2014-12-09 cyn gs slides final (1)
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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
America’s Premier Private & Business Bank
Founded: 1954
Headquarters: Los Angeles
Assets: $32.0 billion
Market Cap: ~$4.0 billion
Offices: 77 (16 regl ctrs)
Colleagues: 3,600
Locations: Southern California Northern California New York City Nevada, Nashville and Atlanta
AUM/A: $61.2 billion
SM
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
Unique Market Position
Mega-Banks Assets > $100B
Assets < $5B
Community Banks
Fortune 1000
Retail Customers
Businesses: $1M – $250M
Individuals1: Assets > $1M
Income > $250K
TOTAL ASSETS CLIENTS
1 City National’s Preferred Banking initiative targets individuals with income of $100,000 or more and investible assets of $250,000 or more.
$32.0B Client Focus
Talent
Capabilities
Values
Reputation
Critical Mass in Key Markets
Los Angeles
Population: 10.0 Million
Businesses: 347,000
Branches: 32
Loans + Deposits: $32 Billion
San Francisco Bay Area Population: 6.1 Million
Businesses: 223,400
Branches: 12
Loans + Deposits: $3 Billion
Orange County/ San Diego Population: 6.3 Million
Businesses: 247,600
Branches: 15
Loans + Deposits: $3 Billion
New York City
Population: 8.3 Million
Businesses: 117,500
Branches: 2
Loans + Deposits: $3 Billion
Source: United States Census Bureau, InfoGroup, City National Bank
Industry Specialties $6.5
Private Banking $1.0
Commercial Banking $0.8
Real Estate $0.4
Core Banking $0.2
Other $0.1
Commercial $9.0
CRE Mortgage $3.5
Residential Mortgage $4.9
RE Construction $0.5
Equity Lines $0.7
Installment $0.2
Corporate Bkg $1.8Entertainment $1.7Leasing $0.9International $0.8Franchise Finance $0.6ABL $0.4Technology $0.1Mtg Warehouse $0.1Healthcare $0.1
Diversified Business Model
Granular loan portfolio
Commercial Loan Portfolio 3Q14 Average Balances ($ in billions)
1. Excludes $283 million in CRE loans to franchisees
1
Total Loan Portfolio 3Q14 Average Balances ($ in billions)
Industry Specialties 3Q14 Average Balances ($ in billions)
Diversified Business Model
Entertainment Real Estate Legal Services
Technology Healthcare
Industry specialties
Corporate Banking
Equipment leasing
Asset-based lending
Franchise finance
Mortgage warehouse banking
Serving clients nationwide
Diversified Business Model
Growing branch network relationships with the affluent client segment through Preferred Banking
$0
$1
$2
$3
2010 2011 2012 2013 3Q2014
Loans Deposits Brokerage/MM/AUA
Managed Assets Total New Money
$0.4
$0.6
$ in
bill
ions
$1.0
$1.3
$1.8
$0.8 $0.9
$2.4
$1.1
$2.7
Diversified Business Model
Preferred Banking Balances
Successful Acquisitions
2009
One FDIC, one branch deal in CA
Acquired Lee Munder Capital Group
2012
Acquired First American Equipment Finance
Acquired Rochdale Investment Management
2010
Opened branch in NYC Acquired Datafaction Two FDIC, one branch
deals in CA and NV
2011
Opened branches in Nashville and Atlanta
FDIC deal in NV
San Francisco
San Jose
Reno
Las Vegas
Los Angeles Nashville
Atlanta
Rochester Boston
New York
San Diego
First American
Rochdale
Lee Munder
Expansion
Expansion
Expansion
Nevada Commerce
Sun West 1st Pacific
Imperial Capital Datafaction
Wealth Management
Serving high-net-worth and institutional clients:
2
Ranked among America’s top wealth managers for 14 years1
1. Barron’s Magazine: 2001-2014, based on assets under management at June 30
2. Excludes City National’s minority interest in Matthews International
3. YTD 2014 fee income calculated on an annualized basis
Growth in Client Assets2 and Fees
$ in
bill
ions
$ in millions
$266.7
$0
$75
$150
$225
$300
$0
$20
$40
$60
$80
2011 2012 2013 YTD2014
Administration Management Fee Income 3
$51.6 $57.2
$64.7 $61.2
City National Rochdale
City National Securities
Convergent Wealth Advisors
Lee Munder Capital Group
Wealth Management
Serving high-net-worth and institutional clients:
2
Ranked among America’s top wealth managers for 14 years1
1. Barron’s Magazine: 2001-2014, based on assets under management at June 30
2. Minority interest
3. YTD14 fee income calculated on an annualized basis
Growth in Client Assets and Fees
$ in
bill
ions
$ in millions
$266.7
$0
$75
$150
$225
$300
$0
$20
$40
$60
$80
2011 2012 2013 YTD2014
Administration Management
Matthews (20%) Fee Income
$54.7
$61.4
$69.9 $66.6
3
City National Rochdale
City National Securities
Convergent Wealth Advisors
Lee Munder Capital Group
Matthews International2
Technology and New Products
Better serve clients:
City National Online
Mobile Banking with FASTdeposit®
EASI LinkSM
Datafaction DFX
International Banking Online
EMV Chip Credit Cards
Achieve greater process and cost efficiencies:
Digital Platform
Big Data
Security
Compliance
Core 3.0
Continuous improvement, innovation and investment to:
Profitable Growth and Asset Sensitivity
3Q2014 Change1
Net income $ 68.7 mil. 8 %
Earnings per share $ 1.15 5 %
Revenue $ 323.7 mil. 7 %
Net interest income $ 215.8 mil. 1 %
Average loans2 $ 18.8 bil. 17 %
Average core deposits $ 26.4 bil. 11 %
Noninterest income $ 107.9 mil. 21 %
Assets under management $ 49.1 bil. 15 %
Loan loss allowance2 1.62% (9) %
1. Percentage change from 3Q2013 2. Excluding FDIC-covered loans
Earnings grew to a record level in 3Q14
Profitable Growth and Asset Sensitivity
Positioned well for rising interest rates
0%
10%
20%
30%
Dynamic Balance Sheet
Year 1 Year 2
Change in net interest income1
(Hypothetical gradual 200 basis point parallel increase)
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
28.7%
6.9%
2
$58 million
$241 million
Strong Balance Sheet and Credit Quality
Loan balances have increased for 14 straight quarters
$ in
bill
ions
1. Excluding FDIC-covered loans
Average Loans1
$0
$5
$10
$15
$20
3Q2013 4Q2013 1Q2014 2Q2014 3Q2014
Commercial CRE Mortgage Residential Mortgage
RE Construction Equity Lines Installment
$16.0
$18.0 $16.8 $17.3
$18.8
Strong Balance Sheet and Credit Quality
Peer Group: National banks with assets of $10-$50 billion Source: SNL Financial
City National already complies with 2019 Basel III standards
5.3% 4.7%
2.9%
1.4%
12.4%
6.0% 5.0%
4.0%
0%
5%
10%
15%
2011 2012 2013 3Q2014CNB Peer Median
Nonaccruals to Tier 1 plus ALLL
$0
$7
$14
$21
$28
2011 2012 2013 3Q2014
Noninterest Bearing Other Interest Bearing CDs > $100K
Strong Balance Sheet and Credit Quality
Low-cost core deposits equal 98% of total balances1
$
in b
illio
ns
$19.3 $21.6
Average Deposits
$24.0
1. Based on 3Q2014 average deposit balances
$26.8
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
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 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) 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 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 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.”
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