City National cuts dividend as earnings plunge
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City National Corp. of Beverly Hills today 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 quarter ended Dec. 31, compared with net income of $46.9 million, or 96 cents a share, during the final quarter of 2007.
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 today before the results were announced.
City National blamed the plunge in earnings on higher loan-loss provisions, write-downs of certain securities holdings and payment of dividends on the $400 million investment the U.S. Treasury made in the bank in November.
City National, which has assets of $16.4 billion, was one of hundreds of banks participating in the government’s program to bolster financial companies’ capital -- an effort to spur lending and help lift the economy. . . .
The bank 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:
In the fourth quarter alone, City National renewed approximately $1 billion of loans and made approximately $340 million of new loans to new and existing clients, including consumers, homeowners, entrepreneurs, and small and mid-size businesses.
The company didn’t report the volume of loans it had not renewed or the extent to which it had trimmed back credit lines -- actions that have generated complaints to The Times by some City National customers.
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, CEO Russell Goldsmith said the bank was ‘well-positioned to remain profitable this year.’
-- E. Scott Reckard