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City National Corporation's Net Income Grows to $63.6 Million in the Third Quarter of 2013 and $174.9 Million Year to Date

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Loan balances grow 21 percent to a record $16.6 billion

Deposits reach all-time high of $25.2 billion

Assets exceed $29 billion for the first time

LOS ANGELES, Oct. 24, 2013 (GLOBE NEWSWIRE) -- City National Corporation (NYSE:CYN), the parent company of wholly owned City National Bank, today reported third-quarter 2013 net income of $63.6 million, up 6 percent from $59.8 million in the year-ago period. Earnings per share were $1.10, compared with $1.10 per share in the third quarter of 2012. Third-quarter 2013 earnings reflect the payment of $2.4 million, or $0.05 per share, for dividends on preferred stock. (The company issued its preferred stock in the fourth quarter of 2012.)

Year-to-date, City National's net income totaled $174.9 million, up 9 percent from $160.8 million in the first nine months of 2012. Earnings per share were $3.04, up 2 percent from $2.97 in the first nine months of last year.

City National also announced today that its Board of Directors has maintained and approved a quarterly common stock cash dividend of $0.25 per share, payable on November 20, 2013 to stockholders of record on November 6, 2013. The Board has also authorized a quarterly cash dividend of $13.75 per share on the 5.50 percent Non‑Cumulative Perpetual Preferred Stock, Series C (equivalent to $0.34375 per related depositary share), payable on November 13, 2013 to shareholders of record on November 4, 2013.

THIRD-QUARTER 2013 HIGHLIGHTS

  • Period-end loans and leases, excluding loans covered by City National's acquisition-related loss-sharing agreements with the Federal Deposit Insurance Corporation (FDIC), reached a record $16.6 billion, up 21 percent from September 30, 2012 and up 5 percent from June 30, 2013. Average third-quarter loan and lease balances, excluding FDIC-covered loans, grew to $16.0 billion, up 18 percent from the third quarter of last year. Average commercial loans were up 23 percent from the same period in 2012.
  • Third-quarter deposit balances averaged $24.3 billion, up 11 percent from the third quarter of 2012. Average core deposits, which equal 98 percent of total balances, were up 12 percent from the third quarter of last year. Period-end deposit balances grew to a new record of $25.2 billion at September 30, 2013.
  • Trust and investment fee income grew to $49.4 million, up 14 percent from the third quarter of 2012. Year to date, it is up 31 percent, to $145.9 million. City National's assets under management or administration grew to $61.5 billion for the first time, up 7 percent from the third quarter of 2012.
  • Net loan recoveries in the third quarter of 2013 totaled $6.8 million, compared to net recoveries of $7.5 million in the second quarter of this year. Excluding FDIC-covered loans, third-quarter 2013 results included no provision for loan and lease losses. City National recorded a $2.0 million provision in the third quarter of 2012. The company remains appropriately reserved at 1.79 percent of total loans, excluding FDIC-covered loans.
  • Noninterest expense fell 1 percent from the second quarter of 2013, but was up 1 percent from the third quarter of 2012.

"City National's very positive momentum, growth and performance continued across the company in the third quarter – its 82nd consecutive profitable quarter," said Chairman and CEO Russell Goldsmith. "Assets, loans and deposits again grew quite significantly to new record levels, with assets exceeding $29 billion for the first time. Wealth management increased its contribution as well, and credit quality improved yet again.

"In spite of a slow-growing economy, very low interest rates, competitive pricing pressures, and the continuing and expected decline of FDIC-covered loans, City National continues to grow its net income and client base by staying focused on meeting the financial needs of its clients and building on its strong reputation as the premier private and business bank in the communities it serves."

For the three months ended For the three
Dollars in millions, September 30, months ended
except per share data 2013 2012 % Change June 30, 2013 % Change
Earnings Per Common Share $ 1.10 $ 1.10 -- $ 1.04 6
Net Income Attributable to CNC 63.6 59.8 6 59.7 7
Net Income Available to Common Shareholders 61.2 59.8 2 57.3 7
Average Assets $ 28,061.1 $ 25,654.6 9 $ 27,469.6 2
Return on Average Assets 0.90% 0.93% (3) 0.87% 3
Return on Average Common Equity 10.12% 10.35% (2) 9.53% 6
Return on Average Tangible Common Equity 14.43% 15.05% (4) 13.60% 6

ASSETS

Total assets reached a record $29.1 billion at September 30, 2013, up 11 percent from the third quarter of 2012 and 6 percent higher than the second quarter of 2013. The increases reflect higher loan balances, as well as higher cash balances.

NET INTEREST INCOME

Fully taxable-equivalent net interest income was $220.0 million in the third quarter of 2013, up 2 percent from the same period of 2012 and 6 percent higher than the second quarter of this year. Fully taxable-equivalent net interest income for the first nine months of 2013 was $634.7 million, down 1 percent from $641.6 million in the year-ago period.

Average third-quarter deposits were $24.3 billion, up 11 percent from the year-ago period and 5 percent higher than the second quarter of 2013. Average deposits for the first nine months of 2013 totaled $23.3 billion, up 11 percent from the same period of 2012. Period-end deposits totaled $25.2 billion, up 12 percent from September 30, 2012 and up 7 percent from June 30, 2013.

Average core deposits were $23.7 billion in the third quarter of 2013, up 12 percent from the same period of 2012 and up 6 percent from the second quarter of this year. Year-to-date 2013 average core deposits grew 11 percent from the year-ago period to $22.7 billion.

Third-quarter 2013 average noninterest-bearing deposits were up 14 percent from the same period of 2012 and 5 percent higher than the second quarter of 2013. Average noninterest-bearing balances in the first nine months of 2013 were up 17 percent from the same period last year.

Treasury Services deposit balances, which consist primarily of title, escrow and property management deposits, averaged $2.6 billion in the third quarter of 2013, up 15 percent from the same period of last year and up 2 percent from the second quarter of 2013. For the first nine months of 2013, Treasury Services deposit balances averaged $2.5 billion, up 17 percent from the same period of 2012. The year-over-year increases were due primarily to an increase in residential refinance activity, as well as existing home sales.

Third-quarter average loan balances, excluding FDIC-covered loans, were $16.0 billion, up 18 percent from the third quarter of 2012 and up 4 percent from the second quarter of 2013. For the first nine months of 2013, City National's average loans, excluding FDIC-covered loans, were $15.4 billion, up 18 percent from the year-ago period.

Third-quarter average commercial loans were up 23 percent from the same period in 2012 and 3 percent higher than the second quarter of 2013.

Average balances for commercial real estate mortgages were up 30 percent from the third quarter of 2012, and they increased 8 percent from the second quarter of 2013. Average balances for commercial real estate construction loans declined 17 percent from the third quarter of 2012 and were down 8 percent from the second quarter of 2013.

Average balances for single-family residential mortgage loans were up 10 percent from the year-ago period and 4 percent higher than the second quarter of 2013.

Average securities for the third quarter of 2013 totaled $8.6 billion, down 1 percent from the third quarter of 2012 and 3 percent lower than the second quarter of 2013. Total available-for-sale securities amounted to $6.9 billion at September 30, 2013, down from $7.9 billion at the end of the third quarter of 2012 and $7.0 billion at June 30, 2013.

The average duration of available-for-sale securities at September 30, 2013 was 2.9 years, up from 2.2 years at September 30, 2012 but down from 3.2 years at the end of the second quarter of 2013. The decrease from the second quarter of this year reflects a rotation from longer duration to shorter duration securities in the available-for-sale portfolio. The move to shorter-duration investments generated a $5.6 million net gain on securities, compared with net gains of $5.6 million in the second quarter of this year and $0.8 million in the third quarter of 2012.

City National's net interest margin in the third quarter of 2013 averaged 3.30 percent, compared with 3.24 percent in the second quarter of 2013. The modest increase was due to higher income from FDIC-covered loans that were repaid or charged off during the quarter. For the first nine months of 2013, City National's net interest margin averaged 3.25 percent, down from 3.74 percent in the previous year.

Third-quarter net interest income included $25.8 million from FDIC-covered loans that were repaid or charged off. This compares with $22.2 million in the third quarter of 2012 and $15.9 million in the second quarter of 2013.

At September 30, 2013, City National's prime lending rate was 3.25 percent, unchanged from both September 30, 2012 and June 30, 2013.

For the three months ended For the three
September 30, % months ended %
Dollars in millions 2013 2012 Change June 30, 2013 Change
Average Loans and Leases, excluding Covered Loans $ 16,039.8 $ 13,587.5 18 $ 15,434.1 4
Average Covered Loans 818.9 1,207.0 (32) 909.7 (10)
Average Total Securities 8,576.5 8,631.4 (1) 8,866.9 (3)
Average Earning Assets 26,417.7 23,892.0 11 25,819.9 2
Average Deposits 24,301.6 21,940.8 11 23,118.8 5
Average Core Deposits 23,716.0 21,208.5 12 22,410.8 6
Fully Taxable-Equivalent
Net Interest Income 220.0 214.8 2 208.4 6
Net Interest Margin 3.30% 3.58% (8) 3.24% 2

COVERED ASSETS

Loans and other real estate owned (OREO) assets acquired in City National's FDIC‑assisted bank acquisitions totaled $784.0 million at the end of the third quarter of 2013, compared to $1.2 billion at September 30, 2012 and $885.4 million at June 30, 2013.

In the third quarter of 2013, City National recorded a $0.5 million non-cash net expense to reflect results of the quarterly update of cash-flow projections for the FDIC-covered loans, compared to a $1.5 million expense recorded in the second quarter of 2013. The third-quarter expense reflects a $2.5 million provision for losses on covered loans and an offsetting $2.0 million of noninterest income related to City National's loss-sharing agreements with the FDIC. In addition to the $0.5 million non-cash net expense for the quarter, the company recognized $3.2 million of other covered assets income.

City National will continue to update cash-flow projections for covered loans on a quarterly basis. Due to the uncertainty in the future performance of the covered loans, additional impairments may be recognized in the future.

OREO assets acquired by City National in its FDIC-assisted bank acquisitions and subject to loss-sharing agreements totaled $29.8 million at September 30, 2013, compared to $83.6 million at the end of the third quarter of 2012 and $41.8 million at June 30, 2013.

NONINTEREST INCOME

Noninterest income was $88.9 million in the third quarter of 2013, down 17 percent from the third quarter of 2012 but up 8 percent from the second quarter of 2013. City National's noninterest income for the first nine months of 2013 was up 3 percent from the same period of 2012.

The decrease in noninterest income from the third quarter of 2012 was due largely to higher FDIC loss-sharing expense, which was partly offset by higher trust and investment income. Results for the third quarter of 2013 also included a $5.6 million net gain on securities, compared with net gains of $5.6 million in the second quarter of this year and $0.8 million in the third quarter of 2012. The increase in noninterest income from the second quarter of this year was due primarily to lower FDIC loss-sharing expense.

In the third quarter of 2013, noninterest income accounted for 29 percent of City National's total revenue, compared to 34 percent in the third quarter of 2012 and 29 percent in the second quarter of 2013.

Wealth Management

City National's assets under management or administration totaled $61.5 billion as of September 30, 2013, up 7 percent from the same period of 2012 and 3 percent higher than the second quarter of 2013.

Trust and investment fees were $49.4 million, up 14 percent from the third quarter of 2012 but down 1 percent from the second quarter of 2013. The increase from the year-ago period was due primarily to additional sales and market appreciation.

Brokerage and mutual fund fees totaled $7.3 million, down 19 percent from the year-earlier period and 10 percent lower than the second quarter of 2013, largely due to declines in short-term interest rates.

Year-to-date 2013 trust and investment fee income was $145.9 million, up 31 percent from the same period of last year. Brokerage and mutual fund fee income was $23.5 million in the first nine months of this year, up 21 percent from the same period of 2012. These increases largely reflect the company's July 2, 2012 acquisition of Rochdale Investment Management, as well as the addition of client assets and market appreciation.

At or for the At or for the
three months ended three months
September 30, % ended %
Dollars in millions 2013 2012 Change June 30, 2013 Change
Trust and Investment Fee Revenue $ 49.4 $ 43.5 14 $ 49.8 (1)
Brokerage and Mutual Fund Fees 7.3 9.1 (19) 8.1 (10)
Assets Under Management (1) 42,811.8 38,620.1 11 41,256.5 4
Assets Under Management
or Administration (1) 61,476.0 57,248.9 7 59,755.3 3
(1) Excludes $26.3 billion, $25.1 billion and $19.8 billion of assets under management for asset managers in which City National held a noncontrolling ownership interest as of September 30, 2013, June 30, 2013 and September 30, 2012, respectively.

Other Noninterest Income

Third-quarter income from cash management and deposit transaction fees was $12.3 million, up 6 percent from the third quarter of 2012 but down 5 percent from the second quarter of 2013. For the first nine months of 2013, cash management and deposit transaction fee income was $38.2 million, up 12 percent from the same period of 2012. The year-over-year increases were due largely to higher sales volume and growth in transaction volumes among existing clients.

Fee income from foreign exchange services and letters of credit totaled $10.9 million in the third quarter of 2013, up 11 percent from the third quarter of 2012 but virtually unchanged from the second quarter of 2013. Year-to-date 2013 foreign exchange services and letters of credit fee income totaled $31.5 million, up 10 percent from the same period last year. The increases from the year-ago periods were due primarily to increased client activity and the addition of new clients.

Other income was $21.2 million in the third quarter of 2013, down 23 percent from the third quarter of 2012 but 4 percent higher than the second quarter of 2013. The decrease from the third quarter of 2012 was due primarily to lower distribution income from investments. Other income in the first nine months of this year was $60.0 million, up 2 percent from the year-ago period.

NONINTEREST EXPENSE

City National's third-quarter 2013 noninterest expense amounted to $209.4 million, up 1 percent from the third quarter of 2012 but down 1 percent from the second quarter of 2013.

Noninterest expense for the first nine months of 2013 amounted to $632.1 million, up 5 percent from the same period of last year. Excluding the company's 2012 acquisitions of Rochdale and First American Equipment Finance, noninterest expense was virtually unchanged from the first nine months of 2012.1

CREDIT QUALITY

The following credit quality information excludes loans subject to loss-sharing agreements involving City National's FDIC-assisted transactions:

Net recoveries in the third quarter of 2013 totaled $6.8 million, or 0.17 percent of total loans and leases on an annualized basis. The company realized net charge-offs of $2.2 million, or 0.06 percent, in the third quarter of 2012 and net recoveries of $7.5 million, or 0.20 percent, in the second quarter of 2013. Net recoveries for the first nine months of 2013 were $19.1 million, or 0.17 percent of total loans and leases. This compares with net recoveries of $5.0 million, or 0.05 percent, in the first nine months of last year.

At September 30, 2013, nonperforming assets amounted to $88.5 million, or 0.53 percent of the company's total loans and leases and OREO, compared to $130.5 million, or 0.95 percent, at September 30, 2012 and $96.3 million, or 0.61 percent, at June 30, 2013.

Nonaccrual loans at September 30, 2013 were $69.6 million, compared to $103.5 million at September 30, 2012 and $76.7 million at June 30, 2013. Classified loans declined from the second quarter of 2013, and overall credit trends remain favorable.

As of As of As of
September 30, 2013 June 30, 2013 September 30, 2012
Period-end Loans (in millions) Total Nonaccrual Total Nonaccrual Total Nonaccrual
Commercial $ 7,856.2 $ 10.1 $ 7,497.1 $ 11.7 $ 6,264.6 $ 18.8
Commercial Real Estate Mortgages 3,217.7 19.0 3,101.2 22.4 2,463.7 36.6
Residential Mortgages 4,418.2 9.7 4,153.1 10.6 3,897.7 11.7
Real Estate Construction 240.0 25.5 217.8 25.7 242.1 29.0
Home Equity Loans and Lines of Credit 681.9 5.3 700.7 6.3 719.0 6.9
Other Loans 152.1 0.0 149.4 0.0 137.6 0.5
Total Loans (1) $ 16,566.1 $ 69.6 $ 15,819.3 $ 76.7 $ 13,724.7 $ 103.5
Other Real Estate Owned (1) 18.9 19.6 27.0
Total Nonperforming Assets, excluding
Covered Assets $ 88.5 $ 96.3 $ 130.5
(1) Excludes covered loans, net of allowance, of $754.2 million, $843.6 million and $1.1 billion at September 30, 2013, June 30, 2013 and September 30, 2012, respectively, and covered other real estate owned of $29.8 million, $41.8 million and $83.6 million at September 30, 2013, June 30, 2013 and September 30, 2012, respectively.

In light of strong and improving credit quality, the company recorded no provision for credit losses in the third quarter of 2013. The company recorded a $2.0 million provision in the third quarter of 2012 and no provision in the second quarter of 2013.

At September 30, 2013, City National's allowance for loan and lease losses totaled $295.9 million, or 1.79 percent of total loans and leases. That compares with $268.4 million, or 1.96 percent, at September 30, 2012 and $289.9 million, or 1.83 percent, at the end of the second quarter of 2013. The company also maintains an additional $25.9 million in reserves for off-balance-sheet credit commitments.

Commercial Loans

Commercial loan net recoveries were $4.4 million in the third quarter of 2013. This compares to net charge-offs of $4.9 million in the year-earlier period and net recoveries of $2.9 million in the second quarter of 2013. Net recoveries in the first nine months of 2013 amounted to $9.4 million, compared to net recoveries of $8.4 million in same period of last year.

Commercial loans on nonaccrual totaled $10.1 million in the third quarter of 2013, compared to $18.8 million at September 30, 2012 and $11.7 million at June 30, 2013.

Real Estate Construction Loans

City National's $240.0 million commercial real estate construction portfolio includes secured loans to developers of residential and nonresidential properties. This portfolio represents less than 2 percent of the company's total loans.

Third-quarter net recoveries of construction loans were $2.9 million, compared to net recoveries of $3.1 million in the third quarter of 2012 and net recoveries of $2.7 million in the second quarter of 2013. Net recoveries amounted to $8.3 million in the first nine months of 2013, compared with net charge-offs of $1.6 million in the same period of last year.

At September 30, 2013, construction loans on nonaccrual totaled $25.5 million, compared to $29.0 million at September 30, 2012 and $25.7 million at June 30, 2013.

Commercial Real Estate Mortgage Loans

Third-quarter net charge-offs in the company's $3.2 billion commercial real estate mortgage portfolio were $0.6 million compared to net charge-offs of $0.2 million in the third quarter of 2012 and net recoveries of $1.0 million in the second quarter of 2013. Net recoveries amounted to $0.5 million in the first nine months of 2013, compared with net recoveries of $0.2 million in the same period of last year.

Commercial real estate mortgage loans on nonaccrual totaled $19.0 million, compared to $36.6 million at September 30, 2012 and $22.4 million at June 30, 2013.

Residential Mortgage Loans and Equity Loans and Lines of Credit

City National's $4.4 billion residential mortgage portfolio and $0.7 billion home equity portfolio continued to perform exceptionally well. Together, they accounted for $0.2 million in net charge-offs in the third quarter of 2013, compared to net charge-offs of $0.6 million at September 30, 2012 and net recoveries of $0.4 million at June 30, 2013. Net recoveries amounted to $0.1 million in the year to date of 2013, compared with net charge-offs of $2.6 million in the same period of last year.

Residential mortgage loans and home equity loans and lines of credit on nonaccrual were $15.0 million in the third quarter of 2013, compared to $18.6 million in the third quarter of 2012 and $16.8 million in the second quarter of 2013.

INCOME TAXES

City National's effective tax rate for the third quarter of 2013 was 29.6 percent, compared to 32.6 percent in the year-earlier period. For the first nine months of 2013, City National's effective tax rate was 29.5 percent, compared to 32.5 percent in the prior-year period.

CAPITAL LEVELS

City National remains well-capitalized. Under Basel I capital rules, the company's Tier 1 common shareholders' equity ratio was 8.8 percent at September 30, 2013.1 The company's Tier 1 common shareholders' equity ratio was 9.1 percent at September 30, 2012 and 8.8 percent at June 30, 2013.1

Under Basel III rules, City National's estimated Tier 1 common equity ratio was 8.6 percent.2 All of the company's pro-forma capital ratios are comfortably above the Basel III rules, which were approved by the Federal Reserve on July 2, 2013. The new rules will begin a phase-in period for banks with less than $250 billion in assets, including City National, on January 1, 2015 and are expected to be fully implemented by January 1, 2019.

City National's Basel I total risk-based capital and Tier 1 risk-based capital ratios at September 30, 2013 were 12.7 percent and 9.7 percent, respectively. The company's Tier 1 leverage ratio at September 30, 2013 was 7.1 percent.

Basel I total risk-based capital, Tier 1 risk-based capital and Tier 1 leverage ratios at September 30, 2012 were 12.4 percent, 9.1 percent and 6.3 percent, respectively.

Basel I period-end ratio of equity to total assets at September 30, 2013 was 8.9 percent, compared to 8.9 percent at September 30, 2012 and 9.3 percent at June 30, 2013.

2013 OUTLOOK

Management continues to expect modest net income growth in 2013, driven by strong loan growth, increasing deposits and very good credit quality. The current low short-term interest rate environment will continue to put pressure on the company's net interest margin. This outlook reflects management's expectations for modest economic growth and stable monetary policies in the fourth quarter.

CONFERENCE CALL

City National Corporation will host a conference call this afternoon to discuss third-quarter 2013 financial results. The call will begin at 2:00 p.m. PDT. Analysts and investors may dial in and participate in the question/answer session. To access the call, please dial (866) 393-6804 and enter Conference ID 68365750. A listen-only live broadcast of the call also will be available on the investor relations page of the company's Website at cnb.com. There, it will be archived and available for 12 months.

ABOUT CITY NATIONAL

City National Corporation's wholly owned subsidiary, City National Bank, provides banking, investment and trust services through 77 offices, including 16 full-service regional centers, in Southern California, the San Francisco Bay Area, Nevada, New York City, Nashville and Atlanta. The corporation and its investment affiliates manage or administer $61.5 billion in client investment assets, including $42.8 billion under direct management.

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

SAFE-HARBOR LANGUAGE

This news release contains forward-looking statements about the company, for which the company claims the protection of the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995.

A number of factors, many of which are beyond the company's ability to control or predict, could cause future results to differ materially from those contemplated by such forward-looking statements. These factors include: (1) changes in general economic, political, or industry conditions and the related credit and market conditions and the impact they have on the company and its customers, including changes in consumer spending, borrowing and savings habits; (2) the impact on financial markets and the economy of the level of U.S. and European debt; (3) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System; (4) continued delay in the pace of economic recovery and continued stagnant or decreasing employment levels; (5) the effect of the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations to be promulgated by supervisory and oversight agencies implementing the new legislation, taking into account that the precise timing, extent and nature of such rules and regulations and the impact on the company are uncertain; (6) the impact of revised capital requirements under Basel III; (7) significant changes in applicable laws and regulations, including those concerning taxes, banking and securities; (8) volatility in the municipal bond market; (9) changes in the level of nonperforming assets, charge-offs, other real estate owned and provision expense; (10) incorrect assumptions in the value of the loans acquired in FDIC-assisted acquisitions resulting in greater than anticipated losses in the acquired loan portfolios exceeding the losses covered by the loss-sharing agreements with the FDIC; (11) changes in inflation, interest rates, and market liquidity which may impact interest margins and impact funding sources; (12) the company's ability to attract new employees and retain and motivate existing employees; (13) increased competition in the company's markets and our ability to increase market share and control expenses; (14) changes in the financial performance and/or condition of the company's customers, or changes in the performance or creditworthiness of our customers' suppliers or other counterparties, which could lead to decreased loan utilization rates, delinquencies, or defaults and could negatively affect our customers' ability to meet certain credit obligations; (15) a substantial and permanent loss of either client accounts and/or assets under management at the company's investment advisory affiliates or its wealth management division; (16) soundness of other financial institutions which could adversely affect the company; (17) protracted labor disputes in the company's markets; (18) the impact of natural disasters, terrorist activities or international hostilities on the operations of our business or the value of collateral; (19) the effect of acquisitions and integration of acquired businesses and de novo branching efforts; (20) changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies; (21) the impact of cyber security attacks or other disruptions to the company's information systems and any resulting compromise of data or disruptions in service; and (22) the success of the company at managing the risks involved in the foregoing.

Forward-looking statements speak only as of the date they are made, and the company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the statements are made, or to update earnings guidance, including the factors that influence earnings.

For a more complete discussion of these risks and uncertainties, please refer to the company's Annual Report on Form 10-K for the year ended December 31, 2012.

1 For notes on non-GAAP measures, see pages 15 and 16 of the Selected Financial Information.

2 Estimated based on management's interpretation of final rules adopted July 2, 2013, by the Federal Reserve Board establishing a new comprehensive capital framework for U.S. banking organizations that would implement the Basel III capital framework and certain provisions of the Dodd-Frank Act. See page 15 of the Selected Financial Information.

Note: Certain prior period balances have been reclassified to conform to current period presentation.

CITY NATIONAL CORPORATION
FINANCIAL HIGHLIGHTS
(unaudited)
Three Months Nine Months
For The Period Ended September 30, 2013 2012 % Change 2013 2012 % Change
Per Common Share
Net income available to common shareholders
Basic $ 1.12 $ 1.10 2 $ 3.07 $ 2.98 3
Diluted 1.10 1.10 -- 3.04 2.97 2
Dividends 0.25 0.25 -- 0.50 0.75 (33)
Book value 44.85 43.81 2
Results of Operations: (In millions)
Interest income $ 228 $ 225 1 $ 661 $ 668 (1)
Interest expense 14 15 (7) 43 41 4
Net interest income 214 210 2 618 627 (1)
Net interest income (Fully taxable-equivalent) 220 215 2 635 642 (1)
Total revenue 303 317 (4) 883 885 (0)
Provision for credit losses on loans and leases, excluding covered loans -- 2 (100) -- 3 (100)
Provision for losses on covered loans 2 18 (86) 0 39 (99)
Net income attributable to City National Corporation 64 60 6 175 161 9
Net income available to common shareholders 61 60 2 168 161 4
Financial Ratios:
Performance Ratios:
Return on average assets 0.90% 0.93% 0.84% 0.87%
Return on average common equity 10.12 10.35 9.37 9.62
Return on average tangible common equity (1) 14.43 15.05 13.42 13.34
Period-end equity to period-end assets 8.91 8.88
Net interest margin 3.30 3.58 3.25 3.74
Expense to revenue ratio 66.37 61.96 68.89 64.06
Capital Adequacy Ratios (Period-end):
Tier 1 leverage 7.07 6.29
Tier 1 risk-based capital 9.69 9.15
Total risk-based capital 12.67 12.42
Asset Quality Ratios:
Allowance for loan and lease losses to:
Total loans and leases, excluding covered loans 1.79% 1.96%
Nonaccrual loans 425.20 259.38
Nonperforming assets, excluding covered assets, to:
Total loans and leases and other real estate owned, excluding covered assets 0.53 0.95
Total assets 0.30 0.50
Net recoveries (charge-offs) to average total loans and leases, excluding covered loans (annualized) 0.17% (0.06)% 0.17% 0.05%
Average Balances: (In millions)
Loans and leases, excluding covered loans $ 16,040 $ 13,588 18 $ 15,432 $ 13,051 18
Covered loans 819 1,207 (32) 906 1,328 (32)
Securities 8,576 8,631 (1) 9,075 8,107 12
Interest-earning assets 26,418 23,892 11 26,096 22,925 14
Assets 28,061 25,655 9 27,748 24,558 13
Core deposits 23,716 21,209 12 22,651 20,318 11
Deposits 24,302 21,941 11 23,284 21,039 11
Interest-bearing liabilities 10,480 10,088 4 10,815 10,029 8
Common shareholders' equity 2,401 2,297 5 2,392 2,234 7
Total shareholders' equity 2,571 2,297 12 2,562 2,234 15
Period-End Balances: (In millions)
Loans and leases, excluding covered loans $ 16,566 $ 13,725 21
Covered loans 780 1,144 (32)
Securities 8,596 9,111 (6)
Assets 29,059 26,252 11
Core deposits 24,685 21,828 13
Deposits 25,237 22,512 12
Common shareholders' equity 2,418 2,330 4
Total shareholders' equity 2,588 2,330 11
Wealth Management: (In millions) (2)
Assets under management $ 42,812 $ 38,620 11
Assets under management or administration 61,476 57,249 7
(1) Return on average tangible common equity is a non-GAAP measure. Refer to page 15 for further discussion of this non-GAAP measure.
(2) Excludes $26.3 billion and $19.8 billion of assets under management for asset managers in which City National held a noncontrolling ownership interest as of September 30, 2013 and September 30, 2012, respectively.
Note: Certain prior period balances in the Selected Financial Information have been reclassified to conform to current period presentation.
CITY NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(Dollars in thousands Three Months Ended
September 30,
Nine Months Ended
September 30,
except per share data) 2013 2012 % Change 2013 2012 % Change
Interest income $ 228,093 $ 224,768 1 $ 660,888 $ 668,249 (1)
Interest expense 13,822 14,846 (7) 42,625 41,135 4
Net interest income 214,271 209,922 2 618,263 627,114 (1)
Provision for credit losses on loans and leases,excluding covered loans -- 2,000 (100) -- 3,000 (100)
Provision for losses on covered loans 2,496 18,089 (86) 461 38,848 (99)
Noninterest income
Trust and investment fees 49,430 43,477 14 145,913 111,198 31
Brokerage and mutual fund fees 7,307 9,059 (19) 23,480 19,380 21
Cash management and deposit transaction fees 12,263 11,526 6 38,152 34,169 12
International services 10,932 9,819 11 31,462 28,621 10
FDIC loss sharing (expense) income, net (20,992) 1,667 (1,359) (51,821) (3,493) 1,384
Gain on disposal of assets 3,092 3,199 (3) 5,155 8,401 (39)
Gain on securities 5,644 817 591 12,298 809 1,420
Other 21,207 27,693 (23) 59,981 58,640 2
Total noninterest income 88,883 107,257 (17) 264,620 257,725 3
Noninterest expense
Salaries and employee benefits 129,049 120,210 7 384,412 355,490 8
Net occupancy of premises 16,074 16,238 (1) 48,268 43,980 10
Legal and professional fees 10,374 11,757 (12) 35,149 34,996 0
Information services 9,876 8,660 14 28,450 25,348 12
Depreciation and amortization 7,827 8,324 (6) 24,248 23,765 2
Amortization of intangibles 1,932 1,932 -- 5,795 5,336 9
Marketing and advertising 8,244 7,141 15 25,204 21,554 17
Office services and equipment 4,821 4,673 3 14,801 13,113 13
Other real estate owned 5,196 8,749 (41) 14,831 28,384 (48)
FDIC assessments 3,776 4,616 (18) 12,920 13,618 (5)
Other 12,195 15,586 (22) 38,055 37,538 1
Total noninterest expense 209,364 207,886 1 632,133 603,122 5
Income before taxes 91,294 89,204 2 250,289 239,869 4
Applicable income taxes 27,052 29,052 (7) 73,735 78,042 (6)
Net income $ 64,242 $ 60,152 7 $ 176,554 $ 161,827 9
Less: Net income attributable to noncontrolling interest 609 372 64 1,657 1,024 62
Net income attributable to City National Corporation $ 63,633 $ 59,780 6 $ 174,897 $ 160,803 9
Less: Dividends on preferred stock 2,407 -- NM 7,219 -- NM
Net income available to common shareholders $ 61,226 $ 59,780 2 $ 167,678 $ 160,803 4
Other Data:
Earnings per common share - basic $ 1.12 $ 1.10 2 $ 3.07 $ 2.98 3
Earnings per common share - diluted $ 1.10 $ 1.10 -- $ 3.04 $ 2.97 2
Dividends paid per common share $ 0.25 $ 0.25 -- $ 0.50 $ 0.75 (33)
Common dividend payout ratio 22.40% 22.63% (1) 16.34% 25.10% (35)
Return on average assets 0.90% 0.93% (3) 0.84% 0.87% (3)
Return on average common equity 10.12% 10.35% (2) 9.37% 9.62% (3)
Return on average tangible common equity 14.43% 15.05% (4) 13.42% 13.34% 1
Net interest margin (Fully taxable-equivalent) 3.30% 3.58% (8) 3.25% 3.74% (13)
Full-time equivalent employees 3,541 3,439 3
CITY NATIONAL CORPORATION
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
(unaudited)
2013
(Dollars in thousands
except per share data)
Third
Quarter
Second
Quarter
First
Quarter
Year to
Date
Interest income $ 228,093 $ 216,995 $ 215,800 $ 660,888
Interest expense 13,822 14,076 14,727 42,625
Net interest income 214,271 202,919 201,073 618,263
Provision for credit losses on loans and leases, excluding covered loans -- -- -- --
Provision for losses on covered loans 2,496 (11,927) 9,892 461
Noninterest income
Trust and investment fees 49,430 49,830 46,653 145,913
Brokerage and mutual fund fees 7,307 8,107 8,066 23,480
Cash management and deposit transaction fees 12,263 12,880 13,009 38,152
International services 10,932 10,911 9,619 31,462
FDIC loss sharing expense, net (20,992) (26,477) (4,352) (51,821)
Gain on disposal of assets 3,092 949 1,114 5,155
Gain on securities 5,644 5,608 1,046 12,298
Other 21,207 20,401 18,373 59,981
Total noninterest income 88,883 82,209 93,528 264,620
Noninterest expense
Salaries and employee benefits 129,049 127,168 128,195 384,412
Net occupancy of premises 16,074 16,205 15,989 48,268
Legal and professional fees 10,374 13,163 11,612 35,149
Information services 9,876 9,183 9,391 28,450
Depreciation and amortization 7,827 8,249 8,172 24,248
Amortization of intangibles 1,932 1,931 1,932 5,795
Marketing and advertising 8,244 8,644 8,316 25,204
Office services and equipment 4,821 5,034 4,946 14,801
Other real estate owned 5,196 4,385 5,250 14,831
FDIC assessments 3,776 3,663 5,481 12,920
Other 12,195 13,804 12,056 38,055
Total noninterest expense 209,364 211,429 211,340 632,133
Income before taxes 91,294 85,626 73,369 250,289
Applicable income taxes 27,052 25,422 21,261 73,735
Net income $ 64,242 $ 60,204 $ 52,108 $ 176,554
Less: Net income attributable to noncontrolling interest 609 463 585 1,657
Net income attributable to City National Corporation $ 63,633 $ 59,741 $ 51,523 $ 174,897
Less: Dividends on preferred stock 2,407 2,406 2,406 7,219
Net income available to common shareholders $ 61,226 $ 57,335 $ 49,117 $ 167,678
Other Data:
Earnings per common share - basic $ 1.12 $ 1.05 $ 0.90 $ 3.07
Earnings per common share - diluted $ 1.10 $ 1.04 $ 0.90 $ 3.04
Dividends paid per common share $ 0.25 $ 0.25 $ -- $ 0.50
Common dividend payout ratio 22.40% 23.81% --% 16.34%
Return on average assets 0.90% 0.87% 0.75% 0.84%
Return on average common equity 10.12% 9.53% 8.43% 9.37%
Return on average tangible common equity 14.43% 13.60% 12.17% 13.42%
Net interest margin (Fully taxable-equivalent) 3.30% 3.24% 3.21% 3.25%
Full-time equivalent employees 3,541 3,551 3,496
CITY NATIONAL CORPORATION
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
(unaudited)
2012
(Dollars in thousands
except per share data)
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Year to
Date
Interest income $ 218,302 $ 224,768 $ 229,889 $ 213,592 $ 886,551
Interest expense 14,580 14,846 13,410 12,879 55,715
Net interest income 203,722 209,922 216,479 200,713 830,836
Provision for credit losses on loans and leases, excluding covered loans 7,000 2,000 1,000 -- 10,000
Provision for losses on covered loans 6,498 18,089 13,293 7,466 45,346
Noninterest income
Trust and investment fees 44,026 43,477 34,067 33,654 155,224
Brokerage and mutual fund fees 8,424 9,059 5,293 5,028 27,804
Cash management and deposit transaction fees 11,480 11,526 11,475 11,168 45,649
International services 11,342 9,819 10,017 8,785 39,963
FDIC loss sharing (expense) income, net (2,524) 1,667 (6,026) 866 (6,017)
Gain on disposal of assets 2,892 3,199 3,011 2,191 11,293
Gain (loss) on securities 13 817 (457) 449 822
Other 24,225 27,693 17,388 13,559 82,865
Total noninterest income 99,878 107,257 74,768 75,700 357,603
Noninterest expense
Salaries and employee benefits 123,812 120,210 115,035 120,245 479,302
Net occupancy of premises 17,554 16,238 14,056 13,686 61,534
Legal and professional fees 17,844 11,757 11,359 11,880 52,840
Information services 8,896 8,660 8,539 8,149 34,244
Depreciation and amortization 8,720 8,324 8,013 7,428 32,485
Amortization of intangibles 1,932 1,932 1,518 1,886 7,268
Marketing and advertising 9,111 7,141 7,597 6,816 30,665
Office services and equipment 4,735 4,673 4,492 3,948 17,848
Other real estate owned 9,869 8,749 7,541 12,094 38,253
FDIC assessments 4,499 4,616 4,523 4,479 18,117
Other 15,044 15,586 11,843 10,109 52,582
Total noninterest expense 222,016 207,886 194,516 200,720 825,138
Income before taxes 68,086 89,204 82,438 68,227 307,955
Applicable income taxes 20,780 29,052 27,271 21,719 98,822
Net income $ 47,306 $ 60,152 $ 55,167 $ 46,508 $ 209,133
Less: Net income attributable to noncontrolling interest 60 372 409 243 1,084
Net income attributable to City National Corporation $ 47,246 $ 59,780 $ 54,758 $ 46,265 $ 208,049
Other Data:
Earnings per common share - basic $ 0.87 $ 1.10 $ 1.02 $ 0.86 $ 3.85
Earnings per common share - diluted $ 0.87 $ 1.10 $ 1.01 $ 0.86 $ 3.83
Dividends paid per common share $ 0.75 $ 0.25 $ 0.25 $ 0.25 $ 1.50
Common dividend payout ratio 86.16% 22.63% 24.57% 28.91% 38.96%
Return on average assets 0.69% 0.93% 0.90% 0.79% 0.82%
Return on average common equity 8.03% 10.35% 9.86% 8.58% 9.20%
Return on average tangible common equity 11.66% 15.05% 13.42% 11.57% 12.92%
Net interest margin (Fully taxable-equivalent) 3.27% 3.58% 3.91% 3.74% 3.61%
Full-time equivalent employees 3,472 3,439 3,330 3,235
CITY NATIONAL CORPORATION
CONSOLIDATED PERIOD END BALANCE SHEETS
(unaudited)
2013
(In thousands) Third
Quarter
Second
Quarter
First
Quarter
Assets
Cash and due from banks $ 301,106 $ 146,338 $ 144,290
Due from banks - interest-bearing 1,045,608 156,221 123,146
Federal funds sold and securities purchased under resale agreements 200,000 200,000 219,500
Securities available-for-sale 6,895,130 7,044,571 7,738,051
Securities held-to-maturity 1,649,520 1,503,973 1,400,890
Trading securities 51,451 48,655 53,526
Loans and leases:
Commercial 7,856,244 7,497,105 7,170,370
Commercial real estate mortgages 3,217,668 3,101,169 2,937,457
Residential mortgages 4,418,231 4,153,051 4,027,741
Real estate construction 240,004 217,808 247,114
Home equity loans and lines of credit 681,879 700,681 696,679
Installment 152,107 149,438 137,545
Loans and leases, excluding covered loans 16,566,133 15,819,252 15,216,906
Allowance for loan and lease losses (295,947) (289,914) (282,328)
Loans and leases, excluding covered loans, net 16,270,186 15,529,338 14,934,578
Covered loans, net (1) 754,190 843,582 909,563
Net loans and leases 17,024,376 16,372,920 15,844,141
Premises and equipment, net 168,600 162,535 152,389
Goodwill and other intangibles 684,965 686,897 688,829
Other real estate owned (2) 48,723 61,477 63,537
FDIC indemnification asset 101,124 117,295 142,906
Other assets 888,801 878,620 862,549
Total assets $ 29,059,404 $ 27,379,502 $ 27,433,754
Liabilities
Deposits:
Noninterest-bearing $ 15,205,973 $ 14,288,001 $ 13,800,017
Interest-bearing 10,030,896 9,363,756 9,137,569
Total deposits 25,236,869 23,651,757 22,937,586
Short-term borrowings 2,588 2,675 806,760
Long-term debt 719,326 706,537 702,967
Other liabilities 472,893 433,822 388,439
Total liabilities 26,431,676 24,794,791 24,835,752
Redeemable noncontrolling interest 39,840 39,943 41,113
Shareholders' equity
Preferred stock 169,920 169,920 169,920
Common stock 54,400 54,274 54,133
Additional paid-in capital 519,760 507,560 496,013
Accumulated other comprehensive income (10,355) 6,585 74,222
Retained earnings 1,879,240 1,831,725 1,788,041
Treasury shares (25,077) (25,296) (25,440)
Total common shareholders' equity 2,417,968 2,374,848 2,386,969
Total shareholders' equity 2,587,888 2,544,768 2,556,889
Total liabilities and shareholders' equity $ 29,059,404 $ 27,379,502 $ 27,433,754
(1) Covered loans are net of $25.9 million, $24.4 million and $42.4 million of allowance for loan losses as of September 30, 2013, June 30, 2013 and March 31, 2013, respectively.
(2) Other real estate owned includes $29.8 million, $41.8 million and $43.8 million covered by FDIC loss share at September 30, 2013,
June 30, 2013 and March 31, 2013, respectively.
CITY NATIONAL CORPORATION
CONSOLIDATED PERIOD END BALANCE SHEETS
(unaudited)
2012
Fourth Third Second First
(In thousands) Quarter Quarter Quarter Quarter
Assets
Cash and due from banks $ 151,969 $ 235,038 $ 162,894 $ 210,799
Due from banks - interest-bearing 246,336 335,300 106,109 101,375
Federal funds sold 17,100 19,500 162,000 156,000
Securities available-for-sale 9,205,989 7,872,064 6,865,881 6,838,710
Securities held-to-maturity 1,398,403 1,174,161 1,100,229 996,613
Trading securities 115,059 64,749 62,585 82,589
Loans and leases:
Commercial 6,949,073 6,264,562 6,086,947 5,573,782
Commercial real estate mortgages 2,829,694 2,463,664 2,424,333 2,213,114
Residential mortgages 3,962,205 3,897,690 3,822,630 3,805,807
Real estate construction 222,780 242,137 301,829 313,409
Home equity loans and lines of credit 711,750 718,966 741,270 715,997
Installment 142,793 137,632 130,200 125,793
Loans and leases, excluding covered loans 14,818,295 13,724,651 13,507,209 12,747,902
Allowance for loan and lease losses (277,888) (268,440) (269,534) (266,077)
Loans and leases, excluding covered loans, net 14,540,407 13,456,211 13,237,675 12,481,825
Covered loans, net (1) 986,223 1,099,359 1,216,988 1,335,685
Net loans and leases 15,526,630 14,555,570 14,454,663 13,817,510
Premises and equipment, net 149,433 147,621 147,245 143,238
Goodwill and other intangibles 690,761 691,765 589,114 521,717
Other real estate owned (2) 79,303 110,673 117,501 107,530
FDIC indemnification asset 150,018 160,991 170,654 185,392
Other assets 887,491 884,096 863,098 877,016
Total assets $ 28,618,492 $ 26,251,528 $ 24,801,973 $ 24,038,489
Liabilities
Deposits:
Noninterest-bearing $ 14,264,797 $ 13,432,413 $ 12,187,075 $ 11,550,000
Interest-bearing 9,237,558 9,079,903 8,921,977 9,237,737
Total deposits 23,502,355 22,512,316 21,109,052 20,787,737
Short-term borrowings 1,423,798 211,739 322,077 222,776
Long-term debt 706,051 706,035 712,280 482,024
Other liabilities 439,858 449,728 361,300 302,951
Total liabilities 26,072,062 23,879,818 22,504,709 21,795,488
Redeemable noncontrolling interest 41,112 41,386 41,899 43,436
Shareholders' equity
Preferred stock 169,920 -- -- --
Common stock 53,886 53,886 53,886 53,886
Additional paid-in capital 490,339 485,975 491,439 489,717
Accumulated other comprehensive income 86,582 93,924 82,807 81,342
Retained earnings 1,738,957 1,732,417 1,686,163 1,644,861
Treasury shares (34,366) (35,878) (58,930) (70,241)
Total common shareholders' equity 2,335,398 2,330,324 2,255,365 2,199,565
Total shareholders' equity 2,505,318 2,330,324 2,255,365 2,199,565
Total liabilities and shareholders' equity $ 28,618,492 $ 26,251,528 $ 24,801,973 $ 24,038,489
(1) Covered loans are net of $44.8 million, $45.0 million, $43.1 million and $61.5 million of allowance for loan losses as of December 31, 2012, September 30, 2012, June 30, 2012 and March 31, 2012, respectively.
(2) Other real estate owned includes $58.3 million, $83.6 million, $82.8 million and $78.5 million covered by FDIC loss share at
December 31, 2012, September 30, 2012, June 30, 2012 and March 31, 2012, respectively.
CITY NATIONAL CORPORATION
CREDIT LOSS EXPERIENCE
(unaudited)
2013 2012
Third Second First Year To Fourth Third Second First Year To
(Dollars in thousands) Quarter Quarter Quarter Date Quarter Quarter Quarter Quarter Date
Allowance for Loan and Lease Losses, Excluding Covered Loans
Balance at beginning of period $ 289,914 $ 282,328 $ 277,888 $ 277,888 $ 268,440 $ 269,534 $ 266,077 $ 262,557 $ 262,557
Net recoveries/(charge-offs):
Commercial 4,375 2,855 2,173 9,403 2,002 (4,936) 8,092 5,283 10,441
Commercial real estate mortgages (584) 1,034 3 453 (290) (241) 1,113 (666) (84)
Residential mortgages 40 37 (68) 9 (7) (535) (543) (494) (1,579)
Real estate construction 2,945 2,682 2,666 8,293 170 3,105 (4,839) 104 (1,460)
Home equity loans and lines of credit (194) 375 (112) 69 (169) (32) (808) (154) (1,163)
Installment 200 522 146 868 319 454 (274) 417 916
Total net recoveries/(charge-offs) 6,782 7,505 4,808 19,095 2,025 (2,185) 2,741 4,490 7,071
Provision for credit losses -- -- -- -- 7,000 2,000 1,000 -- 10,000
Transfers (to) from reserve for off-balance sheet credit commitments (749) 81 (368) (1,036) 423 (909) (284) (970) (1,740)
Balance at end of period $ 295,947 $ 289,914 $ 282,328 $ 295,947 277,888 $ 268,440 $ 269,534 $ 266,077 $ 277,888
Net Recoveries/(Charge-offs) to Average Total Loans and Leases, Excluding Covered Loans (annualized):
Commercial 0.23% 0.16% 0.13% 0.17% 0.12% (0.32)% 0.56% 0.40% 0.18%
Commercial real estate mortgages (0.07)% 0.14% 0.00% 0.02% (0.04)% (0.04)% 0.20% (0.12)% (0.00)%
Residential mortgages 0.00% 0.00% (0.01)% 0.00% (0.00)% (0.06)% (0.06)% (0.05)% (0.04)%
Real estate construction 5.31% 4.51% 4.60% 4.80% 0.29% 4.65% (6.26)% 0.13% (0.52)%
Home equity loans and lines of credit (0.11)% 0.21% (0.06)% 0.01% (0.09)% (0.02)% (0.44)% (0.09)% (0.16)%
Installment 0.54% 1.44% 0.42% 0.80% 0.91% 1.34% (0.85)% 1.30% 0.69%
Total loans and leases, excluding covered loans 0.17% 0.20% 0.13% 0.17% 0.06% (0.06)% 0.08% 0.15% 0.05%
Reserve for Off-Balance Sheet Credit Commitments
Balance at beginning of period $ 25,124 $ 25,205 $ 24,837 $ 24,837 $ 25,260 $ 24,351 $ 24,067 $ 23,097 $ 23,097
Transfers from (to) allowance 749 (81) 368 1,036 (423) 909 284 970 1,740
Balance at end of period $ 25,873 $ 25,124 $ 25,205 $ 25,873 $ 24,837 $ 25,260 $ 24,351 $ 24,067 $ 24,837
Allowance for Losses on Covered Loans
Balance at beginning of period $ 24,414 $ 42,354 $ 44,781 $ 44,781 $ 44,978 $ 43,147 $ 61,471 $ 64,565 $ 64,565
Provision for losses 2,496 (11,927) 9,892 461 6,498 18,089 13,293 7,466 45,346
Reduction in allowance due to loan removals (1,028) (6,013) (12,319) (19,360) (6,695) (16,258) (31,617) (10,560) (65,130)
Balance at end of period $ 25,882 $ 24,414 $ 42,354 $ 25,882 $ 44,781 $ 44,978 $ 43,147 $ 61,471 $ 44,781
CITY NATIONAL CORPORATION
NONPERFORMING ASSETS
(unaudited)
2013 2012
Third Second First Fourth Third Second First
(Dollars in thousands) Quarter Quarter Quarter Quarter Quarter Quarter Quarter
Nonperforming assets, excluding covered assets
Nonaccrual loans, excluding covered loans
Commercial $ 10,127 $ 11,679 $ 7,292 $ 9,207 $ 18,848 $ 19,056 $ 19,584
Commercial real estate mortgages 19,020 22,433 23,066 33,198 36,580 28,780 21,071
Residential mortgages 9,674 10,580 9,136 9,603 11,680 14,064 13,628
Real estate construction 25,471 25,718 39,608 40,882 28,963 29,676 48,964
Home equity loans and lines of credit 5,289 6,239 4,103 6,424 6,946 6,505 8,831
Installment 21 24 70 473 477 575 729
Total nonaccrual loans, excluding covered loans 69,602 76,673 83,275 99,787 103,494 98,656 112,807
Other real estate owned, excluding covered OREO 18,905 19,676 19,786 21,027 27,055 34,667 29,074
Total nonperforming assets, excluding covered assets $ 88,507 $ 96,349 $ 103,061 $ 120,814 $ 130,549 $ 133,323 $ 141,881
Nonperforming covered assets
Nonaccrual loans $ -- $ -- $ -- $ -- $ -- $ 422 $ 422
Other real estate owned 29,818 41,801 43,751 58,276 83,618 82,834 78,456
Total nonperforming covered assets $ 29,818 $ 41,801 $ 43,751 $ 58,276 $ 83,618 $ 83,256 $ 78,878
Loans 90 days or more past due on
accrual status, excluding covered loans $ 383 $ 643 $ 1,688 $ 981 $ 433 $ 2,065 $ 654
Covered loans 90 days or more past due
on accrual status $ 63,071 $ 89,439 $ 102,268 $ 112,396 $ 140,041 $ 190,005 $ 265,175
Allowance for loan and lease losses as a percentage of:
Nonaccrual loans 425.20% 378.12% 339.03% 278.48% 259.38% 273.21% 235.87%
Total nonperforming assets,
excluding covered assets 334.38% 300.90% 273.94% 230.01% 205.62% 202.17% 187.54%
Total loans and leases,
excluding covered loans 1.79% 1.83% 1.86% 1.88% 1.96% 2.00% 2.09%
Nonaccrual loans as a percentage of total loans,
excluding covered loans 0.42% 0.48% 0.55% 0.67% 0.75% 0.73% 0.88%
Nonperforming assets, excluding covered assets, as a percentage of:
Total loans and other real estate owned,
excluding covered assets 0.53% 0.61% 0.68% 0.81% 0.95% 0.98% 1.11%
Total assets 0.30% 0.35% 0.38% 0.42% 0.50% 0.54% 0.59%
CITY NATIONAL CORPORATION
AVERAGE BALANCES AND RATES
(unaudited)
2013
Third Quarter Second Quarter First Quarter Year to Date
Average Average Average Average Average Average Average Average
(Dollars in millions) Balance Rate Balance Rate Balance Rate Balance Rate
Assets
Interest-earning assets
Loans and leases
Commercial $ 7,540 3.53% $ 7,301 3.58% $ 6,876 3.71% $ 7,241 3.60%
Commercial real estate mortgages 3,193 3.74 2,962 4.01 2,865 4.00 3,008 3.91
Residential mortgages 4,254 3.61 4,083 3.72 3,981 3.83 4,107 3.71
Real estate construction 220 4.53 239 4.25 235 4.64 231 4.47
Home equity loans and lines of credit 684 3.56 704 3.60 712 3.68 700 3.61
Installment 149 4.30 145 4.69 140 4.22 145 4.41
Total loans and leases,
excluding covered loans 16,040 3.61 15,434 3.72 14,809 3.83 15,432 3.72
Covered loans 819 20.53 910 14.34 990 12.98 906 15.72
Total loans and leases 16,859 4.42 16,344 4.32 15,799 4.42 16,338 4.38
Due from banks - interest-bearing 611 0.26 236 0.27 193 0.24 348 0.26
Federal funds sold and securities
purchased under resale agreements 283 2.19 277 2.25 154 2.99 238 2.39
Securities 8,576 1.99 8,867 1.98 9,796 1.91 9,075 1.96
Other interest-earning assets 89 5.51 96 4.48 105 3.72 97 4.53
Total interest-earning assets 26,418 3.51 25,820 3.46 26,047 3.44 26,096 3.47
Allowance for loan and lease losses (319) (325) (328) (324)
Cash and due from banks 138 129 129 132
Other non-earning assets 1,824 1,846 1,861 1,844
Total assets $ 28,061 $ 27,470 $ 27,709 $ 27,748
Liabilities and Equity
Interest-bearing deposits
Interest checking accounts $ 2,289 0.07% $ 2,173 0.07% $ 2,217 0.08% $ 2,227 0.07%
Money market accounts 6,286 0.11 5,759 0.11 5,692 0.11 5,914 0.11
Savings deposits 420 0.09 415 0.10 419 0.11 418 0.10
Time deposits - under $100,000 185 0.29 192 0.37 201 0.37 192 0.34
Time deposits -- $100,000 and over 586 0.39 708 0.38 604 0.42 633 0.40
Total interest-bearing deposits 9,766 0.12 9,247 0.13 9,133 0.13 9,384 0.13
Federal funds purchased and securities
sold under repurchase agreements 2 0.08 374 0.13 840 0.13 403 0.13
Other borrowings 712 6.07 928 4.74 1,452 3.21 1,028 4.34
Total interest-bearing liabilities 10,480 0.52 10,549 0.54 11,425 0.52 10,815 0.53
Noninterest-bearing deposits 14,536 13,872 13,278 13,900
Other liabilities 474 466 473 471
Total equity 2,571 2,582 2,533 2,562
Total liabilities and equity $ 28,061 $ 27,470 $ 27,709 $ 27,748
Net interest spread 2.99% 2.92% 2.92% 2.94%
Net interest margin 3.30% 3.24% 3.21% 3.25%
Average prime rate 3.25% 3.25% 3.25% 3.25%
CITY NATIONAL CORPORATION
AVERAGE BALANCES AND RATES
(unaudited)
2012
Fourth Quarter Third Quarter Second Quarter First Quarter Year to Date
Average Average Average Average Average Average Average Average Average Average
(Dollars in millions) Balance Rate Balance Rate Balance Rate Balance Rate Balance Rate
Assets
Interest-earning assets
Loans and leases
Commercial $ 6,395 3.89% $ 6,128 3.97% $ 5,845 4.16% $ 5,319 3.94% $ 5,923 3.99%
Commercial real estate mortgages 2,574 4.34 2,464 4.45 2,295 4.70 2,166 4.87 2,376 4.57
Residential mortgages 3,928 3.95 3,865 4.11 3,815 4.28 3,777 4.36 3,847 4.17
Real estate construction 236 5.33 265 5.67 311 4.31 314 5.33 281 5.13
Home equity loans and lines of credit 711 3.52 731 3.52 731 3.53 727 3.58 725 3.54
Installment 140 4.48 135 4.51 129 4.60 129 4.67 133 4.56
Total loans and leases, excluding covered loans 13,984 4.00 13,588 4.10 13,126 4.27 12,432 4.26 13,285 4.15
Covered loans 1,090 13.09 1,207 13.92 1,341 14.51 1,439 10.63 1,269 12.97
Total loans and leases 15,074 4.65 14,795 4.90 14,467 5.22 13,871 4.93 14,554 4.92
Due from banks - interest-bearing 441 0.26 247 0.26 293 0.24 167 0.22 287 0.25
Federal funds sold and securities purchased under resale agreements 191 0.29 105 0.28 137 0.28 15 0.28 112 0.28
Securities 9,653 1.91 8,631 2.16 7,755 2.37 7,929 2.40 8,496 2.19
Other interest-earning assets 109 3.75 114 2.40 117 2.39 121 2.30 115 2.69
Total interest-earning assets 25,468 3.49 23,892 3.82 22,769 4.15 22,103 3.97 23,564 3.85
Allowance for loan and lease losses (317) (319) (331) (335) (326)
Cash and due from banks 231 184 148 141 176
Other non-earning assets 1,874 1,898 1,777 1,736 1,822
Total assets $ 27,256 $ 25,655 $ 24,363 $ 23,645 $ 25,236
Liabilities and Equity
Interest-bearing deposits
Interest checking accounts $ 2,098 0.08% $ 1,981 0.09% $ 1,890 0.10% $ 1,952 0.11% $ 1,981 0.10%
Money market accounts 5,907 0.11 5,838 0.11 5,856 0.13 6,018 0.15 5,904 0.13
Savings deposits 384 0.12 371 0.14 360 0.14 358 0.14 368 0.14
Time deposits - under $100,000 210 0.41 220 0.51 228 0.50 242 0.49 225 0.48
Time deposits -- $100,000 and over 605 0.44 732 0.41 733 0.45 697 0.51 692 0.45
Total interest-bearing deposits 9,204 0.14 9,142 0.14 9,067 0.16 9,267 0.18 9,170 0.15
Federal funds purchased and securities sold under repurchase agreements 15 0.12 24 0.15 4 0.11 166 0.08 52 0.09
Other borrowings 917 4.97 922 4.97 797 4.97 697 5.09 834 4.99
Total interest-bearing liabilities 10,136 0.57 10,088 0.59 9,868 0.55 10,130 0.51 10,056 0.55
Noninterest-bearing deposits 14,182 12,799 11,881 10,950 12,459
Other liabilities 506 471 380 396 438
Total equity 2,432 2,297 2,234 2,169 2,283
Total liabilities and equity $ 27,256 $ 25,655 $ 24,363 $ 23,645 $ 25,236
Net interest spread 2.92% 3.23% 3.60% 3.46% 3.30%
Net interest margin 3.27% 3.58% 3.91% 3.74% 3.61%
Average prime rate 3.25% 3.25% 3.25% 3.25% 3.25%
CITY NATIONAL CORPORATION
CAPITAL AND CREDIT RATING DATA
(unaudited)
2013 2012
Third Second First Year To Fourth Third Second First Year To
Quarter Quarter Quarter Date Quarter Quarter Quarter Quarter Date
Per Common Share:
Shares outstanding (in thousands):
Average - Basic 54,274 54,105 53,731 54,039 53,566 53,425 53,105 52,741 53,211
Average - Diluted 54,820 54,477 54,068 54,464 53,743 53,711 53,373 53,021 53,475
Period-end 53,915 53,781 53,638 53,216 53,190 52,822 52,661
Book value for shareholders $ 44.85 $ 44.16 $ 44.50 $ 43.89 $ 43.81 $ 42.70 $ 41.77
Closing price:
High $ 71.15 $ 63.66 $ 59.61 $ 71.15 $ 52.60 $ 54.48 $ 54.63 $ 54.44 $ 54.63
Low 64.11 54.36 51.13 51.13 47.27 48.20 46.39 45.39 45.39
Period-end 66.66 63.37 58.91 49.52 51.51 48.58 52.47
Capital Ratios (Dollars in millions):
Risk-based capital
Risk-weighted assets (1) $ 19,977 $ 19,256 $ 18,872 $ 18,627 $ 17,174 $ 16,723 $ 15,840
Tier 1 common equity $ 1,761 $ 1,700 $ 1,643 $ 1,578 $ 1,566 $ 1,597 $ 1,611
Percentage of risk-weighted assets (2) 8.82% 8.83% 8.71% 8.47% 9.12% 9.55% 10.17%
Tier 1 capital $ 1,936 $ 1,875 $ 1,818 $ 1,753 $ 1,571 $ 1,602 $ 1,616
Percentage of risk-weighted assets 9.69% 9.74% 9.64% 9.41% 9.15% 9.58% 10.20%
Total capital $ 2,532 $ 2,461 $ 2,399 $ 2,332 $ 2,133 $ 2,160 $ 2,013
Percentage of risk-weighted assets 12.67% 12.78% 12.71% 12.52% 12.42% 12.91% 12.71%
Tier 1 leverage ratio 7.07% 7.00% 6.72% 6.60% 6.29% 6.74% 6.98%
Period-end equity to period-end assets 8.91% 9.29% 9.32% 8.75% 8.88% 9.09% 9.15%
Period-end common equity to period-end assets 8.32% 8.67% 8.70% 8.16% 8.88% 9.09% 9.15%
Average equity to average assets 9.16% 9.40% 9.14% 9.23% 8.92% 8.95% 9.17% 9.17% 9.05%
Average common equity to average assets 8.55% 8.78% 8.53% 8.62% 8.59% 8.95% 9.17% 9.17% 8.96%
Period-end tangible equity to period-end tangible assets (2) 6.71% 6.96% 6.98% 6.50% 6.41% 6.88% 7.13%
Period-end tangible common equity to period-end tangible assets (2) 6.11% 6.32% 6.35% 5.89% 6.41% 6.88% 7.13%
Average tangible equity to average tangible assets (2) 6.88% 7.07% 6.82% 6.93% 6.55% 6.45% 7.01% 7.12% 6.77%
Average tangible common equity to average tangible assets (2) 6.26% 6.44% 6.19% 6.30% 6.21% 6.45% 7.01% 7.12% 6.68%
Senior Debt Credit Ratings
For The Period Ended September 30, 2013
Moody's Fitch Standard &
Poor's
DBRS
City National Bank A1 A- A- A (high)
City National Corporation A2 A- BBB+ A
(1) In accordance with applicable bank regulatory guidelines, risk-weighted assets are calculated by assigning assets and credit equivalent amounts of derivatives and off-balance sheet items to one of several broad risk categories according to the obligor, or, if relevant, the guarantor or the nature of the collateral. The aggregate dollar amount in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are added together for determining risk-weighted assets.
(2) The Tier 1 common equity to risk-weighted assets ratio, tangible equity to tangible assets ratio, and tangible common equity to tangible assets ratio are non-GAAP financial measures. See pages 15 and 16 for notes on non-GAAP measures.
CITY NATIONAL CORPORATION
COMPUTATION OF BASIC AND DILUTED EARNINGS PER COMMON SHARE
(unaudited)
City National applies the two-class method of computing basic and diluted earnings per common share ("EPS"). Under the two-class method, EPS is determined for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. The company grants restricted stock and restricted stock units under a share-based compensation plan that qualify as participating securities. The computation of basic and diluted EPS is presented in the following table:
2013 2012 2012
Third Second First Year to Fourth Third Second First Full Year to
(Dollars in thousands, except per share amounts) Quarter Quarter Quarter Date Quarter Quarter Quarter Quarter Year Date*
Basic EPS:
Net income attributable to City National Corporation $ 63,633 $ 59,741 $ 51,523 $ 174,897 $ 47,246 $ 59,780 $ 54,758 $ 46,265 $ 208,049 $ 160,803
Less: Dividends on preferred stock 2,407 2,406 2,406 7,219 -- -- -- -- -- --
Net income available to common shareholders $ 61,226 $ 57,335 $ 49,117 $ 167,678 $ 47,246 $ 59,780 $ 54,758 $ 46,265 $ 208,049 $ 160,803
Less: Earnings allocated to participating securities 688 656 637 1,975 652 842 788 738 3,008 2,380
Earnings allocated to common shareholders $ 60,538 $ 56,679 $ 48,480 $ 165,703 $ 46,594 $ 58,938 $ 53,970 $ 45,527 $ 205,041 $ 158,423
Weighted average shares outstanding 54,274 54,105 53,731 54,039 53,566 53,425 53,105 52,741 53,211 53,092
Basic earnings per common share $ 1.12 $ 1.05 $ 0.90 $ 3.07 $ 0.87 $ 1.10 $ 1.02 $ 0.86 $ 3.85 $ 2.98
Diluted EPS:
Earnings allocated to shareholders (1) $ 60,543 $ 56,682 $ 48,484 $ 165,716 $ 46,594 $ 58,941 $ 53,972 $ 45,530 $ 205,050 $ 158,432
Weighted average shares outstanding 54,274 54,105 53,731 54,039 53,566 53,425 53,105 52,741 53,211 53,092
Dilutive effect of equity awards 546 372 337 425 177 286 268 280 264 284
Weighted average diluted shares outstanding 54,820 54,477 54,068 54,464 53,743 53,711 53,373 53,021 53,475 53,376
Diluted earnings per common share $ 1.10 $ 1.04 $ 0.90 $ 3.04 $ 0.87 $ 1.10 $ 1.01 $ 0.86 $ 3.83 $ 2.97
* For the nine months ended September 30, 2012.
(1) Earnings allocated to shareholders for basic and diluted EPS may differ under the two-class method as a result of adding common stock equivalents for options to dilutive shares outstanding, which alters the ratio used to allocate earnings to shareholders and participating securities for the purposes of calculating diluted EPS.
CITY NATIONAL CORPORATION
SELECTED FINANCIAL INFORMATION ON COVERED ASSETS
(unaudited)
The following table provides selected components of income and expense related to covered assets:
2013 2012
Third Second Third
(In thousands) Quarter Quarter Quarter
Summary Totals
Net impairment (expense) income (Sum of A) $ (483) $ (1,463) $ 2,639
Other covered asset income (expense), net 3,190 (520) (837)
Total income (expense), net $ 2,707 $ (1,983) $ 1,802
Interest income (1)
Income on loans paid-off or fully charged-off $ 25,849 $ 15,880 $ 22,164
Provision for losses on covered loans
Provision for losses on covered loans A 2,496 (11,927) 18,089
Noninterest income related to covered assets
FDIC loss sharing (expense) income, net
Gain (loss) on indemnification asset A $ 2,239 $ (13,102) $ 21,426
Indemnification asset amortization (4,417) (4,746) (4,258)
Net FDIC reimbursement for OREO and loan expenses 4,582 4,995 7,612
Removal of indemnification asset for loans paid-off or fully charged-off (9,746) (7,650) (9,731)
Removal of indemnification asset for unfunded loan commitments and loans transferred to OREO (1,550) (1,163) (2,834)
Removal of indemnification asset for OREO and net reimbursement to FDIC for OREO sales (2,451) (428) (1,219)
Loan recoveries shared with FDIC (9,423) (4,095) (8,631)
Increase in FDIC clawback liability A (226) (288) (698)
Total FDIC loss sharing (expense) income, net (20,992) (26,477) 1,667
Gain on disposal of assets
Net gain on sale of OREO 3,064 616 1,524
Other income
Net gain on transfers of covered loans to OREO 1,936 1,445 4,907
Amortization of fair value on acquired unfunded loan
commitments 48 283 192
OREO income 731 456 428
Other 711 (318) (632)
Total other income 3,426 1,866 4,895
Total noninterest income related to covered assets $ (14,502) $ (23,995) $ 8,086
Noninterest expense related to covered assets (2)
Other real estate owned
Valuation write-downs $ 1,556 $ 2,184 $ 4,267
Holding costs and foreclosure expense 3,607 1,894 3,522
Total other real estate owned 5,163 4,078 7,789
Legal and professional fees 969 1,701 2,541
Other operating expense
Other covered asset expenses 12 16 29
Total noninterest expense related to covered assets (3) $ 6,144 $ 5,795 $ 10,359
Total income (expense), net $ 2,707 $ (1,983) $ 1,802
(1) Excludes base yield in interest income related to covered loans.
(2) OREO, legal and professional fees, and other expenses related to covered assets must meet certain FDIC criteria in order for the expense amounts to be reimbursed. Certain amounts reflected in these categories may not be reimbursed by the FDIC.
(3) Excludes personnel and other corporate overhead expenses that the company incurs to service covered assets and costs associated with the branches acquired in FDIC-assisted acquisitions.
CITY NATIONAL CORPORATION
NON-GAAP FINANCIAL MEASURES
(unaudited)
(a) Noninterest expense, excluding the operating expenses of First American Equipment Finance and Rochdale Investment Management
Noninterest expense for the nine months ended September 30, 2013 was $632.1 million, an increase of 5 percent from $603.1 million for the same period last year. Excluding the operating expenses of First American Equipment Finance (acquired at the end of April 2012) and Rochdale Investment Management (acquired in July 2012), noninterest expense was $585.4 million for the nine months ended September 30, 2013, slightly down from $587.6 million for the nine months ended September 30, 2012. Management believes this non-GAAP financial measure enhances the comparability of the financial results with prior periods.
(b) Return on average tangible common equity ratio (annualized)
Return on average tangible common equity is a non-GAAP financial measure that represents the return on average common equity excluding goodwill and other intangible assets and their related amortization expense. Management reviews this measure in evaluating the company's performance and believes that investors may find it useful to evaluate the return on average common equity without the impact of goodwill and other intangible assets. A reconciliation of the GAAP to non-GAAP measure is set forth below:
2013 2012 2012
Third Second First Year to Fourth Third Second First Full Year to
(Dollars in thousands) Quarter Quarter Quarter Date Quarter Quarter Quarter Quarter Year Date*
Net income available to common shareholders $ 61,226 $ 57,335 $ 49,117 $ 167,678 $ 47,246 $ 59,780 $ 54,758 $ 46,265 $ 208,049 $ 160,803
Add: Amortization of intangibles, net of tax 1,124 1,123 1,124 3,371 1,124 1,124 883 1,097 4,228 3,104
Tangible net income available to common shareholders (A) $ 62,350 $ 58,458 $ 50,241 $ 171,049 $ 48,370 $ 60,904 $ 55,641 $ 47,362 $ 212,277 $ 163,907
Average common equity $ 2,400,624 $ 2,412,148 $ 2,363,507 $ 2,392,229 $ 2,341,763 $ 2,296,754 $ 2,234,411 $ 2,168,748 $ 2,260,740 $ 2,233,536
Less: Goodwill and other intangibles (686,091) (687,997) (689,932) (687,993) (690,975) (687,224) (566,989) (522,182) (617,237) (592,479)
Tangible common equity (B) $ 1,714,533 $ 1,724,151 $ 1,673,575 $ 1,704,236 $ 1,650,788 $ 1,609,530 $ 1,667,422 $ 1,646,566 $ 1,643,503 $ 1,641,057
Return on average tangible common equity (A)/(B) 14.43% 13.60% 12.17% 13.42% 11.66% 15.05% 13.42% 11.57% 12.92% 13.34%
* For the nine months ended September 30, 2012.
(c ) Tier 1 common equity to risk-weighted assets
Tier 1 common equity to risk-weighted assets ratio, also known as Tier 1 common ratio, is calculated by dividing (a) Tier 1 capital less non-common components including qualifying perpetual preferred stock, qualifying noncontrolling interest in subsidiaries and qualifying trust preferred securities by (b) risk-weighted assets. Tier 1 capital and risk-weighted assets are calculated in accordance with applicable bank regulatory guidelines. This ratio is a non-GAAP measure that is used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews this measure in evaluating the company's capital levels and has included this ratio in response to market participants' interest in the Tier 1 common equity to risk-weighted assets ratio.
2013 2012
Third Second First Fourth Third Second First
(Dollars in thousands) Quarter Quarter Quarter Quarter Quarter Quarter Quarter
Tier 1 capital $ 1,936,191 $ 1,874,999 $ 1,818,367 $ 1,753,312 $ 1,570,778 $ 1,602,398 $ 1,616,099
Less: Preferred stock (169,920) (169,920) (169,920) (169,920) -- -- --
Less: Trust preferred securities (5,155) (5,155) (5,155) (5,155) (5,155) (5,155) (5,155)
Tier 1 common equity (A) $ 1,761,116 $ 1,699,924 $ 1,643,292 $ 1,578,237 $ 1,565,623 $ 1,597,243 $ 1,610,944
Risk-weighted assets (B) $19,977,106 $19,255,862 $18,872,451 $18,627,165 $17,174,382 $16,722,999 $15,839,944
Tier 1 common equity to risk-weighted assets (A)/(B) 8.82% 8.83% 8.71% 8.47% 9.12% 9.55% 10.17%
Under Basel III capital rules, the Company's estimated Tier 1 common equity ratio was 8.6 percent at September 30, 2013. This ratio was estimated based on management's interpretation of final rules adopted July 2, 2013, by the Federal Reserve Board establishing a new comprehensive capital framework for U.S. banking organizations that would implement the Basel III capital framework and certain provisions of the Dodd-Frank Act. Under management's interpretation of Basel III, estimated Tier 1 common equity was $1.8 billion and estimated risk-weighted assets were $20.7 billion.
CITY NATIONAL CORPORATION
NON-GAAP FINANCIAL MEASURES (continued)
(unaudited)
(d) Tangible equity and tangible common equity ratios
Tangible equity to tangible assets is a non-GAAP financial measure that represents total equity less identifiable intangible assets and goodwill divided by total assets less identifiable intangible assets and goodwill. Tangible common equity to tangible assets is a non-GAAP financial measure that represents tangible equity less preferred stock divided by total assets less identifiable intangible assets and goodwill. Management reviews both these measures in evaluating the company's capital levels and has included these ratios in response to market participant interest in tangible equity and tangible common equity as a measure of capital. A reconciliation of the GAAP to non-GAAP measure is set forth below:
2013 2012
Third Second First Year to Fourth Third Second First Year to
(Dollars in thousands) Quarter Quarter Quarter Date Quarter Quarter Quarter Quarter Date
Period End:
Total equity $ 2,587,888 $ 2,544,768 $ 2,556,889 $ 2,505,318 $ 2,330,324 $ 2,255,365 $ 2,199,565
Less: Goodwill and other intangibles (684,965) (686,897) (688,829) (690,761) (691,765) (589,114) (521,717)
Tangible equity (A) 1,902,923 1,857,871 1,868,060 1,814,557 1,638,559 1,666,251 1,677,848
Less: Preferred stock (169,920) (169,920) (169,920) (169,920) -- -- --
Tangible common equity (B) $ 1,733,003 $ 1,687,951 $ 1,698,140 $ 1,644,637 $ 1,638,559 $ 1,666,251 $ 1,677,848
Total assets $ 29,059,404 $ 27,379,502 $ 27,433,754 $ 28,618,492 $ 26,251,528 $ 24,801,973 $ 24,038,489
Less: Goodwill and other intangibles (684,965) (686,897) (688,829) (690,761) (691,765) (589,114) (521,717)
Tangible assets (C) $ 28,374,439 $ 26,692,605 $ 26,744,925 $ 27,927,731 $ 25,559,763 $ 24,212,859 $ 23,516,772
Period-end tangible equity to period-end tangible assets (A)/(C) 6.71% 6.96% 6.98% 6.50% 6.41% 6.88% 7.13%
Period-end tangible common equity to period-end tangible assets (B)/(C) 6.11% 6.32% 6.35% 5.89% 6.41% 6.88% 7.13%
Average Balance:
Total equity $ 2,570,544 $ 2,582,068 $ 2,533,427 $ 2,562,149 $ 2,432,264 $ 2,296,754 $ 2,234,411 $ 2,168,748 $ 2,283,489
Less: Goodwill and other intangibles (686,091) (687,997) (689,932) (687,993) (690,975) (687,224) (566,989) (522,182) (617,237)
Tangible equity (D) 1,884,453 1,894,071 1,843,495 1,874,156 1,741,289 1,609,530 1,667,422 1,646,566 1,666,252
Less: Preferred stock (169,920) (169,920) (169,920) (169,920) (90,501) -- -- -- (22,749)
Tangible common equity (E) $ 1,714,533 $ 1,724,151 $ 1,673,575 $ 1,704,236 $ 1,650,788 $ 1,609,530 $ 1,667,422 $ 1,646,566 $ 1,643,503
Total assets $ 28,061,134 $ 27,469,581 $ 27,709,159 $ 27,747,914 $ 27,255,859 $ 25,654,594 $ 24,362,546 $ 23,644,899 $ 25,236,172
Less: Goodwill and other intangibles (686,091) (687,997) (689,932) (687,993) (690,975) (687,224) (566,989) (522,182) (617,237)
Tangible assets (F) $ 27,375,043 $ 26,781,584 $ 27,019,227 $ 27,059,921 $ 26,564,884 $ 24,967,370 $ 23,795,557 $ 23,122,717 $ 24,618,935
Average tangible equity to average tangible assets (D)/(F) 6.88% 7.07% 6.82% 6.93% 6.55% 6.45% 7.01% 7.12% 6.77%
Average tangible common equity to average tangible assets (E)/(F) 6.26% 6.44% 6.19% 6.30% 6.21% 6.45% 7.01% 7.12% 6.68%

CONTACT: Financial/Investors Christopher J. Carey, City National, 310.888.6777 Chris.Carey@cnb.com Media Cary Walker, City National, 213.673.7615 Cary.Walker@cnb.com

Source:City National Corporation