LOS ANGELES--(BUSINESS WIRE)--July 13, 2000--City National Corp. (NYSE:CYN), parent company of wholly owned City National Bank, today reported record net income of $33.4 million for the second quarter of 2000, a 28 percent increase from net income of $26.1 million in the second quarter of 1999, and an 8 percent increase from the first quarter of 2000.

Net income per diluted common share of $0.68 per share increased 24 percent, compared with $0.55 per share in the second quarter of 1999, and was 3 percent higher than the $0.66 per share reported for the 2000 first quarter.

City National Corp. also achieved record net income of $64.5 million for the first half of 2000, an increase of 24 percent over net income of $52.1 million for the first half of 1999. Net income per diluted common share increased by 22 percent to $1.34 per share, from $1.10 per share in the first half of 1999. These results reflect, in part, the integration of The Pacific Bank, acquired in February 2000, and American Pacific State Bank, acquired in August 1999, into City National Bank.

Cash net income, which excludes the amortization of core deposit intangibles and goodwill from acquisitions, increased 35 percent to $37.2 million, or $0.76 per diluted common share, for the second quarter of 2000 from $27.6 million, or $0.58 per diluted common share, for the second quarter of 1999. It also increased 10 percent from $33.9 million, or $0.72 per diluted common share, over the first quarter of 2000.

For the first half of 2000, cash net income increased 29 percent to $71.1 million, or $1.48 per diluted common share, from $55.2 million, or $1.17 per diluted common share, for the first half of 1999.

"City National's strong financial performance this quarter demonstrates again that, as California's premier private and business bank, City National continues to enhance the financial solutions it provides to a growing number of California's best businesses, entrepreneurs, professionals and investors. This, in turn, contributed to our 24th consecutive quarter of year-over-year double-digit earnings increases - six consecutive years of consistent quality growth," said Russell Goldsmith, CEO of City National Corp.

"We also reported significant growth in deposits, loans, assets and noninterest income while, in this quarter, our talented team also completed the seamless integration of The Pacific Bank," Goldsmith added. "We were able to produce this strong level of earnings while at the same time, investing in enhanced capabilities and adding to the allowance for credit losses, which reflects our long-standing commitment to maintain a strong balance sheet."

Return on Assets/Return on Equity

The corporation's return on average assets in the second quarter of 2000 was 1.58 percent, compared with 1.68 percent in the 1999 second quarter. The return on average shareholders' equity rose to 20.37 percent, compared with 18.62 percent for the prior-year quarter.

For the first six months of 2000, the return on average assets was 1.60 percent and the return on average shareholders' equity was 20.60 percent, compared with a 1.71 percent return on average assets and an 18.65 percent return on average shareholders' equity for the first six months of 1999.

On a cash basis (which excludes goodwill and the after-tax impact of nonqualifying core deposit intangibles from average assets and average shareholders' equity), the return on average assets in the second quarter of 2000 was 1.79 percent, the same as the year-ago quarter. The return on average shareholders' equity rose to 31.28 percent, compared with 21.94 percent for the prior-year quarter.

On a cash basis, for the first six months of 2000, the return on average assets was 1.80 percent and the return on average shareholders' equity was 29.00 percent, compared with a 1.82 percent return on average assets and a 22.06 percent return on average shareholders' equity for the first six months of 1999.

Assets

Total average assets rose to a record $8.5 billion in the second quarter of 2000, an increase of 37 percent over the $6.2 billion in average assets in the second quarter of 1999 and $0.9 billion higher than the first quarter of 2000. For the six months ended June 30, 2000, total average assets increased 31 percent to $8.1 billion, compared with $6.2 billion for the same period a year ago.

Total assets at June 30, 2000, were $8.7 billion compared with total assets of $6.3 billion at June 30, 1999, and total assets of $8.4 billion at March 31, 2000.

Loans

Average loans rose 38 percent during the second quarter of 2000 to $6.3 billion compared with the second quarter of 1999. Average loans increased 10 percent from the 2000 first quarter. 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 33 percent from $2.5 billion to $3.3 billion.

Real estate commercial mortgage averages rose 72 percent from $0.8 billion to $1.3 billion. Growth in all other loan categories also contributed to the increase in average loans over the prior-year quarter. For the first six months of 2000, average loans increased 32 percent to $6.0 billion from $4.6 billion for the first six months of 1999.

Total loans at June 30, 2000, were $6.3 billion, compared with $4.7 billion at June 30, 1999, and $6.2 billion at March 31, 2000. During the first half of 2000, total loans increased $855 million, or 16 percent. Loans originated as part of a client relationship accounted for the increase. Non-relationship, syndicated loans declined $94.5 million, or 18 percent, during the first half of 2000, to $442 million and represented less than 7 percent of the loan portfolio at June 30, 2000.

Deposits

Average deposits rose 38 percent during the second quarter of 2000 to $6.3 billion, compared with the second quarter of 1999, and increased 11 percent from the 2000 first quarter. Approximately 60 percent of the increase in average deposits between the first and second quarters of 2000 was attributable to The Pacific Bank integration.

During the first six months of 2000, average deposits increased 34 percent to $6.0 billion, compared with $4.5 billion for the same period a year ago. Deposits totaled $6.4 billion at June 30, 2000, compared with $4.7 billion at June 30, 1999, and $6.4 billion at March 31, 2000.

Net Interest Income

As a result of the strong loan and core deposit growth and a higher prime rate, net interest income on a fully taxable-equivalent basis rose 37 percent to $107.8 million, compared with $78.7 million for the second quarter of 1999, and increased 13 percent from $95.3 million for the first quarter of 2000. Net interest income was $203.1 million for the first half of 2000, an increase of 28 percent over $158.9 million for the first half of 1999.

Interest recovered on nonaccrual and charged-off loans was $1.3 million for the second quarter of 2000, compared with $0.6 million for the second quarter of 1999 and $1.0 million for the first quarter of 2000. Interest recovered was $2.3 million in the first half of 2000, compared with $4.1 million for the first half of 1999.

The fully taxable-equivalent net interest margin was 5.58 percent for the quarter ended June 30, 2000, and 5.53 percent for the first half of 2000, compared with 5.48 percent and 5.55 percent for the quarter and first half of 1999, respectively. The net interest margin for the second quarter was slightly higher than the 5.47 percent for the first quarter of 2000, primarily due to an increase in the prime rate.

Noninterest Income

Noninterest income continued its strong growth, increasing 24 percent to $26.8 million for the second quarter 2000 over the same quarter of 1999. This growth reflects an 11 percent increase in the noninterest income reported, over the $24.2 million for the first quarter of 2000. Noninterest income for the first six months of this year of $51.0 million increased 25 percent over the $40.8 million for the first six months of 1999. Noninterest income was 21 percent of total revenues for the first six months of both 2000 and 1999.

All categories of recurring noninterest income increased over the prior-year period, reflecting the corporation's emphasis on growing fee income. Investment services and trust fees rose as a result of a strong cross-selling program to existing City National Bank customers, and business generated from new customers as a result of direct sales activities by City National Investments (CNI), a division of City National Bank.

Assets under administration by CNI were $15.5 billion at June 30, 2000, including $5.4 billion under management, compared with $13.3 billion and $3.5 billion, respectively, at June 30, 1999, and $14.9 billion and $4.8 billion at March 31, 2000. The increase in assets under management is primarily attributable to the new CNI Charter Funds introduced in 1999 and 2000.

International services income rose significantly as a result of increased foreign exchange fees. There were no material gains on the sale of assets and securities for the quarter, and a gain of $0.2 million for the six months of 2000, compared with $2.3 million in the prior-year quarter and $3.6 million for the first six months of 1999.

Noninterest Expense

Noninterest expense was $76.1 million for the second quarter of 2000, compared with $57.8 million in the second quarter of 1999 and $69.1 million in the first quarter of 2000. Noninterest expense for the first six months of 2000 increased $31.5 million to $145.2 million, compared with $113.7 million for the first six months of 1999.

The year-over-year increase in expenses was primarily the result of additional offices and a substantial number of new colleagues, including those added through bank acquisitions, as well as higher professional fees and amortization of goodwill and core deposit intangibles.

Salaries and other employee benefits increased by $9.3 million, or 29 percent, compared with the second quarter of 1999; they increased by $2.7 million, or 7 percent, compared with the first quarter of 2000. All other expenses increased $9.0 million, or 35 percent, from the second quarter of 1999, and increased $4.3 million, or 14 percent, from the first quarter of 2000.

Credit Quality

The corporation recorded a $4.0 million provision for credit losses for the second quarter and first half of 2000. There were no credit loss provisions in the year-earlier periods. Net credit losses for the second quarter and first half of 2000 were $4.0 million and $7.5 million, respectively, compared with net credit recoveries of $1.5 million and $4.8 million in the second quarter and first half of 1999. The provision for credit losses during the second quarter reflects a variety of factors, including levels of net charge-offs, nonaccrual loans and continuing growth of the loan portfolio.

The allowance for credit losses at June 30, 2000, totaled $140.5 million, or 2.21 percent of outstanding loans. This compares with an allowance of $140.2 million, or 2.97 percent of outstanding loans at June 30, 1999, and an allowance of $140.5 million, or 2.28 percent of outstanding loans at March 31, 2000.

The allowance for credit losses as a percentage of nonaccrual loans was 401 percent at June 30, 2000, compared with 528 percent at June 30, 1999, and 434 percent at March 31, 2000. Total non-performing assets (nonaccrual loans and ORE) were $35.5 million, or 0.56 percent, of total loans and ORE at June 30, 2000, compared with $28.2 million, or 0.60 percent, at June 30, 1999, and $32.8 million, or 0.53 percent, at March 31, 2000.

Capital Levels

Total risk-based capital and Tier 1 risk-based capital ratios at June 30, 2000, were 10.56 percent and 7.49 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 6.19 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 10.32 percent, 7.21 percent and 6.46 percent, respectively, at March 31, 2000.

Stock Repurchase

Since the current stock buyback program of 1 million common shares was announced on July 29, 1999, 731,100 shares have been repurchased for a cost of $23.5 million. No shares were repurchased in the second quarter of 2000. The shares purchased under the buyback program have been reissued for acquisitions, upon the exercise of stock options, and for other general corporate purposes. There were no Treasury shares at June 30, 2000.

About City National

City National Corp. is a publicly owned corporation with $8.7 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 independent business and private bank with headquarters in California.

City National Bank, which provides banking, trust and investment services, has 49 California offices located throughout Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Francisco, San Mateo and Ventura counties, and a loan production office in Sacramento.

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, and its results of operations and business.

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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2000, 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) June 30, 2000 1999 % ChangeAssets Cash and due from banks $ 448,501 $ 264,476 70 Securities 1,442,108 1,065,561 35 Federal funds sold 50,000 50,000 - Loans (net of allowance for credit losses of $140,484 and $140,185) 6,204,711 4,582,554 35 Other assets 531,448 339,517 57 Total assets $ 8,676,768 $ 6,302,108 38Liabilities and Shareholders' Equity Noninterest-bearing deposits $ 2,678,556 $ 2,148,956 25 Interest-bearing deposits 3,716,298 2,535,369 47 Total deposits 6,394,854 4,684,325 37 Federal funds purchased and securities sold under repurchase agreements 243,604 308,642 (21) Other short-term borrowed funds 955,163 346,137 176 Subordinated debt 123,547 123,359 - Other long-term debt 180,000 230,000 (22) Other liabilities 107,578 48,229 123 Total liabilities 8,004,746 5,740,692 39 Shareholders' equity 672,022 561,416 20 Total liabilities and shareholders' equity $ 8,676,768 $ 6,302,108 38 Book value per share $ 14.11 $ 12.26 15 Number of shares at period end 47,623,014 45,788,070 4 CONSOLIDATED STATEMENT OF INCOME (unaudited) (Dollars in thousands, except per share amounts) For the three months ended For the six months ended June 30, June 30, 2000 1999 %Change 2000 1999 %ChangeInterest income $ 164,076 $ 110,370 49 $ 306,143 $ 221,862 38Interest expense (59,432) (34,258) 73 (109,252) (68,070) 60Net interest income 104,644 76,112 37 196,891 153,792 28Provision for credit losses (4,000) - N/M (4,000) - N/MNet interest income after provision for credit losses 100,644 76,112 32 192,891 153,792 25Noninterest income 26,790 21,687 24 51,033 40,832 25Noninterest expense (76,074) (57,834) 32 (145,159) (113,735) 28Income before taxes 51,360 39,965 29 98,765 80,889 22Income taxes (17,915) (13,859) 29 (34,312) (28,782) 19Net income $ 33,445 $ 26,106 28 $ 64,453 $ 52,107 24Net income per share, basic $ 0.70 $ 0.57 23 $ 1.38 $ 1.14 21Net income per share, diluted $ 0.68 $ 0.55 24 $ 1.34 $ 1.10 22Dividends paid per share $ 0.18 $ 0.17 6 $ 0.35 $ 0.33 6Shares used to compute per share net income, basic 47,540,159 45,739,057 46,791,844 45,864,300Shares used to compute per share net income, diluted 48,936,743 47,120,556 47,986,361 47,228,505 CITY NATIONAL CORP. SELECTED FINANCIAL INFORMATION (unaudited) (Dollars in thousands)Period end June 30, 2000 1999 % ChangeLoans Commercial $ 3,224,904 $ 2,537,110 27 Residential first mortgage 1,238,224 1,044,656 19 Real estate commercial mortgage 1,395,187 802,246 74 Real estate construction 421,178 288,501 46 Installment 65,702 50,226 31 Total loans $ 6,345,195 $ 4,722,739 34Allowance for Credit Losses Beginning balance $ 144,004 $ 135,339 6 Provision for credit losses 4,000 - N/M Charge-offs 14,413 2,619 450 Recoveries 6,893 7,465 (8) Net (charge-offs) recoveries (7,520) 4,846 N/M Ending balance $ 140,484 $ 140,185 0Nonaccrual loans and ORE Nonaccrual loans $ 35,077 $ 26,533 32 ORE 447 1,696 (74) Total nonaccrual loans and ORE $ 35,524 $ 28,229 26 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 nonaccrual status $ 5,703 $ 8,904 (36) Restructured loans on accrual status $ 2,532 $ 1,771 49Deposits Noninterest bearing $ 2,678,556 $ 2,148,956 25 Interest-bearing, core 2,374,630 1,663,220 43 Total core deposits 5,053,186 3,812,176 33 Time deposits - $100,000 and over 1,341,668 872,149 54 Total deposits $ 6,394,854 $ 4,684,325 37Average Balances For the three months ended For the six months ended June 30, June 30, 2000 1999 %Change 2000 1999 %ChangeLoans Commercial $ 3,303,927 $ 2,486,626 33 $ 3,127,413 $ 2,460,056 27 Residential first mortgage 1,225,906 1,018,360 20 1,216,906 1,027,516 18 Real estate commercial mortgage 1,336,108 776,706 72 1,238,711 761,954 63 Real estate construction 403,339 271,802 48 390,386 258,728 51 Installment 62,441 49,120 27 62,614 48,780 28 Total loans $ 6,331,721 $ 4,602,614 38 $ 6,036,030 $ 4,557,034 32Securities $ 1,381,920 $ 1,140,966 21 $ 1,295,400 $ 1,116,508 16Interest- earning assets 7,768,320 5,781,505 34 7,387,367 5,710,939 29Assets 8,525,861 6,219,097 37 8,093,736 6,160,277 31Core deposits 5,072,101 3,725,673 36 4,796,929 3,685,248 30Deposits 6,277,831 4,564,235 38 5,977,097 4,467,123 34Shareholders' equity 660,325 562,429 17 629,246 563,355 12 CITY NATIONAL CORP. SELECTED FINANCIAL INFORMATION (unaudited) (Dollars in thousands except per share amounts) For the three months For the six months ended ended June 30, June 30, 2000 1999 %Change 2000 1999 %ChangeSelected RatiosFor the Period Return on average assets 1.58% 1.68% (6) 1.60% 1.71% (6) Return on average shareholders' equity 20.37 18.62 9 20.60 18.65 10 Net interest margin 5.58 5.48 2 5.53 5.55 - Efficiency ratio 56.51 57.54 (2) 57.13 56.91 - Dividend payout ratio 24.85 28.94 (14) 25.18 29.14 (14)Period End Tier 1 risk-based capital ratio 7.49 9.82 (24) Total risk-based capital ratio 10.56 13.53 (22) Tier 1 leverage ratio 6.19 8.18 (24) Nonaccrual loans to total loans 0.55 0.56 (2) Nonaccrual loans and ORE to total loans and ORE 0.56 0.60 (7) Allowance for credit losses to total loans 2.21 2.97 (26) Allowance for credit losses to nonaccrual loans 400.50 528.34 (24)Cash net income and ratios (reported net income net of goodwill and nonqualifying core deposit intangibles) (a) Cash net income $ 37,154 $ 27,556 35 $ 71,054 $ 55,155 29 Cash net income per share, basic 0.78 0.60 30 1.52 1.20 27 Cash net income per share, diluted 0.76 0.58 31 1.48 1.17 26 Cash return on average assets 1.79% 1.79% - 1.80% 1.82% (1) Cash return on average shareholders' equity 31.28 21.94 43 29.00 22.06 31 Cash efficiency ratio 53.26 55.63 (4) 54.03 54.92 (2)

(a) Nonqualifying core deposit intangible (CDI) amortization and average balance excluded from these calculations are, with theexception of the efficiency ratio, net of applicable taxes. The after-tax amounts for the amortization and average balance ofnonqualifying CDI were $0.9 million and $16.1 million, respectively, for the quarter ended June 30, 2000 and $0.6 millionand $17.2 million, respectively, for the three months ended June 30, 1999. Goodwill amortization and average balance (whichare not tax effected) were $1.7 million and $166.6 million, respectively, for the quarter ended June 30, 2000, and$0.8 million and $41.4 million, respectively, for the three months ended June 30, 1999. The company's cash earnings per share are notnecessarily comparable to similarly titled measures reported by other companies.

 For the three months For the six months ended ended June 30, June 30, 2000 1999 %Change 2000 1999 %ChangeNoninterest income Service charges on deposit accounts $ 5,749 $ 4,090 41 $ 11,306 $ 8,165 38 Investment services 6,436 4,619 39 12,333 8,939 38 Trust fees 5,389 4,474 20 10,449 8,865 18 International services 3,749 2,395 57 7,057 4,386 61 Bank owned life insurance 657 541 21 1,278 1,080 18 Other 4,815 3,255 48 8,387 5,773 45 Subtotal 26,795 19,374 38 50,810 37,208 37 Gain on sale of loans and assets - 1,121 (100) 5 1,179 (100) Gain on sale of securities (5) 1,192 (100) 218 2,445 (91) Total $ 26,790 $ 21,687 24 $ 51,033 $ 40,832 25Noninterest expense Salaries and other employee benefits $ 41,587 $ 32,313 29 $ 80,438 $ 64,826 24 All Other Professional 6,306 4,926 28 11,691 9,711 20 Net occupancy of premises 5,743 4,486 28 10,548 7,972 32 Information services 3,409 2,938 16 6,996 5,459 28 Marketing and advertising 3,621 2,581 40 6,324 5,145 23 Depreciation 3,241 2,705 20 6,281 5,149 22 Office services 2,776 2,029 37 4,842 3,865 25 Amortization of goodwill and core deposit intangibles 4,379 1,911 129 7,868 3,971 98 Equipment 737 473 56 1,202 1,124 7 Acquisition integration 13 26 (50) 1,322 26 N/M Other operating 4,262 3,446 24 7,647 6,487 18 Total all other 34,487 25,521 35 64,721 48,909 32 Total $ 76,074 $ 57,834 32 $145,159 $113,735 28

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