City National Corp. late Thursday reported a 20 percent rise in third-quarter earnings. The results fell short of Wall Street expectations as Los Angeles County’s largest local bank took its first provision for loan losses this year.
The Los Angeles parent of City National Bank reported third-quarter net income of $41 million (77 cents per share), compared with $34 million (65 cents) in the same period a year earlier. Total revenue rose 6 percent to $269 million. Net interest income rose 7 percent to nearly $203.6 million, and noninterest income rose 4 percent to $69.6 million.
Analysts surveyed by Thomson Reuters on average expected per-share profit of 82 cents on revenue of more than $271 million.
The company took a $7.5 million provision for loan and lease losses, excluding loans covered by FDIC loss-sharing agreements. Chief Executive Officer Russell Goldsmith attributed the need to set aside reserves to the bank’s “good commercial loan growth,” but added that the company's overall credit quality continues to improve.
"In this challenging economic environment, City National completed another positive quarter as it again grew income, loans and deposits meaningfully, and for the first time assets exceeded $23 billion," said Goldsmith in a statement. "City National also is not burdened or distracted by mortgage-related issues and other headline-grabbing challenges that confront some other banks.”
Shares on Friday closed down $1.38, or 3.4 percent, to $39.45 on the New York Stock Exchange.