SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter ended March 31, 1998 Commission File Number 1-10521

CITY NATIONAL CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

Delaware 95-2568550
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

City National Center
400 North Roxbury Drive, Beverly Hills, California 90210
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(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (310) 888-6000

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
---------------- -----------------

Number of shares of common stock outstanding at April 30, 1998: 46,742,882

PART 1 - FINANCIAL INFORMATON
ITEM 1. FINANCIAL STATEMENTS
CITY NATIONAL CORPORATION
CONSOLIDATED BALANCE SHEET
(Unaudited)

March 31, December 31, March 31,
Dollars in thousands, except share amounts 1998 1997 1997
- ------------------------------------------ ----------- ----------- -----------

Assets
Cash and due from banks ................................................. $ 374,309 $ 327,398 $ 268,911
Interest-bearing deposits in other banks ................................ 275 301 1,160
Federal funds sold ...................................................... 280,000 150,000 60,000
Investment securities (fair value $220,785; $227,465 and $212,117 at
March 31, 1998, December 31, 1997 and March 31, 1997, respectively) ... 219,395 225,934 214,820
Securities available-for-sale (cost $595,603; $597,910 and $611,254 at
March 31, 1998, December 31, 1997 and March 31, 1997, respectively) ... 606,313 607,188 602,631
Trading account securities .............................................. 29,484 30,279 39,639
Loans ................................................................... 4,052,046 3,825,224 3,302,001
Less allowance for credit losses ........................................ 137,043 137,761 137,614
----------- ----------- -----------
Net loans ............................................................. 3,915,003 3,687,463 3,164,387

Premises and equipment, net ............................................. 44,839 43,402 32,798
Customers' acceptance liability ......................................... 2,110 1,553 1,988
Other real estate ....................................................... 2,900 2,126 18,958
Deferred tax asset ...................................................... 54,109 58,815 51,834
Goodwill and core deposit intangibles ................................... 73,012 54,921 63,207
Bank owned life insurance ............................................... 40,457 -- --
Other assets ............................................................ 59,916 62,652 63,312
----------- ----------- -----------
Total assets .......................................................... $ 5,702,122 $ 5,252,032 $ 4,583,645
----------- ----------- -----------
----------- ----------- -----------
Liabilities
Demand deposits ......................................................... $ 1,999,820 $ 2,027,014 $ 1,547,850
Interest checking deposits .............................................. 384,642 439,071 375,186
Money market deposits ................................................... 851,413 773,291 813,155
Savings deposits ........................................................ 167,592 171,100 174,072
Time deposits-under $100,000 ............................................ 210,971 204,744 240,054
Time deposits-$100,000 and over ......................................... 755,645 613,128 489,680
----------- ----------- -----------
Total deposits ........................................................ 4,370,083 4,228,348 3,639,997
Federal funds purchased and securities sold under repurchase agreements . 374,275 206,427 130,131
Other short-term borrowings ............................................. 162,969 212,575 262,339
Subordinated debt ....................................................... 124,004 -- --
Other long-term debt .................................................... 75,000 50,000 34,800
Other liabilities ....................................................... 55,642 44,459 49,115
Acceptances outstanding ................................................. 2,110 1,553 1,988
----------- ----------- -----------
Total liabilities ..................................................... 5,164,083 4,743,362 4,118,370
----------- ----------- -----------
Commitments and contingencies

Subsequent events

Shareholders' Equity
Preferred Stock authorized - 5,000,000, none outstanding ................ -- -- --
Common Stock-par value-$1.00; authorized - 75,000,000
Issued- 46,831,840; 46,700,891 and 46,694,668 shares at March 31, 1998,
December 31, 1997 and March 31, 1997, respectively) ................... 46,832 46,701 46,695
Additional paid-in capital .............................................. 296,067 297,654 300,102
Other comprehensive income (loss) ....................................... 6,143 5,349 (4,973)
Retained earnings ....................................................... 189,000 173,089 126,163
Treasury shares, at cost - 1,305; 563,928 and 135,475 shares at March 31,
1998, December 31, 1997 and March 31, 1997, respectively) ............. (3) (14,123) (2,712)
----------- ----------- -----------
Total shareholders' equity ............................................ 538,039 508,670 465,275
----------- ----------- -----------
Total liabilities and shareholders' equity ............................ $ 5,702,122 $ 5,252,032 $ 4,583,645
----------- ----------- -----------
----------- ----------- -----------

See accompanying Notes to the Unaudited Consolidated Financial Statements

CITY NATIONAL CORPORATION
CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)

For the quarter ended March 31,
-------------------------------
In thousands, except per share amounts 1998 1997
- -------------------------------------- -------- --------

Interest Income
Loans ............................................... $ 90,074 $ 70,011
Federal funds sold and securities purchased under
resale agreements ................................. 510 312
Investment securities ............................... 3,085 3,028
Securities available-for-sale ....................... 9,181 9,517
Trading account ..................................... 598 439
-------- --------
Total ............................................. 103,448 83,307
-------- --------
Interest Expense
Deposits ............................................ 20,832 16,494
Federal funds purchased and securities sold under
repurchase agreements ............................. 4,892 5,361
Other short-term borrowings ......................... 1,999 1,171
Subordinated debt ................................... 1,749 --
Other long-term debt ................................ 1,152 509
-------- --------
Total ............................................. 30,624 23,535
-------- --------
Net interest income ................................. 72,824 59,772
Provision for credit losses ........................... -- --
-------- --------
Net interest income after provision for credit losses 72,824 59,772
-------- --------
Noninterest Income
Service charges on deposit accounts ................. 5,032 3,304
Investment services ................................. 3,691 3,051
Trust fees .......................................... 2,242 2,016
International services .............................. 1,686 1,526
Bank owned life insurance ........................... 457 --
Gain on sale of assets .............................. 13 1,039
Gain (loss) on sale of securities ................... 974 (277)
Other ............................................... 2,270 1,966
-------- --------
Total noninterest income .......................... 16,365 12,625
-------- --------
Noninterest Expense
Salaries and other employee benefits ................ 29,742 23,496
Professional ........................................ 7,315 4,582
Net occupancy of premises ........................... 2,464 2,362
Data processing ..................................... 1,203 2,152
Promotion ........................................... 2,437 1,722
Depreciation ........................................ 2,030 1,357
Office services ..................................... 2,111 1,556
Equipment ........................................... 508 581
Amortization of goodwill and core deposit intangibles 1,869 1,381
Other operating ..................................... 4,642 4,358
Other real estate ................................... 45 378
-------- --------
Total noninterest expense ......................... 54,366 43,925
-------- --------
Income before income taxes .......................... 34,823 28,472
Income taxes ........................................ 12,354 10,469
-------- --------
Net income .......................................... 22,469 18,003
-------- --------
Other comprehensive income
Unrealized net gains (losses) on securities
available-for-sale .............................. 1,432 (4,096)
Income taxes (benefit) ............................ 638 (1,272)
-------- --------
Other comprehensive income (loss) ................... 794 (2,824)
-------- --------
Comprehensive income ................................ $ 23,263 $ 15,179
-------- --------
-------- --------
Net income per share, basic ......................... $ 0.48 $ 0.39
-------- --------
-------- --------
Net income per share, diluted ....................... $ 0.46 $ 0.38
-------- --------
-------- --------
Shares used to compute income per share, basic ...... 46,677 45,936
-------- --------
-------- --------
Shares used to compute income per share, diluted .... 48,841 47,608
-------- --------
-------- --------
Dividends per share ................................. $ 0.14 $ 0.11
-------- --------
-------- --------

See accompanying Notes to the Unaudited Consolidated Financial Statements

CITY NATIONAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)

For the three months ended
March 31,
-------------------------
Dollars in thousands 1998 1997
- -------------------- --------- ---------

Cash Flows From Operating Activities
Net income ...................................................... $ 22,469 $ 18,003
Adjustments to net income:
Gain on sales of ORE .......................................... 58 115
Depreciation .................................................. 2,030 1,357
Amortization of goodwill and core deposit intangibles ......... 1,869 1,381
Net (increase) decrease in trading securities ................. 795 (7,510)
Deferred income tax expense (benefit) ......................... (6,177) 13,457
Net increase in other liabilities ............................. 10,165 3,181
Other, net .................................................... 14,344 (15,830)
--------- ---------
Net cash provided by operating activites .................... 45,553 14,154
--------- ---------
Cash Flows From Investing Activities
Net decrease in short-term investments .......................... 26 9,818
Purchase of securities available-for-sale ....................... (88,993) (134,694)
Sales of securities available-for-sale .......................... 80,341 186,565
Maturities of securities available-for-sale ..................... 21,017 11,781
Maturities of investment securities ............................. 9,429 2,988
Purchase of investment securities ............................... (2,528) (21,851)
Purchase of residential mortgage loans .......................... (32,396) (74,681)
Sale of residential mortgage loans .............................. -- 47,513
(Loan originations) and principal collections, net .............. (51,442) (83,751)
Proceeds from sales of ORE ...................................... 647 5,411
Purchase of premises and equipment .............................. (1,143) (2,305)
Net cash from acquisitions ...................................... 43,622 42,876
Bank owned life insurance premium paid .......................... (40,000) --
Gain (loss) on sale of securities ............................... 974 (277)
Other, net ...................................................... 171 (6,151)
--------- ---------
Net cash used by investing activities ....................... (60,275) (16,758)
--------- ---------
Cash Flows From Financing Activities
Net increase in federal funds purchased and securities sold under
repurchase agreements ......................................... 17,848 80,582
Net decrease in deposits ........................................ (63,865) (197,705)
Net increase (decrease) in short-term borrowings ............... 100,394 (31,303)
Net increase from issuance of other long-term debt .............. 25,000 --
Net proceeds of subordinated debt ............................... 124,004 --
Proceeds from excercise of stock options ........................ 6,034 5,312
Stock repurchases ............................................... (13,025) (1,072)
Cash dividends paid ............................................. (6,558) (5,106)
Other, net ...................................................... 1,801 (1,439)
--------- ---------
Net cash provided by financing activities ................... 191,633 (150,731)
--------- ---------
Net increase (decrease) in cash and cash equivalents ............ 176,911 (153,335)
Cash and cash equivalents at beginning of year .................. 477,398 482,246
--------- ---------
Cash and cash equivalents at end of period ...................... $ 654,309 $ 328,911
--------- ---------
--------- ---------
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest .................................................... $ 28,686 $ 21,878
Income taxes ................................................ -- 2

Non-cash investing activities:
Transfer from loans to foreclosed assets .................... 1,436 9,652

See accompanying Notes to the Unaudited Consolidated Financial Statements

CITY NATIONAL CORPORATION
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)

For the three months ended
March 31,
--------------------------
Dollars in thousands 1998 1997
- -------------------- --------- ---------

Common Stock
Balance, beginning of period ..................... $ 46,701 $ 46,303
Stock issued for acquisitions .................... 131 --
Stock options exercised .......................... -- 392
--------- ---------
Balance, end of period ........................... 46,832 46,695
--------- ---------
Additional paid-in capital
Balance, beginning of period ..................... 297,654 275,610
Stock options exercised .......................... -- 4,920
Tax benefit from stock options ................... 1,801 1,385
Excess of cost of treasury shares reissued
over stock option excercise amounts ............ (10,295) --
Excess of market value of shares issued
for acquisitions over historical cost .......... 6,907 18,187
--------- ---------
Balance, end of period ........................... 296,067 300,102
--------- ---------

Treasury shares
Balance, beginning of period ..................... (14,123) (32,283)
Purchase of shares ............................... (13,026) (1,072)
Issuance of shares for acquisitions .............. 10,817 30,643
Issuance of shares for stock options ............. 16,329 --
--------- ---------
Balance, end of period ........................... (3) (2,712)
--------- ---------
Other comprehensive income (loss)
Balance, beginning of period ..................... 5,349 (2,149)
Unrealized net gains (losses) on securities
available-for-sale net of income taxes (benefit) 794 (2,824)
--------- ---------
Balance, end of period ........................... 6,143 (4,973)
--------- ---------
Retained earnings
Balance, beginning of period ..................... 173,089 113,266
Net income ....................................... 22,469 18,003
Dividends paid ................................... (6,558) (5,106)
--------- ---------
Balance, end of period ........................... 189,000 126,163
--------- ---------
Total shareholders' equity ......................... $ 538,039 $ 465,275
--------- ---------
--------- ---------

See accompanying Notes to the Unaudited Consolidated Financial Statements

CITY NATIONAL CORPORATION
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. The results of operations reflect the interim adjustments, all of which
are of a normal recurring nature and which, in the opinion of management,
are necessary for a fair presentation of the results for such interim
periods. 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, 1997.

2. In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures
about Pensions and Other Postretirement Benefits" ("SFAS 132"). This
Statement standardizes the disclosure requirements for defined benefit
plans and recommends a parallel format for presenting information about
pensions and other postretirement benefits. This Statement is effective
for fiscal years beginning after December 15, 1997. At this time the
Company has determined that this Statement will have no significant
impact, since it has no defined benefit plans.

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information" ("SFAS 131"). SFAS 131 establishes
standards for the way that public enterprises report information about
operating segments in annual financial statements and requires that
selected information about those operating segments be reported in interim
financial statements. This statement supersedes SFAS 14 "Financial
Reporting for Segments of a Business Enterprise". SFAS No. 131 requires
that all public enterprises report financial and descriptive information
about its reportable operating segments. Operating segments are defined as
components regularly evaluated by the chief operating decision maker in
deciding how to allocate resources and in assessing performance. This
statement is effective for fiscal year beginning after December 15, 1997.
In the initial year of application, comparative information for earlier
years should be restated. Management is in the process of determining the
impact, if any, this statement will have on the Company.

3. Securities held-for-investment are classified as investment securities.
Because the Company has the ability and management has the intent to hold
investment securities until maturity, investment securities are stated at
cost, adjusted for amortization of premiums and accretion of discounts,
Trading account securities are stated at market value. Investments not
classified as trading securities nor as investment securities are
classified as securities available-for-sale and recorded at fair value.
Unrealized holding gains or losses for securities available-for-sale are
excluded from net income and are reported as comprehensive income included
as a separate component of shareholders' equity net of taxes.

4. On January 9, 1998, the Company completed its acquisition of Harbor
Bancorp (HB), a one-bank holding company with six branches, one of which
was subsequently closed. The total purchase price was approximately $34.5
million. The Company issued approximately 540,000 shares, primarily from
treasury, with an aggregate market value of $17.9 million and paid the
remainder in cash. This acquisition was accounted for under the purchase
method of accounting and resulted in the recording of goodwill and
intangibles of approximately $24.0 million. The results of HB's operations
are included in those reported by the Company beginning on January 10,
1998.

On February 27, 1998, the Company sold its Wilmington branch which had
been acquired as part of the acquisition of Ventura County National
Bancorp to Banco Popular, N.A. (California). With the sale the purchaser
received approximately $40 million of deposits.

The Bank has received regulatory approval from the Office of the
Comptroller of the Currency to close on May 15, 1998 its Magnolia branch
which was acquired in the Company's acquisition of Riverside National
Bank.

5. On January 12, 1998, the Company issued $125 million of 6 3/8%
Subordinated Notes Due 2008. The net proceeds from the sale are being used
for general corporate purposes in the ordinary course of its banking
business.

6. For purposes of reporting cash flows, cash and cash equivalents include
cash on hand, amounts due from banks, and overnight federal funds sold.

7. Certain prior periods' data have been reclassified to conform with current
period presentation.

8. On April 29, 1998, the Company reported it had completed its share
repurchase program announced in March 1997 of 1.5 million shares of its
common stock at a total cost of $42.7 million, or an average price of
$28.46 per share. A new share repurchase program of up to 1.0 million
shares of the Company's common stock from time to time in open market
transactions was also announced at the same time.

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

City National Corporation (the Corporation) is the holding Company for City
National Bank (the Bank). Because the Bank comprises substantially all of the
business of the Corporation, references to the "Company" in this Item 2 reflect
the consolidated activities of the Corporation and the Bank.

RESULTS OF OPERATIONS

Overview

The Company recorded consolidated net income of $22.5 million, or $.46 per
diluted common share, in the first quarter of 1998, compared to $18.0 million,
or $.38 per diluted common share, in the first quarter of 1997. Increased net
income was primarily due to $13.1 million higher net interest income, and $3.7
million higher noninterest income, partially offset by $10.4 million in higher
noninterest expense.

Return on average assets for the first quarter of 1998 was 1.70% compared with
1.65% for the corresponding quarter of 1997. Return on average equity for the
first quarter of 1998 increased to 17.19% from 16.25% in 1997 as a result of the
increase in average equity resulting from the issuance of approximately 540,000
shares for the acquisition of Harbor Bancorp (HB) completed in January 1998.

Earnings before the amortization of goodwill and core deposit intangibles (net
of applicable taxes) ("cash" earnings) for the quarter ended March 31, 1998 were
$24.0 million or $0.49 per diluted common share, compared with $ 18.9 million,
or $0.40 per diluted common share for the quarter ended March 31, 1997. On the
same basis, the return on average assets was 1.84% and the return on average
common equity was 20.87% in the first quarter of 1998 compared with 1.76% and
20.68%, respectively in the year ago quarter. "Cash" earnings are presented
because they measure the Company's ability to support growth, pay dividends and
repurchase stock. The Company's "cash" earnings per share and other ratios are
not necessarily comparable to similarly titled measures reported by other
companies.

Taxable equivalent net interest income was $75.6 million in the first quarter of
1998, up 22.4% from the year ago quarter. The increase resulted from the 21.7%
increase in average interest earning assets between quarters and $1.5 million
in higher interest recoveries on problem loans in the first quarter of 1998
compared to the first quarter of 1997. The net interest spread decreased to
4,67% from 4,68% and the net interest margin of 6.11% was the same as in the
year ago quarter. Management expects modest growth in quarterly net interest
income for the remainder of 1998 from first quarter 1998 levels, assuming, among
other things, that interest rates will essentially remain constant but that loan
balances will continue to grow. Actual results may vary if the assumptions prove
to be incorrect. See "Cautionary Statement for Purposes of the 'Safe Harbor`
Provisions of the Private Securities Litigation Reform Act of 1995", below.

Average loans increased $888.5 million (28.5%) between first quarters to
$4,011.0 million at March 31, 1998. This increase reflected higher average
commercial, real estate commercial mortgage and residential first mortgage loans
outstanding, up $560.7 million (38.2%), $176.7 million (29.8%) and $104.5
million (11.6%), respectively. The increase in commercial loans resulted from
the Bank's internal loan generation, the acquisition of HB in January 1998 and
purchases of corporate syndicated loans. The increase in real estate mortgage
loans was primarily from the acquisition of HB. The increase in residential
first mortgage loans resulted from the Bank's internal loan generation. Average
construction loans increased $44.1 million (40.4%) from the first quarter of
1997.

Total average investment and available-for-sale securities decreased by $23.7
million between first quarters due to strong loan demand, which has absorbed any
excess liquidity. Total average deposits increased $678.3 million (20.0%)
between first quarters due primarily to the acquisition of HB as well as
increased deposit levels generated by the Bank's title and escrow department and
existing branches.

The provision for credit losses was zero for the quarters ended March 31, 1998
and 1997. Loans charged off in the first quarter of 1998 were $7.8 million,
compared to $3.7 million in the first quarter of 1997. Recoveries were $4.3
million in both quarters. The allowance for credit losses was 3.38% of total
loans at March 31, 1998 compared to 4.17% at March 31, 1997 and 3.60% at
December 31, 1997. The provision for credit losses is expected to remain at
reduced levels for the remainder of 1998. This assumes that general economic
conditions in Southern California will not deteriorate materially during the
balance of 1998, and if this assumption proves to be inaccurate, an increased
provision for credit losses may be required. See "Cautionary Statement for
Purposes of the `Safe Harbor' Provisions of the Private Securities Litigation
Reform Act of 1995", below.

Noninterest income excluding gains and losses on the sale of securities and
assets totaled $16.4 million for the first quarter of 1998, up $3.7 million
(29.6%) from a year earlier. Service charges on deposit accounts increased $1.7
million (52.3%) for the quarter ended March 31, 1998 compared to the year ago
quarter due primarily to increases in service charge fee schedules effective
during the fourth quarter of 1997 and the acquisition of HB. Investment services
income increased $0.6 million (21.0%) for the quarter ended March 31, 1998
compared to the same period a year ago due to new customers and new investment
products offered to customers. During the quarter, the company invested in bank
owned life insurance that generated $0.5 million of income. Management expects
modest growth in noninterest income for the remainder of 1998. See "Cautionary
Statement for Purposes of the `Safe Harbor' Provisions of the Private Securities
Litigation Reform Act of 1995", below.

Noninterest expense totaled $54.4 million in the first quarter of 1998, an
increase of $10.4 million (23.8%) from the first quarter of 1997. Salaries and
other employee benefits increased $6.2 million (26.6%) for the quarter ended
March 31, 1998 from the first quarter of 1997 due primarily to the additional
personnel added as a result of the acquisition of HB, from the hiring of
additional personnel to pursue other opportunities, and because of moving to a
more performance based compensation structure. The expense categories other than
staff increased $4.2 million (20.5%) for the quarter ended March 31, 1998 from
the comparable period in 1997. The increase in professional expenses resulted
primarily from higher customer service expense due to increased volumes and
higher consulting fees. Higher promotion expense resulted from the Company's
increased advertising program. Amortization of goodwill and core deposit
intangibles increased to $1.9 million in the first quarter of 1998 from $1.4
million in the first quarter of 1997 reflecting primarily the acquisition of HB.
Lower data processing expense is attributable to savings from the conversion of
core operating systems to a new data processing provider. Other increases are
attributable primarily to the acquisition of HB. Noninterest expense levels for
the remainder of 1998 are expected to be higher than in 1997 reflecting the
growth of the Company and the acquisition of HB. See "Cautionary Statement for
Purposes of the `Safe Harbor' Provisions of the Private Securities Litigation
Reform Act of 1995", below.

During the first quarter, efforts continued to address Year 2000 matters. A
detailed plan was completed. All information and environmental systems have been
identified and inventoried. A business impact analysis and a risk assessment and
renovation decision was made for each of the Bank's systems. In the first
quarter, $0.2 million was spent on Year 2000 matters.

The Company's effective tax rate decreased to 35.5% in the first quarter of
1998 from 36.8% in the first quarter of 1997. The Company expects the
effective tax rate for the remainder of 1998 to remain near 1998 first
quarter levels. See "Cautionary Statement for Purposes of the `Safe Harbor'
Provisions of the Private Securities Litigation Reform Act of 1995", below.

Net Interest Income Summary
The following table presents the components of net interest income on a fully
taxable equivalent basis for the quarters ended March 31, 1998 and 1997.

Net Interest Income Summary
March 31, 1998 March 31, 1997
--------------------------------------- -------------------------------------
Interest Average Interest Average
Average income/ interest Average income/ interest
Dollars in thousands Balance expense rate Balance expense rate
--------------------------------------- -------------------------------------

Assets
Earning assets (1)
Loans:
Commercial ............................ $ 2,029,445 $ 47,816 9.56% $ 1,468,793 $ 34,115 9.14%
Residential first mortgages ........... 1,007,686 19,317 7.77 903,224 17,728 7.96
Real estate - construction ............ 153,352 4,123 10.90 109,243 3,089 11.47
Real estate - commercial mortgage ..... 770,175 18,471 9.73 593,469 14,577 9.96
Installment ........................... 50,330 1,434 11.56 47,725 1,164 9.89
--------- ------ --------- ------
Total loans (2) ....................... 4,010,988 91,161 9.22 3,122,454 70,673 9.18

Due from banks-interest bearing ......... 425 7 6.68 7,730 96 5.04
State and municipal investment securities 106,799 1,872 7.11 98,714 1,724 7.08
Taxable investment securities ........... 116,686 1,876 6.52 112,684 1,825 6.57
Securities available for sale ........... 590,688 10,118 6.95 626,430 10,218 6.62
Federal funds sold and securities
purchased under resale agreements ..... 39,370 510 5.25 25,081 312 5.04
Trading account securities .............. 43,373 666 6.23 39,775 437 4.46
--------- ------ --------- ------
Total earning assets .................. 4,908,329 106,210 8.78 4,032,868 85,285 8.47
------ ------
Allowance for credit losses ............. (140,789) (136,644)
Cash and due from banks ................. 312,983 318,480
Other nonearning assets ................. 270,086 210,385
--------- ---------
Total assets .......................... $ 5,350,609 $ 4,425,089
--------- ---------
--------- ---------
Liabilities and Shareholders' Equity
Interest-bearing deposits:
Interest checking accounts .............. $ 386,152 949 1.00 $ 367,322 908 1.00
Money market accounts ................... 832,527 6,164 3.00 776,539 5,755 3.01
Savings deposits ........................ 176,323 1,511 3.48 167,001 1,367 3.32
Time deposits - under $100,000 .......... 230,187 2,789 4.91 218,718 2,738 5.08
Time deposits - $100,000 and over ....... 708,469 9,419 5.39 449,025 5,726 5.17
--------- ------ ----- --------- ------
Total interest - bearing deposits ..... 2,333,658 20,832 3.62 1,978,605 16,494 3.38
-----
Federal funds purchased and securities
sold under repurchase agreements ...... 363,954 4,892 5.45 233,214 2,922 5.08
Other borrowings ........................ 327,799 4,900 6.06 305,508 4,119 5.47
--------- ------ --------- ------
Total interest - bearing liabilities .. 3,025,411 30,624 4.11 2,517,327 23,535 3.79
------ ------
Noninterest - bearing deposits ............ 1,732,799 1,409,595
Other liabilities ......................... 62,305 48,754
Shareholders' equity ...................... 530,094 449,413
--------- ---------
Total liabilities and shareholders'
equity ...................... $ 5,350,609 $ 4,425,089
--------- ---------
--------- ---------
Net interest spread ......................... 4.67% 4.68%
----- ----
----- ----
Fully taxable equivalent net interest income $ 75,586 $ 61,750
-------- --------
-------- --------
Net interest margin ......................... 6.11% 6.11%
----- ----
----- ----

(1) Includes average nonaccrual loans of $35,621 and $42,723 for 1998 and 1997,
respectively.

(2) Loan income includes loan fees of $2,519 and $1,762 for 1998 and 1997,
respectively.

The following table sets forth the change in net interest income on a fully
taxable equivalent basis broken down by volume and rates. The change in interest
due to both rate and volume has been allocated to change due to volume and rate
in proportion to the relationship of the absolute dollar amounts of the change
in each.

Changes In Net Interest Income

Quarter Ended March 31, Quarter Ended March 31,
1998 vs 1997 1997 vs 1996
--------------------------------- -----------------------------------
Increase Increase
(decrease) (decrease)
due to Net due to Net
--------------------- increase --------------------- increase
Dollars in thousands Volume Rate (decrease) Volume Rate (decrease)
-------- -------- -------- -------- -------- --------

Interest earned on:

Interest-bearing deposits
in other banks ........ $ (113) $ 23 $ (90) $ (246) $ (50) $ (296)

Loans ................... 20,179 309 20,488 17,357 (295) 17,062
Investment securities ... 206 (7) 199 1,319 (34) 1,285
Securities available-
for-sale .............. (598) 498 (100) (1,297) 661 (636)
Trading account
securities ............ 43 186 229 103 (153) (50)
Federal funds sold
and securities
purchased under
resale agreements ..... 185 14 199 (964) (131) (1,095)
-------- -------- -------- -------- -------- --------
Total interest-
earning assets ...... 19,902 1,023 20,925 16,272 (2) 16,270
-------- -------- -------- -------- -------- --------

Interest paid on:

Interest checking ....... 41 -- 41 92 -- 92
Money market deposits ... 427 (18) 409 287 112 399
Savings deposits ........ 77 67 144 268 92 360
Other time deposits ..... 3,525 219 3,744 2,370 (160) 2,210
Other borrowings ........ 2,129 622 2,751 1,391 (78) 1,313
-------- -------- -------- -------- -------- --------
Total interest-bearing
liabilities ........... 6,199 890 7,089 4,408 (34) 4,374
-------- -------- -------- -------- -------- --------
$ 13,703 $ 133 $ 13,836 11,864 $ 32 $ 11,896
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------

BALANCE SHEET ANALYSIS

Security Portfolio

Comparative period-end security portfolio balances are presented below.

Investment Securities

March 31, December 31, March 31,
1998 1997 1997
--------------------- --------------------- ---------------------
Dollars in thousands Cost Fair Value Cost Fair Value Cost Fair Value
-------- ---------- -------- ---------- -------- ----------

Mortgage-backed ....... $102,324 $102,569 $107,386 $107,728 $104,726 $102,725
State and Municipal ... 105,126 106,271 107,567 108,756 100,240 99,538
Other debt ............ 3,154 3,141 3,216 3,201 3,337 3,337
-------- -------- -------- -------- -------- --------
Total debt securities 210,604 211,981 218,169 219,685 208,303 205,600
Equity ................ 8,791 8,804 7,765 7,780 6,517 6,517
-------- -------- -------- -------- -------- --------
Total securities .... $219,395 $220,785 $225,934 $227,465 $214,820 $212,117
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------

Available-for-Sale Securities

U.S. Gov. and federal agency $271,680 $273,067 $178,078 $179,903 $244,868 $242,239
Mortgage-backed ............ 129,339 130,156 248,913 249,229 240,267 232,357
State and Municipal ........ 2,180 2,183 5,911 5,997 13,961 13,895
Other debt ................. 43,345 44,882 23,928 25,920 -- --
-------- -------- -------- -------- -------- --------
Total debt securities .... 446,544 450,288 456,830 461,049 499,096 488,491
Marketable equity securities 149,059 156,025 141,080 146,139 112,158 114,140
-------- -------- -------- -------- -------- --------
Total securities ......... $595,603 $606,313 $597,910 $607,188 $611,254 $602,631
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------

The following tables provide the expected remaining maturities and yields
(taxable-equivalent basis) of debt securities within the securities portfolios.

Investment Debt Securities

One year Over 1 year Over 5 years
or less thru 5 years thru 10 years Over 10 years Total
-------------------- ------------------- ------------------ ------------------ ------------------
Dollars in thousands Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
--------- -------- --------- ------- --------- ------- --------- ------- --------- ------

Mortgage-backed ....... $ -- --% $ 2,800 7.03% $ 19,661 5.96% $ 79,863 6.71% $102,324 6.57%
State and Municipal ... 18,128 6.66 61,306 6.65 21,851 7.05 3,841 6.46 105,126 6.73
Other debt ............ 1,000 7.75 2,154 7.23 -- -- -- -- 3,154 7.39
------- ---- ------- ---- ------- ---- ------- ---- ------- ----
Total debt securities $ 19,128 6.72% $ 66,260 6.68% $ 41,512 6.53% $ 83,704 6.70% $210,604 6.66%
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Fair value .......... $ 19,193 $ 67,028 $ 41,839 $ 83,921 $211,981
------- ------- ------- ------- -------
------- ------- ------- ------- -------

Available-for-Sale Debt Securities

One year Over 1 year Over 5 years
or less thru 5 years thru 10 years Over 10 years Total
---------------- ----------------- ----------------- ------------------- ----------------
Dollars in thousands Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----

U.S. Gov. and federal agency $ 25,049 5.88% $226,780 6.11% $ 21,238 5.89% $ -- --% $273,067 6.07%
Mortgage-backed ............ -- -- -- -- -- -- 130,156 6.76 130,156 6.76
State and Municipal ........ -- -- 2,183 6.07 -- -- -- -- 2,183 6.07
Other debt ................. -- -- -- -- -- -- 44,882 8.03 44,882 8.03
-------- ---- -------- ---- -------- ---- -------- ---- -------- ----
Total debt securities .... $ 25,049 5.88% $228,963 6.11% $ 21,238 5.89% $175,038 7.09% $450,288 6.47%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Amortized cost ........... $ 24,991 $227,672 $ 21,197 $172,684 $446,544
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------

Dividend income included in interest income on securities in the
Consolidated Statement of Income and Comprehensive Income in the first quarters
of 1998 and 1997 was $2.4 million and $1.8 million, respectively.

BALANCE SHEET ANALYSIS

LOAN PORTFOLIO

A comparative period-end loan table is presented below.

Loans

March 31, December 31, March 31,
Dollars in thousands 1998 1997 1997
----------- ----------- -----------

Commercial ...................... $ 2,076,271 $ 1,972,232 $ 1,561,797
Residential first mortgage ...... 1,008,592 980,040 929,205
Real estate - construction ...... 149,886 144,558 121,746
Real estate - commercial mortgage 765,198 686,188 640,866
Installment ..................... 52,099 42,206 48,387
----------- ----------- -----------
Total loans, gross ............ 4,052,046 3,825,224 3,302,001
Less: Allowance for credit losses (137,043) (137,761) (137,614)
----------- ----------- -----------
Total loans, net .............. $ 3,915,003 $ 3,687,463 $ 3,164,387
----------- ----------- -----------
----------- ----------- -----------

Gross loans at March 31, 1998 amounted to $4,052.0 million, up $750.0 million
(22.7%) from March 31, 1997 and up $226.8 million (5.9%) from December 31, 1997.
Approximately $152.2 million of the increase was due to the acquisition of HB.
Also contributing to the $514.5 million increase in commercial loans from March
31, 1997 were loan originations and the purchase of syndicated corporate loans.
The $79.4 million increase in residential first mortgage loans from the year ago
quarter resulted from the Bank's own originations. Construction loans also
increased by $ 28.1 million from March 31, 1997 as the Company continued to
expand its lending for residential construction development. The Company expects
that the Bank's loan portfolio will continue to increase from first quaarter
1998 levels due primarily to to its own internal generation activities. See
"Cautionary Statement for Purposes of the `Safe Harbor' Provisions of the
Private Securities Litigation Reform Act of 1995", below.

The following table presents information concerning nonaccrual loans, ORE, and
restructured loans.

Nonaccrual Loans, ORE and Restructured Loans

March 31, December 31, March 31,
Dollars in thousands 1998 1997 1997
--------- ------------ ---------

Nonaccrual loans:
Commercial ............................. $13,894 $ 6,589 $19,211
Real estate ............................ 22,881 19,243 21,464
Installment ............................ 0 1,734 0
------- ------- -------
Total ................................ 36,775 27,564 40,675
ORE ...................................... 2,900 2,126 18,958
------- ------- -------
Total nonaccrual loans and ORE ....... $39,675 $29,692 $59,633
------- ------- -------
------- ------- -------
Restructured loans, accruing ............. $ 2,899 $ 2,813 $ 5,744
------- ------- -------
------- ------- -------
Total nonaccrual loans as a
percentage of total loans .............. 0.91% 0.72% 1.23%
Total nonaccrual loans and ORE as a
percentage of total loans and ORE ...... 0.98 0.78 1.80
Allowance for credit losses to total loans 3.38 3.60 4.17
Allowance for credit losses
to nonaccrual loans .................... 372.65 499.75 338.33

The table below summarizes the approximate changes in nonaccrual loans for the
quarters ended March 31, 1998 and March 31, 1997.

Changes in Nonaccrual Loans

For the three months ended
March 31,
---------------------------
Dollars in millions 1998 1997
------- -------

Balance, beginning of period ....................... $ 27.6 $ 41.5
Additions from acquisitions ........................ 3.1 2.4
Loans placed on nonaccrual ......................... 20.4 9.1
Charge offs ........................................ (5.3) (2.9)
Loans returned to accrual status ................... 0.0 (0.7)
Repayments (including interest applied to principal) (9.0) (6.0)
Transfer to ORE .................................... (0.0) (2.7)
------- -------
Balance, end of period ............................. $ 36.8 $ 40.7
------- -------
------- -------

At March 31, 1998, in addition to loans disclosed above as nonaccrual or
restructured, management had also identified $10.4 million of problem loans
about which the ability of the borrowers to comply with the present loan
repayment terms in the future is questionable.

ALLOWANCE FOR CREDIT LOSSES

The following table summarizes average loans outstanding and changes in the
allowance for credit losses for the periods presented.

Changes in Allowance for Credit Losses

For the three months ended
March 31,
--------------------------
(Dollars in millions) 1998 1997
----------- -----------

Average amount of loans outstanding ............... $ 4,011.0 $ 3,122.5
----------- -----------
----------- -----------
Balance of allowance for credit losses,
beginning of period ............................. $ 137.8 $ 130.1
Loans charged off:
Commercial ...................................... 7.4 1.4
Real estate ..................................... 0.4 2.3
----------- -----------
Total loans charged off ....................... 7.8 3.7
----------- -----------
Less recoveries of loans previously charged off:
Commercial ..................................... 4.3 4.2
Real estate .................................... 0.0 0.1
----------- -----------
Total recoveries .............................. 4.3 4.3
----------- -----------
Net loans (charged off) recovered ................. (3.5) 0.6
Additions to allowance charged to operating expense 0.0 0.0
Additions to allowance from acquisitions .......... 2.7 6.9
----------- -----------
Balance, end of period ............................ $ 137.0 $ 137.6
----------- -----------
----------- -----------
Ratio of net charge-offs
to average loans ................................ 0.09% *
----------- -----------
----------- -----------
Ratio of allowance for credit losses
to total period end loans ....................... 3.38% 4.17%
----------- -----------
----------- -----------

* Not meaningful

CAPITAL ADEQUACY REQUIREMENT

The following table presents the regulatory standards for well capitalized
institutions and the capital ratios for the Company and the Bank at March 31,
1998, December 31, 1997 and March 31, 1997.

Regulatory
Well Capitalized March 31, December 31, March 31,
Standards 1998 1997 1997

---------------- --------- ------------ ---------
City National Corporation
- -------------------------
Tier 1 leverage 5.00% 8.79% 9.19% 9.48%
Tier I risk-based capital 6.00 10.54 10.99 12.18
Total risk-based capital 10.00 14.63 12.27 13.46

City National Bank
- ------------------
Tier I leverage ......... 5.00 7.70 7.93 8.48
Tier 1 risk-based capital 6.00 9.26 9.50 10.85
Total risk-based capital 10.00 13.38 10.78 12.13

On March 17, 1997, the Company announced a program for repurchase of up to 1.5
million shares of its common stock which was completed on April 28, 1998. The
Company repurchased these shares at a total cost of $42.7 million. A new
repurchase program of up to 1.0 million shares was announced on April 29, 1998.
Shares purchased under the buyback program will be reissued upon the exercise of
stock options and for other general purposes.

On April 22, 1998, the Company declared a regular quarterly dividend of $.14 per
share, payable May 14, 1998 to shareholders of record as of May 4, 1998.

ASSET/LIABILITY MANAGEMENT

The principal objectives of asset/liability management are to maximize net
interest margin subject to margin volatility and liquidity constraints. Margin
volatility results when the rate reset (or repricing) characterstics of assets
are materially different from those of the Company's liabilities. Liquidity risk
results from the mismatching of asset and liability cash flows. Management
chooses asset/liability strategies that promote stable earnings and reliable
funding. Interest rate risk and funding positions are kept within limits
established by the Company's board of directors to ensure that risk-taking is
not excessive and that liquidity is properly managed.

The Company has established three measurement process to quantify and manage
exposure to interest rate risk: net interest income simulation modeling, gap
analysis, and present value of equity analysis. Net interest income simulations
are used to identify the direction and severity of interest rate risk exposure
across a twelve month forecast horizon. Gap analysis provides insight into
structural mismatches of assets and liability repricing characteristics. Present
value of equity calculations are used to estimate the theoretical price
sensitivity of shareholder equity to changes in interest rates.

Generally, an asset sensitive gap indicates that net interest income will
improve during a period of rising interest rates. The gap report is based on the
contractual cash flows of all asset and liability balances on the Company's
books. The contractual life of these balances may differ substantially from
their expected lives however. For example, checking accounts are all subject to
immediate withdrawal. Experience suggests that these accounts will have an
average life of several years. Also, certain loans (such as first mortgages) are
subject to prepayment. The cash flows shown in the gap report are adjusted to
reflect these behaviors. The gap report also shows the effects that interest
rate swaps have had on the repricing profile of the Company.

The use of interest rate swaps to manage interest rate exposure involves the
risk of dealing with counterparties and their ability to meet contractual terms.
These counterparties must receive appropriate credit approval before the Company
enters into an interest rate contract. Notional principal amounts express the
volume of these transactions, although the amounts potentially subject to credit
and market risks are much smaller. At March 31, 1998, almost all of the
Company's interest rate swaps were entered into as hedges against a decrease in
interest income generated from prime based loans if the prime decreased. The
Company has not entered into transactions involving any other interest rate
derivative financial instruments, such as interest rate floors, caps and
interest rate futures contracts,

At March 31, 1998, the under-one-year cumulative gap was a $456 million (8% of
total assets) net asset position compared with a net asset position of $132
million (3% of total assets) at December 31, 1997. The increase resulted from
the Company's funding of asset growth with equity, subordinate debt and seasonal
rate stable deposits. As of March 31, 1998, the Company has $565 million of
notional principal in receive fixed-pay LIBOR interest rate swaps, of which $210
million have maturities greater than one year. The Company's interest-rate
risk-management instruments had a fair value of $2.2 million and $1.7 million
and an exposure to credit risk of $2.2 million and $1.8 million at March 31,
1998 and December 31, 1997, respectively. The credit exposure represents the
cost to replace, on a present value basis and at current market rates, all
profitable contracts outstanding at the end of the period. The Company's swaps
agreements require the deposit of collateral to mitigate the amount of credit
risk if certain thresholds are exceeded. No amounts were required to be
deposited by the Company or its counterparties as of March 31, 1998.

Since interest rate changes do not affect all categories of assets and
liabilities equally or simultaneously, a cumulative gap analysis alone cannot be
used to evaluate the Company's interest rate sensitivity position. To supplement
traditional gap analysis, the Company uses simulation modeling to estimate the
potential effects of changing interest rates. This process allows the Company to
fully explore the complex relationships within the gap over time and various
interest rate scenarios.

At March 31, 1998, the Company's outstanding foreign exchange contracts totaled
$9.5 million. The Company enters into foreign exchange contracts with its
customers and counterparty banks solely for the purpose of offsetting or hedging
transaction and economic exposures arising out of commercial transactions. The
Company's policies prohibit outright speculation by the Company and its
employees. The Company actively manages its foreign exchange exposures within
prescribed risk limits and controls. All foreign exchange contracts outstanding
at March 31, 998 had remaining maturities of six months or less, with the
exception of $0.4 million which had remaining maturities ranging between six
months and 24 months.

LIQUIDITY MANAGEMENT

The Company continues to manage its liquidity through the combination of core
deposits, federal funds purchased, repurchase agreements, collateralized
borrowing lines at the Federal Reserve Bank and the Federal Home Loan Bank of
San Francisco, and a portfolio of securities available-for-sale. Liquidity is
also provided by maturing investment securities and loans.

Average core deposits and shareholders' equity comprised 72.7% of total funding
in the first quarter of 1998, compared to 76.6% in the first quarter of 1997.
This decrease has required that the Company increase its use of more costly
alternative funding sources. Despite the decrease in percentage of funding
derived from core deposits and shareholders' equity, the Company has not faced
any liquidity constraints.

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

The Company wishes to take advantage of the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995 as to "forward looking"
statements in this Quarterly Report which are not historical facts. The
Company cautions readers that the following important factors could affect the
Company's business and cause actual results to differ materially from those
expressed in any forward looking statement made by, or on behalf of, the
Company.

--Economic conditions. The Company's results are strongly influenced by
general economic conditions in its market area, Southern California, and a
deterioration in these conditions could have a material adverse impact on the
quality of the Bank's loan portfolio and the demand for its products and
services. In particular, changes in economic conditions in the real estate and
entertainment industries may affect the Company's performance.

--Interest rates. Management anticipates that interest rate levels will remain
generally constant, but there is some risk of Federal Reserve tightening. If
interest rates vary substantially from present levels, this may cause the
Company's results to differ materially.

--Government regulation and monetary policy. All forward looking statements
presume a continuation of the existing regulatory environment and U.S.
Government policies. The banking industry is subject to extensive federal and
state regulations, and significant new laws or changes in, or repeal of,
existing laws may cause results to differ materially. Further, federal
monetary policy, particularly as implemented through the Federal Reserve
System, significantly affects credit conditions for the Bank, primarily
through open market operations in U.S. government securities, the discount
rate for member bank borrowing and bank reserve requirements, and a material
change in these conditions would be likely to have an impact on results.

--Competition. The Bank competes with numerous other domestic and foreign
financial institutions and non-depository financial intermediaries. Results
may differ if circumstances affecting the nature or level of competitive
change, such as the merger of competing financial institutions or the
acquisition of California institutions by out-of-state companies.

--Credit quality. A significant source of risk arises from the possibility
that losses will be sustained because borrowers, guarantors and related
parties may fail to perform in accordance with the terms of their loans. The
Bank has adopted underwriting and credit monitoring procedures and credit
policies, including the establishment and review of the allowance for credit
losses, that management believes are appropriate to minimize this risk by
assessing the likelihood of nonperformance, tracking loan performance and
diversifying the Bank's credit portfolio, but such policies and procedures may
not prevent unexpected losses that could adversely affect the Company's
results.

--Other risks. From time to time, the Company details other risks to its
businesses and/or its financial results in its filings with the Securities and
Exchange Commission.

While management believes that its assumptions regarding these and other
factors on which forward looking statements are based arc reasonable, such
assumptions are necessarily speculative in nature, and actual outcomes can be
expected to differ to some degree. Consequently, there can be no assurance
that the results described in such forward looking statements will, in fact,
be achieved.

PART 11. OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.

None

ITEM 5.
OTHER INFORMATION

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

10.29 Employment agreement (Change of Control Agreement) with members
of the Bank's Executive Committee.

(b) Reports on Form 8-K

None

SIGNATURES

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

CITY NATIONAL CORPORATION
(Registrant)

DATE: May 14,1998 /S/ FRANK P. PEKNY
---------------- ---------------------------
FRANK P. PEKNY
Executive Vice President
And Chief Financial Officer