Total Assets Exceed $21 Billion for the First Time
Deposits Reach Record Level of $17.4 Billion
LOS ANGELES, Jan. 28, 2010 (GLOBE NEWSWIRE) -- City National Corporation (NYSE:CYN), the parent company of wholly owned City National Bank, today reported fourth-quarter 2009 net income of $29.1 million, compared to $8.9 million in the fourth quarter of 2008 and $8.0 million in the third quarter of 2009.
Fourth-quarter 2009 net income available to common shareholders was $19.7 million, or $0.38 per share. This included an after-tax gain of $21.1 million, or $0.41 per share, for the acquisition of Imperial Capital Bank (less transaction costs) as well as a noncash charge of $4 million, or $0.08 per share, for the repurchase of $200 million of preferred stock issued to the U.S. Treasury Department. By comparison, net income available to common shareholders in the fourth quarter of 2008 totaled $6.5 million, or $0.13 per share. In the third quarter of 2009, it amounted to $2.5 million, or $0.05 per share.
Full-year 2009 net income totaled $51.3 million, while net income available to common shareholders amounted to $25.4 million, or $0.50 per share. In 2008, net income available to common shareholders was $102.5 million, $2.11 per share.
City National also announced today that its Board of Directors has maintained and approved a quarterly common stock cash dividend of $0.10 per share. The company's dividend will be payable on February 24, 2010 to stockholders of record on February 10, 2010.
FOURTH-QUARTER AND YEAR-END 2009 HIGHLIGHTS
* On December 18, 2009, City National acquired the banking operations of Imperial Capital Bank in a purchase and assumption agreement with the Federal Deposit Insurance Corporation (FDIC). City National acquired approximately $3.3 billion in assets and $2.1 billion of deposits. Imperial Capital's $2.4 billion in loans, prior to acquisition-related fair value adjustments, are subject to a loss-sharing agreement with the FDIC. * Fully taxable-equivalent net interest income amounted to $166.5 million, up 9 percent from the fourth quarter of 2008 and 1 percent from the third quarter of 2009. The company's net interest margin averaged 3.74 percent in the fourth quarter of 2009, compared with 3.94 percent in the third quarter of the year. * Year-end deposits grew to $17.4 billion, up 37 percent from December 31, 2008. Average fourth-quarter deposits grew to $15.7 billion, up 24 percent from the same period of 2008 and 6 percent from the third quarter of 2009. Average core deposits were $14.5 billion, up 30 percent from the fourth quarter of 2008 and 7 percent from the third quarter of 2009. * Year-end loans, excluding Imperial Capital Bank assets covered by City National's loss-sharing agreement with the FDIC, totaled $12.1 billion, down 2 percent from 2008. Average fourth-quarter loan balances also totaled $12.1 billion, down 2 percent from both the same period of 2008 and the third quarter of 2009. * Fourth-quarter 2009 net income includes an $80 million provision for credit losses, bringing the total provision for the year to $285 million. The fourth-quarter provision added $21.3 million, after net charge-offs, to the company's allowance for loan and lease losses. Net charge-offs declined 24 percent from the third quarter of 2009, while nonperforming assets, excluding FDIC-covered assets, decreased 2 percent. * Noninterest income totaled $110.1 million, up 98 percent from the same period in 2008 and 60 percent from the third quarter of 2009. These increases were due principally to a $38.2 million pretax gain on the company's fourth-quarter 2009 acquisition of Imperial Capital Bank. * On December 8, 2009, the company raised $250 million of Tier 1 capital through a successful trust preferred securities offering, further strengthening its balance sheet and bringing total new Tier 1 and Tier 2 capital raised in 2009 to $550 million. The company's ratio of Tier 1 common shareholders' equity to risk-based assets was 8.9 percent at December 31, 2009, down from 9.2 percent at September 30, 2009 due to the company's acquisition of Imperial Capital Bank(1). * On December 30, 2009, City National repurchased $200 million of the preferred securities that it had sold to the U.S. Treasury Department in the fourth quarter of 2008. The company expects to repurchase the remaining shares sometime this year, subject to regulatory approval.
"City National finished 2009 positively with the acquisition of Imperial Capital Bank, repayment of $200 million in TARP securities, increased earnings, revenues, reserves, loans and deposits, and the first quarterly improvement of key credit indicators since this harsh economic cycle began," said President and Chief Executive Officer Russell Goldsmith.
"To have completed its 17th consecutive profitable year in spite of the significant costs and challenges posed by this recession is testimony to the quality and strength of City National's capital base and its colleagues, capabilities and value proposition. As the economy improves in 2010, City National is well-positioned to increase its profitability even while credit costs remain elevated."
For the
For the three three
months ended months
December 31, ended
Dollars in millions, -------------------- % Sept. 30, %
except per share 2009 2008 Change 2009 Change
---------------------- --------- --------- ------ --------- ------
Earnings Per Share $ 0.38 $ 0.13 192 $ 0.05 660
Net Income
Attributable to CNC $ 29.1 $ 8.9 225 $ 8.0 262
Less: Dividends and
Accretion on
Preferred Stock 9.4 2.4 284 5.5 71
--------- --------- ---------
Net Income Available
to Common
Shareholders $ 19.7 $ 6.5 203 $ 2.5 675
========= ========= =========
Average Assets $19,095.2 $16,191.2 18 $17,938.2 6
Return on Average
Assets 0.60% 0.22% 173 0.18% 233
Return on Average
Common Shareholders'
Equity 4.27% 1.60% 167 0.56% 663
ASSETS
Total assets at December 31, 2009 were $21.1 billion, up 28 percent from 2008, largely reflecting the company's strong deposit growth as well as its December 18, 2009 FDIC-assisted acquisition of Imperial Capital Bank.
REVENUE
Fourth-quarter revenue was $273.1 million, up 34 percent from the fourth quarter of 2008 and 19 percent from the third quarter of last year. Full-year 2009 revenue was $915.3 million, up 6 percent from the previous year.
NET INTEREST INCOME
Fully taxable-equivalent net interest income totaled $166.5 million in the fourth quarter of 2009, up 9 percent from the same period in 2008 and 1 percent from the third quarter of 2009. Fully taxable-equivalent net interest income for the full-year 2009 was $638.6 million, compared with $616.4 million for the previous year.
Imperial Capital Bank's assets include $2.4 billion in loans, prior to acquisition-related fair value adjustments, that consist primarily of multifamily residential loans, but also include commercial real estate, construction, and commercial and industrial loans.
For the full-year 2009, City National's average loans, excluding FDIC-covered assets, reached $12.3 billion, up 2 percent from 2008.
Fourth-quarter average loans, excluding Imperial Capital Bank assets covered by City National's loss-sharing agreement with the FDIC, totaled $12.1 billion, down 2 percent from both the same period of 2008 and the third quarter of 2009. Commercial loans were down 4 percent from the fourth quarter of 2008 and 2 percent from the third quarter of 2009. Construction and commercial real estate loans were down 10 percent from the year-ago period and 4 percent from the third quarter of 2009. Single-family residential mortgage loans, which are made primarily to City National's private banking clients, rose 4 percent from the fourth quarter of 2008 but were virtually unchanged from the third quarter of 2009.
For the full year of 2009, the company renewed approximately $4.8 billion of loans and made approximately $2.8 billion in new loan commitments. About $1.6 billion of these new commitments were funded.
Average securities for the fourth quarter of 2009 totaled $3.9 billion, up 72 percent from the same period of 2008 and 7 percent from the third quarter of 2009. The increases reflected the company's strong deposit growth. The average duration of total available-for-sale securities at December 31, 2009 was 2.9 years, compared with 2.7 years at the end of 2008 and 2.6 years at September 30, 2009.
City National's net interest margin in the fourth quarter of 2009 averaged 3.74 percent, compared with 4.09 percent in fourth quarter of 2008 and 3.94 percent in the third quarter of 2009. For the full-year 2009, City National's net interest margin averaged 3.91 percent, compared with 4.20 percent in the previous year. The declines were due to the combination of strong deposit growth, lower average loan balances, the purchase of short-term, highly liquid securities and pressure on asset yields caused by low interest rates.
At December 31, 2009, City National?s prime lending rate was 3.25 percent, unchanged from both December 31, 2008 and September 30, 2009.
For the
For the three three
months ended months
December 31, ended
-------------------- % Sept. 30, %
Dollars in millions 2009 2008 Change 2009 Change
--------------------- --------- --------- ------ --------- ------
Average Loans
and Leases,
excluding Covered
Assets $12,100.4 $12,371.4 (2) $12,339.0 (2)
Average Covered
Assets 263.7 -- NM -- NM
Average Total
Securities 3,877.9 2,258.7 72 3,630.3 7
Average Earning
Assets 17,664.6 14,843.9 19 16,587.7 6
Average Deposits 15,729.9 12,639.3 24 14,776.9 6
Average Core
Deposits 14,509.2 11,137.0 30 13,556.1 7
Fully Taxable-
Equivalent
Net Interest
Income 166.5 152.6 9 164.9 1
Net Interest
Margin 3.74% 4.09% (9) 3.94% (5)
Fourth-quarter average deposits grew to $15.7 billion, up 24 percent from the same period of 2008 and 6 percent from the third quarter of 2009. Average deposits for the full-year 2009 totaled $14.4 billion, up 21 percent from 2008, as many depositors continued to seek a safe haven for their funds. Period-end deposits grew to a record $17.4 billion, up $4.7 billion, or 37 percent, from December 31, 2008. Slightly over one-third of this year-over-year deposit growth was due to the acquisition of Imperial Capital Bank.
Average core deposits were $14.5 billion in the fourth quarter of 2009, up 30 percent from the same period of 2008 and 7 percent from the third quarter of 2009. Full-year 2009 average core deposits grew 23 percent from the prior year to $13.0 billion, or 91 percent of the company's average deposit balances. Excluding the acquired Imperial Capital Bank deposits, approximately $2.3 billion of City National's core deposit growth in 2009 came from new and existing bank clients and $1.1 billion more came from money market funds that had been held at City National Asset Management. In addition, the company assumed about $500 million in core deposits of Imperial Capital.
Fourth-quarter average noninterest-bearing deposits were up 31 percent from the same period of 2008 and 8 percent from the third quarter of 2009. Average noninterest-bearing balances in 2009 were up 23 percent from 2008. Period-end noninterest-bearing deposits were up 26 percent from December 31, 2008.
Treasury Services deposit balances, which consist primarily of title, escrow and property management deposits, averaged $1.1 billion in the fourth quarter of 2009, up 31 percent from the same period of 2008 and 8 percent from the third quarter of 2009 due to an increase in residential real estate activity. For the full-year 2009, Treasury Services deposit balances averaged $944.9 million, up $3.9 million from 2008.
NONINTEREST INCOME
Fourth-quarter noninterest income totaled $110.1 million, up 98 percent from the same period in 2008 and 60 percent from the third quarter of 2009. The increases were due largely to City National's $38.2 million pretax gain on the acquisition of Imperial Capital Bank.
In addition, City National recorded $8.4 million in net securities gains during the quarter, which were mostly offset by several other unusual items, including a $1.9 million impairment charge for private equity investments and a $2.1 million noncash loss associated with the deconsolidation of one of the company's asset management affiliates.
City National's noninterest income totaled $290.5 million in 2009, up 9 percent from 2008. In 2009, noninterest income accounted for 32 percent of City National's total revenue.
Wealth Management
City National's assets under management totaled $35.2 billion as of December 31, 2009, up 14 percent from the end of 2008 and 1 percent from September 30, 2009. The year-over-year increase is due primarily to higher equity market values and the July 21, 2009 Lee Munder Capital Group acquisition, which were offset by the deconsolidation of an affiliate's assets under management during the fourth quarter of 2009.
Trust and investment fee income grew to $33.7 million in the fourth quarter of 2009, up 19 percent from the same period of 2008 and 4 percent from the third quarter of 2009. Full-year 2009 trust and investment fee income fell 11 percent from 2008.
Money market mutual fund and brokerage fee income totaled $5.5 million, down 69 percent from the fourth quarter of 2008 and 9 percent from the third quarter of 2009. Full-year 2009 money market mutual fund and brokerage fee income was $27.9 million, down 62 percent from the previous year. These declines were due to historically low interest rates on government and other quality short-term bonds. The decline in brokerage fees from the fourth quarter of 2008 also reflected reduced spreads and trading activity.
At or
At or for the
for the three three
months ended months
December 31, ended
-------------------- % Sept. 30, %
Dollars in millions 2009 2008 Change 2009 Change
--------------------- --------- --------- ------ --------- ------
Trust and Investment
Fee Revenue $ 33.7 $ 28.2 19 $ 32.3 4
Brokerage and Mutual
Fund Fees 5.5 17.8 (69) 6.0 (9)
Assets Under
Management(1)(2) 35,238.8 30,781.9 14 34,927.4 1
Total Assets Under
Management or
Administration(1)(2) 55,119.4 47,519.8 16 53,368.1 3
(1) Excludes $11.5 billion, $9.9 billion, and $4.7 billion of assets
under management for an asset manager in which City National held
a noncontrolling ownership interest as of December 31, 2009,
September 30, 2009, and December 31, 2008 respectively.
(2) Excludes $1.9 billion of assets under management or
administration as of December 31, 2009 for an asset manager that
City National deconsolidated effective November 1, 2009.
Other Noninterest Income
Fourth-quarter income from cash management and deposit transaction fees totaled $12.5 million, down 1 percent from the fourth quarter of 2008 and 5 percent from the third quarter of 2009. The decline from the third quarter reflects seasonally slower cash management sales as clients focused on year-end accounting and reporting obligations.
For the full-year 2009, cash management and deposit transaction fee income rose to $51.7 million, up 7 percent from 2008 due to the sale of additional cash management services and the impact of declining interest rates on compensating deposit balances. The lower rates increased deposit service charge income.
Fee income from foreign exchange services and letters of credit totaled $8.6 million in the fourth quarter, up 2 percent from the year-earlier period and 9 percent from the third quarter of 2009. For full-year 2009, international fee income amounted to $31.0 million, down 4 percent from 2008.
Other income was $2.5 million in the fourth quarter, down 63 percent from the year-earlier period and 59 percent from the third quarter of 2009, due to lower valuations on certain trading securities as well as charges for the impairment of private equity investments and the deconsolidation of an investment affiliate. In 2009, other income was $23.7 million, down 17 percent from 2008.
NONINTEREST EXPENSE
Fourth-quarter noninterest expense was virtually unchanged from the same period of 2008 but up 11 percent from the third quarter of 2009, due to Imperial Capital Bank-related transaction cost and higher other real estate-owned expense.
Noninterest expense for the year amounted to $580.1 million, down 1 percent from 2008 as higher FDIC costs, legal fees and other real estate-owned expenses were offset primarily by lower personnel costs, reduced incentive compensation and a salary freeze.
The company's fourth-quarter 2009 FDIC costs totaled $5.8 million, up from $1.9 million in the year-earlier period. FDIC costs for the full year were $28 million, up from $6.2 million in 2008.
CREDIT QUALITY
The following credit quality information does not include Imperial Capital Bank assets that are subject to City National's loss-sharing agreement with the FDIC:
Net charge-offs in the fourth quarter of 2009 totaled $58.7 million, or 1.93 percent of total loans and leases. Net charge-offs were $24.7 million, or 0.79 percent of total loans and leases, in the fourth quarter of 2008 and $76.9 million, or 2.47 percent, in the third quarter of 2009. Net loan charge-offs for the full-year 2009 were $225.9 million, or 1.84 percent of total loans and leases. This compares with $68.5 million, or 0.57 percent, in 2008.
At December 31, 2009, nonperforming assets amounted to $442.0 million, or 3.62 percent of the company's total loans and leases. They were up from $222.5 million, or 1.79 percent, at the end of 2008 but down from $452.2 million, or 3.70 percent, at September 30, 2009. Nonaccrual loans at year-end 2009 were $388.7 million, up from $211.1 million at the end of 2008, but down from $408.3 million at September 30, 2009.
Period- As of As of As of
end Loans December 31, 2009 September 30, 2009 December 31, 2008
(in ------------------- ------------------- -------------------
millions) Total Nonaccrual Total Nonaccrual Total Nonaccrual
---------- --------- --------- --------- --------- --------- ---------
Commercial
Loans $ 4,709.7 $ 82.0 $ 4,594.7 $ 90.7 $ 4,783.6 $ 46.2
Commercial
R.E
Mortgages 2,161.4 76.0 2,164.4 60.8 2,184.7 8.9
Residential
Mortgages 3,533.4 15.5 3,541.5 13.0 3,414.9 3.2
Real Estate
Construction
Loans 835.6 202.6 999.0 233.9 1,252.0 149.5
Equity Lines
of Credit 734.2 3.4 694.7 2.5 635.3 1.9
Other Loans 172.6 9.2 174.2 7.4 173.8 1.4
--------- --------- --------- --------- --------- ---------
Total
Loans
(1) $12,146.9 $ 388.7 $12,168.5 $ 408.3 $12,444.3 $ 211.1
Other Real
Estate
Owned(1) 53.3 43.9 11.4
Total
Non-
performing
Assets,
excluding
Covered --------- --------- ---------
Assets $ 442.0 $ 452.2 $ 222.5
========= ========= =========
(1) Excludes covered loans of $1.8 billion and covered other real
estate owned of $60.6 million at December 31, 2009.
City National's fourth-quarter provision of $80 million brought total provisions for the year to $285 million. The fourth-quarter provision added $21.3 million, after net charge-offs, to the company's allowance for loan and lease losses. City National recorded provisions of $40 million in the fourth quarter of 2008 and $85 million in the third quarter of 2009.
At December 31, 2009, City National's allowance for loan and lease losses increased to $288.5 million, or 2.38 percent of total loans and leases. That compares with $224.0 million, or 1.80 percent, at the end of 2008 and $265.0 million, or 2.18 percent, at September 30, 2009. The company also maintains an additional $17.3 million in reserves for off-balance-sheet credit commitments.
City National's provision reflects management's continuing assessment of the loan portfolio's credit quality, which is affected by a broad range of economic factors. Additional factors affecting the provision include net loan charge-offs, nonaccrual loans, specific reserves, risk-rating migration and changes in the portfolio size.
Commercial Loans
Commercial loans accounted for $23.1 million of City National's net charge-offs in the fourth quarter of 2009, up from $12.1 million in the year-earlier period, but down from $28.9 million in the third quarter of 2009. Full-year net charge-offs of commercial loans amounted $87.7 million, up from $23.2 million in 2008.
Commercial loans on nonaccrual totaled $82.0 million at December 31, 2009, compared to $46.2 million at the end of 2008, and $90.7 million at September 30, 2009. About 57 percent of commercial nonaccruals are tied to companies in the real estate industry. The remaining loans are not concentrated in any particular industry.
Construction Loans
City National's $835.6 million commercial real estate construction portfolio includes loans to developers of residential and nonresidential properties. This portfolio has been reduced 33 percent since December 31, 2008. The residential sector has shown signs of improvement with modest value increases and growth in sales activity through 2009. The commercial sector continues to exhibit weakness, as evidenced by reductions in values, and lease and sales activity.
Fourth-quarter net charge-offs of construction loans were $27.6 million, up from $12.3 million in the fourth quarter of 2008, but down from $42.7 million in the third quarter of 2009. Full-year 2009 net charge-offs of construction loans were $120.5 million, up from $43.8 million in 2008. At year-end 2009, construction loans on nonaccrual totaled $202.6 million, up from $149.5 million at the end of 2008, but down from $233.8 million at September 30, 2009.
Nonresidential construction loans amounted to $649 million at December 31, 2009, down from $896 million at the end of 2008 and $759 million at September 30, 2009. Fourth-quarter 2009 net charge-offs totaled $10.3 million, up from $6.8 million in the fourth quarter of 2008 but down from $30.5 million in the third quarter of 2009. Full-year net charge-offs amounted to $62.7 million, up from $12.2 million in 2008. Those on nonaccrual were $148 million, up from $29 million at the end of 2008 and $137 million at September 30, 2009.
At December 31, 2009, loans to homebuilders totaled $264 million, down from $306 million in the third quarter of 2009. These loans now equal 2.2 percent of City National's $12.1 billion loan portfolio, excluding assets covered by the FDIC loss-sharing agreement. (The company's portfolio of loans to homebuilders includes $73.4 million of loans in the bank's commercial loan portfolio.) Loans to homebuilders accounted for 27 percent of all construction loans on nonaccrual at the end of 2009 and 29 percent of fourth-quarter 2009 net charge-offs.
Commercial Real Estate Mortgages
Fourth-quarter net charge-offs in the company's $2.2 billion commercial real estate mortgage portfolio were $5.3 million, compared with zero net charge-offs in the fourth quarter of 2008 and $3.4 million in the third quarter of 2009. Full-year 2009 net charge-offs were $8.7 million, up from $0.6 million in 2008. Commercial real estate mortgage loans on nonaccrual totaled $76.0 million at the end of 2009, compared with $8.9 million at the end of 2008 and $60.8 million at September 30, 2009. The increase in nonaccrual loans in the fourth quarter of 2009 is tied primarily to apartment building loans.
Residential Mortgage and Equity Lines of Credit
City National's $3.5 billion residential mortgage portfolio and $734 million home-equity portfolio both continued to perform well. Fourth-quarter net charge-offs were $1.2 million, up from net recoveries of $37,000 in the fourth quarter of 2008 and net charge-offs of $1.1 million the third quarter of 2009. Full-year net charge-offs were $4.4 million, compared with net recoveries of $63,000 in 2008. Nonaccrual loans totaled $18.9 million at the end of 2009, compared with $5.1 million at year-end 2008 and $15.5 million in the third quarter of 2009.
The average loan-to-value ratios at origination for the residential mortgage and home-equity portfolios are 49 percent and 44 percent, respectively. City National does not originate or purchase subprime or option adjustable rate mortgages, and none of its loans has been originated through brokers or third parties.
INCOME TAXES
The company recorded a tax provision of $4.4 million in the fourth quarter of 2009, compared to a tax benefit of $7.0 million for the third quarter of the year. The full-year 2009 results reflect a tax benefit of $1.9 million for the year, which was primarily attributable to an updated effective tax rate based on lower expected income for the year. The company's effective tax rate for 2008 was 27.5 percent.
CAPITAL LEVELS
City National continued to strengthen its balance sheet in 2009, raising a total of $550 million in Tier 1 and Tier 2 capital:
* On December 8, 2009, the company raised $250 million in Tier 1 capital through a successful trust preferred securities offering. * In the third quarter of the year, City National completed the sale of $180 million in subordinated debt, which qualifies as Tier 2 capital for regulatory purposes. * The company's second-quarter common equity offering raised $120 million of Tier 1 capital.
Total risk-based capital and Tier 1 risk-based capital ratios at December 31, 2009 were 15.2 percent and 12.2 percent, respectively, compared with the minimum regulatory standards of 10.0 percent and 6.0 percent for "well-capitalized" institutions. City National's Tier 1 leverage ratio at December 31, 2009 was 9.5 percent, compared with the regulatory minimum ratio of 5.0 percent.
Total risk-based capital, Tier 1 risk-based capital and the Tier 1 leverage ratios at December 31, 2008 were 13.4 percent, 11.7 percent and 10.4 percent, respectively.
The period-end ratio of shareholders' equity to total assets at December 31, 2009 was 9.6 percent, compared to 12.3 percent at December 31, 2008 and 12.1 percent at September 30, 2009, due to the year-end acquisition of Imperial Capital Bank and its $3.3 billion in assets.
2010 OUTLOOK
While business conditions remain challenging, City National's management anticipates increased profitability in 2010. Asset quality has recently shown signs of improvement, and the company expects net charge-offs to gradually subside this year, though OREO expense will increase from 2009. City National expects interest rates to remain low as the economy continues its slow recovery.
(1) For notes on non-GAAP measures, see page 13 of the Selected
Financial Information.
CONFERENCE CALL
City National Corporation will host a conference call this afternoon to discuss 2009 financial results. The call will begin at 2:00 p.m. PST. 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 48818548. A listen-only live broadcast of the call also will be available on the investor relations page of the company's Website at www.cnb.com. There, it will be archived and available for 12 months.
ABOUT CITY NATIONAL
City National Corporation's wholly owned subsidiary, City National Bank, provides banking, investment and trust services through offices in Southern California, the San Francisco Bay Area, Nevada and New York City. City National and its seven consolidated investment affiliates manage or administer $55.1 billion in client assets, including more than $35 billion under direct management.
For more information about City National, visit the company's Website at www.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.
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) local, regional and international business, economic and political conditions, (2) volatility and disruption in financial markets, including capital and credit markets, (3) significant changes in banking laws or regulations, including without limitation, broad-based restructuring of financial industry regulation and as a result of the Emergency Economic Stabilization Act and the creation of, and amendments to, the Troubled Asset Relief Program (TARP), and rules and regulations issued thereunder, including the TARP Standards for Compensation and Corporate Governance, (4) increases and required prepayments in Federal Deposit Insurance Corporation premiums and special federal assessments on financial institutions due to market developments and regulatory changes, (5) changes in the level of nonperforming assets, charge-offs and provision expense, (6) changes in inflation, interest rates, and market liquidity which may impact interest margins and impact funding sources, (7) adequacy of the company's risk management framework, (8) company's ability to increase market share and control expenses, (9) company's ability to attract new employees and retain and motivate existing employees, (10) increased competition in the company's markets, (11) changes in the financial performance and/or condition of the company's borrowers, including changes in levels of unemployment, changes in customers' suppliers, and other counterparties' performance and creditworthiness, (12) 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, (13) changes in consumer spending, borrowing and savings habits, (14) soundness of other financial institutions which could adversely affect the company, (15) protracted labor disputes in the company's markets, (16) earthquake, fire or other natural disasters affecting the condition of real estate collateral, (17) the effect of acquisitions and integration of acquired businesses and de novo branching efforts, (18) the impact of changes in regulatory, judicial or legislative tax treatment of business transactions, (19) changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies, and (20) 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, see the company's Annual Report on Form 10-K for the year ended December 31, 2008 and particularly Part I, Item 1A, titled "Risk Factors."
CITY NATIONAL CORPORATION
FINANCIAL HIGHLIGHTS
(unaudited)
Three Months Twelve Months
----------------------- -----------------------
For The Period Ended % %
December 31, 2009 2008 Change 2009 2008 Change
-------------------------------------------- -----------------------
Per Common Share
Net income
available to
common
shareholders
Basic $ 0.38 $ 0.13 192 $ 0.50 $ 2.12 (76)
Diluted 0.38 0.13 192 0.50 2.11 (76)
Dividends 0.10 0.48 (79) 0.55 1.92 (71)
Book value 34.74 33.52 4
Results of
Operations:
(In millions)
Interest income $ 184 $ 188 (2) $ 710 $ 785 (10)
Interest expense 21 39 (46) 85 185 (54)
------- ------- ------- -------
Net interest
income 163 149 10 625 600 4
Net interest
income (Fully
taxable-
equivalent) 167 153 9 639 616 4
Total revenue 273 204 34 915 867 6
Provision for
credit losses 80 40 100 285 127 124
Net income
attributable to
City National
Corporation 29 9 225 51 105 (51)
Net income
available to
common
shareholders 20 6 203 25 103 (75)
Financial Ratios:
Performance
Ratios:
Return on
average assets 0.60% 0.22% 0.29% 0.65%
Return on
average common
shareholders'
equity 4.27 1.60 1.46 6.26
Period-end
equity to
period-end
assets 9.55 12.34
Net interest
margin 3.74 4.09 3.91 4.20
Expense to
revenue ratio 56.46 77.11 61.76 66.80
Capital Adequacy
Ratios
(Period-end):
Tier 1 leverage 9.48 10.44
Tier 1 risk-
based capital 12.20 11.71
Total risk-based
capital 15.15 13.40
Asset Quality
Ratios:
Allowance for
loan and lease
losses to:
Total loans and
leases,
excluding
covered assets 2.38% 1.80%
Nonaccrual loans 74.22 106.11
Nonperforming
assets to:
Total loans and
leases and other
real estate
owned, excluding
covered assets 3.62 1.79
Total assets 2.10 1.35
Net charge-offs
to average total
loans and
leases,
excluding
covered assets
(annualized) (1.93)% (0.79)% (1.84)% (0.57)%
Average Balances:
(In millions)
Loans and leases,
excluding
covered assets $12,100 $12,371 (2) $12,297 $12,089 2
Covered assets 264 -- NM 66 -- NM
Interest-earning
assets 17,665 14,844 19 16,330 14,670 11
Assets 19,095 16,191 18 17,711 16,029 10
Core deposits 14,509 11,137 30 13,049 10,600 23
Deposits 15,730 12,639 24 14,352 11,900 21
Interest-bearing
liabilities 8,815 8,171 8 8,364 8,436 (1)
Common
shareholders'
equity 1,826 1,618 13 1,745 1,637 7
Total equity 2,241 1,818 23 2,161 1,706 27
Period-End
Balances :
(In millions)
Loans and leases,
excluding
covered assets $12,147 $12,444 (2)
Covered assets 1,852 -- NM
Assets 21,079 16,456 28
Core deposits 15,729 11,210 40
Deposits 17,379 12,652 37
Common
shareholders'
equity 1,790 1,615 11
Total equity 2,013 2,030 (1)
Wealth Management:
(In millions)
(1)(2)
Assets under
management $35,239 $30,782 14
Assets under
management or
administration 55,119 47,520 16
(1) Excludes $11.5 billion and $4.7 billion of assets under
management for an asset manager in which City National held a
noncontrolling ownership interest as of December 31, 2009 and
December 31, 2008, respectively.
(2) Excludes $1.9 billion of assets under management or administration
as of December 31, 2009 for an asset manager that City National
deconsolidated effective November 1, 2009.
Note: Certain prior period balances have been reclassified to
conform to current period presentation.
CITY NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
(Dollars in ------------------------ ------------------------
thousands except % %
per share data) 2009 2008 Change 2009 2008 Change
------------------- ------------------------ ------------------------
Interest income $184,014 $187,623 (2) $709,800 $784,688 (10)
Interest expense 21,052 38,864 (46) 85,024 184,792 (54)
-------- -------- -------- --------
Net Interest
Income 162,962 148,759 10 624,776 599,896 4
Provision for
Credit Losses 80,000 40,000 100 285,000 127,000 124
Noninterest Income
Trust and
investment fees 33,720 28,221 19 117,062 132,214 (11)
Brokerage and
mutual fund fees 5,489 17,845 (69) 27,932 73,446 (62)
Cash management
and deposit
transaction fees 12,526 12,595 (1) 51,669 48,307 7
International
services 8,591 8,384 2 31,007 32,449 (4)
Bank-owned life
insurance 680 645 5 3,053 2,752 11
Gain (loss) on
securities 8,397 (18,871) 144 (2,159) (50,791) (96)
Gain on
acquisition 38,206 -- NM 38,206 -- NM
Other 2,509 6,807 (63) 23,745 28,607 (17)
-------- -------- -------- --------
Total
noninterest
income 110,118 55,626 98 290,515 266,984 9
Noninterest
Expense
Salaries and
employee benefits 85,926 89,943 (4) 320,949 357,015 (10)
Net occupancy of
premises 12,990 12,821 1 50,423 49,514 2
Legal and
professional fees 12,323 8,419 46 36,337 32,842 11
Information
services 7,021 7,799 (10) 27,835 26,969 3
Depreciation and
amortization 7,802 5,737 36 26,219 22,201 18
Amortization of
intangibles 2,120 11,541 (82) 7,357 17,738 (59)
Marketing and
advertising 6,092 6,289 (3) 20,126 22,897 (12)
Office services
and equipment 3,859 4,080 (5) 14,995 15,548 (4)
FDIC assessments 5,816 1,883 209 28,053 6,242 349
Other 15,295 11,466 33 47,834 36,797 30
-------- -------- -------- --------
Total
noninterest
expense 159,244 159,978 (0) 580,128 587,763 (1)
-------- -------- -------- --------
Income Before Taxes 33,836 4,407 668 50,163 152,117 (67)
Applicable Income
Taxes 4,434 (3,177) (240) (1,886) 41,783 105)
-------- -------- -------- --------
Net Income $ 29,402 $ 7,584 288 $ 52,049 $110,334 (53)
-------- -------- -------- --------
Less: Net income
(loss)
attributable to
noncontrolling
interest 335 (1,350) (125) 710 5,378 (87)
-------- -------- -------- --------
Net income
attributable to
City National
Corporation $ 29,067 $ 8,934 225 $ 51,339 $104,956 (51)
-------- -------- -------- --------
Less: Dividends
and accretion on
preferred stock 9,399 2,445 284 25,903 2,445 959
-------- -------- -------- --------
Net income
available to
common
shareholders $ 19,668 $ 6,489 203 $ 25,436 $102,511 (75)
======== ======== ======== ========
Other Data:
Earnings per
common share -
basic (1) $ 0.38 $ 0.13 192 $ 0.50 $ 2.12 (76)
Earnings per
common share -
diluted $ 0.38 $ 0.13 192 $ 0.50 $ 2.11 (76)
Dividends paid
per common share $ 0.10 $ 0.48 (79) $ 0.55 $ 1.92 (71)
Common dividend
payout ratio 26.47% 358.52% (93) 107.80% 90.61% 19
Return on average
assets 0.60% 0.22% 173 0.29% 0.65% (55)
Return on average
common
shareholders'
equity 4.27% 1.60% 167 1.46% 6.26% (77)
Net interest
margin (Fully
taxable-
equivalent) 3.74% 4.09% (9) 3.91% 4.20% (7)
Full-time
equivalent
employees 3,017 2,989 1
(1) Basic EPS for certain prior periods have been restated as a
result of the adoption of ASC Section 260-10-55, Earnings Per
Share - Implementation (formerly FSP EITF 03-6-1 "Determining
Whether Instruments Granted in Share-Based Payment Transactions
are Participating Securities").
Note: Certain prior period balances have been reclassified to
conform to current period presentation.
CITY NATIONAL CORPORATION
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
(unaudited)
2009
(Dollars in ------------------------------------------------
thousands except Fourth Third Second First Year to
per share data) Quarter Quarter Quarter Quarter Date
----------------- -------- -------- -------- -------- --------
Interest income $184,014 $180,419 $175,876 $169,491 $709,800
Interest expense 21,052 19,078 20,300 24,594 85,024
-------- -------- -------- -------- --------
Net Interest Income 162,962 161,341 155,576 144,897 624,776
Provision for Credit
Losses 80,000 85,000 70,000 50,000 285,000
Noninterest Income
Trust and investment
fees 33,720 32,289 25,184 25,869 117,062
Brokerage and mutual
fund fees 5,489 6,041 6,645 9,757 27,932
Cash management and
deposit transaction
fees 12,526 13,142 12,778 13,223 51,669
International
services 8,591 7,895 7,996 6,525 31,007
Bank-owned life
insurance 680 639 871 863 3,053
Gain (loss) on
securities 8,397 2,667 1,744 (14,967) (2,159)
Gain on acquisition 38,206 -- -- -- 38,206
Other 2,509 6,172 9,039 6,025 23,745
-------- -------- -------- -------- --------
Total noninterest
income 110,118 68,845 64,257 47,295 290,515
Noninterest Expense
Salaries and
employee benefits 85,926 80,937 75,834 78,252 320,949
Net occupancy of
premises 12,990 12,613 12,559 12,261 50,423
Legal and
professional fees 12,323 8,545 7,736 7,733 36,337
Information services 7,021 7,342 6,992 6,480 27,835
Depreciation and
amortization 7,802 6,472 5,953 5,992 26,219
Amortization of
intangibles 2,120 1,726 1,668 1,843 7,357
Marketing and
advertising 6,092 4,615 4,743 4,676 20,126
Office services and
equipment 3,859 3,610 3,922 3,604 14,995
FDIC assessments 5,816 5,308 13,861 3,068 28,053
Other 15,295 12,597 10,866 9,076 47,834
-------- -------- -------- -------- --------
Total noninterest
expense 159,244 143,765 144,134 132,985 580,128
-------- -------- -------- -------- --------
Income Before Taxes 33,836 1,421 5,699 9,207 50,163
Applicable Income
Taxes 4,434 (6,966) (986) 1,632 (1,886)
-------- -------- -------- -------- --------
Net Income $ 29,402 $ 8,387 $ 6,685 $ 7,575 $ 52,049
-------- -------- -------- -------- --------
Less: Net income
(loss) attributable
to noncontrolling
interest 335 348 (88) 115 710
-------- -------- -------- -------- --------
Net income
attributable to
City National
Corporation $ 29,067 $ 8,039 $ 6,773 $ 7,460 $ 51,339
-------- -------- -------- -------- --------
Less: Dividends and
accretion on
preferred stock 9,399 5,502 5,501 5,501 25,903
-------- -------- -------- -------- --------
Net income available
to common
shareholders $ 19,668 $ 2,537 $ 1,272 $ 1,959 $ 25,436
======== ======== ======== ======== ========
Other Data:
Earnings per common
share - basic $ 0.38 $ 0.05 $ 0.02 $ 0.04 $ 0.50
Earnings per common
share - diluted $ 0.38 $ 0.05 $ 0.02 $ 0.04 $ 0.50
Dividends paid per
common share $ 0.10 $ 0.10 $ 0.10 $ 0.25 $ 0.55
Common dividend
payout ratio 26.47% 205.08% 383.66% 619.32% 107.80%
Return on average
assets 0.60% 0.18% 0.16% 0.18% 0.29%
Return on average
common
shareholders'
equity 4.27% 0.56% 0.29% 0.49% 1.46%
Net interest margin
(Fully taxable-
equivalent) 3.74% 3.94% 3.98% 4.00% 3.91%
Full-time equivalent
employees 3,017 2,891 2,866 2,933
Note: Certain prior period balances have been reclassified to
conform to current period presentation
CITY NATIONAL CORPORATION
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
(unaudited)
2008
(Dollars in ------------------------------------------------
thousands except Fourth Third Second First Year to
per share data) Quarter Quarter Quarter Quarter Date
------------------- -------- -------- -------- -------- --------
Interest income $187,623 $195,606 $193,707 $207,752 $784,688
Interest expense 38,864 42,802 43,539 59,587 184,792
-------- -------- -------- -------- --------
Net Interest Income 148,759 152,804 150,168 148,165 599,896
Provision for Credit
Losses 40,000 35,000 35,000 17,000 127,000
Noninterest Income
Trust and investment
fees 28,221 33,457 34,187 36,349 132,214
Brokerage and mutual
fund fees 17,845 19,470 18,709 17,422 73,446
Cash management and
deposit transaction
fees 12,595 12,392 12,196 11,124 48,307
International
services 8,384 8,202 8,176 7,687 32,449
Bank-owned life
insurance 645 824 628 655 2,752
(Loss) gain on
securities (18,871) (32,472) (417) 969 (50,791)
Other 6,807 8,205 7,985 5,610 28,607
-------- -------- -------- -------- --------
Total noninterest
income 55,626 50,078 81,464 79,816 266,984
Noninterest Expense
Salaries and
employee benefits 89,943 89,373 87,520 90,179 357,015
Net occupancy of
premises 12,821 12,719 12,462 11,512 49,514
Legal and
professional fees 8,419 8,332 7,531 8,560 32,842
Information services 7,799 6,576 6,388 6,206 26,969
Depreciation and
amortization 5,737 5,502 5,460 5,502 22,201
Amortization of
intangibles 11,541 2,238 1,528 2,431 17,738
Marketing and
advertising 6,289 5,653 5,360 5,595 22,897
Office services and
equipment 4,080 3,683 3,886 3,899 15,548
FDIC assessments 1,883 2,188 1,820 351 6,242
Other 11,466 9,933 8,546 6,852 36,797
-------- -------- -------- -------- --------
Total noninterest
expense 159,978 146,197 140,501 141,087 587,763
-------- -------- -------- -------- --------
Income Before Taxes 4,407 21,685 56,131 69,894 152,117
Applicable Income
Taxes (3,177) 3,974 18,385 22,601 41,783
-------- -------- -------- -------- --------
Net Income $ 7,584 $ 17,711 $ 37,746 $ 47,293 $110,334
-------- -------- -------- -------- --------
Less: Net (loss)
income attributable
to noncontrolling
interest (1,350) 1,160 2,262 3,306 5,378
-------- -------- -------- -------- --------
Net income
attributable to
City National
Corporation $ 8,934 $ 16,551 $ 35,484 $ 43,987 $104,956
-------- -------- -------- -------- --------
Less: Dividends and
accretion on
preferred stock 2,445 -- -- -- 2,445
-------- -------- -------- -------- --------
Net income available
to common
shareholders $ 6,489 $ 16,551 $ 35,484 $ 43,987 $102,511
======== ======== ======== ======== ========
Other Data:
Earnings per common
share - basic (1) $ 0.13 $ 0.34 $ 0.74 $ 0.91 $ 2.12
Earnings per common
share - diluted $ 0.13 $ 0.34 $ 0.73 $ 0.91 $ 2.11
Dividends paid per
common share $ 0.48 $ 0.48 $ 0.48 $ 0.48 $ 1.92
Common dividend
payout ratio 358.52% 140.24% 65.40% 52.75% 90.61%
Return on average
assets 0.22% 0.41% 0.89% 1.13% 0.65%
Return on average
common equity 1.60% 4.03% 8.65% 10.75% 6.26%
Net interest margin
(Fully taxable-
equivalent) 4.09% 4.23% 4.23% 4.26% 4.20%
Full-time equivalent
employees 2,989 3,027 3,013 2,959
(1) Basic EPS for certain prior periods have been restated as a
result of the adoption of ASC Section 260-10-55, Earnings Per
Share - Implementation (formerly FSP EITF 03-6-1 "Determining
Whether Instruments Granted in Share-Based Payment Transactions
are Participating Securities").
Note: Certain prior period balances have been reclassified to
conform to current period presentation.
CITY NATIONAL CORPORATION
CONSOLIDATED PERIOD END BALANCE SHEETS
(unaudited)
2009
--------------------------------------------------
Fourth Third Second First
(In thousands) Quarter Quarter Quarter Quarter
----------------- ----------- ----------- ----------- -----------
Assets
Cash and due from
banks $ 364,483 $ 348,958 $ 350,931 $ 378,289
Federal funds sold 5,000 240,000 125,000 12,300
Due from banks -
interest-bearing 443,443 767,362 205,656 140,484
Securities-
available-for-
sale 4,306,758 3,512,072 3,330,326 2,915,883
Trading securities 154,302 188,904 138,137 67,582
Loans and leases:
Commercial 4,709,667 4,594,683 4,764,755 4,708,627
Commercial real
estate mortgages 2,161,451 2,164,398 2,162,294 2,173,983
Residential
mortgages 3,533,453 3,541,534 3,511,598 3,413,538
Real estate
construction 835,589 999,045 1,116,154 1,189,594
Equity lines of
credit 734,182 694,660 691,226 651,127
Installment 172,566 174,170 175,315 168,245
----------- ----------- ----------- -----------
Loans and
leases,
excluding
covered assets 12,146,908 12,168,490 12,421,342 12,305,114
Covered assets 1,851,821 -- -- --
----------- ----------- ----------- -----------
Total loans and
leases 13,998,729 12,168,490 12,421,342 12,305,114
Allowance for
loan and lease
losses (288,493) (265,005) (256,018) (241,586)
----------- ----------- ----------- -----------
Net loans and
leases 13,710,236 11,903,485 12,165,324 12,063,528
Premises and
equipment, net 124,309 126,097 125,510 128,189
Goodwill and other
intangibles 525,583 533,367 496,562 498,194
Other real estate
owned ($60.6
million covered
by FDIC loss
share at
December 31,
2009) 113,866 43,969 18,064 12,639
FDIC
indemnification
asset 380,743 -- -- --
Other assets 950,034 736,390 705,275 716,442
----------- ----------- ----------- -----------
Total assets $21,078,757 $18,400,604 $17,660,785 $16,933,530
=========== =========== =========== ===========
Liabilities
Deposits:
Noninterest-
bearing $ 7,753,936 $ 7,441,898 $ 7,118,660 $ 6,611,752
Interest-bearing 9,625,512 7,666,545 7,379,591 7,077,798
----------- ----------- ----------- -----------
Total deposits 17,379,448 15,108,443 14,498,251 13,689,550
Federal funds
purchased and
securities sold
under repurchase
agreements 626,779 231,903 316,388 519,687
Other short-term
borrowed funds 690 720 50,000 28,405
Subordinated debt 340,137 341,587 162,434 164,296
Other long-term
debt 471,029 233,536 233,456 242,122
Other liabilities 196,529 216,026 189,588 199,863
----------- ----------- ----------- -----------
Total liabilities 19,014,612 16,132,215 15,450,117 14,843,923
Redeemable
noncontrolling
interest 51,381 49,897 36,752 40,237
Equity
City National
Corporation
shareholders'
equity:
Preferred stock 196,048 391,593 391,091 390,590
Common stock 53,886 53,886 53,886 50,961
Additional
paid-in capital 513,550 514,904 511,939 393,114
Retained earnings 1,377,639 1,363,176 1,365,842 1,369,451
Accumulated other
comprehensive
income (loss) (3,049) 24,329 (18,110) (23,093)
Treasury shares (151,751) (154,245) (156,119) (157,094)
----------- ----------- ----------- -----------
Total common
shareholders'
equity 1,790,275 1,802,050 1,757,438 1,633,339
----------- ----------- ----------- -----------
Total
shareholders'
equity 1,986,323 2,193,643 2,148,529 2,023,929
Noncontrolling
interest 26,441 24,849 25,387 25,441
----------- ----------- ----------- -----------
Total equity 2,012,764 2,218,492 2,173,916 2,049,370
----------- ----------- ----------- -----------
Total
liabilities
and equity $21,078,757 $18,400,604 $17,660,785 $16,933,530
=========== =========== =========== ===========
Note: Certain prior period balances have been reclassified to
conform to current period presentation.
CITY NATIONAL CORPORATION
CONSOLIDATED PERIOD END BALANCE SHEETS
(unaudited)
2008
--------------------------------------------------
Fourth Third Second First
(In thousands) Quarter Quarter Quarter Quarter
----------------- ----------- ----------- ----------- -----------
Assets
Cash and due from
banks $ 279,921 $ 428,557 $ 513,736 $ 514,878
Federal funds sold -- -- -- 1,000
Due from banks -
interest-bearing 144,344 95,993 88,149 77,567
Securities-
available-for-
sale 2,144,870 2,159,918 2,302,982 2,389,459
Trading securities 295,598 310,251 204,825 121,152
Loans and leases:
Commercial 4,783,565 4,746,035 4,703,307 4,442,448
Commercial real
estate mortgages 2,184,688 2,159,101 2,016,090 2,011,221
Residential
mortgages 3,414,868 3,364,332 3,319,741 3,215,871
Real estate
construction 1,252,034 1,313,735 1,483,193 1,462,641
Equity lines of
credit 635,325 540,937 495,334 449,177
Installment 173,779 154,377 160,665 173,507
----------- ----------- ----------- -----------
Total loans and
leases 12,444,259 12,278,517 12,178,330 11,754,865
Allowance for
loan and lease
losses (224,046) (208,046) (185,070) (168,278)
----------- ----------- ----------- -----------
Net loans and
leases 12,220,213 12,070,471 11,993,260 11,586,587
Premises and
equipment, net 131,294 127,361 122,959 119,243
Goodwill and other
intangibles 500,037 512,297 514,584 514,811
Other real estate
owned 11,388 2,279 9,113 3,812
Other assets 727,850 623,741 589,650 605,523
----------- ----------- ----------- -----------
Total assets $16,455,515 $16,330,868 $16,339,258 $15,934,032
=========== =========== =========== ===========
Liabilities
Deposits:
Noninterest-
bearing $ 6,140,619 $ 5,744,863 $ 5,861,823 $ 5,680,845
Interest-bearing 6,511,505 6,422,797 6,034,514 6,111,524
----------- ----------- ----------- -----------
Total deposits 12,652,124 12,167,660 11,896,337 11,792,369
Federal funds
purchased and
securities sold
under repurchase
agreements 908,157 1,272,359 1,221,428 1,118,478
Other short-term
borrowed funds 124,500 630,673 955,000 720,992
Subordinated debt 161,595 157,769 157,080 162,813
Other long-term
debt 246,554 231,321 237,867 243,439
Other liabilities 287,340 170,686 171,598 181,414
----------- ----------- ----------- -----------
Total liabilities 14,380,270 14,630,468 14,639,310 14,219,505
Redeemable
noncontrolling
interest 44,811 52,556 59,234 50,216
Equity
City National
Corporation
shareholders'
equity:
Preferred stock 390,089 -- -- --
Common stock 50,961 50,966 50,972 50,982
Additional
paid-in capital 389,077 371,279 369,045 375,374
Retained earnings 1,379,624 1,396,400 1,403,062 1,390,781
Accumulated other
comprehensive
loss (48,022) (38,071) (24,853) (3,431)
Treasury shares (156,736) (158,193) (183,222) (175,048)
----------- ----------- ----------- -----------
Total common
shareholders'
equity 1,614,904 1,622,381 1,615,004 1,638,658
----------- ----------- ----------- -----------
Total
shareholders'
equity 2,004,993 1,622,381 1,615,004 1,638,658
Noncontrolling
interest 25,441 25,463 25,710 25,653
----------- ----------- ----------- -----------
Total equity 2,030,434 1,647,844 1,640,714 1,664,311
----------- ----------- ----------- -----------
Total
liabilities
and equity $16,455,515 $16,330,868 $16,339,258 $15,934,032
=========== =========== =========== ===========
Note: Certain prior period balances have been reclassified to
conform to current period presentation.
CITY NATIONAL CORPORATION
CREDIT LOSS EXPERIENCE
(unaudited)
2009
------------------------------------------------
(Dollars in Fourth Third Second First Year To
thousands) Quarter Quarter Quarter Quarter Date
------------------- -------- -------- -------- -------- --------
Allowance for Loan
and Lease Losses
(1)
Balance at
beginning
of period $265,005 $256,018 $241,586 $224,046 $224,046
Net (charge-offs)/
recoveries:
Commercial (23,088) (28,852) (17,283) (18,459) (87,682)
Commercial real
estate mortgages (5,291) (3,372) -- -- (8,663)
Residential
mortgages (625) (682) (731) (367) (2,405)
Real estate
construction (27,562) (42,651) (36,189) (14,049) 120,451)
Equity lines of
credit (550) (387) (1,039) (38) (2,014)
Installment (1,632) (915) (1,448) (706) (4,701)
-------- -------- -------- -------- --------
Total net
(charge-offs)/
recoveries (58,748) (76,859) (56,690) (33,619) (225,916)
Provision for
credit losses 80,000 85,000 70,000 50,000 285,000
Transfers from
(to) reserve for
off-balance sheet
credit
commitments 2,236 846 1,122 1,159 5,363
-------- -------- -------- -------- --------
Balance at end of
period $288,493 $265,005 $256,018 $241,586 $288,493
======== ======== ======== ======== ========
Net (Charge-Offs)/
Recoveries to
Average Total
Loans and Leases,
Excluding Covered
Assets:
(annualized)
Commercial (1.99)% (2.42)% (1.47)% (1.57)% (1.87)%
Commercial real
estate mortgages (0.97)% (0.62)% 0.00 % 0.00 % (0.40)%
Residential
mortgage (0.07)% (0.08)% (0.08)% (0.04)% (0.07)%
Real estate
construction (11.92)% (15.68)% (12.59)% (4.63)% (11.01)%
Equity lines of
credit (0.31)% (0.22)% (0.62)% (0.02)% (0.30)%
Installment (3.74)% (2.05)% (3.33)% (1.67)% (2.70)%
Total loans and
leases,
excluding
covered assets (1.93)% (2.47)% (1.84)% (1.10)% (1.84)%
Reserve for Off-
Balance Sheet
Credit
Commitments
Balance at
beginning of
period $ 19,576 $ 20,422 $ 21,544 $ 22,703 $ 22,703
Recovery of prior
charge-off -- -- -- -- --
Transfers (to)
from allowance (2,236) (846) (1,122) (1,159) (5,363)
-------- -------- -------- -------- --------
Balance at end of
period $ 17,340 $ 19,576 $ 20,422 $ 21,544 $ 17,340
======== ======== ======== ======== ========
2008
------------------------------------------------
(Dollars in Fourth Third Second First Year To
thousands) Quarter Quarter Quarter Quarter Date
------------------- -------- -------- -------- -------- --------
Allowance for Loan
and Lease Losses
(1)
Balance at
beginning of
period $208,046 $185,070 $168,278 $168,523 $168,523
Net (charge-offs)/
recoveries:
Commercial (12,123) (4,331) (5,195) (1,574) (23,223)
Commercial real
estate mortgages -- -- -- (552) (552)
Residential
mortgages 37 8 10 8 63
Real estate
construction (12,279) (8,370) (13,196) (9,905) (43,750)
Equity lines of
credit -- -- -- -- --
Installment (316) (101) (535) (64) (1,016)
-------- -------- -------- -------- --------
Total net
(charge-offs)/
recoveries (24,681) (12,794) (18,916) (12,087) (68,478)
Provision for
credit losses 40,000 35,000 35,000 17,000 127,000
Transfers from (to)
reserve for off-
balance sheet
credit commitments 681 770 708 (5,158) (2,999)
-------- -------- -------- -------- --------
Balance at end of
period $224,046 $208,046 $185,070 $168,278 $224,046
======== ======== ======== ======== ========
Net (Charge-Offs)/
Recoveries to
Average Total
Loans and Leases,
Excluding Covered
Assets:
(annualized)
Commercial (1.01)% (0.36)% (0.45)% (0.14)% (0.50)%
Commercial real
estate mortgages 0.00 % 0.00 % 0.00 % (0.11)% (0.03)%
Residential
mortgage 0.00 % 0.00 % 0.00 % 0.00 % 0.00 %
Real estate
construction (3.79)% (2.37)% (3.61)% (2.72)% (3.11)%
Equity lines of
credit 0.00 % 0.00 % 0.00 % 0.00 % 0.00 %
Installment (0.76)% (0.26)% (1.32)% (0.15)% (0.61)%
Total loans and
leases, excluding
covered assets (0.79)% (0.42)% (0.63)% (0.42)% (0.57)%
Reserve for Off-
Balance Sheet
Credit Commitments
Balance at
beginning of
period $ 23,384 $ 24,154 $ 24,862 $ 19,704 $ 19,704
Recovery of prior
charge-off -- -- -- -- --
Transfers (to) from
allowance (681) (770) (708) 5,158 2,999
-------- -------- -------- -------- --------
Balance at end of
period $ 22,703 $ 23,384 $ 24,154 $ 24,862 $ 22,703
======== ======== ======== ======== ========
(1) Allowance for loan and lease losses relates to total loans and
leases, excluding covered assets.
Note: Certain prior period balances have been reclassified to
conform to current period presentation.
CITY NATIONAL CORPORATION
NONPERFORMING ASSETS
(unaudited)
2009
--------------------------------------
Fourth Third Second First
(Dollars in thousands) Quarter Quarter Quarter Quarter
------------------------------ -------- -------- -------- --------
Nonaccrual loans
Commercial $ 81,989 $ 90,744 $ 80,372 $ 56,246
Commercial real estate
mortgages 76,027 60,833 36,112 16,923
Residential mortgages 15,488 12,961 17,262 13,270
Real estate construction 202,605 233,848 237,828 223,416
Equity lines of credit 3,422 2,507 2,919 2,432
Installment 9,176 7,373 3,768 1,354
-------- -------- -------- --------
Total nonaccrual loans 388,707 408,266 378,261 313,641
Other real estate owned 53,308 43,969 18,064 12,639
-------- -------- -------- --------
Total nonperforming assets,
excluding covered assets $442,015 $452,235 $396,325 $326,280
======== ======== ======== ========
Covered assets (other real
estate owned) $ 60,558 $ -- $ -- $ --
Loans 90 days or more past due
on accrual status, excluding
covered assets $ 5,689 $ 10,395 $ -- $ 16,261
Covered assets 90 days or more
past due on accrual status $173,309 $ -- $ -- $ --
Allowance for loan and lease
losses as a percentage of:
Nonaccrual loans 74.22% 64.91% 67.68% 77.03%
Total nonperforming assets,
excluding covered assets 65.27% 58.60% 64.60% 74.04%
Total loans and leases,
excluding covered assets 2.38% 2.18% 2.06% 1.96%
Nonaccrual loans as a
percentage of total loans,
excluding covered assets 3.20% 3.36% 3.05% 2.55%
Nonperforming assets,
excluding covered assets as a
percentage of:
Total loans and other real
estate owned, excluding
covered assets 3.62% 3.70% 3.19% 2.65%
Total assets 2.10% 2.46% 2.24% 1.93%
2008
--------------------------------------
Fourth Third Second First
(Dollars in thousands) Quarter Quarter Quarter Quarter
----------------------------- -------- -------- -------- --------
Nonaccrual loans
Commercial $ 46,238 $ 26,184 $ 16,444 $ 16,293
Commercial real estate
mortgages 8,924 5,878 5,903 1,841
Residential mortgages 3,171 266 549 706
Real estate construction 149,536 113,288 81,120 93,296
Equity lines of credit 1,921 1,380 1,398 1,422
Installment 1,352 3,890 763 64
-------- -------- -------- --------
Total nonaccrual loans 211,142 150,886 106,177 113,622
Other real estate owned 11,388 2,279 9,113 3,812
-------- -------- -------- --------
Total nonperforming assets,
excluding covered assets $222,530 $153,165 $115,290 $117,434
======== ======== ======== ========
Covered assets (other real
estate owned) $ -- $ -- $ -- $ --
Loans 90 days or more past due
on accrual status, excluding
covered assets $ 663 $ 4,930 $ 2 $ 13
Covered assets 90 days or more
past due on accrual status $ -- $ -- $ -- $ --
Allowance for loan and lease
losses as a percentage of:
Nonaccrual loans 106.11% 137.88% 174.30% 148.10%
Total nonperforming assets,
excluding covered assets 100.68% 135.83% 160.53% 143.30%
Total loans and leases,
excluding covered assets 1.80% 1.69% 1.52% 1.43%
Nonaccrual loans as a
percentage of total loans,
excluding covered assets 1.70% 1.23% 0.87% 0.97%
Nonperforming assets, excluding
covered assets as a percentage
of:
Total loans and other real
estate owned, excluding
covered assets 1.79% 1.25% 0.95% 1.00%
Total assets 1.35% 0.94% 0.71% 0.74%
CITY NATIONAL CORPORATION
AVERAGE BALANCES AND RATES
(unaudited)
2009
----------------------------------------------------
Fourth Quarter Third Quarter Second Quarter
---------------- ---------------- ----------------
(Dollars in Average Average Average Average Average Average
millions) Balance Rate Balance Rate Balance Rate
---------------- ------- ------- ------- ------- ------- -------
Assets
Interest-earning
assets
Loans and leases
Commercial $ 4,607 4.30% $ 4,724 4.26% $ 4,721 4.21%
Commercial real
estate
mortgages 2,163 5.47 2,144 5.49 2,178 5.69
Residential
mortgages 3,534 5.56 3,528 5.50 3,454 5.51
Real estate
construction 917 3.88 1,079 3.58 1,153 3.04
Equity lines of
credit 706 3.52 687 3.51 674 3.46
Installment 173 5.10 177 5.08 174 5.05
------- ------- -------
Total loans
and leases,
excluding
covered
assets 12,100 4.80 12,339 4.72 12,354 4.70
Covered assets 264 6.10 -- 0.00 -- 0.00
------- ------- -------
Total loans
and leases 12,364 4.83 12,339 4.72 12,354 4.70
Due from banks -
interest-
bearing 906 0.34 204 0.50 195 0.60
Federal funds
sold and
securities
purchased under
resale
agreements 375 0.13 338 0.15 15 0.23
Securities
available-for-
sale 3,804 3.62 3,560 4.03 3,252 4.08
Trading
securities 74 1.95 71 0.18 112 1.36
FDIC
indemnification
asset 58 4.96 -- 0.00 -- 0.00
Other interest-
earning
assets 84 3.48 76 3.76 75 3.45
------- ------- -------
Total
interest-
earning
assets 17,665 4.21 16,588 4.40 16,003 4.49
Allowance for
loan and lease
losses (276) (260) (246)
Cash and due
from banks 313 308 324
Other
non-earning
assets 1,393 1,302 1,288
------- ------- -------
Total assets $19,095 $17,938 $17,369
======= ======= =======
Liabilities and
Equity
Interest-bearing
deposits
Interest
checking
accounts $ 2,027 0.21% $ 1,637 0.25% $ 1,388 0.29%
Money market
accounts 4,093 0.64 4,232 0.66 4,111 0.86
Savings deposits 306 0.63 262 0.64 222 0.74
Time deposits -
under $100,000 293 0.81 211 1.05 221 1.42
Time deposits -
$100,000 and
over 1,221 1.04 1,221 1.24 1,311 1.56
------- ------- -------
Total interest-
bearing
deposits 7,940 0.60 7,563 0.67 7,253 0.89
Federal funds
purchased and
securities sold
under
repurchase
agreements 236 3.38 234 3.41 472 1.77
Other borrowings 639 4.41 511 3.27 494 1.75
------- ------- -------
Total interest-
bearing
liabilities 8,815 0.95 8,308 0.91 8,219 0.99
Noninterest-
bearing deposits 7,790 7,214 6,770
Other liabilities 249 212 234
Total equity 2,241 2,204 2,146
------- ------- -------
Total
liabilities
and equity $19,095 $17,938 $17,369
======= ======= =======
Net interest
spread 3.26% 3.49% 3.50%
======= ======= =======
Net interest
margin 3.74% 3.94% 3.98%
======= ======= =======
Average prime rate 3.25% 3.25% 3.25%
======= ======= =======
2009
----------------------------------
First Quarter Year to Date
---------------- ----------------
Average Average Average Average
(Dollars in millions) Balance Rate Balance Rate
---------------------------------- ------- ------- ------- -------
Assets
Interest-earning assets
Loans and leases
Commercial $ 4,756 4.22% $ 4,702 4.25%
Commercial real estate mortgages 2,200 5.74 2,171 5.60
Residential mortgages 3,406 5.58 3,481 5.54
Real estate construction 1,232 3.20 1,094 3.40
Equity lines of credit 630 3.39 675 3.47
Installment 171 5.12 174 5.09
------- -------
Total loans and leases,
excluding covered assets 12,395 4.75 12,297 4.74
Covered assets -- 0.00 66 6.10
------- -------
Total loans and leases 12,395 4.75 12,363 4.75
Due from banks - interest-bearing 134 0.47 362 0.41
Federal funds sold and securities
purchased under resale agreements 11 0.24 186 0.14
Securities available-for-sale 2,302 4.65 3,234 4.03
Trading securities 115 0.19 93 0.89
FDIC indemnification asset -- 0.00 15 4.96
Other interest-earning assets 76 3.48 77 3.54
------- -------
Total interest-earning assets 15,033 4.67 16,330 4.43
Allowance for loan and lease
losses (236) (255)
Cash and due from banks 335 320
Other non-earning assets 1,279 1,316
------- -------
Total assets $16,411 $17,711
======= =======
Liabilities and Equity
Interest-bearing deposits
Interest checking accounts $ 1,098 0.32% $ 1,541 0.26%
Money market accounts 3,897 1.01 4,084 0.79
Savings deposits 166 0.65 239 0.66
Time deposits - under $100,000 234 2.22 240 1.34
Time deposits - $100,000 and over 1,463 2.06 1,303 1.50
------- -------
Total interest-bearing deposits 6,858 1.16 7,407 0.82
Federal funds purchased and
securities sold under repurchase
agreements 723 1.22 415 2.00
Other borrowings 526 2.20 542 3.01
------- -------
Total interest-bearing
liabilities 8,107 1.23 8,364 1.02
Noninterest-bearing deposits 5,983 6,945
Other liabilities 271 241
Total equity 2,050 2,161
------- -------
Total liabilities and equity $16,411 $17,711
======= =======
Net interest spread 3.44% 3.41%
======= =======
Net interest margin 4.00% 3.91%
======= =======
Average prime rate 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)
2008
----------------------------------------------------
Fourth Quarter Third Quarter Second Quarter
---------------- ---------------- ----------------
(Dollars in Average Average Average Average Average Average
millions) Balance Rate Balance Rate Balance Rate
---------------- ------- ------- ------- ------- ------- -------
Assets
Interest-earning
assets
Loans and leases
Commercial $ 4,790 4.89% $ 4,727 5.30% $ 4,675 5.30%
Commercial real
estate
mortgages 2,149 6.31 2,095 6.52 2,009 6.50
Residential
mortgages 3,386 5.65 3,335 5.62 3,271 5.57
Real estate
construction 1,288 4.57 1,404 5.05 1,470 5.43
Equity lines of
credit 591 3.62 513 4.34 470 4.45
Installment 167 5.45 157 5.89 164 5.88
------- ------- -------
Total loans and
leases 12,371 5.25 12,231 5.53 12,059 5.57
Due from banks -
interest-
bearing 120 1.34 94 1.85 95 2.24
Federal funds
sold and
securities
purchased under
resale
agreements 18 0.33 5 1.88 9 2.54
Securities
available-for-
sale 2,136 4.96 2,241 4.97 2,351 4.89
Trading
securities 123 1.06 118 1.94 102 1.65
Other interest-
earning assets 76 5.64 79 5.92 79 5.24
------- ------- -------
Total interest-
earning assets 14,844 5.13 14,768 5.39 14,695 5.42
Allowance for
loan and lease
losses (204) (182) (163)
Cash and due
from banks 341 375 386
Other
non-earning
assets 1,210 1,160 1,159
------- ------- -------
Total assets $16,191 $16,121 $16,077
======= ======= =======
Liabilities and
Equity
Interest-bearing
deposits
Interest
checking
accounts $ 888 0.57% $ 826 0.72% $ 867 0.70%
Money market
accounts 3,911 1.85 3,781 1.68 3,738 1.70
Savings deposits 146 0.52 138 0.44 133 0.28
Time deposits -
under $100,000 240 2.85 213 2.89 208 2.89
Time deposits -
$100,000 and
over 1,502 2.32 1,222 2.45 1,143 2.94
------- ------- -------
Total interest-
bearing
deposits 6,687 1.80 6,180 1.72 6,089 1.80
Federal funds
purchased and
securities sold
under
repurchase
agreements 636 1.62 1,357 2.28 1,262 2.42
Other borrowings 848 2.87 1,117 2.97 1,193 2.91
------- ------- -------
Total interest-
bearing
liabilities 8,171 1.89 8,654 1.97 8,544 2.05
Noninterest-
bearing deposits 5,952 5,557 5,606
Other liabilities 250 252 251
Total equity 1,818 1,658 1,676
------- ------- -------
Total
liabilities
and equity $16,191 $16,121 $16,077
======= ======= =======
Net interest
spread 3.24% 3.42% 3.37%
======= ======= =======
Net interest
margin 4.09% 4.23% 4.23%
======= ======= =======
Average prime rate 4.06% 5.00% 5.08%
======= ======= =======
----------------------------------
First Quarter Year to Date
---------------- ----------------
Average Average Average Average
(Dollars in millions) Balance Rate Balance Rate
---------------------------------- ------- ------- ------- -------
Assets
Interest-earning assets
Loans and leases
Commercial $ 4,456 6.28% $ 4,663 5.42%
Commercial real estate mortgages 1,975 6.84 2,058 6.54
Residential mortgages 3,179 5.61 3,293 5.61
Real estate construction 1,464 6.47 1,406 5.41
Equity lines of credit 438 5.65 503 4.44
Installment 177 6.49 166 5.93
------- -------
Total loans and leases 11,689 6.20 12,089 5.63
Due from banks - interest-bearing 78 2.69 97 1.96
Federal funds sold and securities
purchased under resale agreements 8 3.33 10 1.61
Securities available-for-sale 2,446 4.81 2,293 4.90
Trading securities 78 3.11 105 1.83
Other interest-earning assets 72 5.75 76 5.63
------- -------
Total interest-earning assets 14,371 5.93 14,670 5.46
Allowance for loan and lease
losses (165) (179)
Cash and due from banks 379 371
Other non-earning assets 1,139 1,167
------- -------
Total assets $15,724 $16,029
======= =======
Liabilities and Equity
Interest-bearing deposits
Interest checking accounts $ 823 0.69% $ 851 0.67%
Money market accounts 3,610 2.47 3,761 1.92
Savings deposits 135 0.36 138 0.40
Time deposits - under $100,000 220 3.54 220 3.04
Time deposits - $100,000 and over 1,329 3.99 1,299 2.91
------- -------
Total interest-bearing deposits 6,117 2.55 6,269 1.96
Federal funds purchased and
securities sold under repurchase
agreements 1,141 3.39 1,099 2.51
Other borrowings 1,119 4.00 1,068 3.20
------- -------
Total interest-bearing
liabilities 8,377 2.86 8,436 2.19
Noninterest-bearing deposits 5,404 5,631
Other liabilities 272 256
Total equity 1,671 1,706
------- -------
Total liabilities and equity $15,724 $16,029
======= =======
Net interest spread 3.07% 3.27%
======= =======
Net interest margin 4.26% 4.20%
======= =======
Average prime rate 6.22% 5.09%
======= =======
Note: Certain prior period balances have been reclassified to
conform to current period presentation.
CITY NATIONAL CORPORATION
CAPITAL AND CREDIT RATING DATA
(unaudited)
2009
------------------------------------------------
Fourth Third Second First Year To
Quarter Quarter Quarter Quarter Date
-------- -------- -------- -------- --------
Per Common Share:
-----------------
Shares Outstanding
(in thousands):
Average - Basic 51,509 51,482 50,416 48,046 50,272
Average - Diluted
(1) 51,720 51,660 50,551 48,130 50,421
Period-end 51,536 51,499 51,471 48,224
Book value for
common
shareholders $ 34.74 $ 34.99 $ 34.14 $ 33.87
Closing price:
High $ 47.32 $ 43.80 $ 44.14 $ 47.76 $ 47.76
Low 36.59 33.13 31.87 22.83 22.83
Period-end 45.60 38.93 36.83 33.77
Capital Ratios
(Dollars
in millions):
--------------
Risk-based capital
Risk-weighted
assets (2) $ 14,431 $ 13,669 $ 13,887 $ 13,619
Tier I capital $ 1,760 $ 1,682 $ 1,715 $ 1,594
Percentage of
risk-weighted
assets 12.20% 12.31% 12.35% 11.71%
Total capital $ 2,186 $ 2,099 $ 1,969 $ 1,845
Percentage of
risk-weighted
assets 15.15% 15.35% 14.18% 13.55%
Tier I leverage
ratio 9.48% 9.66% 10.16% 10.04%
Period-end equity
to period-end
assets 9.55% 12.06% 12.31% 12.10%
Period-end common
shareholders'
equity to
period-end assets 8.49% 9.79% 9.95% 9.65%
Average equity to
average assets 11.73% 12.29% 12.35% 12.49% 12.20%
Average common
shareholders'
equity to average
assets 9.56% 9.96% 9.96% 9.96% 9.85%
Period-end
tangible equity
to period-end
tangible assets
(3) 7.24% 9.43% 9.77% 9.44%
Period-end
tangible common
shareholders'
equity to period-
end tangible
assets (3) 6.15% 7.10% 7.35% 6.91%
Average tangible
equity to average
tangible assets (3) 9.20% 9.72% 9.77% 9.75% 9.60%
Average tangible
common
shareholders'
equity to
average tangible
assets (3) 6.96% 7.33% 7.30% 7.14% 7.18%
2008
------------------------------------------------
Fourth Third Second First Year To
Quarter Quarter Quarter Quarter Date
-------- -------- -------- -------- --------
Per Common Share:
-----------------
Shares Outstanding
(in thousands):
Average - Basic 48,105 47,934 47,849 47,829 47,930
Average - Diluted
(1) 48,280 48,207 48,179 48,185 48,196
Period-end 48,180 48,155 47,777 47,871
Book value for
common shareholders $ 33.52 $ 33.69 $ 33.80 $ 34.23
Closing price:
High $ 57.56 $ 65.35 $ 51.75 $ 60.00 $ 65.35
Low 34.97 37.60 40.98 48.57 34.97
Period-end 48.70 54.30 42.07 49.46
Capital Ratios
(Dollars in
millions):
--------------
Risk-based capital
Risk-weighted
assets (2) $ 13,943 $ 13,653 $ 13,546 $ 13,160
Tier I capital $ 1,633 $ 1,246 $ 1,224 $ 1,222
Percentage of
risk-weighted
assets 11.71% 9.13% 9.03% 9.29%
Total capital $ 1,868 $ 1,507 $ 1,483 $ 1,477
Percentage of
risk-weighted
assets 13.40% 11.04% 10.95% 11.22%
Tier I leverage
ratio 10.44% 8.01% 7.89% 8.06%
Period-end equity to
period-end assets 12.34% 10.09% 10.04% 10.45%
Period-end common
shareholders'
equity to period-
end assets 9.81% 9.93% 9.88% 10.28%
Average equity to
average assets 11.23% 10.28% 10.43% 10.63% 10.64%
Average common
shareholders'
equity to average
assets 9.99% 10.12% 10.27% 10.46% 10.21%
Period-end tangible
equity
to period-end
tangible assets (3) 9.59% 7.18% 7.12% 7.45%
Period-end tangible
common shareholders'
equity to period-
end tangible
assets (3) 6.99% 7.02% 6.95% 7.29%
Average tangible
equity to average
tangible assets (3) 8.34% 7.33% 7.47% 7.58% 7.68%
Average tangible
common shareholders'
equity to average
tangible assets (3) 7.07% 7.17% 7.31% 7.41% 7.24%
Senior Debt Credit
Ratings
---------------------
For The Period Ended
December 31, 2009 Standard &
Moody's Fitch Poor's DBRS
---------- ---------- ---------- ----------
City National Bank Aa3 A- A- A (high)
City National
Corporation A1 A- BBB+ A
Note: Certain prior period balances have been reclassified to
conform to current period presentation.
(1) Average diluted shares outstanding for prior periods in 2008
have been restated as a result of the adoption of ASC Section
260-10-55, Earnings Per Share - Implementation (formerly FSP
EITF 03-6-1 "Determining Whether Instruments Granted in Share-
Based Payment Transactions are Participating Securities").
(2) 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.
(3) Tangible equity to tangible assets and tangible common
shareholders' equity to tangible assets are non-GAAP financial
measures. For notes on non-GAAP measures, see page 13 of the
Selected Financial Information.
CITY NATIONAL CORPORATION
NON-GAAP FINANCIAL MEASURES
(unaudited)
(a) Tangible equity and tangible common shareholders' 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. Tangible common shareholders'
equity to tangible assets is a non-GAAP financial measure that
represents tangible equity less preferred stock and
noncontrolling interest divided by total assets less identifiable
intangible assets and goodwill. Management reviews both these
measures in evaluating the Company's capital levels and has
included these ratios in response to market participant interest
in tangible equity and tangible common shareholders' equity as a
measure of capital. A reconciliation of the GAAP to non-GAAP
measure is set forth below:
2009
-------------------------------------
Fourth Third Second
(Dollars in thousands) Quarter Quarter Quarter
------------------------------ ----------- ----------- -----------
Period End:
Total equity $ 2,012,764 $ 2,218,492 $ 2,173,916
Less: Goodwill and other
intangibles (525,583) (533,367) (496,562)
----------- ----------- -----------
Tangible equity(A) 1,487,181 1,685,125 1,677,354
Less: Noncontrolling interest (26,441) (24,849) (25,387)
Less: Preferred stock (196,048) (391,593) (391,091)
----------- ----------- -----------
Tangible common shareholders'
equity(B) $ 1,264,692 $ 1,268,683 $ 1,260,876
Total assets $21,078,757 $18,400,604 $17,660,785
Less: Goodwill and other
intangibles (525,583) (533,367) (496,562)
----------- ----------- -----------
Tangible assets(C) $20,553,174 $17,867,237 $17,164,223
Period-end tangible equity
to period-end tangible assets
(A)/(C) 7.24% 9.43% 9.77%
Period-end tangible common
shareholders' equity to
period-end tangible assets
(B)/(C) 6.15% 7.10% 7.35%
Average Balance:
Total equity $ 2,240,642 $ 2,204,220 $ 2,145,859
Less: Goodwill and other
intangibles (533,314) (510,514) (497,487)
----------- ----------- -----------
Tangible equity(D) 1,707,328 1,693,706 1,648,372
Less: Noncontrolling interest (24,815) (25,369) (25,438)
Less: Preferred stock (389,688) (391,353) (390,838)
----------- ----------- -----------
Tangible common shareholders'
equity(E) $ 1,292,825 $ 1,276,984 $ 1,232,096
Total assets $19,095,212 $17,938,231 $17,369,311
Less: Goodwill and other
intangibles (533,314) (510,514) (497,487)
----------- ----------- -----------
Tangible assets(F) $18,561,898 $17,427,717 $16,871,824
Average tangible equity to
average tangible assets
(D)/(F) 9.20% 9.72% 9.77%
Average tangible common
shareholders' equity to
average tangible assets
(E)/(F) 6.96% 7.33% 7.30%
2009
------------------------
First Year To
(Dollars in thousands) Quarter Date
------------------------------------------- ----------- -----------
Period End:
Total equity $ 2,049,370
Less: Goodwill and other intangibles (498,194)
-----------
Tangible equity(A) 1,551,176
Less: Noncontrolling interest (25,441)
Less: Preferred stock (390,590)
-----------
Tangible common shareholders' equity(B) $ 1,135,145
Total assets $16,933,530
Less: Goodwill and other intangibles (498,194)
-----------
Tangible assets(C) $16,435,336
Period-end tangible equity to period-end
tangible assets(A)/(C) 9.44%
Period-end tangible common shareholders'
equity to period-end tangible assets(B)/(C) 6.91%
Average Balance:
Total equity $ 2,050,401 $ 2,160,922
Less: Goodwill and other intangibles (499,229) (510,230)
----------- -----------
Tangible equity (D) 1,551,172 1,650,692
Less: Noncontrolling interest (25,441) (25,264)
Less: Preferred stock (390,348) (390,557)
----------- -----------
Tangible common shareholders' equity(E) $ 1,135,383 $ 1,234,871
Total assets $16,411,240 $17,711,495
Less: Goodwill and other intangibles (499,229) (510,230)
----------- -----------
Tangible assets(F) $15,912,011 $17,201,264
Average tangible equity to average tangible
assets(D)/(F) 9.75% 9.60%
Average tangible common shareholders' equity
to average tangible assets(E)/(F) 7.14% 7.18%
2008
-------------------------------------
Fourth Third Second
(Dollars in thousands) Quarter Quarter Quarter
------------------------------ ----------- ----------- -----------
Period End:
Total equity $ 2,030,434 $ 1,647,844 $ 1,640,714
Less: Goodwill and other
intangibles (500,037) (512,297) (514,584)
----------- ----------- -----------
Tangible equity(A) 1,530,397 1,135,547 1,126,130
Less: Noncontrolling interest (25,441) (25,463) (25,710)
Less: Preferred stock (390,089) -- --
----------- ----------- -----------
Tangible common shareholders'
equity(B) $ 1,114,867 $ 1,110,084 $ 1,100,420
Total assets $16,455,515 $16,330,868 $16,339,258
Less: Goodwill and other
intangibles (500,037) (512,297) (514,584)
----------- ----------- -----------
Tangible assets(C) $15,955,478 $15,818,571 $15,824,674
Period-end tangible equity to
period-end tangible assets
(A)/(C) 9.59% 7.18% 7.12%
Period-end tangible common
shareholders' equity to
period-end tangible assets
(B)/(C) 6.99% 7.02% 6.95%
Average Balance:
Total equity $ 1,818,392 $ 1,657,813 $ 1,676,430
Less: Goodwill and other
intangibles (510,125) (513,609) (513,791)
----------- ----------- -----------
Tangible equity(D) 1,308,267 1,144,204 1,162,639
Less: Noncontrolling interest (25,455) (25,612) (25,677)
Less: Preferred stock (174,677) -- --
----------- ----------- -----------
Tangible common shareholders'
equity(E) $ 1,108,135 $ 1,118,591 $ 1,136,962
Total assets $16,191,243 $16,120,584 $16,077,156
Less: Goodwill and other
intangibles (510,125) (513,609) (513,791)
----------- ----------- -----------
Tangible assets(F) $15,681,118 $15,606,975 $15,563,365
Average tangible equity to
average tangible assets
(D)/(F) 8.34% 7.33% 7.47%
Average tangible common
shareholders' equity to
average tangible assets
(E)/(F) 7.07% 7.17% 7.31%
2008
------------------------
First Year To
(Dollars in thousands) Quarter Date
------------------------------------------- ----------- -----------
Period End:
Total equity $ 1,664,311
Less: Goodwill and other intangibles (514,811)
-----------
Tangible equity (A) 1,149,500
Less: Noncontrolling interest (25,653)
Less: Preferred stock --
-----------
Tangible common shareholders' equity(B) 1,123,847
Total assets $15,934,032
Less: Goodwill and other intangibles (514,811)
-----------
Tangible assets(C) $15,419,221
Period-end tangible equity to period-end
tangible assets(A)/(C) 7.45%
Period-end tangible common shareholders'
equity to period-end tangible assets(B)/(C) 7.29%
Average Balance:
Total equity $ 1,671,030 $ 1,706,092
Less: Goodwill and other intangibles (518,913) (514,097)
----------- -----------
Tangible equity(D) 1,152,117 1,191,995
Less: Noncontrolling interest (25,608) (25,588)
Less: Preferred stock -- (43,908)
----------- -----------
Tangible common shareholders' equity(E) $ 1,126,509 $ 1,122,499
Total assets $15,723,507 $16,028,821
Less: Goodwill and other intangibles (518,913) (514,097)
----------- -----------
Tangible assets(F) $15,204,594 $15,514,724
Average tangible equity to average tangible
assets(D)/(F) 7.58% 7.68%
Average tangible common shareholders' equity
to average tangible assets(E)/(F) 7.41% 7.24%
(b)Tier 1 common shareholders' equity to risk-based assets
Tier 1 common shareholders' equity to risk-based assets was 8.91
percent at December 31, 2009 and 9.22 percent at September 30,
2009. 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 perpetual preferred stock, 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,
including the Federal Reserve in the Supervisory Capital
Assessment Program, 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 participant interest in the Tier 1 common
shareholders to risk-based assets ratio.
Tier 1 capital was $1.76 billion as of December 31, 2009. To
calculate Tier 1 common shareholders' equity, Tier 1 capital was
reduced by preferred stock of $196.0 million, noncontrolling
interest in subsidiaries of $26.3 million and trust preferred
securities of $252.0 million, resulting in Tier 1 common
shareholders' equity of $1.29 billion as of December 31, 2009.
Refer to page 12 for risk-weighted assets as of December 31, 2009.