City National Corp. said late Wednesday that it repurchased half of the $400 million in preferred shares it sold to the U.S. Treasury last year during the TARP bailout of the nation’s financial institutions.

The Los Angeles holding company of City National Bank said that it was able to repurchase the shares because of its strong balance sheet and capitalization. Its ratio of Tier 1 common shareholders’ equity to risk-based assets was 9.22 percent as of Sept. 30, well above the level considered healthy.

City National said the $200 million repurchase will require it to take an after-tax, non-cash charge of $4 million (8 cents per share) this quarter. The company said it intends to repurchase the remaining $200 million of its government-held preferred securities in 2010. They were originally purchased on Nov. 22, 2008.

Earlier this month, the company bought the assets of failed Imperial Capital Bank In La Jolla for $3.4 billion, increasing its branches to 73 and total assets to $21.8 billion. The acquisition made it the county’s largest locally based bank– a position it had long held before being briefly surpassed by Pasadena’ East West Bancorp two months ago.

Shares earlier closed down $1.25, or 2.5 percent, to $46 on the New York Stock Exchange.