City National, Western Alliance report strong earnings

Two of Southern Nevada’s largest regional banks reported earnings increases for 2013, while a third financial institution expects to report a quarterly loss Monday because of fallout from the Volcker Rule.

City National Corp., parent of City National Bank, reported net income of $55.1 million, or 95 cents a share, for the fourth quarter ended Dec. 31, up 17 percent from $47.2 million, or 87 cents per share, from the same period in 2012.

For the year ended Dec. 31, City National posted net income of $230 million, or $3.99 per share, compared with $208 million, or $3.83 a share, in 2012.

CEO Russell Goldsmith attributed City National’s net income gain to an increase in new clients, a modest increase in loan demand, and “very sound and improving credit quality.”

Goldsmith told analysts the Los Angeles-based bank increased its earnings in 2013 despite “very low interest rates, margin pressure and the continuing … runoff of covered assets from our (Federal Deposit Insurance Corp.) bank acquisition some years ago.”

City National operates eight Nevada branches. Goldsmith said nearly all the key industries the bank focuses on, such as technology, entertainment, real estate, and health care are doing reasonably well.

“Even Nevada’s economy is showing some modest signs of improvement,” he said.

City National results, posted after markets closed Thursday, fell short of analysts’ estimates. Analysts expected quarterly earnings of $1.06, according to Yahoo Finance.

Western Alliance Bancorp. also posted a quarterly and annual profit despite a sluggish economy.

“One of the most important things we did to finish up there year doesn’t show up in the numbers, as we consolidated our three banks into one legal charter,” Western Alliance Bancorp CEO Robert Sarver told analysts Friday in a conference call. “We merged Bank of Nevada and Torrey Pines into Western Alliance Bank in Arizona.”

Sarver said net income for the fourth quarter, ended Dec. 31, was $31.4 million, or 36 cents per share, compared with $32.1 million, or 37 cents per share, a year earlier.

For the year, Western Alliance’s income was $114.5 million, or $1.31 a share, compared with $72.8 million, or 83 cents a share a year earlier.

Bank of Nevada, which operates 11 branches in Las Vegas, Henderson, North Las Vegas and Mesquite, reported fourth-quarter net income of $13 million, up from $7.6 million a year earlier.

Loans decreased $102 million in the quarter, because of a drop in commercial real estate and commercial and industrial loans. Overall, Bank of Nevada’s loan portfolio ended 2013 up $102 million to $2.29 billion.

Meanwhile, Zions Bancorp, the parent of Nevada State Bank, has revised its original forecast that the new Volcker Rule would eliminate its quarterly profit, saying the loss will be about half of what it expected after regulators eased enforcement.

The Volcker Rule, named for former Federal Reserve Chairman Paul Volcker, was introduced after the 2008 recession and restricted trading for financial institutions. The rule separates investment banking, private equity and proprietary trading from a financial institution’s commercial lending business.

Zions will report a net loss of 31 cents to 33 cents a share on Monday. In a statement, the Salt Lake City-based company said costs for disposing of trust-preferred collateralized debt obligations will be $135 million to $145 million.

In December, Zions estimated the cost at $387 million. Zions said it expects to sell a portion of its collateralized debt obligation portfolio as part of its overall effort to manage risk.

The quarterly loss includes charges for those collateralized debt obligation sales, as well as an $80 million one-time expense for the retirement of subordinated debt. Zions said it will likely resubmit its 2014 capital plan to the Federal Reserve because of the change in the Volcker Rule.

Contact reporter Chris Sieroty at csieroty@reviewjournal.com or 702-477-3893. Follow @sierotyfeatures on Twitter.