In one of the most ominous signs so far that the Southern California economy is in free-fall, City National Corp. reported a second-quarter loss of $62.6 million.

The huge loss for Beverly Hills-based City National reflected a $95 million addition to loan loss reserves, a 20-fold increase over the provision made in the first quarter.

Nonperforming assets at California's largest independent bank rose 14.4% during the quarter, to $252.1 million. And Tier 1 capital, though still a comfortable 8.26%, was down from 9.37% a year ago.

"I was shocked," said Campbell K. Chaney, an analyst with Sutro & Co., San Francisco, who had forecast a second-quarter profit. "It suggests a real-estate-based recession in Southern California that's going off the scale."

City National, with $4 billion in assets, is a business-oriented bank with an extensive real estate loan portfolio. The company earned $4.7 million in this year's first quarter after reporting a $21.2 million loss for all of 1991.

In its earnings report, the company noted that the region's business climate and real estate market continued to worsen. It predicted the slump would affect earnings "in the second half and beyond."

While City National's results were taken as a warning alarm on the region's banking conditions, analysts noted that the arrival of a new number two executive may have magnified the loss.

City National in April named George H. Benter Jr. as its president and chief operating officer.

Analysts speculated that Mr. Benter, formerly chief credit officer at Security Pacific Corp.s flagship California bank, may have insisted on a massive cleanup of the company's loan portfolio.

However, a company spokesman denied that Mr. Benter played a special role in shaping the quarter's results.

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