City National Bank reports 8 percent profit growth, misses Wall Street targets
City National Corp.'s fourth-quarter earnings rose 8 percent on strong loan growth, especially from commercial and industrial lending, but its profit was hurt by low interest rates, generating results that missed Wall Street expectations.
The parent company of City National Bank earned $47.2 million, or 87 cents a share, compared with $43.9 million, 82 cents a share, in the fourth quarter of 2011. Analysts surveyed by Yahoo Finance had expected $1 a share.
Revenue in the fourth quarter rose
5 percent year-over-year to $303.6 million, slightly higher than analyst expectations of $300 million. Assets reached $28.6 billion at the end of 2012, up 21 percent from the fourth quarter of 2011.
City National operates eight branches in Southern Nevada with local deposits of $348.3 million.
"2012 was a very strong year of growth in earnings, assets, clients and capabilities," City National President and CEO Russell Goldsmith said. "Net income and revenue were up significantly, loan production set new records, deposits grew at double-digit rates, credit quality remained strong, and assets reached a new record."
City National released its earnings Thursday afternoon after the financial markets closed. Shares of City National lost 30 cents, or 0.57 percent, to close at $52.55 on the New York Stock Exchange.
Like many banks in Nevada, City National has seen its lending profits shrink as new loans are issued with lower interest rates. The bank's net interest margin - a measure of lending profitability - averaged 3.27 percent in the fourth quarter, down from 3.58 percent in the third quarter and 3.7 percent a year earlier.
City National's interest earnings were $209.1 million, up 1 percent from a year earlier but down 3 percent from the third quarter. The bank's provision for losses on loans rose from $2 million in the third quarter to $7 million in the fourth quarter.
In an earnings report, the bank cautioned investors and clients "rising loan balances may require a somewhat higher loan-loss provision." It also expects new income to "grow very modestly in 2013."
"Low interest rates and a very flat yield curve will continue to put pressure on the company's net interest margin," the bank said.
Contact reporter Chris Sieroty at
csieroty@reviewjournal.com or 702-477-3893.
Follow @sierotyfeatures on Twitter.
