10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2015

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

For the transition period from                        to                        

Commission file number 1-10521

CITY NATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

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

City National Plaza

555 South Flower Street, Los Angeles, California, 90071

(Address of principal executive offices)(Zip Code)

(213) 673-7700

(Registrant’s telephone number, including area code)

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

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x No o

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

Large accelerated filer x Accelerated filer o Non-accelerated filer o
(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). o Yes x No

As of October 28, 2015, there were 55,777,997 shares of Common Stock outstanding (including unvested restricted shares).

TABLE OF CONTENTS

PART I
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	52
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	86
Item 4.	Controls and Procedures	90
PART II
Item 1A.	Risk Factors	91
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	91
Item 6.	Exhibits	91

2

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CITY NATIONAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30,			December 31,
(in thousands, except share amounts)	2015			2014
Assets
Cash and due from banks	$	434,087		$	336,470
Due from banks - interest-bearing	1,424,109			119,981
Federal funds sold and securities purchased under resale agreements	200,000			200,000
Securities available-for-sale - cost $5,304,000 and $5,894,509 at September 30, 2015 and December 31, 2014, respectively:
Securities pledged as collateral	16,697			14,654
Held in portfolio	5,292,490			5,868,329
Securities held-to-maturity - fair value $3,598,902 and $3,484,647 at September 30, 2015 and December 31, 2014, respectively:
Securities pledged as collateral	515,963			521,262
Held in portfolio	2,990,492			2,905,769
Trading securities	154,706			173,188
Loans and leases, excluding acquired impaired loans	22,536,584			20,337,206
Less: Allowance for loan and lease losses	317,157			310,149
Loans and leases, excluding acquired impaired loans, net	22,219,427			20,027,057
Acquired impaired loans, net of allowance for loan losses	393,879			502,371
Net loans and leases	22,613,306			20,529,428
Premises and equipment, net	210,314			207,700
Deferred tax asset	234,680			233,811
Goodwill	637,918			635,868
Customer-relationship intangibles, net	30,987			34,831
Affordable housing investments	222,877			186,423
Customers’ acceptance liability	1,650			17,664
Other real estate owned ($8,310 and $12,760 covered by FDIC loss share at September 30, 2015 and December 31, 2014, respectively)	13,894			23,496
FDIC indemnification asset	28,164			50,511
Other assets	553,390			537,847
Total assets	$	35,575,724		$	32,597,232
Liabilities
Demand deposits	$	20,796,610		$	18,030,021
Interest checking deposits	2,625,541			2,736,391
Money market deposits	6,682,601			6,198,798
Savings deposits	496,510			469,931
Time deposits - under $250,000	262,905			292,613
Time deposits - $250,000 and over	309,195			380,349
Total deposits	31,173,362			28,108,103
Short-term borrowings	6,490			322,861
Long-term debt	650,078			638,600
Reserve for off-balance sheet credit commitments	29,972			27,811
Acceptances outstanding	1,650			17,664
Other liabilities	570,004			499,514
Total liabilities	32,431,556			29,614,553
Redeemable noncontrolling interest	32,847			39,978
Commitments and contingencies
Shareholders’ equity
Preferred stock, par value $1.00 per share; 5,000,000 shares authorized; 275,000 shares issued at September 30, 2015 and December 31, 2014	267,616			267,616
Common stock, par value $1.00 per share; 75,000,000 shares authorized; 55,695,762 and 55,162,455 shares issued at September 30, 2015 and December 31, 2014, respectively	55,696			55,162
Additional paid-in capital	621,716			578,046
Accumulated other comprehensive income (loss)	2,500			(7,074		)
Retained earnings	2,182,259			2,071,230
Treasury shares, at cost - 304,920 and 377,224 shares at September 30, 2015 and December 31, 2014, respectively	(18,466		)	(22,279		)
Total common shareholders’ equity	2,843,705			2,675,085
Total shareholders’ equity	3,111,321			2,942,701
Total liabilities and shareholders’ equity	$	35,575,724		$	32,597,232

See accompanying Notes to the Unaudited Consolidated Financial Statements.

3

CITY NATIONAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	For the three months ended						For the nine months ended
	September 30,						September 30,
(in thousands, except per share amounts)	2015			2014			2015			2014
Interest income
Loans and leases	$	200,405		$	181,647		$	588,962		$	538,343
Securities	40,601			43,863			123,869			128,910
Due from banks - interest-bearing	931			363			1,500			1,183
Federal funds sold and securities purchased under resale agreements	1,203			1,721			3,578			4,568
Total interest income	243,140			227,594			717,909			673,004
Interest expense
Deposits	1,877			2,033			5,676			6,227
Federal funds purchased and securities sold under repurchase agreements	—			—			79			—
Subordinated debt	3,746			4,722			11,239			16,943
Other long-term debt	5,260			5,063			15,568			15,158
Total interest expense	10,883			11,818			32,562			38,328
Net interest income	232,257			215,776			685,347			634,676
(Reversal of) provision for credit losses on loans and leases, excluding acquired impaired loans	(6,000		)	(8,000		)	4,000			(9,000		)
Provision for losses on acquired impaired loans	1,148			589			2,736			3,783
Net interest income after provision	237,109			223,187			678,611			639,893
Noninterest income
Trust and investment fees	57,978			56,834			171,986			164,739
Brokerage and mutual fund fees	11,735			11,021			33,757			35,303
Cash management and deposit transaction charges	12,783			12,200			38,277			36,361
International services	11,686			12,233			34,128			34,111
FDIC loss sharing expense, net	(9,854		)	(9,606		)	(27,350		)	(40,850		)
(Loss) gain on disposal of assets	(1,264		)	2,985			384			12,649
Gain on sale of securities	30			14			5,331			7,503
Other	21,777			22,311			72,674			60,771
Impairment loss on securities:
Total other-than-temporary impairment loss on securities	(325		)	(318		)	(662		)	(566		)
Less: Portion of loss recognized in other comprehensive income	325			243			325			243
Net impairment loss recognized in earnings	—			(75		)	(337		)	(323		)
Total noninterest income	104,871			107,917			328,850			310,264
Noninterest expense
Salaries and employee benefits	148,790			142,210			438,039			417,902
Net occupancy of premises	18,168			15,862			50,420			48,551
Legal and professional fees	18,105			14,350			52,391			45,693
Information services	11,658			10,260			32,166			29,069
Depreciation and amortization	9,478			8,276			33,968			23,989
Amortization of intangibles	1,241			1,426			3,844			4,367
Marketing and advertising	7,718			7,576			25,486			26,333
Office services and equipment	4,922			5,038			15,160			15,235
Other real estate owned	1,321			2,360			5,146			6,165
FDIC assessments	5,442			4,629			15,812			8,785
Other operating	11,200			10,927			31,713			29,259
Total noninterest expense	238,043			222,914			704,145			655,348
Income before income taxes	103,937			108,190			303,316			294,809
Income taxes	32,208			37,452			100,489			103,571
Net income	$	71,729		$	70,738		$	202,827		$	191,238
Less: Net (loss) income attributable to noncontrolling interest	(79		)	847			954			2,056
Net income attributable to City National Corporation	$	71,808		$	69,891		$	201,873		$	189,182
Less: Dividends on preferred stock	4,093			4,093			12,281			12,281
Net income available to common shareholders	$	67,715		$	65,798		$	189,592		$	176,901
Net income per common share, basic	$	1.20		$	1.18		$	3.38		$	3.19
Net income per common share, diluted	$	1.18		$	1.17		$	3.32		$	3.15
Weighted-average common shares outstanding, basic	55,829			55,031			55,668			54,893
Weighted-average common shares outstanding, diluted	56,687			55,765			56,552			55,616
Dividends per common share	$	0.70		$	0.33		$	1.40		$	0.99

See accompanying Notes to the Unaudited Consolidated Financial Statements.

4

CITY NATIONAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	For the three months ended						For the nine months ended
	September 30,						September 30,
(in thousands)	2015			2014			2015			2014
Net income	$	71,729		$	70,738		$	202,827		$	191,238
Other comprehensive income (loss), net of tax:
Securities available-for-sale:
Net unrealized gains (losses) arising during the period	4,473			(9,547		)	11,941			12,586
Reclassification adjustment for net gains included in net income	(7		)	(4		)	(2,154		)	(4,396		)
Non-credit related impairment loss	(189		)	(141		)	(189		)	(141		)
Foreign currency translation adjustments	(17		)	—			(24		)	—
Total other comprehensive income (loss)	4,260			(9,692		)	9,574			8,049
Comprehensive income	$	75,989		$	61,046		$	212,401		$	199,287
Less: Comprehensive (loss) income attributable to noncontrolling interest	(79		)	847			954			2,056
Comprehensive income attributable to City National Corporation	$	76,068		$	60,199		$	211,447		$	197,231

See accompanying Notes to the Unaudited Consolidated Financial Statements.

5

CITY NATIONAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the nine months ended
	September 30,
(in thousands)	2015			2014
Cash Flows From Operating Activities
Net income	$	202,827		$	191,238
Adjustments to net income:
(Reversal of) provision for credit losses on loans and leases, excluding acquired impaired loans	4,000			(9,000		)
Provision for losses on acquired impaired loans	2,736			3,783
Depreciation and amortization	33,968			23,989
Amortization of intangibles	3,844			4,367
Share-based employee compensation expense	15,943			16,116
Deferred income tax benefit	(7,860		)	(3,391		)
Gain on disposal of assets	(384		)	(12,649		)
Gain on sale of securities	(5,331		)	(7,503		)
Impairment loss on securities	337			323
Other, net	27,570			22,063
Net change in:
Trading securities	18,372			(43,608		)
Other assets and other liabilities, net	(18,192		)	(44,520		)
Net cash provided by operating activities	277,830			141,208
Cash Flows From Investing Activities
Purchase of securities available-for-sale	(1,921,396		)	(1,537,655		)
Sales of securities available-for-sale	401,534			627,102
Maturities and paydowns of securities available-for-sale	2,096,132			1,527,117
Purchase of securities held-to-maturity	(299,383		)	(615,295		)
Maturities and paydowns of securities held-to-maturity	216,979			119,727
Loan originations, net of principal collections	(2,048,750		)	(1,970,596		)
Net payments for premises and equipment	(38,297		)	(34,446		)
Proceeds from sale of business	—			7,053
Other investing activities, net	(2,216		)	13,976
Net cash used in investing activities	(1,595,397		)	(1,863,017		)
Cash Flows From Financing Activities
Net increase in deposits	3,065,259			2,276,543
Net decrease in federal funds purchased	(320,000		)	—
Issuance of long-term debt	53,054			31,759
Repayment of long-term debt	(37,946		)	(135,473		)
Proceeds from exercise of stock options	30,737			21,734
Tax benefit from exercise of stock options	5,769			4,022
Cash dividends paid	(70,650		)	(66,624		)
Other financing activities, net	(6,911		)	(17,268		)
Net cash provided by financing activities	2,719,312			2,114,693
Net increase in cash and cash equivalents	1,401,745			392,884
Cash and cash equivalents at beginning of year	656,451			935,946
Cash and cash equivalents at end of period	$	2,058,196		$	1,328,830
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest	$	40,086		$	48,019
Income taxes	63,200			102,757
Non-cash investing activities:
Transfer of loans to other real estate owned	$	4,200		$	11,364

See accompanying Notes to the Unaudited Consolidated Financial Statements.

6

CITY NATIONAL CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

									Accumulated
	Common					Additional			other									Total
	shares	Preferred		Common		paid-in			comprehensive			Retained			Treasury			shareholders’
(in thousands, except share amounts)	issued	stock		stock		capital			(loss) income			earnings			shares			equity
Balance, December 31, 2013	54,667,295	$	267,616	$	54,667	$	541,210		$	(15,641	)	$	1,918,163		$	(25,029	)	$	2,740,986
Adjustment to initially apply Accounting Standards Update 2014-01	—	—		—		—			—			(11,941		)	—			(11,941		)
Balance, January 1, 2014	54,667,295	267,616		54,667		541,210			(15,641		)	1,906,222			(25,029		)	2,729,045
Net income (1)	—	—		—		—			—			189,182			—			189,182
Other comprehensive income, net of tax	—	—		—		—			8,049			—			—			8,049
Issuance of shares under share-based compensation plans	390,442	—		391		14,402			—			—			2,688			17,481
Share-based employee compensation expense	—	—		—		13,305			—			—			—			13,305
Tax benefit from share-based compensation plans	—	—		—		4,188			—			—			—			4,188
Dividends:
Preferred	—	—		—		—			—			(12,281		)	—			(12,281		)
Common	—	—		—		—			—			(54,877		)	—			(54,877		)
Net change in deferred compensation plans	—	—		—		884			—			—			(2		)	882
Change in redeemable noncontrolling interest	—	—		—		(8,167		)	—			—			—			(8,167		)
Balance, September 30, 2014	55,057,737	$	267,616	$	55,058	$	565,822		$	(7,592	)	$	2,028,246		$	(22,343	)	$	2,886,807
Balance, December 31, 2014	55,162,455	$	267,616	$	55,162	$	578,046		$	(7,074	)	$	2,071,230		$	(22,279	)	$	2,942,701
Net income (1)	—	—		—		—			—			201,873			—			201,873
Other comprehensive income, net of tax	—	—		—		—			9,574			—			—			9,574
Issuance of shares under share-based compensation plans	532,616	—		533		22,958			—			—			3,814			27,305
Share-based employee compensation expense	—	—		—		12,241			—			—			—			12,241
Tax benefit from share-based compensation plans	—	—		—		8,012			—			—			—			8,012
Dividends:
Preferred	—	—		—		—			—			(12,281		)	—			(12,281		)
Common	—	—		—		—			—			(78,563		)	—			(78,563		)
Net change in deferred compensation plans	691	—		1		847			—			—			(1		)	847
Change in redeemable noncontrolling interest	—	—		—		(388		)	—			—			—			(388		)
Balance, September 30, 2015	55,695,762	$	267,616	$	55,696	$	621,716		$	2,500		$	2,182,259		$	(18,466	)	$	3,111,321

(1)Net income excludes net income attributable to redeemable noncontrolling interest of $954 and $2,056 for the nine-month periods ended September 30, 2015 and 2014, respectively.  Redeemable noncontrolling interest is reflected in the mezzanine section of the consolidated balance sheets. See Note 17 of the Notes to the Unaudited Consolidated Financial Statements.

See accompanying Notes to the Unaudited Consolidated Financial Statements.

7

CITY NATIONAL CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Summary of Significant Accounting Policies

Organization

City National Corporation (the “Corporation”) is the holding company for City National Bank (the “Bank”). The Bank delivers banking, investment and trust services through 75 offices in Southern California, the San Francisco Bay area, Nevada, New York City, Nashville, Tennessee and Atlanta, Georgia. As of September 30, 2015, the Corporation had four consolidated investment advisory affiliates and one unconsolidated subsidiary, Business Bancorp Capital Trust I. Because the Bank comprises substantially all of the business of the Corporation, references to the “Company” mean the Corporation and the Bank together. The Corporation is approved as a financial holding company pursuant to the Gramm-Leach-Bliley Act of 1999.

Consolidation

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

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

Use of Estimates

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

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

8

Note 1. Summary of Significant Accounting Policies (Continued)

Basis of Presentation

The Company is on the accrual basis of accounting for income and expenses. The results of operations reflect any adjustments, all of which are of a normal recurring nature, unless otherwise disclosed in this Form 10-Q, and which, in the opinion of management, are necessary for a fair presentation of the results for the periods presented. In accordance with the usual practice of banks, assets and liabilities of individual trust, agency and fiduciary funds have not been included in the financial statements. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

The results for the 2015 interim periods are not necessarily indicative of the results expected for the full year. The Company has not made any significant changes in its critical accounting policies or in its estimates and assumptions from those disclosed in its 2014 Annual Report other than the adoption of new accounting pronouncements and other authoritative guidance that became effective for the Company on or after January 1, 2015. Refer to Accounting Pronouncements for discussion of accounting pronouncements adopted in 2015.

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

Accounting Pronouncements

The following is a summary of accounting pronouncements that became effective during the nine months ended September 30, 2015:

·In January 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-01, Investments—Equity Method and Joint Ventures (Topic 323), Accounting for Investments in Qualified Affordable Housing Projects (“ASU 2014-01”). ASU 2014-01 permits an entity to make an accounting policy election to apply a proportionate amortization method to its low income housing tax credit investments if certain conditions are met. Under the proportionate amortization method, an investor amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received, and recognizes the amortization in the income statement as a component of income taxes attributable to continuing operations. On January 1, 2015, the Company adopted ASU 2014-01 and elected to apply the proportionate amortization method to its low income housing tax credit investments. Following adoption, the Company recognizes amortization of its tax credit investments as a component of income taxes. The Company previously recognized amortization as a component of noninterest expense. Prior periods presented in the Company’s consolidated financial statements have been adjusted to reflect retrospective adoption of ASU 2014-01 as follows:

	Consolidated Balance Sheet
	As of December 31, 2014
(in thousands)	As Reported		As Adjusted
			(Unaudited)
Assets
Deferred tax asset	$	230,376	$	233,811
Affordable housing investments	203,010		186,423
Other assets	537,826		537,847
Shareholders’ equity
Retained earnings	2,084,361		2,071,230

9

Note 1. Summary of Significant Accounting Policies (Continued)

	Consolidated Statement of Income
	For the three months ended				For the nine months ended
	September 30, 2014				September 30, 2014
(in thousands, except per share amounts)	As Reported		As Adjusted		As Reported		As Adjusted
	(Unaudited)				(Unaudited)
Noninterest expense
Other operating	$	15,215	$	10,927	$	41,628	$	29,259
Income taxes	34,404		37,452		90,521		103,571
Net income	69,498		70,738		191,919		191,238
Net income per common share, basic	$	1.16	$	1.18	$	3.20	$	3.19
Net income per common share, diluted	$	1.15	$	1.17	$	3.16	$	3.15

	Consolidated Statement of Cash Flows
	For the nine months ended
	September 30, 2014
(in thousands)	As Reported			As Adjusted
	(Unaudited)
Cash Flows From Operating Activities
Net income	$	191,919		$	191,238
Adjustments to net income:
Deferred income tax benefit	(3,758		)	(3,391		)
Other, net	21,706			22,063
Net change in:
Other assets and other liabilities, net	(44,477		)	(44,520		)

·In January 2014, the FASB issued ASU 2014-04, Receivables—Troubled Debt Restructurings by Creditors (Subtopic 310-40), Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (“ASU 2014-04”). ASU 2014-04 requires entities to reclassify consumer mortgage loans collateralized by residential real estate to OREO when either (1) the creditor obtains legal title to the residential real estate property or (2) the borrower conveys all interest in the property to the creditor to satisfy the loan by completing a deed in lieu of foreclosure or similar agreement. The Company adopted ASU 2014-04 effective January 1, 2015 on a prospective basis. Adoption of the new guidance did not have a significant impact on the Company’s consolidated financial statements.

·In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”). ASU 2014-08 raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. The Company adopted ASU 2014-08 effective January 1, 2015 on a prospective basis. Adoption of the new guidance did not have a significant impact on the Company’s consolidated financial statements.

·In June 2014, the FASB issued ASU 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures (“ASU 2014-11”). ASU 2014-11 aligns the accounting for repurchase-to-maturity transactions and repurchase agreements executed as a repurchase financing with the accounting for other repurchase agreements. Going forward, these transactions will all be accounted for as secured borrowings. Under the new guidance, parties to a repurchase financing transaction will be required to separately account for the initial transfer of the financial asset and the related repurchase agreement. The initial transfer of the financial asset would be accounted for as a sale by the transferor only if all criteria for derecognition have been met. ASU 2014-11 requires new or expanded disclosures for repurchase agreements and similar transactions accounted for as secured borrowings. The Company adopted ASU 2014-11 effective January 1, 2015. Adoption of the new guidance did not have a significant impact on the Company’s consolidated financial statements.

10

Note 1. Summary of Significant Accounting Policies (Continued)

The following is a summary of recently issued accounting pronouncements:

·In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which significantly changes the consolidation analysis required under U.S. GAAP. The new consolidation guidance maintains two models: one for assessing most corporate entities based on the notion that majority voting rights indicate control (the voting model) and another for assessing entities that may be controlled through other means, such as management contracts or subordinated financial support (the variable interest model). Under the new guidance, limited partnerships will be VIEs, unless the limited partners have either substantive kick-out or participating rights. The ASU also changes the effect that fees paid to a decision maker or service provider have on the consolidation analysis. For entities other than limited partnerships, the ASU clarifies how to determine whether the equity holders (as a group) have power over the entity. The ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is allowed for all entities, but the guidance must be applied as of the beginning of the annual period containing the adoption date. Entities have the option of using either a full or modified retrospective approach for adoption. The Company is assessing the impact of the new guidance on its consolidated financial statements.

·In April 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires the debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. The amendments in this ASU are to be applied on a retrospective basis. Adoption of the new guidance is not expected to have a significant impact on the Company’s consolidated financial statements.

·In April 2015, the FASB issued ASU 2015-05, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. Cloud computing arrangements include: (a) software as a service; (b) platform as a service; (c) infrastructure as a service; and (d) other similar hosting arrangements. Under the ASU, if a cloud computing arrangement contains a software license, the customer would account for the fees related to the software license element in a manner consistent with how the acquisition of other software licenses is accounted for under Accounting Standards Codification (“ASC”) 350-40. If the arrangement does not contain a software license, the customer would account for the arrangement as a service contract. The ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. Entities may adopt the guidance either (1) prospectively to arrangements entered into or materially modified after the effective date, or (2) retrospectively. The Company is assessing the impact of the new guidance on its consolidated financial statements.

·In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date to defer by one year the effective dates of the revenue recognition standard ASU 2014-09. As a result, the standard would be effective for public entities for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2017. The Company is assessing the impact of the new revenue recognition guidance on its consolidated financial statements.

11

Note 2. Fair Value Measurements

The following tables summarize assets and liabilities measured at fair value as of September 30, 2015 and December 31, 2014 by level in the fair value hierarchy:

			Fair Value Measurements at Reporting Date Using
(in thousands)	Balance as of September 30, 2015		Quoted Prices in Active Markets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
Measured on a Recurring Basis
Assets
Securities available-for-sale:
U.S. Treasury	$	390,329	$	390,329	$	—	$	—
Federal agency - Debt	286,360		—		286,360		—
Federal agency - MBS	92,881		—		92,881		—
CMOs - Federal agency	3,536,128		—		3,536,128		—
CMOs - Non-agency	20,431		—		20,431		—
State and municipal	360,744		—		357,274		3,470
Other debt securities	622,314		—		622,314		—
Trading securities	154,706		146,710		7,996		—
Derivative assets (1)	82,176		8,454		71,487		2,235
Contingent consideration asset (1)	2,605		—		—		2,605
Total assets at fair value	$	5,548,674	$	545,493	$	4,994,871	$	8,310
Liabilities
Derivative liabilities	$	81,776	$	8,800	$	72,976	$	—
Contingent consideration liability	36,985		—		—		36,985
FDIC clawback liability	16,608		—		—		16,608
Other liabilities	797		—		797		—
Total liabilities at fair value (2)	$	136,166	$	8,800	$	73,773	$	53,593
Redeemable noncontrolling interest	$	32,847	$	—	$	—	$	32,847
Measured on a Nonrecurring Basis
Assets
Other real estate owned (3)	$	9,544	$	—	$	—	$	9,544
Private equity and alternative investments	1,587		—		—		1,587
Total assets at fair value	$	11,131	$	—	$	—	$	11,131

(1) Reported in Other assets in the consolidated balance sheets.

(2) Reported in Other liabilities in the consolidated balance sheets.

(3) Includes covered OREO.

12

Note 2. Fair Value Measurements (Continued)

			Fair Value Measurements at Reporting Date Using
(in thousands)	Balance as of December 31, 2014		Quoted Prices in Active Markets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
Measured on a Recurring Basis
Assets
Securities available-for-sale:
U.S. Treasury	$	116,926	$	116,926	$	—	$	—
Federal agency - Debt	1,398,581		—		1,398,581		—
Federal agency - MBS	104,526		—		104,526		—
CMOs - Federal agency	3,580,590		—		3,580,590		—
CMOs - Non-agency	24,014		—		24,014		—
State and municipal	479,031		—		475,484		3,547
Other debt securities	176,169		—		176,169		—
Equity securities and mutual funds	3,146		3,146		—		—
Trading securities	173,188		171,778		1,410		—
Derivative assets (1)	51,586		6,106		44,598		882
Contingent consideration asset (1)	2,930		—		—		2,930
Total assets at fair value	$	6,110,687	$	297,956	$	5,805,372	$	7,359
Liabilities
Derivative liabilities	$	51,309	$	6,623	$	44,686	$	—
Contingent consideration liability	34,983		—		—		34,983
FDIC clawback liability	15,106		—		—		15,106
Other liabilities	946		—		946		—
Total liabilities at fair value (2)	$	102,344	$	6,623	$	45,632	$	50,089
Redeemable noncontrolling interest	$	39,978	$	—	$	—	$	39,978
Measured on a Nonrecurring Basis
Assets
Other real estate owned (3)	$	5,644	$	—	$	—	$	5,644
Total assets at fair value	$	5,644	$	—	$	—	$	5,644

(1) Reported in Other assets in the consolidated balance sheets.

(2) Reported in Other liabilities in the consolidated balance sheets.

(3) Includes covered OREO.

At September 30, 2015, $5.55 billion, or approximately 16 percent, of the Company’s total assets were recorded at fair value on a recurring basis, compared with $6.11 billion, or 19 percent, at December 31, 2014. The majority of these financial assets were valued using Level 1 or Level 2 inputs. Less than one percent of total assets were measured using Level 3 inputs. At September 30, 2015, $136.2 million of the Company’s total liabilities were recorded at fair value using mostly Level 2 or Level 3 inputs, compared with $102.3 million at December 31, 2014. There were no transfers between Level 1 and Level 2 of the fair value hierarchy for assets or liabilities measured on a recurring basis during the nine months ended September 30, 2015. At September 30, 2015, $11.1 million of the Company’s total assets were recorded at fair value on a nonrecurring basis, compared with $5.6 million at December 31, 2014. These assets represent less than one percent of total assets and were measured using Level 3 inputs.

13

Note 2. Fair Value Measurements (Continued)

Recurring Fair Value Measurements

Assets and liabilities for which fair value measurement is based on significant unobservable inputs are classified as Level 3 in the fair value hierarchy. The following table provides a reconciliation of the beginning and ending balances for Level 3 assets and liabilities measured at fair value on a recurring basis for the nine months ended September 30, 2015 and 2014.

Level 3 Assets and Liabilities Measured on a Recurring Basis

	For the nine months ended September 30, 2015
(in thousands)	Securities Available-for- Sale			Equity Warrants		Contingent Consideration Asset			Contingent Consideration Liability			FDIC Clawback Liability
Balance, beginning of period	$	3,547		$	882	$	2,930		$	(34,983	)	$	(15,106	)
Total realized/unrealized gains (losses):
Included in earnings	—			65		(325		)	(727		)	(1,502		)
Included in other comprehensive income	23			—		—			—			—
Additions	—			1,288		—			—			—
Settlements	(100		)	—		—			—			—
Other (1)	—			—		—			(1,275		)	—
Balance, end of period	$	3,470		$	2,235	$	2,605		$	(36,985	)	$	(16,608	)

	For the nine months ended September 30, 2014
(in thousands)	Securities Available-for- Sale			Equity Warrants			Contingent Consideration Asset		Contingent Consideration Liability			FDIC Clawback Liability
Balance, beginning of period	$	3,633		$	—		$	—	$	(49,900	)	$	(11,967	)
Total realized/unrealized gains (losses):
Included in earnings	—			78			—		—			(2,557		)
Included in other comprehensive income	(9		)	—			—		—			—
Additions	—			631			2,930		—			—
Settlements	(100		)	(29		)	—		17,266			—
Other (1)	—			—			—		(1,859		)	—
Balance, end of period	$	3,524		$	680		$	2,930	$	(34,493	)	$	(14,524	)

(1)  Other rollforward activity consists of accretion of discount related to the contingent consideration liability.

Redeemable noncontrolling interest is classified as Level 3 in the fair value hierarchy and measured on a recurring basis. Redeemable noncontrolling interest is valued based on a combination of factors, including but not limited to, observable valuation of firms similar to the affiliates, multiples of revenue or profit, unique investment products or performance track records, strength in the marketplace, projected discounted cash flow scenarios, strategic value of affiliates to other entities, as well as unique sources of value specific to an individual firm. The methodology used to fair value these interests is consistent with the industry practice of valuing similar types of instruments. Refer to Note 17, Noncontrolling Interest, for a rollforward of activity for the nine months ended September 30, 2015 and 2014.

Level 3 assets measured at fair value on a recurring basis include municipal auction rate securities that are classified in securities available-for-sale, a contingent consideration asset and equity warrants classified as derivative assets. Municipal auction rate securities were valued using an average yield on California variable rate notes that were comparable in credit rating and maturity to the securities held, plus a liquidity premium. The contingent consideration asset represents the fair value of future payments to be received on the sale of the Company’s retirement services recordkeeping business. The fair value of contingent consideration was determined by discounting the expected future cash flows using a bond rate for an investment grade finance company. Equity warrants in private companies obtained in association with certain loan transactions are measured at fair value on a recurring basis using the Black-Scholes option pricing model. Key inputs to the valuation model include current share estimated fair value, strike price, volatility, expected life, risk-free interest rate, and market and liquidity discounts. Several of the inputs to the valuation model incorporate assumptions by management that are not observable in the market; consequently, the valuation of warrants is classified in Level 3 of the fair value hierarchy. Refer to Note 11, Derivative Instruments, for additional discussion of equity warrants.

14

Note 2. Fair Value Measurements (Continued)

Level 3 liabilities measured at fair value on a recurring basis consist of contingent consideration and an FDIC clawback liability that are included in other liabilities. As part of its acquisition of Rochdale Investment Management, LLC and associated entities (collectively, “Rochdale”), the Company entered into a contingent consideration arrangement that requires the Company to pay additional cash consideration to Rochdale’s former shareholders at certain points in time over the six years after the date of acquisition if certain criteria, such as revenue growth and pre-tax margin, are met. In 2014, the Company made total contingent consideration payments to Rochdale’s former shareholders of approximately $17.4 million. The fair value of the remaining contingent consideration was estimated using a probability-weighted discounted cash flow model. Although the acquisition agreement does not set a limit on the total payment, the Company estimates that the remaining consideration payment could be in the range of $17 million to $46 million, but will ultimately be determined based on actual future results. The contingent consideration liability is remeasured to fair value at each reporting date until its settlement.

The FDIC clawback liability was valued using the discounted cash flow method based on the terms specified in loss-sharing agreements with the FDIC, the actual FDIC payments collected, and the following unobservable inputs: (1) risk-adjusted discount rate reflecting the Bank’s credit risk, plus a liquidity premium, and (2) loan performance assumptions such as prepayments and losses.

There were no transfers into or out of Level 3 assets or liabilities measured on a recurring basis during the nine months ended September 30, 2015 and 2014.

Nonrecurring Fair Value Measurements

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

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

Information About Nonrecurring Level 3 Fair Value Measurements

(in thousands)	Fair Value at September 30, 2015		Valuation Method	Unobservable Inputs
Other real estate owned	$	9,544	Third-party appraisal	- Fair values are primarily based on unadjusted appraised values. - A limited number of properties are valued using comparable sales values resulting in discounts to appraised values ranging from 12% to 22%.
Private equity and alternative investments	$	1,587	See note (1)	- See note (1) - Fair values reflect discounts to investment carrying amounts ranging from 27% to 86%.

(1)Fair values are based on management’s assumptions regarding recoverability of an investment based on a range of factors including, but not limited to, nature and age of the investment, actual and forecasted investment performance, fund operating results, recent and planned transactions, general and industry specific market conditions, performance of comparable companies and investment exit strategies.

15

Note 2. Fair Value Measurements (Continued)

For assets measured at fair value on a nonrecurring basis, the following table presents the total net gains and losses, which include charge-offs, recoveries, specific reserves, OREO valuation write-downs and write-ups, gains and losses on sales of OREO, and impairment write-downs on private equity investments, recognized in the three and nine months ended September 30, 2015 and 2014:

	For the three months ended September 30,						For the nine months ended September 30,
(in thousands)	2015			2014			2015			2014
Collateral dependent impaired loans:
Commercial real estate mortgages	$	—		$	—		$	—		$	(5	)
Residential mortgages	—			7			—			81
Other real estate owned (1)	(653		)	(283		)	(1,973		)	784
Private equity and alternative investments	(550		)	—			(2,180		)	—
Total net (losses) gains recognized	$	(1,203	)	$	(276	)	$	(4,153	)	$	860

(1)Net gains and losses on OREO include amounts related to covered OREO, a significant portion of which is payable to or reimbursable by the FDIC.

Fair Value of Financial Instruments

A financial instrument is broadly defined as cash, evidence of an ownership interest in another entity, or a contract that imposes a contractual obligation on one entity and conveys a corresponding right to a second entity to require delivery or exchange of financial assets or liabilities. Refer to Note 1, Summary of Significant Accounting Policies, in the Company’s 2014 Form 10-K for additional information on fair value measurements.

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

The following tables summarize the carrying amounts and estimated fair values of those financial instruments that are reported at amortized cost in the Company’s consolidated balance sheets. The tables also provide information on the level in the fair value hierarchy for inputs used in determining the fair value of those financial instruments. Most financial assets and financial liabilities for which carrying amount equals fair value are considered by the Company to be Level 1 measurements in the fair value hierarchy.

	September 30, 2015
	Carrying		Total		Fair Value Measurements Using
(in millions)	Amount		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and due from banks	$	434.1	$	434.1	$	434.1	$	—	$	—
Due from banks - interest-bearing	1,424.1		1,424.1		1,424.1		—		—
Securities purchased under resale agreements	200.0		201.0		—		201.0		—
Securities held-to-maturity	3,506.5		3,598.9		—		3,598.9		—
Loans and leases, net of allowance	22,219.4		22,772.0		—		—		22,772.0
Acquired impaired loans, net of allowance	393.9		443.0		—		—		443.0
FDIC indemnification asset	28.2		22.4		—		—		22.4
Investment in FHLB and FRB stock	50.6		50.6		—		50.6		—
Financial Liabilities:
Deposits	$	31,173.4	$	31,174.3	$	—	$	30,601.3	$	573.0
Short-term borrowings	6.5		6.5		—		—		6.5
Long-term debt	650.1		725.9		—		614.7		111.2

16

Note 2. Fair Value Measurements (Continued)

	December 31, 2014
	Carrying		Total		Fair Value Measurements Using
(in millions)	Amount		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and due from banks	$	336.5	$	336.5	$	336.5	$	—	$	—
Due from banks - interest-bearing	120.0		120.0		120.0		—		—
Securities purchased under resale agreements	200.0		201.1		—		201.1		—
Securities held-to-maturity	3,427.0		3,484.6		—		3,484.6		—
Loans and leases, net of allowance	20,027.1		20,576.9		—		—		20,576.9
Acquired impaired loans, net of allowance	502.4		549.1		—		—		549.1
FDIC indemnification asset	50.5		40.2		—		—		40.2
Investment in FHLB and FRB stock	58.4		58.4		—		58.4		—
Financial Liabilities:
Deposits	$	28,108.1	$	28,109.6	$	—	$	27,435.1	$	674.5
Short-term borrowings	322.9		322.9		320.0		—		2.9
Long-term debt	638.6		704.3		—		605.3		99.0

Following is a description of the methods and assumptions used in estimating the fair values of these financial instruments:

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

Securities purchased under resale agreements — The fair value of securities purchased under term resale agreements is determined using a combination of quoted market prices and observable market inputs such as interest rates and credit spreads.

Securities held-to-maturity — For securities held-to-maturity, the fair value is generally determined by quoted market prices, where available, or based on observable market inputs appropriate for the type of security.

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

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

FDIC indemnification asset — The fair value of the FDIC indemnification asset is estimated by discounting expected cash flows with appropriate market discount rates.

17

Note 2. Fair Value Measurements (Continued)

Investment in FHLB and FRB stock — Investments in Federal Home Loan Bank of San Francisco (“FHLB”) and Federal Reserve Bank (“FRB”) stock are recorded at cost. Ownership of these securities is restricted to member banks and the securities do not have a readily determinable market value. Purchases and sales of these securities are at par value with the issuer. The fair value of investments in FHLB and FRB stock is equal to the carrying amount.

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

Short-term borrowings — The fair value of nonrecourse debt is determined by discounting expected cash flows with appropriate market discount rates. The carrying amount of the remaining short-term borrowings is a reasonable estimate of fair value.

Long-term debt — The fair value of long-term debt, excluding nonrecourse debt, is obtained through third-party pricing sources. The fair value of nonrecourse debt is determined by discounting expected cash flows with appropriate market discount rates.

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

Note 3. Securities

At September 30, 2015, the Company had total securities of $8.97 billion, comprised of securities available-for-sale at fair value of $5.31 billion, securities held-to-maturity at amortized cost of $3.51 billion and trading securities at fair value of $154.7 million. At December 31, 2014, the Company had total securities of $9.48 billion, comprised of securities available-for-sale at fair value of $5.88 billion, securities held-to-maturity at amortized cost of $3.43 billion and trading securities at fair value of $173.2 million.

18

Note 3. Securities (Continued)

The following is a summary of amortized cost and estimated fair value for the major categories of securities available-for-sale and securities held-to-maturity at September 30, 2015 and December 31, 2014:

			Gross		Gross
	Amortized		Unrealized		Unrealized
(in thousands)	Cost		Gains		Losses			Fair Value
September 30, 2015
Securities available-for-sale:
U.S. Treasury	$	390,098	$	232	$	(1	)	$	390,329
Federal agency - Debt	285,616		758		(14		)	286,360
Federal agency - MBS	91,690		1,851		(660		)	92,881
CMOs - Federal agency	3,538,000		19,867		(21,739		)	3,536,128
CMOs - Non-agency	20,749		25		(343		)	20,431
State and municipal	356,623		4,249		(128		)	360,744
Other debt securities	621,224		1,119		(29		)	622,314
Total securities available-for-sale	$	5,304,000	$	28,101	$	(22,914	)	$	5,309,187
Securities held-to-maturity (1):
Federal agency - Debt	$	445,721	$	11,742	$	(27	)	$	457,436
Federal agency - MBS	575,071		19,039		(227		)	593,883
CMOs - Federal agency	1,630,388		44,862		(2,057		)	1,673,193
State and municipal	769,646		21,704		(2,788		)	788,562
Other debt securities	85,629		200		(1		)	85,828
Total securities held-to-maturity	$	3,506,455	$	97,547	$	(5,100	)	$	3,598,902
December 31, 2014
Securities available-for-sale:
U.S. Treasury	$	116,919	$	17	$	(10	)	$	116,926
Federal agency - Debt	1,401,303		558		(3,280		)	1,398,581
Federal agency - MBS	102,939		2,601		(1,014		)	104,526
CMOs - Federal agency	3,599,831		19,628		(38,869		)	3,580,590
CMOs - Non-agency	24,385		40		(411		)	24,014
State and municipal	473,272		6,139		(380		)	479,031
Other debt securities	174,352		1,817		—			176,169
Total debt securities	5,893,001		30,800		(43,964		)	5,879,837
Equity securities and mutual funds	1,508		1,988		(350		)	3,146
Total securities available-for-sale	$	5,894,509	$	32,788	$	(44,314	)	$	5,882,983
Securities held-to-maturity (1):
Federal agency - Debt	$	292,932	$	6,430	$	(255	)	$	299,107
Federal agency - MBS	553,589		13,427		(2,275		)	564,741
CMOs - Federal agency	1,811,574		29,998		(10,292		)	1,831,280
State and municipal	682,705		22,732		(1,997		)	703,440
Other debt securities	86,231		72		(224		)	86,079
Total securities held-to-maturity	$	3,427,031	$	72,659	$	(15,043	)	$	3,484,647

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

19

Note 3. Securities (Continued)

Proceeds from sales of securities available-for-sale were $0.7 million and $401.5 million for the three and nine months ended September 30, 2015, compared with $1.0 million and $627.1 million for the three and nine months ended September 30, 2014. There were no sales of securities held-to-maturity during the three and nine months ended September 30, 2015 and 2014. The following table provides the gross realized gains and losses on the sales and calls of securities (including trading securities):

	For the three months ended						For the nine months ended
	September 30,						September 30,
(in thousands)	2015			2014			2015			2014
Gross realized gains	$	50		$	19		$	5,475		$	7,989
Gross realized losses	(20		)	(5		)	(144		)	(486		)
Net realized gains	$	30		$	14		$	5,331		$	7,503

Interest income on securities for the three months ended September 30, 2015 and 2014 is comprised of: (i) taxable interest income of $33.4 million and $37.5 million, respectively, (ii) nontaxable interest income of $7.2 million and $6.4 million, respectively, and (iii) dividend income of $22 thousand for the current and prior-year quarter. Interest income on securities for the nine months ended September 30, 2015 and 2014 is comprised of: (i) taxable interest income of $102.5 million and $111.0 million, respectively, (ii) nontaxable interest income of $21.3 million and $17.9 million, respectively, and (iii) dividend income of $52 thousand and $47 thousand, respectively.

The following table provides the expected remaining maturities of debt securities included in the securities portfolio at September 30, 2015, except for maturities of mortgage-backed securities which are allocated according to the average life of expected cash flows. Average expected maturities will differ from contractual maturities because of the amortizing nature of the loan collateral and prepayment behavior of borrowers.

(in thousands)	One year or less		Over 1 year through 5 years		Over 5 years through 10 years		Over 10 years		Total
Securities available-for-sale:
U.S. Treasury	$	269,754	$	120,575	$	—	$	—	$	390,329
Federal agency - Debt	179,603		106,757		—		—		286,360
Federal agency - MBS	1,819		91,062		—		—		92,881
CMOs - Federal agency	119,443		3,248,817		167,868		—		3,536,128
CMOs - Non-agency	1,079		13,234		6,118		—		20,431
State and municipal	165,254		192,119		—		3,371		360,744
Other	126,850		495,464		—		—		622,314
Total debt securities available-for-sale	$	863,802	$	4,268,028	$	173,986	$	3,371	$	5,309,187
Amortized cost	$	861,509	$	4,264,720	$	174,371	$	3,400	$	5,304,000
Securities held-to-maturity:
Federal agency - Debt	$	—	$	45,000	$	209,125	$	191,596	$	445,721
Federal agency - MBS	10		74,949		495,583		4,529		575,071
CMOs - Federal agency	8,724		773,640		848,024		—		1,630,388
State and municipal	897		210,551		458,753		99,445		769,646
Other	—		85,629		—		—		85,629
Total debt securities held-to-maturity at amortized cost	$	9,631	$	1,189,769	$	2,011,485	$	295,570	$	3,506,455

20

Note 3. Securities (Continued)

Impairment Assessment

The Company performs a quarterly assessment of debt and equity securities in its investment portfolio to determine whether a decline in fair value below amortized cost is other-than-temporary. Amortized cost includes adjustments made to the cost of an investment for amortization, accretion, collection of cash and previous other-than-temporary impairment recognized in earnings. The Company’s impairment assessment of debt securities takes the following factors into consideration: the length of time and the extent to which the market value has been less than cost; the financial condition and near-term prospects of the issuer, including events specific to the issuer or industry; defaults or deferrals of scheduled interest and principal payments; external credit ratings; and whether the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis. For equity securities, the evaluation of whether an impairment is other-than-temporary is based on whether and when an equity security will recover in value and whether the Company has the intent and ability to hold the equity security until the anticipated recovery in value occurs. If a decline in fair value is determined to be other-than-temporary, the cost basis of the individual security is written down to fair value which then becomes the security’s new cost basis. The new cost basis is not adjusted for subsequent recoveries in fair value.

Other-than-temporary impairment losses on equity securities are recognized in earnings. For debt securities, if the Company intends to sell an impaired security or it is more likely than not it will be required to sell a security prior to recovery of its amortized cost, an impairment loss is recognized in earnings for the entire difference between the amortized cost and fair value of the security on the measurement date. If the Company does not intend to sell the security or it is not more likely than not it will be required to sell the security prior to recovery of its amortized cost, the credit loss component of impairment is recognized in earnings. A credit loss is the difference between the amortized cost of the security and the present value of cash flows expected to be collected, discounted at the security’s effective interest rate at the date of acquisition. Impairment associated with factors other than credit, such as market liquidity, is recognized in other comprehensive income, net of tax.

Securities Deemed to be Other-Than-Temporarily Impaired

The Company recorded no impairment losses in earnings on securities available-for-sale for the three months ended September 30, 2015 and $0.3 million for the nine months ended September 30, 2015. The Company recorded impairment losses in earnings of $0.1 million and $0.3 million for the three and nine months ended September 30, 2014. The Company recognized after-tax amounts of $0.2 million and $0.1 million of non-credit-related other-than-temporary impairment in accumulated other comprehensive income or loss (“AOCI”) on securities classified as available-for-sale at September 30, 2015 and 2014, respectively. No impairment losses were recognized in earnings or AOCI for securities held-to-maturity during the three and nine months ended September 30, 2015 and 2014.

The following table summarizes the changes in cumulative credit-related other-than-temporary impairment recognized in earnings for debt securities for the three and nine months ended September 30, 2015 and 2014. Credit-related other-than-temporary impairment that was recognized in earnings is reflected as an “Initial credit-related impairment” if the period reported is the first time the security had a credit impairment. A credit-related other-than-temporary impairment is reflected as a “Subsequent credit-related impairment” if the period reported is not the first time the security had a credit impairment. Cumulative impairment is reduced for securities with previously recognized credit-related impairment that were sold or redeemed during the period. Cumulative impairment is further adjusted for other changes in expected cash flows.

	For the three months ended				For the nine months ended
	September 30,				September 30,
(in thousands)	2015		2014		2015		2014
Balance, beginning of period	$	2,587	$	2,395	$	2,470	$	4,549
Subsequent credit-related impairment	—		75		117		323
Reduction for securities sold or redeemed	—		—		—		(2,402		)
Balance, end of period	$	2,587	$	2,470	$	2,587	$	2,470

21

Note 3. Securities (Continued)

The following table provides a summary of the gross unrealized losses and fair value of investment securities that are not deemed to be other-than-temporarily impaired aggregated by investment category and length of time that the securities have been in a continuous unrealized loss position as of September 30, 2015 and December 31, 2014. The table also includes investment securities that had both a credit-related impairment recognized in earnings and a non-credit-related impairment recognized in AOCI.

	Less than 12 months				12 months or greater				Total
(in thousands)	Fair Value		Estimated Unrealized Loss		Fair Value		Estimated Unrealized Loss		Fair Value		Estimated Unrealized Loss
September 30, 2015
Securities available-for-sale:
U.S. Treasury	$	17,001	$	1	$	—	$	—	$	17,001	$	1
Federal agency - Debt	17,556		14		—		—		17,556		14
Federal agency - MBS	—		—		53,639		660		53,639		660
CMOs - Federal agency	690,496		3,947		1,197,026		17,792		1,887,522		21,739
CMOs - Non-agency	—		—		12,739		343		12,739		343
State and municipal	65,670		99		3,470		29		69,140		128
Other debt securities	199,833		29		—		—		199,833		29
Total securities available-for-sale	$	990,556	$	4,090	$	1,266,874	$	18,824	$	2,257,430	$	22,914
Securities held-to-maturity:
Federal agency - Debt	$	—	$	—	$	5,739	$	27	$	5,739	$	27
Federal agency - MBS	21,649		25		26,077		202		47,726		227
CMOs - Federal agency	136,388		596		184,818		1,461		321,206		2,057
State and municipal	118,335		1,727		33,839		1,061		152,174		2,788
Other debt securities	15,100		1		—		—		15,100		1
Total securities held-to-maturity	$	291,472	$	2,349	$	250,473	$	2,751	$	541,945	$	5,100
December 31, 2014
Securities available-for-sale:
U.S. Treasury	$	15,814	$	10	$	—	$	—	$	15,814	$	10
Federal agency - Debt	1,008,234		2,622		135,868		658		1,144,102		3,280
Federal agency - MBS	35		—		57,970		1,014		58,005		1,014
CMOs - Federal agency	871,026		3,417		1,261,695		35,452		2,132,721		38,869
CMOs - Non-agency	1,949		15		12,720		396		14,669		411
State and municipal	130,208		314		4,183		66		134,391		380
Total debt securities	2,027,266		6,378		1,472,436		37,586		3,499,702		43,964
Equity securities and mutual funds	538		350		—		—		538		350
Total securities available-for-sale	$	2,027,804	$	6,728	$	1,472,436	$	37,586	$	3,500,240	$	44,314
Securities held-to-maturity:
Federal agency - Debt	$	—	$	—	$	26,316	$	255	$	26,316	$	255
Federal agency - MBS	4,800		21		114,856		2,254		119,656		2,275
CMOs - Federal agency	202,014		2,247		588,019		8,045		790,033		10,292
State and municipal	14,851		76		95,647		1,921		110,498		1,997
Other debt securities	61,813		224		—		—		61,813		224
Total securities held-to-maturity	$	283,478	$	2,568	$	824,838	$	12,475	$	1,108,316	$	15,043

At September 30, 2015, the Company had securities available-for-sale with a fair value of $2.26 billion and securities held-to-maturity with a fair value of $541.9 million in an unrealized loss position. The debt securities in an unrealized loss position totaled 332 and included 1 U.S. Treasury note, 3 federal agency debt securities, 13 federal agency MBS, 113 federal agency CMOs, 3 non-agency CMOs, 196 state and municipal securities and 3 other debt securities.

22

Note 3. Securities (Continued)

At December 31, 2014, the Company had securities available-for-sale with a fair value of $3.50 billion and securities held-to-maturity with a fair value of $1.11 billion in an unrealized loss position. The debt securities in an unrealized loss position totaled 436 and included 2 U.S. Treasury notes, 37 federal agency debt securities, 23 federal agency MBS, 141 federal agency CMOs, 3 non-agency CMOs, 225 state and municipal securities and 5 other debt securities. At December 31, 2014, the Company had one equity security in an unrealized loss position.

Note 4. Other Investments

FHLB and FRB Stock

The Company’s investment in stock issued by the FHLB and FRB totaled $50.6 million and $58.4 million at September 30, 2015 and December 31, 2014, respectively. Ownership of government agency securities is restricted to member banks, and the securities do not have readily determinable market values. The Company records investments in FHLB and FRB stock at cost in Other assets of the consolidated balance sheets and evaluates these investments for impairment. The Company expects to recover the full amount invested in FHLB and FRB stock.

Private Equity and Alternative Investments

The Company has ownership interests in a limited number of private equity, venture capital, real estate and hedge funds that are not publicly traded and do not have readily determinable fair values. These investments are carried at cost in the Other assets section of the consolidated balance sheets and are net of impairment write-downs, if applicable. The Company’s investments in these funds totaled $24.1 million and $29.2 million at September 30, 2015 and December 31, 2014. A summary of investments by fund type is provided below:

(in thousands)	September 30,		December 31,
Fund Type	2015		2014
Private equity and venture capital	$	15,949	$	18,605
Real estate	6,776		7,081
Hedge	1,168		1,668
Other (1)	250		1,858
Total	$	24,143	$	29,212

(1)  Includes direct investments in a limited number of start-up companies.

Management reviews these investments quarterly for impairment. The impairment assessment includes a review of the most recent financial statements and investment reports for each fund and discussions with fund management. An impairment loss is recognized if the Company does not expect to recover the cost of an investment. The impairment loss is recognized in Other noninterest income in the consolidated statements of income. The new cost basis of the investment is not adjusted for subsequent recoveries in value. The Company recognized $0.5 million and $2.2 million in impairment losses on its investments during the three and nine months ended September 30, 2015. The Company recognized no impairment losses during the three and nine months ended September 30, 2014.

The table below provides information as of September 30, 2015 on private equity and alternative investments measured at fair value on a nonrecurring basis due to the recognition of impairment:

(in thousands) Fund Type	Fair Value		Unfunded Commitments		Redemption Frequency	Redemption Notice Period
Private equity and venture capital	$	1,337	$	273	None (1)	N/A
Other	250		—		None	N/A
Total	$	1,587	$	273

(1) Funds make periodic distributions of income but do not permit redemptions prior to the end of the investment term.

23

Note 5. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments

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

Loans and Leases
	September 30,			December 31,
(in thousands)	2015			2014
Commercial	$	10,253,592		$	9,360,976
Commercial real estate mortgages	3,947,746			3,539,703
Residential mortgages	5,709,272			5,106,803
Real estate construction	932,422			710,224
Home equity loans and lines of credit	799,711			785,796
Installment	206,156			184,613
Lease financing	687,685			649,091
Loans and leases, excluding acquired impaired loans	22,536,584			20,337,206
Less: Allowance for loan and lease losses	(317,157		)	(310,149		)
Loans and leases, excluding acquired impaired loans, net	22,219,427			20,027,057
Acquired impaired loans	399,527			510,979
Less: Allowance for loan losses	(5,648		)	(8,608		)
Acquired impaired loans, net	393,879			502,371
Total loans and leases	$	22,936,111		$	20,848,185
Total loans and leases, net	$	22,613,306		$	20,529,428

The loan amounts above include deferred costs, net of unamortized fees, of $3.5 million and $0.2 million as of September 30, 2015 and December 31, 2014, respectively.

Concentrations of credit risk arise when a number of clients are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions. Although the Company’s lending activities are predominantly in California, and to a lesser extent, New York, the Company has various specialty lending businesses that lend to businesses located throughout the United States of America and in certain foreign countries to facilitate trade finance activities. Excluding acquired impaired loans, at September 30, 2015, California represented 72 percent of total loans outstanding and New York represented 10 percent. The remaining 18 percent of total loans outstanding represented other states and countries. 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 and New York.

Within the Company’s acquired impaired loan portfolio at September 30, 2015, the five states with the largest concentration were California (29 percent), Texas (12 percent), Arizona (6 percent), Ohio (6 percent) and Nevada (6 percent). The remaining 41 percent of total acquired impaired loans outstanding represented other states.

Acquired Impaired Loans

Acquired impaired loans represent loans acquired in FDIC-assisted acquisitions that are accounted for under ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (“ASC 310-30”). Loans are accounted for under ASC 310-30 when there is evidence of credit deterioration since origination and for which it is probable, at acquisition, that the Company would be unable to collect all contractually required payments. The Company evaluated the acquired loans from its FDIC-assisted acquisitions and concluded that all loans, with the exception of a small population, met the requirements of ASC 310-30.

24

Note 5. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Continued)

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

	September 30,			December 31,
(in thousands)	2015			2014
Commercial	$	994		$	1,969
Commercial real estate mortgages	376,335			481,689
Residential mortgages	3,391			4,455
Real estate construction	16,042			18,790
Home equity loans and lines of credit	2,612			3,820
Installment	153			256
Acquired impaired loans	399,527			510,979
Less: Allowance for loan losses	(5,648		)	(8,608		)
Acquired impaired loans, net	$	393,879		$	502,371

The following table provides information on acquired impaired loans and loss-sharing terms by acquired entity:

(in thousands)	Imperial Capital Bank		1st Pacific Bank		Sun West Bank		Nevada Commerce Bank		Total
Acquired impaired loans as of:
September 30, 2015	$	359,723	$	18,981	$	6,356	$	14,467	$	399,527
December 31, 2014	456,177		23,895		9,353		21,554		510,979
As of September 30, 2015:
FDIC indemnification asset	$	25,960	$	760	$	—	$	1,444	$	28,164
FDIC clawback liability	—		13,395		2,801		412		16,608
Expiration date of FDIC loss sharing:
Commercial (1)	12/31/2016		6/30/2015		6/30/2015		6/30/2016
Residential	12/31/2019		5/31/2020		5/31/2020		4/30/2021
Termination date of FDIC loss-sharing agreements:
Commercial (1)	12/19/2017		5/8/2018		5/29/2018		6/30/2019
Residential	12/31/2019		5/31/2020		5/31/2020		4/30/2021

(1)The Company is subject to sharing 80 percent of its recoveries with the FDIC up to the last day of the quarter in which the termination dates of the commercial loss-sharing agreements occur.

FDIC loss sharing under the commercial loss-sharing agreements for 1st Pacific Bank of California and Sun West Bank ended on June 30, 2015. As a result, losses recognized on assets subject to these agreements are no longer shared with the FDIC effective July 1, 2015. However, the Company is still subject to sharing 80 percent of its recoveries with the FDIC for the time period as indicated in the table above. At September 30, 2015, $377.1 million of acquired impaired loans were covered under the FDIC loss-sharing agreements and $22.4 million of acquired impaired loans were not covered.

25

Note 5. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Continued)

The excess of cash flows expected to be collected over the carrying value of the underlying acquired impaired loans is referred to as the accretable yield. This amount is not reported in the consolidated balance sheets but is accreted into interest income over the remaining estimated lives of the underlying pools of loans. Changes in the accretable yield for acquired impaired loans were as follows for the nine months ended September 30, 2015 and 2014:

	For the nine months ended September 30,
(in thousands)	2015			2014
Balance, beginning of period	$	168,469		$	219,018
Accretion	(28,131		)	(36,067		)
Reclassifications from nonaccretable difference	19,545			25,636
Disposals and other	(23,239		)	(28,628		)
Balance, end of period	$	136,644		$	179,959

The factors that most significantly affect estimates of cash flows expected to be collected, and accordingly the accretable yield balance, include: (i) changes in credit assumptions, including both credit loss amounts and timing; (ii) changes in prepayment assumptions; and (iii) changes in interest rates for variable-rate loans. Reclassifications between accretable yield and nonaccretable difference may vary from period to period as the Company periodically updates its cash flow projections. The reclassification of nonaccretable difference to accretable yield during 2015 was principally driven by positive changes in cash flows, resulting mainly from changes in credit assumptions.

The Company recorded an indemnification asset related to its FDIC-assisted acquisitions, which represents the present value of the expected reimbursement from the FDIC for expected losses on acquired loans, OREO and unfunded commitments. The difference between the carrying value of the FDIC indemnification asset and the undiscounted cash flow that the Company expects to collect from the FDIC is accreted or amortized into noninterest income up until the expiration date of the FDIC loss sharing. Refer to the preceding table for a list of expiration dates of FDIC loss sharing by acquired entity. The FDIC indemnification asset is reviewed on a quarterly basis and adjusted based on changes in cash flow projections. The FDIC indemnification asset from all FDIC-assisted acquisitions was $28.2 million at September 30, 2015 and $50.5 million at December 31, 2014.

Credit Quality on Loans and Leases, Excluding Acquired Impaired Loans

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

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

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

26

Note 5. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Continued)

For commercial, non-homogenous loans that are not impaired, the Company derives loss factors for each risk grade and loan type via a process that begins with estimates of probable losses inherent in the portfolio based upon various statistical analyses. The factors considered in the analysis include loan type, migration analysis, in which historical delinquency and credit loss experience is applied to the 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. 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 Company has a qualitative factor matrix to determine the amount of reserves needed for judgmental factors that are not attributable to or reflected in the quantitative model. The methodology to determine the qualitative reserves includes segmenting the Company’s portfolio into three loan categories: commercial real estate secured, commercial and consumer. The qualitative reserve factors are separated into numerically informed and judgmental categories. Numerically informed factors are linked to defined macroeconomic or bank specific criteria, such as portfolio growth, problem loan trends and concentrations. Judgmental factors are based on the Company’s assessment of factors that include, but are not limited to, the legal and regulatory environment, internal systems and procedures, and entry into a new business. Each factor is assigned a risk level and a risk weight in points which is aggregated to determine the level of qualitative reserves. The factors are updated quarterly to reflect changing conditions.

A portion of the allowance for loan and lease losses is attributed to impaired loans that are individually measured for impairment. This measurement is based on the present value of expected future cash flows discounted using the loan’s contractual effective rate, the fair value of collateral or the secondary market value of the loan.

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

27

Note 5. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Continued)

The following is a summary of activity in the allowance for loan and lease losses and period-end recorded investment balances of loans evaluated for impairment, excluding acquired impaired loans, for the three and nine months ended September 30, 2015 and 2014. Activity is provided by loan portfolio segment which is consistent with the Company’s methodology for determining the allowance for loan and lease losses.

(in thousands)	Commercial (1)			Commercial Real Estate Mortgages			Residential Mortgages			Real Estate Construction		Home Equity Loans and Lines of Credit			Installment			Qualitative			Total
Three months ended September 30, 2015
Allowance for loan and lease losses:
Beginning balance	$	124,314		$	48,649		$	9,660		$	10,652	$	5,404		$	2,208		$	116,035		$	316,922
Charge-offs	(4,576		)	—			—			—		—			(240		)	—			(4,816		)
Recoveries	10,514			68			34			142		37			204			—			10,999
Net recoveries (charge-offs)	5,938			68			34			142		37			(36		)	—			6,183
(Reversal of) provision for credit losses	2,939			(211		)	154			783		(163		)	118			(9,620		)	(6,000		)
Transfers from reserve for off-balance sheet credit commitments	—			—			—			—		—			—			52			52
Ending balance	$	133,191		$	48,506		$	9,848		$	11,577	$	5,278		$	2,290		$	106,467		$	317,157
Nine months ended September 30, 2015
Allowance for loan and lease losses:
Beginning balance	$	115,855		$	44,745		$	10,296		$	9,115	$	6,609		$	2,228		$	121,301		$	310,149
Charge-offs	(10,276		)	—			—			—		—			(748		)	—			(11,024		)
Recoveries	12,229			1,270			110			1,852		110			622			—			16,193
Net recoveries (charge-offs)	1,953			1,270			110			1,852		110			(126		)	—			5,169
(Reversal of) provision for credit losses	15,383			2,491			(558		)	610		(1,441		)	188			(12,673		)	4,000
Transfers to reserve for off-balance sheet credit commitments	—			—			—			—		—			—			(2,161		)	(2,161		)
Ending balance	$	133,191		$	48,506		$	9,848		$	11,577	$	5,278		$	2,290		$	106,467		$	317,157
Ending balance of allowance:
Individually evaluated for impairment	$	2,315		$	255		$	39		$	—	$	—		$	—		$	—		$	2,609
Collectively evaluated for impairment	130,876			48,251			9,809			11,577		5,278			2,290			106,467			314,548
Loans and leases, excluding acquired impaired loans
Ending balance of loans and leases:
Loans and leases, excluding acquired impaired loans	$	10,941,277		$	3,947,746		$	5,709,272		$	932,422	$	799,711		$	206,156		$	—		$	22,536,584
Individually evaluated for impairment	18,185			22,918			11,850			5,802		1,137			—			—			59,892
Collectively evaluated for impairment	10,923,092			3,924,828			5,697,422			926,620		798,574			206,156			—			22,476,692

(1) Includes lease financing loans.

28

Note 5. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Continued)

(in thousands)	Commercial (1)			Commercial Real Estate Mortgages			Residential Mortgages			Real Estate Construction			Home Equity Loans and Lines of Credit			Installment			Qualitative			Total
Three months ended September 30, 2014
Allowance for loan and lease losses:
Beginning balance	$	126,279		$	50,651		$	10,296		$	7,191		$	6,575		$	2,284		$	108,000		$	311,276
Charge-offs	(3,773		)	—			—			—			—			(76		)	—			(3,849		)
Recoveries	6,202			225			33			7,729			52			158			—			14,399
Net recoveries	2,429			225			33			7,729			52			82			—			10,550
(Reversal of) provision for credit losses	(5,762		)	113			1,138			(6,175		)	401			18			2,267			(8,000		)
Transfers to reserve for off-balance sheet credit commitments	—			—			—			—			—			—			(1,123		)	(1,123		)
Ending balance	$	122,946		$	50,989		$	11,467		$	8,745		$	7,028		$	2,384		$	109,144		$	312,703
Nine months ended September 30, 2014
Allowance for loan and lease losses:
Beginning balance	$	117,103		$	50,678		$	11,540		$	6,351		$	6,677		$	1,842		$	108,393		$	302,584
Charge-offs	(18,594		)	(5		)	(482		)	—			(165		)	(264		)	—			(19,510		)
Recoveries	15,437			352			258			12,804			254			1,490			—			30,595
Net (charge-offs) recoveries	(3,157		)	347			(224		)	12,804			89			1,226			—			11,085
(Reversal of) provision for credit losses	(353		)	(36		)	151			(10,410		)	262			(684		)	2,070			(9,000		)
Transfers from (to) reserve for off-balance sheet credit commitments	9,353			—			—			—			—			—			(1,319		)	8,034
Ending balance	$	122,946		$	50,989		$	11,467		$	8,745		$	7,028		$	2,384		$	109,144		$	312,703
Ending balance of allowance:
Individually evaluated for impairment	$	1,304		$	291		$	—		$	—		$	—		$	—		$	—		$	1,595
Collectively evaluated for impairment	121,642			50,698			11,467			8,745			7,028			2,384			109,144			311,108
Loans and leases, excluding acquired impaired loans
Ending balance of loans and leases:
Loans and leases, excluding acquired impaired loans	$	9,236,294		$	3,565,188		$	5,023,213		$	585,232		$	759,258		$	178,803		$	—		$	19,347,988
Individually evaluated for impairment	16,316			25,551			7,785			6,610			2,313			—			—			58,575
Collectively evaluated for impairment	9,219,978			3,539,637			5,015,428			578,622			756,945			178,803			—			19,289,413

(1)  Includes lease financing loans.

Off-balance sheet credit exposures include loan commitments and letters of credit. The following table provides a summary of activity in the reserve for off-balance sheet credit commitments for the three and nine months ended September 30, 2015 and 2014:

	For the three months ended September 30,					For the nine months ended September 30,
(in thousands)	2015			2014		2015		2014
Balance, beginning of period	$	30,024		$	24,787	$	27,811	$	33,944
Transfers (to) from allowance for loan and lease losses	(52		)	1,123		2,161		(8,034		)
Balance, end of period	$	29,972		$	25,910	$	29,972	$	25,910

The reserve for off-balance sheet credit commitments decreased $0.1 million and increased $2.2 million during the three and nine months ended September 30, 2015, respectively. The change was due to normal fluctuations in the amount of reserves required due to changes in the composition, amount and quality of risk ratings of borrowers associated with the off-balance sheet commitments. Increases and decreases in the reserve for off-balance sheet credit commitments are reflected as an allocation of provision expense from or to the allowance for loan and lease losses.

29

Note 5. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Continued)

Impaired Loans and Leases

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 $1 million 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. For borrowers with multiple loans totaling $1 million or more, this threshold is applied at the total relationship level. Loans under $1 million are measured for impairment using historical loss factors. 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.

Information on impaired loans, excluding acquired impaired loans, at September 30, 2015, December 31, 2014 and September 30, 2014 is provided in the following tables:

			Unpaid				For the three months ended September 30, 2015				For the nine months ended September 30, 2015
(in thousands)	Recorded Investment		Contractual Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
September 30, 2015
With no related allowance recorded:
Commercial	$	4,784	$	10,605	$	—	$	3,619	$	71	$	4,395	$	94
Commercial real estate mortgages	17,921		19,095		—		17,947		200		18,398		605
Residential mortgages:
Fixed	7,961		8,255		—		7,981		14		7,859		40
Variable	—		—		—		—		—		56		—
Total residential mortgages	7,961		8,255		—		7,981		14		7,915		40
Real estate construction:
Land	5,802		6,885		—		5,809		28		6,801		142
Total real estate construction	5,802		6,885		—		5,809		28		6,801		142
Home equity loans and lines of credit	1,137		2,247		—		1,035		2		1,319		2
Total with no related allowance	$	37,605	$	47,087	$	—	$	36,391	$	315	$	38,828	$	883
With an allowance recorded:
Commercial	$	13,401	$	17,347	$	2,315	$	9,869	$	95	$	8,090	$	138
Commercial real estate mortgages	4,997		5,311		255		5,008		—		5,061		142
Residential mortgages:
Variable	3,889		3,881		39		3,901		26		3,923		78
Total residential mortgages	3,889		3,881		39		3,901		26		3,923		78
Total with an allowance	$	22,287	$	26,539	$	2,609	$	18,778	$	121	$	17,074	$	358
Total impaired loans by type:
Commercial	$	18,185	$	27,952	$	2,315	$	13,488	$	166	$	12,485	$	232
Commercial real estate mortgages	22,918		24,406		255		22,955		200		23,459		747
Residential mortgages	11,850		12,136		39		11,882		40		11,838		118
Real estate construction	5,802		6,885		—		5,809		28		6,801		142
Home equity loans and lines of credit	1,137		2,247		—		1,035		2		1,319		2
Total impaired loans	$	59,892	$	73,626	$	2,609	$	55,169	$	436	$	55,902	$	1,241

30

Note 5. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Continued)

(in thousands)	Recorded Investment		Unpaid Contractual Principal Balance		Related Allowance
December 31, 2014
With no related allowance recorded:
Commercial	$	8,894	$	9,182	$	—
Commercial real estate mortgages	19,858		22,416		—
Residential mortgages:
Fixed	7,756		7,994		—
Variable	224		262		—
Total residential mortgages	7,980		8,256		—
Real estate construction:
Land	6,609		8,758		—
Total real estate construction	6,609		8,758		—
Home equity loans and lines of credit	2,270		3,375		—
Total with no related allowance	$	45,611	$	51,987	$	—
With an allowance recorded:
Commercial	$	6,470	$	8,878	$	399
Commercial real estate mortgages	5,184		5,526		281
Residential mortgages:
Variable	3,957		3,948		48
Total residential mortgages	3,957		3,948		48
Total with an allowance	$	15,611	$	18,352	$	728
Total impaired loans by type:
Commercial	$	15,364	$	18,060	$	399
Commercial real estate mortgages	25,042		27,942		281
Residential mortgages	11,937		12,204		48
Real estate construction	6,609		8,758		—
Home equity loans and lines of credit	2,270		3,375		—
Total impaired loans	$	61,222	$	70,339	$	728

31

Note 5. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Continued)

			Unpaid				For the three months ended September 30, 2014				For the nine months ended September 30, 2014
(in thousands)	Recorded Investment		Contractual Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
September 30, 2014
With no related allowance recorded:
Commercial	$	6,653	$	6,684	$	—	$	6,817	$	38	$	10,653	$	205
Commercial real estate mortgages	20,347		22,698		—		24,290		219		29,478		903
Residential mortgages:
Fixed	2,015		2,254		—		3,406		10		3,459		30
Variable	5,770		5,885		—		3,784		40		3,997		68
Total residential mortgages	7,785		8,139		—		7,190		50		7,456		98
Real estate construction:
Construction	—		—		—		—		—		2,742		76
Land	6,610		8,758		—		9,728		35		11,593		104
Total real estate construction	6,610		8,758		—		9,728		35		14,335		180
Home equity loans and lines of credit	2,313		3,375		—		2,874		—		2,881		—
Installment:
Consumer	—		—		—		—		1		4		1
Total installment	—		—		—		—		1		4		1
Total with no related allowance	$	43,708	$	49,654	$	—	$	50,899	$	343	$	64,807	$	1,387
With an allowance recorded:
Commercial	$	9,663	$	12,134	$	1,304	$	15,957	$	—	$	15,869	$	—
Commercial real estate mortgages	5,204		5,557		291		5,214		73		5,293		191
Residential mortgages:
Variable	—		—		—		2,000		—		1,419		11
Total residential mortgages	—		—		—		2,000		—		1,419		11
Installment:
Consumer	—		—		—		25		—		12		1
Total installment	—		—		—		25		—		12		1
Total with an allowance	$	14,867	$	17,691	$	1,595	$	23,196	$	73	$	22,593	$	203
Total impaired loans by type:
Commercial	$	16,316	$	18,818	$	1,304	$	22,774	$	38	$	26,522	$	205
Commercial real estate mortgages	25,551		28,255		291		29,504		292		34,771		1,094
Residential mortgages	7,785		8,139		—		9,190		50		8,875		109
Real estate construction	6,610		8,758		—		9,728		35		14,335		180
Home equity loans and lines of credit	2,313		3,375		—		2,874		—		2,881		—
Installment	—		—		—		25		1		16		2
Total impaired loans	$	58,575	$	67,345	$	1,595	$	74,095	$	416	$	87,400	$	1,590

Impaired loans at September 30, 2015 and December 31, 2014 included $33.1 million and $30.6 million, respectively, of loans that are on accrual status. With the exception of restructured loans on accrual status and a limited number of loans on cash basis nonaccrual for which the full collection of principal and interest is expected, interest income is not recognized on impaired loans until the principal balance of these loans is paid off.

32

Note 5. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Continued)

Troubled Debt Restructured Loans

The following table provides a summary of loans modified in a troubled debt restructuring during the three months ended September 30, 2015. There were no loans modified in a troubled debt restructuring during the three months ended September 30, 2014.

(in thousands)	Number of Contracts	Pre-Modification Outstanding Principal		Period-End Outstanding Principal		Financial Effects (1)
Three months ended September 30, 2015
Commercial	2	$	2,575	$	2,570	$	—
Commercial real estate mortgages	1	187		185		—
Home equity loans and lines of credit	1	205		205		—
Total troubled debt restructured loans	4	$	2,967	$	2,960	$	—

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

The following table provides a summary of loans modified in a troubled debt restructuring during the nine months ended September 30, 2015 and 2014:

(in thousands)	Number of Contracts	Pre-Modification Outstanding Principal		Period-End Outstanding Principal		Financial Effects (1)
Nine months ended September 30, 2015
Commercial	3	$	3,206	$	3,091	$	—
Commercial real estate mortgages	2	605		593		—
Residential mortgages:
Fixed	1	302		299		—
Home equity loans and lines of credit	2	292		287		—
Total troubled debt restructured loans	8	$	4,405	$	4,270	$	—
Nine months ended September 30, 2014
Commercial	2	$	4,098	$	3,799	$	—
Residential mortgages:
Variable	2	4,676		4,647		5
Installment:
Consumer	1	50		—		50
Total troubled debt restructured loans	5	$	8,824	$	8,446	$	55

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

A restructuring constitutes a troubled debt restructuring when a lender, for reasons related to a borrower’s financial difficulties, grants a concession to the borrower that it would not otherwise consider. Loans with pre-modification outstanding balances totaling $3.0 million and $4.4 million were modified in troubled debt restructurings during the three and nine months ended September 30, 2015. Loans with pre-modification outstanding balances totaling $8.8 million were modified in troubled debt restructurings during the nine months ended September 30, 2014. The concessions granted in the restructurings completed in 2015 largely consisted of maturity extensions.

33

Note 5. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Continued)

The unpaid principal balance of TDR loans was $27.3 million, before specific reserves of $0.4 million, at September 30, 2015 and $34.3 million, before specific reserves of $0.7 million, at December 31, 2014. The net decrease in TDR loans from December 31, 2014 was primarily attributable to payments received on existing TDR loans totaling $8.5 million and charge-offs totaling $3.1 million on an existing TDR loan. These decreases were partially offset by additions totaling $4.4 million. Loans modified in troubled debt restructurings are impaired loans at the time of restructuring and subject to the same measurement criteria as all other impaired loans.

A TDR loan is considered to be in default when payments are 90 days or more past due. The following table provides a summary of TDR loans that subsequently defaulted during the three and nine months ended September 30, 2015 that had been modified as a troubled debt restructuring during the 12 months prior to their default. The Company had no TDR loans that subsequently defaulted during the three and nine months ended September 30, 2014.

	For three months ended September 30, 2015					For nine months ended September 30, 2015
(in thousands)	Number of Contracts	Period-End Outstanding Principal		Period-End Specific Reserve		Number of Contracts	Period-End Outstanding Principal		Period-End Specific Reserve
Commercial	2	$	2,570	$	—	2	$	2,570	$	—
Commercial real estate mortgages	—	—		—		1	64		—
Total loans that subsequently defaulted	2	$	2,570	$	—	3	$	2,634	$	—

All other TDR loans were performing in accordance with their restructured terms at September 30, 2015. As of September 30, 2015, there were $0.3 million of outstanding commitments to lend additional funds on restructured loans.

Past Due and Nonaccrual Loans and Leases

Loans are considered past due following the date when either interest or principal is contractually due and unpaid. The following tables provide a summary of past due and nonaccrual loans, excluding acquired impaired loans, at September 30, 2015 and December 31, 2014 based upon the length of time the loans have been past due:

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days and Accruing		Nonaccrual		Total Past Due and Nonaccrual Loans		Current		Total Loans and Leases
September 30, 2015
Commercial	$	5,094	$	1,550	$	—	$	14,728	$	21,372	$	10,232,220	$	10,253,592
Commercial real estate mortgages	3,847		—		—		2,368		6,215		3,941,531		3,947,746
Residential mortgages:
Fixed	—		2,556		305		10,000		12,861		1,475,111		1,487,972
Variable	—		5,601		2,153		588		8,342		4,212,958		4,221,300
Total residential mortgages	—		8,157		2,458		10,588		21,203		5,688,069		5,709,272
Real estate construction:
Construction	—		—		—		—		—		900,928		900,928
Land	—		—		—		3,460		3,460		28,034		31,494
Total real estate construction	—		—		—		3,460		3,460		928,962		932,422
Home equity loans and lines of credit	910		3,072		460		3,340		7,782		791,929		799,711
Installment:
Commercial	—		—		—		—		—		228		228
Consumer	373		68		543		37		1,021		204,907		205,928
Total installment	373		68		543		37		1,021		205,135		206,156
Lease financing	—		457		—		1		458		687,227		687,685
Total	$	10,224	$	13,304	$	3,461	$	34,522	$	61,511	$	22,475,073	$	22,536,584

34

Note 5. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Continued)

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days and Accruing		Nonaccrual		Total Past Due and Nonaccrual Loans		Current		Total Loans and Leases
December 31, 2014
Commercial	$	8,462	$	325	$	148	$	15,096	$	24,031	$	9,336,945	$	9,360,976
Commercial real estate mortgages	693		—		—		3,575		4,268		3,535,435		3,539,703
Residential mortgages:
Fixed	—		309		921		10,365		11,595		1,390,357		1,401,952
Variable	—		1,165		—		1,578		2,743		3,702,108		3,704,851
Total residential mortgages	—		1,474		921		11,943		14,338		5,092,465		5,106,803
Real estate construction:
Construction	—		—		—		—		—		686,990		686,990
Land	—		—		—		6,598		6,598		16,636		23,234
Total real estate construction	—		—		—		6,598		6,598		703,626		710,224
Home equity loans and lines of credit	—		39		100		4,864		5,003		780,793		785,796
Installment:
Commercial	—		—		—		—		—		298		298
Consumer	324		113		346		84		867		183,448		184,315
Total installment	324		113		346		84		867		183,746		184,613
Lease financing	321		152		—		7		480		648,611		649,091
Total	$	9,800	$	2,103	$	1,515	$	42,167	$	55,585	$	20,281,621	$	20,337,206

Credit Quality Monitoring

The Company closely monitors and assesses credit quality and credit risk in the loan and lease portfolio on an ongoing basis. Loan risk classifications are continuously reviewed and updated. The following table provides a summary of the loan and lease portfolio, excluding acquired impaired loans, by loan type and credit quality classification as of September 30, 2015 and December 31, 2014. Nonclassified loans generally include those loans that are expected to be repaid in accordance with contractual loan terms. Classified loans are those loans that are classified as substandard or doubtful consistent with regulatory guidelines.

	September 30, 2015						December 31, 2014
(in thousands)	Nonclassified		Classified		Total		Nonclassified		Classified		Total
Commercial	$	10,153,594	$	99,998	$	10,253,592	$	9,304,636	$	56,340	$	9,360,976
Commercial real estate mortgages	3,905,035		42,711		3,947,746		3,511,229		28,474		3,539,703
Residential mortgages:
Fixed	1,467,932		20,040		1,487,972		1,375,175		26,777		1,401,952
Variable	4,191,381		29,919		4,221,300		3,675,723		29,128		3,704,851
Total residential mortgages	5,659,313		49,959		5,709,272		5,050,898		55,905		5,106,803
Real estate construction:
Construction	900,928		—		900,928		679,744		7,246		686,990
Land	25,702		5,792		31,494		16,636		6,598		23,234
Total real estate construction	926,630		5,792		932,422		696,380		13,844		710,224
Home equity loans and lines of credit	773,425		26,286		799,711		754,694		31,102		785,796
Installment:
Commercial	228		—		228		298		—		298
Consumer	205,229		699		205,928		183,190		1,125		184,315
Total installment	205,457		699		206,156		183,488		1,125		184,613
Lease financing	681,101		6,584		687,685		645,049		4,042		649,091
Total	$	22,304,555	$	232,029	$	22,536,584	$	20,146,374	$	190,832	$	20,337,206

35

Note 5. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Continued)

Credit Quality on Acquired Impaired Loans

The following is a summary of activity in the allowance for losses on acquired impaired loans:

	For the three months ended September 30,						For the nine months ended September 30,
(in thousands)	2015			2014			2015			2014
Balance, beginning of period	$	8,075		$	9,103		$	8,608		$	15,922
Provision for losses	1,148			589			2,736			3,783
Change in allowance due to loan removals	(3,575		)	(324		)	(5,696		)	(10,337		)
Balance, end of period	$	5,648		$	9,368		$	5,648		$	9,368

The allowance for losses on acquired impaired loans was $5.6 million, $8.6 million and $9.4 million as of September 30, 2015, December 31, 2014 and September 30, 2014, respectively. The Company recorded provision expense of $1.1 million and $2.7 million during the three and nine months ended September 30, 2015, respectively. The Company recorded provision expense of $0.6 million and $3.8 million during the three and nine months ended September 30, 2014, respectively. The Company updates its cash flow projections for acquired impaired loans accounted for under ASC 310-30 on a quarterly basis, and may recognize provision expense or reversal of provision for loan losses as a result of that analysis. The provision expense or reversal of provision for losses on acquired impaired loans is the result of changes in expected cash flows, both amount and timing, due to actual loan performance and the Company’s revised loan loss and prepayment forecasts. The revisions of these forecasts were based on the results of management’s review of market conditions, the credit quality of outstanding acquired impaired loans and the analysis of loan performance data since the acquisition of the acquired impaired loans. The allowance for losses is adjusted for any loan removals, which occur when a loan has been fully paid off, fully charged off, sold or transferred to OREO.

Acquired impaired loans are generally considered accruing and performing loans as the loans accrete interest income over the estimated life of the loan when cash flows are reasonably estimable. Accordingly, acquired impaired loans that are contractually past due are still considered to be accruing and performing loans. If the timing and amount of future cash flows is not reasonably estimable, the loans may be classified as nonaccrual loans and interest income is not recognized until the timing and amount of future cash flows can be reasonably estimated. There were no acquired impaired loans that were on nonaccrual status as of September 30, 2015 and December 31, 2014.

At September 30, 2015, acquired impaired loans that were 30 to 89 days delinquent totaled $0.9 million and acquired impaired loans that were 90 days or more past due on accrual status totaled $20.4 million. At December 31, 2014, acquired impaired loans that were 30 to 89 days delinquent totaled $7.4 million and acquired impaired loans that were 90 days or more past due on accrual status totaled $28.3 million.

Note 6. Other Real Estate Owned

The following table provides a summary of OREO activity for the three months ended September 30, 2015 and 2014:

	For the three months ended September 30, 2015									For the three months ended September 30, 2014
(in thousands)	Non-Covered OREO			Covered OREO			Total			Non-Covered OREO			Covered OREO			Total
Balance, beginning of period	$	5,957		$	11,311		$	17,268		$	4,269		$	17,944		$	22,213
Additions	—			285			285			5,957			1,276			7,233
Sales	—			(2,963		)	(2,963		)	(83		)	(4,366		)	(4,449		)
Valuation adjustments	(373		)	(323		)	(696		)	(28		)	(367		)	(395		)
Balance, end of period	$	5,584		$	8,310		$	13,894		$	10,115		$	14,487		$	24,602

36

Note 6. Other Real Estate Owned (Continued)

The following table provides a summary of OREO activity for the nine months ended September 30, 2015 and 2014:

	For the nine months ended September 30, 2015									For the nine months ended September 30, 2014
(in thousands)	Non-Covered OREO			Covered OREO			Total			Non-Covered OREO			Covered OREO			Total
Balance, beginning of period	$	10,736		$	12,760		$	23,496		$	12,611		$	25,481		$	38,092
Additions	—			4,200			4,200			6,068			5,296			11,364
Sales	(4,779		)	(6,588		)	(11,367		)	(8,523		)	(14,834		)	(23,357		)
Valuation adjustments	(373		)	(2,062		)	(2,435		)	(41		)	(1,456		)	(1,497		)
Balance, end of period	$	5,584		$	8,310		$	13,894		$	10,115		$	14,487		$	24,602

At September 30, 2015, OREO was $13.9 million and included $8.3 million of covered OREO. At December 31, 2014, OREO was $23.5 million and included $12.8 million of covered OREO. The balance of OREO at September 30, 2015 and December 31, 2014 is net of valuation allowances of $2.4 million and $7.4 million, respectively. At September 30, 2015, the Company’s recorded investment in residential mortgage loans, excluding acquired impaired loans, for which foreclosure proceedings had been initiated totaled $7.3 million.

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

Note 7. Borrowed Funds

Short-term borrowings consist of funds with remaining maturities of one year or less, and long-term debt consists of borrowings with remaining maturities greater than one year. The components of short-term borrowings and long-term debt as of September 30, 2015 and December 31, 2014 are provided below:

(in thousands) (1)	September 30, 2015		December 31, 2014
Short-term borrowings
Federal funds purchased	$	—	$	320,000
Current portion of nonrecourse debt (2)	6,490		2,861
Total short-term borrowings	$	6,490	$	322,861
Long-term debt
Senior notes:
City National Corporation - 5.25% Senior Notes Due September 2020	$	299,597	$	299,540
Subordinated debt:
City National Bank - 9.00% Subordinated Notes Due August 2019	75,000		75,000
City National Bank - 5.375% Subordinated Notes Due July 2022	149,995		149,994
Junior subordinated debt:
Floating Rate Business Bancorp Capital Trust I Securities due November 2034 (3)	5,155		5,155
Nonrecourse debt (2)	110,713		99,139
Other long-term debt (4)	9,618		9,772
Total long-term debt	$	650,078	$	638,600

(1)The carrying value of certain borrowed funds is net of discount which is being amortized into interest expense.

(2)Nonrecourse debt bears interest at an average rate of 3.83 percent as of September 30, 2015 and has maturity dates ranging from November 2015 to February 2023.

(3)These floating rate securities bear interest of three-month LIBOR plus 1.965 percent which is reset quarterly. As of September 30, 2015, the interest rate was approximately 2.29 percent.

(4)Other long-term debt includes a note payable that bears a fixed interest rate of 5.64 percent and is scheduled to mature in June 2017.

37

Note 7. Borrowed Funds (Continued)

The Company holds debt affiliated with First American Equipment Finance (“FAEF”), its wholly-owned equipment finance subsidiary. FAEF assigns the future rentals of certain lease financing loans to financial institutions on a nonrecourse basis at fixed interest rates. In return for future minimum lease rentals assigned, FAEF receives a discounted cash payment. Proceeds from discounting are reflected in the table above as nonrecourse debt.

Note 8. Shareholders’ Equity

The components of AOCI at September 30, 2015 and December 31, 2014 are as follows:

(in thousands)	September 30, 2015			December 31, 2014
Net unrealized gain (loss) on securities available-for-sale	$	2,528		$	(7,070	)
Foreign currency translation adjustments	(28		)	(4		)
Total accumulated other comprehensive income (loss)	$	2,500		$	(7,074	)

The following table presents the tax effects allocated to each component of other comprehensive income (loss) for the three and nine months ended September 30, 2015 and 2014:

	For the three months ended September 30, 2015									For the three months ended September 30, 2014
(in thousands)	Pre-tax			Tax expense (benefit)			Net-of-tax			Pre-tax			Tax expense (benefit)			Net-of-tax
Securities available-for-sale:
Net unrealized gains (losses) arising during the period	$	7,741		$	3,268		$	4,473		$	(16,386	)	$	(6,839	)	$	(9,547	)
Reclassification adjustment for net gains included in net income (1)	(12		)	(5		)	(7		)	(7		)	(3		)	(4		)
Non-credit related impairment loss	(325		)	(136		)	(189		)	(243		)	(102		)	(141		)
Total securities available-for-sale	7,404			3,127			4,277			(16,636		)	(6,944		)	(9,692		)
Foreign currency translation adjustments	(17		)	—			(17		)	—			—			—
Total other comprehensive income (loss)	$	7,387		$	3,127		$	4,260		$	(16,636	)	$	(6,944	)	$	(9,692	)

	For the nine months ended September 30, 2015									For the nine months ended September 30, 2014
(in thousands)	Pre-tax			Tax expense (benefit)			Net-of-tax			Pre-tax			Tax expense (benefit)			Net-of-tax
Securities available-for-sale:
Net unrealized gains arising during the period	$	20,617		$	8,676		$	11,941		$	21,646		$	9,060		$	12,586
Reclassification adjustment for net gains included in net income (1)	(3,703		)	(1,549		)	(2,154		)	(7,558		)	(3,162		)	(4,396		)
Non-credit related impairment loss	(325		)	(136		)	(189		)	(243		)	(102		)	(141		)
Total securities available-for-sale	16,589			6,991			9,598			13,845			5,796			8,049
Foreign currency translation adjustments	(24		)	—			(24		)	—			—			—
Total other comprehensive income	$	16,565		$	6,991		$	9,574		$	13,845		$	5,796		$	8,049

(1)  Recognized in Gain on sale of securities in the consolidated statements of income.

38

Note 8. Shareholders’ Equity (Continued)

The following table summarizes the Company’s share repurchases for the three months ended September 30, 2015. All repurchases relate to shares withheld or previously owned shares used to pay taxes due upon vesting of restricted stock. There were no issuer repurchases of the Corporation’s common stock as part of its repurchase plan for the three months ended September 30, 2015.

Period	Total Number of Shares Purchased	Average Price Paid per Share
July 1, 2015 to July 31, 2015	1,609	$	89.65
August 1, 2015 to August 31, 2015	—	—
September 1, 2015 to September 30, 2015	2,897	86.89
Total share repurchases	4,506	87.87

Note 9. Earnings per Common Share

The Company applies the two-class method of computing basic and diluted earnings per common share (“EPS”). Under the two-class method, EPS is determined for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. The Company grants restricted stock and restricted stock units under a share-based compensation plan that qualify as participating securities. The computation of basic and diluted EPS for the three and nine months ended September 30, 2015 and 2014 is presented in the following table:

	For the three months ended September 30,				For the nine months ended September 30,
(in thousands, except per share amounts) (1)	2015		2014		2015		2014
Basic EPS:
Net income attributable to City National Corporation	$	71,808	$	69,891	$	201,873	$	189,182
Less: Dividends on preferred stock	4,093		4,093		12,281		12,281
Net income available to common shareholders	$	67,715	$	65,798	$	189,592	$	176,901
Less: Earnings allocated to participating securities	576		644		1,664		1,801
Earnings allocated to common shareholders	$	67,139	$	65,154	$	187,928	$	175,100
Weighted-average common shares outstanding	55,829		55,031		55,668		54,893
Basic earnings per common share	$	1.20	$	1.18	$	3.38	$	3.19
Diluted EPS:
Earnings allocated to common shareholders (2)	$	67,143	$	65,160	$	187,943	$	175,116
Weighted-average common shares outstanding	55,829		55,031		55,668		54,893
Dilutive effect of equity awards	858		734		884		723
Weighted-average diluted common shares outstanding	56,687		55,765		56,552		55,616
Diluted earnings per common share	$	1.18	$	1.17	$	3.32	$	3.15

(1)Certain prior period amounts have been adjusted to reflect the adoption of ASU 2014-01. See Note 1, Summary of Significant Accounting Policies, for further discussion.

(2)Earnings allocated to common shareholders for basic and diluted EPS may differ under the two-class method as a result of adding common stock equivalents for options to dilutive shares outstanding, which alters the ratio used to allocate earnings to common shareholders and participating securities for the purposes of calculating diluted EPS.

The average price of the Company’s common stock for the period is used to determine the dilutive effect of outstanding stock options. Antidilutive stock options are not included in the calculation of diluted EPS. There were 0.4 million and 0.7 million average outstanding stock options that were antidilutive for the three months ended September 30, 2015 and 2014, respectively. There were 0.4 million and 0.7 million average outstanding stock options that were antidilutive for the nine months ended September 30, 2015 and 2014, respectively.

39

Note 10. Share-Based Compensation

On September 30, 2015, the Company had one share-based compensation plan, the Amended and Restated City National Corporation 2008 Omnibus Plan (the “Plan”), which was originally approved by the Company’s shareholders on April 23, 2008. No new awards have been or will be granted under predecessor plans since the adoption of the Plan. The Plan permits the grant of stock options, restricted stock, restricted stock units, cash-settled restricted stock units, performance shares, performance share units, performance units and stock appreciation rights, or any combination thereof, to the Company’s eligible employees and non-employee directors. No grants of performance shares, performance share units or stock appreciation rights had been made as of September 30, 2015. At September 30, 2015, there were approximately 2.4 million shares available for future grants. Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 for further discussion of the Company’s share-based compensation plan.

The compensation cost that has been recognized for all share-based awards was $4.7 million and $15.9 million for the three and nine months ended September 30, 2015, respectively, compared with $5.5 million and $16.1 million for the three and nine months ended September 30, 2014. The total income tax benefit recognized in the consolidated statements of income for share-based compensation arrangements was $2.0 million and $6.7 million for the three and nine months ended September 30, 2015, respectively, compared with $2.3 million and $6.7 million for the three and nine months ended September 30, 2014. The Company received $30.7 million and $21.7 million in cash for the exercise of stock options during the nine months ended September 30, 2015 and 2014, respectively. The actual tax benefit realized for the tax deductions from stock option exercises was $6.0 million and $3.2 million for the nine months ended September 30, 2015 and 2014, respectively.

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

	For the three months ended September 30,				For the nine months ended September 30,
	2015		2014		2015		2014
Weighted-average volatility	26.35	%	27.08	%	26.66	%	27.35	%
Dividend yield	1.58	%	1.72	%	1.55	%	1.79	%
Expected term (in years)	5.46		5.46		6.05		6.06
Risk-free interest rate	1.76	%	1.97	%	1.78	%	1.99	%

Using the Black-Scholes methodology, the weighted-average grant-date fair values of options granted during the nine months ended September 30, 2015 and 2014 were $21.79 and $17.93, respectively. The total intrinsic value of options exercised during the nine months ended September 30, 2015 and 2014 was $15.8 million and $7.7 million, respectively.

A summary of option activity and related information for the nine months ended September 30, 2015 is presented below:

			Weighted-				Weighted-
			Average		Aggregate		Average
	Number of		Exercise		Intrinsic		Remaining
	Shares		Price		Value		Contractual
Options	(in thousands)		(per share)		(in thousands) (1)		Term
Outstanding at January 1, 2015	3,971		$	57.40
Granted	377		90.47
Exercised	(516	)	59.60
Forfeited or expired	(33	)	67.64
Outstanding at September 30, 2015	3,799		$	60.29	$	106,387	5.33
Exercisable at September 30, 2015	2,691		$	55.62	$	87,297	4.12

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

40

Note 10. Share-Based Compensation (Continued)

A summary of changes in unvested options and related information for the nine months ended September 30, 2015 is presented below:

			Weighted-Average
	Number of		Grant Date
	Shares		Fair Value
Unvested Options	(in thousands)		(per share)
Unvested at January 1, 2015	1,269		$	14.80
Granted	377		21.79
Vested	(515	)	14.78
Forfeited	(23	)	15.41
Unvested at September 30, 2015	1,108		$	17.17

The number of options vested during the nine months ended September 30, 2015 and 2014 was 514,850 and 551,992, respectively. The total fair value of options vested during the nine months ended September 30, 2015 and 2014 was $7.6 million and $8.1 million, respectively. As of September 30, 2015, there was $13.2 million of unrecognized compensation cost related to unvested stock options granted under the Company’s plans. That cost is expected to be recognized over a weighted-average period of 2.6 years.

A summary of changes in restricted stock and related information for the nine months ended September 30, 2015 is presented below:

			Weighted-Average
	Number of		Grant Date
	Shares		Fair Value
Restricted Stock (1)	(in thousands)		(per share)
Unvested at January 1, 2015	525		$	60.60
Granted	100		90.47
Vested	(146	)	54.80
Forfeited	(5	)	68.00
Unvested at September 30, 2015	474		$	68.60

(1) Includes restricted stock units.

Restricted stock is valued at the closing price of the Company’s stock on the date of award. The weighted-average grant-date fair value of restricted stock granted during the nine months ended September 30, 2015 and 2014 was $90.47 and $73.64, respectively. The number of restricted shares vested during the nine months ended September 30, 2015 and 2014 was 145,663 and 180,799, respectively. The total fair value of restricted stock vested was $8.0 million during the nine months ended September 30, 2015 and 2014. As of September 30, 2015, the unrecognized compensation cost related to restricted stock granted under the Company’s plans was $16.2 million. That cost is expected to be recognized over a weighted-average period of 3.3 years.

41

Note 10. Share-Based Compensation (Continued)

Cash-settled restricted stock units are initially valued at the closing price of the Company’s stock on the date of award. They are subsequently remeasured to the closing price of the Company’s stock at each reporting date until settlement. A summary of changes in cash-settled restricted stock units for the nine months ended September 30, 2015 is presented below:

	Number of
	Shares
Cash-Settled Restricted Stock Units	(in thousands)
Unvested at January 1, 2015	174
Granted	14
Vested	(44	)
Forfeited	(3	)
Unvested at September 30, 2015	141

Note 11. Derivative Instruments

The Company may use interest-rate swaps to mitigate interest-rate risk associated with changes to (1) the fair value of certain fixed-rate deposits and borrowings (fair value hedges) and (2) certain cash flows related to future interest payments on variable rate loans (cash flow hedges). Interest-rate swap agreements involve the exchange of fixed and variable rate interest payments between counterparties based upon a notional principal amount and maturity date. The Company recognizes derivatives as assets or liabilities on the consolidated balance sheets at their fair value. The treatment of changes in the fair value of derivatives depends on the character of the transaction. The Company also offers various derivative products to clients and enters into derivative transactions in due course. These transactions are not linked to specific Company assets or liabilities in the consolidated balance sheets or to forecasted transactions in a hedge relationship and, therefore, do not qualify for hedge accounting.

The following table summarizes the fair value and balance sheet classification of derivative instruments as of September 30, 2015 and December 31, 2014. The notional amount of the contract is not recorded on the consolidated balance sheets, but is used as the basis for determining the amount of interest payments to be exchanged between the counterparties. If a counterparty fails to perform, the Company’s counterparty credit risk is equal to the amount reported as a derivative asset.

Notional Amounts and Fair Values of Derivative Instruments

	September 30, 2015						December 31, 2014
(in millions) (1)	Notional Amount		Derivative Assets		Derivative Liabilities		Notional Amount		Derivative Assets		Derivative Liabilities
Derivatives not designated as hedging instruments
Interest rate contracts:
Swaps	$	3,556.1	$	71.5	$	73.0	$	3,094.5	$	44.7	$	45.2
Interest-rate caps, floors and collars	465.6		0.2		0.2		437.3		0.8		0.8
Total interest-rate contracts	4,021.7		71.7		73.2		3,531.8		45.5		46.0
Option contracts	—		—		—		1.9		0.4		—
Foreign exchange contracts:
Spot and forward contracts	815.9		8.5		8.8		802.7		6.1		6.6
Options purchased	—		—		—		3.0		0.1		0.1
Options written	—		—		—		3.0		0.2		0.2
Total foreign exchange contracts	815.9		8.5		8.8		808.7		6.4		6.9
Equity warrants	5.5		2.2		—		2.3		0.9		—
Total derivatives not designated as hedging instruments	$	4,843.1	$	82.4	$	82.0	$	4,344.7	$	53.2	$	52.9

(1)The Company offsets mark-to-market adjustments, interest receivable and interest payable on interest-rate swaps that are executed with the same counterparty under a master netting agreement, and reports the net balance in other assets or other liabilities in the consolidated balance sheets. For purposes of this disclosure, mark-to-market adjustments, interest receivable and interest payable are presented on a gross basis.

42

Note 11. Derivative Instruments (Continued)

Derivatives Designated as Hedging Instruments

The Company had no hedging instruments as of September 30, 2015 and December 31, 2014.

Derivatives Not Designated as Hedging Instruments

Derivative contracts not designated as hedges are composed primarily of interest-rate contracts with certain commercial clients that are largely offset by paired trades with unrelated bank counterparties. The Company also enters into foreign exchange contracts with its clients and counterparty banks primarily for the purpose of offsetting or hedging the clients’ transaction and economic exposures arising out of commercial transactions. The Company also obtains equity warrants in association with certain lending transactions. Derivative contracts not designated as hedges are carried at fair value each reporting period with changes in fair value recorded as a part of Noninterest income in the consolidated statements of income.

The table below provides the amount of gains and losses on these derivative contracts for the three and nine months ended September 30, 2015 and 2014:

(in millions) Derivatives Not Designated as	Location in Consolidated	For the three months ended September 30,					For the nine months ended September 30,
Hedging Instruments	Statements of Income	2015			2014		2015			2014
Interest-rate contracts	Other noninterest income	$	(1.3	)	$	—	$	(0.9	)	$	(1.0	)
Option contracts	Other noninterest income	—			0.1		(0.1		)	0.1
Foreign exchange contracts (1)	International services income	8.3			8.7		24.1			24.2
Equity warrants	Other noninterest income	0.2			—		0.3			0.1
Total income		$	7.2		$	8.8	$	23.4		$	23.4

(1)   Includes spread and translation gains (losses) on foreign exchange spot, forward and option contracts.

In the course of negotiating credit facilities, the Company may obtain rights to acquire stock in the form of equity warrants in primarily private, venture-backed technology companies. The warrants grant the Company an option to purchase a specific number of shares of stock in the underlying company at a specific price within a specific time period. The warrant agreements typically contain a net share settlement provision (cashless exercise) which gives the Company the option to receive at exercise a number of shares equal to the intrinsic value of the warrant divided by the share price. Equity warrants are accounted for as derivatives under ASC Topic 815, Derivatives and Hedging, and are recorded as derivative assets at their estimated fair value on the grant date. The warrant portfolio is reviewed quarterly for changes in fair value. Subsequent changes in the fair value of warrants are recognized in Other noninterest income in the consolidated statements of income. If a warrant is exercised or paid out for cash, the gain is recorded in Other noninterest income in the consolidated statements of income.

Credit Risk Exposure and Collateral

The Company’s swap agreements require the deposit of cash or marketable debt securities as collateral based on certain risk thresholds. These requirements apply individually to the Corporation and to the Bank. Additionally, certain of the Company’s swap contracts contain security agreements that include credit-risk-related contingent features. Under these agreements, the collateral requirements are based on the Company’s credit rating from the major credit rating agencies. The amount of collateral required may vary by counterparty based on a range of credit ratings that correspond with exposure thresholds established in the derivative agreements. If the credit ratings on the Company’s debt were to fall below the level associated with a particular exposure threshold and the derivatives with a counterparty are in a net liability position that exceeds that threshold, the counterparty could request immediate payment or delivery of collateral for the difference between the net liability amount and the exposure threshold. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a net liability position on September 30, 2015 was $22.0 million. The Company delivered collateral in the form of securities valued at $11.1 million on swap agreements that had credit-risk-related contingent features and were in a net liability position at September 30, 2015.

43

Note 11. Derivative Instruments (Continued)

The Company’s interest-rate swaps had no credit risk exposure at September 30, 2015 and December 31, 2014, respectively. The credit exposure represents the cost to replace, on a present value basis and at current market rates, all contracts by trading counterparty having an aggregate positive market value, net of margin collateral received. The Company enters into master netting agreements with swap counterparties to mitigate credit risk. Under these agreements, the net amount due from or payable to each counterparty is settled on the contract payment date. No collateral had been received from swap counterparties at September 30, 2015 and December 31, 2014. The Company delivered collateral in the form of securities valued at $5.6 million and cash totaling $66.0 million on swap agreements that did not have credit-risk-related contingent features at September 30, 2015.

At September 30, 2015, the Company had delivered cash collateral on foreign exchange contracts totaling $1.1 million and received cash collateral on foreign exchange contracts totaling $1.0 million.

See Note 12, Balance Sheet Offsetting, of the Notes to the Unaudited Consolidated Financial Statements for additional information about the Company’s derivative instruments subject to master netting agreements.

Note 12. Balance Sheet Offsetting

Assets and liabilities relating to certain financial instruments, including derivatives, securities purchased under resale agreements (“reverse repurchase agreements”) and securities sold under repurchase agreements (“repurchase agreements”), may be eligible for offset in the consolidated balance sheet as permitted under accounting guidance. The Company is party to transactions involving derivative instruments that are subject to enforceable master netting arrangements or similar agreements. Under these agreements, the Company may have the right to net settle multiple contracts with the same counterparty. Certain derivative transactions may require the Company to receive or pledge marketable debt securities as collateral based on certain risk thresholds. The Company also enters into reverse repurchase agreements and collateral swap agreements. Under reverse repurchase agreements, the Company has the right to claim securities collateral if the counterparty fails to perform. Collateral swap agreements involve the exchange of securities collateral under simultaneous repurchase and reverse repurchase agreements with the same bank counterparty. These agreements have the same principal amounts, inception dates and maturity dates, and have been offset against each other in the balance sheet as permitted under the netting provisions of ASC Topic 210-20-45, Balance Sheet — Offsetting. Securities swaps totaled $500.0 million at September 30, 2015. At September 30, 2015, the Company had delivered collateral consisting of agency mortgage-backed securities with a fair value of approximately $534.2 million on the repurchase agreement and accepted collateral consisting of corporate and municipal bonds with a fair value of approximately $521.0 million on the reverse repurchase agreement. Securities that have been pledged by counterparties as collateral are not recorded in the Company’s consolidated balance sheet unless the counterparty defaults. Securities that have been pledged by the Company to counterparties continue to be reported in the Company’s consolidated balance sheet unless the Company defaults.

The Company also offers various derivative products to clients and enters into derivative transactions in due course. These derivative contracts are offset by paired trades with unrelated bank counterparties. Certain derivative transactions with clients are not subject to master netting arrangements and have been excluded from the balance sheet offsetting tables below. The following tables provide information about financial instruments that are eligible for offset at September 30, 2015 and December 31, 2014:

	Gross		Gross			Net Amount Presented		Gross Amounts Not Offset in the Balance Sheet
(in thousands)	Amount Recognized		Amount Offset			in the Balance Sheet		Securities Collateral			Cash Collateral			Net Amount
September 30, 2015
Financial assets:
Reverse repurchase agreements	$	700,555	$	(500,253	)	$	200,302	$	(200,000	)	$	—		$	302
Derivatives not designated as hedging instruments	8,661		(207		)	8,454		—			—			8,454
Total financial assets	$	709,216	$	(500,460	)	$	208,756	$	(200,000	)	$	—		$	8,756
Financial liabilities:
Repurchase agreements	$	500,253	$	(500,253	)	$	—	$	—		$	—		$	—
Derivatives not designated as hedging instruments	81,776		(207		)	81,569		(16,697		)	(57,162		)	7,710
Total financial liabilities	$	582,029	$	(500,460	)	$	81,569	$	(16,697	)	$	(57,162	)	$	7,710

44

Note 12. Balance Sheet Offsetting (Continued)

	Gross		Gross			Net Amount Presented		Gross Amounts Not Offset in the Balance Sheet
(in thousands)	Amount Recognized		Amount Offset			in the Balance Sheet		Securities Collateral			Cash Collateral			Net Amount
December 31, 2014
Financial assets:
Reverse repurchase agreements	$	700,149	$	(500,041	)	$	200,108	$	(200,000	)	$	—		$	108
Derivatives not designated as hedging instruments	7,669		(1,562		)	6,107		—			—			6,107
Total financial assets	$	707,818	$	(501,603	)	$	206,215	$	(200,000	)	$	—		$	6,215
Financial liabilities:
Repurchase agreements	$	500,041	$	(500,041	)	$	—	$	—		$	—		$	—
Derivatives not designated as hedging instruments	51,125		(1,562		)	49,563		(14,654		)	(28,046		)	6,863
Total financial liabilities	$	551,166	$	(501,603	)	$	49,563	$	(14,654	)	$	(28,046	)	$	6,863

Note 13. Income Taxes

The Company recognized income tax expense of $32.2 million and $100.5 million for the three and nine months ended September 30, 2015, respectively. The Company recognized income tax expense of $37.5 million and $103.6 million for the same periods in 2014.

The Company recognizes accrued interest and penalties relating to uncertain tax positions as an income tax provision expense. The Company recognized a benefit on accrued interest and penalties of $0.3 million for both the nine months ended September 30, 2015 and 2014. The Company had approximately $2.2 million and $2.5 million of accrued interest and penalties as of September 30, 2015 and December 31, 2014, respectively.

The Company and its subsidiaries file federal and various state income tax returns. The Company is currently being audited by the Internal Revenue Service (“IRS”) for the tax year 2014 and 2015. The Company is also under audit with the California Franchise Tax Board for the tax years 2005 to 2007. The Company has recorded a $1.1 million tax benefit in the current quarter in connection with the pending completion of the Franchise Tax Board audit.

From time to time, there may be differences in opinion with respect to the tax treatment of certain transactions. If a tax position which was previously recognized on the consolidated financial statements is no longer more likely than not to be sustained upon a challenge from the taxing authorities, the tax benefit from the tax position will be derecognized. The Company did not have any material tax positions for which previously recognized benefits were derecognized during the nine-month period ended September 30, 2015.

Prior period income tax expense has been adjusted to reflect the adoption of ASU 2014-01 on January 1, 2015. See Note 1, Summary of Significant Accounting Policies, for further discussion of ASU 2014-01.

Note 14. Employee Benefit Plans

Defined Contribution Plan

The Company has a profit-sharing retirement plan with an Internal Revenue Code Section 401(k) feature covering eligible employees. Employer contributions are made annually into a trust fund and are allocated to participants based on their salaries. The profit sharing contribution requirement is based on a percentage of annual operating income subject to a percentage of salary cap. Eligible employees may contribute up to 50 percent of their salary to the 401(k) plan, but not more than the maximum allowed under IRS regulations. The Company matches 50 percent of the first 6 percent of covered compensation. The Company recorded total profit sharing and matching contribution expense of $6.4 million and $18.7 million for the three and nine months ended September 30, 2015, respectively. Profit sharing and matching contribution expense was $6.1 million and $16.8 million for the same periods in 2014, respectively.

45

Note 14. Employee Benefit Plans (Continued)

Deferred Compensation Plan

The Company offers a deferred compensation plan for eligible employees and non-employee directors. Participants under the employee plan may make an annual irrevocable election to defer a portion of base salary and up to 100 percent of commission and incentive compensation while employed with the Company. Participants under the non-employee director plan also may make an annual irrevocable election to defer all or part of annual retainers, annual awards, committee chair retainers and meeting fees (collectively, “directors’ fees”) until board service with the Company ceases. The deferred compensation plans are nonqualified plans under IRS regulations. Deferrals are made on a pretax basis and are allocated among the investment crediting options available under the plans as directed by the plan participants. The Company informally funds plan benefits through the purchase of life insurance policies which are recorded in Other assets on the consolidated balance sheets. Participant deferrals are recorded in Other liabilities on the consolidated balance sheets. Employee salaries and non-employee directors’ fees deferred under the plan are charged to Salaries and employee benefits and Other operating expense, respectively, on the consolidated statements of income. Earnings on plan assets, net of benefits payable to plan participants, are reported in Salaries and employee benefits on the consolidated statements of income. The Company recorded net expenses of $37 thousand and $0.4 million related to the deferred compensation plan for the three and nine months ended September 30, 2015. The Company recorded net expenses of $0.1 million and $0.6 million for the same periods in 2014, respectively.

Note 15. Commitments and Contingencies

In the normal course of business, the Company issues financial guarantees in the form of letters of credit. Standby letters of credit are commitments issued by the Company to guarantee the obligations of its client to beneficiaries. Commercial letters of credit are issued on behalf of clients to ensure payment in connection with trade transactions. Exposure to credit loss in the event of nonperformance by the other party to the letters of credit is represented by the contractual notional amount. At September 30, 2015, the Company had $679.6 million outstanding in letters of credit, of which $567.6 million relate to standby letters of credit and $112.0 million relate to commercial letters of credit. The Company had $718.0 million outstanding in letters of credit at December 31, 2014, of which $607.6 million relate to standby letters of credit and $110.4 million relate to commercial letters of credit.

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

The Company entered into contingent consideration arrangements associated with its acquisition of Rochdale and the sale of its retirement services recordkeeping business. Contingent consideration represents additional purchase price consideration to be transferred from the acquirer to the seller if certain future events or conditions are met. See Note 2, Fair Value Measurements, for additional information about the contingent consideration asset and liability.

Note 16. Variable Interest Entities

The Company holds ownership interests in certain special-purpose entities formed to provide affordable housing. The Company evaluates its interest in these entities to determine whether they meet the definition of a VIE and whether the Company is required to consolidate these entities. The Company is not the primary beneficiary of the affordable housing VIEs in which it holds interests and is therefore not required to consolidate these entities.

The investment in these entities is initially recorded at cost, which approximates the maximum exposure to loss as a result of the Company’s involvement with these unconsolidated entities. Subsequently, the carrying value is amortized over the stream of available tax credits and benefits. The Company expects to recover its investments over time, primarily through realization of federal low-income housing tax credits. The balance of the investments in these entities was $222.9 million at September 30, 2015 and $186.4 million at December 31, 2014, and is included in Affordable housing investments in the consolidated balance sheets. Unfunded commitments for affordable housing investments were $93.8 million at September 30, 2015. These unfunded commitments are recorded in Other liabilities in the consolidated balance sheets.

46

Note 16. Variable Interest Entities (Continued)

The Company also has ownership interests in several private equity and alternative investment funds that are VIEs. The Company is not a primary beneficiary and, therefore, is not required to consolidate these VIEs. The investment in these entities is carried at cost and net of impairments, which approximates the maximum exposure to loss as a result of the Company’s involvement with these entities. The Company expects to recover its investments over time, primarily through the allocation of fund income, gains or losses on the sale of fund assets, dividends or interest income. The balance in these entities was $24.1 million and $29.2 million at September 30, 2015 and December 31, 2014, respectively, and is included in Other assets in the consolidated balance sheets. Income associated with these investments is reported in Other noninterest income in the consolidated statements of income.

Note 17. Noncontrolling Interest

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

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

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

As of September 30, 2015, affiliate noncontrolling owners held equity interests with an estimated fair value of $32.8 million. This estimate reflects the maximum obligation to purchase equity interests in the affiliates. The events which would require the Company to purchase the equity interests may occur in the near term or over a longer period of time. The terms of the put provisions vary by agreement, but the value of the put is at the approximate fair value of the interests. The parent company carries key man life insurance policies to fund a portion of these conditional purchase obligations in the event of the death of certain key holders.

The following is a summary of activity for redeemable noncontrolling interest for the nine months ended September 30, 2015 and 2014:

	For the nine months ended September 30,
(in thousands)	2015			2014
Balance, beginning of period	$	39,978		$	39,768
Net income	954			2,056
Distributions to redeemable noncontrolling interest	(2,430		)	(2,366		)
Additions and redemptions, net	(6,043		)	(403		)
Adjustments to fair value	388			8,167
Balance, end of period	$	32,847		$	47,222

47

Note 18. Segment Results

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

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

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, retirement, 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 City National Rochdale Funds. Both the asset management affiliates and the Bank’s Wealth Management division provide proprietary and nonproprietary products and offer a full spectrum of investment solutions in multiple asset classes and investment styles, including fixed-income instruments, mutual funds, domestic and international equities, and alternative investments such as hedge funds. This segment serves clients nationwide.

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

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

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

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

48

Note 18. Segment Results (Continued)

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

	For the three months ended September 30, 2015
	Commercial and			Wealth						Consolidated
(in thousands)	Private Banking			Management			Other			Company
Earnings Summary:
Net interest income	$	226,171		$	592		$	5,494		$	232,257
(Reversal of) provision for credit losses on loans and leases, excluding acquired impaired loans	(6,000		)	—			—			(6,000		)
Provision for losses on acquired impaired loans	1,148			—			—			1,148
Noninterest income	51,675			70,127			(16,931		)	104,871
Depreciation and amortization	2,482			1,839			6,398			10,719
Noninterest expense	188,367			59,872			(20,915		)	227,324
Income before income taxes	91,849			9,008			3,080			103,937
Provision for income taxes	28,440			2,814			954			32,208
Net income	63,409			6,194			2,126			71,729
Less: Net loss attributable to noncontrolling interest	—			(79		)	—			(79		)
Net income attributable to City National Corporation	$	63,409		$	6,273		$	2,126		$	71,808
Selected Average Balances:
Loans and leases, excluding acquired impaired loans	$	21,913,554		$	—		$	56,038		$	21,969,592
Acquired impaired loans	420,308			—			—			420,308
Total assets	22,390,469			730,148			11,330,543			34,451,160
Deposits	29,953,606			98,004			54,447			30,106,057
Goodwill	393,176			244,742			—			637,918
Customer-relationship intangibles, net	1,315			30,399			—			31,714

	For the three months ended September 30, 2014
	Commercial and			Wealth					Consolidated
(in thousands)	Private Banking			Management		Other			Company
Earnings Summary:
Net interest income	$	204,803		$	452	$	10,521		$	215,776
(Reversal of) provision for credit losses on loans and leases, excluding acquired impaired loans	(8,000		)	—		—			(8,000		)
Provision for losses on acquired impaired loans	589			—		—			589
Noninterest income	50,906			69,289		(12,278		)	107,917
Depreciation and amortization	2,786			1,797		5,119			9,702
Noninterest expense	175,844			57,237		(19,869		)	213,212
Income before income taxes	84,490			10,707		12,993			108,190
Provision for income taxes	29,478			3,441		4,533			37,452
Net income	55,012			7,266		8,460			70,738
Less: Net income attributable to noncontrolling interest	—			847		—			847
Net income attributable to City National Corporation	$	55,012		$	6,419	$	8,460		$	69,891
Selected Average Balances:
Loans and leases, excluding acquired impaired loans	$	18,777,758		$	—	$	60,002		$	18,837,760
Acquired impaired loans	580,200			—		—			580,200
Total assets	19,482,692			738,004		10,675,661			30,896,357
Deposits	26,481,108			71,595		277,930			26,830,633
Goodwill	393,176			249,079		—			642,255
Customer-relationship intangibles, net	2,335			34,689		—			37,024

49

Note 18. Segment Results (Continued)

	For the nine months ended September 30, 2015
	Commercial and		Wealth					Consolidated
(in thousands)	Private Banking		Management		Other			Company
Earnings Summary:
Net interest income	$	662,184	$	2,049	$	21,114		$	685,347
Provision for credit losses on loans and leases, excluding acquired impaired loans	4,000		—		—			4,000
Provision for losses on acquired impaired loans	2,736		—		—			2,736
Noninterest income	158,718		215,544		(45,412		)	328,850
Depreciation and amortization	7,688		5,622		24,502			37,812
Noninterest expense	563,775		170,873		(68,315		)	666,333
Income before income taxes	242,703		41,098		19,515			303,316
Provision for income taxes	80,661		13,342		6,486			100,489
Net income	162,042		27,756		13,029			202,827
Less: Net income attributable to noncontrolling interest	—		954		—			954
Net income attributable to City National Corporation	$	162,042	$	26,802	$	13,029		$	201,873
Selected Average Balances:
Loans and leases, excluding acquired impaired loans	$	21,166,866	$	—	$	57,460		$	21,224,326
Acquired impaired loans	455,786		—		—			455,786
Total assets	21,704,604		738,981		10,761,541			33,205,126
Deposits	28,654,702		94,703		104,932			28,854,337
Goodwill	393,176		243,484		—			636,660
Customer-relationship intangibles, net	1,460		31,458		—			32,918

	For the nine months ended September 30, 2014
	Commercial and			Wealth					Consolidated
(in thousands)	Private Banking			Management		Other			Company
Earnings Summary:
Net interest income	$	602,879		$	1,256	$	30,541		$	634,676
(Reversal of) provision for credit losses on loans and leases, excluding acquired impaired loans	(9,000		)	—		—			(9,000		)
Provision for losses on acquired impaired loans	3,783			—		—			3,783
Noninterest income	135,498			201,418		(26,652		)	310,264
Depreciation and amortization	8,381			5,310		14,665			28,356
Noninterest expense	517,022			166,278		(56,308		)	626,992
Income before income taxes	218,191			31,086		45,532			294,809
Provision for income taxes	77,192			10,270		16,109			103,571
Net income	140,999			20,816		29,423			191,238
Less: Net income attributable to noncontrolling interest	—			2,056		—			2,056
Net income attributable to City National Corporation	$	140,999		$	18,760	$	29,423		$	189,182
Selected Average Balances:
Loans and leases, excluding acquired impaired loans	$	17,993,033		$	—	$	57,583		$	18,050,616
Acquired impaired loans	639,592			—		—			639,592
Total assets	18,814,041			696,524		10,586,949			30,097,514
Deposits	25,710,863			77,657		254,929			26,043,449
Goodwill	393,176			249,322		—			642,498
Customer-relationship intangibles, net	2,717			35,788		—			38,505

50

Note 19. Subsequent Event

On January 22, 2015, the Corporation entered into an Agreement and Plan of Merger with Royal Bank of Canada, a Canadian chartered bank (“Royal Bank of Canada”) and RBC USA Holdco Corporation, a Delaware corporation and wholly owned subsidiary of Royal Bank of Canada (“Holdco”), pursuant to which the Corporation will merge with and into Holdco with Holdco surviving the merger as a wholly owned subsidiary of Royal Bank of Canada. On October 7, 2015, the Company and Royal Bank of Canada announced that they had received approval from both the Board of Governors of the Federal Reserve System and the Office of the Superintendent of Financial Institutions in Canada to complete the merger of the two companies. The merger is expected to close on November 2, 2015, subject to the satisfaction of customary closing conditions.

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

CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS

OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

We have made forward-looking statements in this document about the Company, for which the Company claims the protection of the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are based on management’s knowledge and belief as of today and include information concerning the Company’s possible or assumed future financial condition, and its results of operations, business and earnings outlook. These forward-looking statements are subject to risks and uncertainties. A number of factors, many of which are beyond the Company’s ability to control or predict, could cause future results to differ materially from those contemplated by such forward-looking statements. These factors include: (1) the possibility that the merger does not close when expected or at all because conditions to the closing are not satisfied on a timely basis or at all, or that we experience difficulties in employee retention as a result of the announcement and pendency of the proposed merger; or that clients, distributors, suppliers and competitors seek to change their existing business relationships with us as a result of the announcement of the proposed merger, any of which may have a negative impact on our business or operations; (2) changes in general economic, political, or industry conditions and the related credit and market conditions and the impact they have on the Company and its clients, including changes in consumer spending, borrowing and savings habits; (3) the impact on financial markets and the economy of the level of U.S. and European debt; (4) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System; (5) limited economic growth and elevated levels of unemployment; (6) the effect of the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations to be promulgated by supervisory and oversight agencies implementing the new legislation, taking into account that the precise timing, extent and nature of such rules and regulations and the impact on the Company is uncertain; (7) significant changes in applicable laws and regulations, including those concerning taxes, banking and securities; (8) the impact of cyber security attacks or other disruptions to the Company’s information systems and any resulting compromise of data or disruption in service; (9) changes in the level of nonperforming assets, charge-offs, other real estate owned and provision expense; (10) incorrect assumptions in the value of the loans acquired in FDIC-assisted acquisitions resulting in greater than anticipated losses in the acquired loan portfolios exceeding the losses covered by the loss-sharing agreements with the FDIC; (11) changes in inflation, interest rates, and market liquidity which may impact interest margins and impact funding sources; (12) the Company’s ability to attract new employees and retain and motivate existing employees; (13) increased competition in the Company’s markets and our ability to increase market share and control expenses; (14) changes in the financial performance and/or condition of the Company’s clients, or changes in the performance or creditworthiness of our clients’ suppliers or other counterparties, which could lead to decreased loan utilization rates, delinquencies, or defaults and could negatively affect our clients’ ability to meet certain credit obligations; (15) a substantial and permanent loss of either client accounts and/or assets under management at the Company’s investment advisory affiliates or its wealth management division; (16) soundness of other financial institutions which could adversely affect the Company; (17) protracted labor disputes in the Company’s markets; (18) the impact of natural disasters, terrorist activities or international hostilities on the operations of our business or the value of collateral; (19) the effect of acquisitions and integration of acquired businesses and de novo branching efforts; (20) changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies; and (21) the success of the Company at managing the risks involved in the foregoing.

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

For a more complete discussion of these risks and uncertainties, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 and particularly, Item 1A, titled “Risk Factors.”

52

CITY NATIONAL CORPORATION

FINANCIAL HIGHLIGHTS

										Percent change
	At or for the three months ended									September 30, 2015 from
	September 30,			June 30,			September 30,			June 30,		September 30,
(in thousands, except per share amounts) (1)	2015			2015			2014			2015		2014
	(Unaudited)			(Unaudited)			(Unaudited)
For The Quarter
Total revenue	$	337,128		$	349,414		$	323,693		(4	)%	4	%
Net income attributable to City National Corporation	71,808			68,499			69,891			5		3
Net income available to common shareholders	67,715			64,405			65,798			5		3
Net income per common share, basic	1.20			1.15			1.18			4		2
Net income per common share, diluted	1.18			1.13			1.17			4		1
Dividends per common share	0.70			0.35			0.33			100		112
At Quarter End
Assets	$	35,575,724		$	33,760,498		$	32,002,978		5		11
Securities	8,970,348			8,473,158			9,205,637			6		(3	)
Loans and leases, excluding acquired impaired loans	22,536,584			21,929,328			19,347,988			3		16
Acquired impaired loans (2)	399,527			434,033			552,715			(8	)	(28	)
Deposits	31,173,362			29,481,230			27,955,980			6		12
Common shareholders’ equity	2,843,705			2,804,532			2,619,191			1		9
Total shareholders’ equity	3,111,321			3,072,148			2,886,807			1		8
Book value per common share	51.34			50.67			47.90			1		7
Average Balances
Assets	$	34,451,160		$	32,880,515		$	30,896,357		5		12
Securities	8,564,871			8,480,316			8,944,280			1		(4	)
Loans and leases, excluding acquired impaired loans	21,969,592			21,281,468			18,837,760			3		17
Acquired impaired loans (2)	420,308			455,406			580,200			(8	)	(28	)
Deposits	30,106,057			28,623,323			26,830,633			5		12
Common shareholders’ equity	2,835,500			2,787,105			2,598,395			2		9
Total shareholders’ equity	3,103,117			3,054,721			2,866,011			2		8
Selected Ratios
Return on average assets (annualized)	0.83		%	0.84		%	0.90		%	(1	)	(8	)
Return on average common equity (annualized)	9.47			9.27			10.05			2		(6	)
Common equity tier 1 capital (3)	8.63			8.60			N/A			0		NM
Corporation’s tier 1 risk-based capital (3)	9.68			9.67			9.92			0		NM
Corporation’s total risk-based capital (3)	11.63			11.70			12.14			(1	)	NM
Corporation’s tier 1 leverage (3)	7.32			7.56			7.44			(3	)	NM
Period-end common equity to period-end assets	7.99			8.31			8.18			(4	)	(2	)
Period-end equity to period-end assets	8.75			9.10			9.02			(4	)	(3	)
Common dividend payout ratio	58.08			30.57			27.87			90		108
Net interest margin	2.92			3.16			3.03			(8	)	(4	)
Expense to revenue ratio (4)	68.69			64.63			66.84			6		3
Asset Quality Ratios (5)
Nonaccrual loans to total loans and leases	0.15		%	0.13		%	0.19		%	15		(21	)
Nonaccrual loans and OREO to total loans and leases and OREO	0.18			0.16			0.24			13		(25	)
Allowance for loan and lease losses to total
loans and leases	1.41			1.45			1.62			(3	)	(13	)
Allowance for loan and lease losses to nonaccrual loans	918.71			1,092.27			870.59			(16	)	6
Net recoveries (charge-offs) to average total loans and leases (annualized)	0.11			(0.01		)	0.22			1,200		(50	)
At Quarter End
Assets under management (6)	$	46,318,316		$	47,748,516		$	49,090,864		(3	)	(6	)
Assets under management or administration (6)	59,355,822			61,083,403			61,176,564			(3	)	(3	)

NM - Not meaningful

(1)Certain prior period amounts have been adjusted to reflect the adoption of Accounting Standards Update (“ASU”) 2014-01. See Note 1, Summary of Significant Accounting Policies, of the Notes to the Unaudited Consolidated Financial Statements for further discussion.

(2)Acquired impaired loans represent loans acquired in Federal Deposit Insurance Corporation (“FDIC”) assisted acquisitions that are accounted for under Accounting Standards Codification (“ASC”) Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (“ASC 310-30”).

(3)Risk-based capital ratios for 2015 were calculated under Basel III rules, which became effective for the Company on January 1, 2015. Ratios for 2014 were calculated under Basel I rules. See “Balance Sheet Analysis - Capital” included elsewhere in this report for further discussion.

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

(5)Excludes acquired impaired loans, as well as OREO covered under loss-sharing agreements with the FDIC.

(6)Excludes $25.99 billion, $32.75 billion, and $28.58 billion of assets under management for asset managers in which the Company held a noncontrolling ownership interest as of September 30, 2015, June 30, 2015, and September 30, 2014, respectively.

53

CRITICAL ACCOUNTING POLICIES

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

The Company’s critical accounting policies include those that address financial assets and liabilities reported at fair value, acquired impaired loans, allowance for loan and lease losses and reserve for off-balance sheet credit commitments, goodwill and other intangible assets, and income taxes. The Company has not made any significant changes in its critical accounting policies or its estimates and assumptions from those disclosed in its 2014 Annual Report other than the adoption of new accounting pronouncements and other authoritative guidance that became effective for the Company on or after January 1, 2015. Refer to Note 1, Summary of Significant Accounting Policies, of the Notes to the Unaudited Consolidated Financial Statements for further discussion. Management has applied its critical accounting policies and estimation methods consistently in all periods presented in these financial statements.

RECENT DEVELOPMENTS

On January 22, 2015, the Corporation entered into an Agreement and Plan of Merger with Royal Bank of Canada, a Canadian chartered bank (“Royal Bank of Canada” or “RBC”) and RBC USA Holdco Corporation, a Delaware corporation and wholly owned subsidiary of Royal Bank of Canada (“Holdco”), pursuant to which the Corporation will merge with and into Holdco with Holdco surviving the merger as a wholly owned subsidiary of Royal Bank of Canada. On October 7, 2015, the Company and Royal Bank of Canada announced that they had received approval from both the Board of Governors of the Federal Reserve System and the Office of the Superintendent of Financial Institutions in Canada to complete the merger of the two companies. The merger is expected to close on November 2, 2015, subject to the satisfaction of customary closing conditions.

HIGHLIGHTS

·Consolidated net income attributable to City National Corporation was $71.8 million for the third quarter of 2015, up 3 percent from $69.9 million in the year-earlier quarter and up 5 percent from $68.5 million for the second quarter of 2015. For the third quarter of 2015, consolidated net income available to common shareholders was $67.7 million, or $1.18 per diluted share. Net income available to common shareholders was $65.8 million, or $1.17 per diluted share, for the year-earlier quarter and $64.4 million, or $1.13 per diluted share, for the second quarter of 2015.

·Revenue, which consists of net interest income and noninterest income, was $337.1 million for the third quarter of 2015, up 4 percent from $323.7 million in the year-earlier quarter and down 4 percent from $349.4 million in the second quarter of 2015.

·Fully taxable-equivalent net interest income, including dividend income, amounted to $240.9 million for the third quarter of 2015, up 8 percent from $223.1 million for the third quarter of 2014 and down 2 percent from $245.8 million for the second quarter of 2015.

·Net interest margin for the third quarter of 2015 was 2.92 percent, down from 3.03 percent for the third quarter of 2014 and 3.16 percent for the second quarter of 2015. The decline from the year-earlier quarter was mainly attributable to lower yields on loans and lower income on acquired impaired loans, partially offset by a lower cost of interest-bearing liabilities. The decrease from the second quarter of 2015 was primarily due to lower net accelerated accretable yield recognition on acquired impaired loans that were paid off or fully charged off and a large interest recovery received during the prior quarter on a previously charged off loan.

·Noninterest income was $104.9 million in the third quarter of 2015, down 3 percent from the third quarter of 2014 and 7 percent lower from the second quarter of 2015. The decrease from prior quarters was primarily due to a net loss on disposal of assets in the current quarter compared to a net gain in the prior periods.

54

·Trust and investment fee income grew to $58.0 million in the third quarter of 2015, up 2 percent from the year-earlier quarter and down 1 percent from the second quarter of 2015. AUM totaled $46.32 billion as of September 30, 2015, down 6 percent from September 30, 2014 and down 3 percent from June 30, 2015. The increase in trust and investment fee income compared with the third quarter of 2014 was mainly due to growth in higher yielding AUM balances in the Bank’s core asset management business, which more than offset the impact of a decrease in AUM at a wealth management affiliate.

·Noninterest expense for the third quarter of 2015 was $238.0 million, up 7 percent from the third quarter of 2014 and up 3 percent from the second quarter of 2015. The increases from the prior periods reflect higher compensation costs, occupancy expense, and legal and professional fees.

·The base yield on the acquired impaired loan portfolio generated net interest income of $8.9 million in the third quarter of 2015, compared with $11.2 million for the year-earlier quarter and $9.4 million in the second quarter of 2015. Base yield is the yield on acquired impaired loans, excluding income from acquired impaired loans that were paid off or fully charged off. The Company recognizes other components of income and expense related to its FDIC-assisted acquired assets, including income from acquired impaired loans that were paid off or fully charged off, net impairment charges, and other income and expenses. These components fluctuate from period to period. When aggregated, the impact of these items to the income statement, excluding the base yield, was total net expense of $1.6 million for the third quarter of 2015, compared with net income of $1.4 million for the third quarter of 2014 and net income of $4.5 million for the second quarter of 2015. Refer to the “Net Interest Income,” “Provision for Credit Losses” and “FDIC-Assisted Acquired Assets” sections included elsewhere in this report for further discussion.

·The Company’s effective tax rate was 31.0 percent for the third quarter of 2015, compared with 34.6 percent for the year-earlier quarter and 35.3 percent for the second quarter of 2015. The effective tax rate reflects the Company’s adoption of a new accounting standard for low-income housing tax credits. Refer to Note 1, Summary of Significant Accounting Policies, of the Notes to the Unaudited Consolidated Financial Statements for further discussion.

·Total assets were $35.58 billion at September 30, 2015, up 11 percent from $32.00 billion at September 30, 2014 and up 5 percent from $33.76 billion at June 30, 2015. Total average assets were $34.45 billion for the third quarter of 2015, up 12 percent from $30.90 billion for the third quarter of 2014 and up 5 percent from $32.88 billion for the second quarter of 2015.

·Loans and leases, excluding acquired impaired loans, grew to $22.54 billion at September 30, 2015, an increase of 16 percent from $19.35 billion at September 30, 2014 and 3 percent from $21.93 billion at June 30, 2015. Average loan and lease balances, excluding acquired impaired loans, were $21.97 billion for the third quarter of 2015, up 17 percent from the same period of last year and 3 percent higher from the second quarter of 2015.

·Excluding acquired impaired loans, third quarter 2015 results included a $6.0 million reversal of provision for loan and lease losses. The Company recorded an $8.0 million reversal of provision for loan and lease losses in the third quarter of 2014 and a $10.0 million provision for loan and lease losses in the second quarter of 2015. The allowance for loan and lease losses, excluding acquired impaired loans, was $317.2 million at September 30, 2015, compared with $312.7 million at September 30, 2014 and $316.9 million at June 30, 2015. The Company remains appropriately reserved at 1.41 percent of total loans and leases, excluding acquired impaired loans, at September 30, 2015, compared with 1.62 percent at September 30, 2014 and 1.45 percent at June 30, 2015.

·In the third quarter of 2015, net loan recoveries totaled $6.2 million, or 0.11 percent of average total loans and leases, excluding acquired impaired loans, on an annualized basis, compared with net recoveries of $10.6 million, or 0.22 percent, in the year-earlier quarter, and net charge-offs of $0.6 million, or 0.01 percent, for the second quarter of 2015. Nonaccrual loans, excluding acquired impaired loans, totaled $34.5 million at September 30, 2015, down from $35.9 million at September 30, 2014 but up from $29.0 million at June 30, 2015. At September 30, 2015, nonperforming assets, excluding FDIC-assisted acquired assets, were $40.1 million, down from $46.0 million at September 30, 2014 and up from $35.0 million at June 30, 2015.

·Average securities for the third quarter of 2015 totaled $8.56 billion, down 4 percent from the third quarter of 2014 and 1 percent higher from the second quarter of 2015.

55

·Period-end deposits at September 30, 2015 were $31.17 billion, up 12 percent from $27.96 billion at September 30, 2014 and 6 percent higher from $29.48 billion at June 30, 2015. Deposit balances for the third quarter of 2015 averaged $30.11 billion, up 12 percent from $26.83 billion for the third quarter of 2014 and 5 percent higher from $28.62 billion for the second quarter of 2015. Average core deposits, which do not include certificates of deposits of $100,000 or more, were up 12 percent from the third quarter of 2014 and up 6 percent from the second quarter of 2015. Average core deposits represented 99 percent of total average deposits for the third quarter of 2015.

·The Company remains well capitalized. Under Basel III capital rules, which became effective for the Company on January 1, 2015, the Common equity tier 1 capital ratio was 8.62 percent at September 30, 2015, compared with 8.60 percent at June 30, 2015. Refer to the “Capital” section included elsewhere in this report for further discussion

RESULTS OF OPERATIONS

Net Interest Income

Net interest income is the difference between interest income (which includes yield-related loan fees) and interest expense. Net interest income on a fully taxable-equivalent basis expressed as a percentage of average total earning assets is referred to as the net interest margin, which represents the average net effective yield on earning assets. The following table presents the components of net interest income on a fully taxable-equivalent basis for the three and nine months ended September 30, 2015 and 2014:

56

Net Interest Income Summary

	For the three months ended							For the three months ended
	September 30, 2015							September 30, 2014
				Interest		Average					Interest		Average
	Average			income/		interest		Average			income/		interest
(in thousands) (1)	balance			expense (2)(3)		rate		balance			expense (2)(3)		rate
Assets
Interest-earning assets
Loans and leases
Commercial	$	10,610,399		$	89,415	3.34	%	$	9,042,215		$	75,424	3.31	%
Commercial real estate mortgages	3,907,256			33,344		3.39		3,480,293			30,878		3.52
Residential mortgages	5,590,853			45,890		3.28		4,905,417			42,383		3.46
Real estate construction	878,118			7,688		3.47		509,467			4,699		3.66
Home equity loans and lines of credit	783,462			6,836		3.46		728,404			6,489		3.53
Installment	199,504			2,140		4.26		171,964			1,910		4.41
Total loans and leases, excluding acquired impaired loans (4)	21,969,592			185,313		3.35		18,837,760			161,783		3.41
Acquired impaired loans	420,308			18,410		17.52		580,200			22,470		15.49
Total loans and leases	22,389,900			203,723		3.61		19,417,960			184,253		3.76
Due from banks - interest-bearing	1,408,663			931		0.26		559,476			363		0.26
Federal funds sold and securities purchased under resale agreements	295,652			1,203		1.61		246,658			1,721		2.77
Securities	8,564,871			44,788		2.09		8,944,280			47,553		2.13
Other interest-earning assets	57,333			1,105		7.64		71,305			1,076		5.99
Total interest-earning assets	32,716,419			251,750		3.05		29,239,679			234,966		3.19
Allowance for loan and lease losses	(329,638		)					(327,787		)
Cash and due from banks	188,876							167,581
Other non-earning assets	1,875,503							1,816,884
Total assets	$	34,451,160						$	30,896,357
Liabilities and Equity
Interest-bearing deposits
Interest checking accounts	$	2,574,672		$	305	0.05	%	$	2,396,304		$	328	0.05	%
Money market accounts	6,507,572			1,172		0.07		6,538,567			1,123		0.07
Savings deposits	495,783			71		0.06		463,584			70		0.06
Time deposits	579,606			329		0.23		602,491			512		0.34
Total interest-bearing deposits	10,157,633			1,877		0.07		10,000,946			2,033		0.08
Federal funds purchased and securities sold under repurchase agreements	—			—		—		543			—		0.08
Other borrowings	651,333			9,006		5.49		666,867			9,785		5.82
Total interest-bearing liabilities	10,808,966			10,883		0.40		10,668,356			11,818		0.44
Noninterest-bearing deposits	19,948,424							16,829,687
Other liabilities	590,653							532,303
Total equity	3,103,117							2,866,011
Total liabilities and equity	$	34,451,160						$	30,896,357
Net interest spread						2.65	%						2.75	%
Fully taxable-equivalent net interest and dividend income				$	240,867						$	223,148
Net interest margin						2.92	%						3.03	%
Less: Dividend income included in other income				1,105							1,076
Fully taxable-equivalent net interest income				$	239,762						$	222,072

(1)Certain prior period amounts have been adjusted to reflect the adoption of ASU 2014-01. See Note 1, Summary of Significant Accounting Policies, of the Notes to the Unaudited Consolidated Financial Statements for further discussion.

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

(3)Loan income includes loan fees of $8,492 and $6,979 for 2015 and 2014, respectively.

(4)Includes average nonaccrual loans of $32,023 and $39,743 for 2015 and 2014, respectively.

57

Net Interest Income Summary

	For the nine months ended							For the nine months ended
	September 30, 2015							September 30, 2014
				Interest		Average					Interest		Average
	Average			income/		interest		Average			income/		interest
(in thousands) (1)	balance			expense (2)(3)		rate		balance			expense (2)(3)		rate
Assets
Interest-earning assets
Loans and leases
Commercial	$	10,269,501		$	255,706	3.33	%	$	8,639,706		$	218,563	3.38	%
Commercial real estate mortgages	3,769,753			97,765		3.47		3,364,079			90,042		3.58
Residential mortgages	5,384,782			133,813		3.31		4,740,115			124,607		3.51
Real estate construction	819,084			22,109		3.61		435,172			12,084		3.71
Home equity loans and lines of credit	786,997			20,655		3.51		707,011			19,109		3.61
Installment	194,209			6,239		4.30		164,533			5,425		4.41
Total loans and leases, excluding acquired impaired loans (4)	21,224,326			536,287		3.38		18,050,616			469,830		3.48
Acquired impaired loans	455,786			62,223		18.20		639,592			75,383		15.71
Total loans and leases	21,680,112			598,510		3.69		18,690,208			545,213		3.90
Due from banks - interest-bearing	781,009			1,500		0.26		600,363			1,183		0.26
Federal funds sold and securities purchased under resale agreements	240,152			3,578		1.99		293,672			4,568		2.08
Securities	8,710,302			136,298		2.09		8,733,819			139,252		2.13
Other interest-earning assets	61,404			4,109		8.95		73,449			3,451		6.28
Total interest-earning assets	31,472,979			743,995		3.16		28,391,511			693,667		3.27
Allowance for loan and lease losses	(323,987		)					(326,333		)
Cash and due from banks	191,806							200,765
Other non-earning assets	1,864,328							1,831,571
Total assets	$	33,205,126						$	30,097,514
Liabilities and Equity
Interest-bearing deposits
Interest checking accounts	$	2,645,904		$	925	0.05	%	$	2,381,215		$	1,039	0.06	%
Money market accounts	6,280,337			3,311		0.07		6,507,891			3,365		0.07
Savings deposits	494,343			217		0.06		460,076			206		0.06
Time deposits	639,121			1,223		0.26		626,679			1,617		0.35
Total interest-bearing deposits	10,059,705			5,676		0.08		9,975,861			6,227		0.08
Federal funds purchased and securities sold under repurchase agreements	91,762			79		0.11		495			—		0.07
Other borrowings	643,878			26,807		5.57		714,042			32,101		6.01
Total interest-bearing liabilities	10,795,345			32,562		0.40		10,690,398			38,328		0.48
Noninterest-bearing deposits	18,794,632							16,067,588
Other liabilities	569,014							522,115
Total equity	3,046,135							2,817,413
Total liabilities and equity	$	33,205,126						$	30,097,514
Net interest spread						2.76	%						2.79	%
Fully taxable-equivalent net interest and dividend income				$	711,433						$	655,339
Net interest margin						3.02	%						3.09	%
Less: Dividend income included in other income				4,109							3,451
Fully taxable-equivalent net interest income				$	707,324						$	651,888

(1)Certain prior period amounts have been adjusted to reflect the adoption of ASU 2014-01. See Note 1, Summary of Significant Accounting Policies, of the Notes to the Unaudited Consolidated Financial Statements for further discussion.

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

(3)Loan income includes loan fees of $21,330 and $22,095 for 2015 and 2014, respectively.

(4)Includes average nonaccrual loans of $34,076 and $57,229 for 2015 and 2014, respectively.

Net interest income is impacted by the volume (changes in volume multiplied by prior rate), interest rate (changes in rate multiplied by prior volume) and mix of interest-earning assets and interest-bearing liabilities. The following table provides a breakdown of the changes in net interest income and dividend income on a fully taxable-equivalent basis due to volume and rate between the third quarter and first nine months of 2015 and 2014, as well as the third quarter and first nine months of 2014 and 2013.

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Changes in Net Interest Income

	For the three months ended September 30,									For the three months ended September 30,
	2015 vs 2014									2014 vs 2013
	Increase (decrease)						Net			Increase (decrease)						Net
	due to						increase			due to						increase
(in thousands)	Volume			Rate			(decrease)			Volume			Rate			(decrease)
Interest earned on:
Total loans and leases (1)	$	27,287		$	(7,817	)	$	19,470		$	26,377		$	(29,973	)	$	(3,596	)
Securities	(1,994		)	(771		)	(2,765		)	1,881			2,945			4,826
Due from banks - interest-bearing	561			7			568			(33		)	(7		)	(40		)
Federal funds sold and securities purchased under resale agreements	296			(814		)	(518		)	(216		)	374			158
Other interest-earning assets	(235		)	264			29			(259		)	101			(158		)
Total interest-earning assets	25,915			(9,131		)	16,784			27,750			(26,560		)	1,190
Interest paid on:
Interest checking deposits	23			(46		)	(23		)	17			(74		)	(57		)
Money market deposits	(5		)	54			49			67			(676		)	(609		)
Savings deposits	5			(4		)	1			9			(37		)	(28		)
Time deposits	(18		)	(165		)	(183		)	(146		)	(54		)	(200		)
Total borrowings	(232		)	(547		)	(779		)	(701		)	(409		)	(1,110		)
Total interest-bearing liabilities	(227		)	(708		)	(935		)	(754		)	(1,250		)	(2,004		)
	$	26,142		$	(8,423	)	$	17,719		$	28,504		$	(25,310	)	$	3,194

	For the nine months ended September 30,									For the nine months ended September 30,
	2015 vs 2014									2014 vs 2013
	Increase (decrease)						Net			Increase (decrease)						Net
	due to						increase			due to						increase
(in thousands)	Volume			Rate			(decrease)			Volume			Rate			(decrease)
Interest earned on:
Total loans and leases (1)	$	83,716		$	(30,419	)	$	53,297		$	72,320		$	(62,812	)	$	9,508
Securities	(374		)	(2,580		)	(2,954		)	(5,132		)	10,998			5,866
Due from banks - interest-bearing	348			(31		)	317			496			13			509
Federal funds sold and securities purchased under resale agreements	(804		)	(186		)	(990		)	906			(591		)	315
Other interest-earning assets	(633		)	1,291			658			(895		)	1,077			182
Total interest-earning assets	82,253			(31,925		)	50,328			67,695			(51,315		)	16,380
Interest paid on:
Interest checking deposits	108			(222		)	(114		)	79			(232		)	(153		)
Money market deposits	(121		)	67			(54		)	459			(2,069		)	(1,610		)
Savings deposits	14			(3		)	11			30			(135		)	(105		)
Time deposits	32			(426		)	(394		)	(530		)	(231		)	(761		)
Total borrowings	924			(6,139		)	(5,215		)	(22,345		)	20,677			(1,668		)
Total interest-bearing liabilities	957			(6,723		)	(5,766		)	(22,307		)	18,010			(4,297		)
	$	81,296		$	(25,202	)	$	56,094		$	90,002		$	(69,325	)	$	20,677

(1) Includes acquired impaired loans.

Net interest income was $232.3 million for the third quarter of 2015, a decrease of 2 percent from $236.5 million for the second quarter of 2015 and an increase of 8 percent from $215.8 million for the third quarter of 2014. The decrease in net interest income from the second quarter of 2015 was largely due to lower interest income from acquired impaired loans. The increase in net interest income compared with the year-earlier quarter was due to higher income on loans and leases, excluding acquired impaired loans and lower interest expense on borrowed funds, which was partially offset by decreases in interest income from acquired impaired loans and interest income on securities. Fully taxable-equivalent net interest income and dividend income was $240.9 million for the third quarter of 2015, compared with $245.8 million for the second quarter of 2015 and $223.1 million for the third quarter of 2014.

Interest income on total loans was $200.4 million for the third quarter of 2015, down 2 percent from the second quarter of 2015 and up 10 percent from the third quarter of 2014. The decrease in loan interest income from the prior quarter was

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primarily due to lower net accelerated accretable yield recognition on acquired impaired loans that were paid off or fully charged off, partially offset by the increase in volume of loans and leases, excluding acquired impaired loans. Compared with the year-earlier quarter, the increase in interest income was driven by growth in the loan portfolio, excluding acquired impaired loans, partially offset by a decrease in income from acquired impaired loans. Income from accelerated accretable yield recognition during the third quarter of 2015 was $9.5 million, compared with $16.2 million in the prior quarter and $11.3 million in the year-earlier quarter. Refer to “FDIC-Assisted Acquired Assets” included elsewhere in this report for further discussion of interest income on acquired impaired loans.

Average loans and leases, excluding acquired impaired loans, totaled $21.97 billion for the third quarter of 2015, an increase of 3 percent from $21.28 billion for the second quarter of 2015 and up 17 percent from $18.84 billion for the third quarter of 2014. Average commercial loans grew 3 percent and 17 percent from the second quarter of 2015 and third quarter of 2014, respectively. Average commercial real estate balances increased 3 percent from the prior quarter and 12 percent from the year-earlier quarter, while average residential mortgage loans were up 4 and 14 percent from the respective periods. Average acquired impaired loans decreased to $420.3 million for the third quarter of 2015 from $455.4 million for the second quarter of 2015 and $580.2 million for the year-ago quarter.

Interest income on securities was $40.6 million for the third quarter of 2015, a 1 percent decrease from $41.2 million for the second quarter of 2015 and a 7 percent decrease from $43.9 million for the third quarter of 2014. Average total securities were $8.56 billion for the third quarter of 2015, up 1 percent from $8.48 billion for the second quarter of 2015 and down 4 percent from $8.94 billion for the year-earlier quarter. The decrease in income from the second quarter of 2015 was due to prepayment premiums received during the prior quarter on accelerated paydowns. The decrease from the year-earlier quarter was largely due to lower average portfolio balances as cash flow from short-term investments was used to fund loan growth.

Total interest expense was $10.9 million for the third quarter of 2015, an increase of 1 percent from $10.8 million for the second quarter of 2015 and down 8 percent from $11.8 million for the third quarter of 2014. Interest expense on borrowings was $9.0 million for the third quarter of 2015, up 1 percent from $8.9 million for the second quarter of 2015 and down 8 percent from $9.8 million for the third quarter of 2014. The decrease in total interest expense from the year-earlier quarter was primarily due to the redemption of $105.0 million in subordinated notes during the third quarter of 2014.

Interest expense on deposits was $1.9 million for the third quarter and second quarter of 2015, down 8 percent from $2.0 million for the year-earlier quarter. The decrease in interest expense from the prior-year quarter was due to lower rates on time deposits, partially offset by higher average interest-bearing deposit balances. Average deposits were $30.11 billion for the third quarter of 2015, up 5 percent from $28.62 billion for the second quarter of 2015 and up 12 percent from $26.83 billion for the third quarter of 2014. Average interest-bearing deposits were $10.16 billion for the third quarter of 2015, up 2 percent from $9.96 billion for the second quarter of 2015 and $10.00 billion for the third quarter of 2014, respectively. Average noninterest-bearing deposits were $19.95 billion, up 7 percent from the second quarter of 2015 and up 19 percent from the year-earlier quarter.

Net interest margin was 2.92 percent for the third quarter of 2015, down from 3.16 percent for the second quarter of 2015 and 3.03 percent for the third quarter of 2014. The average yield on earning assets for the third quarter of 2015 was 3.05 percent, down 25 basis points from 3.30 percent for the second quarter of 2015 and down 14 basis points from 3.19 percent for the year-earlier quarter. The average cost of interest-bearing liabilities was 0.40 percent, down from 0.41 percent for the second quarter of 2015 and 0.44 percent for the third quarter of 2014. The decrease in the net interest margin from the prior quarter was primarily the result of lower net accelerated accretable yield recognition on acquired impaired loans that were paid off or fully charged off and a large interest recovery received during the prior quarter on a previously charged off loan. Compared with the year-earlier quarter, the decrease in the net interest margin was mainly attributable to lower yields on loans and lower income on acquired impaired loans, partially offset by a lower cost of interest-bearing liabilities.

Provision for Credit Losses

The Company accounts for the credit risk associated with lending activities through its allowance for loan and lease losses, reserve for off-balance sheet credit commitments and provision for credit losses. The provision for credit losses on loans and leases, excluding acquired impaired loans, is the expense recognized in the consolidated statements of income to adjust the allowance and the reserve for off-balance sheet credit commitments to the levels deemed appropriate by management, as determined through application of the Company’s allowance methodology procedures. See “Critical Accounting Policies— Allowance for Loan and Lease Losses and Reserve for Off-Balance Sheet Credit Commitments” in the Company’s Form 10-K for the year ended December 31, 2014.

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The Company recorded a $6.0 million reversal of provision for credit losses on loans and leases, excluding acquired impaired loans, in the three months ended September 30, 2015, and a provision for credit losses on loans and leases, excluding acquired impaired loans, of $4.0 million in the nine months ended September 30, 2015. The Company recorded reversals of provision for credit losses on loans and leases, excluding acquired impaired loans, of $8.0 million and $9.0 million in the three months and nine months ended September 30, 2014. The reversal of provision during the current quarter reflected loan loss recoveries and improving credit quality. The increase in provision for the first nine months of 2015 compared with the year-earlier period was largely due to loan growth. The provision reflects management’s continuing assessment of the credit quality of the Company’s loan portfolio, which is affected by a broad range of economic factors. Additional factors affecting the provision include net loan charge-offs or recoveries, nonaccrual loans, specific reserves, risk rating migration and changes in the portfolio size and composition. See “Balance Sheet Analysis—Allowance for Loan and Lease Losses and Reserve for Off-Balance Sheet Credit Commitments” included elsewhere in this report 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.

Loans acquired in FDIC-assisted acquisitions are accounted for as acquired impaired loans under ASC 310-30. The provision for losses on acquired impaired loans is the expense recognized in the consolidated statements of income related to impairment losses resulting from the Company’s quarterly review and update of cash flow projections on its acquired impaired loan portfolio. The Company recorded a $1.1 million provision for losses on acquired impaired loans during the third quarter of 2015, compared with a $1.1 million provision in the second quarter of 2015 and a $1.7 million provision during the third quarter of 2014. Refer to “FDIC-Assisted Acquired Assets” included elsewhere in this report for further discussion of the provision for losses on acquired impaired loans.

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

Refer to “Loans and Leases—Asset Quality” included elsewhere in this report for further discussion of credit quality.

Noninterest Income

Noninterest income was $104.9 million in the third quarter of 2015, down 7 percent from the second quarter of 2015 and down 3 percent from the third quarter of 2014. Noninterest income represented 31 percent of the Company’s revenue in the third quarter of 2015, compared with 32 percent in the second quarter of 2015 and 33 percent for the third quarter of 2014.

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

	For the three months ended
	September 30,			June 30,			September 30,
(in thousands)	2015			2015			2014
Trust and investment fees	$	57,978		$	58,487		$	56,834
Brokerage and mutual fund fees	11,735			11,424			11,021
Total wealth management fees	69,713			69,911			67,855
Cash management and deposit transaction charges	12,783			12,861			12,200
International services	11,686			11,774			12,233
FDIC loss sharing expense, net	(9,854		)	(10,808		)	(9,606		)
Other noninterest income	21,777			25,975			22,311
Total noninterest income before gain	106,105			109,713			104,993
(Loss) gain on disposal of assets	(1,264		)	1,538			2,985
Gain on sale of securities	30			1,924			14
Impairment loss on securities	—			(271		)	(75		)
Total noninterest income	$	104,871		$	112,904		$	107,917

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Wealth Management

The Company provides various trust, investment and wealth advisory services to its individual, institutional and business clients. The Company delivers these services through the Bank’s wealth management division as well as through its wealth management affiliates. Trust services are provided only by the Bank. Trust and investment fee revenue includes fees from trust, investment and asset management, and other wealth advisory services. The majority of these fees are based on the market value of client assets managed, advised, administered or held in custody. The remaining portion of these fees is based on the specific service provided, such as estate and financial planning services, or may be fixed fees. For those fees based on market valuations, the mix of assets held in client accounts, as well as the type of managed account, impacts how closely changes in trust and investment fee income correlate with changes in the financial markets. Changes in market valuations are reflected in fee income on a trailing day, month or quarter basis. Also included in total trust and investment fees is the Company’s portion of income from certain investments accounted for under the equity method.

Trust and investment fees were $58.0 million for the third quarter of 2015, a decrease of 1 percent from $58.5 million for the second quarter of 2015 and a 2 percent increase from $56.8 million for the third quarter of 2014. Trust and investment fee income for the current quarter increased compared with the year-earlier period despite lower AUM balances, as growth in higher yielding AUM balances in the Bank’s core asset management business more than offset the impact of a decrease in AUM at a wealth management affiliate. Brokerage and mutual fund fees were $11.7 million for the third quarter of 2015, an increase of 3 percent from $11.4 million for the second quarter of 2015 and a 6 percent increase from $11.0 million for the year-earlier quarter.

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

	September 30,				%		June 30,		%
(in millions)	2015		2014		Change		2015		Change
Assets Under Management	$	46,318	$	49,091	(6	)	$	47,749	(3	)
Assets Under Administration
Brokerage	6,132		5,674		8		6,310		(3	)
Custody and other fiduciary	6,906		6,412		8		7,024		(2	)
Subtotal	13,038		12,086		8		13,334		(2	)
Total assets under management or administration (1)	$	59,356	$	61,177	(3	)	$	61,083	(3	)

(1)Excludes $25.99 billion, $32.75 billion and $28.58 billion of AUM for asset managers in which the Company held a noncontrolling ownership interest as of September 30, 2015, June 30, 2015 and September 30, 2014, respectively.

AUM totaled $46.32 billion as of September 30, 2015, down 3 percent from the second quarter of 2015 and 6 percent from the year-earlier quarter. Assets under management or administration were $59.36 billion at September 30, 2015, down 3 percent from the second quarter of 2015 and year-earlier quarter. The decline in AUM compared with the prior quarter and year-earlier quarter was primarily attributable to a decrease in AUM at a wealth management affiliate and lower market valuations at September 30, 2015.

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

	% of Assets Under Management
Investment	September 30, 2015		June 30, 2015		September 30, 2014
Equities	47	%	49	%	47	%
U.S. fixed income	29		29		25
Cash and cash equivalents	17		14		18
Other (1)	7		8		10
	100	%	100	%	100	%

(1) Includes private equity and other alternative investments.

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Other Noninterest Income

Cash management and deposit transaction fees for the third quarter of 2015 were $12.8 million, down slightly from the second quarter of 2015, and up 5 percent from the third quarter of 2014.

International services income for the third quarter of 2015 was $11.7 million, down 1 percent from the second quarter of 2015, and down 5 percent from the year-earlier quarter. International services income is composed of foreign exchange fees, fees on commercial letters of credit and standby letters of credit, foreign collection fees, and gains and losses associated with fluctuations in foreign currency exchange rates. The decrease from the year-earlier quarter was due to lower client activity.

Net FDIC loss sharing expense was $9.9 million for the third quarter of 2015, compared with $10.8 million for the second quarter of 2015 and $9.6 million for the year-earlier quarter. See “FDIC-Assisted Acquired Assets” included elsewhere in this report for further discussion of FDIC loss sharing income and expense.

Net loss on disposal of assets was $1.3 million in the third quarter of 2015, compared with net gains of $1.5 million and $3.0 million in the second quarter of 2015 and third quarter of 2014, respectively. The decrease compared with the prior and year-earlier quarters was primarily due to losses on disposal of fixed assets in the third quarter of 2015 and lower gains on the sales of covered OREO. The amount for the third quarter of 2014 also includes a $1.4 million gain on the sale of the Company’s retirement services recordkeeping business.

The Company recognized net gains on sales of securities of $30 thousand during the third quarter of 2015, compared with net gains of $1.9 million in the second quarter of 2015 and $14 thousand for the third quarter of 2014. No impairment losses were recognized in earnings on securities-available-for sale in the third quarter of 2015. Impairment losses of $0.3 million and $0.1 million were recognized in earnings on securities available-for-sale in the second quarter of 2015 and third quarter of 2014, respectively. See “Balance Sheet Analysis—Securities” included elsewhere in this report for further discussion of impairment on securities available-for-sale.

Other income for the third quarter of 2015 was $21.8 million, down 16 percent from $26.0 million for the second quarter of 2015 and down 2 percent from $22.3 million for the third quarter of 2014. The decrease from the second quarter of 2015 was largely due to lower income on client swaps, lower lease residual income and lower gains recognized on the transfers of acquired impaired loans to OREO. The decrease from the year-earlier quarter was largely due to decreases in lease residual income and loan syndication fee income, partially offset by higher credit card fee income.

Noninterest Expense

Noninterest expense was $238.0 million for the third quarter of 2015, up 3 percent from $231.7 million for the second quarter of 2015 and up 7 percent from $222.9 million for the third quarter of 2014.

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

	For the three months ended
	September 30,		June 30,		September 30,
(in thousands) (1)	2015		2015		2014
Salaries and employee benefits	$	148,790	$	144,681	$	142,210
All other:
Net occupancy of premises	18,168		16,179		15,862
Legal and professional fees	18,105		17,348		14,350
Information services	11,658		10,648		10,260
Depreciation and amortization	9,478		9,508		8,276
Amortization of intangibles	1,241		1,226		1,426
Marketing and advertising	7,718		8,938		7,576
Office services and equipment	4,922		5,102		5,038
Other real estate owned	1,321		1,094		2,360
FDIC assessments	5,442		5,276		4,629
Other operating	11,200		11,660		10,927
Total all other	89,253		86,979		80,704
Total noninterest expense	$	238,043	$	231,660	$	222,914

(1)Certain prior period amounts have been adjusted to reflect the adoption of ASU 2014-01. See Note 1, Summary of Significant Accounting Policies, of the Notes to the Unaudited Consolidated Financial Statements for further discussion.

Salaries and employee benefits expense was $148.8 million for the third quarter of 2015, up 3 percent from $144.7 million for the second quarter of 2015 and up 5 percent from $142.2 million for the year-earlier quarter. Full-time equivalent staff was 3,684 at September 30, 2015, up from 3,651 at June 30, 2015 and 3,598 at September 30, 2014. The increase in salaries and benefits expense compared with the prior quarter reflects higher group insurance costs, higher salaries due to growth in staff count and higher incentive compensation. The increase in expense from the year-earlier quarter was largely due to higher incentive compensation and higher salaries due to the addition of staff.

Salaries and employee benefits expense for the third quarter of 2015 included $4.7 million of share-based compensation expense compared with $5.0 million for the second quarter of 2015 and $5.5 million for the year-earlier quarter. The decrease from the prior quarter was attributable to expense associated with cash-settled restricted stock units, which fluctuates based on the Company’s stock price. The Company’s average stock price decreased in the third quarter compared with the second quarter. The decrease from the year-earlier quarter was primarily attributable to the vesting of cash-settled restricted stock units in 2015. See Note 10, Share-Based Compensation, of the Notes to the Unaudited Consolidated Financial Statements for further discussion of share-based compensation.

The remaining noninterest expense categories totaled $89.3 million for the third quarter of 2015, up 3 percent from $87.0 million for the second quarter of 2015 and up 11 percent from $80.7 million for the third quarter of 2014. The increase in expense compared with the prior quarter was largely due to higher occupancy costs, higher information services costs due in part to an increase in software license fees, and higher legal and professional fees. These increases were partially offset by lower marketing and advertising costs in the current quarter. The increase in expense compared with the year-earlier quarter, is largely due to the same categories as above, along with higher depreciation and amortization expense and FDIC assessments.

Legal and professional fees were $18.1 million for the third quarter of 2015, up 4 percent from $17.3 million in the second quarter of 2015 and up 26 percent from $14.4 million in the year-earlier quarter. Professional services fees associated with escrow and title accounts increased in the third quarter compared with the prior quarter due to higher volume. The increase from the prior-year quarter was largely due to higher legal fees related to defense matters, higher personnel procurement expenses and higher sub-advisory fees. Legal and professional fees for the third quarter of 2015 included $0.7 million in merger-related expenses.

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Legal and professional fees associated with loans and OREO covered by the FDIC loss-sharing agreements were $1.3 million for the third quarter of 2015, a slight increase from the second quarter of 2015 and up from $0.6 million for the third quarter of 2014. Under the loss-sharing agreements, 80 percent of qualifying legal and professional fees associated with covered loans and OREO are reimbursable by the FDIC and reflected in FDIC loss sharing income (expense), net in the noninterest income section of the consolidated statements of income.

The following table provides a summary of OREO expense for non-covered and covered OREO. Qualifying covered OREO expenses are reimbursable by the FDIC at 80 percent.

	For the three months ended September 30,				For the nine months ended September 30,
(in thousands)	2015		2014		2015		2014
Non-covered OREO expense
Valuation write-downs	$	373	$	28	$	373	$	41
Holding costs and foreclosure expense	171		1,165		467		1,344
Total non-covered OREO expense	$	544	$	1,193	$	840	$	1,385
Covered OREO expense
Valuation write-downs	$	323	$	367	$	2,062	$	1,456
Holding costs and foreclosure expense	454		800		2,244		3,324
Total covered OREO expense	$	777	$	1,167	$	4,306	$	4,780
Total OREO expense	$	1,321	$	2,360	$	5,146	$	6,165

FDIC-Assisted Acquired Assets

The Company accounts for its acquired impaired loans under ASC 310-30. Loans are accounted for under ASC 310-30 when there is evidence of credit deterioration since origination and for which it is probable, at acquisition, that the Company would be unable to collect all contractually required payments. These loans were recorded at fair value at the time of acquisition. In connection with its FDIC-assisted acquisitions, the Company entered into loss-sharing agreements with the FDIC under which the FDIC will reimburse the Company for 80 percent of eligible losses with respect to acquired loans, OREO and unfunded loan commitments. The expected reimbursements under the loss-sharing agreements were recorded as an indemnification asset at their initial estimated fair value on the date of acquisition.

FDIC loss sharing under the commercial loss-sharing agreements for 1st Pacific Bank of California and Sun West Bank ended on June 30, 2015. As a result, losses recognized on assets subject to these agreements are no longer shared with the FDIC effective July 1, 2015. However, the Company is still subject to sharing 80 percent of its recoveries with the FDIC up to the last day of the quarter in which the commercial loss-sharing agreements terminate. See Note 5, Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments, of the Notes to the Unaudited Consolidated Financial Statements for further discussion of the termination dates. At September 30, 2015, $377.1 million of acquired impaired loans were covered under the FDIC loss-sharing agreements and $22.4 million were not covered.

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The following table summarizes the components of income and expense related to FDIC-assisted acquired assets for the three and nine months ended September 30, 2015 and 2014:

	For the three months ended September 30,						For the nine months ended September 30,
(in thousands)	2015			2014			2015			2014
Interest income on acquired impaired loans
Base yield	$	8,896		$	11,160		$	28,131		$	36,067
Income on loans paid-off or fully charged-off	9,514			11,310			34,092			39,316
Total interest income on acquired impaired loans	$	18,410		$	22,470		$	62,223		$	75,383
Provision for losses on acquired impaired loans
Provision for losses on acquired impaired loans	$	1,148		$	589		$	2,736		$	3,783
Noninterest income related to FDIC-assisted acquired assets
FDIC loss sharing expense, net
(Loss) gain on indemnification asset	$	(2,152	)	$	285		$	(6,289	)	$	(508	)
Indemnification asset amortization	(1,897		)	(2,780		)	(6,287		)	(9,264		)
Net FDIC reimbursement for OREO and loan expenses	1,923			1,210			5,362			5,023
Removal of indemnification asset for loans paid-off or fully charged-off	(1,937		)	(3,584		)	(5,231		)	(11,577		)
Removal of indemnification asset for unfunded loan commitments
and loans transferred to OREO	(198		)	(645		)	(1,104		)	(2,094		)
Removal of indemnification asset for OREO and net
reimbursement to FDIC for OREO sales	(60		)	(1,264		)	(1,208		)	(3,402		)
Loan recoveries shared with FDIC	(5,214		)	(2,383		)	(11,091		)	(16,471		)
Increase in FDIC clawback liability	(319		)	(445		)	(1,502		)	(2,557		)
Total FDIC loss sharing expense, net	(9,854		)	(9,606		)	(27,350		)	(40,850		)
Gain on disposal of assets
Net gain on sale of OREO	41			1,252			1,476			4,254
Other income
Net gain on transfers of loans to OREO	65			616			1,555			2,346
Amortization of fair value on acquired unfunded loan commitments	304			146			279			579
OREO income	32			375			289			1,099
Other	1,466			(255		)	1,260			132
Total other income	1,867			882			3,383			4,156
Total noninterest income related to FDIC-assisted acquired assets	$	(7,946	)	$	(7,472	)	$	(22,491	)	$	(32,440	)
Noninterest expense related to FDIC-assisted acquired assets (1)
Other real estate owned
Valuation write-downs	$	323		$	367		$	2,062		$	1,456
Holding costs and foreclosure expense	454			800			2,244			3,324
Total other real estate owned	777			1,167			4,306			4,780
Legal and professional fees	1,274			645			3,031			3,217
Other operating expense
Other expenses	5			4			19			28
Total noninterest expense related to FDIC-assisted acquired assets (2)	$	2,056		$	1,816		$	7,356		$	8,025

(1)OREO, legal and professional fees, and other expenses related to FDIC-assisted acquired assets must meet certain FDIC criteria in order for the expense amounts to be reimbursed. Certain amounts reflected in these categories may not be reimbursed by the FDIC.

(2)Excludes personnel and other corporate overhead expenses that the Company incurs to service FDIC-assisted acquired assets and costs associated with the branches acquired in FDIC-assisted acquisitions.

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Acquired Impaired Loan Base Yield and FDIC Indemnification Asset Amortization/Accretion

For acquired impaired loans, the excess of cash flows expected to be collected over the carrying value of the underlying acquired loans is referred to as “accretable yield.” The accretion of this amount is recognized in interest income over the expected life of the acquired impaired loans and is herein referred to as “base yield.” For the FDIC indemnification asset, the difference between the cash flows the Company expects to collect from the FDIC (“FDIC cash flows”) for covered assets and the carrying value of the indemnification asset is amortized or accreted into noninterest income up until the expiration date of the FDIC loss sharing. Both the base yield and the amortization or accretion of the indemnification asset are calculated using a level yield method that takes into consideration the remaining life of the acquired impaired loans and the terms of the FDIC loss-sharing agreements.

The quarterly review and update of cash flow projections (further discussed below) may adjust the rates used for loan accretion and indemnification asset amortization or accretion. As credit improves, expected loan cash flows will generally improve, resulting in higher accretable yield. Accordingly, as credit improves, expected FDIC cash flows will decrease, resulting in a larger difference between FDIC cash flows and indemnification asset carrying value. Credit improvements generally would result in higher rates of loan accretion and indemnification asset amortization.

The Company recorded base yield on acquired impaired loans of $8.9 million in the third quarter of 2015, compared with $9.4 million in the second quarter of 2015 and $11.2 million in the third quarter of 2014. The Company recognized indemnification asset amortization expense of $1.9 million in the third quarter of 2015, compared with $2.0 million and $2.8 million for the second quarter of 2015 and third quarter of 2014, respectively. The decrease in base yield and indemnification asset amortization expense from prior periods was primarily due to portfolio run-off. Average acquired impaired loans were $420.3 million during the third quarter of 2015, down from $455.4 million during the second quarter of 2015 and $580.2 million for the year-earlier quarter.

Quarterly Update of Cash Flow Projections

The Company reviews and updates cash flow projections on acquired impaired loans and the related FDIC loss-sharing agreements on a quarterly basis. These projections take into consideration such inputs as the contractual terms of the acquired impaired loans, the contractual terms of the FDIC loss-sharing agreements, credit assumptions and prepayment assumptions. The quarterly update of cash flow projections impacts the following balance sheet and income statement items:

Balance Sheet Line Item	Corresponding Income Statement Line Item
Acquired impaired loans	Base yield in interest income
Allowance for losses on acquired impaired loans	(Reversal of) provision for losses on acquired impaired loans
FDIC indemnification asset	FDIC loss sharing income or expense, net
	– Gain or loss on indemnification asset
	– Indemnification asset amortization or accretion (on a prospective basis)
FDIC clawback liability	FDIC loss sharing income or expense, net
	– Increase or decrease in FDIC clawback liability

Generally, for acquired impaired loans, decreases in estimated loan cash flows over those expected at the acquisition date and subsequent measurement periods are recognized by recording a provision for losses on acquired impaired loans. Decreases in estimated loan cash flows are typically accompanied by higher expected losses which would result in increases in FDIC cash flows for covered loans. Increases in expected FDIC cash flows are recognized as gains on the FDIC indemnification asset.

Increases in estimated loan cash flows over those expected at the acquisition date and subsequent measurement periods are recognized as interest income, prospectively, after previously recorded allowances are reversed. Increases in estimated loan cash flows are typically accompanied by lower expected losses which would result in decreases in FDIC cash flows. Decreases in expected FDIC cash flows are recognized as indemnification asset amortization expense on a prospective basis, after previously recorded gains on the indemnification asset have been reversed.

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The FDIC clawback liability represents contingent consideration expected to be paid to the FDIC. The Company is required to reimburse the FDIC if actual cumulative losses are lower than the adjusted intrinsic losses contractually set forth in the FDIC loss-sharing agreements. The total FDIC clawback liability may increase as actual and expected losses decrease. The liability to the FDIC may decrease if actual and expected losses grow. The Company measures the FDIC clawback liability at fair value.

The Company recorded a $1.1 million provision for losses on acquired impaired loans in the third quarter of 2015, compared with a provision for losses of $1.1 million in the second quarter of 2015 and a $0.6 million provision in the third quarter of 2014. Loss on indemnification asset was $2.2 million for the third quarter of 2015, compared with $2.8 million loss for the second quarter of 2015 and $0.3 million gain for the third quarter of 2014. Expense from the increase in FDIC clawback liability was $0.3 million, $0.3 million and $0.4 million for the third quarter of 2015, second quarter of 2015 and third quarter of 2014, respectively. The provision for losses on acquired impaired loans, the loss on indemnification asset and the change in FDIC clawback liability are the result of changes, both in amount and timing, in expected loan cash flows and FDIC cash flows due to actual loan performance and the Company’s revised loan loss and prepayment forecasts. During the third quarter of 2015, the overall expected lifetime cash flows of the acquired impaired loan portfolio improved, but the change in amount and timing of cash flows and change in the allowance due to loan removal, as well as the varying performance among different loan pools, resulted in the recognition of a net provision for losses on acquired impaired loans and a net loss on indemnification asset. The increase in the FDIC clawback liability was driven by an overall improvement in portfolio credit.

The revisions of the loss forecasts were based on the results of management’s review of market conditions, the credit quality of the outstanding acquired impaired loans and loan performance data since the acquisition of those loans. The Company will continue updating cash flow projections on acquired impaired loans and related FDIC loss-sharing agreements on a quarterly basis. Due to the uncertainty in the future performance of the acquired impaired loans, additional provision expense or provision reversal, gain or loss on indemnification asset, and changes in FDIC clawback liability may be recognized in future periods.

Removal of FDIC-Assisted Acquired Assets

A removal of an FDIC-assisted acquired asset occurs when a loan is paid off, fully charged off, sold or transferred to OREO, or when OREO is liquidated. The difference between the carrying value of the asset and the cash or non-cash proceeds received upon its removal is recognized as a gain or loss in the income statement. The gain or loss on acquired impaired loans that are paid off or fully charged off, also referred to as “net accelerated accretable yield recognition,” is recorded in interest income. Gain or loss recognized on the transfer of acquired impaired loans to OREO is calculated as the difference between the carrying value of the acquired impaired loan and the fair value of the underlying foreclosed collateral, and is recognized in other noninterest income. The Company also recognizes gains and losses from the sale of covered OREO through noninterest income.

When a covered asset is removed, the FDIC indemnification asset associated with the covered asset is also removed. The FDIC indemnification asset balance associated with unfunded loan commitments is also removed when an unfunded commitment has been funded. The difference between the FDIC indemnification asset and the expected payment from the FDIC for the removed asset represents the expense or income on removal of the indemnification asset. These amounts are recognized in FDIC loss sharing income or expense.

Interest income from net accelerated accretable yield recognition was $9.5 million in the third quarter of 2015, compared with $16.2 million in the second quarter of 2015 and $11.3 million in the year-earlier quarter. The decrease from the second quarter of 2015 was primarily attributed to smaller recoveries on acquired impaired loans during the third quarter. The net expense from the removal of indemnification asset for loans that were paid off or fully charged off was $1.9 million, $1.2 million and $3.6 million in the third quarter of 2015, second quarter of 2015 and third quarter of 2014, respectively. The increase in balance from the second quarter of 2015 was due to higher portions of gains to be shared with the FDIC from covered loans that were paid off or fully charged off during the third quarter.

Net gain on transfers of acquired impaired loans to OREO was $0.1 million in the third quarter of 2015, compared with $1.2 million for the second quarter of 2015 and $0.6 million in the year-earlier quarter. Transfer of acquired impaired loans to OREO declined as a result of improvements in the portfolio’s credit quality and general market conditions. Net gain on sale of covered OREO was less than $0.1 million in the third quarter of 2015, compared with $1.4 million in the second quarter of 2015 and $1.3 million in the year-earlier quarter. Total net expense from the removal of the indemnification asset for all other

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covered asset removals, excluding the removal of indemnification asset for loans that were paid off or fully charged off, was $0.3 million in the third quarter of 2015, $1.9 million in the second quarter of 2015 and $1.9 million in the year-earlier quarter. The decrease in net gain on sale of covered OREO and related expense from the indemnification asset recognized in the third quarter of 2015 was driven by lower OREO sale volume.

Loan recoveries on previously charged-off covered loans are also shared with the FDIC. The portion that is payable to the FDIC is recognized as “Loan recoveries shared with FDIC” under FDIC loss sharing income or expense. The Company recognized expenses of $5.2 million in the third quarter of 2015, $3.4 million in the second quarter of 2015 and $2.4 million in the year-earlier quarter. The Company has recognized significant loan recoveries in the last several years as a result of increases in the value of real estate collateral and improvements in the financial condition of borrowers or guarantors.

Other Expenses

Noninterest expense related to FDIC-assisted acquired assets includes OREO expense, legal and professional expense, and other operating expenses. These expenses are subject to FDIC reimbursement, but must meet certain FDIC criteria in order to be reimbursed. Certain amounts reflected in the table above may not be reimbursable by the FDIC. The FDIC reimbursements related to qualified expenses are recognized as income in “Net FDIC reimbursement for OREO and loan expenses” under FDIC loss sharing income or expense.

Total OREO expense, which includes valuation write-downs, holding costs and foreclosure expenses was $0.8 million for the third quarter of 2015, down from $1.0 million for the second quarter of 2015 and $1.2 million for the year-earlier quarter. The decrease in total OREO expense from the prior periods was primarily due to lower valuation write-downs during the third quarter of 2015. Legal and professional fees related to FDIC-assisted acquired assets were $1.3 million in the third quarter of 2015, unchanged from the second quarter of 2015 and $0.6 million in the year-earlier quarter. Net FDIC reimbursement for these expenses of $1.9 million for the third quarter of 2015 increased from $0.8 million for the second quarter of 2015 and $1.2 million for the third quarter of 2014.

Other Information on the FDIC Indemnification Asset

The following table is a summary of activity in the FDIC indemnification asset for the three and nine months ended September 30, 2015 and 2014:

	For the three months ended						For the nine months ended
	September 30,						September 30,
(in thousands)	2015			2014			2015			2014
Balance, beginning of period	$	34,799		$	68,038		$	50,511		$	89,227
Indemnification asset amortization	(1,897		)	(2,780		)	(6,287		)	(9,264		)
(Loss) gain on indemnification asset	(2,152		)	285			(6,289		)	(508		)
Reductions (1)	(2,586		)	(5,626		)	(9,771		)	(19,538		)
Balance, end of period	$	28,164		$	59,917		$	28,164		$	59,917

(1)The FDIC indemnification asset is reduced upon covered asset removals, funding of covered unfunded loan commitments, partial charge-offs and OREO write-downs.

The indemnification asset amortization, loss on indemnification asset, and the impact of the reduction of indemnification asset for covered asset removals and funding of unfunded commitments are recognized in the FDIC loss sharing income or expense line item on the consolidated statements of income.

When an FDIC-assisted acquired asset is charged off or written down and is subject to FDIC reimbursement under the FDIC loss-sharing agreements, the Company records the estimated amount of reimbursement in an FDIC receivable account, which is classified in the Other Assets line of the consolidated balance sheet.

Segment Operations

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

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Commercial and Private Banking

Net income for the Commercial and Private Banking segment increased to $63.4 million for the third quarter of 2015 from $55.0 million for the third quarter of 2014. Net income for the nine months ended September 30, 2015 was $162.0 million, up from $141.0 million for the year-earlier period. The increase in net income for the current quarter from the year-earlier quarter was primarily due to higher net interest income, partially offset by a lower reversal of provision for credit losses on loans and leases, excluding acquired impaired loans, and higher noninterest expense. The higher net income for the first nine months of 2015 compared with the year-earlier period was due to increases in net interest income and noninterest income. These increases were partially offset by higher provision on loans and leases and higher noninterest expense.

Net interest income increased to $226.2 million for the third quarter of 2015 from $204.8 million for the year-earlier quarter. Net interest income for the nine months ended September 30, 2015 increased to $662.2 million from $602.9 million for the same period in 2014. The increase from the prior-year periods was primarily attributable to organic loan growth, partially offset by lower interest income from acquired impaired loans. Average loans and leases, excluding acquired impaired loans, in the segment grew 17 percent to $21.91 billion for the third quarter of 2015 from $18.78 billion for the same period in 2014. Average loans and leases for the nine months ended September 30, 2015 increased to $21.17 billion, or by 18 percent from $17.99 billion for the year-earlier period. Average acquired impaired loans decreased to $420.3 million for the current quarter from $580.2 million for the third quarter of 2014 and $455.8 million for the first nine months of 2015 compared to $639.6 million for the same period in 2014.

The growth in net interest income was also a result of continued core deposit growth. The Asset Liability Funding Center (“Funding Center”), which is used for funds transfer pricing, pays the business line units for generating deposits. Average deposits for this segment increased by 13 percent to $29.95 billion for the three months ended September 30, 2015 from $26.48 billion for the year-earlier quarter, and increased by 11 percent to $28.65 billion for the nine months ended September 30, 2015 from $25.71 billion for the same period in 2014. The increase was driven by new client relationships and growth in deposits of existing clients.

The segment recorded a reversal of provision for credit losses on loans and leases, excluding acquired impaired loans, of $6.0 million for the three months ended September 30, 2015 and a provision of $4.0 million for the nine months ended September 30, 2015. The segment recorded reversals of provision for credit losses on loans and leases, excluding acquired impaired loans, of $8.0 million and $9.0 million for the three and nine months ended September 30, 2014. Provision for losses on acquired impaired loans was $1.1 million and $2.7 million for the three and nine months ended September 30, 2015, respectively, compared to provisions of $0.6 million and $3.8 million provision for the three and nine months ended September 30, 2014. Refer to “Results of Operations—Provision for Credit Losses” and “Balance Sheet Analysis—Loan and Lease Portfolio—Asset Quality” included elsewhere in this report for further discussion of the provision. Refer to “Results of Operations—FDIC-Assisted Acquired Assets” included elsewhere in this report for further discussion of the provision for losses on acquired impaired loans.

Noninterest income for the third quarter of 2015 was $51.7 million, up 2 percent from $50.9 million for the prior-year quarter. Noninterest income for the nine months ended September 30, 2015 increased 17 percent to $158.7 million, from $135.5 million for the year-earlier period. The increase from the prior-year quarter was largely due to higher credit card fees and higher wealth management fee income. Revenues associated with wealth management products and services utilized by Commercial and Private Banking clients are allocated to this segment. These increases were partially offset by decreases in lease residual income and net gains on sales of foreclosed assets. The increase in noninterest income for the nine months ended September 30, 2015, compared with the year-earlier period, is primarily due to lower FDIC loss-sharing expense and increases in credit card fee income and client swap income, which were partially offset by lower gains on sales of foreclosed assets.

Noninterest expense, including depreciation and amortization, was $190.8 million for the three months ended September 30, 2015, up 7 percent from $178.6 million for the year-earlier quarter. Noninterest expense, including depreciation and amortization, increased to $571.5 million for the first nine months of 2015, up 9 percent from $525.4 million for the same period in 2014. The increase was primarily due to higher salaries and employee benefit costs, and increases in occupancy costs and legal and professional fees.

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Wealth Management

The Wealth Management segment had net income attributable to City National Corporation of $6.3 million for the third quarter of 2015, down slightly from $6.4 million for the year-earlier quarter. Net income attributable to City National Corporation for the nine months ended September 30, 2015 was $26.8 million, compared with $18.8 million for the year-earlier period.

Noninterest income increased 1 percent to $70.1 million for the third quarter of 2015 from $69.3 million for the year-earlier quarter, and by 7 percent to $215.5 million for the nine months ended September 30, 2015 from $201.4 million for the same period in 2014. The increase from prior periods was mainly due to higher wealth management fees. Refer to “Results of Operations—Noninterest Income—Wealth Management” included elsewhere in this report for further discussion of the factors impacting income for the Wealth Management segment.

Noninterest expense, including depreciation and amortization, was $61.7 million for the third quarter of 2015, up 5 percent from $59.0 million for the year-earlier quarter. Noninterest expense, including depreciation and amortization, increased 3 percent to $176.5 million for the nine months ended September 30, 2015 from $171.6 million for the year-earlier period. The increase in expense from the year-earlier quarter and year-to-date was largely due to higher salary and incentive compensation expense, net of the impact of the sale of the retirement services business during the third quarter of 2014, and higher occupancy costs.

Other

Net income for the Other segment decreased to $2.1 million for the third quarter of 2015 from $8.5 million for the third quarter of 2014. Net income decreased to $13.0 million for the nine months ended September 30, 2015 from $29.4 million for the same period in 2014. The decrease in net income was due to lower net interest income, lower noninterest income and higher depreciation and amortization expense.

Net interest income was $5.5 million and $21.1 million for the three and nine months ended September 30, 2015, down from $10.5 million and $30.5 million for the same periods in 2014. The Funding Center, which is included in the Other segment, charges the business line units for loans and pays them for generating deposits. During the third quarter of 2015, funding credit given to the Commercial and Private Banking segment increased compared with the year-earlier quarter due to higher average deposit balances. Also, funding charges applied to loan balances in the lending units remain low due to the low interest rate environment. Both of these circumstances resulted in lower net interest income in the Other segment and higher net interest income in the Commercial and Private Banking segment.

Noninterest income (loss) was ($16.9) million for the current quarter compared with ($12.3) million for the third quarter of 2014. Noninterest income (loss) increased to ($45.4) million for the nine months ended September 30, 2015 from ($26.7) million for the year-earlier period. Noninterest expense (income), including depreciation and amortization was ($14.5) million and ($43.8) million for the three and nine months ended September 30, 2015, respectively, compared with ($14.8) million and ($41.6) million for the same periods in 2014. The changes in noninterest income (loss) and noninterest expense (income) compared with the same periods in 2014 was primarily due to an increase in the elimination of inter-segment revenues and costs (recorded in the Other segment) associated with wealth management products and services compared to the year-earlier periods. Also contributing to the change in noninterest expense was an increase in depreciation and amortization expense related to fixed assets and software.

Income Taxes

The Company recognized income tax expense of $32.2 million during the third quarter of 2015, compared with tax expense of $37.7 million in the second quarter of 2015 and $37.5 million in the year-earlier quarter. The effective tax rate was 31.0 percent of pretax income for the third quarter of 2015, compared with 35.3 percent for the second quarter of 2015 and 34.6 percent for the year-earlier quarter. The lower tax rate during the third quarter of 2015 was attributable to $4.7 million in tax benefits recorded during the current quarter for annual tax return true-ups, the pending completion of tax audits with the Franchise Tax Board and expected settlements of other tax items. The effective tax rates differ from the applicable statutory federal and state tax rates due to various factors, including tax benefits from investments in affordable housing partnerships, tax-exempt income on municipal bonds, bank-owned life insurance and other adjustments.

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Income tax expense and effective tax rates for prior periods reflect the retrospective adoption of ASU 2014-01 on January 1, 2015. See Note 1, Summary of Significant Accounting Policies, of the Notes to the Unaudited Consolidated Financial Statements for further discussion of ASU 2014-01. See Note 13, Income Taxes, of the Notes to the Unaudited Consolidated Financial Statements for further discussion of income taxes.

BALANCE SHEET ANALYSIS

Total assets were $35.58 billion at September 30, 2015, an increase of 11 percent from $32.00 billion at September 30, 2014 and up 5 percent from $33.76 billion at June 30, 2015. Average assets for the third quarter of 2015 increased 12 percent to $34.45 billion from $30.90 billion for the third quarter of 2014. Total average interest-earning assets for the third quarter of 2015 were $32.72 billion, up 12 percent from $29.24 billion for the third quarter of 2014. The increase in assets from the year-earlier quarter primarily reflects higher loan balances.

Securities

At September 30, 2015, the Company had total securities of $8.97 billion, comprised of securities available-for-sale at fair value of $5.31 billion, securities held-to-maturity at amortized cost of $3.51 billion and trading securities at fair value of $154.7 million. The Company had total securities of $9.48 billion at December 31, 2014, comprised of securities available-for-sale at fair value of $5.88 billion, securities held-to-maturity at amortized cost of $3.43 billion and trading securities at fair value of $173.2 million. At September 30, 2014, the Company had total securities of $9.21 billion, comprised of securities available-for-sale at fair value of $5.63 billion, securities held-to-maturity at amortized cost of $3.45 billion and trading securities at fair value of $125.9 million. The decrease in securities available-for-sale since year-end 2014 reflects the Company’s strategy to fund loan growth with cash flow from the securities portfolio to the extent possible.

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

	September 30, 2015				December 31, 2014				September 30, 2014
	Amortized				Amortized				Amortized
(in thousands)	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value
Securities available-for-sale:
U.S. Treasury	$	390,098	$	390,329	$	116,919	$	116,926	$	46,716	$	46,765
Federal agency - Debt	285,616		286,360		1,401,303		1,398,581		1,329,891		1,326,728
Federal agency - MBS	91,690		92,881		102,939		104,526		105,992		106,976
CMOs - Federal agency	3,538,000		3,536,128		3,599,831		3,580,590		3,583,667		3,559,078
CMOs - Non-agency	20,749		20,431		24,385		24,014		25,521		25,282
State and municipal	356,623		360,744		473,272		479,031		374,948		381,993
Other debt securities	621,224		622,314		174,352		176,169		174,538		177,042
Total available-for-sale debt securities	5,304,000		5,309,187		5,893,001		5,879,837		5,641,273		5,623,864
Equity securities and mutual funds	—		—		1,508		3,146		621		5,312
Total available-for-sale securities	$	5,304,000	$	5,309,187	$	5,894,509	$	5,882,983	$	5,641,894	$	5,629,176
Securities held-to-maturity (1):
Federal agency - Debt	$	445,721	$	457,436	$	292,932	$	299,107	$	296,900	$	299,759
Federal agency - MBS	575,071		593,883		553,589		564,741		582,365		584,316
CMOs - Federal agency	1,630,388		1,673,193		1,811,574		1,831,280		1,847,655		1,839,453
State and municipal	769,646		788,562		682,705		703,440		625,860		640,819
Other debt securities	85,629		85,828		86,231		86,079		97,771		97,641
Total held-to-maturity securities	$	3,506,455	$	3,598,902	$	3,427,031	$	3,484,647	$	3,450,551	$	3,461,988

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

The average duration of the $5.31 billion available-for-sale portfolio was 1.9 years at September 30, 2015, down from 2.2 years at September 30, 2014 and 2.0 years at December 31, 2014. The decrease in average duration reflects a continued rotation from longer-duration to shorter-duration securities in the available-for-sale portfolio.

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Changes in the fair value of securities available-for-sale will impact other comprehensive income, and thus shareholders’ equity, on an after-tax basis. Securities held-to-maturity are presented in the consolidated balance sheets at amortized cost. Changes in the fair value of securities held-to-maturity do not have an impact on other comprehensive income. At September 30, 2015, the available-for-sale securities portfolio had a net unrealized gain of $5.2 million, consisting of $28.1 million of unrealized gains and $22.9 million of unrealized losses. At December 31, 2014, the available-for-sale securities portfolio had a net unrealized loss of $11.5 million, comprised of $32.8 million of unrealized gains and $44.3 million of unrealized losses. At September 30, 2014, the available-for-sale securities portfolio had a net unrealized loss of $12.7 million, comprised of $41.1 million of unrealized gains and $53.8 million of unrealized losses. The increase in the fair value of debt securities at September 30, 2015 compared to December 31, 2014 and September 30, 2014 was due to lower interest rates and other market conditions that, in general, resulted in higher market prices for the securities owned.

The following table provides the expected remaining maturities of debt securities included in the securities portfolio at September 30, 2015, except for maturities of mortgage-backed securities which are allocated according to the average life of expected cash flows. Average expected maturities will differ from contractual maturities because of the amortizing nature of the loan collateral and prepayment behavior of borrowers.

(in thousands)	One year or less		Over 1 year through 5 years		Over 5 years through 10 years		Over 10 years		Total
Securities available-for-sale:
U.S. Treasury	$	269,754	$	120,575	$	—	$	—	$	390,329
Federal agency - Debt	179,603		106,757		—		—		286,360
Federal agency - MBS	1,819		91,062		—		—		92,881
CMOs - Federal agency	119,443		3,248,817		167,868		—		3,536,128
CMOs - Non-agency	1,079		13,234		6,118		—		20,431
State and municipal	165,254		192,119		—		3,371		360,744
Other	126,850		495,464		—		—		622,314
Total debt securities available-for-sale	$	863,802	$	4,268,028	$	173,986	$	3,371	$	5,309,187
Amortized cost	$	861,509	$	4,264,720	$	174,371	$	3,400	$	5,304,000
Securities held-to-maturity:
Federal agency - Debt	$	—	$	45,000	$	209,125	$	191,596	$	445,721
Federal agency - MBS	10		74,949		495,583		4,529		575,071
CMOs - Federal agency	8,724		773,640		848,024		—		1,630,388
State and municipal	897		210,551		458,753		99,445		769,646
Other	—		85,629		—		—		85,629
Total debt securities held-to-maturity at amortized cost	$	9,631	$	1,189,769	$	2,011,485	$	295,570	$	3,506,455

Impairment Assessment

The Company performs a quarterly assessment of the debt and equity securities held in its investment portfolio to determine whether a decline in fair value below amortized cost is other-than-temporary. If a decline in fair value is determined to be other-than-temporary, the cost basis of the individual security is written down to fair value which then becomes the security’s new cost basis. The new cost basis is not adjusted for subsequent recoveries in fair value.

The Company recorded no impairment losses in earnings on securities available-for-sale for the three months ended September 30, 2015 and $0.3 million for the nine months ended September 30, 2015. The Company recorded impairment losses in earnings on securities available-for-sale of $0.1 million and $0.3 million for the three and nine months ended September 30, 2014. The Company recognized after-tax amounts of $0.2 million and $0.1 million of non-credit-related other-than-temporary impairment in accumulated other comprehensive income or loss (“AOCI”) on securities available-for-sale at September 30, 2015 and 2014, respectively. No impairment losses were recognized in earnings or AOCI for securities held-to-maturity during the three and nine months ended September 30, 2015 and 2014.

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Of the total securities available-for-sale in an unrealized loss position at September 30, 2015, approximately $990.6 million of securities with unrealized losses of $4.1 million were in a continuous unrealized loss position for less than 12 months, and $1.27 billion of securities with unrealized losses of $18.8 million were in a continuous loss position for more than 12 months. The majority of the gross unrealized losses are attributable to federal agency CMOs. At December 31, 2014, approximately $2.03 billion of securities with unrealized losses of $6.7 million were in a continuous unrealized loss position for less than 12 months and $1.47 billion of securities with unrealized losses of $37.6 million were in a continuous loss position for more than 12 months. At September 30, 2014, approximately $1.52 billion of securities with unrealized losses of $5.0 million were in a continuous unrealized loss position for less than 12 months and $1.60 billion of securities with unrealized losses of $48.8 million were in a continuous loss position for more than 12 months.

See Note 3, Securities, of the Notes to the Unaudited Consolidated Financial Statements for further disclosures related to the securities portfolio.

Loan and Lease Portfolio

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

Loans and Leases

	September 30,			December 31,			September 30,
(in thousands)	2015			2014			2014
Commercial	$	10,253,592		$	9,360,976		$	8,612,691
Commercial real estate mortgages	3,947,746			3,539,703			3,565,188
Residential mortgages	5,709,272			5,106,803			5,023,213
Real estate construction	932,422			710,224			585,232
Home equity loans and lines of credit	799,711			785,796			759,258
Installment	206,156			184,613			178,803
Lease financing	687,685			649,091			623,603
Loans and leases, excluding acquired impaired loans	22,536,584			20,337,206			19,347,988
Less: Allowance for loan and lease losses	(317,157		)	(310,149		)	(312,703		)
Loans and leases, excluding acquired impaired loans, net	22,219,427			20,027,057			19,035,285
Acquired impaired loans	399,527			510,979			552,715
Less: Allowance for loan losses	(5,648		)	(8,608		)	(9,368		)
Acquired impaired loans, net	393,879			502,371			543,347
Total loans and leases	$	22,936,111		$	20,848,185		$	19,900,703
Total loans and leases, net	$	22,613,306		$	20,529,428		$	19,578,632

Total loans and leases were $22.94 billion, $20.85 billion and $19.90 billion at September 30, 2015, December 31, 2014 and September 30, 2014, respectively. Total loans, excluding acquired impaired loans, were $22.54 billion, $20.34 billion and $19.35 billion at September 30, 2015, December 31, 2014 and September 30, 2014, respectively.

Total loans and leases, excluding acquired impaired loans, at September 30, 2015 increased 11 percent from December 31, 2014 and 16 percent from September 30, 2014. Commercial loans, including lease financing, were up 9 percent from year-end 2014 and 18 percent from the year-earlier quarter. Commercial real estate mortgage loans increased 12 percent from year-end 2014 and 11 percent from the year-earlier quarter. Residential mortgages grew by 12 percent and 14 percent from the same periods, respectively. Real estate construction loans increased 31 percent from year-end 2014 and 59 percent from September 30, 2014.

Acquired Impaired Loans

Acquired impaired loans represent loans acquired in FDIC-assisted acquisitions that are accounted for under ASC 310-30. They totaled $399.5 million as of September 30, 2015, $511.0 million as of December 31, 2014 and $552.7 million as of September 30, 2014. Acquired impaired loans, net of allowance for loan losses, were $393.9 million as of September 30, 2015, $502.4 million as of December 31, 2014 and $543.3 million as of September 30, 2014.

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

	September 30,			December 31,			September 30,
(in thousands)	2015			2014			2014
Commercial	$	994		$	1,969		$	2,273
Commercial real estate mortgages	376,335			481,689			522,883
Residential mortgages	3,391			4,455			5,203
Real estate construction	16,042			18,790			19,016
Home equity loans and lines of credit	2,612			3,820			3,089
Installment	153			256			251
Acquired impaired loans	399,527			510,979			552,715
Less: Allowance for loan losses	(5,648		)	(8,608		)	(9,368		)
Acquired impaired loans, net	$	393,879		$	502,371		$	543,347

Other

To grow loans and diversify and manage concentration risk of the Company’s loan portfolio, the Company purchases and sells participations in loans. Included in this portfolio are purchased participations in Shared National Credits (“SNC”). Purchased SNC commitments at September 30, 2015 totaled $4.64 billion or 14 percent of total loan commitments, compared to $4.22 billion or 14 percent at December 31, 2014 and $4.08 billion or 14 percent at September 30, 2014. Outstanding loan balances on purchased SNCs were $2.24 billion, or approximately 10 percent of total loans outstanding, excluding acquired impaired loans, at September 30, 2015, compared to $1.96 billion or 10 percent at December 31, 2014 and $1.94 billion or 10 percent at September 30, 2014.

Bank regulatory guidance on risk management practices for financial institutions with high or increasing concentrations of commercial real estate (“CRE”) loans on their balance sheets emphasizes the need for sound internal risk management practices for those institutions that have experienced rapid growth in CRE lending, have notable exposure to specific types of CRE, or are approaching or exceeding the supervisory criteria used to evaluate CRE concentration risk. The supervisory criteria are: total reported loans for construction, land development and other land represent 100 percent of the institution’s total risk-based capital, and both total CRE loans represent 300 percent or more of the institution’s total risk-based capital and the institution’s CRE loan portfolio has increased 50 percent or more within the last 36 months. As of September 30, 2015, total loans for construction, land development and other land represented 31 percent of total risk-based capital; total CRE loans represented 137 percent of total risk-based capital and the total portfolio of loans for construction, land development, other land and CRE increased 30 percent over the last 36 months.

Asset Quality

Credit Risk Management

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

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

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Geographic Concentrations and Economic Trends by Geographic Region

Although the Company’s lending activities are predominantly in California, and to a lesser extent, New York, the Company has various specialty lending businesses that lend to businesses located throughout the United States of America and in certain foreign countries to facilitate trade finance activities. Excluding acquired impaired loans, California represented 72 percent of total loans outstanding and New York represented 10 percent as of September 30, 2015. The remaining 18 percent of total loans outstanding represented other states and countries. 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 California. The Company has most of its loans in large metropolitan California cities such as Los Angeles, San Francisco and San Diego, rather than in the outlying suburban communities that have seen higher declines in real estate values during the recession. Within the Company’s Commercial loan portfolio, the five California counties with the largest exposures at September 30, 2015 are Los Angeles (36 percent), Orange (4 percent), San Diego (3 percent), Riverside (3 percent) and San Bernardino (2 percent). Within the Commercial Real Estate Mortgage loan portfolio, the five California counties with the largest exposures are Los Angeles (37 percent), San Diego (9 percent), Orange (8 percent), Riverside (4 percent) and Santa Clara (3 percent). For the Real Estate Construction loan portfolio, the concentration in California is predominately in Los Angeles (28 percent), San Diego (11 percent), Alameda (10 percent), Orange (8 percent) and Santa Clara (5 percent).

Within the Company’s acquired impaired loan portfolio at September 30, 2015, the five states with the largest concentration were California (29 percent), Texas (12 percent), Arizona (6 percent), Ohio (6 percent) and Nevada (6 percent). The remaining 41 percent of total acquired impaired loans outstanding represented other states.

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

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

The Company has an internal credit risk analysis and review staff that issues reports to the Audit & Risk Committee of the Board of Directors and continually reviews loan quality. This analysis includes a detailed review of the classification and categorization of problem loans, potential problem loans and loans to be charged off, an assessment of the overall quality and collectability 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 appropriate level and the need for additional provisions, and presents its analysis to the Audit & Risk Committee which ultimately reviews and approves management’s recommendation.

The provision is the expense recognized in the consolidated statements of income to adjust the allowance and reserve to the level deemed appropriate by management, as determined through application of the Company’s allowance methodology procedures. See “Critical Accounting Policies—Allowance for Loan and Lease Losses and Reserve for Off-Balance Sheet Credit Commitments” in the Company’s 2014 Annual Report on Form 10-K. The process used for determining the adequacy of the reserve for off-balance sheet credit commitments is consistent with the process for the allowance for loan and lease losses.

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The following table summarizes activity in the allowance for loan and lease losses and the reserve for off-balance sheet credit commitments, excluding acquired impaired loans, for the three and nine months ended September 30, 2015 and 2014. Activity is provided by loan portfolio segment which is consistent with the Company’s methodology for determining the allowance for loan and lease losses.

Changes in Allowance for Loan and Lease Losses

	For the three months ended						For the nine months ended
	September 30,						September 30,
(in thousands)	2015			2014			2015			2014
Loans and leases outstanding, excluding acquired impaired loans	$	22,536,584		$	19,347,988		$	22,536,584		$	19,347,988
Average loans and leases outstanding, excluding acquired impaired loans	$	21,969,592		$	18,837,760		$	21,224,326		$	18,050,616
Allowance for loan and lease losses (1)
Balance, beginning of period	$	316,922		$	311,276		$	310,149		$	302,584
Loan charge-offs:
Commercial	(4,576		)	(3,773		)	(10,276		)	(18,594		)
Commercial real estate mortgages	—			—			—			(5		)
Residential mortgages	—			—			—			(482		)
Home equity loans and lines of credit	—			—			—			(165		)
Installment	(240		)	(76		)	(748		)	(264		)
Total charge-offs	(4,816		)	(3,849		)	(11,024		)	(19,510		)
Recoveries of loans previously charged-off:
Commercial	10,514			6,202			12,229			15,437
Commercial real estate mortgages	68			225			1,270			352
Residential mortgages	34			33			110			258
Real estate construction	142			7,729			1,852			12,804
Home equity loans and lines of credit	37			52			110			254
Installment	204			158			622			1,490
Total recoveries	10,999			14,399			16,193			30,595
Net recoveries	6,183			10,550			5,169			11,085
(Reversal of) provision for credit losses	(6,000		)	(8,000		)	4,000			(9,000		)
Transfers from (to) reserve for off-balance sheet credit commitments	52			(1,123		)	(2,161		)	8,034
Balance, end of period	$	317,157		$	312,703		$	317,157		$	312,703
Net recoveries to average loans and leases, excluding acquired impaired loans (annualized)	0.11		%	0.22		%	0.03		%	0.08		%
Allowance for loan and lease losses to total period-end loans and leases, excluding acquired impaired loans	1.41		%	1.62		%	1.41		%	1.62		%
Reserve for off-balance sheet credit commitments
Balance, beginning of period	$	30,024		$	24,787		$	27,811		$	33,944
Transfers (to) from allowance	(52		)	1,123			2,161			(8,034		)
Balance, end of period	$	29,972		$	25,910		$	29,972		$	25,910

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

During the economic recession, the Company recognized significant charge-offs from 2008 to 2010. Total loan charge-offs have declined significantly in recent years due to improving economic and business conditions in the markets served by the Company. Higher loan recoveries in recent years were largely due to increases in the value of real estate collateral, improvements in the financial condition of the Company’s clients and guarantors, and increases in recoveries related to the use of legal remedies available to the Company. Recoveries occurred throughout the loan portfolio; however, the majority of the recoveries related to a small group of credit relationships and were primarily concentrated in the commercial and real estate construction portfolios.

The timing and amount of recoveries is inherently uncertain, imprecise and potentially volatile and is subject to a variety of factors, including but not limited to: general economic conditions, the willingness and financial capacity of the borrower, guarantors or third parties; additional changes in the realizable value of the collateral between the date of charge-off and the date of recovery, and the legal remedies available to the Company needed to effect recovery.

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The Company anticipates the level of recoveries to significantly diminish in the foreseeable future as the amount of charge-offs that are available for recovery is significantly less than in prior periods and the charge-offs which remain have fewer opportunities for recovery due to the limited financial capacity and collateral value of the remaining charged off 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, excluding acquired impaired loans, for September 30, 2015, December 31, 2014 and September 30, 2014 as shown in the table below:

	Allowance amount						Percentage of total allowance
	September 30,		December 31,		September 30,		September 30,		December 31,		September 30,
(in thousands)	2015		2014		2014		2015		2014		2014
Commercial and lease financing	$	133,191	$	115,855	$	122,946	42	%	37	%	39	%
Commercial real estate mortgages	48,506		44,745		50,989		15		15		16
Residential mortgages	9,848		10,296		11,467		3		3		4
Real estate construction	11,577		9,115		8,745		4		3		3
Home equity loans and lines of credit	5,278		6,609		7,028		2		2		2
Installment	2,290		2,228		2,384		1		1		1
Qualitative	106,467		121,301		109,144		33		39		35
Total	$	317,157	$	310,149	$	312,703	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 Company has a qualitative factor matrix to determine the amount of reserves needed for judgmental factors that are not attributable to or reflected in the Company’s quantitative allowance models. The methodology to determine the qualitative reserves includes segmenting the Company’s portfolio into three loan categories: Commercial real estate secured, Commercial and Consumer. The qualitative reserve factors are separated into numerically informed and judgmental categories. Numerically informed factors are linked to defined macroeconomic or bank-specific criteria such as portfolio growth, problem loan trends and concentrations. Judgmental factors are based on the Company’s assessment of factors that include, but are not limited to, the legal and regulatory environment, internal systems and procedures, and entry into a new business. Each factor is assigned a risk level and a risk weight in points which is aggregated to determine the level of qualitative reserves. The factors are updated quarterly to reflect changing conditions. At September 30, 2015, the Company had total qualitative reserves of $106.5 million, of which $29.1 million, $55.2 million and $22.2 million were assigned to the Commercial real estate secured, Commercial and Consumer segments, respectively. The primary drivers of the qualitative reserves as of September 30, 2015 were loan growth, economic conditions, and loan and industry concentrations. The Company had total qualitative reserves of $121.3 million and $109.1 million as of December 31, 2014 and September 30, 2014, respectively.

Nonaccrual loans, excluding acquired impaired loans, were $34.5 million at September 30, 2015, down from $42.2 million at December 31, 2014 and $35.9 million at September 30, 2014. Net loan recoveries were $6.2 million and $5.2 million for the three and nine months ended September 30, 2015, compared to net loan recoveries of $10.6 million and $11.1 for the same periods in 2014. Classified loans were $232.0 million at September 30, 2015, up from $190.8 million at December 31, 2014 and up from $221.7 million at September 30, 2014. The Company recorded a $6.0 million reversal of provision for loan and lease losses in the third quarter of 2015 compared to a $10.0 million provision in the second quarter of 2015 and an $8.0 million reversal of provision in the third quarter of 2014.

The allowance for loan and lease losses, excluding acquired impaired loans, was $317.2 million as of September 30, 2015, compared with $310.1 million as of December 31, 2014 and $312.7 million as of September 30, 2014. The ratio of the allowance for loan and lease losses as a percentage of total loans and leases, excluding acquired impaired loans, was 1.41 percent at September 30, 2015, compared to 1.53 percent at December 31, 2014 and 1.62 percent at September 30, 2014. The allowance for loan and lease losses as a percentage of nonperforming assets, excluding FDIC-assisted acquired assets, was 790.80 percent, 586.26 percent and 679.29 percent at September 30, 2015, December 31, 2014 and September 30, 2014, respectively. The Company believes that its allowance for loan and lease losses continues to be appropriate.

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The following table summarizes the activity in the allowance for loan losses on acquired impaired loans for the three and nine months ended September 30, 2015 and 2014:

	For the three months ended September 30,						For the nine months ended September 30,
(in thousands)	2015			2014			2015			2014
Balance, beginning of period	$	8,075		$	9,103		$	8,608		$	15,922
Provision for losses	1,148			589			2,736			3,783
Change in allowance due to loan removals	(3,575		)	(324		)	(5,696		)	(10,337		)
Balance, end of period	$	5,648		$	9,368		$	5,648		$	9,368

The allowance for losses on acquired impaired loans was $5.6 million at September 30, 2015, down from $8.6 million at December 31, 2014 and $9.4 million at September 30, 2014 due to the stabilizing credit quality of acquired loans and portfolio run-off. The acquired impaired loan portfolio decreased 22 percent to $399.5 million at September 30, 2015 from $511.0 million at December 31, 2014 and 28 percent from $552.7 million at September 30, 2014. The Company recorded a $1.1 million and $2.7 million provision for losses on acquired impaired loans during the three and nine months ended September 30, 2015, respectively. The Company recorded a $0.6 million and $3.8 million provision for losses on acquired impaired loans during the three and nine months ended September 30, 2014. Refer to “FDIC-Assisted Acquired Assets” included elsewhere in this report for further discussion of the provision for loan losses on acquired impaired loans.

Impaired Loans

Loans, other than those included in large groups of smaller-balance homogeneous loans, are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement, including scheduled interest payments. The assessment for impairment occurs when and while such loans are on nonaccrual, or when the loan has been restructured. When a loan with unique risk characteristics has been identified as being impaired, the amount of impairment will be measured by the Company using discounted cash flows, except when it is determined that the primary (remaining) source of repayment for the loan is the operation or liquidation of the underlying collateral. In these cases, the current fair value of the collateral, reduced by costs to sell, will be used in place of discounted cash flows. As a final alternative, the observable market price of the debt may be used to assess impairment.

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

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The following table presents information on impaired loans as of September 30, 2015, December 31, 2014 and September 30, 2014. Loan and lease balances reflect the recorded investment as of the reporting date.

	September 30, 2015				December 31, 2014				September 30, 2014
(in thousands)	Loans and Leases		Related Allowance		Loans and Leases		Related Allowance		Loans and Leases		Related Allowance
Impaired loans, excluding acquired impaired loans (1):
Impaired loans with an allowance	$	22,287	$	2,609	$	15,611	$	728	$	14,867	$	1,595
Impaired loans with no related allowance	37,605		—		45,611		—		43,708		—
Total impaired loans, excluding acquired impaired loans	$	59,892			$	61,222			$	58,575
Total impaired loans by loan type:
Commercial	$	18,185	$	2,315	$	15,364	$	399	$	16,316	$	1,304
Commercial real estate mortgages	22,918		255		25,042		281		25,551		291
Residential mortgages	11,850		39		11,937		48		7,785		—
Real estate construction	5,802		—		6,609		—		6,610		—
Home equity loans and lines of credit	1,137		—		2,270		—		2,313		—
Total impaired loans, excluding acquired impaired loans	$	59,892	$	2,609	$	61,222	$	728	$	58,575	$	1,595

(1)Impaired loans include $33.1 million, $30.6 million and $32.0 million of loans that are on accrual status at September 30, 2015, December 31, 2014 and September 30, 2014, respectively.

The recorded investment in impaired loans, excluding acquired impaired loans, was $59.9 million at September 30, 2015, $61.2 million at December 31, 2014 and $58.6 million at September 30, 2014. There were no impaired FDIC-assisted acquired loans at September 30, 2015, December 31, 2014 or September 30, 2014.

Troubled Debt Restructured Loans

At September 30, 2015, troubled debt restructured loans were $27.3 million, before specific reserves of $0.4 million. Troubled debt restructured loans were $34.3 million, before specific reserves of $0.7 million, at December 31, 2014 and $35.9 million, before specific reserves of $0.9 million, at September 30, 2014. Troubled debt restructured loans included $22.8 million, $18.9 million and $19.3 million of restructured loans on accrual status at September 30, 2015, December 31, 2014 and September 30, 2014, respectively. At September 30, 2015, there were $0.3 million of outstanding commitments to lend additional funds on restructured loans.

Nonaccrual and Past Due Loans

Excluding FDIC-assisted acquired assets, total nonperforming assets (nonaccrual loans and OREO) were $40.1 million, or 0.18 percent of total loans and OREO at September 30, 2015, compared with $52.9 million, or 0.26 percent, at December 31, 2014, and $46.0 million, or 0.24 percent, at September 30, 2014. Total nonperforming FDIC-assisted acquired assets (nonaccrual acquired impaired loans and covered OREO) were $8.3 million at September 30, 2015, $12.8 million at December 31, 2014 and $14.5 million at September 30, 2014.

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. acquired impaired loans accounted for under ASC 310-30 are generally considered accruing and performing loans as the loans accrete interest income over the estimated life of the loan when cash flows are reasonably estimable. Accordingly, acquired impaired loans that are contractually past due are still considered to be accruing and performing loans. If the timing and amount of future cash flows is not reasonably estimable, the loans may be classified as nonaccrual loans and interest income is not recognized until the timing and amount of future cash flows can be reasonably estimated. There were no acquired impaired loans that were on nonaccrual status as of September 30, 2015, December 31, 2014 and September 30, 2014.

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

(in thousands)	September 30, 2015		December 31, 2014		September  30, 2014
Past due loans, excluding acquired impaired loans
30-89 days past due	$	23,528	$	11,903	$	19,156
90 days or more past due on accrual status:
Commercial	—		148		—
Residential mortgages	2,458		921		6,145
Home equity loans and lines of credit	460		100		387
Installment	543		346		292
Total 90 days or more past due on accrual status	$	3,461	$	1,515	$	6,824
Past due acquired impaired loans
30-89 days past due	$	861	$	7,416	$	2,507
90 days or more past due on accrual status	20,419		28,344		38,465

The following table presents information on nonaccrual loans and OREO as of September 30, 2015, December 31, 2014 and September 30, 2014:

	September 30,			December 31,			September 30,
(in thousands)	2015			2014			2014
Nonperforming assets, excluding FDIC-assisted acquired assets
Nonaccrual loans, excluding acquired impaired loans
Commercial	$	14,728		$	15,096		$	14,578
Commercial real estate mortgages	2,368			3,575			3,691
Residential mortgages	10,588			11,943			6,168
Real estate construction	3,460			6,598			6,598
Home equity loans and lines of credit	3,340			4,864			4,776
Installment	37			84			42
Lease financing	1			7			66
Total nonaccrual loans, excluding acquired impaired loans	34,522			42,167			35,919
OREO, excluding covered OREO	5,584			10,736			10,115
Total nonperforming assets, excluding FDIC-assisted acquired assets	$	40,106		$	52,903		$	46,034
Nonperforming FDIC-assisted acquired assets
OREO	$	8,310		$	12,760		$	14,487
Ratios (excluding FDIC-assisted acquired assets):
Nonaccrual loans as a percentage of total loans	0.15		%	0.21		%	0.19		%
Nonperforming assets as a percentage of total loans and OREO	0.18			0.26			0.24
Allowance for loan and lease losses to nonaccrual loans	918.71			735.53			870.59
Allowance for loan and lease losses to total nonperforming assets	790.80			586.26			679.29

All nonaccrual loans greater than $1 million are considered impaired and are individually analyzed. The Company does not maintain a reserve for impaired loans where the carrying value of the loan is less than the fair value of the collateral, reduced by costs to sell. Where the carrying value of the impaired loan is greater than the fair value of the collateral, less costs to sell, the Company specifically establishes an allowance for loan and lease losses to cover the deficiency. This analysis ensures that the non-accruing loans have been appropriately reserved.

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The table below summarizes the total activity in nonaccrual loans, excluding acquired impaired loans, for the three and nine months ended September 30, 2015 and 2014:

Changes in Nonaccrual Loans

	For the three months ended September 30,						For the nine months ended September 30,
(in thousands)	2015			2014			2015			2014
Balance, beginning of the period	$	29,015		$	64,782		$	42,167		$	68,651
Loans placed on nonaccrual	17,508			5,495			26,145			29,592
Net (charge-offs) recoveries	(462		)	7,101			(2,725		)	4,941
Loans returned to accrual status	(961		)	(4,708		)	(4,007		)	(10,150		)
Repayments (including interest applied to principal)	(10,578		)	(31,801		)	(27,058		)	(52,054		)
Transfers to OREO	—			(4,950		)	—			(5,061		)
Balance, end of the period	$	34,522		$	35,919		$	34,522		$	35,919

In addition to loans disclosed above as past due or nonaccrual, management has also identified $24.5 million of credit facilities to 22 borrowers as of October 21, 2015, 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 September 30, 2015, and the identification of these loans is not necessarily indicative of whether the loans will be placed on nonaccrual status. This amount was determined based on analysis of information known to management about the borrowers’ financial condition and current economic conditions. In the Form 10-Q for the period ended June 30, 2015, the Company reported that management had identified $20.1 million of credit facilities to 16 borrowers where the ability to comply with the loan payment terms in the future was questionable. Management’s classification of credits as nonaccrual, restructured or problems does not necessarily indicate that the principal is uncollectible in whole or part.

Other Real Estate Owned

The following tables provide a summary of OREO activity for the three and nine months ended September 30, 2015 and 2014:

	For the three months ended September 30, 2015									For the three months ended September 30, 2014
(in thousands)	Non-Covered OREO			Covered OREO			Total			Non-Covered OREO			Covered OREO			Total
Balance, beginning of period	$	5,957		$	11,311		$	17,268		$	4,269		$	17,944		$	22,213
Additions	—			285			285			5,957			1,276			7,233
Sales	—			(2,963		)	(2,963		)	(83		)	(4,366		)	(4,449		)
Valuation adjustments	(373		)	(323		)	(696		)	(28		)	(367		)	(395		)
Balance, end of period	$	5,584		$	8,310		$	13,894		$	10,115		$	14,487		$	24,602

	For the nine months ended September 30, 2015									For the nine months ended September 30, 2014
(in thousands)	Non-Covered OREO			Covered OREO			Total			Non-Covered OREO			Covered OREO			Total
Balance, beginning of period	$	10,736		$	12,760		$	23,496		$	12,611		$	25,481		$	38,092
Additions	—			4,200			4,200			6,068			5,296			11,364
Sales	(4,779		)	(6,588		)	(11,367		)	(8,523		)	(14,834		)	(23,357		)
Valuation adjustments	(373		)	(2,062		)	(2,435		)	(41		)	(1,456		)	(1,497		)
Balance, end of period	$	5,584		$	8,310		$	13,894		$	10,115		$	14,487		$	24,602

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OREO was $13.9 million at September 30, 2015, $23.5 million at December 31, 2014 and $24.6 million at September 30, 2014, respectively. The OREO balance at September 30, 2015 includes covered OREO of $8.3 million, compared with $12.8 million at December 31, 2014 and $14.5 million at September 30, 2014. The balance of OREO at September 30, 2015, December 31, 2014 and September 30, 2014 is net of valuation allowances of $2.4 million, $7.4 million and $9.9 million, respectively.

The Company recognized $40 thousand in total net gain on the sale of OREO in the third quarter of 2015, compared to $1.4 million in the second quarter of 2015 and $1.3 million in the year-earlier quarter. The net gain on the sale of OREO for the third quarter of 2015, second quarter of 2015 and year-earlier quarter was mostly related to the sale of covered OREO.

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

Other Assets

The following table presents information on other assets:

	September 30,			December 31,			September 30,
(in thousands) (1)	2015			2014			2014
Accrued interest receivable	$	81,787		$	80,721		$	76,467
Deferred compensation fund assets	94,851			92,199			91,542
Stock in government agencies	50,626			58,376			58,376
Private equity and alternative investments	24,143			29,212			28,977
Bank-owned life insurance	89,884			88,069			87,379
Derivative assets	82,176			51,586			39,580
Income tax receivable	12,673			29,463			10,186
FDIC payable	(2,351		)	(993		)	(195		)
Equipment on operating leases, net	8,515			18,544			22,041
Other	111,086			90,670			101,531
Total other assets	$	553,390		$	537,847		$	515,884

(1)Certain prior period amounts have been adjusted to reflect the adoption of ASU 2014-01. See Note 1, Summary of Significant Accounting Policies, of the Notes to the Unaudited Consolidated Financial Statements for further discussion.

Deposits

Deposits totaled $31.17 billion, $28.11 billion and $27.96 billion at September 30, 2015, December 31, 2014 and September 30, 2014, respectively. Average deposits totaled $30.11 billion for the third quarter of 2015, an increase of 5 percent from $28.55 billion for the fourth quarter of 2014 and an increase of 12 percent from $26.83 billion for the third quarter of 2014. Core deposits, which include noninterest-bearing deposits and interest-bearing deposits excluding time deposits of $100,000 and over, provide a stable source of low cost funding. Average core deposits were $29.67 billion, $28.06 billion and $26.39 billion for the quarters ended September 30, 2015, December 31, 2014 and September 30, 2014, respectively, and represented 99 percent, 98 percent and 98 percent of total deposits for each respective period. Average noninterest-bearing deposits in the third quarter of 2015 increased 10 percent from the fourth quarter of 2014 and were 19 percent higher from the year-earlier quarter.

Treasury Services deposit balances, which consist primarily of title, escrow, community association and property management deposits, averaged $3.41 billion in the third quarter of 2015, compared with $3.12 billion in the fourth quarter of 2014 and $3.03 billion for the third quarter of 2014. The increases in Treasury Services deposits were primarily due to mortgage transaction activity, higher home purchase prices, an increase in 1031 Exchange transactions and the acquisition of new client relationships.

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Borrowed Funds

Total borrowed funds were $656.6 million, $961.5 million and $636.1 million at September 30, 2015, December 31, 2014 and September 30, 2014, respectively. Total average borrowed funds were $651.3 million, $639.5 million and $667.4 million for the quarters ended September 30, 2015, December 31, 2014 and September 30, 2014, respectively.

Short-term borrowings consist of funds with remaining maturities of one year or less and the current portion of long-term debt. Short-term borrowings were $6.5 million as of September 30, 2015 compared to $322.9 million as of December 31, 2014 and $4.6 million as of September 30, 2014. Short-term borrowings at September 30, 2015 consist of the current portions of nonrecourse debt. The decrease in balance from year-end 2014 was primarily due to outstanding federal funds purchased at December 31, 2014. The increase from the year-earlier quarter was primarily due to an increase in the current portion of nonrecourse debt compared to the third quarter of 2014.

Long-term debt consists of borrowings with remaining maturities greater than one year and is primarily comprised of senior notes, subordinated debt, junior subordinated debt and nonrecourse debt. Long-term debt was $650.1 million, $638.6 million and $631.4 million as of September 30, 2015, December 31, 2014 and September 30, 2014, respectively. The Company’s long-term borrowings have maturity dates ranging from October 2016 to November 2034.

Off-Balance Sheet

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

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

Commitments to extend credit are agreements to lend to a client as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since a portion of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company had off-balance sheet credit commitments totaling $10.66 billion at September 30, 2015, $9.49 billion at December 31, 2014 and $9.22 billion at September 30, 2014.

Standby letters of credit are commitments issued by the Company to guarantee the obligations of its clients to beneficiaries. Commercial letters of credit are issued on behalf of clients to ensure payment in connection with trade transactions. The Company had $679.6 million in letters of credit at September 30, 2015, of which $567.6 million relate to standby letters of credit and $112.0 million relate to commercial letters of credit. The Company had $718.0 million outstanding in letters of credit at December 31, 2014, of which $607.6 million relate to standby letters of credit and $110.4 million relate to commercial letters of credit.

As of September 30, 2015, the Company had unfunded commitments to private equity and alternative investment funds of $17.4 million. As of December 31, 2014 and September 30, 2014, the Company had unfunded commitments to private equity and alternative investment funds of $8.0 million and $8.8 million, respectively.

Capital

In July 2013, the FDIC, the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System adopted a final rule that revises its risk-based and leverage capital requirements (referred to as the Basel III rule). The Basel III final rule implements a revised definition of regulatory capital, a new common equity Tier 1 minimum capital requirement, and a higher minimum Tier 1 capital requirement. For banking organizations not subject to the advanced approaches rule, compliance with the standardized approach for determining risk-weighted assets and compliance with the transition period for the revised minimum regulatory capital ratios began on January 1, 2015. The transition period for the capital conservation buffer will begin on January 1, 2016 and the fully implemented regulatory capital ratios will be effective on January 1, 2019. Important elements of the Basel III rule include the following:

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·Increased minimum capital requirements;

·Higher quality of capital so banks are better able to absorb losses;

·A leverage ratio concept for international banks and U.S. bank holding companies;

·Specific capital conservation buffers; and

·A more uniform supervisory standard for U.S. financial institution regulatory agencies.

The Basel III rule became effective for the Company on January 1, 2015. At September 30, 2015, the Company reported a common equity tier 1 capital ratio of 8.62 percent, a tier 1 capital ratio of 9.68 percent, a total capital ratio of 11.63 percent and a tier 1 leverage ratio of 7.32 percent.

The following table presents the regulatory standards for well-capitalized institutions and the capital ratios for the Corporation and the Bank at September 30, 2015, December 31, 2014 and September 30, 2014:

	Regulatory Well-Capitalized Standards		September 30, 2015		December 31, 2014		September 30, 2014
City National Corporation (1)
Common equity tier 1 capital (1)	6.50	%	8.62	%	N/A	%	N/A	%
Tier 1 risk-based capital	8.00		9.68		9.78		9.92
Total risk-based capital	10.00		11.63		11.95		12.14
Tier 1 leverage	—		7.32		7.22		7.44
Tangible common equity to tangible assets (2)	—		6.23		6.28		6.21
City National Bank (1)
Common equity tier 1 capital (1)	6.50	%	9.62	%	N/A	%	N/A	%
Tier 1 risk-based capital	8.00		9.62		9.60		9.82
Total risk-based capital	10.00		11.63		11.74		12.01
Tier 1 leverage	5.00		7.29		7.08		7.36

(1)Risk-based capital ratios for the current period were calculated under Basel III rules, which became effective for the Company on January 1, 2015. Prior period data was based on Basel I rules. Common equity tier 1 capital under Basel III replaces Tier 1 common equity under Basel I.

(2)Tangible common equity to tangible assets is a non-GAAP financial measure that represents total common equity less identifiable intangible assets and goodwill divided by total assets less identifiable assets and goodwill.  Management reviews tangible common equity to tangible assets in evaluating the Company’s capital levels and has included this ratio in response to market participant and regulatory interest in tangible common equity as a measure of capital.  See reconciliation of the GAAP financial measure to this non-GAAP financial measure below.

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

(in thousands)	September 30, 2015			December 31, 2014			September 30, 2014
Common equity	$	2,843,705		$	2,675,085		$	2,619,191
Less: Goodwill and other intangible assets	(668,905		)	(670,699		)	(672,123		)
Tangible common equity (A)	$	2,174,800		$	2,004,386		$	1,947,068
Total assets	$	35,575,724		$	32,597,232		$	32,002,978
Less: Goodwill and other intangible assets	(668,905		)	(670,699		)	(672,123		)
Tangible assets (B)	$	34,906,819		$	31,926,533		$	31,330,855
Tangible common equity to tangible assets (A)/(B)	6.23		%	6.28		%	6.21		%

Note: Certain prior period amounts have been adjusted to reflect the adoption of ASU 2014-01. See Note 1, Summary of Significant Accounting Policies, of the Notes to the Unaudited Consolidated Financial Statements for further discussion.

The ratio of period-end equity to period-end assets was 8.75 percent, 9.03 percent and 9.02 percent as of September 30, 2015, December 31, 2014 and September 30, 2014, respectively. Period-end common shareholders’ equity to period-end assets was 7.99 percent, 8.21 percent and 8.18 percent for the same periods, respectively.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ASSET/LIABILITY MANAGEMENT

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

A quantitative and qualitative discussion about market risk is included on pages 72 to 77 of the Corporation’s Form 10-K for the year ended December 31, 2014.

Liquidity Risk

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

In recent years, the Company’s core deposit base has provided the majority of the Company’s funding requirements. This relatively stable and low-cost source of funds, along with shareholders’ equity, provided 95 percent of funding for average total assets for the third quarter and first nine months of 2015, and 95 percent and 94 percent for the three and nine months ended September 30, 2014, respectively. Strong core deposits are indicative of the strength of the Company’s franchise in its chosen markets and reflect the confidence that clients have in the Company. The Company places a very high priority in maintaining this confidence through conservative credit and capital management practices and by maintaining significant on-balance sheet liquidity reserves.

Funding obtained through short-term wholesale or market sources averaged $91.8 million for the nine months ended September 30, 2015, compared to $0.5 million for the year-earlier periods. The Company’s liquidity position was also supported through longer-term borrowings which averaged $651.3 million and $643.9 million for the three and nine months ended September 30, 2015, compared with $666.9 million and $714.0 million for the year-earlier periods. Market sources of funds comprise a modest portion of total Bank funding and are managed within concentration and maturity guidelines reviewed by management and implemented by the Company’s Treasury department.

Liquidity is further provided by assets such as federal funds sold, reverse repurchase agreements, balances held at the Federal Reserve Bank, and trading securities, which may be immediately converted to cash at minimal cost. The aggregate of these assets averaged $1.67 billion and $1.01 billion for the third quarter and first nine months of 2015, compared with $826.3 million and $886.5 million for the year-earlier periods. In addition, the Company has committed and unutilized secured borrowing capacity of $6.62 billion as of September 30, 2015 from the Federal Home Loan Bank of San Francisco, of which the Bank is a member. The Company’s investment portfolio also provides a substantial liquidity reserve. The portfolio of securities available-for-sale averaged $5.01 billion and $5.17 billion for the three and nine months ended September 30, 2015. The portfolio of securities available-for-sale averaged $5.40 billion for the three and nine months ended September 30, 2014. The unpledged portion of securities available-for-sale and held-to-maturity at fair value totaled $7.07 billion at September 30, 2015. These securities could be used as collateral for borrowing or a portion of the securities available-for-sale could be sold.

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Interest-Rate Risk

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

The Company is naturally asset-sensitive due to its large portfolio of rate-sensitive commercial loans that are funded in part by noninterest-bearing and rate-stable core deposits. As a result, if there are no significant changes in the mix of assets and liabilities, the net interest margin increases when interest rates increase and decreases when interest rates decrease. The Company uses on and off-balance sheet hedging vehicles to manage risk. The Company uses a simulation model to estimate the impact of changes in interest rates on net interest income. Interest rate scenarios include stable rates and a 200 basis point and a 400 basis point parallel shift in the yield curve occurring gradually over a two-year period. The model is used to project net interest income assuming no changes in loans or deposit mix as it stood at September 30, 2015, as well as a dynamic simulation that includes changes to balance sheet mix in response to changes in interest rates. Loan yields and deposit rates change over the simulation horizon based on current spreads and adjustment factors that are statistically derived using historical rate and balance sheet data.

As of September 30, 2015, the Federal funds target rate was at a range of zero percent to 0.25 percent. Further declines in interest rates are not expected to significantly reduce earning asset yields or liability costs, nor have a meaningful effect on net interest margin. The Company’s net interest income simulation for 2015 was performed under two rate scenarios: a 200 basis point gradual increase in rates and a 400 basis point gradual increase in rates, both over a 2-year horizon. Under the 200 basis point scenario, loans, excluding acquired impaired loans which are in a runoff mode, increase by 13 percent per year compared to the base case and deposits decline 4 percent per year. At September 30, 2015, a gradual 200 basis point parallel increase in the yield curve over the next 24 months assuming a static balance sheet would result in an increase in projected net interest income of approximately 6.6 percent in year one and 23.1 percent in year two over the base case. The dynamic simulation incorporates balance sheet changes resulting from a gradual 200 basis point increase in rates. In combination, these rate and balance sheet effects result in an increase in projected net interest income of approximately 10.8 percent in year one and 31.5 percent in year two over the base case. Under the 400 basis point scenario, loans, excluding acquired impaired loans which are in a runoff mode, increase by 13 percent per year compared to the base case and deposits decline 7.5 percent per year. At September 30, 2015, a gradual 400 basis point parallel increase in the yield curve over the next 24 months assuming a static balance sheet would result in an increase in projected net interest income of approximately 13.1 percent in year one and 45.5 percent in year two over the base case. This compares to an increase in projected net interest income of 11.8 percent in year one and 40.3 percent in year two over the base case at September 30, 2014. The dynamic simulation based on a gradual 400 basis point increase in rates results in an increase in projected net interest income of approximately 16.0 percent in year one and 47.7 percent in year two over the base case. Interest rate sensitivity has increased due to changes in the mix of the balance sheet, primarily growth in floating rate loans and non-rate sensitive deposits. The Company’s asset sensitivity is primarily tied to changes in short-term rates due to its large portfolio of rate-sensitive loans and funding provided by noninterest-bearing and rate-stable core deposits. The Company’s interest-rate risk exposure remains within Board limits and ALCO guidelines.

The Company’s loan portfolio includes floating rate loans which are tied to short-term market index rates, adjustable rate loans for which the initial rate is fixed for a period from one year to as much as ten years, and fixed-rate loans whose interest rate does not change through the life of the transaction.

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The following table shows the composition of the Company’s loan portfolio, including acquired impaired loans, by major loan category as of September 30, 2015. Each loan category is further divided into Floating, Adjustable and Fixed rate components. Floating rate loans are generally tied to either the Prime rate or to a LIBOR-based index.

	Floating Rate															Total
(in millions)	Prime			LIBOR			Total			Adjustable			Fixed			Loans
Commercial and lease financing	$	2,761		$	6,550		$	9,311		$	50		$	1,580		$	10,941
Commercial real estate mortgages	234			2,376			2,610			79			1,259			3,948
Residential mortgages	7			—			7			4,214			1,488			5,709
Real estate construction	155			745			900			—			32			932
Home equity loans and lines of credit	745			—			745			4			51			800
Installment	106			—			106			—			100			206
Acquired impaired loans	6			56			62			285			53			400
Total loans and leases	$	4,014		$	9,727		$	13,741		$	4,632		$	4,563		$	22,936
Percentage of portfolio	18		%	42		%	60		%	20		%	20		%	100		%

Certain floating rate loans have a “floor” rate which is absolute and below which the loan rate will not fall even though market rates may be unusually low. At September 30, 2015, $13.74 billion (60 percent) of the Company’s loan portfolio was floating rate, of which $12.01 billion (87 percent) was not impacted by rate floors. This is because either the loan contract does not specify a minimum or floor rate, or because the contractual loan rate is above the minimum rate specified in the loan contract. Of the loans which were at their contractual minimum rate, $1.48 billion (11 percent) were within 0.75 percent of the contractual loan rate absent the effects of the floor. Thus, the rate on these loans will be relatively responsive to increases in the underlying Prime or LIBOR index, and all will adjust upwards should the underlying index increase by more than 0.75 percent. Only $24.6 million of floating rate loans have floors that are more than 2 percent above the contractual rate formula. Thus, the yield on the Company’s floating rate loan portfolio is expected to be highly responsive to changes in market rates. The following table shows the balance of loans in the Floating Rate portfolio stratified by spread between the current loan rate and the floor rate as of September 30, 2015:

	Loans with No
	Floor and
	Current Rate			Interest Rate Increase Needed for Loans
	Greater than			Currently at Floor Rate to Become Floating
(in millions)	Floor			< 0.75%			0.76% - 2.00%			> 2.00%			Total
Prime	$	2,952		$	888		$	173		$	1		$	4,014
LIBOR	9,061			593			49			24			9,727
Total floating rate loans	$	12,013		$	1,481		$	222		$	25		$	13,741
% of total floating rate loans	87		%	11		%	2		%	0		%	100		%

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

As of September 30, 2015, an instantaneous 200 basis point increase in interest rates results in a 3.4 percent decline in EVE. This compares to a 4.4 percent decline in EVE a year-earlier. The decrease in sensitivity is primarily due to changes in the mix of the balance sheet and decline in long-term interest rates. Measurement of a 200 basis point decrease in rates as of September 30, 2015 and 2014 is not meaningful due to the current low rate environment.

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Interest-Rate Risk Management

Interest-rate swaps may be used to reduce cash flow variability and to moderate changes in the fair value of long-term financial instruments. Net interest income or expense associated with interest-rate swaps (the difference between the fixed and floating rates paid or received) is included in net interest income in the reporting periods in which they are earned. Derivatives are recorded on the consolidated balance sheets at their fair value. The treatment of changes in the fair value of derivatives depends on the character of the transaction. The Company had no interest-rate swaps designated as hedging instruments at September 30, 2015, December 31, 2014 and September 30, 2014.

The Company has not entered into any hedge transactions involving any other interest-rate derivative instruments, such as interest-rate floors, caps, and interest-rate futures contracts for its own portfolio in 2015. Under existing policy, the Company could use such financial instruments in the future if deemed appropriate.

Other Derivatives

The Company also offers various derivative products to clients and enters into derivative transactions in due course. These derivative contracts are offset by paired trades with unrelated bank counterparties. These transactions are not linked to specific Company assets or liabilities in the consolidated balance sheets or to forecasted transactions in a hedge relationship and, therefore, do not qualify for hedge accounting. The contracts are marked-to-market each reporting period with changes in fair value recorded as part of Other noninterest income in the consolidated statements of income. Fair values are determined from verifiable third-party sources that have considerable experience with the derivative markets. The Company provides client data to the third-party source for purposes of calculating the credit valuation component of the fair value measurement of client derivative contracts. At September 30, 2015 and 2014, the Company had entered into derivative contracts with clients (and offsetting derivative contracts with counterparties) having a notional balance of $4.02 billion and $3.29 billion, respectively.

Counterparty Risk and Collateral

Interest-rate swap agreements involve the exchange of fixed and variable-rate interest payments based upon a notional principal amount and maturity date. The Company’s interest-rate swaps had no credit risk exposure at September 30, 2015, compared with $1.0 million of credit risk exposure at September 30, 2014. The credit exposure represents the cost to replace, on a present value basis and at current market rates, all contracts outstanding by trading counterparty having an aggregate positive market value, net of margin collateral received. The Company’s swap agreements require the deposit of cash or marketable debt securities as collateral for this risk if it exceeds certain market value thresholds. These requirements apply individually to the Corporation and to the Bank. No collateral had been received from swap counterparties at September 30, 2015 and September 30, 2014. The Company delivered cash and securities collateral valued at $82.7 million on swap agreements at September 30, 2015 and $29.4 million at September 30, 2014.

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 actively manages its foreign exchange exposures within prescribed risk limits and controls. At September 30, 2015, the Company’s outstanding foreign exchange contracts for client accounts totaled $815.9 million. The mark-to-market on foreign exchange contracts included in other assets and other liabilities totaled $8.5 million and $8.8 million, respectively, at September 30, 2015. At September 30, 2015, the Company had delivered cash collateral on foreign exchange contracts totaling $1.1 million, and received cash collateral on foreign exchange contracts of $1.0 million.

89

ITEM 4. 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 its “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective.

INTERNAL CONTROL OVER FINANCIAL REPORTING

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

90

PART II — OTHER INFORMATION

ITEM 1A. RISK FACTORS

For a discussion of risk factors relating to the Company’s business, refer to Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 (“Form 10-K”). There has been no material change in the risk factors as previously disclosed in the Company’s Form 10-K.

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

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

The information required by subsection (c) of this item regarding purchases by the Company during the quarter ended September 30, 2015 of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act is incorporated by reference from the relevant portion of Part I, Item 1 of this report under Note 8.

ITEM 6.EXHIBITS

Exhibit No.
12	Statement Re: Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Requirements.
31.1	Chief Executive Officer certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Chief Financial Officer certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

91

SIGNATURES

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

	CITY NATIONAL CORPORATION
	(Registrant)
DATE: October 30, 2015	/s/ Christopher J. Carey
	CHRISTOPHER J. CAREY
	Executive Vice President and
	Chief Financial Officer
	(Authorized Officer and
	Principal Financial Officer)

92

EX-12

Exhibit 12

Computation of Ratio of Earnings to Fixed Charges

and Preferred Stock Dividend Requirements

(in thousands, except ratios)

	Nine Months
	Ended
	September 30,			Year Ended December 31,
	2015			2014			2013			2012			2011			2010
Excluding interest on deposits (1)
Income before income taxes	$	303,316		$	394,940		$	341,980		$	321,540		$	265,871		$	172,014
Equity investee income	(14,070		)	(10,250		)	(16,650		)	(11,000		)	(12,720		)	(10,207		)
Equity investee distributions	8,432			14,468			9,698			8,234			9,428			8,084
Preferred dividends of consolidated subsidiaries	—			—			—			—			(2,885		)	(3,681		)
Fixed charges:
Interest expense (2)	26,558			40,565			44,466			41,881			36,831			52,036
Interest within rental expense	11,804			15,119			16,095			15,195			13,015			13,149
Preferred dividends of consolidated subsidiaries	—			—			—			—			2,885			3,681
Total fixed charges	38,362			55,684			60,561			57,076			52,731			68,866
Total earnings and fixed charges	$	336,040		$	454,842		$	395,589		$	375,850		$	312,425		$	235,076
Fixed charges, as above	$	38,362		$	55,684		$	60,561		$	57,076		$	52,731		$	68,866
Preferred stock dividends	21,112			28,150			16,547			—			—			3,008
Fixed charges including preferred stock dividends	$	59,474		$	83,834		$	77,108		$	57,076		$	52,731		$	71,874
Ratio of earnings to fixed charges and preferred stock dividend requirements	5.65			5.43			5.13			6.59			5.92			3.27
Including interest on deposits
Total earnings and fixed charges, as above	$	336,040		$	454,842		$	395,589		$	375,850		$	312,425		$	235,076
Add: Interest on deposits	5,676			8,271			11,114			14,042			33,685			49,030
Total earnings, fixed charges and interest on deposits	$	341,716		$	463,113		$	406,703		$	389,892		$	346,110		$	284,106
Fixed charges, including preferred stock dividends, as above	$	59,474		$	83,834		$	77,108		$	57,076		$	52,731		$	71,874
Add: Interest on deposits	5,676			8,271			11,114			14,042			33,685			49,030
Total fixed charges including preferred stock dividends and interest on deposits	$	65,150		$	92,105		$	88,222		$	71,118		$	86,416		$	120,904
Ratio of earnings to fixed charges and preferred stock dividend requirements	5.25			5.03			4.61			5.48			4.01			2.35

(1)Certain prior period amounts have been adjusted to reflect the adoption of ASU 2014-01. See Note 1, Summary of Significant Accounting Policies, of the Notes to the Unaudited Consolidated Financial Statements for further discussion.

(2)Includes interest expense on uncertain tax positions.

EX-31.1

Exhibit 31.1

CHIEF EXECUTIVE OFFICER SECTION 302 CERTIFICATION

I, Russell Goldsmith, certify that:

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

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

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

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

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

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

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

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

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

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

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

DATE: October 30, 2015	/s/ Russell Goldsmith
	RUSSELL GOLDSMITH
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CHIEF FINANCIAL OFFICER SECTION 302 CERTIFICATION

I, Christopher J. Carey, certify that:

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

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

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

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

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

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

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

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

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

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

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

DATE: October 30, 2015	/s/ Christopher J. Carey
	CHRISTOPHER J. CAREY
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of City National Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2015 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:

(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: October 30, 2015	/s/ Russell Goldsmith
	RUSSELL GOLDSMITH
	Chief Executive Officer
DATE: October 30, 2015	/s/ Christopher J. Carey
	CHRISTOPHER J. CAREY
	Chief Financial Officer

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

XML

Derivative Instruments (Tables)

9 Months Ended

Sep. 30, 2015

Derivative Instruments

Summary of notional amount and fair values of derivative instruments

	September 30, 2015						December 31, 2014
(in millions) (1)	Notional Amount		Derivative Assets		Derivative Liabilities		Notional Amount		Derivative Assets		Derivative Liabilities
Derivatives not designated as hedging instruments
Interest rate contracts:
Swaps	$	3,556.1	$	71.5	$	73.0	$	3,094.5	$	44.7	$	45.2
Interest-rate caps, floors and collars	465.6		0.2		0.2		437.3		0.8		0.8
Total interest-rate contracts	4,021.7		71.7		73.2		3,531.8		45.5		46.0
Option contracts	—		—		—		1.9		0.4		—
Foreign exchange contracts:
Spot and forward contracts	815.9		8.5		8.8		802.7		6.1		6.6
Options purchased	—		—		—		3.0		0.1		0.1
Options written	—		—		—		3.0		0.2		0.2
Total foreign exchange contracts	815.9		8.5		8.8		808.7		6.4		6.9
Equity warrants	5.5		2.2		—		2.3		0.9		—
Total derivatives not designated as hedging instruments	$	4,843.1	$	82.4	$	82.0	$	4,344.7	$	53.2	$	52.9

(1) The Company offsets mark-to-market adjustments, interest receivable and interest payable on interest-rate swaps that are executed with the same counterparty under a master netting agreement, and reports the net balance in other assets or other liabilities in the consolidated balance sheets. For purposes of this disclosure, mark-to-market adjustments, interest receivable and interest payable are presented on a gross basis.

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

(in millions) Derivatives Not Designated as	Location in Consolidated	For the three months ended September 30,					For the nine months ended September 30,
Hedging Instruments	Statements of Income	2015			2014		2015			2014
Interest-rate contracts	Other noninterest income	$	(1.3	)	$	—	$	(0.9	)	$	(1.0	)
Option contracts	Other noninterest income	—			0.1		(0.1		)	0.1
Foreign exchange contracts (1)	International services income	8.3			8.7		24.1			24.2
Equity warrants	Other noninterest income	0.2			—		0.3			0.1
Total income		$	7.2		$	8.8	$	23.4		$	23.4

(1) Includes spread and translation gains (losses) on foreign exchange spot, forward and option contracts.

XML

Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Dec. 31, 2013
Accounts notes and loans receivable
Loans and leases, excluding acquired impaired loans	$ 22,536,584		$ 20,337,206	$ 19,347,988
Less: Allowance for loan and lease losses	(317,157)	$ (316,922)	(310,149)	(312,703)	$ (311,276)	$ (302,584)
Loans and leases, excluding acquired impaired loans, net	22,219,427		20,027,057
Acquired impaired loans	399,527		510,979
Less: Allowance for loan losses	(5,648)	(8,075)	(8,608)	(9,368)	(9,103)	(15,922)
Acquired impaired loans, net	393,879		502,371
Total loans and leases	22,936,111		20,848,185
Net loans and leases	22,613,306		20,529,428
Net deferred costs (fees)	3,500		200
FDIC indemnification asset	28,164		50,511
FDIC clawback liability	16,608
Acquired impaired loans covered under the FDIC loss-sharing agreements	377,100
Acquired impaired loans not covered under the FDIC loss-sharing agreements	22,400
Imperial Capital Bank
Accounts notes and loans receivable
Acquired impaired loans	359,723		456,177
FDIC indemnification asset	25,960
1st Pacific Bank
Accounts notes and loans receivable
Acquired impaired loans	18,981		23,895
FDIC indemnification asset	760
FDIC clawback liability	13,395
Sun West Bank
Accounts notes and loans receivable
Acquired impaired loans	6,356		9,353
FDIC clawback liability	2,801
Nevada Commerce Bank
Accounts notes and loans receivable
Acquired impaired loans	14,467		21,554
FDIC indemnification asset	1,444
FDIC clawback liability	412
Commercial
Accounts notes and loans receivable
Loans and leases, excluding acquired impaired loans	10,253,592		9,360,976
Acquired impaired loans	$ 994		1,969
Sharing of recoveries with FDIC on expiration date (as a percent)	80.00%
Sharing of recoveries with FDIC on termination date (as a percent)	80.00%
Commercial real estate mortgages
Accounts notes and loans receivable
Loans and leases, excluding acquired impaired loans	$ 3,947,746		3,539,703	3,565,188
Less: Allowance for loan and lease losses	(48,506)	(48,649)	(44,745)	(50,989)	(50,651)	(50,678)
Acquired impaired loans	376,335		481,689
Residential mortgages
Accounts notes and loans receivable
Loans and leases, excluding acquired impaired loans	5,709,272		5,106,803	5,023,213
Less: Allowance for loan and lease losses	(9,848)	(9,660)	(10,296)	(11,467)	(10,296)	(11,540)
Acquired impaired loans	3,391		4,455
Real estate construction
Accounts notes and loans receivable
Loans and leases, excluding acquired impaired loans	932,422		710,224	585,232
Less: Allowance for loan and lease losses	(11,577)	(10,652)	(9,115)	(8,745)	(7,191)	(6,351)
Acquired impaired loans	16,042		18,790
Home equity loans and lines of credit
Accounts notes and loans receivable
Loans and leases, excluding acquired impaired loans	799,711		785,796	759,258
Less: Allowance for loan and lease losses	(5,278)	(5,404)	(6,609)	(7,028)	(6,575)	(6,677)
Acquired impaired loans	2,612		3,820
Installment
Accounts notes and loans receivable
Loans and leases, excluding acquired impaired loans	206,156		184,613	178,803
Less: Allowance for loan and lease losses	(2,290)	$ (2,208)	(2,228)	$ (2,384)	$ (2,284)	$ (1,842)
Acquired impaired loans	153		256
Lease financing
Accounts notes and loans receivable
Loans and leases, excluding acquired impaired loans	$ 687,685		$ 649,091

XML

Fair Value Measurements (Detail 5) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Financial Assets:
Cash and due from banks	$ 434,087	$ 336,470
Due from banks - interest-bearing	1,424,109	119,981
Securities purchased under resale agreements	200,302	200,108
Securities held-to-maturity	3,598,902	3,484,647
Loans and leases, net of allowance	22,219,427	20,027,057
Acquired impaired loans, net of allowance	393,879	502,371
FDIC indemnification asset	28,164	50,511
Investment in FHLB and FRB stock	50,600	58,400
Quoted Prices in Active Markets Level 1
Financial Assets:
Cash and due from banks	434,100	336,500
Due from banks - interest-bearing	1,424,100	120,000
Financial Liabilities:
Short-term borrowings		320,000
Significant Other Observable Inputs Level 2
Financial Assets:
Securities purchased under resale agreements	201,000	201,100
Securities held-to-maturity	3,598,900	3,484,600
Investment in FHLB and FRB stock	50,600	58,400
Financial Liabilities:
Deposits	30,601,300	27,435,100
Long-term debt	614,700	605,300
Significant Unobservable Inputs Level 3
Financial Assets:
Loans and leases, net of allowance	22,772,000	20,576,900
Acquired impaired loans, net of allowance	443,000	549,100
FDIC indemnification asset	22,400	40,200
Financial Liabilities:
Deposits	573,000	674,500
Short-term borrowings	6,500	2,900
Long-term debt	111,200	99,000
Carrying Amount
Financial Assets:
Cash and due from banks	434,100	336,500
Due from banks - interest-bearing	1,424,100	120,000
Securities purchased under resale agreements	200,000	200,000
Securities held-to-maturity	3,506,500	3,427,000
Loans and leases, net of allowance	22,219,400	20,027,100
Acquired impaired loans, net of allowance	393,900	502,400
FDIC indemnification asset	28,200	50,500
Investment in FHLB and FRB stock	50,600	58,400
Financial Liabilities:
Deposits	31,173,400	28,108,100
Short-term borrowings	6,500	322,900
Long-term debt	650,100	638,600
Fair Value
Financial Assets:
Cash and due from banks	434,100	336,500
Due from banks - interest-bearing	1,424,100	120,000
Securities purchased under resale agreements	201,000	201,100
Securities held-to-maturity	3,598,900	3,484,600
Loans and leases, net of allowance	22,772,000	20,576,900
Acquired impaired loans, net of allowance	443,000	549,100
FDIC indemnification asset	22,400	40,200
Investment in FHLB and FRB stock	50,600	58,400
Financial Liabilities:
Deposits	31,174,300	28,109,600
Short-term borrowings	6,500	322,900
Long-term debt	$ 725,900	$ 704,300

XML

Derivative Instruments (Detail) $ in Millions	Sep. 30, 2015 USD ($) item	Dec. 31, 2014 USD ($) item
Derivative
Number of Hedging instruments | item	0	0
Derivatives not designated as hedging instruments
Derivative
Notional Amount	$ 4,843.1	$ 4,344.7
Derivative Assets	82.4	53.2
Derivative Liabilities	82.0	52.9
Derivatives not designated as hedging instruments | Option contracts
Derivative
Notional Amount		1.9
Derivative Assets		0.4
Derivatives not designated as hedging instruments | Interest-Rate Contracts
Derivative
Notional Amount	4,021.7	3,531.8
Derivative Assets	71.7	45.5
Derivative Liabilities	73.2	46.0
Derivatives not designated as hedging instruments | Interest-Rate Swaps
Derivative
Notional Amount	3,556.1	3,094.5
Derivative Assets	71.5	44.7
Derivative Liabilities	73.0	45.2
Derivatives not designated as hedging instruments | Interest Rate Caps, Floors and Collars
Derivative
Notional Amount	465.6	437.3
Derivative Assets	0.2	0.8
Derivative Liabilities	0.2	0.8
Derivatives not designated as hedging instruments | Spot and forward contracts
Derivative
Notional Amount	815.9	802.7
Derivative Assets	8.5	6.1
Derivative Liabilities	8.8	6.6
Derivatives not designated as hedging instruments | Foreign Exchange Contracts
Derivative
Notional Amount	815.9	808.7
Derivative Assets	8.5	6.4
Derivative Liabilities	8.8	6.9
Derivatives not designated as hedging instruments | Foreign Exchange Contracts | Options purchased | Purchase
Derivative
Notional Amount		3.0
Derivative Assets		0.1
Derivative Liabilities		0.1
Derivatives not designated as hedging instruments | Foreign Exchange Contracts | Options purchased | Sale
Derivative
Notional Amount		3.0
Derivative Assets		0.2
Derivative Liabilities		0.2
Equity Warrants | Derivatives not designated as hedging instruments
Derivative
Notional Amount	5.5	2.3
Derivative Assets	$ 2.2	$ 0.9

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Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Detail 2) - Credit Risk	9 Months Ended
	Sep. 30, 2015 item
Acquired impaired loans
Concentrations of credit risk
Number of states with largest concentration by loan type	5
Total loans outstanding | Excluding acquired impaired loans | California
Concentrations of credit risk
Percent of total loans outstanding (as a percent)	72.00%
Total loans outstanding | Excluding acquired impaired loans | New York
Concentrations of credit risk
Percent of total loans outstanding (as a percent)	10.00%
Total loans outstanding | Excluding acquired impaired loans | Other states and countries
Concentrations of credit risk
Percent of total loans outstanding (as a percent)	18.00%
Total loans outstanding | Acquired impaired loans | California
Concentrations of credit risk
Percent of total loans outstanding (as a percent)	29.00%
Total loans outstanding | Acquired impaired loans | Texas
Concentrations of credit risk
Percent of total loans outstanding (as a percent)	12.00%
Total loans outstanding | Acquired impaired loans | Nevada
Concentrations of credit risk
Percent of total loans outstanding (as a percent)	6.00%
Total loans outstanding | Acquired impaired loans | Ohio
Concentrations of credit risk
Percent of total loans outstanding (as a percent)	6.00%
Total loans outstanding | Acquired impaired loans | Arizona
Concentrations of credit risk
Percent of total loans outstanding (as a percent)	6.00%
Total loans outstanding | Acquired impaired loans | Other states
Concentrations of credit risk
Percent of total loans outstanding (as a percent)	41.00%

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Segment Results (Detail) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) item	Sep. 30, 2014 USD ($)
Segment Results
Number of reportable segments | item			3
Earnings Summary:
Net interest income	$ 232,257	$ 215,776	$ 685,347	$ 634,676
(Reversal of) provision for credit losses on loans and leases, excluding acquired impaired loans	(6,000)	(8,000)	4,000	(9,000)
(Reversal of) provision for losses on acquired impaired loans	1,148	589	2,736	3,783
Noninterest income	104,871	107,917	328,850	310,264
Depreciation and amortization	10,719	9,702	37,812	28,356
Noninterest expense	227,324	213,212	666,333	626,992
Income before income taxes	103,937	108,190	303,316	294,809
Provision for income taxes	32,208	37,452	100,489	103,571
Net income	71,729	70,738	202,827	191,238
Less: Net (loss) income attributable to noncontrolling interest	(79)	847	954	2,056
Net income attributable to City National Corporation	71,808	69,891	201,873	189,182
Selected Average Balances:
Loans and leases, excluding acquired impaired loans	21,969,592	18,837,760	21,224,326	18,050,616
Acquired impaired loans	420,308	580,200	455,786	639,592
Total assets	34,451,160	30,896,357	33,205,126	30,097,514
Deposits	30,106,057	26,830,633	28,854,337	26,043,449
Goodwill	637,918	642,255	636,660	642,498
Customer-relationship intangibles, net	31,714	37,024	32,918	38,505
Other segment
Earnings Summary:
Net interest income	5,494	10,521	21,114	30,541
Noninterest income	(16,931)	(12,278)	(45,412)	(26,652)
Depreciation and amortization	6,398	5,119	24,502	14,665
Noninterest expense	(20,915)	(19,869)	(68,315)	(56,308)
Income before income taxes	3,080	12,993	19,515	45,532
Provision for income taxes	954	4,533	6,486	16,109
Net income	2,126	8,460	13,029	29,423
Net income attributable to City National Corporation	2,126	8,460	13,029	29,423
Selected Average Balances:
Loans and leases, excluding acquired impaired loans	56,038	60,002	57,460	57,583
Total assets	11,330,543	10,675,661	10,761,541	10,586,949
Deposits	54,447	277,930	104,932	254,929
Commercial and Private Banking
Earnings Summary:
Net interest income	226,171	204,803	662,184	602,879
(Reversal of) provision for credit losses on loans and leases, excluding acquired impaired loans	(6,000)	(8,000)	4,000	(9,000)
(Reversal of) provision for losses on acquired impaired loans	1,148	589	2,736	3,783
Noninterest income	51,675	50,906	158,718	135,498
Depreciation and amortization	2,482	2,786	7,688	8,381
Noninterest expense	188,367	175,844	563,775	517,022
Income before income taxes	91,849	84,490	242,703	218,191
Provision for income taxes	28,440	29,478	80,661	77,192
Net income	63,409	55,012	162,042	140,999
Net income attributable to City National Corporation	63,409	55,012	162,042	140,999
Selected Average Balances:
Loans and leases, excluding acquired impaired loans	21,913,554	18,777,758	21,166,866	17,993,033
Acquired impaired loans	420,308	580,200	455,786	639,592
Total assets	22,390,469	19,482,692	21,704,604	18,814,041
Deposits	29,953,606	26,481,108	28,654,702	25,710,863
Goodwill	393,176	393,176	393,176	393,176
Customer-relationship intangibles, net	1,315	2,335	1,460	2,717
Wealth Management
Earnings Summary:
Net interest income	592	452	2,049	1,256
Noninterest income	70,127	69,289	215,544	201,418
Depreciation and amortization	1,839	1,797	5,622	5,310
Noninterest expense	59,872	57,237	170,873	166,278
Income before income taxes	9,008	10,707	41,098	31,086
Provision for income taxes	2,814	3,441	13,342	10,270
Net income	6,194	7,266	27,756	20,816
Less: Net (loss) income attributable to noncontrolling interest	(79)	847	954	2,056
Net income attributable to City National Corporation	6,273	6,419	26,802	18,760
Selected Average Balances:
Total assets	730,148	738,004	738,981	696,524
Deposits	98,004	71,595	94,703	77,657
Goodwill	244,742	249,079	243,484	249,322
Customer-relationship intangibles, net	$ 30,399	$ 34,689	$ 31,458	$ 35,788

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Fair Value Measurements (Detail 3) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Minimum
Information about valuation method, inputs and assumptions for nonrecurring Level 3 fair value measurements
Adjustments to appraised values from use of comparable sales values or income approaches (as a percent)	12.00%
Adjustments to investment carrying amounts (as a percent)	27.00%
Maximum
Information about valuation method, inputs and assumptions for nonrecurring Level 3 fair value measurements
Adjustments to appraised values from use of comparable sales values or income approaches (as a percent)	22.00%
Adjustments to investment carrying amounts (as a percent)	86.00%
Other real estate owned
Information about valuation method, inputs and assumptions for nonrecurring Level 3 fair value measurements
Fair value of assets	$ 9,544
Private equity and alternative investments
Information about valuation method, inputs and assumptions for nonrecurring Level 3 fair value measurements
Fair value of assets	1,587
Fair Value | Measured on a Recurring Basis
Information about valuation method, inputs and assumptions for nonrecurring Level 3 fair value measurements
Fair value of assets	5,548,674	$ 6,110,687
Fair Value | Measured on a Nonrecurring Basis
Information about valuation method, inputs and assumptions for nonrecurring Level 3 fair value measurements
Fair value of assets	$ 11,131	$ 5,644

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

9 Months Ended

Sep. 30, 2015

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

Summary of loans

Loans and Leases
	September 30,			December 31,
(in thousands)	2015			2014
Commercial	$	10,253,592		$	9,360,976
Commercial real estate mortgages	3,947,746			3,539,703
Residential mortgages	5,709,272			5,106,803
Real estate construction	932,422			710,224
Home equity loans and lines of credit	799,711			785,796
Installment	206,156			184,613
Lease financing	687,685			649,091
Loans and leases, excluding acquired impaired loans	22,536,584			20,337,206
Less: Allowance for loan and lease losses	(317,157		)	(310,149		)
Loans and leases, excluding acquired impaired loans, net	22,219,427			20,027,057
Acquired impaired loans	399,527			510,979
Less: Allowance for loan losses	(5,648		)	(8,608		)
Acquired impaired loans, net	393,879			502,371
Total loans and leases	$	22,936,111		$	20,848,185
Total loans and leases, net	$	22,613,306		$	20,529,428

Summary of major categories of acquired impaired loans

	September 30,			December 31,
(in thousands)	2015			2014
Commercial	$	994		$	1,969
Commercial real estate mortgages	376,335			481,689
Residential mortgages	3,391			4,455
Real estate construction	16,042			18,790
Home equity loans and lines of credit	2,612			3,820
Installment	153			256
Acquired impaired loans	399,527			510,979
Less: Allowance for loan losses	(5,648		)	(8,608		)
Acquired impaired loans, net	$	393,879		$	502,371

Schedule of information on acquired impaired loans and loss-sharing terms by acquired entity

(in thousands)	Imperial Capital Bank		1st Pacific Bank		Sun West Bank		Nevada Commerce Bank		Total
Acquired impaired loans as of:
September 30, 2015	$	359,723	$	18,981	$	6,356	$	14,467	$	399,527
December 31, 2014	456,177		23,895		9,353		21,554		510,979
As of September 30, 2015:
FDIC indemnification asset	$	25,960	$	760	$	—	$	1,444	$	28,164
FDIC clawback liability	—		13,395		2,801		412		16,608
Expiration date of FDIC loss sharing:
Commercial (1)	12/31/2016		6/30/2015		6/30/2015		6/30/2016
Residential	12/31/2019		5/31/2020		5/31/2020		4/30/2021
Termination date of FDIC loss-sharing agreements:
Commercial (1)	12/19/2017		5/8/2018		5/29/2018		6/30/2019
Residential	12/31/2019		5/31/2020		5/31/2020		4/30/2021

(1) The Company is subject to sharing 80 percent of its recoveries with the FDIC up to the last day of the quarter in which the termination dates of the commercial loss-sharing agreements occur.

Summary of accretable yield for acquired impaired loans

	For the nine months ended September 30,
(in thousands)	2015			2014
Balance, beginning of period	$	168,469		$	219,018
Accretion	(28,131		)	(36,067		)
Reclassifications from nonaccretable difference	19,545			25,636
Disposals and other	(23,239		)	(28,628		)
Balance, end of period	$	136,644		$	179,959

Summary of allowance for loan and lease losses on excluding acquired impaired loans

(in thousands)	Commercial (1)			Commercial Real Estate Mortgages			Residential Mortgages			Real Estate Construction		Home Equity Loans and Lines of Credit			Installment			Qualitative			Total
Three months ended September 30, 2015
Allowance for loan and lease losses:
Beginning balance	$	124,314		$	48,649		$	9,660		$	10,652	$	5,404		$	2,208		$	116,035		$	316,922
Charge-offs	(4,576		)	—			—			—		—			(240		)	—			(4,816		)
Recoveries	10,514			68			34			142		37			204			—			10,999
Net recoveries (charge-offs)	5,938			68			34			142		37			(36		)	—			6,183
(Reversal of) provision for credit losses	2,939			(211		)	154			783		(163		)	118			(9,620		)	(6,000		)
Transfers from reserve for off-balance sheet credit commitments	—			—			—			—		—			—			52			52
Ending balance	$	133,191		$	48,506		$	9,848		$	11,577	$	5,278		$	2,290		$	106,467		$	317,157
Nine months ended September 30, 2015
Allowance for loan and lease losses:
Beginning balance	$	115,855		$	44,745		$	10,296		$	9,115	$	6,609		$	2,228		$	121,301		$	310,149
Charge-offs	(10,276		)	—			—			—		—			(748		)	—			(11,024		)
Recoveries	12,229			1,270			110			1,852		110			622			—			16,193
Net recoveries (charge-offs)	1,953			1,270			110			1,852		110			(126		)	—			5,169
(Reversal of) provision for credit losses	15,383			2,491			(558		)	610		(1,441		)	188			(12,673		)	4,000
Transfers to reserve for off-balance sheet credit commitments	—			—			—			—		—			—			(2,161		)	(2,161		)
Ending balance	$	133,191		$	48,506		$	9,848		$	11,577	$	5,278		$	2,290		$	106,467		$	317,157
Ending balance of allowance:
Individually evaluated for impairment	$	2,315		$	255		$	39		$	—	$	—		$	—		$	—		$	2,609
Collectively evaluated for impairment	130,876			48,251			9,809			11,577		5,278			2,290			106,467			314,548
Loans and leases, excluding acquired impaired loans
Ending balance of loans and leases:
Loans and leases, excluding acquired impaired loans	$	10,941,277		$	3,947,746		$	5,709,272		$	932,422	$	799,711		$	206,156		$	—		$	22,536,584
Individually evaluated for impairment	18,185			22,918			11,850			5,802		1,137			—			—			59,892
Collectively evaluated for impairment	10,923,092			3,924,828			5,697,422			926,620		798,574			206,156			—			22,476,692

(1) Includes lease financing loans.

(in thousands)	Commercial (1)			Commercial Real Estate Mortgages			Residential Mortgages			Real Estate Construction			Home Equity Loans and Lines of Credit			Installment			Qualitative			Total
Three months ended September 30, 2014
Allowance for loan and lease losses:
Beginning balance	$	126,279		$	50,651		$	10,296		$	7,191		$	6,575		$	2,284		$	108,000		$	311,276
Charge-offs	(3,773		)	—			—			—			—			(76		)	—			(3,849		)
Recoveries	6,202			225			33			7,729			52			158			—			14,399
Net recoveries	2,429			225			33			7,729			52			82			—			10,550
(Reversal of) provision for credit losses	(5,762		)	113			1,138			(6,175		)	401			18			2,267			(8,000		)
Transfers to reserve for off-balance sheet credit commitments	—			—			—			—			—			—			(1,123		)	(1,123		)
Ending balance	$	122,946		$	50,989		$	11,467		$	8,745		$	7,028		$	2,384		$	109,144		$	312,703
Nine months ended September 30, 2014
Allowance for loan and lease losses:
Beginning balance	$	117,103		$	50,678		$	11,540		$	6,351		$	6,677		$	1,842		$	108,393		$	302,584
Charge-offs	(18,594		)	(5		)	(482		)	—			(165		)	(264		)	—			(19,510		)
Recoveries	15,437			352			258			12,804			254			1,490			—			30,595
Net (charge-offs) recoveries	(3,157		)	347			(224		)	12,804			89			1,226			—			11,085
(Reversal of) provision for credit losses	(353		)	(36		)	151			(10,410		)	262			(684		)	2,070			(9,000		)
Transfers from (to) reserve for off-balance sheet credit commitments	9,353			—			—			—			—			—			(1,319		)	8,034
Ending balance	$	122,946		$	50,989		$	11,467		$	8,745		$	7,028		$	2,384		$	109,144		$	312,703
Ending balance of allowance:
Individually evaluated for impairment	$	1,304		$	291		$	—		$	—		$	—		$	—		$	—		$	1,595
Collectively evaluated for impairment	121,642			50,698			11,467			8,745			7,028			2,384			109,144			311,108
Loans and leases, excluding acquired impaired loans
Ending balance of loans and leases:
Loans and leases, excluding acquired impaired loans	$	9,236,294		$	3,565,188		$	5,023,213		$	585,232		$	759,258		$	178,803		$	—		$	19,347,988
Individually evaluated for impairment	16,316			25,551			7,785			6,610			2,313			—			—			58,575
Collectively evaluated for impairment	9,219,978			3,539,637			5,015,428			578,622			756,945			178,803			—			19,289,413

(1) Includes lease financing loans.

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

	For the three months ended September 30,					For the nine months ended September 30,
(in thousands)	2015			2014		2015		2014
Balance, beginning of period	$	30,024		$	24,787	$	27,811	$	33,944
Transfers (to) from allowance for loan and lease losses	(52		)	1,123		2,161		(8,034		)
Balance, end of period	$	29,972		$	25,910	$	29,972	$	25,910

Schedule of impaired loans, excluding acquired impaired loans

			Unpaid				For the three months ended September 30, 2015				For the nine months ended September 30, 2015
(in thousands)	Recorded Investment		Contractual Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
September 30, 2015
With no related allowance recorded:
Commercial	$	4,784	$	10,605	$	—	$	3,619	$	71	$	4,395	$	94
Commercial real estate mortgages	17,921		19,095		—		17,947		200		18,398		605
Residential mortgages:
Fixed	7,961		8,255		—		7,981		14		7,859		40
Variable	—		—		—		—		—		56		—
Total residential mortgages	7,961		8,255		—		7,981		14		7,915		40
Real estate construction:
Land	5,802		6,885		—		5,809		28		6,801		142
Total real estate construction	5,802		6,885		—		5,809		28		6,801		142
Home equity loans and lines of credit	1,137		2,247		—		1,035		2		1,319		2
Total with no related allowance	$	37,605	$	47,087	$	—	$	36,391	$	315	$	38,828	$	883
With an allowance recorded:
Commercial	$	13,401	$	17,347	$	2,315	$	9,869	$	95	$	8,090	$	138
Commercial real estate mortgages	4,997		5,311		255		5,008		—		5,061		142
Residential mortgages:
Variable	3,889		3,881		39		3,901		26		3,923		78
Total residential mortgages	3,889		3,881		39		3,901		26		3,923		78
Total with an allowance	$	22,287	$	26,539	$	2,609	$	18,778	$	121	$	17,074	$	358
Total impaired loans by type:
Commercial	$	18,185	$	27,952	$	2,315	$	13,488	$	166	$	12,485	$	232
Commercial real estate mortgages	22,918		24,406		255		22,955		200		23,459		747
Residential mortgages	11,850		12,136		39		11,882		40		11,838		118
Real estate construction	5,802		6,885		—		5,809		28		6,801		142
Home equity loans and lines of credit	1,137		2,247		—		1,035		2		1,319		2
Total impaired loans	$	59,892	$	73,626	$	2,609	$	55,169	$	436	$	55,902	$	1,241

(in thousands)	Recorded Investment		Unpaid Contractual Principal Balance		Related Allowance
December 31, 2014
With no related allowance recorded:
Commercial	$	8,894	$	9,182	$	—
Commercial real estate mortgages	19,858		22,416		—
Residential mortgages:
Fixed	7,756		7,994		—
Variable	224		262		—
Total residential mortgages	7,980		8,256		—
Real estate construction:
Land	6,609		8,758		—
Total real estate construction	6,609		8,758		—
Home equity loans and lines of credit	2,270		3,375		—
Total with no related allowance	$	45,611	$	51,987	$	—
With an allowance recorded:
Commercial	$	6,470	$	8,878	$	399
Commercial real estate mortgages	5,184		5,526		281
Residential mortgages:
Variable	3,957		3,948		48
Total residential mortgages	3,957		3,948		48
Total with an allowance	$	15,611	$	18,352	$	728
Total impaired loans by type:
Commercial	$	15,364	$	18,060	$	399
Commercial real estate mortgages	25,042		27,942		281
Residential mortgages	11,937		12,204		48
Real estate construction	6,609		8,758		—
Home equity loans and lines of credit	2,270		3,375		—
Total impaired loans	$	61,222	$	70,339	$	728

			Unpaid				For the three months ended September 30, 2014				For the nine months ended September 30, 2014
(in thousands)	Recorded Investment		Contractual Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
September 30, 2014
With no related allowance recorded:
Commercial	$	6,653	$	6,684	$	—	$	6,817	$	38	$	10,653	$	205
Commercial real estate mortgages	20,347		22,698		—		24,290		219		29,478		903
Residential mortgages:
Fixed	2,015		2,254		—		3,406		10		3,459		30
Variable	5,770		5,885		—		3,784		40		3,997		68
Total residential mortgages	7,785		8,139		—		7,190		50		7,456		98
Real estate construction:
Construction	—		—		—		—		—		2,742		76
Land	6,610		8,758		—		9,728		35		11,593		104
Total real estate construction	6,610		8,758		—		9,728		35		14,335		180
Home equity loans and lines of credit	2,313		3,375		—		2,874		—		2,881		—
Installment:
Consumer	—		—		—		—		1		4		1
Total installment	—		—		—		—		1		4		1
Total with no related allowance	$	43,708	$	49,654	$	—	$	50,899	$	343	$	64,807	$	1,387
With an allowance recorded:
Commercial	$	9,663	$	12,134	$	1,304	$	15,957	$	—	$	15,869	$	—
Commercial real estate mortgages	5,204		5,557		291		5,214		73		5,293		191
Residential mortgages:
Variable	—		—		—		2,000		—		1,419		11
Total residential mortgages	—		—		—		2,000		—		1,419		11
Installment:
Consumer	—		—		—		25		—		12		1
Total installment	—		—		—		25		—		12		1
Total with an allowance	$	14,867	$	17,691	$	1,595	$	23,196	$	73	$	22,593	$	203
Total impaired loans by type:
Commercial	$	16,316	$	18,818	$	1,304	$	22,774	$	38	$	26,522	$	205
Commercial real estate mortgages	25,551		28,255		291		29,504		292		34,771		1,094
Residential mortgages	7,785		8,139		—		9,190		50		8,875		109
Real estate construction	6,610		8,758		—		9,728		35		14,335		180
Home equity loans and lines of credit	2,313		3,375		—		2,874		—		2,881		—
Installment	—		—		—		25		1		16		2
Total impaired loans	$	58,575	$	67,345	$	1,595	$	74,095	$	416	$	87,400	$	1,590

Schedule of troubled debt restructured loans

(in thousands)	Number of Contracts	Pre-Modification Outstanding Principal		Period-End Outstanding Principal		Financial Effects (1)
Three months ended September 30, 2015
Commercial	2	$	2,575	$	2,570	$	—
Commercial real estate mortgages	1	187		185		—
Home equity loans and lines of credit	1	205		205		—
Total troubled debt restructured loans	4	$	2,967	$	2,960	$	—

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

(in thousands)	Number of Contracts	Pre-Modification Outstanding Principal		Period-End Outstanding Principal		Financial Effects (1)
Nine months ended September 30, 2015
Commercial	3	$	3,206	$	3,091	$	—
Commercial real estate mortgages	2	605		593		—
Residential mortgages:
Fixed	1	302		299		—
Home equity loans and lines of credit	2	292		287		—
Total troubled debt restructured loans	8	$	4,405	$	4,270	$	—
Nine months ended September 30, 2014
Commercial	2	$	4,098	$	3,799	$	—
Residential mortgages:
Variable	2	4,676		4,647		5
Installment:
Consumer	1	50		—		50
Total troubled debt restructured loans	5	$	8,824	$	8,446	$	55

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

Schedule of troubled debt restructured loans that have subsequently defaulted

	For three months ended September 30, 2015					For nine months ended September 30, 2015
(in thousands)	Number of Contracts	Period-End Outstanding Principal		Period-End Specific Reserve		Number of Contracts	Period-End Outstanding Principal		Period-End Specific Reserve
Commercial	2	$	2,570	$	—	2	$	2,570	$	—
Commercial real estate mortgages	—	—		—		1	64		—
Total loans that subsequently defaulted	2	$	2,570	$	—	3	$	2,634	$	—

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

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days and Accruing		Nonaccrual		Total Past Due and Nonaccrual Loans		Current		Total Loans and Leases
September 30, 2015
Commercial	$	5,094	$	1,550	$	—	$	14,728	$	21,372	$	10,232,220	$	10,253,592
Commercial real estate mortgages	3,847		—		—		2,368		6,215		3,941,531		3,947,746
Residential mortgages:
Fixed	—		2,556		305		10,000		12,861		1,475,111		1,487,972
Variable	—		5,601		2,153		588		8,342		4,212,958		4,221,300
Total residential mortgages	—		8,157		2,458		10,588		21,203		5,688,069		5,709,272
Real estate construction:
Construction	—		—		—		—		—		900,928		900,928
Land	—		—		—		3,460		3,460		28,034		31,494
Total real estate construction	—		—		—		3,460		3,460		928,962		932,422
Home equity loans and lines of credit	910		3,072		460		3,340		7,782		791,929		799,711
Installment:
Commercial	—		—		—		—		—		228		228
Consumer	373		68		543		37		1,021		204,907		205,928
Total installment	373		68		543		37		1,021		205,135		206,156
Lease financing	—		457		—		1		458		687,227		687,685
Total	$	10,224	$	13,304	$	3,461	$	34,522	$	61,511	$	22,475,073	$	22,536,584

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days and Accruing		Nonaccrual		Total Past Due and Nonaccrual Loans		Current		Total Loans and Leases
December 31, 2014
Commercial	$	8,462	$	325	$	148	$	15,096	$	24,031	$	9,336,945	$	9,360,976
Commercial real estate mortgages	693		—		—		3,575		4,268		3,535,435		3,539,703
Residential mortgages:
Fixed	—		309		921		10,365		11,595		1,390,357		1,401,952
Variable	—		1,165		—		1,578		2,743		3,702,108		3,704,851
Total residential mortgages	—		1,474		921		11,943		14,338		5,092,465		5,106,803
Real estate construction:
Construction	—		—		—		—		—		686,990		686,990
Land	—		—		—		6,598		6,598		16,636		23,234
Total real estate construction	—		—		—		6,598		6,598		703,626		710,224
Home equity loans and lines of credit	—		39		100		4,864		5,003		780,793		785,796
Installment:
Commercial	—		—		—		—		—		298		298
Consumer	324		113		346		84		867		183,448		184,315
Total installment	324		113		346		84		867		183,746		184,613
Lease financing	321		152		—		7		480		648,611		649,091
Total	$	9,800	$	2,103	$	1,515	$	42,167	$	55,585	$	20,281,621	$	20,337,206

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

	September 30, 2015						December 31, 2014
(in thousands)	Nonclassified		Classified		Total		Nonclassified		Classified		Total
Commercial	$	10,153,594	$	99,998	$	10,253,592	$	9,304,636	$	56,340	$	9,360,976
Commercial real estate mortgages	3,905,035		42,711		3,947,746		3,511,229		28,474		3,539,703
Residential mortgages:
Fixed	1,467,932		20,040		1,487,972		1,375,175		26,777		1,401,952
Variable	4,191,381		29,919		4,221,300		3,675,723		29,128		3,704,851
Total residential mortgages	5,659,313		49,959		5,709,272		5,050,898		55,905		5,106,803
Real estate construction:
Construction	900,928		—		900,928		679,744		7,246		686,990
Land	25,702		5,792		31,494		16,636		6,598		23,234
Total real estate construction	926,630		5,792		932,422		696,380		13,844		710,224
Home equity loans and lines of credit	773,425		26,286		799,711		754,694		31,102		785,796
Installment:
Commercial	228		—		228		298		—		298
Consumer	205,229		699		205,928		183,190		1,125		184,315
Total installment	205,457		699		206,156		183,488		1,125		184,613
Lease financing	681,101		6,584		687,685		645,049		4,042		649,091
Total	$	22,304,555	$	232,029	$	22,536,584	$	20,146,374	$	190,832	$	20,337,206

Summary of the allowance for loan losses on acquired impaired loans

	For the three months ended September 30,						For the nine months ended September 30,
(in thousands)	2015			2014			2015			2014
Balance, beginning of period	$	8,075		$	9,103		$	8,608		$	15,922
Provision for losses	1,148			589			2,736			3,783
Change in allowance due to loan removals	(3,575		)	(324		)	(5,696		)	(10,337		)
Balance, end of period	$	5,648		$	9,368		$	5,648		$	9,368

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Income Taxes (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Income tax expense (benefit)
Interest and penalties expense (benefit) relating to uncertain tax positions			$ (300)	$ (300)
Accrued interest and penalties relating to uncertain tax positions	$ 2,200		2,200		$ 2,500
Income taxes	32,208	$ 37,452	$ 100,489	$ 103,571
California Franchise Tax Board [Member]
Income tax expense (benefit)
Tax benefit	$ 1,100

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Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Detail 4) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Allowance for Loan and Lease Losses
Beginning Balance	$ 316,922	$ 311,276	$ 310,149	$ 302,584
Charge-offs	(4,816)	(3,849)	(11,024)	(19,510)
Recoveries	10,999	14,399	16,193	30,595
Net recoveries (charge-offs)	6,183	10,550	5,169	11,085
(Reversal of) provision for credit losses on loans and leases, excluding acquired impaired loans	(6,000)	(8,000)	4,000	(9,000)
Transfers from (to) reserve for off-balance sheet credit commitments	52	(1,123)	(2,161)	8,034
Ending Balance	317,157	312,703	317,157	312,703
Allowance individually evaluated for impairment	2,609	1,595	2,609	1,595
Allowance collectively evaluated for impairment	314,548	311,108	314,548	311,108
Loans and leases, excluding acquired impaired loans	22,536,584	19,347,988	22,536,584	19,347,988	$ 20,337,206
Loans and leases, individually evaluated for impairment	59,892	58,575	59,892	58,575
Loans and leases, collectively evaluated for impairment	22,476,692	19,289,413	22,476,692	19,289,413
Reserve for Off Balance Sheet Credit Commitments
Balance, beginning of the year	30,024	24,787	27,811	33,944
Transfers (to) from allowance for loan and lease losses	(52)	1,123	2,161	(8,034)
Balance, end of the year	29,972	25,910	29,972	25,910
Commercial (includes lease financing)
Allowance for Loan and Lease Losses
Beginning Balance	124,314	126,279	115,855	117,103
Charge-offs	(4,576)	(3,773)	(10,276)	(18,594)
Recoveries	10,514	6,202	12,229	15,437
Net recoveries (charge-offs)	5,938	2,429	1,953	(3,157)
(Reversal of) provision for credit losses on loans and leases, excluding acquired impaired loans	2,939	(5,762)	15,383	(353)
Transfers from (to) reserve for off-balance sheet credit commitments				9,353
Ending Balance	133,191	122,946	133,191	122,946
Allowance individually evaluated for impairment	2,315	1,304	2,315	1,304
Allowance collectively evaluated for impairment	130,876	121,642	130,876	121,642
Loans and leases, excluding acquired impaired loans	10,941,277	9,236,294	10,941,277	9,236,294
Loans and leases, individually evaluated for impairment	18,185	16,316	18,185	16,316
Loans and leases, collectively evaluated for impairment	10,923,092	9,219,978	10,923,092	9,219,978
Commercial real estate mortgages
Allowance for Loan and Lease Losses
Beginning Balance	48,649	50,651	44,745	50,678
Charge-offs				(5)
Recoveries	68	225	1,270	352
Net recoveries (charge-offs)	68	225	1,270	347
(Reversal of) provision for credit losses on loans and leases, excluding acquired impaired loans	(211)	113	2,491	(36)
Ending Balance	48,506	50,989	48,506	50,989
Allowance individually evaluated for impairment	255	291	255	291
Allowance collectively evaluated for impairment	48,251	50,698	48,251	50,698
Loans and leases, excluding acquired impaired loans	3,947,746	3,565,188	3,947,746	3,565,188	3,539,703
Loans and leases, individually evaluated for impairment	22,918	25,551	22,918	25,551
Loans and leases, collectively evaluated for impairment	3,924,828	3,539,637	3,924,828	3,539,637
Residential mortgages
Allowance for Loan and Lease Losses
Beginning Balance	9,660	10,296	10,296	11,540
Charge-offs				(482)
Recoveries	34	33	110	258
Net recoveries (charge-offs)	34	33	110	(224)
(Reversal of) provision for credit losses on loans and leases, excluding acquired impaired loans	154	1,138	(558)	151
Ending Balance	9,848	11,467	9,848	11,467
Allowance individually evaluated for impairment	39		39
Allowance collectively evaluated for impairment	9,809	11,467	9,809	11,467
Loans and leases, excluding acquired impaired loans	5,709,272	5,023,213	5,709,272	5,023,213	5,106,803
Loans and leases, individually evaluated for impairment	11,850	7,785	11,850	7,785
Loans and leases, collectively evaluated for impairment	5,697,422	5,015,428	5,697,422	5,015,428
Real estate construction
Allowance for Loan and Lease Losses
Beginning Balance	10,652	7,191	9,115	6,351
Recoveries	142	7,729	1,852	12,804
Net recoveries (charge-offs)	142	7,729	1,852	12,804
(Reversal of) provision for credit losses on loans and leases, excluding acquired impaired loans	783	(6,175)	610	(10,410)
Ending Balance	11,577	8,745	11,577	8,745
Allowance collectively evaluated for impairment	11,577	8,745	11,577	8,745
Loans and leases, excluding acquired impaired loans	932,422	585,232	932,422	585,232	710,224
Loans and leases, individually evaluated for impairment	5,802	6,610	5,802	6,610
Loans and leases, collectively evaluated for impairment	926,620	578,622	926,620	578,622
Home equity loans and lines of credit
Allowance for Loan and Lease Losses
Beginning Balance	5,404	6,575	6,609	6,677
Charge-offs				(165)
Recoveries	37	52	110	254
Net recoveries (charge-offs)	37	52	110	89
(Reversal of) provision for credit losses on loans and leases, excluding acquired impaired loans	(163)	401	(1,441)	262
Ending Balance	5,278	7,028	5,278	7,028
Allowance collectively evaluated for impairment	5,278	7,028	5,278	7,028
Loans and leases, excluding acquired impaired loans	799,711	759,258	799,711	759,258	785,796
Loans and leases, individually evaluated for impairment	1,137	2,313	1,137	2,313
Loans and leases, collectively evaluated for impairment	798,574	756,945	798,574	756,945
Installment
Allowance for Loan and Lease Losses
Beginning Balance	2,208	2,284	2,228	1,842
Charge-offs	(240)	(76)	(748)	(264)
Recoveries	204	158	622	1,490
Net recoveries (charge-offs)	(36)	82	(126)	1,226
(Reversal of) provision for credit losses on loans and leases, excluding acquired impaired loans	118	18	188	(684)
Ending Balance	2,290	2,384	2,290	2,384
Allowance collectively evaluated for impairment	2,290	2,384	2,290	2,384
Loans and leases, excluding acquired impaired loans	206,156	178,803	206,156	178,803	$ 184,613
Loans and leases, collectively evaluated for impairment	206,156	178,803	206,156	178,803
Qualitative
Allowance for Loan and Lease Losses
Beginning Balance	116,035	108,000	121,301	108,393
(Reversal of) provision for credit losses on loans and leases, excluding acquired impaired loans	(9,620)	2,267	(12,673)	2,070
Transfers from (to) reserve for off-balance sheet credit commitments	52	(1,123)	(2,161)	(1,319)
Ending Balance	106,467	109,144	106,467	109,144
Allowance collectively evaluated for impairment	$ 106,467	$ 109,144	$ 106,467	$ 109,144

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Variable Interest Entities (Detail) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Variable Interest Entities
Affordable housing investments	$ 222,877	$ 186,423
Affordable Housing VIEs - not primary beneficiary
Variable Interest Entities
Affordable housing investments	222,900	186,400
Unfunded commitments for affordable housing investments	93,800
Aggregate carrying value of private equity and alternative investment funds	$ 24,100	$ 29,200

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Noncontrolling Interest (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2015 USD ($) item	Sep. 30, 2014 USD ($)
Redeemable Noncontrolling Interest
Number of firms in which entity holds majority ownership interest | item	4
Fair value of noncontrolling owners equity interests	$ 39,978
Redeemable noncontrolling interest
Balance, beginning of period	39,978
Net income	954	$ 2,056
Balance, end of period	$ 32,847
Redeemable Noncontrolling Interest
Redeemable Noncontrolling Interest
Number of firms in which entity holds majority ownership interest | item	4
Fair value of noncontrolling owners equity interests	$ 39,978	39,768
Redeemable noncontrolling interest
Balance, beginning of period	39,978	39,768
Net income	954	2,056
Distributions to redeemable noncontrolling interest	(2,430)	(2,366)
Additions and redemptions, net	(6,043)	(403)
Adjustments to fair value	388	8,167
Balance, end of period	$ 32,847	$ 47,222

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Derivative Instruments (Detail 2) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Foreign Exchange Contracts
Credit Risk Exposure and Collateral
Cash collateral received	$ 1.0		$ 1.0
Cash collateral delivered	1.1		1.1
Derivatives not designated as hedging instruments
Derivative instruments gain (loss)
Derivative Instruments, Gain (Loss) Recognized in Income, Net	7.2	$ 8.8	23.4	$ 23.4
Derivatives not designated as hedging instruments | Interest-Rate Contracts | Other noninterest income
Derivative instruments gain (loss)
Derivative Instruments, Gain (Loss) Recognized in Income, Net	(1.3)		(0.9)	(1.0)
Derivatives not designated as hedging instruments | Option contracts. | Other noninterest income
Derivative instruments gain (loss)
Derivative Instruments, Gain (Loss) Recognized in Income, Net		0.1	(0.1)	0.1
Derivatives not designated as hedging instruments | Foreign Exchange Contracts | International services income
Derivative instruments gain (loss)
Derivative Instruments, Gain (Loss) Recognized in Income, Net	8.3	$ 8.7	24.1	24.2
Derivatives designated and not designated as hedging instruments
Credit Risk Exposure and Collateral
Aggregate fair value of derivatives with credit-risk-related contingent features, net liability position	22.0		22.0
Collateral delivered on swap agreements in the form of securities, with credit-risk-related contingent features	11.1		11.1
Derivatives designated and not designated as hedging instruments | Interest-Rate Swaps
Credit Risk Exposure and Collateral
Interest-rate swap credit risk exposure	0.0		0.0		$ 0.0
Collateral received from swap counterparties	0.0		0.0		$ 0.0
Collateral delivered on swap agreements, without credit-risk-related contingent features	5.6		5.6
Collateral delivered on swap agreements in the form of cash, without credit-risk-related contingent features	66.0		66.0
Equity Warrants | Derivatives not designated as hedging instruments | Other noninterest income
Derivative instruments gain (loss)
Derivative Instruments, Gain (Loss) Recognized in Income, Net	$ 0.2		$ 0.3	$ 0.1

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Noncontrolling Interest

9 Months Ended

Sep. 30, 2015

Noncontrolling Interest

Noncontrolling Interest

Note 17. Noncontrolling Interest

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

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

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

As of September 30, 2015, affiliate noncontrolling owners held equity interests with an estimated fair value of $32.8 million. This estimate reflects the maximum obligation to purchase equity interests in the affiliates. The events which would require the Company to purchase the equity interests may occur in the near term or over a longer period of time. The terms of the put provisions vary by agreement, but the value of the put is at the approximate fair value of the interests. The parent company carries key man life insurance policies to fund a portion of these conditional purchase obligations in the event of the death of certain key holders.

The following is a summary of activity for redeemable noncontrolling interest for the nine months ended September 30, 2015 and 2014:

	For the nine months ended September 30,
(in thousands)	2015			2014
Balance, beginning of period	$	39,978		$	39,768
Net income	954			2,056
Distributions to redeemable noncontrolling interest	(2,430		)	(2,366		)
Additions and redemptions, net	(6,043		)	(403		)
Adjustments to fair value	388			8,167
Balance, end of period	$	32,847		$	47,222

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Securities (Detail 2) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Expected remaining maturities of debt securities available-for-sale, fair value
Fair Value	$ 5,309,187	$ 5,882,983
Expected remaining maturities of debt securities held-to-maturity, amortized cost
Total of debt securities held-to-maturity, amortized cost	3,506,455	3,427,031
Total debt securities
Expected remaining maturities of debt securities available-for-sale, fair value
Securities available-for-sale, One year or less, fair value	863,802
Securities available-for-sale, Over 1 year through 5 years, fair value	4,268,028
Securities available-for-sale, Over 5 years through 10 years, fair value	173,986
Securities available-for-sale, Over 10 years, fair value	3,371
Fair Value	5,309,187	5,879,837
Expected remaining maturities of debt securities available-for-sale, amortized cost
Securities available-for-sale, One year or less, amortized cost	861,509
Securities available-for-sale, Over 1 year through 5 years, amortized cost	4,264,720
Securities available-for-sale, Over 5 years through 10 years, amortized cost	174,371
Securities available-for-sale, Over 10 years, amortized cost	3,400
Total of debt securities available-for-sale, amortized cost	5,304,000
Expected remaining maturities of debt securities held-to-maturity, amortized cost
Securities held-to-maturity, One year or less, amortized cost	9,631
Securities held-to-maturity, Over 1 year through 5 years, amortized cost	1,189,769
Securities held-to-maturity, Over 5 years through 10 years, amortized cost	2,011,485
Securities held-to-maturity, Over 10 years, amortized cost	295,570
Total of debt securities held-to-maturity, amortized cost	3,506,455
U.S. Treasury
Expected remaining maturities of debt securities available-for-sale, fair value
Securities available-for-sale, One year or less, fair value	269,754
Securities available-for-sale, Over 1 year through 5 years, fair value	120,575
Fair Value	390,329	116,926
Federal agency - Debt
Expected remaining maturities of debt securities available-for-sale, fair value
Securities available-for-sale, One year or less, fair value	179,603
Securities available-for-sale, Over 1 year through 5 years, fair value	106,757
Fair Value	286,360	1,398,581
Expected remaining maturities of debt securities held-to-maturity, amortized cost
Securities held-to-maturity, Over 1 year through 5 years, amortized cost	45,000
Securities held-to-maturity, Over 5 years through 10 years, amortized cost	209,125
Securities held-to-maturity, Over 10 years, amortized cost	191,596
Total of debt securities held-to-maturity, amortized cost	445,721	292,932
Federal agency - MBS
Expected remaining maturities of debt securities available-for-sale, fair value
Securities available-for-sale, One year or less, fair value	1,819
Securities available-for-sale, Over 1 year through 5 years, fair value	91,062
Fair Value	92,881	104,526
Expected remaining maturities of debt securities held-to-maturity, amortized cost
Securities held-to-maturity, One year or less, amortized cost	10
Securities held-to-maturity, Over 1 year through 5 years, amortized cost	74,949
Securities held-to-maturity, Over 5 years through 10 years, amortized cost	495,583
Securities held-to-maturity, Over 10 years, amortized cost	4,529
Total of debt securities held-to-maturity, amortized cost	575,071	553,589
CMOs - Federal agency
Expected remaining maturities of debt securities available-for-sale, fair value
Securities available-for-sale, One year or less, fair value	119,443
Securities available-for-sale, Over 1 year through 5 years, fair value	3,248,817
Securities available-for-sale, Over 5 years through 10 years, fair value	167,868
Fair Value	3,536,128	3,580,590
Expected remaining maturities of debt securities held-to-maturity, amortized cost
Securities held-to-maturity, One year or less, amortized cost	8,724
Securities held-to-maturity, Over 1 year through 5 years, amortized cost	773,640
Securities held-to-maturity, Over 5 years through 10 years, amortized cost	848,024
Total of debt securities held-to-maturity, amortized cost	1,630,388	1,811,574
CMOs - Non-agency
Expected remaining maturities of debt securities available-for-sale, fair value
Securities available-for-sale, One year or less, fair value	1,079
Securities available-for-sale, Over 1 year through 5 years, fair value	13,234
Securities available-for-sale, Over 5 years through 10 years, fair value	6,118
Fair Value	20,431	24,014
State and municipal
Expected remaining maturities of debt securities available-for-sale, fair value
Securities available-for-sale, One year or less, fair value	165,254
Securities available-for-sale, Over 1 year through 5 years, fair value	192,119
Securities available-for-sale, Over 10 years, fair value	3,371
Fair Value	360,744	479,031
Expected remaining maturities of debt securities held-to-maturity, amortized cost
Securities held-to-maturity, One year or less, amortized cost	897
Securities held-to-maturity, Over 1 year through 5 years, amortized cost	210,551
Securities held-to-maturity, Over 5 years through 10 years, amortized cost	458,753
Securities held-to-maturity, Over 10 years, amortized cost	99,445
Total of debt securities held-to-maturity, amortized cost	769,646	682,705
Other debt securities
Expected remaining maturities of debt securities available-for-sale, fair value
Securities available-for-sale, One year or less, fair value	126,850
Securities available-for-sale, Over 1 year through 5 years, fair value	495,464
Fair Value	622,314	176,169
Expected remaining maturities of debt securities held-to-maturity, amortized cost
Securities held-to-maturity, Over 1 year through 5 years, amortized cost	85,629
Total of debt securities held-to-maturity, amortized cost	$ 85,629	$ 86,231

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Segment Results (Tables)

9 Months Ended

Sep. 30, 2015

Segment Results

Schedule of segment results

	For the three months ended September 30, 2015
	Commercial and			Wealth						Consolidated
(in thousands)	Private Banking			Management			Other			Company
Earnings Summary:
Net interest income	$	226,171		$	592		$	5,494		$	232,257
(Reversal of) provision for credit losses on loans and leases, excluding acquired impaired loans	(6,000		)	—			—			(6,000		)
Provision for losses on acquired impaired loans	1,148			—			—			1,148
Noninterest income	51,675			70,127			(16,931		)	104,871
Depreciation and amortization	2,482			1,839			6,398			10,719
Noninterest expense	188,367			59,872			(20,915		)	227,324
Income before income taxes	91,849			9,008			3,080			103,937
Provision for income taxes	28,440			2,814			954			32,208
Net income	63,409			6,194			2,126			71,729
Less: Net loss attributable to noncontrolling interest	—			(79		)	—			(79		)
Net income attributable to City National Corporation	$	63,409		$	6,273		$	2,126		$	71,808
Selected Average Balances:
Loans and leases, excluding acquired impaired loans	$	21,913,554		$	—		$	56,038		$	21,969,592
Acquired impaired loans	420,308			—			—			420,308
Total assets	22,390,469			730,148			11,330,543			34,451,160
Deposits	29,953,606			98,004			54,447			30,106,057
Goodwill	393,176			244,742			—			637,918
Customer-relationship intangibles, net	1,315			30,399			—			31,714

	For the three months ended September 30, 2014
	Commercial and			Wealth					Consolidated
(in thousands)	Private Banking			Management		Other			Company
Earnings Summary:
Net interest income	$	204,803		$	452	$	10,521		$	215,776
(Reversal of) provision for credit losses on loans and leases, excluding acquired impaired loans	(8,000		)	—		—			(8,000		)
Provision for losses on acquired impaired loans	589			—		—			589
Noninterest income	50,906			69,289		(12,278		)	107,917
Depreciation and amortization	2,786			1,797		5,119			9,702
Noninterest expense	175,844			57,237		(19,869		)	213,212
Income before income taxes	84,490			10,707		12,993			108,190
Provision for income taxes	29,478			3,441		4,533			37,452
Net income	55,012			7,266		8,460			70,738
Less: Net income attributable to noncontrolling interest	—			847		—			847
Net income attributable to City National Corporation	$	55,012		$	6,419	$	8,460		$	69,891
Selected Average Balances:
Loans and leases, excluding acquired impaired loans	$	18,777,758		$	—	$	60,002		$	18,837,760
Acquired impaired loans	580,200			—		—			580,200
Total assets	19,482,692			738,004		10,675,661			30,896,357
Deposits	26,481,108			71,595		277,930			26,830,633
Goodwill	393,176			249,079		—			642,255
Customer-relationship intangibles, net	2,335			34,689		—			37,024

	For the nine months ended September 30, 2015
	Commercial and		Wealth					Consolidated
(in thousands)	Private Banking		Management		Other			Company
Earnings Summary:
Net interest income	$	662,184	$	2,049	$	21,114		$	685,347
Provision for credit losses on loans and leases, excluding acquired impaired loans	4,000		—		—			4,000
Provision for losses on acquired impaired loans	2,736		—		—			2,736
Noninterest income	158,718		215,544		(45,412		)	328,850
Depreciation and amortization	7,688		5,622		24,502			37,812
Noninterest expense	563,775		170,873		(68,315		)	666,333
Income before income taxes	242,703		41,098		19,515			303,316
Provision for income taxes	80,661		13,342		6,486			100,489
Net income	162,042		27,756		13,029			202,827
Less: Net income attributable to noncontrolling interest	—		954		—			954
Net income attributable to City National Corporation	$	162,042	$	26,802	$	13,029		$	201,873
Selected Average Balances:
Loans and leases, excluding acquired impaired loans	$	21,166,866	$	—	$	57,460		$	21,224,326
Acquired impaired loans	455,786		—		—			455,786
Total assets	21,704,604		738,981		10,761,541			33,205,126
Deposits	28,654,702		94,703		104,932			28,854,337
Goodwill	393,176		243,484		—			636,660
Customer-relationship intangibles, net	1,460		31,458		—			32,918

	For the nine months ended September 30, 2014
	Commercial and			Wealth					Consolidated
(in thousands)	Private Banking			Management		Other			Company
Earnings Summary:
Net interest income	$	602,879		$	1,256	$	30,541		$	634,676
(Reversal of) provision for credit losses on loans and leases, excluding acquired impaired loans	(9,000		)	—		—			(9,000		)
Provision for losses on acquired impaired loans	3,783			—		—			3,783
Noninterest income	135,498			201,418		(26,652		)	310,264
Depreciation and amortization	8,381			5,310		14,665			28,356
Noninterest expense	517,022			166,278		(56,308		)	626,992
Income before income taxes	218,191			31,086		45,532			294,809
Provision for income taxes	77,192			10,270		16,109			103,571
Net income	140,999			20,816		29,423			191,238
Less: Net income attributable to noncontrolling interest	—			2,056		—			2,056
Net income attributable to City National Corporation	$	140,999		$	18,760	$	29,423		$	189,182
Selected Average Balances:
Loans and leases, excluding acquired impaired loans	$	17,993,033		$	—	$	57,583		$	18,050,616
Acquired impaired loans	639,592			—		—			639,592
Total assets	18,814,041			696,524		10,586,949			30,097,514
Deposits	25,710,863			77,657		254,929			26,043,449
Goodwill	393,176			249,322		—			642,498
Customer-relationship intangibles, net	2,717			35,788		—			38,505

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Commitments and Contingencies (Details) - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
Commitments and Contingencies
Maximum liability under indemnity in connection with liquidation of an investment acquired	$ 23.0
Commitments and Contingencies.
Letters of Credit
Commitments and Contingencies
Commitments and Contingencies.	$ 679.6	$ 718.0
Standby letters of credit, included within letters of credit
Commitments and Contingencies
Commitments and Contingencies.	567.6	607.6
Commercial letters of credit, including within letters of credit
Commitments and Contingencies
Commitments and Contingencies.	$ 112.0	$ 110.4

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Earnings per Common Share (Tables)

9 Months Ended

Sep. 30, 2015

Earnings per Common Share

Schedule of basic and diluted EPS

	For the three months ended September 30,				For the nine months ended September 30,
(in thousands, except per share amounts) (1)	2015		2014		2015		2014
Basic EPS:
Net income attributable to City National Corporation	$	71,808	$	69,891	$	201,873	$	189,182
Less: Dividends on preferred stock	4,093		4,093		12,281		12,281
Net income available to common shareholders	$	67,715	$	65,798	$	189,592	$	176,901
Less: Earnings allocated to participating securities	576		644		1,664		1,801
Earnings allocated to common shareholders	$	67,139	$	65,154	$	187,928	$	175,100
Weighted-average common shares outstanding	55,829		55,031		55,668		54,893
Basic earnings per common share	$	1.20	$	1.18	$	3.38	$	3.19
Diluted EPS:
Earnings allocated to common shareholders (2)	$	67,143	$	65,160	$	187,943	$	175,116
Weighted-average common shares outstanding	55,829		55,031		55,668		54,893
Dilutive effect of equity awards	858		734		884		723
Weighted-average diluted common shares outstanding	56,687		55,765		56,552		55,616
Diluted earnings per common share	$	1.18	$	1.17	$	3.32	$	3.15

(1) Certain prior period amounts have been adjusted to reflect the adoption of ASU 2014-01. See Note 1, Summary of Significant Accounting Policies, for further discussion.

(2) Earnings allocated to common shareholders for basic and diluted EPS may differ under the two-class method as a result of adding common stock equivalents for options to dilutive shares outstanding, which alters the ratio used to allocate earnings to common shareholders and participating securities for the purposes of calculating diluted EPS.

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Securities (Detail 4) $ in Thousands	Sep. 30, 2015 USD ($) security	Dec. 31, 2014 USD ($) security item
Securities available-for-sale:
Securities available-for-sale, Fair Value, Less than 12 months	$ 990,556	$ 2,027,804
Securities available-for-sale, Estimated Unrealized Loss, Less than 12 months	4,090	6,728
Securities available-for-sale, Fair Value, 12 months or greater	1,266,874	1,472,436
Securities available-for-sale, Estimated Unrealized Loss, 12 months or greater	18,824	37,586
Securities available-for-sale, Fair Value, Total	2,257,430	3,500,240
Securities available-for-sale, Estimated Unrealized Loss, Total	22,914	44,314
Securities held-to-maturity:
Securities held-to-maturity, Fair Value, Less than 12 months	291,472	283,478
Securities held-to-maturity, Estimated Unrealized Loss, Less than 12 months	2,349	2,568
Securities held-to-maturity, Fair Value, 12 months or greater	250,473	824,838
Securities held-to-maturity, Estimated Unrealized Loss, 12 months or greater	2,751	12,475
Securities held-to-maturity, Fair Value, Total	541,945	1,108,316
Securities held-to-maturity, Estimated Unrealized Loss, Total	5,100	15,043
U.S. Treasury
Securities available-for-sale:
Securities available-for-sale, Fair Value, Less than 12 months	17,001	15,814
Securities available-for-sale, Estimated Unrealized Loss, Less than 12 months	1	10
Securities available-for-sale, Fair Value, Total	17,001	15,814
Securities available-for-sale, Estimated Unrealized Loss, Total	$ 1	$ 10
Other information
Number of available-for-sale and held-to-maturity securities in the unrealized loss position | security	1	2
Federal agency - Debt
Securities available-for-sale:
Securities available-for-sale, Fair Value, Less than 12 months	$ 17,556	$ 1,008,234
Securities available-for-sale, Estimated Unrealized Loss, Less than 12 months	14	2,622
Securities available-for-sale, Fair Value, 12 months or greater		135,868
Securities available-for-sale, Estimated Unrealized Loss, 12 months or greater		658
Securities available-for-sale, Fair Value, Total	17,556	1,144,102
Securities available-for-sale, Estimated Unrealized Loss, Total	14	3,280
Securities held-to-maturity:
Securities held-to-maturity, Fair Value, 12 months or greater	5,739	26,316
Securities held-to-maturity, Estimated Unrealized Loss, 12 months or greater	27	255
Securities held-to-maturity, Fair Value, Total	5,739	26,316
Securities held-to-maturity, Estimated Unrealized Loss, Total	$ 27	$ 255
Other information
Number of available-for-sale and held-to-maturity securities in the unrealized loss position | security	3	37
Federal agency - MBS
Securities available-for-sale:
Securities available-for-sale, Fair Value, Less than 12 months		$ 35
Securities available-for-sale, Fair Value, 12 months or greater	$ 53,639	57,970
Securities available-for-sale, Estimated Unrealized Loss, 12 months or greater	660	1,014
Securities available-for-sale, Fair Value, Total	53,639	58,005
Securities available-for-sale, Estimated Unrealized Loss, Total	660	1,014
Securities held-to-maturity:
Securities held-to-maturity, Fair Value, Less than 12 months	21,649	4,800
Securities held-to-maturity, Estimated Unrealized Loss, Less than 12 months	25	21
Securities held-to-maturity, Fair Value, 12 months or greater	26,077	114,856
Securities held-to-maturity, Estimated Unrealized Loss, 12 months or greater	202	2,254
Securities held-to-maturity, Fair Value, Total	47,726	119,656
Securities held-to-maturity, Estimated Unrealized Loss, Total	$ 227	$ 2,275
Other information
Number of available-for-sale and held-to-maturity securities in the unrealized loss position | security	13	23
CMOs - Federal agency
Securities available-for-sale:
Securities available-for-sale, Fair Value, Less than 12 months	$ 690,496	$ 871,026
Securities available-for-sale, Estimated Unrealized Loss, Less than 12 months	3,947	3,417
Securities available-for-sale, Fair Value, 12 months or greater	1,197,026	1,261,695
Securities available-for-sale, Estimated Unrealized Loss, 12 months or greater	17,792	35,452
Securities available-for-sale, Fair Value, Total	1,887,522	2,132,721
Securities available-for-sale, Estimated Unrealized Loss, Total	21,739	38,869
Securities held-to-maturity:
Securities held-to-maturity, Fair Value, Less than 12 months	136,388	202,014
Securities held-to-maturity, Estimated Unrealized Loss, Less than 12 months	596	2,247
Securities held-to-maturity, Fair Value, 12 months or greater	184,818	588,019
Securities held-to-maturity, Estimated Unrealized Loss, 12 months or greater	1,461	8,045
Securities held-to-maturity, Fair Value, Total	321,206	790,033
Securities held-to-maturity, Estimated Unrealized Loss, Total	$ 2,057	$ 10,292
Other information
Number of available-for-sale and held-to-maturity securities in the unrealized loss position | security	113	141
CMOs - Non-agency
Securities available-for-sale:
Securities available-for-sale, Fair Value, Less than 12 months		$ 1,949
Securities available-for-sale, Estimated Unrealized Loss, Less than 12 months		15
Securities available-for-sale, Fair Value, 12 months or greater	$ 12,739	12,720
Securities available-for-sale, Estimated Unrealized Loss, 12 months or greater	343	396
Securities available-for-sale, Fair Value, Total	12,739	14,669
Securities available-for-sale, Estimated Unrealized Loss, Total	$ 343	$ 411
Other information
Number of available-for-sale and held-to-maturity securities in the unrealized loss position | security	3	3
State and municipal
Securities available-for-sale:
Securities available-for-sale, Fair Value, Less than 12 months	$ 65,670	$ 130,208
Securities available-for-sale, Estimated Unrealized Loss, Less than 12 months	99	314
Securities available-for-sale, Fair Value, 12 months or greater	3,470	4,183
Securities available-for-sale, Estimated Unrealized Loss, 12 months or greater	29	66
Securities available-for-sale, Fair Value, Total	69,140	134,391
Securities available-for-sale, Estimated Unrealized Loss, Total	128	380
Securities held-to-maturity:
Securities held-to-maturity, Fair Value, Less than 12 months	118,335	14,851
Securities held-to-maturity, Estimated Unrealized Loss, Less than 12 months	1,727	76
Securities held-to-maturity, Fair Value, 12 months or greater	33,839	95,647
Securities held-to-maturity, Estimated Unrealized Loss, 12 months or greater	1,061	1,921
Securities held-to-maturity, Fair Value, Total	152,174	110,498
Securities held-to-maturity, Estimated Unrealized Loss, Total	$ 2,788	$ 1,997
Other information
Number of available-for-sale and held-to-maturity securities in the unrealized loss position | security	196	225
Other debt securities
Securities available-for-sale:
Securities available-for-sale, Fair Value, Less than 12 months	$ 199,833
Securities available-for-sale, Estimated Unrealized Loss, Less than 12 months	29
Securities available-for-sale, Fair Value, Total	199,833
Securities available-for-sale, Estimated Unrealized Loss, Total	29
Securities held-to-maturity:
Securities held-to-maturity, Fair Value, Less than 12 months	15,100	$ 61,813
Securities held-to-maturity, Estimated Unrealized Loss, Less than 12 months	1	224
Securities held-to-maturity, Fair Value, Total	15,100	61,813
Securities held-to-maturity, Estimated Unrealized Loss, Total	$ 1	$ 224
Other information
Number of available-for-sale and held-to-maturity securities in the unrealized loss position | security	3	5
Total debt securities
Securities available-for-sale:
Securities available-for-sale, Fair Value, Less than 12 months		$ 2,027,266
Securities available-for-sale, Estimated Unrealized Loss, Less than 12 months		6,378
Securities available-for-sale, Fair Value, 12 months or greater		1,472,436
Securities available-for-sale, Estimated Unrealized Loss, 12 months or greater		37,586
Securities available-for-sale, Fair Value, Total		3,499,702
Securities available-for-sale, Estimated Unrealized Loss, Total		$ 43,964
Other information
Number of available-for-sale and held-to-maturity securities in the unrealized loss position | security	332	436
Equity securities and mutual funds
Securities available-for-sale:
Securities available-for-sale, Fair Value, Less than 12 months		$ 538
Securities available-for-sale, Estimated Unrealized Loss, Less than 12 months		350
Securities available-for-sale, Fair Value, Total		538
Securities available-for-sale, Estimated Unrealized Loss, Total		$ 350
Other information
Number of available-for-sale and held-to-maturity securities in the unrealized loss position | item		1

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Share-Based Compensation (Detail) $ / shares in Units, $ in Thousands, shares in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($) plan shares	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) plan $ / shares shares	Sep. 30, 2014 USD ($) $ / shares
Share-based compensation
Number of share-based compensation plans | plan	1		1
Shares available for future grants | shares	2.4		2.4
Compensation cost recognized for share-based awards	$ 4,700	$ 5,500	$ 15,900	$ 16,100
Total income tax benefit recognized for share-based compensation arrangements	$ 2,000	$ 2,300	6,700	6,700
Cash received from the exercise of stock options			30,737	21,734
Actual tax benefit realized for the tax deductions from stock option exercises			$ 6,000	$ 3,200
Stock options
Share-based compensation, fair value
Weighted-average volatility (as a percent)	26.35%	27.08%	26.66%	27.35%
Dividend yield (as a percent)	1.58%	1.72%	1.55%	1.79%
Expected term	5 years 5 months 16 days	5 years 5 months 16 days	6 years 18 days	6 years 22 days
Risk-free interest rate (as a percent)	1.76%	1.97%	1.78%	1.99%
Weighted-average grant-date fair values of options granted (in dollars per share) | $ / shares			$ 21.79	$ 17.93
Total intrinsic value of options exercised			$ 15,800	$ 7,700

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Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Detail 8) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014
Past Due Loans and Leases
30-59 Days Past Due	$ 10,224	$ 9,800
60-89 Days Past Due	13,304	2,103
Greater Than 90 Days and Accruing	3,461	1,515
Nonaccrual	34,522	42,167
Total Past Due and Nonaccrual Loans	61,511	55,585
Current	22,475,073	20,281,621
Total Loans and Leases	22,536,584	20,337,206	$ 19,347,988
Commercial
Past Due Loans and Leases
30-59 Days Past Due	5,094	8,462
60-89 Days Past Due	1,550	325
Greater Than 90 Days and Accruing		148
Nonaccrual	14,728	15,096
Total Past Due and Nonaccrual Loans	21,372	24,031
Current	10,232,220	9,336,945
Total Loans and Leases	10,253,592	9,360,976
Commercial real estate mortgages
Past Due Loans and Leases
30-59 Days Past Due	3,847	693
Nonaccrual	2,368	3,575
Total Past Due and Nonaccrual Loans	6,215	4,268
Current	3,941,531	3,535,435
Total Loans and Leases	3,947,746	3,539,703	3,565,188
Residential mortgages
Past Due Loans and Leases
60-89 Days Past Due	8,157	1,474
Greater Than 90 Days and Accruing	2,458	921
Nonaccrual	10,588	11,943
Total Past Due and Nonaccrual Loans	21,203	14,338
Current	5,688,069	5,092,465
Total Loans and Leases	5,709,272	5,106,803	5,023,213
Fixed
Past Due Loans and Leases
60-89 Days Past Due	2,556	309
Greater Than 90 Days and Accruing	305	921
Nonaccrual	10,000	10,365
Total Past Due and Nonaccrual Loans	12,861	11,595
Current	1,475,111	1,390,357
Total Loans and Leases	1,487,972	1,401,952
Variable
Past Due Loans and Leases
60-89 Days Past Due	5,601	1,165
Greater Than 90 Days and Accruing	2,153
Nonaccrual	588	1,578
Total Past Due and Nonaccrual Loans	8,342	2,743
Current	4,212,958	3,702,108
Total Loans and Leases	4,221,300	3,704,851
Real estate construction
Past Due Loans and Leases
Nonaccrual	3,460	6,598
Total Past Due and Nonaccrual Loans	3,460	6,598
Current	928,962	703,626
Total Loans and Leases	932,422	710,224	585,232
Construction
Past Due Loans and Leases
Current	900,928	686,990
Total Loans and Leases	900,928	686,990
Land.
Past Due Loans and Leases
Nonaccrual	3,460	6,598
Total Past Due and Nonaccrual Loans	3,460	6,598
Current	28,034	16,636
Total Loans and Leases	31,494	23,234
Home equity loans and lines of credit
Past Due Loans and Leases
30-59 Days Past Due	910
60-89 Days Past Due	3,072	39
Greater Than 90 Days and Accruing	460	100
Nonaccrual	3,340	4,864
Total Past Due and Nonaccrual Loans	7,782	5,003
Current	791,929	780,793
Total Loans and Leases	799,711	785,796	759,258
Installment
Past Due Loans and Leases
30-59 Days Past Due	373	324
60-89 Days Past Due	68	113
Greater Than 90 Days and Accruing	543	346
Nonaccrual	37	84
Total Past Due and Nonaccrual Loans	1,021	867
Current	205,135	183,746
Total Loans and Leases	206,156	184,613	$ 178,803
Commercial Installment loan
Past Due Loans and Leases
Current	228	298
Total Loans and Leases	228	298
Consumer Installment loan
Past Due Loans and Leases
30-59 Days Past Due	373	324
60-89 Days Past Due	68	113
Greater Than 90 Days and Accruing	543	346
Nonaccrual	37	84
Total Past Due and Nonaccrual Loans	1,021	867
Current	204,907	183,448
Total Loans and Leases	205,928	184,315
Lease financing
Past Due Loans and Leases
30-59 Days Past Due		321
60-89 Days Past Due	457	152
Nonaccrual	1	7
Total Past Due and Nonaccrual Loans	458	480
Current	687,227	648,611
Total Loans and Leases	$ 687,685	$ 649,091

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Fair Value Measurements (Detail 4) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Rochdale Investment Management, LLC
Total realized/unrealized gains (losses):
Contingent consideration paid to shareholders			$ 17,400
Contingent Consideration Liability
Level 3 Liabilities Measured on a Recurring Basis
Balance, beginning of period	$ (34,983)	$ (49,900)
Total realized/unrealized gains (losses):
Included in earnings	(727)
Settlements		17,266
Other	(1,275)	(1,859)
Balance, end of period	$ (36,985)	(34,493)
Contingent Consideration Liability | Rochdale Investment Management, LLC
Total realized/unrealized gains (losses):
Business Acquisition Period of Additional Cash Consideration Payment	6 years
Low-end of the potential range of estimate of total consideration payment	$ 17,000
High-end of the potential range of estimate of total consideration payment	46,000
FDIC Clawback Liability
Level 3 Liabilities Measured on a Recurring Basis
Balance, beginning of period	(15,106)	(11,967)
Total realized/unrealized gains (losses):
Included in earnings	(1,502)	(2,557)
Balance, end of period	$ (16,608)	$ (14,524)

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2015

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Note 1. Summary of Significant Accounting Policies

Organization

City National Corporation (the “Corporation”) is the holding company for City National Bank (the “Bank”). The Bank delivers banking, investment and trust services through 75 offices in Southern California, the San Francisco Bay area, Nevada, New York City, Nashville, Tennessee and Atlanta, Georgia. As of September 30, 2015, the Corporation had four consolidated investment advisory affiliates and one unconsolidated subsidiary, Business Bancorp Capital Trust I. Because the Bank comprises substantially all of the business of the Corporation, references to the “Company” mean the Corporation and the Bank together. The Corporation is approved as a financial holding company pursuant to the Gramm-Leach-Bliley Act of 1999.

Consolidation

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

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

Use of Estimates

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

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

Basis of Presentation

The Company is on the accrual basis of accounting for income and expenses. The results of operations reflect any adjustments, all of which are of a normal recurring nature, unless otherwise disclosed in this Form 10-Q, and which, in the opinion of management, are necessary for a fair presentation of the results for the periods presented. In accordance with the usual practice of banks, assets and liabilities of individual trust, agency and fiduciary funds have not been included in the financial statements. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

The results for the 2015 interim periods are not necessarily indicative of the results expected for the full year. The Company has not made any significant changes in its critical accounting policies or in its estimates and assumptions from those disclosed in its 2014 Annual Report other than the adoption of new accounting pronouncements and other authoritative guidance that became effective for the Company on or after January 1, 2015. Refer to Accounting Pronouncements for discussion of accounting pronouncements adopted in 2015.

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

Accounting Pronouncements

The following is a summary of accounting pronouncements that became effective during the nine months ended September 30, 2015:

· In January 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-01, Investments—Equity Method and Joint Ventures (Topic 323), Accounting for Investments in Qualified Affordable Housing Projects (“ASU 2014-01”). ASU 2014-01 permits an entity to make an accounting policy election to apply a proportionate amortization method to its low income housing tax credit investments if certain conditions are met. Under the proportionate amortization method, an investor amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received, and recognizes the amortization in the income statement as a component of income taxes attributable to continuing operations. On January 1, 2015, the Company adopted ASU 2014-01 and elected to apply the proportionate amortization method to its low income housing tax credit investments. Following adoption, the Company recognizes amortization of its tax credit investments as a component of income taxes. The Company previously recognized amortization as a component of noninterest expense. Prior periods presented in the Company’s consolidated financial statements have been adjusted to reflect retrospective adoption of ASU 2014-01 as follows:

	Consolidated Balance Sheet
	As of December 31, 2014
(in thousands)	As Reported		As Adjusted
			(Unaudited)
Assets
Deferred tax asset	$	230,376	$	233,811
Affordable housing investments	203,010		186,423
Other assets	537,826		537,847
Shareholders’ equity
Retained earnings	2,084,361		2,071,230

	Consolidated Statement of Income
	For the three months ended				For the nine months ended
	September 30, 2014				September 30, 2014
(in thousands, except per share amounts)	As Reported		As Adjusted		As Reported		As Adjusted
	(Unaudited)				(Unaudited)
Noninterest expense
Other operating	$	15,215	$	10,927	$	41,628	$	29,259
Income taxes	34,404		37,452		90,521		103,571
Net income	69,498		70,738		191,919		191,238
Net income per common share, basic	$	1.16	$	1.18	$	3.20	$	3.19
Net income per common share, diluted	$	1.15	$	1.17	$	3.16	$	3.15

	Consolidated Statement of Cash Flows
	For the nine months ended
	September 30, 2014
(in thousands)	As Reported			As Adjusted
	(Unaudited)
Cash Flows From Operating Activities
Net income	$	191,919		$	191,238
Adjustments to net income:
Deferred income tax benefit	(3,758		)	(3,391		)
Other, net	21,706			22,063
Net change in:
Other assets and other liabilities, net	(44,477		)	(44,520		)

· In January 2014, the FASB issued ASU 2014-04, Receivables—Troubled Debt Restructurings by Creditors (Subtopic 310-40), Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (“ASU 2014-04”). ASU 2014-04 requires entities to reclassify consumer mortgage loans collateralized by residential real estate to OREO when either (1) the creditor obtains legal title to the residential real estate property or (2) the borrower conveys all interest in the property to the creditor to satisfy the loan by completing a deed in lieu of foreclosure or similar agreement. The Company adopted ASU 2014-04 effective January 1, 2015 on a prospective basis. Adoption of the new guidance did not have a significant impact on the Company’s consolidated financial statements.

· In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”). ASU 2014-08 raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. The Company adopted ASU 2014-08 effective January 1, 2015 on a prospective basis. Adoption of the new guidance did not have a significant impact on the Company’s consolidated financial statements.

· In June 2014, the FASB issued ASU 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures (“ASU 2014-11”). ASU 2014-11 aligns the accounting for repurchase-to-maturity transactions and repurchase agreements executed as a repurchase financing with the accounting for other repurchase agreements. Going forward, these transactions will all be accounted for as secured borrowings. Under the new guidance, parties to a repurchase financing transaction will be required to separately account for the initial transfer of the financial asset and the related repurchase agreement. The initial transfer of the financial asset would be accounted for as a sale by the transferor only if all criteria for derecognition have been met. ASU 2014-11 requires new or expanded disclosures for repurchase agreements and similar transactions accounted for as secured borrowings. The Company adopted ASU 2014-11 effective January 1, 2015. Adoption of the new guidance did not have a significant impact on the Company’s consolidated financial statements.

The following is a summary of recently issued accounting pronouncements:

· In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which significantly changes the consolidation analysis required under U.S. GAAP. The new consolidation guidance maintains two models: one for assessing most corporate entities based on the notion that majority voting rights indicate control (the voting model) and another for assessing entities that may be controlled through other means, such as management contracts or subordinated financial support (the variable interest model). Under the new guidance, limited partnerships will be VIEs, unless the limited partners have either substantive kick-out or participating rights. The ASU also changes the effect that fees paid to a decision maker or service provider have on the consolidation analysis. For entities other than limited partnerships, the ASU clarifies how to determine whether the equity holders (as a group) have power over the entity. The ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is allowed for all entities, but the guidance must be applied as of the beginning of the annual period containing the adoption date. Entities have the option of using either a full or modified retrospective approach for adoption. The Company is assessing the impact of the new guidance on its consolidated financial statements.

· In April 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires the debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. The amendments in this ASU are to be applied on a retrospective basis. Adoption of the new guidance is not expected to have a significant impact on the Company’s consolidated financial statements.

· In April 2015, the FASB issued ASU 2015-05, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. Cloud computing arrangements include: (a) software as a service; (b) platform as a service; (c) infrastructure as a service; and (d) other similar hosting arrangements. Under the ASU, if a cloud computing arrangement contains a software license, the customer would account for the fees related to the software license element in a manner consistent with how the acquisition of other software licenses is accounted for under Accounting Standards Codification (“ASC”) 350-40. If the arrangement does not contain a software license, the customer would account for the arrangement as a service contract. The ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. Entities may adopt the guidance either (1) prospectively to arrangements entered into or materially modified after the effective date, or (2) retrospectively. The Company is assessing the impact of the new guidance on its consolidated financial statements.

· In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date to defer by one year the effective dates of the revenue recognition standard ASU 2014-09. As a result, the standard would be effective for public entities for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2017. The Company is assessing the impact of the new revenue recognition guidance on its consolidated financial statements.

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Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Detail 9) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	$ 22,536,584	$ 19,347,988	$ 22,536,584	$ 19,347,988	$ 20,337,206
Covered Loans Allowance
Balance, beginning of period	8,075	9,103	8,608	15,922
Provision for losses	1,148	589	2,736	3,783
Change in allowance due to loan removals	(3,575)	(324)	(5,696)	(10,337)
Balance, end of period	5,648	9,368	5,648	9,368
Acquired impaired loans
Covered Loans Allowance
Loans on nonaccrual status	0		0		0
Acquired impaired loans 30 to 89 days delinquent	900		900		7,400
Loans 90 days or more past due on accrual status	20,400		20,400		28,300
Commercial
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	10,253,592		10,253,592		9,360,976
Commercial real estate mortgages
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	3,947,746	3,565,188	3,947,746	3,565,188	3,539,703
Residential mortgages
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	5,709,272	5,023,213	5,709,272	5,023,213	5,106,803
Fixed
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	1,487,972		1,487,972		1,401,952
Variable
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	4,221,300		4,221,300		3,704,851
Real estate construction
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	932,422	585,232	932,422	585,232	710,224
Construction
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	900,928		900,928		686,990
Land.
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	31,494		31,494		23,234
Home equity loans and lines of credit
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	799,711	759,258	799,711	759,258	785,796
Installment
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	206,156	$ 178,803	206,156	$ 178,803	184,613
Commercial Installment loan
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	228		228		298
Consumer Installment loan
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	205,928		205,928		184,315
Lease financing
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	687,685		687,685		649,091
Nonclassified
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	22,304,555		22,304,555		20,146,374
Nonclassified | Commercial
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	10,153,594		10,153,594		9,304,636
Nonclassified | Commercial real estate mortgages
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	3,905,035		3,905,035		3,511,229
Nonclassified | Residential mortgages
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	5,659,313		5,659,313		5,050,898
Nonclassified | Fixed
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	1,467,932		1,467,932		1,375,175
Nonclassified | Variable
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	4,191,381		4,191,381		3,675,723
Nonclassified | Real estate construction
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	926,630		926,630		696,380
Nonclassified | Construction
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	900,928		900,928		679,744
Nonclassified | Land.
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	25,702		25,702		16,636
Nonclassified | Home equity loans and lines of credit
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	773,425		773,425		754,694
Nonclassified | Installment
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	205,457		205,457		183,488
Nonclassified | Commercial Installment loan
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	228		228		298
Nonclassified | Consumer Installment loan
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	205,229		205,229		183,190
Nonclassified | Lease financing
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	681,101		681,101		645,049
Classified
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	232,029		232,029		190,832
Classified | Commercial
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	99,998		99,998		56,340
Classified | Commercial real estate mortgages
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	42,711		42,711		28,474
Classified | Residential mortgages
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	49,959		49,959		55,905
Classified | Fixed
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	20,040		20,040		26,777
Classified | Variable
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	29,919		29,919		29,128
Classified | Real estate construction
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	5,792		5,792		13,844
Classified | Construction
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans					7,246
Classified | Land.
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	5,792		5,792		6,598
Classified | Home equity loans and lines of credit
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	26,286		26,286		31,102
Classified | Installment
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	699		699		1,125
Classified | Consumer Installment loan
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	699		699		1,125
Classified | Lease financing
Financing Receivable, Recorded Investment
Loans and leases, excluding acquired impaired loans	$ 6,584		$ 6,584		$ 4,042

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Summary of Significant Accounting Policies (Detail) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($) $ / shares	Sep. 30, 2014 USD ($) $ / shares	Sep. 30, 2015 USD ($) item $ / shares	Sep. 30, 2014 USD ($) $ / shares	Dec. 31, 2014 USD ($)
Summary of Significant Accounting Policies
Number of offices for delivery of banking, investment and trust services | item			75
Number of investment advisory affiliates | item			4
Number of unconsolidated subsidiary | item			1
Assets
Deferred tax asset	$ 234,680		$ 234,680		$ 233,811
Affordable Housing Investments	222,877		222,877		186,423
Other Assets	553,390		553,390		537,847
Shareholders' equity
Retained earnings	2,182,259		2,182,259		2,071,230
Noninterest Expense
Other operating	11,200	$ 10,927	31,713	$ 29,259
Income taxes	32,208	37,452	100,489	103,571
Net income	$ 71,729	$ 70,738	$ 202,827	$ 191,238
Net income per common share, basic (in dollars per share) | $ / shares	$ 1.20	$ 1.18	$ 3.38	$ 3.19
Net income per common share, diluted (in dollars per share) | $ / shares	$ 1.18	$ 1.17	$ 3.32	$ 3.15
Cash Flows From Operating Activities
Net income	$ 71,729	$ 70,738	$ 202,827	$ 191,238
Adjustments to net income:
Deferred income tax benefit			(7,860)	(3,391)
Other, net			27,570	22,063
Net change in:
Other assets and other liabilities, net			$ (18,192)	(44,520)
As Reported
Assets
Deferred tax asset					230,376
Affordable Housing Investments					203,010
Other Assets					537,826
Shareholders' equity
Retained earnings					2,084,361
Noninterest Expense
Other operating		15,215		41,628
Income taxes		34,404		90,521
Net income		$ 69,498		$ 191,919
Net income per common share, basic (in dollars per share) | $ / shares		$ 1.16		$ 3.20
Net income per common share, diluted (in dollars per share) | $ / shares		$ 1.15		$ 3.16
Cash Flows From Operating Activities
Net income		$ 69,498		$ 191,919
Adjustments to net income:
Deferred income tax benefit				(3,758)
Other, net				21,706
Net change in:
Other assets and other liabilities, net				(44,477)
As Adjusted
Assets
Deferred tax asset					233,811
Affordable Housing Investments					186,423
Other Assets					537,847
Shareholders' equity
Retained earnings					$ 2,071,230
Noninterest Expense
Other operating		10,927		29,259
Income taxes		37,452		103,571
Net income		$ 70,738		$ 191,238
Net income per common share, basic (in dollars per share) | $ / shares		$ 1.18		$ 3.19
Net income per common share, diluted (in dollars per share) | $ / shares		$ 1.17		$ 3.15
Cash Flows From Operating Activities
Net income		$ 70,738		$ 191,238
Adjustments to net income:
Deferred income tax benefit				(3,391)
Other, net				22,063
Net change in:
Other assets and other liabilities, net				$ (44,520)

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2015

Summary of Significant Accounting Policies

Schedule of Condensed Financial Statements

	Consolidated Balance Sheet
	As of December 31, 2014
(in thousands)	As Reported		As Adjusted
			(Unaudited)
Assets
Deferred tax asset	$	230,376	$	233,811
Affordable housing investments	203,010		186,423
Other assets	537,826		537,847
Shareholders’ equity
Retained earnings	2,084,361		2,071,230

	Consolidated Statement of Income
	For the three months ended				For the nine months ended
	September 30, 2014				September 30, 2014
(in thousands, except per share amounts)	As Reported		As Adjusted		As Reported		As Adjusted
	(Unaudited)				(Unaudited)
Noninterest expense
Other operating	$	15,215	$	10,927	$	41,628	$	29,259
Income taxes	34,404		37,452		90,521		103,571
Net income	69,498		70,738		191,919		191,238
Net income per common share, basic	$	1.16	$	1.18	$	3.20	$	3.19
Net income per common share, diluted	$	1.15	$	1.17	$	3.16	$	3.15

	Consolidated Statement of Cash Flows
	For the nine months ended
	September 30, 2014
(in thousands)	As Reported			As Adjusted
	(Unaudited)
Cash Flows From Operating Activities
Net income	$	191,919		$	191,238
Adjustments to net income:
Deferred income tax benefit	(3,758		)	(3,391		)
Other, net	21,706			22,063
Net change in:
Other assets and other liabilities, net	(44,477		)	(44,520		)

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2015

Summary of Significant Accounting Policies

Organization

Organization

City National Corporation (the “Corporation”) is the holding company for City National Bank (the “Bank”). The Bank delivers banking, investment and trust services through 75 offices in Southern California, the San Francisco Bay area, Nevada, New York City, Nashville, Tennessee and Atlanta, Georgia. As of September 30, 2015, the Corporation had four consolidated investment advisory affiliates and one unconsolidated subsidiary, Business Bancorp Capital Trust I. Because the Bank comprises substantially all of the business of the Corporation, references to the “Company” mean the Corporation and the Bank together. The Corporation is approved as a financial holding company pursuant to the Gramm-Leach-Bliley Act of 1999.

Consolidation

Consolidation

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

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

Use of Estimates

Use of Estimates

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

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

Basis of Presentation

Basis of Presentation

The Company is on the accrual basis of accounting for income and expenses. The results of operations reflect any adjustments, all of which are of a normal recurring nature, unless otherwise disclosed in this Form 10-Q, and which, in the opinion of management, are necessary for a fair presentation of the results for the periods presented. In accordance with the usual practice of banks, assets and liabilities of individual trust, agency and fiduciary funds have not been included in the financial statements. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

The results for the 2015 interim periods are not necessarily indicative of the results expected for the full year. The Company has not made any significant changes in its critical accounting policies or in its estimates and assumptions from those disclosed in its 2014 Annual Report other than the adoption of new accounting pronouncements and other authoritative guidance that became effective for the Company on or after January 1, 2015. Refer to Accounting Pronouncements for discussion of accounting pronouncements adopted in 2015.

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

Accounting Pronouncements

Accounting Pronouncements

The following is a summary of accounting pronouncements that became effective during the nine months ended September 30, 2015:

· In January 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-01, Investments—Equity Method and Joint Ventures (Topic 323), Accounting for Investments in Qualified Affordable Housing Projects (“ASU 2014-01”). ASU 2014-01 permits an entity to make an accounting policy election to apply a proportionate amortization method to its low income housing tax credit investments if certain conditions are met. Under the proportionate amortization method, an investor amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received, and recognizes the amortization in the income statement as a component of income taxes attributable to continuing operations. On January 1, 2015, the Company adopted ASU 2014-01 and elected to apply the proportionate amortization method to its low income housing tax credit investments. Following adoption, the Company recognizes amortization of its tax credit investments as a component of income taxes. The Company previously recognized amortization as a component of noninterest expense. Prior periods presented in the Company’s consolidated financial statements have been adjusted to reflect retrospective adoption of ASU 2014-01 as follows:

	Consolidated Balance Sheet
	As of December 31, 2014
(in thousands)	As Reported		As Adjusted
			(Unaudited)
Assets
Deferred tax asset	$	230,376	$	233,811
Affordable housing investments	203,010		186,423
Other assets	537,826		537,847
Shareholders’ equity
Retained earnings	2,084,361		2,071,230

	Consolidated Statement of Income
	For the three months ended				For the nine months ended
	September 30, 2014				September 30, 2014
(in thousands, except per share amounts)	As Reported		As Adjusted		As Reported		As Adjusted
	(Unaudited)				(Unaudited)
Noninterest expense
Other operating	$	15,215	$	10,927	$	41,628	$	29,259
Income taxes	34,404		37,452		90,521		103,571
Net income	69,498		70,738		191,919		191,238
Net income per common share, basic	$	1.16	$	1.18	$	3.20	$	3.19
Net income per common share, diluted	$	1.15	$	1.17	$	3.16	$	3.15

	Consolidated Statement of Cash Flows
	For the nine months ended
	September 30, 2014
(in thousands)	As Reported			As Adjusted
	(Unaudited)
Cash Flows From Operating Activities
Net income	$	191,919		$	191,238
Adjustments to net income:
Deferred income tax benefit	(3,758		)	(3,391		)
Other, net	21,706			22,063
Net change in:
Other assets and other liabilities, net	(44,477		)	(44,520		)

· In January 2014, the FASB issued ASU 2014-04, Receivables—Troubled Debt Restructurings by Creditors (Subtopic 310-40), Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (“ASU 2014-04”). ASU 2014-04 requires entities to reclassify consumer mortgage loans collateralized by residential real estate to OREO when either (1) the creditor obtains legal title to the residential real estate property or (2) the borrower conveys all interest in the property to the creditor to satisfy the loan by completing a deed in lieu of foreclosure or similar agreement. The Company adopted ASU 2014-04 effective January 1, 2015 on a prospective basis. Adoption of the new guidance did not have a significant impact on the Company’s consolidated financial statements.

· In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”). ASU 2014-08 raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. The Company adopted ASU 2014-08 effective January 1, 2015 on a prospective basis. Adoption of the new guidance did not have a significant impact on the Company’s consolidated financial statements.

· In June 2014, the FASB issued ASU 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures (“ASU 2014-11”). ASU 2014-11 aligns the accounting for repurchase-to-maturity transactions and repurchase agreements executed as a repurchase financing with the accounting for other repurchase agreements. Going forward, these transactions will all be accounted for as secured borrowings. Under the new guidance, parties to a repurchase financing transaction will be required to separately account for the initial transfer of the financial asset and the related repurchase agreement. The initial transfer of the financial asset would be accounted for as a sale by the transferor only if all criteria for derecognition have been met. ASU 2014-11 requires new or expanded disclosures for repurchase agreements and similar transactions accounted for as secured borrowings. The Company adopted ASU 2014-11 effective January 1, 2015. Adoption of the new guidance did not have a significant impact on the Company’s consolidated financial statements.

The following is a summary of recently issued accounting pronouncements:

· In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which significantly changes the consolidation analysis required under U.S. GAAP. The new consolidation guidance maintains two models: one for assessing most corporate entities based on the notion that majority voting rights indicate control (the voting model) and another for assessing entities that may be controlled through other means, such as management contracts or subordinated financial support (the variable interest model). Under the new guidance, limited partnerships will be VIEs, unless the limited partners have either substantive kick-out or participating rights. The ASU also changes the effect that fees paid to a decision maker or service provider have on the consolidation analysis. For entities other than limited partnerships, the ASU clarifies how to determine whether the equity holders (as a group) have power over the entity. The ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is allowed for all entities, but the guidance must be applied as of the beginning of the annual period containing the adoption date. Entities have the option of using either a full or modified retrospective approach for adoption. The Company is assessing the impact of the new guidance on its consolidated financial statements.

· In April 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires the debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. The amendments in this ASU are to be applied on a retrospective basis. Adoption of the new guidance is not expected to have a significant impact on the Company’s consolidated financial statements.

· In April 2015, the FASB issued ASU 2015-05, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. Cloud computing arrangements include: (a) software as a service; (b) platform as a service; (c) infrastructure as a service; and (d) other similar hosting arrangements. Under the ASU, if a cloud computing arrangement contains a software license, the customer would account for the fees related to the software license element in a manner consistent with how the acquisition of other software licenses is accounted for under Accounting Standards Codification (“ASC”) 350-40. If the arrangement does not contain a software license, the customer would account for the arrangement as a service contract. The ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. Entities may adopt the guidance either (1) prospectively to arrangements entered into or materially modified after the effective date, or (2) retrospectively. The Company is assessing the impact of the new guidance on its consolidated financial statements.

· In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date to defer by one year the effective dates of the revenue recognition standard ASU 2014-09. As a result, the standard would be effective for public entities for annual reporting periods, and interim periods within those annual periods, beginning after December 15, 2017. The Company is assessing the impact of the new revenue recognition guidance on its consolidated financial statements.

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Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Detail 3) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Changes in Accretable Yield for Acquired Impaired Loans
Balance at the beginning of the period	$ 168,469	$ 219,018
Accretion	(28,131)	(36,067)
Reclassification from nonaccretable difference	19,545	25,636
Disposals and other	(23,239)	(28,628)
Balance at the end of the period	$ 136,644	$ 179,959
Charge off of consumer loans, delinquency period for overdrafts, low end of range	60 days
Charge off of consumer loans, delinquency period for secured consumer loans	180 days

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Fair Value Measurements (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Fair value assets and liabilities measured on recurring and nonrecurring basis
Fair value of assets transfers from Level 1 to Level 2	$ 0		$ 0
Fair value of assets transfers from Level 2 to Level 1	0		0
Fair value of liabilities transfers from Level 1 to Level 2	0		0
Assets
Securities available-for-sale	5,309,187		5,309,187		$ 5,882,983
Trading securities	154,706		154,706		173,188
Liabilities
FDIC clawback liability	16,608		16,608
Redeemable noncontrolling interest	32,847		32,847		39,978
U.S. Treasury
Assets
Securities available-for-sale	390,329		390,329		116,926
Federal agency - Debt
Assets
Securities available-for-sale	286,360		286,360		1,398,581
Federal agency - MBS
Assets
Securities available-for-sale	92,881		92,881		104,526
CMOs - Federal agency
Assets
Securities available-for-sale	3,536,128		3,536,128		3,580,590
CMOs - Non-agency
Assets
Securities available-for-sale	20,431		20,431		24,014
State and municipal
Assets
Securities available-for-sale	360,744		360,744		479,031
Other debt securities
Assets
Securities available-for-sale	622,314		622,314		176,169
Equity securities and mutual funds
Assets
Securities available-for-sale					3,146
Measured on a Recurring Basis | Quoted Prices in Active Markets Level 1
Assets
Trading securities	146,710		146,710		171,778
Derivatives assets	8,454		8,454		6,106
Total assets at fair value	545,493		545,493		297,956
Liabilities
Derivative liabilities	8,800		8,800		6,623
Total liabilities at fair value	8,800		8,800		6,623
Measured on a Recurring Basis | Quoted Prices in Active Markets Level 1 | U.S. Treasury
Assets
Securities available-for-sale	390,329		390,329		116,926
Measured on a Recurring Basis | Quoted Prices in Active Markets Level 1 | Equity securities and mutual funds
Assets
Securities available-for-sale					3,146
Measured on a Recurring Basis | Significant Other Observable Inputs Level 2
Assets
Trading securities	7,996		7,996		1,410
Derivatives assets	71,487		71,487		44,598
Total assets at fair value	4,994,871		4,994,871		5,805,372
Liabilities
Derivative liabilities	72,976		72,976		44,686
Other liabilities	797		797		946
Total liabilities at fair value	73,773		73,773		45,632
Measured on a Recurring Basis | Significant Other Observable Inputs Level 2 | Federal agency - Debt
Assets
Securities available-for-sale	286,360		286,360		1,398,581
Measured on a Recurring Basis | Significant Other Observable Inputs Level 2 | Federal agency - MBS
Assets
Securities available-for-sale	92,881		92,881		104,526
Measured on a Recurring Basis | Significant Other Observable Inputs Level 2 | CMOs - Federal agency
Assets
Securities available-for-sale	3,536,128		3,536,128		3,580,590
Measured on a Recurring Basis | Significant Other Observable Inputs Level 2 | CMOs - Non-agency
Assets
Securities available-for-sale	20,431		20,431		24,014
Measured on a Recurring Basis | Significant Other Observable Inputs Level 2 | State and municipal
Assets
Securities available-for-sale	357,274		357,274		475,484
Measured on a Recurring Basis | Significant Other Observable Inputs Level 2 | Other debt securities
Assets
Securities available-for-sale	622,314		622,314		176,169
Measured on a Recurring Basis | Significant Unobservable Inputs Level 3
Assets
Derivatives assets	2,235		2,235		882
Contingent consideration asset	2,605		2,605		2,930
Total assets at fair value	8,310		8,310		7,359
Liabilities
Contingent consideration liability	36,985		36,985		34,983
FDIC clawback liability	16,608		16,608		15,106
Total liabilities at fair value	53,593		53,593		50,089
Redeemable noncontrolling interest	$ 32,847		$ 32,847		$ 39,978
Measured on a Recurring Basis | Significant Unobservable Inputs Level 3 | Maximum
Assets
Percent of total assets	1.00%		1.00%		1.00%
Measured on a Recurring Basis | Significant Unobservable Inputs Level 3 | State and municipal
Assets
Securities available-for-sale	$ 3,470		$ 3,470		$ 3,547
Measured on a Nonrecurring Basis
Net (losses) gains recognized for assets measured at fair value on nonrecurring basis
Total net (losses) gains recognized	(1,203)	$ (276)	(4,153)	$ 860
Measured on a Nonrecurring Basis | Commercial real estate mortgages
Net (losses) gains recognized for assets measured at fair value on nonrecurring basis
Collateral dependent impaired loans:				(5)
Measured on a Nonrecurring Basis | Residential mortgages
Net (losses) gains recognized for assets measured at fair value on nonrecurring basis
Collateral dependent impaired loans:		7		81
Measured on a Nonrecurring Basis | Other real estate owned
Net (losses) gains recognized for assets measured at fair value on nonrecurring basis
Total net (losses) gains recognized	(653)	$ (283)	(1,973)	$ 784
Measured on a Nonrecurring Basis | Private equity and alternative investments
Net (losses) gains recognized for assets measured at fair value on nonrecurring basis
Total net (losses) gains recognized	(550)		(2,180)
Measured on a Nonrecurring Basis | Significant Unobservable Inputs Level 3
Assets
Total assets at fair value	$ 11,131		$ 11,131		$ 5,644
Measured on a Nonrecurring Basis | Significant Unobservable Inputs Level 3 | Maximum
Assets
Percent of total assets	1.00%		1.00%		1.00%
Measured on a Nonrecurring Basis | Significant Unobservable Inputs Level 3 | Other real estate owned
Assets
Total assets at fair value	$ 9,544		$ 9,544		$ 5,644
Measured on a Nonrecurring Basis | Significant Unobservable Inputs Level 3 | Private equity and alternative investments
Assets
Total assets at fair value	1,587		1,587
Fair Value
Liabilities
Total liabilities at fair value	136,200		136,200		102,300
Fair Value | Measured on a Recurring Basis
Assets
Trading securities	154,706		154,706		173,188
Derivatives assets	82,176		82,176		51,586
Contingent consideration asset	2,605		2,605		2,930
Total assets at fair value	$ 5,548,674		$ 5,548,674		$ 6,110,687
Percent of total assets	16.00%		16.00%		19.00%
Liabilities
Derivative liabilities	$ 81,776		$ 81,776		$ 51,309
Contingent consideration liability	36,985		36,985		34,983
FDIC clawback liability	16,608		16,608		15,106
Other liabilities	797		797		946
Total liabilities at fair value	136,166		136,166		102,344
Redeemable noncontrolling interest	32,847		32,847		39,978
Fair Value | Measured on a Recurring Basis | U.S. Treasury
Assets
Securities available-for-sale	390,329		390,329		116,926
Fair Value | Measured on a Recurring Basis | Federal agency - Debt
Assets
Securities available-for-sale	286,360		286,360		1,398,581
Fair Value | Measured on a Recurring Basis | Federal agency - MBS
Assets
Securities available-for-sale	92,881		92,881		104,526
Fair Value | Measured on a Recurring Basis | CMOs - Federal agency
Assets
Securities available-for-sale	3,536,128		3,536,128		3,580,590
Fair Value | Measured on a Recurring Basis | CMOs - Non-agency
Assets
Securities available-for-sale	20,431		20,431		24,014
Fair Value | Measured on a Recurring Basis | State and municipal
Assets
Securities available-for-sale	360,744		360,744		479,031
Fair Value | Measured on a Recurring Basis | Other debt securities
Assets
Securities available-for-sale	622,314		622,314		176,169
Fair Value | Measured on a Recurring Basis | Equity securities and mutual funds
Assets
Securities available-for-sale					3,146
Fair Value | Measured on a Nonrecurring Basis
Assets
Total assets at fair value	11,131		11,131		5,644
Fair Value | Measured on a Nonrecurring Basis | Other real estate owned
Assets
Total assets at fair value	9,544		9,544		$ 5,644
Fair Value | Measured on a Nonrecurring Basis | Private equity and alternative investments
Assets
Total assets at fair value	$ 1,587		$ 1,587

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2015

Fair Value Measurements

Summary of assets and liabilities measured at fair value by level

			Fair Value Measurements at Reporting Date Using
(in thousands)	Balance as of September 30, 2015		Quoted Prices in Active Markets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
Measured on a Recurring Basis
Assets
Securities available-for-sale:
U.S. Treasury	$	390,329	$	390,329	$	—	$	—
Federal agency - Debt	286,360		—		286,360		—
Federal agency - MBS	92,881		—		92,881		—
CMOs - Federal agency	3,536,128		—		3,536,128		—
CMOs - Non-agency	20,431		—		20,431		—
State and municipal	360,744		—		357,274		3,470
Other debt securities	622,314		—		622,314		—
Trading securities	154,706		146,710		7,996		—
Derivative assets (1)	82,176		8,454		71,487		2,235
Contingent consideration asset (1)	2,605		—		—		2,605
Total assets at fair value	$	5,548,674	$	545,493	$	4,994,871	$	8,310
Liabilities
Derivative liabilities	$	81,776	$	8,800	$	72,976	$	—
Contingent consideration liability	36,985		—		—		36,985
FDIC clawback liability	16,608		—		—		16,608
Other liabilities	797		—		797		—
Total liabilities at fair value (2)	$	136,166	$	8,800	$	73,773	$	53,593
Redeemable noncontrolling interest	$	32,847	$	—	$	—	$	32,847
Measured on a Nonrecurring Basis
Assets
Other real estate owned (3)	$	9,544	$	—	$	—	$	9,544
Private equity and alternative investments	1,587		—		—		1,587
Total assets at fair value	$	11,131	$	—	$	—	$	11,131

(1) Reported in Other assets in the consolidated balance sheets.

(2) Reported in Other liabilities in the consolidated balance sheets.

(3) Includes covered OREO.

			Fair Value Measurements at Reporting Date Using
(in thousands)	Balance as of December 31, 2014		Quoted Prices in Active Markets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
Measured on a Recurring Basis
Assets
Securities available-for-sale:
U.S. Treasury	$	116,926	$	116,926	$	—	$	—
Federal agency - Debt	1,398,581		—		1,398,581		—
Federal agency - MBS	104,526		—		104,526		—
CMOs - Federal agency	3,580,590		—		3,580,590		—
CMOs - Non-agency	24,014		—		24,014		—
State and municipal	479,031		—		475,484		3,547
Other debt securities	176,169		—		176,169		—
Equity securities and mutual funds	3,146		3,146		—		—
Trading securities	173,188		171,778		1,410		—
Derivative assets (1)	51,586		6,106		44,598		882
Contingent consideration asset (1)	2,930		—		—		2,930
Total assets at fair value	$	6,110,687	$	297,956	$	5,805,372	$	7,359
Liabilities
Derivative liabilities	$	51,309	$	6,623	$	44,686	$	—
Contingent consideration liability	34,983		—		—		34,983
FDIC clawback liability	15,106		—		—		15,106
Other liabilities	946		—		946		—
Total liabilities at fair value (2)	$	102,344	$	6,623	$	45,632	$	50,089
Redeemable noncontrolling interest	$	39,978	$	—	$	—	$	39,978
Measured on a Nonrecurring Basis
Assets
Other real estate owned (3)	$	5,644	$	—	$	—	$	5,644
Total assets at fair value	$	5,644	$	—	$	—	$	5,644

(1) Reported in Other assets in the consolidated balance sheets.

(2) Reported in Other liabilities in the consolidated balance sheets.

(3) Includes covered OREO.

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

	For the nine months ended September 30, 2015
(in thousands)	Securities Available-for- Sale			Equity Warrants		Contingent Consideration Asset			Contingent Consideration Liability			FDIC Clawback Liability
Balance, beginning of period	$	3,547		$	882	$	2,930		$	(34,983	)	$	(15,106	)
Total realized/unrealized gains (losses):
Included in earnings	—			65		(325		)	(727		)	(1,502		)
Included in other comprehensive income	23			—		—			—			—
Additions	—			1,288		—			—			—
Settlements	(100		)	—		—			—			—
Other (1)	—			—		—			(1,275		)	—
Balance, end of period	$	3,470		$	2,235	$	2,605		$	(36,985	)	$	(16,608	)

	For the nine months ended September 30, 2014
(in thousands)	Securities Available-for- Sale			Equity Warrants			Contingent Consideration Asset		Contingent Consideration Liability			FDIC Clawback Liability
Balance, beginning of period	$	3,633		$	—		$	—	$	(49,900	)	$	(11,967	)
Total realized/unrealized gains (losses):
Included in earnings	—			78			—		—			(2,557		)
Included in other comprehensive income	(9		)	—			—		—			—
Additions	—			631			2,930		—			—
Settlements	(100		)	(29		)	—		17,266			—
Other (1)	—			—			—		(1,859		)	—
Balance, end of period	$	3,524		$	680		$	2,930	$	(34,493	)	$	(14,524	)

(1) Other rollforward activity consists of accretion of discount related to the contingent consideration liability.

Information About Nonrecurring Level 3 Fair Value Measurements

(in thousands)	Fair Value at September 30, 2015		Valuation Method	Unobservable Inputs
Other real estate owned	$	9,544	Third-party appraisal	- Fair values are primarily based on unadjusted appraised values. - A limited number of properties are valued using comparable sales values resulting in discounts to appraised values ranging from 12% to 22%.
Private equity and alternative investments	$	1,587	See note (1)	- See note (1) - Fair values reflect discounts to investment carrying amounts ranging from 27% to 86%.

(1) Fair values are based on management’s assumptions regarding recoverability of an investment based on a range of factors including, but not limited to, nature and age of the investment, actual and forecasted investment performance, fund operating results, recent and planned transactions, general and industry specific market conditions, performance of comparable companies and investment exit strategies.

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

	For the three months ended September 30,						For the nine months ended September 30,
(in thousands)	2015			2014			2015			2014
Collateral dependent impaired loans:
Commercial real estate mortgages	$	—		$	—		$	—		$	(5	)
Residential mortgages	—			7			—			81
Other real estate owned (1)	(653		)	(283		)	(1,973		)	784
Private equity and alternative investments	(550		)	—			(2,180		)	—
Total net (losses) gains recognized	$	(1,203	)	$	(276	)	$	(4,153	)	$	860

(1) Net gains and losses on OREO include amounts related to covered OREO, a significant portion of which is payable to or reimbursable by the FDIC.

Schedule of carrying amounts and fair values of financial instruments

	September 30, 2015
	Carrying		Total		Fair Value Measurements Using
(in millions)	Amount		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and due from banks	$	434.1	$	434.1	$	434.1	$	—	$	—
Due from banks - interest-bearing	1,424.1		1,424.1		1,424.1		—		—
Securities purchased under resale agreements	200.0		201.0		—		201.0		—
Securities held-to-maturity	3,506.5		3,598.9		—		3,598.9		—
Loans and leases, net of allowance	22,219.4		22,772.0		—		—		22,772.0
Acquired impaired loans, net of allowance	393.9		443.0		—		—		443.0
FDIC indemnification asset	28.2		22.4		—		—		22.4
Investment in FHLB and FRB stock	50.6		50.6		—		50.6		—
Financial Liabilities:
Deposits	$	31,173.4	$	31,174.3	$	—	$	30,601.3	$	573.0
Short-term borrowings	6.5		6.5		—		—		6.5
Long-term debt	650.1		725.9		—		614.7		111.2

	December 31, 2014
	Carrying		Total		Fair Value Measurements Using
(in millions)	Amount		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and due from banks	$	336.5	$	336.5	$	336.5	$	—	$	—
Due from banks - interest-bearing	120.0		120.0		120.0		—		—
Securities purchased under resale agreements	200.0		201.1		—		201.1		—
Securities held-to-maturity	3,427.0		3,484.6		—		3,484.6		—
Loans and leases, net of allowance	20,027.1		20,576.9		—		—		20,576.9
Acquired impaired loans, net of allowance	502.4		549.1		—		—		549.1
FDIC indemnification asset	50.5		40.2		—		—		40.2
Investment in FHLB and FRB stock	58.4		58.4		—		58.4		—
Financial Liabilities:
Deposits	$	28,108.1	$	28,109.6	$	—	$	27,435.1	$	674.5
Short-term borrowings	322.9		322.9		320.0		—		2.9
Long-term debt	638.6		704.3		—		605.3		99.0

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Securities (Tables)

9 Months Ended

Sep. 30, 2015

Securities

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

			Gross		Gross
	Amortized		Unrealized		Unrealized
(in thousands)	Cost		Gains		Losses			Fair Value
September 30, 2015
Securities available-for-sale:
U.S. Treasury	$	390,098	$	232	$	(1	)	$	390,329
Federal agency - Debt	285,616		758		(14		)	286,360
Federal agency - MBS	91,690		1,851		(660		)	92,881
CMOs - Federal agency	3,538,000		19,867		(21,739		)	3,536,128
CMOs - Non-agency	20,749		25		(343		)	20,431
State and municipal	356,623		4,249		(128		)	360,744
Other debt securities	621,224		1,119		(29		)	622,314
Total securities available-for-sale	$	5,304,000	$	28,101	$	(22,914	)	$	5,309,187
Securities held-to-maturity (1):
Federal agency - Debt	$	445,721	$	11,742	$	(27	)	$	457,436
Federal agency - MBS	575,071		19,039		(227		)	593,883
CMOs - Federal agency	1,630,388		44,862		(2,057		)	1,673,193
State and municipal	769,646		21,704		(2,788		)	788,562
Other debt securities	85,629		200		(1		)	85,828
Total securities held-to-maturity	$	3,506,455	$	97,547	$	(5,100	)	$	3,598,902
December 31, 2014
Securities available-for-sale:
U.S. Treasury	$	116,919	$	17	$	(10	)	$	116,926
Federal agency - Debt	1,401,303		558		(3,280		)	1,398,581
Federal agency - MBS	102,939		2,601		(1,014		)	104,526
CMOs - Federal agency	3,599,831		19,628		(38,869		)	3,580,590
CMOs - Non-agency	24,385		40		(411		)	24,014
State and municipal	473,272		6,139		(380		)	479,031
Other debt securities	174,352		1,817		—			176,169
Total debt securities	5,893,001		30,800		(43,964		)	5,879,837
Equity securities and mutual funds	1,508		1,988		(350		)	3,146
Total securities available-for-sale	$	5,894,509	$	32,788	$	(44,314	)	$	5,882,983
Securities held-to-maturity (1):
Federal agency - Debt	$	292,932	$	6,430	$	(255	)	$	299,107
Federal agency - MBS	553,589		13,427		(2,275		)	564,741
CMOs - Federal agency	1,811,574		29,998		(10,292		)	1,831,280
State and municipal	682,705		22,732		(1,997		)	703,440
Other debt securities	86,231		72		(224		)	86,079
Total securities held-to-maturity	$	3,427,031	$	72,659	$	(15,043	)	$	3,484,647

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

Schedule of gross realized gains and losses on sales and calls of securities (including trading securities) available-for-sale

	For the three months ended						For the nine months ended
	September 30,						September 30,
(in thousands)	2015			2014			2015			2014
Gross realized gains	$	50		$	19		$	5,475		$	7,989
Gross realized losses	(20		)	(5		)	(144		)	(486		)
Net realized gains	$	30		$	14		$	5,331		$	7,503

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

(in thousands)	One year or less		Over 1 year through 5 years		Over 5 years through 10 years		Over 10 years		Total
Securities available-for-sale:
U.S. Treasury	$	269,754	$	120,575	$	—	$	—	$	390,329
Federal agency - Debt	179,603		106,757		—		—		286,360
Federal agency - MBS	1,819		91,062		—		—		92,881
CMOs - Federal agency	119,443		3,248,817		167,868		—		3,536,128
CMOs - Non-agency	1,079		13,234		6,118		—		20,431
State and municipal	165,254		192,119		—		3,371		360,744
Other	126,850		495,464		—		—		622,314
Total debt securities available-for-sale	$	863,802	$	4,268,028	$	173,986	$	3,371	$	5,309,187
Amortized cost	$	861,509	$	4,264,720	$	174,371	$	3,400	$	5,304,000
Securities held-to-maturity:
Federal agency - Debt	$	—	$	45,000	$	209,125	$	191,596	$	445,721
Federal agency - MBS	10		74,949		495,583		4,529		575,071
CMOs - Federal agency	8,724		773,640		848,024		—		1,630,388
State and municipal	897		210,551		458,753		99,445		769,646
Other	—		85,629		—		—		85,629
Total debt securities held-to-maturity at amortized cost	$	9,631	$	1,189,769	$	2,011,485	$	295,570	$	3,506,455

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

	For the three months ended				For the nine months ended
	September 30,				September 30,
(in thousands)	2015		2014		2015		2014
Balance, beginning of period	$	2,587	$	2,395	$	2,470	$	4,549
Subsequent credit-related impairment	—		75		117		323
Reduction for securities sold or redeemed	—		—		—		(2,402		)
Balance, end of period	$	2,587	$	2,470	$	2,587	$	2,470

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

	Less than 12 months				12 months or greater				Total
(in thousands)	Fair Value		Estimated Unrealized Loss		Fair Value		Estimated Unrealized Loss		Fair Value		Estimated Unrealized Loss
September 30, 2015
Securities available-for-sale:
U.S. Treasury	$	17,001	$	1	$	—	$	—	$	17,001	$	1
Federal agency - Debt	17,556		14		—		—		17,556		14
Federal agency - MBS	—		—		53,639		660		53,639		660
CMOs - Federal agency	690,496		3,947		1,197,026		17,792		1,887,522		21,739
CMOs - Non-agency	—		—		12,739		343		12,739		343
State and municipal	65,670		99		3,470		29		69,140		128
Other debt securities	199,833		29		—		—		199,833		29
Total securities available-for-sale	$	990,556	$	4,090	$	1,266,874	$	18,824	$	2,257,430	$	22,914
Securities held-to-maturity:
Federal agency - Debt	$	—	$	—	$	5,739	$	27	$	5,739	$	27
Federal agency - MBS	21,649		25		26,077		202		47,726		227
CMOs - Federal agency	136,388		596		184,818		1,461		321,206		2,057
State and municipal	118,335		1,727		33,839		1,061		152,174		2,788
Other debt securities	15,100		1		—		—		15,100		1
Total securities held-to-maturity	$	291,472	$	2,349	$	250,473	$	2,751	$	541,945	$	5,100
December 31, 2014
Securities available-for-sale:
U.S. Treasury	$	15,814	$	10	$	—	$	—	$	15,814	$	10
Federal agency - Debt	1,008,234		2,622		135,868		658		1,144,102		3,280
Federal agency - MBS	35		—		57,970		1,014		58,005		1,014
CMOs - Federal agency	871,026		3,417		1,261,695		35,452		2,132,721		38,869
CMOs - Non-agency	1,949		15		12,720		396		14,669		411
State and municipal	130,208		314		4,183		66		134,391		380
Total debt securities	2,027,266		6,378		1,472,436		37,586		3,499,702		43,964
Equity securities and mutual funds	538		350		—		—		538		350
Total securities available-for-sale	$	2,027,804	$	6,728	$	1,472,436	$	37,586	$	3,500,240	$	44,314
Securities held-to-maturity:
Federal agency - Debt	$	—	$	—	$	26,316	$	255	$	26,316	$	255
Federal agency - MBS	4,800		21		114,856		2,254		119,656		2,275
CMOs - Federal agency	202,014		2,247		588,019		8,045		790,033		10,292
State and municipal	14,851		76		95,647		1,921		110,498		1,997
Other debt securities	61,813		224		—		—		61,813		224
Total securities held-to-maturity	$	283,478	$	2,568	$	824,838	$	12,475	$	1,108,316	$	15,043

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Net income attributable to redeemable noncontrolling interest	$ 954	$ 2,056

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Other Investments (Tables)

9 Months Ended

Sep. 30, 2015

Other Investments

Summary of investments by fund type

(in thousands)	September 30,		December 31,
Fund Type	2015		2014
Private equity and venture capital	$	15,949	$	18,605
Real estate	6,776		7,081
Hedge	1,168		1,668
Other (1)	250		1,858
Total	$	24,143	$	29,212

(1) Includes direct investments in a limited number of start-up companies.

Schedule of private equity and alternative investments measured at fair value on a nonrecurring basis

(in thousands) Fund Type	Fair Value		Unfunded Commitments		Redemption Frequency	Redemption Notice Period
Private equity and venture capital	$	1,337	$	273	None (1)	N/A
Other	250		—		None	N/A
Total	$	1,587	$	273

(1) Funds make periodic distributions of income but do not permit redemptions prior to the end of the investment term.

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Balance Sheet Offsetting (Tables)

9 Months Ended

Sep. 30, 2015

Balance Sheet Offsetting

Schedule of information about financial instruments that are eligible for offset

	Gross		Gross			Net Amount Presented		Gross Amounts Not Offset in the Balance Sheet
(in thousands)	Amount Recognized		Amount Offset			in the Balance Sheet		Securities Collateral			Cash Collateral			Net Amount
September 30, 2015
Financial assets:
Reverse repurchase agreements	$	700,555	$	(500,253	)	$	200,302	$	(200,000	)	$	—		$	302
Derivatives not designated as hedging instruments	8,661		(207		)	8,454		—			—			8,454
Total financial assets	$	709,216	$	(500,460	)	$	208,756	$	(200,000	)	$	—		$	8,756
Financial liabilities:
Repurchase agreements	$	500,253	$	(500,253	)	$	—	$	—		$	—		$	—
Derivatives not designated as hedging instruments	81,776		(207		)	81,569		(16,697		)	(57,162		)	7,710
Total financial liabilities	$	582,029	$	(500,460	)	$	81,569	$	(16,697	)	$	(57,162	)	$	7,710

	Gross		Gross			Net Amount Presented		Gross Amounts Not Offset in the Balance Sheet
(in thousands)	Amount Recognized		Amount Offset			in the Balance Sheet		Securities Collateral			Cash Collateral			Net Amount
December 31, 2014
Financial assets:
Reverse repurchase agreements	$	700,149	$	(500,041	)	$	200,108	$	(200,000	)	$	—		$	108
Derivatives not designated as hedging instruments	7,669		(1,562		)	6,107		—			—			6,107
Total financial assets	$	707,818	$	(501,603	)	$	206,215	$	(200,000	)	$	—		$	6,215
Financial liabilities:
Repurchase agreements	$	500,041	$	(500,041	)	$	—	$	—		$	—		$	—
Derivatives not designated as hedging instruments	51,125		(1,562		)	49,563		(14,654		)	(28,046		)	6,863
Total financial liabilities	$	551,166	$	(501,603	)	$	49,563	$	(14,654	)	$	(28,046	)	$	6,863

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Other Investments (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
FHLB and FRB Stock
Investment in FRB and FHLB stock	$ 50,600		$ 50,600		$ 58,400
Private Equity and Alternative Investments
Investments carried at cost	24,143		24,143		29,212
Recognized impairment losses on cost method investments	500	$ 0	2,200	$ 0
Alternative Investments Measured at Fair Value on a Nonrecurring Basis
Fair Value	1,587		1,587
Unfunded Commitments	273		273
Private equity and alternative investments
Private Equity and Alternative Investments
Investments carried at cost	15,949		15,949		18,605
Alternative Investments Measured at Fair Value on a Nonrecurring Basis
Fair Value	1,337		1,337
Unfunded Commitments	273		273
Real estate
Private Equity and Alternative Investments
Investments carried at cost	6,776		6,776		7,081
Hedge
Private Equity and Alternative Investments
Investments carried at cost	1,168		1,168		1,668
Other
Private Equity and Alternative Investments
Investments carried at cost	250		250		$ 1,858
Alternative Investments Measured at Fair Value on a Nonrecurring Basis
Fair Value	$ 250		$ 250

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Balance Sheet Offsetting (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Reverse repurchase agreements
Gross Amount Recognized	$ 700,555	$ 700,149
Gross amount Offset	(500,253)	(500,041)
Net Amount Presented in the Balance Sheet	200,302	200,108
Gross Amounts Not Offset in the Balance Sheet, Securities Collateral	(200,000)	(200,000)
Net Amount	302	108
Repurchase agreements
Gross Amount Recognized	500,253	500,041
Gross Amount Offset	(500,253)	(500,041)
Derivatives not designated as hedging instruments | Swap
Financial instruments that are eligible for offset
Principal amount of collateral swap agreement	500,000
Financial assets
Fair Value of Securities Pledged as Collateral	534,200
Financial liabilities
Fair Value of Securities Received as Collateral	521,000
Derivatives not designated as hedging instruments | Master netting arrangements and similar agreements
Financial assets
Gross Amount Recognized	8,661	7,669
Gross Amount Offset	(207)	(1,562)
Net Amount Presented in the Balance Sheet	8,454	6,107
Net Amount	8,454	6,107
Financial liabilities
Gross Amount Recognized	81,776	51,125
Gross Amount Offset	(207)	(1,562)
Net Amount Presented in the Balance Sheet	81,569	49,563
Gross Amounts Not Offset in the Balance Sheet, Securities Collateral	(16,697)	(14,654)
Gross Amounts Not Offset in the Balance Sheet, Cash Collateral	(57,162)	(28,046)
Net Amount	7,710	6,863
Derivatives designated and not designated as hedging instruments | Master netting arrangements and similar agreements
Financial assets
Gross Amount Recognized	709,216	707,818
Gross Amount Offset	(500,460)	(501,603)
Net Amount Presented in the Balance Sheet	208,756	206,215
Gross Amounts Not Offset in the Balance Sheet, Securities Collateral	(200,000)	(200,000)
Net Amount	8,756	6,215
Financial Liabilities
Gross Amount Recognized	582,029	551,166
Gross Amount Offset	(500,460)	(501,603)
Net Amount Presented in the Balance Sheet	81,569	49,563
Gross Amounts Not Offset in the Balance Sheet, Securities Collateral	(16,697)	(14,654)
Gross Amounts Not Offset in the Balance Sheet, Cash Collateral	(57,162)	(28,046)
Net Amount	$ 7,710	$ 6,863

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Assets
Cash and due from banks	$ 434,087	$ 336,470
Due from banks - interest-bearing	1,424,109	119,981
Federal funds sold and securities purchased under resale agreements	200,000	200,000
Securities available-for-sale - cost $5,304,000 and $5,894,509 at September 30, 2015 and December 31, 2014, respectively
Securities pledged as collateral	16,697	14,654
Held in portfolio	5,292,490	5,868,329
Securities held-to-maturity - fair value $3,598,902 and $3,484,647 at September 30, 2015 and December 31, 2014, respectively
Securities pledged as collateral	515,963	521,262
Held in portfolio	2,990,492	2,905,769
Trading securities	154,706	173,188
Loans and leases, excluding acquired impaired loans	22,536,584	20,337,206
Less: Allowance for loan and lease losses	317,157	310,149
Loans and leases, excluding acquired impaired loans, net	22,219,427	20,027,057
Acquired impaired loans, net of allowance for loan losses	393,879	502,371
Net loans and leases	22,613,306	20,529,428
Premises and equipment, net	210,314	207,700
Deferred tax asset	234,680	233,811
Goodwill	637,918	635,868
Customer-relationship intangibles, net	30,987	34,831
Affordable housing investments	222,877	186,423
Customers' acceptance liability	1,650	17,664
Other real estate owned ($8,310 and $12,760 covered by FDIC loss share at September 30, 2015 and December 31, 2014, respectively)	13,894	23,496
FDIC indemnification asset	28,164	50,511
Other assets	553,390	537,847
Total assets	35,575,724	32,597,232
Liabilities
Demand deposits	20,796,610	18,030,021
Interest checking deposits	2,625,541	2,736,391
Money market deposits	6,682,601	6,198,798
Savings deposits	496,510	469,931
Time deposits-under $250,000	262,905	292,613
Time deposits-$250,000 and over	309,195	380,349
Total deposits	31,173,362	28,108,103
Short-term borrowings	6,490	322,861
Long-term debt	650,078	638,600
Reserve for off-balance sheet credit commitments	29,972	27,811
Acceptances outstanding	1,650	17,664
Other liabilities	570,004	499,514
Total liabilities	32,431,556	29,614,553
Redeemable noncontrolling interest	$ 32,847	$ 39,978
Commitments and contingencies
Shareholders' Equity
Preferred stock, par value $1.00 per share; 5,000,000 shares authorized; 275,000 shares issued at September 30, 2015 and December 31, 2014	$ 267,616	$ 267,616
Common stock, par value $1.00 per share; 75,000,000 shares authorized; 55,695,762 and 55,162,455 shares issued at September 30, 2015 and December 31, 2014, respectively	55,696	55,162
Additional paid-in capital	621,716	578,046
Accumulated other comprehensive income (loss)	2,500	(7,074)
Retained earnings	2,182,259	2,071,230
Treasury shares, at cost - 304,920 and 377,224 shares at September 30, 2015 and December 31, 2014, respectively	(18,466)	(22,279)
Total common shareholders' equity	2,843,705	2,675,085
Total shareholders' equity	3,111,321	2,942,701
Total liabilities and shareholders' equity	$ 35,575,724	$ 32,597,232

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Fair Value Measurements (Detail 2) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Total realized/unrealized gains (losses):
Transfers into/out of level 3, assets	$ 0	$ 0
Transfers into/out of level 3, liabilities	0	0
Securities Available-for-Sale
Level 3 Assets Measured on a Recurring Basis
Balance, beginning of period	3,547	3,633
Total realized/unrealized gains (losses):
Included in other comprehensive income	23	(9)
Settlements	(100)	(100)
Balance, end of period	3,470	3,524
Equity Warrants
Level 3 Assets Measured on a Recurring Basis
Balance, beginning of period	882
Total realized/unrealized gains (losses):
Included in earnings	65	78
Additions	1,288	631
Settlements		(29)
Balance, end of period	2,235	680
Contingent Consideration Asset
Level 3 Assets Measured on a Recurring Basis
Balance, beginning of period	2,930
Total realized/unrealized gains (losses):
Included in earnings	(325)
Additions		2,930
Balance, end of period	$ 2,605	$ 2,930

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Cash Flows From Operating Activities
Net income	$ 71,729	$ 70,738	$ 202,827	$ 191,238
Adjustments to net income:
(Reversal of) provision for credit losses on loans and leases, excluding acquired impaired loans	(6,000)	(8,000)	4,000	(9,000)
Provision for losses on acquired impaired loans	1,148	589	2,736	3,783
Depreciation and amortization	9,478	8,276	33,968	23,989
Amortization of intangibles	1,241	1,426	3,844	4,367
Share-based employee compensation expense			15,943	16,116
Deferred income tax benefit			(7,860)	(3,391)
Gain on disposal of assets	1,264	(2,985)	(384)	(12,649)
Gain on sale of securities	(30)	(14)	(5,331)	(7,503)
Impairment loss on securities		75	337	323
Other, net			27,570	22,063
Net change in:
Trading securities			18,372	(43,608)
Other assets and other liabilities, net			(18,192)	(44,520)
Net cash provided by operating activities			277,830	141,208
Cash Flows From Investing Activities
Purchase of securities available-for-sale			(1,921,396)	(1,537,655)
Sales of securities available-for-sale	700	1,000	401,534	627,102
Maturities and paydowns of securities available-for-sale			2,096,132	1,527,117
Purchase of securities held-to-maturity			(299,383)	(615,295)
Maturities and paydowns of securities held-to-maturity			216,979	119,727
Loan originations, net of principal collections			(2,048,750)	(1,970,596)
Net payments for premises and equipment			(38,297)	(34,446)
Proceeds from sale of business				7,053
Other investing activities, net			(2,216)	13,976
Net cash used in investing activities			(1,595,397)	(1,863,017)
Cash Flows From Financing Activities
Net increase in deposits			3,065,259	2,276,543
Net (decrease) increase in federal funds purchased			(320,000)
Issuance of long-term debt			53,054	31,759
Repayment of long-term debt			(37,946)	(135,473)
Proceeds from exercise of stock options			30,737	21,734
Tax benefit from exercise of stock options			5,769	4,022
Cash dividends paid			(70,650)	(66,624)
Other financing activities, net			(6,911)	(17,268)
Net cash provided by financing activities			2,719,312	2,114,693
Net increase in cash and cash equivalents			1,401,745	392,884
Cash and cash equivalents at beginning of year			656,451	935,946
Cash and cash equivalents at end of period	$ 2,058,196	$ 1,328,830	2,058,196	1,328,830
Cash paid during the period for:
Interest			40,086	48,019
Income taxes			63,200	102,757
Non-cash investing activities:
Transfer of loans to other real estate owned			$ 4,200	$ 11,364

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Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Detail 6) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($) item	Sep. 30, 2014 item	Sep. 30, 2015 USD ($) item	Sep. 30, 2014 USD ($) item	Dec. 31, 2014 USD ($)
Financing Receivable, Impaired
Impaired loans on accrual status	$ 33,100		$ 33,100		$ 30,600
TDR loans	27,300		27,300		34,300
Specific Reserves	$ 400		400		$ 700
Decrease to TDR loans			8,500
Charge off to TDR loans			$ 3,100
Total Troubled Debt Restructured Loans
Financing Receivable, Impaired
Number of Contracts | item	4	0	8	5
Pre-Modification Outstanding Principal	$ 2,967		$ 4,405	$ 8,824
Period-End Outstanding Principal	$ 2,960		$ 4,270	8,446
Financial Effects				$ 55
Commercial
Financing Receivable, Impaired
Number of Contracts | item	2		3	2
Pre-Modification Outstanding Principal	$ 2,575		$ 3,206	$ 4,098
Period-End Outstanding Principal	$ 2,570		$ 3,091	$ 3,799
Commercial real estate mortgages
Financing Receivable, Impaired
Number of Contracts | item	1		2
Pre-Modification Outstanding Principal	$ 187		$ 605
Period-End Outstanding Principal	$ 185		$ 593
Fixed
Financing Receivable, Impaired
Number of Contracts | item			1
Pre-Modification Outstanding Principal			$ 302
Period-End Outstanding Principal			$ 299
Variable
Financing Receivable, Impaired
Number of Contracts | item				2
Pre-Modification Outstanding Principal				$ 4,676
Period-End Outstanding Principal				4,647
Financial Effects				$ 5
Home equity loans and lines of credit
Financing Receivable, Impaired
Number of Contracts | item	1		2
Pre-Modification Outstanding Principal	$ 205		$ 292
Period-End Outstanding Principal	$ 205		$ 287
Consumer Installment loan
Financing Receivable, Impaired
Number of Contracts | item				1
Pre-Modification Outstanding Principal				$ 50
Financial Effects				$ 50

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Borrowed Funds (Tables)

9 Months Ended

Sep. 30, 2015

Borrowed Funds

Schedule of short-term borrowings and long-term debt

(in thousands) (1)	September 30, 2015		December 31, 2014
Short-term borrowings
Federal funds purchased	$	—	$	320,000
Current portion of nonrecourse debt (2)	6,490		2,861
Total short-term borrowings	$	6,490	$	322,861
Long-term debt
Senior notes:
City National Corporation - 5.25% Senior Notes Due September 2020	$	299,597	$	299,540
Subordinated debt:
City National Bank - 9.00% Subordinated Notes Due August 2019	75,000		75,000
City National Bank - 5.375% Subordinated Notes Due July 2022	149,995		149,994
Junior subordinated debt:
Floating Rate Business Bancorp Capital Trust I Securities due November 2034 (3)	5,155		5,155
Nonrecourse debt (2)	110,713		99,139
Other long-term debt (4)	9,618		9,772
Total long-term debt	$	650,078	$	638,600

(1) The carrying value of certain borrowed funds is net of discount which is being amortized into interest expense.

(2) Nonrecourse debt bears interest at an average rate of 3.83 percent as of September 30, 2015 and has maturity dates ranging from November 2015 to February 2023.

(3) These floating rate securities bear interest of three-month LIBOR plus 1.965 percent which is reset quarterly. As of September 30, 2015, the interest rate was approximately 2.29 percent.

(4) Other long-term debt includes a note payable that bears a fixed interest rate of 5.64 percent and is scheduled to mature in June 2017.

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Shareholders' Equity (Detail) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended		3 Months Ended		9 Months Ended
	Sep. 30, 2015	Jul. 31, 2015	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Components of AOCI
Net unrealized gain ( loss) on securities available-for-sale	$ 2,528		$ 2,528		$ 2,528		$ (7,070)
Foreign currency translation adjustments	(28)		(28)		(28)		(4)
Total accumulated other comprehensive income (loss)	$ 2,500		2,500		2,500		$ (7,074)
Securities available-for-sale:
Net unrealized gains (losses) arising during the period			7,741	$ (16,386)	20,617	$ 21,646
Reclassification adjustment for net gains included in net income			(12)	(7)	(3,703)	(7,558)
Non-credit related impairment loss			(325)	(243)	(325)	(243)
Total securities available for sale			7,404	(16,636)	16,589	13,845
Foreign currency translation adjustments			(17)		(24)
Total other comprehensive income (loss)			7,387	(16,636)	16,565	13,845
Components and related tax effects of other comprehensive income (loss)
Net unrealized gains (losses) arising during the period			3,268	(6,839)	8,676	9,060
Reclassification adjustment for net gains included in net income, taxes			(5)	(3)	(1,549)	(3,162)
Non-credit related impairment loss, taxes			(136)	(102)	(136)	(102)
Total securities available for sale			3,127	(6,944)	6,991	5,796
Total other comprehensive income			3,127	(6,944)	6,991	5,796
Components of other comprehensive income (loss), net of tax
Net unrealized gains (losses) arising during the period			4,473	(9,547)	11,941	12,586
Reclassification adjustment for net gains/losses included in net income			(7)	(4)	(2,154)	(4,396)
Non-credit related impairment loss			(189)	(141)	(189)	(141)
Total securities available for sale			4,277	(9,692)	9,598	8,049
Foreign currency translation adjustments			(17)		(24)
Total other comprehensive (loss) income			$ 4,260	$ (9,692)	$ 9,574	$ 8,049
Common shares repurchased
Total number of Shares Purchased	2,897	1,609	4,506
Average Price Paid per Share (in dollars per share)	$ 86.89	$ 89.65	$ 87.87

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Employee Benefit Plans

9 Months Ended

Sep. 30, 2015

Employee Benefit Plans

Employee Benefit Plans

Note 14. Employee Benefit Plans

Defined Contribution Plan

The Company has a profit-sharing retirement plan with an Internal Revenue Code Section 401(k) feature covering eligible employees. Employer contributions are made annually into a trust fund and are allocated to participants based on their salaries. The profit sharing contribution requirement is based on a percentage of annual operating income subject to a percentage of salary cap. Eligible employees may contribute up to 50 percent of their salary to the 401(k) plan, but not more than the maximum allowed under IRS regulations. The Company matches 50 percent of the first 6 percent of covered compensation. The Company recorded total profit sharing and matching contribution expense of $6.4 million and $18.7 million for the three and nine months ended September 30, 2015, respectively. Profit sharing and matching contribution expense was $6.1 million and $16.8 million for the same periods in 2014, respectively.

Deferred Compensation Plan

The Company offers a deferred compensation plan for eligible employees and non-employee directors. Participants under the employee plan may make an annual irrevocable election to defer a portion of base salary and up to 100 percent of commission and incentive compensation while employed with the Company. Participants under the non-employee director plan also may make an annual irrevocable election to defer all or part of annual retainers, annual awards, committee chair retainers and meeting fees (collectively, “directors’ fees”) until board service with the Company ceases. The deferred compensation plans are nonqualified plans under IRS regulations. Deferrals are made on a pretax basis and are allocated among the investment crediting options available under the plans as directed by the plan participants. The Company informally funds plan benefits through the purchase of life insurance policies which are recorded in Other assets on the consolidated balance sheets. Participant deferrals are recorded in Other liabilities on the consolidated balance sheets. Employee salaries and non-employee directors’ fees deferred under the plan are charged to Salaries and employee benefits and Other operating expense, respectively, on the consolidated statements of income. Earnings on plan assets, net of benefits payable to plan participants, are reported in Salaries and employee benefits on the consolidated statements of income. The Company recorded net expenses of $37 thousand and $0.4 million related to the deferred compensation plan for the three and nine months ended September 30, 2015. The Company recorded net expenses of $0.1 million and $0.6 million for the same periods in 2014, respectively.

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Shareholders' Equity (Tables)

9 Months Ended

Sep. 30, 2015

Shareholders' Equity

Schedule of components of AOCI

(in thousands)	September 30, 2015			December 31, 2014
Net unrealized gain (loss) on securities available-for-sale	$	2,528		$	(7,070	)
Foreign currency translation adjustments	(28		)	(4		)
Total accumulated other comprehensive income (loss)	$	2,500		$	(7,074	)

Schedule of components of total comprehensive income (loss)

	For the three months ended September 30, 2015									For the three months ended September 30, 2014
(in thousands)	Pre-tax			Tax expense (benefit)			Net-of-tax			Pre-tax			Tax expense (benefit)			Net-of-tax
Securities available-for-sale:
Net unrealized gains (losses) arising during the period	$	7,741		$	3,268		$	4,473		$	(16,386	)	$	(6,839	)	$	(9,547	)
Reclassification adjustment for net gains included in net income (1)	(12		)	(5		)	(7		)	(7		)	(3		)	(4		)
Non-credit related impairment loss	(325		)	(136		)	(189		)	(243		)	(102		)	(141		)
Total securities available-for-sale	7,404			3,127			4,277			(16,636		)	(6,944		)	(9,692		)
Foreign currency translation adjustments	(17		)	—			(17		)	—			—			—
Total other comprehensive income (loss)	$	7,387		$	3,127		$	4,260		$	(16,636	)	$	(6,944	)	$	(9,692	)

	For the nine months ended September 30, 2015									For the nine months ended September 30, 2014
(in thousands)	Pre-tax			Tax expense (benefit)			Net-of-tax			Pre-tax			Tax expense (benefit)			Net-of-tax
Securities available-for-sale:
Net unrealized gains arising during the period	$	20,617		$	8,676		$	11,941		$	21,646		$	9,060		$	12,586
Reclassification adjustment for net gains included in net income (1)	(3,703		)	(1,549		)	(2,154		)	(7,558		)	(3,162		)	(4,396		)
Non-credit related impairment loss	(325		)	(136		)	(189		)	(243		)	(102		)	(141		)
Total securities available-for-sale	16,589			6,991			9,598			13,845			5,796			8,049
Foreign currency translation adjustments	(24		)	—			(24		)	—			—			—
Total other comprehensive income	$	16,565		$	6,991		$	9,574		$	13,845		$	5,796		$	8,049

(1) Recognized in Gain on sale of securities in the consolidated statements of income.

Summary of entity's share repurchases activity

Period	Total Number of Shares Purchased	Average Price Paid per Share
July 1, 2015 to July 31, 2015	1,609	$	89.65
August 1, 2015 to August 31, 2015	—	—
September 1, 2015 to September 30, 2015	2,897	86.89
Total share repurchases	4,506	87.87

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Variable Interest Entities

9 Months Ended

Sep. 30, 2015

Variable Interest Entities

Variable Interest Entities

Note 16. Variable Interest Entities

The Company holds ownership interests in certain special-purpose entities formed to provide affordable housing. The Company evaluates its interest in these entities to determine whether they meet the definition of a VIE and whether the Company is required to consolidate these entities. The Company is not the primary beneficiary of the affordable housing VIEs in which it holds interests and is therefore not required to consolidate these entities.

The investment in these entities is initially recorded at cost, which approximates the maximum exposure to loss as a result of the Company’s involvement with these unconsolidated entities. Subsequently, the carrying value is amortized over the stream of available tax credits and benefits. The Company expects to recover its investments over time, primarily through realization of federal low-income housing tax credits. The balance of the investments in these entities was $222.9 million at September 30, 2015 and $186.4 million at December 31, 2014, and is included in Affordable housing investments in the consolidated balance sheets. Unfunded commitments for affordable housing investments were $93.8 million at September 30, 2015. These unfunded commitments are recorded in Other liabilities in the consolidated balance sheets.

The Company also has ownership interests in several private equity and alternative investment funds that are VIEs. The Company is not a primary beneficiary and, therefore, is not required to consolidate these VIEs. The investment in these entities is carried at cost and net of impairments, which approximates the maximum exposure to loss as a result of the Company’s involvement with these entities. The Company expects to recover its investments over time, primarily through the allocation of fund income, gains or losses on the sale of fund assets, dividends or interest income. The balance in these entities was $24.1 million and $29.2 million at September 30, 2015 and December 31, 2014, respectively, and is included in Other assets in the consolidated balance sheets. Income associated with these investments is reported in Other noninterest income in the consolidated statements of income.

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Share-Based Compensation (Detail 2) - Stock options - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Summary of option activity and related information
Number of Options Outstanding, beginning of the period (in shares)	3,971,000
Number of options granted (in shares)	377,000
Number of options exercised (in shares)	(516,000)
Number of options forfeited or expired (in shares)	(33,000)
Number of Options Outstanding, end of the period (in shares)	3,799,000
Weighted-Average Exercise Price of Options Outstanding, beginning of the period (in dollars per share)	$ 57.40
Weighted-Average Exercise Price of Options Granted (in dollars per share)	90.47
Weighted-Average Exercise Price of Options Exercised (in dollars per share)	59.60
Weighted-Average Exercise Price of Options Forfeited or expired (in dollars per share)	67.64
Weighted-Average Exercise Price of Options Outstanding, end of the period (in dollars per share)	$ 60.29
Outstanding Aggregate Intrinsic Value of in-the-money Options	$ 106,387
Weighted-Average Remaining Contractual Term Outstanding	5 years 3 months 29 days
Number of Options Exercisable (in shares)	2,691,000
Weighted-Average Exercise Price of options exercisable (in dollars per share)	$ 55.62
Aggregate Intrinsic Value of in-the-money Options Exercisable	$ 87,297
Weighted-Average Remaining Contractual Term Exercisable	4 years 1 month 13 days
Share-based Compensation Arrangement by Share-based Payment Award, Options Unvested and related information
Unvested at the beginning of the period (in shares)	1,269,000
Granted (in shares)	377,000
Vested (in shares)	(514,850)	(551,992)
Forfeited (in shares)	(23,000)
Unvested at the end of the period (in shares)	1,108,000
Unvested at the beginning of the period (in dollars per share)	$ 14.80
Granted (in dollars per share)	21.79	$ 17.93
Vested (in dollars per share)	14.78
Forfeited (in dollars per share)	15.41
Unvested at the end of the period (in dollars per share)	$ 17.17
Total fair value of options vested	$ 7,600	$ 8,100
Unrecognized compensation cost related to unvested stock options granted	$ 13,200
Period of recognition for unrecognized compensation cost related to unvested stock options granted	2 years 7 months 6 days

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands		Preferred stock	Common stock	Additional paid-in capital	Accumulated other comprehensive (loss) income	Retained earnings	Treasury shares	Total
Balance (As Reported) at Dec. 31, 2013		$ 267,616	$ 54,667	$ 541,210	$ (15,641)	$ 1,918,163	$ (25,029)	$ 2,740,986
Balance at Dec. 31, 2013		267,616	$ 54,667	541,210	(15,641)	1,906,222	(25,029)	2,729,045
Balance (in shares) (As Reported) at Dec. 31, 2013			54,667,295
Balance (in shares) at Dec. 31, 2013			54,667,295
Increase (Decrease) in Stockholders' Equity
Net income	[1]					189,182		189,182
Other comprehensive income (loss), net of tax					8,049			8,049
Issuance of shares under share-based compensation plans			$ 391	14,402			2,688	17,481
Issuance of shares under share-based compensation plans (in shares)			390,442
Share-based employee compensation expense				13,305				13,305
Tax benefit from share-based compensation plans				4,188				4,188
Dividends : Preferred						(12,281)		(12,281)
Dividends: Common						(54,877)		(54,877)
Net change in deferred compensation plans				884			(2)	882
Change in redeemable noncontrolling interest				(8,167)				(8,167)
Balance at Sep. 30, 2014		267,616	$ 55,058	565,822	(7,592)	2,028,246	(22,343)	2,886,807
Balance (in shares) at Sep. 30, 2014			55,057,737
Balance at Dec. 31, 2014		267,616	$ 55,162	578,046	(7,074)	2,071,230	(22,279)	2,942,701
Balance (in shares) at Dec. 31, 2014			55,162,455
Increase (Decrease) in Stockholders' Equity
Net income	[1]					201,873		201,873
Other comprehensive income (loss), net of tax					9,574			9,574
Issuance of shares under share-based compensation plans			$ 533	22,958			3,814	27,305
Issuance of shares under share-based compensation plans (in shares)			532,616
Share-based employee compensation expense				12,241				12,241
Tax benefit from share-based compensation plans				8,012				8,012
Dividends : Preferred						(12,281)		(12,281)
Dividends: Common						(78,563)		(78,563)
Net change in deferred compensation plans			$ 1	847			(1)	847
Net change in deferred compensation plans (in shares)			691
Change in redeemable noncontrolling interest				(388)				(388)
Balance at Sep. 30, 2015		$ 267,616	$ 55,696	$ 621,716	$ 2,500	$ 2,182,259	$ (18,466)	$ 3,111,321
Balance (in shares) at Sep. 30, 2015			55,695,762

[1] Net income excludes net income attributable to redeemable noncontrolling interest of $954 and $2,056 for the nine-month periods ended September 30, 2015 and 2014, respectively. Redeemable noncontrolling interest is reflected in the mezzanine section of the consolidated balance sheets. See Note 17 of the Notes to the Unaudited Consolidated Financial Statements.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
CONSOLIDATED BALANCE SHEETS
Securities available-for-sale, cost (in dollars)	$ 5,304,000	$ 5,894,509
Securities held-to-maturity, fair value (in dollars)	3,598,902	3,484,647
Other real estate owned, covered by FDIC loss share (in dollars)	$ 8,310	$ 12,760
Preferred stock, par value (in dollars per share)	$ 1.00	$ 1.00
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	275,000	275,000
Common stock, par value (in dollars per share)	$ 1.00	$ 1.00
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	55,695,762	55,162,455
Treasury shares	304,920	377,224

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Earnings per Common Share

9 Months Ended

Sep. 30, 2015

Earnings per Common Share

Earnings per Common Share

Note 9. Earnings per Common Share

The Company applies the two-class method of computing basic and diluted earnings per common share (“EPS”). Under the two-class method, EPS is determined for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. The Company grants restricted stock and restricted stock units under a share-based compensation plan that qualify as participating securities. The computation of basic and diluted EPS for the three and nine months ended September 30, 2015 and 2014 is presented in the following table:

	For the three months ended September 30,				For the nine months ended September 30,
(in thousands, except per share amounts) (1)	2015		2014		2015		2014
Basic EPS:
Net income attributable to City National Corporation	$	71,808	$	69,891	$	201,873	$	189,182
Less: Dividends on preferred stock	4,093		4,093		12,281		12,281
Net income available to common shareholders	$	67,715	$	65,798	$	189,592	$	176,901
Less: Earnings allocated to participating securities	576		644		1,664		1,801
Earnings allocated to common shareholders	$	67,139	$	65,154	$	187,928	$	175,100
Weighted-average common shares outstanding	55,829		55,031		55,668		54,893
Basic earnings per common share	$	1.20	$	1.18	$	3.38	$	3.19
Diluted EPS:
Earnings allocated to common shareholders (2)	$	67,143	$	65,160	$	187,943	$	175,116
Weighted-average common shares outstanding	55,829		55,031		55,668		54,893
Dilutive effect of equity awards	858		734		884		723
Weighted-average diluted common shares outstanding	56,687		55,765		56,552		55,616
Diluted earnings per common share	$	1.18	$	1.17	$	3.32	$	3.15

(1) Certain prior period amounts have been adjusted to reflect the adoption of ASU 2014-01. See Note 1, Summary of Significant Accounting Policies, for further discussion.

(2) Earnings allocated to common shareholders for basic and diluted EPS may differ under the two-class method as a result of adding common stock equivalents for options to dilutive shares outstanding, which alters the ratio used to allocate earnings to common shareholders and participating securities for the purposes of calculating diluted EPS.

The average price of the Company’s common stock for the period is used to determine the dilutive effect of outstanding stock options. Antidilutive stock options are not included in the calculation of diluted EPS. There were 0.4 million and 0.7 million average outstanding stock options that were antidilutive for the three months ended September 30, 2015 and 2014, respectively. There were 0.4 million and 0.7 million average outstanding stock options that were antidilutive for the nine months ended September 30, 2015 and 2014, respectively.

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Oct. 28, 2015
Document and Entity Information
Entity Registrant Name	CITY NATIONAL CORP
Entity Central Index Key	0000201461
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		55,777,997
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3

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Share-Based Compensation

9 Months Ended

Sep. 30, 2015

Share-Based Compensation

Share-Based Compensation

Note 10. Share-Based Compensation

On September 30, 2015, the Company had one share-based compensation plan, the Amended and Restated City National Corporation 2008 Omnibus Plan (the “Plan”), which was originally approved by the Company’s shareholders on April 23, 2008. No new awards have been or will be granted under predecessor plans since the adoption of the Plan. The Plan permits the grant of stock options, restricted stock, restricted stock units, cash-settled restricted stock units, performance shares, performance share units, performance units and stock appreciation rights, or any combination thereof, to the Company’s eligible employees and non-employee directors. No grants of performance shares, performance share units or stock appreciation rights had been made as of September 30, 2015. At September 30, 2015, there were approximately 2.4 million shares available for future grants. Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 for further discussion of the Company’s share-based compensation plan.

The compensation cost that has been recognized for all share-based awards was $4.7 million and $15.9 million for the three and nine months ended September 30, 2015, respectively, compared with $5.5 million and $16.1 million for the three and nine months ended September 30, 2014. The total income tax benefit recognized in the consolidated statements of income for share-based compensation arrangements was $2.0 million and $6.7 million for the three and nine months ended September 30, 2015, respectively, compared with $2.3 million and $6.7 million for the three and nine months ended September 30, 2014. The Company received $30.7 million and $21.7 million in cash for the exercise of stock options during the nine months ended September 30, 2015 and 2014, respectively. The actual tax benefit realized for the tax deductions from stock option exercises was $6.0 million and $3.2 million for the nine months ended September 30, 2015 and 2014, respectively.

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

	For the three months ended September 30,				For the nine months ended September 30,
	2015		2014		2015		2014
Weighted-average volatility	26.35	%	27.08	%	26.66	%	27.35	%
Dividend yield	1.58	%	1.72	%	1.55	%	1.79	%
Expected term (in years)	5.46		5.46		6.05		6.06
Risk-free interest rate	1.76	%	1.97	%	1.78	%	1.99	%

Using the Black-Scholes methodology, the weighted-average grant-date fair values of options granted during the nine months ended September 30, 2015 and 2014 were $21.79 and $17.93, respectively. The total intrinsic value of options exercised during the nine months ended September 30, 2015 and 2014 was $15.8 million and $7.7 million, respectively.

A summary of option activity and related information for the nine months ended September 30, 2015 is presented below:

			Weighted-				Weighted-
			Average		Aggregate		Average
	Number of		Exercise		Intrinsic		Remaining
	Shares		Price		Value		Contractual
Options	(in thousands)		(per share)		(in thousands) (1)		Term
Outstanding at January 1, 2015	3,971		$	57.40
Granted	377		90.47
Exercised	(516	)	59.60
Forfeited or expired	(33	)	67.64
Outstanding at September 30, 2015	3,799		$	60.29	$	106,387	5.33
Exercisable at September 30, 2015	2,691		$	55.62	$	87,297	4.12

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

A summary of changes in unvested options and related information for the nine months ended September 30, 2015 is presented below:

			Weighted-Average
	Number of		Grant Date
	Shares		Fair Value
Unvested Options	(in thousands)		(per share)
Unvested at January 1, 2015	1,269		$	14.80
Granted	377		21.79
Vested	(515	)	14.78
Forfeited	(23	)	15.41
Unvested at September 30, 2015	1,108		$	17.17

The number of options vested during the nine months ended September 30, 2015 and 2014 was 514,850 and 551,992, respectively. The total fair value of options vested during the nine months ended September 30, 2015 and 2014 was $7.6 million and $8.1 million, respectively. As of September 30, 2015, there was $13.2 million of unrecognized compensation cost related to unvested stock options granted under the Company’s plans. That cost is expected to be recognized over a weighted-average period of 2.6 years.

A summary of changes in restricted stock and related information for the nine months ended September 30, 2015 is presented below:

			Weighted-Average
	Number of		Grant Date
	Shares		Fair Value
Restricted Stock (1)	(in thousands)		(per share)
Unvested at January 1, 2015	525		$	60.60
Granted	100		90.47
Vested	(146	)	54.80
Forfeited	(5	)	68.00
Unvested at September 30, 2015	474		$	68.60

(1) Includes restricted stock units.

Restricted stock is valued at the closing price of the Company’s stock on the date of award. The weighted-average grant-date fair value of restricted stock granted during the nine months ended September 30, 2015 and 2014 was $90.47 and $73.64, respectively. The number of restricted shares vested during the nine months ended September 30, 2015 and 2014 was 145,663 and 180,799, respectively. The total fair value of restricted stock vested was $8.0 million during the nine months ended September 30, 2015 and 2014. As of September 30, 2015, the unrecognized compensation cost related to restricted stock granted under the Company’s plans was $16.2 million. That cost is expected to be recognized over a weighted-average period of 3.3 years.

Cash-settled restricted stock units are initially valued at the closing price of the Company’s stock on the date of award. They are subsequently remeasured to the closing price of the Company’s stock at each reporting date until settlement. A summary of changes in cash-settled restricted stock units for the nine months ended September 30, 2015 is presented below:

	Number of
	Shares
Cash-Settled Restricted Stock Units	(in thousands)
Unvested at January 1, 2015	174
Granted	14
Vested	(44	)
Forfeited	(3	)
Unvested at September 30, 2015	141

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CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Interest Income
Loans and leases	$ 200,405	$ 181,647	$ 588,962	$ 538,343
Securities	40,601	43,863	123,869	128,910
Due from banks - interest-bearing	931	363	1,500	1,183
Federal funds sold and securities purchased under resale agreements	1,203	1,721	3,578	4,568
Total interest income	243,140	227,594	717,909	673,004
Interest Expense
Deposits	1,877	2,033	5,676	6,227
Federal funds purchased and securities sold under repurchase agreements			79
Subordinated debt	3,746	4,722	11,239	16,943
Other long-term debt	5,260	5,063	15,568	15,158
Total interest expense	10,883	11,818	32,562	38,328
Net interest income	232,257	215,776	685,347	634,676
(Reversal of) provision for credit losses on loans and leases, excluding acquired impaired loans	(6,000)	(8,000)	4,000	(9,000)
Provision for losses on acquired impaired loans	1,148	589	2,736	3,783
Net interest income after provision	237,109	223,187	678,611	639,893
Noninterest Income
Trust and investment fees	57,978	56,834	171,986	164,739
Brokerage and mutual fund fees	11,735	11,021	33,757	35,303
Cash management and deposit transaction charges	12,783	12,200	38,277	36,361
International services	11,686	12,233	34,128	34,111
FDIC loss sharing expense, net	(9,854)	(9,606)	(27,350)	(40,850)
(Loss) gain on disposal of assets	(1,264)	2,985	384	12,649
Gain on sale of securities	30	14	5,331	7,503
Other	21,777	22,311	72,674	60,771
Impairment loss on securities:
Total other-than-temporary impairment loss on securities	(325)	(318)	(662)	(566)
Less: Portion of loss recognized in other comprehensive income	325	243	325	243
Net impairment loss recognized in earnings		(75)	(337)	(323)
Total noninterest income	104,871	107,917	328,850	310,264
Noninterest Expense
Salaries and employee benefits	148,790	142,210	438,039	417,902
Net occupancy of premises	18,168	15,862	50,420	48,551
Legal and professional fees	18,105	14,350	52,391	45,693
Information services	11,658	10,260	32,166	29,069
Depreciation and amortization	9,478	8,276	33,968	23,989
Amortization of intangibles	1,241	1,426	3,844	4,367
Marketing and advertising	7,718	7,576	25,486	26,333
Office services and equipment	4,922	5,038	15,160	15,235
Other real estate owned	1,321	2,360	5,146	6,165
FDIC assessments	5,442	4,629	15,812	8,785
Other operating	11,200	10,927	31,713	29,259
Total noninterest expense	238,043	222,914	704,145	655,348
Income before income taxes	103,937	108,190	303,316	294,809
Income taxes	32,208	37,452	100,489	103,571
Net income	71,729	70,738	202,827	191,238
Less: Net (loss) income attributable to noncontrolling interest	(79)	847	954	2,056
Net income attributable to City National Corporation	71,808	69,891	201,873	189,182
Less: Dividends on preferred stock	4,093	4,093	12,281	12,281
Net income available to common shareholders	$ 67,715	$ 65,798	$ 189,592	$ 176,901
Net income per common share, basic (in dollars per share)	$ 1.20	$ 1.18	$ 3.38	$ 3.19
Net income per common share, diluted (in dollars per share)	$ 1.18	$ 1.17	$ 3.32	$ 3.15
Weighted-average common shares outstanding, basic (in shares)	55,829	55,031	55,668	54,893
Weighted-average common shares outstanding, diluted (in shares)	56,687	55,765	56,552	55,616
Dividends per common share (in dollars per share)	$ 0.70	$ 0.33	$ 1.40	$ 0.99

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Other Investments

9 Months Ended

Sep. 30, 2015

Other Investments

Other Investments

Note 4. Other Investments

FHLB and FRB Stock

The Company’s investment in stock issued by the FHLB and FRB totaled $50.6 million and $58.4 million at September 30, 2015 and December 31, 2014, respectively. Ownership of government agency securities is restricted to member banks, and the securities do not have readily determinable market values. The Company records investments in FHLB and FRB stock at cost in Other assets of the consolidated balance sheets and evaluates these investments for impairment. The Company expects to recover the full amount invested in FHLB and FRB stock.

Private Equity and Alternative Investments

The Company has ownership interests in a limited number of private equity, venture capital, real estate and hedge funds that are not publicly traded and do not have readily determinable fair values. These investments are carried at cost in the Other assets section of the consolidated balance sheets and are net of impairment write-downs, if applicable. The Company’s investments in these funds totaled $24.1 million and $29.2 million at September 30, 2015 and December 31, 2014. A summary of investments by fund type is provided below:

(in thousands)	September 30,		December 31,
Fund Type	2015		2014
Private equity and venture capital	$	15,949	$	18,605
Real estate	6,776		7,081
Hedge	1,168		1,668
Other (1)	250		1,858
Total	$	24,143	$	29,212

(1) Includes direct investments in a limited number of start-up companies.

Management reviews these investments quarterly for impairment. The impairment assessment includes a review of the most recent financial statements and investment reports for each fund and discussions with fund management. An impairment loss is recognized if the Company does not expect to recover the cost of an investment. The impairment loss is recognized in Other noninterest income in the consolidated statements of income. The new cost basis of the investment is not adjusted for subsequent recoveries in value. The Company recognized $0.5 million and $2.2 million in impairment losses on its investments during the three and nine months ended September 30, 2015. The Company recognized no impairment losses during the three and nine months ended September 30, 2014.

The table below provides information as of September 30, 2015 on private equity and alternative investments measured at fair value on a nonrecurring basis due to the recognition of impairment:

(in thousands) Fund Type	Fair Value		Unfunded Commitments		Redemption Frequency	Redemption Notice Period
Private equity and venture capital	$	1,337	$	273	None (1)	N/A
Other	250		—		None	N/A
Total	$	1,587	$	273

(1) Funds make periodic distributions of income but do not permit redemptions prior to the end of the investment term.

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Securities

9 Months Ended

Sep. 30, 2015

Securities

Securities

Note 3. Securities

At September 30, 2015, the Company had total securities of $8.97 billion, comprised of securities available-for-sale at fair value of $5.31 billion, securities held-to-maturity at amortized cost of $3.51 billion and trading securities at fair value of $154.7 million. At December 31, 2014, the Company had total securities of $9.48 billion, comprised of securities available-for-sale at fair value of $5.88 billion, securities held-to-maturity at amortized cost of $3.43 billion and trading securities at fair value of $173.2 million.

The following is a summary of amortized cost and estimated fair value for the major categories of securities available-for-sale and securities held-to-maturity at September 30, 2015 and December 31, 2014:

			Gross		Gross
	Amortized		Unrealized		Unrealized
(in thousands)	Cost		Gains		Losses			Fair Value
September 30, 2015
Securities available-for-sale:
U.S. Treasury	$	390,098	$	232	$	(1	)	$	390,329
Federal agency - Debt	285,616		758		(14		)	286,360
Federal agency - MBS	91,690		1,851		(660		)	92,881
CMOs - Federal agency	3,538,000		19,867		(21,739		)	3,536,128
CMOs - Non-agency	20,749		25		(343		)	20,431
State and municipal	356,623		4,249		(128		)	360,744
Other debt securities	621,224		1,119		(29		)	622,314
Total securities available-for-sale	$	5,304,000	$	28,101	$	(22,914	)	$	5,309,187
Securities held-to-maturity (1):
Federal agency - Debt	$	445,721	$	11,742	$	(27	)	$	457,436
Federal agency - MBS	575,071		19,039		(227		)	593,883
CMOs - Federal agency	1,630,388		44,862		(2,057		)	1,673,193
State and municipal	769,646		21,704		(2,788		)	788,562
Other debt securities	85,629		200		(1		)	85,828
Total securities held-to-maturity	$	3,506,455	$	97,547	$	(5,100	)	$	3,598,902
December 31, 2014
Securities available-for-sale:
U.S. Treasury	$	116,919	$	17	$	(10	)	$	116,926
Federal agency - Debt	1,401,303		558		(3,280		)	1,398,581
Federal agency - MBS	102,939		2,601		(1,014		)	104,526
CMOs - Federal agency	3,599,831		19,628		(38,869		)	3,580,590
CMOs - Non-agency	24,385		40		(411		)	24,014
State and municipal	473,272		6,139		(380		)	479,031
Other debt securities	174,352		1,817		—			176,169
Total debt securities	5,893,001		30,800		(43,964		)	5,879,837
Equity securities and mutual funds	1,508		1,988		(350		)	3,146
Total securities available-for-sale	$	5,894,509	$	32,788	$	(44,314	)	$	5,882,983
Securities held-to-maturity (1):
Federal agency - Debt	$	292,932	$	6,430	$	(255	)	$	299,107
Federal agency - MBS	553,589		13,427		(2,275		)	564,741
CMOs - Federal agency	1,811,574		29,998		(10,292		)	1,831,280
State and municipal	682,705		22,732		(1,997		)	703,440
Other debt securities	86,231		72		(224		)	86,079
Total securities held-to-maturity	$	3,427,031	$	72,659	$	(15,043	)	$	3,484,647

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

Proceeds from sales of securities available-for-sale were $0.7 million and $401.5 million for the three and nine months ended September 30, 2015, compared with $1.0 million and $627.1 million for the three and nine months ended September 30, 2014. There were no sales of securities held-to-maturity during the three and nine months ended September 30, 2015 and 2014. The following table provides the gross realized gains and losses on the sales and calls of securities (including trading securities):

	For the three months ended						For the nine months ended
	September 30,						September 30,
(in thousands)	2015			2014			2015			2014
Gross realized gains	$	50		$	19		$	5,475		$	7,989
Gross realized losses	(20		)	(5		)	(144		)	(486		)
Net realized gains	$	30		$	14		$	5,331		$	7,503

Interest income on securities for the three months ended September 30, 2015 and 2014 is comprised of: (i) taxable interest income of $33.4 million and $37.5 million, respectively, (ii) nontaxable interest income of $7.2 million and $6.4 million, respectively, and (iii) dividend income of $22 thousand for the current and prior-year quarter. Interest income on securities for the nine months ended September 30, 2015 and 2014 is comprised of: (i) taxable interest income of $102.5 million and $111.0 million, respectively, (ii) nontaxable interest income of $21.3 million and $17.9 million, respectively, and (iii) dividend income of $52 thousand and $47 thousand, respectively.

The following table provides the expected remaining maturities of debt securities included in the securities portfolio at September 30, 2015, except for maturities of mortgage-backed securities which are allocated according to the average life of expected cash flows. Average expected maturities will differ from contractual maturities because of the amortizing nature of the loan collateral and prepayment behavior of borrowers.

(in thousands)	One year or less		Over 1 year through 5 years		Over 5 years through 10 years		Over 10 years		Total
Securities available-for-sale:
U.S. Treasury	$	269,754	$	120,575	$	—	$	—	$	390,329
Federal agency - Debt	179,603		106,757		—		—		286,360
Federal agency - MBS	1,819		91,062		—		—		92,881
CMOs - Federal agency	119,443		3,248,817		167,868		—		3,536,128
CMOs - Non-agency	1,079		13,234		6,118		—		20,431
State and municipal	165,254		192,119		—		3,371		360,744
Other	126,850		495,464		—		—		622,314
Total debt securities available-for-sale	$	863,802	$	4,268,028	$	173,986	$	3,371	$	5,309,187
Amortized cost	$	861,509	$	4,264,720	$	174,371	$	3,400	$	5,304,000
Securities held-to-maturity:
Federal agency - Debt	$	—	$	45,000	$	209,125	$	191,596	$	445,721
Federal agency - MBS	10		74,949		495,583		4,529		575,071
CMOs - Federal agency	8,724		773,640		848,024		—		1,630,388
State and municipal	897		210,551		458,753		99,445		769,646
Other	—		85,629		—		—		85,629
Total debt securities held-to-maturity at amortized cost	$	9,631	$	1,189,769	$	2,011,485	$	295,570	$	3,506,455

Impairment Assessment

The Company performs a quarterly assessment of debt and equity securities in its investment portfolio to determine whether a decline in fair value below amortized cost is other-than-temporary. Amortized cost includes adjustments made to the cost of an investment for amortization, accretion, collection of cash and previous other-than-temporary impairment recognized in earnings. The Company’s impairment assessment of debt securities takes the following factors into consideration: the length of time and the extent to which the market value has been less than cost; the financial condition and near-term prospects of the issuer, including events specific to the issuer or industry; defaults or deferrals of scheduled interest and principal payments; external credit ratings; and whether the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis. For equity securities, the evaluation of whether an impairment is other-than-temporary is based on whether and when an equity security will recover in value and whether the Company has the intent and ability to hold the equity security until the anticipated recovery in value occurs. If a decline in fair value is determined to be other-than-temporary, the cost basis of the individual security is written down to fair value which then becomes the security’s new cost basis. The new cost basis is not adjusted for subsequent recoveries in fair value.

Other-than-temporary impairment losses on equity securities are recognized in earnings. For debt securities, if the Company intends to sell an impaired security or it is more likely than not it will be required to sell a security prior to recovery of its amortized cost, an impairment loss is recognized in earnings for the entire difference between the amortized cost and fair value of the security on the measurement date. If the Company does not intend to sell the security or it is not more likely than not it will be required to sell the security prior to recovery of its amortized cost, the credit loss component of impairment is recognized in earnings. A credit loss is the difference between the amortized cost of the security and the present value of cash flows expected to be collected, discounted at the security’s effective interest rate at the date of acquisition. Impairment associated with factors other than credit, such as market liquidity, is recognized in other comprehensive income, net of tax.

Securities Deemed to be Other-Than-Temporarily Impaired

The Company recorded no impairment losses in earnings on securities available-for-sale for the three months ended September 30, 2015 and $0.3 million for the nine months ended September 30, 2015. The Company recorded impairment losses in earnings of $0.1 million and $0.3 million for the three and nine months ended September 30, 2014. The Company recognized after-tax amounts of $0.2 million and $0.1 million of non-credit-related other-than-temporary impairment in accumulated other comprehensive income or loss (“AOCI”) on securities classified as available-for-sale at September 30, 2015 and 2014, respectively. No impairment losses were recognized in earnings or AOCI for securities held-to-maturity during the three and nine months ended September 30, 2015 and 2014.

The following table summarizes the changes in cumulative credit-related other-than-temporary impairment recognized in earnings for debt securities for the three and nine months ended September 30, 2015 and 2014. Credit-related other-than-temporary impairment that was recognized in earnings is reflected as an “Initial credit-related impairment” if the period reported is the first time the security had a credit impairment. A credit-related other-than-temporary impairment is reflected as a “Subsequent credit-related impairment” if the period reported is not the first time the security had a credit impairment. Cumulative impairment is reduced for securities with previously recognized credit-related impairment that were sold or redeemed during the period. Cumulative impairment is further adjusted for other changes in expected cash flows.

	For the three months ended				For the nine months ended
	September 30,				September 30,
(in thousands)	2015		2014		2015		2014
Balance, beginning of period	$	2,587	$	2,395	$	2,470	$	4,549
Subsequent credit-related impairment	—		75		117		323
Reduction for securities sold or redeemed	—		—		—		(2,402		)
Balance, end of period	$	2,587	$	2,470	$	2,587	$	2,470

The following table provides a summary of the gross unrealized losses and fair value of investment securities that are not deemed to be other-than-temporarily impaired aggregated by investment category and length of time that the securities have been in a continuous unrealized loss position as of September 30, 2015 and December 31, 2014. The table also includes investment securities that had both a credit-related impairment recognized in earnings and a non-credit-related impairment recognized in AOCI.

	Less than 12 months				12 months or greater				Total
(in thousands)	Fair Value		Estimated Unrealized Loss		Fair Value		Estimated Unrealized Loss		Fair Value		Estimated Unrealized Loss
September 30, 2015
Securities available-for-sale:
U.S. Treasury	$	17,001	$	1	$	—	$	—	$	17,001	$	1
Federal agency - Debt	17,556		14		—		—		17,556		14
Federal agency - MBS	—		—		53,639		660		53,639		660
CMOs - Federal agency	690,496		3,947		1,197,026		17,792		1,887,522		21,739
CMOs - Non-agency	—		—		12,739		343		12,739		343
State and municipal	65,670		99		3,470		29		69,140		128
Other debt securities	199,833		29		—		—		199,833		29
Total securities available-for-sale	$	990,556	$	4,090	$	1,266,874	$	18,824	$	2,257,430	$	22,914
Securities held-to-maturity:
Federal agency - Debt	$	—	$	—	$	5,739	$	27	$	5,739	$	27
Federal agency - MBS	21,649		25		26,077		202		47,726		227
CMOs - Federal agency	136,388		596		184,818		1,461		321,206		2,057
State and municipal	118,335		1,727		33,839		1,061		152,174		2,788
Other debt securities	15,100		1		—		—		15,100		1
Total securities held-to-maturity	$	291,472	$	2,349	$	250,473	$	2,751	$	541,945	$	5,100
December 31, 2014
Securities available-for-sale:
U.S. Treasury	$	15,814	$	10	$	—	$	—	$	15,814	$	10
Federal agency - Debt	1,008,234		2,622		135,868		658		1,144,102		3,280
Federal agency - MBS	35		—		57,970		1,014		58,005		1,014
CMOs - Federal agency	871,026		3,417		1,261,695		35,452		2,132,721		38,869
CMOs - Non-agency	1,949		15		12,720		396		14,669		411
State and municipal	130,208		314		4,183		66		134,391		380
Total debt securities	2,027,266		6,378		1,472,436		37,586		3,499,702		43,964
Equity securities and mutual funds	538		350		—		—		538		350
Total securities available-for-sale	$	2,027,804	$	6,728	$	1,472,436	$	37,586	$	3,500,240	$	44,314
Securities held-to-maturity:
Federal agency - Debt	$	—	$	—	$	26,316	$	255	$	26,316	$	255
Federal agency - MBS	4,800		21		114,856		2,254		119,656		2,275
CMOs - Federal agency	202,014		2,247		588,019		8,045		790,033		10,292
State and municipal	14,851		76		95,647		1,921		110,498		1,997
Other debt securities	61,813		224		—		—		61,813		224
Total securities held-to-maturity	$	283,478	$	2,568	$	824,838	$	12,475	$	1,108,316	$	15,043

At September 30, 2015, the Company had securities available-for-sale with a fair value of $2.26 billion and securities held-to-maturity with a fair value of $541.9 million in an unrealized loss position. The debt securities in an unrealized loss position totaled 332 and included 1 U.S. Treasury note, 3 federal agency debt securities, 13 federal agency MBS, 113 federal agency CMOs, 3 non-agency CMOs, 196 state and municipal securities and 3 other debt securities.

At December 31, 2014, the Company had securities available-for-sale with a fair value of $3.50 billion and securities held-to-maturity with a fair value of $1.11 billion in an unrealized loss position. The debt securities in an unrealized loss position totaled 436 and included 2 U.S. Treasury notes, 37 federal agency debt securities, 23 federal agency MBS, 141 federal agency CMOs, 3 non-agency CMOs, 225 state and municipal securities and 5 other debt securities. At December 31, 2014, the Company had one equity security in an unrealized loss position.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2015

Commitments and Contingencies

Commitments and Contingencies

Note 15. Commitments and Contingencies

In the normal course of business, the Company issues financial guarantees in the form of letters of credit. Standby letters of credit are commitments issued by the Company to guarantee the obligations of its client to beneficiaries. Commercial letters of credit are issued on behalf of clients to ensure payment in connection with trade transactions. Exposure to credit loss in the event of nonperformance by the other party to the letters of credit is represented by the contractual notional amount. At September 30, 2015, the Company had $679.6 million outstanding in letters of credit, of which $567.6 million relate to standby letters of credit and $112.0 million relate to commercial letters of credit. The Company had $718.0 million outstanding in letters of credit at December 31, 2014, of which $607.6 million relate to standby letters of credit and $110.4 million relate to commercial letters of credit.

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

The Company entered into contingent consideration arrangements associated with its acquisition of Rochdale and the sale of its retirement services recordkeeping business. Contingent consideration represents additional purchase price consideration to be transferred from the acquirer to the seller if certain future events or conditions are met. See Note 2, Fair Value Measurements, for additional information about the contingent consideration asset and liability.

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Derivative Instruments

9 Months Ended

Sep. 30, 2015

Derivative Instruments

Derivative Instruments

Note 11. Derivative Instruments

The Company may use interest-rate swaps to mitigate interest-rate risk associated with changes to (1) the fair value of certain fixed-rate deposits and borrowings (fair value hedges) and (2) certain cash flows related to future interest payments on variable rate loans (cash flow hedges). Interest-rate swap agreements involve the exchange of fixed and variable rate interest payments between counterparties based upon a notional principal amount and maturity date. The Company recognizes derivatives as assets or liabilities on the consolidated balance sheets at their fair value. The treatment of changes in the fair value of derivatives depends on the character of the transaction. The Company also offers various derivative products to clients and enters into derivative transactions in due course. These transactions are not linked to specific Company assets or liabilities in the consolidated balance sheets or to forecasted transactions in a hedge relationship and, therefore, do not qualify for hedge accounting.

The following table summarizes the fair value and balance sheet classification of derivative instruments as of September 30, 2015 and December 31, 2014. The notional amount of the contract is not recorded on the consolidated balance sheets, but is used as the basis for determining the amount of interest payments to be exchanged between the counterparties. If a counterparty fails to perform, the Company’s counterparty credit risk is equal to the amount reported as a derivative asset.

Notional Amounts and Fair Values of Derivative Instruments

	September 30, 2015						December 31, 2014
(in millions) (1)	Notional Amount		Derivative Assets		Derivative Liabilities		Notional Amount		Derivative Assets		Derivative Liabilities
Derivatives not designated as hedging instruments
Interest rate contracts:
Swaps	$	3,556.1	$	71.5	$	73.0	$	3,094.5	$	44.7	$	45.2
Interest-rate caps, floors and collars	465.6		0.2		0.2		437.3		0.8		0.8
Total interest-rate contracts	4,021.7		71.7		73.2		3,531.8		45.5		46.0
Option contracts	—		—		—		1.9		0.4		—
Foreign exchange contracts:
Spot and forward contracts	815.9		8.5		8.8		802.7		6.1		6.6
Options purchased	—		—		—		3.0		0.1		0.1
Options written	—		—		—		3.0		0.2		0.2
Total foreign exchange contracts	815.9		8.5		8.8		808.7		6.4		6.9
Equity warrants	5.5		2.2		—		2.3		0.9		—
Total derivatives not designated as hedging instruments	$	4,843.1	$	82.4	$	82.0	$	4,344.7	$	53.2	$	52.9

(1) The Company offsets mark-to-market adjustments, interest receivable and interest payable on interest-rate swaps that are executed with the same counterparty under a master netting agreement, and reports the net balance in other assets or other liabilities in the consolidated balance sheets. For purposes of this disclosure, mark-to-market adjustments, interest receivable and interest payable are presented on a gross basis.

Derivatives Designated as Hedging Instruments

The Company had no hedging instruments as of September 30, 2015 and December 31, 2014.

Derivatives Not Designated as Hedging Instruments

Derivative contracts not designated as hedges are composed primarily of interest-rate contracts with certain commercial clients that are largely offset by paired trades with unrelated bank counterparties. The Company also enters into foreign exchange contracts with its clients and counterparty banks primarily for the purpose of offsetting or hedging the clients’ transaction and economic exposures arising out of commercial transactions. The Company also obtains equity warrants in association with certain lending transactions. Derivative contracts not designated as hedges are carried at fair value each reporting period with changes in fair value recorded as a part of Noninterest income in the consolidated statements of income.

The table below provides the amount of gains and losses on these derivative contracts for the three and nine months ended September 30, 2015 and 2014:

(in millions) Derivatives Not Designated as	Location in Consolidated	For the three months ended September 30,					For the nine months ended September 30,
Hedging Instruments	Statements of Income	2015			2014		2015			2014
Interest-rate contracts	Other noninterest income	$	(1.3	)	$	—	$	(0.9	)	$	(1.0	)
Option contracts	Other noninterest income	—			0.1		(0.1		)	0.1
Foreign exchange contracts (1)	International services income	8.3			8.7		24.1			24.2
Equity warrants	Other noninterest income	0.2			—		0.3			0.1
Total income		$	7.2		$	8.8	$	23.4		$	23.4

(1) Includes spread and translation gains (losses) on foreign exchange spot, forward and option contracts.

In the course of negotiating credit facilities, the Company may obtain rights to acquire stock in the form of equity warrants in primarily private, venture-backed technology companies. The warrants grant the Company an option to purchase a specific number of shares of stock in the underlying company at a specific price within a specific time period. The warrant agreements typically contain a net share settlement provision (cashless exercise) which gives the Company the option to receive at exercise a number of shares equal to the intrinsic value of the warrant divided by the share price. Equity warrants are accounted for as derivatives under ASC Topic 815, Derivatives and Hedging, and are recorded as derivative assets at their estimated fair value on the grant date. The warrant portfolio is reviewed quarterly for changes in fair value. Subsequent changes in the fair value of warrants are recognized in Other noninterest income in the consolidated statements of income. If a warrant is exercised or paid out for cash, the gain is recorded in Other noninterest income in the consolidated statements of income.

Credit Risk Exposure and Collateral

The Company’s swap agreements require the deposit of cash or marketable debt securities as collateral based on certain risk thresholds. These requirements apply individually to the Corporation and to the Bank. Additionally, certain of the Company’s swap contracts contain security agreements that include credit-risk-related contingent features. Under these agreements, the collateral requirements are based on the Company’s credit rating from the major credit rating agencies. The amount of collateral required may vary by counterparty based on a range of credit ratings that correspond with exposure thresholds established in the derivative agreements. If the credit ratings on the Company’s debt were to fall below the level associated with a particular exposure threshold and the derivatives with a counterparty are in a net liability position that exceeds that threshold, the counterparty could request immediate payment or delivery of collateral for the difference between the net liability amount and the exposure threshold. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a net liability position on September 30, 2015 was $22.0 million. The Company delivered collateral in the form of securities valued at $11.1 million on swap agreements that had credit-risk-related contingent features and were in a net liability position at September 30, 2015.

The Company’s interest-rate swaps had no credit risk exposure at September 30, 2015 and December 31, 2014, respectively. The credit exposure represents the cost to replace, on a present value basis and at current market rates, all contracts by trading counterparty having an aggregate positive market value, net of margin collateral received. The Company enters into master netting agreements with swap counterparties to mitigate credit risk. Under these agreements, the net amount due from or payable to each counterparty is settled on the contract payment date. No collateral had been received from swap counterparties at September 30, 2015 and December 31, 2014. The Company delivered collateral in the form of securities valued at $5.6 million and cash totaling $66.0 million on swap agreements that did not have credit-risk-related contingent features at September 30, 2015.

At September 30, 2015, the Company had delivered cash collateral on foreign exchange contracts totaling $1.1 million and received cash collateral on foreign exchange contracts totaling $1.0 million.

See Note 12, Balance Sheet Offsetting, of the Notes to the Unaudited Consolidated Financial Statements for additional information about the Company’s derivative instruments subject to master netting agreements.

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Borrowed Funds

9 Months Ended

Sep. 30, 2015

Borrowed Funds

Borrowed Funds

Note 7. Borrowed Funds

Short-term borrowings consist of funds with remaining maturities of one year or less, and long-term debt consists of borrowings with remaining maturities greater than one year. The components of short-term borrowings and long-term debt as of September 30, 2015 and December 31, 2014 are provided below:

(in thousands) (1)	September 30, 2015		December 31, 2014
Short-term borrowings
Federal funds purchased	$	—	$	320,000
Current portion of nonrecourse debt (2)	6,490		2,861
Total short-term borrowings	$	6,490	$	322,861
Long-term debt
Senior notes:
City National Corporation - 5.25% Senior Notes Due September 2020	$	299,597	$	299,540
Subordinated debt:
City National Bank - 9.00% Subordinated Notes Due August 2019	75,000		75,000
City National Bank - 5.375% Subordinated Notes Due July 2022	149,995		149,994
Junior subordinated debt:
Floating Rate Business Bancorp Capital Trust I Securities due November 2034 (3)	5,155		5,155
Nonrecourse debt (2)	110,713		99,139
Other long-term debt (4)	9,618		9,772
Total long-term debt	$	650,078	$	638,600

(1) The carrying value of certain borrowed funds is net of discount which is being amortized into interest expense.

(2) Nonrecourse debt bears interest at an average rate of 3.83 percent as of September 30, 2015 and has maturity dates ranging from November 2015 to February 2023.

(3) These floating rate securities bear interest of three-month LIBOR plus 1.965 percent which is reset quarterly. As of September 30, 2015, the interest rate was approximately 2.29 percent.

(4) Other long-term debt includes a note payable that bears a fixed interest rate of 5.64 percent and is scheduled to mature in June 2017.

The Company holds debt affiliated with First American Equipment Finance (“FAEF”), its wholly-owned equipment finance subsidiary. FAEF assigns the future rentals of certain lease financing loans to financial institutions on a nonrecourse basis at fixed interest rates. In return for future minimum lease rentals assigned, FAEF receives a discounted cash payment. Proceeds from discounting are reflected in the table above as nonrecourse debt.

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Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Detail 7) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2015 USD ($) item	Sep. 30, 2015 USD ($) item	Sep. 30, 2014 item
Troubled debt restructured loans
Commitments to lend additional funds on restructured loans	$ 300	$ 300
Total Troubled Debt Restructured Loans
Troubled debt restructured loans
Number of contracts | item	2	3	0
Period-End Outstanding Principal	$ 2,570	$ 2,634
Commercial
Troubled debt restructured loans
Number of contracts | item	2	2
Period-End Outstanding Principal	$ 2,570	$ 2,570
Commercial real estate mortgages
Troubled debt restructured loans
Number of contracts | item		1
Period-End Outstanding Principal		$ 64

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

9 Months Ended

Sep. 30, 2015

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

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

Note 5. Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments

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

Loans and Leases
	September 30,			December 31,
(in thousands)	2015			2014
Commercial	$	10,253,592		$	9,360,976
Commercial real estate mortgages	3,947,746			3,539,703
Residential mortgages	5,709,272			5,106,803
Real estate construction	932,422			710,224
Home equity loans and lines of credit	799,711			785,796
Installment	206,156			184,613
Lease financing	687,685			649,091
Loans and leases, excluding acquired impaired loans	22,536,584			20,337,206
Less: Allowance for loan and lease losses	(317,157		)	(310,149		)
Loans and leases, excluding acquired impaired loans, net	22,219,427			20,027,057
Acquired impaired loans	399,527			510,979
Less: Allowance for loan losses	(5,648		)	(8,608		)
Acquired impaired loans, net	393,879			502,371
Total loans and leases	$	22,936,111		$	20,848,185
Total loans and leases, net	$	22,613,306		$	20,529,428

The loan amounts above include deferred costs, net of unamortized fees, of $3.5 million and $0.2 million as of September 30, 2015 and December 31, 2014, respectively.

Concentrations of credit risk arise when a number of clients are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions. Although the Company’s lending activities are predominantly in California, and to a lesser extent, New York, the Company has various specialty lending businesses that lend to businesses located throughout the United States of America and in certain foreign countries to facilitate trade finance activities. Excluding acquired impaired loans, at September 30, 2015, California represented 72 percent of total loans outstanding and New York represented 10 percent. The remaining 18 percent of total loans outstanding represented other states and countries. 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 and New York.

Within the Company’s acquired impaired loan portfolio at September 30, 2015, the five states with the largest concentration were California (29 percent), Texas (12 percent), Arizona (6 percent), Ohio (6 percent) and Nevada (6 percent). The remaining 41 percent of total acquired impaired loans outstanding represented other states.

Acquired Impaired Loans

Acquired impaired loans represent loans acquired in FDIC-assisted acquisitions that are accounted for under ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (“ASC 310-30”). Loans are accounted for under ASC 310-30 when there is evidence of credit deterioration since origination and for which it is probable, at acquisition, that the Company would be unable to collect all contractually required payments. The Company evaluated the acquired loans from its FDIC-assisted acquisitions and concluded that all loans, with the exception of a small population, met the requirements of ASC 310-30.

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

	September 30,			December 31,
(in thousands)	2015			2014
Commercial	$	994		$	1,969
Commercial real estate mortgages	376,335			481,689
Residential mortgages	3,391			4,455
Real estate construction	16,042			18,790
Home equity loans and lines of credit	2,612			3,820
Installment	153			256
Acquired impaired loans	399,527			510,979
Less: Allowance for loan losses	(5,648		)	(8,608		)
Acquired impaired loans, net	$	393,879		$	502,371

The following table provides information on acquired impaired loans and loss-sharing terms by acquired entity:

(in thousands)	Imperial Capital Bank		1st Pacific Bank		Sun West Bank		Nevada Commerce Bank		Total
Acquired impaired loans as of:
September 30, 2015	$	359,723	$	18,981	$	6,356	$	14,467	$	399,527
December 31, 2014	456,177		23,895		9,353		21,554		510,979
As of September 30, 2015:
FDIC indemnification asset	$	25,960	$	760	$	—	$	1,444	$	28,164
FDIC clawback liability	—		13,395		2,801		412		16,608
Expiration date of FDIC loss sharing:
Commercial (1)	12/31/2016		6/30/2015		6/30/2015		6/30/2016
Residential	12/31/2019		5/31/2020		5/31/2020		4/30/2021
Termination date of FDIC loss-sharing agreements:
Commercial (1)	12/19/2017		5/8/2018		5/29/2018		6/30/2019
Residential	12/31/2019		5/31/2020		5/31/2020		4/30/2021

(1) The Company is subject to sharing 80 percent of its recoveries with the FDIC up to the last day of the quarter in which the termination dates of the commercial loss-sharing agreements occur.

FDIC loss sharing under the commercial loss-sharing agreements for 1st Pacific Bank of California and Sun West Bank ended on June 30, 2015. As a result, losses recognized on assets subject to these agreements are no longer shared with the FDIC effective July 1, 2015. However, the Company is still subject to sharing 80 percent of its recoveries with the FDIC for the time period as indicated in the table above. At September 30, 2015, $377.1 million of acquired impaired loans were covered under the FDIC loss-sharing agreements and $22.4 million of acquired impaired loans were not covered.

The excess of cash flows expected to be collected over the carrying value of the underlying acquired impaired loans is referred to as the accretable yield. This amount is not reported in the consolidated balance sheets but is accreted into interest income over the remaining estimated lives of the underlying pools of loans. Changes in the accretable yield for acquired impaired loans were as follows for the nine months ended September 30, 2015 and 2014:

	For the nine months ended September 30,
(in thousands)	2015			2014
Balance, beginning of period	$	168,469		$	219,018
Accretion	(28,131		)	(36,067		)
Reclassifications from nonaccretable difference	19,545			25,636
Disposals and other	(23,239		)	(28,628		)
Balance, end of period	$	136,644		$	179,959

The factors that most significantly affect estimates of cash flows expected to be collected, and accordingly the accretable yield balance, include: (i) changes in credit assumptions, including both credit loss amounts and timing; (ii) changes in prepayment assumptions; and (iii) changes in interest rates for variable-rate loans. Reclassifications between accretable yield and nonaccretable difference may vary from period to period as the Company periodically updates its cash flow projections. The reclassification of nonaccretable difference to accretable yield during 2015 was principally driven by positive changes in cash flows, resulting mainly from changes in credit assumptions.

The Company recorded an indemnification asset related to its FDIC-assisted acquisitions, which represents the present value of the expected reimbursement from the FDIC for expected losses on acquired loans, OREO and unfunded commitments. The difference between the carrying value of the FDIC indemnification asset and the undiscounted cash flow that the Company expects to collect from the FDIC is accreted or amortized into noninterest income up until the expiration date of the FDIC loss sharing. Refer to the preceding table for a list of expiration dates of FDIC loss sharing by acquired entity. The FDIC indemnification asset is reviewed on a quarterly basis and adjusted based on changes in cash flow projections. The FDIC indemnification asset from all FDIC-assisted acquisitions was $28.2 million at September 30, 2015 and $50.5 million at December 31, 2014.

Credit Quality on Loans and Leases, Excluding Acquired Impaired Loans

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

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

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

For commercial, non-homogenous loans that are not impaired, the Company derives loss factors for each risk grade and loan type via a process that begins with estimates of probable losses inherent in the portfolio based upon various statistical analyses. The factors considered in the analysis include loan type, migration analysis, in which historical delinquency and credit loss experience is applied to the 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. 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 Company has a qualitative factor matrix to determine the amount of reserves needed for judgmental factors that are not attributable to or reflected in the quantitative model. The methodology to determine the qualitative reserves includes segmenting the Company’s portfolio into three loan categories: commercial real estate secured, commercial and consumer. The qualitative reserve factors are separated into numerically informed and judgmental categories. Numerically informed factors are linked to defined macroeconomic or bank specific criteria, such as portfolio growth, problem loan trends and concentrations. Judgmental factors are based on the Company’s assessment of factors that include, but are not limited to, the legal and regulatory environment, internal systems and procedures, and entry into a new business. Each factor is assigned a risk level and a risk weight in points which is aggregated to determine the level of qualitative reserves. The factors are updated quarterly to reflect changing conditions.

A portion of the allowance for loan and lease losses is attributed to impaired loans that are individually measured for impairment. This measurement is based on the present value of expected future cash flows discounted using the loan’s contractual effective rate, the fair value of collateral or the secondary market value of the loan.

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

The following is a summary of activity in the allowance for loan and lease losses and period-end recorded investment balances of loans evaluated for impairment, excluding acquired impaired loans, for the three and nine months ended September 30, 2015 and 2014. Activity is provided by loan portfolio segment which is consistent with the Company’s methodology for determining the allowance for loan and lease losses.

(in thousands)	Commercial (1)			Commercial Real Estate Mortgages			Residential Mortgages			Real Estate Construction		Home Equity Loans and Lines of Credit			Installment			Qualitative			Total
Three months ended September 30, 2015
Allowance for loan and lease losses:
Beginning balance	$	124,314		$	48,649		$	9,660		$	10,652	$	5,404		$	2,208		$	116,035		$	316,922
Charge-offs	(4,576		)	—			—			—		—			(240		)	—			(4,816		)
Recoveries	10,514			68			34			142		37			204			—			10,999
Net recoveries (charge-offs)	5,938			68			34			142		37			(36		)	—			6,183
(Reversal of) provision for credit losses	2,939			(211		)	154			783		(163		)	118			(9,620		)	(6,000		)
Transfers from reserve for off-balance sheet credit commitments	—			—			—			—		—			—			52			52
Ending balance	$	133,191		$	48,506		$	9,848		$	11,577	$	5,278		$	2,290		$	106,467		$	317,157
Nine months ended September 30, 2015
Allowance for loan and lease losses:
Beginning balance	$	115,855		$	44,745		$	10,296		$	9,115	$	6,609		$	2,228		$	121,301		$	310,149
Charge-offs	(10,276		)	—			—			—		—			(748		)	—			(11,024		)
Recoveries	12,229			1,270			110			1,852		110			622			—			16,193
Net recoveries (charge-offs)	1,953			1,270			110			1,852		110			(126		)	—			5,169
(Reversal of) provision for credit losses	15,383			2,491			(558		)	610		(1,441		)	188			(12,673		)	4,000
Transfers to reserve for off-balance sheet credit commitments	—			—			—			—		—			—			(2,161		)	(2,161		)
Ending balance	$	133,191		$	48,506		$	9,848		$	11,577	$	5,278		$	2,290		$	106,467		$	317,157
Ending balance of allowance:
Individually evaluated for impairment	$	2,315		$	255		$	39		$	—	$	—		$	—		$	—		$	2,609
Collectively evaluated for impairment	130,876			48,251			9,809			11,577		5,278			2,290			106,467			314,548
Loans and leases, excluding acquired impaired loans
Ending balance of loans and leases:
Loans and leases, excluding acquired impaired loans	$	10,941,277		$	3,947,746		$	5,709,272		$	932,422	$	799,711		$	206,156		$	—		$	22,536,584
Individually evaluated for impairment	18,185			22,918			11,850			5,802		1,137			—			—			59,892
Collectively evaluated for impairment	10,923,092			3,924,828			5,697,422			926,620		798,574			206,156			—			22,476,692

(1) Includes lease financing loans.

(in thousands)	Commercial (1)			Commercial Real Estate Mortgages			Residential Mortgages			Real Estate Construction			Home Equity Loans and Lines of Credit			Installment			Qualitative			Total
Three months ended September 30, 2014
Allowance for loan and lease losses:
Beginning balance	$	126,279		$	50,651		$	10,296		$	7,191		$	6,575		$	2,284		$	108,000		$	311,276
Charge-offs	(3,773		)	—			—			—			—			(76		)	—			(3,849		)
Recoveries	6,202			225			33			7,729			52			158			—			14,399
Net recoveries	2,429			225			33			7,729			52			82			—			10,550
(Reversal of) provision for credit losses	(5,762		)	113			1,138			(6,175		)	401			18			2,267			(8,000		)
Transfers to reserve for off-balance sheet credit commitments	—			—			—			—			—			—			(1,123		)	(1,123		)
Ending balance	$	122,946		$	50,989		$	11,467		$	8,745		$	7,028		$	2,384		$	109,144		$	312,703
Nine months ended September 30, 2014
Allowance for loan and lease losses:
Beginning balance	$	117,103		$	50,678		$	11,540		$	6,351		$	6,677		$	1,842		$	108,393		$	302,584
Charge-offs	(18,594		)	(5		)	(482		)	—			(165		)	(264		)	—			(19,510		)
Recoveries	15,437			352			258			12,804			254			1,490			—			30,595
Net (charge-offs) recoveries	(3,157		)	347			(224		)	12,804			89			1,226			—			11,085
(Reversal of) provision for credit losses	(353		)	(36		)	151			(10,410		)	262			(684		)	2,070			(9,000		)
Transfers from (to) reserve for off-balance sheet credit commitments	9,353			—			—			—			—			—			(1,319		)	8,034
Ending balance	$	122,946		$	50,989		$	11,467		$	8,745		$	7,028		$	2,384		$	109,144		$	312,703
Ending balance of allowance:
Individually evaluated for impairment	$	1,304		$	291		$	—		$	—		$	—		$	—		$	—		$	1,595
Collectively evaluated for impairment	121,642			50,698			11,467			8,745			7,028			2,384			109,144			311,108
Loans and leases, excluding acquired impaired loans
Ending balance of loans and leases:
Loans and leases, excluding acquired impaired loans	$	9,236,294		$	3,565,188		$	5,023,213		$	585,232		$	759,258		$	178,803		$	—		$	19,347,988
Individually evaluated for impairment	16,316			25,551			7,785			6,610			2,313			—			—			58,575
Collectively evaluated for impairment	9,219,978			3,539,637			5,015,428			578,622			756,945			178,803			—			19,289,413

(1) Includes lease financing loans.

Off-balance sheet credit exposures include loan commitments and letters of credit. The following table provides a summary of activity in the reserve for off-balance sheet credit commitments for the three and nine months ended September 30, 2015 and 2014:

	For the three months ended September 30,					For the nine months ended September 30,
(in thousands)	2015			2014		2015		2014
Balance, beginning of period	$	30,024		$	24,787	$	27,811	$	33,944
Transfers (to) from allowance for loan and lease losses	(52		)	1,123		2,161		(8,034		)
Balance, end of period	$	29,972		$	25,910	$	29,972	$	25,910

The reserve for off-balance sheet credit commitments decreased $0.1 million and increased $2.2 million during the three and nine months ended September 30, 2015, respectively. The change was due to normal fluctuations in the amount of reserves required due to changes in the composition, amount and quality of risk ratings of borrowers associated with the off-balance sheet commitments. Increases and decreases in the reserve for off-balance sheet credit commitments are reflected as an allocation of provision expense from or to the allowance for loan and lease losses.

Impaired Loans and Leases

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 $1 million 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. For borrowers with multiple loans totaling $1 million or more, this threshold is applied at the total relationship level. Loans under $1 million are measured for impairment using historical loss factors. 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.

Information on impaired loans, excluding acquired impaired loans, at September 30, 2015, December 31, 2014 and September 30, 2014 is provided in the following tables:

			Unpaid				For the three months ended September 30, 2015				For the nine months ended September 30, 2015
(in thousands)	Recorded Investment		Contractual Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
September 30, 2015
With no related allowance recorded:
Commercial	$	4,784	$	10,605	$	—	$	3,619	$	71	$	4,395	$	94
Commercial real estate mortgages	17,921		19,095		—		17,947		200		18,398		605
Residential mortgages:
Fixed	7,961		8,255		—		7,981		14		7,859		40
Variable	—		—		—		—		—		56		—
Total residential mortgages	7,961		8,255		—		7,981		14		7,915		40
Real estate construction:
Land	5,802		6,885		—		5,809		28		6,801		142
Total real estate construction	5,802		6,885		—		5,809		28		6,801		142
Home equity loans and lines of credit	1,137		2,247		—		1,035		2		1,319		2
Total with no related allowance	$	37,605	$	47,087	$	—	$	36,391	$	315	$	38,828	$	883
With an allowance recorded:
Commercial	$	13,401	$	17,347	$	2,315	$	9,869	$	95	$	8,090	$	138
Commercial real estate mortgages	4,997		5,311		255		5,008		—		5,061		142
Residential mortgages:
Variable	3,889		3,881		39		3,901		26		3,923		78
Total residential mortgages	3,889		3,881		39		3,901		26		3,923		78
Total with an allowance	$	22,287	$	26,539	$	2,609	$	18,778	$	121	$	17,074	$	358
Total impaired loans by type:
Commercial	$	18,185	$	27,952	$	2,315	$	13,488	$	166	$	12,485	$	232
Commercial real estate mortgages	22,918		24,406		255		22,955		200		23,459		747
Residential mortgages	11,850		12,136		39		11,882		40		11,838		118
Real estate construction	5,802		6,885		—		5,809		28		6,801		142
Home equity loans and lines of credit	1,137		2,247		—		1,035		2		1,319		2
Total impaired loans	$	59,892	$	73,626	$	2,609	$	55,169	$	436	$	55,902	$	1,241

(in thousands)	Recorded Investment		Unpaid Contractual Principal Balance		Related Allowance
December 31, 2014
With no related allowance recorded:
Commercial	$	8,894	$	9,182	$	—
Commercial real estate mortgages	19,858		22,416		—
Residential mortgages:
Fixed	7,756		7,994		—
Variable	224		262		—
Total residential mortgages	7,980		8,256		—
Real estate construction:
Land	6,609		8,758		—
Total real estate construction	6,609		8,758		—
Home equity loans and lines of credit	2,270		3,375		—
Total with no related allowance	$	45,611	$	51,987	$	—
With an allowance recorded:
Commercial	$	6,470	$	8,878	$	399
Commercial real estate mortgages	5,184		5,526		281
Residential mortgages:
Variable	3,957		3,948		48
Total residential mortgages	3,957		3,948		48
Total with an allowance	$	15,611	$	18,352	$	728
Total impaired loans by type:
Commercial	$	15,364	$	18,060	$	399
Commercial real estate mortgages	25,042		27,942		281
Residential mortgages	11,937		12,204		48
Real estate construction	6,609		8,758		—
Home equity loans and lines of credit	2,270		3,375		—
Total impaired loans	$	61,222	$	70,339	$	728

			Unpaid				For the three months ended September 30, 2014				For the nine months ended September 30, 2014
(in thousands)	Recorded Investment		Contractual Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
September 30, 2014
With no related allowance recorded:
Commercial	$	6,653	$	6,684	$	—	$	6,817	$	38	$	10,653	$	205
Commercial real estate mortgages	20,347		22,698		—		24,290		219		29,478		903
Residential mortgages:
Fixed	2,015		2,254		—		3,406		10		3,459		30
Variable	5,770		5,885		—		3,784		40		3,997		68
Total residential mortgages	7,785		8,139		—		7,190		50		7,456		98
Real estate construction:
Construction	—		—		—		—		—		2,742		76
Land	6,610		8,758		—		9,728		35		11,593		104
Total real estate construction	6,610		8,758		—		9,728		35		14,335		180
Home equity loans and lines of credit	2,313		3,375		—		2,874		—		2,881		—
Installment:
Consumer	—		—		—		—		1		4		1
Total installment	—		—		—		—		1		4		1
Total with no related allowance	$	43,708	$	49,654	$	—	$	50,899	$	343	$	64,807	$	1,387
With an allowance recorded:
Commercial	$	9,663	$	12,134	$	1,304	$	15,957	$	—	$	15,869	$	—
Commercial real estate mortgages	5,204		5,557		291		5,214		73		5,293		191
Residential mortgages:
Variable	—		—		—		2,000		—		1,419		11
Total residential mortgages	—		—		—		2,000		—		1,419		11
Installment:
Consumer	—		—		—		25		—		12		1
Total installment	—		—		—		25		—		12		1
Total with an allowance	$	14,867	$	17,691	$	1,595	$	23,196	$	73	$	22,593	$	203
Total impaired loans by type:
Commercial	$	16,316	$	18,818	$	1,304	$	22,774	$	38	$	26,522	$	205
Commercial real estate mortgages	25,551		28,255		291		29,504		292		34,771		1,094
Residential mortgages	7,785		8,139		—		9,190		50		8,875		109
Real estate construction	6,610		8,758		—		9,728		35		14,335		180
Home equity loans and lines of credit	2,313		3,375		—		2,874		—		2,881		—
Installment	—		—		—		25		1		16		2
Total impaired loans	$	58,575	$	67,345	$	1,595	$	74,095	$	416	$	87,400	$	1,590

Impaired loans at September 30, 2015 and December 31, 2014 included $33.1 million and $30.6 million, respectively, of loans that are on accrual status. With the exception of restructured loans on accrual status and a limited number of loans on cash basis nonaccrual for which the full collection of principal and interest is expected, interest income is not recognized on impaired loans until the principal balance of these loans is paid off.

Troubled Debt Restructured Loans

The following table provides a summary of loans modified in a troubled debt restructuring during the three months ended September 30, 2015. There were no loans modified in a troubled debt restructuring during the three months ended September 30, 2014.

(in thousands)	Number of Contracts	Pre-Modification Outstanding Principal		Period-End Outstanding Principal		Financial Effects (1)
Three months ended September 30, 2015
Commercial	2	$	2,575	$	2,570	$	—
Commercial real estate mortgages	1	187		185		—
Home equity loans and lines of credit	1	205		205		—
Total troubled debt restructured loans	4	$	2,967	$	2,960	$	—

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

The following table provides a summary of loans modified in a troubled debt restructuring during the nine months ended September 30, 2015 and 2014:

(in thousands)	Number of Contracts	Pre-Modification Outstanding Principal		Period-End Outstanding Principal		Financial Effects (1)
Nine months ended September 30, 2015
Commercial	3	$	3,206	$	3,091	$	—
Commercial real estate mortgages	2	605		593		—
Residential mortgages:
Fixed	1	302		299		—
Home equity loans and lines of credit	2	292		287		—
Total troubled debt restructured loans	8	$	4,405	$	4,270	$	—
Nine months ended September 30, 2014
Commercial	2	$	4,098	$	3,799	$	—
Residential mortgages:
Variable	2	4,676		4,647		5
Installment:
Consumer	1	50		—		50
Total troubled debt restructured loans	5	$	8,824	$	8,446	$	55

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

A restructuring constitutes a troubled debt restructuring when a lender, for reasons related to a borrower’s financial difficulties, grants a concession to the borrower that it would not otherwise consider. Loans with pre-modification outstanding balances totaling $3.0 million and $4.4 million were modified in troubled debt restructurings during the three and nine months ended September 30, 2015. Loans with pre-modification outstanding balances totaling $8.8 million were modified in troubled debt restructurings during the nine months ended September 30, 2014. The concessions granted in the restructurings completed in 2015 largely consisted of maturity extensions.

The unpaid principal balance of TDR loans was $27.3 million, before specific reserves of $0.4 million, at September 30, 2015 and $34.3 million, before specific reserves of $0.7 million, at December 31, 2014. The net decrease in TDR loans from December 31, 2014 was primarily attributable to payments received on existing TDR loans totaling $8.5 million and charge-offs totaling $3.1 million on an existing TDR loan. These decreases were partially offset by additions totaling $4.4 million. Loans modified in troubled debt restructurings are impaired loans at the time of restructuring and subject to the same measurement criteria as all other impaired loans.

A TDR loan is considered to be in default when payments are 90 days or more past due. The following table provides a summary of TDR loans that subsequently defaulted during the three and nine months ended September 30, 2015 that had been modified as a troubled debt restructuring during the 12 months prior to their default. The Company had no TDR loans that subsequently defaulted during the three and nine months ended September 30, 2014.

	For three months ended September 30, 2015					For nine months ended September 30, 2015
(in thousands)	Number of Contracts	Period-End Outstanding Principal		Period-End Specific Reserve		Number of Contracts	Period-End Outstanding Principal		Period-End Specific Reserve
Commercial	2	$	2,570	$	—	2	$	2,570	$	—
Commercial real estate mortgages	—	—		—		1	64		—
Total loans that subsequently defaulted	2	$	2,570	$	—	3	$	2,634	$	—

All other TDR loans were performing in accordance with their restructured terms at September 30, 2015. As of September 30, 2015, there were $0.3 million of outstanding commitments to lend additional funds on restructured loans.

Past Due and Nonaccrual Loans and Leases

Loans are considered past due following the date when either interest or principal is contractually due and unpaid. The following tables provide a summary of past due and nonaccrual loans, excluding acquired impaired loans, at September 30, 2015 and December 31, 2014 based upon the length of time the loans have been past due:

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days and Accruing		Nonaccrual		Total Past Due and Nonaccrual Loans		Current		Total Loans and Leases
September 30, 2015
Commercial	$	5,094	$	1,550	$	—	$	14,728	$	21,372	$	10,232,220	$	10,253,592
Commercial real estate mortgages	3,847		—		—		2,368		6,215		3,941,531		3,947,746
Residential mortgages:
Fixed	—		2,556		305		10,000		12,861		1,475,111		1,487,972
Variable	—		5,601		2,153		588		8,342		4,212,958		4,221,300
Total residential mortgages	—		8,157		2,458		10,588		21,203		5,688,069		5,709,272
Real estate construction:
Construction	—		—		—		—		—		900,928		900,928
Land	—		—		—		3,460		3,460		28,034		31,494
Total real estate construction	—		—		—		3,460		3,460		928,962		932,422
Home equity loans and lines of credit	910		3,072		460		3,340		7,782		791,929		799,711
Installment:
Commercial	—		—		—		—		—		228		228
Consumer	373		68		543		37		1,021		204,907		205,928
Total installment	373		68		543		37		1,021		205,135		206,156
Lease financing	—		457		—		1		458		687,227		687,685
Total	$	10,224	$	13,304	$	3,461	$	34,522	$	61,511	$	22,475,073	$	22,536,584

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days and Accruing		Nonaccrual		Total Past Due and Nonaccrual Loans		Current		Total Loans and Leases
December 31, 2014
Commercial	$	8,462	$	325	$	148	$	15,096	$	24,031	$	9,336,945	$	9,360,976
Commercial real estate mortgages	693		—		—		3,575		4,268		3,535,435		3,539,703
Residential mortgages:
Fixed	—		309		921		10,365		11,595		1,390,357		1,401,952
Variable	—		1,165		—		1,578		2,743		3,702,108		3,704,851
Total residential mortgages	—		1,474		921		11,943		14,338		5,092,465		5,106,803
Real estate construction:
Construction	—		—		—		—		—		686,990		686,990
Land	—		—		—		6,598		6,598		16,636		23,234
Total real estate construction	—		—		—		6,598		6,598		703,626		710,224
Home equity loans and lines of credit	—		39		100		4,864		5,003		780,793		785,796
Installment:
Commercial	—		—		—		—		—		298		298
Consumer	324		113		346		84		867		183,448		184,315
Total installment	324		113		346		84		867		183,746		184,613
Lease financing	321		152		—		7		480		648,611		649,091
Total	$	9,800	$	2,103	$	1,515	$	42,167	$	55,585	$	20,281,621	$	20,337,206

Credit Quality Monitoring

The Company closely monitors and assesses credit quality and credit risk in the loan and lease portfolio on an ongoing basis. Loan risk classifications are continuously reviewed and updated. The following table provides a summary of the loan and lease portfolio, excluding acquired impaired loans, by loan type and credit quality classification as of September 30, 2015 and December 31, 2014. Nonclassified loans generally include those loans that are expected to be repaid in accordance with contractual loan terms. Classified loans are those loans that are classified as substandard or doubtful consistent with regulatory guidelines.

	September 30, 2015						December 31, 2014
(in thousands)	Nonclassified		Classified		Total		Nonclassified		Classified		Total
Commercial	$	10,153,594	$	99,998	$	10,253,592	$	9,304,636	$	56,340	$	9,360,976
Commercial real estate mortgages	3,905,035		42,711		3,947,746		3,511,229		28,474		3,539,703
Residential mortgages:
Fixed	1,467,932		20,040		1,487,972		1,375,175		26,777		1,401,952
Variable	4,191,381		29,919		4,221,300		3,675,723		29,128		3,704,851
Total residential mortgages	5,659,313		49,959		5,709,272		5,050,898		55,905		5,106,803
Real estate construction:
Construction	900,928		—		900,928		679,744		7,246		686,990
Land	25,702		5,792		31,494		16,636		6,598		23,234
Total real estate construction	926,630		5,792		932,422		696,380		13,844		710,224
Home equity loans and lines of credit	773,425		26,286		799,711		754,694		31,102		785,796
Installment:
Commercial	228		—		228		298		—		298
Consumer	205,229		699		205,928		183,190		1,125		184,315
Total installment	205,457		699		206,156		183,488		1,125		184,613
Lease financing	681,101		6,584		687,685		645,049		4,042		649,091
Total	$	22,304,555	$	232,029	$	22,536,584	$	20,146,374	$	190,832	$	20,337,206

Credit Quality on Acquired Impaired Loans

The following is a summary of activity in the allowance for losses on acquired impaired loans:

	For the three months ended September 30,						For the nine months ended September 30,
(in thousands)	2015			2014			2015			2014
Balance, beginning of period	$	8,075		$	9,103		$	8,608		$	15,922
Provision for losses	1,148			589			2,736			3,783
Change in allowance due to loan removals	(3,575		)	(324		)	(5,696		)	(10,337		)
Balance, end of period	$	5,648		$	9,368		$	5,648		$	9,368

The allowance for losses on acquired impaired loans was $5.6 million, $8.6 million and $9.4 million as of September 30, 2015, December 31, 2014 and September 30, 2014, respectively. The Company recorded provision expense of $1.1 million and $2.7 million during the three and nine months ended September 30, 2015, respectively. The Company recorded provision expense of $0.6 million and $3.8 million during the three and nine months ended September 30, 2014, respectively. The Company updates its cash flow projections for acquired impaired loans accounted for under ASC 310-30 on a quarterly basis, and may recognize provision expense or reversal of provision for loan losses as a result of that analysis. The provision expense or reversal of provision for losses on acquired impaired loans is the result of changes in expected cash flows, both amount and timing, due to actual loan performance and the Company’s revised loan loss and prepayment forecasts. The revisions of these forecasts were based on the results of management’s review of market conditions, the credit quality of outstanding acquired impaired loans and the analysis of loan performance data since the acquisition of the acquired impaired loans. The allowance for losses is adjusted for any loan removals, which occur when a loan has been fully paid off, fully charged off, sold or transferred to OREO.

Acquired impaired loans are generally considered accruing and performing loans as the loans accrete interest income over the estimated life of the loan when cash flows are reasonably estimable. Accordingly, acquired impaired loans that are contractually past due are still considered to be accruing and performing loans. If the timing and amount of future cash flows is not reasonably estimable, the loans may be classified as nonaccrual loans and interest income is not recognized until the timing and amount of future cash flows can be reasonably estimated. There were no acquired impaired loans that were on nonaccrual status as of September 30, 2015 and December 31, 2014.

At September 30, 2015, acquired impaired loans that were 30 to 89 days delinquent totaled $0.9 million and acquired impaired loans that were 90 days or more past due on accrual status totaled $20.4 million. At December 31, 2014, acquired impaired loans that were 30 to 89 days delinquent totaled $7.4 million and acquired impaired loans that were 90 days or more past due on accrual status totaled $28.3 million.

XML

Other Real Estate Owned

9 Months Ended

Sep. 30, 2015

Other Real Estate Owned.

Other Real Estate Owned

Note 6. Other Real Estate Owned

The following table provides a summary of OREO activity for the three months ended September 30, 2015 and 2014:

	For the three months ended September 30, 2015									For the three months ended September 30, 2014
(in thousands)	Non-Covered OREO			Covered OREO			Total			Non-Covered OREO			Covered OREO			Total
Balance, beginning of period	$	5,957		$	11,311		$	17,268		$	4,269		$	17,944		$	22,213
Additions	—			285			285			5,957			1,276			7,233
Sales	—			(2,963		)	(2,963		)	(83		)	(4,366		)	(4,449		)
Valuation adjustments	(373		)	(323		)	(696		)	(28		)	(367		)	(395		)
Balance, end of period	$	5,584		$	8,310		$	13,894		$	10,115		$	14,487		$	24,602

The following table provides a summary of OREO activity for the nine months ended September 30, 2015 and 2014:

	For the nine months ended September 30, 2015									For the nine months ended September 30, 2014
(in thousands)	Non-Covered OREO			Covered OREO			Total			Non-Covered OREO			Covered OREO			Total
Balance, beginning of period	$	10,736		$	12,760		$	23,496		$	12,611		$	25,481		$	38,092
Additions	—			4,200			4,200			6,068			5,296			11,364
Sales	(4,779		)	(6,588		)	(11,367		)	(8,523		)	(14,834		)	(23,357		)
Valuation adjustments	(373		)	(2,062		)	(2,435		)	(41		)	(1,456		)	(1,497		)
Balance, end of period	$	5,584		$	8,310		$	13,894		$	10,115		$	14,487		$	24,602

At September 30, 2015, OREO was $13.9 million and included $8.3 million of covered OREO. At December 31, 2014, OREO was $23.5 million and included $12.8 million of covered OREO. The balance of OREO at September 30, 2015 and December 31, 2014 is net of valuation allowances of $2.4 million and $7.4 million, respectively. At September 30, 2015, the Company’s recorded investment in residential mortgage loans, excluding acquired impaired loans, for which foreclosure proceedings had been initiated totaled $7.3 million.

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

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Shareholders' Equity

9 Months Ended

Sep. 30, 2015

Shareholders' Equity

Shareholders' Equity

Note 8. Shareholders’ Equity

The components of AOCI at September 30, 2015 and December 31, 2014 are as follows:

(in thousands)	September 30, 2015			December 31, 2014
Net unrealized gain (loss) on securities available-for-sale	$	2,528		$	(7,070	)
Foreign currency translation adjustments	(28		)	(4		)
Total accumulated other comprehensive income (loss)	$	2,500		$	(7,074	)

The following table presents the tax effects allocated to each component of other comprehensive income (loss) for the three and nine months ended September 30, 2015 and 2014:

	For the three months ended September 30, 2015									For the three months ended September 30, 2014
(in thousands)	Pre-tax			Tax expense (benefit)			Net-of-tax			Pre-tax			Tax expense (benefit)			Net-of-tax
Securities available-for-sale:
Net unrealized gains (losses) arising during the period	$	7,741		$	3,268		$	4,473		$	(16,386	)	$	(6,839	)	$	(9,547	)
Reclassification adjustment for net gains included in net income (1)	(12		)	(5		)	(7		)	(7		)	(3		)	(4		)
Non-credit related impairment loss	(325		)	(136		)	(189		)	(243		)	(102		)	(141		)
Total securities available-for-sale	7,404			3,127			4,277			(16,636		)	(6,944		)	(9,692		)
Foreign currency translation adjustments	(17		)	—			(17		)	—			—			—
Total other comprehensive income (loss)	$	7,387		$	3,127		$	4,260		$	(16,636	)	$	(6,944	)	$	(9,692	)

	For the nine months ended September 30, 2015									For the nine months ended September 30, 2014
(in thousands)	Pre-tax			Tax expense (benefit)			Net-of-tax			Pre-tax			Tax expense (benefit)			Net-of-tax
Securities available-for-sale:
Net unrealized gains arising during the period	$	20,617		$	8,676		$	11,941		$	21,646		$	9,060		$	12,586
Reclassification adjustment for net gains included in net income (1)	(3,703		)	(1,549		)	(2,154		)	(7,558		)	(3,162		)	(4,396		)
Non-credit related impairment loss	(325		)	(136		)	(189		)	(243		)	(102		)	(141		)
Total securities available-for-sale	16,589			6,991			9,598			13,845			5,796			8,049
Foreign currency translation adjustments	(24		)	—			(24		)	—			—			—
Total other comprehensive income	$	16,565		$	6,991		$	9,574		$	13,845		$	5,796		$	8,049

(1) Recognized in Gain on sale of securities in the consolidated statements of income.

The following table summarizes the Company’s share repurchases for the three months ended September 30, 2015. All repurchases relate to shares withheld or previously owned shares used to pay taxes due upon vesting of restricted stock. There were no issuer repurchases of the Corporation’s common stock as part of its repurchase plan for the three months ended September 30, 2015.

Period	Total Number of Shares Purchased	Average Price Paid per Share
July 1, 2015 to July 31, 2015	1,609	$	89.65
August 1, 2015 to August 31, 2015	—	—
September 1, 2015 to September 30, 2015	2,897	86.89
Total share repurchases	4,506	87.87

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Borrowed Funds (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Short-term borrowings
Total short-term borrowings	$ 6,490	$ 322,861
Long-term debt
Long-term debt	650,078	638,600
5.25% Senior Notes Due September 2020 | City National Corporation
Long-term debt
Long-term debt	$ 299,597	$ 299,540
Fixed interest rate (as a percent)	5.25%	5.25%
9.00% Subordinated Notes Due August 2019 | City National Bank:
Long-term debt
Long-term debt	$ 75,000	$ 75,000
Fixed interest rate (as a percent)	9.00%	9.00%
5.375% Subordinated Notes Due July 2022 | City National Bank:
Long-term debt
Long-term debt	$ 149,995	$ 149,994
Fixed interest rate (as a percent)	5.375%	5.375%
Floating Rate Securities Due November 2034 | Business Bancorp Capital Trust I
Long-term debt
Long-term debt	$ 5,155	$ 5,155
Variable rate basis	three-month LIBOR
Basis spread (as a percent)	1.965%
Interest rate as of reporting date (as a percent)	2.29%
Nonrecourse debt
Short-term borrowings
Current portion of nonrecourse debt	$ 6,490	2,861
Long-term debt
Long-term debt	$ 110,713	99,139
Average interest rate (as a percent)	3.83%
Other long-term debt
Long-term debt
Long-term debt	$ 9,618	9,772
Fixed interest rate (as a percent)	5.64%
Federal funds purchased
Short-term borrowings
Federal funds purchased		$ 320,000

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Earnings per Common Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Basic EPS:
Net income attributable to City National Corporation	$ 71,808	$ 69,891	$ 201,873	$ 189,182
Less: Dividends on preferred stock	4,093	4,093	12,281	12,281
Net income available to common shareholders	67,715	65,798	189,592	176,901
Less: Earnings allocated to participating securities	576	644	1,664	1,801
Earnings allocated to common shareholders	$ 67,139	$ 65,154	$ 187,928	$ 175,100
Weighted-average common shares outstanding	55,829	55,031	55,668	54,893
Basic earnings per common share (in dollars per share)	$ 1.20	$ 1.18	$ 3.38	$ 3.19
Diluted EPS:
Earnings allocated to common shareholders	$ 67,143	$ 65,160	$ 187,943	$ 175,116
Weighted-average common shares outstanding	55,829	55,031	55,668	54,893
Dilutive effect of equity awards (in shares)	858	734	884	723
Weighted-average diluted common shares outstanding	56,687	55,765	56,552	55,616
Diluted earnings per common share (in dollars per share)	$ 1.18	$ 1.17	$ 3.32	$ 3.15
Stock options
Antidilutive securities not included in calculation of diluted EPS:
Antidilutive securities not included in calculation of diluted EPS (in shares)	400	700	400	700

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Other Real Estate Owned (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
OREO activity
Balance, beginning of period	$ 17,268	$ 22,213	$ 23,496	$ 38,092
Additions	285	7,233	4,200	11,364
Sales	(2,963)	(4,449)	(11,367)	(23,357)
Valuation adjustments	(696)	(395)	(2,435)	(1,497)
Balance, end of period	13,894	24,602	13,894	24,602
OREO Valuation Allowances	2,400		2,400		$ 7,400
Non-Covered OREO
OREO activity
Balance, beginning of period	5,957	4,269	10,736	12,611
Additions		5,957		6,068
Sales		(83)	(4,779)	(8,523)
Valuation adjustments	(373)	(28)	(373)	(41)
Balance, end of period	5,584	10,115	5,584	10,115
Residential mortgage loans in process of foreclosure			7,300
Covered OREO
OREO activity
Balance, beginning of period	11,311	17,944	12,760	25,481
Additions	285	1,276	4,200	5,296
Sales	(2,963)	(4,366)	(6,588)	(14,834)
Valuation adjustments	(323)	(367)	(2,062)	(1,456)
Balance, end of period	$ 8,310	$ 14,487	$ 8,310	$ 14,487
FDIC reimbursement (as a percent)			80.00%
Payable to FDIC (as a percent)			80.00%

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Other Real Estate Owned (Tables)

9 Months Ended

Sep. 30, 2015

Other Real Estate Owned.

Summary of OREO activity

	For the three months ended September 30, 2015									For the three months ended September 30, 2014
(in thousands)	Non-Covered OREO			Covered OREO			Total			Non-Covered OREO			Covered OREO			Total
Balance, beginning of period	$	5,957		$	11,311		$	17,268		$	4,269		$	17,944		$	22,213
Additions	—			285			285			5,957			1,276			7,233
Sales	—			(2,963		)	(2,963		)	(83		)	(4,366		)	(4,449		)
Valuation adjustments	(373		)	(323		)	(696		)	(28		)	(367		)	(395		)
Balance, end of period	$	5,584		$	8,310		$	13,894		$	10,115		$	14,487		$	24,602

	For the nine months ended September 30, 2015									For the nine months ended September 30, 2014
(in thousands)	Non-Covered OREO			Covered OREO			Total			Non-Covered OREO			Covered OREO			Total
Balance, beginning of period	$	10,736		$	12,760		$	23,496		$	12,611		$	25,481		$	38,092
Additions	—			4,200			4,200			6,068			5,296			11,364
Sales	(4,779		)	(6,588		)	(11,367		)	(8,523		)	(14,834		)	(23,357		)
Valuation adjustments	(373		)	(2,062		)	(2,435		)	(41		)	(1,456		)	(1,497		)
Balance, end of period	$	5,584		$	8,310		$	13,894		$	10,115		$	14,487		$	24,602

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Securities (Detail 3) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Available-for-sale securities
Impairment losses recognized in earnings on other-than-temporarily impaired securities		$ 75	$ 337	$ 323
Impairment losses, net of tax, recognized in other comprehensive loss on other-than-temporarily impaired securities	$ 189	141	189	141
Impairment losses recognized in earnings income for securities held- to-maturity	0	0	0	0
Total debt securities
Changes in cumulative credit related other-than-temporary impairment recognized in earnings
Balance, beginning of period	2,587	2,395	2,470	4,549
Subsequent credit-related impairment		75	117	323
Reduction for securities sold or redeemed				(2,402)
Balance, end of period	$ 2,587	$ 2,470	$ 2,587	$ 2,470

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Income Taxes

9 Months Ended

Sep. 30, 2015

Income Taxes

Income Taxes

Note 13. Income Taxes

The Company recognized income tax expense of $32.2 million and $100.5 million for the three and nine months ended September 30, 2015, respectively. The Company recognized income tax expense of $37.5 million and $103.6 million for the same periods in 2014.

The Company recognizes accrued interest and penalties relating to uncertain tax positions as an income tax provision expense. The Company recognized a benefit on accrued interest and penalties of $0.3 million for both the nine months ended September 30, 2015 and 2014. The Company had approximately $2.2 million and $2.5 million of accrued interest and penalties as of September 30, 2015 and December 31, 2014, respectively.

The Company and its subsidiaries file federal and various state income tax returns. The Company is currently being audited by the Internal Revenue Service (“IRS”) for the tax year 2014 and 2015. The Company is also under audit with the California Franchise Tax Board for the tax years 2005 to 2007. The Company has recorded a $1.1 million tax benefit in the current quarter in connection with the pending completion of the Franchise Tax Board audit.

From time to time, there may be differences in opinion with respect to the tax treatment of certain transactions. If a tax position which was previously recognized on the consolidated financial statements is no longer more likely than not to be sustained upon a challenge from the taxing authorities, the tax benefit from the tax position will be derecognized. The Company did not have any material tax positions for which previously recognized benefits were derecognized during the nine-month period ended September 30, 2015.

Prior period income tax expense has been adjusted to reflect the adoption of ASU 2014-01 on January 1, 2015. See Note 1, Summary of Significant Accounting Policies, for further discussion of ASU 2014-01.

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Segment Results

9 Months Ended

Sep. 30, 2015

Segment Results

Segment Results

Note 18. Segment Results

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

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

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, retirement, 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 City National Rochdale Funds. Both the asset management affiliates and the Bank’s Wealth Management division provide proprietary and nonproprietary products and offer a full spectrum of investment solutions in multiple asset classes and investment styles, including fixed-income instruments, mutual funds, domestic and international equities, and alternative investments such as hedge funds. This segment serves clients nationwide.

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

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

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

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

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

	For the three months ended September 30, 2015
	Commercial and			Wealth						Consolidated
(in thousands)	Private Banking			Management			Other			Company
Earnings Summary:
Net interest income	$	226,171		$	592		$	5,494		$	232,257
(Reversal of) provision for credit losses on loans and leases, excluding acquired impaired loans	(6,000		)	—			—			(6,000		)
Provision for losses on acquired impaired loans	1,148			—			—			1,148
Noninterest income	51,675			70,127			(16,931		)	104,871
Depreciation and amortization	2,482			1,839			6,398			10,719
Noninterest expense	188,367			59,872			(20,915		)	227,324
Income before income taxes	91,849			9,008			3,080			103,937
Provision for income taxes	28,440			2,814			954			32,208
Net income	63,409			6,194			2,126			71,729
Less: Net loss attributable to noncontrolling interest	—			(79		)	—			(79		)
Net income attributable to City National Corporation	$	63,409		$	6,273		$	2,126		$	71,808
Selected Average Balances:
Loans and leases, excluding acquired impaired loans	$	21,913,554		$	—		$	56,038		$	21,969,592
Acquired impaired loans	420,308			—			—			420,308
Total assets	22,390,469			730,148			11,330,543			34,451,160
Deposits	29,953,606			98,004			54,447			30,106,057
Goodwill	393,176			244,742			—			637,918
Customer-relationship intangibles, net	1,315			30,399			—			31,714

	For the three months ended September 30, 2014
	Commercial and			Wealth					Consolidated
(in thousands)	Private Banking			Management		Other			Company
Earnings Summary:
Net interest income	$	204,803		$	452	$	10,521		$	215,776
(Reversal of) provision for credit losses on loans and leases, excluding acquired impaired loans	(8,000		)	—		—			(8,000		)
Provision for losses on acquired impaired loans	589			—		—			589
Noninterest income	50,906			69,289		(12,278		)	107,917
Depreciation and amortization	2,786			1,797		5,119			9,702
Noninterest expense	175,844			57,237		(19,869		)	213,212
Income before income taxes	84,490			10,707		12,993			108,190
Provision for income taxes	29,478			3,441		4,533			37,452
Net income	55,012			7,266		8,460			70,738
Less: Net income attributable to noncontrolling interest	—			847		—			847
Net income attributable to City National Corporation	$	55,012		$	6,419	$	8,460		$	69,891
Selected Average Balances:
Loans and leases, excluding acquired impaired loans	$	18,777,758		$	—	$	60,002		$	18,837,760
Acquired impaired loans	580,200			—		—			580,200
Total assets	19,482,692			738,004		10,675,661			30,896,357
Deposits	26,481,108			71,595		277,930			26,830,633
Goodwill	393,176			249,079		—			642,255
Customer-relationship intangibles, net	2,335			34,689		—			37,024

	For the nine months ended September 30, 2015
	Commercial and		Wealth					Consolidated
(in thousands)	Private Banking		Management		Other			Company
Earnings Summary:
Net interest income	$	662,184	$	2,049	$	21,114		$	685,347
Provision for credit losses on loans and leases, excluding acquired impaired loans	4,000		—		—			4,000
Provision for losses on acquired impaired loans	2,736		—		—			2,736
Noninterest income	158,718		215,544		(45,412		)	328,850
Depreciation and amortization	7,688		5,622		24,502			37,812
Noninterest expense	563,775		170,873		(68,315		)	666,333
Income before income taxes	242,703		41,098		19,515			303,316
Provision for income taxes	80,661		13,342		6,486			100,489
Net income	162,042		27,756		13,029			202,827
Less: Net income attributable to noncontrolling interest	—		954		—			954
Net income attributable to City National Corporation	$	162,042	$	26,802	$	13,029		$	201,873
Selected Average Balances:
Loans and leases, excluding acquired impaired loans	$	21,166,866	$	—	$	57,460		$	21,224,326
Acquired impaired loans	455,786		—		—			455,786
Total assets	21,704,604		738,981		10,761,541			33,205,126
Deposits	28,654,702		94,703		104,932			28,854,337
Goodwill	393,176		243,484		—			636,660
Customer-relationship intangibles, net	1,460		31,458		—			32,918

	For the nine months ended September 30, 2014
	Commercial and			Wealth					Consolidated
(in thousands)	Private Banking			Management		Other			Company
Earnings Summary:
Net interest income	$	602,879		$	1,256	$	30,541		$	634,676
(Reversal of) provision for credit losses on loans and leases, excluding acquired impaired loans	(9,000		)	—		—			(9,000		)
Provision for losses on acquired impaired loans	3,783			—		—			3,783
Noninterest income	135,498			201,418		(26,652		)	310,264
Depreciation and amortization	8,381			5,310		14,665			28,356
Noninterest expense	517,022			166,278		(56,308		)	626,992
Income before income taxes	218,191			31,086		45,532			294,809
Provision for income taxes	77,192			10,270		16,109			103,571
Net income	140,999			20,816		29,423			191,238
Less: Net income attributable to noncontrolling interest	—			2,056		—			2,056
Net income attributable to City National Corporation	$	140,999		$	18,760	$	29,423		$	189,182
Selected Average Balances:
Loans and leases, excluding acquired impaired loans	$	17,993,033		$	—	$	57,583		$	18,050,616
Acquired impaired loans	639,592			—		—			639,592
Total assets	18,814,041			696,524		10,586,949			30,097,514
Deposits	25,710,863			77,657		254,929			26,043,449
Goodwill	393,176			249,322		—			642,498
Customer-relationship intangibles, net	2,717			35,788		—			38,505

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Securities (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Realized gains and losses
Gross realized gains	$ 50	$ 19	$ 5,475	$ 7,989
Gross realized losses	(20)	(5)	(144)	(486)
Net realized gains	30	14	5,331	7,503
Securities available-for-sale:
Amortized Cost	5,304,000		5,304,000		$ 5,894,509
Gross Unrealized Gains	28,101		28,101		32,788
Gross Unrealized Losses	(22,914)		(22,914)		(44,314)
Fair Value	5,309,187		5,309,187		5,882,983
Securities held-to-maturity:
Held-to-maturity Securities, Amortized Cost	3,506,455		3,506,455		3,427,031
Gross Unrealized Gains	97,547		97,547		72,659
Gross Unrealized Losses	(5,100)		(5,100)		(15,043)
Fair Value	3,598,902		3,598,902		3,484,647
Sales of securities available-for-sale	700	1,000	401,534	627,102
Sales of securities held-to-maturity			0	0
Interest and dividend income on securities (including trading securities)
Taxable interest income	33,400	37,500	102,500	111,000
Nontaxable interest income	7,200	6,400	21,300	17,900
Dividend income	22	$ 22	52	$ 47
Trading securities	154,706		154,706		173,188
Total securities	8,970,000		8,970,000		9,480,000
Total debt securities
Securities available-for-sale:
Amortized Cost					5,893,001
Gross Unrealized Gains					30,800
Gross Unrealized Losses					(43,964)
Fair Value	5,309,187		5,309,187		5,879,837
Securities held-to-maturity:
Held-to-maturity Securities, Amortized Cost	3,506,455		3,506,455
U.S. Treasury
Securities available-for-sale:
Amortized Cost	390,098		390,098		116,919
Gross Unrealized Gains	232		232		17
Gross Unrealized Losses	(1)		(1)		(10)
Fair Value	390,329		390,329		116,926
Federal agency - Debt
Securities available-for-sale:
Amortized Cost	285,616		285,616		1,401,303
Gross Unrealized Gains	758		758		558
Gross Unrealized Losses	(14)		(14)		(3,280)
Fair Value	286,360		286,360		1,398,581
Securities held-to-maturity:
Held-to-maturity Securities, Amortized Cost	445,721		445,721		292,932
Gross Unrealized Gains	11,742		11,742		6,430
Gross Unrealized Losses	(27)		(27)		(255)
Fair Value	457,436		457,436		299,107
Federal agency - MBS
Securities available-for-sale:
Amortized Cost	91,690		91,690		102,939
Gross Unrealized Gains	1,851		1,851		2,601
Gross Unrealized Losses	(660)		(660)		(1,014)
Fair Value	92,881		92,881		104,526
Securities held-to-maturity:
Held-to-maturity Securities, Amortized Cost	575,071		575,071		553,589
Gross Unrealized Gains	19,039		19,039		13,427
Gross Unrealized Losses	(227)		(227)		(2,275)
Fair Value	593,883		593,883		564,741
CMOs - Federal agency
Securities available-for-sale:
Amortized Cost	3,538,000		3,538,000		3,599,831
Gross Unrealized Gains	19,867		19,867		19,628
Gross Unrealized Losses	(21,739)		(21,739)		(38,869)
Fair Value	3,536,128		3,536,128		3,580,590
Securities held-to-maturity:
Held-to-maturity Securities, Amortized Cost	1,630,388		1,630,388		1,811,574
Gross Unrealized Gains	44,862		44,862		29,998
Gross Unrealized Losses	(2,057)		(2,057)		(10,292)
Fair Value	1,673,193		1,673,193		1,831,280
CMOs - Non-agency
Securities available-for-sale:
Amortized Cost	20,749		20,749		24,385
Gross Unrealized Gains	25		25		40
Gross Unrealized Losses	(343)		(343)		(411)
Fair Value	20,431		20,431		24,014
State and municipal
Securities available-for-sale:
Amortized Cost	356,623		356,623		473,272
Gross Unrealized Gains	4,249		4,249		6,139
Gross Unrealized Losses	(128)		(128)		(380)
Fair Value	360,744		360,744		479,031
Securities held-to-maturity:
Held-to-maturity Securities, Amortized Cost	769,646		769,646		682,705
Gross Unrealized Gains	21,704		21,704		22,732
Gross Unrealized Losses	(2,788)		(2,788)		(1,997)
Fair Value	788,562		788,562		703,440
Other debt securities
Securities available-for-sale:
Amortized Cost	621,224		621,224		174,352
Gross Unrealized Gains	1,119		1,119		1,817
Gross Unrealized Losses	(29)		(29)
Fair Value	622,314		622,314		176,169
Securities held-to-maturity:
Held-to-maturity Securities, Amortized Cost	85,629		85,629		86,231
Gross Unrealized Gains	200		200		72
Gross Unrealized Losses	(1)		(1)		(224)
Fair Value	$ 85,828		$ 85,828		86,079
Equity securities and mutual funds
Securities available-for-sale:
Amortized Cost					1,508
Gross Unrealized Gains					1,988
Gross Unrealized Losses					(350)
Fair Value					$ 3,146

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Noncontrolling Interest (Tables)

9 Months Ended

Sep. 30, 2015

Noncontrolling Interest

Schedule of summary for redeemable noncontrolling interest

	For the nine months ended September 30,
(in thousands)	2015			2014
Balance, beginning of period	$	39,978		$	39,768
Net income	954			2,056
Distributions to redeemable noncontrolling interest	(2,430		)	(2,366		)
Additions and redemptions, net	(6,043		)	(403		)
Adjustments to fair value	388			8,167
Balance, end of period	$	32,847		$	47,222

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 71,729	$ 70,738	$ 202,827	$ 191,238
Securities available-for-sale:
Net unrealized gains (losses) arising during the period	4,473	(9,547)	11,941	12,586
Reclassification adjustment for net gains included in net income	(7)	(4)	(2,154)	(4,396)
Non-credit related impairment loss	(189)	(141)	(189)	(141)
Foreign currency translation adjustments	(17)		(24)
Total other comprehensive (loss) income	4,260	(9,692)	9,574	8,049
Comprehensive income	75,989	61,046	212,401	199,287
Less: Comprehensive (loss) income attributable to noncontrolling interest	(79)	847	954	2,056
Comprehensive income attributable to City National Corporation	$ 76,068	$ 60,199	$ 211,447	$ 197,231

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Fair Value Measurements

9 Months Ended

Sep. 30, 2015

Fair Value Measurements

Fair Value Measurements

Note 2. Fair Value Measurements

The following tables summarize assets and liabilities measured at fair value as of September 30, 2015 and December 31, 2014 by level in the fair value hierarchy:

			Fair Value Measurements at Reporting Date Using
(in thousands)	Balance as of September 30, 2015		Quoted Prices in Active Markets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
Measured on a Recurring Basis
Assets
Securities available-for-sale:
U.S. Treasury	$	390,329	$	390,329	$	—	$	—
Federal agency - Debt	286,360		—		286,360		—
Federal agency - MBS	92,881		—		92,881		—
CMOs - Federal agency	3,536,128		—		3,536,128		—
CMOs - Non-agency	20,431		—		20,431		—
State and municipal	360,744		—		357,274		3,470
Other debt securities	622,314		—		622,314		—
Trading securities	154,706		146,710		7,996		—
Derivative assets (1)	82,176		8,454		71,487		2,235
Contingent consideration asset (1)	2,605		—		—		2,605
Total assets at fair value	$	5,548,674	$	545,493	$	4,994,871	$	8,310
Liabilities
Derivative liabilities	$	81,776	$	8,800	$	72,976	$	—
Contingent consideration liability	36,985		—		—		36,985
FDIC clawback liability	16,608		—		—		16,608
Other liabilities	797		—		797		—
Total liabilities at fair value (2)	$	136,166	$	8,800	$	73,773	$	53,593
Redeemable noncontrolling interest	$	32,847	$	—	$	—	$	32,847
Measured on a Nonrecurring Basis
Assets
Other real estate owned (3)	$	9,544	$	—	$	—	$	9,544
Private equity and alternative investments	1,587		—		—		1,587
Total assets at fair value	$	11,131	$	—	$	—	$	11,131

(1) Reported in Other assets in the consolidated balance sheets.

(2) Reported in Other liabilities in the consolidated balance sheets.

(3) Includes covered OREO.

			Fair Value Measurements at Reporting Date Using
(in thousands)	Balance as of December 31, 2014		Quoted Prices in Active Markets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
Measured on a Recurring Basis
Assets
Securities available-for-sale:
U.S. Treasury	$	116,926	$	116,926	$	—	$	—
Federal agency - Debt	1,398,581		—		1,398,581		—
Federal agency - MBS	104,526		—		104,526		—
CMOs - Federal agency	3,580,590		—		3,580,590		—
CMOs - Non-agency	24,014		—		24,014		—
State and municipal	479,031		—		475,484		3,547
Other debt securities	176,169		—		176,169		—
Equity securities and mutual funds	3,146		3,146		—		—
Trading securities	173,188		171,778		1,410		—
Derivative assets (1)	51,586		6,106		44,598		882
Contingent consideration asset (1)	2,930		—		—		2,930
Total assets at fair value	$	6,110,687	$	297,956	$	5,805,372	$	7,359
Liabilities
Derivative liabilities	$	51,309	$	6,623	$	44,686	$	—
Contingent consideration liability	34,983		—		—		34,983
FDIC clawback liability	15,106		—		—		15,106
Other liabilities	946		—		946		—
Total liabilities at fair value (2)	$	102,344	$	6,623	$	45,632	$	50,089
Redeemable noncontrolling interest	$	39,978	$	—	$	—	$	39,978
Measured on a Nonrecurring Basis
Assets
Other real estate owned (3)	$	5,644	$	—	$	—	$	5,644
Total assets at fair value	$	5,644	$	—	$	—	$	5,644

(1) Reported in Other assets in the consolidated balance sheets.

(2) Reported in Other liabilities in the consolidated balance sheets.

(3) Includes covered OREO.

At September 30, 2015, $5.55 billion, or approximately 16 percent, of the Company’s total assets were recorded at fair value on a recurring basis, compared with $6.11 billion, or 19 percent, at December 31, 2014. The majority of these financial assets were valued using Level 1 or Level 2 inputs. Less than one percent of total assets were measured using Level 3 inputs. At September 30, 2015, $136.2 million of the Company’s total liabilities were recorded at fair value using mostly Level 2 or Level 3 inputs, compared with $102.3 million at December 31, 2014. There were no transfers between Level 1 and Level 2 of the fair value hierarchy for assets or liabilities measured on a recurring basis during the nine months ended September 30, 2015. At September 30, 2015, $11.1 million of the Company’s total assets were recorded at fair value on a nonrecurring basis, compared with $5.6 million at December 31, 2014. These assets represent less than one percent of total assets and were measured using Level 3 inputs.

Recurring Fair Value Measurements

Assets and liabilities for which fair value measurement is based on significant unobservable inputs are classified as Level 3 in the fair value hierarchy. The following table provides a reconciliation of the beginning and ending balances for Level 3 assets and liabilities measured at fair value on a recurring basis for the nine months ended September 30, 2015 and 2014.

Level 3 Assets and Liabilities Measured on a Recurring Basis

	For the nine months ended September 30, 2015
(in thousands)	Securities Available-for- Sale			Equity Warrants		Contingent Consideration Asset			Contingent Consideration Liability			FDIC Clawback Liability
Balance, beginning of period	$	3,547		$	882	$	2,930		$	(34,983	)	$	(15,106	)
Total realized/unrealized gains (losses):
Included in earnings	—			65		(325		)	(727		)	(1,502		)
Included in other comprehensive income	23			—		—			—			—
Additions	—			1,288		—			—			—
Settlements	(100		)	—		—			—			—
Other (1)	—			—		—			(1,275		)	—
Balance, end of period	$	3,470		$	2,235	$	2,605		$	(36,985	)	$	(16,608	)

	For the nine months ended September 30, 2014
(in thousands)	Securities Available-for- Sale			Equity Warrants			Contingent Consideration Asset		Contingent Consideration Liability			FDIC Clawback Liability
Balance, beginning of period	$	3,633		$	—		$	—	$	(49,900	)	$	(11,967	)
Total realized/unrealized gains (losses):
Included in earnings	—			78			—		—			(2,557		)
Included in other comprehensive income	(9		)	—			—		—			—
Additions	—			631			2,930		—			—
Settlements	(100		)	(29		)	—		17,266			—
Other (1)	—			—			—		(1,859		)	—
Balance, end of period	$	3,524		$	680		$	2,930	$	(34,493	)	$	(14,524	)

(1) Other rollforward activity consists of accretion of discount related to the contingent consideration liability.

Redeemable noncontrolling interest is classified as Level 3 in the fair value hierarchy and measured on a recurring basis. Redeemable noncontrolling interest is valued based on a combination of factors, including but not limited to, observable valuation of firms similar to the affiliates, multiples of revenue or profit, unique investment products or performance track records, strength in the marketplace, projected discounted cash flow scenarios, strategic value of affiliates to other entities, as well as unique sources of value specific to an individual firm. The methodology used to fair value these interests is consistent with the industry practice of valuing similar types of instruments. Refer to Note 17, Noncontrolling Interest, for a rollforward of activity for the nine months ended September 30, 2015 and 2014.

Level 3 assets measured at fair value on a recurring basis include municipal auction rate securities that are classified in securities available-for-sale, a contingent consideration asset and equity warrants classified as derivative assets. Municipal auction rate securities were valued using an average yield on California variable rate notes that were comparable in credit rating and maturity to the securities held, plus a liquidity premium. The contingent consideration asset represents the fair value of future payments to be received on the sale of the Company’s retirement services recordkeeping business. The fair value of contingent consideration was determined by discounting the expected future cash flows using a bond rate for an investment grade finance company. Equity warrants in private companies obtained in association with certain loan transactions are measured at fair value on a recurring basis using the Black-Scholes option pricing model. Key inputs to the valuation model include current share estimated fair value, strike price, volatility, expected life, risk-free interest rate, and market and liquidity discounts. Several of the inputs to the valuation model incorporate assumptions by management that are not observable in the market; consequently, the valuation of warrants is classified in Level 3 of the fair value hierarchy. Refer to Note 11, Derivative Instruments, for additional discussion of equity warrants.

Level 3 liabilities measured at fair value on a recurring basis consist of contingent consideration and an FDIC clawback liability that are included in other liabilities. As part of its acquisition of Rochdale Investment Management, LLC and associated entities (collectively, “Rochdale”), the Company entered into a contingent consideration arrangement that requires the Company to pay additional cash consideration to Rochdale’s former shareholders at certain points in time over the six years after the date of acquisition if certain criteria, such as revenue growth and pre-tax margin, are met. In 2014, the Company made total contingent consideration payments to Rochdale’s former shareholders of approximately $17.4 million. The fair value of the remaining contingent consideration was estimated using a probability-weighted discounted cash flow model. Although the acquisition agreement does not set a limit on the total payment, the Company estimates that the remaining consideration payment could be in the range of $17 million to $46 million, but will ultimately be determined based on actual future results. The contingent consideration liability is remeasured to fair value at each reporting date until its settlement.

The FDIC clawback liability was valued using the discounted cash flow method based on the terms specified in loss-sharing agreements with the FDIC, the actual FDIC payments collected, and the following unobservable inputs: (1) risk-adjusted discount rate reflecting the Bank’s credit risk, plus a liquidity premium, and (2) loan performance assumptions such as prepayments and losses.

There were no transfers into or out of Level 3 assets or liabilities measured on a recurring basis during the nine months ended September 30, 2015 and 2014.

Nonrecurring Fair Value Measurements

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

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

Information About Nonrecurring Level 3 Fair Value Measurements

(in thousands)	Fair Value at September 30, 2015		Valuation Method	Unobservable Inputs
Other real estate owned	$	9,544	Third-party appraisal	- Fair values are primarily based on unadjusted appraised values. - A limited number of properties are valued using comparable sales values resulting in discounts to appraised values ranging from 12% to 22%.
Private equity and alternative investments	$	1,587	See note (1)	- See note (1) - Fair values reflect discounts to investment carrying amounts ranging from 27% to 86%.

(1) Fair values are based on management’s assumptions regarding recoverability of an investment based on a range of factors including, but not limited to, nature and age of the investment, actual and forecasted investment performance, fund operating results, recent and planned transactions, general and industry specific market conditions, performance of comparable companies and investment exit strategies.

For assets measured at fair value on a nonrecurring basis, the following table presents the total net gains and losses, which include charge-offs, recoveries, specific reserves, OREO valuation write-downs and write-ups, gains and losses on sales of OREO, and impairment write-downs on private equity investments, recognized in the three and nine months ended September 30, 2015 and 2014:

	For the three months ended September 30,						For the nine months ended September 30,
(in thousands)	2015			2014			2015			2014
Collateral dependent impaired loans:
Commercial real estate mortgages	$	—		$	—		$	—		$	(5	)
Residential mortgages	—			7			—			81
Other real estate owned (1)	(653		)	(283		)	(1,973		)	784
Private equity and alternative investments	(550		)	—			(2,180		)	—
Total net (losses) gains recognized	$	(1,203	)	$	(276	)	$	(4,153	)	$	860

(1) Net gains and losses on OREO include amounts related to covered OREO, a significant portion of which is payable to or reimbursable by the FDIC.

Fair Value of Financial Instruments

A financial instrument is broadly defined as cash, evidence of an ownership interest in another entity, or a contract that imposes a contractual obligation on one entity and conveys a corresponding right to a second entity to require delivery or exchange of financial assets or liabilities. Refer to Note 1, Summary of Significant Accounting Policies, in the Company’s 2014 Form 10-K for additional information on fair value measurements.

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

The following tables summarize the carrying amounts and estimated fair values of those financial instruments that are reported at amortized cost in the Company’s consolidated balance sheets. The tables also provide information on the level in the fair value hierarchy for inputs used in determining the fair value of those financial instruments. Most financial assets and financial liabilities for which carrying amount equals fair value are considered by the Company to be Level 1 measurements in the fair value hierarchy.

	September 30, 2015
	Carrying		Total		Fair Value Measurements Using
(in millions)	Amount		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and due from banks	$	434.1	$	434.1	$	434.1	$	—	$	—
Due from banks - interest-bearing	1,424.1		1,424.1		1,424.1		—		—
Securities purchased under resale agreements	200.0		201.0		—		201.0		—
Securities held-to-maturity	3,506.5		3,598.9		—		3,598.9		—
Loans and leases, net of allowance	22,219.4		22,772.0		—		—		22,772.0
Acquired impaired loans, net of allowance	393.9		443.0		—		—		443.0
FDIC indemnification asset	28.2		22.4		—		—		22.4
Investment in FHLB and FRB stock	50.6		50.6		—		50.6		—
Financial Liabilities:
Deposits	$	31,173.4	$	31,174.3	$	—	$	30,601.3	$	573.0
Short-term borrowings	6.5		6.5		—		—		6.5
Long-term debt	650.1		725.9		—		614.7		111.2

	December 31, 2014
	Carrying		Total		Fair Value Measurements Using
(in millions)	Amount		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and due from banks	$	336.5	$	336.5	$	336.5	$	—	$	—
Due from banks - interest-bearing	120.0		120.0		120.0		—		—
Securities purchased under resale agreements	200.0		201.1		—		201.1		—
Securities held-to-maturity	3,427.0		3,484.6		—		3,484.6		—
Loans and leases, net of allowance	20,027.1		20,576.9		—		—		20,576.9
Acquired impaired loans, net of allowance	502.4		549.1		—		—		549.1
FDIC indemnification asset	50.5		40.2		—		—		40.2
Investment in FHLB and FRB stock	58.4		58.4		—		58.4		—
Financial Liabilities:
Deposits	$	28,108.1	$	28,109.6	$	—	$	27,435.1	$	674.5
Short-term borrowings	322.9		322.9		320.0		—		2.9
Long-term debt	638.6		704.3		—		605.3		99.0

Following is a description of the methods and assumptions used in estimating the fair values of these financial instruments:

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

Securities purchased under resale agreements — The fair value of securities purchased under term resale agreements is determined using a combination of quoted market prices and observable market inputs such as interest rates and credit spreads.

Securities held-to-maturity —  For securities held-to-maturity, the fair value is generally determined by quoted market prices, where available, or based on observable market inputs appropriate for the type of security.

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

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

FDIC indemnification asset —  The fair value of the FDIC indemnification asset is estimated by discounting expected cash flows with appropriate market discount rates.

Investment in FHLB and FRB stock —  Investments in Federal Home Loan Bank of San Francisco (“FHLB”) and Federal Reserve Bank (“FRB”) stock are recorded at cost. Ownership of these securities is restricted to member banks and the securities do not have a readily determinable market value. Purchases and sales of these securities are at par value with the issuer. The fair value of investments in FHLB and FRB stock is equal to the carrying amount.

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

Short-term borrowings — The fair value of nonrecourse debt is determined by discounting expected cash flows with appropriate market discount rates. The carrying amount of the remaining short-term borrowings is a reasonable estimate of fair value.

Long-term debt —  The fair value of long-term debt, excluding nonrecourse debt, is obtained through third-party pricing sources.  The fair value of nonrecourse debt is determined by discounting expected cash flows with appropriate market discount rates.

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

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Loans, Allowance for Loan and Lease Losses, and Reserve for Off-Balance Sheet Credit Commitments (Detail 5) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Recorded Investment
With no related allowance recorded	$ 37,605	$ 43,708	$ 37,605	$ 43,708	$ 45,611
With an allowance recorded	22,287	14,867	22,287	14,867	15,611
Total impaired loans	59,892	58,575	59,892	58,575	61,222
Unpaid Contractual Principal Balance
With no related allowance recorded	47,087	49,654	47,087	49,654	51,987
With an allowance recorded	26,539	17,691	26,539	17,691	18,352
Total impaired loans	73,626	67,345	73,626	67,345	70,339
Related Allowance
Total impaired loans	2,609	1,595	2,609	1,595	728
Average Recorded Investment
With no related allowance recorded	36,391	50,899	38,828	64,807
With an allowance recorded	18,778	23,196	17,074	22,593
Total impaired loans	55,169	74,095	55,902	87,400
Interest Income Recognized
With no related allowance recorded	315	343	883	1,387
With an allowance recorded	121	73	358	203
Total impaired loans	436	416	1,241	1,590
Commercial
Recorded Investment
With no related allowance recorded	4,784	6,653	4,784	6,653	8,894
With an allowance recorded	13,401	9,663	13,401	9,663	6,470
Total impaired loans	18,185	16,316	18,185	16,316	15,364
Unpaid Contractual Principal Balance
With no related allowance recorded	10,605	6,684	10,605	6,684	9,182
With an allowance recorded	17,347	12,134	17,347	12,134	8,878
Total impaired loans	27,952	18,818	27,952	18,818	18,060
Related Allowance
Total impaired loans	2,315	1,304	2,315	1,304	399
Average Recorded Investment
With no related allowance recorded	3,619	6,817	4,395	10,653
With an allowance recorded	9,869	15,957	8,090	15,869
Total impaired loans	13,488	22,774	12,485	26,522
Interest Income Recognized
With no related allowance recorded	71	38	94	205
With an allowance recorded	95		138
Total impaired loans	166	38	232	205
Commercial real estate mortgages
Recorded Investment
With no related allowance recorded	17,921	20,347	17,921	20,347	19,858
With an allowance recorded	4,997	5,204	4,997	5,204	5,184
Total impaired loans	22,918	25,551	22,918	25,551	25,042
Unpaid Contractual Principal Balance
With no related allowance recorded	19,095	22,698	19,095	22,698	22,416
With an allowance recorded	5,311	5,557	5,311	5,557	5,526
Total impaired loans	24,406	28,255	24,406	28,255	27,942
Related Allowance
Total impaired loans	255	291	255	291	281
Average Recorded Investment
With no related allowance recorded	17,947	24,290	18,398	29,478
With an allowance recorded	5,008	5,214	5,061	5,293
Total impaired loans	22,955	29,504	23,459	34,771
Interest Income Recognized
With no related allowance recorded	200	219	605	903
With an allowance recorded		73	142	191
Total impaired loans	200	292	747	1,094
Residential mortgages
Recorded Investment
With no related allowance recorded	7,961	7,785	7,961	7,785	7,980
With an allowance recorded	3,889		3,889		3,957
Total impaired loans	11,850	7,785	11,850	7,785	11,937
Unpaid Contractual Principal Balance
With no related allowance recorded	8,255	8,139	8,255	8,139	8,256
With an allowance recorded	3,881		3,881		3,948
Total impaired loans	12,136	8,139	12,136	8,139	12,204
Related Allowance
Total impaired loans	39		39		48
Average Recorded Investment
With no related allowance recorded	7,981	7,190	7,915	7,456
With an allowance recorded	3,901	2,000	3,923	1,419
Total impaired loans	11,882	9,190	11,838	8,875
Interest Income Recognized
With no related allowance recorded	14	50	40	98
With an allowance recorded	26		78	11
Total impaired loans	40	50	118	109
Fixed
Recorded Investment
With no related allowance recorded	7,961	2,015	7,961	2,015	7,756
Unpaid Contractual Principal Balance
With no related allowance recorded	8,255	2,254	8,255	2,254	7,994
Average Recorded Investment
With no related allowance recorded	7,981	3,406	7,859	3,459
Interest Income Recognized
With no related allowance recorded	14	10	40	30
Variable
Recorded Investment
With no related allowance recorded		5,770		5,770	224
With an allowance recorded	3,889		3,889		3,957
Unpaid Contractual Principal Balance
With no related allowance recorded		5,885		5,885	262
With an allowance recorded	3,881		3,881		3,948
Related Allowance
Total impaired loans	39		39		48
Average Recorded Investment
With no related allowance recorded		3,784	56	3,997
With an allowance recorded	3,901	2,000	3,923	1,419
Interest Income Recognized
With no related allowance recorded		40		68
With an allowance recorded	26		78	11
Real estate construction
Recorded Investment
With no related allowance recorded	5,802	6,610	5,802	6,610	6,609
Total impaired loans	5,802	6,610	5,802	6,610	6,609
Unpaid Contractual Principal Balance
With no related allowance recorded	6,885	8,758	6,885	8,758	8,758
Total impaired loans	6,885	8,758	6,885	8,758	8,758
Average Recorded Investment
With no related allowance recorded	5,809	9,728	6,801	14,335
Total impaired loans	5,809	9,728	6,801	14,335
Interest Income Recognized
With no related allowance recorded	28	35	142	180
Total impaired loans	28	35	142	180
Construction
Average Recorded Investment
With no related allowance recorded				2,742
Interest Income Recognized
With no related allowance recorded				76
Land.
Recorded Investment
With no related allowance recorded	5,802	6,610	5,802	6,610	6,609
Unpaid Contractual Principal Balance
With no related allowance recorded	6,885	8,758	6,885	8,758	8,758
Average Recorded Investment
With no related allowance recorded	5,809	9,728	6,801	11,593
Interest Income Recognized
With no related allowance recorded	28	35	142	104
Home equity loans and lines of credit
Recorded Investment
With no related allowance recorded	1,137	2,313	1,137	2,313	2,270
Total impaired loans	1,137	2,313	1,137	2,313	2,270
Unpaid Contractual Principal Balance
With no related allowance recorded	2,247	3,375	2,247	3,375	3,375
Total impaired loans	2,247	3,375	2,247	3,375	$ 3,375
Average Recorded Investment
With no related allowance recorded	1,035	2,874	1,319	2,881
Total impaired loans	1,035	2,874	1,319	2,881
Interest Income Recognized
With no related allowance recorded	2		2
Total impaired loans	$ 2		$ 2
Installment
Average Recorded Investment
With no related allowance recorded				4
With an allowance recorded		25		12
Total impaired loans		25		16
Interest Income Recognized
With no related allowance recorded		1		1
With an allowance recorded				1
Total impaired loans		1		2
Consumer Installment loan
Average Recorded Investment
With no related allowance recorded				4
With an allowance recorded		25		12
Interest Income Recognized
With no related allowance recorded		$ 1		1
With an allowance recorded				$ 1

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Share-Based Compensation (Detail 3) - USD ($) $ / shares in Units, $ in Millions	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Summary of changes in restricted stock and related information
Weighted-Average Grant Date Fair Value Granted (in dollars per share)	$ 90.47
Restricted stock
Summary of changes in restricted stock and related information
Unvested at the beginning of the period (in shares)	525,000
Granted (in shares)	100,000
Vested (in shares)	(145,663)	(180,799)
Forfeited (in shares)	(5,000)
Unvested at the end of the period (in shares)	474,000
Weighted-Average Grant Date Fair Value, beginning of the period (in dollars per share)	$ 60.60
Weighted-Average Grant Date Fair Value Granted (in dollars per share)	90.47	$ 73.64
Weighted-Average Grant Date Fair Value Vested (in dollars per share)	54.80
Weighted-Average Grant Date Fair Value Forfeited (in dollars per share)	68.00
Weighted-Average Grant Date Fair Value, end of the period (in dollars per share)	$ 68.60
Total fair value of awards vested during the period	$ 8.0	$ 8.0
Unrecognized compensation cost	$ 16.2
Period for recognition of unrecognized compensation cost	3 years 3 months 18 days
Cash-settled restricted stock units
Summary of changes in restricted stock and related information
Unvested at the beginning of the period (in shares)	174,000
Granted (in shares)	14,000
Vested (in shares)	(44,000)
Forfeited (in shares)	(3,000)
Unvested at the end of the period (in shares)	141,000

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Subsequent Event

9 Months Ended

Sep. 30, 2015

Subsequent Event

Subsequent Event

Note 19. Subsequent Event

On January 22, 2015, the Corporation entered into an Agreement and Plan of Merger with Royal Bank of Canada, a Canadian chartered bank (“Royal Bank of Canada”) and RBC USA Holdco Corporation, a Delaware corporation and wholly owned subsidiary of Royal Bank of Canada (“Holdco”), pursuant to which the Corporation will merge with and into Holdco with Holdco surviving the merger as a wholly owned subsidiary of Royal Bank of Canada. On October 7, 2015, the Company and Royal Bank of Canada announced that they had received approval from both the Board of Governors of the Federal Reserve System and the Office of the Superintendent of Financial Institutions in Canada to complete the merger of the two companies. The merger is expected to close on November 2, 2015, subject to the satisfaction of customary closing conditions.

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Employee Benefit Plans (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Employee Benefit Plans
Maximum contribution by employee (as a percent)			50.00%
Percentage of employer contribution of first 6 percent of covered compensation			50.00%
Maximum employee contribution matched by employer as a percentage of covered compensation			6.00%
Profit sharing and matching contribution expense	$ 6,400	$ 6,100	$ 18,700	$ 16,800
Percentage of incentive compensation	100.00%		100.00%
Net deferred compensation expense	$ 37	$ 100	$ 400	$ 600

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Label	Element	Value
Effect Of Adjustments Due To Accounting Standards Update	cyn_EffectOfAdjustmentsDueToAccountingStandardsUpdate	$ (11,941)
Retained Earnings [Member]
Effect Of Adjustments Due To Accounting Standards Update	cyn_EffectOfAdjustmentsDueToAccountingStandardsUpdate	$ (11,941)

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Share-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2015

Share-Based Compensation

Summary of assumptions to estimate the fair value of stock option awards

	For the three months ended September 30,				For the nine months ended September 30,
	2015		2014		2015		2014
Weighted-average volatility	26.35	%	27.08	%	26.66	%	27.35	%
Dividend yield	1.58	%	1.72	%	1.55	%	1.79	%
Expected term (in years)	5.46		5.46		6.05		6.06
Risk-free interest rate	1.76	%	1.97	%	1.78	%	1.99	%

Summary of options activity and related information under the Plan

			Weighted-				Weighted-
			Average		Aggregate		Average
	Number of		Exercise		Intrinsic		Remaining
	Shares		Price		Value		Contractual
Options	(in thousands)		(per share)		(in thousands) (1)		Term
Outstanding at January 1, 2015	3,971		$	57.40
Granted	377		90.47
Exercised	(516	)	59.60
Forfeited or expired	(33	)	67.64
Outstanding at September 30, 2015	3,799		$	60.29	$	106,387	5.33
Exercisable at September 30, 2015	2,691		$	55.62	$	87,297	4.12

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

Summary of changes in unvested options and related information under the Plan

			Weighted-Average
	Number of		Grant Date
	Shares		Fair Value
Unvested Options	(in thousands)		(per share)
Unvested at January 1, 2015	1,269		$	14.80
Granted	377		21.79
Vested	(515	)	14.78
Forfeited	(23	)	15.41
Unvested at September 30, 2015	1,108		$	17.17

Share-based compensation

Summary of changes in restricted stock and related information under the Plan

			Weighted-Average
	Number of		Grant Date
	Shares		Fair Value
Restricted Stock (1)	(in thousands)		(per share)
Unvested at January 1, 2015	525		$	60.60
Granted	100		90.47
Vested	(146	)	54.80
Forfeited	(5	)	68.00
Unvested at September 30, 2015	474		$	68.60

(1) Includes restricted stock units.

Cash-settled restricted stock units

Share-based compensation

Summary of changes in restricted stock and related information under the Plan

	Number of
	Shares
Cash-Settled Restricted Stock Units	(in thousands)
Unvested at January 1, 2015	174
Granted	14
Vested	(44	)
Forfeited	(3	)
Unvested at September 30, 2015	141

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Balance Sheet Offsetting

9 Months Ended

Sep. 30, 2015

Balance Sheet Offsetting

Balance Sheet Offsetting

Note 12. Balance Sheet Offsetting

Assets and liabilities relating to certain financial instruments, including derivatives, securities purchased under resale agreements (“reverse repurchase agreements”) and securities sold under repurchase agreements (“repurchase agreements”), may be eligible for offset in the consolidated balance sheet as permitted under accounting guidance. The Company is party to transactions involving derivative instruments that are subject to enforceable master netting arrangements or similar agreements. Under these agreements, the Company may have the right to net settle multiple contracts with the same counterparty. Certain derivative transactions may require the Company to receive or pledge marketable debt securities as collateral based on certain risk thresholds. The Company also enters into reverse repurchase agreements and collateral swap agreements. Under reverse repurchase agreements, the Company has the right to claim securities collateral if the counterparty fails to perform. Collateral swap agreements involve the exchange of securities collateral under simultaneous repurchase and reverse repurchase agreements with the same bank counterparty. These agreements have the same principal amounts, inception dates and maturity dates, and have been offset against each other in the balance sheet as permitted under the netting provisions of ASC Topic 210-20-45, Balance Sheet — Offsetting. Securities swaps totaled $500.0 million at September 30, 2015. At September 30, 2015, the Company had delivered collateral consisting of agency mortgage-backed securities with a fair value of approximately $534.2 million on the repurchase agreement and accepted collateral consisting of corporate and municipal bonds with a fair value of approximately $521.0 million on the reverse repurchase agreement. Securities that have been pledged by counterparties as collateral are not recorded in the Company’s consolidated balance sheet unless the counterparty defaults. Securities that have been pledged by the Company to counterparties continue to be reported in the Company’s consolidated balance sheet unless the Company defaults.

The Company also offers various derivative products to clients and enters into derivative transactions in due course. These derivative contracts are offset by paired trades with unrelated bank counterparties. Certain derivative transactions with clients are not subject to master netting arrangements and have been excluded from the balance sheet offsetting tables below. The following tables provide information about financial instruments that are eligible for offset at September 30, 2015 and December 31, 2014:

	Gross		Gross			Net Amount Presented		Gross Amounts Not Offset in the Balance Sheet
(in thousands)	Amount Recognized		Amount Offset			in the Balance Sheet		Securities Collateral			Cash Collateral			Net Amount
September 30, 2015
Financial assets:
Reverse repurchase agreements	$	700,555	$	(500,253	)	$	200,302	$	(200,000	)	$	—		$	302
Derivatives not designated as hedging instruments	8,661		(207		)	8,454		—			—			8,454
Total financial assets	$	709,216	$	(500,460	)	$	208,756	$	(200,000	)	$	—		$	8,756
Financial liabilities:
Repurchase agreements	$	500,253	$	(500,253	)	$	—	$	—		$	—		$	—
Derivatives not designated as hedging instruments	81,776		(207		)	81,569		(16,697		)	(57,162		)	7,710
Total financial liabilities	$	582,029	$	(500,460	)	$	81,569	$	(16,697	)	$	(57,162	)	$	7,710

	Gross		Gross			Net Amount Presented		Gross Amounts Not Offset in the Balance Sheet
(in thousands)	Amount Recognized		Amount Offset			in the Balance Sheet		Securities Collateral			Cash Collateral			Net Amount
December 31, 2014
Financial assets:
Reverse repurchase agreements	$	700,149	$	(500,041	)	$	200,108	$	(200,000	)	$	—		$	108
Derivatives not designated as hedging instruments	7,669		(1,562		)	6,107		—			—			6,107
Total financial assets	$	707,818	$	(501,603	)	$	206,215	$	(200,000	)	$	—		$	6,215
Financial liabilities:
Repurchase agreements	$	500,041	$	(500,041	)	$	—	$	—		$	—		$	—
Derivatives not designated as hedging instruments	51,125		(1,562		)	49,563		(14,654		)	(28,046		)	6,863
Total financial liabilities	$	551,166	$	(501,603	)	$	49,563	$	(14,654	)	$	(28,046	)	$	6,863