LOS ANGELES, Apr 16, 2002 (BUSINESS WIRE) --

Assets Rise to $11 Billion for First Time
EPS Rises 16 Percent Over Year-Ago Comparable Results

City National Corporation(NYSE:CYN), parent company of wholly owned City National Bank, today reportedrecord net income of $44.2 million for the first quarter of 2002 compared withreported net income of $33.6 million for the first quarter of 2001. Net incomeper diluted common share was $0.87 compared with $0.69 reported for the firstquarter of 2001. This year's first-quarter results reflect one month ofoperations of Civic BanCorp ("Civic") from February 28, 2002, the date of thecompletion of this acquisition, and the new accounting standard for goodwill,("New GAAP").

The company's first quarter 2002 net income of $44.2 million was up 20 percentcompared to $36.8 million a year earlier, adjusted to exclude the amortizationof goodwill from the prior reported period. On the same basis, results were up 5percent from the fourth quarter of 2001. As a result, net income per dilutedcommon share of $0.87 rose 16 percent from $0.75 in the first quarter a year agoand was 2 percent higher than the $0.85 in the fourth quarter of 2001 on acomparable basis.

Cash net income, which in 2002 only excludes the amortization of core depositintangibles, was $45.1 million, or $0.89 per diluted common share in the firstquarter of 2002 compared with $37.5 million, or $0.77, in the first quarter of2001.

"Thanks to our talented team of colleagues, our clients and a compelling valueproposition as California's premier private and business bank, City National'searnings and assets rose at double-digit year-over-year rates to record levels,driven by healthy growth in real estate and commercial loans," said ChiefExecutive Officer Russell Goldsmith. "Our average core deposits grew 29 percentover the prior year's quarter, due in part to the acquisition of Civic BanCorp,which has doubled our size in the San Francisco Bay Area, as well as continuinggrowth in our client base.

"In view of Southern California's strengthening and diverse economy and ourongoing initiatives to expand City National's client base, enhance our privateclient capabilities, increase our brand recognition, control expenses andsafeguard credit quality, we are increasingly optimistic about the year ahead,"Mr. Goldsmith added.

RETURN ON ASSETS/RETURN ON EQUITY

The company's return on average assets for the first quarter of 2002 was 1.73percent, compared with 1.67 percent for the first quarter of 2001 and 1.69percent for the fourth quarter of 2001 on a pro-forma basis. The return onaverage shareholders' equity was 18.97 percent, compared with 19.51 percent forthe prior-year first quarter and 18.65 percent for the fourth quarter of 2001 ona pro-forma basis.

On a cash basis (which in 2002 only excludes the after-tax impact ofnonqualifying core deposit intangibles from average assets and averageshareholders' equity), the return on average assets was 1.80 percent and thereturn on average shareholders' equity was 23.60 percent for the first quarterof 2002, compared with 1.74 percent and 26.21 percent, respectively, for thefirst quarter of 2001 and 1.75 percent and 23.50 percent, respectively, for thefourth quarter of 2001.

ASSETS

Total average assets reached a record $10.3 billion for the first quarter of2002, an increase of 16 percent over the $8.9 billion in average assets for thefirst quarter of 2001 and 5 percent over the $9.8 billion in average assets forthe fourth quarter of 2001. Total assets at March 31, 2002 were a record $11.2billion, compared with $8.9 billion at March 31, 2001 and $10.2 billion atDecember 31, 2001.

LOANS

Average loans rose to $7.5 billion for the first quarter of 2002, an increase of14 percent over the prior-year first quarter. This increase was driven primarilyby the growth of residential and real estate mortgage loans, as well ascommercial loans. Compared with prior-year first-quarter averages, residentialfirst mortgage loans rose 26 percent to $1.6 billion from $1.3 billion and realestate mortgage loans rose 13 percent to $1.7 billion from $1.5 billion.Commercial loans rose 8 percent to $3.4 billion from $3.2 billion.

Total loans at March 31, 2002 reached a record $7.8 billion, compared with $6.5billion at March 31, 2001, and $7.2 billion at December 31, 2001, increases of19 percent and 8 percent, respectively. The acquisition of Civic added $373.8million to total loans at March 31, 2002. Syndicated non-relationship loans were$62.2 million, less than 1 percent of the total loan portfolio, at March 31,2002, compared with $148.3 million at March 31, 2001 and $86.9 million atDecember 31, 2001.

Management currently anticipates average loan growth for 2002 will be in therange of 11 percent to 15 percent.

DEPOSITS

Average deposits during the first quarter of 2002 were $7.9 billion, an increaseof 17 percent over the first quarter of 2001 and 5 percent over the fourthquarter of 2001. During the first quarter of 2002, average core deposits, whichprovide a stable source of low-cost funding, rose $1.5 billion to $6.6 billion,an increase of 29 percent over the $5.1 billion in the first quarter of 2001 and7 percent higher than the $6.2 billion for the fourth quarter of 2001. Averagecore deposits represented 83 percent of the total average deposit base for thefirst quarter, up from 76 percent for the prior-year quarter. New clients, and areduction in the earnings credit on analyzed deposit accounts resulting fromlower interest rates, combined with the acquisition of Civic, contributed to thegrowth of deposits.

Deposits totaled a record $8.7 billion at March 31, 2002, compared with $6.9billion at March 31, 2001 and $8.1 billion at December 31, 2001, increases of 26percent and 6 percent, respectively. The acquisition of Civic contributed $469.7million to deposits at March 31, 2002.

Management expects average year-over-year deposit growth to be in the range of12 percent to 15 percent for 2002.

NET INTEREST INCOME

Fully taxable-equivalent net interest income for the first quarter of 2002 was$125.4 million, an increase of 16 percent over $108.1 million for the firstquarter of 2001. Interest income recovered on nonaccrual and charged-off loansincluded above was $0.4 million for the first quarter of 2002, compared with$1.6 million for the first quarter of 2001 and $0.7 million for the fourthquarter of 2001. As part of the company's asset liability management strategy,its "plain vanilla" interest rate swaps hedging loans, deposits and borrowingsadded $7.9 million to net interest income in the first quarter of 2002 comparedwith $1.0 million in the first quarter of 2001 and $6.5 million for the fourthquarter of 2001.

The fully taxable-equivalent net interest margin for the first quarter of 2002was 5.34 percent compared with 5.40 percent for the first quarter of 2001 and5.12 percent for the fourth quarter of 2001. The increase from the fourthquarter was primarily due to a lower cost of funds and a reduced level ofaverage federal funds sold. Interest rates began to decline during the firstquarter of 2001, led by the Federal Reserve Board's rate reductions, whichtotaled 475 basis points for 2001. The Bank's prime rate was 4.75 percent as ofMarch 31, 2002, compared with 8.00 percent a year earlier and 4.75 percent atDecember 31, 2001.

Although the net interest margin for the first quarter was higher, managementexpects the net interest margin for 2002 will approximate the net interestmargin of 5.26 percent reported for 2001.

NONINTEREST INCOME

Core noninterest income increased 14 percent to $33.6 million for the firstquarter of 2002, compared with the $29.5 million for the first quarter of 2001,but was 4 percent below the $34.9 million for the fourth quarter of 2001. Lowerincome from participating mortgage loans was the primary cause of the $1.3million decline in core noninterest income from the fourth quarter of 2001.

Assets under administration totaled $18.8 billion at March 31, 2002, including$7.3 billion under management, compared with $17.9 billion and $6.6 billion,respectively, at March 31, 2001, and $18.8 billion and $7.7 billion,respectively, at December 31, 2001. The quarter-over-quarter increase in assetsunder management was attributable largely to new fully managed investmentportfolios as well as growth in the CNI Charter Funds, City National's family ofmutual funds. Total assets under management declined from the fourth quarter of2001 as some clients rebalanced asset allocations of portfolios, extendedmaturities from money market accounts to achieve higher yields, or maintainedfunds as bank deposits to pay for services. Managed money market funds were down$0.6 billion from December 31, 2001 while all other managed funds were up $0.2billion. As a result, trust and investment fee revenue was higherquarter-over-quarter but declined from the fourth quarter of 2001.

Cash management and deposit transaction fees increased quarter-over-quarter asthe result of strong growth in deposits, including those added by the Civicacquisition, higher sales of new online cash management products, and continuingreductions in the earnings credit on analyzed deposit accounts resulting fromlower interest rates.

Gains on the sale of assets and securities for the first quarter of 2002 were$2.4 million compared with $1.7 million for the same period a year ago, and $1.0million for the fourth quarter of 2001. First-quarter results included a $2.0million gain on the sale of a piece of ORE, which had been fully written off,partially offset by a $0.5 million mark-to-market loss on loansavailable-for-sale.

Noninterest income for the first quarters of both 2002 and 2001 was 23 percentof total revenues.

Management expects growth in noninterest income to range from 7 percent to 10percent for 2002. Last year, the acquisition of Reed, Conner & Birdwellaccounted for approximately one- quarter of the 21 percent increase innoninterest income reported for the year. In addition, management expects that amore stable interest rate environment will result in a reduction in the growthrate of cash management and deposit transaction fees for the remainder of 2002.

NONINTEREST EXPENSE

After excluding amortization of goodwill from prior reported periods,noninterest expense of $78.8 million for the first quarter of 2002 was up 7percent from $73.4 million for the first quarter of 2001. Thequarter-over-quarter increase was primarily the result of the company's growth,including the acquisition of Civic and costs associated with additionalcolleagues. Expenses between the first quarter of 2002 and the fourth quarter of2001 on a comparable basis were essentially flat, excluding the $1.3 million inCivic integration expenses in the first quarter of 2002.

The company's cash efficiency ratio for the first quarter of 2002 improved to47.95 percent from 52.01 percent for the first quarter of 2001. The improvementover the prior year was driven by both increased revenues and the company'songoing efforts to improve efficiency and productivity.

Excluding the amortization of goodwill in 2001, management currently anticipatesthat 2002 noninterest expense will increase 7 percent to 10 percent over theprior year with the acquisition of Civic accounting for a significant amount ofthe increase.

INCOME TAXES

The effective tax rate for the first quarter was 34.8 percent, compared with35.5 percent for the first quarter of 2001. A Form N-8F seeking de-registrationof the company's registered investment company has been filed, and managementcurrently expects that de-registration will become effective by the end of May.As a result, the company did not reflect any tax benefit in the first quarter of2002 from its registered investment company. Despite this higher effective taxrate in the first quarter, management currently anticipates the company'seffective tax rate for 2002 will fall within a range of 32 percent to 34 percentdue to the anticipated impact of revised business and tax-planning strategies.

CREDIT QUALITY

Net loan charge-offs were $7.0 million and $8.2 million for the first quartersof 2002 and 2001, respectively, and $5.4 million for the fourth quarter of 2001.First-quarter charge-offs included $6.5 million for one loan to a borrower inthe telecommunications industry. The remaining $3.3 million balance of this loanis classified as "nonaccrual" and is considered impaired with an allocatedallowance for credit losses of $1.0 million. As an annualized percentage ofaverage loans, net charge-offs were 0.38 percent, 0.51 percent and 0.30 percentfor the first quarters of 2002 and 2001 and the fourth quarter of 2001,respectively.

Total nonperforming assets (nonaccrual loans and ORE) were $50.6 million, or0.65 percent of total loans and ORE, at March 31, 2002, compared with $53.8million, or 0.83 percent, at March 31, 2001 and $38.6 million, or 0.54 percent,at December 31, 2001. Three syndicated non-relationship loans on nonaccrualstatus totaled $6.5 million at March 31, 2002 and $5.9 million at December 31,2001. From year-end 2001, nonperforming assets increased due to the $3.3 millionloan balance referred to earlier, another loan for $7.3 million in thetelecommunications industry, and $3.5 million in loans acquired from Civic.

The company recorded a provision for credit losses of $11.0 million for thefirst quarter of 2002, compared with $7.5 million for the same period in 2001.The provision for credit losses in the fourth quarter of 2001 was $11.0 million.The provision for credit losses this quarter primarily reflects growth of theloan portfolio and the levels of net loan charge-offs and nonaccrual loans.Additional factors affecting the provision include changes in the economicenvironment during this period, as well as management's ongoing assessment ofthe credit quality of the portfolio.

The allowance for credit losses at March 31, 2002 totaled $155.7 millionincluding $8.8 million from the Civic acquisition, or 2.01 percent ofoutstanding loans. This compares with an allowance of $134.7 million, or 2.07 atMarch 31, 2001, and an allowance of $142.9 million, or 2.00 percent at December31, 2001. The allowance for credit losses as a percentage of nonaccrual loanswas 310 percent at March 31, 2002, compared with 256 percent at March 31, 2001and 370 percent at December 31, 2001. Management believes the allowance forcredit losses is adequate to cover risks in the portfolio at March 31, 2002.

The provision for credit losses to be taken in 2002 will reflect management'sassessment of the above factors, as well as changes in the economic environmentduring this period. Based on its current assessment, management continues toanticipate that a provision for credit losses for all of 2002 could fall withinthe $35.0 million to $50.0 million range.

OUTLOOK

All guidance in this release has been reviewed and, except for guidance on thenet interest margin, the provision for credit losses and income taxes, has beenincreased primarily for the effect of the Civic acquisition. Excluding theimpact of the amortization of goodwill for 2001 with no tax effect, managementhas increased its expectations for 2002 and now expects net income per dilutedcommon share to be approximately 8 percent to 11 percent higher than pro-formanet income per diluted common share for 2001.

As announced separately today, the retirement of Chief Credit Officer, Robert A.Moore will become effective April 30, 2002. Robert Patterson, member of theExecutive Committee, Co-Chair of the Bank's Credit Quality Initiative, andlongstanding member of the Bank's Credit Planning and Executive Loan committees,will serve as interim Chief Credit Officer. Mr. Patterson has been with CityNational since l989 and has senior credit management experience during a bankingcareer spanning over 30 years. City National has an active recruitment programin process to select a new Chief Credit Officer, and expects to name a successorby the end of this year.

CAPITAL LEVELS

Total risk-based capital and Tier 1 risk-based capital ratios at March 31, 2002were 13.66 percent and 9.17 percent, compared with the minimum"well-capitalized" capital ratios of 10 percent and 6 percent, respectively. Thecompany's Tier 1 leverage ratio of 7.41 percent exceeded the regulatory minimumof 4 percent required for a "well-capitalized" institution. Total risk-basedcapital, Tier 1 risk-based capital and the Tier 1 leverage ratios at December31, 2001 were 14.08 percent, 9.32 percent and 7.26 percent, respectively.

STOCK REPURCHASE

Under the October 26, 2000 stock buyback program of 1 million shares, 348,700shares have been repurchased at an average price of $34.10 per share. There wereno shares repurchased during the first quarter of 2002. The shares purchasedunder the buyback program have been reissued for acquisitions, upon the exerciseof stock options, and for other general corporate purposes. There were notreasury shares at March 31, 2002.

ABOUT CITY NATIONAL

City National Corporation has $11.2 billion in total assets. Its stock is tradedon the New York Stock Exchange under the symbol "CYN." The company's whollyowned subsidiary, City National Bank, is California's Premier Private andBusiness Bank(SM) providing banking, trust and investment services throughoffices in 11 California counties: Alameda, Contra Costa, Los Angeles, Orange,Riverside, San Bernardino, San Diego, San Francisco, San Mateo, Santa Clara andVentura.

This news release contains forward-looking statements about the company forwhich the company claims the protection of the safe harbor provisions containedin the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are based on management's knowledge and belief as oftoday and include information concerning the company's possible or assumedfuture financial condition, and its results of operations and business.Forward-looking statements are subject to risks and uncertainties. A number offactors, some of which are beyond the company's ability to control or predict,could cause future results to differ materially from those contemplated by suchforward-looking statements. These factors include (1) economic uncertaintycreated by the most recent terrorist attacks on the United States and unrest inother parts of the world, (2) economic uncertainty created by the military,diplomatic and humanitarian actions of the United States and allied nations inAfghanistan in response to the terrorists acts, (3) the prospect of additionalterrorist acts within the United States and the uncertain effect of these eventson our national and regional economies, (4) changes in interest rates, (5)significant changes in banking laws or regulations, (6) increased competition inthe company's market, (7) higher-than-expected credit losses, (8) the effect ofacquisitions and integration of acquired businesses, and (9) unanticipatedchanges in regulatory, judicial, or legislative tax treatment of businesstransactions. Management cannot predict at this time the severity or duration ofthe effects of the recent business slowdown on our specific business activitiesand profitability. Decreased capital and consumer spending, and relatedrecessionary trends could adversely affect our performance in a number of waysincluding decreased demand for our products and services and increased creditlosses. Forward-looking statements speak only as of the date they are made, andthe company does not undertake to update forward-looking statements to reflectcircumstances or events that occur after the date the statements are made, or toupdate earnings guidance including the factors that influence earnings.

For a more complete discussion of these risks and uncertainties, see thecompany's Annual Report on Form 10-K for the year-ended December 31, 2001, andparticularly the section of Management's Discussion and Analysis therein titled"Cautionary Statement for Purposes of the 'Safe Harbor' Provisions of thePrivate Securities Litigation Reform Act of 1995."

CITY NATIONAL CORPORATIONCONSOLIDATED BALANCE SHEET (unaudited)(Dollars in thousands, except per share amount) March 31, 2002 2001 %ChangeAssets Cash and due from banks $ 426,846 $ 423,366 1 Federal funds sold 484,000 - N/M Securities 2,064,949 1,567,734 32 Loans (net of allowance for credit losses of $155,657 and $134,727) 7,596,367 6,370,363 19 Other assets 645,187 572,340 13 Total assets $ 11,217,349 $ 8,933,803 26Liabilities and Shareholders' Equity Noninterest-bearing deposits $ 3,690,225 $ 2,956,454 25 Interest-bearing deposits 4,966,999 3,914,363 27 Total deposits 8,657,224 6,870,817 26 Federal funds purchased and securities sold under repurchase agreements 179,140 230,844 (22) Other short-term borrowed funds 793,625 663,125 20 Subordinated debt 267,449 130,879 104 Other long-term debt 194,389 144,177 35 Other liabilities 126,519 109,178 16 Total liabilities 10,218,346 8,149,020 25 Shareholders' equity 999,003 784,783 27 Total liabilities and shareholders' equity $ 11,217,349 $ 8,933,803 26 Book value per share $ 20.11 $ 16.46 22 Number of shares at period end 49,681,899 47,674,170 4CONSOLIDATED STATEMENT OF INCOME (unaudited)(Dollars in thousands, except per share amount) For the three months ended March 31, 2002 2001 %ChangeInterest income $ 148,358 $ 164,192 (10)Interest expense (26,663) (59,275) (55)Net interest income 121,695 104,917 16Provision for credit losses (11,000) (7,500) 47Net interest income after provision for credit losses 110,695 97,417 14Noninterest income 35,943 31,261 15Noninterest expense (78,773) (76,604) 3Income before taxes 67,865 52,074 30Income taxes (23,629) (18,483) 28Net income 44,236 33,591 32Amortization of goodwill - 3,206 (100)Net income - new GAAP $ 44,236 $ 36,797 20Net income - new GAAP per share, diluted $ 0.87 $ 0.75 16Net income per share, basic $ 0.91 $ 0.70 30Net income per share, diluted $ 0.87 $ 0.69 26Dividends paid per share $ 0.20 $ 0.19 5Cash net income $ 45,115 $ 37,532 20Cash net income per share, basic $ 0.93 $ 0.79 18Cash net income per share, diluted $ 0.89 $ 0.77 16Shares used to compute per share net income, basic 48,690,024 47,683,205Shares used to compute per share net income, diluted 50,803,046 48,834,775CITY NATIONAL CORPORATIONSELECTED FINANCIAL INFORMATION (unaudited)(Dollars in thousands)Period end March 31, 2002 2001 %ChangeLoans Commercial $ 3,548,545 $ 3,088,211 15 Residential first mortgage 1,679,969 1,288,132 30 Real estate mortgage 1,840,060 1,616,188 14 Real estate construction 606,768 437,431 39 Installment 76,682 75,128 2 Total loans $ 7,752,024 $ 6,505,090 19Deposits Noninterest-bearing $ 3,690,225 $ 2,956,454 25 Interest-bearing, core 3,628,298 2,361,811 54 Total core deposits 7,318,523 5,318,265 38 Time deposits - $100,000 and over 1,338,701 1,552,552 (14) Total deposits $ 8,657,224 $ 6,870,817 26Credit Quality Nonaccrual loans and ORE Nonaccrual loans $ 50,136 $ 52,729 (5) ORE 505 1,094 (54) Total nonaccrual loans and ORE $ 50,641 $ 53,823 (6) Total nonaccrual loans and ORE to total loans and ORE 0.65 0.83 (22) Loans past due 90 days or more on accrual status $ 2,631 $ 8,847 (70) Restructured loans on accrual status $ - $ 1,358 (100) For the three months endedAllowance for Credit Losses March 31, 2002 2001 %ChangeBeginning balance $ 142,862 $ 135,435 5 Additions from acquisition 8,787 - N/M Provision for credit losses 11,000 7,500 47 Charge-offs (9,296) (12,084) (23) Recoveries 2,304 3,876 (41) Net charge-offs (6,992) (8,208) (15)Ending Balance $ 155,657 $ 134,727 16Total net charge-offs to average loans (annualized) (0.38) (0.51) (25)Allowance for credit losses to total loans 2.01 2.07 (3)Allowance for credit losses to nonaccrual loans 310.47 255.51 22CITY NATIONAL CORPORATIONSELECTED FINANCIAL INFORMATION (unaudited)(Dollars in thousands) For the three months ended March 31, 2002 2001 %ChangeAverage BalancesLoans Commercial $ 3,432,475 $ 3,167,150 8 Residential first mortgage 1,633,024 1,291,176 26 Real estate mortgage 1,717,838 1,521,113 13 Real estate construction 610,878 469,052 30 Installment 71,215 73,223 (3) Total loans $ 7,465,430 $ 6,521,714 14Securities $ 1,924,543 $ 1,557,039 24Interest-earning assets 9,519,670 8,116,541 17Assets 10,344,129 8,920,281 16Core deposits 6,600,710 5,131,990 29Deposits 7,933,481 6,786,666 17Shareholders' equity 945,778 764,712 24Noninterest income Trust and investment fee revenue $ 14,274 $ 13,673 4 Cash management and deposit transaction fees 10,369 6,548 58 International services 3,791 3,559 7 Bank owned life insurance 673 724 (7) Other 4,469 5,023 (11) Subtotal - core 33,576 29,527 14 Gain on sale of loans and assets 1,679 757 122 Gain on sale of securities 688 977 (30) Total $ 35,943 $ 31,261 15Noninterest expense Salaries and employee benefits $ 47,470 $ 42,774 11 All Other Net occupancy of premises 6,180 6,344 (3) Professional 5,229 5,764 (9) Information services 4,360 3,829 14 Depreciation 3,392 3,337 2 Marketing and advertising 2,788 2,581 8 Office services 2,098 2,210 (5) Amortization of core deposit intangibles 1,515 1,405 8 Amortization of goodwill - 3,206 (100) Acquisition integration 1,300 - NM Equipment 482 496 (3) Other operating 3,959 4,658 (15) Total all other 31,303 33,830 (7) Total 78,773 76,604 3 Less amortization of goodwill - (3,206) (100) Adjusted total $ 78,773 $ 73,398 7Selected RatiosFor the Period Return on average assets - new GAAP 1.73 % 1.67 % 4 Return on average shareholders' equity - new GAAP 18.97 19.51 (3) Return on average assets 1.73 1.53 13 Return on average shareholders' equity 18.97 17.81 7 Net interest margin 5.34 5.40 (1) Efficiency ratio - new GAAP 48.89 53.02 (8) Efficiency ratio 48.89 55.32 (12) Dividend payout ratio 21.27 26.22 (19) Cash return on average assets 1.80 1.74 3 Cash return on average shareholders' equity 23.60 26.21 (10) Cash efficiency ratio 47.95 52.01 (8)Period End Tier 1 risk-based capital ratio 9.17 8.33 10 Total risk-based capital ratio 13.66 11.35 20 Tier 1 leverage ratio 7.41 6.71 10

CONTACT: City National Frank Pekny, 310/888-6700 (Financial/Investors) Cary Walker, 213/833-4715 (Media) or Abernathy MacGregor Group Ian Campbell, 213/630-6550 (Financial/Investors)URL: http://www.businesswire.comToday's News On The Net - Business Wire's full file on the Internetwith Hyperlinks to your home page.

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