In the fourth quarter of 2012, the company recorded a $3.5 million non-cash net gain to reflect results of the quarterly update of cash-flow projections for the FDIC-covered loans. That total compared with $2.6 million in the third quarter. The fourth-quarter gain reflects a $6.5 million provision for losses on covered loans and an offsetting $10.0 million of noninterest income related to City National's loss-sharing agreements with the FDIC. In addition to the $3.5 million non-cash gain for the quarter, the company recognized $0.7 million of other covered assets expense. Income, net of expense, from FDIC-covered assets, excluding the base yield, totaled $2.8 million in the fourth quarter of 2012, up from $1.8 million in the third quarter of 2012. (The base yield is the yield on covered assets, excluding income related to covered loans that are repaid or charged off.)
City National will continue to update cash-flow projections for covered loans on a quarterly basis. Due to the uncertainty in the future performance of the covered loans, additional impairments may be recognized in the future.
OREO assets acquired by City National in its four FDIC-assisted bank acquisitions and subject to loss-sharing agreements totaled $58.3 million at December 31, 2012, compared to $98.5 million in the fourth quarter of 2011 and $83.6 million at the end of the third quarter of 2012.
NONINTEREST INCOMENoninterest income was $99.9 million in the fourth quarter of 2012, up 16 percent from the fourth quarter of 2011 but down 7 percent from the third quarter of 2012. The increase from the year-earlier period was due largely to City National's third-quarter 2012 acquisition of Rochdale, lease income from the First American acquisition and higher international services income. The decrease from the third quarter of 2012 was primarily attributable to lower distribution income from investments. City National's noninterest income totaled $357.6 million for the full year of 2012, up 5 percent from 2011.