City National Corporation Grows 2012 Net Income to $208.0 Million, Up 21 Percent From 2011; Fourth Quarter 2012 Net Income Totals $47.2 Million, or $0.87 Per Share

City National Corporation Logo

Loans and deposits grow at double-digit rates to record levels

Assets surpass $28 billion for the first time

LOS ANGELES, Jan. 24, 2013 (GLOBE NEWSWIRE) -- City National Corporation (NYSE:CYN), the parent company of wholly owned City National Bank, today reported full-year 2012 net income of $208.0 million, or $3.83 per share, up 21 percent from $172.4 million, or $3.21 per share, in 2011.

Fourth-quarter 2012 net income totaled $47.2 million, or $0.87 per share, up 8 percent from $43.9 million, or $0.82 per share in the fourth quarter of 2011.

FOURTH-QUARTER 2012 HIGHLIGHTS

  • Average fourth-quarter loan and lease balances were $14.0 billion, up 14 percent from the fourth quarter of 2011 and 3 percent higher than the third quarter of 2012, excluding loans covered by City National's acquisition-related loss-sharing agreements with the Federal Deposit Insurance Corporation (FDIC). Fourth-quarter loans and leases grew $1.1 billion, or 8 percent, from September 30, 2012 to a record of $14.8 billion, excluding FDIC-covered loans. These results reflect strong loan growth across all business segments, with nearly two-thirds coming from commercial and industrial lending.
  • Average deposit balances grew to a record $23.4 billion in the fourth quarter of 2012, up 14 percent from the fourth quarter of 2011 and 7 percent higher than the third quarter of 2012. Average core deposits, which equal 97 percent of total balances, were up 15 percent from the fourth quarter of 2011 and up 7 percent from the third quarter of 2012. Period-end deposits reached a record of $23.5 billion.
  • Fourth-quarter results included a provision for loan and lease losses of $7.0 million, up from $2.0 million in the third quarter of 2012. Total provisions, excluding FDIC-covered loans, were $10.0 million in 2012, compared with $12.5 million in 2011.
  • On November 5, 2012, City National issued $175 million of 5.50 percent non-cumulative perpetual preferred stock, which qualifies as Tier 1 capital. Net proceeds will be used to support the company's future growth and for general corporate purposes, including debt repayment.
  • City National announced on November 15, 2012, that its Board of Directors had declared an accelerated quarterly common stock cash dividend of $0.25 per share and a special common stock cash dividend of $0.25 per share. The quarterly and special dividends were payable on December 18, 2012 to stockholders of record on December 3, 2012, in addition to the regular $0.25 per share dividend paid in November. The company announced today that its Board of Directors has 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), which is payable on February 13, 2013 to shareholders of record on January 29, 2013.

"2012 was a very strong year of growth in earnings, assets, clients and capabilities for City National," said President and CEO Russell Goldsmith. "Net income and revenue were up significantly, loan production set new records, deposits grew at double-digit rates, credit quality remained strong, and assets reached a new record of $28.6 billion.

"We increased our capabilities for clients with the acquisitions of Rochdale Investment Management and First American Equipment Finance, as well as with selected investments in people, products and technology. During the fourth quarter, the company took advantage of favorable market conditions to issue preferred stock, further enhancing its strong capital ratios and expanding its capacity and flexibility for future growth. We expanded our technology banking business to better serve the technology and life science industries, announced plans for new offices in both the San Francisco Bay Area and New York City, and added a strong mortgage warehouse lending team.

"These new capabilities, colleagues and resources, along with the strong momentum the whole company generated in the fourth quarter, strengthened City National's position and ability to serve its clients and grow its increasingly diversified businesses in 2013."

For the three months ended For the three
Dollars in millions, December 31, % months ended %
except per share data 2012 2011 Change September 30, 2012 Change
Earnings Per Common Share $ 0.87 $ 0.82 6 $ 1.10 (21)
Net Income Attributable to CNC 47.2 43.9 8 59.8 (21)
Average Assets $ 27,255.9 $ 23,694.2 15 $ 25,654.6 6
Return on Average Assets 0.69% 0.73% (5) 0.93% (26)
Return on Average Common
Shareholders' Equity 8.03% 8.15% (1) 10.35% (22)

ASSETS

Total assets at December 31, 2012 grew to a record $28.6 billion, up 21 percent from the fourth quarter of 2011 and 9 percent from the third quarter of 2012. The year-over-year increase largely reflects strong loan growth and an increase in the company's securities portfolio due to strong deposit growth.

REVENUE

Revenue for the fourth quarter of 2012 reached $303.6 million, up 5 percent from the year-ago period but down 4 percent from the third quarter of 2012. Revenue for the full-year 2012 totaled $1.2 billion, up 7 percent from 2011.

NET INTEREST INCOME

Fully taxable-equivalent net interest income was $209.1 million in the fourth quarter of 2012, up 1 percent from the same period of 2011 but down 3 percent from the third quarter of 2012. Fully taxable-equivalent net interest income for the full-year 2012 was $850.7 million, up 8 percent from $790.3 million in 2011.

Fourth-quarter average deposits reached a record $23.4 billion, up 14 percent from the fourth quarter of 2011 and up 7 percent from the third quarter of 2012. Average deposits for the full-year 2012 totaled $21.6 billion, up 12 percent from 2011. Period-end deposits grew to $23.5 billion, up 15 percent from December 31, 2011 and up 4 percent from September 30, 2012.

Average core deposits were $22.8 billion in the fourth quarter of 2012, up 15 percent from the same period of 2011 and up 7 percent from the third quarter of 2012. Full-year 2012 average core deposits grew 13 percent from 2011 to $20.9 billion.

Fourth-quarter 2012 average noninterest-bearing deposits were up 31 percent from the same period of 2011 and up 11 percent from the third quarter of 2012. Average noninterest-bearing balances for the full-year 2012 were up 31 percent from 2011.

Treasury Services deposit balances, which consist primarily of title, escrow and property management deposits, averaged $2.4 billion in the fourth quarter of 2012, up 32 percent from the same period of 2011 and up 6 percent from the third quarter of 2012. Treasury Services deposit balances averaged $2.2 billion for the full-year 2012, up 25 percent from 2011. The increases reflect higher residential refinance activity, as well as sales of existing homes during the quarter.

Fourth-quarter average loan balances, excluding FDIC-covered loans, were $14.0 billion, up 14 percent from the fourth quarter of 2011 and up 3 percent from the third quarter of 2012. Excluding leases obtained in the company's second-quarter 2012 acquisition of First American, fourth-quarter average loan and lease balances increased 12 percent from the year-ago period.

Full-year 2012 average loans, excluding FDIC-covered loans, were $13.3 billion, up 14 percent from 2011. Excluding leases obtained in the First American acquisition, full-year 2012 average loan and lease balances increased 12 percent from the prior year.

Fourth-quarter average commercial loans were up 23 percent from the same period in 2011 and 4 percent higher than the third quarter of 2012. The year-over-year increase was primarily due to organic loan growth, as well as the acquisition of First American.

Average balances for commercial real estate mortgages were up 24 percent from the fourth quarter of 2011, and they increased 4 percent from the third quarter of 2012. Average balances for commercial real estate construction loans were down 28 percent from the fourth quarter of 2011, and they declined 11 percent from the third quarter of 2012.

Average balances for single-family residential mortgage loans, nearly all of which are made to City National's private banking and entertainment industry clients, were up 5 percent from the year-ago period and 2 percent higher than the third quarter of 2012.

Average securities for the fourth quarter of 2012 totaled $9.7 billion, up 26 percent from the fourth quarter of 2011 and up 12 percent from the third quarter of 2012. The average duration of total securities at December 31, 2012 was 2.9, compared to 2.4 at December 31, 2011 and 2.8 at the end of the third quarter of 2012.

City National's net interest margin in the fourth quarter of 2012 averaged 3.27 percent, compared with 3.70 percent in the fourth quarter of 2011 and 3.58 percent in the third quarter of 2012. For the full-year 2012, City National's net interest margin averaged 3.61 percent, compared with 3.79 percent in the previous year. The declines were due primarily to strong deposit growth and lower yields on loans and securities. The company continued to invest a large share of its growing deposits in securities and other liquid assets.

Fourth-quarter net interest income included $17.5 million from the FDIC-covered loans that were repaid or charged off during the quarter. This compares with $18.9 million in the fourth quarter of 2011 and $22.2 million in the third quarter of 2012.

At December 31, 2012, City National's prime lending rate was 3.25 percent, unchanged from both December 31, 2011 and September 30, 2012.

For the three months ended For the three
December 31, % months ended %
Dollars in millions 2012 2011 Change September 30, 2012 Change
Average Loans and Leases,
excluding Covered Loans $ 13,984.2 $ 12,213.4 14 $ 13,587.5 3
Average Covered Loans 1,089.9 1,554.2 (30) 1,207.0 (10)
Average Total Securities 9,652.7 7,641.5 26 8,631.4 12
Average Earning Assets 25,468.0 22,083.9 15 23,892.0 7
Average Deposits 23,386.3 20,500.1 14 21,940.8 7
Average Core Deposits 22,781.3 19,781.8 15 21,208.5 7
Fully Taxable-Equivalent
Net Interest Income 209.1 206.0 1 214.8 (3)
Net Interest Margin 3.27% 3.70% (12) 3.58% (9)

COVERED ASSETS

Loans and other real estate owned (OREO) assets acquired in City National's FDIC‑assisted bank acquisitions totaled $1.0 billion at the end of the fourth quarter of 2012, compared to $1.5 billion at December 31, 2011 and $1.2 billion at September 30, 2012.

In the fourth quarter of 2012, the company recorded a $3.5 million non-cash net gain to reflect results of the quarterly update of cash-flow projections for the FDIC-covered loans. That total compared with $2.6 million in the third quarter. The fourth-quarter gain reflects a $6.5 million provision for losses on covered loans and an offsetting $10.0 million of noninterest income related to City National's loss-sharing agreements with the FDIC. In addition to the $3.5 million non-cash gain for the quarter, the company recognized $0.7 million of other covered assets expense. Income, net of expense, from FDIC-covered assets, excluding the base yield, totaled $2.8 million in the fourth quarter of 2012, up from $1.8 million in the third quarter of 2012. (The base yield is the yield on covered assets, excluding income related to covered loans that are repaid or charged off.)

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 four FDIC-assisted bank acquisitions and subject to loss-sharing agreements totaled $58.3 million at December 31, 2012, compared to $98.5 million in the fourth quarter of 2011 and $83.6 million at the end of the third quarter of 2012.

NONINTEREST INCOME

Noninterest income was $99.9 million in the fourth quarter of 2012, up 16 percent from the fourth quarter of 2011 but down 7 percent from the third quarter of 2012. The increase from the year-earlier period was due largely to City National's third-quarter 2012 acquisition of Rochdale, lease income from the First American acquisition and higher international services income. The decrease from the third quarter of 2012 was primarily attributable to lower distribution income from investments.

City National's noninterest income totaled $357.6 million for the full year of 2012, up 5 percent from 2011.

In the fourth quarter of 2012, noninterest income accounted for 33 percent of City National's total revenue, compared to 30 percent in the fourth quarter of 2011 and 34 percent in the third quarter of 2012.

Wealth Management

City National's assets under management totaled $38.2 billion as of December 31, 2012, up 22 percent from the same period of 2011 and 1 percent higher than the third quarter of 2012.

Trust and investment fees were $44.0 million, up 33 percent from the fourth quarter of 2011 and 1 percent higher than the third quarter of 2012. Full-year trust and investment fee income rose 10 percent from 2011. The year-over-year increases were due primarily to the Rochdale acquisition, as well as higher sales and market appreciation.

Brokerage and mutual fund fees totaled $8.4 million, up 74 percent from the year-earlier period but down 7 percent from the third quarter of 2012. Brokerage and mutual fund fee income was $27.8 million for the full-year 2012, up 36 percent from 2011. The year-over-year increases in brokerage and mutual fund fees were due to the acquisition of Rochdale, as well as slightly higher short-term interest rates.

At or for the At or for the
three months ended three months
December 31, % ended %
Dollars in millions 2012 2011 Change September 30, 2012 Change
Trust and Investment Fee Revenue $ 44.0 $ 33.0 33 $ 43.5 1
Brokerage and Mutual Fund Fees 8.4 4.8 74 9.1 (7)
Assets Under Management (1) 38,239.8 31,326.3 22 38,043.1 1
Assets Under Management
or Administration (1)(2) 56,680.3 46,490.3 22 56,671.8 0
(1) Excludes $21.7 billion, $19.8 billion and $16.0 billion of assets under management for asset managers in which City National held a noncontrolling ownership interest as of December 31, 2012, September 30, 2012 and December 31, 2011, respectively.
(2) Assets under administration have been revised to exclude City National's investments that were held in custody and serviced by the company's wealth management business. Prior period balances have been reclassified to conform to current period presentation.

Other Noninterest Income

Fourth-quarter income from cash management and deposit transaction fees was $11.5 million, up 7 percent from the fourth quarter of 2011 but virtually unchanged from the third quarter of 2012. Full-year 2012 cash management and deposit transaction fee income was $45.6 million, up 3 percent from 2011. The year-over-year increases were due to new product sales and growth in transaction volumes.

Fee income from foreign exchange services and letters of credit totaled $11.3 million in the fourth quarter of 2012, up 29 percent from the fourth quarter of 2011 and 16 percent higher than the third quarter of 2012. Full-year 2012 foreign exchange services and letters of credit fee income totaled $40.0 million, up 10 percent from 2011. The increases largely reflect increased client activity and the addition of new relationships.

Other income was $24.2 million in the fourth quarter of 2012, up 39 percent from the fourth quarter of 2011 but down 13 percent from the third quarter of 2012. The increase from the year-ago period was due largely to the First American acquisition, as well as growth of income from client swap transactions and higher distribution income from investments. The increase was partly offset by lower gains on transfers of covered loans to OREO. Other income for the full-year 2012 was $82.9 million, up 9 percent from 2011.

NONINTEREST EXPENSE

City National's fourth-quarter 2012 noninterest expense amounted to $222.0 million, up 12 percent from the fourth quarter of 2011 and 7 percent higher than the third quarter of 2012. The year-over-year increase was due largely to the Rochdale and First American acquisitions, as well as higher premises costs. Fourth-quarter 2012 results also included $4.7 million, or $0.05 per share, in legal and professional fees and expense related to the resolution of a legal claim. This was partly offset by lower OREO expense. Noninterest expense for the full-year 2012 amounted to $825.1 million, up 2 percent from 2011.

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 fourth quarter of 2012 totaled $2.0 million, or 0.06 percent of total loans and leases on an annualized basis. The company realized net charge-offs of $5.5 million, or 0.18 percent, in the fourth quarter of 2011 and $2.2 million, or 0.06 percent, in the third quarter of 2012. Net recoveries for the full-year 2012 were $7.1 million, or 0.05 percent of total loans and leases. This compares with net charge-offs of $5.4 million in 2011.

At December 31, 2012, nonperforming assets amounted to $120.8 million, or 0.81 percent of the company's total loans and leases and OREO, compared to $142.8 million, or 1.16 percent, at December 31, 2011 and $130.5 million, or 0.95 percent, at September 30, 2012.

Nonaccrual loans at December 31, 2012 were $99.8 million, compared to $112.0 million at December 31, 2011 and $103.5 million at September 30, 2012. Criticized and classified loans declined from the third quarter of 2012, and overall credit trends remain favorable.

As of As of As of
December 31, 2012 September 30, 2012 December 31, 2011
Period-end Loans (in millions) Total Nonaccrual Total Nonaccrual Total Nonaccrual
Commercial $ 6,949.1 $ 9.2 $ 6,264.6 $ 18.8 $ 5,246.1 $ 19.9
Commercial Real Estate Mortgages 2,829.7 33.2 2,463.7 36.6 2,110.8 21.9
Residential Mortgages 3,962.2 9.6 3,897.7 11.7 3,763.2 9.8
Real Estate Construction 222.8 40.9 242.1 29.0 315.6 50.9
Equity Lines of Credit 711.7 6.4 719.0 6.9 741.1 8.6
Other Loans 142.8 0.5 137.6 0.5 132.6 0.9
Total Loans (1) $ 14,818.3 $ 99.8 $ 13,724.7 $ 103.5 $ 12,309.4 $ 112.0
Other Real Estate Owned (1) 21.0 27.0 30.8
Total Nonperforming Assets, excluding
Covered Assets $ 120.8 $ 130.5 $ 142.8
(1) Excludes covered loans, net of allowance, of $1.0 billion, $1.1 billion and $1.4 billion at December 31, 2012, September 30, 2012 and December 31, 2011, respectively, and covered other real estate owned of $58.3 million, $83.6 million and $98.5 million at December 31, 2012, September 30, 2012 and December 31, 2011, respectively.

City National recorded a provision for credit losses of $7.0 million in the fourth quarter of 2012, bringing its total provisions for the year to $10.0 million. The company recorded total provisions of $12.5 million in 2011, including $5.0 million in the fourth quarter of 2011.

At December 31, 2012, City National's allowance for loan and lease losses totaled $277.9 million, or 1.88 percent of total loans and leases. That compares with $262.6 million, or 2.13 percent, at December 31, 2011 and $268.4 million, or 1.96 percent, at the end of the third quarter of 2012. The company also maintains an additional $24.8 million in reserves for off-balance-sheet credit commitments.

Commercial Loans

Commercial loan net recoveries were $2.0 million in the fourth quarter of 2012. This compares to net charge-offs of $12.5 million in the year-earlier period and $4.9 million in the third quarter of 2012. Net recoveries in the full year of 2012 amounted to $10.4 million, compared to net charge-offs of $14.8 million in 2011.

Commercial loans on nonaccrual totaled $9.2 million in the fourth quarter of 2012, compared to $19.9 million at December 31, 2011 and $18.8 million at September 30, 2012.

Construction Loans

City National's $222.8 million commercial real estate construction portfolio includes secured loans to developers of residential and nonresidential properties. This portfolio now represents less than 2 percent of the company's total loans.

Fourth-quarter net recoveries of construction loans were $0.2 million, compared to net recoveries of $6.9 million in the fourth quarter of 2011 and $3.1 million in the third quarter of 2012. Full-year net charge-offs of construction loans were $1.5 million, compared to net recoveries of $5.0 million in 2011.

At December 31, 2012, construction loans on nonaccrual totaled $40.9 million, compared to $50.9 million at December 31, 2011 and $29.0 million at September 30, 2012.

Commercial Real Estate Mortgage Loans

Fourth-quarter net charge-offs in the company's $2.8 billion commercial real estate mortgage portfolio were $0.3 million, compared to net charge-offs of $0.1 million in the fourth quarter of 2011 and $0.2 million in the third quarter of 2012. Full-year net charge-offs were $0.1 million, compared to net recoveries of $6.9 million in 2011.

Commercial real estate mortgage loans on nonaccrual totaled $33.2 million, compared to $21.9 million at December 31, 2011 and $36.6 million at September 30, 2012.

Residential Mortgage Loans and Equity Lines of Credit

City National's $4.0 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 fourth quarter of 2012, compared to net charge-offs of $0.6 million at September 30, 2012 and $0.4 million at December 31, 2011. Full-year 2012 net charge-offs amounted to $2.7 million, compared to $2.8 million in 2011.

Residential mortgage loans and lines of credit on nonaccrual were $16.0 million in the fourth quarter of 2012, compared to $18.4 million in the fourth quarter of 2011 and $18.6 million in the third quarter of 2012.

INCOME TAXES

City National's effective tax rate for the fourth quarter of 2012 was 30.5 percent, down from 33.9 percent in the year-earlier period. The company's full-year 2012 effective tax rate was 32.1 percent, up from 30.6 percent in the prior year. The increases were due largely to higher pretax income.

CAPITAL LEVELS

City National remains well-capitalized, ending the fourth quarter of 2012 with a Tier 1 common shareholders' equity ratio of 8.5 percent, compared to 10.2 percent at December 31, 2011 and 9.1 percent at September 30, 2012.1 The change from the year-earlier period is a reflection of asset growth and the acquisitions of Rochdale and First American.

Total risk-based capital and Tier 1 risk-based capital ratios at December 31, 2012 were 12.5 percent and 9.4 percent, respectively. City National's Tier 1 leverage ratio at December 31, 2012 was 6.6 percent. All of City National's capital ratios are above minimum regulatory standards for "well-capitalized" institutions.

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.

The increase in Total and Tier 1 capital ratios from the third quarter was due primarily to the company's issuance of $175 million of preferred stock on November 5, 2012.

The period-end ratio of equity to total assets at December 31, 2012 was 8.8 percent, compared to 9.1 percent at December 31, 2011 and 8.9 percent at September 30, 2012.

2013 OUTLOOK

Given particularly strong growth in net income in 2012, management expects net income to grow very modestly in 2013. Nonetheless, loan and deposit balances are expected to increase, and credit quality should remain strong, though rising loan balances may require a somewhat higher loan-loss provision. Low interest rates and a very flat yield curve will continue to put pressure on the company's net interest margin. This outlook reflects management's expectations for the continuation of moderate economic growth throughout 2013.

CONFERENCE CALL

City National Corporation will host a conference call this afternoon to discuss fourth-quarter 2012 financial results. The call will begin at 2:00 p.m. PST. 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 80288825. 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 78 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 $56.7 billion in client investment assets, including more than $38.2 billion under direct management.

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

The City National Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3142

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 is 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 borrowers, including adverse impact on loan utilization rates, delinquencies, defaults and customers' ability to meet certain credit obligations, changes in customers' suppliers, and other counterparties' performance and creditworthiness; (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 and subsequently filed quarterly reports on Form 10-Q.

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

CITY NATIONAL CORPORATION
FINANCIAL HIGHLIGHTS
(unaudited)
Three Months Twelve Months
For The Period Ended December 31, 2012 2011 % Change 2012 2011 % Change
Per Common Share
Net income attributable to City National Corporation
Basic $ 0.87 $ 0.82 6 $ 3.85 $ 3.24 19
Diluted 0.87 0.82 6 3.83 3.21 19
Dividends 0.75 0.20 275 1.50 0.80 88
Book value 43.89 40.86 7
Results of Operations: (In millions)
Interest income $ 218 $ 215 1 $ 887 $ 843 5
Interest expense 14 13 6 56 70 (21)
Net interest income 204 202 1 831 773 7
Net interest income (Fully taxable-equivalent) 209 206 1 851 790 8
Total revenue 304 288 5 1,188 1,115 7
Provision for credit losses on loans and leases, excluding covered loans 7 5 40 10 13 (20)
Provision for losses on covered loans 6 18 (63) 45 44 4
Net income attributable to City National Corporation 47 44 8 208 172 21
Financial Ratios:
Performance Ratios:
Return on average assets 0.69% 0.73% 0.82% 0.77%
Return on average common shareholders' equity 8.03 8.15 9.20 8.38
Period-end equity to period-end assets 8.75 9.06
Net interest margin 3.27 3.70 3.61 3.79
Expense to revenue ratio 68.90 62.73 65.29 65.53
Capital Adequacy Ratios (Period-end):
Tier 1 leverage 6.60 6.77
Tier 1 risk-based capital 9.41 10.26
Total risk-based capital 12.52 12.83
Asset Quality Ratios:
Allowance for loan and lease losses to:
Total loans and leases, excluding covered loans 1.88% 2.13%
Nonaccrual loans 278.48 234.37
Nonperforming assets, excluding covered assets, to:
Total loans and leases and other real estate owned, excluding covered assets 0.81 1.16
Total assets 0.42 0.60
Net recoveries (charge-offs) to average total loans and leases, excluding covered loans (annualized) 0.06% (0.18)% 0.05% (0.05)%
Average Balances: (In millions)
Loans and leases, excluding covered loans $ 13,984 $ 12,213 14 $ 13,285 $ 11,698 14
Covered loans 1,090 1,554 (30) 1,269 1,699 (25)
Securities 9,653 7,642 26 8,496 6,635 28
Interest-earning assets 25,468 22,084 15 23,564 20,842 13
Assets 27,256 23,694 15 25,236 22,528 12
Core deposits 22,781 19,782 15 20,937 18,512 13
Deposits 23,386 20,500 14 21,629 19,306 12
Interest-bearing liabilities 10,136 10,359 (2) 10,056 10,614 (5)
Common shareholders' equity 2,342 2,136 10 2,261 2,058 10
Total equity 2,432 2,136 14 2,283 2,077 10
Period-End Balances: (In millions)
Loans and leases, excluding covered loans $ 14,818 $ 12,309 20
Covered loans 1,031 1,482 (30)
Securities 10,719 8,102 32
Assets 28,618 23,666 21
Core deposits 22,938 19,728 16
Deposits 23,502 20,388 15
Common shareholders' equity 2,335 2,145 9
Total equity 2,505 2,145 17
Wealth Management: (In millions) (1)
Assets under management $ 38,240 $ 31,326 22
Assets under management or administration (2) 56,680 46,490 22
(1) Excludes $21.7 billion and $16.0 billion of assets under management for asset managers in which City National held a noncontrolling ownership interest as of December 31, 2012 and December 31, 2011, respectively.
(2) Assets under administration have been revised to exclude City National's investments that were held in custody and serviced by the company's wealth management business. Prior period balances have been reclassified to conform to current period presentation.
CITY NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(Dollars in thousands Three Months Ended
December 31,
Twelve Months Ended
December 31,
except per share data) 2012 2011 % Change 2012 2011 % Change
Interest income $ 218,302 $ 215,252 1 $ 886,551 $ 843,090 5
Interest expense 14,580 13,695 6 55,715 70,100 (21)
Net interest income 203,722 201,557 1 830,836 772,990 7
Provision for credit losses on loans and leases, excluding covered loans 7,000 5,000 40 10,000 12,500 (20)
Provision for losses on covered loans 6,498 17,667 (63) 45,346 43,646 4
Noninterest income
Trust and investment fees 44,026 32,995 33 155,224 140,732 10
Brokerage and mutual fund fees 8,424 4,836 74 27,804 20,440 36
Cash management and deposit transaction fees 11,480 10,689 7 45,649 44,305 3
International services 11,342 8,783 29 39,963 36,466 10
FDIC loss sharing (expense) income, net (2,524) 7,633 (133) (6,017) (8,637) (30)
Gain on disposal of assets 2,892 4,263 (32) 11,293 20,300 (44)
Gain (loss) on securities 13 (273) 105 822 4,415 (81)
Gain on acquisition -- -- -- -- 8,164 (100)
Other 24,225 17,476 39 82,865 75,682 9
Total noninterest income 99,878 86,402 16 357,603 341,867 5
Noninterest expense
Salaries and employee benefits 123,812 112,822 10 479,302 448,702 7
Net occupancy of premises 17,554 13,616 29 61,534 54,340 13
Legal and professional fees 17,844 10,846 65 52,840 49,955 6
Information services 8,896 8,359 6 34,244 32,097 7
Depreciation and amortization 8,720 7,014 24 32,485 27,596 18
Amortization of intangibles 1,932 1,350 43 7,268 7,727 (6)
Marketing and advertising 9,111 8,101 12 30,665 28,920 6
Office services and equipment 4,735 4,234 12 17,848 17,968 (1)
Other real estate owned 9,869 15,233 (35) 38,253 65,044 (41)
FDIC assessments 4,499 4,480 0 18,117 29,480 (39)
Other 15,044 12,174 24 52,582 43,266 22
Total noninterest expense 222,016 198,229 12 825,138 805,095 2
Income before taxes 68,086 67,063 2 307,955 253,616 21
Applicable income taxes 20,780 22,758 (9) 98,822 77,561 27
Net income $ 47,306 $ 44,305 7 $ 209,133 $ 176,055 19
Less: Net income attributable to noncontrolling interest 60 445 (87) 1,084 3,634 (70)
Net income attributable to City National Corporation $ 47,246 $ 43,860 8 $ 208,049 $ 172,421 21
Other Data:
Earnings per common share - basic $ 0.87 $ 0.82 6 $ 3.85 $ 3.24 19
Earnings per common share - diluted $ 0.87 $ 0.82 6 $ 3.83 $ 3.21 19
Dividends paid per common share $ 0.75 $ 0.20 275 $ 1.50 $ 0.80 88
Common dividend payout ratio 86.16% 24.25% 255 38.96% 24.64% 58
Return on average assets 0.69% 0.73% (5) 0.82% 0.77% 6
Return on average common shareholders' equity 8.03% 8.15% (1) 9.20% 8.38% 10
Net interest margin (Fully taxable-equivalent) 3.27% 3.70% (12) 3.61% 3.79% (5)
Full-time equivalent employees 3,472 3,256 7
CITY NATIONAL CORPORATION
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
(unaudited)
2012
(Dollars in thousands Fourth Third Second First Year to
except per share data) Quarter Quarter Quarter Quarter 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 shareholders' equity 8.03% 10.35% 9.86% 8.58% 9.20%
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 QUARTERLY STATEMENTS OF INCOME
(unaudited)
2011
(Dollars in thousands Fourth Third Second First Year to
except per share data) Quarter Quarter Quarter Quarter Date
Interest income $ 215,252 $ 216,892 $ 210,136 $ 200,810 $ 843,090
Interest expense 13,695 17,576 19,309 19,520 70,100
Net interest income 201,557 199,316 190,827 181,290 772,990
Provision for credit losses on loans and leases, excluding covered loans 5,000 7,500 -- -- 12,500
Provision for losses on covered loans 17,667 5,147 1,716 19,116 43,646
Noninterest income
Trust and investment fees 32,995 35,412 36,687 35,638 140,732
Brokerage and mutual fund fees 4,836 5,079 4,864 5,661 20,440
Cash management and deposit transaction fees 10,689 10,986 10,905 11,725 44,305
International services 8,783 10,352 9,015 8,316 36,466
FDIC loss sharing income (expense), net 7,633 (14,191) (10,684) 8,605 (8,637)
Gain on disposal of assets 4,263 5,191 8,422 2,424 20,300
(Loss) gain on securities (273) 3,327 1,395 (34) 4,415
Gain on acquisition -- -- 8,164 -- 8,164
Other 17,476 13,479 23,169 21,558 75,682
Total noninterest income 86,402 69,635 91,937 93,893 341,867
Noninterest expense
Salaries and employee benefits 112,822 112,729 112,139 111,012 448,702
Net occupancy of premises 13,616 13,713 13,665 13,346 54,340
Legal and professional fees 10,846 14,242 14,790 10,077 49,955
Information services 8,359 7,906 8,335 7,497 32,097
Depreciation and amortization 7,014 6,930 6,904 6,748 27,596
Amortization of intangibles 1,350 2,105 2,104 2,168 7,727
Marketing and advertising 8,101 6,675 7,626 6,518 28,920
Office services and equipment 4,234 4,456 4,672 4,606 17,968
Other real estate owned 15,233 13,160 22,162 14,489 65,044
FDIC assessments 4,480 6,670 8,524 9,806 29,480
Other 12,174 9,051 10,911 11,130 43,266
Total noninterest expense 198,229 197,637 211,832 197,397 805,095
Income before taxes 67,063 58,667 69,216 58,670 253,616
Applicable income taxes 22,758 16,267 20,650 17,886 77,561
Net income $ 44,305 $ 42,400 $ 48,566 $ 40,784 $ 176,055
Less: Net income attributable to noncontrolling interest 445 1,002 1,095 1,092 3,634
Net income attributable to City National Corporation $ 43,860 $ 41,398 $ 47,471 $ 39,692 $ 172,421
Other Data:
Earnings per common share - basic $ 0.82 $ 0.78 $ 0.89 $ 0.75 $ 3.24
Earnings per common share - diluted $ 0.82 $ 0.77 $ 0.88 $ 0.74 $ 3.21
Dividends paid per common share $ 0.20 $ 0.20 $ 0.20 $ 0.20 $ 0.80
Common dividend payout ratio 24.25% 25.70% 22.40% 26.65% 24.64%
Return on average assets 0.73% 0.71% 0.87% 0.75% 0.77%
Return on average common shareholders' equity 8.15% 7.85% 9.39% 8.16% 8.38%
Net interest margin (Fully taxable-equivalent) 3.70% 3.79% 3.85% 3.84% 3.79%
Full-time equivalent employees 3,256 3,287 3,328 3,258
CITY NATIONAL CORPORATION
CONSOLIDATED PERIOD END BALANCE SHEET
(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
Equity 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
CONSOLIDATED PERIOD END BALANCE SHEET
(unaudited)
2011
Fourth Third Second First
(In thousands) Quarter Quarter Quarter Quarter
Assets
Cash and due from banks $ 168,376 $ 249,496 $ 181,203 $ 203,600
Due from banks - interest-bearing 76,438 144,754 725,304 743,569
Federal funds sold -- 100,000 123,000 100,000
Securities available-for-sale 7,571,901 7,185,288 6,348,055 5,849,390
Securities held-to-maturity 467,680 -- -- --
Trading securities 61,975 93,707 125,829 81,287
Loans and leases:
Commercial 5,246,081 5,166,802 4,800,252 4,468,177
Commercial real estate mortgages 2,110,749 2,059,114 1,930,269 1,902,862
Residential mortgages 3,763,218 3,742,768 3,710,765 3,603,058
Real estate construction 315,609 335,712 355,014 415,241
Equity lines of credit 741,081 728,890 735,899 733,567
Installment 132,647 130,923 130,924 146,779
Loans and leases, excluding covered loans 12,309,385 12,164,209 11,663,123 11,269,684
Allowance for loan and lease losses (262,557) (263,348) (265,933) (263,356)
Loans and leases, excluding covered loans, net 12,046,828 11,900,861 11,397,190 11,006,328
Covered loans, net (1) 1,417,289 1,550,103 1,657,004 1,684,068
Net loans and leases 13,464,117 13,450,964 13,054,194 12,690,396
Premises and equipment, net 143,641 140,871 134,511 131,345
Goodwill and other intangibles 522,753 524,103 526,207 527,419
Other real estate owned (2) 129,340 147,369 162,541 178,164
FDIC indemnification asset 204,259 212,809 261,734 270,576
Other assets 855,811 854,899 883,511 860,186
Total assets $ 23,666,291 $ 23,104,260 $ 22,526,089 $ 21,635,932
Liabilities
Deposits:
Noninterest-bearing $ 11,146,627 $ 10,308,547 $ 9,403,425 $ 8,756,877
Interest-bearing 9,240,955 9,600,534 9,861,695 9,721,062
Total deposits 20,387,582 19,909,081 19,265,120 18,477,939
Short-term borrowings 50,000 30,640 149,771 151,663
Long-term debt 697,778 699,983 701,829 703,173
Other liabilities 341,439 301,387 281,622 246,517
Total liabilities 21,476,799 20,941,091 20,398,342 19,579,292
Redeemable noncontrolling interest 44,643 42,704 43,737 46,013
Equity
City National Corporation shareholders' equity:
Common stock 53,886 53,886 53,886 53,886
Additional paid-in capital 489,200 489,037 485,064 480,918
Accumulated other comprehensive income 72,372 82,467 56,293 26,535
Retained earnings 1,611,969 1,578,747 1,547,989 1,511,153
Treasury shares (82,578) (83,672) (84,311) (86,954)
Total shareholders' equity 2,144,849 2,120,465 2,058,921 1,985,538
Noncontrolling interest -- -- 25,089 25,089
Total equity 2,144,849 2,120,465 2,084,010 2,010,627
Total liabilities and equity $ 23,666,291 $ 23,104,260 $ 22,526,089 $ 21,635,932
(1) Covered loans are net of $64.6 million, $61.8 million, $67.6 million and $82.0 million of allowance for loan losses as of December 31, 2011, September 30, 2011, June 30, 2011 and March 31, 2011, respectively.
(2) Other real estate owned includes $98.5 million, $102.8 million, $114.9 million and $121.8 million covered by FDIC loss share at December 31, 2011, September 30, 2011, June 30, 2011 and March 31, 2011, respectively.
CITY NATIONAL CORPORATION
CREDIT LOSS EXPERIENCE
(unaudited)
2012 2011
Fourth Third Second First Year To Fourth Third Second First Year To
(Dollars in thousands) Quarter Quarter Quarter Quarter Date Quarter Quarter Quarter Quarter Date
Allowance for Loan and Lease Losses, Excluding Covered Loans
Balance at beginning of period $ 268,440 $ 269,534 $ 266,077 $ 262,557 $ 262,557 $ 263,348 $ 265,933 $ 263,356 $ 257,007 $ 257,007
Net recoveries/(charge-offs):
Commercial 2,002 (4,936) 8,092 5,283 10,441 (12,534) (2,915) 2,616 (1,937) (14,770)
Commercial real estate mortgages (290) (241) 1,113 (666) (84) (87) (452) 1,269 6,212 6,942
Residential mortgages (7) (535) (543) (494) (1,579) (52) (163) (253) (615) (1,083)
Real estate construction 170 3,105 (4,839) 104 (1,460) 6,860 (6,233) 577 3,826 5,030
Equity lines of credit (169) (32) (808) (154) (1,163) (377) (512) (120) (757) (1,766)
Installment 319 454 (274) 417 916 670 (309) 106 (202) 265
Total net recoveries/(charge-offs) 2,025 (2,185) 2,741 4,490 7,071 (5,520) (10,584) 4,195 6,527 (5,382)
Provision for credit losses 7,000 2,000 1,000 -- 10,000 5,000 7,500 -- -- 12,500
Transfers from (to) reserve for off-balance sheet credit commitments 423 (909) (284) (970) (1,740) (271) 499 (1,618) (178) (1,568)
Balance at end of period $ 277,888 $ 268,440 $ 269,534 $ 266,077 $ 277,888 $ 262,557 $ 263,348 $ 265,933 $ 263,356 $ 262,557
Net Recoveries/(Charge-offs) to Average Total Loans and Leases, Excluding Covered Loans (annualized):
Commercial 0.12% (0.32)% 0.56% 0.40% 0.18% (0.96)% (0.23)% 0.22% (0.18)% (0.31)%
Commercial real estate mortgages (0.04)% (0.04)% 0.20% (0.12)% (0.00)% (0.02)% (0.09)% 0.27% 1.31% 0.35%
Residential mortgages (0.00)% (0.06)% (0.06)% (0.05)% (0.04)% (0.01)% (0.02)% (0.03)% (0.07)% (0.03)%
Real estate construction 0.29% 4.65% (6.26)% 0.13% (0.52)% 8.29% (7.14)% 0.59% 3.46% 1.33%
Equity lines of credit (0.09)% (0.02)% (0.44)% (0.09)% (0.16)% (0.20)% (0.28)% (0.07)% (0.42)% (0.24)%
Installment 0.91% 1.34% (0.85)% 1.30% 0.69% 2.00% (0.94)% 0.32% (0.55)% 0.19%
Total loans and leases, excluding covered loans 0.06% (0.06)% 0.08% 0.15% 0.05% (0.18)% (0.36)% 0.15% 0.24% (0.05)%
Reserve for Off-Balance Sheet Credit Commitments
Balance at beginning of period $ 25,260 $ 24,351 $ 24,067 $ 23,097 $ 23,097 $ 22,826 $ 23,325 $ 21,707 $ 21,529 $ 21,529
Transfers (to) from allowance (423) 909 284 970 1,740 271 (499) 1,618 178 1,568
Balance at end of period $ 24,837 $ 25,260 $ 24,351 $ 24,067 $ 24,837 $ 23,097 $ 22,826 $ 23,325 $ 21,707 $ 23,097
Allowance for Losses on Covered Loans
Balance at beginning of period $ 44,978 $ 43,147 $ 61,471 $ 64,565 $ 64,565 $ 61,753 $ 67,629 $ 82,016 $ 67,389 $ 67,389
Provision for losses 6,498 18,089 13,293 7,466 45,346 17,667 5,147 1,716 19,116 43,646
Net charge-offs -- -- -- -- -- -- (325) -- -- (325)
Reduction in allowance due to loan removals (6,695) (16,258) (31,617) (10,560) (65,130) (14,855) (10,698) (16,103) (4,489) (46,145)
Balance at end of period $ 44,781 $ 44,978 $ 43,147 $ 61,471 $ 44,781 $ 64,565 $ 61,753 $ 67,629 $ 82,016 $ 64,565
Note: Certain prior period balances have been reclassified to conform to current period presentation.
CITY NATIONAL CORPORATION
NONPERFORMING ASSETS
(unaudited)
2012 2011
Fourth Third Second First Fourth Third Second First
(Dollars in thousands) Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
Nonperforming assets, excluding covered assets
Nonaccrual loans, excluding covered loans
Commercial $ 9,207 $ 18,848 $ 19,056 $ 19,584 $ 19,888 $ 34,937 $ 24,337 $ 19,297
Commercial real estate mortgages 33,198 36,580 28,780 21,071 21,948 20,746 26,676 28,028
Residential mortgages 9,603 11,680 14,064 13,628 9,771 10,512 14,211 14,544
Real estate construction 40,882 28,963 29,676 48,964 50,876 70,827 60,543 81,448
Equity lines of credit 6,424 6,946 6,505 8,831 8,669 8,401 6,668 6,676
Installment 473 477 575 729 874 707 365 7,399
Total nonaccrual loans, excluding covered loans 99,787 103,494 98,656 112,807 112,026 146,130 132,800 157,392
Other real estate owned, excluding covered OREO 21,027 27,055 34,667 29,074 30,790 44,521 47,634 56,342
Total nonperforming assets, excluding covered assets $ 120,814 $ 130,549 $ 133,323 $ 141,881 $ 142,816 $ 190,651 $ 180,434 $ 213,734
Nonperforming covered assets
Nonaccrual loans $ -- $ -- $ 422 $ 422 $ 422 $ 1,023 $ 1,408 $ 2,343
Other real estate owned 58,276 83,618 82,834 78,456 98,550 102,848 114,907 121,822
Total nonperforming covered assets $ 58,276 $ 83,618 $ 83,256 $ 78,878 $ 98,972 $ 103,871 $ 116,315 $ 124,165
Loans 90 days or more past due on accrual status, excluding covered loans $ 981 $ 433 $ 2,065 $ 654 $ 453 $ 379 $ 7,214 $ 3,679
Covered loans 90 days or more past due on accrual status $ 112,396 $ 140,041 $ 190,005 $ 265,175 $ 330,169 $ 336,193 $ 368,379 $ 390,267
Allowance for loan and lease losses as a percentage of:
Nonaccrual loans 278.48% 259.38% 273.21% 235.87% 234.37% 180.21% 200.25% 167.32%
Total nonperforming assets, excluding covered assets 230.01% 205.62% 202.17% 187.54% 183.84% 138.13% 147.39% 123.22%
Total loans and leases, excluding covered loans 1.88% 1.96% 2.00% 2.09% 2.13% 2.16% 2.28% 2.34%
Nonaccrual loans as a percentage of total loans, excluding covered loans 0.67% 0.75% 0.73% 0.88% 0.91% 1.20% 1.14% 1.40%
Nonperforming assets, excluding covered assets, as a percentage of:
Total loans and other real estate owned, excluding covered assets 0.81% 0.95% 0.98% 1.11% 1.16% 1.56% 1.54% 1.89%
Total assets 0.42% 0.50% 0.54% 0.59% 0.60% 0.83% 0.80% 0.99%
Note: Certain prior period balances have been reclassified to conform to current period presentation.
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
Equity 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 506 471 379 396 438
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%
Note: Certain prior period balances have been reclassified to conform to current period presentation.
CITY NATIONAL CORPORATION
AVERAGE BALANCES AND RATES
(unaudited)
2011
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 $ 5,204 3.89% $ 4,928 4.09% $ 4,693 4.22% $ 4,437 4.30% $ 4,818 4.11%
Commercial real estate mortgages 2,077 5.12 1,944 5.30 1,904 5.67 1,924 5.56 1,963 5.40
Residential mortgages 3,739 4.49 3,717 4.74 3,663 4.78 3,563 4.81 3,671 4.70
Real estate construction 328 5.08 347 4.65 395 5.10 448 4.56 379 4.84
Equity lines of credit 732 3.58 731 3.55 730 3.59 733 3.57 731 3.57
Installment 133 4.87 130 4.94 131 4.88 151 4.81 136 4.88
Total loans and leases, excluding covered loans 12,213 4.30 11,797 4.47 11,516 4.64 11,256 4.67 11,698 4.51
Covered loans 1,554 11.06 1,664 10.65 1,770 8.70 1,811 7.78 1,699 9.48
Total loans and leases 13,767 5.05 13,461 5.23 13,286 5.19 13,067 5.11 13,397 5.14
Due from banks - interest-bearing 435 0.30 642 0.29 526 0.31 490 0.25 524 0.29
Federal funds sold and securities purchased under resale agreements 115 0.28 130 0.28 143 0.28 232 0.27 154 0.27
Securities 7,642 2.27 6,954 2.45 6,224 2.66 5,693 2.75 6,635 2.51
Other interest-earning assets 125 2.13 130 2.09 135 2.09 139 2.04 132 2.09
Total interest-earning assets 22,084 3.95 21,317 4.12 20,314 4.23 19,621 4.24 20,842 4.13
Allowance for loan and lease losses (331) (330) (344) (329) (333)
Cash and due from banks 199 203 184 201 197
Other non-earning assets 1,742 1,809 1,856 1,885 1,822
Total assets $ 23,694 $ 22,999 $ 22,010 $ 21,378 $ 22,528
Liabilities and Equity
Interest-bearing deposits
Interest checking accounts $ 1,865 0.12% $ 1,727 0.15% $ 1,707 0.17% $ 1,772 0.19% $ 1,768 0.16%
Money market accounts 6,467 0.18 6,900 0.35 6,683 0.43 6,452 0.45 6,626 0.35
Savings deposits 344 0.17 329 0.29 327 0.32 303 0.34 326 0.28
Time deposits - under $100,000 262 0.53 280 0.48 308 0.49 325 0.56 294 0.52
Time deposits - $100,000 and over 718 0.57 801 0.61 833 0.70 823 0.75 793 0.66
Total interest-bearing deposits 9,656 0.20 10,037 0.34 9,858 0.41 9,675 0.43 9,807 0.34
Federal funds purchased and securities sold under repurchase agreements 2 0.06 -- 0.07 10 0.07 -- 0.00 3 0.07
Other borrowings 701 4.96 804 4.46 855 4.36 858 4.41 804 4.53
Total interest-bearing liabilities 10,359 0.52 10,841 0.64 10,723 0.72 10,533 0.75 10,614 0.66
Noninterest-bearing deposits 10,844 9,688 8,927 8,509 9,499
Other liabilities 355 353 307 338 338
Total equity 2,136 2,117 2,053 1,998 2,077
Total liabilities and equity $ 23,694 $ 22,999 $ 22,010 $ 21,378 $ 22,528
Net interest spread 3.43% 3.48% 3.51% 3.49% 3.47%
Net interest margin 3.70% 3.79% 3.85% 3.84% 3.79%
Average prime rate 3.25% 3.25% 3.25% 3.25% 3.25%
Note: Certain prior period balances have been reclassified to conform to current period presentation.
CITY NATIONAL CORPORATION
CAPITAL AND CREDIT RATING DATA
(unaudited)
2012 2011
Fourth Third Second First Year To Fourth Third Second First Year To
Quarter Quarter Quarter Quarter Date Quarter Quarter Quarter Quarter Date
Per Common Share:
Shares Outstanding (in thousands):
Average - Basic 53,566 53,425 53,105 52,741 53,211 52,488 52,481 52,462 52,320 52,439
Average - Diluted 53,743 53,711 53,373 53,021 53,475 52,750 52,720 52,977 52,894 52,849
Period-end 53,216 53,190 52,822 52,661 52,499 52,484 52,475 52,440
Book value for shareholders $ 43.89 $ 43.81 $ 42.70 $ 41.77 $ 40.86 $ 40.40 $ 39.24 $ 37.86
Closing price:
High $ 52.60 $ 54.48 $ 54.63 $ 54.44 $ 54.63 $ 45.10 $ 55.54 $ 58.75 $ 62.90 $ 62.90
Low 47.27 48.20 46.39 45.39 45.39 36.01 37.76 52.02 55.65 36.01
Period-end 49.52 51.51 48.58 52.47 44.18 37.76 54.25 57.05
Capital Ratios (Dollars in millions):
Risk-based capital
Risk-weighted assets (1) $ 18,627 $ 17,174 $ 16,723 $ 15,840 $ 15,305 $ 14,926 $ 14,286 $ 13,551
Tier 1 common shareholders' equity $ 1,578 $ 1,566 $ 1,597 $ 1,611 $ 1,565 $ 1,530 $ 1,493 $ 1,449
Percentage of risk-weighted assets (2) 8.47% 9.12% 9.55% 10.17% 10.22% 10.25% 10.45% 10.69%
Tier 1 capital $ 1,753 $ 1,571 $ 1,602 $ 1,616 $ 1,570 $ 1,535 $ 1,523 $ 1,479
Percentage of risk-weighted assets 9.41% 9.15% 9.58% 10.20% 10.26% 10.28% 10.66% 10.91%
Total capital $ 2,332 $ 2,133 $ 2,160 $ 2,013 $ 1,963 $ 1,923 $ 1,905 $ 1,853
Percentage of risk-weighted assets 12.52% 12.42% 12.91% 12.71% 12.83% 12.88% 13.34% 13.68%
Tier 1 leverage ratio 6.60% 6.29% 6.74% 6.98% 6.77% 6.82% 7.09% 7.09%
Period-end equity to period-end assets 8.75% 8.88% 9.09% 9.15% 9.06% 9.18% 9.25% 9.29%
Period-end common shareholders' equity to period-end assets 8.16% 8.88% 9.09% 9.15% 9.06% 9.18% 9.14% 9.18%
Average equity to average assets 8.92% 8.95% 9.17% 9.17% 9.05% 9.02% 9.21% 9.33% 9.35% 9.22%
Average common shareholders' equity to average assets 8.59% 8.95% 9.17% 9.17% 8.96% 9.02% 9.10% 9.22% 9.23% 9.14%
Period-end tangible equity to period-end tangible assets (2) 6.50% 6.41% 6.88% 7.13% 7.01% 7.07% 7.08% 7.03%
Period-end tangible common shareholders' equity to period-end tangible assets (2) 5.89% 6.41% 6.88% 7.13% 7.01% 7.07% 6.97% 6.91%
Average tangible equity to average tangible assets (2) 6.55% 6.45% 7.01% 7.12% 6.77% 6.96% 7.08% 7.11% 7.05% 7.05%
Average tangible common shareholders' equity to average tangible assets (2) 6.21% 6.45% 7.01% 7.12% 6.68% 6.96% 6.98% 6.99% 6.93% 6.96%
Senior Debt Credit Ratings
For The Period Ended December 31, 2012 Standard &
Moody's Fitch 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 shareholders' equity to risk-weighted assets ratio, tangible equity to tangible assets ratio, and tangible common shareholders' equity to tangible assets ratio are non-GAAP financial measures. See page 15 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:
2012 2011
Fourth Third Second First Year to Fourth Third Second First Year to
(Dollars in thousands, except per share amounts) Quarter Quarter Quarter Quarter Date Quarter Quarter Quarter Quarter Date
Basic EPS:
Net income attributable to City National Corporation $ 47,246 $ 59,780 $ 54,758 $ 46,265 $ 208,049 $ 43,860 $ 41,398 $ 47,471 $ 39,692 $ 172,421
Less: Earnings allocated to participating securities 652 842 788 738 3,008 690 655 759 578 2,678
Earnings allocated to shareholders $ 46,594 $ 58,938 $ 53,970 $ 45,527 $ 205,041 $ 43,170 $ 40,743 $ 46,712 $ 39,114 $ 169,743
Weighted average shares outstanding 53,566 53,425 53,105 52,741 53,211 52,488 52,481 52,462 52,320 52,439
Basic earnings per common share $ 0.87 $ 1.10 $ 1.02 $ 0.86 $ 3.85 $ 0.82 $ 0.78 $ 0.89 $ 0.75 $ 3.24
Diluted EPS:
Earnings allocated to shareholders (1) $ 46,594 $ 58,941 $ 53,972 $ 45,530 $ 205,050 $ 43,173 $ 40,745 $ 46,718 $ 39,119 $ 169,759
Weighted average shares outstanding 53,566 53,425 53,105 52,741 53,211 52,488 52,481 52,462 52,320 52,439
Dilutive effect of equity awards 177 286 268 280 264 262 239 515 574 410
Weighted average diluted shares outstanding 53,743 53,711 53,373 53,021 53,475 52,750 52,720 52,977 52,894 52,849
Diluted earnings per common share $ 0.87 $ 1.10 $ 1.01 $ 0.86 $ 3.83 $ 0.82 $ 0.77 $ 0.88 $ 0.74 $ 3.21
(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:
2012 2011
Fourth Third Fourth
(In thousands) Quarter Quarter Quarter
Summary Totals
Net impairment income (expense) (Sum of A) $ 3,517 $ 2,639 $ (52)
Other covered asset (expense) income, net (720) (837) 394
Total income, net $ 2,797 $ 1,802 $ 342
Interest income (1)
Income on loans paid-off or fully charged-off $ 17,536 $ 22,164 $ 18,902
Provision for losses on covered loans
Provision for losses on covered loans A 6,498 18,089 17,667
Noninterest income related to covered assets
FDIC loss sharing (expense) income, net
Gain on indemnification asset A $ 10,070 $ 21,426 $ 17,675
Indemnification asset accretion (4,818) (4,258) (3,775)
Net FDIC reimbursement for OREO and loan expenses 8,020 7,612 13,858
Removal of indemnification asset for loans paid-off or fully charged-off (5,896) (9,731) (5,955)
Removal of indemnification asset for unfunded loan commitments and loans transferred to OREO (1,500) (2,834) (4,714)
Removal of indemnification asset for OREO and net reimbursement to FDIC for OREO sales (2,042) (1,219) (1,543)
Loan recoveries shared with FDIC (6,303) (8,631) (7,853)
Increase in FDIC clawback liability A (55) (698) (60)
Total FDIC loss sharing (expense) income, net (2,524) 1,667 7,633
Gain on disposal of assets
Net gain on sale of OREO 2,593 1,524 1,927
Other income
Net gain on transfers of covered loans to OREO 1,926 4,907 6,824
Amortization of fair value on acquired unfunded loan commitments 408 192 558
OREO income 977 428 406
Other (636) (632) (745)
Total other income 2,675 4,895 7,043
Total noninterest income related to covered assets $ 2,744 $ 8,086 $ 16,603
Noninterest expense related to covered assets (2)
Other real estate owned
Valuation write-downs $ 4,115 $ 4,267 $ 9,984
Holding costs and foreclosure expense 3,878 3,522 4,890
Total other real estate owned 7,993 7,789 14,874
Legal and professional fees 2,977 2,541 2,609
Other operating expense
Other covered asset expenses 15 29 13
Total noninterest expense related to covered assets (3) $ 10,985 $ 10,359 $ 17,496
Total income, net $ 2,797 $ 1,802 $ 342
Note: Certain prior period balances have been reclassified to conform to current period presentation.
(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) Tangible equity and tangible common shareholders' 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 shareholders' equity to tangible assets is a non-GAAP financial measure that represents tangible equity less preferred stock and noncontrolling interest 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 shareholders' equity as a measure of capital. A reconciliation of the GAAP to non-GAAP measure is set forth below:
2012 2011
Fourth Third Second First Year to Fourth Third Second First Year to
(Dollars in thousands) Quarter Quarter Quarter Quarter Date Quarter Quarter Quarter Quarter Date
Period End:
Total equity $ 2,505,318 $ 2,330,324 $ 2,255,365 $ 2,199,565 $ 2,144,849 $ 2,120,465 $ 2,084,010 $ 2,010,627
Less: Goodwill and other intangibles (690,761) (691,765) (589,114) (521,717) (522,753) (524,103) (526,207) (527,419)
Tangible equity (A) 1,814,557 1,638,559 1,666,251 1,677,848 1,622,096 1,596,362 1,557,803 1,483,208
Less: Preferred stock (169,920) -- -- -- -- -- -- --
Less: Noncontrolling interest -- -- -- -- -- -- (25,089) (25,089)
Tangible common shareholders' equity (B) $ 1,644,637 $ 1,638,559 $ 1,666,251 $ 1,677,848 $ 1,622,096 $ 1,596,362 $ 1,532,714 $ 1,458,119
Total assets $ 28,618,492 $ 26,251,528 $ 24,801,973 $ 24,038,489 $ 23,666,291 $ 23,104,260 $ 22,526,089 $ 21,635,932
Less: Goodwill and other intangibles (690,761) (691,765) (589,114) (521,717) (522,753) (524,103) (526,207) (527,419)
Tangible assets (C) $ 27,927,731 $ 25,559,763 $ 24,212,859 $ 23,516,772 $ 23,143,538 $ 22,580,157 $ 21,999,882 $ 21,108,513
Period-end tangible equity to period-end tangible assets (A)/(C) 6.50% 6.41% 6.88% 7.13% 7.01% 7.07% 7.08% 7.03%
Period-end tangible common shareholders' equity 5.89% 6.41% 6.88% 7.13% 7.01% 7.07% 6.97% 6.91%
Average Balance:
Total equity $ 2,432,264 $ 2,296,754 $ 2,234,411 $ 2,168,748 $ 2,283,489 $ 2,136,215 $ 2,117,249 $ 2,053,447 $ 1,998,006 $ 2,076,721
Less: Goodwill and other intangibles (690,975) (687,224) (566,989) (522,182) (617,237) (523,206) (525,300) (527,072) (528,205) (525,930)
Tangible equity (D) 1,741,289 1,609,530 1,667,422 1,646,566 1,666,252 1,613,009 1,591,949 1,526,375 1,469,801 1,550,791
Less: Preferred stock (90,501) -- -- -- (22,749) -- -- -- -- --
Less: Noncontrolling interest -- -- -- -- -- -- (23,822) (25,089) (25,110) (18,451)
Tangible common shareholders' equity (E) $ 1,650,788 $ 1,609,530 $ 1,667,422 $ 1,646,566 $ 1,643,503 $ 1,613,009 $ 1,568,127 $ 1,501,286 $ 1,444,691 $ 1,532,340
Total assets $ 27,255,859 $ 25,654,594 $ 24,362,546 $ 23,644,899 $ 25,236,172 $ 23,694,160 $ 22,998,562 $ 22,009,749 $ 21,377,904 $ 22,527,750
Less: Goodwill and other intangibles (690,975) (687,224) (566,989) (522,182) (617,237) (523,206) (525,300) (527,072) (528,205) (525,930)
Tangible assets (F) $ 26,564,884 $ 24,967,370 $ 23,795,557 $ 23,122,717 $ 24,618,935 $ 23,170,954 $ 22,473,262 $ 21,482,677 $ 20,849,699 $ 22,001,820
Average tangible equity to average tangible assets (D)/(F) 6.55% 6.45% 7.01% 7.12% 6.77% 6.96% 7.08% 7.11% 7.05% 7.05%
Average tangible common shareholders' equity to average tangible assets (E)/(F) 6.21% 6.45% 7.01% 7.12% 6.68% 6.96% 6.98% 6.99% 6.93% 6.96%
(b) Tier 1 common shareholders' equity to risk-weighted assets
Tier 1 common shareholders' 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 these ratios in response to market participants' interest in the Tier 1 common shareholders' equity to risk-weighted assets ratio.
2012 2011
Fourth Third Second First Fourth Third Second First
(Dollars in thousands) Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
Tier 1 capital $ 1,753,312 $ 1,570,778 $ 1,602,398 $ 1,616,099 $ 1,570,101 $ 1,534,831 $ 1,523,269 $ 1,478,820
Less: Preferred stock (169,920) -- -- -- -- -- -- --
Less: Noncontrolling interest -- -- -- -- -- -- (25,089) (25,089)
Less: Trust preferred securities (5,155) (5,155) (5,155) (5,155) (5,155) (5,155) (5,155) (5,155)
Tier 1 common shareholders' equity (A) $ 1,578,237 $ 1,565,623 $ 1,597,243 $ 1,610,944 $ 1,564,946 $ 1,529,676 $ 1,493,025 $ 1,448,576
Risk-weighted assets (B) $ 18,627,165 $ 17,174,382 $ 16,722,999 $ 15,839,944 $ 15,305,328 $ 14,925,715 $ 14,285,572 $ 13,551,318
Tier 1 common shareholders' equity to risk-weighted assets (A)/(B) 8.47% 9.12% 9.55% 10.17% 10.22% 10.25% 10.45% 10.69%

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 Conference Call: Today 2:00 p.m. PST (866) 393-6804 Conference ID: 80288825

Source:City National Corporation