City National Corp.(CYN), the parent company of wholly owned City National Bank, Thursday said its third quarter profit nearly halved from a year ago, impacted by higher provision for credit losses. Revenue, however, grew 13% reflecting increased average securities balances, lower funding costs and a net securities gain.
For the third quarter, net income of City National halved to $8.04 million from $16.55 million in the same quarter a year ago.
Net income available to common shareholders, after dividend pay out under the United States Treasury Department's Capital Purchase Program, was $2.54 million or $0.05 per share, compared to $16.55 million or $0.34 per share in the year-ago quarter.
On average, 18 analysts polled by Thomson Reuters expected earnings of $0.09 per share for the quarter. Analysts' estimate typically excludes one-time items. Net income includes an $85 million provision for credit losses. After net charge-offs of $76.9 million, the third-quarter provision added a net total of $8.1 million to City National's allowance for loan and lease losses.
Allowance increased to $265.0 million, and now equals 2.18 percent of total loans and leases, compared to $256.0 million, or 2.06 percent of total loans and leases, at the end of the second quarter of 2009.
Revenue for the quarter grew 13% to $230.2 million from $203 million in the preceding year quarter, due mainly to increased average securities balances, lower funding costs and a net securities gain. Analysts expected revenues of $223.49 million for the quarter.
The company also continues to expect that the corporation will remain modestly profitable in 2009.
Net interest income for the third quarter grew 6% to $161.34 million from $152.80 million in the same quarter a year ago. Total non-interest income was $68.85 million, up 37% from $50.08 million in the year-ago quarter, reflecting significant securities losses in the year-ago period, compared to net securities gains in the third quarter of 2009.
In the preceding second quarter, City National's net income available to common shareholders was $1.3 million or $0.02 per share, compared to $35.5 million or $0.73 per share in the prior year period. Revenue for quarter was $219.8 million, down 5% from $232 million in the same quarter last year.
Amongst others in the industry, U.S. Bancorp (USB), the holding company for U.S. Bank National Association, reported a 4.7% increase in profit for the third quarter, as revenues grew 26% from last year due to higher net interest income and fee revenue. net income applicable to U.S. Bancorp was $603 million. Total net revenue was $4.25 billion.
Another player, Wells Fargo & Co. (WFC) posted higher profit for the third quarter, thanks to its Wachovia acquisition that more than doubled revenues. net income applicable to common stock was $2.64 billion, while quarterly revenue totaled $22.5 billion.
For the quarter under review, net interest margin of City National averaged 3.94%, down 29 basis points from the year-ago period. The corporation's average prime rate was 3.25%, down 175 basis points from the same quarter last year.
Total non-interest expense amounted to $143.77 million, down 2% from the third quarter of 2008, as lower personnel costs were offset by a $3 million increase in FDIC premiums and a $1.3 million lease write-off relating to an affiliate
Average deposit balances grew to a record $14.8 billion, up 26% from $11.7 billion in the third quarter of 2008. Average loans were $12.3 billion, up 1% from the same period last year. City National's assets under management totaled $34.9 billion as of September 30, 2009, while, nonperforming assets amounted to $452.2 million at September 30, 2009, compared with $396.3 million at June 30 of this year.
The company said its board again declared a 2009 quarterly common stock cash dividend of $0.10 per share, payable on November 18, 2009 to stockholders of record on November 4, 2009.
For the nine-month period, net income attributable to the company plunged to $22.27 million or $0.11 per share from $96.02 million or $1.98 per share in the prior-year period. Net interest income was $461.81 million, up from $451.14 million in the year-earlier period. Total non-interest income was $180.40 million, compared to $211.36 million in the prior-year period.
On September 29, 2009, brokerage, FBR Capital Upgraded City National shared to 'Mkt Perfrom' from 'Underperform,' with a mean target of $40.87.
CYN closed Thursday's regular trading at $41.54, up $1.64 or 4.11%, on a volume of 1.13 million share. In the last 52-week period, the stock traded in the range of $22.59 to $53.85, with a three-month average volume of 0.63 million shares.
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