City National Corporation Reports Net Income of $48.7 Million and EPS of $0.94 for 2002 Third Quarter; Third-Quarter Net Income Increases 20 Percent On A Comparable Basis.Business Editors LOS LOS Length of stay, see there ANGELES--(BUSINESS WIRE)--Oct. 16, 2002 For First Time Deposits Exceed $9 Billion, Loans Approach $8 Billion, and 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 Exceed $19 Billion City National Corporation (NYSE NYSE See: New York Stock Exchange : CYN CYN Canyon ), parent company of wholly owned City National Bank, today reported record third-quarter 2002 net income of $48.7 million, or $0.94 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, compared with reported net income of $37.5 million, or $0.75 per share, for the third quarter of 2001 and $45.8 million, or $0.88 per share, for the second quarter of 2002. The company's third-quarter 2002 net income of $48.7 million was up 20 percent from $40.7 million a year earlier, this latter amount having been adjusted to exclude the amortization of goodwill from the prior reported period to reflect the new accounting standards for goodwill ("New GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "). As a result, net income per diluted common share of $0.94 rose 15 percent from $0.82 in the third quarter a year ago on a comparable basis. Results for 2002 include the operations of Civic BanCorp ("Civic") from February February: see month. 28, 2002, the date that the acquisition was completed. Third-quarter 2002 net income included, as a loss on the sale of loans and assets, approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $3.8 million, or $0.04 per share after tax, in realized and unrealized write downs on a previously designated available-for-sale media and telecommunication telecommunication Communication between parties at a distance from one another. Modern telecommunication systems—capable of transmitting telephone, fax, data, radio, or television signals—can transmit large volumes of information over long distances. loan portfolio. During the third quarter of 2002, two loans with total commitments of $18.2 million were sold out of the original $69.2 million in commitments on seven loans, leaving five media and telecommunication loans with commitments of $48.3 million in other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. at September September: see month. 30, 2002. The quarter also included approximately $4.6 million, or $0.09 a share, in income tax benefits -- $3.0 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the first-half-of-the-year impact from the recently completed conversion of the company's former regulated investment company Regulated investment company An investment company allowed to pass capital gains, dividends, and interest earned on fund investments directly to its shareholders so that it is taxed only at the personal level, and double taxation is avoided. to a real estate investment trust and $1.6 million from a change in state tax law concerning the tax treatment of loan loss reserves. For the first nine months of 2002, City National Corporation achieved record net income of $138.7 million, or $2.69 per diluted common share, compared with reported net income of $107.4 million, or $2.18 per share for the first nine months of 2001. Net income for the first nine months of 2002 was up 18 percent from $117.1 million for the first nine months of 2001, the latter amount adjusted to reflect New GAAP. Accordingly, net income per diluted common share increased 13 percent from $2.38 in the first nine months of 2001 on a comparable basis. "City National's 33rd consecutive quarter of year-over-year net income growth and continuing strong year-over-year growth in loans, deposits, investment assets and clients reflect our position, potential and effectiveness as California's Premier Private and Business Bank," 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. "We achieved this 20 percent growth in net income while adding to our allowance for credit losses." As a result of New GAAP, the difference between cash and GAAP performance has diminished di·min·ish v. di·min·ished, di·min·ish·ing, di·min·ish·es v.tr. 1. a. To make smaller or less or to cause to appear so. b. , but cash results continue to be reported to be spoken of; to be mentioned, whether favorably or unfavorably. See also: Report on the attached schedules. RETURN ON ASSETS/RETURN ON EQUITY The company's return on average assets for the third quarter of 2002 was 1.76 percent, compared with, on an adjusted basis, 1.71 percent for the third quarter of 2001 and 1.68 percent for the second quarter of 2002. 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 17.65 percent, compared with, on an adjusted basis, 19.11 percent for the prior-year third quarter and 17.53 percent for the second quarter of 2002. For the first nine months of 2002, the return on average assets was 1.72 percent, and the return on average shareholders' equity was 18.01 percent compared with, on an adjusted basis, 1.71 percent and 19.50 percent for the first nine months of 2001. The adjustment makes the 2001 data comparable with New GAAP. The lower return on average shareholders' equity in the current period compared with a year ago is due primarily to a higher level of shareholders' equity from increased unrealized gains Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. on available-for-sale securities and cash flow hedges A cash flow hedge is a hedge of the exposure to the variability of cash flow that
A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. . ASSETS Total average assets reached $11.0 billion for the third quarter of 2002, an increase of 16 percent over $9.4 billion for the third quarter of 2001 and essentially unchanged over the $10.9 billion in average assets for the second quarter of 2002. Total assets at September 30, 2002 were $11.3 billion, compared with $9.8 billion at September 30, 2001 and $11.0 billion at June June: see month. 30, 2002. Total average interest-earning assets were $10.0 billion for the third quarter of 2002, an increase of 16 percent over the $8.6 billion in average interest-earning assets for the third quarter of 2001 and 1 percent under the $10.1 billion in average interest-earning assets for the second quarter of 2002. LOANS Average loans for the third quarter of 2002 rose to $8.0 billion, an increase of 18 percent over the third quarter of 2001, reflecting the acquisition of Civic and continuing internally-generated loan growth. Third-quarter average loans increased slightly over the second quarter of 2002, reflecting in part, the impact of transferring seven media and telecommunication credits to available-for-sale at the end of the second quarter. Compared with the prior-year quarter, commercial loans rose 17 percent to $3.6 billion from $3.1 billion. Residential first mortgage loans rose 17 percent to $1.7 billion from $1.5 billion. Real estate mortgage loans rose 19 percent to $1.9 billion from $1.6 billion, and real estate construction loans rose 21 percent to $0.7 billion from $0.5 billion. Average loans for the first nine months of 2002 increased 18 percent to $7.8 billion from $6.6 billion for the same period last year. Commercial loans rose 15 percent to $3.6 billion from $3.1 billion. Residential first mortgage loans rose 24 percent to $1.7 billion from $1.4 billion. Real estate mortgage loans rose 15 percent to $1.8 billion from $1.6 billion and real estate construction loans rose 29 percent to $0.6 billion from $0.5 billion. Total loans at September 30, 2002 reached $8.0 billion, compared with $6.9 billion at September 30, 2001, and $7.9 billion at June 30, 2002, increases of 16 percent and 1 percent, respectively. The company's September 30, 2002 media and telecommunication loan portfolio, excluding the available-for-sale loans which are carried in other assets, contains 23 loans with commitment and outstanding balances of $134.1 million and $92.6 million, respectively, or just slightly more than 1 percent of the loan portfolio. All but one of these loans are syndicated. Syndicated non-relationship loans were $48.0 million, approximately one-half of 1 percent of the loan portfolio, at September 30, 2002, compared with $93.4 million at September 30, 2001 and $47.5 million at June 30, 2002. Five media and telecommunication loans with commitment and outstanding balances of $22.2 million and $16.0 million, respectively, as of September 30, 2002 are included among these non-relationship loans and also in the total media and telecommunication loan portfolio discussed above. Management has revised its forecast and currently expects that average loan growth for 2002 will be in the range of 15 percent to 17 percent. DEPOSITS Average deposits during the third quarter of 2002 were $8.8 billion, an increase of 26 percent over the third quarter of 2001 and 3 percent over the second quarter of 2002. During the first nine months of 2002, average deposits increased 22 percent to $8.4 billion, compared with $6.9 billion for the first nine months of 2001. During the third quarter of 2002, average core deposits, which provide a source of low-cost funding, rose to $7.6 billion, an increase of 36 percent over the $5.6 billion in the third quarter of 2001 and 5 percent higher than the $7.2 billion for the second quarter of 2002. Average core deposits represented 86 percent of the total average deposit base for the third quarter, up from 80 percent for the prior-year quarter and up from 85 percent for the second quarter of 2002. For the first nine months of 2002, average core deposits were $7.1 billion, up 32 percent from $5.4 billion for the first nine months of 2001. New clients, the acquisition of Civic, and higher existing client balances maintained as deposits to pay for services, contributed to the growth of deposits. For the first time, deposits exceeded $9 billion, totaling $9.1 billion at September 30, 2002, compared with $7.4 billion at September 30, 2001 and $8.8 billion at June 30, 2002, increases of 23 percent and 4 percent, respectively. Management has revised its forecast and currently expects average year-over-year deposit growth to be in the range of 18 percent to 20 percent for 2002. NET INTEREST INCOME Fully taxable-equivalent net interest income for the third quarter of 2002 was $135.2 million, an increase of 18 percent over $114.7 million for the third quarter of 2001. Third-quarter net interest income was 1 percent higher than the $134.3 million recorded for the second quarter of 2002. Fully taxable-equivalent net interest income for the first nine months of 2002 was $394.9 million, an increase of 19 percent over $331.2 million for the first nine months of 2001. Interest income recovered on nonaccrual and charged-off loans included above was $0.4 million for the third quarter of 2002, compared with $1.4 million for the third quarter of 2001 and $0.6 million for the second quarter of 2002. Interest recovered in the first nine months of 2002 was $1.4 million compared with $3.6 million for the first nine months of 2001. As part of the company's asset liability management strategy, its "plain vanilla Refers to the bare minimum of functions that are known to be available in an application or system. Contrast with bells and whistles. " 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. hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. loans, deposits and borrowings added $8.2 million to net interest income in the third quarter of 2002 compared with $5.4 million in the third quarter of 2001 and $8.5 million for the second quarter of 2002. This included $3.7 million, $1.5 million and $3.7 million for the third quarter of 2002 and 2001 and the second quarter of 2002, respectively, for interest rate swaps qualifying as fair value hedges. For the first nine months of 2002, interest rate swaps added $24.6 million to net interest income, compared with $8.5 million for the first nine months of 2001. These amounts include $10.6 million and $3.9 million, respectively, for interest swaps qualifying as fair value hedges. Income from swaps qualifying as cash flow hedges of loans expected to be recorded in net interest income within the next 12 months is $8.1 million. The fully taxable-equivalent net interest margin for the third quarter of 2002 was 5.35 percent, compared with 5.28 percent for the third quarter of 2001 and 5.35 percent for the second quarter of 2002. The net interest margin for the first nine months of 2002 was 5.35 percent compared with 5.30 percent for the first nine months of 2001. The increases over the same periods last year are primarily due to this year's more stable interest rate environment. The Bank's prime rate was 4.75 percent as of September 30, 2002, compared with 6.00 percent a year earlier and 4.75 percent at June 30, 2002. Management continues to expect the net interest margin for 2002 will be slightly higher than the net interest margin of 5.26 percent reported for 2001. NONINTEREST INCOME Core noninterest income increased 16 percent to $36.7 million for the third quarter of 2002, compared with $31.7 million for the third quarter of 2001, and decreased 1 percent from the $37.2 million for the second quarter of 2002. For the first nine months of 2002, core noninterest income increased 16 percent to $107.5 million compared with $92.7 million for the first nine months of 2001. Assets under administration at September 30, 2002 totaled $19.1 billion, including $7.0 billion under management, compared with $18.3 billion and $7.2 billion, respectively, at September 30, 2001, and $18.3 billion and $6.9 billion, respectively, at June 30, 2002. The quarter-over-prior-year quarter increase in assets under administration is due to continued strong new sales. Trust and investment fee revenues for the third quarter and first nine months of 2002 were higher compared with the prior-year periods also due to new sales, while revenues were slightly down from the second quarter due to declining market conditions. Cash management and deposit transaction fees for the third quarter and first nine months of 2002 increased over the same periods last year as the result of strong growth in deposits, higher sales of online cash management products, and the impact on fees of 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. Cash management and deposit transaction fees for the third quarter of 2002 were slightly lower than the preceding second quarter. Increases quarter-over-prior-year quarter in international services and other income were partially attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to additional entertainment and middle-market The term middle-market may refer to either a type of newspaper or a type of company. A middle-market newspaper is one that attempts to cater to readers who want some entertainment value from their newspaper as well as adequate serious coverage of significant news commercial international business and higher participating mortgage loan income. Gains (losses) on the sale of loans, 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 for the third quarter of 2002 was a $2.6 million loss compared with a $0.6 million gain for the same period last year. The loss recognized for the third quarter of 2002 included approximately $3.8 million related to the write down on seven media and telecommunication loans classified as available-for-sale. For the first nine months of 2002, $1.3 million in net gains, including $2.0 million and $1.2 million gain on the sale of ORE and bank property during the first and second quarters of 2002, respectively, were recognized compared with $3.7 million in gains for the first nine months of 2001. Noninterest income for the third quarter and first nine months of 2002 was 21 percent and 22 percent of total revenues, respectively, compared with 23 percent for both the third quarter and first nine months of 2001. Management continues to expect growth in noninterest income to range from 7 percent to 10 percent for 2002. Last year, 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:
NONINTEREST EXPENSE After excluding amortization of goodwill from prior-year reported periods, noninterest expense of $82.4 million for the third quarter of 2002 was up 11 percent from $74.1 million for the third quarter of 2001 and down 1 percent from $83.0 million for the second quarter of 2002. The increase over the prior-year quarter was primarily the result of the company's growth, including the acquisition of Civic, and costs associated with additional colleagues. Noninterest expense for the first nine months of 2002 increased 9 percent to $244.1 million compared with $223.3 million for the first nine months of 2001 on a comparable basis. The company's cash efficiency ratio for the third quarter of 2002 was 47.49 percent compared with 49.49 percent for the third quarter of 2001 and 46.76 percent for the second quarter of 2002. For the first nine months of 2002, the cash efficiency ratio was 47.39 percent compared with 51.34 percent for the first nine months of 2001. The improvement over the prior year was driven by both increased revenues and the company's ongoing efforts to improve efficiency and productivity. Excluding the amortization of goodwill in 2001, management continues to anticipate that 2002 noninterest expense will increase 7 percent to 10 percent over the prior year, with the acquisition of Civic accounting for a significant amount of the increase. INCOME TAXES The effective tax rate for the first nine months of 2002 was 30.3 percent, which included $4.6 million in income tax benefits in this quarter -- $3.0 million relating to the first-half-of-the-year impact from the recently completed conversion of the company's former regulated investment company to a real estate investment trust and $1.6 million from a change in state tax law concerning the tax treatment of loan loss reserves. These items contributed to an effective tax rate for the third quarter of 22.5 percent. These rates compare with as reported rates of 33.2 percent for the third quarter and 33.1 percent for the first nine months of 2001. The effective tax rate for the second quarter of 2002 was 33.1 percent. The lower effective tax rates in 2002 also reflect the realization (specification) realization - A UML semantic relationship between a classifier that specifies a contract and another classifier that guarantees to carry it out. [Handout by Mr. David Gillibrand]. of a capital loss resulting from the issuance and subsequent sale of an additional series of preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. by one of the company's real estate investment trust subsidiaries. Due to the third-quarter factors discussed above, management has revised its forecast and currently anticipates the company's effective tax rate for 2002 will be within a range of 30 percent to 32 percent. CREDIT QUALITY Net loan charge-offs were $19.0 million and $6.6 million for the third quarters of 2002 and 2001, respectively, and $16.0 million for the second quarter of 2002. Third-quarter charge-offs included $10.3 million, including an $8.5 million previously identified potential problem commitment, relating to one private banking client, and $4.5 million relating to two relationship syndicated credits, one of which was media and telecommunication related. For the first nine months of 2002 and 2001, net loan charge-offs were $42.0 million and $22.2 million, respectively. Charge-offs do not contain any concentration within a specific industry sector. As an 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. percentage of average loans, net charge-offs were 0.95 percent, 0.39 percent and 0.81 percent for the third quarters of 2002 and 2001 and the second quarter of 2002, respectively. Year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. net charge-offs were 0.72 percent compared to 0.45 percent a year ago as an annualized percentage of average loans. 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 $50.6 million, or 0.64 percent of total loans and ORE, at September 30, 2002, compared with $40.1 million, or 0.59 percent, at September 30, 2001 and $64.9 million, or 0.83 percent, at June 30, 2002 and do not contain any concentration of credits within a specific industry sector. Total syndicated non-relationship loans on nonaccrual status consisted of three loans totaling $6.2 million at September 30, 2002 and $6.4 million at June 30, 2002. The company recorded a provision for credit losses of $20.5 million and $49.5 million for the third quarter and first nine months of 2002, respectively, compared with $10.0 million and $24.0 million for the same periods in 2001. The provision for credit losses in the second quarter of 2002 was $18.0 million. The provision for credit losses this quarter primarily reflects management's ongoing assessment of the credit quality of the portfolio, including changes in the media and telecommunication sectors, and the general economic environment during this period. Additional factors affecting the provision include net loan charge-offs and nonaccrual loans and growth in the portfolio. The allowance for credit losses at September 30, 2002 totaled $159.2 million, or 2.00 percent of outstanding loans. This compares with an allowance of $137.2 million, or 2.00 percent at September 30, 2001 and an allowance of $157.6 million, or 2.01 percent at June 30, 2002. The allowance for credit losses as a percentage of nonaccrual loans was 317 percent at September 30, 2002, compared with 342 percent at September 30, 2001 and 245 percent at June 30, 2002. Management believes the allowance for credit losses is adequate to cover risks in the portfolio, including any unfunded commitments at September 30, 2002. The provision for credit losses to be taken in 2002 will reflect management's assessment of the above factors, as well as changes in the economic environment during this period. Given the current economic environment, management expects nonaccrual loans will increase from current levels. Based on its assessment of credit quality indicators, management has revised its forecast and currently anticipates that a provision for credit losses for all of 2002 could be within the $65.0 million to $75.0 million range. OUTLOOK Management has revised its forecast and currently expects net income per diluted common share for 2002 will be approximately 8 percent to 10 percent higher than New GAAP net income per diluted common share of $3.22 for 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, 2002 were 14.61 percent and 10.16 percent, compared with the minimum "well-capitalized" capital ratios of 10 percent and 6 percent, respectively. The company's Tier 1 leverage ratio of 7.88 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, 2002 were 14.24 percent, 9.74 percent and 7.44 percent, respectively. The total risk-based capital ratio benefited from the issuance of $6.7 million in the third quarter of 2002 of 8.5 percent preferred stock by real estate investment trust subsidiaries of the bank. The stock qualifies as Tier 1 capital Tier 1 Capital A term used to describe the capital adequacy of a bank. Tier I capital is core capital, this includes equity capital and disclosed reserves. Notes: Equity capital includes instruments that can't be redeemed at the option of the holder. . STOCK REPURCHASE Stock repurchase A firm's repurchase of outstanding shares of its common stock. Under the October October: see month. 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 1 million shares, 494,000 shares have been repurchased at an average price of $37.49 per share, including 145,000 shares at an average price of $45.62 repurchased during the third quarter of 2002. 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. There were 112,338 treasury shares at September 30, 2002. ABOUT CITY NATIONAL City National Corporation (NYSE: CYN) 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 $11.3 billion in total assets. Its 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 the second largest independent bank headquartered 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). . As California's Premier Private and Business Bank(SM), City National provides banking, investment and trust services through 54 offices, including 11 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, and 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 . The company has more than $19 billion in investment and trust assets under management or administration. For more information about City National, visit the company's Web site at cnb.com http://www.cnb.com/. 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 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) economic uncertainty created by increasing unrest Unrest is a sociological phenomenon, for instance:
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. on our specific business activities and profitability. Weak or a decline in capital and consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. , and related recessionary trends 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 Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the quarter-ended June 30, 2002, 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,
2002 2001 % Change
Assets
Cash and due from banks $480,884 $418,830 15
Federal funds sold 268,000 311,500 (14)
Securities 2,046,020 1,797,898 14
Loans (net of allowance for credit
losses of $159,173 and $137,239) 7,807,628 6,713,743 16
Other assets 671,235 544,103 23
Total assets $11,273,767 $9,786,074 15
Liabilities and Shareholders'
Equity
Noninterest-bearing deposits $4,200,997 $3,275,183 28
Interest-bearing deposits 4,925,725 4,125,169 19
Total deposits 9,126,722 7,400,352 23
Federal funds purchased and
securities sold under
repurchase agreements 231,389 149,701 55
Other short-term borrowed funds 294,125 785,125 (63)
Subordinated debt 301,917 274,493 10
Other long-term debt 68,897 194,995 (65)
Other liabilities 124,862 106,003 18
Total liabilities 10,147,912 8,910,669 14
Shareholders' equity 1,125,855 875,405 29
Total liabilities and
shareholders' equity $11,273,767 $9,786,074 15
Book value per share $22.44 $18.21 23
Number of shares at period end 50,163,305 48,068,566 4
CONSOLIDATED STATEMENT OF INCOME (unaudited)
(Dollars in thousands, except per share amount)
For the three months
ended September 30,
2002 2001 % Change
Interest income $154,616 $156,516 (1)
Interest expense (23,092) (45,387) (49)
Net interest income 131,524 111,129 18
Provision for credit losses (20,500) (10,000) 105
Net interest income after
provision for credit losses 111,024 101,129 10
Noninterest income 34,178 32,282 6
Noninterest expense (82,372) (77,329) 7
Income before taxes 62,830 56,082 12
Income taxes (14,145) (18,598) (24)
Net income 48,685 37,484 30
Amortization of goodwill -- 3,220 (100)
Net income -- new GAAP $48,685 $40,704 20
Net income per share, basic $0.97 $0.78 24
Net income per share, diluted $0.94 $0.75 25
Net income -- new GAAP per share,
diluted $0.94 $0.82 15
Dividends paid per share $0.20 $0.19 5
Cash net income (1) $49,831 $41,439 20
Cash net income per share, basic $0.99 $0.86 15
Cash net income per share, diluted $0.96 $0.83 16
Shares used to compute per share
net income, basic 50,107,163 48,015,739
Shares used to compute per share
net income, diluted 51,898,897 49,803,704
For the nine months
ended September 30,
2002 2001 % Change
Interest income $458,485 $477,198 (4)
Interest expense (74,692) (156,103) (52)
Net interest income 383,793 321,095 20
Provision for credit losses (49,500) (24,000) 106
Net interest income after provision
for credit losses 334,293 297,095 13
Noninterest income 108,859 96,437 13
Noninterest expense (244,104) (232,945) 5
Income before taxes 199,048 160,587 24
Income taxes (60,367) (53,168) 14
Net income 138,681 107,419 29
Amortization of goodwill -- 9,647 (100)
Net income -- new GAAP $138,681 $117,066 18
Net income per share, basic $2.80 $2.25 24
Net income per share, diluted $2.69 $2.18 23
Net income -- new GAAP per share,
diluted $2.69 $2.38 13
Dividends paid per share $0.59 $0.56 5
Cash net income (1) $141,898 $119,271 19
Cash net income per share, basic $2.86 $2.49 15
Cash net income per share, diluted $2.75 $2.42 14
Shares used to compute per share
net income, basic 49,586,859 47,822,393
Shares used to compute per share
net income, diluted 51,594,818 49,285,704
(1) Cash results exclude the after-tax amortization of core
deposit intangibles and goodwill where applicable.
CITY NATIONAL CORPORATION
SELECTED FINANCIAL INFORMATION (unaudited)
(Dollars in thousands)
Period end September 30,
2002 2001 % Change
Loans
Commercial $3,572,267 $3,045,448 17
Residential first mortgage 1,746,649 1,528,505 14
Real estate mortgage 1,910,277 1,608,086 19
Real estate construction 661,698 596,081 11
Installment 75,910 72,862 4
Total loans $7,966,801 $6,850,982 16
Deposits
Noninterest-bearing $4,200,997 $3,275,183 28
Interest-bearing, core 3,826,919 2,679,780 43
Total core deposits 8,027,916 5,954,963 35
Time deposits -- $100,000
and over 1,098,806 1,445,389 (24)
Total deposits $9,126,722 $7,400,352 23
Credit Quality
Nonaccrual loans and ORE
Nonaccrual loans $50,173 $40,115 25
ORE 460 10 N/M
Total nonaccrual loans and ORE $50,633 $40,125 26
Total nonaccrual loans and ORE
to total loans and ORE 0.64 0.59 8
Loans past due 90 days or more
on accrual status $8,906 $3,462 157
For the three months ended
September 30,
Allowance for Credit Losses 2002 2001 % Change
Beginning balance $157,647 $133,883 18
Additions from acquisition -- -- --
Provision for credit losses 20,500 10,000 105
Charge-offs (20,268) (8,509) 138
Recoveries 1,294 1,865 (31)
Net charge-offs (18,974) (6,644) 186
Ending Balance $159,173 $137,239 16
Total net charge-offs to average
loans (annualized) (0.95) (0.39) 144
For the nine months ended
September 30,
Allowance for Credit Losses 2002 2001 % Change
Beginning balance $142,862 $135,435 5
Additions from acquisition 8,787 -- N/M
Provision for credit losses 49,500 24,000 106
Charge-offs (47,425) (31,431) 51
Recoveries 5,449 9,235 (41)
Net charge-offs (41,976) (22,196) 89
Ending Balance $159,173 $137,239 16
Total net charge-offs to average
loans (annualized) (0.72) (0.45) 60
Allowance for credit losses to total
loans 2.00 2.00 --
Allowance for credit losses to
nonaccrual loans 317.25 342.11 (7)
CITY NATIONAL CORPORATION
SELECTED FINANCIAL INFORMATION (unaudited)
(Dollars in thousands)
For the three months
ended September 30,
2002 2001 % Change
Average Balances
Loans
Commercial $3,598,795 $3,074,506 17
Residential first mortgage 1,733,693 1,482,327 17
Real estate mortgage 1,900,612 1,591,224 19
Real estate construction 651,174 539,409 21
Installment 73,984 72,509 2
Total loans $7,958,258 $6,759,975 18
Securities $1,936,582 $1,782,906 9
Interest-earning assets 10,015,119 8,616,506 16
Assets 10,964,142 9,419,018 16
Core deposits 7,565,699 5,570,380 36
Deposits 8,772,826 6,947,324 26
Shareholders' equity 1,094,381 844,931 30
Noninterest income
Trust and investment fee revenue $15,287 $14,896 3
Cash management and deposit
transaction fees 9,929 8,068 23
International services 4,747 3,756 26
Bank owned life insurance 737 714 3
Other 6,028 4,287 41
Subtotal -- core 36,728 31,721 16
Gain (loss) on sale of loans
and assets/debt repurchase (3,756) (355) 958
Gain on sale of securities 1,206 916 32
Total $34,178 $32,282 6
Noninterest expense
Salaries and employee benefits $49,109 $42,476 16
All Other
Net occupancy of premises 6,837 6,434 6
Professional 5,418 6,203 (13)
Information services 4,200 4,111 2
Depreciation 3,268 3,510 (7)
Marketing and advertising 3,259 2,375 37
Office services 2,231 2,159 3
Amortization of core deposit
intangibles 1,976 1,405 41
Amortization of goodwill -- 3,220 (100)
Acquisition integration -- -- --
Equipment 599 497 21
Other operating 5,475 4,939 11
Total all other 33,263 34,853 (5)
Total 82,372 77,329 7
Less amortization of goodwill -- (3,220) (100)
Adjusted total $82,372 $74,109 11
Selected Ratios
For the Period
Return on average assets -- new
GAAP 1.76 % 1.71 % 3
Return on average shareholders'
equity -- new GAAP 17.65 19.11 (8)
Return on average assets 1.76 1.58 11
Return on average shareholders'
equity 17.65 17.60 --
Net interest margin 5.35 5.28 1
Efficiency ratio -- new GAAP 48.65 50.44 (4)
Efficiency ratio 48.65 52.64 (8)
Dividend payout ratio 20.03 23.68 (15)
Cash return on average assets 1.84 1.78 3
Cash return on average
shareholders' equity 23.35 25.09 (7)
Cash efficiency ratio 47.49 49.49 (4)
For the nine months
ended September 30,
2002 2001 % Change
Average Balances
Loans
Commercial $3,573,657 $3,107,809 15
Residential first mortgage 1,695,501 1,371,504 24
Real estate mortgage 1,803,924 1,569,050 15
Real estate construction 628,239 485,394 29
Installment 71,382 73,472 (3)
Total loans $7,772,703 $6,607,229 18
Securities $1,963,666 $1,677,737 17
Interest-earning assets 9,869,411 8,348,930 18
Assets 10,749,782 9,158,935 17
Core deposits 7,138,607 5,405,764 32
Deposits 8,422,254 6,903,606 22
Shareholders' equity 1,029,611 802,640 28
Noninterest income
Trust and investment fee revenue $45,297 $43,348 4
Cash management and deposit
transaction fees 30,323 22,199 37
International services 13,257 11,155 19
Bank owned life insurance 2,129 2,135 --
Other 16,532 13,875 19
Subtotal -- core 107,538 92,712 16
Gain (loss) on sale of loans
and assets/debt repurchase (757) 1,293 (159)
Gain on sale of securities 2,078 2,432 (15)
Total $108,859 $96,437 13
Noninterest expense
Salaries and employee benefits $146,221 $127,961 14
All Other
Net occupancy of premises 19,512 19,406 1
Professional 15,829 18,325 (14)
Information services 13,221 12,028 10
Depreciation 9,996 10,260 (3)
Marketing and advertising 9,358 8,272 13
Office services 7,060 6,793 4
Amortization of core deposit
intangibles 5,547 4,214 32
Amortization of goodwill -- 9,647 (100)
Acquisition integration 1,300 -- N/M
Equipment 1,870 1,596 17
Other operating 14,190 14,443 (2)
Total all other 97,883 104,984 (7)
Total 244,104 232,945 5
Less amortization of goodwill -- (9,647) (100)
Adjusted total $244,104 $223,298 9
Selected Ratios
For the Period
Return on average assets -- new GAAP 1.72 % 1.71 % 1
Return on average shareholders'
equity -- new GAAP 18.01 19.50 (8)
Return on average assets 1.72 1.57 10
Return on average shareholders'
equity 18.01 17.89 1
Net interest margin 5.35 5.30 1
Efficiency ratio -- new GAAP 48.49 52.32 (7)
Efficiency ratio 48.49 54.58 (11)
Dividend payout ratio 20.86 24.73 (16)
Cash return on average assets 1.80 1.78 1
Cash return on average
shareholders' equity 22.99 25.60 (10)
Cash efficiency ratio 47.39 51.34 (8)
Period End
Tier 1 risk-based capital ratio 10.16 9.06 12
Total risk-based capital ratio 14.61 13.93 5
Tier 1 leverage ratio 7.88 7.17 10
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