Long-Term Debt

The components of long-term debt are summarized below (in thousands):

The Company formed a statutory business trust, City Holding Capital Trust III (“Capital Trust III”), under the laws of Delaware. Capital Trust III was created for the exclusive purpose of (i) issuing trust-preferred capital securities (“Capital Securities”), which represent preferred undivided beneficial interests in the assets of the trust, (ii) using the proceeds from the sale of the Capital Securities to acquire junior subordinated debentures (“Debentures”) issued by the Company, and (iii) engaging in only those activities necessary or incidental thereto. The trust is considered a variable interest entity for which the Company is not the primary beneficiary. Accordingly, the accounts of the trust are not included in the Company’s consolidated financial statements.

Distributions on the Debentures are cumulative and will be payable quarterly at an interest rate of 3.50% over the three month LIBOR rate, reset quarterly. Interest payments are due in March, June, September and December each year until maturity. The Debentures are redeemable prior to maturity at the option of the Company (i) in whole at any time or in part from time to time, or (ii) in whole, but not in part, at any time within 90 days following the occurrence and during the continuation of certain predefined events.

Payments of distributions on the Capital Securities and payments on redemption of the Capital Securities are guaranteed by the Company. The Company also entered into an agreement as to expenses and liabilities with the trust pursuant to which it agreed, on a subordinated basis, to pay any cost, expenses or liabilities of the trust other than those arising under the Capital Securities. The obligations of the Company under the Debentures, the related indentures, the trust agreement establishing the trust, the guarantees and the agreements as to expenses and liabilities, in the aggregate, constitute a full and unconditional guarantee by the Company of the trust’s obligations under the Capital Securities. The Capital Securities issued by the statutory business trust qualify as Tier 1 capital for the Company under current Federal Reserve Board guidelines.

On September 26, 2018, the Board of Directors of the Company authorized repayment in whole of the Debentures issued by the Company and held by City Holding Capital Trust III at a price of 100% of the principal amount. After receiving all required regulatory approvals, City Holding Capital Trust III will repay its Capital Securities on December 17, 2018 at a price of 100% of the principal amount. These securities were issued on March 27, 2008 and were callable in whole anytime after June 15, 2013. The Company estimates that the redemption of the Debentures and Capital Securities will reduce the Company's interest expense by approximately $1.0 million annually through 2038. After giving effect to the redemption of the Capital Securities, the Company anticipates it will remain "Well Capitalized" as defined by the banking regulators (total Risk-based capital of at least 10%, Tier 1 Capital ratio of at least 6% and a leverage ratio of at least 5%).

September 30, 2018

December 31, 2017

Junior subordinated debentures owed to City Holding Capital Trust III, due 2038, interest at a rate of 5.83% and 5.09%, respectively