<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 13, 2000
City National Corporation
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(Exact name of registrant as specified in charter)
Delaware 1-10521 95-2568550
---------------- ------------- ---------------
(State or other (Commission (IRS employer
jurisdiction of file number) identification no.)
incorporation)
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
--------------
Not applicable
-----------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS.
On January 13, 2000, City National issued a press release reporting its
financial results for the quarter and year ended December 31, 1999.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
99.1 Press release dated January 13, 2000 reporting financial results
for the quarter and year ended December 31, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: January 25, 2000
CITY NATIONAL CORPORATION
/s/ Barbara S. Polsky
----------------------------
Barbara S. Polsky
Executive Vice President,
General Counsel and Secretary
<PAGE>
EXHIBIT 99.1
[CITY NATIONAL LETTERHEAD]
NEWS RELEASE
Contacts:
FINANCIAL/INVESTORS
Frank Pekny (City National) 310-888-6700
Ian Campbell (Abernathy MacGregor Group) 213-630-6550
MEDIA
Jim Dunnigan (City National) 310-888-6636
Dennis Wolcott (Stoorza, Ziegaus & Metzger) 213-891-2822
FOR IMMEDIATE RELEASE
- ---------------------
CITY NATIONAL REPORTS FOURTH CONSECUTIVE YEAR OF RECORD NET INCOME
LOS ANGELES, January 13, 2000 -- City National Corporation (NYSE: CYN)
today reported its fourth consecutive year of record net income. Net income
totaled $108.1 million in 1999, a 12 percent increase from net income of
$96.2 million in 1998. Net income per diluted common share rose 15 percent
to $2.30 per share, compared with $2.00 per share in 1998.
City National Corporation, parent company of wholly owned City National
Bank, also reported net income of $27.9 million for the fourth quarter of
1999, an increase of 13 percent over net income of $24.7 million for the
fourth quarter of 1998. Net income per diluted common share increased by 15
percent to $0.60 per share from $0.52 per share in the fourth quarter of 1998.
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Cash earnings, which exclude the amortization of core deposit
intangibles and goodwill, increased 13 percent to $115.4 million from $101.7
million in 1998. Cash earnings per diluted common share rose 17 percent to
$2.46 per diluted common share in 1999, from $2.11 per diluted common share
in 1998.
"Continuing to build upon our strong momentum, outstanding team and
unique position as the premier private and business bank in Southern
California, City National generated strong growth in both loans and core
deposits, and at year-end, our assets grew to over $7 billion for the first
time," said Russell Goldsmith, CEO of City National Bank and City National
Corporation. "In 1999, we also achieved double-digit growth in net income for
the fifth consecutive year, maintained outstanding credit quality and
increased non-interest income by nearly 30 percent."
"In 1999, we were particularly pleased to add American Pacific State
Bank into our Company and to reach a merger agreement with The Pacific Bank
which, for the first time, will expand City National into San Francisco and
the dynamic Bay Area economy later in this quarter," Mr. Goldsmith added.
RETURN ON ASSETS/RETURN ON EQUITY
The Company's return on average assets in 1999 was 1.67 percent,
compared with 1.71 percent for 1998. The return on average common equity
increased to 19.16 percent, compared with 17.87 percent in the prior year, as
growth in net income exceeded growth in shareholders' equity. The growth in
shareholders' equity was affected by the repurchase of the Company's stock at
a cost of $38.0 million.
City National's total average assets rose to a record $6.5 billion in
1999, an increase of 15 percent, compared with $5.6 billion in average assets
in 1998. Internally generated growth was
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primarily responsible for the increase in total assets, and was supplemented
by the acquisition of American Pacific State Bank in August 1999.
LOANS
Average loans rose 20 percent for the 1999 fourth quarter and 14 percent
for the year to $4.8 billion. Annual loan growth was driven primarily by
increases in commercial, real estate commercial mortgage, and construction
loans. Commercial loan average balances rose 17 percent from $2.2 billion to
$2.6 billion. Real estate commercial mortgage loan average balances rose 13
percent from $755.8 million to $851.4 million. In addition, construction loan
average balances rose 50 percent from $191.8 million to $288.1 million.
Total loans at December 31, 1999 were $5.5 billion, compared with $4.5
billion at December 31, 1998. During the year, relationship-originated loans
increased $974.7 million while non-relationship-syndicated loans -- which
continue to be less than 10 percent of the portfolio -- and purchased
residential first mortgages fell $14.5 million due to repayments and sales.
DEPOSITS
Total deposits were $5.7 billion at December 31, 1999, compared with
$4.9 billion at December 31, 1998. Core deposits -- which continued to
significantly benefit the bank's cost of funds -- increased by approximately
$367 million, or 9 percent, with the remaining growth coming from
certificates of deposit over $100,000.
NET INTEREST INCOME
Net interest income on a fully taxable-equivalent basis rose 9 percent
to $332.7 million,
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compared with $304.2 million in 1998. Interest recovered on non-accrual and
charged-off loans was $5.3 million in 1999, compared with $7.1 million in
1998.
The fully taxable-equivalent net interest margin in 1999 was 5.56
percent, compared with 5.86 percent the preceding year. The combination of
growth in earning assets -- which outpaced growth in lower-cost core deposits
- -- and a slightly lower average prime rate in 1999 caused the year-over-year
decrease in the net interest margin. The 11-basis-point reduction in the net
interest margin between the third and the fourth quarters of 1999 is
primarily attributable to increased rates paid on time deposits and swaps,
and to Y2K liquidity precautions. The preparations taken in anticipation of
the January 1, 2000 rollover have, to date, resulted in a successful Y2K
transition.
NON-INTEREST INCOME/EXPENSE
Non-interest income continued its strong growth trend, rising 29 percent
to $87.2 million for 1999 over the $67.7 million reported in 1998 -- which,
in turn, was 27 percent higher than in 1997. Non-interest revenues as a
percent of total revenues increased to 21.3 percent in 1999 from 18.7 percent
the year earlier, reflecting the Company's continued emphasis on diversifying
its sources of revenue.
Essentially all categories of non-interest income increased over the
prior year. Investment services and trust fees grew as a result of strong,
internally generated new business as well as new revenue contributions from
the North American Trust Company acquisition, which was completed at the end
of 1998. International services income rose 23 percent to just under $10.0
million. Gains on the sale of assets and securities amounted to $5.8 million
for the year, compared with $4.9 million in the prior year.
Non-interest expense was $241.8 million in 1999, compared with $211.3
million in 1998. The year-over-year increase is primarily the result of
expenses related to two acquired businesses -- North
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American Trust Company at the end of 1998 and American Pacific State Bank in
August 1999; expenses related to new branch openings; and other growth
opportunities. Compared with 1998, salaries and other benefits increased by
$19.0 million, or 17 percent, and all other expenses increased $11.5 million,
or 12 percent. The Company's emphasis on cost control continues to be
reflected in its cash efficiency ratio, which grew very modestly from 55.03
percent in 1998 to 55.37 percent in 1999.
CREDIT QUALITY
The Company recorded no credit loss provisions for 1999 or 1998, as
credit quality remained strong. Net credit losses were $4.7 million in 1999,
compared with net credit losses of $5.2 million in 1998. In the fourth
quarter, loan charge-offs include approximately $8.0 million for two
syndicated nursing sector health care credits in which the bank sold its
position at a discount.
The allowance for credit losses at December 31, 1999, totaled $134.1
million, or 2.44 percent of outstanding loans. This compares with an
allowance of $135.3 million, or 2.99 percent at December 31, 1998. The
allowance for credit losses as a percentage of nonaccrual loans was 530
percent at December 31, 1999, compared with 585 percent at December 31, 1998.
Total non-performing assets (nonaccrual loans and OREO) were $26.7 million,
or 0.49 percent of total loans and OREO at December 31, 1999, slightly higher
than the $21.5 million or 0.41 percent at September 30, 1999 and comparable
to the $26.6 million or 0.59 percent at December 31, 1998.
CAPITAL LEVELS
Total-capital and Tier 1 capital ratios at December 31, 1999 were 11.21
percent and 7.88 percent, well above the capitalization ratios of 10.00
percent and 6.00 percent required for an institution to be classified as
"well-capitalized." The Company's leverage ratio of 6.73 percent
substantially exceeded
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the regulatory minimum of 4.00 percent required for a "well-capitalized"
institution. Lower capital ratios, as compared to prior periods, are
primarily attributable to the growth in assets from the all-cash acquisition
of American Pacific State Bank and the Company's stock repurchase programs.
STOCK REPURCHASE
City National repurchased 1,152,800 shares of stock at a cost of $38.0
million during 1999. Under the current stock buyback program of 1 million
common shares announced on July 29, 1999, 280,800 shares -- including 32,400
shares in the fourth quarter -- were repurchased for a cost of $9.3 million.
Shares purchased under the buyback program will be reissued for the
acquisition of The Pacific Bank, upon the exercise of stock options and for
other general corporate purposes. Treasury shares at December 31, 1999
totaled 1,428,439 shares.
PROPOSED ACQUISITION OF THE PACIFIC BANK
On December 29, 1999, the OCC approved the Company's application to
acquire The Pacific Bank, subject to The Pacific Bank's shareholders'
approval.
ABOUT CITY NATIONAL
City National Corporation is a publicly owned corporation with $7.2
billion in total assets. Its 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. City
National Bank has 46 offices throughout Los Angeles, Orange, Riverside, San
Bernardino, San Diego and Ventura counties.
For more information about City National, our Fax-On-Demand Information
Service is at
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1.800.873.5293, and City National's web page is at http://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 that are not historical facts. City National
Corporation notes that a variety of factors could affect the Company's
business and cause actual results to differ materially from those expressed
in any forward-looking statement made in this release. The risks and
uncertainties that may affect the operations, performance and results of the
Company's business include the following: economic conditions; interest
rates; government regulation and monetary policy; competition; and credit
quality.
For a more complete discussion of these risks and uncertainties, the
reader's attention is directed to City National Corporation's Form 10-Q for
the quarter ended September 30, 1999, particularly the section entitled
"Cautionary Statement for Purposes of the 'Safe-Harbor' Provisions of the
Private Securities Litigation Reform Act of 1995," and the Registration
Statement on Form S-4 filed with the Securities and Exchange Commission on
January 10, 2000, particularly the section entitled "Risk Factors."
###
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<PAGE>
Earnings Release
January 13, 2000
CITY NATIONAL CORPORATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET (unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Dollars in thousands, except per share amounts) December 31,
--------------------------------------------------
1999 1998 % Change
--------------- --------------- --------------
<S> <C> <C> <C>
Assets
Cash and due from banks $ 233,178 $ 286,367 (19)
Securities 1,129,806 1,047,017 8
Federal funds sold 57,000 405,000 (86)
Loans (net of allowance for credit
losses of $134,077 and $135,339) 5,356,592 4,395,088 22
Other assets 437,043 294,309 48
--------------- --------------- --------------
Total assets $ 7,213,619 $ 6,427,781 12
=============== =============== ==============
Liabilities and Shareholders' Equity
Noninterest-bearing deposits $ 2,448,916 $ 2,382,724 3
Interest-bearing deposits 3,220,493 2,504,678 29
--------------- --------------- --------------
Total deposits 5,669,409 4,887,402 16
Federal funds purchased and securities sold
under repurchase agreements 295,487 451,311 (35)
Other short term borrowed funds 296,739 92,001 223
Subordinated debt 123,453 123,265 0
Other long-term debt 180,000 250,000 (28)
Other liabilities 76,885 61,999 24
--------------- --------------- --------------
Total liabilities 6,641,973 5,865,978 13
Shareholders' equity 571,646 561,803 2
--------------- --------------- --------------
Total liabilities and shareholders' equity $ 7,213,619 $ 6,427,781 12
=============== =============== ==============
Book value per share $12.58 $12.21 3
Number of shares at period end 45,456,743 46,007,237 (1)
</TABLE>
CONSOLIDATED STATEMENT OF INCOME (unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the three months ended For the twelve months ended
(Dollars in thousands,
except per share amounts) December 31, December 31,
-------------------------------------------------- -------------------------------------------
1999 1998 % Change 1999 1998 % Change
--------------- --------------- -------------- -------------- --------------- --------
<S> <C> <C> <C> <C> <C> <C>
Interest income $ 129,435 $ 109,632 18 $ 470,446 $ 423,949 11
Interest expense (42,524) (34,738) 22 (148,441) (130,278) 14
--------------- --------------- -------------- -------------- --------------- --------
Net interest income 86,911 74,894 16 322,005 293,671 10
Provision for credit losses - - - - - -
--------------- --------------- -------------- -------------- --------------- --------
Net interest income after
provision for credit losses 86,911 74,894 16 322,005 293,671 10
Noninterest income 23,215 17,175 35 87,212 67,684 29
Noninterest expense (66,699) (53,133) 26 (241,803) (211,331) 14
--------------- --------------- -------------- -------------- --------------- --------
Income before taxes 43,427 38,936 12 167,414 150,024 12
Income taxes (15,510) (14,202) 9 (59,307) (53,796) 10
--------------- --------------- -------------- -------------- --------------- --------
Net income $ 27,917 $ 24,734 13 $ 108,107 $ 96,228 12
=============== =============== ============== ============== =============== ========
Net income per share, basic $ 0.61 $ 0.54 13 $ 2.36 $ 2.08 13
=============== =============== ============== ============== =============== ========
Net income per share, diluted $ 0.60 $ 0.52 15 $ 2.30 $ 2.00 15
=============== =============== ============== ============== =============== ========
Dividends paid per share $ 0.17 $ 0.14 18 $ 0.66 $ 0.56 18
=============== =============== ============== ============== =============== ========
Shares used to compute per
share net income, basic 45,428,367 45,918,688 45,682,714 46,357,351
Shares used to compute per
share net income, diluted 46,605,553 47,506,073 46,938,130 48,140,869
</TABLE>
<PAGE>
Earnings Release
January 13, 2000
CITY NATIONAL CORPORATION
- -------------------------------------------------------------------------------
SELECTED FINANCIAL INFORMATION (unaudited) (Dollars in thousands)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period end December 31,
--------------------------------------------------
1999 1998 % Change
--------------- --------------- --------------
<S> <C> <C> <C>
Loans
Commercial $ 2,870,438 $ 2,457,946 17
Residential first mortgage 1,173,334 1,038,229 13
Real estate - commercial mortgage 1,042,123 747,711 39
Real estate - construction 344,870 237,015 46
Installment 59,904 49,526 21
--------------- --------------- --------------
Total loans $ 5,490,669 $ 4,530,427 21
=============== =============== ==============
Nonaccrual loans and ORE
Nonaccrual loans $ 25,288 $ 23,138 9
ORE 1,413 3,480 (59)
--------------- --------------- --------------
Total nonaccrual loans and ORE $ 26,701 $ 26,618 0
=============== =============== ==============
Loans past due 90 days or more on accrual status $ 4,033 $ 8,623 (53)
=============== =============== ==============
Restructured loans on accrual status $ 2,707 $ 1,982 37
=============== =============== ==============
Deposits
Noninterest bearing $ 2,448,916 $ 2,382,724 3
Interest-bearing, core 2,051,799 1,750,963 17
--------------- --------------- --------------
Total core deposits 4,500,715 4,133,687 9
Time deposits - $100,000 and over 1,168,694 753,715 55
--------------- --------------- --------------
Total deposits $ 5,669,409 $ 4,887,402 16
=============== =============== ==============
</TABLE>
<TABLE>
<CAPTION>
For the three months ended For the twelve months ended
Average Balances December 31, December 31,
--------------------------------------------- -----------------------------------------
1999 1998 % Change 1999 1998 % Change
------------ ------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Loans
Commercial $2,743,592 $2,358,466 16 $2,560,701 $2,186,395 17
Residential first mortgage 1,148,876 1,031,483 11 1,069,522 1,028,966 4
Real estate - commercial mortgage 1,018,816 741,382 37 851,396 755,752 13
Real estate - construction 329,146 243,566 35 288,084 191,782 50
Installment 59,854 49,823 20 52,551 50,958 3
---------- ---------- ---------- ---------- ---------- ----------
Total loans $5,300,284 $4,424,720 20 $4,822,254 $4,213,853 14
========== ========== ========== ========== ========== ==========
Securities $1,155,776 $ 998,741 16 $1,118,127 $ 898,161 24
Earning assets 6,526,811 5,575,436 17 5,985,018 5,187,897 15
Assets 7,132,771 6,021,957 18 6,488,834 5,633,829 15
Core deposits 4,325,587 3,695,810 17 3,881,108 3,506,554 11
Deposits 5,508,263 4,490,460 23 4,809,800 4,267,602 13
Shareholders' equity 570,932 547,967 4 564,091 538,426 5
</TABLE>
<PAGE>
Earnings Release
January 13, 2000
CITY NATIONAL CORPORATION
- -------------------------------------------------------------------------------
SELECTED FINANCIAL INFORMATION (unaudited) (Dollars in
thousands except per share amounts)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the three months ended For the twelve months ended
December 31, December 31,
----------------------------------------------- ----------------------------
1999 1998 % Change 1999 1998 % Change
---------- --------- --------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Selected Ratios
For the Period
Return on average assets 1.55 % 1.63 % (5) 1.67 % 1.71 % (2)
Return on average shareholders' equity 19.40 17.91 8 19.16 17.87 7
Net interest margin 5.46 5.52 (1) 5.56 5.86 (5)
Efficiency ratio 58.81 55.97 5 57.58 56.87 1
Dividend payout ratio 26.69 25.83 3 27.91 27.06 3
Period End
Tier 1 risk-based capital ratio 7.88 9.43 (16)
Total risk-based capital ratio 11.21 13.20 (15)
Tier 1 leverage ratio 6.73 7.99 (16)
Nonaccrual loans to total loans 0.46 0.51 (10)
Nonaccrual loans and ORE to total loans and ORE 0.49 0.59 (17)
Allowance for credit losses to total loans 2.44 2.99 (18)
Allowance for credit losses to nonaccrual loans 530.20 584.92 (9)
Cash earnings and ratios (reported earnings net of
goodwill and nonqualifying core deposit
intangibles) (1)
Cash net income $ 30,411 $ 26,086 17 $ 115,358 $ 101,714 13
Cash net income per share, basic 0.67 0.57 18 2.53 2.19 16
Cash net income per share, diluted 0.65 0.55 18 2.46 2.11 17
Cash return on average assets 1.72 % 1.73 % (1) 1.80 % 1.82 % (1)
Cash return on average shareholders' equity 26.71 20.98 27 23.98 20.98 14
Cash efficiency ratio 56.11 54.14 4 55.37 55.03 1
</TABLE>
(1) Nonqualifying core deposit intangible (CDI) amortization and average
balance excluded from these calculations are, with the exception of the
efficiency ratio, net of applicable taxes. The after-tax amounts for the
amortization and average balance of nonqualifying CDI were $0.8 million and
$13.3 million, respectively, for the quarter ended December 31, 1999 and
$0.3 million and $13.1 million, respectively, for the three months ended
December 31, 1998. For the years, the amortization and average balance of
nonqualifying CDI were $2.8 million and $11.5 million, respectively for
1999 and $1.9 million and $22.0 million respectively for 1998. Goodwill
amortization and average balance (which are not tax effected) were $1.7
million and $105.9 million, respectively, for the quarter ended December
31, 1999 and $0.8 million and $42.4 million respectively, for the three
months ended December 31, 1998. For the years, the goodwill amortization
and average balance were $4.4 million and $71.4 million respectively for
1999 and $3.6 million and $40.8 million respectively for 1998. The
Company's cash earnings per share are not necessarily comparable to
similarly titled measures reported by other companies.
<TABLE>
<CAPTION>
For the three months ended For the twelve months ended
December 31, December 31,
---------------------------------------- -----------------------------------
1999 1998 % Change 1999 1998 % Change
---------- ----------- ----------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Noninterest income:
Service charges on deposit accounts $ 5,417 $ 4,355 24 $ 18,113 $ 17,386 4
Investment services 5,350 4,430 21 19,763 16,330 21
Trust fees 4,752 2,641 80 18,059 9,376 93
International services 3,085 2,177 42 9,950 8,106 23
Bank owned life insurance 614 557 10 2,268 2,146 6
Other 3,923 2,330 68 13,246 9,445 40
-------- -------- -------- -------- -------- --------
Subtotal 23,141 16,490 40 81,399 62,789 30
Gain on sale of loans and assets 393 (58) N/M 2,117 1,823 16
Gain on sale of securities (319) 743 (143) 3,696 3,072 20
-------- -------- -------- -------- -------- --------
Total $ 23,215 $ 17,175 35 $ 87,212 $ 67,684 29
======== ======== ======== ======== ======== ========
Noninterest expense:
Salaries and other employee
benefits $ 34,918 $ 27,893 25 $133,935 $114,965 17
-------- -------- -------- -------- -------- --------
All Other
Professional 5,993 6,885 (13) 20,811 23,445 (11)
Net occupancy of premises 6,230 4,011 55 18,955 14,189 34
Information services 3,604 2,025 78 12,267 8,805 39
Marketing and advertising 2,871 3,175 (10) 10,444 10,313 1
Depreciation 3,088 2,447 26 11,242 8,816 28
Office services 2,229 1,622 37 8,212 7,308 12
Amortization of goodwill and
core deposit intangibles 3,052 1,735 76 9,309 6,854 36
Equipment 667 634 5 2,213 2,250 (2)
Acquisition integration 52 717 (93) 1,161 1,126 3
Other operating 3,995 1,989 101 13,254 13,260 0
-------- -------- -------- -------- -------- -------
Total other 31,781 25,240 26 107,868 96,366 12
-------- -------- -------- -------- -------- -------
Total $ 66,699 $ 53,133 26 $241,803 $211,331 14
======== ======== ======== ======== ======== ========
</TABLE>
(Released to Business Wire this date)
