City National Bank in Los Angeles said Thursday that its second-quarter profit rose 5% from the same period last year, driven by heavier demand for commercial loans.
The $33.8 billion-asset bank, which has agreed to sell itself to Royal Bank of Canada, posted net income of $68.5 million, or $1.09 a share, beating a consensus of analysts' estimates by a penny.
Second-quarter loan and lease balances jumped 18%, to $21.3 billion, compared with a year earlier. Commercial loans rose 21% from a year earlier, to $10.7 billion. Commercial real estate construction loans were another big standout, nearly doubling to $878 million.
Interest income rose 9%, to $245.8 million. The net interest margin was 3.16%, down five basis points from a year earlier but 17 basis points higher than in the first quarter. The linked-quarter increase was due primarily to a large interest recovery on a legacy loan as well as higher income on loans partially covered by the Federal Deposit Insurance Corp. that were resolved in the second quarter.
Trust and investment fee income rose 7% from a year earlier, to $58.5 million. Assets under management rose 1% to $47.7 billion.
Chairman and Chief Executive Russell Goldsmith said the bank has "made good progress" towards the completion of its sale to Royal Bank of Canada, which is expected later this year. The deal was announced in January, and City National shareholders overwhelmingly voted for it in late May; regulatory approvals are still required.