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City National Trims Year's Profit Forecast

The bank posts a solid third quarter, but looming loan problems are cause for concern.

October 17, 2002|E. Scott Reckard | Times Staff Writer

City National Corp. said Wednesday that third-quarter profit rose nearly 30%, but it trimmed its forecast for full-year earnings growth as it increased its provisions for troubled loans.

The bank, based in Beverly Hillls, earned $48.7 million, or 94 cents a share, compared with $37.5 million, or 75 cents a share, a year earlier. Adjusted for an accounting change, year-earlier earnings were $40.7 million, or 82 cents a share.

City National has recorded increases in deposits, loans and profit despite the weak economy, Chairman Russell Goldsmith said.

But even though lending this year will grow 15% to 16%, loan growth slowed in the third quarter, City National said. It revised its upper estimate of earnings growth for 2002 to 10% from 11%.

The bank wrote off $19 million in loans as uncollectable in the third quarter, compared with $6.6 million in the third quarter of 2001. Provisions for bad loans will total $65 million to $75 million this year, the bank said, up from earlier estimates of $45 million.

Analysts expected City National to earn 89 cents a share. Excluding a one-time tax benefit of $4.6 million, profit would have been 86 cents to 87 cents, said Putnam Lovell Securities analyst Jacqueline Reeves, who rates the bank "hold" because of worries about loan quality.

City National shares fell $5.01, or 10.5%, to $42.86 on the New York Stock Exchange on Wednesday.

Separately, Newport Beach thrift Downey Financial Corp. said third-quarter profit fell 33% to $14.5 million, or 52 cents a share, from $21.8 million, or 77 cents a share, as mortgage refinancings eroded the value of its home-loan servicing business.

Downey's shares fell 26 cents to $36 on the NYSE.

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