City National Corporation (CYN)

CYN 
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City National Corporation (CYN)

F4Q11 Earnings Call

January 19, 2011 05:00 PM ET

Executives

Cary Walker - SVP and Manager of Corporate Communications

Russell Goldsmith - President and CEO

Chris Carey - CFO

Analysts

Steven Alexopoulos - JPMorgan

Joe Morford - RBC Capital Markets

Brian Klock - Keefe, Bruyette & Woods

John Pancari - Evercore Partners

Jennifer Demba - SunTrust Robinson Humphrey

Aaron Deer - Sandler O’Neill & Partners

Brett Rabatin - Sterne Agee

Steve Scinicariello - UBS Securities

Connor Fitzgerald - Bank of America-Merrill Lynch

Gary Tenner - D.A. Davidson

Brian Klock - Keefe, Bruyette & Woods

Operator

Good afternoon. My name is Stephanie and I will be your conference operator today. I would like to welcome everyone to this discussion of City National Corporation’s Fourth Quarter and year end 2011 Financial Results. At this time, all participants are in listen-only mode. After the speakers’ remarks, there will be a question-and-answer period for analysts and investors.

(Operator Instructions). This call is being recorded and will be available shortly after it is completed on City National’s website at cnb.com.

Now I’d like to turn the call over to Cary Walker, Senior Vice President and Manager of Corporate Communications for City National. Please proceed.

Cary Walker

Good afternoon. Here to discuss City National’s fourth quarter and year end 2011 highlights are Russell Goldsmith, our President and Chief Executive Officer, and Chris Carey, our Chief Financial Officer.

This call will include comments and forward-looking statements based on current plans, expectations, commitments and financial industry trends that may affect the company’s future operating results and financial position. These statements involve risks and uncertainties and future activities, and results may differ materially from these expectations. The speakers on this call claim the protection of the Safe Harbor provisions contained in the Securities Litigation Reform Act of 1995. For a more complete discussion of the risks and uncertainties that may cause actual results to differ materially from expected results, see the company’s Annual Report on Form 10-K for the year ended December 31, 2010.

This afternoon, City National issued a news release outlining its fourth quarter and year end 2011 financial results. To take a copy please visit our website at cnb.com. After comments by management today we we’ll open up your call to questions.

And now I'll turn the call over to our CEO, Russell Goldsmith.

Russell Goldsmith

Thank you very much and good afternoon. We appreciate everybody joining us for this quarterly call. As you know, City National just announced a very solid result for 2011. We are very pleased with the performance of City National both in the fourth quarter and throughout 2011. Despite the continuing very low interest rates in the country, continuing margin pressure and they are still slow growing economy, earnings for the fourth quarter at City National grew to $43.9 million or $0.82 a share which is up 11% from the fourth quarter of 2010 on a year-over-year basis, and net income for the year increased quite strongly by 37% to $172 million.

I am happy to tell you that assets, revenue and deposits all reached record levels for City National. Loan growth picked up in the second half of the year and credit quality continued to show very strong improvement. You know, sitting here at the end of the year, reflecting back on where City National and the country were just three years ago, we are particularly pleased with how City National has emerged from what has certainly been the worst economy in my lifetime.

City National today is bigger, better, safer and stronger than ever before, which I am not sure that everybody would have predicted three years ago. Since the financial crisis began in earnest in the fall of 2008, City National has added on a net basis, 17 banking offices and grown its deposits more than 60% by about $7.7 billion. And of that, our core deposit base is now 96% of our total deposit base, which is quite unusual.

We have essentially taken almost all of the construction risk out of our loan portfolio. We have added 267 colleagues on a net basis, which is almost 10% of our colleague base. Certainly we have added thousands of new clients and grown our capital. We bought four banks from the FDIC, repositioned and strengthened our private bank and our wealth management businesses, grown our physical and digital platforms substantially.

Through all of this, City National has had a consistent set of lending practices. We have been open for business in supporting and lending to our clients through this whole period. And we have grown our earning assets by more than 40% over these past three years.

And in every quarter of those three years, City National has been profitable. In fact, City National has been profitable in every quarter of the past 19 years. So, we have strengthened our balance sheet, enhanced our reputation, increased our market share, improved what we do for our clients, our shareholders, our colleagues and our communities.

Importantly over the past three years and going forward into 2012, City National remains unencumbered by many of the challenges still facing so many banks, especially the very largest ones. City National never loaded up on sub-prime loans, never bought broker mortgages or exotic derivatives. Nor did we fund mortgage backed securities.

We do not face foreclosure related legal challenges and we have no exposure to European debt. City National is highly personalized relationship driven client centric value proposition as the private and business bank, our broad product and service offering and the exceptional service, scale and relationships that are 3300 colleagues provide, continue to distinguish City National from other financial institutions, as they have for almost 60 years.

Read the rest of this transcript for free on seekingalpha.com