10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM                   TO                   

COMMISSION FILE NUMBER: 1-10521

CITY NATIONAL CORPORATION

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

Delaware	95-2568550
(State of Incorporation)	(I.R.S. Employer Identification No.)

City National Plaza

555 South Flower Street, Los Angeles, California, 90071

(Address of principal executive offices)(Zip Code)

(213) 673-7700

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days. Yes x  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act). (Check one):

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  o Yes  x No

As of April 30, 2012, there were 53,300,468 shares of Common Stock outstanding (including unvested restricted shares).

TABLE OF CONTENTS

PART I
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	50
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	81
Item 4.	Controls and Procedures	85
PART II
Item 1A.	Risk Factors	86
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	86
Item 6.	Exhibits	86

2

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CITY NATIONAL CORPORATION

CONSOLIDATED BALANCE SHEETS

	March 31,			December 31,
(in thousands, except share amounts)	2012			2011
	(Unaudited)
Assets
Cash and due from banks	$	210,799		$	168,376
Due from banks - interest-bearing	101,375			76,438
Federal funds sold	156,000			—
Securities available-for-sale - cost $6,699,181 and $7,445,999 at March 31, 2012 and December 31, 2011, respectively:
Securities pledged as collateral	38,817			37,861
Held in portfolio	6,799,893			7,534,040
Securities held-to-maturity - fair value $996,455 and $473,903 at March 31, 2012 and December 31, 2011, respectively	996,613			467,680
Trading securities	82,589			61,975
Loans and leases, excluding covered loans	12,747,902			12,309,385
Less: Allowance for loan and lease losses	266,077			262,557
Loans and leases, excluding covered loans, net	12,481,825			12,046,828
Covered loans, net of allowance for loan losses	1,335,685			1,417,289
Net loans and leases	13,817,510			13,464,117
Premises and equipment, net	143,238			143,641
Deferred tax asset	149,532			155,529
Goodwill	487,233			486,383
Customer-relationship intangibles, net	34,484			36,370
Affordable housing investments	143,916			121,039
Customers’ acceptance liability	1,343			1,702
Other real estate owned ($78,456 and $98,550 covered by FDIC loss share at March 31, 2012 and December 31, 2011, respectively)	107,530			129,340
FDIC indemnification asset	185,392			204,259
Other assets	582,225			577,541
Total assets	$	24,038,489		$	23,666,291
Liabilities
Demand deposits	$	11,550,000		$	11,146,627
Interest checking deposits	1,950,035			2,034,815
Money market deposits	5,946,064			5,954,886
Savings deposits	365,773			339,858
Time deposits-under $100,000	234,180			251,782
Time deposits-$100,000 and over	741,685			659,614
Total deposits	20,787,737			20,387,582
Short-term borrowings	222,776			50,000
Long-term debt	482,024			697,778
Reserve for off-balance sheet credit commitments	24,067			23,097
Acceptances outstanding	1,343			1,702
Other liabilities	277,541			316,640
Total liabilities	21,795,488			21,476,799
Redeemable noncontrolling interest	43,436			44,643
Commitments and contingencies
Shareholders’ Equity
Common stock, par value $1.00 per share; 75,000,000 shares authorized; 53,885,886 shares issued at March 31, 2012 and December 31, 2011	53,886			53,886
Additional paid-in capital	489,717			489,200
Accumulated other comprehensive income	81,342			72,372
Retained earnings	1,644,861			1,611,969
Treasury shares, at cost - 1,225,218 and 1,386,705 shares at March 31, 2012 and December 31, 2011, respectively	(70,241		)	(82,578		)
Total shareholders’ equity	2,199,565			2,144,849
Total liabilities and shareholders’ equity	$	24,038,489		$	23,666,291

See accompanying Notes to the Unaudited Consolidated Financial Statements.

3

CITY NATIONAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	For the three months ended
	March 31,
(in thousands, except per share amounts)	2012			2011
Interest income
Loans and leases	$	168,102		$	162,939
Securities	45,387			37,420
Due from banks - interest-bearing	93			297
Federal funds sold and securities purchased under resale agreements	10			154
Total interest income	213,592			200,810
Interest expense
Deposits	4,033			10,190
Federal funds purchased and securities sold under repurchase agreements	31			—
Subordinated debt	4,061			4,648
Other long-term debt	4,754			4,682
Total interest expense	12,879			19,520
Net interest income	200,713			181,290
Provision for credit losses on loans and leases, excluding covered loans	—			—
Provision for losses on covered loans	7,466			19,116
Net interest income after provision	193,247			162,174
Noninterest income
Trust and investment fees	33,654			35,638
Brokerage and mutual fund fees	5,028			5,661
Cash management and deposit transaction charges	11,168			11,725
International services	8,785			8,316
FDIC loss sharing income, net	866			8,605
Gain on disposal of assets	2,191			2,424
Gain on sale of securities	449			130
Other	13,559			21,558
Impairment loss on securities:
Total other-than-temporary impairment loss on securities	(2,432		)	(4,510		)
Less: Portion of loss recognized in other comprehensive income	2,432			4,346
Net impairment loss recognized in earnings	—			(164		)
Total noninterest income	75,700			93,893
Noninterest expense
Salaries and employee benefits	120,245			111,012
Net occupancy of premises	13,686			13,346
Legal and professional fees	11,880			10,077
Information services	8,149			7,497
Depreciation and amortization	7,428			6,748
Amortization of intangibles	1,886			2,168
Marketing and advertising	6,816			6,518
Office services and equipment	3,948			4,606
Other real estate owned	12,094			14,489
FDIC assessments	4,479			9,806
Other operating	10,109			11,130
Total noninterest expense	200,720			197,397
Income before income taxes	68,227			58,670
Income taxes	21,719			17,886
Net income	$	46,508		$	40,784
Less: Net income attributable to noncontrolling interest	243			1,092
Net income attributable to City National Corporation	$	46,265		$	39,692
Net income per share, basic	$	0.86		$	0.75
Net income per share, diluted	$	0.86		$	0.74
Shares used to compute net income per share, basic	52,741			52,320
Shares used to compute net income per share, diluted	53,021			52,894
Dividends per share	$	0.25		$	0.20

See accompanying Notes to the Unaudited Consolidated Financial Statements.

4

CITY NATIONAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	For the three months ended
	March 31,
(in thousands)	2012			2011
Net income	$	46,508		$	40,784
Other comprehensive income (loss), net of tax:
Securities available for sale:
Net unrealized gain (loss), net of taxes of $6,882 and ($5,167)	9,570			(7,185		)
Reclassification adjustment for net gains included in net income, net of taxes of $165 and $37	(229		)	(51		)
Non-credit related impairment loss, net of taxes of ($1,017) and ($1,818)	(1,414		)	(2,528		)
Net change on cash flow hedges (1)	(42		)	(586		)
Pension liability adjustment	1,085			32
Total other comprehensive income (loss)	8,970			(10,318		)
Comprehensive income	$	55,478		$	30,466
Less: Comprehensive income attributable to noncontrolling interest	243			1,092
Comprehensive income attributable to City National Corporation	$	55,235		$	29,374

(1)  See Note 12 for additional information on other comprehensive income related to cash flow hedges.

5

CITY NATIONAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the three months ended
	March 31,
(in thousands)	2012			2011
Cash Flows From Operating Activities
Net income	$	46,508		$	40,784
Adjustments to net income:
Provision for losses on covered loans	7,466			19,116
Amortization of intangibles	1,886			2,168
Depreciation and amortization	7,428			6,748
Share-based employee compensation expense	4,706			4,678
Deferred income tax benefit	297			(811		)
Gain on disposal of assets	(2,191		)	(2,424		)
Gain on sale of securities	(449		)	(130		)
Impairment loss on securities	—			164
Other, net	(2,430		)	(12,700		)
Net change in:
Trading securities	(20,559		)	174,171
Other assets and other liabilities, net	(41,395		)	35,560
Net cash provided by operating activities	1,267			267,324
Cash Flows From Investing Activities
Purchase of securities available-for-sale	(629,049		)	(598,336		)
Sales of securities available-for-sale	5,173			6,094
Maturities and paydowns of securities available-for-sale	1,362,442			436,519
Purchase of securities held-to-maturity	(530,159		)	—
Maturities and paydowns of securities held-to-maturity	1,005			—
Loan originations, net of principal collections	(346,887		)	199,409
Net payments for premises and equipment	(7,025		)	(9,567		)
Net cash (paid) acquired in acquisitions	(850		)	7,922
Other investing activities, net	20,592			16,624
Net cash (used in) provided by investing activities	(124,758		)	58,665
Cash Flows From Financing Activities
Net increase in deposits	400,155			292,671
Net decrease in federal funds purchased and securities sold under repurchase agreements	(40,000		)	—
Net (decrease) increase in short-term borrowings, net of transfers from long-term debt	(1,500		)	70
Proceeds from exercise of stock options	2,000			4,015
Tax benefit from exercise of stock options	770			920
Cash dividends paid	(13,302		)	(10,576		)
Other financing activities, net	(1,272		)	(609		)
Net cash provided by financing activities	346,851			286,491
Net increase in cash and cash equivalents	223,360			612,480
Cash and cash equivalents at beginning of year	244,814			434,689
Cash and cash equivalents at end of period	$	468,174		$	1,047,169
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest	$	22,386		$	32,666
Income taxes	27,163			2
Non-cash investing activities:
Transfer of loans to other real estate owned	$	8,292		$	34,139
Transfer of SERP liability to equity		8,348			—

See accompanying Notes to the Unaudited Consolidated Financial Statements.

6

CITY NATIONAL CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

	City National Corporation Shareholders’ Equity
							Accumulated
	Common			Additional			other									Non-
	shares	Common		paid-in			comprehensive			Retained			Treasury			controlling			Total
(in thousands, except share amounts)	issued	stock		capital			income (loss)			earnings			shares			interest			equity
Balance, January 1, 2011	53,885,886	$	53,886	$	487,868		$	36,853		$	1,482,037		$	(101,065	)	$	25,139		$	1,984,718
Net income (1)	—	—		—			—			39,692			—			534			40,226
Other comprehensive loss, net of tax	—	—		—			(10,318		)	—			—			—			(10,318		)
Dividends and distributions to noncontrolling interest	—	—		—			—			—			—			(534		)	(534		)
Issuance of shares under share-based compensation plans	—	—		(11,820		)	—			—			14,111			—			2,291
Share-based employee compensation expense	—	—		4,629			—			—			—			—			4,629
Tax benefit from share-based compensation plans	—	—		1,037			—			—			—			—			1,037
Common stock dividends	—	—		—			—			(10,576		)	—			—			(10,576		)
Net change in deferred compensation plans	—	—		26			—			—			—			—			26
Change in redeemable noncontrolling interest	—	—		(822		)	—			—			—			—			(822		)
Other	—	—		—			—			—			—			(50		)	(50		)
Balance, March 31, 2011	53,885,886	$	53,886	$	480,918		$	26,535		$	1,511,153		$	(86,954	)	$	25,089		$	2,010,627
Balance, January 1, 2012	53,885,886	$	53,886	$	489,200		$	72,372		$	1,611,969		$	(82,578	)	$	—		$	2,144,849
Net income (1)	—	—		—			—			46,265			—			—			46,265
Other comprehensive income, net of tax	—	—		—			8,970			—			—			—			8,970
Issuance of shares under share-based compensation plans	—	—		(12,175		)	—			—			12,337			—			162
Share-based employee compensation expense	—	—		4,549			—			—			—			—			4,549
Tax expense from share-based compensation plans	—	—		(136		)	—			—			—			—			(136		)
Common stock dividends	—	—		—			—			(13,373		)	—			—			(13,373		)
Net change in deferred compensation plans	—	—		42			—			—			—			—			42
Change in redeemable noncontrolling interest	—	—		(111		)	—			—			—			—			(111		)
Other (2)	—	—		8,348			—			—			—			—			8,348
Balance, March 31, 2012	53,885,886	$	53,886	$	489,717		$	81,342		$	1,644,861		$	(70,241	)	$	—		$	2,199,565

(1)	Net income excludes net income attributable to redeemable noncontrolling interest of $243 and $558 for the three-month periods ended March 31, 2012 and 2011, respectively. Redeemable noncontrolling interest is reflected in the mezzanine section of the consolidated balance sheets. See Note 17 of the Notes to the Unaudited Consolidated Financial Statements.
(2)	Conversion of pension liability to equity due to SERP amendment. See Note 14 for additional information.

See accompanying Notes to the Unaudited Consolidated Financial Statements.

7

CITY NATIONAL CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Summary of Significant Accounting Policies

Organization

City National Corporation (the “Corporation”) is the holding company for City National Bank (the “Bank”). The Bank delivers banking, trust and investment services through 79 offices in Southern California, the San Francisco Bay area, Nevada, New York City, Nashville, Tennessee and Atlanta, Georgia. As of March 31, 2012, the Corporation had five consolidated investment advisory affiliates and one unconsolidated subsidiary, Business Bancorp Capital Trust I. Because the Bank comprises substantially all of the business of the Corporation, references to the “Company” mean the Corporation and the Bank together. The Corporation is approved as a financial holding company pursuant to the Gramm-Leach-Bliley Act of 1999.

Consolidation

The consolidated financial statements of the Company include the accounts of the Corporation, its non-bank subsidiaries, the Bank and the Bank’s wholly owned subsidiaries, after the elimination of all material intercompany transactions. It also includes noncontrolling interest, which is the portion of equity in a subsidiary not attributable to a parent. Preferred stock of consolidated bank affiliates that is owned by third parties is reflected as Noncontrolling interest in the equity section of the consolidated balance sheets. This preferred stock was liquidated or redeemed in full by the Bank in the third quarter of 2011. Redeemable noncontrolling interest includes noncontrolling ownership interests that are redeemable at the option of the holder or outside the control of the issuer. The redeemable equity ownership interests of third parties in the Corporation’s investment advisory affiliates are not considered to be permanent equity and are reflected as Redeemable noncontrolling interest in the mezzanine section between liabilities and equity in the consolidated balance sheets. Noncontrolling interests’ share of subsidiary earnings is reflected as Net income attributable to noncontrolling interest in the consolidated statements of income.

The Company’s investment management and wealth advisory affiliates are organized as limited liability companies. The Corporation generally owns a majority position in each affiliate and certain management members of each affiliate own the remaining shares. The Corporation has contractual arrangements with its affiliates whereby a percentage of revenue is allocable to fund affiliate operating expenses (“operating share”) while the remaining portion of revenue (“distributable revenue”) is allocable to the Corporation and the noncontrolling owners. All majority-owned affiliates that meet the prescribed criteria for consolidation are consolidated. The Corporation’s interests in investment management affiliates in which it holds a noncontrolling share are accounted for using the equity method. Additionally, the Company has various interests in variable interest entities (“VIEs”) that are not required to be consolidated. See Note 16 for a more detailed discussion on VIEs.

Use of Estimates

The Company’s accounting and reporting policies conform to generally accepted accounting principles (“GAAP”) and practices in the financial services industry. To prepare the financial statements in conformity with GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and income and expenses during the reporting period. Circumstances and events that differ significantly from those underlying the Company’s estimates and assumptions could cause actual financial results to differ from those estimates. The material estimates included in the financial statements relate to the allowance for loan and lease losses, the reserve for off-balance sheet credit commitments, valuation of stock options and restricted stock, income taxes, goodwill and intangible asset impairment, securities impairment, private equity and alternative investment impairment, valuation of assets and liabilities acquired in business combinations, subsequent valuations of acquired impaired loans, Federal Deposit Insurance Corporation (“FDIC”) indemnification assets, valuation of noncontrolling interest and the valuation of financial assets and liabilities reported at fair value.

8

Note 1. Summary of Significant Accounting Policies (Continued)

The Company has applied its critical accounting policies and estimation methods consistently in all periods presented in these financial statements. The Company’s estimates and assumptions are expected to change as changes in market conditions and the Company’s portfolio occur in subsequent periods.

Basis of Presentation

The Company is on the accrual basis of accounting for income and expenses. The results of operations reflect any adjustments, all of which are of a normal recurring nature, unless otherwise disclosed in this Form 10-Q, and which, in the opinion of management, are necessary for a fair presentation of the results for the periods presented. In accordance with the usual practice of banks, assets and liabilities of individual trust, agency and fiduciary funds have not been included in the financial statements. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

The results for the 2012 interim period are not necessarily indicative of the results expected for the full year. The Company has not made any significant changes in its critical accounting policies or in its estimates and assumptions from those disclosed in its 2011 Annual Report other than the adoption of new accounting pronouncements and other authoritative guidance that became effective for the Company on or after January 1, 2012. Refer to Accounting Pronouncements for discussion of accounting pronouncements adopted in 2012.

Certain prior period amounts have been reclassified to conform to the current period presentation.

Accounting Pronouncements

During the three months ended March 31, 2012, the following accounting pronouncements applicable to the Company were issued or became effective:

·In April 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-03, Transfers and Servicing (Topic 860): Reconsideration of Effective Control for Repurchase Agreements (“ASU 2011-03”). Accounting Standards Codification (“ASC”) Topic 860, Transfers and Servicing, provides the criteria for determining whether a transfer of financial assets under a repurchase agreement is accounted for as a secured borrowing or as a sale. In a typical repurchase transaction, an entity transfers financial assets to a counterparty in exchange for cash with an agreement for the counterparty to return the same or equivalent financial assets for a fixed price in the future. Under the guidance, an entity that maintains effective control over transferred assets must account for the transfer as a secured borrowing. ASU 2011-03 eliminates the requirement for entities to consider whether a transferor has the ability to repurchase the financial assets in a repurchase agreement for purposes of determining whether the transferor has maintained effective control. The ASU does not change the other criteria applicable to the assessment of effective control. Adoption of ASU 2011-03 on January 1, 2012 did not have a material effect on the Company’s consolidated financial statements.

·In May 2011, the FASB issued ASU 2011-04, Fair Value Measurements (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (“ASU 2011-04”). ASU 2011-04 represents the converged guidance of the FASB and International Accounting Standards Board on fair value. The new guidance establishes a common framework for measuring fair value and for disclosing information about fair value measurements. While ASU 2011-04 is largely consistent with existing fair value measurement principles, it does expand disclosure requirements and amends certain guidance. Under the revised guidance, the highest and best use and valuation premise concepts only apply to measuring the fair value of nonfinancial assets. The highest and best use of a nonfinancial asset is one that is physically possible, legally permissible and financially feasible. The valuation premise guidance provides that the highest and best use of a nonfinancial asset is either on a stand-alone basis or in combination with other assets as a group. The ASU provides a framework for considering whether a premium or discount can be applied in a fair value measurement, and provides a model for measuring the fair value of an instrument classified in shareholders’ equity. ASU 2011-04 requires entities to make an accounting policy election regarding fair value measurements of financial assets and liabilities, such as derivatives, for which the exposure to market or counterparty credit risks is managed on a net or portfolio basis. The Company elected to continue measuring derivative instruments that are subject to master netting agreements on the net risk exposure at the measurement date.

9

Note 1. Summary of Significant Accounting Policies (Continued)

The expanded disclosure requirements include more detailed disclosures about the valuation processes used in fair value measurements within Level 3 of the fair value hierarchy, and categorization by level of the fair value hierarchy for items that are not measured at fair value in the statement of financial position but for which fair value is required to be disclosed in accordance with ASC Topic 825, Financial Instruments. The Company adopted ASU 2011-04 for first quarter 2012 reporting. Adoption of the new guidance did not have a significant impact on the Company’s consolidated financial statements.

·In June 2011, the FASB issued ASU 2011-05, Comprehensive Income (Topic 220), Presentation of Comprehensive Income (“ASU 2011-05”). ASU 2011-05 revises the manner in which entities present comprehensive income in their financial statements. The new guidance requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. Under the two-statement approach, the first statement would include components of net income, which is consistent with the income statement format used today, and the second statement would include components of other comprehensive income. In December 2011, the FASB issued ASU 2011-12, Comprehensive Income (Topic 220), Deferral of the Effective Date for Amendments to the Presentation of Reclassification of Items out of Accumulated Other Comprehensive Income in ASU 2011-05 (“ASU 2011-12”). ASU 2011-12 indefinitely defers the provision of ASU 2011-05 that would have required entities to present reclassification adjustments out of accumulated other comprehensive income (“AOCI”) by component in both the statement in which net income is presented and the statement in which other comprehensive income is presented. ASU 2011-05 and ASU 2011-12 became effective for the Company for first quarter 2012 reporting. The Company elected to report components of comprehensive income in two separate but consecutive statements. The new guidances were applied retrospectively for all periods presented.

Note 2. Business Combinations

Nevada Commerce Bank

On April 8, 2011, the Bank acquired the banking operations of Nevada Commerce Bank (“NCB”), based in Las Vegas, Nevada, in a purchase and assumption agreement with the FDIC. Excluding the effects of acquisition accounting adjustments, the Bank acquired approximately $138.9 million in assets and assumed $121.9 million in liabilities. The Bank acquired most of NCB’s assets, including loans and other real estate owned (“OREO”) with a fair value of $56.4 million and $7.5 million, respectively, and assumed deposits with a fair value of $118.4 million. The Bank received approximately $2.7 million in cash from the FDIC at acquisition and recognized a gain of $8.2 million on the acquisition of NCB in the second quarter of 2011.

In connection with the acquisition of NCB, the Bank entered into loss-sharing agreements with the FDIC under which the FDIC will reimburse the Bank for 80 percent of eligible losses with respect to covered assets. Covered assets include acquired loans (“covered loans”) and OREO (“covered OREO”) that are covered under loss-sharing agreements with the FDIC. The term of the loss-sharing agreements is 10 years for single-family residential loans and eight years for all other loans. The expected reimbursements under the loss-sharing agreements were recorded as an indemnification asset at their estimated fair value of $33.8 million. The difference between the fair value of the FDIC indemnification asset and the undiscounted cash flow the Bank expects to collect from the FDIC is accreted into noninterest income.

San Jose, California Branch

On February 11, 2011, the Company purchased a branch banking office in San Jose, California from another financial institution. The Company acquired approximately $8.4 million in deposits, and recorded goodwill and core deposit intangibles of $0.3 million and $0.1 million, respectively.

10

Note 3. Fair Value Measurements

The following tables summarize assets and liabilities measured at fair value as of March 31, 2012 and December 31, 2011 by level in the fair value hierarchy:

			Fair Value Measurements at Reporting Date Using
(in thousands)	Balance as of March 31, 2012		Quoted Prices in Active Markets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
Measured on a Recurring Basis
Assets
Securities available-for-sale:
U.S. Treasury	$	19,202	$	19,202	$	—	$	—
Federal agency - Debt	1,051,348		—		1,051,348		—
Federal agency - MBS	720,590		—		720,590		—
CMOs - Federal agency	4,400,318		—		4,400,318		—
CMOs - Non-agency	68,587		—		68,587		—
State and municipal	395,723		—		395,723		—
Other debt securities	181,792		—		162,783		19,009
Equity securities and mutual funds	1,150		1,150		—		—
Trading securities	82,589		80,527		2,062		—
Mark-to-market derivatives (1)	57,891		3,239		54,652		—
Total assets at fair value	$	6,979,190	$	104,118	$	6,856,063	$	19,009
Liabilities
Mark-to-market derivatives (2)	$	49,384	$	1,574	$	47,810	$	—
Other liabilities	290		—		290		—
Total liabilities at fair value	$	49,674	$	1,574	$	48,100	$	—
Measured on a Nonrecurring Basis
Assets
Collateral dependent impaired loans (3):
Commercial (4)	$	1,878	$	—	$	—	$	1,878
Commercial real estate mortgages	3,170		—		3,170		—
Residential mortgages	5,988		—		5,525		463
Real estate construction	14,300		—		7,500		6,800
Equity lines of credit	904		—		—		904
Installment	550		—		550		—
Other real estate owned (5)	27,347		—		23,269		4,078
Private equity and alternative investments	258		—		—		258
Total assets at fair value	$	54,395	$	—	$	40,014	$	14,381

(1)	Reported in Other assets in the consolidated balance sheets.
(2)	Reported in Other liabilities in the consolidated balance sheets.
(3)	Impaired loans for which fair value was calculated using the collateral valuation method.
(4)	Includes lease financing.
(5)	Other real estate owned balance of $107.5 million in the consolidated balance sheets includes $78.5 million of covered OREO and is net of estimated disposal costs.

11

Note 3. Fair Value Measurements (Continued)

			Fair Value Measurements at Reporting Date Using
(in thousands)	Balance as of December 31, 2011		Quoted Prices in Active Markets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
Measured on a Recurring Basis
Assets
Securities available-for-sale:
U.S. Treasury	$	19,182	$	19,182	$	—	$	—
Federal agency - Debt	1,973,862		—		1,973,862		—
Federal agency - MBS	681,044		—		681,044		—
CMOs - Federal agency	4,326,907		—		4,326,907		—
CMOs - Non-agency	69,001		—		69,001		—
State and municipal	401,604		—		401,604		—
Other debt securities	99,074		—		79,491		19,583
Equity securities and mutual funds	1,227		1,227		—		—
Trading securities	61,975		61,922		53		—
Mark-to-market derivatives (1)	62,230		2,552		59,678		—
Total assets at fair value	$	7,696,106	$	84,883	$	7,591,640	$	19,583
Liabilities
Mark-to-market derivatives (2)	$	52,881	$	1,542	$	51,339	$	—
Other liabilities	263		—		263		—
Total liabilities at fair value	$	53,144	$	1,542	$	51,602	$	—
Measured on a Nonrecurring Basis
Assets
Collateral dependent impaired loans (3):
Commercial (4)	$	2,484	$	—	$	—	$	2,484
Commercial real estate mortgages	6,830		—		6,830		—
Residential mortgages	5,555		—		5,084		471
Real estate construction	18,528		—		9,680		8,848
Equity lines of credit	3,471		—		2,588		883
Installment	675		—		675		—
Collateral dependent impaired covered loans (3):
Commercial	422		—		—		422
Other real estate owned (5)	66,837		—		56,898		9,939
Private equity and alternative investments	6,558		—		—		6,558
Total assets at fair value	$	111,360	$	—	$	81,755	$	29,605

(1)	Reported in Other assets in the consolidated balance sheets.
(2)	Reported in Other liabilities in the consolidated balance sheets.
(3)	Impaired loans for which fair value was calculated using the collateral valuation method.
(4)	Includes lease financing.
(5)	Other real estate owned balance of $129.3 million in the consolidated balance sheets includes $98.6 million of covered OREO and is net of estimated disposal costs.

12

Note 3. Fair Value Measurements (Continued)

At March 31, 2012, $6.98 billion, or approximately 29 percent, of the Company’s total assets were recorded at fair value on a recurring basis, compared with $7.70 billion, or 33 percent, at December 31, 2011. The majority of these financial assets were valued using Level 1 or Level 2 inputs. Less than 1 percent of total assets were measured using Level 3 inputs. At March 31, 2012, $49.7 million of the Company’s total liabilities were recorded at fair value using Level 1 or Level 2 inputs, compared with $53.1 million at December 31, 2011. There were no transfers between Level 1 and Level 2 of the fair value hierarchy for assets or liabilities measured on a recurring basis during the first quarter of 2012. At March 31, 2012, $54.4 million, or approximately 0.2 percent of the Company’s total assets, were recorded at fair value on a nonrecurring basis, compared with $111.4 million, or approximately 0.5 percent, at December 31, 2011. These assets were measured using Level 2 and Level 3 inputs.

Recurring Fair Value Measurements

Assets and liabilities for which fair value measurement is based on significant unobservable inputs are classified as Level 3 in the fair value hierarchy. Level 3 assets measured at fair value on a recurring basis consist of collateralized debt obligation senior notes that are included in securities available-for-sale. These securities totaling $19.0 million at March 31, 2012 were valued using the discounted cash flow method with the following unobservable inputs: (1) risk-adjusted discount rate consistent with similarly rated securities, (2) prepayment rate of 2 percent, (3) default rate of 0.75 percent of performing collateral, and (4) 15 percent recovery rate with a 2-year lag. The Company had no liabilities with fair value measurements categorized as Level 3 at March 31, 2012 or 2011.

The following table provides a reconciliation of the beginning and ending balances for Level 3 assets measured at fair value on a recurring basis for the three months ended March 31, 2012 and 2011. Unrealized gains and losses on securities available-for-sale are reported as a component of AOCI in the consolidated balance sheets.

Level 3 Assets Measured on a Recurring Basis

	March 31, 2012			March 31, 2011
(in thousands)	Securities Available- for-Sale			Securities Available- for-Sale
Balance, beginning of period	$	19,583		$	20,982
Total realized/unrealized gains (losses):
Included in other comprehensive income	964			1,690
Settlements	(1,562		)	(1,707		)
Other (1)	24			(53		)
Balance, end of period	$	19,009		$	20,912

(1) Other rollforward activity consists of amortization of premiums and accretion of discounts recognized on the initial purchase of the securities available-for-sale.

There were no purchases, sales, or transfers in and/or out of Level 3 assets measured on a recurring basis during the three months ended March 31, 2012 and 2011. Paydowns of $1.6 million and $1.7 million were received on Level 3 assets measured on a recurring basis for the three months ended March 31, 2012 and 2011, respectively. There were no gains or losses for the three months ended March 31, 2012 and 2011 included in earnings that were attributable to the change in unrealized gains or losses relating to assets still held as of March 31, 2012 and 2011.

13

Note 3. Fair Value Measurements (Continued)

Nonrecurring Fair Value Measurements

Assets measured at fair value on a nonrecurring basis using significant unobservable inputs include certain collateral dependent impaired loans, OREO for which fair value is not solely based on market observable inputs, and certain private equity and alternative investments. Private equity and alternative investments do not have readily determinable fair values. These investments are carried at cost and evaluated for impairment on a quarterly basis. Due to the lack of readily determinable fair values for these investments, the impairment assessment is based primarily on a review of investment performance and the likelihood that the capital invested would be recovered.

The table below provides information about valuation method, inputs and assumptions for nonrecurring Level 3 fair value measurements. The weight assigned to each input is based on the facts and circumstances that exist at the date of measurement.

Information About Nonrecurring Level 3 Fair Value Measurements

(in thousands)	Fair Value at March 31, 2012		Valuation Method	Unobservable Inputs
Collateral dependent impaired loans	$	10,045	Market	- Adjustments to external or internal appraised values - Probability weighting of broker price opinions - Management assumptions regarding market trends or other relevant factors
Other real estate owned	$	4,078	Market	- Adjustments to external or internal appraised values
				- Probability weighting of broker price opinions
				- Management assumptions regarding market trends or other relevant factors
Private equity and alternative investments	$	258	Cost Recovery	- Management’s assumptions regarding recoverability of investment based on fund financial performance, market conditions and other relevant factors

Market-based valuation methods use prices and other relevant information generated by market transactions involving identical or comparable assets. Under the cost recovery approach, fair value represents an estimate of the amount of an asset expected to be recovered. The Company only employs the cost recovery approach for assets that are not readily marketable and for which minimal market-based information exists.

For assets measured at fair value on a nonrecurring basis, the following table presents the total net (losses) gains, which include charge-offs, recoveries, specific reserves, OREO valuation write-downs and write-ups, gains and losses on sales of OREO, and impairment write-downs on private equity investments, recognized in the three months ended March 31, 2012 and 2011:

	For the three months ended March 31,
(in thousands)	2012			2011
Collateral dependent impaired loans:
Commercial	$	(368	)	$	(606	)
Commercial real estate mortgages	(365		)	7,114
Residential mortgages	(582		)	(142		)
Real estate construction	(6,472		)	2,217
Equity lines of credit	54			36
Installment	(107		)	(4,514		)
Other real estate owned (1)	(8,465		)	(9,122		)
Private equity and alternative investments	(127		)	—
Total net losses recognized	$	(16,432	)	$	(5,017	)

(1) Net losses on OREO includes $7.6 million and $8.2 million of net losses related to covered OREO for the three months ended March 31, 2012 and 2011, respectively, a significant portion of which is reimbursable by the FDIC.

14

Note 3. Fair Value Measurements (Continued)

Fair Value of Financial Instruments

A financial instrument is broadly defined as cash, evidence of an ownership interest in another entity, or a contract that imposes a contractual obligation on one entity and conveys a corresponding right to a second entity to require delivery or exchange of a financial instrument. The table below summarizes the estimated fair values for the Company’s financial instruments as of March 31, 2012 and December 31, 2011. The table also provides information on the level in the fair value hierarchy for inputs used in the fair value of financial assets and financial liabilities. Refer to Note 1, Summary of Significant Accounting Policies, in the Company’s 2011 Form 10-K for additional information on fair value measurements. Financial assets and financial liabilities for which carrying amount equals fair value are considered by the Company to be Level 1 in the fair value hierarchy. Additional detail on assets and liabilities that are categorized in multiple levels of the fair value hierarchy is provided in the above tables of this Note.

The disclosure does not include estimated fair value amounts for assets and liabilities which are not defined as financial instruments but which have significant value. These assets and liabilities include the value of customer-relationship intangibles, goodwill, affordable housing investments carried at cost, other assets, deferred taxes and other liabilities. Accordingly, the total of the fair values presented does not represent the underlying value of the Company.

Following is a description of the methods and assumptions used in estimating the fair values for each class of financial instrument:

Cash and due from banks, Due from banks—interest bearing and Federal funds sold — For these short-term instruments, the carrying amount is a reasonable estimate of fair value.

Securities available-for-sale, Securities held-to-maturity and Trading securities — For securities held as available-for-sale and held-to-maturity, the fair value is determined by quoted market prices, where available, or on observable market inputs appropriate for the type of security. If quoted market prices or observable market inputs are not available, discounted cash flows may be used to determine an appropriate fair value. Fair values for trading securities are based on quoted market prices or dealer quotes. The fair value of trading securities for which quoted prices are not available is based on observable market inputs.

Loans and leases — Loans and leases, excluding covered loans, are not recorded at fair value on a recurring basis. Nonrecurring fair value adjustments are periodically recorded on impaired loans that are measured for impairment based on the fair value of collateral. Due to the lack of activity in the secondary market for the types of loans in the Company’s portfolio, a model-based approach is used for determining the fair value of loans for purposes of the disclosures in the following table. The fair value of loans is estimated by discounting future cash flows using discount rates that incorporate the Company’s assumptions concerning current market yields, credit risk and liquidity premiums. Loan cash flow projections are based on contractual loan terms adjusted for the impact of current interest rate levels on borrower behavior, including prepayments. Loan prepayment assumptions are based on industry standards for the type of loans being valued. Projected cash flows are discounted using yield curves based on current market conditions. Yield curves are constructed by product type using the Bank’s loan pricing model for like-quality credits. The discount rates used in the Company’s model represent the rates the Bank would offer to current borrowers for like-quality credits. These rates could be different from what other financial institutions could offer for these loans.

Covered loans — The fair value of covered loans is based on estimates of future loan cash flows and appropriate discount rates, which incorporate the Company’s assumptions about market funding cost and liquidity premium. The estimates of future loan cash flows are determined using the Company’s assumptions concerning the amount and timing of principal and interest payments, prepayments and credit losses.

FDIC indemnification asset — The fair value of the FDIC indemnification asset is estimated by discounting estimated future cash flows based on estimated current market rates.

Investment in FHLB and FRB stock — Investments in government agency stock are recorded at cost. Ownership of these securities is restricted to member banks and the securities do not have a readily determinable market value. Purchases and sales of these securities are at par value with the issuer. The fair value of investments in FRB and FHLB stock is equal to the carrying amount.

Derivative contracts — The fair value of non-exchange traded (over-the-counter) derivatives is obtained from third party market sources. The Company provides client data to the third party source for purposes of calculating the credit valuation component of the fair value measurement of client derivative contracts. The fair values of interest rate contracts include interest receivable and payable and cash collateral, if any.

15

Note 3. Fair Value Measurements (Continued)

Deposits — The fair value of demand and interest checking deposits, savings deposits, and certain money market accounts is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit (“CD”) is determined by discounting expected future cash flows using the rates offered by the Bank for deposits of similar type and remaining maturity at the measurement date. This value is compared to the termination value of each CD given the Bank’s standard early withdrawal penalties. The fair value reported is the higher of the discounted present value of each CD and the termination value after the recovery of prepayment penalties. The Bank reviews pricing for its CD products weekly. This review gives consideration to market pricing for products of similar type and maturity offered by other financial institutions.

Federal funds purchased and Securities sold under repurchase agreements — The carrying amount is a reasonable estimate of fair value.

Other short-term borrowings — The fair value of the current portion of long-term debt classified in short-term borrowings is obtained through third-party pricing sources. The carrying amount of the remaining other short-term borrowings is a reasonable estimate of fair value.

Long-term debt — The fair value of long-term debt is obtained through third-party pricing sources.

FDIC clawback liability — The FDIC clawback liability represents an estimated payment by the Company to the FDIC if actual cumulative losses on acquired covered assets are lower than the cumulative losses originally estimated by the FDIC at the time of acquisition. The fair value of the FDIC clawback liability is estimated by discounting estimated future cash flows based on estimated current market rates.

Off-balance sheet commitments, which include commitments to extend credit, are excluded from the table below. A reasonable estimate of fair value for these instruments is the carrying amount of deferred fees and the reserve for any credit losses related to these off-balance sheet instruments. This estimate is not material to the Company’s financial position.

		March 31, 2012				December 31, 2011
	Fair Value	Carrying		Fair		Carrying		Fair
(in millions)	Level	Amount		Value		Amount		Value
Financial Assets:
Cash and due from banks	1	$	210.8	$	210.8	$	168.4	$	168.4
Due from banks - interest bearing	1	101.4		101.4		76.4		76.4
Federal funds sold	1	156.0		156.0		—		—
Securities available-for-sale	1,2,3	6,838.7		6,838.7		7,571.9		7,571.9
Securities held-to-maturity	2	996.6		996.5		467.7		473.9
Trading securities	1,2	82.6		82.6		62.0		62.0
Loans and leases, net of allowance	3	12,481.8		12,909.0		12,046.8		12,400.5
Covered loans, net of allowance	3	1,335.7		1,388.7		1,417.3		1,472.6
FDIC indemnification asset	3	185.4		163.0		204.3		184.3
Investment in FHLB and FRB stock	1	103.8		103.8		107.4		107.4
Derivative assets	1,2	57.9		57.9		62.2		62.2
Financial Liabilities:
Deposits	1,3	$	20,787.7	$	20,791.8	$	20,387.6	$	20,392.3
Federal funds purchased and securities sold under repurchase agreements	1	10.0		10.0		50.0		50.0
Other short-term borrowings	2	212.8		219.0		—		—
Long-term debt	2	482.0		505.6		697.8		718.7
Derivative liabilities	1,2	49.4		49.4		52.9		52.9
FDIC clawback liability	3	8.7		8.7		8.1		8.1

16

Note 4. Securities

At March 31, 2012, the Company had total securities of $7.92 billion, comprised of securities available-for-sale at fair value of $6.84 billion, securities held-to-maturity at amortized cost of $996.6 million and trading securities at fair value of $82.6 million. At December 31, 2011, the Company had total securities of $8.10 billion, comprised of securities available-for-sale at fair value of $7.57 billion, securities held-to-maturity at amortized cost of $467.7 million and trading securities at fair value of $62.0 million.

The following is a summary of amortized cost and estimated fair value for the major categories of securities available-for-sale and securities held-to-maturity at March 31, 2012 and December 31, 2011:

			Gross		Gross
	Amortized		Unrealized		Unrealized
(in thousands)	Cost		Gains		Losses			Fair Value
March 31, 2012
Securities available-for-sale:
U.S. Treasury	$	19,217	$	8	$	(23	)	$	19,202
Federal agency - Debt	1,046,035		5,348		(35		)	1,051,348
Federal agency - MBS	690,183		30,580		(173		)	720,590
CMOs - Federal agency	4,304,148		97,498		(1,328		)	4,400,318
CMOs - Non-agency	74,737		809		(6,959		)	68,587
State and municipal	378,541		17,379		(197		)	395,723
Other debt securities	185,968		3,417		(7,593		)	181,792
Total debt securities	6,698,829		155,039		(16,308		)	6,837,560
Equity securities and mutual funds	352		798		—			1,150
Total securities available-for-sale	$	6,699,181	$	155,837	$	(16,308	)	$	6,838,710
Securities held-to-maturity (1):
Federal agency - Debt	$	104,268	$	394	$	(66	)	$	104,596
Federal agency - MBS	173,380		1,794		(427		)	174,747
CMOs - Federal agency	590,931		2,496		(3,918		)	589,509
State and municipal	128,034		1,431		(1,862		)	127,603
Total securities held-to-maturity	$	996,613	$	6,115	$	(6,273	)	$	996,455
December 31, 2011
Securities available-for-sale:
U.S. Treasury	$	19,163	$	24	$	(5	)	$	19,182
Federal agency - Debt	1,967,928		6,230		(296		)	1,973,862
Federal agency - MBS	650,091		31,040		(87		)	681,044
CMOs - Federal agenc	4,239,205		89,926		(2,224		)	4,326,907
CMOs - Non-agency	79,999		322		(11,320		)	69,001
State and municipal	383,210		18,767		(373		)	401,604
Other debt securities	106,051		1,896		(8,873		)	99,074
Total debt securities	7,445,647		148,205		(23,178		)	7,570,674
Equity securities and mutual funds	352		875		—			1,227
Total securities available-for-sale	$	7,445,999	$	149,080	$	(23,178	)	$	7,571,901
Securities held-to-maturity (1):
Federal agency - Debt	$	40,423	$	780	$	—		$	41,203
Federal agency - MBS	75,231		1,632		—			76,863
CMOs - Federal agency	292,547		2,580		(195		)	294,932
State and municipal	59,479		1,463		(37		)	60,905
Total securities held-to-maturity	$	467,680	$	6,455	$	(232	)	$	473,903

(1) Securities held-to-maturity are presented in the consolidated balance sheets at amortized cost.

17

Note 4. Securities (Continued)

Proceeds from sales of securities available-for-sale were $5.2 million and $6.1 million for the three months ended March 31, 2012 and 2011, respectively. There were no sales of securities held-to-maturity during the three months ended March 31, 2012. The following table provides the gross realized gains and losses on the sales and calls of securities:

	For the three months ended
	March 31,
(in thousands)	2012			2011
Gross realized gains	$	496		$	160
Gross realized losses	(47		)	(30		)
Net realized gains	$	449		$	130

Interest income on securities (including trading securities) for the three months ended March 31, 2012 and 2011 is comprised of: (i) taxable interest income of $41.5 million and $34.3 million, respectively (ii) nontaxable interest income of $3.8 million and $2.9 million, respectively, and (iii) dividend income of $0.1 million and $0.2 million, respectively.

The following table provides the expected remaining maturities of debt securities included in the securities portfolio at March 31, 2012. The maturities of mortgage-backed securities are allocated according to the average life of expected cash flows. Average expected maturities will differ from contractual maturities because of the amortizing nature of the loan collateral and prepayment behavior of borrowers.

(in thousands)	One year or less		Over 1 year through 5 years		Over 5 years through 10 years		Over 10 years		Total
Securities available-for-sale:
U.S. Treasury	$	10,013	$	9,189	$	—	$	—	$	19,202
Federal agency - Debt	847,374		203,974		—		—		1,051,348
Federal agency - MBS	14		447,143		273,433		—		720,590
CMOs - Federal agency	181,389		4,040,298		178,631		—		4,400,318
CMOs - Non-agency	8,286		33,100		27,201		—		68,587
State and municipal	53,996		209,947		80,836		50,944		395,723
Other	3,383		136,042		42,367		—		181,792
Total debt securities available-for-sale	$	1,104,455	$	5,079,693	$	602,468	$	50,944	$	6,837,560
Amortized cost	$	1,099,279	$	4,965,611	$	583,091	$	50,848	$	6,698,829
Securities held-to-maturity:
Federal agency - Debt	$	10,950	$	33,669	$	—	$	59,649	$	104,268
Federal agency - MBS	—		—		173,380		—		173,380
CMOs - Federal agency	—		45,373		545,558		—		590,931
State and municipal	—		8,259		79,468		40,307		128,034
Total debt securities held-to-maturity at amortized cost	$	10,950	$	87,301	$	798,406	$	99,956	$	996,613

Impairment Assessment

The Company performs a quarterly assessment of the debt and equity securities in its investment portfolio that have an unrealized loss to determine whether the decline in the fair value of these securities below their cost is other-than-temporary. Impairment is considered other-than-temporary when it becomes probable that an investor will be unable to recover the cost of an investment. The Company’s impairment assessment takes into consideration factors such as the length of time and the extent to which the market value has been less than cost; the financial condition and near-term prospects of the issuer, including events

18

Note 4. Securities (Continued)

specific to the issuer or industry; defaults or deferrals of scheduled interest, principal or dividend payments; external credit ratings and recent downgrades; and whether the Company intends to sell the security and whether it is more likely than not it will be required to sell the security prior to recovery of its amortized cost basis. If a decline in fair value is judged to be other than temporary, the cost basis of the individual security is written down to fair value which then becomes the new cost basis. The new cost basis is not adjusted for subsequent recoveries in fair value.

When there are credit losses associated with an impaired debt security and the Company does not have the intent to sell the security and it is more likely than not that it will not have to sell the security before recovery of its cost basis, the Company will separate the amount of the impairment into the amount that is credit-related and the amount related to non-credit factors. The credit-related impairment is recognized in Net impairment loss recognized in earnings in the consolidated statements of income. The non-credit-related impairment is recognized in AOCI.

Securities Deemed to be Other-Than-Temporarily Impaired

The Company determined through its impairment assessment process that none of the securities held had a credit loss impairment at March 31, 2012. Accordingly, there were no impairment losses recognized in earnings on securities available-for-sale for the three months ended March 31, 2012. The Company recognized an impairment loss of $0.2 million in earnings related to non-agency CMOs for the three months ended March 31, 2011. The Company recognized $2.4 million and $4.3 million of non-credit-related other-than-temporary impairment in AOCI on securities available-for-sale at March 31, 2012 and 2011, respectively. There were no impairment losses recognized in earnings or AOCI for securities held-to-maturity during the three months ended March 31, 2012.

The following table summarizes the changes in cumulative credit-related other-than-temporary impairment recognized in earnings for debt securities for the three months ended March 31, 2012 and 2011. Credit-related other-than-temporary impairment that was recognized in earnings is reflected as an “Initial credit-related impairment” if the period reported is the first time the security had a credit impairment. A credit-related other-than-temporary impairment is reflected as a “Subsequent credit-related impairment” if the period reported is not the first time the security had a credit impairment. Cumulative impairment is reduced for securities with previously recognized credit-related impairment that were sold during the period. Cumulative impairment is further reduced for increases in expected cash flows.

	For the three months ended
	March 31,
(in thousands)	2012			2011
Balance, beginning of period	$	17,531		$	17,923
Subsequent credit-related impairment	—			164
Net increase in expected cash flows on securities for which OTTI was previously recognized	(162		)	(537		)
Balance, end of period	$	17,369		$	17,550

Non-Agency CMOs

The Company held $44.7 million of variable rate non-agency CMOs at March 31, 2012. These CMOs have a fixed interest rate for an initial period after which they become variable-rate instruments with annual rate resets. The variable rate non-agency securities held include $10.8 million of securities that had non-credit-related impairment recognized in AOCI. There were no credit-related impairment losses recognized in earnings in the first quarter of 2012. The non-credit portion of other-than-temporary impairment for these securities at March 31, 2012 was recognized in AOCI, and is attributed to external market conditions, primarily the lack of liquidity in these securities, and increases in interest rates. The Company recognized credit-related impairment losses in earnings on its investments in certain variable rate non-agency CMOs totaling $0.2 million in the first quarter of 2011. The Company also holds $23.9 million in fixed rate non-agency CMOs at March 31, 2012, none of which have experienced any other-than-temporary impairment.

19

Note 4. Securities (Continued)

The following table provides a summary of the gross unrealized losses and fair value of investment securities that are not deemed to be other-than-temporarily impaired aggregated by investment category and length of time that the securities have been in a continuous unrealized loss position as of March 31, 2012 and December 31, 2011. The table also includes investment securities that had both a credit-related impairment recognized in earnings and a non-credit-related impairment recognized in AOCI.

	Less than 12 months				12 months or greater				Total
(in thousands)	Fair Value		Estimated Unrealized Loss		Fair Value		Estimated Unrealized Loss		Fair Value		Estimated Unrealized Loss
March 31, 2012
Securities available-for-sale:
U.S. Treasury	$	9,189	$	23	$	—	$	—	$	9,189	$	23
Federal agency - Debt	45,807		35		—		—		45,807		35
Federal agency - MBS	44,771		173		—		—		44,771		173
CMOs - Federal agency	368,373		1,328		—		—		368,373		1,328
CMOs - Non-agency	9,795		16		34,099		6,943		43,894		6,959
State and municipal	4,795		64		2,010		133		6,805		197
Other debt securities	29,225		199		15,626		7,394		44,851		7,593
Total securities available-for-sale	$	511,955	$	1,838	$	51,735	$	14,470	$	563,690	$	16,308
Securities held-to-maturity:
Federal agency - Debt	$	9,935	$	66	$	—	$	—	$	9,935	$	66
Federal agency - MBS	76,985		427		—		—		76,985		427
CMOs - Federal agency	358,386		3,918		—		—		358,386		3,918
State and municipal	66,525		1,862		—		—		66,525		1,862
Total securities held-to-maturity	$	511,831	$	6,273	$	—	$	—	$	511,831	$	6,273
December 31, 2011
Securities available-for-sale:
U.S. Treasury	$	4,145	$	5	$	—	$	—	$	4,145	$	5
Federal agency - Debt	409,129		296		—		—		409,129		296
Federal agency - MBS	24,519		87		—		—		24,519		87
CMOs - Federal agency	744,737		2,224		—		—		744,737		2,224
CMOs - Non-agency	20,094		833		31,400		10,487		51,494		11,320
State and municipal	42,164		268		2,023		105		44,187		373
Other debt securities	34,153		508		14,718		8,365		48,871		8,873
Total securities available-for-sale	$	1,278,941	$	4,221	$	48,141	$	18,957	$	1,327,082	$	23,178
Securities held-to-maturity:
CMOs - Federal agency	$	32,256	$	195	$	—	$	—	$	32,256	$	195
State and municipal	5,784		37		—		—		5,784		37
Total securities held-to-maturity	$	38,040	$	232	$	—	$	—	$	38,040	$	232

At March 31, 2012, the Company had $563.7 million of securities available-for-sale in an unrealized loss position, consisting of $552.9 million of temporarily impaired securities and $10.8 million of securities that had non-credit-related impairment recognized in AOCI. The Company had $511.8 million of securities held-to-maturity in an unrealized loss position. At March 31, 2012, the Company had 175 debt securities available-for-sale and held-to-maturity in an unrealized loss position. The debt securities in an unrealized loss position include 3 U.S. Treasury securities, 3 federal agency debt securities, 10 federal agency MBS, 36 federal agency CMOs, 10 non-agency CMOs, 109 state and municipal securities and 4 other debt securities.

20

Note 4. Securities (Continued)

The unrealized loss on non-agency CMOs reflects the lack of liquidity in this sector of the market. The Company only holds the most senior tranches of each non-agency issue which provides protection against defaults. The Company expects to receive principal and interest payments equivalent to or greater than the current cost basis of its portfolio of debt securities. Additionally, the Company does not intend to sell the securities, and it is not more likely than not that it will be required to sell the securities before it recovers the cost basis of its investment. The mortgages in these asset pools are relatively large and have been made to borrowers with strong credit history and significant equity invested in their homes. They are well diversified geographically. Over the past year, the real estate market has stabilized somewhat, though performance varies substantially by geography and borrower. Though reduced, a significant weakening of economic fundamentals coupled with a return to elevated unemployment rates and substantial deterioration in the value of high-end residential properties could increase the probability of default and related credit losses. These conditions could cause the value of these securities to decline and trigger the recognition of further other-than-temporary impairment charges.

Other debt securities include the Company’s investments in highly rated corporate debt and collateralized bond obligations backed by trust preferred securities (“CDOs”) issued by a geographically diverse pool of small- and medium-sized financial institutions. The CDOs held in securities available-for-sale at March 31, 2012 are the most senior tranches of each issue. Trading activity for the type of CDO held by the Company has been limited since 2008. Accordingly, the fair values of these securities were determined using an internal pricing model that incorporates assumptions about discount rates in an illiquid market, projected cash flows and collateral performance. The CDOs had a $7.3 million net unrealized loss at March 31, 2012, which the Company attributes to the illiquid credit markets. The CDOs have collateral that well exceeds the outstanding debt. Security valuations reflect the current and prospective performance of the issuers whose debt is contained in these asset pools. The Company expects to receive all contractual principal and interest payments due on its CDOs. Additionally, the Company does not intend to sell the securities, and it is not more likely than not that it will be required to sell the securities before it recovers the cost basis of its investment.

At December 31, 2011, the Company had $1.33 billion of securities available-for-sale in an unrealized loss position consisting of $1.32 billion of temporarily impaired securities and $9.2 million of securities that had non-credit-related impairment recognized in AOCI. The Company had $38.0 million of securities held-to-maturity in an unrealized loss position. At December 31, 2011, the Company had 90 debt securities available-for-sale and held-to-maturity in an unrealized loss position. The debt securities in an unrealized loss position included 2 U.S. Treasury securities, 12 federal agency debt securities, 3 federal agency MBS, 36 federal agency CMOs, 12 non-agency CMOs, 19 state and municipal securities and 6 other debt securities.

Note 5. Other Investments

Federal Home Loan Bank of San Francisco and Federal Reserve Bank Stock

The Company’s investment in stock issued by the Federal Home Loan Bank of San Francisco (“FHLB”) and Federal Reserve Bank (“FRB”) totaled $103.8 million and $107.4 million at March 31, 2012 and December 31, 2011, respectively. Ownership of government agency securities is restricted to member banks, and the securities do not have readily determinable market values. The Company records investments in FHLB and FRB stock at cost in Other assets of the consolidated balance sheets and evaluates these investments for impairment. The Company expects to recover the full amount invested in FHLB and FRB stock and does not consider its investments to be impaired at March 31, 2012.

21

Note 5. Other Investments (Continued)

Private Equity and Alternative Investments

The Company has ownership interests in a limited number of private equity, venture capital, real estate and hedge funds that are not publicly traded and do not have readily determinable fair values. These investments are carried at cost in the Other assets section of the consolidated balance sheets and are net of impairment write-downs, if applicable. The Company’s investments in these funds totaled $40.1 million at March 31, 2012 and $39.9 million at December 31, 2011. A summary of investments by fund type is provided below:

(in thousands)	March 31,		December 31,
Fund Type	2012		2011
Private equity and venture capital	$	23,271	$	23,093
Real estate	10,551		10,541
Hedge	2,883		2,883
Other	3,378		3,402
Total	$	40,083	$	39,919

Management reviews these investments quarterly for impairment. The impairment assessment includes a review of the most recent financial statements and investment reports for each fund and discussions with fund management. An impairment loss is recognized if it is deemed probable that the Company will not recover the cost of an investment. The impairment loss is recognized in Other noninterest income in the consolidated statements of income. The new cost basis of the investment is not adjusted for subsequent recoveries in value. The Company recognized impairment losses totaling $0.1 million on its investments during the three months ended March 31, 2012. No impairment losses were recognized on these investments during the three months ended March 31, 2011.

The table below provides information as of March 31, 2012 on private equity and alternative investments measured at fair value on a nonrecurring basis due to the recognition of impairment:

Alternative Investments Measured at Fair Value on a Nonrecurring Basis

(in thousands) Fund Type	Fair Value		Unfunded Commitments		Redemption Frequency	Redemption Notice Period
Private equity and venture capital (2)	$	258	$	—	None (1)	N/A

(1)	Funds make periodic distributions of income but do not permit redemptions prior to the end of the investment term.
(2)	Funds invest in securities and other instruments of public and private companies, including corporations, partnerships, limited liability companies and joint ventures.

22

Note 6. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments

The following is a summary of the major categories of loans:

Loans and Leases
	March 31,			December 31,
(in thousands)	2012			2011
Commercial	$	5,175,396		$	4,846,594
Commercial real estate mortgages	2,213,114			2,110,749
Residential mortgages	3,805,807			3,763,218
Real estate construction	313,409			315,609
Equity lines of credit	715,997			741,081
Installment	125,793			132,647
Lease financing	398,386			399,487
Loans and leases, excluding covered loans	12,747,902			12,309,385
Less: Allowance for loan and lease losses	(266,077		)	(262,557		)
Loans and leases, excluding covered loans, net	12,481,825			12,046,828
Covered loans	1,397,156			1,481,854
Less: Allowance for loan losses	(61,471		)	(64,565		)
Covered loans, net	1,335,685			1,417,289
Total loans and leases	$	14,145,058		$	13,791,239
Total loans and leases, net	$	13,817,510		$	13,464,117

The loan amounts above include unamortized fees, net of deferred costs, of $8.2 million and $7.5 million as of March 31, 2012 and December 31, 2011, respectively.

Concentrations of credit risk arise when a number of clients are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions. The Company’s lending activities are predominantly in California, and to a lesser extent, New York and Nevada. Excluding covered loans, at March 31, 2012, California represented 82 percent of total loans outstanding and Nevada and New York represented 3 percent and 6 percent, respectively. The remaining 9 percent of total loans outstanding represented other states. Although the Company has a diversified loan portfolio, a substantial portion of the loan portfolio and credit performance depends on the economic stability of Southern California. Credit performance also depends, to a lesser extent, on economic conditions in the San Francisco Bay area, New York and Nevada. Within the Company’s covered loan portfolio at March 31, 2012, the five states with the largest concentration were California (39 percent), Texas (11 percent), Nevada (7 percent), New York (5 percent) and Arizona (4 percent). The remaining 34 percent of total covered loans outstanding represented other states.

Covered Loans

Covered loans represent loans acquired from the FDIC that are subject to loss-sharing agreements. Covered loans were $1.40 billion as of March 31, 2012 and $1.48 billion as of December 31, 2011. Covered loans, net of allowance for loan losses, were $1.34 billion at March 31, 2012 and $1.42 billion at December 31, 2011.

23

Note 6. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Continued)

The following is a summary of the major categories of covered loans:

	March 31,			December 31,
(in thousands)	2012			2011
Commercial	$	22,395		$	30,911
Commercial real estate mortgages	1,219,923			1,288,352
Residential mortgages	13,378			14,931
Real estate construction	135,065			140,992
Equity lines of credit	5,210			5,167
Installment	1,185			1,501
Covered loans	1,397,156			1,481,854
Less: Allowance for loan losses	(61,471		)	(64,565		)
Covered loans, net	$	1,335,685		$	1,417,289

The Company evaluated the acquired loans from its FDIC-assisted acquisitions and concluded that all loans, with the exception of a small population of acquired loans, would be accounted for under ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (“ASC 310-30”). Loans are accounted for under ASC 310-30 when there is evidence of credit deterioration since origination and for which it is probable, at acquisition, that the Company would be unable to collect all contractually required payments. Interest income is recognized on all acquired impaired loans through accretion of the difference between the carrying amount of the loans and their expected cash flows.

As of NCB’s acquisition date in 2011, the estimates of the contractually required payments receivable for all acquired impaired covered loans of NCB were $107.4 million, the cash flows expected to be collected were $66.2 million, and the fair value of the acquired impaired loans was $55.3 million. The above amounts were determined based on the estimated performance over the remaining life of the underlying loans, which included the effects of estimated prepayments. Fair value of the acquired loans included estimated credit losses.

Changes in the accretable yield for acquired impaired loans were as follows for the three months ended March 31, 2012 and 2011:

	For the three months ended March 31,
(in thousands)	2012			2011
Balance, beginning of period	$	436,374		$	562,826
Accretion	(22,225		)	(27,572		)
Reclassifications to nonaccretable yield	(21,468		)	(2,448		)
Disposals and other	(16,213		)	(11,248		)
Balance, end of period	$	376,468		$	521,558

At acquisition date, the Company recorded an indemnification asset for its FDIC-assisted acquisitions. The FDIC indemnification asset represents the present value of the expected reimbursement from the FDIC related to expected losses on acquired loans, OREO and unfunded commitments. The FDIC indemnification asset from all FDIC-assisted acquisitions was $185.4 million at March 31, 2012 and $204.3 million at December 31, 2011.

24

Note 6. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Continued)

Credit Quality on Loans and Leases, Excluding Covered Loans

Allowance for Loan and Lease Losses and Reserve for Off-Balance Sheet Credit Commitments

The Company accounts for the credit risk associated with lending activities through its allowance for loan and lease losses, reserve for off-balance sheet credit commitments and provision for credit losses. The provision is the expense recognized in the consolidated statements of income to adjust the allowance and reserve to the levels deemed appropriate by management, as determined through application of the Company’s allowance methodology procedures. The provision for credit losses reflects management’s judgment of the adequacy of the allowance for loan and lease losses and the reserve for off-balance sheet credit commitments. It is determined through quarterly analytical reviews of the loan and commitment portfolios and consideration of such other factors as the Company’s loan and lease loss experience, trends in problem loans, concentrations of credit risk, underlying collateral values, and current economic conditions, as well as the results of the Company’s ongoing credit review process. As conditions change, the Company’s level of provisioning and the allowance for loan and lease losses and reserve for off-balance sheet credit commitments may change.

For commercial, non-homogenous loans that are not impaired, the Bank derives loss factors via a process that begins with estimates of probable losses inherent in the portfolio based upon various statistical analyses. The factors considered in the analysis include loan type, migration analysis, in which historical delinquency and credit loss experience is applied to the current aging of the portfolio, as well as analyses that reflect current trends and conditions. Each portfolio of smaller balance homogeneous loans, including residential first mortgages, installment, revolving credit and most other consumer loans, is collectively evaluated for loss potential. Management also establishes a qualitative reserve that considers overall portfolio indicators, including current and historical credit losses; delinquent, nonperforming and criticized loans; portfolio concentrations, trends in volumes and terms of loans; and economic trends in the broad market and in specific industries.

The allowance for loan and lease losses attributed to impaired loans considers all available evidence, including as appropriate, the probability that a specific loan will default, the expected exposure of a loan at default, an estimate of loss given default, the present value of expected future cash flows discounted using the loan’s contractual effective rate, the secondary market value of the loan and the fair value of collateral.

The quantitative portion of the allowance for loan and lease losses is adjusted for qualitative factors to account for model imprecision and to incorporate the range of probable outcomes inherent in the estimates used for the allowance. The qualitative portion of the allowance attempts to incorporate the risks inherent in the portfolio, economic uncertainties, competition, regulatory requirements and other subjective factors including industry trends, changes in underwriting standards, and existence of concentrations.

The relative significance of risk considerations vary by portfolio segment. For commercial loans, the primary risk consideration is a borrower’s ability to generate sufficient cash flows to repay their loan. Secondary considerations include the creditworthiness of guarantors and the valuation of collateral. In addition to the creditworthiness of a borrower, the type and location of real estate collateral is an important risk factor for commercial real estate and real estate construction loans. The primary risk considerations for consumer loans are a borrower’s personal cash flow and liquidity, as well as collateral value.

Generally, commercial, commercial real estate and real estate construction loans are charged off immediately when it is determined that advances to the borrower are in excess of the calculated current fair value of the collateral or if a borrower is deemed incapable of repayment of unsecured debt, there is little or no prospect for near term improvement and no realistic strengthening action of significance pending. Consumer loans are charged-off based on delinquency, ranging from 60 days for overdrafts to 180 days for secured consumer loans, or earlier when it is determined that the loan is uncollectible due to a triggering event, such as bankruptcy, fraud or death.

25

Note 6. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Continued)

The following tables provide a summary of activity in the allowance for loan and lease losses and the period-end recorded investment balances of loans evaluated for impairment, excluding covered loans, for the three months ended March 31, 2012 and 2011. Activity is provided by loan type which is consistent with the Company’s methodology for determining the allowance for loan and lease losses.

(in thousands)	Commercial (1)			Commercial Real Estate Mortgages			Residential Mortgages			Real Estate Construction			Equity Lines of Credit			Installment			Unallocated		Total
Three months ended March 31, 2012
Allowance for loan and lease losses:
Beginning balance	$	82,965		$	45,967		$	14,029		$	23,347		$	8,024		$	1,959		$	86,266	$	262,557
Provision for credit losses (2)	(4,161		)	1,285			268			(1,355		)	162			(438		)	3,269		(970		)
Charge-offs	(8,917		)	(692		)	(554		)	(1,601		)	(189		)	(209		)	—		(12,162		)
Recoveries	14,200			26			60			1,705			35			626			—		16,652
Net (charge-offs) recoveries	5,283			(666		)	(494		)	104			(154		)	417			—		4,490
Ending balance	$	84,087		$	46,586		$	13,803		$	22,096		$	8,032		$	1,938		$	89,535	$	266,077
Ending balance of allowance:
Individually evaluated for impairment	$	3,335		$	1,019		$	331		$	9,395		$	38		$	—		$	—	$	14,118
Collectively evaluated for impairment	80,752			45,567			13,472			12,701			7,994			1,938			89,535		251,959
Loans and leases, excluding covered loans
Ending balance of loans and leases:
Loans and leases, excluding covered loans	$	5,573,782		$	2,213,114		$	3,805,807		$	313,409		$	715,997		$	125,793		$	—	$	12,747,902
Individually evaluated for impairment	40,415			22,306			13,000			67,686			6,980			550			—		150,937
Collectively evaluated for impairment	5,533,367			2,190,808			3,792,807			245,723			709,017			125,243			—		12,596,965
Three months ended March 31, 2011
Allowance for loan and lease losses:
Beginning balance	$	82,451		$	52,516		$	16,753		$	40,824		$	7,229		$	3,931		$	53,303	$	257,007
Provision for credit losses (2)	(4,853		)	(11,209		)	(2,611		)	(7,957		)	(27		)	1,716			24,763		(178		)
Charge-offs	(3,238		)	(2,799		)	(647		)	(566		)	(793		)	(324		)	—		(8,367		)
Recoveries	1,301			9,011			32			4,392			36			122			—		14,894
Net (charge-offs) recoveries	(1,937		)	6,212			(615		)	3,826			(757		)	(202		)	—		6,527
Ending balance	$	75,661		$	47,519		$	13,527		$	36,693		$	6,445		$	5,445		$	78,066	$	263,356
Ending balance of allowance:
Individually evaluated for impairment	$	2,291		$	1,060		$	384		$	334		$	72		$	4,514		$	—	$	8,655
Collectively evaluated for impairment	73,370			46,459			13,143			36,359			6,373			931			78,066		254,701
Loans and leases, excluding covered loans
Ending balance of loans and leases:
Loans and leases, excluding covered loans	$	4,468,177		$	1,902,862		$	3,603,058		$	415,241		$	733,567		$	146,779		$	—	$	11,269,684
Individually evaluated for impairment	14,431			25,790			12,476			81,604			4,249			6,938			—		145,488
Collectively evaluated for impairment	4,453,746			1,877,072			3,590,582			333,637			729,318			139,841			—		11,124,196

(1)

Includes lease financing loans.

(2)

Provision for credit losses in the allowance rollforward for the three months ended March 31, 2012 includes total transfers from the reserve for off-balance sheet credit commitments of $1.0 million. Provision for credit losses for the three months ended March 31, 2011 includes total transfers to the reserve for off-balance sheet credit commitments of $0.2 million. There was no other provision for credit losses recognized for the three months ended March 31, 2012 and 2011.

26

Note 6. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Continued)

Off-balance sheet credit exposures include loan commitments and letters of credit. The following table provides a summary of activity in the reserve for off-balance sheet credit commitments for the three months ended March 31, 2012 and 2011:

	For the three months ended March 31,
(in thousands)	2012		2011
Balance, beginning of period	$	23,097	$	21,529
Transfers from allowance for loan and lease losses	970		178
Balance, end of period	$	24,067	21,707

27

Note 6. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Continued)

Impaired Loans and Leases

Information on impaired loans, excluding covered loans, at March 31, 2012, December 31, 2011 and March 31, 2011 is provided in the following tables:

			Unpaid				For the three months ended March 31, 2012
(in thousands)	Recorded Investment		Contractual Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
March 31, 2012
With no related allowance recorded:
Commercial	$	27,822	$	36,069	$	—	$	18,988	$	—
Commercial real estate mortgages	14,008		19,022		—		16,938		69
Residential mortgages:
Fixed	2,666		3,194		—		3,080		—
Variable	6,567		7,240		—		5,128		—
Total residential mortgages	9,233		10,434		—		8,208		—
Real estate construction:
Construction	21,045		34,381		—		24,240		116
Land	24,090		27,340		—		26,541		—
Total real estate construction	45,135		61,721		—		50,781		116
Equity lines of credit	6,035		7,185		—		5,688		—
Installment:
Consumer	550		927		—		604		—
Total installment	550		927		—		604		—
Lease financing	—		—		—		14		—
Total with no related allowance	$	102,783	$	135,358	$	—	$	101,221	$	185
With an allowance recorded:
Commercial	$	12,593	$	17,643	$	3,335	$	14,110	$	—
Commercial real estate mortgages	8,298		8,715		1,019		9,555		—
Residential mortgages:
Fixed	2,341		2,367		287		1,428		—
Variable	1,426		1,476		44		1,438		—
Total residential mortgages	3,767		3,843		331		2,866		—
Real estate construction:
Land	22,551		34,312		9,395		20,968		—
Total real estate construction	22,551		34,312		9,395		20,968		—
Equity lines of credit	945		985		38		1,119		—
Total with an allowance	$	48,154	$	65,498	$	14,118	$	48,618	$	—
Total impaired loans by type:
Commercial	$	40,415	$	53,712	$	3,335	$	33,098	$	—
Commercial real estate mortgages	22,306		27,737		1,019		26,493		69
Residential mortgages	13,000		14,277		331		11,074		—
Real estate construction	67,686		96,033		9,395		71,749		116
Equity lines of credit	6,980		8,170		38		6,807		—
Installment	550		927		—		604		—
Lease financing	—		—		—		14		—
Total impaired loans	$	150,937	$	200,856	$	14,118	$	149,839	$	185

28

Note 6. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Continued)

			Unpaid
			Contractual
	Recorded		Principal		Related
(in thousands)	Investment		Balance (1)		Allowance
December 31, 2011
With no related allowance recorded:
Commercial	$	10,153	$	11,588	$	—
Commercial real estate mortgages	19,867		23,983		—
Residential mortgages:
Fixed	3,493		4,035		—
Variable	3,689		4,000		—
Total residential mortgages	7,182		8,035		—
Real estate construction:
Construction	27,435		40,605		—
Land	28,991		32,335		—
Total real estate construction	56,426		72,940		—
Equity lines of credit	5,341		6,325		—
Installment:
Consumer	658		976		—
Total installment	658		976		—
Lease financing	28		5,225		—
Total with no related allowance	$	99,655	$	129,072	$	—
With an allowance recorded:
Commercial	$	15,627	$	21,377	$	7,135
Commercial real estate mortgages	10,811		11,215		1,551
Residential mortgages:
Fixed	515		535		40
Variable	1,449		1,476		68
Total residential mortgages	1,964		2,011		108
Real estate construction:
Land	19,385		29,381		4,377
Total real estate construction	19,385		29,381		4,377
Equity lines of credit	1,292		1,461		91
Total with an allowance	$	49,079	$	65,445	$	13,262
Total impaired loans by type:
Commercial	$	25,780	$	32,965	$	7,135
Commercial real estate mortgages	30,678		35,198		1,551
Residential mortgages	9,146		10,046		108
Real estate construction	75,811		102,321		4,377
Equity lines of credit	6,633		7,786		91
Installment	658		976		—
Lease financing	28		5,225		—
Total impaired loans	$	148,734	$	194,517	$	13,262

(1)   The table has been revised to present unpaid contractual principal balances, whereas the Company had previously disclosed unpaid contractual principal balances that were net of charge-offs.

29

Note 6. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Continued)

			Unpaid				For the three months ended March 31, 2011
(in thousands)	Recorded Investment		Contractual Principal Balance (1)		Related Allowance		Average Recorded Investment		Interest Income Recognized
March 31, 2011
With no related allowance recorded:
Commercial	$	6,400	$	15,721	$	—	$	6,848	$	—
Commercial real estate mortgages	18,491		24,047		—		20,994		130
Residential mortgages:
Fixed	6,238		7,324		—		8,590		145
Variable	3,271		3,280		—		3,659		10
Total residential mortgages	9,509		10,604		—		12,249		155
Real estate construction:
Construction	49,258		83,788		—		62,518		230
Land	23,528		24,296		—		23,630		—
Total real estate construction	72,786		108,084		—		86,148		230
Equity lines of credit	3,292		3,830		—		3,149		—
Installment:
Commercial	—		—		—		569		—
Consumer	41		41		—		41		—
Total installment	41		41		—		610		—
Lease financing	1,108		6,243		—		554		99
Total with no related allowance	$	111,627	$	168,570	$	—	$	130,552	$	614
With an allowance recorded:
Commercial	$	6,923	$	16,314	$	2,291	$	7,745	$	—
Commercial real estate mortgages	7,299		8,386		1,060		13,219		—
Residential mortgages:
Fixed	1,553		1,549		103		1,060		—
Variable	1,414		1,508		281		1,424		—
Total residential mortgages	2,967		3,057		384		2,484		—
Real estate construction:
Construction	8,818		8,991		334		8,834		—
Total real estate construction	8,818		8,991		334		8,834		—
Equity lines of credit	957		963		72		1,412		3
Installment:
Commercial	6,897		7,417		4,514		3,448		—
Total installment	6,897		7,417		4,514		3,448		—
Total with an allowance	$	33,861	$	45,128	$	8,655	$	37,142	$	3
Total impaired loans by type:
Commercial	$	13,323	$	32,035	$	2,291	$	14,593	$	—
Commercial real estate mortgages	25,790		32,433		1,060		34,213		130
Residential mortgages	12,476		13,661		384		14,733		155
Real estate construction	81,604		117,075		334		94,982		230
Equity lines of credit	4,249		4,793		72		4,561		3
Installment	6,938		7,458		4,514		4,058		—
Lease financing	1,108		6,243		—		554		99
Total impaired loans	$	145,488	$	213,698	$	8,655	$	167,694	$	617

(1)   The table has been revised to present unpaid contractual principal balances, whereas the Company had previously disclosed unpaid contractual principal balances that were net of charge-offs.

30

Note 6. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Continued)

Additional detail on the components of impaired loans, excluding covered loans, is provided below:

(in thousands)	March 31, 2012		December 31, 2011
Nonaccrual loans (1)	$	104,441	$	101,873
Troubled debt restructured loans on accrual	46,111		46,647
Deferred fees, accrued interest, and premiums and discounts, net	385		214
Total recorded investment in impaired loans, excluding covered loans	$	150,937	$	148,734

(1) Impaired loans exclude $8.4 million and $10.2 million of nonaccrual loans under $500,000 that are not individually evaluated for impairment at March 31, 2011 and December 31, 2011, respectively.

Impaired loans at March 31, 2012 and December 31, 2011 included $46.1 million and $46.6 million, respectively, of restructured loans that are on accrual status. With the exception of restructured loans on accrual status and a limited number of loans on cash basis nonaccrual for which the full collection of principal and interest is expected, interest income is not recognized on impaired loans until the principal balance of these loans is paid off.

Troubled Debt Restructured Loans

The following table provides a summary of loans modified in a troubled debt restructuring during the three months ended March 31, 2012:

	For the three months ended March 31, 2012
(in thousands)	Number of Contracts	Pre-Modification Outstanding Principal		Period-End Outstanding Principal		Financial Effects (1)
Commercial	5	$	16,982	$	16,903	$	—
Residential mortgages:
Fixed	1	655		655		—
Real estate construction:
Construction	1	5,532		5,532		—
Total troubled debt restructured loans	7	$	23,169	$	23,090	$	—

(1) Financial effects are comprised of charge-offs and specific reserves recognized on TDR loans at modification date.

The following table provides a summary of troubled debt restructured (“TDR”) loans that subsequently defaulted during the three months ended March 31, 2012, that had been modified as a troubled debt restructuring during the 12 months prior to their default:

(in thousands)	Number of Contracts	Period-End Outstanding Principal		Period-End Specific Reserve
Commercial	1	$	26	$	10
Real estate construction:
Land	2	6,339		3,318
Total TDR loans that subsequently defaulted	3	$	6,365	$	3,328

31

Note 6. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Continued)

A restructuring constitutes a troubled debt restructuring when a lender, for reasons related to a borrower’s financial difficulties, grants a concession to the borrower it would not otherwise consider. Loans with pre-modification outstanding balances totaling $23.2 million were modified in troubled debt restructurings during the three months ended March 31, 2012. The concessions granted in the restructurings completed in 2012 largely consisted of interest rate concessions on commercial and construction loans. The unpaid principal balance of TDR loans was $88.1 million, before specific reserves of $4.5 million, at March 31, 2012 and $89.4 million, before specific reserves of $1.7 million, at December 31, 2011. Loans modified in troubled debt restructurings are impaired loans at the time of restructuring and subject to the same measurement criteria as all other impaired loans.

During the three months ended March 31, 2012, two land loans and one commercial loan that had been restructured within the preceding 12 months were not performing in accordance with their new terms. One land loan comprises the majority of the $6.4 million balance of restructured loans that subsequently defaulted. This loan went into technical default when the borrower failed to sell the collateral by the date specified in the restructuring agreement. All other TDR loans were performing in accordance with their restructured terms at March 31, 2012. As of March 31, 2012, there were no commitments to lend additional funds on restructured loans.

Past Due and Nonaccrual Loans and Leases

Loans are considered past due following the date when either interest or principal is contractually due and unpaid. The following tables provide a summary of past due and nonaccrual loans, excluding covered loans, at March 31, 2012 and December 31, 2011 based upon the length of time the loans have been past due:

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days and Accruing		Nonaccrual		Total Past Due and Nonaccrual Loans		Current		Total Loans and Leases
March 31, 2012
Commercial	$	10,267	$	980	$	7	$	19,584	$	30,838	$	5,144,558	$	5,175,396
Commercial real estate mortgages	3,953		—		—		21,071		25,024		2,188,090		2,213,114
Residential mortgages:
Fixed	525		—		379		5,657		6,561		1,531,537		1,538,098
Variable	—		1,519		—		7,971		9,490		2,258,219		2,267,709
Total residential mortgages	525		1,519		379		13,628		16,051		3,789,756		3,805,807
Real estate construction:
Construction	—		—		—		15,453		15,453		206,184		221,637
Land	16,288		—		—		33,511		49,799		41,973		91,772
Total real estate construction	16,288		—		—		48,964		65,252		248,157		313,409
Equity lines of credit	248		74		268		8,831		9,421		706,576		715,997
Installment:
Commercial	—		—		—		—		—		489		489
Consumer	137		400		—		729		1,266		124,038		125,304
Total installment	137		400		—		729		1,266		124,527		125,793
Lease financing	—		—		—		—		—		398,386		398,386
Total	$	31,418	$	2,973	$	654	$	112,807	$	147,852	$	12,600,050	$	12,747,902

32

Note 6. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Continued)

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days and Accruing		Nonaccrual		Total Past Due and Nonaccrual Loans		Current		Total Loans and Leases
December 31, 2011
Commercial	$	6,817	$	1,003	$	—	$	19,888	$	27,708	$	4,818,886	$	4,846,594
Commercial real estate mortgages	5,838		—		—		21,948		27,786		2,082,963		2,110,749
Residential mortgages:
Fixed	662		525		379		5,572		7,138		1,574,658		1,581,796
Variable	—		2,983		—		4,199		7,182		2,174,240		2,181,422
Total residential mortgages	662		3,508		379		9,771		14,320		3,748,898		3,763,218
Real estate construction:
Construction	—		—		—		15,582		15,582		202,279		217,861
Land	—		—		—		35,294		35,294		62,454		97,748
Total real estate construction	—		—		—		50,876		50,876		264,733		315,609
Equity lines of credit	—		—		74		8,669		8,743		732,338		741,081
Installment:
Commercial	—		—		—		4		4		601		605
Consumer	150		—		—		870		1,020		131,022		132,042
Total installment	150		—		—		874		1,024		131,623		132,647
Lease financing	—		—		—		—		—		399,487		399,487
Total	$	13,467	$	4,511	$	453	$	112,026	$	130,457	$	12,178,928	$		12,309,385

Credit Quality Monitoring

The Company closely monitors and assesses credit quality and credit risk in the loan and lease portfolio on an ongoing basis. Loan risk classifications are continuously reviewed and updated. The following tables provide a summary of the loan and lease portfolio, excluding covered loans, by loan type and credit quality classification as of March 31, 2012 and December 31, 2011. Nonclassified loans generally include those loans that are expected to be repaid in accordance with contractual loan terms. Classified loans are those loans that are classified as substandard or doubtful consistent with regulatory guidelines.

	March 31, 2012						December 31, 2011
(in thousands)	Nonclassified		Classified		Total		Nonclassified		Classified		Total
Commercial	$	5,068,902	$	106,494	$	5,175,396	$	4,732,663	$	113,931	$	4,846,594
Commercial real estate mortgages	2,080,452		132,662		2,213,114		1,930,001		180,748		2,110,749
Residential mortgages:
Fixed	1,526,029		12,069		1,538,098		1,565,420		16,376		1,581,796
Variable	2,257,505		10,204		2,267,709		2,163,458		17,964		2,181,422
Total residential mortgages	3,783,534		22,273		3,805,807		3,728,878		34,340		3,763,218
Real estate construction:
Construction	165,761		55,876		221,637		147,916		69,945		217,861
Land	39,579		52,193		91,772		43,717		54,031		97,748
Total real estate construction	205,340		108,069		313,409		191,633		123,976		315,609
Equity lines of credit	700,363		15,634		715,997		724,045		17,036		741,081
Installment:
Commercial	489		—		489		601		4		605
Consumer	124,094		1,210		125,304		130,921		1,121		132,042
Total installment	124,583		1,210		125,793		131,522		1,125		132,647
Lease financing	395,497		2,889		398,386		396,256		3,231		399,487
Total	$	12,358,671	$	389,231	$	12,747,902	$	11,834,998	$	474,387	$	12,309,385

33

Note 6. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Continued)

Credit Quality on Covered Loans

The following is a summary of activity in the allowance for loan losses on covered loans:

	For the three months ended March 31,
(in thousands)	2012			2011
Balance, beginning of period	$	64,565		$	67,389
Provision for losses	7,466			19,116
Reduction in allowance due to loan removals	(10,560		)	(4,489		)
Balance, end of period	$	61,471		$	82,016

The allowance for loan losses on covered loans was $61.5 million, $64.6 million and $82.0 million as of March 31, 2012, December 31, 2011 and March 31, 2011, respectively. The Company recorded provision expense of $7.5 million and $19.1 million on covered loans for the three months ended March 31, 2012 and 2011, respectively. The Company updates its cash flow projections for covered loans accounted for under ASC 310-30 on a quarterly basis, and may recognize provision expense and an allowance for loan losses as a result of that analysis. The loss on covered loans is the result of changes in expected cash flows, both amount and timing, due to loan payments and the Company’s revised loss forecasts, though overall estimated credit losses decreased as compared with previous expectations. The revisions of the loss forecasts were based on the results of management’s review of the credit quality of the outstanding covered loans and the analysis of the loan performance data since the acquisition of covered loans. The allowance for loan losses on covered loans is reduced for any loan removals. A loan is removed when it has been fully paid-off, fully charged off, sold or transferred to OREO.

Covered loans accounted for under ASC 310-30 are generally considered accruing and performing loans as the loans accrete interest income over the estimated life of the loan when cash flows are reasonably estimable. Accordingly, acquired impaired loans that are contractually past due are still considered to be accruing and performing loans. If the timing and amount of future cash flows is not reasonably estimable, the loans may be classified as nonaccrual loans and interest income is not recognized until the timing and amount of future cash flows can be reasonably estimated. At March 31, 2012 and December 31, 2011, there were no acquired impaired covered loans accounted for under ASC 310-30 that were on nonaccrual status. Of the population of covered loans that are accounted for outside the scope of ASC 310-30, the Company had $0.4 million of acquired covered loans that were on nonaccrual status and were considered to be impaired as of March 31, 2012 and December 31, 2011.

At March 31, 2012, covered loans that were 30 to 89 days delinquent totaled $59.4 million and covered loans that were 90 days or more past due on accrual status totaled $265.2 million. At December 31, 2011, covered loans that were 30 to 89 days delinquent totaled $49.1 million and covered loans that were 90 days or more past due on accrual status totaled $330.2 million.

Note 7. Other Real Estate Owned

The following table provides a summary of OREO activity for the three months ended March 31, 2012 and 2011:

	For the three months ended March 31, 2012									For the three months ended March 31, 2011
(in thousands)	Non-Covered OREO			Covered OREO			Total			Non-Covered OREO			Covered OREO			Total
Balance, beginning of period	$	30,790		$	98,550		$	129,340		$	57,317		$	120,866		$	178,183
Additions	2,217			6,075			8,292			6,562			27,577			34,139
Sales	(2,877		)	(18,362		)	(21,239		)	(6,064		)	(18,317		)	(24,381		)
Valuation adjustments	(1,056		)	(7,807		)	(8,863		)	(1,473		)	(8,304		)	(9,777		)
Balance, end of period	$	29,074		$	78,456		$	107,530		$	56,342		$	121,822		$	178,164

34

Note 7. Other Real Estate Owned (Continued)

At March 31, 2012, OREO was $107.5 million and included $78.5 million of covered OREO. At December 31, 2011, OREO was $129.3 million and included $98.6 million of covered OREO. The balance of OREO at March 31, 2012 and December 31, 2011 is net of valuation allowances of $36.4 million and $37.4 million, respectively.

Covered OREO expenses and valuation write-downs are recorded in the noninterest expense section of the consolidated statements of income. Under the loss-sharing agreements, 80 percent of eligible covered OREO expenses and valuation write-downs are reimbursable to the Company from the FDIC. The portion of these expenses that is reimbursable is recorded in FDIC loss sharing income (expense), net in the noninterest income section of the consolidated statements of income.

Note 8. Borrowed Funds

Short-term borrowings consist of funds with remaining maturities of one year or less and long-term debt consists of borrowings with remaining maturities greater than one year. The components of short-term borrowings and long-term debt as of March 31, 2012 and December 31, 2011 are provided below:

	March 31,		December 31,
(in thousands) (1)	2012		2011
Short-term borrowings
Current portion of senior notes:
City National Corporation - 5.125% Senior Notes Due February 2013	$	212,776	$	—
Federal funds purchased	10,000		50,000
Total short-term borrowings	$	222,776	$	50,000
Long-term debt
Senior notes:
City National Corporation - 5.125% Senior Notes Due February 2013	$	—	$	215,848
City National Corporation - 5.25% Senior Notes Due September 2020	297,385		297,308
Subordinated debt:
City National Bank - 9.00% Subordinated Notes Due July 2019 (2)	49,727		49,718
City National Bank - 9.00% Subordinated Notes Due August 2019	74,862		74,858
City National Bank - Fixed and Floating Subordinated Notes due August 2019 (3)	54,899		54,895
Junior subordinated debt:
Floating Rate Business Bancorp Capital Trust I Securities due November 2034 (4)	5,151		5,151
Total long-term debt	$	482,024	$	697,778

(1)	The carrying value of certain borrowed funds is net of discount and issuance costs, which are being amortized into interest expense, as well as the impact of fair value hedge accounting, if applicable.
(2)	These notes bear a fixed interest rate of 9 percent for the initial five years from the date of issuance (July 15, 2009) and thereafter the rate is reset at the Bank’s option to either LIBOR plus 600 basis points or to prime plus 500 basis points.
(3)	These notes bear a fixed interest rate of 9 percent for the initial five years from the date of issuance (August 12, 2009) and thereafter bear an interest rate equal to the three-month LIBOR rate plus 6 percent.  The rate is reset quarterly and is subject to an interest rate cap of 10 percent throughout the term of the notes.
(4)	These floating rate securities pay interest of three-month LIBOR plus 1.965 percent which is reset quarterly.  As of March 31, 2012, the interest rate was 2.46 percent.

35

Note 9. Shareholders’ Equity

The components of AOCI at March 31, 2012 and December 31, 2011 are as follows:

	March 31,		December 31,
(in thousands)	2012		2011
Net unrealized gain on securities available-for-sale	$	81,162	$	73,235
Net unrealized gain on cash flow hedges	180		222
Pension liability adjustment	—		(1,085		)
Total accumulated other comprehensive income	$	81,342	$	72,372

The following table summarizes the Company’s share repurchases for the three months ended March 31, 2012. All repurchases relate to shares withheld or previously owned shares used to pay taxes due upon vesting of restricted stock. There were no issuer repurchases of the Corporation’s common stock as part of its repurchase plan for the three months ended March 31, 2012.

Period	Total Number of Shares (or Units) Purchased	Average Price Paid per Share (or Unit)
January 1, 2012 to January 31, 2012	148	$	48.86
February 1, 2012 to February 29, 2012	25,029	47.69
March 1, 2012 to March 31, 2012	13,817	46.12
	38,994	47.14

At March 31, 2012, the Corporation had 1.1 million shares of common stock reserved for issuance and 0.6 million shares of unvested restricted stock (excluding restricted stock units) granted to employees and directors under share-based compensation programs.

Note 10. Earnings per Common Share

The Company applies the two-class method of computing basic and diluted 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.

36

Note 10. Earnings per Common Share (Continued)

The computation of basic and diluted EPS is presented in the following table:

	For the three months ended March 31,
(in thousands, except per share amounts)	2012		2011
Basic EPS:
Net income attributable to City National Corporation	$	46,265	$	39,692
Less: Earnings allocated to participating securities	738		578
Earnings allocated to common shareholders	$	45,527	$	39,114
Weighted average common shares outstanding	52,741		52,320
Basic earnings per common share	$	0.86	$	0.75
Diluted EPS:
Earnings allocated to common shareholders (1)	$	45,530	$	39,119
Weighted average common shares outstanding	52,741		52,320
Dilutive effect of equity awards	280		574
Weighted average diluted common shares outstanding	53,021		52,894
Diluted earnings per common share	$	0.86	$	0.74

(1)   Earnings allocated to common 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 common shareholders and participating securities for the purposes of calculating diluted EPS.

The average price of the Company’s common stock for the period is used to determine the dilutive effect of outstanding stock options. Antidilutive stock options are not included in the calculation of basic or diluted EPS. There were 3.0 million and 1.7 million average outstanding stock options that were antidilutive for the three months ended March 31, 2012 and 2011, respectively.

Note 11. Share-Based Compensation

On March 31, 2012, the Company had one share-based compensation plan, the Amended and Restated City National Corporation 2008 Omnibus Plan (the “Plan”), which was approved by the Company’s shareholders on April 23, 2008. No new awards will be granted under predecessor plans. A description of the Plan is provided below. The compensation cost that has been recognized for all share-based awards was $4.7 million for the three months ended March 31, 2012 and 2011. The total income tax benefit recognized in the consolidated statements of income for share-based compensation arrangements was $2.0 million for the three months ended March 31, 2012 and 2011. The Company received $2.0 million and $4.0 million in cash for the exercise of stock options during the three months ended March 31, 2012 and 2011, respectively. The actual tax benefit realized for the tax deductions from stock option exercises was $0.4 million and $1.0 million for the three months ended March 31, 2012 and 2011, respectively.

37

Note 11. Share-Based Compensation (Continued)

Plan Description

The Plan permits the grant of stock options, restricted stock, restricted stock units, performance shares, performance share units, performance units and stock appreciation rights, or any combination thereof, to the Company’s eligible employees and non-employee directors. No grants of performance shares, performance share units or stock appreciation rights had been made as of March 31, 2012. The purpose of the Plan is to promote the success of the Company by providing additional means to attract, motivate, retain and reward key employees of the Company with awards and incentives for high levels of individual performance and improved financial performance of the Company, and to link non-employee director compensation to shareholder interests through equity grants. Stock option awards are granted with an exercise price equal to the market price of the Company’s stock at the date of grant. These awards vest in four years and have 10-year contractual terms. Restricted stock awards granted under the Plan vest over a period of at least three years, as determined by the Compensation, Nominating and Governance Committee. The participant is entitled to dividends and voting rights for all shares issued even though they are not vested. Restricted stock awards issued under predecessor plans vest over five years. The Plan provides for acceleration of vesting if there is a change in control (as defined in the Plan) or a termination of service, which may include disability or death. Unvested options are forfeited upon termination of employment, except for those instances noted above, and the case of the retirement of a retirement-age employee for options granted prior to January 31, 2006. The Company generally issues treasury shares upon share option exercises. All unexercised options expire 10 years from the grant date. At March 31, 2012, there were approximately 1.1 million shares available for future grants.

Fair Value

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation methodology that uses the assumptions noted in the following table. The Company evaluates exercise behavior and values options separately for executive and non-executive employees. Expected volatilities are based on the historical volatility of the Company’s stock. The Company uses a 20-year look back period to calculate the volatility factor. The length of the look back period reduces the impact of the recent disruptions in the capital markets, and provides values that management believes are more representative of expected future volatility. The Company uses historical data to predict option exercise and employee termination behavior. The expected term of options granted is derived from historical exercise activity and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The dividend yield is equal to the dividend yield of the Company’s stock at the time of the grant.

To estimate the fair value of stock option awards, the Company uses the Black-Scholes methodology, which incorporates the assumptions summarized in the table below:

	For the three months ended March 31,
	2012		2011
Weighted-average volatility	30.58	%	30.91	%
Dividend yield	2.14	%	1.46	%
Expected term (in years)	6.11		6.04
Risk-free interest rate	1.44	%	2.98	%

Using the Black-Scholes methodology, the weighted-average grant-date fair values of options granted during the three months ended March 31, 2012 and 2011 were $11.64 and $18.43, respectively. The total intrinsic values of options exercised during the three months ended March 31, 2012 and 2011 were $0.9 million and $2.3 million, respectively.

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Note 11. Share-Based Compensation (Continued)

A summary of option activity and related information for the three months ended March 31, 2012 is presented below:

			Weighted				Weighted
			Average		Aggregate		Average
	Number of		Exercise		Intrinsic		Remaining
	Shares		Price		Value		Contractual
Options	(in thousands)		(per share)		(in thousands) (1)		Term
Outstanding at January 1, 2012	4,990		$	52.61
Granted	603		46.66
Exercised	(59	)	34.24
Forfeited or expired	(460	)	50.83
Outstanding at March 31, 2012	5,074		$	52.28	$	265,246	5.96
Exercisable at March 31, 2012	3,443		$	54.54	$	187,779	4.62

(1) Includes in-the-money options only.

A summary of changes in unvested options and related information for the three months ended March 31, 2012 is presented below:

			Weighted Average
	Number of		Grant Date
	Shares		Fair Value
Unvested Options	(in thousands)		(per share)
Unvested at January 1, 2012	1,641		$	13.57
Granted	603		11.64
Vested	(599	)	12.22
Forfeited	(14	)	13.43
Unvested at March 31, 2012	1,631		$	13.35

The number of options vested during the three months ended March 31, 2012 and 2011 was 599,119 and 580,636, respectively. The total fair value of options vested during the three months ended March 31, 2012 and 2011 was $7.3 million and $6.8 million, respectively. As of March 31, 2012, there was $17.8 million of unrecognized compensation cost related to unvested stock options granted under the Company’s plans. That cost is expected to be recognized over a weighted-average period of 2.9 years.

The Plan provides for granting of restricted shares of Company stock to employees. In general, twenty-five percent of the restricted stock vests two years from the date of grant, then twenty-five percent vests on each of the next three consecutive grant anniversary dates. The restricted stock is subject to forfeiture until the restrictions lapse or terminate. A summary of changes in restricted stock and related information for the three months ended March 31, 2012 is presented below:

			Weighted Average
	Number of		Grant Date
	Shares		Fair Value
Restricted Stock (1)	(in thousands)		(per share)
Unvested at January 1, 2012	875		$	50.12
Granted	76		46.66
Vested	(170	)	45.75
Forfeited	(5	)	48.24
Unvested at March 31, 2012	776		$	50.75

(1) Includes restricted stock units.

39

Note 11. Share-Based Compensation (Continued)

Restricted stock is valued at the closing price of the Company’s stock on the date of award. The weighted-average grant-date fair values of restricted stock granted during the three months ended March 31, 2012 and 2011 were $46.66 and $60.86, respectively. The number of restricted shares vested during the three months ended March 31, 2012 and 2011 was 169,568 and 134,636, respectively. The total fair value of restricted stock vested during the three months ended March 31, 2012 and 2011 was $7.8 million and $6.2 million, respectively. The compensation expense related to restricted stock for the three months ended March 31, 2012 and 2011 was $2.5 million and $2.3 million, respectively. As of March 31, 2012, the unrecognized compensation cost related to restricted stock granted under the Company’s plans was $26.3 million. That cost is expected to be recognized over a weighted-average period of 3.5 years.

In February 2012, the Company amended the Plan to permit the grant of cash-settled restricted stock units. In general, twenty-five percent of the cash-settled restricted stock units vests two years from the date of grant, then twenty-five percent vests on each of the next three consecutive grant anniversary dates. The units are subject to forfeiture until the restrictions lapse or terminate. Upon vesting, the units are converted to cash based on the closing stock price at vesting date and distributed to plan participants. Plan participants are entitled to dividends, which vest and are paid at the same time as the underlying cash-settled restricted stock units. Dividends are subject to forfeiture in the same manner as the underlying cash-settled restricted stock units. A summary of changes in cash-settled restricted stock units for the three months ended March 31, 2012 is presented below:

	Number of
	Shares
Cash-Settled Restricted Stock Units	(in thousands)
Unvested at January 1, 2012	—
Granted	99
Forfeited	(1	)
Unvested at March 31, 2012	98

Cash-settled restricted stock units are initially valued at the closing price of the Company’s stock on the date of award and subsequently remeasured at each reporting date until settlement. The compensation expense related to cash-settled restricted stock units for the three months ended March 31, 2012 was $0.1 million.

40

Note 12. Derivative Instruments

The following tables summarize the fair value and balance sheet classification of derivative instruments as of March 31, 2012 and December 31, 2011. The notional amount of the contract is not recorded on the consolidated balance sheets, but is used as the basis for determining the amount of interest payments to be exchanged between the counterparties. If a counterparty fails to perform, the Company’s counterparty credit risk is equal to the amount reported as a derivative asset.

Notional Amounts and Fair Values of Derivative Instruments

	March 31, 2012						December 31, 2011
(in millions) (1)	Notional Amount		Derivative Assets		Derivative Liabilities		Notional Amount		Derivative Assets		Derivative Liabilities
Derivatives designated as hedging instruments
Interest rate swaps - fair value:
Long-term and subordinated debt	205.9		8.1		—		207.4		9.8		—
Total derivatives designated as hedging instruments	$	205.9	$	8.1	$	—	$	207.4	$	9.8	$	—
Derivatives not designated as hedging instruments
Interest rate contracts:
Swaps	$	1,551.4	$	48.6	$	49.1	$	1,482.1	$	51.3	$	52.5
Interest-rate caps, floors and collars	243.9		0.1		0.1		267.1		0.3		0.3
Options purchased	2.0		0.2		0.2		2.0		0.1		0.1
Options written	2.0		—		—		2.0		—		—
Total interest-rate contracts	$	1,799.3	$	48.9	$	49.4	$	1,753.2	$	51.7	$	52.9
Option contracts	$	—	$	0.2	$	—	$	—	$	0.7	$	—
Foreign exchange contracts:
Spot and forward contracts	$	277.7	$	2.7	$	2.2	$	203.8	$	2.1	$	2.1
Options purchased	5.8		—		—		—		—		—
Options written	5.8		0.1		0.1		—		—		—
Total foreign exchange contracts	$	289.3	$	2.8	$	2.3	$	203.8	$	2.1	$	2.1
Total derivatives not designated as hedging instruments	$	2,088.6	$	51.9	$	51.7	$	1,957.0	$	54.5	$	55.0

(1)Derivative assets include the estimated gain to settle a derivative contract net of cash collateral received from counterparties plus net interest receivable.  Derivative liabilities include the estimated loss to settle a derivative contract.

Derivatives Designated as Hedging Instruments

As of March 31, 2012, the Company had $205.9 million notional amount of interest-rate swap hedge transactions, all of which were designated as fair value hedges. There were no cash flow hedges at March 31, 2012. The positive fair value of the fair value hedges of $8.1 million is recorded in other assets. It includes a mark-to-market asset of $7.1 million and net interest receivable of $1.0 million. The balance of borrowings reported in the consolidated balance sheet includes a $7.1 million mark-to-market adjustment associated with interest-rate hedge transactions.

As of December 31, 2011, the Company had $207.4 million notional amount of interest-rate swap hedge transactions, all of which were designated as fair value hedges. There were no cash flow hedges outstanding at December 31, 2011. The positive fair value of the fair value hedges of $9.8 million is recorded in other assets. It includes a mark-to-market asset of $8.8 million and net interest receivable of $1.0 million. The balance of deposits and borrowings reported in the consolidated balance sheet include a $8.8 million mark-to-market adjustment associated with interest-rate hedge transactions.

41

Note 12. Derivative Instruments (Continued)

The periodic net settlement of interest-rate swaps is recorded as an adjustment to interest income or interest expense. The impact of interest-rate swaps on interest income and interest expense for the three months ended March 31, 2012 and 2011 is provided below:

(in millions) Derivative Instruments Designated as	Location in Consolidated	For the three months ended March 31,
Hedging Instruments	Statements of Income	2012			2011
Interest-rate swaps-fair value	Interest expense	$	(2.0	)	$	(4.2	)
Interest-rate swaps-cash flow	Interest income	0.1			0.6
Total income		$	2.1		$	4.8

Fair value interest-rate swaps increased net interest income by $2.1 million and $4.8 million for the three months ended March 31, 2012 and 2011, respectively.

Changes in fair value of the effective portion of cash flow hedges are reported in AOCI. When the cash flows associated with the hedged item are realized, the gain or loss included in AOCI is recognized in Interest income on loans and leases, the same location in the consolidated statements of income as the income on the hedged item. There were no cash flow hedges outstanding during the three month periods ended March 31, 2012 and March 31, 2011. The $0.1 million and $0.6 million of gain on cash flow hedges reclassified from AOCI to interest income for the three months ended March 31, 2012 and 2011, respectively, represents the amortization of deferred gains on cash flow hedges that were terminated in 2010 prior to their respective maturity dates for which the hedge transactions had yet to occur. At March 31, 2012, the balance of deferred gain on terminated swaps reported in AOCI was $0.2 million. This balance will be amortized into interest income within the next 12 months.

Derivatives Not Designated as Hedging Instruments

Derivative contracts not designated as hedges are composed primarily of interest rate contracts with clients that are offset by paired trades with unrelated bank counterparties and foreign exchange contracts. Derivative contracts not designated as hedges are marked-to-market each reporting period with changes in fair value recorded as a part of Noninterest income in the consolidated statements of income. The table below provides the amount of gains and losses on these derivative contracts for the three months ended March 31, 2012 and 2011:

(in millions) Derivatives Not Designated as	Location in Consolidated	For the three months ended March 31,
Hedging Instruments	Statements of Income	2012			2011
Interest-rate contracts	Other noninterest income	$	0.7		$	0.2
Option contracts	Other noninterest income	(0.6		)	—
Foreign exchange contracts	International services income	5.8			5.4
Total income		$	5.9		$	5.6

42

Note 12. Derivative Instruments (Continued)

Credit Risk Exposure and Collateral

The Company’s swap agreements require the deposit of cash or marketable debt securities as collateral based on certain risk thresholds. These requirements apply individually to the Corporation and to the Bank. Additionally, certain of the Company’s swap contracts contain security agreements that include credit-risk-related contingent features. Under these agreements, the collateral requirements are based on the Company’s credit rating from the major credit rating agencies. The amount of collateral required may vary by counterparty based on a range of credit ratings that correspond with exposure thresholds established in the derivative agreements. If the credit ratings on the Company’s debt were to fall below the level associated with a particular exposure threshold and the derivatives with a counterparty are in a net liability position that exceeds that threshold, the counterparty could request immediate payment or delivery of collateral for the difference between the net liability amount and the exposure threshold. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a net liability position on March 31, 2012 was $24.6 million. The Company delivered collateral valued at $20.0 million on swap agreements that had credit-risk contingent features and were in a net liability position at March 31, 2012.

The Company’s interest-rate swaps had $4.0 million and $5.3 million of credit risk exposure at March 31, 2012 and December 31, 2011, respectively. The credit exposure represents the cost to replace, on a present value basis and at current market rates, all contracts by trading counterparty having an aggregate positive market value, net of margin collateral received. The Company enters into master netting agreements with swap counterparties to mitigate credit risk. Under these agreements, the net amount due from or payable to each counterparty is settled on the contract payment date. Collateral in the form of securities valued at $4.8 million and $5.0 million had been received from swap counterparties at March 31, 2012 and December 31, 2011, respectively. The Company delivered collateral valued at $18.8 million on swap agreements that did not have credit-risk contingent features at March 31, 2012.

Note 13. Income Taxes

The Company recognized income tax expense of $21.7 million and $17.9 million for the three months ended March 31, 2012 and 2011, respectively.

The Company recognizes accrued interest and penalties relating to uncertain tax positions as an income tax provision expense. The Company recognized interest and penalties expense of approximately $0.1 million and $0.3 million for the three months ended March 31, 2012 and 2011, respectively. The Company had approximately $3.2 million of accrued interest and penalties as of March 31, 2012 and December 31, 2011.

The Company and its subsidiaries file a consolidated federal income tax return and also file income tax returns in various state jurisdictions. The Company is currently being audited by the Internal Revenue Service for the tax years 2011 and 2012. The Company is also under audit with the California Franchise Tax Board for the tax years 2005 to 2007. The potential financial statement impact, if any, resulting from completion of these audits is expected to be minimal.

From time to time, there may be differences in opinion with respect to the tax treatment of certain transactions. If a tax position which was previously recognized on the consolidated financial statements is no longer “more likely than not” to be sustained upon a challenge from the taxing authorities, the tax benefit from the tax position will be derecognized. The Company did not have any tax positions for which previously recognized benefits were derecognized during the quarter ended March 31, 2012.

43

Note 14. Employee Benefit Plans

Defined Contribution Plan

The Company has a profit-sharing retirement plan with an Internal Revenue Code Section 401(k) feature covering eligible employees. Employer contributions are made annually into a trust fund and are allocated to participants based on their salaries. The profit sharing contribution requirement is based on a percentage of annual operating income subject to a percentage of salary cap. Eligible employees may contribute up to 50 percent of their salary to the 401(k) plan, but not more than the maximum allowed under Internal Revenue Service (“IRS”) regulations. The Company matches 50 percent of the first 6 percent of covered compensation. The Company recorded total profit sharing and matching contribution expense of $4.7 million and $4.5 million for the three months ended March 31, 2012 and 2011, respectively.

Deferred Compensation Plan

The Company offers a deferred compensation plan for eligible employees and non-employee directors. Participants under the employee plan may make an annual irrevocable election to defer a portion of base salary and up to 100 percent of commission and incentive compensation while employed with the Company. Participants under the non-employee director plan also may make an annual irrevocable election to defer all or part of annual retainers, annual awards, committee chair retainers and meeting fees (collectively, “directors’ fees”) until board service with the Company ceases. The deferred compensation plans are nonqualified plans under IRS regulations. Deferrals are made on a pretax basis and are allocated among the investment options available under the plans as directed by the plan participants. The Company funds plan benefits through the purchase of life insurance policies which are recorded in Other assets on the consolidated balance sheets. Participant deferrals are recorded in Other liabilities on the consolidated balance sheets. Employee salaries and non-employee directors’ fees deferred under the plan are charged to Salaries and employee benefits and Other operating expense, respectively, on the consolidated statements of income. Earnings on plan assets, net of benefits payable to plan participants, are reported in Salaries and employee benefits on the consolidated statements of income, and was $0.1 million for the three months ended March 31, 2012 and 2011.

Other Plans

The Company administers a Supplemental Executive Retirement Plan (“SERP”) for one of its executive officers. On March 14, 2012, the SERP was amended. In exchange for cancellation of the executive officer’s rights to receive supplemental retirement benefits under the SERP, the executive officer would receive fully vested interests in a deferred compensation stock fund under the amended plan. The present value of the accumulated SERP benefit under the amended plan at March 14, 2012 was deemed to be invested in the deferred compensation stock fund, with the number of units being determined by the closing price of the Company’s stock on March 14, 2012. The benefit was converted to 167,423 units in the deferred compensation stock fund at March 14, 2012. Distributions to the executive officer from the stock fund will be made solely in Company stock upon termination of employment. As a result of this conversion, the Company reversed its $8.3 million pension liability related to the SERP, recorded the fully vested interests in the deferred compensation stock fund in equity for the same amount, and recognized expense of $1.7 million in the consolidated statements of income for the three months ended March 31, 2012. The Company recognized total expense related to this SERP of $1.9 million and $0.2 million for the three months ended March 31, 2012 and 2011, respectively.

The Company also has a SERP covering three former executives of Pacific Bank, which the Company acquired in 2000. As of March 31, 2012, there was an unfunded pension liability for this SERP of $2.3 million. Expense for the three months ended March 31, 2012 and 2011 was insignificant.

Note 15. Contingencies

In connection with the liquidation of an investment acquired in a previous bank merger, the Company has an outstanding long-term indemnity. The maximum liability under the indemnity is $23.0 million, but the Company does not expect to make any payments of more than nominal amounts under the terms of this indemnity.

In 2011, the Company received unfavorable judgments through arbitration on two legal claims totaling $7.2 million. Approximately $5.3 million of these judgments was covered by the Company’s insurance policies and was received in full by the Company in 2011. Prior to finalizing these amounts in the second quarter of 2011, the Company had recognized estimated net charges of $1.4 million in Other operating expense in the noninterest expense section of the consolidated statements of income for the three months ended March 31, 2011.

44

Note 16. Variable Interest Entities

The Company holds ownership interests in certain special-purpose entities formed to provide affordable housing. The Company evaluates its interest in these entities to determine whether they meet the definition of a VIE and whether the Company is required to consolidate these entities. The Company is not the primary beneficiary of the affordable housing VIEs in which it holds interests and is therefore not required to consolidate these entities. The investment in these entities is initially recorded at cost, which approximates the maximum exposure to loss as a result of the Company’s involvement with these unconsolidated entities. Subsequently, the carrying value is amortized over the stream of available tax credits and benefits. The Company expects to recover its investments over time, primarily through realization of federal low-income housing tax credits. The balance of the investments in these entities was $143.9 million and $121.0 million at March 31, 2012 and December 31, 2011, respectively, and is included in Affordable housing investments in the consolidated balance sheets. Unfunded commitments for affordable housing investments were $54.7 million at March 31, 2012. These unfunded commitments are recorded in Other liabilities in the consolidated balance sheets.

Of the affordable housing investments held as of March 31, 2012, the Company had a significant variable interest in four affordable housing partnerships. These interests were acquired at various times from 1998 to 2001. The Company’s maximum exposure to loss as a result of its involvement with these entities is limited to the $2.0 million aggregate carrying value of these investments at March 31, 2012. There were no unfunded commitments for these affordable housing investments at March 31, 2012.

The Company also has ownership interests in several private equity and alternative investment funds that are VIEs. The Company is not a primary beneficiary and, therefore, is not required to consolidate these VIEs. The investment in these entities is carried at cost, which approximates the maximum exposure to loss as a result of the Company’s involvement with these entities. The Company expects to recover its investments over time, primarily through the allocation of fund income, gains or losses on the sale of fund assets, dividends or interest income. The balance in these entities was $40.1 million and $39.9 million at March 31, 2012 and December 31, 2011, respectively, and is included in Other assets in the consolidated balance sheets. Income associated with these investments is reported in Other noninterest income in the consolidated statements of income.

Note 17. Noncontrolling Interest

In accordance with ASC Topic 810, Consolidation, and EITF Topic D-98, Classification and Measurement of Redeemable Securities (“Topic D-98”), the Company reports noncontrolling interest in its majority-owned affiliates as either a separate component of equity in Noncontrolling interest in the consolidated balance sheets or as Redeemable noncontrolling interest in the mezzanine section between liabilities and equity in the consolidated financial statements. Topic D-98 specifies that securities that are redeemable at the option of the holder or outside the control of the issuer are not considered permanent equity and should be classified in the “mezzanine” section.

The Bank previously had two real estate investment trust subsidiaries that had issued preferred stock to third-party investors. The ownership interests of third-party investors were included in Noncontrolling interest in the equity section of the consolidated balance sheets. In July and August 2011, the Company liquidated or redeemed all outstanding shares of preferred stock held by noncontrolling interest owners.

Redeemable Noncontrolling Interest

The Corporation holds a majority ownership interest in five investment management and wealth advisory affiliates that it consolidates. In general, the management of each majority-owned affiliate has a significant noncontrolling ownership position in its firm and supervises the day-to-day operations of the affiliate. The Corporation is in regular contact with each affiliate regarding its operations and is an active participant in the management of the affiliates through its position on each firm’s board.

45

Note 17. Noncontrolling Interest (Continued)

The Corporation’s investment in each affiliate is governed by operating agreements and other arrangements which provide the Corporation certain rights, benefits and obligations. The Corporation determines the appropriate method of accounting based upon these agreements and the factors contained therein. All majority-owned affiliates that have met the criteria for consolidation are included in the consolidated financial statements. All material intercompany balances and transactions are eliminated. The Company applies the equity method of accounting for certain investments where it holds a noncontrolling interest. For equity method investments, the Company’s portion of income before taxes is included in Trust and investment fees in the consolidated statements of income.

As of March 31, 2012, affiliate noncontrolling owners held equity interests with an estimated fair value of $43.4 million. This estimate reflects the maximum obligation to purchase equity interests in the affiliates. The events which would require the Company to purchase the equity interests may occur in the near term or over a longer period of time. The terms of the put provisions vary by agreement, but the value of the put is at the approximate fair value of the interests. The parent company carries key man life insurance policies to fund a portion of these conditional purchase obligations in the event of the death of certain key holders.

Redeemable noncontrolling interest is not considered to be permanent equity and continues to be reported in the mezzanine section between liabilities and equity in the consolidated balance sheets.

The following is a summary of activity for redeemable noncontrolling interest for the three months ended March 31, 2012 and 2011:

	For the three months ended March 31,
(in thousands)	2012			2011
Balance, beginning of period	$	44,643		$	45,676
Net income	243			558
Distributions to redeemable noncontrolling interest	(289		)	(484		)
Additions and redemptions, net	(1,272		)	(559		)
Adjustments to fair value	111			822
Balance, end of period	$	43,436		$	46,013

Note 18. Segment Results

The Company has three reportable segments: Commercial and Private Banking, Wealth Management and Other. The factors considered in determining whether individual operating segments could be aggregated include that the operating segments: (i) offer the same products and services, (ii) offer services to the same types of clients, (iii) provide services in the same manner and (iv) operate in the same regulatory environment. The management accounting process measures the performance of the operating segments based on the Company’s management structure and is not necessarily comparable with similar information for other financial services companies. If the management structures and/or the allocation process changes, allocations, transfers and assignments may change.

The Commercial and Private Banking reportable segment is the aggregation of the Commercial and Private Banking, Real Estate, Entertainment, Corporate Banking and Core Branch Banking operating segments. The Commercial and Private Banking segment provides banking products and services, including commercial and mortgage loans, lines of credit, deposits, cash management services, international trade finance and letters of credit to small and medium-sized businesses, entrepreneurs and affluent individuals. This segment primarily serves clients in California, New York, Nevada, Tennessee and Georgia.

46

Note 18. Segment Results (Continued)

The Wealth Management segment includes the Corporation’s investment advisory affiliates and the Bank’s Wealth Management Services. The asset management affiliates and the Wealth Management division of the Bank make the following investment advisory and wealth management resources and expertise available to individual and institutional clients: investment management, wealth advisory services, brokerage, estate and financial planning and personal, business, custodial and employee trust services. The Wealth Management segment also advises and makes available mutual funds under the name of CNI Charter Funds. Both the asset management affiliates and the Bank’s Wealth Management division provide proprietary and nonproprietary products to offer a full spectrum of investment solutions in all asset classes and investment styles, including fixed-income instruments, mutual funds, domestic and international equities and alternative investments such as hedge funds. This segment serves clients nationwide.

The Other segment includes all other subsidiaries of the Company, the corporate departments, including the Treasury Department and the Asset Liability Funding Center, that have not been allocated to the other segments, and inter-segment eliminations for revenue recognized in multiple segments for management reporting purposes. The Company uses traditional matched-maturity funds transfer pricing methodology. However, both positive and negative variances occur over time when transfer pricing non-maturing balance sheet items such as demand deposits. These variances, offset in the Funding Center, are evaluated annually by management and allocated back to the business segments as deemed necessary.

Business segment earnings are the primary measure of the segment’s performance as evaluated by management. Business segment earnings include direct revenue and expenses of the segment as well as corporate and inter-company cost allocations. Allocations of corporate expenses, such as data processing and human resources, are calculated based on estimated activity levels for the fiscal year. Costs associated with intercompany support and services groups, such as Operational Services, are allocated to each business segment based on actual services used. Capital is allocated based on the estimated risk within each business segment. The methodology of allocating capital is based on each business segment’s credit, market, and operational risk profile. If applicable, any provision for credit losses is allocated based on various credit factors, including but not limited to, credit risk ratings, credit rating fluctuation, charge-offs and recoveries and loan growth.

Income taxes are charged to the business segments at the statutory rate. The Other segment includes an adjustment to reconcile to the Company’s overall effective tax rate.

Exposure to market risk is managed in the Company’s Treasury department. Interest rate risk is mostly removed from the Commercial and Private Banking segment and transferred to the Funding Center through a fund transfer pricing (“FTP”) methodology and allocating model. The FTP model records a cost of funds or credit for funds using a combination of matched maturity funding for fixed term assets and liabilities and a blended rate for the remaining assets and liabilities with varying maturities.

The Bank’s investment portfolio and unallocated equity are included in the Other segment. Amortization expense associated with customer-relationship intangibles is charged to the affected operating segments.

Selected financial information for each segment is presented in the following tables. Commercial and Private Banking includes all revenue and costs from products and services utilized by clients of Commercial and Private Banking, including both revenue and costs for Wealth Management products and services. The revenues and costs associated with Wealth Management products and services that are allocated to Commercial and Private Banking for management reporting purposes are eliminated in the Other segment. The current period reflects any changes made in the process or methodology for allocations to the reportable segments. Prior period segment results have been revised to conform with current period presentation.

47

Note 18. Segment Results (Continued)

	For the three months ended March 31, 2012
	Commercial and		Wealth					Consolidated
(in thousands)	Private Banking		Management		Other			Company
Earnings Summary:
Net interest income	$	171,725	$	764	$	28,224		$	200,713
Provision for credit losses on loans and leases, excluding covered loans	—		—		—			—
Provision for losses on covered loans	7,466		—		—			7,466
Noninterest income	47,245		39,371		(10,916		)	75,700
Depreciation and amortization	3,582		1,446		4,286			9,314
Noninterest expense	171,593		35,984		(16,171		)	191,406
Income before income taxes	36,329		2,705		29,193			68,227
Provision (benefit) for income taxes	15,258		1,034		5,427			21,719
Net income	21,071		1,671		23,766			46,508
Less: Net income attributable to noncontrolling interest	—		243		—			243
Net income attributable to City National Corporation	$	21,071	$	1,428	$	23,766		$	46,265
Selected Average Balances:
Loans and leases, excluding covered loans	$	12,379,023	$	—	$	53,269		$	12,432,292
Covered loans	1,438,714		—		—			1,438,714
Total assets	14,137,481		537,732		8,969,686			23,644,899
Deposits	19,721,998		99,035		396,362			20,217,395
Goodwill	324,761		161,921		—			486,682
Customer-relationship intangibles, net	9,007		26,493		—			35,500

48

Note 18. Segment Results (Continued)

	For the three months ended March 31, 2011
	Commercial and		Wealth					Consolidated
(in thousands)	Private Banking		Management		Other			Company
Earnings Summary:
Net interest income	$	172,687	$	567	$	8,036		$	181,290
Provision for credit losses on loans and leases, excluding covered loans	—		—		—			—
Provision for losses on covered loans	19,116		—		—			19,116
Noninterest income	63,210		41,877		(11,194		)	93,893
Depreciation and amortization	3,633		1,449		3,834			8,916
Noninterest expense	165,508		38,182		(15,209		)	188,481
Income (loss) before income taxes	47,640		2,813		8,217			58,670
Provision (benefit) for income taxes	20,009		947		(3,070		)	17,886
Net income	27,631		1,866		11,287			40,784
Less: Net income attributable to noncontrolling interest	—		558		534			1,092
Net income attributable to City National Corporation	$	27,631	$	1,308	$	10,753		$	39,692
Selected Average Balances:
Loans and leases, excluding covered loans	$	11,197,583	$	—	$	58,304		$	11,255,887
Covered loans	1,810,986		—		—			1,810,986
Total assets	13,534,385		551,729		7,291,790			21,377,904
Deposits	17,750,931		46,566		386,071			18,183,568
Goodwill	325,211		161,642		—			486,853
Customer-relationship intangibles, net	12,411		28,941		—			41,352

Note 19. Subsequent Events

On April 25, 2012, the Company entered into a definitive agreement to acquire Rochdale Investment Management (“Rochdale”), a $4.8 billion New York City-based investment firm that manages assets for affluent and high-net-worth clients and their financial advisors across the nation. Rochdale will be combined with City National Asset Management to create an investment management firm called City National Rochdale Investment Management. It will offer a wide array of equity, fixed income and non-traditional investment alternatives. The new firm, a wholly owned subsidiary of the Bank, will operate separately as a registered investment advisor within the Bank’s wealth management group. The acquisition is expected to close in the second quarter of 2012.

On April 30, 2012, the Company acquired First American Equipment Finance, a privately owned equipment leasing company. Headquartered in Rochester, New York, First American Equipment Finance leases technology and office equipment nationwide. Its clients include educational institutions, hospitals and health systems, large law firms, insurance underwriters, enterprise businesses, professional service businesses and nonprofit organizations. First American Equipment Finance will operate as a wholly owned subsidiary of the Bank. At the issuance date of these financial statements, the Company had not completed its initial accounting for this business combination.

49

ITEM 2.      MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS

OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

We have made forward-looking statements in this document 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, (2) the impact on financial markets and the economy of the level of U.S. and European debt, (3) changes in the pace of economic recovery and related changes in employment levels, (4) 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, (5) significant changes in applicable laws and regulations, including those concerning taxes, banking and securities, (6) volatility in the municipal bond market, (7) changes in the level of nonperforming assets, charge-offs, other real estate owned and provision expense, (8) 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, (9) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board, (10) changes in inflation, interest rates, and market liquidity which may impact interest margins and impact funding sources, (11) adequacy of the Company’s enterprise risk management framework, (12) the Company’s ability to increase market share and control expenses, (13) the Company’s ability to attract new employees and retain and motivate existing employees, (14) increased competition in the Company’s markets, (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) changes in consumer spending, borrowing and savings habits, (18) soundness of other financial institutions which could adversely affect the Company, (19) protracted labor disputes in the Company’s markets, (20) earthquake, fire or other natural disasters affecting the condition of real estate collateral, (21) the effect of acquisitions and integration of acquired businesses and de novo branching efforts, (22) the impact of changes in regulatory, judicial or legislative tax treatment of business transactions, (23) changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies, (24) security breaches and disruptions to the Company’s information systems, and (25) 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, 2011 and particularly, Item 1A, titled “Risk Factors.”

50

CITY NATIONAL CORPORATION

FINANCIAL HIGHLIGHTS

										Percent change
	At or for the three months ended									March 31, 2012 from
	March 31,			December 31,			March 31,			December 31,		March 31,
(in thousands, except per share amounts)	2012			2011			2011			2011		2011
	(Unaudited)			(Unaudited)			(Unaudited)
For The Quarter
Net income attributable to City National Corporation	$	46,265		$	43,860		$	39,692		5	%	17	%
Net income per share, basic	0.86			0.82			0.75			5		15
Net income per share, diluted	0.86			0.82			0.74			5		16
Dividends per share	0.25			0.20			0.20			25		25
At Quarter End
Assets	$	24,038,489		$	23,666,291		$	21,635,932		2		11
Securities	7,917,912			8,101,556			5,930,677			(2	)	34
Loans and leases, excluding covered loans	12,747,902			12,309,385			11,269,684			4		13
Covered loans (1)	1,397,156			1,481,854			1,766,085			(6	)	(21	)
Deposits	20,787,737			20,387,582			18,477,939			2		13
Shareholders’ equity	2,199,565			2,144,849			1,985,538			3		11
Total equity	2,199,565			2,144,849			2,010,627			3		9
Book value per share	41.77			40.86			37.86			2		10
Average Balances
Assets	$	23,644,899		$	23,694,160		$	21,377,904		(0	)	11
Securities	7,929,312			7,641,512			5,693,322			4		39
Loans and leases, excluding covered loans	12,432,292			12,213,429			11,255,887			2		10
Covered loans (1)	1,438,714			1,554,223			1,810,986			(7	)	(21	)
Deposits	20,217,395			20,500,138			18,183,568			(1	)	11
Shareholders’ equity	2,168,748			2,136,215			1,972,896			2		10
Total equity	2,168,748			2,136,215			1,998,006			2		9
Selected Ratios
Return on average assets (annualized)	0.79		%	0.73		%	0.75		%	8		5
Return on average shareholders’ equity (annualized)	8.58			8.15			8.16			5		5
Corporation’s tier 1 leverage	6.98			6.77			7.09			3		(2	)
Corporation’s tier 1 risk-based capital	10.20			10.26			10.91			(1	)	(7	)
Corporation’s total risk-based capital	12.71			12.83			13.68			(1	)	(7	)
Period-end shareholders’ equity to period-end assets	9.15			9.06			9.18			1		(0	)
Period-end equity to period-end assets	9.15			9.06			9.29			1		(2	)
Dividend payout ratio, per share	28.91			24.25			26.65			19		8
Net interest margin	3.74			3.70			3.84			1		(3	)
Expense to revenue ratio (2)	67.27			62.73			65.62			7		3
Asset Quality Ratios (3)
Nonaccrual loans to total loans and leases	0.88		%	0.91		%	1.40		%	(3	)	(37	)
Nonaccrual loans and OREO to total loans and leases and OREO	1.11			1.16			1.89			(4	)	(41	)
Allowance for loan and lease losses to total loans and leases	2.09			2.13			2.34			(2	)	(11	)
Allowance for loan and lease losses to nonaccrual loans	235.87			234.37			167.32			1		41
Net recoveries/(charge-offs) to average total loans and leases (annualized)	0.15			(0.18		)	0.24			NM		(38	)
At Quarter End
Assets under management (4)	$	32,535,021		$	31,326,318		$	37,852,450		4		(14	)
Assets under management or administration (4)	57,837,897			54,492,355			60,113,143			6		(4	)

NM - Not meaningful

(1) Covered loans represent acquired loans that are covered under loss-sharing agreements with the Federal Deposit Insurance Corporation (“FDIC”).

(2) The expense to revenue ratio is defined as noninterest expense excluding other real estate owned (“OREO”) expense divided by total revenue (net interest income on a fully taxable-equivalent basis and noninterest income).

(3) Excludes covered assets, which consist of acquired loans and OREO that are covered under loss-sharing agreements with the FDIC.

(4) Excludes $18.48 billion, $15.95 billion and $20.43 billion of assets under management for asset managers in which the Company held a noncontrolling ownership interest as of March 31, 2012, December 31, 2011 and March 31, 2011, respectively.

51

CRITICAL ACCOUNTING POLICIES

The accounting and reporting policies of the Company conform with U.S. generally accepted accounting principles. The Company’s accounting policies are fundamental to understanding management’s discussion and analysis of results of operations and financial condition. The Company has identified 11 policies as being critical because they require management to make estimates, assumptions and judgments that affect the reported amount of assets and liabilities, contingent assets and liabilities, and revenues and expenses included in the consolidated financial statements. The judgments and assumptions used by management are based on historical experience and other factors, which are believed to be reasonable under the circumstances. Circumstances and events that differ significantly from those underlying the Company’s estimates, assumptions and judgments could cause the actual amounts reported to differ significantly from these estimates.

The Company’s critical accounting policies include those that address accounting for business combinations, financial assets and liabilities reported at fair value, securities, acquired impaired loans, allowance for loan and lease losses and reserve for off-balance sheet credit commitments, OREO, goodwill and other intangible assets, noncontrolling interest, share-based compensation plans, income taxes, and derivatives and hedging activities. The Company has not made any significant changes in its critical accounting policies or its estimates and assumptions from those disclosed in its 2011 Annual Report. Mangement has applied its critical accounting policies and estimation methods consistently in all periods presented in these financial statements.

RECENT DEVELOPMENTS

On April 25, 2012, the Company entered into a definitive agreement to acquire Rochdale Investment Management (“Rochdale”), a $4.8 billion New York City-based investment firm that manages assets for affluent and high-net-worth clients and their financial advisors across the nation. Rochdale will be combined with City National Asset Management to create an investment management firm called City National Rochdale Investment Management. It will offer a wide array of equity, fixed income and non-traditional investment alternatives. The new firm, a wholly owned subsidiary of the Bank, will operate separately as a registered investment advisor within the Bank’s wealth management group. The acquisition is expected to close in the second quarter of 2012.

On April 30, 2012, the Company acquired First American Equipment Finance, a privately owned, full-service mid-ticket equipment leasing company. Headquartered in Rochester, New York, First American Equipment Finance leases technology and office equipment nationwide. Its clients include educational institutions, hospitals and health systems, large law firms, insurance underwriters, enterprise businesses, professional service businesses and nonprofit organizations. First American Equipment Finance will operate as a wholly owned subsidiary of the Bank.

HIGHLIGHTS

·For the quarter ended March 31, 2012, consolidated net income attributable to City National Corporation was $46.3 million, or $0.86 per diluted share, compared to $39.7 million, or $0.74 per diluted share, for the year-earlier quarter. The growth in net income is primarily attributable to an increase in net interest income as a result of higher interest income from securities and covered loans and lower interest expense on deposits.

·Revenue, which consists of net interest income and noninterest income, was $276.4 million for the first quarter of 2012, down 4 percent from $288.0 million in the fourth quarter of 2011, but up slightly from $275.2 million in the year-earlier quarter.

·Fully taxable-equivalent net interest income, including dividend income, amounted to $205.4 million for the first quarter of 2012, up 11 percent from the year earlier period but virtually unchanged from the fourth quarter of 2011.

·The Company’s net interest margin in the first quarter of 2012 was 3.74 percent, up from 3.70 percent in the fourth quarter of 2011 and down from 3.84 percent in the first quarter of 2011.

·Noninterest income was $75.7 million for the first quarter of 2012, down 12 percent from the fourth quarter of 2011 and 19 percent from the year-earlier quarter. The decrease from the prior quarters was due largely to lower net FDIC loss sharing income and lower gains on transfers of covered loans to OREO.

52

·Noninterest expense for the first quarter of 2012 was $200.7 million, up 1 percent from the fourth quarter of 2011 and 2 percent from the first quarter of 2011. The increases were due primarily to higher compensation costs and legal and professional services fees, which were offset in part by lower OREO expenses.

·The Company’s effective tax rate was 31.8 percent for the first quarter of 2012 compared with 33.9 percent for the fourth quarter of 2011 and 30.5 percent from the year-earlier period.

·Total assets were $24.04 billion at March 31, 2012, up 2 percent from $23.67 billion at December 31, 2011 and 11 percent from $21.64 billion at March 31, 2011. Total average assets was $23.64 billion for the first quarter of 2012, compared to $23.69 billion for the fourth quarter of 2011 and $21.38 billion for the first quarter of 2011.

·Loans and leases, excluding covered loans, were $12.75 billion at March 31, 2012, an increase of 4 percent from December 31, 2011 and 13 percent from March 31, 2011. Average loans for the first quarter of 2012, excluding covered loans, were $12.43 billion, up 2 percent from the fourth quarter of 2011 and 10 percent from the first quarter of last year. Average commercial loan balances grew 2 percent from the fourth quarter of 2011 and 20 percent from the year-earlier period.

·Excluding covered loans, results for the first quarter of 2012 included no provision for loan and lease losses. The Company recorded no provision in the first quarter of 2011 and a $5.0 million provision in the fourth quarter of last year. The allowance for loan and lease losses on non-covered loans was $266.1 million at March 31, 2012, compared with $262.6 million at December 31, 2011 and $263.4 million at March 31, 2011. The Company remains adequately reserved at 2.09 percent of total loans and leases, excluding covered loans, at March 31, 2012, compared with 2.13 percent at December 31, 2011 and 2.34 percent at March 31, 2011.

·In the first quarter of 2012, net loan recoveries totaled $4.5 million, or 0.15 percent of average total loans and leases, excluding covered loans, on an annualized basis. The Company realized net charge-offs of $5.5 million, or 0.18 percent, in the fourth quarter of 2011 and net recoveries of $6.5 million, or 0.24 percent, in the year-earlier quarter. Nonaccrual loans, excluding covered loans, totaled $112.8 million at March 31, 2012, up slightly from $112.0 million at December 31, 2011 and down from $157.4 million at March 31, 2011. At March 31, 2012, nonperforming assets, excluding covered assets, were $141.9 million, down from $142.8 million at December 31, 2011 and $213.7 million at March 31, 2011.

·Average securities for the first quarter of 2012 totaled $7.93 billion, up 4 percent from the fourth quarter of 2011 and 39 percent from the first quarter of 2011, as deposit growth continued to outpace loan growth.

·Period-end deposits at March 31, 2012 grew to $20.79 billion, up 2 percent from $20.39 billion at December 31, 2011 and 13 percent from $18.48 billion at March 31, 2011. Average deposit balances for the first quarter of 2012 were $20.22 billion, down 1 percent from $20.50 billion for the fourth quarter of 2011 and up 11 percent from $18.18 billion for the first quarter of 2011. Average core deposits decreased 1 percent from the fourth quarter of 2011 and increased 12 percent from the first quarter of 2011. Core deposits account for 97 percent of average deposit balances.

·The Company’s ratio of Tier 1 common shareholders’ equity to risk-based assets was 10.2 percent at March 31, 2012 compared with 10.2 percent at December 31, 2011 and 10.7 percent at March 31, 2011. Refer to the “Capital” section of Management’s Discussion and Analysis for further discussion of this non-GAAP measure.

OUTLOOK

The Company’s management continues to anticipate net income growth in 2012, as loans and deposits continue to increase and credit quality improves. Although the company recorded no provision in the first quarter, management still expects to record loan-loss provisions during the remainder of the year. This outlook reflects management’s expectations for moderate economic growth in 2012 and continued low interest rates for the remainder of the year.

53

RESULTS OF OPERATIONS

Net Interest Income

Net interest income is the difference between interest income (which includes yield-related loan fees) and interest expense. Net interest income on a fully taxable-equivalent basis expressed as a percentage of average total earning assets is referred to as the net interest margin, which represents the average net effective yield on earning assets. The following tables present the components of net interest income on a fully taxable-equivalent basis for the three months ended March 31, 2012 and 2011:

54

Net Interest Income Summary

	For the three months ended							For the three months ended
	March 31, 2012							March 31, 2011
				Interest		Average					Interest		Average
	Average			income/		interest		Average			income/		interest
(in thousands) (1)	balance			expense (2)(4)		rate		balance			expense (2)(4)		rate
Assets
Interest-earning assets
Loans and leases
Commercial	$	5,318,652		$	52,071	3.94	%	$	4,437,164		$	46,998	4.30	%
Commercial real estate mortgages	2,165,931			26,234		4.87		1,924,463			26,367		5.56
Residential mortgages	3,777,660			41,148		4.36		3,562,525			42,875		4.81
Real estate construction	313,681			4,159		5.33		448,089			5,034		4.56
Equity lines of credit	726,964			6,463		3.58		733,128			6,460		3.57
Installment	129,404			1,580		4.91		150,518			1,786		4.81
Total loans and leases, excluding covered loans (3)	12,432,292			131,655		4.26		11,255,887			129,520		4.67
Covered loans	1,438,714			38,224		10.63		1,810,986			35,240		7.78
Total loans and leases	13,871,006			169,879		4.93		13,066,873			164,760		5.11
Due from banks - interest-bearing	167,145			93		0.22		490,352			297		0.25
Federal funds sold and securities purchased under resale agreements	14,544			10		0.28		231,399			154		0.27
Securities	7,929,312			47,585		2.40		5,693,322			39,154		2.75
Other interest-earning assets	120,688			690		2.30		138,972			700		2.04
Total interest-earning assets	22,102,695			218,257		3.97		19,620,918			205,065		4.24
Allowance for loan and lease losses	(334,846		)					(328,838		)
Cash and due from banks	141,435							201,040
Other non-earning assets	1,735,615							1,884,784
Total assets	$	23,644,899						$	21,377,904
Liabilities and Equity
Interest-bearing deposits
Interest checking accounts	$	1,952,181		$	525	0.11		$	1,771,724		$	813	0.19
Money market accounts	6,017,601			2,202		0.15		6,452,245			7,153		0.45
Savings deposits	358,094			127		0.14		302,995			257		0.34
Time deposits - under $100,000	242,232			296		0.49		325,421			450		0.56
Time deposits - $100,000 and over	696,653			883		0.51		822,464			1,517		0.75
Total interest-bearing deposits	9,266,761			4,033		0.18		9,674,849			10,190		0.43
Federal funds purchased and securities sold under repurchase agreements	166,359			31		0.08		—			—		0.00
Other borrowings	696,617			8,815		5.09		858,550			9,330		4.41
Total interest-bearing liabilities	10,129,737			12,879		0.51		10,533,399			19,520		0.75
Noninterest-bearing deposits	10,950,634							8,508,719
Other liabilities	395,780							337,780
Total equity	2,168,748							1,998,006
Total liabilities and equity	$	23,644,899						$	21,377,904
Net interest spread						3.46	%						3.49	%
Fully taxable-equivalent net interest and dividend income				$	205,378						$	185,545
Net interest margin						3.74	%						3.84	%
Less: Dividend income included in other income				690							700
Fully taxable-equivalent net interest income				$	204,688						$	184,845

(1)  Certain prior period balances have been reclassified to conform to the current period presentation.

(2)  Net interest income is presented on a fully taxable-equivalent basis.

(3)  Includes average nonaccrual loans of $114,688 and $171,229 for 2012 and 2011, respectively.

(4)  Loan income includes loan fees of $5,039 and $4,241 for 2012 and 2011, respectively.

55

Net interest income is impacted by the volume (changes in volume multiplied by prior rate), interest rate (changes in rate multiplied by prior volume), and mix of interest-earning assets and interest-bearing liabilities. The following table provides a breakdown of the changes in net interest income on a fully taxable-equivalent basis and dividend income due to volume and rate between the first quarter of 2012 and 2011. The impact of interest rate swaps, which affect interest income on loans and leases and interest expense on deposits and borrowings, is included in rate changes.

Changes In Net Interest Income

	For the three months ended March 31,									For the three months ended March 31,
	2012 vs 2011									2011 vs 2010
	Increase (decrease)						Net			Increase (decrease)						Net
	due to						increase			due to						increase
(in thousands) (1)	Volume			Rate			(decrease)			Volume			Rate			(decrease)
Interest earned on:
Total loans and leases (2)	$	10,850		$	(5,731	)	$	5,119		$	(8,716	)	$	2,746		$	(5,970	)
Securities	13,859			(5,428		)	8,431			12,001			(6,486		)	5,515
Due from banks - interest-bearing	(179		)	(25		)	(204		)	184			(233		)	(49		)
Federal funds sold and securities purchased under resale agreements	(153		)	9			(144		)	121			11			132
Other interest-earning assets	(96		)	86			(10		)	(35		)	100			65
Total interest-earning assets	24,281			(11,089		)	13,192			3,555			(3,862		)	(307		)
Interest paid on:
Interest checking deposits	79			(367		)	(288		)	(253		)	(254		)	(507		)
Money market deposits	(451		)	(4,500		)	(4,951		)	2,065			(2,356		)	(291		)
Savings deposits	41			(171		)	(130		)	(115		)	(258		)	(373		)
Time deposits	(319		)	(469		)	(788		)	(1,185		)	(618		)	(1,803		)
Total borrowings	48			(532		)	(484		)	(2,842		)	(1,225		)	(4,067		)
Total interest-bearing liabilities	(602		)	(6,039		)	(6,641		)	(2,330		)	(4,711		)	(7,041		)
	$	24,883		$	(5,050	)	$	19,833		$	5,885		$	849		$	6,734

(1) Certain prior period balances have been reclassified to conform to current period presentation.

(2) Includes covered loans.

Net interest income was $200.7 million for the first quarter of 2012, a decrease from $201.6 million for the fourth quarter of 2011 and an increase from $181.3 million for the first quarter of 2011. The increase from the year-earlier quarter was largely due to higher interest income on total loans and an increase in interest income on securities. The decrease from the fourth quarter of 2011 was attributable to a decline in interest income on covered loans, partially offset by higher interest income on securities.

Interest income on total loans was $168.1 million for the first quarter of 2012, down 3 percent from the fourth quarter of 2011 and up 3 percent from the year-earlier quarter. The growth from the first quarter of 2011 was primarily due to a 10 percent increase in average non-covered loans and higher interest income from covered loans. The 3 percent decrease in interest income on total loans from the fourth quarter of 2011 largely reflects lower income from the accelerated accretable yield recognition on covered loans in the first quarter of 2012. Interest income from covered loans includes $15.7 million of income from the accelerated accretable yield recognition on covered loans that were paid off or fully charged off during the first quarter of 2012, compared to $18.9 million in the fourth quarter of 2011 and $7.4 million in the year-earlier quarter.

Interest income on securities was $45.4 million for the first quarter of 2012, a 10 percent increase from $41.3 million for the fourth quarter of 2011 and a 21 percent increase from $37.4 million for the first quarter of 2011. The growth in securities income from the year-earlier quarter is due to a 39 percent increase in average securities, partially offset by lower yields. The growth in securities income from the fourth quarter of 2011 is a result of a 4 percent growth in average securities and higher yields.

Total interest expense was $12.9 million for the first quarter of 2012, down from $13.7 million and $19.5 million for the fourth quarter of 2011 and first quarter of 2011, respectively. Interest expense on deposits was $4.0 million for the first quarter of 2012, down 18 percent from $4.9 million for the fourth quarter of 2011 and 60 percent from $10.2 million for the year-earlier quarter as a result of lower interest rates. Interest expense on borrowings was $8.8 million for the first quarter of 2012, relatively unchanged from the fourth quarter of 2011 and down 5 percent from $9.3 million for the same period in 2011.

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The net settlement of interest-rate swaps increased net interest income by $2.1 million for the first quarter of 2012, compared to $2.2 million for the fourth quarter of 2011 and $4.8 million for the year-earlier quarter.

The fully taxable net interest margin was 3.74 percent for the first quarter of 2012, up from 3.70 percent for the fourth quarter of 2011 and down from 3.84 percent for the first quarter of 2011. The average yield on earning assets for the first quarter of 2012 was 3.97 percent, up 2 basis points from 3.95 percent for the fourth quarter of 2011 and down 27 basis points from 4.24 percent for the year-earlier quarter. The average cost of interest-bearing liabilities decreased to 0.51 percent, or by 1 basis point, from 0.52 percent for the fourth quarter of 2011 and by 24 basis points from 0.75 percent for the same period in 2011. Fully taxable-equivalent net interest income, which includes amounts to convert nontaxable income to fully taxable-equivalent amounts, was $204.7 million for the first quarter of 2012 compared to $205.3 million for the fourth quarter of 2011 and $184.8 million for the first quarter of 2011. Fully taxable-equivalent net interest income and dividend income was $205.4 million for the first quarter of 2012 compared with $206.0 million for the fourth quarter of 2011 and $185.5 million for the same period in 2011. The $19.8 million increase in fully taxable-equivalent net interest and dividend income from the year-ago quarter was primarily generated through loans and securities growth (volume variance) and lower rates on interest-bearing liabilities, partially offset by lower yields on loans and securities (rate variance).

Average loans and leases, excluding covered loans, totaled $12.43 billion for the first quarter of 2012, an increase of 2 percent from $12.21 billion for the fourth quarter of 2011 and 10 percent from $11.26 billion for the first quarter of 2011. The increases were primarily driven by a growth in commercial loans, which grew 2 percent and 20 percent from the fourth quarter of 2011 and year-earlier quarter, respectively, and commercial real estate loans, which grew 4 percent and 13 percent for the same periods. Average covered loans were $1.44 billion for the first quarter of 2012, a decrease of 7 percent from $1.55 billion in the fourth quarter of 2011 and 21 percent from $1.81 billion for the year-ago quarter.

Average total securities, which include trading securities, were $7.93 billion for the first quarter of 2012, an increase of 4 percent from the fourth quarter of 2011 and 39 percent from the first quarter of 2011. The increases reflect the Company’s strong deposit growth which continues to outpace loan growth.

Average deposits were $20.22 billion for the first quarter of 2012, a 1 percent decrease from $20.50 billion for the fourth quarter of 2011 and an 11 percent increase from $18.18 billion for the first quarter of 2011. Average core deposits, which do not include certificates of deposits of $100,000 or more, were $19.52 billion for the first quarter of 2012 and represented 97 percent of the total average deposit balance, compared to $19.78 billion and 96 percent in the fourth quarter of 2011 and $17.36 billion and 95 percent for the year-earlier quarter. Average interest-bearing deposits were $9.27 billion for the first quarter of 2012, down 4 percent from the fourth quarter of 2011 and the year-earlier quarter. Average noninterest-bearing deposits was $10.95 billion, up 1 percent from the fourth quarter of 2011 and 29 percent from the first quarter of 2011.

Provision for Credit Losses

The Company accounts for the credit risk associated with lending activities through its allowance for loan and lease losses, reserve for off-balance sheet credit commitments and provision for credit losses. The provision for credit losses on loans and leases, excluding covered loans, is the expense recognized in the consolidated statements of income to adjust the allowance and the reserve for off-balance sheet credit commitments to the levels deemed appropriate by management, as determined through application of the Company’s allowance methodology procedures. See “Critical Accounting Policies— Allowance for Loan and Lease Losses and Reserve for Off-Balance Sheet Credit Commitments” in the Company’s Form 10-K for the year ended December 31, 2011.

The Company recorded no provision for credit losses on loans and leases, excluding covered loans, for the quarters ended March 31, 2012 and 2011. The provision reflects management’s continuing assessment of the credit quality of the Company’s loan portfolio, which is affected by a broad range of economic factors. Additional factors affecting the provision include net loan charge-offs, nonaccrual loans, specific reserves, risk rating migration and changes in the portfolio size and composition. See “Balance Sheet Analysis—Allowance for Loan and Lease Losses and Reserve for Off-Balance Sheet Credit Commitments” for further information on factors considered by the Company in assessing the credit quality of the loan portfolio and establishing the allowance for loan and lease losses.

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Nonaccrual loans, excluding covered loans, were $112.8 million at March 31, 2012, up from $112.0 million at December 31, 2011 but down from $157.4 million at March 31, 2011. Net loan recoveries on non-covered loans were $4.5 million, or 0.15 percent of total loans and leases, excluding covered loans, on an annualized basis, for the first quarter of 2012. Net loan charge-offs were $5.5 million, or 0.18 percent, for the fourth quarter of 2011 and net loan recoveries were $6.5 million, or 0.24 percent, in the year-earlier quarter. The net loan recoveries in the first quarter of 2012 were comprised principally of net recoveries in the Company’s commercial loan portfolio.

Covered loans represent loans acquired from the FDIC that are subject to loss-sharing agreements, and are primarily accounted for as acquired impaired loans under ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (“ASC 310-30”). The provision for losses on covered loans is the expense recognized in the consolidated statements of income related to impairment losses resulting from the Company’s quarterly review and update of cash flow projections on its covered loan portfolio. The Company recorded provision for losses on covered loans of $7.5 million during the first quarter of 2012, compared to $19.1 million in the first quarter of 2011. The provision for losses on covered loans is the result of changes in expected cash flows, both amount and timing, due to loan payments and the Company’s revised loss forecasts. The revisions of the loss forecasts were based on the results of management’s review of the credit quality of the outstanding covered loans and the analysis of the loan performance data since the acquisition of covered loans. The Company will continue updating cash flow projections on 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.

Credit quality will be influenced by underlying trends in the economic cycle, particularly in California and Nevada, and other factors which are beyond management’s control. Consequently, no assurances can be given that the Company will not sustain loan or lease losses, in any particular period, that are sizable in relation to the allowance for loan and lease losses.

Refer to “Loans and Leases—Asset Quality” on page 70 for further discussion of credit quality.

Noninterest Income

Noninterest income was $75.7 million in the first quarter of 2012, a decrease of 12 percent from the fourth quarter of 2011 and 19 percent from the first quarter of 2011. The decrease from the prior quarters was largely a result of lower net FDIC loss sharing income and a decrease in gains on the transfer of covered loans to OREO. Noninterest income represented 27 percent of the Company’s revenue in the first quarter of 2012, a decrease from 30 percent in the fourth quarter of 2011 and 34 percent in the year-earlier quarter.

A following table provides a summary of noninterest income by category:

	For the three months ended
	March 31,		December 31,			March 31,
(in thousands)	2012		2011			2011
Trust and investment fees	$	33,654	$	32,995		$	35,638
Brokerage and mutual fund fees	5,028		4,836			5,661
Total wealth management fees	38,682		37,831			41,299
Cash management and deposit transaction charges	11,168		10,689			11,725
International services	8,785		8,783			8,316
FDIC loss sharing income, net	866		7,633			8,605
Other noninterest income	13,559		17,476			21,558
Total noninterest income before gain (loss)	73,060		82,412			91,503
Gain on disposal of assets	2,191		4,263			2,424
Gain (loss) on sale of securities	449		(273		)	130
Impairment loss on securities	—		—			(164		)
Total noninterest income	$	75,700	$	86,402		$	93,893

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Wealth Management

The Company provides various trust, investment and wealth advisory services to its individual and business clients. The Company delivers these services through the Bank’s wealth management division as well as through its wealth management affiliates. Trust services are provided only by the Bank. Trust and investment fee revenue includes fees from trust, investment and asset management, and other wealth advisory services. The majority of these fees are based on the market value of client assets managed, advised, administered or held in custody. The remaining portion of these fees is based on the specific service provided, such as estate and financial planning services, or may be fixed fees. For those fees based on market valuations, the mix of assets held in client accounts, as well as the type of managed account, impacts how closely changes in trust and investment fee income correlate with changes in the financial markets. Changes in market valuations are reflected in fee income primarily on a trailing-quarter basis. Also included in total trust and investment fees is the Company’s portion of income from certain investments accounted for under the equity method. Trust and investment fees were $33.7 million for the first quarter of 2012, an increase of 2 percent from $33.0 million for the fourth quarter of 2011 and a decrease of 6 percent from $35.6 million for the first quarter of 2011. Money market mutual fund and brokerage fees were $5.0 million for the quarter, up 4 percent from $4.8 million for the fourth quarter of 2011 and down 11 percent from $5.7 million for the year-earlier quarter. The decline from the year-ago period was due primarily to the impact of extraordinarily low short-term interest rates.

Assets under management (“AUM”) include assets for which the Company makes investment decisions on behalf of its clients and assets under advisement for which the Company receives advisory fees from its clients. Assets under administration (“AUA”) are assets the Company holds in a fiduciary capacity or for which it provides non-advisory services. The table below provides a summary of AUM and AUA for the dates indicated:

	March 31,				%		December 31,		%
(in millions)	2012		2011		Change		2011		Change
Assets Under Management	$	32,535	$	37,852	(14	)	31,326		4
Assets Under Administration
Brokerage	5,560		6,114		(9	)	5,320		5
Custody and other fiduciary	19,743		16,147		22		17,846		11
Subtotal	25,303		22,261		14		23,166		9
Total assets under management or administration (1)	$	57,838	$	60,113	(4	)	$	54,492	6

(1)Excludes $18.48 billion and $15.95 billion and $20.43 billion of assets under management for asset managers in which the Company held a noncontrolling ownership interest as of March 31, 2012, December 31, 2011 and March 31, 2011, respectively.

AUM totaled $32.54 billion as of March 31, 2012, down 14 percent from the year-earlier quarter and up 4 percent from the fourth quarter of 2011. Assets under management or administration were $57.84 billion at March 31, 2012, down 4 percent from the year-earlier quarter and up 6 percent from the fourth quarter of 2011. The decline in AUM from the year-earlier quarter was primarily attributable to the divestiture of certain institutional assets by one of the Company’s wealth management affiliates in the third quarter of 2011 and the deconsolidation of another affiliate in the second quarter of 2011. This was partially offset by higher equity values in the first quarter of 2012.

A distribution of AUM by type of investment is provided in the following table:

	% of AUM
Investment	March 31, 2012		December 31, 2011		March 31, 2011
Equities	41	%	38	%	42	%
U.S. fixed income	26		28		24
Cash and cash equivalents	20		21		20
Other (1)	13		13		14
	100	%	100	%	100	%

(1) Includes private equity and other alternative investments.

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Other Noninterest Income

Cash management and deposit transaction fees for the first quarter of 2012 were $11.2 million, up 4 percent from the fourth quarter of 2011 and down 5 percent from the first quarter of 2011.

International services income for the first quarter of 2012 was $8.8 million, up 6 percent from the first quarter of 2011 and virtually unchanged from the fourth quarter of 2011. International services income includes foreign exchange fees, fees on commercial letters of credit and standby letters of credit, foreign collection fees and gains and losses associated with fluctuations in foreign currency exchange rates. The increase from the year-ago period was due primarily to increased client activity and the addition of new clients.

Net FDIC loss sharing income was $0.9 million for the first quarter of 2012, compared to $7.6 million for the fourth quarter of 2011 and $8.6 million for the year-earlier quarter. See “Noninterest Income and Expense Related to Covered Assets” for further discussion of FDIC loss sharing income and expense.

Net gain on disposal of assets was $2.2 million in the first quarter of 2012, compared with net gains of $4.3 million in the fourth quarter of 2011 and $2.4 million in the year-earlier quarter. The net gain is primarily due to gains recognized on the sale of covered and non-covered OREO.

The Company recognized $0.4 million of net gain on the sale of securities in the first quarter of 2012, compared with a net loss of $0.3 million for the fourth quarter of 2011 and a net gain of $0.1 million for the first quarter of 2011.

The Company did not recognize impairment losses on securities in earnings for the first quarter of 2012 and fourth quarter of 2011. Impairment losses on securities recognized in earnings were $0.2 million for the first quarter of 2011, See “Balance Sheet Analysis—Securities” for a discussion of impairment on securities available-for-sale.

Other income for the first quarter of 2012 was $13.6 million, a decrease of 22 percent from $17.5 million for the fourth quarter of 2011 and 37 percent from $21.6 million for the first quarter of 2011. The decrease in other income from both quarters in 2011 was primarily attributable to lower net gains on the transfer of covered loans to OREO, which declined to $2.5 million from $6.8 million for the fourth quarter of 2011 and $10.3 million for the first quarter of 2011.

Noninterest Expense

Noninterest expense was $200.7 million for the first quarter of 2012, an increase of 1 percent from $198.2 million for the fourth quarter of 2011 and an increase of 2 percent from $197.4 million for the first quarter of 2011. The increases were due largely to higher compensation costs and legal and professional services fees, which were offset in part by lower OREO expenses.

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The following table provides a summary of noninterest expense by category:

	For the three months ended
	March 31,		December 31,		March 31,
(in thousands)	2012		2011		2011
Salaries and employee benefits	$	120,245	$	112,822	$	111,012
All other:
Net occupancy of premises	13,686		13,616		13,346
Legal and professional fees	11,880		10,846		10,077
Information services	8,149		8,359		7,497
Depreciation and amortization	7,428		7,014		6,748
Amortization of intangibles	1,886		1,350		2,168
Marketing and advertising	6,816		8,101		6,518
Office services and equipment	3,948		4,234		4,606
Other real estate owned	12,094		15,233		14,489
FDIC assessments	4,479		4,480		9,806
Other operating	10,109		12,174		11,130
Total all other	80,475		85,407		86,385
Total noninterest expense	$	200,720	$	198,229	$	197,397

Salaries and employee benefits expense was $120.2 million for the first quarter of 2012, an increase of 7 percent from $112.8 million for the fourth quarter of 2011 and an increase of 8 percent from $111.0 million for the year-earlier quarter. The growth in salaries and employee benefits from the fourth quarter of 2011 was primarily due to seasonally higher personnel cost, including higher employer taxes, and a one-time expense affiliated with an executive’s supplemental employee retirement plan (“SERP”). See Note 14, Employee Benefit Plans, for further discussion of the SERP expense. Full-time equivalent staff was 3,235 at March 31, 2012, down from 3,256 at December 31, 2011 and 3,258 at March 31, 2011.

Salaries and employee benefits expense for the first quarter of 2012 includes $4.7 million of share-based compensation expense compared with $5.3 million for the fourth quarter of 2011 and $4.7 million for the year-earlier quarter. At March 31, 2012, there was $17.8 million of unrecognized compensation cost related to unvested stock options granted under the Company’s plans. That cost is expected to be recognized over a weighted average period of 2.9 years. At March 31, 2012, there was $26.3 million of unrecognized compensation cost related to restricted shares granted under the Company’s plans. That cost is expected to be recognized over a weighted average period of 3.5 years. In February 2012, the Company granted cash-settled restricted stock units to employees. Cash-settled restricted stock units are initially valued at the closing price of the Company’s stock on the date of award and subsequently remeasured at each reporting date until settlement. See Note 11, Share-Based Compensation, of the Notes to the Unaudited Consolidated Financial Statements for further discussion.

The remaining noninterest expense categories totaled $80.5 million for the first quarter of 2012, down from $85.4 million for the fourth quarter of 2011 and $86.4 million for the first quarter of 2011. The decrease from the prior year quarters was due primarily to lower OREO expense and FDIC assessments, partially offset by higher legal and professional fees. OREO expense was $12.1 million for the first quarter of 2012, and was comprised mostly of expense related to covered OREO. Refer to the following table for further detail on OREO expense. Of the qualified covered asset-related expenses, 80 percent is reimbursable by the FDIC and reflected in FDIC loss sharing income (expense), net in the noninterest income section of the consolidated statements of income.

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The following table provides OREO expense for non-covered OREO and covered OREO:

	For the three months ended
	March 31,		December 31,			March 31,
(in thousands)	2012		2011			2011
Non-covered OREO expense
Valuation write-downs	$	908	$	633		$	907
Holding costs and foreclosure expense (income)	171		(274		)	784
Total non-covered OREO expense	$	1,079	$	359		$	1,691
Covered OREO expense
Valuation write-downs	$	7,808	$	9,984		$	8,305
Holding costs and foreclosure expense	3,207		4,890			4,493
Total covered OREO expense	$	11,015	$	14,874		$	12,798
Total OREO expense	$	12,094	$	15,233		$	14,489

Legal and professional fees were $11.9 million for the first quarter of 2012, up 10 percent from $10.8 million in the fourth quarter of 2011 and 18 percent from $10.1 million in the year-earlier quarter. Legal and professional fees associated with covered loans and OREO were approximately $2.3 million for the first quarter of 2012, $2.6 million for the fourth quarter of 2011 and $1.8 million for the first quarter of 2011. Qualifying legal and professional fees for covered assets are also reimbursable by the FDIC at 80 percent.

Net income attributable to noncontrolling interest, representing noncontrolling ownership interests in the net income of affiliates, was $0.2 million for the first quarter of 2012, compared to $0.4 million for the fourth quarter of 2011 and $1.1 million for the year-earlier quarter.

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Noninterest Income and Expense Related to Covered Assets

The following table summarizes the components of noninterest income and noninterest expense related to covered assets for the three ended March 31, 2012, December 31, 2011 and March 31, 2011:

	For the three months ended
(in thousands)	March 31, 2012			December 31, 2011			March 31, 2011
Noninterest income related to covered assets
FDIC loss sharing income, net
Gain on indemnification asset	$	10,839		$	17,675		$	15,048
Indemnification asset accretion	(4,025		)	(3,775		)	(3,624		)
Net FDIC reimbursement for OREO and loan expenses	10,441			13,858			11,118
Removal of indemnification asset for loans paid-off or fully charged-off	(6,516		)	(5,955		)	(3,513		)
Removal of indemnification asset for unfunded loan commitments and loans transferred to OREO	(2,113		)	(4,714		)	(7,673		)
Removal of indemnification asset for OREO and net reimbursement to FDIC for OREO sales	(2,656		)	(1,543		)	(1,282		)
Loan recoveries shared with FDIC	(4,487		)	(7,853		)	(1,971		)
Increase in FDIC clawback liability	(617		)	(60		)	(276		)
Other	—			—			778
Total FDIC loss sharing income, net	866			7,633			8,605
Gain on disposal of assets
Net gain on sale of OREO	2,137			1,927			1,628
Other income
Net gain on transfers of covered loans to OREO	2,483			6,824			10,330
Amortization of fair value on acquired unfunded loan commitments	559			558			692
OREO income	905			406			661
Other	(1,018		)	(745		)	29
Total other income	2,929			7,043			11,712
Total noninterest income related to covered assets	$	5,932		$	16,603		$	21,945
Noninterest expense related to covered assets (1)
Other real estate owned
Valuation write-downs	$	7,808		$	9,984		$	8,305
Holding costs and foreclosure expense	3,207			4,890			4,493
Total other real estate owned	11,015			14,874			12,798
Legal and professional fees	2,278			2,609			1,819
Other operating expense
Other covered asset expenses	9			13			92
Total noninterest expense related to covered assets (2)	$	13,302		$	17,496		$	14,709

(1)   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.

(2)   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.

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Noninterest Income

Income and expense from FDIC loss-sharing agreements is reflected in FDIC loss sharing income (expense), net. This balance includes FDIC indemnification asset accretion or amortization, gain or loss on the FDIC indemnification asset, and expense from the reduction of the FDIC indemnification asset upon the removal of loans, OREO and unfunded loan commitments. Loans are removed when they have been fully paid off, fully charged off, sold or transferred to OREO. Net FDIC loss sharing income (expense) also includes income recognized on the portion of expenses related to covered assets that are reimbursable by the FDIC, net of income due to the FDIC, as well as the income statement effects of other loss-share transactions.

Net FDIC loss sharing income was $0.9 million for the first quarter of 2012, compared to $7.6 million in the fourth quarter of 2011 and $8.6 million in the year-earlier quarter. The decline in net FDIC loss sharing income from the prior year quarters was primarily attributable to a lower gain on the indemnification asset from the revision of the Company’s projected cash flows forecast on its covered loans. It also reflects lower FDIC reimbursement for covered OREO and loan expenses, due to lower levels of OREO and loan expense recognized in the current quarter.

The Company recognized a net gain on sales of covered OREO of $2.1 million in the first quarter of 2012 compared to $1.9 million in the fourth quarter of 2011 and $1.6 million in the first quarter of 2011. Other income related to covered assets was $2.9 million in the current quarter and consists primarily of net gain on transfers of covered loans to OREO, the amortization of fair value on acquired unfunded loan commitments and OREO income. The total balance decreased from $7.0 million in the fourth quarter of 2011 and $11.7 million in the year-earlier quarter primarily because of lower gains on transfers of covered loans to OREO. Refer to the above table for additional information on the components of other income related to covered assets for the three months ending March 31, 2012, December 31, 2011 and March 31, 2011.

Noninterest expense

Noninterest expense related to covered assets includes OREO expense, legal and professional expense and other covered asset-related expenses, and may be subject to FDIC reimbursement. Expenses must meet certain FDIC criteria in order for the expense amounts to be reimbursed. Certain amounts reflected in these balances may not be reimbursed by the FDIC if they do not meet the criteria. Total covered OREO expense, which includes valuation write-downs, holding costs and foreclosure expenses was $11.0 million for the first quarter of 2012, down from $14.9 million for the fourth quarter of 2011 and $12.8 million for the year-earlier quarter.

Segment Operations

The Company’s reportable segments are Commercial and Private Banking, Wealth Management and Other. For a more complete description of the segments, including summary financial information, see Note 18 to the Unaudited Consolidated Financial Statements.

Commercial and Private Banking

Net income for the Commercial and Private Banking segment decreased to $21.1 million for the first quarter of 2012 from $27.6 million for the first quarter of 2011. The decrease in net income from the prior-year quarter was due to a decrease in noninterest income and an increase in noninterest expense, partially offset by lower provision for losses on covered loans. Net interest income decreased to $171.7 million for the first quarter of 2012 from $172.7 million for the year-earlier quarter. A decrease in net interest income due to lower funds transfer pricing income on deposits was largely offset by higher accelerated yield recognition on covered loans that were paid off or charged off during the quarter. See Other below for a discussion of funds transfer pricing. Average loans, excluding covered loans, increased to $12.38 billion, or by 11 percent, for the first quarter of 2012 compared with the year-earlier quarter. Average covered loans were $1.44 billion for the first quarter of 2012 compared to $1.81 billion for the first quarter of 2011. Average deposits increased by 11 percent to $19.72 billion for the first quarter of 2012 from $17.75 billion for the year-earlier quarter. The growth in average deposits compared with the prior-year period was driven by new client relationships and growth in liquidity of existing clients.

There was no provision for credit losses on loans and leases, excluding covered loans, for the three months ended March 31, 2012 and in the year-earlier quarter. Provision for losses on covered loans was $7.5 million for the first quarter of 2012, compared to $19.1 million in the year-earlier quarter. Refer to “Results of Operations—Provision for Credit Losses” for further discussion of the provision.

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Noninterest income for the first quarter of 2012 was $47.2 million, down 25 percent from $63.2 million for the prior-year quarter. The decrease is primarily due to lower FDIC loss sharing income and lower gains on the transfer of covered loans to OREO.  Noninterest expense, including depreciation and amortization, increased to $175.2 million, or by 4 percent, for the first quarter of 2012 from $169.1 million for the year-earlier quarter. Noninterest expense increased from the prior year period primarily as a result of higher personnel costs and legal and professional services fees, which were offset in part by lower OREO and FDIC assessment expense.

Wealth Management

The Wealth Management segment had net income attributable to City National Corporation (“CNC”) of $1.4 million for the first quarter of 2012, an increase of 9 percent from $1.3 million for the year-earlier quarter. Noninterest income decreased to $39.4 million, or by 6 percent, for the first quarter of 2012 from $41.9 million for the year-earlier quarter. Refer to “Results of Operations—Noninterest Income—Wealth Management” for a discussion of the factors impacting fee income for the Wealth Management segment. Noninterest expense, including depreciation and amortization, was $37.4 million for the first quarter of 2012, down by 6 percent from $39.6 million for the year-earlier quarter. The reduction in expense compared with the year-earlier quarter is primarily due to lower legal fees,

Other

Net income attributable to CNC for the Other segment increased to $23.8 million for the first quarter of 2012, from $10.8 million for the first quarter of 2011. The Asset Liability Funding Center, which is included in the Other segment, is used for funds transfer pricing. The Funding Center charges the business line units for loans and pays them for generating deposits. In general, net interest income decreases in the Funding Center when loan and securities balances decrease or when deposit balances increase. However, in periods of extremely low interest rates, the funding credit given on deposits declines considerably which may cause net interest income in the Funding Center to increase. Net interest income was $28.2 million for the quarter ended March 31, 2012, an increase from $8.0 million for the year-earlier period. The increase in net interest income is due to higher funds transfer income due to loan and securities portfolio growth, and to a reduction in the funds transfer rate paid to business line units on deposit balances. Although deposits have increased from the prior-year quarter, the transfer pricing rate paid on deposits declined as a result of the continuing low interest rate environment. Noninterest income (loss) was ($10.9) million for the current quarter compared with ($11.2) million for the year-earlier quarter.

Income Taxes

The Company recognized income tax expense of $21.7 million during the first quarter of 2012, compared with tax expense of $22.8 million in the fourth quarter of 2011 and $17.9 million in the year-earlier quarter. The effective tax rate was 31.8 percent of pretax income for the first quarter of 2012, compared with 33.9 percent for the fourth quarter of 2011 and 30.5 percent for the year-earlier quarter. The effective tax rates differ from the applicable statutory federal and state tax rates due to various factors, including tax benefits from investments in affordable housing partnerships, tax-exempt income on municipal bonds, bank-owned life insurance and other adjustments.

The Company recognizes accrued interest and penalties relating to uncertain tax positions as an income tax provision expense. The Company recognized interest and penalties expense of approximately $64 thousand and $0.3 million for the three months ended March 31, 2012 and 2011, respectively. The Company had approximately $3.2 million of accrued interest and penalties as of March 31, 2012, December 31, 2011 and March 31, 2011.

The Company and its subsidiaries file a consolidated federal income tax return and also file income tax returns in various state jurisdictions. The Company is currently being audited by the Internal Revenue Service for 2011 and 2012. The Company is also currently under audit with the California Franchise Tax Board for the tax years 2005 to 2007. The potential financial statement impact, if any, resulting from completion of these audits is expected to be minimal.

From time to time, there may be differences in opinion with respect to the tax treatment of certain transactions. If a tax position which was previously recognized on the consolidated financial statements is no longer “more likely than not” to be sustained upon a challenge from the taxing authorities, the tax benefit from the tax position will be derecognized. The Company did not have any tax positions for which previously recognized benefits were derecognized during the quarter ended March 31, 2012.

See Note 13 to the Consolidated Financial Statements for further discussion of income taxes.

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BALANCE SHEET ANALYSIS

Total assets were $24.04 billion at March 31, 2012, an increase of 11 percent from $21.64 billion at March 31, 2011 and 2 percent from $23.67 billion at December 31, 2011. Average assets for the first quarter of 2012 increased to $23.64 billion from $21.38 billion for the first quarter of 2011. The increase in period-end and average assets from the year-earlier quarter reflects the growth in loans and securities.

Total average interest-earning assets for the first quarter of 2012 were $22.10 billion, up from $19.62 billion for the first quarter of 2011.

Securities

The following is a summary of amortized cost and estimated fair value for the major categories of securities available-for-sale and held-to-maturity:

	March 31, 2012				December 31, 2011				March 31, 2011
	Amortized				Amortized				Amortized
(in thousands)	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value
Securities available-for-sale:
U.S. Treasury	$	19,217	$	19,202	$	19,163	$	19,182	$	14,051	$	14,091
Federal agency - Debt	1,046,035		1,051,348		1,967,928		1,973,862		1,542,122		1,538,090
Federal agency - MBS	690,183		720,590		650,091		681,044		511,829		520,571
CMOs - Federal agency	4,304,148		4,400,318		4,239,205		4,326,907		3,236,969		3,275,555
CMOs - Non-agency	74,737		68,587		79,999		69,001		113,482		106,676
State and municipal	378,541		395,723		383,210		401,604		332,190		341,405
Other debt securities	185,968		181,792		106,051		99,074		48,816		43,885
Total available-for-sale debt securities	6,698,829		6,837,560		7,445,647		7,570,674		5,799,459		5,840,273
Equity securities and mutual funds	352		1,150		352		1,227		4,164		9,117
Total available-for-sale securities	$	6,699,181	$	6,838,710	$	7,445,999	$	7,571,901	$	5,803,623	$	5,849,390
Securities held-to-maturity (1):
Federal agency - Debt	$	104,268	$	104,596	$	40,423	$	41,203	$	—	$	—
Federal agency - MBS	173,380		174,747		75,231		76,863		—		—
CMOs - Federal agency	590,931		589,509		292,547		294,932		—		$	—
State and municipal	128,034		127,603		59,479		60,905		—		—
Total held-to-maturity securities	$	996,613	$	996,455	$	467,680	$	473,903	$	—	$	—

(1) Securities held-to-maturity are presented in the consolidated balance sheets at amortized cost.

At March 31, 2012, the available-for-sale securities portfolio had a net unrealized gain of $139.5 million, comprised of $155.8 million of unrealized gains and $16.3 million of unrealized losses. At December 31, 2011, the available-for-sale securities portfolio had a net unrealized gain of $125.9 million, comprised of $149.1 million of unrealized gains and $23.2 million of unrealized losses. At March 31, 2011, the available-for-sale securities portfolio had a net unrealized gain of $45.8 million, comprised of $86.1 million of unrealized gains and $40.3 million of unrealized losses.

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The following table provides the expected remaining maturities of debt securities included in the securities portfolio at March 31, 2012. The maturities of mortgage-backed securities are allocated according to the average life of expected cash flows. Average expected maturities will differ from contractual maturities because of the amortizing nature of the loan collateral and prepayment behavior of borrowers.

(in thousands)	One year or less		Over 1 year through 5 years		Over 5 years through 10 years		Over 10 years		Total
Securities available-for-sale:
U.S. Treasury	$	10,013	$	9,189	$	—	$	—	$	19,202
Federal agency - Debt	847,374		203,974		—		—		1,051,348
Federal agency - MBS	14		447,143		273,433		—		720,590
CMOs - Federal agency	181,389		4,040,298		178,631		—		4,400,318
CMOs - Non-agency	8,286		33,100		27,201		—		68,587
State and municipal	53,996		209,947		80,836		50,944		395,723
Other	3,383		136,042		42,367		—		181,792
Total debt securities available-for-sale	$	1,104,455	$	5,079,693	$	602,468	$	50,944	$	6,837,560
Amortized cost	$	1,099,279	$	4,965,611	$	583,091	$	50,848	$	6,698,829
Securities held-to-maturity:
Federal agency - Debt	$	10,950	$	33,669	$	—	$	59,649	$	104,268
Federal agency - MBS	—		—		173,380		—		173,380
CMOs - Federal agency	—		45,373		545,558		—		590,931
State and municipal	—		8,259		79,468		40,307		128,034
Total debt securities held-to-maturity at amortized cost	$	10,950	$	87,301	$	798,406	$	99,956	$	996,613

Impairment Assessment

The Company performs a quarterly assessment of the debt and equity securities in its investment portfolio that have an unrealized loss to determine whether the decline in the fair value of these securities below their cost is other-than-temporary. Impairment is considered other-than-temporary when it becomes probable that an investor will be unable to recover the cost of an investment. The Company’s impairment assessment takes into consideration factors such as the length of time and the extent to which the market value has been less than cost; the financial condition and near-term prospects of the issuer, including events specific to the issuer or industry; defaults or deferrals of scheduled interest, principal or dividend payments; external credit ratings and recent downgrades; and whether the Company intends to sell the security and whether it is more likely than not it will be required to sell the security prior to recovery of its amortized cost basis. If a decline in fair value is judged to be other than temporary, the cost basis of the individual security is written down to fair value which then becomes the new cost basis. The new cost basis is not adjusted for subsequent recoveries in fair value.

The Company determined through its impairment assessment process that none of the securities held had a credit loss impairment at March 31, 2012. Accordingly, there were no impairment losses recognized in earnings on securities available-for-sale for the three months ended March 31, 2012. The Company recognized an impairment loss of $0.2 million in earnings related to non-agency CMOs for the three months ended March 31, 2011. The Company recognized $2.4 million and $4.3 million of non-credit-related other-than-temporary impairment in AOCI on securities available-for-sale at March 31, 2012 and 2011, respectively. There were no impairment losses recognized in earnings or AOCI for securities held-to-maturity during the three months ended March 31, 2012.

Of the total securities available-for-sale in an unrealized loss position at March 31, 2012, approximately $512.0 billion of securities with unrealized losses of $1.8 million were in a continuous unrealized loss position for less than 12 months and $51.7 million of securities with unrealized losses of $14.5 million were in a continuous loss position for more than 12 months. While the securities in a loss position at March 31, 2012 are comprised mostly of federal agency CMOs, a significant portion of the total gross unrealized loss relates to non-agency CMOs and collateralized debt obligation senior notes.

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At December 31, 2011, approximately $1.28 billion of securities with unrealized losses of $4.2 million were in a continuous unrealized loss position for less than 12 months and $48.1 million of securities with unrealized losses of $19.0 million were in a continuous loss position for more than 12 months. At March 31, 2011, approximately $2.18 billion of securities with unrealized losses of $25.1 million were in a continuous unrealized loss position for less than 12 months and $69.9 million of securities with unrealized losses of $15.2 million were in a continuous unrealized loss position for more than 12 months.

See Note 4, Securities, of the Notes to Consolidated Financial Statements for further disclosures related to the securities portfolio.

Loan and Lease Portfolio

A comparative period-end loan and lease table is presented below:

Loans and Leases

	March 31,			December 31,			March 31,
(in thousands)	2012			2011			2011
Commercial	$	5,175,396		$	4,846,594		$	4,096,507
Commercial real estate mortgages	2,213,114			2,110,749			1,902,862
Residential mortgages	3,805,807			3,763,218			3,603,058
Real estate construction	313,409			315,609			415,241
Equity lines of credit	715,997			741,081			733,567
Installment	125,793			132,647			146,779
Lease financing	398,386			399,487			371,670
Loans and leases, excluding covered loans	12,747,902			12,309,385			11,269,684
Less: Allowance for loan and lease losses	(266,077		)	(262,557		)	(263,356		)
Loans and leases, excluding covered loans, net	12,481,825			12,046,828			11,006,328
Covered loans	1,397,156			1,481,854			1,766,084
Less: Allowance for loan losses	(61,471		)	(64,565		)	(82,016		)
Covered loans, net	1,335,685			1,417,289			1,684,068
Total loans and leases	$	14,145,058		$	13,791,239		$	13,035,768
Total loans and leases, net	$	13,817,510		$	13,464,117		$	12,690,396

Total loans and leases were $14.15 billion, $13.79 billion and $13.04 billion at March 31, 2012, December 31, 2011 and March 31, 2011, respectively. Total loans, excluding covered loans, were $12.75 billion, $12.31 billion and $11.27 billion at March 31, 2012, December 31, 2011 and March 31, 2011, respectively.

Total loans and leases, excluding covered loans, at March 31, 2012 increased 4 percent from December 31, 2011 and 13 percent from March 31, 2011. Commercial loans, including lease financing, were up 6 percent from year-end 2011 and 25 percent from the year-earlier quarter. Commercial real estate mortgage loans increased by 5 percent from year-end 2011 and 16 percent from the year-earlier quarter. Residential mortgages grew by 1 percent from year-end 2011 and 6 percent from the year-earlier quarter. Real estate construction loans declined by 1 percent and 25 percent for the same periods, respectively.

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Covered Loans

Covered loans represent loans acquired from the FDIC that are subject to loss-sharing agreements and were $1.40 billion at March 31, 2012, $1.48 billion as of December 31, 2011 and $1.77 billion as of March 31, 2011. Covered loans, net of allowance for loan losses, were $1.34 billion as of March 31, 2012, $1.42 billion as of December 31, 2011 and $1.68 billion as of March 31, 2011.

The following is a summary of the major categories of covered loans:

	March 31,			December 31,			March 31,
(in thousands)	2012			2011			2011
Commercial	$	22,395		$	30,911		$	43,450
Commercial real estate mortgages	1,219,923			1,288,352			1,508,551
Residential mortgages	13,378			14,931			18,210
Real estate construction	135,065			140,992			188,344
Equity lines of credit	5,210			5,167			5,944
Installment	1,185			1,501			1,585
Covered loans	1,397,156			1,481,854			1,766,084
Less: Allowance for loan losses	(61,471		)	(64,565		)	(82,016		)
Covered loans, net	$	1,335,685		$	1,417,289		$	1,684,068

The Company evaluated the acquired loans from its FDIC-assisted acquisitions and concluded that all loans, with the exception of a small population of acquired loans, would be accounted for under ASC 310-30. Loans are accounted for under ASC 310-30 when there is evidence of credit deterioration since origination and for which it is probable, at acquisition, that the Company would be unable to collect all contractually required payments. Interest income is recognized on all acquired impaired loans through accretion of the difference between the carrying amount of the loans and their expected cash flows.

At acquisition date, the Company recorded an indemnification asset for its FDIC-assisted acquisitions. The FDIC indemnification asset represents the present value of the expected reimbursement from the FDIC related to expected losses on acquired loans, OREO and unfunded loan commitments. The FDIC indemnification asset from all FDIC-assisted acquisitions was $185.4 million at March 31, 2012, $204.3 million at December 31, 2011 and $270.6 million as of March 31, 2011.

Other

To grow loans and diversify and manage concentration risk of the Company’s loan portfolio, the Company purchases and sells participations in loans. Included in this portfolio are purchased participations in Shared National Credits (“SNC”). Purchased SNC commitments totaled $2.64 billion, or 14 percent of total loan commitments, at March 31, 2012, $2.24 billion or 12 percent at December 31, 2011 and $1.31 billion or 8 percent at March 31, 2011. Outstanding loan balances on purchased SNCs were $1.12 billion, or approximately 9 percent of total loans outstanding, excluding covered loans, at March 31, 2012, compared to $941.7 million or 8 percent at December 31, 2011 and $587.6 million or 5 percent at March 31, 2011.

Bank regulatory guidance on risk management practices for financial institutions with high or increasing concentrations of commercial real estate (“CRE”) loans on their balance sheets emphasizes the need for sound internal risk management practices for those institutions that have experienced rapid growth in CRE lending, have notable exposure to specific types of CRE, or are approaching or exceeding the supervisory criteria used to evaluate CRE concentration risk. The supervisory criteria are: total reported loans for construction, land development and other land represent 100 percent of the institution’s total risk-based capital, and both total CRE loans represent 300 percent or more of the institution’s total risk-based capital and the institution’s CRE loan portfolio has increased 50 percent or more within the last 36 months. As of March 31, 2012, total loans for construction, land development and other land represented 20 percent of total risk-based capital; total CRE loans represented 139 percent of total risk-based capital and the total portfolio of loans for construction, land development, other land and CRE increased 14 percent over the last 36 months.

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Asset Quality

Credit Risk Management

The Company has a comprehensive methodology to monitor credit quality and prudently manage credit concentration within each portfolio. The methodology includes establishing concentration limits to ensure that the loan portfolio is diversified. The limits are evaluated quarterly and are intended to mitigate the impact of any segment on the Company’s capital and earnings. The limits cover major industry groups, geography, product type, loan size and customer relationship. Additional sub-limits are established for certain industries where the bank has higher exposure. The concentration limits are approved by the Bank’s Credit Policy Committee and reviewed annually by the Audit & Risk Committee of the Board of Directors.

The loan portfolios are monitored through delinquency tracking and a dynamic risk rating process that is designed to detect early signs of deterioration. In addition, once a loan has shown signs of deterioration, it is transferred to a Special Assets Department that consists of professionals who specialize in managing problem assets. An oversight group meets monthly to review the progress of problem loans and OREO. Also, the Company has established portfolio review requirements that include a periodic review and risk assessment by the Risk Management Division that reports to the Audit & Risk Committee of the Board of Directors.

Through the recent economic down-turn, the Company has taken and continues to take steps to address deterioration in credit quality in various segments of its loan portfolio. Deterioration has been centered in the land, acquisition and development and construction portfolios with lesser deterioration in its commercial loans portfolio. These steps have included modifying underwriting standards, implementation of loss mitigation actions including curtailment of certain commitments and lending to certain sectors, and proactively identifying, managing, and resolving problem loans.

Geographic Concentrations and Economic Trends by Geographic Region

The Company’s lending activities are predominately in California, and to a lesser extent, New York and Nevada. Excluding covered loans, at March 31, 2012, California represented 82 percent of total loans outstanding and Nevada and New York represented 3 percent and 6 percent, respectively. The remaining 9 percent of total loans outstanding represented other states. Concentrations of credit risk arise when a number of clients are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions. Although the Company has a diversified loan portfolio, a substantial portion of the loan portfolio and credit performance depends on the economic stability of Southern California. California has experienced significant declines in real estate values and adverse effects of the recession. California’s unemployment rate in March 2012 was 11 percent. The Company’s loan portfolio has been affected by the economy, but the impact is lessened by the Company having most of its loans in large metropolitan California cities such as Los Angeles, San Francisco and San Diego rather than in the outlying suburban communities that have seen higher declines in real estate values. Within the Company’s Commercial loan portfolio, the five California counties with the largest exposures are Los Angeles (66 percent), Orange (7 percent), San Diego (5 percent), San Francisco (4 percent) and Ventura (3 percent). Within the Commercial Real Estate Mortgage loan portfolio, the five California counties with the largest exposures are Los Angeles (39 percent), San Diego (12 percent), Orange (11 percent), Ventura (5 percent) and Riverside (4 percent). For the Real Estate Construction loan portfolio, the concentration in California is predominately in Los Angeles (26 percent), Ventura (10 percent), Santa Barbara (10 percent), San Diego (6 percent) and Riverside (5 percent).

Generally, loan portfolios related to borrowers or properties located within Nevada have fared worse than California and New York. The Nevada economy continues to struggle and the recovery is anticipated to be protracted and it is dependent on economic improvement at the national level such that Nevada tourism increases to a level that supports new jobs and real estate development. In March 2012, the Nevada unemployment rate was 12 percent. The consensus outlook for 2012 is that the Nevada economy will remain challenged in part due to its troubled real estate and tourism sectors. The Company’s construction and land portfolios in Nevada, which had been affected by significant stress in prior years, now represent 0.4 percent of total loans, excluding covered loans. The Company has very few residential mortgage loans in Nevada. The New York loan portfolio primarily relates to private banking clients in the Entertainment and Legal industries which continue to perform well.

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Within the Company’s covered loan portfolio at March 31, 2012, the five states with the largest concentration were California (39 percent), Texas (11 percent), Nevada (7 percent), New York (5 percent) and Arizona (4 percent). The remaining 34 percent of total covered loans outstanding represented other states.

Allowance for Loan and Lease Losses and Reserve for Off-Balance Sheet Credit Commitments

A consequence of lending activities is that losses may be experienced. The amount of such losses will vary from time to time depending upon the risk characteristics of the loan portfolio as affected by economic conditions, changing interest rates, and the financial performance of borrowers. The allowance for loan and lease losses and the reserve for off-balance sheet credit commitments which provide for the risk of losses inherent in the credit extension process, are increased by the provision for credit losses charged to operating expense. The allowance for loan and lease losses is decreased by the amount of charge-offs, net of recoveries. There is no exact method of predicting specific losses or amounts that ultimately may be charged off on particular segments of the loan portfolio.

The Company has an internal credit risk analysis and review staff that issues reports to the Audit & Risk Committee of the Board of Directors and continually reviews loan quality. This analysis includes a detailed review of the classification and categorization of problem loans, potential problem loans and loans to be charged off, an assessment of the overall quality and collectibility of the portfolio, consideration of the credit loss experience, trends in problem loans and concentration of credit risk, as well as current economic conditions, particularly in California and Nevada. Management then evaluates the allowance, determines its appropriate level and the need for additional provisions, and presents its analysis to the Audit & Risk Committee which ultimately reviews and approves management’s recommendation.

The provision is the expense recognized in the consolidated statements of income to adjust the allowance and reserve to the level deemed appropriate by management, as determined through application of the Company’s allowance methodology procedures. See “Critical Accounting Policies—Allowance for Loan and Lease Losses and Reserve for Off-Balance Sheet Credit Commitments” in the Company’s 2011 Annual Report on Form 10-K. The process used for determining the adequacy of the reserve for off-balance sheet credit commitments is consistent with the process for the allowance for loan and lease losses.

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The following table summarizes the activity in the allowance for loan and lease losses and the reserve for off-balance sheet credit commitments, excluding covered loans, for the three months ended March 31, 2012 and 2011. Activity is provided by loan type which is consistent with the Company’s methodology for determining the allowance for loan and lease losses:

Changes in Allowance for Loan and Lease Losses

	For the three months ended
	March 31,
(in thousands)	2012			2011
Loans and leases outstanding, excluding covered loans	$	12,747,902		$	11,269,684
Average loans and leases outstanding, excluding covered loans	$	12,432,292		$	11,255,887
Allowance for loan and lease losses (1)
Balance, beginning of period	$	262,557		$	257,007
Loans charged-off:
Commercial	(8,917		)	(3,238		)
Commercial real estate mortgages	(692		)	(2,799		)
Residential mortgages	(554		)	(647		)
Real estate construction	(1,601		)	(566		)
Equity lines of credit	(189		)	(793		)
Installment	(209		)	(324		)
Total loans charged-off	(12,162		)	(8,367		)
Recoveries of loans previously charged-off:
Commercial	14,200			1,301
Commercial real estate mortgages	26			9,011
Residential mortgages	60			32
Real estate construction	1,705			4,392
Equity lines of credit	35			36
Installment	626			122
Total recoveries	16,652			14,894
Net recoveries	4,490			6,527
Transfers to reserve for off-balance sheet credit commitments	(970		)	(178		)
Balance, end of period	$	266,077		$	263,356
Net recoveries to average loans and leases, excluding covered loans (annualized)	0.15		%	0.24		%
Allowance for loan and lease losses to total period-end loans and leases, excluding covered loans	2.09		%	2.34		%
Reserve for off-balance sheet credit commitments
Balance, beginning of period	$	23,097		$	21,529
Transfers from allowance	970			178
Balance, end of period	$	24,067		$	21,707

(1) The allowance for loan and lease losses in this table excludes amounts related to covered loans.

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The following table summarizes the activity in the allowance for loan losses on covered loans for the three months ended March 31, 2012 and 2011:

	For the three months ended March 31,
(in thousands)	2012			2011
Balance, beginning of period	$	64,565		$	67,389
Provision for losses	7,466			19,116
Reduction in allowance due to loan removals	(10,560		)	(4,489		)
Balance, end of period	$	61,471		$	82,016

The allowance for loan losses on covered loans was $61.5 million as of March 31, 2012, compared to $64.6 million at December 31, 2011 and $82.0 million at March 31, 2011. The Company recorded provision expense of $7.5 million and $19.1 million on covered loans for the three months ended March 31, 2012 and 2011, respectively. The Company updates its cash flow projections for covered loans accounted for under ASC 310-30 on a quarterly basis, and may recognize provision expense and an allowance for loan losses as a result of that analysis. The loss on covered loans is the result of changes in expected cash flows, both amount and timing, due to loan payments and the Company’s revised loss forecasts, though overall estimated credit losses decreased as compared with previous expectations. The revisions of the loss forecasts were based on the results of management’s review of the credit quality of the outstanding covered loans and the analysis of the loan performance data since the acquisition of covered loans. The allowance for loan losses on covered loans is reduced for any loan removals. A loan is removed when it has been fully paid-off, fully charged off, sold or transferred to OREO

Impaired Loans

Loans, other than those included in large groups of smaller-balance homogeneous loans, are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement, including scheduled interest payments. The assessment for impairment occurs when and while such loans are on nonaccrual, or when the loan has been restructured. When a loan with unique risk characteristics has been identified as being impaired, the amount of impairment will be measured by the Company using discounted cash flows, except when it is determined that the primary (remaining) source of repayment for the loan is the operation or liquidation of the underlying collateral. In these cases, the current fair value of the collateral, reduced by costs to sell, will be used in place of discounted cash flows. As a final alternative, the observable market price of the debt may be used to assess impairment. In general, nonperforming loans under $500,000 are not individually evaluated for impairment. Instead, these loans are measured using historical loss factors which approximate the discounted cash flows method.

If the measurement of the impaired loan is less than the recorded investment in the loan (including accrued interest, net deferred loan fees or costs and unamortized premium or discount), an impairment allowance is recognized by creating or adjusting the existing allocation of the allowance for loan and lease losses. Interest payments received on impaired loans are generally applied as follows: (1) to principal if the loan is on nonaccrual principal recapture status, (2) to interest income if the loan is on cash basis nonaccrual and (3) to interest income if the impaired loan has been returned to accrual status.

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The following table presents information on impaired loans as of March 31, 2012, December 31, 2011 and March 31, 2011:

	March 31, 2012				December 31, 2011				March 31, 2011
(in thousands)	Loans and Leases		Related Allowance		Loans and Leases		Related Allowance		Loans and Leases		Related Allowance
Impaired loans, excluding covered loans:
Nonaccrual loans (1)	$	104,441			$	101,873			$	145,113
Troubled debt restructured loans on accrual.	46,111				46,647				—
Deferred fees, accrued interest, and premiums and discounts, net	385				214				375
Total recorded investment in impaired loans, excluding covered loans	$	150,937			$	148,734			$	145,488
Total impaired loans with an allowance	$	48,154	$	14,118	$	49,079	$	13,262	$	33,861	$	8,655
Total impaired loans with no related allowance	102,783		—		99,655		—		111,627		—
Total impaired loans by loan type:
Commercial	$	40,415	$	3,335	$	25,780	$	7,135	$	13,323	$	2,291
Commercial real estate mortgages	22,306		1,019		30,678		1,551		25,790		1,060
Residential mortgages	13,000		331		9,146		108		12,476		384
Real estate construction	67,686		9,395		75,811		4,377		81,604		334
Equity lines of credit	6,980		38		6,633		91		4,249		72
Installment	550		—		658		—		6,938		4,514
Lease financing	—		—		28		—		1,108		—
Total impaired loans, excluding covered loans	$	150,937	$	14,118	$	148,734	$	13,262	$	145,488	$	8,655
Impaired covered loans	$	422	—		$	422	—		$	2,343	—

(1)   Impaired loans exclude $8.4 million, $10.2 million and $12.3 million of nonaccrual loans under $500,000 that are not individually evaluated for impairment at March 31, 2012, December 31, 2011 and March 31, 2011, respectively.

The recorded investment in impaired loans, excluding covered loans, were $150.9 million at March 31, 2012, $148.7 million at December 31, 2011 and $145.5 million at March 31, 2011. Impaired covered loans were $0.4 million at March 31, 2012, $0.4 million at December 31, 2011 and $2.3 million at March 31, 2011, and are included in the Company’s population of acquired covered loans that are accounted for outside the scope of ASC 310-30.

Nonaccrual, Past Due and Restructured Loans

Total nonperforming assets (nonaccrual loans and OREO), excluding covered assets, were $141.9 million, or 1.11 percent of total loans and OREO, excluding covered assets, at March 31, 2012, compared with $142.8 million, or 1.16 percent, at December 31, 2011, and $213.7 million, or 1.89 percent, at March 31, 2011. Total nonperforming covered assets (nonaccrual covered loans and covered OREO) were $78.9 million at March 31, 2012, $99.0 million at December 31, 2011 and $124.2 million at March 31, 2011.

Troubled debt restructured loans were $88.1 million, before specific reserves of $4.5 million, at March 31, 2012. Troubled debt restructured loans were $89.4 million, before specific reserves of $1.7 million, at December 31, 2011. At March 31, 2011, troubled debt restructured loans were $10.1 million, before specific reserves of $1.6 million. Troubled debt restructured loans included $46.1 million and $46.6 million of restructured loans on accrual status at March 31, 2012 and December 31, 2011. There were no troubled debt restructured loans on accrual status at March 31, 2011. There were no commitments to lend additional funds on restructured loans at March 31, 2012.

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The following table presents information on nonaccrual loans and OREO as of March 31, 2012, December 31, 2011 and March 31, 2011:

	March 31,			December 31,			March 31,
(in thousands)	2012			2011			2011
Nonperforming assets, excluding covered assets
Nonaccrual loans, excluding covered loans
Commercial	$	19,584		$	19,888		$	17,944
Commercial real estate mortgages	21,071			21,948			28,028
Residential mortgages	13,628			9,771			14,544
Real estate construction	48,964			50,876			81,448
Equity lines of credit	8,831			8,669			6,676
Installment	729			874			7,399
Lease financing	—			—			1,353
Total nonaccrual loans, excluding covered loans	112,807			112,026			157,392
OREO, excluding covered OREO	29,074			30,790			56,342
Total nonperforming assets, excluding covered assets	$	141,881		$	142,816		$	213,734
Nonperforming covered assets
Nonaccrual loans	$	422		$	422		$	2,343
OREO	78,456			98,550			121,822
Total nonperforming covered assets	$	78,878		$	98,972		$	124,165
Ratios (excluding covered assets):
Nonaccrual loans as a percentage of total loans	0.88		%	0.91		%	1.40		%
Nonperforming assets as a percentage of total loans and OREO	1.11			1.16			1.89
Allowance for loan and lease losses to nonaccrual loans	235.87			234.37			167.32
Allowance for loan and lease losses to total nonperforming assets	187.54			183.84			123.22
Allowance for loan and lease losses to total loans and leases	2.09			2.13			2.34

Company policy requires that a loan be placed on nonaccrual status if either principal or interest payments are 90 days past due, unless the loan is both well secured and in process of collection, or if full collection of interest or principal becomes uncertain, regardless of the time period involved. Covered loans accounted for under ASC 310-30 are generally considered accruing and performing loans as the loans accrete interest income over the estimated life of the loan when cash flows are reasonably estimable. Accordingly, acquired impaired covered loans that are contractually past due are still considered to be accruing and performing loans. If the timing and amount of future cash flows is not reasonably estimable, the loans may be classified as nonaccrual loans and interest income is not recognized until the timing and amount of future cash flows can be reasonably estimated.

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Loans are considered past due following the date when either interest or principal is contractually due and unpaid. A summary of past due is provided below:

(in thousands)	March 31, 2012		December 31, 2011		March 31, 2011
Past due loans, excluding covered loans
30-89 days past due	$	34,391	$	17,978	$	26,854
90 days or more past due on accrual status:
Commercial	7		—		2,556
Residential mortgages	379		379		1,123
Equity lines of credit	268		74		—
Total 90 days or more past due on accrual status	$	654	$	453	$	3,679
Past due covered loans
30-89 days past due	$	59,426	$	49,111	$	89,263
90 days or more past due on accrual status	265,175		330,169		390,267

Nonaccrual loans, excluding covered loans, were $112.8 million at March 31, 2012, up slightly from $112.0 million at December 31, 2011 and a decrease from $157.4 million at March 31, 2011. Net loan recoveries in the first quarter of 2012 were $4.5 million, or 0.15 percent of average loans and leases, excluding covered loans, on an annualized basis, compared with net loan charge-offs of $5.5 million, or 0.18 percent, for the fourth quarter of 2011, and net loan recoveries of $6.5 million, or 0.24 percent, for the first quarter of 2011. In accordance with the Company’s allowance for loan and lease losses methodology and in response to continuing credit quality improvement, the Company recorded no provision for loan and lease losses for the three months ending March 31, 2012. The Company recorded no provision in the first quarter of 2011 and a $5.0 million provision in the fourth quarter of 2011.

The allowance for loan and lease losses, excluding covered loans, was $266.1 million as of March 31, 2012, compared with $262.6 million as of December 31, 2011 and $263.4 million as of March 31, 2011. The ratio of the allowance for loan and lease losses as a percentage of total loans and leases, excluding covered loans, was 2.09 percent at March 31, 2012 compared to 2.13 percent at December 31, 2011 and 2.34 percent at March 31, 2011. The allowance for loan and lease losses as a percentage of nonperforming assets, excluding covered assets, was 187.5 percent, 183.8 percent, and 123.2 percent at March 31, 2012, December 31, 2011 and March 31, 2011, respectively. The Company believes that its allowance for loan and lease losses continues to be adequate.

All nonaccrual loans greater than $500,000 are considered impaired and are individually analyzed. The Company does not maintain a reserve for impaired loans where the carrying value of the loan is less than the fair value of the collateral, reduced by costs to sell. Where the carrying value of the impaired loan is greater than the fair value of the collateral, less costs to sell, the Company specifically establishes an allowance for loan and lease losses to cover the deficiency. This analysis ensures that the non-accruing loans have been adequately reserved.

At March 31, 2012, there were no acquired impaired covered loans accounted for under ASC 310-30 that were on nonaccrual basis. Of the population of covered loans that are accounted for outside the scope of ASC 310-30, the Company had $0.4 million of acquired covered loans that were on nonaccrual status at March 31, 2012 and December 31, 2011, and $2.3 million at March 31, 2011.

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The table below summarizes the total activity in non-covered and covered nonaccrual loans for the three months ended March 31, 2012 and 2011:

Changes in Nonaccrual Loans

	For the three months ended March 31,
(in thousands)	2012			2011
Balance, beginning of the period	$	112,448		$	193,480
Loans placed on nonaccrual	19,732			18,695
Charge-offs	(11,126		)	(5,694		)
Loans returned to accrual status	(206		)	(5,208		)
Repayments (including interest applied to principal)	(5,603		)	(33,584		)
Transfers to OREO	(2,016		)	(7,954		)
Balance, end of the period	$	113,229		$	159,735

In addition to loans disclosed above as past due or nonaccrual, management has also identified $40.3 million of loans to 18 borrowers as of April 24, 2012, where the ability to comply with the present loan payment terms in the future is questionable. However, the inability of the borrowers to comply with repayment terms was not sufficiently probable to place the loan on nonaccrual status at March 31, 2012, and the identification of these loans is not necessarily indicative of whether the loans will be placed on nonaccrual status. This amount was determined based on analysis of information known to management about the borrowers’ financial condition and current economic conditions. In the 2011 Form 10-K, the Company reported that management had identified $35.7 million of loans to 19 borrowers where the ability to comply with the loan payment terms in the future was questionable. Management’s classification of credits as nonaccrual, restructured or problems does not necessarily indicate that the principal is uncollectible in whole or part.

Other Real Estate Owned

The following tables provide a summary of OREO activity for the three months ended March 31, 2012 and 2011:

	For the three months ended March 31, 2012									For the three months ended March 31, 2011
(in thousands)	Non- Covered			Covered OREO			Total			Non- Covered			Covered OREO			Total
Balance, beginning of period	$	30,790		$	98,550		$	129,340		$	57,317		$	120,866		$	178,183
Additions	2,217			6,075			8,292			6,562			27,577			34,139
Sales	(2,877		)	(18,362		)	(21,239		)	(6,064		)	(18,317		)	(24,381		)
Valuation adjustments	(1,056		)	(7,807		)	(8,863		)	(1,473		)	(8,304		)	(9,777		)
Balance, end of period	$	29,074		$	78,456		$	107,530		$	56,342		$	121,822		$	178,164

OREO was $107.5 million at March 31, 2012, $129.3 million at December 31 2011 and $178.2 million at March 31, 2011, respectively. The OREO balance at March 31, 2012 includes covered OREO of $78.5 million compared with $98.6 million at December 31, 2011 and $121.8 million at March 31, 2011. Covered OREO represents OREO from the FDIC-assisted acquisitions that is subject to loss-sharing agreements. The balance of OREO at March 31, 2012, December 31, 2011 and March 31, 2011 is net of valuation allowances of $36.4 million, $37.4 million and $14.6 million, respectively.

The Company recognized $2.2 million in total net gain on the sale of OREO in the first quarter of 2012, compared with $4.2 million in the fourth quarter of 2011 and $2.5 million in the year-earlier quarter. Net gain on the sale of OREO in the first quarter of 2012 included $2.1 million of net gain related to the sale of covered OREO, compared to $1.9 million in the fourth quarter of 2011 and $1.6 million in the year-earlier quarter.

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Covered OREO expenses and valuation write-downs are recorded in the noninterest expense section of the consolidated statements of income and gains or losses on sale of covered OREO are recognized in the noninterest income section. Under the loss sharing agreements, 80 percent of eligible covered OREO expenses, valuation write-downs, and losses on sales are reimbursable to the Company from the FDIC and 80 percent of covered gains on sales are payable to the FDIC. The portion of these expenses that is reimbursable or income that is payable is recorded in FDIC loss sharing income (expense), net in the noninterest income section of the consolidated statements of income.

Other Assets

The following table presents information on other assets: 

	March 31,		December 31,		March 31,
(in thousands)	2012		2011		2011
Accrued interest receivable	$	67,381	$	67,257	$	63,042
Deferred compensation fund assets	60,689		53,648		56,466
Stock in government agencies	103,762		107,423		117,097
Private equity and alternative investments	40,083		39,919		37,958
Bank-owned life insurance	81,025		80,337		80,257
Mark-to-market on derivatives	57,891		62,230		39,860
Income tax receivable	39,345		40,300		51,836
Prepaid FDIC assessment	33,117		36,975		51,567
FDIC receivable	22,919		19,763		39,914
Other	76,013		69,689		95,804
Total other assets	$	582,225	$	577,541	$	633,801

Deposits

Deposits totaled $20.79 billion, $20.39 billion and $18.48 billion at March 31, 2012, December 31, 2011 and March 31, 2011, respectively. Average deposits totaled $20.22 billion for the first quarter of 2012, a decrease of 1 percent from $20.50 billion for the fourth quarter of 2011 and an increase of 11 percent from $18.18 billion for the first quarter of 2011. Core deposits, which include noninterest-bearing deposits and interest-bearing deposits excluding time deposits of $100,000 and over, provide a stable source of low cost funding. Average core deposits were $19.52 billion, $19.78 billion and $17.36 billion for the quarters ended March 31, 2012, December 31, 2011 and March 31, 2011, respectively, and represented 97 percent, 96 percent and 95 percent of total deposits for the same periods. Average noninterest-bearing deposits in the first quarter of 2012 increased 1 percent and 29 percent compared with the fourth quarter of 2011 and year-earlier quarter, respectively.

Treasury Services deposit balances, which consists primarily of title, escrow, community association and property management deposits, averaged $1.70 billion in the first quarter of 2012, compared with $1.67 billion in the fourth quarter of 2011 and $1.51 billion for the first quarter of 2011. The increases were due to the addition of new title and escrow clients and an increase in residential and commercial real estate activity by the company’s title and escrow clients.

Borrowed Funds

Total borrowed funds were $704.8 million, $747.8 million and $854.8 million at March 31, 2012, December 31, 2011 and March 31, 2011, respectively. Total average borrowed funds were $863.0 million, $702.4 million and $858.6 million for the quarters ended March 31, 2012, December 31, 2011 and March 31, 2011, respectively.

Short-term borrowings consist of funds with remaining maturities of one year or less. Short-term borrowings were $222.8 million as of March 31, 2012 compared to $50.0 million as of December 31, 2011 and $151.7 million as of March 31, 2011. Short-term borrowings at March 31, 2012 consist primarily of the current portion of senior notes that mature in February 2013.

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Long-term debt consists of borrowings with remaining maturities greater than one year and is primarily comprised of senior notes, subordinated debt and junior subordinated debt. Long-term debt was $482.0 million, $697.8 million and $703.2 million as of March 31, 2012, December 31, 2011 and March 31, 2011, respectively. The Company’s long-term borrowings have maturity dates ranging from July 2019 to November 2034.

Off-Balance Sheet

In the normal course of business, the Company is a party to financial instruments with off-balance sheet risk. These financial instruments include commitments to extend credit and letters of credit; and to invest in affordable housing funds, private equity and other alternative investments. These instruments involve elements of credit, foreign exchange, and interest rate risk, to varying degrees, in excess of the amount reflected in the consolidated balance sheets.

Exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and letters of credit is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments, and will evaluate each client’s creditworthiness on a case-by-case basis.

Commitments to extend credit are agreements to lend to a client as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since a portion of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company had off-balance sheet credit commitments totaling $5.96 billion at March 31, 2012, $5.67 billion at December 31, 2011 and $4.73 billion at March 31, 2011.

Standby letters of credit are commitments issued by the Company to guarantee the obligations of its customer to beneficiaries. Commercial letters of credit are issued on behalf of customers to ensure payment in connection with trade transactions. The Company had $715.1 million in letters of credit at March 31, 2012, of which $701.2 million relate to standby letters of credit and $13.9 million relate to commercial letters of credit. The Company had $723.5 million outstanding in letters of credit at December 31, 2011, of which $708.9 million relate to standby letters of credit and $14.7 million relate to commercial letters of credit. At March 31, 2011, the Company had $602.6 million outstanding in letters of credit of which $589.2 million relate to standby letters of credit and $13.4 million relate to commercial letters of credit.

As of March 31, 2012, the Company had private equity fund and alternative investment fund commitments of $68.9 million, of which $58.3 million was funded. As of December 31, 2011 and March 31, 2011, the Company had private equity and alternative investment fund commitments of $68.9 million and $65.9 million, of which $57.9 million and $53.0 million was funded, respectively.

In connection with the liquidation of an investment acquired in a previous bank merger, the Company has an outstanding long-term indemnity. The maximum liability under the indemnity is $23.0 million, but the Company does not expect to make any payments of more than nominal amounts under the terms of this indemnity.

Fair Value Measurements

Management employs market standard valuation techniques in determining the fair value of assets and liabilities. Inputs used in valuation techniques are based on assumptions that market participants would use in pricing an asset or liability. The Company utilizes quoted market prices to measure fair value to the extent available (Level 1). If market prices are not available, fair value measurements are based on models that use primarily market-based assumptions including interest rate yield curves, anticipated prepayment rates, default rates and foreign currency rates (Level 2). In certain circumstances, market observable inputs for model-based valuation techniques may not be available and the Company is required to make judgments about assumptions that market participants would use in estimating the fair value of a financial instrument (Level 3). Refer to Note 3, Fair Value Measurements, to the Consolidated Financial Statements for additional information on fair value measurements.

At March 31, 2012, $6.98 billion, or approximately 29 percent, of the Company’s total assets were recorded at fair value on a recurring basis. The majority of these financial assets were valued using Level 1 or Level 2 inputs. Less than one percent of total assets is measured using Level 3 inputs. At March 31, 2012, $49.7 million of the Company’s total liabilities were recorded at fair value on a recurring basis using Level 1 or Level 2 inputs.

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At March 31, 2012, $54.4 million, or less than 1 percent of the Company’s total assets, were recorded at fair value on a nonrecurring basis. These assets were measured using Level 2 and Level 3 inputs. No liabilities were measured at fair value on a nonrecurring basis at March 31, 2012.

Capital

The ratio of period-end equity to period-end assets was 9.15 percent, 9.06 percent and 9.29 percent as of March 31, 2012, December 31, 2011 and March 31, 2011, respectively.

The following table presents the regulatory standards for well capitalized institutions and the capital ratios for the Corporation and the Bank at March 31, 2012, December 31, 2011 and March 31, 2011:

	Regulatory Well-Capitalized Standards		March 31, 2012		December 31, 2011		March 31, 2011
City National Corporation
Tier 1 leverage	—		6.98	%	6.77	%	7.09	%
Tier 1 risk-based capital	6.00	%	10.20		10.26		10.91
Total risk-based capital	10.00		12.71		12.83		13.68
Tangible equity to tangible assets (1)	—		7.13		7.01		7.03
Tier 1 common shareholders’ equity to risk-based assets (2)	—		10.17		10.22		10.69
City National Bank
Tier 1 leverage	5.00	%	8.24	%	8.07	%	8.62	%
Tier 1 risk-based capital	6.00		12.03		12.23		13.30
Total risk-based capital	10.00		14.44		14.68		15.91

(1)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 assets and goodwill.  Management reviews tangible equity to tangible assets in evaluating the Company’s capital levels and has included this ratio in response to market participants’ interest in tangible equity as a measure of capital.  See reconciliation of the GAAP financial measure to this non-GAAP financial measure below.

(2)Tier 1 common shareholders’ equity to risk-based assets 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 this measure in response to market participants’ interest in the Tier 1 common shareholders’ equity to risk-based assets ratio.  See reconciliation of the GAAP financial measure to this non-GAAP financial measure below.

Reconciliation of GAAP financial measure to non-GAAP financial measure:

(in thousands)	March 31, 2012			December 31, 2011			March 31, 2011
Total equity	$	2,199,565		$	2,144,849		$	2,010,627
Less: Goodwill and other intangible assets	(521,717		)	(522,753		)	(527,419		)
Tangible equity (A)	$	1,677,848		$	1,622,096		$	1,483,208
Total assets	$	24,038,489		$	23,666,291		$	21,635,932
Less: Goodwill and other intangible assets	(521,717		)	(522,753		)	(527,419		)
Tangible assets (B)	$	23,516,772		$	23,143,538		$	21,108,513
Tangible equity to tangible assets (A)/(B)	7.13		%	7.01		%	7.03		%
Tier 1 capital	1,616,099			1,570,101			1,478,820
Less: Noncontrolling interest	—			—			(25,089		)
Less: Trust preferred securities	(5,155		)	(5,155		)	(5,155		)
Tier 1 common shareholders’ equity (C)	$	1,610,944		$	1,564,946		$	1,448,576
Risk-weighted assets (D)	$	15,839,944		$	15,305,328		$	13,551,318
Tier 1 common shareholders’ equity to risk-based assets (C)/(D)	10.17		%	10.22		%	10.69		%

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ASSET/LIABILITY MANAGEMENT

Market risk results from the variability of future cash flows and earnings due to changes in the financial markets. These changes may also impact the fair values of loans, securities and borrowings. The values of financial instruments may fluctuate because of interest rate changes, foreign currency exchange rate changes or other market changes. The Company’s asset/liability management process entails the evaluation, measurement and management of market risk and liquidity risk. The principal objective of asset/liability management is to optimize net interest income subject to margin volatility and liquidity constraints over the long term. Margin volatility results when the rate reset (or repricing) characteristics of assets are materially different from those of the Company’s liabilities. The Board of Directors approves asset/liability policies and annually reviews and approves the limits within which the risks must be managed. The Asset/Liability Management Committee (“ALCO”), which is comprised of senior management and key risk management individuals, sets risk management guidelines within the broader limits approved by the Board, monitors the risks and periodically reports results to the Board.

A quantitative and qualitative discussion about market risk is included on pages 66 to 72 of the Corporation’s Form 10-K for the year ended December 31, 2011.

Liquidity Risk

Liquidity risk results from the mismatching of asset and liability cash flows. Funds for this purpose can be obtained in cash markets, by borrowing, or by selling certain assets. The objective of liquidity management is to manage cash flow and liquidity reserves so that they are adequate to fund the Company’s operations and meet obligations and other commitments on a timely basis and at a reasonable cost. The Company achieves this objective through the selection of asset and liability maturity mixes that it believes best meet its needs. The Company’s liquidity position is enhanced by its ability to raise additional funds as needed in the wholesale markets. Liquidity risk management is an important element in the Company’s ALCO process, and is managed within limits approved by the Board of Directors and guidelines set by management. Attention is also paid to potential outflows resulting from disruptions in the financial markets or to unexpected credit events. These factors are incorporated into the Company’s contingency funding analysis, and provide the basis for the identification of primary and secondary liquidity reserves.

In recent years, the Company’s core deposit base has provided the majority of the Company’s funding requirements. This relatively stable and low-cost source of funds, along with shareholders’ equity, provided 92 percent and 90 percent of funding for average total assets in the quarters ended March 31, 2012 and 2011, respectively. Strong core deposits are indicative of the strength of the Company’s franchise in its chosen markets and reflect the confidence that clients have in the Company. The Company places a very high priority in maintaining this confidence through conservative credit and capital management practices and by maintaining significant on-balance sheet liquidity reserves.

Funding obtained through short-term wholesale or market sources averaged $166.4 million and $0.7 million in the first quarter of 2012 and 2011, respectively, and ended the first quarter of 2012 at $10.0 million. The Company’s liquidity position was also supported through longer-term borrowings which averaged $696.6 million for the first quarter of 2012 and $857.8 million for the year-earlier quarter. Market sources of funds comprise a modest portion of total Bank funding and are managed within concentration and maturity guidelines reviewed by management and implemented by the Company’s treasury department.

Liquidity is further provided by assets such as federal funds sold, balances held at the Federal Reserve Bank, and trading account securities, which may be immediately converted to cash at minimal cost. The aggregate of these assets averaged $176.9 million and $703.1 million in the first quarter of 2012 and 2011, respectively. In addition, the Company has committed and unutilized secured borrowing capacity of $4.05 billion as of March 31, 2012 from the Federal Home Loan Bank of San Francisco, of which the Bank is a member. The Company’s investment portfolio also provides a substantial liquidity reserve. The portfolio of securities available-for-sale averaged $7.15 billion and $5.63 billion for the quarters ended March 31, 2012 and 2011, respectively. The unpledged portion of securities available-for-sale and held-to-maturity at fair value totaled $6.83 billion at March 31, 2012. These securities could be used as collateral for borrowing or a portion could be sold.

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Interest Rate Risk

Net Interest Simulation: As part of its overall interest rate risk management process, the Company performs stress tests on net interest income projections based on a variety of factors, including interest rate levels, changes in the relationship between the prime rate and short-term interest rates, and the shape of the yield curve. The Company uses a simulation model to estimate the severity of this risk and to develop mitigation strategies, including interest-rate hedges. The magnitude of the change is determined from historical volatility analysis. The assumptions used in the model are updated periodically and reviewed and approved by ALCO. In addition, the Board of Directors has adopted limits within which interest rate exposure must be contained. Within these broader limits, ALCO sets management guidelines to further contain interest rate risk exposure.

The Company is naturally asset-sensitive due to its large portfolio of rate-sensitive commercial loans that are funded in part by noninterest bearing and rate-stable core deposits. As a result, if there are no significant changes in the mix of assets and liabilities, the net interest margin increases when interest rates increase and decreases when interest rates decrease. The Company uses on and off-balance sheet hedging vehicles to manage risk. The Company uses a simulation model to estimate the impact of changes in interest rates on net interest income. Interest rate scenarios include stable rates and a 400 basis point parallel shift in the yield curve occurring gradually over a two-year period. The model is used to project net interest income assuming no changes in loans or deposit mix as it stood at March 31, 2012, as well as a dynamic simulation that includes changes to balance sheet mix in response to changes in interest rates. In the dynamic simulation, loan and deposit balances are modeled based on experience in previous vigorous economic recovery cycles. Loans, excluding covered loans, increase 10 percent per year compared to the base case. Similarly, deposits decline 5 percent per year. Loan yields and deposit rates change over the simulation horizon based on current spreads and adjustment factors that are statistically derived using historical rate and balance sheet data.

As of March 31, 2012, the Federal funds target rate was at a range of zero percent to 0.25 percent. Further declines in interest rates are not expected to significantly reduce earning asset yields or liability costs, nor have a meaningful effect on net interest margin. At March 31, 2012, a gradual 400 basis point parallel increase in the yield curve over the next 24 months assuming a static balance sheet would result in an increase in projected net interest income of approximately 6.3 percent in year one and a 23.1 percent increase in year two. This compares to an increase in projected net interest income of 3.0 percent in year one and a 14.7 percent increase in year two at March 31, 2011. Interest rate sensitivity has increased due to changes in the mix of the balance sheet, primarily significant growth in non-rate sensitive deposits. The dynamic simulation incorporates balance sheet changes resulting from a gradual 400 basis point increase in rates. In combination, these rate and balance sheet effects result in an increase in projected net interest income of approximately 7.3 percent in year one and 25.8 percent increase in year two. The Company’s interest rate risk exposure remains within Board limits and ALCO guidelines.

The Company’s loan portfolio includes floating rate loans which are tied to short-term market index rates, adjustable rate loans for which the initial rate is fixed for a period from one year to as much as ten years, and fixed-rate loans whose interest rate does not change through the life of the transaction. The following table shows the composition of the Company’s loan portfolio by major loan category as of March 31, 2012. Each loan category is further divided into Floating, Adjustable and Fixed rate components. Floating rate loans are generally tied to either the Prime rate or to a LIBOR based index.

	Floating Rate															Total
(in millions)	Prime			LIBOR			Total			Adjustable			Fixed			Loans
Commercial	$	1,924		$	2,515		$	4,439		$	77		$	1,058		$	5,574
Commercial real estate mortgages	246			739			985			70			1,158			2,213
Residential mortgages	30			28			58			2,214			1,534			3,806
Real estate construction	159			116			275			—			38			313
Equity lines of credit	716			—			716			—			—			716
Installment	72			—			72			—			54			126
Covered loans	108			144			252			808			337			1,397
Total loans and leases	$	3,255		$	3,542		$	6,797		$	3,169		$	4,179		$	14,145
Percentage of portfolio	23		%	25		%	48		%	22		%	30		%	100		%

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Certain floating rate loans have a “floor” rate which is absolute and below which the loan rate will not fall even though market rates may be unusually low. At March 31, 2012, $6.80 billion (48 percent) of the Company’s loan portfolio was floating rate, of which $4.52 billion (67 percent) was not impacted by rate floors. This is because either the loan contract does not specify a minimum or floor rate, or because the contractual loan rate is above the minimum rate specified in the loan contract. Of the loans which were at their contractual minimum rate, $1.52 billion (22 percent) were within 0.75 percent of the contractual loan rate absent the effects of the floor. Thus, the rate on these loans will be relatively responsive to increases in the underlying Prime or LIBOR index, and all will adjust upwards should the underlying index increase by more than 0.75 percent. Only $94.7 million of floating rate loans have floors that are more than 2.00 percent above the contractual rate formula. Thus, the yield on the Company’s floating rate loan portfolio is expected to be highly responsive to changes in market rates. The following table shows the balance of loans in the Floating Rate portfolio stratified by spread between the current loan rate and the floor rate as of March 31, 2012:

	Loans with No Floor and Current Rate Greater than			Interest Rate Increase Needed for Loans Currently at Floor Rate to Become Floating
(in millions)	Floor			< 0.75%			0.76% - 2.00%			> 2.00%			Total
Prime	$	1,585		$	1,105		$	531		$	34		$	3,255
LIBOR	2,931			419			131			61			3,542
Total floating rate loans	$	4,516		$	1,524		$	662		$	95		$	6,797
% of total floating rate loans	67		%	22		%	10		%	1		%	100		%

Economic Value of Equity: The economic value of equity (“EVE”) model is used to evaluate the vulnerability of the market value of shareholders’ equity to changes in interest rates. The EVE model calculates the expected cash flow of all of the Company’s assets and liabilities under sharply higher and lower interest rate scenarios. The present value of these cash flows is calculated by discounting them using the interest rates for that scenario. The difference between the present value of assets and the present value of liabilities in each scenario is the EVE. The assumptions about the timing of cash flows, level of interest rates and shape of the yield curve are the same as those used in the net interest income simulation. They are updated periodically and are reviewed by ALCO at least annually.

As of March 31, 2012, an instantaneous 200 basis point increase in interest rates results in a 1.4 percent decline in EVE. This compares to a 3.5 percent decline a year-earlier. The decrease is due to changes in the mix of the balance sheet resulting from the historically low interest rate environment. Measurement of a 200 basis point decrease in rates as of March 31, 2012 and March 31, 2011 is not meaningful due to the current low rate environment.

Interest-Rate Risk Management

The following table presents the notional amount and fair value of the Company’s interest rate swap agreements according to the specific asset or liability hedged:

	March 31, 2012						December 31, 2011						March 31, 2011
(in millions)	Notional Amount		Fair Value			Duration (Years)	Notional Amount		Fair Value			Duration (Years)	Notional Amount		Fair Value			Duration (Years)
Fair Value Hedge Interest Rate Swap
Certificates of deposit	$	—	$	—		—	$	—	$	—		—	$	10.0	$	0.3		0.2
Long-term and subordinated debt	$	205.9	$	8.1		0.8	$	207.4	$	9.8		1.0	355.9		17.2			1.1
Total fair value hedge swaps	205.9		8.1		(1)	0.8	207.4		9.8		(1)	1.0	365.9		17.5		(1)	1.1

(1)Net fair value is the estimated net gain (loss) to settle derivative contracts. The net fair value is the sum of the mark-to-market asset net of cash collateral received, mark-to-market liability (if applicable), and net interest receivable or payable.

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Interest-rate swaps may be used to reduce cash flow variability and to moderate changes in the fair value of long-term financial instruments. Net interest income or expense associated with interest-rate swaps (the difference between the fixed and floating rates paid or received) is included in net interest income in the reporting periods in which they are earned. All derivatives are recorded on the consolidated balance sheets at their fair value. The treatment of changes in the fair value of derivatives depends on the character of the transaction.

At March 31, 2012, the Company had $205.9 million notional amount of interest-rate swap hedge transactions, all of which were designated as fair value hedges of long-term debt. There were no cash flow hedges outstanding at March 31, 2012. The positive fair value of the fair value hedges of $8.1 million is recorded in other assets. It consists of a positive mark-to-market of $7.1 million and net interest receivable of $1.0 million. The balance of debt reported in the consolidated balance sheet has been increased by a $7.1 million mark-to-market adjustment associated with interest-rate hedge transactions.

The hedged long-term debt consists of City National Corporation senior notes with a face value of $205.9 million due on February 15, 2013.

The Company has not entered into any hedge transactions involving any other interest-rate derivative instruments, such as interest-rate floors, caps, and interest-rate futures contracts for its own portfolio in 2012. Under existing policy, the Company could use such financial instruments in the future if deemed appropriate.

Other Derivatives

The Company also offers various derivative products to clients and enters into derivative transactions in due course. These derivative contracts are offset by paired trades with unrelated bank counterparties. These transactions are not linked to specific Company assets or liabilities in the consolidated balance sheets or to forecasted transactions in a hedge relationship and, therefore, do not qualify for hedge accounting. The contracts are marked-to-market each reporting period with changes in fair value recorded as part of Other noninterest income in the consolidated statements of income. Fair values are determined from verifiable first-party sources that have considerable experience with the derivative markets. The Company provides client data to the first-party source for purposes of calculating the credit valuation component of the fair value measurement of client derivative contracts. At March 31, 2012 and 2011, the Company had entered into derivative contracts with clients (and offsetting derivative contracts with counterparties) having a notional balance of $1.80 billion and $1.08 billion, respectively.

Counterparty Risk and Collateral

Interest-rate swap agreements involve the exchange of fixed and variable-rate interest payments based upon a notional principal amount and maturity date. The Company’s interest-rate swaps had $4.0 million and $5.7 million of credit risk exposure at March 31, 2012 and 2011, respectively. The credit exposure represents the cost to replace, on a present value basis and at current market rates, all contracts outstanding by trading counterparty having an aggregate positive market value, net of margin collateral received. The Company’s swap agreements require the deposit of cash or marketable debt securities as collateral for this risk if it exceeds certain market value thresholds. These requirements apply individually to the Corporation and to the Bank. Collateral in the form of securities valued at $4.8 million had been received from swap counterparties at March 31, 2012. At March 31, 2011, collateral valued at $9.5 million comprised of securities valued at $7.7 million and cash of $1.8 million, had been received from swap counterparties. Additionally, the Company delivered collateral valued at $38.8 million on swap agreements at March 31, 2012.

Market Risk—Foreign Currency Exchange

The Company enters into foreign-exchange contracts with its clients and counterparty banks primarily for the purpose of offsetting or hedging clients’ transaction and economic exposures arising out of commercial transactions. The Company’s policies also permit taking proprietary currency positions within certain approved limits. The Company actively manages its foreign exchange exposures within prescribed risk limits and controls. At March 31, 2012, the Company’s outstanding foreign exchange contracts, both proprietary and for customer accounts, totaled $289.3 million. The mark-to-market on foreign exchange contracts included in other assets and other liabilities totaled $2.8 million and $2.3 million at March 31, 2012, respectively.

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ITEM 4. CONTROL AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

Under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, the Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a - 15(e) under the Securities and Exchange Act of 1934 (the “Exchange Act”)). Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective.

INTERNAL CONTROL OVER FINANCIAL REPORTING

There was no change in the Company’s internal control over financial reporting that occurred during the Company’s last fiscal quarter that has materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1A.RISK FACTORS

Refer to Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 for a discussion of risk factors relating to the Company’s business. There has been no material change in the Corporation’s risk factors as previously disclosed in the Company’s Form 10-K.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(c) Purchase of Equity Securities by the Issuer and Affiliated Purchaser.

The information required by subsection (c) of this item regarding purchases by the Company during the quarter ended March 31, 2012 of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act is incorporated by reference from that portion of Part I, Item 1 of the report under Note 9.

ITEM 6.EXHIBITS

No.
10.1*	Amendment to Russell Goldsmith Amended and Restated Employment Agreement dated as March 14, 2012 by and among Russell Goldsmith, Registrant and City National Bank (Incorporated by reference from Exhibit 10.49 to the Registrant’s Current Report on Form 8-K filed on March 16, 2012.)
10.2*	Form of Performance Unit Award Agreement Under the City National Corporation 2008 Omnibus Plan (EPS).
10.3*	Form of Performance Unit Award Agreement Addendum Under the City National Corporation 2008 Omnibus Plan (EPS).
10.4*	Form of Restricted Stock Unit Award Agreement (Cash Only) under the City National Corporation 2008 Omnibus Plan (Filed herewith in replacement of Exhibit 10.51 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2011.)
10.5*	Form of Restricted Stock Unit Award Agreement (Cash Only) Addendum under the City National Corporation 2008 Omnibus Plan (Filed herewith in replacement of Exhibit 10.52 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2011.)
31.1	Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
32.0	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document

86

101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

* Management contract or compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CITY NATIONAL CORPORATION
	(Registrant)
DATE: May 9, 2012	/s/ Christopher J. Carey
	CHRISTOPHER J. CAREY
	Executive Vice President and
	Chief Financial Officer
	(Authorized Officer and
	Principal Financial Officer)

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EX-10.2

Exhibit 10.2

PERFORMANCE UNIT AWARD AGREEMENT

UNDER THE

CITY NATIONAL CORPORATION

2008 OMNIBUS PLAN

(EPS)

THIS PERFORMANCE UNIT AWARD AGREEMENT is made by and between CITY NATIONAL CORPORATION, a Delaware corporation (the “Company”), and                           , an employee of the Company or a subsidiary of the Company (“Colleague”), with reference to the following:

A.On April 23, 2008 the shareholders of the Company adopted the City National Corporation 2008 Omnibus Plan, as amended from time to time thereafter (the “Plan”), pursuant to which the Compensation, Nominating & Governance Committee of the Board of Directors (the “Committee”) may award selected officers and other Company or Company subsidiary employees Performance Awards, including Performance Units payable solely in cash, or other deferred Awards of the Company’s common stock.

B.The Committee has determined to grant to Colleague an award of Performance Units payable solely in cash pursuant to the terms and conditions of this Agreement (“Performance Unit Award”).

1.Grant of Performance Unit Award.

(a)Details of Performance Unit Award.  Pursuant to the Plan, the Company hereby grants a Performance Unit Award with the following terms:

(i)2012-2014 Target Performance Unit Award:                    (“2012-2014 Performance Units”);

(ii)2012-2015 Target Performance Unit Award:                    (“2012-2015 Performance Units” and together with the 2012-2014 Performance Units, the “Performance Units”);

(iii)The date of the Performance Unit Award (the “Award Date”):                    ; and

(iv)The consideration, if any, for the Performance Units:  Colleague’s Employment with the Company.

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(b)Performance Unit Account.  The Performance Units will be credited to Colleague’s Performance Unit Account as of the Award Date and upon satisfaction of the conditions of this Agreement.

2.Performance Units.  Colleague hereby accepts the Performance Units and agrees with respect thereto as follows:

(a)Forfeiture. In the event of termination of Colleague’s employment with the Company or employing subsidiary for any reason other than as provided in Section C of the Addendum, Colleague shall, for no consideration, immediately forfeit to the Company the Performance Units to the extent then subject to forfeiture.

(b)Lapse of Forfeiture Restrictions.  With respect to the 2012-2014 Performance Units, the forfeiture restrictions lapse as to one hundred percent of the underlying Performance Units on the third anniversary of the Award Date; provided that Colleague has been continuously employed by the Company from the Award Date through such third anniversary.  With respect to the 2012-2015 Performance Units, the forfeiture restrictions lapse as to one hundred percent of the underlying Performance Units on the fifth anniversary of the Award Date, provided that Colleague has been continuously employed by the Company from the Award Date through such fifth anniversary.

Notwithstanding the foregoing, the forfeiture restrictions shall lapse as to the Performance Units earlier upon the termination and vesting events provided in Section C of the Addendum. In the event Colleague’s employment is terminated for any reason other than as provided in Section C of the Addendum, the Committee or its delegate, as appropriate, may, in the Committee’s or such delegate’s sole discretion, approve the lapse of forfeiture restrictions as to any or all Performance Units still subject to such conditions, such lapse to be effective on the date of such approval or Colleague’s termination date, if later.

(c)Performance Unit Account.  Colleague’s Performance Unit Account shall be a memorandum account on the books of the Company. The Performance Units credited to a Performance Unit Account shall be used solely as the basis for the determination of the amount of cash to be eventually distributed to Colleague in accordance with the Addendum to this Agreement. The Performance Units shall not be treated as property or as a trust fund of any kind. The Performance Units credited (and the amount of cash to which Colleague is entitled under the Plan) shall be subject to adjustment in accordance with the terms of the Plan.

(d)Nontransferability.  The Performance Units and the rights and interests of Colleague under this Agreement may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of prior to distribution.

2

3.Withholding of Tax.  The receipt of cash upon distribution may result in income to Colleague for federal or state tax purposes.  The Company is authorized to withhold from any cash remuneration then or thereafter payable to Colleague for any tax required to be withheld by reason of such resulting compensation income.

4.Limitation on Transfer.  Other than upon death or pursuant to a DRO, the Performance Units and all rights granted under this Agreement are personal to Colleague and cannot be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and will not be subject to execution, attachment or similar processes.

5.Plan and Addendum Incorporated/Availability.  Colleague acknowledges that the Company has made available a copy of the Plan and the Addendum to this Agreement, and agrees that this Performance Unit Award shall be subject to all of the terms and conditions set forth in the Plan and the Addendum, including future amendments thereto, if any, pursuant to the terms thereof, which Plan and Addendum are incorporated herein by reference as a part of this Agreement. In the event of any conflict between the Plan, the Addendum and this Agreement, the provisions of the Plan will prevail.  Colleague’s rights hereunder are subject to modification or termination in certain events, as provided in the Plan, including without limitation such rules and regulations as may from time to time be adopted or promulgated in accordance with paragraph 1.3 of the Plan.  Capitalized terms not defined in this Agreement shall have the meanings set forth in the Plan and the Addendum.

6.Employment Relationship.  For purposes of this Agreement, Colleague shall be considered to be in the employment of the Company as long as Colleague remains an employee of either the Company, any successor corporation or a parent or subsidiary corporation (as defined in section 424 of the Internal Revenue Code) of the Company or any successor corporation.  Any question as to whether and when there has been a termination of such employment, and the cause of such termination, shall be determined by the Committee, or its delegate, as appropriate, and its determination shall be final.

7.Committee’s Powers.  No provision contained in this Agreement shall in any way terminate, modify or alter, or be construed or interpreted as terminating, modifying or altering any of the powers, rights or authority vested in the Committee or, to the extent delegated, in its delegate pursuant to the terms of the Plan or resolutions adopted in furtherance of the Plan, including, without limitation, the right to make certain determinations and elections with respect to the Performance Units.  All decisions of the Committee (as established pursuant to the Plan) with respect to any questions concerning the application, administration or interpretation of the Plan will be conclusive and binding on the Company and Colleague.

3

8.Binding Effect.  This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under Colleague.

9.Dispute Resolution.  If a dispute arises between Colleague and Company in connection with the Performance Unit Award, the dispute will be resolved by binding arbitration with the American Arbitration Association (AAA) in accordance with the AAA’s Commercial Arbitration Rules then in effect.

10.Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of California.

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and Colleague has executed this Agreement, all as of                     .

CITY NATIONAL CORPORATION

By:

Christopher J. Carey, Executive Vice

President, Chief Financial Officer

Colleague

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EX-10.3

Exhibit 10.3

PERFORMANCE UNIT AWARD AGREEMENT

ADDENDUM

(EPS)

THIS ADDENDUM TO THE PERFORMANCE UNIT AWARD AGREEMENT provides the rules and procedures relating to the grant of the Performance Unit Award and the operation of the Performance Unit Account.

A.Definitions.  Any capitalized terms used, but not defined, in this Addendum shall have the meaning set forth in the Performance Unit Award Agreement.  Whenever the following terms are used in the Performance Unit Award Agreement or in this Addendum, they shall have the meaning specified below, unless the context clearly indicates to the contrary:

1.Cumulative Actual EPS means the sum of the Company’s actual diluted earnings per share for each of the 2012-2014 calendar years.

2.Cumulative Target EPS means the sum of the Company’s budgeted diluted earnings per share for each of the 2012-2014 calendar years, as determined by the Committee by March 15 of the applicable calendar year.

3.Fifth Year Performance means the percentage by which the Five-Year Cumulative Actual EPS exceeds the Five-Year Cumulative Target EPS (but in no event less than zero).

4.Five-Year Cumulative Actual EPS means the sum of the Company’s actual diluted earnings per share for each of the 2012-2016 calendar years.

5.Five-Year Cumulative Target EPS means the sum of the Company’s budgeted diluted earnings per share for each of the 2012-2016 calendar years, as determined by the Committee by March 15 of the applicable calendar year.

6.Four-Year Cumulative Actual EPS means the sum of the Company’s actual diluted earnings per share for each of the 2012-2015 calendar years.

7.Four-Year Cumulative Target EPS means the sum of the Company’s budgeted diluted earnings per share for each of the 2012-2015 calendar years, as determined by the Committee by March 15 of the applicable calendar year.

8.Fourth Year Performance means the percentage by which the Four-Year Cumulative Actual EPS exceeds the Four-Year Cumulative Target EPS (but in no event less than zero).

9.Disability means Colleague shall become incapable of fulfilling his obligations because of injury or physical or mental illness which shall exist or may reasonably be anticipated to exist for a period of twelve (12) consecutive months or for an aggregate of twelve (12) months during any twenty-four (24) month period.

10.Performance Unit Account means the memorandum account maintained by the Company on behalf of Colleague which is credited with Performance Units.  Each Performance Unit represents the right to receive a distribution of cash in an amount as provided in the Performance Unit Award Agreement and this Addendum.

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B.Performance Unit Account.  As soon as practicable following the Award Date, the Company shall credit Colleague’s Performance Unit Account with the Performance Units.

C.Lapse of Forfeiture Restrictions.  The Performance Unit Award is subject to forfeiture until the forfeiture restrictions lapse in accordance with Section 2(b) of the Performance Unit Award Agreement.

1.2012-2014 Performance Units.  Notwithstanding the forfeiture provision in Section 2(b) of the Performance Unit Award Agreement, the forfeiture restrictions on the 2012-2014 Performance Units shall immediately lapse:

·upon Colleague’s termination of employment by the Company without good cause or by Colleague for good reason;

·upon Colleague’s voluntary termination of employment for any reason or by the Company without good cause on or after expiration of Colleague’s employment agreement;

·upon Colleague’s termination of employment by the Company without cause or by Colleague for good reason following a Change in Control; or

·provided the Performance Units have not been forfeited, upon Colleague’s death or Disability.

2.2012-2015 Performance Units.  Notwithstanding the forfeiture provision in the Performance Unit Award Agreement, if any of the following occurs on or prior to March 14, 2017, the forfeiture restrictions on the 2012-2015 Performance Units shall immediately lapse:

·upon Colleague’s termination of employment by the Company without good cause or by Colleague for good reason;

·upon Colleague’s voluntary termination of employment for any reason or by the Company without good cause on or after expiration of the Colleague’s employment agreement;

·upon Colleague’s termination of employment by the Company without cause or by Colleague for good reason following a Change in Control;

·provided the Performance Units have not been forfeited, upon Colleague’s death or Disability; or

·provided the Performance Units have not been forfeited, on March 14, 2016 with respect to that portion of the 2012-2015 Performance Units that correspond to the Fourth Year Value .

D.Valuation of Performance Units.  The value of the Performance Units (“Value”) shall be determined by the Committee as follows:

1.2012-2014 Performance Units.

a.Subject to subsection 1(c) and 3(a) of this Section D, if the Cumulative Actual EPS is 75% of the Cumulative Target EPS, the Value of the 2012-2014 Performance Units shall be equal to 60% of the 2012-2014 Performance Units and scaling up to 100% of the 2012-2014

2

Performance Units if 100% or more of the Cumulative Target EPS is achieved.  In no event may the Value of the 2012-2014 Performance Units exceed 100% of the 2012-2014 Performance Units.

b.If the Cumulative Actual EPS is less than 75% of the Cumulative Target EPS, the Value the 2012-2014 Performance Units shall be zero and no amount shall be payable in respect of the 2012-2014 Performance Units.

c.If the level of achievement of the budgeted profit target used for purposes of determining achievement of the Colleague’s annual bonus for the fiscal year in which the Performance Unit Award is granted is not achieved at a level of at least 40% of target for such fiscal year, the Value the 2012-2014 Performance Units shall be zero and no amount shall be payable in respect of the 2012-2014 Performance Units.

2.2012-2015 Performance Units.

a.Subject to subsection 2(c) and 3(b) of this Section D, if the Fourth Year Performance is 7.5% or more, the Value of the 2012-2015 Performance Units shall be equal to 100% of the 2012-2015 Performance Units and scaling down to 33.33% of the 2012-2014 Performance Units if the Fourth Year Performance is equal to 5% (the value of the 2012-2015 Performance Units determined herein, the “Fourth Year Value”).  Unless the forfeiture restrictions on the 2012-2015 Performance Units have earlier lapsed pursuant to Section C(2), the forfeiture restrictions with respect to the 2012-2015 Performance Units underlying the Fourth Year Value shall lapse as of                     .  If the Fourth Year Performance is less than 5%, the Fourth Year Value shall be equal to zero.

b.Subject to subsection 2(c) and 3(b) of this Section D, if the Fourth Year Value is less than $562,500 and the Fifth Year Performance exceeds the Fourth Year Performance, a calculation similar to that set forth in subsection (a) above based on the Five-Year Cumulative Actual EPS and the Five-Year Cumulative Target EPS will be applied and the Value of the remaining 2012-2015 Performance Units shall be equal to the difference between (i) the amount of such calculation and (ii) the Fourth Year Value (such difference, the “Fifth Year Value”).  If the Fifth Year Performance does not exceed the Fourth Year Performance, the Fifth Year Value shall be equal to zero.

c.If the level of achievement of the budgeted profit target used for purposes of determining achievement of the Colleague’s annual bonus for the fiscal year in which the Performance Unit Award is granted is not achieved at a level of at least 40% of target for such fiscal year, the Value the 2012-2015 Performance Units shall be zero and no amount shall be payable in respect of the 2012-2015 Performance Units.  In no event may the sum of the Fourth Year Value and Fifth Year Value exceed                     .

d.Sample Calculation:

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·Assume the Four-Year Cumulative Actual EPS is $10.60 and the Four-Year Cumulative Target EPS is $10.00.  The Fourth Year Performance is equal to 6%.  As such, the Fourth Year Value payable to Colleague would equal                     .  Because the Fourth Year Value is less than                     , Colleague would have the opportunity to earn the remaining                      based on the Fifth Year Performance.

·Assume the Five Year Cumulative Actual EPS is $10.70 and the Five Year Cumulative Target EPS is $10.00.  The Fifth Year Performance is equal to 7% which is greater than the Fourth Year Performance of 6%.  The Fifth Year Value payable to Colleague would be equal to          .

3.Change in Control.

a.2012-2014 Performance Units.  In the event a Change in Control occurs on or prior to December 31, 2014, the 2012-2014 Performance Units shall have a deemed Value of $1,500,000.  If a Change in Controls occurs after December 31, 2014, the Change in Control shall have no effect on the determination of Value of the 2012-2014 Performance Units and the Value shall be determined pursuant to Section D(1) above.

b.2012-2015 Performance Units.  In the event a Change in Control occurs between January 1, 2015 and December 31, 2015, inclusive, the 2012-2015 Performance Units shall have a deemed Fourth Year Value of                      and a deemed Fifth Year Value equal to zero.  In the event a Change in Control occurs between January 1, 2016 and December 31, 2016, inclusive, and (i) the Fourth Year Value (as determined under Section D(2)(a) above) was equal to or greater than               , Colleague shall not be entitled to any further payment in respect of the 2012-2015 Performance Units or (ii) the Fourth Year Value (as determined under Section D(2)(a) above) was less than                     , the Fifth Year Value shall be equal to the difference between                      and the Fourth Year Value.  In the event a Change in Control occurs prior to January 1, 2015, the Value of the 2012-2015 Performance Units shall be deemed to be zero and no amount shall be payable in respect of the 2012-2015 Performance Units.  In the event a Change in Controls occurs after December 31, 2016, the Change in Control shall have no effect on the determination of Value of the 2012-2015 Performance Units and the Value shall be determined pursuant to Section D(2) above.

E.Payment Date.

1.2012-2014 Performance Units.  The Value of the 2012-2014 Performance Units as determined in Section D(1) above, if any, shall be distributed to Colleague (or, in the event of his death, Colleague’s Beneficiary) in cash in a lump sum payment on                    ; or earlier upon Colleague’s involuntary termination without cause or for good reason that occurs within twenty-four months following a Change in Control that also constitutes a change in control event pursuant to Treasury Regulations section 1.409A-3(i)(5)(v) (a “409A CIC”).  Any earlier payment upon Colleague’s involuntary termination without cause or for good reason shall be subject to Section F below.

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2.2012-2015 Performance Units.

(a)The Fourth Year Value of the 2012-2015 Performance Units as determined in Section D(2) above, if any, shall be distributed to Colleague (or, in the event of his death, Colleague’s Beneficiary) in cash in a lump sum payment on                  ; or earlier upon Colleague’s involuntary termination without cause or for good reason that occurs within twenty-four months following a 409A CIC.   Any earlier payment upon Colleague’s involuntary termination without cause or for good reason shall be subject to Section F below.

(b)The Fifth Year Value of the 2012-2015 Performance Units as determined in Section D(2) above, if any, shall be distributed to Colleague (or, in the event of his death, Colleague’s Beneficiary) in cash in a lump sum payment on                  ; or earlier upon Colleague’s involuntary termination without cause or for good reason that occurs within twenty-four months following a 409A CIC.  Any earlier payment upon Colleague’s involuntary termination without cause or for good reason shall be subject to Section F below.

F.Plan Construction.  It is the intent of the Company that the Performance Units shall comply with Section 409A, and the Performance Unit Award Agreement and this Addendum shall be interpreted in a manner which is consistent with the foregoing intent.  Any provisions of the Performance Unit Award Agreement and this Addendum which would not comply with the requirements of Section 409A and the Regulations adopted thereunder shall be deemed to be modified or eliminated in order to comply with these requirements.  Sections of Colleague’s employment agreement addressing the application of Section 409A of the Code are hereby incorporated by reference.  Notwithstanding anything in the Plan, the Performance Unit Award Agreement or the Addendum to the contrary, in the event of a 409A CIC, the Company may terminate the Performance Unit Awards granted hereunder in a manner consistent with Section 1.409A-3(j)(ix)(B) of the regulations under Section 409A.

G.Unfunded Plan.  The liability of the Company to the Colleague under this Performance Unit Award Agreement shall be that of a debtor only pursuant to such contractual obligations as are created by the Plan, the Performance Unit Award Agreement and this Addendum, and no such obligation of the Company shall be deemed to be secured by any assets, pledges, or other encumbrances on any property of the Company.  The Company has not segregated or earmarked any of the Company’s assets for the benefit of Colleague or his beneficiary or estate, and the Plan does not, and shall not be construed to, require the Company to do so.  Colleague and his beneficiary or estate shall have only an unsecured, contractual right against the Company with respect to any Performance Unit and such right shall not be deemed superior to the right of any other creditor.

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EX-10.4

Exhibit 10.4

RESTRICTED STOCK UNIT AWARD AGREEMENT

(CASH ONLY)

UNDER THE

CITY NATIONAL CORPORATION

2008 OMNIBUS PLAN

THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (CASH ONLY) is made as of  between CITY NATIONAL CORPORATION, a Delaware corporation (the “Company”), and employee of the Company or a subsidiary of the Company (“Colleague”), with reference to the following:

A.On April 23, 2008 the shareholders of the Company adopted the City National Corporation 2008 Omnibus Plan, as amended from time to time thereafter (the “Plan”), pursuant to which the Compensation, Nominating & Governance Committee of the Board of Directors (the “Committee”) may award selected officers and other Company or Company subsidiary employees restricted shares, restricted units, including restricted stock units payable solely in cash, or other deferred Awards of the Company’s common stock (the “Common Stock”).

B.The Committee has determined to grant to Colleague an award of restricted stock units payable in cash only and dividend equivalent units pursuant to the terms and conditions of this Agreement.

1.Grant of Restricted Stock Unit Award.

(a)Details of Award.  Pursuant to the Plan, the Company hereby grants a Restricted Stock Unit Award (as defined in the Addendum to this Agreement) with the following terms:

(i)Number of Restricted Stock Units to be issued: units awarded (the “Restricted Stock Units”);

(ii)The date of the Award  (the “Award Date”); and

(iii)The consideration, if any, for the Restricted Stock Units:  Colleague’s Employment with the Company.

(b)Restricted Stock Unit Account.  The Restricted Stock Unit Award will be credited to Colleague’s Restricted Stock Unit Account as of the Award Date and upon satisfaction of the conditions of this Agreement.

2.Restricted Stock Units.  Colleague hereby accepts the Restricted Stock Units and agrees with respect thereto as follows:

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(a)Forfeiture. In the event of termination of Colleague’s employment with the Company or employing subsidiary for any reason other than (i) death or (ii) Total Disability, or except as otherwise provided in the last sentence of subparagraph (b) of this Paragraph 2, Colleague shall, for no consideration, forfeit to the Company all Restricted Stock Units to the extent then subject to forfeiture.

(b)Lapse of Forfeiture Restrictions.  All Restricted Stock Units are subject to forfeiture, as provided in subparagraph (a), until the forfeiture restrictions lapse in accordance with the following schedule provided that Colleague has been continuously employed by the Company from the Award Date through the lapse date:

	Percentage of
Time From	Restrictions Which		Total Percentage of
Date of Award	Lapse (Vesting)		Restrictions Lapsed
After 1 year	0	%	0	%
After 2 years	25	%	25	%
After 3 years	25	%	50	%
After 4 years	25	%	75	%
After 5 years	25	%	100	%

Notwithstanding the foregoing, the forfeiture restrictions shall lapse as to all of the Restricted Stock Units on the earlier of (i) subject to the discretion of the Committee, the occurrence of a Change in Control Event (as such term is defined in the Plan), or (ii) the date Colleague’s employment with the Company is terminated by reason of death or Total Disability. In the event Colleague’s employment is terminated for any other reason, the Committee or its delegate, as appropriate, may, in the Committee’s or such delegate’s sole discretion, approve the lapse of forfeiture restrictions as to any or all Restricted Stock Units still subject to such conditions, such lapse to be effective on the date of such approval or Colleague’s termination date, if later.

(c)Restricted Stock Unit Accounts/Dividend Equivalent Unit Accounts.  A Colleague’s Restricted Stock Unit Account and Dividend Equivalent Unit Account shall be memorandum accounts on the books of the Company. The Restricted Stock Units credited to a Restricted Stock Unit Account and Dividend Equivalent Units credited to the Colleague’s Dividend Equivalent Unit Account shall be used solely as a method for the determination of the amount of cash to be eventually distributed to the Colleague in accordance with the Addendum to this Agreement. The Restricted Stock Units and the Dividend Equivalent Units shall not be treated as property or as a trust fund of any kind. The Colleague shall not be entitled to any voting or other stockholder rights with respect to Restricted Stock Units awarded or credited under the Plan. The number of Restricted Stock Units credited (and the amount of cash to which the Colleague is entitled under the Plan) shall be subject to adjustment in accordance with the terms of the Plan.

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(d)Dividend Equivalents.  Colleague’s Dividend Equivalent Unit Account shall be credited with Dividend Equivalent Units in an amount equal to the dividend per Share for the applicable dividend payment date (which, in the case of any dividend distributable in property other than Shares, shall be the per Share value of such dividend, as determined by the Company for purposes of income tax reporting) times the number of Restricted Stock Units held by Colleague on the record date for the payment of such dividend.  Dividend Equivalent Units credited to Colleague’s Dividend Equivalent Unit Account shall vest and be paid at the same time as the underlying Restricted Stock Units for which such Dividend Equivalent Units were credited vest and are paid, and may be subject to forfeiture in the same manner as the underlying Restricted Stock Units for which such Dividend Equivalent Units were credited.

(e)Nontransferability.  The Restricted Stock Units and the Dividend Equivalent Units and the rights and interests of the Colleague under this Agreement may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of prior to distribution.

3.Withholding of Tax.  The receipt of cash upon distribution may result in income to you for federal or state tax purposes.  To the extent that you become subject to taxation, you shall deliver to the Company at the time of such receipt such amount of money or shares of unrestricted Common Stock, as the Company may require to meet its withholding obligation under applicable tax laws or regulations.  If you fail to do so, the Company is authorized to withhold from any cash remuneration then or thereafter payable to you for any tax required to be withheld by reason of such resulting compensation income.  Your delivery of Shares to meet the tax withholding obligation is subject to the Company’s Securities Trading Policy as may be in effect from time to time.  [You must have owned any Common Stock you deliver for at least six months.]  Any Common Stock you deliver or which is withheld by the Company will be valued on the date of which the amount of tax to be withheld is determined.  Any fractional shares of Common Stock resulting from withholding of taxes will be paid to you in cash. [See comment to Participant’s Addendum]

4.Limitation on Transfer.  Other than upon death or pursuant to a DRO, the Restricted Stock Units and all rights granted under this Agreement are personal to Colleague and cannot be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and will not be subject to execution, attachment or similar processes.  [Isn’t this duplicative of 2(e)?]

5.Plan and Addendum Incorporated/Availability.  Colleague acknowledges that the Company has made available a copy of the Plan and the Addendum to this Agreement, and agrees that this Award of Restricted Stock Units and Dividend Equivalent Units shall be subject to all of the terms and conditions set forth in the Plan and the Addendum, including future amendments thereto, if any, pursuant to the terms thereof, which Plan and Addendum are incorporated herein by reference as a part of this Agreement. In the event of any conflict between the Plan, the Addendum and this Agreement, the provisions of the Plan will prevail.  Colleague’s rights hereunder are subject to modification or termination in certain events, as provided in the Plan, including without limitation such rules

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and regulations as may from time to time be adopted or promulgated in accordance with paragraph 1.3 of the Plan.  Capitalized terms not defined in this Agreement shall have the meanings set forth in the Plan and the Addendum.

6.Employment Relationship.  For purposes of this Agreement, Colleague shall be considered to be in the employment of the Company as long as Colleague remains a Colleague of either the Company, any successor corporation or a parent or subsidiary corporation (as defined in section 424 of the Internal Revenue Code) of the Company or any successor corporation.  Any question as to whether and when there has been a termination of such employment, and the cause of such termination, shall be determined by the Committee, or its delegate, as appropriate, and its determination shall be final.

7.Committee’s Powers.  No provision contained in this Agreement shall in any way terminate, modify or alter, or be construed or interpreted as terminating, modifying or altering any of the powers, rights or authority vested in the Committee or, to the extent delegated, in its delegate pursuant to the terms of the Plan or resolutions adopted in furtherance of the Plan, including, without limitation, the right to make certain determinations and elections with respect to the Restricted Stock Units and Dividend Equivalent Units.  All decisions of the Committee (as established pursuant to the Plan) with respect to any questions concerning the application, administration or interpretation of the Plan will be conclusive and binding on the Company and Colleague.

8.Binding Effect.  This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under Colleague.

9.Dispute Resolution.  If a dispute arises between Colleague and Company in connection with the Restricted Stock Unit Award, including Dividend Equivalent Units, the dispute will be resolved by binding arbitration with the American Arbitration Association (AAA) in accordance with the AAA’s Commercial Arbitration Rules then in effect.

10.Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of California.

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and Colleague has executed this Agreement, all as of the date first above written.

CITY NATIONAL CORPORATION

By:

Christopher J. Carey, Executive Vice

President, Chief Financial Officer

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Colleague

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EX-10.5

Exhibit 10.5

RESTRICTED STOCK UNIT AWARD AGREEMENT

(CASH ONLY)

ADDENDUM

THIS ADDENDUM TO THE RESTRICTED STOCK UNIT AWARD AGREEMENT (CASH ONLY) provides the rules and procedures relating to the grant of the Award and the operation of the Restricted Stock Unit Account and the Dividend Equivalent Unit Account.

A.Whenever the following terms are used in the Restricted Stock Unit Award Agreement or in this Addendum, they shall have the meaning specified below, unless the context clearly indicates to the contrary:

Dividend Equivalent Unit Account means the memorandum account maintained by the Company or its agent on behalf of Colleague which is credited with Dividend Equivalent Units.

Dividend Equivalent Unit means a unit of measurement which is deemed for bookkeeping and payment purposes to represent one dollar ($1.00) solely for purposes of this Agreement.

Fair Market Value shall mean, with respect to Common Stock of the Company, the price at which the Stock sold on the last normal transaction of the trading day on a specified date, or if no trading occurs on such specified date, on the most recent preceding business day on which trading occurred, as quoted on the New York Stock Exchange.

Restricted Stock Unit means a non-voting unit of measurement which is deemed for bookkeeping and payment purposes to represent one outstanding share of Common Stock of the Company solely for purposes of this Agreement.

Restricted Stock Unit Account means the memorandum account maintained by the Company on behalf of each Colleague which is credited with Restricted Stock Units under this Agreement.  Each Restricted Stock Unit represents the right to receive a distribution of cash in the amount of the Fair Market Value of one Share at the date of distribution as provided in the Restricted Stock Unit Award Agreement and this Addendum.

Shares means shares of the Company’s Common Stock.

B.Restricted Stock Unit Account.  As soon as practical following the Award Date, the Company shall credit the Colleague’s Restricted Stock Unit Account with the number of Restricted Stock Units awarded.

C.Dividend Equivalent Unit Account. As soon as practical following each of the Company’s dividend payable dates, the Colleague’s Dividend Equivalent Unit Account shall be credited with the number of Dividend Equivalent Units equal to the dividends paid by the Company during the quarter on a number of Shares equal to the aggregate number of Restricted Stock Units in the Colleague’s Restricted Stock Unit Account as of the record date for such quarter’s dividend payment.

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D.Distributions.  As soon as practical following the Lapse of Forfeiture Restrictions as set forth in Paragraph 2(b) of the Colleague’s Restricted Stock Unit Award Agreement (but in no event later than two and one-half months following the end of the calendar year in which such Lapse of Forfeiture Restrictions occurred), the Restricted Stock Units credited to the Colleague’s Restricted Stock Unit Account which are not subject to forfeiture as provided in the Plan (the “Vested RSUs”) and the Dividend Equivalent Units credited to the Colleague’s Dividend Equivalent Unit Account in respect of the Vested RSUs shall be converted to cash and the cash shall be distributed to the Colleague (or, in the event of his or her death, the Colleague’s Beneficiary).

E.Adjustments in Case of Changes in Common Stock.  If there shall occur any change in the outstanding Shares of the Company’s Common Stock such as described in Section 6.2(a) of the Plan, the Company shall make such proportionate and equitable adjustments consistent with the effect of such event on stockholders generally, as the Committee determines to be necessary or appropriate, in the number, kind and/or character of Colleague’s Restricted Stock Units or other securities, property and/or rights contemplated hereunder, including any appropriate adjustments to the market prices used in the determination of the number and Restricted Stock Units, and in rights in respect of the Colleague’s Restricted Stock Unit Account credited under this Agreement so as to preserve the benefits intended.

F.Plan Construction.  It is the intent of the Company that transactions pursuant to the Plan satisfy and be interpreted in a manner that satisfies the applicable conditions for exemption under Rule 16b-3 promulgated under the Exchange Act (“Rule 16b-3”) so that to the extent consistent therewith the crediting of Restricted Stock Units and Dividend Equivalent Units and the distribution of the balance remaining in the Restricted Stock Unit Account and the Dividend Equivalent Unit Account hereunder will be entitled to the benefits of Rule 16b-3 or other exemptive rules under Section 16 of the Exchange Act and will not be subjected to avoidable liability thereunder.

It is the intent of the Company that the Restricted Stock Units and Dividend Equivalent Units to which the Restricted Stock Unit Award Agreement and this Addendum applies shall comply with Section 409A, and the Restricted Stock Unit Award Agreement and this Addendum shall be interpreted in a manner which is consistent with the foregoing intent.  Any provisions of the Restricted Stock Unit Award Agreement and this Addendum which would not comply with the requirements of Section 409A and the Regulations adopted thereunder shall be deemed to be modified or eliminated in order to comply with these requirements.

G.Unfunded Plan.  The liability of the Company to the Colleague under this Restricted Stock Unit Award Agreement shall be that of a debtor only pursuant to such contractual obligations as are created by the Plan, the Agreement and this Addendum, and no such obligation of the Company shall be deemed to be secured by any assets, pledges, or other encumbrances on any property of the Company.  The Company has not segregated or earmarked any of the Company’s assets for the benefit of Colleague or his/her beneficiary or estate, and the Plan does not, and shall not be construed to, require the Company to do so.  The Colleague and his/her beneficiary or estate shall have only an unsecured, contractual right against the Company with respect to any Restricted Stock Units or Dividend Equivalent Units, and such right shall not be deemed superior to the right of any other creditor.

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EX-31.1

Exhibit 31.1

CHIEF EXECUTIVE OFFICER SECTION 302 CERTIFICATION

I, Russell Goldsmith, certify that:

1.I have reviewed this quarterly report on Form 10-Q of City National Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

DATE: May 9, 2012	/s/ Russell Goldsmith
	RUSSELL GOLDSMITH
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CHIEF FINANCIAL OFFICER SECTION 302 CERTIFICATION

I, Christopher J. Carey, certify that:

1.I have reviewed this quarterly report on Form 10-Q of City National Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

DATE: May 9, 2012	/s/ Christopher J. Carey
	CHRISTOPHER J. CAREY
	Chief Financial Officer

EX-32.0

Exhibit 32.0

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of City National Corporation (the “Company”) on Form 10-Q for the period ending March 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Russell Goldsmith, Chief Executive Officer of the Company, and Christopher J. Carey, Chief Financial Officer of the Company, certify, pursuant to 18 U.S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge, based on a review of the Report of the Company, and except as corrected or supplemented in a subsequent report:

(1)  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

DATE: May 9, 2012	/s/ Russell Goldsmith
	RUSSELL GOLDSMITH
	Chief Executive Officer
DATE: May 9, 2012	/s/ Christopher J. Carey
	CHRISTOPHER J. CAREY
	Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to City National Corporation and will be retained by City National Corporation and furnished to the Securities and Exchange Commission upon request.

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Derivative Instruments (Tables)

3 Months Ended

Mar. 31, 2012

Derivative Instruments

Summary of notional amount and fair values of derivative instruments

	March 31, 2012						December 31, 2011
(in millions) (1)	Notional Amount		Derivative Assets		Derivative Liabilities		Notional Amount		Derivative Assets		Derivative Liabilities
Derivatives designated as hedging instruments
Interest rate swaps - fair value:
Long-term and subordinated debt	205.9		8.1		—		207.4		9.8		—
Total derivatives designated as hedging instruments	$	205.9	$	8.1	$	—	$	207.4	$	9.8	$	—
Derivatives not designated as hedging instruments
Interest rate contracts:
Swaps	$	1,551.4	$	48.6	$	49.1	$	1,482.1	$	51.3	$	52.5
Interest-rate caps, floors and collars	243.9		0.1		0.1		267.1		0.3		0.3
Options purchased	2.0		0.2		0.2		2.0		0.1		0.1
Options written	2.0		—		—		2.0		—		—
Total interest-rate contracts	$	1,799.3	$	48.9	$	49.4	$	1,753.2	$	51.7	$	52.9
Option contracts	$	—	$	0.2	$	—	$	—	$	0.7	$	—
Foreign exchange contracts:
Spot and forward contracts	$	277.7	$	2.7	$	2.2	$	203.8	$	2.1	$	2.1
Options purchased	5.8		—		—		—		—		—
Options written	5.8		0.1		0.1		—		—		—
Total foreign exchange contracts	$	289.3	$	2.8	$	2.3	$	203.8	$	2.1	$	2.1
Total derivatives not designated as hedging instruments	$	2,088.6	$	51.9	$	51.7	$	1,957.0	$	54.5	$	55.0

(1)Derivative assets include the estimated gain to settle a derivative contract net of cash collateral received from counterparties plus net interest receivable.  Derivative liabilities include the estimated loss to settle a derivative contract.

Schedule of impact of interest-rate swaps on interest income and interest expense

(in millions) Derivative Instruments Designated as	Location in Consolidated	For the three months ended March 31,
Hedging Instruments	Statements of Income	2012			2011
Interest-rate swaps-fair value	Interest expense	$	(2.0	)	$	(4.2	)
Interest-rate swaps-cash flow	Interest income	0.1			0.6
Total income		$	2.1		$	4.8

Schedule of the amount of gains and losses on derivative contracts not designated as hedges

(in millions) Derivatives Not Designated as	Location in Consolidated	For the three months ended March 31,
Hedging Instruments	Statements of Income	2012			2011
Interest-rate contracts	Other noninterest income	$	0.7		$	0.2
Option contracts	Other noninterest income	(0.6		)	—
Foreign exchange contracts	International services income	5.8			5.4
Total income		$	5.9		$	5.6

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Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Details 2) (USD $)	3 Months Ended
	Mar. 31, 2012 D	Mar. 31, 2011	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2011 Nevada Commerce Bank	Apr. 08, 2011 Nevada Commerce Bank	Mar. 31, 2012 Commercial	Dec. 31, 2011 Commercial	Mar. 31, 2012 Commercial real estate mortgages	Dec. 31, 2011 Commercial real estate mortgages	Mar. 31, 2012 Residential mortgage	Dec. 31, 2011 Residential mortgage	Mar. 31, 2012 Real estate construction	Dec. 31, 2011 Real estate construction	Mar. 31, 2012 Equity lines of credit	Dec. 31, 2011 Equity lines of credit	Mar. 31, 2012 Installment loan	Dec. 31, 2011 Installment loan
Accounts notes and loans receivable
Covered loans	$ 1,397,156,000		$ 1,481,854,000				$ 22,395,000	$ 30,911,000	$ 1,219,923,000	$ 1,288,352,000	$ 13,378,000	$ 14,931,000	$ 135,065,000	$ 140,992,000	$ 5,210,000	$ 5,167,000	$ 1,185,000	$ 1,501,000
Less: Allowance for loan losses	(61,471,000)	(82,016,000)	(64,565,000)	(67,389,000)
Covered loans, net of allowance for loan losses	1,335,685,000		1,417,289,000
Acquired loans
Preliminary estimates of the contractually required payments receivable for all acquired impaired covered loans					107,400,000
Cash flows expected to be collected					66,200,000
Fair value of acquired impaired loans					55,300,000
FDIC indemnification asset	185,392,000		204,259,000			33,800,000
Number of days of delinquency required to charge-off overdrafts	60
Number of days of delinquency required to charge-off secured consumer loans	180
Changes in Accretable Yield for Acquired Impaired Loans
Balance at the beginning of the period	436,374,000	562,826,000
Accretion	(22,225,000)	(27,572,000)
Reclassifications from (to) nonaccretable yield	(21,468,000)	(2,448,000)
Disposals and other	(16,213,000)	(11,248,000)
Balance at the end of the period	$ 376,468,000	$ 521,558,000

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Securities (Details) (USD $)	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Dec. 31, 2011
Securities
Total securities	$ 7,920,000,000		$ 8,100,000,000
Trading securities, at fair value	82,589,000		61,975,000
Securities available-for-sale:
Amortized Cost	6,699,181,000		7,445,999,000
Gross Unrealized Gains	155,837,000		149,080,000
Gross Unrealized Losses	(16,308,000)		(23,178,000)
Fair Value	6,838,710,000		7,571,901,000
Securities held-to-maturity:
Amortized Cost	996,613,000		467,680,000
Gross Unrealized Gains	6,115,000		6,455,000
Gross Unrealized Losses	(6,273,000)		(232,000)
Fair Value	996,455,000		473,903,000
Proceeds from sales of securities	5,173,000	6,094,000
Realized gains and losses
Gross realized gains	496,000	160,000
Gross realized losses	(47,000)	(30,000)
Net realized gains	449,000	130,000
Interest and dividend income on securities (including trading securities)
Taxable interest income	41,500,000	34,300,000
Nontaxable interest income	3,800,000	2,900,000
Dividend income	100,000	200,000
Total debt securities
Securities available-for-sale:
Amortized Cost	6,698,829,000		7,445,647,000
Gross Unrealized Gains	155,039,000		148,205,000
Gross Unrealized Losses	(16,308,000)		(23,178,000)
Fair Value	6,837,560,000		7,570,674,000
U.S. Treasury
Securities available-for-sale:
Amortized Cost	19,217,000		19,163,000
Gross Unrealized Gains	8,000		24,000
Gross Unrealized Losses	(23,000)		(5,000)
Fair Value	19,202,000		19,182,000
Federal agency - Debt
Securities available-for-sale:
Amortized Cost	1,046,035,000		1,967,928,000
Gross Unrealized Gains	5,348,000		6,230,000
Gross Unrealized Losses	(35,000)		(296,000)
Fair Value	1,051,348,000		1,973,862,000
Securities held-to-maturity:
Amortized Cost	104,268,000		40,423,000
Gross Unrealized Gains	394,000		780,000
Gross Unrealized Losses	(66,000)
Fair Value	104,596,000		41,203,000
Federal agency - MBS
Securities available-for-sale:
Amortized Cost	690,183,000		650,091,000
Gross Unrealized Gains	30,580,000		31,040,000
Gross Unrealized Losses	(173,000)		(87,000)
Fair Value	720,590,000		681,044,000
Securities held-to-maturity:
Amortized Cost	173,380,000		75,231,000
Gross Unrealized Gains	1,794,000		1,632,000
Gross Unrealized Losses	(427,000)
Fair Value	174,747,000		76,863,000
CMOs - Federal agency
Securities available-for-sale:
Amortized Cost	4,304,148,000		4,239,205,000
Gross Unrealized Gains	97,498,000		89,926,000
Gross Unrealized Losses	(1,328,000)		(2,224,000)
Fair Value	4,400,318,000		4,326,907,000
Securities held-to-maturity:
Amortized Cost	590,931,000		292,547,000
Gross Unrealized Gains	2,496,000		2,580,000
Gross Unrealized Losses	(3,918,000)		(195,000)
Fair Value	589,509,000		294,932,000
CMOs - Non-agency
Securities available-for-sale:
Amortized Cost	74,737,000		79,999,000
Gross Unrealized Gains	809,000		322,000
Gross Unrealized Losses	(6,959,000)		(11,320,000)
Fair Value	68,587,000		69,001,000
State and municipal
Securities available-for-sale:
Amortized Cost	378,541,000		383,210,000
Gross Unrealized Gains	17,379,000		18,767,000
Gross Unrealized Losses	(197,000)		(373,000)
Fair Value	395,723,000		401,604,000
Securities held-to-maturity:
Amortized Cost	128,034,000		59,479,000
Gross Unrealized Gains	1,431,000		1,463,000
Gross Unrealized Losses	(1,862,000)		(37,000)
Fair Value	127,603,000		60,905,000
Other debt securities
Securities available-for-sale:
Amortized Cost	185,968,000		106,051,000
Gross Unrealized Gains	3,417,000		1,896,000
Gross Unrealized Losses	(7,593,000)		(8,873,000)
Fair Value	181,792,000		99,074,000
Equity securities and mutual funds
Securities available-for-sale:
Amortized Cost	352,000		352,000
Gross Unrealized Gains	798,000		875,000
Fair Value	$ 1,150,000		$ 1,227,000

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Contingencies (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2011	Dec. 31, 2011 claim	Mar. 31, 2012
Contingencies
Maximum liability under indemnity in connection with liquidation of an investment acquired			$ 23.0
Number of legal claims with unfavorable judgment		2
Unfavorable judgments through arbitration on legal claims		7.2
Loss covered by entity's insurance policies		5.3
Net charges included in other operating expense in noninterest expense	$ 1.4

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Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Details 3) (USD $)	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Dec. 31, 2011
Allowance for Loan and Lease Losses
Beginning Balance	$ 262,557,000	$ 257,007,000
Provision for credit losses, net of transfers	(970,000)	(178,000)
Charge-offs	(12,162,000)	(8,367,000)
Recoveries	16,652,000	14,894,000
Net (charge-offs) recoveries	4,490,000	6,527,000
Ending Balance	266,077,000	263,356,000
Allowance individually evaluated for impairment	14,118,000	8,655,000
Allowance collectively evaluated for impairment	251,959,000	254,701,000
Loans and leases, excluding covered loans	12,747,902,000	11,269,684,000	12,309,385,000
Loans and leases, individually evaluated for impairment	150,937,000	145,488,000
Loans and leases, collectively evaluated for impairment	12,596,965,000	11,124,196,000
Transfers to reserve for off-balance sheet credit commitments	1,000,000	200,000
Reserve for Off Balance Sheet Credit Commitments
Balance, beginning of period	23,097,000	21,529,000
Transfers from allowance for loan and lease losses	970,000	178,000
Balance, end of period	24,067,000	21,707,000
Commercial (includes lease financing)
Allowance for Loan and Lease Losses
Beginning Balance	82,965,000	82,451,000
Provision for credit losses, net of transfers	(4,161,000)	(4,853,000)
Charge-offs	(8,917,000)	(3,238,000)
Recoveries	14,200,000	1,301,000
Net (charge-offs) recoveries	5,283,000	(1,937,000)
Ending Balance	84,087,000	75,661,000
Allowance individually evaluated for impairment	3,335,000	2,291,000
Allowance collectively evaluated for impairment	80,752,000	73,370,000
Loans and leases, excluding covered loans	5,573,782,000	4,468,177,000
Loans and leases, individually evaluated for impairment	40,415,000	14,431,000
Loans and leases, collectively evaluated for impairment	5,533,367,000	4,453,746,000
Commercial real estate mortgages
Allowance for Loan and Lease Losses
Beginning Balance	45,967,000	52,516,000
Provision for credit losses, net of transfers	1,285,000	(11,209,000)
Charge-offs	(692,000)	(2,799,000)
Recoveries	26,000	9,011,000
Net (charge-offs) recoveries	(666,000)	6,212,000
Ending Balance	46,586,000	47,519,000
Allowance individually evaluated for impairment	1,019,000	1,060,000
Allowance collectively evaluated for impairment	45,567,000	46,459,000
Loans and leases, excluding covered loans	2,213,114,000	1,902,862,000	2,110,749,000
Loans and leases, individually evaluated for impairment	22,306,000	25,790,000
Loans and leases, collectively evaluated for impairment	2,190,808,000	1,877,072,000
Residential mortgage
Allowance for Loan and Lease Losses
Beginning Balance	14,029,000	16,753,000
Provision for credit losses, net of transfers	268,000	(2,611,000)
Charge-offs	(554,000)	(647,000)
Recoveries	60,000	32,000
Net (charge-offs) recoveries	(494,000)	(615,000)
Ending Balance	13,803,000	13,527,000
Allowance individually evaluated for impairment	331,000	384,000
Allowance collectively evaluated for impairment	13,472,000	13,143,000
Loans and leases, excluding covered loans	3,805,807,000	3,603,058,000	3,763,218,000
Loans and leases, individually evaluated for impairment	13,000,000	12,476,000
Loans and leases, collectively evaluated for impairment	3,792,807,000	3,590,582,000
Real estate construction
Allowance for Loan and Lease Losses
Beginning Balance	23,347,000	40,824,000
Provision for credit losses, net of transfers	(1,355,000)	(7,957,000)
Charge-offs	(1,601,000)	(566,000)
Recoveries	1,705,000	4,392,000
Net (charge-offs) recoveries	104,000	3,826,000
Ending Balance	22,096,000	36,693,000
Allowance individually evaluated for impairment	9,395,000	334,000
Allowance collectively evaluated for impairment	12,701,000	36,359,000
Loans and leases, excluding covered loans	313,409,000	415,241,000	315,609,000
Loans and leases, individually evaluated for impairment	67,686,000	81,604,000
Loans and leases, collectively evaluated for impairment	245,723,000	333,637,000
Equity lines of credit
Allowance for Loan and Lease Losses
Beginning Balance	8,024,000	7,229,000
Provision for credit losses, net of transfers	162,000	(27,000)
Charge-offs	(189,000)	(793,000)
Recoveries	35,000	36,000
Net (charge-offs) recoveries	(154,000)	(757,000)
Ending Balance	8,032,000	6,445,000
Allowance individually evaluated for impairment	38,000	72,000
Allowance collectively evaluated for impairment	7,994,000	6,373,000
Loans and leases, excluding covered loans	715,997,000	733,567,000	741,081,000
Loans and leases, individually evaluated for impairment	6,980,000	4,249,000
Loans and leases, collectively evaluated for impairment	709,017,000	729,318,000
Installment loan
Allowance for Loan and Lease Losses
Beginning Balance	1,959,000	3,931,000
Provision for credit losses, net of transfers	(438,000)	1,716,000
Charge-offs	(209,000)	(324,000)
Recoveries	626,000	122,000
Net (charge-offs) recoveries	417,000	(202,000)
Ending Balance	1,938,000	5,445,000
Allowance individually evaluated for impairment		4,514,000
Allowance collectively evaluated for impairment	1,938,000	931,000
Loans and leases, excluding covered loans	125,793,000	146,779,000	132,647,000
Loans and leases, individually evaluated for impairment	550,000	6,938,000
Loans and leases, collectively evaluated for impairment	125,243,000	139,841,000
Unallocated
Allowance for Loan and Lease Losses
Beginning Balance	86,266,000	53,303,000
Provision for credit losses, net of transfers	3,269,000	24,763,000
Ending Balance	89,535,000	78,066,000
Allowance collectively evaluated for impairment	$ 89,535,000	$ 78,066,000

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Fair Value Measurements (Details 3) (USD $)	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Total realized/unrealized gains (losses):
Paydowns received on Level 3 assets measured on a recurring basis	$ 1,600,000	$ 1,700,000
Securities Available-for-Sale
Level 3 Assets Measured on a Recurring Basis
Balance, beginning of period	19,583,000	20,982,000
Total realized/unrealized gains (losses):
Included in other comprehensive income	964,000	1,690,000
Settlements	(1,562,000)	(1,707,000)
Other	24,000	(53,000)
Balance, end of period	$ 19,009,000	$ 20,912,000

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Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Tables)

3 Months Ended

Mar. 31, 2012

Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments

Summary of loans

	March 31,			December 31,
(in thousands)	2012			2011
Commercial	$	5,175,396		$	4,846,594
Commercial real estate mortgages	2,213,114			2,110,749
Residential mortgages	3,805,807			3,763,218
Real estate construction	313,409			315,609
Equity lines of credit	715,997			741,081
Installment	125,793			132,647
Lease financing	398,386			399,487
Loans and leases, excluding covered loans	12,747,902			12,309,385
Less: Allowance for loan and lease losses	(266,077		)	(262,557		)
Loans and leases, excluding covered loans, net	12,481,825			12,046,828
Covered loans	1,397,156			1,481,854
Less: Allowance for loan losses	(61,471		)	(64,565		)
Covered loans, net	1,335,685			1,417,289
Total loans and leases	$	14,145,058		$	13,791,239
Total loans and leases, net	$	13,817,510		$	13,464,117

Summary of major categories of covered loans

	March 31,			December 31,
(in thousands)	2012			2011
Commercial	$	22,395		$	30,911
Commercial real estate mortgages	1,219,923			1,288,352
Residential mortgages	13,378			14,931
Real estate construction	135,065			140,992
Equity lines of credit	5,210			5,167
Installment	1,185			1,501
Covered loans	1,397,156			1,481,854
Less: Allowance for loan losses	(61,471		)	(64,565		)
Covered loans, net	$	1,335,685		$	1,417,289

Summary of accretable yield for acquired impaired loans

For the three months ended March 31,
(in thousands)	2012			2011
Balance, beginning of period	$	436,374		$	562,826
Accretion	(22,225		)	(27,572		)
Reclassifications to nonaccretable yield	(21,468		)	(2,448		)
Disposals and other	(16,213		)	(11,248		)
Balance, end of period	$	376,468		$	521,558

Summary of allowance for loan and lease losses on non-covered loans

(in thousands)	Commercial (1)			Commercial Real Estate Mortgages			Residential Mortgages			Real Estate Construction			Equity Lines of Credit			Installment			Unallocated		Total
Three months ended March 31, 2012
Allowance for loan and lease losses:
Beginning balance	$	82,965		$	45,967		$	14,029		$	23,347		$	8,024		$	1,959		$	86,266	$	262,557
Provision for credit losses (2)	(4,161		)	1,285			268			(1,355		)	162			(438		)	3,269		(970		)
Charge-offs	(8,917		)	(692		)	(554		)	(1,601		)	(189		)	(209		)	—		(12,162		)
Recoveries	14,200			26			60			1,705			35			626			—		16,652
Net (charge-offs) recoveries	5,283			(666		)	(494		)	104			(154		)	417			—		4,490
Ending balance	$	84,087		$	46,586		$	13,803		$	22,096		$	8,032		$	1,938		$	89,535	$	266,077
Ending balance of allowance:
Individually evaluated for impairment	$	3,335		$	1,019		$	331		$	9,395		$	38		$	—		$	—	$	14,118
Collectively evaluated for impairment	80,752			45,567			13,472			12,701			7,994			1,938			89,535		251,959
Loans and leases, excluding covered loans
Ending balance of loans and leases:
Loans and leases, excluding covered loans	$	5,573,782		$	2,213,114		$	3,805,807		$	313,409		$	715,997		$	125,793		$	—	$	12,747,902
Individually evaluated for impairment	40,415			22,306			13,000			67,686			6,980			550			—		150,937
Collectively evaluated for impairment	5,533,367			2,190,808			3,792,807			245,723			709,017			125,243			—		12,596,965
Three months ended March 31, 2011
Allowance for loan and lease losses:
Beginning balance	$	82,451		$	52,516		$	16,753		$	40,824		$	7,229		$	3,931		$	53,303	$	257,007
Provision for credit losses (2)	(4,853		)	(11,209		)	(2,611		)	(7,957		)	(27		)	1,716			24,763		(178		)
Charge-offs	(3,238		)	(2,799		)	(647		)	(566		)	(793		)	(324		)	—		(8,367		)
Recoveries	1,301			9,011			32			4,392			36			122			—		14,894
Net (charge-offs) recoveries	(1,937		)	6,212			(615		)	3,826			(757		)	(202		)	—		6,527
Ending balance	$	75,661		$	47,519		$	13,527		$	36,693		$	6,445		$	5,445		$	78,066	$	263,356
Ending balance of allowance:
Individually evaluated for impairment	$	2,291		$	1,060		$	384		$	334		$	72		$	4,514		$	—	$	8,655
Collectively evaluated for impairment	73,370			46,459			13,143			36,359			6,373			931			78,066		254,701
Loans and leases, excluding covered loans
Ending balance of loans and leases:
Loans and leases, excluding covered loans	$	4,468,177		$	1,902,862		$	3,603,058		$	415,241		$	733,567		$	146,779		$	—	$	11,269,684
Individually evaluated for impairment	14,431			25,790			12,476			81,604			4,249			6,938			—		145,488
Collectively evaluated for impairment	4,453,746			1,877,072			3,590,582			333,637			729,318			139,841			—		11,124,196

(1)

Includes lease financing loans.

(2)

Provision for credit losses in the allowance rollforward for the three months ended March 31, 2012 includes total transfers from the reserve for off-balance sheet credit commitments of $1.0 million. Provision for credit losses for the three months ended March 31, 2011 includes total transfers to the reserve for off-balance sheet credit commitments of $0.2 million. There was no other provision for credit losses recognized for the three months ended March 31, 2012 and 2011.

Summary of activity in the reserve for off-balance sheet credit commitments

	For the three months ended March 31,
(in thousands)	2012		2011
Balance, beginning of period	$	23,097	$	21,529
Transfers from allowance for loan and lease losses	970		178
Balance, end of period	$	24,067	21,707

Schedule of impaired loans, excluding covered loans

			Unpaid				For the three months ended March 31, 2012
(in thousands)	Recorded Investment		Contractual Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
March 31, 2012
With no related allowance recorded:
Commercial	$	27,822	$	36,069	$	—	$	18,988	$	—
Commercial real estate mortgages	14,008		19,022		—		16,938		69
Residential mortgages:
Fixed	2,666		3,194		—		3,080		—
Variable	6,567		7,240		—		5,128		—
Total residential mortgages	9,233		10,434		—		8,208		—
Real estate construction:
Construction	21,045		34,381		—		24,240		116
Land	24,090		27,340		—		26,541		—
Total real estate construction	45,135		61,721		—		50,781		116
Equity lines of credit	6,035		7,185		—		5,688		—
Installment:
Consumer	550		927		—		604		—
Total installment	550		927		—		604		—
Lease financing	—		—		—		14		—
Total with no related allowance	$	102,783	$	135,358	$	—	$	101,221	$	185
With an allowance recorded:
Commercial	$	12,593	$	17,643	$	3,335	$	14,110	$	—
Commercial real estate mortgages	8,298		8,715		1,019		9,555		—
Residential mortgages:
Fixed	2,341		2,367		287		1,428		—
Variable	1,426		1,476		44		1,438		—
Total residential mortgages	3,767		3,843		331		2,866		—
Real estate construction:
Land	22,551		34,312		9,395		20,968		—
Total real estate construction	22,551		34,312		9,395		20,968		—
Equity lines of credit	945		985		38		1,119		—
Total with an allowance	$	48,154	$	65,498	$	14,118	$	48,618	$	—
Total impaired loans by type:
Commercial	$	40,415	$	53,712	$	3,335	$	33,098	$	—
Commercial real estate mortgages	22,306		27,737		1,019		26,493		69
Residential mortgages	13,000		14,277		331		11,074		—
Real estate construction	67,686		96,033		9,395		71,749		116
Equity lines of credit	6,980		8,170		38		6,807		—
Installment	550		927		—		604		—
Lease financing	—		—		—		14		—
Total impaired loans	$	150,937	$	200,856	$	14,118	$	149,839	$	185

			Unpaid
			Contractual
	Recorded		Principal		Related
(in thousands)	Investment		Balance (1)		Allowance
December 31, 2011
With no related allowance recorded:
Commercial	$	10,153	$	11,588	$	—
Commercial real estate mortgages	19,867		23,983		—
Residential mortgages:
Fixed	3,493		4,035		—
Variable	3,689		4,000		—
Total residential mortgages	7,182		8,035		—
Real estate construction:
Construction	27,435		40,605		—
Land	28,991		32,335		—
Total real estate construction	56,426		72,940		—
Equity lines of credit	5,341		6,325		—
Installment:
Consumer	658		976		—
Total installment	658		976		—
Lease financing	28		5,225		—
Total with no related allowance	$	99,655	$	129,072	$	—
With an allowance recorded:
Commercial	$	15,627	$	21,377	$	7,135
Commercial real estate mortgages	10,811		11,215		1,551
Residential mortgages:
Fixed	515		535		40
Variable	1,449		1,476		68
Total residential mortgages	1,964		2,011		108
Real estate construction:
Land	19,385		29,381		4,377
Total real estate construction	19,385		29,381		4,377
Equity lines of credit	1,292		1,461		91
Total with an allowance	$	49,079	$	65,445	$	13,262
Total impaired loans by type:
Commercial	$	25,780	$	32,965	$	7,135
Commercial real estate mortgages	30,678		35,198		1,551
Residential mortgages	9,146		10,046		108
Real estate construction	75,811		102,321		4,377
Equity lines of credit	6,633		7,786		91
Installment	658		976		—
Lease financing	28		5,225		—
Total impaired loans	$	148,734	$	194,517	$	13,262

(1)   The table has been revised to present unpaid contractual principal balances, whereas the Company had previously disclosed unpaid contractual principal balances that were net of charge-offs.

			Unpaid				For the three months ended March 31, 2011
(in thousands)	Recorded Investment		Contractual Principal Balance (1)		Related Allowance		Average Recorded Investment		Interest Income Recognized
March 31, 2011
With no related allowance recorded:
Commercial	$	6,400	$	15,721	$	—	$	6,848	$	—
Commercial real estate mortgages	18,491		24,047		—		20,994		130
Residential mortgages:
Fixed	6,238		7,324		—		8,590		145
Variable	3,271		3,280		—		3,659		10
Total residential mortgages	9,509		10,604		—		12,249		155
Real estate construction:
Construction	49,258		83,788		—		62,518		230
Land	23,528		24,296		—		23,630		—
Total real estate construction	72,786		108,084		—		86,148		230
Equity lines of credit	3,292		3,830		—		3,149		—
Installment:
Commercial	—		—		—		569		—
Consumer	41		41		—		41		—
Total installment	41		41		—		610		—
Lease financing	1,108		6,243		—		554		99
Total with no related allowance	$	111,627	$	168,570	$	—	$	130,552	$	614
With an allowance recorded:
Commercial	$	6,923	$	16,314	$	2,291	$	7,745	$	—
Commercial real estate mortgages	7,299		8,386		1,060		13,219		—
Residential mortgages:
Fixed	1,553		1,549		103		1,060		—
Variable	1,414		1,508		281		1,424		—
Total residential mortgages	2,967		3,057		384		2,484		—
Real estate construction:
Construction	8,818		8,991		334		8,834		—
Total real estate construction	8,818		8,991		334		8,834		—
Equity lines of credit	957		963		72		1,412		3
Installment:
Commercial	6,897		7,417		4,514		3,448		—
Total installment	6,897		7,417		4,514		3,448		—
Total with an allowance	$	33,861	$	45,128	$	8,655	$	37,142	$	3
Total impaired loans by type:
Commercial	$	13,323	$	32,035	$	2,291	$	14,593	$	—
Commercial real estate mortgages	25,790		32,433		1,060		34,213		130
Residential mortgages	12,476		13,661		384		14,733		155
Real estate construction	81,604		117,075		334		94,982		230
Equity lines of credit	4,249		4,793		72		4,561		3
Installment	6,938		7,458		4,514		4,058		—
Lease financing	1,108		6,243		—		554		99
Total impaired loans	$	145,488	$	213,698	$	8,655	$	167,694	$	617

(1)   The table has been revised to present unpaid contractual principal balances, whereas the Company had previously disclosed unpaid contractual principal balances that were net of charge-offs.

Schedule of additional detail on impaired loans, excluding covered loans

(in thousands)	March 31, 2012		December 31, 2011
Nonaccrual loans (1)	$	104,441	$	101,873
Troubled debt restructured loans on accrual	46,111		46,647
Deferred fees, accrued interest, and premiums and discounts, net	385		214
Total recorded investment in impaired loans, excluding covered loans	$	150,937	$	148,734

(1) Impaired loans exclude $8.4 million and $10.2 million of nonaccrual loans under $500,000 that are not individually evaluated for impairment at March 31, 2011 and December 31, 2011, respectively.

Schedule of troubled debt restructured loans

	For the three months ended March 31, 2012
(in thousands)	Number of Contracts	Pre-Modification Outstanding Principal		Period-End Outstanding Principal		Financial Effects (1)
Commercial	5	$	16,982	$	16,903	$	—
Residential mortgages:
Fixed	1	655		655		—
Real estate construction:
Construction	1	5,532		5,532		—
Total troubled debt restructured loans	7	$	23,169	$	23,090	$	—

(1) Financial effects are comprised of charge-offs and specific reserves recognized on TDR loans at modification date.

Schedule of troubled debt restructured loans that have subsequently defaulted

(in thousands)	Number of Contracts	Period-End Outstanding Principal		Period-End Specific Reserve
Commercial	1	$	26	$	10
Real estate construction:
Land	2	6,339		3,318
Total TDR loans that subsequently defaulted	3	$	6,365	$	3,328

Summary of past due loans, excluding covered loans, based upon the length of time the loans have been past due

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days and Accruing		Nonaccrual		Total Past Due and Nonaccrual Loans		Current		Total Loans and Leases
March 31, 2012
Commercial	$	10,267	$	980	$	7	$	19,584	$	30,838	$	5,144,558	$	5,175,396
Commercial real estate mortgages	3,953		—		—		21,071		25,024		2,188,090		2,213,114
Residential mortgages:
Fixed	525		—		379		5,657		6,561		1,531,537		1,538,098
Variable	—		1,519		—		7,971		9,490		2,258,219		2,267,709
Total residential mortgages	525		1,519		379		13,628		16,051		3,789,756		3,805,807
Real estate construction:
Construction	—		—		—		15,453		15,453		206,184		221,637
Land	16,288		—		—		33,511		49,799		41,973		91,772
Total real estate construction	16,288		—		—		48,964		65,252		248,157		313,409
Equity lines of credit	248		74		268		8,831		9,421		706,576		715,997
Installment:
Commercial	—		—		—		—		—		489		489
Consumer	137		400		—		729		1,266		124,038		125,304
Total installment	137		400		—		729		1,266		124,527		125,793
Lease financing	—		—		—		—		—		398,386		398,386
Total	$	31,418	$	2,973	$	654	$	112,807	$	147,852	$	12,600,050	$	12,747,902

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days and Accruing		Nonaccrual		Total Past Due and Nonaccrual Loans		Current		Total Loans and Leases
December 31, 2011
Commercial	$	6,817	$	1,003	$	—	$	19,888	$	27,708	$	4,818,886	$	4,846,594
Commercial real estate mortgages	5,838		—		—		21,948		27,786		2,082,963		2,110,749
Residential mortgages:
Fixed	662		525		379		5,572		7,138		1,574,658		1,581,796
Variable	—		2,983		—		4,199		7,182		2,174,240		2,181,422
Total residential mortgages	662		3,508		379		9,771		14,320		3,748,898		3,763,218
Real estate construction:
Construction	—		—		—		15,582		15,582		202,279		217,861
Land	—		—		—		35,294		35,294		62,454		97,748
Total real estate construction	—		—		—		50,876		50,876		264,733		315,609
Equity lines of credit	—		—		74		8,669		8,743		732,338		741,081
Installment:
Commercial	—		—		—		4		4		601		605
Consumer	150		—		—		870		1,020		131,022		132,042
Total installment	150		—		—		874		1,024		131,623		132,647
Lease financing	—		—		—		—		—		399,487		399,487
Total	$	13,467	$	4,511	$	453	$	112,026	$	130,457	$	12,178,928	$		12,309,385

Summary of the loan and lease portfolio, excluding covered loans, by loan type and credit quality classification

	March 31, 2012						December 31, 2011
(in thousands)	Nonclassified		Classified		Total		Nonclassified		Classified		Total
Commercial	$	5,068,902	$	106,494	$	5,175,396	$	4,732,663	$	113,931	$	4,846,594
Commercial real estate mortgages	2,080,452		132,662		2,213,114		1,930,001		180,748		2,110,749
Residential mortgages:
Fixed	1,526,029		12,069		1,538,098		1,565,420		16,376		1,581,796
Variable	2,257,505		10,204		2,267,709		2,163,458		17,964		2,181,422
Total residential mortgages	3,783,534		22,273		3,805,807		3,728,878		34,340		3,763,218
Real estate construction:
Construction	165,761		55,876		221,637		147,916		69,945		217,861
Land	39,579		52,193		91,772		43,717		54,031		97,748
Total real estate construction	205,340		108,069		313,409		191,633		123,976		315,609
Equity lines of credit	700,363		15,634		715,997		724,045		17,036		741,081
Installment:
Commercial	489		—		489		601		4		605
Consumer	124,094		1,210		125,304		130,921		1,121		132,042
Total installment	124,583		1,210		125,793		131,522		1,125		132,647
Lease financing	395,497		2,889		398,386		396,256		3,231		399,487
Total	$	12,358,671	$	389,231	$	12,747,902	$	11,834,998	$	474,387	$	12,309,385

Summary of the allowance for loan losses on covered loans

	For the three months ended March 31,
(in thousands)	2012			2011
Balance, beginning of period	$	64,565		$	67,389
Provision for losses	7,466			19,116
Reduction in allowance due to loan removals	(10,560		)	(4,489		)
Balance, end of period	$	61,471		$	82,016

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Segment Results (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012 segment	Mar. 31, 2011
Segment Results
Number of reportable segments	3
Earnings Summary:
Net interest income	$ 200,713	$ 181,290
Provision for losses on covered loans	7,466	19,116
Noninterest income	75,700	93,893
Depreciation and amortization	9,314	8,916
Noninterest expense	191,406	188,481
Income before income taxes	68,227	58,670
Provision (benefit) for income taxes	21,719	17,886
Net income	46,508	40,784
Less: Net income attributable to noncontrolling interest	243	1,092
Net income attributable to City National Corporation	46,265	39,692
Provision for credit losses on loans and leases, excluding covered loans	0
Selected Average Balances:
Loans and leases, excluding covered loans	12,432,292	11,255,887
Covered loans	1,438,714	1,810,986
Total assets	23,644,899	21,377,904
Deposits	20,217,395	18,183,568
Goodwill	486,682	486,853
Customer-relationship intangibles, net	35,500	41,352
Commercial and Private Banking
Earnings Summary:
Net interest income	171,725	172,687
Provision for losses on covered loans	7,466	19,116
Noninterest income	47,245	63,210
Depreciation and amortization	3,582	3,633
Noninterest expense	171,593	165,508
Income before income taxes	36,329	47,640
Provision (benefit) for income taxes	15,258	20,009
Net income	21,071	27,631
Net income attributable to City National Corporation	21,071	27,631
Selected Average Balances:
Loans and leases, excluding covered loans	12,379,023	11,197,583
Covered loans	1,438,714	1,810,986
Total assets	14,137,481	13,534,385
Deposits	19,721,998	17,750,931
Goodwill	324,761	325,211
Customer-relationship intangibles, net	9,007	12,411
Wealth Management
Earnings Summary:
Net interest income	764	567
Noninterest income	39,371	41,877
Depreciation and amortization	1,446	1,449
Noninterest expense	35,984	38,182
Income before income taxes	2,705	2,813
Provision (benefit) for income taxes	1,034	947
Net income	1,671	1,866
Less: Net income attributable to noncontrolling interest	243	558
Net income attributable to City National Corporation	1,428	1,308
Selected Average Balances:
Total assets	537,732	551,729
Deposits	99,035	46,566
Goodwill	161,921	161,642
Customer-relationship intangibles, net	26,493	28,941
Other
Earnings Summary:
Net interest income	28,224	8,036
Noninterest income	(10,916)	(11,194)
Depreciation and amortization	4,286	3,834
Noninterest expense	(16,171)	(15,209)
Income before income taxes	29,193	8,217
Provision (benefit) for income taxes	5,427	(3,070)
Net income	23,766	11,287
Less: Net income attributable to noncontrolling interest		534
Net income attributable to City National Corporation	23,766	10,753
Selected Average Balances:
Loans and leases, excluding covered loans	53,269	58,304
Total assets	8,969,686	7,291,790
Deposits	$ 396,362	$ 386,071

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Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Details 5) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011	Mar. 31, 2011
Past Due Loans and Leases
30-59 Days Past Due	$ 31,418	$ 13,467
60-89 Days Past Due	2,973	4,511
Greater Than 90 Days and Accruing	654	453
Nonaccrual	112,807	112,026
Total Past Due and Nonaccrual Loans	147,852	130,457
Current	12,600,050	12,178,928
Total Loans and Leases	12,747,902	12,309,385	11,269,684
Commercial
Past Due Loans and Leases
30-59 Days Past Due	10,267	6,817
60-89 Days Past Due	980	1,003
Greater Than 90 Days and Accruing	7
Nonaccrual	19,584	19,888
Total Past Due and Nonaccrual Loans	30,838	27,708
Current	5,144,558	4,818,886
Total Loans and Leases	5,175,396	4,846,594
Commercial real estate mortgages
Past Due Loans and Leases
30-59 Days Past Due	3,953	5,838
Nonaccrual	21,071	21,948
Total Past Due and Nonaccrual Loans	25,024	27,786
Current	2,188,090	2,082,963
Total Loans and Leases	2,213,114	2,110,749	1,902,862
Residential mortgage
Past Due Loans and Leases
30-59 Days Past Due	525	662
60-89 Days Past Due	1,519	3,508
Greater Than 90 Days and Accruing	379	379
Nonaccrual	13,628	9,771
Total Past Due and Nonaccrual Loans	16,051	14,320
Current	3,789,756	3,748,898
Total Loans and Leases	3,805,807	3,763,218	3,603,058
Fixed
Past Due Loans and Leases
30-59 Days Past Due	525	662
60-89 Days Past Due		525
Greater Than 90 Days and Accruing	379	379
Nonaccrual	5,657	5,572
Total Past Due and Nonaccrual Loans	6,561	7,138
Current	1,531,537	1,574,658
Total Loans and Leases	1,538,098	1,581,796
Variable
Past Due Loans and Leases
60-89 Days Past Due	1,519	2,983
Nonaccrual	7,971	4,199
Total Past Due and Nonaccrual Loans	9,490	7,182
Current	2,258,219	2,174,240
Total Loans and Leases	2,267,709	2,181,422
Real estate construction
Past Due Loans and Leases
30-59 Days Past Due	16,288
Nonaccrual	48,964	50,876
Total Past Due and Nonaccrual Loans	65,252	50,876
Current	248,157	264,733
Total Loans and Leases	313,409	315,609	415,241
Construction
Past Due Loans and Leases
Nonaccrual	15,453	15,582
Total Past Due and Nonaccrual Loans	15,453	15,582
Current	206,184	202,279
Total Loans and Leases	221,637	217,861
Land
Past Due Loans and Leases
30-59 Days Past Due	16,288
Nonaccrual	33,511	35,294
Total Past Due and Nonaccrual Loans	49,799	35,294
Current	41,973	62,454
Total Loans and Leases	91,772	97,748
Equity lines of credit
Past Due Loans and Leases
30-59 Days Past Due	248
60-89 Days Past Due	74
Greater Than 90 Days and Accruing	268	74
Nonaccrual	8,831	8,669
Total Past Due and Nonaccrual Loans	9,421	8,743
Current	706,576	732,338
Total Loans and Leases	715,997	741,081	733,567
Installment loan
Past Due Loans and Leases
30-59 Days Past Due	137	150
60-89 Days Past Due	400
Nonaccrual	729	874
Total Past Due and Nonaccrual Loans	1,266	1,024
Current	124,527	131,623
Total Loans and Leases	125,793	132,647	146,779
Commercial Installment loan
Past Due Loans and Leases
Nonaccrual		4
Total Past Due and Nonaccrual Loans		4
Current	489	601
Total Loans and Leases	489	605
Consumer Installment loan
Past Due Loans and Leases
30-59 Days Past Due	137	150
60-89 Days Past Due	400
Nonaccrual	729	870
Total Past Due and Nonaccrual Loans	1,266	1,020
Current	124,038	131,022
Total Loans and Leases	125,304	132,042
Lease financing
Past Due Loans and Leases
Current	398,386	399,487
Total Loans and Leases	$ 398,386	$ 399,487

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Variable Interest Entities (Details) (USD $)	Mar. 31, 2012 entity	Dec. 31, 2011
Variable Interest Entities
Affordable housing investments	$ 143,916,000	$ 121,039,000
Unfunded commitments for affordable housing investments	54,700,000
Number of significant variable interest in affordable housing partnerships (in entities)	4
Maximum exposure to loss	2,000,000
Aggregate carrying value of private equity and alternative investment funds that are variable interest entities	$ 40,100,000	$ 39,900,000

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Variable Interest Entities

3 Months Ended

Mar. 31, 2012

Variable Interest Entities

Variable Interest Entities

Note 16. Variable Interest Entities

The Company holds ownership interests in certain special-purpose entities formed to provide affordable housing. The Company evaluates its interest in these entities to determine whether they meet the definition of a VIE and whether the Company is required to consolidate these entities. The Company is not the primary beneficiary of the affordable housing VIEs in which it holds interests and is therefore not required to consolidate these entities. The investment in these entities is initially recorded at cost, which approximates the maximum exposure to loss as a result of the Company’s involvement with these unconsolidated entities. Subsequently, the carrying value is amortized over the stream of available tax credits and benefits. The Company expects to recover its investments over time, primarily through realization of federal low-income housing tax credits. The balance of the investments in these entities was $143.9 million and $121.0 million at March 31, 2012 and December 31, 2011, respectively, and is included in Affordable housing investments in the consolidated balance sheets. Unfunded commitments for affordable housing investments were $54.7 million at March 31, 2012. These unfunded commitments are recorded in Other liabilities in the consolidated balance sheets.

Of the affordable housing investments held as of March 31, 2012, the Company had a significant variable interest in four affordable housing partnerships. These interests were acquired at various times from 1998 to 2001. The Company’s maximum exposure to loss as a result of its involvement with these entities is limited to the $2.0 million aggregate carrying value of these investments at March 31, 2012. There were no unfunded commitments for these affordable housing investments at March 31, 2012.

The Company also has ownership interests in several private equity and alternative investment funds that are VIEs. The Company is not a primary beneficiary and, therefore, is not required to consolidate these VIEs. The investment in these entities is carried at cost, which approximates the maximum exposure to loss as a result of the Company’s involvement with these entities. The Company expects to recover its investments over time, primarily through the allocation of fund income, gains or losses on the sale of fund assets, dividends or interest income. The balance in these entities was $40.1 million and $39.9 million at March 31, 2012 and December 31, 2011, respectively, and is included in Other assets in the consolidated balance sheets. Income associated with these investments is reported in Other noninterest income in the consolidated statements of income.

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Securities (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Dec. 31, 2011
Available-for-sale securities
Non-credit-related losses other-than-temporary impairment on available-for-sale securities	$ 2,432	$ 4,346
Impairment losses recognized in earnings on other-than-temporarily impaired securities		164
Credit related other-than-temporary impairment recognized in earnings
Fair value of total securities available-for-sale	6,838,710		7,571,901
Non-agency CMOs
Available-for-sale securities
Impairment losses recognized in earnings on other-than-temporarily impaired securities		200
Credit related other-than-temporary impairment recognized in earnings
Fair value of total securities available-for-sale	68,587		69,001
Variable rate non-agency CMOs
Credit related other-than-temporary impairment recognized in earnings
Fair value of total securities available-for-sale	44,700
Fixed rate non-agency CMOs
Credit related other-than-temporary impairment recognized in earnings
Fair value of total securities available-for-sale	23,900
Total debt securities
Credit related other-than-temporary impairment recognized in earnings
Balance, beginning of period	17,531	17,923
Subsequent credit-related impairment		164
Net increase in expected cash flows on securities for which OTTI was previously recognized	(162)	(537)
Balance, end of period	17,369	17,550
Fair value of total securities available-for-sale	$ 6,837,560		$ 7,570,674

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Summary of Significant Accounting Policies (Details)	3 Months Ended
	Mar. 31, 2012 entity office
Summary of Significant Accounting Policies
Number of offices for delivery of banking, trust and investment services	79
Number of investment advisory affiliates	5
Number of unconsolidated subsidiary	1

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Earnings per Common Share (Tables)

3 Months Ended

Mar. 31, 2012

Earnings per Common Share

Schedule of basic and diluted EPS

	For the three months ended March 31,
(in thousands, except per share amounts)	2012		2011
Basic EPS:
Net income attributable to City National Corporation	$	46,265	$	39,692
Less: Earnings allocated to participating securities	738		578
Earnings allocated to common shareholders	$	45,527	$	39,114
Weighted average common shares outstanding	52,741		52,320
Basic earnings per common share	$	0.86	$	0.75
Diluted EPS:
Earnings allocated to common shareholders (1)	$	45,530	$	39,119
Weighted average common shares outstanding	52,741		52,320
Dilutive effect of equity awards	280		574
Weighted average diluted common shares outstanding	53,021		52,894
Diluted earnings per common share	$	0.86	$	0.74

(1)   Earnings allocated to common 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 common shareholders and participating securities for the purposes of calculating diluted EPS.

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Other Investments (Details) (USD $)	3 Months Ended
	Mar. 31, 2012	Dec. 31, 2011
Federal Home Loan Bank of San Francisco and Federal Reserve Bank Stock
Investment in FRB and FHLB stock	$ 103,800,000	$ 107,400,000
Private Equity and Alternative Investments
Investments carried at cost	40,083,000	39,919,000
Recognized impairment on cost method investments	100,000
Private equity and venture capital
Private Equity and Alternative Investments
Investments carried at cost	23,271,000	23,093,000
Alternative Investments Measured at Fair Value on a Nonrecurring Basis
Fair Value	258,000
Real estate
Private Equity and Alternative Investments
Investments carried at cost	10,551,000	10,541,000
Hedge
Private Equity and Alternative Investments
Investments carried at cost	2,883,000	2,883,000
Other
Private Equity and Alternative Investments
Investments carried at cost	$ 3,378,000	$ 3,402,000

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Derivative Instruments (Details 2) (USD $) In Millions, unless otherwise specified	3 Months Ended			3 Months Ended
	Mar. 31, 2012 Derivatives designated as hedging instruments	Mar. 31, 2011 Derivatives designated as hedging instruments	Mar. 31, 2012 Derivatives designated as hedging instruments Interest income	Mar. 31, 2012 Derivatives designated as hedging instruments Fair Value Hedge Interest Rate Swaps Interest expense	Mar. 31, 2011 Derivatives designated as hedging instruments Fair Value Hedge Interest Rate Swaps Interest expense	Mar. 31, 2012 Derivatives designated as hedging instruments Cash Flow Hedge Interest income	Mar. 31, 2011 Derivatives designated as hedging instruments Cash Flow Hedge Interest income	Mar. 31, 2012 Derivatives designated as hedging instruments Cash Flow Hedge Interest Rate Swaps Interest income	Mar. 31, 2011 Derivatives designated as hedging instruments Cash Flow Hedge Interest Rate Swaps Interest income	Mar. 31, 2012 Derivatives not designated as hedging instruments	Mar. 31, 2011 Derivatives not designated as hedging instruments	Mar. 31, 2012 Derivatives not designated as hedging instruments Interest Rate Contracts Other noninterest income	Mar. 31, 2011 Derivatives not designated as hedging instruments Interest Rate Contracts Other noninterest income	Mar. 31, 2012 Derivatives not designated as hedging instruments Option contracts Other noninterest income	Mar. 31, 2012 Derivatives not designated as hedging instruments Foreign Exchange Contracts International services income	Mar. 31, 2011 Derivatives not designated as hedging instruments Foreign Exchange Contracts International services income	Mar. 31, 2012 Derivatives designated and not designated as hedging instruments	Mar. 31, 2012 Derivatives designated and not designated as hedging instruments Interest Rate Swaps	Dec. 31, 2011 Derivatives designated and not designated as hedging instruments Interest Rate Swaps
Derivative instruments gain (loss)
Derivative Instruments, Gain (Loss) Recognized in Income, Net	$ 2.1	$ 4.8		$ 2.0	$ 4.2			$ 0.1	$ 0.6	$ 5.9	$ 5.6	$ 0.7	$ 0.2	$ (0.6)	$ 5.8	$ 5.4
Amount of gains and (losses) reclassified from AOCI to Income						0.1	0.6
Other comprehensive income to be reclassified to interest income within the next 12 months			0.2
Credit Risk Exposure and Collateral
Aggregate fair value of derivatives with credit-risk-related contingent features, net liability position																	24.6
Collateral delivered on swap agreements, with credit-risk-related contingent features																	20.0
Interest rate swap credit risk exposure																		4.0	5.3
Collateral received from swap counterparties																		4.8	5.0
Collateral delivered on swap agreements, without credit-risk contingent features																		$ 18.8

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Shareholders' Equity (Details) (USD $) In Thousands, except Share data, unless otherwise specified	1 Months Ended			3 Months Ended
	Mar. 31, 2012	Feb. 29, 2012	Jan. 31, 2012	Mar. 31, 2012	Dec. 31, 2011
Components of AOCI
Net unrealized gain on securities available-for-sale	$ 81,162			$ 81,162	$ 73,235
Net unrealized gain on cash flow hedges	180			180	222
Pension liability adjustment					(1,085)
Total accumulated other comprehensive income	$ 81,342			$ 81,342	$ 72,372
Common shares repurchased
Total number of Shares (or Units) Purchased	13,817	25,029	148	38,994
Average Price Paid per Share (or Unit) (in dollars per share)	$ 46.12	$ 47.69	$ 48.86	$ 47.14
Shares of common stock reserved for issuance (in shares)	1,100,000			1,100,000
Shares of unvested restricted stock (in shares)	600,000			600,000

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Fair Value Measurements (Details 4) (USD $)	Mar. 31, 2012	Dec. 31, 2011
Financial Assets:
Cash and due from banks	$ 210,799,000	$ 168,376,000
Due from banks - interest-bearing	101,375,000	76,438,000
Federal funds sold	156,000,000
Loans and leases, net of allowance	12,481,825,000	12,046,828,000
Covered loans, net of allowance	1,335,685,000	1,417,289,000
FDIC indemnification asset	185,392,000	204,259,000
Investment in FHLB and FRB stock	103,800,000	107,400,000
Carrying Amount
Financial Assets:
Cash and due from banks	210,800,000	168,400,000
Due from banks - interest-bearing	101,400,000	76,400,000
Federal funds sold	156,000,000
Securities available-for-sale	6,838,700,000	7,571,900,000
Securities held-to-maturity	996,600,000	467,700,000
Trading securities	82,600,000	62,000,000
Loans and leases, net of allowance	12,418,800,000	12,046,800,000
Covered loans, net of allowance	1,335,700,000	1,417,300,000
FDIC indemnification asset	185,400,000	204,300,000
Investment in FHLB and FRB stock	103,800,000	107,400,000
Derivative Assets	57,900,000	62,200,000
Financial Liabilities:
Deposits	20,787,700,000	20,387,600,000
Federal funds purchased and securities sold under repurchase agreements	10,000,000	50,000,000
Other short-term borrowings	212,800,000
Long-term debt	482,000,000	697,800,000
Derivative Liabilities	49,400,000	52,900,000
FDIC clawback liability	8,700,000	8,100,000
Fair Value | Quoted Prices in Active Markets Level 1
Financial Assets:
Cash and due from banks	210,800,000	168,400,000
Due from banks - interest-bearing	101,400,000	76,400,000
Federal funds sold	156,000,000
Securities available-for-sale	6,838,700,000	7,571,900,000
Trading securities	82,600,000	62,000,000
Investment in FHLB and FRB stock	103,800,000	107,400,000
Derivative Assets	57,900,000	62,200,000
Financial Liabilities:
Deposits	20,791,800,000	20,392,300,000
Federal funds purchased and securities sold under repurchase agreements	10,000,000	50,000,000
Derivative Liabilities	49,400,000	52,900,000
Fair Value | Significant Other Observable Inputs Level 2
Financial Assets:
Securities available-for-sale	6,838,700,000	7,571,900,000
Securities held-to-maturity	996,500,000	473,900,000
Trading securities	82,600,000	62,000,000
Derivative Assets	57,900,000	62,200,000
Financial Liabilities:
Other short-term borrowings	219,000,000
Long-term debt	505,600,000	718,700,000
Derivative Liabilities	49,400,000	52,900,000
Fair Value | Significant Unobservable Inputs Level 3
Financial Assets:
Securities available-for-sale	6,838,700,000	7,571,900,000
Loans and leases, net of allowance	12,909,000,000	12,400,500,000
Covered loans, net of allowance	1,388,700,000	1,472,600,000
FDIC indemnification asset	163,000,000	184,300,000
Financial Liabilities:
Deposits	20,791,800,000	20,392,300,000
FDIC clawback liability	$ 8,700,000	$ 8,100,000

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Net income attributable to redeemable noncontrolling interest	$ 243	$ 558

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Earnings per Common Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Basic EPS:
Net income attributable to City National Corporation	$ 46,265	$ 39,692
Less: Earnings allocated to participating securities	738	578
Earnings allocated to common shareholders	45,527	39,114
Weighted average common shares outstanding	52,741,000	52,320,000
Basic earnings per common share	$ 0.86	$ 0.75
Diluted EPS:
Earnings allocated to common shareholders	$ 45,530	$ 39,119
Weighted average common shares outstanding	52,741,000	52,320,000
Dilutive effect of equity awards (in shares)	280,000	574,000
Weighted average diluted common shares outstanding	53,021,000	52,894,000
Diluted earnings per common share	$ 0.86	$ 0.74
Average outstanding stock options
Antidilutive securities not included in calculation of diluted EPS:
Antidilutive securities not included in calculation of diluted EPS (in shares)	3,000,000	1,700,000

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Business Combinations (Details) (USD $)			3 Months Ended
	Mar. 31, 2012	Dec. 31, 2011	Mar. 31, 2012 Nevada Commerce Bank Y	Jun. 30, 2011 Nevada Commerce Bank	Apr. 08, 2011 Nevada Commerce Bank	Feb. 11, 2011 Branch office in San Jose
Business acquisitions
Carrying value of assets acquired					$ 138,900,000
Carrying value of liabilities assumed					121,900,000
Acquired goodwill						300,000
Core deposit intangible						100,000
Covered loans					56,400,000
Covered other real estate owned					7,500,000
Deposits					118,400,000	8,400,000
Cash from the FDIC					2,700,000
FDIC reimbursement (as a percent)			80.00%
Term of loss-sharing agreements for single family residential loans (in years)			10
Term of loss-sharing agreements for other loans (in years)			8
FDIC indemnification asset	185,392,000	204,259,000			33,800,000
Gain on acquisition				$ 8,200,000

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2012

Summary of Significant Accounting Policies

Organization

City National Corporation (the “Corporation”) is the holding company for City National Bank (the “Bank”). The Bank delivers banking, trust and investment services through 79 offices in Southern California, the San Francisco Bay area, Nevada, New York City, Nashville, Tennessee and Atlanta, Georgia. As of March 31, 2012, the Corporation had five consolidated investment advisory affiliates and one unconsolidated subsidiary, Business Bancorp Capital Trust I. Because the Bank comprises substantially all of the business of the Corporation, references to the “Company” mean the Corporation and the Bank together. The Corporation is approved as a financial holding company pursuant to the Gramm-Leach-Bliley Act of 1999.

Consolidation

The consolidated financial statements of the Company include the accounts of the Corporation, its non-bank subsidiaries, the Bank and the Bank’s wholly owned subsidiaries, after the elimination of all material intercompany transactions. It also includes noncontrolling interest, which is the portion of equity in a subsidiary not attributable to a parent. Preferred stock of consolidated bank affiliates that is owned by third parties is reflected as Noncontrolling interest in the equity section of the consolidated balance sheets. This preferred stock was liquidated or redeemed in full by the Bank in the third quarter of 2011. Redeemable noncontrolling interest includes noncontrolling ownership interests that are redeemable at the option of the holder or outside the control of the issuer. The redeemable equity ownership interests of third parties in the Corporation’s investment advisory affiliates are not considered to be permanent equity and are reflected as Redeemable noncontrolling interest in the mezzanine section between liabilities and equity in the consolidated balance sheets. Noncontrolling interests’ share of subsidiary earnings is reflected as Net income attributable to noncontrolling interest in the consolidated statements of income.

The Company’s investment management and wealth advisory affiliates are organized as limited liability companies. The Corporation generally owns a majority position in each affiliate and certain management members of each affiliate own the remaining shares. The Corporation has contractual arrangements with its affiliates whereby a percentage of revenue is allocable to fund affiliate operating expenses (“operating share”) while the remaining portion of revenue (“distributable revenue”) is allocable to the Corporation and the noncontrolling owners. All majority-owned affiliates that meet the prescribed criteria for consolidation are consolidated. The Corporation’s interests in investment management affiliates in which it holds a noncontrolling share are accounted for using the equity method. Additionally, the Company has various interests in variable interest entities (“VIEs”) that are not required to be consolidated. See Note 16 for a more detailed discussion on VIEs.

Use of Estimates

The Company’s accounting and reporting policies conform to generally accepted accounting principles (“GAAP”) and practices in the financial services industry. To prepare the financial statements in conformity with GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and income and expenses during the reporting period. Circumstances and events that differ significantly from those underlying the Company’s estimates and assumptions could cause actual financial results to differ from those estimates. The material estimates included in the financial statements relate to the allowance for loan and lease losses, the reserve for off-balance sheet credit commitments, valuation of stock options and restricted stock, income taxes, goodwill and intangible asset impairment, securities impairment, private equity and alternative investment impairment, valuation of assets and liabilities acquired in business combinations, subsequent valuations of acquired impaired loans, Federal Deposit Insurance Corporation (“FDIC”) indemnification assets, valuation of noncontrolling interest and the valuation of financial assets and liabilities reported at fair value.

The Company has applied its critical accounting policies and estimation methods consistently in all periods presented in these financial statements. The Company’s estimates and assumptions are expected to change as changes in market conditions and the Company’s portfolio occur in subsequent periods.

Basis of Presentation

The Company is on the accrual basis of accounting for income and expenses. The results of operations reflect any adjustments, all of which are of a normal recurring nature, unless otherwise disclosed in this Form 10-Q, and which, in the opinion of management, are necessary for a fair presentation of the results for the periods presented. In accordance with the usual practice of banks, assets and liabilities of individual trust, agency and fiduciary funds have not been included in the financial statements. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

The results for the 2012 interim period are not necessarily indicative of the results expected for the full year. The Company has not made any significant changes in its critical accounting policies or in its estimates and assumptions from those disclosed in its 2011 Annual Report other than the adoption of new accounting pronouncements and other authoritative guidance that became effective for the Company on or after January 1, 2012. Refer to Accounting Pronouncements for discussion of accounting pronouncements adopted in 2012.

Certain prior period amounts have been reclassified to conform to the current period presentation.

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Subsequent Events

3 Months Ended

Mar. 31, 2012

Subsequent Events

Subsequent Events

Note 19. Subsequent Events

On April 25, 2012, the Company entered into a definitive agreement to acquire Rochdale Investment Management (“Rochdale”), a $4.8 billion New York City-based investment firm that manages assets for affluent and high-net-worth clients and their financial advisors across the nation. Rochdale will be combined with City National Asset Management to create an investment management firm called City National Rochdale Investment Management. It will offer a wide array of equity, fixed income and non-traditional investment alternatives. The new firm, a wholly owned subsidiary of the Bank, will operate separately as a registered investment advisor within the Bank’s wealth management group. The acquisition is expected to close in the second quarter of 2012.

On April 30, 2012, the Company acquired First American Equipment Finance, a privately owned equipment leasing company. Headquartered in Rochester, New York, First American Equipment Finance leases technology and office equipment nationwide. Its clients include educational institutions, hospitals and health systems, large law firms, insurance underwriters, enterprise businesses, professional service businesses and nonprofit organizations. First American Equipment Finance will operate as a wholly owned subsidiary of the Bank. At the issuance date of these financial statements, the Company had not completed its initial accounting for this business combination.

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Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Details 4) (USD $)	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Dec. 31, 2011
Financing Receivable, Impaired
Recorded Investment	$ 150,937,000	$ 145,488,000	$ 148,734,000
Unpaid Contractual Principal Balance	200,856,000	213,698,000	194,517,000
Related Allowance	14,118,000	8,655,000	13,262,000
Average Recorded Investment	149,839,000	167,694,000
Interest Income Recognized	185,000	617,000
Nonaccrual loans included in impaired loans	104,441,000		101,873,000
Troubled debt restructured loans on accrual	46,111,000		46,647,000
Deferred fees, accrued interest and premiums and discounts, net	385,000		214,000
Nonaccrual loans under $500,000 that are not individually evaluated for impairment	8,400,000		10,200,000
TDR loans	88,100,000		89,400,000
Specific Reserves	4,500,000		1,700,000
Total Troubled Debt Restructured Loans
Financing Receivable, Impaired
Number of Contracts	7
Pre-Modification Outstanding Principal	23,169,000
Period-End Outstanding Principal	23,090,000
Troubled debt restructured loans that have subsequently defaulted
Number of contracts	3
Period-End Outstanding Principal	6,365,000
Period-End Specific Reserve	3,328,000
Commercial
Financing Receivable, Impaired
Recorded Investment	40,415,000	13,323,000	25,780,000
Unpaid Contractual Principal Balance	53,712,000	32,035,000	32,965,000
Related Allowance	3,335,000	2,291,000	7,135,000
Average Recorded Investment	33,098,000	14,593,000
Number of Contracts	5
Pre-Modification Outstanding Principal	16,982,000
Period-End Outstanding Principal	16,903,000
Troubled debt restructured loans that have subsequently defaulted
Number of contracts	1
Period-End Outstanding Principal	26,000
Period-End Specific Reserve	10,000
Commercial real estate mortgages
Financing Receivable, Impaired
Recorded Investment	22,306,000	25,790,000	30,678,000
Unpaid Contractual Principal Balance	27,737,000	32,433,000	35,198,000
Related Allowance	1,019,000	1,060,000	1,551,000
Average Recorded Investment	26,493,000	34,213,000
Interest Income Recognized	69,000	130,000
Residential mortgage
Financing Receivable, Impaired
Recorded Investment	13,000,000	12,476,000	9,146,000
Unpaid Contractual Principal Balance	14,277,000	13,661,000	10,046,000
Related Allowance	331,000	384,000	108,000
Average Recorded Investment	11,074,000	14,733,000
Interest Income Recognized		155,000
Fixed
Financing Receivable, Impaired
Number of Contracts	1
Pre-Modification Outstanding Principal	655,000
Period-End Outstanding Principal	655,000
Real estate construction
Financing Receivable, Impaired
Recorded Investment	67,686,000	81,604,000	75,811,000
Unpaid Contractual Principal Balance	96,033,000	117,075,000	102,321,000
Related Allowance	9,395,000	334,000	4,377,000
Average Recorded Investment	71,749,000	94,982,000
Interest Income Recognized	116,000	230,000
Construction
Financing Receivable, Impaired
Number of Contracts	1
Pre-Modification Outstanding Principal	5,532,000
Period-End Outstanding Principal	5,532,000
Land
Troubled debt restructured loans that have subsequently defaulted
Number of contracts	2
Period-End Outstanding Principal	6,339,000
Period-End Specific Reserve	3,318,000
Equity lines of credit
Financing Receivable, Impaired
Recorded Investment	6,980,000	4,249,000	6,633,000
Unpaid Contractual Principal Balance	8,170,000	4,793,000	7,786,000
Related Allowance	38,000	72,000	91,000
Average Recorded Investment	6,807,000	4,561,000
Interest Income Recognized		3,000
Installment loan
Financing Receivable, Impaired
Recorded Investment	550,000	6,938,000	658,000
Unpaid Contractual Principal Balance	927,000	7,458,000	976,000
Related Allowance		4,514,000
Average Recorded Investment	604,000	4,058,000
Lease financing
Financing Receivable, Impaired
Recorded Investment		1,108,000	28,000
Unpaid Contractual Principal Balance		6,243,000	5,225,000
Average Recorded Investment	14,000	554,000
Interest Income Recognized		99,000
Impaired loans without specific allowance
Financing Receivable, Impaired
Recorded Investment	102,783,000	111,627,000	99,655,000
Unpaid Contractual Principal Balance	135,358,000	168,570,000	129,072,000
Average Recorded Investment	101,221,000	130,552,000
Interest Income Recognized	185,000	614,000
Impaired loans without specific allowance | Commercial
Financing Receivable, Impaired
Recorded Investment	27,822,000	6,400,000	10,153,000
Unpaid Contractual Principal Balance	36,069,000	15,721,000	11,588,000
Average Recorded Investment	18,988,000	6,848,000
Impaired loans without specific allowance | Commercial real estate mortgages
Financing Receivable, Impaired
Recorded Investment	14,008,000	18,491,000	19,867,000
Unpaid Contractual Principal Balance	19,022,000	24,047,000	23,983,000
Average Recorded Investment	16,938,000	20,994,000
Interest Income Recognized	69,000	130,000
Impaired loans without specific allowance | Residential mortgage
Financing Receivable, Impaired
Recorded Investment	9,233,000	9,509,000	7,182,000
Unpaid Contractual Principal Balance	10,434,000	10,604,000	8,035,000
Average Recorded Investment	8,208,000	12,249,000
Interest Income Recognized		155,000
Impaired loans without specific allowance | Fixed
Financing Receivable, Impaired
Recorded Investment	2,666,000	6,238,000	3,493,000
Unpaid Contractual Principal Balance	3,194,000	7,324,000	4,035,000
Average Recorded Investment	3,080,000	8,590,000
Interest Income Recognized		145,000
Impaired loans without specific allowance | Variable
Financing Receivable, Impaired
Recorded Investment	6,567,000	3,271,000	3,689,000
Unpaid Contractual Principal Balance	7,240,000	3,280,000	4,000,000
Average Recorded Investment	5,128,000	3,659,000
Interest Income Recognized		10,000
Impaired loans without specific allowance | Real estate construction
Financing Receivable, Impaired
Recorded Investment	45,135,000	72,786,000	56,426,000
Unpaid Contractual Principal Balance	61,721,000	108,084,000	72,940,000
Average Recorded Investment	50,781,000	86,148,000
Interest Income Recognized	116,000	230,000
Impaired loans without specific allowance | Construction
Financing Receivable, Impaired
Recorded Investment	21,045,000	49,258,000	27,435,000
Unpaid Contractual Principal Balance	34,381,000	83,788,000	40,605,000
Average Recorded Investment	24,240,000	62,518,000
Interest Income Recognized	116,000	230,000
Impaired loans without specific allowance | Land
Financing Receivable, Impaired
Recorded Investment	24,090,000	23,528,000	28,991,000
Unpaid Contractual Principal Balance	27,340,000	24,296,000	32,335,000
Average Recorded Investment	26,541,000	23,630,000
Impaired loans without specific allowance | Equity lines of credit
Financing Receivable, Impaired
Recorded Investment	6,035,000	3,292,000	5,341,000
Unpaid Contractual Principal Balance	7,185,000	3,830,000	6,325,000
Average Recorded Investment	5,688,000	3,149,000
Impaired loans without specific allowance | Installment loan
Financing Receivable, Impaired
Recorded Investment	550,000	41,000	658,000
Unpaid Contractual Principal Balance	927,000	41,000	976,000
Average Recorded Investment	604,000	610,000
Impaired loans without specific allowance | Commercial Installment loan
Financing Receivable, Impaired
Average Recorded Investment		569,000
Impaired loans without specific allowance | Consumer Installment loan
Financing Receivable, Impaired
Recorded Investment	550,000	41,000	658,000
Unpaid Contractual Principal Balance	927,000	41,000	976,000
Average Recorded Investment	604,000	41,000
Impaired loans without specific allowance | Lease financing
Financing Receivable, Impaired
Recorded Investment		1,108,000	28,000
Unpaid Contractual Principal Balance		6,243,000	5,225,000
Average Recorded Investment	14,000	554,000
Interest Income Recognized		99,000
Impaired loans with a specific allowance
Financing Receivable, Impaired
Recorded Investment	48,154,000	33,861,000	49,079,000
Unpaid Contractual Principal Balance	65,498,000	45,128,000	65,445,000
Related Allowance	14,118,000	8,655,000	13,262,000
Average Recorded Investment	48,618,000	37,142,000
Interest Income Recognized		3,000
Impaired loans with a specific allowance | Commercial
Financing Receivable, Impaired
Recorded Investment	12,593,000	6,923,000	15,627,000
Unpaid Contractual Principal Balance	17,643,000	16,314,000	21,377,000
Related Allowance	3,335,000	2,291,000	7,135,000
Average Recorded Investment	14,110,000	7,745,000
Impaired loans with a specific allowance | Commercial real estate mortgages
Financing Receivable, Impaired
Recorded Investment	8,298,000	7,299,000	10,811,000
Unpaid Contractual Principal Balance	8,715,000	8,386,000	11,215,000
Related Allowance	1,019,000	1,060,000	1,551,000
Average Recorded Investment	9,555,000	13,219,000
Impaired loans with a specific allowance | Residential mortgage
Financing Receivable, Impaired
Recorded Investment	3,767,000	2,967,000	1,964,000
Unpaid Contractual Principal Balance	3,843,000	3,057,000	2,011,000
Related Allowance	331,000	384,000	108,000
Average Recorded Investment	2,866,000	2,484,000
Impaired loans with a specific allowance | Fixed
Financing Receivable, Impaired
Recorded Investment	2,341,000	1,553,000	515,000
Unpaid Contractual Principal Balance	2,367,000	1,549,000	535,000
Related Allowance	287,000	103,000	40,000
Average Recorded Investment	1,428,000	1,060,000
Impaired loans with a specific allowance | Variable
Financing Receivable, Impaired
Recorded Investment	1,426,000	1,414,000	1,449,000
Unpaid Contractual Principal Balance	1,476,000	1,508,000	1,476,000
Related Allowance	44,000	281,000	68,000
Average Recorded Investment	1,438,000	1,424,000
Impaired loans with a specific allowance | Real estate construction
Financing Receivable, Impaired
Recorded Investment	22,551,000	8,818,000	19,385,000
Unpaid Contractual Principal Balance	34,312,000	8,991,000	29,381,000
Related Allowance	9,395,000	334,000	4,377,000
Average Recorded Investment	20,968,000	8,834,000
Impaired loans with a specific allowance | Construction
Financing Receivable, Impaired
Recorded Investment		8,818,000
Unpaid Contractual Principal Balance		8,991,000
Related Allowance		334,000
Average Recorded Investment		8,834,000
Impaired loans with a specific allowance | Land
Financing Receivable, Impaired
Recorded Investment	22,551,000		19,385,000
Unpaid Contractual Principal Balance	34,312,000		29,381,000
Related Allowance	9,395,000		4,377,000
Average Recorded Investment	20,968,000
Impaired loans with a specific allowance | Equity lines of credit
Financing Receivable, Impaired
Recorded Investment	945,000	957,000	1,292,000
Unpaid Contractual Principal Balance	985,000	963,000	1,461,000
Related Allowance	38,000	72,000	91,000
Average Recorded Investment	1,119,000	1,412,000
Interest Income Recognized		3,000
Impaired loans with a specific allowance | Installment loan
Financing Receivable, Impaired
Recorded Investment		6,897,000
Unpaid Contractual Principal Balance		7,417,000
Related Allowance		4,514,000
Average Recorded Investment		3,448,000
Impaired loans with a specific allowance | Commercial Installment loan
Financing Receivable, Impaired
Recorded Investment		6,897,000
Unpaid Contractual Principal Balance		7,417,000
Related Allowance		4,514,000
Average Recorded Investment		$ 3,448,000

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Fair Value Measurements (Details) (USD $)																																														3 Months Ended						3 Months Ended
	Mar. 31, 2012	Dec. 31, 2011	Mar. 31, 2011	Dec. 31, 2010	Mar. 31, 2012 Significant Unobservable Inputs Level 3	Mar. 31, 2012 Measured on a Recurring Basis	Dec. 31, 2011 Measured on a Recurring Basis	Mar. 31, 2012 Measured on a Recurring Basis Fair Value	Dec. 31, 2011 Measured on a Recurring Basis Fair Value	Mar. 31, 2012 Measured on a Recurring Basis Fair Value U.S. Treasury	Dec. 31, 2011 Measured on a Recurring Basis Fair Value U.S. Treasury	Mar. 31, 2012 Measured on a Recurring Basis Fair Value Federal agency - Debt	Dec. 31, 2011 Measured on a Recurring Basis Fair Value Federal agency - Debt	Mar. 31, 2012 Measured on a Recurring Basis Fair Value Federal agency - MBS	Dec. 31, 2011 Measured on a Recurring Basis Fair Value Federal agency - MBS	Mar. 31, 2012 Measured on a Recurring Basis Fair Value CMOs - Federal agency	Dec. 31, 2011 Measured on a Recurring Basis Fair Value CMOs - Federal agency	Mar. 31, 2012 Measured on a Recurring Basis Fair Value CMOs - Non-agency	Dec. 31, 2011 Measured on a Recurring Basis Fair Value CMOs - Non-agency	Mar. 31, 2012 Measured on a Recurring Basis Fair Value State and municipal	Dec. 31, 2011 Measured on a Recurring Basis Fair Value State and municipal	Mar. 31, 2012 Measured on a Recurring Basis Fair Value Other debt securities	Dec. 31, 2011 Measured on a Recurring Basis Fair Value Other debt securities	Mar. 31, 2012 Measured on a Recurring Basis Fair Value Equity securities and mutual funds	Dec. 31, 2011 Measured on a Recurring Basis Fair Value Equity securities and mutual funds	Mar. 31, 2012 Measured on a Recurring Basis Quoted Prices in Active Markets Level 1	Dec. 31, 2011 Measured on a Recurring Basis Quoted Prices in Active Markets Level 1	Mar. 31, 2012 Measured on a Recurring Basis Quoted Prices in Active Markets Level 1 U.S. Treasury	Dec. 31, 2011 Measured on a Recurring Basis Quoted Prices in Active Markets Level 1 U.S. Treasury	Mar. 31, 2012 Measured on a Recurring Basis Quoted Prices in Active Markets Level 1 Equity securities and mutual funds	Dec. 31, 2011 Measured on a Recurring Basis Quoted Prices in Active Markets Level 1 Equity securities and mutual funds	Mar. 31, 2012 Measured on a Recurring Basis Significant Other Observable Inputs Level 2	Dec. 31, 2011 Measured on a Recurring Basis Significant Other Observable Inputs Level 2	Mar. 31, 2012 Measured on a Recurring Basis Significant Other Observable Inputs Level 2 Federal agency - Debt	Dec. 31, 2011 Measured on a Recurring Basis Significant Other Observable Inputs Level 2 Federal agency - Debt	Mar. 31, 2012 Measured on a Recurring Basis Significant Other Observable Inputs Level 2 Federal agency - MBS	Dec. 31, 2011 Measured on a Recurring Basis Significant Other Observable Inputs Level 2 Federal agency - MBS	Mar. 31, 2012 Measured on a Recurring Basis Significant Other Observable Inputs Level 2 CMOs - Federal agency	Dec. 31, 2011 Measured on a Recurring Basis Significant Other Observable Inputs Level 2 CMOs - Federal agency	Mar. 31, 2012 Measured on a Recurring Basis Significant Other Observable Inputs Level 2 CMOs - Non-agency	Dec. 31, 2011 Measured on a Recurring Basis Significant Other Observable Inputs Level 2 CMOs - Non-agency	Mar. 31, 2012 Measured on a Recurring Basis Significant Other Observable Inputs Level 2 State and municipal	Dec. 31, 2011 Measured on a Recurring Basis Significant Other Observable Inputs Level 2 State and municipal	Mar. 31, 2012 Measured on a Recurring Basis Significant Other Observable Inputs Level 2 Other debt securities	Dec. 31, 2011 Measured on a Recurring Basis Significant Other Observable Inputs Level 2 Other debt securities	Mar. 31, 2012 Measured on a Recurring Basis Significant Unobservable Inputs Level 3 Y	Dec. 31, 2011 Measured on a Recurring Basis Significant Unobservable Inputs Level 3	Mar. 31, 2012 Measured on a Recurring Basis Significant Unobservable Inputs Level 3 Other debt securities	Dec. 31, 2011 Measured on a Recurring Basis Significant Unobservable Inputs Level 3 Other debt securities	Mar. 31, 2012 Measured on a Recurring Basis Level 1 or Level 2	Dec. 31, 2011 Measured on a Recurring Basis Level 1 or Level 2	Mar. 31, 2012 Measured on a Nonrecurring Basis	Mar. 31, 2011 Measured on a Nonrecurring Basis	Mar. 31, 2012 Measured on a Nonrecurring Basis Commercial	Mar. 31, 2011 Measured on a Nonrecurring Basis Commercial	Mar. 31, 2012 Measured on a Nonrecurring Basis Commercial real estate mortgages	Mar. 31, 2011 Measured on a Nonrecurring Basis Commercial real estate mortgages	Mar. 31, 2012 Measured on a Nonrecurring Basis Residential mortgage	Mar. 31, 2011 Measured on a Nonrecurring Basis Residential mortgage	Mar. 31, 2012 Measured on a Nonrecurring Basis Real estate construction	Mar. 31, 2011 Measured on a Nonrecurring Basis Real estate construction	Mar. 31, 2012 Measured on a Nonrecurring Basis Equity lines of credit	Mar. 31, 2011 Measured on a Nonrecurring Basis Equity lines of credit	Mar. 31, 2012 Measured on a Nonrecurring Basis Installment loan	Mar. 31, 2011 Measured on a Nonrecurring Basis Installment loan	Mar. 31, 2012 Measured on a Nonrecurring Basis Other real estate owned	Mar. 31, 2011 Measured on a Nonrecurring Basis Other real estate owned	Mar. 31, 2012 Measured on a Nonrecurring Basis Private equity and alternative investments	Mar. 31, 2012 Measured on a Nonrecurring Basis Fair Value	Dec. 31, 2011 Measured on a Nonrecurring Basis Fair Value	Mar. 31, 2012 Measured on a Nonrecurring Basis Fair Value Commercial	Dec. 31, 2011 Measured on a Nonrecurring Basis Fair Value Commercial	Mar. 31, 2012 Measured on a Nonrecurring Basis Fair Value Commercial real estate mortgages	Dec. 31, 2011 Measured on a Nonrecurring Basis Fair Value Commercial real estate mortgages	Mar. 31, 2012 Measured on a Nonrecurring Basis Fair Value Residential mortgage	Dec. 31, 2011 Measured on a Nonrecurring Basis Fair Value Residential mortgage	Mar. 31, 2012 Measured on a Nonrecurring Basis Fair Value Real estate construction	Dec. 31, 2011 Measured on a Nonrecurring Basis Fair Value Real estate construction	Mar. 31, 2012 Measured on a Nonrecurring Basis Fair Value Equity lines of credit	Dec. 31, 2011 Measured on a Nonrecurring Basis Fair Value Equity lines of credit	Mar. 31, 2012 Measured on a Nonrecurring Basis Fair Value Installment loan	Dec. 31, 2011 Measured on a Nonrecurring Basis Fair Value Installment loan	Mar. 31, 2012 Measured on a Nonrecurring Basis Fair Value Other real estate owned	Dec. 31, 2011 Measured on a Nonrecurring Basis Fair Value Other real estate owned	Mar. 31, 2012 Measured on a Nonrecurring Basis Fair Value Private equity and alternative investments	Dec. 31, 2011 Measured on a Nonrecurring Basis Fair Value Private equity and alternative investments	Mar. 31, 2012 Measured on a Nonrecurring Basis Significant Other Observable Inputs Level 2	Dec. 31, 2011 Measured on a Nonrecurring Basis Significant Other Observable Inputs Level 2	Mar. 31, 2012 Measured on a Nonrecurring Basis Significant Other Observable Inputs Level 2 Commercial real estate mortgages	Dec. 31, 2011 Measured on a Nonrecurring Basis Significant Other Observable Inputs Level 2 Commercial real estate mortgages	Mar. 31, 2012 Measured on a Nonrecurring Basis Significant Other Observable Inputs Level 2 Residential mortgage	Dec. 31, 2011 Measured on a Nonrecurring Basis Significant Other Observable Inputs Level 2 Residential mortgage	Mar. 31, 2012 Measured on a Nonrecurring Basis Significant Other Observable Inputs Level 2 Real estate construction	Dec. 31, 2011 Measured on a Nonrecurring Basis Significant Other Observable Inputs Level 2 Real estate construction	Dec. 31, 2011 Measured on a Nonrecurring Basis Significant Other Observable Inputs Level 2 Equity lines of credit	Mar. 31, 2012 Measured on a Nonrecurring Basis Significant Other Observable Inputs Level 2 Installment loan	Dec. 31, 2011 Measured on a Nonrecurring Basis Significant Other Observable Inputs Level 2 Installment loan	Mar. 31, 2012 Measured on a Nonrecurring Basis Significant Other Observable Inputs Level 2 Other real estate owned	Dec. 31, 2011 Measured on a Nonrecurring Basis Significant Other Observable Inputs Level 2 Other real estate owned	Mar. 31, 2012 Measured on a Nonrecurring Basis Significant Unobservable Inputs Level 3	Dec. 31, 2011 Measured on a Nonrecurring Basis Significant Unobservable Inputs Level 3	Mar. 31, 2012 Measured on a Nonrecurring Basis Significant Unobservable Inputs Level 3 Commercial	Dec. 31, 2011 Measured on a Nonrecurring Basis Significant Unobservable Inputs Level 3 Commercial	Mar. 31, 2012 Measured on a Nonrecurring Basis Significant Unobservable Inputs Level 3 Residential mortgage	Dec. 31, 2011 Measured on a Nonrecurring Basis Significant Unobservable Inputs Level 3 Residential mortgage	Mar. 31, 2012 Measured on a Nonrecurring Basis Significant Unobservable Inputs Level 3 Real estate construction	Dec. 31, 2011 Measured on a Nonrecurring Basis Significant Unobservable Inputs Level 3 Real estate construction	Mar. 31, 2012 Measured on a Nonrecurring Basis Significant Unobservable Inputs Level 3 Equity lines of credit	Dec. 31, 2011 Measured on a Nonrecurring Basis Significant Unobservable Inputs Level 3 Equity lines of credit	Mar. 31, 2012 Measured on a Nonrecurring Basis Significant Unobservable Inputs Level 3 Other real estate owned	Dec. 31, 2011 Measured on a Nonrecurring Basis Significant Unobservable Inputs Level 3 Other real estate owned	Mar. 31, 2012 Measured on a Nonrecurring Basis Significant Unobservable Inputs Level 3 Private equity and alternative investments	Dec. 31, 2011 Measured on a Nonrecurring Basis Significant Unobservable Inputs Level 3 Private equity and alternative investments
Assets
Securities available-for-sale										$ 19,202,000	$ 19,182,000	$ 1,051,348,000	$ 1,973,862,000	$ 720,590,000	$ 681,044,000	$ 4,400,318,000	$ 4,326,907,000	$ 68,587,000	$ 69,001,000	$ 395,723,000	$ 401,604,000	$ 181,792,000	$ 99,074,000	$ 1,150,000	$ 1,227,000			$ 19,202,000	$ 19,182,000	$ 1,150,000	$ 1,227,000			$ 1,051,348,000	$ 1,973,862,000	$ 720,590,000	$ 681,044,000	$ 4,400,318,000	$ 4,326,907,000	$ 68,587,000	$ 69,001,000	$ 395,723,000	$ 401,604,000	$ 162,783,000	$ 79,491,000			$ 19,009,000	$ 19,583,000
Trading securities								82,589,000	61,975,000																	80,527,000	61,922,000					2,062,000	53,000
Mark-to-market derivatives asset								57,891,000	62,230,000																	3,239,000	2,552,000					54,652,000	59,678,000
Collateral dependent impaired loans																																																																							1,878,000	2,484,000	3,170,000	6,830,000	5,988,000	5,555,000	14,300,000	18,528,000	904,000	3,471,000	550,000	675,000							3,170,000	6,830,000	5,525,000	5,084,000	7,500,000	9,680,000	2,588,000	550,000	675,000					1,878,000	2,484,000	463,000	471,000	6,800,000	8,848,000	904,000	883,000
Collateral dependent impaired covered loans																																																																								422,000																															422,000
Other real estate owned	107,530,000	129,340,000	178,164,000	178,183,000
Covered other real estate owned	78,456,000	98,550,000
Total assets at fair value								6,979,190,000	7,696,106,000																	104,118,000	84,883,000					6,856,063,000	7,591,640,000													19,009,000	19,583,000																						54,395,000	111,360,000													27,347,000	66,837,000	258,000	6,558,000	40,014,000	81,755,000										23,269,000	56,898,000	14,381,000	29,605,000									4,078,000	9,939,000	258,000	6,558,000
Percent of total assets					1.00%	29.00%	33.00%																																																														0.20%	0.50%
Prepayment rate (as a percent)																																														2.00%
Default rate of performing collateral (as a percent)																																														0.75%
Recovery Rate (as a percent)																																														15.00%
Recovery Rate lag time (in years)																																														2
Liabilities
Mark-to-market derivatives liabilities								49,384,000	52,881,000																	1,574,000	1,542,000					47,810,000	51,339,000
Other liabilities								290,000	263,000																							290,000	263,000
Total liabilities at fair value								49,674,000	53,144,000																	1,574,000	1,542,000					48,100,000	51,602,000																	49,700,000	53,100,000
Net (losses) gains recognized for assets measured at fair value on nonrecurring basis
Collateral dependent impaired loans:																																																						(368,000)	(606,000)	(365,000)	7,114,000	(582,000)	(142,000)	(6,472,000)	2,217,000	54,000	36,000	(107,000)	(4,514,000)
Total net losses recognized																																																				(16,432,000)	(5,017,000)													(8,465,000)	(9,122,000)	(127,000)
Total net losses recognized on covered assets																																																																		$ (7,600,000)	$ (8,200,000)

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2012

Fair Value Measurements

Summary of assets and liabilities measured at fair value by level

			Fair Value Measurements at Reporting Date Using
(in thousands)	Balance as of March 31, 2012		Quoted Prices in Active Markets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
Measured on a Recurring Basis
Assets
Securities available-for-sale:
U.S. Treasury	$	19,202	$	19,202	$	—	$	—
Federal agency - Debt	1,051,348		—		1,051,348		—
Federal agency - MBS	720,590		—		720,590		—
CMOs - Federal agency	4,400,318		—		4,400,318		—
CMOs - Non-agency	68,587		—		68,587		—
State and municipal	395,723		—		395,723		—
Other debt securities	181,792		—		162,783		19,009
Equity securities and mutual funds	1,150		1,150		—		—
Trading securities	82,589		80,527		2,062		—
Mark-to-market derivatives (1)	57,891		3,239		54,652		—
Total assets at fair value	$	6,979,190	$	104,118	$	6,856,063	$	19,009
Liabilities
Mark-to-market derivatives (2)	$	49,384	$	1,574	$	47,810	$	—
Other liabilities	290		—		290		—
Total liabilities at fair value	$	49,674	$	1,574	$	48,100	$	—
Measured on a Nonrecurring Basis
Assets
Collateral dependent impaired loans (3):
Commercial (4)	$	1,878	$	—	$	—	$	1,878
Commercial real estate mortgages	3,170		—		3,170		—
Residential mortgages	5,988		—		5,525		463
Real estate construction	14,300		—		7,500		6,800
Equity lines of credit	904		—		—		904
Installment	550		—		550		—
Other real estate owned (5)	27,347		—		23,269		4,078
Private equity and alternative investments	258		—		—		258
Total assets at fair value	$	54,395	$	—	$	40,014	$	14,381

(1)	Reported in Other assets in the consolidated balance sheets.
(2)	Reported in Other liabilities in the consolidated balance sheets.
(3)	Impaired loans for which fair value was calculated using the collateral valuation method.
(4)	Includes lease financing.
(5)	Other real estate owned balance of $107.5 million in the consolidated balance sheets includes $78.5 million of covered OREO and is net of estimated disposal costs.

			Fair Value Measurements at Reporting Date Using
(in thousands)	Balance as of December 31, 2011		Quoted Prices in Active Markets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
Measured on a Recurring Basis
Assets
Securities available-for-sale:
U.S. Treasury	$	19,182	$	19,182	$	—	$	—
Federal agency - Debt	1,973,862		—		1,973,862		—
Federal agency - MBS	681,044		—		681,044		—
CMOs - Federal agency	4,326,907		—		4,326,907		—
CMOs - Non-agency	69,001		—		69,001		—
State and municipal	401,604		—		401,604		—
Other debt securities	99,074		—		79,491		19,583
Equity securities and mutual funds	1,227		1,227		—		—
Trading securities	61,975		61,922		53		—
Mark-to-market derivatives (1)	62,230		2,552		59,678		—
Total assets at fair value	$	7,696,106	$	84,883	$	7,591,640	$	19,583
Liabilities
Mark-to-market derivatives (2)	$	52,881	$	1,542	$	51,339	$	—
Other liabilities	263		—		263		—
Total liabilities at fair value	$	53,144	$	1,542	$	51,602	$	—
Measured on a Nonrecurring Basis
Assets
Collateral dependent impaired loans (3):
Commercial (4)	$	2,484	$	—	$	—	$	2,484
Commercial real estate mortgages	6,830		—		6,830		—
Residential mortgages	5,555		—		5,084		471
Real estate construction	18,528		—		9,680		8,848
Equity lines of credit	3,471		—		2,588		883
Installment	675		—		675		—
Collateral dependent impaired covered loans (3):
Commercial	422		—		—		422
Other real estate owned (5)	66,837		—		56,898		9,939
Private equity and alternative investments	6,558		—		—		6,558
Total assets at fair value	$	111,360	$	—	$	81,755	$	29,605

(1)	Reported in Other assets in the consolidated balance sheets.
(2)	Reported in Other liabilities in the consolidated balance sheets.
(3)	Impaired loans for which fair value was calculated using the collateral valuation method.
(4)	Includes lease financing.
(5)	Other real estate owned balance of $129.3 million in the consolidated balance sheets includes $98.6 million of covered OREO and is net of estimated disposal costs.

Schedule of reconciliation of Level 3 assets measured on a recurring basis

	March 31, 2012			March 31, 2011
(in thousands)	Securities Available- for-Sale			Securities Available- for-Sale
Balance, beginning of period	$	19,583		$	20,982
Total realized/unrealized gains (losses):
Included in other comprehensive income	964			1,690
Settlements	(1,562		)	(1,707		)
Other (1)	24			(53		)
Balance, end of period	$	19,009		$	20,912

(1) Other rollforward activity consists of amortization of premiums and accretion of discounts recognized on the initial purchase of the securities available-for-sale.

Information About Nonrecurring Level 3 Fair Value Measurements

(in thousands)	Fair Value at March 31, 2012		Valuation Method	Unobservable Inputs
Collateral dependent impaired loans	$	10,045	Market	- Adjustments to external or internal appraised values - Probability weighting of broker price opinions - Management assumptions regarding market trends or other relevant factors
Other real estate owned	$	4,078	Market	- Adjustments to external or internal appraised values
				- Probability weighting of broker price opinions
				- Management assumptions regarding market trends or other relevant factors
Private equity and alternative investments	$	258	Cost Recovery	- Management’s assumptions regarding recoverability of investment based on fund financial performance, market conditions and other relevant factors

Schedule of total (losses) gains for assets measured at fair value on a nonrecurring basis

	For the three months ended March 31,
(in thousands)	2012			2011
Collateral dependent impaired loans:
Commercial	$	(368	)	$	(606	)
Commercial real estate mortgages	(365		)	7,114
Residential mortgages	(582		)	(142		)
Real estate construction	(6,472		)	2,217
Equity lines of credit	54			36
Installment	(107		)	(4,514		)
Other real estate owned (1)	(8,465		)	(9,122		)
Private equity and alternative investments	(127		)	—
Total net losses recognized	$	(16,432	)	$	(5,017	)

(1) Net losses on OREO includes $7.6 million and $8.2 million of net losses related to covered OREO for the three months ended March 31, 2012 and 2011, respectively, a significant portion of which is reimbursable by the FDIC.

Schedule of carrying amounts and fair values of financial instruments

		March 31, 2012				December 31, 2011
	Fair Value	Carrying		Fair		Carrying		Fair
(in millions)	Level	Amount		Value		Amount		Value
Financial Assets:
Cash and due from banks	1	$	210.8	$	210.8	$	168.4	$	168.4
Due from banks - interest bearing	1	101.4		101.4		76.4		76.4
Federal funds sold	1	156.0		156.0		—		—
Securities available-for-sale	1,2,3	6,838.7		6,838.7		7,571.9		7,571.9
Securities held-to-maturity	2	996.6		996.5		467.7		473.9
Trading securities	1,2	82.6		82.6		62.0		62.0
Loans and leases, net of allowance	3	12,481.8		12,909.0		12,046.8		12,400.5
Covered loans, net of allowance	3	1,335.7		1,388.7		1,417.3		1,472.6
FDIC indemnification asset	3	185.4		163.0		204.3		184.3
Investment in FHLB and FRB stock	1	103.8		103.8		107.4		107.4
Derivative assets	1,2	57.9		57.9		62.2		62.2
Financial Liabilities:
Deposits	1,3	$	20,787.7	$	20,791.8	$	20,387.6	$	20,392.3
Federal funds purchased and securities sold under repurchase agreements	1	10.0		10.0		50.0		50.0
Other short-term borrowings	2	212.8		219.0		—		—
Long-term debt	2	482.0		505.6		697.8		718.7
Derivative liabilities	1,2	49.4		49.4		52.9		52.9
FDIC clawback liability	3	8.7		8.7		8.1		8.1

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Securities (Tables)

3 Months Ended

Mar. 31, 2012

Securities

Summary of amortized cost and estimated fair value for the major categories of securities available-for-sale and held-to-maturity

			Gross		Gross
	Amortized		Unrealized		Unrealized
(in thousands)	Cost		Gains		Losses			Fair Value
March 31, 2012
Securities available-for-sale:
U.S. Treasury	$	19,217	$	8	$	(23	)	$	19,202
Federal agency - Debt	1,046,035		5,348		(35		)	1,051,348
Federal agency - MBS	690,183		30,580		(173		)	720,590
CMOs - Federal agency	4,304,148		97,498		(1,328		)	4,400,318
CMOs - Non-agency	74,737		809		(6,959		)	68,587
State and municipal	378,541		17,379		(197		)	395,723
Other debt securities	185,968		3,417		(7,593		)	181,792
Total debt securities	6,698,829		155,039		(16,308		)	6,837,560
Equity securities and mutual funds	352		798		—			1,150
Total securities available-for-sale	$	6,699,181	$	155,837	$	(16,308	)	$	6,838,710
Securities held-to-maturity (1):
Federal agency - Debt	$	104,268	$	394	$	(66	)	$	104,596
Federal agency - MBS	173,380		1,794		(427		)	174,747
CMOs - Federal agency	590,931		2,496		(3,918		)	589,509
State and municipal	128,034		1,431		(1,862		)	127,603
Total securities held-to-maturity	$	996,613	$	6,115	$	(6,273	)	$	996,455
December 31, 2011
Securities available-for-sale:
U.S. Treasury	$	19,163	$	24	$	(5	)	$	19,182
Federal agency - Debt	1,967,928		6,230		(296		)	1,973,862
Federal agency - MBS	650,091		31,040		(87		)	681,044
CMOs - Federal agenc	4,239,205		89,926		(2,224		)	4,326,907
CMOs - Non-agency	79,999		322		(11,320		)	69,001
State and municipal	383,210		18,767		(373		)	401,604
Other debt securities	106,051		1,896		(8,873		)	99,074
Total debt securities	7,445,647		148,205		(23,178		)	7,570,674
Equity securities and mutual funds	352		875		—			1,227
Total securities available-for-sale	$	7,445,999	$	149,080	$	(23,178	)	$	7,571,901
Securities held-to-maturity (1):
Federal agency - Debt	$	40,423	$	780	$	—		$	41,203
Federal agency - MBS	75,231		1,632		—			76,863
CMOs - Federal agency	292,547		2,580		(195		)	294,932
State and municipal	59,479		1,463		(37		)	60,905
Total securities held-to-maturity	$	467,680	$	6,455	$	(232	)	$	473,903

(1) Securities held-to-maturity are presented in the consolidated balance sheets at amortized cost.

Schedule of gross realized gains and losses on sales and calls of securities available-for-sale

	For the three months ended
	March 31,
(in thousands)	2012			2011
Gross realized gains	$	496		$	160
Gross realized losses	(47		)	(30		)
Net realized gains	$	449		$	130

Schedule of remaining maturities of debt securities included in the securities portfolio

(in thousands)	One year or less		Over 1 year through 5 years		Over 5 years through 10 years		Over 10 years		Total
Securities available-for-sale:
U.S. Treasury	$	10,013	$	9,189	$	—	$	—	$	19,202
Federal agency - Debt	847,374		203,974		—		—		1,051,348
Federal agency - MBS	14		447,143		273,433		—		720,590
CMOs - Federal agency	181,389		4,040,298		178,631		—		4,400,318
CMOs - Non-agency	8,286		33,100		27,201		—		68,587
State and municipal	53,996		209,947		80,836		50,944		395,723
Other	3,383		136,042		42,367		—		181,792
Total debt securities available-for-sale	$	1,104,455	$	5,079,693	$	602,468	$	50,944	$	6,837,560
Amortized cost	$	1,099,279	$	4,965,611	$	583,091	$	50,848	$	6,698,829
Securities held-to-maturity:
Federal agency - Debt	$	10,950	$	33,669	$	—	$	59,649	$	104,268
Federal agency - MBS	—		—		173,380		—		173,380
CMOs - Federal agency	—		45,373		545,558		—		590,931
State and municipal	—		8,259		79,468		40,307		128,034
Total debt securities held-to-maturity at amortized cost	$	10,950	$	87,301	$	798,406	$	99,956	$	996,613

Schedule of roll forward of credit-related other-than-temporary impairment recognized in earnings for debt securities

	For the three months ended
	March 31,
(in thousands)	2012			2011
Balance, beginning of period	$	17,531		$	17,923
Subsequent credit-related impairment	—			164
Net increase in expected cash flows on securities for which OTTI was previously recognized	(162		)	(537		)
Balance, end of period	$	17,369		$	17,550

Summary of the gross unrealized losses and fair value of investment securities that are in an unrealized loss position aggregated by investment category and length of time

	Less than 12 months				12 months or greater				Total
(in thousands)	Fair Value		Estimated Unrealized Loss		Fair Value		Estimated Unrealized Loss		Fair Value		Estimated Unrealized Loss
March 31, 2012
Securities available-for-sale:
U.S. Treasury	$	9,189	$	23	$	—	$	—	$	9,189	$	23
Federal agency - Debt	45,807		35		—		—		45,807		35
Federal agency - MBS	44,771		173		—		—		44,771		173
CMOs - Federal agency	368,373		1,328		—		—		368,373		1,328
CMOs - Non-agency	9,795		16		34,099		6,943		43,894		6,959
State and municipal	4,795		64		2,010		133		6,805		197
Other debt securities	29,225		199		15,626		7,394		44,851		7,593
Total securities available-for-sale	$	511,955	$	1,838	$	51,735	$	14,470	$	563,690	$	16,308
Securities held-to-maturity:
Federal agency - Debt	$	9,935	$	66	$	—	$	—	$	9,935	$	66
Federal agency - MBS	76,985		427		—		—		76,985		427
CMOs - Federal agency	358,386		3,918		—		—		358,386		3,918
State and municipal	66,525		1,862		—		—		66,525		1,862
Total securities held-to-maturity	$	511,831	$	6,273	$	—	$	—	$	511,831	$	6,273
December 31, 2011
Securities available-for-sale:
U.S. Treasury	$	4,145	$	5	$	—	$	—	$	4,145	$	5
Federal agency - Debt	409,129		296		—		—		409,129		296
Federal agency - MBS	24,519		87		—		—		24,519		87
CMOs - Federal agency	744,737		2,224		—		—		744,737		2,224
CMOs - Non-agency	20,094		833		31,400		10,487		51,494		11,320
State and municipal	42,164		268		2,023		105		44,187		373
Other debt securities	34,153		508		14,718		8,365		48,871		8,873
Total securities available-for-sale	$	1,278,941	$	4,221	$	48,141	$	18,957	$	1,327,082	$	23,178
Securities held-to-maturity:
CMOs - Federal agency	$	32,256	$	195	$	—	$	—	$	32,256	$	195
State and municipal	5,784		37		—		—		5,784		37
Total securities held-to-maturity	$	38,040	$	232	$	—	$	—	$	38,040	$	232

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (USD $) In Thousands, except Share data, unless otherwise specified		Total	Common stock	Additional paid-in capital	Accumulated other comprehensive income (loss)	Retained earnings	Treasury shares	Non-controlling interest
Balance at Dec. 31, 2010		$ 1,984,718	$ 53,886	$ 487,868	$ 36,853	$ 1,482,037	$ (101,065)	$ 25,139
Balance (in shares) at Dec. 31, 2010			53,885,886
Increase (Decrease) in Stockholders' Equity
Net income	[1]	40,226				39,692		534
Other comprehensive income (loss), net of tax		(10,318)			(10,318)
Dividends and distributions to noncontrolling interest		(534)						(534)
Issuance of shares under share-based compensation plans		2,291		(11,820)			14,111
Share-based employee compensation expense		4,629		4,629
Tax benefit from share-based compensation plans		1,037		1,037
Common stock dividends		(10,576)				(10,576)
Net change in deferred compensation plans		26		26
Change in redeemable noncontrolling interest		(822)		(822)
Other		(50)						(50)
Balance at Mar. 31, 2011		2,010,627	53,886	480,918	26,535	1,511,153	(86,954)	25,089
Balance (in shares) at Mar. 31, 2011			53,885,886
Balance at Dec. 31, 2011		2,144,849	53,886	489,200	72,372	1,611,969	(82,578)
Balance (in shares) at Dec. 31, 2011			53,885,886
Increase (Decrease) in Stockholders' Equity
Net income	[1]	46,265				46,265
Other comprehensive income (loss), net of tax		8,970			8,970
Issuance of shares under share-based compensation plans		162		(12,175)			12,337
Share-based employee compensation expense		4,549		4,549
Tax benefit from share-based compensation plans		(136)		(136)
Common stock dividends		(13,373)				(13,373)
Net change in deferred compensation plans		42		42
Change in redeemable noncontrolling interest		(111)		(111)
Other	[2]	8,348		8,348
Balance at Mar. 31, 2012		$ 2,199,565	$ 53,886	$ 489,717	$ 81,342	$ 1,644,861	$ (70,241)
Balance (in shares) at Mar. 31, 2012			53,885,886

[1] Net income excludes net income attributable to redeemable noncontrolling interest of $243 and $558 for the three-month periods ended March 31, 2012 and 2011, respectively. Redeemable noncontrolling interest is reflected in the mezzanine section of the consolidated balance sheets. See Note 17 of the Notes to the Unaudited Consolidated Financial Statements.

[2] Conversion of pension liability to equity due to SERP amendment, See Note 14 for additional information.

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Other Investments (Tables)

3 Months Ended

Mar. 31, 2012

Other Investments

Summary of investments by fund type

(in thousands)	March 31,		December 31,
Fund Type	2012		2011
Private equity and venture capital	$	23,271	$	23,093
Real estate	10,551		10,541
Hedge	2,883		2,883
Other	3,378		3,402
Total	$	40,083	$	39,919

Schedule of private equity and alternative investments nonrecurring measurement

(in thousands) Fund Type	Fair Value		Unfunded Commitments		Redemption Frequency	Redemption Notice Period
Private equity and venture capital (2)	$	258	$	—	None (1)	N/A

(1)	Funds make periodic distributions of income but do not permit redemptions prior to the end of the investment term.
(2)	Funds invest in securities and other instruments of public and private companies, including corporations, partnerships, limited liability companies and joint ventures.

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Noncontrolling Interest (Tables)

3 Months Ended

Mar. 31, 2012

Noncontrolling Interest

Schedule of reconciliation of redeemable noncontrolling interest

	For the three months ended March 31,
(in thousands)	2012			2011
Balance, beginning of period	$	44,643		$	45,676
Net income	243			558
Distributions to redeemable noncontrolling interest	(289		)	(484		)
Additions and redemptions, net	(1,272		)	(559		)
Adjustments to fair value	111			822
Balance, end of period	$	43,436		$	46,013

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Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Details) (USD $)	Mar. 31, 2012 state	Dec. 31, 2011	Mar. 31, 2011	Dec. 31, 2010
Accounts notes and loans receivable
Loans and leases, excluding covered loans	$ 12,747,902,000	$ 12,309,385,000	$ 11,269,684,000
Less: Allowance for loan and lease losses	(266,077,000)	(262,557,000)	(263,356,000)	(257,007,000)
Loans and leases, excluding covered loans, net	12,481,825,000	12,046,828,000
Covered loans	1,397,156,000	1,481,854,000
Less: Allowance for loan losses	(61,471,000)	(64,565,000)	(82,016,000)	(67,389,000)
Covered loans, net	1,335,685,000	1,417,289,000
Total loans and leases	14,145,058,000	13,791,239,000
Net loans and leases	13,817,510,000	13,464,117,000
Unamortized fees, net of deferred costs	8,200,000	7,500,000
Number of states with largest concentration within covered loan portfolio	5
California
Accounts notes and loans receivable
Percent of total loans excluding covered loans outstanding	82.00%
Percent of total covered loans	39.00%
Nevada
Accounts notes and loans receivable
Percent of total loans excluding covered loans outstanding	3.00%
Percent of total covered loans	7.00%
New York
Accounts notes and loans receivable
Percent of total loans excluding covered loans outstanding	6.00%
Percent of total covered loans	5.00%
Texas
Accounts notes and loans receivable
Percent of total covered loans	11.00%
Arizona
Accounts notes and loans receivable
Percent of total covered loans	4.00%
Other states
Accounts notes and loans receivable
Percent of total loans excluding covered loans outstanding	9.00%
Percent of total covered loans	34.00%
Commercial
Accounts notes and loans receivable
Loans and leases, excluding covered loans	5,175,396,000	4,846,594,000
Covered loans	22,395,000	30,911,000
Commercial real estate mortgages
Accounts notes and loans receivable
Loans and leases, excluding covered loans	2,213,114,000	2,110,749,000	1,902,862,000
Less: Allowance for loan and lease losses	(46,586,000)	(45,967,000)	(47,519,000)	(52,516,000)
Covered loans	1,219,923,000	1,288,352,000
Residential mortgage
Accounts notes and loans receivable
Loans and leases, excluding covered loans	3,805,807,000	3,763,218,000	3,603,058,000
Less: Allowance for loan and lease losses	(13,803,000)	(14,029,000)	(13,527,000)	(16,753,000)
Covered loans	13,378,000	14,931,000
Real estate construction
Accounts notes and loans receivable
Loans and leases, excluding covered loans	313,409,000	315,609,000	415,241,000
Less: Allowance for loan and lease losses	(22,096,000)	(23,347,000)	(36,693,000)	(40,824,000)
Covered loans	135,065,000	140,992,000
Equity lines of credit
Accounts notes and loans receivable
Loans and leases, excluding covered loans	715,997,000	741,081,000	733,567,000
Less: Allowance for loan and lease losses	(8,032,000)	(8,024,000)	(6,445,000)	(7,229,000)
Covered loans	5,210,000	5,167,000
Installment loan
Accounts notes and loans receivable
Loans and leases, excluding covered loans	125,793,000	132,647,000	146,779,000
Less: Allowance for loan and lease losses	(1,938,000)	(1,959,000)	(5,445,000)	(3,931,000)
Covered loans	1,185,000	1,501,000
Lease financing
Accounts notes and loans receivable
Loans and leases, excluding covered loans	$ 398,386,000	$ 399,487,000

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Noncontrolling Interest (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012 entity trustsubsidiaries	Mar. 31, 2011
Noncontrolling Interest
Number of real estate investment trust subsidiaries	2
Number of firms in which entity holds majority ownership interest	5
Fair value of noncontrolling owners equity interests	$ 43,436	$ 46,013
Redeemable noncontrolling interest
Balance, beginning of period	44,643	45,676
Net income	243	558
Distributions to redeemable noncontrolling interest	(289)	(484)
Additions and redemptions, net	(1,272)	(559)
Adjustments to fair value	111	822
Balance, end of period	$ 43,436	$ 46,013

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
Assets
Cash and due from banks	$ 210,799	$ 168,376
Due from banks - interest-bearing	101,375	76,438
Federal funds sold	156,000
Securities available-for-sale - cost $6,699,181 and $7,445,999 at March 31, 2012 and December 31, 2011, respectively:
Securities pledged as collateral	38,817	37,861
Held in portfolio	6,799,893	7,534,040
Securities held-to-maturity - fair value $996,455 and $473,903 at March 31, 2012 and December 31, 2011, respectively	996,613	467,680
Trading securities	82,589	61,975
Loans and leases, excluding covered loans	12,747,902	12,309,385
Less: Allowance for loan and lease losses	266,077	262,557
Loans and leases, excluding covered loans, net	12,481,825	12,046,828
Covered loans, net of allowance for loan losses	1,335,685	1,417,289
Net loans and leases	13,817,510	13,464,117
Premises and equipment, net	143,238	143,641
Deferred tax asset	149,532	155,529
Goodwill	487,233	486,383
Customer-relationship intangibles, net	34,484	36,370
Affordable housing investments	143,916	121,039
Customers' acceptance liability	1,343	1,702
Other real estate owned ($78,456 and $98,550 covered by FDIC loss share at March 31, 2012 and December 31, 2011, respectively)	107,530	129,340
FDIC indemnification asset	185,392	204,259
Other assets	582,225	577,541
Total assets	24,038,489	23,666,291
Liabilities
Demand deposits	11,550,000	11,146,627
Interest checking deposits	1,950,035	2,034,815
Money market deposits	5,946,064	5,954,886
Savings deposits	365,773	339,858
Time deposits-under $100,000	234,180	251,782
Time deposits-$100,000 and over	741,685	659,614
Total deposits	20,787,737	20,387,582
Short-term borrowings	222,776	50,000
Long-term debt	482,024	697,778
Reserve for off-balance sheet credit commitments	24,067	23,097
Acceptances outstanding	1,343	1,702
Other liabilities	277,541	316,640
Total liabilities	21,795,488	21,476,799
Redeemable noncontrolling interest	43,436	44,643
Commitments and contingencies
Shareholders' Equity
Common stock, par value $1.00 per share; 75,000,000 shares authorized; 53,885,886 shares issued at March 31, 2012 and December 31, 2011	53,886	53,886
Additional paid-in capital	489,717	489,200
Accumulated other comprehensive income	81,342	72,372
Retained earnings	1,644,861	1,611,969
Treasury shares, at cost - 1,225,218 and 1,386,705 shares at March 31, 2012 and December 31, 2011, respectively	(70,241)	(82,578)
Total shareholders' equity	2,199,565	2,144,849
Total liabilities and shareholders' equity	$ 24,038,489	$ 23,666,291

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Fair Value Measurements (Details 2) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012
Collateral dependent impaired loans
Information about valuation method, inputs and assumptions for nonrecurring Level 3 fair value measurements
Fair value of assets	$ 10,045
Other real estate owned
Information about valuation method, inputs and assumptions for nonrecurring Level 3 fair value measurements
Fair value of assets	4,078
Private equity and alternative investments
Information about valuation method, inputs and assumptions for nonrecurring Level 3 fair value measurements
Fair value of assets	$ 258

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net unrealized gain (loss), taxes	$ 6,882	$ (5,167)
Reclassification adjustment for net losses (gains) included in net income, taxes	165	37
Non-credit related impairment loss, taxes	$ (1,017)	$ (1,818)

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Other Real Estate Owned (Details) (USD $)	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Dec. 31, 2011
OREO activity
Balance, beginning of period	$ 129,340,000	$ 178,183,000
Additions	8,292,000	34,139,000
Sales	(21,239,000)	(24,381,000)
Valuation adjustments	(8,863,000)	(9,777,000)
Balance, end of period	107,530,000	178,164,000
OREO Valuation Allowances	36,400,000		37,400,000
Non-Covered OREO
OREO activity
Balance, beginning of period	30,790,000	57,317,000
Additions	2,217,000	6,562,000
Sales	(2,877,000)	(6,064,000)
Valuation adjustments	(1,056,000)	(1,473,000)
Balance, end of period	29,074,000	56,342,000
Covered OREO
OREO activity
Balance, beginning of period	98,550,000	120,866,000
Additions	6,075,000	27,577,000
Sales	(18,362,000)	(18,317,000)
Valuation adjustments	(7,807,000)	(8,304,000)
Balance, end of period	$ 78,456,000	$ 121,822,000
FDIC reimbursement (as a percent)	80.00%

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Borrowed Funds (Tables)

3 Months Ended

Mar. 31, 2012

Borrowed Funds

Schedule of short-term borrowings and long-term debt

	March 31,		December 31,
(in thousands) (1)	2012		2011
Short-term borrowings
Current portion of senior notes:
City National Corporation - 5.125% Senior Notes Due February 2013	$	212,776	$	—
Federal funds purchased	10,000		50,000
Total short-term borrowings	$	222,776	$	50,000
Long-term debt
Senior notes:
City National Corporation - 5.125% Senior Notes Due February 2013	$	—	$	215,848
City National Corporation - 5.25% Senior Notes Due September 2020	297,385		297,308
Subordinated debt:
City National Bank - 9.00% Subordinated Notes Due July 2019 (2)	49,727		49,718
City National Bank - 9.00% Subordinated Notes Due August 2019	74,862		74,858
City National Bank - Fixed and Floating Subordinated Notes due August 2019 (3)	54,899		54,895
Junior subordinated debt:
Floating Rate Business Bancorp Capital Trust I Securities due November 2034 (4)	5,151		5,151
Total long-term debt	$	482,024	$	697,778

(1)	The carrying value of certain borrowed funds is net of discount and issuance costs, which are being amortized into interest expense, as well as the impact of fair value hedge accounting, if applicable.
(2)	These notes bear a fixed interest rate of 9 percent for the initial five years from the date of issuance (July 15, 2009) and thereafter the rate is reset at the Bank’s option to either LIBOR plus 600 basis points or to prime plus 500 basis points.
(3)	These notes bear a fixed interest rate of 9 percent for the initial five years from the date of issuance (August 12, 2009) and thereafter bear an interest rate equal to the three-month LIBOR rate plus 6 percent.  The rate is reset quarterly and is subject to an interest rate cap of 10 percent throughout the term of the notes.
(4)	These floating rate securities pay interest of three-month LIBOR plus 1.965 percent which is reset quarterly.  As of March 31, 2012, the interest rate was 2.46 percent.

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Share-Based Compensation (Details 3) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Summary of changes in restricted stock and related information
Compensation expense	$ 4.7	$ 4.7
Restricted stock
Share-based compensation
Percentage of restricted stock vesting two years from the grant date	25.00%
Percentage of restricted stock vesting on each of the next three consecutive grant anniversary dates	25.00%
Summary of changes in restricted stock and related information
Unvested at the beginning of the period (in shares)	875,000
Granted (in shares)	76,000
Vested (in shares)	(169,568)	(134,636)
Forfeited (in shares)	(5,000)
Unvested at the end of the period (in shares)	776,000
Weighted Average Grant Date Fair Value, beginning of the period (in dollars per share)	$ 50.12
Weighted Average Grant Date Fair Value Granted (in dollars per share)	$ 46.66	$ 60.86
Weighted Average Grant Date Fair Value Vested (in dollars per share)	$ 45.75
Weighted Average Grant Date Fair Value Forfeited (in dollars per share)	$ 48.24
Weighted Average Grant Date Fair Value, end of the period (in dollars per share)	$ 50.75
Total fair value of awards vested during the period	7.8	6.2
Compensation expense	2.5	2.3
Unrecognized compensation cost	26.3
Period for recognition of unrecognized compensation cost (in years)	3.5
Cash-settled restricted stock units
Share-based compensation
Percentage of restricted stock vesting two years from the grant date	25.00%
Percentage of restricted stock vesting on each of the next three consecutive grant anniversary dates	25.00%
Summary of changes in restricted stock and related information
Granted (in shares)	99,000
Forfeited (in shares)	(1,000)
Unvested at the end of the period (in shares)	98,000
Compensation expense	$ 0.1

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Income Taxes

3 Months Ended

Mar. 31, 2012

Income Taxes

Income Taxes

Note 13. Income Taxes

The Company recognized income tax expense of $21.7 million and $17.9 million for the three months ended March 31, 2012 and 2011, respectively.

The Company recognizes accrued interest and penalties relating to uncertain tax positions as an income tax provision expense. The Company recognized interest and penalties expense of approximately $0.1 million and $0.3 million for the three months ended March 31, 2012 and 2011, respectively. The Company had approximately $3.2 million of accrued interest and penalties as of March 31, 2012 and December 31, 2011.

The Company and its subsidiaries file a consolidated federal income tax return and also file income tax returns in various state jurisdictions. The Company is currently being audited by the Internal Revenue Service for the tax years 2011 and 2012. The Company is also under audit with the California Franchise Tax Board for the tax years 2005 to 2007. The potential financial statement impact, if any, resulting from completion of these audits is expected to be minimal.

From time to time, there may be differences in opinion with respect to the tax treatment of certain transactions. If a tax position which was previously recognized on the consolidated financial statements is no longer “more likely than not” to be sustained upon a challenge from the taxing authorities, the tax benefit from the tax position will be derecognized. The Company did not have any tax positions for which previously recognized benefits were derecognized during the quarter ended March 31, 2012.

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Shareholders' Equity (Tables)

3 Months Ended

Mar. 31, 2012

Shareholders' Equity

Schedule of components of AOCI

	March 31,		December 31,
(in thousands)	2012		2011
Net unrealized gain on securities available-for-sale	$	81,162	$	73,235
Net unrealized gain on cash flow hedges	180		222
Pension liability adjustment	—		(1,085		)
Total accumulated other comprehensive income	$	81,342	$	72,372

Summary of entity's share repurchases activity

Period	Total Number of Shares (or Units) Purchased	Average Price Paid per Share (or Unit)
January 1, 2012 to January 31, 2012	148	$	48.86
February 1, 2012 to February 29, 2012	25,029	47.69
March 1, 2012 to March 31, 2012	13,817	46.12
	38,994	47.14

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Contingencies

3 Months Ended

Mar. 31, 2012

Contingencies

Contingencies

Note 15. Contingencies

In connection with the liquidation of an investment acquired in a previous bank merger, the Company has an outstanding long-term indemnity. The maximum liability under the indemnity is $23.0 million, but the Company does not expect to make any payments of more than nominal amounts under the terms of this indemnity.

In 2011, the Company received unfavorable judgments through arbitration on two legal claims totaling $7.2 million. Approximately $5.3 million of these judgments was covered by the Company’s insurance policies and was received in full by the Company in 2011. Prior to finalizing these amounts in the second quarter of 2011, the Company had recognized estimated net charges of $1.4 million in Other operating expense in the noninterest expense section of the consolidated statements of income for the three months ended March 31, 2011.

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Income Taxes (Details) (USD $)	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Dec. 31, 2011
Income tax expense (benefit)
Income tax expense	$ 21,719,000	$ 17,886,000
Interest and penalties expense relating to uncertain tax positions	100,000	300,000
Accrued interest and penalties relating to uncertain tax positions	$ 3,200,000		$ 3,200,000

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Cash Flows From Operating Activities
Net income	$ 46,508	$ 40,784
Adjustments to net income:
Provision for losses on covered loans	7,466	19,116
Amortization of intangibles	1,886	2,168
Depreciation and amortization	7,428	6,748
Share-based employee compensation expense	4,706	4,678
Deferred income tax benefit	297	(811)
Gain on disposal of assets	(2,191)	(2,424)
Gain on sale of securities	(449)	(130)
Impairment loss on securities		164
Other, net	(2,430)	(12,700)
Net change in:
Trading securities	(20,559)	174,171
Other assets and other liabilities, net	(41,395)	35,560
Net cash provided by operating activities	1,267	267,324
Cash Flows From Investing Activities
Purchase of securities available-for-sale	(629,049)	(598,336)
Sales of securities available-for-sale	5,173	6,094
Maturities and paydowns of securities available-for-sale	1,362,442	436,519
Purchase of securities held-to-maturity	(530,159)
Maturities and paydowns of securities held-to-maturity	1,005
Loan originations, net of principal collections	(346,887)	199,409
Net payments for premises and equipment	(7,025)	(9,567)
Net cash (paid) acquired in acquisitions	(850)	7,922
Other investing activities, net	20,592	16,624
Net cash (used in) provided by investing activities	(124,758)	58,665
Cash Flows From Financing Activities
Net increase in deposits	400,155	292,671
Net decrease in federal funds purchased and securities sold under repurchase agreements	(40,000)
Net (decrease) increase in short-term borrowings, net of transfers from long-term debt	(1,500)	70
Proceeds from exercise of stock options	2,000	4,015
Tax benefit from exercise of stock options	770	920
Cash dividends paid	(13,302)	(10,576)
Other financing activities, net	(1,272)	(609)
Net cash provided by financing activities	346,851	286,491
Net increase in cash and cash equivalents	223,360	612,480
Cash and cash equivalents at beginning of year	244,814	434,689
Cash and cash equivalents at end of period	468,174	1,047,169
Cash paid during the period for:
Interest	22,386	32,666
Income taxes	27,163	2
Non-cash investing activities:
Transfer of loans to other real estate owned	8,292	34,139
Transfer of SERP liability to equity	$ 8,348

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
CONSOLIDATED BALANCE SHEETS
Securities available-for-sale, cost (in dollars)	$ 6,699,181	$ 7,445,999
Securities held-to-maturity, fair value (in dollars)	996,455	473,903
Other real estate owned, covered by FDIC loss share (in dollars)	$ 78,456	$ 98,550
Common stock, par value (in dollars per share)	$ 1.00	$ 1.00
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	53,885,886	53,885,886
Treasury shares	1,225,218	1,386,705

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Borrowed Funds

3 Months Ended

Mar. 31, 2012

Borrowed Funds

Borrowed Funds

Note 8. Borrowed Funds

Short-term borrowings consist of funds with remaining maturities of one year or less and long-term debt consists of borrowings with remaining maturities greater than one year. The components of short-term borrowings and long-term debt as of March 31, 2012 and December 31, 2011 are provided below:

	March 31,		December 31,
(in thousands) (1)	2012		2011
Short-term borrowings
Current portion of senior notes:
City National Corporation - 5.125% Senior Notes Due February 2013	$	212,776	$	—
Federal funds purchased	10,000		50,000
Total short-term borrowings	$	222,776	$	50,000
Long-term debt
Senior notes:
City National Corporation - 5.125% Senior Notes Due February 2013	$	—	$	215,848
City National Corporation - 5.25% Senior Notes Due September 2020	297,385		297,308
Subordinated debt:
City National Bank - 9.00% Subordinated Notes Due July 2019 (2)	49,727		49,718
City National Bank - 9.00% Subordinated Notes Due August 2019	74,862		74,858
City National Bank - Fixed and Floating Subordinated Notes due August 2019 (3)	54,899		54,895
Junior subordinated debt:
Floating Rate Business Bancorp Capital Trust I Securities due November 2034 (4)	5,151		5,151
Total long-term debt	$	482,024	$	697,778

(1)	The carrying value of certain borrowed funds is net of discount and issuance costs, which are being amortized into interest expense, as well as the impact of fair value hedge accounting, if applicable.
(2)	These notes bear a fixed interest rate of 9 percent for the initial five years from the date of issuance (July 15, 2009) and thereafter the rate is reset at the Bank’s option to either LIBOR plus 600 basis points or to prime plus 500 basis points.
(3)	These notes bear a fixed interest rate of 9 percent for the initial five years from the date of issuance (August 12, 2009) and thereafter bear an interest rate equal to the three-month LIBOR rate plus 6 percent.  The rate is reset quarterly and is subject to an interest rate cap of 10 percent throughout the term of the notes.
(4)	These floating rate securities pay interest of three-month LIBOR plus 1.965 percent which is reset quarterly.  As of March 31, 2012, the interest rate was 2.46 percent.

XML

Document and Entity Information	3 Months Ended
	Mar. 31, 2012	Apr. 30, 2012
Document and Entity Information
Entity Registrant Name	CITY NATIONAL CORP
Entity Central Index Key	0000201461
Document Type	10-Q
Document Period End Date	Mar. 31, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		53,300,468
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1

XML

Shareholders' Equity

3 Months Ended

Mar. 31, 2012

Shareholders' Equity

Shareholders' Equity

Note 9. Shareholders’ Equity

The components of AOCI at March 31, 2012 and December 31, 2011 are as follows:

	March 31,		December 31,
(in thousands)	2012		2011
Net unrealized gain on securities available-for-sale	$	81,162	$	73,235
Net unrealized gain on cash flow hedges	180		222
Pension liability adjustment	—		(1,085		)
Total accumulated other comprehensive income	$	81,342	$	72,372

The following table summarizes the Company’s share repurchases for the three months ended March 31, 2012. All repurchases relate to shares withheld or previously owned shares used to pay taxes due upon vesting of restricted stock. There were no issuer repurchases of the Corporation’s common stock as part of its repurchase plan for the three months ended March 31, 2012.

Period	Total Number of Shares (or Units) Purchased	Average Price Paid per Share (or Unit)
January 1, 2012 to January 31, 2012	148	$	48.86
February 1, 2012 to February 29, 2012	25,029	47.69
March 1, 2012 to March 31, 2012	13,817	46.12
	38,994	47.14

At March 31, 2012, the Corporation had 1.1 million shares of common stock reserved for issuance and 0.6 million shares of unvested restricted stock (excluding restricted stock units) granted to employees and directors under share-based compensation programs.

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CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Interest income
Loans and leases	$ 168,102	$ 162,939
Securities	45,387	37,420
Due from banks - interest-bearing	93	297
Federal funds sold and securities purchased under resale agreements	10	154
Total interest income	213,592	200,810
Interest expense
Deposits	4,033	10,190
Federal funds purchased and securities sold under repurchase agreements	31
Subordinated debt	4,061	4,648
Other long-term debt	4,754	4,682
Total interest expense	12,879	19,520
Net interest income	200,713	181,290
Provision for credit losses on loans and leases, excluding covered loans	0
Provision for losses on covered loans	7,466	19,116
Net interest income after provision	193,247	162,174
Noninterest income
Trust and investment fees	33,654	35,638
Brokerage and mutual fund fees	5,028	5,661
Cash management and deposit transaction charges	11,168	11,725
International services	8,785	8,316
FDIC loss sharing income, net	866	8,605
Gain on disposal of assets	2,191	2,424
Gain on sale of securities	449	130
Other	13,559	21,558
Impairment loss on securities:
Total other-than-temporary impairment loss on securities	(2,432)	(4,510)
Less: Portion of loss recognized in other comprehensive income	2,432	4,346
Net impairment loss recognized in earnings		(164)
Total noninterest income	75,700	93,893
Noninterest expense
Salaries and employee benefits	120,245	111,012
Net occupancy of premises	13,686	13,346
Legal and professional fees	11,880	10,077
Information services	8,149	7,497
Depreciation and amortization	7,428	6,748
Amortization of intangibles	1,886	2,168
Marketing and advertising	6,816	6,518
Office services and equipment	3,948	4,606
Other real estate owned	12,094	14,489
FDIC assessments	4,479	9,806
Other operating	10,109	11,130
Total noninterest expense	200,720	197,397
Income before income taxes	68,227	58,670
Income taxes	21,719	17,886
Net income	46,508	40,784
Less: Net income attributable to noncontrolling interest	243	1,092
Net income attributable to City National Corporation	$ 46,265	$ 39,692
Net income per share, basic (in dollars per share)	$ 0.86	$ 0.75
Net income per share, diluted (in dollars per share)	$ 0.86	$ 0.74
Shares used to compute net income per share, basic	52,741	52,320
Shares used to compute net income per share, diluted	53,021	52,894
Dividends per share (in dollars per share)	$ 0.25	$ 0.20

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Fair Value Measurements

3 Months Ended

Mar. 31, 2012

Fair Value Measurements

Fair Value Measurements

Note 3. Fair Value Measurements

The following tables summarize assets and liabilities measured at fair value as of March 31, 2012 and December 31, 2011 by level in the fair value hierarchy:

			Fair Value Measurements at Reporting Date Using
(in thousands)	Balance as of March 31, 2012		Quoted Prices in Active Markets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
Measured on a Recurring Basis
Assets
Securities available-for-sale:
U.S. Treasury	$	19,202	$	19,202	$	—	$	—
Federal agency - Debt	1,051,348		—		1,051,348		—
Federal agency - MBS	720,590		—		720,590		—
CMOs - Federal agency	4,400,318		—		4,400,318		—
CMOs - Non-agency	68,587		—		68,587		—
State and municipal	395,723		—		395,723		—
Other debt securities	181,792		—		162,783		19,009
Equity securities and mutual funds	1,150		1,150		—		—
Trading securities	82,589		80,527		2,062		—
Mark-to-market derivatives (1)	57,891		3,239		54,652		—
Total assets at fair value	$	6,979,190	$	104,118	$	6,856,063	$	19,009
Liabilities
Mark-to-market derivatives (2)	$	49,384	$	1,574	$	47,810	$	—
Other liabilities	290		—		290		—
Total liabilities at fair value	$	49,674	$	1,574	$	48,100	$	—
Measured on a Nonrecurring Basis
Assets
Collateral dependent impaired loans (3):
Commercial (4)	$	1,878	$	—	$	—	$	1,878
Commercial real estate mortgages	3,170		—		3,170		—
Residential mortgages	5,988		—		5,525		463
Real estate construction	14,300		—		7,500		6,800
Equity lines of credit	904		—		—		904
Installment	550		—		550		—
Other real estate owned (5)	27,347		—		23,269		4,078
Private equity and alternative investments	258		—		—		258
Total assets at fair value	$	54,395	$	—	$	40,014	$	14,381

(1)	Reported in Other assets in the consolidated balance sheets.
(2)	Reported in Other liabilities in the consolidated balance sheets.
(3)	Impaired loans for which fair value was calculated using the collateral valuation method.
(4)	Includes lease financing.
(5)	Other real estate owned balance of $107.5 million in the consolidated balance sheets includes $78.5 million of covered OREO and is net of estimated disposal costs.

			Fair Value Measurements at Reporting Date Using
(in thousands)	Balance as of December 31, 2011		Quoted Prices in Active Markets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
Measured on a Recurring Basis
Assets
Securities available-for-sale:
U.S. Treasury	$	19,182	$	19,182	$	—	$	—
Federal agency - Debt	1,973,862		—		1,973,862		—
Federal agency - MBS	681,044		—		681,044		—
CMOs - Federal agency	4,326,907		—		4,326,907		—
CMOs - Non-agency	69,001		—		69,001		—
State and municipal	401,604		—		401,604		—
Other debt securities	99,074		—		79,491		19,583
Equity securities and mutual funds	1,227		1,227		—		—
Trading securities	61,975		61,922		53		—
Mark-to-market derivatives (1)	62,230		2,552		59,678		—
Total assets at fair value	$	7,696,106	$	84,883	$	7,591,640	$	19,583
Liabilities
Mark-to-market derivatives (2)	$	52,881	$	1,542	$	51,339	$	—
Other liabilities	263		—		263		—
Total liabilities at fair value	$	53,144	$	1,542	$	51,602	$	—
Measured on a Nonrecurring Basis
Assets
Collateral dependent impaired loans (3):
Commercial (4)	$	2,484	$	—	$	—	$	2,484
Commercial real estate mortgages	6,830		—		6,830		—
Residential mortgages	5,555		—		5,084		471
Real estate construction	18,528		—		9,680		8,848
Equity lines of credit	3,471		—		2,588		883
Installment	675		—		675		—
Collateral dependent impaired covered loans (3):
Commercial	422		—		—		422
Other real estate owned (5)	66,837		—		56,898		9,939
Private equity and alternative investments	6,558		—		—		6,558
Total assets at fair value	$	111,360	$	—	$	81,755	$	29,605

(1)	Reported in Other assets in the consolidated balance sheets.
(2)	Reported in Other liabilities in the consolidated balance sheets.
(3)	Impaired loans for which fair value was calculated using the collateral valuation method.
(4)	Includes lease financing.
(5)	Other real estate owned balance of $129.3 million in the consolidated balance sheets includes $98.6 million of covered OREO and is net of estimated disposal costs.

At March 31, 2012, $6.98 billion, or approximately 29 percent, of the Company’s total assets were recorded at fair value on a recurring basis, compared with $7.70 billion, or 33 percent, at December 31, 2011. The majority of these financial assets were valued using Level 1 or Level 2 inputs. Less than 1 percent of total assets were measured using Level 3 inputs. At March 31, 2012, $49.7 million of the Company’s total liabilities were recorded at fair value using Level 1 or Level 2 inputs, compared with $53.1 million at December 31, 2011. There were no transfers between Level 1 and Level 2 of the fair value hierarchy for assets or liabilities measured on a recurring basis during the first quarter of 2012. At March 31, 2012, $54.4 million, or approximately 0.2 percent of the Company’s total assets, were recorded at fair value on a nonrecurring basis, compared with $111.4 million, or approximately 0.5 percent, at December 31, 2011. These assets were measured using Level 2 and Level 3 inputs.

Recurring Fair Value Measurements

Assets and liabilities for which fair value measurement is based on significant unobservable inputs are classified as Level 3 in the fair value hierarchy. Level 3 assets measured at fair value on a recurring basis consist of collateralized debt obligation senior notes that are included in securities available-for-sale. These securities totaling $19.0 million at March 31, 2012 were valued using the discounted cash flow method with the following unobservable inputs: (1) risk-adjusted discount rate consistent with similarly rated securities, (2) prepayment rate of 2 percent, (3) default rate of 0.75 percent of performing collateral, and (4) 15 percent recovery rate with a 2-year lag. The Company had no liabilities with fair value measurements categorized as Level 3 at March 31, 2012 or 2011.

The following table provides a reconciliation of the beginning and ending balances for Level 3 assets measured at fair value on a recurring basis for the three months ended March 31, 2012 and 2011. Unrealized gains and losses on securities available-for-sale are reported as a component of AOCI in the consolidated balance sheets.

Level 3 Assets Measured on a Recurring Basis

	March 31, 2012			March 31, 2011
(in thousands)	Securities Available- for-Sale			Securities Available- for-Sale
Balance, beginning of period	$	19,583		$	20,982
Total realized/unrealized gains (losses):
Included in other comprehensive income	964			1,690
Settlements	(1,562		)	(1,707		)
Other (1)	24			(53		)
Balance, end of period	$	19,009		$	20,912

(1) Other rollforward activity consists of amortization of premiums and accretion of discounts recognized on the initial purchase of the securities available-for-sale.

There were no purchases, sales, or transfers in and/or out of Level 3 assets measured on a recurring basis during the three months ended March 31, 2012 and 2011. Paydowns of $1.6 million and $1.7 million were received on Level 3 assets measured on a recurring basis for the three months ended March 31, 2012 and 2011, respectively. There were no gains or losses for the three months ended March 31, 2012 and 2011 included in earnings that were attributable to the change in unrealized gains or losses relating to assets still held as of March 31, 2012 and 2011.

Nonrecurring Fair Value Measurements

Assets measured at fair value on a nonrecurring basis using significant unobservable inputs include certain collateral dependent impaired loans, OREO for which fair value is not solely based on market observable inputs, and certain private equity and alternative investments. Private equity and alternative investments do not have readily determinable fair values. These investments are carried at cost and evaluated for impairment on a quarterly basis. Due to the lack of readily determinable fair values for these investments, the impairment assessment is based primarily on a review of investment performance and the likelihood that the capital invested would be recovered.

The table below provides information about valuation method, inputs and assumptions for nonrecurring Level 3 fair value measurements. The weight assigned to each input is based on the facts and circumstances that exist at the date of measurement.

Information About Nonrecurring Level 3 Fair Value Measurements

(in thousands)	Fair Value at March 31, 2012		Valuation Method	Unobservable Inputs
Collateral dependent impaired loans	$	10,045	Market	- Adjustments to external or internal appraised values - Probability weighting of broker price opinions - Management assumptions regarding market trends or other relevant factors
Other real estate owned	$	4,078	Market	- Adjustments to external or internal appraised values
				- Probability weighting of broker price opinions
				- Management assumptions regarding market trends or other relevant factors
Private equity and alternative investments	$	258	Cost Recovery	- Management’s assumptions regarding recoverability of investment based on fund financial performance, market conditions and other relevant factors

Market-based valuation methods use prices and other relevant information generated by market transactions involving identical or comparable assets. Under the cost recovery approach, fair value represents an estimate of the amount of an asset expected to be recovered. The Company only employs the cost recovery approach for assets that are not readily marketable and for which minimal market-based information exists.

For assets measured at fair value on a nonrecurring basis, the following table presents the total net (losses) gains, which include charge-offs, recoveries, specific reserves, OREO valuation write-downs and write-ups, gains and losses on sales of OREO, and impairment write-downs on private equity investments, recognized in the three months ended March 31, 2012 and 2011:

	For the three months ended March 31,
(in thousands)	2012			2011
Collateral dependent impaired loans:
Commercial	$	(368	)	$	(606	)
Commercial real estate mortgages	(365		)	7,114
Residential mortgages	(582		)	(142		)
Real estate construction	(6,472		)	2,217
Equity lines of credit	54			36
Installment	(107		)	(4,514		)
Other real estate owned (1)	(8,465		)	(9,122		)
Private equity and alternative investments	(127		)	—
Total net losses recognized	$	(16,432	)	$	(5,017	)

(1) Net losses on OREO includes $7.6 million and $8.2 million of net losses related to covered OREO for the three months ended March 31, 2012 and 2011, respectively, a significant portion of which is reimbursable by the FDIC.

Fair Value of Financial Instruments

A financial instrument is broadly defined as cash, evidence of an ownership interest in another entity, or a contract that imposes a contractual obligation on one entity and conveys a corresponding right to a second entity to require delivery or exchange of a financial instrument. The table below summarizes the estimated fair values for the Company’s financial instruments as of March 31, 2012 and December 31, 2011. The table also provides information on the level in the fair value hierarchy for inputs used in the fair value of financial assets and financial liabilities. Refer to Note 1, Summary of Significant Accounting Policies, in the Company’s 2011 Form 10-K for additional information on fair value measurements. Financial assets and financial liabilities for which carrying amount equals fair value are considered by the Company to be Level 1 in the fair value hierarchy. Additional detail on assets and liabilities that are categorized in multiple levels of the fair value hierarchy is provided in the above tables of this Note.

The disclosure does not include estimated fair value amounts for assets and liabilities which are not defined as financial instruments but which have significant value. These assets and liabilities include the value of customer-relationship intangibles, goodwill, affordable housing investments carried at cost, other assets, deferred taxes and other liabilities. Accordingly, the total of the fair values presented does not represent the underlying value of the Company.

Following is a description of the methods and assumptions used in estimating the fair values for each class of financial instrument:

Cash and due from banks, Due from banks—interest bearing and Federal funds sold — For these short-term instruments, the carrying amount is a reasonable estimate of fair value.

Securities available-for-sale, Securities held-to-maturity and Trading securities — For securities held as available-for-sale and held-to-maturity, the fair value is determined by quoted market prices, where available, or on observable market inputs appropriate for the type of security. If quoted market prices or observable market inputs are not available, discounted cash flows may be used to determine an appropriate fair value. Fair values for trading securities are based on quoted market prices or dealer quotes. The fair value of trading securities for which quoted prices are not available is based on observable market inputs.

Loans and leases — Loans and leases, excluding covered loans, are not recorded at fair value on a recurring basis. Nonrecurring fair value adjustments are periodically recorded on impaired loans that are measured for impairment based on the fair value of collateral. Due to the lack of activity in the secondary market for the types of loans in the Company’s portfolio, a model-based approach is used for determining the fair value of loans for purposes of the disclosures in the following table. The fair value of loans is estimated by discounting future cash flows using discount rates that incorporate the Company’s assumptions concerning current market yields, credit risk and liquidity premiums. Loan cash flow projections are based on contractual loan terms adjusted for the impact of current interest rate levels on borrower behavior, including prepayments. Loan prepayment assumptions are based on industry standards for the type of loans being valued. Projected cash flows are discounted using yield curves based on current market conditions. Yield curves are constructed by product type using the Bank’s loan pricing model for like-quality credits. The discount rates used in the Company’s model represent the rates the Bank would offer to current borrowers for like-quality credits. These rates could be different from what other financial institutions could offer for these loans.

Covered loans — The fair value of covered loans is based on estimates of future loan cash flows and appropriate discount rates, which incorporate the Company’s assumptions about market funding cost and liquidity premium. The estimates of future loan cash flows are determined using the Company’s assumptions concerning the amount and timing of principal and interest payments, prepayments and credit losses.

FDIC indemnification asset — The fair value of the FDIC indemnification asset is estimated by discounting estimated future cash flows based on estimated current market rates.

Investment in FHLB and FRB stock — Investments in government agency stock are recorded at cost. Ownership of these securities is restricted to member banks and the securities do not have a readily determinable market value. Purchases and sales of these securities are at par value with the issuer. The fair value of investments in FRB and FHLB stock is equal to the carrying amount.

Derivative contracts — The fair value of non-exchange traded (over-the-counter) derivatives is obtained from third party market sources. The Company provides client data to the third party source for purposes of calculating the credit valuation component of the fair value measurement of client derivative contracts. The fair values of interest rate contracts include interest receivable and payable and cash collateral, if any.

Deposits — The fair value of demand and interest checking deposits, savings deposits, and certain money market accounts is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit (“CD”) is determined by discounting expected future cash flows using the rates offered by the Bank for deposits of similar type and remaining maturity at the measurement date. This value is compared to the termination value of each CD given the Bank’s standard early withdrawal penalties. The fair value reported is the higher of the discounted present value of each CD and the termination value after the recovery of prepayment penalties. The Bank reviews pricing for its CD products weekly. This review gives consideration to market pricing for products of similar type and maturity offered by other financial institutions.

Federal funds purchased and Securities sold under repurchase agreements — The carrying amount is a reasonable estimate of fair value.

Other short-term borrowings — The fair value of the current portion of long-term debt classified in short-term borrowings is obtained through third-party pricing sources. The carrying amount of the remaining other short-term borrowings is a reasonable estimate of fair value.

Long-term debt — The fair value of long-term debt is obtained through third-party pricing sources.

FDIC clawback liability — The FDIC clawback liability represents an estimated payment by the Company to the FDIC if actual cumulative losses on acquired covered assets are lower than the cumulative losses originally estimated by the FDIC at the time of acquisition. The fair value of the FDIC clawback liability is estimated by discounting estimated future cash flows based on estimated current market rates.

Off-balance sheet commitments, which include commitments to extend credit, are excluded from the table below. A reasonable estimate of fair value for these instruments is the carrying amount of deferred fees and the reserve for any credit losses related to these off-balance sheet instruments. This estimate is not material to the Company’s financial position.

		March 31, 2012				December 31, 2011
	Fair Value	Carrying		Fair		Carrying		Fair
(in millions)	Level	Amount		Value		Amount		Value
Financial Assets:
Cash and due from banks	1	$	210.8	$	210.8	$	168.4	$	168.4
Due from banks - interest bearing	1	101.4		101.4		76.4		76.4
Federal funds sold	1	156.0		156.0		—		—
Securities available-for-sale	1,2,3	6,838.7		6,838.7		7,571.9		7,571.9
Securities held-to-maturity	2	996.6		996.5		467.7		473.9
Trading securities	1,2	82.6		82.6		62.0		62.0
Loans and leases, net of allowance	3	12,481.8		12,909.0		12,046.8		12,400.5
Covered loans, net of allowance	3	1,335.7		1,388.7		1,417.3		1,472.6
FDIC indemnification asset	3	185.4		163.0		204.3		184.3
Investment in FHLB and FRB stock	1	103.8		103.8		107.4		107.4
Derivative assets	1,2	57.9		57.9		62.2		62.2
Financial Liabilities:
Deposits	1,3	$	20,787.7	$	20,791.8	$	20,387.6	$	20,392.3
Federal funds purchased and securities sold under repurchase agreements	1	10.0		10.0		50.0		50.0
Other short-term borrowings	2	212.8		219.0		—		—
Long-term debt	2	482.0		505.6		697.8		718.7
Derivative liabilities	1,2	49.4		49.4		52.9		52.9
FDIC clawback liability	3	8.7		8.7		8.1		8.1

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Business Combinations

3 Months Ended

Mar. 31, 2012

Business Combinations

Business Combinations

Note 2. Business Combinations

Nevada Commerce Bank

On April 8, 2011, the Bank acquired the banking operations of Nevada Commerce Bank (“NCB”), based in Las Vegas, Nevada, in a purchase and assumption agreement with the FDIC. Excluding the effects of acquisition accounting adjustments, the Bank acquired approximately $138.9 million in assets and assumed $121.9 million in liabilities. The Bank acquired most of NCB’s assets, including loans and other real estate owned (“OREO”) with a fair value of $56.4 million and $7.5 million, respectively, and assumed deposits with a fair value of $118.4 million. The Bank received approximately $2.7 million in cash from the FDIC at acquisition and recognized a gain of $8.2 million on the acquisition of NCB in the second quarter of 2011.

In connection with the acquisition of NCB, the Bank entered into loss-sharing agreements with the FDIC under which the FDIC will reimburse the Bank for 80 percent of eligible losses with respect to covered assets. Covered assets include acquired loans (“covered loans”) and OREO (“covered OREO”) that are covered under loss-sharing agreements with the FDIC. The term of the loss-sharing agreements is 10 years for single-family residential loans and eight years for all other loans. The expected reimbursements under the loss-sharing agreements were recorded as an indemnification asset at their estimated fair value of $33.8 million. The difference between the fair value of the FDIC indemnification asset and the undiscounted cash flow the Bank expects to collect from the FDIC is accreted into noninterest income.

San Jose, California Branch

On February 11, 2011, the Company purchased a branch banking office in San Jose, California from another financial institution. The Company acquired approximately $8.4 million in deposits, and recorded goodwill and core deposit intangibles of $0.3 million and $0.1 million, respectively.

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Employee Benefit Plans

3 Months Ended

Mar. 31, 2012

Employee Benefit Plans

Employee Benefit Plans

Note 14. Employee Benefit Plans

Defined Contribution Plan

The Company has a profit-sharing retirement plan with an Internal Revenue Code Section 401(k) feature covering eligible employees. Employer contributions are made annually into a trust fund and are allocated to participants based on their salaries. The profit sharing contribution requirement is based on a percentage of annual operating income subject to a percentage of salary cap. Eligible employees may contribute up to 50 percent of their salary to the 401(k) plan, but not more than the maximum allowed under Internal Revenue Service (“IRS”) regulations. The Company matches 50 percent of the first 6 percent of covered compensation. The Company recorded total profit sharing and matching contribution expense of $4.7 million and $4.5 million for the three months ended March 31, 2012 and 2011, respectively.

Deferred Compensation Plan

The Company offers a deferred compensation plan for eligible employees and non-employee directors. Participants under the employee plan may make an annual irrevocable election to defer a portion of base salary and up to 100 percent of commission and incentive compensation while employed with the Company. Participants under the non-employee director plan also may make an annual irrevocable election to defer all or part of annual retainers, annual awards, committee chair retainers and meeting fees (collectively, “directors’ fees”) until board service with the Company ceases. The deferred compensation plans are nonqualified plans under IRS regulations. Deferrals are made on a pretax basis and are allocated among the investment options available under the plans as directed by the plan participants. The Company funds plan benefits through the purchase of life insurance policies which are recorded in Other assets on the consolidated balance sheets. Participant deferrals are recorded in Other liabilities on the consolidated balance sheets. Employee salaries and non-employee directors’ fees deferred under the plan are charged to Salaries and employee benefits and Other operating expense, respectively, on the consolidated statements of income. Earnings on plan assets, net of benefits payable to plan participants, are reported in Salaries and employee benefits on the consolidated statements of income, and was $0.1 million for the three months ended March 31, 2012 and 2011.

Other Plans

The Company administers a Supplemental Executive Retirement Plan (“SERP”) for one of its executive officers. On March 14, 2012, the SERP was amended. In exchange for cancellation of the executive officer’s rights to receive supplemental retirement benefits under the SERP, the executive officer would receive fully vested interests in a deferred compensation stock fund under the amended plan. The present value of the accumulated SERP benefit under the amended plan at March 14, 2012 was deemed to be invested in the deferred compensation stock fund, with the number of units being determined by the closing price of the Company’s stock on March 14, 2012. The benefit was converted to 167,423 units in the deferred compensation stock fund at March 14, 2012. Distributions to the executive officer from the stock fund will be made solely in Company stock upon termination of employment. As a result of this conversion, the Company reversed its $8.3 million pension liability related to the SERP, recorded the fully vested interests in the deferred compensation stock fund in equity for the same amount, and recognized expense of $1.7 million in the consolidated statements of income for the three months ended March 31, 2012. The Company recognized total expense related to this SERP of $1.9 million and $0.2 million for the three months ended March 31, 2012 and 2011, respectively.

The Company also has a SERP covering three former executives of Pacific Bank, which the Company acquired in 2000. As of March 31, 2012, there was an unfunded pension liability for this SERP of $2.3 million. Expense for the three months ended March 31, 2012 and 2011 was insignificant.

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Earnings per Common Share

3 Months Ended

Mar. 31, 2012

Earnings per Common Share

Earnings per Common Share

Note 10. Earnings per Common Share

The Company applies the two-class method of computing basic and diluted 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:

	For the three months ended March 31,
(in thousands, except per share amounts)	2012		2011
Basic EPS:
Net income attributable to City National Corporation	$	46,265	$	39,692
Less: Earnings allocated to participating securities	738		578
Earnings allocated to common shareholders	$	45,527	$	39,114
Weighted average common shares outstanding	52,741		52,320
Basic earnings per common share	$	0.86	$	0.75
Diluted EPS:
Earnings allocated to common shareholders (1)	$	45,530	$	39,119
Weighted average common shares outstanding	52,741		52,320
Dilutive effect of equity awards	280		574
Weighted average diluted common shares outstanding	53,021		52,894
Diluted earnings per common share	$	0.86	$	0.74

(1)   Earnings allocated to common 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 common shareholders and participating securities for the purposes of calculating diluted EPS.

The average price of the Company’s common stock for the period is used to determine the dilutive effect of outstanding stock options. Antidilutive stock options are not included in the calculation of basic or diluted EPS. There were 3.0 million and 1.7 million average outstanding stock options that were antidilutive for the three months ended March 31, 2012 and 2011, respectively.

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Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments

3 Months Ended

Mar. 31, 2012

Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments

Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments

Note 6. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments

The following is a summary of the major categories of loans:

Loans and Leases
	March 31,			December 31,
(in thousands)	2012			2011
Commercial	$	5,175,396		$	4,846,594
Commercial real estate mortgages	2,213,114			2,110,749
Residential mortgages	3,805,807			3,763,218
Real estate construction	313,409			315,609
Equity lines of credit	715,997			741,081
Installment	125,793			132,647
Lease financing	398,386			399,487
Loans and leases, excluding covered loans	12,747,902			12,309,385
Less: Allowance for loan and lease losses	(266,077		)	(262,557		)
Loans and leases, excluding covered loans, net	12,481,825			12,046,828
Covered loans	1,397,156			1,481,854
Less: Allowance for loan losses	(61,471		)	(64,565		)
Covered loans, net	1,335,685			1,417,289
Total loans and leases	$	14,145,058		$	13,791,239
Total loans and leases, net	$	13,817,510		$	13,464,117

The loan amounts above include unamortized fees, net of deferred costs, of $8.2 million and $7.5 million as of March 31, 2012 and December 31, 2011, respectively.

Concentrations of credit risk arise when a number of clients are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions. The Company’s lending activities are predominantly in California, and to a lesser extent, New York and Nevada. Excluding covered loans, at March 31, 2012, California represented 82 percent of total loans outstanding and Nevada and New York represented 3 percent and 6 percent, respectively. The remaining 9 percent of total loans outstanding represented other states. Although the Company has a diversified loan portfolio, a substantial portion of the loan portfolio and credit performance depends on the economic stability of Southern California. Credit performance also depends, to a lesser extent, on economic conditions in the San Francisco Bay area, New York and Nevada. Within the Company’s covered loan portfolio at March 31, 2012, the five states with the largest concentration were California (39 percent), Texas (11 percent), Nevada (7 percent), New York (5 percent) and Arizona (4 percent). The remaining 34 percent of total covered loans outstanding represented other states.

Covered Loans

Covered loans represent loans acquired from the FDIC that are subject to loss-sharing agreements. Covered loans were $1.40 billion as of March 31, 2012 and $1.48 billion as of December 31, 2011. Covered loans, net of allowance for loan losses, were $1.34 billion at March 31, 2012 and $1.42 billion at December 31, 2011.

The following is a summary of the major categories of covered loans:

	March 31,			December 31,
(in thousands)	2012			2011
Commercial	$	22,395		$	30,911
Commercial real estate mortgages	1,219,923			1,288,352
Residential mortgages	13,378			14,931
Real estate construction	135,065			140,992
Equity lines of credit	5,210			5,167
Installment	1,185			1,501
Covered loans	1,397,156			1,481,854
Less: Allowance for loan losses	(61,471		)	(64,565		)
Covered loans, net	$	1,335,685		$	1,417,289

The Company evaluated the acquired loans from its FDIC-assisted acquisitions and concluded that all loans, with the exception of a small population of acquired loans, would be accounted for under ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (“ASC 310-30”). Loans are accounted for under ASC 310-30 when there is evidence of credit deterioration since origination and for which it is probable, at acquisition, that the Company would be unable to collect all contractually required payments. Interest income is recognized on all acquired impaired loans through accretion of the difference between the carrying amount of the loans and their expected cash flows.

As of NCB’s acquisition date in 2011, the estimates of the contractually required payments receivable for all acquired impaired covered loans of NCB were $107.4 million, the cash flows expected to be collected were $66.2 million, and the fair value of the acquired impaired loans was $55.3 million. The above amounts were determined based on the estimated performance over the remaining life of the underlying loans, which included the effects of estimated prepayments. Fair value of the acquired loans included estimated credit losses.

Changes in the accretable yield for acquired impaired loans were as follows for the three months ended March 31, 2012 and 2011:

	For the three months ended March 31,
(in thousands)	2012			2011
Balance, beginning of period	$	436,374		$	562,826
Accretion	(22,225		)	(27,572		)
Reclassifications to nonaccretable yield	(21,468		)	(2,448		)
Disposals and other	(16,213		)	(11,248		)
Balance, end of period	$	376,468		$	521,558

At acquisition date, the Company recorded an indemnification asset for its FDIC-assisted acquisitions. The FDIC indemnification asset represents the present value of the expected reimbursement from the FDIC related to expected losses on acquired loans, OREO and unfunded commitments. The FDIC indemnification asset from all FDIC-assisted acquisitions was $185.4 million at March 31, 2012 and $204.3 million at December 31, 2011.

Credit Quality on Loans and Leases, Excluding Covered Loans

Allowance for Loan and Lease Losses and Reserve for Off-Balance Sheet Credit Commitments

The Company accounts for the credit risk associated with lending activities through its allowance for loan and lease losses, reserve for off-balance sheet credit commitments and provision for credit losses. The provision is the expense recognized in the consolidated statements of income to adjust the allowance and reserve to the levels deemed appropriate by management, as determined through application of the Company’s allowance methodology procedures. The provision for credit losses reflects management’s judgment of the adequacy of the allowance for loan and lease losses and the reserve for off-balance sheet credit commitments. It is determined through quarterly analytical reviews of the loan and commitment portfolios and consideration of such other factors as the Company’s loan and lease loss experience, trends in problem loans, concentrations of credit risk, underlying collateral values, and current economic conditions, as well as the results of the Company’s ongoing credit review process. As conditions change, the Company’s level of provisioning and the allowance for loan and lease losses and reserve for off-balance sheet credit commitments may change.

For commercial, non-homogenous loans that are not impaired, the Bank derives loss factors via a process that begins with estimates of probable losses inherent in the portfolio based upon various statistical analyses. The factors considered in the analysis include loan type, migration analysis, in which historical delinquency and credit loss experience is applied to the current aging of the portfolio, as well as analyses that reflect current trends and conditions. Each portfolio of smaller balance homogeneous loans, including residential first mortgages, installment, revolving credit and most other consumer loans, is collectively evaluated for loss potential. Management also establishes a qualitative reserve that considers overall portfolio indicators, including current and historical credit losses; delinquent, nonperforming and criticized loans; portfolio concentrations, trends in volumes and terms of loans; and economic trends in the broad market and in specific industries.

The allowance for loan and lease losses attributed to impaired loans considers all available evidence, including as appropriate, the probability that a specific loan will default, the expected exposure of a loan at default, an estimate of loss given default, the present value of expected future cash flows discounted using the loan’s contractual effective rate, the secondary market value of the loan and the fair value of collateral.

The quantitative portion of the allowance for loan and lease losses is adjusted for qualitative factors to account for model imprecision and to incorporate the range of probable outcomes inherent in the estimates used for the allowance. The qualitative portion of the allowance attempts to incorporate the risks inherent in the portfolio, economic uncertainties, competition, regulatory requirements and other subjective factors including industry trends, changes in underwriting standards, and existence of concentrations.

The relative significance of risk considerations vary by portfolio segment. For commercial loans, the primary risk consideration is a borrower’s ability to generate sufficient cash flows to repay their loan. Secondary considerations include the creditworthiness of guarantors and the valuation of collateral. In addition to the creditworthiness of a borrower, the type and location of real estate collateral is an important risk factor for commercial real estate and real estate construction loans. The primary risk considerations for consumer loans are a borrower’s personal cash flow and liquidity, as well as collateral value.

Generally, commercial, commercial real estate and real estate construction loans are charged off immediately when it is determined that advances to the borrower are in excess of the calculated current fair value of the collateral or if a borrower is deemed incapable of repayment of unsecured debt, there is little or no prospect for near term improvement and no realistic strengthening action of significance pending. Consumer loans are charged-off based on delinquency, ranging from 60 days for overdrafts to 180 days for secured consumer loans, or earlier when it is determined that the loan is uncollectible due to a triggering event, such as bankruptcy, fraud or death.

The following tables provide a summary of activity in the allowance for loan and lease losses and the period-end recorded investment balances of loans evaluated for impairment, excluding covered loans, for the three months ended March 31, 2012 and 2011. Activity is provided by loan type which is consistent with the Company’s methodology for determining the allowance for loan and lease losses.

(in thousands)	Commercial (1)			Commercial Real Estate Mortgages			Residential Mortgages			Real Estate Construction			Equity Lines of Credit			Installment			Unallocated		Total
Three months ended March 31, 2012
Allowance for loan and lease losses:
Beginning balance	$	82,965		$	45,967		$	14,029		$	23,347		$	8,024		$	1,959		$	86,266	$	262,557
Provision for credit losses (2)	(4,161		)	1,285			268			(1,355		)	162			(438		)	3,269		(970		)
Charge-offs	(8,917		)	(692		)	(554		)	(1,601		)	(189		)	(209		)	—		(12,162		)
Recoveries	14,200			26			60			1,705			35			626			—		16,652
Net (charge-offs) recoveries	5,283			(666		)	(494		)	104			(154		)	417			—		4,490
Ending balance	$	84,087		$	46,586		$	13,803		$	22,096		$	8,032		$	1,938		$	89,535	$	266,077
Ending balance of allowance:
Individually evaluated for impairment	$	3,335		$	1,019		$	331		$	9,395		$	38		$	—		$	—	$	14,118
Collectively evaluated for impairment	80,752			45,567			13,472			12,701			7,994			1,938			89,535		251,959
Loans and leases, excluding covered loans
Ending balance of loans and leases:
Loans and leases, excluding covered loans	$	5,573,782		$	2,213,114		$	3,805,807		$	313,409		$	715,997		$	125,793		$	—	$	12,747,902
Individually evaluated for impairment	40,415			22,306			13,000			67,686			6,980			550			—		150,937
Collectively evaluated for impairment	5,533,367			2,190,808			3,792,807			245,723			709,017			125,243			—		12,596,965
Three months ended March 31, 2011
Allowance for loan and lease losses:
Beginning balance	$	82,451		$	52,516		$	16,753		$	40,824		$	7,229		$	3,931		$	53,303	$	257,007
Provision for credit losses (2)	(4,853		)	(11,209		)	(2,611		)	(7,957		)	(27		)	1,716			24,763		(178		)
Charge-offs	(3,238		)	(2,799		)	(647		)	(566		)	(793		)	(324		)	—		(8,367		)
Recoveries	1,301			9,011			32			4,392			36			122			—		14,894
Net (charge-offs) recoveries	(1,937		)	6,212			(615		)	3,826			(757		)	(202		)	—		6,527
Ending balance	$	75,661		$	47,519		$	13,527		$	36,693		$	6,445		$	5,445		$	78,066	$	263,356
Ending balance of allowance:
Individually evaluated for impairment	$	2,291		$	1,060		$	384		$	334		$	72		$	4,514		$	—	$	8,655
Collectively evaluated for impairment	73,370			46,459			13,143			36,359			6,373			931			78,066		254,701
Loans and leases, excluding covered loans
Ending balance of loans and leases:
Loans and leases, excluding covered loans	$	4,468,177		$	1,902,862		$	3,603,058		$	415,241		$	733,567		$	146,779		$	—	$	11,269,684
Individually evaluated for impairment	14,431			25,790			12,476			81,604			4,249			6,938			—		145,488
Collectively evaluated for impairment	4,453,746			1,877,072			3,590,582			333,637			729,318			139,841			—		11,124,196

(1)

Includes lease financing loans.

(2)

Provision for credit losses in the allowance rollforward for the three months ended March 31, 2012 includes total transfers from the reserve for off-balance sheet credit commitments of $1.0 million. Provision for credit losses for the three months ended March 31, 2011 includes total transfers to the reserve for off-balance sheet credit commitments of $0.2 million. There was no other provision for credit losses recognized for the three months ended March 31, 2012 and 2011.

Off-balance sheet credit exposures include loan commitments and letters of credit. The following table provides a summary of activity in the reserve for off-balance sheet credit commitments for the three months ended March 31, 2012 and 2011:

	For the three months ended March 31,
(in thousands)	2012		2011
Balance, beginning of period	$	23,097	$	21,529
Transfers from allowance for loan and lease losses	970		178
Balance, end of period	$	24,067	21,707

Impaired Loans and Leases

Information on impaired loans, excluding covered loans, at March 31, 2012, December 31, 2011 and March 31, 2011 is provided in the following tables:

			Unpaid				For the three months ended March 31, 2012
(in thousands)	Recorded Investment		Contractual Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
March 31, 2012
With no related allowance recorded:
Commercial	$	27,822	$	36,069	$	—	$	18,988	$	—
Commercial real estate mortgages	14,008		19,022		—		16,938		69
Residential mortgages:
Fixed	2,666		3,194		—		3,080		—
Variable	6,567		7,240		—		5,128		—
Total residential mortgages	9,233		10,434		—		8,208		—
Real estate construction:
Construction	21,045		34,381		—		24,240		116
Land	24,090		27,340		—		26,541		—
Total real estate construction	45,135		61,721		—		50,781		116
Equity lines of credit	6,035		7,185		—		5,688		—
Installment:
Consumer	550		927		—		604		—
Total installment	550		927		—		604		—
Lease financing	—		—		—		14		—
Total with no related allowance	$	102,783	$	135,358	$	—	$	101,221	$	185
With an allowance recorded:
Commercial	$	12,593	$	17,643	$	3,335	$	14,110	$	—
Commercial real estate mortgages	8,298		8,715		1,019		9,555		—
Residential mortgages:
Fixed	2,341		2,367		287		1,428		—
Variable	1,426		1,476		44		1,438		—
Total residential mortgages	3,767		3,843		331		2,866		—
Real estate construction:
Land	22,551		34,312		9,395		20,968		—
Total real estate construction	22,551		34,312		9,395		20,968		—
Equity lines of credit	945		985		38		1,119		—
Total with an allowance	$	48,154	$	65,498	$	14,118	$	48,618	$	—
Total impaired loans by type:
Commercial	$	40,415	$	53,712	$	3,335	$	33,098	$	—
Commercial real estate mortgages	22,306		27,737		1,019		26,493		69
Residential mortgages	13,000		14,277		331		11,074		—
Real estate construction	67,686		96,033		9,395		71,749		116
Equity lines of credit	6,980		8,170		38		6,807		—
Installment	550		927		—		604		—
Lease financing	—		—		—		14		—
Total impaired loans	$	150,937	$	200,856	$	14,118	$	149,839	$	185

			Unpaid
			Contractual
	Recorded		Principal		Related
(in thousands)	Investment		Balance (1)		Allowance
December 31, 2011
With no related allowance recorded:
Commercial	$	10,153	$	11,588	$	—
Commercial real estate mortgages	19,867		23,983		—
Residential mortgages:
Fixed	3,493		4,035		—
Variable	3,689		4,000		—
Total residential mortgages	7,182		8,035		—
Real estate construction:
Construction	27,435		40,605		—
Land	28,991		32,335		—
Total real estate construction	56,426		72,940		—
Equity lines of credit	5,341		6,325		—
Installment:
Consumer	658		976		—
Total installment	658		976		—
Lease financing	28		5,225		—
Total with no related allowance	$	99,655	$	129,072	$	—
With an allowance recorded:
Commercial	$	15,627	$	21,377	$	7,135
Commercial real estate mortgages	10,811		11,215		1,551
Residential mortgages:
Fixed	515		535		40
Variable	1,449		1,476		68
Total residential mortgages	1,964		2,011		108
Real estate construction:
Land	19,385		29,381		4,377
Total real estate construction	19,385		29,381		4,377
Equity lines of credit	1,292		1,461		91
Total with an allowance	$	49,079	$	65,445	$	13,262
Total impaired loans by type:
Commercial	$	25,780	$	32,965	$	7,135
Commercial real estate mortgages	30,678		35,198		1,551
Residential mortgages	9,146		10,046		108
Real estate construction	75,811		102,321		4,377
Equity lines of credit	6,633		7,786		91
Installment	658		976		—
Lease financing	28		5,225		—
Total impaired loans	$	148,734	$	194,517	$	13,262

(1)   The table has been revised to present unpaid contractual principal balances, whereas the Company had previously disclosed unpaid contractual principal balances that were net of charge-offs.

			Unpaid				For the three months ended March 31, 2011
(in thousands)	Recorded Investment		Contractual Principal Balance (1)		Related Allowance		Average Recorded Investment		Interest Income Recognized
March 31, 2011
With no related allowance recorded:
Commercial	$	6,400	$	15,721	$	—	$	6,848	$	—
Commercial real estate mortgages	18,491		24,047		—		20,994		130
Residential mortgages:
Fixed	6,238		7,324		—		8,590		145
Variable	3,271		3,280		—		3,659		10
Total residential mortgages	9,509		10,604		—		12,249		155
Real estate construction:
Construction	49,258		83,788		—		62,518		230
Land	23,528		24,296		—		23,630		—
Total real estate construction	72,786		108,084		—		86,148		230
Equity lines of credit	3,292		3,830		—		3,149		—
Installment:
Commercial	—		—		—		569		—
Consumer	41		41		—		41		—
Total installment	41		41		—		610		—
Lease financing	1,108		6,243		—		554		99
Total with no related allowance	$	111,627	$	168,570	$	—	$	130,552	$	614
With an allowance recorded:
Commercial	$	6,923	$	16,314	$	2,291	$	7,745	$	—
Commercial real estate mortgages	7,299		8,386		1,060		13,219		—
Residential mortgages:
Fixed	1,553		1,549		103		1,060		—
Variable	1,414		1,508		281		1,424		—
Total residential mortgages	2,967		3,057		384		2,484		—
Real estate construction:
Construction	8,818		8,991		334		8,834		—
Total real estate construction	8,818		8,991		334		8,834		—
Equity lines of credit	957		963		72		1,412		3
Installment:
Commercial	6,897		7,417		4,514		3,448		—
Total installment	6,897		7,417		4,514		3,448		—
Total with an allowance	$	33,861	$	45,128	$	8,655	$	37,142	$	3
Total impaired loans by type:
Commercial	$	13,323	$	32,035	$	2,291	$	14,593	$	—
Commercial real estate mortgages	25,790		32,433		1,060		34,213		130
Residential mortgages	12,476		13,661		384		14,733		155
Real estate construction	81,604		117,075		334		94,982		230
Equity lines of credit	4,249		4,793		72		4,561		3
Installment	6,938		7,458		4,514		4,058		—
Lease financing	1,108		6,243		—		554		99
Total impaired loans	$	145,488	$	213,698	$	8,655	$	167,694	$	617

(1)   The table has been revised to present unpaid contractual principal balances, whereas the Company had previously disclosed unpaid contractual principal balances that were net of charge-offs.

Additional detail on the components of impaired loans, excluding covered loans, is provided below:

(in thousands)	March 31, 2012		December 31, 2011
Nonaccrual loans (1)	$	104,441	$	101,873
Troubled debt restructured loans on accrual	46,111		46,647
Deferred fees, accrued interest, and premiums and discounts, net	385		214
Total recorded investment in impaired loans, excluding covered loans	$	150,937	$	148,734

(1) Impaired loans exclude $8.4 million and $10.2 million of nonaccrual loans under $500,000 that are not individually evaluated for impairment at March 31, 2011 and December 31, 2011, respectively.

Impaired loans at March 31, 2012 and December 31, 2011 included $46.1 million and $46.6 million, respectively, of restructured loans that are on accrual status. With the exception of restructured loans on accrual status and a limited number of loans on cash basis nonaccrual for which the full collection of principal and interest is expected, interest income is not recognized on impaired loans until the principal balance of these loans is paid off.

Troubled Debt Restructured Loans

The following table provides a summary of loans modified in a troubled debt restructuring during the three months ended March 31, 2012:

	For the three months ended March 31, 2012
(in thousands)	Number of Contracts	Pre-Modification Outstanding Principal		Period-End Outstanding Principal		Financial Effects (1)
Commercial	5	$	16,982	$	16,903	$	—
Residential mortgages:
Fixed	1	655		655		—
Real estate construction:
Construction	1	5,532		5,532		—
Total troubled debt restructured loans	7	$	23,169	$	23,090	$	—

(1) Financial effects are comprised of charge-offs and specific reserves recognized on TDR loans at modification date.

The following table provides a summary of troubled debt restructured (“TDR”) loans that subsequently defaulted during the three months ended March 31, 2012, that had been modified as a troubled debt restructuring during the 12 months prior to their default:

(in thousands)	Number of Contracts	Period-End Outstanding Principal		Period-End Specific Reserve
Commercial	1	$	26	$	10
Real estate construction:
Land	2	6,339		3,318
Total TDR loans that subsequently defaulted	3	$	6,365	$	3,328

A restructuring constitutes a troubled debt restructuring when a lender, for reasons related to a borrower’s financial difficulties, grants a concession to the borrower it would not otherwise consider. Loans with pre-modification outstanding balances totaling $23.2 million were modified in troubled debt restructurings during the three months ended March 31, 2012. The concessions granted in the restructurings completed in 2012 largely consisted of interest rate concessions on commercial and construction loans. The unpaid principal balance of TDR loans was $88.1 million, before specific reserves of $4.5 million, at March 31, 2012 and $89.4 million, before specific reserves of $1.7 million, at December 31, 2011. Loans modified in troubled debt restructurings are impaired loans at the time of restructuring and subject to the same measurement criteria as all other impaired loans.

During the three months ended March 31, 2012, two land loans and one commercial loan that had been restructured within the preceding 12 months were not performing in accordance with their new terms. One land loan comprises the majority of the $6.4 million balance of restructured loans that subsequently defaulted. This loan went into technical default when the borrower failed to sell the collateral by the date specified in the restructuring agreement. All other TDR loans were performing in accordance with their restructured terms at March 31, 2012. As of March 31, 2012, there were no commitments to lend additional funds on restructured loans.

Past Due and Nonaccrual Loans and Leases

Loans are considered past due following the date when either interest or principal is contractually due and unpaid. The following tables provide a summary of past due and nonaccrual loans, excluding covered loans, at March 31, 2012 and December 31, 2011 based upon the length of time the loans have been past due:

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days and Accruing		Nonaccrual		Total Past Due and Nonaccrual Loans		Current		Total Loans and Leases
March 31, 2012
Commercial	$	10,267	$	980	$	7	$	19,584	$	30,838	$	5,144,558	$	5,175,396
Commercial real estate mortgages	3,953		—		—		21,071		25,024		2,188,090		2,213,114
Residential mortgages:
Fixed	525		—		379		5,657		6,561		1,531,537		1,538,098
Variable	—		1,519		—		7,971		9,490		2,258,219		2,267,709
Total residential mortgages	525		1,519		379		13,628		16,051		3,789,756		3,805,807
Real estate construction:
Construction	—		—		—		15,453		15,453		206,184		221,637
Land	16,288		—		—		33,511		49,799		41,973		91,772
Total real estate construction	16,288		—		—		48,964		65,252		248,157		313,409
Equity lines of credit	248		74		268		8,831		9,421		706,576		715,997
Installment:
Commercial	—		—		—		—		—		489		489
Consumer	137		400		—		729		1,266		124,038		125,304
Total installment	137		400		—		729		1,266		124,527		125,793
Lease financing	—		—		—		—		—		398,386		398,386
Total	$	31,418	$	2,973	$	654	$	112,807	$	147,852	$	12,600,050	$	12,747,902

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days and Accruing		Nonaccrual		Total Past Due and Nonaccrual Loans		Current		Total Loans and Leases
December 31, 2011
Commercial	$	6,817	$	1,003	$	—	$	19,888	$	27,708	$	4,818,886	$	4,846,594
Commercial real estate mortgages	5,838		—		—		21,948		27,786		2,082,963		2,110,749
Residential mortgages:
Fixed	662		525		379		5,572		7,138		1,574,658		1,581,796
Variable	—		2,983		—		4,199		7,182		2,174,240		2,181,422
Total residential mortgages	662		3,508		379		9,771		14,320		3,748,898		3,763,218
Real estate construction:
Construction	—		—		—		15,582		15,582		202,279		217,861
Land	—		—		—		35,294		35,294		62,454		97,748
Total real estate construction	—		—		—		50,876		50,876		264,733		315,609
Equity lines of credit	—		—		74		8,669		8,743		732,338		741,081
Installment:
Commercial	—		—		—		4		4		601		605
Consumer	150		—		—		870		1,020		131,022		132,042
Total installment	150		—		—		874		1,024		131,623		132,647
Lease financing	—		—		—		—		—		399,487		399,487
Total	$	13,467	$	4,511	$	453	$	112,026	$	130,457	$	12,178,928	$		12,309,385

Credit Quality Monitoring

The Company closely monitors and assesses credit quality and credit risk in the loan and lease portfolio on an ongoing basis. Loan risk classifications are continuously reviewed and updated. The following tables provide a summary of the loan and lease portfolio, excluding covered loans, by loan type and credit quality classification as of March 31, 2012 and December 31, 2011. Nonclassified loans generally include those loans that are expected to be repaid in accordance with contractual loan terms. Classified loans are those loans that are classified as substandard or doubtful consistent with regulatory guidelines.

	March 31, 2012						December 31, 2011
(in thousands)	Nonclassified		Classified		Total		Nonclassified		Classified		Total
Commercial	$	5,068,902	$	106,494	$	5,175,396	$	4,732,663	$	113,931	$	4,846,594
Commercial real estate mortgages	2,080,452		132,662		2,213,114		1,930,001		180,748		2,110,749
Residential mortgages:
Fixed	1,526,029		12,069		1,538,098		1,565,420		16,376		1,581,796
Variable	2,257,505		10,204		2,267,709		2,163,458		17,964		2,181,422
Total residential mortgages	3,783,534		22,273		3,805,807		3,728,878		34,340		3,763,218
Real estate construction:
Construction	165,761		55,876		221,637		147,916		69,945		217,861
Land	39,579		52,193		91,772		43,717		54,031		97,748
Total real estate construction	205,340		108,069		313,409		191,633		123,976		315,609
Equity lines of credit	700,363		15,634		715,997		724,045		17,036		741,081
Installment:
Commercial	489		—		489		601		4		605
Consumer	124,094		1,210		125,304		130,921		1,121		132,042
Total installment	124,583		1,210		125,793		131,522		1,125		132,647
Lease financing	395,497		2,889		398,386		396,256		3,231		399,487
Total	$	12,358,671	$	389,231	$	12,747,902	$	11,834,998	$	474,387	$	12,309,385

Credit Quality on Covered Loans

The following is a summary of activity in the allowance for loan losses on covered loans:

	For the three months ended March 31,
(in thousands)	2012			2011
Balance, beginning of period	$	64,565		$	67,389
Provision for losses	7,466			19,116
Reduction in allowance due to loan removals	(10,560		)	(4,489		)
Balance, end of period	$	61,471		$	82,016

The allowance for loan losses on covered loans was $61.5 million, $64.6 million and $82.0 million as of March 31, 2012, December 31, 2011 and March 31, 2011, respectively. The Company recorded provision expense of $7.5 million and $19.1 million on covered loans for the three months ended March 31, 2012 and 2011, respectively. The Company updates its cash flow projections for covered loans accounted for under ASC 310-30 on a quarterly basis, and may recognize provision expense and an allowance for loan losses as a result of that analysis. The loss on covered loans is the result of changes in expected cash flows, both amount and timing, due to loan payments and the Company’s revised loss forecasts, though overall estimated credit losses decreased as compared with previous expectations. The revisions of the loss forecasts were based on the results of management’s review of the credit quality of the outstanding covered loans and the analysis of the loan performance data since the acquisition of covered loans. The allowance for loan losses on covered loans is reduced for any loan removals. A loan is removed when it has been fully paid-off, fully charged off, sold or transferred to OREO.

Covered loans accounted for under ASC 310-30 are generally considered accruing and performing loans as the loans accrete interest income over the estimated life of the loan when cash flows are reasonably estimable. Accordingly, acquired impaired loans that are contractually past due are still considered to be accruing and performing loans. If the timing and amount of future cash flows is not reasonably estimable, the loans may be classified as nonaccrual loans and interest income is not recognized until the timing and amount of future cash flows can be reasonably estimated. At March 31, 2012 and December 31, 2011, there were no acquired impaired covered loans accounted for under ASC 310-30 that were on nonaccrual status. Of the population of covered loans that are accounted for outside the scope of ASC 310-30, the Company had $0.4 million of acquired covered loans that were on nonaccrual status and were considered to be impaired as of March 31, 2012 and December 31, 2011.

At March 31, 2012, covered loans that were 30 to 89 days delinquent totaled $59.4 million and covered loans that were 90 days or more past due on accrual status totaled $265.2 million. At December 31, 2011, covered loans that were 30 to 89 days delinquent totaled $49.1 million and covered loans that were 90 days or more past due on accrual status totaled $330.2 million.

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Borrowed Funds (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012 Y	Dec. 31, 2011
Short-term borrowings
Federal funds purchased	$ 10,000	$ 50,000
Total short-term borrowings	222,776	50,000
Long-term debt
Long-term debt	482,024	697,778
5.125% Senior Notes Due February 2013 | City National Corporation
Short-term borrowings
Current portion of senior notes	212,776
Long-term debt
Long-term debt		215,848
Fixed interest rate (as a percent)	5.125%	5.125%
5.25% Senior Notes Due September 2020 | City National Corporation
Long-term debt
Long-term debt	297,385	297,308
Fixed interest rate (as a percent)	5.25%	5.25%
9.00% Subordinated Notes Due July 2019 | City National Bank
Long-term debt
Long-term debt	49,727	49,718
Fixed interest rate (as a percent)	9.00%	9.00%
Interest rate for initial period (as a percent)	9.00%
Initial interest rate period (in years)	5
9.00% Subordinated Notes Due July 2019 | City National Bank | LIBOR
Long-term debt
Variable rate basis	LIBOR
Basis spread after initial period (as a percent)	6.00%
9.00% Subordinated Notes Due July 2019 | City National Bank | Prime rate
Long-term debt
Variable rate basis	Prime rate
Basis spread after initial period (as a percent)	5.00%
9.00% Subordinated Notes Due August 2019 | City National Bank
Long-term debt
Long-term debt	74,862	74,858
Fixed interest rate (as a percent)	9.00%	9.00%
Fixed and Floating Subordinated Notes due August 2019 | City National Bank
Long-term debt
Long-term debt	54,899	54,895
Variable rate basis	three-month LIBOR
Frequency to reset interest rate	Quarterly
Interest rate cap (as a percent)	10.00%
Interest rate for initial period (as a percent)	9.00%
Initial interest rate period (in years)	5
Basis spread after initial period (as a percent)	6.00%
Floating Rate Securities Due November 2034 | Business Bancorp Capital Trust I
Long-term debt
Long-term debt	$ 5,151	$ 5,151
Variable rate basis	three-month LIBOR
Frequency to reset interest rate	Quarterly
Basis spread (as a percent)	1.965%
Interest rate as of reporting date (as a percent)	2.46%

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Securities

3 Months Ended

Mar. 31, 2012

Securities

Securities

Note 4. Securities

At March 31, 2012, the Company had total securities of $7.92 billion, comprised of securities available-for-sale at fair value of $6.84 billion, securities held-to-maturity at amortized cost of $996.6 million and trading securities at fair value of $82.6 million. At December 31, 2011, the Company had total securities of $8.10 billion, comprised of securities available-for-sale at fair value of $7.57 billion, securities held-to-maturity at amortized cost of $467.7 million and trading securities at fair value of $62.0 million.

The following is a summary of amortized cost and estimated fair value for the major categories of securities available-for-sale and securities held-to-maturity at March 31, 2012 and December 31, 2011:

			Gross		Gross
	Amortized		Unrealized		Unrealized
(in thousands)	Cost		Gains		Losses			Fair Value
March 31, 2012
Securities available-for-sale:
U.S. Treasury	$	19,217	$	8	$	(23	)	$	19,202
Federal agency - Debt	1,046,035		5,348		(35		)	1,051,348
Federal agency - MBS	690,183		30,580		(173		)	720,590
CMOs - Federal agency	4,304,148		97,498		(1,328		)	4,400,318
CMOs - Non-agency	74,737		809		(6,959		)	68,587
State and municipal	378,541		17,379		(197		)	395,723
Other debt securities	185,968		3,417		(7,593		)	181,792
Total debt securities	6,698,829		155,039		(16,308		)	6,837,560
Equity securities and mutual funds	352		798		—			1,150
Total securities available-for-sale	$	6,699,181	$	155,837	$	(16,308	)	$	6,838,710
Securities held-to-maturity (1):
Federal agency - Debt	$	104,268	$	394	$	(66	)	$	104,596
Federal agency - MBS	173,380		1,794		(427		)	174,747
CMOs - Federal agency	590,931		2,496		(3,918		)	589,509
State and municipal	128,034		1,431		(1,862		)	127,603
Total securities held-to-maturity	$	996,613	$	6,115	$	(6,273	)	$	996,455
December 31, 2011
Securities available-for-sale:
U.S. Treasury	$	19,163	$	24	$	(5	)	$	19,182
Federal agency - Debt	1,967,928		6,230		(296		)	1,973,862
Federal agency - MBS	650,091		31,040		(87		)	681,044
CMOs - Federal agenc	4,239,205		89,926		(2,224		)	4,326,907
CMOs - Non-agency	79,999		322		(11,320		)	69,001
State and municipal	383,210		18,767		(373		)	401,604
Other debt securities	106,051		1,896		(8,873		)	99,074
Total debt securities	7,445,647		148,205		(23,178		)	7,570,674
Equity securities and mutual funds	352		875		—			1,227
Total securities available-for-sale	$	7,445,999	$	149,080	$	(23,178	)	$	7,571,901
Securities held-to-maturity (1):
Federal agency - Debt	$	40,423	$	780	$	—		$	41,203
Federal agency - MBS	75,231		1,632		—			76,863
CMOs - Federal agency	292,547		2,580		(195		)	294,932
State and municipal	59,479		1,463		(37		)	60,905
Total securities held-to-maturity	$	467,680	$	6,455	$	(232	)	$	473,903

(1) Securities held-to-maturity are presented in the consolidated balance sheets at amortized cost.

Proceeds from sales of securities available-for-sale were $5.2 million and $6.1 million for the three months ended March 31, 2012 and 2011, respectively. There were no sales of securities held-to-maturity during the three months ended March 31, 2012. The following table provides the gross realized gains and losses on the sales and calls of securities:

	For the three months ended
	March 31,
(in thousands)	2012			2011
Gross realized gains	$	496		$	160
Gross realized losses	(47		)	(30		)
Net realized gains	$	449		$	130

Interest income on securities (including trading securities) for the three months ended March 31, 2012 and 2011 is comprised of: (i) taxable interest income of $41.5 million and $34.3 million, respectively (ii) nontaxable interest income of $3.8 million and $2.9 million, respectively, and (iii) dividend income of $0.1 million and $0.2 million, respectively.

The following table provides the expected remaining maturities of debt securities included in the securities portfolio at March 31, 2012. The maturities of mortgage-backed securities are allocated according to the average life of expected cash flows. Average expected maturities will differ from contractual maturities because of the amortizing nature of the loan collateral and prepayment behavior of borrowers.

(in thousands)	One year or less		Over 1 year through 5 years		Over 5 years through 10 years		Over 10 years		Total
Securities available-for-sale:
U.S. Treasury	$	10,013	$	9,189	$	—	$	—	$	19,202
Federal agency - Debt	847,374		203,974		—		—		1,051,348
Federal agency - MBS	14		447,143		273,433		—		720,590
CMOs - Federal agency	181,389		4,040,298		178,631		—		4,400,318
CMOs - Non-agency	8,286		33,100		27,201		—		68,587
State and municipal	53,996		209,947		80,836		50,944		395,723
Other	3,383		136,042		42,367		—		181,792
Total debt securities available-for-sale	$	1,104,455	$	5,079,693	$	602,468	$	50,944	$	6,837,560
Amortized cost	$	1,099,279	$	4,965,611	$	583,091	$	50,848	$	6,698,829
Securities held-to-maturity:
Federal agency - Debt	$	10,950	$	33,669	$	—	$	59,649	$	104,268
Federal agency - MBS	—		—		173,380		—		173,380
CMOs - Federal agency	—		45,373		545,558		—		590,931
State and municipal	—		8,259		79,468		40,307		128,034
Total debt securities held-to-maturity at amortized cost	$	10,950	$	87,301	$	798,406	$	99,956	$	996,613

Impairment Assessment

The Company performs a quarterly assessment of the debt and equity securities in its investment portfolio that have an unrealized loss to determine whether the decline in the fair value of these securities below their cost is other-than-temporary. Impairment is considered other-than-temporary when it becomes probable that an investor will be unable to recover the cost of an investment. The Company’s impairment assessment takes into consideration factors such as the length of time and the extent to which the market value has been less than cost; the financial condition and near-term prospects of the issuer, including events specific to the issuer or industry; defaults or deferrals of scheduled interest, principal or dividend payments; external credit ratings and recent downgrades; and whether the Company intends to sell the security and whether it is more likely than not it will be required to sell the security prior to recovery of its amortized cost basis. If a decline in fair value is judged to be other than temporary, the cost basis of the individual security is written down to fair value which then becomes the new cost basis. The new cost basis is not adjusted for subsequent recoveries in fair value.

When there are credit losses associated with an impaired debt security and the Company does not have the intent to sell the security and it is more likely than not that it will not have to sell the security before recovery of its cost basis, the Company will separate the amount of the impairment into the amount that is credit-related and the amount related to non-credit factors. The credit-related impairment is recognized in Net impairment loss recognized in earnings in the consolidated statements of income. The non-credit-related impairment is recognized in AOCI.

Securities Deemed to be Other-Than-Temporarily Impaired

The Company determined through its impairment assessment process that none of the securities held had a credit loss impairment at March 31, 2012. Accordingly, there were no impairment losses recognized in earnings on securities available-for-sale for the three months ended March 31, 2012. The Company recognized an impairment loss of $0.2 million in earnings related to non-agency CMOs for the three months ended March 31, 2011. The Company recognized $2.4 million and $4.3 million of non-credit-related other-than-temporary impairment in AOCI on securities available-for-sale at March 31, 2012 and 2011, respectively. There were no impairment losses recognized in earnings or AOCI for securities held-to-maturity during the three months ended March 31, 2012.

The following table summarizes the changes in cumulative credit-related other-than-temporary impairment recognized in earnings for debt securities for the three months ended March 31, 2012 and 2011. Credit-related other-than-temporary impairment that was recognized in earnings is reflected as an “Initial credit-related impairment” if the period reported is the first time the security had a credit impairment. A credit-related other-than-temporary impairment is reflected as a “Subsequent credit-related impairment” if the period reported is not the first time the security had a credit impairment. Cumulative impairment is reduced for securities with previously recognized credit-related impairment that were sold during the period. Cumulative impairment is further reduced for increases in expected cash flows.

	For the three months ended
	March 31,
(in thousands)	2012			2011
Balance, beginning of period	$	17,531		$	17,923
Subsequent credit-related impairment	—			164
Net increase in expected cash flows on securities for which OTTI was previously recognized	(162		)	(537		)
Balance, end of period	$	17,369		$	17,550

Non-Agency CMOs

The Company held $44.7 million of variable rate non-agency CMOs at March 31, 2012. These CMOs have a fixed interest rate for an initial period after which they become variable-rate instruments with annual rate resets. The variable rate non-agency securities held include $10.8 million of securities that had non-credit-related impairment recognized in AOCI. There were no credit-related impairment losses recognized in earnings in the first quarter of 2012. The non-credit portion of other-than-temporary impairment for these securities at March 31, 2012 was recognized in AOCI, and is attributed to external market conditions, primarily the lack of liquidity in these securities, and increases in interest rates. The Company recognized credit-related impairment losses in earnings on its investments in certain variable rate non-agency CMOs totaling $0.2 million in the first quarter of 2011. The Company also holds $23.9 million in fixed rate non-agency CMOs at March 31, 2012, none of which have experienced any other-than-temporary impairment.

The following table provides a summary of the gross unrealized losses and fair value of investment securities that are not deemed to be other-than-temporarily impaired aggregated by investment category and length of time that the securities have been in a continuous unrealized loss position as of March 31, 2012 and December 31, 2011. The table also includes investment securities that had both a credit-related impairment recognized in earnings and a non-credit-related impairment recognized in AOCI.

	Less than 12 months				12 months or greater				Total
(in thousands)	Fair Value		Estimated Unrealized Loss		Fair Value		Estimated Unrealized Loss		Fair Value		Estimated Unrealized Loss
March 31, 2012
Securities available-for-sale:
U.S. Treasury	$	9,189	$	23	$	—	$	—	$	9,189	$	23
Federal agency - Debt	45,807		35		—		—		45,807		35
Federal agency - MBS	44,771		173		—		—		44,771		173
CMOs - Federal agency	368,373		1,328		—		—		368,373		1,328
CMOs - Non-agency	9,795		16		34,099		6,943		43,894		6,959
State and municipal	4,795		64		2,010		133		6,805		197
Other debt securities	29,225		199		15,626		7,394		44,851		7,593
Total securities available-for-sale	$	511,955	$	1,838	$	51,735	$	14,470	$	563,690	$	16,308
Securities held-to-maturity:
Federal agency - Debt	$	9,935	$	66	$	—	$	—	$	9,935	$	66
Federal agency - MBS	76,985		427		—		—		76,985		427
CMOs - Federal agency	358,386		3,918		—		—		358,386		3,918
State and municipal	66,525		1,862		—		—		66,525		1,862
Total securities held-to-maturity	$	511,831	$	6,273	$	—	$	—	$	511,831	$	6,273
December 31, 2011
Securities available-for-sale:
U.S. Treasury	$	4,145	$	5	$	—	$	—	$	4,145	$	5
Federal agency - Debt	409,129		296		—		—		409,129		296
Federal agency - MBS	24,519		87		—		—		24,519		87
CMOs - Federal agency	744,737		2,224		—		—		744,737		2,224
CMOs - Non-agency	20,094		833		31,400		10,487		51,494		11,320
State and municipal	42,164		268		2,023		105		44,187		373
Other debt securities	34,153		508		14,718		8,365		48,871		8,873
Total securities available-for-sale	$	1,278,941	$	4,221	$	48,141	$	18,957	$	1,327,082	$	23,178
Securities held-to-maturity:
CMOs - Federal agency	$	32,256	$	195	$	—	$	—	$	32,256	$	195
State and municipal	5,784		37		—		—		5,784		37
Total securities held-to-maturity	$	38,040	$	232	$	—	$	—	$	38,040	$	232

At March 31, 2012, the Company had $563.7 million of securities available-for-sale in an unrealized loss position, consisting of $552.9 million of temporarily impaired securities and $10.8 million of securities that had non-credit-related impairment recognized in AOCI. The Company had $511.8 million of securities held-to-maturity in an unrealized loss position. At March 31, 2012, the Company had 175 debt securities available-for-sale and held-to-maturity in an unrealized loss position. The debt securities in an unrealized loss position include 3 U.S. Treasury securities, 3 federal agency debt securities, 10 federal agency MBS, 36 federal agency CMOs, 10 non-agency CMOs, 109 state and municipal securities and 4 other debt securities.

The unrealized loss on non-agency CMOs reflects the lack of liquidity in this sector of the market. The Company only holds the most senior tranches of each non-agency issue which provides protection against defaults. The Company expects to receive principal and interest payments equivalent to or greater than the current cost basis of its portfolio of debt securities. Additionally, the Company does not intend to sell the securities, and it is not more likely than not that it will be required to sell the securities before it recovers the cost basis of its investment. The mortgages in these asset pools are relatively large and have been made to borrowers with strong credit history and significant equity invested in their homes. They are well diversified geographically. Over the past year, the real estate market has stabilized somewhat, though performance varies substantially by geography and borrower. Though reduced, a significant weakening of economic fundamentals coupled with a return to elevated unemployment rates and substantial deterioration in the value of high-end residential properties could increase the probability of default and related credit losses. These conditions could cause the value of these securities to decline and trigger the recognition of further other-than-temporary impairment charges.

Other debt securities include the Company’s investments in highly rated corporate debt and collateralized bond obligations backed by trust preferred securities (“CDOs”) issued by a geographically diverse pool of small- and medium-sized financial institutions. The CDOs held in securities available-for-sale at March 31, 2012 are the most senior tranches of each issue. Trading activity for the type of CDO held by the Company has been limited since 2008. Accordingly, the fair values of these securities were determined using an internal pricing model that incorporates assumptions about discount rates in an illiquid market, projected cash flows and collateral performance. The CDOs had a $7.3 million net unrealized loss at March 31, 2012, which the Company attributes to the illiquid credit markets. The CDOs have collateral that well exceeds the outstanding debt. Security valuations reflect the current and prospective performance of the issuers whose debt is contained in these asset pools. The Company expects to receive all contractual principal and interest payments due on its CDOs. Additionally, the Company does not intend to sell the securities, and it is not more likely than not that it will be required to sell the securities before it recovers the cost basis of its investment.

At December 31, 2011, the Company had $1.33 billion of securities available-for-sale in an unrealized loss position consisting of $1.32 billion of temporarily impaired securities and $9.2 million of securities that had non-credit-related impairment recognized in AOCI. The Company had $38.0 million of securities held-to-maturity in an unrealized loss position. At December 31, 2011, the Company had 90 debt securities available-for-sale and held-to-maturity in an unrealized loss position. The debt securities in an unrealized loss position included 2 U.S. Treasury securities, 12 federal agency debt securities, 3 federal agency MBS, 36 federal agency CMOs, 12 non-agency CMOs, 19 state and municipal securities and 6 other debt securities.

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Other Investments

3 Months Ended

Mar. 31, 2012

Other Investments

Other Investments

Note 5. Other Investments

Federal Home Loan Bank of San Francisco and Federal Reserve Bank Stock

The Company’s investment in stock issued by the Federal Home Loan Bank of San Francisco (“FHLB”) and Federal Reserve Bank (“FRB”) totaled $103.8 million and $107.4 million at March 31, 2012 and December 31, 2011, respectively. Ownership of government agency securities is restricted to member banks, and the securities do not have readily determinable market values. The Company records investments in FHLB and FRB stock at cost in Other assets of the consolidated balance sheets and evaluates these investments for impairment. The Company expects to recover the full amount invested in FHLB and FRB stock and does not consider its investments to be impaired at March 31, 2012.

Private Equity and Alternative Investments

The Company has ownership interests in a limited number of private equity, venture capital, real estate and hedge funds that are not publicly traded and do not have readily determinable fair values. These investments are carried at cost in the Other assets section of the consolidated balance sheets and are net of impairment write-downs, if applicable. The Company’s investments in these funds totaled $40.1 million at March 31, 2012 and $39.9 million at December 31, 2011. A summary of investments by fund type is provided below:

(in thousands)	March 31,		December 31,
Fund Type	2012		2011
Private equity and venture capital	$	23,271	$	23,093
Real estate	10,551		10,541
Hedge	2,883		2,883
Other	3,378		3,402
Total	$	40,083	$	39,919

Management reviews these investments quarterly for impairment. The impairment assessment includes a review of the most recent financial statements and investment reports for each fund and discussions with fund management. An impairment loss is recognized if it is deemed probable that the Company will not recover the cost of an investment. The impairment loss is recognized in Other noninterest income in the consolidated statements of income. The new cost basis of the investment is not adjusted for subsequent recoveries in value. The Company recognized impairment losses totaling $0.1 million on its investments during the three months ended March 31, 2012. No impairment losses were recognized on these investments during the three months ended March 31, 2011.

The table below provides information as of March 31, 2012 on private equity and alternative investments measured at fair value on a nonrecurring basis due to the recognition of impairment:

Alternative Investments Measured at Fair Value on a Nonrecurring Basis

(in thousands) Fund Type	Fair Value		Unfunded Commitments		Redemption Frequency	Redemption Notice Period
Private equity and venture capital (2)	$	258	$	—	None (1)	N/A

(1)	Funds make periodic distributions of income but do not permit redemptions prior to the end of the investment term.
(2)	Funds invest in securities and other instruments of public and private companies, including corporations, partnerships, limited liability companies and joint ventures.

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Other Real Estate Owned

3 Months Ended

Mar. 31, 2012

Other Real Estate Owned

Other Real Estate Owned

Note 7. Other Real Estate Owned

The following table provides a summary of OREO activity for the three months ended March 31, 2012 and 2011:

	For the three months ended March 31, 2012									For the three months ended March 31, 2011
(in thousands)	Non-Covered OREO			Covered OREO			Total			Non-Covered OREO			Covered OREO			Total
Balance, beginning of period	$	30,790		$	98,550		$	129,340		$	57,317		$	120,866		$	178,183
Additions	2,217			6,075			8,292			6,562			27,577			34,139
Sales	(2,877		)	(18,362		)	(21,239		)	(6,064		)	(18,317		)	(24,381		)
Valuation adjustments	(1,056		)	(7,807		)	(8,863		)	(1,473		)	(8,304		)	(9,777		)
Balance, end of period	$	29,074		$	78,456		$	107,530		$	56,342		$	121,822		$	178,164

At March 31, 2012, OREO was $107.5 million and included $78.5 million of covered OREO. At December 31, 2011, OREO was $129.3 million and included $98.6 million of covered OREO. The balance of OREO at March 31, 2012 and December 31, 2011 is net of valuation allowances of $36.4 million and $37.4 million, respectively.

Covered OREO expenses and valuation write-downs are recorded in the noninterest expense section of the consolidated statements of income. Under the loss-sharing agreements, 80 percent of eligible covered OREO expenses and valuation write-downs are reimbursable to the Company from the FDIC. The portion of these expenses that is reimbursable is recorded in FDIC loss sharing income (expense), net in the noninterest income section of the consolidated statements of income.

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Share-Based Compensation (Details 2) (Stock options, USD $)	3 Months Ended
	Mar. 31, 2012 Y	Mar. 31, 2011
Stock options
Summary of option activity and related information
Number of Options Outstanding, beginning of the period (in shares)	4,990,000
Number of options granted (in shares)	603,000
Number of options exercised (in shares)	(59,000)
Number of options forfeited or expired (in shares)	(460,000)
Number of Options Outstanding, end of the period (in shares)	5,074,000
Weighted Average Exercise Price of Options Outstanding, beginning of the period (in dollars per share)	$ 52.61
Weighted Average Exercise Price of Options Granted (in dollars per share)	$ 46.66
Weighted Average Exercise Price of Options Exercised (in dollars per share)	$ 34.24
Weighted Average Exercise Price of Options Forfeited or expired (in dollars per share)	$ 50.83
Weighted Average Exercise Price of Options Outstanding, end of the period (in dollars per share)	$ 52.28
Outstanding Aggregate Intrinsic Value of in-the-money Options	$ 265,246,000
Weighted Average Remaining Contractual Term Outstanding (in years)	5.96
Number of Options Exercisable (in shares)	3,443,000
Weighted Average Exercise Price of options exercisable (in dollars per share)	$ 54.54
Aggregate Intrinsic Value of in-the-money Options Exercisable	187,779,000
Weighted Average Remaining Contractual Term Exercisable (in years)	4.62
Share-based Compensation Arrangement by Share-based Payment Award, Options Unvested and related information
Unvested at the beginning of the period (in shares)	1,641,000
Granted (in shares)	603,000
Vested (in shares)	(599,119)	(580,636)
Forfeited (in shares)	(14,000)
Unvested at the end of the period (in shares)	1,631,000
Unvested at the beginning of the period (in dollars per share)	$ 13.57
Granted (in dollars per share)	$ 11.64	$ 18.43
Vested (in dollars per share)	$ 12.22
Forfeited (in dollars per share)	$ 13.43
Unvested at the end of the period (in dollars per share)	$ 13.35
Total fair value of options vested	7,300,000	6,800,000
Unrecognized compensation cost related to unvested stock options granted	$ 17,800,000
Period of recognition for unrecognized compensation cost related to unvested stock options granted (in years)	2.9

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Derivative Instruments (Details) (USD $)	Mar. 31, 2012	Dec. 31, 2011
Derivatives designated as hedging instruments
Derivative
Notional Amount	$ 205,900,000	$ 207,400,000
Derivative Assets	8,100,000	9,800,000
Derivatives designated as hedging instruments | Deposits and borrowings
Derivative
Derivative Assets	7,100,000	8,800,000
Derivatives designated as hedging instruments | Fair Value Hedge | Interest Rate Swaps
Derivative
Mark-to-market asset	7,100,000	8,800,000
Net interest receivable	1,000,000	1,000,000
Derivatives designated as hedging instruments | Fair Value Hedge | Interest Rate Swaps | Long-term and subordinated debt
Derivative
Notional Amount	205,900,000	207,400,000
Derivative Assets	8,100,000	9,800,000
Derivatives not designated as hedging instruments
Derivative
Notional Amount	2,088,600,000	1,957,000,000
Derivative Assets	51,900,000	54,500,000
Derivative Liabilities	51,700,000	55,000,000
Derivatives not designated as hedging instruments | Interest Rate Contracts
Derivative
Notional Amount	1,799,300,000	1,753,200,000
Derivative Assets	48,900,000	51,700,000
Derivative Liabilities	49,400,000	52,900,000
Derivatives not designated as hedging instruments | Interest Rate Swaps
Derivative
Notional Amount	1,551,400,000	1,482,100,000
Derivative Assets	48,600,000	51,300,000
Derivative Liabilities	49,100,000	52,500,000
Derivatives not designated as hedging instruments | Interest Rate Caps, Floors and Collars
Derivative
Notional Amount	243,900,000	267,100,000
Derivative Assets	100,000	300,000
Derivative Liabilities	100,000	300,000
Derivatives not designated as hedging instruments | Options purchased
Derivative
Notional Amount	2,000,000	2,000,000
Derivative Assets	200,000	100,000
Derivative Liabilities	200,000	100,000
Derivatives not designated as hedging instruments | Options written
Derivative
Notional Amount	2,000,000	2,000,000
Derivatives not designated as hedging instruments | Option contracts
Derivative
Derivative Assets	200,000	700,000
Derivatives not designated as hedging instruments | Foreign Exchange Contracts
Derivative
Notional Amount	289,300,000	203,800,000
Derivative Assets	2,800,000	2,100,000
Derivative Liabilities	2,300,000	2,100,000
Derivatives not designated as hedging instruments | Spot and forward contracts
Derivative
Notional Amount	277,700,000	203,800,000
Derivative Assets	2,700,000	2,100,000
Derivative Liabilities	2,200,000	2,100,000
Derivatives not designated as hedging instruments | Foreign exchange options purchased
Derivative
Notional Amount	5,800,000
Derivatives not designated as hedging instruments | Foreign exchange options written
Derivative
Notional Amount	5,800,000
Derivative Assets	100,000
Derivative Liabilities	$ 100,000

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Share-Based Compensation (Details) (USD $) Share data in Millions, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2012 plan	Mar. 31, 2011
Share-Based Compensation
Number of share-based compensation plans	1
Compensation cost recognized for share-based awards	$ 4,700,000	$ 4,700,000
Total income tax benefit recognized for share-based compensation arrangements	2,000,000	2,000,000
Cash received from the exercise of stock options	2,000,000	4,015,000
Actual tax benefit realized for the tax deductions from stock option exercises	400,000	1,000,000
Share-based compensation
Shares available for future grants	1.1
Stock options
Share-based compensation
Minimum vesting period (in years)	4 years
Expiration period (in years)	P10Y
Share-based compensation, fair value
Volatility look back period (in years)	20
Weighted-average volatility (as a percent)	30.58%	30.91%
Dividend yield (as a percent)	2.14%	1.46%
Expected term (in years)	6.11	6.04
Risk-free interest rate (as a percent)	1.44%	2.98%
Weighted-average grant-date fair values of options granted (in dollars per share)	$ 11.64	$ 18.43
Total intrinsic values of options exercised	$ 900,000	$ 2,300,000
Restricted stock
Share-based compensation
Minimum vesting period (in years)	3 years
Vesting Period for awards (in years)	5

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Other Real Estate Owned (Tables)

3 Months Ended

Mar. 31, 2012

Other Real Estate Owned

Summary of OREO activity

	For the three months ended March 31, 2012									For the three months ended March 31, 2011
(in thousands)	Non-Covered OREO			Covered OREO			Total			Non-Covered OREO			Covered OREO			Total
Balance, beginning of period	$	30,790		$	98,550		$	129,340		$	57,317		$	120,866		$	178,183
Additions	2,217			6,075			8,292			6,562			27,577			34,139
Sales	(2,877		)	(18,362		)	(21,239		)	(6,064		)	(18,317		)	(24,381		)
Valuation adjustments	(1,056		)	(7,807		)	(8,863		)	(1,473		)	(8,304		)	(9,777		)
Balance, end of period	$	29,074		$	78,456		$	107,530		$	56,342		$	121,822		$	178,164

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Securities (Details 4) (USD $)	Mar. 31, 2012	Dec. 31, 2011
Securities available-for-sale:
Securities available-for-sale, Fair Value, Less than 12 months	$ 511,955,000	$ 1,278,941,000
Securities available-for-sale, Estimated Unrealized Loss, Less than 12 months	1,838,000	4,221,000
Securities available-for-sale, Fair Value, 12 months or greater	51,735,000	48,141,000
Securities available-for-sale, Estimated Unrealized Loss, 12 months or greater	14,470,000	18,957,000
Securities available-for-sale, Fair Value, Total	563,690,000	1,327,082,000
Securities available-for-sale, Estimated Unrealized Loss, Total	16,308,000	23,178,000
Securities held-to-maturity:
Securities held-to-maturity, Fair Value, Less than 12 months	511,831,000	38,040,000
Securities held-to-maturity, Estimated Unrealized Loss, Less than 12 months	6,273,000	232,000
Securities held-to-maturity, Fair Value, Total	511,831,000	38,040,000
Securities held-to-maturity, Estimated Unrealized Loss, Total	6,273,000	232,000
Other information
Fair value securities, having non-credit impairment recognized in AOCI	10,800,000	9,200,000
Temporarily impaired securities	552,900,000	1,320,000,000
U.S. Treasury
Securities available-for-sale:
Securities available-for-sale, Fair Value, Less than 12 months	9,189,000	4,145,000
Securities available-for-sale, Estimated Unrealized Loss, Less than 12 months	23,000	5,000
Securities available-for-sale, Fair Value, Total	9,189,000	4,145,000
Securities available-for-sale, Estimated Unrealized Loss, Total	23,000	5,000
Other information
Number of available-for-sale and held-to-maturity securities in the unrealized loss position	3	2
Federal agency - Debt
Securities available-for-sale:
Securities available-for-sale, Fair Value, Less than 12 months	45,807,000	409,129,000
Securities available-for-sale, Estimated Unrealized Loss, Less than 12 months	35,000	296,000
Securities available-for-sale, Fair Value, Total	45,807,000	409,129,000
Securities available-for-sale, Estimated Unrealized Loss, Total	35,000	296,000
Securities held-to-maturity:
Securities held-to-maturity, Fair Value, Less than 12 months	9,935,000
Securities held-to-maturity, Estimated Unrealized Loss, Less than 12 months	66,000
Securities held-to-maturity, Fair Value, Total	9,935,000
Securities held-to-maturity, Estimated Unrealized Loss, Total	66,000
Other information
Number of available-for-sale and held-to-maturity securities in the unrealized loss position	3	12
Federal agency - MBS
Securities available-for-sale:
Securities available-for-sale, Fair Value, Less than 12 months	44,771,000	24,519,000
Securities available-for-sale, Estimated Unrealized Loss, Less than 12 months	173,000	87,000
Securities available-for-sale, Fair Value, Total	44,771,000	24,519,000
Securities available-for-sale, Estimated Unrealized Loss, Total	173,000	87,000
Securities held-to-maturity:
Securities held-to-maturity, Fair Value, Less than 12 months	76,985,000
Securities held-to-maturity, Estimated Unrealized Loss, Less than 12 months	427,000
Securities held-to-maturity, Fair Value, Total	76,985,000
Securities held-to-maturity, Estimated Unrealized Loss, Total	427,000
Other information
Number of available-for-sale and held-to-maturity securities in the unrealized loss position	10	3
CMOs - Federal agency
Securities available-for-sale:
Securities available-for-sale, Fair Value, Less than 12 months	368,373,000	744,737,000
Securities available-for-sale, Estimated Unrealized Loss, Less than 12 months	1,328,000	2,224,000
Securities available-for-sale, Fair Value, Total	368,373,000	744,737,000
Securities available-for-sale, Estimated Unrealized Loss, Total	1,328,000	2,224,000
Securities held-to-maturity:
Securities held-to-maturity, Fair Value, Less than 12 months	358,386,000	32,256,000
Securities held-to-maturity, Estimated Unrealized Loss, Less than 12 months	3,918,000	195,000
Securities held-to-maturity, Fair Value, Total	358,386,000	32,256,000
Securities held-to-maturity, Estimated Unrealized Loss, Total	3,918,000	195,000
Other information
Number of available-for-sale and held-to-maturity securities in the unrealized loss position	36	36
CMOs - Non-agency
Securities available-for-sale:
Securities available-for-sale, Fair Value, Less than 12 months	9,795,000	20,094,000
Securities available-for-sale, Estimated Unrealized Loss, Less than 12 months	16,000	833,000
Securities available-for-sale, Fair Value, 12 months or greater	34,099,000	31,400,000
Securities available-for-sale, Estimated Unrealized Loss, 12 months or greater	6,943,000	10,487,000
Securities available-for-sale, Fair Value, Total	43,894,000	51,494,000
Securities available-for-sale, Estimated Unrealized Loss, Total	6,959,000	11,320,000
Other information
Number of available-for-sale and held-to-maturity securities in the unrealized loss position	10	12
State and municipal
Securities available-for-sale:
Securities available-for-sale, Fair Value, Less than 12 months	4,795,000	42,164,000
Securities available-for-sale, Estimated Unrealized Loss, Less than 12 months	64,000	268,000
Securities available-for-sale, Fair Value, 12 months or greater	2,010,000	2,023,000
Securities available-for-sale, Estimated Unrealized Loss, 12 months or greater	133,000	105,000
Securities available-for-sale, Fair Value, Total	6,805,000	44,187,000
Securities available-for-sale, Estimated Unrealized Loss, Total	197,000	373,000
Securities held-to-maturity:
Securities held-to-maturity, Fair Value, Less than 12 months	66,525,000	5,784,000
Securities held-to-maturity, Estimated Unrealized Loss, Less than 12 months	1,862,000	37,000
Securities held-to-maturity, Fair Value, Total	66,525,000	5,784,000
Securities held-to-maturity, Estimated Unrealized Loss, Total	1,862,000	37,000
Other information
Number of available-for-sale and held-to-maturity securities in the unrealized loss position	109	19
Other debt securities
Securities available-for-sale:
Securities available-for-sale, Fair Value, Less than 12 months	29,225,000	34,153,000
Securities available-for-sale, Estimated Unrealized Loss, Less than 12 months	199,000	508,000
Securities available-for-sale, Fair Value, 12 months or greater	15,626,000	14,718,000
Securities available-for-sale, Estimated Unrealized Loss, 12 months or greater	7,394,000	8,365,000
Securities available-for-sale, Fair Value, Total	44,851,000	48,871,000
Securities available-for-sale, Estimated Unrealized Loss, Total	7,593,000	8,873,000
Other information
Number of available-for-sale and held-to-maturity securities in the unrealized loss position	4	6
Collateralized debt obligations
Securities available-for-sale:
Securities available-for-sale, Estimated Unrealized Loss, Total	$ 7,300,000
Total debt securities
Other information
Number of available-for-sale and held-to-maturity securities in the unrealized loss position	175	90

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Derivative Instruments

3 Months Ended

Mar. 31, 2012

Derivative Instruments

Derivative Instruments

Note 12. Derivative Instruments

The following tables summarize the fair value and balance sheet classification of derivative instruments as of March 31, 2012 and December 31, 2011. The notional amount of the contract is not recorded on the consolidated balance sheets, but is used as the basis for determining the amount of interest payments to be exchanged between the counterparties. If a counterparty fails to perform, the Company’s counterparty credit risk is equal to the amount reported as a derivative asset.

Notional Amounts and Fair Values of Derivative Instruments

	March 31, 2012						December 31, 2011
(in millions) (1)	Notional Amount		Derivative Assets		Derivative Liabilities		Notional Amount		Derivative Assets		Derivative Liabilities
Derivatives designated as hedging instruments
Interest rate swaps - fair value:
Long-term and subordinated debt	205.9		8.1		—		207.4		9.8		—
Total derivatives designated as hedging instruments	$	205.9	$	8.1	$	—	$	207.4	$	9.8	$	—
Derivatives not designated as hedging instruments
Interest rate contracts:
Swaps	$	1,551.4	$	48.6	$	49.1	$	1,482.1	$	51.3	$	52.5
Interest-rate caps, floors and collars	243.9		0.1		0.1		267.1		0.3		0.3
Options purchased	2.0		0.2		0.2		2.0		0.1		0.1
Options written	2.0		—		—		2.0		—		—
Total interest-rate contracts	$	1,799.3	$	48.9	$	49.4	$	1,753.2	$	51.7	$	52.9
Option contracts	$	—	$	0.2	$	—	$	—	$	0.7	$	—
Foreign exchange contracts:
Spot and forward contracts	$	277.7	$	2.7	$	2.2	$	203.8	$	2.1	$	2.1
Options purchased	5.8		—		—		—		—		—
Options written	5.8		0.1		0.1		—		—		—
Total foreign exchange contracts	$	289.3	$	2.8	$	2.3	$	203.8	$	2.1	$	2.1
Total derivatives not designated as hedging instruments	$	2,088.6	$	51.9	$	51.7	$	1,957.0	$	54.5	$	55.0

(1)Derivative assets include the estimated gain to settle a derivative contract net of cash collateral received from counterparties plus net interest receivable.  Derivative liabilities include the estimated loss to settle a derivative contract.

Derivatives Designated as Hedging Instruments

As of March 31, 2012, the Company had $205.9 million notional amount of interest-rate swap hedge transactions, all of which were designated as fair value hedges. There were no cash flow hedges at March 31, 2012. The positive fair value of the fair value hedges of $8.1 million is recorded in other assets. It includes a mark-to-market asset of $7.1 million and net interest receivable of $1.0 million. The balance of borrowings reported in the consolidated balance sheet includes a $7.1 million mark-to-market adjustment associated with interest-rate hedge transactions.

As of December 31, 2011, the Company had $207.4 million notional amount of interest-rate swap hedge transactions, all of which were designated as fair value hedges. There were no cash flow hedges outstanding at December 31, 2011. The positive fair value of the fair value hedges of $9.8 million is recorded in other assets. It includes a mark-to-market asset of $8.8 million and net interest receivable of $1.0 million. The balance of deposits and borrowings reported in the consolidated balance sheet include a $8.8 million mark-to-market adjustment associated with interest-rate hedge transactions.

The periodic net settlement of interest-rate swaps is recorded as an adjustment to interest income or interest expense. The impact of interest-rate swaps on interest income and interest expense for the three months ended March 31, 2012 and 2011 is provided below:

(in millions) Derivative Instruments Designated as	Location in Consolidated	For the three months ended March 31,
Hedging Instruments	Statements of Income	2012			2011
Interest-rate swaps-fair value	Interest expense	$	(2.0	)	$	(4.2	)
Interest-rate swaps-cash flow	Interest income	0.1			0.6
Total income		$	2.1		$	4.8

Fair value interest-rate swaps increased net interest income by $2.1 million and $4.8 million for the three months ended March 31, 2012 and 2011, respectively.

Changes in fair value of the effective portion of cash flow hedges are reported in AOCI. When the cash flows associated with the hedged item are realized, the gain or loss included in AOCI is recognized in Interest income on loans and leases, the same location in the consolidated statements of income as the income on the hedged item. There were no cash flow hedges outstanding during the three month periods ended March 31, 2012 and March 31, 2011. The $0.1 million and $0.6 million of gain on cash flow hedges reclassified from AOCI to interest income for the three months ended March 31, 2012 and 2011, respectively, represents the amortization of deferred gains on cash flow hedges that were terminated in 2010 prior to their respective maturity dates for which the hedge transactions had yet to occur. At March 31, 2012, the balance of deferred gain on terminated swaps reported in AOCI was $0.2 million. This balance will be amortized into interest income within the next 12 months.

Derivatives Not Designated as Hedging Instruments

Derivative contracts not designated as hedges are composed primarily of interest rate contracts with clients that are offset by paired trades with unrelated bank counterparties and foreign exchange contracts. Derivative contracts not designated as hedges are marked-to-market each reporting period with changes in fair value recorded as a part of Noninterest income in the consolidated statements of income. The table below provides the amount of gains and losses on these derivative contracts for the three months ended March 31, 2012 and 2011:

(in millions) Derivatives Not Designated as	Location in Consolidated	For the three months ended March 31,
Hedging Instruments	Statements of Income	2012			2011
Interest-rate contracts	Other noninterest income	$	0.7		$	0.2
Option contracts	Other noninterest income	(0.6		)	—
Foreign exchange contracts	International services income	5.8			5.4
Total income		$	5.9		$	5.6

Credit Risk Exposure and Collateral

The Company’s swap agreements require the deposit of cash or marketable debt securities as collateral based on certain risk thresholds. These requirements apply individually to the Corporation and to the Bank. Additionally, certain of the Company’s swap contracts contain security agreements that include credit-risk-related contingent features. Under these agreements, the collateral requirements are based on the Company’s credit rating from the major credit rating agencies. The amount of collateral required may vary by counterparty based on a range of credit ratings that correspond with exposure thresholds established in the derivative agreements. If the credit ratings on the Company’s debt were to fall below the level associated with a particular exposure threshold and the derivatives with a counterparty are in a net liability position that exceeds that threshold, the counterparty could request immediate payment or delivery of collateral for the difference between the net liability amount and the exposure threshold. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a net liability position on March 31, 2012 was $24.6 million. The Company delivered collateral valued at $20.0 million on swap agreements that had credit-risk contingent features and were in a net liability position at March 31, 2012.

The Company’s interest-rate swaps had $4.0 million and $5.3 million of credit risk exposure at March 31, 2012 and December 31, 2011, respectively. The credit exposure represents the cost to replace, on a present value basis and at current market rates, all contracts by trading counterparty having an aggregate positive market value, net of margin collateral received. The Company enters into master netting agreements with swap counterparties to mitigate credit risk. Under these agreements, the net amount due from or payable to each counterparty is settled on the contract payment date. Collateral in the form of securities valued at $4.8 million and $5.0 million had been received from swap counterparties at March 31, 2012 and December 31, 2011, respectively. The Company delivered collateral valued at $18.8 million on swap agreements that did not have credit-risk contingent features at March 31, 2012.

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Noncontrolling Interest

3 Months Ended

Mar. 31, 2012

Noncontrolling Interest

Noncontrolling Interest

Note 17. Noncontrolling Interest

In accordance with ASC Topic 810, Consolidation, and EITF Topic D-98, Classification and Measurement of Redeemable Securities (“Topic D-98”), the Company reports noncontrolling interest in its majority-owned affiliates as either a separate component of equity in Noncontrolling interest in the consolidated balance sheets or as Redeemable noncontrolling interest in the mezzanine section between liabilities and equity in the consolidated financial statements. Topic D-98 specifies that securities that are redeemable at the option of the holder or outside the control of the issuer are not considered permanent equity and should be classified in the “mezzanine” section.

The Bank previously had two real estate investment trust subsidiaries that had issued preferred stock to third-party investors. The ownership interests of third-party investors were included in Noncontrolling interest in the equity section of the consolidated balance sheets. In July and August 2011, the Company liquidated or redeemed all outstanding shares of preferred stock held by noncontrolling interest owners.

Redeemable Noncontrolling Interest

The Corporation holds a majority ownership interest in five investment management and wealth advisory affiliates that it consolidates. In general, the management of each majority-owned affiliate has a significant noncontrolling ownership position in its firm and supervises the day-to-day operations of the affiliate. The Corporation is in regular contact with each affiliate regarding its operations and is an active participant in the management of the affiliates through its position on each firm’s board.

The Corporation’s investment in each affiliate is governed by operating agreements and other arrangements which provide the Corporation certain rights, benefits and obligations. The Corporation determines the appropriate method of accounting based upon these agreements and the factors contained therein. All majority-owned affiliates that have met the criteria for consolidation are included in the consolidated financial statements. All material intercompany balances and transactions are eliminated. The Company applies the equity method of accounting for certain investments where it holds a noncontrolling interest. For equity method investments, the Company’s portion of income before taxes is included in Trust and investment fees in the consolidated statements of income.

As of March 31, 2012, affiliate noncontrolling owners held equity interests with an estimated fair value of $43.4 million. This estimate reflects the maximum obligation to purchase equity interests in the affiliates. The events which would require the Company to purchase the equity interests may occur in the near term or over a longer period of time. The terms of the put provisions vary by agreement, but the value of the put is at the approximate fair value of the interests. The parent company carries key man life insurance policies to fund a portion of these conditional purchase obligations in the event of the death of certain key holders.

Redeemable noncontrolling interest is not considered to be permanent equity and continues to be reported in the mezzanine section between liabilities and equity in the consolidated balance sheets.

The following is a summary of activity for redeemable noncontrolling interest for the three months ended March 31, 2012 and 2011:

	For the three months ended March 31,
(in thousands)	2012			2011
Balance, beginning of period	$	44,643		$	45,676
Net income	243			558
Distributions to redeemable noncontrolling interest	(289		)	(484		)
Additions and redemptions, net	(1,272		)	(559		)
Adjustments to fair value	111			822
Balance, end of period	$	43,436		$	46,013

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Securities (Details 2) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
Expected remaining maturities of debt securities available-for-sale, fair value
Fair Value	$ 6,838,710	$ 7,571,901
Total debt securities
Expected remaining maturities of debt securities available-for-sale, fair value
Securities available-for-sale, One year or less fair value	1,104,455
Securities available-for-sale, Over 1 year through 5 years, fair value	5,079,693
Securities available-for-sale, Over 5 years through 10 years, fair value	602,468
Securities available-for-sale, Over 10 years, fair value	50,944
Fair Value	6,837,560	7,570,674
Expected remaining maturities of debt securities available-for-sale, amortized cost
Securities available-for-sale, One year or less, amortized cost	1,099,279
Securities available-for-sale, Over 1 year through 5 years, amortized cost	4,965,611
Securities available-for-sale, Over 5 years through 10 years, amortized cost	583,091
Securities available-for-sale, Over 10 years, amortized cost	50,848
Total of debt securities available-for-sale, amortized cost	6,698,829
Expected remaining maturities of debt securities held-to-maturity, amortized cost
Securities held-to-maturity, One year or less, amortized cost	10,950
Securities held-to-maturity, Over 1 year through 5 years, amortized cost	87,301
Securities held-to-maturity, Over 5 years through 10 years, amortized cost	798,406
Securities held-to-maturity, Over 10 years, amortized cost	99,956
Total of debt securities held-to-maturity, amortized cost	996,613
U.S. Treasury
Expected remaining maturities of debt securities available-for-sale, fair value
Securities available-for-sale, One year or less fair value	10,013
Securities available-for-sale, Over 1 year through 5 years, fair value	9,189
Fair Value	19,202	19,182
Federal agency - Debt
Expected remaining maturities of debt securities available-for-sale, fair value
Securities available-for-sale, One year or less fair value	847,374
Securities available-for-sale, Over 1 year through 5 years, fair value	203,974
Fair Value	1,051,348	1,973,862
Expected remaining maturities of debt securities held-to-maturity, amortized cost
Securities held-to-maturity, One year or less, amortized cost	10,950
Securities held-to-maturity, Over 1 year through 5 years, amortized cost	33,669
Securities held-to-maturity, Over 10 years, amortized cost	59,649
Total of debt securities held-to-maturity, amortized cost	104,268
Federal agency - MBS
Expected remaining maturities of debt securities available-for-sale, fair value
Securities available-for-sale, One year or less fair value	14
Securities available-for-sale, Over 1 year through 5 years, fair value	447,143
Securities available-for-sale, Over 5 years through 10 years, fair value	273,433
Fair Value	720,590	681,044
Expected remaining maturities of debt securities held-to-maturity, amortized cost
Securities held-to-maturity, Over 5 years through 10 years, amortized cost	173,380
Total of debt securities held-to-maturity, amortized cost	173,380
CMOs - Federal agency
Expected remaining maturities of debt securities available-for-sale, fair value
Securities available-for-sale, One year or less fair value	181,389
Securities available-for-sale, Over 1 year through 5 years, fair value	4,040,298
Securities available-for-sale, Over 5 years through 10 years, fair value	178,631
Fair Value	4,400,318	4,326,907
Expected remaining maturities of debt securities held-to-maturity, amortized cost
Securities held-to-maturity, Over 1 year through 5 years, amortized cost	45,373
Securities held-to-maturity, Over 5 years through 10 years, amortized cost	545,558
Total of debt securities held-to-maturity, amortized cost	590,931
CMOs - Non-agency
Expected remaining maturities of debt securities available-for-sale, fair value
Securities available-for-sale, One year or less fair value	8,286
Securities available-for-sale, Over 1 year through 5 years, fair value	33,100
Securities available-for-sale, Over 5 years through 10 years, fair value	27,201
Fair Value	68,587	69,001
State and municipal
Expected remaining maturities of debt securities available-for-sale, fair value
Securities available-for-sale, One year or less fair value	53,996
Securities available-for-sale, Over 1 year through 5 years, fair value	209,947
Securities available-for-sale, Over 5 years through 10 years, fair value	80,836
Securities available-for-sale, Over 10 years, fair value	50,944
Fair Value	395,723	401,604
Expected remaining maturities of debt securities held-to-maturity, amortized cost
Securities held-to-maturity, Over 1 year through 5 years, amortized cost	8,259
Securities held-to-maturity, Over 5 years through 10 years, amortized cost	79,468
Securities held-to-maturity, Over 10 years, amortized cost	40,307
Total of debt securities held-to-maturity, amortized cost	128,034
Other debt securities
Expected remaining maturities of debt securities available-for-sale, fair value
Securities available-for-sale, One year or less fair value	3,383
Securities available-for-sale, Over 1 year through 5 years, fair value	136,042
Securities available-for-sale, Over 5 years through 10 years, fair value	42,367
Fair Value	$ 181,792	$ 99,074

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Segment Results (Tables)

3 Months Ended

Mar. 31, 2012

Segment Results

Schedule of segment results

	For the three months ended March 31, 2012
	Commercial and		Wealth					Consolidated
(in thousands)	Private Banking		Management		Other			Company
Earnings Summary:
Net interest income	$	171,725	$	764	$	28,224		$	200,713
Provision for credit losses on loans and leases, excluding covered loans	—		—		—			—
Provision for losses on covered loans	7,466		—		—			7,466
Noninterest income	47,245		39,371		(10,916		)	75,700
Depreciation and amortization	3,582		1,446		4,286			9,314
Noninterest expense	171,593		35,984		(16,171		)	191,406
Income before income taxes	36,329		2,705		29,193			68,227
Provision (benefit) for income taxes	15,258		1,034		5,427			21,719
Net income	21,071		1,671		23,766			46,508
Less: Net income attributable to noncontrolling interest	—		243		—			243
Net income attributable to City National Corporation	$	21,071	$	1,428	$	23,766		$	46,265
Selected Average Balances:
Loans and leases, excluding covered loans	$	12,379,023	$	—	$	53,269		$	12,432,292
Covered loans	1,438,714		—		—			1,438,714
Total assets	14,137,481		537,732		8,969,686			23,644,899
Deposits	19,721,998		99,035		396,362			20,217,395
Goodwill	324,761		161,921		—			486,682
Customer-relationship intangibles, net	9,007		26,493		—			35,500

	For the three months ended March 31, 2011
	Commercial and		Wealth					Consolidated
(in thousands)	Private Banking		Management		Other			Company
Earnings Summary:
Net interest income	$	172,687	$	567	$	8,036		$	181,290
Provision for credit losses on loans and leases, excluding covered loans	—		—		—			—
Provision for losses on covered loans	19,116		—		—			19,116
Noninterest income	63,210		41,877		(11,194		)	93,893
Depreciation and amortization	3,633		1,449		3,834			8,916
Noninterest expense	165,508		38,182		(15,209		)	188,481
Income (loss) before income taxes	47,640		2,813		8,217			58,670
Provision (benefit) for income taxes	20,009		947		(3,070		)	17,886
Net income	27,631		1,866		11,287			40,784
Less: Net income attributable to noncontrolling interest	—		558		534			1,092
Net income attributable to City National Corporation	$	27,631	$	1,308	$	10,753		$	39,692
Selected Average Balances:
Loans and leases, excluding covered loans	$	11,197,583	$	—	$	58,304		$	11,255,887
Covered loans	1,810,986		—		—			1,810,986
Total assets	13,534,385		551,729		7,291,790			21,377,904
Deposits	17,750,931		46,566		386,071			18,183,568
Goodwill	325,211		161,642		—			486,853
Customer-relationship intangibles, net	12,411		28,941		—			41,352

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012		Mar. 31, 2011
Net income	$ 46,508		$ 40,784
Securities available for sale:
Net unrealized gain (loss), net of taxes of $6,882 and ($5,167)	9,570		(7,185)
Reclassification adjustment for net gains included in net income, net of taxes of $165 and $37	(229)		(51)
Non-credit related impairment loss, net of taxes of ($1,017) and ($1,818)	(1,414)		(2,528)
Net change on cash flow hedges	(42)	[1]	(586)	[1]
Pension liability adjustment	1,085		32
Total other comprehensive income (loss)	8,970		(10,318)
Comprehensive income	55,478		30,466
Less: Comprehensive income attributable to noncontrolling interest	243		1,092
Comprehensive income attributable to City National Corporation	$ 55,235		$ 29,374

[1] See Note 12 for additional information on other comprehensive income related to cash flow hedges.

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2012

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Note 1. Summary of Significant Accounting Policies

Organization

City National Corporation (the “Corporation”) is the holding company for City National Bank (the “Bank”). The Bank delivers banking, trust and investment services through 79 offices in Southern California, the San Francisco Bay area, Nevada, New York City, Nashville, Tennessee and Atlanta, Georgia. As of March 31, 2012, the Corporation had five consolidated investment advisory affiliates and one unconsolidated subsidiary, Business Bancorp Capital Trust I. Because the Bank comprises substantially all of the business of the Corporation, references to the “Company” mean the Corporation and the Bank together. The Corporation is approved as a financial holding company pursuant to the Gramm-Leach-Bliley Act of 1999.

Consolidation

The consolidated financial statements of the Company include the accounts of the Corporation, its non-bank subsidiaries, the Bank and the Bank’s wholly owned subsidiaries, after the elimination of all material intercompany transactions. It also includes noncontrolling interest, which is the portion of equity in a subsidiary not attributable to a parent. Preferred stock of consolidated bank affiliates that is owned by third parties is reflected as Noncontrolling interest in the equity section of the consolidated balance sheets. This preferred stock was liquidated or redeemed in full by the Bank in the third quarter of 2011. Redeemable noncontrolling interest includes noncontrolling ownership interests that are redeemable at the option of the holder or outside the control of the issuer. The redeemable equity ownership interests of third parties in the Corporation’s investment advisory affiliates are not considered to be permanent equity and are reflected as Redeemable noncontrolling interest in the mezzanine section between liabilities and equity in the consolidated balance sheets. Noncontrolling interests’ share of subsidiary earnings is reflected as Net income attributable to noncontrolling interest in the consolidated statements of income.

The Company’s investment management and wealth advisory affiliates are organized as limited liability companies. The Corporation generally owns a majority position in each affiliate and certain management members of each affiliate own the remaining shares. The Corporation has contractual arrangements with its affiliates whereby a percentage of revenue is allocable to fund affiliate operating expenses (“operating share”) while the remaining portion of revenue (“distributable revenue”) is allocable to the Corporation and the noncontrolling owners. All majority-owned affiliates that meet the prescribed criteria for consolidation are consolidated. The Corporation’s interests in investment management affiliates in which it holds a noncontrolling share are accounted for using the equity method. Additionally, the Company has various interests in variable interest entities (“VIEs”) that are not required to be consolidated. See Note 16 for a more detailed discussion on VIEs.

Use of Estimates

The Company’s accounting and reporting policies conform to generally accepted accounting principles (“GAAP”) and practices in the financial services industry. To prepare the financial statements in conformity with GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and income and expenses during the reporting period. Circumstances and events that differ significantly from those underlying the Company’s estimates and assumptions could cause actual financial results to differ from those estimates. The material estimates included in the financial statements relate to the allowance for loan and lease losses, the reserve for off-balance sheet credit commitments, valuation of stock options and restricted stock, income taxes, goodwill and intangible asset impairment, securities impairment, private equity and alternative investment impairment, valuation of assets and liabilities acquired in business combinations, subsequent valuations of acquired impaired loans, Federal Deposit Insurance Corporation (“FDIC”) indemnification assets, valuation of noncontrolling interest and the valuation of financial assets and liabilities reported at fair value.

The Company has applied its critical accounting policies and estimation methods consistently in all periods presented in these financial statements. The Company’s estimates and assumptions are expected to change as changes in market conditions and the Company’s portfolio occur in subsequent periods.

Basis of Presentation

The Company is on the accrual basis of accounting for income and expenses. The results of operations reflect any adjustments, all of which are of a normal recurring nature, unless otherwise disclosed in this Form 10-Q, and which, in the opinion of management, are necessary for a fair presentation of the results for the periods presented. In accordance with the usual practice of banks, assets and liabilities of individual trust, agency and fiduciary funds have not been included in the financial statements. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

The results for the 2012 interim period are not necessarily indicative of the results expected for the full year. The Company has not made any significant changes in its critical accounting policies or in its estimates and assumptions from those disclosed in its 2011 Annual Report other than the adoption of new accounting pronouncements and other authoritative guidance that became effective for the Company on or after January 1, 2012. Refer to Accounting Pronouncements for discussion of accounting pronouncements adopted in 2012.

Certain prior period amounts have been reclassified to conform to the current period presentation.

Accounting Pronouncements

During the three months ended March 31, 2012, the following accounting pronouncements applicable to the Company were issued or became effective:

·In April 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-03, Transfers and Servicing (Topic 860): Reconsideration of Effective Control for Repurchase Agreements (“ASU 2011-03”). Accounting Standards Codification (“ASC”) Topic 860, Transfers and Servicing, provides the criteria for determining whether a transfer of financial assets under a repurchase agreement is accounted for as a secured borrowing or as a sale. In a typical repurchase transaction, an entity transfers financial assets to a counterparty in exchange for cash with an agreement for the counterparty to return the same or equivalent financial assets for a fixed price in the future. Under the guidance, an entity that maintains effective control over transferred assets must account for the transfer as a secured borrowing. ASU 2011-03 eliminates the requirement for entities to consider whether a transferor has the ability to repurchase the financial assets in a repurchase agreement for purposes of determining whether the transferor has maintained effective control. The ASU does not change the other criteria applicable to the assessment of effective control. Adoption of ASU 2011-03 on January 1, 2012 did not have a material effect on the Company’s consolidated financial statements.

·In May 2011, the FASB issued ASU 2011-04, Fair Value Measurements (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (“ASU 2011-04”). ASU 2011-04 represents the converged guidance of the FASB and International Accounting Standards Board on fair value. The new guidance establishes a common framework for measuring fair value and for disclosing information about fair value measurements. While ASU 2011-04 is largely consistent with existing fair value measurement principles, it does expand disclosure requirements and amends certain guidance. Under the revised guidance, the highest and best use and valuation premise concepts only apply to measuring the fair value of nonfinancial assets. The highest and best use of a nonfinancial asset is one that is physically possible, legally permissible and financially feasible. The valuation premise guidance provides that the highest and best use of a nonfinancial asset is either on a stand-alone basis or in combination with other assets as a group. The ASU provides a framework for considering whether a premium or discount can be applied in a fair value measurement, and provides a model for measuring the fair value of an instrument classified in shareholders’ equity. ASU 2011-04 requires entities to make an accounting policy election regarding fair value measurements of financial assets and liabilities, such as derivatives, for which the exposure to market or counterparty credit risks is managed on a net or portfolio basis. The Company elected to continue measuring derivative instruments that are subject to master netting agreements on the net risk exposure at the measurement date.

The expanded disclosure requirements include more detailed disclosures about the valuation processes used in fair value measurements within Level 3 of the fair value hierarchy, and categorization by level of the fair value hierarchy for items that are not measured at fair value in the statement of financial position but for which fair value is required to be disclosed in accordance with ASC Topic 825, Financial Instruments. The Company adopted ASU 2011-04 for first quarter 2012 reporting. Adoption of the new guidance did not have a significant impact on the Company’s consolidated financial statements.

·In June 2011, the FASB issued ASU 2011-05, Comprehensive Income (Topic 220), Presentation of Comprehensive Income (“ASU 2011-05”). ASU 2011-05 revises the manner in which entities present comprehensive income in their financial statements. The new guidance requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. Under the two-statement approach, the first statement would include components of net income, which is consistent with the income statement format used today, and the second statement would include components of other comprehensive income. In December 2011, the FASB issued ASU 2011-12, Comprehensive Income (Topic 220), Deferral of the Effective Date for Amendments to the Presentation of Reclassification of Items out of Accumulated Other Comprehensive Income in ASU 2011-05 (“ASU 2011-12”). ASU 2011-12 indefinitely defers the provision of ASU 2011-05 that would have required entities to present reclassification adjustments out of accumulated other comprehensive income (“AOCI”) by component in both the statement in which net income is presented and the statement in which other comprehensive income is presented. ASU 2011-05 and ASU 2011-12 became effective for the Company for first quarter 2012 reporting. The Company elected to report components of comprehensive income in two separate but consecutive statements. The new guidances were applied retrospectively for all periods presented.

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Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Details 6) (USD $)	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Dec. 31, 2011
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	$ 12,747,902,000	$ 11,269,684,000	$ 12,309,385,000
Covered Loans Allowance
Balance, beginning of period	64,565,000	67,389,000
Provision for losses	7,466,000	19,116,000
Reduction in allowance due to loan removals	(10,560,000)	(4,489,000)
Balance, end of period	61,471,000	82,016,000
Acquired covered loans on nonaccrual status	400,000		400,000
Covered loans 30 to 89 days delinquent	59,400,000		49,100,000
Covered loans 90 days or more past due on accrual status	265,200,000		330,200,000
Commercial
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	5,175,396,000		4,846,594,000
Commercial real estate mortgages
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	2,213,114,000	1,902,862,000	2,110,749,000
Residential mortgage
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	3,805,807,000	3,603,058,000	3,763,218,000
Fixed
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	1,538,098,000		1,581,796,000
Variable
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	2,267,709,000		2,181,422,000
Real estate construction
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	313,409,000	415,241,000	315,609,000
Construction
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	221,637,000		217,861,000
Land
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	91,772,000		97,748,000
Equity lines of credit
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	715,997,000	733,567,000	741,081,000
Installment loan
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	125,793,000	146,779,000	132,647,000
Commercial Installment loan
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	489,000		605,000
Consumer Installment loan
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	125,304,000		132,042,000
Lease financing
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	398,386,000		399,487,000
Nonclassified
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	12,358,671,000		11,834,998,000
Nonclassified | Commercial
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	5,068,902,000		4,732,663,000
Nonclassified | Commercial real estate mortgages
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	2,080,452,000		1,930,001,000
Nonclassified | Residential mortgage
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	3,783,534,000		3,728,878,000
Nonclassified | Fixed
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	1,526,029,000		1,565,420,000
Nonclassified | Variable
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	2,257,505,000		2,163,458,000
Nonclassified | Real estate construction
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	205,340,000		191,633,000
Nonclassified | Construction
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	165,761,000		147,916,000
Nonclassified | Land
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	39,579,000		43,717,000
Nonclassified | Equity lines of credit
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	700,363,000		724,045,000
Nonclassified | Installment loan
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	124,583,000		131,522,000
Nonclassified | Commercial Installment loan
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	489,000		601,000
Nonclassified | Consumer Installment loan
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	124,094,000		130,921,000
Nonclassified | Lease financing
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	395,497,000		396,256,000
Classified
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	389,231,000		474,387,000
Classified | Commercial
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	106,494,000		113,931,000
Classified | Commercial real estate mortgages
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	132,662,000		180,748,000
Classified | Residential mortgage
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	22,273,000		34,340,000
Classified | Fixed
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	12,069,000		16,376,000
Classified | Variable
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	10,204,000		17,964,000
Classified | Real estate construction
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	108,069,000		123,976,000
Classified | Construction
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	55,876,000		69,945,000
Classified | Land
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	52,193,000		54,031,000
Classified | Equity lines of credit
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	15,634,000		17,036,000
Classified | Installment loan
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	1,210,000		1,125,000
Classified | Commercial Installment loan
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans			4,000
Classified | Consumer Installment loan
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	1,210,000		1,121,000
Classified | Lease financing
Financing Receivable, Recorded Investment
Loans and leases, excluding covered loans	$ 2,889,000		$ 3,231,000

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Employee Benefit Plans (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2012 person	Mar. 31, 2011	Mar. 14, 2012
Employee Benefit Plans
Maximum contribution by employee (as a percent)	50.00%
Percentage of employer contribution of first 6 percent of covered compensation	50.00%
Maximum employee contribution matched by employer as a percentage of covered compensation	6.00%
Profit sharing and matching contribution expense	$ 4.7	$ 4.5
Percentage of incentive compensation	100.00%
Net deferred compensation expense	0.1	0.1
Supplemental Executive Retirement Plan ("SERP")
Supplemental Executive Retirement Plan ("SERP"):
Number of executives (in persons)	1
Number of units converted into the deferred compensation stock fund	167,423
Deferred compensation stock fund in equity			8.3
Pension expense	1.9	0.2
Unfunded pension liability			8.3
Pension expense from conversion of fully vested interest into the deferred compensation stock fund in equity	1.7
Supplemental Executive Retirement Plan ("SERP") for former executives of the Pacific Bank
Supplemental Executive Retirement Plan ("SERP"):
Number of executives (in persons)	3
Unfunded pension liability	$ 2.3	$ 2.3

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Segment Results

3 Months Ended

Mar. 31, 2012

Segment Results

Segment Results

Note 18. Segment Results

The Company has three reportable segments: Commercial and Private Banking, Wealth Management and Other. The factors considered in determining whether individual operating segments could be aggregated include that the operating segments: (i) offer the same products and services, (ii) offer services to the same types of clients, (iii) provide services in the same manner and (iv) operate in the same regulatory environment. The management accounting process measures the performance of the operating segments based on the Company’s management structure and is not necessarily comparable with similar information for other financial services companies. If the management structures and/or the allocation process changes, allocations, transfers and assignments may change.

The Commercial and Private Banking reportable segment is the aggregation of the Commercial and Private Banking, Real Estate, Entertainment, Corporate Banking and Core Branch Banking operating segments. The Commercial and Private Banking segment provides banking products and services, including commercial and mortgage loans, lines of credit, deposits, cash management services, international trade finance and letters of credit to small and medium-sized businesses, entrepreneurs and affluent individuals. This segment primarily serves clients in California, New York, Nevada, Tennessee and Georgia.

The Wealth Management segment includes the Corporation’s investment advisory affiliates and the Bank’s Wealth Management Services. The asset management affiliates and the Wealth Management division of the Bank make the following investment advisory and wealth management resources and expertise available to individual and institutional clients: investment management, wealth advisory services, brokerage, estate and financial planning and personal, business, custodial and employee trust services. The Wealth Management segment also advises and makes available mutual funds under the name of CNI Charter Funds. Both the asset management affiliates and the Bank’s Wealth Management division provide proprietary and nonproprietary products to offer a full spectrum of investment solutions in all asset classes and investment styles, including fixed-income instruments, mutual funds, domestic and international equities and alternative investments such as hedge funds. This segment serves clients nationwide.

The Other segment includes all other subsidiaries of the Company, the corporate departments, including the Treasury Department and the Asset Liability Funding Center, that have not been allocated to the other segments, and inter-segment eliminations for revenue recognized in multiple segments for management reporting purposes. The Company uses traditional matched-maturity funds transfer pricing methodology. However, both positive and negative variances occur over time when transfer pricing non-maturing balance sheet items such as demand deposits. These variances, offset in the Funding Center, are evaluated annually by management and allocated back to the business segments as deemed necessary.

Business segment earnings are the primary measure of the segment’s performance as evaluated by management. Business segment earnings include direct revenue and expenses of the segment as well as corporate and inter-company cost allocations. Allocations of corporate expenses, such as data processing and human resources, are calculated based on estimated activity levels for the fiscal year. Costs associated with intercompany support and services groups, such as Operational Services, are allocated to each business segment based on actual services used. Capital is allocated based on the estimated risk within each business segment. The methodology of allocating capital is based on each business segment’s credit, market, and operational risk profile. If applicable, any provision for credit losses is allocated based on various credit factors, including but not limited to, credit risk ratings, credit rating fluctuation, charge-offs and recoveries and loan growth.

Income taxes are charged to the business segments at the statutory rate. The Other segment includes an adjustment to reconcile to the Company’s overall effective tax rate.

Exposure to market risk is managed in the Company’s Treasury department. Interest rate risk is mostly removed from the Commercial and Private Banking segment and transferred to the Funding Center through a fund transfer pricing (“FTP”) methodology and allocating model. The FTP model records a cost of funds or credit for funds using a combination of matched maturity funding for fixed term assets and liabilities and a blended rate for the remaining assets and liabilities with varying maturities.

The Bank’s investment portfolio and unallocated equity are included in the Other segment. Amortization expense associated with customer-relationship intangibles is charged to the affected operating segments.

Selected financial information for each segment is presented in the following tables. Commercial and Private Banking includes all revenue and costs from products and services utilized by clients of Commercial and Private Banking, including both revenue and costs for Wealth Management products and services. The revenues and costs associated with Wealth Management products and services that are allocated to Commercial and Private Banking for management reporting purposes are eliminated in the Other segment. The current period reflects any changes made in the process or methodology for allocations to the reportable segments. Prior period segment results have been revised to conform with current period presentation.

	For the three months ended March 31, 2012
	Commercial and		Wealth					Consolidated
(in thousands)	Private Banking		Management		Other			Company
Earnings Summary:
Net interest income	$	171,725	$	764	$	28,224		$	200,713
Provision for credit losses on loans and leases, excluding covered loans	—		—		—			—
Provision for losses on covered loans	7,466		—		—			7,466
Noninterest income	47,245		39,371		(10,916		)	75,700
Depreciation and amortization	3,582		1,446		4,286			9,314
Noninterest expense	171,593		35,984		(16,171		)	191,406
Income before income taxes	36,329		2,705		29,193			68,227
Provision (benefit) for income taxes	15,258		1,034		5,427			21,719
Net income	21,071		1,671		23,766			46,508
Less: Net income attributable to noncontrolling interest	—		243		—			243
Net income attributable to City National Corporation	$	21,071	$	1,428	$	23,766		$	46,265
Selected Average Balances:
Loans and leases, excluding covered loans	$	12,379,023	$	—	$	53,269		$	12,432,292
Covered loans	1,438,714		—		—			1,438,714
Total assets	14,137,481		537,732		8,969,686			23,644,899
Deposits	19,721,998		99,035		396,362			20,217,395
Goodwill	324,761		161,921		—			486,682
Customer-relationship intangibles, net	9,007		26,493		—			35,500

	For the three months ended March 31, 2011
	Commercial and		Wealth					Consolidated
(in thousands)	Private Banking		Management		Other			Company
Earnings Summary:
Net interest income	$	172,687	$	567	$	8,036		$	181,290
Provision for credit losses on loans and leases, excluding covered loans	—		—		—			—
Provision for losses on covered loans	19,116		—		—			19,116
Noninterest income	63,210		41,877		(11,194		)	93,893
Depreciation and amortization	3,633		1,449		3,834			8,916
Noninterest expense	165,508		38,182		(15,209		)	188,481
Income (loss) before income taxes	47,640		2,813		8,217			58,670
Provision (benefit) for income taxes	20,009		947		(3,070		)	17,886
Net income	27,631		1,866		11,287			40,784
Less: Net income attributable to noncontrolling interest	—		558		534			1,092
Net income attributable to City National Corporation	$	27,631	$	1,308	$	10,753		$	39,692
Selected Average Balances:
Loans and leases, excluding covered loans	$	11,197,583	$	—	$	58,304		$	11,255,887
Covered loans	1,810,986		—		—			1,810,986
Total assets	13,534,385		551,729		7,291,790			21,377,904
Deposits	17,750,931		46,566		386,071			18,183,568
Goodwill	325,211		161,642		—			486,853
Customer-relationship intangibles, net	12,411		28,941		—			41,352

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Subsequent Events (Details) (USD $) In Billions, unless otherwise specified	Apr. 25, 2012
Subsequent Event
Assets under management by acquired firm, Rochdale Investment Management	$ 4.8

XML

Share-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2012

Share-Based Compensation

Summary of assumptions to estimate the fair value of stock option awards

	For the three months ended March 31,
	2012		2011
Weighted-average volatility	30.58	%	30.91	%
Dividend yield	2.14	%	1.46	%
Expected term (in years)	6.11		6.04
Risk-free interest rate	1.44	%	2.98	%

Summary of option activity and related information under the Plan

			Weighted				Weighted
			Average		Aggregate		Average
	Number of		Exercise		Intrinsic		Remaining
	Shares		Price		Value		Contractual
Options	(in thousands)		(per share)		(in thousands) (1)		Term
Outstanding at January 1, 2012	4,990		$	52.61
Granted	603		46.66
Exercised	(59	)	34.24
Forfeited or expired	(460	)	50.83
Outstanding at March 31, 2012	5,074		$	52.28	$	265,246	5.96
Exercisable at March 31, 2012	3,443		$	54.54	$	187,779	4.62

(1) Includes in-the-money options only.

Summary of changes in unvested options and related information under the Plan

			Weighted Average
	Number of		Grant Date
	Shares		Fair Value
Unvested Options	(in thousands)		(per share)
Unvested at January 1, 2012	1,641		$	13.57
Granted	603		11.64
Vested	(599	)	12.22
Forfeited	(14	)	13.43
Unvested at March 31, 2012	1,631		$	13.35

Share-based compensation

Summary of changes in restricted stock and related information under the Plan

			Weighted Average
	Number of		Grant Date
	Shares		Fair Value
Restricted Stock (1)	(in thousands)		(per share)
Unvested at January 1, 2012	875		$	50.12
Granted	76		46.66
Vested	(170	)	45.75
Forfeited	(5	)	48.24
Unvested at March 31, 2012	776		$	50.75

(1) Includes restricted stock units.

Cash-settled restricted stock units

Share-based compensation

Summary of changes in restricted stock and related information under the Plan

	Number of
	Shares
Cash-Settled Restricted Stock Units	(in thousands)
Unvested at January 1, 2012	—
Granted	99
Forfeited	(1	)
Unvested at March 31, 2012	98

XML

Share-Based Compensation

3 Months Ended

Mar. 31, 2012

Share-Based Compensation

Share-Based Compensation

Note 11. Share-Based Compensation

On March 31, 2012, the Company had one share-based compensation plan, the Amended and Restated City National Corporation 2008 Omnibus Plan (the “Plan”), which was approved by the Company’s shareholders on April 23, 2008. No new awards will be granted under predecessor plans. A description of the Plan is provided below. The compensation cost that has been recognized for all share-based awards was $4.7 million for the three months ended March 31, 2012 and 2011. The total income tax benefit recognized in the consolidated statements of income for share-based compensation arrangements was $2.0 million for the three months ended March 31, 2012 and 2011. The Company received $2.0 million and $4.0 million in cash for the exercise of stock options during the three months ended March 31, 2012 and 2011, respectively. The actual tax benefit realized for the tax deductions from stock option exercises was $0.4 million and $1.0 million for the three months ended March 31, 2012 and 2011, respectively.

Plan Description

The Plan permits the grant of stock options, restricted stock, restricted stock units, performance shares, performance share units, performance units and stock appreciation rights, or any combination thereof, to the Company’s eligible employees and non-employee directors. No grants of performance shares, performance share units or stock appreciation rights had been made as of March 31, 2012. The purpose of the Plan is to promote the success of the Company by providing additional means to attract, motivate, retain and reward key employees of the Company with awards and incentives for high levels of individual performance and improved financial performance of the Company, and to link non-employee director compensation to shareholder interests through equity grants. Stock option awards are granted with an exercise price equal to the market price of the Company’s stock at the date of grant. These awards vest in four years and have 10-year contractual terms. Restricted stock awards granted under the Plan vest over a period of at least three years, as determined by the Compensation, Nominating and Governance Committee. The participant is entitled to dividends and voting rights for all shares issued even though they are not vested. Restricted stock awards issued under predecessor plans vest over five years. The Plan provides for acceleration of vesting if there is a change in control (as defined in the Plan) or a termination of service, which may include disability or death. Unvested options are forfeited upon termination of employment, except for those instances noted above, and the case of the retirement of a retirement-age employee for options granted prior to January 31, 2006. The Company generally issues treasury shares upon share option exercises. All unexercised options expire 10 years from the grant date. At March 31, 2012, there were approximately 1.1 million shares available for future grants.

Fair Value

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation methodology that uses the assumptions noted in the following table. The Company evaluates exercise behavior and values options separately for executive and non-executive employees. Expected volatilities are based on the historical volatility of the Company’s stock. The Company uses a 20-year look back period to calculate the volatility factor. The length of the look back period reduces the impact of the recent disruptions in the capital markets, and provides values that management believes are more representative of expected future volatility. The Company uses historical data to predict option exercise and employee termination behavior. The expected term of options granted is derived from historical exercise activity and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The dividend yield is equal to the dividend yield of the Company’s stock at the time of the grant.

To estimate the fair value of stock option awards, the Company uses the Black-Scholes methodology, which incorporates the assumptions summarized in the table below:

	For the three months ended March 31,
	2012		2011
Weighted-average volatility	30.58	%	30.91	%
Dividend yield	2.14	%	1.46	%
Expected term (in years)	6.11		6.04
Risk-free interest rate	1.44	%	2.98	%

Using the Black-Scholes methodology, the weighted-average grant-date fair values of options granted during the three months ended March 31, 2012 and 2011 were $11.64 and $18.43, respectively. The total intrinsic values of options exercised during the three months ended March 31, 2012 and 2011 were $0.9 million and $2.3 million, respectively.

A summary of option activity and related information for the three months ended March 31, 2012 is presented below:

			Weighted				Weighted
			Average		Aggregate		Average
	Number of		Exercise		Intrinsic		Remaining
	Shares		Price		Value		Contractual
Options	(in thousands)		(per share)		(in thousands) (1)		Term
Outstanding at January 1, 2012	4,990		$	52.61
Granted	603		46.66
Exercised	(59	)	34.24
Forfeited or expired	(460	)	50.83
Outstanding at March 31, 2012	5,074		$	52.28	$	265,246	5.96
Exercisable at March 31, 2012	3,443		$	54.54	$	187,779	4.62

(1) Includes in-the-money options only.

A summary of changes in unvested options and related information for the three months ended March 31, 2012 is presented below:

			Weighted Average
	Number of		Grant Date
	Shares		Fair Value
Unvested Options	(in thousands)		(per share)
Unvested at January 1, 2012	1,641		$	13.57
Granted	603		11.64
Vested	(599	)	12.22
Forfeited	(14	)	13.43
Unvested at March 31, 2012	1,631		$	13.35

The number of options vested during the three months ended March 31, 2012 and 2011 was 599,119 and 580,636, respectively. The total fair value of options vested during the three months ended March 31, 2012 and 2011 was $7.3 million and $6.8 million, respectively. As of March 31, 2012, there was $17.8 million of unrecognized compensation cost related to unvested stock options granted under the Company’s plans. That cost is expected to be recognized over a weighted-average period of 2.9 years.

The Plan provides for granting of restricted shares of Company stock to employees. In general, twenty-five percent of the restricted stock vests two years from the date of grant, then twenty-five percent vests on each of the next three consecutive grant anniversary dates. The restricted stock is subject to forfeiture until the restrictions lapse or terminate. A summary of changes in restricted stock and related information for the three months ended March 31, 2012 is presented below:

			Weighted Average
	Number of		Grant Date
	Shares		Fair Value
Restricted Stock (1)	(in thousands)		(per share)
Unvested at January 1, 2012	875		$	50.12
Granted	76		46.66
Vested	(170	)	45.75
Forfeited	(5	)	48.24
Unvested at March 31, 2012	776		$	50.75

(1) Includes restricted stock units.

Restricted stock is valued at the closing price of the Company’s stock on the date of award. The weighted-average grant-date fair values of restricted stock granted during the three months ended March 31, 2012 and 2011 were $46.66 and $60.86, respectively. The number of restricted shares vested during the three months ended March 31, 2012 and 2011 was 169,568 and 134,636, respectively. The total fair value of restricted stock vested during the three months ended March 31, 2012 and 2011 was $7.8 million and $6.2 million, respectively. The compensation expense related to restricted stock for the three months ended March 31, 2012 and 2011 was $2.5 million and $2.3 million, respectively. As of March 31, 2012, the unrecognized compensation cost related to restricted stock granted under the Company’s plans was $26.3 million. That cost is expected to be recognized over a weighted-average period of 3.5 years.

In February 2012, the Company amended the Plan to permit the grant of cash-settled restricted stock units. In general, twenty-five percent of the cash-settled restricted stock units vests two years from the date of grant, then twenty-five percent vests on each of the next three consecutive grant anniversary dates. The units are subject to forfeiture until the restrictions lapse or terminate. Upon vesting, the units are converted to cash based on the closing stock price at vesting date and distributed to plan participants. Plan participants are entitled to dividends, which vest and are paid at the same time as the underlying cash-settled restricted stock units. Dividends are subject to forfeiture in the same manner as the underlying cash-settled restricted stock units. A summary of changes in cash-settled restricted stock units for the three months ended March 31, 2012 is presented below:

	Number of
	Shares
Cash-Settled Restricted Stock Units	(in thousands)
Unvested at January 1, 2012	—
Granted	99
Forfeited	(1	)
Unvested at March 31, 2012	98

Cash-settled restricted stock units are initially valued at the closing price of the Company’s stock on the date of award and subsequently remeasured at each reporting date until settlement. The compensation expense related to cash-settled restricted stock units for the three months ended March 31, 2012 was $0.1 million.