8. City Holding Company

Shares of City Holding Company ( CHCO) of Charleston, W.V., closed at $30.93 Friday, with a flat return over the previous year. Based on a quarterly payout of 34 cents, the shares have a dividend yield of 4.40%.

City Holding Company was the highest-yielding bank stock included in our previous list of 10 Bank Dividends with Room to Rise.

During the first quarter, the company repurchased 270,745 common shares at a weighted average price of $34.62, and said that as of March 31, it was authorized to buy back another 294,000 shares.

The company had $2.7 billion in total assets as of March 31, with 68 offices in West Virginia, Kentucky, and Ohio.

First-quarter net income was $9.6 million, or 62 cents a share, increasing from $9.3 million, or 58 cents a share, a year earlier. For both periods, the provision for loan losses was $1.1 million.

Service charge income declined 11% year-over-year to $9.1 million during the first quarter, showing the effects of the Electronic Funds Transfer Act and Federal Reserve Board Regulation E, with the new "opt-in rules" for expensive overdraft protection on ATM and debit transactions and the "implementation of an enhanced customer service providing 'real-time' processing of electronic transactions," combining to reduce checking account service fees.

Despite the fee revenue decline, City Holding Company's first-quarter return on assets of 1.44% was the highest among this group of 10 banks. The company's dividend payout ratio has ranged between 50% and 59% over the past five quarters.

Following the company's first-quarter earnings announcement, Kenneth James of Sterne Agee reiterated his neutral rating on the shares, saying they were likely to remain bound within a range of $30 to $35. The analyst lowered his 2011 earnings estimate by seven cents to $2.44 a share, and his 2012 estimate by 12 cents to $2.64 a share.

The analyst consensus is for City Holding Company to earn $2.48 a share for 2011. The shares trade for 12 times the consensus 2012 earnings estimate of $2.65 a share.

All nine analysts covering City Holding Company have neutral ratings on the shares.

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