Following successful efforts to raise capital and trim loan problems, Beverly Hills, Calif.-based City National Corp. is shutting six branches to cut costs, the bank company said on Tuesday.
City National president George H. Benter Jr. said in an interview that the closures will eliminate 175 positions, about 12% of the company's total roster.
The cutback will leave City National with 16 full-service offices from Los Angeles to San Diego.
The bank declined to project cost savings from the cuts.
The company will book gains totaling $16.3 million over the next two quarters from a recent sale of real estate assets. In early November, the bank agreed to sell real estate loans and foreclosed property to a Goldman Sachs partnership for about $70 million.
The assets had an original book value of roughly $120 million written down to about $51 million, Mr. Benter said.
City National will take a $12 million restructuring charge in the fourth quarter in connection with the branch closures. For the quarter, the charge will be almost entirely offset by the gain from asset sales.
Cost Cutting a Priority
Slashing expenses is clearly a priority for City National. As it has recovered from loan problems and severe losses, the bank has shrunk its balance sheet dramatically. But that saddled it with a stratospheric expense-to-revenue ratio of over 78% in recent quarters.
Despite the recent shrinkage, City National, with $3 billion of assets, remains one of California's biggest independent banks. Going forward, the bank will focus on small and midsized companies and wealthy individuals, Mr. Benter said.
Earlier this year, City National raised $81 million in equity through a rights offering, boosting capital levels far above regulatory requirements.
