City National Corporation Grows Third-Quarter 2012 Net Income To $59.8 Million, Or $1.10 Per Share, Up 44 Percent From Third-Quarter 2011

Revenue, loans and deposits grow to record levels

Period-end assets surpass $26 billion for the first time

LOS ANGELES, Oct. 18, 2012 (GLOBE NEWSWIRE) -- City National Corporation (NYSE:CYN), the parent company of wholly owned City National Bank, today reported third-quarter 2012 net income of $59.8 million, or $1.10 per share, up 44 percent from $41.4 million, or $0.77 per share, in the third quarter of 2011.

Year to date, City National's net income totaled $160.8 million, up 25 percent from $128.6 million in the first nine months of 2011. Earnings per share were $2.97, up 24 percent from $2.39 in the first nine months of last year.

City National also announced today that its Board of Directors has maintained and approved a quarterly common stock cash dividend of $0.25 per share. The company's dividend is payable on November 21, 2012 to stockholders of record on November 7, 2012.

THIRD-QUARTER 2012 HIGHLIGHTS
  • Average third-quarter loan and lease balances, excluding loans covered by City National's acquisition-related loss-sharing agreements with the Federal Deposit Insurance Corporation (FDIC), were $13.6 billion, up 15 percent from the third quarter of last year and 4 percent higher than the second quarter of 2012.
  • Fully taxable-equivalent net interest income amounted to $214.8 million, up 6 percent from the year-earlier period and down 3 percent from the second quarter of 2012.
  • Third-quarter deposit balances averaged $21.9 billion, up 11 percent from the third quarter of 2011 and up 5 percent from the second quarter of 2012. Average core deposits, which equal 97 percent of total balances, were up 12 percent from the third quarter of 2011 and up 5 percent from the second quarter of 2012. Period-end deposits reached a record of $22.5 billion.
  • Excluding FDIC-covered loans, third-quarter 2012 results included a $2.0 million provision for loan and lease losses. The company recorded a $1 million provision, excluding FDIC-covered loans, in the second quarter of 2012.
  • Third-quarter 2012 earnings included pretax gains of $4.8 million related to investments. Income, net of expense, from FDIC-covered assets, excluding the base yield, totaled $1.8 million in the third quarter. The aggregate impact of these items was after-tax income of $3.8 million, or $0.07 per share.
  • On July 2, 2012, City National Bank completed its acquisition of Rochdale Investment Management, a New York City-based investment firm that manages $5.1 billion of assets for affluent and high-net-worth clients and their financial advisors across the nation.

"City National delivered another solid performance in the third quarter, and the company is well on the way to achieving its 20 th consecutive year of profitability," said President and CEO Russell Goldsmith.  "Net income, earnings per share, revenue, loans and deposits all continued to grow at double-digit rates, and for the first time assets exceeded $26 billion. New loan production reached a record level for the third quarter in a row.  Credit quality was sound, and expenses remained in check. At the same time, we continued to selectively invest in new people, products and technologies, new companies and capabilities.

"During the third quarter, strong organic growth, especially from new clients, drove income growth, along with the acquisitions of Rochdale Investment Management and First American Equipment Finance. City National also successfully launched its personal mobile banking in the quarter, and it will be followed by business mobile banking in the fourth quarter."
    For the three months ended   For the three  
Dollars in millions, September 30, % months ended %
except per share data 2012 2011 Change June 30, 2012 Change
Earnings Per Share  $ 1.10  $ 0.77 43  $ 1.01 9
Net Income Attributable to CNC  59.8  41.4 44  54.8 9
             
Average Assets  $ 25,654.6  $ 22,998.6 12  $ 24,362.5 5
Return on Average Assets  0.93 %   0.71 % 31  0.90 %  3
Return on Average Equity  10.35 %   7.85 %  32  9.86 %  5

ASSETS

Total assets at September 30, 2012 grew to a record $26.3 billion, up 14 percent from the third quarter of 2011 and 6 percent from the second quarter of this year. The year-over-year increase largely reflects strong loan growth and an increase in the securities portfolio due to strong deposit growth.

REVENUE

Revenue for the third quarter of 2012 reached a record $317.2 million, up 18 percent from the year-ago period and up 9 percent from the second quarter of 2012. Revenue for the first nine months of this year was $884.8 million, up 7 percent from the same period of 2011.

NET INTEREST INCOME

Fully taxable-equivalent net interest income was $214.8 million in the third quarter of 2012, up 6 percent from the third quarter of 2011 but down 3 percent from the second quarter of this year. Fully taxable-equivalent net interest income for the first nine months of 2012 was $641.6 million, up 10 percent from $584.3 million in the year-ago period.

Average third-quarter deposits were $21.9 billion, up 11 percent from the year-ago period and up 5 percent from the second quarter of 2012. Average deposits for the first nine months of 2012 totaled $21.0 billion, up 11 percent from the same period of 2011. Period-end deposits grew to a record $22.5 billion, up 13 percent from September 30, 2011 and up 7 percent from June 30, 2012.

Average core deposits were $21.2 billion in the third quarter of 2012, up 12 percent from the same period of 2011 and up 5 percent from the second quarter of this year. Year-to-date 2012 average core deposits grew 12 percent from the year-ago period to $20.3 billion.

Third-quarter 2012 average noninterest-bearing deposits were up 32 percent from the same period of 2011 and up 8 percent from the second quarter of 2012. Average noninterest-bearing deposit balances in the first nine months of 2012 were up 31 percent from the same period last year.

Treasury Services deposit balances, which consist primarily of title, escrow and property management deposits, averaged $2.3 billion in the third quarter of 2012, up 21 percent from the same period of last year and up 7 percent from the second quarter of 2012. For the first nine months of 2012, Treasury Services deposit balances averaged $2.1 billion, up 22 percent from the same period of 2011.  The increases reflect an increase in residential refinance activity, as well as sales of existing homes during the quarter.

Third-quarter average loan and lease balances, excluding FDIC-covered loans, were $13.6 billion, up 15 percent from the third quarter of 2011 and up 4 percent from the second quarter of this year. Excluding leases obtained in the company's acquisition of First American Equipment Finance, third-quarter average loan and lease balances increased 13 percent from the year-ago period.

For the first nine months of 2012, City National's average loans and leases, excluding FDIC-covered loans, were $13.1 billion, up 13 percent from the year-ago period.  Excluding leases obtained in the company's acquisition of First American, year-to-date average loan and lease balances increased 12 percent from the year-ago period.

Third-quarter average commercial loans were up 24 percent from the year-ago period and 5 percent higher than the second quarter of 2012.  The year-over-year increase was primarily due to organic loan growth, as well as the acquisition of First American. Average balances for commercial real estate mortgages were up 27 percent from the third quarter of 2011, and they increased 7 percent from the second quarter of this year. Average balances for commercial real estate construction loans were down 24 percent from the third quarter of last year, and they declined 15 percent from the second quarter of 2012.

Average balances for single-family residential mortgage loans, nearly all of which are made to City National's private banking and entertainment industry clients, were up 4 percent from the year-ago period and 1 percent higher than the second quarter of 2012.

Average securities for the third quarter of 2012 totaled $8.6 billion, up 24 percent from the third quarter of 2011 and up 11 percent from the second quarter of this year, as period-end deposit growth outpaced loan growth. The average duration of total securities at September 30, 2012 was 2.8 compared to 2.1 at September 30, 2011 and 3.0 at the end of the second quarter of 2012.

City National's net interest margin in the third quarter of 2012 averaged 3.58 percent, compared with 3.91 percent in the second quarter of this year and 3.79 percent in the third quarter of 2011. The second-quarter net interest margin reflected the recovery of a previously charged-off loan, and the decline in the third quarter was due primarily to lower interest income related to covered loans that were repaid or charged off in the third quarter, lower loan yields, and continuing deposit growth. The company continued to invest a large share of its growing deposits in securities and other liquid assets. For the first nine months of 2012, City National's net interest margin averaged 3.74 percent, down from 3.82 percent in the previous year. 

Third-quarter net interest income included $22.2 million from FDIC-covered loans that were repaid or charged off during the quarter. This compares with $18.3 million in the third quarter of 2011 and $27.4 million in the second quarter of this year.

At September 30, 2012, City National's prime lending rate was 3.25 percent, unchanged from both September 30, 2011 and June 30, 2012.
  For the three months ended   For the three  
  September 30, % months ended %
Dollars in millions 2012 2011 Change June 30, 2012 Change
           
Average Loans and Leases, excluding Covered Loans  $ 13,587.5  $ 11,796.6 15  $ 13,125.9 4
Average Covered Loans  1,207.0  1,664.3 (27)  1,341.0 (10)
Average Total Securities   8,631.4  6,954.1 24  7,755.3 11
Average Earning Assets  23,892.0  21,316.6 12  22,769.1 5
Average Deposits  21,940.8  19,724.6 11  20,948.2 5
Average Core Deposits  21,208.5  18,923.6 12  20,215.2 5
Fully Taxable-Equivalent Net Interest Income  214.8  203.6 6  221.4 (3)
Net Interest Margin  3.58 %   3.79 %  (6)  3.91 %  (8)

COVERED ASSETS

Loans and other real estate owned (OREO) assets acquired in City National's FDIC‑assisted bank acquisitions totaled $1.2 billion at the end of the third quarter of 2012 compared to $1.7 billion at September 30, 2011 and $1.3 billion at June 30, 2012.

In the third quarter of 2012, the company recorded a $2.6 million non-cash net gain to reflect results of the quarterly update of cash-flow projections for the FDIC-covered loans. The gain reflects an $18.1 million provision for losses on covered loans and an offsetting $20.7 million of noninterest income related to City National's loss-sharing agreements with the FDIC.  In addition to the $2.6 million non-cash gain for the quarter, the company recognized $0.8 million of other covered assets expense. Income, net of expense, from FDIC-covered assets, excluding the base yield, totaled $1.8 million in the third quarter of 2012, down from $7.3 million in the second quarter of this year. (The base yield is the yield on covered assets, excluding income related to covered loans that are repaid or charged off.) The decrease from $7.3 million in the second quarter was due primarily to lower income from loans that were repaid or charged off.

City National will continue to update cash-flow projections for covered loans on a quarterly basis. Due to the uncertainty in the future performance of the covered loans, additional impairments may be recognized in the future.

OREO assets acquired by City National in four FDIC-assisted bank acquisitions and subject to loss-sharing agreements totaled $83.6 million at September 30, 2012, compared to $102.8 million in the third quarter of 2011 and $82.8 million at the end of the second quarter of this year.

NONINTEREST INCOME

Noninterest income was $107.3 million in the third quarter of 2012, up 54 percent from the year-ago quarter and 43 percent higher than the second quarter of 2012. The increases were due to City National's July 2, 2012 acquisition of Rochdale Investment Management, as well as higher FDIC loss-sharing income and distribution income from investments.

City National's noninterest income for the first nine months of 2012 was up 1 percent from the same period of 2011.

In the third quarter of 2012, noninterest income accounted for 34 percent of City National's total revenue compared to 26 percent in both the third quarter of 2011 and the second quarter of 2012.

Wealth Management

City National's assets under management totaled $38.0 billion as of September 30, 2012, up 13 percent from the year-earlier period and 18 percent higher than the second quarter of 2012.

Trust and investment fees were $43.5 million, up 23 percent from the third quarter of 2011 and 28 percent higher than the second quarter of 2012. Year-to-date 2012 trust and investment fee income was up 3 percent from the same period last year.  The increases in assets under management and trust and investment fees were due primarily to the Rochdale acquisition.

Brokerage and mutual fund fees totaled $9.1 million, up 78 percent from the year-earlier period and 71 percent higher than the second quarter of 2012. Brokerage and mutual fund fee income was $19.4 million in the first nine months of this year, up 24 percent from the same period of 2011. The increases in mutual fund fees were due primarily to slightly higher short-term interest rates. The increases in brokerage fees were due to both the acquisition of Rochdale and growth within City National Securities. Not including the Rochdale acquisition, brokerage and mutual fund fees grew 14 percent from the second quarter of 2012 and 5 percent year to date. 1
  At or for the    At or for the  
  three months ended   three months  
  September 30, % ended %
Dollars in millions 2012 2011 Change June 30, 2012 Change
Trust and Investment Fee Revenue  $ 43.5  $ 35.4 23  $ 34.1 28
Brokerage and Mutual Fund Fees  9.1  5.1 78  5.3 71
Assets Under Management (1)  38,043.1  33,590.5 13  32,105.1 18
Assets Under Management or Administration (1)(2)  56,671.8  48,507.4 17  50,040.1 13
           
(1) Excludes $19.8 billion, $18.4 billion and $16.1 billion of assets under management for asset managers in which City National held a noncontrolling ownership interest as of September 30, 2012, June 30, 2012 and September 30, 2011, respectively.
(2) Assets under administration have been revised to exclude the company's investments that are held in custody and serviced by our wealth management business. Prior-period balances have been reclassified to conform to current period presentation. 

Other Noninterest Income

Third-quarter income from cash management and deposit transaction fees was $11.5 million, up 5 percent from the third quarter of 2011 but virtually unchanged from the second quarter of this year. For the first nine months of 2012, cash management and deposit transaction fee income was $34.2 million, up 2 percent from the same period of 2011.

Fee income from foreign exchange services and letters of credit totaled $9.8 million in the third quarter of 2012, down 5 percent from the third quarter of 2011 and 2 percent lower than the second quarter of this year. Year-to-date 2012 foreign exchange services and letters of credit fee income totaled $28.6 million, up 3 percent from the same period last year.

Other income was $27.7 million in the third quarter of 2012, up 105 percent from the year-earlier period and 59 percent higher than the second quarter of 2012. The increases largely reflect gains from investments and trading securities, lease income from First American Equipment Finance, and the growth of income from client swap transactions.  Other income in the first nine months of this year was $58.6 million, up 1 percent from the year-ago period.

NONINTEREST EXPENSE

City National's third-quarter 2012 noninterest expense amounted to $207.9 million, up 5 percent from the third quarter of last year and 7 percent from the second quarter of 2012. The increases were due largely to the acquisitions of Rochdale Investment Management and First American Equipment Finance. Noninterest expense for the first nine months of 2012 amounted to $603.1 million, down 1 percent from the same period of last year.

CREDIT QUALITY

The following credit quality information excludes loans subject to loss-sharing agreements involving City National's FDIC-assisted transactions:

Net charge-offs in the third quarter of 2012 totaled $2.2 million, or 0.06 percent of total loans and leases on an annualized basis. The company realized net charge-offs of $10.6 million, or 0.36 percent, in the third quarter of 2011 and net recoveries of $2.7 million, or 0.08 percent, in the second quarter of 2012. Net recoveries for the first nine months of 2012 were $5.0 million, or 0.05 percent of total loans and leases. This compares with net recoveries of $0.1 million in the first nine months of last year.

At September 30, 2012, nonperforming assets amounted to $130.5 million, or 0.95 percent of the company's total loans and leases and OREO, compared to $190.7 million, or 1.56 percent, at September 30, 2011 and $133.3 million, or 0.98 percent, at June 30, 2012.

Nonaccrual loans at September 30, 2012 were $103.5 million compared to $146.1 million at September 30, 2011 and $98.7 million at June 30, 2012.

  As of September 30, 2012 As of June 30, 2012 As of September 30, 2011
Period-end Loans (in millions) Total Nonaccrual Total Nonaccrual Total Nonaccrual
Commercial $ 6,264.6 $ 18.8 $ 6,087.0 $ 19.0 $ 5,166.8 $ 34.9
Commercial Real Estate Mortgages  2,463.7  36.6  2,424.3  28.8  2,059.1  20.8
Residential Mortgages  3,897.7  11.7  3,822.6  14.1  3,742.8  10.5
Real Estate Construction  242.1  29.0  301.8  29.7  335.7  70.8
Equity Lines of Credit  719.0  6.9  741.3  6.5  728.9  8.4
Other Loans  137.6  0.5  130.2  0.6  130.9  0.7
Total Loans (1) $ 13,724.7 $ 103.5 $ 13,507.2 $ 98.7 $ 12,164.2 $ 146.1
             
Other Real Estate Owned (1)    27.0    34.6    44.5
             
 Total Nonperforming Assets, excluding Covered Assets $ 130.5   $ 133.3   $ 190.6
             
(1) Excludes covered loans, net of allowance, of $1.1 billion, $1.2 billion and $1.6 billion at September 30, 2012, June 30, 2012 and September 30, 2011, respectively, and covered other real estate owned of $83.6 million, $82.8 million and $102.8 million at September 30, 2012, June 30, 2012 and September 30, 2011, respectively.

City National recorded a $2.0 million provision for credit losses in the third quarter of 2012, bringing the total for the year to $3.0 million. The company recorded a $7.5 million provision in the third quarter of 2011.

At September 30, 2012, City National's allowance for loan and lease losses totaled $268.4 million, or 1.96 percent of total loans and leases. That compares to $263.3 million, or 2.16 percent, at September 30, 2011 and $269.5 million, or 2.00 percent, at the end of the second quarter of 2012. The company also maintains an additional $25.3 million in reserves for off-balance-sheet credit commitments.

Commercial Loans

Commercial loan net charge-offs were $4.9 million in the third quarter of 2012. This compares to net charge-offs of $2.9 million in the year-earlier period and net recoveries of $8.1 million in the second quarter of 2012. Net recoveries in the first nine months of 2012 amounted to $8.4 million, compared to net charge-offs of $2.2 million in the same period of last year.

Commercial loans on nonaccrual totaled $18.8 million in the third quarter of 2012 compared to $34.9 million at September 30, 2011 and $19.1 million at June 30, 2012.

Construction Loans

City National's $242.1 million commercial real estate construction portfolio includes secured loans to developers of residential and nonresidential properties. This portfolio now represents slightly less than 2 percent of the company's total loans.

Third-quarter net recoveries of construction loans were $3.1 million compared to net charge-offs of $6.2 million in the third quarter of 2011 and net charge-offs of $4.8 million in the second quarter of 2012. Net charge-offs amounted to $1.6 million in the first nine months of 2012, compared with net charge-offs of $1.8 million in the same period of last year.

At September 30, 2012, construction loans on nonaccrual totaled $29.0 million compared to $70.8 million at September 30, 2011 and $29.7 million at June 30, 2012.

Commercial Real Estate Mortgage Loans

Third-quarter net charge-offs in the company's $2.5 billion commercial real estate mortgage portfolio were $0.2 million compared to net charge-offs of $0.5 million in the third quarter of 2011 and net recoveries of $1.1 million in the second quarter of 2012. Net recoveries amounted to $0.2 million in the first nine months of 2012, compared with net recoveries of $7.0 million in the same period of last year.

Commercial real estate mortgage loans on nonaccrual totaled $36.6 million compared to $20.7 million at September 30, 2011 and $28.8 million at June 30, 2012.

Residential Mortgage Loans and Equity Lines of Credit

City National's $3.9 billion residential mortgage portfolio and $0.7 billion home-equity portfolio continued to perform exceptionally well.  Together, they accounted for $0.6 million in net charge-offs in the third quarter of 2012 compared to net charge-offs of $0.7 million at September 30, 2011 and $1.4 million at June 30, 2012. Net charge-offs amounted to $2.6 million in the first nine months of 2012, compared with net charge-offs of $2.4 million in the same period of last year.

Residential mortgage loans and lines of credit on nonaccrual were $18.6 million in the third quarter of 2012 compared to $18.9 million in the third quarter of 2011 and $20.6 million in the second quarter of 2012.

INCOME TAXES

City National's effective tax rate for the third quarter of 2012 was 32.6 percent, up from 27.7 percent in the year-earlier period but down from 33.1 percent in the second quarter of 2012.  For the first nine months of 2012, City National's effective tax rate was 32.5 percent, compared to 29.4 percent in the prior-year period. The increases from last year were due primarily to higher pretax income.

CAPITAL LEVELS

City National remains well-capitalized, ending the third quarter of 2012 with a Tier 1 common shareholders' equity ratio of 9.1 percent compared to 10.2 percent at September 30, 2011 and 9.6 percent at June 30, 2012. 1 The change from prior periods is a reflection of both asset growth and the acquisitions of Rochdale Investment Management and First American Equipment Finance.

Total risk-based capital and Tier 1 risk-based capital ratios at September 30, 2012 were 12.4 percent and 9.1 percent, respectively. City National's Tier 1 leverage ratio at September 30, 2012 was 6.3 percent. All of City National's capital ratios are above minimum regulatory standards for "well-capitalized" institutions.

Total risk-based capital, Tier 1 risk-based capital and Tier 1 leverage ratios at June 30, 2012 were 12.9 percent, 9.6 percent and 6.7 percent, respectively.

The period-end ratio of equity to total assets at September 30, 2012 was 8.9 percent compared to 9.2 percent at September 30, 2011 and 9.1 percent at June 30, 2012.

2012 OUTLOOK

City National's management continues to anticipate net income growth in 2012, as loans and deposits continue to increase and credit quality remains stable. This outlook reflects management's expectations for modest economic growth and loan-loss provisions as well as low interest rates for the remainder of the year.

CONFERENCE CALL

City National Corporation will host a conference call this afternoon (October 18) to discuss third-quarter 2012 financial results.  The call will begin at 2:00 p.m. PDT. Analysts and investors may dial in and participate in the question/answer session.  To access the call, please dial (866) 393-6804 and enter Conference ID 29949796.  A listen-only live broadcast of the call also will be available on the investor relations page of the company's Website at cnb.com .  There, it will be archived and available for 12 months.

ABOUT CITY NATIONAL

City National Corporation's wholly owned subsidiary, City National Bank, provides banking, investment and trust services through 78 offices, including 16 full-service regional centers, in Southern California, the San Francisco Bay Area, Nevada, New York City, Nashville and Atlanta. The corporation and its investment affiliates manage or administer $56.7 billion in client investment assets, including $38.0 billion under direct management.

For more information about City National, visit the company's Website at cnb.com.

The City National Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3142

SAFE-HARBOR LANGUAGE

This news release 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 Federal Reserve Board; (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) adequacy of the company's enterprise risk management framework; (13) the company's ability to attract new employees and retain and motivate existing employees; (14) increased competition in the company's markets and our ability to increase market share and control expenses; (15) 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; (16) 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; (17) soundness of other financial institutions which could adversely affect the company; (18) protracted labor disputes in the company's markets; (19) the impact of natural disasters, terrorist activities or international hostilities on the operations of our business or the value of collateral; (20) the effect of acquisitions and integration of acquired businesses and de novo branching efforts; (21) changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies; (22) 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 (23) 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, 2011 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2012.

1For notes on non-GAAP measures, see pages 15 and 16 of the Selected Financial Information.
CITY NATIONAL CORPORATION            
FINANCIAL HIGHLIGHTS            
(unaudited)            
             
  Three Months Nine Months
For The Period Ended September 30, 2012 2011 % Change 2012 2011 % Change
Per Share            
Net income attributable to City National Corporation            
Basic  $ 1.10  $ 0.78  41  $ 2.98  $ 2.41  24
Diluted  1.10  0.77  43  2.97  2.39  24
Dividends  0.25  0.20  25  0.75  0.60  25
Book value        43.81  40.40  8
             
Results of Operations: (In millions)            
Interest income  $ 225  $ 217  4  $ 668  $ 628  6
Interest expense 15 18  (16) 41 57  (27)
Net interest income 210 199  5 627 571  10
Net interest income (Fully taxable-equivalent) 215 204  6 642 584  10
Total revenue 317 269  18 885 827  7
Provision for credit losses on loans and leases, excluding covered loans 2 8  (73)  3  8  (60)
Provision for losses on covered loans 18 5  251  39 26  50
Net income attributable to City National Corporation 60 41  44 161 129  25
             
Financial Ratios:            
Performance Ratios:            
Return on average assets   0.93 %  0.71 %    0.87 %  0.78 %  
Return on average shareholders' equity  10.35  7.85    9.62  8.46  
Period-end equity to period-end assets        8.88  9.18  
Net interest margin  3.58  3.79    3.74  3.82  
Expense to revenue ratio  61.96  67.68    64.06  66.50  
Capital Adequacy Ratios (Period-end):            
Tier 1 leverage        6.29  6.82  
Tier 1 risk-based capital        9.15  10.28  
Total risk-based capital        12.42  12.88  
             
Asset Quality Ratios:            
Allowance for loan and lease losses to:            
Total loans and leases, excluding covered loans        1.96 %  2.16 %  
Nonaccrual loans        259.38  180.21  
Nonperforming assets, excluding covered assets, to:            
Total loans and leases and other real estate owned, excluding covered assets        0.95  1.56  
Total assets        0.50  0.83  
Net (charge-offs) recoveries to average total loans and leases, excluding covered loans (annualized)  (0.06) %  (0.36) %    0.05 % 0.00 %  
             
Average Balances: (In millions)            
Loans and leases, excluding covered loans  $ 13,588  $ 11,797  15  $ 13,051  $ 11,525  13
Covered loans 1,207 1,664  (27) 1,328 1,748  (24)
Securities 8,631 6,954  24 8,107 6,295  29
Interest-earning assets 23,892 21,317  12 22,925 20,424  12
Assets 25,655 22,999  12 24,558 22,135  11
Core deposits 21,209 18,924  12 20,318 18,084  12
Deposits 21,941 19,725  11 21,039 18,903  11
Interest-bearing liabilities 10,088 10,841  (7) 10,029 10,701  (6)
Shareholders' equity 2,297 2,093  10 2,234 2,032  10
Total equity 2,297 2,117  9 2,234 2,057  9
             
Period-End Balances: (In millions)            
Loans and leases, excluding covered loans        $ 13,725  $ 12,164  13
Covered loans       1,144 1,612  (29)
Securities       9,111 7,279  25
Assets       26,252 23,104  14
Core deposits       21,828 19,137  14
Deposits       22,512 19,909  13
Shareholders' equity       2,330 2,120  10
Total equity       2,330 2,120  10
             
Wealth Management: (In millions) (1)            
Assets under management        $ 38,043  $ 33,591  13
Assets under management or administration (2)       56,672 48,507  17
             
(1) Excludes $19.8 billion and $16.1 billion of assets under management for asset managers in which City National held a noncontrolling ownership interest as of September 30, 2012 and September 30, 2011, respectively.            
(2) Assets under administration have been revised to exclude the Company's investments that are held in custody and serviced by our wealth management business. Prior period balances have been reclassified to conform to current period presentation.            
             
CITY NATIONAL CORPORATION            
CONSOLIDATED STATEMENTS OF INCOME            
(unaudited)            
             
  Three Months Ended Nine Months Ended
(Dollars in thousands September 30, September 30,
except per share data) 2012 2011 % Change 2012 2011 % Change
Interest income  $ 224,768  $ 216,892  4  $ 668,249  $ 627,838  6
Interest expense  14,846  17,576  (16)  41,135  56,405  (27)
Net interest income  209,922  199,316  5  627,114  571,433  10
             
Provision for credit losses on loans and leases, excluding covered loans  2,000  7,500  (73)  3,000  7,500  (60)
Provision for losses on covered loans  18,089  5,147  251  38,848  25,979  50
             
Noninterest income            
Trust and investment fees  43,477  35,412  23  111,198  107,737  3
Brokerage and mutual fund fees  9,059  5,079  78  19,380  15,604  24
Cash management and deposit transaction fees  11,526  10,986  5  34,169  33,616  2
International services  9,819  10,352  (5)  28,621  27,683  3
FDIC loss sharing income (expense), net  1,667  (14,191)  112  (3,493)  (16,270)  (79)
Gain on disposal of assets  3,199  5,191  (38)  8,401  16,037  (48)
Gain on securities  817  3,327  (75)  809  4,688  (83)
Gain on acquisition  --  --  --  --  8,164  (100)
Other  27,693  13,479  105  58,640  58,206  1
Total noninterest income  107,257  69,635  54  257,725  255,465  1
             
Noninterest expense            
Salaries and employee benefits  120,210  112,729  7  355,490  335,880  6
Net occupancy of premises  16,238  13,713  18  43,980  40,724  8
Legal and professional fees  11,757  14,242  (17)  34,996  39,109  (11)
Information services  8,660  7,906  10  25,348  23,738  7
Depreciation and amortization  8,324  6,930  20  23,765  20,582  15
Amortization of intangibles  1,932  2,105  (8)  5,336  6,377  (16)
Marketing and advertising  7,141  6,675  7  21,554  20,819  4
Office services and equipment  4,673  4,456  5  13,113  13,734  (5)
Other real estate owned  8,749  13,160  (34)  28,384  49,811  (43)
FDIC assessments  4,616  6,670  (31)  13,618  25,000  (46)
Other  15,586  9,051  72  37,538  31,092  21
Total noninterest expense  207,886  197,637  5  603,122  606,866  (1)
             
Income before taxes  89,204  58,667  52  239,869  186,553  29
             
Applicable income taxes  29,052  16,267  79  78,042  54,803  42
             
Net income  $ 60,152  $ 42,400  42  $ 161,827  $ 131,750  23
             
Less: Net income attributable to noncontrolling interest  372  1,002  (63)  1,024  3,189  (68)
             
Net income attributable to City National Corporation  $ 59,780  $ 41,398  44  $ 160,803  $ 128,561  25
             
Other Data:            
Earnings per share - basic  $ 1.10  $ 0.78  41  $ 2.98  $ 2.41  24
Earnings per share - diluted  $ 1.10  $ 0.77  43  $ 2.97  $ 2.39  24
Dividends paid per share  $ 0.25  $ 0.20  25  $ 0.75  $ 0.60  25
Dividend payout ratio  22.63 %  25.70 %  (12)  25.10 %  24.77 %  1
Return on average assets  0.93 %  0.71 %  31  0.87 %  0.78 %  12
Return on average shareholders' equity  10.35 %  7.85 %  32  9.62 %  8.46 %  14
Net interest margin (Fully taxable-equivalent)  3.58 %  3.79 %  (6)  3.74 %  3.82 %  (2)
Full-time equivalent employees  3,439  3,287  5      
         
CITY NATIONAL CORPORATION        
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME        
(unaudited)        
         
  2012
(Dollars in thousands Third Second First Year to
except per share data) Quarter Quarter Quarter Date
Interest income $ 224,768  $ 229,889  $ 213,592  $ 668,249
Interest expense  14,846  13,410  12,879  41,135
Net interest income  209,922  216,479  200,713  627,114
         
Provision for credit losses on loans and leases, excluding covered loans  2,000  1,000  --  3,000
Provision for losses on covered loans  18,089  13,293  7,466  38,848
         
Noninterest income        
Trust and investment fees  43,477  34,067  33,654  111,198
Brokerage and mutual fund fees  9,059  5,293  5,028  19,380
Cash management and deposit transaction fees  11,526  11,475  11,168  34,169
International services  9,819  10,017  8,785  28,621
FDIC loss sharing income (expense), net  1,667  (6,026)  866  (3,493)
Gain on disposal of assets  3,199  3,011  2,191  8,401
Gain (loss) on securities  817  (457)  449  809
Other  27,693  17,388  13,559  58,640
Total noninterest income  107,257  74,768  75,700  257,725
         
Noninterest expense        
Salaries and employee benefits  120,210  115,035  120,245  355,490
Net occupancy of premises  16,238  14,056  13,686  43,980
Legal and professional fees  11,757  11,359  11,880  34,996
Information services  8,660  8,539  8,149  25,348
Depreciation and amortization  8,324  8,013  7,428  23,765
Amortization of intangibles  1,932  1,518  1,886  5,336
Marketing and advertising  7,141  7,597  6,816  21,554
Office services and equipment  4,673  4,492  3,948  13,113
Other real estate owned  8,749  7,541  12,094  28,384
FDIC assessments  4,616  4,523  4,479  13,618
Other  15,586  11,843  10,109  37,538
Total noninterest expense  207,886  194,516  200,720  603,122
         
Income before taxes  89,204  82,438  68,227  239,869
         
Applicable income taxes  29,052  27,271  21,719  78,042
         
Net income  $ 60,152  $ 55,167  $ 46,508  $ 161,827
         
Less: Net income attributable to noncontrolling interest  372  409  243  1,024
         
Net income attributable to City National Corporation  $ 59,780  $ 54,758  $ 46,265  $ 160,803
         
Other Data:        
Earnings per share - basic  $ 1.10  $ 1.02  $ 0.86  $ 2.98
Earnings per share - diluted  $ 1.10  $ 1.01  $ 0.86  $ 2.97
Dividends paid per share  $ 0.25  $ 0.25  $ 0.25  $ 0.75
Dividend payout ratio  22.63 %  24.57 %  28.91 %  25.10 %
Return on average assets  0.93 %  0.90 %  0.79 %  0.87 %
Return on average shareholders' equity  10.35 %  9.86 %  8.58 %  9.62 %
Net interest margin (Fully taxable-equivalent)  3.58 %  3.91 %  3.74 %  3.74 %
Full-time equivalent employees  3,439  3,330  3,235  
           
CITY NATIONAL CORPORATION          
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME          
(unaudited)          
           
  2011
(Dollars in thousands Fourth Third Second First Year to
except per share data) Quarter Quarter Quarter Quarter Date
Interest income  $ 215,252  $ 216,892  $ 210,136  $ 200,810  $ 843,090
Interest expense  13,695  17,576  19,309  19,520  70,100
Net interest income  201,557  199,316  190,827  181,290  772,990
           
Provision for credit losses on loans and leases, excluding covered loans  5,000  7,500  --  --  12,500
Provision for losses on covered loans  17,667  5,147  1,716  19,116  43,646
           
Noninterest income          
Trust and investment fees  32,995  35,412  36,687  35,638  140,732
Brokerage and mutual fund fees  4,836  5,079  4,864  5,661  20,440
Cash management and deposit transaction fees  10,689  10,986  10,905  11,725  44,305
International services  8,783  10,352  9,015  8,316  36,466
FDIC loss sharing income (expense), net  7,633 (14,191) (10,684)  8,605 (8,637)
Gain on disposal of assets  4,263  5,191  8,422  2,424  20,300
(Loss) gain on securities (273)  3,327  1,395 (34)  4,415
Gain on acquisition  --  --  8,164  --  8,164
Other  17,476  13,479  23,169  21,558  75,682
Total noninterest income  86,402  69,635  91,937  93,893  341,867
           
Noninterest expense          
Salaries and employee benefits  112,822  112,729  112,139  111,012  448,702
Net occupancy of premises  13,616  13,713  13,665  13,346  54,340
Legal and professional fees  10,846  14,242  14,790  10,077  49,955
Information services  8,359  7,906  8,335  7,497  32,097
Depreciation and amortization  7,014  6,930  6,904  6,748  27,596
Amortization of intangibles  1,350  2,105  2,104  2,168  7,727
Marketing and advertising  8,101  6,675  7,626  6,518  28,920
Office services and equipment  4,234  4,456  4,672  4,606  17,968
Other real estate owned  15,233  13,160  22,162  14,489  65,044
FDIC assessments  4,480  6,670  8,524  9,806  29,480
Other  12,174  9,051  10,911  11,130  43,266
Total noninterest expense  198,229  197,637  211,832  197,397  805,095
           
Income before taxes  67,063  58,667  69,216  58,670  253,616
           
Applicable income taxes  22,758  16,267  20,650  17,886  77,561
           
Net income  $ 44,305  $ 42,400  $ 48,566  $ 40,784  $ 176,055
           
Less: Net income attributable to noncontrolling interest  445  1,002  1,095  1,092  3,634
           
Net income attributable to City National Corporation  $ 43,860  $ 41,398  $ 47,471  $ 39,692  $ 172,421
           
Other Data:          
Earnings per share - basic  $ 0.82  $ 0.78  $ 0.89  $ 0.75  $ 3.24
Earnings per share - diluted  $ 0.82  $ 0.77  $ 0.88  $ 0.74  $ 3.21
Dividends paid per share  $ 0.20  $ 0.20  $ 0.20  $ 0.20  $ 0.80
Dividend payout ratio  24.25 %  25.70 %  22.40 %  26.65 %  24.64 %
Return on average assets  0.73 %  0.71 %  0.87 %  0.75 %  0.77 %
Return on average shareholders' equity  8.15 %  7.85 %  9.39 %  8.16 %  8.38 %
Net interest margin (Fully taxable-equivalent)  3.70 %  3.79 % 3.85 % 3.84 % 3.79 %
Full-time equivalent employees  3,256  3,287  3,328 3,258  
       
CITY NATIONAL CORPORATION      
CONSOLIDATED PERIOD END BALANCE SHEET      
(unaudited)      
       
  2012
(In thousands) Third Quarter Second Quarter First Quarter
Assets      
Cash and due from banks  $ 235,038  $ 162,894  $ 210,799
Due from banks - interest-bearing 335,300 106,109 101,375
Federal funds sold 19,500 162,000 156,000
Securities available-for-sale 7,872,064 6,865,881 6,838,710
Securities held-to-maturity 1,174,161 1,100,229 996,613
Trading securities 64,749 62,585 82,589
Loans and leases:      
Commercial 6,264,562 6,086,947 5,573,782
Commercial real estate mortgages 2,463,664 2,424,333 2,213,114
Residential mortgages 3,897,690 3,822,630 3,805,807
Real estate construction 242,137 301,829 313,409
Equity lines of credit 718,966 741,270 715,997
Installment 137,632 130,200 125,793
Loans and leases, excluding covered loans 13,724,651 13,507,209 12,747,902
Allowance for loan and lease losses (268,440) (269,534) (266,077)
Loans and leases, excluding covered loans, net 13,456,211 13,237,675 12,481,825
Covered loans, net (1) 1,099,359 1,216,988 1,335,685
Net loans and leases 14,555,570 14,454,663 13,817,510
Premises and equipment, net 147,621 147,245 143,238
Goodwill and other intangibles 691,765 589,114 521,717
Other real estate owned (2) 110,673 117,501 107,530
FDIC indemnification asset 160,991 170,654 185,392
Other assets 884,096 863,098 877,016
Total assets  $ 26,251,528  $ 24,801,973  $ 24,038,489
       
Liabilities      
Deposits:      
Noninterest-bearing  $ 13,432,413  $ 12,187,075  $ 11,550,000
Interest-bearing 9,079,903 8,921,977 9,237,737
Total deposits 22,512,316 21,109,052 20,787,737
Short-term borrowings 211,739 322,077 222,776
Long-term debt 706,035 712,280 482,024
Other liabilities 449,728 361,300 302,951
Total liabilities 23,879,818 22,504,709 21,795,488
       
Redeemable noncontrolling interest 41,386 41,899 43,436
       
Shareholders' equity      
Common stock 53,886 53,886 53,886
Additional paid-in capital 485,975 491,439 489,717
Accumulated other comprehensive income 93,924 82,807 81,342
Retained earnings 1,732,417 1,686,163 1,644,861
Treasury shares (35,878) (58,930) (70,241)
Total shareholders' equity 2,330,324 2,255,365 2,199,565
Total liabilities and shareholders' equity  $ 26,251,528  $ 24,801,973  $ 24,038,489
       
(1) Covered loans are net of $45.0 million, $43.1 million and $61.5 million of allowance for loan losses as of September 30, 2012, June 30, 2012 and March 31, 2012, respectively.      
(2) Other real estate owned includes $83.6 million, $82.8 million and $78.5 million covered by FDIC loss share at September 30, 2012, June 30, 2012 and March 31, 2012, respectively.      
         
CITY NATIONAL CORPORATION        
CONSOLIDATED PERIOD END BALANCE SHEET        
(unaudited)        
         
  2011
(In thousands) Fourth Quarter Third Quarter Second Quarter First Quarter
Assets        
Cash and due from banks  $ 168,376  $ 249,496  $ 181,203  $ 203,600
Due from banks - interest-bearing 76,438 144,754 725,304 743,569
Federal funds sold  -- 100,000 123,000 100,000
Securities available-for-sale 7,571,901 7,185,288 6,348,055 5,849,390
Securities held-to-maturity 467,680  --  --  --
Trading securities 61,975 93,707 125,829 81,287
Loans and leases:        
Commercial 5,246,081 5,166,802 4,800,252 4,468,177
Commercial real estate mortgages 2,110,749 2,059,114 1,930,269 1,902,862
Residential mortgages 3,763,218 3,742,768 3,710,765 3,603,058
Real estate construction 315,609 335,712 355,014 415,241
Equity lines of credit 741,081 728,890 735,899 733,567
Installment 132,647 130,923 130,924 146,779
Loans and leases, excluding covered loans 12,309,385 12,164,209 11,663,123 11,269,684
Allowance for loan and lease losses (262,557) (263,348) (265,933) (263,356)
Loans and leases, excluding covered loans, net 12,046,828 11,900,861 11,397,190 11,006,328
Covered loans, net (1) 1,417,289 1,550,103 1,657,004 1,684,068
Net loans and leases 13,464,117 13,450,964 13,054,194 12,690,396
Premises and equipment, net 143,641 140,871 134,511 131,345
Goodwill and other intangibles 522,753 524,103 526,207 527,419
Other real estate owned (2) 129,340 147,369 162,541 178,164
FDIC indemnification asset 204,259 212,809 261,734 270,576
Other assets 855,811 854,899 883,511 860,186
Total assets  $ 23,666,291  $ 23,104,260  $ 22,526,089  $ 21,635,932
         
Liabilities        
Deposits:        
Noninterest-bearing  $ 11,146,627  $ 10,308,547  $ 9,403,425  $ 8,756,877
Interest-bearing 9,240,955 9,600,534 9,861,695 9,721,062
Total deposits 20,387,582 19,909,081 19,265,120 18,477,939
Short-term borrowings 50,000 30,640 149,771 151,663
Long-term debt 697,778 699,983 701,829 703,173
Other liabilities 341,439 301,387 281,622 246,517
Total liabilities 21,476,799 20,941,091 20,398,342 19,579,292
         
Redeemable noncontrolling interest 44,643 42,704 43,737 46,013
         
Equity        
City National Corporation shareholders' equity:        
Common stock 53,886 53,886 53,886 53,886
Additional paid-in capital 489,200 489,037 485,064 480,918
Accumulated other comprehensive income 72,372 82,467 56,293 26,535
Retained earnings 1,611,969 1,578,747 1,547,989 1,511,153
Treasury shares (82,578) (83,672) (84,311) (86,954)
Total shareholders' equity 2,144,849 2,120,465 2,058,921 1,985,538
Noncontrolling interest  --  -- 25,089 25,089
Total equity 2,144,849 2,120,465 2,084,010 2,010,627
Total liabilities and equity  $ 23,666,291  $ 23,104,260  $ 22,526,089  $ 21,635,932
         
(1) Covered loans are net of $64.6 million, $61.8 million, $67.6 million and $82.0 million of allowance for loan losses as of December 31, 2011, September 30, 2011, June 30, 2011 and March 31, 2011, respectively.        
(2) Other real estate owned includes $98.5 million, $102.8 million, $114.9 million and $121.8 million covered by FDIC loss share at December 31, 2011, September 30, 2011, June 30, 2011 and March 31, 2011, respectively.        
                   
CITY NATIONAL CORPORATION                  
CREDIT LOSS EXPERIENCE                  
(unaudited)                  
                   
  2012 2011
(Dollars in thousands) Third Quarter Second Quarter First Quarter Year To Date Fourth Quarter Third Quarter Second Quarter First Quarter Year To Date
                   
Allowance for Loan and Lease Losses, Excluding Covered Loans                  
                   
Balance at beginning of period $ 269,534 $ 266,077 $ 262,557 $ 262,557 $ 263,348 $ 265,933 $ 263,356 $ 257,007 $ 257,007
                   
Net (charge-offs)/recoveries:                  
Commercial (4,936)  8,092  5,283  8,439 (12,534) (2,915)  2,616 (1,937) (14,770)
Commercial real estate mortgages (241)  1,113 (666)  206 (87) (452)  1,269  6,212  6,942
Residential mortgages (535) (543) (494) (1,572) (52) (163) (253) (615) (1,083)
Real estate construction  3,105 (4,839)  104 (1,630)  6,860 (6,233)  577  3,826  5,030
Equity lines of credit (32) (808) (154) (994) (377) (512) (120) (757) (1,766)
Installment  454 (274)  417  597  670 (309)  106 (202)  265
Total net (charge-offs)/recoveries (2,185)  2,741  4,490  5,046 (5,520) (10,584)  4,195  6,527 (5,382)
                   
Provision for credit losses  2,000  1,000  --  3,000  5,000  7,500  --  --  12,500
                   
Transfers (to) from reserve for off-balance sheet credit commitments (909) (284) (970) (2,163) (271)  499 (1,618) (178) (1,568)
                   
Balance at end of period $ 268,440 $ 269,534 $ 266,077 $ 268,440 $ 262,557 $ 263,348 $ 265,933 $ 263,356 $ 262,557
                   
Net (Charge-Offs)/Recoveries to Average Total Loans and Leases, Excluding Covered Loans (annualized):                  
                   
Commercial (0.32) % 0.56 % 0.40 % 0.20 %  (0.96) %  (0.23) % 0.22 %  (0.18) %  (0.31) %
Commercial real estate mortgages (0.04) % 0.20 %  (0.12) % 0.01 %  (0.02) %  (0.09) % 0.27 % 1.31 % 0.35 %
Residential mortgages (0.06) %  (0.06) %  (0.05) %  (0.05) %  (0.01) %  (0.02) %  (0.03) %  (0.07) %  (0.03) %
Real estate construction 4.65 %  (6.26) % 0.13 %  (0.73) % 8.29 %  (7.14) % 0.59 % 3.46 % 1.33 %
Equity lines of credit (0.02) %  (0.44) %  (0.09) %  (0.18) %  (0.20) %  (0.28) %  (0.07) %  (0.42) %  (0.24) %
Installment 1.34 %  (0.85) % 1.30 % 0.61 % 2.00 %  (0.94) % 0.32 %  (0.55) % 0.19 %
Total loans and leases, excluding covered loans (0.06) % 0.08 % 0.15 % 0.05 %  (0.18) %  (0.36) % 0.15 % 0.24 %  (0.05) %
                   
Reserve for Off-Balance Sheet Credit Commitments                  
                   
Balance at beginning of period  $ 24,351  $ 24,067  $ 23,097  $ 23,097  $ 22,826  $ 23,325  $ 21,707  $ 21,529  $ 21,529
Transfers from (to) allowance  909  284  970  2,163  271 (499)  1,618  178  1,568
Balance at end of period  $ 25,260  $ 24,351  $ 24,067  $ 25,260  $ 23,097  $ 22,826  $ 23,325  $ 21,707  $ 23,097
                   
Allowance for Losses on Covered Loans                  
                   
Balance at beginning of period  $ 43,147  $ 61,471  $ 64,565  $ 64,565  $ 61,753  $ 67,629  $ 82,016  $ 67,389  $ 67,389
Provision for losses  18,089  13,293  7,466  38,848  17,667  5,147  1,716  19,116  43,646
Net charge-offs  --  --  --  --  -- (325)  --  -- (325)
Reduction in allowance due to loan removals (16,258) (31,617) (10,560) (58,435) (14,855) (10,698) (16,103) (4,489) (46,145)
Balance at end of period  $ 44,978  $ 43,147  $ 61,471  $ 44,978  $ 64,565  $ 61,753  $ 67,629  $ 82,016  $ 64,565
                   
Note: Certain prior period balances have been reclassified to conform to current period presentation.                  
               
CITY NATIONAL CORPORATION              
NONPERFORMING ASSETS              
(unaudited)              
               
  2012 2011
(Dollars in thousands) Third Quarter Second Quarter First Quarter Fourth Quarter Third Quarter Second Quarter First Quarter
               
Nonperforming assets, excluding covered assets              
Nonaccrual loans, excluding covered loans              
Commercial  $ 18,848  $ 19,056  $ 19,584  $ 19,888  $ 34,937  $ 24,337  $ 19,297
Commercial real estate mortgages  36,580  28,780  21,071  21,948  20,746  26,676  28,028
Residential mortgages  11,680  14,064  13,628  9,771  10,512  14,211  14,544
Real estate construction  28,963  29,676  48,964  50,876  70,827  60,543  81,448
Equity lines of credit  6,946  6,505  8,831  8,669  8,401  6,668  6,676
Installment  477  575  729  874  707  365  7,399
Total nonaccrual loans, excluding covered loans  103,494  98,656  112,807  112,026  146,130  132,800  157,392
               
Other real estate owned, excluding covered OREO  27,055  34,667  29,074  30,790  44,521  47,634  56,342
               
Total nonperforming assets, excluding covered assets  $ 130,549  $ 133,323  $ 141,881  $ 142,816  $ 190,651  $ 180,434  $ 213,734
               
Nonperforming covered assets              
Nonaccrual loans  $ --  $ 422  $ 422  $ 422  $ 1,023  $ 1,408  $ 2,343
Other real estate owned  83,618  82,834  78,456  98,550  102,848  114,907  121,822
Total nonperforming covered assets  $ 83,618  $ 83,256  $ 78,878  $ 98,972  $ 103,871  $ 116,315  $ 124,165
               
Loans 90 days or more past due on accrual status, excluding covered loans  $ 433  $ 2,065  $ 654  $ 453  $ 379  $ 7,214  $ 3,679
               
Covered loans 90 days or more past due on accrual status  $ 140,041  $ 190,005  $ 265,175  $ 330,169  $ 336,193  $ 368,379  $ 390,267
               
               
Allowance for loan and lease losses as a percentage of:              
Nonaccrual loans  259.38 %  273.21 %  235.87 %  234.37 %  180.21 %  200.25 %  167.32 %
Total nonperforming assets, excluding covered assets  205.62 %  202.17 %  187.54 %  183.84 %  138.13 %  147.39 %  123.22 %
Total loans and leases, excluding covered loans  1.96 %  2.00 %  2.09 %  2.13 %  2.16 %  2.28 %  2.34 %
               
Nonaccrual loans as a percentage of total loans, excluding covered loans  0.75 %  0.73 %  0.88 %  0.91 %  1.20 %  1.14 %  1.40 %
               
Nonperforming assets, excluding covered assets, as a percentage of:              
Total loans and other real estate owned, excluding covered assets  0.95 %  0.98 %  1.11 %  1.16 %  1.56 %  1.54 %  1.89 %
Total assets  0.50 %  0.54 %  0.59 %  0.60 %  0.83 %  0.80 %  0.99 %
               
Note: Certain prior period balances have been reclassified to conform to current period presentation.              
                 
CITY NATIONAL CORPORATION                
AVERAGE BALANCES AND RATES                
(unaudited)                
  2012
  Third Quarter Second Quarter First Quarter Year to Date
(Dollars in millions) Average Balance Average Rate Average Balance Average Rate Average Balance Average Rate Average Balance Average Rate
Assets                
Interest-earning assets                 
Loans and leases                 
Commercial   $ 6,128  3.97 %  $ 5,845  4.16 %  $ 5,319  3.94 %  $ 5,765  4.03 %
Commercial real estate mortgages  2,464  4.45  2,295  4.70  2,166  4.87  2,309  4.66
Residential mortgages  3,865  4.11  3,815  4.28  3,777  4.36  3,819  4.25
Real estate construction  265  5.67  311  4.31  314  5.33  297  5.08
Equity lines of credit  731  3.52  731  3.53  727  3.58  730  3.54
Installment   135  4.51  129  4.60  129  4.67  131  4.59
Total loans and leases, excluding covered loans  13,588  4.10  13,126  4.27  12,432  4.26  13,051  4.21
Covered loans  1,207  13.92  1,341  14.51  1,439  10.63  1,328  12.93
Total loans and leases   14,795  4.90  14,467  5.22  13,871  4.93  14,379  5.02
Due from banks - interest-bearing  247  0.26  293  0.24  167  0.22  236  0.24
Federal funds sold and securities purchased under resale agreements  105  0.28  137  0.28  15  0.28  86  0.28
Securities  8,631  2.16  7,755  2.37  7,929  2.40  8,107  2.30
Other interest-earning assets  114  2.40  117  2.39  121  2.30  117  2.36
Total interest-earning assets  23,892  3.82  22,769  4.15  22,103  3.97  22,925  3.98
Allowance for loan and lease losses (319)   (331)   (335)   (328)  
Cash and due from banks  184    148    141    158  
Other non-earning assets  1,898    1,777    1,736    1,803  
Total assets  $ 25,655    $ 24,363    $ 23,645    $ 24,558  
                 
Liabilities and Equity                
Interest-bearing deposits                
Interest checking accounts $ 1,981  0.09 %  $ 1,890  0.10 %  $ 1,952  0.11 %  $ 1,941  0.10 %
Money market accounts  5,838  0.11  5,856  0.13  6,018  0.15  5,904  0.13
Savings deposits  371  0.14  360  0.14  358  0.14  363  0.14
Time deposits - under $100,000  220  0.51  228  0.50  242  0.49  230  0.50
Time deposits -- $100,000 and over  732  0.41  733  0.45  697  0.51  721  0.46
Total interest-bearing deposits  9,142  0.14  9,067  0.16  9,267  0.18  9,159  0.16
                 
Federal funds purchased and securities sold under repurchase agreements  24  0.15  4  0.11  166  0.08  64  0.09
Other borrowings  922  4.97  797  4.97  697  5.09  806  5.00
Total interest-bearing liabilities  10,088  0.59  9,868  0.55  10,130  0.51  10,029  0.55
Noninterest-bearing deposits  12,799    11,881    10,950    11,880  
Other liabilities  471    379    396    415  
Total equity  2,297    2,234    2,169    2,234  
Total liabilities and equity  $ 25,655    $ 24,363    $ 23,645    $ 24,558  
                 
                 
Net interest spread    3.23 %    3.60 %    3.46 %    3.43 %
Net interest margin    3.58 %    3.91 %    3.74 %    3.74 %
                 
Average prime rate    3.25 %    3.25 %    3.25 %    3.25 %
                 
Note: Certain prior period balances have been reclassified to conform to current period presentation.                
                   
CITY NATIONAL CORPORATION                  
AVERAGE BALANCES AND RATES                  
(unaudited)                    
                     
  2011
  Fourth Quarter Third Quarter Second Quarter First Quarter Year to Date
(Dollars in millions)  Average Balance  Average Rate Average Balance Average Rate Average Balance Average Rate  Average  Balance  Average Rate Average Balance Average Rate
Assets                    
Interest-earning assets                   
Loans and leases                     
Commercial   $ 5,204  3.89 %  $ 4,928  4.09 %  $ 4,693  4.22 %  $ 4,437  4.30 %  $ 4,818  4.11 %
Commercial real estate mortgages  2,077  5.12  1,944  5.30  1,904  5.67  1,924  5.56  1,963  5.40
Residential mortgages  3,739  4.49  3,717  4.74  3,663  4.78  3,563  4.81  3,671  4.70
Real estate construction  328  5.08  347  4.65  395  5.10  448  4.56  379  4.84
Equity lines of credit  732  3.58  731  3.55  730  3.59  733  3.57  731  3.57
Installment   133  4.87  130  4.94  131  4.88  151  4.81  136  4.88
Total loans and leases, excluding covered loans  12,213  4.30  11,797  4.47  11,516  4.64  11,256  4.67  11,698  4.51
Covered loans  1,554  11.06  1,664  10.65  1,770  8.70  1,811  7.78  1,699  9.48
Total loans and leases  13,767  5.05  13,461  5.23  13,286  5.19  13,067  5.11  13,397  5.14
Due from banks - interest-bearing  435  0.30  642  0.29  526  0.31  490  0.25  524  0.29
Federal funds sold and securities purchased under resale agreements  115  0.28  130  0.28  143  0.28  232  0.27  154  0.27
Securities   7,642  2.27  6,954  2.45  6,224  2.66  5,693  2.75  6,635  2.51
Other interest-earning assets  125  2.13  130  2.09  135  2.09  139  2.04  132  2.09
Total interest-earning assets  22,084  3.95  21,317  4.12  20,314  4.23  19,621  4.24  20,842  4.13
Allowance for loan and lease losses (331)   (330)   (344)   (329)   (333)  
Cash and due from banks  199    203    184    201    197  
Other non-earning assets  1,742    1,809    1,856    1,885    1,822  
Total assets  $ 23,694    $ 22,999    $ 22,010    $ 21,378    $ 22,528  
                     
Liabilities and Equity                  
Interest-bearing deposits                    
Interest checking accounts  $ 1,865  0.12 %  $ 1,727  0.15 %  $ 1,707  0.17 %  $ 1,772  0.19 %  $ 1,768  0.16 %
Money market accounts  6,467  0.18  6,900  0.35  6,683  0.43  6,452  0.45  6,626  0.35
Savings deposits  344  0.17  329  0.29  327  0.32  303  0.34  326  0.28
Time deposits - under $100,000  262  0.53  280  0.48  308  0.49  325  0.56  294  0.52
Time deposits -- $100,000 and over  718  0.57  801  0.61  833  0.70  823  0.75  793  0.66
Total interest-bearing deposits  9,656  0.20  10,037  0.34  9,858  0.41  9,675  0.43  9,807  0.34
                     
Federal funds purchased and securities sold under repurchase agreements  2  0.06  --  0.07  10  0.07  -- 0.00  3  0.07
Other borrowings  701  4.96  804  4.46  855  4.36  858  4.41  804  4.53
Total interest-bearing liabilities  10,359  0.52  10,841  0.64  10,723  0.72  10,533  0.75  10,614  0.66
Noninterest-bearing deposits  10,844    9,688    8,927    8,509    9,499  
Other liabilities  355    353    307    338    338  
Total equity  2,136    2,117    2,053    1,998    2,077  
Total liabilities and equity  $ 23,694    $ 22,999    $ 22,010    $ 21,378    $ 22,528  
                     
                     
Net interest spread    3.43 %    3.48 %    3.51 %    3.49 %    3.47 %
Net interest margin    3.70 %    3.79 %    3.85 %    3.84 %    3.79 %
                     
Average prime rate    3.25 %    3.25 %    3.25 %    3.25 %    3.25 %
                     
Note: Certain prior period balances have been reclassified to conform to current period presentation.                    
                   
CITY NATIONAL CORPORATION                  
CAPITAL AND CREDIT RATING DATA                  
(unaudited)                  
                   
  2012 2011
  Third Quarter Second Quarter First Quarter Year To Date Fourth Quarter Third Quarter Second Quarter First Quarter Year To Date
Per Common Share:                  
Shares Outstanding (in thousands):                  
Average - Basic  53,425  53,105  52,741  53,092  52,488  52,481  52,462  52,320  52,439
Average - Diluted  53,711  53,373  53,021  53,376  52,750  52,720  52,977  52,894  52,849
Period-end  53,190  52,822  52,661    52,499  52,484  52,475  52,440  
Book value for shareholders  $ 43.81  $ 42.70  $ 41.77    $ 40.86  $ 40.40  $ 39.24  $ 37.86  
Closing price:                  
High  $ 54.48  $ 54.63  $ 54.44  $ 54.63  $ 45.10  $ 55.54  $ 58.75  $ 62.90  $ 62.90
Low  48.20  46.39  45.39  45.39  36.01  37.76  52.02  55.65  36.01
Period-end  51.51  48.58  52.47    44.18  37.76  54.25  57.05  
                   
                   
Capital Ratios (Dollars in millions):                  
Risk-based capital                  
Risk-weighted assets (1)  $ 17,174  $ 16,723  $ 15,840    $ 15,305  $ 14,926  $ 14,286  $ 13,551  
Tier 1 common shareholders' equity  $ 1,566  $ 1,597  $ 1,611    $ 1,565  $ 1,530  $ 1,493  $ 1,449  
Percentage of risk-weighted assets (2)  9.12 %  9.55 %  10.17 %    10.22 %  10.25 %  10.45 %  10.69 %  
Tier 1 capital  $ 1,571  $ 1,602  $ 1,616    $ 1,570  $ 1,535  $ 1,523  $ 1,479  
Percentage of risk-weighted assets  9.15 %  9.58 %  10.20 %    10.26 %  10.28 %  10.66 %  10.91 %  
Total capital  $ 2,133  $ 2,160  $ 2,013    $ 1,963  $ 1,923  $ 1,905  $ 1,853  
Percentage of risk-weighted assets  12.42 %  12.91 %  12.71 %    12.83 %  12.88 %  13.34 %  13.68 %  
Tier 1 leverage ratio  6.29 %  6.74 %  6.98 %    6.77 %  6.82 %  7.09 %  7.09 %  
                   
Period-end equity to period-end assets  8.88 %  9.09 %  9.15 %    9.06 %  9.18 %  9.25 %  9.29 %  
Period-end shareholders' equity to period-end assets  8.88 %  9.09 %  9.15 %    9.06 %  9.18 %  9.14 %  9.18 %  
                   
Average equity to average assets  8.95 %  9.17 %  9.17 %  9.09 %  9.02 %  9.21 %  9.33 %  9.35 %  9.22 %
Average shareholders' equity to average assets  8.95 %  9.17 %  9.17 %  9.09 %  9.02 %  9.10 %  9.22 %  9.23 %  9.14 %
                   
Period-end tangible equity to period-end tangible assets (2)  6.41 %  6.88 %  7.13 %    7.01 %  7.07 %  7.08 %  7.03 %  
                   
Average tangible equity to average tangible assets (2)  6.45 %  7.01 %  7.12 %  6.85 %  6.96 %  7.08 %  7.11 %  7.05 %  7.05 %
                   
                   
Senior Debt Credit Ratings                  
For The Period Ended September 30, 2012                  
  Moody's Fitch Standard & Poor's DBRS          
City National Bank A1  A- A- A (high)          
City National Corporation A2  A- BBB+  A           
                   
                   
(1) In accordance with applicable bank regulatory guidelines, the Company calculates risk-weighted assets by assigning assets and credit equivalent amounts of derivatives and off-balance sheet items to one of several broad risk categories according to the obligor, or, if relevant, the guarantor or the nature of the collateral. The aggregate dollar amount in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are added together for determining risk-weighted assets.                  
(2) The Tier 1 common shareholders' equity to risk-weighted assets ratio and tangible equity to tangible assets ratio are non-GAAP financial measures. See page 15 and 16 for notes on non-GAAP measures.                  
                   
CITY NATIONAL CORPORATION                  
COMPUTATION OF BASIC AND DILUTED EARNINGS PER SHARE              
(unaudited)                  
                   
City National Corporation applies the two-class method of computing basic and diluted earnings per share ("EPS"). Under the two-class method, EPS is determined for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. The Company grants restricted stock and restricted stock units under a share-based compensation plan that qualify as participating securities. The computation of basic and diluted EPS is presented in the following table:
                   
  2012 2011
(Dollars in thousands, except per share amounts) Third Quarter Second Quarter First Quarter Year to Date Fourth Quarter Third Quarter Second Quarter First Quarter Year to Date
Basic EPS:                  
Net income attributable to City National Corporation  $ 59,780  $ 54,758  $ 46,265  $ 160,803  $ 43,860  $ 41,398  $ 47,471  $ 39,692  $ 172,421
Less: Earnings allocated to participating securities  842  788  738  2,380  690  655  759  578  2,678
Earnings allocated to shareholders  $ 58,938  $ 53,970  $ 45,527  $ 158,423  $ 43,170  $ 40,743  $ 46,712  $ 39,114  $ 169,743
                   
Weighted average shares outstanding  53,425  53,105  52,741  53,092  52,488  52,481  52,462  52,320  52,439
                   
Basic earnings per share  $ 1.10  $ 1.02  $ 0.86  $ 2.98  $ 0.82  $ 0.78  $ 0.89  $ 0.75  $ 3.24
                   
Diluted EPS:                  
Earnings allocated to shareholders (1)  $ 58,941  $ 53,972  $ 45,530  $ 158,432  $ 43,173  $ 40,745  $ 46,718  $ 39,119  $ 169,759
                   
Weighted average shares outstanding  53,425  53,105  52,741  53,092  52,488  52,481  52,462  52,320  52,439
Dilutive effect of equity awards  286  268  280  284  262  239  515  574  410
Weighted average diluted shares outstanding  53,711  53,373  53,021  53,376  52,750  52,720  52,977  52,894  52,849
                   
Diluted earnings per share  $ 1.10  $ 1.01  $ 0.86  $ 2.97  $ 0.82  $ 0.77  $ 0.88  $ 0.74  $ 3.21
                   
(1) Earnings allocated to shareholders for basic and diluted EPS may differ under the two-class method as a result of adding common stock equivalents for options to dilutive shares outstanding, which alters the ratio used to allocate earnings to shareholders and participating securities for the purposes of calculating diluted EPS.                  
         
CITY NATIONAL CORPORATION        
SELECTED FINANCIAL INFORMATION ON COVERED ASSETS        
(unaudited)        
         
The following table provides selected components of income and expense related to covered assets:
         
    2012 2011
(in thousands)   Third Quarter Second Quarter Third Quarter
         
Summary Totals        
Net impairment income (expense) (Sum of A)    $ 2,639  $ 3,932  $ (5,884)
Other covered asset (expense) income, net    (837)  3,388  (589)
Total income (expense), net    $ 1,802  $ 7,320  $ (6,473)
         
Interest income (1)        
Income on loans paid-off or fully charged-off    $ 22,164  $ 27,402  $ 18,343
         
Provision for losses on covered loans        
Provision for losses on covered loans A  18,089  13,293  5,147
         
Noninterest income related to covered assets        
         
FDIC loss sharing income (expense), net        
Gain on indemnification asset A  $ 21,426  $ 17,722  $ (384)
Indemnification asset accretion    (4,258)  (4,133)  (4,043)
Net FDIC reimbursement for OREO and loan expenses    7,612  6,724  10,496
Removal of indemnification asset for loans paid-off or fully charged-off    (9,731)  (10,654)  (10,228)
Removal of indemnification asset for unfunded loan commitments and loans transferred to OREO    (2,834)  (4,773)  (3,703)
Removal of indemnification asset for OREO and net reimbursment to FDIC for OREO sales    (1,219)  (1,189)  (2,823)
Loan recoveries shared with FDIC    (8,631)  (9,226)  (3,153)
Increase in FDIC clawback liability A  (698)  (497)  (353)
Total FDIC loss sharing income (expense), net    1,667  (6,026)  (14,191)
         
Gain on disposal of assets        
Net gain on sale of OREO    1,524  1,486  3,625
         
Other income        
Net gain on transfers of covered loans to OREO    4,907  6,864  3,887
Amortization of fair value on acquired unfunded loan commitments    192  413  1,088
OREO income    428  615  379
Other    (632)  (864)  (503)
Total other income    4,895  7,028  4,851
         
Total noninterest income related to covered assets    $ 8,086  $ 2,488  $ (5,715)
         
Noninterest expense related to covered assets (2)        
         
Other real estate owned        
Valuation write-downs    $ 4,267  $ 4,250  $ 7,526
Holding costs and foreclosure expense    3,522  2,796  3,449
Total other real estate owned    7,789  7,046  10,975
         
Legal and professional fees    2,541  2,200  2,961
         
Other operating expense        
Other covered asset expenses    29  31  18
         
Total noninterest expense related to covered assets (3)    $ 10,359  $ 9,277  $ 13,954
         
Total income (expense), net    $ 1,802  $ 7,320  $ (6,473)
         
Note: Certain prior period balances have been reclassified to conform to current period presentation.        
(1) Excludes base yield in interest income related to covered loans.        
(2) OREO, legal and professional fees, and other expenses related to covered assets must meet certain FDIC criteria in order for the expense amounts to be reimbursed. Certain amounts reflected in these categories may not be reimbursed by the FDIC.        
(3) Excludes personnel and other corporate overhead expenses that the Company incurs to service covered assets and costs associated with the branches acquired in FDIC-assisted acquisitions.        
                   
CITY NATIONAL CORPORATION                  
NON-GAAP FINANCIAL MEASURES                  
(unaudited)                  
                   
(a) Tangible equity ratios                  
                   
Tangible equity to tangible assets is a non-GAAP financial measure that represents total equity less identifiable intangible assets and goodwill divided by total assets less identifiable intangible assets and goodwill. Management reviews this measure in evaluating the Company's capital levels and has included the ratio in response to market participants' interest in tangible equity as a measure of capital. A reconciliation of the GAAP to non-GAAP measure is set forth below: 
                   
  2012 2011
(Dollars in thousands) Third Quarter Second Quarter First Quarter Year to Date Fourth Quarter Third Quarter Second Quarter First Quarter Year to Date
Period End:                  
Total equity  $ 2,330,324  $ 2,255,365  $ 2,199,565    $ 2,144,849  $ 2,120,465  $ 2,084,010  $ 2,010,627  
Less: Goodwill and other intangibles  (691,765)  (589,114)  (521,717)    (522,753)  (524,103)  (526,207)  (527,419)  
Tangible equity (A)  1,638,559  1,666,251  1,677,848    1,622,096  1,596,362  1,557,803  1,483,208  
                   
Total assets  $ 26,251,528  $ 24,801,973  $ 24,038,489    $ 23,666,291  $ 23,104,260  $ 22,526,089  $ 21,635,932  
Less: Goodwill and other intangibles  (691,765)  (589,114)  (521,717)    (522,753)  (524,103)  (526,207)  (527,419)  
Tangible assets (B)  $ 25,559,763  $ 24,212,859  $ 23,516,772    $ 23,143,538  $ 22,580,157  $ 21,999,882  $ 21,108,513  
                   
Period-end tangible equity to period-end tangible assets (A)/(B)  6.41% 6.88% 7.13%   7.01% 7.07% 7.08% 7.03%  
                   
Average Balance:                  
Total equity  $ 2,296,754  $ 2,234,411  $ 2,168,748  $ 2,233,536  $ 2,136,215  $ 2,117,249  $ 2,053,447  $ 1,998,006  $ 2,076,721
Less: Goodwill and other intangibles  (687,224)  (566,989)  (522,182)  (592,479)  (523,206)  (525,300)  (527,072)  (528,205)  (525,930)
Tangible equity (C)  1,609,530  1,667,422  1,646,566  1,641,057  1,613,009  1,591,949  1,526,375  1,469,801  1,550,791
                   
Total assets  $ 25,654,594  $ 24,362,546  $ 23,644,899  $ 24,558,030  $ 23,694,160  $ 22,998,562  $ 22,009,749  $ 21,377,904  $ 22,527,750
Less: Goodwill and other intangibles  (687,224)  (566,989)  (522,182)  (592,479)  (523,206)  (525,300)  (527,072)  (528,205)  (525,930)
Tangible assets (D)  $ 24,967,370  $ 23,795,557  $ 23,122,717  $ 23,965,551  $ 23,170,954  $ 22,473,262  $ 21,482,677  $ 20,849,699  $ 22,001,820
                   
Average tangible equity to average tangible assets (C)/(D) 6.45% 7.01% 7.12% 6.85% 6.96% 7.08% 7.11% 7.05% 7.05%
                   
(b) Tier 1 common shareholders' equity to risk-based assets                  
                   
The Tier 1 common shareholders' equity to risk-based assets ratio, also known as Tier 1 common ratio, is calculated by dividing (a) Tier 1 capital less non-common components including qualifying noncontrolling interest in subsidiaries and qualifying trust preferred securities by (b) risk-weighted assets. Tier 1 capital and risk-weighted assets are calculated in accordance with applicable bank regulatory guidelines. This ratio is a non-GAAP measure that is used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews this measure in evaluating the Company's capital levels and has included these ratios in response to market participants' interest in the Tier 1 common shareholders' equity to risk-based assets ratio. 
                   
  2012 2011    
(Dollars in thousands) Third Quarter Second Quarter First Quarter Fourth Quarter Third Quarter Second Quarter First Quarter    
Tier 1 capital  $ 1,570,778  $ 1,602,398  $ 1,616,099  $ 1,570,101  $ 1,534,831  $ 1,523,269  $ 1,478,820    
Less: Noncontrolling interest  --  --  --  --  --  (25,089)  (25,089)    
Less: Trust preferred securities  (5,155)  (5,155)  (5,155)  (5,155)  (5,155)  (5,155)  (5,155)    
Tier 1 common shareholders' equity (A)  $ 1,565,623  $ 1,597,243  $ 1,610,944  $ 1,564,946  $ 1,529,676  $ 1,493,025  $ 1,448,576    
                   
Risk-weighted assets (B)  $ 17,174,382  $ 16,722,999  $ 15,839,944  $ 15,305,328  $ 14,925,715  $ 14,285,572  $ 13,551,318    
                   
Tier 1 common shareholders' equity to risk-based assets (A)/(B) 9.12% 9.55% 10.17% 10.22% 10.25% 10.45% 10.69%    
                   
(c) Brokerage and money market mutual fund fees, excluding Rochdale fees                  
                   
Brokerage and money market mutual fund fees for the third quarter of 2012 were $9.1 million, an increase of 71 percent from the second quarter of 2012. Brokerage and money market mutual fund fees for the first nine months of 2012 were $19.4 million, an increase of 24 percent from the same period in 2011. Both current periods included $3.0 million of fee income from the July 2, 2012 acquisition of Rochdale Investment Management. Excluding this amount, brokerage and money market mutual fund fees increased 14 percent during the third quarter of 2012 from the second quarter of 2012, and increased 5 percent for the first nine months of 2012 compared to the year-earlier period.
                   
Management believes this non-GAAP financial measure enhances the comparability of the financial results with prior periods as well as to highlight the effects of the Rochdale acquisition in the periods presented. The Company believes that investors may find it useful to see this non-GAAP financial measure to analyze the Company's underlying financial performance without the impact of the acquisition.
CONTACT:  Financial/Investors          Christopher J. Carey, City National,          310.888.6777          Chris.Carey@cnb.com          Media          Cary Walker, City National, 213.673.7615          Cary.Walker@cnb.com          Conference Call:          Today 2:00 p.m. PDT          (866) 393-6804          Conference ID: 29949796

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