LOS ANGELES--(BUSINESS WIRE)--Dec. 30, 2002--City National Bank,the second largest independent bank headquartered in California,announced today that its investment division, City National AssetManagement, is implementing a 5 percent asset allocation shift in itsclient accounts toward equities - a move that signals a slightpreference for stocks over bonds in the coming months.

"In keeping with our disciplined approach to investing, we findthat stocks are marginally more attractive than bonds at the currenttime based on a broad spectrum of factors, including those relating tothe economy, fundamental valuation and investor psychology," saidChief Investment Officer Richard Weiss.

City National Bank, with more than $7 billion in assets undermanagement, is raising the current allocation for clients' investmentportfolios to 5 percent above the midpoint of the allowable range forequities.

According to Weiss, one reason for this shift is that the economicrecovery - although still tentative - remains intact. "We believethe economy will continue to strengthen throughout next year," hesaid, "and economic growth bodes favorably for equities relative tobonds."

Weiss cited a number of other factors for increasing the equityexposure in its managed accounts at the expense of bonds:

  • The corporate earnings cycle appears to have bottomed out.Corporate profits came in at or above expectations in thethird quarter of 2002, and they are widely forecasted to grow10 percent or better next year due to cost-containment effortsand higher overall corporate productivity.

  • Following a mild economic recession, 12 interest rate cuts,and three years of one of the worst bear markets in history,lower interest rates do not appear likely. Similarly,longer-term interest rates have begun to ratchet upward in thelast few weeks, in anticipation of economic recovery and itsattendant inflationary pressures.

  • Credit spreads have narrowed significantly over the lastseveral weeks. The perceived economic risk in corporate bondexposure relative to governments appears to have peaked and isnow subsiding. This phenomenon typically bodes relatively wellfor equities.

  • Equity valuation levels have come back into line withhistorical norms over the last three years. The excesses ofthe late 1990s have effectively been wrung out of the marketduring this bear phase. Similarly, the current 1.8 percentdividend yield on the S&P 500 compares favorably with yieldsbeing offered on cash-equivalents and shorter-term bonds.

In addition, Weiss noted that consumer and investor sentiment --despite brief up ticks due to recent market strength - remainsignificantly below the peaks seen in the late 1990s. "Low investorconfidence typically correlates with high cash holdings, indicatingthat there may be money on the sidelines that is poised to re-enterthe market," he said. "To the extent that such pent-up demand forstocks exists, it is bullish for stocks."

About City National

City National Corporation (NYSE:CYN) is a financial servicescompany with $11.3 billion in total assets. Its wholly ownedsubsidiary, City National Bank, is the second largest independent bankheadquartered in California. As California's Premier Private andBusiness Bank(R), City National provides banking, investment and trustservices through 55 offices, including 11 full-service regionalcenters, in Southern California, the San Francisco Bay Area and NewYork City. The company has more than $19 billion in investment andtrust assets under management or administration.

For more information about City National, visit the company's Website at www.cnb.com.

Note to Editors: Richard Weiss, chief investment officer, CityNational Bank, is available for interview about the bank's shifttoward equities in its managed accounts, as well as the economicrecovery and other factors that will continue to influence investmentdecisions in 2003.

CONTACT:City National BankLinda Mueller, 213.833.4719linda.mueller@cnb.com