UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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) October 20, 2011
City National Corporation
(Exact name of registrant as specified in its charter)
Delaware | 1-10521 | 95-2568550 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
City National Plaza 555 S. Flower Street, Los Angeles, California |
90071 | |||
(Address of Principal Executive Offices) | (Zip Code) |
(213) 673-7700
(Registrant's Telephone Number, Including Area Code)
________________________________________________________________________________
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |
||
[ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
[ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
[ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
[ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On October 20, 2011, City National Corporation issued a press release reporting its financial results for the nine months and quarter ended September 30, 2011. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. This information is being furnished under Item 2.02 (Results of Operations and Financial Condition) of Form 8-K.
Item 9.01. Financial Statements and Exhibits.
(d) Press release dated October 20, 2011 reporting the financial results of City National Corporation for the nine months and quarter ended September 30, 2011.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
City National Corporation |
||
October 20, 2011 | /s/ CHRISTOPHER J. CAREY Christopher J. Carey Executive Vice President and Chief Financial Officer (Authorized Officer and Principal Financial Officer) |
EXHIBIT 99.1
Commercial loans increase 15 percent year over year
Core deposits rise 10 percent
Total assets exceed $23 billion for the first time
LOS ANGELES, Oct. 20, 2011 (GLOBE NEWSWIRE) -- City National Corporation (NYSE:CYN), the parent company of wholly owned City National Bank, today reported third-quarter 2011 net income of $41.4 million, or $0.77 per share, up 20 percent from $34.4 million, or $0.65 per share in the third quarter of 2010.
Year to date, City National's net income totaled $128.6 million, up 41 percent from $91.4 million in the first nine months of 2010. Earnings per share were $2.39, up 48 percent from $1.62 per share 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 $0.20 per share. The quarterly dividend is payable on November 16, 2011 to stockholders of record on November 2, 2011.
THIRD-QUARTER 2011 AND YEAR-TO-DATE HIGHLIGHTS
"In this challenging economic environment, City National completed another positive quarter as it again grew income, loans and deposits meaningfully, and for the first time assets exceeded $23 billion," said Chief Executive Officer Russell Goldsmith. "Even with our first credit provision in 2011, which was due in part to good commercial loan growth, the company's overall credit quality continues to improve.
"City National also is not burdened or distracted by mortgage-related issues and other headline-grabbing challenges that confront some other banks. Instead, we continue to grow our client base and invest in the future by expanding our products and services, enhancing our productivity and capabilities, and selectively adding talented new colleagues to the City National team."
Dollars in millions, |
For the three months ended September 30, |
% |
For the three months ended |
% | |
except per share data | 2011 | 2010 | Change | June 30, 2011 | Change |
Earnings Per Share | $ 0.77 | $ 0.65 | 18 | $ 0.88 | (13) |
Net Income Attributable to CNC | 41.4 | 34.4 | 20 | 47.5 | (13) |
Average Assets | $ 22,998.6 | $ 21,614.7 | 6 | $ 22,009.7 | 4 |
Return on Average Assets | 0.71 % | 0.63 % | 13 | 0.87 % | (18) |
Return on Average Equity | 7.85 % | 7.06 % | 11 | 9.39 % | (16) |
ASSETS
Total assets at September 30, 2011 grew to a record $23.1 billion, up 3 percent from the second quarter of this year and 6 percent from the third quarter of 2010.
REVENUE
Revenue for the third quarter of 2011 was $269.0 million, down 5 percent from the second quarter of this year but up 6 percent from the third quarter of 2010. Revenue for the first nine months of 2011 totaled $826.9 million, up 2 percent from $811.5 million during the same period of 2010.
NET INTEREST INCOME
Fully taxable-equivalent net interest income was $203.6 million in the third quarter of 2011, up 4 percent from the second quarter of this year and 7 percent from the same period last year. Fully taxable-equivalent net interest income for the first nine months of 2011 was $584.3 million, up 5 percent from $555.2 million in the year-ago period.
Third-quarter average deposits reached a record $19.7 billion, up 5 percent from the second quarter of this year and 8 percent from the third quarter of 2010. Average deposits for the first nine months of 2011 totaled $18.9 billion, up 7 percent from the first nine months of 2010. Period-end deposits grew to $19.9 billion, up 3 percent from June 30 of this year and 8 percent from September 30, 2010.
Average core deposits were $18.9 billion in the third quarter of 2011, up 5 percent from the second quarter of 2011 and 10 percent from the same period of 2010. Year-to-date average core deposits grew 10 percent from the same period of 2010. Core deposits represent 96 percent of the company's average balances.
Third-quarter 2011 average noninterest-bearing deposits were up 9 percent from the second quarter of 2011 and 19 percent from the same period of 2010. Average noninterest-bearing balances in the first nine months of 2011 were up 14 percent from the same period last year.
Treasury Services deposit balances, which consist primarily of title, escrow and property management deposits, averaged $1.8 billion in the third quarter of this year, up 6 percent from the second quarter of 2011 and 16 percent from the same period of 2010. Year to date, Treasury Services deposit balances averaged $1.6 billion, up 23 percent from the first nine months of 2010. The increases reflect the addition of new title and escrow clients, as well as an increase in commercial real estate activity and residential refinance activity during the quarter.
Third-quarter average loan balances, excluding FDIC-covered loans, were $11.8 billion, up 2 percent from the second quarter of this year and 3 percent from the third quarter of 2010. For the first nine months of 2011, City National's average loans, excluding FDIC-covered loans, were $11.5 billion, down 1 percent from the year-ago period.
Third-quarter average commercial loans were up 5 percent from the second quarter of 2011 and 15 percent from the same period last year.
Average balances for commercial real estate mortgages were up 2 percent from the second quarter of 2011 but down 4 percent from the third quarter of last year. Average balances for commercial real estate construction loans were down 12 percent from the second quarter of 2011 and 43 percent from the third quarter of last year.
Average balances for single-family residential mortgage loans, nearly all of which are made to City National's private banking clients, were up 1 percent from the second quarter of this year and 4 percent from the year-ago period.
Average securities for the third quarter of 2011 totaled $7.0 billion, up 12 percent from the second quarter of this year and 40 percent from the third quarter of 2010, as deposit growth continued to outpace loan growth. The average duration of total available-for-sale securities at September 30, 2011 was 2.1 years, down from 2.3 years at the end of the second quarter of this year but unchanged from September 30, 2010.
City National's net interest margin in the third quarter of 2011 averaged 3.79 percent, compared with 3.85 percent in the second quarter of 2011 and 3.84 percent in the third quarter of 2010. For the first nine months of 2011, City National's net interest margin averaged 3.82 percent, compared with 3.91 percent in the previous year. The declines were due primarily to strong deposit growth and lower loan yields. The company continued to invest a large share of its growing deposits in securities available-for-sale and other liquid assets.
Third-quarter net interest income included $18.3 million from the FDIC-covered loans that were repaid or charged off during the quarter. This compares with $11.1 million in the second quarter of this year and $9.2 million in the third quarter of 2010.
At September 30, 2011, City National's prime lending rate was 3.25 percent, unchanged from both June 30, 2011 and September 30, 2010.
For the three months ended September 30, |
% |
For the three months ended |
% | ||
Dollars in millions | 2011 | 2010 | Change | June 30, 2011 | Change |
Average Loans and Leases, excluding Covered Loans | $ 11,796.6 | $ 11,414.9 | 3 | $ 11,516.0 | 2 |
Average Covered Loans | 1,664.3 | 2,015.7 | (17) | 1,770.4 | (6) |
Average Total Securities | 6,954.1 | 4,980.2 | 40 | 6,224.3 | 12 |
Average Earning Assets | 21,316.6 | 19,755.4 | 8 | 20,314.4 | 5 |
Average Deposits | 19,724.6 | 18,297.2 | 8 | 18,784.4 | 5 |
Average Core Deposits | 18,923.6 | 17,200.7 | 10 | 17,951.4 | 5 |
Fully Taxable-Equivalent Net Interest Income | 203.6 | 191.1 | 7 | 195.1 | 4 |
Net Interest Margin | 3.79 % | 3.84 % | (1) | 3.85 % | (2) |
COVERED ASSETS
Loans and other real estate owned (OREO) assets acquired in City National's FDIC‑assisted acquisitions totaled $1.7 billion at the end of the third quarter of 2011, down from $1.8 billion at June 30, 2011 and $2.0 billion at September 30, 2010.
In the third quarter of 2011, the company recorded a $5.9 million non-cash net impairment charge to reflect results of the quarterly update of cash-flow projections for the FDIC-covered loans. The loss reflected a provision for loan losses of $5.1 million for covered loans and a corresponding $0.8 million of other expense related to City National's loss-sharing agreements with the FDIC. 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 four FDIC-assisted acquisitions and subject to loss-sharing agreements totaled $102.8 million at September 30, 2011, compared to $114.9 million at the end of the second quarter of this year and $110.4 million in the third quarter of 2010.
NONINTEREST INCOME
Noninterest income was $69.6 million in the third quarter of 2011, down 24 percent from the second quarter of 2011 but up 4 percent from the year-ago quarter. Third-quarter 2011 results included a net FDIC loss-sharing expense of $14.2 million, up from $10.7 million in the second quarter of 2011 and $0.4 million in the third quarter of last year.
Noninterest income for the second quarter of 2011 and third quarter of 2010 also included net gains of $8.2 million and $2.1 million, respectively, for FDIC-assisted acquisitions. Excluding these items, third-quarter noninterest income was down 17 percent from the second quarter of 2011 and up 8 percent from the same period last year.1
City National's noninterest income totaled $255.5 million in the first nine months of 2011, down 4 percent from the same period of 2010.
In the third quarter of 2011, noninterest income accounted for 26 percent of City National's total revenue, compared to 33 percent in the second quarter of this year and 26 percent in the third quarter of 2010.
Wealth Management
City National's assets under management totaled $33.6 billion as of September 30, 2011, down 8 percent from the second quarter of this year and 6 percent from the same period of 2010.
Trust and investment fees were $35.4 million, down 4 percent from the second quarter of 2011 but up 8 percent from the third quarter of 2010. Year-to-date trust and investment fee income rose 8 percent from the same period last year.
Money market mutual fund and brokerage fees totaled $5.1 million, up 4 percent from the second quarter of this year but down 22 percent from the year-ago period. Money market mutual fund and brokerage fee income was $15.6 million in the first nine months of this year, down 9 percent from the same period of 2010. The declines in money market mutual fund and brokerage fees were due primarily to the impact of extraordinarily low short-term interest rates.
At or for the three months ended September 30, |
% |
At or for the three months ended |
% | ||
Dollars in millions | 2011 | 2010 | Change | June 30, 2011 | Change |
Trust and Investment Fee Revenue | $ 35.4 | $ 32.7 | 8 | $ 36.7 | (4) |
Brokerage and Mutual Fund Fees | 5.1 | 6.5 | (22) | 4.9 | 4 |
Assets Under Management (1) | 33,590.5 | 35,690.0 | (6) | 36,407.3 | (8) |
Assets Under Management or Administration (1) | 55,647.1 | 56,890.6 | (2) | 58,502.0 | (5) |
(1) Excludes $16.1 billion, $19.5 billion, and $19.0 billion of assets under management for asset managers in which City National held a noncontrolling ownership interest as of September 30, 2011, June 30, 2011 and September 30, 2010, respectively. |
Other Noninterest Income
Third-quarter income from cash management and deposit transaction fees was $11.0 million, up 1 percent from the second quarter of 2011 and down 5 percent from the third quarter of 2010. Year-to-date 2011 cash management and deposit transaction fees were $33.6 million, down 7 percent from the same period last year. The declines were due to higher deposit balances used to offset service charge fees.
Fee income from foreign exchange services and letters of credit totaled $10.4 million in the third quarter of 2011, up 15 percent from the second quarter of 2011 and 31 percent from the third quarter of last year, due primarily to higher foreign exchange volume. Year-to-date 2011 foreign exchange services and letters of credit fee income totaled $27.7 million, up 21 percent from the first nine months of 2010.
Other income was $13.5 million in the third quarter of 2011, down 42 percent from the second quarter of this year but up 291 percent from the year-ago period. Other income in the first nine months of this year was $58.2 million, up 152 percent from the same period last year. Results for the first nine months of 2011 reflected higher gains on the transfer of covered loans to OREO. In addition, third-quarter 2010 results included a $12.3 million charge for the early retirement of debt.
NONINTEREST EXPENSE
City National's third-quarter 2011 noninterest expense amounted to $197.6 million, down 7 percent from the second quarter of this year but up 7 percent from the third quarter of 2010.
Expense growth from the third quarter of last year was due largely to higher compensation, reflecting the addition of more than 90 new colleagues. The growth also stems from higher expenses for OREO, legal and professional services, and marketing and advertising. Approximately 83 percent of OREO expenses are related to covered assets, and a significant portion of these expenses is reimbursed by the FDIC and reflected in noninterest income.
Noninterest expense for the first nine months of 2011 amounted to $606.9 million, up 11 percent from the same period last year.
CREDIT QUALITY
The following credit quality information excludes loans subject to loss-sharing agreements involving City National's FDIC-assisted transactions:
Net charge-offs in the third quarter of 2011 totaled $10.6 million, or 0.36 percent of total loans and leases on an annualized basis. The company realized net recoveries of $4.2 million, or 0.15 percent, in the second quarter of this year and net charge-offs of $28.2 million, or 0.98 percent, in the third quarter of 2010.
At September 30, 2011, nonperforming assets amounted to $190.7 million, or 1.56 percent of the company's total loans and leases and OREO, compared to $180.4 million, or 1.54 percent, at June 30, 2011, and $297.6 million, or 2.59 percent, at September 30, 2010.
Nonaccrual loans at September 30, 2011 were $146.1 million, compared to $132.8 million at June 30, 2011 and $239.1 million at September 30, 2010. The increases in charge-offs and nonaccruals were principally due to one commercial loan and a construction credit. Delinquencies and classified loans declined from the second quarter, and overall credit trends remain favorable.
As of September 30, 2011 |
As of June 30, 2011 |
As of September 30, 2010 |
||||
Period-end Loans (in millions) | Total | Nonaccrual | Total | Nonaccrual | Total | Nonaccrual |
Commercial | $ 5,166.8 | $ 34.9 | $ 4,800.2 | $ 24.3 | $ 4,364.1 | $ 30.1 |
Commercial Real Estate Mortgages | 2,059.1 | 20.8 | 1,930.3 | 26.7 | 1,967.9 | 50.4 |
Residential Mortgages | 3,742.8 | 10.5 | 3,710.8 | 14.2 | 3,586.9 | 16.2 |
Real Estate Construction | 335.7 | 70.8 | 355.0 | 60.5 | 575.1 | 135.8 |
Equity Lines of Credit | 728.9 | 8.4 | 735.9 | 6.7 | 757.2 | 5.6 |
Other Loans | 130.9 | 0.7 | 130.9 | 0.4 | 167.4 | 1.0 |
Total Loans (1) | $ 12,164.2 | $ 146.1 | $ 11,663.1 | $ 132.8 | $ 11,418.6 | $ 239.1 |
Other Real Estate Owned (1) | 44.5 | 47.6 | 58.5 | |||
Total Nonperforming Assets, excluding | ||||||
Covered Assets | $ 190.6 | $ 180.4 | $ 297.5 | |||
(1) Excludes covered loans, net of allowance, of $1.6 billion, $1.7 billion and $1.9 billion at September 30, 2011, June 30, 2011 and September 30, 2010, respectively, and covered other real estate owned of $102.8 million, $114.9 million and $110.4 million at September 30, 2011, June 30, 2011 and September 30, 2010, respectively. |
City National recorded a provision for credit losses of $7.5 million in the third quarter of 2011, following two quarters with no provision. The company recorded a $13.0 million provision in the third quarter of 2010, bringing its total for the first nine months of last year to $100.0 million.
At September 30, 2011, City National's allowance for loan and lease losses totaled $263.3 million, or 2.16 percent of total loans and leases. That compares with $265.9 million, or 2.28 percent, at the end of the second quarter of 2011 and $274.2 million, or 2.40 percent, at September 30, 2010. The company also maintains an additional $22.8 million in reserves for off-balance-sheet credit commitments.
Commercial Loans
Commercial loan net charge-offs were $2.9 million in the third quarter of 2011. This compares to net recoveries of $2.6 million in the second quarter of this year, and net charge-offs of $17.9 million in the year-earlier period. Net charge-offs in the first nine months of 2011 amounted to $2.2 million, compared to net charge-offs of $56.8 million in the first nine months of last year.
Commercial loans on nonaccrual totaled $34.9 million in the third quarter of 2011, compared to $24.3 million at June 30, 2011, and $30.1 million at September 30, 2010.
Construction Loans
City National's $335.7 million commercial real estate construction portfolio includes secured loans to developers of residential and nonresidential properties. This portfolio has been reduced 42 percent since September 30, 2010, and construction loans now account for 3 percent of the company's total loans.
Third quarter net charge-offs of construction loans were $6.2 million, compared to net recoveries of $577,000 in the second quarter of 2011 and $39,000 in the third quarter of 2010. Net charge-offs amounted to $1.8 million in the first nine months of 2011, down from $25.1 million in the same period of last year.
At September 30, 2011, construction loans on nonaccrual totaled $70.8 million, compared to $60.5 million at June 30, 2011, and $135.8 million at September 30, 2010.
Commercial Real Estate Mortgage Loans
Third-quarter net charge-offs in the company's $2.1 billion commercial real estate mortgage portfolio were $452,000, compared to net recoveries of $1.3 million in the second quarter of 2011, and net charge-offs of $9.0 million in the third quarter of 2010. Net recoveries amounted to $7.0 million in the first nine months of 2011, compared with net charge-offs of $24.3 million in the first nine months of last year.
Commercial real estate mortgage loans on nonaccrual totaled $20.7 million, down from $26.7 million at June 30, 2011, and $50.4 million at September 30, 2010.
Residential Mortgage Loans and Equity Lines of Credit
City National's $3.7 billion residential mortgage portfolio and $728.9 million home-equity portfolio continued to perform exceptionally well. Together, they accounted for $0.7 million in net charge-offs, compared to $0.4 million at June 30, 2011, and $1.4 million at September 30, 2010. Net charge-offs amounted to $2.4 million in the first nine months of 2011, compared to $3.9 million in the same period of last year.
Residential mortgage loans and lines of credit on nonaccrual were $18.9 million in the third quarter of 2011, compared to $20.9 million in the second quarter of this year and $21.8 million in the third quarter of 2010.
INCOME TAXES
City National's effective tax rate for the third quarter of 2011 was 27.7 percent, unchanged from the year-ago period. For the first nine months of 2011, City National's effective tax rate was 29.4 percent, compared to 13.7 percent in the prior year period. The increase largely reflects a tax litigation settlement and revisions to certain deferred tax accounts in 2010, as well as higher pretax income in the first nine months of this year.
CAPITAL LEVELS
City National remains well-capitalized, ending the third quarter of 2011 with a Tier 1 common shareholders' equity ratio of 10.3 percent, compared to 10.5 percent at June 30, 2011 and 10.0 percent at September 30, 2010.1
Total risk-based capital and Tier 1 risk-based capital ratios at September 30, 2011 were 12.9 percent and 10.3 percent, respectively. City National's Tier 1 leverage ratio at September 30, 2011 was 6.8 percent. All of City National's capital ratios are above minimum regulatory standards for "well-capitalized" institutions.
Total risk-based capital, Tier 1 risk-based capital and Tier 1 leverage ratios at June 30, 2011 were 13.3 percent, 10.7 percent and 7.1 percent, respectively.
The period-end ratio of equity to total assets at September 30, 2011 was 9.2 percent, compared to 9.3 percent at June 30, 2011 and 9.1 percent at September 30, 2010.
2011 OUTLOOK
Management continues to expect significantly increased profitability for 2011 as compared with 2010.
CONFERENCE CALL
City National Corporation will host a conference call this afternoon to discuss third-quarter 2011 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 10733405. 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 78 offices, including 16 full-service regional centers, in Southern California, the San Francisco Bay Area, Nevada, New York City and Nashville, Tenn. The corporation and its investment affiliates manage or administer $55.6 billion in client investment assets, including nearly $33.6 billion under direct management.
For more information about City National, visit the company's Website at cnb.com.
The City National Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3142
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, (2) the impact on financial markets and the economy of the downgrade by Standard & Poor's of U.S. Treasury obligations and other U.S. government-backed debt, as well as issues surrounding the level of U.S. and European debt, (3) changes in the pace of economic recovery and related changes in employment levels, (4) the effect of the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the new 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 is uncertain, (5) significant changes in applicable laws and regulations, including those concerning taxes, banking and securities, (6) volatility in the municipal bond market, (7) changes in the level of nonperforming assets, charge-offs, other real estate owned and provision expense, (8) 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, (9) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board, (10) changes in inflation, interest rates, and market liquidity which may impact interest margins and impact funding sources, (11) adequacy of the company's enterprise risk management framework, (12) the company's ability to increase market share and control expenses, (13) the company's ability to attract new employees and retain and motivate existing employees, (14) increased competition in the company's markets, (15) changes in the financial performance and/or condition of the company's borrowers, including adverse impact on loan utilization rates, delinquencies, defaults and customers' ability to meet certain credit obligations, changes in customers' suppliers, and other counterparties' performance and creditworthiness, (16) 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, (17) changes in consumer spending, borrowing and savings habits, (18) soundness of other financial institutions which could adversely affect the company, (19) protracted labor disputes in the company's markets, (20) earthquake, fire or other natural disasters affecting the condition of real estate collateral, (21) the effect of acquisitions and integration of acquired businesses and de novo branching efforts, (22) the impact of changes in regulatory, judicial or legislative tax treatment of business transactions, (23) changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies, and (24) 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, see the company's Annual Report on Form 10-K for the year ended December 31, 2010 and particularly, Item 1A, titled "Risk Factors."
1 For notes on non-GAAP measures, see pages 15 and 16 of the Selected Financial Information.
CITY NATIONAL CORPORATION | ||||||||||||
FINANCIAL HIGHLIGHTS | ||||||||||||
(unaudited) | ||||||||||||
Three Months | Nine Months | |||||||||||
For The Period Ended September 30, | 2011 | 2010 | % Change | 2011 | 2010 | % Change | ||||||
Per Common Share | ||||||||||||
Net income available to common shareholders | ||||||||||||
Basic | $ 0.78 | $ 0.65 | 20 | $ 2.41 | $ 1.63 | 48 | ||||||
Diluted | 0.77 | 0.65 | 18 | 2.39 | 1.62 | 48 | ||||||
Dividends | 0.20 | 0.10 | 100 | 0.60 | 0.30 | 100 | ||||||
Book value | 40.40 | 37.46 | 8 | |||||||||
Results of Operations: (In millions) | ||||||||||||
Interest income | $ 217 | $ 214 | 1 | $ 628 | $ 624 | 1 | ||||||
Interest expense | 18 | 26 | (33) | 57 | 79 | (28) | ||||||
Net interest income | 199 | 188 | 6 | 571 | 545 | 5 | ||||||
Net interest income (Fully taxable-equivalent) | 204 | 191 | 7 | 584 | 555 | 5 | ||||||
Total revenue | 269 | 255 | 6 | 827 | 812 | 2 | ||||||
Provision for credit losses on loans and leases, excluding covered loans | 8 | 13 | (42) | 8 | 100 | (93) | ||||||
Provision for losses on covered loans | 5 | 8 | (37) | 26 | 55 | (53) | ||||||
Net income attributable to City National Corporation | 41 | 34 | 20 | 129 | 91 | 41 | ||||||
Net income available to common shareholders | 41 | 34 | 20 | 129 | 86 | 50 | ||||||
Financial Ratios: | ||||||||||||
Performance Ratios: | ||||||||||||
Return on average assets | 0.71 % | 0.63 % | 0.78 % | 0.58 % | ||||||||
Return on average common shareholders' equity | 7.85 | 7.06 | 8.46 | 6.10 | ||||||||
Period-end equity to period-end assets | 9.18 | 9.06 | ||||||||||
Net interest margin | 3.79 | 3.84 | 3.82 | 3.91 | ||||||||
Expense to revenue ratio | 67.68 | 66.91 | 66.50 | 61.09 | ||||||||
Capital Adequacy Ratios (Period-end): | ||||||||||||
Tier 1 leverage | 6.82 | 7.82 | ||||||||||
Tier 1 risk-based capital | 10.32 | 11.97 | ||||||||||
Total risk-based capital | 12.93 | 14.74 | ||||||||||
Asset Quality Ratios: | ||||||||||||
Allowance for loan and lease losses to: | ||||||||||||
Total loans and leases, excluding covered loans | 2.16 % | 2.40 % | ||||||||||
Nonaccrual loans | 180.21 | 114.66 | ||||||||||
Nonperforming assets, excluding covered assets, to: | ||||||||||||
Total loans and leases and other real estate owned, excluding covered assets |
1.56 | 2.59 | ||||||||||
Total assets | 0.83 | 1.36 | ||||||||||
Net (charge-offs) recoveries to average total loans and leases, excluding covered loans (annualized) | (0.36) % | (0.98) % | 0.00 % | (1.28) % | ||||||||
Average Balances: (In millions) | ||||||||||||
Loans and leases, excluding covered loans | $ 11,797 | $ 11,415 | 3 | $ 11,525 | $ 11,645 | (1) | ||||||
Covered loans | 1,664 | 2,016 | (17) | 1,748 | 1,951 | (10) | ||||||
Securities | 6,954 | 4,980 | 40 | 6,295 | 4,424 | 42 | ||||||
Interest-earning assets | 21,317 | 19,755 | 8 | 20,424 | 18,981 | 8 | ||||||
Assets | 22,999 | 21,615 | 6 | 22,135 | 20,899 | 6 | ||||||
Core deposits | 18,924 | 17,201 | 10 | 18,084 | 16,432 | 10 | ||||||
Deposits | 19,725 | 18,297 | 8 | 18,903 | 17,592 | 7 | ||||||
Interest-bearing liabilities | 10,841 | 11,178 | (3) | 10,701 | 10,723 | -- | ||||||
Common shareholders' equity | 2,093 | 1,935 | 8 | 2,032 | 1,879 | 8 | ||||||
Total equity | 2,117 | 1,960 | 8 | 2,057 | 1,948 | 6 | ||||||
Period-End Balances: (In millions) | ||||||||||||
Loans and leases, excluding covered loans | $ 12,164 | $ 11,419 | 7 | |||||||||
Covered loans | 1,612 | 1,960 | (18) | |||||||||
Securities | 7,279 | 5,569 | 31 | |||||||||
Assets | 23,104 | 21,824 | 6 | |||||||||
Core deposits | 19,137 | 17,343 | 10 | |||||||||
Deposits | 19,909 | 18,414 | 8 | |||||||||
Common shareholders' equity | 2,120 | 1,952 | 9 | |||||||||
Total equity | 2,120 | 1,977 | 7 | |||||||||
Wealth Management: (In millions) (1) | ||||||||||||
Assets under management | $ 33,591 | $ 35,690 | (6) | |||||||||
Assets under management or administration | 55,647 | 56,891 | (2) | |||||||||
(1) Excludes $16.1 billion and $19.0 billion of assets under management for asset managers in which City National held a noncontrolling ownership interest as of September 30, 2011 and September 30, 2010, respectively. | ||||||||||||
Note: Certain prior period balances 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) | 2011 | 2010 | % Change | 2011 | 2010 | % Change | ||||||
Interest income | $ 216,892 | $ 214,061 | 1 | $ 627,838 | $ 623,930 | 1 | ||||||
Interest expense | 17,576 | 26,345 | (33) | 56,405 | 78,711 | (28) | ||||||
Net Interest Income | 199,316 | 187,716 | 6 | 571,433 | 545,219 | 5 | ||||||
Provision for credit losses on loans and leases, excluding covered loans | 7,500 | 13,000 | (42) | 7,500 | 100,000 | (93) | ||||||
Provision for losses on covered loans | 5,147 | 8,233 | (37) | 25,979 | 54,749 | (53) | ||||||
Noninterest Income | ||||||||||||
Trust and investment fees | 35,412 | 32,695 | 8 | 107,737 | 100,180 | 8 | ||||||
Brokerage and mutual fund fees | 5,079 | 6,494 | (22) | 15,604 | 17,236 | (9) | ||||||
Cash management and deposit transaction fees | 10,986 | 11,620 | (5) | 33,616 | 36,204 | (7) | ||||||
International services | 10,352 | 7,905 | 31 | 27,683 | 22,787 | 21 | ||||||
FDIC loss sharing (expense) income, net | (14,191) | (377) | 3,664 | (16,270) | 37,048 | (144) | ||||||
Gain on securities | 3,327 | 299 | 1,013 | 4,688 | 1,279 | 267 | ||||||
Gain on disposal of assets | 5,191 | 2,603 | 99 | 16,037 | 1,180 | 1,259 | ||||||
Gain on acquisition | -- | 2,111 | (100) | 8,164 | 27,339 | (70) | ||||||
Other | 13,479 | 3,448 | 291 | 58,206 | 23,054 | 152 | ||||||
Total noninterest income | 69,635 | 66,798 | 4 | 255,465 | 266,307 | (4) | ||||||
Noninterest Expense | ||||||||||||
Salaries and employee benefits | 112,729 | 103,397 | 9 | 335,880 | 297,966 | 13 | ||||||
Net occupancy of premises | 13,713 | 14,463 | (5) | 40,724 | 40,715 | 0 | ||||||
Legal and professional fees | 14,242 | 10,633 | 34 | 39,109 | 33,570 | 16 | ||||||
Information services | 7,906 | 7,940 | (0) | 23,738 | 22,994 | 3 | ||||||
Depreciation and amortization | 6,930 | 6,351 | 9 | 20,582 | 19,061 | 8 | ||||||
Amortization of intangibles | 2,105 | 2,228 | (6) | 6,377 | 6,803 | (6) | ||||||
Marketing and advertising | 6,675 | 4,954 | 35 | 20,819 | 16,000 | 30 | ||||||
Office services and equipment | 4,456 | 4,035 | 10 | 13,734 | 12,105 | 13 | ||||||
Other real estate owned | 13,160 | 12,642 | 4 | 49,811 | 46,731 | 7 | ||||||
FDIC assessments | 6,670 | 7,561 | (12) | 25,000 | 21,744 | 15 | ||||||
Other | 9,051 | 10,477 | (14) | 31,092 | 29,613 | 5 | ||||||
Total noninterest expense | 197,637 | 184,681 | 7 | 606,866 | 547,302 | 11 | ||||||
Income Before Taxes | 58,667 | 48,600 | 21 | 186,553 | 109,475 | 70 | ||||||
Applicable Income Taxes | 16,267 | 13,461 | 21 | 54,803 | 15,020 | 265 | ||||||
Net Income | $ 42,400 | $ 35,139 | 21 | $ 131,750 | $ 94,455 | 39 | ||||||
Less: Net income attributable to noncontrolling interest | 1,002 | 721 | 39 | 3,189 | 3,021 | 6 | ||||||
Net income attributable to City National Corporation | $ 41,398 | $ 34,418 | 20 | $ 128,561 | $ 91,434 | 41 | ||||||
Less: Dividends and accretion on preferred stock | -- | -- | -- | -- | 5,702 | (100) | ||||||
Net income available to common shareholders | $ 41,398 | $ 34,418 | 20 | $ 128,561 | $ 85,732 | 50 | ||||||
Other Data: | ||||||||||||
Earnings per common share - basic | $ 0.78 | $ 0.65 | 20 | $ 2.41 | $ 1.63 | 48 | ||||||
Earnings per common share - diluted | $ 0.77 | $ 0.65 | 18 | $ 2.39 | $ 1.62 | 48 | ||||||
Dividends paid per common share | $ 0.20 | $ 0.10 | 100 | $ 0.60 | $ 0.30 | 100 | ||||||
Common dividend payout ratio | 25.70 % | 15.31 % | 68 | 24.77 % | 18.36 % | 35 | ||||||
Return on average assets | 0.71 % | 0.63 % | 13 | 0.78 % | 0.58 % | 34 | ||||||
Return on average common shareholders' equity | 7.85 % | 7.06 % | 11 | 8.46 % | 6.10 % | 39 | ||||||
Net interest margin (Fully taxable-equivalent) | 3.79 % | 3.84 % | (1) | 3.82 % | 3.91 % | (2) | ||||||
Full-time equivalent employees | 3,287 | 3,195 | 3 | |||||||||
Note: Certain prior period balances have been reclassified to conform to current period presentation. |
CITY NATIONAL CORPORATION | ||||||||
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME | ||||||||
(unaudited) | ||||||||
2011 | ||||||||
(Dollars in thousands | Third | Second | First | Year to | ||||
except per share data) | Quarter | Quarter | Quarter | Date | ||||
Interest income | $ 216,892 | $ 210,136 | $ 200,810 | $ 627,838 | ||||
Interest expense | 17,576 | 19,309 | 19,520 | 56,405 | ||||
Net Interest Income | 199,316 | 190,827 | 181,290 | 571,433 | ||||
Provision for credit losses on loans and leases, excluding covered loans | 7,500 | -- | -- | 7,500 | ||||
Provision for losses on covered loans | 5,147 | 1,716 | 19,116 | 25,979 | ||||
Noninterest Income | ||||||||
Trust and investment fees | 35,412 | 36,687 | 35,638 | 107,737 | ||||
Brokerage and mutual fund fees | 5,079 | 4,864 | 5,661 | 15,604 | ||||
Cash management and deposit transaction fees | 10,986 | 10,905 | 11,725 | 33,616 | ||||
International services | 10,352 | 9,015 | 8,316 | 27,683 | ||||
FDIC loss sharing (expense) income, net | (14,191) | (10,684) | 8,605 | (16,270) | ||||
Gain (loss) on securities | 3,327 | 1,395 | (34) | 4,688 | ||||
Gain on disposal of assets | 5,191 | 8,422 | 2,424 | 16,037 | ||||
Gain on acquisition | -- | 8,164 | -- | 8,164 | ||||
Other | 13,479 | 23,169 | 21,558 | 58,206 | ||||
Total noninterest income | 69,635 | 91,937 | 93,893 | 255,465 | ||||
Noninterest Expense | ||||||||
Salaries and employee benefits | 112,729 | 112,139 | 111,012 | 335,880 | ||||
Net occupancy of premises | 13,713 | 13,665 | 13,346 | 40,724 | ||||
Legal and professional fees | 14,242 | 14,790 | 10,077 | 39,109 | ||||
Information services | 7,906 | 8,335 | 7,497 | 23,738 | ||||
Depreciation and amortization | 6,930 | 6,904 | 6,748 | 20,582 | ||||
Amortization of intangibles | 2,105 | 2,104 | 2,168 | 6,377 | ||||
Marketing and advertising | 6,675 | 7,626 | 6,518 | 20,819 | ||||
Office services and equipment | 4,456 | 4,672 | 4,606 | 13,734 | ||||
Other real estate owned | 13,160 | 22,162 | 14,489 | 49,811 | ||||
FDIC assessments | 6,670 | 8,524 | 9,806 | 25,000 | ||||
Other | 9,051 | 10,911 | 11,130 | 31,092 | ||||
Total noninterest expense | 197,637 | 211,832 | 197,397 | 606,866 | ||||
Income Before Taxes | 58,667 | 69,216 | 58,670 | 186,553 | ||||
Applicable Income Taxes | 16,267 | 20,650 | 17,886 | 54,803 | ||||
Net Income | $ 42,400 | $ 48,566 | $ 40,784 | $ 131,750 | ||||
Less: Net income attributable to noncontrolling interest | 1,002 | 1,095 | 1,092 | 3,189 | ||||
Net income attributable to City National Corporation | $ 41,398 | $ 47,471 | $ 39,692 | $ 128,561 | ||||
Other Data: | ||||||||
Earnings per common share - basic | $ 0.78 | $ 0.89 | $ 0.75 | $ 2.41 | ||||
Earnings per common share - diluted | $ 0.77 | $ 0.88 | $ 0.74 | $ 2.39 | ||||
Dividends paid per common share | $ 0.20 | $ 0.20 | $ 0.20 | $ 0.60 | ||||
Common dividend payout ratio | 25.70 % | 22.40 % | 26.65 % | 24.77 % | ||||
Return on average assets | 0.71 % | 0.87 % | 0.75 % | 0.78 % | ||||
Return on average common shareholders' equity | 7.85 % | 9.39 % | 8.16 % | 8.46 % | ||||
Net interest margin (Fully taxable-equivalent) | 3.79 % | 3.85 % | 3.84 % | 3.82 % | ||||
Full-time equivalent employees | 3,287 | 3,328 | 3,258 |
CITY NATIONAL CORPORATION | ||||||||||
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME | ||||||||||
(unaudited) | ||||||||||
2010 | ||||||||||
(Dollars in thousands | Fourth | Third | Second | First | Year to | |||||
except per share data) | Quarter | Quarter | Quarter | Quarter | Date | |||||
Interest income | $ 206,266 | $ 214,061 | $ 207,803 | $ 202,066 | $ 830,196 | |||||
Interest expense | 21,160 | 26,345 | 25,805 | 26,561 | 99,871 | |||||
Net Interest Income | 185,106 | 187,716 | 181,998 | 175,505 | 730,325 | |||||
Provision for credit losses on loans and leases, excluding covered loans | 3,000 | 13,000 | 32,000 | 55,000 | 103,000 | |||||
Provision for losses on covered loans | 21,469 | 8,233 | 46,516 | -- | 76,218 | |||||
Noninterest Income | ||||||||||
Trust and investment fees | 34,547 | 32,695 | 33,976 | 33,509 | 134,727 | |||||
Brokerage and mutual fund fees | 6,506 | 6,494 | 5,461 | 5,281 | 23,742 | |||||
Cash management and deposit transaction fees | 11,389 | 11,620 | 12,008 | 12,576 | 47,593 | |||||
International services | 8,510 | 7,905 | 8,374 | 6,508 | 31,297 | |||||
FDIC loss sharing income (expense), net | 26,287 | (377) | 28,339 | 9,086 | 63,335 | |||||
(Loss) gain on securities | (2,917) | 299 | (151) | 1,131 | (1,638) | |||||
Gain (loss) on disposal of assets | 1,657 | 2,603 | (2,814) | 1,391 | 2,837 | |||||
Gain on acquisition | -- | 2,111 | 25,228 | -- | 27,339 | |||||
Other | 9,089 | 3,448 | 12,215 | 7,391 | 32,143 | |||||
Total noninterest income | 95,068 | 66,798 | 122,636 | 76,873 | 361,375 | |||||
Noninterest Expense | ||||||||||
Salaries and employee benefits | 111,857 | 103,397 | 99,110 | 95,459 | 409,823 | |||||
Net occupancy of premises | 14,852 | 14,463 | 13,347 | 12,905 | 55,567 | |||||
Legal and professional fees | 14,071 | 10,633 | 13,754 | 9,183 | 47,641 | |||||
Information services | 7,830 | 7,940 | 7,538 | 7,516 | 30,824 | |||||
Depreciation and amortization | 6,784 | 6,351 | 6,363 | 6,347 | 25,845 | |||||
Amortization of intangibles | 2,233 | 2,228 | 2,128 | 2,447 | 9,036 | |||||
Marketing and advertising | 7,112 | 4,954 | 5,798 | 5,248 | 23,112 | |||||
Office services and equipment | 4,276 | 4,035 | 4,272 | 3,798 | 16,381 | |||||
Other real estate owned | 16,380 | 12,642 | 16,892 | 17,197 | 63,111 | |||||
FDIC assessments | 7,311 | 7,561 | 7,662 | 6,521 | 29,055 | |||||
Other | 11,322 | 10,477 | 9,823 | 9,313 | 40,935 | |||||
Total noninterest expense | 204,028 | 184,681 | 186,687 | 175,934 | 751,330 | |||||
Income Before Taxes | 51,677 | 48,600 | 39,431 | 21,444 | 161,152 | |||||
Applicable Income Taxes | 11,035 | 13,461 | (2,859) | 4,418 | 26,055 | |||||
Net Income | $ 40,642 | $ 35,139 | $ 42,290 | $ 17,026 | $ 135,097 | |||||
Less: Net income attributable to noncontrolling interest | 899 | 721 | 972 | 1,328 | 3,920 | |||||
Net income attributable to City National Corporation | $ 39,743 | $ 34,418 | $ 41,318 | $ 15,698 | $ 131,177 | |||||
Less: Dividends and accretion on preferred stock | -- | -- | -- | 5,702 | 5,702 | |||||
Net income available to common shareholders | $ 39,743 | $ 34,418 | $ 41,318 | $ 9,996 | $ 125,475 | |||||
Other Data: | ||||||||||
Earnings per common share - basic | $ 0.75 | $ 0.65 | $ 0.78 | $ 0.19 | $ 2.38 | |||||
Earnings per common share - diluted | $ 0.74 | $ 0.65 | $ 0.78 | $ 0.19 | $ 2.36 | |||||
Dividends paid per common share | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.40 | |||||
Common dividend payout ratio | 13.27 % | 15.31 % | 12.71 % | 52.16 % | 16.75 % | |||||
Return on average assets | 0.72 % | 0.63 % | 0.80 % | 0.31 % | 0.62 % | |||||
Return on average common shareholders' equity | 7.99 % | 7.06 % | 8.93 % | 2.20 % | 6.59 % | |||||
Net interest margin (Fully taxable-equivalent) | 3.71 % | 3.84 % | 3.93 % | 3.97 % | 3.86 % | |||||
Full-time equivalent employees | 3,178 | 3,195 | 3,144 | 2,983 | ||||||
Note: Certain prior period balances have been reclassified to conform to current period presentation. |
CITY NATIONAL CORPORATION | ||||||
CONSOLIDATED PERIOD END BALANCE SHEET | ||||||
(unaudited) | ||||||
2011 | ||||||
(In thousands) |
Third Quarter |
Second Quarter |
First Quarter |
|||
Assets | ||||||
Cash and due from banks | $ 249,496 | $ 181,203 | $ 203,600 | |||
Federal funds sold | 100,000 | 123,000 | 100,000 | |||
Due from banks - interest-bearing | 144,754 | 725,304 | 743,569 | |||
Securities available-for-sale | 7,185,288 | 6,348,055 | 5,849,390 | |||
Trading securities | 93,707 | 125,829 | 81,287 | |||
Loans and leases: | ||||||
Commercial | 5,166,802 | 4,800,252 | 4,468,177 | |||
Commercial real estate mortgages | 2,059,114 | 1,930,269 | 1,902,862 | |||
Residential mortgages | 3,742,768 | 3,710,765 | 3,603,058 | |||
Real estate construction | 335,712 | 355,014 | 415,241 | |||
Equity lines of credit | 728,890 | 735,899 | 733,567 | |||
Installment | 130,923 | 130,924 | 146,779 | |||
Loans and leases, excluding covered loans | 12,164,209 | 11,663,123 | 11,269,684 | |||
Allowance for loan and lease losses | (263,348) | (265,933) | (263,356) | |||
Loans and leases, excluding covered loans, net | 11,900,861 | 11,397,190 | 11,006,328 | |||
Covered loans, net (1) | 1,550,103 | 1,657,004 | 1,684,068 | |||
Net loans and leases | 13,450,964 | 13,054,194 | 12,690,396 | |||
Premises and equipment, net | 140,871 | 134,511 | 131,345 | |||
Goodwill and other intangibles | 524,103 | 526,207 | 527,419 | |||
Other real estate owned (2) | 147,369 | 162,541 | 178,164 | |||
FDIC indemnification asset | 212,809 | 261,734 | 270,576 | |||
Other assets | 854,899 | 883,511 | 860,186 | |||
Total assets | $ 23,104,260 | $ 22,526,089 | $ 21,635,932 | |||
Liabilities | ||||||
Deposits: | ||||||
Noninterest-bearing | $ 10,308,547 | $ 9,403,425 | $ 8,756,877 | |||
Interest-bearing | 9,600,534 | 9,861,695 | 9,721,062 | |||
Total deposits | 19,909,081 | 19,265,120 | 18,477,939 | |||
Short-term borrowings | 30,640 | 149,771 | 151,663 | |||
Long-term debt | 699,983 | 701,829 | 703,173 | |||
Other liabilities | 301,387 | 281,622 | 246,517 | |||
Total liabilities | 20,941,091 | 20,398,342 | 19,579,292 | |||
Redeemable noncontrolling interest | 42,704 | 43,737 | 46,013 | |||
Equity | ||||||
City National Corporation shareholders' equity: | ||||||
Common stock | 53,886 | 53,886 | 53,886 | |||
Additional paid-in capital | 489,037 | 485,064 | 480,918 | |||
Retained earnings | 1,578,747 | 1,547,989 | 1,511,153 | |||
Accumulated other comprehensive income | 82,467 | 56,293 | 26,535 | |||
Treasury shares | (83,672) | (84,311) | (86,954) | |||
Total common shareholders' equity | 2,120,465 | 2,058,921 | 1,985,538 | |||
Total shareholders' equity | 2,120,465 | 2,058,921 | 1,985,538 | |||
Noncontrolling interest | -- | 25,089 | 25,089 | |||
Total equity | 2,120,465 | 2,084,010 | 2,010,627 | |||
Total liabilities and equity | $ 23,104,260 | $ 22,526,089 | $ 21,635,932 | |||
(1) Covered loans are net of $61.8 million, $67.6 million and $82.0 million of allowance for loan losses as of September 30, 2011, June 30, 2011 and March 31, 2011, respectively. | ||||||
(2) Other real estate owned includes $102.8 million, $114.9 million and $121.8 million covered by FDIC loss share at September 30, 2011, June 30, 2011 and March 31, 2011, respectively. |
CITY NATIONAL CORPORATION | ||||||||
CONSOLIDATED PERIOD END BALANCE SHEET | ||||||||
(unaudited) | ||||||||
2010 | ||||||||
(In thousands) |
Fourth Quarter |
Third Quarter |
Second Quarter |
First Quarter |
||||
Assets | ||||||||
Cash and due from banks | $ 126,882 | $ 224,363 | $ 184,277 | $ 293,855 | ||||
Federal funds sold | 165,000 | 395,010 | 404,760 | 50,000 | ||||
Due from banks - interest-bearing | 142,807 | 506,081 | 336,244 | 429,157 | ||||
Securities available-for-sale | 5,720,675 | 5,397,870 | 4,761,143 | 3,928,481 | ||||
Trading securities | 255,397 | 170,750 | 129,287 | 68,405 | ||||
Loans and leases: | ||||||||
Commercial | 4,514,329 | 4,364,143 | 4,286,104 | 4,424,233 | ||||
Commercial real estate mortgages | 1,958,317 | 1,967,959 | 2,078,003 | 2,121,941 | ||||
Residential mortgages | 3,552,312 | 3,586,858 | 3,577,894 | 3,514,149 | ||||
Real estate construction | 467,785 | 575,060 | 629,902 | 730,734 | ||||
Equity lines of credit | 733,741 | 757,210 | 742,071 | 733,550 | ||||
Installment | 160,144 | 167,395 | 169,070 | 164,929 | ||||
Loans and leases, excluding covered loans | 11,386,628 | 11,418,625 | 11,483,044 | 11,689,536 | ||||
Allowance for loan and lease losses | (257,007) | (274,167) | (290,492) | (292,799) | ||||
Loans and leases, excluding covered loans, net | 11,129,621 | 11,144,458 | 11,192,552 | 11,396,737 | ||||
Covered loans, net (1) | 1,790,133 | 1,910,133 | 2,034,591 | 1,803,048 | ||||
Net loans and leases | 12,919,754 | 13,054,591 | 13,227,143 | 13,199,785 | ||||
Premises and equipment, net | 128,426 | 123,427 | 121,960 | 123,178 | ||||
Goodwill and other intangibles | 528,634 | 522,592 | 524,820 | 523,135 | ||||
Other real estate owned (2) | 178,183 | 168,853 | 153,292 | 135,551 | ||||
FDIC indemnification asset | 295,466 | 324,240 | 394,012 | 325,356 | ||||
Other assets | 891,894 | 935,839 | 994,509 | 989,572 | ||||
Total assets | $ 21,353,118 | $ 21,823,616 | $ 21,231,447 | $ 20,066,475 | ||||
Liabilities | ||||||||
Deposits: | ||||||||
Noninterest-bearing | $ 8,457,178 | $ 8,455,164 | $ 8,173,386 | $ 7,881,959 | ||||
Interest-bearing | 9,719,684 | 9,958,442 | 9,799,527 | 9,081,770 | ||||
Total deposits | 18,176,862 | 18,413,606 | 17,972,913 | 16,963,729 | ||||
Short-term borrowings | 153,444 | 156,359 | 3,400 | 9,614 | ||||
Long-term debt | 704,971 | 950,792 | 985,974 | 986,585 | ||||
Other liabilities | 287,447 | 278,729 | 294,578 | 196,471 | ||||
Total liabilities | 19,322,724 | 19,799,486 | 19,256,865 | 18,156,399 | ||||
Redeemable noncontrolling interest | 45,676 | 46,967 | 47,622 | 46,665 | ||||
Equity | ||||||||
City National Corporation shareholders' equity: | ||||||||
Common stock | 53,886 | 53,886 | 53,886 | 53,886 | ||||
Additional paid-in capital | 487,868 | 487,919 | 483,983 | 505,330 | ||||
Retained earnings | 1,482,037 | 1,447,569 | 1,418,486 | 1,382,421 | ||||
Accumulated other comprehensive income | 36,853 | 73,369 | 58,050 | 23,927 | ||||
Treasury shares | (101,065) | (110,769) | (112,634) | (127,342) | ||||
Total common shareholders' equity | 1,959,579 | 1,951,974 | 1,901,771 | 1,838,222 | ||||
Total shareholders' equity | 1,959,579 | 1,951,974 | 1,901,771 | 1,838,222 | ||||
Noncontrolling interest | 25,139 | 25,189 | 25,189 | 25,189 | ||||
Total equity | 1,984,718 | 1,977,163 | 1,926,960 | 1,863,411 | ||||
Total liabilities and equity | $ 21,353,118 | $ 21,823,616 | $ 21,231,447 | $ 20,066,475 | ||||
(1) Covered loans are net of $67.4 million, $50.1 million and $46.3 million of allowance for loan losses as of December 31, 2010, September 30, 2010 and June 30, 2010, respectively. | ||||||||
(2) Other real estate owned includes $120.9 million, $110.4 million, $98.8 million and $77.5 million covered by FDIC loss share at December 31, 2010, September 30, 2010, June 30, 2010, and March 31, 2010, respectively. | ||||||||
Note: Certain prior period balances have been reclassified to conform to current period presentation. |
CITY NATIONAL CORPORATION | ||||||||||||||||||
CREDIT LOSS EXPERIENCE | ||||||||||||||||||
(unaudited) | ||||||||||||||||||
2011 | 2010 | |||||||||||||||||
(Dollars in thousands) |
Third Quarter |
Second Quarter |
First Quarter |
Year To Date |
Fourth Quarter |
Third Quarter |
Second Quarter |
First Quarter |
Year To Date |
|||||||||
Allowance for Loan and Lease Losses, Excluding Covered Loans | ||||||||||||||||||
Balance at beginning of period | $ 265,933 | $ 263,356 | $ 257,007 | $ 257,007 | $ 274,167 | $ 290,492 | $ 292,799 | $ 288,493 | $ 288,493 | |||||||||
Net (charge-offs)/recoveries: | ||||||||||||||||||
Commercial | (2,915) | 2,616 | (1,937) | (2,236) | (6,510) | (17,871) | (21,290) | (17,625) | (63,296) | |||||||||
Commercial real estate mortgages | (452) | 1,269 | 6,212 | 7,029 | (5,275) | (8,954) | (402) | (14,967) | (29,598) | |||||||||
Residential mortgages | (163) | (253) | (615) | (1,031) | (624) | (572) | (610) | (1,391) | (3,197) | |||||||||
Real estate construction | (6,233) | 577 | 3,826 | (1,830) | (5,496) | 39 | (10,944) | (14,183) | (30,584) | |||||||||
Equity lines of credit | (512) | (120) | (757) | (1,389) | (628) | (793) | (337) | (210) | (1,968) | |||||||||
Installment | (309) | 106 | (202) | (405) | (499) | (83) | 88 | (1,160) | (1,654) | |||||||||
Total net (charge-offs)/recoveries | (10,584) | 4,195 | 6,527 | 138 | (19,032) | (28,234) | (33,495) | (49,536) | (130,297) | |||||||||
Provision for credit losses | 7,500 | -- | -- | 7,500 | 3,000 | 13,000 | 32,000 | 55,000 | 103,000 | |||||||||
Transfers from (to) reserve for off-balance sheet credit commitments | 499 | (1,618) | (178) | (1,297) | (1,128) | (1,091) | (812) | (1,158) | (4,189) | |||||||||
Balance at end of period | $ 263,348 | $ 265,933 | $ 263,356 | $ 263,348 | $ 257,007 | $ 274,167 | $ 290,492 | $ 292,799 | $ 257,007 | |||||||||
Net (Charge-Offs)/Recoveries to Average Total Loans and Leases, Excluding Covered Assets (annualized): | ||||||||||||||||||
Commercial | (0.23) % | 0.22 % | (0.18) % | (0.06) % | (0.59) % | (1.66) % | (1.97) % | (1.57) % | (1.44) % | |||||||||
Commercial real estate mortgages | (0.09) % | 0.27 % | 1.31 % | 0.49 % | (1.07) % | (1.75) % | (0.08) % | (2.82) % | (1.44) % | |||||||||
Residential mortgage | (0.02) % | (0.03) % | (0.07) % | (0.04) % | (0.07) % | (0.06) % | (0.07) % | (0.16) % | (0.09) % | |||||||||
Real estate construction | (7.14) % | 0.59 % | 3.46 % | (0.62) % | (4.05) % | 0.03 % | (6.36) % | (7.12) % | (4.63) % | |||||||||
Equity lines of credit | (0.28) % | (0.07) % | (0.42) % | (0.25) % | (0.34) % | (0.42) % | (0.18) % | (0.12) % | (0.26) % | |||||||||
Installment | (0.94) % | 0.32 % | (0.55) % | (0.39) % | (1.18) % | (0.19) % | 0.21 % | (2.77) % | (0.98) % | |||||||||
Total loans and leases, excluding covered loans | (0.36) % | 0.15 % | 0.24 % | 0.00 % | (0.66) % | (0.98) % | (1.16) % | (1.68) % | (1.13) % | |||||||||
Reserve for Off-Balance Sheet Credit Commitments | ||||||||||||||||||
Balance at beginning of period | $ 23,325 | $ 21,707 | $ 21,529 | $ 21,529 | $ 20,401 | $ 19,310 | $ 18,498 | $ 17,340 | $ 17,340 | |||||||||
Transfers (to) from allowance | (499) | 1,618 | 178 | 1,297 | 1,128 | 1,091 | 812 | 1,158 | 4,189 | |||||||||
Balance at end of period | $ 22,826 | $ 23,325 | $ 21,707 | $ 22,826 | $ 21,529 | $ 20,401 | $ 19,310 | $ 18,498 | $ 21,529 | |||||||||
Allowance for Losses on Covered Loans | ||||||||||||||||||
Balance at beginning of period | $ 67,629 | $ 82,016 | $ 67,389 | $ 67,389 | $ 50,057 | $ 46,255 | $ -- | $ -- | $ -- | |||||||||
Provision for losses | 5,147 | 1,716 | 19,116 | 25,979 | 21,469 | 8,233 | 46,516 | -- | 76,218 | |||||||||
Net (charge-offs)/recoveries | (325) | -- | -- | (325) | -- | (414) | -- | -- | (414) | |||||||||
Reduction in allowance due to loan removals | (10,698) | (16,103) | (4,489) | (31,290) | (4,137) | (4,017) | (261) | -- | (8,415) | |||||||||
Balance at end of period | $ 61,753 | $ 67,629 | $ 82,016 | $ 61,753 | $ 67,389 | $ 50,057 | $ 46,255 | $ -- | $ 67,389 | |||||||||
Note: Certain prior period balances have been reclassified to conform to current period presentation. |
CITY NATIONAL CORPORATION | ||||||||||||||
NONPERFORMING ASSETS | ||||||||||||||
(unaudited) | ||||||||||||||
2011 | 2010 | |||||||||||||
(Dollars in thousands) |
Third Quarter |
Second Quarter |
First Quarter |
Fourth Quarter |
Third Quarter |
Second Quarter |
First Quarter |
|||||||
Nonperforming assets, excluding covered assets | ||||||||||||||
Nonaccrual loans, excluding covered loans | ||||||||||||||
Commercial | $ 34,937 | $ 24,337 | $ 19,297 | $ 21,739 | $ 30,054 | $ 47,667 | $ 73,838 | |||||||
Commercial real estate mortgages | 20,746 | 26,676 | 28,028 | 44,882 | 50,366 | 57,155 | 66,194 | |||||||
Residential mortgages | 10,512 | 14,211 | 14,544 | 18,721 | 16,259 | 11,506 | 12,045 | |||||||
Real estate construction | 70,827 | 60,543 | 81,448 | 98,209 | 135,778 | 138,909 | 164,985 | |||||||
Equity lines of credit | 8,401 | 6,668 | 6,676 | 6,782 | 5,584 | 3,909 | 4,089 | |||||||
Installment | 707 | 365 | 7,399 | 590 | 1,064 | 972 | 8,865 | |||||||
Total nonaccrual loans, excluding covered loans | 146,130 | 132,800 | 157,392 | 190,923 | 239,105 | 260,118 | 330,016 | |||||||
Other real estate owned, excluding covered OREO | 44,521 | 47,634 | 56,342 | 57,317 | 58,462 | 54,451 | 58,025 | |||||||
Total nonperforming assets, excluding covered assets | $ 190,651 | $ 180,434 | $ 213,734 | $ 248,240 | $ 297,567 | $ 314,569 | $ 388,041 | |||||||
Nonperforming covered assets | ||||||||||||||
Nonaccrual loans | $ 1,023 | $ 1,408 | $ 2,343 | $ 2,557 | $ 2,633 | $ -- | $ -- | |||||||
Other real estate owned | 102,848 | 114,907 | 121,822 | 120,866 | 110,391 | 98,841 | 77,526 | |||||||
Total nonperforming covered assets | $ 103,871 | $ 116,315 | $ 124,165 | $ 123,423 | $ 113,024 | $ 98,841 | $ 77,526 | |||||||
Loans 90 days or more past due on accrual status, excluding covered loans | $ 379 | $ 7,214 | $ 3,679 | $ 2,499 | $ 1,020 | $ 789 | $ 1,712 | |||||||
Covered loans 90 days or more past due on accrual status | $ 336,193 | $ 368,379 | $ 390,267 | $ 399,019 | $ 416,875 | $ 362,722 | $ 323,620 | |||||||
Allowance for loan and lease losses as a percentage of: | ||||||||||||||
Nonaccrual loans | 180.21 % | 200.25 % | 167.32 % | 134.61 % | 114.66 % | 111.68 % | 88.72 % | |||||||
Total nonperforming assets, excluding covered assets | 138.13 % | 147.39 % | 123.22 % | 103.53 % | 92.14 % | 92.35 % | 75.46 % | |||||||
Total loans and leases, excluding covered loans | 2.16 % | 2.28 % | 2.34 % | 2.26 % | 2.40 % | 2.53 % | 2.50 % | |||||||
Nonaccrual loans as a percentage of total loans, excluding covered loans | 1.20 % | 1.14 % | 1.40 % | 1.68 % | 2.09 % | 2.27 % | 2.82 % | |||||||
Nonperforming assets, excluding covered assets, as a percentage of: | ||||||||||||||
Total loans and other real estate owned, excluding covered assets | 1.56 % | 1.54 % | 1.89 % | 2.17 % | 2.59 % | 2.73 % | 3.30 % | |||||||
Total assets | 0.83 % | 0.80 % | 0.99 % | 1.16 % | 1.36 % | 1.48 % | 1.93 % | |||||||
Note: Certain prior period balances have been reclassified to conform to current period presentation. |
CITY NATIONAL CORPORATION | |||||||||||||||||
AVERAGE BALANCES AND RATES | |||||||||||||||||
(unaudited) | |||||||||||||||||
2011 | |||||||||||||||||
Third Quarter | Second Quarter | First Quarter | Year to Date | ||||||||||||||
(Dollars in millions) |
Average Balance |
Average Rate |
Average Balance |
Average Rate |
Average Balance |
Average Rate |
Average Balance |
Average Rate |
|||||||||
Assets | |||||||||||||||||
Interest-earning assets | |||||||||||||||||
Loans and leases | |||||||||||||||||
Commercial | $ 4,928 | 4.09 % | $ 4,693 | 4.22 % | $ 4,437 | 4.30 % | $ 4,688 | 4.20 % | |||||||||
Commercial real estate mortgages | 1,944 | 5.30 | 1,904 | 5.67 | 1,924 | 5.56 | 1,924 | 5.51 | |||||||||
Residential mortgages | 3,717 | 4.74 | 3,663 | 4.78 | 3,563 | 4.81 | 3,648 | 4.78 | |||||||||
Real estate construction | 347 | 4.65 | 395 | 5.10 | 448 | 4.56 | 396 | 4.77 | |||||||||
Equity lines of credit | 731 | 3.55 | 730 | 3.59 | 733 | 3.57 | 732 | 3.57 | |||||||||
Installment | 130 | 4.94 | 131 | 4.88 | 151 | 4.81 | 137 | 4.88 | |||||||||
Total loans and leases, excluding covered loans | 11,797 | 4.47 | 11,516 | 4.64 | 11,256 | 4.67 | 11,525 | 4.59 | |||||||||
Covered loans | 1,664 | 10.65 | 1,770 | 8.70 | 1,811 | 7.78 | 1,748 | 9.01 | |||||||||
Total loans and leases | 13,461 | 5.23 | 13,286 | 5.19 | 13,067 | 5.11 | 13,273 | 5.18 | |||||||||
Due from banks - interest-bearing | 642 | 0.29 | 526 | 0.31 | 490 | 0.25 | 553 | 0.28 | |||||||||
Federal funds sold and securities purchased under resale agreements | 130 | 0.28 | 143 | 0.28 | 232 | 0.27 | 168 | 0.27 | |||||||||
Securities available-for-sale | 6,883 | 2.47 | 6,155 | 2.67 | 5,631 | 2.77 | 6,228 | 2.63 | |||||||||
Trading securities | 71 | 0.58 | 69 | 1.45 | 62 | 0.85 | 67 | 0.96 | |||||||||
Other interest-earning assets | 130 | 2.09 | 135 | 2.09 | 139 | 2.04 | 135 | 2.07 | |||||||||
Total interest-earning assets | 21,317 | 4.12 | 20,314 | 4.23 | 19,621 | 4.24 | 20,424 | 4.19 | |||||||||
Allowance for loan and lease losses | (330) | (344) | (329) | (334) | |||||||||||||
Cash and due from banks | 203 | 184 | 201 | 196 | |||||||||||||
Other non-earning assets | 1,809 | 1,856 | 1,885 | 1,849 | |||||||||||||
Total assets | $ 22,999 | $ 22,010 | $ 21,378 | $ 22,135 | |||||||||||||
Liabilities and Equity | |||||||||||||||||
Interest-bearing deposits | |||||||||||||||||
Interest checking accounts | $ 1,727 | 0.15 % | $ 1,707 | 0.17 % | $ 1,772 | 0.19 % | $ 1,735 | 0.17 % | |||||||||
Money market accounts | 6,900 | 0.35 | 6,683 | 0.43 | 6,452 | 0.45 | 6,680 | 0.41 | |||||||||
Savings deposits | 329 | 0.29 | 327 | 0.32 | 303 | 0.34 | 320 | 0.32 | |||||||||
Time deposits - under $100,000 | 280 | 0.48 | 308 | 0.49 | 325 | 0.56 | 304 | 0.51 | |||||||||
Time deposits -- $100,000 and over | 801 | 0.61 | 833 | 0.70 | 823 | 0.75 | 819 | 0.69 | |||||||||
Total interest-bearing deposits | 10,037 | 0.34 | 9,858 | 0.41 | 9,675 | 0.43 | 9,858 | 0.39 | |||||||||
Federal funds purchased and securities sold under repurchase agreements | -- | 0.07 | 10 | 0.07 | -- | 0.00 | 4 | 0.07 | |||||||||
Other borrowings | 804 | 4.46 | 855 | 4.36 | 858 | 4.41 | 839 | 4.41 | |||||||||
Total interest-bearing liabilities | 10,841 | 0.64 | 10,723 | 0.72 | 10,533 | 0.75 | 10,701 | 0.70 | |||||||||
Noninterest-bearing deposits | 9,688 | 8,927 | 8,509 | 9,045 | |||||||||||||
Other liabilities | 353 | 307 | 338 | 332 | |||||||||||||
Total equity | 2,117 | 2,053 | 1,998 | 2,057 | |||||||||||||
Total liabilities and equity | $ 22,999 | $ 22,010 | $ 21,378 | $ 22,135 | |||||||||||||
Net interest spread | 3.48 % | 3.51 % | 3.49 % | 3.49 % | |||||||||||||
Net interest margin | 3.79 % | 3.85 % | 3.84 % | 3.82 % | |||||||||||||
Average prime rate | 3.25 % | 3.25 % | 3.25 % | 3.25 % |
CITY NATIONAL CORPORATION | ||||||||||||||||||||
AVERAGE BALANCES AND RATES | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
2010 | ||||||||||||||||||||
Fourth Quarter | Third Quarter | Second Quarter | First Quarter | Year to Date | ||||||||||||||||
(Dollars in millions) | Average Balance | Average Rate | Average Balance | Average Rate | Average Balance | Average Rate | Average Balance | Average Rate | Average Balance | Average Rate | ||||||||||
Assets | ||||||||||||||||||||
Interest-earning assets | ||||||||||||||||||||
Loans and leases | ||||||||||||||||||||
Commercial | $ 4,392 | 4.39 % | $ 4,277 | 4.51 % | $ 4,339 | 4.50 % | $ 4,559 | 4.33 % | $ 4,391 | 4.43 % | ||||||||||
Commercial real estate mortgages | 1,965 | 5.57 | 2,027 | 5.60 | 2,098 | 5.59 | 2,151 | 5.49 | 2,060 | 5.56 | ||||||||||
Residential mortgages | 3,567 | 4.97 | 3,581 | 5.28 | 3,542 | 5.36 | 3,522 | 5.39 | 3,553 | 5.25 | ||||||||||
Real estate construction | 538 | 4.29 | 610 | 4.04 | 691 | 3.91 | 807 | 3.70 | 661 | 3.96 | ||||||||||
Equity lines of credit | 743 | 3.57 | 750 | 3.60 | 743 | 3.58 | 735 | 3.56 | 743 | 3.58 | ||||||||||
Installment | 167 | 5.19 | 170 | 5.27 | 169 | 5.16 | 170 | 5.14 | 169 | 5.19 | ||||||||||
Total loans and leases, excluding covered loans | 11,372 | 4.72 | 11,415 | 4.86 | 11,582 | 4.88 | 11,944 | 4.80 | 11,577 | 4.81 | ||||||||||
Covered loans | 1,908 | 7.41 | 2,016 | 7.75 | 2,003 | 6.90 | 1,833 | 6.44 | 1,940 | 7.14 | ||||||||||
Total loans and leases | 13,280 | 5.10 | 13,431 | 5.28 | 13,585 | 5.18 | 13,777 | 5.03 | 13,517 | 5.15 | ||||||||||
Due from banks - interest-bearing | 897 | 0.25 | 835 | 0.26 | 701 | 0.24 | 275 | 0.51 | 679 | 0.28 | ||||||||||
Federal funds sold and securities purchased under resale agreements | 373 | 0.25 | 360 | 0.26 | 213 | 0.25 | 46 | 0.20 | 249 | 0.25 | ||||||||||
Securities available-for-sale | 5,371 | 2.78 | 4,922 | 3.02 | 4,190 | 3.28 | 3,974 | 3.39 | 4,619 | 3.08 | ||||||||||
Trading securities | 59 | 0.42 | 58 | 0.23 | 54 | 0.18 | 62 | (0.33) | 58 | 0.12 | ||||||||||
Other interest-earning assets | 146 | 2.00 | 149 | 2.00 | 148 | 1.80 | 147 | 1.76 | 148 | 1.89 | ||||||||||
Total interest-earning assets | 20,126 | 4.13 | 19,755 | 4.37 | 18,891 | 4.48 | 18,281 | 4.56 | 19,270 | 4.38 | ||||||||||
Allowance for loan and lease losses | (325) | (332) | (308) | (295) | (315) | |||||||||||||||
Cash and due from banks | 201 | 212 | 241 | 299 | 238 | |||||||||||||||
Other non-earning assets | 1,920 | 1,980 | 1,975 | 1,982 | 1,964 | |||||||||||||||
Total assets | $ 21,922 | $ 21,615 | $ 20,799 | $ 20,267 | $ 21,157 | |||||||||||||||
Liabilities and Equity | ||||||||||||||||||||
Interest-bearing deposits | ||||||||||||||||||||
Interest checking accounts | $ 1,680 | 0.18 % | $ 1,703 | 0.19 % | $ 2,385 | 0.24 % | $ 2,235 | 0.24 % | $ 1,999 | 0.22 % | ||||||||||
Money market accounts | 6,755 | 0.45 | 6,643 | 0.53 | 5,365 | 0.57 | 4,853 | 0.62 | 5,911 | 0.53 | ||||||||||
Savings deposits | 290 | 0.34 | 293 | 0.39 | 301 | 0.45 | 387 | 0.66 | 317 | 0.48 | ||||||||||
Time deposits - under $100,000 | 355 | 0.49 | 400 | 0.29 | 414 | 0.83 | 556 | 0.62 | 431 | 0.57 | ||||||||||
Time deposits -- $100,000 and over | 965 | 0.73 | 1,097 | 0.78 | 1,147 | 0.82 | 1,239 | 0.96 | 1,111 | 0.83 | ||||||||||
Total interest-bearing deposits | 10,045 | 0.43 | 10,136 | 0.49 | 9,612 | 0.53 | 9,270 | 0.58 | 9,769 | 0.50 | ||||||||||
Federal funds purchased and securities sold under repurchase agreements | -- | 0.00 | 173 | 3.78 | 183 | 3.74 | 300 | 2.62 | 163 | 3.24 | ||||||||||
Other borrowings | 900 | 4.54 | 869 | 5.60 | 804 | 5.75 | 812 | 5.73 | 847 | 5.38 | ||||||||||
Total interest-bearing liabilities | 10,945 | 0.77 | 11,178 | 0.94 | 10,599 | 0.98 | 10,382 | 1.04 | 10,779 | 0.93 | ||||||||||
Noninterest-bearing deposits | 8,642 | 8,161 | 7,988 | 7,594 | 8,100 | |||||||||||||||
Other liabilities | 336 | 316 | 330 | 288 | 317 | |||||||||||||||
Total equity | 1,999 | 1,960 | 1,882 | 2,003 | 1,961 | |||||||||||||||
Total liabilities and equity | $ 21,922 | $ 21,615 | $ 20,799 | $ 20,267 | $ 21,157 | |||||||||||||||
Net interest spread | 3.36 % | 3.43 % | 3.50 % | 3.52 % | 3.45 % | |||||||||||||||
Net interest margin | 3.71 % | 3.84 % | 3.93 % | 3.97 % | 3.86 % | |||||||||||||||
Average prime rate | 3.25 % | 3.25 % | 3.25 % | 3.25 % | 3.25 % |
CITY NATIONAL CORPORATION | ||||||||||||||||||
CAPITAL AND CREDIT RATING DATA | ||||||||||||||||||
(unaudited) | ||||||||||||||||||
2011 | 2010 | |||||||||||||||||
Third Quarter |
Second Quarter |
First Quarter |
Year To Date |
Fourth Quarter |
Third Quarter |
Second Quarter |
First Quarter |
Year To Date |
||||||||||
Per Common Share: | ||||||||||||||||||
Shares Outstanding (in thousands): | ||||||||||||||||||
Average - Basic | 52,481 | 52,462 | 52,320 | 52,422 | 52,154 | 52,105 | 52,012 | 51,690 | 51,992 | |||||||||
Average - Diluted | 52,720 | 52,977 | 52,894 | 52,882 | 52,680 | 52,498 | 52,542 | 52,092 | 52,455 | |||||||||
Period-end | 52,484 | 52,475 | 52,440 | 52,247 | 52,114 | 52,089 | 51,888 | |||||||||||
Book value for common shareholders | $ 40.40 | $ 39.24 | $ 37.86 | $ 37.51 | $ 37.46 | $ 36.51 | $ 35.43 | |||||||||||
Closing price: | ||||||||||||||||||
High | $ 55.54 | $ 58.75 | $ 62.90 | $ 62.90 | $ 62.91 | $ 58.00 | $ 64.13 | $ 54.86 | $ 64.13 | |||||||||
Low | 37.76 | 52.02 | 55.65 | 37.76 | 51.57 | 47.91 | 51.23 | 45.81 | 45.81 | |||||||||
Period-end | 37.76 | 54.25 | 57.05 | 61.36 | 53.07 | 51.23 | 53.97 | |||||||||||
Capital Ratios (Dollars in millions): | ||||||||||||||||||
Risk-based capital | ||||||||||||||||||
Risk-weighted assets (1) | $ 14,866 | $ 14,286 | $ 13,551 | $ 13,712 | $ 13,788 | $ 13,807 | $ 13,856 | |||||||||||
Tier 1 common shareholders' equity | $ 1,530 | $ 1,493 | $ 1,449 | $ 1,412 | $ 1,373 | $ 1,337 | $ 1,309 | |||||||||||
Percentage of risk-weighted assets (2) | 10.29 % | 10.45 % | 10.69 % | 10.29 % | 9.96 % | 9.68 % | 9.44 % | |||||||||||
Tier 1 capital | $ 1,535 | $ 1,523 | $ 1,479 | $ 1,442 | $ 1,651 | $ 1,614 | $ 1,586 | |||||||||||
Percentage of risk-weighted assets | 10.32 % | 10.66 % | 10.91 % | 10.52 % | 11.97 % | 11.69 % | 11.44 % | |||||||||||
Total capital | $ 1,922 | $ 1,905 | $ 1,853 | $ 1,821 | $ 2,032 | $ 2,027 | $ 1,998 | |||||||||||
Percentage of risk-weighted assets | 12.93 % | 13.34 % | 13.68 % | 13.28 % | 14.74 % | 14.68 % | 14.42 % | |||||||||||
Tier 1 leverage ratio | 6.82 % | 7.09 % | 7.09 % | 6.74 % | 7.82 % | 7.96 % | 8.03 % | |||||||||||
Period-end equity to period-end assets | 9.18 % | 9.25 % | 9.29 % | 9.29 % | 9.06 % | 9.08 % | 9.29 % | |||||||||||
Period-end common shareholders' equity to period-end assets | 9.18 % | 9.14 % | 9.18 % | 9.18 % | 8.94 % | 8.96 % | 9.16 % | |||||||||||
Average equity to average assets | 9.21 % | 9.33 % | 9.35 % | 9.29 % | 9.12 % | 9.07 % | 9.05 % | 9.88 % | 9.27 % | |||||||||
Average common shareholders' equity to average assets | 9.10 % | 9.22 % | 9.23 % | 9.18 % | 9.01 % | 8.95 % | 8.93 % | 9.10 % | 8.99 % | |||||||||
Period-end tangible equity to period-end tangible assets (2) | 7.07 % | 7.08 % | 7.03 % | 6.99 % | 6.83 % | 6.77 % | 6.86 % | |||||||||||
Average tangible equity to average tangible assets (2) | 7.08 % | 7.11 % | 7.05 % | 7.08 % | 6.89 % | 6.81 % | 6.70 % | 7.49 % | 6.96 % | |||||||||
Senior Debt Credit Ratings | ||||||||||||||||||
For The Period Ended September 30, 2011 | Standard & | |||||||||||||||||
Moody's | Fitch | 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, the Company calculates risk-weighted assets 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 shareholders' equity to risk-weighted assets ratio and tangible equity to tangible assets ratio are non-GAAP financial measures. For notes on non-GAAP measures, see pages 15 and 16 of the Selected Financial Information. |
CITY NATIONAL CORPORATION | ||||||||||||||||||
COMPUTATION OF BASIC AND DILUTED EARNINGS PER SHARE | ||||||||||||||||||
(unaudited) | ||||||||||||||||||
City National Corporation applies the two-class method of computing basic and diluted earnings per 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 shares under a share-based compensation plan that qualify as participating securities. The computation of basic and diluted EPS is presented in the following table: | ||||||||||||||||||
2011 | 2010 | |||||||||||||||||
(Dollars in thousands, except per share amounts) |
Third Quarter |
Second Quarter |
First Quarter |
Year to Date |
Fourth Quarter |
Third Quarter |
Second Quarter |
First Quarter |
Year to Date |
|||||||||
Basic EPS: | ||||||||||||||||||
Net income attributable to City National Corporation | $ 41,398 | $ 47,471 | $ 39,692 | $ 128,561 | $ 39,743 | $ 34,418 | $ 41,318 | $ 15,698 | $ 131,177 | |||||||||
Less: Dividends and accretion on preferred stock | -- | -- | -- | -- | -- | -- | -- | 5,702 | 5,702 | |||||||||
Net income available to common shareholders | $ 41,398 | $ 47,471 | $ 39,692 | $ 128,561 | $ 39,743 | $ 34,418 | $ 41,318 | $ 9,996 | $ 125,475 | |||||||||
Less: Earnings allocated to participating securities | 655 | 759 | 578 | 1,988 | 532 | 447 | 535 | 113 | 1,605 | |||||||||
Earnings allocated to common shareholders | $ 40,743 | $ 46,712 | $ 39,114 | $ 126,573 | $ 39,211 | $ 33,971 | $ 40,783 | $ 9,883 | $ 123,870 | |||||||||
Weighted average common shares outstanding | 52,481 | 52,462 | 52,320 | 52,422 | 52,154 | 52,105 | 52,012 | 51,690 | 51,992 | |||||||||
Basic earnings per common share | $ 0.78 | $ 0.89 | $ 0.75 | $ 2.41 | $ 0.75 | $ 0.65 | $ 0.78 | $ 0.19 | $ 2.38 | |||||||||
Diluted EPS: | ||||||||||||||||||
Earnings allocated to common shareholders (1) | $ 40,745 | $ 46,718 | $ 39,119 | $ 126,586 | $ 39,216 | $ 33,974 | $ 40,787 | $ 9,883 | $ 123,882 | |||||||||
Weighted average common shares outstanding | 52,481 | 52,462 | 52,320 | 52,422 | 52,154 | 52,105 | 52,012 | 51,690 | 51,992 | |||||||||
Dilutive effect of equity awards | 239 | 515 | 574 | 460 | 526 | 393 | 530 | 402 | 463 | |||||||||
Weighted average diluted common shares outstanding | 52,720 | 52,977 | 52,894 | 52,882 | 52,680 | 52,498 | 52,542 | 52,092 | 52,455 | |||||||||
Diluted earnings per common share | $ 0.77 | $ 0.88 | $ 0.74 | $ 2.39 | $ 0.74 | $ 0.65 | $ 0.78 | $ 0.19 | $ 2.36 | |||||||||
(1) Earnings allocated to common shareholders for basic and diluted EPS may differ under the two-class method as a result of adding common stock equivalents for options and warrants to dilutive shares outstanding, which alters the ratio used to allocate earnings to common 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: | ||||||
2011 | ||||||
(in thousands) |
Third Quarter |
Second Quarter |
First Quarter |
|||
Interest income (1) | ||||||
Income on loans paid-off or fully charged-off | $ 18,343 | $ 11,105 | $ 7,389 | |||
Provision for losses on covered loans | ||||||
Provision for losses on covered loans | 5,147 | 1,716 | 19,116 | |||
Noninterest income related to covered assets | ||||||
FDIC loss sharing (expense) income, net | ||||||
(Loss) gain on indemnification asset | $ (384) | $ 1,687 | $ 15,048 | |||
Indemnification asset accretion | (4,043) | (4,126) | (3,624) | |||
Net FDIC reimbursement for OREO and loan expenses | 10,496 | 17,852 | 11,118 | |||
Removal of indemnification asset on loans | (13,931) | (15,161) | (11,186) | |||
Removal of indemnification asset on OREO and net reimbursement to FDIC for OREO sales | (2,823) | (7,219) | (1,282) | |||
Loan recoveries shared with FDIC | (3,153) | (3,197) | (1,971) | |||
Increase in FDIC clawback liability | (353) | (503) | (276) | |||
Other | -- | (17) | 778 | |||
Total FDIC loss sharing (expense) income, net | (14,191) | (10,684) | 8,605 | |||
Gain on disposal of assets | ||||||
Net gain on sale of OREO | 3,625 | 9,092 | 1,628 | |||
Gain on acquisition | -- | 8,164 | -- | |||
Other income | ||||||
Net gain on transfers of covered loans to OREO | 3,887 | 12,817 | 10,330 | |||
Amortization of fair value on acquired unfunded loan commitments | 1,088 | 766 | 692 | |||
OREO income | 379 | 637 | 661 | |||
Other | (503) | (690) | 29 | |||
Total other income | 4,851 | 13,530 | 11,712 | |||
Total noninterest income related to covered assets | $ (5,715) | $ 20,102 | $ 21,945 | |||
Noninterest expense related to covered assets (2) | ||||||
Other real estate owned | ||||||
Valuation write-downs | $ 7,526 | $ 15,628 | 8,305 | |||
Holding costs and foreclosure expense | 3,449 | 4,564 | 4,493 | |||
Total other real estate owned | 10,975 | 20,192 | 12,798 | |||
Legal and professional fees | 2,961 | 2,832 | 1,819 | |||
Other operating expense | ||||||
Other covered asset expenses | 18 | (70) | 92 | |||
Total noninterest expense related to covered assets (3) | $ 13,954 | $ 22,954 | $ 14,709 | |||
(1) Excludes core 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) Tangible 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. Management reviews this measure in evaluating the Company's capital levels and has included the ratio in response to market participant interest in tangible equity as a measure of capital. A reconciliation of the GAAP to non-GAAP measure is set forth below: | ||||||||||||||||||
2011 | 2010 | |||||||||||||||||
(Dollars in thousands) |
Third Quarter |
Second Quarter |
First Quarter |
Year to Date |
Fourth Quarter |
Third Quarter |
Second Quarter |
First Quarter |
Year to Date |
|||||||||
Period End: | ||||||||||||||||||
Total equity | $ 2,120,465 | $ 2,084,010 | $ 2,010,627 | $ 1,984,718 | $ 1,977,163 | $ 1,926,960 | $ 1,863,411 | |||||||||||
Less: Goodwill and other intangibles | (524,103) | (526,207) | (527,419) | (528,634) | (522,592) | (524,820) | (523,135) | |||||||||||
Tangible equity (A) | 1,596,362 | 1,557,803 | 1,483,208 | 1,456,084 | 1,454,571 | 1,402,140 | 1,340,276 | |||||||||||
Total assets | $ 23,104,260 | $ 22,526,089 | $ 21,635,932 | $ 21,353,118 | $ 21,823,616 | $ 21,231,447 | $ 20,066,475 | |||||||||||
Less: Goodwill and other intangibles | (524,103) | (526,207) | (527,419) | (528,634) | (522,592) | (524,820) | (523,135) | |||||||||||
Tangible assets (B) | $ 22,580,157 | $ 21,999,882 | $ 21,108,513 | $ 20,824,484 | $ 21,301,024 | $ 20,706,627 | $ 19,543,340 | |||||||||||
Period-end tangible equity to period-end tangible assets (A)/(B) | 7.07% | 7.08% | 7.03% | 6.99% | 6.83% | 6.77% | 6.86% | |||||||||||
Average Balance: | ||||||||||||||||||
Total equity | $ 2,117,249 | $ 2,053,447 | $ 1,998,006 | $ 2,056,671 | $ 1,999,494 | $ 1,960,206 | $ 1,881,635 | $ 2,003,150 | $ 1,961,109 | |||||||||
Less: Goodwill and other intangibles | (525,300) | (527,072) | (528,205) | (526,848) | (525,747) | (523,855) | (522,311) | (524,838) | (524,189) | |||||||||
Tangible equity (C) | 1,591,949 | 1,526,375 | 1,469,801 | 1,529,823 | 1,473,747 | 1,436,351 | 1,359,324 | 1,478,312 | 1,436,920 | |||||||||
Total assets | $ 22,998,562 | $ 22,009,749 | $ 21,377,904 | $ 22,134,675 | $ 21,922,240 | $ 21,614,748 | $ 20,799,187 | $ 20,267,248 | $ 21,156,661 | |||||||||
Less: Goodwill and other intangibles | (525,300) | (527,072) | (528,205) | (526,848) | (525,747) | (523,855) | (522,311) | (524,838) | (524,189) | |||||||||
Tangible assets (D) | $ 22,473,262 | $ 21,482,677 | $ 20,849,699 | $ 21,607,827 | $ 21,396,493 | $ 21,090,893 | $ 20,276,876 | $ 19,742,410 | $ 20,632,472 | |||||||||
Average tangible equity to average tangible assets (C)/(D) | 7.08% | 7.11% | 7.05% | 7.08% | 6.89% | 6.81% | 6.70% | 7.49% | 6.96% |
CITY NATIONAL CORPORATION | ||||||||||||||||
NON-GAAP FINANCIAL MEASURES (continued) | ||||||||||||||||
(unaudited) | ||||||||||||||||
(b) Tier 1 common shareholders' equity to risk-based assets | ||||||||||||||||
The Tier 1 common shareholders' equity to risk-based assets ratio, also known as Tier 1 common ratio, is calculated by dividing (a) Tier 1 capital less non-common components including 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 these ratios in response to market participant interest in the Tier 1 common shareholders' equity to risk-based assets ratio. | ||||||||||||||||
2011 | 2010 | |||||||||||||||
(Dollars in thousands) |
Third Quarter |
Second Quarter |
First Quarter |
Fourth Quarter |
Third Quarter |
Second Quarter |
First Quarter |
|||||||||
Tier 1 capital | $ 1,534,831 | $ 1,523,269 | $ 1,478,820 | $ 1,441,837 | $ 1,650,793 | $ 1,614,341 | $ 1,585,727 | |||||||||
Less: Noncontrolling interest | -- | (25,089) | (25,089) | (25,139) | (25,189) | (25,088) | (25,088) | |||||||||
Less: Trust preferred securities | (5,155) | (5,155) | (5,155) | (5,155) | (252,115) | (252,088) | (252,062) | |||||||||
Tier 1 common shareholders' equity (A) | $ 1,529,676 | $ 1,493,025 | $ 1,448,576 | $ 1,411,543 | $ 1,373,489 | $ 1,337,165 | $ 1,308,577 | |||||||||
Risk-weighted assets (B) | $ 14,866,356 | $ 14,285,572 | $ 13,551,318 | $ 13,712,097 | $ 13,788,060 | $ 13,806,764 | $ 13,856,028 | |||||||||
Tier 1 common shareholders' equity to risk-based assets (A)/(B) | 10.29% | 10.45% | 10.69% | 10.29% | 9.96% | 9.68% | 9.44% | |||||||||
(c) Noninterest income, excluding gain on acquisition | ||||||||||||||||
Noninterest income for the third quarter of 2011 was $69.6 million, a decrease of 24 percent from the second quarter of 2011 but an increase of 4 percent compared to the third quarter of 2010. Noninterest income for the second quarter of 2011 and third quarter of 2010 included gains on acquisition of $8.2 million and $2.1 million, respectively. Excluding these items, noninterest income for the third quarter of 2011 decreased 17 percent from the second quarter of 2011 and increased 8 percent from the third quarter of 2010. | ||||||||||||||||
Management believes this non-GAAP financial measure enhances the comparability of the financial results with prior periods as well as to highlight the effects of unusual items in the periods presented. The Company believes that investors may find it useful to see this non-GAAP financial measure to analyze the Company's underlying financial performance without the impact of unusual items. |
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 Conference Call: Today 2:00 p.m. PDT (866) 393-6804 Conference ID: 10733405