City National 3Q14 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

$32 B in assets

“City National’s assets grew to $32 billion, up 10% from a year ago. Loans, deposits and wealth management income all increased at double-digit rates from the third quarter of last year, and credit quality improved even further and remained sound.”

Real estate contributed a lot of the loan growth

“Residential lending for our clients, largely in our entertainment and private client businesses, accounted for around 1/4 of the loan growth in the third quarter. The remaining growth came from a variety of areas but primarily from construction and finished commercial properties in all of our markets, but especially in the San Francisco Bay Area.”

The inland empire has become fastest growing region in Southern Cal

“the Inland Empire, where we have offices and was the region hardest hit by the recession in Southern California, has now become the fastest-growing economic region in Southern California. Job growth in Riverside and San Bernardino counties is up 2.7%, reflecting some very strong business formation. Economic growth there is being driven by a lower housing cost and the region’s pivotal role as a distribution hub for merchandise that comes into and goes out of the ports of Los Angeles and Long Beach”

Seeing construction activity (I don’t see any cranes in LA for what it’s worth)

“We’re seeing a lot of construction activity. For example, if you come to downtown Los Angeles or downtown San Francisco, you will see more cranes on the skyline than I’ve seen in over 30 years. ”

Expect another quarter of strength in 4Q

“As we talk to clients, I think we’ve been getting a lot of positive feedback across a broad range of industries. It’s kind of when Labor Day passes, it’s like somebody lowering the flag on a NASCAR track, and the cars take off of a bit. So we expect the fourth quarter to be another solid quarter for the company.”

Growing the sales force in addition to back office

“we’ll grow our specific sales force in the 8% to 10%. It’s be — some of it will be just the timing because we have — but there’s always people on the pipeline that we’re looking to bring in. We really — we feel pretty good about what we’ve done on the hiring front. We certainly self hired some people in compliance and beefed that up as everyone has, and we’ve added more people to our tech staff as we continue to work on really a lot of new products and client-facing technologies there.”

Adding people in every geography

“on a net basis, we’re adding people virtually in every geography we’re in, in California and New York.”

Deposit growth has come from existing clients

“It’s certainly very heavily skewed towards existing clients, at least 80% existing and maybe even higher. I don’t have the specific number. We have some people — I just talked to someone before the call. I have to get a little more color on it, but it’s certainly skewed towards existing.”

Trends look pretty good

“our pipelines looking forward, while not a perfect indicator, do look to be very solid pretty much across the board, and we came into the end of the quarter with a significant momentum. So that, combined with the kind of anecdotal, on-the-ground input that we get from our clients every day plus the statistical information that we’re picking up that I tried to mention at the beginning of the call, I think all of that combined, even though we all recognize that there are a lot of headlines and events that occur and softness globally that affects the psychology and to some degree, the business, there’s a certain amount of kind of a peripatetic quality that happens as people follow headlines. But I think what we’re trying to point out is on the ground, we’re seeing a fairly solid, fairly steady improvement in the economy, and the trends continue to look good as we look to the end of this year.”