EX-99 2 newsrelease.htm PRESS RELEASE City National Corporation Grows Second-Quarter 2013 Net Income to $59.7 Million, Up 9 Percent From Second-Quarter 2012; First-Half 2013 Net Income Totals $111.3 Million, Up 10 Percent

EXHIBIT 99.1

City National Corporation Grows Second-Quarter 2013 Net Income to $59.7 Million, Up 9 Percent From Second-Quarter 2012; First-Half 2013 Net Income Totals $111.3 Million, Up 10 Percent

Average loan balances reach record $15.4 billion, up 18 percent,
with commercial loans up 25 percent

Assets and deposits grow at double-digit rates year-over-year

Trust and investment fees up 46 percent from a year ago

LOS ANGELES, July 18, 2013 (GLOBE NEWSWIRE) -- City National Corporation (NYSE:CYN), the parent company of wholly owned City National Bank, today reported second-quarter 2013 net income of $59.7 million, up 9 percent from $54.8 million in the year-ago period. Earnings per share were $1.04, compared with $1.01 per share in the second quarter of 2012.

City National's net income in the first half of this year totaled $111.3 million, up 10 percent from $101.0 million in the first half of 2012. Earnings per share were $1.94, up 4 percent from $1.87 in the first half of last year.

City National also announced today that its Board of Directors has maintained and approved a quarterly common stock cash dividend of $0.25 per share, payable on August 21, 2013 to stockholders of record on August 7, 2013. The Board has also authorized a quarterly cash dividend of $13.75 per share on the 5.50 percent Non‑Cumulative Perpetual Preferred Stock, Series C (equivalent to $0.34375 per related depositary share), payable on August 13, 2013 to shareholders of record on July 29, 2013.

SECOND-QUARTER 2013 HIGHLIGHTS

  • Period-end loans and leases, excluding loans covered by City National's acquisition-related loss-sharing agreements with the Federal Deposit Insurance Corporation (FDIC), reached a record $15.8 billion, up 17 percent from June 30, 2012 and up 4 percent from March 31, 2013. Average second-quarter loan and lease balances, excluding FDIC-covered loans, grew to $15.4 billion, up 18 percent from the second quarter of last year. Average commercial loans were up 25 percent from the same period in 2012.
  • Second-quarter deposit balances averaged $23.1 billion, up 10 percent from the second quarter of 2012. Average core deposits, which equal 97 percent of total balances, were up 11 percent from the second quarter of last year.
  • City National's assets under management or administration grew to $59.1 billion, up 18 percent from the second quarter of 2012. Trust and investment fees were $49.8 million, up 46 percent from the second quarter of 2012.
  • Net loan recoveries in the second quarter of 2013 totaled $7.5 million, up from $4.8 million in the first quarter. Excluding FDIC-covered loans, second-quarter 2013 results included no provision for loan and lease losses. City National recorded a $1.0 million provision in the second quarter of 2012 and no provision in the first quarter of 2013. The company remains appropriately reserved at 1.83 percent of total loans, excluding FDIC-covered loans.
  • City National remains well-capitalized. Under Basel I capital rules, the company's Tier 1 common shareholders' equity ratio was 8.8 percent at June 30, 2013.1 Under Basel III rules, its estimated Tier 1 common equity ratio was 8.6 percent.2 All of the company's pro-forma capital ratios are comfortably above the Basel III rules, which were approved by the Federal Reserve on July 2, 2013. These rules are not scheduled to be fully required until 2019.

"City National delivered another solid performance in the second quarter – its 81st consecutive profitable quarter – achieving double-digit growth in assets, loans, deposits, and wealth management fee income, while strategically investing in, expanding, and benefiting from new talent, offices, products and technologies to better serve our clients and grow our business," said President and CEO Russell Goldsmith. "Our strong credit quality improved further. The company continued to add both new clients and more assets and income from existing clients.

"City National also added two new banking offices in the second quarter – one in San Francisco's East Bay area and, after 11 years in New York City, the bank's first ground-floor branch in Manhattan. This month, City National also expanded its commitment, capabilities and opportunities to serve the technology industry and its entrepreneurs and investors by opening a loan production office in Boston, led by an experienced technology banking team."

  For the three months ended   For the three  
Dollars in millions, June 30, % months ended %
except per share data 2013 2012 Change March 31, 2013 Change
Earnings Per Common Share  $ 1.04  $ 1.01 3  $ 0.90 16
Net Income Attributable to CNC  59.7  54.8 9  51.5 16
Net Income Available to Common          
Shareholders  57.3  54.8 5  49.1 17
           
Average Assets  $ 27,469.6  $ 24,362.5 13  $ 27,709.2 (1)
Return on Average Assets  0.87%  0.90% (3)  0.75% 16
Return on Average Common Equity  9.53%  9.86% (3)  8.43% 13
Return on Average Tangible          
Common Equity  13.60%  13.42% 1  12.17% 12

ASSETS

Total assets at June 30, 2013 were $27.4 billion, up 10 percent from the second quarter of 2012, but virtually unchanged from the first quarter of 2013. The increase from the year-ago period reflects higher loan balances, as well as growth in the company's securities portfolio.

NET INTEREST INCOME

Fully taxable-equivalent net interest income was $208.4 million in the second quarter of 2013, down 6 percent from the same period of 2012 but up 1 percent from the first quarter of this year. Fully taxable-equivalent net interest income for the first half of 2013 was $414.7 million, down 3 percent from $426.8 million in the year-ago period.

Average second-quarter deposits were $23.1 billion, up 10 percent from the year-ago period and 3 percent higher than the first quarter of 2013. Average deposits for the first half of 2013 totaled $22.8 billion, up 11 percent from the first half of 2012. Period-end deposits totaled $23.7 billion, up 12 percent from June 30, 2012 and up 3 percent from March 31, 2013.

Average core deposits were $22.4 billion in the second quarter of 2013, up 11 percent from the same period of 2012 and up 3 percent from the first quarter of this year. First-half 2013 average core deposits grew 11 percent from the year-ago period to $22.1 billion.

Second-quarter 2013 average noninterest-bearing deposits were up 17 percent from the same period of 2012 and 4 percent higher than the first quarter of 2013. Average noninterest-bearing balances in the first half of 2013 were up 19 percent from the same period last year.

Treasury Services deposit balances, which consist primarily of title, escrow and property management deposits, averaged $2.6 billion in the second quarter of 2013, up 21 percent from the same period of last year and up 14 percent from the first quarter of 2013. For the first six months of 2013, Treasury Services deposit balances averaged $2.4 billion, up 18 percent from the first half of 2012. The increases were due primarily to a continued increase in residential refinance activity, as well as existing home sales.

Second-quarter average loan balances, excluding FDIC-covered loans, were $15.4 billion, up 18 percent from the second quarter of 2012 and up 4 percent from the first quarter of 2013. For the first six months of 2013, City National's average loans, excluding FDIC-covered loans, were $15.1 billion, up 18 percent from the year-ago period.

Second-quarter average commercial loans were up 25 percent from the same period in 2012 and 6 percent higher than the first quarter of 2013.

Average balances for commercial real estate mortgages were up 29 percent from the second quarter of 2012, and they increased 3 percent from the first quarter of 2013. Average balances for commercial real estate construction loans declined 23 percent from the second quarter of 2012, but were up 2 percent from the first quarter of 2013.

Average balances for single-family residential mortgage loans were up 7 percent from the year-ago period and 3 percent higher than the first quarter of 2013.

Average securities for the second quarter of 2013 totaled $8.9 billion, up 14 percent from the second quarter of 2012 but down 9 percent from the first quarter of 2013. Total available-for-sale securities amounted to $7.0 billion at June 30, 2013, up from $6.9 billion at the end of the second quarter of 2012 but down from $7.7 billion at March 31, 2013.

The average duration of available-for-sale securities at June 30, 2013 was 3.2 years, up from 2.5 years at June 30, 2012 and 2.8 years at the end of the first quarter of 2013. These increases largely reflect higher long-term interest rates, which have slowed down mortgage prepayment expectations and increased the anticipated duration of mortgage-backed securities.

City National's net interest margin in the second quarter of 2013 averaged 3.24 percent, compared with 3.21 percent in the first quarter of 2013. The modest increase was due to strong loan growth and a reduction of short-term borrowings. For the first six months of 2013, City National's net interest margin averaged 3.22 percent, down from 3.83 percent in the previous year.

Second-quarter net interest income included $15.9 million from FDIC-covered loans that were repaid or charged off during the quarter. This compares with $27.4 million in the second quarter of 2012 and $15.6 million in the first quarter of 2013.

At June 30, 2013, City National's prime lending rate was 3.25 percent, unchanged from both June 30, 2012 and March 31, 2013.

  For the three months ended   For the three  
  June 30, % months ended %
Dollars in millions 2013 2012 Change March 31, 2013 Change
Average Loans and Leases,          
excluding Covered Loans  $ 15,434.1  $ 13,125.9 18  $ 14,809.3 4
Average Covered Loans  909.7  1,341.0 (32)  989.5 (8)
Average Total Securities   8,866.9  7,755.3 14  9,796.3 (9)
Average Earning Assets  25,819.9  22,769.1 13  26,046.6 (1)
Average Deposits  23,118.8  20,948.2 10  22,411.0 3
Average Core Deposits  22,447.5  20,215.2 11  21,815.2 3
Fully Taxable-Equivalent          
Net Interest Income  208.4  221.4 (6)  206.3 1
Net Interest Margin  3.24%  3.91% (17)  3.21% 1

COVERED ASSETS

Loans and other real estate owned (OREO) assets acquired in City National's FDIC‑assisted bank acquisitions totaled $885.4 million at the end of the second quarter of 2013, compared to $1.3 billion at June 30, 2012 and $953.3 million at March 31, 2013.

In the second quarter of 2013, City National recorded a $1.5 million non-cash net expense to reflect results of the quarterly update of cash-flow projections for the FDIC-covered loans, compared to a $0.1 million expense recorded in the first quarter of 2013. Due to improvements in the portfolio's credit quality and general market conditions, the company recorded an $11.9 million reversal of its allowance for covered loans in the second quarter of 2013.  The reversal of the allowance was offset by the expense on the related indemnification asset.

In addition to the $1.5 million non-cash net expense for the quarter, the company recognized $0.5 million of other covered assets expense.

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

OREO assets acquired by City National in its FDIC-assisted bank acquisitions and subject to loss-sharing agreements totaled $41.8 million at June 30, 2013, compared to $82.8 million at the end of the second quarter of 2012 and $43.8 million at March 31, 2013.

NONINTEREST INCOME

Noninterest income was $82.2 million in the second quarter of 2013, up 10 percent from the second quarter of 2012 but down 12 percent from the first quarter of 2013. City National's noninterest income for the first half of 2013 was up 17 percent from the same period of 2012.

The increases in noninterest income from the year-earlier periods were due largely to City National's acquisition of Rochdale. The decrease from the first quarter of 2013 was primarily attributable to higher FDIC loss-sharing expense, which was partly offset by increases in lease income and income from client swap transactions.  Results for the second quarter of 2013 also included a $5.6 million net gain on securities, compared with a net loss of $0.5 million in the second quarter of 2012 and a net gain of $1.0 million in the first quarter of this year.

In the second quarter of 2013, noninterest income accounted for 29 percent of City National's total revenue, compared to 26 percent in the second quarter of 2012 and 32 percent in the first quarter of 2013.

Wealth Management

City National's assets under management or administration totaled $59.1 billion as of June 30, 2013, up 18 percent from the same period of 2012 but virtually unchanged from the first quarter of 2013. 

Trust and investment fees were $49.8 million, up 46 percent from the second quarter of 2012 and 7 percent higher than the first quarter of 2013. First-half 2013 trust and investment fee income was up 42 percent from the same period last year.

Brokerage and mutual fund fees totaled $8.1 million, up 53 percent from the year-earlier period and 1 percent higher than the first quarter of 2013. Brokerage and mutual fund fee income was $16.2 million in the first six months of this year, up 57 percent from the first half of 2012.

The year-over-year increases in assets under management, trust and investment fees, and brokerage and mutual fund fees were due to the Rochdale acquisition, additional client assets, and market appreciation.

  At or for the    At or for the  
  three months ended   three months  
  June 30, % ended %
Dollars in millions 2013 2012 Change March 31, 2013 Change
Trust and Investment Fee Revenue  $ 49.8  $ 34.1 46  $ 46.7 7
Brokerage and Mutual Fund Fees  8.1  5.3 53  8.1 0
Assets Under Management (1)  40,634.4  32,105.1 27  39,693.5 2
Assets Under Management          
or Administration (1)(2)  59,133.1  50,040.1 18  59,040.8 0
           
(1) Excludes $25.1 billion, $24.8 billion and $18.4 billion of assets under management for asset managers in which City National held a noncontrolling ownership interest as of June 30, 2013, March 31, 2013 and June 30, 2012, respectively. 
(2) Assets under administration were revised to exclude City National's investments that were held in custody and serviced by the company's wealth management business. Prior period balances were reclassified to conform to current period presentation. 

Other Noninterest Income

Second-quarter income from cash management and deposit transaction fees was $12.9 million, up 12 percent from the second quarter of 2012 but down 1 percent from the first quarter of 2013. For the first six months of 2013, cash management and deposit transaction fee income was $25.9 million, up 14 percent from the first half of 2012. The year-over-year increases were due largely to higher sales volume and growth in transaction volumes among existing clients.

Fee income from foreign exchange services and letters of credit totaled $10.9 million in the second quarter of 2013, up 9 percent from the second quarter of 2012 and up 13 percent from the first quarter of 2013. First-half 2013 foreign exchange services and letters of credit fee income totaled $20.5 million, up 9 percent from the same period last year. The increases were due primarily to increased client activity and the addition of new clients.

Other income was $20.4 million in the second quarter of 2013, up 17 percent from the second quarter of 2012 and 11 percent higher than the first quarter of 2013.  Other income in the first half of this year was $38.8 million, up 25 percent from the year-ago period. The increases from the year-ago periods were due primarily to higher lease income and higher income from client swap transactions. Second-quarter 2012 results included only two months of lease income from the April 30, 2012, acquisition of First American Equipment Finance.

NONINTEREST EXPENSE

City National's second-quarter 2013 noninterest expense amounted to $211.4 million, up 9 percent from the second quarter of 2012. Excluding the acquisitions of Rochdale and First American Equipment Finance, noninterest expense was up 2 percent from the second quarter of last year.1 Noninterest expense was virtually unchanged from the first quarter of 2013.

Noninterest expense for the first six months of 2013 amounted to $422.8 million, up 7 percent from the first half of last year.

CREDIT QUALITY

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

Net recoveries in the second quarter of 2013 totaled $7.5 million, or 0.20 percent of total loans and leases on an annualized basis. The company realized net recoveries of $2.7 million, or 0.08 percent, in the second quarter of 2012 and net recoveries of $4.8 million, or 0.13 percent, in the first quarter of 2013. Net recoveries for the first half of 2013 were $12.3 million, or 0.16 percent of total loans and leases. This compares with net recoveries of $7.2 million, or 0.11 percent, in the first half of last year.

At June 30, 2013, nonperforming assets amounted to $96.3 million, or 0.61 percent of the company's total loans and leases and OREO, compared to $133.3 million, or 0.98 percent, at June 30, 2012 and $103.1 million, or 0.68 percent, at March 31, 2013.

Nonaccrual loans at June 30, 2013 were $76.7 million, compared to $98.7 million at June 30, 2012 and $83.3 million at March 31, 2013. Criticized and classified loans declined from the first quarter of 2013, and overall credit trends remain favorable.

  As of As of As of
  June 30, 2013 March 31, 2013 June 30, 2012
Period-end Loans (in millions) Total Nonaccrual Total Nonaccrual Total Nonaccrual
Commercial $ 7,497.1 $ 11.7 $ 7,170.4 $ 7.3 $ 6,087.0 $ 19.0
Commercial Real Estate Mortgages  3,101.2  22.4  2,937.5  23.1  2,424.3  28.8
Residential Mortgages  4,153.1  10.6  4,027.7  9.1  3,822.6  14.1
Real Estate Construction  217.8  25.7  247.1  39.6  301.8  29.7
Home Equity Loans and Lines of Credit  700.7  6.3  696.7  4.1  741.3  6.5
Other Loans  149.4  0.0  137.5  0.1  130.2  0.6
Total Loans (1) $ 15,819.3 $ 76.7 $ 15,216.9 $ 83.3 $ 13,507.2 $ 98.7
Other Real Estate Owned (1)    19.6    19.8    34.6
Total Nonperforming Assets, excluding            
Covered Assets   $ 96.3   $ 103.1   $ 133.3
             
(1) Excludes covered loans, net of allowance, of $843.6 million, $909.6 million and $1.2 billion at June 30, 2013, March 31, 2013 and June 30, 2012, respectively, and covered other real estate owned of $41.8 million, $43.8 million and $82.8 million at June 30, 2013, March 31, 2013 and June 30, 2012, respectively.

In light of improving credit metrics across the board and net recoveries, the company recorded no provision for credit losses in the second quarter of 2013. The company recorded a $1.0 million provision in the second quarter of 2012 and no provision in the first quarter of 2013.

At June 30, 2013, City National's allowance for loan and lease losses totaled $289.9 million, or 1.83 percent of total loans and leases. That compares with $269.5 million, or 2.00 percent, at June 30, 2012 and $282.3 million, or 1.86 percent, at the end of the first quarter of 2013. The company also maintains an additional $25.1 million in reserves for off-balance-sheet credit commitments.

Commercial Loans

Commercial loan net recoveries were $2.9 million in the second quarter of 2013. This compares to net recoveries of $8.1 million in the year-earlier period and net recoveries of $2.2 million in the first quarter of 2013. Net recoveries in the first half of 2013 amounted to $5.0 million, compared to net recoveries of $13.4 million in the first half of last year.

Commercial loans on nonaccrual totaled $11.7 million in the second quarter of 2013, compared to $19.1 million at June 30, 2012 and $7.3 million at March 31, 2013.

Real Estate Construction Loans

City National's $217.8 million commercial real estate construction portfolio includes secured loans to developers of residential and nonresidential properties. This portfolio represents less than 2 percent of the company's total loans.

Second-quarter net recoveries of construction loans were $2.7 million, compared to net charge-offs of $4.8 million in the second quarter of 2012 and net recoveries of $2.7 million in the first quarter of 2013. Net recoveries amounted to $5.3 million in the first half of 2013, compared with net charge-offs of $4.7 million in the first half of last year.

At June 30, 2013, construction loans on nonaccrual totaled $25.7 million, compared to $29.7 million at June 30, 2012 and $39.6 million at March 31, 2013.

Commercial Real Estate Mortgage Loans

Second-quarter net recoveries in the company's $3.1 billion commercial real estate mortgage portfolio were $1.0 million compared to net recoveries of $1.1 million in the second quarter of 2012 and a small net recovery in the first quarter of 2013. Net recoveries amounted to $1.0 million in the first-half of 2013, compared with net recoveries of $0.4 million in the first half of last year.

Commercial real estate mortgage loans on nonaccrual totaled $22.4 million, compared to $28.8 million at June 30, 2012 and $23.1 million at March 31, 2013.

Residential Mortgage Loans and Equity Loans and Lines of Credit

City National's $4.2 billion residential mortgage portfolio and $0.7 billion home equity portfolio continued to perform exceptionally well.  Together, they accounted for $0.4 million in net recoveries in the second quarter of 2013, compared to net charge-offs of $1.4 million at June 30, 2012 and net charge-offs of $0.2 million at March 31, 2013. Net recoveries amounted to $0.2 million in the first half of 2013, compared with net charge-offs of $2.0 million in the same period of last year.

Residential mortgage loans and home equity loans and lines of credit on nonaccrual were $16.8 million in the second quarter of 2013, compared to $20.6 million in the second quarter of 2012 and $13.2 million in the first quarter of 2013.

INCOME TAXES

City National's effective tax rate for the second quarter of 2013 was 29.7 percent, compared to 33.1 percent in the year-earlier period. For the first half of 2013, City National's effective tax rate was 29.4 percent, compared to 32.5 percent in the prior-year period.

CAPITAL LEVELS

City National remains well-capitalized. Under Basel I capital rules, the company's Tier 1 common shareholders' equity ratio was 8.8 percent at June 30, 2013.1  The company's Tier 1 common shareholders' equity ratio was 9.6 percent at June 30, 2012 and 8.7 percent at March 31, 2013.1 The change from the year-earlier period is a reflection of asset growth and the acquisition of Rochdale.

Under Basel III rules, City National's estimated Tier 1 common equity ratio was 8.6 percent.2 All of the company's pro-forma capital ratios are comfortably above the Basel III rules, which were approved by the Federal Reserve on July 2, 2013. The new rules will begin a phase-in period for banks with less than $250 billion in assets, including City National, on January 1, 2015 and are expected to be fully implemented by January 1, 2019.

City National's Basel I total risk-based capital and Tier 1 risk-based capital ratios at June 30, 2013 were 12.8 percent and 9.7 percent, respectively. The company's Tier 1 leverage ratio at June 30, 2013 was 7.0 percent.

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

Basel I period-end ratio of equity to total assets at June 30, 2013 was 9.3 percent, compared to 9.1 percent at June 30, 2012 and 9.3 percent at March 31, 2013.

2013 OUTLOOK

Management continues to expect net income growth in 2013 to be modest. Nonetheless, loan and deposit balances are expected to increase, and credit quality should remain strong, though rising loan balances may require some modest loan-loss provision. The current low short-term interest rate environment and relatively flat yield curve will continue to put pressure on the company's net interest margin. This outlook reflects management's expectations for moderate economic growth throughout 2013 and does not take into account the effect that any changes in monetary policy could have on short-term interest rates.

CONFERENCE CALL

City National Corporation will host a conference call this afternoon to discuss second-quarter 2013 financial results.  The call will begin at 2:00 p.m. PDT.  Analysts and investors may dial in and participate in the question/answer session.  To access the call, please dial (866) 393-6804 and enter Conference ID 93427620.  A listen-only live broadcast of the call also will be available on the investor relations page of the company's Website at cnb.com.  There, it will be archived and available for 12 months.

ABOUT CITY NATIONAL

City National Corporation's wholly owned subsidiary, City National Bank, provides banking, investment and trust services through 78 offices, including 16 full-service regional centers, in Southern California, the San Francisco Bay Area, Nevada, New York City, Nashville and Atlanta. The corporation and its investment affiliates manage or administer $59.1 billion in client investment assets, including more than $40 billion under direct management.

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

SAFE-HARBOR LANGUAGE

This news release contains forward-looking statements about the company, for which the company claims the protection of the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995.

A number of factors, many of which are beyond the company's ability to control or predict, could cause future results to differ materially from those contemplated by such forward-looking statements.  These factors include: (1) changes in general economic, political, or industry conditions and the related credit and market conditions and the impact they have on the company and its customers, including changes in consumer spending, borrowing and savings habits; (2) the impact on financial markets and the economy of the level of U.S. and European debt; (3) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System; (4) continued delay in the pace of economic recovery and continued stagnant or decreasing employment levels; (5) the effect of the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations to be promulgated by supervisory and oversight agencies implementing the new legislation, taking into account that the precise timing, extent and nature of such rules and regulations and the impact on the company is uncertain; (6) the impact of revised capital requirements under Basel III; (7) significant changes in applicable laws and regulations, including those concerning taxes, banking and securities; (8) volatility in the municipal bond market; (9) changes in the level of nonperforming assets, charge-offs, other real estate owned and provision expense; (10) incorrect assumptions in the value of the loans acquired in FDIC-assisted acquisitions resulting in greater than anticipated losses in the acquired loan portfolios exceeding the losses covered by the loss-sharing agreements with the FDIC; (11) changes in inflation, interest rates, and market liquidity which may impact interest margins and impact funding sources; (12) the company's ability to attract new employees and retain and motivate existing employees; (13) increased competition in the company's markets and our ability to increase market share and control expenses; (14) changes in the financial performance and/or condition of the company's customers, or changes in the performance or creditworthiness of our customers' suppliers or other counterparties, which could lead to decreased loan utilization rates, delinquencies, or defaults and could negatively affect our customers' ability to meet certain credit obligations; (15) a substantial and permanent loss of either client accounts and/or assets under management at the company's investment advisory affiliates or its wealth management division; (16) soundness of other financial institutions which could adversely affect the company; (17) protracted labor disputes in the company's markets; (18) the impact of natural disasters, terrorist activities or international hostilities on the operations of our business or the value of collateral; (19) the effect of acquisitions and integration of acquired businesses and de novo branching efforts; (20) changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies; (21) the impact of cyber security attacks or other disruptions to the company's information systems and any resulting compromise of data or disruptions in service; and (22) the success of the company at managing the risks involved in the foregoing.

Forward-looking statements speak only as of the date they are made, and the company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the statements are made, or to update earnings guidance, including the factors that influence earnings.

For a more complete discussion of these risks and uncertainties, please refer to the company's Annual Report on Form 10-K for the year ended December 31, 2012.

1 For notes on non-GAAP measures, see pages 15 and 16 of the Selected Financial Information.

2 Estimated based on management's interpretation of final rules adopted July 2, 2013, by the Federal Reserve Board establishing a new comprehensive capital framework for U.S. banking organizations that would implement the Basel III capital framework and certain provisions of the Dodd-Frank Act. See page 15 of the Selected Financial Information.

             
CITY NATIONAL CORPORATION            
FINANCIAL HIGHLIGHTS            
(unaudited)            
             
  Three Months Six Months
For The Period Ended June 30, 2013 2012 % Change 2013 2012 % Change
Per Common Share            
Net income available to common shareholders            
Basic  $ 1.05  $ 1.02  3  $ 1.95  $ 1.88  4
Diluted  1.04  1.01  3  1.94  1.87  4
Dividends  0.25  0.25  --  0.25  0.50  (50)
Book value        44.16  42.70  3
             
Results of Operations: (In millions)            
Interest income  $ 217  $ 230  (6)  $ 433  $ 443  (2)
Interest expense 14 14  5 29 26  10
Net interest income 203 216  (6) 404 417  (3)
Net interest income (Fully taxable-equivalent) 208 221  (6) 415 427  (3)
Total revenue 285 291  (2) 580 568  2
Provision for credit losses on loans and leases, excluding covered loans  -- 1  (100)  -- 1  (100)
Provision for losses on covered loans (12) 13  (190) (2)  21  (110)
Net income attributable to City National Corporation 60 55  9 111 101  10
Net income available to common shareholders 57 55  5 106 101  5
             
Financial Ratios:            
Performance Ratios:            
Return on average assets  0.87 %  0.90 %    0.81 %  0.85 %  
Return on average common equity  9.53  9.86    8.99  9.23  
Return on average tangible common equity (1)  13.60  13.42    12.90  12.50  
Period-end equity to period-end assets        9.29  9.09  
Net interest margin  3.24  3.91    3.22  3.83  
Expense to revenue ratio  71.51  63.28    70.21  65.23  
Capital Adequacy Ratios (Period-end):            
Tier 1 leverage        7.00  6.74  
Tier 1 risk-based capital        9.74  9.58  
Total risk-based capital        12.78  12.91  
             
Asset Quality Ratios:            
Allowance for loan and lease losses to:            
Total loans and leases, excluding covered loans        1.83 %  2.00 %  
Nonaccrual loans        378.12  273.21  
Nonperforming assets, excluding covered assets, to:            
Total loans and leases and other real estate owned, excluding covered assets        0.61  0.98  
Total assets        0.35  0.54  
Net recoveries to average total loans and leases, excluding covered loans (annualized)  0.20 %  0.08 %    0.16 % 0.11 %  
             
Average Balances: (In millions)            
Loans and leases, excluding covered loans  $ 15,434  $ 13,126  18  $ 15,123  $ 12,779  18
Covered loans 910 1,341  (32) 950 1,390  (32)
Securities 8,867 7,755  14 9,329 7,842  19
Interest-earning assets 25,820 22,769  13 25,933 22,436  16
Assets 27,470 24,363  13 27,589 24,004  15
Core deposits 22,448 20,215  11 22,133 19,868  11
Deposits 23,119 20,948  10 22,767 20,583  11
Interest-bearing liabilities 10,549 9,868  7 10,984 9,999  10
Common shareholders' equity 2,412 2,234  8 2,388 2,202  8
Total shareholders' equity 2,582 2,234  16 2,558 2,202  16
             
Period-End Balances: (In millions)            
Loans and leases, excluding covered loans        $ 15,819  $ 13,507  17
Covered loans       868 1,260  (31)
Securities       8,597 8,029  7
Assets       27,380 24,802  10
Core deposits       23,004 20,342  13
Deposits       23,652 21,109  12
Common shareholders' equity       2,375 2,255  5
Total shareholders' equity       2,545 2,255  13
             
Wealth Management: (In millions) (2)            
Assets under management        $ 40,634  $ 32,105  27
Assets under management or administration (3)       59,133 50,040  18
             
(1) Return on average tangible common equity is a non-GAAP measure. Refer to page 15 for further discussion of this non-GAAP measure.            
(2) Excludes $25.1 billion and $18.4 billion of assets under management for asset managers in which City National held a noncontrolling ownership interest as of June 30, 2013 and June 30, 2012, respectively.            
(3) Assets under administration were revised to exclude City National's investments that were held in custody and serviced by the company's wealth management business. Prior period balances were reclassified to conform to current period presentation.            
           
CITY NATIONAL CORPORATION          
CONSOLIDATED STATEMENTS OF INCOME        
(unaudited)            
             
  Three Months Ended Six Months Ended
(Dollars in thousands  June 30,  June 30,
except per share data) 2013 2012 % Change 2013 2012 % Change
Interest income  $ 216,995  $ 229,889  (6)  $ 432,795  $ 443,481  (2)
Interest expense  14,076  13,410  5  28,803  26,289  10
Net interest income  202,919  216,479  (6)  403,992  417,192  (3)
             
Provision for credit losses on loans and leases, excluding covered loans  --  1,000  (100)  --  1,000  (100)
Provision for losses on covered loans  (11,927)  13,293  (190)  (2,035)  20,759  (110)
             
Noninterest income            
Trust and investment fees  49,830  34,067  46  96,483  67,721  42
Brokerage and mutual fund fees  8,107  5,293  53  16,173  10,321  57
Cash management and deposit transaction fees  12,880  11,475  12  25,889  22,643  14
International services  10,911  10,017  9  20,530  18,802  9
FDIC loss sharing expense, net  (26,477)  (6,026)  339  (30,829)  (5,160)  497
Gain on disposal of assets  949  3,011  (68)  2,063  5,202  (60)
Gain (loss) on securities  5,608  (457)  1,327  6,654  (8)  83,275
Other  20,401  17,388  17  38,774  30,947  25
Total noninterest income  82,209  74,768  10  175,737  150,468  17
             
Noninterest expense            
Salaries and employee benefits  127,168  115,035  11  255,363  235,280  9
Net occupancy of premises  16,205  14,056  15  32,194  27,742  16
Legal and professional fees  13,163  11,359  16  24,775  23,239  7
Information services  9,183  8,539  8  18,574  16,688  11
Depreciation and amortization  8,249  8,013  3  16,421  15,441  6
Amortization of intangibles  1,931  1,518  27  3,863  3,404  13
Marketing and advertising  8,644  7,597  14  16,960  14,413  18
Office services and equipment  5,034  4,492  12  9,980  8,440  18
Other real estate owned  4,385  7,541  (42)  9,635  19,635  (51)
FDIC assessments  3,663  4,523  (19)  9,144  9,002  2
Other  13,804  11,843  17  25,860  21,952  18
Total noninterest expense  211,429  194,516  9  422,769  395,236  7
             
Income before taxes  85,626  82,438  4  158,995  150,665  6
             
Applicable income taxes  25,422  27,271  (7)  46,683  48,990  (5)
             
Net income  $ 60,204  $ 55,167  9  $ 112,312  $ 101,675  10
             
Less: Net income attributable to noncontrolling interest  463  409  13  1,048  652  61
             
Net income attributable to City National Corporation  $ 59,741  $ 54,758  9  $ 111,264  $ 101,023  10
             
Less: Dividends on preferred stock  2,406  --  NM   4,812  --  NM 
             
Net income available to common shareholders  $ 57,335  $ 54,758  5  $ 106,452  $ 101,023  5
             
Other Data:            
Earnings per common share - basic  $ 1.05  $ 1.02  3  $ 1.95  $ 1.88  4
Earnings per common share - diluted  $ 1.04  $ 1.01  3  $ 1.94  $ 1.87  4
Dividends paid per common share  $ 0.25  $ 0.25  --  $ 0.25  $ 0.50  (50)
Common dividend payout ratio  23.81 %  24.57 %  (3)  12.85 %  26.56 %  (52)
Return on average assets  0.87 %  0.90 %  (3)  0.81 %  0.85 %  (5)
Return on average common equity  9.53 %  9.86 %  (3)  8.99 %  9.23 %  (3)
Return on average tangible common equity  13.60 %  13.42 %  1  12.90 %  12.50 %  3
Net interest margin (Fully taxable-equivalent)  3.24 %  3.91 %  (17)  3.22 %  3.83 %  (16)
Full-time equivalent employees  3,551  3,330  7      
       
CITY NATIONAL CORPORATION      
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME      
(unaudited)      
       
  2013
(Dollars in thousands Second First Year to
except per share data) Quarter Quarter Date
Interest income  $ 216,995  $ 215,800  $ 432,795
Interest expense  14,076  14,727  28,803
Net interest income  202,919  201,073  403,992
       
Provision for credit losses on loans and leases, excluding covered loans  --  --  --
Provision for losses on covered loans  (11,927)  9,892  (2,035)
       
Noninterest income      
Trust and investment fees  49,830  46,653  96,483
Brokerage and mutual fund fees  8,107  8,066  16,173
Cash management and deposit transaction fees  12,880  13,009  25,889
International services  10,911  9,619  20,530
FDIC loss sharing expense, net  (26,477)  (4,352)  (30,829)
Gain on disposal of assets  949  1,114  2,063
Gain on securities  5,608  1,046  6,654
Other  20,401  18,373  38,774
Total noninterest income  82,209  93,528  175,737
       
Noninterest expense      
Salaries and employee benefits  127,168  128,195  255,363
Net occupancy of premises  16,205  15,989  32,194
Legal and professional fees  13,163  11,612  24,775
Information services  9,183  9,391  18,574
Depreciation and amortization  8,249  8,172  16,421
Amortization of intangibles  1,931  1,932  3,863
Marketing and advertising  8,644  8,316  16,960
Office services and equipment  5,034  4,946  9,980
Other real estate owned  4,385  5,250  9,635
FDIC assessments  3,663  5,481  9,144
Other  13,804  12,056  25,860
Total noninterest expense  211,429  211,340  422,769
       
Income before taxes  85,626  73,369  158,995
       
Applicable income taxes  25,422  21,261  46,683
       
Net income  $ 60,204  $ 52,108  $ 112,312
       
Less: Net income attributable to noncontrolling interest  463  585  1,048
       
Net income attributable to City National Corporation  $ 59,741  $ 51,523  $ 111,264
       
Less: Dividends on preferred stock  2,406  2,406  4,812
       
Net income available to common shareholders  $ 57,335  $ 49,117  $ 106,452
       
Other Data:      
Earnings per common share - basic  $ 1.05  $ 0.90  $ 1.95
Earnings per common share - diluted  $ 1.04  $ 0.90  $ 1.94
Dividends paid per common share  $ 0.25  $ --   $ 0.25
Common dividend payout ratio  23.81 %  -- %  12.85 %
Return on average assets  0.87 %  0.75 %  0.81 %
Return on average common equity  9.53 %  8.43 %  8.99 %
Return on average tangible common equity  13.60 %  12.17 %  12.90 %
Net interest margin (Fully taxable-equivalent)  3.24 %  3.21 %  3.22 %
Full-time equivalent employees  3,551  3,496  
           
CITY NATIONAL CORPORATION          
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME          
(unaudited)          
           
  2012
(Dollars in thousands Fourth Third Second First Year to
except per share data) Quarter Quarter Quarter Quarter Date
Interest income  $ 218,302  $ 224,768  $ 229,889  $ 213,592  $ 886,551
Interest expense  14,580  14,846  13,410  12,879  55,715
Net interest income  203,722  209,922  216,479  200,713  830,836
           
Provision for credit losses on loans and leases, excluding covered loans  7,000  2,000  1,000  --  10,000
Provision for losses on covered loans  6,498  18,089  13,293  7,466  45,346
           
Noninterest income          
Trust and investment fees  44,026  43,477  34,067  33,654  155,224
Brokerage and mutual fund fees  8,424  9,059  5,293  5,028  27,804
Cash management and deposit transaction fees  11,480  11,526  11,475  11,168  45,649
International services  11,342  9,819  10,017  8,785  39,963
FDIC loss sharing (expense) income, net (2,524)  1,667 (6,026)  866 (6,017)
Gain on disposal of assets  2,892  3,199  3,011  2,191  11,293
Gain (loss) on securities  13  817 (457)  449  822
Other  24,225  27,693  17,388  13,559  82,865
Total noninterest income  99,878  107,257  74,768  75,700  357,603
           
Noninterest expense          
Salaries and employee benefits  123,812  120,210  115,035  120,245  479,302
Net occupancy of premises  17,554  16,238  14,056  13,686  61,534
Legal and professional fees  17,844  11,757  11,359  11,880  52,840
Information services  8,896  8,660  8,539  8,149  34,244
Depreciation and amortization  8,720  8,324  8,013  7,428  32,485
Amortization of intangibles  1,932  1,932  1,518  1,886  7,268
Marketing and advertising  9,111  7,141  7,597  6,816  30,665
Office services and equipment  4,735  4,673  4,492  3,948  17,848
Other real estate owned  9,869  8,749  7,541  12,094  38,253
FDIC assessments  4,499  4,616  4,523  4,479  18,117
Other  15,044  15,586  11,843  10,109  52,582
Total noninterest expense  222,016  207,886  194,516  200,720  825,138
           
Income before taxes  68,086  89,204  82,438  68,227  307,955
           
Applicable income taxes  20,780  29,052  27,271  21,719  98,822
           
Net income  $ 47,306  $ 60,152  $ 55,167  $ 46,508  $ 209,133
           
Less: Net income attributable to noncontrolling interest  60  372  409  243  1,084
           
Net income attributable to City National Corporation  $ 47,246  $ 59,780  $ 54,758  $ 46,265  $ 208,049
           
Other Data:          
Earnings per common share - basic  $ 0.87  $ 1.10  $ 1.02  $ 0.86  $ 3.85
Earnings per common share - diluted  $ 0.87  $ 1.10  $ 1.01  $ 0.86  $ 3.83
Dividends paid per common share  $ 0.75  $ 0.25  $ 0.25  $ 0.25  $ 1.50
Common dividend payout ratio  86.16 %  22.63 %  24.57 %  28.91 %  38.96 %
Return on average assets  0.69 %  0.93 %  0.90 %  0.79 %  0.82 %
Return on average common equity  8.03 %  10.35 %  9.86 %  8.58 %  9.20 %
Return on average tangible common equity  11.66 %  15.05 %  13.42 %  11.57 %  12.92 %
Net interest margin (Fully taxable-equivalent)  3.27 %  3.58 % 3.91 % 3.74 % 3.61 %
Full-time equivalent employees  3,472  3,439  3,330 3,235  
     
CITY NATIONAL CORPORATION    
CONSOLIDATED PERIOD END BALANCE SHEET    
(unaudited)    
     
  2013
(In thousands) Second
Quarter
First
Quarter
Assets    
Cash and due from banks  $ 146,338  $ 144,290
Due from banks - interest-bearing 156,221 123,146
Federal funds sold and securities purchased under resale agreements 200,000 219,500
Securities available-for-sale 7,044,571 7,738,051
Securities held-to-maturity 1,503,973 1,400,890
Trading securities 48,655 53,526
Loans and leases:    
Commercial 7,497,105 7,170,370
Commercial real estate mortgages 3,101,169 2,937,457
Residential mortgages 4,153,051 4,027,741
Real estate construction 217,808 247,114
Home equity loans and lines of credit 700,681 696,679
Installment 149,438 137,545
Loans and leases, excluding covered loans 15,819,252 15,216,906
Allowance for loan and lease losses (289,914) (282,328)
Loans and leases, excluding covered loans, net 15,529,338 14,934,578
Covered loans, net (1) 843,582 909,563
Net loans and leases 16,372,920 15,844,141
Premises and equipment, net 162,535 152,389
Goodwill and other intangibles 686,897 688,829
Other real estate owned (2) 61,477 63,537
FDIC indemnification asset 117,295 142,906
Other assets 878,620 862,549
Total assets  $ 27,379,502  $ 27,433,754
     
Liabilities    
Deposits:    
Noninterest-bearing  $ 14,288,001  $ 13,800,017
Interest-bearing 9,363,756 9,137,569
Total deposits 23,651,757 22,937,586
Short-term borrowings 2,675 806,760
Long-term debt 706,537 702,967
Other liabilities 433,822 388,439
Total liabilities 24,794,791 24,835,752
     
Redeemable noncontrolling interest 39,943 41,113
     
Shareholders' equity    
Preferred stock 169,920 169,920
Common stock 54,274 54,133
Additional paid-in capital 507,560 496,013
Accumulated other comprehensive income 6,585 74,222
Retained earnings 1,831,725 1,788,041
Treasury shares (25,296) (25,440)
Total common shareholders' equity 2,374,848 2,386,969
Total shareholders' equity 2,544,768 2,556,889
Total liabilities and shareholders' equity  $ 27,379,502  $ 27,433,754
     
(1) Covered loans are net of $24.4 million and $42.4 million of allowance for loan losses as of June 30, 2013 and March 31, 2013, respectively.    
(2) Other real estate owned includes $41.8 million and $43.8 million covered by FDIC loss share at June 30, 2013 and March 31, 2013, respectively.
         
CITY NATIONAL CORPORATION        
CONSOLIDATED PERIOD END BALANCE SHEET        
(unaudited)        
         
  2012
(In thousands) Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Assets        
Cash and due from banks  $ 151,969  $ 235,038  $ 162,894  $ 210,799
Due from banks - interest-bearing 246,336 335,300 106,109 101,375
Federal funds sold 17,100 19,500 162,000 156,000
Securities available-for-sale 9,205,989 7,872,064 6,865,881 6,838,710
Securities held-to-maturity 1,398,403 1,174,161 1,100,229 996,613
Trading securities 115,059 64,749 62,585 82,589
Loans and leases:        
Commercial 6,949,073 6,264,562 6,086,947 5,573,782
Commercial real estate mortgages 2,829,694 2,463,664 2,424,333 2,213,114
Residential mortgages 3,962,205 3,897,690 3,822,630 3,805,807
Real estate construction 222,780 242,137 301,829 313,409
Home equity loans and lines of credit 711,750 718,966 741,270 715,997
Installment 142,793 137,632 130,200 125,793
Loans and leases, excluding covered loans 14,818,295 13,724,651 13,507,209 12,747,902
Allowance for loan and lease losses (277,888) (268,440) (269,534) (266,077)
Loans and leases, excluding covered loans, net 14,540,407 13,456,211 13,237,675 12,481,825
Covered loans, net (1) 986,223 1,099,359 1,216,988 1,335,685
Net loans and leases 15,526,630 14,555,570 14,454,663 13,817,510
Premises and equipment, net 149,433 147,621 147,245 143,238
Goodwill and other intangibles 690,761 691,765 589,114 521,717
Other real estate owned (2) 79,303 110,673 117,501 107,530
FDIC indemnification asset 150,018 160,991 170,654 185,392
Other assets 887,491 884,096 863,098 877,016
Total assets  $ 28,618,492  $ 26,251,528  $ 24,801,973  $ 24,038,489
         
Liabilities        
Deposits:        
Noninterest-bearing  $ 14,264,797  $ 13,432,413  $ 12,187,075  $ 11,550,000
Interest-bearing 9,237,558 9,079,903 8,921,977 9,237,737
Total deposits 23,502,355 22,512,316 21,109,052 20,787,737
Short-term borrowings 1,423,798 211,739 322,077 222,776
Long-term debt 706,051 706,035 712,280 482,024
Other liabilities 439,858 449,728 361,300 302,951
Total liabilities 26,072,062 23,879,818 22,504,709 21,795,488
         
Redeemable noncontrolling interest 41,112 41,386 41,899 43,436
         
Shareholders' equity        
Preferred stock 169,920  --   --   -- 
Common stock 53,886 53,886 53,886 53,886
Additional paid-in capital 490,339 485,975 491,439 489,717
Accumulated other comprehensive income 86,582 93,924 82,807 81,342
Retained earnings 1,738,957 1,732,417 1,686,163 1,644,861
Treasury shares (34,366) (35,878) (58,930) (70,241)
Total common shareholders' equity 2,335,398 2,330,324 2,255,365 2,199,565
Total shareholders' equity 2,505,318 2,330,324 2,255,365 2,199,565
Total liabilities and shareholders' equity  $ 28,618,492  $ 26,251,528  $ 24,801,973  $ 24,038,489
         
(1) Covered loans are net of $44.8 million, $45.0 million, $43.1 million and $61.5 million of allowance for loan losses as of December 31, 2012, September 30, 2012, June 30, 2012 and March 31, 2012, respectively.  
(2) Other real estate owned includes $58.3 million, $83.6 million, $82.8 million and $78.5 million covered by FDIC loss share at December 31, 2012, September 30, 2012, June 30, 2012 and March 31, 2012, respectively.
                 
CITY NATIONAL CORPORATION                
CREDIT LOSS EXPERIENCE                
(unaudited)                
                 
  2013 2012
(Dollars in thousands) Second
Quarter
First
Quarter
Year To
Date
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Year To
Date
                 
Allowance for Loan and Lease Losses, Excluding Covered Loans                
                 
Balance at beginning of period $ 282,328 $ 277,888 $ 277,888 $ 268,440 $ 269,534 $ 266,077 $ 262,557 $ 262,557
                 
Net recoveries/(charge-offs):                
Commercial  2,855  2,173  5,028  2,002 (4,936)  8,092  5,283  10,441
Commercial real estate mortgages  1,034  3  1,037 (290) (241)  1,113 (666) (84)
Residential mortgages  37 (68) (31) (7) (535) (543) (494) (1,579)
Real estate construction  2,682  2,666  5,348  170  3,105 (4,839)  104 (1,460)
Home equity loans and lines of credit  375 (112)  263 (169) (32) (808) (154) (1,163)
Installment  522  146  668  319  454 (274)  417  916
Total net recoveries/(charge-offs)  7,505  4,808  12,313  2,025 (2,185)  2,741  4,490  7,071
                 
Provision for credit losses  --  --  --  7,000  2,000  1,000  --  10,000
                 
Transfers from (to) reserve for off-balance sheet credit commitments  81 (368) (287)  423 (909) (284) (970) (1,740)
                 
Balance at end of period $ 289,914 $ 282,328 $ 289,914 $ 277,888 $ 268,440 $ 269,534 $ 266,077 $ 277,888
                 
Net Recoveries/(Charge-offs) to Average Total Loans and Leases, Excluding Covered Loans (annualized):              
                 
Commercial 0.16 % 0.13 % 0.14 % 0.12 % (0.32) % 0.56 % 0.40 % 0.18 %
Commercial real estate mortgages 0.14 % 0.00 % 0.07 % (0.04) % (0.04) % 0.20 %  (0.12) %  (0.00) %
Residential mortgages 0.00 %  (0.01) %  (0.00) % (0.00) % (0.06) %  (0.06) %  (0.05) %  (0.04) %
Real estate construction 4.51 % 4.60 % 4.55 % 0.29 % 4.65 %  (6.26) % 0.13 %  (0.52) %
Home equity loans and lines of credit 0.21 %  (0.06) % 0.07 % (0.09) % (0.02) %  (0.44) %  (0.09) %  (0.16) %
Installment 1.44 % 0.42 % 0.94 % 0.91 % 1.34 %  (0.85) % 1.30 % 0.69 %
Total loans and leases, excluding covered loans 0.20 % 0.13 % 0.16 % 0.06 % (0.06) % 0.08 % 0.15 % 0.05 %
                 
Reserve for Off-Balance Sheet Credit Commitments                
                 
Balance at beginning of period  $ 25,205  $ 24,837  $ 24,837  $ 25,260  $ 24,351  $ 24,067  $ 23,097  $ 23,097
Transfers (to) from allowance (81)  368  287 (423)  909  284  970  1,740
Balance at end of period  $ 25,124  $ 25,205  $ 25,124  $ 24,837  $ 25,260  $ 24,351  $ 24,067  $ 24,837
                 
Allowance for Losses on Covered Loans                
                 
Balance at beginning of period  $ 42,354  $ 44,781  $ 44,781  $ 44,978  $ 43,147  $ 61,471  $ 64,565  $ 64,565
Provision for losses (11,927)  9,892 (2,035)  6,498  18,089  13,293  7,466  45,346
Reduction in allowance due to loan removals (6,013) (12,319) (18,332) (6,695) (16,258) (31,617) (10,560) (65,130)
Balance at end of period  $ 24,414  $ 42,354  $ 24,414  $ 44,781  $ 44,978  $ 43,147  $ 61,471  $ 44,781
             
CITY NATIONAL CORPORATION            
NONPERFORMING ASSETS            
(unaudited)            
             
  2013 2012
(Dollars in thousands) Second
Quarter
First
Quarter
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
             
Nonperforming assets, excluding covered assets            
Nonaccrual loans, excluding covered loans            
Commercial  $ 11,679  $ 7,292  $ 9,207  $ 18,848  $ 19,056  $ 19,584
Commercial real estate mortgages  22,433  23,066  33,198  36,580  28,780  21,071
Residential mortgages  10,580  9,136  9,603  11,680  14,064  13,628
Real estate construction  25,718  39,608  40,882  28,963  29,676  48,964
Home equity loans and lines of credit  6,239  4,103  6,424  6,946  6,505  8,831
Installment  24  70  473  477  575  729
Total nonaccrual loans, excluding covered loans  76,673  83,275  99,787  103,494  98,656  112,807
             
Other real estate owned, excluding covered OREO  19,676  19,786  21,027  27,055  34,667  29,074
             
Total nonperforming assets, excluding covered assets  $ 96,349  $ 103,061  $ 120,814  $ 130,549  $ 133,323  $ 141,881
             
Nonperforming covered assets            
Nonaccrual loans  $ --  $ --  $ --  $ --  $ 422  $ 422
Other real estate owned  41,801  43,751  58,276  83,618  82,834  78,456
Total nonperforming covered assets  $ 41,801  $ 43,751  $ 58,276  $ 83,618  $ 83,256  $ 78,878
             
Loans 90 days or more past due on accrual status, excluding covered loans  $ 643  $ 1,688  $ 981  $ 433  $ 2,065  $ 654
             
Covered loans 90 days or more past due on accrual status  $ 89,439  $ 102,268  $ 112,396  $ 140,041  $ 190,005  $ 265,175
             
             
Allowance for loan and lease losses as a percentage of:            
Nonaccrual loans  378.12 %  339.03 %  278.48 %  259.38 %  273.21 %  235.87 %
Total nonperforming assets, excluding covered assets  300.90 %  273.94 %  230.01 %  205.62 %  202.17 %  187.54 %
Total loans and leases, excluding covered loans  1.83 %  1.86 %  1.88 %  1.96 %  2.00 %  2.09 %
             
Nonaccrual loans as a percentage of total loans, excluding covered loans  0.48 %  0.55 %  0.67 %  0.75 %  0.73 %  0.88 %
             
Nonperforming assets, excluding covered assets, as a percentage of:            
Total loans and other real estate owned, excluding covered assets  0.61 %  0.68 %  0.81 %  0.95 %  0.98 %  1.11 %
Total assets  0.35 %  0.38 %  0.42 %  0.50 %  0.54 %  0.59 %
             
CITY NATIONAL CORPORATION            
AVERAGE BALANCES AND RATES            
(unaudited)            
             
  2013
  Second Quarter First Quarter Year to Date
(Dollars in millions) Average
Balance
Average
Rate
Average
Balance
Average
Rate
Average
Balance
Average
Rate
Assets            
Interest-earning assets             
Loans and leases             
Commercial   $ 7,301  3.58 %  $ 6,876  3.71 %  $ 7,089  3.64 %
Commercial real estate mortgages  2,962  4.01  2,865  4.00  2,914  4.00
Residential mortgages  4,083  3.72  3,981  3.83  4,032  3.77
Real estate construction  239  4.25  235  4.64  237  4.44
Home equity loans and lines of credit  704  3.60  712  3.68  708  3.64
Installment   145  4.69  140  4.22  143  4.46
Total loans and leases, excluding covered loans  15,434  3.72  14,809  3.83  15,123  3.78
Covered loans  910  14.34  990  12.98  950  13.64
 Total loans and leases   16,344  4.32  15,799  4.42  16,073  4.36
Due from banks - interest-bearing  236  0.27  193  0.24  215  0.25
Federal funds sold and securities purchased under resale agreements  277  2.25  154  2.99  216  2.51
Securities  8,867  1.98  9,796  1.91  9,329  1.94
Other interest-earning assets  96  4.48  105  3.72  100  4.09
Total interest-earning assets  25,820  3.46  26,047  3.44  25,933  3.45
Allowance for loan and lease losses (325)   (328)   (327)  
Cash and due from banks  129    129    129  
Other non-earning assets  1,846    1,861    1,854  
Total assets  $ 27,470    $ 27,709    27,589  
             
Liabilities and Equity            
Interest-bearing deposits            
Interest checking accounts  $ 2,173  0.07 %  $ 2,217  0.08 %  $ 2,195  0.07 %
Money market accounts  5,759  0.11  5,692  0.11  5,725  0.11
Savings deposits  415  0.10  419  0.11  417  0.10
Time deposits - under $100,000  229  0.31  209  0.35  219  0.33
Time deposits - $100,000 and over  671  0.41  596  0.43  634  0.42
Total interest-bearing deposits  9,247  0.13  9,133  0.13  9,190  0.13
             
Federal funds purchased and securities sold under repurchase agreements  374  0.13  840  0.13  606  0.13
Other borrowings  928  4.74  1,452  3.21  1,188  3.81
Total interest-bearing liabilities  10,549  0.54  11,425  0.52  10,984  0.53
Noninterest-bearing deposits  13,872    13,278    13,577  
Other liabilities  466    473    470  
Total equity  2,582    2,533    2,558  
Total liabilities and equity  $ 27,470    $ 27,709    $ 27,589  
             
             
Net interest spread    2.92 %    2.92 %    2.92 %
Net interest margin    3.24 %    3.21 %    3.22 %
             
Average prime rate    3.25 %    3.25 %    3.25 %
                     
CITY NATIONAL CORPORATION                    
AVERAGE BALANCES AND RATES                    
(unaudited)                    
                     
  2012
  Fourth Quarter Third Quarter Second Quarter First Quarter Year to Date
(Dollars in millions) Average Balance Average Rate Average Balance Average Rate Average Balance Average Rate Average Balance Average Rate Average Balance Average Rate
Assets                    
Interest-earning assets                     
Loans and leases                     
Commercial   $ 6,395  3.89 %  $ 6,128  3.97 %  $ 5,845  4.16 %  $ 5,319  3.94 %  $ 5,923  3.99 %
Commercial real estate mortgages  2,574  4.34  2,464  4.45  2,295  4.70  2,166  4.87  2,376  4.57
Residential mortgages  3,928  3.95  3,865  4.11  3,815  4.28  3,777  4.36  3,847  4.17
Real estate construction  236  5.33  265  5.67  311  4.31  314  5.33  281  5.13
Home equity loans and lines of credit  711  3.52  731  3.52  731  3.53  727  3.58  725  3.54
Installment   140  4.48  135  4.51  129  4.60  129  4.67  133  4.56
Total loans and leases, excluding covered loans  13,984  4.00  13,588  4.10  13,126  4.27  12,432  4.26  13,285  4.15
Covered loans  1,090  13.09  1,207  13.92  1,341  14.51  1,439  10.63  1,269  12.97
 Total loans and leases  15,074  4.65  14,795  4.90  14,467  5.22  13,871  4.93  14,554  4.92
Due from banks - interest-bearing  441  0.26  247  0.26  293  0.24  167  0.22  287  0.25
Federal funds sold and securities purchased under resale agreements  191  0.29  105  0.28  137  0.28  15  0.28  112  0.28
Securities   9,653  1.91  8,631  2.16  7,755  2.37  7,929  2.40  8,496  2.19
Other interest-earning assets  109  3.75  114  2.40  117  2.39  121  2.30  115  2.69
Total interest-earning assets  25,468  3.49  23,892  3.82  22,769  4.15  22,103  3.97  23,564  3.85
Allowance for loan and lease losses (317)   (319)   (331)   (335)   (326)  
Cash and due from banks  231    184    148    141    176  
Other non-earning assets  1,874    1,898    1,777    1,736    1,822  
Total assets  $ 27,256    $ 25,655    $ 24,363    $ 23,645    $ 25,236  
                     
Liabilities and Equity                    
Interest-bearing deposits                    
Interest checking accounts  $ 2,098  0.08 %  $ 1,981  0.09 %  $ 1,890  0.10 %  $ 1,952  0.11 %  $ 1,981  0.10 %
Money market accounts  5,907  0.11  5,838  0.11  5,856  0.13  6,018  0.15  5,904  0.13
Savings deposits  384  0.12  371  0.14  360  0.14  358  0.14  368  0.14
Time deposits - under $100,000  210  0.41  220  0.51  228  0.50  242  0.49  225  0.48
Time deposits -- $100,000 and over  605  0.44  732  0.41  733  0.45  697  0.51  692  0.45
Total interest-bearing deposits  9,204  0.14  9,142  0.14  9,067  0.16  9,267  0.18  9,170  0.15
                     
Federal funds purchased and securities sold under repurchase agreements  15  0.12  24  0.15  4  0.11  166  0.08  52  0.09
Other borrowings  917  4.97  922  4.97  797  4.97  697  5.09  834  4.99
Total interest-bearing liabilities  10,136  0.57  10,088  0.59  9,868  0.55  10,130  0.51  10,056  0.55
Noninterest-bearing deposits  14,182    12,799    11,881    10,950    12,459  
Other liabilities  506    471    380    396    438  
Total equity  2,432    2,297    2,234    2,169    2,283  
Total liabilities and equity  $ 27,256    $ 25,655    $ 24,363    $ 23,645    $ 25,236  
                     
                     
Net interest spread    2.92 %    3.23 %    3.60 %    3.46 %    3.30 %
Net interest margin    3.27 %    3.58 %    3.91 %    3.74 %    3.61 %
                     
Average prime rate    3.25 %    3.25 %    3.25 %    3.25 %    3.25 %
                     
Note: Certain prior period balances have been reclassified to conform to current period presentation.                    
                 
CITY NATIONAL CORPORATION                
CAPITAL AND CREDIT RATING DATA                
(unaudited)                
                 
  2013 2012
  Second
Quarter
First
Quarter
Year To
Date
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Year To
Date
Per Common Share:                
Shares outstanding (in thousands):                
Average - Basic  54,105  53,731  53,919  53,566  53,425  53,105  52,741  53,211
Average - Diluted  54,477  54,068  54,280  53,743  53,711  53,373  53,021  53,475
Period-end  53,781  53,638    53,216  53,190  52,822  52,661  
Book value for shareholders  $ 44.16  $ 44.50    $ 43.89  $ 43.81  $ 42.70  $ 41.77  
Closing price:                
High  $ 63.66  $ 59.61  $ 63.66  $ 52.60  $ 54.48  $ 54.63  $ 54.44  $ 54.63
Low  54.36  51.13  51.13  47.27  48.20  46.39  45.39  45.39
Period-end  63.37  58.91    49.52  51.51  48.58  52.47  
                 
                 
Capital Ratios (Dollars in millions):                
Risk-based capital                
Risk-weighted assets (1)  $ 19,256  $ 18,872    $ 18,627  $ 17,174  $ 16,723  $ 15,840  
Tier 1 common equity  $ 1,700  $ 1,643    $ 1,578  $ 1,566  $ 1,597  $ 1,611  
Percentage of risk-weighted assets (2)  8.83 %  8.71 %    8.47 %  9.12 %  9.55 %  10.17 %  
Tier 1 capital  $ 1,875  $ 1,818    $ 1,753  $ 1,571  $ 1,602  $ 1,616  
Percentage of risk-weighted assets  9.74 %  9.64 %    9.41 %  9.15 %  9.58 %  10.20 %  
Total capital  $ 2,461  $ 2,399    $ 2,332  $ 2,133  $ 2,160  $ 2,013  
Percentage of risk-weighted assets  12.78 %  12.71 %    12.52 %  12.42 %  12.91 %  12.71 %  
Tier 1 leverage ratio  7.00 %  6.72 %    6.60 %  6.29 %  6.74 %  6.98 %  
                 
Period-end equity to period-end assets  9.29 %  9.32 %    8.75 %  8.88 %  9.09 %  9.15 %  
Period-end common equity to period-end assets  8.67 %  8.70 %    8.16 %  8.88 %  9.09 %  9.15 %  
                 
Average equity to average assets  9.40 %  9.14 %  9.27 %  8.92 %  8.95 %  9.17 %  9.17 %  9.05 %
Average common equity to average assets  8.78 %  8.53 %  8.66 %  8.59 %  8.95 %  9.17 %  9.17 %  8.96 %
                 
Period-end tangible equity to period-end tangible assets (2)  6.96 %  6.98 %    6.50 %  6.41 %  6.88 %  7.13 %  
Period-end tangible common equity to period-end tangible assets (2)  6.32 %  6.35 %    5.89 %  6.41 %  6.88 %  7.13 %  
                 
Average tangible equity to average tangible assets (2)  7.07 %  6.82 %  6.95 %  6.55 %  6.45 %  7.01 %  7.12 %  6.77 %
Average tangible common equity to average tangible assets (2)  6.44 %  6.19 %  6.32 %  6.21 %  6.45 %  7.01 %  7.12 %  6.68 %
                 
                 
Senior Debt Credit Ratings                
For The Period Ended June 30, 2013     Standard &          
  Moody's Fitch Poor's DBRS        
City National Bank A1  A- A- A (high)        
City National Corporation A2  A- BBB+  A         
                 
                 
(1) In accordance with applicable bank regulatory guidelines, risk-weighted assets are calculated by assigning assets and credit equivalent amounts of derivatives and off-balance sheet items to one of several broad risk categories according to the obligor, or, if relevant, the guarantor or the nature of the collateral. The aggregate dollar amount in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are added together for determining risk-weighted assets.
(2) The Tier 1 common equity to risk-weighted assets ratio, tangible equity to tangible assets ratio, and tangible common equity to tangible assets ratio are non-GAAP financial measures. See pages 15 and 16 for notes on non-GAAP measures.                
                 
CITY NATIONAL CORPORATION                
COMPUTATION OF BASIC AND DILUTED EARNINGS PER COMMON SHARE        
(unaudited)                  
                   
City National applies the two-class method of computing basic and diluted earnings per common share ("EPS"). Under the two-class method, EPS is determined for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. The company grants restricted stock and restricted stock units under a share-based compensation plan that qualify as participating securities. The computation of basic and diluted EPS is presented in the following table:
                   
  2013 2012 2012
(Dollars in thousands, except per share amounts) Second
Quarter
First
Quarter
Year to
Date
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Full
Year
Year to
Date*
Basic EPS:                  
Net income attributable to City National Corporation  $ 59,741  $ 51,523  $ 111,264  $ 47,246  $ 59,780  $ 54,758  $ 46,265  $ 208,049  $ 101,023
Less: Dividends on preferred stock  2,406  2,406  4,812  --  --  --  --  --  --
Net income available to common shareholders  $ 57,335  $ 49,117  $ 106,452  $ 47,246  $ 59,780  $ 54,758  $ 46,265  $ 208,049  $ 101,023
Less: Earnings allocated to participating securities  656  637  1,287  652  842  788  738  3,008  1,532
Earnings allocated to common shareholders  $ 56,679  $ 48,480  $ 105,165  $ 46,594  $ 58,938  $ 53,970  $ 45,527  $ 205,041  $ 99,491
                   
Weighted average shares outstanding  54,105  53,731  53,919  53,566  53,425  53,105  52,741  53,211  52,923
                   
Basic earnings per common share  $ 1.05  $ 0.90  $ 1.95  $ 0.87  $ 1.10  $ 1.02  $ 0.86  $ 3.85  $ 1.88
                   
Diluted EPS:                  
Earnings allocated to shareholders (1)  $ 56,682  $ 48,484  $ 105,173  $ 46,594  $ 58,941  $ 53,972  $ 45,530  $ 205,050  $ 99,496
                   
Weighted average shares outstanding  54,105  53,731  53,919  53,566  53,425  53,105  52,741  53,211  52,923
Dilutive effect of equity awards  372  337  361  177  286  268  280  264  294
Weighted average diluted shares outstanding  54,477  54,068  54,280  53,743  53,711  53,373  53,021  53,475  53,217
                   
Diluted earnings per common share  $ 1.04  $ 0.90  $ 1.94  $ 0.87  $ 1.10  $ 1.01  $ 0.86  $ 3.83  $ 1.87
                   
* For the six months ended June 30, 2012.              
                   
(1) Earnings allocated to shareholders for basic and diluted EPS may differ under the two-class method as a result of adding common stock equivalents for options to dilutive shares outstanding, which alters the ratio used to allocate earnings to shareholders and participating securities for the purposes of calculating diluted EPS.
         
CITY NATIONAL CORPORATION        
SELECTED FINANCIAL INFORMATION ON COVERED ASSETS        
(unaudited)        
         
The following table provides selected components of income and expense related to covered assets:
         
    2013  2012
(In thousands)   Second
Quarter
First
Quarter
Second
Quarter
         
Summary Totals        
Net impairment (expense) income (Sum of A)    $ (1,463)  $ (71)  $ 3,932
Other covered asset (expense) income, net    (520)  (144)  3,388
Total (expense) income, net    $ (1,983)  $ (215)  $ 7,320
         
Interest income (1)        
Income on loans paid-off or fully charged-off    $ 15,880  $ 15,625  $ 27,402
         
Provision for losses on covered loans        
Provision for losses on covered loans A  (11,927)  9,892  13,293
         
Noninterest income related to covered assets        
         
FDIC loss sharing expense, net        
(Loss) gain on indemnification asset A  $ (13,102)  $ 10,616  $ 17,722
Indemnification asset accretion    (4,746)  (4,899)  (4,133)
Net FDIC reimbursement for OREO and loan expenses    4,995  5,193  6,724
Removal of indemnification asset for loans paid-off or fully charged-off    (7,650)  (6,073)  (10,654)
Removal of indemnification asset for unfunded loan commitments and loans transferred to OREO    (1,163)  (2,569)  (4,773)
Removal of indemnification asset for OREO and net reimbursement to FDIC for OREO sales    (428)  (844)  (1,189)
Loan recoveries shared with FDIC    (4,095)  (4,981)  (9,226)
Increase in FDIC clawback liability A  (288)  (795)  (497)
Total FDIC loss sharing expense, net    (26,477)  (4,352)  (6,026)
         
Gain on disposal of assets        
Net gain on sale of OREO    616  974  1,486
         
         
Other income        
Net gain on transfers of covered loans to OREO    1,445  3,506  6,864
Amortization of fair value on acquired unfunded loan commitments    283  394  413
OREO income    456  826  615
Other    (318)  (334)  (864)
Total other income    1,866  4,392  7,028
         
Total noninterest income related to covered assets    $ (23,995)  $ 1,014  $ 2,488
         
Noninterest expense related to covered assets (2)        
         
Other real estate owned        
Valuation write-downs    $ 2,184  $ 3,035  $ 4,250
Holding costs and foreclosure expense    1,894  1,893  2,796
Total other real estate owned    4,078  4,928  7,046
         
Legal and professional fees    1,701  2,020  2,200
         
Other operating expense        
Other covered asset expenses    16  14  31
         
Total noninterest expense related to covered assets (3)    $ 5,795  $ 6,962  $ 9,277
         
Total (expense) income, net    $ (1,983)  $ (215)  $ 7,320
         
(1) Excludes base yield in interest income related to covered loans.        
(2) OREO, legal and professional fees, and other expenses related to covered assets must meet certain FDIC criteria in order for the expense amounts to be reimbursed. Certain amounts reflected in these categories may not be reimbursed by the FDIC.
(3) Excludes personnel and other corporate overhead expenses that the company incurs to service covered assets and costs associated with the branches acquired in FDIC-assisted acquisitions.
               
CITY NATIONAL CORPORATION              
NON-GAAP FINANCIAL MEASURES              
(unaudited)                  
                   
(a) Noninterest expense, excluding the operating expenses of First American Equipment Finance and Rochdale Investment Management
                   
Noninterest expense for the second quarter of 2013 was $211.4 million, an increase of 9 percent from the second quarter of 2012. Excluding the operating expenses of First American Equipment Finance (acquired at the end of April 2012) and Rochdale Investment Management (acquired in July 2012), noninterest expense for the second quarter of 2013 was $196.1 million, an increase of 2 percent from the second quarter of 2012. Management believes this non-GAAP financial measure enhances the comparability of the financial results with prior periods.
                   
(b) Return on average tangible common equity ratio (annualized)          
                   
Return on average tangible common equity is a non-GAAP financial measure that represents the return on average common equity excluding goodwill and other intangible assets and their related amortization expense. Management reviews this measure in evaluating the company's performance and believes that investors may find it useful to evaluate the return on average common equity without the impact of goodwill and other intangible assets. A reconciliation of the GAAP to non-GAAP measure is set forth below: 
 
   2013 2012 2012
(Dollars in thousands) Second
Quarter
First
Quarter
Year to
Date
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Full
Year
Year to
Date*
Net income available to common shareholders  $ 57,335  $ 49,117  $ 106,452  $ 47,246  $ 59,780  $ 54,758  $ 46,265  $ 208,049  $ 101,023
Add: Amortization of intangibles, net of tax  1,123  1,124  2,247  1,124  1,124  883  1,097  4,228  1,980
Tangible net income available to common shareholders (A)  $ 58,458  $ 50,241  $ 108,699  $ 48,370  $ 60,904  $ 55,641  $ 47,362  $ 212,277  $ 103,003
                   
Average common equity  $ 2,412,148  $ 2,363,524  $ 2,387,970  $ 2,341,763  $ 2,296,754  $ 2,234,411  $ 2,168,748  $ 2,260,740  $ 2,201,579
Less: Goodwill and other intangibles  (687,997)  (689,932)  (688,959)  (690,975)  (687,224)  (566,989)  (522,182)  (617,237)  (544,585)
Tangible common equity (B)  $ 1,724,151  $ 1,673,592  $ 1,699,011  $ 1,650,788  $ 1,609,530  $ 1,667,422  $ 1,646,566  $ 1,643,503  $ 1,656,994
                   
Return on average tangible common equity (A)/(B) 13.60% 12.17% 12.90% 11.66% 15.05% 13.42% 11.57% 12.92% 12.50%
                   
* For the six months ended June 30, 2012.          
                   
(c) Tier 1 common equity to risk-weighted assets                  
                   
Tier 1 common equity to risk-weighted assets ratio, also known as Tier 1 common ratio, is calculated by dividing (a) Tier 1 capital less non-common components including qualifying perpetual preferred stock, qualifying noncontrolling interest in subsidiaries and qualifying trust preferred securities by (b) risk-weighted assets. Tier 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 ratio in response to market participants' interest in the Tier 1 common equity to risk-weighted assets ratio. 
                   
   2013 2012      
(Dollars in thousands) Second
Quarter
First
Quarter
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
     
Tier 1 capital  $ 1,874,999  $ 1,818,367  $ 1,753,312  $ 1,570,778  $ 1,602,398  $ 1,616,099      
Less: Preferred stock  (169,920)  (169,920)  (169,920)  --  --  --      
Less: Trust preferred securities  (5,155)  (5,155)  (5,155)  (5,155)  (5,155)  (5,155)      
Tier 1 common equity (A)  $ 1,699,924  $ 1,643,292  $ 1,578,237  $ 1,565,623  $ 1,597,243  $ 1,610,944      
                   
Risk-weighted assets (B)  $19,255,862  $18,872,451  $18,627,165  $17,174,382  $16,722,999  $15,839,944      
                   
Tier 1 common equity to risk-weighted assets (A)/(B) 8.83% 8.71% 8.47% 9.12% 9.55% 10.17%      
                   
Under Basel III capital rules, the Company's estimated Tier 1 common equity ratio was 8.6 percent at June 30, 2013. This ratio was estimated based on management's interpretation of final rules adopted July 2, 2013, by the Federal Reserve Board establishing a new comprehensive capital framework for U.S. banking organizations that would implement the Basel III capital framework and certain provisions of the Dodd-Frank Act. Under management's interpretation of Basel III, estimated Tier 1 common equity was $1.7 billion and estimated risk-weighted assets were $19.9 billion.
                 
CITY NATIONAL CORPORATION                
NON-GAAP FINANCIAL MEASURES (continued)                
(unaudited)                
                 
(d) Tangible equity and tangible common equity ratios                
                 
Tangible equity to tangible assets is a non-GAAP financial measure that represents total equity less identifiable intangible assets and goodwill divided by total assets less identifiable intangible assets and goodwill. Tangible common equity to tangible assets is a non-GAAP financial measure that represents tangible equity less preferred stock divided by total assets less identifiable intangible assets and goodwill. Management reviews both these measures in evaluating the company's capital levels and has included these ratios in response to market participant interest in tangible equity and tangible common equity as a measure of capital. A reconciliation of the GAAP to non-GAAP measure is set forth below: 
                 
  2013 2012
(Dollars in thousands) Second
Quarter
First
Quarter
Year to
Date
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Year to
Date
Period End:                
Total equity  $ 2,544,768  $ 2,556,889    $ 2,505,318  $ 2,330,324  $ 2,255,365  $ 2,199,565  
Less: Goodwill and other intangibles  (686,897)  (688,829)    (690,761)  (691,765)  (589,114)  (521,717)  
Tangible equity (A)  1,857,871  1,868,060    1,814,557  1,638,559  1,666,251  1,677,848  
Less: Preferred stock  (169,920)  (169,920)    (169,920)  --  --  --  
Tangible common equity (B)  $ 1,687,951  $ 1,698,140    $ 1,644,637  $ 1,638,559  $ 1,666,251  $ 1,677,848  
                 
Total assets  $ 27,379,502  $ 27,433,754    $ 28,618,492  $ 26,251,528  $ 24,801,973  $ 24,038,489  
Less: Goodwill and other intangibles  (686,897)  (688,829)    (690,761)  (691,765)  (589,114)  (521,717)  
Tangible assets (C)  $ 26,692,605  $ 26,744,925    $ 27,927,731  $ 25,559,763  $ 24,212,859  $ 23,516,772  
                 
Period-end tangible equity to period-end tangible assets (A)/(C)  6.96% 6.98%   6.50% 6.41% 6.88% 7.13%  
Period-end tangible common equity to period-end tangible assets (B)/(C)  6.32% 6.35%   5.89% 6.41% 6.88% 7.13%  
                 
Average Balance:                
Total equity  $ 2,582,068  $ 2,533,444  $ 2,557,890  $ 2,432,264  $ 2,296,754  $ 2,234,411  $ 2,168,748  $ 2,283,489
Less: Goodwill and other intangibles  (687,997)  (689,932)  (688,959)  (690,975)  (687,224)  (566,989)  (522,182)  (617,237)
Tangible equity (D)  1,894,071  1,843,512  1,868,931  1,741,289  1,609,530  1,667,422  1,646,566  1,666,252
Less: Preferred stock  (169,920)  (169,920)  (169,920)  (90,501)  --  --  --  (22,749)
Tangible common equity (E)  $ 1,724,151  $ 1,673,592  $ 1,699,011  $ 1,650,788  $ 1,609,530  $ 1,667,422  $ 1,646,566  $ 1,643,503
                 
Total assets  $ 27,469,581  $ 27,709,159  $ 27,588,708  $ 27,255,859  $ 25,654,594  $ 24,362,546  $ 23,644,899  $ 25,236,172
Less: Goodwill and other intangibles  (687,997)  (689,932)  (688,959)  (690,975)  (687,224)  (566,989)  (522,182)  (617,237)
Tangible assets (F)  $ 26,781,584  $ 27,019,227  $ 26,899,749  $ 26,564,884  $ 24,967,370  $ 23,795,557  $ 23,122,717  $ 24,618,935
                 
Average tangible equity to average tangible assets (D)/(F) 7.07% 6.82% 6.95% 6.55% 6.45% 7.01% 7.12% 6.77%
Average tangible common equity to average tangible assets (E)/(F) 6.44% 6.19% 6.32% 6.21% 6.45% 7.01% 7.12% 6.68%
CONTACT: Financial/Investors
         Christopher J. Carey, City National, 310.888.6777
         Chris.Carey@cnb.com

         Media
         Cary Walker, City National, 213.673.7615
         Cary.Walker@cnb.com

         Conference Call:
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         Conference ID: 93427620