City National’s profit sinks, dividend slashed
City National Corp. of Beverly Hills on Thursday joined the slew of banks reporting disappointing earnings, saying its fourth-quarter profit tumbled 86%.
The company joined another growing list of banks as well -- by slashing its dividend: The quarterly payout now will be 25 cents a share, down from 48 cents.
The largest bank based in Los Angeles County said it earned $6.5 million, or 13 cents a share, in the latest quarter, compared with net income of $46.9 million, or 96 cents, a year earlier.
Wall Street analysts had expected the bank to earn about 62 cents a share in the quarter, excluding certain items. On that same basis, reported profit was 50 cents a share. The company’s stock fell $2.59, or 7.3%, to $32.76 before the results were announced.
City National blamed the plunge in earnings on higher loan-loss provisions, write-downs of certain securities it holds and the payment of dividends to the government on the $400-million investment the U.S. Treasury made in the bank in November.
The bank, which has assets of $16.4 billion, was one of hundreds of financial institutions participating in the government’s program to bolster their capital. Critics have complained that the program hasn’t spurred lending by the banks that have gotten money from the government.
In reporting its results, City National made a point of noting that its average loan balances grew 9% over the course of 2008, to $12.1 billion, and that it boosted lending in the fourth quarter as well, even as the recession deepened.
City National doubled its provision for credit losses to $40 million in the fourth quarter from $20 million a year earlier.
Despite the sinking economy, Chief Executive Russell Goldsmith said the bank was “well-positioned to remain profitable this year.”
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