EXHIBIT 99.1
Total Assets Exceed $21 Billion for the First Time Deposits Reach Record Level of $17.4 Billion
LOS ANGELES, Jan. 28, 2010 (GLOBE NEWSWIRE) -- City National Corporation (NYSE:CYN), the parent company of wholly owned City National Bank, today reported fourth-quarter 2009 net income of $29.1 million, compared to $8.9 million in the fourth quarter of 2008 and $8.0 million in the third quarter of 2009.
Fourth-quarter 2009 net income available to common shareholders was $19.7 million, or $0.38 per share. This included an after-tax gain of $21.1 million, or $0.41 per share, for the acquisition of Imperial Capital Bank (less transaction costs) as well as a noncash charge of $4 million, or $0.08 per share, for the repurchase of $200 million of preferred stock issued to the U.S. Treasury Department. By comparison, net income available to common shareholders in the fourth quarter of 2008 totaled $6.5 million, or $0.13 per share. In the third quarter of 2009, it amounted to $2.5 million, or $0.05 per share.
Full-year 2009 net income totaled $51.3 million, while net income available to common shareholders amounted to $25.4 million, or $0.50 per share. In 2008, net income available to common shareholders was $102.5 million, $2.11 per share.
City National also announced today that its Board of Directors has maintained and approved a quarterly common stock cash dividend of $0.10 per share. The company's dividend will be payable on February 24, 2010 to stockholders of record on February 10, 2010.
FOURTH-QUARTER AND YEAR-END 2009 HIGHLIGHTS
* On December 18, 2009, City National acquired the banking operations of Imperial Capital Bank in a purchase and assumption agreement with the Federal Deposit Insurance Corporation (FDIC). City National acquired approximately $3.3 billion in assets and $2.1 billion of deposits. Imperial Capital's $2.4 billion in loans, prior to acquisition-related fair value adjustments, are subject to a loss-sharing agreement with the FDIC. * Fully taxable-equivalent net interest income amounted to $166.5 million, up 9 percent from the fourth quarter of 2008 and 1 percent from the third quarter of 2009. The company's net interest margin averaged 3.74 percent in the fourth quarter of 2009, compared with 3.94 percent in the third quarter of the year. * Year-end deposits grew to $17.4 billion, up 37 percent from December 31, 2008. Average fourth-quarter deposits grew to $15.7 billion, up 24 percent from the same period of 2008 and 6 percent from the third quarter of 2009. Average core deposits were $14.5 billion, up 30 percent from the fourth quarter of 2008 and 7 percent from the third quarter of 2009. * Year-end loans, excluding Imperial Capital Bank assets covered by City National's loss-sharing agreement with the FDIC, totaled $12.1 billion, down 2 percent from 2008. Average fourth-quarter loan balances also totaled $12.1 billion, down 2 percent from both the same period of 2008 and the third quarter of 2009. * Fourth-quarter 2009 net income includes an $80 million provision for credit losses, bringing the total provision for the year to $285 million. The fourth-quarter provision added $21.3 million, after net charge-offs, to the company's allowance for loan and lease losses. Net charge-offs declined 24 percent from the third quarter of 2009, while nonperforming assets, excluding FDIC-covered assets, decreased 2 percent. * Noninterest income totaled $110.1 million, up 98 percent from the same period in 2008 and 60 percent from the third quarter of 2009. These increases were due principally to a $38.2 million pretax gain on the company's fourth-quarter 2009 acquisition of Imperial Capital Bank. * On December 8, 2009, the company raised $250 million of Tier 1 capital through a successful trust preferred securities offering, further strengthening its balance sheet and bringing total new Tier 1 and Tier 2 capital raised in 2009 to $550 million. The company's ratio of Tier 1 common shareholders' equity to risk-based assets was 8.9 percent at December 31, 2009, down from 9.2 percent at September 30, 2009 due to the company's acquisition of Imperial Capital Bank(1). * On December 30, 2009, City National repurchased $200 million of the preferred securities that it had sold to the U.S. Treasury Department in the fourth quarter of 2008. The company expects to repurchase the remaining shares sometime this year, subject to regulatory approval.
"City National finished 2009 positively with the acquisition of Imperial Capital Bank, repayment of $200 million in TARP securities, increased earnings, revenues, reserves, loans and deposits, and the first quarterly improvement of key credit indicators since this harsh economic cycle began," said President and Chief Executive Officer Russell Goldsmith.
"To have completed its 17th consecutive profitable year in spite of the significant costs and challenges posed by this recession is testimony to the quality and strength of City National's capital base and its colleagues, capabilities and value proposition. As the economy improves in 2010, City National is well-positioned to increase its profitability even while credit costs remain elevated."
For the For the three three months ended months December 31, ended Dollars in millions, -------------------- % Sept. 30, % except per share 2009 2008 Change 2009 Change ---------------------- --------- --------- ------ --------- ------ Earnings Per Share $ 0.38 $ 0.13 192 $ 0.05 660 Net Income Attributable to CNC $ 29.1 $ 8.9 225 $ 8.0 262 Less: Dividends and Accretion on Preferred Stock 9.4 2.4 284 5.5 71 --------- --------- --------- Net Income Available to Common Shareholders $ 19.7 $ 6.5 203 $ 2.5 675 ========= ========= ========= Average Assets $19,095.2 $16,191.2 18 $17,938.2 6 Return on Average Assets 0.60% 0.22% 173 0.18% 233 Return on Average Common Shareholders' Equity 4.27% 1.60% 167 0.56% 663
ASSETS
Total assets at December 31, 2009 were $21.1 billion, up 28 percent from 2008, largely reflecting the company's strong deposit growth as well as its December 18, 2009 FDIC-assisted acquisition of Imperial Capital Bank.
REVENUE
Fourth-quarter revenue was $273.1 million, up 34 percent from the fourth quarter of 2008 and 19 percent from the third quarter of last year. Full-year 2009 revenue was $915.3 million, up 6 percent from the previous year.
NET INTEREST INCOME
Fully taxable-equivalent net interest income totaled $166.5 million in the fourth quarter of 2009, up 9 percent from the same period in 2008 and 1 percent from the third quarter of 2009. Fully taxable-equivalent net interest income for the full-year 2009 was $638.6 million, compared with $616.4 million for the previous year.
Imperial Capital Bank's assets include $2.4 billion in loans, prior to acquisition-related fair value adjustments, that consist primarily of multifamily residential loans, but also include commercial real estate, construction, and commercial and industrial loans.
For the full-year 2009, City National's average loans, excluding FDIC-covered assets, reached $12.3 billion, up 2 percent from 2008.
Fourth-quarter average loans, excluding Imperial Capital Bank assets covered by City National's loss-sharing agreement with the FDIC, totaled $12.1 billion, down 2 percent from both the same period of 2008 and the third quarter of 2009. Commercial loans were down 4 percent from the fourth quarter of 2008 and 2 percent from the third quarter of 2009. Construction and commercial real estate loans were down 10 percent from the year-ago period and 4 percent from the third quarter of 2009. Single-family residential mortgage loans, which are made primarily to City National's private banking clients, rose 4 percent from the fourth quarter of 2008 but were virtually unchanged from the third quarter of 2009.
For the full year of 2009, the company renewed approximately $4.8 billion of loans and made approximately $2.8 billion in new loan commitments. About $1.6 billion of these new commitments were funded.
Average securities for the fourth quarter of 2009 totaled $3.9 billion, up 72 percent from the same period of 2008 and 7 percent from the third quarter of 2009. The increases reflected the company's strong deposit growth. The average duration of total available-for-sale securities at December 31, 2009 was 2.9 years, compared with 2.7 years at the end of 2008 and 2.6 years at September 30, 2009.
City National's net interest margin in the fourth quarter of 2009 averaged 3.74 percent, compared with 4.09 percent in fourth quarter of 2008 and 3.94 percent in the third quarter of 2009. For the full-year 2009, City National's net interest margin averaged 3.91 percent, compared with 4.20 percent in the previous year. The declines were due to the combination of strong deposit growth, lower average loan balances, the purchase of short-term, highly liquid securities and pressure on asset yields caused by low interest rates.
At December 31, 2009, City National?s prime lending rate was 3.25 percent, unchanged from both December 31, 2008 and September 30, 2009.
For the For the three three months ended months December 31, ended -------------------- % Sept. 30, % Dollars in millions 2009 2008 Change 2009 Change --------------------- --------- --------- ------ --------- ------ Average Loans and Leases, excluding Covered Assets $12,100.4 $12,371.4 (2) $12,339.0 (2) Average Covered Assets 263.7 -- NM -- NM Average Total Securities 3,877.9 2,258.7 72 3,630.3 7 Average Earning Assets 17,664.6 14,843.9 19 16,587.7 6 Average Deposits 15,729.9 12,639.3 24 14,776.9 6 Average Core Deposits 14,509.2 11,137.0 30 13,556.1 7 Fully Taxable- Equivalent Net Interest Income 166.5 152.6 9 164.9 1 Net Interest Margin 3.74% 4.09% (9) 3.94% (5)
Fourth-quarter average deposits grew to $15.7 billion, up 24 percent from the same period of 2008 and 6 percent from the third quarter of 2009. Average deposits for the full-year 2009 totaled $14.4 billion, up 21 percent from 2008, as many depositors continued to seek a safe haven for their funds. Period-end deposits grew to a record $17.4 billion, up $4.7 billion, or 37 percent, from December 31, 2008. Slightly over one-third of this year-over-year deposit growth was due to the acquisition of Imperial Capital Bank.
Average core deposits were $14.5 billion in the fourth quarter of 2009, up 30 percent from the same period of 2008 and 7 percent from the third quarter of 2009. Full-year 2009 average core deposits grew 23 percent from the prior year to $13.0 billion, or 91 percent of the company's average deposit balances. Excluding the acquired Imperial Capital Bank deposits, approximately $2.3 billion of City National's core deposit growth in 2009 came from new and existing bank clients and $1.1 billion more came from money market funds that had been held at City National Asset Management. In addition, the company assumed about $500 million in core deposits of Imperial Capital.
Fourth-quarter average noninterest-bearing deposits were up 31 percent from the same period of 2008 and 8 percent from the third quarter of 2009. Average noninterest-bearing balances in 2009 were up 23 percent from 2008. Period-end noninterest-bearing deposits were up 26 percent from December 31, 2008.
Treasury Services deposit balances, which consist primarily of title, escrow and property management deposits, averaged $1.1 billion in the fourth quarter of 2009, up 31 percent from the same period of 2008 and 8 percent from the third quarter of 2009 due to an increase in residential real estate activity. For the full-year 2009, Treasury Services deposit balances averaged $944.9 million, up $3.9 million from 2008.
NONINTEREST INCOME
Fourth-quarter noninterest income totaled $110.1 million, up 98 percent from the same period in 2008 and 60 percent from the third quarter of 2009. The increases were due largely to City National's $38.2 million pretax gain on the acquisition of Imperial Capital Bank.
In addition, City National recorded $8.4 million in net securities gains during the quarter, which were mostly offset by several other unusual items, including a $1.9 million impairment charge for private equity investments and a $2.1 million noncash loss associated with the deconsolidation of one of the company's asset management affiliates.
City National's noninterest income totaled $290.5 million in 2009, up 9 percent from 2008. In 2009, noninterest income accounted for 32 percent of City National's total revenue.
Wealth Management
City National's assets under management totaled $35.2 billion as of December 31, 2009, up 14 percent from the end of 2008 and 1 percent from September 30, 2009. The year-over-year increase is due primarily to higher equity market values and the July 21, 2009 Lee Munder Capital Group acquisition, which were offset by the deconsolidation of an affiliate's assets under management during the fourth quarter of 2009.
Trust and investment fee income grew to $33.7 million in the fourth quarter of 2009, up 19 percent from the same period of 2008 and 4 percent from the third quarter of 2009. Full-year 2009 trust and investment fee income fell 11 percent from 2008.
Money market mutual fund and brokerage fee income totaled $5.5 million, down 69 percent from the fourth quarter of 2008 and 9 percent from the third quarter of 2009. Full-year 2009 money market mutual fund and brokerage fee income was $27.9 million, down 62 percent from the previous year. These declines were due to historically low interest rates on government and other quality short-term bonds. The decline in brokerage fees from the fourth quarter of 2008 also reflected reduced spreads and trading activity.
At or At or for the for the three three months ended months December 31, ended -------------------- % Sept. 30, % Dollars in millions 2009 2008 Change 2009 Change --------------------- --------- --------- ------ --------- ------ Trust and Investment Fee Revenue $ 33.7 $ 28.2 19 $ 32.3 4 Brokerage and Mutual Fund Fees 5.5 17.8 (69) 6.0 (9) Assets Under Management(1)(2) 35,238.8 30,781.9 14 34,927.4 1 Total Assets Under Management or Administration(1)(2) 55,119.4 47,519.8 16 53,368.1 3 (1) Excludes $11.5 billion, $9.9 billion, and $4.7 billion of assets under management for an asset manager in which City National held a noncontrolling ownership interest as of December 31, 2009, September 30, 2009, and December 31, 2008 respectively. (2) Excludes $1.9 billion of assets under management or administration as of December 31, 2009 for an asset manager that City National deconsolidated effective November 1, 2009.
Other Noninterest Income
Fourth-quarter income from cash management and deposit transaction fees totaled $12.5 million, down 1 percent from the fourth quarter of 2008 and 5 percent from the third quarter of 2009. The decline from the third quarter reflects seasonally slower cash management sales as clients focused on year-end accounting and reporting obligations.
For the full-year 2009, cash management and deposit transaction fee income rose to $51.7 million, up 7 percent from 2008 due to the sale of additional cash management services and the impact of declining interest rates on compensating deposit balances. The lower rates increased deposit service charge income.
Fee income from foreign exchange services and letters of credit totaled $8.6 million in the fourth quarter, up 2 percent from the year-earlier period and 9 percent from the third quarter of 2009. For full-year 2009, international fee income amounted to $31.0 million, down 4 percent from 2008.
Other income was $2.5 million in the fourth quarter, down 63 percent from the year-earlier period and 59 percent from the third quarter of 2009, due to lower valuations on certain trading securities as well as charges for the impairment of private equity investments and the deconsolidation of an investment affiliate. In 2009, other income was $23.7 million, down 17 percent from 2008.
NONINTEREST EXPENSE
Fourth-quarter noninterest expense was virtually unchanged from the same period of 2008 but up 11 percent from the third quarter of 2009, due to Imperial Capital Bank-related transaction cost and higher other real estate-owned expense.
Noninterest expense for the year amounted to $580.1 million, down 1 percent from 2008 as higher FDIC costs, legal fees and other real estate-owned expenses were offset primarily by lower personnel costs, reduced incentive compensation and a salary freeze.
The company's fourth-quarter 2009 FDIC costs totaled $5.8 million, up from $1.9 million in the year-earlier period. FDIC costs for the full year were $28 million, up from $6.2 million in 2008.
CREDIT QUALITY
The following credit quality information does not include Imperial Capital Bank assets that are subject to City National's loss-sharing agreement with the FDIC:
Net charge-offs in the fourth quarter of 2009 totaled $58.7 million, or 1.93 percent of total loans and leases. Net charge-offs were $24.7 million, or 0.79 percent of total loans and leases, in the fourth quarter of 2008 and $76.9 million, or 2.47 percent, in the third quarter of 2009. Net loan charge-offs for the full-year 2009 were $225.9 million, or 1.84 percent of total loans and leases. This compares with $68.5 million, or 0.57 percent, in 2008.
At December 31, 2009, nonperforming assets amounted to $442.0 million, or 3.62 percent of the company's total loans and leases. They were up from $222.5 million, or 1.79 percent, at the end of 2008 but down from $452.2 million, or 3.70 percent, at September 30, 2009. Nonaccrual loans at year-end 2009 were $388.7 million, up from $211.1 million at the end of 2008, but down from $408.3 million at September 30, 2009.
Period- As of As of As of end Loans December 31, 2009 September 30, 2009 December 31, 2008 (in ------------------- ------------------- ------------------- millions) Total Nonaccrual Total Nonaccrual Total Nonaccrual ---------- --------- --------- --------- --------- --------- --------- Commercial Loans $ 4,709.7 $ 82.0 $ 4,594.7 $ 90.7 $ 4,783.6 $ 46.2 Commercial R.E Mortgages 2,161.4 76.0 2,164.4 60.8 2,184.7 8.9 Residential Mortgages 3,533.4 15.5 3,541.5 13.0 3,414.9 3.2 Real Estate Construction Loans 835.6 202.6 999.0 233.9 1,252.0 149.5 Equity Lines of Credit 734.2 3.4 694.7 2.5 635.3 1.9 Other Loans 172.6 9.2 174.2 7.4 173.8 1.4 --------- --------- --------- --------- --------- --------- Total Loans (1) $12,146.9 $ 388.7 $12,168.5 $ 408.3 $12,444.3 $ 211.1 Other Real Estate Owned(1) 53.3 43.9 11.4 Total Non- performing Assets, excluding Covered --------- --------- --------- Assets $ 442.0 $ 452.2 $ 222.5 ========= ========= ========= (1) Excludes covered loans of $1.8 billion and covered other real estate owned of $60.6 million at December 31, 2009.
City National's fourth-quarter provision of $80 million brought total provisions for the year to $285 million. The fourth-quarter provision added $21.3 million, after net charge-offs, to the company's allowance for loan and lease losses. City National recorded provisions of $40 million in the fourth quarter of 2008 and $85 million in the third quarter of 2009.
At December 31, 2009, City National's allowance for loan and lease losses increased to $288.5 million, or 2.38 percent of total loans and leases. That compares with $224.0 million, or 1.80 percent, at the end of 2008 and $265.0 million, or 2.18 percent, at September 30, 2009. The company also maintains an additional $17.3 million in reserves for off-balance-sheet credit commitments.
City National's provision reflects management's continuing assessment of the loan portfolio's credit quality, which is affected by a broad range of economic factors. Additional factors affecting the provision include net loan charge-offs, nonaccrual loans, specific reserves, risk-rating migration and changes in the portfolio size.
Commercial Loans
Commercial loans accounted for $23.1 million of City National's net charge-offs in the fourth quarter of 2009, up from $12.1 million in the year-earlier period, but down from $28.9 million in the third quarter of 2009. Full-year net charge-offs of commercial loans amounted $87.7 million, up from $23.2 million in 2008.
Commercial loans on nonaccrual totaled $82.0 million at December 31, 2009, compared to $46.2 million at the end of 2008, and $90.7 million at September 30, 2009. About 57 percent of commercial nonaccruals are tied to companies in the real estate industry. The remaining loans are not concentrated in any particular industry.
Construction Loans
City National's $835.6 million commercial real estate construction portfolio includes loans to developers of residential and nonresidential properties. This portfolio has been reduced 33 percent since December 31, 2008. The residential sector has shown signs of improvement with modest value increases and growth in sales activity through 2009. The commercial sector continues to exhibit weakness, as evidenced by reductions in values, and lease and sales activity.
Fourth-quarter net charge-offs of construction loans were $27.6 million, up from $12.3 million in the fourth quarter of 2008, but down from $42.7 million in the third quarter of 2009. Full-year 2009 net charge-offs of construction loans were $120.5 million, up from $43.8 million in 2008. At year-end 2009, construction loans on nonaccrual totaled $202.6 million, up from $149.5 million at the end of 2008, but down from $233.8 million at September 30, 2009.
Nonresidential construction loans amounted to $649 million at December 31, 2009, down from $896 million at the end of 2008 and $759 million at September 30, 2009. Fourth-quarter 2009 net charge-offs totaled $10.3 million, up from $6.8 million in the fourth quarter of 2008 but down from $30.5 million in the third quarter of 2009. Full-year net charge-offs amounted to $62.7 million, up from $12.2 million in 2008. Those on nonaccrual were $148 million, up from $29 million at the end of 2008 and $137 million at September 30, 2009.
At December 31, 2009, loans to homebuilders totaled $264 million, down from $306 million in the third quarter of 2009. These loans now equal 2.2 percent of City National's $12.1 billion loan portfolio, excluding assets covered by the FDIC loss-sharing agreement. (The company's portfolio of loans to homebuilders includes $73.4 million of loans in the bank's commercial loan portfolio.) Loans to homebuilders accounted for 27 percent of all construction loans on nonaccrual at the end of 2009 and 29 percent of fourth-quarter 2009 net charge-offs.
Commercial Real Estate Mortgages
Fourth-quarter net charge-offs in the company's $2.2 billion commercial real estate mortgage portfolio were $5.3 million, compared with zero net charge-offs in the fourth quarter of 2008 and $3.4 million in the third quarter of 2009. Full-year 2009 net charge-offs were $8.7 million, up from $0.6 million in 2008. Commercial real estate mortgage loans on nonaccrual totaled $76.0 million at the end of 2009, compared with $8.9 million at the end of 2008 and $60.8 million at September 30, 2009. The increase in nonaccrual loans in the fourth quarter of 2009 is tied primarily to apartment building loans.
Residential Mortgage and Equity Lines of Credit
City National's $3.5 billion residential mortgage portfolio and $734 million home-equity portfolio both continued to perform well. Fourth-quarter net charge-offs were $1.2 million, up from net recoveries of $37,000 in the fourth quarter of 2008 and net charge-offs of $1.1 million the third quarter of 2009. Full-year net charge-offs were $4.4 million, compared with net recoveries of $63,000 in 2008. Nonaccrual loans totaled $18.9 million at the end of 2009, compared with $5.1 million at year-end 2008 and $15.5 million in the third quarter of 2009.
The average loan-to-value ratios at origination for the residential mortgage and home-equity portfolios are 49 percent and 44 percent, respectively. City National does not originate or purchase subprime or option adjustable rate mortgages, and none of its loans has been originated through brokers or third parties.
INCOME TAXES
The company recorded a tax provision of $4.4 million in the fourth quarter of 2009, compared to a tax benefit of $7.0 million for the third quarter of the year. The full-year 2009 results reflect a tax benefit of $1.9 million for the year, which was primarily attributable to an updated effective tax rate based on lower expected income for the year. The company's effective tax rate for 2008 was 27.5 percent.
CAPITAL LEVELS
City National continued to strengthen its balance sheet in 2009, raising a total of $550 million in Tier 1 and Tier 2 capital:
* On December 8, 2009, the company raised $250 million in Tier 1 capital through a successful trust preferred securities offering. * In the third quarter of the year, City National completed the sale of $180 million in subordinated debt, which qualifies as Tier 2 capital for regulatory purposes. * The company's second-quarter common equity offering raised $120 million of Tier 1 capital.
Total risk-based capital and Tier 1 risk-based capital ratios at December 31, 2009 were 15.2 percent and 12.2 percent, respectively, compared with the minimum regulatory standards of 10.0 percent and 6.0 percent for "well-capitalized" institutions. City National's Tier 1 leverage ratio at December 31, 2009 was 9.5 percent, compared with the regulatory minimum ratio of 5.0 percent.
Total risk-based capital, Tier 1 risk-based capital and the Tier 1 leverage ratios at December 31, 2008 were 13.4 percent, 11.7 percent and 10.4 percent, respectively.
The period-end ratio of shareholders' equity to total assets at December 31, 2009 was 9.6 percent, compared to 12.3 percent at December 31, 2008 and 12.1 percent at September 30, 2009, due to the year-end acquisition of Imperial Capital Bank and its $3.3 billion in assets.
2010 OUTLOOK
While business conditions remain challenging, City National's management anticipates increased profitability in 2010. Asset quality has recently shown signs of improvement, and the company expects net charge-offs to gradually subside this year, though OREO expense will increase from 2009. City National expects interest rates to remain low as the economy continues its slow recovery.
(1) For notes on non-GAAP measures, see page 13 of the Selected Financial Information.
CONFERENCE CALL
City National Corporation will host a conference call this afternoon to discuss 2009 financial results. The call will begin at 2:00 p.m. PST. Analysts and investors may dial in and participate in the question/answer session. To access the call, please dial (866) 393-6804 and enter Conference ID 48818548. A listen-only live broadcast of the call also will be available on the investor relations page of the company's Website at www.cnb.com. There, it will be archived and available for 12 months.
ABOUT CITY NATIONAL
City National Corporation's wholly owned subsidiary, City National Bank, provides banking, investment and trust services through offices in Southern California, the San Francisco Bay Area, Nevada and New York City. City National and its seven consolidated investment affiliates manage or administer $55.1 billion in client assets, including more than $35 billion under direct management.
For more information about City National, visit the company's Website at www.cnb.com.
The City National Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3142
SAFE-HARBOR LANGUAGE
This news release contains forward-looking statements about the company, for which the company claims the protection of the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based on management's knowledge and belief as of today and include information concerning the company's possible or assumed future financial condition, and its results of operations, business and earnings outlook. These forward-looking statements are subject to risks and uncertainties. A number of factors, some of which are beyond the company's ability to control or predict, could cause future results to differ materially from those contemplated by such forward-looking statements. These factors include (1) local, regional and international business, economic and political conditions, (2) volatility and disruption in financial markets, including capital and credit markets, (3) significant changes in banking laws or regulations, including without limitation, broad-based restructuring of financial industry regulation and as a result of the Emergency Economic Stabilization Act and the creation of, and amendments to, the Troubled Asset Relief Program (TARP), and rules and regulations issued thereunder, including the TARP Standards for Compensation and Corporate Governance, (4) increases and required prepayments in Federal Deposit Insurance Corporation premiums and special federal assessments on financial institutions due to market developments and regulatory changes, (5) changes in the level of nonperforming assets, charge-offs and provision expense, (6) changes in inflation, interest rates, and market liquidity which may impact interest margins and impact funding sources, (7) adequacy of the company's risk management framework, (8) company's ability to increase market share and control expenses, (9) company's ability to attract new employees and retain and motivate existing employees, (10) increased competition in the company's markets, (11) changes in the financial performance and/or condition of the company's borrowers, including changes in levels of unemployment, changes in customers' suppliers, and other counterparties' performance and creditworthiness, (12) a substantial and permanent loss of either client accounts and/or assets under management at the company's investment advisory affiliates or its wealth management division, (13) changes in consumer spending, borrowing and savings habits, (14) soundness of other financial institutions which could adversely affect the company, (15) protracted labor disputes in the company's markets, (16) earthquake, fire or other natural disasters affecting the condition of real estate collateral, (17) the effect of acquisitions and integration of acquired businesses and de novo branching efforts, (18) the impact of changes in regulatory, judicial or legislative tax treatment of business transactions, (19) changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies, and (20) the success of the company at managing the risks involved in the foregoing.
Forward-looking statements speak only as of the date they are made, and the company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the statements are made, or to update earnings guidance, including the factors that influence earnings.
For a more complete discussion of these risks and uncertainties, see the company's Annual Report on Form 10-K for the year ended December 31, 2008 and particularly Part I, Item 1A, titled "Risk Factors."
CITY NATIONAL CORPORATION FINANCIAL HIGHLIGHTS (unaudited) Three Months Twelve Months ----------------------- ----------------------- For The Period Ended % % December 31, 2009 2008 Change 2009 2008 Change -------------------------------------------- ----------------------- Per Common Share Net income available to common shareholders Basic $ 0.38 $ 0.13 192 $ 0.50 $ 2.12 (76) Diluted 0.38 0.13 192 0.50 2.11 (76) Dividends 0.10 0.48 (79) 0.55 1.92 (71) Book value 34.74 33.52 4 Results of Operations: (In millions) Interest income $ 184 $ 188 (2) $ 710 $ 785 (10) Interest expense 21 39 (46) 85 185 (54) ------- ------- ------- ------- Net interest income 163 149 10 625 600 4 Net interest income (Fully taxable- equivalent) 167 153 9 639 616 4 Total revenue 273 204 34 915 867 6 Provision for credit losses 80 40 100 285 127 124 Net income attributable to City National Corporation 29 9 225 51 105 (51) Net income available to common shareholders 20 6 203 25 103 (75) Financial Ratios: Performance Ratios: Return on average assets 0.60% 0.22% 0.29% 0.65% Return on average common shareholders' equity 4.27 1.60 1.46 6.26 Period-end equity to period-end assets 9.55 12.34 Net interest margin 3.74 4.09 3.91 4.20 Expense to revenue ratio 56.46 77.11 61.76 66.80 Capital Adequacy Ratios (Period-end): Tier 1 leverage 9.48 10.44 Tier 1 risk- based capital 12.20 11.71 Total risk-based capital 15.15 13.40 Asset Quality Ratios: Allowance for loan and lease losses to: Total loans and leases, excluding covered assets 2.38% 1.80% Nonaccrual loans 74.22 106.11 Nonperforming assets to: Total loans and leases and other real estate owned, excluding covered assets 3.62 1.79 Total assets 2.10 1.35 Net charge-offs to average total loans and leases, excluding covered assets (annualized) (1.93)% (0.79)% (1.84)% (0.57)% Average Balances: (In millions) Loans and leases, excluding covered assets $12,100 $12,371 (2) $12,297 $12,089 2 Covered assets 264 -- NM 66 -- NM Interest-earning assets 17,665 14,844 19 16,330 14,670 11 Assets 19,095 16,191 18 17,711 16,029 10 Core deposits 14,509 11,137 30 13,049 10,600 23 Deposits 15,730 12,639 24 14,352 11,900 21 Interest-bearing liabilities 8,815 8,171 8 8,364 8,436 (1) Common shareholders' equity 1,826 1,618 13 1,745 1,637 7 Total equity 2,241 1,818 23 2,161 1,706 27 Period-End Balances : (In millions) Loans and leases, excluding covered assets $12,147 $12,444 (2) Covered assets 1,852 -- NM Assets 21,079 16,456 28 Core deposits 15,729 11,210 40 Deposits 17,379 12,652 37 Common shareholders' equity 1,790 1,615 11 Total equity 2,013 2,030 (1) Wealth Management: (In millions) (1)(2) Assets under management $35,239 $30,782 14 Assets under management or administration 55,119 47,520 16 (1) Excludes $11.5 billion and $4.7 billion of assets under management for an asset manager in which City National held a noncontrolling ownership interest as of December 31, 2009 and December 31, 2008, respectively. (2) Excludes $1.9 billion of assets under management or administration as of December 31, 2009 for an asset manager that City National deconsolidated effective November 1, 2009. Note: Certain prior period balances have been reclassified to conform to current period presentation. CITY NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF INCOME (unaudited) Three Months Ended Twelve Months Ended December 31, December 31, (Dollars in ------------------------ ------------------------ thousands except % % per share data) 2009 2008 Change 2009 2008 Change ------------------- ------------------------ ------------------------ Interest income $184,014 $187,623 (2) $709,800 $784,688 (10) Interest expense 21,052 38,864 (46) 85,024 184,792 (54) -------- -------- -------- -------- Net Interest Income 162,962 148,759 10 624,776 599,896 4 Provision for Credit Losses 80,000 40,000 100 285,000 127,000 124 Noninterest Income Trust and investment fees 33,720 28,221 19 117,062 132,214 (11) Brokerage and mutual fund fees 5,489 17,845 (69) 27,932 73,446 (62) Cash management and deposit transaction fees 12,526 12,595 (1) 51,669 48,307 7 International services 8,591 8,384 2 31,007 32,449 (4) Bank-owned life insurance 680 645 5 3,053 2,752 11 Gain (loss) on securities 8,397 (18,871) 144 (2,159) (50,791) (96) Gain on acquisition 38,206 -- NM 38,206 -- NM Other 2,509 6,807 (63) 23,745 28,607 (17) -------- -------- -------- -------- Total noninterest income 110,118 55,626 98 290,515 266,984 9 Noninterest Expense Salaries and employee benefits 85,926 89,943 (4) 320,949 357,015 (10) Net occupancy of premises 12,990 12,821 1 50,423 49,514 2 Legal and professional fees 12,323 8,419 46 36,337 32,842 11 Information services 7,021 7,799 (10) 27,835 26,969 3 Depreciation and amortization 7,802 5,737 36 26,219 22,201 18 Amortization of intangibles 2,120 11,541 (82) 7,357 17,738 (59) Marketing and advertising 6,092 6,289 (3) 20,126 22,897 (12) Office services and equipment 3,859 4,080 (5) 14,995 15,548 (4) FDIC assessments 5,816 1,883 209 28,053 6,242 349 Other 15,295 11,466 33 47,834 36,797 30 -------- -------- -------- -------- Total noninterest expense 159,244 159,978 (0) 580,128 587,763 (1) -------- -------- -------- -------- Income Before Taxes 33,836 4,407 668 50,163 152,117 (67) Applicable Income Taxes 4,434 (3,177) (240) (1,886) 41,783 105) -------- -------- -------- -------- Net Income $ 29,402 $ 7,584 288 $ 52,049 $110,334 (53) -------- -------- -------- -------- Less: Net income (loss) attributable to noncontrolling interest 335 (1,350) (125) 710 5,378 (87) -------- -------- -------- -------- Net income attributable to City National Corporation $ 29,067 $ 8,934 225 $ 51,339 $104,956 (51) -------- -------- -------- -------- Less: Dividends and accretion on preferred stock 9,399 2,445 284 25,903 2,445 959 -------- -------- -------- -------- Net income available to common shareholders $ 19,668 $ 6,489 203 $ 25,436 $102,511 (75) ======== ======== ======== ======== Other Data: Earnings per common share - basic (1) $ 0.38 $ 0.13 192 $ 0.50 $ 2.12 (76) Earnings per common share - diluted $ 0.38 $ 0.13 192 $ 0.50 $ 2.11 (76) Dividends paid per common share $ 0.10 $ 0.48 (79) $ 0.55 $ 1.92 (71) Common dividend payout ratio 26.47% 358.52% (93) 107.80% 90.61% 19 Return on average assets 0.60% 0.22% 173 0.29% 0.65% (55) Return on average common shareholders' equity 4.27% 1.60% 167 1.46% 6.26% (77) Net interest margin (Fully taxable- equivalent) 3.74% 4.09% (9) 3.91% 4.20% (7) Full-time equivalent employees 3,017 2,989 1 (1) Basic EPS for certain prior periods have been restated as a result of the adoption of ASC Section 260-10-55, Earnings Per Share - Implementation (formerly FSP EITF 03-6-1 "Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities"). Note: Certain prior period balances have been reclassified to conform to current period presentation. CITY NATIONAL CORPORATION CONSOLIDATED QUARTERLY STATEMENTS OF INCOME (unaudited) 2009 (Dollars in ------------------------------------------------ thousands except Fourth Third Second First Year to per share data) Quarter Quarter Quarter Quarter Date ----------------- -------- -------- -------- -------- -------- Interest income $184,014 $180,419 $175,876 $169,491 $709,800 Interest expense 21,052 19,078 20,300 24,594 85,024 -------- -------- -------- -------- -------- Net Interest Income 162,962 161,341 155,576 144,897 624,776 Provision for Credit Losses 80,000 85,000 70,000 50,000 285,000 Noninterest Income Trust and investment fees 33,720 32,289 25,184 25,869 117,062 Brokerage and mutual fund fees 5,489 6,041 6,645 9,757 27,932 Cash management and deposit transaction fees 12,526 13,142 12,778 13,223 51,669 International services 8,591 7,895 7,996 6,525 31,007 Bank-owned life insurance 680 639 871 863 3,053 Gain (loss) on securities 8,397 2,667 1,744 (14,967) (2,159) Gain on acquisition 38,206 -- -- -- 38,206 Other 2,509 6,172 9,039 6,025 23,745 -------- -------- -------- -------- -------- Total noninterest income 110,118 68,845 64,257 47,295 290,515 Noninterest Expense Salaries and employee benefits 85,926 80,937 75,834 78,252 320,949 Net occupancy of premises 12,990 12,613 12,559 12,261 50,423 Legal and professional fees 12,323 8,545 7,736 7,733 36,337 Information services 7,021 7,342 6,992 6,480 27,835 Depreciation and amortization 7,802 6,472 5,953 5,992 26,219 Amortization of intangibles 2,120 1,726 1,668 1,843 7,357 Marketing and advertising 6,092 4,615 4,743 4,676 20,126 Office services and equipment 3,859 3,610 3,922 3,604 14,995 FDIC assessments 5,816 5,308 13,861 3,068 28,053 Other 15,295 12,597 10,866 9,076 47,834 -------- -------- -------- -------- -------- Total noninterest expense 159,244 143,765 144,134 132,985 580,128 -------- -------- -------- -------- -------- Income Before Taxes 33,836 1,421 5,699 9,207 50,163 Applicable Income Taxes 4,434 (6,966) (986) 1,632 (1,886) -------- -------- -------- -------- -------- Net Income $ 29,402 $ 8,387 $ 6,685 $ 7,575 $ 52,049 -------- -------- -------- -------- -------- Less: Net income (loss) attributable to noncontrolling interest 335 348 (88) 115 710 -------- -------- -------- -------- -------- Net income attributable to City National Corporation $ 29,067 $ 8,039 $ 6,773 $ 7,460 $ 51,339 -------- -------- -------- -------- -------- Less: Dividends and accretion on preferred stock 9,399 5,502 5,501 5,501 25,903 -------- -------- -------- -------- -------- Net income available to common shareholders $ 19,668 $ 2,537 $ 1,272 $ 1,959 $ 25,436 ======== ======== ======== ======== ======== Other Data: Earnings per common share - basic $ 0.38 $ 0.05 $ 0.02 $ 0.04 $ 0.50 Earnings per common share - diluted $ 0.38 $ 0.05 $ 0.02 $ 0.04 $ 0.50 Dividends paid per common share $ 0.10 $ 0.10 $ 0.10 $ 0.25 $ 0.55 Common dividend payout ratio 26.47% 205.08% 383.66% 619.32% 107.80% Return on average assets 0.60% 0.18% 0.16% 0.18% 0.29% Return on average common shareholders' equity 4.27% 0.56% 0.29% 0.49% 1.46% Net interest margin (Fully taxable- equivalent) 3.74% 3.94% 3.98% 4.00% 3.91% Full-time equivalent employees 3,017 2,891 2,866 2,933 Note: Certain prior period balances have been reclassified to conform to current period presentation CITY NATIONAL CORPORATION CONSOLIDATED QUARTERLY STATEMENTS OF INCOME (unaudited) 2008 (Dollars in ------------------------------------------------ thousands except Fourth Third Second First Year to per share data) Quarter Quarter Quarter Quarter Date ------------------- -------- -------- -------- -------- -------- Interest income $187,623 $195,606 $193,707 $207,752 $784,688 Interest expense 38,864 42,802 43,539 59,587 184,792 -------- -------- -------- -------- -------- Net Interest Income 148,759 152,804 150,168 148,165 599,896 Provision for Credit Losses 40,000 35,000 35,000 17,000 127,000 Noninterest Income Trust and investment fees 28,221 33,457 34,187 36,349 132,214 Brokerage and mutual fund fees 17,845 19,470 18,709 17,422 73,446 Cash management and deposit transaction fees 12,595 12,392 12,196 11,124 48,307 International services 8,384 8,202 8,176 7,687 32,449 Bank-owned life insurance 645 824 628 655 2,752 (Loss) gain on securities (18,871) (32,472) (417) 969 (50,791) Other 6,807 8,205 7,985 5,610 28,607 -------- -------- -------- -------- -------- Total noninterest income 55,626 50,078 81,464 79,816 266,984 Noninterest Expense Salaries and employee benefits 89,943 89,373 87,520 90,179 357,015 Net occupancy of premises 12,821 12,719 12,462 11,512 49,514 Legal and professional fees 8,419 8,332 7,531 8,560 32,842 Information services 7,799 6,576 6,388 6,206 26,969 Depreciation and amortization 5,737 5,502 5,460 5,502 22,201 Amortization of intangibles 11,541 2,238 1,528 2,431 17,738 Marketing and advertising 6,289 5,653 5,360 5,595 22,897 Office services and equipment 4,080 3,683 3,886 3,899 15,548 FDIC assessments 1,883 2,188 1,820 351 6,242 Other 11,466 9,933 8,546 6,852 36,797 -------- -------- -------- -------- -------- Total noninterest expense 159,978 146,197 140,501 141,087 587,763 -------- -------- -------- -------- -------- Income Before Taxes 4,407 21,685 56,131 69,894 152,117 Applicable Income Taxes (3,177) 3,974 18,385 22,601 41,783 -------- -------- -------- -------- -------- Net Income $ 7,584 $ 17,711 $ 37,746 $ 47,293 $110,334 -------- -------- -------- -------- -------- Less: Net (loss) income attributable to noncontrolling interest (1,350) 1,160 2,262 3,306 5,378 -------- -------- -------- -------- -------- Net income attributable to City National Corporation $ 8,934 $ 16,551 $ 35,484 $ 43,987 $104,956 -------- -------- -------- -------- -------- Less: Dividends and accretion on preferred stock 2,445 -- -- -- 2,445 -------- -------- -------- -------- -------- Net income available to common shareholders $ 6,489 $ 16,551 $ 35,484 $ 43,987 $102,511 ======== ======== ======== ======== ======== Other Data: Earnings per common share - basic (1) $ 0.13 $ 0.34 $ 0.74 $ 0.91 $ 2.12 Earnings per common share - diluted $ 0.13 $ 0.34 $ 0.73 $ 0.91 $ 2.11 Dividends paid per common share $ 0.48 $ 0.48 $ 0.48 $ 0.48 $ 1.92 Common dividend payout ratio 358.52% 140.24% 65.40% 52.75% 90.61% Return on average assets 0.22% 0.41% 0.89% 1.13% 0.65% Return on average common equity 1.60% 4.03% 8.65% 10.75% 6.26% Net interest margin (Fully taxable- equivalent) 4.09% 4.23% 4.23% 4.26% 4.20% Full-time equivalent employees 2,989 3,027 3,013 2,959 (1) Basic EPS for certain prior periods have been restated as a result of the adoption of ASC Section 260-10-55, Earnings Per Share - Implementation (formerly FSP EITF 03-6-1 "Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities"). Note: Certain prior period balances have been reclassified to conform to current period presentation. CITY NATIONAL CORPORATION CONSOLIDATED PERIOD END BALANCE SHEETS (unaudited) 2009 -------------------------------------------------- Fourth Third Second First (In thousands) Quarter Quarter Quarter Quarter ----------------- ----------- ----------- ----------- ----------- Assets Cash and due from banks $ 364,483 $ 348,958 $ 350,931 $ 378,289 Federal funds sold 5,000 240,000 125,000 12,300 Due from banks - interest-bearing 443,443 767,362 205,656 140,484 Securities- available-for- sale 4,306,758 3,512,072 3,330,326 2,915,883 Trading securities 154,302 188,904 138,137 67,582 Loans and leases: Commercial 4,709,667 4,594,683 4,764,755 4,708,627 Commercial real estate mortgages 2,161,451 2,164,398 2,162,294 2,173,983 Residential mortgages 3,533,453 3,541,534 3,511,598 3,413,538 Real estate construction 835,589 999,045 1,116,154 1,189,594 Equity lines of credit 734,182 694,660 691,226 651,127 Installment 172,566 174,170 175,315 168,245 ----------- ----------- ----------- ----------- Loans and leases, excluding covered assets 12,146,908 12,168,490 12,421,342 12,305,114 Covered assets 1,851,821 -- -- -- ----------- ----------- ----------- ----------- Total loans and leases 13,998,729 12,168,490 12,421,342 12,305,114 Allowance for loan and lease losses (288,493) (265,005) (256,018) (241,586) ----------- ----------- ----------- ----------- Net loans and leases 13,710,236 11,903,485 12,165,324 12,063,528 Premises and equipment, net 124,309 126,097 125,510 128,189 Goodwill and other intangibles 525,583 533,367 496,562 498,194 Other real estate owned ($60.6 million covered by FDIC loss share at December 31, 2009) 113,866 43,969 18,064 12,639 FDIC indemnification asset 380,743 -- -- -- Other assets 950,034 736,390 705,275 716,442 ----------- ----------- ----------- ----------- Total assets $21,078,757 $18,400,604 $17,660,785 $16,933,530 =========== =========== =========== =========== Liabilities Deposits: Noninterest- bearing $ 7,753,936 $ 7,441,898 $ 7,118,660 $ 6,611,752 Interest-bearing 9,625,512 7,666,545 7,379,591 7,077,798 ----------- ----------- ----------- ----------- Total deposits 17,379,448 15,108,443 14,498,251 13,689,550 Federal funds purchased and securities sold under repurchase agreements 626,779 231,903 316,388 519,687 Other short-term borrowed funds 690 720 50,000 28,405 Subordinated debt 340,137 341,587 162,434 164,296 Other long-term debt 471,029 233,536 233,456 242,122 Other liabilities 196,529 216,026 189,588 199,863 ----------- ----------- ----------- ----------- Total liabilities 19,014,612 16,132,215 15,450,117 14,843,923 Redeemable noncontrolling interest 51,381 49,897 36,752 40,237 Equity City National Corporation shareholders' equity: Preferred stock 196,048 391,593 391,091 390,590 Common stock 53,886 53,886 53,886 50,961 Additional paid-in capital 513,550 514,904 511,939 393,114 Retained earnings 1,377,639 1,363,176 1,365,842 1,369,451 Accumulated other comprehensive income (loss) (3,049) 24,329 (18,110) (23,093) Treasury shares (151,751) (154,245) (156,119) (157,094) ----------- ----------- ----------- ----------- Total common shareholders' equity 1,790,275 1,802,050 1,757,438 1,633,339 ----------- ----------- ----------- ----------- Total shareholders' equity 1,986,323 2,193,643 2,148,529 2,023,929 Noncontrolling interest 26,441 24,849 25,387 25,441 ----------- ----------- ----------- ----------- Total equity 2,012,764 2,218,492 2,173,916 2,049,370 ----------- ----------- ----------- ----------- Total liabilities and equity $21,078,757 $18,400,604 $17,660,785 $16,933,530 =========== =========== =========== =========== Note: Certain prior period balances have been reclassified to conform to current period presentation. CITY NATIONAL CORPORATION CONSOLIDATED PERIOD END BALANCE SHEETS (unaudited) 2008 -------------------------------------------------- Fourth Third Second First (In thousands) Quarter Quarter Quarter Quarter ----------------- ----------- ----------- ----------- ----------- Assets Cash and due from banks $ 279,921 $ 428,557 $ 513,736 $ 514,878 Federal funds sold -- -- -- 1,000 Due from banks - interest-bearing 144,344 95,993 88,149 77,567 Securities- available-for- sale 2,144,870 2,159,918 2,302,982 2,389,459 Trading securities 295,598 310,251 204,825 121,152 Loans and leases: Commercial 4,783,565 4,746,035 4,703,307 4,442,448 Commercial real estate mortgages 2,184,688 2,159,101 2,016,090 2,011,221 Residential mortgages 3,414,868 3,364,332 3,319,741 3,215,871 Real estate construction 1,252,034 1,313,735 1,483,193 1,462,641 Equity lines of credit 635,325 540,937 495,334 449,177 Installment 173,779 154,377 160,665 173,507 ----------- ----------- ----------- ----------- Total loans and leases 12,444,259 12,278,517 12,178,330 11,754,865 Allowance for loan and lease losses (224,046) (208,046) (185,070) (168,278) ----------- ----------- ----------- ----------- Net loans and leases 12,220,213 12,070,471 11,993,260 11,586,587 Premises and equipment, net 131,294 127,361 122,959 119,243 Goodwill and other intangibles 500,037 512,297 514,584 514,811 Other real estate owned 11,388 2,279 9,113 3,812 Other assets 727,850 623,741 589,650 605,523 ----------- ----------- ----------- ----------- Total assets $16,455,515 $16,330,868 $16,339,258 $15,934,032 =========== =========== =========== =========== Liabilities Deposits: Noninterest- bearing $ 6,140,619 $ 5,744,863 $ 5,861,823 $ 5,680,845 Interest-bearing 6,511,505 6,422,797 6,034,514 6,111,524 ----------- ----------- ----------- ----------- Total deposits 12,652,124 12,167,660 11,896,337 11,792,369 Federal funds purchased and securities sold under repurchase agreements 908,157 1,272,359 1,221,428 1,118,478 Other short-term borrowed funds 124,500 630,673 955,000 720,992 Subordinated debt 161,595 157,769 157,080 162,813 Other long-term debt 246,554 231,321 237,867 243,439 Other liabilities 287,340 170,686 171,598 181,414 ----------- ----------- ----------- ----------- Total liabilities 14,380,270 14,630,468 14,639,310 14,219,505 Redeemable noncontrolling interest 44,811 52,556 59,234 50,216 Equity City National Corporation shareholders' equity: Preferred stock 390,089 -- -- -- Common stock 50,961 50,966 50,972 50,982 Additional paid-in capital 389,077 371,279 369,045 375,374 Retained earnings 1,379,624 1,396,400 1,403,062 1,390,781 Accumulated other comprehensive loss (48,022) (38,071) (24,853) (3,431) Treasury shares (156,736) (158,193) (183,222) (175,048) ----------- ----------- ----------- ----------- Total common shareholders' equity 1,614,904 1,622,381 1,615,004 1,638,658 ----------- ----------- ----------- ----------- Total shareholders' equity 2,004,993 1,622,381 1,615,004 1,638,658 Noncontrolling interest 25,441 25,463 25,710 25,653 ----------- ----------- ----------- ----------- Total equity 2,030,434 1,647,844 1,640,714 1,664,311 ----------- ----------- ----------- ----------- Total liabilities and equity $16,455,515 $16,330,868 $16,339,258 $15,934,032 =========== =========== =========== =========== Note: Certain prior period balances have been reclassified to conform to current period presentation. CITY NATIONAL CORPORATION CREDIT LOSS EXPERIENCE (unaudited) 2009 ------------------------------------------------ (Dollars in Fourth Third Second First Year To thousands) Quarter Quarter Quarter Quarter Date ------------------- -------- -------- -------- -------- -------- Allowance for Loan and Lease Losses (1) Balance at beginning of period $265,005 $256,018 $241,586 $224,046 $224,046 Net (charge-offs)/ recoveries: Commercial (23,088) (28,852) (17,283) (18,459) (87,682) Commercial real estate mortgages (5,291) (3,372) -- -- (8,663) Residential mortgages (625) (682) (731) (367) (2,405) Real estate construction (27,562) (42,651) (36,189) (14,049) 120,451) Equity lines of credit (550) (387) (1,039) (38) (2,014) Installment (1,632) (915) (1,448) (706) (4,701) -------- -------- -------- -------- -------- Total net (charge-offs)/ recoveries (58,748) (76,859) (56,690) (33,619) (225,916) Provision for credit losses 80,000 85,000 70,000 50,000 285,000 Transfers from (to) reserve for off-balance sheet credit commitments 2,236 846 1,122 1,159 5,363 -------- -------- -------- -------- -------- Balance at end of period $288,493 $265,005 $256,018 $241,586 $288,493 ======== ======== ======== ======== ======== Net (Charge-Offs)/ Recoveries to Average Total Loans and Leases, Excluding Covered Assets: (annualized) Commercial (1.99)% (2.42)% (1.47)% (1.57)% (1.87)% Commercial real estate mortgages (0.97)% (0.62)% 0.00 % 0.00 % (0.40)% Residential mortgage (0.07)% (0.08)% (0.08)% (0.04)% (0.07)% Real estate construction (11.92)% (15.68)% (12.59)% (4.63)% (11.01)% Equity lines of credit (0.31)% (0.22)% (0.62)% (0.02)% (0.30)% Installment (3.74)% (2.05)% (3.33)% (1.67)% (2.70)% Total loans and leases, excluding covered assets (1.93)% (2.47)% (1.84)% (1.10)% (1.84)% Reserve for Off- Balance Sheet Credit Commitments Balance at beginning of period $ 19,576 $ 20,422 $ 21,544 $ 22,703 $ 22,703 Recovery of prior charge-off -- -- -- -- -- Transfers (to) from allowance (2,236) (846) (1,122) (1,159) (5,363) -------- -------- -------- -------- -------- Balance at end of period $ 17,340 $ 19,576 $ 20,422 $ 21,544 $ 17,340 ======== ======== ======== ======== ======== 2008 ------------------------------------------------ (Dollars in Fourth Third Second First Year To thousands) Quarter Quarter Quarter Quarter Date ------------------- -------- -------- -------- -------- -------- Allowance for Loan and Lease Losses (1) Balance at beginning of period $208,046 $185,070 $168,278 $168,523 $168,523 Net (charge-offs)/ recoveries: Commercial (12,123) (4,331) (5,195) (1,574) (23,223) Commercial real estate mortgages -- -- -- (552) (552) Residential mortgages 37 8 10 8 63 Real estate construction (12,279) (8,370) (13,196) (9,905) (43,750) Equity lines of credit -- -- -- -- -- Installment (316) (101) (535) (64) (1,016) -------- -------- -------- -------- -------- Total net (charge-offs)/ recoveries (24,681) (12,794) (18,916) (12,087) (68,478) Provision for credit losses 40,000 35,000 35,000 17,000 127,000 Transfers from (to) reserve for off- balance sheet credit commitments 681 770 708 (5,158) (2,999) -------- -------- -------- -------- -------- Balance at end of period $224,046 $208,046 $185,070 $168,278 $224,046 ======== ======== ======== ======== ======== Net (Charge-Offs)/ Recoveries to Average Total Loans and Leases, Excluding Covered Assets: (annualized) Commercial (1.01)% (0.36)% (0.45)% (0.14)% (0.50)% Commercial real estate mortgages 0.00 % 0.00 % 0.00 % (0.11)% (0.03)% Residential mortgage 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % Real estate construction (3.79)% (2.37)% (3.61)% (2.72)% (3.11)% Equity lines of credit 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % Installment (0.76)% (0.26)% (1.32)% (0.15)% (0.61)% Total loans and leases, excluding covered assets (0.79)% (0.42)% (0.63)% (0.42)% (0.57)% Reserve for Off- Balance Sheet Credit Commitments Balance at beginning of period $ 23,384 $ 24,154 $ 24,862 $ 19,704 $ 19,704 Recovery of prior charge-off -- -- -- -- -- Transfers (to) from allowance (681) (770) (708) 5,158 2,999 -------- -------- -------- -------- -------- Balance at end of period $ 22,703 $ 23,384 $ 24,154 $ 24,862 $ 22,703 ======== ======== ======== ======== ======== (1) Allowance for loan and lease losses relates to total loans and leases, excluding covered assets. Note: Certain prior period balances have been reclassified to conform to current period presentation. CITY NATIONAL CORPORATION NONPERFORMING ASSETS (unaudited) 2009 -------------------------------------- Fourth Third Second First (Dollars in thousands) Quarter Quarter Quarter Quarter ------------------------------ -------- -------- -------- -------- Nonaccrual loans Commercial $ 81,989 $ 90,744 $ 80,372 $ 56,246 Commercial real estate mortgages 76,027 60,833 36,112 16,923 Residential mortgages 15,488 12,961 17,262 13,270 Real estate construction 202,605 233,848 237,828 223,416 Equity lines of credit 3,422 2,507 2,919 2,432 Installment 9,176 7,373 3,768 1,354 -------- -------- -------- -------- Total nonaccrual loans 388,707 408,266 378,261 313,641 Other real estate owned 53,308 43,969 18,064 12,639 -------- -------- -------- -------- Total nonperforming assets, excluding covered assets $442,015 $452,235 $396,325 $326,280 ======== ======== ======== ======== Covered assets (other real estate owned) $ 60,558 $ -- $ -- $ -- Loans 90 days or more past due on accrual status, excluding covered assets $ 5,689 $ 10,395 $ -- $ 16,261 Covered assets 90 days or more past due on accrual status $173,309 $ -- $ -- $ -- Allowance for loan and lease losses as a percentage of: Nonaccrual loans 74.22% 64.91% 67.68% 77.03% Total nonperforming assets, excluding covered assets 65.27% 58.60% 64.60% 74.04% Total loans and leases, excluding covered assets 2.38% 2.18% 2.06% 1.96% Nonaccrual loans as a percentage of total loans, excluding covered assets 3.20% 3.36% 3.05% 2.55% Nonperforming assets, excluding covered assets as a percentage of: Total loans and other real estate owned, excluding covered assets 3.62% 3.70% 3.19% 2.65% Total assets 2.10% 2.46% 2.24% 1.93% 2008 -------------------------------------- Fourth Third Second First (Dollars in thousands) Quarter Quarter Quarter Quarter ----------------------------- -------- -------- -------- -------- Nonaccrual loans Commercial $ 46,238 $ 26,184 $ 16,444 $ 16,293 Commercial real estate mortgages 8,924 5,878 5,903 1,841 Residential mortgages 3,171 266 549 706 Real estate construction 149,536 113,288 81,120 93,296 Equity lines of credit 1,921 1,380 1,398 1,422 Installment 1,352 3,890 763 64 -------- -------- -------- -------- Total nonaccrual loans 211,142 150,886 106,177 113,622 Other real estate owned 11,388 2,279 9,113 3,812 -------- -------- -------- -------- Total nonperforming assets, excluding covered assets $222,530 $153,165 $115,290 $117,434 ======== ======== ======== ======== Covered assets (other real estate owned) $ -- $ -- $ -- $ -- Loans 90 days or more past due on accrual status, excluding covered assets $ 663 $ 4,930 $ 2 $ 13 Covered assets 90 days or more past due on accrual status $ -- $ -- $ -- $ -- Allowance for loan and lease losses as a percentage of: Nonaccrual loans 106.11% 137.88% 174.30% 148.10% Total nonperforming assets, excluding covered assets 100.68% 135.83% 160.53% 143.30% Total loans and leases, excluding covered assets 1.80% 1.69% 1.52% 1.43% Nonaccrual loans as a percentage of total loans, excluding covered assets 1.70% 1.23% 0.87% 0.97% Nonperforming assets, excluding covered assets as a percentage of: Total loans and other real estate owned, excluding covered assets 1.79% 1.25% 0.95% 1.00% Total assets 1.35% 0.94% 0.71% 0.74% CITY NATIONAL CORPORATION AVERAGE BALANCES AND RATES (unaudited) 2009 ---------------------------------------------------- Fourth Quarter Third Quarter Second Quarter ---------------- ---------------- ---------------- (Dollars in Average Average Average Average Average Average millions) Balance Rate Balance Rate Balance Rate ---------------- ------- ------- ------- ------- ------- ------- Assets Interest-earning assets Loans and leases Commercial $ 4,607 4.30% $ 4,724 4.26% $ 4,721 4.21% Commercial real estate mortgages 2,163 5.47 2,144 5.49 2,178 5.69 Residential mortgages 3,534 5.56 3,528 5.50 3,454 5.51 Real estate construction 917 3.88 1,079 3.58 1,153 3.04 Equity lines of credit 706 3.52 687 3.51 674 3.46 Installment 173 5.10 177 5.08 174 5.05 ------- ------- ------- Total loans and leases, excluding covered assets 12,100 4.80 12,339 4.72 12,354 4.70 Covered assets 264 6.10 -- 0.00 -- 0.00 ------- ------- ------- Total loans and leases 12,364 4.83 12,339 4.72 12,354 4.70 Due from banks - interest- bearing 906 0.34 204 0.50 195 0.60 Federal funds sold and securities purchased under resale agreements 375 0.13 338 0.15 15 0.23 Securities available-for- sale 3,804 3.62 3,560 4.03 3,252 4.08 Trading securities 74 1.95 71 0.18 112 1.36 FDIC indemnification asset 58 4.96 -- 0.00 -- 0.00 Other interest- earning assets 84 3.48 76 3.76 75 3.45 ------- ------- ------- Total interest- earning assets 17,665 4.21 16,588 4.40 16,003 4.49 Allowance for loan and lease losses (276) (260) (246) Cash and due from banks 313 308 324 Other non-earning assets 1,393 1,302 1,288 ------- ------- ------- Total assets $19,095 $17,938 $17,369 ======= ======= ======= Liabilities and Equity Interest-bearing deposits Interest checking accounts $ 2,027 0.21% $ 1,637 0.25% $ 1,388 0.29% Money market accounts 4,093 0.64 4,232 0.66 4,111 0.86 Savings deposits 306 0.63 262 0.64 222 0.74 Time deposits - under $100,000 293 0.81 211 1.05 221 1.42 Time deposits - $100,000 and over 1,221 1.04 1,221 1.24 1,311 1.56 ------- ------- ------- Total interest- bearing deposits 7,940 0.60 7,563 0.67 7,253 0.89 Federal funds purchased and securities sold under repurchase agreements 236 3.38 234 3.41 472 1.77 Other borrowings 639 4.41 511 3.27 494 1.75 ------- ------- ------- Total interest- bearing liabilities 8,815 0.95 8,308 0.91 8,219 0.99 Noninterest- bearing deposits 7,790 7,214 6,770 Other liabilities 249 212 234 Total equity 2,241 2,204 2,146 ------- ------- ------- Total liabilities and equity $19,095 $17,938 $17,369 ======= ======= ======= Net interest spread 3.26% 3.49% 3.50% ======= ======= ======= Net interest margin 3.74% 3.94% 3.98% ======= ======= ======= Average prime rate 3.25% 3.25% 3.25% ======= ======= ======= 2009 ---------------------------------- First Quarter Year to Date ---------------- ---------------- Average Average Average Average (Dollars in millions) Balance Rate Balance Rate ---------------------------------- ------- ------- ------- ------- Assets Interest-earning assets Loans and leases Commercial $ 4,756 4.22% $ 4,702 4.25% Commercial real estate mortgages 2,200 5.74 2,171 5.60 Residential mortgages 3,406 5.58 3,481 5.54 Real estate construction 1,232 3.20 1,094 3.40 Equity lines of credit 630 3.39 675 3.47 Installment 171 5.12 174 5.09 ------- ------- Total loans and leases, excluding covered assets 12,395 4.75 12,297 4.74 Covered assets -- 0.00 66 6.10 ------- ------- Total loans and leases 12,395 4.75 12,363 4.75 Due from banks - interest-bearing 134 0.47 362 0.41 Federal funds sold and securities purchased under resale agreements 11 0.24 186 0.14 Securities available-for-sale 2,302 4.65 3,234 4.03 Trading securities 115 0.19 93 0.89 FDIC indemnification asset -- 0.00 15 4.96 Other interest-earning assets 76 3.48 77 3.54 ------- ------- Total interest-earning assets 15,033 4.67 16,330 4.43 Allowance for loan and lease losses (236) (255) Cash and due from banks 335 320 Other non-earning assets 1,279 1,316 ------- ------- Total assets $16,411 $17,711 ======= ======= Liabilities and Equity Interest-bearing deposits Interest checking accounts $ 1,098 0.32% $ 1,541 0.26% Money market accounts 3,897 1.01 4,084 0.79 Savings deposits 166 0.65 239 0.66 Time deposits - under $100,000 234 2.22 240 1.34 Time deposits - $100,000 and over 1,463 2.06 1,303 1.50 ------- ------- Total interest-bearing deposits 6,858 1.16 7,407 0.82 Federal funds purchased and securities sold under repurchase agreements 723 1.22 415 2.00 Other borrowings 526 2.20 542 3.01 ------- ------- Total interest-bearing liabilities 8,107 1.23 8,364 1.02 Noninterest-bearing deposits 5,983 6,945 Other liabilities 271 241 Total equity 2,050 2,161 ------- ------- Total liabilities and equity $16,411 $17,711 ======= ======= Net interest spread 3.44% 3.41% ======= ======= Net interest margin 4.00% 3.91% ======= ======= Average prime rate 3.25% 3.25% ======= ======= Note: Certain prior period balances have been reclassified to conform to current period presentation. CITY NATIONAL CORPORATION AVERAGE BALANCES AND RATES (unaudited) 2008 ---------------------------------------------------- Fourth Quarter Third Quarter Second Quarter ---------------- ---------------- ---------------- (Dollars in Average Average Average Average Average Average millions) Balance Rate Balance Rate Balance Rate ---------------- ------- ------- ------- ------- ------- ------- Assets Interest-earning assets Loans and leases Commercial $ 4,790 4.89% $ 4,727 5.30% $ 4,675 5.30% Commercial real estate mortgages 2,149 6.31 2,095 6.52 2,009 6.50 Residential mortgages 3,386 5.65 3,335 5.62 3,271 5.57 Real estate construction 1,288 4.57 1,404 5.05 1,470 5.43 Equity lines of credit 591 3.62 513 4.34 470 4.45 Installment 167 5.45 157 5.89 164 5.88 ------- ------- ------- Total loans and leases 12,371 5.25 12,231 5.53 12,059 5.57 Due from banks - interest- bearing 120 1.34 94 1.85 95 2.24 Federal funds sold and securities purchased under resale agreements 18 0.33 5 1.88 9 2.54 Securities available-for- sale 2,136 4.96 2,241 4.97 2,351 4.89 Trading securities 123 1.06 118 1.94 102 1.65 Other interest- earning assets 76 5.64 79 5.92 79 5.24 ------- ------- ------- Total interest- earning assets 14,844 5.13 14,768 5.39 14,695 5.42 Allowance for loan and lease losses (204) (182) (163) Cash and due from banks 341 375 386 Other non-earning assets 1,210 1,160 1,159 ------- ------- ------- Total assets $16,191 $16,121 $16,077 ======= ======= ======= Liabilities and Equity Interest-bearing deposits Interest checking accounts $ 888 0.57% $ 826 0.72% $ 867 0.70% Money market accounts 3,911 1.85 3,781 1.68 3,738 1.70 Savings deposits 146 0.52 138 0.44 133 0.28 Time deposits - under $100,000 240 2.85 213 2.89 208 2.89 Time deposits - $100,000 and over 1,502 2.32 1,222 2.45 1,143 2.94 ------- ------- ------- Total interest- bearing deposits 6,687 1.80 6,180 1.72 6,089 1.80 Federal funds purchased and securities sold under repurchase agreements 636 1.62 1,357 2.28 1,262 2.42 Other borrowings 848 2.87 1,117 2.97 1,193 2.91 ------- ------- ------- Total interest- bearing liabilities 8,171 1.89 8,654 1.97 8,544 2.05 Noninterest- bearing deposits 5,952 5,557 5,606 Other liabilities 250 252 251 Total equity 1,818 1,658 1,676 ------- ------- ------- Total liabilities and equity $16,191 $16,121 $16,077 ======= ======= ======= Net interest spread 3.24% 3.42% 3.37% ======= ======= ======= Net interest margin 4.09% 4.23% 4.23% ======= ======= ======= Average prime rate 4.06% 5.00% 5.08% ======= ======= ======= ---------------------------------- First Quarter Year to Date ---------------- ---------------- Average Average Average Average (Dollars in millions) Balance Rate Balance Rate ---------------------------------- ------- ------- ------- ------- Assets Interest-earning assets Loans and leases Commercial $ 4,456 6.28% $ 4,663 5.42% Commercial real estate mortgages 1,975 6.84 2,058 6.54 Residential mortgages 3,179 5.61 3,293 5.61 Real estate construction 1,464 6.47 1,406 5.41 Equity lines of credit 438 5.65 503 4.44 Installment 177 6.49 166 5.93 ------- ------- Total loans and leases 11,689 6.20 12,089 5.63 Due from banks - interest-bearing 78 2.69 97 1.96 Federal funds sold and securities purchased under resale agreements 8 3.33 10 1.61 Securities available-for-sale 2,446 4.81 2,293 4.90 Trading securities 78 3.11 105 1.83 Other interest-earning assets 72 5.75 76 5.63 ------- ------- Total interest-earning assets 14,371 5.93 14,670 5.46 Allowance for loan and lease losses (165) (179) Cash and due from banks 379 371 Other non-earning assets 1,139 1,167 ------- ------- Total assets $15,724 $16,029 ======= ======= Liabilities and Equity Interest-bearing deposits Interest checking accounts $ 823 0.69% $ 851 0.67% Money market accounts 3,610 2.47 3,761 1.92 Savings deposits 135 0.36 138 0.40 Time deposits - under $100,000 220 3.54 220 3.04 Time deposits - $100,000 and over 1,329 3.99 1,299 2.91 ------- ------- Total interest-bearing deposits 6,117 2.55 6,269 1.96 Federal funds purchased and securities sold under repurchase agreements 1,141 3.39 1,099 2.51 Other borrowings 1,119 4.00 1,068 3.20 ------- ------- Total interest-bearing liabilities 8,377 2.86 8,436 2.19 Noninterest-bearing deposits 5,404 5,631 Other liabilities 272 256 Total equity 1,671 1,706 ------- ------- Total liabilities and equity $15,724 $16,029 ======= ======= Net interest spread 3.07% 3.27% ======= ======= Net interest margin 4.26% 4.20% ======= ======= Average prime rate 6.22% 5.09% ======= ======= Note: Certain prior period balances have been reclassified to conform to current period presentation. CITY NATIONAL CORPORATION CAPITAL AND CREDIT RATING DATA (unaudited) 2009 ------------------------------------------------ Fourth Third Second First Year To Quarter Quarter Quarter Quarter Date -------- -------- -------- -------- -------- Per Common Share: ----------------- Shares Outstanding (in thousands): Average - Basic 51,509 51,482 50,416 48,046 50,272 Average - Diluted (1) 51,720 51,660 50,551 48,130 50,421 Period-end 51,536 51,499 51,471 48,224 Book value for common shareholders $ 34.74 $ 34.99 $ 34.14 $ 33.87 Closing price: High $ 47.32 $ 43.80 $ 44.14 $ 47.76 $ 47.76 Low 36.59 33.13 31.87 22.83 22.83 Period-end 45.60 38.93 36.83 33.77 Capital Ratios (Dollars in millions): -------------- Risk-based capital Risk-weighted assets (2) $ 14,431 $ 13,669 $ 13,887 $ 13,619 Tier I capital $ 1,760 $ 1,682 $ 1,715 $ 1,594 Percentage of risk-weighted assets 12.20% 12.31% 12.35% 11.71% Total capital $ 2,186 $ 2,099 $ 1,969 $ 1,845 Percentage of risk-weighted assets 15.15% 15.35% 14.18% 13.55% Tier I leverage ratio 9.48% 9.66% 10.16% 10.04% Period-end equity to period-end assets 9.55% 12.06% 12.31% 12.10% Period-end common shareholders' equity to period-end assets 8.49% 9.79% 9.95% 9.65% Average equity to average assets 11.73% 12.29% 12.35% 12.49% 12.20% Average common shareholders' equity to average assets 9.56% 9.96% 9.96% 9.96% 9.85% Period-end tangible equity to period-end tangible assets (3) 7.24% 9.43% 9.77% 9.44% Period-end tangible common shareholders' equity to period- end tangible assets (3) 6.15% 7.10% 7.35% 6.91% Average tangible equity to average tangible assets (3) 9.20% 9.72% 9.77% 9.75% 9.60% Average tangible common shareholders' equity to average tangible assets (3) 6.96% 7.33% 7.30% 7.14% 7.18% 2008 ------------------------------------------------ Fourth Third Second First Year To Quarter Quarter Quarter Quarter Date -------- -------- -------- -------- -------- Per Common Share: ----------------- Shares Outstanding (in thousands): Average - Basic 48,105 47,934 47,849 47,829 47,930 Average - Diluted (1) 48,280 48,207 48,179 48,185 48,196 Period-end 48,180 48,155 47,777 47,871 Book value for common shareholders $ 33.52 $ 33.69 $ 33.80 $ 34.23 Closing price: High $ 57.56 $ 65.35 $ 51.75 $ 60.00 $ 65.35 Low 34.97 37.60 40.98 48.57 34.97 Period-end 48.70 54.30 42.07 49.46 Capital Ratios (Dollars in millions): -------------- Risk-based capital Risk-weighted assets (2) $ 13,943 $ 13,653 $ 13,546 $ 13,160 Tier I capital $ 1,633 $ 1,246 $ 1,224 $ 1,222 Percentage of risk-weighted assets 11.71% 9.13% 9.03% 9.29% Total capital $ 1,868 $ 1,507 $ 1,483 $ 1,477 Percentage of risk-weighted assets 13.40% 11.04% 10.95% 11.22% Tier I leverage ratio 10.44% 8.01% 7.89% 8.06% Period-end equity to period-end assets 12.34% 10.09% 10.04% 10.45% Period-end common shareholders' equity to period- end assets 9.81% 9.93% 9.88% 10.28% Average equity to average assets 11.23% 10.28% 10.43% 10.63% 10.64% Average common shareholders' equity to average assets 9.99% 10.12% 10.27% 10.46% 10.21% Period-end tangible equity to period-end tangible assets (3) 9.59% 7.18% 7.12% 7.45% Period-end tangible common shareholders' equity to period- end tangible assets (3) 6.99% 7.02% 6.95% 7.29% Average tangible equity to average tangible assets (3) 8.34% 7.33% 7.47% 7.58% 7.68% Average tangible common shareholders' equity to average tangible assets (3) 7.07% 7.17% 7.31% 7.41% 7.24% Senior Debt Credit Ratings --------------------- For The Period Ended December 31, 2009 Standard & Moody's Fitch Poor's DBRS ---------- ---------- ---------- ---------- City National Bank Aa3 A- A- A (high) City National Corporation A1 A- BBB+ A Note: Certain prior period balances have been reclassified to conform to current period presentation. (1) Average diluted shares outstanding for prior periods in 2008 have been restated as a result of the adoption of ASC Section 260-10-55, Earnings Per Share - Implementation (formerly FSP EITF 03-6-1 "Determining Whether Instruments Granted in Share- Based Payment Transactions are Participating Securities"). (2) In accordance with applicable bank regulatory guidelines, the Company calculates risk-weighted assets by assigning assets and credit equivalent amounts of derivatives and off-balance sheet items to one of several broad risk categories according to the obligor, or, if relevant, the guarantor or the nature of the collateral. The aggregate dollar amount in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are added together for determining risk-weighted assets. (3) Tangible equity to tangible assets and tangible common shareholders' equity to tangible assets are non-GAAP financial measures. For notes on non-GAAP measures, see page 13 of the Selected Financial Information. CITY NATIONAL CORPORATION NON-GAAP FINANCIAL MEASURES (unaudited) (a) Tangible equity and tangible common shareholders' equity ratios Tangible equity to tangible assets is a non-GAAP financial measure that represents total equity less identifiable intangible assets and goodwill divided by total assets less identifiable intangible assets and goodwill. Tangible common shareholders' equity to tangible assets is a non-GAAP financial measure that represents tangible equity less preferred stock and noncontrolling interest divided by total assets less identifiable intangible assets and goodwill. Management reviews both these measures in evaluating the Company's capital levels and has included these ratios in response to market participant interest in tangible equity and tangible common shareholders' equity as a measure of capital. A reconciliation of the GAAP to non-GAAP measure is set forth below: 2009 ------------------------------------- Fourth Third Second (Dollars in thousands) Quarter Quarter Quarter ------------------------------ ----------- ----------- ----------- Period End: Total equity $ 2,012,764 $ 2,218,492 $ 2,173,916 Less: Goodwill and other intangibles (525,583) (533,367) (496,562) ----------- ----------- ----------- Tangible equity(A) 1,487,181 1,685,125 1,677,354 Less: Noncontrolling interest (26,441) (24,849) (25,387) Less: Preferred stock (196,048) (391,593) (391,091) ----------- ----------- ----------- Tangible common shareholders' equity(B) $ 1,264,692 $ 1,268,683 $ 1,260,876 Total assets $21,078,757 $18,400,604 $17,660,785 Less: Goodwill and other intangibles (525,583) (533,367) (496,562) ----------- ----------- ----------- Tangible assets(C) $20,553,174 $17,867,237 $17,164,223 Period-end tangible equity to period-end tangible assets (A)/(C) 7.24% 9.43% 9.77% Period-end tangible common shareholders' equity to period-end tangible assets (B)/(C) 6.15% 7.10% 7.35% Average Balance: Total equity $ 2,240,642 $ 2,204,220 $ 2,145,859 Less: Goodwill and other intangibles (533,314) (510,514) (497,487) ----------- ----------- ----------- Tangible equity(D) 1,707,328 1,693,706 1,648,372 Less: Noncontrolling interest (24,815) (25,369) (25,438) Less: Preferred stock (389,688) (391,353) (390,838) ----------- ----------- ----------- Tangible common shareholders' equity(E) $ 1,292,825 $ 1,276,984 $ 1,232,096 Total assets $19,095,212 $17,938,231 $17,369,311 Less: Goodwill and other intangibles (533,314) (510,514) (497,487) ----------- ----------- ----------- Tangible assets(F) $18,561,898 $17,427,717 $16,871,824 Average tangible equity to average tangible assets (D)/(F) 9.20% 9.72% 9.77% Average tangible common shareholders' equity to average tangible assets (E)/(F) 6.96% 7.33% 7.30% 2009 ------------------------ First Year To (Dollars in thousands) Quarter Date ------------------------------------------- ----------- ----------- Period End: Total equity $ 2,049,370 Less: Goodwill and other intangibles (498,194) ----------- Tangible equity(A) 1,551,176 Less: Noncontrolling interest (25,441) Less: Preferred stock (390,590) ----------- Tangible common shareholders' equity(B) $ 1,135,145 Total assets $16,933,530 Less: Goodwill and other intangibles (498,194) ----------- Tangible assets(C) $16,435,336 Period-end tangible equity to period-end tangible assets(A)/(C) 9.44% Period-end tangible common shareholders' equity to period-end tangible assets(B)/(C) 6.91% Average Balance: Total equity $ 2,050,401 $ 2,160,922 Less: Goodwill and other intangibles (499,229) (510,230) ----------- ----------- Tangible equity (D) 1,551,172 1,650,692 Less: Noncontrolling interest (25,441) (25,264) Less: Preferred stock (390,348) (390,557) ----------- ----------- Tangible common shareholders' equity(E) $ 1,135,383 $ 1,234,871 Total assets $16,411,240 $17,711,495 Less: Goodwill and other intangibles (499,229) (510,230) ----------- ----------- Tangible assets(F) $15,912,011 $17,201,264 Average tangible equity to average tangible assets(D)/(F) 9.75% 9.60% Average tangible common shareholders' equity to average tangible assets(E)/(F) 7.14% 7.18% 2008 ------------------------------------- Fourth Third Second (Dollars in thousands) Quarter Quarter Quarter ------------------------------ ----------- ----------- ----------- Period End: Total equity $ 2,030,434 $ 1,647,844 $ 1,640,714 Less: Goodwill and other intangibles (500,037) (512,297) (514,584) ----------- ----------- ----------- Tangible equity(A) 1,530,397 1,135,547 1,126,130 Less: Noncontrolling interest (25,441) (25,463) (25,710) Less: Preferred stock (390,089) -- -- ----------- ----------- ----------- Tangible common shareholders' equity(B) $ 1,114,867 $ 1,110,084 $ 1,100,420 Total assets $16,455,515 $16,330,868 $16,339,258 Less: Goodwill and other intangibles (500,037) (512,297) (514,584) ----------- ----------- ----------- Tangible assets(C) $15,955,478 $15,818,571 $15,824,674 Period-end tangible equity to period-end tangible assets (A)/(C) 9.59% 7.18% 7.12% Period-end tangible common shareholders' equity to period-end tangible assets (B)/(C) 6.99% 7.02% 6.95% Average Balance: Total equity $ 1,818,392 $ 1,657,813 $ 1,676,430 Less: Goodwill and other intangibles (510,125) (513,609) (513,791) ----------- ----------- ----------- Tangible equity(D) 1,308,267 1,144,204 1,162,639 Less: Noncontrolling interest (25,455) (25,612) (25,677) Less: Preferred stock (174,677) -- -- ----------- ----------- ----------- Tangible common shareholders' equity(E) $ 1,108,135 $ 1,118,591 $ 1,136,962 Total assets $16,191,243 $16,120,584 $16,077,156 Less: Goodwill and other intangibles (510,125) (513,609) (513,791) ----------- ----------- ----------- Tangible assets(F) $15,681,118 $15,606,975 $15,563,365 Average tangible equity to average tangible assets (D)/(F) 8.34% 7.33% 7.47% Average tangible common shareholders' equity to average tangible assets (E)/(F) 7.07% 7.17% 7.31% 2008 ------------------------ First Year To (Dollars in thousands) Quarter Date ------------------------------------------- ----------- ----------- Period End: Total equity $ 1,664,311 Less: Goodwill and other intangibles (514,811) ----------- Tangible equity (A) 1,149,500 Less: Noncontrolling interest (25,653) Less: Preferred stock -- ----------- Tangible common shareholders' equity(B) 1,123,847 Total assets $15,934,032 Less: Goodwill and other intangibles (514,811) ----------- Tangible assets(C) $15,419,221 Period-end tangible equity to period-end tangible assets(A)/(C) 7.45% Period-end tangible common shareholders' equity to period-end tangible assets(B)/(C) 7.29% Average Balance: Total equity $ 1,671,030 $ 1,706,092 Less: Goodwill and other intangibles (518,913) (514,097) ----------- ----------- Tangible equity(D) 1,152,117 1,191,995 Less: Noncontrolling interest (25,608) (25,588) Less: Preferred stock -- (43,908) ----------- ----------- Tangible common shareholders' equity(E) $ 1,126,509 $ 1,122,499 Total assets $15,723,507 $16,028,821 Less: Goodwill and other intangibles (518,913) (514,097) ----------- ----------- Tangible assets(F) $15,204,594 $15,514,724 Average tangible equity to average tangible assets(D)/(F) 7.58% 7.68% Average tangible common shareholders' equity to average tangible assets(E)/(F) 7.41% 7.24% (b)Tier 1 common shareholders' equity to risk-based assets Tier 1 common shareholders' equity to risk-based assets was 8.91 percent at December 31, 2009 and 9.22 percent at September 30, 2009. The Tier 1 common shareholders' equity to risk-based assets ratio, also known as Tier 1 common ratio, is calculated by dividing (a) Tier 1 capital less non-common components including qualifying perpetual preferred stock, qualifying noncontrolling interest in subsidiaries and qualifying trust preferred securities by (b) risk-weighted assets. Tier 1 capital and risk-weighted assets are calculated in accordance with applicable bank regulatory guidelines. This ratio is a non-GAAP measure that is used by investors, analysts and bank regulatory agencies, including the Federal Reserve in the Supervisory Capital Assessment Program, to assess the capital position of financial services companies. Management reviews this measure in evaluating the Company's capital levels and has included these ratios in response to market participant interest in the Tier 1 common shareholders to risk-based assets ratio. Tier 1 capital was $1.76 billion as of December 31, 2009. To calculate Tier 1 common shareholders' equity, Tier 1 capital was reduced by preferred stock of $196.0 million, noncontrolling interest in subsidiaries of $26.3 million and trust preferred securities of $252.0 million, resulting in Tier 1 common shareholders' equity of $1.29 billion as of December 31, 2009. Refer to page 12 for risk-weighted assets as of December 31, 2009.
CONTACT: City National Corp. Financial/Investors Christopher J. Carey 310.888.6777 Chris.Carey@cnb.com Media Cary Walker 213.673.7615 Cary.Walker@cnb.com Conference Call: Today 2:00 p.m. PDT (866) 393-6804 Conference ID: 90428519