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New Deposits Have Grown at City National

City National Corp has picked up business from new and existing customers following the failure of IndyMac Bancorp Inc., helping offset the Los Angeles County’s largest local bank’s own challenges with bad loans.

Net new deposits in July were quadruple the five-year average, the parent of City National Bank said, and its brokerage unit is seeing about a 50 percent increase in new accounts, with customers opting for more conservative government bonds and money market funds.

“There’s no question that there’s a level of anxiety out there, whether you’re a depositor in IndyMac or you were or are a depositor at a number of institutions that are having issues raised in the press or on Wall Street,” said Chief Executive Russell Goldsmith in an interview with Bloomberg News published Monday. “City National is not alone in having refugees from troubled or challenged institutions.”

Pasadena-based IndyMac was seized by regulators on July 11 as news of mounting mortgage losses caused a run on the bank and a resulting liquidity crisis.

City National remains profitable, but has been hit by the same problems plaguing other area banks. The holding company last month reported its second-quarter profit dropped 40 percent to $35.5 million as the bank company set aside $35 million to cover potential losses from loans.

City National shares were down 66 cents, or more than 1 percent, to $47.62 in Tuesday morning trading on the New York Stock Exchange. The stock has dropped 33 percent over the last year as the credit crunch took its toll on the financial services industry.

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