updated 1/20/2011 4:45:53 PM ET 2011-01-20T21:45:53

Fourth-quarter EPS up 95 percent

Full-year revenue grows 19 percent, exceeds $1 billion for the first time

Credit quality improves for fifth consecutive quarter

Company doubles quarterly dividend to $0.20 per share

LOS ANGELES, Jan. 20, 2011 (GLOBE NEWSWIRE) -- City National Corporation (NYSE:CYN), the parent company of wholly owned City National Bank, today reported fourth-quarter 2010 net income and net income available to common shareholders of $39.7 million, or $0.74 per share. In the fourth quarter of 2009, net income was $29.1 million, while net income available to common shareholders was $19.7 million, or $0.38 per share.

Full-year 2010 net income totaled $131.2 million, up 156 percent from 2009. Net income available to common shareholders amounted to $125.5 million, or $2.36 per share. In 2009, the company earned net income of $51.3 million, while net income available to common shareholders amounted to $25.4 million, or $0.50 per share.

Fourth-quarter 2010 net income included an after-tax charge of $3.9 million for the redemption of trust preferred securities and a $3.4 million non-cash charge related to one of the company's affiliated investment advisors. Excluding these items, fourth-quarter net income totaled $47.1 million, or $0.88 per share.1

City National also announced today that its Board of Directors has increased the company's quarterly common stock cash dividend to $0.20 per share. The dividend will be payable on February 16, 2011 to stockholders of record on February 2, 2011.

FOURTH-QUARTER AND YEAR-END 2010 HIGHLIGHTS

  • Fourth-quarter revenue totaled $280.2 million, up 2 percent from the fourth quarter of 2009. Revenue for the full year reached $1.1 billion, up 19 percent from 2009. 
     
  • Fully taxable-equivalent net interest income amounted to $188.3 million, up 14 percent from the fourth quarter of 2009, but down 1 percent from the third quarter of 2010. Fully taxable-equivalent net interest income for the full-year 2010 was $743.5 million, up 17 percent from 2009.
     
  • Average fourth-quarter deposits grew to $18.7 billion, up 19 percent from the same period of 2009 and 2 percent from the third quarter of 2010. Average core deposits were $17.7 billion, up 22 percent from the fourth quarter of 2009 and 3 percent from the third quarter of 2010. Year-end deposits grew to $18.2 billion, up 5 percent from December 31, 2009.
     
  • Average fourth-quarter loan balances, excluding loans covered by City National's acquisition-related loss-sharing agreements with the FDIC, totaled $11.4 billion, down 6 percent from the same period of 2009 but virtually unchanged from the third quarter of 2010. Average commercial loan balances grew for the second consecutive quarter, up 3 percent from the third quarter of 2010. Year-end loans totaled $11.4 billion, down 6 percent from 2009. 
     
  • Fourth-quarter 2010 net income includes a $3.0 million provision for credit losses on non-FDIC covered loans, 77 percent lower than it was in the third quarter of 2010. Net charge-offs declined 33 percent from the third quarter of 2010, while nonperforming assets, excluding FDIC-covered assets, decreased 17 percent.
     
  • On October 16, 2010, the company completed the redemption of $250 million of 9.625 percent cumulative trust preferred securities, using most of the net proceeds from a third-quarter 2010 issue of $300 million of 10-year 5.25 percent senior notes.
     
  • On November 15, 2010, City National completed the relatively small, but strategically important acquisition of a Los Angeles-based accounting software firm, Datafaction, which will complement the bank's proprietary cash management solutions available to its business clients.

"City National's dramatically increasing profitability in 2010 reflects significant improvement in credit quality and double-digit increases in revenue, net interest income and deposits," said President and Chief Executive Officer Russell Goldsmith.

"City National has emerged from the recession larger, financially stronger and better able to serve its growing client base. In 2010, the company continued to invest significantly in its capabilities by hiring talented colleagues, upgrading technology, introducing new products and expanding its presence in California and Nevada. The completion of three FDIC-assisted acquisitions in 2009 and 2010 has given us 10 additional branches. In 2011, we will continue City National's growth investments and expansion with a second office in New York and the addition of three more offices in Southern California and San Jose. City National's core earnings power and its capital base are strong, as evidenced by today's dividend increase, and the company is well-positioned for the continuing but moderate economic recovery and the opportunities it presents."

           
  For the three months ended   For the three  
Dollars in millions, December 31, % months ended %
except per share 2010 2009 Change September 30, 2010 Change
Earnings Per Share  $ 0.74  $ 0.38 95  $ 0.65 14
           
Net Income Attributable to CNC  $ 39.7  $ 29.1 37  $ 34.4 15
Less: Dividends and Accretion on Preferred Stock  --   9.4 (100)  --  NM
Net Income Available to Common Shareholders  $ 39.7  $ 19.7 102  $ 34.4 15
           
Average Assets  $ 21,922.2  $ 19,095.2 15  $ 21,614.7 1
Return on Average Assets 0.72% 0.60% 20 0.63% 14
Return on Average Common Shareholders' Equity 7.99% 4.27% 87 7.06% 13

ASSETS

Total assets at December 31, 2010 were $21.4 billion, up 1 percent from year-end 2009.

REVENUE

Fourth-quarter revenue was $280.2 million, up 2 percent from the fourth quarter of 2009 and 10 percent from the third quarter of 2010.  Full-year 2010 revenue was $1.1 billion, up 19 percent from the previous year. Fourth-quarter 2009 results included a $38.2 million gain on an FDIC acquisition.

NET INTEREST INCOME AND DEPOSITS

Fully taxable-equivalent net interest income totaled $188.3 million in the fourth quarter of 2010, up 14 percent from the same period in 2009 but down 1 percent from the third quarter of 2010. Fully taxable-equivalent net interest income for the full-year 2010 was $743.5 million, compared with $637.9 million for the previous year.

Fourth-quarter average deposits grew to $18.7 billion, up 19 percent from the same period of 2009 and 2 percent from the third quarter of 2010. Average deposits for the full-year 2010 totaled $17.9 billion, up 25 percent from 2009. Period-end deposits grew to $18.2 billion, up 5 percent from December 31, 2009.

Average core deposits were $17.7 billion in the fourth quarter of 2010, up 22 percent from the same period of 2009 and 3 percent from the third quarter of 2010.  Full-year 2010 average core deposits grew 28 percent from the prior year to $16.8 billion.  Core deposits now represent 94 percent of the company's average deposit balances.

Fourth-quarter average noninterest-bearing deposits were up 11 percent from the same period of 2009 and 6 percent from the third quarter of 2010. Average noninterest-bearing balances in 2010 were up 17 percent from 2009.

Treasury Services deposit balances, which consist primarily of title, escrow, community association and property management deposits, averaged $1.5 billion in the fourth quarter of 2010, up 44 percent from the same period of 2009 and 1 percent from the third quarter of 2010. For the full-year 2010, Treasury Services deposit balances averaged $1.4 billion, up 47 percent from 2009. 

Fourth-quarter average loans, excluding FDIC-covered loans, totaled $11.4 billion, down 6 percent from the same period of 2009 but virtually unchanged from the third quarter of 2010. For the full-year 2010, City National's average loans, excluding FDIC-covered loans, were $11.6 billion, down 6 percent from 2009. The declines reflect relatively weak loan demand due to challenging business and economic conditions, along with the company's continued progress in reducing the number of problem loans.

Fourth-quarter average balances for commercial loans were down 5 percent from the fourth quarter of 2009 but up 3 percent from the third quarter of 2010. Average balances for commercial real estate and construction loans together were down 19 percent from the year-ago period and 5 percent from the third quarter of 2010. Average balances for single-family residential mortgage loans, nearly all of which are made to City National's private banking clients, were up 1 percent from the fourth quarter of 2009 but virtually unchanged from the third quarter of 2010.

Average securities for the fourth quarter of 2010 totaled $5.4 billion, up 40 percent from the same period of 2009 and 9 percent from the third quarter of 2010. The increases reflect the company's strong deposit growth and relatively weak loan demand due to economic conditions. The average duration of total available-for-sale securities at December 31, 2010 was 2.8 years, compared with 2.9 years at the end of 2009 and 2.1 years at September 30, 2010.

City National's net interest margin in the fourth quarter of 2010 averaged 3.71 percent, compared with 3.74 percent in the fourth quarter of 2009 and 3.84 percent in the third quarter of 2010.  For the full-year 2010, City National's net interest margin averaged 3.86 percent, compared with 3.91 percent in the previous year.  The declines were due primarily to strong growth in deposits, which were invested in securities available-for-sale and other liquid assets, as well as lower loan balances.

Fourth-quarter net interest income included $7.0 million from the acceleration of a discount recognized for covered loans that were repaid or charged off during the quarter.  This compares with $9.2 million of additional net interest income in the third quarter of 2010.

At December 31, 2010, City National's prime lending rate was 3.25 percent, unchanged from both December 31, 2009 and September 30, 2010.

           
  For the three months ended   For the three  
  December 31, % months ended %
Dollars in millions 2010 2009 Change September 30, 2010 Change
Average Loans and Leases, excluding Covered Loans  $ 11,372.5  $ 12,100.4 (6)  $ 11,414.9 (0)
Average Covered Loans  1,907.9  263.7 623  2,015.7 (5)
Average Total Securities   5,430.2  3,877.9 40  4,980.2 9
Average Earning Assets  20,125.9  17,606.8 14  19,755.4 2
Average Deposits  18,687.2  15,729.9 19  18,297.2 2
Average Core Deposits  17,722.2  14,509.2 22  17,200.7 3
Fully Taxable-Equivalent          
Net Interest Income  188.3  165.8 14  191.1 (1)
Net Interest Margin 3.71% 3.74% (1) 3.84% (3)
           

COVERED ASSETS

Loans and OREO assets acquired in City National's three FDIC-assisted bank acquisitions totaled $1.9 billion at the end of the fourth quarter of 2010.

In the fourth quarter, the company recorded a $1.9 million non-cash net gain to reflect results of the quarterly update of cash-flow projections for FDIC-covered loans. The gain reflected a provision for loan losses of $21.5 million for covered loans offset by $23.4 million of other income from City National's loss-sharing agreements with the FDIC. City National will continue to update the cash-flow projections for covered loans on a quarterly basis. Due to the uncertainty in the future performance of the covered loans, additional impairments or gains may be recognized in the future.

NONINTEREST INCOME

Fourth-quarter noninterest income totaled $95.1 million, down 15 percent from the same period in 2009. Results for the fourth quarter of 2009 included a $38.2 million gain on an FDIC-assisted acquisition. Fourth-quarter 2010 results included $26.3 million of FDIC loss-sharing income, compared with $0.7 million in the same quarter of 2009. Noninterest income was up 42 percent from the third quarter of 2010, reflecting FDIC loss-sharing income and an increase in wealth management revenue.

City National's noninterest income totaled $361.4 million in 2010, up 24 percent from 2009, due to the same factors cited above. In 2010, noninterest income accounted for 33 percent of City National's total revenue.

Wealth Management

City National's assets under management totaled $36.8 billion as of December 31, 2010, up 4 percent from the end of 2009 and 3 percent from September 30, 2010. These changes were primarily attributable to increases in equity market values.

Trust and investment fees grew to $34.5 million in the fourth quarter of 2010, up 2 percent from the same period of 2009 and 6 percent from the third quarter of 2010. Full-year 2010 trust and investment fee income rose 15 percent from 2009.

Money market mutual fund and brokerage fees totaled $6.5 million, up 19 percent from the fourth quarter of 2009 but virtually unchanged from the third quarter of 2010. Full-year 2010 money market mutual fund and brokerage fee income was $23.7 million, down 15 percent from the previous year due largely to low interest rates.

           
  At or for the    At or for the  
  three months ended   three months  
  December 31, % ended %
Dollars in millions 2010 2009 Change September 30, 2010 Change
           
Trust and Investment Fee Revenue  $ 34.5  $ 33.7 2  $ 32.7 6
Brokerage and Mutual Fund Fees  6.5  5.5 19  6.5 0
Assets Under Management (1)  36,753.7  35,238.8 4  35,690.0 3
Assets Under Management or Administration (1)  58,470.8  55,119.4 6  56,890.6 3
           
(1) Excludes $21.3 billion, $19.0 billion, and $13.4 billion of assets under management for asset managers in which City National held a noncontrolling ownership interest as of December 31, 2010, September 30, 2010, and December 31, 2009, respectively.

Other Noninterest Income

Fourth-quarter income from cash management and deposit transaction fees totaled $11.4 million, down 9 percent from the fourth quarter of 2009 and 2 percent from the third quarter of 2010. For the full-year 2010, cash management and deposit transaction fee income was $47.6 million, down 8 percent from 2009. The decreases were due to higher deposit balances used to offset service charge fees.

Fee income from foreign exchange services and letters of credit totaled $8.5 million in the fourth quarter, down 1 percent from the year-earlier period but up 8 percent from the third quarter of 2010. For full-year 2010, international fee income amounted to $31.3 million, up 1 percent from 2009.

Other income was $8.4 million in the fourth quarter, up 308 percent from the year-earlier period and 209 percent from the third quarter of 2010, due primarily to FDIC-acquired bank activity. Other income in the fourth quarter included pre-tax charges of $6.8 million for the redemption of trust preferred securities and $5.9 million related to one of the company's affiliated investment advisors. In 2010, other income was $29.4 million, up 26 percent from 2009 due primarily to the same acquired bank activity mentioned above.

NONINTEREST EXPENSE

Fourth-quarter noninterest expense amounted to $204.0 million, up 27 percent from the same period of 2009 and 10 percent from the third quarter of 2010. Noninterest expense for the year amounted to $751.3 million, up 29 percent from 2009.

Contributing to the year-over-year increases were the company's three FDIC-assisted bank acquisitions and higher compensation costs, legal and professional fees, and expenses related to covered assets, including other real estate owned properties. Many of the qualified covered asset-related expenses are reimbursed by the FDIC and reflected in noninterest income.

CREDIT QUALITY

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

Net charge-offs in the fourth quarter of 2010 totaled $19.0 million, or 0.66 percent of total loans and leases on an annualized basis. Net charge-offs were $58.7 million, or 1.93 percent of total loans and leases, in the fourth quarter of 2009 and $28.2 million, or 0.98 percent, in the third quarter of 2010. Net charge-offs for the full-year 2010 were $130.3 million, or 1.13 percent of total loans and leases. This compares with $225.9 million, or 1.84 percent, in 2009.

At December 31, 2010, nonperforming assets amounted to $248.2 million, or 2.17 percent of the company's total loans and leases and OREO. They were down from $442.0 million, or 3.62 percent, at the end of 2009 and $297.6 million, or 2.59 percent, at September 30, 2010. Nonaccrual loans at year-end 2010 were $190.9 million, down from $388.7 million at the end of 2009 and $239.1 million at September 30, 2010.

             
  As of As of As of
  December 31, 2010 September 30, 2010 December 31, 2009
Period-end Loans (in millions) Total Nonaccrual Total Nonaccrual Total Nonaccrual
             
Commercial Loans $ 4,514.3 $ 20.6 $ 4,364.1 $ 28.9 $ 4,709.7 $ 82.0
Commercial Real Estate Mortgages  1,958.3  44.9  1,967.9  50.4  2,161.4  76.0
Residential Mortgages  3,552.3  18.7  3,586.9  16.2  3,533.4  15.5
Real Estate Construction Loans  467.8  98.2  575.1  135.8  835.6  202.6
Equity Lines of Credit  733.7  6.8  757.2  5.6  734.2  3.4
Other Loans  160.2  1.7  167.4  2.2  172.6  9.2
Total Loans (1) $ 11,386.6 $ 190.9 $ 11,418.6 $ 239.1 $ 12,146.9 $ 388.7
             
Other Real Estate Owned (1)    57.3    58.5    53.3
Total Nonperforming Assets, excluding          
Covered Assets   $ 248.2   $ 297.6   $ 442.0
             
(1) Excludes covered loans, net of allowance, of $1.8 billion, $1.9 billion and $1.9 billion at December 31, 2010, September 30, 2010 and December 31, 2009, respectively, and covered other real estate owned of $120.9 million, $110.4 million and $60.6 million at December 31, 2010, September 30, 2010 and December 31, 2009, respectively.

City National's fourth-quarter provision for credit losses of $3.0 million brought total provisions for the year to $103.0 million, down from $285.0 million in 2009.  City National recorded provisions of $80.0 million in the fourth quarter of 2009 and $13.0 million in the third quarter of 2010.

At December 31, 2010, City National's allowance for loan and lease losses totaled $257.0 million, or 2.26 percent of total loans and leases. That compares with $288.5 million, or 2.38 percent, at the end of 2009 and $274.2 million, or 2.40 percent, at September 30, 2010. The company also maintains an additional $21.5 million in reserves for off-balance-sheet credit commitments.

City National's provision reflects management's continuing assessment of the loan portfolio's credit quality and economic conditions. This assessment also takes into account a broad range of economic factors, including net loan charge-offs, nonaccrual loans, specific reserves, risk-rating migration and changes in the portfolio size and composition.

Commercial Loans

Commercial loans accounted for $6.5 million of City National's net charge-offs in the fourth quarter of 2010, down from $23.1 million in the year-earlier period and $17.9 million in the third quarter of 2010. Full-year net charge-offs of commercial loans amounted to $63.3 million, down from $87.7 million in 2009.

Commercial loans on nonaccrual totaled $20.6 million at December 31, 2010, compared to $82.0 million at the end of 2009, and $28.9 million at September 30, 2010.

Construction Loans

City National's $467.8 million commercial real estate construction portfolio includes secured loans to developers of residential and nonresidential properties. This portfolio has been reduced 44 percent since December 31, 2009, and construction loans now account for just 4 percent of the company's total loans.

Fourth-quarter net charge-offs of construction loans were $5.5 million, down from $27.6 million in the fourth quarter of 2009. There were virtually no construction net charge-offs in the third quarter of 2010. Full-year 2010 net charge-offs of construction loans were $30.6 million, down from $120.5 million in 2009. At year-end 2010, construction loans on nonaccrual totaled $98.2 million, down from $202.6 million at the end of 2009 and $135.8 million at September 30, 2010.

The company's portfolio of loans to residential developers totaled $101.3 million at December 31, 2010 – less than 1 percent of City National's total loan portfolio. Loans to residential developers accounted for 37 percent of all construction loans on nonaccrual at December 31, 2010.

The remainder of City National's construction portfolio consists of loans to developers of nonresidential projects. Nonresidential construction loans amounted to $366.5 million at December 31, 2010, down from $645.4 million at the end of 2009 and $460.2 million at September 30, 2010. Nonresidential construction loans on nonaccrual were $61.9 million, down from $148.1 million at the end of 2009 and $90.5 million at September 30, 2010.

Commercial Real Estate Mortgages

Fourth-quarter net charge-offs in the company's $2.0 billion commercial real estate mortgage portfolio were $5.3 million, unchanged from the fourth quarter of 2009 but down from $9.0 million in the third quarter of 2010. Full-year 2010 net charge-offs were $29.6 million, compared to $8.7 million in 2009. Commercial real estate mortgage loans on nonaccrual totaled $44.9 million at the end of 2010, down from $76.0 million at the end of 2009 and $50.4 million at September 30, 2010.

Residential Mortgage and Equity Lines of Credit

City National's $3.6 billion residential mortgage portfolio and $733.7 million home-equity portfolio both continued to perform well.  Together, they accounted for $1.3 million in fourth-quarter net charge-offs, compared to $1.2 million in the fourth quarter of 2009 and $1.4 million the third quarter of 2010. Full-year net charge-offs were $5.2 million, compared to $4.4 million in 2009. Nonaccrual loans totaled $25.5 million at the end of 2010, compared to $18.9 million at year-end 2009 and $21.8 million in the third quarter of 2010. The company recorded a total of only six foreclosures last year.

INCOME TAXES

City National's fourth-quarter 2010 effective tax rate was 21.4 percent, compared to 13.1 percent in the year-ago period. For the full-year 2010, City National's effective tax rate was 16.2 percent, while the company's 2009 results reflected a tax benefit of $1.9 million for the year. The higher tax rates are attributable to higher pretax income.

CAPITAL LEVELS

City National continued to optimize its balance sheet in 2010, replacing higher cost financing with more attractive alternatives. In the first quarter of the year, the company repurchased its remaining $200 million of TARP preferred stock. In September 2010, City National issued $300 million of 10-year 5.25 percent senior notes. The company used most of the net proceeds to redeem $250 million of 9.625 percent cumulative trust preferred securities, which qualified as Tier 1 capital.

The company remains well-capitalized, ending the year with a Tier 1 common shareholders' equity ratio of 10.3 percent, compared to 8.9 percent at December 31, 2009, and 10.0 percent at September 30, 2010.

Total risk-based capital and Tier 1 risk-based capital ratios at December 31, 2010 were 13.3 percent and 10.5 percent, respectively. City National's Tier 1 leverage ratio at December 31, 2010 was 6.7 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 September 30, 2010 were 14.7 percent, 12.0 percent and 7.8 percent, respectively. Excluding the trust preferred securities, City National's pro-forma Tier 1 risk-based capital and Tier 1 leverage ratios at September 30, 2010 were 10.1 percent and 6.6 percent, respectively.1

Due to strong growth in assets, the period-end ratio of shareholders' equity to total assets at December 31, 2010 was 9.3 percent, compared to 9.6 percent at December 31, 2009 and 9.1 percent at September 30, 2010.

2011 OUTLOOK

City National's management anticipates increased profitability in 2011, as asset quality continues to improve and annual credit costs move lower than the $103 million recorded in 2010 (excluding provisions related to FDIC-covered loans). However, it is likely that slow economic growth, limited loan demand, conditions in the commercial real estate market, and the continuing decline of covered assets will moderate overall average loan growth. Low interest rates will continue to place pressure on the company's net interest margin and revenue growth. Management expects to increase the company's already-strong capital ratios in 2011.

CONFERENCE CALL

City National Corporation will host a conference call this afternoon to discuss 2010 financial results. The call will begin at 2:00 p.m. PST. 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 25044743.  A listen-only live broadcast of the call also will be available on the investor relations page of the company's Website at www.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 75 offices, including 17 full-service regional centers, in Southern California, the San Francisco Bay Area, Nevada and New York City. City National and its seven consolidated investment affiliates manage or administer $58.5 billion in client assets, including nearly $37 billion under direct management.

For more information about City National, visit the company's Website at www.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, (2) changes in the pace of economic recovery and related changes in employment levels, (3) the effect of the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the new 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, (4) significant changes in applicable laws and regulations, including those concerning taxes, banking and securities, (5) increases and required prepayments in Federal Deposit Insurance Corporation ("FDIC") premiums and special federal assessments on financial institutions due to market developments and regulatory changes, (6) changes in the level of nonperforming assets, charge-offs, other real estate owned and provision expense, (7) 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, (8) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board, (9) changes in inflation, interest rates, and market liquidity which may impact interest margins and impact funding sources, (10) adequacy of the Company's enterprise risk management framework, (11) the Company's ability to increase market share and control expenses, (12) the Company's ability to attract new employees and retain and motivate existing employees, (13) increased competition in the Company's markets, (14) changes in the financial performance and/or condition of the Company's borrowers, including adverse impact on loan utilization rates, delinquencies, defaults and customers' ability to meet certain credit obligations, changes in customers' suppliers, and other counterparties' performance and creditworthiness, (15) a substantial and permanent loss of either client accounts and/or assets under management at the Company's investment advisory affiliates or its wealth management division, (16) changes in consumer spending, borrowing and savings habits, (17) soundness of other financial institutions which could adversely affect the Company, (18) protracted labor disputes in the Company's markets, (19) earthquake, fire or other natural disasters affecting the condition of real estate collateral, (20) the effect of acquisitions and integration of acquired businesses and de novo branching efforts, (21) the impact of changes in regulatory, judicial or legislative tax treatment of business transactions, (22) changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies, 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, see the Company's Annual Report on Form 10-K for the year ended December 31, 2009 and particularly Part I, Item 1A, titled "Risk Factors."

1For notes on non-GAAP measures, see pages 13 and 14 of the Selected Financial Information.

CITY NATIONAL CORPORATION            
FINANCIAL HIGHLIGHTS            
(unaudited)            
  Three Months Twelve Months
For The Period Ended December 31, 2010 2009 % Change 2010 2009 % Change
Per Common Share            
Net income available to common shareholders            
Basic  $ 0.75  $ 0.38  97  $ 2.38  $ 0.50  376
Diluted  0.74  0.38  95  2.36  0.50  372
Dividends  0.10  0.10  --  0.40  0.55  (27)
Book value        37.51  34.74  8
             
Results of Operations: (In millions)            
Interest income $ 206 $ 183  13 $ 830 $ 709  17
Interest expense 21 21  1 100 85  17
Net interest income 185 162  14 730 624  17
Net interest income (Fully taxable-equivalent) 188 166  14 743 638  17
Total revenue 280 274  2 1,092 916  19
Provision for credit losses on loans and leases, excluding covered loans  3 80  (96) 103 285  (64)
Provision for losses on covered loans 21  --  NM  76  --  NM 
Net income attributable to City National Corporation 40 29  37 131 51  156
Net income available to common shareholders 40 20  102 125 25  393
             
Financial Ratios:            
Performance Ratios:            
Return on average assets  0.72 %  0.60 %    0.62 %  0.29 %  
Return on average common shareholders' equity  7.99  4.27    6.59  1.46  
Period-end equity to period-end assets        9.29  9.55  
Net interest margin  3.71  3.74    3.86  3.91  
Expense to revenue ratio  66.39  56.26    62.45  61.70  
Capital Adequacy Ratios (Period-end):            
Tier 1 leverage        6.74  9.48  
Tier 1 risk-based capital        10.52  12.20  
Total risk-based capital        13.28  15.15  
             
Asset Quality Ratios:            
Allowance for loan and lease losses to:            
Total loans and leases, excluding covered loans        2.26 %  2.38 %  
Nonaccrual loans        134.61  74.22  
Nonperforming assets, excluding covered assets, to:            
             
 Total loans and leases and other real estate owned, excluding covered assets        2.17  3.62  
Total assets        1.16  2.10  
             
Net charge-offs to average total loans and leases, excluding covered loans (annualized)  (0.66) %  (1.93) %    (1.13) %  (1.84) %  
             
Average Balances: (In millions)            
Loans and leases, excluding covered loans  $ 11,372  $ 12,100  (6)  $ 11,577  $ 12,297  (6)
Covered loans 1,908 264  623 1,940 66  2,839
Securities 5,430 3,878  40 4,677 3,327  41
Interest-earning assets 20,126 17,607  14 19,270 16,315  18
Assets 21,922 19,095  15 21,157 17,711  19
Core deposits 17,722 14,509  22 16,758 13,049  28
Deposits 18,687 15,730  19 17,868 14,352  25
Interest-bearing liabilities 10,945 8,815  24 10,779 8,364  29
Common shareholders' equity 1,974 1,826  8 1,903 1,745  9
Total equity 1,999 2,241  (11) 1,961 2,161  (9)
             
Period-End Balances: (In millions)            
Loans and leases, excluding covered loans       $ 11,387  $ 12,147  (6)
Covered loans       1,790 1,852  (3)
Securities       5,976 4,461  34
Assets       21,353 21,079  1
Core deposits       17,294 15,729  10
Deposits       18,177 17,379  5
Common shareholders' equity       1,960 1,790  9
Total equity       1,985 2,013  (1)
             
Wealth Management: (In millions) (1)            
Assets under management       $ 36,754 $ 35,239  4
Assets under management or administration       58,471 55,119  6
             
(1) Excludes $21.3 billion and $13.4 billion of assets under management for asset managers in which City National held a noncontrolling ownership interest as of December 31, 2010 and December 31, 2009, respectively.
             
Note: Certain prior period balances have been reclassified to conform to current period presentation.            
             
CITY NATIONAL CORPORATION            
CONSOLIDATED STATEMENTS OF INCOME            
(unaudited)            
     
(Dollars in thousands Three Months Ended

December 31,
Twelve Months Ended

December 31,
except per share data) 2010 2009 % Change 2010 2009 % Change
Interest income  $ 206,266  $ 183,291  13  $ 830,196  $ 709,077  17
Interest expense  21,160  21,052  1  99,871  85,024  17
Net Interest Income  185,106  162,239  14  730,325  624,053  17
             
Provision for credit losses on loans and leases, excluding covered loans  3,000  80,000  (96)  103,000  285,000  (64)
Provision for losses on covered loans  21,469  --  NM   76,218  --  NM 
             
Noninterest Income            
Trust and investment fees  34,547  33,720  2  134,727  117,062  15
Brokerage and mutual fund fees  6,506  5,489  19  23,742  27,932  (15)
Cash management and deposit transaction fees  11,389  12,526  (9)  47,593  51,669  (8)
International services  8,510  8,591  (1)  31,297  31,007  1
Bank-owned life insurance  673  680  (1)  2,736  3,053  (10)
FDIC loss sharing income, net  26,287  723  3,536  63,335  723  8,660
(Loss) gain on securities  (2,917)  8,397  (135)  (1,638)  (2,159)  (24)
Gain on disposal of assets  1,657  1,406  18  2,837  1,276  122
Gain on acquisition  --  38,206  (100)  27,339  38,206  (28)
Other  8,416  2,062  308  29,407  23,428  26
Total noninterest income  95,068  111,800  (15)  361,375  292,197  24
             
Noninterest Expense            
Salaries and employee benefits  111,857  85,586  31  409,823  320,276  28
Net occupancy of premises  14,852  12,990  14  55,567  50,423  10
Legal and professional fees  14,071  12,663  11  47,641  37,010  29
Information services  7,830  7,021  12  30,824  27,835  11
Depreciation and amortization  6,784  7,802  (13)  25,845  26,219  (1)
Amortization of intangibles  2,233  2,120  5  9,036  7,357  23
Marketing and advertising  7,112  6,092  17  23,112  20,126  15
Office services and equipment  4,276  3,859  11  16,381  14,995  9
Other real estate owned  16,380  4,445  269  63,111  8,925  607
FDIC assessments  7,311  5,816  26  29,055  28,053  4
Other  11,322  11,809  (4)  40,935  39,868  3
Total noninterest expense  204,028  160,203  27  751,330  581,087  29
             
Income Before Taxes  51,677  33,836  53  161,152  50,163  221
             
Applicable Income Taxes  11,035  4,434  149  26,055  (1,886)  1,481
             
Net Income  $ 40,642  $ 29,402  38  $ 135,097  $ 52,049  160
             
Less: Net income attributable to noncontrolling interest  899  335  168  3,920  710  452
             
Net income attributable to City National Corporation  $ 39,743  $ 29,067  37  $ 131,177  $ 51,339  156
             
Less: Dividends on preferred stock  --  9,399  (100)  5,702  25,903  (78)
             
Net income available to common shareholders  $ 39,743  $ 19,668  102  $ 125,475  $ 25,436  393
             
Other Data:            
Earnings per common share - basic  $ 0.75  $ 0.38  97  $ 2.38  $ 0.50  376
Earnings per common share - diluted  $ 0.74  $ 0.38  95  $ 2.36  $ 0.50  372
Dividends paid per common share  $ 0.10  $ 0.10  --  $ 0.40  $ 0.55  (27)
Common dividend payout ratio  13.27 %  26.47 %  (50)  16.75 %  107.80 %  (84)
Return on average assets  0.72 %  0.60 %  20  0.62 %  0.29 %  114
Return on average common shareholders' equity  7.99 %  4.27 %  87  6.59 %  1.46 %  351
Net interest margin (Fully taxable-equivalent)  3.71 %  3.74 %  (1)  3.86 %  3.91 %  (1)
Full-time equivalent employees  3,178  3,017  5      
             
Note: Certain prior period balances have been reclassified to conform to current period presentation.            
           
CITY NATIONAL CORPORATION          
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME          
(unaudited)          
  2010
(Dollars in thousands Fourth Third Second First Year to
except per share data)  Quarter Quarter  Quarter Quarter Date
Interest income $ 206,266 $ 214,061  $ 207,803  $ 202,066  $ 830,196
Interest expense  21,160  26,345  25,805  26,561  99,871
Net Interest Income  185,106  187,716  181,998  175,505  730,325
           
Provision for credit losses on loans and leases, excluding covered loans  3,000  13,000  32,000  55,000  103,000
Provision for losses on covered loans  21,469  8,233  46,516  --  76,218
           
Noninterest Income          
Trust and investment fees  34,547  32,695  33,976  33,509  134,727
Brokerage and mutual fund fees  6,506  6,494  5,461  5,281  23,742
Cash management and deposit transaction fees  11,389  11,620  12,008  12,576  47,593
International services  8,510  7,905  8,374  6,508  31,297
Bank-owned life insurance  673  727  658  678  2,736
FDIC loss sharing income, net  26,287  (377)  28,339  9,086  63,335
(Loss) gain on securities  (2,917)  299  (151)  1,131  (1,638)
Gain (loss) on disposal of assets  1,657  2,603  (2,814)  1,391  2,837
Gain on acquisition  --  2,111  25,228  --  27,339
Other  8,416  2,721  11,557  6,713  29,407
Total noninterest income  95,068  66,798  122,636  76,873  361,375
           
Noninterest Expense          
Salaries and employee benefits  111,857  103,397  99,110  95,459  409,823
Net occupancy of premises  14,852  14,463  13,347  12,905  55,567
Legal and professional fees  14,071  10,633  13,754  9,183  47,641
Information services  7,830  7,940  7,538  7,516  30,824
Depreciation and amortization  6,784  6,351  6,363  6,347  25,845
Amortization of intangibles  2,233  2,228  2,128  2,447  9,036
Marketing and advertising  7,112  4,954  5,798  5,248  23,112
Office services and equipment  4,276  4,035  4,272  3,798  16,381
Other real estate owned  16,380  12,642  16,892  17,197  63,111
FDIC assessments  7,311  7,561  7,662  6,521  29,055
Other  11,322  10,477  9,823  9,313  40,935
Total noninterest expense  204,028  184,681  186,687  175,934  751,330
           
Income Before Taxes  51,677  48,600  39,431  21,444  161,152
           
Applicable Income Taxes  11,035  13,461  (2,859)  4,418  26,055
           
Net Income  $ 40,642  $ 35,139  $ 42,290  $ 17,026  $ 135,097
           
Less: Net income attributable to noncontrolling interest  899  721  972  1,328  3,920
           
Net income attributable to City National Corporation  $ 39,743  $ 34,418  $ 41,318  $ 15,698  $ 131,177
           
Less: Dividends on preferred stock  --  --  --  5,702  5,702
           
Net income available to common shareholders  $ 39,743  $ 34,418  $ 41,318  $ 9,996  $ 125,475
           
Other Data:          
Earnings per common share - basic  $ 0.75  $ 0.65  $ 0.78  $ 0.19  $ 2.38
Earnings per common share - diluted  $ 0.74  $ 0.65  $ 0.78  $ 0.19  $ 2.36
Dividends paid per common share  $ 0.10  $ 0.10  $ 0.10  $ 0.10  $ 0.40
Common dividend payout ratio  13.27 %  15.31 %  12.71 %  52.16 %  16.75 %
Return on average assets  0.72 %  0.63 %  0.80 %  0.31 %  0.62 %
Return on average common shareholders' equity  7.99 %  7.06 %  8.93 %  2.20 %  6.59 %
Net interest margin (Fully taxable-equivalent)  3.71 %  3.84 %  3.93 %  3.97 %  3.86 %
Full-time equivalent employees  3,178  3,195  3,144  2,983  
           
Note: Certain prior period balances have been reclassified to conform to current period presentation.          
           
CITY NATIONAL CORPORATION          
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME          
(unaudited)          
  2009
(Dollars in thousands Fourth Third Second First Year to
except per share data) Quarter Quarter Quarter Quarter Date
Interest income  $ 183,291  $ 180,419  $ 175,876  $ 169,491  $ 709,077
Interest expense  21,052  19,078  20,300  24,594  85,024
Net Interest Income  162,239  161,341  155,576  144,897  624,053
           
Provision for credit losses on loans and leases, excluding covered loans  80,000  85,000  70,000  50,000  285,000
           
Noninterest Income          
Trust and investment fees  33,720  32,289  25,184  25,869  117,062
Brokerage and mutual fund fees  5,489  6,041  6,645  9,757  27,932
Cash management and deposit transaction fees  12,526  13,142  12,778  13,223  51,669
International services  8,591  7,895  7,996  6,525  31,007
Bank-owned life insurance  680  639  871  863  3,053
FDIC loss sharing income, net  723  --  --  --  723
Gain (loss) on securities  8,397  2,667  1,744 (14,967) (2,159)
Gain (loss) on disposal of assets  1,406 (173)  43  --  1,276
Gain on acquisition  38,206  --  --  --  38,206
Other  2,062  6,345  8,996  6,025  23,428
Total noninterest income  111,800  68,845  64,257  47,295  292,197
           
Noninterest Expense          
Salaries and employee benefits  85,586  80,776  75,765  78,149  320,276
Net occupancy of premises  12,990  12,613  12,559  12,261  50,423
Legal and professional fees  12,663  8,706  7,805  7,836  37,010
Information services  7,021  7,342  6,992  6,480  27,835
Depreciation and amortization  7,802  6,472  5,953  5,992  26,219
Amortization of intangibles  2,120  1,726  1,668  1,843  7,357
Marketing and advertising  6,092  4,615  4,743  4,676  20,126
Office services and equipment  3,859  3,610  3,922  3,604  14,995
Other real estate owned  4,445  2,231  2,155  94  8,925
FDIC assessments  5,816  5,308  13,861  3,068  28,053
Other  11,809  10,366  8,711  8,982  39,868
Total noninterest expense  160,203  143,765  144,134  132,985  581,087
           
Income Before Taxes  33,836  1,421  5,699  9,207  50,163
           
Applicable Income Taxes  4,434 (6,966) (986)  1,632 (1,886)
           
Net Income  $ 29,402  $ 8,387  $ 6,685  $ 7,575  $ 52,049
           
Less: Net income (loss) attributable to noncontrolling interest  335  348  (88)  115  710
           
Net income attributable to City National Corporation  $ 29,067  $ 8,039  $ 6,773  $ 7,460  $ 51,339
           
Less: Dividends and accretion on preferred stock  9,399  5,502  5,501  5,501  25,903
           
Net income available to common shareholders  $ 19,668  $ 2,537  $ 1,272  $ 1,959  $ 25,436
           
Other Data:          
Earnings per common share - basic  $ 0.38  $ 0.05  $ 0.02  $ 0.04  $ 0.50
Earnings per common share - diluted  $ 0.38  $ 0.05  $ 0.02  $ 0.04  $ 0.50
Dividends paid per common share  $ 0.10  $ 0.10  $ 0.10  $ 0.25  $ 0.55
Common dividend payout ratio  26.47 %  205.08 %  383.66 %  619.32 %  107.80 %
Return on average assets  0.60 %  0.18 %  0.16 %  0.18 %  0.29 %
Return on average common shareholders' equity  4.27 %  0.56 %  0.29 %  0.49 %  1.46 %
Net interest margin (Fully taxable-equivalent)  3.74 %  3.94 % 3.98 % 4.00 % 3.91 %
Full-time equivalent employees  3,017  2,891  2,866 2,933  
           
Note: Certain prior period balances have been reclassified to conform to current period presentation.          
         
CITY NATIONAL CORPORATION        
CONSOLIDATED PERIOD END BALANCE SHEET        
(unaudited)        
  2010
(In thousands) Fourth

Quarter
Third

Quarter
Second

Quarter
First

Quarter
Assets        
Cash and due from banks  $ 126,882  $ 224,363  $ 184,277  $ 293,855
Federal funds sold 165,000 395,010 404,760 50,000
Due from banks - interest-bearing 142,807 506,081 336,244 429,157
Securities available-for-sale 5,720,675 5,397,870 4,761,143 3,928,481
Trading securities 255,397 170,750 129,287 68,405
Loans and leases:        
Commercial 4,514,329 4,364,143 4,286,104 4,424,233
Commercial real estate mortgages 1,958,317 1,967,959 2,078,003 2,121,941
Residential mortgages 3,552,312 3,586,858 3,577,894 3,514,149
Real estate construction 467,785 575,060 629,902 730,734
Equity lines of credit 733,741 757,210 742,071 733,550
Installment 160,144 167,395 169,070 164,929
Loans and leases, excluding covered loans 11,386,628 11,418,625 11,483,044 11,689,536
Allowance for loan and lease losses (257,007) (274,167) (290,492) (292,799)
Loans and leases, excluding covered loans, net 11,129,621 11,144,458 11,192,552 11,396,737
Covered loans (1) 1,790,133 1,910,133 2,034,591 1,803,048
Net loans and leases 12,919,754 13,054,591 13,227,143 13,199,785
Premises and equipment, net 128,426 123,427 121,960 123,178
Goodwill and other intangibles 528,634 522,592 524,820 523,135
Other real estate owned (2) 178,183 168,853 153,292 135,551
FDIC indemnification asset 295,466 324,240 394,012 325,356
Other assets 891,894 935,839 994,509 989,572
Total assets  $ 21,353,118  $ 21,823,616  $ 21,231,447  $ 20,066,475
         
Liabilities        
Deposits:        
Noninterest-bearing  $ 8,457,178  $ 8,455,164  $ 8,173,386  $ 7,881,959
Interest-bearing 9,719,684 9,958,442 9,799,527 9,081,770
 Total deposits 18,176,862 18,413,606 17,972,913 16,963,729
Federal funds purchased and securities sold under repurchase agreements  --  -- 177,700 183,884
Other short-term borrowed funds 620 710 700 730
Subordinated debt 332,225 335,033 337,691 339,392
Other long-term debt 525,570 771,408 473,283 472,193
Other liabilities 287,447 278,729 294,578 196,471
Total liabilities 19,322,724 19,799,486 19,256,865 18,156,399
         
Redeemable noncontrolling interest 45,676 46,967 47,622 46,665
         
Equity        
City National Corporation shareholders' equity:        
Preferred stock  --  --  --  --
Common stock 53,886 53,886 53,886 53,886
Additional paid-in capital 487,868 487,919 483,983 505,330
Retained earnings 1,482,037 1,447,569 1,418,486 1,382,421
Accumulated other comprehensive income 36,853 73,369 58,050 23,927
Treasury shares (101,065) (110,769) (112,634) (127,342)
Total common shareholders' equity 1,959,579 1,951,974 1,901,771 1,838,222
 Total shareholders' equity 1,959,579 1,951,974 1,901,771 1,838,222
Noncontrolling interest 25,139 25,189 25,189 25,189
Total equity 1,984,718 1,977,163 1,926,960 1,863,411
Total liabilities and equity  $ 21,353,118  $ 21,823,616  $ 21,231,447  $ 20,066,475
         
(1) Covered loans are net of $67.4 million, $50.1 million and $46.3 million of allowance for loan losses as of December 31, 2010, September 30, 2010 and June 30, 2010, respectively.
(2) Other real estate owned includes $120.9 million, $110.4 million, $98.8 million and $77.5 million covered by FDIC loss share at December 31, 2010, September 30, 2010, June 30, 2010, and March 31, 2010, respectively.
         
CITY NATIONAL CORPORATION        
CONSOLIDATED PERIOD END BALANCE SHEET        
(unaudited)        
         
  2009
(In thousands) Fourth

Quarter
Third

Quarter
Second

Quarter
First

Quarter
Assets        
Cash and due from banks  $ 364,483  $ 348,958  $ 350,931  $ 378,289
Federal funds sold 5,000 240,000 125,000 12,300
Due from banks - interest-bearing 443,443 767,362 205,656 140,484
Securities available-for-sale 4,306,758 3,512,072 3,330,326 2,915,883
Trading securities 154,302 188,904 138,137 67,582
Loans and leases:        
Commercial 4,709,667 4,594,683 4,764,755 4,708,627
Commercial real estate mortgages 2,161,451 2,164,398 2,162,294 2,173,983
Residential mortgages 3,533,453 3,541,534 3,511,598 3,413,538
Real estate construction 835,589 999,045 1,116,154 1,189,594
Equity lines of credit 734,182 694,660 691,226 651,127
Installment 172,566 174,170 175,315 168,245
Loans and leases, excluding covered loans 12,146,908 12,168,490 12,421,342 12,305,114
Allowance for loan and lease losses (288,493) (265,005) (256,018) (241,586)
Loans and leases, excluding covered loans, net 11,858,415 11,903,485 12,165,324 12,063,528
Covered loans 1,851,821  --  --  --
Net loans and leases 13,710,236 11,903,485 12,165,324 12,063,528
Premises and equipment, net 124,309 126,097 125,510 128,189
Goodwill and other intangibles 525,583 533,367 496,562 498,194
Other real estate owned (1) 113,866 43,969 18,064 12,639
FDIC indemnification asset 380,743  --  --  --
Other assets 950,034 736,390 705,275 716,442
Total assets  $ 21,078,757  $ 18,400,604  $ 17,660,785  $ 16,933,530
         
Liabilities        
Deposits:        
Noninterest-bearing  $ 7,753,936  $ 7,441,898  $ 7,118,660  $ 6,611,752
Interest-bearing 9,625,512 7,666,545 7,379,591 7,077,798
Total deposits 17,379,448 15,108,443 14,498,251 13,689,550
Federal funds purchased and securities sold under repurchase agreements 626,779 231,903 316,388 519,687
Other short-term borrowed funds 690 720 50,000 28,405
Subordinated debt 340,137 341,587 162,434 164,296
Other long-term debt 471,029 233,536 233,456 242,122
Other liabilities 196,529 216,026 189,588 199,863
Total liabilities 19,014,612 16,132,215 15,450,117 14,843,923
         
Redeemable noncontrolling interest 51,381 49,897 36,752 40,237
         
Equity        
City National Corporation shareholders' equity:        
Preferred stock 196,048 391,593 391,091 390,590
Common stock 53,886 53,886 53,886 50,961
Additional paid-in capital 513,550 514,904 511,939 393,114
Retained earnings 1,377,639 1,363,176 1,365,842 1,369,451
Accumulated other comprehensive income (loss) (3,049) 24,329 (18,110) (23,093)
Treasury shares (151,751) (154,245) (156,119) (157,094)
Total common shareholders' equity 1,790,275 1,802,050 1,757,438 1,633,339
 Total shareholders' equity 1,986,323 2,193,643 2,148,529 2,023,929
Noncontrolling interest 26,441 24,849 25,387 25,441
Total equity 2,012,764 2,218,492 2,173,916 2,049,370
Total liabilities and equity  $ 21,078,757  $ 18,400,604  $ 17,660,785  $ 16,933,530
(1) Other real estate owned includes $60.6 million covered by FDIC loss share at December 31, 2009.        
                     
CITY NATIONAL CORPORATION                    
CREDIT LOSS EXPERIENCE                    
(unaudited)                    
  2010 2009
(Dollars in thousands) Fourth

Quarter
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 (1)                    
Balance at beginning of period $ 274,167 $ 290,492 $ 292,799 $ 288,493 $ 288,493 $ 265,005 $ 256,018 $ 241,586 $ 224,046 $ 224,046
                     
Net (charge-offs)/recoveries:                    
Commercial (6,510) (17,871) (21,290) (17,625) (63,296) (23,088) (28,852) (17,283) (18,459) (87,682)
Commercial real estate mortgages (5,275) (8,954) (402) (14,967) (29,598) (5,291) (3,372)  --  -- (8,663)
Residential mortgages (624) (572) (610) (1,391) (3,197) (625) (682) (731) (367) (2,405)
Real estate construction (5,496)  39 (10,944) (14,183) (30,584) (27,562) (42,651) (36,189) (14,049) (120,451)
Equity lines of credit (628) (793) (337) (210) (1,968) (550) (387) (1,039) (38) (2,014)
Installment (499) (83)  88 (1,160) (1,654) (1,632) (915) (1,448) (706) (4,701)
Total net (charge-offs)/recoveries (19,032) (28,234) (33,495) (49,536) (130,297) (58,748) (76,859) (56,690) (33,619) (225,916)
                     
Provision for credit losses  3,000  13,000  32,000  55,000 103,000  80,000  85,000  70,000  50,000  285,000
                     
Transfers (to) from reserve for off-balance sheet credit commitments (1,128) (1,091) (812) (1,158) (4,189)  2,236  846  1,122  1,159  5,363
                     
Balance at end of period $ 257,007 $ 274,167 $ 290,492 $ 292,799 $ 257,007 $ 288,493 $ 265,005 $ 256,018 $ 241,586 $ 288,493
                     
                     
Net (Charge-Offs)/Recoveries to Average Total Loans and Leases, Excluding Covered Assets (annualized):                  
                     
Commercial (0.59) % (1.66) %  (1.97) %  (1.57) %  (1.44) %  (1.99) %  (2.42) %  (1.47) %  (1.57) %  (1.87) %
Commercial real estate mortgages (1.07) % (1.75) %  (0.08) %  (2.82) %  (1.44) %  (0.97) %  (0.62) % 0.00 % 0.00 %  (0.40) %
Residential mortgage (0.07) % (0.06) %  (0.07) %  (0.16) %  (0.09) %    (0.07) %  (0.08) %  (0.08) %  (0.04) %  (0.07) %
Real estate construction (4.05) % 0.03 %  (6.36) %  (7.12) %  (4.63) %  (11.92) %  (15.68) %  (12.59) %  (4.63) %  (11.01) %
Equity lines of credit (0.34) % (0.42) %  (0.18) %  (0.12) %  (0.26) %  (0.31) %  (0.22) %  (0.62) %  (0.02) %  (0.30) %
Installment (1.18) % (0.19) % 0.21 %  (2.77) %  (0.98) %  (3.74) %  (2.05) %  (3.33) %  (1.67) %  (2.70) %
Total loans and leases, excluding covered loans (0.66) % (0.98) %  (1.16) %  (1.68) %  (1.13) %  (1.93) %  (2.47) %  (1.84) %  (1.10) %  (1.84) %
                     
Reserve for Off-Balance Sheet Credit Commitments                    
                     
Balance at beginning of period $ 20,401 $ 19,310 $ 18,498 $ 17,340 $ 17,340 $ 19,576 $ 20,422 $ 21,544 $ 22,703 $ 22,703
Transfers from (to) allowance  1,128  1,091  812  1,158  4,189 (2,236) (846) (1,122) (1,159) (5,363)
Balance at end of period $ 21,529 $ 20,401 $ 19,310 $ 18,498 $ 21,529 $ 17,340 $ 19,576 $ 20,422 $ 21,544 $ 17,340
                     
(1) Allowance for loan and lease losses relates to total loans and leases, excluding covered loans. Allowance for loan losses for covered loans was $67.4 million, $50.1 million and $46.3 million as of December 31, 2010, September 30, 2010 and June 30, 2010, respectively.
   
Note: Certain prior period balances have been reclassified to conform to current period presentation.                    
                 
CITY NATIONAL CORPORATION                
NONPERFORMING ASSETS                
(unaudited)                
  2010 2009
(Dollars in thousands) Fourth

Quarter
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 $ 20,633  $ 28,917  $ 46,530  $ 73,838  $ 81,989  $ 90,744  $ 80,372  $ 56,246
Commercial real estate mortgages  44,882  50,366  57,155  66,194  76,027  60,833  36,112  16,923
Residential mortgages  18,721  16,259  11,506  12,045  15,488  12,961  17,262  13,270
Real estate construction  98,209  135,778  138,909  164,985  202,605  233,848  237,828  223,416
Equity lines of credit  6,782  5,584  3,909  4,089  3,422  2,507  2,919  2,432
Installment  1,696  2,201  2,109  8,865  9,176  7,373  3,768  1,354
Total nonaccrual loans, excluding covered loans  190,923  239,105  260,118  330,016  388,707  408,266  378,261  313,641
                 
Other real estate owned, excluding covered OREO  57,317  58,462  54,451  58,025  53,308  43,969  18,064  12,639
                 
Total nonperforming assets, excluding covered assets $ 248,240 $ 297,567  $ 314,569  $ 388,041  $ 442,015  $ 452,235  $ 396,325  $ 326,280
                 
Nonperforming covered assets                
Nonaccrual loans  $ 2,557  $ 2,633  $ --  $ --  $ --  $ --  $ --  $ --
Other real estate owned  120,866  110,391  98,841  77,526  60,558  --  --  --
Total nonperforming covered assets  $ 123,423  $ 113,024  $ 98,841  $ 77,526  $ 60,558  $ --  $ --  $ --
                 
Loans 90 days or more past due on accrual status, excluding covered loans $ 2,499 $ 1,020  $ 789  $ 1,712  $ 5,689  $ 10,395  $ --  $ 16,261
                 
Covered loans 90 days or more past due on accrual status  $ 399,019  $ 416,875  $ 362,722  $ 323,620  $ 173,309  $ --  $ --  $ --
                 
                 
Allowance for loan and lease losses as a percentage of:                
Nonaccrual loans  134.61 %  114.66 %  111.68 %  88.72 %  74.22 %  64.91 %  67.68 %  77.03 %
Total nonperforming assets, excluding covered assets  103.53 %  92.14 %  92.35 %  75.46 %  65.27 %  58.60 %  64.60 %  74.04 %
Total loans and leases, excluding covered loans  2.26 %  2.40 %  2.53 %  2.50 %  2.38 %  2.18 %  2.06 %  1.96 %
                 
Nonaccrual loans as a percentage of total loans, excluding covered loans  1.68 %  2.09 %  2.27 %  2.82 %  3.20 %  3.36 %  3.05 %  2.55 %
                 
Nonperforming assets, excluding covered assets, as a percentage of:                
Total loans and other real estate owned, excluding covered assets  2.17 %  2.59 %  2.73 %  3.30 %  3.62 %  3.70 %  3.19 %  2.65 %
Total assets  1.16 %  1.36 %  1.48 %  1.93 %  2.10 %  2.46 %  2.24 %  1.93 %
                     
CITY NATIONAL CORPORATION                    
AVERAGE BALANCES AND RATES                    
(unaudited)                    
  2010
  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   $ 4,392  4.39 %  $ 4,277  4.51 %  $ 4,339  4.50 %  $ 4,559  4.33 %  $ 4,391  4.43 %
Commercial real estate mortgages  1,965  5.57  2,027  5.60  2,098  5.59  2,151  5.49  2,060  5.56
Residential mortgages  3,567  4.97  3,581  5.28  3,542  5.36  3,522  5.39  3,553  5.25
Real estate construction  538  4.29  610  4.04  691  3.91  807  3.70  661  3.96
Equity lines of credit  743  3.57  750  3.60  743  3.58  735  3.56  743  3.58
Installment   167  5.19  170  5.27  169  5.16  170  5.14  169  5.19
 Total loans and leases, excluding covered loans  11,372  4.72  11,415  4.86  11,582  4.88  11,944  4.80  11,577  4.81
Covered loans  1,908  7.41  2,016  7.75  2,003  6.90  1,833  6.44  1,940  7.14
 Total loans and leases   13,280  5.10  13,431  5.28  13,585  5.18  13,777  5.03  13,517  5.15
Due from banks - interest-bearing  897  0.25  835  0.26  701  0.24  275  0.51  679  0.28
Federal funds sold and securities purchased under resale agreements  373  0.25  360  0.26  213  0.25  46  0.20  249  0.25
Securities available-for-sale  5,371  2.78  4,922  3.02  4,190  3.28  3,974  3.39  4,619  3.08
Trading securities  59  0.42  58  0.23  54  0.18  62  (0.33)  58  0.12
Other interest-earning assets  146  2.00  149  2.00  148  1.80  147  1.76  148  1.89
Total interest-earning assets  20,126  4.13  19,755  4.37  18,891  4.48  18,281  4.56  19,270  4.38
Allowance for loan and lease losses (325)   (332)   (308)   (295)   (315)  
Cash and due from banks  201    212    241    299    238  
Other non-earning assets  1,920    1,980    1,975    1,982    1,964  
Total assets  $ 21,922    $ 21,615    $ 20,799    $ 20,267    $ 21,157  
                     
Liabilities and Equity                    
Interest-bearing deposits                    
Interest checking accounts  $ 1,680  0.18 % $ 1,703  0.19 %  $ 2,385  0.24 %  $ 2,235  0.24 %  $ 1,999  0.22 %
Money market accounts  6,755  0.45  6,643  0.53  5,365  0.57  4,853  0.62  5,911  0.53
Savings deposits  290  0.34  293  0.39  301  0.45  387  0.66  317  0.48
Time deposits - under $100,000  355  0.49  400  0.29  414  0.83  556  0.62  431  0.57
Time deposits -- $100,000 and over  965  0.73  1,097  0.78  1,147  0.82  1,239  0.96  1,111  0.83
Total interest-bearing deposits  10,045  0.43  10,136  0.49  9,612  0.53  9,270  0.58  9,769  0.50
                     
Federal funds purchased and securities sold under repurchase agreements  -- 0.00  173  3.78  183  3.74  300  2.62  163  3.24
Other borrowings  900  4.54  869  5.60  804  5.75  812  5.73  847  5.38
Total interest-bearing liabilities  10,945  0.77  11,178  0.94  10,599  0.98  10,382  1.04  10,779  0.93
Noninterest-bearing deposits  8,642    8,161    7,988    7,594    8,100  
Other liabilities  336    316    330    288    317  
Total equity  1,999    1,960    1,882    2,003    1,961  
Total liabilities and equity  $ 21,922    $ 21,615    $ 20,799    $ 20,267    $ 21,157  
                     
                     
Net interest spread    3.36 %    3.43 %    3.50 %    3.52 %    3.45 %
Net interest margin    3.71 %    3.84 %    3.93 %    3.97 %    3.86 %
                     
Average prime rate    3.25 %    3.25 %    3.25 %    3.25 %    3.25 %
                     
CITY NATIONAL CORPORATION                    
AVERAGE BALANCES AND RATES                    
(unaudited)                    
  2009
  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   $ 4,607  4.30 %  $ 4,724  4.26 %  $ 4,721  4.21 %  $ 4,756  4.22 %  $ 4,702  4.25 %
Commercial real estate mortgages  2,163  5.47  2,144  5.49  2,178  5.69  2,200  5.74  2,171  5.60
Residential mortgages  3,534  5.56  3,528  5.50  3,454  5.51  3,406  5.58  3,481  5.54
Real estate construction  917  3.88  1,079  3.58  1,153  3.04  1,232  3.20  1,094  3.40
Equity lines of credit  706  3.52  687  3.51  674  3.46  630  3.39  675  3.47
Installment   173  5.10  177  5.08  174  5.05  171  5.12  174  5.09
 Total loans and leases, excluding covered loans  12,100  4.80  12,339  4.72  12,354  4.70  12,395  4.75  12,297  4.74
Covered loans  264  6.10  -- 0.00  -- 0.00  -- 0.00  66  6.10
 Total loans and leases  12,364  4.83  12,339  4.72  12,354  4.70  12,395  4.75  12,363  4.75
Due from banks - interest-bearing  906  0.34  204  0.50  195  0.60  134  0.47  362  0.41
Federal funds sold and securities purchased under resale agreements  375  0.13  338  0.15  15  0.23  11  0.24  186  0.14
Securities available-for-sale  3,804  3.62  3,560  4.03  3,252  4.08  2,302  4.65  3,234  4.03
Trading securities  74  1.95  71  0.18  112  1.36  115  0.19  93  0.89
Other interest-earning assets  84  3.48  76  3.76  75  3.45  76  3.48  77  3.54
Total interest-earning assets  17,607  4.21  16,588  4.40  16,003  4.49  15,033  4.67  16,315  4.43
Allowance for loan and lease losses (276)   (260)   (246)   (236)   (255)  
Cash and due from banks  313    308    324    335    320  
Other non-earning assets  1,451    1,302    1,288    1,279    1,331  
Total assets  $ 19,095    $ 17,938    $ 17,369    $ 16,411    $ 17,711  
                     
Liabilities and Equity                    
Interest-bearing deposits                    
Interest checking accounts  $ 2,027  0.21 %  $ 1,637  0.25 %  $ 1,388  0.29 %  $ 1,098  0.32 %  $ 1,541  0.26 %
Money market accounts  4,093  0.64  4,232  0.66  4,111  0.86  3,897  1.01  4,084  0.79
Savings deposits  306  0.63  262  0.64  222  0.74  166  0.65  239  0.66
Time deposits - under $100,000  293  0.81  211  1.05  221  1.42  234  2.22  240  1.34
Time deposits -- $100,000 and over  1,221  1.04  1,221  1.24  1,311  1.56  1,463  2.06  1,303  1.50
Total interest-bearing deposits  7,940  0.60  7,563  0.67  7,253  0.89  6,858  1.16  7,407  0.82
                     
Federal funds purchased and securities sold under repurchase agreements  236  3.38  234  3.41  472  1.77  723  1.22  415  2.00
Other borrowings  639  4.41  511  3.27  494  1.75  526  2.20  542  3.01
Total interest-bearing liabilities  8,815  0.95  8,308  0.91  8,219  0.99  8,107  1.23  8,364  1.02
Noninterest-bearing deposits  7,790    7,214    6,770    5,983    6,945  
Other liabilities  249    212    234    271    241  
Total equity  2,241    2,204    2,146    2,050    2,161  
Total liabilities and equity  $ 19,095    $ 17,938    $ 17,369    $ 16,411    $ 17,711  
                     
                     
Net interest spread    3.26 %    3.49 %    3.50 %    3.44 %    3.41 %
Net interest margin    3.74 %    3.94 %    3.98 %    4.00 %    3.91 %
                     
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)                    
  2010 2009
  Fourth

Quarter
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  52,154  52,105  52,012  51,690  51,992  51,509  51,482  50,416  48,046  50,272
Average - Diluted  52,680  52,498  52,542  52,092  52,455  51,720  51,660  50,551  48,130  50,421
Period-end  52,247  52,114  52,089  51,888    51,536  51,499  51,471  48,224  
Book value for common shareholders  $ 37.51  $ 37.46  $ 36.51  $ 35.43    $ 34.74  $ 34.99  $ 34.14  $ 33.87  
Closing price:                    
High  $ 62.91  $ 58.00  $ 64.13  $ 54.86  $ 64.13  $ 47.32  $ 43.80  $ 44.14  $ 47.76  $ 47.76
Low  51.57  47.91  51.23  45.81  45.81  36.59  33.13  31.87  22.83  22.83
Period-end  61.36  53.07  51.23  53.97    45.60  38.93  36.83  33.77  
                     
                     
Capital Ratios (Dollars in millions):                    
Risk-based capital                    
Risk-weighted assets (1)  $ 13,712  $ 13,788  $ 13,807  $ 13,856    $ 14,431  $ 13,669  $ 13,887  $ 13,619  
Tier I common shareholders' equity  $ 1,412  $ 1,373  $ 1,337  $ 1,309    $ 1,286  $ 1,261  $ 1,293  $ 1,173  
Percentage of risk-weighted assets (2)  10.29  9.96  9.68  9.44    8.91  9.22  9.31  8.61  
Tier I capital  $ 1,442  $ 1,651  $ 1,614  $ 1,586    $ 1,760  $ 1,682  $ 1,715  $ 1,594  
Percentage of risk-weighted assets  10.52 %  11.97 %  11.69 %  11.44 %    12.20 %  12.31 %  12.35 %  11.71 %  
Total capital  $ 1,821  $ 2,032  $ 2,027  $ 1,998    $ 2,186  $ 2,099  $ 1,969  $ 1,845  
Percentage of risk-weighted assets  13.28 %  14.74 %  14.68 %  14.42 %    15.15 %  15.35 %  14.18 %  13.55 %  
Tier I leverage ratio  6.74 %  7.82 %  7.96 %  8.03 %    9.48 %  9.66 %  10.16 %  10.04 %  
                     
Period-end equity to period-end assets  9.29 %  9.06 %  9.08 %  9.29 %    9.55 %  12.06 %  12.31 %  12.10 %  
Period-end common shareholders' equity to period-end assets  9.18 %  8.94 %  8.96 %  9.16 %    8.49 %  9.79 %  9.95 %  9.65 %  
                     
Average equity to average assets  9.12 %  9.07 %  9.05 %  9.88 %  9.27 %  11.73 %  12.29 %  12.35 %  12.49 %  12.20 %
Average common shareholders' equity to average assets  9.01 %  8.95 %  8.93 %  9.10 %  8.99 %  9.56 %  9.96 %  9.96 %  9.96 %  9.85 %
                     
                     
Period-end tangible equity to period-end tangible assets (2)  6.99 %  6.83 %  6.77 %  6.86 %    7.24 %  9.43 %  9.77 %  9.44 %  
Period-end tangible common shareholders' equity to period-end tangible assets (2)  6.87 %  6.71 %  6.65 %  6.73 %    6.15 %  7.10 %  7.35 %  6.91 %  
                     
Average tangible equity to average tangible assets (2)  6.89 %  6.81 %  6.70 %  7.49 %  6.96 %  9.20 %  9.72 %  9.77 %  9.75 %  9.60 %
                     
Average tangible common shareholders' equity to average tangible assets (2)  6.77 %  6.69 %  6.58 %  6.68 %  6.68 %  6.96 %  7.33 %  7.30 %  7.14 %  7.18 %
                     
                     
Senior Debt Credit Ratings                    
For The Period Ended December 31, 2010                    
  Moody's Fitch Standard &

Poor's
DBRS            
City National Bank Aa3  A- A- A (high)            
City National Corporation A1  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 mutlipled 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 I common shareholders' equity to risk-weighted assets ratio, tangible equity to tangible assets ratio, and tangible common shareholders' equity to tangible assets ratio are non-GAAP financial measures. For notes on non-GAAP measures, see pages 13 and 14 of the Selected Financial Information.
                 
CITY NATIONAL CORPORATION                
NON-GAAP FINANCIAL MEASURES                
(unaudited)                
                 
(a) Net income available to common shareholders, excluding unusual items                
                 
A reconciliation of the GAAP to non-GAAP measure is set forth below:                
                 
  Quarter Ending

December 31, 2010
           
(Dollars in thousands, except per share amounts) Amount Per Share            
Net income available to common shareholders  $ 39,743  $ 0.74            
After tax adjustments:                
Add: Redemption of trust preferred securities  3,949  0.07            
Add: Impairment of affiliated investment advisor  3,432  0.07            
Net income available to common shareholders, excluding unusual items  $ 47,124  $ 0.88            
                 
Management believes this non-GAAP financial measure enhances the comparability of the financial results with prior periods as well as highlights the effects of unusual items 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 unusual items.
                 
(b) Tier I common shareholders' equity to risk-based assets                
                 
The Tier I common shareholders' equity to risk-based assets ratio, also known as Tier I common ratio, is calculated by dividing (a) Tier I capital less non-common components including qualifying perpetual preferred stock, qualifying noncontrolling interest in subsidiaries and qualifying trust preferred securities by (b) risk-weighted assets. Tier I 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 participant interest in the Tier I common shareholders' equity to risk-based assets ratio. 
                 
  2010 2009
(Dollars in thousands) Fourth

Quarter
Third

Quarter
Second

Quarter
First

Quarter
Fourth

Quarter
Third

Quarter
Second

Quarter
First

Quarter
Tier I capital  $ 1,441,837  $ 1,650,793  $ 1,614,341  $ 1,585,727  $ 1,760,136  $ 1,682,155  $ 1,714,912  $ 1,594,371
Less: Preferred stock  --  --  --  --  (196,048)  (391,593)  (391,091)  (390,590)
Less: Noncontrolling interest  (25,139)  (25,189)  (25,088)  (25,088)  (26,339)  (24,748)  (25,387)  (25,441)
Less: Trust preferred securities  (5,155)  (252,115)  (252,088)  (252,062)  (252,036)  (5,155)  (5,155)  (5,155)
Tier I common shareholders' equity (A)  $ 1,411,543  $ 1,373,489  $ 1,337,165  $ 1,308,577  $ 1,285,713  $ 1,260,659  $ 1,293,279  $ 1,173,185
                 
Risk-weighted assets (B)  $ 13,712,097  $ 13,788,060  $ 13,806,764  $ 13,856,028  $ 14,430,857  $ 13,669,051  $ 13,886,674  $ 13,618,545
                 
Tier I common shareholders' equity to risk-based assets (A)/(B)  10.29 %  9.96 %  9.68 %  9.44 %  8.91 %  9.22 %  9.31 %  8.61 %
                     
CITY NATIONAL CORPORATION                    
NON-GAAP FINANCIAL MEASURES (continued)                    
(unaudited)                    
                     
(c) Pro-forma Tier I risk-based capital and Tier I leverage, excluding trust preferred securities                    
                     
Tier I risk-based capital was 11.97% as of September 30, 2010, and was calculated by dividing Tier I capital of $1.65 billion by risk weighted assets of $13.79 billion. Tier I capital and risk-weighted assets are calculated in accordance with applicable bank regulatory guidelines. Tier I risk-based capital, excluding trust preferred securities of $247.0 million and its related income statement impact of $6.8 million, was 10.13% at September 30, 2010, and was calculated by dividing adjusted Tier I capital of $1.40 billion by risk weighted assets of $13.79 billion. 
                     
Tier I leverage was 7.82% as of September 30, 2010, and was calculated by dividing Tier I capital of $1.65 billion by average total consolidated assets of $21.10 billion. Tier I capital and average total consolidated assets are calculated in accordance with applicable bank regulatory guidelines. Excluding trust preferred securities of $247.0 million, its related income statement impact of $6.8 million, and the redemption's impact to average total consolidated assets, Tier 1 leverage was 6.62% at September 30, 2010, and was calculated by dividing adjusted Tier I capital of $1.40 billion by adjusted average total consolidated assets of $21.10 billion. 
                     
Management believes these non-GAAP financial measures highlight the effect of significant events on the Company's capital ratios. The Company believes that investors may find it useful to see these non-GAAP financial measures to analyze the Company's capital position.  
                     
(d) Tangible equity and tangible common shareholders' 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. Tangible common shareholders' equity to tangible assets is a non-GAAP financial measure that represents tangible equity less preferred stock and noncontrolling interest divided by total assets less identifiable intangible assets and goodwill. Management reviews both these measures in evaluating the Company's capital levels and has included these ratios in response to market participant interest in tangible equity and tangible common shareholders' equity as a measure of capital. A reconciliation of the GAAP to non-GAAP measure is set forth below: 
                     
  2010 2009
(Dollars in thousands) Fourth

Quarter
Third

Quarter
Second

Quarter
First

Quarter
Year To

Date
Fourth

Quarter
Third

Quarter
Second

Quarter
First

Quarter
Year To

Date
Period End:                    
Total equity  $ 1,984,718  $ 1,977,163  $ 1,926,960  $ 1,863,411    $ 2,012,764  $ 2,218,492  $ 2,173,916  $ 2,049,370  
Less: Goodwill and other intangibles  (528,634)  (522,592)  (524,820)  (523,135)    (525,583)  (533,367)  (496,562)  (498,194)  
Tangible equity (A)  1,456,084  1,454,571  1,402,140  1,340,276    1,487,181  1,685,125  1,677,354  1,551,176  
Less: Noncontrolling interest  (25,139)  (25,189)  (25,189)  (25,189)    (26,441)  (24,849)  (25,387)  (25,441)  
Less: Preferred stock  --  --  --  --    (196,048)  (391,593)  (391,091)  (390,590)  
Tangible common shareholders' equity (B)  $ 1,430,945  $ 1,429,382  $ 1,376,951  $ 1,315,087    $ 1,264,692  $ 1,268,683  $ 1,260,876  $ 1,135,145  
                     
Total assets  $ 21,353,118  $ 21,823,616  $ 21,231,447  $ 20,066,475    $ 21,078,757  $ 18,400,604  $ 17,660,785  $ 16,933,530  
Less: Goodwill and other intangibles  (528,634)  (522,592)  (524,820)  (523,135)    (525,583)  (533,367)  (496,562)  (498,194)  
Tangible assets (C)  $ 20,824,484  $ 21,301,024  $ 20,706,627  $ 19,543,340    $ 20,553,174  $ 17,867,237  $ 17,164,223  $ 16,435,336  
                     
Period-end tangible equity to period-end tangible assets (A)/(C)  6.99% 6.83% 6.77% 6.86%   7.24% 9.43% 9.77% 9.44%  
Period-end tangible common shareholders' equity to period-end tangible assets (B)/(C)  6.87% 6.71% 6.65% 6.73%   6.15% 7.10% 7.35% 6.91%  
                     
Average Balance:                    
Total equity  $ 1,999,494  $ 1,960,206  $ 1,881,635  $ 2,003,150  $ 1,961,109  $ 2,240,642  $ 2,204,220  $ 2,145,859  $ 2,050,401  $ 2,160,922
Less: Goodwill and other intangibles  (525,747)  (523,855)  (522,311)  (524,838)  (524,189)  (533,314)  (510,514)  (497,487)  (499,229)  (510,230)
Tangible equity (D)  1,473,747  1,436,351  1,359,324  1,478,312  1,436,920  1,707,328  1,693,706  1,648,372  1,551,172  1,650,692
Less: Noncontrolling interest  (25,168)  (25,189)  (25,189)  (26,427)  (25,489)  (24,815)  (25,369)  (25,438)  (25,441)  (25,264)
Less: Preferred stock  --  --  --  (132,915)  (32,773)  (389,688)  (391,353)  (390,838)  (390,348)  (390,557)
Tangible common shareholders' equity (E)  $ 1,448,579  $ 1,411,162  $ 1,334,135  $ 1,318,970  $ 1,378,658  $ 1,292,825  $ 1,276,984  $ 1,232,096  $ 1,135,383  $ 1,234,871
                     
Total assets  $ 21,922,240  $ 21,614,748  $ 20,799,187  $ 20,267,248  $ 21,156,661  $ 19,095,212  $ 17,938,231  $ 17,369,311  $ 16,411,240  $ 17,711,495
Less: Goodwill and other intangibles  (525,747)  (523,855)  (522,311)  (524,838)  (524,189)  (533,314)  (510,514)  (497,487)  (499,229)  (510,230)
Tangible assets (F)  $ 21,396,493  $ 21,090,893  $ 20,276,876  $ 19,742,410  $ 20,632,472  $ 18,561,898  $ 17,427,717  $ 16,871,824  $ 15,912,011  $ 17,201,264
                     
Average tangible equity to average tangible assets (D)/(F) 6.89% 6.81% 6.70% 7.49% 6.96% 9.20% 9.72% 9.77% 9.75% 9.60%
Average tangible common shareholders' equity to average tangible assets (E)/(F) 6.77% 6.69% 6.58% 6.68% 6.68% 6.96% 7.33% 7.30% 7.14% 7.18%
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. PST
         (866) 393-6804
         Conference ID: 25044743

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