Monday, City Holding Co. (CHCO), the holding company for City National Bank of West Virginia, said its second quarter earnings dipped from a year ago, falling short of Street estimates, as interest income declined and loan loss provisions increased.
The Charleston, West Virginia-based company's second-quarter net income decreased to $10.15 million or $0.64 per share from $13.38 million or $0.83 per share in the prior year period. On average, six analysts polled by Thomson Reuters expected the company to report earnings of $0.67 per share for the quarter.
For the quarter, the company recorded a provision for loan losses of $2.15 million, compared to $0.85 million in the prior-year period.
Net interest income slipped 7.9% to $23.44 million in the quarter from $25.47 million a year ago, while non-interest income slightly increased to $14.29 million from $14.2 million in the year-ago period. Analysts estimated revenues of $39.84 million for the period.
City noted that net interest income dipped as interest income from loans and investments decreased more quickly than interest expense on deposits and other interest bearing liabilities. Due to a decline in yield on loans of 106 basis points from the second quarter of 2008, interest income related to loans declined $4.0 million.
Net interest margin for the quarter decreased to 4.12% from 4.65% in the prior year quarter ended June 30, 2008.
City's chief executive officer, Charles Hageboeck said, "Due to the recession that the U.S. economy is experiencing, City's earnings are lower than historical levels, but continue to hold up relatively well as compared to many of our peers in the banking industry."
Hageboeck added that in particular, earnings were down significantly in the second quarter due to the costs of a special assessment from the FDIC - a cost borne by City, but created by losses at other banking institutions. Additionally, historically low interest rates are squeezing City's net interest income - as they have most retail-deposit focused banking franchises.
Loans decreased $26.0 million or 1.4% as on June 30, 2009, compared to December 31, 2008, due to decreases in commercial loans of $20.4 million or 2.7% and residential real estate loans of $15.0 million or 2.5%.
Total average depository balances increased $71.8 million or 3.4%, from the quarter ended March 31, 2009 to the quarter ended June 30, 2009, owing to increases in time deposits, savings deposits, interest bearing demand deposits and non-interest bearing demand deposits.
For the first half, the company posted net income of $21.07 million or $1.32 per share, down from $26.42 million or $1.63 per share in the corresponding period last year. Net interest income was lower at $48.19 million, compared to $49.4 million in the previous year. Non-interest income dipped to $26.72 million from $31.51 million in the prior year period.
CHCO is trading at $31.06, down $0.29 or 0.94%, on a volume of fifteen thousand the Nasdaq.
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