City National profit drops 84%
A tough economy battered first-quarter earnings at City National Corp. of Beverly Hills, although deposits grew to a record high of $13.7 billion.
The largest bank based in Los Angeles County on Thursday reported that net income plummeted 84% for the first three months of the year to $7.6 million, or 4 cents a share, compared with $47.3 million, or 91 cents, a year earlier.
The company cut its dividend to 10 cents a share from 25 cents the previous quarter.
City National attributed the drop in earnings to a difficult economy, low interest rates, large losses on securities it was forced to sell in a down market and the payment of preferred dividends to the federal government for loans it received as part of the Troubled Asset Relief Program.
“If you take out the tremendous drop in interest rates and the increase in loan loss provisions, it covers the decline from a year ago,” Chief Executive Russell Goldsmith said.
Revenue was $192 million, down 16% from $228 million in the first quarter of 2008.
The Thomson Reuters poll of analysts showed that Wall Street was expecting City National to earn 22 cents a share on revenue of $222.7 million.
The company’s stock rose $1.58, or 4.75%, to $34.81 before the results were announced.
Cathay General Bancorp of Los Angeles, the holding company for Cathay Bank, also reported a drop in profit. Net income fell to $10.2 million, or 12 cents a share, from $27.3 million, or 55 cents, a year earlier. Cathay announced an 8-cent dividend, down 24% from the previous quarter.
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