Our ballyhooed new U.S. acquisition led us to a flat quarter. Woo-hoo!

Normally that wouldn't be something to celebrate. But when you are a major Canadian financial institution like Royal Bank of Canada that is buffeted by oil-and-gas, domestic-economic, stock market and other crosscurrents, any buoy in a storm is welcome.

The Toronto banking company's $5.3 billion acquisition of City National in Los Angeles on Nov. 2, the biggest U.S. bank M&A deal of 2015, provided a real bright spot in quarterly results announced Wednesday.

RBC earned $2.4 billion for the quarter that ended Jan. 31, about even with results from a year earlier, while revenue fell 3%, to $9.4 billion. The reasons for those lackluster results included the energy-sector slump; higher claims and fair-value-accounting matters in its insurance operations; and lower fee income from fewer investment transactions amid volatile markets.

City National’s operations, however, had a "robust" quarter, RBC Chief Executive David McKay said during an earnings conference call on Wednesday. The newly acquired bank earned more than $100 million in the quarter and saw double-digit growth in loans (14%) and deposits (12%).

Once one subtracts merger costs of $23 million, along with certain amortization costs, City National still contributed $53 million of earnings, or nearly 17% of the $303 million in profit at RBC's wealth management unit.

"I'm very pleased with the underlying performance," McKay said. City National's net boost to earnings was "ahead of plan."

RBC paid mightily for the $36 billion-asset City National – about 270% of the seller’s tangible book value. But City National, a niche player that focused on entertainment and other high-net-worth clients in Los Angeles, New York and San Francisco, was generally seen as a good fit for RBC as it reentered the U.S. after an earlier foray into more general banking that went poorly.

When the deal was announced early last year, RBC said it expected the acquisition to be accretive to its earnings per share, excluding amortization of intangibles, by the end of its third year, and to start adding to the bottom line in year two.

But in an interview last fall right after the deal closed, McKay said he planned an aggressive cross-selling strategy, vowing to "put rocket boosters on City National."

The results announced Wednesday gave McKay something to crow about in a quarter that had plenty of rough spots.

"In the current environment, there is tremendous value in being a leader across a diverse set of global businesses," McKay said. "City National creates a powerful platform for long-term growth in the U.S., RBC's second home market."

That said, any deal comes with certain downsides.

Net operating leverage was negative 2.3%, including City National, and positive 1.3% without the company, Chief Financial Officer Janice Fukakusa said. Return on equity was 15.3%, down 260 basis points from last year, mostly because of the shares issued to fund half of City National’s purchase price, she said. RBC maintains a medium-term objective of 18%-plus return on equity.

RBC's Tier 1 common equity ratio was 9.1%, down 70 basis points. Adding City National created a 94-point drag – "slightly more than previous estimates" primarily because of foreign exchange rates on risk-weighted assets, Fukakusa said.

Moreover, gross impaired loans increased $835 million from the previous quarter. Officials blamed $657 million in loans acquired from City National, primarily associated with loans covered by loss-share agreements with the Federal Deposit Insurance Corp.

Nevertheless, "our integration is proceeding well and City National's results are ahead of plan, given strong core performance, helped by a favorable exchange rate," Fukakusa said.

RBC said it will provide more details about its plans for City National at an investor day set for March 4 in Toronto.

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