City Holding in Charleston, W.Va., reported slightly lower quarterly profit because of a shrinking net interest margin and fewer gains from prior acquisitions.

The $3.4 billion-asset company said in a press release Tuesday that its second-quarter net income fell 2% from a year earlier, to $12.8 million. Earnings of 80 cents a share were a penny less than the average of analysts polled by Bloomberg.

Net interest income fell 8%, to $28.9 million. The company attributed the decline to an "expected decrease in accretion" from its purchases of Virginia Savings in May 2012 and Community Bank in January 2013. Still, the net interest margin compressed 40 basis points, to 3.95%, offsetting a 2% increase in total loans, to $2.6 billion.

"We recognize that the economy remains stalled in a low-growth trajectory with many customers too uncertain about the future to buy homes or invest in growing their businesses," Charles Hageboeck, City Holding's chief executive, said in the release.

Asset quality improved. The company's loan-loss provision decreased by 84%, to $285,000. Net chargeoffs fell 43%, to $943,000.

Noninterest income rose 6%, to $15.1 million, though the company had $818,000 in securities gains.

Noninterest expenses held steady, at $24.3 million.

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