City National profit rises 20%
City National Corp.'s third-quarter profit rose 20% despite the sluggish economy, with commercial loan balances up 15% from a year earlier and a continuing surge in deposits at the private bank and business lender.
This post has been corrected. See note at bottom for details.
The L.A.-based parent of City National Bank said it earned $41.4 million, or 77 cents a share, compared with $34.4 million, or 65 cents, in the third quarter of 2010. The bank's revenue totaled $269 million, up 6% from $255 million a year earlier but down 5% from the second quarter.
The results, which missed Wall Street's expectations of 83 cents a share, were announced after the close of trading Thursday. In regular trading, City National shares had risen 41 cents, or 1%, to $40.83. The stock is down more than 22% over the last year.
City National said it made its first provision this year for loan losses: $7.5 million. Like many other banks, it also is seeing tighter profit margins on its basic business of accepting deposits and making loans because interest rates are so low.
Chief Executive Russell Goldsmith said total assets were up 6% from a year earlier and had topped $23 billion for the first time at the end of the quarter. Deposits, at $19.7 billion, were up 8% -- a reflection of how cautious City National's clientele of business owners and other affluent individuals remain in what Goldsmith described as the tepid economy.
"Corporate America is hoarding cash," Chief Financial Officer Chris Carey said during a conference call with analysts. "And high-net-worth clients, I can tell you, are hoarding cash."
In other L.A.-area bank earnings, Pasadena's East West Bancorp said Wednesday that its net income rose 33% in the third quarter to $62.4 million on strong loan growth. Cathay General Bancorp of Los Angeles said its quarterly profit was up 51% at $26.1 million, with fewer delinquent loans and a jump in commercial lending.
[For the record, 6:52 p.m.: An earlier version of this post said East West Bancorp announced earnings Tuesday. The announcement was Wednesday.]
-- E. Scott Reckard
Photo: City National Bank branch at Wilshire Boulevard and Fairfax Avenue in Los Angeles. Credit: Eduardo Aparicio via Flickr