Bank Says It Expects to Settle

The parent of Beverly Hills-based City National Bank, which caters to businesses and wealthy individuals, expects to reach a settlement with federal regulators over its compliance with the Bank Secrecy Act and other laws against money laundering.

City National Corp. said in a news release and a Securities and Exchange Commission filing Jan. 12 that it expected to reach an agreement with regulators “in the near term” after stepping up its spending in the fourth quarter to comply with the anti-laundering rules. The company said it didn’t know whether a fine would be assessed, and it declined to provide other details of the negotiations.

“Like a number of other banks, in 2004 and 2005 we’re spending more money to comply with an evolving set of regulatory requirements,” Chief Executive Russell Goldsmith said in a conference call with analysts this month. Goldsmith said he expected an accord to be finalized in the first quarter.

On Monday, company spokesman Cary Walker declined to comment further.

Todd Stender, an analyst at Crowell, Weedon & Co., said he expected any settlement to have “no material impact on earnings” for the publicly traded company. “City National is such a reputable bank.... We’re not overly concerned,” Stender said.

In its 2004 earnings release, City National said its non-interest expenses rose 9% to $395.4 million, in part because of the costs of complying with the Bank Secrecy Act, the USA Patriot Act and the Sarbanes-Oxley Act.

About a dozen banking companies were penalized in 2004 for violating anti-laundering regulations, according to the trade publication American Banker.

In October, for example, AmSouth Bancorp agreed to pay $50 million in civil penalties to resolve allegations that it failed to establish an adequate program to detect money laundering or to file timely reports of suspicious activity.

On Monday, City National Corp. shares rose 7 cents to $69.29 on the New York Stock Exchange.