LOS ANGELES--(BUSINESS WIRE)--April 13, 2000--City National Corp. (NYSE:CYN) today reported record net income of $31.0 million for the first quarter of 2000, a 19 percent increase from net income of $26.0 million in the first quarter of 1999, and an 11 percent increase from the fourth quarter of 1999.

Net income per diluted common share of $0.66 per share increased 20 percent, compared with $0.55 per share in the first quarter of 1999, and was 10 percent higher than the $0.60 per share reported for the 1999 fourth quarter. Results reflect the operations of The Pacific Bank, N.A. from Feb. 29, 2000, the date of acquisition.

Cash earnings, which exclude the amortization of core deposit intangibles and goodwill from acquisitions, increased 23 percent to $33.9 million, or $0.72 per diluted common share, for the first quarter of 2000 from $27.6 million, or $0.58 per diluted common share, for the first quarter of 1999. They also increased 12 percent from $30.4 million, or $0.65 per diluted common share, for the fourth quarter of 1999.

"These solid earnings were driven by strong loan demand, a growing client base and the resulting strong growth in revenue - both net interest income and noninterest income. Our earnings rose 19 percent year-over-year, our 23rd consecutive quarter of double-digit earnings growth," said Russell Goldsmith, CEO of City National Corp.

"For the first time in our 46-year history, City National's total assets exceeded the $8 billion level, and total loans and deposits each crossed the $6 billion threshold," Goldsmith said. "These results come just one quarter after City National first grew to $7 billion in assets and more than $5 billion in both loans and deposits."

Goldsmith added: "The first quarter was also highlighted by the addition on February 29 of the colleagues and clients of The Pacific Bank to our team. With over 50 offices in California today, City National now has a new, strategically positioned platform for growth in the remarkably robust Northern California economy - as well as added strength in Southern California."

Return on Assets/Return on Equity

The Corporation's return on average assets in the first quarter of 2000 was 1.63 percent, compared with 1.73 percent in the 1999 first quarter and 1.55 percent in the fourth quarter of 1999. The return on average common equity rose to 20.85 percent, compared with 18.69 percent for the prior-year quarter and 19.40 percent for the fourth quarter of 1999. The cash return on equity was 28.3 percent.

Total average assets rose to a record $7.7 billion in the first quarter of 2000, an increase of 26 percent over the $6.1 billion in average assets for the first quarter of 1999 and $0.5 billion higher than the fourth quarter of 1999. Both internally generated growth and acquisitions contributed to the increase in total average assets.

The Pacific Bank added $248.3 million of additional average assets for the first quarter of 2000. Total assets at March 31, 2000, were $8.4 billion, compared with total assets of $6.3 billion at March 31, 1999, and total assets of $7.2 billion at Dec. 31, 1999.

Loans

Average loans rose 27 percent during the first quarter of 2000 to $5.7 billion compared with the first quarter of 1999. Average loans increased 8 percent from the 1999 fourth quarter; approximately 3 percent of the loan growth since Dec. 31, 1999, is attributable to the acquisition of The Pacific Bank. Loan growth was driven primarily by increases in commercial loans and real estate commercial mortgages.

Compared with the year-ago quarter, commercial loan average balances rose 21 percent from $2.4 billion to $3.0 billion. Real estate commercial mortgage averages rose 53 percent from $0.7 billion to $1.1 billion. Growth in all other loan categories also contributed to the increase in average loans over the prior-year quarter.

Total loans at March 31, 2000, were $6.2 billion, compared with $4.5 billion at March 31, 1999, and $5.5 billion at Dec. 31, 1999. During the quarter, total loans increased $673.3 million, or 12 percent. The acquisition of The Pacific Bank added $497.7 million of the increase with other growth primarily driven by loans originated as part of a client relationship.

Purchased residential first mortgages rose $21.1 million, or 10 percent, and non-relationship, syndicated loans rose $3.2 million, or less than 1 percent. Non-relationship syndicated loans continue to account for less than 10 percent of the loan portfolio.

Deposits

Average deposits rose 30 percent during the first quarter of 2000 to $5.7 billion compared with the first quarter of 1999, and increased 3 percent from the 1999 fourth quarter. Deposits totaled $6.4 billion at March 31, 2000, compared with $4.6 billion at March 31, 1999, and $5.7 billion at Dec. 31, 1999.

Deposit growth also benefited from the acquisition of The Pacific Bank, which added $699 million to deposits at March 31, 2000. Core deposits - which continued to provide substantial benefits to the Bank's cost of funds - rose 16 percent, making a significant contribution to the total increase from Dec. 31, 1999.

Net Interest Income

Net interest income on a fully taxable-equivalent basis rose 19 percent to $95.3 million, compared with $80.1 million for the first quarter of 1999, and increased 6 percent from $89.9 million in the fourth quarter of last year. Interest recovered on nonaccrual and charged-off loans was $1.0 million for the first quarter of 2000, compared with $3.4 million for the first quarter and $0.4 million for the fourth quarter of 1999.

The fully taxable-equivalent net interest margin was 5.47 percent for the quarter ended March 31, 2000, compared with 5.60 percent for the year-earlier period and 5.46 percent for the fourth quarter of 1999. The lower net interest margin compared with the year-ago quarter is primarily attributable to lower interest recovered on nonaccrual and charged-off loans.

Noninterest Income

Noninterest income continued its strong growth, totaling $24.2 million for the first-quarter 2000, a 27 percent increase over the $19.1 million reported in the first quarter of 1999. These results reflect a 4 percent increase over the $23.2 million for the fourth quarter of 1999. Noninterest income was 20.8 percent of total revenues in the first quarter of 2000, compared with 19.8 percent for the year-earlier period and 21.1 percent for the fourth quarter of 1999.

All categories of recurring noninterest income increased over the prior-year period. Investment services and trust fees rose as a result of strong, internally generated new business, and a growing client base. International services income rose as a result of increased foreign exchange fees. Growth in noninterest income also reflects the acquisition of The Pacific Bank. Gains on the sale of assets and securities amounted to $0.2 million for the quarter, compared with $1.3 million in the prior-year quarter.

City National Investments (CNI), a division of the Bank, had assets under administration and management of $14.9 billion as of March 31, 2000, compared with $14.1 billion at Dec. 31, 1999. The increase is primarily attributable to the acquisition of The Pacific Bank. During the quarter, CNI also rolled out the CNI Charter Funds, a new suite of proprietary money market, private equity and fixed income investment funds.

Noninterest Expense

Noninterest expense was $69.1 million for the first quarter of 2000, compared with $55.9 million in the first quarter and $66.7 million in the fourth quarter of 1999. This year-over-year increase in expenses is primarily the result of additional offices and employees, including those resulting from the acquisition of The Pacific Bank. Salaries and other employee benefits increased by $6.3 million, or 19 percent, compared with the first quarter of 1999; they increased by $3.9 million, or 11 percent, compared with the fourth quarter of 1999.

All other expenses increased $6.8 million, or 29 percent, from the first quarter of 1999, and decreased $1.5 million, or 5 percent, from the fourth quarter of 1999. First-quarter noninterest expense included $1.3 million relating to the integration of The Pacific Bank and included system conversion charges, the cost of new client checks and facility consolidation expenses.

Income Taxes

The effective tax rate in the first quarter of 2000 declined to 34.6 percent, compared with 36.5 percent in the first quarter and 35.7 percent in the fourth quarter of 1999. The decline is due primarily to the impact of the formation of a regulated investment company subsidiary that provides flexibility to raise additional capital in a tax-efficient manner.

Credit Quality

The Corporation recorded no credit loss provisions for the first quarter of 2000, as credit quality remained strong. There were also no credit loss provisions in the year-earlier period. Net credit losses for the first quarter of 2000 were $3.6 million, compared with net credit recoveries of $3.4 million in the year-earlier period and net credit losses of $4.9 million for the fourth quarter of 1999.

The allowance for credit losses at March 31, 2000, totaled $140.5 million, or 2.28 percent of outstanding loans, which included an allowance of $9.9 million related to the acquisition of The Pacific Bank. This compares with an allowance of $138.7 million, or 3.07 percent of outstanding loans at March 31, 1999, and an allowance of $134.1 million, or 2.44 percent of outstanding loans at Dec. 31, 1999.

The allowance for credit losses as a percentage of nonaccrual loans was 434 percent at March 31, 2000, compared with 596 percent at March 31, 1999, and 530 percent at Dec. 31, 1999. Total non-performing assets (nonaccrual loans and ORE) were $32.8 million, or 0.53 percent of total loans and ORE at March 31, 2000, compared with $25.7 million, or 0.57 percent, at March 31, 1999, and $26.7 million, or 0.49 percent, at Dec. 31, 1999.

Capital Levels

Total risk-based capital and Tier 1 risk-based capital ratios at March 31, 2000, were 10.32 percent and 7.21 percent, compared with the capitalization ratios of 10.00 percent and 6.00 percent required for an institution to be classified as "well-capitalized." The Corporation's Tier 1 leverage ratio of 6.46 percent exceeded the regulatory minimum of 4.00 percent required for a "well-capitalized" institution.

Total risk-based capital, Tier 1 risk-based capital and the Tier 1 leverage ratio were 11.21 percent, 7.88 percent and 6.73 percent, respectively, as of Dec. 31, 1999. The change in capital ratios was due primarily to the acquisition of The Pacific Bank.

During the first quarter of 2000, the Corporation increased its quarterly dividend by 6 percent to $0.175 per share.

Stock Repurchase

Under the current stock buyback program of 1 million common shares announced on July 29, 1999, 731,100 shares, including 450,300 shares in the first quarter of 2000, were repurchased for a cost of $23.5 million. Shares purchased under the buyback program have been --and will continue to be - reissued for acquisitions, upon the exercise of stock options, and for other general corporate purposes. Treasury shares at March 31, 2000, totaled 81,473 shares, reflecting the use of 1,715,127 shares for the acquisition of The Pacific Bank.

About City National

City National Corp. is a publicly owned corporation with $8.4 billion in total assets whose stock is traded on the New York Stock Exchange under the symbol "CYN". The Corporation's wholly owned subsidiary, City National Bank, is the premier business and private bank with headquarters in California.

City National Bank has more than 50 offices in California throughout Los Angeles, Orange, Riverside, San Bernardino, San Diego, Ventura, San Mateo and San Francisco counties, as well as a loan production office in Sacramento and an office in the Cayman Islands.

This news release contains forward-looking statements about the Corporation for which the Corporation claims the protection of the safe harbor contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information concerning the Corporation's possible or assumed future financial condition, results of operations and business, and statements preceded by, followed by, or that include the words "will," "may," "believes," "expects," "anticipates," "intends," "plans," "estimates," or similar expressions.

Forward-looking statements are subject to risks and uncertainties. A number of factors, some of which are beyond the Corporation's ability to control or predict, could cause actual results to differ materially from those contemplated by such forward-looking statements. These factors include (1) an economic slowdown in California, (2) changes in interest rates, (3) significant changes in banking laws or regulations, (4) increased competition in the Corporation's market, and (5) higher-than-expected credit losses.

For a more complete discussion of these risks and uncertainties, see the Corporation's Annual Report on Form 10-K for the year ended Dec. 31, 1999, and particularly the section of Management's Discussion and Analysis therein titled "Cautionary Statement for Purposes of the 'Safe Harbor' Provisions of the Private Securities Litigation Reform Act of 1995."

 CITY NATIONAL CORP. CONSOLIDATED BALANCE SHEET (unaudited) (Dollars in thousands, except per share amounts) March 31, 2000 1999 % Change ----------- ----------- --------Assets Cash and due from banks $ 381,763 $ 287,911 33 Securities 1,196,531 1,108,036 8 Federal funds sold 285,000 210,000 36 Loans (net of allowance for credit losses of $140,450 and $138,710) 6,023,566 4,379,566 38 Other assets 536,645 298,806 80 Total assets $ 8,423,505 $ 6,284,319 34Liabilities and Shareholders' Equity Noninterest-bearing deposits $ 2,705,431 $ 2,101,752 29 Interest-bearing deposits 3,672,029 2,501,978 47 Total deposits 6,377,460 4,603,730 39 Federal funds purchased and securities sold under repurchase agreements 231,404 152,583 52 Other short-term borrowed funds 829,549 507,326 64 Subordinated debt 123,500 123,311 - Other long-term debt 130,000 280,000 (54) Other liabilities 84,140 58,344 44 Total liabilities 7,776,053 5,725,294 36 Shareholders' equity 647,452 559,025 16 Total liabilities and shareholders' equity $ 8,423,505 $ 6,284,319 34 Book value per share $ 13.64 $ 12.20 12 Number of shares at period end 47,453,386 45,828,993 4 CONSOLIDATED STATEMENT OF INCOME (unaudited) (Dollars in thousands, except per share amounts) For the three months ended March 31, 2000 1999 % Change ----------- ----------- --------Interest income $ 142,067 $ 111,492 27Interest expense (49,820) (33,812) 47Net interest income 92,247 77,680 19Provision for credit losses - -- --Net interest income after provision for credit losses 92,247 77,680 19Noninterest income 24,243 19,145 27Noninterest expense (69,085) (55,901) 24Income before taxes 47,405 40,924 16Income taxes (16,397) (14,923) 10Net income $ 31,008 $ 26,001 19Net income per share, basic $ 0.68 $ 0.57 19Net income per share, diluted $ 0.66 $ 0.55 20Dividends paid per share $ 0.18 $ 0.17 6Shares used to compute per share net income, basic 45,903,093 45,989,544Shares used to compute per share net income, diluted 46,895,543 47,336,455 CITY NATIONAL CORP. SELECTED FINANCIAL INFORMATION (unaudited) (Dollars in thousands)Period end March 31, 2000 1999 % Change ----------- ----------- --------Loans Commercial $ 3,141,456 $ 2,427,843 29 Residential first mortgage 1,224,343 1,032,383 19 Real estate commercial mortgage 1,307,961 763,772 71 Real estate construction 421,639 246,760 71 Installment 68,617 47,518 44 Total loans $ 6,164,016 $ 4,518,276 36Nonaccrual loans and ORE Nonaccrual loans $ 32,330 $ 23,264 39 ORE 429 2,390 (82) Total nonaccrual loans and ORE $ 32,759 $ 25,654 28 Loans past due 90 days or more on accrual status, including credits in the process of being paid or renewed and not anticipated to move to nonaccrual status $ 28,358 $ 16,704 70 Restructured loans on accrual status $ 2,647 $ 1,881 41Deposits* Noninterest bearing $ 2,705,431 $ 2,101,752 29 Interest-bearing, core 2,511,399 1,701,272 48 Total core deposits 5,216,830 3,803,024 37 Time deposits - $100,000 and over 1,160,630 800,706 45 Total deposits $ 6,377,460 $ 4,603,730 39 For the three months endedAverage Balances March 31, 2000 1999 % Change ----------- ----------- --------Loans Commercial $ 2,950,902 $ 2,433,188 21 Residential first mortgage 1,207,907 1,036,771 17 Real estate commercial mortgage 1,141,315 747,037 53 Real estate construction 377,433 245,509 54 Installment 62,786 48,436 30 Total loans $ 5,740,343 $ 4,510,941 27Securities $ 1,208,883 $ 1,091,773 11Interest-earning assets 7,006,420 5,639,577 24Assets 7,661,611 6,100,799 26Core deposits 4,521,759 3,644,378 24Deposits 5,676,364 4,368,935 30Shareholders' equity 598,166 564,294 6 CITY NATIONAL CORP. SELECTED FINANCIAL INFORMATION (unaudited) (Dollars in thousands except per share amounts) For the three months ended March 31, 2000 1999 % Change ----------- ----------- --------Selected RatiosFor the Period Return on average assets 1.63 % 1.73 % (6) Return on average shareholders' equity 20.85 18.69 12 Net interest margin 5.47 5.60 (2) Efficiency ratio 57.82 56.27 3 Dividend payout ratio 25.53 29.34 (13)Period End Tier 1 risk-based capital ratio 7.21 9.76 (26) Total risk-based capital ratio 10.32 13.54 (24) Tier 1 leverage ratio 6.46 8.06 (20) Nonaccrual loans to total loans 0.52 0.51 2 Nonaccrual loans and ORE to total loans and ORE 0.53 0.57 (7) Allowance for credit losses to total loans 2.28 3.07 (26) Allowance for credit losses to nonaccrual loans 434.20 596.24 (27)Cash earnings and ratios (reported earnings net of goodwill and nonqualifying core deposit intangibles) (a) Cash net income $ 33,900 $ 27,599 23 Cash net income per share, basic 0.74 0.60 23 Cash net income per share, diluted 0.72 0.58 24 Cash return on average assets 1.81 % 1.85 % (2) Cash return on average shareholders' equity 28.31 22.19 28 Cash efficiency ratio 54.90 54.20 1

(a) 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 $12.6 million, respectively, for the quarter ended March 31, 2000, and $0.6 million and $17.7 million, respectively, for the three months ended March 31, 1999. Goodwill amortization and average balance (which are not tax effected) were $2.1 million and $104.0 million, respectively, for the quarter ended March 31, 2000, and $0.8 million and $42.3 million, respectively, for the three months ended March 31, 1999. The company's cash earnings per share are not necessarily comparable to similarly titled measures reported by other companies.

 For the three months ended March 31, 2000 1999 % Change ------- ------- --------Noninterest income: Service charges on deposit accounts $ 5,557 $ 4,075 36 Investment services 5,897 4,320 37 Trust fees 5,060 4,391 15 International services 3,308 1,991 66 Bank-owned life insurance 621 539 15 Other 3,572 2,518 42 Subtotal 24,015 17,834 35 Gain on sale of loans and assets 5 58 (91) Gain on sale of securities 223 1,253 (82) Total $24,243 $19,145 27Noninterest expense: Salaries and other employee benefits $38,851 $32,513 19 All other Professional 5,385 4,785 13 Net occupancy of premises 4,805 3,486 38 Information services 3,587 2,521 42 Marketing and advertising 2,703 2,564 5 Depreciation 3,040 2,444 24 Office services 2,066 1,836 13 Amortization of goodwill and core deposit intangibles 3,489 2,060 69 Equipment 465 651 (29) Acquisition integration 1,309 - -- Other operating 3,385 3,041 11 Total other 30,234 23,388 29 Total $69,085 $55,901 24*T CONTACT: City National Corp., Los Angeles Frank Pekny, 310/888-6700 (investors) Jim Dunnigan, 310/888-6636 (media) or Abernathy MacGregor Group, Los Angeles Ian Campbell, 213/630-6550 (investors) or Stoorza, Ziegaus & Metzger, Los Angeles Denis Wolcott, 213/891-2822 (media)