City National (CYN) has become the latest recipient of government bailout money seeking to repay funds it received under the Troubled Asset Relief Program. The Los Angeles-based bank said Wednesday that it has repurchased $200 million worth of the $400 million in shares that were sold to the U.S. Treasury in 2008 under TARP, and pledged to repurchase the remaining $200 million in 2010, pending regulators' approval.%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%% The buyback will result in a one-time, non-cash charge of $4 million or 8 cents a share. The regional bank was forecast to earn 4 cents a share in the fourth quarter, based on a consensus estimate of 18 analysts compiled by Zacks.com. If that forecast holds, City National would record a loss of 4 cents a share in the quarter ending today, after accounting for the charge.
The bank, which has more than 60 branches in Southern California, the San Francisco Bay area, Nevada and New York City, has been known as "the Bank to the Stars" since it opened in Beverly Hills in the 1950s. It caters to high-net-worth individuals, as well as entrepreneurs and midsized businesses.
As a regional bank, City National is among many smaller banks that received bailout money under TARP. In seeking to repay its obligation in full, the bank appears on track to emerge as a strong survivor of the financial crisis, even as questions remain about its exposure to California's weak economy and shaky commercial real estate market, The Los Angeles Times reported.
Still, one industry expert sounded a positive note. "They are definitely in a position to repay it all," RBC Capital Markets analyst Joe Morford told the The Los Angeles Times. City National might get the regulators' OK to repay the balance of its TARP infusion by June if California's job picture improves, Morford told the newspaper.
City National isn't to be confused with National City, the former Cleveland-based bank that was bought by Pittsburgh-based PNC Financial (PNC) amid the financial-sector meltdown in October 2008, a deal was finalized later that year. National City was among several banks mortally exposed to losses caused by the collapse of the mortgage market; it recorded some $20 billion on bad mortgages and other debt.
On Wednesday, Wells Fargo (WFC) became the latest big bank to exit TARP by repaying the entire $25 billion that it had taken as aid in October 2008. In doing so, Wells Fargo joined Citigroup (C), and Bank of America (BAC), which repaid a combined $65 billion in TARP funds earlier this month.
What's your investing game plan?View Course »