 % | 31 | 0.90 % | 3 | |
| Return on Average Equity | 10.35 % | 7.85 % | 32 | 9.86 % | 5 | |
ASSETS
Total assets at September 30, 2012 grew to a record $26.3 billion, up 14 percent from the third quarter of 2011 and 6 percent from the second quarter of this year. The year-over-year increase largely reflects strong loan growth and an increase in the securities portfolio due to strong deposit growth.
REVENUE
Revenue for the third quarter of 2012 reached a record $317.2 million, up 18 percent from the year-ago period and up 9 percent from the second quarter of 2012. Revenue for the first nine months of this year was $884.8 million, up 7 percent from the same period of 2011.
NET INTEREST INCOME
Fully taxable-equivalent net interest income was $214.8 million in the third quarter of 2012, up 6 percent from the third quarter of 2011 but down 3 percent from the second quarter of this year. Fully taxable-equivalent net interest income for the first nine months of 2012 was $641.6 million, up 10 percent from $584.3 million in the year-ago period.
Average third-quarter deposits were $21.9 billion, up 11 percent from the year-ago period and up 5 percent from the second quarter of 2012. Average deposits for the first nine months of 2012 totaled $21.0 billion, up 11 percent from the same period of 2011. Period-end deposits grew to a record $22.5 billion, up 13 percent from September 30, 2011 and up 7 percent from June 30, 2012.
Average core deposits were $21.2 billion in the third quarter of 2012, up 12 percent from the same period of 2011 and up 5 percent from the second quarter of this year. Year-to-date 2012 average core deposits grew 12 percent from the year-ago period to $20.3 billion.
Third-quarter 2012 average noninterest-bearing deposits were up 32 percent from the same period of 2011 and up 8 percent from the second quarter of 2012. Average noninterest-bearing deposit balances in the first nine months of 2012 were up 31 percent from the same period last year.
Treasury Services deposit balances, which consist primarily of title, escrow and property management deposits, averaged $2.3 billion in the third quarter of 2012, up 21 percent from the same period of last year and up 7 percent from the second quarter of 2012. For the first nine months of 2012, Treasury Services deposit balances averaged $2.1 billion, up 22 percent from the same period of 2011. The increases reflect an increase in residential refinance activity, as well as sales of existing homes during the quarter.
Third-quarter average loan and lease balances, excluding FDIC-covered loans, were $13.6 billion, up 15 percent from the third quarter of 2011 and up 4 percent from the second quarter of this year. Excluding leases obtained in the company's acquisition of First American Equipment Finance, third-quarter average loan and lease balances increased 13 percent from the year-ago period.
For the first nine months of 2012, City National's average loans and leases, excluding FDIC-covered loans, were $13.1 billion, up 13 percent from the year-ago period. Excluding leases obtained in the company's acquisition of First American, year-to-date average loan and lease balances increased 12 percent from the year-ago period.
Third-quarter average commercial loans were up 24 percent from the year-ago period and 5 percent higher than the second quarter of 2012. The year-over-year increase was primarily due to organic loan growth, as well as the acquisition of First American. Average balances for commercial real estate mortgages were up 27 percent from the third quarter of 2011, and they increased 7 percent from the second quarter of this year. Average balances for commercial real estate construction loans were down 24 percent from the third quarter of last year, and they declined 15 percent from the second quarter of 2012.
Average balances for single-family residential mortgage loans, nearly all of which are made to City National's private banking and entertainment industry clients, were up 4 percent from the year-ago period and 1 percent higher than the second quarter of 2012.
Average securities for the third quarter of 2012 totaled $8.6 billion, up 24 percent from the third quarter of 2011 and up 11 percent from the second quarter of this year, as period-end deposit growth outpaced loan growth. The average duration of total securities at September 30, 2012 was 2.8 compared to 2.1 at September 30, 2011 and 3.0 at the end of the second quarter of 2012.
City National's net interest margin in the third quarter of 2012 averaged 3.58 percent, compared with 3.91 percent in the second quarter of this year and 3.79 percent in the third quarter of 2011. The second-quarter net interest margin reflected the recovery of a previously charged-off loan, and the decline in the third quarter was due primarily to lower interest income related to covered loans that were repaid or charged off in the third quarter, lower loan yields, and continuing deposit growth. The company continued to invest a large share of its growing deposits in securities and other liquid assets. For the first nine months of 2012, City National's net interest margin averaged 3.74 percent, down from 3.82 percent in the previous year.
Third-quarter net interest income included $22.2 million from FDIC-covered loans that were repaid or charged off during the quarter. This compares with $18.3 million in the third quarter of 2011 and $27.4 million in the second quarter of this year.
At September 30, 2012, City National's prime lending rate was 3.25 percent, unchanged from both September 30, 2011 and June 30, 2012.
| For the three months ended | For the three | ||||
| September 30, | % | months ended | % | ||
| Dollars in millions | 2012 | 2011 | Change | June 30, 2012 | Change |
| Average Loans and Leases, excluding Covered Loans | $ 13,587.5 | $ 11,796.6 | 15 | $ 13,125.9 | 4 |
| Average Covered Loans | 1,207.0 | 1,664.3 | (27) | 1,341.0 | (10) |
| Average Total Securities | 8,631.4 | 6,954.1 | 24 | 7,755.3 | 11 |
| Average Earning Assets | 23,892.0 | 21,316.6 | 12 | 22,769.1 | 5 |
| Average Deposits | 21,940.8 | 19,724.6 | 11 | 20,948.2 | 5 |
| Average Core Deposits | 21,208.5 | 18,923.6 | 12 | 20,215.2 | 5 |
| Fully Taxable-Equivalent Net Interest Income | 214.8 | 203.6 | 6 | 221.4 | (3) |
| Net Interest Margin | 3.58 % | 3.79 % | (6) | 3.91 % | (8) |
COVERED ASSETS
Loans and other real estate owned (OREO) assets acquired in City National's FDIC‑assisted bank acquisitions totaled $1.2 billion at the end of the third quarter of 2012 compared to $1.7 billion at September 30, 2011 and $1.3 billion at June 30, 2012.
In the third quarter of 2012, the company recorded a $2.6 million non-cash net gain to reflect results of the quarterly update of cash-flow projections for the FDIC-covered loans. The gain reflects an $18.1 million provision for losses on covered loans and an offsetting $20.7 million of noninterest income related to City National's loss-sharing agreements with the FDIC. In addition to the $2.6 million non-cash gain for the quarter, the company recognized $0.8 million of other covered assets expense. Income, net of expense, from FDIC-covered assets, excluding the base yield, totaled $1.8 million in the third quarter of 2012, down from $7.3 million in the second quarter of this year. (The base yield is the yield on covered assets, excluding income related to covered loans that are repaid or charged off.) The decrease from $7.3 million in the second quarter was due primarily to lower income from loans that were repaid or charged off.
City National will continue to update cash-flow projections for covered loans on a quarterly basis. Due to the uncertainty in the future performance of the covered loans, additional impairments may be recognized in the future.
OREO assets acquired by City National in four FDIC-assisted bank acquisitions and subject to loss-sharing agreements totaled $83.6 million at September 30, 2012, compared to $102.8 million in the third quarter of 2011 and $82.8 million at the end of the second quarter of this year.
NONINTEREST INCOME
Noninterest income was $107.3 million in the third quarter of 2012, up 54 percent from the year-ago quarter and 43 percent higher than the second quarter of 2012. The increases were due to City National's July 2, 2012 acquisition of Rochdale Investment Management, as well as higher FDIC loss-sharing income and distribution income from investments.
City National's noninterest income for the first nine months of 2012 was up 1 percent from the same period of 2011.
In the third quarter of 2012, noninterest income accounted for 34 percent of City National's total revenue compared to 26 percent in both the third quarter of 2011 and the second quarter of 2012.
Wealth Management
City National's assets under management totaled $38.0 billion as of September 30, 2012, up 13 percent from the year-earlier period and 18 percent higher than the second quarter of 2012.
Trust and investment fees were $43.5 million, up 23 percent from the third quarter of 2011 and 28 percent higher than the second quarter of 2012. Year-to-date 2012 trust and investment fee income was up 3 percent from the same period last year. The increases in assets under management and trust and investment fees were due primarily to the Rochdale acquisition.
Brokerage and mutual fund fees totaled $9.1 million, up 78 percent from the year-earlier period and 71 percent higher than the second quarter of 2012. Brokerage and mutual fund fee income was $19.4 million in the first nine months of this year, up 24 percent from the same period of 2011. The increases in mutual fund fees were due primarily to slightly higher short-term interest rates. The increases in brokerage fees were due to both the acquisition of Rochdale and growth within City National Securities. Not including the Rochdale acquisition, brokerage and mutual fund fees grew 14 percent from the second quarter of 2012 and 5 percent year to date.1
| At or for the | At or for the | ||||
| three months ended | three months | ||||
| September 30, | % | ended | % | ||
| Dollars in millions | 2012 | 2011 | Change | June 30, 2012 | Change |
| Trust and Investment Fee Revenue | $ 43.5 | $ 35.4 | 23 | $ 34.1 | 28 |
| Brokerage and Mutual Fund Fees | 9.1 | 5.1 | 78 | 5.3 | 71 |
| Assets Under Management (1) | 38,043.1 | 33,590.5 | 13 | 32,105.1 | 18 |
| Assets Under Management or Administration (1)(2) | 56,671.8 | 48,507.4 | 17 | 50,040.1 | 13 |
| (1) Excludes $19.8 billion, $18.4 billion and $16.1 billion of assets under management for asset managers in which City National held a noncontrolling ownership interest as of September 30, 2012, June 30, 2012 and September 30, 2011, respectively. | |||||
| (2) Assets under administration have been revised to exclude the company's investments that are held in custody and serviced by our wealth management business. Prior-period balances have been reclassified to conform to current period presentation. | |||||
Other Noninterest Income
Third-quarter income from cash management and deposit transaction fees was $11.5 million, up 5 percent from the third quarter of 2011 but virtually unchanged from the second quarter of this year. For the first nine months of 2012, cash management and deposit transaction fee income was $34.2 million, up 2 percent from the same period of 2011.
Fee income from foreign exchange services and letters of credit totaled $9.8 million in the third quarter of 2012, down 5 percent from the third quarter of 2011 and 2 percent lower than the second quarter of this year. Year-to-date 2012 foreign exchange services and letters of credit fee income totaled $28.6 million, up 3 percent from the same period last year.
Other income was $27.7 million in the third quarter of 2012, up 105 percent from the year-earlier period and 59 percent higher than the second quarter of 2012. The increases largely reflect gains from investments and trading securities, lease income from First American Equipment Finance, and the growth of income from client swap transactions. Other income in the first nine months of this year was $58.6 million, up 1 percent from the year-ago period.
NONINTEREST EXPENSE
City National's third-quarter 2012 noninterest expense amounted to $207.9 million, up 5 percent from the third quarter of last year and 7 percent from the second quarter of 2012. The increases were due largely to the acquisitions of Rochdale Investment Management and First American Equipment Finance. Noninterest expense for the first nine months of 2012 amounted to $603.1 million, down 1 percent from the same period of last year.
CREDIT QUALITY
The following credit quality information excludes loans subject to loss-sharing agreements involving City National's FDIC-assisted transactions:
Net charge-offs in the third quarter of 2012 totaled $2.2 million, or 0.06 percent of total loans and leases on an annualized basis. The company realized net charge-offs of $10.6 million, or 0.36 percent, in the third quarter of 2011 and net recoveries of $2.7 million, or 0.08 percent, in the second quarter of 2012. Net recoveries for the first nine months of 2012 were $5.0 million, or 0.05 percent of total loans and leases. This compares with net recoveries of $0.1 million in the first nine months of last year.
At September 30, 2012, nonperforming assets amounted to $130.5 million, or 0.95 percent of the company's total loans and leases and OREO, compared to $190.7 million, or 1.56 percent, at September 30, 2011 and $133.3 million, or 0.98 percent, at June 30, 2012.
Nonaccrual loans at September 30, 2012 were $103.5 million compared to $146.1 million at September 30, 2011 and $98.7 million at June 30, 2012.
|
As of September 30, 2012 |
As of June 30, 2012 |
As of September 30, 2011 |
||||
| Period-end Loans (in millions) | Total | Nonaccrual | Total | Nonaccrual | Total | Nonaccrual |
| Commercial | $ 6,264.6 | $ 18.8 | $ 6,087.0 | $ 19.0 | $ 5,166.8 | $ 34.9 |
| Commercial Real Estate Mortgages | 2,463.7 | 36.6 | 2,424.3 | 28.8 | 2,059.1 | 20.8 |
| Residential Mortgages | 3,897.7 | 11.7 | 3,822.6 | 14.1 | 3,742.8 | 10.5 |
| Real Estate Construction | 242.1 | 29.0 | 301.8 | 29.7 | 335.7 | 70.8 |
| Equity Lines of Credit | 719.0 | 6.9 | 741.3 | 6.5 | 728.9 | 8.4 |
| Other Loans | 137.6 | 0.5 | 130.2 | 0.6 | 130.9 | 0.7 |
| Total Loans (1) | $ 13,724.7 | $ 103.5 | $ 13,507.2 | $ 98.7 | $ 12,164.2 | $ 146.1 |
| Other Real Estate Owned (1) | 27.0 | 34.6 | 44.5 | |||
| Total Nonperforming Assets, excluding Covered Assets | $ 130.5 | $ 133.3 | $ 190.6 | |||
| (1) Excludes covered loans, net of allowance, of $1.1 billion, $1.2 billion and $1.6 billion at September 30, 2012, June 30, 2012 and September 30, 2011, respectively, and covered other real estate owned of $83.6 million, $82.8 million and $102.8 million at September 30, 2012, June 30, 2012 and September 30, 2011, respectively. | ||||||
City National recorded a $2.0 million provision for credit losses in the third quarter of 2012, bringing the total for the year to $3.0 million. The company recorded a $7.5 million provision in the third quarter of 2011.
At September 30, 2012, City National's allowance for loan and lease losses totaled $268.4 million, or 1.96 percent of total loans and leases. That compares to $263.3 million, or 2.16 percent, at September 30, 2011 and $269.5 million, or 2.00 percent, at the end of the second quarter of 2012. The company also maintains an additional $25.3 million in reserves for off-balance-sheet credit commitments.
Commercial Loans
Commercial loan net charge-offs were $4.9 million in the third quarter of 2012. This compares to net charge-offs of $2.9 million in the year-earlier period and net recoveries of $8.1 million in the second quarter of 2012. Net recoveries in the first nine months of 2012 amounted to $8.4 million, compared to net charge-offs of $2.2 million in the same period of last year.
Commercial loans on nonaccrual totaled $18.8 million in the third quarter of 2012 compared to $34.9 million at September 30, 2011 and $19.1 million at June 30, 2012.
Construction Loans
City National's $242.1 million commercial real estate construction portfolio includes secured loans to developers of residential and nonresidential properties. This portfolio now represents slightly less than 2 percent of the company's total loans.
Third-quarter net recoveries of construction loans were $3.1 million compared to net charge-offs of $6.2 million in the third quarter of 2011 and net charge-offs of $4.8 million in the second quarter of 2012. Net charge-offs amounted to $1.6 million in the first nine months of 2012, compared with net charge-offs of $1.8 million in the same period of last year.
At September 30, 2012, construction loans on nonaccrual totaled $29.0 million compared to $70.8 million at September 30, 2011 and $29.7 million at June 30, 2012.
Commercial Real Estate Mortgage Loans
Third-quarter net charge-offs in the company's $2.5 billion commercial real estate mortgage portfolio were $0.2 million compared to net charge-offs of $0.5 million in the third quarter of 2011 and net recoveries of $1.1 million in the second quarter of 2012. Net recoveries amounted to $0.2 million in the first nine months of 2012, compared with net recoveries of $7.0 million in the same period of last year.
Commercial real estate mortgage loans on nonaccrual totaled $36.6 million compared to $20.7 million at September 30, 2011 and $28.8 million at June 30, 2012.
Residential Mortgage Loans and Equity Lines of Credit
City National's $3.9 billion residential mortgage portfolio and $0.7 billion home-equity portfolio continued to perform exceptionally well. Together, they accounted for $0.6 million in net charge-offs in the third quarter of 2012 compared to net charge-offs of $0.7 million at September 30, 2011 and $1.4 million at June 30, 2012. Net charge-offs amounted to $2.6 million in the first nine months of 2012, compared with net charge-offs of $2.4 million in the same period of last year.
Residential mortgage loans and lines of credit on nonaccrual were $18.6 million in the third quarter of 2012 compared to $18.9 million in the third quarter of 2011 and $20.6 million in the second quarter of 2012.
INCOME TAXES
City National's effective tax rate for the third quarter of 2012 was 32.6 percent, up from 27.7 percent in the year-earlier period but down from 33.1 percent in the second quarter of 2012. For the first nine months of 2012, City National's effective tax rate was 32.5 percent, compared to 29.4 percent in the prior-year period. The increases from last year were due primarily to higher pretax income.
CAPITAL LEVELS
City National remains well-capitalized, ending the third quarter of 2012 with a Tier 1 common shareholders' equity ratio of 9.1 percent compared to 10.2 percent at September 30, 2011 and 9.6 percent at June 30, 2012.1 The change from prior periods is a reflection of both asset growth and the acquisitions of Rochdale Investment Management and First American Equipment Finance.
Total risk-based capital and Tier 1 risk-based capital ratios at September 30, 2012 were 12.4 percent and 9.1 percent, respectively. City National's Tier 1 leverage ratio at September 30, 2012 was 6.3 percent. All of City National's capital ratios are above minimum regulatory standards for "well-capitalized" institutions.
Total risk-based capital, Tier 1 risk-based capital and Tier 1 leverage ratios at June 30, 2012 were 12.9 percent, 9.6 percent and 6.7 percent, respectively.
The period-end ratio of equity to total assets at September 30, 2012 was 8.9 percent compared to 9.2 percent at September 30, 2011 and 9.1 percent at June 30, 2012.
2012 OUTLOOK
City National's management continues to anticipate net income growth in 2012, as loans and deposits continue to increase and credit quality remains stable. This outlook reflects management's expectations for modest economic growth and loan-loss provisions as well as low interest rates for the remainder of the year.
CONFERENCE CALL
City National Corporation will host a conference call this afternoon (October 18) to discuss third-quarter 2012 financial results. 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) 393-6804 and enter Conference ID 29949796. 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, provides banking, investment and trust services through 78 offices, including 16 full-service regional centers, in Southern California, the San Francisco Bay Area, Nevada, New York City, Nashville and Atlanta. The corporation and its investment affiliates manage or administer $56.7 billion in client investment assets, including $38.0 billion under direct management.
For more information about City National, visit the company's Website at cnb.com.
The City National Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3142
SAFE-HARBOR LANGUAGE
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.
A number of factors, many 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 general economic, political, or industry conditions and the related credit and market conditions and the impact they have on the company and its customers, including changes in consumer spending, borrowing and savings habits; (2) the impact on financial markets and the economy of the level of U.S. and European debt; (3) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board; (4) continued delay in the pace of economic recovery and continued stagnant or decreasing employment levels; (5) the effect of the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations to be promulgated by supervisory and oversight agencies implementing the new legislation, taking into account that the precise timing, extent and nature of such rules and regulations and the impact on the company is uncertain; (6) the impact of revised capital requirements under Basel III; (7) significant changes in applicable laws and regulations, including those concerning taxes, banking and securities; (8) volatility in the municipal bond market; (9) changes in the level of nonperforming assets, charge-offs, other real estate owned and provision expense; (10) incorrect assumptions in the value of the loans acquired in FDIC-assisted acquisitions resulting in greater than anticipated losses in the acquired loan portfolios exceeding the losses covered by the loss-sharing agreements with the FDIC; (11) changes in inflation, interest rates, and market liquidity which may impact interest margins and impact funding sources; (12) adequacy of the company's enterprise risk management framework; (13) the company's ability to attract new employees and retain and motivate existing employees; (14) increased competition in the company's markets and our ability to increase market share and control expenses; (15) changes in the financial performance and/or condition of the company's borrowers, including adverse impact on loan utilization rates, delinquencies, defaults and customers' ability to meet certain credit obligations, changes in customers' suppliers, and other counterparties' performance and creditworthiness; (16) a substantial and permanent loss of either client accounts and/or assets under management at the company's investment advisory affiliates or its wealth management division; (17) soundness of other financial institutions which could adversely affect the company; (18) protracted labor disputes in the company's markets; (19) the impact of natural disasters, terrorist activities or international hostilities on the operations of our business or the value of collateral; (20) the effect of acquisitions and integration of acquired businesses and de novo branching efforts; (21) changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies; (22) the impact of cyber security attacks or other disruptions to the company's information systems and any resulting compromise of data or disruptions in service; and (23) the success of the company at managing the risks involved in the foregoing.
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, please refer to the company's Annual Report on Form 10-K for the year ended December 31, 2011 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2012.
1For notes on non-GAAP measures, see pages 15 and 16 of the Selected Financial Information.
| CITY NATIONAL CORPORATION | ||||||||||||
| FINANCIAL HIGHLIGHTS | ||||||||||||
| (unaudited) | ||||||||||||
| Three Months | Nine Months | |||||||||||
| For The Period Ended September 30, | 2012 | 2011 | % Change | 2012 | 2011 | % Change | ||||||
| Per Share | ||||||||||||
| Net income attributable to City National Corporation | ||||||||||||
| Basic | $ 1.10 | $ 0.78 | 41 | $ 2.98 | $ 2.41 | 24 | ||||||
| Diluted | 1.10 | 0.77 | 43 | 2.97 | 2.39 | 24 | ||||||
| Dividends | 0.25 | 0.20 | 25 | 0.75 | 0.60 | 25 | ||||||
| Book value | 43.81 | 40.40 | 8 | |||||||||
| Results of Operations: (In millions) | ||||||||||||
| Interest income | $ 225 | $ 217 | 4 | $ 668 | $ 628 | 6 | ||||||
| Interest expense | 15 | 18 | (16) | 41 | 57 | (27) | ||||||
| Net interest income | 210 | 199 | 5 | 627 | 571 | 10 | ||||||
| Net interest income (Fully taxable-equivalent) | 215 | 204 | 6 | 642 | 584 | 10 | ||||||
| Total revenue | 317 | 269 | 18 | 885 | 827 | 7 | ||||||
| Provision for credit losses on loans and leases, excluding covered loans | 2 | 8 | (73) | 3 | 8 | (60) | ||||||
| Provision for losses on covered loans | 18 | 5 | 251 | 39 | 26 | 50 | ||||||
| Net income attributable to City National Corporation | 60 | 41 | 44 | 161 | 129 | 25 | ||||||
| Financial Ratios: | ||||||||||||
| Performance Ratios: | ||||||||||||
| Return on average assets | 0.93 % | 0.71 % | 0.87 % | 0.78 % | ||||||||
| Return on average shareholders' equity | 10.35 | 7.85 | 9.62 | 8.46 | ||||||||
| Period-end equity to period-end assets | 8.88 | 9.18 | ||||||||||
| Net interest margin | 3.58 | 3.79 | 3.74 | 3.82 | ||||||||
| Expense to revenue ratio | 61.96 | 67.68 | 64.06 | 66.50 | ||||||||
| Capital Adequacy Ratios (Period-end): | ||||||||||||
| Tier 1 leverage | 6.29 | 6.82 | ||||||||||
| Tier 1 risk-based capital | 9.15 | 10.28 | ||||||||||
| Total risk-based capital | 12.42 | 12.88 | ||||||||||
| Asset Quality Ratios: | ||||||||||||
| Allowance for loan and lease losses to: | ||||||||||||
| Total loans and leases, excluding covered loans | 1.96 % | 2.16 % | ||||||||||
| Nonaccrual loans | 259.38 | 180.21 | ||||||||||
| Nonperforming assets, excluding covered assets, to: | ||||||||||||
| Total loans and leases and other real estate owned, excluding covered assets | 0.95 | 1.56 | ||||||||||
| Total assets | 0.50 | 0.83 | ||||||||||
| Net (charge-offs) recoveries to average total loans and leases, excluding covered loans (annualized) | (0.06) % | (0.36) % | 0.05 % | 0.00 % | ||||||||
| Average Balances: (In millions) | ||||||||||||
| Loans and leases, excluding covered loans | $ 13,588 | $ 11,797 | 15 | $ 13,051 | $ 11,525 | 13 | ||||||
| Covered loans | 1,207 | 1,664 | (27) | 1,328 | 1,748 | (24) | ||||||
| Securities | 8,631 | 6,954 | 24 | 8,107 | 6,295 | 29 | ||||||
| Interest-earning assets | 23,892 | 21,317 | 12 | 22,925 | 20,424 | 12 | ||||||
| Assets | 25,655 | 22,999 | 12 | 24,558 | 22,135 | 11 | ||||||
| Core deposits | 21,209 | 18,924 | 12 | 20,318 | 18,084 | 12 | ||||||
| Deposits | 21,941 | 19,725 | 11 | 21,039 | 18,903 | 11 | ||||||
| Interest-bearing liabilities | 10,088 | 10,841 | (7) | 10,029 | 10,701 | (6) | ||||||
| Shareholders' equity | 2,297 | 2,093 | 10 | 2,234 | 2,032 | 10 | ||||||
| Total equity | 2,297 | 2,117 | 9 | 2,234 | 2,057 | 9 | ||||||
| Period-End Balances: (In millions) | ||||||||||||
| Loans and leases, excluding covered loans | $ 13,725 | $ 12,164 | 13 | |||||||||
| Covered loans | 1,144 | 1,612 | (29) | |||||||||
| Securities | 9,111 | 7,279 | 25 | |||||||||
| Assets | 26,252 | 23,104 | 14 | |||||||||
| Core deposits | 21,828 | 19,137 | 14 | |||||||||
| Deposits | 22,512 | 19,909 | 13 | |||||||||
| Shareholders' equity | 2,330 | 2,120 | 10 | |||||||||
| Total equity | 2,330 | 2,120 | 10 | |||||||||
| Wealth Management: (In millions) (1) | ||||||||||||
| Assets under management | $ 38,043 | $ 33,591 | 13 | |||||||||
| Assets under management or administration (2) | 56,672 | 48,507 | 17 | |||||||||
| (1) Excludes $19.8 billion and $16.1 billion of assets under management for asset managers in which City National held a noncontrolling ownership interest as of September 30, 2012 and September 30, 2011, respectively. | ||||||||||||
| (2) Assets under administration have been revised to exclude the Company's investments that are held in custody and serviced by our wealth management business. Prior period balances have been reclassified to conform to current period presentation. | ||||||||||||
| CITY NATIONAL CORPORATION | ||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
| (unaudited) | ||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||
| (Dollars in thousands | September 30, | September 30, | ||||||||||
| except per share data) | 2012 | 2011 | % Change | 2012 | 2011 | % Change | ||||||
| Interest income | $ 224,768 | $ 216,892 | 4 | $ 668,249 | $ 627,838 | 6 | ||||||
| Interest expense | 14,846 | 17,576 | (16) | 41,135 | 56,405 | (27) | ||||||
| Net interest income | 209,922 | 199,316 | 5 | 627,114 | 571,433 | 10 | ||||||
| Provision for credit losses on loans and leases, excluding covered loans | 2,000 | 7,500 | (73) | 3,000 | 7,500 | (60) | ||||||
| Provision for losses on covered loans | 18,089 | 5,147 | 251 | 38,848 | 25,979 | 50 | ||||||
| Noninterest income | ||||||||||||
| Trust and investment fees | 43,477 | 35,412 | 23 | 111,198 | 107,737 | 3 | ||||||
| Brokerage and mutual fund fees | 9,059 | 5,079 | 78 | 19,380 | 15,604 | 24 | ||||||
| Cash management and deposit transaction fees | 11,526 | 10,986 | 5 | 34,169 | 33,616 | 2 | ||||||
| International services | 9,819 | 10,352 | (5) | 28,621 | 27,683 | 3 | ||||||
| FDIC loss sharing income (expense), net | 1,667 | (14,191) | 112 | (3,493) | (16,270) | (79) | ||||||
| Gain on disposal of assets | 3,199 | 5,191 | (38) | 8,401 | 16,037 | (48) | ||||||
| Gain on securities | 817 | 3,327 | (75) | 809 | 4,688 | (83) | ||||||
| Gain on acquisition | -- | -- | -- | -- | 8,164 | (100) | ||||||
| Other | 27,693 | 13,479 | 105 | 58,640 | 58,206 | 1 | ||||||
| Total noninterest income | 107,257 | 69,635 | 54 | 257,725 | 255,465 | 1 | ||||||
| Noninterest expense | ||||||||||||
| Salaries and employee benefits | 120,210 | 112,729 | 7 | 355,490 | 335,880 | 6 | ||||||
| Net occupancy of premises | 16,238 | 13,713 | 18 | 43,980 | 40,724 | 8 | ||||||
| Legal and professional fees | 11,757 | 14,242 | (17) | 34,996 | 39,109 | (11) | ||||||
| Information services | 8,660 | 7,906 | 10 | 25,348 | 23,738 | 7 | ||||||
| Depreciation and amortization | 8,324 | 6,930 | 20 | 23,765 | 20,582 | 15 | ||||||
| Amortization of intangibles | 1,932 | 2,105 | (8) | 5,336 | 6,377 | (16) | ||||||
| Marketing and advertising | 7,141 | 6,675 | 7 | 21,554 | 20,819 | 4 | ||||||
| Office services and equipment | 4,673 | 4,456 | 5 | 13,113 | 13,734 | (5) | ||||||
| Other real estate owned | 8,749 | 13,160 | (34) | 28,384 | 49,811 | (43) | ||||||
| FDIC assessments | 4,616 | 6,670 | (31) | 13,618 | 25,000 | (46) | ||||||
| Other | 15,586 | 9,051 | 72 | 37,538 | 31,092 | 21 | ||||||
| Total noninterest expense | 207,886 | 197,637 | 5 | 603,122 | 606,866 | (1) | ||||||
| Income before taxes | 89,204 | 58,667 | 52 | 239,869 | 186,553 | 29 | ||||||
| Applicable income taxes | 29,052 | 16,267 | 79 | 78,042 | 54,803 | 42 | ||||||
| Net income | $ 60,152 | $ 42,400 | 42 | $ 161,827 | $ 131,750 | 23 | ||||||
| Less: Net income attributable to noncontrolling interest | 372 | 1,002 | (63) | 1,024 | 3,189 | (68) | ||||||
| Net income attributable to City National Corporation | $ 59,780 | $ 41,398 | 44 | $ 160,803 | $ 128,561 | 25 | ||||||
| Other Data: | ||||||||||||
| Earnings per share - basic | $ 1.10 | $ 0.78 | 41 | $ 2.98 | $ 2.41 | 24 | ||||||
| Earnings per share - diluted | $ 1.10 | $ 0.77 | 43 | $ 2.97 | $ 2.39 | 24 | ||||||
| Dividends paid per share | $ 0.25 | $ 0.20 | 25 | $ 0.75 | $ 0.60 | 25 | ||||||
| Dividend payout ratio | 22.63 % | 25.70 % | (12) | 25.10 % | 24.77 % | 1 | ||||||
| Return on average assets | 0.93 % | 0.71 % | 31 | 0.87 % | 0.78 % | 12 | ||||||
| Return on average shareholders' equity | 10.35 % | 7.85 % | 32 | 9.62 % | 8.46 % | 14 | ||||||
| Net interest margin (Fully taxable-equivalent) | 3.58 % | 3.79 % | (6) | 3.74 % | 3.82 % | (2) | ||||||
| Full-time equivalent employees | 3,439 | 3,287 | 5 | |||||||||
| CITY NATIONAL CORPORATION | ||||||||
| CONSOLIDATED QUARTERLY STATEMENTS OF INCOME | ||||||||
| (unaudited) | ||||||||
| 2012 | ||||||||
| (Dollars in thousands | Third | Second | First | Year to | ||||
| except per share data) | Quarter | Quarter | Quarter | Date | ||||
| Interest income | $ 224,768 | $ 229,889 | $ 213,592 | $ 668,249 | ||||
| Interest expense | 14,846 | 13,410 | 12,879 | 41,135 | ||||
| Net interest income | 209,922 | 216,479 | 200,713 | 627,114 | ||||
| Provision for credit losses on loans and leases, excluding covered loans | 2,000 | 1,000 | -- | 3,000 | ||||
| Provision for losses on covered loans | 18,089 | 13,293 | 7,466 | 38,848 | ||||
| Noninterest income | ||||||||
| Trust and investment fees | 43,477 | 34,067 | 33,654 | 111,198 | ||||
| Brokerage and mutual fund fees | 9,059 | 5,293 | 5,028 | 19,380 | ||||
| Cash management and deposit transaction fees | 11,526 | 11,475 | 11,168 | 34,169 | ||||
| International services | 9,819 | 10,017 | 8,785 | 28,621 | ||||
| FDIC loss sharing income (expense), net | 1,667 | (6,026) | 866 | (3,493) | ||||
| Gain on disposal of assets | 3,199 | 3,011 | 2,191 | 8,401 | ||||
| Gain (loss) on securities | 817 | (457) | 449 | 809 | ||||
| Other | 27,693 | 17,388 | 13,559 | 58,640 | ||||
| Total noninterest income | 107,257 | 74,768 | 75,700 | 257,725 | ||||
| Noninterest expense | ||||||||
| Salaries and employee benefits | 120,210 | 115,035 | 120,245 | 355,490 | ||||
| Net occupancy of premises | 16,238 | 14,056 | 13,686 | 43,980 | ||||
| Legal and professional fees | 11,757 | 11,359 | 11,880 | 34,996 | ||||
| Information services | 8,660 | 8,539 | 8,149 | 25,348 | ||||
| Depreciation and amortization | 8,324 | 8,013 | 7,428 | 23,765 | ||||
| Amortization of intangibles | 1,932 | 1,518 | 1,886 | 5,336 | ||||
| Marketing and advertising | 7,141 | 7,597 | 6,816 | 21,554 | ||||
| Office services and equipment | 4,673 | 4,492 | 3,948 | 13,113 | ||||
| Other real estate owned | 8,749 | 7,541 | 12,094 | 28,384 | ||||
| FDIC assessments | 4,616 | 4,523 | 4,479 | 13,618 | ||||
| Other | 15,586 | 11,843 | 10,109 | 37,538 | ||||
| Total noninterest expense | 207,886 | 194,516 | 200,720 | 603,122 | ||||
| Income before taxes | 89,204 | 82,438 | 68,227 | 239,869 | ||||
| Applicable income taxes | 29,052 | 27,271 | 21,719 | 78,042 | ||||
| Net income | $ 60,152 | $ 55,167 | $ 46,508 | $ 161,827 | ||||
| Less: Net income attributable to noncontrolling interest | 372 | 409 | 243 | 1,024 | ||||
| Net income attributable to City National Corporation | $ 59,780 | $ 54,758 | $ 46,265 | $ 160,803 | ||||
| Other Data: | ||||||||
| Earnings per share - basic | $ 1.10 | $ 1.02 | $ 0.86 | $ 2.98 | ||||
| Earnings per share - diluted | $ 1.10 | $ 1.01 | $ 0.86 | $ 2.97 | ||||
| Dividends paid per share | $ 0.25 | $ 0.25 | $ 0.25 | $ 0.75 | ||||
| Dividend payout ratio | 22.63 % | 24.57 % | 28.91 % | 25.10 % | ||||
| Return on average assets | 0.93 % | 0.90 % | 0.79 % | 0.87 % | ||||
| Return on average shareholders' equity | 10.35 % | 9.86 % | 8.58 % | 9.62 % | ||||
| Net interest margin (Fully taxable-equivalent) | 3.58 % | 3.91 % | 3.74 % | 3.74 % | ||||
| Full-time equivalent employees | 3,439 | 3,330 | 3,235 | |||||
| CITY NATIONAL CORPORATION | ||||||||||
| CONSOLIDATED QUARTERLY STATEMENTS OF INCOME | ||||||||||
| (unaudited) | ||||||||||
| 2011 | ||||||||||
| (Dollars in thousands | Fourth | Third | Second | First | Year to | |||||
| except per share data) | Quarter | Quarter | Quarter | Quarter | Date | |||||
| Interest income | $ 215,252 | $ 216,892 | $ 210,136 | $ 200,810 | $ 843,090 | |||||
| Interest expense | 13,695 | 17,576 | 19,309 | 19,520 | 70,100 | |||||
| Net interest income | 201,557 | 199,316 | 190,827 | 181,290 | 772,990 | |||||
| Provision for credit losses on loans and leases, excluding covered loans | 5,000 | 7,500 | -- | -- | 12,500 | |||||
| Provision for losses on covered loans | 17,667 | 5,147 | 1,716 | 19,116 | 43,646 | |||||
| Noninterest income | ||||||||||
| Trust and investment fees | 32,995 | 35,412 | 36,687 | 35,638 | 140,732 | |||||
| Brokerage and mutual fund fees | 4,836 | 5,079 | 4,864 | 5,661 | 20,440 | |||||
| Cash management and deposit transaction fees | 10,689 | 10,986 | 10,905 | 11,725 | 44,305 | |||||
| International services | 8,783 | 10,352 | 9,015 | 8,316 | 36,466 | |||||
| FDIC loss sharing income (expense), net | 7,633 | (14,191) | (10,684) | 8,605 | (8,637) | |||||
| Gain on disposal of assets | 4,263 | 5,191 | 8,422 | 2,424 | 20,300 | |||||
| (Loss) gain on securities | (273) | 3,327 | 1,395 | (34) | 4,415 | |||||
| Gain on acquisition | -- | -- | 8,164 | -- | 8,164 | |||||
| Other | 17,476 | 13,479 | 23,169 | 21,558 | 75,682 | |||||
| Total noninterest income | 86,402 | 69,635 | 91,937 | 93,893 | 341,867 | |||||
| Noninterest expense | ||||||||||
| Salaries and employee benefits | 112,822 | 112,729 | 112,139 | 111,012 | 448,702 | |||||
| Net occupancy of premises | 13,616 | 13,713 | 13,665 | 13,346 | 54,340 | |||||
| Legal and professional fees | 10,846 | 14,242 | 14,790 | 10,077 | 49,955 | |||||
| Information services | 8,359 | 7,906 | 8,335 | 7,497 | 32,097 | |||||
| Depreciation and amortization | 7,014 | 6,930 | 6,904 | 6,748 | 27,596 | |||||
| Amortization of intangibles | 1,350 | 2,105 | 2,104 | 2,168 | 7,727 | |||||
| Marketing and advertising | 8,101 | 6,675 | 7,626 | 6,518 | 28,920 | |||||
| Office services and equipment | 4,234 | 4,456 | 4,672 | 4,606 | 17,968 | |||||
| Other real estate owned | 15,233 | 13,160 | 22,162 | 14,489 | 65,044 | |||||
| FDIC assessments | 4,480 | 6,670 | 8,524 | 9,806 | 29,480 | |||||
| Other | 12,174 | 9,051 | 10,911 | 11,130 | 43,266 | |||||
| Total noninterest expense | 198,229 | 197,637 | 211,832 | 197,397 | 805,095 | |||||
| Income before taxes | 67,063 | 58,667 | 69,216 | 58,670 | 253,616 | |||||
| Applicable income taxes | 22,758 | 16,267 | 20,650 | 17,886 | 77,561 | |||||
| Net income | $ 44,305 | $ 42,400 | $ 48,566 | $ 40,784 | $ 176,055 | |||||
| Less: Net income attributable to noncontrolling interest | 445 | 1,002 | 1,095 | 1,092 | 3,634 | |||||
| Net income attributable to City National Corporation | $ 43,860 | $ 41,398 | $ 47,471 | $ 39,692 | $ 172,421 | |||||
| Other Data: | ||||||||||
| Earnings per share - basic | $ 0.82 | $ 0.78 | $ 0.89 | $ 0.75 | $ 3.24 | |||||
| Earnings per share - diluted | $ 0.82 | $ 0.77 | $ 0.88 | $ 0.74 | $ 3.21 | |||||
| Dividends paid per share | $ 0.20 | $ 0.20 | $ 0.20 | $ 0.20 | $ 0.80 | |||||
| Dividend payout ratio | 24.25 % | 25.70 % | 22.40 % | 26.65 % | 24.64 % | |||||
| Return on average assets | 0.73 % | 0.71 % | 0.87 % | 0.75 % | 0.77 % | |||||
| Return on average shareholders' equity | 8.15 % | 7.85 % | 9.39 % | 8.16 % | 8.38 % | |||||
| Net interest margin (Fully taxable-equivalent) | 3.70 % | 3.79 % | 3.85 % | 3.84 % | 3.79 % | |||||
| Full-time equivalent employees | 3,256 | 3,287 | 3,328 | 3,258 | ||||||
| CITY NATIONAL CORPORATION | ||||||
| CONSOLIDATED PERIOD END BALANCE SHEET | ||||||
| (unaudited) | ||||||
| 2012 | ||||||
| (In thousands) |
Third Quarter |
Second Quarter |
First Quarter |
|||
| Assets | ||||||
| Cash and due from banks | $ 235,038 | $ 162,894 | $ 210,799 | |||
| Due from banks - interest-bearing | 335,300 | 106,109 | 101,375 | |||
| Federal funds sold | 19,500 | 162,000 | 156,000 | |||
| Securities available-for-sale | 7,872,064 | 6,865,881 | 6,838,710 | |||
| Securities held-to-maturity | 1,174,161 | 1,100,229 | 996,613 | |||
| Trading securities | 64,749 | 62,585 | 82,589 | |||
| Loans and leases: | ||||||
| Commercial | 6,264,562 | 6,086,947 | 5,573,782 | |||
| Commercial real estate mortgages | 2,463,664 | 2,424,333 | 2,213,114 | |||
| Residential mortgages | 3,897,690 | 3,822,630 | 3,805,807 | |||
| Real estate construction | 242,137 | 301,829 | 313,409 | |||
| Equity lines of credit | 718,966 | 741,270 | 715,997 | |||
| Installment | 137,632 | 130,200 | 125,793 | |||
| Loans and leases, excluding covered loans | 13,724,651 | 13,507,209 | 12,747,902 | |||
| Allowance for loan and lease losses | (268,440) | (269,534) | (266,077) | |||
| Loans and leases, excluding covered loans, net | 13,456,211 | 13,237,675 | 12,481,825 | |||
| Covered loans, net (1) | 1,099,359 | 1,216,988 | 1,335,685 | |||
| Net loans and leases | 14,555,570 | 14,454,663 | 13,817,510 | |||
| Premises and equipment, net | 147,621 | 147,245 | 143,238 | |||
| Goodwill and other intangibles | 691,765 | 589,114 | 521,717 | |||
| Other real estate owned (2) | 110,673 | 117,501 | 107,530 | |||
| FDIC indemnification asset | 160,991 | 170,654 | 185,392 | |||
| Other assets | 884,096 | 863,098 | 877,016 | |||
| Total assets | $ 26,251,528 | $ 24,801,973 | $ 24,038,489 | |||
| Liabilities | ||||||
| Deposits: | ||||||
| Noninterest-bearing | $ 13,432,413 | $ 12,187,075 | $ 11,550,000 | |||
| Interest-bearing | 9,079,903 | 8,921,977 | 9,237,737 | |||
| Total deposits | 22,512,316 | 21,109,052 | 20,787,737 | |||
| Short-term borrowings | 211,739 | 322,077 | 222,776 | |||
| Long-term debt | 706,035 | 712,280 | 482,024 | |||
| Other liabilities | 449,728 | 361,300 | 302,951 | |||
| Total liabilities | 23,879,818 | 22,504,709 | 21,795,488 | |||
| Redeemable noncontrolling interest | 41,386 | 41,899 | 43,436 | |||
| Shareholders' equity | ||||||
| Common stock | 53,886 | 53,886 | 53,886 | |||
| Additional paid-in capital | 485,975 | 491,439 | 489,717 | |||
| Accumulated other comprehensive income | 93,924 | 82,807 | 81,342 | |||
| Retained earnings | 1,732,417 | 1,686,163 | 1,644,861 | |||
| Treasury shares | (35,878) | (58,930) | (70,241) | |||
| Total shareholders' equity | 2,330,324 | 2,255,365 | 2,199,565 | |||
| Total liabilities and shareholders' equity | $ 26,251,528 | $ 24,801,973 | $ 24,038,489 | |||
| (1) Covered loans are net of $45.0 million, $43.1 million and $61.5 million of allowance for loan losses as of September 30, 2012, June 30, 2012 and March 31, 2012, respectively. | ||||||
| (2) Other real estate owned includes $83.6 million, $82.8 million and $78.5 million covered by FDIC loss share at September 30, 2012, June 30, 2012 and March 31, 2012, respectively. | ||||||
| CITY NATIONAL CORPORATION | ||||||||
| CONSOLIDATED PERIOD END BALANCE SHEET | ||||||||
| (unaudited) | ||||||||
| 2011 | ||||||||
| (In thousands) |
Fourth Quarter |
Third Quarter |
Second Quarter |
First Quarter |
||||
| Assets | ||||||||
| Cash and due from banks | $ 168,376 | $ 249,496 | $ 181,203 | $ 203,600 | ||||
| Due from banks - interest-bearing | 76,438 | 144,754 | 725,304 | 743,569 | ||||
| Federal funds sold | -- | 100,000 | 123,000 | 100,000 | ||||
| Securities available-for-sale | 7,571,901 | 7,185,288 | 6,348,055 | 5,849,390 | ||||
| Securities held-to-maturity | 467,680 | -- | -- | -- | ||||
| Trading securities | 61,975 | 93,707 | 125,829 | 81,287 | ||||
| Loans and leases: | ||||||||
| Commercial | 5,246,081 | 5,166,802 | 4,800,252 | 4,468,177 | ||||
| Commercial real estate mortgages | 2,110,749 | 2,059,114 | 1,930,269 | 1,902,862 | ||||
| Residential mortgages | 3,763,218 | 3,742,768 | 3,710,765 | 3,603,058 | ||||
| Real estate construction | 315,609 | 335,712 | 355,014 | 415,241 | ||||
| Equity lines of credit | 741,081 | 728,890 | 735,899 | 733,567 | ||||
| Installment | 132,647 | 130,923 | 130,924 | 146,779 | ||||
| Loans and leases, excluding covered loans | 12,309,385 | 12,164,209 | 11,663,123 | 11,269,684 | ||||
| Allowance for loan and lease losses | (262,557) | (263,348) | (265,933) | (263,356) | ||||
| Loans and leases, excluding covered loans, net | 12,046,828 | 11,900,861 | 11,397,190 | 11,006,328 | ||||
| Covered loans, net (1) | 1,417,289 | 1,550,103 | 1,657,004 | 1,684,068 | ||||
| Net loans and leases | 13,464,117 | 13,450,964 | 13,054,194 | 12,690,396 | ||||
| Premises and equipment, net | 143,641 | 140,871 | 134,511 | 131,345 | ||||
| Goodwill and other intangibles | 522,753 | 524,103 | 526,207 | 527,419 | ||||
| Other real estate owned (2) | 129,340 | 147,369 | 162,541 | 178,164 | ||||
| FDIC indemnification asset | 204,259 | 212,809 | 261,734 | 270,576 | ||||
| Other assets | 855,811 | 854,899 | 883,511 | 860,186 | ||||
| Total assets | $ 23,666,291 | $ 23,104,260 | $ 22,526,089 | $ 21,635,932 | ||||
| Liabilities | ||||||||
| Deposits: | ||||||||
| Noninterest-bearing | $ 11,146,627 | $ 10,308,547 | $ 9,403,425 | $ 8,756,877 | ||||
| Interest-bearing | 9,240,955 | 9,600,534 | 9,861,695 | 9,721,062 | ||||
| Total deposits | 20,387,582 | 19,909,081 | 19,265,120 | 18,477,939 | ||||
| Short-term borrowings | 50,000 | 30,640 | 149,771 | 151,663 | ||||
| Long-term debt | 697,778 | 699,983 | 701,829 | 703,173 | ||||
| Other liabilities | 341,439 | 301,387 | 281,622 | 246,517 | ||||
| Total liabilities | 21,476,799 | 20,941,091 | 20,398,342 | 19,579,292 | ||||
| Redeemable noncontrolling interest | 44,643 | 42,704 | 43,737 | 46,013 | ||||
| Equity | ||||||||
| City National Corporation shareholders' equity: | ||||||||
| Common stock | 53,886 | 53,886 | 53,886 | 53,886 | ||||
| Additional paid-in capital | 489,200 | 489,037 | 485,064 | 480,918 | ||||
| Accumulated other comprehensive income | 72,372 | 82,467 | 56,293 | 26,535 | ||||
| Retained earnings | 1,611,969 | 1,578,747 | 1,547,989 | 1,511,153 | ||||
| Treasury shares | (82,578) | (83,672) | (84,311) | (86,954) | ||||
| Total shareholders' equity | 2,144,849 | 2,120,465 | 2,058,921 | 1,985,538 | ||||
| Noncontrolling interest | -- | -- | 25,089 | 25,089 | ||||
| Total equity | 2,144,849 | 2,120,465 | 2,084,010 | 2,010,627 | ||||
| Total liabilities and equity | $ 23,666,291 | $ 23,104,260 | $ 22,526,089 | $ 21,635,932 | ||||
| (1) Covered loans are net of $64.6 million, $61.8 million, $67.6 million and $82.0 million of allowance for loan losses as of December 31, 2011, September 30, 2011, June 30, 2011 and March 31, 2011, respectively. | ||||||||
| (2) Other real estate owned includes $98.5 million, $102.8 million, $114.9 million and $121.8 million covered by FDIC loss share at December 31, 2011, September 30, 2011, June 30, 2011 and March 31, 2011, respectively. | ||||||||
| CITY NATIONAL CORPORATION | ||||||||||||||||||
| CREDIT LOSS EXPERIENCE | ||||||||||||||||||
| (unaudited) | ||||||||||||||||||
| 2012 | 2011 | |||||||||||||||||
| (Dollars in thousands) |
Third Quarter |
Second Quarter |
First Quarter |
Year To Date |
Fourth Quarter |
Third Quarter |
Second Quarter |
First Quarter |
Year To Date |
|||||||||
| Allowance for Loan and Lease Losses, Excluding Covered Loans | ||||||||||||||||||
| Balance at beginning of period | $ 269,534 | $ 266,077 | $ 262,557 | $ 262,557 | $ 263,348 | $ 265,933 | $ 263,356 | $ 257,007 | $ 257,007 | |||||||||
| Net (charge-offs)/recoveries: | ||||||||||||||||||
| Commercial | (4,936) | 8,092 | 5,283 | 8,439 | (12,534) | (2,915) | 2,616 | (1,937) | (14,770) | |||||||||
| Commercial real estate mortgages | (241) | 1,113 | (666) | 206 | (87) | (452) | 1,269 | 6,212 | 6,942 | |||||||||
| Residential mortgages | (535) | (543) | (494) | (1,572) | (52) | (163) | (253) | (615) | (1,083) | |||||||||
| Real estate construction | 3,105 | (4,839) | 104 | (1,630) | 6,860 | (6,233) | 577 | 3,826 | 5,030 | |||||||||
| Equity lines of credit | (32) | (808) | (154) | (994) | (377) | (512) | (120) | (757) | (1,766) | |||||||||
| Installment | 454 | (274) | 417 | 597 | 670 | (309) | 106 | (202) | 265 | |||||||||
| Total net (charge-offs)/recoveries | (2,185) | 2,741 | 4,490 | 5,046 | (5,520) | (10,584) | 4,195 | 6,527 | (5,382) | |||||||||
| Provision for credit losses | 2,000 | 1,000 | -- | 3,000 | 5,000 | 7,500 | -- | -- | 12,500 | |||||||||
| Transfers (to) from reserve for off-balance sheet credit commitments | (909) | (284) | (970) | (2,163) | (271) | 499 | (1,618) | (178) | (1,568) | |||||||||
| Balance at end of period | $ 268,440 | $ 269,534 | $ 266,077 | $ 268,440 | $ 262,557 | $ 263,348 | $ 265,933 | $ 263,356 | $ 262,557 | |||||||||
| Net (Charge-Offs)/Recoveries to Average Total Loans and Leases, Excluding Covered Loans (annualized): | ||||||||||||||||||
| Commercial | (0.32) % | 0.56 % | 0.40 % | 0.20 % | (0.96) % | (0.23) % | 0.22 % | (0.18) % | (0.31) % | |||||||||
| Commercial real estate mortgages | (0.04) % | 0.20 % | (0.12) % | 0.01 % | (0.02) % | (0.09) % | 0.27 % | 1.31 % | 0.35 % | |||||||||
| Residential mortgages | (0.06) % | (0.06) % | (0.05) % | (0.05) % | (0.01) % | (0.02) % | (0.03) % | (0.07) % | (0.03) % | |||||||||
| Real estate construction | 4.65 % | (6.26) % | 0.13 % | (0.73) % | 8.29 % | (7.14) % | 0.59 % | 3.46 % | 1.33 % | |||||||||
| Equity lines of credit | (0.02) % | (0.44) % | (0.09) % | (0.18) % | (0.20) % | (0.28) % | (0.07) % | (0.42) % | (0.24) % | |||||||||
| Installment | 1.34 % | (0.85) % | 1.30 % | 0.61 % | 2.00 % | (0.94) % | 0.32 % | (0.55) % | 0.19 % | |||||||||
| Total loans and leases, excluding covered loans | (0.06) % | 0.08 % | 0.15 % | 0.05 % | (0.18) % | (0.36) % | 0.15 % | 0.24 % | (0.05) % | |||||||||
| Reserve for Off-Balance Sheet Credit Commitments | ||||||||||||||||||
| Balance at beginning of period | $ 24,351 | $ 24,067 | $ 23,097 | $ 23,097 | $ 22,826 | $ 23,325 | $ 21,707 | $ 21,529 | $ 21,529 | |||||||||
| Transfers from (to) allowance | 909 | 284 | 970 | 2,163 | 271 | (499) | 1,618 | 178 | 1,568 | |||||||||
| Balance at end of period | $ 25,260 | $ 24,351 | $ 24,067 | $ 25,260 | $ 23,097 | $ 22,826 | $ 23,325 | $ 21,707 | $ 23,097 | |||||||||
| Allowance for Losses on Covered Loans | ||||||||||||||||||
| Balance at beginning of period | $ 43,147 | $ 61,471 | $ 64,565 | $ 64,565 | $ 61,753 | $ 67,629 | $ 82,016 | $ 67,389 | $ 67,389 | |||||||||
| Provision for losses | 18,089 | 13,293 | 7,466 | 38,848 | 17,667 | 5,147 | 1,716 | 19,116 | 43,646 | |||||||||
| Net charge-offs | -- | -- | -- | -- | -- | (325) | -- | -- | (325) | |||||||||
| Reduction in allowance due to loan removals | (16,258) | (31,617) | (10,560) | (58,435) | (14,855) | (10,698) | (16,103) | (4,489) | (46,145) | |||||||||
| Balance at end of period | $ 44,978 | $ 43,147 | $ 61,471 | $ 44,978 | $ 64,565 | $ 61,753 | $ 67,629 | $ 82,016 | $ 64,565 | |||||||||
| Note: Certain prior period balances have been reclassified to conform to current period presentation. | ||||||||||||||||||
| CITY NATIONAL CORPORATION | ||||||||||||||
| NONPERFORMING ASSETS | ||||||||||||||
| (unaudited) | ||||||||||||||
| 2012 | 2011 | |||||||||||||
| (Dollars in thousands) |
Third Quarter |
Second Quarter |
First Quarter |
Fourth Quarter |
Third Quarter |
Second Quarter |
First Quarter |
|||||||
| Nonperforming assets, excluding covered assets | ||||||||||||||
| Nonaccrual loans, excluding covered loans | ||||||||||||||
| Commercial | $ 18,848 | $ 19,056 | $ 19,584 | $ 19,888 | $ 34,937 | $ 24,337 | $ 19,297 | |||||||
| Commercial real estate mortgages | 36,580 | 28,780 | 21,071 | 21,948 | 20,746 | 26,676 | 28,028 | |||||||
| Residential mortgages | 11,680 | 14,064 | 13,628 | 9,771 | 10,512 | 14,211 | 14,544 | |||||||
| Real estate construction | 28,963 | 29,676 | 48,964 | 50,876 | 70,827 | 60,543 | 81,448 | |||||||
| Equity lines of credit | 6,946 | 6,505 | 8,831 | 8,669 | 8,401 | 6,668 | 6,676 | |||||||
| Installment | 477 | 575 | 729 | 874 | 707 | 365 | 7,399 | |||||||
| Total nonaccrual loans, excluding covered loans | 103,494 | 98,656 | 112,807 | 112,026 | 146,130 | 132,800 | 157,392 | |||||||
| Other real estate owned, excluding covered OREO | 27,055 | 34,667 | 29,074 | 30,790 | 44,521 | 47,634 | 56,342 | |||||||
| Total nonperforming assets, excluding covered assets | $ 130,549 | $ 133,323 | $ 141,881 | $ 142,816 | $ 190,651 | $ 180,434 | $ 213,734 | |||||||
| Nonperforming covered assets | ||||||||||||||
| Nonaccrual loans | $ -- | $ 422 | $ 422 | $ 422 | $ 1,023 | $ 1,408 | $ 2,343 | |||||||
| Other real estate owned | 83,618 | 82,834 | 78,456 | 98,550 | 102,848 | 114,907 | 121,822 | |||||||
| Total nonperforming covered assets | $ 83,618 | $ 83,256 | $ 78,878 | $ 98,972 | $ 103,871 | $ 116,315 | $ 124,165 | |||||||
| Loans 90 days or more past due on accrual status, excluding covered loans | $ 433 | $ 2,065 | $ 654 | $ 453 | $ 379 | $ 7,214 | $ 3,679 | |||||||
| Covered loans 90 days or more past due on accrual status | $ 140,041 | $ 190,005 | $ 265,175 | $ 330,169 | $ 336,193 | $ 368,379 | $ 390,267 | |||||||
| Allowance for loan and lease losses as a percentage of: | ||||||||||||||
| Nonaccrual loans | 259.38 % | 273.21 % | 235.87 % | 234.37 % | 180.21 % | 200.25 % | 167.32 % | |||||||
| Total nonperforming assets, excluding covered assets | 205.62 % | 202.17 % | 187.54 % | 183.84 % | 138.13 % | 147.39 % | 123.22 % | |||||||
| Total loans and leases, excluding covered loans | 1.96 % | 2.00 % | 2.09 % | 2.13 % | 2.16 % | 2.28 % | 2.34 % | |||||||
| Nonaccrual loans as a percentage of total loans, excluding covered loans | 0.75 % | 0.73 % | 0.88 % | 0.91 % | 1.20 % | 1.14 % | 1.40 % | |||||||
| Nonperforming assets, excluding covered assets, as a percentage of: | ||||||||||||||
| Total loans and other real estate owned, excluding covered assets | 0.95 % | 0.98 % | 1.11 % | 1.16 % | 1.56 % | 1.54 % | 1.89 % | |||||||
| Total assets | 0.50 % | 0.54 % | 0.59 % | 0.60 % | 0.83 % | 0.80 % | 0.99 % | |||||||
| Note: Certain prior period balances have been reclassified to conform to current period presentation. | ||||||||||||||
| CITY NATIONAL CORPORATION | ||||||||||||||||
| AVERAGE BALANCES AND RATES | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| 2012 | ||||||||||||||||
| Third Quarter | Second Quarter | First Quarter | Year to Date | |||||||||||||
| (Dollars in millions) |
Average Balance |
Average Rate |
Average Balance |
Average Rate |
Average Balance |
Average Rate |
Average Balance |
Average Rate |
||||||||
| Assets | ||||||||||||||||
| Interest-earning assets | ||||||||||||||||
| Loans and leases | ||||||||||||||||
| Commercial | $ 6,128 | 3.97 % | $ 5,845 | 4.16 % | $ 5,319 | 3.94 % | $ 5,765 | 4.03 % | ||||||||
| Commercial real estate mortgages | 2,464 | 4.45 | 2,295 | 4.70 | 2,166 | 4.87 | 2,309 | 4.66 | ||||||||
| Residential mortgages | 3,865 | 4.11 | 3,815 | 4.28 | 3,777 | 4.36 | 3,819 | 4.25 | ||||||||
| Real estate construction | 265 | 5.67 | 311 | 4.31 | 314 | 5.33 | 297 | 5.08 | ||||||||
| Equity lines of credit | 731 | 3.52 | 731 | 3.53 | 727 | 3.58 | 730 | 3.54 | ||||||||
| Installment | 135 | 4.51 | 129 | 4.60 | 129 | 4.67 | 131 | 4.59 | ||||||||
| Total loans and leases, excluding covered loans | 13,588 | 4.10 | 13,126 | 4.27 | 12,432 | 4.26 | 13,051 | 4.21 | ||||||||
| Covered loans | 1,207 | 13.92 | 1,341 | 14.51 | 1,439 | 10.63 | 1,328 | 12.93 | ||||||||
| Total loans and leases | 14,795 | 4.90 | 14,467 | 5.22 | 13,871 | 4.93 | 14,379 | 5.02 | ||||||||
| Due from banks - interest-bearing | 247 | 0.26 | 293 | 0.24 | 167 | 0.22 | 236 | 0.24 | ||||||||
| Federal funds sold and securities purchased under resale agreements | 105 | 0.28 | 137 | 0.28 | 15 | 0.28 | 86 | 0.28 | ||||||||
| Securities | 8,631 | 2.16 | 7,755 | 2.37 | 7,929 | 2.40 | 8,107 | 2.30 | ||||||||
| Other interest-earning assets | 114 | 2.40 | 117 | 2.39 | 121 | 2.30 | 117 | 2.36 | ||||||||
| Total interest-earning assets | 23,892 | 3.82 | 22,769 | 4.15 | 22,103 | 3.97 | 22,925 | 3.98 | ||||||||
| Allowance for loan and lease losses | (319) | (331) | (335) | (328) | ||||||||||||
| Cash and due from banks | 184 | 148 | 141 | 158 | ||||||||||||
| Other non-earning assets | 1,898 | 1,777 | 1,736 | 1,803 | ||||||||||||
| Total assets | $ 25,655 | $ 24,363 | $ 23,645 | $ 24,558 | ||||||||||||
| Liabilities and Equity | ||||||||||||||||
| Interest-bearing deposits | ||||||||||||||||
| Interest checking accounts | $ 1,981 | 0.09 % | $ 1,890 | 0.10 % | $ 1,952 | 0.11 % | $ 1,941 | 0.10 % | ||||||||
| Money market accounts | 5,838 | 0.11 | 5,856 | 0.13 | 6,018 | 0.15 | 5,904 | 0.13 | ||||||||
| Savings deposits | 371 | 0.14 | 360 | 0.14 | 358 | 0.14 | 363 | 0.14 | ||||||||
| Time deposits - under $100,000 | 220 | 0.51 | 228 | 0.50 | 242 | 0.49 | 230 | 0.50 | ||||||||
| Time deposits -- $100,000 and over | 732 | 0.41 | 733 | 0.45 | 697 | 0.51 | 721 | 0.46 | ||||||||
| Total interest-bearing deposits | 9,142 | 0.14 | 9,067 | 0.16 | 9,267 | 0.18 | 9,159 | 0.16 | ||||||||
| Federal funds purchased and securities sold under repurchase agreements | 24 | 0.15 | 4 | 0.11 | 166 | 0.08 | 64 | 0.09 | ||||||||
| Other borrowings | 922 | 4.97 | 797 | 4.97 | 697 | 5.09 | 806 | 5.00 | ||||||||
| Total interest-bearing liabilities | 10,088 | 0.59 | 9,868 | 0.55 | 10,130 | 0.51 | 10,029 | 0.55 | ||||||||
| Noninterest-bearing deposits | 12,799 | 11,881 | 10,950 | 11,880 | ||||||||||||
| Other liabilities | 471 | 379 | 396 | 415 | ||||||||||||
| Total equity | 2,297 | 2,234 | 2,169 | 2,234 | ||||||||||||
| Total liabilities and equity | $ 25,655 | $ 24,363 | $ 23,645 | $ 24,558 | ||||||||||||
| Net interest spread | 3.23 % | 3.60 % | 3.46 % | 3.43 % | ||||||||||||
| Net interest margin | 3.58 % | 3.91 % | 3.74 % | 3.74 % | ||||||||||||
| Average prime rate | 3.25 % | 3.25 % | 3.25 % | 3.25 % | ||||||||||||
| Note: Certain prior period balances have been reclassified to conform to current period presentation. | ||||||||||||||||
| CITY NATIONAL CORPORATION | ||||||||||||||||||||
| AVERAGE BALANCES AND RATES | ||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||
| 2011 | ||||||||||||||||||||
| Fourth Quarter | Third Quarter | Second Quarter | First Quarter | Year to Date | ||||||||||||||||
| (Dollars in millions) | Average Balance | Average Rate | Average Balance | Average Rate | Average Balance | Average Rate | Average Balance | Average Rate | Average Balance | Average Rate | ||||||||||
| Assets | ||||||||||||||||||||
| Interest-earning assets | ||||||||||||||||||||
| Loans and leases | ||||||||||||||||||||
| Commercial | $ 5,204 | 3.89 % | $ 4,928 | 4.09 % | $ 4,693 | 4.22 % | $ 4,437 | 4.30 % | $ 4,818 | 4.11 % | ||||||||||
| Commercial real estate mortgages | 2,077 | 5.12 | 1,944 | 5.30 | 1,904 | 5.67 | 1,924 | 5.56 | 1,963 | 5.40 | ||||||||||
| Residential mortgages | 3,739 | 4.49 | 3,717 | 4.74 | 3,663 | 4.78 | 3,563 | 4.81 | 3,671 | 4.70 | ||||||||||
| Real estate construction | 328 | 5.08 | 347 | 4.65 | 395 | 5.10 | 448 | 4.56 | 379 | 4.84 | ||||||||||
| Equity lines of credit | 732 | 3.58 | 731 | 3.55 | 730 | 3.59 | 733 | 3.57 | 731 | 3.57 | ||||||||||
| Installment | 133 | 4.87 | 130 | 4.94 | 131 | 4.88 | 151 | 4.81 | 136 | 4.88 | ||||||||||
| Total loans and leases, excluding covered loans | 12,213 | 4.30 | 11,797 | 4.47 | 11,516 | 4.64 | 11,256 | 4.67 | 11,698 | 4.51 | ||||||||||
| Covered loans | 1,554 | 11.06 | 1,664 | 10.65 | 1,770 | 8.70 | 1,811 | 7.78 | 1,699 | 9.48 | ||||||||||
| Total loans and leases | 13,767 | 5.05 | 13,461 | 5.23 | 13,286 | 5.19 | 13,067 | 5.11 | 13,397 | 5.14 | ||||||||||
| Due from banks - interest-bearing | 435 | 0.30 | 642 | 0.29 | 526 | 0.31 | 490 | 0.25 | 524 | 0.29 | ||||||||||
| Federal funds sold and securities purchased under resale agreements | 115 | 0.28 | 130 | 0.28 | 143 | 0.28 | 232 | 0.27 | 154 | 0.27 | ||||||||||
| Securities | 7,642 | 2.27 | 6,954 | 2.45 | 6,224 | 2.66 | 5,693 | 2.75 | 6,635 | 2.51 | ||||||||||
| Other interest-earning assets | 125 | 2.13 | 130 | 2.09 | 135 | 2.09 | 139 | 2.04 | 132 | 2.09 | ||||||||||
| Total interest-earning assets | 22,084 | 3.95 | 21,317 | 4.12 | 20,314 | 4.23 | 19,621 | 4.24 | 20,842 | 4.13 | ||||||||||
| Allowance for loan and lease losses | (331) | (330) | (344) | (329) | (333) | |||||||||||||||
| Cash and due from banks | 199 | 203 | 184 | 201 | 197 | |||||||||||||||
| Other non-earning assets | 1,742 | 1,809 | 1,856 | 1,885 | 1,822 | |||||||||||||||
| Total assets | $ 23,694 | $ 22,999 | $ 22,010 | $ 21,378 | $ 22,528 | |||||||||||||||
| Liabilities and Equity | ||||||||||||||||||||
| Interest-bearing deposits | ||||||||||||||||||||
| Interest checking accounts | $ 1,865 | 0.12 % | $ 1,727 | 0.15 % | $ 1,707 | 0.17 % | $ 1,772 | 0.19 % | $ 1,768 | 0.16 % | ||||||||||
| Money market accounts | 6,467 | 0.18 | 6,900 | 0.35 | 6,683 | 0.43 | 6,452 | 0.45 | 6,626 | 0.35 | ||||||||||
| Savings deposits | 344 | 0.17 | 329 | 0.29 | 327 | 0.32 | 303 | 0.34 | 326 | 0.28 | ||||||||||
| Time deposits - under $100,000 | 262 | 0.53 | 280 | 0.48 | 308 | 0.49 | 325 | 0.56 | 294 | 0.52 | ||||||||||
| Time deposits -- $100,000 and over | 718 | 0.57 | 801 | 0.61 | 833 | 0.70 | 823 | 0.75 | 793 | 0.66 | ||||||||||
| Total interest-bearing deposits | 9,656 | 0.20 | 10,037 | 0.34 | 9,858 | 0.41 | 9,675 | 0.43 | 9,807 | 0.34 | ||||||||||
| Federal funds purchased and securities sold under repurchase agreements | 2 | 0.06 | -- | 0.07 | 10 | 0.07 | -- | 0.00 | 3 | 0.07 | ||||||||||
| Other borrowings | 701 | 4.96 | 804 | 4.46 | 855 | 4.36 | 858 | 4.41 | 804 | 4.53 | ||||||||||
| Total interest-bearing liabilities | 10,359 | 0.52 | 10,841 | 0.64 | 10,723 | 0.72 | 10,533 | 0.75 | 10,614 | 0.66 | ||||||||||
| Noninterest-bearing deposits | 10,844 | 9,688 | 8,927 | 8,509 | 9,499 | |||||||||||||||
| Other liabilities | 355 | 353 | 307 | 338 | 338 | |||||||||||||||
| Total equity | 2,136 | 2,117 | 2,053 | 1,998 | 2,077 | |||||||||||||||
| Total liabilities and equity | $ 23,694 | $ 22,999 | $ 22,010 | $ 21,378 | $ 22,528 | |||||||||||||||
| Net interest spread | 3.43 % | 3.48 % | 3.51 % | 3.49 % | 3.47 % | |||||||||||||||
| Net interest margin | 3.70 % | 3.79 % | 3.85 % | 3.84 % | 3.79 % | |||||||||||||||
| Average prime rate | 3.25 % | 3.25 % | 3.25 % | 3.25 % | 3.25 % | |||||||||||||||
| Note: Certain prior period balances have been reclassified to conform to current period presentation. | ||||||||||||||||||||
| CITY NATIONAL CORPORATION | ||||||||||||||||||
| CAPITAL AND CREDIT RATING DATA | ||||||||||||||||||
| (unaudited) | ||||||||||||||||||
| 2012 | 2011 | |||||||||||||||||
|
Third Quarter |
Second Quarter |
First Quarter |
Year To Date |
Fourth Quarter |
Third Quarter |
Second Quarter |
First Quarter |
Year To Date |
||||||||||
| Per Common Share: | ||||||||||||||||||
| Shares Outstanding (in thousands): | ||||||||||||||||||
| Average - Basic | 53,425 | 53,105 | 52,741 | 53,092 | 52,488 | 52,481 | 52,462 | 52,320 | 52,439 | |||||||||
| Average - Diluted | 53,711 | 53,373 | 53,021 | 53,376 | 52,750 | 52,720 | 52,977 | 52,894 | 52,849 | |||||||||
| Period-end | 53,190 | 52,822 | 52,661 | 52,499 | 52,484 | 52,475 | 52,440 | |||||||||||
| Book value for shareholders | $ 43.81 | $ 42.70 | $ 41.77 | $ 40.86 | $ 40.40 | $ 39.24 | $ 37.86 | |||||||||||
| Closing price: | ||||||||||||||||||
| High | $ 54.48 | $ 54.63 | $ 54.44 | $ 54.63 | $ 45.10 | $ 55.54 | $ 58.75 | $ 62.90 | $ 62.90 | |||||||||
| Low | 48.20 | 46.39 | 45.39 | 45.39 | 36.01 | 37.76 | 52.02 | 55.65 | 36.01 | |||||||||
| Period-end | 51.51 | 48.58 | 52.47 | 44.18 | 37.76 | 54.25 | 57.05 | |||||||||||
| Capital Ratios (Dollars in millions): | ||||||||||||||||||
| Risk-based capital | ||||||||||||||||||
| Risk-weighted assets (1) | $ 17,174 | $ 16,723 | $ 15,840 | $ 15,305 | $ 14,926 | $ 14,286 | $ 13,551 | |||||||||||
| Tier 1 common shareholders' equity | $ 1,566 | $ 1,597 | $ 1,611 | $ 1,565 | $ 1,530 | $ 1,493 | $ 1,449 | |||||||||||
| Percentage of risk-weighted assets (2) | 9.12 % | 9.55 % | 10.17 % | 10.22 % | 10.25 % | 10.45 % | 10.69 % | |||||||||||
| Tier 1 capital | $ 1,571 | $ 1,602 | $ 1,616 | $ 1,570 | $ 1,535 | $ 1,523 | $ 1,479 | |||||||||||
| Percentage of risk-weighted assets | 9.15 % | 9.58 % | 10.20 % | 10.26 % | 10.28 % | 10.66 % | 10.91 % | |||||||||||
| Total capital | $ 2,133 | $ 2,160 | $ 2,013 | $ 1,963 | $ 1,923 | $ 1,905 | $ 1,853 | |||||||||||
| Percentage of risk-weighted assets | 12.42 % | 12.91 % | 12.71 % | 12.83 % | 12.88 % | 13.34 % | 13.68 % | |||||||||||
| Tier 1 leverage ratio | 6.29 % | 6.74 % | 6.98 % | 6.77 % | 6.82 % | 7.09 % | 7.09 % | |||||||||||
| Period-end equity to period-end assets | 8.88 % | 9.09 % | 9.15 % | 9.06 % | 9.18 % | 9.25 % | 9.29 % | |||||||||||
| Period-end shareholders' equity to period-end assets | 8.88 % | 9.09 % | 9.15 % | 9.06 % | 9.18 % | 9.14 % | 9.18 % | |||||||||||
| Average equity to average assets | 8.95 % | 9.17 % | 9.17 % | 9.09 % | 9.02 % | 9.21 % | 9.33 % | 9.35 % | 9.22 % | |||||||||
| Average shareholders' equity to average assets | 8.95 % | 9.17 % | 9.17 % | 9.09 % | 9.02 % | 9.10 % | 9.22 % | 9.23 % | 9.14 % | |||||||||
| Period-end tangible equity to period-end tangible assets (2) | 6.41 % | 6.88 % | 7.13 % | 7.01 % | 7.07 % | 7.08 % | 7.03 % | |||||||||||
| Average tangible equity to average tangible assets (2) | 6.45 % | 7.01 % | 7.12 % | 6.85 % | 6.96 % | 7.08 % | 7.11 % | 7.05 % | 7.05 % | |||||||||
| Senior Debt Credit Ratings | ||||||||||||||||||
| For The Period Ended September 30, 2012 | ||||||||||||||||||
| Moody's | Fitch |
Standard & Poor's |
DBRS | |||||||||||||||
| City National Bank | A1 | A- | A- | A (high) | ||||||||||||||
| City National Corporation | A2 | A- | BBB+ | A | ||||||||||||||
| (1) In accordance with applicable bank regulatory guidelines, the Company calculates risk-weighted assets by assigning assets and credit equivalent amounts of derivatives and off-balance sheet items to one of several broad risk categories according to the obligor, or, if relevant, the guarantor or the nature of the collateral. The aggregate dollar amount in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are added together for determining risk-weighted assets. | ||||||||||||||||||
| (2) The Tier 1 common shareholders' equity to risk-weighted assets ratio and tangible equity to tangible assets ratio are non-GAAP financial measures. See page 15 and 16 for notes on non-GAAP measures. | ||||||||||||||||||
| CITY NATIONAL CORPORATION | ||||||||||||||||||
| COMPUTATION OF BASIC AND DILUTED EARNINGS PER SHARE | ||||||||||||||||||
| (unaudited) | ||||||||||||||||||
| City National Corporation applies the two-class method of computing basic and diluted earnings per share ("EPS"). Under the two-class method, EPS is determined for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. The Company grants restricted stock and restricted stock units under a share-based compensation plan that qualify as participating securities. The computation of basic and diluted EPS is presented in the following table: | ||||||||||||||||||
| 2012 | 2011 | |||||||||||||||||
| (Dollars in thousands, except per share amounts) |
Third Quarter |
Second Quarter |
First Quarter |
Year to Date |
Fourth Quarter |
Third Quarter |
Second Quarter |
First Quarter |
Year to Date |
|||||||||
| Basic EPS: | ||||||||||||||||||
| Net income attributable to City National Corporation | $ 59,780 | $ 54,758 | $ 46,265 | $ 160,803 | $ 43,860 | $ 41,398 | $ 47,471 | $ 39,692 | $ 172,421 | |||||||||
| Less: Earnings allocated to participating securities | 842 | 788 | 738 | 2,380 | 690 | 655 | 759 | 578 | 2,678 | |||||||||
| Earnings allocated to shareholders | $ 58,938 | $ 53,970 | $ 45,527 | $ 158,423 | $ 43,170 | $ 40,743 | $ 46,712 | $ 39,114 | $ 169,743 | |||||||||
| Weighted average shares outstanding | 53,425 | 53,105 | 52,741 | 53,092 | 52,488 | 52,481 | 52,462 | 52,320 | 52,439 | |||||||||
| Basic earnings per share | $ 1.10 | $ 1.02 | $ 0.86 | $ 2.98 | $ 0.82 | $ 0.78 | $ 0.89 | $ 0.75 | $ 3.24 | |||||||||
| Diluted EPS: | ||||||||||||||||||
| Earnings allocated to shareholders (1) | $ 58,941 | $ 53,972 | $ 45,530 | $ 158,432 | $ 43,173 | $ 40,745 | $ 46,718 | $ 39,119 | $ 169,759 | |||||||||
| Weighted average shares outstanding | 53,425 | 53,105 | 52,741 | 53,092 | 52,488 | 52,481 | 52,462 | 52,320 | 52,439 | |||||||||
| Dilutive effect of equity awards | 286 | 268 | 280 | 284 | 262 | 239 | 515 | 574 | 410 | |||||||||
| Weighted average diluted shares outstanding | 53,711 | 53,373 | 53,021 | 53,376 | 52,750 | 52,720 | 52,977 | 52,894 | 52,849 | |||||||||
| Diluted earnings per share | $ 1.10 | $ 1.01 | $ 0.86 | $ 2.97 | $ 0.82 | $ 0.77 | $ 0.88 | $ 0.74 | $ 3.21 | |||||||||
| (1) Earnings allocated to shareholders for basic and diluted EPS may differ under the two-class method as a result of adding common stock equivalents for options to dilutive shares outstanding, which alters the ratio used to allocate earnings to shareholders and participating securities for the purposes of calculating diluted EPS. | ||||||||||||||||||
| CITY NATIONAL CORPORATION | |||||||
| SELECTED FINANCIAL INFORMATION ON COVERED ASSETS | |||||||
| (unaudited) | |||||||
| The following table provides selected components of income and expense related to covered assets: | |||||||
| 2012 | 2011 | ||||||
| (in thousands) |
Third Quarter |
Second Quarter |
Third Quarter | ||||
| Summary Totals | |||||||
| Net impairment income (expense) (Sum of A) | $ 2,639 | $ 3,932 | $ (5,884) | ||||
| Other covered asset (expense) income, net | (837) | 3,388 | (589) | ||||
| Total income (expense), net | $ 1,802 | $ 7,320 | $ (6,473) | ||||
| Interest income (1) | |||||||
| Income on loans paid-off or fully charged-off | $ 22,164 | $ 27,402 | $ 18,343 | ||||
| Provision for losses on covered loans | |||||||
| Provision for losses on covered loans | A | 18,089 | 13,293 | 5,147 | |||
| Noninterest income related to covered assets | |||||||
| FDIC loss sharing income (expense), net | |||||||
| Gain on indemnification asset | A | $ 21,426 | $ 17,722 | $ (384) | |||
| Indemnification asset accretion | (4,258) | (4,133) | (4,043) | ||||
| Net FDIC reimbursement for OREO and loan expenses | 7,612 | 6,724 | 10,496 | ||||
| Removal of indemnification asset for loans paid-off or fully charged-off | (9,731) | (10,654) | (10,228) | ||||
| Removal of indemnification asset for unfunded loan commitments and loans transferred to OREO | (2,834) | (4,773) | (3,703) | ||||
| Removal of indemnification asset for OREO and net reimbursment to FDIC for OREO sales | (1,219) | (1,189) | (2,823) | ||||
| Loan recoveries shared with FDIC | (8,631) | (9,226) | (3,153) | ||||
| Increase in FDIC clawback liability | A | (698) | (497) | (353) | |||
| Total FDIC loss sharing income (expense), net | 1,667 | (6,026) | (14,191) | ||||
| Gain on disposal of assets | |||||||
| Net gain on sale of OREO | 1,524 | 1,486 | 3,625 | ||||
| Other income | |||||||
| Net gain on transfers of covered loans to OREO | 4,907 | 6,864 | 3,887 | ||||
| Amortization of fair value on acquired unfunded loan commitments | 192 | 413 | 1,088 | ||||
| OREO income | 428 | 615 | 379 | ||||
| Other | (632) | (864) | (503) | ||||
| Total other income | 4,895 | 7,028 | 4,851 | ||||
| Total noninterest income related to covered assets | $ 8,086 | $ 2,488 | $ (5,715) | ||||
| Noninterest expense related to covered assets (2) | |||||||
| Other real estate owned | |||||||
| Valuation write-downs | $ 4,267 | $ 4,250 | $ 7,526 | ||||
| Holding costs and foreclosure expense | 3,522 | 2,796 | 3,449 | ||||
| Total other real estate owned | 7,789 | 7,046 | 10,975 | ||||
| Legal and professional fees | 2,541 | 2,200 | 2,961 | ||||
| Other operating expense | |||||||
| Other covered asset expenses | 29 | 31 | 18 | ||||
| Total noninterest expense related to covered assets (3) | $ 10,359 | $ 9,277 | $ 13,954 | ||||
| Total income (expense), net | $ 1,802 | $ 7,320 | $ (6,473) | ||||
| Note: Certain prior period balances have been reclassified to conform to current period presentation. | |||||||
| (1) Excludes base yield in interest income related to covered loans. | |||||||
| (2) OREO, legal and professional fees, and other expenses related to covered assets must meet certain FDIC criteria in order for the expense amounts to be reimbursed. Certain amounts reflected in these categories may not be reimbursed by the FDIC. | |||||||
| (3) Excludes personnel and other corporate overhead expenses that the Company incurs to service covered assets and costs associated with the branches acquired in FDIC-assisted acquisitions. | |||||||
| CITY NATIONAL CORPORATION | ||||||||||||||||||
| NON-GAAP FINANCIAL MEASURES | ||||||||||||||||||
| (unaudited) | ||||||||||||||||||
| (a) Tangible equity ratios | ||||||||||||||||||
| Tangible equity to tangible assets is a non-GAAP financial measure that represents total equity less identifiable intangible assets and goodwill divided by total assets less identifiable intangible assets and goodwill. Management reviews this measure in evaluating the Company's capital levels and has included the ratio in response to market participants' interest in tangible equity as a measure of capital. A reconciliation of the GAAP to non-GAAP measure is set forth below: | ||||||||||||||||||
| 2012 | 2011 | |||||||||||||||||
| (Dollars in thousands) |
Third Quarter |
Second Quarter |
First Quarter |
Year to Date |
Fourth Quarter |
Third Quarter |
Second Quarter |
First Quarter |
Year to Date |
|||||||||
| Period End: | ||||||||||||||||||
| Total equity | $ 2,330,324 | $ 2,255,365 | $ 2,199,565 | $ 2,144,849 | $ 2,120,465 | $ 2,084,010 | $ 2,010,627 | |||||||||||
| Less: Goodwill and other intangibles | (691,765) | (589,114) | (521,717) | (522,753) | (524,103) | (526,207) | (527,419) | |||||||||||
| Tangible equity (A) | 1,638,559 | 1,666,251 | 1,677,848 | 1,622,096 | 1,596,362 | 1,557,803 | 1,483,208 | |||||||||||
| Total assets | $ 26,251,528 | $ 24,801,973 | $ 24,038,489 | $ 23,666,291 | $ 23,104,260 | $ 22,526,089 | $ 21,635,932 | |||||||||||
| Less: Goodwill and other intangibles | (691,765) | (589,114) | (521,717) | (522,753) | (524,103) | (526,207) | (527,419) | |||||||||||
| Tangible assets (B) | $ 25,559,763 | $ 24,212,859 | $ 23,516,772 | $ 23,143,538 | $ 22,580,157 | $ 21,999,882 | $ 21,108,513 | |||||||||||
| Period-end tangible equity to period-end tangible assets (A)/(B) | 6.41% | 6.88% | 7.13% | 7.01% | 7.07% | 7.08% | 7.03% | |||||||||||
| Average Balance: | ||||||||||||||||||
| Total equity | $ 2,296,754 | $ 2,234,411 | $ 2,168,748 | $ 2,233,536 | $ 2,136,215 | $ 2,117,249 | $ 2,053,447 | $ 1,998,006 | $ 2,076,721 | |||||||||
| Less: Goodwill and other intangibles | (687,224) | (566,989) | (522,182) | (592,479) | (523,206) | (525,300) | (527,072) | (528,205) | (525,930) | |||||||||
| Tangible equity (C) | 1,609,530 | 1,667,422 | 1,646,566 | 1,641,057 | 1,613,009 | 1,591,949 | 1,526,375 | 1,469,801 | 1,550,791 | |||||||||
| Total assets | $ 25,654,594 | $ 24,362,546 | $ 23,644,899 | $ 24,558,030 | $ 23,694,160 | $ 22,998,562 | $ 22,009,749 | $ 21,377,904 | $ 22,527,750 | |||||||||
| Less: Goodwill and other intangibles | (687,224) | (566,989) | (522,182) | (592,479) | (523,206) | (525,300) | (527,072) | (528,205) | (525,930) | |||||||||
| Tangible assets (D) | $ 24,967,370 | $ 23,795,557 | $ 23,122,717 | $ 23,965,551 | $ 23,170,954 | $ 22,473,262 | $ 21,482,677 | $ 20,849,699 | $ 22,001,820 | |||||||||
| Average tangible equity to average tangible assets (C)/(D) | 6.45% | 7.01% | 7.12% | 6.85% | 6.96% | 7.08% | 7.11% | 7.05% | 7.05% | |||||||||
| (b) Tier 1 common shareholders' equity to risk-based assets | ||||||||||||||||||
| The Tier 1 common shareholders' equity to risk-based assets ratio, also known as Tier 1 common ratio, is calculated by dividing (a) Tier 1 capital less non-common components including qualifying noncontrolling interest in subsidiaries and qualifying trust preferred securities by (b) risk-weighted assets. Tier 1 capital and risk-weighted assets are calculated in accordance with applicable bank regulatory guidelines. This ratio is a non-GAAP measure that is used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews this measure in evaluating the Company's capital levels and has included these ratios in response to market participants' interest in the Tier 1 common shareholders' equity to risk-based assets ratio. | ||||||||||||||||||
| 2012 | 2011 | |||||||||||||||||
| (Dollars in thousands) |
Third Quarter |
Second Quarter |
First Quarter |
Fourth Quarter |
Third Quarter |
Second Quarter |
First Quarter |
|||||||||||
| Tier 1 capital | $ 1,570,778 | $ 1,602,398 | $ 1,616,099 | $ 1,570,101 | $ 1,534,831 | $ 1,523,269 | $ 1,478,820 | |||||||||||
| Less: Noncontrolling interest | -- | -- | -- | -- | -- | (25,089) | (25,089) | |||||||||||
| Less: Trust preferred securities | (5,155) | (5,155) | (5,155) | (5,155) | (5,155) | (5,155) | (5,155) | |||||||||||
| Tier 1 common shareholders' equity (A) | $ 1,565,623 | $ 1,597,243 | $ 1,610,944 | $ 1,564,946 | $ 1,529,676 | $ 1,493,025 | $ 1,448,576 | |||||||||||
| Risk-weighted assets (B) | $ 17,174,382 | $ 16,722,999 | $ 15,839,944 | $ 15,305,328 | $ 14,925,715 | $ 14,285,572 | $ 13,551,318 | |||||||||||
| Tier 1 common shareholders' equity to risk-based assets (A)/(B) | 9.12% | 9.55% | 10.17% | 10.22% | 10.25% | 10.45% | 10.69% | |||||||||||
| (c) Brokerage and money market mutual fund fees, excluding Rochdale fees | ||||||||||||||||||
| Brokerage and money market mutual fund fees for the third quarter of 2012 were $9.1 million, an increase of 71 percent from the second quarter of 2012. Brokerage and money market mutual fund fees for the first nine months of 2012 were $19.4 million, an increase of 24 percent from the same period in 2011. Both current periods included $3.0 million of fee income from the July 2, 2012 acquisition of Rochdale Investment Management. Excluding this amount, brokerage and money market mutual fund fees increased 14 percent during the third quarter of 2012 from the second quarter of 2012, and increased 5 percent for the first nine months of 2012 compared to the year-earlier period. | ||||||||||||||||||
| Management believes this non-GAAP financial measure enhances the comparability of the financial results with prior periods as well as to highlight the effects of the Rochdale acquisition in the periods presented. The Company believes that investors may find it useful to see this non-GAAP financial measure to analyze the Company's underlying financial performance without the impact of the acquisition. | ||||||||||||||||||