10-K

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2007
OR
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 (State or other jurisdiction of incorporation or organization)	95-2568550 (I.R.S. Employer Identification No.)
City National Center 400 North Roxbury Drive, Beverly Hills, California (Address of principal executive offices)	90210 (Zip Code)
Registrant's telephone number, including area code (310) 888-6000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, $1.00 par value	New York Stock Exchange

No securities are registered pursuant to Section 12(g) of the Act.

         Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý    No o

         Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes o    No ý

         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 such filing requirements for the past 90 days. Yes ý    No o

         Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 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.

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

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

         As of June 30, 2007, the aggregate market value of the registrant's common stock ("Common Stock") held by non-affiliates of the registrant was approximately $3,127,954,972 based on the June 30, 2007 closing sale price of Common Stock of $76.09 per share as reported on the New York Stock Exchange.

         As of January 31, 2008, there were 48,068,909 shares of Common Stock outstanding.

Documents Incorporated by Reference

The information required to be disclosed pursuant to Part III of this report either shall be (i) deemed to be incorporated by reference from selected portions of City National Corporation's definitive proxy statement for the 2008 annual meeting of stockholders, if such proxy statement is filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of the Corporation's most recently completed fiscal year, or (ii) included in an amendment to this report filed with the Commission on Form 10-K/A not later than the end of such 120 day period.

TABLE OF CONTENTS

PART I
Item 1.	Business	2
Item 1A.	Risk Factors	13
Item 1B.	Unresolved Staff Comments	16
Item 2.	Properties	16
Item 3.	Legal Proceedings	16
Item 4.	Submission of Matters to a Vote of Security Holders	16
PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	17
Item 6.	Selected Financial Data	18
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	18
Item 8.	Financial Statements and Supplementary Data	18
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	18
Item 9A.	Controls and Procedures	18
Item 9B.	Other Information	18
PART III
Item 10.	Directors and Officers of the Registrant	19
Item 11.	Executive Compensation	19
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	19
Item 13.	Certain Relationships and Related Transactions	19
Item 14.	Principal Accountant Fees and Services	19
PART IV
Item 15.	Exhibits and Financial Statement Schedules	20

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PART I

Item 1.    Business

General

        City National Corporation (the "Corporation"), a Delaware corporation organized in 1968, is a bank holding company and a financial holding company under the Gramm-Leach-Bliley Financial Modernization Act of 1999 (the "GLB Act"). The Corporation provides a wide range of banking, investing and trust services to its clients through its wholly-owned banking subsidiary, City National Bank (the "Bank" and together with the Corporation, its subsidiaries and its asset management affiliates the "Company"). The Bank, which has conducted business since 1954, is a national banking association headquartered in Beverly Hills, California and operating through 62 offices, including 15 full-service regional centers, in Southern California, the San Francisco Bay area, Nevada and New York City. As of December 31, 2007, the Corporation had a majority ownership interest in eight asset management affiliates and a minority interest in one other asset management firm. At December 31, 2007, the Company had consolidated total assets of $15.9 billion, loan balances of $11.6 billion, and assets under management or administration (excluding the minority-owned asset manager) of $58.5 billion. The Company focuses on providing affluent individuals and entrepreneurs, their businesses and their families with complete financial solutions. The organization's mission is to provide this banking and financial experience through an uncommon dedication to extraordinary service, proactive advice and total financial solutions.

        On February 28, 2007, the Company completed the acquisition of Business Bank Corporation ("BBC"), the parent of Business Bank of Nevada ("BBNV") and an unconsolidated subsidiary, Business Bancorp Capital Trust I, in a cash and stock transaction valued at $167 million. BBNV operated as a wholly owned subsidiary of City National Corporation until after the close of business on April 30, 2007, at which time it was merged into the Bank. Refer to the "Management's Discussion and Analysis" section of this report for further details regarding this acquisition.

        On May 1, 2007, the Corporation completed the acquisition of Lydian Wealth Management in an all-cash transaction. The wealth and investment advisory firm is headquartered in Rockville, Maryland and currently manages or advises on client assets totaling $8.9 billion. Lydian Wealth Management changed its name to Convergent Wealth Advisors ("Convergent Wealth") and became a subsidiary of Convergent Capital Management LLC, the Chicago-based asset management holding company that the Company acquired in 2003. Refer to the "Management's Discussion and Analysis" section of this report for further details regarding this acquisition.

        The Company has three reportable segments, Commercial and Private Banking, Wealth Management, and Other. All investment advisory affiliates and the Bank's Wealth Management Services are included in the Wealth Management segment. All other subsidiaries, the unallocated portion of corporate departments and inter-segment eliminations are included in the Other segment. Information about the Company's segments is provided in Note 21 to the Consolidated Financial Statements beginning on page A-45 of this report as well as in the "Management's Discussion and Analysis" beginning on page 28 of this report. In addition, the following information is provided to assist the reader in understanding the Company's business segments:

        The Bank's principal client base comprises small to mid-sized businesses, entrepreneurs, professionals, and affluent individuals. The Bank serves its clients through relationship banking. The Bank's value proposition is to provide the ultimate banking experience through depth of expertise, breadth of resources, focus and location, dedication to complete solutions, a relationship banking model and an integrated team approach. Through the use of private and commercial banking teams, product specialists and investment advisors, the Bank facilitates the use by the client, where appropriate, of multiple services and products offered by the Company. The Company offers a broad range of lending,

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deposit, cash management, international banking, equipment financing, and other products and services. The Company also lends, invests, and provides services in accordance with its Community Reinvestment Act ("CRA") commitments.

        The Bank's Wealth Management division and the Corporation's asset management subsidiaries make available the following investment advisory and wealth management resources and expertise to the Company's clients:

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investment management and advisory services and brokerage services, including portfolio management, securities trading and asset management;



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personal and business trust and investment services, including employee benefit trust services, 401(k) and defined benefit plans; and



•

estate and financial planning and custodial services.

        The Bank also advises and makes available mutual funds under the name of CNI Charter Funds. The Corporation's asset management subsidiaries and the Bank's Wealth Management Division provide both proprietary and nonproprietary products to offer a full spectrum of asset classes and investment styles, including fixed-income instruments, mutual funds, domestic and international equities and alternative investments, such as hedge funds. Investment services are provided to institutional as well as individual clients.

        At December 31, 2007, the Company had 2,914 full-time equivalent employees.

Competition

        There is significant competition among commercial banks and other financial institutions in the Company's market areas. California, New York and Nevada are highly competitive environments for banking and other financial organizations providing private and business banking and wealth management services. The Bank faces competitive credit and pricing pressure as it competes with other banks and financial organizations. The Company's performance is also significantly influenced by California's economy. As a result of the GLB Act, the Company also competes with other providers of financial services such as money market mutual funds, securities firms, credit unions, insurance companies and other financial services companies. Furthermore, interstate banking legislation has promoted more intense competition by eroding the geographic constraints on the financial services industry.

        Our ability to compete effectively is due to our provision of personalized services resulting from management's knowledge and awareness of its clients' needs and its market areas. We believe this relationship banking approach and knowledge provide a business advantage in providing high client satisfaction and serving the small to mid-sized businesses, entrepreneurs, professionals and other affluent individuals that comprise the Company's client base. Our ability to compete also depends on our ability to continue to attract and retain our senior management and other key colleagues. Further, our ability to compete depends in part on our ability to continue to develop and market new and innovative products and services and to adopt or develop new technologies that differentiate our products and services.

Economic Conditions, Government Policies, Legislation, and Regulation

        The Company's profitability, like most financial institutions, is highly dependent on interest rate differentials. In general, the difference between the interest rates paid by the Bank on interest-bearing liabilities, such as deposits and other borrowings, and the interest rates received by the Bank on its interest-earning assets, such as loans extended to its clients and securities held in its investment portfolio, comprise the major portion of the Company's earnings. These rates are highly sensitive to

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many factors that are beyond the Company's control, such as inflation, recession, and unemployment. Energy and commodity prices and the value of the dollar are additional primary sources of risk and volatility. The impact that future changes in domestic and foreign economic conditions might have on the Company cannot be predicted. See Item 1A—Risk Factors.

        The Company's business and earnings are affected by the monetary and fiscal policies of the federal government and its agencies, particularly the Board of Governors of the Federal Reserve System (the "Federal Reserve"). The Federal Reserve regulates the supply of money and credit in the United States. Among the instruments of monetary policy available to the Federal Reserve are its open-market operations in U.S. Government securities, including adjusting the required level of reserves for depository institutions subject to its reserve requirements, and varying the target federal funds and discount rates applicable to borrowings by depository institutions. The actions of the Federal Reserve in these areas influence the growth of bank loans, investments, and deposits and also affect interest rates earned on interest-earning assets and paid on interest-bearing liabilities. Changes in the policies of the Federal Reserve may have an effect on the Company's business, results of operations and financial condition.

        Proposals to change the laws and regulations governing the operations and taxation of banks, bank holding companies, and other financial institutions and financial services providers are frequently introduced in the U.S. Congress, in the state legislatures, and before various regulatory agencies. The likelihood and timing of any proposals or legislation and the impact they may have on the Company cannot be determined at this time.

Supervision and Regulation

General

        The Corporation, the Bank and the Corporation's non-banking subsidiaries are subject to extensive regulation under both federal and state law. This regulation is intended primarily for the protection of depositors, the deposit insurance fund, and the banking system as a whole, and not for the protection of shareholders of the Corporation. Set forth below is a summary description of the significant laws and regulations applicable to the Corporation and the Bank. The description is qualified in its entirety by reference to the applicable laws and regulations.

Regulatory Agencies

        The Corporation is a legal entity separate and distinct from the Bank and its other subsidiaries. As a financial holding company and a bank holding company, the Corporation is regulated under the Bank Holding Company Act of 1956 (the "BHC Act"), and is subject to supervision, regulation and inspection by the Federal Reserve. The Corporation is also under the jurisdiction of the Securities and Exchange Commission ("SEC") and is subject to the disclosure and regulatory requirements of the Securities Act of 1933 and the Securities Exchange Act of 1934, each administered by the SEC. The Corporation is listed on the New York Stock Exchange ("NYSE") under the trading symbol "CYN" and is subject to the rules of the NYSE for listed companies.

        The Bank, as a national banking association, is subject to broad federal regulation and oversight extending to all its operations by the Office of the Comptroller of the Currency ("OCC"), its primary regulator, and also by the Federal Reserve and the Federal Deposit Insurance Corporation.

        The Corporation's non-bank subsidiaries are also subject to regulation by the Federal Reserve and other federal and state agencies, including for those non-bank subsidiaries that are investment advisors, the SEC under the Investment Advisors Act of 1940. City National Securities, Inc. ("CNS") is regulated by the SEC, the Financial Industry Regulatory Authority ("FINRA") and state securities regulators.

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The Corporation

        The Corporation is a bank holding company and a financial holding company. In general, the BHC Act limits the business of bank holding companies to banking, managing or controlling banks and other activities that the Federal Reserve has determined to be so closely related to banking as to be a proper incident thereto. As a result of the GLB Act, which amended the BHC Act, bank holding companies that are financial holding companies may engage in any activity, or acquire and retain the shares of a company engaged in any activity, that is either (i) financial in nature or incidental to such financial activity (as determined by the Federal Reserve in consultation with the OCC) or (ii) complementary to a financial activity, and that does not pose a substantial risk to the safety and soundness of depository institutions or the financial system generally (as determined solely by the Federal Reserve). Activities that are financial in nature include securities underwriting and dealing, insurance underwriting and agency, and making merchant banking investments.

        If a bank holding company seeks to engage in the broader range of activities that are permitted under the BHC Act for financial holding companies, (i) all of its depository institution subsidiaries must be "well capitalized" and "well managed" and (ii) it must file a declaration with the Federal Reserve that it elects to be a financial holding company. A depository institution subsidiary is considered to be "well capitalized" if it satisfies the requirements for this status discussed in the section captioned "Capital Adequacy and Prompt Corrective Action," included elsewhere in this item. A depository institution subsidiary is considered "well managed" if it received a composite rating and management rating of at least "satisfactory" in its most recent examination. In addition, the subsidiary depository institution must have received a rating of at least "satisfactory" in its most recent examination under the Community Reinvestment Act. (See the section captioned "Community Reinvestment Act" included elsewhere in this item.)

        Financial holding companies that do not continue to meet all of the requirements for such status will, depending on which requirement they fail to meet, face not being able to undertake new activities or acquisitions that are financial in nature, or losing their ability to continue those activities that are not generally permissible for bank holding companies. In addition, failure to satisfy conditions prescribed by the Federal Reserve to comply with any such requirements could result in orders to divest banking subsidiaries or to cease engaging in activities other than those closely related to banking under the BHC Act.

        The BHC Act, the Federal Bank Merger Act, and other federal and state statutes regulate acquisitions of commercial banks. The BHC Act requires the prior approval of the Federal Reserve for the direct or indirect acquisition of more than 5 percent of the voting shares of a commercial bank or its parent holding company. Under the Federal Bank Merger Act, the prior approval of the OCC is required for a national bank to merge with another bank or purchase the assets or assume the deposits of another bank. In reviewing applications seeking approval of merger and acquisition transactions, the bank regulatory authorities will consider, among other things, the competitive effect and public benefits of the transactions, the capital position of the combined organization, the applicant's performance record under the Community Reinvestment Act (see the section captioned "Community Reinvestment Act" included elsewhere in this item), fair housing laws and the effectiveness of the subject organizations in combating money laundering activities.

Source of Strength Doctrine

        Federal Reserve policy requires a bank holding company to serve as a source of financial and managerial strength to its subsidiary banks and does not permit a bank holding company to conduct its operations in an unsafe or unsound manner. Under this "source of strength doctrine," a bank holding company is expected to stand ready to use its available resources to provide adequate capital funds to its subsidiary banks during periods of financial stress or adversity, and to maintain resources and the

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capacity to raise capital that it can commit to its subsidiary banks. Any capital loans by a bank holding company to any of its subsidiary banks are subordinate in right of payment of deposits and to certain other indebtedness of such subsidiary banks. The BHC Act provides that, in the event of a bank holding company's bankruptcy, any commitment by the bank holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment. In addition, under the National Bank Act, if the capital stock of the Bank is impaired by losses or otherwise, the OCC is authorized to require payment of the deficiency by assessment upon the Corporation. If the assessment is not paid within three months, the OCC could order a sale of the Bank stock held by the Corporation to make good the deficiency. Furthermore, the Federal Reserve has the right to order a bank holding company to terminate any activity that the Federal Reserve believes is a serious risk to the financial safety, soundness or stability of any subsidiary bank.

The Bank

        The OCC has extensive examination, supervision and enforcement authority over all national banks, including the Bank. If, as a result of an examination of a bank, the OCC determines that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity, or other aspects of the bank's operations are unsatisfactory or that the bank or its management is violating or has violated any law or regulation, various remedies are available to the OCC. These remedies include the power to enjoin "unsafe or unsound" practices, to require affirmative action to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in capital, to restrict the growth of the Bank, to assess civil monetary penalties, to remove officers and directors, and ultimately to terminate the Bank's deposit insurance.

        The OCC, as well as other federal banking agencies, has adopted regulations and guidelines establishing safety and soundness standards, including but not limited to such matters as loan underwriting and documentation, risk management, internal controls and audit systems, interest rate risk exposure, asset quality and earnings and compensation and other employee benefits.

        Various other requirements and restrictions under the laws of the United States affect the operations of the Bank. Statutes and regulations relate to many aspects of the Bank's operations, including reserves against deposits, ownership of deposit accounts, interest rates payable on deposits, loans, investments, mergers and acquisitions, borrowings, dividends, locations of branch offices, and capital requirements.

Anti-Money Laundering and OFAC Regulation

        A major focus of governmental policy on financial institutions in recent years has been aimed at combating money laundering and terrorist financing. The Bank Secrecy Act of 1970 ("BSA") and subsequent laws and regulations require the Bank to take steps to prevent the use of the Bank or its systems from facilitating the flow of illegal or illicit money and to file suspicious activity reports. Those requirements include ensuring effective Board and management oversight, establishing policies and procedures, developing effective monitoring and reporting capabilities, ensuring adequate training and establishing a comprehensive internal audit of BSA compliance activities. The USA Patriot Act of 2001 ("Patriot Act") significantly expanded the anti-money laundering ("AML") and financial transparency laws and regulations by imposing significant new compliance and due diligence obligations, creating new crimes and penalties and expanding the extra-territorial jurisdiction of the United States. Regulations promulgated under the Patriot Act impose various requirements on financial institutions, such as standards for verifying client identification at account opening and maintaining expanded records (including "Know Your Customer" and "Enhanced Due Diligence" practices) and other obligations to maintain appropriate policies, procedures and controls to aid the process of preventing,

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detecting, and reporting money laundering and terrorist financing. The Patriot Act also applies BSA procedures to broker-dealers. An institution subject to the Patriot Act must provide AML training to employees, designate an AML compliance officer and annually audit the AML program to assess its effectiveness. The OCC continues to issue regulations and new guidance with respect to the application and requirements of BSA and AML. The United States has imposed economic sanctions that affect transactions with designated foreign countries, nationals and others. Based on their administration by the U.S. Treasury Department Office of Foreign Assets Control ("OFAC"), these are typically known as the OFAC rules. The OFAC-administered sanctions targeting countries take many different forms. Generally, however, they contain one or more of the following elements: (i) restrictions on trade with or investment in a sanctioned country, including prohibitions against direct or indirect imports from and exports to a sanctioned country and prohibitions on "U.S. persons" engaging in financial transactions relating to making investments in, or providing investment-related advice or assistance to, a sanctioned country; and (ii) a blocking of assets in which the government or specially designated nationals of the sanctioned country have an interest, by prohibiting transfers of property subject to U.S. jurisdiction (including property in the possession or control of U.S. persons). Blocked assets (e.g., property and bank deposits) cannot be paid out, withdrawn, set off or transferred in any manner without a license from OFAC.

        Failure of a financial institution to maintain and implement adequate BSA, AML and OFAC programs, or to comply with all of the relevant laws or regulations, could have serious legal and reputational consequences for the institution.

Dividends and Other Transfers of Funds

        The Corporation is a legal entity separate and distinct from the Bank. Dividends from the Bank constitute the principal source of cash revenues to the Corporation. The Bank is subject to various statutory and regulatory restrictions on its ability to pay dividends to the Corporation. The prior approval of the OCC is required if the total of all dividends declared by a national bank in any calendar year would exceed the sum of the bank's net profits for that year and its retained net profits for the preceding two calendar years, less any required transfers to surplus. Federal law also prohibits national banks from paying dividends that would be greater than the bank's undivided profits after deducting statutory bad debt in excess of the bank's allowance for loan and lease losses. In addition, federal bank regulatory authorities can prohibit the Bank from paying dividends, depending upon the Bank's financial condition and compliance with capital and non-capital safety and soundness standards established under the Federal Deposit Insurance Act, as described below. Federal regulatory authorities have indicated that paying dividends that deplete a bank's capital base to an inadequate level would be an unsafe and unsound banking practice and that banking organizations should generally pay dividends only out of current operating earnings. See Note 19 of Notes to Consolidated Financial Statements for additional information.

        Federal law limits the ability of the Bank to extend credit to the Corporation or its other affiliates, to invest in stock or other securities thereof, to take such securities as collateral for loans, and to purchase assets from the Corporation or other affiliates. These restrictions prevent the Corporation and such other affiliates from borrowing from the Bank unless the loans are secured by marketable obligations of designated amounts. Further, such secured loans and investments by the Bank to or in the Corporation or to or in any other affiliate are limited individually to 10 percent of the Bank's capital stock and surplus and in the aggregate to 20 percent of the Bank's capital stock and surplus. See Note 19 of Notes to Consolidated Financial Statements on page A-41 of this report.

        Federal law also provides that extensions of credit and other transactions between the Bank and the Corporation or one of its non-bank subsidiaries must be on terms and conditions, including credit standards, that are substantially the same or at least as favorable to the Bank as those prevailing at the time for comparable transactions involving other non-affiliated companies, or, in the absence of

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comparable transactions, on terms and conditions, including credit standards, that in good faith would be offered to, or would apply to, non-affiliated companies. Further, a bank holding company and its subsidiaries are prohibited from engaging in certain tie-in arrangements in connection with any extension of credit, lease or sale of property, or furnishing of services.

Capital Adequacy and Prompt Corrective Action

        Each federal banking regulatory agency has adopted risk-based capital regulations under which a banking organization's capital is compared to the risk associated with its operations for both transactions reported on the balance sheet as assets as well as transactions which are off-balance sheet items, such as letters of credit and recourse arrangements. Under the capital regulations, the nominal dollar amounts of assets and the balance sheet equivalent amounts of off-balance sheet items are multiplied by one of several risk adjustment percentages, which range from 0 percent for asset categories with low credit risk, such as certain U.S. Treasury securities, to 100 percent for asset categories with relatively high credit risk, such as commercial loans.

        In addition to the risk-based capital guidelines, federal banking regulatory agencies require banking organizations to maintain a minimum amount of Tier 1 capital to total assets, referred to as the leverage ratio. For a banking organization rated composite 1 under the "Composite Uniform Financial Institutions Rating System ("CAMELS")" for banks, which indicates the lowest level of supervisory concern of the five categories used by the federal banking agencies to rate banking organizations ("5" being the highest level of supervisory concern), the minimum leverage ratio is 3 percent. For all banking organizations other than those rated composite 1 under the CAMELS system, the minimum leverage ratio is 4 percent. Banking organizations with supervisory, financial, operational, or managerial weaknesses, as well as organizations that are anticipating or experiencing significant growth, are expected to maintain capital ratios above the minimum levels. In addition to these uniform risk-based capital guidelines and leverage ratios that apply across the industry, the federal banking agencies have the discretion to set individual minimum capital requirements for specific institutions at rates significantly above the minimum guidelines and ratios.

        At December 31, 2007, the Corporation and the Bank each exceeded the required risk-based capital ratios for classification as "well capitalized" as well as the required minimum leverage ratios. See "Management's Discussion and Analysis—Balance Sheet Analysis—Capital" on page 66 of this report.

        The Federal Deposit Insurance Act (FDICIA) requires federal bank regulatory agencies to take "prompt corrective action" with respect to FDIC-insured depository institutions that do not meet minimum capital requirements. A depository institution's treatment for purposes of the prompt corrective action provisions will depend on how its capital levels compare to various capital measures and certain other factors, as established by regulation. FDICIA imposes progressively more restrictive constraints on operations, management and capital distributions depending on the category in which an institution is classified. Failure to meet the capital guidelines could also subject a banking institution to capital raising requirements. An "undercapitalized" bank must develop a capital restoration plan and its parent holding company must guarantee that bank's compliance with the plan. The liability of the parent holding company under any such guarantee is limited to the lesser of five percent of the bank's assets at the time it become "undercapitalized" or the amount needed to comply with the plan. Furthermore, in the event of the bankruptcy of the parent holding company, such guarantee would take priority over the parent's general unsecured creditors. In addition, FDICIA requires the various regulatory agencies to prescribe certain non-capital standards for safety and soundness relating generally to operations and management, asset quality and executive compensation and permits regulatory action against a financial institution that does not meet such standards.

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        The existing U.S. federal bank regulatory agencies' risk-based capital guidelines are based upon the 1988 capital accord ("Basel I") of the Basel Committee on Banking Supervision ("BIS"). The BIS is a committee of central banks and bank supervisors/regulators from the major industrialized countries that develops broad policy guidelines for use by each country's supervisors in determining the supervisory policies they apply.

        The federal banking agencies have approved a final rule, effective April 1, 2008, to implement new risk-based capital requirements in the United States. These new requirements, often referred to as the "Basel II Accord," will, among other things, modify the capital charge applicable to credit risk and incorporate a capital charge for operational risk. The Basel II Accord also places greater reliance on market discipline than current standards. The Basel II standards will be mandatory with respect to banking organizations with total banking assets of $250 billion or more or total on-balance-sheet foreign exposure of $10 billion or more. Basel II's framework offers banks a choice of three methodologies for determining risk weights: (1) a "Standardized" approach, (2) an advanced internal ratings-based approach, and (3) an advanced measurements approach. Mandatory organizations may only use Basel II's most advanced methods.

        As of December 31, 2007, the Corporation would not have been mandatorily required to adopt the Basel II standards. Organizations, such as the Corporation, that do not meet the size criteria of a mandatory organization may choose voluntarily to comply with the more advanced requirements specified under the new capital framework and are called "opt in" organizations. "General" organizations, consisting of those institutions that choose not to "opt in," will continue to operate under existing risk-based capital rules, subject to any changes made to those standards.

        The banking agencies have issued a proposal that would allow the voluntary adoption of the Standardized approach to offer general organizations a set of regulatory capital requirements that have more risk sensitivity than the current Basel I rules, but less complexity than the Basel II advanced standards. The proposal would replace an earlier proposed rule in the area. Among other things, the proposal is being designed both to provide greater differentiation across corporate exposures based on borrowers' underlying credit quality and to recognize a broader spectrum of credit-risk mitigation techniques. It will establish fixed risk weights corresponding to each supervisory risk weight category and make use of the external credit assessments to enhance risk sensitivity compared with the current Basel Accord. The current goal is for the Standardized approach to be ready for implementation concurrently with the start of the first Basel II transition phase.

        The federal banking regulatory agencies are also considering revised capital standards that would apply to all financial institutions that are not subject to the Basel II Accord ("Basel 1A"), with the expressed intention to align those standards more closely with those that would be applicable to Basel II institutions. Among the key issues under consideration in connection with Basel 1A are: 1) the use of loan-to-value ratios to determine risk weights for most residential mortgages, 2) an increase in the number of risk weight categories to which credit exposures may be assigned, 3) expansion of the use of external credit ratings for certain externally-rated exposures, 4) expansion of the range of collateral and guarantors that may qualify as exposure for lower risk weights, and 5) assessment of a risk-based capital charge to reflect the risk in securitizations with early amortization provisions.

        At this time, the Corporation cannot predict the final form the optional Basel II Standardized approach will take, when it will be implemented, the effect that it might have on the Bank's financial condition or results of its operations, or how these effects might impact the Corporation. Accordingly, the Corporation has not yet determined whether it would opt to apply the Basel 1A or the Basel II provisions once they become effective.

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Premiums for Deposit Insurance

        The Bank's deposit accounts are insured by the Deposit Insurance Fund ("DIF"), as administered by the Federal Deposit Insurance Corporation (the "FDIC"), up to the maximum permitted by law. Insurance of deposits may be terminated by the FDIC upon a finding that the institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order, or condition imposed by the FDIC or the institution's primary regulator.

        The FDIC charges an annual assessment for the insurance of deposits, which as of December 31, 2007 ranged from 5 to 43 cents per $100 of insured deposits, based on the risk a particular institution poses to its deposit insurance fund. The risk classification is based on an institution's capital group and supervisory subgroup assignment. An institution's capital group is based on the FDIC's determination of whether the institution is well capitalized, adequately capitalized, or less than adequately capitalized. An institution's supervisory subgroup assignment is based on the FDIC's assessment of the financial condition of the institution and the probability that FDIC intervention or other corrective action will be required. For 2007, the Bank was assessed at the lowest rate. In addition to its normal deposit insurance premium as a member of the DIF, the Bank must pay an additional premium toward the retirement of the Financing Corporation bonds ("FICO Bonds") issued in the 1980s to assist in the recovery of the savings and loan industry. In 2007, this premium was approximately $1.5 million, determined at the blended rate of 1.16 cents per $100 of insured deposits. The higher premiums assessed in 2007 were offset by credits allowed for institutions that were in existence as of December 31, 1996 and had previously paid deposit premiums or are successors to such institutions. Any further increase in the assessment rate in future years could have an adverse effect on the Company's earnings, depending on the amount of the increase.

Depositor Preference

        The Federal Deposit Insurance Act provides that, in the event of the "liquidation or other resolution" of an insured depository institution, the claims of depositors of the institutions, including the claims of the FDIC as subrogee of insured depositors, and certain claims for administrative expenses of the FDIC as a receiver, will have priority over other general unsecured claims against the institution. If an insured depository institution fails, insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of unsecured non-deposit creditors, including the parent bank holding company, with respect to any extensions of credit they have made to such insured depository institution.

Interstate Banking and Branching

        The Riegle-Neal Interstate Banking and Branching Act permits banks and bank holding companies from any state to acquire banks located in any other state, subject to certain conditions, including certain nationwide and state-imposed concentration limits. The Company also has the ability, subject to certain restrictions, to acquire branches outside its home state by acquisition or merger. The establishment of new interstate branches is also possible in those states with laws that expressly permit de novo branching. The Corporation has established or acquired banking operations outside its home state of California in the states of New York and Nevada.

Community Reinvestment Act

        Under the Community Reinvestment Act of 1977 ("CRA"), the Bank has a continuing and affirmative obligation consistent with safe and sound banking practices to help meet the credit needs of its entire community, including low and moderate income neighborhoods. CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution's

10

discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with CRA. CRA generally requires the federal banking agencies to evaluate the record of a financial institution in meeting the credit needs of its local communities and to take that record into account in its evaluation of certain applications by such institution, such as applications for charters, branches and other deposit facilities, relocations, mergers, consolidations and acquisitions or engage in certain activities pursuant to the GLB Act. An unsatisfactory rating may be the basis for denying the application. Based on its most recent examination report from January 2006, the Bank received an overall rating of "satisfactory." In arriving at the overall rating, the OCC rated the Bank's performance levels under CRA with respect to lending (high satisfactory), investment (outstanding) and service (high satisfactory).

Consumer Protection Laws

        The Company is subject to a number of federal and state laws designed to protect borrowers and promote lending to various sectors of the economy and population. These laws include the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Home Mortgage Disclosure Act, and the Real Estate Settlement Procedures Act, and various state law counterparts.

        In addition, federal law and certain state laws (including California) currently contain client privacy protection provisions. These provisions limit the ability of banks and other financial institutions to disclose non-public information about consumers to affiliated companies and non-affiliated third parties. These rules require disclosure of privacy policies to clients and, in some circumstance, allow consumers to prevent disclosure of certain personal information to affiliates or non-affiliated third parties by means of "opt out" or "opt in" authorizations. Pursuant to the GLB Act and certain state laws (including California) companies are required to notify clients of security breaches resulting in unauthorized access to their personal information.

Securities and Exchange Commission

        The Sarbanes-Oxley Act of 2002 ("SOX") imposed significant new requirements on publicly-held companies such as the Corporation, particularly in the area of external audits, financial reporting and disclosure, conflicts of interest, and corporate governance at public companies. The Company, like other public companies, has reviewed and reinforced its internal controls and financial reporting procedures in response to the various requirements of SOX and implementing regulations issued by the SEC and the New York Stock Exchange. The Company emphasized best practices in corporate governance before SOX and has continued to do so in compliance with SOX.

        The SEC regulations applicable to the Company's investment advisers cover all aspects of the investment advisory business, including compliance requirements, limitations on fees, record-keeping, reporting and disclosure requirements and general anti-fraud prohibitions.

11

Executive Officers of the Registrant

        Shown below are the names and ages of all executive officers of the Corporation and officers of the Bank who are deemed to be executive officers of the Corporation as of January 31, 2008, with indication of all positions and offices with the Corporation and the Bank.

Name	Age	Present principal occupation and principal occupation during the past five years
Russell D. Goldsmith (1)	57	President, City National Corporation since May 2005; Chief Executive Officer, City National Corporation and Chairman of the Board and Chief Executive Officer, City National Bank since October 1995; Vice Chairman of City National Corporation October 1995 to May 2005
Bram Goldsmith	84	Chairman of the Board, City National Corporation
Christopher J. Carey	53	Executive Vice President and Chief Financial Officer, City National Corporation and City National Bank since July 2004; Executive Vice President and Chief Financial Officer, Provident Financial Group, November 1998 to June 2004
Christopher J. Warmuth	53	Executive Vice President, City National Corporation and President, City National Bank since May 2005; Executive Vice President and Chief Credit Officer, City National Bank June 2002 to May 2005
Michael B. Cahill	54	Executive Vice President, Corporate Secretary and General Counsel, City National Bank and City National Corporation since June 2001; Interim Senior Risk Management Officer, October 2003 to July 2004
Brian Fitzmaurice	47	Executive Vice President and Chief Credit Officer, City National Bank since February 2006; Senior Risk Manager, Citibank West, FSB successor to California Federal Bank, FSB, November 2002 to February 2006; Senior Vice President and Chief Credit Officer, Commercial Banking, California Federal Bank, FSB, April 1998 to November 2002
Nancy Gilson	52	Senior Vice President and Controller, City National Corporation and City National Bank since April 2005; Assistant Controller, City National Bank, December 2004 to April 2005; Vice President, Financial Reporting, California National Bank, October 2002 to December 2004

(1)

Russell Goldsmith is the son of Bram Goldsmith.

Available Information

        The Company's home page on the Internet is www.cnb.com. The Company makes its web site content available for information purposes only. It should not be relied upon for investment purposes, nor is it incorporated by reference into this Form 10-K.

        The Company makes its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and proxy statement for its annual shareholder meetings, as well as any amendment to those reports, available free of charge through the Investor Relations page of its web site as soon as reasonably practicable after it electronically files such material with, or furnishes it to, the SEC. More information about the Company can be obtained by reviewing the Company's SEC

12

filings on its web site. Information about the Corporation's Board of Directors (the "Board") and its committees and the Company's corporate governance policies and practices is available on the Corporate Governance section of the Investor Relations page of the Company's web site. The SEC also maintains a web site at www.sec.gov that contains reports, proxy statements and other information regarding SEC registrants, including the Corporation.

Item 1A—Risk Factors

Forward-Looking Statements

        This report and other reports and statements issued by the Company and its officers from time to time contain forward-looking statements that are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of our management, and on information currently available to our management. Forward-looking statements include information concerning our possible or assumed future results of operations, and statements preceded by, followed by, or that include the words "will," "believes," "expects," "anticipates," "intends," "plans," "estimates," or similar expressions.

        Our management believes these forward-looking statements are reasonable. However, you should not place undue reliance on the forward-looking statements, since they are based on current expectations. Actual results may differ materially from those currently expected or anticipated. Forward-looking statements are not guarantees of performance. By their nature, forward-looking statements are subject to risks, uncertainties, and assumptions. These statements speak only as of the date they are made. The Company does not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements are made or to update earnings guidance including the factors that influence earnings. 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, without limitation, the significant factors set forth below.

Factors That May Affect Future Results

        Changes in interest rates affect our profitability.    We derive our income mainly from the difference or "spread" between the interest earned on loans, securities, and other interest-earning assets, and interest paid on deposits, borrowings, and other interest-bearing liabilities. In general, the wider the spread, the more we earn. When market rates of interest change, the interest we receive on our assets and the interest we pay on our liabilities fluctuate. This causes our spread to increase or decrease and affects our net interest income. In addition, interest rates affect how much money we lend, and changes in interest rates may negatively affect deposit growth.

        Our results would be adversely affected if we suffered higher than expected losses on our loans due to a slowing economy, real estate cycles or other economic events which could require us to increase our allowance for credit losses.    We assume credit risk from the possibility that we will suffer losses because borrowers, guarantors, and related parties fail to perform under the terms of their loans. We try to minimize and monitor this risk by adopting and implementing what we believe are effective underwriting and credit policies and procedures, including how we establish and review the allowance for loan and lease losses. We assess the likelihood of nonperformance, track loan performance, and diversify our credit portfolio. Those policies and procedures may still not prevent unexpected losses that could adversely affect our results. The Company continually monitors changes in the economy, particularly housing prices and unemployment rates. We also monitor the value of collateral, such as real estate, for loans made by us. Changes in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of the Company's control, may require an increase in the allowance for loan and lease losses.

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        General business and economic conditions may significantly affect our earnings.    Our business and earnings are sensitive to general business and economic conditions. These conditions include the characteristics and slope of the yield curve, inflation, available money supply, the value of the U.S. dollar as compared to foreign currencies, fluctuations in both debt and equity markets, and the strength of the U.S. economy and the local economies in which we conduct business. Changes in these conditions may adversely affect demand for our products and services, and may adversely affect the underlying financial strength and liquidity of our clients. A prolonged economic downturn could increase the number of clients who become delinquent or default on their loans. An increase in delinquencies or defaults could result in a higher level of nonperforming assets, charge-offs and provision for credit losses, which could adversely affect our earnings. A slowdown in real estate can adversely affect title and escrow deposit balances, a relatively low cost source of funds.

        A portion of the income generated by our Wealth Management division and asset management affiliates is subject to market valuation risks.    A substantial portion of trust and investment fee income is based on equity, fixed income and other market valuations. As a result, volatility in these markets can positively or negatively impact noninterest income.

        Bank clients could move their money to alternative investments causing us to lose a lower cost source of funding.    Demand deposits can decrease when clients perceive alternative investments, such as those available in our wealth management business, as providing a better risk/return tradeoff. Technology and other changes have made it more convenient for bank customers to transfer funds into alternative investments or other deposit accounts offered by other financial institutions or non-bank service providers. When clients move money out of bank demand deposits and into other investments, we lose a relatively low cost source of funds, increasing our funding costs and reducing our net interest income.

        Significant changes in banking laws or regulations could materially affect our business.    The banking industry is subject to extensive federal and state regulations, and significant new laws or changes in, or repeals of, existing laws may cause results to differ materially. Also, federal monetary policy, particularly as implemented through the Federal Reserve System, significantly affects our credit conditions, primarily through open market operations in U.S. government securities, the discount rate for member bank borrowing, and bank reserve requirements. A material change in these conditions would affect our results. Parts of our business are also subject to federal and state securities laws and regulations. Significant changes in these laws and regulations would also affect our business. For further discussion of the regulation of financial services, see "Supervision and Regulation" and the discussion under Item 1, Business, "Economic Conditions, Government Policies, Legislation and Regulation."

        Increased competition from financial service companies and other companies that offer banking and wealth management services could negatively impact our business.    Increased competition in our market may result in reduced loans, deposits and/or assets under management. Many competitors offer the banking services and wealth management services that we offer in our service area. These competitors, both domestic and foreign, include national, regional, and community banks. We also face intense competition from many other types of financial institutions, including, without limitation, savings and loans, finance companies, brokerage firms, insurance companies, credit unions, private equity funds, mortgage banks, and other financial intermediaries. Banks, trust companies, investment advisors, mutual fund companies, multi-family offices and insurance companies compete with us for trust and asset management business. In addition, technological advances and the growth of e-commerce have made it possible for non-depository institutions to offer products and services that were traditionally offered only by banks.

        We also face intense competition for talent. Our success depends, in large part, on our ability to hire and retain key people. Competition for the best people in most businesses in which we engage can be intense. If we are unable to attract and retain talented people, our business could suffer.

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        Our controls and procedures could fail or be circumvented.    Management regularly reviews and updates our internal controls, disclosure controls and procedures and corporate governance policies and procedures. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, but not absolute, assurances of the effectiveness of these systems and controls, and that the objectives of these controls have been met. Any failure or circumvention of our controls and procedures, and any failure to comply with regulations related to controls and procedures could adversely affect our business, results of operations and financial condition.

        Changes in accounting standards or tax legislation.    Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operations. From time to time the Financial Accounting Standards Board ("FASB") and SEC change the financial accounting and reporting standards that govern the preparation of our financial statements or elected representatives approve changes to tax laws. These changes can be hard to predict and can materially impact how we record and report our financial condition and results of operations.

        Acquisition risks.    We have in the past and may in the future seek to grow our business by acquiring other businesses. We cannot predict the frequency, size or timing of our acquisitions, and we typically do not comment publicly on a possible acquisition until we have signed a definitive agreement. There can be no assurance that our acquisitions will have the anticipated positive results, including results related to: the total cost of integration; the time required to complete the integration; the amount of longer-term cost savings; continued growth; or the overall performance of the acquired company or combined entity. Integration of an acquired business can be complex and costly. If we are not able to integrate successfully past or future acquisitions, there is a risk that results of operations could be adversely affected.

        Impairment of goodwill or amortizable intangible assets associated with acquisitions would result in a charge to earnings.    Goodwill is evaluated for impairment at least annually, and amortizable intangible assets are evaluated for impairment annually or when events or circumstances indicate that the carrying value of those assets may not be recoverable. We may be required to record a charge to earnings during the period in which any impairment of goodwill or intangibles is determined.

        Operational risks.    The potential for operational risk exposure exists throughout our organization. Integral to our performance is the continued efficacy of our technology and information systems, operational infrastructure and relationships with third parties and our colleagues in our day-to-day and ongoing operations. Failure by any or all of these resources subjects us to risks that may vary in size, scale and scope. This includes but is not limited to operational or systems failures, disruption of client operations and activities, ineffectiveness or exposure due to interruption in third party support as expected, as well as, the loss of key colleagues or failure on the part of key colleagues to perform properly.

        Negative public opinion could damage our reputation and adversely affect our earnings.    Reputational risk, or the risk to our earnings and capital from negative public opinion, is inherent in our business. Negative public opinion can result from the actual or perceived manner in which we conduct our business activities, including activities in our private and business banking operations and investment and trust operations; our management of actual or potential conflicts of interest and ethical issues; and our protection of confidential client information. Negative public opinion can adversely affect our ability to keep and attract clients and can expose us to litigation and regulatory action. We take steps to minimize reputation risk in the way we conduct our business activities and deal with our clients, communities and vendors.

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Item 1B—Unresolved Staff Comments

        The Company has no written comments regarding its periodic or current reports from the staff of the Securities and Exchange Commission that were issued 180 days or more preceding the end of its 2007 fiscal year and that remain unresolved.

Item 2.    Properties

        The Company has its principal offices in the City National Center, 400 North Roxbury Drive, Beverly Hills, California 90210, which the Company owns and occupies. The property has a market value in excess of its depreciated value included in the Company's financial statements. As of December 31, 2007, the Bank owned four other banking office properties in Riverside and Sun Valley, California and in Cheyenne and Carson Valley, Nevada. In addition to the properties owned, the Company actively maintains operations in 54 banking offices and certain other properties.

        The Bank leases approximately 391,000 rentable square feet of commercial office space in downtown Los Angeles in the office tower located at 555 S. Flower Street ("City National Tower" and together with the three story plaza building adjacent to City National Tower at 525 S. Flower Street, "City National Plaza"). City National Tower serves as the Bank's administrative center, bringing together more than 24 departments. In addition, City National Plaza houses the Company's Downtown Los Angeles Regional Center, offering extensive private and business banking and wealth management capabilities.

        The remaining banking offices and other properties are leased by the Bank. Total annual rental payments (exclusive of operating charges and real property taxes) are approximately $26 million, with lease expiration dates for office facilities ranging from 2008 to 2022, exclusive of renewal options.

Item 3.    Legal Proceedings

        The Corporation and its subsidiaries are defendants in various pending lawsuits. Based on present knowledge, management, including in-house counsel, does not believe that the outcome of such lawsuits will have a material adverse effect upon the Company.

        The Corporation is not aware of any material proceedings to which any director, officer, or affiliate of the Corporation, any owner of record or beneficially of more than 5 percent of the voting securities of the Corporation as of December 31, 2007, or any associate of any such director, officer, affiliate of the Corporation, or security holder is a party adverse to the Corporation or any of its subsidiaries or has a material interest adverse to the Corporation or any of its subsidiaries.

Item 4.    Submission of Matters to a Vote of Security Holders

        There was no submission of matters to a vote of security holders during the fourth quarter of the year ended December 31, 2007.

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PART II

Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

        The Corporation's common stock is listed and traded principally on the New York Stock Exchange under the symbol "CYN." Information concerning the range of high and low sales prices for the Corporation's common stock, and the dividends declared, for each quarterly period within the past two fiscal years is set forth below.

Quarter Ended	High		Low		Dividends Declared
2007
March 31	$	75.39	$	68.00	$	0.46
June 30		78.39		72.30		0.46
September 30		78.00		69.00		0.46
December 31		72.97		59.10		0.46
2006
March 31	$	78.25	$	71.95	$	0.41
June 30		78.25		60.02		0.41
September 30		68.41		63.69		0.41
December 31		71.29		65.34		0.41

        As of January 31, 2008, the closing price of the Corporation's stock on the New York Stock Exchange was $56.88 per share. As of that date, there were approximately 2,166 holders of record of the Corporation's common stock. On January 24, 2008, the Board of Directors authorized a regular quarterly cash dividend on its common stock at a rate of $0.48 per share payable on February 20, 2008 to all shareholders of record on February 6, 2008.

        For a discussion of dividend restrictions on the Corporation's common stock, see Note 19 of the Notes to Consolidated Financial Statements on page A-41 of this report.

        The following table provides information about purchases by the Company of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act during the quarter ended December 31, 2007.

Period	Total Number of Shares (or Units) Purchased	Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
10/1/07 - 10/31/07	68,500	$	65.57	68,500		851,300
11/1/07 - 11/30/07	164,400	$	63.50	164,400		686,900
12/1/07 - 12/31/07	125,000	$	59.87	125,000		561,900
	357,900	$	62.63	357,900	(1)	561,900	(1)

(1)

On August 7, 2007, the Company's Board of Directors authorized the Company to repurchase 1 million additional shares of the Company's stock following completion of its previously approved stock buyback initiative. Unless terminated earlier by resolution of our Board of Directors, the program will expire when the Company has repurchased all shares authorized for repurchase thereunder. During the fourth quarter of 2007, the Company repurchased an aggregate of 357,900 shares of our common stock pursuant to the repurchase program that we publicly announced on August 7, 2007, and there are 561,900 shares remaining to be purchased as of December 31, 2007. We received no shares in payment for the exercise price of stock options.

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Item 6.    Selected Financial Data

        The information required by this item appears on page 27, under the caption "Selected Financial Information," and is incorporated herein by reference.

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

        The information required by this item appears on pages 28 through 66, under the caption "Management's Discussion and Analysis," and is incorporated herein by reference.

Item 7A.    Quantitative and Qualitative Disclosures about Market Risk

        The information required by this item appears on pages 48 through 52, under the caption "Management's Discussion and Analysis," and is incorporated herein by reference.

Item 8.    Financial Statements and Supplementary Data

        The information required by this item appears on page 68 under the captions "2007 Quarterly Operating Results" and "2006 Quarterly Operating Results," and on page A-4 through A-50 and is incorporated herein by reference.

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

        None.

Item 9A.    Controls 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

Management's Report on Internal Control over Financial Reporting

        Management's Report on Internal Control Over Financial Reporting appears on page A-1 of this report. The Company's independent registered public accounting firm, KPMG LLP, has issued an audit report on the effectiveness of the Company's internal control over financial reporting. That report appears on page A-2.

Changes in Internal Controls

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

Item 9B.    Other Information

        None.

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PART III

Item 10.    Directors and Executive Officers of the Registrant

        Information regarding executive officers is included in Part I of this Form 10-K as permitted by General Instruction G (3).

        The additional information required by this item will appear in the Corporation's definitive proxy statement for the 2008 Annual Meeting of Stockholders (the "2008 Proxy Statement"), and such information either shall be (i) deemed to be incorporated herein by reference from that portion of the 2008 Proxy Statement, if filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of the Corporation's most recently completed fiscal year, or (ii) included in an amendment to this report filed with the Commission on Form 10-K/A not later than the end of such 120 day period.

Item 11.    Executive Compensation

        The information required by this item will appear in the 2008 Proxy Statement, and such information either shall be (i) deemed to be incorporated herein by reference from the 2008 Proxy Statement, if filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of the Corporation's most recently completed fiscal year, or (ii) included in an amendment to this report filed with the Commission on Form 10-K/A not later than the end of such 120 day period.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

        The information required by this item will appear in the 2008 Proxy Statement, and such information either shall be (i) deemed to be incorporated herein by reference from the 2008 Proxy Statement, if filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of the Corporation's most recently completed fiscal year, or (ii) included in an amendment to this report filed with the Commission on Form 10-K/A not later than the end of such 120 day period.

Item 13.    Certain Relationships and Related Transactions

        The information required by this item will appear in the 2008 Proxy Statement, and such information either shall be (i) deemed to be incorporated herein by reference from the 2008 Proxy Statement, if filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of the Corporation's most recently completed fiscal year, or (ii) included in an amendment to this report filed with the Commission on Form 10-K/A not later than the end of such 120 day period. Also see Note 6 to Notes to Consolidated Financial Statements on page A-22 of this report.

Item 14.    Principal Accountant Fees and Services

        The information required by this item will appear in the 2008 Proxy Statement, and such information either shall be (i) deemed to be incorporated herein by reference from the 2008 Proxy Statement, if filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of the Corporation's most recently completed fiscal year, or (ii) included in an amendment to this report filed with the Commission on Form 10-K/A not later than the end of such 120 day period.

19

PART IV

Item 15.    Exhibits and Financial Statement Schedules

(a)

The following documents are filed as part of this report:

1.	Financial Statements:
	Management's Report on Internal Control Over Financial Reporting	A-1
	Report of Independent Registered Public Accounting Firm	A-2
	Report of Independent Registered Public Accounting Firm	A-3
	Consolidated Balance Sheet at December 31, 2007 and 2006	A-4
	Consolidated Statements of Income for each of the years in the three-year period ended December 31, 2007	A-5
	Consolidated Statements of Cash Flows for each of the years in the three-year period ended December 31, 2007	A-6
	Consolidated Statements of Changes in Shareholders' Equity and Comprehensive Income for each of the years in the three-year period ended December 31, 2007	A-7
	Notes to Consolidated Financial Statements	A-8
2.	All other schedules and separate financial statements of 50 percent or less owned companies accounted for by the equity method have been omitted because they are not applicable.
3.	Exhibits

3.	(a)	Restated Certificate of Incorporation (This Exhibit is incorporated by reference from the Registrant's Annual Report on Form 10-K for the year ended December 31, 2004).
	(b)	Form of Certificate of Designations of Series A Junior Participating Cumulative Preferred Stock (This Exhibit is incorporated by reference from the Registrant's Annual Report on Form 10-K for the year ended December 31, 2004).
	(c)	Bylaws, as amended to date (This Exhibit is incorporated by reference from the Registrant's Report of Unscheduled Material events on Form 8-K filed September 21, 2007.)
4.	(a)	Specimen Common Stock Certificate for Registrant.
	(b)	6.75 percent Subordinated Notes Due 2011 in the principal amount of $150.0 million (This Exhibit is incorporated by reference from the Registrant's Annual Report on Form 10-K for the year ended December 31, 2006).
	(c)	Indenture dated as of February 13, 2003 between Registrant and U.S. Bank National Association, as Trustee pursuant to which Registrant issued its 5.125 percent Senior Notes due 2013 in the principal amount of $225.0 million and form of 5.125 percent Senior Note due 2013
	(d)	Certificate of Amendment of Articles of Incorporation of CN Real Estate Investment Corporation Articles of Incorporation
	(e)	CN Real Estate Investment Corporation Bylaws (This Exhibit is incorporated by reference from the Registrant's Annual Report on Form 10-K for the year ended December 31, 2006).
	(f)	CN Real Estate Investment Corporation Servicing Agreement (This Exhibit is incorporated by reference from the Registrant's Annual Report on Form 10-K for the year ended December 31, 2006).
	(g)	CN Real Estate Investment Corporation II Articles of Amendment and Restatement
	(h)	CN Real Estate Investment Corporation II Amended and Restated Bylaws

20

10.	(a)*	Employment Agreement made as of May 15, 2003, by and between Bram Goldsmith, and the Registrant and City National Bank. (This Exhibit is incorporated by reference from the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2003).
	(b)*	Amendment to Employment Agreement dated as of May 15, 2005 by and between Bram Goldsmith and City National Corporation and City National Bank. (This Exhibit is incorporated by reference from the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2005).
	(c)*	Second Amendment to Employment Agreement for Bram Goldsmith dated as of May 15, 2007, among Bram Goldsmith, City National Corporation and City National Bank. (This Exhibit is incorporated by reference from the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2007).
	(d)*	Employment Agreement made as of June 30, 2006 by and between Russell Goldsmith and the Registrant and City National Bank (This Exhibit is incorporated by reference from the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2006).
	(e)*	1995 Omnibus Plan (This Exhibit is incorporated by reference from the Registrant's Annual Report on Form 10-K for the year ended December 31, 2005)
	(f)*	Amendment to 1995 Omnibus Plan (This Exhibit is incorporated by reference form the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003).
	(g)*	Amended and Restated Section 2.8 of 1995 Omnibus Plan.
	(h)*	1999 Omnibus Plan (This Exhibit is incorporated by reference from the Registrants Annual Report on Form 10-K for the year ended December 31, 2004).
	(i)*	Amended and Restated 2002 Omnibus Plan (This Exhibit is incorporated by reference from the Registrant's Proxy Statement filed with the SEC for the Annual Meeting of Shareholders held on April 28, 2004).
	(j)*	Amended and Restated 1999 Variable Bonus Plan (This Exhibit is incorporated by reference from the Registrant's Proxy Statement filed with the SEC for the Annual Meeting of Shareholders held on April 28, 2004).
	(k)*	Form of Indemnification Agreement for directors and executive officers of the Company. (This Exhibit is incorporated by reference from the Registrant's Annual Report on Form 10-K for the year ended December 31, 2004).
	(l)*	2000 City National Bank Executive Deferred Compensation Plan. (This Exhibit is incorporated by reference from the Registrant's Annual Report on Form 10-K for the year ended December 31, 2005.)
	(m)*	Amendment Number 3 to 2000 City National Bank Executive Deferred Compensation Plan.
	(n)*	Form of Change of Control Agreement for members of City National Bank executive committee (This Exhibit is incorporated by reference from the Registrant's Annual Report on Form 10-K for the year ended December 31, 2004).
	(o)*	2000 City National Bank Director Deferred Compensation Plan. (This Exhibit is incorporated by reference from the Registrant's Annual Report on Form 10-K for the year ended December 31, 2005.)
	(p)*	Amendment Number 2 to 2000 City National Bank Director Deferred Compensation Plan.
	(q)*	City National Bank Executive Management Bonus Plan. (This Exhibit is incorporated by reference from the Registrant's Annual Report on Form 10-K for the year ended December 31, 2005.)
	(r)*	City National Corporation 2001 Stock Option Plan. (This Exhibit is incorporated by reference from the Registrant's Annual Report on Form 10-K for the year ended December 31, 2005.)

21

(s)*	Form of Restricted Stock Unit Award Agreement Under the City National Corporation 2002 Amended and Restated Omnibus Plan (This Exhibit is incorporated by reference from the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004).
(t)*	Form of Stock Option Award Agreement Under the City National Corporation 2002 Amended and Restated Omnibus Plan (Compensation Committee and Board Approval) (This Exhibit is incorporated by reference from the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004).
(u)*	Form of Stock Option Award Agreement Under the City National Corporation 2002 Amended and Restated Omnibus Plan (Compensation Committee Approval)) (This Exhibit is incorporated by reference from the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004).
(v)*	Form of Restricted Stock Award Agreement Under the City National Corporation 2002 Amended and Restated Omnibus Plan) (This Exhibit is incorporated by reference from the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004).
(w)*	Form of Director Stock Option Agreement Under the City National Corporation Amended and Restated 2002 Omnibus plan (This Exhibit is incorporated by reference from the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004).
(x)*	City National Corporation 2006 Compensatory Agreement with CEO and Named Executive Officers filed in current report on Form 8-K dated March 1, 2006 (This Exhibit is incorporated by reference from the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2006).
(y)*	First Amendment to the City National Corporation Amended and Restated 2002 Omnibus Plan. (This Exhibit is incorporated by reference from the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2005).
(z)*	Form of Stock Option Award Agreement Under the City National Corporation Amended and Restated 2002 Omnibus Plan (2006 and later grants). (This Exhibit is incorporated by reference from the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2006.)
10.1*	Form of Restricted Stock Award Agreement Under the City National Corporation Amended and Restated 2002 Omnibus Plan and Restricted Stock Unit Award Agreement Addendum (2006 and later grants). (This Exhibit is incorporated by reference from the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2006.)
10.2*	Form of Restricted Stock Unit Award Agreement Under the City National Corporation Amended and Restated 2002 Omnibus Plan and Restricted Stock Unit Award Agreement Addendum (2006 and later grants). (This Exhibit is incorporated by reference from the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2006.)
10.3*	Form of Restricted Stock Unit Award Agreement (Cash Only Award) Under the City National Corporation Amended and Restated 2002 Omnibus Plan and Restricted Stock Unit Award Agreement (Cash Only Award) Addendum. (This Exhibit is incorporated by reference from the Registrant's Annual Report on Form 10-K for the year ended December 31, 2006).

22

10.4	Lease dated September 30, 1996 between Citinational-Buckeye Building Co. and City National Bank, as amended by that certain First Lease Addendum dated as of May 1, 1998, by that certain Second Lease Addendum dated as of November 13, 1998, by that certain Third Lease Addendum dated as of November 1, 2002 and the 2003 Lease Supplement (as herein defined) (This Exhibit is incorporated by reference from the Registrant's Annual Report on Form 10-K for the year ended December 31, 2003).
10.5	Lease dated November 1, 2002, between Citinational-Buckeye Building Co. and City National Bank as amended by the 2003 Lease Supplement (as herein defined)) (This Exhibit is incorporated by reference from the Registrant's Annual Report on Form 10-K for the year ended December 31, 2003).
10.6	Lease dated August 1, 2000, between Citinational-Buckeye Building Co. and City National Bank, as amended by that certain First Lease Addendum dated as of November 1, 2002, and the 2003 Lease Supplement (as herein defined)) (This Exhibit is incorporated by reference from the Registrant's Annual Report on Form 10-K for the year ended December 31, 2003).
10.7	Lease Supplement, dated May 28, 2003 (the "2003 Lease Supplement"), by and between Citinational Buckeye Building Co and City National Bank) (This Exhibit is incorporated by reference from the Registrant's Annual Report on Form 10-K for the year ended December 31, 2003).
10.8	Lease dated November 19, 2003 between TPG Plaza Investments and City National Bank (Portions of this exhibit have been omitted pursuant to a request for confidential treatment)) (This Exhibit is incorporated by reference from the Registrant's Annual Report on Form 10-K for the year ended December 31, 2003).
21	Subsidiaries of the Registrant
23	Consent of KPMG LLP
31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14 (a) or 15d-14 (a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14 (a) or 15d-14 (a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.0	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*

Management contract or compensatory plan or arrangement

23

SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) 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)
February 27, 2008	By:	/s/  RUSSELL D. GOLDSMITH Russell D. Goldsmith President and Chief Executive Officer

        Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/  RUSSELL D. GOLDSMITH Russell D. Goldsmith (Principal Executive Officer)	President/Chief Executive Officer/Director	February 27, 2008
/s/  CHRISTOPHER J. CAREY Christopher J. Carey (Principal Financial Officer and Principal Accounting Officer)	Executive Vice President and Chief Financial Officer	February 27, 2008
/s/  BRAM GOLDSMITH Bram Goldsmith	Chairman of the Board/Director	February 27, 2008
/s/  CHRISTOPHER J. WARMUTH Christopher J. Warmuth	Executive Vice President/Director	February 27, 2008
/s/  RICHARD L. BLOCH Richard L. Bloch	Director	February 27, 2008
/s/  KENNETH L. COLEMAN Kenneth L. Coleman	Director	February 27, 2008

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/s/  ASHOK ISRANI Ashok Israni	Director	February 27, 2008
/s/  LINDA M. GRIEGO Linda M. Griego	Director	February 27, 2008
/s/  MICHAEL L. MEYER Michael L. Meyer	Director	February 27, 2008
/s/  RONALD L. OLSON Ronald L. Olson	Director	February 27, 2008
/s/  BRUCE ROSENBLUM Bruce Rosenblum	Director	February 27, 2008
/s/  PETER M. THOMAS Peter M. Thomas	Director	February 27, 2008
/s/  KENNETH ZIFFREN Kenneth Ziffren	Director	February 27, 2008

25

FINANCIAL HIGHLIGHTS

Dollars in thousands, except per share amounts (1)		2007			2006			Percent change
FOR THE YEAR
	Net income	$	222,713		$	233,523		(5	)%
	Net income per common share, basic		4.62			4.82		(4	)
	Net income per common share, diluted		4.52			4.66		(3	)
	Dividends per common share		1.84			1.64		12
AT YEAR END
	Assets	$	15,889,290		$	14,884,309		7
	Securities		2,756,010			3,101,154		(11	)
	Loans and leases		11,630,638			10,386,005		12
	Deposits		11,822,505			12,172,816		(3	)
	Shareholders' equity		1,655,607			1,490,843		11
	Book value per common share		34.61			31.39		10
AVERAGE BALANCES
	Assets	$	15,370,764		$	14,715,512		4
	Securities		2,833,489			3,488,005		(19	)
	Loans and leases		11,057,411			9,948,363		11
	Deposits		12,236,383			11,869,927		3
	Shareholders' equity		1,599,488			1,460,792		9
SELECTED RATIOS
	Return on average assets		1.45	%		1.59	%	(9	)
	Return on average shareholders' equity		13.92			15.99		(13	)
	Corporation's tier 1 leverage		7.97			8.81		(10	)
	Corporation's tier 1 risk-based capital		9.31			11.09		(16	)
	Corporation's total risk-based capital		11.27			13.60		(17	)
	Period-end shareholders' equity to period-end assets		10.42			10.02		4
	Dividend payout ratio, per share		40.13			34.31		17
	Net interest margin		4.45			4.58		(3	)
	Efficiency ratio (2)		58.21			55.97		4
ASSET QUALITY RATIOS
	Nonaccrual loans to total loans and leases		0.65	%		0.20	%	225
	Nonaccrual loans and OREO to total loans and leases and OREO		0.65			0.20		225
	Allowance for loan and lease losses to total loans and leases		1.45			1.50		(3	)
	Allowance for loan and lease losses to nonaccrual loans		223.03			743.88		(70	)
	Net (charge-offs)/recoveries to average loans		(0.08	)		0.03		NM
AT YEAR END
	Assets under management (3)	$	37,268,529		$	27,634,473		35
	Assets under management or administration (3)		58,506,256			48,458,981		21

(1)

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

(2)

The efficiency ratio is defined as noninterest expense excluding OREO expense divided by total revenue (net interest income on a tax-equivalent basis and noninterest income).

(3)

Excludes $12.4 billion and $9.1 billion of assets under management for the asset manager in which the Company holds a minority ownership interest as of December 31, 2007 and December 31, 2006, respectively.

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SELECTED FINANCIAL INFORMATION

			As of or for the year ended December 31,
Dollars in thousands, except per share data (1)
			2007			2006			2005			2004			2003
Statement of Income Data:
	Interest income		$	894,101		$	826,315		$	716,166		$	602,180		$	573,465
	Interest expense			285,829			220,405			106,125			58,437			61,110
	Net interest income			608,272			605,910			610,041			543,743			512,355
	Provision for credit losses			20,000			(610	)		—			—			29,000
	Noninterest income			303,202			242,370			210,368			186,410			179,485
	Noninterest expense			529,245			476,046			438,178			395,410			364,178
	Minority interest			8,856			5,958			5,675			4,992			4,039
	Income before taxes			353,373			366,886			376,556			329,751			294,623
	Income taxes			130,660			133,363			141,821			123,429			107,946
		Net income	$	222,713		$	233,523		$	234,735		$	206,322		$	186,677
Per Share Data:
	Net income per share, basic			4.62			4.82			4.77			4.21			3.84
	Net income per share, diluted			4.52			4.66			4.60			4.04			3.72
	Dividends per share			1.84			1.64			1.44			1.28			0.97
	Book value per share			34.61			31.39			29.55			27.39			24.85
	Shares used to compute income per share, basic			48,234			48,477			49,159			48,950			48,643
	Shares used to compute income per share, diluted			49,290			50,063			51,062			51,074			50,198
Balance Sheet Data—At Period End:
	Assets		$	15,889,290		$	14,884,309		$	14,581,809		$	14,231,500		$	13,028,213
	Securities			2,756,010			3,101,154			4,010,757			4,142,430			3,409,262
	Loans and leases			11,630,638			10,386,005			9,265,602			8,481,277			7,882,742
	Interest-earning assets			14,544,176			13,722,062			13,520,922			13,333,792			11,985,678
	Deposits			11,822,505			12,172,816			12,138,472			11,986,915			10,937,063
	Shareholders' equity			1,655,607			1,490,843			1,457,957			1,348,522			1,219,256
Balance Sheet Data—Average Balances:
	Assets		$	15,370,764		$	14,715,512		$	14,161,241		$	13,395,993		$	12,156,145
	Securities			2,833,489			3,488,005			4,028,332			3,641,615			2,929,699
	Loans and leases			11,057,411			9,948,363			8,875,358			8,106,657			7,729,150
	Interest-earning assets			14,054,123			13,568,255			13,047,244			12,322,193			11,159,034
	Deposits			12,236,383			11,869,927			11,778,839			11,275,017			10,045,267
	Shareholders' equity			1,599,488			1,460,792			1,389,700			1,262,560			1,147,477
Asset Quality:
	Nonaccrual loans		$	75,561		$	20,883		$	14,400		$	34,638		$	42,273
	OREO			—			—			—			—			—
		Total nonaccrual loans and OREO	$	75,561		$	20,883		$	14,400		$	34,638		$	42,273
Performance Ratios:
	Return on average assets			1.45	%		1.59	%		1.66	%		1.54	%		1.54	%
	Return on average shareholders' equity			13.92			15.99			16.89			16.34			16.27
	Net interest spread			2.91			3.18			3.99			4.12			4.30
	Net interest margin			4.45			4.58			4.79			4.54			4.74
	Period-end shareholders' equity to period-end assets			10.42			10.02			10.00			9.48			9.36
	Dividend payout ratio, per share			40.13			34.31			30.03			30.50			25.33
	Efficiency ratio			58.21			55.97			53.29			53.83			52.14
Asset Quality Ratios:
	Nonaccrual loans to total loans and leases			0.65	%		0.20	%		0.16	%		0.41	%		0.54	%
	Nonaccrual loans and OREO to total loans and leases and OREO			0.65			0.20			0.16			0.41			0.54
	Allowance for loan and lease losses to total loans and leases			1.45			1.50			1.66			1.75			1.98
	Allowance for loan and lease losses to nonaccrual loans			223.03			743.88			1,069.33			428.91			369.13
	Net (charge-offs)/recoveries to average total loans and leases			(0.08	)		0.03			0.10			(0.07	)		(0.36	)

(1)

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

27

MANAGEMENT'S DISCUSSION AND ANALYSIS

OVERVIEW

        City National Corporation, through its primary subsidiary, City National Bank (the "Bank"), provides private and business banking services, including investment and trust services to mid-size businesses, entrepreneurs, professionals and affluent individuals. The Bank is the largest independent commercial bank headquartered in Los Angeles. For over fifty years, the Bank has served clients through relationship banking. The Bank seeks to build client relationships with a high level of personal service and tailored products through private and commercial banking teams, product specialists and investment advisors to facilitate clients' use, where appropriate, of multiple services and products offered by the Company. The Company offers a broad range of lending, deposit, cash management, international banking and other products and services. The Company also lends, invests and provides services in accordance with its Community Reinvestment Act commitment. Through the Company's asset management firms, subsidiaries of the Corporation, and Wealth Management Services, a division of the Bank, the Company offers 1) investment management and advisory services and brokerage services, including portfolio management, securities trading and asset management; 2) personal and business trust and investment services, including employee benefit trust services; 401(k) and defined benefit plan administration, and; 3) estate and financial planning and custodial services. The Bank also advises and markets mutual funds under the name of CNI Charter Funds.

        City National Corporation ("the Corporation") is the holding company for the Bank. References to the "Company" mean the Corporation and its subsidiaries including the Bank. The financial information presented herein includes the accounts of the Corporation, its non-bank subsidiaries, the Bank, and the Bank's wholly owned subsidiaries. All material transactions between these entities are eliminated.

        See "Cautionary Statement for Purposes of the 'Safe Harbor' Provision of the Private Securities Litigation Reform Act of 1995," on page 67 in connection with "forward-looking" statements included in this report.

        Over the last three years, the Company's total assets and loans have grown by 12 percent and 37 percent, respectively. The growth in loans occurred primarily in commercial and residential mortgage loans, and includes the acquisition of Business Bank of Nevada in the first quarter of 2007. Deposit balances decreased modestly for the same period primarily due to lower title and escrow deposits resulting from the nationwide slowdown in the housing market.

        The Company continues to experience strong growth in noninterest income which increased by 25 percent from 2006 and 44 percent from 2005 primarily due to growth in trust and investment fees. Noninterest income increased to 33 percent of total revenue in 2007 up from 29 percent of total revenue in 2006. The increase in noninterest income reflects internal growth as well as the acquisition of Independence Investments, LLC, in 2006 and Convergent Wealth Advisors in 2007.

        On February 28, 2007, the Company completed the acquisition of Business Bank Corporation ("BBC"), the parent of Business Bank of Nevada ("BBNV") and an unconsolidated subsidiary, Business Bancorp Capital Trust I, in a cash and stock transaction valued at $167 million. BBNV operated as a wholly owned subsidiary of City National Corporation until after the close of business on April 30, 2007, at which time it was merged into the Bank. BBC had assets of $496 million, loans of $395 million and deposits of $441 million on the date of acquisition.

        On May 1, 2007, the Corporation completed the acquisition of Lydian Wealth Management in an all-cash transaction. The investment advisory firm is headquartered in Rockville, Maryland and now manages or advises on client assets totaling $8.9 billion. Lydian Wealth Management changed its name to Convergent Wealth Advisors ("Convergent Wealth") and became a subsidiary of Convergent Capital Management LLC, the Chicago-based asset management holding company that the Company acquired

28

in 2003. All of the senior executives of Convergent Wealth signed employment agreements and acquired a significant minority ownership interest in Convergent Wealth.

CAPITAL ACTIVITY

        In 2005, the Company repurchased 630,500 shares of its common stock under a 1 million share buyback program approved by the Board of Directors in March 2004, and the remaining 369,500 shares were repurchased in 2006. On April 26, 2006 the Board of Directors authorized the repurchase of 1.5 million additional shares of City National Corporation stock, following the completion of the March 24, 2004 buyback initiative. The buyback was completed in August 2006 at an average cost of $69.04. On July 6, 2006, the Board of Directors authorized the repurchase of 1.5 million additional shares of City National Corporation stock, following the completion of the April 26, 2006 buyback initiative. In 2006, 442,300 shares were repurchased under this program at an average cost of $66.24. On August 7, 2007, the Company's Board of Directors authorized the Company to repurchase 1 million additional shares of the Company's stock following completion of its previously approved stock buyback initiative. The Company repurchased an aggregate of 1,495,800 shares of common stock in 2007 at an average price of $69.47. The shares purchased under the buyback programs may be reissued for acquisitions, upon the exercise of stock options, and for other general corporate purposes. On January 24, 2008, the Board of Directors authorized the repurchase of an additional 1 million shares of City National Corporation stock, following the completion of the August 7, 2007 buyback initiative. At January 31, 2008, 1,561,900 additional shares could be repurchased under the existing authority.

        The Corporation paid dividends of $1.84 per share of common stock in 2007 and $1.64 per share of common stock in 2006. On January 24, 2008, the Board of Directors authorized a regular quarterly cash dividend on common stock at an increased rate of $0.48 per share (or $1.92 per share for the year) to shareholders of record on February 6, 2008 payable on February 20, 2008. This reflects a 4 percent increase over the $0.46 per share paid in November 2007.

CRITICAL ACCOUNTING POLICIES

        The accounting and reporting policies of the Company conform with U.S. generally accepted accounting principles ("GAAP"). The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, contingent assets and liabilities, and revenues and expenses included in the consolidated financial statements. Circumstances and events that differ significantly from those underlying the Company's estimates and assumptions could cause actual financial results to differ from the 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 and the valuation of financial assets and liabilities reported at fair value.

        Certain accounting policies involve significant judgments and assumptions by management which have a material impact on the carrying value of certain assets and liabilities; management considers such accounting policies to be critical accounting policies. The judgments and assumptions used by management are based on historical experience and other factors, which are believed to be reasonable under the circumstances. The Company has applied its critical accounting policies and estimation methods consistently in all periods presented in these financial statements and management has discussed these policies with the Audit Committee.

29

        Management believes the following are critical accounting policies that require the most significant judgments and estimates used in the preparation of its consolidated financial statements:

Accounting for securities

        All securities other than trading securities are classified as available-for-sale and are valued at fair value. Unrealized gains or losses on securities available-for-sale are excluded from net income but are included as separate components of comprehensive income, net of taxes. Premiums or discounts on securities available-for-sale are amortized or accreted into income using the interest method over the expected lives of the individual securities. Realized gains or losses on sales of securities available-for-sale are recorded using the specific identification method. Trading securities are valued at fair value with any unrealized gains or losses included in income.

        If available, quoted market prices provide the best indication of value. If quoted market prices are not available for fixed-maturity securities, the Company discounts the expected cash flows using market interest rates commensurate with the credit quality and maturity of the securities. The determination of market or fair value considers various factors, including time value and volatility factors; price activity for equivalent instruments; counterparty credit quality; and the potential impact on market prices or fair value of liquidating the Company's positions in an orderly manner over a reasonable period of time under current market conditions. Changes in assumptions could affect the fair values of investments.

        For the substantial majority of the Company's investments, fair values are determined based upon externally verifiable quoted prices. Using this information, the Company conducts quarterly reviews to determine whether there have been any events or economic circumstances to indicate that a security on which there is an unrealized loss is impaired on an other-than-temporary basis. Deteriorating global, regional or specific issuer-related economic conditions could adversely affect these values. The Company considers such factors as the length of time and the extent to which the market value has been less than cost and the Company's intent with regard to the securities in evaluating securities for other-than-temporary impairment. The value of securities is reduced when the declines are considered other-than-temporary, and a new cost basis is established for the securities. Any other-than-temporary impairment loss is included in net income.

Accounting for the 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 allowances 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 income statement 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, our level of provisioning and the allowance for loan and lease losses and reserve for off-balance sheet credit commitments may change.

        Nonperforming loans greater than $500,000 are individually evaluated for impairment based upon the borrower's overall financial condition, resources, and payment record, and the prospects for support from any financially responsible guarantors. In addition, the allowance for loan and lease losses attributed to these 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

30

loss given default, the present value of the 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.

        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. These include 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 classified loans; trends in volumes and terms of loans; and an evaluation of overall credit quality and the credit process, including lending policies and procedures, economic, geographical, product and other environmental factors. Management also considers trends in internally risk-rated exposures, classified exposures, cash-basis loans, and historical and forecasted write-offs; as well as a review of industry, geographic, and portfolio concentrations, including current developments within those segments. In addition, management considers the current business strategy and credit process, including credit-limit setting and compliance, credit approvals, loan underwriting criteria and loan workout procedures.

        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, decline in the value of collateral for collateral dependent loans and existence of concentrations. The reserve for off-balance sheet credit commitments is established by converting the off-balance sheet exposures to a loan equivalent amount and then applying the methodology used for loans described above.

Accounting for goodwill and other intangible assets

        The Company accounts for acquisitions using the purchase method of accounting. Under the purchase method, assets acquired and liabilities assumed are recorded at their estimated fair values at the date of acquisition. Management utilizes various valuation techniques including discounted cash flow analyses to determine these fair values. Any excess of the purchase price over amounts allocated to acquired assets, including identifiable intangible assets, and liabilities assumed is recorded as goodwill.

        Goodwill and intangible assets are evaluated at least annually for impairment or more frequently if events or circumstances, such as changes in economic or market conditions, indicate that impairment may exist. Goodwill is tested for impairment at the reporting unit level. A reporting unit is an operating segment or one level below an operating segment for which discrete financial information is available and regularly reviewed by management. If the fair value of the reporting unit including goodwill is determined to be less than the carrying amount of the reporting unit, a further test is required to measure the amount of impairment. If an impairment loss exists, the carrying amount of the goodwill is adjusted to a new cost basis. For purposes of the goodwill impairment test, fair value techniques based on multiples of earnings or book value are used to determine the fair value of the Company's reporting units. The multiples used in these calculations are consistent with current industry practice for valuing similar types of companies.

        Intangible assets include core deposit intangibles and client contract intangibles (combined, customer-relationship intangibles) originating from acquisitions of financial services firms. These assets are amortized over their estimated useful lives. Impairment testing of these assets is performed at the

31

individual asset level. Impairment exists if the carrying amount of the asset exceeds its fair value at the date of the impairment test. The fair value of a reporting unit is the amount at which the unit as a whole could be bought or sold in a current transaction between willing parties. For intangible assets, estimates of expected future cash flows (cash inflows less cash outflows) that are directly associated with an intangible asset are used to determine the fair value of that asset. Management makes certain estimates and assumptions in determining the expected future cash flows from customer-relationship intangibles including account attrition, expected lives, discount rates, interest rates, servicing costs and other factors. Significant changes in these estimates and assumptions could adversely impact the valuation of these intangible assets.

        If an impairment loss exists, the carrying amount of the intangible asset is adjusted to a new cost basis. The new cost basis is amortized over the remaining useful life of the asset.

Accounting for derivatives and hedging activities

        As part of its asset and liability management strategies, the Company uses interest-rate swaps to reduce cash flow variability and to moderate changes in the fair value of financial instruments. In accordance with Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended ("SFAS 133"), the Company recognizes derivatives as assets or liabilities on the balance sheet at their fair value. The treatment of changes in the fair value of derivatives depends on the character of the transaction.

        In accordance with SFAS 133, the Company documents its hedging relationships, including identification of the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transaction at the time the derivative contract is executed. This includes designating each derivative contract as either (i) a "fair value hedge" which is a hedge of a recognized asset or liability, (ii) a "cash flow hedge" which hedges a forecasted transaction or the variability of the cash flows to be received or paid related to a recognized asset or liability or (iii) an "undesignated hedge", a derivative instrument not designated as a hedging instrument whose change in fair value is recognized directly in the consolidated statements of income. All derivatives designated as fair value or cash flow hedges are linked to specific hedged items or to groups of specific assets and liabilities on the balance sheet. The Company did not have any significant undesignated hedges during 2007 or 2006.

        Both at inception and at least quarterly thereafter, the Company assesses whether the derivatives used in hedging transactions are highly effective (as defined in SFAS 133) in offsetting changes in either the fair value or cash flows of the hedged item. Retroactive effectiveness is assessed, as well as the expectation that the hedge will remain effective prospectively.

        For cash flow hedges, in which derivatives hedge the variability of cash flows (interest payments) on loans that are indexed to U.S. dollar LIBOR or to the Bank's prime interest rate, the effectiveness is assessed prospectively at the inception of the hedge, and prospectively and retrospectively at least quarterly thereafter. Ineffectiveness of the cash flow hedges is measured using the hypothetical derivative method described in Derivatives Implementation Group Issue G7, "Measuring the Ineffectiveness of a Cash Flow Hedge of Interest Rate Risk under Paragraph 30(b) When the Shortcut Method is not Applied." For cash flow hedges, the effective portion of the changes in the derivatives' fair value is not included in current earnings but is reported as other comprehensive income. When the cash flows associated with the hedged item are realized, the gain or loss included in other comprehensive income is recognized on the same line in the consolidated statements of income as the hedged item, i.e., included in interest income on loans. Any ineffective portion of the changes of fair value of cash flow hedges is recognized immediately in other noninterest income in the consolidated statements of income.

        For fair value hedges, the Company uses interest-rate swaps to hedge the fair value of certain certificates of deposits, subordinated debt and other long-term debt. The certificates of deposit are

32

single maturity, fixed-rate, non-callable, negotiable certificates of deposit that pay interest only at maturity and contain no compounding features. The certificates cannot be redeemed early except in the case of the holder's death. The interest-rate swaps are executed at the time the deposit transactions are negotiated. Interest-rate swaps are structured so that all key terms of the swaps match those of the underlying deposit or debt transactions, therefore ensuring there is no hedge ineffectiveness at inception. The Company ensures that the interest-rate swaps meet the requirements for utilizing the short cut method in accordance with paragraph 68 of SFAS 133 and maintains appropriate documentation for each interest-rate swap. On a quarterly basis, fair value hedges are analyzed to ensure that the key terms of the hedged items and hedging instruments remain unchanged, and the hedging counterparties are evaluated to ensure that there are no adverse developments regarding counterparty default, thus ensuring continuous effectiveness. For these fair value hedges, the effective portion of the changes in the fair value of derivatives is reflected in current earnings, on the same line in the consolidated statements of income as the related hedged item.

        The fair values of the interest-rate swaps are determined from verifiable third-party sources that have considerable experience with the interest-rate swap market. For both fair value and cash flow hedges, the periodic accrual of interest receivable or payable on interest-rate swaps is recorded as an adjustment to net interest income for the hedged items.

        The Company discontinues hedge accounting prospectively when (i) a derivative is no longer highly effective in offsetting changes in the fair value or cash flows of a hedged item, (ii) a derivative expires or is sold, terminated or exercised, (iii) a derivative is un-designated as a hedge, because it is unlikely that a forecasted transaction will occur, or (iv) the Company determines that designation of a derivative as a hedge is no longer appropriate. If a fair value hedge derivative instrument is terminated or the hedge designation removed, the previous adjustments to the carrying amount of the hedged asset or liability would be subsequently accounted for in the same manner as other components of the carrying amount of that asset or liability. For interest-earning assets and interest-bearing liabilities, such adjustments would be amortized into earnings over the remaining life of the respective asset or liability. If a cash flow hedge derivative instrument is terminated or the hedge designation is removed, related amounts reported in other comprehensive income are reclassified into earnings in the same period or periods during which the hedged forecasted transaction affects earnings.

Accounting for stock-based compensation

        The Company grants stock options, restricted stock and restricted stock units to employees in order to leverage the success of the Company by providing a means of aligning employees' interests with the interests of shareholders in increasing shareholder value, and by attracting, motivating, retaining, and rewarding key employees. The stock-based compensation plans are authorized and administered by the Compensation, Nominating & Governance Committee of the Board of Directors ("the Committee"). Awards may be granted to eligible employees, and shall not exceed 500,000 shares to an employee during any one-year period. Non-qualified and incentive options are issued with an exercise price equal to the market price of the Company's stock on the grant date. The options generally vest evenly over a four-year period, beginning on the first anniversary of the grant date, and have a term of ten years. Unvested options are forfeited upon termination of employment, except in the case of the retirement of a retirement-age employee for options granted prior to January 31, 2006, or upon the death of an employee, at which point the remaining unvested options are automatically vested. Certain options and stock awards provide for accelerated vesting if there is a change of control (as defined in the City National Corporation 2002 Amended and Restated Omnibus Plan). All unexercised options expire ten years from the grant date.

        On December 16, 2004, the FASB issued Statement of Financial Accounting Standards No. 123 (revised), Share Based Payment, ("SFAS 123R") which replaced SFAS 123 and superseded APB 25. SFAS 123R requires the Company to measure the cost of employee services received in exchange for

33

an award of equity instruments, such as stock options or restricted stock, based on the fair value of the award on the grant date. This cost must be recognized in the income statement over the vesting period of the award.

        The Company adopted SFAS 123R effective January 1, 2006. The Company previously applied APB Opinion No. 25, Accounting for Stock Issued to Employees, in accounting for stock-based compensation plans, and accordingly, no compensation cost had been recognized for stock options in the periods prior to January 1, 2006. The Company applied the Modified Prospective Application in its implementation of the accounting standard. In 2006, the Company recognized stock-based compensation expense on new awards and on existing awards that were modified, repurchased or cancelled after January 1, 2006, and on existing awards that were not fully vested as of the date of adoption, but did not restate prior periods. The Company did not make any modifications to outstanding stock options prior to the adoption of SFAS 123R. Pro forma net income for 2005 and earnings per share information for the current and prior years is provided in Note 11.

        Since 2003, stock-based compensation performance awards granted to colleagues of the Company have included grants of restricted stock or restricted stock units and fewer stock options. This reduced the total number of shares awarded but better aligned the interests of shareholders and colleagues. Restricted stock awards vest over a five-year period during which time the holder receives dividends and has full voting rights. Twenty-five percent of the restricted stock awards vest two years from the date of grant, then twenty-five percent vests on each of the next three consecutive grant anniversary dates. Restricted stock is valued at the closing price of the Company's stock on the date of award. The portion of the market value of the restricted stock related to the current service period is recognized as compensation expense. The portion of the market value of the restricted stock relating to future service periods is included in deferred equity compensation and is amortized over the remaining vesting period on a straight-line basis.

        The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model that uses certain assumptions. 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 historical data to predict option exercise and employee termination behavior. The expected term of options granted is derived from the actual historical exercise activity over the past 20 years 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. As a practice, the exercise price of the Company's stock option grants equals the closing market price of the common stock on the date of the grant.

        The actual value, if any, which a grantee may realize will depend upon the difference between the option exercise price and the market price of the Company's common stock on the date of exercise.

Accounting for Income Taxes

        The calculation of the Company's income tax provision and related tax accruals requires the use of estimates and judgments. The provision for income taxes is based on amounts reported in the consolidated statements of income which are adjusted to reflect the permanent and temporary differences in the tax and financial accounting for certain assets and liabilities.

        Deferred income taxes represent the tax effect of the differences in tax and financial reporting basis arising from temporary differences in accounting treatment. On a quarterly basis, management evaluates its deferred tax assets to determine if these tax benefits are expected to be realized in future periods. This determination is based on facts and circumstances, including the Company's current and

34

future tax outlook. To the extent a deferred tax asset is no longer considered "more likely than not" to be realized, a valuation allowance is established.

        Accrued income taxes represent the estimated amounts due or received from the various taxing jurisdictions where the Company has established a business presence. The balance also includes a contingent reserve for potential taxes, interest and penalties related to uncertain tax positions. On a quarterly basis, management evaluates the contingent tax accruals to determine if they are sufficient based on a probability assessment of potential outcomes. The determination is based on facts and circumstances, including the interpretation of existing law, new judicial or regulatory guidance and the status of tax audits.

RECENT DEVELOPMENTS

        Continued upheaval in the credit markets has negatively affected the nation's economy with significant impact on the residential mortgage and for-sale housing sectors. Large housing inventories and increasing numbers of foreclosures will continue to drive the downturn in the housing market. In addition, higher oil prices and increases in unemployment will impact economic growth in the near term.

2007 HIGHLIGHTS

•

Consolidated net income for 2007 was $222.7 million, or $4.52 per diluted common share, compared with $233.5 million, or $4.66 per diluted common share, in 2006. The decrease in net income is largely due to a $20.0 million, or $11.6 million after tax, provision for credit losses recorded in the fourth quarter. This was the first provision for loan losses recorded by the Company in almost four years and reflects significant loan growth, as well as the turmoil in the for-sale housing market.



•

Full-year revenue increased to $911.5 million, an increase of 7 percent from $848.3 million for 2006.



•

Fully taxable-equivalent net interest income reached $625.0 million in 2007, up slightly from $621.4 million for 2006. The Company's prime lending rate averaged 8.05 percent for 2007 compared with 7.96 percent for 2006.



•

Noninterest income reached $303.2 million in 2007, up 25 percent from the previous year due to the acquisition of Convergent Wealth Advisors, as well as growth in trust and investment, cash management and international service fees. Noninterest income grew 13 percent from 2006 excluding the acquisition of Convergent Wealth Advisors in mid-2007 and Independence Investments in the second quarter of 2006. Noninterest income accounted for 33 percent of the Company's revenue in 2007, up from 29 percent in 2006.



•

The Company's effective tax rate was 36.9 percent for the year, slightly higher than the 36.4 percent rate in 2006, due to a decrease in tax benefits from investments in affordable housing partnerships and an income tax expense of approximately $0.7 million related to the expected resolution of two pending tax matters.



•

Total assets at December 31, 2007 reached $15.9 billion, up 7 percent from $14.9 billion at the end of 2006 and up 2 percent from the third quarter of 2007. The increase in total assets is primarily attributable to loan growth and the first-quarter 2007 acquisition of Business Bank of Nevada.



•

Total average assets increased to $15.4 billion for 2007 from $14.7 billion for 2006, an increase of 4 percent.

35

•

The return on average assets was 1.45 percent for 2007 compared with 1.59 percent for 2006. The return on average shareholders' equity was 13.92 percent for 2007 compared with 15.99 percent for the prior year.



•

Average loan balances grew by 11 percent to $11.1 billion for 2007 compared with $9.9 billion for 2006.



•

Nonaccrual loans totaled $75.6 million as of December 31, 2007, compared with $20.9 million at December 31, 2006. Net loan charge-offs were $8.5 million in 2007, compared with net loan recoveries of $2.8 million in 2006. The increase in nonaccruals and net charge-offs occurred primarily in the Company's for-sale housing construction portfolio.



•

Average securities for 2007 totaled $2.8 billion, a decrease of 19 percent from $3.5 billion for 2006. The average duration of the total available-for-sale securities portfolio at December 31, 2007 was 3.4 years, compared with 3.3 years at December 31, 2006.



•

Average deposits totaled $12.2 billion for 2007, a 3 percent increase from average deposits of $11.9 billion in 2006. The increase is due in large part to the acquisition of the Business Bank of Nevada as well as growth in time deposits and other interest-bearing deposits. Average noninterest-bearing deposits fell 3.5 percent from 2006, as some of the Bank's clients moved funds from core deposit accounts to higher-yielding instruments and title and escrow balances declined due to the weakness in the housing market.

OUTLOOK

        Based on its current assessment of economic conditions, management expects earnings per share to be 7 to 12 percent lower in 2008 than in 2007. Management's outlook is based upon its current view that the economy will grow at a nominal rate this year and that certain sectors, such as housing, will continue to put downward pressure on economic conditions. A material change in economic conditions would affect the Company's earnings expectations for 2008.

        In this economic environment, management anticipates moderate growth in loans and deposits this year as well as strong growth in noninterest income. The loan loss provision is expected to be higher in 2008 than in 2007, reflecting a more normal level. Growth in net interest income will be constrained due to lower interest rates, an increase in non-performing loans, and a moderate decline in commercial real estate loans. Noninterest expense is expected to grow at a lower rate than it did in 2007, despite significantly higher FDIC premiums, additional personnel costs and the impact of acquisitions made last year.

36

RESULTS OF OPERATIONS

Summary

        A summary of the Company's results of operations on a fully taxable-equivalent basis for each of the last five years ended December 31 follows.

					Increase (Decrease)								Increase (Decrease)					Year Ended December 31,
Dollars in thousands (except per share amounts)			Year Ended 2007							Year Ended 2006
					Amount			%					Amount			%		2005		2004		2003
Interest income (1)			$	910,854	$	69,099		8		$	841,755		$	110,818		15		$	730,937	$	618,060	$	590,206
Interest expense				285,829		65,424		30			220,405			114,280		108			106,125		58,437		61,110
Net interest income				625,025		3,675		1			621,350			(3,462	)	(1	)		624,812		559,623		529,096
Provision for credit losses				20,000		20,610		NM			(610	)		(610	)	NM			—		—		29,000
Noninterest income				303,202		60,832		25			242,370			32,002		15			210,368		186,410		179,485
Noninterest expense:
	Staff expense			331,091		35,940		12			295,151			31,753		12			263,398		239,583		217,494
	Other expense			198,154		17,259		10			180,895			6,115		3			174,780		155,827		146,684
		Total		529,245		53,199		11			476,046			37,868		9			438,178		395,410		364,178
Minority interest expense				8,856		2,898		49			5,958			283		5			5,675		4,992		4,039
Income before income taxes				370,126		(12,200	)	(3	)		382,326			(9,001	)	(2	)		391,327		345,631		311,364
Income taxes				130,660		(2,703	)	(2	)		133,363			(8,458	)	(6	)		141,821		123,429		107,946
Less: adjustments (1)				16,753		1,313		9			15,440			669		5			14,771		15,880		16,741
		Net income	$	222,713	$	(10,810	)	(5	)	$	233,523		$	(1,212	)	(1	)	$	234,735	$	206,322	$	186,677
		Net income per share, diluted	$	4.52	$	(0.14	)	(3	)	$	4.66		$	0.06		1		$	4.60	$	4.04	$	3.72

(1)

Includes amounts to convert nontaxable income to a fully taxable-equivalent yield. To compare tax-exempt asset yields to taxable yields, amounts are adjusted to pre-tax equivalents based on the marginal corporate federal tax rate of 35 percent.

NM—Not

Meaningful 

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.

37

        The following table shows average balances, interest income and yields for the last five years.

Net Interest Income Summary

					2007							2006
Dollars in thousands					Average Balance			Interest income/ expense (1)(4)		Average interest rate		Average Balance			Interest income/ expense (1)(4)		Average interest rate
Assets (2)
	Interest-earning assets
		Loans and leases
			Commercial		$	4,279,523		$	310,869	7.26	%	$	3,882,466		$	268,364	6.91	%
			Commercial real estate mortgages			1,878,671			136,446	7.26			1,786,024			133,429	7.47
			Residential mortgages			3,020,316			166,823	5.52			2,764,599			147,573	5.34
			Real estate construction			1,291,708			110,483	8.55			955,456			84,462	8.84
			Equity lines of credit			404,493			30,456	7.53			364,744			27,938	7.66
			Installment			182,700			13,539	7.41			195,074			14,760	7.57
				Total loans and leases (3)		11,057,411			768,616	6.95			9,948,363			676,526	6.80
		Due from banks—interest-bearing				88,787			2,089	2.35			54,843			795	1.45
		Federal funds sold and securities purchased under resale agreements				13,066			686	5.25			30,417			1,525	5.01
		Securities available-for-sale				2,757,304			131,733	4.78			3,438,002			157,574	4.58
		Trading account securities				76,185			3,959	5.20			50,003			2,803	5.61
		Other interest-earning assets				61,370			3,771	6.14			46,627			2,532	5.43
				Total interest-earning assets		14,054,123			910,854	6.48			13,568,255			841,755	6.20
		Allowance for loan and lease losses				(157,012	)						(157,433	)
		Cash and due from banks				423,526							428,742
		Other non-earning assets				1,050,127							875,948
				Total assets	$	15,370,764						$	14,715,512
Liabilities and Shareholders' Equity (2)
	Interest-bearing deposits
		Interest checking accounts			$	784,293		$	4,739	0.60		$	758,164		$	2,427	0.32
		Money market accounts				3,654,508			111,827	3.06			3,303,373			76,293	2.31
		Savings deposits				147,764			715	0.48			168,853			685	0.41
		Time deposits—under $100,000				240,388			9,518	3.96			183,972			6,355	3.45
		Time deposits—$100,000 and over				1,876,184			87,881	4.68			1,721,292			73,264	4.26
				Total interest-bearing deposits		6,703,137			214,680	3.20			6,135,654			159,024	2.59
		Federal funds purchased and securities sold under repurchase agreements				662,928			32,491	4.90			541,671			26,463	4.89
		Other borrowings				644,633			38,658	6.00			627,409			34,918	5.57
				Total interest-bearing liabilities		8,010,698			285,829	3.57			7,304,734			220,405	3.02
	Noninterest-bearing deposits					5,533,246							5,734,273
	Other liabilities					227,332							215,713
	Shareholders' equity					1,599,488							1,460,792
				Total liabilities and shareholders' equity	$	15,370,764						$	14,715,512
Net interest spread										2.91	%						3.18	%
Fully taxable-equivalent net interest and dividend income								$	625,025						$	621,350
Net interest margin										4.45	%						4.58	%
Less: Dividend income included in other income									3,771							2,532
Fully taxable-equivalent net interest income								$	621,254						$	618,818

(1)

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

(2)

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

(3)

Includes average nonaccrual loans of $28,512, $16,725, $22,495, $39,266, and $66,675 for 2007, 2006, 2005, 2004, and 2003, respectively.

(4)

Loan income includes loan fees of $15,684, $16,249, $24,894, $20,354, and $21,648 for 2007, 2006, 2005, 2004, and 2003, respectively.

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Net Interest Income Summary

2005							2004							2003
Average Balance			Interest income/ expense (1)(4)		Average interest rate		Average Balance			Interest income/ expense (1)(4)		Average interest rate		Average Balance			Interest income/ expense (1)(4)		Average interest rate
$	3,306,277		$	202,672	6.13	%	$	3,042,167		$	158,738	5.22	%%	$	3,256,646		$	170,561	5.24	%
	1,836,904			132,245	7.20			1,776,193			111,992	6.31			1,681,056			113,830	6.77
	2,481,122			129,314	5.21			2,138,365			115,042	5.38			1,832,682			110,430	6.03
	749,911			56,930	7.59			756,022			41,734	5.52			647,851			33,593	5.19
	298,751			18,029	6.03			216,206			9,649	4.46			173,937			7,528	4.33
	202,393			14,022	6.93			177,704			10,843	6.10			136,978			8,883	6.48
	8,875,358			553,212	6.23			8,106,657			447,998	5.53			7,729,150			444,825	5.76
	46,705			282	0.60			63,042			699	1.11			66,755			576	0.86
	50,287			1,617	3.22			463,979			6,884	1.48			386,388			4,185	1.08
	3,990,687			172,155	4.31			3,609,139			159,906	4.43			2,897,401			138,021	4.76
	37,645			1,396	3.71			32,476			331	1.02			32,298			211	0.65
	46,562			2,275	4.89			46,900			2,242	4.78			47,042			2,388	5.08
	13,047,244			730,937	5.60			12,322,193			618,060	5.02			11,159,034			590,206	5.29
	(150,303	)						(153,266	)						(161,869	)
	443,828							442,570							436,870
	820,472							784,496							722,110
$	14,161,241						$	13,395,993						$	12,156,145
$	828,530		$	1,067	0.13		$	792,424		$	697	0.09		$	652,238		$	1,218	0.19
	3,557,633			43,880	1.23			3,711,983			27,670	0.75			3,205,041			26,078	0.81
	196,590			540	0.27			249,081			533	0.21			285,584			614	0.21
	183,888			3,034	1.65			190,821			2,902	1.52			209,520			3,521	1.68
	1,013,486			27,524	2.72			849,489			12,456	1.47			1,003,012			14,377	1.43
	5,780,127			76,045	1.32			5,793,798			44,258	0.76			5,355,395			45,808	0.86
	278,576			8,583	3.08			119,251			1,422	1.19			147,883			1,538	1.04
	533,755			21,497	4.03			571,807			12,757	2.23			645,578			13,764	2.13
	6,592,458			106,125	1.61			6,484,856			58,437	0.90			6,148,856			61,110	0.99
	5,998,712							5,481,219							4,689,872
	180,371							167,358							169,940
	1,389,700							1,262,560							1,147,477
$	14,161,241						$	13,395,993						$	12,156,145
					3.99	%						4.12	%						4.30	%
			$	624,812						$	559,623						$	529,096
					4.79	%						4.54	%						4.74	%
				2,275							2,242							2,388
			$	622,537						$	557,381						$	526,708

              39

        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 shows changes in net interest income between 2007 and 2006 as well as between 2006 and 2005 broken down between volume and rate.

Changes In Net Interest Income

		2007 vs 2006									2006 vs 2005
		Increase (decrease) due to									Increase (decrease) due to
Dollars in thousands								Net increase (decrease)									Net increase (decrease)
		Volume			Rate						Volume			Rate
Interest earned on:
Loans and leases		$	76,878		$	15,212		$	92,090		$	70,193		$	53,121		$	123,314
Securities available-for-sale			(32,439	)		6,598			(25,841	)		(24,878	)		10,297			(14,581	)
Due from banks—interest-bearing			646			648			1,294			56			457			513
Trading account securities			1,374			(218	)		1,156			549			858			1,407
Federal funds sold and securities purchased under resale agreements			(909	)		70			(839	)		(786	)		694			(92	)
Other interest-earning assets			876			363			1,239			3			254			257
	Total interest-earning assets		46,426			22,673			69,099			45,137			65,681			110,818
Interest paid on:
Interest checking deposits			87			2,225			2,312			(98	)		1,458			1,360
Money market deposits			8,764			26,770			35,534			(3,344	)		35,757			32,413
Savings deposits			(87	)		117			30			(87	)		232			145
Time deposits			9,329			8,451			17,780			23,573			25,488			49,061
Other borrowings			7,482			2,286			9,768			16,020			15,281			31,301
	Total interest-bearing liabilities		25,575			39,849			65,424			36,064			78,216			114,280
		$	20,851		$	(17,176	)	$	3,675		$	9,073		$	(12,535	)	$	(3,462	)

Comparison of 2007 with 2006

        Net interest income was negatively impacted by changes in interest rates during 2007. The carryover effect of interest rate increases in 2006 caused the cost of interest-bearing liabilities to increase by 55 basis points in 2007 compared to a 28 basis point rise in the yield on earning assets. The net effect of these rate changes was a decrease in net interest income of $17.2 million, which was more than offset by the additional interest income related to the increase in average earning assets. The impact of changes in interest-bearing assets and liabilities caused net interest income to increase by $20.9 million. This benefit was partially offset by reduced average noninterest-bearing deposit balances which declined by $201 million. Interest rate increases also had a positive effect on service charges and fees on deposits which increased slightly due to lower earnings credits on deposit balances. Together, these changes caused the net interest margin to decline by 13 basis points, despite the $3.7 million increase in net interest income.

        Taxable-equivalent net interest income totaled $621.3 million in 2007, compared with $618.8 million for 2006. Higher loan balances and a higher average prime lending rate in 2007 compared with 2006 contributed to the increase. Although the prime rate declined during the fourth quarter of 2007, the average rate for the year was slightly higher than it was in 2006. The average cost of interest-bearing deposits increased to 3.20 percent for 2007 compared with 2.59 percent for 2006. Net interest income for 2007 also includes $5.4 million in expense from the net settlement of interest-rate swaps compared with $9.6 million in 2006. Interest income recovered on charged-off loans

40

included above was $1.7 million in 2007, compared with $2.0 million for 2006. The fully taxable-equivalent net interest margin in 2007 was 4.45 percent, compared with 4.58 percent for 2006.

        Average loans and leases for 2007 increased to $11.1 billion for 2007, an 11 percent increase from average loans and leases of $9.9 billion for 2006. Loan growth was led by a 16 percent increase in commercial real estate and construction loans to $3.2 billion, and a 10 percent increase in commercial loans to $4.3 billion compared with 2006. In addition, average single-family residential loans increased 9 percent from the prior year. excluding the acquisition of the Business Bank of Nevada average loans grew by 7 percent in 2007.

        Average total securities in 2007 were $2.8 billion, a decrease of $654.5 million, or 19 percent, from 2006.

        Average core deposits, which continued to provide substantial benefits to the bank's cost of funds, increased 2 percent to $10.4 billion from $10.1 billion for 2006. Average core deposits, which do not include certificates of deposit of $100,000 or more, represented 84.7 percent of the total average deposit base for the year. Included in core deposits are specialty deposits. Average specialty deposits, primarily from title and escrow companies, were $1.2 billion in 2007, compared with $1.3 billion in 2006, a decrease of 6 percent. Specialty deposit balances declined due to the slowdown in the housing market.

        Average interest-bearing core deposits increased to $4.8 billion in 2007 from $4.4 billion in 2006, an increase of $413 million, or 9 percent. Average noninterest-bearing deposits decreased to $5.5 billion in 2007 from $5.7 billion in 2006, a decrease of $201 million, or 4 percent. Average time deposits in denominations of $100,000 or more increased by $155 million, or 9 percent, to $1.9 billion, between 2006 and 2007. The decrease in noninterest-bearing deposits and increase in time deposits occurred as some of the Bank's clients shifted funds to higher-yielding accounts.

Comparison of 2006 with 2005

        Taxable-equivalent net interest income totaled $618.8 million in 2006, compared with $622.5 million for 2005. The decrease in net interest income was due primarily to higher deposit costs. Included in 2006 was $9.6 million from the receipt of net settlements of interest rate risk management instruments compared to $9.9 million in 2005. Interest income recovered on charged-off loans included above was $2.0 million in 2006, compared with $2.5 million for 2005. The fully taxable-equivalent net interest margin in 2006 was 4.58 percent, compared with 4.79 percent for 2005.

        Average loans for 2006 were $9.9 billion, $1.1 billion or 12 percent higher than 2005, due to strong demand and to the acquisition of new clients. Compared with 2005 averages, residential mortgage loans rose 11 percent to $2.8 billion, commercial loans increased 17 percent to $3.9 billion and the combined total of commercial real estate mortgage loans and real estate construction loans increased 6 percent to $2.7 billion.

        Average total securities in 2006 were $3.5 billion, a decrease of $552.7 million, or 14 percent, from 2005.

        Average core deposits, which continued to provide substantial benefits to the bank's cost of funds in 2006, fell to $10.1 billion, an decrease of 6 percent from 2005. Average core deposits represented 85.5 percent of the total average deposit base for the year. Included in core deposits are specialty deposits. Average specialty deposits, primarily from title and escrow companies, were $1.3 billion in 2006, compared to $1.6 billion in 2005, a decrease of 22 percent.

        Average interest-bearing core deposits decreased to $4.4 billion in 2006 from $4.8 billion in 2005, a decrease of $352.3 million, or 7 percent. Average noninterest-bearing deposits decreased to $5.7 billion

41

in 2006 from $6.0 billion in 2005, a decrease of $264.4 million, or 4 percent. Average time deposits in denominations of $100,000 or more increased $707.8 million, or 70 percent, between 2005 and 2006.

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 is the expense recognized in the income statement to adjust the allowance and reserve to the levels deemed appropriate by management, as determined through its application of the Company's allowance methodology procedures (see "Critical Accounting Policies" on page 29).

        The provision for credit losses primarily reflects management's ongoing assessment of the credit quality and growth of the loan and commitment portfolios as well as the levels of net loan (charge-offs)/recoveries and nonaccrual loans, and changes in the economic environment during the period.

        The Company recorded expense of $20.0 million through the provision for credit losses in 2007 and income of $0.6 million during 2006. No provision for credit losses was recorded in 2005. The provision recorded in the fourth quarter of 2007 reflects management's ongoing assessment of the credit quality of the Company's portfolio, which is impacted by various economic factors including weakness in the housing sector. Additional factors affecting the provision include net loan charge-offs, increased nonaccrual loans, risk rating migration and growth in the loan portfolio. See "Balance Sheet Analysis—Asset Quality—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.

        Total nonaccrual loans increased to $75.6 million at December 31, 2007, from $20.9 million at December 31, 2006 and $26.2 million at September 30, 2007. The increase in nonaccruals occurred primarily in the Company's for-sale housing construction portfolio. For-sale housing loans represented approximately 5 percent of the $11.6 billion loan portfolio at December 31, 2007.

        The Company has not originated nor purchased subprime or option adjustable-rate mortgages.

        Net loan charge-offs totaled $8.5 million for the year ended December 31, 2007 compared with net loan recoveries of $2.8 and $9.3 million for the years ended December 31, 2006 and 2005, respectively. The charge-offs occurred primarily in the for-sale construction portfolio.

        Based on its current assessment of economic conditions, management expects the loan loss provision to be higher in 2008 than in 2007. Credit quality will be influenced by underlying trends in the economic cycle, particularly in California, 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. Additionally, subsequent evaluation of the loan and commitment portfolios by the Company and its regulators, in light of factors then prevailing, may warrant an adjustment to the amount of the projected provision.

Noninterest Income

        The Company experienced continued strong growth in noninterest income in 2007. Noninterest income for the year totaled $303.2 million, an increase of $60.8 million, or 25 percent, from 2006. Noninterest income increased $32.0 million, or 15 percent, between 2006 and 2005. Noninterest income represented 33 percent of total revenues in 2007, compared with 29 percent and 26 percent in 2006 and 2005, respectively.

42

        A breakdown of noninterest income by category is provided in the table below:

Analysis of Changes in Noninterest Income

					Increase (Decrease)								Increase (Decrease)
Dollars in millions (1)
		2007			Amount			%		2006			Amount			%		2005
Trust and investment fees		$	140.7		$	33.2		30.9		$	107.5		$	26.7		33.0		$	80.8
Brokerage and mutual fund fees			60.3			10.0		19.9			50.3			8.4		20.0			41.9
Cash management and deposit transaction fees			35.3			3.7		11.7			31.6			(2.5	)	(7.3	)		34.1
International services fees			30.4			4.2		16.0			26.2			3.0		12.9			23.2
Bank-owned life insurance			2.7			(0.3	)	(10.0	)		3.0			(0.2	)	(6.3	)		3.2
Other service charges and fees			29.2			3.7		14.5			25.5			0.7		2.8			24.8
	Total noninterest income before gain (loss)		298.6			54.5		22.3			244.1			36.1		17.4			208.0
Gain on sale of other assets			6.0			3.2		114.3			2.8			1.7		154.5			1.1
(Loss) gain on sale of securities			(1.4	)		3.1		68.9			(4.5	)		(5.8	)	(446.2	)		1.3
	Total	$	303.2		$	60.8		25.1		$	242.4		$	32.0		15.2		$	210.4

(1)

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

        Trust and investment fee revenue includes fees from trust, investment and asset management, and other wealth advisory services. A portion of these fees are based on the market valuations of client assets managed, administered or held in custody. Increases in market values are reflected in fee income primarily on a trailing-quarter basis. The remaining portion of these fees, such as those for estate and financial planning, is based on the specific service provided or may be a fixed fee. Trust and investment fees increased 31 percent to $140.7 million for 2007 compared with a year earlier. The increase is attributable to continued growth in the Company's core trust business, a full-year of results for Independence Investments, and the acquisition of Convergent Wealth in May 2007. Convergent Wealth contributed $21.8 million to trust and investment fee revenue in 2007. Excluding Convergent Wealth, trust and investment fee revenue increased to $119.0 million, or 11 percent, over 2006. Trust and investment fee revenue increased by $26.7 million, or 33 percent, in 2006 compared with 2005. The increase was largely due to the acquisition of Independence Investments in May 2006.

        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 are assets the Company holds in a fiduciary capacity or otherwise provides non-advisory related services. Assets managed for clients include equities, fixed income instruments, cash and other assets. The type or mix of assets held in managed accounts can have a significant impact on revenue. Changes in the value of AUM are not directly correlated with changes in revenue or the number of customer accounts. The value of AUM fluctuates with changes in market valuations and other account activity, particularly trust or other account disbursements. Management believes that changes in revenue are a better indicator of trends in the wealth management business than the level of AUM.

        At December 31, 2007, the Company had AUM of $37.3 billion, an increase of 35 percent from AUM of $27.6 billion at December 31, 2006. Excluding Convergent Wealth, AUM increased by 3 percent to $28.3 billion at December 31, 2007. Assets under management or administration increased 21 percent to $58.5 billion at December 31, 2007 from $48.5 billion at December 31, 2006.

43

        Brokerage and mutual fund revenue includes fees on client securities transactions and shareholder, advisory and administrative fees associated with mutual funds. Brokerage and mutual fund revenue increased by $10.0 million, or 20 percent, in 2007 compared with 2006. The increase is due to higher transaction volumes and the addition of new clients.

        Cash management and deposit transaction fees increased $3.7 million, or 12 percent, in 2007, compared with a 7 percent decrease in 2006 from 2005. The growth in deposit-related fee income from the prior year is due to increased sales of cash management products to new and existing customers.

        International services income for 2007 increased $4.2 million, or 16 percent, over 2006, compared with a 13 percent increase in 2006 over 2005. International services income includes foreign exchange fees, fees on commercial letters of credit and standby letters of credit, and foreign collection fees. The increase in 2007 reflects increasing demand for both foreign exchange services and letters of credit. In 2006, international services income increased $3.0 million over 2005 due to the continued demand for the Company's international services including letters of credit.

        Other service charges and fees increased $3.7 million in 2007 over 2006, or 15 percent. The growth occurred in a number of categories including funds transfer fees and debit card fees and interchange fees, due to higher transaction volumes. Other service charges and fees increased $0.7 million in 2006 over 2005, or 3 percent, due to higher miscellaneous fees.

        The Company sold certain securities in 2007 and 2006 in order to reduce borrowings, improve liquidity and reduce prepayment risk. Losses on the sale of securities available-for-sale totaled $1.4 million and $4.5 million in 2007 and 2006, respectively. The Company realized gains on the sale of securities available-for-sale of $1.3 million in 2005.

        Gain on sale of other assets for 2007 includes a $5.1 million gain on the recovery of an investment in liquidation and a $0.6 million gain on the sale of an insurance policy.

        Other noninterest income for 2007 includes a $1.0 million relocation incentive payment received from the landlord of one of the Bank's operations facilities.

Noninterest Expense

        Noninterest expense (including minority interest expense) was $538.1 million in 2007, an increase of $56.1 million, or 12 percent, over 2006. Noninterest expense increased $38.1 million, or 9 percent, in 2006 over 2005. Noninterest expense grew in 2007 largely due to the acquisitions of BBNV and Convergent Wealth. Excluding the impact of acquisitions, noninterest expense increased 6 percent from the prior year.

44

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

Analysis of Changes in Noninterest Expense

						Increase (Decrease)					Increase (Decrease)
Dollars in millions (1)
				2007		Amount		%	2006		Amount			%		2005
Salaries and employee benefits				$	331.1	$	35.9	12.2	$	295.2	$	31.8		12.1		$	263.4
All Other:
	Net occupancy of premises				43.5		3.3	8.2		40.2		5.1		14.5			35.1
	Legal and professional fees				36.0		1.0	2.9		35.0		(4.1	)	(10.5	)		39.1
	Information services				23.4		1.6	7.3		21.8		2.3		11.8			19.5
	Marketing and advertising				21.8		3.1	16.6		18.7		2.5		15.4			16.2
	Depreciation and amortization				20.9		1.8	9.4		19.1		0.7		3.8			18.4
	Office services				12.3		1.5	13.9		10.8		0.1		0.9			10.7
	Amortization of intangibles				8.9		3.6	67.9		5.3		(1.3	)	(19.7	)		6.6
	Equipment				3.2		0.4	14.3		2.8		0.4		16.7			2.4
	Minority interest expense				8.9		3.0	50.8		5.9		0.2		3.5			5.7
	Other operating				28.1		0.9	3.3		27.2		0.4		1.5			26.8
		Total all other			207.0		20.2	10.8		186.8		6.3		3.5			180.5
			Total	$	538.1	$	56.1	11.6	$	482.0	$	38.1		8.6		$	443.9

(1)

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

        Salaries and employee benefits expense increased to $331.1 million, or 12 percent in 2007 from $295.2 million in 2006 primarily due to the acquisitions of BBNV and Convergent Wealth and to higher performance-based compensation costs. Salaries and benefits expense for 2007 includes $13.9 million related to stock-based compensation plans compared with $12.3 million for 2006 and $4.2 million for 2005. Salaries and benefits expense increased 12 percent in 2006 from 2005 largely due to the acquisition of Independence Investments in May 2006 and increases in performance-based compensation including the recognition of expense for unvested stock options. Full-time equivalent staff increased to 2,914 at December 31, 2007 from 2,689 at December 31, 2006 and 2,539 at December 31, 2005.

        As described in Note 1 of Notes to Consolidated Financial Statements and "Critical Accounting Policies", the Company adopted SFAS 123(R) effective January 1, 2006. The Company previously applied APB Opinion No. 25, Accounting for Stock Issued to Employees, in accounting for stock-based compensation plans and accordingly, no compensation cost had been recognized for these plans in the prior period financial statements. Prior period amounts have not been restated. As a result of adopting Statement 123(R), the Company recorded $8.1 and $6.9 million of additional stock-based compensation expense for the years ended of December 31, 2007 and 2006, respectively.

        The remaining noninterest expense categories increased $20.2 million or 11 percent, between 2006 and 2007. Occupancy costs increased $3.3 million and information services expenses increased by $1.6 million, respectively, largely due to the acquisitions of BBNV and Convergent Wealth. Marketing and advertising expense increased by $3.1 million over 2006 due to the costs associated with new advertising campaigns and integrating BBNV into the Company's marketing programs. Office services expense increased by $1.5 million from the prior year due to higher postage and mailing expenses, and higher telephone and office supplies expense related to the addition of new offices and the acquisitions of BBNV and Convergent Wealth. Amortization of intangible assets, which include customer-relationship intangibles, increased by $3.6 million from the year-earlier due to the aforementioned

45

acquisitions. Minority interest expense, representing minority shareholders' interests in the net income of affiliates, increased by $3.0 million from 2006 primarily due to the acquisition of Convergent Wealth and increased income at our other majority-owned affiliates.

        The remaining noninterest expense categories increased $6.3 million, or 4 percent, between 2005 and 2006. Occupancy costs increased $5.1 million in 2006 from a year earlier due to the acquisition of Independence Investments, rent increases and a $0.8 million accrual for facility exit costs.

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 21 on page A-45 of the Notes to Consolidated Financial Statements.

Commercial and Private Banking

        Total revenue for the Commercial and Private Banking segment increased $41.7 million, or 6 percent, in 2007 over 2006. Revenue also increased 6 percent in 2006 over 2005. The increase in Commercial and Private Banking revenue in both years was driven by strong loan growth, primarily in commercial and industrial and residential mortgage loans, but higher interest income on loans in both years was offset in large part by higher funding costs due to a change in the deposit mix and increases in deposit rates. Net income for this segment in 2007 of $201.5 million represented a decrease of approximately $7.3 million from the $208.8 million recorded in 2006. The decrease in net income is primarily attributable to the $20.0 million provision for credit losses recorded in the fourth quarter. Net income increased $10.5 million, or 5 percent, in 2006 compared with 2005. Average loans were $11.0 billion in 2007, an increase of 11 percent from $9.8 billion in 2006. Average loans were up 12 percent from 2005 compared with 2006. Average deposits were $11.1 billion in 2007, an increase of 5 percent from 2006. Average deposits decreased $454.5 million, or 4 percent, in 2006 compared with 2005. Noninterest income rose 15 percent in 2007 compared to 2006, and 14 percent from 2005 to 2006. Noninterest expense, including depreciation and amortization expense, was 7 percent, or $29.7 million, higher in 2007 than in 2006 due to the acquisition of BBNV, higher staffing costs, including the expense for unvested stock options and the expense of new banking offices. Noninterest expense increased 8 percent, or $30.8 million, in 2006 compared to 2005 due to higher staffing costs, including the expense for unvested stock options, the expense of new banking offices and the expense associated with promoting new banking products.

Wealth Management

        The Wealth Management segment had total revenue of $205.8 million in 2007 compared to $158.0 million in 2006. The 30 percent increase is attributable to the acquisition of Convergent Wealth in 2007, a full year of income for Independence Investments, growth in the Company's trust business and higher transaction volumes. Revenue grew 25 percent in 2006 compared with 2005 as a result of the acquisition of Independence Investments, the addition of new clients and higher transaction volumes. Net income for this segment was $37.9 million in 2007 compared with $26.1 million in 2006 and $17.4 million in 2005. The 46 percent increase in net income in 2007 is attributable to the factors discussed above. Noninterest expense, including depreciation and amortization, was $28.1 million, or 24 percent, higher in 2007 compared with 2006 due to the acquisition of Convergent Wealth, a full year's results for Independence Investments and higher staffing costs. Noninterest expense increased $18.0 million, or 18 percent, in 2006 compared with 2005 due to the acquisition of Independence Investments and higher staffing costs.

46

Other

        Total revenue for the Other segment decreased $26.3 million in 2007 compared with 2006 and decreased $42.8 million in 2006 compared with 2005. Net income for the Other segment declined $15.4 million in 2007 from 2006 and declined $20.4 million in 2006 compared with 2005. The declines are related to higher funding costs, lower prepayment fees and higher expense on interest-rate swaps in the Asset Liability Funding Center.

Income Taxes

        The effective tax rate for 2007 was 36.9 percent, compared with 36.4 percent for 2006 and 37.7 percent for 2005. 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 and tax-exempt income on municipal bonds and bank-owned life insurance. See Note 8 of the Notes to Consolidated Financial Statements on page A-25.

        The Internal Revenue Service has completed its audit of the Company's tax returns for the years 2002-2003 The Company is currently in IRS appeals proceedings related to certain tax positions taken in these years and expects resolution on these items in the first quarter of 2008. The Company does not expect the final settlement of these matters to vary materially from the Company's current tax accrual for these matters as of December 31, 2007.

        The Company is also under examination by the California Franchise Tax Board for the years 1998-2004. The Company expects the Franchise Tax Board to complete its examination for the years 1998 through 2003 within the next 12 months. The potential financial statement impact resulting from the completion of the audit is not determinable at this time.

        From time to time, there may be differences in opinions with respect to the Company's tax treatment of certain transactions. A tax position which was previously recognized on the financial statements is not reversed unless it appears the benefits are no longer "more likely than not" to be sustained upon a challenge from the taxing authorities. The Company did not have any tax positions for which previously recognized benefits were reversed during the year ended December 31, 2007.

        As previously reported, on December 31, 2003, the California Franchise Tax Board ("FTB") announced that it had taken the position that certain REIT and regulated investment company ("RIC") tax deductions would be disallowed consistent with notices issued by the State of California that stipulate that the REIT and RIC are listed transactions under California tax-shelter legislation. Prior to this announcement, the Company had created two REITs (one of which was formed as a RIC in 2000) to raise capital for the Bank. While management continues to believe that the tax benefits related to the REITs are appropriate, the Company deemed it prudent to participate in the statutory Voluntary Compliance Initiative—Option 2, requiring payment of all California taxes and interest on potential tax exposures from the 2000-2002 tax years. The Company may then claim a refund for the taxes paid while avoiding potential penalties. Management continues to aggressively pursue its claims with the Franchise Tax Board for the REIT and RIC refunds for the tax years 2000 through 2004. While an outcome from the claims cannot be predicted with certainty, a potentially adverse result will not have any material impact on the Company's financial statements. See Note 8 of the Notes to Consolidated Financial Statements on page A-25 for additional information.

47

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        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 change because of interest rate changes, foreign currency exchange rate changes, changes in credit ratings or other market changes. The Company's asset/liability management process entails the evaluation, measurement and management of interest rate risk, 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 sets 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.

Risk Management Framework

        Risk management oversight and governance is provided through the Board of Directors' Audit and Risk Committee and facilitated through multiple management committees. Consisting of four outside directors, the Audit and Risk Committee monitors the Company's overall aggregate risk profile as established by the Board of Directors including all credit, market, operational and regulatory risk management activities. The Committee reviews and approves the activities of key management governance committees that regularly evaluate risks and internal controls for the Company. These management committees include the Asset/Liability Management Committee, the Credit Policy Committee, the Senior Operations Risk Committee and the Risk Council, among others. The Risk Council reviews the development, implementation and maintenance of risk management processes from a Company-wide perspective, and assesses the adequacy and effectiveness of the Company's risk management policies and the Enterprise Risk Management program. Other management committees, with representatives from the Company's various lines of business and affiliates, address and monitor specific risk types, including the Compliance Committee, the Wire Risk Committee, and the Information Technology Steering Committee, and report periodically to the key management committees. The Senior Risk Management Officer and the Internal Audit and Credit Risk Review units provide the Audit and Risk Committee with independent assessments of the Company's internal control structure and related systems and processes.

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 and cost-effective basis. 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.

        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 has, along with shareholders' equity, provided 78 percent and 79 percent of funding for average total assets in 2007 and 2006, respectively.

        A significant portion of remaining funding of average total assets is provided by short-term federal fund purchases and, to a lesser extent, sales of securities under repurchase agreements. These funding

48

sources, on average, totaled $662.9 million and $541.7 million in 2007 and 2006, respectively. The Company also increased its funding from other longer-term borrowings to $644.6 million on average in 2007 from $627.4 million in 2006.

        Liquidity is also provided by assets such as federal funds sold and trading account securities, which may be immediately converted to cash at minimal cost. The aggregate of these assets averaged $89.3 million during 2007 compared with $80.4 million in 2006. Liquidity is also provided by the portfolio of securities available-for-sale, which averaged $2.8 billion and $3.4 billion in 2007 and 2006, respectively. The unpledged portion of securities available-for-sale at December 31, 2007 totaled $1.3 billion and could be sold under certain circumstances or made available as collateral for borrowing. Maturing loans provide additional liquidity, and $3.9 billion, or 34 percent, of the Company's loans are scheduled to mature in 2008.

Interest Rate Risk

        Interest rate risk is inherent in financial services businesses. Interest rate risk results from assets and liabilities maturing or repricing at different times; assets and liabilities repricing at the same time but in different amounts or from short-term and long-term interest rates changing by different amounts (changes in the yield curve).

        The Company has established two primary measurement processes to quantify and manage exposure to interest rate risk: net interest income simulation modeling and present value of equity analysis. Net interest income simulations are used to identify the direction and severity of interest rate risk exposure across a 12 and 24 month forecast horizon. Present value of equity calculations are used to estimate the price sensitivity of shareholders' equity to changes in interest rates. The Company also uses gap analysis to provide insight into structural mismatches of asset and liability cash flows.

        Net Interest Income Simulation:    The Company is naturally asset-sensitive due to its large portfolio of rate-sensitive commercial loans that are funded in part by rate-stable core deposits. As a result, if there are no significant changes in the mix of assets or liabilities, the net interest margin increases when interest rates increase and decreases when interest rates decrease. 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 the Asset/ Liability Management Committee. 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.

        During 2007 the Company maintained a slightly asset-sensitive interest rate position. The average prime rate increased 9 basis points in 2007. The Company's net interest margin decreased by 13 basis points, primarily due to loan growth, a decline in demand deposits related to the title and escrow business, and competitive pricing pressures on deposits. The simulation model is based on the balance sheet as of year end, and projects net interest income assuming no change in loan or deposit mix. Interest rate scenarios include stable rates and 100 and 200 basis point parallel shifts in the yield curve occurring gradually over a twelve-month period. As of December 31, 2007, the simulation model indicates that a 100 basis point decline in the yield curve over a twelve-month horizon would result in a decrease in projected net interest income of approximately 0.1 percent while a 200 basis point decline would reduce projected net interest income by approximately 3.2 percent. This compares to a decrease in projected net interest income of 0.3 percent with a 100 basis point decline and 1.0 percent with a 200 basis point decline at December 31, 2006. At December 31, 2007, a gradual 100 basis point parallel

49

increase in the yield curve over the next 12 months would result in an increase in projected net interest income of approximately 1.4 percent while a 200 basis point increase would increase projected net interest income by approximately 2.6 percent. This compares to an increase in projected net interest income of 0.9 percent with a 100 basis point increase and 1.8 percent with a 200 basis point increase at December 31, 2006. The Company's interest rate risk exposure remains within Board limits and ALCO guidelines.

        Market Value of Portfolio Equity:    The market value of portfolio equity ("MVPE") model is used to evaluate the vulnerability of the market value of shareholders' equity to changes in interest rates. The MVPE 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 MVPE. 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.

        The MVPE model indicates that MVPE is somewhat vulnerable to a sudden and substantial increase in interest rates. As of December 31, 2007, a 200 basis point increase in interest rates results in a 3.5 percent decline in MVPE. This compares to a 3.0 percent decline a year earlier. The higher sensitivity is due to changes in the deposit mix and greater reliance on wholesale funding sources. As of December 31, 2007, a 200 basis point decrease in rates would improve MVPE by 1.4 percent. As of December 31, 2006, the MVPE would improve 1.5 percent as rates decreased.

        Gap Analysis:    The gap analysis is based on the contractual cash flows of all asset and liability balances on the Company's books. Contractual lives of assets and liabilities may differ substantially from their expected lives. For example, checking accounts are subject to immediate withdrawal. However, experience suggests that these accounts will have longer average lives. Also, certain loans, such as first mortgages, are subject to prepayment. The gap analysis may be used to identify periods in which there is a substantial mismatch between asset and liability cash flows. These mismatches can be moderated by investments or interest-rate derivatives. Gap analysis is used to support both interest rate risk and liquidity risk management.

        Interest-rate swaps are 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.

        Interest-rate swap transactions involve dealing with counterparties and the risk that they may not meet their contractual obligations. Counterparties must receive appropriate credit approval before the Company enters into an interest rate contract. Notional principal amounts express the volume of these transactions, although the amounts subject to credit and market risk are much smaller. At December 31, 2007 the Company's interest-rate swaps were entered into as hedges of the variability in interest cash flows generated from LIBOR and prime-based loans due to fluctuations in the LIBOR and prime indices or to convert fixed-rate deposits and borrowings into floating-rate liabilities. As discussed in "Critical Accounting Policies—Accounting for derivatives and hedging activities," all derivatives are recorded on the balance sheet at their fair value. The treatment of changes in the fair value of derivatives depends on the character of the transaction.

        As of December 31, 2007, the Company had $0.9 billion notional amount of interest-rate swaps designated as hedges, of which $511 million were designated as fair value hedges and $350 million were designated as cash flow hedges. The positive mark-to-market on the fair value hedges resulted in the recognition of other assets and an increase in hedged deposits and borrowings of $12.0 million. The

50

positive mark-to-market on the cash flow hedges of variable-rate loans resulted in the recognition of other assets and other comprehensive income of $4.7 million, before taxes of $2.0 million.

        The subordinated debt and other long-term debt consists of City National Bank ten-year subordinated notes with a face value of $115.9 million due on January 15, 2008, City National Bank ten-year subordinated notes with a face value of $150.0 million due on September 1, 2011, and City National Corporation senior notes with a face value of $225.0 million due on February 15, 2013. In addition, the Company has outstanding Trust Preferred Debentures with a face value of $5.2 million due on November 23, 2034.

        Amounts to be paid or received on the cash flow hedge interest-rate swaps will be reclassified into earnings upon receipt of interest payments on the underlying hedged loans, including amounts totaling $4.7 million that reduced net interest income during 2007. Comprehensive gains expected to be reclassified into net interest income within the next 12 months are $3.3 million.

				December 31, 2007						December 31, 2006						December 31, 2005
Dollars in millions				Notional Amount		Fair Value			Duration	Notional Amount		Fair Value			Duration	Notional Amount		Fair Value			Duration
Fair Value
	Interest Rate Swaps
		Certificates of deposit		$	20.0	$	0.9		2.7	$	175.0	$	(0.1	)	0.2	$	15.0	$	—		0.6
		Long-term and subordinated debt			490.9		11.1		3.0		490.9		(2.5	)	3.8		490.9		5.7		4.5
			Total fair value hedge swaps		510.9		12.0		3.0		665.9		(2.6	)	2.8		505.9		5.7		4.4
Cash Flow Hedge
	Interest Rate Swaps
		US Dollar LIBOR based loans			100.0		3.9		2.3		325.0		(1.8	)	0.6		600.0		(7.9	)	0.8
		Prime based loans			250.0		0.8		0.4		375.0		(3.1	)	0.6		425.0		(3.3	)	1.7
			Total cash flow hedge swaps		350.0		4.7		0.9		700.0		(4.9	)	0.6		1,025.0		(11.2	)	1.2
Fair Value and Cash Flow Hedge
	Interest Rate Swaps			$	860.9	$	16.7	(1)	2.2	$	1,365.9	$	(7.5	)	1.7	$	1,530.9	$	(5.5	)	2.2

(1)

Net Fair value is the estimated net gain (loss) to settle derivative contracts in 2007. The net fair value for 2007 of $16.7 million is the mark-to-market asset on swaps.

        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. The Company could consider using such financial instruments in the future if they offered a significant advantage over interest-rate swaps.

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        The table below shows the notional amounts of the Company's interest-rate swap maturities and average rates at December 31, 2007 and December 31, 2006. Average interest rates on variable-rate instruments are based upon the Company's interest rate forecast.

Interest Rate Swap Maturities and Average Rates
December 31, 2007

Dollars in millions	2008			2009			2010			2011			2012		Thereafter			Total			Fair Value
Notional amount	$	340.9		$	25.0		$	110.0		$	160.0		$	—	$	225.0		$	860.9		$	16.7
Weighted average rate received		6.99	%		7.97	%		5.31	%		5.57	%		—		4.38	%		5.86	%
Weighted average rate paid		6.62	%		7.25	%		4.66	%		5.11	%		—		4.87	%		5.65	%

Interest Rate Swap Maturities and Average Rates
December 31, 2006

Dollars in millions	2007			2008			2009			2010		2011			Thereafter			Total			Fair Value
Notional amount	$	600.0		$	340.9		$	50.0		$	—	$	150.0		$	225.0		$	1,365.9		$	(7.5	)
Weighted average rate received		4.91	%		6.99	%		5.15	%		—		5.57	%		4.38	%		5.42	%
Weighted average rate paid		6.05	%		7.35	%		5.33	%		—		5.37	%		5.37	%		6.16	%

        The Company also offers interest-rate swaps, cross-currency interest-rate swaps and interest-rate caps, floors and collars to its clients to assist them in hedging their lending activities. These derivative contracts are offset by paired trades with unrelated third parties. They are not designated as hedges under SFAS 133, and the positions are marked-to-market each reporting period. As of December 31, 2007, the Company had entered into swaps with clients (and offsetting derivative contracts with counterparties) having a notional balance of $48.1 million.

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 December 31, 2007, the Company's outstanding foreign exchange contracts, both proprietary and for customer accounts, totaled $185.6 million. All foreign exchange contracts outstanding at December 31, 2007 had remaining maturities of 12 months or less and the mark-to-market included in other assets totaled $0.6 million.

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BALANCE SHEET ANALYSIS

Securities

        Comparative period-end balances for available-for-sale securities are presented below:

Securities Available-for-Sale

		December 31, 2007				December 31, 2006
Dollars in thousands
		Cost		Fair Value		Cost		Fair Value
U.S. Treasury		$	45,106	$	45,228	$	49,937	$	49,938
Federal Agency			50,996		51,042		263,227		258,778
CMOs			1,041,692		1,027,439		1,247,161		1,215,397
Mortgage-backed			822,193		807,534		1,017,409		983,917
State and Municipal			391,790		395,455		360,759		362,318
Other			32,870		31,001		10,166		10,064
	Total debt securities		2,384,647		2,357,699		2,948,659		2,880,412
Equity securities			100,256		104,956		68,531		72,835
	Total securities	$	2,484,903	$	2,462,655	$	3,017,190	$	2,953,247

        At December 31, 2007, the fair value of securities available-for-sale totaled $2.46 billion, a decrease of $490.6 million, or 17 percent from December 31, 2006. The decrease was due to scheduled maturities of $256.0 million, paydowns of $356.8 million, and the sale of $196.3 million of securities to fund loan growth, improve liquidity and reduce prepayment risk, offset in part by additional purchases of $211.5 million. The average duration of total available-for-sale securities at December 31, 2007 and December 31, 2006 was 3.4 and 3.3 years, respectively.

        At December 31, 2007, the securities available-for-sale portfolio had a net unrealized loss of $22.2 million, comprised of $11.6 million of unrealized gains and $33.9 million of unrealized losses. At December 31, 2006, the securities available-for-sale portfolio had a net unrealized loss of $63.9 million, comprised of $8.4 million of unrealized gains and $72.3 million of unrealized losses. The unrealized gain or loss on securities available-for-sale is reported on an after-tax basis as a component of other comprehensive income.

        The investment portfolio is composed of fixed-rate medium-term securities. It generates a stable income stream and provides a liquidity reserve. It is mainly composed of securities that are backed by prime-based residential mortgages. At December 31, 2007, the Company owned mortgage-backed securities with a fair value of $1.9 billion, of which $1.5 billion are guaranteed by GNMA, FNMA or Freddie Mac, and $0.4 billion are AAA-rated collateralized mortgage obligations (CMOs) secured by prime-based mortgages. The Company also owned fixed-rate medium-term municipal bonds with a fair value of $0.4 billion. None of the bonds in the Company's investment portfolio has suffered a ratings downgrade and none of them are on negative credit watch. Management assessed the portfolio for other-than-temporary impairment and concluded that no impairment existed as of December 31, 2007 or 2006, as the unrealized losses are due only to changes in interest rates and the Company has the ability and intent to hold the securities until recovery.

        Dividend income included in interest income on securities available-for-sale in the consolidated statements of income was $7.2 million and $4.8 million for the years ended December 31, 2007 and 2006, respectively.

        The following table provides the expected remaining maturities and yields (taxable-equivalent basis) of debt securities included in the securities portfolio at December 31, 2007, except for mortgage-backed securities which are allocated according to average expected maturities. Average expected

53

maturities will differ from contractual maturities because mortgage debt issuers may have the right to repay obligations prior to contractual maturity. To compare the tax-exempt asset yields to taxable yields, amounts are adjusted to pre-tax equivalents based on the marginal corporate federal tax rate of 35 percent.

Debt Securities Available-for-Sale

		One year or less			Over 1 year thru 5 years			Over 5 years thru 10 years			Over 10 years			Total
Dollars in thousands		Amount		Yield (%)	Amount		Yield (%)	Amount		Yield (%)	Amount		Yield (%)	Amount		Yield (%)
U.S. Treasury		$	45,228	4.62	$	—	—	$	—	—	$	—	—	$	45,228	4.62
Federal Agency			30,932	3.94		20,110	4.01		—	—		—	—		51,042	3.97
CMO's			70,639	5.36		798,787	4.43		158,013	5.37		—	—		1,027,439	4.64
Mortgage-backed			—	—		618,426	4.23		182,387	4.49		6,721	6.07		807,534	4.31
State and Municipal			42,541	4.34		120,279	3.95		201,207	3.87		31,428	3.96		395,455	3.95
Other			—	—		—	—		31,001	5.71		—	—		31,001	5.71
	Total debt securities	$	189,340	4.72	$	1,557,602	4.31	$	572,608	4.58	$	38,149	4.33	$	2,357,699	4.41
	Amortized cost	$	189,524		$	1,578,305		$	578,722		$	38,096		$	2,384,647

Loan Portfolio

        Total loans were $11.6 billion, $10.4 billion, and $9.3 billion at December 31, 2007, 2006, and 2005, respectively. Total loans increased $1.2 billion during 2007 due to increased loan demand augmented by the acquisition of BBNV. Commercial loans, including lease financing, increased $0.4 billion. Residential mortgage loans grew $0.3 billion while construction loans and commercial real estate mortgages increased $0.6 billion.

        Total loans increased $1.1 billion during 2006 due to strong loan demand. Residential mortgage loans grew $0.2 billion, while commercial loans, including lease financing, grew $0.6 billion. The combined total of construction loans and commercial real estate mortgages increased $0.2 billion.

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        The following table shows the Company's consolidated loans by type of loan and their percentage distribution:

	December 31,
Dollars in thousands
	2007			2006			2005			2004			2003
Commercial	$	4,193,436		$	3,869,161		$	3,388,640		$	2,851,790		$	3,035,462
Residential mortgages		3,176,322			2,869,775			2,644,030			2,299,600			1,986,052
Commercial real estate mortgages		1,954,539			1,710,113			1,857,273			1,841,974			1,765,451
Real estate construction		1,429,761			1,115,958			724,879			834,445			637,590
Equity lines of credit		432,513			404,657			333,548			255,194			188,710
Installment loans		178,195			201,125			200,296			219,701			149,266
Lease financing		265,872			215,216			116,936			178,573			120,211
Total loans and leases	$	11,630,638		$	10,386,005		$	9,265,602		$	8,481,277		$	7,882,742
Commercial		36.1	%		37.3	%		36.6	%		33.6	%		38.5	%
Residential mortgages		27.3			27.6			28.5			27.1			25.2
Commercial real estate mortgages		16.8			16.5			20.0			21.7			22.4
Real estate construction		12.3			10.7			7.8			9.9			8.1
Equity lines of credit		3.7			3.9			3.6			3.0			2.4
Installment loans		1.5			1.9			2.2			2.6			1.9
Lease financing		2.3			2.1			1.3			2.1			1.5
Total loans and leases		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

        The Company's loan portfolio consists primarily of loans for business and real estate purposes. Generally, loans are made on the basis of an available cash-flow repayment source as the first priority, with collateral being a secondary source for loan qualification. Although the legal lending limit for any one borrowing relationship was $218.9 million at December 31, 2007, the Bank has established "house limits" for individual borrowings. These limits vary by risk rating.

Commercial

        Commercial loans, including lease financing, were $4.46 billion at December 31, 2007, representing 38.3 percent of the loan portfolio compared with $4.08 billion, or 39.3 percent of the loan portfolio, at December 31, 2006. The average outstanding individual note balance in the commercial loan portfolio at December 31, 2007 was $643,895. See also "Results of Operations—Net Interest Income."

        To grow and diversify its portfolio, the bank purchases and sells participations in loans. Included in this portfolio are purchased participations in shared national credits ("SNCs"). As of December 31, 2007 purchased SNC commitments totaled $1.3 billion or 7.3 percent of total loan commitments. Outstanding loan balances on purchased SNCs were $495 million or 4.2 percent of total loans outstanding. At December 31, 2006, purchased SNC commitments totaled $1 billion, and outstanding balances totaled $388 million. The growth in the purchased SNC portfolio during 2007 was related to commercial credits.

        The commercial loan portfolio also includes $111.0 million of loans to borrowers in the for-sale housing industry.

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        Following is a breakdown of commercial loans and lease financing to businesses engaged in the industries listed.

Commercial Loans and Leases by Industry

		December 31,
Dollars in thousands
		2007			%	2006			%
Services (1)		$	908,755		20.4	$	764,417		18.7
Entertainment			795,281		17.8		826,232		20.2
Wholesale Trade			292,034		6.5		330,645		8.1
Manufacturing			375,580		8.4		318,168		7.8
Public Finance			187,322		4.2		200,003		4.9
Real estate owner/lessors (2)			541,702		12.1		533,794		13.1
Construction and development (2)			211,593		4.7		189,144		4.6
Finance and Insurance			525,290		11.8		392,374		9.6
Retail Trade			334,103		7.5		283,938		7.0
Other			287,648		6.6		245,662		6.0
	Total	$	4,459,308		100.0	$	4,084,377		100.0
Nonaccrual loans		$	17,103			$	2,977
Percentage of total commercial loans			0.38	%			0.07	%

(1)

Legal, membership organizations, engineering and management services, etc.

(2)

Not secured by real estate.

Residential Mortgage

        Residential mortgage loans, which comprised 27.3 percent of total loans in 2007, grew $306.5 million, or 10.7 percent, to $3.18 billion at December 31, 2007. In 2007, 100 percent of the portfolio was originated internally, primarily to existing clients. The Company has not purchased any loans since 1997, except for CRA purposes. The residential first mortgage loans originated internally, primarily as an accommodation to existing clients, have a weighted average loan-to-value ratio of 51 percent at origination. The average outstanding individual note balance at December 31, 2007 was $780,956.

Commercial Real Estate Mortgage

        Commercial real estate mortgages, representing 16.8 percent of the loan portfolio, were comprised of 95.9 percent commercial properties and 4.1 percent multi-family condominium or apartment loans.

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The average outstanding individual note balance at December 31, 2007 was $1,458,117. A breakdown of real estate mortgage loans by collateral type follows:

Commercial Real Estate Mortgage Loans by Collateral Type

		December 31,
Dollars in thousands
		2007			%	2006			%
Industrial		$	887,669		45.4	$	838,025		49.0
Office buildings			331,872		17.0		307,476		18.0
Shopping centers			164,187		8.4		115,419		6.7
Land, agriculture			47,134		2.4		29,163		1.7
Non-Profit (religious/schools)			68,970		3.5		41,944		2.5
Auto dealership			95,725		4.9		73,742		4.3
Condominiums/apartments			79,639		4.1		75,760		4.4
Other			279,343		14.3		228,584		13.4
	Total	$	1,954,539		100.0	$	1,710,113		100.0
Nonaccrual loans		$	1,621			$	4,849
Percentage of total commercial real estate mortgage loans			0.08	%			0.28	%

Real Estate Construction

        The real estate construction portfolio includes land loans and loans to develop or construct and sell residential and commercial properties. These loans represent 12.3 percent of the Company's $11.6 billion loan portfolio and a vast majority of the loans have guarantees. The Real estate construction portfolio includes approximately $519 million of loans to borrowers in the for-sale housing industry. Real estate construction loans are made on the basis of the economic viability for the specific project, the cash flow resources of the developer, the developer's equity in the project, and the underlying financial strength of the borrower. The Company's policy is to monitor each loan with respect to the project's incurred costs, sales price and absorption. The average outstanding individual note balance at December 31, 2007 was $4,076,906. Following is a breakdown of real estate construction loans by collateral type:

Real Estate Construction Loans by Collateral Type

		December 31,
Dollars in thousands
		2007			%	2006			%
Industrial		$	151,726		10.6	$	110,010		9.9
1-4 family			359,473		25.1		226,539		20.3
Office buildings			181,087		12.7		161,331		14.5
Land, Commercial			240,273		16.8		114,862		10.3
Land, residential			164,090		11.5		130,447		11.7
Shopping centers			163,863		11.5		102,684		9.2
Condominiums/apartments			119,002		8.3		191,598		17.2
Other			50,247		3.5		78,487		6.9
	Total	$	1,429,761		100.0	$	1,115,958		100.0
Nonaccrual loans		$	55,632			$	12,678
Percentage of total real estate construction loans			3.89	%			1.14	%

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Equity Lines of Credit

        Equity lines of credit which comprised 3.7 percent of total loans at December 31, 2007 are made primarily to existing clients. The average LTV at origination for these loans was 55.0 percent. The average outstanding individual note balance at December 31, 2007 was $243,534. At December 31, 2007, equity lines of credit totaling approximately $679,000 were on nonaccrual.

Installment

        Installment loans consist primarily of loans to individuals for personal purchases. At December 31, 2007 installment loans comprised 1.5 percent of total loans and loans totaling approximately $139,000 were on nonaccrual. The average outstanding individual note balance at December 31, 2007 was $69,611.

Portfolio Characteristics

        The Company's lending activities are predominantly in California, and to a lesser extent, New York and Nevada. 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. Credit performance also depends, to a lesser extent, on economic conditions in the San Francisco Bay area, New York and Nevada.

        Inherent in any loan portfolio are risks associated with certain types of loans. The Company assesses and manages credit risk on an ongoing basis through diversification guidelines, lending limits, credit review and approval policies, and internal monitoring. As part of the control process, an independent credit risk review department regularly examines the Company's loan portfolio and other credit-related products, including unused commitments and letters of credit. In addition to this internal credit process, the Company's loan portfolio is subject to examination by external regulators in the normal course of business. Credit quality is influenced by underlying trends in the economic and business cycle. The Company also seeks to manage and control its risk through diversification of the portfolio by type of loan, industry concentration, and type of borrower as well as specific maximum loan-to-value ("LTV") limitations at origination for various categories of real estate-related loans other than residential first mortgage loans. These ratios are as follows:

Maximum LTV Ratios

Category of Real Estate Collateral	Maximum LTV Ratio
1-4 family	80	%
Multi-family	75
Equity lines of credit	80
Industrial	75
Shopping centers	75
Churches/religious	65
Office building	70
Other improved property	65
Acquisition and development	65
Land, nonresidential	50

        The Company's loan policy provides that any term loan on income-producing properties should have minimum debt service coverage at origination of at least 1.20 to 1 for non-owner-occupied

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property. Any exception to these guidelines requires approval at higher levels of authority based on the type of exception. Exceptions are reviewed by the Credit Policy Committee of the Bank.

        The federal banking regulatory agencies issued final guidance on December 6, 2006 on risk management practices for financial institutions with high or increasing concentrations of commercial real estate ("CRE") loans on their balance sheets. The regulatory guidance provides for an increased level of regulatory oversight and monitoring for those institutions that have experienced rapid growth in CRE lending, have notable exposure to specific type of CRE, or are approaching or exceeding the supervisory criteria used to evaluate the CRE concentration risk, but the guidance is not to be construed as a limit for CRE exposure. The supervisory criteria are: total reported loans for construction, land development and other land represent 100 percent or more of the institution's total risk-based capital; 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. The Company is within the thresholds specified by the guidance. As of December 31, 2007, total loans for construction, land development and other land represented 100 percent of total risk-based capital; total CRE loans represented 207 percent of total risk-based capital and the total portfolio of loans for construction, land development, other land and CRE increased 42 percent over the last 36 months.

        The Company has no residential mortgage loans with high LTVs (as defined in FDICIA as greater than 90 percent), loans with option ARM terms, as defined in SOP 94-6-1, "Terms of Loan Products that May Give Rise to a Concentration of Credit Risk," or that allow for negative amortization. The Company does offer interest-only loans. As of December 31, 2007, there were interest-only residential mortgages totaling approximately $612.9 million and home equity lines of credit totaling approximately $432.5 million. As of December 31, 2006, there were interest-only residential mortgages totaling approximately $372.8 million and home equity lines of credit totaling approximately $404.7 million.

        Floating-rate loans comprised 61.1 percent of the total loan portfolio at December 31, 2007 compared to 57.8 percent at December 31, 2006. At December 31, 2007, 76.3 percent of outstanding commercial loans, including lease financing, 57.8 percent of commercial real estate loans, 44.8 percent of residential real estate loans, and 71.4 percent of installment loans were floating-rate loans. Hybrid loans, which convert from fixed to floating rates, are included in floating-rate loans.

        One of the significant risks associated with real estate lending involves environmental hazards on or in property affiliated with the loan. The Company analyzes such risks through an evaluation performed by the Bank's Environmental Risk Management Unit for all loans secured by real estate. A Phase I Environmental Site Assessment ("ESA") report may be required if the evaluation determines it appropriate. Other reasons would include the industrial use of environmentally sensitive substances or the proximity to other known environmental problems. A more comprehensive Phase II ESA report is required in certain cases, depending on the outcome of the Phase I report.

        The loan maturities shown in the table below are based on contractual maturities. As is customary in the banking industry, loans that meet sound underwriting criteria can be renewed by mutual agreement between the Company and the borrower. Because the Company is unable to estimate the extent to which its borrowers will renew their loans, the table is based on contractual maturities.

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Loan Maturities

			December 31, 2007
Dollars in thousands			Commercial		Residential Mortgages		Commercial Real Estate Mortgages		Real Estate Construction		Equity Lines of Credit		Installment		Total
Aggregate maturities of balances due:
In one year or less
	Interest rate—floating		$	2,467,405	$	8,949	$	152,638	$	974,406	$	16,211	$	111,501	$	3,731,110
	Interest rate—fixed			167,267		4,121		8,397		18,629		—		592		199,006
After one year but within five years
	Interest rate—floating			692,907		14,362		158,399		421,610		23,731		10,859		1,321,868
	Interest rate—fixed			381,351		31,842		31,933		7,205		—		15,027		467,358
After five years
	Interest rate—floating			241,761		1,161,141		245,500		4,039		392,571		4,937		2,049,949
	Interest rate—fixed			508,617		1,955,907		1,357,672		3,872		—		35,279		3,861,347
		Total loans	$	4,459,308	$	3,176,322	$	1,954,539	$	1,429,761	$	432,513	$	178,195	$	11,630,638

Asset Quality

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 and allowances acquired through acquisitions. 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 and 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. Management then evaluates the allowance, determines its desired level, determines appropriate provisions, and reviews the results with the Audit and Risk Committee which ultimately approves management's recommendation.

        The provision is the expense recognized in the income statement 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" on page 29.

        In accordance with the Company's allowance for loan and lease losses methodology, the Company recorded $20.0 million of expense through the provision for credit losses for the year ended December 31, 2007, and recorded $0.6 million of income through the provision for credit losses for the year ended December 31, 2006. Prior to 2007, the Company had not recorded a provision expense for credit losses since the second quarter of 2003. For additional discussion of the provision for credit losses see "Results of Operations—Provision for Credit 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 for the five years ended December 31, 2007:

			Year ended December 31,
Dollars in thousands
			2007			2006			2005			2004			2003
Loans and leases outstanding			$	11,630,638		$	10,386,005		$	9,265,602		$	8,481,277		$	7,882,742
Average amount of loans and leases outstanding			$	11,057,411		$	9,948,363		$	8,875,358		$	8,106,657		$	7,729,150
Balance of allowance for loan and lease losses, beginning of year			$	155,342		$	153,983		$	148,568		$	156,015		$	156,598
Loans charged-off:
	Commercial			(7,768	)		(7,320	)		(6,575	)		(24,265	)		(38,314	)
	Residential mortgages			—			—			—			(3	)		—
	Commercial real estate mortgages			(297	)		(94	)		(1,898	)		(3,920	)		—
	Real estate construction			(5,929	)		(684	)		—			—			(1,524	)
	Equity lines of credit			(50	)		(11	)		—			—			—
	Installment			(187	)		(62	)		(95	)		(337	)		(184	)
		Total loans charged-off		(14,231	)		(8,171	)		(8,568	)		(28,525	)		(40,022	)
Recoveries of loans previously charged-off:
	Commercial			5,265			9,482			16,055			21,628			11,544
	Residential mortgages			—			—			3			14			13
	Commercial real estate mortgages			11			1,305			345			1,046			440
	Real estate construction			438			68			1,300			100			411
	Equity lines of credit			—			—			41			3			42
	Installment			40			113			84			67			56
		Total recoveries		5,754			10,968			17,828			22,858			12,506
Net loans (charged-off)/recovered				(8,477	)		2,797			9,260			(5,667	)		(27,516	)
Provision for credit losses				20,000			(610	)		—			—			29,000
Transfers to reserve for off-balance sheet credit commitments				(2,855	)		(828	)		(3,845	)		(1,780	)		(2,067	)
Allowance of acquired institution				4,513			—			—			—			—
Balance, end of year			$	168,523		$	155,342		$	153,983		$	148,568		$	156,015
Net (charge-offs)/recoveries to average loans and leases				(0.08	)%		0.03	%		0.10	%		(0.07	)%		(0.36	)
Ratio of allowance for loan and lease losses to total period-end loans and leases				1.45	%		1.50	%		1.66	%		1.75	%		1.98
Reserve for off-balance sheet credit commitments
Balance, beginning of the year			$	16,424		$	15,596		$	11,751		$	9,971		$	7,904
Recovery of prior charge-off				(67	)		—			—			—			—
Reserve of acquired institution				492			—			—			—			—
Transfers from allowance				2,855			828			3,845			1,780			2,067
Balance, end of the year			$	19,704		$	16,424		$	15,596		$	11,751		$	9,971

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        Net loan charge-offs were $8.5 million for 2007 or 0.08 percent of average loans and leases. Net loan recoveries for 2006 and 2005 were $2.8 million, or 0.03 percent of average loans, and $9.3 million, or 0.1 percent of average loans and leases, respectively.

        The allowance for loan and lease losses as a percentage of total loans and leases was 1.45 percent, 1.50 percent, and 1.66 percent at December 31, 2007, 2006, and 2005, respectively. The allowance for loan and lease losses as a percentage of nonperforming loans was 223.0 percent, 743.9 percent, and 1,069.3 percent at December 31, 2007, 2006, and 2005, respectively. See "Nonaccrual, Past Due, and Restructured Loans" below for additional discussion of nonperforming and restructured loans.

        Based on an evaluation of individual credits, previous loan and lease loss experience, management's evaluation of the current loan portfolio, and current economic conditions, management has allocated the allowance for loan and lease losses as shown for the past five years in the table below.

Allocation of Allowance for Loan and Lease Losses

		Allowance amount										Percent of loans to total loans
Dollars in thousands
		2007		2006		2005		2004		2003		2007		2006		2005		2004		2003
Commercial		$	81,221	$	82,984	$	82,120	$	79,093	$	96,893	38	%	39	%	38	%	36	%	40	%
Residential mortgages			9,255		8,778		8,423		7,967		5,236	27		28		29		27		25
Commercial real estate mortgages			33,241		35,630		37,010		39,549		36,580	17		16		20		22		22
Real estate construction			38,455		17,309		15,082		14,994		12,350	12		11		8		10		8
Equity lines of credit			2,997		6,951		6,500		4,964		3,210	4		4		4		3		2
Installment			3,354		3,690		4,848		2,001		1,746	2		2		1		2		3
	Total	$	168,523	$	155,342	$	153,983	$	148,568	$	156,015	100	%	100	%	100	%	100	%	100	%

        While the allowance is allocated by loan type above, the allowance is general in nature and is available for the portfolio in its entirety. The increased allowance allocation to real estate construction loans is due to the ongoing weakness in the housing sector. Refer to the Recent Developments section of this report for further discussion of the credit markets. In 2006 and 2005, increased allocations to commercial loans and residential mortgages reflect the growth of the portfolios.

        At December 31, 2007, there were $71.4 million of impaired loans included in nonaccrual loans that had an allowance of $8.4 million allocated to them. On a comparable basis, at December 31, 2006, there were $19.0 million of impaired loans which had an allowance of $0.5 million allocated to them.

        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. Impaired loans with commitments of less than $500,000 are aggregated for the purpose of measuring impairment using historical loss factors as a means of measurement.

        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

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loan and lease losses. The Company's policy is to record cash receipts on impaired loans first as reductions in principal and then as interest income.

Nonaccrual, Past Due, and Restructured Loans

        Total nonperforming assets (nonaccrual loans and OREO) were $75.6 million, or 0.65 percent of total loans at December 31, 2007, compared with $20.9 million, or 0.20 percent of total loans, at December 31, 2006. The Company had no OREO or troubled debt restructured at December 31, 2007 or December 31, 2006.

        The following table presents information concerning nonaccrual loans, OREO and loans which are contractually past due 90 days or more as to interest or principal payments and still accruing:

			December 31,
Dollars in thousands
			2007			2006			2005			2004			2003
Nonaccrual loans:
	Commercial		$	17,103		$	2,977		$	5,141		$	30,334		$	37,418
	Residential mortgages			387			—			294			94			899
	Commercial real estate mortgages			1,621			4,849			923			2,255			2,527
	Real estate construction			55,632			12,678			7,650			790			916
	Equity lines of credit			679			—			21			380			168
	Installment			139			379			371			785			345
		Total		75,561			20,883			14,400			34,638			42,273
OREO				—			—			—			—			—
Total nonaccrual loans and OREO			$	75,561		$	20,883		$	14,400		$	34,638		$	42,273
Total nonaccrual loans as a percentage of total loans and leases				0.65	%		0.20	%		0.16	%		0.41	%		0.54	%
Total nonaccrual loans and OREO as a percentage of total loans and leases and OREO				0.65			0.20			0.16			0.41			0.54
Allowance for loan and lease losses to total loans and leases				1.45			1.50			1.66			1.75			1.98
Allowance for loan and lease losses to nonaccrual loans				223.0			743.9			1,069.3			428.9			369.1
Loans past due 90 days or more on accrual status:
	Commercial		$	—		$	—		$	—		$	142		$	235
	Real estate			—			—			—			—			1,808
	Other			1			337			—			—			—
		Total	$	1		$	337		$	—		$	142		$	2,043

        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.

        At December 31, 2007, in addition to loans disclosed above as past due or nonaccrual, management also identified $67.9 million of loans to 24 borrowers, 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 December 31, 2007. This amount was determined based on analysis of information known to management about the borrowers' financial condition and current economic conditions. Management's

63

classification of credits as nonaccrual, restructured or problems does not necessarily indicate that the principal is uncollectible in whole or part.

        The table below summarizes the changes in nonaccrual loans for the years ended December 31, 2007 and 2006.

Nonaccrual Loans

Dollars in thousands	2007			2006
Balance, beginning of the year	$	20,883		$	14,400
Loans placed on nonaccrual		85,724			36,515
Loans from acquisitions		50			—
Charge-offs		(10,815	)		(5,917	)
Loans returned to accrual status		(4,134	)		(5,723	)
Repayments (including interest applied to principal)		(16,147	)		(18,392	)
Balance, end of year	$	75,561		$	20,883

        The additional interest income that would have been recorded from nonaccrual loans, if the loans had not been on nonaccrual status was $3.7 million, $2.3 million, and $2.6 million for the years ended December 31, 2007, 2006, and 2005, respectively. Interest payments received on nonaccrual loans are applied to principal unless there is no doubt as to ultimate full repayment of principal, in which case the interest payments are recognized as interest income. Interest collected on nonaccrual loans and applied to principal was $1.4 million, $1.1 million, and $1.4 million for the years ended December 31, 2007, 2006, and 2005, respectively. Interest income not recognized on nonaccrual loans reduced the net interest margin by 2, 1, and 1 basis points for the years ended December 31, 2007, 2006, and 2005, respectively.

Other Assets

        Other assets include the following:

		December 31,
Dollars in thousands
		2007		2006
Accrued interest receivable		$	70,660	$	74,534
Other accrued income			23,668		22,938
Deferred Compensation Fund assets			50,336		35,396
Stock in government agencies			48,828		46,963
Income tax receivable			—		43,133
Private Equity and alternative investments			28,391		15,983
PML assets			1,448		13,716
Other			76,759		40,591
	Total other assets	$	300,090	$	293,254

        Additional information on the income tax receivable item can be found in Note 8 of the Notes to Consolidated Financial Statements.

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, letters of credit, and financial guarantees. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount reflected in the consolidated balance sheets. Commitments to extend credit

64

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 evaluates each client's creditworthiness on a case-by-case basis.

        The Company had off-balance sheet loan commitments aggregating $5.3 billion at December 31, 2007, an increase from $5.0 billion at December 31, 2006. In addition, the Company had $840.2 million outstanding in bankers' acceptances and letters of credit of which $822.1 million relate to standby letters of credit at December 31, 2007. At December 31, 2006, bankers' acceptances and letters of credit were $662.0 million of which $650.6 million related to standby letters of credit. Substantially all of the Company's loan commitments are on a variable-rate basis and are comprised of real estate and commercial loan commitments.

        As of December 31, 2007, the Company had private equity fund and alternative investment commitments of $60.7 million, of which $31.0 million was funded. As of December 31, 2006, the Company had private equity fund and alternative investment commitments of $49.7 million, of which $19.4 million was funded. In addition, the Company had unfunded Affordable Housing Fund commitments of $30.3 million and $26.4 million as of December 31, 2007 and 2006, respectively.

        In addition to the commitments described above, the Company enters into other contractual obligations in the ordinary course of business. Certain of these obligations, such as time deposits and long-term debt, are recorded as liabilities in the consolidated financial statements. Other items, such as operating leases and agreements to purchase goods or services are only required to be disclosed. The following table summarizes the Company's contractual obligations at December 31, 2007, and provides the expected cash payments (not including interest) to be made in future periods to settle these obligations. Expected cash payments associated with time deposits and long-term debt are based on deposit maturity and principal payment dates, respectively. Additional details regarding these obligations are provided in the footnotes to the financial statements as referenced in the table.

Contractual Obligations

	Minimum Contractual Payments by Period
Dollars in thousands	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Time deposits (Note 12)	$	1,527,735	$	1,454,272	$	62,615	$	5,776	$	5,072
Long-term debt (Note 12)		498,338		117,869		150,314		225,000		5,155
Operating leases (Note 7)		228,680		30,458		80,557		40,260		77,405
Purchases of affiliate interests (Note 15)		24,764		1,419		7,180		5,271		10,894
Purchase obligations (1)		50,539		16,763		27,957		2,217		3,602
Contingent tax reserves (Note 8)		15,943		—		15,943		—		—
Total contractual obligations	$	2,345,999	$	1,620,781	$	344,566	$	278,524	$	102,128

(1)

Represents agreements to purchase data processing and software services.

Deposits and Borrowed Funds

        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 increased to $10.36 billion in 2007 compared with $10.15 billion in 2006. The increase in average deposits is largely due to the acquisition of BBNV as well as growth of interest-bearing and time deposits. The overall increase in average deposits includes a 3.5 percent decrease in average

65

noninterest-bearing deposits as some clients shifted funds to higher yielding accounts, and title and escrow deposits declined due to the slowdown in the housing industry.

        Certificates of deposit of $100,000 or more totaled $1,306.8 million at December 31, 2007, of which $669.8 million mature within three months, $580.2 million mature within four months to one year and $56.8 million mature beyond one year.

        At December 31, 2007 and 2006, the aggregate amount of deposits by foreign depositors in domestic offices totaled $87.1 million and $92.6 million, respectively. Brokered deposits were $20.2 million and $444 million, at December 31, 2007 and 2006, respectively. The decline in brokered deposit balances compared with the prior year is due to maturities. These deposits were not replaced as growth in interest-bearing and time deposits provided a lower cost source of funds.

        Borrowed funds provide an additional source of funding for loan growth. The average balance of short-term borrowings increased to $662.9 million for 2007 from $541.7 million for 2006. Short-term borrowings include federal funds purchased, securities sold under agreements to repurchase, treasury tax and loan notes and FHLB borrowings. The average balance of other borrowings was $644.6 million for 2007 compared with $627.4 for 2006. Other borrowings includes ten-year subordinated notes issued by the bank and senior notes issued by the Corporation. The notes have maturity dates ranging from January 2008 to February 2013. The subordinated notes qualify as capital for purposes of determining the Company's risk-based capital ratios. Further information on borrowed funds is provided in Note 12 of the Notes to Consolidated Financial Statements on page A-33.

Capital

        At December 31, 2007, the Corporation's and the Bank's Tier 1 capital, which is comprised of common shareholders' equity as modified by certain regulatory adjustments, amounted to $1.20 billion and $1.18 billion, respectively. At December 31, 2006, the Corporation's and the Bank's Tier 1 capital amounted to $1.27 billion and $1.29 billion, respectively. The decrease from December 31, 2006 resulted from 2007 earnings and the exercise of stock options which were more than offset by dividends paid and shares repurchased. See Note 19 of the Notes to Consolidated Financial Statements.

        The following table presents the regulatory standards for well capitalized institutions and the capital ratios for the Corporation and the Bank at December 31, 2007, 2006, and 2005.

	Regulatory Well Capitalized Standards		December 31,
			2007		2006		2005
City National Corporation
Tier 1 leverage	N/A	%	7.97	%	8.81	%	8.82	%
Tier 1 risk-based capital	6.00		9.31		11.09		12.33
Total risk-based capital	10.00		11.27		13.60		15.53
City National Bank
Tier 1 leverage	5.00	%	7.95	%	9.04	%	9.26	%
Tier 1 risk-based capital	6.00		9.28		11.38		12.86
Total risk-based capital	10.00		11.24		13.89		16.05

        Shareholders' equity to assets as of December 31, 2007 was 10.42 percent compared with 10.02 percent as of December 31, 2006.

66

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

        The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of the Company. We have made forward-looking statements in this document that are subject to risks and uncertainties. For those statements, we claim the protection of the safe harbor contained in the Private Securities Litigation Reform Act of 1995. See Part I, Item 1A—Risk Factors regarding these forward-looking statements and a number of factors, many of which are beyond the Company's ability to control or predict, that could cause future results to differ materially from those contemplated by such forward-looking statements.

67

QUARTERLY RESULTS

        The following table summarizes quarterly operating results for 2007 and 2006.

2007 Quarterly Operating Results (Unaudited)

	Quarter ended
Dollars in thousands
	March 31,		June 30,		September 30,			December 31,		Total
Interest income	$	214,241	$	225,825	$	230,066		$	223,969	$	894,101
Interest expense		66,972		72,921		76,340			69,596		285,829
Net interest income		147,269		152,904		153,726			154,373		608,272
Provision for credit losses		—		—		—			20,000		20,000
Net interest income after provision for credit losses		147,269		152,904		153,726			134,373		588,272
Noninterest income		65,679		72,822		83,749			82,326		304,576
Gain (loss) on sale of securities		269		866		(2,516	)		7		(1,374	)
Noninterest expense		121,713		130,315		135,186			142,031		529,245
Minority interest		2,076		2,325		2,211			2,244		8,856
Income before taxes		89,428		93,952		97,562			72,431		353,373
Income taxes		32,883		34,799		37,469			25,509		130,660
Net income	$	56,545	$	59,153	$	60,093		$	46,922	$	222,713
Net income per share, basic	$	1.18	$	1.22	$	1.24		$	0.98	$	4.62
Net income per share, diluted	$	1.15	$	1.19	$	1.22		$	0.96	$	4.52

2006 Quarterly Operating Results (Unaudited)

	Quarter ended
Dollars in thousands
	March 31,		June 30,			September 30,			December 31,			Total
Interest income	$	198,168	$	206,228		$	208,395		$	213,524		$	826,315
Interest expense		45,786		52,206			59,625			62,788			220,405
Net interest income		152,382		154,022			148,770			150,736			605,910
Provision for credit losses		—		(610	)		—			—			(610	)
Net interest income after provision for credit losses		152,382		154,632			148,770			150,736			606,520
Noninterest income		54,190		59,259			65,065			68,356			246,870
Gain (loss) on sale of securities		708		(716	)		(362	)		(4,130	)		(4,500	)
Noninterest expense		114,039		117,938			118,824			125,245			476,046
Minority interest expense		1,228		1,213			1,808			1,709			5,958
Income before taxes		92,013		94,024			92,841			88,008			366,886
Income taxes		34,781		35,283			33,847			29,452			133,363
Net income	$	57,232	$	58,741		$	58,994		$	58,556		$	233,523
Net income per share, basic	$	1.16	$	1.20		$	1.23		$	1.23		$	4.82
Net income per share, diluted	$	1.12	$	1.16		$	1.20		$	1.19		$	4.66

68

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

        Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Company's internal control over financial reporting is designed by, or under the supervision of, the Company's principal executive and principal financial officers and effected by the Company's Board of Directors, management and other personnel, 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. The Company's internal control over financial reporting includes those policies and procedures that:

        (i)    pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

        (ii)   provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

        (iii)  provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        The Company's management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2007, using the criteria for effective internal control over financial reporting set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control—Integrated Framework. Based on this assessment, management believes that, as of December 31, 2007, the Company's internal control over financial reporting is effective.

        KPMG LLP, the independent registered public accounting firm that audited the Company's consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2007, has issued an audit report on the effectiveness of the Company's internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board. That report appears on page A-2.

A-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of
City National Corporation:

        We have audited City National Corporation's (the Corporation) internal control over financial reporting as of December 31, 2007, based on criteria established in the Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Corporation's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Controls Over Financial Reporting. Our responsibility is to express an opinion on the Corporation's internal control over financial reporting based on our audit.

        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

        A company's internal control over financial reporting is a process designed 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. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        In our opinion, City National Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on criteria established in the Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of City National Corporation and subsidiaries as of December 31, 2007 and 2006, and the related consolidated statements of income, shareholders' equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2007, and our report dated February 27, 2008 expressed an unqualified opinion on those consolidated financial statements.

                                                                                                       /s/ KPMG LLP

Los Angeles, California
February 27, 2008

A-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of
City National Corporation:

        We have audited the accompanying consolidated balance sheets of City National Corporation and subsidiaries (the Corporation) as of December 31, 2007 and 2006 and the related consolidated statements of income, shareholders' equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2007. These consolidated financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of City National Corporation and subsidiaries as of December 31, 2007 and 2006 and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2007, in conformity with U.S. generally accepted accounting principles.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Corporation's internal control over financial reporting as of December 31, 2007, based on criteria established in the Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 27, 2008 expressed an unqualified opinion on the effectiveness of the Corporation's internal control over financial reporting,

        As discussed in Note 1 to the consolidated financial statements in 2007 the Corporation changed its method of accounting for uncertainty in income taxes, and in 2006 the Corporation changed its method of accounting for defined benefit pensions and other postretirement plans, stock-based compensation, and considering the effects of prior year misstatements in current year financial statements.

                                                                                                       /s/ KPMG LLP

Los Angeles, California
February 27, 2008

A-3

CITY NATIONAL CORPORATION

CONSOLIDATED BALANCE SHEET

			December 31,
Dollars in thousands, except per share amounts
			2007			2006
Assets
	Cash and due from banks		$	365,918		$	423,114
	Due from banks—interest-bearing			88,151			60,940
	Federal funds sold			—			127,000
	Securities available-for-sale—cost $2,484,903 and $3,017,190 at December 31, 2007 and December 31, 2006, respectively:
		Securities pledged as collateral		212,233			—
		Held in portfolio		2,250,422			2,953,247
	Trading account securities			293,355			147,907
	Loans and leases			11,630,638			10,386,005
	Less allowance for loan and lease losses			168,523			155,342
		Net loans and leases		11,462,115			10,230,663
	Premises and equipment, net			118,067			94,745
	Deferred tax asset			129,403			126,045
	Goodwill			452,480			249,641
	Customer-relationship intangibles, net			67,647			37,920
	Bank-owned life insurance			72,220			70,156
	Affordable housing investments			73,640			65,800
	Customers' acceptance liability			3,549			3,877
	Other assets			300,090			293,254
		Total assets	$	15,889,290		$	14,884,309
Liabilities
	Demand deposits		$	5,858,497		$	6,002,068
	Interest checking deposits			879,062			755,098
	Money market deposits			3,421,691			3,216,949
	Savings deposits			135,519			153,417
	Time deposits—under $100,000			220,928			198,329
	Time deposits—$100,000 and over			1,306,808			1,846,955
		Total deposits		11,822,505			12,172,816
	Federal funds purchased and securities sold under repurchase agreements			1,544,411			422,903
	Other short-term borrowings			100,000			97,525
	Current portion of subordinated debt			115,850			—
	Subordinated debt			157,709			269,848
	Long-term debt			233,465			217,569
	Reserve for off-balance sheet credit commitments			19,704			16,424
	Other liabilities			204,814			164,079
	Acceptances outstanding			3,549			3,877
		Total liabilities		14,202,007			13,365,041
Minority interest in consolidated subsidiaries—includes redeemable minority interests with a redemption value of $26,065 and $21,205 at December 31, 2007 and December 31, 2006, respectively				31,676			28,425
Commitments and contingencies
Shareholders' Equity
	Preferred Stock authorized—5,000,000; none outstanding			—			—
	Common Stock-par value-$1.00; authorized—75,000,000; Issued—50,824,178 and 50,718,794 shares at December 31, 2007 and December 31, 2006, respectively			50,824			50,719
	Additional paid-in capital			420,168			412,249
	Accumulated other comprehensive loss			(9,349	)		(41,459	)
	Retained earnings			1,369,999			1,264,697
	Treasury shares, at cost—2,588,299 and 2,835,908 shares at December 31, 2007 and December 31, 2006, respectively			(176,035	)		(195,363	)
		Total shareholders' equity		1,655,607			1,490,843
		Total liabilities and shareholders' equity	$	15,889,290		$	14,884,309

See accompanying Notes to the Consolidated Financial Statements.

A-4

CITY NATIONAL CORPORATION

CONSOLIDATED STATEMENT OF INCOME

			For the year ended December 31,
In thousands, except per share amounts
			2007			2006			2005
Interest Income
	Loans and leases		$	764,441		$	672,018		$	548,905
	Securities available-for-sale			123,060			149,262			164,004
	Trading account securities			3,825			2,715			1,358
	Due from banks—interest-bearing			2,089			795			282
	Federal funds sold and securities purchased under resale agreements			686			1,525			1,617
		Total interest income		894,101			826,315			716,166
Interest Expense
	Deposits			214,680			159,024			76,045
	Federal funds purchased and securities sold under repurchase agreements			32,491			26,463			8,583
	Subordinated debt			16,272			15,399			10,600
	Other long-term debt			14,728			12,989			10,074
	Other short-term borrowings			7,658			6,530			823
		Total interest expense		285,829			220,405			106,125
Net interest income				608,272			605,910			610,041
	Provision for credit losses			20,000			(610	)		—
	Net interest income after provision for credit losses			588,272			606,520			610,041
Noninterest Income
	Trust and investment fees			140,753			107,462			80,818
	Brokerage and mutual fund fees			60,279			50,358			41,927
	Cash management and deposit transaction charges			35,261			31,631			34,096
	International services			30,399			26,174			23,159
	Gain on sale of other assets			5,989			2,750			1,067
	Bank-owned life insurance			2,690			2,996			3,203
	(Loss) gain on sale of securities			(1,374	)		(4,500	)		1,287
	Other			29,205			25,499			24,811
		Total noninterest income		303,202			242,370			210,368
Noninterest Expense
	Salaries and employee benefits			331,091			295,151			263,398
	Net occupancy of premises			43,538			40,241			35,083
	Legal and professional fees			35,975			34,998			39,105
	Information services			23,364			21,830			19,487
	Depreciation and amortization			20,932			19,062			18,434
	Marketing and advertising			21,837			18,654			16,171
	Office services			12,295			10,751			10,697
	Amortization of intangibles			8,854			5,284			6,595
	Equipment			3,249			2,812			2,355
	Other operating			28,110			27,263			26,853
		Total noninterest expense		529,245			476,046			438,178
Minority interest expense				8,856			5,958			5,675
	Income before income taxes			353,373			366,886			376,556
	Income taxes			130,660			133,363			141,821
Net income			$	222,713		$	233,523		$	234,735
	Net income per share, basic		$	4.62		$	4.82		$	4.77
	Net income per share, diluted		$	4.52		$	4.66		$	4.60
	Shares used to compute income per share, basic			48,234			48,477			49,159
	Shares used to compute income per share, diluted			49,290			50,063			51,062
	Dividends per share		$	1.84		$	1.64		$	1.44

See accompanying Notes to the Consolidated Financial Statements.

A-5

CITY NATIONAL CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

			For the year ended December 31,
Dollars in thousands
			2007			2006			2005
Cash Flows From Operating Activities
Net income			$	222,713		$	233,523		$	234,735
Adjustments to net income:
	Provision for credit losses			20,000			(610	)		—
	Amortization of intangibles			8,854			5,284			6,595
	Depreciation and amortization			20,932			19,062			18,434
	Amortization of cost and discount on long-term debt			708			707			708
	Stock-based employee compensation expense			13,949			12,251			4,209
	Gain on sale of other assets			(5,989	)		(2,750	)		(1,067	)
	Loss (gain) on sales of securities			1,374			4,500			(1,287	)
	Other, net			(9,506	)		(15,995	)		(10,208	)
Net change in:
	Trading account securities			(145,448	)		(88,563	)		16,534
	Deferred income tax benefit			6,395			(817	)		(5,567	)
	Other assets and other liabilities, net			(1,270	)		(27,260	)		23,840
		Net cash provided by operating activities		132,712			139,332			286,926
Cash Flows From Investing Activities
	Purchase of securities available-for-sale			(211,479	)		(195,777	)		(831,156	)
	Sales of securities available-for-sale			196,329			527,599			147,309
	Maturities and paydowns of securities			611,870			678,230			717,989
	Loan originations, net of principal collections			(847,442	)		(1,115,555	)		(781,701	)
	Purchase of premises and equipment			(37,030	)		(30,939	)		(32,678	)
	Acquisition of BBNV, net of cash acquired			(53,953	)		—			—
	Acquisition of Convergent Wealth, net of cash acquired			(101,292	)		—			—
	Other investing activities			(15,508	)		(6,443	)		(3,319	)
		Net cash used by investing activities		(458,505	)		(142,885	)		(783,556	)
Cash Flows From Financing Activities
	Net (decrease) increase in deposits			(791,429	)		34,344			151,557
	Net increase (decrease) in federal funds purchased and securities sold under repurchase agreements			1,121,508			232,713			(14,464	)
	Net increase (decrease) in short-term borrowings, net of transfers from long-term debt			2,475			(2,475	)		99,875
	Net increase (decrease) in other borrowings			146			(283	)		(1,998	)
	Proceeds from exercise of stock options			25,907			19,073			27,039
	Tax benefit from exercise of stock options			5,026			9,959			9,959
	Stock repurchases			(105,450	)		(161,618	)		(44,924	)
	Cash dividends paid			(89,375	)		(80,126	)		(71,248	)
		Net cash provided by financing activities		168,808			51,587			155,796
	Net (decrease) increase in cash and cash equivalents			(156,985	)		48,034			(340,834	)
	Cash and cash equivalents at beginning of year			611,054			563,020			903,854
	Cash and cash equivalents at end of period		$	454,069		$	611,054		$	563,020
Supplemental Disclosures of Cash Flow Information:
	Cash paid during the period for:
		Interest	$	300,307		$	203,346		$	104,763
		Income taxes		92,602			156,343			106,755
	Non-cash investing activities:
		Restructuring of investment		—			—			2,724
		Stock issued for acquisition		88,015			—			—

See accompanying Notes to the Consolidated Financial Statements.

A-6

CITY NATIONAL CORPORATION

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
AND COMPREHENSIVE INCOME

Dollars in thousands		Shares issued		Common stock			Additional paid-in capital			Accumulated other comprehensive income (loss)			Retained Earnings			Treasury stock			Total shareholders' equity
Balance, December 31, 2004		50,589,408		$	50,589		$	397,954		$	(1,365	)	$	957,987		$	(56,643	)	$	1,348,522
Net income		—			—			—			—			234,735			—			234,735
Other comprehensive loss net of tax
	Net unrealized loss on securities available-for-sale, net of taxes of $32.5 million and reclassification of $3.5 million for net loss included in net income	—			—			—			(44,895	)		—			—			(44,895	)
	Net unrealized loss on cash flow hedges, net of taxes of $3.9 million and reclassification of $0.1 million net loss included in net income	—			—			—			(5,342	)		—			—			(5,342	)
Total other comprehensive loss		—			—			—			(50,237	)		—			—			(50,237	)
Issuance of shares for stock options		(29,739	)		(29	)		(15,324	)		—			—			42,392			27,039
Restricted stock grants, net of cancellations		41,274			41			(41	)		—			—			—			—
Stock-based employee compensation expense		—			—			4,111			—			—			—			4,111
Tax benefit from stock options		—			—			9,959			—			—			—			9,959
Cash dividends paid		—			—			—			—			(71,248	)		—			(71,248	)
Repurchased shares, net		—			—			—			—			—			(44,924	)		(44,924	)
Balance, December 31, 2005		50,600,943			50,601			396,659			(51,602	)		1,121,474			(59,175	)		1,457,957
Adjustment to initially apply Staff Accounting Bulletin No. 108		—			—			—			—			(10,174	)		—			(10,174	)
Balance, January 1, 2006		50,600,943			50,601			396,659			(51,602	)		1,111,300			(59,175	)		1,447,783
Net income		—			—			—			—			233,523			—			233,523
Other comprehensive income net of tax
	Net unrealized gain on securities available-for-sale, net of taxes of $5.8 million and reclassification of $3.8 million for net loss included in net income	—			—			—			8,038			—			—			8,038
	Net unrealized gain on cash flow hedges, net of taxes of $2.6 million and reclassification of $6.0 million net loss included in net income	—			—			—			3,644			—			—			3,644
Total other comprehensive income		—			—			—			11,682			—			—			11,682
Adjustment to initially apply FASB Statement No. 158		—			—			—			(1,539	)		—			—			(1,539	)
Issuance of shares for stock options		68,246			68			(6,425	)		—			—			25,430			19,073
Restricted stock grants, net of cancellations		49,605			50			(50	)		—			—			—			—
Stock-based employee compensation expense		—			—			12,106			—			—			—			12,106
Tax benefit from stock options		—			—			9,959			—			—			—			9,959
Cash dividends paid		—			—			—			—			(80,126	)		—			(80,126	)
Repurchased shares, net		—			—			—			—			—			(161,618	)		(161,618	)
Balance, December 31, 2006		50,718,794			50,719			412,249			(41,459	)		1,264,697			(195,363	)		1,490,843
Adjustment to initially apply FASB Interpretation 48		—			—			—			—			(28,036	)		—			(28,036	)
Balance, January 1, 2007		50,718,794			50,719			412,249			(41,459	)		1,236,661			(195,363	)		1,462,807
Net income		—		$	—		$	—		$	—		$	222,713		$	—		$	222,713
Other comprehensive income net of tax
	Amortization of prior service cost	—			—			—			218			—			—			218
	Minimum pension liability adjustment	—			—			—			1,426			—			—			1,426
	Net unrealized gain on securities available-for-sale, net of taxes of $17.5 million and reclassification of $2.0 million for net loss included in net income	—			—			—			24,116			—			—			24,116
	Net unrealized gain on cash flow hedges, net of taxes of $4.0 million and reclassification of $2.7 million net loss included in net income	—			—			—			6,350			—			—			6,350
Total other comprehensive income		—			—			—			32,110			—			—			32,110
Issuance of shares for stock options		—			—			(18,767	)		—			—			44,674			25,907
Restricted stock grants, net of cancellations		105,384			105			(105	)		—			—			—			—
Stock-based employee compensation expense		—			—			13,854			—			—			—			13,854
Tax benefit from stock options		—			—			5,026			—			—			—			5,026
Cash dividends paid		—			—			—			—			(89,375	)		—			(89,375	)
Repurchased shares, net		—			—			—			—			—			(105,450	)		(105,450	)
Issuance of shares for acquisition		—			—			7,911			—			—			80,104			88,015
Balance, December 31, 2007		50,824,178		$	50,824		$	420,168		$	(9,349	)	$	1,369,999		$	(176,035	)	$	1,655,607

See accompanying Notes to Consolidated Financial Statements.

A-7

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies

Organization

        City National Corporation (the "Corporation") is the holding company for City National Bank (the "Bank"). City National Bank delivers banking, trust and investment services through 62 offices in Southern California, the San Francisco Bay area, Nevada and New York City. As of December 31, 2007, the Corporation had a majority ownership interest in eight investment advisory affiliates and a minority interest in one other firm. The Corporation also has an 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.

        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 our estimates and assumptions could cause actual financial results to differ from our 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 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 (to the periods in which they applied) and management has discussed these policies with our Audit Committee. The results of operations reflect any adjustments, all of which are of a normal recurring nature, and which, in the opinion of management, are necessary for a fair presentation of the results for the periods presented.

        The Company is on the accrual basis of accounting for income and expenses. 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.

        Certain prior year balances have been reclassified to conform to the current year presentation.

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. Preferred stock and equity ownership of others is reflected as Minority interest in consolidated subsidiaries in the consolidated balance sheets. The related minority interest in earnings is included in Other noninterest expense in the consolidated statements of income.

        The Company holds ownership interests in certain special-purpose entities formed to provide affordable housing. These entities are variable interest entities ("VIEs"). A variable interest entity is an entity that has (1) an insufficient amount of equity to finance its principal activities without additional subordinated financial support; (2) equity investors that, as a group, lack the ability to make decisions about the entity's activities through voting or similar rights; (3) equity investors that, as group, do not have the obligation to absorb the entity's expected losses or receive the expected residual returns if

A-8

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 1. Summary of Significant Accounting Policies (Continued)

they occur, or (4) voting rights of some investors that are not proportional to their obligation to absorb expected losses or receive residual returns and substantially all of the entity's activities are conducted on behalf of an investor that has disproportionate voting rights. If any of these characteristics is present, the entity is subject to consolidation based on variable interests, not on ownership of the entity's outstanding voting stock. Variable interests are defined as contractual, ownership or other monetary interest in an entity that changes with fluctuations in the fair value of the entity's net assets.

        The primary beneficiary is required to consolidate the VIE. The primary beneficiary is the entity that absorbs the majority (more than 50%) of the VIE's expected losses or receives the majority of the VIE's expected returns, or both. The Company evaluates its ownership interests in VIEs annually to determine whether these investments qualify for consolidation. None of the Company's investments in VIEs met the criteria for consolidation at either December 31, 2007 or 2006. The Company initially records its investments in these entities at cost, which approximates the maximum exposure to loss. Subsequently, the carrying value is amortized over the stream of available tax credits and benefits. The Company expects to recover its investments over time, through realization of federal low-income housing tax credits. Affordable housing VIEs are included in Affordable housing investments in the consolidated balance sheets with associated income reported in Other noninterest income in the consolidated statements of income.

        In addition, the Company, as a limited partner, holds an insignificant ownership percentage in certain private equity partnerships. While these entities may meet the definition of a VIE, the Company is not the primary beneficiary of any of these entities. The Company accounts for its interests in these partnerships under the cost method. These investments are included in Other assets in the consolidated balance sheet with associated income reported in Other noninterest income in the consolidated statements of income.

Wealth and Investment Advisory Affiliates

        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 owns 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 other affiliate owners. All majority-owned affiliates are consolidated. The Corporation's interest in one investment management affiliate in which it holds a minority share is accounted for using the equity method.

Cash and due from banks

        Cash on hand, cash items in the process of collection, and amounts due from correspondent banks and the Federal Reserve Bank are included in Cash and due from banks on the consolidated balance sheet.

Securities

        Securities are classified based on management's intention on the date of purchase. All securities other than trading securities are classified as available-for-sale and are presented at fair value. Unrealized gains or losses on securities available-for-sale are excluded from net income but are

A-9

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 1. Summary of Significant Accounting Policies (Continued)

included as separate components of other comprehensive income, net of taxes. Premiums or discounts on securities available-for-sale are amortized or accreted into income using the interest method over the expected lives of the individual securities. On a quarterly basis, the Company makes an assessment to determine whether there have been any events or economic circumstances to indicate that a security on which there is an unrealized loss is impaired on an other-than-temporary basis. The value of securities is reduced when the declines are considered other-than-temporary, and a new cost basis is established for the securities. Any other-than-temporary loss is included in net income. Realized gains or losses on sales of securities available-for-sale are recorded using the specific identification method. Trading securities are valued at fair value with any unrealized gains or losses included in net income.

Loans

        Loans are generally carried at principal amounts less net deferred loan fees. Net deferred loan fees include deferred unamortized fees less direct incremental loan origination costs. Net deferred fees are amortized into interest income over the terms of the loans for all loans except residential mortgages. Net deferred fees on residential mortgage loans are amortized over the average expected life of the loans. The amortization is calculated using the effective yield method for all loans except revolving loans, for which the straight-line method is used. Premiums or discounts on loans are amortized or accreted into income using the effective interest method. Interest income is accrued as earned.

        Loans are placed on nonaccrual status when a loan becomes contractually past due 90 days with respect to interest or principal unless the loan is both well secured and in the process of collection, or if full collection of interest or principal becomes uncertain. When a loan is placed on nonaccrual status, the accrued and unpaid interest receivable is reversed and the accretion of net deferred loan fees ceases. Thereafter, interest collected on the loan is accounted for on the cash collection or cost recovery method until qualifying for return to accrual status. Generally, a loan may be returned to accrual status when the delinquent principal and interest are brought current in accordance with the terms of the loan agreement and certain ongoing performance criteria have been met.

        The Company considers a loan to be impaired when it is probable that it will be unable to collect all amounts due according to the contractual terms of the loan agreement. Once a loan is determined to be impaired, the impairment is measured based on the present value of the expected future cash flows discounted at the loan's effective interest rate, except that if the loan is collateral dependent, the impairment is measured by using the fair value of the loan's collateral. As a final alternative, the observable market price of the debt may be used to assess impairment. Nonperforming loans greater than $500,000 are individually evaluated for impairment based upon the borrower's overall financial condition, resources, and payment record, and the prospects for support from any financially responsible guarantors. Impairment on loans less than $500,000 is measured using historical loss factors, which approximates the discounted cash flows method.

        When the measurement of the impaired loan is less than the recorded amount of the loan, an impairment is recognized by creating a valuation allowance with a corresponding charge to the allowance for loan and lease losses or by adjusting an existing valuation allowance for the impaired loan.

        The Company's policy is to record cash receipts received on impaired loans first as reductions to principal and then to interest income.

A-10

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 1. Summary of Significant Accounting Policies (Continued)

        Unfunded loan commitments are generally related to providing credit facilities to clients of the Bank, and are not actively traded financial instruments. These unfunded commitments are disclosed as off-balance sheet financial instruments in Note 20 in the Notes to Consolidated Financial Statements.

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 allowances 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 income statement 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, our 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. These include 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 classified loans; trends in volumes and terms of loans; and, an evaluation of overall credit quality and the credit process, including lending policies and procedures, economic, geographical, product, and other environmental factors. Management also considers trends in internally risk-rated exposures, classified exposures, cash-basis loans, and historical and forecasted write-offs; and, a review of industry, geographic, and portfolio concentrations, including current developments within those segments. In addition, management considers the current business strategy and credit process, including credit-limit setting and compliance, credit approvals, loan underwriting criteria and loan workout procedures.

        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 the 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, decline in the value of collateral for collateral dependent loans and existence of concentrations. The

A-11

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 1. Summary of Significant Accounting Policies (Continued)

reserve for off-balance sheet credit commitments is established by converting the off-balance sheet exposures to a loan equivalent amount and then applying the methodology used for loans described above.

        The allowance for loan and lease losses and reserve for off-balance sheet credit commitments are increased by the provision for credit losses charged to operating expense and allowances acquired through acquisitions. The allowance for loan and lease losses is decreased by the amount of charge-offs.

Other Real Estate Owned

        Other real estate owned ("OREO") is composed of real estate acquired in satisfaction of loans. Properties acquired by foreclosure or deed in lieu of foreclosure are transferred to OREO and are recorded at fair value less estimated costs to sell, at the date of transfer of the property. If the carrying value exceeds the fair value at the time of the transfer, the difference is charged to the allowance for loan and lease losses. The fair value of the OREO property is based upon a current appraisal. Losses that result from the ongoing periodic valuation of these properties are charged against OREO expense in the period in which they are identified. Expenses for holding costs are charged to OREO expense as incurred.

Premises and Equipment

        Bank premises and equipment are stated at cost less accumulated depreciation and amortization. Leasehold improvements are amortized over the terms of the respective leases. Depreciation is generally computed on a straight-line basis over the estimated useful life of each type of asset. Gains and losses on dispositions are reflected in current operations. Maintenance and repairs are charged to operating expenses.

Software

        Capitalized software is stated at cost, less accumulated amortization. Capitalized software includes purchased software and capitalizable application development costs associated with internally developed software. Amortization is computed on a straight-line basis and charged to expense over the estimated useful life of the software which is generally 5 years. Capitalized software is included in Premises and equipment, net in the consolidated balance sheets.

Goodwill and Intangibles

        The Company accounts for acquisitions using the purchase method of accounting. Under the purchase method, assets acquired and liabilities assumed are recorded at their estimated fair values at the date of acquisition. Management utilizes valuation techniques based on discounted cash flow analysis to determine these fair values. Any excess of the purchase price over amounts allocated to acquired assets, including identifiable intangible assets, and liabilities assumed is recorded as goodwill. Intangible assets include core deposit intangibles and client advisory contract intangibles (combined, customer-relationship intangibles) originating from acquisitions of financial services firms. Core deposit intangibles are amortized over a range of seven to eight years and client advisory contract intangibles are amortized over various periods ranging from 14 to 20 years. The weighted-average amortization period for the contract intangibles is 18.6 years.

A-12

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 1. Summary of Significant Accounting Policies (Continued)

        Goodwill and intangible assets are evaluated at least annually for impairment or more frequently if events or circumstances, such as changes in economic or market conditions, indicate that potential impairment exists. Goodwill is tested for impairment at the reporting unit level. A reporting unit is an operating segment or one level below an operating segment for which discrete financial information is available and regularly reviewed by management. If the fair value of the reporting unit, including goodwill, is determined to be less than the carrying amount of the reporting unit, a further test is required to measure the amount of impairment. If an impairment loss exists, the carrying amount of the goodwill is adjusted to a new cost basis. Subsequent reversal of a previously recognized goodwill impairment loss is prohibited. Impairment testing of customer-relationship intangibles is performed at the individual asset level. Impairment exists if the carrying amount of an asset exceeds its fair value at the date of the impairment test. If an impairment loss exists, the carrying amount of the intangible asset is adjusted to a new cost basis. The new cost basis is amortized over the remaining useful life of the asset.

Private Equity Investments

        The Company has ownership interests in a limited number of private equity investments that are not publicly traded. These investments are carried at cost in the Other Assets section of the balance sheet. Management reviews these investments quarterly for possible other-than-temporary impairment. This review includes consideration of the facts and circumstances associated with each investment, expectations for future cash flows and capital needs, the viability of the entity's business model and our exit strategy. If and when a decline in value occurs that is considered "other-than-temporary", the asset value would be reduced. The estimated loss would be recognized as a loss on other assets included in other noninterest income.

Investment Fee Revenue

        Investment fee revenue consists of fees, commissions, and markups on securities transactions with clients and money market mutual fund fees.

International Services Income

        International services income includes foreign exchange fees, fees on commercial letters of credit and standby letters of credit, foreign collection and other fee income. International services fees are recognized when earned, except for the fees on commercial letters of credit and standby letters of credit which are deferred and recognized into income over the terms of the letters of credit.

Income Taxes

        The Company and its subsidiaries file a consolidated federal income tax return and also file income tax returns in various state jurisdictions. The provision for income taxes includes current and deferred income tax expense on net income adjusted for permanent and temporary differences such as affordable housing tax credits and interest income on state and municipal securities. Deferred tax assets and liabilities are recognized for the expected future tax consequences of existing temporary differences between the financial reporting and tax reporting basis of assets and liabilities, as well as for operating losses and tax credit carry forwards, using enacted tax laws and rates. On a quarterly basis, management evaluates deferred tax assets to determine if these tax benefits are expected to be realized

A-13

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 1. Summary of Significant Accounting Policies (Continued)

in future periods. This determination is based on facts and circumstances, including the Company's current and future tax outlook. To the extent a deferred tax asset is no longer considered "more likely than not" to be realized, a valuation allowance is established.

        Accrued income taxes represent the estimated amounts due or received from the various taxing jurisdictions where the Company has established a business presence. The balance also includes a contingent reserve for potential taxes, interest and penalties related to uncertain tax positions. On a quarterly basis, management evaluates the contingent tax accruals to determine if they are sufficiently reserved based on a probability assessment of potential outcomes. The determination is based on facts and circumstances, including the interpretation of existing law, new judicial or regulatory guidance and the status of tax audits.

        From time to time, the Company engages in business strategies that may also have an effect on its tax liabilities. If the tax effects of a strategy are significant, the Company's practice is to obtain the opinion of advisors that the tax effects of such strategies should prevail if challenged.

Net Income per Share

        Basic earnings per share is calculated based on the weighted average shares of common stock outstanding less unvested restricted shares and units. Diluted earnings per share gives effect to all potential dilutive common shares, which consist of stock options and restricted shares and units that were outstanding during part or all of the year.

Stock-based Compensation Plans

        The Company adopted Statement of Financial Accounting Standards No. 123 (revised), Share Based Payment, ("SFAS 123R") effective January 1, 2006. SFAS 123R requires the Company to measure the cost of employee services received in exchange for awards of equity instruments, such as stock options or restricted stock, based on the fair value of the award on the grant date. This cost must be recognized in the income statement over the vesting period of the award.

        The Company previously applied APB Opinion No. 25, Accounting for Stock Issued to Employees, in accounting for stock-based compensation plans, and accordingly, no compensation cost had been recognized for stock options in the financial statements prior to implementation. The Company applied the Modified Prospective Application in its implementation of the new accounting standard. In 2006, the Company recognized stock-based compensation expense on new awards and on existing awards that were modified, repurchased or cancelled after January 1, 2006, and on existing awards that were not fully vested as of the date of adoption, but did not restate prior periods. The Company did not make any modifications to outstanding stock options prior to the adoption of SFAS 123R. Pro forma net income for 2005 and earnings per share information for the current and prior years is provided in Note 11.

A-14

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 1. Summary of Significant Accounting Policies (Continued)

        The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model into which the Company inputs its assumptions. The Company evaluates exercise behavior and values options separately for executive and non-executive employees. The Company uses historical data to predict option exercise and employee termination behavior. Expected volatilities are based on the historical volatility of the Company's stock. The expected term of options granted is derived from the actual historical exercise activity over the past 20 years and represents the period of time that options granted are expected to be outstanding. The risk-free rate 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. As a practice, the exercise price of the Company's stock option grants equals the closing market price of the Company's common stock on the date of the grant.

        In 2003, the Company began issuing restricted stock awards which vest over a five-year period during which time the holder receives dividends and has full voting rights. Twenty-five percent of the restricted stock awards vest two years from the date of grant, then twenty-five percent vests on each of the next three consecutive grant anniversary dates. Restricted stock is valued at the closing price of the Company's stock on the date of award. The portion of the market value of the restricted stock related to the current service period is recognized as compensation expense. The portion of the market value of the restricted stock relating to future service periods is included in deferred equity compensation and is amortized over the remaining vesting period on a straight-line basis.

Interest Rate Risk Management Activities

        In accordance with FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended (SFAS 133), the Company documents its hedge relationships, including identification of the hedging instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transaction at the time the derivative contract is executed. This includes designating each derivative contract as either (i) a "fair value hedge" which is a hedge of a recognized asset or liability, (ii) a "cash flow hedge" which hedges a forecasted transaction or the variability of the cash flows to be received or paid related to a recognized asset or liability or (iii) an "undesignated hedge", a derivative instrument not designated as a hedging instrument whose change in fair value is recognized directly in the consolidated statements of income. All derivatives designated as fair value or cash flow hedges are linked to specific hedged items or to groups of specific assets and liabilities on the balance sheet. The Company did not have any significant undesignated hedges during 2007 or 2006.

        Both at inception and at least quarterly thereafter, the Company assesses whether the derivatives used in hedging transactions are highly effective (as defined in SFAS 133) in offsetting changes in either the fair value or cash flows of the hedged item. Retroactive effectiveness is assessed, as well as the continued expectation that the hedge will remain effective prospectively.

        For cash flow hedges, in which derivatives hedge the variability of cash flows (interest payments) on loans that are indexed to U.S. dollar LIBOR or the Bank's prime interest rate, the effectiveness is assessed prospectively at the inception of the hedge, and prospectively and retrospectively at least quarterly thereafter. Ineffectiveness of the cash flow hedges is measured using the hypothetical derivative method described in Derivatives Implementation Group Issue G7, "Measuring the Ineffectiveness of a Cash Flow Hedge of Interest Rate Risk under Paragraph 30(b) When the Shortcut Method is not Applied". For cash flow hedges, the effective portion of the changes in the derivatives'

A-15

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 1. Summary of Significant Accounting Policies (Continued)

fair value is not included in current earnings but is reported as Accumulated other comprehensive income (loss). When the cash flows associated with the hedged item are realized, the gain or loss included in Accumulated other comprehensive income (loss) is recognized on the same line in the consolidated statements of income as the hedged item, i.e., included in Interest income on loans and leases. Any ineffective portion of the changes of fair value of cash flow hedges is recognized immediately in Other noninterest income in the consolidated statements of income.

        For fair value hedges, the Company uses interest-rate swaps to hedge the fair value of certain certificates of deposits, subordinated debt and other long-term debt. The certificates of deposit are single maturity, fixed-rate, non-callable, negotiable certificates of deposit that pay interest only at maturity and contain no compounding features. The certificates cannot be redeemed early except in the case of the holder's death. The interest-rate swaps are executed at the time the deposit transactions are negotiated. The subordinated debt and other long-term debt consists of City National Bank ten-year subordinated notes with a face value of $115.9 million due on January 15, 2008, City National Bank ten-year subordinated notes with a face value of $150.0 million due on September 1, 2011, and City National Corporation senior notes with a face value of $225.0 million due on February 15, 2013. Interest-rate swaps are structured so that all key terms of the swaps match those of the underlying deposit or debt transactions, therefore ensuring there is no hedge ineffectiveness at inception. The Company ensures that the interest-rate swaps meet the requirements for utilizing the short cut method in accordance with paragraph 68 of SFAS 133 and maintains appropriate documentation for each interest-rate swap. On a quarterly basis, fair value hedges are analyzed to ensure that the key terms of the hedged items and hedging instruments remain unchanged, and the hedging counterparties are evaluated to ensure that there are no adverse developments regarding counterparty default, thus ensuring continuous effectiveness. For these fair value hedges, the effective portion of the changes in the fair value of derivatives is reflected in current earnings, on the same line in the consolidated statement of income as the related hedged item.

        The Company also offers various derivatives products to clients and enters into derivatives transactions in due course. These transactions are not linked to specific Company assets or liabilities in the balance sheet or to forecasted transactions in an accounting hedge relationship and, therefore, do not qualify for hedge accounting. They are carried at fair value with changes in fair value recorded as part of other noninterest income in the income statement.

        Fair values are determined from verifiable third-party sources that have considerable experience with the interest-rate swap market. For both fair value and cash flow hedges, the periodic accrual of interest receivable or payable on interest-rate swaps is recorded as an adjustment to net interest income for the hedged items.

        The Company discontinues hedge accounting prospectively when (i) a derivative is no longer highly effective in offsetting changes in the fair value or cash flows of a hedged item, (ii) a derivative expires or is sold, terminated or exercised, (iii) a derivative is un-designated as a hedge, because it is unlikely that a forecasted transaction will occur, or (iv) the Company determines that designation of a derivative as a hedge is no longer appropriate. If a fair value hedge derivative instrument is terminated or the hedge designation removed, the previous adjustments to the carrying amount of the hedged asset or liability would be subsequently accounted for in the same manner as other components of the carrying amount of that asset or liability. For interest-earning assets and interest-bearing liabilities, such adjustments would be amortized into earnings over the remaining life of the respective asset or liability.

A-16

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 1. Summary of Significant Accounting Policies (Continued)

If a cash flow derivative instrument is terminated or the hedge designation is removed, related amounts reported in other comprehensive income are reclassified into earnings in the same period or periods during which the hedged forecasted transaction affects earnings.

Recently Issued or Proposed Accounting Pronouncements

        During the year ended December 31, 2007, the following accounting pronouncements were issued or became effective:

        The Company adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48") on January 1, 2007. FIN 48 provides guidance on measurement, de-recognition of tax benefits, classification, accounting, disclosure and transition requirements in accounting for uncertain tax positions. The Statement establishes a minimum threshold that a tax position is required to meet before being recognized in the financial statements. Upon adoption, the Company recognized a cumulative effect adjustment as a charge to January 1, 2007 retained earnings and a reduction to the contingent tax reserve of $28 million, net of taxes.

        On February 15, 2007 the FASB issued FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities ("SFAS 159"). SFAS 159 provides companies with an irrevocable option to report eligible financial assets and liabilities at fair value on an instrument-by-instrument basis. Unrealized gains and losses on instruments for which the fair value option has been elected would be reported in earnings at each subsequent reporting date. SFAS 159's objective is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. SFAS 159 will be effective for the Company as of January 1, 2008. If the Company elected the fair value option for any financial assets and liabilities, the effect of the adoption would be recorded as a cumulative effect adjustment to beginning retained earnings. Additional disclosures will be required upon implementation. The Company has evaluated the guidance contained in SFAS 159 and does not expect to present any other financial assets and liabilities at their fair value as of January 1, 2008, but may elect to do so in the future.

        On April 30, 2007 the FASB issued Staff Position, ("FSP") FIN 39-1, which amends certain aspects of FASB Interpretation Number 39, Offsetting of Amounts Related to Certain Contracts—an interpretation of APB Opinion No. 10 and FASB Statement No. 105 ("FIN 39"). The FSP amends paragraph 10 of FIN 39 to permit a reporting entity to offset fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) against fair value amounts, including amounts that approximate fair value, recognized for derivative instruments executed with the same counterparty under the same master netting arrangement. Derivative instruments permitted to be netted for the purposes of the FSP include those instruments that meet the definition of a derivative in FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, including those that are not included in the scope of Statement 133. The FSP only impacts the presentation of the derivative's fair value and the related collateral on the balance sheet. The Company has evaluated the guidance in the FSP, which is effective for the Company as of January 1, 2008 and does not expect it to have a significant impact on the Company's financial statements.

        EITF Issue No. 06-11, Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards, ratified by the EITF on June 14, 2007, provides that realized income tax benefits from dividends or dividend equivalents that are charged to retained earnings and paid to employees for

A-17

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 1. Summary of Significant Accounting Policies (Continued)

equity classified nonvested equity shares, nonvested equity share units, and outstanding equity share options are to be recognized as an increase to additional paid-in capital. The amount recognized in additional paid-in capital for the realized income tax benefit from dividends on those awards are to be included in the pool of excess tax benefits available to absorb tax deficiencies on share-based payment awards. The EITF is effective for the Company as of January 1, 2008. The Company currently recognizes the tax benefit associated with dividend payments on unvested shares as a reduction of income tax expense. The Company's effective tax rate is expected to increase in 2008 upon adoption.

        On December 4, 2007, the FASB issued FASB Statements No. 141(R) ("SFAS 141(R)"), Business Combinations and No. 160, Noncontrolling Interests in Consolidated Financial Statements ("SFAS 160"). SFAS 141(R) requires the acquiring entity in a business combination to recognize 100 percent of the assets acquired and liabilities assumed in the transaction; establishes acquisition date fair value as the measurement objective for the assets acquired and liabilities assumed; requires recognition of contingent consideration arrangements at their acquisition date fair values; and expands required disclosures regarding the nature and financial effect of the business combination. SFAS 141(R) also requires that acquisition-related costs be expensed when incurred. SFAS 160 requires that noncontrolling (minority) interests in subsidiaries be initially measured at fair value and classified as a separate component of equity in the consolidated financial statements. The Company currently reports minority interest in the mezzanine section of the balance sheet between liabilities and equity. Under SFAS 160, noncontrolling interests' share of subsidiary earnings will no longer be recognized as an expense by the parent entity. SFAS 141 (R) and SFAS 160 are effective for annual periods beginning after December 15, 2008, and will be adopted by the Company effective January 1, 2009. The Company has not yet evaluated the impact of adoption on its consolidated financial statements.

        On February 12, 2008, the FASB issued FASB Staff Position No. FAS 157-2, Effective Date of FASB Statement No. 157 (the FSP). The FSP amends FASB Statement No. 157, Fair Value Measurements ("SFAS 157"), to delay the effective date of SFAS 157 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Examples of non-financial assets for the Company include goodwill and intangible assets associated with acquisitions. The FSP defers the effective date of SFAS 157 for items within its scope to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years.

        Previously issued accounting pronouncement:

        On September 15, 2006, the FASB issued FASB Statement No. 157, Fair Value Measurements ("SFAS 157"). SFAS 157 defines fair value for financial reporting purposes, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The statement applies under other accounting pronouncements where fair value is required or permitted. This statement, which is effective for the Company on January 1, 2008, clarifies the application of fair value measurements and may result in changes in the way fair value is measured for some assets and liabilities. The Company has determined that adoption of SFAS 157 will not have a significant impact on its consolidated financial statements. The provisions of the Statement will be applied prospectively upon adoption.

A-18

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2. Restrictions on Cash and Due from Banks

        Bank subsidiaries are required to maintain minimum average reserve balances with the Federal Reserve Bank. The amount of those reserve balances averaged approximately $66.3 million and $73.5 million during the year ended December 31, 2007 and December 31, 2006, respectively.

Note 3. Acquisitions

        On February 28, 2007, the Company completed the acquisition of Business Bank Corporation ("BBC"), the parent of Business Bank of Nevada ("BBNV") and an unconsolidated subsidiary, Business Bancorp Capital Trust I, in a cash and stock transaction valued at $167 million. BBNV operated as a wholly owned subsidiary of City National Corporation until after the close of business on April 30, 2007, at which time it was merged into the Bank. BBC had assets of $496 million, loans of $395 million and deposits of $441 million on the date of acquisition. As a result of the BBC merger, the Company acquired certain loans for which there was, at the time of the merger, evidence of deterioration of credit quality since origination and for which it was probable that all contractually required payments would not be collected. These loans were accounted for in accordance with SOP 03-3, Accounting for Certain Loans or Debt Securities Acquired in a Transfer, which requires that purchased impaired loans be recorded at fair value as of the merger date. This resulted in an insignificant, $50,000 adjustment to goodwill.

        On May 1, 2007, the Corporation completed the acquisition of Lydian Wealth Management in an all-cash transaction. The investment advisory firm is headquartered in Rockville, Maryland and now manages or advises on client assets totaling $8.9 billion. Lydian Wealth Management changed its name to Convergent Wealth Advisors ("Convergent Wealth") and became a subsidiary of Convergent Capital Management LLC, the Chicago-based asset management holding company that the Company acquired in 2003. Convergent Wealth provides wealth management and advisory services to individuals and families with considerable investable assets and net worth. All of the senior executives of Convergent Wealth signed employment agreements and acquired a significant minority ownership interest in Convergent Wealth.

A-19

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 4. Securities Available-for-Sale

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

Dollars in thousands			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
December 31, 2007
	U.S. Treasury		$	45,106	$	122	$	—		$	45,228
	Federal agency			50,996		113		(67	)		51,042
	Mortgage-backed			1,863,885		1,760		(30,672	)		1,834,973
	State and Municipal			391,790		4,486		(821	)		395,455
	Other			32,870		—		(1,869	)		31,001
		Total debt securities		2,384,647		6,481		(33,429	)		2,357,699
	Marketable equity securities			100,256		5,137		(437	)		104,956
		Total securities	$	2,484,903	$	11,618	$	(33,866	)	$	2,462,655
December 31, 2006
	U.S. Treasury		$	49,937	$	4	$	(3	)	$	49,938
	Federal agency			263,227		—		(4,449	)		258,778
	Mortgage-backed			2,264,570		558		(65,814	)		2,199,314
	State and Municipal			360,759		3,391		(1,832	)		362,318
	Other			10,166		—		(102	)		10,064
		Total debt securities		2,948,659		3,953		(72,200	)		2,880,412
	Marketable equity securities			68,531		4,427		(123	)		72,835
		Total securities	$	3,017,190	$	8,380	$	(72,323	)	$	2,953,247

        Gross realized gains and (losses) related to the available-for-sale portfolio were $2.9 million and ($4.3 million), respectively, for the year ended December 31, 2007, $11.1 million and ($15.6 million), respectively, for the year ended December 31, 2006, and $2.3 million and ($1.0 million), respectively, for the year ended December 31, 2005. The $1.4 million net loss on the sale of securities in 2007 primarily relates to the sale of $196.3 million of securities in September to reduce borrowings, improve liquidity and reduce prepayment risk. Proceeds from sales of securities were $527.6 million and $147.3 million in 2006 and 2005, respectively.

        A security with an unrealized loss is considered impaired when the fair value is less than the amortized cost. Impairment may be "temporary" or "other-than-temporary". The following table is a summary of debt securities with a continuous unrealized loss by duration as of December 31, 2007.

		Less than 12 months				12 months or longer				Total
Dollars in thousands		Fair Value		Unrealized loss		Fair Value		Unrealized loss		Fair Value		Unrealized loss
U.S Government and federal agency		$	—	$	—	$	30,933	$	67	$	30,933	$	67
Mortgage-backed			63,387		289		1,588,125		30,383		1,651,512		30,672
State and Municipal			37,978		232		68,201		589		106,179		821
Other			22,781		1,328		8,220		541		31,001		1,869
	Total debt securities	$	124,146	$	1,849	$	1,695,479	$	31,580	$	1,819,625	$	33,429

A-20

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 4. Securities Available-for-Sale (Continued)

        For the securities with unrealized losses in the table above, the losses are a result of the change in market interest rates and are not a result of the issuers' underlying ability to repay. Additionally, the securities have relatively short maturities, the Company has the ability and intent to hold the securities until maturity and expects to recover the full principal and interest amounts owed. Accordingly, management does not believe there is any "other-than-temporary" impairment of the investment portfolio at December 31, 2007, and has not recognized any impairment charge in consolidated net income.

        The following table provides the expected remaining maturities and yields (taxable-equivalent basis) of debt securities at December 31, 2007, by contractual maturity except for mortgage-backed securities which are allocated according to their average expected maturities. Average expected maturities will differ from contractual maturities because mortgage debt issuers may have the right to prepay obligations prior to contractual maturity. To compare the tax-exempt asset yields to taxable yields, amounts are adjusted to pre-tax equivalents based on the marginal corporate federal tax rate of 35 percent.

Debt Securities Available-for-Sale

		One year or less			Over 1 year thru 5 years			Over 5 years thru 10 years			Over 10 years			Total
Dollars in thousands		Amount		Yield (%)	Amount		Yield (%)	Amount		Yield (%)	Amount		Yield (%)	Amount		Yield (%)
U.S. Treasury		$	45,228	4.62	$	—	—	$	—	—	$	—	—	$	45,228	4.62
Federal Agency			30,932	3.94		20,110	4.01		—	—		—	—		51,042	3.97
CMOs			70,639	5.36		798,787	4.43		158,013	5.37		—	—		1,027,439	4.64
Mortgage-backed			—	—		618,426	4.23		182,387	4.49		6,721	6.07		807,534	4.31
State and Municipal			42,541	4.34		120,279	3.95		201,207	3.87		31,428	3.96		395,455	3.95
Other			—	—		—	—		31,001	5.71		—	—		31,001	5.71
	Total debt securities	$	189,340	4.72	$	1,557,602	4.31	$	572,608	4.58	$	38,149	4.33	$	2,357,699	4.41
	Amortized cost	$	189,524		$	1,578,305		$	578,722		$	38,096		$	2,384,647

        Securities available-for-sale totaling $818.4 million were pledged to secure trust funds, public deposits, or for other purposes required or permitted by law at December 31, 2007.

        Interest income on available-for-sale securities is comprised of: (i) taxable interest income of $103.3 million, $133.0 million and $148.0 million for the years ended December 31, 2007, 2006, and 2005 respectively, (ii) nontaxable interest income of $15.1 million, $13.6 million and $12.7 million for the years ended December 31, 2007, 2006, and 2005 and (iii) dividend income of $4.7 million, $2.7 million and $3.3 million for the years ended December 31, 2007, 2006, and 2005 respectively.

Note 5. Federal Home Loan Bank and Federal Reserve Bank Stock

        The Company had $48.8 million and $47.0 million outstanding in government agency stock at December 31, 2007 and 2006, respectively. The Company records its investment in the stock of these government agencies at cost.

A-21

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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:

	December 31,
Dollars in thousands
	2007		2006
Commercial	$	4,193,436	$	3,869,161
Residential mortgages		3,176,322		2,869,775
Commercial real estate mortgages		1,954,539		1,710,113
Real estate construction		1,429,761		1,115,958
Equity lines of credit		432,513		404,657
Installment loans		178,195		201,125
Lease financing		265,872		215,216
Total loans and leases	$	11,630,638	$	10,386,005

        The loan amounts above include net unamortized fees and costs of $7.2 million and $9.0 million as of December 31, 2007 and 2006, respectively.

        In the normal course of business, the Bank makes loans to executive officers and directors as well as loans to companies and individuals affiliated with or guaranteed by officers and directors of the Company and the Bank. These loans were made in the ordinary course of business at rates and terms no more favorable than those offered to others with a similar credit standing. The aggregate dollar amounts of these loans were $32.1 million and $9.0 million at December 31, 2007 and 2006, respectively. During 2007, new loans and advances totaled $130.4 million and repayments totaled $107.3 million. Interest income recognized on these loans amounted to $4.4 million, $0.5 million and $0.5 million during 2007, 2006, and 2005, respectively. At December 31, 2007, none of these loans was past due or on nonaccrual status. Based on analysis of information presently known to management about the loans to officers and directors and their affiliates, management believes all have the ability to comply with the present loan repayment terms.

        The Company has no residential mortgage loans with high LTVs (as defined in FDICIA as greater than 90 percent), loans with option ARM terms, as defined in SOP 94-6-1, Terms of Loan Products that May Give Rise to Concentration of Credit Risk, or that allow for negative amortization. The Company does offer interest-only loans. As of December 31, 2007 there were interest-only residential mortgages totaling approximately $612.9 million and home equity lines of credit totaling approximately $432.5 million. As of December 31, 2006, there were interest-only residential mortgages totaling approximately $372.8 million and home equity lines of credit totaling approximately $404.7 million.

        The Company's lending activities are predominantly in California, and to a lesser extent, New York and Nevada. 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. Credit performance also depends, to a lesser extent, on economic conditions in the San Francisco Bay area, New York and Nevada.

A-22

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

        Loans past due 90 days or more and still accruing interest were not significant in 2007, 2006, or 2005. There were no restructured loan balances at December 31, 2007, 2006, or 2005.

        The allowance for loan and lease losses and the reserve for off-balance sheet credit commitments are significant estimates that can and do change based on management's process in analyzing the loan and commitment portfolios and on management's assumptions about specific borrowers and applicable economic and environmental conditions, among other factors. 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 and allowances acquired through acquisitions. 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 following is a summary of activity in the allowance for loan and lease losses and reserve for off-balance sheet credit commitments:

		Year ended December 31,
Dollars in thousands
		2007			2006			2005
Allowance for loan and lease losses
	Balance, beginning of the year	$	155,342		$	153,983		$	148,568
	Provision for credit losses		20,000			(610	)		—
	Transfers to reserve for off-balance sheet credit commitments		(2,855	)		(828	)		(3,845	)
	Allowance of acquired institution		4,513			—			—
	Charge-offs		(14,231	)		(8,171	)		(8,568	)
	Recoveries		5,754			10,968			17,828
Net loans (charged-off)/recovered			(8,477	)		2,797			9,260
Balance, end of year		$	168,523		$	155,342		$	153,983
Reserve for off-balance sheet credit commitments
Balance, beginning of the year		$	16,424		$	15,596		$	11,751
Recovery of prior charge-off			(67	)		—			—
Provision for credit losses			2,855			828			3,845
Reserve of acquired institution			492			—			—
Balance, end of the year		$	19,704		$	16,424		$	15,596

A-23

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

        The following is a summary of nonaccrual loans and related interest foregone:

		December 31,
Dollars in thousands
		2007		2006		2005
Nonaccrual loans		$	75,561	$	20,883	$	14,400
Contractual interest due		$	3,725	$	2,339	$	2,621
Interest collected and applied to principal			1,423		1,145		1,435
	Net interest foregone	$	2,302	$	1,194	$	1,186

        At December 31, 2007, there were $71.4 million of impaired loans included in nonaccrual loans which had an allowance of $8.4 million allocated to them. On a comparable basis, at December 31, 2006, there were $19.0 million of impaired loans which had an allowance of $0.5 million allocated to them. For 2007, 2006, and 2005, the average balances of all impaired loans were $33.7 million, $14.4 million, and $18.8 million, respectively. During 2007, 2006, and 2005, no interest income was recognized on impaired loans until the principal balances of these loans were paid off.

        The Company has pledged eligible residential first mortgages and equity lines of credit totaling $1.04 billion as collateral for its borrowing facility at the Federal Home Loan Bank of San Francisco.

Note 7. Premises and Equipment

        The following is a summary of data for the major categories of premises and equipment:

Dollars in thousands			Cost		Accumulated Depreciation And Amortization		Carrying Value		Range of Lives
December 31, 2007
	Premises, including land of $3,586		$	127,211	$	67,296	$	59,915	0 to 39 years
	Furniture, fixtures and equipment			146,081		109,362		36,719	3 to 10 years
	Software			59,134		37,701		21,433	5 years
		Total	$	332,426	$	214,359	$	118,067
December 31, 2006
	Premises, including land of $2,790		$	112,465	$	60,061	$	52,404	0 to 39 years
	Furniture, fixtures and equipment			131,024		98,654		32,370	3 to 10 years
	Software			43,991		34,020		9,971	5 years
		Total	$	287,480	$	192,735	$	94,745

        Depreciation and amortization expense was $20.9 million in 2007, $19.1 million in 2006, and $18.4 million in 2005. Net rental payments on operating leases included in net occupancy of premises in the consolidated statements of income were $36.3 million in 2007, $33.7 million in 2006, and $29.3 million in 2005.

A-24

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 7. Premises and Equipment (Continued)

        The future net minimum rental commitments were as follows at December 31, 2007:

Dollars in thousands	Net Minimum Rental Commitments
2008	$	30,458
2009		28,612
2010		26,444
2011		25,501
2012		22,212
Thereafter		95,454
	$	228,681

        The rental commitment amounts in the table above reflect the contractual obligations of the Company under all leases. Lease obligations related to acquisitions have been adjusted to current market values through purchase accounting adjustments. The allowance thus created is being accreted over the terms of the leases and reduces the total expense recognized by the Company in its operating expenses. At December 31, 2007, the Company is contractually entitled to receive minimum future rentals of $4.2 million under non-cancelable sub-leases with terms through 2038.

        A majority of the leases provide for the payment of taxes, maintenance, insurance, and certain other expenses applicable to the leased premises. Many of the leases contain extension provisions and escalation clauses.

Note 8. Income Taxes

        Income taxes (benefits) in the consolidated statement of income include the following amounts:

Dollars in thousands			Current		Deferred			Total
2007
	Federal		$	103,372	$	(5,012	)	$	98,360
	State			33,751		(1,451	)		32,300
		Total	$	137,123	$	(6,463	)	$	130,660
2006
	Federal		$	101,138	$	(1,388	)	$	99,750
	State			32,787		826			33,613
		Total	$	133,925	$	(562	)	$	133,363
2005
	Federal		$	113,054	$	(7,037	)	$	106,017
	State			34,334		1,470			35,804
		Total	$	147,388	$	(5,567	)	$	141,821

        Income taxes payable were $14.3 million, ($19.2 million) and $14.7 million as of December 31, 2007, December 31, 2006 and December 31, 2005, respectively.

A-25

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 8. Income Taxes (Continued)

        The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities at December 31, 2007 and 2006 are presented below:

Net deferred tax assets

			December 31,
Dollars in thousands
			2007			2006
Deferred tax assets:
	Allowance for credit losses		$	78,118		$	78,840
	Accrued expenses			26,753			21,999
	Depreciation			5,911			3,881
	Tax receivable reserve			—			8,437
	Unrealized (gains) losses on cash flow hedges			(1,890	)		2,073
	Unrealized losses on available-for-sale securities			9,195			26,852
	Stock-based compensation			10,885			2,873
	Other			11,715			12,443
		Total gross deferred tax assets		140,687			157,398
Deferred tax liabilities:
	Core deposit and other intangibles			8,516			2,862
	State income taxes			(3,721	)		19,715
	Deferred loan origination costs			2,368			1,979
	Prepaid expenses			1,287			2,642
	Other			2,834			4,155
		Total gross deferred tax liabilities		11,284			31,353
Net deferred tax assets			$	129,403		$	126,045

        The tax benefit of deductible temporary differences and tax carry forwards are recorded as an asset to the extent that management assesses the utilization of such temporary differences and carry forwards to be "more likely than not." As of any period end, the amount of the deferred tax asset that is considered realizable could be reduced if estimates of future taxable income are reduced. Management expects to have sufficient taxable income in future years to fully realize the deferred tax assets recorded at December 31, 2007, and has determined that a valuation reserve is not required for any of its deferred tax assets.

A-26

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 8. Income Taxes (Continued)

        Income taxes resulted in effective tax rates that differ from the statutory federal income tax rate for the following reasons:

	Percent of Pretax Income (Loss)
	2007		2006		2005
Statutory rate	35.0	%	35.0	%	35.0	%
Net state income tax	5.9		6.1		6.1
Tax exempt income	(2.4	)	(2.3	)	(2.3	)
Affordable housing investments	(0.8	)	(1.3	)	(1.2	)
All other, net	(0.8	)	(1.1	)	0.1
Effective tax provision	36.9	%	36.4	%	37.7	%

        The Company has completed its audits by the Internal Revenue Service ("IRS") for the years 2002-2003. The Company is currently in the IRS appeals process on certain tax positions taken in these years and expects the resolution of these items in the first quarter of 2008. The Company does not expect the final settlement of these items to vary materially from the Company's current tax accrual as of December 31, 2007. The Company is currently being audited by the IRS for the years 2006-2007 and by the California Franchise Tax Board for the years 1998-2004.

        From time to time, there may be differences in opinions with respect to the tax treatment accorded transactions. If a tax position which was previously recognized on the 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. As of December 31, 2007, the Company does not have any tax positions which dropped below a "more likely than not" threshold.

        The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, on January 1, 2007. Upon adoption, the Company recognized a cumulative effect adjustment of approximately $28 million, comprising a $25.2 million increase to its tax liability and $2.8 million increase in accrued interest. The adjustment was recorded as a charge to retained earnings and the contingent tax reserve. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

Dollars in thousands	Amount
Balance at January 1, 2007	$	15,416
Additions based on tax positions related to the current year		433
Additions for tax positions of prior years		1,743
Reductions for tax positions of prior years		(44	)
Settlements		(1,605	)
Balance at December 31, 2007	$	15,943

        As of December 31, 2007, the total tax liabilities associated with unrecognized tax benefits that, if recognized, would impact the effective tax rate is $10.8 million.

A-27

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 8. Income Taxes (Continued)

        The Company recognizes accrued interest and penalties related to unrecognized tax benefits as an income tax provision expense. The Company recognized approximately $1.3 million of interest and penalties expense for the year ended December 31, 2007. The Company had approximately $7.8 million of accrued interest and penalties as of December 31, 2007

        As previously reported, on December 31, 2003, the California Franchise Tax Board (FTB) announced that it had taken the position that certain REIT and regulated investment company ("RIC") tax deductions would be disallowed consistent with notices issued by the State of California that stipulate that the REIT and RIC are listed transactions under California tax-shelter legislation. The Company had created its two REITs (one of which was formed as a RIC in 2000) to raise capital for the Bank. While management continues to believe that the tax benefits related to the two REITs realized in prior years are appropriate, the Company deemed it prudent to participate in the statutory Voluntary Compliance Initiative-Option 2, requiring payment of all California taxes and interest on potential tax exposures from the 2000-2002 tax years. The Company may then claim a refund for the taxes paid while avoiding potential penalties. The Company has elected to proceed with its claim for refund as allowed by law. As of December 31, 2006, the Company had a $43.1 million state tax receivable for refund claims filed for the 2000, 2001 and 2002 tax years, net of contingent tax reserves, or an equivalent of $28.0 million, net of applicable federal and state taxes. The Company reduced the state tax receivable to zero upon the adoption of FIN 48. Management continues to aggressively pursue its claims with the FTB for these refund claims. While an outcome from the claims cannot be predicted with certainty, a potentially adverse result will not have a material impact on the Company's financial position.

Note 9. Goodwill and Intangibles

        The following table summarizes the Company's goodwill and other intangible assets as of December 31, 2007 and December 31, 2006.

Dollars in thousands		December 31, 2006			Additions			Reductions			December 31, 2007
Goodwill		$	283,622		$	203,121		$	(282	)	$	486,461
Accumulated Amortization			(33,981	)		—			—			(33,981	)
	Net Goodwill	$	249,641		$	203,121		$	(282	)	$	452,480
Customer-Relationship Intangibles
Core deposit intangibles		$	29,796		$	17,331		$	—		$	47,127
Accumulated amortization			(24,669	)		(5,329	)		—			(29,998	)
Client advisory contracts			38,249			21,111			—			59,360
Accumulated amortization			(5,456	)		(3,386	)		—			(8,842	)
	Net Intangibles	$	37,920		$	29,727		$	—		$	67,647

        The increase in goodwill in 2007 from 2006 is primarily due to the acquisitions of BBNV and Convergent Wealth. Additionally, goodwill increased due to contingent consideration related to the acquisition of Independence Investments in accordance with the terms of the purchase agreement. The net increase in core deposit intangibles and client advisory contracts from the prior year is due to the acquisitions of BBNV and Convergent Wealth, respectively.

A-28

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 9. Goodwill and Intangibles (Continued)

        Customer relationship intangibles are amortized over their estimated lives. At December 31, 2007, the estimated aggregate amortization of intangibles for the years 2008 through 2012 is $9.8 million, $7.9 million, $7.5 million, $7.5 million, and $4.5 million, respectively.

Note 10. Retirement Plans

        The Company has a profit sharing retirement plan with an Internal Revenue Code Section 401(k) feature covering eligible employees. Employer contributions are made on an annual basis into a trust fund and are allocated to the 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. For 2007, 2006, and 2005, the Company recorded total contributions expense of $15.6 million, $12.8 million, and $16.9 million, respectively.

        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 regulations. The Company matches 50 percent of the first 6 percent of covered compensation. For 2007, 2006, and 2005, the Company's matching contribution included in the total contribution above was $3.5 million, $3.1 million, and $3.4 million, respectively.

        During 2002, a Supplemental Executive Retirement Plan, "SERP" was created for one of the officers of the Company. The SERP meets the definition of a pension plan, per FASB Statement No. 87, Employers' Accounting for Pensions. The Company applies SFAS 158, Accounting for Defined Benefit Pension and Other Postretirement Plans ("SFAS 158"), in accounting for the SERP. At December 31, 2007, there was a $3.3 million unfunded pension liability. Total expense in each of the years ending December 31, 2007, 2006, and 2005 was $0.8 million.

        The Company does not provide any other post-retirement employee benefits beyond the profit sharing retirement plan and the SERP.

Note 11. Stock-Based Compensation Plans

        The Company applies FASB Statement No. 123 (revised), Share Based Payment, ("SFAS 123R") in accounting for stock option plans. The Company uses a Black-Scholes model to determine stock-based compensation expense.

        On December 31, 2007, the Company had one stock-based compensation plan, which provides for granting of stock options, restricted shares and restricted units. The plan is described in more detail below. The compensation cost that has been charged against income for all stock-based awards was $13.9 million for the year ended December 31, 2007, compared to $12.3 million for the period ended December 31, 2006 and $4.2 million for the period ended December 31, 2005, respectively. The total income tax benefit recognized in the income statement for stock-based compensation arrangements was $5.0 million for 2007, $10.0 million for 2006, and $10.0 million for 2005. Amounts prior to January 1, 2006 include expense for restricted shares and restricted units, but do not include expense for stock options granted at market value. The fair value of restricted stock awards is charged to compensation expense over the vesting period. See the table below for a comparison of actual net income for 2007

A-29

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 11. Stock-Based Compensation Plans (Continued)

and 2006 and pro-forma net income for 2005 as if the Company had recognized expense for stock options.

Dollars in thousands, except for per share amounts	2007			2006			2005
Net income, as reported	$	222,713		$	233,523		$	234,735
Add: Stock-based compensation included in reported net income, net of tax		8,090			7,106			2,569
Less: Stock-based employee compensation expense determined under the fair-value method for all awards, net of tax		(8,090	)		(7,106	)		(8,582	)
Pro forma net income	$	222,713		$	233,523		$	228,722
Net income per share, basic, as reported	$	4.62		$	4.82		$	4.77
Pro forma net income per share, basic,		N/A			N/A		$	4.65
Net income per share, diluted, as reported	$	4.52		$	4.66		$	4.60
Pro forma net income per share, diluted,		N/A			N/A		$	4.48

Stock-based Compensation Plan

        The City National Corporation Amended and Restated Omnibus Plan (the "Plan"), approved by shareholders, permits the grant of stock options and restricted stock or restricted units to its employees. At December 31, 2007 there were approximately 1.9 million shares available for future grants. The Company believes that such awards better align the interest of its employees with those of its shareholders. Employee 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 generally vest over 5 years, during which time the holder receives dividends and has full voting rights. Certain option and stock awards provide for accelerated vesting if there is a change in control (as defined in the Plan), or upon retirement, for options issued prior to January 31, 2006. All unexercised options expire 10 years from the grant date.

        The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model 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 historical data to predict option exercise and employee termination behavior. The expected term of options granted is derived from the historical exercise activity over the past 20 years 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.

	December 31,
	2007		2006		2005
Weighted-average volatility	21.80	%	23.96	%	24.69	%
Dividend yield	2.54	%	2.29	%	2.15	%
Expected term (in years)	6.14		5.99		5.91
Risk-free rate	4.60	%	4.69	%	4.10	%

A-30

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 11. Stock-Based Compensation Plans (Continued)

        A summary of stock option activity and related information for the years ended December 31, 2007, 2006, and 2005 are presented in the tables below:

Options	Number of Shares (000)		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value ($000)
Outstanding at January 1, 2007	4,295		$	49.54	4.35	$	55,730
BBNV acquisition	109			10.77	3.52		5,340
Granted	553			73.47	9.12		—
Exercised	(653	)		39.90	3.21		(13,176	)
Forfeited or expired	(133	)		68.31	7.34		(272	)
Outstanding at December 31, 2007	4,171			52.60	5.03	$	47,622
Exercisable at December 31, 2007	3,030			45.20	3.82	$	43,468

	2006				2005
Options	Number of Shares (000)		Weighted Average Exercise Price		Number of Shares (000)		Weighted Average Exercise Price
Outstanding at January 1	4,375		$	45.98	4,745		$	41.84
Granted	479			75.51	547			69.05
Exercised	(471	)		40.41	(779	)		35.15
Forfeited or expired	(88	)		63.05	(138	)		55.41
Outstanding at December 31	4,295		$	49.54	4,375		$	45.98
Exercisable	3,156		$	42.89	3,043		$	40.07

        Using the Black-Scholes model, the weighted-average grant-date fair values of options granted during the years ended December 31, 2007, 2006 and 2005 were $16.62, $19.53, and $16.99, respectively. The total intrinsic values of options exercised during the years ended December 31, 2007, 2006 and 2005 were $13.2 million, $14.5 million, and $29.1 million respectively.

        A summary of unvested option activity and related information for the year ended December 31, 2007 is presented below:

Unvested Shares	Number of Shares (000)		Weighted-Average Grant-Date Fair Value
Unvested at January 1, 2007	1,139		$	16.75
Granted	553			16.62
Vested	(439	)		15.08
Forfeited	(112	)		17.14
Unvested at December 31, 2007	1,141		$	17.29

A-31

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 11. Stock-Based Compensation Plans (Continued)

        The number of shares vested during the year ended December 31, 2007 was 439,005. The total fair value of shares vested during 2007 was $6.6 million. As of December 31, 2007, there was $15.5 million of unrecognized compensation cost related to unvested stock options granted under the Plan. That cost is expected to be recognized over a weighted-average period of 2.4 years.

        During 2007, the Company issued 653,369 treasury shares in connection with the exercise of stock options. The Company issued 470,924 and 779,054 treasury shares in connection with the exercise of stock options in 2006 and 2005, respectively.

        Information concerning currently outstanding and exercisable options at December 31, 2007 is as follows:

	Options Outstanding				Options Exercisable
Shares in thousands	Number Outstanding	Weighted Average Remaining Life (Yrs)	Weighted Average Outstanding Price		Number Exercisable	Weighted Average Exercise Price
Options issued at prices less than $19.99 per share	62	3.39	$	8.56	62	$	8.56
Options issued at prices between $20.00 and $35.99 per share	566	1.26		30.97	566		30.97
Options issued at prices between $36.00 and $44.99 per share	706	2.36		37.33	706		37.33
Options issued at prices between $45.00 and $69.99 per share	1,922	5.56		55.24	1,569		52.90
Options issued at prices between $70.00 and $74.99 per share	537	8.97		74.24	32		72.08
Options issued at prices between $75.00 and $84.99 per share	378	8.18		76.64	95		76.65
	4,171				3,030

        At December 31, 2007, 2,720,662 nonqualified stock options and 309,365 incentive stock options on the Company's common stock were exercisable under the plans.

        The 2002 Omnibus Plan provides for granting of restricted shares of Company stock to employees. Beginning in the second quarter of 2003, stock-based performance awards granted to colleagues of the Company included grants of restricted stock for the first time. This reduced the total number of shares awarded but better aligned the interests of shareholders and colleagues. In 2004, the number of shares awarded in connection with stock-based performance awards for 2003 was further reduced when the Company took into consideration changes in the value of the Company's stock price when determining share awards. 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.

        Restricted stock is valued at the closing price of the Company's stock on the date of award. During 2007, the Compensation, Nominating and Governance Committee (the "Committee") of the Company's Board of Directors awarded 145,139 shares of restricted common stock having a market value of $10.2 million. During 2006, the Committee awarded 123,944 shares of restricted common stock having a

A-32

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 11. Stock-Based Compensation Plans (Continued)

market value of $9.1 million and in 2005, 130,328 shares with a corresponding market value of $9.4 million were awarded. The portion of the market value of the restricted stock related to the current service period was recognized as compensation expense in 2007, 2006 and 2005. The portion of the market value relating to future service periods was recorded as deferred equity compensation and will be amortized over the remaining vesting period. The compensation expense related to restricted stock for 2007 was $5.7 million compared to $5.2 million in 2006 and $4.1 million in 2005. As of December 31, 2007, the unrecognized compensation cost related to restricted shares granted under the plan was $9.0 million. There were 406,294 restricted shares that had not vested as of December 31, 2007.

Note 12. Deposits and Borrowed Funds

        The following table sets forth the maturity distribution of time deposits as of December 31, 2007:

Dollars in millions	2008		2009		2010		2011		2012		2013 and after		Total
Time deposits, $100,000 and over	$	1,250.0	$	25.0	$	12.2	$	11.2	$	3.1	$	5.3	$	1,306.8
Other Time Deposits		204.2		7.9		4.0		2.3		2.4		0.1		220.9
	$	1,454.2	$	32.9	$	16.2	$	13.5	$	5.5	$	5.4	$	1,527.7

        Details regarding federal funds purchased and securities sold under repurchase agreements as well as other short-term borrowings follow:

Dollars in thousands	Balances at Year-end		Average Balance		Average Rate		Balances at Year-end		Average Balance		Average Rate		Balances at Year-end		Average Balance		Average Rate
Overnight federal funds purchased and securities sold under repurchase agreements	$	1,344,411	$	566,080	4.99	%	$	422,903	$	541,671	4.89	%	$	190,190	$	278,576	3.08	%
Term securities sold under repurchase agreements		200,000		96,849	4.38			—		—	—			—		—	—
Other short-term borrowings		100,000		153,096	5.00			97,525		135,900	4.80			100,000		21,732	3.47

        The maximum amount of overnight federal funds purchased and securities sold under agreements to repurchase (both overnight and term) outstanding at any month-end was $1,544.4 million, $836.3 million, and $509.2 million in 2007, 2006, and 2005, respectively. The average amount of securities sold under agreements to repurchase was $101.0 million, $15.2 million and $24.9 million during 2007, 2006, and 2005, respectively. At December 31, 2007, the Company had delivered securities with a fair value of $212.2 million as collateral for the term repurchase agreements and associated interest payable. The securities underlying the agreements to repurchase remain under the Company's control.

A-33

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 12. Deposits and Borrowed Funds (Continued)

        Additional detail on the components of other short-term borrowings and long-term debt is provided below:

			December 31,
Dollars in thousands
			2007		2006
Other short-term borrowings:
	Treasury, tax and loan note		$	100,000	$	47,525
	Federal Home Loan Bank advances			—		50,000
		Total	$	100,000	$	97,525
Current portion of subordinated debt			$	115,850	$	—
Subordinated debt				157,709		269,848
			$	273,559	$	269,848
Long-term debt:
	Senior notes		$	225,981	$	215,382
	Other long-term notes			7,484		2,187
		Total	$	233,465	$	217,569

        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 maximum amount of other short-term borrowings at any month-end was $359.3 million, $505.3 million, and $100.0 million in 2007, 2006, and 2005, respectively.

        The Company has a borrowing capacity of $794 million as of December 31, 2007, secured by collateral, from the Federal Home Loan Bank of San Francisco, of which City National Bank is a member.

        Subordinated debt consists of City National Bank 6.75 percent ten-year notes with a face value $150.0 million due on September 1, 2011, and City National Bank 6.375 percent ten-year notes with a face value of $115.9 million due on January 15, 2008. The 6.75 percent subordinated notes qualify as Tier II Capital. Interest on the notes is payable semi-annually in arrears. The carrying value of the City National Bank subordinated notes is net of the impact of fair value hedge accounting and issuance costs which are being amortized into interest expense to yield an effective interest rate of 6.92 percent and 6.62 percent, respectively.

        Long-term debt consists of City National Corporation 5.125 percent ten-year senior notes with a face value of $225.0 million due on February 15, 2013, Business Bank Corporation trust preferred debentures with a face value of $5.2 million maturing on November 23, 2034, and notes payable described below. The carrying value of the senior notes is net of the impact of fair value hedge accounting and issuance costs which are being amortized into interest expense to yield an effective interest rate of 5.28 percent. The rate on the trust preferred debentures is LIBOR plus 1.965 percent.

        The remaining notes payable relate to the purchase of interests in various CCM affiliates. The CCM notes accrue interest at 7.5 percent and mature between 2008 and 2010. Interest on the notes is payable semi-annually in arrears.

A-34

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 13. Derivative Financial Instruments

        The following table presents the notional amount and fair value of interest rate risk management hedging instruments:

	December 31,
	2007				2006
Dollars in millions	Notional Amount		Fair Value		Notional Amount		Fair Value
Receive fixed/pay variable	$	860.9	$	16.7	$	1,365.9	$	(7.5	)

        The Company uses interest-rate swaps to mitigate risks associated with changes to: 1) the fair value of certain fixed-rate deposits and borrowings and 2) certain cash flows related to future interest payments on variable-rate loans. As of December 31, 2007, the Company had $860.9 million notional amount of interest-rate swaps, of which $510.9 million were designated as fair value hedges and $350.0 million were designated as cash flow hedges. The positive mark-to-market on the fair value hedges resulted in the recognition of other assets and an increase in hedged deposits and borrowings of $12.0 million. The positive mark-to-market on the cash flow hedges of variable-rate loans resulted in the recognition of other assets, other liabilities, and an other comprehensive gain of $4.7 million, before taxes of $2.0 million.

        Amounts to be paid or received on the interest-rate swaps designated as cash flow hedges are reclassified into earnings upon receipt of interest payments on the underlying hedged loans, including amounts totaling $4.7 million that were reclassified into net interest income during 2007. Within the next 12 months, $3.3 million of other comprehensive loss is expected to be reclassified into net interest income.

        As of December 31, 2006, the Company had $1.37 billion notional amount of interest-rate swaps, of which $665.9 million were designated as fair value hedges and $700.0 million were designated as cash flow hedges. The negative mark-to-market on the fair value hedges resulted in the recognition of other liabilities and a decrease in hedged deposits and borrowings of $2.6 million. The negative mark-to-market on the cash flow hedges of variable-rate loans resulted in the recognition of other assets, other liabilities, and an other comprehensive loss of $4.9 million, before taxes of $2.1 million.

        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 risk management instruments had $12.1 million of credit risk exposure at December 31, 2007 and $1.4 million as of December 31, 2006. The credit exposure represents the cost to replace, on a present value basis and at current market rates, all profitable contracts outstanding at year-end. 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 City National Corporation and to City National Bank. As of December 31, 2007 collateral valued at $5.5 million had been received from swap counterparties. As of December 31, 2006 collateral valued at $0.7 million had been received from swap counterparties and $6.6 million in securities were pledged to interest-rate swap counterparties as collateral for hedge transactions.

        The Company also offers interest-rate swaps, cross-currency interest-rate swaps and interest-rate caps, floors and collars to its clients to assist them in hedging their lending activities. These derivative contracts are offset by paired trades with unrelated third parties. They are not designated as hedges under SFAS 133, and the positions are marked to market each reporting period. As of December 31,

A-35

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 13. Derivative Financial Instruments (Continued)

2007, the Company had entered into swaps with clients (and offsetting derivative contracts with counterparties) having a notional balance of $48.1 million.

        The following tables present the interest rate swap maturities and average rates as of December 31, 2007 and 2006.

Interest Rate Swap Maturities and Average Rates
December 31, 2007

Dollars in millions	2008			2009			2010			2011			2012		Thereafter			Total			Fair Value
Notional amount	$	340.9		$	25.0		$	110.0		$	160.0		$	—	$	225.0		$	860.9		$	16.7
Weighted average rate received		6.99	%		7.97	%		5.31	%		5.57	%		—		4.38	%		5.86	%
Weighted average rate paid		6.62	%		7.25	%		4.66	%		5.11	%		—		4.87	%		5.65	%

Interest Rate Swap Maturities and Average Rates
December 31, 2006

Dollars in millions	2007			2008			2009			2010		2011			Thereafter			Total			Fair Value
Notional amount	$	600.0		$	340.9		$	50.0		$	—	$	150.0		$	225.0		$	1,365.9		$	(7.5	)
Weighted average rate received		4.91	%		6.99	%		5.15	%		—		5.57	%		4.38	%		5.42	%
Weighted average rate paid		6.05	%		7.35	%		5.33	%		—		5.37	%		5.37	%		6.16	%

        The periodic net settlement of interest rate risk management instruments is recorded as an adjustment to net interest income. These fair value and cash flow swaps decreased net interest income by $5.4 million in 2007 and by $9.6 million in 2006. The fair value and cash flow swaps increased net interest income by $9.9 million in 2005.

Note 14. Variable Interest Entities

        The Company holds 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 variable interest entity ("VIE") and whether the company is required to consolidate the 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 Company initially records its investment in these entities at cost, which approximates the maximum exposure to loss as a result of its 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 $73.6 million and $65.8 million at December 31, 2007 and December 31, 2006, respectively, and is included in Affordable housing investments in the consolidated balance sheets.

        The Company also has ownership interests in several private equity investment funds that are variable interest entities. The Company is not a primary beneficiary and, therefore, is not required to consolidate these variable interest entities. The Company carries its investment in these entities at cost, which approximates the maximum exposure to loss as a result of its involvement with these entities.

A-36

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 14. Variable Interest Entities (Continued)

The Company expects to recover its investments over time, primarily through the allocation of fund income or loss, gains or losses on the sale of fund assets, dividends, or interest income. The balance in these entities was $28.4 million and $15.9 million at December 31, 2007 and December 31, 2006, 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. The Company reviews these assets at least quarterly for possible other-than-temporary impairment. The review typically includes an analysis of the facts and circumstances of each investment, the expectations for the investment's cash flows and capital needs, the viability of its business model and our exit strategy. If and when declines in value are considered to be other-than-temporary, the Company would reduce the asset value. The estimated loss would be recognized as a loss in Other noninterest income in the consolidated statements of income. In addition to the above, Convergent Wealth is the administrative manager of the Barlow Long-Short Equity Fund, a hedge fund that is a variable interest entity. Convergent Wealth is not a primary beneficiary and, therefore, is not required to consolidate this entity.

Note 15. Redeemable Minority Interests

        The Corporation holds a majority ownership interest in eight and a minority interest in one investment management and wealth advisory affiliates. In general, the management of each affiliate has a significant minority ownership position in their firm and supervises the day to day operations of the affiliate. The Corporation participates in quarterly board meetings with each affiliate and is in regular contact with each affiliate regarding their operations. In 2007, the Corporation acquired its newest wealth management affiliate, Convergent Wealth Advisors, formerly known as Lydian Wealth Management.

        The Corporation's investment in each affiliate is governed by operating agreements and other documents which provide the Corporation certain rights, benefits and obligations. Generally, these affiliate operating agreements direct a percentage of revenue allocable to fund affiliate operating expenses ("operating share") while the remaining portion of revenue ("distributable revenue") is allocable to profits to be distributed to the Corporation and other affiliate owners. The Corporation determines the appropriate method of accounting based upon these agreements and the factors contained therein. All majority-owned affiliates have met the criteria for consolidation and are accordingly included in the consolidated financial statements.

        For affiliate operations included in the consolidated financial statements, the portion of the income allocated to owners other than the Corporation is included in Minority interest expense in the consolidated statements of income. Minority interest on the consolidated balance sheet includes capital and undistributed income owned by the affiliate minority owners. All material intercompany balances and transactions have been eliminated. The Corporation applies the equity method of accounting to investments where it does not hold a majority equity interest. For equity method investments, the Corporation's portion of income before taxes is included in Trust and investment fees.

        Most of the affiliate operating agreements provide the affiliate minority owners the conditional right to require the parent company to purchase a portion of their ownership interests at certain intervals ("put rights"). These agreements also provide the parent company a conditional right to require affiliate owners to sell their ownership interests to it upon their death, permanent disability or termination of employment, and also provide affiliate owners a conditional right to require the parent

A-37

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 15. Redeemable Minority Interests (Continued)

company to purchase such ownership interests upon the occurrence of specified events. Management is unable to predict when these specified events might occur. Additionally, in many instances the purchase of interests can be settled using a combination of cash and notes payable, and in all cases the parent company can consent to the transfer of these interests directly to other individuals.

        As of December 31, 2007, affiliate minority ownership interests with a redemption value of $26.1 million could be put to the Company over the next 10 years or longer under the put provisions in the affiliate operating agreements. The terms of the put provisions vary by agreement, but the value of the put is generally based on the application of a growth multiple to distributable revenues. In the event of certain circumstances, including but not limited to death or disability, the parent company may be obligated to purchase some of these shares. This estimate reflects the maximum obligation to purchase equity interests in the affiliates that may be put to the parent company by affiliate owners exercising their put rights under normal operating circumstances. The amount and timing of the obligation can be limited by various factors such as our ownership level, first rights of refusal by other minority owners and other factors contained in the affiliate operating agreements. In extraordinary circumstances, including but not limited to death or disability of affiliate minority owners, the estimated purchase obligations could be accelerated or be greater than the amounts shown. There are additional affiliate ownership interests held by affiliate minority owners that are not available to be put to the parent company in the normal course of operations but that the parent company may be required to purchase under certain circumstances, such as death or disability of the minority shareholder. The parent company carries key man life insurance policies to fund a portion of the purchase obligations under certain circumstances.

Note 16. Disclosure about Fair Value of Financial Instruments

        The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

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

Securities available-for-sale and trading account securities—For securities held as available-for-sale, the fair value is determined by quoted market prices, if available. If a quoted market price is not available, discounted cash flows or matrix or model pricing may be used to determine an appropriate fair value. For trading account securities, fair values are based on quoted market prices or dealer quotes.

Loans and Leases—For certain homogeneous categories of loans, such as some residential mortgages and other consumer loans, fair value is estimated using dealer quotes, adjusted for differences in loan characteristics. The fair value of other types of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. In establishing the credit risk component of the fair value calculations for loans, the Company concluded that the allowance for loan and lease losses represented a reasonable estimate of the credit risk component of the fair value of loans at December 31, 2007 and 2006.

A-38

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 16. Disclosure about Fair Value of Financial Instruments (Continued)

Derivative Contracts—The fair value of non-exchange traded (over-the-counter) derivatives consists of net unrealized gains or losses, accrued interest receivable or payable and any premiums paid or received.

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 is estimated using the rates currently offered for deposits of similar remaining maturities.

Federal funds purchased, Securities sold under repurchase agreements (including Structured repurchase agreements) and Other short-term borrowings—The carrying amount is a reasonable estimate of fair value.

Subordinated and long-term debt—The fair value of long-term debt was estimated by discounting the future payments at current interest rates.

Commitments to extend credit—The fair value of these commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. The Company does not make fixed-rate loan commitments. The fair value of letters of guarantee and letters of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counterparties at the reporting date.

Commitments to private equity and affordable housing funds—The fair value of commitments to invest in private equity and affordable housing funds is based on the estimated cost to terminate them or otherwise settle the obligation.

A-39

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 16. Disclosure about Fair Value of Financial Instruments (Continued)

        The estimated fair values of financial instruments of the Company are as follows:

		December 31, 2007					December 31, 2006
Dollars in millions		Carrying Amount		Fair Value			Carrying Amount			Fair Value
Financial Assets:
	Cash and due from banks	$	365.9	$	365.9		$	423.1		$	423.1
	Due from banks—interest bearing		88.2		88.2			60.9			60.9
	Federal funds sold		—		—			127.0			127.0
	Securities available-for-sale		2,462.7		2,462.7			2,953.2			2,953.2
	Trading account securities		293.4		293.4			147.9			147.9
	Loans and leases, net of allowance		11,462.1		11,526.8			10,230.7			10,050.6
	Derivative contracts		16.7		16.7			(7.5	)		(7.5	)
Financial Liabilities:
	Deposits	$	11,822.5	$	11,826.5		$	12,172.8		$	12,176.6
	Federal funds purchased and securities sold under repurchase agreements		1,344.4		1,344.4			422.9			422.9
	Structured securities sold under repurchase agreements		200.0		205.3			—			—
	Other short-term borrowings		100.0		100.0			97.5			97.5
	Subordinated and long-term debt		507.0		533.8			487.4			498.1
	Commitments to extend credit		—		(8.1	)		—			(7.7	)
	Commitments to private equity and affordable housing funds		—		59.3			—			55.2

Note 17. Shareholders' Equity

        On August 7, 2007, the Company's Board of Directors authorized the Company to repurchase 1 million additional shares of the Company's stock following completion of its previously approved stock buyback initiative. Unless terminated earlier by resolution of the Board of Directors, the program will expire when the Company has repurchased all shares authorized for repurchase thereunder. On January 24, 2008, the Company's Board of Directors authorized the Company to repurchase an additional 1 million shares of the Company's stock following completion of the August 7, 2007 buyback initiative. All purchases under the program are made in open market transactions and comply with the safe harbor provisions of SEC Rule 10B-18 regarding blackout periods and daily aggregate limits. The Company repurchased an aggregate of 1,495,800 shares of common stock in 2007, 2,321,200 shares in 2006 and 630,500 shares in 2005.

A-40

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 17. Shareholders' Equity (Continued)

        The following table summarizes the Company's share repurchases for the year ended December 31, 2007:

Period	Total Number of Shares (or Units) Purchased	Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
03/01/07 - 03/31/07	263,000	$	72.11	263,000		794,700
06/01/07 - 06/30/07	16,500	$	74.78	16,500		778,200
07/01/07 - 07/31/07	295,000	$	72.86	295,000		483,200
08/01/07 - 08/31/07	510,000	$	70.78	510,000		973,200
09/01/07 - 09/30/07	53,400	$	69.43	53,400		919,800
10/01/07 - 10/31/07	68,500	$	65.57	68,500		851,300
11/01/07 - 11/30/07	164,400	$	63.50	164,400		686,900
12/01/07 - 12/31/07	125,000	$	59.87	125,000		561,900
	1,495,800	$	69.47	1,495,800	(1)	561,900	(1)

(1)

On August 7, 2007, the Company's Board of Directors authorized the Company to repurchase 1 million additional shares of the Company's stock following completion of its previously approved stock buyback initiative. Unless terminated earlier by resolution of our Board of Directors, the program will expire when the Company has repurchased all shares authorized for repurchase there under. During the fourth quarter of 2007, the Company repurchased an aggregate of 357,900 shares of our common stock pursuant to the repurchase program that we publicly announced on August 7, 2007, and there are 561,900 shares remaining to be purchased as of December 31, 2007. We received no shares in payment for the exercise price of stock options.

        At December 31, 2007, the Corporation had 2.6 million shares of common stock reserved for issuance and 0.4 million shares of unvested restricted stock granted to employees and directors under share-based compensation programs.

A-41

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 18. Net Income per Common Share

        Calculations of basic and diluted net income per common share follow:

		For the year ended December 31,
In thousands, except for per share amounts
		2007			2006			2005
Basic
	Net Income	$	222,713		$	233,523		$	234,735
	Average Common Shares Outstanding		50,783			50,720			50,635
	Average Treasury Shares Outstanding		(2,138	)		(1,852	)		(1,104	)
	Average Unvested Restricted Shares Outstanding		(411	)		(391	)		(372	)
	Net Average Common Shares Outstanding		48,234			48,477			49,159
	Basic Earnings Per Share	$	4.62		$	4.82		$	4.77
Diluted
	Net Income	$	222,713		$	233,523		$	234,735
	Average Common Shares Outstanding		50,783			50,720			50,635
	Average Treasury Shares Outstanding		(2,138	)		(1,852	)		(1,104	)
	Net Average Common Shares Outstanding		48,645			48,868			49,531
	Stock Option Dilution Adjustment		645			1,195			1,531
	Shares Outstanding and Equivalents		49,290			50,063			51,062
	Diluted Earnings Per Share	$	4.52		$	4.66		$	4.60

        Basic earnings per share is calculated by dividing net income by the weighted-average shares of common stock outstanding for the period less unvested restricted shares and units. Diluted earnings per share gives effect to all potential dilutive common shares, which consist of stock options and restricted shares and units that were outstanding during the period. The average price of the Company's common stock for the period is used to determine the dilutive effect of outstanding stock options utilizing the treasury stock method. Antidilutive stock options are not included in the calculation of basic or diluted EPS. There were 1,701,091 outstanding stock options that were antidilutive at December 31, 2007. There were 509,749 and 4,400 outstanding stock options that were antidilutive at December 31, 2006 and 2005, respectively.

Note 19. Availability of Funds from Subsidiaries and Capital

        The Company is authorized to issue 5,000,000 shares of preferred stock. The Company's Board of Directors has the authority to issue the preferred stock in one or more series, and to fix the designations, rights, preferences, privileges, qualifications and restrictions, including dividend rights, conversion rights, voting rights, rights and terms of redemption, liquidation preferences, and sinking fund terms. As of December 31, 2007 no shares of preferred stock have been issued.

        During 2001, the Bank formed and funded CN Real Estate Investment Corporation ("CN"), a wholly-owned subsidiary of the Bank. City National Bank contributed cash and participation interest in certain loans in exchange for 100 percent of the common stock of CN. The net income and assets of CN are eliminated in consolidation for all periods presented. During 2001, CN sold 33,933 shares of

A-41

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 19. Availability of Funds from Subsidiaries and Capital (Continued)

8.50 percent Series A Preferred Stock to accredited investors for $3.4 million which is included in minority interest. During 2002, CN sold 6,828 shares of 8.5 percent Series B Preferred Stock to accredited investors for $6.8 million which is also included in Minority interest. Dividends of $868,811, which are included in Minority interest expense, were paid in each of the years 2007, 2006 and 2005 on both of the preferred stock issues.

        During 2002, the Bank converted its former registered investment company, a wholly-owned subsidiary of the Bank, to a real estate investment trust to provide the Bank with flexibility in raising capital. The net income and assets of City National Real Estate Investment Corporation II ("CNII") are eliminated in consolidation for all periods presented. During 2002 and 2003, CNII sold 152,680 shares of 8.50 percent Series A Preferred Stock to accredited investors for $10.5 million which is included in minority interest. Dividends of $1,297,780, which are included in minority interest expense, were paid in each of the years 2007, 2006 and 2005.

        Historically, the majority of the funds for the payment of dividends by the Company have been obtained from the Bank. Dividends paid by the Bank to its parent company are subject to certain legal and regulatory limitations. In 2008, the Bank may pay dividends up to its net income for 2008, as defined by statute, through the date of any such dividend declaration, without prior regulatory approval. See Part I, Item 1 of the Form 10-K for a discussion of regulatory restrictions affecting the payment of dividends. Federal banking law also prohibits the Company from borrowing from the Bank on less than a fully secured basis. The Company had no borrowings from the Bank at either December 31, 2007 or December 31, 2006.

        The Corporation and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation and the Bank must meet specific capital guidelines that involve quantitative measures of the Corporation's and Bank's assets, liabilities and certain off-balance sheet items as calculated under the regulatory accounting rules. The Corporation's and the Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

        Quantitative measures established by regulation to ensure capital adequacy require the Corporation and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined). As of December 31, 2007, the Corporation and the Bank met and exceeded all capital adequacy requirements to which either is subject. Additionally, the regulatory agencies are required by law to take specific prompt action with respect to banks that do not meet minimum capital standards. As of December 31, 2007, the Bank was categorized as "well capitalized." There have been no events or circumstances that cause Management to believe that there would be a change in Corporation's and the Bank's category of "well capitalized."

A-42

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 19. Availability of Funds from Subsidiaries and Capital (Continued)

        The Corporation's actual capital amounts and ratios are presented in the following table:

			Actual				Adequately Capitalized				Well Capitalized
Dollars in millions
			Amount		Ratio		Amount		Ratio		Amount		Ratio
As of December 2007
	Total capital
		(to risk weighted assets)	$	1,452.5	11.27	%	$	1,030.9	³ 8.0	%	$	1,288.6	³ 10.0	%
	Tier 1 capital
		(to risk weighted assets)		1,199.4	9.31	%		515.4	³ 4.0	%		773.1	³ 6.0	%
	Tier 1 capital
		(to average assets)		1,199.4	7.97	%		601.8	³ 4.0	%		—	—
As of December 2006
	Total capital
		(to risk weighted assets)	$	1,553.8	13.60	%	$	913.7	³ 8.0	%	$	1,142.1	³ 10.0	%
	Tier 1 capital
		(to risk weighted assets)		1,266.3	11.09	%		456.8	³ 4.0	%		685.3	³ 6.0	%
	Tier 1 capital
		(to average assets)		1,266.3	8.81	%		574.8	³ 4.0	%		—	—

        The Bank's actual capital amounts and ratios are presented in the following table:

			Actual				Adequately Capitalized				Well Capitalized
Dollars in millions
			Amount		Ratio		Amount		Ratio		Amount		Ratio
As of December 2007
	Total capital
		(to risk weighted assets)	$	1,430.6	11.24	%	$	1,018.5	³ 8.0	%	$	1,273.1	³ 10.0	%
	Tier 1 capital
		(to risk weighted assets)		1,181.5	9.28	%		509.2	³ 4.0	%		763.8	³ 6.0	%
	Tier 1 capital
		(to average assets)		1,181.5	7.95	%		594.8	³ 4.0	%		—	—
As of December 2006
	Total capital
		(to risk weighted assets)	$	1,574.8	13.89	%	$	907.3	³ 8.0	%	$	1,134.1	³ 10.0	%
	Tier 1 capital
		(to risk weighted assets)		1,290.2	11.38	%		453.6	³ 4.0	%		680.5	³ 6.0	%
	Tier 1 capital
		(to average assets)		1,290.2	9.04	%		570.9	³ 4.0	%		—	—

        The Company's shareholders' equity to assets was 10.4 percent as of December 31, 2007 and 10.0 percent at December 31, 2006.

A-43

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 20. Commitments and Contingencies

        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, letters of credit, and financial guarantees; and to invest in private equity and affordable housing funds. 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, letters of credit, and financial guarantees written 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.

        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 evaluates each client's creditworthiness on a case-by-case basis.

        The Company had outstanding off-balance sheet loan commitments aggregating $5.28 billion and $5.00 billion at December 31, 2007 and 2006, respectively compared to outstanding loan balances of $11.63 billion and $10.39 billion, respectively. Substantially all of the Company's loan commitments are on a variable rate basis and are comprised of real estate and commercial loan commitments. In addition, the Company had $840.2 million and $662.0 million outstanding in bankers' acceptances and letters of credit at December 31, 2007 and 2006, respectively, of which $822.1 million and $650.6 million relate to standby letters of credit. Included in standby letters of credit were $722.4 million and $569.3 million of financial guarantees as of December 31, 2007 and 2006, respectively. Substantially all fees received from the issuance of financial guarantees are deferred and amortized on a straight-line basis over the terms of the guarantee. Collateral, generally in the form of pledged certificates of deposit, is obtained on certain letters of credit in accordance with the Company's underwriting and credit approval policies.

        As of December 31, 2007, the Company had private equity fund and alternative investment commitments of $60.7 million of which $31.0 million was funded. As of December 31, 2006, the Company had private equity fund and alternative investment commitments of $49.7 million, of which $19.4 million was funded. At December 31, 2007 and 2006, the Company had Affordable Housing Fund commitments of $30.3 million and $26.4 million.

        In connection with the liquidation of an investment acquired in a previous bank merger, the Company has an outstanding long-term guarantee, the maximum liability under the guarantee is $23 million, but the Company does not expect to make any payments under the terms of this guarantee.

        The Company or its subsidiaries are defendants in various pending lawsuits claiming substantial amounts. Based upon present knowledge, management including in-house counsel does not believe that the final outcome of such lawsuits will have a material adverse effect on the Company.

A-44

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 21. Segment Operations

        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) they 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 structure 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 and Nevada.

        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.

        The Other segment includes all other subsidiaries of the Company, the portion of 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.

        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-unit allocations. Allocations of corporate expenses, such as data processing and human resources, are calculated based on estimated activity levels for the fiscal year. Inter-unit support groups, such as Operational Services, are allocated based on actual expenses incurred. Capital is allocated using a methodology similar to that used for federal regulatory risk-based capital purposes. Any provision for credit losses is allocated based on various credit factors, including but not limited to, credit risk ratings, ratings migration, charge-offs and recoveries and loan growth. Income taxes are charged on unit income at the company's overall effective tax rate of 36.9 percent.

A-45

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 21. Segment Operations (Continued)

        Exposure to market risk is managed in the Treasury department. Interest rate risk is removed from the units comprising the Commercial and Private Banking segment to the Funding Center through a funds transfer pricing ("FTP") model. The FTP model records a cost of funds or credit for funds using a combination of matched maturity funding for most assets and liabilities and a blended rate based on various maturities for the remaining assets and liabilities.

        The Bank's investment portfolio and unallocated equity are included in the Other segment. Core deposit intangible amortization is charged to the affected operating segments.

        Operating results for the segments are discussed in the Segment Results section of Management's Discussion and Analysis. Selected financial information for each segment is presented in the tables below. The numbers reflect both the additional Wealth Management segment as well as a change in the allocation of revenue to the Commercial and Private Banking segment. Commercial and Private Banking now 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.

Commercial and Private Banking

		For the year ended December 31,
Dollars in thousands
		2007		2006			2005
Earnings Summary:
Net interest income		$	620,442	$	598,080		$	575,103
Provision for credit losses			20,000		(610	)		—
Noninterest income			151,296		131,994			115,851
Depreciation and amortization			19,248		18,106			17,468
Noninterest expense			414,720		386,193			356,031
	Income before income taxes		317,770		326,385			317,455
Provision for income taxes			116,294		117,589			119,178
	Net income	$	201,476	$	208,796		$	198,277
Selected Average Balances:
Loans		$	10,957,726	$	9,843,054		$	8,768,545
Total Assets			11,338,187		10,263,754			9,173,234
Deposits			11,054,528		10,557,479			11,011,952
Goodwill			308,558		213,117			214,133
Customer-relationship intangibles, net			17,659		7,031			11,242

A-46

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 21. Segment Operations (Continued)

Wealth Management

		For the year ended December 31,
Dollars in thousands
		2007		2006		2005
Earnings Summary:
Net interest income		$	1,921	$	2,234	$	1,757
Provision for credit losses			—		—		—
Noninterest income			203,900		155,780		124,675
Depreciation and amortization			1,684		956		966
Noninterest expense			142,229		114,831		96,835
	Income before income taxes		61,908		42,227		28,631
Provision for income taxes			23,993		16,177		11,205
	Net income	$	37,915	$	26,050	$	17,426
Selected Average Balances:
Loans		$	1,587	$	85	$	928
Total Assets			208,880		176,852		151,586
Deposits			59,354		57,960		77,771
Goodwill			76,898		38,987		37,000
Customer-relationship intangibles, net			52,883		32,952		21,171

Other

		For the year ended December 31,
Dollars in thousands
		2007			2006			2005
Earnings Summary:
Net interest income		$	(14,091	)	$	5,596		$	33,181
Provision for credit losses			—			—			—
Noninterest income			(51,994	)		(45,404	)		(30,158	)
Depreciation and amortization			—			—			—
Noninterest expense			(39,780	)		(38,082	)		(27,447	)
	Income before income taxes		(26,305	)		(1,726	)		30,470
Provision for income taxes			(9,627	)		(403	)		11,438
	Net income	$	(16,678	)	$	(1,323	)	$	19,032
Selected Average Balances:
Loans		$	98,098		$	105,224		$	105,885
Total Assets			3,823,697			4,274,906			4,836,421
Deposits			1,122,501			1,254,488			689,116
Goodwill			—			—			—
Customer-relationship intangibles, net			—			—			—

A-47

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 21. Segment Operations (Continued)

Consolidated Company

		For the year ended December 31,
Dollars in thousands
		2007		2006			2005
Earnings Summary:
Net interest income		$	608,272	$	605,910		$	610,041
Provision for credit losses			20,000		(610	)		—
Noninterest income			303,202		242,370			210,368
Depreciation and amortization			20,932		19,062			18,434
Noninterest expense			517,169		462,942			425,419
	Income before income taxes		353,373		366,886			376,556
Provision for income taxes			130,660		133,363			141,821
	Net income	$	222,713	$	233,523		$	234,735
Selected Average Balances:
Loans		$	11,057,411	$	9,948,363		$	8,875,358
Total Assets			15,370,764		14,715,512			14,161,241
Deposits			12,236,383		11,869,927			11,778,839
Goodwill			385,456		252,104			251,133
Customer-relationship intangibles, net			70,542		39,983			32,413

Note 22. Parent Company Only Condensed Financial Statements

        Condensed parent Company financial statements, which include transactions with subsidiaries, follow:

CONDENSED BALANCE SHEET

		December 31,
Dollars in thousands
		2007		2006
Assets
Cash		$	14,087	$	44,778
Securities available-for-sale			127,145		103,157
Other assets			237,222		72,510
Investment in City National Bank			1,344,798		1,409,681
Investment in non-bank subsidiaries			174,741		99,379
	Total assets	$	1,897,993	$	1,729,505
Liabilities
Senior notes		$	225,980	$	215,381
Other liabilities			16,406		23,209
	Total liabilities		242,386		238,590
Shareholders' equity			1,655,607		1,490,915
	Total liabilities and shareholders' equity	$	1,897,993	$	1,729,505

A-48

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 22. Parent Company Only Condensed Financial Statements (Continued)

CONDENSED STATEMENT OF INCOME

Dollars in thousands			For the year ended December 31,
			2007			2006			2005
Income
	Dividends from Bank and non-bank subsidiaries		$	334,217		$	225,495		$	87,942
	Interest and dividend income and other income			11,572			7,001			6,371
	Gain on sale of securities			1,099			6,264			672
		Total income		346,888			238,760			94,985
Interest on notes payable to Bank and non-affiliates				13,729			11,775			9,075
Other expenses				5,918			4,744			677
Total expenses				19,647			16,519			9,752
	Income before taxes and equity in undistributed income of Bank and non-bank subsidiaries			327,241			222,241			85,233
	Income taxes (benefit)			(3,705	)		(1,623	)		(1,336	)
	Income before equity in undistributed income of Bank and non-bank subsidiaries			330,946			223,864			86,569
	Equity in undistributed income of Bank and non-bank subsidiaries			(108,233	)		9,659			148,166
	Net income		$	222,713		$	233,523		$	234,735

A-49

CITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 22. Parent Company Only Condensed Financial Statements (Continued)

CONDENSED STATEMENT OF CASH FLOWS

			For the year ended December 31,
Dollars in thousands
			2007			2006			2005
Cash Flows From Operating Activities
Net income			$	222,713		$	233,523		$	234,735
Adjustments to net income:
	Equity in undistributed (income) loss of Bank and non-bank subsidiaries			108,233			(9,659	)		(148,166	)
	Other, net			(22,492	)		(2,459	)		20,742
		Net cash provided by operating activities		308,454			221,405			107,311
Cash Flows From Investing Activities
Purchase of securities available-for-sale				(66,607	)		(76,317	)		(15,418	)
Sales of securities available-for-sale				39,526			76,781			19,040
Investment in subsidiaries				—			(679	)		—
Acquisitions, net of cash acquired				(148,172	)		—			—
	Net cash (used) provided by investing activities			(175,253	)		(215	)		3,622
Cash Flows For Financing Activities
Cash dividends paid				(89,375	)		(80,126	)		(71,248	)
Stock repurchases				(105,450	)		(160,691	)		(44,597	)
Stock options exercised				30,933			18,181			26,712
	Net cash used by financing activities			(163,892	)		(222,636	)		(89,133	)
Net (decrease) increase in cash and cash equivalents				(30,691	)		(1,446	)		21,800
Cash and cash equivalents at beginning of year				44,778			46,224			24,424
Cash and cash equivalents at end of year			$	14,087		$	44,778		$	46,224

A-50

QuickLinks

TABLE OF CONTENTS
PART I

Item 1. Business

Item 1A—Risk Factors
Item 1B—Unresolved Staff Comments
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information

PART III

Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions
Item 14. Principal Accountant Fees and Services

PART IV

Item 15. Exhibits and Financial Statement Schedules

SIGNATURES
FINANCIAL HIGHLIGHTS
SELECTED FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
CITY NATIONAL CORPORATION CONSOLIDATED BALANCE SHEET
CITY NATIONAL CORPORATION CONSOLIDATED STATEMENT OF INCOME
CITY NATIONAL CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS
CITY NATIONAL CORPORATION CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
CITY NATIONAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED BALANCE SHEET
CONDENSED STATEMENT OF INCOME
CONDENSED STATEMENT OF CASH FLOWS

EX-4.(A)

Exhibit 4(a)

NUMBER
BG

PAR VALUE $1.00 PER SHARE		COMMON STOCK
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE	[PICTURE]	THIS CERTIFICATE IS TRANSFERABLE IN NEW YORK, NEW YORK, OR BEVERLY HILLS, CALIFORNIA

City National Corporation

THIS CERTIFIES THAT              CUSIP 178566 10 5 SEE REVERSE FOR
CERTAIN DEFINITIONS

IS THE RECORD
HOLDER OF             

FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK OF

City National Corporation, transferable on the books of the Corporation in person or by duly authorized attorney upon surrender of this Certificate properly endorsed. This Certificate is not valid unless countersigned by the Transfer Agent and registered by the Registrar.

Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.

Dated

[City National Corporation SEAL]

	COUNTERSIGNED AND REGISTERED: CONTINENTAL STOCK TRANSFER & TRUST COMPANY
		(Jersey City, NJ)
		TRANSFER AGENT AND REGISTRAR
	BY
		AUTHORIZED OFFICER
[ILLEGIBLE] SECRETARY		[ILLEGIBLE] CHAIRMAN OF THE BOARD

        The Corporation shall furnish without charge to each stockholder who so requests a statement of the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock of the Corporation or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Such requests shall be made to the Corporation's Secretary at the principal office of the Corporation.

The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN COM — as tenants in common	UNIF GIFT MIN ACT—	(Cust)	Custodian	(Minor)
TEN ENT — as tenants by the entireties
JT TEN — as joint tenants with right of survivorship and not as tenants in common		Under Uniform Gifts to Minors Act      (State)
	UNIF TRF MIN ACT—	(Cust)	Custodian (until age     )	(Minor)
		under Uniform Transfers to Minors Act      (State)

Additional abbreviations may also be used though not in the above list.

        FOR VALUE RECEIVED,                                      hereby sell, assign and transfer unto

        PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

Shares

of the common stock represented by the within Certificate, and do hereby irrevocably constitute and appoint

Attorney

to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises.

Dated                                     

X
X
NOTICE:	THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS WRITTEN UP THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.

Signature(s) Guaranteed

By

THE SIGNATURE(S) SHOULD BE GUARANTEED AND ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

This certificate also evidences and entitles the holder hereof to certain Rights as set forth in a Rights Agreement dated as of February 26, 1997, by and between City National Corporation and Continental Stock Transfer & Trust Company, as Rights Agent (the "Rights Agreement"), as amended to date, the terms and conditions of which are hereby incorporated herein by reference and a copy of which is on file at the principal executive offices of City National Corporation. Under certain circumstances specified in the Rights Agreement, such Rights will be represented by separate certificates and will no longer be represented by this certificate. Under certain circumstances specified in the Rights Agreement, Rights beneficially owned by certain persons may become null and void. City National Corporation will mail to the record holder of this certificate a copy of the Rights Agreement without charge promptly following receipt of a written request therefore. As described in the Rights Agreement, Rights issued to any Person who becomes an Acquiring Person (as defined in the Rights Agreement) shall become null and void.

EX-4.(C)

Exhibit 4(c)

CITY NATIONAL CORPORATION
INDENTURE
Dated as of February 13, 2003
U.S. BANK NATIONAL ASSOCIATION,
Trustee

TABLE OF CONTENTS

		Page
ARTICLE ONE Definitions and Other Provisions of General Application
SECTION 1.01.	Definitions	1
SECTION 1.02.	Compliance Certificates and Opinions	6
SECTION 1.03.	Form of Documents Delivered to Trustee	6
SECTION 1.04.	Acts of Holders	7
SECTION 1.05.	Notices, etc., to Trustee and Company	9
SECTION 1.06.	Notices to Holders; Waiver	9
SECTION 1.07.	Language of Notices, etc	10
SECTION 1.08.	Conflict with Trust Indenture Act	10
SECTION 1.09.	Effect of Headings and Table of Contents	10
SECTION 1.10.	Successors and Assigns	10
SECTION 1.11.	Separability Clause	10
SECTION 1.12.	Benefits of Indenture	10
SECTION 1.13.	Legal Holidays	10
SECTION 1.14.	Governing Law	10
ARTICLE TWO Security Forms
SECTION 2.01.	Forms Generally	11
SECTION 2.02.	Form of Securities	11
SECTION 2.03.	Form of Trustee's Certificate of Authentication	12
SECTION 2.04.	Global Securities	12
ARTICLE THREE The Securities
SECTION 3.01.	Title and Terms	12
SECTION 3.02.	Denominations	14
SECTION 3.03.	Execution, Authentication, Delivery and Dating	14
SECTION 3.04.	Temporary Securities	16
SECTION 3.05.	Registration, Registration of Transfer and Exchange	18
SECTION 3.06.	Mutilated, Destroyed, Lost and Stolen Securities	21
SECTION 3.07.	Payment of Interest; Interest Rights Preserved	22
SECTION 3.08.	Persons Deemed Owners	24
SECTION 3.09.	Cancellation	24
SECTION 3.10.	Computation of Interest	24
SECTION 3.11.	Form of Certification	24
SECTION 3.12.	Judgments	25
SECTION 3.13.	CUSIP Numbers	25
ARTICLE FOUR Redemption of Securities
SECTION 4.01.	Applicability of Article	25
SECTION 4.02.	Election To Redeem; Notice to Trustee	26
SECTION 4.03.	Selection by Security Registrar of Securities To Be Redeemed	26
SECTION 4.04.	Notice of Redemption	26
SECTION 4.05.	Deposit of Redemption Price	27
SECTION 4.06.	Securities Payable on Redemption Date	27
SECTION 4.07.	Securities Redeemed in Part	28

i

ARTICLE FIVE Covenants
SECTION 5.01.	Payment of Principal, Premium and Interest	28
SECTION 5.02.	Maintenance of Office or Agency	28
SECTION 5.03.	Money for Security Payments To Be Held in Trust	29
SECTION 5.04.	Additional Amounts	30
SECTION 5.05.	Statement as to Compliance	31
SECTION 5.06.	Maintenance of Corporate Existence, Rights and Franchises	31
SECTION 5.07.	Limitation on Disposition of Stock of Banks	31
SECTION 5.08.	Waiver of Covenants	32
ARTICLE SIX Holders' Lists and Reports by Trustee and Company
SECTION 6.01.	Company To Furnish Trustee Names and Addresses of Holders	32
SECTION 6.02.	Preservation of Information; Communications to Holders	33
SECTION 6.03.	Reports by Trustee	34
SECTION 6.04.	Reports by Company	34
ARTICLE SEVEN Remedies
SECTION 7.01.	Events of Default	34
SECTION 7.02.	Acceleration of Maturity; Rescission and Annulment	35
SECTION 7.03.	Collection of Indebtedness and Suits for Enforcement by Trustee	36
SECTION 7.04.	Trustee May File Proofs of Claim	37
SECTION 7.05.	Trustee May Enforce Claims Without Possession of Securities	37
SECTION 7.06.	Application of Money Collected	37
SECTION 7.07.	Limitation on Suits	38
SECTION 7.08.	Unconditional Right of Holders To Receive Principal, Premium and Interest	38
SECTION 7.09.	Restoration of Rights and Remedies	38
SECTION 7.10.	Rights and Remedies Cumulative	39
SECTION 7.11.	Delay or Omission Not Waiver	39
SECTION 7.12	Control by Holders	39
SECTION 7.13	Waiver of Past Defaults	39
SECTION 7.14.	Undertaking for Costs	39
SECTION 7.15.	Waiver of Stay or Extension Laws	40
ARTICLE EIGHT The Trustee
SECTION 8.01.	Certain Duties and Responsibilities	40
SECTION 8.02.	Notice of Default	41
SECTION 8.03.	Certain Rights of Trustee	41
SECTION 8.04.	Not Responsible for Recitals or Issuance of Securities	42
SECTION 8.05.	May Hold Securities	42
SECTION 8.06.	Money Held in Trust	42
SECTION 8.07.	Compensation and Reimbursement	42
SECTION 8.08.	Disqualification; Conflicting Interests	43
SECTION 8.09.	Corporate Trustee Required; Eligibility	43
SECTION 8.10.	Resignation and Removal; Appointment of Successor	44
SECTION 8.11.	Acceptance of Appointment by Successor	45
SECTION 8.12.	Merger, Conversion, Consolidation or Succession to Business of Trustee	46
SECTION 8.13.	Preferential Collection of Claims Against Company	46
SECTION 8.14.	Appointment of Authenticating Agents	46

ii

ARTICLE NINE Supplemental Indentures
SECTION 9.01.	Supplemental Indentures Without Consent of Holders	48
SECTION 9.02.	Supplemental Indentures With Consent of Holders	49
SECTION 9.03.	Execution of Supplemental Indentures	50
SECTION 9.04.	Effect of Supplemental Indentures	50
SECTION 9.05.	Conformity with Trust Indenture Act	50
SECTION 9.06.	Reference in Securities to Supplemental Indentures	50
ARTICLE TEN Consolidation, Merger, Conveyance or Transfer
SECTION 10.01.	Company May Consolidate, etc., Only on Certain Terms	51
SECTION 10.02.	Successor Corporation Substituted	51
ARTICLE ELEVEN Satisfaction and Discharge
SECTION 11.01.	Satisfaction and Discharge of Indenture	51
SECTION 11.02.	Application of Trust Money	52
SECTION 11.03.	Reinstatement	52
ARTICLE TWELVE Immunity of Incorporators, Stockholders, Officers and Directors
SECTION 12.01.	Exemption from Individual Liability	53
ARTICLE THIRTEEN Sinking Funds
SECTION 13.01.	Applicability of Article	53
SECTION 13.02.	Satisfaction of Sinking Fund Payments with Securities	53
SECTION 13.03.	Redemption of Securities for Sinking Fund	54
ARTICLE FOURTEEN Repayment at the Option of Holders
SECTION 14.01.	Applicability of Article	54
SECTION 14.02.	Repayment of Securities	54
SECTION 14.03.	Exercise of Option, Notice	54
SECTION 14.04.	Election of Repayment by Remarketing Entities	55
SECTION 14.05.	Securities Payable on the Repayment Date	55
ARTICLE FIFTEEN Meetings of Holders of Securities
SECTION 15.01.	Purposes for Which Meetings May Be Called	55
SECTION 15.02.	Call, Notice and Place of Meetings	55
SECTION 15.03.	Persons Entitled to Vote at Meetings	56
SECTION 15.04.	Quorum; Action	56
SECTION 15.05.	Determination of Voting Rights; Conduct and Adjournment of Meetings	57
SECTION 15.06.	Counting Votes and Recording Action of Meetings	57
ARTICLE SIXTEEN Miscellaneous
SECTION 16.01.	Counterparts	58

iii

CROSS-REFERENCE TABLE

TIA Section		Indenture Section
310	(a)(1)	8.09
	(a)(2)	8.09
	(a)(3)	N.A.
	(a)(4)	N.A.
	(b)	8.08;
		8.10
	(c)	N.A.
311	(a)	8.13
	(b)	8.13
	(c)	N.A.
312	(a)	6.01;
		6.02
	(b)	6.02
	(c)	6.02
313	(a)	6.03
	(b)(1)	6.03
	(b)(2)	6.03
	(c)	6.03
	(d)	6.03
314	(a)	6.04;
		5.05
	(b)	N.A.
	(c)(1)	1.02
	(c)(2)	1.02
	(c)(3)	N.A.
	(d)	N.A.
	(e)	1.02
	(f)	1.02
315	(a)	8.01
	(b)	8.02
	(c)	8.01
	(d)	8.01
	(e)	7.14
316	(a)
	(last sentence)	1.01
	(a)(1)(A)	7.12
	(a)(1)(B)	7.13
	(a)(2)	N.A.
	(b)	7.08
	(c)	1.04
317	(a)(1)	7.03
	(a)(2)	7.04
	(b)	5.03
318	(a)	N.A.
	N.A. Means Not Applicable.

Note:    This Cross-Reference Table shall not, for any purpose, be deemed to be part of this indenture.

iv

        THIS INDENTURE is entered into as of February 13, 2003, between CITY NATIONAL CORPORATION, a corporation organized and existing under the laws of the State of Delaware (hereinafter called the "Company"), having its principal executive office at City National Center, 400 North Roxbury Drive, Beverly Hills, CA 90210, and U.S. BANK NATIONAL ASSOCIATION, a national banking association (hereinafter called the "Trustee"), having its principal corporate trust office at 550 South Hope Street, 5th Floor, Los Angeles, California 90071.

RECITALS OF THE COMPANY

        The Company deems it necessary from time to time to issue its unsecured debentures, notes, bonds and other evidences of indebtedness to be issued in one or more series (hereinafter called the "Securities") as hereinafter set forth, and to provide therefor the Company has duly authorized the execution and delivery of this Indenture.

        All things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

        For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of any series thereof, as follows:

ARTICLE ONE
Definitions and Other
Provisions of General Application

        SECTION 1.01.    Definitions.    For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:

          (i)  the term "this Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and shall include the terms of particular series of Securities established as contemplated by Section 3.01;

         (ii)  all references in this instrument to designated "Articles", "Sections" and other subdivisions are to the designated Articles, Sections and other subdivisions of this Indenture. The words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. The words "including" and words of similar import shall mean "including, without limitation," unless otherwise specified. The word "or" shall not be exclusive;

        (iii)  the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;

        (iv)  all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; and

         (v)  all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and, except as may be otherwise expressly provided herein or in one or more indentures supplemental hereto, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted at the date of such computation.

        "Act", when used with respect to any Holder, has the meaning specified in Section 1.04.

        "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes

of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.

        "Authenticating Agent" means any Person authorized to act on behalf of the Trustee to authenticate Securities pursuant to Section 8.14.

        "Authorized Newspaper" means a newspaper, in an official language of the country of publication or in the English language, customarily published on each Business Day, whether or not published on Saturdays, Sundays or holidays, and of general circulation in the place in connection with which the term is used or in the financial community of such place. Where successive publications are required to be made in Authorized Newspapers, the successive publications may be made in the same or in different newspapers in the same city meeting the foregoing requirements and in each case on any Business Day.

        "Authorized Officer" means the Chairman of the Board, the President, any Vice Chairman of the Board, the Chief Financial Officer, any Vice President, the Treasurer, the Secretary, the Comptroller, any Assistant Comptroller, any Assistant Treasurer or any Assistant Secretary of the Company.

        "Bearer Security" means any Security in the form established pursuant to Section 2.02 which is payable to bearer, including, without limitation, unless the context otherwise indicates, a Security in global bearer form.

        "Board of Directors" means (i) the board of directors of the Company or any duly authorized committee of that board or (ii) the Chairman, any Vice Chairman, the President or any Vice President of the Company, in each case, duly authorized by the board of directors of the Company to take a specified action or make a specified determination.

        "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee.

        "Business Day" means any day, other than a Saturday or Sunday, on which banking institutions in Los Angeles, California, New York, New York and any Place of Payment for the Securities are open for business.

        "Clearstream" means Clearstream Banking, S.A., or its successors.

        "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if any time after the execution and delivery of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time.

        "Common Depositary" has the meaning specified in Section 3.04(b)(ii).

        "Company" means the Person named as the "Company" in the first paragraph of this instrument until any successor corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean any such successor corporation.

        "Company Request" and "Company Order" mean, respectively, a written request or order signed in the name of the Company by its Chairman of the Board, its President, a Vice Chairman of the Board, its Chief Financial Officer or a Vice President, and by its Treasurer, an Assistant Treasurer, its Comptroller, an Assistant Comptroller, its Secretary or an Assistant Secretary, and delivered to the Trustee.

        "corporation" includes corporations, associations, companies and business trusts.

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        "coupon" means any interest coupon appertaining to a Bearer Security.

        "Defaulted Interest" has the meaning specified in Section 3.07.

        "Depositary" means, with respect to the Securities of any series issuable or issued in the form of a Global Security, the Person designated as Depositary by the Company pursuant to Section 3.01 until a successor Depositary shall have been appointed pursuant to Section 3.05, and thereafter "Depositary" shall mean or include each Person who is then a Depositary hereunder, and if at any time there is more than one such Person, "Depositary" as used with respect to the Securities of any such series shall mean the Depositary with respect to the Securities of that series.

        "Designated Currency" has the meaning specified in Section 3.12.

        "Dollar" or "$" means the coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts.

        "Euroclear" means Euroclear Bank S.A./N.V., as operator of the Euroclear System, or any successor securities clearing agency.

        "Event of Default" has the meaning specified in Section 7.01.

        "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, and any statute successor thereto.

        "Exchange Rate" shall have the meaning specified as contemplated in Section 3.01.

        "Exchange Rate Agent" shall have the meaning specified as contemplated in Section 3.01.

        "Exchange Rate Officer's Certificate" with respect to any date for the payment of principal of (and premium, if any) and interest on any series of Securities, means a certificate setting forth the applicable Exchange Rate and the amounts payable in Dollars and Foreign Currencies in respect of the principal of (and premium, if any) and interest on Securities denominated in any composite currency or Foreign Currency, and signed by the Chairman of the Board, a Vice Chairman of the Board, the President, the Chief Financial Officer, any Vice President, the Treasurer or any Assistant Treasurer of the Company or the Exchange Rate Agent appointed pursuant to Section 3.01 and delivered to the Trustee.

        "Foreign Currency" means a currency issued by the government of any country other than the United States of America.

        "Global Exchange Date" has the meaning specified in Section 3.04(b)(iv).

        "Global Security" means a Security issued to evidence all or a part of a series of Securities in accordance with Section 3.03.

        "Holder", with respect to a Registered Security, means a Person in whose name such Registered Security is registered in the Security Register and, with respect to a Bearer Security (or any temporary Global Security) or a coupon, means the bearer thereof.

        "interest", when used with respect to an Original Issue Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity.

        "Interest Payment Date", when used with respect to any series of Securities, means the Stated Maturity of an installment of interest on such Securities.

        "Maturity", when used with respect to any Security, means the date on which the principal of such Security (or any installment of principal) becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.

        "Officers' Certificate" means a certificate signed by the Chairman of the Board, the President, a Vice Chairman of the Board, the Chief Financial Officer or a Vice President, and by the Treasurer, an

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Assistant Treasurer, the Comptroller, an Assistant Comptroller, the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. Each such certificate shall contain the statements set forth in Section 1.02, if applicable.

        "Opinion of Counsel" means a written opinion of counsel, who may (except as otherwise expressly provided in this Indenture) be an employee of the Company. Each such opinion shall contain the statements set forth in Section 1.02, if applicable.

        "Original Issue Discount Security" means any Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 7.02.

        "Outstanding", when used with respect to Securities or Securities of any series, means, as of the date of determination, all such Securities theretofore authenticated and delivered under this Indenture, except:

          (i)  such Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;

         (ii)  such Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and

        (iii)  such Securities in lieu of which other Securities have been authenticated and delivered pursuant to Section 3.06 of this Indenture;

provided, however, that in determining whether the Holders of the requisite principal amount of such Securities Outstanding have given any request, demand, authorization, direction, notice, consent or waiver hereunder or whether a quorum is present at a meeting of Holders of Securities, the principal amount of Original Issue Discount Securities that shall be deemed to be Outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the Maturity thereof pursuant to Section 7.02, and Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which a Responsible Officer of the Trustee actually knows to be so owned shall be disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor.

        "Paying Agent" means any Person authorized by the Company to pay the principal of, premium, if any, or interest on any Securities or any coupons appertaining thereto on behalf of the Company.

        "Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

        "Place of Payment", when used with respect to the Securities of any series, means the place or places where, subject to the provisions of Section 5.02, the principal of (and premium, if any) and interest on the Securities of that series are payable as specified in accordance with Section 3.01.

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        "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and for the purposes of this definition, any Security authenticated and delivered under Section 3.06 in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.

        "Principal Corporate Trust Office" means the office of the Trustee, at which at any particular time its corporate trust business shall be principally administered, which office at the date of execution of this instrument is at the address set forth in the first paragraph of this instrument.

        "Principal Paying Agent" means the Paying Agent, if any, designated as such by the Company pursuant to Section 3.01 of this Indenture.

        "Redemption Date", when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture.

        "Redemption Price", when used with respect to any Security to be redeemed, means the price specified in such Security at which it is to be redeemed pursuant to this Indenture.

        "Registered Security" means any Security in the form established pursuant to Section 2.02 which is registered in the Security Register.

        "Regular Record Date" for the interest payable on any Security on any Interest Payment Date means the date, if any, specified in such Security as the "Regular Record Date".

        "Remarketing Entity", when used with respect to the Securities of any series which are repayable at the option of the Holders thereof before their Stated Maturity, means any Person designated by the Company to purchase any such Securities.

        "Repayment Date", when used with respect to any Security to be repaid upon exercise of option for repayment by the Holder, means the date fixed for such repayment pursuant to this Indenture.

        "Repayment Price", when used with respect to any Security to be repaid upon exercise of option for repayment by the Holder, means the price at which it is to be repaid pursuant to this Indenture.

        "Responsible Officer", when used with respect to the Trustee, means any officer of the Trustee with direct responsibility for the administration of this Indenture and also means, with respect to a particular corporate trust matter, any other officer of the Trustee to whom such matter is referred because of his knowledge of and familiarity with the particular subject.

        "Security" or "Securities" means any Security or Securities, as the case may be, authenticated and delivered under this Indenture; provided, however, that, if at any time there is more than one Person acting as Trustee under this Indenture, "Securities", with respect to any such Person, shall mean Securities authenticated and delivered under this Indenture, exclusive, however, of Securities of any series as to which such Person is not Trustee.

        "Security Register" has the meaning specified in Section 3.05.

        "Security Registrar" and "Co-Security Registrar" have the meaning specified in Section 3.05.

        "Special Record Date" for the payment of any Defaulted Interest means the date fixed by the Trustee pursuant to Section 3.07.

        "Stated Maturity", when used with respect to any Security, or any installment of principal thereof or interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security, or such installment of principal or interest, is due and payable.

        "Subsidiary of the Company" or "Subsidiary" means a Person at least a majority of the outstanding voting securities or interests of which is owned, directly or indirectly, by the Company or by

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one or more Subsidiaries of the Company, or by the Company and one or more Subsidiaries of the Company.

        As used under this definition, the term "voting stock" means stock having ordinary voting power for the election of directors irrespective of whether or not stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency.

        "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more than one such Person, "Trustee" as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series.

        "Trust Indenture Act" or "TIA" (except as herein otherwise expressly provided) means the Trust Indenture Act of 1939, as in force at the date as of which this instrument was executed, and, to the extent required by law, as amended.

        "United States" means the United States of America (including the States and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction.

        "United States Alien", except as otherwise provided in or pursuant to this Indenture, means any Person who, for United States Federal income tax purposes, is a foreign corporation, a nonresident alien individual, a nonresident alien fiduciary of a foreign estate or trust, or a foreign partnership, one or more of the members of which is, for United States Federal income tax purposes, a foreign corporation, a nonresident alien individual or a nonresident alien fiduciary of a foreign estate or trust.

        "Vice President", when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president".

        SECTION 1.02.    Compliance Certificates and Opinions.    Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished.

        Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (except as otherwise expressly provided in this Indenture) shall include:

          (i)  a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;

         (ii)  a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

        (iii)  a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

        (iv)  a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.

        SECTION 1.03.    Form of Documents Delivered to Trustee.    In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all

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such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

        Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company.

        Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

        SECTION 1.04.    Acts of Holders.    (i) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders or Holders of any series may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing. If Securities of a series are issuable in whole or in part as Bearer Securities, any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may, alternatively, be embodied in and evidenced by the record of Holders of Securities voting in favor thereof, either in person or by proxies duly appointed in writing, at any meeting of Holders of Securities duly called and held in accordance with the provisions of Article Fifteen, or a combination of such instruments and any such record. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record or both are delivered to the Trustee, and, where it is hereby expressly required, to the Company. Such instrument or instruments and any such record (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments and so voting at any such meeting. Proof of execution of any such instrument or of a writing appointing any such agent, or the holding by any Person of a Security, shall be sufficient for any purpose of this Indenture and (subject to Section 8.01) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. The record of any meeting of Holders of Securities shall be proved in the manner provided in Section 15.06.

         (ii)  The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by or on behalf of any legal entity other than an individual, such certificate or affidavit shall also constitute proof of the authority of the Person executing the same. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient.

        (iii)  The ownership of Registered Securities shall be proved by the Security Register.

        (iv)  The principal amount and serial numbers of Bearer Securities held by any Person, and the date of holding the same, may be proved by the production of such Bearer Securities or by a certificate executed, as depositary, by any trust company, bank or other depositary, wherever situated, if such certificate shall be deemed by the Trustee to be satisfactory, showing that at the date therein mentioned such Person had on deposit with such depositary, or exhibited to it, the Bearer Securities therein described; or such facts may be proved by the certificate or affidavit of the Person holding such Bearer Securities, if such certificate or affidavit is deemed by the Trustee to be satisfactory. The Trustee and the Company may assume that such ownership of any Bearer Security continues until (1) another

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certificate or affidavit bearing a later date issued in respect of the same Bearer Security is produced, or (2) such Bearer Security is produced to the Trustee by some other Person, or (3) such Bearer Security is surrendered in exchange for a Registered Security, or (4) such Bearer Security is no longer Outstanding.

         (v)  The fact and date of execution of any such instrument or writing, the authority of the Person executing the same and the principal amount and serial numbers of Bearer Securities held by the Person so executing such instrument or writing and the date of holding the same may also be proved in any other manner which the Trustee deems sufficient; and the Trustee may in any instance require further proof with respect to any of the matters referred to in this Section.

        (vi)  Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, in respect of any action taken, suffered or omitted by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security.

       (vii)  For purposes of determining the principal amount of Outstanding Securities of any series the Holders of which are required, requested or permitted to give any request, demand, authorization, direction, notice, consent, waiver or take any other Act under the Indenture, each Security denominated in a Foreign Currency or composite currency shall be deemed to have the principal amount determined by the Exchange Rate Agent by converting the principal amount of such Security in the currency in which such Security is denominated into Dollars at the Exchange Rate as of the date such Act is delivered to the Trustee and, where it is hereby expressly required, to the Company, by Holders of the required aggregate principal amount of the Outstanding Securities of such series (or, if there is no such rate on such date, such rate on the date determined as specified as contemplated in Section 3.01).

      (viii)  The Company may, in the circumstances permitted by the Trust Indenture Act, set a record date for purposes of determining the identity of Holders of Securities of any series entitled to give any request, demand, authorization, direction, notice, consent, waiver or take any other Act, or to vote or consent to any action by vote or consent authorized or permitted to be given or taken by Holders of Securities of such series. If not set by the Company prior to the first solicitation of a Holder of Securities of such Series made by any Person in respect of any such action, or in the case of any such vote, prior to such vote, such record date shall be the later of 30 days prior to the first solicitation of such consent or the date of the most recent list of Holders of such Securities furnished to the Trustee pursuant to Section 6.01 prior to such solicitation.

        (ix)  Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents, each of which may do so pursuant to such appointment with regard to all or any part of such principal amount. Any notice given or action taken by a Holder or its agents with regard to different parts of such principal amount pursuant to this paragraph shall have the same effect as if given or taken by separate Holders of each such different part.

         (x)  Without limiting the generality of the foregoing, unless otherwise specified pursuant to Section 3.01 or pursuant to one or more indentures supplemental hereto, a Holder, including a Depositary that is the Holder of a Global Security, may make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders, and a Depositary that is the Holder of a Global Security may provide its proxy or proxies to the beneficial owners of interests in any such Global Security through such Depositary's standing instructions and customary practices.

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        (xi)  The Company may fix a record date for the purpose of determining the Persons who are beneficial owners of interests in any Global Security held by a Depositary entitled under the procedures of such Depositary to make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders. If such a record date is fixed, the Holders on such record date or their duly appointed proxy or proxies, and only such Persons, shall be entitled to make, give or take such request, demand, authorization, direction, notice, consent, waiver or other action, whether or not such Holders remain Holders after such record date. No such request, demand, authorization, direction, notice, consent, waiver or other action shall be valid or effective if made, given or taken more than 90 days after such record date.

        SECTION 1.05.    Notices, etc., to Trustee and Company.    Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with:

          (i)  the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Principal Corporate Trust Office, Attention: Corporate Trust; or

         (ii)  the Company by any Holder or by the Trustee shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class, postage prepaid, to the Company, to the attention of its Treasurer, addressed to it at the address of its principal office specified in the first paragraph of this Indenture or at any other address previously furnished in writing to the Trustee by the Company.

        SECTION 1.06.    Notices to Holders; Waiver.    Where this Indenture or any Security provides for notice to Holders of any event:

        (1)   such notice shall be sufficiently given (unless otherwise herein or in such Security expressly provided) if in writing and mailed, first class, postage prepaid, to each Holder of Registered Securities affected by such event, at his address as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice.

        (2)   such notice shall be sufficiently given to Holders of Bearer Securities if published in an Authorized Newspaper in The City of New York and, if the Securities of such series are then listed on the London Stock Exchange plc and such stock exchange shall so require, in London and, if the Securities of such series are then listed on the Luxembourg Stock Exchange and such stock exchange shall so require, in Luxembourg and, if the Securities of such series are then listed on any other stock exchange and such stock exchange shall so require, in any other required city outside the United States, or, if not practicable, elsewhere in Europe on a Business Day at least twice, the first such publication to be not earlier than the earliest date, and not later than the latest date, prescribed for the giving of such notice. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice to Holders of Registered Securities by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. In any case where notice to Holders of Registered Securities is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder of Registered Securities shall affect the sufficiency of such notice with respect to other Holders of Registered Securities or the sufficiency of any notice by publication to Holders of Bearer Securities given as provided above. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.

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        In case by reason of the suspension of publication of any Authorized Newspaper or Authorized Newspapers or by reason of any other cause it shall be impracticable to publish any notice to Holders of Bearer Securities as provided above, then such notification to Holders of Bearer Securities as shall be given with the approval of the Trustee shall constitute sufficient notice to such Holders for every purpose hereunder. Neither the failure to give notice by publication to Holders of Bearer Securities as provided above, nor any defect in any notice so published, shall affect the sufficiency of any notice mailed to Holders of Registered Securities as provided above.

        Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

        SECTION 1.07.    Language of Notices, etc.    Any request, demand, authorization, direction, notice, consent, or waiver required or permitted under this Indenture shall be in the English language, except that any published notice may be in an official language of the country of publication, as may be specified in a form of Security or, in the absence of such specification, as directed in writing by the Company.

        SECTION 1.08.    Conflict with Trust Indenture Act.    If and to the extent that any provision of this Indenture limits, qualifies or conflicts with the duties imposed by, or with another provision (an "incorporated provision") included in this Indenture by operation of, Sections 310 to 318, inclusive, of the TIA, such imposed duties or incorporated provision shall control.

        SECTION 1.09.    Effect of Headings and Table of Contents.    The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.

        SECTION 1.10.    Successors and Assigns.    All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not.

        SECTION 1.11.    Separability Clause.    In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

        SECTION 1.12.    Benefits of Indenture.    Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture.

        SECTION 1.13.    Legal Holidays.    Unless otherwise provided as contemplated by Section 3.01 with respect to any series of Securities, in any case where any Interest Payment Date, Stated Maturity, Repayment Date or Redemption Date of any Security or any date on which any Defaulted Interest is proposed to be paid shall not be a Business Day at any Place of Payment, then (notwithstanding any other provisions of the Securities or this Indenture) payment of the principal of, premium, if any, or interest on any Securities need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date, Stated Maturity, Repayment Date or Redemption Date or on the date on which Defaulted Interest is proposed to be paid, and, if such payment is made on such next succeeding Business Day, no interest shall accrue on such payment for the intervening period from and after any such original Interest Payment Date, Stated Maturity, Repayment Date or Redemption Date, or date on which Defaulted Interest is proposed to be paid, as the case may be.

        SECTION 1.14.    Governing Law.    This Indenture and the Securities shall be construed in accordance with and governed by the laws of the State of New York.

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ARTICLE TWO
Security Forms

        SECTION 2.01.    Forms Generally.    All Securities and any related coupons shall have such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Securities or coupons, as evidenced by their execution of the Securities or coupons.

        The Trustee's certificates of authentication shall be in substantially the form set forth in this Article.

        Unless otherwise provided as contemplated by Section 3.01 with respect to any series of Securities, the Securities of each series shall be issuable in registered form without coupons. If so provided as contemplated by Section 3.01, the Securities of a series shall be issuable solely in bearer form, or in both registered form and bearer form. Unless otherwise specified as contemplated by Section 3.01, Securities in bearer form shall have interest coupons attached.

        The definitive Securities and coupons shall be printed, lithographed or engraved or produced by any combination of these methods on a steel engraved border or steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Securities or coupons, as evidenced by their execution of such Securities or coupons.

        SECTION 2.02.    Form of Securities.    Each Security and coupon shall be in one of the forms approved from time to time by or pursuant to a Board Resolution or an indenture supplemental hereto. Upon or prior to the delivery of a Security or coupons in any such form to the Trustee for authentication, the Company shall deliver to the Trustee the following:

          (i)  such indenture supplemental hereto or the Board Resolution by or pursuant to which such form of Security or coupons has been approved, certified by the Secretary or an Assistant Secretary of the Company;

         (ii)  the Officers' Certificate required by Section 3.01 of this Indenture;

        (iii)  the Company Order required by Section 3.03 of this Indenture; and

        (iv)  the Opinion of Counsel required by Section 3.03 of this Indenture.

        If temporary Securities of any series are issued in global form as permitted by Section 3.04, the form thereof also shall be established as provided in this Section 2.02.

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        SECTION 2.03.    Form of Trustee's Certificate of Authentication.

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

        This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION, as Trustee,
by	Authorized Officer

        Date:

        SECTION 2.04.    Global Securities.    If Securities of a series are issuable in whole or in part in global form, as specified as contemplated by Section 3.01, then, notwithstanding clause (xii) of Section 3.01 and the provisions of Section 3.02, such Global Security shall represent such of the outstanding Securities of such series as shall be specified therein and may provide that it shall represent the aggregate amount of Outstanding Securities from time to time endorsed thereon and that the aggregate amount of Outstanding Securities represented thereby may from time to time be reduced or increased to reflect exchanges or increased to reflect the issuance of additional uncertificated securities of such series. Any endorsement of a Global Security to reflect the amount, or any increase or decrease in the amount, of Outstanding Securities represented thereby shall be made in such manner and upon instructions given by such Person or Persons as shall be specified therein or in the Company Order to be delivered to the Trustee pursuant to Section 3.03 or Section 3.04.

        Global Securities may be issued in either registered or bearer form and in either temporary or permanent form.

ARTICLE THREE
The Securities

        SECTION 3.01.    Title and Terms.    The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued up to the aggregate principal amount of Securities from time to time authorized by or pursuant to a Board Resolution.

        The Securities may be issued in one or more series. All Securities of each series issued under this Indenture shall in all respects be equally and ratably entitled to the benefits hereof with respect to such series without preference, priority or distinction on account of the actual time or times of the authentication and delivery or Maturity of the Securities of such series. There shall be established in or pursuant to a Board Resolution, and set forth in, or determined in the manner provided in, an Officers' Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series:

          (i)  the title of the Securities of the series (which shall distinguish the Securities of the series from all other Securities);

         (ii)  any limit upon the aggregate principal amount or aggregate initial public offering price of the Securities of the series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of that series pursuant to this Article Three or Sections 4.07, 9.06 or 14.03);

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        (iii)  the priority of payment, if any, of the Securities;

        (iv)  the price or prices (which may be expressed as a percentage of the aggregate principal amount thereof) at which the Securities will be issued;

         (v)  the date or dates on which the principal and premium, if any, of the Securities of the series is payable;

        (vi)  the rate or rates at which the Securities of the series shall bear interest, if any, or the method or methods by which such rates may be determined, if any, the date or dates from which such interest shall accrue, the Interest Payment Dates on which such interest shall be payable, the Regular Record Date for the interest payable on any Interest Payment Date and the basis upon which interest shall be calculated if other than that of a 360-day year consisting of twelve 30-day months;

       (vii)  the extent to which any of the Securities will be issuable in temporary or permanent global form, and in such case, the Depositary for such Global Security or Securities, the terms and conditions, if any, upon which such Global Security may be exchanged in whole or in part for definitive securities, and the manner in which any interest payable on a temporary or permanent Global Security will be paid, whether or not consistent with Section 3.04 or 3.05;

      (viii)  the office or offices or agency where, subject to Section 5.02, the Securities may be presented for registration of transfer or exchange;

        (ix)  the place or places where, subject to the provisions of Section 5.02, the principal of (and premium, if any) and interest, if any, on Securities of the series shall be payable;

         (x)  the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series may be redeemed, in whole or in part, at the option of the Company;

        (xi)  the obligation, if any, of the Company to redeem or purchase Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series shall be redeemed or purchased, in whole or in part, pursuant to such obligation;

       (xii)  if other than denominations of $1,000 and any integral multiple thereof, the denominations in which Registered Securities of the series shall be issuable; and, if other than $5,000 or any integral multiple thereof, the denominations in which Bearer Securities of the series shall be issuable;

      (xiii)  the currency or currencies of denominations of the Securities of any series, which may be in Dollars, any Foreign Currency or any composite currency, and, if any such currency of denomination is a composite currency, the agency or organization, if any, responsible for overseeing such composite currency;

      (xiv)  the currency or currencies in which payment of the principal of (and premium, if any) and interest on the Securities will be made, the currency or currencies, if any, in which payment of the principal of (and premium, if any) or the interest on Registered Securities, at the election of each of the Holders thereof, may also be payable and the periods within which and the terms and conditions upon which such election is to be made and the Exchange Rate and the Exchange Rate Agent;

       (xv)  if the amount of payments of principal of (and premium, if any) or any interest on Securities of the series may be determined with reference to an index, the method or methods by which such amounts shall be determined;

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      (xvi)  whether Securities of the series are to be issuable as Registered Securities, Bearer Securities or both, whether Securities of the series are to be issuable with or without coupons or both and, in the case of Bearer Securities, the date as of which such Bearer Securities shall be dated if other than the date of original issuance of the first Security of such series of like tenor and term to be issued;

     (xvii)  whether, and under what conditions, additional amounts will be payable to Holders of Securities of the series pursuant to Section 5.04;

    (xviii)  whether any of the Securities will be issued as Original Issue Discount Securities and the portion of the principal amount of such Securities which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 7.02;

      (xix)  information with respect to book-entry procedures, if any;

       (xx)  any addition to or change in the Events of Default or covenants of the Company pertaining to the Securities of the series; and

      (xxi)  any other terms of the series.

        All Securities of any one series and the coupons appertaining to Bearer Securities of such series, if any, shall be substantially identical except, in the case of Registered Securities, as to denomination and except as may otherwise be provided in or pursuant to such Board Resolution and set forth, or determined in the manner provided in such Officers' Certificate or in any indenture supplemental hereto.

        Securities of any particular series may be issued at various times, with different dates on which the principal or any installment of principal is payable, with different rates of interest, if any, or different methods by which rates of interest may be determined, with different dates on which such interest may be payable and with different Redemption Dates or Repayment Dates and may be denominated in different currencies or payable in different currencies.

        Notwithstanding Section 3.01(ii) and unless otherwise expressly provided with respect to a series of Securities, the aggregate principal amount of a series of Securities may be increased and additional Securities of such series may be issued up to the maximum aggregate principal amount authorized with respect to such series as increased.

        SECTION 3.02.    Denominations.    The Securities of each series shall be issuable in such form and denominations as shall be specified as contemplated by Section 3.01. In the absence of any specification with respect to the Securities of any series, the Registered Securities of each series shall be issuable only as Securities without coupons in denominations of $1,000 and any integral multiple thereof and the Bearer Securities of each series, if any, shall be issuable with coupons and in denominations of $5,000 and any integral multiple thereof.

        SECTION 3.03.    Execution, Authentication, Delivery and Dating.    The Securities shall be executed on behalf of the Company by its Chairman of the Board, its Chief Financial Officer, its President, a Vice Chairman of the Board, or one of its Vice Presidents or its Treasurer and by its Secretary or one of its Assistant Secretaries. The signatures of any or all of these officers on the Securities may be manual or facsimile. Coupons shall bear the facsimile signature of the Company's Chairman of the Board, its President, a Vice Chairman of the Board, its Chief Financial Officer, one of its Vice Presidents or its Treasurer.

        Securities and coupons bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.

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        At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series, together with any coupons appertaining thereto, executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee shall, upon receipt of the Company Order, authenticate and deliver such Securities as in this Indenture provided and not otherwise; provided, however, that, in connection with its original issuance, no Bearer Security shall be mailed or otherwise delivered to any location in the United States; and provided further that a Bearer Security may be delivered in connection with its original issuance only if the Person entitled to receive such Bearer Security shall have delivered to the Trustee, or such other Person as shall be specified in a temporary Global Security delivered pursuant to Section 3.04, a certificate in the form required by Section 3.11(i).

        If the Company shall establish pursuant to Section 3.01 that the Securities of a series are to be issued in whole or in part in the form of one or more Global Securities in registered or permanent bearer form, then the Company shall execute and the Trustee shall, in accordance with this Section and a Company Order for the authentication and delivery of such Global Securities with respect to such series, authenticate and deliver one or more Global Securities in permanent or temporary form that (i) shall represent and shall be denominated in an aggregate amount equal to the aggregate principal amount of the Outstanding Securities of such series to be represented by one or more Global Securities, (ii) shall be registered, if in registered form, in the name of the Depositary for such Global Security or Securities or the nominee of such Depositary, and (iii) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary's instructions.

        Each Depositary designated pursuant to Section 3.01 for a Global Security in registered form must, at the time of its designation and at all times while it serves as Depositary, be a clearing agency registered under the Exchange Act and any other applicable statute or regulation.

        In authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section 8.01) shall be fully protected in relying upon, an Opinion of Counsel complying with Section 1.02 and stating that:

          (i)  the form of such Securities and coupons, if any, has been established in conformity with the provisions of this Indenture;

         (ii)  the terms of such Securities and coupons, if any, or the manner of determining such terms, have been established in conformity with the provisions of this Indenture; and

        (iii)  that such Securities and coupons, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium and other laws of general applicability relating to or affecting the enforcement of creditors' rights and to general principles of equity.

        The Trustee shall not be required to authenticate such Securities if the issue thereof will adversely affect the Trustee's own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee.

        Notwithstanding the provisions of Section 3.01 and of this Section 3.03, if all Securities of a series are not to be originally issued at one time, it shall not be necessary to deliver the Board Resolution or Officers' Certificate otherwise required pursuant to Section 3.01 or the Company Order and Opinion of Counsel otherwise required pursuant to this Section 3.03 at or prior to the time of authentication of each Security of such series if such documents are delivered at or prior to the authentication upon original issuance of the first Security of such series to be issued and such documents reasonably contemplate the issuance of all Securities of such series; provided that any subsequent request by the

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Company to the Trustee to authenticate Securities of such series upon original issuance shall constitute a representation and warranty by the Company that as of the date of such request, the statements made in the Officers' Certificate or other certificates delivered pursuant to Sections 1.02 and 3.01 shall be true and correct as if made on such date.

        A Company Order, Officers' Certificate or Board Resolution or supplemental indenture delivered by the Company to the Trustee in the circumstances set forth in the preceding paragraph may provide that Securities which are the subject thereof will be authenticated and delivered by the Trustee or its agent on original issue from time to time in the aggregate principal amount, if any, established for such series pursuant to such procedures acceptable to the Trustee as may be specified from time to time by Company Order upon the telephonic (promptly confirmed in writing), electronic or written order of Persons designated in such Company Order, Officers' Certificate, supplemental indenture or Board Resolution and that such Persons are authorized to determine, consistent with such Company Order, Officers' Certificate, supplemental indenture or Board Resolution, such terms and conditions of said Securities as are specified in such Company Order, Officers' Certificate, supplemental indenture or Board Resolution.

        Each Registered Security shall be dated the date of its authentication; and unless otherwise specified as contemplated by Section 3.01, each Bearer Security and any temporary Global Security referred to in Section 3.04 shall be dated as of the date of original issuance of such Security.

        No Security or coupon appertaining thereto shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature of an authorized officer, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Except as permitted by Section 3.06, the Trustee shall not authenticate and deliver any Bearer Security unless all appurtenant coupons for interest then matured have been detached and cancelled. Notwithstanding the foregoing, if any Security or portion thereof shall have been duly authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 3.09 together with a written statement (which need not comply with Section 1.02 and need not be accompanied by an Opinion of Counsel) stating that such Security or portion thereof has never been issued and sold by the Company, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.

        SECTION 3.04.    Temporary Securities.    (a) Pending the preparation of definitive Securities of any series, the Company may execute, and upon Company Order and the receipt of the certifications and opinions required under Sections 3.01 and 3.03, the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denominations, substantially of the tenor of the definitive Securities in lieu of which they are issued in registered form or, if authorized, in bearer form with one or more coupons or without coupons, and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities. In the case of any series which may be issuable as Bearer Securities, such temporary Securities may be in global form, representing such of the Outstanding Securities of such series as shall be specified therein.

        (b)   Unless otherwise provided pursuant to Section 3.01:

          (i)  Except in the case of temporary Securities in global form, each of which shall be exchanged in accordance with the provisions of the following paragraphs, if temporary Securities of any series are issued, the Company will cause definitive Securities of such series to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities of such series shall be exchangeable for definitive Securities of such series upon surrender of the

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temporary Securities of such series at the office or agency of the Company in a Place of Payment for that series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any series (accompanied, if applicable, by all unmatured coupons and all matured coupons in default appertaining thereto), the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities of such series of authorized denominations; provided, however, that no definitive Bearer Security shall be delivered in exchange for a temporary Registered Security; and provided further that a definitive Bearer Security shall be delivered in exchange for a temporary Bearer Security only in compliance with the conditions set forth in the provisions of the third paragraph of Section 3.03. Until so exchanged, the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series.

         (ii)  If temporary Securities of any series are issued in global form, any such temporary Global Security shall, unless otherwise provided in such temporary Global Security, be delivered to the London office of a depositary or common depositary (the "Common Depositary"), for the benefit of the operator of Euroclear and Clearstream, for credit to the respective accounts of the beneficial owners of such Securities (or to such other accounts as they may direct). Upon receipt of written instructions (which need not comply with Section 1.02) signed on behalf of the Company by any Person authorized to give such instructions, the Trustee or any Authenticating Agent shall endorse such temporary Global Security to reflect the initial principal amount, or an increase in the principal amount, of Outstanding Securities represented thereby. Until such initial endorsement, such temporary Global Security shall not evidence any obligation of the Company. Such temporary Global Security shall at any time represent the aggregate principal amount of Outstanding Securities theretofore endorsed thereon as provided above, subject to reduction to reflect exchanges as described below.

        (iii)  Unless otherwise specified in such temporary Global Security, and subject to the second proviso in the following paragraph, the interest of a beneficial owner of Securities of a series in a temporary Global Security shall be exchanged for definitive Securities (including a definitive Global Bearer Security) of such series and of like tenor following the Global Exchange Date (as defined below) when the account holder instructs Euroclear or Clearstream, as the case may be, to request such exchange on his behalf and delivers to Euroclear or Clearstream, as the case may be, a certificate in the form required by Section 3.11(i), dated no earlier than 15 days prior to the Global Exchange Date, copies of which certificate shall be available from the offices of Euroclear and Clearstream, the Trustee, any Authenticating Agent appointed for such series of Securities and each Paying Agent. Unless otherwise specified in such temporary Global Security, any such exchange shall be made free of charge to the beneficial owners of such temporary Global Security, except that a Person receiving definitive Securities must bear the cost of insurance, postage, transportation and the like in the event that such Person does not take delivery of such definitive Securities in person at the offices of Euroclear or Clearstream. Definitive Securities in bearer form to be delivered in exchange for any portion of a temporary Global Security shall be delivered only outside the United States.

        (iv)  Without unnecessary delay but in any event not later than the date specified in, or determined pursuant to the terms of, any such temporary Global Security as the "Global Exchange Date" (the "Global Exchange Date"), the Company shall deliver to the Trustee, or, if the Trustee appoints an Authenticating Agent pursuant to Section 8.14, to any such Authenticating Agent, definitive Securities in aggregate principal amount equal to the principal amount of such temporary Global Security, executed by the Company. Unless otherwise specified as contemplated by Section 3.01, such definitive Securities shall be in the form of Bearer Securities or Registered Securities, or any combination thereof, as may be specified by the Company. On or after the Global Exchange Date, such temporary Global Security shall be surrendered by the Common

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Depositary to the Trustee or any such Authenticating Agent, as the Company's agent for such purpose, to be exchanged, in whole or from time to time in part, for definitive Securities without charge and the Trustee or any such Authenticating Agent shall authenticate and deliver, in exchange for each portion of such temporary Global Security, an equal aggregate principal amount of definitive Securities of the same series, of authorized denominations and of like tenor as the portion of such temporary Global Security to be exchanged, which, except as otherwise specified as contemplated by Section 3.01, shall be in the form of Bearer Securities or Registered Securities, or any combination thereof; provided, however, that, unless otherwise specified in such temporary Global Security, upon such presentation by the Common Depositary, such temporary Global Security is accompanied by a certificate dated the Global Exchange Date or a subsequent date and signed by Euroclear as to the portion of such temporary Global Security held for its account then to be exchanged and a certificate dated the Global Exchange Date or a subsequent date and signed by Clearstream, as to the portion of such temporary Global Security held for its account then to be exchanged, each in the form required by Section 3.11(ii); and provided further that a definitive Bearer Security (including a definitive global Bearer Security) shall be delivered in exchange for a portion of a temporary Global Security only in compliance with the conditions set forth in the provisions of the third paragraph of Section 3.03.

         (v)  Upon any exchange of a portion of any such temporary Global Security, such temporary Global Security shall be endorsed by the Trustee or any such Authenticating Agent, as the case may be, to reflect the reduction of the principal amount evidenced thereby, whereupon its remaining principal amount shall be reduced for all purposes by the amount so exchanged. Until so exchanged in full, such temporary Global Security shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series authenticated and delivered hereunder, except that, unless otherwise specified as contemplated by Section 3.01, interest payable on such temporary Global Security on an Interest Payment Date for Securities of such series occurring prior to the applicable Global Exchange Date shall be payable, without interest, to Euroclear and Clearstream on or after such Interest Payment Date upon delivery by Euroclear and Clearstream to the Trustee or the Paying Agent, as the case may be, of a certificate or certificates in the form required by Section 3.11(iii), for credit on or after such Interest Payment Date to the respective accounts of the Persons who are the beneficial owners of such temporary Global Security on such Interest Payment Date and who have each delivered to Euroclear or Clearstream, as the case may be, a certificate in the form required by Section 3.11(iv). Any interest so received by Euroclear and Clearstream and not paid as herein provided prior to the Global Exchange Date shall be returned to the Trustee or Paying Agent, as the case may be, which, upon expiration of two years after such Interest Payment Date, shall repay such interest to the Company on Company Request in accordance with Section 5.03.

        SECTION 3.05.    Registration, Registration of Transfer and Exchange.    With respect to Registered Securities, the Company shall keep or cause to be kept a register (sometimes referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Registered Securities and the registration of transfers of Registered Securities and the Company shall appoint a "Security Registrar", and may appoint any "Co-Security Registrar" as may be appropriate, to keep the Security Register. The Trustee is hereby initially appointed Security Registrar with respect to the series of Securities for which it is acting as Trustee. Such Security Register shall be in written form or in any other form capable of being converted into written form within a reasonable time. At all reasonable times the information contained in such Security Register shall be available for inspection by the Trustee at the office of the Security Registrar. In the event that any Registered Securities issued hereunder have The City of New York as a Place of Payment, the Company shall appoint either a Security Registrar or Co-Security Registrar located in The City of New York.

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        Upon surrender for registration of transfer of any Registered Security of any series at the office or agency of the Company maintained pursuant to Section 5.02 for such purpose in a Place of Payment for such series, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Registered Securities of such series of any authorized denominations and of a like aggregate principal amount, tenor and Stated Maturity.

        At the option of the Holder, Registered Securities of any series may be exchanged for other Registered Securities of such series, of any authorized denominations and of like aggregate principal amount, tenor and Stated Maturity, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive.

        Registered Securities may not be exchanged for Bearer Securities. Bearer Securities may not be exchanged for Bearer Securities of other authorized denominations.

        At the option of the Holder, Bearer Securities of any series may be exchanged for Registered Securities of the same series of any authorized denominations and of a like aggregate principal amount and tenor, upon surrender of the Bearer Securities to be exchanged at any such office or agency, with all unmatured coupons and all matured coupons in default thereto appertaining. If the Holder of a Bearer Security is unable to produce any such unmatured coupon or coupons or matured coupon or coupons in default, such exchange may be effected if the Bearer Securities are accompanied by payment in funds acceptable to the Company in an amount equal to the face amount of such missing coupon or coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there be furnished to them such security or indemnity as they may require to save each of them and any Paying Agent harmless. If thereafter the Holder of such Security shall surrender to any Paying Agent any such missing coupon in respect of which such a payment shall have been made, such Holder shall be entitled to receive the amount of any such payment from the Company; provided, however, that interest represented by coupons shall be payable only upon presentation and surrender of those coupons at an office or agency of a Paying Agent, maintained pursuant to Section 5.02 for such purpose, located outside the United States. Notwithstanding the foregoing, in case a Bearer Security of any series is surrendered at any such office or agency in exchange for a Registered Security of the same series and like tenor after the close of business at such office or agency on (i) any Regular Record Date and before the opening of business at such office or agency on the relevant Interest Payment Date, or (ii) any Special Record Date and before the opening of business at such office or agency on the related date for payment of Defaulted Interest, such Bearer Security shall be surrendered without the coupon relating to such Interest Payment Date or proposed date for payment, as the case may be.

        Notwithstanding any other provision of this Section, unless and until it is exchanged in whole or in part for individual Securities represented thereby, a Global Security representing all or a portion of the Securities of a series may not be transferred except as a whole by the Depositary for such series to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor Depositary for such series or a nominee of such successor Depositary.

        Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive.

        If at any time the Depositary for the Securities of a series notifies the Company that it is unwilling or unable to continue as Depositary for the Securities of such series or if at any time the Depositary for the Securities of such series shall no longer be eligible under Section 3.03, the Company shall appoint a successor Depositary with respect to the Securities of such series. If a successor Depositary

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for the Securities of such series is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility, the Company's election pursuant to Section 3.01(vii) shall no longer be effective with respect to the Securities of such series and the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive Securities of such series, will authenticate and deliver Securities of such series of like tenor and terms in definitive form in an aggregate principal amount equal to the principal amount of the Global Security or Securities representing such series in exchange for such Global Security or Securities.

        The Company may at any time and in its sole discretion determine that the Securities of any series issued in the form of one or more Global Securities shall no longer be represented by such Global Security or Securities. In such event, the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive Securities of such series, will authenticate and deliver, Securities of such series of like tenor and terms in definitive form in an aggregate principal amount equal to the principal amount of the Global Security or Securities representing such series in exchange for such Global Security or Securities.

        If specified by the Company pursuant to Section 3.01 with respect to a series of Securities, the Depositary for such series of Securities may surrender a Global Security for such series of Securities in exchange in whole or in part for Securities of such series of like tenor and terms and in definitive form on such terms as are acceptable to the Company, the Trustee and such Depositary. Thereupon, the Company shall execute, and the Trustee upon receipt of a Company Order for the authentication and delivery of definitive Securities of such series, shall authenticate and deliver, without service charge:

        (a)   to the Depositary or to each Person specified by such Depositary a new Security or Securities of the same series, of like tenor and terms and of any authorized denomination as requested by such Person in aggregate principal amount equal to and in exchange for such Person's beneficial interest in the Global Security; and

        (b)   to such Depositary a new Global Security of like tenor and terms and in an authorized denomination equal to the difference, if any, between the principal amount of the surrendered Global Security and the aggregate principal amount of Securities delivered to Holders thereof.

        In any exchange provided for in any of the preceding three paragraphs, the Company will execute and the Trustee, pursuant to a Company Order, will authenticate and deliver, Securities (a) in definitive registered form in authorized denominations, if the Securities of such series are issuable as Registered Securities, (b) in definitive bearer form in authorized denominations, with coupons attached, if the Securities of such series are issuable as Bearer Securities or (c) as either Registered or Bearer Securities, if the Securities of such series are issuable in either form; provided, however, that no definitive Bearer Security shall be delivered in exchange for a temporary Global Security other than in accordance with the provisions of Sections 3.03 and 3.04.

        Upon the exchange of Global Securities for Securities in definitive form, such Global Securities shall be cancelled by the Trustee. Registered Securities issued in exchange for a Global Security pursuant to this Section 3.05 shall be registered in such names and in such authorized denominations, and delivered to such addresses, as the Depositary for such Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee in writing. The Trustee shall deliver such Registered Securities to the Persons in whose names such Securities are so registered or to the Depositary. The Trustee shall deliver Bearer Securities issued in exchange for a Global Security pursuant to this Section 3.05 to the Depositary or to the Persons at such addresses, and in such authorized denominations, as the Depositary for such Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee in writing; provided, however, that no definitive Bearer Security shall be delivered in exchange for a temporary Global Security other than in accordance with the provisions of Sections 3.03 and 3.04.

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        All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange.

        Every Security presented or surrendered for registration of transfer or exchange shall (if so required by the Company or the Security Registrar) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing.

        Unless otherwise provided in the Securities to be registered for transfer or exchanged, no service charge shall be made for any registration of transfer or exchange of Securities, but the Company may (unless otherwise provided in such Securities) require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges expressly provided in this Indenture to be made at the Company's own expense or without expense or without charge to the Holders.

        Neither the Company, the Security Registrar nor any Co-Security Registrar shall be required (i) to issue, register the transfer of or exchange any Securities of any series during a period beginning at the opening of business 15 days before the day of selection of Securities of such series to be redeemed and ending at the close of business on (A) if Securities of the series are issuable only as Registered Securities, the day of the mailing of the relevant notice of redemption of Registered Securities of such series so selected for redemption or (B) if Securities of the series are issuable as Bearer Securities, the day of the first publication of the relevant notice of redemption or, if Securities of the series are also issuable as Registered Securities and there is no publication, the mailing of the relevant notice of redemption, or (ii) to register the transfer or exchange of any Securities or portions thereof so selected for redemption.

        Notwithstanding anything herein to the contrary, the exchange of Bearer Securities into Registered Securities shall be subject to applicable laws and regulations in effect at the time of exchange; none of the Company, the Trustee nor the Security Registrar shall exchange any Bearer Securities into Registered Securities if it has received an Opinion of Counsel that as a result of such exchanges the Company would suffer adverse consequences under the United States Federal income tax laws and regulations then in effect and the Company has delivered to the Trustee a Company Order directing the Trustee not to make such exchanges unless and until the Trustee receives a subsequent Company Order to the contrary. The Company shall deliver copies of such Company Orders to the Security Registrar.

        SECTION 3.06.    Mutilated, Destroyed, Lost and Stolen Securities.    If (i) any mutilated Security or Security with a mutilated coupon is surrendered to the Trustee or the Security Registrar, or if the Company, the Trustee and the Security Registrar receive evidence to their satisfaction of the destruction, loss or theft of any Security or coupon and (ii) there is delivered to the Company, the Trustee and the Security Registrar such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company, the Trustee or the Security Registrar that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and deliver, in lieu of any such mutilated, destroyed, lost or stolen Security or in exchange for the Security to which a mutilated, destroyed, lost or stolen coupon appertains (with all appurtenant coupons not mutilated, destroyed, lost or stolen), a new Security of the same series and Stated Maturity and of like tenor and principal amount, bearing a number not contemporaneously outstanding and, if applicable, with coupons corresponding to the coupons appertaining thereto; provided, however, that any new Bearer Security will be delivered only in compliance with the conditions set forth in Section 3.05.

        In case any such mutilated, destroyed, lost or stolen Security or coupon has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay

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such Security; provided, however, that payment of principal of (and premium, if any) and any interest on Bearer Securities shall be payable only at an office or agency located outside the United States, and, in the case of interest, unless otherwise specified as contemplated by Section 3.01, only upon presentation and surrender of the coupons appertaining thereto.

        Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

        Every new Security of any series, with its coupons, if any, issued pursuant to this Section in lieu of any destroyed, lost or stolen Security, or in exchange for a Security with a destroyed, lost or stolen coupon, shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security and its coupons, if any, or the destroyed, lost or stolen coupon shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of the same series and their coupons, if any, duly issued hereunder.

        The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities or coupons.

        SECTION 3.07.    Payment of Interest; Interest Rights Preserved.    Unless otherwise provided as contemplated by Section 3.01, interest on any Registered Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall unless otherwise provided in such Security be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest. Unless otherwise specified as contemplated by Section 3.01, in case a Bearer Security of any series is surrendered in exchange for a Registered Security of such series after the close of business (at an office or agency referred to in Section 3.05) on any Regular Record Date and before the opening of business (at such office or agency) on the next succeeding Interest Payment Date, such Bearer Security shall be surrendered without the coupon relating to such Interest Payment Date and interest will not be payable on such Interest Payment Date in respect of the Registered Security issued in exchange for such Bearer Security, but will be payable only to the Holder of such coupon when due in accordance with the provisions of this Indenture. At the option of the Company, payment of interest on any Registered Security may be made by check in the currency designated for such payment pursuant to the terms of such Registered Security mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or by wire transfer to an account in such currency designated by such Person in writing not later than ten days prior to the date of such payment.

        Any interest on any Registered Security which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of his having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (i) or clause (ii) below.

          (i)  The Company may elect to make payments of any Defaulted Interest to the Persons in whose names any such Registered Securities (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Registered Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted

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Interest as in this clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class, postage prepaid, to each Holder at his address as it appears in the Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names such Registered Securities (or their respective Predecessor Securities) are registered on such Special Record Date and shall no longer be payable pursuant to the following clause (ii). In case a Bearer Security of any series is surrendered at the office or agency in a Place of Payment for such series in exchange for a Registered Security of such series after the close of business at such office or agency on any Special Record Date and before the opening of business at such office or agency on the related proposed date of payment of Defaulted Interest, such Bearer Security shall be surrendered without the coupon relating to such proposed date for payment and Defaulted Interest will not be payable on such proposed date for payment in respect of the Registered Security issued in exchange for such Bearer Security, but will be payable only to the Holder of such coupon when due in accordance with the provisions of this Indenture.

         (ii)  The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities with respect to which there exists such default may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such payment shall be deemed practicable by the Trustee.

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        Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of, or in exchange for, or in lieu of, any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security.

        Subject to the limitations set forth in Section 5.02, the Holder of any coupon appertaining to a Bearer Security shall be entitled to receive the interest payable on such coupon upon presentation and surrender of such coupon on or after the Interest Payment Date of such coupon at an office or agency maintained for such purpose pursuant to Section 5.02.

        SECTION 3.08.    Persons Deemed Owners.    Title to any Bearer Security, any coupons appertaining thereto and any temporary Global Security shall pass by delivery.

        Prior to due presentment for registration of transfer of any Registered Security, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of, premium, if any, and (subject to Section 3.07) interest on such Security, and for all purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.

        The Company, the Trustee and any agent of the Company or the Trustee may treat the bearer of any Bearer Security and the bearer of any coupon as the absolute owner of such Security or coupon for the purpose of receiving payment thereof or on account thereof and for all other purposes whatsoever, whether or not such Security or coupon be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.

        None of the Company, the Trustee, any Paying Agent, any Authenticating Agent or the Security Registrar will have the responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interest of a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interest, and they shall be fully protected in acting or refraining from acting on any such information provided by the Depositary.

        SECTION 3.09.    Cancellation.    Unless otherwise provided with respect to a series of Securities, all Securities and coupons surrendered for payment, registration of transfer, exchange, repayment or redemption shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee. All Securities so delivered or surrendered directly to the Trustee for any such purpose shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly cancelled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by this Indenture or such Securities. All cancelled Securities or coupons held by the Trustee shall be disposed of by the Trustee in accordance with its customary procedures and the Trustee shall deliver a certificate of such disposition to the Company.

        SECTION 3.10.    Computation of Interest.    Except as otherwise specified as contemplated by Section 3.01 for Securities of any series, interest on the Securities of each series shall be computed on the basis of a 360-day year consisting of twelve 30-day months.

        SECTION 3.11.    Form of Certification.    Unless otherwise provided pursuant to Section 3.01:

          (i)  Whenever any provision of this Indenture or the forms of Securities contemplate that certification be given by a Person entitled to receive a Bearer Security, such certification shall be provided substantially in the form of Exhibit A hereto, with only such changes as shall be approved by the Company.

         (ii)  Whenever any provision of this Indenture or the forms of Securities contemplate that certification be given by Euroclear and Clearstream in connection with the exchange of a portion

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of a temporary Global Security, such certification shall be provided substantially in the form of Exhibit B hereto, with only such changes as shall be approved by the Company.

        (iii)  Whenever any provision of the Indenture or the forms of Securities contemplate that certification be given by Euroclear and Clearstream in connection with payment of interest with respect to a temporary Global Security prior to the related Global Exchange Date, such certification shall be provided substantially in the form of Exhibit C hereto, with only such changes as shall be approved by the Company.

        (iv)  Whenever any provision of the Indenture or the forms of Securities contemplate that certification be given by a beneficial owner of a portion of a temporary Global Security in connection with payment of interest with respect to a temporary Global Security prior to the related Global Exchange Date, such certification shall be provided substantially in the form of Exhibit D hereto, with only such changes as shall be approved by the Company.

        SECTION 3.12.    Judgments.    The Company may provide, pursuant to Section 3.01, for the Securities of any series that, to the fullest extent possible under applicable law and except as may otherwise be specified as contemplated in Section 3.01, (a) the obligation, if any, of the Company to pay the principal of (and premium, if any) and interest on the Securities of any series and any appurtenant coupons in a Foreign Currency, composite currency or Dollars (the "Designated Currency") as may be specified pursuant to Section 3.01 is of the essence and agrees that judgments in respect of such Securities shall be given in the Designated Currency; (b) the obligation of the Company to make payments in the Designated Currency of the principal of (and premium, if any) and interest on such Securities and any appurtenant coupons shall, notwithstanding any payment in any other currency (whether pursuant to a judgment or otherwise), be discharged only to the extent of the amount in the Designated Currency that the Holder receiving such payment may, in accordance with normal banking procedures, purchase with the sum paid in such other currency (after any premium and cost of exchange) in the country of issue of the Designated Currency in the case of Foreign Currency or Dollars or in the international banking community in the case of a composite currency on the Business Day immediately following the day on which such Holder receives such payment; (c) if the amount in the Designated Currency that may be so purchased for any reason falls short of the amount originally due, the Company shall pay such additional amounts as may be necessary to compensate for such shortfall; and (d) any obligation of the Company not discharged by such payment shall be due as a separate and independent obligation and, until discharged as provided herein, shall continue in full force and effect.

        SECTION 3.13.    CUSIP Numbers.    The Company in issuing the Securities may use "CUSIP" numbers or Euroclear or Clearstream reference numbers (if then generally in use), and if, so, the Trustee shall use such numbers in notices of redemption or other related material as a convenience to Holders; provided that any such notice or other related material may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of redemption or other related material and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers.

ARTICLE FOUR
Redemption of Securities

        SECTION 4.01.    Applicability of Article.    Securities of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and, except as otherwise specified as contemplated by Section 3.01 for Securities of any series, in accordance with this Article.

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        SECTION 4.02.    Election To Redeem; Notice to Trustee.    The election of the Company to redeem any Securities redeemable at the option of the Company shall be evidenced by an Officers' Certificate. In case of any redemption at the election of the Company of the Securities of any series, the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee in the Trustee's sole discretion), notify the Trustee and the Security Registrar of such Redemption Date and of the principal amount of Securities of such series to be redeemed. In the case of any redemption of Securities (i) prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, or (ii) pursuant to an election of the Company which is subject to a condition specified in the terms of such Securities, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with such restriction or condition.

        SECTION 4.03.    Selection by Security Registrar of Securities To Be Redeemed.    If less than all the Securities of any series with the same terms are to be redeemed, the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Security Registrar from the Outstanding Securities of such series having such terms not previously called for redemption, by such method as the Security Registrar shall deem fair and appropriate and which may provide for the selection for redemption of portions of the principal amount of Securities of such series of a denomination equal to or larger than the minimum authorized denomination for Securities of such series. Unless otherwise provided by the terms of the Securities of any series so selected for partial redemption, the portions of the principal of Securities of such series so selected for partial redemption shall be, in the case of Registered Securities, equal to $1,000 or an integral multiple thereof or, in the case of Bearer Securities, equal to $5,000 or an integral multiple thereof, and the principal amount of any such Security which remains outstanding shall not be less than the minimum authorized denomination for Securities of such series.

        The Security Registrar shall promptly notify the Company, the Trustee and the Co-Security Registrar, if any, in writing of the Securities selected for redemption and, in the case of any Security selected for partial redemption, the principal amount thereof to be redeemed.

        For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal of such Security which has been or is to be redeemed.

        SECTION 4.04.    Notice of Redemption.    Notice of redemption shall be given in the manner provided in Section 1.06, not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed.

        All notices of redemption shall state:

          (i)  the Redemption Date;

         (ii)  the Redemption Price;

        (iii)  if less than all Outstanding Securities of any series having the same terms are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the particular Securities to be redeemed;

        (iv)  that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed, and that interest, if any, thereon shall cease to accrue on and after said date;

         (v)  the place or places where such Securities, together in the case of Bearer Securities with all remaining coupons appertaining thereto, if any, maturing after the Redemption Date, are to be surrendered for payment of the Redemption Price;

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        (vi)  that the redemption is from a sinking fund, if such is the case; and

       (vii)  the CUSIP number or the Euroclear or the Clearstream reference number (or any other number used by a Depositary to identify such Securities), if any, of the Securities to be redeemed.

        A notice of redemption published as contemplated by Section 1.06 need not identify particular Registered Securities to be redeemed.

        Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, on Company Request, by the Trustee in the name and at the expense of the Company. The notice if mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. In any case, a failure to give such notice by mail or any defect in the notice to the Holder of any Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security.

        SECTION 4.05.    Deposit of Redemption Price.    At or prior to the opening of business on any Redemption Date, the Company shall deposit or cause to be deposited with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 5.03) an amount of money sufficient to pay the Redemption Price of all the Securities which are to be redeemed on that date; provided, however, that deposits with respect to Bearer Securities shall be made with a Paying Agent or Paying Agents located outside the United States except as otherwise provided in Section 5.02, unless otherwise specified as contemplated by Section 3.01.

        SECTION 4.06.    Securities Payable on Redemption Date.    Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and from and after such date (unless the Company shall default in the payment of the Redemption Price) such Securities shall cease to bear interest and the coupons for such interest appertaining to any Bearer Securities so to be redeemed, except to the extent provided below, shall be void. Upon surrender of any such Securities for redemption in accordance with said notice, such Securities shall be paid by the Company at the Redemption Price; provided, however, that installments of interest on Bearer Securities whose Stated Maturity is on or prior to the Redemption Date shall be payable only at an office or agency located outside the United States and, unless otherwise specified as contemplated by Section 3.01, only upon presentation and surrender of coupons for such interest. Installments of interest on Registered Securities whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such on the close of business on the relevant Regular Record Dates according to their terms and the provisions of Section 3.07.

        If any Bearer Security surrendered for redemption shall not be accompanied by all appurtenant coupons maturing after the Redemption Date, such Security may be paid after deducting from the Redemption Price an amount equal to the face amount of all such missing coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there be furnished to them such security or indemnity as they may require to save each of them and any Paying Agent harmless. If thereafter the Holder of such Security shall surrender to the Trustee or any Paying Agent any such missing coupon in respect of which a deduction shall have been made from the Redemption Price, such Holder shall be entitled to receive the amount so deducted; provided, however, that interest represented by coupons shall be payable only at an office or agency located outside the United States and, unless otherwise specified as contemplated by Section 3.01, only upon presentation and surrender of those coupons.

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        If any Security called for redemption shall not be paid upon surrender thereof for redemption, the principal shall, until paid, bear interest from the Redemption Date at the rate borne by such Security, or as otherwise provided in such Security.

        SECTION 4.07.    Securities Redeemed in Part.    Any Security which is to be redeemed only in part shall be surrendered at the office or agency of the Company in a Place of Payment therefor (with, if the Company or the Security Registrar so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder of such Security or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities of the same series and Stated Maturity, containing identical terms and conditions, of any authorized denominations as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered.

ARTICLE FIVE
Covenants

        SECTION 5.01.    Payment of Principal, Premium and Interest.    The Company covenants and agrees for the benefit of each series of Securities that it will duly and punctually pay the principal of, premium, if any, and interest on the Securities of such series in accordance with the terms of the Securities of such series, any coupons appertaining thereto and this Indenture. Unless otherwise specified as contemplated by Section 3.01 with respect to any series of Securities, any interest due on Bearer Securities on or before Maturity shall be payable only outside the United States upon presentation and surrender of the several coupons for such interest installments as are evidenced thereby as they severally mature.

        SECTION 5.02.    Maintenance of Office or Agency.    If Securities of a series are issuable only as Registered Securities, the Company will maintain in each Place of Payment for any series of Securities an office or agency where Securities of that series may be presented or surrendered for payment, where Securities of that series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and of any change in the location, of such office or agency. If Securities of a series may be issuable as Bearer Securities, the Company will maintain (A) in the Borough of Manhattan, The City of New York, an office or agency where any Registered Securities of that series may be presented or surrendered for payment, where any Registered Securities of that series may be surrendered for registration of transfer, where Securities of that series may be surrendered for exchange and where notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be served, (B) subject to any laws or regulations applicable thereto, in a Place of Payment for that series which is located outside the United States, an office or agency where Securities of that series and related coupons may be presented and surrendered for payment (including payment of any additional amounts payable on Securities of that series pursuant to Section 5.04); provided, however, that if the Securities of that series are listed on The International Stock Exchange of the United Kingdom and the Republic of Ireland Limited or the Luxembourg Stock Exchange or any other stock exchange located outside the United States and such stock exchange shall so require, the Company will maintain a Paying Agent for the Securities of that series in London or Luxembourg or any other required city located outside the United States, as the case may be, so long as the Securities of that series are listed on such exchange, and (C) subject to any laws or regulations applicable thereto, in a Place of Payment for such series located outside the United States an office or agency where any Registered Securities of that series may be surrendered for registration of transfer, where Securities of that series may be surrendered for exchange and where notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be served. The Company will give prompt written notice to the Trustee

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of the location, and any change in the location, of any such office or agency. If at any time the Company shall fail to maintain any such required office or agency in respect of any series of Securities or shall fail to furnish the Trustee with the address thereof, such presentations, and surrenders of Securities of that series may be made and notices and demands may be made or served at the Principal Corporate Trust Office of the Trustee, except that Bearer Securities of that series and the related coupons may be presented and surrendered for payment (including payment of any additional amounts payable on Bearer Securities of that series pursuant to Section 5.04) at the place specified for the purpose as contemplated by Section 3.01, and the Company hereby appoints the Trustee as its agent to receive such respective presentations, surrenders, notices and demands.

        Except as otherwise provided in the form of Bearer Security of any particular series pursuant to the provisions of this Indenture, no payment of principal, premium or interest on Bearer Securities shall be made at any office or agency of the Company in the United States or by check mailed to any address in the United States or by transfer to an account maintained with a bank located in the United States; provided, however, payment of principal of and any premium and interest denominated in Dollars (including additional amounts payable in respect thereof) on any Bearer Security may be made at an office or agency of, and designated by, the Company located in the United States if (but only if) payment of the full amount of such principal, premium, interest or additional amounts in Dollars at all offices outside the United States maintained for the purpose by the Company in accordance with this Indenture is illegal or effectively precluded by exchange controls or similar restrictions and the Trustee receives an Opinion of Counsel that such payment within the United States is legal. Unless otherwise provided as contemplated by Section 3.01 with respect to any series of Securities, at the option of the Holder of any Bearer Security or related coupon, payment may be made by check in the currency designated for such payment pursuant to the terms of such Bearer Security presented or mailed to an address outside the United States or by transfer to an account in such currency maintained by the payee with a bank located outside the United States.

        The Company may also from time to time designate one or more other offices or agencies where the Securities of one or more series may be presented or surrendered for any or all of such purposes specified above in this Section and may constitute and appoint one or more Paying Agents for the payment of such Securities, in one or more other cities, and may from time to time rescind such designations and appointments; provided, however, that no such designation, appointment or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment for Securities of any series for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. Unless and until the Company rescinds one or more such appointments, the Company hereby appoints the Trustee, acting through its office or agency in The City of New York, as its Paying Agent in The City of New York with respect to all series of Securities having a Place of Payment in The City of New York.

        SECTION 5.03.    Money for Security Payments To Be Held in Trust.    If the Company shall at any time act as its own Paying Agent for any series of Securities, it will, on or before each due date of the principal of, premium, if any, or interest on any of the Securities of such series and any appurtenant coupons, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal, premium or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee of its action or failure so to act.

        Whenever the Company shall have one or more Paying Agents for any series of Securities, it will, at or prior to the opening of business on each due date of the principal of, premium, if any, or interest on any Securities of such series and any appurtenant coupons, deposit with a Paying Agent a sum sufficient to pay the principal, premium or interest so becoming due, such sum to be held in trust for

29

the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act.

        The Company will cause each Paying Agent other than the Trustee for any series of Securities to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee subject to the provisions of this Section, that such Paying Agent will:

          (i)  hold all sums held by it for the payment of principal of, premium, if any, or interest on Securities of such series and any appurtenant coupons in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided;

         (ii)  give the Trustee notice of any default by the Company (or any other obligor upon the Securities of such series) in the making of any payment of principal, premium or interest on the Securities of such series or any appurtenant coupons; and

        (iii)  at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent.

        The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent, and, upon such payments by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.

        Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Security of any series or any appurtenant coupons and remaining unclaimed for two years after such principal, premium or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security or any coupon appertaining thereto shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in an Authorized Newspaper in each Place of Payment, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.

        SECTION 5.04.    Additional Amounts.    If the Securities of a series provide for the payment of additional amounts, the Company will pay to the Holder of any Security of any series or any coupon appertaining thereto additional amounts as provided therein. Whenever in this Indenture there is mentioned, in any context, the payment of the principal of (or premium, if any) or interest on, or in respect of, any Security of any series or payment of any related coupon or the net proceeds received on the sale or exchange of any Security of any series, such mention shall be deemed to include mention of the payment of additional amounts provided for in this Section to the extent that, in such context, additional amounts are, were or would be payable in respect thereof pursuant to the provisions of this Section and express mention of the payment of additional amounts (if applicable) in any provisions hereof shall not be construed as excluding additional amounts in those provisions hereof where such express mention is not made.

        If the Securities of a series provide for the payment of additional amounts, at least 10 days prior to the first Interest Payment Date with respect to that series of Securities (or if the Securities of that series will not bear interest prior to Maturity, the first day on which a payment of principal (and

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premium, if any) is made), and at least 10 days prior to each date of payment of principal (and premium, if any) or interest if there has been any change with respect to the matters set forth in the below-mentioned Officers' Certificate, the Company will furnish the Trustee and the Company's Principal Paying Agent or Paying Agents, if other than the Trustee, with an Officers' Certificate instructing the Trustee and such Paying Agent or Paying Agents whether such payment of principal of (and premium, if any) or interest on the Securities of that series shall be made to Holders of Securities of that series or any related coupons who are United States Aliens without withholding for or on account of any tax, assessment or other governmental charge described in the Securities of that series. If any such withholding shall be required, then such Officers' Certificate shall specify by country the amount, if any, required to be withheld on such payments to such Holders of Securities or coupons and the Company will pay to the Trustee or such Paying Agent the additional amounts required by this Section. The Company covenants to indemnify the Trustee and any Paying Agent for, and to hold them harmless against, any loss, liability or reasonable expense incurred without negligence or bad faith on their part arising out of or in connection with actions taken or omitted by any of them in reliance on any Officers' Certificate furnished pursuant to this Section.

        SECTION 5.05.    Statement as to Compliance.    The Company will deliver to the Trustee, within 120 days after the end of each fiscal year of the Company, commencing with the first calendar year following the issuance of Securities of any series under this Indenture, an Officers' Certificate (which need not comply with Section 1.02) (provided, however, that one of the signatories of which shall be the Company's principal executive officer, principal financial officer or principal accounting officer) covering the preceding calendar year (or portion thereof) stating, as to each signer thereof, that:

          (i)  a review of the activities of the Company during such year and of performance under this Indenture and under the terms of the Securities has been made under his supervision; and

         (ii)  to the best of his knowledge, based on such review, (a) the Company has fulfilled all its obligations and complied with all conditions and covenants under this Indenture and under the terms of the Securities throughout such year, in all material respects, or, if there has been a default in the fulfillment of any such obligation, condition or covenant specifying each such default known to him and the nature and status thereof, and (b) no event has occurred and is occurring which is, or after notice or lapse of time or both would become, an Event of Default, or if such an event has occurred and is continuing, specifying such event known to him and the nature and status thereof.

        For purposes of this Section, compliance or default shall be determined without regard to any period of grace or requirement of notice provided for herein.

        SECTION 5.06.    Maintenance of Corporate Existence, Rights and Franchises.    So long as any of the Securities shall be Outstanding, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights and franchises to carry on its business; provided, however, that nothing in this Section 5.06 shall (i) require the Company to preserve any such right or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the Holders, (ii) prevent any consolidation or merger of the Company, or any conveyance or transfer of its property and assets substantially as an entirety to any person, permitted by Article Ten, or (iii) prevent the liquidation or dissolution of the Company after any conveyance or transfer of its property and assets substantially as an entirety to any person permitted by Article Ten.

        SECTION 5.07.    Limitation on Disposition of Stock of Banks.    So long as any Securities shall be Outstanding, neither the Company nor any Intermediate Subsidiary (as hereinafter defined) will (except to the Company or an Intermediate Subsidiary) sell, assign, transfer, grant a security interest in or otherwise dispose of any shares of, securities convertible into, or options, warrants or rights to subscribe

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for or purchase shares of voting stock of City National Bank (the "Bank"), nor will the Company or any Intermediate Subsidiary permit the Bank to issue (except to the Company or an Intermediate Subsidiary) any shares of, or securities convertible into, or options, warrants or rights to subscribe for or purchase shares of, voting stock of the Bank, nor will the Company permit any Intermediate Subsidiary that owns any shares of, or securities convertible into, or options, warrants or rights to subscribe for or purchase shares of, voting stock of the Bank to cease to be an Intermediate Subsidiary (unless, after giving effect thereto, the Company and all Intermediate Subsidiaries taken together shall continue to own at least 80% of the voting stock of the Bank then issued and outstanding), except that (i) the Company or an Intermediate Subsidiary may make any such sale, assignment, transfer, or grant of a security interest or other disposition for fair market value on the date thereof, as determined by the Board of Directors of the Company or such Intermediate Subsidiary, as the case may be (which determination shall be conclusive), and evidenced by a duly adopted resolution thereof, and (ii) in each such case, after giving effect thereto, the Company and any one or more Intermediate Subsidiaries will own at least 80% of the voting stock of the Bank then issued and outstanding free and clear of any security interest. Notwithstanding the foregoing, the Bank may be merged into or consolidated with another banking institution organized under the laws of the United States, any State thereof or the District of Columbia, if after giving effect to such merger or consolidation the Company and any one or more Intermediate Subsidiaries own at least 80% of the voting stock of such other banking institution and immediately after giving effect thereto and treating any such resulting bank thereafter as the Bank for purposes of this Indenture, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing. For purposes of this Section, an "Intermediate Subsidiary" means a Subsidiary (i) that is organized under the laws of the United States, any State thereof or the District of Columbia, and (ii) of which all the shares of each class of capital stock issued and outstanding, and all securities convertible into, and options, warrants and rights to subscribe for or purchase shares of, such capital stock, are owned directly or indirectly by the Company, free and clear of any security interest.

        The provisions of this Section 5.07 shall not prohibit the Company from consolidating with or merging into any other Person or from conveying, transferring or leasing the Company's properties and assets substantially as an entirety to any Person as otherwise permitted pursuant to Article Ten.

        SECTION 5.08.    Waiver of Covenants.    The Company may omit in any particular instance to comply with any term, provision or condition set forth in Sections 5.06 or 5.07 with respect to the Securities of any series if before the time for such compliance the Holders of at least 50% in principal amount of the Outstanding Securities of that series shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such term, provision or condition (but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee for such series in respect of any such term, provision or condition shall remain in full force and effect).

ARTICLE SIX
Holders' Lists and Reports by Trustee and Company

        SECTION 6.01.    Company To Furnish Trustee Names and Addresses of Holders.    The Company will furnish or cause to be furnished to the Trustee (i) semiannually, not more than 15 days after each February 1 and August 1, a list, in such form as the Trustee may reasonably require, containing all the information in the possession or control of the Company, any of its Paying Agents (other than the Trustee) or the Security Registrar, if other than the Trustee, as to the names and addresses of the Holders of Securities as of such February 1 and August 1, and (ii) at such other times as the Trustee may request in writing, within 30 days after receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is requested to

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be furnished; provided, however, that if and so long as the Trustee is the Security Registrar for Securities of a series, no such list need be furnished with respect to such series of Securities.

        SECTION 6.02.    Preservation of Information; Communications to Holders.    (i) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders of Securities contained in the most recent list furnished to the Trustee as provided in Section 6.01 and the names and addresses of Holders of Securities received by the Trustee in its capacity as the Security Registrar, if so acting. The Trustee may destroy any list furnished to it as provided in Section 6.01 upon receipt of a new list so furnished.

         (ii)  If three or more Holders of Securities of any series (hereinafter referred to as "applicants") apply in writing to the Trustee, and furnish to the Trustee reasonable proof that each such applicant has owned a Security of such series for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders of Securities of such series or with the Holders of all Securities with respect to their rights under this Indenture or under such Securities and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall, within five Business Days after the receipt of such application, at its election, either:

         (a)  afford such applicants access to the information preserved at the time by the Trustee in accordance with Section 6.02(i); or

         (b)  inform such applicants as to the approximate number of Holders of Securities of such series or all Securities, as the case may be, whose names and addresses appear in the information preserved at the time by the Trustee in accordance with Section 6.02(i), and as to the approximate cost of mailing to such Holders the form of proxy or other communication, if any, specified in such application.

        If the Trustee shall elect not to afford such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Holder of a Security of such series or all Holders of Securities, as the case may be, whose names and addresses appear in the information preserved at the time by the Trustee in accordance with Section 6.02(i), a copy of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless, within five days after such tender, the Trustee shall mail to such applicants and file with the Commission, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interests of the Holders of Securities of such series or all Securities, as the case may be, or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Holders of Securities with reasonable promptness after the entry of such order and the renewal of such tender; otherwise, the Trustee shall be relieved of any obligation or duty to such applicants respecting their application.

        (iii)  Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders of Securities in accordance with Section 6.02(ii), regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 6.02(ii).

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        SECTION 6.03.    Reports by Trustee.    (i) Within 60 days after May 15 of each year commencing with the year 2003 the Trustee shall mail to each Holder reports concerning the Trustee and its action under the Indenture as may be required pursuant to Section 313(a) of the Trust Indenture Act if and to the extent and in the manner provided pursuant thereto. The Trustee shall also comply with the other provisions of Section 313 of the Trust Indenture Act.

         (ii)  Reports pursuant to this Section shall be transmitted by mail (1) to all Holders of Registered Securities, as their names and addresses appear in the Security Register and (2) to such Holders of Bearer Securities as have, within the two years preceding such transmission, filed their names and addresses with the Trustee for that purpose, and (3) except in the cases of reports under Section 313(b)(2) of the Trust Indenture Act, to each Holder of a Security of any series whose name and address appear in the information preserved at the time by the Trustee in accordance with Section 6.02(i).

        (iii)  A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each securities exchange upon which any Securities are listed, and also with the Commission. The Company will notify the Trustee when any Securities are listed on any securities exchange.

        SECTION 6.04.    Reports by Company.    The Company will:

          (i)  file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports pursuant to either of said Sections, then it will file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Exchange Act in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations;

         (ii)  file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and

        (iii)  transmit by mail to Holders of Securities, in the manner and to the extent provided in Section 6.03(ii), within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to paragraphs (i) and (ii) of this Section as may be required by rules and regulations prescribed from time to time by the Commission.

ARTICLE SEVEN
Remedies

        SECTION 7.01.    Events of Default.    "Event of Default", with respect to any series of Securities, wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body), unless it is either inapplicable to a particular series or it is specifically deleted or

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modified in the supplemental indenture or Board Resolution under which such series of Securities is issued or in the form of Security for such series:

          (i)  default in the payment of any interest upon any Security of that series when it becomes due and payable, and continuance of such default for a period of 30 days; or

         (ii)  default in the payment of the principal of (or premium, if any, on) any Security of that series at its Maturity; or

        (iii)  default in the performance, or breach, of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with or which has expressly been included in this Indenture solely for the benefit of series of Securities other than that series), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of that series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or

        (iv)  the entry of a decree or order by a court having jurisdiction in the premises granting relief in respect of the Company in an involuntary case under the Federal Bankruptcy Code, adjudging the Company a bankrupt, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under the Federal Bankruptcy Code or any other applicable Federal or State bankruptcy, insolvency or similar law, or appointing a receiver, liquidator, custodian, assignee, trustee, sequestrator (or other similar official) of the Company, or of substantially all of its properties, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or

         (v)  the institution by the Company of proceedings to be adjudicated a bankrupt, or the consent of the Company to the institution of bankruptcy proceedings against it, or the filing by the Company of a petition or answer or consent seeking reorganization or relief under the Federal Bankruptcy Code or any other applicable Federal or State bankruptcy, insolvency or similar law, or the consent by the Company to the filing of any such petition or to the appointment of a receiver, liquidator, custodian, assignee, trustee, sequestrator (or other similar official) of the Company or of substantially all of its properties; or

      (viii)  any other Event of Default provided with respect to Securities of that series.

        SECTION 7.02.    Acceleration of Maturity; Rescission and Annulment.    If an Event of Default with respect to any series of Securities for which there are Securities Outstanding occurs and is continuing, then, and in every such case, the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of such series may declare the principal of all the Securities of such series (or, if the Securities of that series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of that series) to be immediately due and payable, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration the same shall become immediately due and payable.

        At any time after such a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Securities of such series, by written notice to the Company and the Trustee, may rescind

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and annul such declaration and its consequences, and any Event of Default giving rise to such declaration shall not be deemed to have occurred, if:

          (i)  the Company has paid or deposited with the Trustee a sum sufficient to pay:

         (a)  all overdue installments of interest on all Securities of such series;

         (b)  the principal of and premium, if any, on any Securities of such series which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor by the terms of the Securities of such series;

         (c)  to the extent that payment of such interest is lawful, interest upon overdue installments of interest at the rate or rates prescribed therefor by the terms of the Securities of such series; and

         (d)  all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, the Security Registrar, any Paying Agent, and their agents and counsel and all other amounts due the Trustee under Section 8.07; and

         (ii)  all Events of Default with respect to Securities of that series, other than the nonpayment of the principal of Securities of that series which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 7.13.

        No such rescission shall affect any subsequent default or impair any right consequent thereon.

        SECTION 7.03.    Collection of Indebtedness and Suits for Enforcement by Trustee.    The Company covenants that if:

          (i)  default is made in the payment of any installment of interest on any Security of any series when such interest becomes due and payable and such default continues for a period of 30 days; or

         (ii)  default is made in the payment of the principal of or premium, if any, on any Security of any series at the Maturity thereof;

the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holder of any such Security or coupon appertaining thereto, if any, the whole amount then due and payable on any such Security or coupon for principal, premium, if any, and interest, with interest upon the overdue principal and premium, if any, and (to the extent that payment of such interest shall be lawful) upon overdue installments of interest, at the rate or rates prescribed therefor by the terms of any such Security; and, in addition thereto, such further amount as shall be sufficient to cover the reasonable costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other amounts due the Trustee under Section 8.07.

        If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities, wherever situated.

        If an Event of Default with respect to any series of Securities occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

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        SECTION 7.04.    Trustee May File Proofs of Claim.    In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of any Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal, premium, if any, or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise:

          (i)  to file and prove a claim for the whole amount of principal, premium, if any, and interest owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other amounts due the Trustee under Section 8.07) and of the Holders allowed in such judicial proceeding; and

         (ii)  to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same;

and any receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 8.07.

        Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder of a Security or coupon any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder of a Security or coupon in any such proceeding.

        SECTION 7.05.    Trustee May Enforce Claims Without Possession of Securities.    All rights of action and claims under this Indenture or under the Securities of any series, or coupons (if any) appertaining thereto, may be prosecuted and enforced by the Trustee without the possession of any of the Securities of such series or coupons appertaining thereto or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other amounts due the Trustee under Section 8.07, be for the ratable benefit of the Holders of the Securities of such series and coupons appertaining thereto in respect of which such judgment has been recovered.

        SECTION 7.06.    Application of Money Collected.    Any money collected by the Trustee with respect to a series of Securities pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee, and, in case of the distribution of such money on account of principal, premium, if any, or interest, upon presentation of the Securities of such series or coupons appertaining thereto, if any, or both, as the case may be, and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

        FIRST:    To the payment of all amounts due the Trustee under Section 8.07;

        SECOND:    To the payment of the amounts then due and unpaid upon the Securities of such series and coupons for principal, premium, if any, and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind,

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according to the amounts due and payable on Securities of such series and coupons, if any, for principal, premium, if any, and interest, respectively. The Holders of each series of Securities denominated in any composite currency or a Foreign Currency and any matured coupons relating thereto shall be entitled to receive a ratable portion of the amount determined by the Exchange Rate Agent by converting the principal amount Outstanding of such series of Securities and matured but unpaid interest on such series of Securities in the currency in which such series of Securities is denominated into Dollars at the Exchange Rate as of the Business Day immediately preceding the date of payment; and

        THIRD:    The balance, if any, to the Person or Persons entitled thereto.

        SECTION 7.07.    Limitation on Suits.    No Holder of any Security of any series or any related coupons shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:

          (i)  such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to Securities of such series;

         (ii)  the Holders of not less than a majority in principal amount of the Outstanding Securities of such series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;

        (iii)  such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;

        (iv)  the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and

         (v)  no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities of such series;

it being understood and intended that no one or more Holders of Securities of such series shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Securities of such series or to obtain or to seek to obtain priority or preference over any other such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders of Securities of such series.

        SECTION 7.08.    Unconditional Right of Holders To Receive Principal, Premium and Interest.     Notwithstanding any other provision in this Indenture, the Holder of any Security or coupon shall have the right, which is absolute and unconditional, to receive payment of the principal of, premium, if any, and (subject to Section 3.07) interest on such Security or payment of such coupon on the respective Stated Maturities expressed in such Security or coupon (or, in the case of redemption or repayment, on the Redemption Date or Repayment Date) and to institute suit for the enforcement of such payment, and such rights shall not be impaired without the consent of such Holder.

        SECTION 7.09.    Restoration of Rights and Remedies.    If the Trustee or any Holder of a Security or coupon has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case the Company, the Trustee and the Holders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.

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        SECTION 7.10.    Rights and Remedies Cumulative.    Except as otherwise provided with respect to the replacement or payment of mutilated, lost, destroyed or stolen Securities or coupons in the last paragraph of Section 3.06, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

        SECTION 7.11.    Delay or Omission Not Waiver.    No delay or omission of the Trustee or of any Holder of any Security or coupon to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

        SECTION 7.12.    Control by Holders.    The Holders of a majority in principal amount of the Outstanding Securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to the Securities of such series; provided that:

          (i)  such direction shall not be in conflict with any rule of law or with this Indenture;

         (ii)  the Trustee shall not determine that the action so directed would be unjustly prejudicial to the Holders not taking part in such direction;

        (iii)  subject to the provisions of Section 8.01, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall, by a Responsible Officer or Officers of the Trustee, determine that the proceeding so directed would involve the Trustee in personal liability; and

        (iv)  the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.

        SECTION 7.13.    Waiver of Past Defaults.    The Holders of a majority in principal amount of the Outstanding Securities of any series may on behalf of the Holders of all the Securities of such series waive any past default hereunder and its consequences, except a default not theretofore cured:

          (i)  in the payment of the principal of, premium, if any, or interest on any Security of such series; or

         (ii)  in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected.

        Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of the Securities of such series under this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.

        SECTION 7.14.    Undertaking for Costs.    All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such

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suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Company, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities of any series, or to any suit instituted by any Holder of Securities or coupons for the enforcement of the payment of the principal of, premium, if any, or interest on any Security or payment of any coupon on or after the respective Stated Maturities expressed in such Security or coupon (or, in the case of redemption or repayment, on or after the Redemption Date or Repayment Date).

        SECTION 7.15.    Waiver of Stay or Extension Laws.    The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

ARTICLE EIGHT
The Trustee

        SECTION 8.01.    Certain Duties and Responsibilities.    (i) Except during the continuance of an Event of Default with respect to any series of Securities:

         (a)  the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture with respect to Securities of such series, and no implied covenants or obligations shall be read into this Indenture against the Trustee with respect to such series; and

         (b)  in the absence of bad faith on its part, the Trustee may conclusively rely with respect to such series, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificate or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform as to form to the requirements of the Indenture.

         (ii)  In case an Event of Default with respect to any series of Securities has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture with respect to such series, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.

        (iii)  No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

         (a)  this Subsection shall not be construed to limit the effect of Subsection (i) of this Section;

         (b)  the Trustee shall not be liable for any error or judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;

         (c)  the Trustee shall not be liable with respect to any action taken, suffered or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in

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principal amount of the Outstanding Securities of any series relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to Securities of such series; and

         (d)  no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

        (iv)  Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section.

        SECTION 8.02.    Notice of Default.    Within 90 days after the occurrence of any default hereunder with respect to Securities of any series, the Trustee shall transmit by mail to all Holders of Securities of such series entitled to receive reports pursuant to Section 6.03(ii) notice of such default hereunder known to the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of, premium, if any, or interest on any Security of such series, or any related coupons or in the payment of any sinking fund installment with respect to Securities of such series the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of Securities of such series; and provided further that in the case of any default of the character specified in Section 7.01(iii) with respect to Securities of such series, no such notice to Holders of Securities of such series shall be given until at least 90 days after the occurrence thereof. For the purpose of this Section, the term "default", with respect to Securities of any series, means any event which is, or after notice or lapse of time, or both, would become, an Event of Default with respect to Securities of such series.

        SECTION 8.03.    Certain Rights of Trustee.    Except as otherwise provided in Section 8.01:

          (i)  the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

         (ii)  any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;

        (iii)  whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate;

        (iv)  the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;

         (v)  the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the

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costs, expenses and liabilities which might be incurred by it in compliance with such request or direction;

        (vi)  the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, security or other paper or document, but the Trustee, in its discretion, may make further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney and, if so requested to do so by any of the Holders, at the sole cost and expense of the Holders;

       (vii)  the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder;

      (viii)  the Trustee shall not be charged with knowledge of any default (as defined in Section 8.02) or Event of Default unless either (1) a Responsible Officer of the Trustee shall have actual knowledge of such default or Event of Default or (2) written notice of such default or Event of Default shall have been given to the Trustee by the Company or any Holder;

        (ix)  the Trustee shall not be liable for any action taken, suffered or omitted by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture; and

         (x)  in the event that the Trustee is also acting as Paying Agent, Authenticating Agent or Security Registrar hereunder, the rights and protections afforded to the Trustee pursuant to this Article Eight shall also be afforded to such Paying Agent, Authenticating Agent or Security Registrar.

        SECTION 8.04.    Not Responsible for Recitals or Issuance of Securities.    The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and neither the Trustee nor any Authenticating Agent assumes responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. The Trustee shall not be accountable for the use or application by the Company of Securities or the proceeds thereof.

        SECTION 8.05.    May Hold Securities.    The Trustee, any Authenticating Agent, any Paying Agent, the Security Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 8.08 and 8.13, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent.

        SECTION 8.06.    Money Held in Trust.    Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company.

        SECTION 8.07.    Compensation and Reimbursement.    The Company agrees:

          (i)  to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);

         (ii)  except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in

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accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and

        (iii)  to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.

        As security for the performance of the obligations of the Company under this Section the Trustee shall have a lien prior to the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of principal of, premium, if any, or interest on particular Securities.

        Without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 7.01(iv) or (v), the expenses (including the reasonable fees and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable bankruptcy, insolvency or other similar law.

        The obligations of the Company set forth in this Section 8.07 and any lien arising hereunder shall survive the resignation or removal of any Trustee, the discharge of the Company's obligations pursuant to Article Eleven of this Indenture and the termination of this Indenture and the repayment of the Securities whether at the Stated Maturity or otherwise.

        SECTION 8.08.    Disqualification; Conflicting Interests.    If the Trustee has or shall acquire a conflicting interest within the meaning of Section 310 of the Trust Indenture Act, the Trustee shall either eliminate such conflicting interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture. To the extent permitted by the Trust Indenture Act, the Trustee shall not be deemed to have a conflicting interest with respect to the Securities of any series by virtue of being Trustee with respect to the Securities of any particular series of Securities other than that series.

        SECTION 8.09.    Corporate Trustee Required; Eligibility.    There shall at all times be a Trustee with respect to each series of Securities hereunder which shall be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, subject to supervision or examination by Federal or State authority; provided, however, that if Section 310(a) of the Trust Indenture Act or the rules and regulations of the Commission under the Trust Indenture Act at any time permit a corporation organized and doing business under the laws of any other jurisdiction to serve as trustee of an indenture qualified under the Trust Indenture Act, this Section 8.09 shall be automatically deemed amended to permit a corporation organized and doing business under the laws of any such jurisdiction to serve as Trustee hereunder. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. Neither the Company nor any person directly or indirectly controlling, controlled by or under common control with the Company may serve as Trustee. If at any time the Trustee with respect to any series of Securities shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.

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        SECTION 8.10.    Resignation and Removal; Appointment of Successor.    (i) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 8.11.

         (ii)  The Trustee may resign with respect to any series of Securities at any time by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the resigning Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to Securities of such series.

        (iii)  The Trustee may be removed with respect to any series of Securities at any time by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series, delivered to the Trustee and to the Company.

        (iv)  If at any time:

         (a)  the Trustee shall fail to comply with Section 8.08 with respect to any series of Securities after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security of such series for at least six months; or

         (b)  the Trustee shall cease to be eligible under Section 8.09 with respect to any series of Securities and shall fail to resign after written request therefor by the Company or by any Holder of Securities of such series; or

         (c)  the Trustee shall become incapable of acting with respect to any series of Securities or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation;

then, in any such case, (1) the Company by a Board Resolution may remove the Trustee with respect to such series, or (2) subject to Section 7.14, any Holder who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee with respect to such series.

         (v)  If the Trustee shall resign, be removed or become incapable of acting with respect to any series of Securities, or if a vacancy shall occur in the office of Trustee with respect to any series of Securities for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Securities of any particular series) and shall comply with the applicable requirements of Section 8.11. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to such series of Securities shall be appointed by the Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee with respect to such series, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee with respect to such series and to that extent supersede the successor Trustee appointed by the Company with respect to such series. If no successor Trustee with respect to such series shall have been so appointed by the Company or the Holders of Securities of such series and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to such series.

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        (vi)  The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series by mailing written notice of such event by first-class mail, postage prepaid, to the Holders of Registered Securities of such series as their names and addresses appear in the Security Register and, if Securities of such series are issuable as Bearer Securities, by publishing notice of such event once in an Authorized Newspaper in each Place of Payment for the Securities of such series located outside the United States. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Principal Corporate Trust Office.

        SECTION 8.11.    Acceptance of Appointment by Successor.    (i) In the case of the appointment hereunder of a successor Trustee with respect to any series of Securities, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective with respect to all or any series as to which it is resigning as Trustee, and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to all or any such series; but, on request of the Company or such successor Trustee, such retiring Trustee shall upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of such retiring Trustee with respect to all or any such series; and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to all or any such series, subject nevertheless to its lien, if any, provided for in Section 8.07.

         (ii)  In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (a) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (b) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (c) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, subject nevertheless to its lien, if any, provided for in Section 8.07.

        (iii)  Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (i) or (ii) of this Section, as the case may be.

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        (iv)  No successor Trustee with respect to a series of Securities shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible with respect to such series under this Article.

        SECTION 8.12.    Merger, Conversion, Consolidation or Succession to Business of Trustee.    Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder (provided that such corporation shall be otherwise qualified and eligible under this Article), without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities.

        SECTION 8.13.    Preferential Collection of Claims Against Company.    If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of Section 311 of the Trust Indenture Act regarding the collection of any claims as a creditor against the Company (or any such other obligor). A Trustee that has resigned or been removed shall be subject to and comply with said Section 311 to the extent required thereby.

        SECTION 8.14.    Appointment of Authenticating Agents.    The Trustee may appoint an Authenticating Agent or Agents, which may include any Affiliate of the Company, with respect to one or more series of Securities. Such Authenticating Agent or Agents at the option of the Trustee shall be authorized to act on behalf of the Trustee to authenticate Securities of such series issued upon original issuance, exchange, registration of transfer or partial redemption thereof or pursuant to Section 3.06, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Whenever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee's certificate of authentication or the delivery of Securities to the Trustee for authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent, a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent and delivery of Securities to the Authenticating Agent on behalf of the Trustee. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $5,000,000 and subject to supervision or examination by Federal or State authority. Notwithstanding the foregoing, an Authenticating Agent located outside the United States may be appointed by the Trustee if previously approved in writing by the Company and if such Authenticating Agent meets the minimum capitalization requirements of this Section 8.14. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section.

        The Trustee shall initially act as Authenticating Agent located within the United States for each series of Securities issued hereunder.

        Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to

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which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent (provided such corporation shall be otherwise eligible under this Section), without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.

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        An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time (and upon request by the Company shall) terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section.

        If an appointment with respect to one or more series is made pursuant to this Section, the Securities of such series may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternate certificate of authentication in the following form:

        This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION, as Trustee,
by	as Authenticating Agent
by	Authorized Signatory

        Date:

ARTICLE NINE
Supplemental Indentures

        SECTION 9.01.    Supplemental Indentures Without Consent of Holders.    Without the consent of any Holder of any Securities or coupons, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, for any of the following purposes:

          (i)  to evidence the succession of another corporation or Person to the Company, and the assumption by any such successor of the covenants of the Company herein and in the Securities; or

         (ii)  to evidence and provide for the acceptance of appointment by another corporation as a successor Trustee hereunder with respect to one or more series of Securities and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to Section 8.11; or

        (iii)  to add to the covenants of the Company, for the benefit of the Holders of Securities of all or any series of Securities or coupons (and if such covenants are to be for the benefit of less than all series of Securities or coupons, stating that such covenants are expressly being included solely for the benefit of such series), or to surrender any right or power herein conferred upon the Company; or

        (iv)  to cure any ambiguity, defect or inconsistency; or

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         (v)  to add any additional Events of Default with respect to all or any series of the Securities (and, if such Event of Default is applicable to less than all series of Securities, specifying the series to which such Event of Default is applicable); or

        (vi)  to add to, change or eliminate any of the provisions of this Indenture to provide that Bearer Securities may be registrable as to principal, to change or eliminate any restrictions on the payment of principal of (or premium, if any) or any interest on Bearer Securities, to permit Bearer Securities to be issued in exchange for Registered Securities, to permit Bearer Securities to be issued in exchange for Bearer Securities of other authorized denominations or to permit or facilitate the issuance of Securities in uncertificated form; provided any such action shall not adversely affect the interests of the Holders of Securities of any series or any related coupons in any material respect; or

       (vii)  to add to, change or eliminate any of the provisions of this Indenture; provided that any such addition, change or elimination (a) shall become effective only when there is no Security Outstanding of any series created prior to the execution of such supplemental indenture the interests of the Holders of which (or of the related coupons of which) is adversely affected in any material respect by such change in or elimination of such provision or (b) shall not apply to any Securities Outstanding; or

      (viii)  to establish the form or terms of Securities of any series as permitted by Sections 2.02 and 3.01; or

        (ix)  to add to or change any provisions of this Indenture to such extent as shall be necessary to permit or facilitate the issuance of Securities convertible into other securities; or

         (x)  to evidence any changes to Section 8.09 as permitted by the terms thereof; or

        (xi)  to convey, transfer, assign, mortgage or pledge any property to or with the Trustee; or

       (xii)  to add to or change or eliminate any provision of this Indenture as shall be necessary or desirable in accordance with any amendments to the Trust Indenture Act; provided such action shall not adversely affect the interest of Holders of Securities of any series or any appurtenant coupons in any material respect.

        SECTION 9.02.    Supplemental Indentures With Consent of Holders.    With the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities of all series affected by such supplemental indenture or indentures (acting as one class), by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities of each such series and any related coupons under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby:

          (i)  change the Stated Maturity of the principal of, or the Stated Maturity of any installment of interest (or premium, if any) on, any Outstanding Security, or reduce the principal amount thereof or any premium thereon or the rate of interest thereon, or change the obligation of the Company to pay additional amounts pursuant to Section 5.04 (except as contemplated by Section 10.01(i) and permitted by Section 9.01), or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 7.02, or change the method of calculating interest thereon or the coin or currency in which any Outstanding Security (or premium, if any, thereon) or the interest thereon is payable, or reduce the minimum rate of interest thereon, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity

49

thereof (or, in the case of redemption or repayment, on or after the Redemption Date or Repayment Date);

         (ii)  reduce the percentage in principal amount of the Outstanding Securities of any series, the consent of whose Holders is required for any such supplemental indenture or the consent of whose Holders is required for any waiver of certain defaults hereunder and their consequences) provided for in this Indenture or reduce the requirements of Section 15.04 for a quorum;

        (iii)  change any obligation of the Company to maintain an office or agency in the places and for the purposes specified in Section 5.02; or

        (iv)  modify any of the provisions of this Section or Section 7.13, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived.

        A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series.

        It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

        SECTION 9.03.    Execution of Supplemental Indentures.    In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 8.01) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by and complies with this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, liabilities, duties or immunities under this Indenture or otherwise.

        SECTION 9.04.    Effect of Supplemental Indentures.    Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.

        SECTION 9.05.    Conformity with Trust Indenture Act.    Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the TIA as then in effect.

        SECTION 9.06.    Reference in Securities to Supplemental Indentures.    Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall, if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities.

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ARTICLE TEN
Consolidation, Merger, Conveyance or Transfer

        SECTION 10.01.    Company May Consolidate, etc., Only on Certain Terms.    The Company shall not consolidate with or merge into, or convey or transfer its properties and assets substantially as an entirety to, any Person, unless:

          (i)  the Person formed by such consolidation (if other than the Company) or into which the Company is merged or the Person which acquires by conveyance or transfer the properties and assets of the Company substantially as an entirety shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, the due and punctual payment of the principal of, premium, if any, and interest (including all additional amounts, if any, payable pursuant to Section 5.04) on all the Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed;

         (ii)  immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time, or both, would become an Event of Default, shall have happened and be continuing; and

        (iii)  the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each stating that such consolidation, merger, conveyance or transfer and such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with.

        SECTION 10.02.    Successor Corporation Substituted.    Upon any consolidation or merger, or any conveyance or transfer of the properties and assets of the Company substantially as an entirety in accordance with Section 10.01, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein. In the event of any such conveyance or transfer, the Company as the predecessor corporation shall be relieved of all obligations and covenants under this Indenture and may be dissolved, wound up and liquidated at any time thereafter.

        In case of any such consolidation, merger, sale or conveyance, such changes in phraseology and form may be made in the Securities thereafter to be issued as may be appropriate.

ARTICLE ELEVEN
Satisfaction and Discharge

        SECTION 11.01.    Satisfaction and Discharge of Indenture.    This Indenture shall cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for and rights to receive payments thereon and any right to receive additional amounts, as provided in Section 5.04), and the Trustee, on receipt of a Company Request and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when:

          (i)  either:

         (a)  all Securities theretofore authenticated and delivered (other than (1) coupons appertaining to Bearer Securities surrendered for exchange for Registered Securities and maturing after such exchange, whose surrender is not required or has not been waived as provided in Section 3.05, (2) coupons appertaining to Bearer Securities called for redemption and maturing after the relevant Redemption Date, whose surrender has been waived as

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provided in Section 4.06, (3) coupons appertaining to Bearer Securities surrendered for repayment pursuant to Section 15.03 and maturing after the Repayment Date, whose surrender has been waived as provided in Section 15.03, (4) Securities and coupons which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 3.06, and (5) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 5.03) have been delivered to the Trustee for cancellation; or

         (b)  all such Securities not theretofore delivered to the Trustee for cancellation:

         (1)  have become due and payable, or

         (2)  will become due and payable at their Stated Maturity within one year, or

         (3)  are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,

and the Company, in the case of (b) (1), (2) or (3) above, has deposited or caused to be deposited with the Trustee, as trust funds in trust for the purpose, an amount sufficient to pay and discharge the entire indebtedness on such Securities and coupons not theretofore delivered to the Trustee for cancellation, for principal, premium, if any, and interest to the date of such deposit (in the case of Securities which have become due and payable), or to the Stated Maturity or Redemption Date, as the case may be;

         (ii)  the Company has paid or caused to be paid all other sums payable hereunder by the Company; and

        (iii)  the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.

Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 8.07 and, if money shall have been deposited with the Trustee pursuant to subclause (b) of clause (i) of this Section, the obligations of the Trustee under Section 11.02 and the last paragraph of Section 5.03 shall survive.

        SECTION 11.02.    Application of Trust Money.    Subject to the provisions of the last paragraph of Section 5.03, all money deposited with the Trustee pursuant to Section 11.01 shall be held in trust and applied by it, in accordance with the provisions of the Securities, the coupons, if any, and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent), as the Trustee may determine, to the Persons entitled thereto, of the principal, premium, if any, and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law.

        SECTION 11.03.    Reinstatement.    If the Trustee or any Paying Agent is unable to apply any money in accordance with Section 11.02 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 11.01 until such time as the Trustee or any Paying Agent is permitted to apply all such money in accordance with Section 11.02.

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ARTICLE TWELVE
Immunity of Incorporators, Stockholders,
Officers and Directors

        SECTION 12.01.    Exemption from Individual Liability.    No recourse under or upon any obligation, covenant or agreement of this Indenture, or of any Security or coupon, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any successor corporation, either directly or through the Company, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that this Indenture and the obligations issued hereunder are solely corporate obligations of the Company, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, stockholders, officers or directors, as such, of the Company or of any successor corporation, or any of them, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Securities or coupons or implied therefrom; and that any and all such personal liability, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, stockholder, officer or director, as such, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Securities or coupons or implied therefrom, are hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issuance of the Securities.

ARTICLE THIRTEEN
Sinking Funds

        SECTION 13.01.    Applicability of Article.    If provided for by the terms of Securities of any series as contemplated by Section 3.01, the provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of such series (except as otherwise specified as contemplated by Section 3.01 for Securities of such series).

        The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an "optional sinking fund payment". If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 13.02. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series.

        SECTION 13.02.    Satisfaction of Sinking Fund Payments with Securities.    The Company (i) may deliver Outstanding Securities of a series (other than any previously called for redemption), together in the case of any Bearer Securities of such series with all unmatured coupons appertaining thereto and (ii) may apply as a credit Securities of a series which have been redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Securities of such series required to be made pursuant to the terms of such Securities as provided for by the terms of such series; provided that such Securities have not been previously so credited. Such Securities shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly.

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        SECTION 13.03.    Redemption of Securities for Sinking Fund.    Not less than 60 days prior to each sinking fund payment date for any series of Securities, the Company will deliver to the Trustee and the Security Registrar an Officers' Certificate specifying (i) the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that series, (ii) the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities of that series pursuant to Section 13.02, and (iii) that none of such Securities has theretofore been so credited and stating the basis for such credit, and will also deliver to the Trustee any Securities to be so delivered. Not less than 30 days before each sinking fund payment date the Security Registrar shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 4.03 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 4.04. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 4.06 and 4.07 and shall be subject to Section 4.08.

ARTICLE FOURTEEN
Repayment at the Option of Holders

        SECTION 14.01.    Applicability of Article.    If provided for by the terms of Securities of any series as contemplated by Section 3.01, Securities of such series which are repayable at the option of the Holders thereof before their Stated Maturity shall be repaid in accordance with their terms and (except as otherwise specified pursuant to Section 3.01 for Securities of such series) in accordance with this Article.

        SECTION 14.02.    Repayment of Securities.    Each Security which is subject to repayment in whole or in part at the option of the Holder thereof on a Repayment Date shall be repaid at the applicable Repayment Price together with interest accrued to such Repayment Date as specified pursuant to Section 3.01.

        SECTION 14.03.    Exercise of Option, Notice.    Each Holder desiring to exercise such Holder's option for repayment shall, as conditions to such repayment, surrender the Security to be repaid in whole or in part together with written notice of the exercise of such option at any office or agency of the Company in a Place of Payment, not less than 30 nor more than 45 days prior to the Repayment Date; provided, however, that surrender of Bearer Securities together with written notice of exercise of such option shall be made at an office or agency located outside the United States except as otherwise provided in Section 5.02. Such notice, which shall be irrevocable, shall specify the principal amount of such Security to be repaid, which shall be equal to the minimum authorized denomination for such Security or an integral multiple thereof, and shall identify the Security to be repaid and, in the case of a partial repayment of the Security, shall specify the denomination or denominations of the Security or Securities of the same series to be issued to the Holder for the portion of the principal of the Security surrendered which is not to be repaid.

        If any Bearer Security surrendered for repayment shall not be accompanied by all unmatured coupons and all matured coupons in default, such Bearer Security may be paid after deducting from the Repayment Price an amount equal to the face amount of all such missing coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there be furnished to them such security or indemnity as they may require to save each of them and any Paying Agent harmless. If thereafter the Holder of such Bearer Security shall surrender to the Trustee or any Paying Agent any such missing coupon in respect of which a deduction shall have been made from the Repayment Price, such Holder shall be entitled to receive the amount so deducted without interest thereon; provided, however, that interest represented by coupons shall be payable only at an office or agency located outside the United States except as otherwise provided in Section 5.02.

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        The Company shall execute and the Trustee shall authenticate and deliver without service charge to the Holder of any Registered Security so surrendered a new Registered Security or Securities of the same series and tenor, of any authorized denomination specified in the foregoing notice, in an aggregate principal amount equal to any portion of the principal of the Registered Security so surrendered which is not to be repaid.

        The Company shall execute and the Trustee shall authenticate and deliver without service charge to the Holder of any Bearer Security so surrendered a new Registered Security or Securities or new Bearer Security or Securities (and all appurtenant unmatured coupons and matured coupons in default) or any combination thereof of the same series and tenor of any authorized denomination or denominations specified in the foregoing notice, in an aggregate principal amount equal to any portion of the principal of the Security so surrendered which is not to be repaid; provided, however, that the issuance of a Registered Security therefor shall be subject to applicable laws and regulations, including provisions of the United States Federal income tax laws and regulations in effect at the time of the exchange; neither the Company, the Trustee nor the Security Registrar shall issue Registered Securities for Bearer Securities if it has received an Opinion of Counsel that as a result of such issuance the Company would suffer adverse consequences under the United States Federal income tax laws then in effect and the Company has delivered to the Trustee a Company Order directing the Trustee not to make such issuances thereafter unless and until the Trustee receives a subsequent Company Order to the contrary. The Company shall deliver copies of such Company Order to the Security Registrar.

        For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the repayment of Securities shall relate, in the case of any Security repaid or to be repaid only in part, to the portion of the principal of such Security which has been or is to be repaid.

        SECTION 14.04.    Election of Repayment by Remarketing Entities.    The Company may elect, with respect to Securities of any series which are repayable at the option of the Holders thereof before their Stated Maturity, at any time prior to any Repayment Date to designate one or more Remarketing Entities to purchase, at a price equal to the Repayment Price, Securities of such series from the Holders thereof who give notice and surrender their Securities in accordance with Section 14.03.

        SECTION 14.05.    Securities Payable on the Repayment Date.    Notice of exercise of the option of repayment having been given and the Securities so to be repaid having been surrendered as aforesaid, such Securities shall, unless purchased in accordance with Section 14.04, on the Repayment Date become due and payable at the price therein specified and from and after the Repayment Date such Securities shall cease to bear interest and shall be paid on the Repayment Date, and the coupons for such interest appertaining to Bearer Securities so to be repaid, except to the extent provided above, shall be void, unless the Company shall default in the payment of such price, in which case the Company shall continue to be obligated for the principal amount of such Securities and shall be obligated to pay interest on such principal amount at the rate prescribed therefor by such Securities from time to time until payment in full of such principal amount.

ARTICLE FIFTEEN
Meetings of Holders of Securities

        SECTION 15.01.    Purposes for Which Meetings May Be Called.    If Securities of a series are issuable in whole or in part as Bearer Securities, a meeting of Holders of Securities of such series may be called at any time and from time to time pursuant to this Article to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other Act provided by this Indenture to be made, given or taken by Holders of Securities of such series.

        SECTION 15.02.    Call, Notice and Place of Meetings.    (i) The Trustee may at any time call a meeting of Holders of Securities of any series issuable in whole or in part as Bearer Securities for any

55

purpose specified in Section 15.01, to be held at such time and at such place in Beverly Hills, California, in the Borough of Manhattan, The City of New York, or in London as the Trustee shall determine. Notice of every meeting of Holders of Securities of any series, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given, in the manner provided in Section 1.06, not less than 21 nor more than 180 days prior to the date fixed for the meeting.

         (ii)  In case at any time the Company, pursuant to a Board Resolution, or the Holders of at least 10% in principal amount of the Outstanding Securities of any such series shall have requested the Trustee to call a meeting of the Holders of Securities of such series for any purpose specified in Section 15.01, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have made the first publication of the notice of such meeting within 21 days after receipt of such request or shall not thereafter proceed to cause the meeting to be held as provided herein, then the Company or the Holders of Securities of such series in the amount above specified, as the case may be, may determine the time and the place in Beverly Hills, California, in the Borough of Manhattan, The City of New York, or in London for such meeting and may call such meeting for such purposes by giving notice thereof as provided in subsection (i) of this Section.

        SECTION 15.03.    Persons Entitled to Vote at Meetings.    To be entitled to vote at any meeting of Holders of Securities of any series, a Person shall be (1) a Holder of one or more Outstanding Securities of such series, or (2) a Person appointed by an instrument in writing as proxy for a Holder or Holders of one or more Outstanding Securities of such series by such Holder or Holders. The only Persons who shall be entitled to be present or to speak at any meeting of Holders of Securities of any series shall be the Persons entitled to vote at such meeting and their counsel, any representatives of the Trustee and its counsel and any representatives of the Company and its counsel.

        SECTION 15.04.    Quorum; Action.    The Persons entitled to vote a majority in principal amount of the Outstanding Securities of a series shall constitute a quorum for a meeting of Holders of Securities of such series; provided, however, that if any action is to be taken at such meeting with respect to a consent or waiver which this Indenture expressly provides may be given by the Holders of a greater percentage in principal amount of the Outstanding Securities of a series, the Persons entitled to vote such greater percentage in principal amount of the Outstanding Securities of such series shall constitute a quorum. In the absence of a quorum within 30 minutes of the time appointed for any such meeting, the meeting shall, if convened at the request of Holders of Securities of such series, be dissolved. In the absence of a quorum in any other case the meeting may be adjourned for a period of not less than 10 days as determined by the chairperson of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period of not less than 10 days as determined by the chairperson of the meeting prior to the adjournment of such adjourned meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in Section 15.02 (i), except that such notice need be given only once not less than five days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage, as provided above, of the principal amount of the Outstanding Securities of such series which shall constitute a quorum.

        Except as limited by the provisos to Section 9.02, any resolution presented to a meeting or adjourned meeting duly reconvened at which a quorum is present as aforesaid may be adopted only by the affirmative vote of the Holders of a majority in principal amount of the Outstanding Securities of the series; provided, however, that, except as limited by the provisos to Section 9.02, any resolution with respect to any consent or waiver which this Indenture expressly provides may be given by the Holders of a greater percentage in principal amount of the Outstanding Securities of a series may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid only by the affirmative vote of the Holders of such greater percentage in principal amount of the

56

Outstanding Securities of that series; and provided further that, except as limited by the provisos to Section 9.02, any resolution with respect to any request, demand, authorization, direction, notice, consent, waiver or other Act which this Indenture expressly provides may be made, given or taken by the Holders of a specified percentage, which is less than a majority in principal amount of the Outstanding Securities of a series may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid by the affirmative vote of the Holders of such specified percentage in principal amount of the Outstanding Securities of that series.

        Any resolution passed or decision taken at any meeting of Holders of Securities of any series duly held in accordance with this Section shall be binding on all the Holders of Securities of such series and the related coupons, whether or not present or represented at the meeting.

        SECTION 15.05.    Determination of Voting Rights; Conduct and Adjournment of Meetings.

        (a)   Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders of Securities of such series in regard to proof of the holding of Securities of such series and of the appointment of proxies and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. Except as otherwise permitted or required by any such regulations, the holding of Securities shall be proved in the manner specified in Section 1.04 and the appointment of any proxy shall be proved in the manner specified in Section 1.04 or, in the case of Bearer Securities, by having the signature of the person executing the proxy witnessed or guaranteed by any trust company, bank or banker authorized by Section 1.04 to certify to the holding of Bearer Securities. Such regulations may provide that written instruments appointing proxies, regular on their face, may be presumed valid and genuine without the proof specified in Section 1.04 or other proof.

        (b)   The Trustee shall, by an instrument in writing, appoint a temporary chairperson of the meeting, unless the meeting shall have been called by the Company or by Holders of Securities as provided in Section 15.02(ii), in which case the Company or the Holders of Securities of the series calling the meeting, as the case may be, shall in like manner appoint a temporary chairperson. A permanent chairperson and a permanent secretary of the meeting shall be elected by vote of the Persons entitled to vote a majority in principal amount of the Outstanding Securities of such series represented at the meeting.

        (c)   At any meeting each Holder of a Security of such series or proxy shall be entitled to one vote for each $1,000 principal amount (or the equivalent in any composite currency or a Foreign Currency) of Securities of such series held or represented by him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and ruled by the chairperson of the meeting not to be Outstanding. The chairperson of the meeting shall have no right to vote, except as a Holder of a Security of such series or proxy.

        (d)   Any meeting of Holders of Securities of any series duly called pursuant to Section 15.02 at which a quorum is present may be adjourned from time to time by Persons entitled to vote a majority in principal amount of the Outstanding Securities of such series represented at the meeting; and the meeting may be held as so adjourned without further notice.

        SECTION 15.06.    Counting Votes and Recording Action of Meetings.    The vote upon any resolution submitted to any meeting of Holders of Securities of any series shall be by written ballots on which shall be subscribed the signatures of the Holders of Securities of such series or of their representatives by proxy and the principal amounts and serial numbers of the Outstanding Securities of such series held or represented by them. The permanent chairperson of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in triplicate of all votes cast at

57

the meeting. A record, at least in triplicate, of the proceedings of each meeting of Holders of Securities of any series shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was given as provided in Section 15.02 and, if applicable, Section 15.04. Each copy shall be signed and verified by the affidavits of the permanent chairperson and secretary of the meeting and one such copy shall be delivered to the Company, and another to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated.

ARTICLE SIXTEEN
Miscellaneous

        SECTION 16.01.    Counterparts.    This Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument.

        U.S. Bank National Association hereby accepts the trusts in this Indenture declared and provided, upon the terms and conditions hereinabove set forth.

        IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written.

	CITY NATIONAL CORPORATION,
	by	Name: Title:
[Seal]
Attest:
		[CORPORATE SEAL]
Assistant Secretary
	U.S. BANK NATIONAL ASSOCIATION, as Trustee,
	by	Name: Title:

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STATE OF	)
	) ss.:
COUNTY OF	)

        On this                        day of                        , 2003, before me personally came to me known,                         , who, being by me duly sworn, did depose and say that he resides at                                     ; that he is                                    of CITY NATIONAL CORPORATION, one of the corporations described in and which executed the foregoing instrument; that he knows the corporate seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority.

	Notary Public
[Notarial Seal]

STATE OF	)
	) ss.:
COUNTY OF	)

        On this                        day of                        , 2003, before me personally appeared                                    , to me known, who, being by me duly sworn, did depose and say that he resides at                                     ; that he is a                        of U.S. BANK NATIONAL ASSOCIATION, one of the parties described in and which executed the foregoing instrument; that he knows the corporate seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority.

	Notary Public
[Notarial Seal]

EXHIBIT A

FORM OF CERTIFICATE TO BE GIVEN BY
PERSON ENTITLED TO RECEIVE BEARER SECURITY

CERTIFICATE

[Insert title or sufficient description of Securities to be delivered]

        This is to certify that the above-captioned Securities are not being acquired by or on behalf of a United States person, or, if a beneficial interest in the Securities is being acquired by or on behalf of a United States person, that such United States person is a financial institution within the meaning of Section 1.165-12 (c) (1) (v) of the United States Treasury regulations which agrees to comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended and the regulations thereunder. If the undersigned is a dealer, the undersigned agrees to obtain a similar certificate from each person entitled to delivery of any of the above-captioned Securities in bearer form purchased from it; provided, however, that, if the undersigned has actual knowledge that the information contained in such a certificate is false, the undersigned will not deliver a Security in temporary or definitive bearer form to the person who signed such certificate notwithstanding the delivery of such certificate to the undersigned.

        As used herein, "United States person" means any citizen or resident of the United States, any corporation, partnership or other entity created or organized in or under the laws of the United States and any estate or trust the income of which is subject to United States Federal income taxation regardless of its source, and "United States" means the United States of America (including the States and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction.

        We undertake to advise you by telex if the above statement as to beneficial ownership is not correct on the date of delivery of the above-captioned Securities in bearer form as to all of such Securities.

        We understand that this certificate is required in connection with certain tax legislation in the United States. If administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorize you to produce this certificate or a copy thereof to any interested party in such proceedings.

Dated:                                    , 20

[To be dated no earlier than 15 days prior to the Exchange Date]

[Name of Person Entitled to Receive Bearer Security)

(Authorized Signatory)

Name:
Title:

EXHIBIT B

FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR AND CLEARSTREAM IN
CONNECTION WITH THE
EXCHANGE OF A PORTION OF A TEMPORARY GLOBAL SECURITY

CERTIFICATE

[Insert title or sufficient description of Securities to be delivered]

        This is to certify with respect to $                        principal amount of the above-captioned Securities (i) that we have received from each of the persons appearing in our records as persons entitled to a portion of such principal amount (our "Qualified Account Holders") a certificate with respect to such portion substantially in the form attached hereto, and (ii) that we are not submitting herewith for exchange any portion of the temporary global Security representing the above-captioned Securities excepted in such certificates.

        We further certify that as of the date hereof we have not received any notification from any of our Qualified Account Holders to the effect that the statements made by such Qualified Account Holders with respect to any portion of the part submitted herewith for exchange are no longer true and cannot be relied upon as of the date hereof.

Dated:                        , 20

[To be dated no earlier than the Exchange Date]

[Euroclear Bank S.A./N.V., as Operator of the Euroclear System, or any successor securities clearing agency]

[CLEARSTREAM]

By

EXHIBIT C

FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR AND
CLEARSTREAM TO OBTAIN INTEREST PRIOR TO AN EXCHANGE DATE

CERTIFICATE

[Insert title or sufficient description of Securities]

        This is to certify that, as of the Interest Payment Date on [Insert Date], the undersigned, which is a holder of an interest in the temporary global Security representing the above Securities, is not a United States person.

        As used herein, "United States person" means any citizen or resident of the United States, any corporation, partnership or other entity created or organized in or under the laws of the United States and any estate or trust the income of which is subject to United States Federal income taxation regardless of its source, and "United States" means the United States of America (including the States and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction.

        We confirm that the interest payable on such Interest Payment Date will be paid to each of the persons appearing in our records as being entitled to interest to be paid on the above date from whom we have received a written certification dated not earlier than 15 days prior to such Interest Payment Date to the effect that the beneficial owner of such portion with respect to which interest is to be paid on such date either is not a United States person or is a United States person which is a financial institution which has provided an Internal Revenue Service Form W-9 or is an exempt recipient as defined in United States Treasury Regulations § 1.6049-4(c)(1)(ii). We undertake to retain certificates received from our member organizations in connection herewith for four years from the end of the calendar year in which such certificates are received.

        The foregoing reflects any advice received subsequent to the date of any certificate stating that the statements contained in such certificate are no longer correct.

Dated:                        , 20

[To be dated on or after the relevant Interest Payment Date]

[Euroclear Bank S.A./N.V., as Operator of the Euroclear System, or any successor securities clearing agency]

[CLEARSTREAM]

By

EXHIBIT D

FORM OF CERTIFICATE TO BE GIVEN BY BENEFICIAL OWNERS TO
OBTAIN INTEREST PRIOR TO AN EXCHANGE DATE

CERTIFICATE

[Insert title or sufficient description of Securities]

        This is to certify that as of the date hereof, no portion of the temporary global Security representing the above-captioned Securities and held by you for our account is beneficially owned by a United States person or, if any portion thereof held by you for our account is beneficially owned by a United States person, such United States person is a financial institution within the meaning of Section 1.165-12(c)(1)(v) of the United States Treasury regulations which agrees to comply with Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended and the regulations thereunder, and certifies that either it has provided an Internal Revenue Service Form W-9 or is an exempt recipient as defined in Section 1.6049-4(c)(1)(ii) of the United States Treasury regulations.

        As used herein, "United States person" means any citizen or resident of the United States, any corporation, partnership or other entity created or organized in or under the laws of the United States and any estate or trust the income of which is subject to United States Federal income taxation regardless of its source, and "United States" means the United States of America (including the States and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction.

        We undertake to advise you by telex if the above statement as to beneficial ownership is not correct on the Interest Payment Date on [Insert Date] as to any such portion of such temporary global Security.

        We understand that this certificate is required in connection with certain tax legislation in the United States. If administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorize you to produce this certificate or a copy thereof to any interested party in such proceedings.

Dated:                        , 20

[To be dated on or after the 15th day before the relevant Interest Payment Date]

[Name of Account Holder]

(Authorized Signatory)

Name:
Title:

        UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

        THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE.

        THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF IS DEEMED TO HAVE AGREED TO BE BOUND BY THE PROVISIONS OF A REGISTRATION RIGHTS AGREEMENT DATED FEBRUARY 13, 2003 (THE "REGISTRATION RIGHTS AGREEMENT"), AMONG THE COMPANY AND THE INITIAL PURCHASERS, AS THEREIN DEFINED. THE COMPANY WILL PROVIDE A COPY OF THE REGISTRATION RIGHTS AGREEMENT TO A HOLDER OF THIS SECURITY WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS.

        THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO CITY NATIONAL CORPORATION, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (3) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (4) PURSUANT TO ANY EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES; (B) THE HOLDER WILL NOTIFY ANY PURCHASER OF SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE, IF THEN APPLICABLE; AND (C) WITH RESPECT TO ANY TRANSFER OF SECURITIES PURSUANT TO CLAUSE (A)(4), THE HOLDER WILL DELIVER TO CITY NATIONAL CORPORATION AND THE TRUSTEE AN OPINION OF COUNSEL, CERTIFICATES AND OTHER INFORMATION AS THEY MAY REQUIRE TO CONFIRM THAT THE TRANSFER BY IT COMPLIES WITH THE FOREGOING RESTRICTIONS.

        THESE SECURITIES ARE NOT SAVINGS OR DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS OF ANY BANK OR NONBANK SUBSIDIARY OF CITY NATIONAL CORPORATION AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY.

CITY NATIONAL CORPORATION

5.125% Senior Note Due 2013

No. 001 CUSIP No. 178566AA3

CITY NATIONAL CORPORATION, a Delaware corporation (herein called the "Company", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to

CEDE & CO.

or registered assigns, the principal sum of TWO HUNDRED TWENTY FIVE MILLION DOLLARS ($225,000,000) on February 15, 2013 (the "Maturity Date"), and to pay interest on said principal sum semiannually on February 15 and August 15 in each year (individually referred to as an "Interest Payment Date" and collectively as the "Interest Payment Dates"), commencing August 15, 2003, at the rate of 5.125% per annum, computed on the basis of a 360-day year consisting of twelve 30-day months, from February 13, 2003, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the February 1 or August 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date, provided that interest payable on the Maturity Date shall be payable to the Person to whom the principal hereof is payable. In the event any Interest Payment Date or the Maturity Date is not a Business Day, principal and interest will be paid on the next succeeding Business Day with the same force and effect as if made on such date and no interest on such payment will accrue from and after such date. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice of which shall be given to the Holder of this Security not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange upon which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in such Indenture. Payment of the principal of and interest on this Security due on the Maturity Date will be made in immediately available funds upon presentation of this Security, provided that it is presented to the Paying Agent in time for the Paying Agent to make such payment in such funds in accordance with its normal procedures. For the purposes of this Security, "Business Day" means any day, other than a Saturday or Sunday, on which banking institutions in the City of Los Angeles, California, the City of New York, New York and any place of Payment for the Securities are open for business. Payment of the principal of and interest on this Security will be made at the office or agency of the Company maintained for that purpose in The City of New York, New York, and if this Security is no longer held in global form, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that, at the option of the

2

Company, payment of interest (other than interest payable on the Maturity Date) may be paid by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register at the close of business on the Regular Record Date.

        Pursuant to the Registration Rights Agreement dated February 13, 2003 (the "Registration Rights Agreement") among the Company and the initial purchasers party thereto, the Company is obligated to consummate an exchange offer pursuant to which the holder of this Security shall, subject to the conditions set forth in the Registration Rights Agreement, have the right to exchange this Security for a New Security, which has been registered under the Securities Act, in like principal amount and having identical terms as the Securities (other than as set forth in the Registration Rights Agreement). Capitalized terms used in this paragraph and the following paragraph but not defined in these paragraphs have the meanings assigned to them in the Registration Rights Agreement.

        In the event that (i) on or prior to the 120th calendar day after the date hereof (or, if such day is not a Business Day, the Business Day thereafter), neither the Exchange Offer Registration Statement nor the Shelf Registration Statement is filed with the Securities and Exchange Commission (the "Commission"), (ii) on or prior to the 210th calendar day after the date hereof (or, if such day is not a Business Day, the first Business Day thereafter), neither the Exchange Offer Registration Statement nor the Shelf Registration Statement is declared effective, (iii) on or prior to the 45th calendar day after the date of effectiveness of the Exchange Offer Registration Statement, the Registered Exchange Offer has not been consummated (provided no Shelf Registration Statement is required or requested to be filed), or (iv) after either the Exchange Offer Registration Statement or the Shelf Registration Statement has been declared effective, such Registration Statement ceases to be effective or usable in connection with resales of Securities or New Securities, as applicable, at any time that the Company is obligated to maintain the effectiveness thereof pursuant to the Registration Rights Agreement (each, a "Registration Default"), the per annum interest rate borne by the Securities and the New Securities affected thereby shall be increased by one-quarter of one percent (0.25%) per annum immediately following such Registration Default and payable pursuant to Section 5.04 of the Indenture. Upon (w) the filing of the Exchange Offer Registration Statement or the Shelf Registration Statement after the 120-day period described in clause (i) above, (x) the effectiveness of the Exchange Offer Registration Statement or the Shelf Registration Statement after the 210-day period described in clause (ii) above, (y) the consummation of the Registered Exchange Offer after the 45-day period described in clause (iii) above, or (z) receipt of notice by the Holders of the Securities or the New Securities, as applicable, from the Company that the applicable Registration Statement or related Prospectus is once again effective or usable following an event described in clause (iv) above, the interest rate borne by the Securities or the New Securities, as applicable, from the date of such filing, effectiveness, consummation or notice, as the case may be, shall be reduced to the original interest rate if the Company is otherwise in compliance with this paragraph; provided, however, that, if after any such reduction in interest rate, a different Registration Default occurs, the interest rate shall again be increased pursuant to the foregoing provisions.

        Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

3

        IN WITNESS WHEREOF, the Company has caused this Security to be duly executed.

CITY NATIONAL CORPORATION
By	Title:
ATTEST:
By:	Title:

CERTIFICATE OF AUTHENTICATION

        This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

U.S. BANK NATIONAL ASSOCIATION as Trustee
By	Authorized Officer

Date: February 13, 2003

4

[REVERSE OF SECURITY]

        This Security is one of a duly authorized issue of notes of the series designated above of the Company (herein called the "Securities"), issued and to be issued under an indenture dated as of February 13, 2003 for senior debt securities (the "Indenture"), between CITY NATIONAL CORPORATION and U.S. BANK NATIONAL ASSOCIATION, to which the Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof, initially limited in aggregate principal amount equal to $225,000,000 as of the date of this Security. In addition, the Company may from time to time without the consent of the Holders of Securities create and issue further securities having the same terms and conditions as the Securities in all respects (or in all respects except for the issue date and issue price) and so that such further issue shall be consolidated and form a single series with the outstanding securities of this issue (including the Securities) or upon such terms as the Company may determine at the time of their issue. References herein to the Securities include (unless the context requires otherwise) any other securities issued as described in this paragraph and forming a single series with the Securities.

        Where the Indenture or this Security provides for notice to the Holder of this Security of any event, such notice shall be sufficiently given if in writing and mailed, first class, postage prepaid, to the Holder of this Security at his address as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice to the Holder of this Security by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. In any case where notice to Holder of this Security is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to the Holder of this Security shall affect the sufficiency of such notice with respect to other Holders of the Securities.

        This Security may not be redeemed, in whole or in part, prior to the Maturity Date. This Security is not subject to any sinking fund.

        This Security shall have the benefit of the covenants and agreements set forth in the Indenture.

        If an Event of Default with respect to the Securities shall occur and be continuing, the principal of all the Securities may be declared due and payable in the manner and with the effect provided in the Indenture.

        The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series under the Indenture to be affected at any time by the Company with the consent of the Holders of a majority in principal amount of the Outstanding Securities of all series to be affected (acting as one class). The Indenture also contains provisions permitting the Holders of a majority in principal amount of the Outstanding Securities of each series, on behalf of the Holders of all Securities of such series, to waive certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

        As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding, judicial or otherwise, with respect to the Indenture, or for the appointment of a receiver or trustee, or for any other remedy thereunder, unless such Holder has

5

previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than a majority in principal amount of the Outstanding Securities of this series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder, such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request, the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute such proceeding, and no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities of this series. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal of, premium, if any, and interest on this Security on or after the respective due dates expressed herein.

        No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company which is absolute and unconditional to pay the principal of premium, if any, and interest on this Security at the times, places and rate, and in the coin or currency herein and in the Indenture prescribed.

        As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registerable in the Security Register of the Company, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of authorized denominations and for the same aggregate principal amount will be issued to the designated transferee or transferees.

        The Securities are issuable only in fully registered form without coupons, in denominations of $1,000 and integral multiples thereof. As provided in the Indenture and subject to certain limitations therein set forth, the Securities are exchangeable for a like aggregate principal amount of Securities of a different authorized denomination, as requested by the Holder surrendering the same.

        The Securities are issuable in the form of one or more Global Securities and shall be exchangeable for definitive Securities only in the circumstances specified in Section 3.05 of the Indenture (other than the tenth paragraph thereof). The Depositary for the Securities shall be The Depository Trust Company.

        No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

        Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

        This Security shall be construed in accordance with and governed by the laws of the State of New York.

        All terms not defined herein shall have the respective meanings ascribed to them in the Indenture referred to herein.

        Unless the certificate of authentication hereon has been manually executed by or on behalf of the Trustee under such Indenture, this Security shall not be entitled to any benefits under such Indenture or be valid or obligatory for any purpose.

6

[FORM OF ASSIGNMENT]

        For value received                                    hereby sell(s), assign(s) and transfer(s) unto                                     (please insert social security or other identifying number of assignee) the within Security, and hereby irrevocably constitutes and appoints                                    attorney to transfer the said Security on the books of the Company, with full power of substitution in the premises.

        In connection with any transfer of the within Security occurring prior to the second anniversary of the date of original issuance of such Security, the undersigned confirms that such Security is being transferred:

(1)	[            ]	To City National Corporation; or
(2)	[            ]	So long as this Security is eligible for resale pursuant to Rule 144A under the Securities Act, to a person whom the seller reasonably believes is a Qualified Institutional Buyer within the meaning of Rule 144A, purchasing for its own account or for the account of a Qualified Institutional Buyer to whom notice is given that the resale, pledge or other transfer is being made in reliance on Rule 144A; or
(3)	[            ]	Pursuant to offers and sales that occur outside the United States within the meaning of Regulation S under the Securities Act; or
(4)	[            ]	Pursuant to any exemption from registration under the Securities Act; or
(5)	[            ]	Pursuant to an effective Registration Statement under the Securities Act.

        Unless one of the boxes above is checked, the Trustee will refuse to register any of the within Notes in the name of any person other than the registered holder thereof (or hereof); provided, however, that the Trustee may, in its sole discretion, register the transfer of such Notes if it has received such certifications, legal opinions and/or other information as the Company has required to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended.

        In addition, if box (4) above is checked, the holder must furnish to the Trustee certifications, legal opinions or other information as it or the Company may require to confirm that such transfer is being made pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended.

Dated:

Signature(s)

        Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15.

Signature Guarantee

7

SCHEDULE OF INCREASES OR DECREASES

        The initial principal amount of this Global Security is U.S. $225,000,000. The following increases or decreases in this Global Security have been made:

Date of Exchange
Amount of increase in Principal Amount of this Global Security Amount of decrease in Principal Amount of this Global Security Principal Amount of this Global Note following such increase or decrease Signature of authorized signatory of Trustee

8

EX-4.(D)

Exhibit 4(d)

ENDORSED—FILED
in the office of the Secretary of State
of the State of California
APR 18 2002
BILL JONES, Secretary of State

CERTIFICATE OF AMENDMENT OF
ARTICLES OF INCORPORATION OF
CN REAL ESTATE INVESTMENT CORPORATION

        Frank P. Pekny and Heng Chen certify that:

        1.     They are the president and the secretary/chief financial officer, respectively, of CN Real Estate Investment Corporation, a California corporation.

        2.     The articles of incorporation are amended in full to read:

        ARTICLE FIRST:    The name of this corporation is CN Real Estate Investment Corporation (the "Corporation").

        ARTICLE SECOND:    The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporations Code.

        ARTICLE THIRD:    Authorized shares and classes of stock are designated as follows:

        (a)   The total number of shares of stock the Corporation shall have authority to issue is 4,000,000 shares, of which:

          (i)  3,800,000 shares shall consist of Common Stock, no par value per share (the "Common Stock"); and

         (ii)  200,000 shares shall consist of Preferred Stock ("Preferred Stock"), which consists of:

        (A)  180,000 shares of Series A Non-Cumulative Preferred Stock, no par value per share (the "Series A Preferred Shares"). Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, however, that no decrease shall reduce the number of shares designated as Series A Preferred Shares to a number less than the number of Series A Preferred Shares then outstanding plus the number of shares reserved for issuance upon the exercise of any outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series A Preferred Shares; and

        (B)  15,000 shares of Series B Non-Cumulative Preferred Stock, no par value per share (the "Series B Preferred Shares"). Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, however, that no decrease shall reduce the number of shares designated as Series B Preferred Shares to a number less than the number of Series B Preferred Shares then outstanding plus the number of shares reserved for issuance upon the exercise of any outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series B Preferred Shares.

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        (b)   Shares of Preferred Stock may be issued from time to time in one or more series. The Board of Directors is authorized to fix the number of shares of any series of Preferred Stock and to determine the designation of any series. The Board of Directors is also authorized to determine or alter the rights preferences, privileges and restrictions granted to or imposed on any wholly unissued series of Preferred Stock and, within the limits and restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any series, to increase or decrease (but not below the number of shares of such series than outstanding) the number of shares of any such series subsequent to the issue of shares of that series.

        (c)   The rights, preferences, privileges and restrictions of the Series A Preferred Shares shall be as follows:

        1.    Dividends and Distributions.

        1.A. Subject to the rights of the holders of any shares of any other series of Preferred Stock (or any similar stock) ranking prior and superior to, or on a par with, the Series A Preferred Shares with respect to dividends, the holders of record of Series A Preferred Shares, in preference to the holders of any other class or series of stock of the Corporation (including shares of Common Stock), shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available to the extent such funds are available for the purpose, quarterly dividends payable in cash on or prior to the last day of April, July, October and January, as applicable, in each year (each such date being referred to in this Section (c) as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred Shares, in an amount per share (rounded to the nearest cent) equal to $2.125 per share ($8.50 per annum).

        1.B. The Corporation shall declare a dividend or distribution on the Series A Preferred Shares as provided in paragraph l.A. of this Section (c) immediately before it declares any dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock) provided, however, that dividends shall be non-cumulative. Accordingly, if the Corporation fails to declare a dividend on the Series A Preferred Shares for a quarterly dividend period, then the holders of the Series A Preferred Shares will have no right to receive a dividend on such shares for that quarter, and the Corporation will have no obligation to pay a dividend for that quarter, whether or not dividends are declared and paid for any future quarter with respect to either the Series A Preferred Shares or the Common Stock of the Corporation. The Board of Directors may fix a record date for the determination of holders of Series A Preferred Shares entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 60 days prior to the date fixed for the payment thereof.

        2.    Voting Rights.

        2.A. Subject to the provision for adjustment hereinafter set forth, each Series A Preferred Share shall entitle the holder thereof to one (1) vote on all matters submitted to a vote of the stockholders of the Corporation.

        2.B. Except as otherwise provided in this Amended and Restated Articles of Incorporation, in a Certificate of Determination creating a series of Preferred Stock or any similar stock or by law, the holders of Series A Preferred Shares and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

        2.C. Holders of Series A Preferred Shares shall have the right to vote on all matters submitted to a vote of the holders of shares of Common Stock and of shares of other classes or series which may be entitled to vote thereon and as otherwise provided by law and as set forth in Section 903 of the California Corporations Code.

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        3.    Certain Restrictions.

        3.A. Whenever quarterly dividends or other dividends or distributions that have been declared on the Series A Preferred Shares remain outstanding and payable and until such unpaid dividends and distributions shall have been paid in full, the Corporation shall not, directly or indirectly:

        (1)   declare or pay dividends on, or make any other distributions with respect to, any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Shares;

        (2)   declare or pay dividends on, or make any other distributions with respect to any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Shares, except dividends paid ratably on the Series A Preferred Shares and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

        (3)   redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Shares, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Preferred Shares; or

        (4)   redeem or purchase or otherwise acquire for consideration any Series A Preferred Shares, or any shares of stock ranking on a parity with the Series A Preferred Shares, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

        3.B. The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration, directly or indirectly, any shares of stock of the Corporation unless the Corporation could, under paragraph 3.A. of this Section (c), purchase or otherwise acquire such shares at such time and in such manner.

        4.    Reacquired Shares.

        Any Series A Preferred Shares purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth in this Amended and Restated Articles of Incorporation, in any Certificate of Designation creating a series of Preferred Stock or any similar stock or as otherwise required by law.

        5.    Liquidation, Dissolution or Winding Up.

        Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall be made to: (i) the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Shares unless, prior thereto, the holders of Series A Preferred Shares shall have received the sum of $100 per share (the "Liquidation Preference") plus any declared and unpaid dividends; or (ii) the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Shares, except distributions made ratably on the Series A Preferred Shares and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up.

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        6.    Consolidation, Merger or Other.

        In the event the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, or otherwise changed, then in any such event each share of Series A Preferred Shares shall at the same time be similarly exchanged or changed into an amount per share equal to $100.

        7.    Redemption.

        7.A. The Series A Preferred Shares may be redeemed by the Corporation any time after October 31, 2006 upon 30 days written notice, for a redemption price equal to $100 per share plus any declared and unpaid dividends. The notice of redemption for the Series A Preferred Shares shall set forth all the following: (1) the class or series of shares or part of any class or series of shares to be redeemed; (2) the date fixed for redemption; (3) the redemption price; and (4) the place in which the shareholders may obtain payment of the redemption price upon surrender of their share certificates.

        7.B. The Corporation will have the right at any time to redeem the Series A Preferred Shares at a redemption price equal to the Liquidation Preference plus any declared and unpaid dividends thereon after one of the following two events have occurred:

        (1)   The receipt by the Corporation of advice from a nationally recognized law or accounting firm that, as a result of (i) any amendment to, clarification of or change (including any announced prospective change) in the laws or treaties (or any regulation thereunder) of the United States or any political subdivision or taxing authority thereof or therein affecting taxation, (ii) any judicial decision, official administrative pronouncement, ruling, regulatory procedure, notice or announcement (including any official administrative notice or announcement of intent to adopt such procedures or regulations) ("Administrative Action") or (iii) any amendment to, clarification of or change in the official position or the interpretation of such Administrative Action or judicial decision or any judicial interpretation or pronouncement that provides for a position with respect to such Administrative Action or judicial decision that differs from the theretofore generally accepted position, in each case, by any legislative body, court, governmental authority or regulatory body, irrespective of the manner in which such amendment, clarification or change is made known, which amendment, clarification or change is effective or such pronouncement or decision is announced on or after the date of issuance of the Series A Preferred Shares, there is more than an insubstantial risk that a dividend paid or to be paid by the Corporation with respect to the capital stock of the Corporation is not, or will not be, fully deductible for United States federal income tax purposes (a "Tax Event"); or

        (2)   The receipt by City National Bank, a national banking association (the "Bank") or CN Real Estate Investment Holdings, Inc. (the "Parent Corporation") of an opinion of independent bank regulatory counsel experienced in such matters to the effect that as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any rules, guidelines or policies of an applicable regulatory agency for the Bank, the Parent Corporation or any of their respective affiliates, or (b) any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or which pronouncement or decision is announced on or after the date of original issuance of the Series A Preferred Shares, the Series A Preferred Shares do not constitute, or within 90 days of the date of such opinion will not constitute, Tier 1 Capital (as defined in Section 2(a)(2) of Appendix A of 12 C.F.R. 3) (or its then equivalent) for purposes of any capital adequacy

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guidelines as then in effect and applicable to the Bank, the Parent Corporation or any of their respective affiliates.

        8.    Automatic Exchange.

        Each Series A Preferred Share will be exchanged automatically (the "Automatic Exchange") for one newly issued preferred share of Bank stock (each a "Bank Series A Preferred Share") if the Office of the Comptroller of the Currency (the "OCC") directs in writing (a "Directive") an exchange of Series A Preferred Shares for Bank Series A Preferred Shares due to the occurrence of any of the following events (each an "Exchange Event"): (i) the Bank becomes "undercapitalized" under the OCC's then current prompt corrective action regulations, (ii) the Bank is placed into bankruptcy, reorganization, conservatorship or receivership, or (iii) the OCC, in its exercise of supervisory authority over the Bank, requires the Automatic Exchange of Series A Preferred Shares. Upon receipt by the Corporation of a Directive, each holder of Series A Preferred Shares shall be unconditionally obligated to surrender to the Bank the certificates representing such Series A Preferred Shares of such holder in exchange for a certificate representing one Bank Series A Preferred Share for each share of Series A Preferred Shares. Any Series A Preferred Shares purchased or redeemed by the Corporation prior to the Time of Exchange (as defined below) shall not be deemed outstanding and shall not be subject to the Automatic Exchange.

        The Automatic Exchange shall occur as of 9:00 a.m., Los Angeles local time, on the date for such exchange set forth in the Directive, or, if such date is not set forth in the Directive, as of 9:00 a.m., Los Angeles local time, on the earliest possible date such exchange could occur consistent with the Directive (the "Time of Exchange"), as evidenced by the issuance by the Bank of a press release prior to such time. As of the Time of Exchange, all of the Series A Preferred Shares required to be exchanged shall be deemed canceled without any further action by the Corporation, all rights of the holders of such Series A Preferred Shares as stockholders of the Corporation shall cease, and such persons shall thereupon and thereafter be deemed to be and shall be for all purposes the holders of Bank Series A Preferred Shares. The Corporation shall mail notice of the occurrence of an Exchange Event to each holder of the Series A Preferred Shares within 30 days of such event, and the Bank shall deliver to each such holder certificates for Bank Series A Preferred Shares upon surrender of certificates for the Series A Preferred Shares required to be exchanged. Until such replacement stock certificates are delivered (or in the event such replacement certificates are not delivered, certificates previously representing the Series A Preferred Shares shall be deemed for all purposes to represent corresponding Bank Series Preferred Shares.

        9.    Rank.

        The Series A Preferred Shares shall rank, with respect to the payment of dividends and the distribution of assets, senior to shares of Common Stock and no less than pari passu with all series of Preferred Stock whether issued before or after the issuance of the Series A Preferred Shares.

        10.    Restricted Transfer.

        Each certificate representing Series A Preferred Shares shall contain the following legend:

        "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND NONE OF THIS SECURITY, THE SHARES OF PREFERRED STOCK EVIDENCED HEREBY ("PREFERRED SHARES"), OR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH A REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 4(2) OF THE SECURITIES ACT AND RULE 506 THEREUNDER. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS, ACKNOWLEDGES AND AGREES FOR THE

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BENEFIT OF THE CORPORATION THAT: (i) IT HAS ACQUIRED A "RESTRICTED" SECURITY WHICH HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT; (ii) IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE CORPORATION, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) TO A PERSON WHO THE SELLER REASONABLY BELIEVES, AND WHO REPRESENTS ITSELF TO BE, AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 506, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY APPLICABLE JURISDICTION; AND (iii) IT WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS SECURITY OR ANY PREFERRED SHARES OF THE RESALE RESTRICTIONS SET FORTH IN (ii) ABOVE. ANY OFFER, SALE OR OTHER DISPOSITION PURSUANT TO THE FOREGOING CLAUSE (ii)(D) IS SUBJECT TO THE RIGHT OF THE CORPORATION TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS OR OTHER INFORMATION REASONABLY ACCEPTABLE TO IT IN FORM AND SUBSTANCE.

        THIS SECURITY (AND THE PREFERRED SHARES EVIDENCED HEREBY) ARE SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER FOR THE PURPOSE OF THE CORPORATION'S MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT TRUST (A "REIT") UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). NO PERSON MAY (1) BENEFICIALLY OWN PREFERRED SHARES IN EXCESS OF THE APPLICABLE OWNERSHIP LIMIT, EXCEPT AS SET FORTH IN THE CORPORATION'S BYLAWS, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, OR (2) BENEFICIALLY OWN PREFERRED SHARES OF THE SECURITIES THAT WOULD RESULT IN THE CORPORATION BEING "CLOSELY HELD" UNDER SECTION 856(H) OF THE CODE OR OTHERWISE TO FAIL TO QUALIFY AS A REIT. ANY PERSON (OTHER THAN CITY NATIONAL BANK AND ITS AFFILIATES) WHO ATTEMPTS TO BENEFICIALLY OWN PREFERRED SHARES IN EXCESS OF THE APPLICABLE LIMITATION MUST IMMEDIATELY NOTIFY THE CORPORATION IN WRITING. NO PERSON MAY TRANSFER THIS SECURITY OR ANY PREFERRED SHARES IF SUCH TRANSFER WOULD RESULT IN THE OUTSTANDING COMMON STOCK AND PREFERRED STOCK OF THE CORPORATION BEING BENEFICIALLY OWNED BY LESS THAN 100 PERSONS (DETERMINED WITHOUT REFERENCE TO ANY RULES OF ATTRIBUTION).

        NO PERSON MAY TRANSFER THIS SECURITY OR ANY PREFERRED SHARES WITHOUT FIRST HAVING OFFERED THIS SECURITY OR SUCH PREFERRED SHARES PROPOSED TO BE TRANSFERRED TO THE CORPORATION, WHEREUPON THE CORPORATION SHALL HAVE THE RIGHT TO ELECT TO PURCHASE, OR SHALL HAVE THE RIGHT, BUT NOT THE OBLIGATION, TO ELECT TO DESIGNATE A THIRD PARTY TO PURCHASE, THIS SECURITY OR ALL (BUT NOT LESS THAN ALL) OF THE PREFERRED SHARES PROPOSED TO BE TRANSFERRED. IF THE RESTRICTIONS ON TRANSFER ARE VIOLATED, ALL OR A PORTION OF THE PREFERRED SHARES REPRESENTED HEREBY WILL BE TRANSFERRED AUTOMATICALLY AND BY OPERATION OF LAW TO A TRUST AND SHALL BE DESIGNATED "EXCESS SHARES."

        IN ADDITION, NO PERSON MAY TRANSFER THIS SECURITY OR ANY PREFERRED SHARES IF SUCH TRANSFER WOULD RESULT IN THE NUMBER OF HOLDERS OF PREFERRED SHARES EQUALING OR EXCEEDING 500 PERSONS (AS DEFINED IN THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED). ANY ATTEMPTED TRANSFER IN

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VIOLATION OF SUCH RESTRICTIONS SHALL BE VOID AND OF NO FURTHER EFFECT AND SHALL BE SUBJECT TO THE FURTHER PROVISIONS OF THE CORPORATION'S BYLAWS.

        THESE RESTRICTIONS ARE SET FORTH IN FULL DETAIL IN THE CORPORATION'S BYLAWS, A COPY OF WHICH WILL BE SENT WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS."

        11.    Amendment.

        The Articles of Incorporation of the Corporation shall not be amended in any manner that would materially alter or change the powers, preferences or special rights of the Series A Preferred Shares without the affirmative vote of the holders of at least a majority of the outstanding Series A Preferred Shares, voting together as a single class.

        (d)   The rights, preferences, privileges and restrictions of the Series B Preferred Shares shall be as follows:

        1.    Dividends and Distributions.

        l.A.  Subject to the rights of the holders of any shares of any other series of Preferred Stock (or any similar stock) ranking prior and superior to, or on a par with, the Series B Preferred Shares with respect to dividends, the holders of record of Series B Preferred Shares, in preference to the holders of any other class or series of stock of the Corporation (including shares of Common Stock), shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available to the extent such funds are available for the purpose, quarterly dividends payable in cash on or prior to the last day of April, July, October and January, as applicable, in each year (each such date being referred to in this Section (d) as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series B Preferred Shares, in an amount per share (rounded to the nearest cent) equal to $21.25 per share ($85.0 per annum); provided, however, that the first Quarterly Dividend Payment will be prorated from the date of issuance to the first Quarterly Dividend Payment Date.

        l.B.  The Corporation shall declare a dividend or distribution on the Series B Preferred Shares as provided in paragraph l.A. of this Section (d) immediately before it declares any dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock) provided, however, that dividends shall be non-cumulative. Accordingly, if the Corporation fails to declare a dividend on the Series B Preferred Shares for a quarterly dividend period, then the holders of the Series B Preferred Shares will have no right to receive a dividend on such shares for that quarter, and the Corporation will have no obligation to pay a dividend for that quarter, whether or not dividends are declared and paid for any future quarter with respect to either the Series B Preferred Shares or the Common Stock of the Corporation. The Board of Directors may fix a record date for the determination of holders of Series B Preferred Shares entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 60 days prior to the date fixed for the payment thereof.

        2.    Voting Rights.

        2.A. Subject to the provision for adjustment hereinafter set forth, each Series B Preferred Share shall entitle the holder thereof to one (1) vote on all matters submitted to a vote of the stockholders of the Corporation.

        2.B. Except as otherwise provided in this Amended and Restated Articles of Incorporation, in any Certificate of Determination creating a series of Preferred Stock or any similar stock or by law, the holders of Series B Preferred Shares and the holders of shares of Common Stock and any

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other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

        2.C. Holders of Series B Preferred Shares shall have the right to vote on all matters submitted to a vote of the holders of shares of Common Stock and of shares of other classes or series which may be entitled to vote thereon and as otherwise provided by law and as set forth in Section 903 of the California Corporations Code.

        3.    Certain Restrictions.

        3.A. Whenever quarterly dividends or other dividends or distributions that have been declared on the Series B Preferred Shares remain outstanding and payable and until such unpaid dividends and distributions shall have been paid in full, the Corporation shall not, directly or indirectly:

        (1)   declare or pay dividends on, or make any other distributions with respect to, any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series B Preferred Shares;

        (2)   declare or pay dividends on, or make any other distributions with respect to any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series B Preferred Shares, except dividends paid ratably on the Series B Preferred Shares and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

        (3)   redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series B Preferred Shares, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series B Preferred Shares; or

        (4)   redeem or purchase or otherwise acquire for consideration any Series B Preferred Shares, or any shares of stock ranking on a parity with the Series B Preferred Shares (other than the Series A Preferred Shares), except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

        3.B. The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration, directly or indirectly, any shares of stock of the Corporation unless the Corporation could, under paragraph 3.A. of this Section (d), purchase or otherwise acquire such shares at such time and in such manner.

        4.    Reacquired Shares.

        Any Series B Preferred Shares purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth in this Amended and Restated Articles of Incorporation, in any Certificate of Determination creating a series of Preferred Stock or any similar stock or as otherwise required by law.

        5.    Liquidation, Dissolution or Winding Up.

        Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall be made to: (i) the holders of shares of stock ranking junior (either as to dividends or upon liquidation,

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dissolution or winding up) to the Series B Preferred Shares unless, prior thereto, the holders of Series B Preferred Shares shall have received the sum of $1,000 per share (the "Liquidation Preference") plus any declared and unpaid dividends; or (ii) the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series B Preferred Shares, except distributions made ratably on the Series B Preferred Shares and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up.

        6.    Consolidation, Merger or Other.

        In the event the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, or otherwise changed, then in any such event each share of Series B Preferred Shares shall at the same time be similarly exchanged or changed into an amount per share equal to $1,000.

        7.    Redemption.

        7.A. The Series B Preferred Shares may be redeemed by the Corporation any time after twenty (20) years and ninety (90) days after the date of issuance of the Series B Preferred Shares upon 30 days written notice, for a redemption price equal to $1,000 per share plus any declared and unpaid dividends. The notice of redemption for the Series B Preferred Shares shall set forth all the following: (1) the class or series of shares or part of any class or series of shares to be redeemed; (2) the date fixed or redemption; (3) the redemption price; and (4) the place in which the shareholders may obtain payment of the redemption price upon surrender of their share certificates.

        7.B. The Corporation will have the right at any time to redeem the Series B Preferred Shares at a redemption price equal to the Liquidation Preference plus any declared and unpaid dividends thereon if the following event has occurred:

        (1)   The receipt by the Corporation of advice from a nationally recognized law or accounting firm that, as a result of (i) any amendment to, clarification of or change (including any announced prospective change) in the laws or treaties (or any regulation thereunder) of the United States or any political subdivision or taxing authority thereof or therein affecting taxation, (ii) any judicial decision, official administrative pronouncement, ruling, regulatory procedure, notice or announcement (including any official administrative notice or announcement of intent to adopt such procedures or regulations) ("Administrative Action") or (iii) any amendment to, clarification of or change in the official position or the interpretation of such Administrative Action or judicial decision or any judicial interpretation or pronouncement that provides for a position with respect to such Administrative Action or judicial decision that differs from the theretofore generally accepted position, in each case, by any legislative body, court, governmental authority or regulatory body, irrespective of the manner in which such amendment, clarification or change is made known, which amendment, clarification or change is effective or such pronouncement or decision is announced on or after the date of issuance of the Series B Preferred Shares, there is more than an insubstantial risk that a dividend paid or to be paid by the Corporation with respect to the capital stock of the Corporation is not, or will not be, fully deductible for United States federal income tax purposes (a "Tax Event"); or

        (2)   The receipt by City National Bank, a national banking association (the "Bank") or CN Real Estate Investment Holdings, Inc. (the "Parent Corporation") of an opinion of independent bank regulatory counsel experienced in such matters to the effect that as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any rules, guidelines or policies

9

of an applicable regulatory agency for the Bank, the Parent Corporation or any of their respective affiliates, or (b) any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or which pronouncement or decision is announced on or after the date of original issuance of the Series B Preferred Shares, the Series B Preferred Shares do not constitute, or within 90 days of the date of such opinion will not constitute, Tier 1 Capital (as defined in Section 2(a)(2) of Appendix A of 12 C.F.R. 3) (or its then equivalent) for purposes of any capital adequacy guidelines as then in effect and applicable to the Bank, the Parent Corporation or any of their respective affiliates.

        8.    Automatic Exchange.

        Each Series B Preferred Share will be exchanged automatically (the "Automatic Exchange") for one newly issued preferred share of Bank stock (each a "Bank Series B Preferred Share") if the Office of the Comptroller of the Currency (the "OCC") directs in writing (a "Directive") an exchange of Series B Preferred Shares for Bank Series B Preferred Shares due to the occurrence of any of the following events (each an "Exchange Event"): (i) the Bank becomes "undercapitalized" under the OCC's then current prompt corrective action regulations, (ii) the Bank is placed into bankruptcy, reorganization, conservatorship or receivership, or (iii) the OCC, in its exercise of supervisory authority over the Bank, requires the Automatic Exchange of Series B Preferred Shares. Upon receipt by the Corporation of a Directive, each holder of Series B Preferred Shares shall be unconditionally obligated to surrender to the Bank the certificates representing such Series B Preferred Shares of such holder in exchange for a certificate representing one Bank Series B Preferred Share for each share of Series B Preferred Shares. Any Series B Preferred Shares purchased or redeemed by the Corporation prior to the Time of Exchange (as defined below) shall not be deemed outstanding and shall not be subject to the Automatic Exchange.

        The Automatic Exchange shall occur as of 9:00 a.m., Los Angeles local time, on the date for such exchange set forth in the Directive, or, if such date is not set forth in the Directive, as of 9:00 a.m., Los Angeles local time, on the earliest possible date such exchange could occur consistent with the Directive (the "Time of Exchange"), as evidenced by the issuance by the Bank of a press release prior to such time. As of the Time of Exchange, all of the Series B Preferred Shares required to be exchanged shall be deemed canceled without any further action by the Corporation, all rights of the holders of such Series B Preferred Shares as stockholders of the Corporation shall cease, and such persons shall thereupon and thereafter be deemed to be and shall be for all purposes the holders of Bank Series B Preferred Shares. The Corporation shall mail notice of the occurrence of an Exchange Event to each holder of the Series B Preferred Shares within 30 days of such event, and the Bank shall deliver to each such holder certificates for Bank Series B Preferred Shares upon surrender of certificates for the Series B Preferred Shares required to be exchanged. Until such replacement stock certificates are delivered (or in the event such replacement certificates are not delivered, certificates previously representing the Series B Preferred Shares shall be deemed for all purposes to represent corresponding Bank Series B Preferred Shares.

        9.    Rank.

        The Series B Preferred Shares shall rank, with respect to the payment of dividends and the distribution of assets, senior to shares of Common Stock and no less than pari passu with all series of Preferred Stock whether issued before or after the issuance of the Series B Preferred Shares.

        10.    Restricted Transfer.

        Each certificate representing Series B Preferred Shares shall contain the following legend:

        "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND NONE OF THIS SECURITY, THE SHARES OF PREFERRED STOCK EVIDENCED

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HEREBY ("PREFERRED SHARES"), OR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH A REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 4(2) OF THE SECURITIES ACT AND RULE 506 THEREUNDER. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS, ACKNOWLEDGES AND AGREES FOR THE BENEFIT OF THE CORPORATION THAT: (i) IT HAS ACQUIRED A "RESTRICTED" SECURITY WHICH HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT; (ii) IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE CORPORATION, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) TO A PERSON WHO THE SELLER REASONABLY BELIEVES, AND WHO REPRESENTS ITSELF TO BE, AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 506, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY APPLICABLE JURISDICTION; AND (iii) IT WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS SECURITY OR ANY PREFERRED SHARES OF THE RESALE RESTRICTIONS SET FORTH IN (ii) ABOVE. ANY OFFER, SALE OR OTHER DISPOSITION PURSUANT TO THE FOREGOING CLAUSE (ii)(D) IS SUBJECT TO THE RIGHT OF THE CORPORATION TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS OR OTHER INFORMATION REASONABLY ACCEPTABLE TO IT IN FORM AND SUBSTANCE.

        THIS SECURITY (AND THE PREFERRED SHARES EVIDENCED HEREBY) ARE SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER FOR THE PURPOSE OF THE CORPORATION'S MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT TRUST (A "REIT") UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). NO PERSON MAY (1) BENEFICIALLY OWN PREFERRED SHARES IN EXCESS OF THE APPLICABLE OWNERSHIP LIMIT, EXCEPT AS SET FORTH IN THE CORPORATION'S BYLAWS, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, OR (2) BENEFICIALLY OWN PREFERRED SHARES OF THE SECURITIES THAT WOULD RESULT IN THE CORPORATION BEING "CLOSELY HELD" UNDER SECTION 856(H) OF THE CODE OR OTHERWISE TO FAIL TO QUALIFY AS A REIT. ANY PERSON (OTHER THAN CITY NATIONAL BANK AND ITS AFFILIATES) WHO ATTEMPTS TO BENEFICIALLY OWN PREFERRED SHARES IN EXCESS OF THE APPLICABLE LIMITATION MUST IMMEDIATELY NOTIFY THE CORPORATION IN WRITING. NO PERSON MAY TRANSFER THIS SECURITY OR ANY PREFERRED SHARES IF SUCH TRANSFER WOULD RESULT IN THE OUTSTANDING COMMON STOCK AND PREFERRED STOCK OF THE CORPORATION BEING BENEFICIALLY OWNED BY LESS THAN 100 PERSONS (DETERMINED WITHOUT REFERENCE TO ANY RULES OF ATTRIBUTION).

        NO PERSON MAY TRANSFER THIS SECURITY OR ANY PREFERRED SHARES WITHOUT FIRST HAVING OFFERED THIS SECURITY OR SUCH PREFERRED SHARES PROPOSED TO BE TRANSFERRED TO THE CORPORATION, WHEREUPON THE CORPORATION SHALL HAVE THE RIGHT TO ELECT TO PURCHASE, OR SHALL HAVE THE RIGHT, BUT NOT THE OBLIGATION, TO ELECT TO DESIGNATE A THIRD PARTY TO PURCHASE, THIS SECURITY OR ALL (BUT NOT LESS THAN ALL) OF THE PREFERRED SHARES PROPOSED TO BE TRANSFERRED. IF THE RESTRICTIONS ON TRANSFER ARE VIOLATED, ALL OR A PORTION OF THE PREFERRED SHARES REPRESENTED HEREBY

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WILL BE TRANSFERRED AUTOMATICALLY AND BY OPERATION OF LAW TO A TRUST AND SHALL BE DESIGNATED "EXCESS SHARES."

        IN ADDITION, NO PERSON MAY TRANSFER THIS SECURITY OR ANY PREFERRED SHARES IF SUCH TRANSFER WOULD RESULT IN THE NUMBER OF HOLDERS OF PREFERRED SHARES EQUALING OR EXCEEDING 500 PERSONS (AS DEFINED IN THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED). ANY ATTEMPTED TRANSFER IN VIOLATION OF SUCH RESTRICTIONS SHALL BE VOID AND OF NO FURTHER EFFECT AND SHALL BE SUBJECT TO THE FURTHER PROVISIONS OF THE CORPORATION'S BYLAWS.

        THESE RESTRICTIONS ARE SET FORTH IN FULL DETAIL IN THE CORPORATION'S BYLAWS, A COPY OF WHICH WILL BE SENT WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS."

        11.    Amendment.

        The Articles of Incorporation of the Corporation shall not be amended in any manner that would materially alter or change the powers, preferences or special rights of the Series B Preferred Shares without the affirmative vote of the holders of at least a majority of the outstanding Series B Preferred Shares, voting together as a single class.

        3.     The amendment herein set forth has been duly approved by the Board of Directors.

        4.     The amendment herein set forth has been duly approved by the required vote of shareholders in accordance with Section 902 of the Corporations Code. The corporation has two classes of shares outstanding, each of which is entitled to vote with respect to the amendment herein set forth. The number of outstanding shares of each such class is 3,800,000 shares of common stock and 33,933 shares of preferred stock. The number of shares voting in favor of the amendment equaled or exceeded the vote required. The percentage vote required for the approval of the amendment herein set forth was more than 50% for each class.

*****

/s/  FRANK P. PEKNY Frank P. Pekny

/s/  HENG CHEN Heng Chen

        The undersigned, Frank P. Pekny, declares this April 18th, 2002 at Beverly Hills, Los Angeles County, California under penalty of perjury under the laws of the State of California that he has read the foregoing certificate and knows the contents thereof and that the same is true of his knowledge.

/s/  FRANK P. PEKNY Frank P. Pekny

        The undersigned, Heng Chen, declares this April 18th, 2002 at Los Angeles, Los Angeles County, California under penalty of perjury under the laws of the State of California that he has read the foregoing certificate and knows the contents thereof and that the same is true of his knowledge.

/s/  HENG CHEN Heng Chen

           
[SEAL]

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EX-4.(G)

Exhibit 4(g)

CN REAL ESTATE INVESTMENT CORPORATION II
ARTICLES OF AMENDMENT AND RESTATEMENT

        CN REAL ESTATE INVESTMENT CORPORATION II, a Maryland corporation, hereby certifies to the State Department of Assessments and Taxation of Maryland that:

FIRST:    CN Real Estate Investment Corporation II desires to, and does hereby, amend and restate its charter (the "Charter") as currently in effect.

SECOND:    The following provisions are all the provisions of the Charter currently in effect as amended and restated hereby:

ARTICLE I
NAME

        The name of the corporation (the "Corporation") is:

CN Real Estate Investment Corporation II

ARTICLE II
PURPOSE

        The purposes for which the Corporation is formed are to engage in any lawful act or activity (including, without limitation or obligation, engaging in business as a real estate investment trust under the Internal Revenue Code of 1986, as amended, or any successor statute (the "Code")) for which corporations may be organized under the general laws of the State of Maryland as now or hereafter in force. For purposes of these Articles, "REIT" means a real estate investment trust under Sections 856 through 860 of the Code.

ARTICLE III
PRINCIPAL OFFICE IN STATE AND RESIDENT AGENT

        The address of the principal office of the Corporation in the State of Maryland is The Corporation Trust Incorporated, 300 East Lombard Street, Baltimore, Maryland 21202-3242. The name and address of the resident agent of the Corporation in the State of Maryland is The Corporation Trust Incorporated, 300 East Lombard Street, Baltimore, Maryland 21202-3242.

ARTICLE IV
PROVISIONS FOR DEFINING, LIMITING
AND REGULATING CERTAIN POWERS OF THE CORPORATION AND OF THE
STOCKHOLDERS AND DIRECTORS

        Section 4.1    Number of Directors.    The business and affairs of the Corporation shall be managed under the direction of the Board of Directors. The number of directors of the Corporation shall be fixed pursuant to the bylaws of the Corporation (the "Bylaws") but shall never be more than nine (9) nor less than the minimum number required by the Maryland General Corporation Law (the "MGCL"). The directors may increase the number of directors and may fill any vacancy, whether resulting from an increase in the number of directors or otherwise, on the Board of Directors occurring before the first annual meeting of stockholders in the manner provided in the Bylaws.

        Section 4.2    Extraordinary Actions.    Except as otherwise specifically provided in Section 4.10 of this Article IV and in Article VIII of the charter of the Corporation (the "Charter"), notwithstanding any provision of law requiring a greater proportion of the votes entitled to be cast by the stockholders

in order to take or approve any action, such action shall be valid and effective if taken or approved by the affirmative vote of at least a majority of all votes entitled to be cast by the stockholders on the matter.

        Section 4.3    Authorization by Board of Stock Issuance.    The Board of Directors may authorize the issuance from time to time of shares of stock of the Corporation of any class or series, whether now or hereafter authorized, or securities or rights convertible into shares of its stock of any class or series, whether now or hereafter authorized, for such consideration as the Board of Directors may deem advisable (or without consideration in the case of a stock split or stock dividend or as otherwise permitted by law), subject to such restrictions or limitations, if any, as may be set forth in the Charter or the Bylaws.

        Section 4.4    Preemptive Rights.    Except as may be provided by the Board of Directors in setting the terms of classified or reclassified shares of stock pursuant to Section 5.4 or as may otherwise be provided by contract, no holder of shares of stock of the Corporation shall, as such holder, have any preemptive right to purchase or subscribe for any additional shares of stock of the Corporation or any other security of the Corporation which it may issue or sell.

        Section 4.5    Indemnification.    The Corporation shall have the power, to the maximum extent permitted by Maryland law in effect from time to time, to obligate itself to indemnify, and to pay or reimburse reasonable expenses in advance of final disposition of a proceeding to, (a) any individual who is a present or former director or officer of the Corporation or (b) any individual who, while a director of the Corporation and at the request of the Corporation, serves or has served as a director, officer, partner or trustee of another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or any other enterprise from and against any claim or liability to which such person may become subject or which such person may incur by reason of his status as a present or former director or officer of the Corporation. The Corporation shall have the power, with the approval of the Board of Directors, to provide such indemnification and advancement of expenses to a person who served a predecessor of the Corporation in any of the capacities described in (a) or (b) above and to any employee or agent of the Corporation or a predecessor of the Corporation.

        Section 4.6    Determinations by Board.    The determination as to any of the following matters, made in good faith by or pursuant to the direction of the Board of Directors consistent with the Charter and in the absence of actual receipt of an improper benefit in money, property or services or active and deliberate dishonesty established by a court, shall be final and conclusive and shall be binding upon the Corporation and every holder of shares of its stock: the amount of the net income of the Corporation for any period and the amount of assets at any time legally available for the payment of dividends, redemption of its stock or the payment of other distributions on its stock; the amount of paid-in surplus, net assets, other surplus, annual or other net profit, net assets in excess of capital, undivided profits or excess of profits over losses on sales of assets; the amount, purpose, time of creation, increase or decrease, alteration or cancellation of any reserves or charges and the propriety thereof (whether or not any obligation or liability for which such reserves or charges shall have been created shall have been paid or discharged); the fair value, or any sale, bid or asked price to be applied in determining the fair value, of any asset owned or held by the Corporation; any matter relating to the acquisition, holding and disposition of any assets by the Corporation; or any other matter relating to the business and affairs of the Corporation.

        Section 4.7    REIT Qualification.    If the Corporation elects to qualify for federal income tax treatment as a REIT, the Board of Directors shall use its reasonable best efforts to take such actions as are necessary or appropriate to preserve the status of the Corporation as a REIT; however, if the Board of Directors determines that it is no longer in the best interests of the Corporation to continue to be qualified as a REIT, the Board of Directors may revoke or otherwise terminate the Corporation's REIT election pursuant to Section 856(g) of the Code.

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        Section 4.8    Business Combinations; Control Share Acquisitions.    Any business combination between the Corporation and any Interested Stockholder or any Affiliate of an Interested Stockholder (both as defined in Section 3-601 of the MGCL), or any other person or entity, is hereby exempted from the provisions of Section 3-602 of the MGCL. In addition, Subtitle 7 of Title 3 of the MGCL shall not apply to any acquisition of shares of stock of the Corporation by any person.

        Section 4.9    Rights of Objecting Stockholders.    No stockholder of the Corporation shall be entitled to exercise the rights of an objecting stockholder under Subtitle 2 of Title 3 of the MGCL.

        Section 4.10    Removal of Directors.    Subject to the rights of holders of shares of one or more classes or series of Preferred Stock to elect one or more directors and to remove such directors so elected, a director may be removed from office, with or without cause, only by the affirmative vote of at least two-thirds (²/3) of all votes entitled to be cast by the stockholders for the election of directors.

ARTICLE V
STOCK

        Section 5.1    Authorized Shares.    The Corporation has authority to issue 30,000,000 shares of stock, consisting of 23,000,000 shares of common stock, $.01 par value per share ("Common Stock"), and 7,000,000 shares of preferred stock, $.01 par value per share ("Preferred Stock"). The aggregate par value of all authorized shares of stock having par value is $300,000. If shares of one class of stock are classified or reclassified into shares of another class of stock pursuant to this Article V, the number of authorized shares of the former class shall be automatically decreased and the number of shares of the latter class shall be automatically increased, in each case by the number of shares so classified or reclassified, so that the aggregate number of shares of stock of all classes that the Corporation has authority to issue shall not be more than the total number of shares of stock set forth in the first sentence of this paragraph. To the extent permitted by Maryland law, the Board of Directors, without any action by the stockholders of the Corporation, may amend the Charter from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Corporation has authority to issue.

        Section 5.2    Common Stock.    Subject to the express terms of any other class or series of stock of the Corporation then outstanding, each share of Common Stock shall entitle the holder thereof to one vote on each matter upon which stockholders are entitled to vote and to receive dividends and other distributions as may be authorized and declared from time to time by the Board of Directors in accordance with and subject to provisions of the Charter of the Corporation and applicable law.

        Section 5.3    Preferred Stock.    Of the 7,000,000 shares of Preferred Stock authorized, 300,000 shares are classified and designated as shares of the Series A Non-Cumulative Preferred Stock ("Series A Preferred Stock") and 6,700,000 shares are unclassified. The preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, terms and conditions of redemption and other terms and conditions of the Series A Preferred Stock are set forth in Section 5.6 of this Article V. Any shares of Preferred Stock which are unclassified will be issued, from time to time, in one or more classes or series with such designations, and with such preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, terms and conditions of redemption and other terms and conditions as may be set by the Board of Directors pursuant to Section 5.4 of this Article V.

        Section 5.4    Classified or Reclassified Shares.    The Board of Directors may classify or reclassify any unissued shares of stock by setting or changing the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption. Prior to issuance of classified or reclassified shares of any class or series, the Board of Directors by resolution shall: (a) designate that class or series to distinguish it from all other

3

classes and series of shares of the Corporation; (b) specify the number of shares to be included in the class or series; (c) set or change, subject to the express terms of any class or series of shares of the Corporation outstanding at the time, the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms and conditions of redemption for each class or series; and (d) cause the Corporation to file articles supplementary with the State Department of Assessments and Taxation of Maryland (the "SDAT"). Any of the terms of any class or series of shares set or changed pursuant to clause (c) of this Section 5.4 may be made dependent upon facts or events ascertainable outside the Charter of the Corporation (including determinations by the Board of Directors or other facts or events within the control of the Corporation) and may vary among holders thereof, provided that the manner in which such facts, events or variations shall operate upon the terms of such class or series of shares is clearly and expressly set forth in the articles supplementary filed with the SDAT.

        Section 5.5    Charter and Bylaws.    All persons who shall acquire stock in the Corporation shall acquire the same subject to the provisions of the Charter and the Bylaws.

        Section 5.6    Series A Preferred Stock Terms and Conditions.

        (a)   Dividends and Distributions.

          (i)  Subject to the rights of the holders of any shares of any other class or series of Preferred Stock (or any similar stock) ranking prior and superior to, or on a par with, the shares of Series A Preferred Stock with respect to dividends, the holder of record of each share or fraction of a share of Series A Preferred Stock, in preference to the holders of any other class or series of stock of the Corporation (including shares of Common Stock), shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available to the extent such funds are available for the purpose, quarterly dividends payable in cash on or prior to the last day of January, April, July and October, as applicable, in each year (each such date being referred to in this Section 5.6(a)(i) as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of such share or fraction of a share of Series A Preferred Stock, in an amount per share (rounded to the nearest cent) equal to $2.125 per share ($8.50 per annum); provided, however, that if such share or fraction of a share is issued less than three months prior to a Quarterly Dividend Payment Date, the quarterly dividend which the holder of such share or fraction of a share shall be entitled to receive on the first Quarterly Dividend Payment Date after the issuance of such share or fraction of a share shall be prorated based upon the number of days between the date of first issuance of such share or fraction of a share and the first Quarterly Dividend Payment Date after such issuance as a percentage of the number of days between the first day of the second calendar month preceding the month in which such Quarterly Dividend Payment Date occurs and such Quarterly Dividend Payment Date.

         (ii)  The Corporation shall declare a dividend or distribution on the Series A Preferred Stock as provided in paragraph (i) of this Section 5.6(a) immediately before it declares any dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided, however, that dividends shall be non-cumulative. Accordingly, if the Corporation fails to declare a dividend on the Series A Preferred Stock for a quarterly dividend period, then the holders of shares of Series A Preferred Stock will have no right to receive a dividend on such shares for that quarter, and the Corporation will have no obligation to pay a dividend for that quarter, whether or not dividends are declared and paid for any future quarter with respect to either the Series A Preferred Stock or the Common Stock of the Corporation. The Board of Directors may fix a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 60 days prior to the date fixed for the payment thereof.

        (b)   Voting Rights.

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          (i)  Subject to any provisions for adjustment set forth in the Charter of the Corporation, each share of Series A Preferred Stock shall entitle the holder thereof to one (1) vote on all matters submitted to a vote of stockholders of the Corporation.

         (ii)  Except as otherwise provided in the Charter of the Corporation, the holders of shares of Series A Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

        (iii)  Holders of shares of Series A Preferred Stock shall have the right to vote on all matters submitted to a vote of the holders of shares of Common Stock and of shares of any other class or series of stock which may be entitled to vote thereon, together with the holders of shares of Common Stock.

        (c)   Certain Restrictions.

          (i)  Whenever quarterly dividends or other dividends or distributions that have been declared on the Series A Preferred Stock remain outstanding and payable and until such unpaid dividends and distributions shall have been paid in full, the Corporation shall not, directly or indirectly:

        (A)  declare or pay dividends on, or make any other distributions with respect to, any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock;

        (B)  declare or pay dividends on, or make any other distributions with respect to any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except dividends paid ratably on the Series A Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

        (C)  redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Preferred Stock; or

        (D)  redeem or purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of stock ranking on a parity with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

         (ii)  The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration, directly or indirectly, any shares of stock of the Corporation unless the Corporation could, under paragraph (i) of this Section 5.6(c), purchase or otherwise acquire such shares at such time and in such manner.

        (d)   Reacquired Shares.

        Any shares of Series A Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued Preferred Stock and may be reissued as part of a new class or series of Preferred Stock subject to the conditions and restrictions on issuance

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set forth in the Charter of the Corporation, in any articles supplementary creating a class or series of Preferred Stock or any similar stock or as otherwise required by law.

        (e)   Liquidation, Dissolution or Winding Up.

          (i)  Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall be made to: (1) the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock shall have received the sum of $100 per share (the "Liquidation Preference") plus any declared and unpaid dividends; or (2) the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except distributions made ratably on the shares of Series A Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. After payment of the full amount of the Liquidation Preference plus declared and unpaid dividends to which they are entitled, the holders of shares of Series A Preferred Stock will not be entitled to further participation in any distribution of assets of the Corporation.

         (ii)  Neither the voluntary sale, conveyance, exchange or transfer (for cash, securities or other consideration) of all or substantially all of the property and assets of the Corporation, nor the merger or consolidation of the Corporation with any one or more corporations or other entities, shall be deemed a voluntary or involuntary dissolution, liquidation or winding up of the Corporation, unless such voluntary sale, conveyance or exchange shall be in connection with a plan of liquidation, dissolution or winding up of the Corporation.

        (f)    Consolidation, Merger or Other.

        In the event the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, or otherwise changed, then in any such event each share of Series A Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share equal to $100.

        (g)   Redemption.

          (i)  The Series A Preferred Stock may be redeemed by the Corporation any time after September 30, 2005 upon 30 days written notice, for a redemption price equal to $100 per share plus any declared and unpaid dividends. The notice of redemption for the Series A Preferred Stock shall set forth all the following: (1) the class or series of shares or part of any class or series of shares to be redeemed; (2) the date fixed for redemption; (3) the redemption price; and (4) the place in which the stockholders may obtain payment of the redemption price upon surrender of their share certificates.

         (ii)  The Corporation will have the right at any time to redeem the shares of Series A Preferred Stock at a redemption price equal to the Liquidation Preference plus any declared and unpaid dividends thereon after one of the following two events have occurred:

        (A)  The receipt by the Corporation of advice from a nationally recognized law or accounting firm that, as a result of (i) any amendment to, clarification of or change (including any announced prospective change) in the laws or treaties (or any regulation thereunder) of the United States or any political subdivision or taxing authority thereof or therein affecting taxation, (ii) any judicial decision, official administrative pronouncement, ruling, regulatory procedure, notice or announcement (including any official administrative notice or announcement of intent to adopt such procedures or regulations) ("Administrative Action") or (iii) any amendment to, clarification of or change in the official position or the interpretation of such Administrative Action or judicial decision or any judicial interpretation or pronouncement that provides for a position with respect

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to such Administrative Action or judicial decision that differs from the theretofore generally accepted position, in each case, by any legislative body, court, governmental authority or regulatory body, irrespective of the manner in which such amendment, clarification or change is made known, which amendment, clarification or change is effective or such pronouncement or decision is announced on or after the date of issuance of the Series A Preferred Stock, there is more than an insubstantial risk that a dividend paid or to be paid by the Corporation with respect to the capital stock of the Corporation is not, or will not be, fully deductible for United States federal income tax purposes (a "Tax Event"); or

        (B)  The receipt by City National Bank, a national banking association ("CNB") or City National Corporation, a Delaware corporation (the "Parent Company") of an opinion of independent bank regulatory counsel experienced in such matters to the effect that as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any rules, guidelines or policies of an applicable regulatory agency for CNB, the Parent Company or any of their respective affiliates, or (b) any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or which pronouncement or decision is announced on or after the date of original issuance of the shares of Series A Preferred Stock, the shares of Series A Preferred Stock do not constitute, or within 90 days of the date of such opinion will not constitute, Tier 1 Capital (as defined in Section 2(a)(2) of Appendix A of 12 C.F.R. 3) (or its then equivalent) for purposes of any capital adequacy guidelines as then in effect and applicable to CNB, the Parent Company or any of their respective affiliates.

        In the event that the Corporation proposes to redeem shares of Series A Preferred Stock after the occurrence of any event described in Section 5.6(g)(ii)(A) or (B), the Corporation will provide written notice of such redemption, via first-class mail, to each holder of record of the shares of Series A Preferred Stock to be redeemed not less than thirty (30) days nor more than sixty (60) days prior to the date for redemption of such shares.

        (h)   Automatic Exchange.

        Each share of Series A Preferred Stock will be exchanged automatically (the "Automatic Exchange") for one newly issued preferred share of CNB stock (each a "CNB Series C Preferred Share") having preferences, rights, restrictions and limitations which are substantially the same as the preferences, rights, restrictions and limitations of the Series A Preferred Stock if the Office of the Comptroller of the Currency (the "OCC") directs in writing (a "Directive") an exchange of Series A Preferred Stock for CNB Series C Preferred Shares due to the occurrence of any of the following events (each an "Exchange Event"): (i) CNB becomes "undercapitalized" under the OCC's then current prompt corrective action regulations, (ii) CNB is placed into bankruptcy, reorganization, conservatorship or receivership, or (iii) the OCC, in its exercise of supervisory authority over CNB, requires the Automatic Exchange of Series A Preferred Stock. Upon receipt by the Corporation of a Directive, each holder of shares of Series A Preferred Stock shall be unconditionally obligated to surrender to CNB the certificates representing such shares of Series A Preferred Stock of such holder in exchange for a certificate representing one CNB Series C Preferred Share for each share of Series A Preferred Stock. Any shares of Series A Preferred Stock purchased or redeemed by the Corporation prior to the Time of Exchange (as defined below) shall not be deemed outstanding and shall not be subject to the Automatic Exchange.

        The Automatic Exchange shall occur as of 9:00 a.m., Los Angeles local time, on the date for such exchange set forth in the Directive, or, if such date is not set forth in the Directive, as of 9:00 a.m., Los Angeles local time, on the earliest possible date such exchange could occur consistent with the Directive (the "Time of Exchange"), as evidenced by the issuance by CNB of a press release prior to such time. As of the Time of Exchange, all of the shares of Series A Preferred Stock required to be

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exchanged shall be deemed canceled without any further action by the Corporation, all rights of the holders of such shares of Series A Preferred Stock as stockholders of the Corporation shall cease, and such persons shall thereupon and thereafter be deemed to be and shall be for all purposes the holders of CNB Series C Preferred Shares. The Corporation shall mail notice of the occurrence of an Exchange Event to each holder of shares of Series A Preferred Stock within 30 days of such event, and CNB shall deliver to each such holder certificates for CNB Series C Preferred Shares upon surrender of certificates for the shares of Series A Preferred Stock required to be exchanged. Until such replacement stock certificates are delivered (or in the event such replacement certificates are not delivered, certificates previously representing the shares of Series A Preferred Stock shall be deemed for all purposes to represent corresponding CNB Series C Preferred Shares.

        (i)    Rank.

        The Series A Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets, senior to the Common Stock and no less than pari passu with all other classes or series of Preferred Stock whether issued before or after the issuance of the Series A Preferred Stock.

        (j)    Restrictions on Transfer.

          (i)  The shares of Series A Preferred Stock shall be subject to all of the provisions and restrictions on transfer as provided in Article VI and Article VII of the Charter of the Corporation, and each certificate representing shares of Series A Preferred Stock shall contain the legend set forth in Section 6.11 and the legend set forth in Section 7.2.

         (ii)  Unless the shares of Series A Preferred Stock have been registered under the Securities Act of 1933, as amended, and all applicable state securities laws, each certificate representing shares of Series A Preferred Stock shall contain the following legend:

        "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND NONE OF THIS SECURITY, THE SHARES OF PREFERRED STOCK EVIDENCED HEREBY ("PREFERRED SHARES"), OR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH A REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 4(2) OF THE SECURITIES ACT AND RULE 506 THEREUNDER. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS, ACKNOWLEDGES AND AGREES FOR THE BENEFIT OF THE CORPORATION THAT: (i) IT HAS ACQUIRED A "RESTRICTED" SECURITY WHICH HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT; (ii) IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE CORPORATION, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) TO A PERSON WHO THE SELLER REASONABLY BELIEVES, AND WHO REPRESENTS ITSELF TO BE, AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 506, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY APPLICABLE JURISDICTION; AND (iii) IT WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS SECURITY OR ANY PREFERRED SHARES OF THE RESALE RESTRICTIONS SET FORTH IN (ii) ABOVE. ANY OFFER, SALE OR OTHER DISPOSITION PURSUANT TO THE FOREGOING CLAUSE (ii)(D) IS SUBJECT TO THE

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RIGHT OF THE CORPORATION TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS OR OTHER INFORMATION REASONABLY ACCEPTABLE TO IT IN FORM AND SUBSTANCE.

        (k)   Amendment.

        The Charter of the Corporation shall not be amended in any manner that would materially alter or change the powers, preferences or special rights of the Series A Preferred Stock without the affirmative vote of the holders of at least a majority of the outstanding shares of Series A Preferred Stock, voting together as a single class, in addition to any vote of stockholders otherwise required by law or under the Charter.

ARTICLE VI
REIT RESTRICTIONS ON TRANSFER

        Section 6.1    Definitions.    The following terms shall have the following meanings for purposes of this Article VI and other articles of the Charter:

        "Beneficial Ownership" means ownership of shares of any class or series of Common Stock or Preferred Stock by a Person (as defined below) who would be treated as an owner of such shares under Section 542(a)(2) of the Code either directly or constructively through the application of Section 544 of the Code as modified by Section 856(h)(i)(B) of the Code. The terms "Beneficial Owner," "Beneficially Own" and "Own Beneficially" shall have correlative meanings.

        "Beneficiary" means, with respect to the Trust (as defined below), one or more organizations named by the Corporation as beneficiary or beneficiaries of the Trust in accordance with Section 6.13(a) of this Article VI. Each such Beneficiary shall be an organization described in Section 501(c)(3) of the Code, that is not an "individual" within the meaning of Section 541 of the Code, contributions to which must be eligible for deduction under each of Sections 170(b)(l)(A), 2055 and 2522 of the Code.

        "Board of Directors" means the Board of Directors of the Corporation.

        "Excess Shares" has the meaning set forth in Section 6.3 of this Article VI.

        "Initial Issuance Date" means the calendar day immediately following the initial issuance of shares of Series A Preferred Stock.

        "Market Price", with respect to any class or series of Common Stock or Preferred Stock, on any date means the Closing Price (as defined below) on the Trading Day (as defined below) immediately preceding such date of such class or series of Common Stock or Preferred Stock. The "Closing Price", with respect to any class or series of Common Stock or Preferred Stock, on any date shall mean the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE, as reported in the principal, consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which such class or series of Common Stock or Preferred Stock is listed or admitted to trading or, if such class or series of Common Stock or Preferred Stock is not listed or admitted to trading on any national securities exchange, the last quoted, price, or if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the NASDAQ or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if such class or series of Common Stock or Preferred Stock is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a

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market in such class or series of Common Stock or Preferred Stock selected by the Board of Directors of the Corporation or, if there is no professional market maker making a market in such class or series of Common Stock or Preferred Stock, the liquidation value of a share of such class or series of Common Stock or Preferred Stock as determined by the Board of Directors in its reasonable discretion. "Trading Day" means a day on which the principal national securities exchange on which the relevant class or series of Common Stock or Preferred Stock is listed or admitted to trading is open for the transaction of business or, if the relevant class or series of Common Stock or Preferred Stock is not listed or admitted to trading on any national securities exchange, shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of California are authorized or obligated by law or executive order to close.

        "NASDAQ" means the National Association of Securities Dealers, Inc. Automated Quotation System.

        "Non-Transfer Event" means any event other than a purported Transfer that would cause (i) any Person (as defined below) (other than CNB and its affiliates) to Own Beneficially (as defined below) shares of Preferred Stock in excess of the Ownership Limit (as defined below), (ii) the Corporation to become "closely held" within the meaning of Section 856(h) of the Code, and/or (iii) the Corporation to otherwise fail to qualify as a REIT (other than as a result of a violation of the "100-shareholder" requirement of Section 856(a)(5) of the Code), in each case including, but not limited to, the granting of any option on entering into any agreement for the sale, transfer or other disposition of shares of Common Stock or Preferred Stock or the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for shares of Common Stock or Preferred Stock.

        "NYSE" means the New York Stock Exchange, Inc.

        "Ownership Limit" means, for any Person (as defined below), other than CNB and its affiliates, the Beneficial Ownership of nine and nine-tenths percent (9.9%), in number of shares or value (determined on the basis of the Market Price), of the outstanding shares of any class or series of Preferred Stock of the Corporation.

        "Permitted Transferee" means any Person designated as a Permitted Transferee in accordance with the provisions of Section 6.13(e) of this Article VI.

        "Person" means (i) an individual, corporation, partnership, estate, trust (including a trust qualified under Section 401(a) or 501(c)(17) of the Code), a portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company, limited liability company or other entity and (ii) also includes a group as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.

        "Prohibited Owner" means, with respect to any purported Transfer or Non-Transfer Event, any Person whom, but for the provisions of Section 6.3 of this Article VI, would Beneficially Own shares of Common Stock or Preferred Stock.

        "Restriction Termination Date" means the first day on which the Board of Directors determines that it is no longer in the best interests of the Corporation to attempt to, or continue to, qualify as a REIT.

        "Transfer" means any sale, transfer, gift, assignment, devise or other disposition of any shares of Common Stock or Preferred Stock (including (i) the granting of any option (including, but not limited to, an option to acquire an option or any series of such options) or entering into any agreement for the sale, transfer or other disposition of Common Stock or Preferred Stock or

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(ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Common Stock or Preferred Stock or the exercise of such rights) whether voluntary or involuntary, whether of record or beneficially, and whether by operation of law or otherwise (including, but not limited to, any transfer of an interest in other entities which results in a change in the Beneficial Ownership of shares of Common Stock or Preferred Stock). The terms "Transfers" and "Transferred" shall have correlative meanings.

        "Trust" means the trust created pursuant to Section 6.13 of this Article VI.

        "Trustee" means any Person or entity unaffiliated with both the Corporation and any Prohibited Owner who is designated by the Corporation to act as trustee of the Trust, and any successor trustee appointed by the Corporation.

        Section 6.2    Restriction on Ownership and Transfers.

        (a)   Except as provided in Section 6.10 of this Article VI, commencing on the Initial Issuance Date and prior to the Restriction Termination Date, no Person (other than CNB and its affiliates) shall Beneficially Own shares of any class or series of Preferred Stock in excess of the Ownership Limit.

        (b)   Except as provided in Section 6.10 of this Article VI, and subject to the provisions of Section 6.14 of this Article VI, commencing on the Initial Issuance Date and prior to the Restriction Termination Date, any Transfer or other event that, if effective, would result in any Person (other than CNB and its affiliates) Beneficially Owning shares of any class or series of Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Preferred Stock which would be otherwise Beneficially Owned by such Person in excess of the Ownership Limit, and the intended transferee shall acquire no right or interest in such shares of Preferred Stock.

        (c)   Subject to the provisions of Section 6.14 of this Article VI, commencing on the Initial Issuance Date and prior to the Restriction Termination Date, any Transfer that, if effective, would result in the outstanding shares of Common Stock and Preferred Stock being Beneficially Owned by less than 100 Persons (determined without reference to any rules of attribution) shall be void ab initio, and the intended transferee shall acquire no right or interest in such shares of Common Stock or Preferred Stock.

        (d)   Notwithstanding any other provision herein, subject to the provisions of Section 6.14 of this Article VI, commencing on the Initial Issuance Date and prior to the Restriction Termination Date, any Transfer that, if effective, would result in the Corporation being "closely held" within the meaning of Section 856(h) of the Code shall be void ab initio as to the Transfer of that number of shares of Common Stock or Preferred Stock, as the case may be, that would cause the Corporation to be "closely held" within the meaning of Section 856(h) of the Code, and the intended transferee shall acquire no right or interest in such shares of Common Stock or Preferred Stock, as the case may be.

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        (e)   Notwithstanding any other provision herein, subject to the provisions of Section 6.14 of this Article VI, commencing on the Initial Issuance Date and prior to the Restriction Termination Date, any Transfer that, if effective, would cause the Corporation to fail to qualify as a REIT under the Code for any reason shall be void ab initio as to the Transfer of that number of shares of Common Stock or Preferred Stock, as the case may be, in excess of the number that could have been Transferred without such result; and the intended transferee shall acquire no right or interest in such shares of Common Stock or Preferred Stock, as the case may be.

        (f)    A Transfer of a share of Common Stock or Preferred Stock which is null and void under paragraphs (b), (c), (d) or (e) of this Section 6.2 of this Article VI shall not adversely affect the validity of the Transfer of any other share of Common Stock or Preferred Stock in the same or any other related transaction.

        Section 6.3    Transfer in Trust.

        (a)   If, notwithstanding the other provisions contained in this Article VI, at any time on or after the Initial Issuance Date and prior to the Restriction Termination Date, there is a purported Transfer or Non-Transfer Event such that any Person (other than CNB and its affiliates) would Own Beneficially shares of any class or series of Preferred Stock in excess of the Ownership Limit, then (i) except as otherwise provided in Section 6.10 of this Article VI, the Prohibited Owner shall acquire no right, or interest (or in the case of a Non-Transfer Event, shall cease to own any right or interest) in such number of shares of such class or series of Preferred Stock that would cause such Beneficial Owner to Beneficially Own shares of such class or series of Preferred Stock in excess of the Ownership Limit and (ii) such number of shares of such class or series of Preferred Stock in excess of the Ownership Limit (rounded up to the nearest whole share) shall be designated as excess shares ("Excess Shares") and, in accordance with Section 6.13 of this Article VI, be transferred automatically and by operation of law to the Trust for the benefit of the Beneficiary. Such transfer to the Trust and the designation of the shares as Excess Shares shall be effective as of the close of business on the business day prior to the date of the purported Transfer or Non-Transfer Event, as the case may be.

        (b)   If, notwithstanding the other provisions contained in this Article VI, at any time on or after the Initial Issuance Date and prior to the Restriction Termination Date, there is a purported Transfer or Non-Transfer Event that, if effective, would cause the Corporation to become "closely held" within the meaning of Section 856(h) of the Code or to otherwise fail to qualify as a REIT (other than as a result of a violation of the 100-shareholder requirement of Section 856(a)(5)), then (i) except as otherwise provided in Section 6.10 of this Article VI, the Prohibited Owner shall acquire no right or interest (or, in the case of a Non-Transfer Event, shall cease to own any right or interest) in such number of shares of Common Stock or Preferred Stock, the ownership of which by such purported transferee or record holder would cause the Corporation to be "closely held" within the meaning of Section 856(h) of the Code or to otherwise fail to qualify as a REIT (other than as a result of a violation of the 100-shareholder requirement of Section 856(a)(5)) and (ii) such number of shares of Common Stock or Preferred Stock (rounded up to the nearest whole share) shall be designated as Excess Shares and, in accordance with the provisions of Section 6.13 of this Article VI, be transferred automatically and by operation of law to the Trust for the benefit of the Beneficiary. Such transfer to the Trust and the designation of shares as Excess Shares shall be effective as of the close of business on the business day prior to the date of the Transfer or Non-Transfer Event, as the case may be.

        Section 6.4    Remedies for Breach.    If the Board of Directors or a committee thereof shall at any time determine in good faith that a Non-Transfer Event has occurred, a Transfer has taken place in violation of Section 6.2 of this Article VI or that a Person intends to acquire or has attempted to acquire or may acquire Beneficial Ownership of any shares of Common Stock or Preferred Stock in violation of Section 6.2 of this Article VI (whether or not such violation is intended), the Board of Directors shall be empowered to take any action it deems advisable to refuse to give effect to or to

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prevent such Transfer or Non-Transfer Event, including but not limited to, refusing to give effect to such Transfer or Non-Transfer Event on the books of the Corporation or instituting proceedings to enjoin or rescind such Transfer or acquisition.

        Section 6.5    Notice of Restricted Transfer.    Any Person who acquires or attempts to acquire shares of Common Stock or Preferred Stock in violation of Section 6.2 of this Article VI, or any Person who owned shares of Common Stock or Preferred Stock that were transferred to a Trust pursuant to the provisions of Section 6.3 of this Article VI, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or Non-Transfer Event, as the case may be, on the Corporation's status as a REIT. Failure to give such notice shall not in any way limit the rights and remedies of the Board of Directors provided herein.

        Section 6.6    Reserved.

        Section 6.7    Owners Required to Provide Information.    Prior to the Restriction Termination Date:

        (a)   Every Beneficial Owner of more than one-half of one percent (0.5%) (or such lower percentage as required in the applicable regulations adopted under the Code) of shares of any class or series of Preferred Stock of the Corporation outstanding shall, within thirty (30) days after December 31 of each year, give written notice to the Corporation stating the name and address of such Beneficial Owner, the number of shares of such class or series of Preferred Stock Beneficially Owned by such Beneficial Owner, a full description of how such shares are held and a statement identifying the actual or constructive owners of such shares. Each such Beneficial Owner shall, upon demand by the Corporation, disclose to the Corporation in writing such additional information with respect to its Beneficial Ownership of shares of such class or series of Preferred Stock as the Corporation, in its sole discretion, deems appropriate or necessary, (i) to comply with the provisions of the Code regarding the qualification of the Corporation as a REIT and (ii) to ensure compliance with the Ownership Limit.

        (b)   At the request of the Corporation, any Person who is a Beneficial Owner of shares of Common Stock or Preferred Stock and any Person (including the stockholder of record) who is holding shares of Common Stock or Preferred Stock for a Beneficial Owner, and any proposed transferee of shares, shall provide (i) such information as the Corporation, in its sole discretion, may request from time to time in order (A) to determine the Corporation's status as a REIT, (B) to ensure compliance with the requirements of any taxing authority or other governmental agency or (C) to ensure compliance with the Ownership Limit and (ii) a statement or affidavit to the Corporation setting forth the number of shares of each class or series of Common Stock or Preferred Stock Beneficially Owned by such stockholder or proposed transferee and any related Persons specified, which statement or affidavit shall be in the form prescribed by the Corporation for that purpose.

        (c)   In addition, every individual who Beneficially Owns shares of any class or series of Preferred Stock of the Corporation shall, upon demand by the Corporation, disclose to the Corporation in writing information for the purpose of determining whether the Corporation is a "pension-held REIT" within the meaning of Section 865(h)(3)(D) of the Code. In this context, "individual" is defined as any natural person and any entity that is included in the definition of "individual" in Section 542(a)(c) of the Code, but does not include a pension trust described in Section 401(a) of the Code that qualifies for "look through treatment" under Section 856(h)(3)(A)(i) of the Code.

        Section 6.8    Remedies Not Limited.    Nothing contained in this Article VI shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable (subject to the provisions of Section 6.14 of this Article VI) to protect the Corporation and the interests of its

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stockholders in the preservation of the Corporation's status as a REIT, and to insure compliance with the Ownership Limit.

        Section 6.9    Ambiguity.    In the case of an ambiguity in the application of any of the provisions of this Article VI, including any definition contained in Section 6.1 of this Article VI, the Board of Directors shall have the power to determine the application of such provisions with respect to any situation based on its reasonable belief, understanding or knowledge of the circumstances.

        Section 6.10    Exceptions.

        (a)   The Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of tax counsel or other evidence satisfactory to it, may waive the application of the Ownership Limit, in whole or in part, to any Person, if such Person is not an individual for purpose of Section 542(a) of the Code and is a corporation, partnership, estate or trust; provided, however, in no event may the Board of Directors grant any such exception if it would, in the Board of Director's judgment, jeopardize the Corporation's status as a REIT. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board of Directors deems necessary in its sole discretion to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT.

        (b)   For a period of 90 days following the acquisition of shares of Preferred Stock by an underwriter that (i) is a corporation or a partnership and (ii) participates in an offering of the Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the shares of Preferred Stock purchased by it as a part of such offering.

        (c)   Anything in this Article VI or elsewhere in the Charter to the contrary notwithstanding, CNB, any directly or indirectly owned subsidiary of CNB or the Parent Corporation, and any other affiliate of CNB, and with respect to any of the foregoing, any of their respective successors, shall be exempt from the Ownership Limit and may Beneficially Own shares of any class or series of Preferred Stock in excess of the Ownership Limit.

        Section 6.11    Legend.    Each certificate for shares of Common Stock or Preferred Stock shall bear the following legend (in addition to the legends required by other provisions of the Charter of the Corporation):

        THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON BENEFICIAL OWNERSHIP AND TRANSFER FOR THE PURPOSE OF THE CORPORATION'S MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT (A "REIT") UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). SUBJECT TO CERTAIN OTHER RESTRICTIONS, AND EXCEPT AS EXPRESSLY PROVIDED IN THE CHARTER OF THE CORPORATION: (1) NO PERSON (OTHER THAN CITY NATIONAL BANK AND ITS AFFILIATES) MAY BENEFICIALLY OWN SHARES OF PREFERRED STOCK OF ANY CLASS OR SERIES OF THE CORPORATION IN EXCESS OF 9.9% (BY VALUE OR BY NUMBER OF OUTSTANDING SHARES OF SUCH CLASS OR SERIES OF PREFERRED STOCK) OF THE OUTSTANDING SHARES OF SUCH CLASS OR SERIES OF PREFERRED STOCK; (2) NO PERSON MAY BENEFICIALLY OWN SHARES OF STOCK IN THE CORPORATION THAT WOULD RESULT IN THE CORPORATION BEING "CLOSELY HELD" UNDER SECTION 856(H) OF THE CODE OR OTHERWISE CAUSE THE CORPORATION TO FAIL TO QUALIFY AS A REIT; AND (3) NO PERSON MAY TRANSFER SHARES OF STOCK OF THE CORPORATION IF SUCH TRANSFER WOULD RESULT IN THE SHARES OF STOCK OF THE CORPORATION BEING OWNED BY FEWER THAN 100 PERSONS (DETERMINED WITHOUT REFERENCE TO ANY RULES OF ATTRIBUTION). ANY PERSON WHO BENEFICIALLY OWNS OR ATTEMPTS TO BENEFICIALLY OWN SHARES

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OF STOCK OF THE CORPORATION WHICH CAUSES OR WILL CAUSE A PERSON TO BENEFICIALLY OWN SHARES OF STOCK OF THE CORPORATION IN VIOLATION OF THE ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY THE CORPORATION. IF ANY OF THE RESTRICTIONS ON TRANSFER OR OWNERSHIP ARE VIOLATED, SOME OR ALL OF THE SHARES OF STOCK OF THE CORPORATION REPRESENTED HEREBY WILL BE TRANSFERRED AUTOMATICALLY AND BY OPERATION OF LAW TO A TRUST FOR THE BENEFIT OF ONE OR MORE CHARITABLE BENEFICIARIES. FURTHERMORE, UPON THE OCCURRENCE OF CERTAIN EVENTS, ATTEMPTED TRANSFERS (OR CHANGES IN RECORD OWNERSHIP OF SHARES OF STOCK IN THE CORPORATION IN THE CASE OF A NON-TRANSFER EVENT) IN VIOLATION OF THE RESTRICTIONS DESCRIBED ABOVE MAY BE VOID AB INITIO. ALL TERMS USED IN THIS LEGEND WHICH ARE DEFINED IN THE CHARTER OF THE CORPORATION SHALL HAVE THE MEANINGS SET FORTH IN THE CHARTER OF THE CORPORATION, A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON TRANSFER AND OWNERSHIP SET FORTH ABOVE, WILL BE FURNISHED TO EACH HOLDER OF SHARES OF STOCK OF THE CORPORATION UPON REQUEST AND WITHOUT CHARGE. REQUESTS FOR A COPY OF THE CHARTER OF THE CORPORATION MUST BE DIRECTED TO THE SECRETARY OF THE CORPORATION.

        Section 6.12    Severability.    If any provision of this Article VI or any application of any such provision is determined to be void, invalid or unenforceable by any federal or state court having jurisdiction over the issues, the validity and enforceability of the remaining provisions of the Charter of the Corporation (including without limitation this Article VI) shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court.

        Section 6.13    Excess Shares.

        (a)   Ownership in Trust.    Upon any purported Transfer, Non-Transfer Event or purported change in Beneficial Ownership that results in shares of Preferred Stock being designated Excess Shares pursuant to Section 6.3 of this Article VI, such Excess Shares shall be transferred to a Trust for the exclusive benefit of the Beneficiary. The Corporation shall name a Beneficiary that is an organization described in Section 501(c)(3) of the Code that is not an "individual" within the meaning of Section 542 of the Code, if one does not already exist, within five (5) days after the discovery of any Transfer to the Trust. Excess Shares shall remain issued and outstanding shares of stock of the Corporation and shall be entitled to the same rights and privileges on identical terms and conditions as all other issued and outstanding shares of the same class and series of stock. When transferred to a Permitted Transferee in accordance with the provisions of Section 6.13(e) of this Article VI, such Excess Shares shall cease to be designated as Excess Shares.

        (b)   Dividend Rights.    The Trustee, as record holder of the Excess Shares, shall be entitled to receive all dividends and distributions as may be declared by the Board of Directors of the Corporation on such shares of Common Stock or Preferred Stock designated Excess Shares and shall hold such dividends or distributions in trust for the benefit of the Beneficiary. The Prohibited Owner with respect to Excess Shares shall repay to the Trustee the amount of any dividends or distributions received by it that (i) are attributable to any shares of Common Stock or Preferred Stock designated Excess Shares and (ii) the record date of which is on or after the date that such shares became Excess Shares. The Corporation shall take all measures that it determines reasonably necessary to recover the amount of any such dividend or distribution paid to a Prohibited Owner, including, if necessary, withholding any portion of future dividends or distributions payable on shares of Common Stock or Preferred Stock Beneficially Owned by the Person who, but for the provisions of Section 6.3 of this Article VI, would Beneficially Own the Excess Shares, and as soon as reasonably practicable following the Corporation's

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receipt or withholding thereof, shall pay over to the Trustee for the benefit of the Beneficiary the dividends so received or withheld, as the case may be.

        (c)   Rights Upon Liquidation.    Subject to the preferential rights of any class or series of Preferred Stock, if any, as may be determined by the Board of Directors pursuant to Section 5.4 or 5.6 of the Charter of the Corporation, in the event of any voluntary or involuntary liquidation, dissolution or winding up of, or any distribution of the assets of, the Corporation, the Trustee of Excess Shares shall be entitled to receive, ratably with each other holder of shares of Common Stock or Preferred Stock of the same class or series, that portion of the assets of the Corporation available for distribution to the holders of such class and series of Common Stock or Preferred Stock. The Trustee shall distribute to the Prohibited Owners the amounts received upon such liquidation, dissolution, or winding up, or distribution; provided, however, that no Prohibited Owner who paid for shares of Common Stock or Preferred Stock in any purported Transfer that resulted in the Excess Shares, or in the case of a Non-Transfer Event or a Transfer in which the Prohibited Owners did not give value for such shares (e.g., through a gift or devise), shall receive a distribution greater than a price per share equal to the Market Price on the date of any purported Transfer or Non-Transfer Event that resulted in the Excess Shares. Any remaining amount in the Trust shall be distributed ratably to the Beneficiary of the Trust.

        (d)   Voting Rights.    The Trustee shall be entitled to vote all Excess Shares. Any vote by a Prohibited Owner as a holder of shares of Common Stock or Preferred Stock subsequent to the discovery of the Corporation that such shares of Common Stock or Preferred Stock are Excess Shares shall, subject to applicable law and only to the extent that no Person other than the applicable Prohibited Owner is materially and adversely affected, be rescinded and shall be void ab initio with respect to such Excess Shares and the applicable Prohibited Owner shall be deemed to have given, as of the close of business on the business day prior to the date of the purported Transfer or Non-Transfer Event that results in the transfer to the Trust of the shares of Common Stock or Preferred Stock under Section 6.3(a) of this Article VI, an irrevocable proxy to the Trustee to vote the Excess Shares in the manner in which the Trustee, in its sole and absolute discretion, desires.

        (e)   Designation of Permitted Transferee.    The Trustee shall have the exclusive and absolute right to designate one or more Permitted Transferees of any and all Excess Shares. As soon as reasonably practicable, in an orderly fashion so as not to materially adversely affect the Market Price of the Excess Shares, the Trustee shall designate any person as a Permitted Transferee; provided, however, that (i) any Permitted Transferee so designated purchases for valuable consideration (whether in a public or private sale) the Excess Shares and (ii) the acquisition of such Excess Shares by any Permitted Transferee so designated will not result in a transfer to a Trust and the redesignation of such shares of Common Stock or Preferred Stock so acquired as Excess Shares under Section 6.3 of this Article VI. Upon the designation by the Trustee of a Permitted Transferee in accordance with the provisions of this paragraph, the Trustee of the Trust shall (i) cause to be transferred to the Permitted Transferee that number of Excess Shares acquired by the Permitted Transferee, (ii) cause the Permitted Transferee to be recorded as the holder of record of such number of shares of Common Stock or Preferred Stock on the books of the Corporation; and (iii) distribute to the Beneficiary any and all amounts held with respect to the Excess Shares after making payment to the applicable Prohibited Owner pursuant to Section 6.13(f) of this Article VI.

        (f)    Compensation to Record Holder of Shares that Become Excess Shares.    Any Prohibited Owner shall be entitled (following discovery of the Excess Shares and the subsequent designation of a Permitted Transferee in accordance with Section 6.13(e) of this Article VI to receive from the Trustee the lesser of (i) in the case of (a) a purported Transfer in which the Prohibited Owner gave value for shares of Common Stock or Preferred Stock and which Transfer resulted in the transfer of the shares to the Trust, the price per share, if any, such Prohibited Owner paid for such shares, or in the case of (b) a Non-Transfer Event or Transfer in which the Prohibited Owner did not give value for such shares (e.g., if the shares were received through a gift or devise) and which Non-Transfer Event or Transfer, as

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the case may be, resulted in the transfer of shares to the Trust, the price per share equal to the Market Price on the date of such Non-Transfer Event or Transfer, and (ii) the price per share received by the Trustee of the Trust from the sale or other disposition of such Excess Shares in accordance with Section 6.13(e) of this Article VI. Any amounts received by the Trustee in respect of the Excess Shares in excess of the amounts to be paid to the applicable Prohibited Owner pursuant to this Section 6.13(f) of this Article VI shall be distributed to the Beneficiary in accordance with the provisions of Section 6.13(e) of this Article VI. Each Beneficiary and Prohibited Owner waives any and all claims that they may have against the Trustee and the Corporation arising out of the disposition of Excess Shares, except for claims arising out of the gross negligence or willful misconduct of, or any failure to make payments in accordance with this Section 6.13 of this Article VI by, such Trustee or the Corporation.

        (g)   Purchase Right in Excess Shares.    Excess Shares shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that created such Excess Shares (or, in the case of a devise or gift, the Market Price on the date of such devise or gift) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer for a period of ninety days after the later of (i) the date of the Transfer which resulted in such Excess Shares and (ii) the date the Board of Directors determines in good faith that a Transfer resulting in Excess Shares has occurred.

        Section 6.14    Settlement.    Notwithstanding any provision contained herein to the contrary, nothing in the Charter of the Corporation shall preclude the settlement of any transaction with respect to any class or series of Common Stock or Preferred Stock entered into through facilities of the NYSE or the NASDAQ.

ARTICLE VII
OTHER RESTRICTIONS ON TRANSFER

        Section 7.1    No class or series of Preferred Stock of the Corporation may be owned (either directly or indirectly) by 500 or more persons (as such term is defined in the Securities Exchange Act of 1934, as amended). If any purported Transfer (as defined in Article VI) or other event would result in any class or series of Preferred Stock being owned (either directly or indirectly) by 500 or more persons, then the purported Transfer or other event shall be null and void ab initio, and the intended Transferee shall acquire no right or interest in such shares of Preferred Stock.

        Section 7.2    Each certificate representing shares of Preferred Stock shall bear the following legend (in addition to the legends required by other provisions of the Charter of the Corporation or applicable law):

"NO PERSON MAY TRANSFER THIS SECURITY OR ANY SHARES OF PREFERRED STOCK OF ANY CLASS OR SERIES IF SUCH TRANSFER WOULD RESULT IN THE NUMBER OF HOLDERS OF SHARES OF PREFERRED STOCK OF SUCH CLASS OR SERIES EQUALING OR EXCEEDING 500 PERSONS (AS DEFINED IN THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED). ANY ATTEMPTED TRANSFER IN VIOLATION OF SUCH RESTRICTIONS SHALL BE VOID AND OF NO FURTHER EFFECT AND SHALL BE SUBJECT TO THE FURTHER PROVISIONS OF THE CORPORATION'S CHARTER. THESE RESTRICTIONS ARE SET FORTH IN FULL DETAIL IN THE CORPORATION'S CHARTER, A COPY OF WHICH WILL BE SENT WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS."

        Section 7.3    The provisions of Article VII of the Charter shall cease to apply to any class or series of Preferred Stock of the Corporation which has been registered under the Securities Exchange Act of 1934, as amended.

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ARTICLE VIII
AMENDMENTS

        The Corporation reserves the right from time to time to make any amendment to its Charter, now or hereafter authorized by law, including any amendment altering the terms or contract rights, as expressly set forth in the Charter, of any shares of outstanding stock. All rights and powers conferred by the Charter of the Corporation on stockholders, directors and officers are granted subject to this reservation. Except as otherwise provided in the Charter of the Corporation, any amendment to the Charter shall be valid only if approved by the affirmative vote of two-thirds of all the votes entitled to be cast on the matter by the stockholder of the Corporation.

ARTICLE IX
LIMITATION OF LIABILITY

        To the maximum extent that Maryland law in effect from time to time permits limitation of the liability of directors and officers of a corporation, no director or officer of the Corporation shall be liable to the Corporation or its stockholders for money damages. Neither the amendment nor repeal of this Article IX, nor the adoption or amendment of any other provision of the Charter or Bylaws inconsistent with this Article IX, shall apply to or affect in any respect the applicability of the preceding sentence with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.

        THIRD:    The amendment to and restatement of the Charter as hereinabove set forth have been duly advised by the Board of Directors and approved by the stockholders of the Corporation as required by law.

        FOURTH:    The foregoing amendment and restatement of the Charter does not increase the authorized stock of the Corporation.

        FIFTH:    The current address of the principal office of the Corporation is as set forth in Article III of the foregoing amendment and restatement of the Charter.

        SIXTH:    The name and address of the Corporation's current resident agent is as set forth in Article III of the foregoing amendment and restatement of the Charter.

        SEVENTH:    There are currently four directors of the Corporation, and the names of those directors currently in office are as follows: Marshall Ezralow, Frank Pekny, Sandy Singer and Heng Chen.

        EIGHTH:    The undersigned President acknowledges these Articles of Amendment and Restatement to be the corporate act of the Corporation and as to all matters or facts required to be verified under oath, the undersigned President acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.

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        IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment and Restatement to be signed in its name and on its behalf by its President and attested to by its Assistant Secretary on this 5th day of Sept, 2002.

ATTEST:	CN REAL ESTATE INVESTMENT CORPORATION II
/s/ [ILLEGIBLE] Assistant Secretary	By:	/s/ FRANK P. PEKNY President

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EX-4.(H)

EXHIBIT 4(h)

CN REAL ESTATE INVESTMENT CORPORATION II
A Maryland Corporation
AMENDED AND RESTATED
BYLAWS

August 16, 2002

AMENDED AND RESTATED BYLAWS
OF
CN REAL ESTATE INVESTMENT CORPORATION II
(A MARYLAND CORPORATION)
ARTICLE I
NAME OF CORPORATION, LOCATION OF
OFFICES AND SEAL

        Section 1.    Name.    The name of the Corporation is CN Real Estate Investment Corporation II.

        Section 2.    Principal Offices.    The principal office of the Corporation is in the City of Baltimore. The Corporation may, in addition, establish and maintain such other offices and places of business as the Board of Directors may, from time to time, determine.

        Section 3.    Seal.    The corporate seal of the Corporation shall be circular in form and shall bear the name of the Corporation, the year of its incorporation, and the word "Maryland." The form of the seal shall be subject to alteration by the Board of Directors and the seal may be used by causing it or a facsimile to be impressed or affixed or printed or otherwise reproduced. Any officer or director of the Corporation shall have authority to affix the corporate seal of the Corporation to any document requiring the same.

ARTICLE II
STOCKHOLDERS

        Section 1.    Annual Meetings.    The annual meeting of stockholders shall be held on a date and at a time set by the Board of Directors during the month of March, at which the stockholders shall elect a Board of Directors and transact such other business as may be required by law or these Bylaws ("Bylaws") or as may properly come before the meeting. All meetings of stockholders shall be held at the principal executive office of the Corporation or at such other place as shall be set by the Board of Directors and stated in the notice of meeting.

        Section 2.    Special Meetings.    Special meetings of stockholders may be called at any time by the Chairman of the Board, or President, or by a majority of the Board of Directors, and shall be held at such time and place as may be stated in the notice of the meeting.

        Special meetings of the stockholders may be called by the Secretary upon the written request of the holders of shares entitled to vote not less than a majority of all the votes entitled to be cast at such meeting, provided that (1) such request shall state the purposes of such meeting and the matters proposed to be acted on, and (2) the stockholders requesting such meeting shall have paid to the Corporation the reasonably estimated cost of preparing and mailing the notice thereof, which the Secretary shall determine and specify to such stockholders. No special meeting shall be called upon the request of stockholders to consider any matter which is substantially the same as a matter voted upon at any special meeting of the stockholders held during the preceding twelve months, unless requested by the holders of a majority of all shares entitled to be cast at such meeting.

        Section 3.    Notice of Meetings.    The Secretary shall cause notice of the place, date and hour, and, in the case of a special meeting or as otherwise may be required by statute, the purpose or purposes for which the meeting is called, to be mailed, postage prepaid, not less than ten nor more than ninety days before the date of the meeting, to each stockholder entitled to vote at such meeting and to each stockholder not entitled to vote who is entitled to notice of the meeting at his or her address as it appears on the records of the Corporation at the time of such mailing. Notice shall be deemed to be given when deposited in the United States mail addressed to the stockholders as aforesaid, with postage thereon prepaid. Notice of any stockholders' meeting need not be given to any

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stockholder who shall sign a written waiver of such notice whether before or after the time of such meeting which is filed with the records of stockholders' meetings, or to any stockholder who is present at such meeting in person or by proxy. Notice of adjournment of a stockholders' meeting to another date and time need not be given if such date and time are announced at the meeting; provided, however, that the date and time for such adjourned meeting is not more than 120 days after the original record date. Irregularities in the notice of any meeting to, or the nonreceipt of any such notice by, any of the stockholders shall not invalidate any action otherwise properly taken by or at any such meeting.

        Section 4.    Quorum and Adjournment of Meetings.    The presence at any stockholders' meeting, in person, by telephone conference, or by proxy, of stockholders entitled to cast a majority of all the votes entitled to be cast at the meeting shall be necessary and sufficient to constitute a quorum for the transaction of business. In the absence of a quorum, the holders of shares entitled to vote at the meeting and present in person or by proxy, or, if no stockholder entitled to vote is present in person or by proxy, any officer present entitled to preside or act as secretary of such meeting may adjourn the meeting from time to time without further notice to a date not more than 120 days after the original record date. Any business that might have been transacted at the meeting originally called may be transacted at any such adjourned meeting at which a quorum is present.

        Section 5.    Voting.    Except as otherwise provided in the charter of the Corporation (the "Charter") or by applicable law, at each stockholders' meeting each stockholder shall be entitled to one vote for each share of stock of the Corporation validly issued and outstanding and registered in the name of such stockholder on the books of the Corporation on the record date fixed in accordance with Section 5 of Article VI hereof, either in person or by proxy appointed by instrument in writing subscribed by such stockholder or such stockholder's duly authorized attorney or by any other manner permitted by applicable law, except that no shares held by the Corporation shall be entitled to a vote.

        Except as otherwise provided in the Charter, these Bylaws, or as required under Maryland law, all matters shall be decided by a vote of the majority of the votes validly cast. The vote upon any question shall be by ballot whenever requested by any person entitled to vote, but, unless such a request is made, voting may be conducted in any way approved at the meeting. At any meeting at which there is an election of directors, the Chairman of the meeting may, and upon the request of the holders often percent of the stock entitled to vote at such election shall, appoint two inspectors of election who shall first subscribe an oath or affirmation to execute faithfully the duties of inspectors at such election with strict impartiality and according to the best of their ability, and shall, after the election, make a certificate of the result of the vote taken. No candidate for the office of director shall be appointed as an inspector.

        Section 6.    Validity of Proxies.    The right to vote by proxy shall exist only if the instrument authorizing such proxy to act shall have been signed by the stockholder or by his or her duly authorized attorney or if the proxy is authorized in any other manner permitted by applicable law. Unless a proxy provides otherwise, it shall not be valid more than eleven months after its date. All proxies shall be delivered to the Secretary of the Corporation or to the person acting as Secretary of the meeting before being voted, who shall decide all questions concerning qualification of voters, the validity of proxies, and the acceptance or rejection of votes. If inspectors of election have been appointed by the Chairman of the meeting, such inspectors shall decide all such questions. A proxy with respect to stock held in the name of two or more persons shall be valid if executed by one of them unless at or prior to exercise of such proxy the Corporation receives a specific written notice to the contrary from any one of them. A proxy purporting to be executed by or on behalf of a stockholder shall be deemed valid unless challenged at or prior to its exercise.

        Section 7.    Stock Ledger.    It shall be the duty of the Secretary or Assistant Secretary of the Corporation to cause an original or duplicate stock ledger to be maintained at the office of the

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Corporation's transfer agent. Such stock ledger may be in written form or any other form capable of being converted into written form within a reasonable time for visual inspection.

        Section 8.    Action Without Meeting.    Any action required or permitted to be taken by stockholders at a meeting of stockholders may be taken without a meeting if (1) all stockholders entitled to vote on the matter sign a written consent to the action, (2) all stockholders entitled to notice of the meeting but not entitled to vote at it sign a written waiver of any right to dissent, and (3) the consents and waivers are filed with the records of the meetings of stockholders. Such consent shall be treated for all purposes as a vote at the meeting.

        Section 9.    Advance Notice of Stockholder Nominees for Director and Other Stockholder Proposals.

         (a)  Annual Meetings of Stockholders.    (1) Nominations of persons for election to the Board of Directors and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders (i) pursuant to the Corporation's notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the Corporation who was a stockholder of record both at the time of giving of notice provided for in this Section 9(a) and at the time of the annual meeting, who is entitled to vote at the meeting and who complied with the notice procedures set forth in this Section 9(a).

         (2)  For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of paragraph (a)(l) of this Section 9, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such other business must otherwise be a proper matter for action by the stockholders. To be timely, a stockholder's notice shall be delivered to the Secretary at the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the first anniversary of the date of mailing of the notice for the preceding year's annual meeting; provided, however, that in the event that the date of the mailing of the notice for the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of mailing of the notice for the preceding year's annual meeting, notice by the stockholder to be timely must be so delivered not earlier than the 120^th day prior to the date of mailing of the notice for such annual meeting and not later than the close of business on the later of the 90^th day prior to the date of mailing of the notice for such annual meeting or the tenth day following the day on which disclosure of the date of mailing of the notice for such meeting is first made. In no event shall the public announcement of a postponement or adjournment of an annual meeting commence a new time period for the giving of a stockholder's notice as described above. Such stockholder's notice shall set forth (i) as to each person whom the stockholder proposes to nominate for election or reelection as a director, (A) the name, age, business address and residence address of such person, (B) the class and number of shares of stock of the Corporation that are beneficially owned by such person and (C) if the Corporation has any class or series of stock which is registered under the Securities Exchange Act of 1934 (the "Exchange Act"), all other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest (even if an election contest is not involved), or is otherwise required, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act and the rules thereunder (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (ii) as to any other business that the stockholder proposes to bring before the meeting, a description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder (including any anticipated benefit to the stockholder therefrom) and of each beneficial owner, if any, on whose behalf the proposal is made; and (iii) as to the stockholder giving the notice and each beneficial owner, if any, on whose behalf the nomination or proposal is made, (x) the name and address of such stockholder, as they appear on the Corporation's stock ledger and current name and address, if different, and of such beneficial owner, and (y) the class and number of shares of each

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class of stock of the Corporation which are owned beneficially and of record by such stockholder and owned beneficially by such beneficial owner.

         (3)  Notwithstanding anything in this subsection (a) of this Section 9 to the contrary, in the event the Board of Directors increases or decreases the maximum or minimum number of directors in accordance with Article III, Section 2 of these Bylaws, and there is no announcement of such action at least 100 days prior to the first anniversary of the date of mailing of the notice of the preceding year's annual meeting, a stockholder's notice required by this Section 9(a) shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth day following the day on which such public announcement is first made by the Corporation.

         (b)  Special Meetings of Stockholders.    Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation's notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected (i) pursuant to the Corporation's notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) provided that the Board of Directors has determined that directors shall be elected at such special meeting, by any stockholder of the Corporation who is a stockholder of record both at the time of giving of notice provided for in this Section 9 and at the time of the special meeting, who is entitled to vote at the meeting and who complied with the notice procedures set forth in this Section 9. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder may nominate a person or persons (as the case may be) for election as a director as specified in the Corporation's notice of meeting, if the stockholder's notice required by paragraph (a)(2) of this Section 9 shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the 120^th day prior to such special meeting and not later than the close of business on the later of the 90^th day prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of a postponement or adjournment of a special meeting commence a new time period for the giving of a stockholder's notice as described above.

         (c)  General.    Only such persons who are nominated in accordance with the procedures set forth in this Section 9 shall be eligible to serve as directors, and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 9. The chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 9 and, if any proposed nomination or business is not in compliance with this Section 9, to declare that such defective nomination or proposal be disregarded.

ARTICLE III;
BOARD OF DIRECTORS

        Section 1.    Powers.    Except as otherwise provided by operation of law, by the Charter, or by these Bylaws, the business and affairs of the Corporation shall be managed under the direction of and all the powers of the Corporation shall be exercised by or under authority of its Board of Directors.

        Section 2.    Number and Term of Directors.    Except for the initial Board of Directors, the Board of Directors shall consist of a number of directors which may be established, and thereafter increased or decreased from time to time, as specified by a resolution of a majority of the entire Board of Directors but in no event shall the number of directors be fewer than one nor more than nine.

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Directors need not be stockholders of the Corporation. All acts done at any meeting of the directors or by any person acting as a director, so long as his or her successor shall not have been duly elected or appointed, shall, notwithstanding that it be afterwards discovered that there was some defect in the election of the directors or of such person acting as a director, or that they or any of them were disqualified, be as valid as if the directors or such other person, as the case may be, had been duly elected and were or was qualified to be directors or a director of the Corporation. Each director shall hold office until his or her successor is elected and qualified or until his or her earlier death, resignation, or removal.

        Section 3.    Election.    A plurality of all the votes cast at a meeting of stockholders duly called and at which a quorum is present is sufficient to elect a director. Each share may be voted for as many individuals as there are directors to be elected and for whose election the share is entitled to be voted.

        Section 4.    Vacancies and Newly Created Directorships.    If any vacancies shall occur in the Board of directors by reason of death, resignation, removal, or otherwise, or if the authorized number of directors shall be increased, the directors then in office shall continue to act, and such vacancies (if not previously filled by the stockholders) may be filled by a majority of the directors then in office, although less than a quorum, except that a newly created directorship may be filled only by a majority vote of the entire Board of Directors.

        Section 5.    Removal.    The stockholders may remove any director in accordance with and subject to the provisions of the Charter and applicable law.

        Section 6.    Annual and Regular Meetings.    The annual meeting of the Board of Directors for choosing officers and transacting other proper business shall be held within a reasonable time after each annual meeting of stockholders at such time and place as the Board may determine. The Board of Directors from to time may provide by resolution for the holding of regular meetings and fix their time and place within or outside the State of Maryland. Notice of the time and place of such annual and regular meeting shall be specified in a notice given as hereinafter provided in the manner provided for notice of special meetings. Members of the Board of Directors or any committee designated thereby, may participate in a meeting of such Board or committee by means of a conference telephone or similar communications equipment that allows all persons participating in the meeting to hear each other at the same time.

        Section 7.    Special Meetings.    Special meetings of the Board of Directors shall be held whenever called by the Chairman of the Board, the Vice Chairman, the President (or, in the absence or disability of the President, by any Vice President), the Chief Financial Officer, or by two or more directors, at the time and place (within or without the State of Maryland) specified in the respective notice or waivers of notice of such meetings. Notice of special meetings, stating the time and place, shall be (1) mailed to each director at his or her residence or regular place of business at least three days before the day on which a special meeting is to be held, or (2) delivered to him or her personally or transmitted to him or her by telegraph, telecopy, telex, cable, or wireless at least one day before the meeting.

        Section 8.    Waiver of Notice.    No notice of any meeting need be given to any director who is present at the meeting or who waives notice of such meeting in writing (which waiver shall be filed with the records of such meeting) either before or after the time of the meeting.

        Section 9.    Quorum and Voting.    At all meetings of the Board of Directors, the presence of one half or more of the number of directors then in office shall constitute a quorum for the transaction of business, provided that, at any time that there shall be more than one director, there shall be present at least two directors. In the absence of a quorum, a majority of the directors present may adjourn the meeting, from time to time, until a quorum shall be present. The action of a majority of the directors present at a meeting at which a quorum is present shall be the action of the Board of Directors, unless

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concurrence of a greater proportion is required for such action by law, by the Charter, or by these Bylaws.

        Section 10.    Telephonic Meetings.    Members of the Board of Directors or any committee of the Board of Directors may participate in a meeting by means by a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time.

        Section 11.    Action Without a Meeting.    Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if a written consent to such action is signed by all members of the Board or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board or committee.

        Section 12.    Compensation of Directors.    Directors shall be entitled to receive such compensation from the Corporation for their services as may from time to time be determined by resolution of the Board of Directors.

ARTICLE IV
COMMITTEES

        Section 1.    Organization.    By resolution adopted by the Board of Directors, the Board may designate one or more committees of the Board of Directors, including an Executive Committee. The Chairmen of such committees shall be elected by the Board of Directors. Each committee must be comprised of one or more members, each of whom must be a director and shall hold committee membership at the pleasure of the Board. The Board of Directors shall have the power at any time to change the members of such committees and to fill vacancies in the committees. The Board may delegate to these committees any of its powers, except as prohibited by law.

        Section 2.    Executive Committee.    Unless otherwise provided by resolution of the Board of Directors, when the Board of Directors is not in session, the Executive Committee, if one is designated by the Board, shall have and may exercise all powers of the Board of Directors in the management of the business and affairs of the Corporation that may lawfully be exercised by an Executive Committee. The President and Chairman shall automatically be members of the Executive Committee.

        Section 3.    Proceedings and Quorum.    Notice of committee meetings shall be given in the same manner as notice for special meetings of the Board of Directors. In the absence of an appropriate resolution of the Board of Directors, each committee may adopt such rules and regulations governing its proceedings, quorum, and manner of acting as it shall deem proper and desirable. In the event any member of any committee is absent from any meeting, the members thereof present at the meeting, whether or not they constitute a quorum, may appoint a member of the Board of Directors to act in the place of such absent member.

        Section 4.    Other Committees.    The Board of Directors may appoint other committees, each consisting of one or more persons, who need not be directors. Each such committee shall have such powers and perform such duties as may be assigned to it from time to time by the Board of Directors, but shall not exercise any power which may lawfully be exercised only by the Board of Directors or a committee thereof.

ARTICLE V
OFFICERS

        Section 1.    General.    The officers of the Corporation shall be a President, a Treasurer, who shall also be the Chief Financial Officer unless the Board of Directors otherwise specifies, a Secretary and such other officers, if any, as the Board of Directors from time to time may in its discretion elect

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or appoint in accordance with Section 9 of this Article including without limitation a Chairman of the Board, one or more Vice Presidents and a Controller. The Corporation may also have such agents, if any, as the Board of Directors from time to time may in its discretion choose. Any officer may be but none need be a stockholder. Any officer may be required by the Board of Directors to secure the faithful performance of his duties to the corporation by giving bond in such amount and with sureties or otherwise as the Board of Directors may determine.

        Section 2.    Election, Tenure and Qualifications.    The officers of the Corporation, except those appointed as provided in Section 9 of this Article V, shall be elected by the Board of Directors at its first meeting or such subsequent meetings as shall be held prior to its first annual meeting, and thereafter annually at its annual meeting. If any officers are not elected at any annual meeting, such officers may be elected at any subsequent regular or special meeting of the Board. Except as otherwise provided in this Article V, each officer elected by the Board of Directors shall hold office until the next annual meeting of the Board of Directors and until his or her successor shall have been elected and qualified. Any person may hold one or more offices of the Corporation, except that no one person may serve concurrently as both President and Vice President. A person who holds more than one office in the Corporation may not act in more than one capacity to execute, acknowledge, or verify an instrument required by law to be executed, acknowledged, or verified by more than one officer. No officer, other than the Chairman or Vice Chairman, need be a director.

        Section 3.    Vacancies and Newly Created Officers.    If any vacancy shall occur in any office by reason of death, resignation, removal, disqualification, or other cause, or if any new office shall be created, such vacancies or newly created offices may be filled by the Board of Directors at any regular or special meeting or, in the case of any office created pursuant to Section 9 hereof, by any officer upon whom such power shall have been conferred by the Board of Directors.

        Section 4.    Removal and Resignation.    Any officer may be removed from office by the vote of a majority of the members of the Board of Directors given at a regular meeting or any special meeting called for such purpose. Any officer may resign from office at any time by delivering a written resignation to the Board of Directors, the President, the Chairman, the Secretary, or any Assistant Secretary. Unless otherwise specified therein, such resignation shall take effect upon delivery.

        Section 5.    Chairman, President and Vice President.    The Chairman of the Board, if any, shall have such duties and powers as shall be designated from time to time by the Board of Directors. Unless the Board of Directors otherwise specifies, the Chairman of the Board, or if there is none, the Chief Executive Officer, shall preside, or designate the person who shall preside, at all meetings of the stockholders and of the Board of Directors.

        Unless the Board of Directors otherwise specifies, the President shall be the Chief Executive Officer and shall have direct charge of all business operations of the corporation and, subject to the control of the directors, shall have general charge and supervision of the business of the corporation.

        Any Vice Presidents shall have such duties and powers as shall be set forth in these Bylaws or as shall be designated from time to time by the Board of Directors or by the President.

        Section 6.    Treasurer, Chief Financial Officer and Assistant Chief Financial Officers.    Unless the Board of Directors otherwise specifies, the Treasurer shall be the Chief Financial Officer of the Corporation and shall be in charge of its funds and valuable papers, and shall have such other duties and powers as may be designated from time to time by the Board of Directors or by the President. If no Controller is elected, the Chief Financial Officer shall, unless the Board of Directors otherwise specifies, also have the duties and powers of the Controller.

        Any assistant Chief Financial Officers or Assistant Treasurers shall have such duties and powers as shall be designated from time to time by the Board of Directors, the President or the Treasurer.

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        Section 7.    Controller and Assistant Controller.    If a Controller is elected, he shall, unless the Board of Directors otherwise specifies, be the chief accounting officer of the corporation and be in charge of its books of account and accounting records, and of its accounting procedures. He shall have such other duties and powers as may be designated from time to time by the Board of Directors, the President or the Treasurer.

        Section 8.    Secretary and Assistant Secretaries.    The Secretary shall attend to the giving and serving of all notices of the Corporation and shall record all proceedings of the meetings of the stockholders and directors in books to be kept for that purpose. The Secretary shall keep in safe custody the seal of the Corporation, and shall have responsibility for the records of the Corporation, including the stock books and such other books and papers as the Board of Directors may direct and such books, reports, certificates, and other documents required by law to be kept, all of which shall at all reasonable times be open to inspection by any director. The Secretary shall perform such other duties which appertain to this office or as may be required by the Board of Directors.

        Any Assistant Secretary may perform such duties of the Secretary as the Secretary or the Board of Directors may assign, and, in the absence of the Secretary, may perform all the duties of the Secretary.

        Section 9.    Subordinate Officers.    The Board of Directors from time to time may appoint such other officers and agents as it may deem advisable, each of whom shall have such title, hold office for such period, have such authority, and perform such duties as the Board of Directors may determine. The Board of Directors from time to time may delegate to one or more officers or agents the power to appoint any such subordinate officers or agents and to prescribe their respective rights, terms of office, authorities, and duties. Any officer or agent appointed in accordance with the provisions of this Section 9 may be removed, either with or without cause, by any officer upon whom such power of removal shall have been conferred by the Board of Directors.

        Section 10.    Remuneration.    The salaries or other compensation, if any, of the officers of the Corporation shall be fixed from time to time by resolution of the Board of Directors in the manner provided by Section 12 of Article III, except that the Board of Directors may by resolution delegate to any person or group of persons the power to fix the salaries or other compensation of any subordinate officers or agents appointed in accordance with the provisions of Section 9 of this Article V.

        Section 11.    Surety Bond.    The Board of Directors may require any officer or agent of the Corporation to execute a bond to the Corporation in such sum and with such surety or sureties as the Board of Directors may determine, conditioned upon the faithful performance of his or her duties to the Corporation, including responsibility for negligence and for the accounting of any of the Corporation's property, funds or securities that may come into his or her hands.

ARTICLE VI
CAPITAL STOCK

        Section 1.    Certificates of Stock.    The interest of each stockholder of the Corporation may be evidenced by certificates for shares of stock in such form as the Board of Directors may from time to time authorize; provided, however, the Board of Directors may, in its discretion, authorize the issuance of non-certificated shares. No certificate shall be valid unless it is signed by the Chairman of the Board, President, or a Vice President and countersigned by the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer of the Corporation and sealed with the seal of the Corporation, or bears the facsimile signatures of such officers and a facsimile of such seal. In case any officer who shall have signed any such certificate, or whose facsimile signature has been placed thereon, shall cease to be such an officer (because of death, resignation, or otherwise) before such certificate is issued, such certificate may be issued and delivered by the Corporation with the same effect as if he or she were such officer at the date of issue. Each certificate representing shares which are restricted as to their

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transferability or voting powers, which are preferred or limited as to their dividends or as to their allocable portion of the assets upon liquidation or which are redeemable at the option of the Corporation, shall have a statement of such restriction, limitation, preference or redemption provision, or a summary thereof, plainly stated on the certificate. If the Corporation has authority to issue stock of more than one class, the certificate shall contain on the face or back a full statement or summary of the designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption of each class of stock and, if the Corporation is authorized to issue any preferred or special class in series, the differences in the relative rights and preferences between the shares of each series to the extent they have been set and the authority of the Board of Directors to set the relative rights and preferences of subsequent series. In lieu of such statement or summary, the certificate may state that the Corporation will furnish a full statement of such information to any stockholder upon request and without charge. If any class of stock is restricted by the Corporation as to transferability, the certificate shall contain a full statement of the restriction or state that the Corporation will furnish information about the restrictions to the stockholder on request and without charge.

        In the event that the Board of Directors authorizes the issuance of non-certificated shares of stock, the Board of Directors may, in its discretion and at any time, discontinue the issuance of share certificates and may, by written notice to the registered owners of each certificated share, require the surrender of share certificates to the Corporation for cancellation. Such surrender and cancellation shall not affect the ownership of shares of the Corporation.

        Section 2.    Transfer of Shares.    Subject to the provisions of the next sentence of this Section 2 of Article VI, shares of the Corporation shall be transferable on the books of the Corporation by the holder of record thereof in person or by his or her duly authorized attorney or legal representative (i) upon surrender and cancellation of any certificate or certificates for the same number of shares of the same class, duly endorsed or accompanied by proper instruments of assignment and transfer, with such proof of the authenticity of the signature as the Corporation or its agents may reasonably require, or (ii) as otherwise prescribed by the Board of Directors. The Board of Directors may, from time to time, adopt limitations and rules and regulations with reference to the transfer of the shares of stock of the Corporation to comply with the requirements of the Securities Act of 1933, as amended, or other applicable laws. The Corporation shall be entitled to treat the holder of record of any share of stock as the absolute owner thereof for all purposes, and accordingly shall not be bound to recognize any legal, equitable, or other claim or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided by law or the statutes of the State of Maryland.

        Notwithstanding the foregoing, transfers of shares of stock will be subject in all respects to the Charter of the Corporation and all of the terms and conditions contained therein.

        Section 3.    Stock Ledger.    The stock ledger of the Corporation, containing the names and addresses of the stockholders and the number of shares of stock held by them respectively, shall be kept at the principal offices of the Corporation or, if the Corporation employs a transfer agent, at the offices of the transfer agent of the Corporation.

        Section 4.    Transfer Agents and Registrars.    The Board of Directors may from time to time appoint or remove transfer agents and registrars of transfers for shares of stock of the Corporation, and it may appoint the same person as both transfer agent and registrar. Upon any such appointment being made, all certificates representing shares of capital stock thereafter issued shall be countersigned by one of such transfer agents or by one of such registrars or by both and shall not be valid unless so countersigned. If the same person shall be both transfer agent and registrar, only one countersignature by such person shall be required.

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        Section 5.    Fixing of Record Date.    The Board of Directors may fix in advance a date as a record date for the determination of the stockholders entitled to notice of or to vote at any stockholders' meeting or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or to receive payment of any dividend or other distribution or allotment of any rights, or to exercise any rights in respect of any change, conversion, or exchange of stock, or for the purpose of any other lawful action, provided that (1) such record date shall not be prior to the close of business on the day the record date is fixed and shall be within ninety days prior to the date on which the particular action requiring such determination will be taken, (2) the transfer books shall not be closed for a period longer than twenty days, and (3) in the case of a meeting of stockholders, the record date shall be at least ten days before the date of the meeting.

        Section 6.    Lost, Stolen or Destroyed Certificates.    Before issuing a new certificate for stock of the Corporation alleged to have been lost, stolen, or destroyed, the Board of Directors or any officer authorized by the Board may, in their discretion, require the owner of the lost, stolen, or destroyed certificate (or his or her legal representative) to give the Corporation a bond or other indemnity, in such form and in such amount as the Board or any such officer may direct and with such surety or sureties as may be satisfactory to the Board or any such officer, sufficient to indemnify the Corporation against any claim that may be made against it on account of the alleged loss, theft, or destruction of any such certificate or the issuance of such new certificate.

ARTICLE VII
FISCAL YEAR

        The fiscal year of the Corporation shall, unless otherwise ordered by the Board of Directors, be twelve calendar months ending on the 31st day of December.

ARTICLE VIII
INDEMNIFICATION AND INSURANCE

        Section 1.    Indemnification of Officers and Directors.    The Corporation shall indemnify, in the manner and to the maximum extent permitted by law, any person (or the estate of any person) who is or was a party to, or is threatened to be made a party to, any threatened, pending or completed action, suit or proceeding, whether or not by or in the right of the Corporation, and whether civil, criminal, administrative, investigative or otherwise, by reason of the fact that such person is or was a director or officer of the Corporation or that such person while a director or officer of the Corporation is or was serving at the request of the Corporation as a director, officer, trustee, partner, member, agent or employee of another corporation, partnership, limited liability company, association, joint venture, trust or other enterprise. To the maximum extent permitted by law, the indemnification provided herein shall include expenses (including attorneys' fees), judgments, fines and amounts paid in settlement, and any such expenses may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding. The indemnification and reimbursement of expenses provided herein shall not be deemed to limit the right of the Corporation to indemnify any other person against any liability and expenses to the fullest extent permitted by law, nor shall it be deemed exclusive of any other rights to which any person seeking indemnification from the Corporation may be entitled under any agreement, the Charter of the Corporation, a vote of stockholders or disinterested directors, or otherwise, both as to action in such person's official capacity as an officer or director and as to any action in another capacity, at the request of the Corporation, while acting as an officer or director of the Corporation.

        Section 2.    Indemnification of Employees and Agents.    The Corporation shall have the power, with the approval of the Board of Directors, to provide indemnification and advancement of expenses, to the same extent which it is authorized to provide indemnification to present and past directors and officers, to any person who served a predecessor of the Corporation in any of the capacities described

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in Section 1 of this Article VIII above and to any employee or agent of the Corporation or a predecessor of the Corporation.

        Section 3.    Insurance of Officers, Directors, Employees and Agents.    The Corporation may purchase and maintain insurance on behalf of any person who is or was a director or officer of the Corporation or who while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, trustee, partner, member, agent or employee of another corporation, partnership, limited liability company, association, joint venture, trust, or other enterprise, against any liability asserted against that person and incurred by that person in or arising out of his or her position, whether or not the Corporation would have the power to indemnify him or her against such liability. Notwithstanding the foregoing, any insurance so purchased will not protect or purport to protect any officer or director against liabilities for willful misfeasance, bad faith, gross negligence, or reckless disregard of duty.

        Section 4.    Amendment.    No amendment, alteration, or repeal of this Article or the adoption, alteration, or amendment of any other provision of the Charter or Bylaws inconsistent with this Article shall adversely affect any right or protection of any person under this Article with respect to any act or failure to act which occurred prior to such amendment, alteration, repeal, or adoption.

ARTICLE IX
AMENDMENTS

        The Board of Directors shall have the exclusive right and power to amend, alter or repeal any of the Bylaws, and to adopt new Bylaws.

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EX-10.(G)

Exhibit 10(g)

Exhibit B
AMENDED AND RESTATED SECTION 2.8.
OF
CITY NATIONAL CORPORATION 1995 OMNIBUS PLAN

        2.8    Special Requirements for Director Stock Options.

         (a)  Eligibility.    All directors of the Company who are not employees of the Company shall be eligible to receive Director Stock Options, as set forth in this Section 2.8. Notwithstanding the foregoing, any director who is, or who during the preceding calendar year was, a member of the Committee or any committee administering any other stock option, stock appreciation, stock bonus or other stock plan of the Company or any Subsidiary will not be eligible to receive Director Stock Options hereunder if, in the opinion of counsel for the Company, the receipt of Director Stock Options will cause such director to be a "disinterested person" with respect to the Plan or any other stock option, stock appreciation, stock bonus or other stock plan of the Company or any subsidiary pursuant to Rule 16b-3 of the Securities and Exchange Commission, or will otherwise disqualify the Plan or any other such Plan from compliance with said rule.

         (b)  Grant of Director Options.    Every eligible director will receive five hundred (500) Director Stock Options on the date of each annual meeting of shareholders. Director Stock Options shall be granted automatically to each such eligible director on the business day following such annual meeting of stockholders, without further action of the Committee or the Board.

         (c)  Stock Option Price.    The purchase price of the stock pursuant to a Director Stock Option shall be $1.00 per share.

         (d)  Other Terms of Director Stock Options.    Each Director Stock Option shall become exercisable six (6) months after the date of grant. Unless otherwise determined by the Committee, if the holder of Director Stock Options ceases to serve as a director of the Company for any reason other than for cause, the Director Stock Options shall expire at the end of their fixed term, or three months after the date of such termination, and until then shall be exercisable in full, regardless of any vesting schedule otherwise applicable. Except as set forth in this Section 2.8, all terms and provisions of the Director Stock Options shall be as set forth in the Plan with respect to options which are not Director Stock Options.

EX-10.(M)

Exhibit 10(m)

AMENDMENT NUMBER 3
TO
2000 CITY NATIONAL BANK
EXECUTIVE DEFERRED COMPENSATION PLAN

        WHEREAS, City National Bank (the "Bank") maintains the 2000 City National Bank Executive Deferred Compensation Plan (the "Plan") to provide supplemental retirement income benefits for a select group of management and highly compensated employees through deferrals of salary and/or commissions and bonuses; and

        WHEREAS, pursuant to Section 8.4 of the Plan, the Bank has the right to amend the Plan;

        WHEREAS, it is desirable to adopt an amendment to the Plan to allow Participants to make investment elections in a "CNC Stock" Fund; and

        NOW, THEREFORE, the Plan is hereby amended, effective as of January 1, 2008, with approval by the Compensation, Nominating and Governance Committee of the Board of Directors of City National Corporation, as follows:

           1.  Section 3.2 of the Plan is hereby amended to add the following subsection (e) thereof to read as follows:

         (e)  Effective as of January 1, 2008, the "CNC Stock" Fund will be added as a Fund available under the Plan, subject to the following conditions and such other conditions as the Committee which administers the Plan may determine:

          (i)  A Participant may designate, on a form provided and in a manner specified by the Committee, a percentage of his or her Plan Year Subaccount for any Plan Year that shall be deemed to be invested in the CNC Stock Fund.

        (A)  A Participant must make an election to designate the CNC Stock Fund for all or a specified percentage of his or her Plan Year Subaccount for any Plan Year beginning in 2008 or thereafter at the time when the Participant elects to defer compensation for such Plan Year.

        (B)  A Participant will only be permitted to make a one-time election in 2007 to designate the CNC Stock Fund for all or specified percentages of his Plan Year Subaccounts for 2007 or earlier years.

         (ii)  Notwithstanding any other provision of the Plan, a Participant may not subsequently change his or her investment election (or diversify out of the CNC Stock Fund) for any amounts which the Participant has designated to be invested in the CNC Stock Fund.

        (iii)  Notwithstanding any other provision of the Plan, unless otherwise permitted by the Committee, no in-service distribution election may be made by a Participant for any Plan Year Subaccount if any portion of such Plan Year Subaccount is designated to be invested in the CNC Stock Fund. The portion of any Plan Year Subaccount which is designated to be invested in the CNC Stock Fund will be distributed in a lump sum or installments following the Participant's termination of employment at the same time when other distributions are made from such Plan Year Subaccount pursuant to the distribution elections made by the participant in accordance with the provisions of the Plan.

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        (A)  A Participant may not designate the CNC Stock Fund for his or her Plan Year Subaccount for 2004 or any earlier year for which the Participant has previously elected to receive an in service distribution.

        (B)  A Participant may not designate the CNC Stock Fund for his or her Plan Year Subaccount for any Plan Year between 2004 and 2007 for which the Participant has previously elected to receive an in service distribution, unless the Participant makes a new election in 2007 for such Plan Year Subaccount to receive a distribution in a lump sum or installments following the Participant's termination of employment in accordance with the provisions of the Plan.

        (iv)  The CNC Stock Fund will be measured in number of shares of City National Corporation Common Stock ("CNC Stock"). The number of shares of CNC Stock will be appropriately adjusted, as determined by the Committee, to reflect any stock splits, reverse stock splits, stock dividends, or similar events.

         (v)  Shares in the CNC Stock Fund do not convey the rights to ownership of shares of CNC Stock and do not have voting rights. The Company's obligation with respect to the CNC Stock Fund is unfunded. A Participant will only acquire ownership and voting rights when shares of CNC Stock are actually distributed to the Participant in accordance with the provisions of the Plan.

        (vi)  All distributions from the CNC Stock Fund will be made solely in CNC Stock, except that any fractional shares will be paid in cash. The number of shares distributed will be reduced to cover all taxes which are required to be withheld by Bank in respect to distributions of CNC Stock under the Plan.

       (vii)  All cash dividends which are paid on CNC Stock held in the CNC Stock Fund will not be deemed to be invested in the CNC Stock Fund, but will be credited in cash and will initially be deemed to be invested in the money market option or such other Fund that the Committee designates for this purpose, and thereafter may be reallocated by the Participant among Funds (other than the CNC Stock Fund) as permitted by the Committee.

      (viii)  All CNC Stock which is distributed to Participants pursuant to this Plan will be distributed under a plan which has been approved by the stockholders of the Company, if required to comply with any applicable federal or state law or applicable New York Stock Exchange listing standard.

        IN WITNESS WHEREOF, the Bank has caused its duly authorized officer to execute this Amendment on this                        day of                                    , 2007.

CITY NATIONAL BANK
By:	/s/  PATTI FISCHER Patti Fischer
Its:	Senior Vice President Human Resources

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EX-10.(P)

Exhibit 10(p)

AMENDMENT NUMBER 2
TO
2000 CITY NATIONAL BANK
DIRECTOR DEFERRED COMPENSATION PLAN

        WHEREAS, City National Bank (the "Bank") maintains the 2000 City National Bank Director Deferred Compensation Plan (the "Plan") to provide supplemental retirement income benefits for the outside directors of the Bank through deferrals of directors' fees; and

        WHEREAS, pursuant to Section 8.4 of the Plan, the Bank has the right to amend the Plan; and

        WHEREAS, it is desirable to adopt an amendment to the Plan to make modifications with regard to the fees which Participants may defer under the Plan and to allow Participants to make investment elections in a "CNC Stock" Fund;

        NOW, THEREFORE, the Plan is hereby amended, effective as of January 1, 2008, with approval by the Compensation, Nominating and Governance Committee of the Board of Directors of City National Corporation, as follows:

           1.  Section 1.2 of the Plan is hereby amended to add a definition of "Annual Award" and to revise the definitions of "Annual Retainer" and "Compensation" to read as follows:

        "Annual Award" shall mean the annual award to which a Director is entitled for service as a member of the Board of Directors of the Corporation or the Board of Directors of the Bank which is payable in cash in an amount equivalent to the value of a specified number of shares (currently 500) of Common Stock of the Corporation.

        "Annual Retainer" shall mean the annual retainer fee for Committee Chairs to which a Director is entitled for service as a Chair of a Board committee of the Board of Directors of the Corporation or the Board of Directors of the Bank.

        "Compensation" shall mean the Participant's Annual Award, Annual Retainer and Meeting Fees.

           2.  Section 3.1 of the Plan is hereby amended to revise subsections (b) and (c) thereof to read as follows:

         (b)  General Rule.    Subject to the minimum deferral provisions of Section 3.1(c) below, the amount of Compensation which an Eligible Director may elect to defer is as follows:

          (i)  Any percentage or dollar amount of Annual Retainer up to 100%; and/or

         (ii)  Any percentage or dollar amount of Meeting Fees up to 100%; and/or

        (iii)  100% of the Annual Award; provided that any Annual Award which is deferred must be designated to be invested in the CNC Stock Fund (as defined in subsection 3.2(e)).

         (c)  Minimum Deferrals.    For each Plan Year during which an Eligible Director is a Participant, the minimum amount that may be elected under Section 3.1(b) is $5,000. This $5,000 minimum deferral for any Plan Year may be met by a combination of deferrals of Annual Retainer and/or Meeting Fees and/or Annual Award for the Plan Year.

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           3.  Section 3.2 of the Plan is hereby amended to add the following subsection (e) thereof to read as follows:

         (e)  Effective as of January 1, 2008, the "CNC Stock" Fund will be added as a Fund available under the Plan, subject to the following conditions and such other conditions as the Committee which administers the Plan may determine:

          (i)  A Participant may designate, on a form provided and in a manner specified by the Committee, a percentage of his or her Plan Year Subaccount for any Plan Year that shall be deemed to be invested in the CNC Stock Fund, subject to the following conditions:

        (A)  A Participant must make an election to designate the CNC Stock Fund for the entire Annual Award which the Participant defers for any Plan Year beginning in 2008 or thereafter at the time when the Participant elects to defer Compensation for such Plan Year.

        (B)  A Participant will only be permitted to make a one-time election in 2007 to designate the CNC Stock Fund for all or specified percentages of his Plan Year Subaccounts for 2007 or earlier years or for Rollover Amounts.

        (C)  A Participant will not be permitted to designate the CNC Stock Fund for any Annual Retainer or Meeting Fees which are payable in 2008 or thereafter.

         (ii)  Notwithstanding any other provision of the Plan, a Participant may not subsequently change his or her investment election (or diversify out of the CNC Stock Fund) for any amounts which the Participant has designated to be invested in the CNC Stock Fund.

        (iii)  Notwithstanding any other provision of the Plan, unless otherwise permitted by the Committee, no in-service distribution election may be made by a Participant for any Plan Year Subaccount if any portion of such Plan Year Subaccount is designated to be invested in the CNC Stock Fund. The portion of any Plan Year Subaccount which is designated to be invested in the CNC Stock Fund will be distributed in a lump sum or installments following the Participant's termination of service as an Eligible Director at the same time when other distributions are made from such Plan Year Subaccount pursuant to the distribution elections made by the Participant in accordance with the provisions of the Plan.

        (A)  A Participant may not designate the CNC Stock Fund for his or her Plan Year Subaccount for 2004 or any earlier year or his or her Rollover Amount for which the Participant has previously elected to receive an in service distribution.

        (B)  A Participant may not designate the CNC Stock Fund for his or her Plan Year Subaccount for any Plan Year between 2004 and 2007 for which the Participant has previously elected to receive an in service distribution, unless the Participant makes a new election in 2007 for such Plan Year Subaccount to receive a distribution in a lump sum or installments following the Participant's termination of service as an Eligible Director in accordance with the provisions of the Plan.

        (iv)  The CNC Stock Fund will be measured in number of shares of City National Corporation Common Stock ("CNC Stock"). The number of shares of CNC Stock will be appropriately adjusted, as determined by the Committee, to reflect any stock splits, reverse stock splits, stock dividends, or similar events.

2

         (v)  Shares in the CNC Stock Fund do not convey the rights to ownership of shares of CNC Stock and do not have voting rights. The Company's obligation with respect to the CNC Stock Fund is unfunded. A Participant will only acquire ownership and voting rights when shares of CNC Stock are actually distributed to the Participant in accordance with the provisions of the Plan.

        (vi)  All distributions from the CNC Stock Fund will be made solely in CNC Stock, except that any fractional shares will be paid in cash. The number of shares distributed will be reduced to cover all taxes, if any, which are required to be withheld by Bank in respect to distributions of CNC Stock under the Plan.

       (vii)  All cash dividends which are paid on CNC Stock held in the CNC Stock Fund will not be deemed to be invested in the CNC Stock Fund, but will be credited in cash and will initially be deemed to be invested in the money market option or such other Fund that the Committee designates for this purpose, and thereafter may be reallocated by the Participant among Funds (other than the CNC Stock Fund) as permitted by the Committee.

      (viii)  All CNC Stock which is distributed to Participants pursuant to this Plan will be distributed under a plan which has been approved by the stockholders of the Company, if required to comply with any applicable federal or state law or applicable New York Stock Exchange listing standard.

        IN WITNESS WHEREOF, the Bank has caused its duly authorized officer to execute this Amendment on this                        day of                        , 2007.

CITY NATIONAL BANK
By:	/s/  PATTI FISCHER Patti Fischer
Its:	Senior Vice President Human Resources

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EX-21

Exhibit 21

Parent and subsidiaries

City National Corporation
            City National Bank (100%)

        City National Corporation ("Registrant") is a corporation organized under the laws of the State of Delaware. City National Bank is a national banking association organized under the laws of the United States of America. Registrant owns 100 percent of the outstanding capital stock of City National Bank ("Bank").

EX-23

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Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors
City National Corporation:

        We consent to the incorporation by reference in the registration statements (Nos. 333-01993, 333-87719, 333-61854, 333-88118 and 33-56632) on Form S-8, and (No. 333-104395) on Form S-4 of City National Corporation of our reports dated February 27, 2008, with respect to the consolidated balance sheets of City National Corporation and subsidiaries as of December 31, 2007 and 2006, and the related consolidated statements of earnings, shareholders' equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2007, and the effectiveness of internal control over financial reporting as of December 31, 2007, which reports appear in the December 31, 2007 annual report on Form 10-K of City National Corporation.

        Our report on the consolidated financial statements refers to changes in 2007 in City National Corporation's method of accounting for uncertainty in income taxes, and in 2006, City National Corporation changed its methods of accounting for defined benefit pensions and other postretirement plans, stock-based compensation, and considering the effects of prior year misstatements when quantifying misstatements in the current year financial statements.

KPMG LLP

Los Angeles, California
February 27, 2008

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Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

EX-31.1

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Exhibit 31.1

CHIEF EXECUTIVE OFFICER SECTION 302 CERTIFICATION

I, Russell Goldsmith, certify that:

1.

I have reviewed this annual report on Form 10-K 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 fourth 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: February 27, 2008 /s/ RUSSELL GOLDSMITHRUSSELL GOLDSMITH
Chief Executive Officer

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Exhibit 31.1

CHIEF EXECUTIVE OFFICER SECTION 302 CERTIFICATION

EX-31.2

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Exhibit 31.2

CHIEF FINANCIAL OFFICER SECTION 302 CERTIFICATION

I, Christopher Carey, certify that:

1.

I have reviewed this annual report on Form 10-K 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 fourth 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 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: February 27, 2008 /s/ CHRISTOPHER J. CAREYCHRISTOPHER J. CAREY
Chief Financial Officer

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Exhibit 31.2

CHIEF FINANCIAL OFFICER SECTION 302 CERTIFICATION

EX-32.0

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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 Annual Report of City National Corporation (the "Company") on Form 10-K for the period ending December 31, 2007 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: February 27, 2008	/s/ RUSSELL GOLDSMITH RUSSELL GOLDSMITH Chief Executive Officer
DATE: February 27, 2008	/s/ CHRISTOPHER J. CAREY CHRISTOPHER J. CAREY Chief Financial Officer

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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