City Bank Announces 1st Quarter 2009 Results and Home Sales Through April 30, 2009

LYNNWOOD, Wash.--(Business Wire)--
City Bank (NASDAQ:CTBK) today announced a net loss of $8.02 million for the
quarter ended March 31, 2009, or $.51 per diluted share. The primary causes for
the net loss were the reduced interest income related to nonperforming assets, a
provision for loan losses of $5.63 million, and expenses of $5.00 million
relating to these assets in the first quarter of 2009. This compared to a
reported net income of $9.69 million, or $.61 per diluted share for the same
quarter in the prior year. This also compares to a loss of $64.88 million, or
$4.12 per diluted share reported in the fourth quarter of 2008.

Three Months Summary (In thousands, except ratios)
March 31 2009 December 31 March 31 2008
2008
Total Assets $ 1,370,683 $ 1,325,541 $ 1,309,029
Total Loans $ 1,029,959 $ 1,064,080 $ 1,213,422
Total Cash and Federal Funds $ 185,116 $ 111,632 $ 59,461
Net Income (Loss) $ (8,024 ) $ (64,884 ) $ 9,685
Non-Performing Assets $ 607,170 $ 601,193 $ 59,307
Net Interest Margin 1.08 % 1.87 % 6.09 %
Return on Average Assets (ROA) -2.41 % -19.58 % 3.11 %
Return on Average Equity (ROE) -22.82 % -125.30 % 18.09 %
Average Equity to Average Assets 10.58 % 15.63 % 17.21 %

During the last two quarters of 2008 and the first quarter of 2009, the Bank
experienced a significant increase in nonperforming assets primarily as a result
of the reduced ability of home builders to sell inventory in this period of
declining demand. City Bank defines nonperforming assets to include "accruing
loans past due ninety days or more, non-accrual loans, including loans where the
borrower is making cash payments of interest that we apply to principal in
accordance with GAAP, loans which have been restructured to provide a reduction
in or deferral of interest or floor rates or principal for reasons related to
the debtors financial difficulties, potential problem loans and loan
concentrations of related borrowers, and foreclosed real estate." During the 4th
quarter of 2008 and the 1st quarter of 2009 there was a significant downturn in
local economic conditions due to the national recession and the banking crisis.
These forces coupled with the Bank`s focus on residential real estate
construction lending have led to significant increases in nonperforming loans
and a higher provision for loan losses of $5.63 million for the quarter ended
March 31, 2009, compared to $85.95 million for the fourth quarter in 2008 and
$500 thousand for the first quarter of 2008. As of March 31, 2009, nonperforming
assets totaled $607.17 million, which represented 44.30% of total assets. The
total nonperforming assets reflects partial charge-offs to adjust loan balances
to collateral value. For the quarter ended March 31, 2009, the allowance for
loan losses was $40.56 million, which represents 3.88% of total loans compared
to .96% in the prior quarter of 2008.

Summary of Paid Homes Sales through March 31, 2009 ($ in Thousands)
Number of Paid Transaction Amount Paid

Total 286 $ 80,062

Average Balance per transaction $ 280

Summary of Paid and Pending Homes Sales through April 30, 2009 ($ in Thousands)
Assets Categories Number of Paid Transaction Paid Number of Pending Pending Total

Transaction

Total 399 $ 116,003 171 $ 53,307 $ 169,310

Average Balance per transaction $ 291 $ 312

Conrad Hanson, President and CEO, commented, "We are encouraged by sales of
homes, both unit and dollar volumes during the first four months of 2009." As
the tables above indicate that the Bank has been conducting an orderly and
aggressive effort to dispose of residential properties securing the Bank`s
loans, which is already showing positive results. Since the beginning of January
up through April 30, 2009, over 399 homes representing over $116.00 million have
been sold and paid-off and over 171 properties have pending sales (signed
agreements with earnest money deposits) totaling $53.31 million for closing
dates primarily in May and June. These 570 transactions totaled $169.30 million
- averaging approximately $42.33 million per month in closed or pending
agreements.

City Bank, despite being impacted by these industry wide problems, has always
expressly provided for the possibility of such an economic downturn by
historically maintaining capital at significantly higher than the average
levels. The following table summarizes the Bank`s Shareholders` Equity and
Allowance for Credit Losses, as reported on a GAAP basis:

March 31, 2009 December 31, 2008 March 31, 2008

Shareholders` Equity ($000`s) $ 133,129 $ 141,157 $ 217,393
Allowance for Credit Losses ($000`s) $ 40,560 $ 34,990 $ 11,644
$ 173,689 $ 176,147 $ 229,037

The above table indicates that during 2009, the Bank`s Shareholders` Equity was
reduced by the impact of the net loss in the first quarter of 2009 and an
unprecedented loan loss provision of $119.05 million in 2008. However, at the
same time, the Bank built up the allowance for credit losses to $40.56 million
from $11.64 million for the same period in 2008. The combined total of
Shareholders` Equity and the Allowance for Credit Losses for first quarter of
2009, December 31, 2008 and March 31, 2008 are $173.69 million, $176.15 million
and $229.04 million, respectively. During the first quarter of 2009, the Bank
recorded net loan charge-offs of $56 thousand compared to $125 thousand for the
same quarter in 2008.

The following is the Bank`s Regulatory Capital and Ratios as of March 31, 2009,
December 31, 2008 and March 31, 2008:

Tier 1 (Core) Capital Tier 2 (Total) Capital Leverage Capital

Amount Ratio Amount Ratio Amount Ratio

Actual at March 31, 2009 $132,978 11.13% $148,222 12.41% $132,978 10.36%
Actual at December 31, 2008 $141,000 11.61% $156,424 12.88% $141,000 10.72%
Actual at March 31, 2008 $217,156 17.45% $228,805 18.36% $217,156 17.42%

At March 31, 2009 the Bank had Cash Equivalents (in the form of Cash, Cash in
Banks, Interest Bearing Accounts in Banks and Federal Funds Sold) which totaled
$185.12 million compared to $111.63 million at December 31, 2008 and $59.46
million at March 31, 2008. As of April 30, 2009, the Bank has further increased
liquidity in the form of Cash Equivalents to $214 million, which represents
approximately 16% of total assets.

Result of Operations

Interest income for the quarter ended March 31, 2009 was down 55.13% from the
comparable period in 2008. As a result of the weakening residential real estate
market, the Bank`s nonperforming assets increased from $59.31 million at March
31, 2008, to $ 601.19 million at December 31, 2008 and $607.17 million at March
31, 2009. Accrued interest of $603 thousand was reversed from income for the
quarter ended March 31, 2009 due to the transfer of nonperforming loans to
non-accrual status. Also contributing to the decrease in interest income was the
decline in short term interest rates during the latter part of 2008 (on which
the majority of the Bank`s interest-earning assets are priced) as evidenced by
the decline in the yield on the interest earning assets year over year. The
average yield on loans for the three months ended March 31, 2009 was 4.85%, down
from 9.89% for the same period in 2008, and net interest margin decreased to
1.08% compared to 6.09% in the same quarter in the prior year.

Interest expense for the quarter ended March 31, 2009 decreased 9.12% to $9.95
million compared to $10.95 million recorded in the comparable period in 2008.
The average cost of deposits and borrowed funds for the quarter ended March 31,
2009 decreased to 3.33%, down 111 basis points from 4.44% for the same period in
2008, reflecting a lower rate environment. Average interest bearing deposits and
borrowed funds for the quarter ended March 31, 2009 were $1.20 billion, a 21.29%
increase over the $986.60 million average for the comparable period in 2008.

Non-interest income of $1.07 million reflects a net decrease of $1.04 million or
49.34% for the quarter ended March 31, 2009 over the quarter ended March 31,
2008. The majority of this decrease was due to a non recurring pre-tax gain of
$1.22 million on the partial redemption of the Bank`s equity interest in VISA
Inc. (NYSE: V) in the first quarter of 2008. Non-interest income excluding VISA
reflected a net gain of $148 thousand primarily due to the net gains from sale
of loans.

Non-interest expense of $11.00 million for the quarter ended March 31, 2009
reflects a net increase of 109.81% or $5.76 million over the same period in
2008. The majority of the increase relates to losses and expenses on
nonperforming loans and foreclosed real estate, which increased by $5.00 million
over the same time frame in 2008. Audit Expense increased by $707 thousand due
to increased review of nonperforming assets. FDIC insurance expense increased by
$469 thousand compared to the same period in 2008, which is a function of the
Bank`s increased level of deposits and the higher rate of assessment applied to
all banks as a result of the national banking crisis. Offsetting the increases
was a decrease in salary and employee benefits expense by $1.25 million compared
to the same period in 2008, due to the reduction in the level of incentive
compensation.

At March 31, 2009, total assets were $1.37 billion, up 4.92% over March 31,
2008. Total loans decreased by 15.12% to $1.03 billion at March 31, 2009
compared to $1.21 billion at March 31, 2008. At March 31, 2009, deposits
increased 19.62% to $1.14 billion compared to $954.62 million at March 31, 2008.

City Bank`s return on average assets for quarter ended March 31, 2009 was
negative -2.41% compared to 3.11% for the same period in 2008. Return on average
equity was negative -22.82% for the quarter ended March 31, 2009, compared to
18.09% for the same period in 2008. The ratio of average equity to average
assets (Tier 1 Capital) for the quarter ended March 31, 2009 was 10.58% compared
to 17.21% for the same period in 2008.

Forward-Looking Statements

The previous discussion contains a review of City Bank`s operating results and
financial condition for the three months ended March 31, 2009 and twelve months
ended December 31, 2008. The discussion may contain certain forward-looking
statements, which are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Such statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from those stated, including, but not limited to, the Bank`s inability to
generate increased earning assets, sustain credit losses, maintain adequate net
interest margin, control fluctuations in operating results, maintain liquidity
to fund assets, retain key personnel, and other risks detailed from time to time
in the Bank`s filings with the Federal Deposit Insurance Corporation, including
our Annual Report on Form 10-K for the period ended December 31, 2008. Readers
are cautioned not to place undue reliance on these forward-looking statements.

City Bank is a state-chartered commercial bank founded in 1974 and headquartered
in Lynnwood, Washington. The Bank is publicly traded (NASDAQ: CTBK) and many of
the stockholders are local individuals. Eight banking offices serve both
Snohomish and North King counties. Three mortgage loan offices serve Snohomish,
King, Pierce and Clark counties. City Bank provides a wide range of banking
services for business and individuals, including loans for residential
construction, land development, mortgage, commercial, Small Business
Administration, consumer, and all types of deposits as well as other general
banking services.

Selected Financial Highlights(unaudited)
(In thousands, except per share data)
March December March Annual

Income Statement Data 2009 2008 2008 % Change
Interest income $ 13,328 $ 16,093 $ 29,706 -55.13 %
Interest expense 9,947 10,207 10,945 -9.12 %
Net interest income 3,381 5,886 18,761 -81.98 %
Provision for credit losses 5,626 85,951 500 1025.20 %
Net interest income (loss) after provision for credit losses (2,245 ) (80,065 ) 18,261 -112.29 %
Other noninterest income 1,067 730 1,902 -43.90 %
Expense related to nonperforming assets 4,998 17,742 174 2772.41 %
Other noninterest expense 5,998 2,727 4,863 23.34 %
Income (loss) before income taxes (12,174 ) (99,804 ) 15,126 -180.48 %
Provision (benefit) for income taxes (4,150 ) (34,920 ) 5,441 -176.27 %
Net Income ( Loss) $ (8,024 ) $ (64,884 ) $ 9,685 -182.85 %

Share Data
Actual shares outstanding 15,764 15,764 15,762 0.01 %
Earnings Per Share:
Basic earnings per common share $ (0.51 ) $ (4.12 ) $ 0.61 -183.61 %
Diluted earnings per common share $ (0.51 ) $ (4.12 ) $ 0.61 -183.61 %
Book value per common share $ 8.45 $ 8.95 $ 13.79 -38.77 %
Basic average shares outstanding 15,764 15,764 15,754 0.06 %
Fully diluted average shares outstanding 15,764 15,764 15,790 -0.16 %
Dividends paid per share $ 0.00 $ 0.06 $ 0.15 -100.00 %

Balance Sheet Data (at period end)
On balance sheet liquidity
Fed Funds Sold and Cash and Due From Bank $ 185,116 $ 111,632 $ 59,461 211.32 %
Investment securities $ 14,465 $ 14,483 $ 14,597 -0.90 %
Loans held for sale 16,009 4,744 5,410 195.91 %
Total on balance sheet liquidity $ 215,590 $ 130,859 $ 79,468 171.29 %
Loans, net of unearned income 1,029,959 1,064,080 1,213,422 -15.12 %
Allowance for credit losses 40,560 34,990 11,644 248.33 %
Total assets 1,370,683 1,325,541 1,309,029 4.71 %
Total deposits 1,141,922 1,088,091 954,616 19.62 %
Liabilities related to discontinued operations 854 847 826 3.39 %
Total Shareholders' Equity 133,129 141,157 217,393 -38.76 %

Selected Ratios
Return on average shareholders' equity -22.83 % -125.30 % 18.09 % -226.20 %
Average shareholders' equity to average assets 10.58 % 15.63 % 17.21 % -38.55 %
Return on average total assets -2.41 % -19.58 % 3.11 % -177.55 %
Net interest spread 0.94 % 1.37 % 5.21 % -81.96 %
Net interest margin 1.08 % 1.87 % 6.09 % -82.27 %
Efficiency ratio 247.08 % -309.26 % 24.98 % 889.06 %

Asset Quality Ratios
Allowance for credit losses $ 40,560 $ 34,990 $ 11,644 248.33 %
Allowance to ending total loans 3.88 % 3.29 % 0.96 % -5.44 %
Non-performing assets
Non-Accrual $ 435,549 $ 416,189 $ 50,204 767.56 %
Impaired loans still accruing $ 69,565 $ 84,733 $ 4,085 1602.94 %
90 days past due and still accruing $ 3,826 $ 313 $ 0 -
Foreclosed real estate $ 98,230 $ 99,958 $ 5,018 100.00 %
Total Nonperforming assets $ 607,170 $ 601,193 $ 59,307 100.00 %
Non-performing assets to total assets 44.30 % 45.35 % 4.53 % 877.72 %
Net (charge-offs) recoveries $ (56 ) $ (95,331 ) $ (125 ) -55.49 %
Net loan (charge-offs) recoveries (annualized) to average loans -0.01 % 7.95 % -0.01 % -57.23 %

City Bank
Conrad Hanson, 425-745-5933
President and CEO
investorrelations@citybankwa.com
Chantha Bunphoath, 425-745-5933
Chief Financial Officer
investorrelations@citybankwa.com

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