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EXHIBIT 99.1
City National Corporation's Net Income Grows to $63.6 Million in the Third Quarter of 2013 and $174.9 Million Year to Date
Loan balances grow 21 percent to a record $16.6 billion
Deposits reach all-time high of $25.2 billion
Assets exceed $29 billion for the first time
LOS ANGELES, Oct. 24, 2013 (GLOBE NEWSWIRE) -- City National Corporation (NYSE:CYN), the parent company of wholly owned City National Bank, today reported third-quarter 2013 net income of $63.6 million, up 6 percent from $59.8 million in the year-ago period. Earnings per share were $1.10, compared with $1.10 per share in the third quarter of 2012. Third-quarter 2013 earnings reflect the payment of $2.4 million, or $0.05 per share, for dividends on preferred stock. (The company issued its preferred stock in the fourth quarter of 2012.)
Year-to-date, City National's net income totaled $174.9 million, up 9 percent from $160.8 million in the first nine months of 2012. Earnings per share were $3.04, up 2 percent from $2.97 in the first nine months of last year.
City National also announced today that its Board of Directors has maintained and approved a quarterly common stock cash dividend of $0.25 per share, payable on November 20, 2013 to stockholders of record on November 6, 2013. The Board has also authorized a quarterly cash dividend of $13.75 per share on the 5.50 percent Non‑Cumulative Perpetual Preferred Stock, Series C (equivalent to $0.34375 per related depositary share), payable on November 13, 2013 to shareholders of record on November 4, 2013.
THIRD-QUARTER 2013 HIGHLIGHTS
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Period-end loans and leases, excluding loans covered by City National's acquisition-related loss-sharing agreements with the Federal Deposit Insurance Corporation (FDIC), reached a record $16.6 billion, up 21 percent from September 30, 2012 and up 5 percent from June 30, 2013. Average third-quarter loan and lease balances, excluding FDIC-covered loans, grew to $16.0 billion, up 18 percent from the third quarter of last year. Average commercial loans were up 23 percent from the same period in 2012.
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Third-quarter deposit balances averaged $24.3 billion, up 11 percent from the third quarter of 2012. Average core deposits, which equal 98 percent of total balances, were up 12 percent from the third quarter of last year. Period-end deposit balances grew to a new record of $25.2 billion at September 30, 2013.
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Trust and investment fee income grew to $49.4 million, up 14 percent from the third quarter of 2012. Year to date, it is up 31 percent, to $145.9 million. City National's assets under management or administration grew to $61.5 billion for the first time, up 7 percent from the third quarter of 2012.
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Net loan recoveries in the third quarter of 2013 totaled $6.8 million, compared to net recoveries of $7.5 million in the second quarter of this year. Excluding FDIC-covered loans, third-quarter 2013 results included no provision for loan and lease losses. City National recorded a $2.0 million provision in the third quarter of 2012. The company remains appropriately reserved at 1.79 percent of total loans, excluding FDIC-covered loans.
- Noninterest expense fell 1 percent from the second quarter of 2013, but was up 1 percent from the third quarter of 2012.
"City National's very positive momentum, growth and performance continued across the company in the third quarter – its 82nd consecutive profitable quarter," said Chairman and CEO Russell Goldsmith. "Assets, loans and deposits again grew quite significantly to new record levels, with assets exceeding $29 billion for the first time. Wealth management increased its contribution as well, and credit quality improved yet again.
"In spite of a slow-growing economy, very low interest rates, competitive pricing pressures, and the continuing and expected decline of FDIC-covered loans, City National continues to grow its net income and client base by staying focused on meeting the financial needs of its clients and building on its strong reputation as the premier private and business bank in the communities it serves."
| For the three months ended | For the three | ||||
| Dollars in millions, | September 30, | months ended | |||
| except per share data | 2013 | 2012 | % Change | June 30, 2013 | % Change |
| Earnings Per Common Share | $ 1.10 | $ 1.10 | -- | $ 1.04 | 6 |
| Net Income Attributable to CNC | 63.6 | 59.8 | 6 | 59.7 | 7 |
| Net Income Available to Common Shareholders | 61.2 | 59.8 | 2 | 57.3 | 7 |
| Average Assets | $ 28,061.1 | $ 25,654.6 | 9 | $ 27,469.6 | 2 |
| Return on Average Assets | 0.90% | 0.93% | (3) | 0.87% | 3 |
| Return on Average Common Equity | 10.12% | 10.35% | (2) | 9.53% | 6 |
| Return on Average Tangible Common Equity | 14.43% | 15.05% | (4) | 13.60% | 6 |
ASSETS
Total assets reached a record $29.1 billion at September 30, 2013, up 11 percent from the third quarter of 2012 and 6 percent higher than the second quarter of 2013. The increases reflect higher loan balances, as well as higher cash balances.
NET INTEREST INCOME
Fully taxable-equivalent net interest income was $220.0 million in the third quarter of 2013, up 2 percent from the same period of 2012 and 6 percent higher than the second quarter of this year. Fully taxable-equivalent net interest income for the first nine months of 2013 was $634.7 million, down 1 percent from $641.6 million in the year-ago period.
Average third-quarter deposits were $24.3 billion, up 11 percent from the year-ago period and 5 percent higher than the second quarter of 2013. Average deposits for the first nine months of 2013 totaled $23.3 billion, up 11 percent from the same period of 2012. Period-end deposits totaled $25.2 billion, up 12 percent from September 30, 2012 and up 7 percent from June 30, 2013.
Average core deposits were $23.7 billion in the third quarter of 2013, up 12 percent from the same period of 2012 and up 6 percent from the second quarter of this year. Year-to-date 2013 average core deposits grew 11 percent from the year-ago period to $22.7 billion.
Third-quarter 2013 average noninterest-bearing deposits were up 14 percent from the same period of 2012 and 5 percent higher than the second quarter of 2013. Average noninterest-bearing balances in the first nine months of 2013 were up 17 percent from the same period last year.
Treasury Services deposit balances, which consist primarily of title, escrow and property management deposits, averaged $2.6 billion in the third quarter of 2013, up 15 percent from the same period of last year and up 2 percent from the second quarter of 2013. For the first nine months of 2013, Treasury Services deposit balances averaged $2.5 billion, up 17 percent from the same period of 2012. The year-over-year increases were due primarily to an increase in residential refinance activity, as well as existing home sales.
Third-quarter average loan balances, excluding FDIC-covered loans, were $16.0 billion, up 18 percent from the third quarter of 2012 and up 4 percent from the second quarter of 2013. For the first nine months of 2013, City National's average loans, excluding FDIC-covered loans, were $15.4 billion, up 18 percent from the year-ago period.
Third-quarter average commercial loans were up 23 percent from the same period in 2012 and 3 percent higher than the second quarter of 2013.
Average balances for commercial real estate mortgages were up 30 percent from the third quarter of 2012, and they increased 8 percent from the second quarter of 2013. Average balances for commercial real estate construction loans declined 17 percent from the third quarter of 2012 and were down 8 percent from the second quarter of 2013.
Average balances for single-family residential mortgage loans were up 10 percent from the year-ago period and 4 percent higher than the second quarter of 2013.
Average securities for the third quarter of 2013 totaled $8.6 billion, down 1 percent from the third quarter of 2012 and 3 percent lower than the second quarter of 2013. Total available-for-sale securities amounted to $6.9 billion at September 30, 2013, down from $7.9 billion at the end of the third quarter of 2012 and $7.0 billion at June 30, 2013.
The average duration of available-for-sale securities at September 30, 2013 was 2.9 years, up from 2.2 years at September 30, 2012 but down from 3.2 years at the end of the second quarter of 2013. The decrease from the second quarter of this year reflects a rotation from longer duration to shorter duration securities in the available-for-sale portfolio. The move to shorter-duration investments generated a $5.6 million net gain on securities, compared with net gains of $5.6 million in the second quarter of this year and $0.8 million in the third quarter of 2012.
City National's net interest margin in the third quarter of 2013 averaged 3.30 percent, compared with 3.24 percent in the second quarter of 2013. The modest increase was due to higher income from FDIC-covered loans that were repaid or charged off during the quarter. For the first nine months of 2013, City National's net interest margin averaged 3.25 percent, down from 3.74 percent in the previous year.
Third-quarter net interest income included $25.8 million from FDIC-covered loans that were repaid or charged off. This compares with $22.2 million in the third quarter of 2012 and $15.9 million in the second quarter of 2013.
At September 30, 2013, City National's prime lending rate was 3.25 percent, unchanged from both September 30, 2012 and June 30, 2013.
| For the three months ended | For the three | ||||
| September 30, | % | months ended | % | ||
| Dollars in millions | 2013 | 2012 | Change | June 30, 2013 | Change |
| Average Loans and Leases, excluding Covered Loans | $ 16,039.8 | $ 13,587.5 | 18 | $ 15,434.1 | 4 |
| Average Covered Loans | 818.9 | 1,207.0 | (32) | 909.7 | (10) |
| Average Total Securities | 8,576.5 | 8,631.4 | (1) | 8,866.9 | (3) |
| Average Earning Assets | 26,417.7 | 23,892.0 | 11 | 25,819.9 | 2 |
| Average Deposits | 24,301.6 | 21,940.8 | 11 | 23,118.8 | 5 |
| Average Core Deposits | 23,716.0 | 21,208.5 | 12 | 22,410.8 | 6 |
| Fully Taxable-Equivalent | |||||
| Net Interest Income | 220.0 | 214.8 | 2 | 208.4 | 6 |
| Net Interest Margin | 3.30% | 3.58% | (8) | 3.24% | 2 |
COVERED ASSETS
Loans and other real estate owned (OREO) assets acquired in City National's FDIC‑assisted bank acquisitions totaled $784.0 million at the end of the third quarter of 2013, compared to $1.2 billion at September 30, 2012 and $885.4 million at June 30, 2013.
In the third quarter of 2013, City National recorded a $0.5 million non-cash net expense to reflect results of the quarterly update of cash-flow projections for the FDIC-covered loans, compared to a $1.5 million expense recorded in the second quarter of 2013. The third-quarter expense reflects a $2.5 million provision for losses on covered loans and an offsetting $2.0 million of noninterest income related to City National's loss-sharing agreements with the FDIC. In addition to the $0.5 million non-cash net expense for the quarter, the company recognized $3.2 million of other covered assets income.
City National will continue to update cash-flow projections for covered loans on a quarterly basis. Due to the uncertainty in the future performance of the covered loans, additional impairments may be recognized in the future.
OREO assets acquired by City National in its FDIC-assisted bank acquisitions and subject to loss-sharing agreements totaled $29.8 million at September 30, 2013, compared to $83.6 million at the end of the third quarter of 2012 and $41.8 million at June 30, 2013.
NONINTEREST INCOME
Noninterest income was $88.9 million in the third quarter of 2013, down 17 percent from the third quarter of 2012 but up 8 percent from the second quarter of 2013. City National's noninterest income for the first nine months of 2013 was up 3 percent from the same period of 2012.
The decrease in noninterest income from the third quarter of 2012 was due largely to higher FDIC loss-sharing expense, which was partly offset by higher trust and investment income. Results for the third quarter of 2013 also included a $5.6 million net gain on securities, compared with net gains of $5.6 million in the second quarter of this year and $0.8 million in the third quarter of 2012. The increase in noninterest income from the second quarter of this year was due primarily to lower FDIC loss-sharing expense.
In the third quarter of 2013, noninterest income accounted for 29 percent of City National's total revenue, compared to 34 percent in the third quarter of 2012 and 29 percent in the second quarter of 2013.
Wealth Management
City National's assets under management or administration totaled $61.5 billion as of September 30, 2013, up 7 percent from the same period of 2012 and 3 percent higher than the second quarter of 2013.
Trust and investment fees were $49.4 million, up 14 percent from the third quarter of 2012 but down 1 percent from the second quarter of 2013. The increase from the year-ago period was due primarily to additional sales and market appreciation.
Brokerage and mutual fund fees totaled $7.3 million, down 19 percent from the year-earlier period and 10 percent lower than the second quarter of 2013, largely due to declines in short-term interest rates.
Year-to-date 2013 trust and investment fee income was $145.9 million, up 31 percent from the same period of last year. Brokerage and mutual fund fee income was $23.5 million in the first nine months of this year, up 21 percent from the same period of 2012. These increases largely reflect the company's July 2, 2012 acquisition of Rochdale Investment Management, as well as the addition of client assets and market appreciation.
| At or for the | At or for the | ||||
| three months ended | three months | ||||
| September 30, | % | ended | % | ||
| Dollars in millions | 2013 | 2012 | Change | June 30, 2013 | Change |
| Trust and Investment Fee Revenue | $ 49.4 | $ 43.5 | 14 | $ 49.8 | (1) |
| Brokerage and Mutual Fund Fees | 7.3 | 9.1 | (19) | 8.1 | (10) |
| Assets Under Management (1) | 42,811.8 | 38,620.1 | 11 | 41,256.5 | 4 |
| Assets Under Management | |||||
| or Administration (1) | 61,476.0 | 57,248.9 | 7 | 59,755.3 | 3 |
| (1) Excludes $26.3 billion, $25.1 billion and $19.8 billion of assets under management for asset managers in which City National held a noncontrolling ownership interest as of September 30, 2013, June 30, 2013 and September 30, 2012, respectively. |
Other Noninterest Income
Third-quarter income from cash management and deposit transaction fees was $12.3 million, up 6 percent from the third quarter of 2012 but down 5 percent from the second quarter of 2013. For the first nine months of 2013, cash management and deposit transaction fee income was $38.2 million, up 12 percent from the same period of 2012. The year-over-year increases were due largely to higher sales volume and growth in transaction volumes among existing clients.
Fee income from foreign exchange services and letters of credit totaled $10.9 million in the third quarter of 2013, up 11 percent from the third quarter of 2012 but virtually unchanged from the second quarter of 2013. Year-to-date 2013 foreign exchange services and letters of credit fee income totaled $31.5 million, up 10 percent from the same period last year. The increases from the year-ago periods were due primarily to increased client activity and the addition of new clients.
Other income was $21.2 million in the third quarter of 2013, down 23 percent from the third quarter of 2012 but 4 percent higher than the second quarter of 2013. The decrease from the third quarter of 2012 was due primarily to lower distribution income from investments. Other income in the first nine months of this year was $60.0 million, up 2 percent from the year-ago period.
NONINTEREST EXPENSE
City National's third-quarter 2013 noninterest expense amounted to $209.4 million, up 1 percent from the third quarter of 2012 but down 1 percent from the second quarter of 2013.
Noninterest expense for the first nine months of 2013 amounted to $632.1 million, up 5 percent from the same period of last year. Excluding the company's 2012 acquisitions of Rochdale and First American Equipment Finance, noninterest expense was virtually unchanged from the first nine months of 2012.1
CREDIT QUALITY
The following credit quality information excludes loans subject to loss-sharing agreements involving City National's FDIC-assisted transactions:
Net recoveries in the third quarter of 2013 totaled $6.8 million, or 0.17 percent of total loans and leases on an annualized basis. The company realized net charge-offs of $2.2 million, or 0.06 percent, in the third quarter of 2012 and net recoveries of $7.5 million, or 0.20 percent, in the second quarter of 2013. Net recoveries for the first nine months of 2013 were $19.1 million, or 0.17 percent of total loans and leases. This compares with net recoveries of $5.0 million, or 0.05 percent, in the first nine months of last year.
At September 30, 2013, nonperforming assets amounted to $88.5 million, or 0.53 percent of the company's total loans and leases and OREO, compared to $130.5 million, or 0.95 percent, at September 30, 2012 and $96.3 million, or 0.61 percent, at June 30, 2013.
Nonaccrual loans at September 30, 2013 were $69.6 million, compared to $103.5 million at September 30, 2012 and $76.7 million at June 30, 2013. Classified loans declined from the second quarter of 2013, and overall credit trends remain favorable.
| As of | As of | As of | ||||
| September 30, 2013 | June 30, 2013 | September 30, 2012 | ||||
| Period-end Loans (in millions) | Total | Nonaccrual | Total | Nonaccrual | Total | Nonaccrual |
| Commercial | $ 7,856.2 | $ 10.1 | $ 7,497.1 | $ 11.7 | $ 6,264.6 | $ 18.8 |
| Commercial Real Estate Mortgages | 3,217.7 | 19.0 | 3,101.2 | 22.4 | 2,463.7 | 36.6 |
| Residential Mortgages | 4,418.2 | 9.7 | 4,153.1 | 10.6 | 3,897.7 | 11.7 |
| Real Estate Construction | 240.0 | 25.5 | 217.8 | 25.7 | 242.1 | 29.0 |
| Home Equity Loans and Lines of Credit | 681.9 | 5.3 | 700.7 | 6.3 | 719.0 | 6.9 |
| Other Loans | 152.1 | 0.0 | 149.4 | 0.0 | 137.6 | 0.5 |
| Total Loans (1) | $ 16,566.1 | $ 69.6 | $ 15,819.3 | $ 76.7 | $ 13,724.7 | $ 103.5 |
| Other Real Estate Owned (1) | 18.9 | 19.6 | 27.0 | |||
| Total Nonperforming Assets, excluding | ||||||
| Covered Assets | $ 88.5 | $ 96.3 | $ 130.5 | |||
| (1) Excludes covered loans, net of allowance, of $754.2 million, $843.6 million and $1.1 billion at September 30, 2013, June 30, 2013 and September 30, 2012, respectively, and covered other real estate owned of $29.8 million, $41.8 million and $83.6 million at September 30, 2013, June 30, 2013 and September 30, 2012, respectively. |
In light of strong and improving credit quality, the company recorded no provision for credit losses in the third quarter of 2013. The company recorded a $2.0 million provision in the third quarter of 2012 and no provision in the second quarter of 2013.
At September 30, 2013, City National's allowance for loan and lease losses totaled $295.9 million, or 1.79 percent of total loans and leases. That compares with $268.4 million, or 1.96 percent, at September 30, 2012 and $289.9 million, or 1.83 percent, at the end of the second quarter of 2013. The company also maintains an additional $25.9 million in reserves for off-balance-sheet credit commitments.
Commercial Loans
Commercial loan net recoveries were $4.4 million in the third quarter of 2013. This compares to net charge-offs of $4.9 million in the year-earlier period and net recoveries of $2.9 million in the second quarter of 2013. Net recoveries in the first nine months of 2013 amounted to $9.4 million, compared to net recoveries of $8.4 million in same period of last year.
Commercial loans on nonaccrual totaled $10.1 million in the third quarter of 2013, compared to $18.8 million at September 30, 2012 and $11.7 million at June 30, 2013.
Real Estate Construction Loans
City National's $240.0 million commercial real estate construction portfolio includes secured loans to developers of residential and nonresidential properties. This portfolio represents less than 2 percent of the company's total loans.
Third-quarter net recoveries of construction loans were $2.9 million, compared to net recoveries of $3.1 million in the third quarter of 2012 and net recoveries of $2.7 million in the second quarter of 2013. Net recoveries amounted to $8.3 million in the first nine months of 2013, compared with net charge-offs of $1.6 million in the same period of last year.
At September 30, 2013, construction loans on nonaccrual totaled $25.5 million, compared to $29.0 million at September 30, 2012 and $25.7 million at June 30, 2013.
Commercial Real Estate Mortgage Loans
Third-quarter net charge-offs in the company's $3.2 billion commercial real estate mortgage portfolio were $0.6 million compared to net charge-offs of $0.2 million in the third quarter of 2012 and net recoveries of $1.0 million in the second quarter of 2013. Net recoveries amounted to $0.5 million in the first nine months of 2013, compared with net recoveries of $0.2 million in the same period of last year.
Commercial real estate mortgage loans on nonaccrual totaled $19.0 million, compared to $36.6 million at September 30, 2012 and $22.4 million at June 30, 2013.
Residential Mortgage Loans and Equity Loans and Lines of Credit
City National's $4.4 billion residential mortgage portfolio and $0.7 billion home equity portfolio continued to perform exceptionally well. Together, they accounted for $0.2 million in net charge-offs in the third quarter of 2013, compared to net charge-offs of $0.6 million at September 30, 2012 and net recoveries of $0.4 million at June 30, 2013. Net recoveries amounted to $0.1 million in the year to date of 2013, compared with net charge-offs of $2.6 million in the same period of last year.
Residential mortgage loans and home equity loans and lines of credit on nonaccrual were $15.0 million in the third quarter of 2013, compared to $18.6 million in the third quarter of 2012 and $16.8 million in the second quarter of 2013.
INCOME TAXES
City National's effective tax rate for the third quarter of 2013 was 29.6 percent, compared to 32.6 percent in the year-earlier period. For the first nine months of 2013, City National's effective tax rate was 29.5 percent, compared to 32.5 percent in the prior-year period.
CAPITAL LEVELS
City National remains well-capitalized. Under Basel I capital rules, the company's Tier 1 common shareholders' equity ratio was 8.8 percent at September 30, 2013.1 The company's Tier 1 common shareholders' equity ratio was 9.1 percent at September 30, 2012 and 8.8 percent at June 30, 2013.1
Under Basel III rules, City National's estimated Tier 1 common equity ratio was 8.6 percent.2 All of the company's pro-forma capital ratios are comfortably above the Basel III rules, which were approved by the Federal Reserve on July 2, 2013. The new rules will begin a phase-in period for banks with less than $250 billion in assets, including City National, on January 1, 2015 and are expected to be fully implemented by January 1, 2019.
City National's Basel I total risk-based capital and Tier 1 risk-based capital ratios at September 30, 2013 were 12.7 percent and 9.7 percent, respectively. The company's Tier 1 leverage ratio at September 30, 2013 was 7.1 percent.
Basel I total risk-based capital, Tier 1 risk-based capital and Tier 1 leverage ratios at September 30, 2012 were 12.4 percent, 9.1 percent and 6.3 percent, respectively.
Basel I period-end ratio of equity to total assets at September 30, 2013 was 8.9 percent, compared to 8.9 percent at September 30, 2012 and 9.3 percent at June 30, 2013.
2013 OUTLOOK
Management continues to expect modest net income growth in 2013, driven by strong loan growth, increasing deposits and very good credit quality. The current low short-term interest rate environment will continue to put pressure on the company's net interest margin. This outlook reflects management's expectations for modest economic growth and stable monetary policies in the fourth quarter.
CONFERENCE CALL
City National Corporation will host a conference call this afternoon to discuss third-quarter 2013 financial results. The call will begin at 2:00 p.m. PDT. Analysts and investors may dial in and participate in the question/answer session. To access the call, please dial (866) 393-6804 and enter Conference ID 68365750. A listen-only live broadcast of the call also will be available on the investor relations page of the company's Website at cnb.com. There, it will be archived and available for 12 months.
ABOUT CITY NATIONAL
City National Corporation's wholly owned subsidiary, City National Bank, provides banking, investment and trust services through 77 offices, including 16 full-service regional centers, in Southern California, the San Francisco Bay Area, Nevada, New York City, Nashville and Atlanta. The corporation and its investment affiliates manage or administer $61.5 billion in client investment assets, including $42.8 billion under direct management.
For more information about City National, visit the company's Website at cnb.com.
SAFE-HARBOR LANGUAGE
This news release contains forward-looking statements about the company, for which the company claims the protection of the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995.
A number of factors, many of which are beyond the company's ability to control or predict, could cause future results to differ materially from those contemplated by such forward-looking statements. These factors include: (1) changes in general economic, political, or industry conditions and the related credit and market conditions and the impact they have on the company and its customers, including changes in consumer spending, borrowing and savings habits; (2) the impact on financial markets and the economy of the level of U.S. and European debt; (3) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System; (4) continued delay in the pace of economic recovery and continued stagnant or decreasing employment levels; (5) the effect of the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations to be promulgated by supervisory and oversight agencies implementing the new legislation, taking into account that the precise timing, extent and nature of such rules and regulations and the impact on the company are uncertain; (6) the impact of revised capital requirements under Basel III; (7) significant changes in applicable laws and regulations, including those concerning taxes, banking and securities; (8) volatility in the municipal bond market; (9) changes in the level of nonperforming assets, charge-offs, other real estate owned and provision expense; (10) incorrect assumptions in the value of the loans acquired in FDIC-assisted acquisitions resulting in greater than anticipated losses in the acquired loan portfolios exceeding the losses covered by the loss-sharing agreements with the FDIC; (11) changes in inflation, interest rates, and market liquidity which may impact interest margins and impact funding sources; (12) the company's ability to attract new employees and retain and motivate existing employees; (13) increased competition in the company's markets and our ability to increase market share and control expenses; (14) changes in the financial performance and/or condition of the company's customers, or changes in the performance or creditworthiness of our customers' suppliers or other counterparties, which could lead to decreased loan utilization rates, delinquencies, or defaults and could negatively affect our customers' ability to meet certain credit obligations; (15) a substantial and permanent loss of either client accounts and/or assets under management at the company's investment advisory affiliates or its wealth management division; (16) soundness of other financial institutions which could adversely affect the company; (17) protracted labor disputes in the company's markets; (18) the impact of natural disasters, terrorist activities or international hostilities on the operations of our business or the value of collateral; (19) the effect of acquisitions and integration of acquired businesses and de novo branching efforts; (20) changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies; (21) the impact of cyber security attacks or other disruptions to the company's information systems and any resulting compromise of data or disruptions in service; and (22) the success of the company at managing the risks involved in the foregoing.
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 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, please refer to the company's Annual Report on Form 10-K for the year ended December 31, 2012.
1 For notes on non-GAAP measures, see pages 15 and 16 of the Selected Financial Information.
2 Estimated based on management's interpretation of final rules adopted July 2, 2013, by the Federal Reserve Board establishing a new comprehensive capital framework for U.S. banking organizations that would implement the Basel III capital framework and certain provisions of the Dodd-Frank Act. See page 15 of the Selected Financial Information.
Note: Certain prior period balances have been reclassified to conform to current period presentation.
| CITY NATIONAL CORPORATION | ||||||||||||
| FINANCIAL HIGHLIGHTS | ||||||||||||
| (unaudited) | ||||||||||||
| Three Months | Nine Months | |||||||||||
| For The Period Ended September 30, | 2013 | 2012 | % Change | 2013 | 2012 | % Change | ||||||
| Per Common Share | ||||||||||||
| Net income available to common shareholders | ||||||||||||
| Basic | $ 1.12 | $ 1.10 | 2 | $ 3.07 | $ 2.98 | 3 | ||||||
| Diluted | 1.10 | 1.10 | -- | 3.04 | 2.97 | 2 | ||||||
| Dividends | 0.25 | 0.25 | -- | 0.50 | 0.75 | (33) | ||||||
| Book value | 44.85 | 43.81 | 2 | |||||||||
| Results of Operations: (In millions) | ||||||||||||
| Interest income | $ 228 | $ 225 | 1 | $ 661 | $ 668 | (1) | ||||||
| Interest expense | 14 | 15 | (7) | 43 | 41 | 4 | ||||||
| Net interest income | 214 | 210 | 2 | 618 | 627 | (1) | ||||||
| Net interest income (Fully taxable-equivalent) | 220 | 215 | 2 | 635 | 642 | (1) | ||||||
| Total revenue | 303 | 317 | (4) | 883 | 885 | (0) | ||||||
| Provision for credit losses on loans and leases, excluding covered loans | -- | 2 | (100) | -- | 3 | (100) | ||||||
| Provision for losses on covered loans | 2 | 18 | (86) | 0 | 39 | (99) | ||||||
| Net income attributable to City National Corporation | 64 | 60 | 6 | 175 | 161 | 9 | ||||||
| Net income available to common shareholders | 61 | 60 | 2 | 168 | 161 | 4 | ||||||
| Financial Ratios: | ||||||||||||
| Performance Ratios: | ||||||||||||
| Return on average assets | 0.90% | 0.93% | 0.84% | 0.87% | ||||||||
| Return on average common equity | 10.12 | 10.35 | 9.37 | 9.62 | ||||||||
| Return on average tangible common equity (1) | 14.43 | 15.05 | 13.42 | 13.34 | ||||||||
| Period-end equity to period-end assets | 8.91 | 8.88 | ||||||||||
| Net interest margin | 3.30 | 3.58 | 3.25 | 3.74 | ||||||||
| Expense to revenue ratio | 66.37 | 61.96 | 68.89 | 64.06 | ||||||||
| Capital Adequacy Ratios (Period-end): | ||||||||||||
| Tier 1 leverage | 7.07 | 6.29 | ||||||||||
| Tier 1 risk-based capital | 9.69 | 9.15 | ||||||||||
| Total risk-based capital | 12.67 | 12.42 | ||||||||||
| Asset Quality Ratios: | ||||||||||||
| Allowance for loan and lease losses to: | ||||||||||||
| Total loans and leases, excluding covered loans | 1.79% | 1.96% | ||||||||||
| Nonaccrual loans | 425.20 | 259.38 | ||||||||||
| Nonperforming assets, excluding covered assets, to: | ||||||||||||
| Total loans and leases and other real estate owned, excluding covered assets | 0.53 | 0.95 | ||||||||||
| Total assets | 0.30 | 0.50 | ||||||||||
| Net recoveries (charge-offs) to average total loans and leases, excluding covered loans (annualized) | 0.17% | (0.06)% | 0.17% | 0.05% | ||||||||
| Average Balances: (In millions) | ||||||||||||
| Loans and leases, excluding covered loans | $ 16,040 | $ 13,588 | 18 | $ 15,432 | $ 13,051 | 18 | ||||||
| Covered loans | 819 | 1,207 | (32) | 906 | 1,328 | (32) | ||||||
| Securities | 8,576 | 8,631 | (1) | 9,075 | 8,107 | 12 | ||||||
| Interest-earning assets | 26,418 | 23,892 | 11 | 26,096 | 22,925 | 14 | ||||||
| Assets | 28,061 | 25,655 | 9 | 27,748 | 24,558 | 13 | ||||||
| Core deposits | 23,716 | 21,209 | 12 | 22,651 | 20,318 | 11 | ||||||
| Deposits | 24,302 | 21,941 | 11 | 23,284 | 21,039 | 11 | ||||||
| Interest-bearing liabilities | 10,480 | 10,088 | 4 | 10,815 | 10,029 | 8 | ||||||
| Common shareholders' equity | 2,401 | 2,297 | 5 | 2,392 | 2,234 | 7 | ||||||
| Total shareholders' equity | 2,571 | 2,297 | 12 | 2,562 | 2,234 | 15 | ||||||
| Period-End Balances: (In millions) | ||||||||||||
| Loans and leases, excluding covered loans | $ 16,566 | $ 13,725 | 21 | |||||||||
| Covered loans | 780 | 1,144 | (32) | |||||||||
| Securities | 8,596 | 9,111 | (6) | |||||||||
| Assets | 29,059 | 26,252 | 11 | |||||||||
| Core deposits | 24,685 | 21,828 | 13 | |||||||||
| Deposits | 25,237 | 22,512 | 12 | |||||||||
| Common shareholders' equity | 2,418 | 2,330 | 4 | |||||||||
| Total shareholders' equity | 2,588 | 2,330 | 11 | |||||||||
| Wealth Management: (In millions) (2) | ||||||||||||
| Assets under management | $ 42,812 | $ 38,620 | 11 | |||||||||
| Assets under management or administration | 61,476 | 57,249 | 7 | |||||||||
| (1) Return on average tangible common equity is a non-GAAP measure. Refer to page 15 for further discussion of this non-GAAP measure. | ||||||||||||
| (2) Excludes $26.3 billion and $19.8 billion of assets under management for asset managers in which City National held a noncontrolling ownership interest as of September 30, 2013 and September 30, 2012, respectively. | ||||||||||||
| Note: Certain prior period balances in the Selected Financial Information have been reclassified to conform to current period presentation. | ||||||||||||
| CITY NATIONAL CORPORATION | ||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||
| (unaudited) | ||||||
| (Dollars in thousands |
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||
| except per share data) | 2013 | 2012 | % Change | 2013 | 2012 | % Change |
| Interest income | $ 228,093 | $ 224,768 | 1 | $ 660,888 | $ 668,249 | (1) |
| Interest expense | 13,822 | 14,846 | (7) | 42,625 | 41,135 | 4 |
| Net interest income | 214,271 | 209,922 | 2 | 618,263 | 627,114 | (1) |
| Provision for credit losses on loans and leases,excluding covered loans | -- | 2,000 | (100) | -- | 3,000 | (100) |
| Provision for losses on covered loans | 2,496 | 18,089 | (86) | 461 | 38,848 | (99) |
| Noninterest income | ||||||
| Trust and investment fees | 49,430 | 43,477 | 14 | 145,913 | 111,198 | 31 |
| Brokerage and mutual fund fees | 7,307 | 9,059 | (19) | 23,480 | 19,380 | 21 |
| Cash management and deposit transaction fees | 12,263 | 11,526 | 6 | 38,152 | 34,169 | 12 |
| International services | 10,932 | 9,819 | 11 | 31,462 | 28,621 | 10 |
| FDIC loss sharing (expense) income, net | (20,992) | 1,667 | (1,359) | (51,821) | (3,493) | 1,384 |
| Gain on disposal of assets | 3,092 | 3,199 | (3) | 5,155 | 8,401 | (39) |
| Gain on securities | 5,644 | 817 | 591 | 12,298 | 809 | 1,420 |
| Other | 21,207 | 27,693 | (23) | 59,981 | 58,640 | 2 |
| Total noninterest income | 88,883 | 107,257 | (17) | 264,620 | 257,725 | 3 |
| Noninterest expense | ||||||
| Salaries and employee benefits | 129,049 | 120,210 | 7 | 384,412 | 355,490 | 8 |
| Net occupancy of premises | 16,074 | 16,238 | (1) | 48,268 | 43,980 | 10 |
| Legal and professional fees | 10,374 | 11,757 | (12) | 35,149 | 34,996 | 0 |
| Information services | 9,876 | 8,660 | 14 | 28,450 | 25,348 | 12 |
| Depreciation and amortization | 7,827 | 8,324 | (6) | 24,248 | 23,765 | 2 |
| Amortization of intangibles | 1,932 | 1,932 | -- | 5,795 | 5,336 | 9 |
| Marketing and advertising | 8,244 | 7,141 | 15 | 25,204 | 21,554 | 17 |
| Office services and equipment | 4,821 | 4,673 | 3 | 14,801 | 13,113 | 13 |
| Other real estate owned | 5,196 | 8,749 | (41) | 14,831 | 28,384 | (48) |
| FDIC assessments | 3,776 | 4,616 | (18) | 12,920 | 13,618 | (5) |
| Other | 12,195 | 15,586 | (22) | 38,055 | 37,538 | 1 |
| Total noninterest expense | 209,364 | 207,886 | 1 | 632,133 | 603,122 | 5 |
| Income before taxes | 91,294 | 89,204 | 2 | 250,289 | 239,869 | 4 |
| Applicable income taxes | 27,052 | 29,052 | (7) | 73,735 | 78,042 | (6) |
| Net income | $ 64,242 | $ 60,152 | 7 | $ 176,554 | $ 161,827 | 9 |
| Less: Net income attributable to noncontrolling interest | 609 | 372 | 64 | 1,657 | 1,024 | 62 |
| Net income attributable to City National Corporation | $ 63,633 | $ 59,780 | 6 | $ 174,897 | $ 160,803 | 9 |
| Less: Dividends on preferred stock | 2,407 | -- | NM | 7,219 | -- | NM |
| Net income available to common shareholders | $ 61,226 | $ 59,780 | 2 | $ 167,678 | $ 160,803 | 4 |
| Other Data: | ||||||
| Earnings per common share - basic | $ 1.12 | $ 1.10 | 2 | $ 3.07 | $ 2.98 | 3 |
| Earnings per common share - diluted | $ 1.10 | $ 1.10 | -- | $ 3.04 | $ 2.97 | 2 |
| Dividends paid per common share | $ 0.25 | $ 0.25 | -- | $ 0.50 | $ 0.75 | (33) |
| Common dividend payout ratio | 22.40% | 22.63% | (1) | 16.34% | 25.10% | (35) |
| Return on average assets | 0.90% | 0.93% | (3) | 0.84% | 0.87% | (3) |
| Return on average common equity | 10.12% | 10.35% | (2) | 9.37% | 9.62% | (3) |
| Return on average tangible common equity | 14.43% | 15.05% | (4) | 13.42% | 13.34% | 1 |
| Net interest margin (Fully taxable-equivalent) | 3.30% | 3.58% | (8) | 3.25% | 3.74% | (13) |
| Full-time equivalent employees | 3,541 | 3,439 | 3 | |||
| CITY NATIONAL CORPORATION | |||||||
| CONSOLIDATED QUARTERLY STATEMENTS OF INCOME | |||||||
| (unaudited) | |||||||
| 2013 | |||||||
|
(Dollars in thousands except per share data) |
Third Quarter |
Second Quarter |
First Quarter |
Year to Date |
|||
| Interest income | $ 228,093 | $ 216,995 | $ 215,800 | $ 660,888 | |||
| Interest expense | 13,822 | 14,076 | 14,727 | 42,625 | |||
| Net interest income | 214,271 | 202,919 | 201,073 | 618,263 | |||
| Provision for credit losses on loans and leases, excluding covered loans | -- | -- | -- | -- | |||
| Provision for losses on covered loans | 2,496 | (11,927) | 9,892 | 461 | |||
| Noninterest income | |||||||
| Trust and investment fees | 49,430 | 49,830 | 46,653 | 145,913 | |||
| Brokerage and mutual fund fees | 7,307 | 8,107 | 8,066 | 23,480 | |||
| Cash management and deposit transaction fees | 12,263 | 12,880 | 13,009 | 38,152 | |||
| International services | 10,932 | 10,911 | 9,619 | 31,462 | |||
| FDIC loss sharing expense, net | (20,992) | (26,477) | (4,352) | (51,821) | |||
| Gain on disposal of assets | 3,092 | 949 | 1,114 | 5,155 | |||
| Gain on securities | 5,644 | 5,608 | 1,046 | 12,298 | |||
| Other | 21,207 | 20,401 | 18,373 | 59,981 | |||
| Total noninterest income | 88,883 | 82,209 | 93,528 | 264,620 | |||
| Noninterest expense | |||||||
| Salaries and employee benefits | 129,049 | 127,168 | 128,195 | 384,412 | |||
| Net occupancy of premises | 16,074 | 16,205 | 15,989 | 48,268 | |||
| Legal and professional fees | 10,374 | 13,163 | 11,612 | 35,149 | |||
| Information services | 9,876 | 9,183 | 9,391 | 28,450 | |||
| Depreciation and amortization | 7,827 | 8,249 | 8,172 | 24,248 | |||
| Amortization of intangibles | 1,932 | 1,931 | 1,932 | 5,795 | |||
| Marketing and advertising | 8,244 | 8,644 | 8,316 | 25,204 | |||
| Office services and equipment | 4,821 | 5,034 | 4,946 | 14,801 | |||
| Other real estate owned | 5,196 | 4,385 | 5,250 | 14,831 | |||
| FDIC assessments | 3,776 | 3,663 | 5,481 | 12,920 | |||
| Other | 12,195 | 13,804 | 12,056 | 38,055 | |||
| Total noninterest expense | 209,364 | 211,429 | 211,340 | 632,133 | |||
| Income before taxes | 91,294 | 85,626 | 73,369 | 250,289 | |||
| Applicable income taxes | 27,052 | 25,422 | 21,261 | 73,735 | |||
| Net income | $ 64,242 | $ 60,204 | $ 52,108 | $ 176,554 | |||
| Less: Net income attributable to noncontrolling interest | 609 | 463 | 585 | 1,657 | |||
| Net income attributable to City National Corporation | $ 63,633 | $ 59,741 | $ 51,523 | $ 174,897 | |||
| Less: Dividends on preferred stock | 2,407 | 2,406 | 2,406 | 7,219 | |||
| Net income available to common shareholders | $ 61,226 | $ 57,335 | $ 49,117 | $ 167,678 | |||
| Other Data: | |||||||
| Earnings per common share - basic | $ 1.12 | $ 1.05 | $ 0.90 | $ 3.07 | |||
| Earnings per common share - diluted | $ 1.10 | $ 1.04 | $ 0.90 | $ 3.04 | |||
| Dividends paid per common share | $ 0.25 | $ 0.25 | $ -- | $ 0.50 | |||
| Common dividend payout ratio | 22.40% | 23.81% | --% | 16.34% | |||
| Return on average assets | 0.90% | 0.87% | 0.75% | 0.84% | |||
| Return on average common equity | 10.12% | 9.53% | 8.43% | 9.37% | |||
| Return on average tangible common equity | 14.43% | 13.60% | 12.17% | 13.42% | |||
| Net interest margin (Fully taxable-equivalent) | 3.30% | 3.24% | 3.21% | 3.25% | |||
| Full-time equivalent employees | 3,541 | 3,551 | 3,496 | ||||
| CITY NATIONAL CORPORATION | |||||
| CONSOLIDATED QUARTERLY STATEMENTS OF INCOME | |||||
| (unaudited) | |||||
| 2012 | |||||
|
(Dollars in thousands except per share data) |
Fourth Quarter |
Third Quarter |
Second Quarter |
First Quarter |
Year to Date |
| Interest income | $ 218,302 | $ 224,768 | $ 229,889 | $ 213,592 | $ 886,551 |
| Interest expense | 14,580 | 14,846 | 13,410 | 12,879 | 55,715 |
| Net interest income | 203,722 | 209,922 | 216,479 | 200,713 | 830,836 |
| Provision for credit losses on loans and leases, excluding covered loans | 7,000 | 2,000 | 1,000 | -- | 10,000 |
| Provision for losses on covered loans | 6,498 | 18,089 | 13,293 | 7,466 | 45,346 |
| Noninterest income | |||||
| Trust and investment fees | 44,026 | 43,477 | 34,067 | 33,654 | 155,224 |
| Brokerage and mutual fund fees | 8,424 | 9,059 | 5,293 | 5,028 | 27,804 |
| Cash management and deposit transaction fees | 11,480 | 11,526 | 11,475 | 11,168 | 45,649 |
| International services | 11,342 | 9,819 | 10,017 | 8,785 | 39,963 |
| FDIC loss sharing (expense) income, net | (2,524) | 1,667 | (6,026) | 866 | (6,017) |
| Gain on disposal of assets | 2,892 | 3,199 | 3,011 | 2,191 | 11,293 |
| Gain (loss) on securities | 13 | 817 | (457) | 449 | 822 |
| Other | 24,225 | 27,693 | 17,388 | 13,559 | 82,865 |
| Total noninterest income | 99,878 | 107,257 | 74,768 | 75,700 | 357,603 |
| Noninterest expense | |||||
| Salaries and employee benefits | 123,812 | 120,210 | 115,035 | 120,245 | 479,302 |
| Net occupancy of premises | 17,554 | 16,238 | 14,056 | 13,686 | 61,534 |
| Legal and professional fees | 17,844 | 11,757 | 11,359 | 11,880 | 52,840 |
| Information services | 8,896 | 8,660 | 8,539 | 8,149 | 34,244 |
| Depreciation and amortization | 8,720 | 8,324 | 8,013 | 7,428 | 32,485 |
| Amortization of intangibles | 1,932 | 1,932 | 1,518 | 1,886 | 7,268 |
| Marketing and advertising | 9,111 | 7,141 | 7,597 | 6,816 | 30,665 |
| Office services and equipment | 4,735 | 4,673 | 4,492 | 3,948 | 17,848 |
| Other real estate owned | 9,869 | 8,749 | 7,541 | 12,094 | 38,253 |
| FDIC assessments | 4,499 | 4,616 | 4,523 | 4,479 | 18,117 |
| Other | 15,044 | 15,586 | 11,843 | 10,109 | 52,582 |
| Total noninterest expense | 222,016 | 207,886 | 194,516 | 200,720 | 825,138 |
| Income before taxes | 68,086 | 89,204 | 82,438 | 68,227 | 307,955 |
| Applicable income taxes | 20,780 | 29,052 | 27,271 | 21,719 | 98,822 |
| Net income | $ 47,306 | $ 60,152 | $ 55,167 | $ 46,508 | $ 209,133 |
| Less: Net income attributable to noncontrolling interest | 60 | 372 | 409 | 243 | 1,084 |
| Net income attributable to City National Corporation | $ 47,246 | $ 59,780 | $ 54,758 | $ 46,265 | $ 208,049 |
| Other Data: | |||||
| Earnings per common share - basic | $ 0.87 | $ 1.10 | $ 1.02 | $ 0.86 | $ 3.85 |
| Earnings per common share - diluted | $ 0.87 | $ 1.10 | $ 1.01 | $ 0.86 | $ 3.83 |
| Dividends paid per common share | $ 0.75 | $ 0.25 | $ 0.25 | $ 0.25 | $ 1.50 |
| Common dividend payout ratio | 86.16% | 22.63% | 24.57% | 28.91% | 38.96% |
| Return on average assets | 0.69% | 0.93% | 0.90% | 0.79% | 0.82% |
| Return on average common equity | 8.03% | 10.35% | 9.86% | 8.58% | 9.20% |
| Return on average tangible common equity | 11.66% | 15.05% | 13.42% | 11.57% | 12.92% |
| Net interest margin (Fully taxable-equivalent) | 3.27% | 3.58% | 3.91% | 3.74% | 3.61% |
| Full-time equivalent employees | 3,472 | 3,439 | 3,330 | 3,235 | |
| CITY NATIONAL CORPORATION | |||
| CONSOLIDATED PERIOD END BALANCE SHEETS | |||
| (unaudited) | |||
| 2013 | |||
| (In thousands) |
Third Quarter |
Second Quarter |
First Quarter |
| Assets | |||
| Cash and due from banks | $ 301,106 | $ 146,338 | $ 144,290 |
| Due from banks - interest-bearing | 1,045,608 | 156,221 | 123,146 |
| Federal funds sold and securities purchased under resale agreements | 200,000 | 200,000 | 219,500 |
| Securities available-for-sale | 6,895,130 | 7,044,571 | 7,738,051 |
| Securities held-to-maturity | 1,649,520 | 1,503,973 | 1,400,890 |
| Trading securities | 51,451 | 48,655 | 53,526 |
| Loans and leases: | |||
| Commercial | 7,856,244 | 7,497,105 | 7,170,370 |
| Commercial real estate mortgages | 3,217,668 | 3,101,169 | 2,937,457 |
| Residential mortgages | 4,418,231 | 4,153,051 | 4,027,741 |
| Real estate construction | 240,004 | 217,808 | 247,114 |
| Home equity loans and lines of credit | 681,879 | 700,681 | 696,679 |
| Installment | 152,107 | 149,438 | 137,545 |
| Loans and leases, excluding covered loans | 16,566,133 | 15,819,252 | 15,216,906 |
| Allowance for loan and lease losses | (295,947) | (289,914) | (282,328) |
| Loans and leases, excluding covered loans, net | 16,270,186 | 15,529,338 | 14,934,578 |
| Covered loans, net (1) | 754,190 | 843,582 | 909,563 |
| Net loans and leases | 17,024,376 | 16,372,920 | 15,844,141 |
| Premises and equipment, net | 168,600 | 162,535 | 152,389 |
| Goodwill and other intangibles | 684,965 | 686,897 | 688,829 |
| Other real estate owned (2) | 48,723 | 61,477 | 63,537 |
| FDIC indemnification asset | 101,124 | 117,295 | 142,906 |
| Other assets | 888,801 | 878,620 | 862,549 |
| Total assets | $ 29,059,404 | $ 27,379,502 | $ 27,433,754 |
| Liabilities | |||
| Deposits: | |||
| Noninterest-bearing | $ 15,205,973 | $ 14,288,001 | $ 13,800,017 |
| Interest-bearing | 10,030,896 | 9,363,756 | 9,137,569 |
| Total deposits | 25,236,869 | 23,651,757 | 22,937,586 |
| Short-term borrowings | 2,588 | 2,675 | 806,760 |
| Long-term debt | 719,326 | 706,537 | 702,967 |
| Other liabilities | 472,893 | 433,822 | 388,439 |
| Total liabilities | 26,431,676 | 24,794,791 | 24,835,752 |
| Redeemable noncontrolling interest | 39,840 | 39,943 | 41,113 |
| Shareholders' equity | |||
| Preferred stock | 169,920 | 169,920 | 169,920 |
| Common stock | 54,400 | 54,274 | 54,133 |
| Additional paid-in capital | 519,760 | 507,560 | 496,013 |
| Accumulated other comprehensive income | (10,355) | 6,585 | 74,222 |
| Retained earnings | 1,879,240 | 1,831,725 | 1,788,041 |
| Treasury shares | (25,077) | (25,296) | (25,440) |
| Total common shareholders' equity | 2,417,968 | 2,374,848 | 2,386,969 |
| Total shareholders' equity | 2,587,888 | 2,544,768 | 2,556,889 |
| Total liabilities and shareholders' equity | $ 29,059,404 | $ 27,379,502 | $ 27,433,754 |
| (1) Covered loans are net of $25.9 million, $24.4 million and $42.4 million of allowance for loan losses as of September 30, 2013, June 30, 2013 and March 31, 2013, respectively. | |||
|
(2) Other real estate owned includes $29.8 million, $41.8 million and $43.8 million covered by FDIC loss share at September 30, 2013, June 30, 2013 and March 31, 2013, respectively. |
|||
| CITY NATIONAL CORPORATION | ||||
| CONSOLIDATED PERIOD END BALANCE SHEETS | ||||
| (unaudited) | ||||
| 2012 | ||||
| Fourth | Third | Second | First | |
| (In thousands) | Quarter | Quarter | Quarter | Quarter |
| Assets | ||||
| Cash and due from banks | $ 151,969 | $ 235,038 | $ 162,894 | $ 210,799 |
| Due from banks - interest-bearing | 246,336 | 335,300 | 106,109 | 101,375 |
| Federal funds sold | 17,100 | 19,500 | 162,000 | 156,000 |
| Securities available-for-sale | 9,205,989 | 7,872,064 | 6,865,881 | 6,838,710 |
| Securities held-to-maturity | 1,398,403 | 1,174,161 | 1,100,229 | 996,613 |
| Trading securities | 115,059 | 64,749 | 62,585 | 82,589 |
| Loans and leases: | ||||
| Commercial | 6,949,073 | 6,264,562 | 6,086,947 | 5,573,782 |
| Commercial real estate mortgages | 2,829,694 | 2,463,664 | 2,424,333 | 2,213,114 |
| Residential mortgages | 3,962,205 | 3,897,690 | 3,822,630 | 3,805,807 |
| Real estate construction | 222,780 | 242,137 | 301,829 | 313,409 |
| Home equity loans and lines of credit | 711,750 | 718,966 | 741,270 | 715,997 |
| Installment | 142,793 | 137,632 | 130,200 | 125,793 |
| Loans and leases, excluding covered loans | 14,818,295 | 13,724,651 | 13,507,209 | 12,747,902 |
| Allowance for loan and lease losses | (277,888) | (268,440) | (269,534) | (266,077) |
| Loans and leases, excluding covered loans, net | 14,540,407 | 13,456,211 | 13,237,675 | 12,481,825 |
| Covered loans, net (1) | 986,223 | 1,099,359 | 1,216,988 | 1,335,685 |
| Net loans and leases | 15,526,630 | 14,555,570 | 14,454,663 | 13,817,510 |
| Premises and equipment, net | 149,433 | 147,621 | 147,245 | 143,238 |
| Goodwill and other intangibles | 690,761 | 691,765 | 589,114 | 521,717 |
| Other real estate owned (2) | 79,303 | 110,673 | 117,501 | 107,530 |
| FDIC indemnification asset | 150,018 | 160,991 | 170,654 | 185,392 |
| Other assets | 887,491 | 884,096 | 863,098 | 877,016 |
| Total assets | $ 28,618,492 | $ 26,251,528 | $ 24,801,973 | $ 24,038,489 |
| Liabilities | ||||
| Deposits: | ||||
| Noninterest-bearing | $ 14,264,797 | $ 13,432,413 | $ 12,187,075 | $ 11,550,000 |
| Interest-bearing | 9,237,558 | 9,079,903 | 8,921,977 | 9,237,737 |
| Total deposits | 23,502,355 | 22,512,316 | 21,109,052 | 20,787,737 |
| Short-term borrowings | 1,423,798 | 211,739 | 322,077 | 222,776 |
| Long-term debt | 706,051 | 706,035 | 712,280 | 482,024 |
| Other liabilities | 439,858 | 449,728 | 361,300 | 302,951 |
| Total liabilities | 26,072,062 | 23,879,818 | 22,504,709 | 21,795,488 |
| Redeemable noncontrolling interest | 41,112 | 41,386 | 41,899 | 43,436 |
| Shareholders' equity | ||||
| Preferred stock | 169,920 | -- | -- | -- |
| Common stock | 53,886 | 53,886 | 53,886 | 53,886 |
| Additional paid-in capital | 490,339 | 485,975 | 491,439 | 489,717 |
| Accumulated other comprehensive income | 86,582 | 93,924 | 82,807 | 81,342 |
| Retained earnings | 1,738,957 | 1,732,417 | 1,686,163 | 1,644,861 |
| Treasury shares | (34,366) | (35,878) | (58,930) | (70,241) |
| Total common shareholders' equity | 2,335,398 | 2,330,324 | 2,255,365 | 2,199,565 |
| Total shareholders' equity | 2,505,318 | 2,330,324 | 2,255,365 | 2,199,565 |
| Total liabilities and shareholders' equity | $ 28,618,492 | $ 26,251,528 | $ 24,801,973 | $ 24,038,489 |
| (1) Covered loans are net of $44.8 million, $45.0 million, $43.1 million and $61.5 million of allowance for loan losses as of December 31, 2012, September 30, 2012, June 30, 2012 and March 31, 2012, respectively. | ||||
|
(2) Other real estate owned includes $58.3 million, $83.6 million, $82.8 million and $78.5 million covered by FDIC loss share at December 31, 2012, September 30, 2012, June 30, 2012 and March 31, 2012, respectively. |
||||
| CITY NATIONAL CORPORATION | |||||||||
| CREDIT LOSS EXPERIENCE | |||||||||
| (unaudited) | |||||||||
| 2013 | 2012 | ||||||||
| Third | Second | First | Year To | Fourth | Third | Second | First | Year To | |
| (Dollars in thousands) | Quarter | Quarter | Quarter | Date | Quarter | Quarter | Quarter | Quarter | Date |
| Allowance for Loan and Lease Losses, Excluding Covered Loans | |||||||||
| Balance at beginning of period | $ 289,914 | $ 282,328 | $ 277,888 | $ 277,888 | $ 268,440 | $ 269,534 | $ 266,077 | $ 262,557 | $ 262,557 |
| Net recoveries/(charge-offs): | |||||||||
| Commercial | 4,375 | 2,855 | 2,173 | 9,403 | 2,002 | (4,936) | 8,092 | 5,283 | 10,441 |
| Commercial real estate mortgages | (584) | 1,034 | 3 | 453 | (290) | (241) | 1,113 | (666) | (84) |
| Residential mortgages | 40 | 37 | (68) | 9 | (7) | (535) | (543) | (494) | (1,579) |
| Real estate construction | 2,945 | 2,682 | 2,666 | 8,293 | 170 | 3,105 | (4,839) | 104 | (1,460) |
| Home equity loans and lines of credit | (194) | 375 | (112) | 69 | (169) | (32) | (808) | (154) | (1,163) |
| Installment | 200 | 522 | 146 | 868 | 319 | 454 | (274) | 417 | 916 |
| Total net recoveries/(charge-offs) | 6,782 | 7,505 | 4,808 | 19,095 | 2,025 | (2,185) | 2,741 | 4,490 | 7,071 |
| Provision for credit losses | -- | -- | -- | -- | 7,000 | 2,000 | 1,000 | -- | 10,000 |
| Transfers (to) from reserve for off-balance sheet credit commitments | (749) | 81 | (368) | (1,036) | 423 | (909) | (284) | (970) | (1,740) |
| Balance at end of period | $ 295,947 | $ 289,914 | $ 282,328 | $ 295,947 | 277,888 | $ 268,440 | $ 269,534 | $ 266,077 | $ 277,888 |
| Net Recoveries/(Charge-offs) to Average Total Loans and Leases, Excluding Covered Loans (annualized): | |||||||||
| Commercial | 0.23% | 0.16% | 0.13% | 0.17% | 0.12% | (0.32)% | 0.56% | 0.40% | 0.18% |
| Commercial real estate mortgages | (0.07)% | 0.14% | 0.00% | 0.02% | (0.04)% | (0.04)% | 0.20% | (0.12)% | (0.00)% |
| Residential mortgages | 0.00% | 0.00% | (0.01)% | 0.00% | (0.00)% | (0.06)% | (0.06)% | (0.05)% | (0.04)% |
| Real estate construction | 5.31% | 4.51% | 4.60% | 4.80% | 0.29% | 4.65% | (6.26)% | 0.13% | (0.52)% |
| Home equity loans and lines of credit | (0.11)% | 0.21% | (0.06)% | 0.01% | (0.09)% | (0.02)% | (0.44)% | (0.09)% | (0.16)% |
| Installment | 0.54% | 1.44% | 0.42% | 0.80% | 0.91% | 1.34% | (0.85)% | 1.30% | 0.69% |
| Total loans and leases, excluding covered loans | 0.17% | 0.20% | 0.13% | 0.17% | 0.06% | (0.06)% | 0.08% | 0.15% | 0.05% |
| Reserve for Off-Balance Sheet Credit Commitments | |||||||||
| Balance at beginning of period | $ 25,124 | $ 25,205 | $ 24,837 | $ 24,837 | $ 25,260 | $ 24,351 | $ 24,067 | $ 23,097 | $ 23,097 |
| Transfers from (to) allowance | 749 | (81) | 368 | 1,036 | (423) | 909 | 284 | 970 | 1,740 |
| Balance at end of period | $ 25,873 | $ 25,124 | $ 25,205 | $ 25,873 | $ 24,837 | $ 25,260 | $ 24,351 | $ 24,067 | $ 24,837 |
| Allowance for Losses on Covered Loans | |||||||||
| Balance at beginning of period | $ 24,414 | $ 42,354 | $ 44,781 | $ 44,781 | $ 44,978 | $ 43,147 | $ 61,471 | $ 64,565 | $ 64,565 |
| Provision for losses | 2,496 | (11,927) | 9,892 | 461 | 6,498 | 18,089 | 13,293 | 7,466 | 45,346 |
| Reduction in allowance due to loan removals | (1,028) | (6,013) | (12,319) | (19,360) | (6,695) | (16,258) | (31,617) | (10,560) | (65,130) |
| Balance at end of period | $ 25,882 | $ 24,414 | $ 42,354 | $ 25,882 | $ 44,781 | $ 44,978 | $ 43,147 | $ 61,471 | $ 44,781 |
| CITY NATIONAL CORPORATION | |||||||
| NONPERFORMING ASSETS | |||||||
| (unaudited) | |||||||
| 2013 | 2012 | ||||||
| Third | Second | First | Fourth | Third | Second | First | |
| (Dollars in thousands) | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter |
| Nonperforming assets, excluding covered assets | |||||||
| Nonaccrual loans, excluding covered loans | |||||||
| Commercial | $ 10,127 | $ 11,679 | $ 7,292 | $ 9,207 | $ 18,848 | $ 19,056 | $ 19,584 |
| Commercial real estate mortgages | 19,020 | 22,433 | 23,066 | 33,198 | 36,580 | 28,780 | 21,071 |
| Residential mortgages | 9,674 | 10,580 | 9,136 | 9,603 | 11,680 | 14,064 | 13,628 |
| Real estate construction | 25,471 | 25,718 | 39,608 | 40,882 | 28,963 | 29,676 | 48,964 |
| Home equity loans and lines of credit | 5,289 | 6,239 | 4,103 | 6,424 | 6,946 | 6,505 | 8,831 |
| Installment | 21 | 24 | 70 | 473 | 477 | 575 | 729 |
| Total nonaccrual loans, excluding covered loans | 69,602 | 76,673 | 83,275 | 99,787 | 103,494 | 98,656 | 112,807 |
| Other real estate owned, excluding covered OREO | 18,905 | 19,676 | 19,786 | 21,027 | 27,055 | 34,667 | 29,074 |
| Total nonperforming assets, excluding covered assets | $ 88,507 | $ 96,349 | $ 103,061 | $ 120,814 | $ 130,549 | $ 133,323 | $ 141,881 |
| Nonperforming covered assets | |||||||
| Nonaccrual loans | $ -- | $ -- | $ -- | $ -- | $ -- | $ 422 | $ 422 |
| Other real estate owned | 29,818 | 41,801 | 43,751 | 58,276 | 83,618 | 82,834 | 78,456 |
| Total nonperforming covered assets | $ 29,818 | $ 41,801 | $ 43,751 | $ 58,276 | $ 83,618 | $ 83,256 | $ 78,878 |
| Loans 90 days or more past due on | |||||||
| accrual status, excluding covered loans | $ 383 | $ 643 | $ 1,688 | $ 981 | $ 433 | $ 2,065 | $ 654 |
| Covered loans 90 days or more past due | |||||||
| on accrual status | $ 63,071 | $ 89,439 | $ 102,268 | $ 112,396 | $ 140,041 | $ 190,005 | $ 265,175 |
| Allowance for loan and lease losses as a percentage of: | |||||||
| Nonaccrual loans | 425.20% | 378.12% | 339.03% | 278.48% | 259.38% | 273.21% | 235.87% |
| Total nonperforming assets, | |||||||
| excluding covered assets | 334.38% | 300.90% | 273.94% | 230.01% | 205.62% | 202.17% | 187.54% |
| Total loans and leases, | |||||||
| excluding covered loans | 1.79% | 1.83% | 1.86% | 1.88% | 1.96% | 2.00% | 2.09% |
| Nonaccrual loans as a percentage of total loans, | |||||||
| excluding covered loans | 0.42% | 0.48% | 0.55% | 0.67% | 0.75% | 0.73% | 0.88% |
| Nonperforming assets, excluding covered assets, as a percentage of: | |||||||
| Total loans and other real estate owned, | |||||||
| excluding covered assets | 0.53% | 0.61% | 0.68% | 0.81% | 0.95% | 0.98% | 1.11% |
| Total assets | 0.30% | 0.35% | 0.38% | 0.42% | 0.50% | 0.54% | 0.59% |
| CITY NATIONAL CORPORATION | ||||||||
| AVERAGE BALANCES AND RATES | ||||||||
| (unaudited) | ||||||||
| 2013 | ||||||||
| Third Quarter | Second Quarter | First Quarter | Year to Date | |||||
| Average | Average | Average | Average | Average | Average | Average | Average | |
| (Dollars in millions) | Balance | Rate | Balance | Rate | Balance | Rate | Balance | Rate |
| Assets | ||||||||
| Interest-earning assets | ||||||||
| Loans and leases | ||||||||
| Commercial | $ 7,540 | 3.53% | $ 7,301 | 3.58% | $ 6,876 | 3.71% | $ 7,241 | 3.60% |
| Commercial real estate mortgages | 3,193 | 3.74 | 2,962 | 4.01 | 2,865 | 4.00 | 3,008 | 3.91 |
| Residential mortgages | 4,254 | 3.61 | 4,083 | 3.72 | 3,981 | 3.83 | 4,107 | 3.71 |
| Real estate construction | 220 | 4.53 | 239 | 4.25 | 235 | 4.64 | 231 | 4.47 |
| Home equity loans and lines of credit | 684 | 3.56 | 704 | 3.60 | 712 | 3.68 | 700 | 3.61 |
| Installment | 149 | 4.30 | 145 | 4.69 | 140 | 4.22 | 145 | 4.41 |
| Total loans and leases, | ||||||||
| excluding covered loans | 16,040 | 3.61 | 15,434 | 3.72 | 14,809 | 3.83 | 15,432 | 3.72 |
| Covered loans | 819 | 20.53 | 910 | 14.34 | 990 | 12.98 | 906 | 15.72 |
| Total loans and leases | 16,859 | 4.42 | 16,344 | 4.32 | 15,799 | 4.42 | 16,338 | 4.38 |
| Due from banks - interest-bearing | 611 | 0.26 | 236 | 0.27 | 193 | 0.24 | 348 | 0.26 |
| Federal funds sold and securities | ||||||||
| purchased under resale agreements | 283 | 2.19 | 277 | 2.25 | 154 | 2.99 | 238 | 2.39 |
| Securities | 8,576 | 1.99 | 8,867 | 1.98 | 9,796 | 1.91 | 9,075 | 1.96 |
| Other interest-earning assets | 89 | 5.51 | 96 | 4.48 | 105 | 3.72 | 97 | 4.53 |
| Total interest-earning assets | 26,418 | 3.51 | 25,820 | 3.46 | 26,047 | 3.44 | 26,096 | 3.47 |
| Allowance for loan and lease losses | (319) | (325) | (328) | (324) | ||||
| Cash and due from banks | 138 | 129 | 129 | 132 | ||||
| Other non-earning assets | 1,824 | 1,846 | 1,861 | 1,844 | ||||
| Total assets | $ 28,061 | $ 27,470 | $ 27,709 | $ 27,748 | ||||
| Liabilities and Equity | ||||||||
| Interest-bearing deposits | ||||||||
| Interest checking accounts | $ 2,289 | 0.07% | $ 2,173 | 0.07% | $ 2,217 | 0.08% | $ 2,227 | 0.07% |
| Money market accounts | 6,286 | 0.11 | 5,759 | 0.11 | 5,692 | 0.11 | 5,914 | 0.11 |
| Savings deposits | 420 | 0.09 | 415 | 0.10 | 419 | 0.11 | 418 | 0.10 |
| Time deposits - under $100,000 | 185 | 0.29 | 192 | 0.37 | 201 | 0.37 | 192 | 0.34 |
| Time deposits -- $100,000 and over | 586 | 0.39 | 708 | 0.38 | 604 | 0.42 | 633 | 0.40 |
| Total interest-bearing deposits | 9,766 | 0.12 | 9,247 | 0.13 | 9,133 | 0.13 | 9,384 | 0.13 |
| Federal funds purchased and securities | ||||||||
| sold under repurchase agreements | 2 | 0.08 | 374 | 0.13 | 840 | 0.13 | 403 | 0.13 |
| Other borrowings | 712 | 6.07 | 928 | 4.74 | 1,452 | 3.21 | 1,028 | 4.34 |
| Total interest-bearing liabilities | 10,480 | 0.52 | 10,549 | 0.54 | 11,425 | 0.52 | 10,815 | 0.53 |
| Noninterest-bearing deposits | 14,536 | 13,872 | 13,278 | 13,900 | ||||
| Other liabilities | 474 | 466 | 473 | 471 | ||||
| Total equity | 2,571 | 2,582 | 2,533 | 2,562 | ||||
| Total liabilities and equity | $ 28,061 | $ 27,470 | $ 27,709 | $ 27,748 | ||||
| Net interest spread | 2.99% | 2.92% | 2.92% | 2.94% | ||||
| Net interest margin | 3.30% | 3.24% | 3.21% | 3.25% | ||||
| Average prime rate | 3.25% | 3.25% | 3.25% | 3.25% | ||||
| CITY NATIONAL CORPORATION | ||||||||||
| AVERAGE BALANCES AND RATES | ||||||||||
| (unaudited) | ||||||||||
| 2012 | ||||||||||
| Fourth Quarter | Third Quarter | Second Quarter | First Quarter | Year to Date | ||||||
| Average | Average | Average | Average | Average | Average | Average | Average | Average | Average | |
| (Dollars in millions) | Balance | Rate | Balance | Rate | Balance | Rate | Balance | Rate | Balance | Rate |
| Assets | ||||||||||
| Interest-earning assets | ||||||||||
| Loans and leases | ||||||||||
| Commercial | $ 6,395 | 3.89% | $ 6,128 | 3.97% | $ 5,845 | 4.16% | $ 5,319 | 3.94% | $ 5,923 | 3.99% |
| Commercial real estate mortgages | 2,574 | 4.34 | 2,464 | 4.45 | 2,295 | 4.70 | 2,166 | 4.87 | 2,376 | 4.57 |
| Residential mortgages | 3,928 | 3.95 | 3,865 | 4.11 | 3,815 | 4.28 | 3,777 | 4.36 | 3,847 | 4.17 |
| Real estate construction | 236 | 5.33 | 265 | 5.67 | 311 | 4.31 | 314 | 5.33 | 281 | 5.13 |
| Home equity loans and lines of credit | 711 | 3.52 | 731 | 3.52 | 731 | 3.53 | 727 | 3.58 | 725 | 3.54 |
| Installment | 140 | 4.48 | 135 | 4.51 | 129 | 4.60 | 129 | 4.67 | 133 | 4.56 |
| Total loans and leases, excluding covered loans | 13,984 | 4.00 | 13,588 | 4.10 | 13,126 | 4.27 | 12,432 | 4.26 | 13,285 | 4.15 |
| Covered loans | 1,090 | 13.09 | 1,207 | 13.92 | 1,341 | 14.51 | 1,439 | 10.63 | 1,269 | 12.97 |
| Total loans and leases | 15,074 | 4.65 | 14,795 | 4.90 | 14,467 | 5.22 | 13,871 | 4.93 | 14,554 | 4.92 |
| Due from banks - interest-bearing | 441 | 0.26 | 247 | 0.26 | 293 | 0.24 | 167 | 0.22 | 287 | 0.25 |
| Federal funds sold and securities purchased under resale agreements | 191 | 0.29 | 105 | 0.28 | 137 | 0.28 | 15 | 0.28 | 112 | 0.28 |
| Securities | 9,653 | 1.91 | 8,631 | 2.16 | 7,755 | 2.37 | 7,929 | 2.40 | 8,496 | 2.19 |
| Other interest-earning assets | 109 | 3.75 | 114 | 2.40 | 117 | 2.39 | 121 | 2.30 | 115 | 2.69 |
| Total interest-earning assets | 25,468 | 3.49 | 23,892 | 3.82 | 22,769 | 4.15 | 22,103 | 3.97 | 23,564 | 3.85 |
| Allowance for loan and lease losses | (317) | (319) | (331) | (335) | (326) | |||||
| Cash and due from banks | 231 | 184 | 148 | 141 | 176 | |||||
| Other non-earning assets | 1,874 | 1,898 | 1,777 | 1,736 | 1,822 | |||||
| Total assets | $ 27,256 | $ 25,655 | $ 24,363 | $ 23,645 | $ 25,236 | |||||
| Liabilities and Equity | ||||||||||
| Interest-bearing deposits | ||||||||||
| Interest checking accounts | $ 2,098 | 0.08% | $ 1,981 | 0.09% | $ 1,890 | 0.10% | $ 1,952 | 0.11% | $ 1,981 | 0.10% |
| Money market accounts | 5,907 | 0.11 | 5,838 | 0.11 | 5,856 | 0.13 | 6,018 | 0.15 | 5,904 | 0.13 |
| Savings deposits | 384 | 0.12 | 371 | 0.14 | 360 | 0.14 | 358 | 0.14 | 368 | 0.14 |
| Time deposits - under $100,000 | 210 | 0.41 | 220 | 0.51 | 228 | 0.50 | 242 | 0.49 | 225 | 0.48 |
| Time deposits -- $100,000 and over | 605 | 0.44 | 732 | 0.41 | 733 | 0.45 | 697 | 0.51 | 692 | 0.45 |
| Total interest-bearing deposits | 9,204 | 0.14 | 9,142 | 0.14 | 9,067 | 0.16 | 9,267 | 0.18 | 9,170 | 0.15 |
| Federal funds purchased and securities sold under repurchase agreements | 15 | 0.12 | 24 | 0.15 | 4 | 0.11 | 166 | 0.08 | 52 | 0.09 |
| Other borrowings | 917 | 4.97 | 922 | 4.97 | 797 | 4.97 | 697 | 5.09 | 834 | 4.99 |
| Total interest-bearing liabilities | 10,136 | 0.57 | 10,088 | 0.59 | 9,868 | 0.55 | 10,130 | 0.51 | 10,056 | 0.55 |
| Noninterest-bearing deposits | 14,182 | 12,799 | 11,881 | 10,950 | 12,459 | |||||
| Other liabilities | 506 | 471 | 380 | 396 | 438 | |||||
| Total equity | 2,432 | 2,297 | 2,234 | 2,169 | 2,283 | |||||
| Total liabilities and equity | $ 27,256 | $ 25,655 | $ 24,363 | $ 23,645 | $ 25,236 | |||||
| Net interest spread | 2.92% | 3.23% | 3.60% | 3.46% | 3.30% | |||||
| Net interest margin | 3.27% | 3.58% | 3.91% | 3.74% | 3.61% | |||||
| Average prime rate | 3.25% | 3.25% | 3.25% | 3.25% | 3.25% | |||||
| CITY NATIONAL CORPORATION | |||||||||||
| CAPITAL AND CREDIT RATING DATA | |||||||||||
| (unaudited) | |||||||||||
| 2013 | 2012 | ||||||||||
| Third | Second | First | Year To | Fourth | Third | Second | First | Year To | |||
| Quarter | Quarter | Quarter | Date | Quarter | Quarter | Quarter | Quarter | Date | |||
| Per Common Share: | |||||||||||
| Shares outstanding (in thousands): | |||||||||||
| Average - Basic | 54,274 | 54,105 | 53,731 | 54,039 | 53,566 | 53,425 | 53,105 | 52,741 | 53,211 | ||
| Average - Diluted | 54,820 | 54,477 | 54,068 | 54,464 | 53,743 | 53,711 | 53,373 | 53,021 | 53,475 | ||
| Period-end | 53,915 | 53,781 | 53,638 | 53,216 | 53,190 | 52,822 | 52,661 | ||||
| Book value for shareholders | $ 44.85 | $ 44.16 | $ 44.50 | $ 43.89 | $ 43.81 | $ 42.70 | $ 41.77 | ||||
| Closing price: | |||||||||||
| High | $ 71.15 | $ 63.66 | $ 59.61 | $ 71.15 | $ 52.60 | $ 54.48 | $ 54.63 | $ 54.44 | $ 54.63 | ||
| Low | 64.11 | 54.36 | 51.13 | 51.13 | 47.27 | 48.20 | 46.39 | 45.39 | 45.39 | ||
| Period-end | 66.66 | 63.37 | 58.91 | 49.52 | 51.51 | 48.58 | 52.47 | ||||
| Capital Ratios (Dollars in millions): | |||||||||||
| Risk-based capital | |||||||||||
| Risk-weighted assets (1) | $ 19,977 | $ 19,256 | $ 18,872 | $ 18,627 | $ 17,174 | $ 16,723 | $ 15,840 | ||||
| Tier 1 common equity | $ 1,761 | $ 1,700 | $ 1,643 | $ 1,578 | $ 1,566 | $ 1,597 | $ 1,611 | ||||
| Percentage of risk-weighted assets (2) | 8.82% | 8.83% | 8.71% | 8.47% | 9.12% | 9.55% | 10.17% | ||||
| Tier 1 capital | $ 1,936 | $ 1,875 | $ 1,818 | $ 1,753 | $ 1,571 | $ 1,602 | $ 1,616 | ||||
| Percentage of risk-weighted assets | 9.69% | 9.74% | 9.64% | 9.41% | 9.15% | 9.58% | 10.20% | ||||
| Total capital | $ 2,532 | $ 2,461 | $ 2,399 | $ 2,332 | $ 2,133 | $ 2,160 | $ 2,013 | ||||
| Percentage of risk-weighted assets | 12.67% | 12.78% | 12.71% | 12.52% | 12.42% | 12.91% | 12.71% | ||||
| Tier 1 leverage ratio | 7.07% | 7.00% | 6.72% | 6.60% | 6.29% | 6.74% | 6.98% | ||||
| Period-end equity to period-end assets | 8.91% | 9.29% | 9.32% | 8.75% | 8.88% | 9.09% | 9.15% | ||||
| Period-end common equity to period-end assets | 8.32% | 8.67% | 8.70% | 8.16% | 8.88% | 9.09% | 9.15% | ||||
| Average equity to average assets | 9.16% | 9.40% | 9.14% | 9.23% | 8.92% | 8.95% | 9.17% | 9.17% | 9.05% | ||
| Average common equity to average assets | 8.55% | 8.78% | 8.53% | 8.62% | 8.59% | 8.95% | 9.17% | 9.17% | 8.96% | ||
| Period-end tangible equity to period-end tangible assets (2) | 6.71% | 6.96% | 6.98% | 6.50% | 6.41% | 6.88% | 7.13% | ||||
| Period-end tangible common equity to period-end tangible assets (2) | 6.11% | 6.32% | 6.35% | 5.89% | 6.41% | 6.88% | 7.13% | ||||
| Average tangible equity to average tangible assets (2) | 6.88% | 7.07% | 6.82% | 6.93% | 6.55% | 6.45% | 7.01% | 7.12% | 6.77% | ||
| Average tangible common equity to average tangible assets (2) | 6.26% | 6.44% | 6.19% | 6.30% | 6.21% | 6.45% | 7.01% | 7.12% | 6.68% | ||
| Senior Debt Credit Ratings | |||||||||||
| For The Period Ended September 30, 2013 | |||||||||||
| Moody's | Fitch |
Standard & Poor's |
DBRS | ||||||||
| City National Bank | A1 | A- | A- | A (high) | |||||||
| City National Corporation | A2 | A- | BBB+ | A | |||||||
| (1) In accordance with applicable bank regulatory guidelines, risk-weighted assets are calculated by assigning assets and credit equivalent amounts of derivatives and off-balance sheet items to one of several broad risk categories according to the obligor, or, if relevant, the guarantor or the nature of the collateral. The aggregate dollar amount in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are added together for determining risk-weighted assets. | |||||||||||
| (2) The Tier 1 common equity to risk-weighted assets ratio, tangible equity to tangible assets ratio, and tangible common equity to tangible assets ratio are non-GAAP financial measures. See pages 15 and 16 for notes on non-GAAP measures. | |||||||||||
| CITY NATIONAL CORPORATION | ||||||||||
| COMPUTATION OF BASIC AND DILUTED EARNINGS PER COMMON SHARE | ||||||||||
| (unaudited) | ||||||||||
| City National applies the two-class method of computing basic and diluted earnings per common share ("EPS"). Under the two-class method, EPS is determined for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. The company grants restricted stock and restricted stock units under a share-based compensation plan that qualify as participating securities. The computation of basic and diluted EPS is presented in the following table: | ||||||||||
| 2013 | 2012 | 2012 | ||||||||
| Third | Second | First | Year to | Fourth | Third | Second | First | Full | Year to | |
| (Dollars in thousands, except per share amounts) | Quarter | Quarter | Quarter | Date | Quarter | Quarter | Quarter | Quarter | Year | Date* |
| Basic EPS: | ||||||||||
| Net income attributable to City National Corporation | $ 63,633 | $ 59,741 | $ 51,523 | $ 174,897 | $ 47,246 | $ 59,780 | $ 54,758 | $ 46,265 | $ 208,049 | $ 160,803 |
| Less: Dividends on preferred stock | 2,407 | 2,406 | 2,406 | 7,219 | -- | -- | -- | -- | -- | -- |
| Net income available to common shareholders | $ 61,226 | $ 57,335 | $ 49,117 | $ 167,678 | $ 47,246 | $ 59,780 | $ 54,758 | $ 46,265 | $ 208,049 | $ 160,803 |
| Less: Earnings allocated to participating securities | 688 | 656 | 637 | 1,975 | 652 | 842 | 788 | 738 | 3,008 | 2,380 |
| Earnings allocated to common shareholders | $ 60,538 | $ 56,679 | $ 48,480 | $ 165,703 | $ 46,594 | $ 58,938 | $ 53,970 | $ 45,527 | $ 205,041 | $ 158,423 |
| Weighted average shares outstanding | 54,274 | 54,105 | 53,731 | 54,039 | 53,566 | 53,425 | 53,105 | 52,741 | 53,211 | 53,092 |
| Basic earnings per common share | $ 1.12 | $ 1.05 | $ 0.90 | $ 3.07 | $ 0.87 | $ 1.10 | $ 1.02 | $ 0.86 | $ 3.85 | $ 2.98 |
| Diluted EPS: | ||||||||||
| Earnings allocated to shareholders (1) | $ 60,543 | $ 56,682 | $ 48,484 | $ 165,716 | $ 46,594 | $ 58,941 | $ 53,972 | $ 45,530 | $ 205,050 | $ 158,432 |
| Weighted average shares outstanding | 54,274 | 54,105 | 53,731 | 54,039 | 53,566 | 53,425 | 53,105 | 52,741 | 53,211 | 53,092 |
| Dilutive effect of equity awards | 546 | 372 | 337 | 425 | 177 | 286 | 268 | 280 | 264 | 284 |
| Weighted average diluted shares outstanding | 54,820 | 54,477 | 54,068 | 54,464 | 53,743 | 53,711 | 53,373 | 53,021 | 53,475 | 53,376 |
| Diluted earnings per common share | $ 1.10 | $ 1.04 | $ 0.90 | $ 3.04 | $ 0.87 | $ 1.10 | $ 1.01 | $ 0.86 | $ 3.83 | $ 2.97 |
| * For the nine months ended September 30, 2012. | ||||||||||
| (1) Earnings allocated to shareholders for basic and diluted EPS may differ under the two-class method as a result of adding common stock equivalents for options to dilutive shares outstanding, which alters the ratio used to allocate earnings to shareholders and participating securities for the purposes of calculating diluted EPS. | ||||||||||
| CITY NATIONAL CORPORATION | |||||
| SELECTED FINANCIAL INFORMATION ON COVERED ASSETS | |||||
| (unaudited) | |||||
| The following table provides selected components of income and expense related to covered assets: | |||||
| 2013 | 2012 | ||||
| Third | Second | Third | |||
| (In thousands) | Quarter | Quarter | Quarter | ||
| Summary Totals | |||||
| Net impairment (expense) income (Sum of A) | $ (483) | $ (1,463) | $ 2,639 | ||
| Other covered asset income (expense), net | 3,190 | (520) | (837) | ||
| Total income (expense), net | $ 2,707 | $ (1,983) | $ 1,802 | ||
| Interest income (1) | |||||
| Income on loans paid-off or fully charged-off | $ 25,849 | $ 15,880 | $ 22,164 | ||
| Provision for losses on covered loans | |||||
| Provision for losses on covered loans | A | 2,496 | (11,927) | 18,089 | |
| Noninterest income related to covered assets | |||||
| FDIC loss sharing (expense) income, net | |||||
| Gain (loss) on indemnification asset | A | $ 2,239 | $ (13,102) | $ 21,426 | |
| Indemnification asset amortization | (4,417) | (4,746) | (4,258) | ||
| Net FDIC reimbursement for OREO and loan expenses | 4,582 | 4,995 | 7,612 | ||
| Removal of indemnification asset for loans paid-off or fully charged-off | (9,746) | (7,650) | (9,731) | ||
| Removal of indemnification asset for unfunded loan commitments and loans transferred to OREO | (1,550) | (1,163) | (2,834) | ||
| Removal of indemnification asset for OREO and net reimbursement to FDIC for OREO sales | (2,451) | (428) | (1,219) | ||
| Loan recoveries shared with FDIC | (9,423) | (4,095) | (8,631) | ||
| Increase in FDIC clawback liability | A | (226) | (288) | (698) | |
| Total FDIC loss sharing (expense) income, net | (20,992) | (26,477) | 1,667 | ||
| Gain on disposal of assets | |||||
| Net gain on sale of OREO | 3,064 | 616 | 1,524 | ||
| Other income | |||||
| Net gain on transfers of covered loans to OREO | 1,936 | 1,445 | 4,907 | ||
| Amortization of fair value on acquired unfunded loan | |||||
| commitments | 48 | 283 | 192 | ||
| OREO income | 731 | 456 | 428 | ||
| Other | 711 | (318) | (632) | ||
| Total other income | 3,426 | 1,866 | 4,895 | ||
| Total noninterest income related to covered assets | $ (14,502) | $ (23,995) | $ 8,086 | ||
| Noninterest expense related to covered assets (2) | |||||
| Other real estate owned | |||||
| Valuation write-downs | $ 1,556 | $ 2,184 | $ 4,267 | ||
| Holding costs and foreclosure expense | 3,607 | 1,894 | 3,522 | ||
| Total other real estate owned | 5,163 | 4,078 | 7,789 | ||
| Legal and professional fees | 969 | 1,701 | 2,541 | ||
| Other operating expense | |||||
| Other covered asset expenses | 12 | 16 | 29 | ||
| Total noninterest expense related to covered assets (3) | $ 6,144 | $ 5,795 | $ 10,359 | ||
| Total income (expense), net | $ 2,707 | $ (1,983) | $ 1,802 | ||
| (1) Excludes base yield in interest income related to covered loans. | |||||
| (2) OREO, legal and professional fees, and other expenses related to covered assets must meet certain FDIC criteria in order for the expense amounts to be reimbursed. Certain amounts reflected in these categories may not be reimbursed by the FDIC. | |||||
| (3) Excludes personnel and other corporate overhead expenses that the company incurs to service covered assets and costs associated with the branches acquired in FDIC-assisted acquisitions. | |||||
| CITY NATIONAL CORPORATION | ||||||||||
| NON-GAAP FINANCIAL MEASURES | ||||||||||
| (unaudited) | ||||||||||
| (a) Noninterest expense, excluding the operating expenses of First American Equipment Finance and Rochdale Investment Management | ||||||||||
| Noninterest expense for the nine months ended September 30, 2013 was $632.1 million, an increase of 5 percent from $603.1 million for the same period last year. Excluding the operating expenses of First American Equipment Finance (acquired at the end of April 2012) and Rochdale Investment Management (acquired in July 2012), noninterest expense was $585.4 million for the nine months ended September 30, 2013, slightly down from $587.6 million for the nine months ended September 30, 2012. Management believes this non-GAAP financial measure enhances the comparability of the financial results with prior periods. | ||||||||||
| (b) Return on average tangible common equity ratio (annualized) | ||||||||||
| Return on average tangible common equity is a non-GAAP financial measure that represents the return on average common equity excluding goodwill and other intangible assets and their related amortization expense. Management reviews this measure in evaluating the company's performance and believes that investors may find it useful to evaluate the return on average common equity without the impact of goodwill and other intangible assets. A reconciliation of the GAAP to non-GAAP measure is set forth below: | ||||||||||
| 2013 | 2012 | 2012 | ||||||||
| Third | Second | First | Year to | Fourth | Third | Second | First | Full | Year to | |
| (Dollars in thousands) | Quarter | Quarter | Quarter | Date | Quarter | Quarter | Quarter | Quarter | Year | Date* |
| Net income available to common shareholders | $ 61,226 | $ 57,335 | $ 49,117 | $ 167,678 | $ 47,246 | $ 59,780 | $ 54,758 | $ 46,265 | $ 208,049 | $ 160,803 |
| Add: Amortization of intangibles, net of tax | 1,124 | 1,123 | 1,124 | 3,371 | 1,124 | 1,124 | 883 | 1,097 | 4,228 | 3,104 |
| Tangible net income available to common shareholders (A) | $ 62,350 | $ 58,458 | $ 50,241 | $ 171,049 | $ 48,370 | $ 60,904 | $ 55,641 | $ 47,362 | $ 212,277 | $ 163,907 |
| Average common equity | $ 2,400,624 | $ 2,412,148 | $ 2,363,507 | $ 2,392,229 | $ 2,341,763 | $ 2,296,754 | $ 2,234,411 | $ 2,168,748 | $ 2,260,740 | $ 2,233,536 |
| Less: Goodwill and other intangibles | (686,091) | (687,997) | (689,932) | (687,993) | (690,975) | (687,224) | (566,989) | (522,182) | (617,237) | (592,479) |
| Tangible common equity (B) | $ 1,714,533 | $ 1,724,151 | $ 1,673,575 | $ 1,704,236 | $ 1,650,788 | $ 1,609,530 | $ 1,667,422 | $ 1,646,566 | $ 1,643,503 | $ 1,641,057 |
| Return on average tangible common equity (A)/(B) | 14.43% | 13.60% | 12.17% | 13.42% | 11.66% | 15.05% | 13.42% | 11.57% | 12.92% | 13.34% |
| * For the nine months ended September 30, 2012. | ||||||||||
| (c ) Tier 1 common equity to risk-weighted assets | ||||||||||
| Tier 1 common equity to risk-weighted assets ratio, also known as Tier 1 common ratio, is calculated by dividing (a) Tier 1 capital less non-common components including qualifying perpetual preferred stock, qualifying noncontrolling interest in subsidiaries and qualifying trust preferred securities by (b) risk-weighted assets. Tier 1 capital and risk-weighted assets are calculated in accordance with applicable bank regulatory guidelines. This ratio is a non-GAAP measure that is used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews this measure in evaluating the company's capital levels and has included this ratio in response to market participants' interest in the Tier 1 common equity to risk-weighted assets ratio. | ||||||||||
| 2013 | 2012 | |||||||||
| Third | Second | First | Fourth | Third | Second | First | ||||
| (Dollars in thousands) | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | |||
| Tier 1 capital | $ 1,936,191 | $ 1,874,999 | $ 1,818,367 | $ 1,753,312 | $ 1,570,778 | $ 1,602,398 | $ 1,616,099 | |||
| Less: Preferred stock | (169,920) | (169,920) | (169,920) | (169,920) | -- | -- | -- | |||
| Less: Trust preferred securities | (5,155) | (5,155) | (5,155) | (5,155) | (5,155) | (5,155) | (5,155) | |||
| Tier 1 common equity (A) | $ 1,761,116 | $ 1,699,924 | $ 1,643,292 | $ 1,578,237 | $ 1,565,623 | $ 1,597,243 | $ 1,610,944 | |||
| Risk-weighted assets (B) | $19,977,106 | $19,255,862 | $18,872,451 | $18,627,165 | $17,174,382 | $16,722,999 | $15,839,944 | |||
| Tier 1 common equity to risk-weighted assets (A)/(B) | 8.82% | 8.83% | 8.71% | 8.47% | 9.12% | 9.55% | 10.17% | |||
| Under Basel III capital rules, the Company's estimated Tier 1 common equity ratio was 8.6 percent at September 30, 2013. This ratio was estimated based on management's interpretation of final rules adopted July 2, 2013, by the Federal Reserve Board establishing a new comprehensive capital framework for U.S. banking organizations that would implement the Basel III capital framework and certain provisions of the Dodd-Frank Act. Under management's interpretation of Basel III, estimated Tier 1 common equity was $1.8 billion and estimated risk-weighted assets were $20.7 billion. | ||||||||||
| CITY NATIONAL CORPORATION | |||||||||
| NON-GAAP FINANCIAL MEASURES (continued) | |||||||||
| (unaudited) | |||||||||
| (d) Tangible equity and tangible common equity ratios | |||||||||
| Tangible equity to tangible assets is a non-GAAP financial measure that represents total equity less identifiable intangible assets and goodwill divided by total assets less identifiable intangible assets and goodwill. Tangible common equity to tangible assets is a non-GAAP financial measure that represents tangible equity less preferred stock divided by total assets less identifiable intangible assets and goodwill. Management reviews both these measures in evaluating the company's capital levels and has included these ratios in response to market participant interest in tangible equity and tangible common equity as a measure of capital. A reconciliation of the GAAP to non-GAAP measure is set forth below: | |||||||||
| 2013 | 2012 | ||||||||
| Third | Second | First | Year to | Fourth | Third | Second | First | Year to | |
| (Dollars in thousands) | Quarter | Quarter | Quarter | Date | Quarter | Quarter | Quarter | Quarter | Date |
| Period End: | |||||||||
| Total equity | $ 2,587,888 | $ 2,544,768 | $ 2,556,889 | $ 2,505,318 | $ 2,330,324 | $ 2,255,365 | $ 2,199,565 | ||
| Less: Goodwill and other intangibles | (684,965) | (686,897) | (688,829) | (690,761) | (691,765) | (589,114) | (521,717) | ||
| Tangible equity (A) | 1,902,923 | 1,857,871 | 1,868,060 | 1,814,557 | 1,638,559 | 1,666,251 | 1,677,848 | ||
| Less: Preferred stock | (169,920) | (169,920) | (169,920) | (169,920) | -- | -- | -- | ||
| Tangible common equity (B) | $ 1,733,003 | $ 1,687,951 | $ 1,698,140 | $ 1,644,637 | $ 1,638,559 | $ 1,666,251 | $ 1,677,848 | ||
| Total assets | $ 29,059,404 | $ 27,379,502 | $ 27,433,754 | $ 28,618,492 | $ 26,251,528 | $ 24,801,973 | $ 24,038,489 | ||
| Less: Goodwill and other intangibles | (684,965) | (686,897) | (688,829) | (690,761) | (691,765) | (589,114) | (521,717) | ||
| Tangible assets (C) | $ 28,374,439 | $ 26,692,605 | $ 26,744,925 | $ 27,927,731 | $ 25,559,763 | $ 24,212,859 | $ 23,516,772 | ||
| Period-end tangible equity to period-end tangible assets (A)/(C) | 6.71% | 6.96% | 6.98% | 6.50% | 6.41% | 6.88% | 7.13% | ||
| Period-end tangible common equity to period-end tangible assets (B)/(C) | 6.11% | 6.32% | 6.35% | 5.89% | 6.41% | 6.88% | 7.13% | ||
| Average Balance: | |||||||||
| Total equity | $ 2,570,544 | $ 2,582,068 | $ 2,533,427 | $ 2,562,149 | $ 2,432,264 | $ 2,296,754 | $ 2,234,411 | $ 2,168,748 | $ 2,283,489 |
| Less: Goodwill and other intangibles | (686,091) | (687,997) | (689,932) | (687,993) | (690,975) | (687,224) | (566,989) | (522,182) | (617,237) |
| Tangible equity (D) | 1,884,453 | 1,894,071 | 1,843,495 | 1,874,156 | 1,741,289 | 1,609,530 | 1,667,422 | 1,646,566 | 1,666,252 |
| Less: Preferred stock | (169,920) | (169,920) | (169,920) | (169,920) | (90,501) | -- | -- | -- | (22,749) |
| Tangible common equity (E) | $ 1,714,533 | $ 1,724,151 | $ 1,673,575 | $ 1,704,236 | $ 1,650,788 | $ 1,609,530 | $ 1,667,422 | $ 1,646,566 | $ 1,643,503 |
| Total assets | $ 28,061,134 | $ 27,469,581 | $ 27,709,159 | $ 27,747,914 | $ 27,255,859 | $ 25,654,594 | $ 24,362,546 | $ 23,644,899 | $ 25,236,172 |
| Less: Goodwill and other intangibles | (686,091) | (687,997) | (689,932) | (687,993) | (690,975) | (687,224) | (566,989) | (522,182) | (617,237) |
| Tangible assets (F) | $ 27,375,043 | $ 26,781,584 | $ 27,019,227 | $ 27,059,921 | $ 26,564,884 | $ 24,967,370 | $ 23,795,557 | $ 23,122,717 | $ 24,618,935 |
| Average tangible equity to average tangible assets (D)/(F) | 6.88% | 7.07% | 6.82% | 6.93% | 6.55% | 6.45% | 7.01% | 7.12% | 6.77% |
| Average tangible common equity to average tangible assets (E)/(F) | 6.26% | 6.44% | 6.19% | 6.30% | 6.21% | 6.45% | 7.01% | 7.12% | 6.68% |
CONTACT: Financial/Investors
Christopher J. Carey, City National, 310.888.6777
Chris.Carey@cnb.com
Media
Cary Walker, City National, 213.673.7615
Cary.Walker@cnb.com