In the third quarter of 2013, City National recorded a $0.5 million non-cash net expense to reflect results of the quarterly update of cash-flow projections for the FDIC-covered loans, compared to a $1.5 million expense recorded in the second quarter of 2013. The third-quarter expense reflects a $2.5 million provision for losses on covered loans and an offsetting $2.0 million of noninterest income related to City National's loss-sharing agreements with the FDIC. In addition to the $0.5 million non-cash net expense for the quarter, the company recognized $3.2 million of other covered assets income.
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 FDIC-assisted bank acquisitions and subject to loss-sharing agreements totaled $29.8 million at September 30, 2013, compared to $83.6 million at the end of the third quarter of 2012 and $41.8 million at June 30, 2013.
NONINTEREST INCOMENoninterest income was $88.9 million in the third quarter of 2013, down 17 percent from the third quarter of 2012 but up 8 percent from the second quarter of 2013. City National's noninterest income for the first nine months of 2013 was up 3 percent from the same period of 2012. The decrease in noninterest income from the third quarter of 2012 was due largely to higher FDIC loss-sharing expense, which was partly offset by higher trust and investment income. Results for the third quarter of 2013 also included a $5.6 million net gain on securities, compared with net gains of $5.6 million in the second quarter of this year and $0.8 million in the third quarter of 2012. The increase in noninterest income from the second quarter of this year was due primarily to lower FDIC loss-sharing expense.