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.

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