City National Corporation Reports Record Net Income of $45.8 Million and EPS of $0.88 for 2002 Second Quarter; Second-Quarter Net Income Increases 16 Percent On A Comparable Basis.Business Editors City National Corporation (NYSE NYSE See: New York Stock Exchange : CYN CYN Canyon ), parent company of wholly owned City National Bank, today reported record net income of $45.8 million for the second quarter of 2002, compared with reported net income of $36.3 million for the second quarter of 2001 and $44.2 million for the first quarter of 2002. 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 was $0.88, compared with $0.74 reported for the second quarter of 2001 and $0.87 for the first quarter of 2002. Results for 2002 include the operations of Civic BanCorp ("Civic") from February February: see month. 28, 2002, the date that the acquisition was completed, and the new accounting standards for goodwill ("New GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "). For the first half of 2002, City National Corporation achieved record net income of $90.0 million, compared with reported net income of $69.9 million for the first half of 2001. For the first half of 2002, net income per diluted common share was $1.75, compared with $1.43 per share reported in the first half of 2001. The company's second-quarter 2002 net income of $45.8 million was up 16 percent from $39.6 million a year earlier, this latter amount having been adjusted to exclude the amortization of goodwill from the prior reported period to reflect New GAAP. As a result, net income per diluted common share of $0.88 rose 10 percent from $0.80 in the second quarter a year ago on a comparable basis. Net income for the first half of 2002 of $90.0 million was up 18 percent from $76.4 million for the first half of 2001, the latter amount adjusted to reflect New GAAP. Accordingly, net income per diluted common share was $1.75, an increase of 12 percent from $1.56 in the first half of 2001 on a comparable basis. Cash net income, which in 2002 excludes only 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. , was $47.0 million, or $0.90 per diluted common share in the second quarter of 2002, compared with $40.3 million, or $0.82 per share, in the second quarter of 2001, and $45.1 million, or $0.89 per share in the first quarter of 2002. For the first half of 2002, cash net income was $92.1 million, or $1.79 per diluted common share, compared with $77.8 million, or $1.59 per share for the first half of 2001. "City National continued to report record quarterly net income growth backed by solid increases in our loan portfolio and particularly strong growth in deposits," 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 addition to completing the integration of Civic BanCorp and expanding our presence in 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 to about 10 percent of our assets in this quarter, we continued to attract new clients, control costs and build City National's capabilities as California's premier private and business bank." "We were able to post record results even while taking the prudent step of increasing our provision for credit losses, primarily to further reduce our declining exposure to syndicated 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. loans," Goldsmith added. Return on Assets/Return on Equity The company's return on average assets for the second quarter of 2002 was 1.68 percent, compared with, on an adjusted basis, 1.74 percent for the second quarter of 2001 and 1.73 percent for the first 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 17.53 percent, compared with, on an adjusted basis, 19.90 percent for the prior-year second quarter and 18.97 percent for the first quarter of 2002. For the first half of 2002, the return on average assets was 1.71 percent, and the return on average shareholders' equity was 18.21 percent compared with, on an adjusted basis, 1.71 percent and 19.71 percent for the first half 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 securities gains, retained net income, the shares issued for the Civic acquisition and from the exercise of stock options. On a cash basis (which in 2002 excludes only 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 was 1.76 percent and the return on average shareholders' equity was 23.05 percent for the second quarter of 2002, compared with 1.81 percent and 26.40 percent, respectively, for the second quarter of 2001 and 1.80 percent and 23.60 percent, respectively, for the first quarter of 2002. For the first half of 2002, the return on average assets was 1.78 percent and the return on average shareholders' equity was 23.23 percent, compared with 1.78 percent and 26.19 percent for the first half of 2001. Assets Total average assets reached $10.9 billion for the second quarter of 2002, an increase of 20 percent over $9.1 billion for the second quarter of 2001 and 6 percent over the $10.3 billion in average assets for the first quarter of 2002. Total assets at June June: see month. 30, 2002 were $11.0 billion, compared with $9.1 billion at June 30, 2001 and $11.2 billion at March 31, 2002. Total average interest-earning assets were $10.1 billion for the second quarter of 2002, an increase of 21 percent over the $8.3 billion in average interest-earning assets for the second quarter of 2001 and 6 percent over the $9.5 billion in average interest-earning assets for the first quarter of 2002. Loans Average loans for the second quarter of 2002 rose to $7.9 billion, an increase of 21 percent over the second quarter of 2001, reflecting the acquisition of Civic and continuing solid internally generated loan growth, albeit at a rate somewhat less than achieved in the first quarter of 2002. Compared with the prior-year quarter, commercial loans rose 20 percent to $3.7 billion from $3.1 billion. Residential first mortgage loans rose 28 percent to $1.7 billion from $1.3 billion. Real estate mortgage loans rose 12 percent to $1.8 billion from $1.6 billion and real estate construction loans rose 39 percent to $0.6 billion from $0.4 billion. Average loans increased 6 percent from the first quarter of 2002. Average loans for the first half of 2002 increased 18 percent to $7.7 billion from $6.5 billion for the same period last year. Commercial loans rose 14 percent to $3.6 billion from $3.1 billion. Residential first mortgage loans rose 27 percent to $1.7 billion from $1.3 billion. Real estate mortgage loans rose 13 percent to $1.8 billion from $1.6 billion and real estate construction loans rose 35 percent to $0.6 billion from $0.5 billion. Total loans at June 30, 2002 reached $7.9 billion, compared with $6.6 billion at June 30, 2001, and $7.8 billion at March 31, 2002, increases of 20 percent and 1 percent, respectively. During the quarter, the company decided to reduce its media and telecommunication exposure and identified for sale seven syndicated loans Syndicated Loan A very large loan in which a group of banks work together to provide funds for one borrower. There is usually one lead bank that takes a small percentage of the loan and syndicates the rest to other banks. Notes: Also known as a "syndicated bank facility. with individual commitment levels above $7.5 million. These loans totaled approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $60.0 million in outstanding balances and were transferred to assets available-for-sale. As of June 30, 2002, following the transfer of these loans to available-for-sale, the company's media and telecommunication portfolio contains 23 loans with commitment and outstanding balances of $138.3 million and $94.8 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 $47.5 million, less than 1 percent of the loan portfolio, at June 30, 2002, compared with $110.5 million at June 30, 2001 and $62.2 million at March 31, 2002. Five media and telecommunication loans with commitment and outstanding balances of $22.3 million and $12.9 million, respectively, as of June 30, 2002 are included among these non-relationship loans and in the total media and telecommunication loan portfolio discussed above. Management continues to expect that average loan growth for 2002 will be in the range of 11 percent to 15 percent. Deposits Average deposits during the second quarter of 2002 were $8.6 billion, an increase of 23 percent over the second quarter of 2001 and 8 percent over the first quarter of 2002. During the first half of 2002, average deposits increased 20 percent to $8.2 billion, compared with $6.9 billion for the first half of 2001. During the second quarter of 2002, average core deposits, which provide a stable source of low-cost funding, rose $1.7 billion to $7.2 billion, an increase of 31 percent over the $5.5 billion in the second quarter of 2001 and 10 percent higher than the $6.6 billion for the first quarter of 2002. Average core deposits represented 85 percent of the total average deposit base for the second quarter, up from 79 percent for the prior-year quarter and up from 83 percent for the first quarter of 2002. For the first half of 2002, average core deposits were $6.9 billion, up 30 percent from $5.3 billion for the first half of 2001. New clients, the acquisition of Civic, and a lower 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, contributed to the growth of deposits. Deposits totaled $8.8 billion at June 30, 2002, compared with $7.1 billion at June 30, 2001 and $8.7 billion at March 31, 2002, increases of 24 percent and 2 percent, respectively. Management has revised its forecast and currently expects average year-over-year deposit growth to be in the range of 14 percent to 16 percent for 2002. Net Interest Income Fully taxable-equivalent net interest income for the second quarter of 2002 was $134.3 million, an increase of 24 percent over $108.4 million for the second quarter of 2001. Second-quarter net interest income was 7 percent higher than the $125.4 million recorded for the first quarter of 2002. Fully taxable-equivalent net interest income for the first half of 2002 was $259.7 million, an increase of 20 percent over $216.5 million for the first half of 2001. Interest income recovered on nonaccrual and charged-off loans included above was $0.6 million for the second quarter of 2002, compared with $0.6 million for the second quarter of 2001 and $0.4 million for the first quarter of 2002. 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 $8.5 million to net interest income in the second quarter of 2002 compared with $3.1 million in the second quarter of 2001 and $7.9 million for the first quarter of 2002. This included $3.7 million, $1.5 million and $3.2 million for the second quarter of 2002 and 2001 and the first quarter of 2002, respectively, for interest rate swaps qualifying as fair value hedges. For the first half of 2002, interest rate swaps added $16.4 million to net interest income, compared with $4.1 million for the first half of 2001. These amounts include $6.9 million and $2.4 million, respectively, for interest swaps qualifying as fair value hedges. The fully taxable-equivalent net interest margin for the second quarter of 2002 was 5.35 percent, compared with 5.23 percent for the second quarter of 2001 and 5.34 percent for the first quarter of 2002. The net interest margin for the first half of 2002 was 5.35 percent compared with 5.32 percent for the first half 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 June 30, 2002, compared with 6.75 percent a year earlier and 4.75 percent at March 31, 2002. Management has revised its forecast and currently expects 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 18 percent to $37.2 million for the second quarter of 2002, compared with $31.5 million for the second quarter of 2001, and 11 percent over the $33.6 million for the first quarter of 2002. For the first half of 2002, core noninterest income increased 16 percent to $70.8 million compared with $61.0 million for the first half of 2001. Assets under administration at June 30, 2002 totaled $18.3 billion, including $6.9 billion under management, down slightly compared with $18.5 billion and $7.2 billion, respectively, at June 30, 2001, and $18.8 billion and $7.3 billion, respectively, at March 31, 2002. The quarter-over-quarter decrease in 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. was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk largely to a decline in money-market fund money-market fund, type of mutual fund that invests in high-yielding, short-term money-market instruments, such as U.S. government securities, commercial paper, and certificates of deposit. balances as some clients rebalanced asset allocations Asset Allocation The process of dividing a portfolio among major asset categories such as bonds, stocks or cash. The purpose of asset allocation is to reduce risk by diversifying the portfolio. of portfolios, extended maturities from money-market accounts to achieve higher yields, or maintained funds as bank deposits to pay for services. Trust and investment fee revenues for the second quarter and first half of 2002 were higher compared with the prior-year periods, primarily due to transaction volume. Cash management and deposit transaction fees for the second quarter and first half of 2002 increased over the same periods last year as the result of strong growth in deposits, including those added by the Civic acquisition, higher sales of online cash management products, and reductions in the earnings credit on analyzed deposit accounts resulting from lower interest rates. Cash management and deposit transaction fees for the second quarter of 2002 were slightly lower than the first quarter due to the absence of prior-year annual fees recognized in the first quarter. Increases in international services and other income were partially attributable 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 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. for debt and gains on the sale of securities for the second quarter of 2002 were $1.5 million. The total for the same period last year was $1.4 million, which included a $0.9 million gain on repurchase of debt. The first quarter of 2002 included $2.4 million in gains. During the second quarter of 2002, a $1.2 million gain was realized from the sale of a bank property. For the first half of 2002, $3.9 million in gains, including a $2.0 million gain on the sale of ORE during the first quarter, were realized compared with $3.2 million in gains for the first half of 2001. Noninterest income for both the second quarter and first half of 2002 was 23 percent of total revenues, compared with 24 percent and 23 percent, respectively, for the second quarter and first half 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 $83.0 million for the second quarter of 2002 was up 9 percent from $75.8 million for the second quarter of 2001 and 5 percent from $78.8 million for the first quarter of 2002. The increases were primarily the result of the company's growth, including the acquisition of Civic, and costs associated with additional colleagues. Noninterest expense for the first half of 2002 increased 8 percent to $161.7 million compared with $149.2 million for the first half of 2001 on a comparable basis. The company's cash efficiency ratio for the second quarter of 2002 improved to 46.76 percent from 52.60 percent for the second quarter of 2001 and 47.95 percent for the first quarter of 2002. The improvement over the prior year was driven by both increased revenues and the company's ongoing efforts to improve efficiency and productivity. For the first half of 2002, the cash efficiency ratio was 47.34 percent compared with 52.31 percent for the first half of 2001. 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 second quarter was 33.1 percent and 33.9 percent for the first half of 2002, compared with, as reported, 30.7 percent for the second quarter and 33.1 percent for the first half of 2001. The effective tax rate for the first quarter of 2002 was 34.8 percent. The higher effective tax rates in 2002 are partially due to the elimination of the tax benefit precipitated by the completion of the de-registration of the company's registered investment company, offset by 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 the company's real estate investment trust subsidiary. Management continues to anticipate the company's effective tax rate for 2002 will fall within a range of 32 percent to 34 percent. Credit Quality Net loan charge-offs were $16.0 million and $7.3 million for the second quarters of 2002 and 2001, respectively, and $7.0 million for the first quarter of 2002. For the first six months of 2002 and 2001, net loan charge-offs were $23.0 million and $15.6 million, respectively. 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 0.81 percent, 0.45 percent and 0.38 percent for the second quarters of 2002 and 2001 and the first quarter of 2002, respectively. Second-quarter loan charge-offs reflected $9.7 million for nine media and telecommunication syndicated loans, including the impact of the loans transferred to available-for-sale. 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 $64.9 million, or 0.83 percent of total loans and ORE, at June 30, 2002, compared with $38.3 million, or 0.58 percent, at June 30, 2001 and $50.6 million, or 0.65 percent, at March 31, 2002 and do not contain any concentration of credits within a specific industry sector. Of the $14.3 million increase from March 31, 2002, $12.7 million related to 5 loans which are either fully collateralized or have been written down to their current estimated recoverable values. Three syndicated non-relationship loans on nonaccrual status totaled $6.4 million at June 30, 2002 and $6.5 million at March 31, 2002. The company recorded a provision for credit losses of $18.0 million and $29.0 million for the second quarter and first half of 2002, respectively, compared with $6.5 million and $14.0 million for the same periods in 2001. The provision for credit losses in the first quarter of 2002 was $11.0 million. The provision for credit losses this quarter primarily reflects the levels of net loan charge-offs and nonaccrual loans. Additional factors affecting the provision include management's ongoing assessment of the credit quality of the portfolio as well as its growth and the economic environment during this period. The allowance for credit losses at June 30, 2002 totaled $157.6 million, or 2.01 percent of outstanding loans. This compares with an allowance of $133.9 million, or 2.04 percent at June 30, 2001 and an allowance of $155.7 million, or 2.01 percent at March 31, 2002. The allowance for credit losses as a percentage of nonaccrual loans was 245 percent at June 30, 2002, compared with 361 percent at June 30, 2001 and 310 percent at March 31, 2002. Management believes the allowance for credit losses is adequate to cover risks in the portfolio, including any unfunded commitments at June 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. Based on its current assessment, management anticipates that a provision for credit losses for all of 2002, including the amount required by its decision to reduce its media and telecommunication exposure could fall within the $40.0 million to $55.0 million range. Outlook Management continues to believe net income per diluted common share for 2002 will be approximately 8 percent to 11 percent higher than adjusted net income per diluted common share 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 June 30, 2002 were 14.24 percent and 9.74 percent, compared with the minimum "well-capitalized" capital ratios of 10 percent and 6 percent, respectively. The company's Tier 1 leverage ratio of 7.44 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 March 31, 2002 were 13.55 percent, 9.05 percent and 7.31 percent, respectively. The total risk-based capital ratio benefited from the issuance of $2.8 million of Series B preferred stock in the second quarter by a subsidiary 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, 348,700 shares have been repurchased at an average price of $34.10 per share. There were no shares repurchased during the second 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 have been reissued for acquisitions, upon the exercise of stock options, and for other general corporate purposes. There were no treasury shares at June 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 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 in 12 California counties. The company has approximately $18 billion in investment and trust assets under management or administration. 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 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. Decreased 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. 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 March 31, 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)
June 30,
2002 2001 % Change
Assets
Cash and due from banks $ 442,343 $ 441,665 --
Federal funds sold 165,000 10,000 N/M
Securities 1,988,817 1,681,233 18
Loans (net of allowance for credit
losses of $157,647 and $133,883) 7,696,883 6,433,487 20
Other assets 689,377 557,208 24
Total assets $10,982,420 $ 9,123,593 20
Liabilities and Shareholders' Equity
Noninterest-bearing deposits $ 3,973,435 $ 3,134,792 27
Interest-bearing deposits 4,823,732 3,945,842 22
Total deposits 8,797,167 7,080,634 24
Federal funds purchased and
securities sold under repurchase
agreements 110,665 261,849 (58)
Other short-term borrowed funds 421,125 653,125 (36)
Subordinated debt 282,043 118,939 137
Other long-term debt 169,144 94,255 79
Other liabilities 128,938 98,951 30
Total liabilities 9,909,082 8,307,753 19
Shareholders' equity 1,073,338 815,840 32
Total liabilities and
shareholders' equity $10,982,420 $ 9,123,593 20
Book value per share $ 21.41 $ 17.04 26
Number of shares at period end 50,122,921 47,888,923 5
CONSOLIDATED STATEMENT OF INCOME
(unaudited)
(Dollars in thousands, except per share amount)
For the three months ended
June 30,
2002 2001 % Change
Interest income $ 155,511 $ 156,490 (1)
Interest expense (24,937) (51,441) (52)
Net interest income 130,574 105,049 24
Provision for credit losses (18,000) (6,500) 177
Net interest income after provision
for credit losses 112,574 98,549 14
Noninterest income 38,738 32,894 18
Noninterest expense (82,959) (79,012) 5
Income before taxes 68,353 52,431 30
Income taxes (22,593) (16,087) 40
Net income 45,760 36,344 26
Amortization of goodwill -- 3,220 (100)
Net income -- new GAAP $ 45,760 $ 39,564 16
Net income -- new GAAP per share,
diluted $ 0.88 $ 0.80 10
Net income per share, basic $ 0.92 $ 0.76 21
Net income per share, diluted $ 0.88 $ 0.74 19
Dividends paid per share $ 0.20 $ 0.19 5
Cash net income $ 46,952 $ 40,300 17
Cash net income per share, basic $ 0.94 $ 0.84 12
Cash net income per share, diluted $ 0.90 $ 0.82 10
Shares used to compute per share
net income, basic 49,963,388 47,768,235
Shares used to compute per share
net income, diluted 52,082,511 49,218,635
For the six months ended
June 30,
2002 2001 % Change
Interest income $ 303,869 $ 320,682 (5)
Interest expense (51,600) (110,716) (53)
Net interest income 252,269 209,966 20
Provision for credit losses (29,000) (14,000) 107
Net interest income after provision
for credit losses 223,269 195,966 14
Noninterest income 74,681 64,155 16
Noninterest expense (161,732) (155,616) 4
Income before taxes 136,218 104,505 30
Income taxes (46,222) (34,570) 34
Net income 89,996 69,935 29
Amortization of goodwill -- 6,427 (100)
Net income -- new GAAP $ 89,996 $ 76,362 18
Net income -- new GAAP per share,
diluted $ 1.75 $ 1.56 12
Net income per share, basic $ 1.82 $ 1.47 24
Net income per share, diluted $ 1.75 $ 1.43 22
Dividends paid per share $ 0.39 $ 0.37 5
Cash net income $ 92,067 $ 77,832 18
Cash net income per share, basic $ 1.87 $ 1.63 15
Cash net income per share, diluted $ 1.79 $ 1.59 13
Shares used to compute per share
net income, basic 49,326,706 47,725,720
Shares used to compute per share
net income, diluted 51,442,779 49,026,705
CITY NATIONAL CORPORATION
SELECTED FINANCIAL INFORMATION
(unaudited)
(Dollars in thousands)
Period end June 30,
2002 2001 % Change
Loans
Commercial $ 3,552,800 $ 3,013,343 18
Residential first mortgage 1,730,589 1,407,621 23
Real estate mortgage 1,866,086 1,582,691 18
Real estate construction 635,218 490,146 30
Installment 69,837 73,569 (5)
Total loans $ 7,854,530 $ 6,567,370 20
Deposits
Noninterest-bearing $ 3,973,435 $ 3,134,792 27
Interest-bearing, core 3,530,798 2,587,181 36
Total core deposits 7,504,233 5,721,973 31
Time deposits -- $100,000 and over 1,292,934 1,358,661 (5)
Total deposits $ 8,797,167 $ 7,080,634 24
Credit Quality
Nonaccrual loans and ORE
Nonaccrual loans $ 64,432 $ 37,085 74
ORE 460 1,212 (62)
Total nonaccrual loans and ORE $ 64,892 $ 38,297 69
Total nonaccrual loans and ORE to
total loans and ORE 0.83 0.58 43
Loans past due 90 days or more
on accrual status $ 3,257 $ 13,107 (75)
Restructured loans on accrual
status $ -- $ 1,463 (100)
For the three months ended
June 30,
Allowance for Credit Losses 2002 2001 % Change
Beginning balance $ 155,657 $ 134,727 16
Additions from acquisition -- -- --
Provision for credit losses 18,000 6,500 177
Charge-offs (17,861) (10,838) 65
Recoveries 1,851 3,494 (47)
Net charge-offs (16,010) (7,344) 118
Ending Balance $ 157,647 $ 133,883 18
Total net charge-offs to average
loans (annualized) (0.81) (0.45) 80
Allowance for credit losses to
total loans
Allowance for credit losses to
nonaccrual loans
For the six months ended
June 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 29,000 14,000 107
Charge-offs (27,157) (22,922) 18
Recoveries 4,155 7,370 (44)
Net charge-offs (23,002) (15,552) 48
Ending Balance $ 157,647 $ 133,883 18
Total net charge-offs to average
loans (annualized) (0.60) (0.48) 25
Allowance for credit losses to
total loans 2.01 2.04 (1)
Allowance for credit losses to
nonaccrual loans 244.67 361.02 (32)
CITY NATIONAL CORPORATION
SELECTED FINANCIAL INFORMATION
(unaudited)
(Dollars in thousands)
For the three months ended
June 30,
Average Balances 2002 2001 % Change
Loans
Commercial $ 3,687,873 $ 3,082,786 20
Residential first mortgage 1,718,680 1,338,909 28
Real estate mortgage 1,791,314 1,594,040 12
Real estate construction 622,223 446,949 39
Installment 68,915 74,691 (8)
Total loans $ 7,889,005 $ 6,537,375 21
Securities $ 2,029,742 $ 1,690,786 20
Interest-earning assets 10,068,002 8,308,244 21
Assets 10,934,265 9,132,024 20
Core deposits 7,238,807 5,510,106 31
Deposits 8,551,230 6,975,066 23
Shareholders' equity 1,047,042 797,398 31
Noninterest income
Trust and investment fee revenue $ 15,736 $ 14,779 6
Cash management and deposit
transaction fees 10,025 7,583 32
International services 4,719 3,840 23
Bank owned life insurance 719 697 3
Other 6,035 4,565 32
Subtotal -- core 37,234 31,464 18
Gain on sale of loans and
assets/debt repurchase 1,320 891 48
Gain on sale of securities 184 539 (66)
Total $ 38,738 $ 32,894 18
Noninterest expense
Salaries and employee benefits $ 49,642 $ 42,711 16
All Other
Net occupancy of premises 6,495 6,628 (2)
Professional 5,182 6,358 (18)
Information services 4,661 4,088 14
Depreciation 3,336 3,413 (2)
Marketing and advertising 3,311 3,316 --
Office services 2,731 2,424 13
Amortization of core deposit
intangibles 2,056 1,405 46
Amortization of goodwill -- 3,220 (100)
Acquisition integration -- -- --
Equipment 789 603 31
Other operating 4,756 4,846 (2)
Total all other 33,317 36,301 (8)
Total 82,959 79,012 5
Less amortization of goodwill -- (3,220) (100)
Adjusted total $ 82,959 $ 75,792 9
Selected Ratios
For the Period
Return on average assets --
new GAAP 1.68 % 1.74 % (3)
Return on average shareholders'
equity -- new GAAP 17.53 19.90 (12)
Return on average assets 1.68 1.60 5
Return on average shareholders' equity 17.53 18.28 (4)
Net interest margin 5.35 5.23 2
Efficiency ratio -- new GAAP 47.95 53.59 (11)
Efficiency ratio 47.95 55.87 (14)
Dividend payout ratio 21.34 24.39 (13)
Cash return on average assets 1.76 1.81 (3)
Cash return on average shareholders'
equity 23.05 26.40 (13)
Cash efficiency ratio 46.76 52.60 (11)
Period End
Tier 1 risk-based capital ratio
Total risk-based capital ratio
Tier 1 leverage ratio
For the six months ended
June 30,
Average Balances 2002 2001 % Change
Loans
Commercial $ 3,560,880 $ 3,124,734 14
Residential first mortgage 1,676,088 1,315,175 27
Real estate mortgage 1,754,779 1,557,778 13
Real estate construction 616,582 457,939 35
Installment 70,059 73,961 (5)
Total loans $ 7,678,388 $ 6,529,587 18
Securities $ 1,977,433 $ 1,624,282 22
Interest-earning assets 9,795,351 8,212,922 19
Assets 10,640,826 9,026,738 18
Core deposits 6,921,521 5,322,092 30
Deposits 8,244,062 6,881,386 20
Shareholders' equity 996,690 781,146 28
Noninterest income
Trust and investment fee revenue $ 30,010 $ 28,452 5
Cash management and deposit
transaction fees 20,394 14,131 44
International services 8,510 7,399 15
Bank owned life insurance 1,392 1,421 (2)
Other 10,504 9,588 10
Subtotal -- core 70,810 60,991 16
Gain on sale of loans and
assets/debt repurchase 2,999 1,648 82
Gain on sale of securities 872 1,516 (42)
Total $ 74,681 $ 64,155 16
Noninterest expense
Salaries and employee benefits $ 97,112 $ 85,485 14
All Other
Net occupancy of premises 12,675 12,972 (2)
Professional 10,411 12,122 (14)
Information services 9,021 7,917 14
Depreciation 6,728 6,750 --
Marketing and advertising 6,099 5,897 3
Office services 4,829 4,634 4
Amortization of core deposit
intangibles 3,571 2,809 27
Amortization of goodwill -- 6,427 (100)
Acquisition integration 1,300 -- N/M
Equipment 1,271 1,099 16
Other operating 8,715 9,504 (8)
Total all other 64,620 70,131 (8)
Total 161,732 155,616 4
Less amortization of goodwill -- (6,427) (100)
Adjusted total $ 161,732 $ 149,189 8
Selected Ratios
For the Period
Return on average assets --
new GAAP 1.71 % 1.71 % --
Return on average shareholders'
equity -- new GAAP 18.21 19.71 (8)
Return on average assets 1.71 1.56 10
Return on average shareholders' equity 18.21 18.05 1
Net interest margin 5.35 5.32 1
Efficiency ratio -- new GAAP 47.95 53.31 (10)
Efficiency ratio 48.40 55.60 (13)
Dividend payout ratio 21.30 25.28 (16)
Cash return on average assets 1.78 1.78 --
Cash return on average shareholders'
equity 23.23 26.19 (11)
Cash efficiency ratio 47.34 52.31 (10)
Period End
Tier 1 risk-based capital ratio 9.74 8.76 11
Total risk-based capital ratio 14.24 11.64 22
Tier 1 leverage ratio 7.44 6.97 7
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