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LOS ANGELES, Apr 20, 2005 (BUSINESS WIRE) - City National Corporation (NYSE:CYN), parent company ofwholly owned City National Bank, today reported net income of $55.5million, or $1.09 per share, for the first quarter of 2005 comparedwith $50.9 million, or $1.00 per share, for the first quarter of 2004.

HIGHLIGHTS

-- Revenue for the first quarter of 2005 rose 11 percent over the same period a year ago and 5 percent over the fourth quarter of 2004.

-- The net interest margin of 4.75 percent at March 31, 2005 represents a 21-basis-point increase over the December 31, 2004 net interest margin of 4.54 percent, and a 9-basis- point increase over the March 31, 2004 net interest margin of 4.66 percent.

-- No provision for credit losses was recorded for the seventh consecutive quarter, a result of continued strong credit quality and an adequate current level of allowance for credit losses. Nonaccrual loans as of March 31, 2005 were $29.9 million, down 30 percent from March 31, 2004 and 14 percent from December 31, 2004.

-- Average deposits and average core deposits were both up 10 percent for the first quarter of 2005 from the first quarter a year ago due to continued bank-wide growth. Average core deposits represented 92 percent of the total average deposit base for the first quarter of 2005.

-- First-quarter average loans increased 9 percent from the same period last year to $8.6 billion.

-- Average securities for the first quarter of 2005 were up 19 percent from the same period a year ago as deposit growth outpaced loan growth in 2004.

"City National's strong first-quarter results reflect double-digitincreases in revenue, deposits and wealth management fees, andmeaningful growth in loans and our net interest margin. Furtherimprovements in our strong credit quality, the absence of a provisionfor loan losses and a good economy in California were also significantfactors in our organization's success this quarter," said ChiefExecutive Officer Russell Goldsmith.

For theDollars in millions, For the three months except per share three months ended % ended % March 31, Change December Change 2005 2004 31, 2004----------------------- ---------- ---------- ------ ---------- ------Earnings Per Share $1.09 $1.00 9 $0.97 12Net Income 55.5 50.9 9 49.7 12Average Assets 13,873.4 12,617.3 10 14,120.5 (2)Return on Average Assets 1.62 % 1.62 % 0 1.40 % 16Return on Average Equity 16.63 16.75 (1) 14.87 12

The bank's prime rate was 5.75 percent as of March 31, 2005, anincrease of 175 basis points over the same period last year.

ASSETS

Total assets at March 31, 2005 increased 5 percent to $13.9billion from $13.2 billion at March 31, 2004, and decreased 2 percentfrom $14.2 billion at December 31, 2004 due to the runoff of federalfunds sold as a result of the seasonal decline in deposits in thefirst quarter. Average assets for the first quarter of 2005 werehigher than the first quarter of 2004, primarily due to an increase inaverage securities and loans.

REVENUE

Revenue (net interest income plus noninterest income) for thefirst quarter of 2005 increased 11 percent to $196.8 million comparedwith $177.5 million for the first quarter of 2004 due to higher netinterest income and wealth management fees. Revenue was up 5 percentfrom the fourth quarter of 2004.

NET INTEREST INCOME

Fully taxable-equivalent net interest income reached $149.9million in the first quarter of 2005, up 12 percent from $134.3million for the same period last year. Compared to the fourth quarterof 2004, fully taxable-equivalent net interest income grew 1 percentfrom $148.8 million. The net interest margin was 9 basis points higherthan the first quarter of 2004 and 21 basis points higher than thefourth quarter of 2004. Both higher yields and higher averageinterest-earning assets contributed to the increases in net interestincome and the net interest margin from the same period last year.Higher yields are responsible for the increases from the fourthquarter of 2004.

For the For the three months three months ended % ended %Dollars in millions March 31, Change December Change 2005 2004 31, 2004----------------------- ---------- ---------- ------ ---------- ------Average Loans $8,585.2 $7,886.3 9 $8,356.6 3Average Securities 4,115.4 3,462.5 19 4,012.2 3Average Earning Assets 12,798.5 11,601.9 10 13,039.6 (2)Average Deposits 11,572.4 10,533.5 10 11,938.7 (3)Average Core Deposits 10,628.3 9,621.2 10 11,074.4 (4)Fully Taxable-Equivalent Net Interest Income 149.9 134.3 12 148.8 1 Net Interest Margin 4.75 % 4.66 % 2 4.54 % 5

Compared with the prior-year first-quarter averages, residentialmortgage loans rose 17 percent, real estate construction loans rose 22percent, commercial real estate mortgage loans rose 4 percent andcommercial loans increased 2 percent. Compared with the prior quarter,average loans increased in all categories except installment loans.

Period-end March 31, 2005 loans increased $91.3 million fromDecember 31, 2004, reflecting growth in commercial lending and mostreal estate-related loan categories.

Deposits at March 31, 2005 were $224.3 million, or 2 percent,lower than at December 31, 2004 due to seasonal runoff and thevariability of our specialty deposit business.

The company's "plain-vanilla" interest rate swaps, which are partof its long-standing asset-liability management strategy of hedgingloans, deposits and borrowings, were $1.4 billion in notional value atMarch 31, 2005, which increased $0.3 billion and $0.1 billion,respectively, from the notional value at March 31, 2004 and December31, 2004.

NONINTEREST INCOME

First-quarter 2005 noninterest income was 8 percent higher thanthe first quarter of 2004 due primarily to higher wealth managementincome. As a percentage of total revenue, noninterest income was 26percent for both the first quarters of 2005 and 2004, and 22 percentfor the fourth quarter of 2004.

Wealth Management

Trust and investment fees increased 25 percent over the firstquarter of 2004 primarily due to higher balances under management oradministration. Assets under management at March 31, 2005 increased 14percent from the same period last year primarily due to new business,strong relative investment performance and higher market values.Increases in market values are reflected in fee income primarily on atrailing-quarter basis.

At or for the At or for the three months three months ended % ended %Dollars in millions March 31, Change December Change 2005 2004 31, 2004------------------------- --------- --------- ------ --------- ------Trust and Investment Fee Revenue $19.4 $15.6 25 $19.3 1Brokerage and Mutual Fund Fees 9.9 8.7 13 9.9 0Assets Under Management (1) 16,378.8 14,339.3 14 16,185.2 1Assets Under Administration 35,829.2 30,532.3 17 35,092.7 2(1) Excludes $6,071, $3,591, and $4,227 million of assets undermanagement for the CCM minority-owned asset managers as of March 31,2005, March 31, 2004, and December 31, 2004, respectively

Other Noninterest Income

Cash management and deposit transaction fees for the first quarterof 2005 decreased 19 percent from the same period last year. Comparedwith the fourth quarter of 2004, first-quarter 2005 cash managementand deposit transaction fees were essentially unchanged. Higheraverage deposit balances and a higher earnings credit rate contributedto the variance from the first quarter of last year.

International service fees for the first quarter of 2005 fell 5percent from the prior-year quarter and 10 percent from the fourthquarter of 2004 primarily due to pricing pressures.

Other income for the first quarter of 2005 was 32 percent higherthan the first quarter of 2004 and 16 percent higher than the fourthquarter of 2004 primarily due to higher participating mortgage loanfees.

For the first quarter of 2005, the company recorded $0.3 millionin gains on the sale of assets and securities, compared to $0.6million in gains for the first quarter of 2004 and $7.7 million inlosses for the fourth quarter of 2004. As previously disclosed,results for the fourth quarter of 2004 included an $8.2 millionnon-cash charge on certain perpetual fixed-rate preferred securitiesissued by government-sponsored entities.

NONINTEREST EXPENSE

First-quarter 2005 noninterest expense of $106.5 million was up 13percent from $94.5 million for the first quarter of 2004, but down 1percent from $107.5 million from the fourth quarter of 2004. Theyear-over-year increase was primarily related to higher staffingcosts.

Staffing expenses were 12 percent higher in the first quarter of2005 compared with the first quarter of 2004 due to hiring of newcolleagues as well as higher commissions and bonuses. Staffingexpenses increased 9 percent over the fourth quarter of 2004 primarilydue to higher commissions paid and seasonally higher payroll taxes.

Professional fees for the first quarter of 2005 increased $2.6million, or 43 percent, from the first quarter of 2004 for expensesrelated to compliance with the Sarbanes-Oxley Act, the Bank SecrecyAct, and the USA Patriot Act. Professional fees were down $2.6million, or 23 percent, from the fourth quarter of 2004.

As previously disclosed, City National Bank entered into a consentagreement with the Office of the Comptroller of the Currency onFebruary 23, 2005 in connection with compliance with the Bank SecrecyAct and the USA Patriot Act, and paid a monetary assessment of$750,000 in the first quarter.

For the first quarter of 2005, the efficiency ratio was 54.10percent compared with 53.39 percent for the first quarter of 2004, and56.69 percent for the fourth quarter of 2004.

INCOME TAXES

The first-quarter 2005 effective tax rate was 37.3 percent,compared with 37.4 percent for all of 2004. As previously reported,the California Franchise Tax Board has taken the position that certainreal estate investment trust and registered investment company taxdeductions shall be disallowed under California law adopted in thefourth quarter of 2003. While management continues to believe that thetax benefits realized in previous years were appropriate, the companydeemed it prudent to participate in the statutory Voluntary ComplianceInitiative-Option 2, requiring payment of all California taxes andinterest on the disputed 2000-through- 2002 tax years, and permittingthe company to claim a refund for these years while avoiding certainpotential penalties. The company's strategic and financial positionsremain unchanged from the previously reported period. The company'sreceivable related to the disputed taxes is $23.7 million, net ofpreviously established reserves.

CREDIT QUALITY

The company, for the seventh consecutive quarter, made noprovision for credit losses in the first three months of 2005. Thiswas attributable to the continued strong credit quality of itsportfolio, low level of net charge-offs, management's ongoingassessment of the credit quality of the portfolio, modest loan growthand an improving economic environment. Nonaccrual loans as of March31, 2005 were $29.9 million, down 30 percent from March 31, 2004 and14 percent from December 31, 2004.

At March 31, 2005, the allowance for loan losses was $147.6million or 1.72 percent of outstanding loans. The reserve for unfundedcredit commitments was $12.9 million.

At or for the At or for the three monthsDollars in millions three months ended ended March 31, % December 31, % 2005 2004 Change 2004 Change---------------------------- -------- -------- ------ --------- ------Provision For Credit Losses $- $- N/M $- N/MNet Loan Recoveries/(Charge- Offs) 0.2 (0.9) 125 - N/MAnnualized Percentage of Recoveries/(Charge-offs) to Average Loans 0.01 % (0.05)% 120 - N/MNonperforming Assets $29.9 $42.7 (30) $34.6 (14)Percentage of Nonaccrual Loans and ORE to Total Loans and ORE 0.35 % 0.54 % (35) 0.41 % (15)Allowance for Loan Losses $147.6 $154.5 (4) $148.6 (1)Reserve for Off-Balance Sheet Credit Commitments $12.9 $10.6 22 $11.8 10Percentage of Allowance for Loan Losses to Outstanding Loans 1.72 % 1.94 % (11) 1.75 % (2)Percentage of Allowance for Loan Losses to Nonaccrual Loans 493.37 361.54 36 428.92 15

OUTLOOK

Based on current economic conditions and business indicators,management continues to expect the growth of earnings per share for2005 to be approximately 11 percent to 14 percent higher than earningsper share for 2004.

CAPITAL LEVELS

Total risk-based capital and Tier 1 risk-based capital ratios atMarch 31, 2005 were 15.27 percent and 11.69 percent, compared with theminimum "well capitalized" capital ratios of 10 percent and 6 percent,respectively. The company's Tier 1 leverage ratio at March 31, 2005was 8.12 percent. Total risk-based capital, Tier 1 risk-based capitaland the Tier 1 leverage ratios at December 31, 2004 were 15.11percent, 11.51 percent and 7.83 percent, respectively.

Shareholders' equity to assets as of March 31, 2005 was 9.5percent compared to 9.4 percent as of March 31, 2004 and 9.5 percentas of December 31, 2004.

The accumulated other comprehensive loss at March 31, 2005 was$43.3 million compared with income of $32.2 million at March 31, 2004and a loss of $1.4 million at December 31, 2004. The average durationof total available-for-sale securities at March 31, 2005 was 3.5 yearscompared to 3.0 years at December 31, 2004 and 3.1 years at March 31,2004.

STOCK OPTIONS

On April 14, 2005 the Securities and Exchange Commission announceda new rule delaying the implementation of Statement of FinancialAccounting Standards No. 123R, Share-Based Payment. The Commission'snew rule allows companies to implement Statement No. 123R at the startof their next fiscal year which begins after June 15, 2005. CityNational will comply with the requirements of Statement No. 123R as ofJanuary 1, 2006.

STOCK REPURCHASE

During the first quarter of 2005, the company repurchased 495,500of outstanding shares at an average cost of $69.36. The company hasboard authorization to repurchase 514,000 additional shares as ofMarch 31, 2005. There were 1,334,703 treasury shares at March 31,2005.

CONFERENCE CALL

City National Corporation will host a conference call thisafternoon to discuss results for the first quarter of 2005. The callwill begin at 2:00 p.m. PDT. Analysts and investors may dial in andparticipate in the question/answer session. To access the call, pleasedial (866) 800-8652 and enter pass code 59502398. A listen-only livebroadcast of the call also will be available on the investor relationspage of the company's Website at cnb.com. There, it will be archivedand available for 12 months.

ABOUT CITY NATIONAL

City National Corporation is a financial services company with$13.9 billion in total assets. Its wholly owned subsidiary, CityNational Bank, is California's Premier Private and Business Bank(R).The bank provides banking, investment, and trust services through 52offices, including 12 full-service regional centers, in SouthernCalifornia, the San Francisco Bay Area and New York City. The companyand its affiliates manage or administer more than $35.8 billion inclient trust and investment assets, including more than $16.3 billionunder management.

In 2005, the company will open four new offices in SouthernCalifornia.

For more information about City National, visit the company'sWebsite at cnb.com.

This news release contains forward-looking statements about thecompany for which the company claims the protection of the safe harborprovisions contained in the Private Securities Litigation Reform Actof 1995.

Forward-looking statements are based on management's knowledge andbelief as of today and include information concerning the company'spossible or assumed future financial condition, and its results ofoperations, business and earnings outlook. These forward-lookingstatements are subject to risks and uncertainties. A number offactors, some of which are beyond the company's ability to control orpredict, could cause future results to differ materially from thosecontemplated by such forward-looking statements. These factors include(1) the unknown economic impact of state budget issues, (2) changes ininterest rates, (3) significant changes in banking laws orregulations, (4) the costs of complying with Anti-Money Laundering andUSA Patriot Act requirements, (5) increased competition in thecompany's markets, (6) other-than-expected credit losses due to realestate cycles or other economic events, (7) earthquake or othernatural disasters affecting the condition of real estate collateral,(8) the effect of acquisitions and integration of acquired businesses,and (9) the impact of changes in regulatory, judicial, or legislativetax treatment of business transactions. Management cannot predict atthis time the extent of the economic recovery, and a slowing orreversal could adversely affect our performance in a number of waysincluding decreased demand for our products and services and increasedcredit losses. Likewise, changes in deposit interest rates, amongother things, could slow the rate of growth or put pressure on currentdeposit levels. Forward-looking statements speak only as of the datethey are made, and the company does not undertake to updateforward-looking statements to reflect circumstances or events thatoccur after the date the statements are made, or to update earningsguidance 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-endedDecember 31, 2004, and particularly the section of Management'sDiscussion and Analysis therein titled "Cautionary Statement forPurposes of the 'Safe Harbor' Provisions of the Private SecuritiesLitigation Reform Act of 1995."

CITY NATIONAL CORPORATION----------------------------------------------------------------------CONSOLIDATED BALANCE SHEET (unaudited)(Dollars in thousands, except per share amount)---------------------------------------------------------------------- March 31, December 31, ----------------------------------- 2005 2004 % Change 2004 ------------ ------------ ---------------------Assets Cash and due from banks $386,999 $472,541 (18) $240,492 Federal funds sold 190,000 519,000 (63) 427,000 Due from banks - interest bearing 36,982 34,570 7 236,362 Securities 4,056,459 3,651,722 11 4,190,176 Loans (net of allowance for loan losses of $147,607; $154,498 and $148,568) 8,437,856 7,813,141 8 8,345,619 Other assets 809,742 740,124 9 791,864 ------------ ------------ ------------ Total assets $13,918,038 $13,231,098 5 $14,231,513 ============ ============ ============Liabilities and Shareholders' Equity Noninterest- bearing deposits $6,069,061 $5,525,627 10 $6,026,428 Interest-bearing deposits 5,693,563 5,609,050 2 5,960,487 ------------ ------------ ------------ Total deposits 11,762,624 11,134,677 6 11,986,915 Federal funds purchased and securities sold under repurchase agreements 155,645 88,063 77 204,654 Other short-term borrowed funds 125 50,125 (100) 125 Subordinated debt 280,068 300,758 (7) 288,934 Other long-term debt 224,829 239,804 (6) 230,416 Reserve for off- balance sheet credit commitments 12,944 10,574 22 11,751 Other liabilities / minority interest 161,620 167,167 (3) 160,183 ------------ ------------ ------------ Total liabilities 12,597,855 11,991,168 5 12,882,978 Shareholders' equity Common stock, paid-in capital, retained earnings, treasury shares and deferred equity compensation 1,363,471 1,207,693 13 1,349,887 Accumulated other comprehensive income (loss) (43,288) 32,237 (234) (1,352) ------------ ------------ ------------ Total shareholders' equity 1,320,183 1,239,930 6 1,348,535 ------------ ------------ ------------ Total liabilities and shareholders' equity $13,918,038 $13,231,098 5 $14,231,513 ============ ============ ============ Book value per share $26.97 $25.54 6 $27.39 Number of shares at period end 48,957,992 48,553,409 1 49,237,756CONSOLIDATED STATEMENT OF INCOME (unaudited)(Dollars in thousands, except per share amount)------------------------------------------------------------------- For the three months ended March 31, ---------------------------------- 2005 2004 % Change ----------- ----------- ----------Interest income $167,650 $143,797 17Interest expense (21,224) (12,825) 65 ----------- -----------Net interest income 146,426 130,972 12Provision for credit losses - - - ----------- -----------Net interest income after provision for credit losses 146,426 130,972 12Noninterest income 50,358 46,570 8Noninterest expense (106,504) (94,531) 13Minority interest (1,811) (1,600) 13 ----------- -----------Income before taxes 88,469 81,411 9Income taxes (33,008) (30,513) 8 ----------- -----------Net income $55,461 $50,898 9 =========== ===========Net income per share, diluted $1.09 $1.00 9 =========== ===========Dividends paid per share $0.36 $0.32 13 =========== ===========Shares used to compute per share net income, diluted 51,030,470 50,679,109CITY NATIONAL CORPORATION-------------------------------------------------------------------SELECTED FINANCIAL INFORMATION (unaudited)(Dollars in thousands)------------------------------------------------------------------- For the three months ended March 31, ---------------------------------- 2005 2004 % Change ----------- ----------- ----------Average BalancesLoans Commercial $3,236,444 $3,172,149 2 Commercial real estate mortgage 1,876,720 1,807,549 4 Residential mortgage 2,285,759 1,952,305 17 Real estate construction 829,702 678,479 22 Equity lines of credit 265,417 194,184 37 Installment 91,159 81,667 12 ----------- ----------- Total loans $8,585,201 $7,886,333 9 =========== ===========Securities $4,115,383 $3,462,547 19Due from banks - interest bearing 64,917 78,348 (17)Interest-earning assets 12,798,505 11,601,877 10Assets 13,873,392 12,617,328 10Core deposits 10,628,289 9,621,156 10Deposits 11,572,401 10,533,471 10Shareholders' equity 1,352,472 1,222,017 11Noninterest income Trust and investment fees $19,437 $15,588 25 Brokerage and mutual fund fees 9,868 8,726 13 Cash management and deposit transaction fees 9,010 11,098 (19) International services 4,888 5,126 (5) Bank owned life insurance 864 831 4 Other 6,013 4,572 32 ----------- ----------- Subtotal - core 50,080 45,941 9 Gain (loss) on sale of loans and assets/debt repurchase 23 - N/M Gain (loss) on sale or writedown of securities 255 629 (59) ----------- ----------- Total $50,358 $46,570 8 =========== ===========Total revenue $196,784 $177,542 11 =========== ===========Noninterest expense Salaries and employee benefits $66,632 $59,676 12 ----------- ----------- All Other Net occupancy of premises 7,616 7,308 4 Professional 8,714 6,106 43 Information services 5,166 4,522 14 Depreciation 3,615 3,228 12 Marketing and advertising 3,574 3,507 2 Office services 2,489 2,419 3 Amortization of intangibles 1,441 1,759 (18) Equipment 549 765 (28) Other operating 6,708 5,241 28 ----------- ----------- Total all other 39,872 34,855 14 ----------- ----------- Total $106,504 $94,531 13 =========== ===========Selected RatiosFor the Period Return on average assets 1.62 % 1.62 % - Return on average shareholders' equity 16.63 16.75 (1) Efficiency ratio (1) 54.10 53.39 1 Dividend payout ratio 32.02 30.71 4Period End Tier 1 risk-based capital ratio 11.69 10.65 10 Total risk-based capital ratio 15.27 14.41 6 Tier 1 leverage ratio 8.12 7.60 7(1) The efficiency ratio is defined as noninterest expenseexcluding ORE expense divided by total revenue (net interest income ona fully tax-equivalent basis and noninterest income).CITY NATIONAL CORPORATION----------------------------------------------------------------------SELECTED FINANCIAL INFORMATION (unaudited)(Dollars in thousands)----------------------------------------------------------------------Period end March 31, December 31, ------------------------------------ 2005 2004 % Change 2004 ------------ ------------ ---------- ------------Loans Commercial $3,205,776 $3,163,312 1 $3,158,369 Commercial real estate mortgage 1,919,788 1,807,591 6 1,892,823 Residential mortgage 2,323,879 1,977,952 17 2,248,742 Real estate construction 772,000 741,637 4 847,364 Equity lines of credit 274,735 197,269 39 255,194 Installment 89,285 79,878 12 91,695 ------------ ------------ ------------ Total loans $8,585,463 $7,967,639 8 $8,494,187 ============ ============ ============Deposits Noninterest- bearing $6,069,061 $5,525,627 10 $6,026,428 Interest- bearing, core 4,791,619 4,760,018 1 5,027,638 ------------ ------------ ------------ Total core deposits 10,860,680 10,285,645 6 11,054,066 Time deposits - $100,000 and over 901,944 849,032 6 932,849 ------------ ------------ ------------ Total deposits $11,762,624 $11,134,677 6 $11,986,915 ============ ============ ============ For the three months ended March 31, ------------------------------ 2005 2004 % Change --------- --------- ----------Yields and Rates for the Period Loans 5.97 % 5.47 % 9 Securities 4.37 4.58 (5) Interest-earning assets 5.42 5.10 6 Interest-bearing deposits 1.05 0.71 48 Other borrowings 3.53 1.97 79 Total interest bearing liabilities 1.29 0.83 55 Net interest margin 4.75 4.66 2 March 31, December 31, ------------------------------ 2005 2004 % Change 2004 --------- --------- ---------- --------Credit Quality Nonaccrual loans and ORE Nonaccrual loans $29,918 $42,733 (30) $34,638 ORE - - - - --------- --------- -------- Total nonaccrual loans and ORE $29,918 $42,733 (30) $34,638 ========= ========= ======== Total nonaccrual loans and ORE to total loans and ORE 0.35 0.54 (35) 0.41 Loans past due 90 days or more on accrual status $807 $5,057 (84) $142 ========= ========= ======== For the three months ended March 31, ------------------------------ 2005 2004 % Change --------- --------- ----------Allowance for Loan LossesBeginning balance $148,568 $156,015 (5) Provision for credit losses (1,193) (603) 98 Charge-offs (3,506) (4,349) (19) Recoveries 3,738 3,435 9 --------- --------- Net recoveries/(charge- offs) 232 (914) 125 --------- ---------Ending Balance $147,607 $154,498 (4) ========= =========Reserve for Off-Balance Sheet Credit CommitmentsBeginning balance $11,751 $9,971 18 Provision 1,193 603 98 --------- ---------Ending Balance $12,944 $10,574 22 ========= =========Total net recoveries/(charge-offs) to average loans (annualized) 0.01 (0.05) 120Allowance for loan losses to total loans 1.72 1.94 (11)Allowance for loan losses to nonaccrual loans 493.37 361.54 36

SOURCE: City National Corporation

City National
Financial/Investors:
Christopher J. Carey, 310-888-6777
Media:
Cary Walker, 213-833-4715