City National Corporation Net Income Rises 10 Percent to $37.5 Million for 2001 Third Quarter; Diluted Earnings Per Share $0.75 For the Third Quarter.Business Editors LOS LOS Length of stay, see there ANGELES--(BUSINESS WIRE)--Oct. 11, 2001 First Nine Months Net Income Up 9 Percent to $107.4 Million City National Corporation (NYSE NYSE See: New York Stock Exchange : CYN CYN Canyon ), parent corporation of wholly owned City National Bank, today reported record net income of $37.5 million for the third quarter of 2001, up 10 percent from $34.2 million for the third quarter of 2000 and 3 percent from the second quarter of 2001. Net income per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. common share of $0.75 increased 7 percent from $0.70 per share in the third quarter of 2000 and was slightly above the $0.74 per share in the second quarter of 2001. For the first nine months of 2001, City National Corporation also achieved net income of $107.4 million, an increase of 9 percent over net income of $98.6 million for the first nine months of 2000. Net income per diluted common share was $2.18, an increase of 7 percent compared with $2.04 per share in the first nine months of 2000. Cash net income per diluted common share, which excludes the amortization of core deposit intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. and goodwill from acquisitions, rose 8 percent to $0.83 per share, compared with $0.77 per share in the third quarter of 2000 and was up slightly compared with $0.82 per share in the second quarter of 2001. For the first nine months of 2001, cash net income per diluted common share was $2.42, an increase of 8 percent from $2.25 per share for the first nine months of 2000. "While the ramifications ramifications npl → Auswirkungen pl from the events of September September: see month. 11 are affecting our nation and economy, in the third quarter City National continued to generate meaningful growth in noninterest income, core deposits and loans to new and existing clients," said 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. "In light of the solid growth in our loan portfolio and the economic uncertainties arising from September 11, and even though our total allowance for credit losses is substantial, we added a credit loss provision of $10 million this quarter. Nonetheless, net income grew by 10 percent. "The Corporation's continuing commitment to productivity improvement and expense management also contributed to our earnings growth and, remarkably, pushed our cash efficiency ratio below 50 percent, while we maintained our traditional standards of outstanding service," Goldsmith said. "The 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. accomplishments and strategic positioning of City National have enhanced our ability to meet the challenges and capitalize To regard the cost of an improvement or other purchase as a capital asset for purposes of determining Income Tax liability. To calculate the net worth upon which an investment is based. To issue company stocks or bonds to finance an investment. upon the many opportunities that lie ahead here in California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). , the fifth largest economy in the world, where we are better positioned than ever before as California's Premier Private and Business Bank." RETURN ON ASSETS/RETURN ON EQUITY The corporation's return on average assets for the third quarter of 2001 was 1.58 percent, compared with 1.55 percent for the third quarter of 2000 and 1.60 percent for the second quarter of 2001. The return on average 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. was 17.60 percent for the third quarter of 2001, compared with 19.63 percent for the prior-year third quarter and 18.28 percent for the second quarter of 2001. For the first nine months of 2001, the return on average assets was 1.57 percent and the return on average shareholders' equity was 17.89 percent compared with a 1.58 percent return on average assets and a 20.25 percent return on average shareholders' equity for the first nine months of 2000. The lower return on average shareholders' equity compared with a year ago is due primarily to a higher level of shareholders' equity, which resulted from increased unrealized securities gains and the positive mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. valuation of interest rate swaps Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. treated as cash flow hedges A cash flow hedge is a hedge of the exposure to the variability of cash flow that
On a cash basis (which excludes goodwill and the after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. impact of nonqualifying core deposit intangibles from average assets and average shareholders' equity), the return on average assets in the third quarter of 2001 was 1.78 percent, compared with 1.75 percent in the third quarter of 2000, and 1.81 percent for the second quarter of 2001. The return on average shareholders' equity on a cash basis was 25.09 percent for the third quarter of 2001, compared with 29.13 percent for the prior-year third quarter and 26.40 percent for the second quarter of 2001. On a cash basis, for the first nine months of 2001, the return on average assets was 1.78 percent and the return on average shareholders' equity was 25.60 percent, compared with a 1.79 percent return on average assets and 30.09 percent return on average shareholder's equity for the first nine months of 2000. ASSETS Total average assets reached $9.4 billion in the third quarter of 2001, up 8 percent from the $8.8 billion in average assets for the third quarter of 2000 and up 3 percent from the $9.1 billion in average assets for the second quarter of 2001. Total assets at September 30, 2001 were $9.8 billion, compared with $8.9 billion at September 30, 2000 and $9.1 billion at June June: see month. 30, 2001. Loans and, to a lesser extent, federal funds Federal Funds Funds deposited to regional Federal Reserve Banks by commercial banks, including funds in excess of reserve requirements. Notes: These non-interest bearing deposits are lent out at the Fed funds rate to other banks unable to meet overnight reserve sold and securities accounted for the increase in assets from last year and from the second quarter of 2001. LOANS Average loans rose to $6.8 billion for the third quarter of 2001, an increase of 5 percent over the prior-year third quarter. Average relationship loans increased $0.7 billion, or 11 percent, this quarter over the year-ago quarter. Conversely con·verse 1 intr.v. con·versed, con·vers·ing, con·vers·es 1. To engage in a spoken exchange of thoughts, ideas, or feelings; talk. See Synonyms at speak. 2. , average syndicated non-relationship loans fell to $101.7 million for the third quarter of 2001, down significantly from both the third quarter of 2000, as well as the second quarter of 2001. This is consistent with the bank's objective of reducing its exposure to syndicated non-relationship loans. For the first nine months of 2001, average relationship loans increased 14 percent to $6.5 billion from $5.7 billion for the first nine months of 2000. The growth in average relationship loans over the year-ago period was driven primarily by increases in residential first mortgage loans, real estate mortgage, construction and commercial loans. Compared with the prior-year third quarter averages, residential first mortgage loans rose 19 percent to $1.5 billion from $1.2 billion; real estate mortgage loans rose 12 percent to $1.6 billion from $1.4 billion; construction loans rose 25 percent to $0.5 billion from $0.4 billion; and commercial loans rose 4 percent to $3.0 billion from $2.8 billion. Total loans at September 30, 2001 were $6.9 billion, compared with $6.4 billion at September 30, 2000, and $6.6 billion at June 30, 2001. At September 30, 2001, syndicated non-relationship loans totaled $93.4 million, or slightly over 1 percent of the loan portfolio, compared with $110.5 million at June 30, 2001, $191.8 million at December December: see month. 31, 2000, and $334.6 million at September 30, 2000. The average outstanding loan balance in the syndicated non-relationship portfolio at September 30, 2001 was $2.5 million, which represents just under half the average commitment amount. Average relationship loan growth is expected to slow during the fourth quarter of 2001 and will range between 9 percent to 13 percent for the full year as the performance of the California economy slows to more closely resemble the economic results of the nation. DEPOSITS Average deposits during the third quarter of 2001 increased 7 percent to $6.9 billion over the third quarter of 2000, but were slightly lower than the second quarter of 2001. During the first nine months of 2001, average deposits increased 12 percent to $6.9 billion, compared with $6.2 billion for the first nine months of 2000. During the third quarter of 2001, average core deposits, which provide a stable source of low cost funding, were $5.6 billion, an increase of 11 percent over the $5.0 billion in the third quarter of 2000, and were slightly higher than the second quarter of 2001. Average core deposits represented 80 percent of the total average deposit base for the quarter. For the first nine months of 2001, average core deposits were $5.4 billion compared with $4.9 billion for the first nine months of 2000, an increase of 11 percent. Internal growth, increased sales of cash management products and a reduction in the earnings credit on analyzed an·a·lyze tr.v. an·a·lyzed, an·a·lyz·ing, an·a·lyz·es 1. To examine methodically by separating into parts and studying their interrelations. 2. Chemistry To make a chemical analysis of. 3. deposit accounts resulting from lower interest rates all contributed to the growth in deposits from last year. Deposits totaled $7.4 billion at September 30, 2001, compared with $6.9 billion at September 30, 2000, and $7.1 billion at June 30, 2001. Management expects average deposit growth in 2001, compared with 2000, to be in the range of 8 percent to 12 percent. NET INTEREST INCOME Net interest income on a fully taxable-equivalent basis rose 7 percent to $114.7 million in the third quarter of 2001, compared with $107.3 million for the third quarter of 2000. Third quarter 2001 net interest income was 6 percent higher than the $108.4 million recorded for the second quarter of 2001. Fully taxable-equivalent net interest income for the first nine months of 2001 was $331.2 million, an increase of 7 percent over $310.4 million for the first nine months of 2000. Interest income recovered on nonaccrual and charged-off loans included above was $1.4 million in the third quarter of 2001, compared with $0.8 million for the third quarter a year ago and $0.6 million for the second quarter of 2001. Interest recovered in the first nine months of 2001 was $3.6 million compared with $3.1 million for the first nine months of 2000. The fully taxable-equivalent net interest margin in the third quarter of 2001 was 5.28 percent, compared with 5.32 percent for the third quarter of 2000 and 5.23 percent for the second quarter of 2001. The net interest margin for the first nine months of 2001 was 5.30 percent compared with 5.46 percent for the first nine months of 2000. The Bank's prime rate was 6.00 percent at September 30, 2001, compared with 9.50 percent a year earlier and 6.75 percent at June 30, 2001. The prime rate was further reduced to 5.50 percent effective October October: see month. 3, 2001. Management expects the net interest margin for 2001 will be slightly less than the 5.30 percent year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. margin, as time deposits and interest rate swaps re-price on a lagged basis. This expectation is contingent on Adj. 1. contingent on - determined by conditions or circumstances that follow; "arms sales contingent on the approval of congress" contingent upon, dependant on, dependant upon, dependent on, dependent upon, depending on, contingent rates remaining relatively stable for the rest of the year. NONINTEREST INCOME Reflecting the success of strategic initiatives to grow fee income, core noninterest income continued its strong, across-the-board growth, rising 18 percent to $31.7 million in the third quarter of 2001, from $26.8 million in the third quarter of 2000, and up slightly from the $31.5 million for the second quarter of 2001. Core noninterest income of $92.7 million for the first nine months of 2001 increased 19 percent compared with the $77.6 million for the first nine months of 2000. Trust and investment fee revenue benefited from the acquisition of Reed, Conner con 1 adv. In opposition or disagreement; against: debated the issue pro and con. n. 1. An argument or opinion against something. 2. & Birdwell Birdwell can refer to:
n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2000, and an increase in new business from City National Investments (CNI (1) (Certified NetWare Instructor) See Novell certification. (2) (Coalition for Networked Information, Washington, DC, www.cni.org) A partnership of the Association of Research Libraries, CAUSE and EDUCOM, founded in 1990. ). Assets under administration totaled $18.3 billion at September 30, 2001, including $7.2 billion under management, compared with $16.7 billion and $5.3 billion, respectively, at September 30, 2000, and $18.5 billion and $7.2 billion, respectively, at June 30, 2001. 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. included $1.2 billion of assets managed by Reed, Conner & Birdwell at September 30, 2001 and June 30, 2001. The remaining year-over-year increase in assets under management is primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to increased participation in the CNI Charter Funds, City National's family of mutual funds. The other key component in the growth of noninterest income is cash management and deposit transaction fees. These increased as the result of strong growth in deposits, in many cases attributable to higher sales of new online cash management products. Gains (losses) on the sale of assets and the 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. of debt and gains on the sale of securities amounted to $0.6 million for the third quarter of 2001, compared with a $l.7 million gain for the same period a year earlier, and gains of $1.4 million for the second quarter of 2001. For the first nine months of 2001, $3.7 million in gains on the sale of assets and the repurchase of debt and gains on the sale of securities were realized, compared with $2.0 million for the first nine months of 2000. Noninterest income for the third quarter and first nine months of 2001 was 23 percent of total revenues compared with 22 percent and 21 percent, respectively, for the third quarter and first nine months of 2000. Management expects growth in noninterest income to range from 15 percent to 20 percent for 2001. NONINTEREST EXPENSE Noninterest expense was $77.3 million in the third quarter of 2001, up 5 percent from $74.0 million for the third quarter of 2000, and down 2 percent from $79.0 million for the second quarter of 2001. The increase over the year-ago quarter was primarily the result of the corporation's growth, including expenses related to Reed, Conner & Birdwell and additional colleagues. Noninterest expense for the first nine months of 2001 was $232.9 million, an increase of 6 percent compared with $219.1 million for the first nine months of 2000. The corporation's cash efficiency ratio for the third quarter of 2001 improved to 49.49 percent, from 51.23 percent for the third quarter of 2000. The 3 percent improvement over the prior-year quarter and the 6 percent improvement from the 52.60 percent for the second quarter of 2001 is due to both increased revenues and the corporation's ongoing efforts to improve efficiency and productivity. For the first nine months of 2001, the cash efficiency ratio was 51.34 percent compared with 53.06 percent for the first nine months of 2000. Management currently anticipates that 2001 noninterest expense will increase between 5 percent and 8 percent from 2000. INCOME TAXES The effective tax rate, was 33.2 percent for the third quarter, and 33.1 percent for the first nine months of 2001. This compares with 33.7 percent for the third quarter and 34.4 percent for the first nine months of 2000. The lower tax rates, compared with prior periods, are due primarily to the formation of a special purpose subsidiary for capital-raising activities during the second quarter of 2001. The corporation continues to evaluate its long-term plan for its registered investment company subsidiary. Management currently anticipates its effective tax rate may fall within a range of 32.5 percent to 33.5 percent for 2001. CREDIT QUALITY Net loan charge-offs were $6.6 million and $8.3 million for the third quarters of 2001 and 2000, respectively. Net loan charge-offs for the second quarter of 2001 were $7.3 million. For the first nine months of 2001 and 2000, net loan charge-offs were $22.2 million and $15.8 million, respectively. Relationship loan net charge-offs were $3.9 million for the third quarter of 2001, compared with $3.6 million for the third quarter of 2000 and $4.3 million for the second quarter of 2001. Third quarter 2001 syndicated non-relationship loan net charge-offs were $2.7 million, compared with $4.7 million in the third quarter of 2000, and $3.0 million for the second quarter of 2001. As a percentage of average loans, annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. net charge-offs were 0.39 percent and 0.51 percent for the third quarters of 2001 and 2000, respectively. Relationship loan annualized net charge-offs were 0.23 percent of average relationship loans outstanding for the third quarter of 2001, compared with 0.24 percent for the third quarter of 2000. Total nonperforming assets Nonperforming asset An asset that is not effectively producing income, such as an overdue loan. nonperforming asset An asset that produces no income. (nonaccrual loans and ORE) were $40.1 million, or 0.59 percent of total loans and ORE, at September 30, 2001, compared with $47.0 million, or 0.73 percent, at September 30, 2000, and $38.3 million, or 0.58 percent, at June 30, 2001. Nonperforming assets increased 5 percent from the second quarter 2001, but decreased 36 percent from year-end 2000. Total nonperforming relationship assets were $31.5 million, or 0.47 percent of total relationship loans and ORE, at September 30, 2001, compared with $29.9 million, or 0.49 percent, at September 30, 2000, and $30.2 million, or 0.47 percent, at June 30, 2001, and do not contain any concentration of credits within a specific industry sector. Total syndicated non-relationship loans on nonaccrual status totaled $8.6 million at September 30, 2001 and consisted of 3 loans, compared with 2 loans totaling $8.1 million that were outstanding at June 30, 2001. The corporation recorded a provision for credit losses of $10.0 million and $24.0 million for the third quarter and first nine months of 2001, respectively, compared with $7.0 million and $11.0 million for the third quarter and first nine months of 2000. The provision for credit losses in the second quarter of 2001 was $6.5 million. The provision for credit losses primarily reflects the levels of net loan charge-offs and nonaccrual loans, as well as management's ongoing assessment of the credit quality of the portfolio and growth of the loan portfolio during the quarter. The allowance for credit losses at September 30, 2001 totaled $137.2 million, or 2.0 percent of outstanding loans. This compares with an allowance of $139.2 million, or 2.17 percent of outstanding loans, at September 30, 2000, and an allowance of $133.9 million, or 2.04 percent of outstanding loans at June 30, 2001. The allowance for credit losses as a percentage of nonaccrual loans was 342 percent at September 30, 2001, compared with 297 percent at September 30, 2000 and 361 percent at June 30, 2001. Management believes the allowance for credit losses is adequate to cover risks inherent in the portfolio at September 30, 2001. The provision for credit losses to be taken in the fourth quarter of 2001 will reflect management's assessment of the above factors, as well as changes in the economic environment during this period. Based on its current assessment, management anticipates that a provision for credit losses for all of 2001 could fall within the $31 million to $38 million range. OUTLOOK Management's estimates of business and economic levels and the related effect on earnings during this period of economic uncertainty are subject to a greater degree of variability than normal given current world events and their impact on the economy. Based on the information available, management continues to expect that net income per diluted common share for 2001 will be approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 8 percent to 11 percent higher than 2000. In anticipation The performance of an act or obligation before it is legally due. In patent law, the publication of the existence of an invention that has already been patented or has a patent pending, of the elimination of goodwill amortization in 2002, it should be noted that the amortization of goodwill net of tax benefits reduced net income by $3.1 million for the third quarter and $9.4 million for the first nine months of 2001. CAPITAL LEVELS 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 September 30, 2001 were 13.93 percent and 9.06 percent, compared with the minimum "well-capitalized" capital ratios of 10 percent and 6 percent, respectively. The corporation's Tier 1 leverage ratio of 7.17 percent exceeded the 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. minimum of 4 percent required for a "well-capitalized" institution. Total risk-based capital, Tier 1 risk-based capital and the Tier 1 leverage ratios at June 30, 2001 were 11.64 percent, 8.76 percent and 6.97 percent, respectively. The total risk-based capital ratio benefited from the issuance by City National Bank of $150.0 million of 6.75 percent, 10 year, subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. notes on August 30, 2001 which qualifies as Tier 2 capital Tier 2 Capital A term used to describe the capital adequacy of a bank. Tier II capital is secondary bank capital that includes items such as undisclosed reserves, general loss reserves, subordinated term debt, and more. Notes: This is related to Tier 1 Capital. . STOCK REPURCHASE Stock repurchase A firm's repurchase of outstanding shares of its common stock. Under the October 26, 2000 stock buyback Stock buyback A corporation's purchase of its own outstanding stock, usually in order to raise the company's earnings per share. stock buyback See buyback. program of one million shares, 341,700 shares have been repurchased at an average price of $33.99 per share including 50,000 shares purchased at an average price of $39.63 during the third quarter of 2001. The shares purchased under the buyback Buyback The buying back of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies will buyback shares either to increase the value of shares still available (reducing supply), or to eliminate any threats by shareholders who may program will be reissued for acquisitions, upon the exercise of stock options, and for other general corporate purposes. Treasury shares at September 30, 2001 totaled 50,000 shares. ABOUT CITY NATIONAL City National Corporation is a publicly owned Publicly owned can refer to:
World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the symbol "CYN." The corporation's wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , City National Bank, is California's Premier Private and Business Bank(SM). City National Bank, which provides banking, trust and investment services, has 49 California offices located in Contra Costa Contra Costa can refer to:
1 City (1990 pop. 226,505), seat of Riverside co., S Calif.; inc. 1883. One of the fastest growing U.S. cities in the late 20th cent., it is famous for its orange industry. , San Bernardino San Bernardino, city, United States San Bernardino (săn bûr'nədē`nō), city (1990 pop. 164,164), seat of San Bernardino co., S Calif., at the foot of the San Bernardino Mts.; inc. 1854. , San Diego San Diego (săn dēā`gō), city (1990 pop. 1,110,549), seat of San Diego co., S Calif., on San Diego Bay; inc. 1850. San Diego includes the unincorporated communities of La Jolla and Spring Valley. Coronado is across the bay. , San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden , San Mateo San Mateo (săn mətā`ō), city (1990 pop. 85,486), San Mateo co., W Calif., on San Francisco Bay; inc. 1894. It is a commercial and retail center with some high-technology manufacturing. San Mateo, Spanish for St. , Santa Clara Santa Clara, city, Cuba Santa Clara (sän`tä klä`rä), city (1994 est. pop. 217,000), capital of Villa Clara prov., central Cuba. and Ventura Ventura (vĕnt  `rə), city (1990 pop. 92,575), seat of Ventura co., SW Calif., on the Pacific coast in a farm and oil region; inc. 1866. counties.
This news release contains 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. about the corporation for which the corporation 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 corporation's possible or assumed future financial condition, and its results of operations and business. Forward-looking statements are subject to risks and uncertainties. A number of factors, some of which are beyond the corporation'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) a continued economic 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 national and California economies attributable to various ongoing developments such as declining retail sales, declines in consumer confidence, reduced industrial production, declining business inventories, reduced capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. , and declining occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy in commercial and residential real estate resulting in declines in underlying value of real estate assets, or other unforeseen adverse changes in national and regional economic activity, (2) increased economic uncertainty created by the most recent terrorist attacks on the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , (3) economic uncertainty created by the military, diplomatic and humanitarian actions of the United States and allied nations in Afghanistan Afghanistan (ăfgăn`ĭstăn', ăfgän'ĭstän`), officially Islamic Republic of Afghanistan, republic (2005 est. pop. 29,929,000), 249,999 sq mi (647,497 sq km), S central Asia. in response to the terrorists acts, (4) the increased prospect of additional terrorist acts within the United States and the uncertain effect of these events on our national and regional economies, (5) changes in interest rates, (6) significant changes in banking laws or regulations, (7) increased competition in the corporation's market, (8) higher-than-expected credit losses, and (9) possible changes in the plans for its registered investment company subsidiary. For a more complete discussion of these risks and uncertainties, see the corporation's Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the quarter-ended June 30, 2001, and particularly the section of Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial therein titled "Cautionary Statement for Purposes of the 'Safe Harbor' Provisions of the Private Securities Litigation Reform Act of 1995."
CITY NATIONAL CORPORATION
CONSOLIDATED BALANCE SHEET
(unaudited)(Dollars in thousands, except per share amount)
September 30,
2001 2000 % Change
Assets
Cash and due from banks $ 418,830 $ 393,669 6
Securities 1,797,898 1,660,082 8
Federal funds sold 311,500 30,000 N/M
Loans (net of allowance
for credit losses of
$137,239 and $139,195) 6,713,743 6,287,597 7
Other assets 544,103 542,607 -
Total assets $ 9,786,074 $ 8,913,955 10
Liabilities and Shareholders' Equity
Noninterest-bearing deposits $ 3,275,183 $ 2,743,717 19
Interest-bearing deposits 4,125,169 4,129,796 -
Total deposits 7,400,352 6,873,513 8
Federal funds purchased
and securities sold
under repurchase agreements 149,701 132,750 13
Other short-term borrowed funds 785,125 740,638 6
Subordinated debt 274,493 123,594 122
Other long-term debt 194,995 205,000 (5)
Other liabilities 106,003 127,802 (17)
Total liabilities 8,910,669 8,203,297 9
Shareholders' equity 875,405 710,658 23
Total liabilities
and shareholders' equity $ 9,786,074 $ 8,913,955 10
Book value per share $ 18.21 $ 14.88 22
Number of shares at period end 48,068,566 47,765,807 1
CONSOLIDATED STATEMENT OF INCOME
(unaudited) (Dollars in thousands, except per share amount)
For the three months ended For the nine months ended
September 30, September 30,
2001 2000 %Change 2001 2000 %Change
Interest
income $ 156,516 $ 170,927 (8) $ 477,198 $ 477,070 -
Interest
expense (45,387) (66,926) (32) (156,103) (176,178) (11)
Net interest
income 111,129 104,001 7 321,095 300,892 7
Provision
for credit
losses (10,000) (7,000) 43 (24,000) (11,000) 118
Net interest
income after
provision
for credit
losses 101,129 97,001 4 297,095 289,892 2
Noninterest
income 32,282 28,522 13 96,437 79,555 21
Noninterest
expense (77,329) (73,984) 5 (232,945) (219,143) 6
Income before
taxes 56,082 51,539 9 160,587 150,304 7
Income taxes (18,598) (17,378) 7 (53,168) (51,690) 3
Net income $ 37,484 $ 34,161 10 $ 107,419 $ 98,614 9
Net income
per share,
basic $ 0.78 $ 0.72 8 $ 2.25 $ 2.09 8
Net income
per share,
diluted $ 0.75 $ 0.70 7 $ 2.18 $ 2.04 7
Dividends paid
per share $ 0.19 $ 0.18 6 $ 0.56 $ 0.53 6
Cash net
income $ 41,439 $ 37,853 9 $ 119,271 $ 108,907 10
Cash net
income
per share,
basic $ 0.86 $ 0.79 9 $ 2.49 $ 2.31 8
Cash net income
per share,
diluted $ 0.83 $ 0.77 8 $ 2.42 $ 2.25 8
Shares used
to compute
per share
net income,
basic 48,015,739 47,694,471 47,822,393 47,092,720
Shares used
to compute
per share
net income,
diluted 49,803,704 49,082,476 49,285,704 48,351,733
CITY NATIONAL CORPORATION
SELECTED FINANCIAL INFORMATION
(unaudited) (Dollars in thousands)
Period end September 30,
2001 2000 % Change
Loans
Commercial (a) $ 2,952,076 $ 2,920,518 1
Residential first mortgage 1,528,505 1,254,557 22
Real estate mortgage 1,608,086 1,438,814 12
Real estate construction 596,081 408,749 46
Installment 72,862 69,528 5
Total relationship loans 6,757,610 6,092,166 11
Syndicated non-relationship (a) 93,372 334,626 (72)
Total loans $ 6,850,982 $ 6,426,792 7
(a)Commercial loans were $2,902,807 and syndicated
non-relationship loans were $110,536 at June 30, 2001
Deposits
Noninterest bearing $ 3,275,183 $ 2,743,717 19
Interest-bearing, core 2,679,780 2,514,552 7
Total core deposits 5,954,963 5,258,269 13
Time deposits
- $100,000 and over 1,445,389 1,615,244 (11)
Total deposits $ 7,400,352 $ 6,873,513 8
Credit Quality
Nonaccrual loans and ORE (b)
Relationship loans $ 31,474 $ 29,717 6
Syndicated non-relationship loans 8,641 17,166 (50)
40,115 46,883 (14)
ORE 10 133 (92)
Total nonaccrual loans and ORE $ 40,125 $ 47,016 (15)
Relationship nonaccrual loans
and ORE to total relationship
loans and ORE 0.47 0.49 (4)
Total nonaccrual loans and ORE
to total loans and ORE 0.59 0.73 (19)
Loans past due 90 days or more
on accrual status $ 3,462 $ 5,375 (36)
Restructured loans on accrual status $ - $ 2,411 (100)
(b) Nonaccrual loans were $37,085 at June 30, 2001 including
$28,942 of relationship loans and $8,143 of syndicated
non-relationship loans.
Allowance for Credit Losses
For the three months ended For the nine months ended
September 30, September 30,
2001 2000 %Change 2001 2000 %Change
Beginning
balance $ 133,883 $ 140,484 (5) $ 135,435 $ 134,077 1
Additions
from acquisitions - - - - 9,927 (100)
Provision for
credit losses 10,000 7,000 43 24,000 11,000 118
Charge-offs(c)
Relationship
loans (5,207) (5,060) 3 (22,915) (15,241) 50
Syndicated non-
relationship
loans (3,302) (4,690) (30) (8,516) (8,922) (5)
(8,509) (9,750) (13) (31,431) (24,163) 30
Recoveries (d) 1,865 1,461 28 9,235 8,354 11
Net charge-offs (6,644) (8,289) (20) (22,196) (15,809) 40
Ending Balance $ 137,239 $ 139,195 (1) $ 137,239 $ 139,195 (1)
Net relationship
charge-offs to average
relationship loans
(annualized) (0.23)% (0.24)% (4) (0.30)% (0.16)% 88
Total net
charge-offs
to average loans
(annualized) (0.39) (0.51) (24) (0.45) (0.34) 32
Allowance for credit losses to total loans 2.00 2.17 (8)
Allowance for credit losses to nonaccrual loans 342.11 296.90 15
(c) Charge-offs in the second quarter 2001 were $7,725 in
relationship loans and $3,113 in syndicated non-relationship loans
(d) Includes $574 and $849 in syndicated non-relationship loans for
the third quarter and first nine months of 2001, respectively
CITY NATIONAL CORPORATION
SELECTED FINANCIAL INFORMATION
(unaudited) (Dollars in thousands except per share amounts)
For the three months ended
September 30,
2001 2000 % Change
Average Balances
Loans
Commercial $ 2,972,774 $ 2,848,223 4
Residential first mortgage 1,482,327 1,245,026 19
Real estate mortgage 1,591,224 1,416,387 12
Real estate construction 539,409 430,538 25
Installment 72,509 67,336 8
Total relationship loans 6,658,243 6,007,510 11
Syndicated non-relationship 101,732 422,961 (76)
Total loans $ 6,759,975 $ 6,430,471 5
Securities $ 1,782,906 $ 1,558,339 14
Interest-earning assets 8,616,506 8,017,627 7
Assets 9,419,018 8,757,790 8
Core deposits 5,570,380 5,000,742 11
Deposits 6,947,324 6,501,125 7
Shareholders' equity 844,931 692,436 22
Noninterest income
Trust and investment
fee revenue $ 14,896 $ 12,028 24
Cash management and deposit
transaction fees 8,068 5,888 37
International services 3,756 3,967 (5)
Bank owned life insurance 714 646 11
Other 4,287 4,256 1
Subtotal - core 31,721 26,785 18
Gain (loss) on sale of loans
and assets / debt repurchase (355) (82) 333
Gain on sale of securities 916 1,819 (50)
Total $ 32,282 $ 28,522 13
Noninterest expense
Salaries and other
employee benefits $ 42,476 $ 40,506 5
All Other
Professional 6,203 5,047 23
Net occupancy of premises 6,434 7,235 (11)
Information services 4,111 3,369 22
Marketing and advertising 2,375 2,503 (5)
Depreciation 3,510 3,203 10
Office services 2,159 2,302 (6)
Amortization of goodwill 3,220 2,957 9
Amortization of core
deposit intangibles 1,405 1,404 -
Equipment 497 537 (7)
Other operating 4,939 4,921 -
Total all other 34,853 33,478 4
Total $ 77,329 $ 73,984 5
Selected Ratios
For the Period
Return on average assets 1.58% 1.55% 2
Return on average
shareholders' equity 17.60 19.63 (10)
Net interest margin 5.28 5.32 (1)
Efficiency ratio 52.64 54.44 (3)
Dividend payout ratio 23.68 24.33 (3)
Cash return on average assets 1.78 1.75 2
Cash return on average
shareholders' equity 25.09 29.13 (14)
Cash efficiency ratio 49.49 51.23 (3)
For the nine months ended
September 30,
2001 2000 % Change
Average Balances
Loans
Commercial $ 2,971,530 $ 2,690,750 10
Residential first mortgage 1,371,504 1,226,347 12
Real estate mortgage 1,569,050 1,298,368 21
Real estate construction 485,394 403,868 20
Installment 73,472 64,199 14
Total relationship loans 6,470,950 5,683,532 14
Syndicated non-relationship 136,279 484,937 (72)
Total loans $ 6,607,229 $ 6,168,469 7
Securities $ 1,677,737 $ 1,383,686 21
Interest-earning assets 8,348,930 7,598,986 10
Assets 9,158,935 8,316,702 10
Core deposits 5,405,764 4,865,363 11
Deposits 6,903,606 6,153,048 12
Shareholders' equity 802,640 650,464 23
Noninterest income
Trust and investment
fee revenue $ 43,348 $ 34,810 25
Cash management and deposit
transaction fees 22,199 17,194 29
International services 11,155 11,024 1
Bank owned life insurance 2,135 1,924 11
Other 13,875 12,643 10
Subtotal - core 92,712 77,595 19
Gain (loss) on sale of loans
and assets / debt repurchase 1,293 (77) N/M
Gain on sale of securities 2,432 2,037 19
Total $ 96,437 $ 79,555 21
Noninterest expense
Salaries and other
employee benefits $ 127,961 $ 120,944 6
All Other
Professional 18,325 16,738 9
Net occupancy of premises 19,406 17,783 9
Information services 12,028 10,365 16
Marketing and advertising 8,272 8,827 (6)
Depreciation 10,260 9,484 8
Office services 6,793 7,144 (5)
Amortization of goodwill 9,647 8,190 18
Amortization of core
deposit intangibles 4,214 4,039 4
Equipment 1,596 1,739 (8)
Other operating 14,443 13,890 4
Total all other 104,984 98,199 7
Total $ 232,945 $ 219,143 6
Selected Ratios
For the Period
Return on average assets 1.57% 1.58% (1)
Return on average
shareholders' equity 17.89 20.25 (12)
Net interest margin 5.30 5.46 (3)
Efficiency ratio 54.58 56.19 (3)
Dividend payout ratio 24.73 24.88 (1)
Cash return on average assets 1.78 1.79 (1)
Cash return on average
shareholders' equity 25.60 30.09 (15)
Cash efficiency ratio 51.34 53.06 (3)
Period End
Tier 1 risk-based capital ratio 9.06 7.85 15
Total risk-based capital ratio 13.93 10.88 28
Tier 1 leverage ratio 7.17 6.41 12
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