LOS ANGELES, April 24, 2014 (GLOBE NEWSWIRE) -- City National Corporation (NYSE:CYN), the parent company of wholly owned City National Bank, today reported first-quarter 2014 net income of $54.5 million, up 6 percent from $51.5 million in the year-ago period. Earnings per share were $0.90, compared to $0.90 per share in the first quarter of 2013. First-quarter 2014 earnings per share reflect dividend payments for preferred stock that was issued in November, 2013, as well as a higher share count than the same period a year ago.
City National also announced today that its Board of Directors has maintained and approved a quarterly common stock cash dividend of $0.33 per share, payable on May 21, 2014 to stockholders of record on May 7, 2014.
FIRST-QUARTER 2014 HIGHLIGHTS
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Average first-quarter loans and leases, excluding those covered by City National's acquisition-related loss-sharing agreements with the Federal Deposit Insurance Corporation (FDIC), grew to $17.3 billion, up 17 percent from the first quarter of 2013. Average commercial loans were up 20 percent from the year-ago period. Period-end loan balances grew to a new record of $17.8 billion at March 31, 2014.
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First-quarter deposit balances averaged $25.4 billion, up 13 percent from the first quarter of 2013. Average core deposits, which equal 98 percent of total balances, were up 14 percent from the first quarter of 2013. Period-end deposit balances totaled $25.7 billion at March 31, 2014.
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Trust and investment fee income grew to $53.3 million, up 14 percent from the first quarter of 2013. City National's assets under management or administration grew to $66.4 billion, up 11 percent from the first quarter of 2013.
- Net loan recoveries in the first quarter of 2014 totaled $4.2 million, compared to net recoveries of $14.7 million in the fourth quarter of 2013. Excluding FDIC-covered loans, first-quarter 2014 results included no provision for loan and lease losses. City National recorded no provisions in 2013. The company remains appropriately reserved at 1.72 percent of total loans, excluding FDIC-covered loans.
"This year is off to a good start, as City National celebrates its 60th anniversary and the company continues to strengthen its capabilities, reputation, and client and colleague base in some of the nation's most dynamic communities," said Chairman and CEO Russell Goldsmith. "Loans, deposits, and investment fee income increased at double-digit rates from the first quarter of last year, and expenses remained in check even as the company continued to invest in additional people, products, and technology.
"I'm pleased that first-quarter net income grew 6 percent despite low interest rates and the run-off of covered assets. This growth underscores the fact that the fundamentals and momentum of our businesses remain positive."
For the three months ended | For the three | ||||
Dollars in millions, | March 31, | % | months ended | % | |
except per share data | 2014 | 2013 | Change | December 31, 2013 | Change |
Earnings Per Common Share | $ 0.90 | $ 0.90 | -- | $ 0.95 | (5) |
Net Income Attributable to City National Corporation | 54.5 | 51.5 | 6 | 55.1 | (1) |
Net Income Available to Common Shareholders | 50.4 | 49.1 | 3 | 52.7 | (4) |
Average Assets | $ 29,426.4 | $ 27,709.2 | 6 | $ 29,902.4 | (2) |
Return on Average Assets | 0.75% | 0.75% | -- | 0.73% | 3 |
Return on Average Common Equity | 8.14% | 8.43% | (3) | 8.48% | (4) |
Return on Average Tangible Common Equity | 11.36% | 12.17% | (7) | 11.97% | (5) |
ASSETS
Total assets were $29.7 billion at March 31, 2014, up 8 percent from the first quarter of 2013, but virtually unchanged from the fourth quarter of last year. The increase from the year-ago period primarily reflects higher loan balances.
NET INTEREST INCOME
Fully taxable-equivalent net interest income was $206.1 million in the first quarter of 2014, virtually unchanged from the same period of 2013 and 2 percent lower than in the fourth quarter of last year.
Deposits
First-quarter deposit balances averaged $25.4 billion, up 13 percent from the year-ago period. Average deposit balances were down 2 percent from the fourth quarter of 2013, reflecting traditional seasonal business patterns. Period-end deposits totaled $25.7 billion at March 31, 2014, up 12 percent from March 31, 2013 but virtually unchanged from December 31, 2013.
First-quarter 2014 average noninterest-bearing deposits were up 17 percent from the same period of 2013, but down 3 percent from the fourth quarter of last year.
Treasury Services deposit balances, which consist primarily of title, escrow and property management deposits, averaged $2.7 billion in the first quarter of 2014, up 17 percent from the same period of last year and 2 percent higher than in the fourth quarter of 2013. The increases were due primarily to increased Section 1031 Exchange activity and higher home sales prices.
Loans
First-quarter average loan balances, excluding FDIC-covered loans, were $17.3 billion, up 17 percent from the same period in 2013 and 3 percent higher than the fourth quarter of 2013. Period-end loan balances grew to a new record of $17.8 billion, up 17 percent from March 31, 2013 and up 3 percent from December 31, 2013.
First-quarter average commercial loans were up 20 percent from the same period of 2013 and 5 percent higher than the fourth quarter of last year.
Average balances for commercial real estate mortgages were up 18 percent from the first quarter of 2013, and they increased 3 percent from the fourth quarter of last year. Average balances for commercial real estate construction loans were up 13 percent from the first quarter of 2013, but down 5 percent from the fourth quarter of last year.
Average balances for single-family residential mortgage loans were up 15 percent from the year-ago period and 3 percent higher than the fourth quarter of 2013.
Securities
Average securities for the first quarter of 2014 totaled $8.6 billion, down 12 percent from the first quarter of 2013 and 8 percent lower than in the fourth quarter of last year. Total available-for-sale securities amounted to $5.4 billion at March 31, 2014, down from $7.7 billion at the end of the first quarter of 2013 and down from $6.2 billion at December 31, 2013.
The average duration of available-for-sale securities at March 31, 2014 was 2.3 years, compared to 2.8 years at March 31, 2013 and 2.4 years at the end of the fourth quarter of last year. The decrease from the year-ago period reflects the November 5, 2013 transfer of $1.0 billion of debt securities from the available-for-sale category to the held-to-maturity category and a rotation from longer-duration to shorter-duration securities in the available-for-sale portfolio.
City National's net interest margin in the first quarter of 2014 averaged 3.02 percent, compared to 2.97 percent in the fourth quarter of 2013. The modest increase was due to the redeployment of securities to fund loan growth. It was partially offset by lower income on covered loans that were paid off or fully charged off in the first quarter.
First-quarter net interest income included $9.3 million from the FDIC-covered loans that were repaid or charged off during the quarter. This compares with $15.6 million in the first quarter of 2013 and $13.7 million in the fourth quarter of last year.
At March 31, 2014, City National's prime lending rate was 3.25 percent, unchanged from both March 31, 2013 and December 31, 2013.
For the three months ended | For the three | ||||
March 31, | % | months ended | % | ||
Dollars in millions | 2014 | 2013 | Change | December 31, 2013 | Change |
Average Loans and Leases, excluding Covered Loans | $ 17,338.4 | $ 14,809.3 | 17 | $ 16,795.6 | 3 |
Average Covered Loans | 696.2 | 989.5 | (30) | 747.6 | (7) |
Average Total Securities | 8,585.2 | 9,796.3 | (12) | 9,306.3 | (8) |
Average Earning Assets | 27,640.9 | 26,046.6 | 6 | 28,218.6 | (2) |
Average Deposits | 25,371.6 | 22,411.0 | 13 | 25,942.6 | (2) |
Average Core Deposits | 24,888.2 | 21,806.7 | 14 | 25,423.1 | (2) |
Fully Taxable-Equivalent Net Interest Income | 206.1 | 206.3 | (0) | 211.2 | (2) |
Net Interest Margin | 3.02% | 3.21% | (6) | 2.97% | 2 |
COVERED ASSETS
Loans and other real estate owned (OREO) assets acquired in City National's FDIC‑assisted bank acquisitions totaled $679.7 million at the end of the first quarter of 2014, compared to $953.3 million at March 31, 2013 and $726.5 million at December 31, 2013.
In the first quarter of 2014, the company recorded a $2.0 million non-cash net impairment charge to reflect results of the quarterly update of cash-flow projections for the FDIC-covered loans. In the fourth quarter of 2013, the company recorded a $0.2 million net impairment. The first-quarter charge reflects a $4.7 million provision for losses on covered loans. In addition to the $2.0 million non-cash net impairment charge for the first quarter of 2014, the company recognized $1.6 million of other covered assets expense, bringing total net expense to $3.6 million. This compares to total net expense of $0.3 million in the fourth quarter of last year.
City National updates 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 its FDIC-assisted bank acquisitions and subject to loss-sharing agreements totaled $24.9 million at March 31, 2014, compared to $43.8 million at the end of the first quarter of 2013 and $25.5 million at December 31, 2013.
NONINTEREST INCOME
Noninterest income was $101.2 million in the first quarter of 2014, up 8 percent from the first quarter of 2013 and 12 percent higher than in the fourth quarter of 2013. The increase from the fourth quarter was due largely to lower FDIC loss-sharing expense and higher wealth management fee income. Results for the first quarter of 2014 also included a $2.1 million net gain on securities, compared to a net gain of $1.0 million in the first quarter of 2013 and a net loss of $4.6 million in the fourth quarter of last year.
In the first quarter of 2014, noninterest income accounted for 34 percent of City National's total revenue, compared to 32 percent in the first quarter of 2013 and 31 percent in the fourth quarter of 2013.
Wealth Management
City National's assets under management or administration totaled $66.4 billion as of March 31, 2014, up 11 percent from the same period of 2013 and 3 percent higher than in the fourth quarter of 2013.
Trust and investment fees were $53.3 million in the first quarter of 2014, up 14 percent from the first quarter of 2013 and 5 percent higher than the fourth quarter of 2013. The increases were due primarily to asset inflows and market appreciation.
First-quarter 2014 brokerage and mutual fund fees totaled $10.0 million, up 24 percent from the year-earlier period but down 5 percent from the fourth quarter of 2013. Fourth-quarter 2013 brokerage and mutual fund fees included the recognition of annual performance fees.
At or for the | At or for the | ||||
three months ended | three months | ||||
March 31, | % | ended | % | ||
Dollars in millions | 2014 | 2013 | Change | December 31, 2013 | Change |
Trust and Investment Fee Revenue | $ 53.3 | $ 46.7 | 14 | $ 50.6 | 5 |
Brokerage and Mutual Fund Fees | 10.0 | 8.1 | 24 | 10.6 | (5) |
Assets Under Management (1) | 46,374.2 | 40,264.8 | 15 | 45,001.1 | 3 |
Assets Under Management or Administration (1) | 66,399.8 | 59,612.0 | 11 | 64,691.2 | 3 |
(1) Excludes $26.1 billion, $27.1 billion and $24.8 billion of assets under management for asset managers in which City National held a noncontrolling ownership interest as of March 31, 2014, December 31, 2013 and March 31, 2013, respectively. |
Other Noninterest Income
First-quarter income from cash management and deposit transaction fees was $12.0 million, down 8 percent from the first quarter of 2013 and 3 percent lower than in the fourth quarter of last year. The decreases were due largely to higher deposit balances used to offset service charge fees.
Fee income from foreign exchange services and letters of credit totaled $10.4 million in the first quarter of 2014, up 8 percent from the first quarter of 2013, reflecting increased client activity and the addition of new relationships. Fee income was down 2 percent from the fourth quarter of 2013.
Other income was $17.6 million in the first quarter of 2014, down 4 percent from the first quarter of 2013 and 13 percent lower than in the fourth quarter of 2013. The decreases were due to lower gains on transfers of covered loans to OREO, reduced income from client swap transactions, and lower lease residual income.
NONINTEREST EXPENSE
City National's first-quarter 2014 noninterest expense amounted to $214.9 million, up 2 percent from the first quarter of 2013 but down 2 percent from the fourth quarter of 2013. The increase from the year-ago period largely reflects higher costs for compensation, legal and professional services, regulatory and compliance requirements, and marketing and advertising. These costs were offset in part by lower OREO expense and FDIC assessments.
CREDIT QUALITY
The following credit quality information excludes loans subject to loss-sharing agreements involving City National's FDIC-assisted transactions:
Net recoveries in the first quarter of 2014 totaled $4.2 million, or 0.10 percent of total loans and leases on an annualized basis. The company realized net recoveries of $4.8 million, or 0.13 percent, in the first quarter of 2013 and net recoveries of $14.7 million, or 0.35 percent, in the fourth quarter of 2013.
At March 31, 2014, nonperforming assets decreased to $80.7 million, or 0.45 percent of the company's total loans and leases and OREO, compared to $103.1 million, or 0.68 percent, at March 31, 2013 and $81.3 million, or 0.47 percent, at December 31, 2013.
Nonaccrual loans at March 31, 2014 were $71.3 million, compared to $83.3 million at March 31, 2013 and $68.7 million at December 31, 2013. Classified ratios remain at low levels, and overall credit trends are stable.
As of | As of | As of | ||||
March 31, 2014 | December 31, 2013 | March 31, 2013 | ||||
Period-end Loans (in millions) | Total | Nonaccrual | Total | Nonaccrual | Total | Nonaccrual |
Commercial | $ 8,557.0 | $ 19.9 | $ 8,164.8 | $ 14.3 | $ 7,170.4 | $ 7.3 |
Commercial Real Estate Mortgages | 3,280.9 | 16.4 | 3,223.0 | 18.4 | 2,832.1 | 23.1 |
Residential Mortgages | 4,682.1 | 10.0 | 4,554.3 | 11.7 | 4,027.7 | 9.1 |
Real Estate Construction | 389.2 | 18.8 | 367.0 | 19.1 | 352.5 | 39.6 |
Home Equity Loans and Lines of Credit | 691.3 | 6.0 | 709.3 | 5.1 | 696.7 | 4.1 |
Other Loans | 150.9 | 0.2 | 152.0 | 0.1 | 137.5 | 0.1 |
Total Loans (1) | $ 17,751.4 | $ 71.3 | $ 17,170.4 | $ 68.7 | $ 15,216.9 | $ 83.3 |
Other Real Estate Owned (1) | 9.4 | 12.6 | 19.8 | |||
Total Nonperforming Assets, excluding Covered Assets | $ 80.7 | $ 81.3 | $ 103.1 | |||
(1) Excludes covered loans, net of allowance, of $654.9 million, $701.0 million and $909.6 million at March 31, 2014, December 31, 2013 and March 31, 2013, respectively, and covered other real estate owned of $24.9 million, $25.5 million and $43.8 million at March 31, 2014, December 31, 2013 and March 31, 2013, respectively. |
In light of strong and stable credit quality, continued net recoveries, and a growing loan portfolio, the company did not record a provision for credit losses or reserve release in the first quarter of 2014. The company recorded no provisions or reserve releases in 2013.
At March 31, 2014, City National's allowance for loan and lease losses totaled $305.8 million, or 1.72 percent of total loans and leases. That compares with $282.3 million, or 1.86 percent, at March 31, 2013 and $302.6 million, or 1.76 percent, at the end of the fourth quarter of 2013. The company also maintains an additional $34.9 million in reserves for off-balance-sheet credit commitments.
Commercial Loans
Commercial loan net charge-offs were $0.2 million in the first quarter of 2014. This compares to net recoveries of $2.2 million in the year-earlier period and net recoveries of $9.5 million in the fourth quarter of 2013.
Commercial loans on nonaccrual totaled $19.9 million in the first quarter of 2014, compared to $7.3 million at March 31, 2013 and $14.3 million at December 31, 2013.
Real Estate Construction Loans
City National's $389.2 million commercial real estate construction portfolio includes secured loans to developers of residential and nonresidential properties. This portfolio represents 2 percent of the company's total loans.
First-quarter net recoveries of construction loans were $4.4 million, compared to net recoveries of $2.7 million in the first quarter of 2013 and net recoveries of $4.7 million in the fourth quarter of 2013.
At March 31, 2014, construction loans on nonaccrual totaled $18.8 million, compared to $39.6 million at March 31, 2013 and $19.1 million at December 31, 2013.
Commercial Real Estate Mortgage Loans
In the first quarter of 2014, the company recorded net recoveries of $0.1 million in its $3.3 billion commercial real estate mortgage portfolio. This compares to small net recoveries in both the first quarter and the fourth quarter of 2013.
Commercial real estate mortgage loans on nonaccrual totaled $16.4 million, compared to $23.1 million at March 31, 2013 and $18.4 million at December 31, 2013.
Residential Mortgage Loans and Home Equity Loans and Lines of Credit
City National's period-end $4.7 billion residential mortgage portfolio and $0.7 billion home equity portfolio continued to perform exceptionally well. Together, they accounted for $0.3 million in net charge-offs in the first quarter of 2014, compared to net charge-offs of $0.2 million in the first quarter of 2013 and net recoveries of $0.2 million in the fourth quarter of last year.
Residential mortgage loans and home equity loans and lines of credit on nonaccrual were $16.0 million in the first quarter of 2014, compared to $13.2 million in the first quarter of 2013 and $16.8 million in the fourth quarter of 2013.
INCOME TAXES
City National's effective tax rate for the first quarter of 2014 was 32.3 percent, compared to 29.0 percent in the year-earlier period.
CAPITAL LEVELS
City National remains well-capitalized. Under Basel I capital rules, the company's Tier 1 common shareholders' equity ratio was 8.9 percent at March 31, 2014. The company's Tier 1 common shareholders' equity ratio was 8.7 percent at March 31, 2013 and 8.8 percent at December 31, 2013.1
Under Basel III rules, City National's estimated Tier 1 common equity ratio was 8.6 percent.2 All of the company's pro-forma capital ratios are already comfortably above the Basel III rules that are expected to be fully implemented by January 1, 2019.
City National's Basel I total risk-based capital and Tier 1 risk-based capital ratios at March 31, 2014 were 13.1 percent and 10.2 percent, respectively. City National's Tier 1 leverage ratio at March 31, 2014 was 7.4 percent.
Basel I total risk-based capital, Tier 1 risk-based capital and Tier 1 leverage ratios at March 31, 2013 were 12.7 percent, 9.6 percent and 6.7 percent, respectively.
The increase in Total and Tier 1 capital ratios from March 31, 2013, was due largely to the company's issuance of $100 million of preferred stock on November 7, 2013.
City National's period-end ratio of equity to total assets at March 31, 2014 was 9.4 percent, compared to 9.3 percent at March 31, 2013 and 9.2 percent at December 31, 2013.
2014 OUTLOOK
Management expects modest net income growth in 2014, even as low short-term interest rates continue to put pressure on the company's net interest margin. The company anticipates continued solid growth in loans, deposits, and wealth management assets. Rising loan balances are expected to require some loan-loss provisions, but credit quality should remain stable. This outlook reflects management's expectations for continued moderate U.S. economic growth in 2014.
CONFERENCE CALL
City National Corporation will host a conference call this afternoon to discuss first-quarter 2014 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 (877) 359-9508 and enter Conference ID 13387727. 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 has $29.7 billion in assets. The company's wholly owned subsidiary, City National Bank, provides banking, investment and trust services through 77 offices, including 16 full-service regional centers, in Southern California, the San Francisco Bay Area, Nevada, New York City, Nashville and Atlanta. City National and its investment affiliates manage or administer $66.4 billion in client investment assets, including $46.4 billion under direct management.
For more information about City National, visit the company's Website at cnb.com.
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 Board of Governors of the Federal Reserve System; (4) limited economic growth and elevated levels of unemployment; (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 are 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) 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; (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) the company's ability to attract new employees and retain and motivate existing employees; (13) increased competition in the company's markets and our ability to increase market share and control expenses; (14) changes in the financial performance and/or condition of the company's customers, or changes in the performance or creditworthiness of our customers' suppliers or other counterparties, which could lead to decreased loan utilization rates, delinquencies, or defaults and could negatively affect our customers' ability to meet certain credit obligations; (15) 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; (16) soundness of other financial institutions which could adversely affect the company; (17) protracted labor disputes in the company's markets; (18) the impact of natural disasters, terrorist activities or international hostilities on the operations of our business or the value of collateral; (19) the effect of acquisitions and integration of acquired businesses and de novo branching efforts; (20) changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies; and (21) 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, 2013.
1 For notes on non-GAAP measures, see pages 16 and 17 of the Selected Financial Information.
2 Estimated based on management's interpretation of final rules adopted July 2, 2013, by the Federal Reserve Board establishing a new comprehensive capital framework for U.S. banking organizations that would implement the Basel III capital framework and certain provisions of the Dodd-Frank Act. See page 16 of the Selected Financial Information.
Note: Certain prior period balances have been reclassified to conform to current period presentation.
CITY NATIONAL CORPORATION | |||
FINANCIAL HIGHLIGHTS | |||
(unaudited) | |||
Three Months | |||
For The Period Ended March 31, | 2014 | 2013 | % Change |
Per Common Share | |||
Net income available to common shareholders | |||
Basic | $ 0.91 | $ 0.90 | 1 |
Diluted | 0.90 | 0.90 | -- |
Dividends | 0.33 | -- | NM |
Book value | 46.38 | 44.50 | 4 |
Results of Operations: (In millions) | |||
Net interest income | $ 200 | $ 201 | (1) |
Net interest income (Fully taxable-equivalent) | 206 | 206 | (0) |
Total revenue | 301 | 295 | 2 |
Provision for credit losses on loans and leases, excluding covered loans | -- | -- | -- |
Provision for losses on covered loans | 5 | 10 | (53) |
Net income attributable to City National Corporation | 55 | 52 | 6 |
Net income available to common shareholders | 50 | 49 | 3 |
Financial Ratios: | |||
Performance Ratios: | |||
Return on average assets | 0.75% | 0.75% | |
Return on average common equity | 8.14 | 8.43 | |
Return on average tangible common equity (1) | 11.36 | 12.17 | |
Period-end equity to period-end assets | 9.40 | 9.32 | |
Net interest margin | 3.02 | 3.21 | |
Expense to revenue ratio | 69.73 | 68.95 | |
Capital Adequacy Ratios (Period-end): | |||
Tier 1 common equity | 8.89 | 8.71 | |
Tier 1 risk-based capital | 10.18 | 9.64 | |
Total risk-based capital | 13.08 | 12.71 | |
Tier 1 leverage | 7.41 | 6.72 | |
Asset Quality Ratios: | |||
Allowance for loan and lease losses to: | |||
Total loans and leases, excluding covered loans | 1.72% | 1.86% | |
Nonaccrual loans | 429.21 | 339.03 | |
Nonperforming assets, excluding covered assets, to: | |||
Total loans and leases and other real estate owned, excluding covered assets | 0.45 | 0.68 | |
Total assets | 0.27 | 0.38 | |
Net recoveries to average total loans and leases, excluding covered loans (annualized) | 0.10% | 0.13% | |
Average Balances: (In millions) | |||
Loans and leases, excluding covered loans | $ 17,339 | $ 14,809 | 17 |
Covered loans | 696 | 990 | (30) |
Securities | 8,585 | 9,796 | (12) |
Interest-earning assets | 27,641 | 26,047 | 6 |
Assets | 29,426 | 27,709 | 6 |
Core deposits | 24,888 | 21,807 | 14 |
Deposits | 25,372 | 22,411 | 13 |
Interest-bearing liabilities | 10,636 | 11,425 | (7) |
Common shareholders' equity | 2,513 | 2,364 | 6 |
Total shareholders' equity | 2,780 | 2,533 | 10 |
Period-End Balances: (In millions) | |||
Loans and leases, excluding covered loans | $ 17,751 | $ 15,217 | 17 |
Covered loans | 673 | 952 | (29) |
Securities | 8,651 | 9,192 | (6) |
Assets | 29,738 | 27,434 | 8 |
Core deposits | 25,276 | 22,259 | 14 |
Deposits | 25,732 | 22,938 | 12 |
Common shareholders' equity | 2,528 | 2,387 | 6 |
Total shareholders' equity | 2,796 | 2,557 | 9 |
Wealth Management: (In millions) (2) | |||
Assets under management | $ 46,374 | $ 40,265 | 15 |
Assets under management or administration | 66,400 | 59,612 | 11 |
(1) Return on average tangible common equity is a non-GAAP measure. Refer to page 16 for further discussion of this non-GAAP measure. | |||
(2) Excludes $26.1 billion and $24.8 billion of assets under management for asset managers in which City National held a noncontrolling ownership interest as of March 31, 2014 and March 31, 2013, respectively. | |||
Note: Certain prior period balances in the Selected Financial Information have been reclassified to conform to current period presentation. |
CITY NATIONAL CORPORATION | |||
CONSOLIDATED STATEMENTS OF INCOME | |||
(unaudited) | |||
(Dollars in thousands |
Three Months Ended March 31, |
||
except per share data) | 2014 | 2013 | % Change |
Interest income | $ 213,085 | $ 215,800 | (1) |
Interest expense | 13,287 | 14,727 | (10) |
Net interest income | 199,798 | 201,073 | (1) |
Provision for credit losses on loans and leases, excluding covered loans | -- | -- | -- |
Provision for losses on covered loans | 4,655 | 9,892 | (53) |
Noninterest income | |||
Trust and investment fees | 53,306 | 46,653 | 14 |
Brokerage and mutual fund fees | 10,042 | 8,066 | 24 |
Cash management and deposit transaction fees | 12,033 | 13,009 | (8) |
International services | 10,395 | 9,619 | 8 |
FDIC loss sharing expense, net | (7,083) | (4,352) | 63 |
Gain on disposal of assets | 2,826 | 1,114 | 154 |
Gain on securities | 2,122 | 1,046 | 103 |
Other | 17,607 | 18,373 | (4) |
Total noninterest income | 101,248 | 93,528 | 8 |
Noninterest expense | |||
Salaries and employee benefits | 136,833 | 128,195 | 7 |
Net occupancy of premises | 16,094 | 15,989 | 1 |
Legal and professional fees | 12,950 | 11,952 | 8 |
Information services | 9,346 | 9,391 | (0) |
Depreciation and amortization | 7,828 | 8,172 | (4) |
Amortization of intangibles | 1,487 | 1,932 | (23) |
Marketing and advertising | 9,775 | 7,976 | 23 |
Office services and equipment | 4,910 | 4,946 | (1) |
Other real estate owned | 1,433 | 5,250 | (73) |
FDIC assessments | 1,391 | 5,481 | (75) |
Other | 12,846 | 12,056 | 7 |
Total noninterest expense | 214,893 | 211,340 | 2 |
Income before taxes | 81,498 | 73,369 | 11 |
Applicable income taxes | 26,288 | 21,261 | 24 |
Net income | $ 55,210 | $ 52,108 | 6 |
Less: Net income attributable to noncontrolling interest | 699 | 585 | 19 |
Net income attributable to City National Corporation | $ 54,511 | $ 51,523 | 6 |
Less: Dividends on preferred stock | 4,094 | 2,406 | 70 |
Net income available to common shareholders | $ 50,417 | $ 49,117 | 3 |
Other Data: | |||
Earnings per common share - basic | $ 0.91 | $ 0.90 | 1 |
Earnings per common share - diluted | $ 0.90 | $ 0.90 | -- |
Dividends paid per common share | $ 0.33 | $ -- | NM |
Common dividend payout ratio | 36.15% | --% | NM |
Return on average assets | 0.75% | 0.75% | -- |
Return on average common equity | 8.14% | 8.43% | (3) |
Return on average tangible common equity | 11.36% | 12.17% | (7) |
Net interest margin (Fully taxable-equivalent) | 3.02% | 3.21% | (6) |
Full-time equivalent employees | 3,587 | 3,496 | 3 |
CITY NATIONAL CORPORATION | ||
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME | ||
(unaudited) | ||
2014 | 2013 | |
(Dollars in thousands | First | Fourth |
except per share data) | Quarter | Quarter |
Interest income | $ 213,085 | $ 218,773 |
Interest expense | 13,287 | 13,321 |
Net interest income | 199,798 | 205,452 |
Provision for credit losses on loans and leases, excluding covered loans | -- | -- |
Provision for losses on covered loans | 4,655 | 174 |
Noninterest income | ||
Trust and investment fees | 53,306 | 50,561 |
Brokerage and mutual fund fees | 10,042 | 10,621 |
Cash management and deposit transaction fees | 12,033 | 12,349 |
International services | 10,395 | 10,575 |
FDIC loss sharing expense, net | (7,083) | (12,953) |
Gain on disposal of assets | 2,826 | 3,871 |
Gain (loss) on securities | 2,122 | (4,649) |
Other | 17,607 | 20,174 |
Total noninterest income | 101,248 | 90,549 |
Noninterest expense | ||
Salaries and employee benefits | 136,833 | 133,331 |
Net occupancy of premises | 16,094 | 17,452 |
Legal and professional fees | 12,950 | 16,058 |
Information services | 9,346 | 8,902 |
Depreciation and amortization | 7,828 | 8,019 |
Amortization of intangibles | 1,487 | 1,722 |
Marketing and advertising | 9,775 | 9,029 |
Office services and equipment | 4,910 | 4,679 |
Other real estate owned | 1,433 | 3,296 |
FDIC assessments | 1,391 | 2,646 |
Other | 12,846 | 13,847 |
Total noninterest expense | 214,893 | 218,981 |
Income before taxes | 81,498 | 76,846 |
Applicable income taxes | 26,288 | 20,884 |
Net income | $ 55,210 | $ 55,962 |
Less: Net income attributable to noncontrolling interest | 699 | 850 |
Net income attributable to City National Corporation | $ 54,511 | $ 55,112 |
Less: Dividends on preferred stock | 4,094 | 2,406 |
Net income available to common shareholders | $ 50,417 | $ 52,706 |
Other Data: | ||
Earnings per common share - basic | $ 0.91 | $ 0.96 |
Earnings per common share - diluted | $ 0.90 | $ 0.95 |
Dividends paid per common share | $ 0.33 | $ 0.25 |
Common dividend payout ratio | 36.15% | 26.15% |
Return on average assets | 0.75% | 0.73% |
Return on average common equity | 8.14% | 8.48% |
Return on average tangible common equity | 11.36% | 11.97% |
Net interest margin (Fully taxable-equivalent) | 3.02% | 2.97% |
Full-time equivalent employees | 3,587 | 3,566 |
CITY NATIONAL CORPORATION | |||||
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME | |||||
(unaudited) | |||||
2013 | |||||
(Dollars in thousands | Fourth | Third | Second | First | Year to |
except per share data) | Quarter | Quarter | Quarter | Quarter | Date |
Interest income | $ 218,773 | $ 228,093 | $ 216,995 | $ 215,800 | $ 879,661 |
Interest expense | 13,321 | 13,822 | 14,076 | 14,727 | 55,946 |
Net interest income | 205,452 | 214,271 | 202,919 | 201,073 | 823,715 |
Provision for credit losses on loans and leases, excluding covered loans | -- | -- | -- | -- | -- |
Provision for losses on covered loans | 174 | 2,496 | (11,927) | 9,892 | 635 |
Noninterest income | |||||
Trust and investment fees | 50,561 | 49,430 | 49,830 | 46,653 | 196,474 |
Brokerage and mutual fund fees | 10,621 | 7,307 | 8,107 | 8,066 | 34,101 |
Cash management and deposit transaction fees | 12,349 | 12,263 | 12,880 | 13,009 | 50,501 |
International services | 10,575 | 10,932 | 10,911 | 9,619 | 42,037 |
FDIC loss sharing expense, net | (12,953) | (20,992) | (26,477) | (4,352) | (64,774) |
Gain on disposal of assets | 3,871 | 3,092 | 949 | 1,114 | 9,026 |
(Loss) gain on securities | (4,649) | 5,644 | 5,608 | 1,046 | 7,649 |
Other | 20,174 | 21,207 | 20,401 | 18,373 | 80,155 |
Total noninterest income | 90,549 | 88,883 | 82,209 | 93,528 | 355,169 |
Noninterest expense | |||||
Salaries and employee benefits | 133,331 | 129,049 | 127,168 | 128,195 | 517,743 |
Net occupancy of premises | 17,452 | 16,074 | 16,205 | 15,989 | 65,720 |
Legal and professional fees | 16,058 | 10,731 | 13,514 | 11,952 | 52,255 |
Information services | 8,902 | 9,876 | 9,183 | 9,391 | 37,352 |
Depreciation and amortization | 8,019 | 7,827 | 8,249 | 8,172 | 32,267 |
Amortization of intangibles | 1,722 | 1,932 | 1,931 | 1,932 | 7,517 |
Marketing and advertising | 9,029 | 7,887 | 8,293 | 7,976 | 33,185 |
Office services and equipment | 4,679 | 4,821 | 5,034 | 4,946 | 19,480 |
Other real estate owned | 3,296 | 5,196 | 4,385 | 5,250 | 18,127 |
FDIC assessments | 2,646 | 3,776 | 3,663 | 5,481 | 15,566 |
Other | 13,847 | 12,195 | 13,804 | 12,056 | 51,902 |
Total noninterest expense | 218,981 | 209,364 | 211,429 | 211,340 | 851,114 |
Income before taxes | 76,846 | 91,294 | 85,626 | 73,369 | 327,135 |
Applicable income taxes | 20,884 | 27,052 | 25,422 | 21,261 | 94,619 |
Net income | $ 55,962 | $ 64,242 | $ 60,204 | $ 52,108 | $ 232,516 |
Less: Net income attributable to noncontrolling interest | 850 | 609 | 463 | 585 | 2,507 |
Net income attributable to City National Corporation | $ 55,112 | $ 63,633 | $ 59,741 | $ 51,523 | $ 230,009 |
Less: Dividends on preferred stock | 2,406 | 2,407 | 2,406 | 2,406 | 9,625 |
Net income available to common shareholders | $ 52,706 | $ 61,226 | $ 57,335 | $ 49,117 | $ 220,384 |
Other Data: | |||||
Earnings per common share - basic | $ 0.96 | $ 1.12 | $ 1.05 | $ 0.90 | $ 4.02 |
Earnings per common share - diluted | $ 0.95 | $ 1.10 | $ 1.04 | $ 0.90 | $ 3.99 |
Dividends paid per common share | $ 0.25 | $ 0.25 | $ 0.25 | $ -- | $ 0.75 |
Common dividend payout ratio | 26.15% | 22.40% | 23.81% | --% | 18.69% |
Return on average assets | 0.73% | 0.90% | 0.87% | 0.75% | 0.81% |
Return on average common equity | 8.48% | 10.12% | 9.53% | 8.43% | 9.14% |
Return on average tangible common equity | 11.97% | 14.43% | 13.60% | 12.17% | 13.04% |
Net interest margin (Fully taxable-equivalent) | 2.97% | 3.30% | 3.24% | 3.21% | 3.18% |
Full-time equivalent employees | 3,566 | 3,541 | 3,551 | 3,496 |
CITY NATIONAL CORPORATION | ||
CONSOLIDATED PERIOD END BALANCE SHEETS | ||
(unaudited) | ||
2014 | 2013 | |
First | Fourth | |
(In thousands) | Quarter | Quarter |
Assets | ||
Cash and due from banks | $ 425,427 | $ 183,227 |
Due from banks - interest-bearing | 434,297 | 552,719 |
Federal funds sold and securities purchased under resale agreements | 205,000 | 200,000 |
Securities available-for-sale | 5,386,754 | 6,241,117 |
Securities held-to-maturity | 3,202,997 | 2,957,843 |
Trading securities | 61,608 | 82,357 |
Loans and leases: | ||
Commercial | 8,557,041 | 8,164,823 |
Commercial real estate mortgages | 3,280,868 | 3,223,001 |
Residential mortgages | 4,682,055 | 4,554,311 |
Real estate construction | 389,188 | 367,004 |
Home equity loans and lines of credit | 691,338 | 709,344 |
Installment | 150,895 | 151,955 |
Loans and leases, excluding covered loans | 17,751,385 | 17,170,438 |
Allowance for loan and lease losses | (305,790) | (302,584) |
Loans and leases, excluding covered loans, net | 17,445,595 | 16,867,854 |
Covered loans, net (1) | 654,855 | 700,989 |
Net loans and leases | 18,100,450 | 17,568,843 |
Premises and equipment, net | 199,401 | 198,398 |
Goodwill and other intangibles | 681,756 | 683,243 |
Other real estate owned (2) | 34,267 | 38,092 |
FDIC indemnification asset | 84,851 | 89,227 |
Other assets | 921,444 | 922,885 |
Total assets | $ 29,738,252 | $ 29,717,951 |
Liabilities | ||
Deposits: | ||
Noninterest-bearing | $ 15,664,029 | $ 16,058,968 |
Interest-bearing | 10,067,737 | 9,620,469 |
Total deposits | 25,731,766 | 25,679,437 |
Short-term borrowings | 4,107 | 3,889 |
Long-term debt | 733,537 | 735,968 |
Other liabilities | 427,241 | 517,903 |
Total liabilities | 26,896,651 | 26,937,197 |
Redeemable noncontrolling interest | 45,641 | 39,768 |
Shareholders' equity | ||
Preferred stock | 267,616 | 267,616 |
Common stock | 54,899 | 54,667 |
Additional paid-in capital | 549,989 | 541,210 |
Accumulated other comprehensive loss | (4,363) | (15,641) |
Retained earnings | 1,950,356 | 1,918,163 |
Treasury shares | (22,537) | (25,029) |
Total common shareholders' equity | 2,528,344 | 2,473,370 |
Total shareholders' equity | 2,795,960 | 2,740,986 |
Total liabilities and shareholders' equity | $ 29,738,252 | $ 29,717,951 |
(1) Covered loans are net of $18.4 million and $15.9 million of allowance for loan losses as of March 31, 2014 and December 31, 2013, respectively. | ||
(2) Other real estate owned includes $24.9 million and $25.5 million covered by FDIC loss share at March 31, 2014 and December 31, 2013, respectively. |
CITY NATIONAL CORPORATION | ||||
CONSOLIDATED PERIOD END BALANCE SHEETS | ||||
(unaudited) | ||||
2013 | ||||
Fourth | Third | Second | First | |
(In thousands) | Quarter | Quarter | Quarter | Quarter |
Assets | ||||
Cash and due from banks | $ 183,227 | $ 301,106 | $ 146,338 | $ 144,290 |
Due from banks - interest-bearing | 552,719 | 1,045,608 | 156,221 | 123,146 |
Federal funds sold and securities purchased under resale agreements | 200,000 | 200,000 | 200,000 | 219,500 |
Securities available-for-sale | 6,241,117 | 6,895,130 | 7,044,571 | 7,738,051 |
Securities held-to-maturity | 2,957,843 | 1,649,520 | 1,503,973 | 1,400,890 |
Trading securities | 82,357 | 51,451 | 48,655 | 53,526 |
Loans and leases: | ||||
Commercial | 8,164,823 | 7,856,244 | 7,497,105 | 7,170,370 |
Commercial real estate mortgages | 3,223,001 | 3,077,183 | 2,978,975 | 2,832,107 |
Residential mortgages | 4,554,311 | 4,418,231 | 4,153,051 | 4,027,741 |
Real estate construction | 367,004 | 380,489 | 340,002 | 352,464 |
Home equity loans and lines of credit | 709,344 | 681,879 | 700,681 | 696,679 |
Installment | 151,955 | 152,107 | 149,438 | 137,545 |
Loans and leases, excluding covered loans | 17,170,438 | 16,566,133 | 15,819,252 | 15,216,906 |
Allowance for loan and lease losses | (302,584) | (295,947) | (289,914) | (282,328) |
Loans and leases, excluding covered loans, net | 16,867,854 | 16,270,186 | 15,529,338 | 14,934,578 |
Covered loans, net (1) | 700,989 | 754,190 | 843,582 | 909,563 |
Net loans and leases | 17,568,843 | 17,024,376 | 16,372,920 | 15,844,141 |
Premises and equipment, net | 198,398 | 168,600 | 162,535 | 152,389 |
Goodwill and other intangibles | 683,243 | 684,965 | 686,897 | 688,829 |
Other real estate owned (2) | 38,092 | 48,723 | 61,477 | 63,537 |
FDIC indemnification asset | 89,227 | 101,124 | 117,295 | 142,906 |
Other assets | 922,885 | 888,801 | 878,620 | 862,549 |
Total assets | $ 29,717,951 | $ 29,059,404 | $ 27,379,502 | $ 27,433,754 |
Liabilities | ||||
Deposits: | ||||
Noninterest-bearing | $ 16,058,968 | $ 15,205,973 | $ 14,288,001 | $ 13,800,017 |
Interest-bearing | 9,620,469 | 10,030,896 | 9,363,756 | 9,137,569 |
Total deposits | 25,679,437 | 25,236,869 | 23,651,757 | 22,937,586 |
Short-term borrowings | 3,889 | 2,588 | 2,675 | 806,760 |
Long-term debt | 735,968 | 719,326 | 706,537 | 702,967 |
Other liabilities | 517,903 | 472,893 | 433,822 | 388,439 |
Total liabilities | 26,937,197 | 26,431,676 | 24,794,791 | 24,835,752 |
Redeemable noncontrolling interest | 39,768 | 39,840 | 39,943 | 41,113 |
Shareholders' equity | ||||
Preferred stock | 267,616 | 169,920 | 169,920 | 169,920 |
Common stock | 54,667 | 54,400 | 54,274 | 54,133 |
Additional paid-in capital | 541,210 | 519,760 | 507,560 | 496,013 |
Accumulated other comprehensive (loss) income | (15,641) | (10,355) | 6,585 | 74,222 |
Retained earnings | 1,918,163 | 1,879,240 | 1,831,725 | 1,788,041 |
Treasury shares | (25,029) | (25,077) | (25,296) | (25,440) |
Total common shareholders' equity | 2,473,370 | 2,417,968 | 2,374,848 | 2,386,969 |
Total shareholders' equity | 2,740,986 | 2,587,888 | 2,544,768 | 2,556,889 |
Total liabilities and shareholders' equity | $ 29,717,951 | $ 29,059,404 | $ 27,379,502 | $ 27,433,754 |
(1) Covered loans are net of $15.9 million, $25.9 million, $24.4 million and $42.4 million of allowance for loan losses as of December 31, 2013, September 30, 2013, June 30, 2013 and March 31, 2013, respectively. | ||||
(2) Other real estate owned includes $25.5 million, $29.8 million, $41.8 million and $43.8 million covered by FDIC loss share at December 31, 2013, September 30, 2013, June 30, 2013 and March 31, 2013, respectively. |
CITY NATIONAL CORPORATION | ||||||
CREDIT LOSS EXPERIENCE | ||||||
(unaudited) | ||||||
2014 | 2013 | |||||
First | Fourth | Third | Second | First | Year To | |
(Dollars in thousands) | Quarter | Quarter | Quarter | Quarter | Quarter | Date |
Allowance for Loan and Lease Losses, Excluding Covered Loans | ||||||
Balance at beginning of period | $ 302,584 | $ 295,947 | $ 289,914 | $ 282,328 | $ 277,888 | $ 277,888 |
Net recoveries/(charge-offs): | ||||||
Commercial | (227) | 9,515 | 4,375 | 2,855 | 2,173 | 18,918 |
Commercial real estate mortgages | 95 | 23 | (584) | 1,034 | 3 | 476 |
Residential mortgages | (447) | 32 | 40 | 37 | (68) | 41 |
Real estate construction | 4,388 | 4,660 | 2,945 | 2,682 | 2,666 | 12,953 |
Home equity loans and lines of credit | 143 | 129 | (194) | 375 | (112) | 198 |
Installment | 218 | 349 | 200 | 522 | 146 | 1,217 |
Total net recoveries | 4,170 | 14,708 | 6,782 | 7,505 | 4,808 | 33,803 |
Provision for credit losses | -- | -- | -- | -- | -- | -- |
Transfers (to) from reserve for off-balance sheet credit commitments | (964) | (8,071) | (749) | 81 | (368) | (9,107) |
Balance at end of period | $ 305,790 | $ 302,584 | $ 295,947 | $ 289,914 | $ 282,328 | $ 302,584 |
Net Recoveries/(Charge-offs) to Average Total Loans and Leases, Excluding Covered Loans (annualized): | ||||||
Commercial | (0.01)% | 0.48% | 0.23% | 0.16% | 0.13% | 0.26% |
Commercial real estate mortgages | 0.01% | 0.00% | (0.08)% | 0.15% | 0.00% | 0.02% |
Residential mortgages | (0.04)% | 0.00% | 0.00% | 0.00% | (0.01)% | 0.00% |
Real estate construction | 4.73% | 4.69% | 3.32% | 3.05% | 3.25% | 3.62% |
Home equity loans and lines of credit | 0.08% | 0.07% | (0.11)% | 0.21% | (0.06)% | 0.03% |
Installment | 0.58% | 0.89% | 0.54% | 1.44% | 0.42% | 0.82% |
Total loans and leases, excluding covered loans | 0.10% | 0.35% | 0.17% | 0.20% | 0.13% | 0.21% |
Reserve for Off-Balance Sheet Credit Commitments | ||||||
Balance at beginning of period | $ 33,944 | $ 25,873 | $ 25,124 | $ 25,205 | $ 24,837 | $ 24,837 |
Transfers from (to) allowance | 964 | 8,071 | 749 | (81) | 368 | 9,107 |
Balance at end of period | $ 34,908 | $ 33,944 | $ 25,873 | $ 25,124 | $ 25,205 | $ 33,944 |
Allowance for Losses on Covered Loans | ||||||
Balance at beginning of period | $ 15,922 | $ 25,882 | $ 24,414 | $ 42,354 | $ 44,781 | $ 44,781 |
Provision for losses | 4,655 | 174 | 2,496 | (11,927) | 9,892 | 635 |
Net recoveries | -- | 9 | -- | -- | -- | 9 |
Reduction in allowance due to loan removals | (2,138) | (10,143) | (1,028) | (6,013) | (12,319) | (29,503) |
Balance at end of period | $ 18,439 | $ 15,922 | $ 25,882 | $ 24,414 | $ 42,354 | $ 15,922 |
CITY NATIONAL CORPORATION | |||||
NONPERFORMING ASSETS | |||||
(unaudited) | |||||
2014 | 2013 | ||||
First | Fourth | Third | Second | First | |
(Dollars in thousands) | Quarter | Quarter | Quarter | Quarter | Quarter |
Nonperforming assets, excluding covered assets | |||||
Nonaccrual loans, excluding covered loans | |||||
Commercial | $ 19,931 | $ 14,298 | $ 10,127 | $ 11,679 | $ 7,292 |
Commercial real estate mortgages | 16,397 | 18,449 | 19,020 | 22,433 | 23,066 |
Residential mortgages | 9,966 | 11,661 | 9,674 | 10,580 | 9,136 |
Real estate construction | 18,760 | 19,067 | 25,471 | 25,718 | 39,608 |
Home equity loans and lines of credit | 6,040 | 5,144 | 5,289 | 6,239 | 4,103 |
Installment | 151 | 32 | 21 | 24 | 70 |
Total nonaccrual loans, excluding covered loans | 71,245 | 68,651 | 69,602 | 76,673 | 83,275 |
Other real estate owned, excluding covered OREO | 9,412 | 12,611 | 18,905 | 19,676 | 19,786 |
Total nonperforming assets, excluding covered assets | $ 80,657 | $ 81,262 | $ 88,507 | $ 96,349 | $ 103,061 |
Nonperforming covered assets | |||||
Other real estate owned | $ 24,855 | $ 25,481 | $ 29,818 | $ 41,801 | $ 43,751 |
Loans 90 days or more past due on accrual status, excluding covered loans | $ 424 | $ 453 | $ 383 | $ 643 | $ 1,688 |
Covered loans 90 days or more past due on accrual status | $ 38,548 | $ 45,662 | $ 63,071 | $ 89,439 | $ 102,268 |
Allowance for loan and lease losses as a percentage of: | |||||
Nonaccrual loans | 429.21% | 440.76% | 425.20% | 378.12% | 339.03% |
Total nonperforming assets, excluding covered assets | 379.12% | 372.36% | 334.38% | 300.90% | 273.94% |
Total loans and leases, excluding covered loans | 1.72% | 1.76% | 1.79% | 1.83% | 1.86% |
Nonaccrual loans as a percentage of total loans, excluding covered loans | 0.40% | 0.40% | 0.42% | 0.48% | 0.55% |
Nonperforming assets, excluding covered assets, as a percentage of: | |||||
Total loans and other real estate owned, excluding covered assets | 0.45% | 0.47% | 0.53% | 0.61% | 0.68% |
Total assets | 0.27% | 0.27% | 0.30% | 0.35% | 0.38% |
CITY NATIONAL CORPORATION | ||||
AVERAGE BALANCES AND RATES | ||||
(unaudited) | ||||
2014 | 2013 | |||
First Quarter | Fourth Quarter | |||
Average | Average | Average | Average | |
(Dollars in millions) | Balance | Rate | Balance | Rate |
Assets | ||||
Interest-earning assets | ||||
Loans and leases | ||||
Commercial | $ 8,263 | 3.35% | $ 7,905 | 3.40% |
Commercial real estate mortgages | 3,255 | 3.65 | 3,171 | 3.57 |
Residential mortgages | 4,596 | 3.56 | 4,481 | 3.58 |
Real estate construction | 376 | 3.74 | 394 | 4.61 |
Home equity loans and lines of credit | 695 | 3.62 | 689 | 3.62 |
Installment | 154 | 4.48 | 156 | 4.43 |
Total loans and leases, excluding covered loans | 17,339 | 3.50 | 16,796 | 3.52 |
Covered loans | 696 | 12.56 | 747 | 14.50 |
Total loans and leases | 18,035 | 3.86 | 17,543 | 3.98 |
Due from banks - interest-bearing | 665 | 0.27 | 970 | 0.25 |
Federal funds sold and securities purchased under resale agreements | 279 | 1.99 | 317 | 1.99 |
Securities | 8,585 | 2.09 | 9,306 | 1.93 |
Other interest-earning assets | 77 | 6.38 | 83 | 5.87 |
Total interest-earning assets | 27,641 | 3.22 | 28,219 | 3.16 |
Allowance for loan and lease losses | (323) | (327) | ||
Cash and due from banks | 248 | 196 | ||
Other non-earning assets | 1,860 | 1,814 | ||
Total assets | $ 29,426 | $ 29,902 | ||
Liabilities and Equity | ||||
Interest-bearing deposits | ||||
Interest checking accounts | $ 2,420 | 0.06% | $ 2,359 | 0.06% |
Money market accounts | 6,365 | 0.07 | 6,459 | 0.07 |
Savings deposits | 454 | 0.06 | 437 | 0.06 |
Time deposits - under $100,000 | 174 | 0.22 | 179 | 0.23 |
Time deposits -- $100,000 and over | 484 | 0.41 | 520 | 0.40 |
Total interest-bearing deposits | 9,897 | 0.09 | 9,954 | 0.09 |
Federal funds purchased and securities sold under repurchase agreements | -- | -- | -- | -- |
Other borrowings | 739 | 6.12 | 728 | 6.03 |
Total interest-bearing liabilities | 10,636 | 0.51 | 10,682 | 0.49 |
Noninterest-bearing deposits | 15,475 | 15,989 | ||
Other liabilities | 535 | 538 | ||
Total equity | 2,780 | 2,693 | ||
Total liabilities and equity | $ 29,426 | $ 29,902 | ||
Net interest spread | 2.71% | 2.67% | ||
Net interest margin | 3.02% | 2.97% | ||
Average prime rate | 3.25% | 3.25% |
CITY NATIONAL CORPORATION | ||||||||||
AVERAGE BALANCES AND RATES | ||||||||||
(unaudited) | ||||||||||
2013 | ||||||||||
Fourth Quarter | Third Quarter | Second Quarter | First Quarter | Year to Date | ||||||
Average | Average | Average | Average | Average | Average | Average | Average | Average | Average | |
(Dollars in millions) | Balance | Rate | Balance | Rate | Balance | Rate | Balance | Rate | Balance | Rate |
Assets | ||||||||||
Interest-earning assets | ||||||||||
Loans and leases | ||||||||||
Commercial | $ 7,905 | 3.40% | $ 7,540 | 3.53% | $ 7,301 | 3.58% | $ 6,876 | 3.71% | $ 7,409 | 3.55% |
Commercial real estate mortgages | 3,171 | 3.57 | 3,062 | 3.71 | 2,848 | 4.00 | 2,767 | 3.97 | 2,963 | 3.80 |
Residential mortgages | 4,481 | 3.58 | 4,254 | 3.61 | 4,083 | 3.72 | 3,981 | 3.83 | 4,201 | 3.68 |
Real estate construction | 394 | 4.61 | 351 | 4.53 | 353 | 4.24 | 333 | 4.64 | 358 | 4.51 |
Home equity loans and lines of credit | 689 | 3.62 | 684 | 3.56 | 704 | 3.60 | 712 | 3.68 | 697 | 3.62 |
Installment | 156 | 4.43 | 149 | 4.30 | 145 | 4.69 | 140 | 4.22 | 148 | 4.41 |
Total loans and leases, excluding covered loans | 16,796 | 3.52 | 16,040 | 3.61 | 15,434 | 3.72 | 14,809 | 3.83 | 15,776 | 3.66 |
Covered loans | 747 | 14.50 | 819 | 20.53 | 910 | 14.34 | 990 | 12.98 | 866 | 15.46 |
Total loans and leases | 17,543 | 3.98 | 16,859 | 4.42 | 16,344 | 4.32 | 15,799 | 4.42 | 16,642 | 4.28 |
Due from banks - interest-bearing | 970 | 0.25 | 611 | 0.26 | 236 | 0.27 | 193 | 0.24 | 504 | 0.25 |
Federal funds sold and securities purchased under resale agreements | 317 | 1.99 | 283 | 2.19 | 277 | 2.25 | 154 | 2.99 | 258 | 2.26 |
Securities | 9,306 | 1.93 | 8,576 | 1.99 | 8,867 | 1.98 | 9,796 | 1.91 | 9,134 | 1.95 |
Other interest-earning assets | 83 | 5.87 | 89 | 5.51 | 96 | 4.48 | 105 | 3.72 | 93 | 4.83 |
Total interest-earning assets | 28,219 | 3.16 | 26,418 | 3.51 | 25,820 | 3.46 | 26,047 | 3.44 | 26,631 | 3.39 |
Allowance for loan and lease losses | (327) | (319) | (325) | (328) | (325) | |||||
Cash and due from banks | 196 | 138 | 129 | 129 | 148 | |||||
Other non-earning assets | 1,814 | 1,824 | 1,846 | 1,861 | 1,837 | |||||
Total assets | $ 29,902 | $ 28,061 | $ 27,470 | $ 27,709 | $ 28,291 | |||||
Liabilities and Equity | ||||||||||
Interest-bearing deposits | ||||||||||
Interest checking accounts | $ 2,359 | 0.06% | $ 2,289 | 0.07% | $ 2,173 | 0.07% | $ 2,217 | 0.08% | $ 2,260 | 0.07% |
Money market accounts | 6,459 | 0.07 | 6,286 | 0.11 | 5,759 | 0.11 | 5,692 | 0.11 | 6,052 | 0.10 |
Savings deposits | 437 | 0.06 | 420 | 0.09 | 415 | 0.10 | 419 | 0.11 | 423 | 0.09 |
Time deposits - under $100,000 | 179 | 0.23 | 185 | 0.29 | 192 | 0.37 | 201 | 0.37 | 189 | 0.32 |
Time deposits -- $100,000 and over | 520 | 0.40 | 586 | 0.39 | 708 | 0.38 | 604 | 0.42 | 604 | 0.40 |
Total interest-bearing deposits | 9,954 | 0.09 | 9,766 | 0.12 | 9,247 | 0.13 | 9,133 | 0.13 | 9,528 | 0.12 |
Federal funds purchased and securities sold under repurchase agreements | -- | -- | 2 | 0.08 | 374 | 0.13 | 840 | 0.13 | 301 | 0.13 |
Other borrowings | 728 | 6.03 | 712 | 6.07 | 928 | 4.74 | 1,452 | 3.21 | 952 | 4.66 |
Total interest-bearing liabilities | 10,682 | 0.49 | 10,480 | 0.52 | 10,549 | 0.54 | 11,425 | 0.52 | 10,781 | 0.52 |
Noninterest-bearing deposits | 15,989 | 14,536 | 13,872 | 13,278 | 14,426 | |||||
Other liabilities | 538 | 474 | 466 | 473 | 489 | |||||
Total equity | 2,693 | 2,571 | 2,582 | 2,533 | 2,595 | |||||
Total liabilities and equity | $ 29,902 | $ 28,061 | $ 27,470 | $ 27,709 | $ 28,291 | |||||
Net interest spread | 2.67% | 2.99% | 2.92% | 2.92% | 2.87% | |||||
Net interest margin | 2.97% | 3.30% | 3.24% | 3.21% | 3.18% | |||||
Average prime rate | 3.25% | 3.25% | 3.25% | 3.25% | 3.25% |
CITY NATIONAL CORPORATION | ||||||
CAPITAL AND CREDIT RATING DATA | ||||||
(unaudited) | ||||||
2014 | 2013 | |||||
First | Fourth | Third | Second | First | Year To | |
Quarter | Quarter | Quarter | Quarter | Quarter | Date | |
Per Common Share: | ||||||
Shares outstanding (in thousands): | ||||||
Average - Basic | 54,689 | 54,438 | 54,274 | 54,105 | 53,731 | 54,139 |
Average - Diluted | 55,429 | 55,141 | 54,820 | 54,477 | 54,068 | 54,640 |
Period-end | 54,511 | 54,184 | 53,915 | 53,781 | 53,638 | |
Book value for shareholders | $ 46.38 | $ 45.65 | $ 44.85 | $ 44.16 | $ 44.50 | |
Closing price: | ||||||
High | $ 81.07 | $ 79.33 | $ 71.15 | $ 63.66 | $ 59.61 | $ 79.33 |
Low | 68.39 | 65.39 | 64.11 | 54.36 | 51.13 | 51.13 |
Period-end | 78.72 | 79.22 | 66.66 | 63.37 | 58.91 | |
Capital Ratios (Dollars in millions): | ||||||
Risk-based capital | ||||||
Risk-weighted assets (1) | $ 21,016 | $ 20,766 | $ 19,977 | $ 19,256 | $ 18,872 | |
Tier 1 common equity | $ 1,867 | $ 1,823 | $ 1,761 | $ 1,700 | $ 1,643 | |
Percentage of risk-weighted assets (2) | 8.89% | 8.78% | 8.82% | 8.83% | 8.71% | |
Tier 1 capital | $ 2,140 | $ 2,096 | $ 1,936 | $ 1,875 | $ 1,818 | |
Percentage of risk-weighted assets | 10.18% | 10.09% | 9.69% | 9.74% | 9.64% | |
Total capital | $ 2,749 | $ 2,699 | $ 2,532 | $ 2,461 | $ 2,399 | |
Percentage of risk-weighted assets | 13.08% | 13.00% | 12.67% | 12.78% | 12.71% | |
Tier 1 leverage ratio | 7.41% | 7.17% | 7.07% | 7.00% | 6.72% | |
Period-end equity to period-end assets | 9.40% | 9.22% | 8.91% | 9.29% | 9.32% | |
Period-end common equity to period-end assets | 8.50% | 8.32% | 8.32% | 8.67% | 8.70% | |
Average equity to average assets | 9.45% | 9.01% | 9.16% | 9.40% | 9.14% | 9.17% |
Average common equity to average assets | 8.54% | 8.24% | 8.55% | 8.78% | 8.53% | 8.52% |
Period-end tangible common equity to period-end tangible assets (2) | 6.36% | 6.17% | 6.11% | 6.32% | 6.35% | |
Period-end tangible common equity to period-end tangible assets excluding net unrealized gain/loss on AFS securities (2) | 6.37% | 6.22% | 6.14% | 6.30% | 6.09% | |
Average tangible common equity to average tangible assets (2) | 6.37% | 6.09% | 6.26% | 6.44% | 6.19% | 6.24% |
Average tangible common equity to average tangible assets excluding net unrealized gain/loss on AFS securities (2) | 6.38% | 6.10% | 6.30% | 6.20% | 5.93% | 6.13% |
Senior Debt Credit Ratings | ||||||
For The Period Ended March 31, 2014 | Standard & | |||||
Moody's | Fitch | Poor's | DBRS | |||
City National Bank | A2 | A-- | A-- | A (high) | ||
City National Corporation | A3 | A-- | BBB+ | A | ||
(1) In accordance with applicable bank regulatory guidelines, risk-weighted assets are calculated 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 equity to risk-weighted assets ratio, tangible common equity to tangible assets ratio, and tangible common equity to tangible assets ratio excluding net unrealized gain/loss on AFS (available-for-sale) securities are non-GAAP financial measures. See pages 16 and 17 for notes on non-GAAP measures. |
CITY NATIONAL CORPORATION | ||||||
COMPUTATION OF BASIC AND DILUTED EARNINGS PER COMMON SHARE | ||||||
(unaudited) | ||||||
City National applies the two-class method of computing basic and diluted earnings per common 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: | ||||||
2014 | 2013 | |||||
First | Fourth | Third | Second | First | Year to | |
(Dollars in thousands, except per share amounts) | Quarter | Quarter | Quarter | Quarter | Quarter | Date |
Basic EPS: | ||||||
Net income attributable to City National Corporation | $ 54,511 | $ 55,112 | $ 63,633 | $ 59,741 | $ 51,523 | $ 230,009 |
Less: Dividends on preferred stock | 4,094 | 2,406 | 2,407 | 2,406 | 2,406 | 9,625 |
Net income available to common shareholders | $ 50,417 | $ 52,706 | $ 61,226 | $ 57,335 | $ 49,117 | $ 220,384 |
Less: Earnings allocated to participating securities | 543 | 585 | 688 | 656 | 637 | 2,555 |
Earnings allocated to common shareholders | $ 49,874 | $ 52,121 | $ 60,538 | $ 56,679 | $ 48,480 | $ 217,829 |
Weighted average shares outstanding | 54,689 | 54,438 | 54,274 | 54,105 | 53,731 | 54,139 |
Basic earnings per common share | $ 0.91 | $ 0.96 | $ 1.12 | $ 1.05 | $ 0.90 | $ 4.02 |
Diluted EPS: | ||||||
Earnings allocated to shareholders (1) | $ 49,879 | $ 52,126 | $ 60,543 | $ 56,682 | $ 48,484 | $ 217,848 |
Weighted average shares outstanding | 54,689 | 54,438 | 54,274 | 54,105 | 53,731 | 54,139 |
Dilutive effect of equity awards | 740 | 703 | 546 | 372 | 337 | 501 |
Weighted average diluted shares outstanding | 55,429 | 55,141 | 54,820 | 54,477 | 54,068 | 54,640 |
Diluted earnings per common share | $ 0.90 | $ 0.95 | $ 1.10 | $ 1.04 | $ 0.90 | $ 3.99 |
(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: | ||||
2014 | 2013 | |||
First | Fourth | First | ||
(In thousands) | Quarter | Quarter | Quarter | |
Summary Totals | ||||
Net impairment expense (Sum of A) | $ (2,019) | $ (185) | $ (71) | |
Other covered asset expense, net | (1,561) | (124) | (144) | |
Total expense, net | $ (3,580) | $ (309) | $ (215) | |
Interest income (1) | ||||
Income on loans paid-off or fully charged-off | $ 9,324 | $ 13,691 | $ 15,625 | |
Provision for losses on covered loans | ||||
Provision for losses on covered loans | A | 4,655 | 174 | 9,892 |
Noninterest income related to covered assets | ||||
FDIC loss sharing expense, net | ||||
Gain on indemnification asset | A | $ 3,599 | $ 677 | $ 10,616 |
Indemnification asset amortization | (3,164) | (3,142) | (4,899) | |
Net FDIC reimbursement for OREO and loan expenses | 1,653 | 2,289 | 5,193 | |
Removal of indemnification asset for loans paid-off or fully charged-off | (2,999) | (6,813) | (6,073) | |
Removal of indemnification asset for unfunded loan commitments and loans transferred to OREO | (676) | (1,017) | (2,569) | |
Removal of indemnification asset for OREO and net reimbursement to FDIC for OREO sales | (311) | (680) | (844) | |
Loan recoveries shared with FDIC | (4,222) | (3,579) | (4,981) | |
Increase in FDIC clawback liability | A | (963) | (688) | (795) |
Total FDIC loss sharing expense, net | (7,083) | (12,953) | (4,352) | |
Gain on disposal of assets | ||||
Net gain on sale of OREO | 389 | 850 | 974 | |
Other income | ||||
Net gain on transfers of covered loans to OREO | 863 | 1,427 | 3,506 | |
Amortization of fair value on acquired unfunded loan commitments | 215 | 69 | 394 | |
OREO income | 435 | 517 | 826 | |
Other | (156) | (276) | (334) | |
Total other income | 1,357 | 1,737 | 4,392 | |
Total noninterest income related to covered assets | $ (5,337) | $ (10,366) | $ 1,014 | |
Noninterest expense related to covered assets (2) | ||||
Other real estate owned | ||||
Valuation write-downs | $ 155 | $ 241 | $ 3,035 | |
Holding costs and foreclosure expense | 1,158 | 1,463 | 1,893 | |
Total other real estate owned | 1,313 | 1,704 | 4,928 | |
Legal and professional fees | 1,580 | 1,749 | 2,020 | |
Other operating expense | ||||
Other covered asset expenses | 19 | 7 | 14 | |
Total noninterest expense related to covered assets (3) | $ 2,912 | $ 3,460 | $ 6,962 | |
Total expense, net | $ (3,580) | $ (309) | $ (215) | |
(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 | ||||||||||||||
SELECTED FINANCIAL INFORMATION ON COVERED ASSETS (continued) | ||||||||||||||
(unaudited) | ||||||||||||||
The following table provides selected components of income and expense related to covered assets from the first quarter of 2011 to the first quarter of 2014: | ||||||||||||||
2014 | 2013 | 2012 | 2011 | |||||||||||
First | Fourth | Third | Second | First | Fourth | Third | Second | First | Fourth | Third | Second | First | ||
(In thousands) | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | |
Summary Totals | ||||||||||||||
Net impairment (expense) income (Sum of A) | $ (2,019) | $ (185) | $ (483) | $ (1,463) | $ (71) | $ 3,517 | $ 2,639 | $ 3,932 | $ 2,756 | $ (52) | $ (5,884) | $ (532) | $ (4,344) | |
Other covered asset (expense) income, net | (1,561) | (124) | 3,190 | (520) | (144) | (720) | (837) | 3,388 | (1,893) | 394 | (589) | (1,095) | (147) | |
Total (expense) income, net | $ (3,580) | $ (309) | $ 2,707 | $ (1,983) | $ (215) | $ 2,797 | $ 1,802 | $ 7,320 | $ 863 | $ 342 | $ (6,473) | $ (1,627) | $ (4,491) | |
Interest income | ||||||||||||||
Income on loans paid-off or fully charged-off | $ 9,324 | $ 13,691 | $ 25,849 | $ 15,880 | $ 15,625 | $ 17,536 | $ 22,164 | $ 27,402 | $ 15,699 | $ 18,902 | $ 18,343 | $ 11,105 | $ 7,389 | |
Provision for losses on covered loans | ||||||||||||||
Provision for losses on covered loans | A | 4,655 | 174 | 2,496 | (11,927) | 9,892 | 6,498 | 18,089 | 13,293 | 7,466 | 17,667 | 5,147 | 1,716 | 19,116 |
Noninterest income related to covered assets | ||||||||||||||
FDIC loss sharing (expense) income, net | ||||||||||||||
Gain (loss) on indemnification asset | A | $ 3,599 | $ 677 | $ 2,239 | $ (13,102) | $ 10,616 | $ 10,070 | $ 21,426 | $ 17,722 | $ 10,839 | $ 17,675 | $ (384) | $ 1,687 | $ 15,048 |
Indemnification asset amortization | (3,164) | (3,142) | (4,417) | (4,746) | (4,899) | (4,818) | (4,258) | (4,133) | (4,025) | (3,775) | (4,043) | (4,126) | (3,624) | |
Net FDIC reimbursement for OREO and loan expenses | 1,653 | 2,289 | 4,582 | 4,995 | 5,193 | 8,020 | 7,612 | 6,724 | 10,441 | 13,858 | 10,496 | 17,852 | 11,118 | |
Removal of indemnification asset for loans paid-off or fully charged-off | (2,999) | (6,813) | (9,746) | (7,650) | (6,073) | (5,896) | (9,731) | (10,654) | (6,516) | (5,955) | (10,228) | (6,306) | (3,513) | |
Removal of indemnification asset for unfunded loan commitments and loans transferred to OREO | (676) | (1,017) | (1,550) | (1,163) | (2,569) | (1,500) | (2,834) | (4,773) | (2,113) | (4,714) | (3,703) | (8,855) | (7,673) | |
Removal of indemnification asset for OREO and net reimbursement to FDIC for OREO sales | (311) | (680) | (2,451) | (428) | (844) | (2,042) | (1,219) | (1,189) | (2,656) | (1,543) | (2,823) | (7,219) | (1,282) | |
Loan recoveries shared with FDIC | (4,222) | (3,579) | (9,423) | (4,095) | (4,981) | (6,303) | (8,631) | (9,226) | (4,487) | (7,853) | (3,153) | (3,197) | (1,971) | |
Increase in FDIC clawback liability | A | (963) | (688) | (226) | (288) | (795) | (55) | (698) | (497) | (617) | (60) | (353) | (503) | (276) |
Other | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | (17) | 778 | |
Total FDIC loss sharing (expense) income, net | (7,083) | (12,953) | (20,992) | (26,477) | (4,352) | (2,524) | 1,667 | (6,026) | 866 | 7,633 | (14,191) | (10,684) | 8,605 | |
Gain on disposal of assets | ||||||||||||||
Net gain on sale of OREO | 389 | 850 | 3,064 | 616 | 974 | 2,593 | 1,524 | 1,486 | 2,137 | 1,927 | 3,625 | 9,092 | 1,628 | |
Other income | ||||||||||||||
Net gain on transfers of covered loans to OREO | 863 | 1,427 | 1,936 | 1,445 | 3,506 | 1,926 | 4,907 | 6,864 | 2,483 | 6,824 | 3,887 | 12,817 | 10,330 | |
Amortization of fair value on acquired unfunded loan commitments | 215 | 69 | 48 | 283 | 394 | 408 | 192 | 413 | 559 | 558 | 1,088 | 766 | 692 | |
OREO income | 435 | 517 | 731 | 456 | 826 | 977 | 428 | 615 | 905 | 406 | 379 | 637 | 661 | |
Other | (156) | (276) | 711 | (318) | (334) | (636) | (632) | (864) | (1,018) | (745) | (503) | (690) | 29 | |
Total other income | 1,357 | 1,737 | 3,426 | 1,866 | 4,392 | 2,675 | 4,895 | 7,028 | 2,929 | 7,043 | 4,851 | 13,530 | 11,712 | |
Total noninterest income related to covered assets | $ (5,337) | $ (10,366) | $ (14,502) | $ (23,995) | $ 1,014 | $ 2,744 | $ 8,086 | $ 2,488 | $ 5,932 | $ 16,603 | $ (5,715) | $ 11,938 | $ 21,945 | |
Noninterest expense related to covered assets | ||||||||||||||
Other real estate owned | ||||||||||||||
Valuation write-downs | $ 155 | $ 241 | $ 1,556 | $ 2,184 | $ 3,035 | $ 4,115 | $ 4,267 | $ 4,250 | $ 7,808 | $ 9,984 | $ 7,526 | $ 15,628 | $ 8,305 | |
Holding costs and foreclosure expense | 1,158 | 1,463 | 3,607 | 1,894 | 1,893 | 3,878 | 3,522 | 2,796 | 3,207 | 4,890 | 3,449 | 4,564 | 4,493 | |
Total other real estate owned | 1,313 | 1,704 | 5,163 | 4,078 | 4,928 | 7,993 | 7,789 | 7,046 | 11,015 | 14,874 | 10,975 | 20,192 | 12,798 | |
Legal and professional fees | 1,580 | 1,749 | 969 | 1,701 | 2,020 | 2,977 | 2,541 | 2,200 | 2,278 | 2,609 | 2,961 | 2,832 | 1,819 | |
Other operating expense | ||||||||||||||
Other covered asset expenses | 19 | 7 | 12 | 16 | 14 | 15 | 29 | 31 | 9 | 13 | 18 | (70) | 92 | |
Total noninterest expense related to covered assets | $ 2,912 | $ 3,460 | $ 6,144 | $ 5,795 | $ 6,962 | $ 10,985 | $ 10,359 | $ 9,277 | $ 13,302 | $ 17,496 | $ 13,954 | $ 22,954 | $ 14,709 | |
Total (expense) income, net | $ (3,580) | $ (309) | $ 2,707 | $ (1,983) | $ (215) | $ 2,797 | $ 1,802 | $ 7,320 | $ 863 | $ 342 | $ (6,473) | $ (1,627) | $ (4,491) |
CITY NATIONAL CORPORATION | ||||||
NON-GAAP FINANCIAL MEASURES | ||||||
(unaudited) | ||||||
(a) Return on average tangible common equity ratio (annualized) | ||||||
Return on average tangible common equity is a non-GAAP financial measure that represents the return on average common equity excluding goodwill and other intangible assets and their related amortization expense. Management reviews this measure in evaluating the company's performance and believes that investors may find it useful to evaluate the return on average common equity without the impact of goodwill and other intangible assets. A reconciliation of the GAAP to non-GAAP measure is set forth below: | ||||||
2014 | 2013 | |||||
First | Fourth | Third | Second | First | Year to | |
(Dollars in thousands) | Quarter | Quarter | Quarter | Quarter | Quarter | Date |
Net income available to common shareholders | $ 50,417 | $ 52,706 | $ 61,226 | $ 57,335 | $ 49,117 | $ 220,384 |
Add: Amortization of intangibles, net of tax | 865 | 1,002 | 1,124 | 1,123 | 1,124 | 4,373 |
Tangible net income available to common shareholders (A) | $ 51,282 | $ 53,708 | $ 62,350 | $ 58,458 | $ 50,241 | $ 224,757 |
Average common equity | $ 2,512,775 | $ 2,465,056 | $ 2,400,624 | $ 2,412,148 | $ 2,363,507 | $ 2,410,585 |
Less: Goodwill and other intangibles | (682,676) | (684,289) | (686,091) | (687,997) | (689,932) | (687,059) |
Tangible common equity (B) | $ 1,830,099 | $ 1,780,767 | $ 1,714,533 | $ 1,724,151 | $ 1,673,575 | $ 1,723,526 |
Return on average tangible common equity (A)/(B) | 11.36% | 11.97% | 14.43% | 13.60% | 12.17% | 13.04% |
(b) Tier 1 common equity to risk-weighted assets | ||||||
Tier 1 common equity to risk-weighted 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 to assess the capital position of financial services companies. Management reviews this measure in evaluating the company's capital levels and has included this ratio in response to market participants' interest in the Tier 1 common equity to risk-weighted assets ratio. | ||||||
2014 | 2013 | |||||
First | Fourth | Third | Second | First | ||
(Dollars in thousands) | Quarter | Quarter | Quarter | Quarter | Quarter | |
Tier 1 capital | $ 2,140,136 | $ 2,095,576 | $ 1,936,191 | $ 1,874,999 | $ 1,818,367 | |
Less: Preferred stock | (267,616) | (267,616) | (169,920) | (169,920) | (169,920) | |
Less: Trust preferred securities | (5,155) | (5,155) | (5,155) | (5,155) | (5,155) | |
Tier 1 common equity (A) | $ 1,867,365 | $ 1,822,805 | $ 1,761,116 | $ 1,699,924 | $ 1,643,292 | |
Risk-weighted assets (B) | $21,015,948 | $20,766,237 | $19,977,106 | $19,255,862 | $18,872,451 | |
Tier 1 common equity to risk-weighted assets (A)/(B) | 8.89% | 8.78% | 8.82% | 8.83% | 8.71% | |
Under Basel III capital rules, the Company's estimated Tier 1 common equity ratio was 8.6 percent at March 31, 2014. This ratio was estimated based on management's interpretation of final rules adopted July 2, 2013, by the Federal Reserve Board establishing a new comprehensive capital framework for U.S. banking organizations that would implement the Basel III capital framework and certain provisions of the Dodd-Frank Act. Under management's interpretation of Basel III, estimated Tier 1 common equity was $1.9 billion and estimated risk-weighted assets were $21.8 billion. |
CITY NATIONAL CORPORATION | ||||||
NON-GAAP FINANCIAL MEASURES (continued) | ||||||
(unaudited) | ||||||
(c) Ratios for tangible common equity and tangible common equity excluding net unrealized gain/loss on AFS securities | ||||||
Ratios for tangible common equity and tangible common equity excluding net unrealized gain/loss on AFS securities are non-GAAP financial measures. Tangible common equity to tangible assets represents total common shareholders' equity less identifiable intangible assets and goodwill divided by total assets less identifiable intangible assets and goodwill. Tangible common equity to tangible assets excluding unrealized gain/loss on AFS securities represents tangible common equity less net unrealized gain/loss on AFS securities divided by total assets less identifiable intangible assets, goodwill and net unrealized gain/loss on AFS securities. Management reviews these measures in evaluating the company's capital levels and has included these ratios in response to market participant and regulatory interest in tangible common equity as a measure of capital. A reconciliation of the GAAP to non-GAAP measure is set forth below: | ||||||
2014 | 2013 | |||||
First | Fourth | Third | Second | First | Year to | |
(Dollars in thousands) | Quarter | Quarter | Quarter | Quarter | Quarter | Date |
Period End: | ||||||
Total common shareholders' equity | $ 2,528,344 | $ 2,473,370 | $ 2,417,968 | $ 2,374,848 | $ 2,386,969 | |
Less: Goodwill and other intangibles | (681,756) | (683,243) | (684,965) | (686,897) | (688,829) | |
Tangible common equity (A) | $ 1,846,588 | $ 1,790,127 | $ 1,733,003 | $ 1,687,951 | $ 1,698,140 | |
Less: Net unrealized loss/(gain) on AFS securities | 4,363 | 15,641 | 10,355 | (6,585) | (74,201) | |
Tangible common equity excluding net unrealized gain/loss on AFS securities (B) | $ 1,850,951 | $ 1,805,768 | $ 1,743,358 | $ 1,681,366 | $ 1,623,939 | |
Total assets | $ 29,738,252 | $ 29,717,951 | $ 29,059,404 | $ 27,379,502 | $ 27,433,754 | |
Less: Goodwill and other intangibles | (681,756) | (683,243) | (684,965) | (686,897) | (688,829) | |
Tangible assets (C) | $ 29,056,496 | $ 29,034,708 | $ 28,374,439 | $ 26,692,605 | $ 26,744,925 | |
Less: Net unrealized loss/(gain) on AFS securities | 4,363 | 15,641 | 10,355 | (6,585) | (74,201) | |
Tangible assets excluding net unrealized gain/loss on AFS securities (D) | $ 29,060,859 | $ 29,050,349 | $ 28,384,794 | $ 26,686,020 | $ 26,670,724 | |
Period-end tangible common equity to period-end tangible assets (A)/(C) | 6.36% | 6.17% | 6.11% | 6.32% | 6.35% | |
Period-end tangible common equity to period-end tangible assets excluding net unrealized gain/loss on AFS securities (B)/(D) | 6.37% | 6.22% | 6.14% | 6.30% | 6.09% | |
Average Balance: | ||||||
Total common shareholders' equity | $ 2,512,775 | $ 2,465,056 | $ 2,400,624 | $ 2,412,148 | $ 2,363,507 | $ 2,410,585 |
Less: Goodwill and other intangibles | (682,676) | (684,289) | (686,091) | (687,997) | (689,932) | (687,059) |
Tangible common equity (E) | $ 1,830,099 | $ 1,780,767 | $ 1,714,533 | $ 1,724,151 | $ 1,673,575 | $ 1,723,526 |
Less: Net unrealized loss/(gain) on AFS securities | 3,016 | 1,223 | 10,835 | (68,768) | (76,916) | (33,071) |
Tangible common equity excluding net unrealized gain/loss on AFS securities (F) | $ 1,833,115 | $ 1,781,990 | $ 1,725,368 | $ 1,655,383 | $ 1,596,659 | $ 1,690,455 |
Total assets | $ 29,426,360 | $ 29,902,443 | $ 28,061,134 | $ 27,469,581 | $ 27,709,159 | $ 28,290,973 |
Less: Goodwill and other intangibles | (682,676) | (684,289) | (686,091) | (687,997) | (689,932) | (687,059) |
Tangible assets (G) | $ 28,743,684 | $ 29,218,154 | $ 27,375,043 | $ 26,781,584 | $ 27,019,227 | $ 27,603,914 |
Less: Net unrealized loss/(gain) on AFS securities | 3,016 | 1,223 | 10,835 | (68,768) | (76,916) | (33,071) |
Tangible assets excluding net unrealized gain/loss on AFS securities (H) | $ 28,746,700 | $ 29,219,377 | $ 27,385,878 | $ 26,712,816 | $ 26,942,311 | $ 27,570,843 |
Average tangible common equity to average tangible assets (E)/(G) | 6.37% | 6.09% | 6.26% | 6.44% | 6.19% | 6.24% |
Average tangible common equity to average tangible assets excluding net unrealized gain/loss on AFS securities (F)/(H) | 6.38% | 6.10% | 6.30% | 6.20% | 5.93% | 6.13% |