City Holding Company is a financial holding company headquartered in Charleston,
West Virginia. The Company conducts its principal activities through its wholly-owned
subsidiary, City National Bank of West Virginia (“City National”).
City National provides banking, trust and investment management and other financial
solutions through its network of 85 banking offices located in the states of
West Virginia, Virginia, eastern Kentucky and southeastern Ohio. The Company’s
business activities are currently limited to one reportable business segment,
which is community banking.
Commercial Banking - City National offers a full range of commercial banking
services to corporations and other business customers. Loans are provided for
a variety of business purposes, including financing for commercial and industrial
projects, income producing commercial real estate, owner-occupied real estate
and construction and land development. City National also provides deposit services
for commercial customers, including treasury management, lockbox and other cash
management services. City National provides merchant credit card services through
an agreement with a third party vendor.
Consumer Banking - City National provides banking services to consumers, including
checking, savings and money market accounts as well as certificates of deposit
and individual retirement accounts. In addition, City National provides consumers
with installment and real estate loans and lines of credit. City National also
offers credit cards through an agreement with a third party vendor.
Mortgage Banking - City National provides mortgage banking services, including
fixed and adjustable-rate mortgages, construction financing, production of conventional
and government insured mortgages, secondary marketing and mortgage servicing.
Wealth Management and Trust Services - City National offers specialized services
and expertise in the areas of wealth management, trust, investment and custodial
services for commercial and individual customers. These services include the
administration of personal trusts and estates as well as the management of investment
accounts for individuals, employee benefit plans and charitable foundations.
City National also provides corporate trust and institutional custody, financial
and estate planning and retirement plan services.
The commercial and industrial loan portfolio consists of loans to corporate
and other legal entity borrowers primarily in small to mid-size industrial and
commercial companies. Commercial and industrial loans are considered to contain
a higher level of risk than other loan types although care is taken to minimize
these risks. Numerous risk factors impact this portfolio including industry
specific risks such as economy, new technology, labor rates and cyclicality,
as well as customer specific factors, such as cash flow, financial structure,
operating controls and asset quality.
Commercial real estate loans consist of commercial mortgages, which generally
are secured by nonresidential and multi-family residential properties. Commercial
real estate loans are to many of the same customers and carry similar industry
risks as the commercial and industrial loans.
City National diversifies risk within the commercial and industrial and commercial
real estate portfolios by closely monitoring industry concentrations and portfolios
to ensure that it does not exceed established lending guidelines. Diversification
is intended to limit the risk of loss from any single unexpected economic event
or trend. Underwriting standards require a comprehensive credit analysis and
independent evaluation of all larger balance commercial loans by the loan committee
prior to approval.
City National categorizes commercial loans by industry according to the North
American Industry Classification System (NAICS) to monitor the portfolio for
possible concentrations in one or more industries.
Residential real estate loans represent loans to consumers that are secured
by a first lien on residential property. Residential real estate loans provide
for the purchase or refinance of a residence and first-lien home equity loans
that allow consumers to borrower against the equity in their home. These loans
primarily consist of single family 3 and 5 year adjustable rate mortgages with
terms that amortize up to 30 years. City National also offers fixed-rate residential
real estate loans that are sold in the secondary market that are not included
on City Nationals balance sheet and City National does not retain the servicing
rights to these loans. Residential mortgage loans are generally underwritten
to comply with Fannie Mae guidelines, while the home equity loans are underwritten
with typically less documentation, but with lower loan-to-value ratios and shorter
maturities.
City Nationals home equity loans represent loans to consumers that are secured
by a second (or junior) lien on a residential property. Home equity loans allow
consumers to borrower against the equity in their home without paying off an
existing first lien. These loans consist of home equity lines of credit ("HELOC")
and amortized home equity loans that require monthly installment payments. Home
equity loans are underwritten with less documentation, lower loan-to-value ratios
and for shorter terms. The amount of credit extended is directly related to
the value of the real estate at the time the loan is made.
Consumer loans may be secured by automobiles, boats, recreational vehicles,
certificates of deposit and other personal property or they may be unsecured.
The Company monitors the risk associated with these types of loans by monitoring
such factors as portfolio growth, lending policies and economic conditions.
Underwriting standards are continually evaluated and modified based upon these
factors.
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