City National The way up.

Transcription

1 City National The way up. Russell Goldsmith Chairman and Chief Executive Officer Christopher J. Carey Chief Financial Officer Goldman Sachs U.S. Financial Services Conference New York, December 9, 2014

2 America s Premier Private & Business Bank SM Founded: 1954 Headquarters: Assets: Market Cap: Offices: Los Angeles $32.0 billion ~$4.0 billion 77 (16 regl ctrs) Colleagues: 3,600 Locations: AUM/A: Southern California Northern California New York City Nevada, Nashville and Atlanta $61.2 billion

3 Why City National? 1. Unique market position 2. Critical mass in key markets 3. Diversified business model 4. Successful acquisitions 5. Wealth management 6. Technology and new products 7. Profitable growth and asset sensitivity 8. Strong balance sheet and credit quality

4 Unique Market Position TOTAL ASSETS Mega-Banks Assets > $100B CLIENTS Fortune 1000 $32.0B Client Focus Talent Capabilities Values Reputation Businesses: $1M $250M Individuals 1 : Assets > $1M Income > $250K Assets < $5B Community Banks Retail Customers 1 City National s Preferred Banking initiative targets individuals with income of $100,000 or more and investible assets of $250,000 or more.

5 Critical Mass in Key Markets Los Angeles San Francisco Bay Area Orange County/ San Diego New York City Population: 10.0 Million Population: 6.1 Million Population: 6.3 Million Population: 8.3 Million Businesses: 347,000 Businesses: 223,400 Businesses: 247,600 Businesses: 117,500 Branches: 32 Branches: 12 Branches: 15 Branches: 2 Loans + Deposits: $32 Billion Loans + Deposits: $3 Billion Loans + Deposits: $3 Billion Loans + Deposits: $3 Billion Source: United States Census Bureau, InfoGroup, City National Bank

6 Diversified Business Model Granular loan portfolio Total Loan Portfolio 3Q14 Average Balances ($ in billions) Commercial Loan Portfolio 3Q14 Average Balances ($ in billions) Industry Specialties 3Q14 Average Balances ($ in billions) Commercial $9.0 CRE Mortgage $3.5 Residential Mortgage $4.9 RE Construction $0.5 Equity Lines $0.7 Installment $0.2 Industry Specialties $6.5 Private Banking $1.0 Commercial Banking $0.8 Real Estate $0.4 Core Banking $0.2 Other $0.1 Corporate Bkg $1.8 Entertainment $1.7 Leasing $0.9 International $0.8 1 Franchise Finance $0.6 ABL $0.4 Technology $0.1 Mtg Warehouse $0.1 Healthcare $ Excludes $283 million in CRE loans to franchisees

7 Diversified Business Model Industry specialties Entertainment Real Estate Legal Services Technology Healthcare Corporate Banking

8 Diversified Business Model Serving clients nationwide Equipment leasing Asset-based lending Franchise finance Mortgage warehouse banking

9 Diversified Business Model Growing branch network relationships with the affluent client segment through Preferred Banking Preferred Banking Balances $3 $2.7 $2.4 $ in billions $2 $1 $1.0 $1.3 $0.6 $1.8 $0.8 $0.9 $1.1 $0.4 $ Q2014 Loans Deposits Brokerage/MM/AUA Managed Assets Total New Money

10 Successful Acquisitions First American Lee Munder Rochester Boston Rochdale New York San Francisco San Jose Reno Las Vegas Nevada Commerce Expansion 1 st Pacific Los Angeles Sun West Nashville Expansion Imperial Capital San Diego Datafaction Atlanta Expansion One FDIC, one branch deal in CA Acquired Lee Munder Capital Group Opened branch in NYC Acquired Datafaction Two FDIC, one branch deals in CA and NV Opened branches in Nashville and Atlanta FDIC deal in NV Acquired First American Equipment Finance Acquired Rochdale Investment Management

11 Wealth Management Ranked among America s top wealth managers for 14 years 1 Growth in Client Assets 2 and Fees $ in billions $80 $60 $40 $20 $51.6 $ $64.7 $300 $266.7 $61.2 $225 $150 $75 $ in millions Serving high-net-worth and institutional clients: City National Rochdale City National Securities Convergent Wealth Advisors $ YTD2014 $0 Lee Munder Capital Group Administration Management Fee Income 3 1. Barron s Magazine: , based on assets under management at June Excludes City National s minority interest in Matthews International 3. YTD 2014 fee income calculated on an annualized basis

12 Wealth Management Ranked among America s top wealth managers for 14 years 1 Growth in Client Assets and Fees $ in billions $80 $60 $40 $20 $54.7 $61.4 $ $300 $266.7 $66.6 $225 $150 $75 $ in millions Serving high-net-worth and institutional clients: City National Rochdale City National Securities Convergent Wealth Advisors $ YTD2014 Administration Management $0 Lee Munder Capital Group Matthews International 2 Matthews (20%) Fee Income 3 1. Barron s Magazine: , based on assets under management at June Minority interest 3. YTD14 fee income calculated on an annualized basis

13 Technology and New Products Continuous improvement, innovation and investment to: Better serve clients: City National Online Mobile Banking with FASTdeposit EASI Link SM Datafaction DFX International Banking Online Achieve greater process and cost efficiencies: Digital Platform Big Data Security Compliance Core 3.0 EMV Chip Credit Cards

14 Profitable Growth and Asset Sensitivity Earnings grew to a record level in 3Q14 3Q2014 Change 1 Net income $ 68.7 mil. 8 % Earnings per share $ % Revenue $ mil. 7 % Net interest income $ mil. 1 % Average loans 2 $ 18.8 bil. 17 % Average core deposits $ 26.4 bil. 11 % Noninterest income $ mil. 21 % Assets under management $ 49.1 bil. 15 % Loan loss allowance % (9) % 1. Percentage change from 3Q Excluding FDIC-covered loans

15 Profitable Growth and Asset Sensitivity Positioned well for rising interest rates Change in net interest income 1 (Hypothetical gradual 200 basis point parallel increase) 30% 28.7% 20% $241 million 10% 6.9% $58 million 0% 2 Dynamic Balance Sheet Year 1 Year 2 1. From base case, which assumes stable rates and stable balance sheet 2. Assumes loans (excluding FDIC-covered loans) increase 13% per year and deposits decline 4% per year compared to base case As of September 30, 2014

16 Strong Balance Sheet and Credit Quality Loan balances have increased for 14 straight quarters Average Loans 1 $20 $16.0 $16.8 $17.3 $18.0 $18.8 $15 $ in billions $10 $5 $0 3Q2013 4Q2013 1Q2014 2Q2014 3Q2014 Commercial CRE Mortgage Residential Mortgage RE Construction Equity Lines Installment 1. Excluding FDIC-covered loans

17 Strong Balance Sheet and Credit Quality City National already complies with 2019 Basel III standards 15% 12.4% Nonaccruals to Tier 1 plus ALLL 10% 5% 5.3% 4.7% 6.0% 5.0% 4.0% 2.9% 1.4% 0% Q2014 CNB Peer Median Peer Group: National banks with assets of $10-$50 billion Source: SNL Financial

18 Strong Balance Sheet and Credit Quality Low-cost core deposits equal 98% of total balances 1 Average Deposits $28 $26.8 $21 $19.3 $21.6 $24.0 $ in billions $14 $7 $ Q2014 Noninterest Bearing Other Interest Bearing CDs > $100K 1. Based on 3Q2014 average deposit balances

19 Why City National? 1. Unique market position 2. Critical mass in key markets 3. Diversified business model 4. Successful acquisitions 5. Wealth management 6. Technology and new products 7. Profitable growth and asset sensitivity 8. Strong balance sheet and credit quality

20 Forward-Looking Statements This presentation 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 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) limited economic growth and elevated levels of unemployment; (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) the impact of cyber security attacks or other disruptions to the company s information systems and any resulting compromise of data or disruption in service; (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 FDICassisted acquisitions resulting in greater than anticipated losses in the acquired loan portfolios exceeding the losses covered by the loss-sharing agreements with the FDIC; (11) changes in inflation, interest rates, and market liquidity which may impact interest margins and impact funding sources; (12) the company s ability to attract new employees and retain and motivate existing employees; (13) increased competition in the company s markets and our ability to increase market share and control expenses; (14) changes in the financial performance and/or condition of the company s customers, or changes in the performance or creditworthiness of our customers suppliers or other counterparties, which could lead to decreased loan utilization rates, delinquencies, or defaults and could negatively affect our customers ability to meet certain credit obligations; (15) a substantial and permanent loss of either client accounts and/or assets under management at the company s investment advisory affiliates or its wealth management division; (16) soundness of other financial institutions which could adversely affect the company; (17) protracted labor disputes in the company s markets; (18) the impact of natural disasters, terrorist activities or international hostilities on the operations of our business or the value of collateral; (19) the effect of acquisitions and integration of acquired businesses and de novo branching efforts; (20) changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies; and (21) 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, see the company s Annual Report on Form 10-K for the year ended December 31, 2013 and particularly, Item 1A, titled Risk Factors.

21 Thank you.