LOS ANGELES--(BUSINESS WIRE)--Jan. 14, 2003--City NationalCorporation (NYSE:CYN), parent company of wholly owned City NationalBank, today reported its seventh consecutive year of record netincome. Net income totaled $183.1 million in 2002, or $3.56 per share,compared with reported net income of $146.2 million in 2001, or $2.96per share.
The company's 2002 net income of $183.1 million was up 15.1percent from $159.0 million a year earlier, this latter amount havingbeen adjusted to reflect the new accounting standards for goodwillamortization ("New GAAP"). Net income per diluted common share of$3.56 increased 10.6 percent over $3.22 on a comparable basis. Resultsfor 2002 include the operations of Civic BanCorp ("Civic") fromFebruary 28, 2002, the date that the acquisition was completed.
Fourth-quarter 2002 net income was $44.4 million, or $0.87 pershare, compared with reported net income of $38.8 million, or $0.78per share for the prior-year fourth quarter and $48.7 million, or$0.94 per share for the third quarter of 2002. Third-quarter 2002results included approximately $4.6 million, or $0.09 a share inincome tax benefits relating to the two previous quarters and a statetax law change. Additionally, 1.2 million common shares wererepurchased in the open market and affected earnings per share for thecurrent quarter. Fourth-quarter 2002 net income increased 5.8 percentfrom $42.0 million a year earlier on a comparable basis. Net incomeper diluted common share of $0.87 increased 2.4 percent over $0.85 ona comparable basis.
"For the seventh consecutive year, City National achieved recordnet income and double-digit growth in assets, loans, noninterestincome and, most dramatically, a 21 percent increase in deposits,"said Chief Executive Officer Russell Goldsmith. "We also continued toinvest in our business, completing the Civic Bank acquisition in theSan Francisco Bay Area, opening our first office in New York City, andcontinuing to enhance our private client and wealth managementcapabilities, our technology and our outstanding personnel.
"In sum, as City National begins its 50th year in banking, it hasfurther strengthened its position as California's premier private andbusiness bank," Goldsmith added.
RETURN ON ASSETS/RETURN ON EQUITY
The company's return on average assets in 2002 was 1.68 percent,compared with, on an adjusted basis, 1.70 percent in 2001. The returnon average shareholders' equity was 17.45 percent, compared with, onan adjusted basis, 19.27 percent for the prior year. For the fourthquarter of 2002, the return on average assets was 1.56 percent and thereturn on average shareholders' equity was 15.90 percent, comparedwith, on an adjusted basis, a 1.69 percent return on average assetsand an 18.65 percent return on average shareholders' equity for thefourth quarter of 2001. The adjustment makes the 2001 data comparablewith New GAAP. The lower return on average shareholders' equity in thecurrent period compared with a year ago is due primarily to a higherlevel of shareholders' equity from increased unrealized gains onavailable-for-sale securities, retained net income, the shares issuedfor the Civic acquisition and from the exercise of stock options, netof treasury share repurchases.
Total average assets reached $10.9 billion in 2002, an increase of17 percent over $9.3 billion in 2001. For the fourth quarter of 2002,total average assets increased 15 percent to $11.3 billion, comparedwith $9.8 billion for the fourth quarter of 2001. Total assets atDecember 31, 2002 increased 17 percent to $11.9 billion from $10.2billion at December 31, 2001.
Total average interest-earning assets were $10.0 billion in 2002,an increase of 17 percent over $8.5 billion in 2001. Fourth-quarter2002 total average interest-earning assets increased 15 percent to$10.4 billion, compared with $9.0 billion for the fourth quarter of2001, and increased slightly from the third quarter of 2002.
Average loans rose to $7.8 billion in 2002, an increase of 17percent over the prior year, reflecting continuinginternally-generated loan growth and the acquisition of Civic.Compared with the prior-year averages, commercial loans rose 14percent to $3.6 billion from $3.1 billion. Residential first mortgageloans rose 20 percent to $1.7 billion from $1.4 billion. Real estatemortgage loans rose 16 percent to $1.8 billion from $1.6 billion, andreal estate construction loans rose 24 percent to $0.6 billion from$0.5 billion.
Average loans for the fourth quarter of 2002 increased 13 percentto $8.0 billion from $7.0 billion for the same period in 2001.Commercial loans rose 13 percent to $3.6 billion from $3.2 billion.Residential first mortgage loans rose 11 percent to $1.7 billion from$1.6 billion. Real estate mortgage loans rose 18 percent to $1.9billion from $1.6 billion and real estate construction loans rose 9percent to $0.7 billion from $0.6 billion.
Fourth-quarter 2002 average loans were essentially flat comparedwith the preceding quarter in 2002 in light of economic conditions andcontinued emphasis on credit quality and portfolio management.
Total loans at December 31, 2002 reached $8.0 billion, an increaseof 12 percent, compared with $7.2 billion at December 31, 2001, andincreased slightly from September 30, 2002. Subsequent to September30, 2002, management split its media and telecommunication portfoliointo purchased syndicated and originated middle-market portfolios. Thecompany's December 31, 2002 purchased syndicated media andtelecommunication loan portfolio contains 21 loans with commitment andoutstanding balances of $108.1 million and $71.3 million,respectively, or just slightly less than 1 percent of the loanportfolio. These balances were down from the comparable balances of$112.1 million and $78.5 million, respectively, as of September 30,2002. At December 31, 2002 the originated middle-market media andtelecommunication portfolio had commitments of $54.2 million andoutstanding balances of $36.4 million, compared with comparablecommitments of $49.9 million and outstanding balances of $33.4 millionas of September 30, 2002. In addition, two remaining media andtelecommunication available-for-sale loans with commitment andoutstanding balances of $23.8 million and $17.7 million, respectively,as of December 31, 2002 are included in other assets.
In light of the current condition of the economy and continuedemphasis on credit quality and portfolio management, average loangrowth for 2003 is currently expected to be in the range of 6 percentto 8 percent.
Average deposits were $8.6 billion in 2002, an increase of 22percent over 2001. During the fourth quarter of 2002, average depositsincreased 23 percent to $9.3 billion, compared with $7.6 billion forthe same period a year ago, and increased 6 percent over the thirdquarter of 2002.
During 2002, average core deposits, which include all depositsexcept time deposits of $100,000 or more, rose to $7.4 billion, anincrease of 32 percent over the $5.6 billion reported in 2001. For thefourth quarter of 2002, average core deposits increased 33 percent to$8.2 billion over the $6.2 billion reported for the same period in2001, and increased 8 percent over the third quarter of 2002. Averagecore deposits represented 86 percent and 88 percent of the totalaverage deposit base for the year and fourth quarter 2002,respectively, compared with 79 percent and 82 percent for the year andfourth quarter of 2001. New clients, the acquisition of Civic, andhigher existing client balances maintained as deposits to pay forservices, contributed to the growth of deposits.
Deposits totaled $9.8 billion at December 31, 2002, compared with$8.1 billion at December 31, 2001 and $9.1 billion at September 30,2002, increases of 21 percent and 8 percent, respectively.Historically the company's deposits experience a seasonal increase atyear-end.
In light of the extraordinary growth in average deposits in 2002and economic conditions anticipated for 2003, management currentlyexpects growth in average deposits year-over-year to be in the rangeof 5 percent to 7 percent for 2003.
NET INTEREST INCOME
Fully taxable-equivalent net interest income for the year 2002 was$530.1 million, an increase of 18 percent over $447.8 million for theyear 2001. For the fourth quarter 2002, fully taxable-equivalent netinterest income increased 16 percent to $135.2 million over the $116.6million reported for the fourth quarter of 2001. Interest incomerecovered on nonaccrual and charged-off loans included above was $2.3million and $0.9 million for the year and fourth quarter of 2002,respectively, compared with $4.3 million and $0.7 million for the yearand fourth quarter of 2001.
As part of the company's long standing asset liability managementstrategy, its "plain vanilla" interest rate swaps hedging loans,deposits and borrowings added $32.2 million to net interest income in2002, compared with $15.0 million in 2001. These amounts included$14.4 million and $6.0 million, respectively, for interest swapsqualifying as fair-value hedges. For the fourth quarter 2002, interestrate swaps added $7.6 million to net interest income, compared with$6.5 million in the fourth quarter of 2001 and $8.2 million for thethird quarter of 2002. This included $3.8 million, $2.1 million and$3.7 million for the fourth quarter of 2002 and 2001 and the thirdquarter of 2002, respectively, for interest rate swaps qualifying asfair-value hedges. Income from swaps qualifying as cash-flow hedgeswas $17.8 million for 2002 and $3.8 million for the fourth quarter.These amounts compare to $9.0 million for 2001 and $4.4 million and$4.5 million for the fourth quarter of 2001 and the third quarter of2002. Income from existing swaps qualifying as cash flow hedges ofloans expected to be recorded in net interest income within the next12 months is $8.5 million.
The fully taxable-equivalent net interest margin in 2002 was 5.30percent, compared with 5.26 percent for 2001. The fullytaxable-equivalent net interest margin for the fourth quarter of 2002was 5.17 percent, compared with 5.12 percent for the fourth quarter of2001 and 5.35 for the third quarter of 2002. The increases over thesame periods in 2001 are primarily due to a more stable interest rateenvironment in 2002. The Federal Reserve lowered rates 11 times during2001, compared with once in 2002. The Bank's prime rate was 4.25percent as of December 31, 2002, compared with 4.75 percent a yearearlier. The 18 basis points decline in the margin from the thirdquarter to the fourth quarter of 2002 is primarily attributable to the50 basis points decline in the prime rate on November 7, 2002 andhigher Federal funds sold during the fourth quarter.
Based on expectations for loan and deposit growth, and economicconditions anticipated for 2003, management currently expects the netinterest margin for 2003 to be in the range of 5.15 percent to 5.25percent.
Core noninterest income, which excludes gain on sale of securitiesand gain (loss) on sale of loans and assets/debt repurchase, increased13 percent to $144.9 million for the year 2002 compared with $127.6million for 2001. For the fourth quarter 2002, core noninterest incomeincreased 7 percent to $37.3 million, compared with $34.9 million forthe fourth quarter of 2001, and increased 2 percent from the $36.7million for the third quarter of 2002.
Assets under administration at December 31, 2002 totaled $19.5billion, including $7.4 billion under management, compared with $18.8billion and $7.7 billion, respectively, at December 31, 2001. Thisyear-over-prior-year increase in assets under administration is due tocontinued strong new sales. The reduction in assets under managementis primarily attributable to lower balances in money market accounts.New business in all other categories, aided by overall positiverelative investment performance, offset the decline in asset valuescaused by lower market values. Trust and investment fee revenues forthe year and the fourth quarter of 2002 rose 5 percent compared withthe prior-year periods.
Cash management and deposit transaction fees for the year 2002increased 32 percent over 2001 as the result of strong growth indeposits, higher sales of cash management products, and the impact onfees of a reduction in the earnings credit on analyzed depositaccounts. Cash management and deposit transaction fees for the fourthquarter of 2002 were higher than the third quarter, reflecting theaccrual for annual fees billed in arrears. The increase ininternational services over the prior year and prior-year quarter waspartially attributable to additional entertainment and middle-marketcommercial international business.
Gains (losses) on the sale of loans, assets and the repurchase ofdebt and gains on the sale of securities for the year and fourthquarter of 2002 amounted to a $1.4 million gain and $0.1 million gain,respectively, compared with a $4.8 million gain and $1.0 million gainfor the same periods in 2001.
Noninterest income for the year was 22 percent of total revenues,compared with 23 percent for 2001, largely as a result of net interestincome growth exceeding noninterest income growth.
Management currently expects growth in noninterest income to be inthe range of 6 percent to 8 percent for 2003.
After excluding amortization of goodwill from prior-year reportedperiods, noninterest expense in 2002 increased 11 percent to $332.6million, compared with $300.5 million for 2001. On a comparable basis,noninterest expense for the fourth quarter of 2002 was $88.5 million,an increase of 15 percent from $77.2 million for the fourth quarter of2001 and 7 percent from $82.4 million for the third quarter of 2002.The increase over the prior-year periods was primarily the result ofthe company's growth, including the acquisition of Civic, and costsassociated with additional colleagues. The increase from the thirdquarter to the fourth quarter of 2002 was primarily attributable tocollection activities, the opening of the new office in New York City,and the upgrading of facilities and technological systems.
The company's efficiency ratio in 2002 was 49.20 percent, comparedwith 51.86 percent for 2001 on a comparable basis. The improvementover the prior-year period was driven by both increased revenues andthe company's ongoing efforts to improve efficiency and productivity.
Consistent with management's commitment to disciplined expensecontrol while prudently investing in the company's long term growth,it is currently anticipated that 2003 noninterest expense willincrease in the range of 4 percent to 6 percent over 2002.
The 2002 effective tax rate was 30.1 percent, compared with 33.0percent for 2001. The lower effective tax rates in 2002 reflect theconversion of the company's former regulated investment company to areal estate investment trust, a $1.6 million benefit from a change instate tax law concerning the tax treatment of loan loss reserves, andthe realization of a capital loss resulting from the issuance andsubsequent sale of an additional series of preferred stock by one ofthe company's real estate investment trust subsidiaries.
Management currently anticipates the company's effective tax ratefor 2003 to be within a range of 31 percent to 33 percent due to theabsence in 2003 of certain tax benefits recorded in 2002.
Net loan charge-offs were $54.1 million and $27.6 million for theyears 2002 and 2001, respectively. Net loan charge-offs for the fourthquarter of 2002 and 2001 were $12.2 million and $5.4 million,respectively. As a percentage of average loans, net charge-offs were
0.69 percent and 0.41 percent for the years 2002 and 2001,respectively.
Total nonperforming assets (nonaccrual loans and ORE) were $72.0million, or 0.90 percent of total loans and ORE, at December 31, 2002,compared with $38.6 million, or 0.54 percent, at December 31, 2001 and$50.6 million, or 0.64 percent, at September 30, 2002. Purchasedsyndicated media and telecommunication loans on nonaccrual statusconsisted of 5 loans totaling $15.9 million at December 31, 2002,compared with 4 loans totaling $13.6 million at September 30, 2002.
The company recorded a provision for credit losses of $67.0million and $17.5 million for the year and fourth quarter of 2002,respectively, compared with $35.0 million and $11.0 million for thesame periods in 2001. The provision for credit losses in the thirdquarter of 2002 was $20.5 million. The provision for credit lossesprimarily reflects management's ongoing assessment of the creditquality of the portfolio and the general economic environment duringthis period. Additional factors affecting the provision include netloan charge-offs, nonaccrual loans and growth in the portfolio.
The allowance for credit losses at December 31, 2002 totaled$164.5 million, or 2.06 percent of outstanding loans. This compareswith an allowance of $142.9 million, or 2.00 percent at December 31,2001 and an allowance of $159.2 million, or 2.00 percent at September30, 2002. The allowance for credit losses as a percentage ofnonaccrual loans was 231 percent at December 31, 2002, compared with370 percent at December 31, 2001 and 317 percent at September 30,2002. Management believes the allowance for credit losses is adequateto cover risks in the portfolio at December 31, 2002.
The provision for credit losses to be taken in 2003 will reflectmanagement's assessment of the above factors, as well as changes inthe economic environment during this period. Based on its assessmentof credit quality and economic indicators, management currentlyanticipates that a provision for credit losses for all of 2003 to bewithin the $60.0 million to $75.0 million range.
Management currently expects net income per diluted common sharefor 2003 to be in the range of approximately 8 percent to 10 percenthigher than net income per diluted common share for 2002 in light ofthe business indicators discussed above.
Total risk-based capital and Tier 1 risk-based capital ratios atDecember 31, 2002 were 14.26 percent and 9.87 percent, compared withthe minimum "well-capitalized" capital ratios of 10 percent and 6percent, respectively. The company's Tier 1 leverage ratio of 7.55percent exceeded the regulatory minimum of 4 percent required for a"well-capitalized" institution. Total risk-based capital, Tier 1risk-based capital and the Tier 1 leverage ratios at September 30,2002 were 14.61 percent, 10.16 percent and 7.88 percent, respectively.The capital ratios benefited from the issuance of $17.3 million in2002 of 8.5 percent preferred stock by real estate investment trustsubsidiaries of the bank. The stock qualifies as Tier 1 capital.
Under the modified October 26, 2000 stock buyback program of 2million shares, 1,213,500 shares were repurchased during the fourthquarter at an average price of $43.59 per share bringing the totalbuyback to 1,707,500 shares at an average price of $41.83 per share.The shares purchased under the buyback program will be reissued foracquisitions, upon the exercise of stock options, and for othergeneral corporate purposes. There were 1,299,312 treasury shares atDecember 31, 2002.
ABOUT CITY NATIONAL
City National Corporation (NYSE:CYN) is a financial servicescompany with $11.9 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(SM), City National provides banking, investment andtrust services through 55 offices, including 11 full-service regionalcenters, in Southern California, the San Francisco Bay Area and in 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 cnb.com (http://www.cnb.com/).NOTE:City National Corporation will host a conference call thisafternoon to discuss results for the fourth quarter and year-2002. Thecall will begin at 2:00 p.m. PST. Analysts and investors may dial inand participate in the question/answer session. To access the call,please dial (877) 313-6466. A listen-only live broadcast of the callalso will be available on the investor relations page of the company'swebsite at www.cnb.com. There, it will be archived and available fortwo weeks.
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) changes in interest rates, (2) significant changes in banking lawsor regulations, (3) increased competition in the company's market, (4)higher-than-expected credit losses, (5) earthquake or other naturaldisasters impacting the condition of real estate collateral, (6) theeffect of acquisitions and integration of acquired businesses, (7)unanticipated changes in regulatory, judicial, or legislative taxtreatment of business transactions, (8) unknown economic impactscaused by the State of California's budget shortfall, and (9) economicuncertainty created by increasing unrest in other parts of the world.Management cannot predict at this time the severity or duration of theeffects of the recent business slowdown on our specific businessactivities and profitability. Weaker or a further decline in capitaland consumer spending, and related recessionary trends could adverselyaffect our performance in a number of ways including decreased demandfor our products and services and increased credit losses. Likewise,changes in deposit interest rates, among other things, could slow therate of growth or put pressure on current deposit levels.Forward-looking statements speak only as of the date they are made,and the company does not undertake to update forward-lookingstatements to reflect circumstances or events that occur after thedate the statements are made, or to update earnings guidance includingthe factors that influence earnings.
For a more complete discussion of these risks and uncertainties,see the company's Quarterly Report on Form 10-Q for the quarter-endedSeptember 30, 2002, 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 CORPORATIONCONSOLIDATED BALANCE SHEET (unaudited)(Dollars in thousands, except per share amount) December 31, 2002 2001 % ChangeAssets Cash and due from banks $497,273 $328,018 52 Federal funds sold 460,000 395,000 16 Securities 2,398,867 1,893,105 27 Loans (net of allowance for credit losses of $164,502 and $142,862) 7,834,968 7,016,344 12 Other assets 679,285 543,849 25 Total assets $11,870,393 $10,176,316 17Liabilities and Shareholders' Equity Noninterest-bearing deposits $4,764,234 $3,846,789 24 Interest-bearing deposits 5,075,464 4,284,413 18 Total deposits 9,839,698 8,131,202 21 Federal funds purchased and securities sold under repurchase agreements 266,727 171,531 55 Other short-term borrowed funds 125,125 415,125 (70) Subordinated debt 303,795 272,236 12 Other long-term debt 65,265 194,671 (66) Other liabilities 159,823 100,974 58 Total liabilities 10,760,433 9,285,739 16 Shareholders' equity 1,109,960 890,577 25 Total liabilities and shareholders' equity $11,870,393 $10,176,316 17 Book value per share $22.66 $18.50 23 Number of shares at period end 48,983,431 48,149,998 2CONSOLIDATED STATEMENT OF INCOME (unaudited)(Dollars in thousands, except per share amount) For the three months ended December 31, 2002 2001 % ChangeInterest income $151,215 $148,050 2Interest expense (19,752) (34,991) (44)Net interest income 131,463 113,059 16Provision for credit losses (17,500) (11,000) 59Net interest income after provision for credit losses 113,963 102,059 12Noninterest income 37,434 35,947 4Noninterest expense (88,487) (80,450) 10Income before taxes 62,910 57,556 9Income taxes (18,491) (18,805) (2)Net income 44,419 38,751 15Amortization of goodwill - 3,221 (100)Net income - new GAAP $44,419 $41,972 6Net income per share, basic $0.90 $0.81 11Net income per share, diluted $0.87 $0.78 12Net income - new GAAP per share, diluted $0.87 $0.85 2Dividends paid per share $0.20 $0.19 5Shares used to compute per share net income, basic 49,489,632 48,117,183Shares used to compute per share net income, diluted 50,773,446 49,648,577 For the twelve months ended December 31, 2002 2001 % ChangeInterest income $609,700 $625,248 (2)Interest expense (94,444) (191,094) (51)Net interest income 515,256 434,154 19Provision for credit losses (67,000) (35,000) 91Net interest income after provision for credit losses 448,256 399,154 12Noninterest income 146,293 132,384 11Noninterest expense (332,591) (313,395) 6Income before taxes 261,958 218,143 20Income taxes (78,858) (71,973) 10Net income 183,100 146,170 25Amortization of goodwill - 12,868 (100)Net income - new GAAP $183,100 $159,038 15Net income per share, basic $3.69 $3.05 21Net income per share, diluted $3.56 $2.96 20Net income - new GAAP per share, diluted $3.56 $3.22 11Dividends paid per share $0.78 $0.74 5Shares used to compute per share net income, 49,562,552 47,896,091 basicShares used to compute per share net income, diluted 51,389,475 49,376,423CITY NATIONAL CORPORATIONSELECTED FINANCIAL INFORMATION (unaudited)(Dollars in thousands)Period end December 31, 2002 2001 % ChangeLoans Commercial $3,609,053 $3,247,320 11 Residential first mortgage 1,738,909 1,587,303 10 Real estate mortgage 1,934,409 1,668,114 16 Real estate construction 640,861 586,066 9 Installment 76,238 70,403 8 Total loans $7,999,470 $7,159,206 12Deposits Noninterest-bearing $4,764,234 $3,846,789 24 Interest-bearing, core 4,038,497 2,940,053 37 Total core deposits 8,802,731 6,786,842 30 Time deposits - $100,000 and over 1,036,967 1,344,360 (23) Total deposits $9,839,698 $8,131,202 21Credit Quality Nonaccrual loans and ORE Nonaccrual loans $71,357 $38,563 85 ORE 670 10 N/M Total nonaccrual loans and ORE $72,027 $38,573 87 Total nonaccrual loans and ORE to total loans and ORE 0.90 0.54 67 Loans past due 90 days or more on accrual status $6,156 $3,615 70 For the three months ended For the twelve months endedAllowance for December 31, December 31, Credit Losses % % 2002 2001 Change 2002 2001 ChangeBeginning balance $159,173 $137,239 16 $142,862 $135,435 5 Additions from acquisition - - - 8,787 - N/M Provision for credit losses 17,500 11,000 59 67,000 35,000 91 Charge-offs (16,590) (11,148) 49 (64,015) (42,579) 50 Recoveries 4,419 5,771 (23) 9,868 15,006 (34) Net charge- offs (12,171) (5,377) 126 (54,147) (27,573) 96Ending Balance $164,502 $142,862 15 $164,502 $142,862 15Total net charge-offs to average loans (annualized) (0.61) (0.30) 103 (0.69) (0.41) 68Allowance for credit losses to total loans 2.06 2.00 3Allowance for credit losses to nonaccrual loans 230.53 370.46 (38)CITY NATIONAL CORPORATIONSELECTED FINANCIAL INFORMATION (unaudited)(Dollars in thousands) For the three months ended December 31, 2002 2001 % ChangeAverage BalancesLoans Commercial $3,599,985 $3,184,942 13 Residential first mortgage 1,731,487 1,553,762 11 Real estate mortgage 1,911,839 1,623,813 18 Real estate construction 651,386 595,645 9 Installment 76,177 69,945 9 Total loans $7,970,874 $7,028,107 13Securities $2,117,873 $1,764,794 20Interest-earning assets 10,375,595 9,028,587 15Assets 11,312,332 9,831,716 15Core deposits 8,175,534 6,168,871 33Deposits 9,284,335 7,555,753 23Shareholders' equity 1,108,090 892,712 24Noninterest income Trust and investment fee revenue $15,980 $15,248 5 Cash management and deposit transaction fees 10,399 8,712 19 International services 5,034 3,862 30 Bank owned life insurance 731 725 1 Other 5,170 6,370 (19) Subtotal - core 37,314 34,917 7 Gain (loss) on sale of loans and assets/debt repurchase (833) 120 (794) Gain on sale of securities 953 910 5 Total $37,434 $35,947 4Total revenue $168,897 $149,006 13Noninterest expense Salaries and employee benefits $49,431 $42,403 17 All Other Professional 8,791 6,309 39 Net occupancy of premises 8,109 6,969 16 Information services 4,991 4,595 9 Marketing and advertising 3,718 3,821 (3) Depreciation 3,195 3,488 (8) Office services 2,692 2,603 3 Amortization of core deposit intangibles 1,976 1,404 41 Equipment 593 649 (9) Acquisition integration 164 - N/M Amortization of goodwill - 3,221 (100) Other operating 4,827 4,988 (3) Total all other 39,056 38,047 3 Total 88,487 80,450 10 Less amortization of goodwill - (3,221) (100) Adjusted total $88,487 $77,229 15Selected RatiosFor the Period Return on average assets 1.56 % 1.56 % - Return on average shareholders' equity 15.90 17.22 (8) Return on average assets - new GAAP 1.56 1.69 (8) Return on average shareholders' equity - new GAAP 15.90 18.65 (15) Net interest margin 5.17 5.12 1 Efficiency ratio 51.28 52.69 (3) Efficiency ratio - new GAAP 51.28 50.58 1 Dividend payout ratio 21.87 22.97 (5) For the twelve months ended December 31, 2002 2001 % ChangeAverage BalancesLoans Commercial $3,580,293 $3,127,252 14 Residential first mortgage 1,704,571 1,417,443 20 Real estate mortgage 1,831,125 1,582,853 16 Real estate construction 634,074 513,184 24 Installment 72,590 72,583 - Total loans $7,822,653 $6,713,315 17Securities $2,002,536 $1,699,680 18Interest-earning assets 9,996,998 8,520,242 17Assets 10,891,575 9,328,512 17Core deposits 7,399,970 5,598,110 32Deposits 8,639,546 7,067,984 22Shareholders' equity 1,049,393 825,344 27Noninterest income Trust and investment fee revenue $61,277 $58,596 5 Cash management and deposit transaction fees 40,722 30,911 32 International services 18,291 15,017 22 Bank owned life insurance 2,860 2,860 - Other 21,702 20,245 7 Subtotal - core 144,852 127,629 13 Gain (loss) on sale of loans and assets/debt repurchase (1,590) 1,413 (213) Gain on sale of securities 3,031 3,342 (9) Total $146,293 $132,384 11Total revenue $661,549 $566,538 17Noninterest expense Salaries and employee benefits $195,652 $170,364 15 All Other Professional 24,620 24,634 - Net occupancy of premises 27,621 26,375 5 Information services 18,212 16,623 10 Marketing and advertising 13,076 12,093 8 Depreciation 13,191 13,748 (4) Office services 9,752 9,396 4 Amortization of core deposit intangibles 7,523 5,618 34 Equipment 2,463 2,245 10 Acquisition integration 1,464 - N/M Amortization of goodwill - 12,868 (100) Other operating 19,017 19,431 (2) Total all other 136,939 143,031 (4) Total 332,591 313,395 6 Less amortization of goodwill - (12,868) (100) Adjusted total $332,591 $300,527 11Selected RatiosFor the Period Return on average assets 1.68 % 1.57 % 7 Return on average shareholders' equity 17.45 17.71 (1) Return on average assets - new GAAP 1.68 1.70 (1) Return on average shareholders' equity - new GAAP 17.45 19.27 (9) Net interest margin 5.30 5.26 1 Efficiency ratio 49.20 54.08 (9) Efficiency ratio - new GAAP 49.20 51.86 (5) Dividend payout ratio 21.10 24.26 (13)Period End Tier 1 risk-based capital ratio 9.87 9.32 6 Total risk-based capital ratio 14.26 14.08 1 Tier 1 leverage ratio 7.55 7.26 4
CONTACT:City National CorporationFinancial/Investors:Frank Pekny (City National), 310/888-6700Ian Campbell (Abernathy MacGregor Group), 213/630-6550orMedia:Cary Walker (City National), 213/833-4715