Christopher J. Carey Chief Financial Officer. Sandler O Neill & Partners West Coast Financial Services Conference San Francisco March 5, 2013

Transcription

1 Christopher J. Carey Chief Financial Officer Sandler O Neill & Partners West Coast Financial Services Conference San Francisco March 5, 2013

2 City National: Premier Private & Business Bank Founded: 1954 Headquarters: Assets: Market Cap: Offices: Los Angeles $28.6 billion $3.0 billion 78 (16 regional centers) Colleagues: 3,400 AUM/A: $56.7 billion

3 Why City National? 1. Track record of profitability 2. Uniquely attractive clientele and focus 3. Exceptional deposit base 4. Growing loan portfolio 5. Strong, low-risk balance sheet 6. Excellent capabilities to drive long-term growth

4 Why City National? 1. Track record of profitability 2. Uniquely attractive clientele and focus 3. Exceptional deposit base 4. Growing loan portfolio 5. Strong, low-risk balance sheet 6. Excellent capabilities to drive long-term growth

5 A Track Record of Profitability 2012 Change 1 Net income $ mil. 21 % Earnings per share $ % Revenue $ 1,108.4 mil. 7 % Net interest income $ mil. 7 % Average loans 2 $ 13.3 bil. 14 % Average core deposits $ 20.9 bil. 13 % Noninterest income $ mil. 5 % Assets under mgmt/admin $ 56.7 bil. 22 % Loan loss provision 2 $ 10.0 mil. (20) % Loan loss allowance % 1. Percentage change from Excluding FDIC-covered loans

6 Why City National? 1. Track record of profitability 2. Uniquely attractive clientele and focus 3. Exceptional deposit base 4. Growing loan portfolio 5. Strong, low-risk balance sheet 6. Excellent capabilities to drive long-term growth

7 Uniquely Attractive Clientele and Focus TOTAL ASSETS CLIENTS Mega Banks > $100B Fortune 1000 Strong Client Focus City National $28.6B Businesses: $1M $250M Individuals 1 : Assets > $1M Income > $250K Community Banks < $5B Retail Customers 1. City National s Preferred Banking initiative targets individuals with income of $150,000 or more and investable assets of $250,000 or more.

8 Uniquely Attractive Clientele and Focus Premier Private and Business Bank 7 excellence awards for overall service in middle-market business banking, including: Overall satisfaction Financial stability Likelihood to recommend Treasury management customer service and overall satisfaction

9 Uniquely Attractive Clientele and Focus Serving California the world s 9 th largest economy 11 counties 27 million people 1 million businesses 570,000 millionaire households Plus Nevada, New York City, Nashville, and Atlanta

10 Uniquely Attractive Clientele and Focus Top 50 Metro Markets 1 (by Number of Millionaire Households) 1. New York et al, NY-NJ-PA 448, Los Angeles-Long Beach et al, CA 245, San Francisco-Oakland et al, CA 121, Atlanta-Sandy Springs et al, GA 104, San Diego-Carlsbad et al, CA 67, Riverside et al, CA 66, San Jose-Sunnyvale et al, CA 50, Las Vegas-Paradise, NV 35, Nashville-Davidson et al, TN 30,232 Source: Phoenix Marketing International, AMS Core Based Statistical Area

11 Why City National? 1. Track record of profitability 2. Uniquely attractive clientele and focus 3. Exceptional deposit base 4. Growing loan portfolio 5. Strong, low-risk balance sheet 6. Excellent capabilities to drive long-term growth

12 Exceptional Deposit Base Low-cost core deposits equal 97% of total 25 Average Deposits Average Deposit Growth 1 By Business Line $ $17.9 $19.3 $ in billions $11.9 $ Noninterest Bearing Other Interest Bearing CDs > $100K Entertainment 36% Core 19% CBS 17% PCS 13% Treasury Mgmt. 12% Specialty Banking 3% 1 Percentage growth for business lines only, excluding FAEF,

13 Why City National? 1. Track record of profitability 2. Uniquely attractive clientele and focus 3. Exceptional deposit base 4. Growing loan portfolio 5. Strong, low-risk balance sheet 6. Excellent capabilities to drive long-term growth

14 $ in billions Growing Loan Portfolio Loan balances increased for 7 th straight quarter Average Loans 1 15 $12.2 $12.4 $13.1 $13.6 $14.0 Record loan production in each quarter of C&I accounted for nearly two-thirds of 4Q12 loan growth 5 Commercial line utilization increased for second straight quarter 0 4Q2011 1Q2012 2Q2012 3Q2012 4Q2012 Commercial CRE Mortgage Residential Mortgage RE Construction Equity Lines Installment 1. Excluding FDIC-covered loans

15 Growing Loan Portfolio Loan growth driven by C&I lending 8 Average C&I Loans Average C&I Loan Growth 1 By Business Line 6 $5.2 $5.3 $5.8 $6.1 $6.4 $ in billions Q2011 1Q2012 2Q2012 3Q2012 4Q2012 Specialty Banking 34% Real Estate 26% Entertainment 17% Private Client Services 11% Commercial Banking 7% Core Banking 5% 1 Percentage growth for business lines only, excluding FAEF and International Correspondent, 4Q11 4Q12

16 Why City National? 1. Track record of profitability 2. Uniquely attractive clientele and focus 3. Exceptional deposit base 4. Growing loan portfolio 5. Strong, low-risk balance sheet 6. Excellent capabilities to drive long-term growth

17 Strong, Low-Risk Balance Sheet Asset quality remains very sound NPAs and NCOs 1 Provision and Reserves $ in millions (0.15) (0.08) (0.06) 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 $7.5 $5.0 $7.0 $0.0 $1.0 $2.0 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 NPAs / Total loans NCOs (Net Recoveries) / Avg. loans Provision ($mm) Allowance / Total loans 1 All totals and ratios exclude FDIC-covered assets

18 $ in billions Strong, Low-Risk Balance Sheet Net charge-offs average 0.39% over 10 years 10-Year Average Net Charge-offs (by Portfolio) $6.9 $4.0 $ $0.2 $ $0.1 Commercial CRE Mortgage Residential Mortgage RE Construction Equity Lines Installment Portfolio* 10-Year Ave. Net Charge-Offs** * As of 12/31/12, excluding FDIC-covered assets ** 10-year average

19 Strong, Low-Risk Balance Sheet The company is well-capitalized Nonaccruals to Tier 1 plus ALLL 30% 29.9% 25.0% 20% 20.5% 18.0% 10% 9.3% 14.6% 15.3% 12.4% 10.9% 5.3% 6.0% 4.7% 0% CNB Peer Average Peer Median Peer Group: National banks with assets of $10-$50 billion Source: Thomson Reuters Bank Insight

20 Proposed Basel III Capital Standards City National 1 Common Equity Tier % 4.000% 4.500% 4.500% 4.500% 4.500% 4.500% Comply Capital Conservation Buffer Total Common Equity Tier % 1.250% 1.875% 2.500% Comply 3.500% 4.000% 4.500% 5.125% 5.750% 6.375% 7.000% Comply Tier 1 Capital 4.500% 5.500% 6.000% 6.625% 7.250% 7.875% 8.500% Comply Total Capital 6.500% 7.500% 8.000% 8.625% 9.250% 9.875% % Comply Notes: Implementation of new capital calculations will be phased in beginning in 2013 over five years. The Capital Conservation Buffer will be phased in over four years, beginning in New risk-weighted asset formulae will be implemented on January 1, As of December 31, 2012

21 City National Is Naturally Asset Sensitive Stands to benefit as interest rates rise 35% 30% 25% 20% 15% 10% 5% 0% Change in net interest income (400 basis points rate ramp up over 2 years) 8.2% 29.2% Year 1 Year 2 61% of deposits are DDA 52% of loans are variable rate (tied to prime or LIBOR) Rates on 76% of these loans will reset as soon as short-term rates rise Note: Assumes stable balance sheet As of December 31, 2012

22 Why City National? 1. Track record of profitability 2. Uniquely attractive clientele and focus 3. Exceptional deposit base 4. Growing loan portfolio 5. Strong, low-risk balance sheet 6. Excellent capabilities to drive long-term growth

23 Excellent Capabilities to Drive Long-Term Growth Acquisitions to supplement organic growth

24 Excellent Capabilities to Drive Long-Term Growth Acquisitions to supplement organic growth Rochdale Investment Management $5.2 billion in managed assets 1 First American Equipment Finance Plus: $340 million in assets 2 Average yield of 6-7% Datafaction 4 FDIC-assisted bank acquisitions San Jose banking office Asset-based lending portfolio 1 As of December 31, As of acquisition date

25 Excellent Capabilities to Drive Long-Term Growth Acquisitions to supplement organic growth Substantial wealth management business

26 Substantial Wealth Management Business A comprehensive wealth management platform Offers services to Affluent, high and ultra-high-net-worth clients: - Investment Management - Brokerage - Personal Trust - Wealth Planning and Institutional Clients - Investment Management - Retirement Services Delivered through Various channels, including: - Private Client Services - Entertainment Business Managers - Commercial Banking Services - Preferred Banking - Financial advisors and other intermediaries - Direct sales and consultants Provided by The following businesses: - City National Rochdale - Convergent Wealth Advisors - Lee Munder Capital - City National Securities - Mid-Continent Capital - AMBS Investment Counsel - Clifford Swan Investment Counsel - Matthews International

27 Excellent Capabilities to Drive Long-Term Growth Acquisitions to supplement organic growth Substantial wealth management business Banking office strategy 3.0

28 Banking Office Strategy 3.0 New York - Park Avenue New York - 6 th Avenue

29 Banking Office Strategy 3.0 More efficient footprint Geared to today s in-branch client needs More innovative and interactive technology Colleagues with broader sales and service capabilities Increasing focus on small business

30 $ in millions Banking Office Strategy 3.0 Meeting the financial needs of the affluent client segment $3,000 $2,500 $2,000 $1,500 $1,000 $500 $604* $391 $1,435 $929 $2,037 $1,337 $2,625 $1,747 Client Value Proposition Tailored banking, credit, and wealth management solutions Preferred credit and deposit rates Complimentary ATM use world-wide Professionally managed and self-directed investment programs $0 2009* Loans Deposits Brokerage Assets Managed Assets Total New Money * 2009 investment balance data unavailable Differentiated service A dedicated in-branch Relationship Manager and Financial Advisor An exclusive toll-free customer service line

31 Excellent Capabilities to Drive Long-Term Growth Acquisitions to supplement organic growth Substantial wealth management business Banking office strategy 3.0 Expanding industry specialties

32 Expanding Industry Specialties Franchise finance Asset-based lending Legal Healthcare Technology International trade services

33 Excellent Capabilities to Drive Long-Term Growth Acquisitions to supplement organic growth Substantial wealth management business Banking office strategy 3.0 Expanding industry specialties New products, technology and sales colleagues

34 New Products, Technology and Sales Colleagues

35 California s Economy: Turning the Corner

36 No. 2 in Job Creation Net Job Growth 1 12-Month Change to December 2012 (000s) 1. Texas California New York Ohio Georgia North Carolina Florida Arizona Indiana Washington 55.1 Source: Bureau of Labor Statistics 1. Nonfarm payroll, not seasonally adjusted Preliminary

37 Job Growth Across the Board For many industries, the recovery is well underway 12-Month Change to December 2012 (000s) 1 Leisure & Hospitality Healthcare & Social Assistance Prof'l, Scientific & Tech. Services Retail Trade Construction Information Wholesale Trade Educational Services Admin & Support Service Finance & Insurance Manufacturing Government Source: California Employment Development Dept. 1. Not seasonally adjusted Preliminary

38 City National: Premier Private and Business Bank 1. Track record of profitability 2. Uniquely attractive clientele and focus 3. Exceptional deposit base 4. Growing loan portfolio 5. Strong, low-risk balance sheet 6. Excellent capabilities to drive long-term growth

39 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) 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.

40