No strategy for quality growth would be complete without a strong commitment to credit quality and good risk management practices. We focus as intently on credit quality as on growth, and do not sacrifice the former to the latter. This disciplined approach served us well during last year's economic slowdown.

At year-end 2001, the ratio of nonperforming assets to loans and owned real estate stood at 0.54 percent compared with 0.96 percent at year-end 2000. Last year, the bank recorded a provision for credit losses of $35 million and remained well reserved at 2 percent of total loans.

The decline in nonperforming assets was principally the result of steps we took to dramatically reduce non-relationship syndicated loans. At year end, these loans accounted for approximately 1 percent of our entire loan portfolio.

Our relationship-based approach and our commitment to credit quality has enabled us to achieve and maintain comparatively low levels of nonperforming assets while generating a five-year compounded annual rate of loan growth of 20 percent.

Our disciplined underwriting and credit review process is led by bankers with years of experience in managing credit quality in California. During the last six years, we have steadily diversified our lending portfolio through geographic expansion, the introduction of new business lines and the growth of products like single-family mortgages. In addition, we link our bankers' compensation to the quality of the loans they make, as judged over time, thus making all of our lenders active participants in the effort to safeguard City National's credit quality.

Noninterest Income ($ millions) Noninterest income now accounts for slightly more than 23 percent of revenues.

Assets Under Management/Administration ($ billions) Assets under management grew at a five-year compounded annual rate of 52 percent.