City National 3Q14 Earnings Call Notes

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.”

City National Bank 1Q14 Earnings Call Notes

A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.

Strength in C&I, residential and commercial mortgages

“C&I lending which increased 19% from the first quarter of last year was responsible in this quarter for just over two-thirds of the growth linked quarter-to-quarter. Residential and commercial real estate mortgages also made strong contributions.”

Rising optimism in client base

“Overall, we are seeing rising optimism in our client base.”

Seeing strength across the board

“I think that we’re seeing it across the board as I was just suggesting; technology, franchise, finance, equipment leasing, construction I mentioned, commercial and residential real estate mortgages. We’re still seeing very strong purchase activity in the mortgage space in our client base.”

Most pressure in middle market lending

“middle market lending is where there’s the most pressure. I mean you have less people doing real estate lending or I think you’re seeing some of that’s come back now, it might help us. People have flocked into that and that’s put more pressure on the pricing behind that price and I said a little bit around the specialty areas tend to have less pressure but by the way some of them, franchise get some pressure on the pricing.”

Construction coming back

“I think we are seeing signs that construction levels are picking up and with that that construction lending is an opportunity that’s picking up. I think it is noteworthy that I think loans in this space and projects in this space are getting underwritten on a more conservative basis with more capital, more equity in the deal. So, we’re encouraged by that but it’s a little early in the year to really know for sure. But we think there’s going to be some positive growth here on a sound footing for City National. If we drive around the markets that we’re in, you’re seeing levels of construction, you’re seeing cranes that we all bought four years ago that all moved to China.”

City National Bank 4Q13 Earnings Call Notes

A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.

Loan demand not as robust as 2013

“I don’t think we’re taking a more conservative approach. I think we have a very measured credit standards, and we don’t see those changing in 2014. I think it’s really just a reflection of our outlook for the economy, the general level of loan demand. We had, I think, very strong growth this year and attracted a strong group of new clients. We think we will have another very solid year of growth in 2014. But at this point, we’re not projecting quite as robust a level of growth, just given the general economic conditions and low levels of loan demand.”

Hoping that short term rates increase

“Yes, we are not predicting short-term rates are going to increase in 2014. So without short-term rates increasing, our best guess is likely that our liquidity is still going to stay high. I hope I’m wrong, and I hope they increase”

Optimism in real estate

“I think there’s a tone of additional optimism in the real estate space and in the commercial space. And our pipelines are actually looking pretty good across the company. So the kind of outlook that we’re giving you does reflect the sense that loan demand is going to continue on the trend that we saw in the second half of the year.”

City National Bank 3Q13 Earnings Call Notes

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. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“In the quarter, City National grew its assets, loans and deposits by double digits to new record levels. For the first time, City National’s assets reached $29.1 billion, which is a very strong 11% increase from the year-ago.”

“the specialty areas where we have been investing and expanding, where we have significant expertise and where we provide a particularly strong value proposition to certain sectors of the economy that are more robust than the economy is at the moment as a whole.”

“Some of these specialty areas that have been particularly strong for City National include, of course, our very strong entertainment division, which as you know is not only in Beverly Hills and growing in New York, but also in Nashville and Atlanta.”

“the August unemployment rate for the entire state of California stood at 8.9%. But conditions are considerably better principally in the areas we are in. For example, the unemployment rate in the San Francisco Bay Area is just 5.6%. And in Orange County, which has 3 million people all by itself, unemployment is just 5.2%.”

“even Nevada is showing some improvement. But clearly, the economy there is lagging behind the other economies that we’re in. But it was interesting to see in Las Vegas yesterday, cranes up as there’s construction of some new offices, hotels even, and homes. ”

“Credit quality improved steadily through the first 9 months of 2013. City National has not recorded any provisions this year. And the company remains well-reserved.”

“We’re not — we don’t budget on or plan on making any acquisitions. And frankly, I like the position we’re in now, the base that we’ve got and the geographies we’re in and the businesses that we’re in. And we’re more focused really on organic growth”

“I do tend to think that sellers still overvalue the worth of their businesses. And I also think that you’re seeing activity, but you’re likely to see it kind of more amongst the smallest banks who I think are particularly challenged in this environment”

“in this rate environment, our earnings are still significantly compressed. ”