Recent insider buying of stock in City National Corp. has prompted questions about whether the Beverly Hills bank could be headed toward a takeover.

During July, three officers and directors snapped up 36,000 shares in the open market at around $10 a share, according to CDA/Investnet, Ft. Lauderdale, Fla., which tricks such actions. Significantly, the insiders were buying at prices much higher than they paid a few months ago. City National's stock closed Wednesday at $10.50, up 40% from its yearend price.

"Averaging up [in price] by insiders is one of the rarest, and strongest, statements that can be made about any stock," said Robert Gable, president of CDA/Investnet.

The top inside buyer last month was vice chairman Steven D. Broidy, who acquired 31,500 shares.

George H. Bentner Jr., City National's president, bought 2,500 shares, while Richard H. Sheehan Jr., vice president, acquired 2,000.

They paid from $10 to $10.75 a share. By contrast, Mr. Broidy paid $8.625 each for 16,500 shares last March and Mr. Bentner paid $8 each for 1,100 shares last February.

In addition, City National director Edward Sanders last month exercised options to buy 621 shares without selling any underlying stock, also regarded as a bullish by followers of insider transactions.

The insiders invested $382,680 for the 36,621 shares they bought during July, not including the cost of options.

The latest buying took place at prices that bank analysts feel are relatively higher than other California banks and which fully reflects the fundamental earning position of City National right now.

Selling at 1.52 times book value right now, the shares are "at the upper end of the price-to-book value range for California banks," Steven Didion of Hoefer & Arnett, San Francisco, said Wednesday.

"They are fairly valued right," said the analyst, who has a "hold" rating on the stock. "They could bring 30% to 40% more in a takeover, but at this point you would have to be buying them for that."

The stock has done well this year because City National's earnings have improved significantly as it has disposed of the bad assets that had previously been a huge drag on its results.

The bank's recovery, including an injection of new management, has taken place under its chairman, Bram Goldsmith, who is regarded as one of California's savviest bankers and businessmen.

In 1991 and 1992 the bank posted enormous losses as a result of the near-collapse of the Southern California commercial real estate market.

From November 1992 until January of this year, the company operated under agreement with the Comptroller of the Currency to improve its financial health.

Mr. Didion said institutional investors have shown increased interest in City National recently, because its shares are the most liquid of the California banks below the state's three giants: BankAmerica Corp., Wells Fargo & Co., and First Interstate Bancorp.

Another analyst, Kenneth Frankel of Drake Capital Securities in Santa Monica, cited some possible reasons for the insider buying in addition to takeover speculation.

A very large proportion of City National's loan portfolio is on a floating-rate basis, he said. Thus the bank may be poised to benefit more than many others from the current environment of rising interest rates.

Further, investors outside Southern California may not realize that City National's borrowers and other customers suffered far less from the recent earthquake than did other those of other institutions.

Finally, he pointed out, "sometimes the insiders think more of their company and it stock than the market does."

City National did not return a telephone call for comment.

Meanwhile other bank stocks were mostly mixed as the stock market overall slipped lower. Analysts said investors were trying to assess the impact of Tuesday's interest rate hike by the Federal Reserve Board.

J.P. Morgan & Co. was off 50 cents to $64.375 in late trading while Citicorp was down 12.5 cents to $43.625.

Defying the trend, First Interstate was up $1.25 to $76,875.

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