Terms

Series

5.50% Non-Cumulative Perpetual Preferred Stock, Series C

Liquidation Preference

$25.00

Coupon Rate

5.5%

Rate Type

Fixed

Annual Dividend

$1.38

Payment Frequency

Quarterly

Cumulative

No

Perpetual

Yes

Convertible

No

Callable

Yes

First Call Date

November 13, 2017

First Call Price

$25.00

Redemption Notice Period

30 days

Capital Stack Ranking

Junior To: All Existing And Future Debt Obligations Of City National, Any Future Senior Preferred Stock Issued With Requisite Consent; Pari Passu With: Other Series Of Preferred Stock Unless Designated As Senior Or Junior; Senior To: Common Stock, Any Other Junior Stock

Regulatory (Basel III) Call

Yes

Tax Classification

Qualified Dividend

Qualifies for QDI

Yes

Qualifies for DRD

Yes

Depositary Share Fraction

0.025

Shares Offered

7,000,000

Prospectus Summary

City National Corporation, a Los Angeles-based bank holding company, is offering 7,000,000 depositary shares (NYSE: CYNPRC), each representing a 1/40th interest in a share of its 5.50% Non-Cumulative Perpetual Preferred Stock, Series C ($1.00 par value). Each depositary share carries a $25.00 liquidation preference and pays a fixed annual dividend of $1.375 ($0.34375 per quarter), subject to board declaration. The stock is non-cumulative, meaning that if the board skips a dividend in any quarter, that payment is permanently forfeited — holders have no legal right to recoup it in future periods. City National may redeem the shares at $25.00 on any dividend payment date on or after November 13, 2017. As a holding company issue, these depositary shares are structurally subordinated to all liabilities of City National's operating subsidiary, City National Bank, whose creditors have first claim on the bank's assets. At the holding company level, the Preferred Stock ranks junior to all existing and future debt, senior to common stock and other junior equity, and on parity with any other preferred stock series (unless a senior series is later authorized with holder consent). Importantly, City National may redeem the Preferred Stock early — within 90 days of a 'regulatory capital treatment event' — triggered if the company determines in good faith that a change in law or regulation creates more than an insubstantial risk that the shares will no longer qualify as full Tier 1 Capital. Given Basel III uncertainty at the time of issuance, this provision was considered a meaningful near-term risk. At the $25.00 offering price, the security yields exactly 5.50% per annum, paid quarterly on February 13, May 13, August 13, and November 13, beginning February 13, 2013. The record date is the 15th calendar day prior to each payment date. Dividends are expected to qualify for the 15%/20% qualified dividend income (QDI) rate for individual holders and the dividends-received deduction (DRD) for corporate holders, provided City National has sufficient current or accumulated earnings and profits — a condition the company notes may not always be met. The dividend stopper prevents City National from paying dividends on or repurchasing common stock and junior securities in any quarter where the prior period's full preferred dividend was not paid, offering a measure of protection to preferred holders.

Summarized from the SEC prospectus filing.

Distribution History

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If City National has not paid the full dividend on the Preferred Stock for the preceding dividend period, it is blocked from paying dividends on or repurchasing its common stock and other junior securities (with limited exceptions), and from repurchasing parity preferred stock except on a pro rata basis.

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 75 (Strong)