City National posts significant gains for fourth-quarter, full-year 1994.

BEVERLY HILLS, Calif.--(BUSINESS WIRE)--Jan. 18, 1995--City National Corp. (NYSE:CYN) achieved significantly improved operating results for the fourth-quarter and full-year 1994 over corresponding periods in 1993, benefiting from higher net interest income, substantially lower credit costs and improved noninterest expense levels.

Fourth-quarter 1994 net income of $9.9 million, or 21 cents per share, was 115 percent higher than the 1993 comparable period of $4.6 million, or 10 cents per share. For the year ended Dec. 31, 1994, City National posted net income of $37.2 million, or 81 cents per share, compared with the 1993 net loss of $6.9 million, or 17 cents per share.

In contrast with negative returns for 1993, the return on average assets improved to 1.3 percent for 1994, while the return on average equity was 11.9 percent.

"It was an exceptionally good year for City National, and these results show how well we have overcome a rough period and restored our financial health despite weak market conditions in Southern California," stated Bram Goldsmith, chairman and chief executive officer.

"Credit quality has been a priority, and as a result of the significant improvements, we were able to reduce the provision for credit losses from the high levels in 1993 and 1992. Expenses were also significantly reduced during 1994. We are confident that City National can sustain this positive momentum, provided that current economic indicators favorable to Southern California remain on target."

Full-year results for 1994 included the positive impact of gains of $4.2 million ($2.7 million net of tax) from the sale of the remaining Accelerated Asset Disposition Program (AADP) properties and $1.3 million ($0.9 million net of tax) on the sale of a leverage lease. These gains added 8 cents per share to net income for the year.

The 1993 loss was net of gains of $10.8 million ($7.1 million net of tax) from the sale of the company's discontinued data processing business and $6.4 million ($4.2 million net of tax) from the sale of other assets.

Net interest income on a fully taxable-equivalent basis rose 13.3 percent to $39.2 million in the fourth quarter of 1994, compared with $34.6 million in the prior-year quarter as the company benefited from the 250 basis point increase in prime since January 1994. Although average loan balances decreased in the current period, average securities balances were higher and the quarterly net interest margin also rose to 6.02 percent from 5.10 percent a year earlier.

For the full year 1994, fully taxable-equivalent net interest income was $144.5 million, compared with $129.1 million in 1993. This 11.9 percent increase resulted even though average earning assets were essentially the same in 1994 as in 1993. The 1994 margin rose to 5.59 percent vs. 4.97 percent for 1993.

The credit loss provision was positively impacted by the continuing improvement in credit quality, the higher proportion of lower-risk loans, and the reduced level of net loan charge-offs totaling $11.2 million for 1994, as compared with $54.1 million in 1993.

The company had a zero provision for credit losses in the fourth quarter of 1994 vs. $5.5 million for the corresponding quarter in 1993. For all of 1994, the provision for credit losses totaled $6 million, compared with the prior-year period's provision of $30 million.

Noninterest income excluding gains and losses on the sales of securities and assets for the fourth quarter of 1994 was $8.1 million, down from $9.3 million in the prior year. Lower service fee income on deposit accounts caused this decrease, because customers paid for services with higher earnings on deposit balances which stemmed from increased interest rates.

The company sold securities from its available for sale portfolio during the fourth quarter of 1994 at a loss of $2.7 million, the proceeds from which have been reinvested in higher yielding assets.

For the 12 months ended Dec. 31, 1994, noninterest income excluding gains and losses on sales of securities and assets totaled $34.7 million, 12 percent less than last year's total of $39.4 million. Lower fee income from deposit accounts and credit-related activities, foreign exchange and other miscellaneous categories contributed to the decrease.

In 1994, in addition to the $3.4 million in losses from the sale of securities, the company had gains on the sale of assets of $1.5 million, the majority of which related to the sale of its residual investment in a leveraged lease. In 1993, gains from the sales of assets were $6.4 million and included $1.9 million from the sale of the company's merchant draft business and $4.5 million from the sale of Equity Line of Credit loans.

Noninterest expense, excluding ORE results, was $32.9 million in the fourth quarter of 1994, compared with $32.1 million in 1993, exclusive of the 1993 fourth-quarter $12 million charge for the consolidation of certain company operations.

Expenses in the last quarter of 1994 include quarter-over-quarter increased costs associated with employee incentives and contributions to the profit-sharing plan, as well as $1.5 million related to the writedown of an in-substance foreclosed intangible asset.

For the full year 1994, noninterest expense, excluding ORE results and the consolidation charge, decreased 5 percent to $122.8 million from $129.2 million in 1993, due mainly to the company's branch consolidation program and other cost-control measures.

ORE expense for the fourth quarter of 1994 was $0.2 million, compared with income of $12.6 million in 1993. For the full year, ORE activities in 1994 generated $5.3 million of income as contrasted with net ORE expense of $25.7 million in 1993. Both year's results are primarily related to the adoption and completion of the AADP.

During the fourth quarter of 1994, the company's income tax expense was reduced by $3.9 million to reflect the recognition of a portion of previously unrecognized California deferred tax benefits as a result of the company's return to sustained profitability.

Total average assets were $2.8 billion for the fourth quarter of 1994, down 5.9 percent from the previous year. Average loans for the period were $1.6 billion. Although unchanged from the previous year, the 1994 average balance included $191 million of single-family residential loans, of which 85 percent was purchased, compared with $4.7 million during the fourth quarter of 1993, all of which were internally generated.

Almost all residential loans are variable rate. Average securities increased $105.5 million, or 14.8 percent in 1994 from 1993. Average core deposits decreased 7.9 percent between the fourth quarters of 1993 and 1994 and 3 percent on a full year-to-year comparison.

Levels of nonperforming assets (nonaccrual loans, ORE, intangible assets and assets held for accelerated disposition) continued to decline to $63.5 million at Dec. 31, 1994, from $98.8 million at Dec. 31, 1993, and $68.3 million at Sept. 30, 1994.

Nonperforming assets as a percent of total loans and related balances improved to 3.9 percent at Dec. 31, 1994, as compared with 6 percent a year earlier.

The allowance for credit losses at Dec. 31, 1994, was $105.3 million, or 6.43 percent of outstanding loans, compared with $110.5 million, or 6.82 percent, at Dec. 31, 1993, and $112.3 million, or 7.32 percent, at Sept. 30, 1994. The allowance for credit losses as a percentage of nonaccrual loans at Dec. 31, 1994, was 197.7 percent, compared with 155.5 percent at Dec. 31, 1993, and 200.1 percent at Sept. 30, 1994.

The corporation's Tier 1 capital ratio at Dec. 31, 1994, was 17.50 percent, while its leverage ratio was 11.86 percent. City National Bank's Tier 1 capital ratio was 16.62 percent and its leverage ratio was 11.31 percent. Both the corporation's and the bank's ratios are substantially above the minimum capital ratio requirements for a well-capitalized institution.

City National Corp.'s principal subsidiary is City National Bank, a $3 billion federally chartered commercial bank with headquarters in Beverly Hills and offices in Los Angeles, Orange and San Diego counties. -0-

                            City National Corp.
                      Summary Statement of Operations
                              (000 omitted)
                               (Unaudited)

                                      For the three months
                                         ended Dec. 31,
                                         1994        1993

Net interest income                   $ 38,849    $ 34,334
Credit loss provision                     --        (5,500)
Net interest income
  after credit loss provision           38,849      28,834
Noninterest income                       8,135       9,265
(Losses) on sales of securities         (2,736)       --
Gains on sales of assets                    65        --
Noninterest expense
 before ORE expense                    (32,879)    (32,143)
ORE (expense) income                      (206)     12,570
Consolidation charge                      --       (12,000)
Net income (loss) before taxes
  from continuing operations            11,228       6,526
Income tax benefit (provision)          (1,366)     (1,943)
Net income (loss) from
  continuing operations                  9,862       4,583
Net income from
  discontinued operations/a               --          --
  Net income (loss)                   $  9,862    $  4,583
Income (loss) per share
  from continuing operations          21 cents    10 cents
Total income (loss) per share         21 cents    10 cents
Shares used to compute per-
  share net income (loss)               45,677      45,024

                                        For the 12 months
                                          ended Dec. 31,
                                         1994        1993

Net interest income                   $143,411    $127,796
Credit loss provision                   (6,000)    (30,000)
Net interest income
  after credit loss provision          137,411      97,796
Noninterest income                      34,687      39,409
Gains (losses) on sales of securities   (3,383)       --
Gains on sales of assets                 1,493       6,401
Noninterest expense
 before ORE expense                   (122,831)   (129,226)
ORE (expense) income                     5,297     (25,674)
Consolidation charge                      --       (12,000)
Net income (loss) before taxes
  from continuing operations            52,674     (23,294)
Income tax benefit (provision)         (15,511)      9,260
Net income (loss) from
  continuing operations                 37,163     (14,034)
Net income from
  discontinued operations/a               --         7,128
  Net income (loss)                   $ 37,163    $ (6,906)
Income (loss) per share
  from continuing operations          81 cents   (35 cents)
Total income (loss) per share         81 cents   (17 cents)
Shares used to compute per-
  share net income (loss)               45,626      39,580

(a)  During the second quarter of 1993, the company recorded an
     after tax gain of $7,128 from the sale of its data processing
     division, which became a discontinued operation in December
     1992.

       Selected Condensed Balance Sheet Totals -- Dec. 31

                                 1994        1993           Percent
                                                            Change
Period End Data
Total assets                  $3,012,775  $3,100,626          (3)

Gross loans                   $1,638,406  $1,620,556           1

Allowance for credit losses   $  105,343  $  110,499          (5)

Deposits
  Noninterest bearing         $1,151,709  $1,088,026           6
  Interest-bearing, core       1,141,283   1,270,308         (10)
    Total core deposits        2,292,992   2,358,334          (3)
  Time deposits --
   $100,000 and over             124,770     168,433         (26)
    Total deposits            $2,417,762  $2,526,767          (4)

Shareholders' equity          $  330,721  $  298,074          11
Book value per share                7.32        6.62
Ratio of period end
 Tier 1 capital to
 risk weighted assets         17.50 pct.  15.75 pct.
Ratio of period end
 Total capital to
 risk weighted assets         18.81 pct.  17.06 pct.
Leverage ratio                11.86 pct.   9.95 pct.
Return on assets               1.31 pct.   (.23 pct.)
Return on equity              11.87 pct.  (2.65 pct.)

Quarterly Average Balances
Gross loans                   $1,581,952  $1,589,098           0
Total assets                   2,822,510   2,999,285          (6)
Total earning assets           2,584,059   2,689,260          (4)
Total core deposits            2,074,407   2,251,958          (8)
Shareholders' equity             324,854     296,364          10
Net interest margin            6.02 pct.   5.10 pct.

                           Nonperforming Assets

                       Dec. 31, 1994   Sept. 30, 1994    Dec. 31, 1993

Nonaccrual loans         $ 53,289         $ 56,113         $ 71,056
Other real estate           7,924            8,269            5,559
In-substance foreclosures
 -- non-real estate         2,314            3,889            4,740
Assets held for
 accelerated disposition     --               --             17,450
   Total nonperforming
    assets               $ 63,527         $ 68,271         $ 98,805
Loans past due 90 days
 or more and still
 accruing interest       $  3,858         $ 21,901         $ 28,949

CONTACT: City National Corp., Beverly Hills

Frank Pekny, 310/888-6700 (financial)

Jim Dunnigan, 310/888-6636 (media)

or

Pondel Parsons & Wilkinson, Los Angeles

Craig A. Parsons, 310/207-9300