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Stocks Under $10 with 50-100% upside potential - 14 days FREE!

5 Expensive Bank Stocks Still Worth Buying (Update 3)

Stocks in this article: BAC C JPM WFC USB CYN TCBI OZRK INDB

1. City National Corp.

Shares of City National Corp. (CYN) of Los Angeles closed at $47.14 Monday, returning 7% year-to-date. Based on a quarterly payout of 20 cents, the shares have a dividend yield of 1.70%.

The company had $23.7 billion in total assets as of Dec. 30, and has expanded, in part, through purchases of failed banks from the Federal Deposit Insurance Corp., including most recently Nevada Commerce Bank of Las Vegas, last April.

City National reported fourth-quarter net income available to common shareholders of $43.9 million, or 82 cents a share, increasing from $41.4 million, or 77 cents a share, in the third quarter, and $39.7 million, or 74 cents a share, in the fourth quarter of 2010.

Net revenue grew 32% from the previous quarter and 36% year-over-year, to $94.5 million in the fourth quarter.

During the fourth quarter, City National booked $7.6 million in income from FDIC loss-sharing agreements, compared to loss-sharing expenses of $14.2 million the previous quarter and positive loss-sharing income of $26.3 million a year earlier. The major year-over-year improvements were growth of fourth-quarter net interest income to $201.6 million from $185.1 million, and a decline in noninterest expenses to $198.3 million, from $204 million.

Average loans grew 7% year-over-year, to $12.2 billion in the fourth quarter, while average deposits grew 12% year-over-year, to $20.5 billion.

The company's ROA has ranged from 0.72% to 0.86% over the past year.

Morgan Stanley analyst Ken Zerbe has a neutral rating on City National, saying on Jan. 19 that aside from a higher-than-expected tax rate and the FDIC "covered loan accounting noise," the company achieved a "solid quarter," with loan growth and net interest income "outpacing expectations."

The shares trade for 1.5 times tangible book value and for 14 times the consensus 2012 EPS estimate of $3.48.

The shares rose slightly on Wednesday, to close at 47.58.

Interested in more on City National Corp.? See TheStreet Ratings' report card for this stock.

>>To see these stocks in action, visit the 5 Expensive Bank Stocks Still Worth Buying portfolio on Stockpickr.


-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.

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To submit a news tip, send an email to:

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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