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City National Corporation Message Board

  • stuntroad stuntroad Dec 22, 2009 10:41 AM Flag

    Buying Nothing for Almost Nothing

    CYN buys Imperial in an FDIC assisted deal for a tiney deposit premium and gets a loss shareing agreement, adds a few billion of deposits and loans. Stock soars. So far, so good. Except the reason (in summary)that Imperial failed is that it had a very bad business model, so bad that it could not attract new capital during its final days. Bad assets funded by bad deposits (brokered deposits and borrowings). So CYN will add bad assets and bad deposits to its premier balance sheet and the stock soars? Something is very wrong here. Maybe CYN is able to pick up come branches cheaply (the physical locations - not the deposits), or maybe there is some ability to use the NOLs from Imperial to shelter CYN income (like Wells will be able to do with the acq of Wachovia), but surely all of the Imperial deposits will run off as the CDs mature and the rates are cut to City-like rates (lower), and the loan portfolio will generate some losses. This deal makes little sense on its face.

    City's management should be working on a bid for PCBC, which has an excellent footprint for City's banking model.

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    • Sun West and City National fit well together, especially given that all seven of Sun West’s banking offices are located in the northern and southern Nevada communities that City National now serves.

    • Stunt,

      "City's management should be working on a bid for PCBC, which has an excellent footprint for City's banking model"

      PCBC sure looks to be circling the drain. Looks like the Feds have cleared the decks and put this bank into the chop shop.

      Out of their 46 branches maybe Santa Barbara Bank and Trust would have some interest do you think? If this goes under ... looks like only pieces of it would be of interest if you follow CYN's business mode.

    • Stun,

      It is projected to add .17/share to earnings in 2010. They purchased some of the assets at a whopping .24 % premium, wow...

      FDIC takes most of the losses. For this to work for FDIC, they needed to give this screwed up bank to skilled bankers to straighten out. If assets can be sold ABOVE projected levels, then FDIC stands to pocket 80% to 95% of the recoveries.

      The FDIC takes it up the azz on the downside: 80%, and then 95% if it gets real bad.

      FDIC is looking for CYN to do their work and make them more money than they could get themselves because as we all know: "There is absolutely NO room for excellence in any government project."

    • NOTHING is right! They bought a failed bank with shady assets and 9 whole branches!!! BIG DEAL!