LOS ANGELES--(BUSINESS WIRE)--June 28, 2004--City NationalCorporation (NYSE:CYN):
- The high cost of doing business in the Golden State is among their biggest concerns, along with terrorism and the war in Iraq - Wealthy residents give Governor Schwarzenegger high marks
Affluent Californians aren't particularly worried that the FederalReserve Board likely will increase short-term interest rates nextweek, according to an independent survey commissioned by City NationalBank of individuals whose net worth exceeds $2 million. They aren'tespecially worried about the state's economic outlook, either.
On the contrary, wealthy Californians share generally upbeat viewsof the future, with many of them citing the election of ArnoldSchwarzenegger to the governorship as a primary reason for optimism,according to the 2004 City National Survey of Affluent Californians.
However, California's affluent residents are worried about thehigh cost of doing business in the state, along with the war in Iraqand terrorism in the U.S. and abroad, the survey found.
"Californians are known for their optimism - a characteristicthat often is cited as a factor in the state's resilience and economicdiversity," said Shelley Thompson, director of Wealth ManagementServices for City National. "Evidence of that optimism is clear in theresults of this survey. The wealthy here are bullish on the economyand are unafraid of higher interest rates, but they are concernedabout the state's high cost of doing business."
Interest Rates and the Economy: No Worries
Asked about the much anticipated Fed action, more than seven in 10(72 percent) affluent Californians surveyed say they are not concernedabout the likely increase in short-term interest rates, and nearly asmany (65 percent) say that an increase in rates would have no impacton how they invest and save.
Regarding the California economy, 60 percent believe its currentcondition is either "very strong" or "moderately strong," and 70percent say the same about the national economy, the survey found.Looking forward to the fourth quarter of this year, 72 percent believethe state's economy will be very or moderately strong.
Their general optimism about the economy aside, however, wealthyCalifornians remain cautious when it comes to their own investing andsaving habits. Asked to rate nine possible investments on a scale ofone to seven - with one representing the least likely choice andseven the most likely - they give highest ranking to domesticblue-chip stocks and real estate, with mean or average scores of 4.4and 3.9, respectively. Hedge funds garner a 2.1 - the lowest ranking-- and venture capital gets only a 2.5.
Governor Gets High Marks
Asked to rank the impact of eight recent events on their personalfinances on a scale of one to seven - with one being very negativeand seven being very positive - California's affluent give thehighest marks to Governor Schwarzenegger's election last year andhistorically low interest rates, with each receiving an average scoreof 5.0.
The high cost of doing business in California compared to otherstates is seen as having a very negative effect on the investments andpersonal finances of wealthy Californians - receiving an averagescore of 2.9 on the same seven-point scale and ranking along with thewar in Iraq (3.3) and terrorism (3.4) as a top concern.
Among other findings of the survey: - Half (50 percent) believe the national jobless rate will drop by the end of the year, but fewer (45 percent) expect a drop in the state's unemployment rate by then; - Seven in 10 (69 percent) expect the rate of inflation to increase through the rest of the year; - Nine in 10 (91 percent) consider this either a very good or a fairly good time to sell a house, and seven in 10 (71 percent) say the same about buying a house; - Eighty-nine percent say the healthcare, pharmaceuticals and biotechnology sector is either very attractive or somewhat attractive for investment during the next 12 months; - Other attractive sectors include: high technology (76 percent), energy and natural resources (75 percent), real estate (72 percent), and defense and aerospace (72 percent). On the other hand, fewer than half are likely to invest in the entertainment (47 percent), transportation (44 percent), agriculture (43 percent) or precious metals (37 percent) industries. Hard Work Is Key to Success
Asked to rank factors contributing to their own financial success,wealthy Californians rate the willingness to work hard as mostimportant (average score of 6.4 on a scale of one to seven, with oneindicating not very important and seven very important). This wasclosely followed by the ability to get along with others (6.2),professional or technical skills (6.1) and native intelligence (5.9).
The vast majority of affluent Californians polled (86 percent) saythey are just as likely or more likely to seek advice from aprofessional investment advisor today as they were a year ago. Only 13percent say they are less likely to do so.
Respondents were split over whether it is more difficult or easierfor young people to accumulate wealth today compared to a generationago. Forty-eight percent consider it more difficult, while a slightmajority (51 percent) indicates that it is about as difficult oreasier for today's youth to accumulate wealth compared to the previousgeneration.
Regional Differences: Southland More Positive
Southern California's wealthy tend to have a more positive outlookon the economy than their counterparts in Northern California.Three-quarters (74 percent) of those in the south say the U.S. economyis strong compared to 66 percent in the north. Similarly, two-thirds(66 percent) of affluent Southern Californians consider the state'seconomy to be strong while only about half (51 percent) in NorthernCalifornia give that answer.
Affluent individuals in the south are also more positive aboutCalifornia's economic future. Three-quarters (76 percent) say thestate's economy will be strong in the fourth quarter of 2004; 67percent of northerners agree.
Additionally, wealthy individuals in the Bay Area say they aremore apt to feel the impact of a short-term interest rate hike. Almostfour in 10 (38 percent) say a short-term interest rate hike would havean impact on how they invest and save; only 29 percent in theSouthland give that answer.
From May 20 to June 10, 2004, independent opinion research andpublic policy analysis firm, Fairbank, Maslin, Maullin & Associates,completed 300 telephone interviews with individuals in California withnet worth of $2 million or more. The margin of sampling error for thefull sample is +/-5.7% with a 95 percent level of confidence. Marginsof error for subgroups within the sample will be higher.
About City National
City National Corporation (NYSE:CYN) is a financial servicescompany with $13.2 billion in total assets. Its wholly ownedsubsidiary, City National Bank, is the largest bank headquartered inSouthern California. As California's Premier Private and BusinessBank(R), City National provides banking, investment and trust servicesthrough 53 offices, including 12 full-service regional centers, inSouthern California, the San Francisco Bay Area and New York City.
City National is ranked among America's top companies in Forbesmagazine's "Super 500" list. It also is one of the nation's top wealthmanagers, according to Barron's magazine. The company and itsaffiliates manage or administer more than $30 billion of client trustand investment assets. For more information about City National, visitthe company's Website at cnb.com.
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CONTACT: City National Bank Linda Mueller, 213-833-4719 email@example.com SOURCE: City National Bank