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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported) September 22, 1999
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CITY NATIONAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 1-10521 95-2568550
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
City National Center
400 North Roxbury Drive, Beverly Hills, California 90210
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (310) 888-6000
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N\A
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(Former name or former address, if changed since last report)
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Item 5. Other Events
On September 22, 1999, City National Corporation, a Delaware corporation
("CNC") and The Pacific Bank, a national banking association ("Pacific
Bank"), announced that they had entered into an Agreement and Plan of
Reorganization, dated as of September 21, 1999 (the 'Merger Agreement").
Under the terms of the Merger Agreement, CNC will acquire The Pacific
Bank for $29.00 for each of the 5.0 million shares of The Pacific Bank common
stock outstanding. The transaction is tax deferred to The Pacific Bank
shareholders on its common stock component and is conditioned upon the
approval of regulatory authorities and the shareholders of The Pacific Bank.
The Pacific Bank's shareholders will receive-at their election-cash, common
stock or a combination thereof valued at $29.00 per share provided that the
20-day average closing CNC stock price three days prior to closing is between
$28.05 and $37.95 per share, with a minimum of at least 47 percent and a
maximum of 52.5 percent in common stock.
Pursuant to the Merger Agreement, The Pacific Bank shall merge with and
into City National Bank ("CNB"), a wholly owned subsidiary of CNC with CNB as
the surviving association.
The Pacific Bank and CNC have also entered into a stock option agreement
that grants CNC the right to purchase 19.9 percent of Pacific Bank's Common
Stock at $19.00 a share.
A copy of the press release issued in connection with the announcement
is attached hereto as Exhibit 1 and is incorporated by reference herein in
its entirety.
A copy of an information presentation is attached hereto as Exhibit 2
and is incorporated by reference herein in its entirety.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Not Applicable
(b) Not Applicable
(c) Exhibits.
The following Exhibits are filed with this Current Report on Form 8-K.
Exhibit
Number Description
1 Press Release, dated September 22, 1999
2 Information Presentation
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registration has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
CITY NATIONAL CORPORATION
Dated: September 22, 1999 /s/ Arthur G. Spence
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ARTHUR G. SPENCE
Assistant Secretary
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EXHIBIT 1
CITY NATIONAL EXTENDS GROWTH STRATEGY TO NORTHERN CALIFORNIA
City National Corporation (NYSE: CYN), parent company of City National Bank,
and The Pacific Bank (NASDAQ: PBSF) today announced a definitive agreement
for the acquisition of $728 million-asset The Pacific Bank
NEWS RELEASE
Contacts:
Financial/Investors
Frank Pekny (City National) 310/888-6700
Ian Campbell (Abernathy MacGregor Frank) 213/630-6550
Steve Bruce (Abernathy MacGregor Frank) 212/371-5999
John Halicky (The Pacific Bank) 415/576-2763 (media also)
Media
Jim Dunnigan (City National) 310/888-6636
Denis Wolcott (Stoorza, Ziegaus & Metzger) 213/891-2822
FOR IMMEDIATE RELEASE
CITY NATIONAL TO ACQUIRE
SAN FRANCISCO-HEADQUARTERED THE PACIFIC BANK
City National Extends Growth Strategy
To Northern California
LOS ANGELES, September 22, 1999 -- City National Corporation (NYSE: CYN),
parent company of City National Bank, and The Pacific Bank (NASDAQ: PBSF)
today announced a definitive agreement for the acquisition of $728
million-asset The Pacific Bank by City National in an approximately 50
percent common stock, 50 percent cash transaction valued at $153 million. The
combination of these two private and business banks marks City National's
strategic expansion into Northern California and will bring its total pro
forma assets to $7.5 billion, based on June 30, 1999 totals.
Under the terms of the agreement, City National will acquire The Pacific Bank
for $29.00 for each of the 5.0 million shares of The Pacific Bank common
stock outstanding. This represents a multiple of 19.9 times The Pacific
Bank's adjusted trailing twelve months earnings and 2.2 times The Pacific
Bank's tangible book value at June 30, 1999. The acquisition will be
accounted for as a purchase. Assuming the transaction closes in the first
quarter of 2000, it is expected to be accretive to both GAAP and cash
earnings in the year 2000.
"This combination marks our entry into the robust Bay Area economy, provides
an excellent platform for our future growth in Northern California and is a
logical extension of our proven formula of delivering premier private and
business banking to a very compelling community and customer base," said City
National Chairman and CEO Russell Goldsmith. "This is the right opportunity
in the right place at the right time with the right partner."
Mr. Goldsmith noted that City National and The Pacific Bank share a similar
focus on delivering superior relationship banking to entrepreneurs,
professionals and small- to mid-size businesses, who will benefit from City
National's expertise in key industries that drive economic growth in both
Northern and Southern California. These include international trade,
technology, real estate, media and entertainment. Moreover, the $1.0 billion
in assets under custody or management in The Pacific Bank's trust division
will be an excellent fit with City National's $13 billion trust and
investment management division.
"This acquisition will deliver significant benefits to The Pacific Bank's
shareholders, employees, customers, and the communities we serve," said
Michael Tun Zan, President and Chief Executive Officer of The Pacific
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Bank. "City National will provide us with enhanced banking and lending
capabilities, a broader array of financial products and services, and a
long-standing tradition of community involvement - all of which will help our
combined companies realize the full potential of The Pacific Bank."
When the merger occurs, Mr. Tun Zan will join City National as its senior
banking executive for Northern California. He also will chair a San Francisco
Board of Advisors to be formed by City National, which will consist of key
leaders from the Bay Area.
"We're extremely pleased that Michael has committed to help lead our entry
into Northern California, and we fully expect that most of the other key
members of The Pacific Bank team will continue in key roles in the combined
bank," said Mr. Goldsmith.
While City National said it anticipates that it will invest considerable
resources into growth in Northern California, the combination also will
result in significant cost savings as a result of duplicate corporate and
administrative operations, as well as significant branch consolidations in
Southern California.
The transaction is tax deferred to The Pacific Bank shareholders on its
common stock component and is conditioned upon the approval of regulatory
authorities and the shareholders of The Pacific Bank. The Pacific Bank's
shareholders will receive -- at their election -- cash, common stock or a
combination thereof valued at $29.00 per share provided that the 20-day
average closing City National Corporation stock price three days prior to
closing is between $28.05 and $37.95 per share, with a minimum of at least 47
percent and a maximum of 52.5 percent in common stock. City National
Corporation will use previously repurchased shares for most of the stock
portion of the transaction. In addition, City National has received an option
to purchase 19.9 percent of The Pacific Bank's common stock.
The Pacific Bank, founded in 1983, has 292 employees and 12 offices in San
Francisco, Burlingame, Sacramento, Los Angeles, Hong Kong and the Cayman
Islands. It provides full banking services to middle market businesses,
professional service firms and individuals, as well as international banking
services.
City National Corporation is a publicly owned corporation with $6.7 billion
in assets whose stock is traded on the New York Stock Exchange under the
symbol "CYN." The company's wholly owned subsidiary, City National Bank, is
Southern California's premier business and private bank, as well as the
largest independent bank headquartered in Southern California. City National
Bank has 48 offices throughout Los Angeles, Orange, Riverside, San Diego, San
Bernardino and Ventura counties. City National Investments manages or
administers over $13 billion in trust and investment assets.
For more information about City National, call the Fax-On-Demand Information
Service at 1-800-873-5293, or visit City National's Web site at www.cnb.com.
The company wishes to take advantage of the "safe-harbor" provisions of the
Private Securities Litigation Reform Act of 1995 as to "forward-looking"
statements in this release which are not historical facts. The reader's
attention is drawn to City National Corporation's Annual Report on Form 10-K
for the year ended December 31, 1998, particularly the section entitled
"Cautionary Statement for Purposes of the `Safe-Harbor' Provisions of the
Private Securities Litigation Reform Act of 1995" for a discussion of factors
which could affect the Corporation's business and cause actual results to
differ materially from those expressed in any forward looking statement made
in this release.
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CITY NATIONAL CORPORATION
[LOGO]
ACQUIRES
THE PACIFIC BANK
[LOGO]
September 22, 1999
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[LOGO]
FORWARD LOOKING INFORMATION
This presentation contains forward looking statements with respect to the
financial condition, results of operations and business of City National
Corporation (CYN) and The Pacific Bank, N.A. (PBSF) assuming the consummation
of the merger, including statements relating to: (i) the cost savings and
accretion to reported earnings that will be realized from the merger; and
(ii) the integration costs expected to be incurred in connection with the
merger. These forward looking statements involve certain risks and
uncertainties. Factors that may cause actual results to differ materially
from those contemplated by such forward looking statements include, among
other things, the following possibilities: (i) expected cost savings from the
merger cannot be fully realized or realized within the expected time; (ii)
revenues following the merger are lower than expected; (iii) competitive
pressure among depository institutions increase significantly; (iv) costs of
the difficulties related to the integration of the business of The Pacific
Bank and City National Bank are greater than expected; (v) changes in the
interest rate environment reduces interest margins; (vi) general economic
conditions, either nationally or in California, are less favorable than
expected; (vii) legislation or regulatory requirements or changes adversely
affect the business in which the combined company will be engaged; and (viii)
changes may occur in the securities market.
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[LOGO]
STRATEGIC RATIONALE
- - Extension of CYN's core business to a new, but fundamentally similar market
is the logical next step in evolving CYN's strategy
- - In looking for fundamentally similar geographic markets, Northern
California offers the following positive characteristics:
- attractive market of entrepreneurs and growing young businesses
- significant & growing high net worth individual market
- very active real estate market
- - 9 of top 20 "richest" cities are in Northern California (as ranked by
median home price by Worth magazine)
2
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[LOGO]
STRATEGIC RATIONAL (CONT.)
- - Northern California provides for diversification of CYN's portfolio risk
- - Excellent opportunity to extend CYN's relationship banking approach to
Northern California
- - The disruptions in the California banking market create a key opportunity
for CYN to expand into Northern California at this time
- - PBSF has customers in Northern California with whom we can do additional
business
3
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[LOGO]
TRANSACTION SUMMARY
NAME: The Pacific Bank, N.A.
HEADQUARTERS: San Francisco, CA
STRUCTURE: Purchase, 50% stock/50% cash
PRICE: $29.00 per share
$152.9 million Aggregate Transaction Value
COLLARS: Exchange ratio floats between $28.05 and $37.95, is fixed
at .7642 from $37.95 to $41.25 and floats above $41.25
based on $31.52 divided by the final CYN stock price
LOCK UP ARRANGEMENT: Pacific Bank to grant CYN an option at $19.00 for 19.9%
of its stock
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[LOGO]
TRANSACTION SUMMARY (CONT.)
TIMING: Subject to regulatory and Pacific shareholder
approvals. Targeted to close early 2000
DUE DILIGENCE: Completed, including year 2000 review
WALKAWAY: Permitted if final CYN stock price is less than $24.75
and has declined by more than 15 percentage points, in
relation to the decline in the NASDAQ Bank Index
COST SAVINGS: Approximately 30%
ACCRETION: Approximately 1--2% to consensus 2000 GAAP earnings
for CYN,over 5--6% to consensus 2000 cash earnings for
CYN
INTEGRATION COST: $1.5 million pre-tax
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<TABLE>
<CAPTION>
BALANCE SHEET IMPACT - AS OF JUNE 30, 1999
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ACQUISITION
CYN APSB(1) PACIFIC ADJUSTMENTS PRO FORMA
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<S> <C> <C> <C> <C> <C>
Assets $6,302 $442 $729 ($82) $7,391
Loans 4,723 243 503 5,469
Intangibles 70 0 8 115 193
Deposits 4,684 407 638 5,729
Equity 561 32 74 (33) 634
Equity/Assets 8.90% 7.24% 10.15% 8.58%
Tangible Equity/Assets 8.19 7.24 9.05 6.22
Loans/Deposits 100.83 59.71 78.84 95.46
NPLs/Loans 0.56 0.32 0.50 0.56
NPAs/Assets 0.45 0.36 0.34 0.44
Reserves/NPLs 528.34 239.86 480.66 512.75
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</TABLE>
(1) The American Pacific State Bank (APSB) acquisition closed on August 27,
1999.
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<TABLE>
<CAPTION>
HISTORICAL FINANCIAL PROFILE OF PACIFIC ($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
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FYE DECEMBER 31, 6 MOS. ENDED
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1996 1997 1998 1998 1999
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<S> <C> <C> <C> <C> <C>
Loans $330.1 $396.3 $484.5 $418.8 $502.7
Loan Loss Reserve 10.8 10.8 12.3 10.1 12.1
Deposits 392.5 506.7 611.9 488.1 637.8
Common Equity 72.8 80.0 80.3 83.0 73.6
Total Assets 476.7 603.4 713.3 586.5 728.6
Equity/Assets 15.3% 13.3% 11.3% 14.1% 10.1%
Tier 1/Assets 19.40 16.70 12.70 16.83 11.73
Loans/Assets 67.30 64.00 61.70 69.60 67.30
Net Income $7.1 $7.3 $3.3 $3.6 $3.9
Net Income/Share 1.25 1.28 0.57 0.62 0.74
ROAA 1.56% 1.35% 0.51% 1.22% 1.12%
ROAE 10.00 9.47 3.92 8.77 10.40
Net Interest Margin 6.20 5.86 5.75 5.76 5.61
Efficiency Ratio 74.33 70.01 65.28 69.26 72.00
NPAs/Assets 0.36 0.23 0.41 0.40 0.35
Reserves/NPAs 604.47 787.13 418.85 386.40 480.66
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</TABLE>
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[LOGO]
<TABLE>
<CAPTION>
LOAN PORTFOLIO COMPOSITION
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6 MONTHS ENDED, 1999
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PBSF CYN
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<S> <C> <C>
Commercial 52.8% 53.7%
Construction 9.8 6.1
Real Estate 33.4 17.0
Residential Mortgage 0.0 22.1
Other 4.0 1.1
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Total 100.0% 100.0%
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</TABLE>
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<TABLE>
<CAPTION>
PACIFIC'S CORE LINES OF BUSINESS ($ IN MILLIONS)
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SIX MONTHS ENDED 6/30,
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1999 1998
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<S> <C> <C>
Domestic Commercial Banking
Revenues $13.9 $10.5
Pretax Income 6.7 5.1
International / Trade Finance
Revenues 4.9 6.1
Pretax Income 1.4 2.5
Wealth Management Services
Revenues 1.6 1.9
Pretax Income 0.8 0.6
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</TABLE>
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