City National's (NYSE:CYN) Credit Quality Improves for Fifth Straight Quarter

The credit quality of City National (NYSE:CYN) has improved for the fifth quarter in a row, but in order to grow, noted UBS, their loan portfolio will have to kick in.

UBS says, "Bottom-line, CYN's 4Q10 results evidenced its fifth straight quarter of material credit quality improvement. Positive growth in operating revenues continued despite a lack of loan growth thanks to fee income gains. While the announced doubling of its dividend to a 25% payout ratio reflects its strong capital position, we believe a return of more robust loan demand/higher short-term interest rates will be needed to drive the shares higher. Its 2011outlook calls for increased profitability on a continuation of asset quality improvement and lower credits cots. Its loan growth guidance remains cautious pointing to an only modest increase. We remain concerned with its NIM in this low rate environment and look for continued pressure near term. A solid franchise nevertheless."

"...we are maintaining our 2011 EPS estimate at $3.20, as lower credit-related costs substantially offset our reduced net interest margin forecast. Our inaugural 2012 EPS estimate is $3.45."

Barclays maintains a "Buy' rating on City National (CYN), which closed Friday at $59.37, down $2.75, or 4.43 percent. Barclays has a price target of $65 on City National.