City National Corp. Reports 2006 First-Quarter Earnings of $57.2 Million, or $1.12 per Share.LOS ANGELES Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. -- City National Corporation (NYSE NYSE See: New York Stock Exchange :CYN CYN Canyon ), the parent company of wholly-owned City National Bank, today reported an increase in net income to $57.2 million, or $1.12 per share, compared with $55.5 million, or $1.09 per share, for the first quarter of 2005. Lending and fee income continued to grow solidly and credit quality was excellent. At the same time, deposits were just slightly higher than the first quarter of 2005 but lower than expected, in part because of a general slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in the real estate industry that affected title and escrow escrow Instrument, such as a deed, money, or property, that constitutes evidence of obligations between two or more parties and is held by a third party. It is delivered by the third party only upon fulfillment of some condition. balances. First-quarter results also reflect significant seasonal expense variations and new costs associated with the treatment of stock options. City National's management has revised its previously announced expectation of 9 percent to 12 percent earnings per share growth for 2006, and now expects earnings per share to grow between 8 percent and 10 percent for the year. FIRST-QUARTER HIGHLIGHTS --Revenue totaled $207.3 million, a 5 percent increase from the first quarter of 2005. --Average loans grew to $9.6 billion, up 12 percent from the first quarter of last year. This growth was led by increases in commercial loans and residential mortgages. --Loan recoveries again exceeded charge-offs, and nonaccrual loans were reduced to $14.6 million, down 51 percent from the first quarter of 2005. The company required no provision for credit losses and remained well reserved at 1.64 percent of total loans. --Average deposits of $11.6 billion were just slightly higher than the first quarter of 2005 and down 3 percent from the fourth quarter of last year. --Noninterest income grew to $54.9 million, up 9 percent from the first quarter of 2005. The increase was led by the growth of trust, investment and brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. fee income, as assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. or administration topped $40 billion for the first time. International services fee income grew 23 percent from the first quarter of last year. "In the first quarter, commercial lending and noninterest income grew strongly and credit quality remained excellent," said President and Chief Executive Officer Russell Russell, English noble family. It first appeared prominently in the reign of Henry VIII when John Russell, 1st earl of Bedford, 1486?–1555, rose to military and diplomatic importance. Goldsmith. "Although deposits were somewhat less than anticipated, our overall business and progress adding new clients, growing revenue and building momentum for the year ahead positions City National for another successful year. The quarter was also highlighted by our agreement to add Independence Investments to our excellent team of asset management affiliates and by Standard and Poor's Noun 1. Standard and Poor's - a broadly based stock market index Standard and Poor's Index decision to upgrade City National Bank's long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. credit rating to A."
For the three months
ended March 31,
Dollars in millions, --------------------- %
except per share 2006 2005 Change
----------------------------------------- ---------- ---------- ------
Earnings Per Share $1.12 $1.09 3
Net Income 57.2 55.5 3
Average Assets 14,826.5 13,873.4 7
Return on Average Assets 1.57% 1.62% (3)
Return on Average Equity 15.68 16.63 (6)
ASSETS Total assets at March 31, 2006 reached $14.7 billion, up 6 percent from one year ago and 1 percent from the fourth quarter of 2005. These increases reflect City National's robust loan growth in the first quarter of this year. REVENUE Loan growth and rising interest rates also drove revenue higher. First-quarter revenue (net interest income plus noninterest income) increased 5 percent to $207.3 million. NET INTEREST INCOME Fully taxable-equivalent net interest income reached $155.5 million in the first quarter of 2006, up 4 percent from $149.9 million for the same period last year. Fully taxable-equivalent net interest income in the fourth quarter of 2005 was $163 million. First-quarter loans grew significantly. Average balances reached $9.6 billion, up 12 percent from one year ago and 5 percent from the fourth quarter of 2005. Commercial loans increased 24 percent from the first quarter of 2005 and 8 percent from the fourth quarter of last year. Residential mortgage lending rose 13 percent from one year ago and 2 percent from the fourth quarter. Commercial mortgage lending was up 1 percent from the first quarter of 2005 and 2 percent from the fourth quarter. Real estate construction loans declined 9 percent from one year ago, but grew 2 percent from the fourth quarter of last year. Higher asset yields also contributed to first-quarter net interest income growth. City National's yield on earning assets Earning Assets Any income-earning asset owned by a company. Notes: These assets are generally interest-bearing accounts, bonds, and securities available for sale. See also: Asset, Asset Valuation, Earnings, Net Interest Margin reached 5.98 percent, up from 5.43 percent in the first quarter of 2005. At March 31, 2006, the bank's prime rate was 7.75 percent, 200 basis points higher than it was at the same time last year. Average deposits totaled $11.6 billion, just slightly higher than the first quarter of 2005 but down 3 percent, or $412 million, from the fourth quarter of last year. City National's deposit balances typically reach seasonally high levels in the fourth quarter and then subside sub·side intr.v. sub·sid·ed, sub·sid·ing, sub·sides 1. To sink to a lower or normal level. 2. To sink or settle down, as into a sofa. 3. To sink to the bottom, as a sediment. 4. in January January: see month. . In the first quarter of this year, they declined more than usual. Average specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. deposits, which include title and escrow balances and typically vary according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. conditions in the real estate market, amounted to $1.2 billion in the first quarter of 2006, compared with $1.5 billion a year ago and in the fourth quarter of 2005. While the total number of City National clients increased in the first quarter, commercial and private banking deposits also were lower than expected, as some clients redeployed excess balances in response to higher interest rates. Deposits picked up at the end of March and period-end balances were $321 million higher than the average for the first quarter of 2006. The company's first-quarter net interest margin was 4.62 percent, compared with 4.75 percent during the same period last year and 4.85 percent in the fourth quarter of 2005. Lower-than-expected average core deposits, which include specialty deposits, were the principal factor in the decline of the net interest margin from the fourth quarter. Average securities totaled $4 billion in the first quarter of 2006, down 4 percent from one year ago and 2 percent from the fourth quarter of 2005. The average duration of total available-for-sale securities at March 31, 2006 was 3.2 years, compared with 3.0 years at December December: see month. 31, 2005.
For the three
months ended
March 31,
------------------ %
Dollars in millions 2006 2005 Change
-------------------------------------------- ------------------ ------
Average Loans $9,625.0 $8,572.3 12
Average Securities 3,970.5 4,115.4 (4)
Average Deposits 11,587.6 11,572.4 0
Average Core Deposits 10,334.0 10,628.3 (3)
Fully Taxable-Equivalent
Net Interest Income 155.5 149.9 4
Net Interest Margin 4.62% 4.75% (3)
NONINTEREST INCOME First-quarter 2006 noninterest income was $54.9 million, 9 percent higher than the first quarter of 2005, due primarily to the continuing growth of City National's wealth management and international businesses. Wealth Management Trust and investment fees increased 10 percent over the first quarter of 2005, due primarily to higher balances under management or administration. Assets under management at March 31, 2006 were 18 percent higher than at the end of the first quarter last year, largely on account of new business, a strong relative investment performance and higher market values. Increases in market values are reflected in fee income primarily on a trailing-quarter basis. On March 24, City National announced plans to acquire Independence Investment LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , a Boston-based firm that manages $7.5 billion in assets for corporate, public and Taft-Hartley pension plans, as well as foundations and endowments. City National expects this acquisition to close in the second quarter and to become modestly accretive to earnings in the second half of 2006. The acquisition is expected to bring City National's assets under management or administration to more than $47 billion, on a pro-forma basis. Other Noninterest Income First-quarter cash management and deposit transaction fee income fell 10 percent from the same period last year, as many clients paid for services with compensating deposit balances. Cash management and deposit fee income increased 3 percent from the fourth quarter of 2005, due to payments from clients that settle on an annual basis as well as increased sales and the addition of new clients. International service fee income grew 23 percent from the first quarter of last year, largely because of an increase in foreign exchange revenue. Fee income for international services fell 4 percent from the fourth quarter, as trade finance returned to more normal levels after the 2005 holiday season. Other service charges and fees for the first quarter of 2006 amounted to $5.8 million, up 3 percent from one year ago, but down 12 percent from the fourth quarter of 2005. (The fourth-quarter 2005 total included a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. gain of $1.1 million.)
March 31,
------------------- %
Dollars in millions 2006 2005 Change
------------------------------------------- --------- --------- ------
Trust and Investment Fee Revenue $21.8 $19.8 10
Brokerage and Mutual Fund Fees 11.7 9.9 18
Assets Under Management (1) 19,246.3 16,378.8 18
Assets Under Management
Or Administration 40,435.8 35,829.2 13
(1) Excludes $9.4 billion and $6.1 billion of assets under management
for the CCM asset managers in which City National holds minority
ownership interests as of March 31, 2006 and March 31, 2005,
respectively.
NONINTEREST EXPENSE First-quarter 2006 noninterest expense amounted to $115.3 million, up 6 percent from the first quarter of 2005 and 1 percent from the fourth quarter. Staffing costs amounted to $71.6 million, up 7 percent from one year ago and 8 percent from the fourth quarter of 2005. First-quarter staffing expenses reflect higher seasonal employer taxes. For the first time, expenses also included $1.6 million for stock options. Not including this new accounting treatment of stock options, first-quarter staffing expenses grew approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 5 percent both from one year ago and from the fourth quarter of 2005. City National's efficiency ratio for the first quarter of 2006 was 54.80 percent, compared with 54.10 percent one year ago and 52.86 percent for the fourth quarter of 2005. INCOME TAXES The company's first-quarter 2006 effective tax rate was 37.8 percent, compared with 37.3 percent in the first quarter of 2005. CREDIT QUALITY Asset quality remains strong. At March 31, 2006, nonaccrual loans were $14.6 million, compared with $29.9 million at the same time last year and $14.4 million in the fourth quarter of 2005. Recoveries exceeded charge-offs by $2.7 million, and for the 11th consecutive quarter, City National made no provision for credit losses. This decision reflected management's assessment of asset quality, loan growth and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. economic conditions. The company currently expects to record some provision for loan losses in 2006, although, due to higher-than-expected first-quarter net recoveries, it will likely be lower than initially anticipated. At March 31, 2006, the allowance for loan losses was $156.5 million, or 1.64 percent of outstanding loans. The reserve for unfunded credit commitments was an additional $15.8 million. FIRST-QUARTER EARNINGS AND OUTLOOK While management expected first-quarter earnings to be lower than fourth-quarter 2005 earnings per share of $1.21 due to seasonal deposit variations, employer taxes, the requirement to expense stock options and fewer days in the quarter, actual first-quarter earnings reflected the added impact of lower-than-expected deposit balances. Overall, balances appear to have stabilized sta·bi·lize v. sta·bi·lized, sta·bi·liz·ing, sta·bi·liz·es v.tr. 1. To make stable or steadfast. 2. , and management expects them to grow slowly through the rest of this year. City National's management has revised its previously announced expectation of 9 percent to 12 percent earnings per share growth for 2006, and now expects earnings per share to grow between 8 percent and 10 percent for the year. CAPITAL RATIOS Total risk-based capital and Tier 1 risk-based capital ratios Risk-based capital ratio Bank requirement that there be a minimum ratio of estimated total capital to estimated risk-weighted asset. at March 31, 2006 were 15.51 percent and 12.36 percent, compared with the minimum "well capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. " capital ratios of 10 percent and 6 percent, respectively. The company's Tier 1 leverage ratio at March 31, 2006 was 8.92 percent. Total risk-based capital, Tier 1 risk-based capital and the Tier 1 leverage ratios at December 31, 2005 were 15.53 percent, 12.33 percent and 8.82 percent, respectively. The period-end ratio of shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. to total assets at March 31, 2006 was 10.04 percent, compared to 9.49 percent as of March 31, 2005, and 10.00 percent at December 31, 2005. The accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. other comprehensive loss at March 31, 2006 was $73.2 million, compared with a loss of $43.3 million at March 31, 2005 and $51.6 million at December 31, 2005. STOCK REPURCHASE Stock repurchase A firm's repurchase of outstanding shares of its common stock. AND DIVIDEND During the first quarter of 2006, City National repurchased 41,200 of outstanding shares at an average cost of $73.64. The company is currently authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. as many as 337,800 additional shares. There were 826,230 treasury shares at March 31, 2006. For the 11th consecutive year, City National also increased its annual dividend. On January 19, 2005, the company raised its common stock cash dividend 14 percent to $1.64 per share. CONFERENCE CALL City National Corporation will host a conference call this afternoon to discuss results for the first quarter of 2006. The call will begin at 2:00 p.m. PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT . Analysts and investors may dial in and participate in the question/answer session. To access the call, please dial (866) 202-1971 and enter pass code 86541110. A listen-only live broadcast of the call also will be available on the investor relations Investor relations The process by which the corporation communicates with its investors. page of the company's Website at http://www.cnb.com. There, it will be archived and available for 12 months. ABOUT CITY NATIONAL City National Corporation is a financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. company with $14.7 billion in total assets. Its wholly-owned subsidiary, City National Bank, is California's Premier Private and Business Bank(R). City National provides banking, investment and trust services through 55 offices, including 12 full-service full-ser·vice adj. Associated with or offering complete service: full-service gasoline pumps; full-service banks. regional centers, in Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, , the San Francisco Bay Area “Bay Area” redirects here. For other uses, see Bay Area (disambiguation). The San Francisco Bay Area, colloquially known as the Bay Area or The Bay and New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. . The company and its affiliates manage or administer To give an oath, as to administer the oath of office to the president at the inauguration. To direct the transactions of business or government. Immigration laws are administered largely by the Immigration and Naturalization Service. more than $40 billion in client trust and investment assets, including more than $19 billion under direct management. The pending acquisition of Independence Investment LLC is expected to increase City National's assets under management or administration to more than $47 billion, on a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma basis. FORWARD-LOOKING STATEMENTS forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This news release contains forward-looking statements about the company, for which the company claims the protection of the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions contained in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Forward-looking statements are based on management's knowledge and belief as of today and include information concerning the company's possible or assumed future financial condition, and its results of operations, business and earnings outlook. These forward-looking statements are subject to risks and uncertainties. A number of factors, some of which are beyond the company's ability to control or predict, could cause future results to differ materially from those contemplated by such forward-looking statements. These factors include (1) changes in interest rates, (2) significant changes in banking laws or regulations, (3) increased competition in the company's markets, (4) other-than-expected credit losses due to real estate cycles or other economic events, (5) earthquake earthquake, trembling or shaking movement of the earth's surface. Most earthquakes are minor tremors. Larger earthquakes usually begin with slight tremors but rapidly take the form of one or more violent shocks, and end in vibrations of gradually diminishing force or other natural disasters affecting the condition of real estate collateral collateral (kəlăt`ərəl), something of value given or pledged as security for payment of a loan. Collateral consists usually of financial instruments, such as stocks, bonds, and negotiable paper, rather than physical goods, although , (6) the effect of acquisitions and integration of acquired businesses, and (7) the impact of changes in regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. , judicial or legislative tax treatment of business transactions. Management cannot predict at this time the strength of the economy, and a slowing or reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its could adversely affect our performance in a number of ways including decreased demand for our products and services and increased credit losses. Likewise, changes in deposit interest rates, among other things, could slow the rate of growth or put pressure on current deposit levels. 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2005 and particularly Part I, Item 1A, titled "Risk Factors."
CITY NATIONAL CORPORATION
FINANCIAL HIGHLIGHTS
(unaudited)
Three Months
----------------------------
For The Period Ended March 31, 2006 2005 % Change
------------------------------ ----------------------------
Per Common Share
Net Income
Basic $1.16 $1.13 3
Diluted 1.12 1.09 3
Dividends 0.41 0.36 14
Book value 29.87 26.97 11
Results of Operations: (in millions)
Interest income $198 $168 18
Interest expense 46 21 116
--------- --------
Net interest income 152 146 4
Net interest income (Fully tax-
equivalent) 156 150 4
Total revenue 207 197 5
Provision for credit losses - - -
Net income 57 55 3
Financial Ratios:
Performance Ratios:
Return on average assets 1.57% 1.62%
Return on average shareholders' equity 15.68 16.63
Period-end shareholders' equity to
period-end assets 10.04 9.49
Net interest margin 4.62 4.75
Efficiency ratio 54.80 54.10
Capital Adequacy Ratios (Period end):
Tier 1 leverage 8.92 8.12
Tier 1 risk-based capital 12.36 11.69
Total risk-based capital 15.51 15.27
Asset Quality Ratios:
Allowance for loan losses to:
Total loans 1.64% 1.72%
Nonaccrual loans 1,075.11 493.37
Nonperforming assets to:
Total loans and nonperforming assets 0.15 0.35
Total assets 0.10 0.21
Net (charge-offs)/recoveries to
Average total loans (annualized) 0.11 0.01
Average Balances: (in millions)
Loans $9,625 $8,572 12
Interest-earning assets 13,652 12,786 7
Assets 14,827 13,873 7
Core deposits 10,334 10,628 (3)
Deposits 11,588 11,573 -
Interest-bearing liabilities 7,367 6,652 11
Shareholders' equity 1,481 1,352 10
Period-End Balances: (in millions)
Loans $9,567 $8,573 12
Assets 14,739 13,918 6
Core deposits 10,489 10,861 (3)
Deposits 11,909 11,763 1
Shareholders' equity 1,480 1,320 12
Wealth Management: (in millions) (1)
Assets under management $19,246 $16,379 18
Assets under management or
administration 40,436 35,829 13
(1) Excludes $9,431 million and $6,071 million of assets under
management for the Convergent Capital Management asset managers
in which City National holds minority ownership interests as of
March 31, 2006 and March 31, 2005, respectively.
CITY NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended
March 31,
(Dollars in thousands -----------------------------
except per share data) 2006 2005 % Change
------------------------ -----------------------------
Interest income $198,192 $167,650 18
Interest expense 45,786 21,224 116
--------- ---------
Net Interest Income 152,406 146,426 4
Provision for Credit Losses - - -
Noninterest Income
Trust and investment fees 21,774 19,844 10
Brokerage and mutual fund fees 11,684 9,877 18
Cash management and
deposit transaction fees 8,064 9,010 (10)
International services 5,989 4,888 23
Bank-owned life insurance 934 864 8
Other service charges and fees 5,777 5,597 3
Gain on sale of assets - 23 (100)
Gain on sale of securities 708 255 178
--------- ---------
Total noninterest income 54,930 50,358 9
Noninterest Expense
Salaries and employee benefits 71,616 66,632 7
Net occupancy of premises 9,012 7,616 18
Legal and professional fees 9,417 8,714 8
Information services 4,456 4,211 6
Depreciation 4,660 4,570 2
Amortization of intangibles 1,891 1,441 31
Marketing and advertising 4,016 3,574 12
Office services 2,691 2,489 8
Equipment 632 549 15
Minority interest expense 1,228 1,811 (32)
Other 5,704 6,708 (15)
--------- ---------
Total noninterest expense 115,323 108,315 6
--------- ---------
Income Before Taxes 92,013 88,469 4
Applicable Income Taxes 34,781 33,008 5
--------- ---------
Net Income $57,232 $55,461 3
========= =========
Other Data:
Earnings per common share - basic $1.16 $1.13 3
Earnings per common share - diluted $1.12 $1.09 3
Dividends paid per common share $0.41 $0.36 14
Dividend payout ratio 35.65% 32.02% 11
Return on average assets 1.57% 1.62% (3)
Return on average shareholders' equity 15.68% 16.63% (6)
Net interest margin (Fully taxable-
equivalent) 4.62% 4.75% (3)
Full-time equivalent employees 2,570 2,445 5
CITY NATIONAL CORPORATION
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
(unaudited)
2006 2005
------------ ------------
(Dollars in thousands First Fourth
except per share data) Quarter Quarter
------------------------ ------------ ------------
Interest Income $198,192 $191,927
Interest Expense 45,786 31,886
------------ ------------
Net Interest Income 152,406 160,041
Provision for Credit Losses - -
Noninterest Income
Trust and investment fees 21,774 20,362
Brokerage and mutual fund fees 11,684 11,174
Cash management
deposit transaction fees 8,064 7,842
International services 5,989 6,256
Bank-owned life insurance 934 670
Other service charges and fees 5,777 6,591
Gain on sale of assets - 81
Gain (loss) on sale of securities 708 (53)
------------ ------------
Total noninterest income 54,930 52,923
Noninterest Expense
Salaries and employee benefits 71,616 66,460
Net occupancy of premises 9,012 10,074
Legal and professional fees 9,417 11,419
Information services 4,456 4,299
Depreciation 4,660 4,778
Amortization of intangibles 1,891 1,865
Marketing and advertising 4,016 4,472
Office services 2,691 2,942
Equipment 632 582
Minority interest expense 1,228 571
Other 5,704 6,690
------------ ------------
Total noninterest expense 115,323 114,152
Income Before Taxes 92,013 98,812
Applicable Income Taxes 34,781 37,055
------------ ------------
Net Income $57,232 $61,757
============ ============
Other Data:
Earnings per common share - basic $1.16 $1.25
Earnings per common share - diluted 1.12 1.21
Dividends paid per common share 0.41 0.36
Dividend payout ratio 35.65% 28.89%
Return on average assets 1.57% 1.69%
Return on average shareholders' equity 15.68% 17.15%
Net interest margin (Fully taxable-
equivalent) 4.62% 4.85%
Full-time equivalent employees 2,570 2,539
CITY NATIONAL CORPORATION
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
(unaudited)
(Dollars in thousands except per share data)
2005
-------------------------------------------------
Fourth Third Second First Full
Quarter Quarter Quarter Quarter Year
------------------- --------- --------- --------- --------- ---------
Interest Income $191,927 $184,710 $174,265 $167,650 $718,552
Interest Expense 31,886 28,396 24,619 21,224 106,125
--------- --------- --------- --------- ---------
Net Interest
Income 160,041 156,314 149,646 146,426 612,427
Provision for
Credit Losses - - - - -
Noninterest Income
Trust and
investment fees 20,362 20,494 20,119 19,844 80,818
Brokerage and
mutual fund fees 11,174 10,946 9,931 9,877 41,927
Cash management
deposit
transaction fees 7,842 8,370 8,874 9,010 34,096
International
services 6,256 6,107 5,908 4,888 23,159
Bank-owned life
insurance 670 1,017 652 864 3,203
Other service
charges and fees 6,591 5,573 4,869 5,597 22,632
Gain on sale of
assets 81 801 162 23 1,067
Gain (loss) on
sale of
securities (53) 241 844 255 1,287
--------- --------- --------- --------- ---------
Total
noninterest
income 52,923 53,549 51,359 50,358 208,189
Noninterest Expense
Salaries and
employee benefits 66,460 66,467 63,839 66,632 263,398
Net occupancy of
premises 10,074 8,666 8,727 7,616 35,083
Legal and
professional fees 11,419 10,672 10,791 8,714 41,596
Information
services 4,299 4,471 4,015 4,211 16,996
Depreciation 4,778 4,551 4,535 4,570 18,434
Amortization of
intangibles 1,865 1,852 1,441 1,441 6,595
Marketing and
advertising 4,472 4,182 3,943 3,574 16,171
Office services 2,942 2,578 2,688 2,489 10,697
Equipment 582 578 646 549 2,355
Minority interest
expense 571 1,761 1,532 1,811 5,675
Other 6,690 6,862 6,796 6,708 27,060
--------- --------- --------- --------- ---------
Total
noninterest
expense 114,152 112,640 108,953 108,315 444,060
--------- --------- --------- --------- ---------
Income Before Taxes 98,812 97,223 92,052 88,469 376,556
Applicable Income
Taxes 37,055 37,413 34,345 33,008 141,821
--------- --------- --------- --------- ---------
Net Income $61,757 $59,810 $57,707 $55,461 $234,735
========= ========= ========= ========= =========
Other Data:
Earnings per
common share -
basic $1.25 $1.22 $1.18 $1.13 $4.77
Earnings per
common share -
diluted $1.21 $1.17 $1.13 $1.09 $4.60
Dividends paid
per common share $0.36 $0.36 $0.36 $0.36 $1.44
Dividend payout
ratio 28.89% 29.82% 30.86% 32.02% 30.35%
Return on average
assets 1.69% 1.66% 1.65% 1.62% 1.66%
Return on average
shareholders'
equity 17.15% 16.74% 17.03% 16.63% 16.89%
Net interest
margin (Fully
taxable-
equivalent) 4.85% 4.80% 4.74% 4.75% 4.79%
Full-time
equivalent
employees 2,539 2,516 2,477 2,445
CITY NATIONAL CORPORATION
CONSOLIDATED PERIOD END BALANCE SHEET
(unaudited)
First
(In thousands) Quarter
----------------------------------------------------------------------
Assets
Cash and due from banks $457,156
Federal funds sold -
Due from banks - interest-bearing 48,890
Securities-available-for-sale 3,850,173
Trading account securities 57,353
Loans:
Commercial 3,735,223
Commercial Real estate mortgages 1,854,908
Residential mortgages 2,700,966
Real estate construction 748,696
Equity lines of credit 339,348
Installment 188,262
------------
Total loans 9,567,403
Allowance for loan losses (156,482)
------------
Net loans 9,410,921
Premises and equipment, net 84,884
Goodwill and other intangibles 283,642
Other assets 546,365
------------
Total assets $14,739,384
============
Liabilities:
Deposits:
Noninterest-bearing $5,945,485
Interest-bearing 5,963,044
------------
Total deposits 11,908,529
Federal funds purchased and securities
sold under repurchase agreement 526,920
Other short-term borrowed funds 151,522
Subordinated debt 269,785
Other long-term debt 213,819
Minority Interest 25,225
Other liabilities 164,020
------------
Total liabilities 13,259,820
Shareholders' Equity
Common stock 50,693
Additional paid-in capital 399,974
Retained earnings 1,158,290
Accumulated other
comprehensive loss (73,248)
Treasury shares (56,145)
------------
Total shareholders' equity 1,479,564
------------
Total liabilities and shareholders' equity $14,739,384
============
CITY NATIONAL CORPORATION
CONSOLIDATED PERIOD END BALANCE SHEET
(unaudited)
2005
---------------------------------------------------
Fourth Third Second First
(In thousands) Quarter Quarter Quarter Quarter
-------------- ------------ ------------ ------------ ------------
Assets
Cash and due
from banks $365,217 $438,786 $406,709 $386,999
Federal funds
sold 157,000 185,000 400,000 190,000
Due from banks -
interest-
bearing 40,803 39,485 34,676 36,982
Securities-
available-for-
sale 3,999,261 4,030,296 4,057,267 4,018,969
Trading account
securities 59,344 42,634 22,337 37,490
Loans:
Commercial 3,544,504 3,392,487 3,320,836 3,082,663
Commercial
Real estate
mortgages 1,821,334 1,816,231 1,816,602 1,848,512
Residential
mortgages 2,644,030 2,571,537 2,485,177 2,405,732
Real estate
construction 721,890 711,755 724,895 759,090
Equity lines
of credit 333,548 317,703 310,101 274,735
Installment 200,296 195,168 212,064 201,821
------------ ------------ ------------ ------------
Total loans 9,265,602 9,004,881 8,869,675 8,572,553
Allowance
for loan
losses (153,983) (152,920) (147,930) (147,607)
------------ ------------ ------------ ------------
Net loans 9,111,619 8,851,961 8,721,745 8,424,946
Premises and
equipment, net 82,868 76,754 73,169 68,354
Goodwill and
other
intangibles 284,124 285,553 289,675 291,116
Other assets 481,624 478,975 470,020 463,182
------------ ------------ ------------ ------------
Total assets $14,581,860 $14,429,444 $14,475,598 $13,918,038
============ ============ ============ ============
Liabilities:
Deposits:
Noninterest-
bearing $6,562,038 $6,345,907 $6,468,339 $6,069,061
Interest-
bearing 5,576,434 5,769,807 5,683,869 5,693,563
------------ ------------ ------------ ------------
Total
deposits 12,138,472 12,115,714 12,152,208 11,762,624
Federal funds
purchased and
securities
sold under
repurchase
agreement 190,190 191,036 204,052 155,645
Other short-term
borrowed funds 100,000 26,197 27,678 125
Subordinated debt 275,682 278,076 285,771 280,068
Other long-term
debt 219,445 221,168 233,290 224,829
Minority Interest 24,351 24,856 25,400 25,525
Other liabilities 175,712 155,220 146,311 149,039
------------ ------------ ------------ ------------
Total
liabilities 13,123,852 13,012,267 13,074,710 12,597,855
Shareholders'
Equity
Common stock 50,601 50,601 50,640 50,712
Additional paid-
in capital 411,389 414,073 415,802 419,505
Retained earnings 1,121,474 1,077,561 1,035,589 995,688
Accumulated other
comprehensive
income (loss) (51,551) (36,879) (12,948) (43,288)
Deferred equity
compensation (14,730) (15,784) (16,821) (19,893)
Treasury shares (59,175) (72,395) (71,374) (82,541)
------------ ------------ ------------ ------------
Total
shareholders'
equity 1,458,008 1,417,177 1,400,888 1,320,183
------------ ------------ ------------ ------------
Total
liabilities
and
shareholders'
equity $14,581,860 $14,429,444 $14,475,598 $13,918,038
============ ============ ============ ============
CITY NATIONAL CORPORATION
CREDIT LOSS EXPERIENCE
(unaudited)
2006
-------------------
First Year To
(Dollars in thousands) Quarter Date
---------------------- --------- ---------
Allowance for Loan Losses
Balance at beginning of period $153,983 $153,983
Net (charge-offs)/recoveries:
Commercial 1,792 1,792
Commercial real estate mortgages 844 844
Residential mortgages - -
Real estate construction 16 16
Equity lines of credit - -
Installment 4 4
--------- ---------
Total net (charge-offs)/recoveries 2,656 2,656
Provision charged to expense - -
Provision allocated (to) from reserve
for off-balance sheet commitments (157) (157)
--------- ---------
Balance at end of period $156,482 $156,482
========= =========
Net (Charge-Offs)/Recoveries to Average Total Loans: (annualized)
Commercial 0.19% 0.19%
Commercial real estate mortgages 0.19% 0.19%
Residential mortgage 0.00% 0.00%
Real estate construction 0.01% 0.01%
Equity lines of credit 0.00% 0.00%
Installment 0.01% 0.01%
Total loans 0.11% 0.11%
Reserve for Off-Balance Sheet Credit Commitments
Balance at beginning of period $15,596 $15,596
Provision for credit losses 157 157
--------- ---------
Balance at end of period $15,753 $15,753
========= =========
2005
-------------------------------------------------
(Dollars in Fourth Third Second First Full
thousands) Quarter Quarter Quarter Quarter Year
------------------- --------- --------- --------- --------- ---------
Allowance for Loan
Losses
Balance at
beginning of
period $152,920 $147,930 $147,607 $148,568 $148,568
Net (charge-
offs)/recoveries:
Commercial 2,085 4,213 1,067 2,117 9,482
Commercial real
estate mortgages 7 324 7 (1,893) (1,555)
Residential
mortgages - - 1 2 3
Real estate
construction 15 1,192 71 23 1,301
Equity lines of
credit - - 39 1 40
Installment (11) 13 5 (18) (11)
--------- --------- --------- --------- ---------
Total net
(charge-
offs)/recoveries 2,096 5,742 1,190 232 9,260
Provision charged
to expense - - - - -
Provision allocated
(to) from reserve
for off-balance
sheet commitments (1,033) (752) (867) (1,193) (3,845)
--------- --------- --------- --------- ---------
Balance at end of
period $153,983 $152,920 $147,930 $147,607 $153,983
========= ========= ========= ========= =========
Net (Charge-Offs)/Recoveries to
Average Total Loans:
(annualized)
Commercial 0.23 % 0.49 % 0.13 % 0.28 % 0.29 %
Commercial real
estate mortgages 0.00 % 0.07 % 0.00 % (0.41)% (0.09)%
Residential
mortgage 0.00 % 0.00 % 0.00 % 0.00 % 0.00 %
Real estate
construction 0.01 % 0.65 % 0.04 % 0.01 % 0.17 %
Equity lines of
credit 0.00 % 0.00 % 0.05 % 0.00 % 0.01 %
Installment (0.02)% 0.02 % 0.01 % (0.03)% (0.01)%
Total loans 0.09 % 0.25 % 0.05 % 0.01 % 0.10 %
Reserve for Off-
Balance Sheet
Credit Commitments
Balance at
beginning of
period $14,563 $13,811 $12,944 $11,751 $11,751
Provision for
credit losses 1,033 752 867 1,193 3,845
--------- --------- --------- --------- ---------
Balance at end of
period $15,596 $14,563 $13,811 $12,944 $15,596
========= ========= ========= ========= =========
CITY NATIONAL CORPORATION
NONPERFORMING ASSETS
(unaudited)
2006 2005
--------- ------------------------------------
First Fourth Third Second First
(Dollars in thousands) Quarter Quarter Quarter Quarter Quarter
---------------------- --------- --------- -------- -------- --------
Nonaccrual Loans
Commercial $5,642 $5,141 $14,917 $17,982 $25,117
Commercial real
estate mortgages 923 923 955 1,543 1,945
Residential
mortgages - 294 2,259 1,990 1,990
Real estate
construction 7,492 7,650 - - -
Equity lines of
credit - 21 22 22 212
Installment 498 371 401 624 654
--------- --------- -------- -------- --------
Total nonaccrual
loans 14,555 14,400 18,554 22,161 29,918
Other Nonperforming
Assets - - - - -
--------- --------- -------- -------- --------
Total nonperforming
assets $14,555 $14,400 $18,554 $22,161 $29,918
========= ========= ======== ======== ========
Loans 90 Days or More
Past Due
on Accrual Status $- $- $- $103 $807
Allowance for loan
losses as a
percentage of:
Nonaccrual loans 1,075.11% 1,069.33% 824.19% 667.52% 493.37%
Total nonperforming
assets 1,075.11% 1,069.33% 824.19% 667.52% 493.37%
Total loans 1.64% 1.66% 1.70% 1.67% 1.72%
Nonaccrual loans as a
percentage of total
loans 0.15% 0.16% 0.21% 0.25% 0.35%
Nonperforming assets
as a percentage of:
Total loans and other
nonperforming assets 0.15% 0.16% 0.21% 0.25% 0.35%
Total Assets 0.10% 0.10% 0.13% 0.15% 0.21%
CITY NATIONAL CORPORATION
AVERAGE BALANCES AND RATES
(unaudited)
2006
---------------------------------
First Quarter Year to Date
---------------- ----------------
Average Average Average Average
(Dollars in millions) Balance Rate Balance Rate
--------------------- -------- ------- -------- -------
Assets
Interest-earning assets
Loans
Commercial $3,850 6.62% $3,850 6.62%
Commercial real estate
mortgages 1,838 7.36 1,838 7.36
Residential mortgages 2,663 5.27 2,663 5.27
Real estate construction 743 8.58 743 8.58
Equity lines of credit 334 7.17 334 7.17
Installment 197 7.41 197 7.41
-------- --------
Total loans 9,625 6.59 9,625 6.59
Due from banks - interest-
bearing 44 1.98 44 1.98
Federal funds sold and
securities
purchased under resale
agreements 13 4.32 13 4.32
Securities available-for-sale 3,926 4.47 3,926 4.47
Trading account securities 44 5.26 44 5.26
-------- --------
Total interest-earning assets 13,652 5.98 13,652 5.98
Allowance for loan losses (155) (155)
Cash and due from banks 439 439
Other assets 891 891
-------- --------
Total assets $14,827 $14,827
======== ========
Liabilities and Shareholders' Equity
Interest-bearing deposits
Interest checking accounts $808 0.23 $808 0.23
Money market accounts 3,388 1.81 3,388 1.81
Savings deposits 179 0.37 179 0.37
Time deposits - under $100,000 180 2.95 180 2.95
Time deposits - $100,000 and
over 1,254 3.37 1,254 3.37
-------- --------
Total interest-bearing
deposits 5,809 1.92 5,809 1.92
Federal funds purchased and
securities sold under
repurchase agreements 809 4.48 809 4.48
Other borrowings 749 5.09 749 5.09
-------- --------
Total interest-bearing
liabilities 7,367 2.52 7,367 2.52
Noninterest-bearing deposits 5,779 5,779
Other liabilities 200 200
Shareholders' equity 1,481 1,481
-------- --------
Total liabilities and
shareholders' equity $14,827 $14,827
======== ========
Net interest spread 3.46% 3.46%
====== ======
Net interest margin 4.62% 4.62%
====== ======
CITY NATIONAL CORPORATION
AVERAGE BALANCES AND RATES
(unaudited)
2005
-----------------------------------------------
Fourth Quarter Third Quarter Second Quarter
--------------- --------------- ---------------
Average Average Average Average Average Average
(Dollars in millions) Balance Rate Balance Rate Balance Rate
---------------------- ------- ------- ------- ------- ------- -------
Assets
Interest-earning
assets
Loans
Commercial $3,556 6.49% $3,401 6.21% $3,225 6.06%
Commercial real
estate mortgages 1,810 7.30 1,804 7.50 1,846 7.02
Residential
mortgages 2,603 5.23 2,519 5.24 2,444 5.19
Real estate
construction 727 8.36 725 7.98 728 7.37
Equity lines of
credit 322 6.77 310 6.10 297 5.70
Installment 192 7.19 204 7.05 208 7.12
------- ------- -------
Total loans 9,210 6.45 8,963 6.34 8,748 6.13
Due from banks -
interest-bearing 44 1.63 41 1.45 37 1.24
Federal funds sold
and securities
purchased under
resale agreements 23 4.23 65 3.70 80 2.76
Securities
available-for-sale 4,012 4.37 4,030 4.26 4,034 4.25
Trading account
securities 39 5.13 37 3.95 37 3.25
------- ------- -------
Total interest-
earning assets 13,328 5.80 13,136 5.67 12,936 5.50
Allowance for loan
losses (153) (151) (148)
Cash and due from
banks 451 441 443
Other assets 842 830 810
------- ------- -------
Total assets $14,468 $14,256 $14,041
======= ======= =======
Liabilities and
Shareholders' Equity
Interest-bearing
deposits
Interest checking
accounts $813 0.21 $795 0.14 $849 0.08
Money market
accounts 3,471 1.49 3,507 1.30 3,568 1.15
Savings deposits 186 0.29 196 0.29 199 0.28
Time deposits -
under $100,000 189 2.65 183 2.64 181 2.38
Time deposits -
$100,000 and over 1,136 2.78 1,074 2.76 897 2.56
------- ------- -------
Total interest-
bearing deposits 5,795 1.56 5,755 1.42 5,694 1.22
Federal funds
purchased and
securities sold
under repurchase
agreements 289 3.79 256 3.25 315 2.88
Other borrowings 552 4.55 545 4.13 518 3.85
------- ------- -------
Total interest-
bearing
liabilities 6,636 1.91 6,556 1.72 6,527 1.51
Noninterest-bearing
deposits 6,205 6,104 5,985
Other liabilities 198 178 170
Shareholders' equity 1,429 1,418 1,359
------- ------- -------
Total liabilities
and shareholders'
equity $14,468 $14,256 $14,041
======= ======= =======
Net interest spread 3.89% 3.95% 3.99%
====== ====== ======
Net interest margin 4.85% 4.80% 4.74%
====== ====== ======
2005
--------------------------------
First Quarter Full Year
--------------- ---------------
Average Average Average Average
(Dollars in millions) Balance Rate Balance Rate
--------------------- ------- ------- ------- -------
Assets
Interest-earning assets
Loans
Commercial $3,112 5.75% $3,325 6.13 %
Commercial real estate mortgages 1,818 7.02 1,819 7.21
Residential mortgages 2,354 5.18 2,481 5.21
Real estate construction 817 6.74 749 7.59
Equity lines of credit 265 5.42 299 6.03
Installment 206 6.28 202 6.93
------- -------
Total loans 8,572 5.98 8,875 6.23
Due from banks - interest-bearing 65 1.34 47 1.42
Federal funds sold and securities
purchased under resale agreements 33 2.59 50 3.22
Securities available-for-sale 4,078 4.38 4,038 4.32
Trading account securities 38 2.40 38 3.71
------- -------
Total interest-earning assets 12,786 5.43 13,048 5.60
Allowance for loan losses (149) (150)
Cash and due from banks 441 444
Other assets 795 819
------- -------
Total assets $13,873 $14,161
======= =======
Liabilities and Shareholders' Equity
Interest-bearing deposits
Interest checking accounts $858 0.09 $828 0.13
Money market accounts 3,690 1.00 3,558 1.23
Savings deposits 205 0.24 197 0.27
Time deposits - under $100,000 182 2.07 184 2.44
Time deposits - $100,000 and over 944 2.11 1,013 2.57
------- -------
Total interest-bearing deposits 5,879 1.05 5,780 1.32
Federal funds purchased and
securities sold under repurchase
agreements 254 2.33 278 3.08
Other borrowings 519 3.53 534 4.03
------- -------
Total interest-bearing liabilities 6,652 1.29 6,592 1.61
Noninterest-bearing deposits 5,694 5,999
Other liabilities 175 180
Shareholders' equity 1,352 1,390
------- -------
Total liabilities and shareholders'
equity $13,873 $14,161
======= =======
Net interest spread 4.14% 3.99 %
====== ======
Net interest margin 4.75% 4.79 %
====== ======
CITY NATIONAL CORPORATION
CAPITAL AND CREDIT RATING DATA
(unaudited)
2006 2005
---------------- ----------------------------------------
First Year To Fourth Third Second First Full
Quarter Date Quarter Quarter Quarter Quarter Year
-------- ------- -------- ------- ------- ------- -------
Per Common
Share:
----------
Shares
Outstanding
(in
thousands):
Average -
Basic 49,484 49,484 49,238 49,198 49,090 49,162 49,159
Average -
Diluted 51,309 51,309 51,053 51,123 51,043 51,030 51,062
Period-End 49,535 49,347 49,117 49,145 48,958
Book Value $29.87 $29.55 $28.85 $28.51 $26.97
Price:
High $78.25 $78.25 $75.12 $76.10 $72.90 $71.35 $76.10
Low 71.95 71.95 66.39 68.42 66.84 67.49 66.39
Period-end 76.79 72.44 70.09 71.71 69.82
Capital Ratios
(Dollars in
millions):
--------------
Risk-based
capital
Risk-adjusted
assets $10,473 $10,148 $9,802 $9,663 $9,410
Tier I
capital $1,295 $1,251 $1,195 $1,151 $1,100
Percentage
of risk
adjusted
assets 12.36% 12.33 12.19% 11.91% 11.69%
Total capital $1,624 $1,576 $1,539 $1,493 $1,437
Percentage
of risk
adjusted
assets 15.51% 15.53 15.70% 15.45% 15.27%
Tier I
leverage
ratio 8.92% 8.82 8.58% 8.39% 8.12%
Period-end
shareholders'
equity
to total
period-end
assets 10.04% 10.00 9.82% 9.68% 9.49%
Period-end
tangible
shareholders'
equity to
total
period-end
tangible
assets 8.27% 8.21 8.00% 7.83% 7.55%
Average
shareholders'
equity to
total
average
assets 9.99% 9.99% 9.88 9.94% 9.68% 9.75% 9.81%
Average
tangible
shareholders'
equity to
total
average
tangible
assets 8.23% 8.23% 8.07 8.08% 7.77% 7.80% 7.93%
Senior Debt Credit Ratings
--------------------------
For The Period Ended March 31, 2006 Standard
&
Moody's Fitch Poor's DBRS
------- ----- -------- ------
City National Bank A2 A- A A
City National Corporation A3 A- A- A(low)
Conference Call:
Today 2:00 p.m. PDT
866.202.1971
Pass Code: 86541110
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