EPS Grows 3 Percent From the First Quarter of 2006
Assets Exceed $15 Billion for the First Time
LOS ANGELES, April 18, 2007 (PRIME NEWSWIRE) -- City National Corporation (NYSE:CYN), the parent company of wholly owned City National Bank and Business Bank of Nevada, today reported first-quarter 2007 net income of $56.5 million, or $1.15 per share. In the first quarter of 2006, the company earned $1.12 per share on net income of $57.2 million.
City National's first-quarter 2007 financial results reflect its February 28, 2007 acquisition of Business Bank of Nevada.
FIRST-QUARTER 2007 FINANCIAL HIGHLIGHTS
* City National's first-quarter average loan balances reached $10.6 billion, up 10 percent from the previous year, primarily due to organic growth but also to the acquisition of Business Bank of Nevada. * Average deposits grew to $11.9 billion, a 3 percent increase from the first quarter of 2006, also due in part to the acquisition of Business Bank of Nevada. * Noninterest income totaled $66 million, up 20 percent from the first quarter of last year due to fee revenue generated by wealth management, international banking and cash management services as well as the May 31, 2006 acquisition of Independence Investments LLC. This acquisition was one of the contributors that helped lift noninterest income to 31 percent of City National's total revenue. * Assets under direct management amounted to $27.3 billion, a 42 percent increase from the first quarter of 2006. Assets under management or administration grew 20 percent to $48.6 billion. * Credit quality remained strong in the first quarter of 2007. The company required no provision for credit losses and remained adequately reserved at 1.51 percent of total loans. * City National's first-quarter return on average equity was 15.10 percent and its return on average assets was 1.55 percent.
"Year-over-year loan growth, continuing very good credit quality, sustained double-digit increases in noninterest income and sound expense management contributed to a solid first quarter for City National in a challenging and competitive interest-rate environment," said President and Chief Executive Officer Russell Goldsmith. "The fundamental strength of City National was recognized by Moody's Investors Service, which upgraded the bank's credit rating early this year to Aa3. We were able to achieve these results while at the same time broadening our capabilities and expanding into Nevada with the acquisition of Business Bank of Nevada.
"In the first quarter, City National also reached an agreement to acquire Lydian Wealth Management, an outstanding investment advisory firm for the ultra-affluent market. Through these and other initiatives, City National continued to enhance its capabilities and opportunities as the premier private and business bank in California and beyond."
For the three months ended
March 31,
Dollars in millions, --------------------------- %
except per share 2007 2006 Change
------------------------ --------------------------- ------
Earnings Per Share $ 1.15 $ 1.12 3
Net Income 56.5 57.2 (1)
Average Assets 14,836.4 14,826.5 0
Return on Average Assets 1.55% 1.57% (1)
Return on Average Equity 15.10 15.68 (4)
ASSETS
Total assets at March 31, 2007 were $15.3 billion, 4 percent higher than the previous year.
REVENUE
Revenue grew 3 percent, reaching a total of $213.3 million in the first quarter of 2007.
NET INTEREST INCOME
Fully taxable-equivalent net interest income totaled $151.3 million in the first quarter of 2007, down 3 percent from the same period last year.
First-quarter average loan balances grew 10 percent to $10.6 billion from the same period of 2006. Commercial real estate and construction loans together increased 12 percent from the first quarter of last year, while both commercial and single-family residential loans grew 9 percent.
City National's prime lending rate was 8.25 percent on March 31, 2007, unchanged from December 31, 2006 and up 50 basis points from the first quarter of last year.
For the three months ended
March 31,
------------------------- %
Dollars in millions 2007 2006 Change
------------------- ----------- ----------- ------
Average Loans $10,554.9 $ 9,625.0 10
Average Total Securities 2,971.4 3,970.5 (25)
Average Earning Assets 13,660.7 13,699.0 (0)
Average Deposits 11,916.3 11,587.6 3
Average Core Deposits 10,044.8 10,334.0 (3)
Fully Taxable-Equivalent
Net Interest Income 151.3 156.1 (3)
Net Interest Margin 4.49% 4.62% (3)
First-quarter average deposits totaled $11.9 billion, 3 percent higher than the same period of 2006 but 1 percent lower than the fourth quarter due to seasonal variations.
Average noninterest-bearing deposits fell 5 percent from the first quarter of 2006, as some of City National's clients shifted funds from core deposit accounts into higher-yielding money market and wealth management instruments. Average noninterest-bearing deposits declined 4 percent from the fourth quarter of last year.
Average interest-bearing deposits increased 11 percent from the first quarter of 2006 and 1 percent from the fourth quarter of last year.
First-quarter title and escrow balances averaged $1.2 billion, virtually unchanged from the first and fourth quarters of last year.
City National's average net interest margin in the first quarter of 2007 was 4.49 percent, compared with 4.51 percent in the fourth quarter of last year. This modest change was attributable primarily to seasonally lower average demand deposits.
Average securities for the first quarter of 2007 totaled nearly $3 billion, a 25 percent decline from the same period last year. The company used investment proceeds to fund loan growth, reduce federal funds purchased and to provide cash for its acquisition of Business Bank of Nevada. At March 31, 2007, the average duration of total available-for-sale securities was 3.4 years. It was 3.2 years at the end of the first quarter of 2006.
NONINTEREST INCOME
Noninterest income reached $66 million in the first quarter of 2007, up 20 percent from the previous year, or 9 percent excluding the impact of City National's second-quarter 2006 acquisition of Independence Investments and the fourth-quarter disposition of an investment affiliate. The increase in the first quarter of this year reflects the continued growth of City National's wealth management, international banking and cash management services fees.
At March 31, 2007, noninterest income accounted for 31 percent of City National's total revenue, up from 26 percent at March 31, 2006.
Wealth Management
Trust and investment fees grew 39 percent from the first quarter of 2006, while fees for brokerage and mutual fund services increased 18 percent. Assets under management went up 42 percent from the first quarter of 2006, due to the acquisition of Independence Investments, new business, strong investment performance and higher market values. Increases in market values are reflected in fee income primarily on a trailing-quarter basis.
At or for the
three months ended
March 31,
---------------------- %
Dollars in millions 2007 2006 Change
-------------------------------- ---------------------- ------
Trust and Investment Fee Revenue $ 30.3 $ 21.8 39
Brokerage and Mutual Fund Fees 13.8 11.7 18
Assets Under Management (a) 27,290.5 19,246.3 42
Total Assets Under Management
or Administration (a) 48,648.7 40,435.8 20
(a) Excludes $9.3 billion and $9.4 billion of assets under
management for an asset manager in which City National held
minority ownership interests as of March 31, 2007 and March 31,
2006, respectively.
Other Noninterest Income
International banking services fees grew 8 percent from the first quarter of 2006, reflecting increased demand for both foreign exchange services and letters of credit. Service charges for deposit accounts rose 5 percent from the first quarter of last year, due largely to the sale of additional services to new and existing clients.
NONINTEREST EXPENSE
While City National's first-quarter noninterest expense grew 7 percent from the same period last year, it grew less than 2 percent excluding the acquisitions of both Business Bank of Nevada and Independence Investments.
City National's first-quarter efficiency ratio was 57.18, compared with 54.80 for the same period a year ago. This year-over-year increase was due primarily to pressure on core deposits, modest revenue growth and the continued expansion of City National's fee-based businesses, including the addition of Independence Investments.
CREDIT QUALITY
Asset quality remained strong. Net loan recoveries in the first quarter amounted to $1.2 million and nonaccrual loans totaled $23.4 million, or 22 basis points of total loans. In the fourth quarter of last year, nonaccruals amounted to $20.9 million, or 20 basis points of total loans.
City National made no provision for credit losses in the first quarter. The company's loan-loss allowance methodology takes into account several quantitative and qualitative factors, including asset quality, credit risk, loan growth and economic conditions. At March 31, 2007, the allowance for loan and lease losses was $161 million, or 1.51 percent of total loans.
INCOME TAXES
City National's effective tax rate for the first quarter was 36.8 percent. The first-quarter 2006 rate was 37.8 percent. The effective rate for the fourth quarter of last year was 33.5 percent, which included a tax-free gain.
2007 OUTLOOK
Based on current economic conditions and business indicators, management continues to expect earnings per share growth of between 3 percent and 5 percent in 2007.
The company's recently completed acquisition of Business Bank of Nevada is expected to be neutral to earnings per share this year. City National's pending acquisition of Lydian Wealth Management is scheduled to close during the second quarter of 2007. It is expected to be $0.01 dilutive to earnings per share this year and accretive thereafter.
CAPITAL LEVELS
City National remains well-capitalized. Total risk-based capital and Tier 1 risk-based capital ratios at March 31, 2007 were 13.07 percent and 10.57 percent, respectively, compared with the minimum regulatory standards of 10 percent and 6 percent for "well-capitalized" institutions. City National's Tier 1 leverage ratio at March 31, 2007 was 8.55 percent, well above the regulatory minimum ratio of 5 percent.
At December 31, 2006 the total risk-based capital, Tier 1 risk-based capital and Tier 1 leverage ratios were 13.60 percent, 11.09 percent and 8.81 percent, respectively.
The period-end ratio of shareholders' equity to total assets at March 31, 2007 was 10.42 percent, compared with 10.04 percent at the same time in 2006 and 10.02 percent at December 31, 2006.
In the first quarter, Moody's Investors Service upgraded City National Bank's credit rating to Aa3.
City National adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48), as of January 1, 2007. As a result of the implementation of FIN 48, the company recognized a $28 million increase in the reserve for contingent tax liabilities, which was accounted for as a reduction to the January 1, 2007 balance of retained earnings.
STOCK REPURCHASE
In the first quarter of 2007, City National repurchased 263,000 shares at an average cost of $72.11. The company is currently authorized to buy back an additional 794,700 shares.
CONFERENCE CALL
City National Corporation will host a conference call this afternoon to discuss first-quarter 2007 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 800.573.4840 and enter pass code 18841371. 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. It will be archived and available there for 12 months.
ABOUT CITY NATIONAL
City National Corporation's wholly owned subsidiaries, City National Bank and Business Bank of Nevada, provide banking, investment and trust services through 61 offices, including 15 full-service regional centers, in Southern California, the San Francisco Bay Area, Nevada and New York City. The company and its eight investment affiliates manage or administer $48.6 billion in client assets, including $27.3 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.primenewswire.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) changes in interest rates, (2) significant changes in banking laws or regulations, (3) increased competition in the company's markets, (4) other-than-expected credit losses due to business losses, real estate cycles or other economic events, (5) earthquake or other natural disasters affecting the condition of real estate collateral, (6) the effect of acquisitions and integration of acquired businesses and de novo branching efforts, (7) the impact of changes in regulatory, judicial or legislative tax treatment of business transactions, (8) changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies, and (9) general business and economic conditions, including movements in interest rates, the slope of the yield curve and changes in business formation and growth, commercial real estate development and real estate prices.
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, 2006 and particularly Part I, Item 1A, titled "Risk Factors."
CITY NATIONAL CORPORATION
FINANCIAL HIGHLIGHTS
(unaudited)
Three Months
--------------------------
%
For The Period Ended March 31, 2007 2006 Change
---------------------------------------------------------------------
Per Common Share
Net Income
Basic $ 1.18 $ 1.16 2
Diluted 1.15 1.12 3
Dividends 0.46 0.41 12
Book value 32.72 29.87 10
Results of Operations: (In millions)
Interest income $ 214 $ 198 8
Interest expense 67 46 46
------- -------
Net interest income 147 152 (3)
Net interest income (Fully
taxable-equivalent) 151 156 (3)
Total revenue 213 207 3
Provision for credit losses -- -- NM
Net income 57 57 (1)
Financial Ratios:
Performance Ratios:
Return on average assets 1.55% 1.57%
Return on average shareholders' equity 15.10 15.68
Period-end shareholders' equity to
period-end assets 10.42 10.04
Net interest margin 4.49 4.62
Efficiency ratio 57.18 54.80
Capital Adequacy Ratios (Period end):
Tier 1 leverage 8.55 8.92
Tier 1 risk-based capital 10.57 12.36
Total risk-based capital 13.07 15.51
Asset Quality Ratios:
Allowance for loan and lease losses to:
Total loans 1.51% 1.64%
Nonaccrual loans 687.55 1,075.11
Nonperforming assets to:
Total loans and nonperforming assets 0.22 0.15
Total assets 0.15 0.10
Net (charge-offs)/recoveries to
Average total loans (annualized) 0.05% 0.11%
Average Balances: (In millions)
Loans $10,555 $ 9,625 10
Interest-earning assets 13,661 13,699 --
Assets 14,836 14,827 --
Core deposits 10,045 10,334 (3)
Deposits 11,916 11,588 3
Interest-bearing liabilities 7,608 7,367 3
Shareholders' equity 1,519 1,481 3
Period-End Balances: (In millions)
Loans $10,650 $ 9,567 11
Assets 15,264 14,739 4
Core deposits 10,673 10,489 2
Deposits 12,606 11,909 6
Shareholders' equity 1,590 1,480 7
Wealth Management: (In millions)(a)
Assets under management $27,291 $19,246 42
Assets under management or administration 48,649 40,436 20
(a) Excludes $9.3 billion and $9.4 billion of assets under
management for asset managers in which City National held
minority ownership interests as of March 31, 2007 and March 31,
2006, respectively.
CITY NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended
March 31,
--------------------------
(Dollars in thousands %
except per share data) 2007 2006 Change
------------------------------------ -----------------------------
Interest income $214,264 $198,192 8
Interest expense 66,972 45,786 46
-------- --------
Net Interest Income 147,292 152,406 (3)
Provision for Credit Losses -- -- NM
Noninterest Income
Trust and investment fees 30,254 21,774 39
Brokerage and mutual fund fees 13,780 11,684 18
Cash management and
deposit transaction fees 8,471 8,064 5
International services 6,463 5,989 8
Bank-owned life insurance 624 934 (33)
Other service charges and fees 6,160 5,777 7
Loss on sale of assets (46) -- NM
Gain on sale of securities 269 708 (62)
-------- --------
Total noninterest income 65,975 54,930 20
Noninterest Expense
Salaries and employee benefits 77,984 71,616 9
Net occupancy of premises 9,458 9,012 5
Legal and professional fees 9,274 9,417 (2)
Information services 4,999 4,456 12
Depreciation 5,000 4,660 7
Amortization of intangibles 1,630 1,891 (14)
Marketing and advertising 3,998 4,016 (0)
Office services 2,747 2,691 2
Equipment 718 632 14
Minority interest expense 2,076 1,228 69
Other 5,955 5,704 4
-------- --------
Total noninterest expense 123,839 115,323 7
-------- --------
Income Before Taxes 89,428 92,013 (3)
Applicable Income Taxes 32,883 34,781 (5)
-------- --------
Net Income $ 56,545 $ 57,232 (1)
======== ========
Other Data:
Earnings per common share - basic $ 1.18 $ 1.16 2
Earnings per common share - diluted $ 1.15 $ 1.12 3
Dividends paid per common share $ 0.46 $ 0.41 12
Dividend payout ratio 39.11% 35.65% 10
Return on average assets 1.55% 1.57% (1)
Return on average shareholders'
equity 15.10% 15.68% (4)
Net interest margin (Fully
taxable-equivalent) 4.49% 4.62% (3)
Full-time equivalent employees 2,800 2,570 9
CITY NATIONAL CORPORATION
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
(unaudited)
2007 2006
--------- ---------
(Dollars in thousands First Fourth
except per share data) Quarter Quarter
--------------------------------------- --------- ---------
Interest Income $ 214,264 $ 213,551
Interest Expense 66,972 62,788
--------- ---------
Net Interest Income 147,292 150,763
Provision for Credit Losses -- --
Noninterest Income
Trust and investment fees 30,254 30,777
Brokerage and mutual fund fees 13,780 13,309
Cash management and
deposit transaction fees 8,471 7,909
International services 6,463 6,486
Bank-owned life insurance 624 700
Other service charges and fees 6,160 6,725
Gain (loss) on sale of assets (46) 2,482
Gain (loss) on sale of securities 269 (4,130)
--------- ---------
Total noninterest income 65,975 64,258
Noninterest Expense
Salaries and employee benefits 77,984 74,499
Net occupancy of premises 9,458 11,562
Legal and professional fees 9,274 10,025
Information services 4,999 5,138
Depreciation 5,000 4,908
Amortization of intangibles 1,630 1,456
Marketing and advertising 3,998 5,153
Office services 2,747 2,888
Equipment 718 1,043
Minority interest expense 2,076 1,709
Other 5,955 8,632
--------- ---------
Total noninterest expense 123,839 127,013
--------- ---------
Income Before Taxes 89,428 88,008
Applicable Income Taxes 32,883 29,452
--------- ---------
Net Income $ 56,545 $ 58,556
========= =========
Other Data:
Earnings per common share - basic $ 1.18 $ 1.23
Earnings per common share - diluted $ 1.15 $ 1.19
Dividends paid per common share $ 0.46 $ 0.41
Dividend payout ratio 39.11% 33.55%
Return on average assets 1.55% 1.58%
Return on average shareholders' equity 15.10% 15.77%
Net interest margin (Fully
taxable-equivalent) 4.49% 4.51%
Full-time equivalent employees 2,800 2,670
CITY NATIONAL CORPORATION
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
(unaudited)
(Dollars in thousands except per share data)
2006
----------------------------------------------------
Fourth Third Second First Full
Quarter Quarter Quarter Quarter Year
--------------- -------- -------- -------- -------- --------
Interest
Income $213,551 $208,347 $206,204 $198,192 $826,294
Interest
Expense 62,788 59,625 52,206 45,786 220,405
-------- -------- -------- -------- --------
Net Interest
Income 150,763 148,722 153,998 152,406 605,889
Provision for
Credit Losses -- -- (610) -- (610)
Noninterest
Income
Trust and
investment
fees 30,777 30,002 24,909 21,774 107,462
Brokerage and
mutual fund
fees 13,309 13,096 12,269 11,684 50,358
Cash management
and deposit
transaction
fees 7,909 7,967 7,691 8,064 31,631
International
services 6,486 6,829 6,870 5,989 26,174
Bank-owned life
insurance 700 685 677 934 2,996
Other service
charges and fees 6,725 6,303 6,888 5,777 25,693
Gain on sale of
assets 2,482 268 -- -- 2,750
Gain (loss) on
sale of
securities (4,130) (362) (716) 708 (4,500)
-------- -------- -------- -------- --------
Total non-
interest
income 64,258 64,788 58,588 54,930 242,564
Noninterest
Expense
Salaries and
employee
benefits 74,499 75,318 73,718 71,616 295,151
Net occupancy of
premises 11,562 10,207 9,460 9,012 40,241
Legal and pro-
fessional fees 10,025 9,120 9,169 9,417 37,731
Information
services 5,138 4,932 4,571 4,456 19,097
Depreciation 4,908 4,832 4,662 4,660 19,062
Amortization of
intangibles 1,456 (37) 1,974 1,891 5,284
Marketing and
advertising 5,153 4,495 4,990 4,016 18,654
Office services 2,888 2,623 2,549 2,691 10,751
Equipment 1,043 514 623 632 2,812
Minority interest
expense 1,709 1,808 1,213 1,228 5,958
Other 8,632 6,857 6,243 5,704 27,436
-------- -------- -------- -------- --------
Total non-
interest
expense 127,013 120,669 119,172 115,323 482,177
-------- -------- -------- -------- --------
Income Before
Taxes 88,008 92,841 94,024 92,013 366,886
Applicable Income
Taxes 29,452 33,847 35,283 34,781 133,363
-------- -------- -------- -------- --------
Net Income $ 58,556 $ 58,994 $ 58,741 $ 57,232 $233,523
======== ======== ======== ======== ========
Other Data:
Earnings per
common share
- basic $ 1.23 $ 1.23 $ 1.20 $ 1.16 $ 4.82
Earnings per
common share
- diluted $ 1.19 $ 1.20 $ 1.16 $ 1.12 $ 4.66
Dividends paid
per common
share $ 0.41 $ 0.41 $ 0.41 $ 0.41 $ 1.64
Dividend payout
ratio 33.55% 33.64% 34.43% 35.65% 34.31%
Return on average
assets 1.58% 1.61% 1.59% 1.57% 1.59%
Return on average
shareholders'
equity 15.77% 16.30% 16.20% 15.68% 15.99%
Net interest
margin (Fully
taxable-
equivalent) 4.51% 4.53% 4.65% 4.62% 4.58%
Full-time
equivalent
employees 2,670 2,672 2,648 2,570 --
CITY NATIONAL CORPORATION
CONSOLIDATED PERIOD END BALANCE SHEET
(unaudited)
2007
------------
First
(In thousands) Quarter
--------------------------------------------- ------------
Assets
Cash and due from banks $ 494,231
Federal funds sold 210,000
Due from banks - interest-bearing 77,214
Securities-available-for-sale 2,903,546
Trading account securities 35,981
Loans:
Commercial 4,030,601
Commercial real estate mortgages 1,926,687
Residential mortgages 2,935,729
Real estate construction 1,173,854
Equity lines of credit 388,279
Installment 194,448
------------
Total loans 10,649,598
Allowance for loan and lease losses (161,005)
------------
Net loans 10,488,593
Premises and equipment, net 103,259
Goodwill and other intangibles 420,197
Other assets 530,871
------------
Total assets $ 15,263,892
============
Liabilities:
Deposits:
Noninterest-bearing $ 5,690,413
Interest-bearing 6,915,968
------------
Total deposits 12,606,381
Federal funds purchased and securities
sold under repurchase agreements 310,738
Other short-term borrowed funds 50,667
Subordinated debt 270,174
Other long-term debt 224,079
Minority interest 28,285
Other liabilities 183,193
------------
Total liabilities 13,673,517
Shareholders' Equity
Common stock 50,803
Additional paid-in capital 421,827
Retained earnings 1,271,092
Accumulated other
comprehensive loss (30,940)
Treasury shares (122,407)
------------
Total shareholders' equity 1,590,375
------------
Total liabilities and shareholders' equity $ 15,263,892
============
CITY NATIONAL CORPORATION
CONSOLIDATED PERIOD END BALANCE SHEET
(unaudited)
2006
--------------------------------------------------
Fourth Third Second First
(In thousands) Quarter Quarter Quarter Quarter
----------------- ----------- ----------- ----------- -----------
Assets
Cash and due
from banks $ 423,114 $ 457,396 $ 467,076 $ 457,156
Federal funds sold 127,000 3,300 1,900 --
Due from banks
- interest-bearing 60,940 65,323 50,416 48,890
Securities-avail-
able-for-sale 2,954,372 3,175,230 3,211,590 3,850,173
Trading account
securities 147,907 116,870 123,418 57,353
Loans:
Commercial 4,084,377 3,782,781 3,738,361 3,698,614
Commercial real
estate mortgages 1,801,390 1,843,810 1,874,003 1,819,856
Residential
mortgages 2,869,775 2,830,761 2,769,340 2,700,966
Real estate
construction 1,024,681 980,305 882,265 820,357
Equity lines of
credit 404,657 384,830 364,312 339,348
Installment 201,125 197,871 193,474 188,262
----------- ----------- ----------- -----------
Total loans 10,386,005 10,020,358 9,821,755 9,567,403
Allowance for
loan and lease
losses (155,342) (159,063) (157,580) (156,482)
----------- ----------- ----------- -----------
Net loans 10,230,663 9,861,295 9,664,175 9,410,921
Premises and
equipment, net 94,745 88,582 84,802 84,884
Goodwill and other
intangibles 287,561 298,471 298,004 283,642
Other assets 558,079 550,291 575,686 546,365
----------- ----------- ----------- -----------
Total assets $14,884,381 $14,616,758 $14,477,067 $14,739,384
=========== =========== =========== ===========
Liabilities:
Deposits:
Noninterest-
bearing $ 6,002,068 $ 5,639,811 $ 5,880,630 $ 5,945,485
Interest-bearing 6,170,748 6,252,206 6,098,200 5,963,044
----------- ----------- ----------- -----------
Total deposits 12,172,816 11,892,017 11,978,830 11,908,529
Federal funds
purchased and
securities sold
under repurchase
agreements 422,903 506,962 234,995 526,920
Other short-term
borrowed funds 97,525 72,426 143,724 151,522
Subordinated debt 269,848 270,522 266,675 269,785
Other long-term
debt 217,569 217,323 209,864 213,819
Minority interest 28,425 28,578 27,985 25,225
Other liabilities 184,380 170,710 206,929 164,020
----------- ----------- ----------- -----------
Total
liabilities 13,393,466 13,158,538 13,069,002 13,259,820
Shareholders' Equity
Common stock 50,719 50,729 50,735 50,693
Additional paid-in
capital 412,248 404,163 402,476 399,976
Retained earnings 1,264,697 1,235,959 1,196,812 1,158,290
Accumulated other
comprehensive
loss (41,386) (46,400) (86,931) (73,250)
Treasury shares (195,363) (186,231) (155,027) (56,145)
----------- ----------- ----------- -----------
Total shareholders'
equity 1,490,915 1,458,220 1,408,065 1,479,564
----------- ----------- ----------- -----------
Total liabilities
and shareholders'
equity $14,884,381 $14,616,758 $14,477,067 $14,739,384
=========== =========== =========== ===========
CITY NATIONAL CORPORATION
CREDIT LOSS EXPERIENCE
(unaudited) 2007
---------------------
First Year To
(Dollars in thousands) Quarter Date
--------------------------------------------- -------- --------
Allowance for Loan and Lease Losses
Balance at beginning of period $155,342 $155,342
Allowance of acquired institution 4,513 4,513
Net (charge-offs)/recoveries:
Commercial 1,247 1,247
Commercial real estate mortgages -- --
Residential mortgages -- --
Real estate construction 18 18
Equity lines of credit -- --
Installment (26) (26)
-------- --------
Total net (charge-offs)/recoveries 1,239 1,239
Provision for credit losses/transfers (89) (89)
-------- --------
Balance at end of period $161,005 $161,005
======== ========
Net (Charge-Offs)/Recoveries to
Average Total Loans: (annualized)
Commercial 0.12% 0.12%
Commercial real estate mortgages 0.00% 0.00%
Residential mortgage 0.00% 0.00%
Real estate construction 0.01% 0.01%
Equity lines of credit 0.00% 0.00%
Installment (0.06)% (0.06)%
Total loans 0.05% 0.05%
Reserve for Off-Balance Sheet Credit Commitments
Balance at beginning of period $ 16,424 $ 16,424
Reserve of acquired institution 492 492
Provision for credit losses/transfers 89 89
-------- --------
Balance at end of period $ 17,005 $ 17,005
======== ========
----------------------------------------------------
2006
----------------------------------------------------
(Dollars in Fourth Third Second First Full
thousands) Quarter Quarter Quarter Quarter Year
--------------- -------- -------- -------- -------- --------
Allowance for
Loan and Lease
Losses
Balance at
beginning of
period $159,063 $157,580 $156,482 $153,983 $153,983
Allowance of
acquired
institution -- -- -- -- --
Net (charge-offs)
/recoveries:
Commercial (2,665) 1,912 1,122 1,792 2,161
Commercial real
estate
mortgages 356 -- 11 844 1,211
Residential
mortgages -- -- -- -- --
Real estate
construction (666) 18 17 16 (615)
Equity lines of
credit -- (11) -- -- (11)
Installment 26 10 11 4 51
-------- -------- -------- -------- --------
Total net
(charge-offs)/
recoveries (2,949) 1,929 1,161 2,656 2,797
Provision for
credit losses/
transfers (772) (446) (63) (157) (1,438)
-------- -------- -------- -------- --------
Balance at end
of period $155,342 $159,063 $157,580 $156,482 $155,342
======== ======== ======== ======== ========
Net (Charge-Offs)/
Recoveries to
Average Total
Loans: (annualized)
Commercial (0.27)% 0.20% 0.11% 0.19% 0.06%
Commercial real
estate mortgages 0.08% 0.00% 0.00% 0.19% 0.07%
Residential
mortgage 0.00% 0.00% 0.00% 0.00% 0.00%
Real estate
construction (0.26)% 0.01% 0.01% 0.01% (0.07)%
Equity lines of
credit 0.00% (0.01)% 0.00% 0.00% (0.00)%
Installment 0.05% 0.02% 0.02% 0.01% 0.03%
Total loans (0.11)% 0.08% 0.05% 0.11% 0.03%
Reserve for Off-
Balance Sheet Credit
Commitments
Balance at
beginning of
period $ 15,652 $ 15,206 $ 15,753 $ 15,596 $ 15,596
Reserve of
acquired
institution -- -- -- -- --
Provision for
credit losses/
transfers 772 446 (547) 157 828
-------- -------- -------- -------- --------
Balance at end
of period $ 16,424 $ 15,652 $ 15,206 $ 15,753 $ 16,424
======== ======== ======== ======== ========
CITY NATIONAL CORPORATION
NONPERFORMING ASSETS
(unaudited)
2007 2006
------- ---------------------------------------
(Dollars in First Fourth Third Second First
thousands) Quarter Quarter Quarter Quarter Quarter
------------------ ------- ------- ------- ------- -------
Nonaccrual Loans
Commercial $ 7,024 $ 2,977 $10,416 $ 6,691 $ 5,642
Commercial real
estate mortgages 4,783 4,849 8,094 3,644 923
Residential
mortgages -- -- -- -- --
Real estate
construction 11,199 12,678 -- 4,617 7,492
Equity lines of
credit 362 -- -- -- --
Installment 49 379 269 49 498
------- ------- ------- ------- -------
Total nonaccrual
loans 23,417 20,883 18,779 15,001 14,555
Other Nonperforming
Assets -- -- -- -- --
------- ------- ------- ------- -------
Total nonper-
forming assets $23,417 $20,883 $18,779 $15,001 $14,555
======= ======= ======= ======= =======
Loans 90 Days or
More Past Due on
Accrual Status $ 199 $ 337 $ 27 $ 18 $ --
Allowance for loan
and lease losses
as a percentage
of:
Nonaccrual loans 687.55% 743.88% 847.03% 1,050.47% 1,075.11%
Total nonper-
forming assets 687.55% 743.88% 847.03% 1,050.47% 1,075.11%
Total loans 1.51% 1.50% 1.59% 1.60% 1.64%
Nonaccrual loans as
a percentage of
total loans 0.22% 0.20% 0.19% 0.15% 0.15%
Nonperforming assets
as a percentage of:
Total loans and
other nonperforming
assets 0.22% 0.20% 0.19% 0.15% 0.15%
Total assets 0.15% 0.14% 0.13% 0.10% 0.10%
CITY NATIONAL CORPORATION
AVERAGE BALANCES AND RATES
(unaudited)
2007 2006
----------------- ----------------
First Quarter Fourth Quarter
----------------- -----------------
Average Average Average Average
(Dollars in millions) Balance Rate Balance Rate
------------------------------- ------- ------- ------- -------
Assets
Interest-earning assets
Loans
Commercial $ 4,146 7.25% $ 3,955 7.12%
Commercial real estate
mortgages 1,894 7.51 1,836 7.55
Residential mortgages 2,899 5.41 2,852 5.40
Real estate construction 1,031 8.70 1,010 8.93
Equity lines of credit 394 7.86 397 7.86
Installment 191 7.64 195 7.56
------- -------
Total loans 10,555 6.98 10,245 6.92
Due from banks - interest-
bearing 73 2.97 68 2.70
Federal funds sold and
securities purchased under
resale agreements 14 5.36 54 5.28
Securities available-for-sale 2,917 4.70 3,122 4.64
Trading account securities 54 6.09 49 5.32
Other interest-earning assets 48 5.96 47 5.64
------- -------
Total interest-earning assets 13,661 6.48 13,585 6.35
Allowance for loan and lease
losses (157) (159)
Cash and due from banks 422 407
Other assets 910 879
------- -------
Total assets $14,836 $14,712
======= =======
Liabilities and
Shareholders' Equity
Interest-bearing deposits
Interest checking accounts $ 749 0.48% $ 762 0.43%
Money market accounts 3,419 2.98 3,252 2.75
Savings deposits 155 0.47 160 0.48
Time deposits - under $100,000 232 4.08 197 4.35
Time deposits - $100,000 and
over 1,872 4.72 1,969 4.63
------- -------
Total interest-bearing
deposits 6,427 3.18 6,340 3.04
Federal funds purchased
and securities sold under
repurchase agreements 582 5.27 416 5.24
Other borrowings 599 6.15 554 6.19
------- -------
Total interest-bearing
liabilities 7,608 3.57 7,310 3.41
Noninterest-bearing deposits 5,489 5,711
Other liabilities 220 218
Shareholders' equity 1,519 1,473
------- -------
Total liabilities and
shareholders' equity $14,836 $14,712
======= =======
Net interest spread 2.91% 2.94%
==== ====
Net interest margin 4.49% 4.51%
==== ====
Average prime rate 8.25% 8.25%
==== =====
CITY NATIONAL CORPORATION
AVERAGE BALANCES AND RATES
(unaudited)
(Dollars in millions)
2006
------------------------------------------------
Fourth Quarter Third Quarter Second Quarter
-------------- -------------- --------------
Average Average Average
Balance Rate Balance Rate Balance Rate
------------------- ------- ---- ------- ---- ------- ----
Assets
Interest-earning
assets
Loans
Commercial $ 3,955 7.12% $ 3,827 7.05% $ 3,933 6.85%
Commercial real
estate mortgages 1,836 7.55 1,857 7.47 1,843 7.60
Residential
mortgages 2,852 5.40 2,801 5.38 2,737 5.31
Real estate
construction 1,010 8.93 959 9.01 843 8.92
Equity lines of
credit 397 7.86 375 7.91 352 7.63
Installment 195 7.56 194 7.58 195 7.72
------- ------- -------
Total loans 10,245 6.92 10,013 6.88 9,903 6.79
Due from banks -
interest-bearing 68 2.70 61 2.55 46 2.31
Federal funds sold
and securities
purchased under
resale agreements 54 5.28 3 7.13 51 4.77
Securities avail-
able-for-sale 3,122 4.64 3,191 4.63 3,529 4.55
Trading account
securities 49 5.32 54 5.22 52 6.61
Other interest-
earning assets 47 5.64 46 5.45 46 5.40
------- ------- -------
Total interest-
earning assets 13,585 6.35 13,368 6.30 13,627 6.18
Allowance for loan
and lease losses (159) (158) (157)
Cash and due from
banks 407 428 443
Other assets 879 907 869
------- ------- -------
Total assets $14,712 $14,545 $14,782
======= ======= =======
Liabilities and
Shareholders' Equity
Interest-bearing
deposits
Interest checking
accounts $ 762 0.43% $ 706 0.36% $ 757 0.27%
Money market
accounts 3,252 2.75 3,224 2.57 3,352 2.13
Savings deposits 160 0.48 163 0.41 174 0.37
Time deposits -
under $100,000 197 4.35 184 4.11 176 3.24
Time deposits -
$100,000 and over 1,969 4.63 1,999 4.52 1,652 4.04
------- ------- -------
Total interest-
bearing deposits 6,340 3.04 6,276 2.93 6,111 2.40
Federal funds
purchased and
securities sold
under repurchase
agreements 416 5.24 401 5.26 546 4.93
Other borrowings 554 6.19 558 5.63 652 5.51
------- ------- -------
Total interest-
bearing
liabilities 7,310 3.41 7,235 3.27 7,309 2.86
Noninterest-bearing
deposits 5,711 5,629 5,820
Other liabilities 218 245 199
Shareholders' equity 1,473 1,436 1,454
------- ------- -------
Total liabilities
and shareholders'
equity $14,712 $14,545 $14,782
======= ======= =======
Net interest spread 2.94% 3.03% 3.32%
==== ==== ====
Net interest margin 4.51% 4.53% 4.65%
==== ==== ====
Average prime rate 8.25% 8.25% 7.90%
==== ==== ====
--------------------------------
First Quarter Year to Date
-------------- --------------
Average Average
Balance Rate Balance Rate
----------------------------------- ------- ---- ------- ----
Assets
Interest-earning assets
Loans
Commercial $ 3,813 6.62% $ 3,882 6.91%
Commercial real estate mortgages 1,809 7.37 1,836 7.50
Residential mortgages 2,666 5.27 2,765 5.34
Real estate construction 806 8.44 905 8.84
Equity lines of credit 334 7.17 365 7.66
Installment 197 7.41 195 7.57
------- -------
Total loans 9,625 6.59 9,948 6.80
Due from banks - interest-bearing 44 1.98 55 2.43
Federal funds sold and securities
purchased under resale agreements 13 4.32 30 5.01
Securities available-for-sale 3,926 4.47 3,439 4.57
Trading account securities 44 5.26 50 5.61
Other interest-earning assets 47 5.23 47 5.43
------- -------
Total interest-earning assets 13,699 5.98 13,569 6.20
Allowance for loan and lease losses (155) (157)
Cash and due from banks 439 429
Other assets 844 875
------- -------
Total assets $14,827 $14,716
======= =======
Liabilities and Shareholders' Equity
Interest-bearing deposits
Interest checking accounts $ 808 0.23% $ 758 0.32%
Money market accounts 3,388 1.81 3,304 2.31
Savings deposits 179 0.37 169 0.41
Time deposits - under $100,000 180 2.80 184 3.65
Time deposits - $100,000 and over 1,254 3.39 1,721 4.24
------- -------
Total interest-bearing deposits 5,809 1.92 6,136 2.59
Federal funds purchased and
securities sold under repurchase
agreements 809 4.48 542 4.89
Other borrowings 749 5.09 627 5.57
------- -------
Total interest-bearing liabilities 7,367 2.52 7,305 3.02
Noninterest-bearing deposits 5,779 5,734
Other liabilities 200 216
Shareholders' equity 1,481 1,461
------- -------
Total liabilities and
shareholders' equity $14,827 $14,716
======= =======
Net interest spread 3.46% 3.18%
==== ====
Net interest margin 4.62% 4.58%
==== ====
Average prime rate 7.43% 7.96%
==== ====
CITY NATIONAL CORPORATION
CAPITAL AND CREDIT RATING DATA
(unaudited)
2007
-------------------
First Year To
Quarter Date
------- -------
Per Common Share:
-----------------
Shares Outstanding (in thousands):
Average - Basic 47,968 47,968
Average - Diluted 49,087 49,087
Period-End 48,602
Book Value $ 32.72
Price:
High $ 75.39 $ 75.39
Low 68.00 68.00
Period-end 73.60
Capital Ratios (Dollars in millions):
Risk-based capital
Risk-adjusted assets $11,618
Tier I capital $ 1,228
Percentage of risk adjusted assets 10.57%
Total capital $ 1,519
Percentage of risk adjusted assets 13.07%
Tier I leverage ratio 8.55%
Period-end shareholders' equity
to total period-end assets 10.42%
Period-end tangible shareholders' equity
to total period-end tangible assets 7.88%
Average shareholders' equity
to total average assets 10.24% 10.24%
Average tangible shareholders' equity
to total average tangible assets 8.18% 8.18%
2006
-----------------------------------------------
Fourth Third Second First Full
Quarter Quarter Quarter Quarter Year
------- ------- ------- ------- -------
Per Common Share:
-----------------
Shares Outstanding
(in thousands):
Average - Basic 47,573 47,919 48,957 49,484 48,477
Average - Diluted 49,012 49,318 50,654 51,309 50,063
Period-End 47,492 47,639 48,115 49,535
$ 31.39 $ 30.61 $ 29.26 $ 29.87
Book Value
Price:
High $ 71.29 $ 68.41 $ 78.25 $ 78.25 $ 78.25
Low 65.34 63.69 60.02 71.95 60.02
Period-end 71.20 67.06 65.09 76.79
Capital Ratios
(Dollars in millions):
----------------------
Risk-based capital
Risk-adjusted
assets $11,411 $10,999 $10,811 $10,473
Tier I capital $ 1,256 $ 1,229 $ 1,221 $ 1,295
Percentage of risk
adjusted assets 11.09% 11.18% 11.29% 12.36%
Total capital $ 1,544 $ 1,563 $ 1,552 $ 1,624
Percentage of risk
adjusted assets 13.60% 14.21% 14.36% 15.51%
Tier I leverage
ratio 8.81% 8.66% 8.45% 8.92%
Period-end share-
holders' equity to
total period-end
assets 10.02% 9.98% 9.73% 10.04%
Period-end tangible
shareholders' equity
to total period-end
tangible assets 8.24% 8.10% 7.83% 8.27%
Average shareholders'
equity to total
average assets 10.01% 9.87% 9.84% 9.99% 9.93%
Average tangible
shareholders' equity
to total average
tangible assets 8.16% 7.99% 8.04% 8.23% 8.10%
Senior Debt Credit Ratings
--------------------------
For The Period Ended March 31, 2007
Standard &
Moody's Fitch Poor's DBRS
------- ----- ---------- -------
City National Bank Aa3 A- A A (high)
City National Corporation A1 A- A- A