Total Assets Exceed $18 Billion for the First Time
Revenue Rises as Total Deposits Grow to More Than $15 Billion
LOS ANGELES, Oct. 22, 2009 (GLOBE NEWSWIRE) -- City National Corporation (NYSE:CYN), the parent company of wholly owned City National Bank, today reported third-quarter 2009 net income of $8.0 million, compared to $6.8 million in the second quarter of 2009 and $16.6 million in the third quarter of 2008.
After the dividend paid on preferred stock under the United States Treasury Department's Capital Purchase Program, third-quarter net income available to common shareholders was $2.5 million, or $0.05 per share. This compares to net income available to common shareholders of $1.3 million, or $0.02 per share, in the second quarter of 2009 and $16.6 million, or $0.34 per share in the third quarter of 2008.
Year to date, City National's net income totaled $22.3 million, while net income available to common shareholders was $5.8 million, or $0.11 per share. Excluding second-quarter 2009 after-tax charges of $6.0 million, or $0.12 per share, for an industry-wide special FDIC assessment, year-to-date net income available to common shareholders amounted to $11.8 million, or $0.23 per share(1). In the first nine months of 2008, the company earned net income of $96.0 million, or $1.98 per share.
The company also announced today that its Board of Directors has again declared a 2009 quarterly common stock cash dividend of $0.10 per share. The quarterly dividend is payable on November 18, 2009 to stockholders of record on November 4, 2009.
THIRD-QUARTER 2009 HIGHLIGHTS
* City National further strengthened its capital position in the third quarter by completing the sale of approximately $180 million of subordinated debt. Proceeds from the sale of these securities qualifies as Tier 2 capital for regulatory purposes. The subordinated debt sale followed the company's successful second-quarter common equity offering, which raised $120 million. City National remains well-capitalized. Its ratio of Tier 1 common shareholders' equity to risk-based assets was 9.22 percent at September 30, 2009, compared with 9.31 percent at June 30, 2009(1). Recent regulatory guidelines for the banking industry call for a minimum of 4.0 percent. The company's third-quarter ratio of total equity to total assets was 12.06 percent, compared to 12.31 percent at June 30 of this year. The modest declines in these ratios reflect the growth of assets. The company's total equity grew to more than $2.2 billion. * Third-quarter net interest income grew 4 percent from the second quarter of this year and 6 percent from the same period of 2008. City National's net interest margin averaged 3.94 percent in the third quarter of 2009, down 4 basis points from the second quarter of this year. * Average deposit balances grew to a record $14.8 billion, up 5 percent from $14.0 billion in the second quarter of this year and 26 percent from $11.7 billion in the third quarter of 2008. Average core deposits, which grew 7 percent from the second quarter of 2009 and 29 percent from the third quarter of last year, amounted to 92 percent of average deposits. Period-end deposits grew to a record $15.1 billion, up 4 percent from June 30 of this year and 24 percent from September 30, 2008. * Average loans were $12.3 billion, down slightly from the second quarter of 2009 but up 1 percent from the same period last year. In the third quarter of this year, the company renewed approximately $1.3 billion of loans and made approximately $675 million in new loan commitments. About $386 million of these new commitments were funded. * Third-quarter 2009 net income includes an $85 million provision for credit losses. After net charge-offs of $76.9 million, the third-quarter provision added a net total of $8.1 million to City National's allowance for loan and lease losses. The corporation's allowance increased to $265.0 million, and now equals 2.18 percent of total loans and leases, compared to $256.0 million, or 2.06 percent of total loans and leases, at the end of the second quarter of 2009. City National also maintained an additional $19.6 million in reserves for off-balance-sheet credit commitments. At September 30, 2009, nonperforming assets amounted to $452.2 million, compared with $396.3 million at June 30 of this year. * Noninterest income totaled $68.8 million in the third quarter of 2009, up 7 percent from the second quarter of this year, largely due to an increase in wealth management fees stemming from improved market conditions and the July 21, 2009 acquisition of Lee Munder Capital Group, which manages assets primarily for institutional investors. Noninterest income was up 37 percent from the third quarter of 2008, reflecting significant securities losses in the year-ago period compared to net securities gains in the third quarter of 2009. * The corporation continued to effectively manage expenses. Third-quarter noninterest expense was down slightly from the second quarter of 2009 and down 2 percent from the third quarter of 2008.
"City National increased its assets, revenues, loans, deposits, clients and capabilities in the third quarter, while absorbing an increase in credit costs," said Chief Executive Officer Russell Goldsmith. "As we have indicated previously, commercial real estate conditions continue to increase credit costs, but due to its strong earnings power, very solid capital base and prudent expense management, City National has continued to be modestly profitable both in this quarter and year to date.
"The company continues to not only absorb the challenges of this economic environment but also to capitalize upon select opportunities to build for the future. In the third quarter, we completed the acquisition of Lee Munder Capital Group, which is off to a good start, and reached agreement to purchase our first branch in San Jose to extend our coverage in the San Francisco Bay Area. In addition, the sale of $180 million in sub debt further enhanced our robust capital ratios."
For
For the the three
three months months
ended September 30, ended
Dollars in millions, -------------------- % June 30, %
except per share 2009 2008 Change 2009 Change
------------------------ --------- --------- ------ --------- ------
Earnings Per Share $ 0.05 $ 0.34 (85) $ 0.02 150
Net Income Attributable
to CNC $ 8.0 $ 16.6 (51) $ 6.8 19
Less: Dividend on
Preferred Stock 5.5 -- NM 5.5 0
--------- --------- ---------
Net Income Available to
Common Shareholders $ 2.5 $ 16.6 (85) $ 1.3 99
========= ========= =========
Average Assets 17,938.2 16,120.6 11 17,369.3 3
Return on Average Assets 0.18% 0.41% (56) 0.16% 13
Return on Average Common
Equity 0.56% 4.03% (86) 0.29% 93
ASSETS
Total assets at September 30, 2009 grew to a record $18.4 billion, up 4 percent from the second quarter of this year and 13 percent from the third quarter of 2008, largely reflecting the company's strong deposit growth.
REVENUE
Revenue for the third quarter of 2009 was $230.2 million, up 5 percent from the second quarter of this year and 13 percent from the third quarter of 2008, due principally to increased average securities balances, lower funding costs and a net securities gain.
NET INTEREST INCOME
Fully taxable-equivalent net interest income was $164.9 million in the third quarter, up 4 percent from the second quarter of this year and 5 percent from the same period last year.
Third-quarter average loan balances were $12.3 billion, down slightly from the second quarter of this year, but up 1 percent from the third quarter of 2008. Commercial loan balances were virtually unchanged from both the second quarter of this year and third quarter of 2008.
Construction and commercial real estate loans together were down 3 percent from the second quarter of 2009 and 8 percent from the third quarter of last year. Average balances for single-family residential mortgage loans, nearly all of which are made to City National's private banking clients, rose 2 percent from the second quarter of this year and 6 percent from the third quarter of 2008.
Average securities for the third quarter of 2009 totaled $3.6 billion, up $267 million from the second quarter of 2009 and $1.3 billion from the same period last year, as increased capital was invested in high-grade, fixed-income instruments. The average duration of total available-for-sale securities at September 30, 2009 was 2.6 years, compared with 3.0 years at June 30, 2009 and 3.4 years at the end of the third quarter of 2008.
City National's net interest margin in the third quarter of 2009 averaged 3.94 percent, down 4 basis points from the second quarter of 2009 and 29 basis points from the year-ago period. The corporation's average prime rate was 3.25 percent in the third quarter of 2009, unchanged from the second quarter of this year, but down 175 basis points from the third quarter of 2008.
For the
three
For the three months months
ended September 30, ended
---------------------- % June 30, %
Dollars in millions 2009 2008 Change 2009 Change
--------------------- ---------- ---------- ------ ---------- ------
Average Loans and
Leases $ 12,339.0 $ 12,230.6 1 $ 12,354.3 (0)
Average Total
Securities 3,630.3 2,358.9 54 3,364.2 8
Average Earning
Assets 16,587.7 14,767.8 12 16,003.3 4
Average Deposits 14,776.9 11,737.1 26 14,023.3 5
Average Core Deposits 13,556.1 10,514.8 29 12,711.8 7
Fully Taxable-
Equivalent Net
Interest Income 164.9 157.1 5 158.9 4
Net Interest Margin 3.94% 4.23% (7) 3.98% (1)
Third-quarter average deposits reached a record $14.8 billion, up 5 percent from the second quarter of this year and 26 percent from the third quarter of 2008, as depositors continued to seek a safe haven for their funds.
Average core deposits grew 7 percent from the second quarter of this year and 29 percent from third quarter of 2008, and now stand at $13.6 billion, or 92 percent of the company's average deposit balances. Average noninterest-bearing deposits were up 7 percent from the second quarter of 2009 and 30 percent from the third quarter of 2008. The company estimates that approximately $1.6 billion of its $2.7 billion in year-to-date core deposit growth has come from new and existing clients, and that approximately $1.1 billion more has come from money market funds that had been held at City National Asset Management. Period-end deposits grew to a record $15.1 billion, up 4 percent from June 30 of this year and 24 percent from September 30, 2008.
Treasury Services deposit balances, which consist primarily of title, escrow and property management deposits, averaged $981 million in the third quarter of this year, compared to $978 million in the second quarter of this year and $967 million in the third quarter of 2008. The $3 million increase in Treasury Services deposits from the second quarter was due to the addition of new client relationships and stable residential real estate activity.
NONINTEREST INCOME
Noninterest income was $68.8 million in the third quarter of 2009, up 7 percent from the second quarter of 2009, primarily due to higher wealth management fee income as market conditions improved, as well as the Lee Munder Capital Group acquisition. Noninterest income was up 37 percent from the third quarter of 2008, reflecting net securities gains of $2.7 million in the third quarter of 2009 compared to net securities losses of $32.5 million in the year-ago period.
In the third quarter of 2009, noninterest income accounted for 30 percent of City National's total revenue.
Wealth Management
City National's assets under management totaled $34.9 billion as of September 30, 2009, up 15 percent from the second quarter of this year, primarily due to higher equity market values and the Lee Munder Capital Group acquisition. Assets under management were up 6 percent from the year-earlier period. Excluding the acquisition, assets under management were up 2 percent from the second quarter of 2009, but down 7 percent from the third quarter of last year.
Trust and investment fees were up 28 percent from the second quarter of 2009, as market conditions improved, but were down 3 percent from the third quarter of 2008, reflecting the year-over-year decline in market values. Money market mutual fund and brokerage fee income was $6.0 million, down 9 percent from $6.6 million in the second quarter of this year and 69 percent from $19.5 million in the year-ago period, due to historically low interest rates on government and other quality short-term bonds. Additionally, brokerage fees declined significantly from the year-ago period, reflecting reduced spreads and trading activity.
On July 21, 2009, City National completed its acquisition of Lee Munder Capital Group, a Boston-based investment firm that manages assets for corporations, pensions, endowments and affluent households, and merged its operations with Independence Investments, another Boston-based institutional asset management firm in which City National held a majority interest. The combined company serves as City National's primary institutional asset management affiliate, with more than $4 billion of assets under management. It operates under the Lee Munder Capital Group name.
At or for
At or for the the three
three months ended months
September 30, ended
-------------------- % June 30, %
Dollars in millions 2009 2008 Change 2009 Change
-------------------- --------- --------- ------ --------- ------
Trust and Investment
Fee Revenue $ 32.3 $ 33.5 (3) $ 25.2 28
Brokerage and Mutual
Fund Fees 6.0 19.5 (69) 6.6 (9)
Assets Under
Management(1) 34,927.4 33,105.6 6 30,286.4 15
Assets Under
Management or
Administration(1) 53,368.1 52,367.2 2 47,838.9 12
--------- --------- ------ --------- ------
(1) Excludes $9.9 billion, $6.9 billion, and $7.5 billion of assets
under management for an asset manager in which City National held
a noncontrolling ownership interest as of September 30, 2009,
September 30, 2008, and June 30, 2009, respectively.
Other Noninterest Income
Income from cash management and deposit transaction fees grew to $13.1 million in the third quarter, up 3 percent from second quarter of this year and 6 percent from the third quarter of 2008. The increases were due to the sales 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 was down 1 percent from the second quarter of this year and 4 percent from the third quarter of 2008.
Other income was $6.2 million in the third quarter of 2009, down 32 percent from the second quarter of this year and 25 percent from the year-ago period, due to lower valuations on certain trading securities and a $1.4 million impairment on private equity investments.
NONINTEREST EXPENSE
Third-quarter 2009 noninterest expense amounted to $143.8 million, down slightly from the second quarter of this year. Noninterest expense was down 2 percent from the third quarter of 2008, as lower personnel costs were offset by a $3 million increase in FDIC premiums and a $1.3 million lease write-off relating to an affiliate. The company also recorded $2.2 million in third-quarter 2009 net expense associated with foreclosed assets. Excluding increased FDIC premiums and the lease write-off, third-quarter 2009 noninterest expense was down 4 percent from the year-ago period(1).
CREDIT QUALITY
Net loan charge-offs for the third quarter of 2009 were $76.9 million, or 2.47 percent of average total loans and leases on an annualized basis. This compares with $56.7 million, or 1.84 percent, in the second quarter of this year and $12.8 million, or 0.42 percent, in the year-ago period.
At September 30, 2009, nonaccrual loans totaled $408.3 million, up from $378.3 million at June 30, 2009 and $150.9 million at September 30, 2008. Total nonperforming assets (nonaccrual loans and other real estate owned) were $452.2 million, or 3.70 percent of total loans and other real estate owned, at September 30, 2009. That compares with $396.3 million, or 3.19 percent, at the end of second quarter of this year and $153.2 million, or 1.25 percent, at September 30, 2008.
As of As of As of
September 30, 2009 June 30, 2009 September 30, 2008
------------------ ----------------- ------------------
Period-end Loans Non- Non- Non-
(in millions) Total accrual Total accrual Total accrual
--------------- --------- ------- --------- ------- --------- -------
Commercial
Loans $ 4,594.7 $ 90.7 $ 4,764.8 $ 80.4 $ 4,746.0 $ 26.2
Commercial R.E.
Mortgages 2,164.4 60.8 2,162.3 36.1 2,159.1 5.9
Real Estate
Construction
Loans 999.0 233.9 1,116.1 237.8 1,313.7 113.3
Residential
Mortgages 3,541.5 13.0 3,511.6 17.3 3,364.3 0.2
Equity Lines of
Credit 694.7 2.5 691.2 2.9 541.0 1.4
Other Loans 174.2 7.4 175.3 3.8 154.4 3.9
--------- ------- --------- ------- --------- -------
Total Loans $12,168.5 $ 408.3 $12,421.3 $ 378.3 $12,278.5 $ 150.9
Other Real
Estate Owned 43.9 18.0 2.3
------- ------- -------
Total
Nonperforming
Assets $ 452.2 $ 396.3 $ 153.2
======= ======= =======
The corporation's $85 million third-quarter provision for credit losses added $8.1 million, after net charge-offs, to its allowance for loan and lease losses. City National recorded provisions of $70 million in the second quarter of this year and $35 million in the third quarter of 2008. At September 30, 2009, the allowance for loan and lease losses was $265.0 million, or 2.18 percent of total loans and leases. That compares with $256.0 million, or 2.06 percent in the second quarter of this year and $208.0 million, or 1.69 percent, at the end of the third quarter of 2008. City National also maintains an additional $19.6 million in reserves for off-balance-sheet credit commitments.
The provision reflects management's continuing assessment of the loan portfolio's credit quality, which is affected by a broad range of economic factors, including weak valuations in commercial real estate. 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 $28.9 million of City National's net charge-offs in the third quarter of 2009, up from $17.3 million in the second quarter of this year. More than two-thirds of the commercial loan charge-offs for the quarter were related to two multi-bank credits made to a large California-based company in the import/export business.
Commercial loans on nonaccrual totaled $90.7 million at September 30, 2009, compared to $80.4 million at June 30, 2009, and $26.2 million a year earlier. About 38 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 $1.0 billion commercial real estate construction portfolio, which includes loans to developers of residential and non-residential properties, continued to show signs of weakness. In the commercial sector, sales and lease absorption rates slowed, and values and lease rates declined due to the economic slowdown. Meanwhile, in the residential sector, the value of land continued to deteriorate even as new home sales activity in certain markets continues to strengthen.
Net charge-offs of construction loans were $42.7 million in the third quarter of 2009, up from $36.2 million in the second quarter of this year. Construction loans on nonaccrual totaled $233.9 million in the third quarter, down from $237.8 million in the second quarter of 2009.
At the end of the third quarter, non-residential construction loans amounted to $759 million. Net charge-offs totaled $30.5 million, up from $17.5 million at June 30, 2009 and $5.4 million at September 30, 2008. Those on nonaccrual were $137 million, up from $116 million at June 30, 2009 and $20 million at September 30, 2008.
Loans to homebuilders accounted for 41 percent of all construction loans on nonaccrual and 16 percent of third-quarter net charge-offs. Overall, loans to homebuilders totaled $306 million, or 2.5 percent of City National's $12.2 billion loan portfolio, at September 30, 2009. This total includes $63 million of homebuilder loans contained in the commercial loan portfolio.
Commercial Real Estate Mortgages
Net charge-offs in the company's $2.2 billion commercial real estate mortgage portfolio were $3.4 million, compared with zero in the second quarter of this year. Commercial real estate mortgage loans on nonaccrual totaled $60.8 million at September 30, 2009, compared to $36.1 million at June 30, 2009. The increase in nonaccrual loans is tied primarily to three investor-owned properties, one in Northern California and the other two in Nevada.
Residential Mortgage and Equity Lines of Credit
City National's $3.5 billion residential mortgage portfolio and $695 million home-equity portfolio continued to perform well. Net charge-offs for the third quarter of 2009 were $1.1 million, compared to $1.8 million in the second quarter of this year. Nonaccrual loans totaled $15.5 million in the third quarter, down from $20.2 million in the second quarter of 2009.
The average loan-to-value ratios at origination for the residential mortgage and home-equity portfolios are 49 percent and 54 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
City National's third-quarter 2009 results reflect a tax benefit of $7.0 million, which was primarily attributable to an updated effective tax rate based on lower expected taxable income for the year. The company's effective tax rate in the third quarter of last year was 18.3 percent.
2009 YEAR-TO-DATE HIGHLIGHTS
* Year to date, City National's net income totaled $22.3 million. Net income available to common shareholders was $5.8 million, or $0.11 per share, compared to $1.98 per share for the first nine months of 2008. * Revenue for the first nine months of this year was $642.2 million, compared with $662.5 million for the first three quarters of 2008. * Fully taxable-equivalent net interest income amounted to $472.1 million, up 2 percent from $463.8 million in the first nine months of 2008. The company's net interest margin averaged 3.97 percent in the first nine months of 2009, down from 4.24 percent during the same period of the prior year. * Average loans reached $12.4 billion, up 3 percent from the first nine months of 2008. * Average deposits for the first nine months of this year amounted to $13.9 billion, up 19 percent from the same period of 2008. Core deposit balances totaled $12.6 billion in the first three quarters of 2009, up 21 percent from the first nine months of 2008. * Noninterest income totaled $180.4 million, down 15 percent from the first nine months of 2008. * During the first nine months of 2009, the company's provisions for credit losses totaled $205 million. The company made provisions of $87 million during the first nine months of 2008. * Noninterest expense for the first nine months of 2009 was down 2 percent from the same period of 2008. Excluding increased FDIC costs, noninterest expense was down 5 percent from the same period of 2008(1).
CAPITAL LEVELS
During the third quarter of 2009, City National continued to strengthen its balance sheet by completing the sale of $180 million in subordinated debt, which qualifies as Tier 2 capital for regulatory purposes. On July 15, 2009, City National Bank sold $50 million of subordinated debt that may be called after five years. On August 12, 2009, the bank sold an additional $130 million in subordinated debt, $55 million of which may be called after five years.
At September 30, 2009, City National's total risk-based capital and Tier 1 risk-based capital ratios were 15.48 percent and 12.67 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 September 30, 2009 was 9.95 percent, well above the regulatory minimum ratio of 5.0 percent.
Total risk-based capital, Tier 1 risk-based capital and the Tier 1 leverage ratios at June 30, 2009 were 14.31 percent, 12.61 percent and 10.38 percent, respectively.
The period-end ratio of total equity to total assets at September 30, 2009 was 12.06 percent, compared to 12.31 percent at June 30, 2009 and 10.09 percent at September 30, 2008.
2009 OUTLOOK
Management continues to expect that the corporation will remain modestly profitable in 2009.
CONFERENCE CALL
City National Corporation will host a conference call this afternoon to discuss third-quarter 2009 financial results. The call will begin at 2:00 p.m. PDT. Analysts and investors may dial in and participate in the question/answer session. To access the call, please dial (866) 393-6804 and enter Conference ID 31089368. A listen-only live broadcast of the call also will be available on the investor relations page of the company's Website at cnb.com. There, it will be archived and available for 12 months.
ABOUT CITY NATIONAL
City National Bank is the wholly owned subsidiary of City National Corporation (NYSE:CYN). Headquartered in Los Angeles, the company is backed by $18.4 billion in total assets, and provides banking, investment and trust services through 63 offices, including 15 full-service regional centers, in Southern California, the San Francisco Bay Area, Nevada and New York City. City National and its eight majority-owned investment affiliates manage or administer $53.4 billion in client investment assets, including nearly $35 billion under direct management.
For more information about City National, visit the company's Website at cnb.com.
The City National Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3142
SAFE-HARBOR LANGUAGE
This news release contains forward-looking statements about the company, for which the company claims the protection of the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995.
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) continuation or worsening of current recessionary conditions (2) continued volatility and disruption in the functioning of financial markets, including the 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 possible amendments to the Troubled Asset Relief Program (TARP), and rules and regulations issued thereunder, including the TARP Standards for Compensation and Corporate Governance, (4) the ongoing budget crisis in the State of California, (5) continued weakness in the real estate market, including the markets for commercial and residential real estate, which may affect, among other things, the level of nonperforming assets, charge-offs and provision expense, (6) continued volatility in equity, fixed income and other market valuations, (7) changes in market rates and prices which may adversely impact the value of financial products including securities, loans, deposits, debt and derivative financial instruments, and other similar financial instruments, (8) changes in the interest rate environment and market liquidity which may reduce interest margins and impact funding sources, (9) increased competition in the company's markets, (10) 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, (11) 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, (12) changes in consumer spending, borrowing and savings habits, (13) soundness of other financial institutions which could adversely affect the company, (14) increases and required prepayments in Federal Deposit Insurance Corporation premiums due to market developments and regulatory changes, (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."
(1) For notes on non-GAAP measures, see pages 13 and 14 of the Selected Financial Information.
CITY NATIONAL CORPORATION
FINANCIAL HIGHLIGHTS
(unaudited)
Three Months Nine Months
----------------------- -----------------------
For The Period % %
Ended September 30, 2009 2008 Change 2009 2008 Change
------------------- ----------------------- -----------------------
Per Common Share
Net income
available to
common
shareholders
Basic $ 0.05 $ 0.34 (85) $ 0.11 $ 1.99 (94)
Diluted 0.05 0.34 (85) 0.11 1.98 (94)
Dividends 0.10 0.48 (79) 0.45 1.44 (69)
Book value 34.99 33.69 4
Results of
Operations:
(In millions)
Interest income $ 180 $ 196 (8) $ 526 $ 597 (12)
Interest expense 19 43 (55) 64 146 (56)
------- ------- ------- -------
Net interest
income 161 153 6 462 451 2
Net interest
income (Fully
taxable-
equivalent) 165 157 5 472 464 2
Total revenue 230 203 13 642 662 (3)
Provision for
credit losses 85 35 143 205 87 136
Net income
attributable to
City National
Corporation 8 17 (51) 22 96 (77)
Net income
available to
common
shareholders 3 17 (85) 6 96 (94)
Financial Ratios:
Performance Ratios:
Return on
average assets 0.18% 0.41% 0.17% 0.80%
Return on
average common
shareholders'
equity 0.56 4.03 0.45 7.81
Period-end
equity to
period-end
assets 12.06 10.09
Net interest
margin 3.94 4.23 3.97 4.24
Expense to
revenue ratio 60.75 70.96 64.01 63.62
Capital Adequacy
Ratios
(Period-end):
Tier 1 leverage 9.95 8.01
Tier 1 risk-based
capital 12.67 9.13
Total risk-based
capital 15.48 11.04
Asset Quality
Ratios:
Allowance for
loan and lease
losses to:
Total loans and
leases 2.18% 1.69%
Nonaccrual loans 64.91 137.88
Nonperforming
assets to:
Total loans and
leases and
other real
estate owned 3.70 1.25
Total assets 2.46 0.94
Net (charge-offs)/
recoveries to
Average total
loans and leases
(annualized) (2.47)% (0.42)% (1.81)% (0.49)%
Average Balances:
(In millions)
Loans and leases $12,339 $12,231 1 $12,363 $11,994 3
Interest-earning
assets 16,588 14,768 12 15,880 14,612 9
Assets 17,938 16,121 11 17,245 15,974 8
Core deposits 13,556 10,515 29 12,557 10,420 21
Deposits 14,777 11,737 26 13,888 11,651 19
Interest-bearing
liabilities 8,308 8,654 (4) 8,213 8,526 (4)
Common
shareholders'
equity 1,787 1,632 10 1,718 1,643 5
Total equity 2,204 1,658 33 2,134 1,668 28
Period-End Balances:
(In millions)
Loans and leases $12,168 $12,279 (1)
Assets 18,401 16,331 13
Core deposits 13,926 10,792 29
Deposits 15,108 12,168 24
Common share-
holders' equity 1,802 1,622 11
Total equity 2,218 1,648 35
Wealth Management:
(In millions) (1)
Assets under
management $34,927 $33,106 6
Assets under
management or
administration 53,368 52,367 2
(1) Excludes $9.9 billion and $6.9 billion of assets under management
for an asset manager in which City National held a noncontrolling
ownership interest as of September 30, 2009 and September 30,
2008, respectively
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
September 30,
(Dollars in thousands ------------------------------
except per share data) 2009 2008 % Change
----------------------- ------------------------------
Interest income $ 180,419 $ 195,606 (8)
Interest expense 19,078 42,802 (55)
--------- ---------
Net Interest Income 161,341 152,804 6
Provision for Credit Losses 85,000 35,000 143
Noninterest Income
Trust and investment fees 32,289 33,457 (3)
Brokerage and mutual fund fees 6,041 19,470 (69)
Cash management and
deposit transaction fees 13,142 12,392 6
International services 7,895 8,202 (4)
Bank-owned life insurance 639 824 (22)
Gain (loss) on securities 2,667 (32,472) 108
Other 6,172 8,205 (25)
--------- ---------
Total noninterest income 68,845 50,078 37
Noninterest Expense
Salaries and employee benefits 80,937 89,373 (9)
Net occupancy of premises 12,613 12,719 (1)
Legal and professional fees 8,545 8,332 3
Information services 7,342 6,576 12
Depreciation and amortization 6,472 5,502 18
Amortization of intangibles 1,726 2,238 (23)
Marketing and advertising 4,615 5,653 (18)
Office services and equipment 3,610 3,683 (2)
FDIC assessments 5,308 2,188 143
Other 12,597 9,933 27
--------- ---------
Total noninterest expense 143,765 146,197 (2)
--------- ---------
Income Before Taxes 1,421 21,685 (93)
Applicable Income Taxes (6,966) 3,974 (275)
--------- ---------
Net Income $ 8,387 $ 17,711 (53)
--------- ---------
Less: Net income attributable to
noncontrolling interest 348 1,160 (70)
--------- ---------
Net income attributable to City
National Corporation $ 8,039 $ 16,551 (51)
--------- ---------
Less: Dividends on preferred
stock 5,502 -- NM
--------- ---------
Net income available to common
shareholders $ 2,537 $ 16,551 (85)
========= =========
Other Data:
Earnings per common share -
basic (1) $ 0.05 $ 0.34 (85)
Earnings per common share -
diluted $ 0.05 $ 0.34 (85)
Dividends paid per common share $ 0.10 $ 0.48 (79)
Common dividend payout ratio 205.08% 140.24% 46
Return on average assets 0.18% 0.41% (56)
Return on average common
shareholders' equity 0.56% 4.03% (86)
Net interest margin (Fully
taxable-equivalent) 3.94% 4.23% (7)
Full-time equivalent employees 2,891 3,027 (4)
Nine Months Ended
September 30,
(Dollars in thousands ------------------------------
except per share data) 2009 2008 % Change
----------------------- ------------------------------
Interest income $ 525,786 $ 597,065 (12)
Interest expense 63,972 145,928 (56)
--------- ---------
Net Interest Income 461,814 451,137 2
Provision for Credit Losses 205,000 87,000 136
Noninterest Income
Trust and investment fees 83,342 103,993 (20)
Brokerage and mutual fund fees 22,443 55,601 (60)
Cash management and
deposit transaction fees 39,143 35,712 10
International services 22,416 24,065 (7)
Bank-owned life insurance 2,373 2,107 13
Gain (loss) on securities (10,556) (31,920) (67)
Other 21,236 21,800 (3)
--------- ---------
Total noninterest income 180,397 211,358 (15)
Noninterest Expense
Salaries and employee benefits 235,023 267,072 (12)
Net occupancy of premises 37,433 36,693 2
Legal and professional fees 24,014 24,423 (2)
Information services 20,814 19,170 9
Depreciation and amortization 18,417 16,464 12
Amortization of intangibles 5,237 6,197 (15)
Marketing and advertising 14,034 16,608 (15)
Office services and equipment 11,136 11,468 (3)
FDIC assessments 22,237 4,359 410
Other 32,539 25,331 28
--------- ---------
Total noninterest expense 420,884 427,785 (2)
--------- ---------
Income Before Taxes 16,327 147,710 (89)
Applicable Income Taxes (6,320) 44,960 (114)
--------- ---------
Net Income $ 22,647 $ 102,750 (78)
--------- ---------
Less: Net income attributable
to noncontrolling interest 375 6,728 (94)
--------- ---------
Net income attributable to City
National Corporation $ 22,272 $ 96,022 (77)
--------- ---------
Less: Dividends on preferred
stock 16,504 -- NM
Net income available to common
shareholders $ 5,768 $ 96,022 (94)
========= =========
Other Data:
Earnings per common share -
basic (1) $ 0.11 $ 1.99 (94)
Earnings per common share -
diluted $ 0.11 $ 1.98 (94)
Dividends paid per common share $ 0.45 $ 1.44 (69)
Common dividend payout ratio 385.15% 72.51% 431
Return on average assets 0.17% 0.80% (79)
Return on average common
shareholders' equity 0.45% 7.81% (94)
Net interest margin (Fully
taxable-equivalent) 3.97% 4.24% (6)
Full-time equivalent employees
(1) Basic EPS for certain prior periods have been restated as a
result of the adoption of 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 Third Second First Year to
except per share data) Quarter Quarter Quarter Date
------------------------ --------- --------- --------- ---------
Interest income $ 180,419 $ 175,876 $ 169,491 $ 525,786
Interest expense 19,078 20,300 24,594 63,972
--------- --------- --------- ---------
Net Interest Income 161,341 155,576 144,897 461,814
Provision for Credit
Losses 85,000 70,000 50,000 205,000
Noninterest Income
Trust and investment
fees 32,289 25,184 25,869 83,342
Brokerage and mutual
fund fees 6,041 6,645 9,757 22,443
Cash management and
deposit transaction
fees 13,142 12,778 13,223 39,143
International services 7,895 7,996 6,525 22,416
Bank-owned life
insurance 639 871 863 2,373
Gain (loss) on
securities 2,667 1,744 (14,967) (10,556)
Other 6,172 9,039 6,025 21,236
--------- --------- --------- ---------
Total noninterest
income 68,845 64,257 47,295 180,397
Noninterest Expense
Salaries and employee
benefits 80,937 75,834 78,252 235,023
Net occupancy of
premises 12,613 12,559 12,261 37,433
Legal and professional
fees 8,545 7,736 7,733 24,014
Information services 7,342 6,992 6,480 20,814
Depreciation and
amortization 6,472 5,953 5,992 18,417
Amortization of
intangibles 1,726 1,668 1,843 5,237
Marketing and
advertising 4,615 4,743 4,676 14,034
Office services and
equipment 3,610 3,922 3,604 11,136
FDIC assessments 5,308 13,861 3,068 22,237
Other 12,597 10,866 9,076 32,539
--------- --------- --------- ---------
Total noninterest
expense 143,765 144,134 132,985 420,884
--------- --------- --------- ---------
Income Before Taxes 1,421 5,699 9,207 16,327
Applicable Income Taxes (6,966) (986) 1,632 (6,320)
--------- --------- --------- ---------
Net Income $ 8,387 $ 6,685 $ 7,575 $ 22,647
--------- --------- --------- ---------
Less: Net income (loss)
attributable to
noncontrolling
interest 348 (88) 115 375
--------- --------- --------- ---------
Net income attributable
to City National
Corporation $ 8,039 $ 6,773 $ 7,460 $ 22,272
--------- --------- --------- ---------
Less: Dividends on
preferred stock 5,502 5,501 5,501 16,504
--------- --------- --------- ---------
Net income available to
common shareholders $ 2,537 $ 1,272 $ 1,959 $ 5,768
========= ========= ========= =========
Other Data:
Earnings per common
share - basic $ 0.05 $ 0.02 $ 0.04 $ 0.11
Earnings per common
share - diluted $ 0.05 $ 0.02 $ 0.04 $ 0.11
Dividends paid per
common share $ 0.10 $ 0.10 $ 0.25 $ 0.45
Common dividend payout
ratio 205.08% 383.66% 619.32% 385.15%
Return on average
assets 0.18% 0.16% 0.18% 0.17%
Return on average
common shareholders'
equity 0.56% 0.29% 0.49% 0.45%
Net interest margin
(Fully taxable-
equivalent) 3.94% 3.98% 4.00% 3.97%
Full-time equivalent
employees 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)
(Dollars in 2008
thousands ------------------------------------------------
except per Fourth Third Second First Year to
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
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 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
------------------------------------------
Third Second First
(In thousands) Quarter Quarter Quarter
---------------------- ------------ ------------ ------------
Assets
Cash and due from banks $ 348,958 $ 350,931 $ 378,289
Federal funds sold 240,000 125,000 12,300
Due from banks -
interest-bearing 767,362 205,656 140,484
Securities-available-
for-sale 3,512,072 3,330,326 2,915,883
Trading securities 188,904 138,137 67,582
Loans and leases:
Commercial 4,594,683 4,764,755 4,708,627
Commercial real estate
mortgages 2,164,398 2,162,294 2,173,983
Residential mortgages 3,541,534 3,511,598 3,413,538
Real estate
construction 999,045 1,116,154 1,189,594
Equity lines of credit 694,660 691,226 651,127
Installment 174,170 175,315 168,245
------------ ------------ ------------
Total loans and
leases 12,168,490 12,421,342 12,305,114
Allowance for loan
and lease losses (265,005) (256,018) (241,586)
------------ ------------ ------------
Net loans and leases 11,903,485 12,165,324 12,063,528
Premises and equipment,
net 126,097 125,510 128,189
Goodwill and other
intangibles 533,367 496,562 498,194
Other assets 780,359 723,339 729,081
------------ ------------ ------------
Total assets $ 18,400,604 $ 17,660,785 $ 16,933,530
============ ============ ============
Liabilities
Deposits:
Noninterest-bearing $ 7,441,898 $ 7,118,660 $ 6,611,752
Interest-bearing 7,666,545 7,379,591 7,077,798
------------ ------------ ------------
Total deposits 15,108,443 14,498,251 13,689,550
Federal funds
purchased and
securities sold under
repurchase agreements 231,903 316,388 519,687
Other short-term
borrowed funds 720 50,000 28,405
Subordinated debt 341,587 162,434 164,296
Other long-term debt 233,536 233,456 242,122
Other liabilities 216,026 189,588 199,863
------------ ------------ ------------
Total liabilities 16,132,215 15,450,117 14,843,923
Redeemable
noncontrolling
interest 49,897 36,752 40,237
Equity
City National
Corporation
shareholders' equity:
Preferred stock 391,593 391,091 390,590
Common stock 53,886 53,886 50,961
Additional paid-in
capital 514,904 511,939 393,114
Retained earnings 1,363,176 1,365,842 1,369,451
Accumulated other
comprehensive
income (loss) 24,329 (18,110) (23,093)
Treasury shares (154,245) (156,119) (157,094)
------------ ------------ ------------
Total common
shareholders'
equity 1,802,050 1,757,438 1,633,339
------------ ------------ ------------
Total shareholders'
equity 2,193,643 2,148,529 2,023,929
Noncontrolling interest 24,849 25,387 25,441
------------ ------------ ------------
Total equity 2,218,492 2,173,916 2,049,370
------------ ------------ ------------
Total liabilities
and equity $ 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 assets 739,238 626,020 598,763 609,335
----------- ----------- ----------- -----------
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
------------------------------------------
Third Second First Year To
(Dollars in thousands) Quarter Quarter Quarter Date
------------------------- --------- --------- --------- ---------
Allowance for Loan and
Lease Losses
Balance at beginning of
period $ 256,018 $ 241,586 $ 224,046 $ 224,046
Net (charge-offs)/
recoveries:
Commercial (28,852) (17,283) (18,459) (64,594)
Commercial real estate
mortgages (3,372) -- -- (3,372)
Residential mortgages (682) (731) (367) (1,780)
Real estate construction (42,651) (36,189) (14,049) (92,889)
Equity lines of credit (387) (1,039) (38) (1,464)
Installment (915) (1,448) (706) (3,069)
--------- --------- --------- ---------
Total net (charge-
offs)/recoveries (76,859) (56,690) (33,619) (167,168)
Provision for credit
losses 85,000 70,000 50,000 205,000
Transfers from (to)
reserve for off-balance
sheet credit commitments 846 1,122 1,159 3,127
--------- --------- --------- ---------
Balance at end of period $ 265,005 $ 256,018 $ 241,586 $ 265,005
========= ========= ========= =========
Net (Charge-Offs)/
Recoveries to Average
Total Loans and Leases:
(annualized)
Commercial (2.42)% (1.47)% (1.57)% (1.82)%
Commercial real estate
mortgages (0.62)% 0.00 % 0.00 % (0.21)%
Residential mortgage (0.08)% (0.08)% (0.04)% (0.07)%
Real estate construction (15.68)% (12.59)% (4.63)% (10.76)%
Equity lines of credit (0.22)% (0.62)% (0.02)% (0.29)%
Installment (2.05)% (3.33)% (1.67)% (2.36)%
Total loans and leases (2.47)% (1.84)% (1.10)% (1.81)%
Reserve for Off-Balance
Sheet Credit Commitments
Balance at beginning of
period $ 20,422 $ 21,544 $ 22,703 $ 22,703
Recovery of prior
charge-off -- -- -- --
Transfers (to) from
allowance (846) (1,122) (1,159) (3,127)
--------- --------- --------- ---------
Balance at end of period $ 19,576 $ 20,422 $ 21,544 $ 19,576
========= ========= ========= =========
2008
-----------------------------------------------------
(Dollars in Fourth Third Second First Year To
thousands) Quarter Quarter Quarter Quarter Date
-------------- --------- --------- --------- --------- ---------
Allowance for
Loan and Lease
Losses
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:
(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 (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
========= ========= ========= ========= =========
Note: Certain prior period balances have been reclassified to
conform to current period presentation.
CITY NATIONAL CORPORATION
NONPERFORMING ASSETS
(unaudited)
2009
-------------------------------
Third Second First
(Dollars in thousands) Quarter Quarter Quarter
----------------------------------- --------- --------- ---------
Nonaccrual loans
Commercial $ 90,744 $ 80,372 $ 56,246
Commercial real estate mortgages 60,833 36,112 16,923
Residential mortgages 12,961 17,262 13,270
Real estate construction 233,848 237,828 223,416
Equity lines of credit 2,507 2,919 2,432
Installment 7,373 3,768 1,354
--------- --------- ---------
Total nonaccrual loans 408,266 378,261 313,641
Other real estate owned 43,969 18,064 12,639
--------- --------- ---------
Total nonperforming assets $ 452,235 $ 396,325 $ 326,280
========= ========= =========
Loans 90 days or more past due
on accrual status $ 10,395 $ -- $ 16,261
Allowance for loan and lease losses
as a percentage of:
Nonaccrual loans 64.91% 67.68% 77.03%
Total nonperforming assets 58.60% 64.60% 74.04%
Total loans and leases 2.18% 2.06% 1.96%
Nonaccrual loans as a percentage of
total loans 3.36% 3.05% 2.55%
Nonperforming assets as a percentage
of:
Total loans and other real estate
owned 3.70% 3.19% 2.65%
Total assets 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 $ 222,530 $ 153,165 $ 115,290 $ 117,434
========= ========= ========= =========
Loans 90 days or more
past due on accrual
status $ 663 $ 4,930 $ 2 $ 13
Allowance for loan and
lease losses as a
percentage of:
Nonaccrual loans 106.11% 137.88% 174.30% 148.10%
Total nonperforming
assets 100.68% 135.83% 160.53% 143.30%
Total loans and leases 1.80% 1.69% 1.52% 1.43%
Nonaccrual loans as a
percentage of total loans 1.70% 1.23% 0.87% 0.97%
Nonperforming assets as a
percentage of:
Total loans and other
real estate owned 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
----------------------------------
Third Quarter Second Quarter
---------------- ----------------
Average Average Average Average
(Dollars in millions) Balance Rate Balance Rate
--------------------------------- ------- ------- ------- -------
Assets
Interest-earning assets
Loans and leases
Commercial $ 4,724 4.26% $ 4,721 4.21%
Commercial real estate
mortgages 2,144 5.49 2,178 5.69
Residential mortgages 3,528 5.50 3,454 5.51
Real estate construction 1,079 3.58 1,153 3.04
Equity lines of credit 687 3.51 674 3.46
Installment 177 5.08 174 5.05
------- -------
Total loans and leases 12,339 4.72 12,354 4.70
Due from banks - interest-bearing 204 0.50 195 0.60
Federal funds sold and securities
purchased under resale
agreements 338 0.15 15 0.23
Securities available-for-sale 3,560 4.03 3,252 4.08
Trading securities 71 0.18 112 1.36
Other interest-earning assets 76 3.76 75 3.45
------- -------
Total interest-earning assets 16,588 4.40 16,003 4.49
Allowance for loan and lease
losses (260) (246)
Cash and due from banks 308 324
Other non-earning assets 1,302 1,288
------- -------
Total assets $17,938 $17,369
======= =======
Liabilities and Equity
Interest-bearing deposits
Interest checking accounts $ 1,637 0.25% $ 1,388 0.29%
Money market accounts 4,232 0.66 4,111 0.86
Savings deposits 262 0.64 222 0.74
Time deposits - under $100,000 211 1.05 221 1.42
Time deposits - $100,000 and over 1,221 1.24 1,311 1.56
------- -------
Total interest-bearing deposits 7,563 0.67 7,253 0.89
Federal funds purchased and
securities sold under
repurchase agreements 234 3.41 472 1.77
Other borrowings 511 3.27 494 1.75
------- -------
Total interest-bearing
liabilities 8,308 0.91 8,219 0.99
Noninterest-bearing deposits 7,214 6,770
Other liabilities 212 234
Total equity 2,204 2,146
------- -------
Total liabilities and equity $17,938 $17,369
======= =======
Net interest spread 3.49% 3.50%
======= =======
Net interest margin 3.94% 3.98%
======= =======
Average prime rate 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% $ 4,734 4.23%
Commercial real estate
mortgages 2,200 5.74 2,174 5.64
Residential mortgages 3,406 5.58 3,463 5.53
Real estate construction 1,232 3.20 1,154 3.27
Equity lines of credit 630 3.39 664 3.45
Installment 171 5.12 174 5.08
------- -------
Total loans and leases 12,395 4.75 12,363 4.73
Due from banks - interest-bearing 134 0.47 178 0.53
Federal funds sold and securities
purchased under resale
agreements 11 0.24 123 0.16
Securities available-for-sale 2,302 4.65 3,042 4.20
Trading securities 115 0.19 99 0.63
Other interest-earning assets 76 3.48 75 3.57
------- -------
Total interest-earning assets 15,033 4.67 15,880 4.51
Allowance for loan and lease
losses (236) (247)
Cash and due from banks 335 322
Other non-earning assets 1,279 1,290
------- -------
Total assets $16,411 $17,245
======= =======
Liabilities and Equity
Interest-bearing deposits
Interest checking accounts $ 1,098 0.32% $ 1,377 0.28%
Money market accounts 3,897 1.01 4,081 0.84
Savings deposits 166 0.65 217 0.68
Time deposits - under $100,000 234 2.22 222 1.58
Time deposits - $100,000 and over 1,463 2.06 1,331 1.64
------- -------
Total interest-bearing deposits 6,858 1.16 7,228 0.90
Federal funds purchased and
securities sold under
repurchase agreements 723 1.22 475 1.77
Other borrowings 526 2.20 510 2.41
------- -------
Total interest-bearing
liabilities 8,107 1.23 8,213 1.04
Noninterest-bearing deposits 5,983 6,660
Other liabilities 271 238
Total equity 2,050 2,134
------- -------
Total liabilities and equity $16,411 $17,245
======= =======
Net interest spread 3.44% 3.47%
======= =======
Net interest margin 4.00% 3.97%
======= =======
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%
======= ======= =======
2008
----------------------------------
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
----------------------------------
Third Second First Year To
Quarter Quarter Quarter Date
------- ------- ------- -------
Per Common Share:
-----------------
Shares Outstanding (in thousands):
Average - Basic 51,482 50,416 48,046 49,855
Average - Diluted(1) 51,660 50,551 48,130 49,987
Period-end 51,499 51,471 48,224
Book value for common shareholders $ 34.99 $ 34.14 $ 33.87
Closing price:
High $ 43.80 $ 44.14 $ 47.76 $ 47.76
Low 33.13 31.87 22.83 22.83
Period-end 38.93 36.83 33.77
Capital Ratios (Dollars in
millions):
--------------------------
Risk-based capital
Risk-weighted assets(2) $13,669 $13,887 $13,619
Tier I capital $ 1,732 $ 1,752 $ 1,635
Percentage of risk-weighted
assets 12.67% 12.61% 12.00%
Total capital $ 2,116 $ 1,987 $ 1,866
Percentage of risk-weighted
assets 15.48% 14.31% 13.70%
Tier I leverage ratio 9.95% 10.38% 10.30%
Period-end equity to period-end
assets 12.06% 12.31% 12.10%
Period-end common shareholders'
equity to period-end assets 9.79% 9.95% 9.65%
Average equity to average assets 12.29% 12.35% 12.49% 12.37%
Average common shareholders' equity
to average assets 9.96% 9.96% 9.96% 9.96%
Period-end tangible equity to
period-end tangible assets(3) 9.43% 9.77% 9.44%
Period-end tangible common
shareholders' equity to period-end
tangible assets(3) 7.10% 7.35% 6.91%
Average tangible equity to average
tangible assets(3) 9.72% 9.77% 9.75% 9.75%
Average tangible common
shareholders' equity to average
tangible assets(3) 7.33% 7.30% 7.14% 7.26%
CITY NATIONAL CORPORATION
CAPITAL AND CREDIT RATING DATA
(unaudited)
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 September 30, 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 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 equity to
tangible assets are non-GAAP financial For notes on non-GAAP
measures, see page 13 of the Selected Financial Information.
CITY NATIONAL CORPORATION
NON-GAAP FINANCIAL MEASURES
(unaudited)
(a) Net income available to common shareholders, excluding FDIC
special assessment fee
A reconciliation of the GAAP to non-GAAP measure is set forth
below:
Year To Date 2009
------------------
(in thousands, except per share amounts) $ Per Share
------------------------------------------ -------- ---------
Net income available to common shareholders $ 5,768 $ 0.11
Add: FDIC special assessment fee, after tax 6,030 0.12
-------- --------
Net income per share, excluding FDIC special
assessment fee $ 11,798 $ 0.23
======== ========
Management believes these non-GAAP financial measures enhance
the comparability of the financial results with prior periods as
well as to highlight the effects of unusual charges in the
periods presented. The Company believes that investors may find
it useful to see these non-GAAP financial measures to analyze the
Company's underlying financial performance without the impact of
unusual items.
(b) 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
-----------------------------------------------
Third Second First Year To
(in thousands) Quarter Quarter Quarter Date
-------------------- ----------- ----------- ----------- -----------
Period End:
Total equity $ 2,218,492 $ 2,173,916 $ 2,049,370
Less: Goodwill and
other intangibles (533,367) (496,562) (498,194)
----------- ----------- -----------
Tangible equity(A) 1,685,125 1,677,354 1,551,176
Less: Noncontrolling
interest (24,849) (25,387) (25,441)
Less: Preferred
stock (391,593) (391,091) (390,590)
----------- ----------- -----------
Tangible common
shareholders'
equity(B) $ 1,268,683 $ 1,260,876 $ 1,135,145
Total assets $18,400,604 $17,660,785 $16,933,530
Less: Goodwill and
other intangibles (533,367) (496,562) (498,194)
----------- ----------- -----------
Tangible assets(C) $17,867,237 $17,164,223 $16,435,336
Period-end tangible
equity to
period-end tangible
assets(A)/(C) 9.43% 9.77% 9.44%
Period-end tangible
common
shareholders'
equity to
period-end tangible
assets(B)/(C) 7.10% 7.35% 6.91%
Average Balance:
Total equity $ 2,204,220 $ 2,145,859 $ 2,050,401 $ 2,134,057
Less: Goodwill and
other intangibles (510,514) (497,487) (499,229) (502,451)
----------- ----------- ----------- -----------
Tangible equity(D) 1,693,706 1,648,372 1,551,172 1,631,606
Less: Noncontrolling
interest (25,369) (25,438) (25,441) (25,416)
Less: Preferred
stock (391,353) (390,838) (390,348) (390,850)
----------- ----------- ----------- -----------
Tangible common
shareholders'
equity(E) $ 1,276,984 $ 1,232,096 $ 1,135,383 $ 1,215,340
Total assets $17,938,231 $17,369,311 $16,411,240 $17,245,187
Less: Goodwill and
other intangibles (510,514) (497,487) (499,229) (502,451)
----------- ----------- ----------- -----------
Tangible
assets(F) $17,427,717 $16,871,824 $15,912,011 $16,742,736
Average tangible
equity to average
tangible assets
(D)/(F) 9.72% 9.77% 9.75% 9.75%
Average tangible
common
shareholders'
equity to average
tangible assets
(E)/(F) 7.33% 7.30% 7.14% 7.26%
2008
-----------------------------------------------
Fourth Third Second First
(in thousands) Quarter Quarter Quarter Quarter
------------------- ----------- ----------- ----------- -----------
Period End:
Total equity $ 2,030,434 $ 1,647,844 $ 1,640,714 $ 1,664,311
Less: Goodwill and
other intangibles (500,037) (512,297) (514,584) (514,811)
----------- ----------- ----------- -----------
Tangible equity(A) 1,530,397 1,135,547 1,126,130 1,149,500
Less: Noncontrolling
interest (25,441) (25,463) (25,710) (25,653)
Less: Preferred stock (390,089) -- -- --
----------- ----------- ----------- -----------
Tangible common
shareholders'
equity(B) $ 1,114,867 $ 1,110,084 $ 1,100,420 $ 1,123,847
Total assets $16,455,515 $16,330,868 $16,339,258 $15,934,032
Less: Goodwill and
other intangibles (500,037) (512,297) (514,584) (514,811)
----------- ----------- ----------- -----------
Tangible assets(C) $15,955,478 $15,818,571 $15,824,674 $15,419,221
Period-end tangible
equity to period-end
tangible assets
(A)/(C) 9.59% 7.18% 7.12% 7.45%
Period-end tangible
common shareholders'
equity to period-end
tangible assets
(B)/(C) 6.99% 7.02% 6.95% 7.29%
Average Balance:
Total equity $ 1,818,392 $ 1,657,813 $ 1,676,430 $ 1,671,030
Less: Goodwill and
other intangibles (510,125) (513,609) (513,791) (518,913)
----------- ----------- ----------- -----------
Tangible equity(D) 1,308,267 1,144,204 1,162,639 1,152,117
Less: Noncontrolling
interest (25,455) (25,612) (25,677) (25,608)
Less: Preferred stock (174,677) -- -- --
----------- ----------- ----------- -----------
Tangible common
shareholders'
equity(E) $ 1,108,135 $ 1,118,591 $ 1,136,962 $ 1,126,509
Total assets $16,191,243 $16,120,584 $16,077,156 $15,723,507
Less: Goodwill and
other intangibles (510,125) (513,609) (513,791) (518,913)
----------- ----------- ----------- -----------
Tangible assets(F) $15,681,118 $15,606,975 $15,563,365 $15,204,594
Average tangible
equity to average
tangible assets
(D)/(F) 8.34% 7.33% 7.47% 7.58%
Average tangible
common shareholders'
equity to average
tangible assets
(E)/(F) 7.07% 7.17% 7.31% 7.41%
2008
-----------
Year To
(in thousands) Date
-------------------------------------------------------- -----------
Period End:
Total equity
Less: Goodwill and other intangibles
Tangible equity(A)
Less: Noncontrolling interest
Less: Preferred stock
Tangible common shareholders' equity(B)
Total assets
Less: Goodwill and other intangibles
Tangible assets(C)
Period-end tangible equity to period-end tangible assets
(A)/(C)
Period-end tangible common shareholders' equity to
period-end tangible assets(B)/(C)
Average Balance:
Total equity $ 1,706,092
Less: Goodwill and other intangibles (514,097)
-----------
Tangible equity(D) 1,191,995
Less: Noncontrolling interest (25,588)
Less: Preferred stock (43,908)
-----------
Tangible common shareholders' equity(E) $ 1,122,499
Total assets $16,028,821
Less: Goodwill and other intangibles (514,097)
-----------
Tangible assets(F) $15,514,724
Average tangible equity to average tangible assets
(D)/(F) 7.68%
Average tangible common shareholders' equity to average
tangible assets(E)/(F) 7.24%
CITY NATIONAL CORPORATION
NON-GAAP FINANCIAL MEASURES (continued)
(unaudited)
(c) Tier 1 common shareholders' equity to risk-based assets
The Tier 1 common shareholders' equity to risk-based assets
ratio, also known as Tier 1 common ratio, is calculated by
dividing (a) Tier 1 capital less non-common components including
qualifying 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' equity to risk-based assets ratio.
Tier 1 capital was $1.73 billion as of September 30, 2009. To
calculate Tier 1 common shareholders' equity, Tier 1 capital was
reduced by preferred stock of $391.6 million, noncontrolling
interest in subsidiaries of $74.6 million and trust preferred
securities of $5.2 million, resulting in Tier 1 common
shareholders' equity of $1.26 billion as of September 30, 2009.
Refer to page 12 of the Selected Financial Information for
risk-weighted assets as of September 30, 2009.
(d) Noninterest expense, excluding higher FDIC costs and lease
write-off expense
Noninterest expense for the three-months ending September 30,
2009 was $143.8 million, a decrease of 2 percent compared to the
three-months ending September 30, 2008. Noninterest expense,
excluding higher FDIC costs of $2.2 million and lease write-off
expense of $1.3 million, was $140.2 million, a decrease of 4
percent compared to the three-months ending September 30, 2008.
Noninterest expense for the nine-months ending September 30,
2009 was $420.9 million, a decrease of 2 percent compared to the
nine-months ending September 30, 2008. Noninterest expense,
excluding higher FDIC costs of $13.0 million (which includes the
special assessment fee), was $407.9 million, a decrease of 5
percent compared to the nine-months ending September 30, 2008.
Management believes these non-GAAP financial measures enhance
the comparability of the financial results with prior periods as
well as to highlight the effects of unusual charges in the
periods presented. The Company believes that investors may find
it useful to see these non-GAAP financial measures to analyze
the Company's underlying financial performance without the
impact of unusual items.