-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L4cxwfYExE3kjfqwHmDwAuVg1yojMumW7g9+EGP2tlz4JdoVZiqT+KGzIiZMUy8L qDtrNApwfEkgxHHJWCfYOA== 0000912057-00-002322.txt : 20000203 0000912057-00-002322.hdr.sgml : 20000203 ACCESSION NUMBER: 0000912057-00-002322 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000113 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000126 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CITY NATIONAL CORP CENTRAL INDEX KEY: 0000201461 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 952568550 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-10521 FILM NUMBER: 513022 BUSINESS ADDRESS: STREET 1: 400 N ROXBURY DR CITY: BEVERLY HILLS STATE: CA ZIP: 90210 BUSINESS PHONE: 3108584270 MAIL ADDRESS: STREET 1: 400 N ROXBURY DR CITY: BEVERLY HILLS STATE: CA ZIP: 90210 8-K 1 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): January 13, 2000 City National Corporation -------------------------------------------------- (Exact name of registrant as specified in charter) Delaware 1-10521 95-2568550 ---------------- ------------- --------------- (State or other (Commission (IRS employer jurisdiction of file number) identification no.) incorporation) 400 North Roxbury Drive, Beverly Hills, California 90210 ----------------------------------------------------- --------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (310) 888-6000 -------------- Not applicable ----------------------- (Former name or former address, if changed since last report) ITEM 5. OTHER EVENTS. On January 13, 2000, City National issued a press release reporting its financial results for the quarter and year ended December 31, 1999. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits. 99.1 Press release dated January 13, 2000 reporting financial results for the quarter and year ended December 31, 1999. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: January 25, 2000 CITY NATIONAL CORPORATION /s/ Barbara S. Polsky ---------------------------- Barbara S. Polsky Executive Vice President, General Counsel and Secretary EX-99.1 2 EXHIBIT 99.1 EXHIBIT 99.1 [CITY NATIONAL LETTERHEAD] NEWS RELEASE Contacts: FINANCIAL/INVESTORS Frank Pekny (City National) 310-888-6700 Ian Campbell (Abernathy MacGregor Group) 213-630-6550 MEDIA Jim Dunnigan (City National) 310-888-6636 Dennis Wolcott (Stoorza, Ziegaus & Metzger) 213-891-2822 FOR IMMEDIATE RELEASE - --------------------- CITY NATIONAL REPORTS FOURTH CONSECUTIVE YEAR OF RECORD NET INCOME LOS ANGELES, January 13, 2000 -- City National Corporation (NYSE: CYN) today reported its fourth consecutive year of record net income. Net income totaled $108.1 million in 1999, a 12 percent increase from net income of $96.2 million in 1998. Net income per diluted common share rose 15 percent to $2.30 per share, compared with $2.00 per share in 1998. City National Corporation, parent company of wholly owned City National Bank, also reported net income of $27.9 million for the fourth quarter of 1999, an increase of 13 percent over net income of $24.7 million for the fourth quarter of 1998. Net income per diluted common share increased by 15 percent to $0.60 per share from $0.52 per share in the fourth quarter of 1998. Page 1 Cash earnings, which exclude the amortization of core deposit intangibles and goodwill, increased 13 percent to $115.4 million from $101.7 million in 1998. Cash earnings per diluted common share rose 17 percent to $2.46 per diluted common share in 1999, from $2.11 per diluted common share in 1998. "Continuing to build upon our strong momentum, outstanding team and unique position as the premier private and business bank in Southern California, City National generated strong growth in both loans and core deposits, and at year-end, our assets grew to over $7 billion for the first time," said Russell Goldsmith, CEO of City National Bank and City National Corporation. "In 1999, we also achieved double-digit growth in net income for the fifth consecutive year, maintained outstanding credit quality and increased non-interest income by nearly 30 percent." "In 1999, we were particularly pleased to add American Pacific State Bank into our Company and to reach a merger agreement with The Pacific Bank which, for the first time, will expand City National into San Francisco and the dynamic Bay Area economy later in this quarter," Mr. Goldsmith added. RETURN ON ASSETS/RETURN ON EQUITY The Company's return on average assets in 1999 was 1.67 percent, compared with 1.71 percent for 1998. The return on average common equity increased to 19.16 percent, compared with 17.87 percent in the prior year, as growth in net income exceeded growth in shareholders' equity. The growth in shareholders' equity was affected by the repurchase of the Company's stock at a cost of $38.0 million. City National's total average assets rose to a record $6.5 billion in 1999, an increase of 15 percent, compared with $5.6 billion in average assets in 1998. Internally generated growth was Page 2 primarily responsible for the increase in total assets, and was supplemented by the acquisition of American Pacific State Bank in August 1999. LOANS Average loans rose 20 percent for the 1999 fourth quarter and 14 percent for the year to $4.8 billion. Annual loan growth was driven primarily by increases in commercial, real estate commercial mortgage, and construction loans. Commercial loan average balances rose 17 percent from $2.2 billion to $2.6 billion. Real estate commercial mortgage loan average balances rose 13 percent from $755.8 million to $851.4 million. In addition, construction loan average balances rose 50 percent from $191.8 million to $288.1 million. Total loans at December 31, 1999 were $5.5 billion, compared with $4.5 billion at December 31, 1998. During the year, relationship-originated loans increased $974.7 million while non-relationship-syndicated loans -- which continue to be less than 10 percent of the portfolio -- and purchased residential first mortgages fell $14.5 million due to repayments and sales. DEPOSITS Total deposits were $5.7 billion at December 31, 1999, compared with $4.9 billion at December 31, 1998. Core deposits -- which continued to significantly benefit the bank's cost of funds -- increased by approximately $367 million, or 9 percent, with the remaining growth coming from certificates of deposit over $100,000. NET INTEREST INCOME Net interest income on a fully taxable-equivalent basis rose 9 percent to $332.7 million, Page 3 compared with $304.2 million in 1998. Interest recovered on non-accrual and charged-off loans was $5.3 million in 1999, compared with $7.1 million in 1998. The fully taxable-equivalent net interest margin in 1999 was 5.56 percent, compared with 5.86 percent the preceding year. The combination of growth in earning assets -- which outpaced growth in lower-cost core deposits - -- and a slightly lower average prime rate in 1999 caused the year-over-year decrease in the net interest margin. The 11-basis-point reduction in the net interest margin between the third and the fourth quarters of 1999 is primarily attributable to increased rates paid on time deposits and swaps, and to Y2K liquidity precautions. The preparations taken in anticipation of the January 1, 2000 rollover have, to date, resulted in a successful Y2K transition. NON-INTEREST INCOME/EXPENSE Non-interest income continued its strong growth trend, rising 29 percent to $87.2 million for 1999 over the $67.7 million reported in 1998 -- which, in turn, was 27 percent higher than in 1997. Non-interest revenues as a percent of total revenues increased to 21.3 percent in 1999 from 18.7 percent the year earlier, reflecting the Company's continued emphasis on diversifying its sources of revenue. Essentially all categories of non-interest income increased over the prior year. Investment services and trust fees grew as a result of strong, internally generated new business as well as new revenue contributions from the North American Trust Company acquisition, which was completed at the end of 1998. International services income rose 23 percent to just under $10.0 million. Gains on the sale of assets and securities amounted to $5.8 million for the year, compared with $4.9 million in the prior year. Non-interest expense was $241.8 million in 1999, compared with $211.3 million in 1998. The year-over-year increase is primarily the result of expenses related to two acquired businesses -- North Page 4 American Trust Company at the end of 1998 and American Pacific State Bank in August 1999; expenses related to new branch openings; and other growth opportunities. Compared with 1998, salaries and other benefits increased by $19.0 million, or 17 percent, and all other expenses increased $11.5 million, or 12 percent. The Company's emphasis on cost control continues to be reflected in its cash efficiency ratio, which grew very modestly from 55.03 percent in 1998 to 55.37 percent in 1999. CREDIT QUALITY The Company recorded no credit loss provisions for 1999 or 1998, as credit quality remained strong. Net credit losses were $4.7 million in 1999, compared with net credit losses of $5.2 million in 1998. In the fourth quarter, loan charge-offs include approximately $8.0 million for two syndicated nursing sector health care credits in which the bank sold its position at a discount. The allowance for credit losses at December 31, 1999, totaled $134.1 million, or 2.44 percent of outstanding loans. This compares with an allowance of $135.3 million, or 2.99 percent at December 31, 1998. The allowance for credit losses as a percentage of nonaccrual loans was 530 percent at December 31, 1999, compared with 585 percent at December 31, 1998. Total non-performing assets (nonaccrual loans and OREO) were $26.7 million, or 0.49 percent of total loans and OREO at December 31, 1999, slightly higher than the $21.5 million or 0.41 percent at September 30, 1999 and comparable to the $26.6 million or 0.59 percent at December 31, 1998. CAPITAL LEVELS Total-capital and Tier 1 capital ratios at December 31, 1999 were 11.21 percent and 7.88 percent, well above the capitalization ratios of 10.00 percent and 6.00 percent required for an institution to be classified as "well-capitalized." The Company's leverage ratio of 6.73 percent substantially exceeded Page 5 the regulatory minimum of 4.00 percent required for a "well-capitalized" institution. Lower capital ratios, as compared to prior periods, are primarily attributable to the growth in assets from the all-cash acquisition of American Pacific State Bank and the Company's stock repurchase programs. STOCK REPURCHASE City National repurchased 1,152,800 shares of stock at a cost of $38.0 million during 1999. Under the current stock buyback program of 1 million common shares announced on July 29, 1999, 280,800 shares -- including 32,400 shares in the fourth quarter -- were repurchased for a cost of $9.3 million. Shares purchased under the buyback program will be reissued for the acquisition of The Pacific Bank, upon the exercise of stock options and for other general corporate purposes. Treasury shares at December 31, 1999 totaled 1,428,439 shares. PROPOSED ACQUISITION OF THE PACIFIC BANK On December 29, 1999, the OCC approved the Company's application to acquire The Pacific Bank, subject to The Pacific Bank's shareholders' approval. ABOUT CITY NATIONAL City National Corporation is a publicly owned corporation with $7.2 billion in total assets. Its stock is traded on the New York Stock Exchange under the symbol "CYN." The company's wholly owned subsidiary, City National Bank, is Southern California's premier business and private bank. City National Bank has 46 offices throughout Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura counties. For more information about City National, our Fax-On-Demand Information Service is at Page 6 1.800.873.5293, and City National's web page is at http://www.cnb.com. The Company wishes to take advantage of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995 as to "forward-looking" statements in this release that are not historical facts. City National Corporation notes that a variety of factors could affect the Company's business and cause actual results to differ materially from those expressed in any forward-looking statement made in this release. The risks and uncertainties that may affect the operations, performance and results of the Company's business include the following: economic conditions; interest rates; government regulation and monetary policy; competition; and credit quality. For a more complete discussion of these risks and uncertainties, the reader's attention is directed to City National Corporation's Form 10-Q for the quarter ended September 30, 1999, particularly the section entitled "Cautionary Statement for Purposes of the 'Safe-Harbor' Provisions of the Private Securities Litigation Reform Act of 1995," and the Registration Statement on Form S-4 filed with the Securities and Exchange Commission on January 10, 2000, particularly the section entitled "Risk Factors." ### Page 7 Earnings Release January 13, 2000 CITY NATIONAL CORPORATION - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEET (unaudited) - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
(Dollars in thousands, except per share amounts) December 31, -------------------------------------------------- 1999 1998 % Change --------------- --------------- -------------- Assets Cash and due from banks $ 233,178 $ 286,367 (19) Securities 1,129,806 1,047,017 8 Federal funds sold 57,000 405,000 (86) Loans (net of allowance for credit losses of $134,077 and $135,339) 5,356,592 4,395,088 22 Other assets 437,043 294,309 48 --------------- --------------- -------------- Total assets $ 7,213,619 $ 6,427,781 12 =============== =============== ============== Liabilities and Shareholders' Equity Noninterest-bearing deposits $ 2,448,916 $ 2,382,724 3 Interest-bearing deposits 3,220,493 2,504,678 29 --------------- --------------- -------------- Total deposits 5,669,409 4,887,402 16 Federal funds purchased and securities sold under repurchase agreements 295,487 451,311 (35) Other short term borrowed funds 296,739 92,001 223 Subordinated debt 123,453 123,265 0 Other long-term debt 180,000 250,000 (28) Other liabilities 76,885 61,999 24 --------------- --------------- -------------- Total liabilities 6,641,973 5,865,978 13 Shareholders' equity 571,646 561,803 2 --------------- --------------- -------------- Total liabilities and shareholders' equity $ 7,213,619 $ 6,427,781 12 =============== =============== ============== Book value per share $12.58 $12.21 3 Number of shares at period end 45,456,743 46,007,237 (1)
CONSOLIDATED STATEMENT OF INCOME (unaudited) - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
For the three months ended For the twelve months ended (Dollars in thousands, except per share amounts) December 31, December 31, -------------------------------------------------- ------------------------------------------- 1999 1998 % Change 1999 1998 % Change --------------- --------------- -------------- -------------- --------------- -------- Interest income $ 129,435 $ 109,632 18 $ 470,446 $ 423,949 11 Interest expense (42,524) (34,738) 22 (148,441) (130,278) 14 --------------- --------------- -------------- -------------- --------------- -------- Net interest income 86,911 74,894 16 322,005 293,671 10 Provision for credit losses - - - - - - --------------- --------------- -------------- -------------- --------------- -------- Net interest income after provision for credit losses 86,911 74,894 16 322,005 293,671 10 Noninterest income 23,215 17,175 35 87,212 67,684 29 Noninterest expense (66,699) (53,133) 26 (241,803) (211,331) 14 --------------- --------------- -------------- -------------- --------------- -------- Income before taxes 43,427 38,936 12 167,414 150,024 12 Income taxes (15,510) (14,202) 9 (59,307) (53,796) 10 --------------- --------------- -------------- -------------- --------------- -------- Net income $ 27,917 $ 24,734 13 $ 108,107 $ 96,228 12 =============== =============== ============== ============== =============== ======== Net income per share, basic $ 0.61 $ 0.54 13 $ 2.36 $ 2.08 13 =============== =============== ============== ============== =============== ======== Net income per share, diluted $ 0.60 $ 0.52 15 $ 2.30 $ 2.00 15 =============== =============== ============== ============== =============== ======== Dividends paid per share $ 0.17 $ 0.14 18 $ 0.66 $ 0.56 18 =============== =============== ============== ============== =============== ======== Shares used to compute per share net income, basic 45,428,367 45,918,688 45,682,714 46,357,351 Shares used to compute per share net income, diluted 46,605,553 47,506,073 46,938,130 48,140,869
Earnings Release January 13, 2000 CITY NATIONAL CORPORATION - ------------------------------------------------------------------------------- SELECTED FINANCIAL INFORMATION (unaudited) (Dollars in thousands) - -------------------------------------------------------------------------------
Period end December 31, -------------------------------------------------- 1999 1998 % Change --------------- --------------- -------------- Loans Commercial $ 2,870,438 $ 2,457,946 17 Residential first mortgage 1,173,334 1,038,229 13 Real estate - commercial mortgage 1,042,123 747,711 39 Real estate - construction 344,870 237,015 46 Installment 59,904 49,526 21 --------------- --------------- -------------- Total loans $ 5,490,669 $ 4,530,427 21 =============== =============== ============== Nonaccrual loans and ORE Nonaccrual loans $ 25,288 $ 23,138 9 ORE 1,413 3,480 (59) --------------- --------------- -------------- Total nonaccrual loans and ORE $ 26,701 $ 26,618 0 =============== =============== ============== Loans past due 90 days or more on accrual status $ 4,033 $ 8,623 (53) =============== =============== ============== Restructured loans on accrual status $ 2,707 $ 1,982 37 =============== =============== ============== Deposits Noninterest bearing $ 2,448,916 $ 2,382,724 3 Interest-bearing, core 2,051,799 1,750,963 17 --------------- --------------- -------------- Total core deposits 4,500,715 4,133,687 9 Time deposits - $100,000 and over 1,168,694 753,715 55 --------------- --------------- -------------- Total deposits $ 5,669,409 $ 4,887,402 16 =============== =============== ==============
For the three months ended For the twelve months ended Average Balances December 31, December 31, --------------------------------------------- ----------------------------------------- 1999 1998 % Change 1999 1998 % Change ------------ ------------ ------------ ----------- ----------- ----------- Loans Commercial $2,743,592 $2,358,466 16 $2,560,701 $2,186,395 17 Residential first mortgage 1,148,876 1,031,483 11 1,069,522 1,028,966 4 Real estate - commercial mortgage 1,018,816 741,382 37 851,396 755,752 13 Real estate - construction 329,146 243,566 35 288,084 191,782 50 Installment 59,854 49,823 20 52,551 50,958 3 ---------- ---------- ---------- ---------- ---------- ---------- Total loans $5,300,284 $4,424,720 20 $4,822,254 $4,213,853 14 ========== ========== ========== ========== ========== ========== Securities $1,155,776 $ 998,741 16 $1,118,127 $ 898,161 24 Earning assets 6,526,811 5,575,436 17 5,985,018 5,187,897 15 Assets 7,132,771 6,021,957 18 6,488,834 5,633,829 15 Core deposits 4,325,587 3,695,810 17 3,881,108 3,506,554 11 Deposits 5,508,263 4,490,460 23 4,809,800 4,267,602 13 Shareholders' equity 570,932 547,967 4 564,091 538,426 5
Earnings Release January 13, 2000 CITY NATIONAL CORPORATION - ------------------------------------------------------------------------------- SELECTED FINANCIAL INFORMATION (unaudited) (Dollars in thousands except per share amounts) - -------------------------------------------------------------------------------
For the three months ended For the twelve months ended December 31, December 31, ----------------------------------------------- ---------------------------- 1999 1998 % Change 1999 1998 % Change ---------- --------- --------- ---------- ----------- ------------ Selected Ratios For the Period Return on average assets 1.55 % 1.63 % (5) 1.67 % 1.71 % (2) Return on average shareholders' equity 19.40 17.91 8 19.16 17.87 7 Net interest margin 5.46 5.52 (1) 5.56 5.86 (5) Efficiency ratio 58.81 55.97 5 57.58 56.87 1 Dividend payout ratio 26.69 25.83 3 27.91 27.06 3 Period End Tier 1 risk-based capital ratio 7.88 9.43 (16) Total risk-based capital ratio 11.21 13.20 (15) Tier 1 leverage ratio 6.73 7.99 (16) Nonaccrual loans to total loans 0.46 0.51 (10) Nonaccrual loans and ORE to total loans and ORE 0.49 0.59 (17) Allowance for credit losses to total loans 2.44 2.99 (18) Allowance for credit losses to nonaccrual loans 530.20 584.92 (9) Cash earnings and ratios (reported earnings net of goodwill and nonqualifying core deposit intangibles) (1) Cash net income $ 30,411 $ 26,086 17 $ 115,358 $ 101,714 13 Cash net income per share, basic 0.67 0.57 18 2.53 2.19 16 Cash net income per share, diluted 0.65 0.55 18 2.46 2.11 17 Cash return on average assets 1.72 % 1.73 % (1) 1.80 % 1.82 % (1) Cash return on average shareholders' equity 26.71 20.98 27 23.98 20.98 14 Cash efficiency ratio 56.11 54.14 4 55.37 55.03 1
(1) Nonqualifying core deposit intangible (CDI) amortization and average balance excluded from these calculations are, with the exception of the efficiency ratio, net of applicable taxes. The after-tax amounts for the amortization and average balance of nonqualifying CDI were $0.8 million and $13.3 million, respectively, for the quarter ended December 31, 1999 and $0.3 million and $13.1 million, respectively, for the three months ended December 31, 1998. For the years, the amortization and average balance of nonqualifying CDI were $2.8 million and $11.5 million, respectively for 1999 and $1.9 million and $22.0 million respectively for 1998. Goodwill amortization and average balance (which are not tax effected) were $1.7 million and $105.9 million, respectively, for the quarter ended December 31, 1999 and $0.8 million and $42.4 million respectively, for the three months ended December 31, 1998. For the years, the goodwill amortization and average balance were $4.4 million and $71.4 million respectively for 1999 and $3.6 million and $40.8 million respectively for 1998. The Company's cash earnings per share are not necessarily comparable to similarly titled measures reported by other companies.
For the three months ended For the twelve months ended December 31, December 31, ---------------------------------------- ----------------------------------- 1999 1998 % Change 1999 1998 % Change ---------- ----------- ----------- ---------- -------- ---------- Noninterest income: Service charges on deposit accounts $ 5,417 $ 4,355 24 $ 18,113 $ 17,386 4 Investment services 5,350 4,430 21 19,763 16,330 21 Trust fees 4,752 2,641 80 18,059 9,376 93 International services 3,085 2,177 42 9,950 8,106 23 Bank owned life insurance 614 557 10 2,268 2,146 6 Other 3,923 2,330 68 13,246 9,445 40 -------- -------- -------- -------- -------- -------- Subtotal 23,141 16,490 40 81,399 62,789 30 Gain on sale of loans and assets 393 (58) N/M 2,117 1,823 16 Gain on sale of securities (319) 743 (143) 3,696 3,072 20 -------- -------- -------- -------- -------- -------- Total $ 23,215 $ 17,175 35 $ 87,212 $ 67,684 29 ======== ======== ======== ======== ======== ======== Noninterest expense: Salaries and other employee benefits $ 34,918 $ 27,893 25 $133,935 $114,965 17 -------- -------- -------- -------- -------- -------- All Other Professional 5,993 6,885 (13) 20,811 23,445 (11) Net occupancy of premises 6,230 4,011 55 18,955 14,189 34 Information services 3,604 2,025 78 12,267 8,805 39 Marketing and advertising 2,871 3,175 (10) 10,444 10,313 1 Depreciation 3,088 2,447 26 11,242 8,816 28 Office services 2,229 1,622 37 8,212 7,308 12 Amortization of goodwill and core deposit intangibles 3,052 1,735 76 9,309 6,854 36 Equipment 667 634 5 2,213 2,250 (2) Acquisition integration 52 717 (93) 1,161 1,126 3 Other operating 3,995 1,989 101 13,254 13,260 0 -------- -------- -------- -------- -------- ------- Total other 31,781 25,240 26 107,868 96,366 12 -------- -------- -------- -------- -------- ------- Total $ 66,699 $ 53,133 26 $241,803 $211,331 14 ======== ======== ======== ======== ======== ========
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