CITY NATIONAL CORP

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.

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.

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.

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.

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.