City Holding Company, “the Company” (NASDAQ:CHCO), a $3.5
billion bank holding company headquartered in Charleston, today
announced third quarter net income per diluted share of $0.69 and
net income of $10.6 million. For the third quarter of 2015, the
Company achieved a return on assets of 1.21%, a return on tangible
equity of 12.2%, a net interest margin of 3.62%, and an efficiency
ratio of 57.3%. For the nine months ended September 30, 2015, the
Company achieved net income of $40.6 million, a return on assets of
1.53%, a return on tangible equity of 15.9%, a net interest margin
of 3.81%, and an efficiency ratio of 55.4%.
Net Interest Income
The Company’s tax equivalent net interest income declined $0.9
million, or 3.2%, from $28.9 million during the second quarter of
2015 to $28.0 million during the third quarter of 2015. This is
primarily due to the decrease in accretion related to earlier
acquisitions of Virginia Savings and Community Bank ($1.1 million
for quarter ended September 30, 2015 compared to $1.6 million for
the quarter ended June 30, 2015). The Company’s reported net
interest margin decreased from 3.82% for the second quarter of 2015
to 3.62% for the third quarter of 2015. Excluding the favorable
impact of the accretion from the fair value adjustments, the net
interest margin would have been 3.48% for the quarter ended
September 30, 2015 and 3.60% for the quarter ended June 30, 2015.
The Company continues to originate a significant portion of its
commercial loans based on WSJ Prime or LIBOR and has elected to
keep fixed rate investment security balances at approximately 10%
of total assets and allow cash balances to increase. The Company
believes that these measures position its balance sheet to benefit
from a rising rate environment.
Credit Quality
The Company’s ratio of nonperforming assets to total loans and
other real estate owned increased from 0.84% at June 30, 2015 to
1.03% at September 30, 2015. Excluded from this ratio are purchased
credit-impaired loans in which the Company estimated cash flows and
estimated a credit mark. These loans are considered performing
loans provided that the loan is performing in accordance with the
estimated expectations. Such loans would be considered
nonperforming loans if the loan’s performance deteriorates below
the initial expectations. This increase was entirely related to a
single commercial customer engaged in the mining and energy sectors
(per the North American Industry Classification System (NAICS))
which filed for bankruptcy and for which the Company recorded a
charge off in the second quarter of 2015. Total past due loans
increased modestly from $9.6 million, or 0.36% of total loans
outstanding, at June 30, 2015 to $10.6 million, or 0.39% of total
loans outstanding, at September 30, 2015. Acquired past due loans
represent approximately 34% of total past due loans at September
30, 2015 and have declined $12.8 million, or 78%, since March 31,
2013.
As a result of the Company’s quarterly analysis of the adequacy
of the Allowance for Loan Losses (“ALLL”), the Company recorded a
provision for loan losses of $0.5 million in the third quarter of
2015, compared to $1.9 for the comparable period in 2014 and $2.8
million for the second quarter of 2015. The provision for loan
losses recorded in the third quarter of 2015 reflects the modest
growth in the loan portfolio, changes in the quality of the
portfolio and general improvement in the Company’s historical loss
rates used to compute the allowance not specifically allocated to
individual credits. For the nine months ended September 30, 2015,
the Company recorded provision for loan losses of $4.2 million and
net charge offs for the same period were approximately $3.4
million. Changes in the amount of the provision and related
allowance are based on the Company’s detailed systematic
methodology and are directionally consistent with changes in the
composition and quality of the Company’s loan portfolio. The
Company believes its methodology for determining the adequacy of
its ALLL adequately provides for probable losses inherent in the
loan portfolio.
Non-interest Income
Non-interest income decreased $0.8 million to $13.7 million in
the third quarter of 2015 as compared to $14.5 million in the third
quarter of 2014. The primary reason for this decrease was the sale
of CityInsurance effective January 1, 2015, which had insurance
commission revenues of $1.4 million in the third quarter of 2014.
This decrease was partially offset by an increase in other income
of $0.3 million primarily related to mortgage banking activities
and bank owned life insurance income of $0.2 million due to death
benefit proceeds.
Non-interest Expenses
Non-interest expenses increased $1.1 million, from $24.3 million
in the third quarter of 2014 to $25.4 million in the third quarter
of 2015. This increase was primarily related to an increase in
other expenses as the Company recognized a loss related to a
partnership investment in Mountaineer Capital LP. In 2000, the
Company’s former management team committed $2.8 million to an
investment in Mountaineer Capital LP that to date has returned $0.6
million. The Company has taken various write-downs totaling $0.8
million related to this investment. Based upon recently obtained
information from the partnership, the Company has concluded that it
will not receive any significant additional value from its
investment in Mountaineer Capital LP and has written down the
remainder of its basis in this investment of $1.4 million. In
addition, the Company realized losses of $0.5 million during the
third quarter of 2015 on the sale of repossessed assets and $0.2
million in merger related expenses in connection with the Company’s
forthcoming acquisition of three branches in Lexington, Kentucky
from American Founders Bank, Inc., a wholly-owned subsidiary of
Financial Holdings, Inc. These increases were partially offset by a
decrease in salaries and employee benefits of $1.0 million as a
result of the sale of CityInsurance.
Balance Sheet Trends
Loans increased $12.0 million (0.5%) from June 30, 2015 to $2.70
billion at September 30, 2015. Residential real estate loans
increased $32.6 million (2.5%) and junior lien home equity loans
increased $1.0 million (0.7%). These increases were partially
offset by a decrease in commercial and industrial (“C&I”) loans
of $17.6 million (12.4%) and commercial real estate loans of $3.2
million (0.3%). During the third quarter the decrease in C&I
loans outstanding was largely due to a C&I loan customer that
sold its business and repaid a $7.6 million loan.
Total average depository balances decreased $29.2 million, or
1.0%, from the quarter ended June 30, 2015 to the quarter ended
September 30, 2015. Decreases in savings deposits ($17.4 million),
time deposits ($17.2 million) and interest-bearing deposits ($3.6
million), were partially offset by an increase in
noninterest-bearing deposits ($9.1 million).
Income Tax Expense
The Company’s effective income tax rate for the third quarter of
2015 was 32.6% compared to 31.4% for the year ended December 31,
2014, and 33.6% for the quarter ended September 30, 2014. The
effective rate is based upon the Company’s expected tax rate for
the year ending December 31, 2015.
Capitalization and Liquidity
The Company’s loan to deposit ratio was 94.1% and the loan to
asset ratio was 76.9% at September 30, 2015. The Company maintained
investment securities totaling 11.2% of assets as of this date.
Further, the Company’s deposit mix is weighted heavily toward
checking and saving accounts that fund 53.7% of assets at September
30, 2015. Time deposits fund 28.0% of assets at September 30, 2015,
but very few of these deposits are in accounts that have balances
of more than $250,000, reflecting the core retail orientation of
the Company.
The Company continues to be strongly capitalized. The Company’s
tangible equity ratio was 10.1% at September 30, 2015 compared to
9.4% at December 31, 2014. At September 30, 2015, City National
Bank’s Leverage Ratio is 9.65%, its Common Equity Tier I ratio is
12.64%, its Tier I Capital ratio is 13.62%, and its Total
Risk-Based Capital ratio is 14.48%. These regulatory capital ratios
are significantly above levels required to be considered “well
capitalized,” which is the highest possible regulatory
designation.
On September 30, 2015, the Board approved a quarterly cash
dividend of $0.42 cents per share payable October 30, 2015, to
shareholders of record as of October 15, 2015.
City Holding Company is the parent company of City National Bank
of West Virginia. City National Bank operates 82 branches across
West Virginia, Virginia, Kentucky and Ohio.
On June 1, 2015, the Company announced that City National Bank
of West Virginia had executed an agreement to acquire three
branches in Lexington, Kentucky, from American Founders Bank, Inc.,
a wholly-owned subsidiary of Financial Holdings, Inc. The proposed
acquisition is expected to be completed in the fourth quarter of
2015, pending final regulatory approval and the completion of other
closing conditions. This acquisition is expected to be immediately
accretive to earnings per share.
Forward-Looking Information
This news release contains certain forward-looking statements
that are included pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Such information
involves risks and uncertainties that could result in the Company's
actual results differing materially from those projected in the
forward-looking statements. Important factors that could cause
actual results to differ materially from those discussed in such
forward-looking statements include, but are not limited to, (1) the
Company may incur additional loan loss provision due to negative
credit quality trends in the future that may lead to a
deterioration of asset quality; (2) the Company may incur increased
charge-offs in the future; (3) the Company could have adverse legal
actions of a material nature; (4) the Company may face competitive
loss of customers; (5) the Company may be unable to manage its
expense levels; (6) the Company may have difficulty retaining key
employees; (7) changes in the interest rate environment may have
results on the Company’s operations materially different from those
anticipated by the Company’s market risk management functions; (8)
changes in general economic conditions and increased competition
could adversely affect the Company’s operating results; (9) changes
in other regulations and government policies affecting bank holding
companies and their subsidiaries, including changes in monetary
policies, could negatively impact the Company’s operating results;
(10) the Company may experience difficulties growing loan and
deposit balances; (11) the current economic environment poses
significant challenges for us and could adversely affect our
financial condition and results of operations; (12) deterioration
in the financial condition of the U.S. banking system may impact
the valuations of investments the Company has made in the
securities of other financial institutions resulting in either
actual losses or other than temporary impairments on such
investments; (13) the effects of the Wall Street Reform and
Consumer Protection Act (the “Dodd-Frank Act”) and the regulations
promulgated and to be promulgated thereunder, which may subject the
Company and its subsidiaries to a variety of new and more stringent
legal and regulatory requirements which adversely affect their
respective businesses; (14) the impact of new minimum capital
thresholds established as a part of the implementation of Basel
III; and (15) other risk factors relating to the banking industry
or the Company as detailed from time to time in the Company’s
reports filed with the Securities and Exchange Commission,
including those risk factors included in the disclosures under the
heading “ITEM 1A Risk Factors” of the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2014.
Forward-looking statements made herein reflect management's
expectations as of the date such statements are made. Such
information is provided to assist stockholders and potential
investors in understanding current and anticipated financial
operations of the Company and is included pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995. The Company undertakes no obligation to update any
forward-looking statement to reflect events or circumstances that
arise after the date such statements are made. Further, the Company
is required to evaluate subsequent events through the filing of its
September 30, 2015 Form 10-Q. The Company will continue to evaluate
the impact of any subsequent events on the preliminary September
30, 2015 results and will adjust the amounts if necessary.
CITY HOLDING COMPANY AND SUBSIDIARIES Financial
Highlights (Unaudited)
Three Months Ended
September 30, Percent 2015
2014 Change Earnings
($000s, except per share data): Net Interest Income (FTE) $ 28,005
$ 29,622 (5.46 )% Net Income available to common shareholders
10,607 11,872 (10.66 )% Earnings per Basic Share 0.69 0.76 (9.63 )%
Earnings per Diluted Share 0.69 0.76 (9.27 )%
Key Ratios (percent): Return on Average Assets 1.21 %
1.40 % (14.04 )% Return on Average Tangible Equity 12.19 % 14.65 %
(16.79 )% Net Interest Margin 3.62 % 3.95 % (8.49 )% Efficiency
Ratio 57.26 % 54.74 % 4.61 % Average Shareholders' Equity to
Average Assets 11.90 % 11.78 % 1.05 % Consolidated Risk
Based Capital Ratios (a): CET I 14.42 % * N/A Tier I 15.08 % 13.36
% 12.87 % Total 15.95 % 14.21 % 12.24 % Tangible Equity to
Tangible Assets 10.14 % 9.58 % 5.80 %
Common Stock Data: Cash Dividends
Declared per Share $ 0.42 $ 0.40 5.00 % Book Value per Share 27.34
25.52 7.11 % Tangible Book Value per Share 22.72 20.67 9.93 %
Market Value per Share: High 51.73 46.44 11.39 % Low 45.56 41.20
10.58 % End of Period 49.30 42.13 17.02 % Price/Earnings
Ratio (b) 17.84 13.78 29.49 %
Nine Months Ended September 30, Percent
2015 2014
Change
Earnings ($000s, except per share data): Net Interest Income
(FTE) $ 86,464 $ 88,817 (2.65 )% Net Income available to common
shareholders 40,582 38,432 5.59 % Earnings per Basic Share 2.66
2.45 8.29 % Earnings per Diluted Share 2.65 2.44 8.73 %
Key Ratios (percent): Return on Average
Assets 1.53 % 1.51 % 1.21 % Return on Average Tangible Equity 15.87
% 15.90 % (0.21 )% Net Interest Margin 3.81 % 4.02 % (5.23 )%
Efficiency Ratio (c) 55.43 % 54.24 % 2.19 % Average Shareholders'
Equity to Average Assets 11.64 % 11.71 % (0.57 )%
Common Stock Data: Cash Dividends Declared per
Share $ 1.26 $ 1.20 5.00 % Market Value per Share: High 51.73 46.69
10.79 % Low 41.76 41.20 1.36 % Price/Earnings Ratio (b)
13.92 12.89 8.06 % (a) September 30, 2015 risk-based
capital ratios are estimated. (b) September 30, 2015 price/earnings
ratio computed based on annualized third quarter 2015 earnings. (c)
The September 30, 2015 YTD efficiency ratio calculation excludes
the gain on sale of insurance division. (*) Basel III CET 1 ratio
requirements are effective beginning January 1, 2015 and are not
required for prior periods.
CITY HOLDING COMPANY AND
SUBSIDIARIES Financial Highlights
(Unaudited)
Book Value and Market Price Range per Share
Market Price Book Value per Share Range per
Share March 31 June 30 September
30 December 31 Low
High 2011 $ 20.39 $ 20.58 $ 20.86 $ 21.05 $ 26.06 $
37.22 2012 21.46 21.63 22.14 22.47 30.96 37.16 2013 23.36 23.52
24.03 24.61 36.07 49.21 2014 25.05 25.45 25.52 25.85 41.20 46.95
2015 26.63 26.92 27.34 45.56 51.73
Earnings per Basic Share Quarter Ended
March 31 June 30 September 30
December 31 Year-to-Date 2011 $
0.62 $ 0.65 $ 0.77 $ 0.65 $ 2.68 2012 0.68 0.50 0.71 0.73 2.63 2013
0.51 0.83 0.89 0.84 3.07 2014 0.87 0.81 0.76 0.95 3.40 2015 1.18
0.78 0.69 2.66
Earnings per
Diluted Share Quarter Ended March 31
June 30 September 30 December
31 Year-to-Date 2011 $ 0.62 $ 0.64 $ 0.76
$ 0.65 $ 2.67 2012 0.67 0.50 0.71 0.73 2.61 2013 0.51 0.82 0.88
0.83 3.04 2014 0.86 0.80 0.76 0.95 3.38 2015 1.17 0.78 0.69 2.65
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited) ($
in 000s, except per share data) Three Months Ended
September 30, 2015
2014 Interest Income Interest and fees on
loans $ 27,875 $ 29,292 Interest on investment securities: Taxable
2,621 2,864 Tax-exempt 272 282
Total Interest
Income 30,768 32,438
Interest Expense Interest on
deposits 2,686 2,730 Interest on short-term borrowings 69 86
Interest on long-term debt 155 152
Total Interest
Expense 2,910 2,968
Net Interest Income
27,858 29,470 Provision for loan losses 451 1,872
Net Interest Income After Provision for Loan Losses 27,407
27,598
Non-Interest Income Gains on sale of
investment securities - 71 Service charges 6,907 6,934 Bankcard
revenue 3,895 3,796 Insurance commissions - 1,396 Trust and
investment management fee income 1,176 1,103 Bank owned life
insurance 929 771 Other income 799 538
Total
Non-Interest Income 13,706 14,609
Non-Interest
Expense Salaries and employee benefits 12,179 13,144 Occupancy
and equipment 2,575 2,531 Depreciation 1,522 1,542 FDIC insurance
expense 456 432 Advertising 777 799 Bankcard expenses 785 877
Postage, delivery, and statement mailings 523 557 Office supplies
384 405 Legal and professional fees 620 476 Telecommunications 418
510 Repossessed asset losses, net of expenses 492 31 Merger related
expenses 175 - Other expenses 4,471 3,021
Total
Non-Interest Expense 25,377 24,325
Income
Before Income Taxes 15,736 17,882 Income tax expense
5,129 6,010
Net Income Available to Common
Shareholders $ 10,607 $ 11,872 Distributed earnings
allocated to common shareholders $ 6,362 $ 6,073 Undistributed
earnings allocated to common shareholders 4,125 5,673
Net earnings allocated to common shareholders $ 10,487 $ 11,746
Average common shares outstanding 15,178 15,363 Effect of
dilutive securities: Employee stock options and warrants 20
82 Shares for diluted earnings per share 15,198
15,445 Basic earnings per common share $ 0.69 $ 0.76
Diluted earnings per common share $ 0.69 $ 0.76 Dividends declared
per common share $ 0.42 $ 0.40 Comprehensive Income $ 11,939
$ 11,460
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)
Nine months ended September 30, 2015
2014 Interest Income
Interest and fees on loans $ 86,075 $ 87,647 Interest on investment
securities: Taxable 7,974 8,797 Tax-exempt 803 840
Total Interest Income 94,852 97,284
Interest
Expense Interest on deposits 8,126 8,220 Interest on short-term
borrowings 236 246 Interest on long-term debt 458 453
Total Interest Expense 8,820 8,919
Net
Interest Income 86,032 88,365 Provision for loan losses
4,175 3,670
Net Interest Income After Provision for Loan
Losses 81,857 84,695
Non-Interest Income Gains on
sale of investment securities 2,130 972 Service charges 19,423
19,833 Bankcard revenue 11,971 11,319 Insurance commissions - 4,740
Trust and investment management fee income 3,577 3,251 Bank owned
life insurance 2,476 2,292 Gain on sale of insurance division
11,084 - Other income 2,471 1,646
Total
Non-Interest Income 53,132 44,053
Non-Interest
Expense Salaries and employee benefits 36,551 39,260 Occupancy
and equipment 7,694 7,541 Depreciation 4,549 4,553 FDIC insurance
expense 1,351 1,199 Advertising 2,182 2,548 Bankcard expenses 2,485
2,607 Postage, delivery, and statement mailings 1,591 1,662 Office
supplies 1,077 1,235 Legal and professional fees 1,729 1,497
Telecommunications 1,356 1,354 Repossessed asset losses, net of
expenses 1,047 552 Merger related expenses 283 - Other expenses
9,891 7,998
Total Non-Interest Expense
71,786 72,006
Income Before Income Taxes 63,203
56,742 Income tax expense 22,621 18,310
Net Income
Available to Common Shareholders $ 40,582 $ 38,432
Distributed earnings allocated to common shareholders $ 19,086 $
18,220 Undistributed earnings allocated to common shareholders
21,040 19,809 Net earnings allocated to common
shareholders $ 40,126 $ 38,029 Average common shares
outstanding 15,111 15,509 Effect of dilutive securities: Employee
stock options and warrants 21 85 Shares for diluted
earnings per share 15,132 15,594 Basic
earnings per common share $ 2.66 $ 2.45 Diluted earnings per common
share $ 2.65 $ 2.44 Dividends declared per common share $ 1.26 $
1.20 Comprehensive Income $ 41,181 $ 40,501
CITY HOLDING
COMPANY AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
(Unaudited) ($ in 000s) Three Months
Ended September 30, 2015 September 30,
2014 Balance at July 1 $ 411,240 $ 397,231
Net income 10,607 11,872 Other comprehensive income:
Change in unrealized (loss) gain on
securities available-for-sale
1,332 (412 ) Cash dividends declared ($0.42/share) and
($0.40/share), respectively (6,435 ) (6,169 ) Issuance of stock
award shares, net 370 321 Exercise of 42,500 stock options 1,653 -
Purchase of 262,205 common shares of treasury -
(11,170 )
Balance at September 30 $
418,767 $ 391,673
Nine Months Ended September 30, 2015
September 30, 2014 Balance at January 1 $
390,853 $ 387,623 Net income 40,582 38,432 Other
comprehensive income: Change in unrealized gain (loss) on
securities available-for-sale 599 2,069 Cash dividends declared
($1.26/share) and ($1.20/share), respectively (19,242 ) (18,681 )
Issuance of stock award shares, net 1,430 1,210 Exercise of 71,750
stock options 2,649 - Exercise of 19,000 stock options - 553
Exercise of 61,796 warrants 1,896 - Purchase of 456,856 common
shares of treasury - (19,533 )
Balance at
September 30 $ 418,767 $ 391,673
CITY HOLDING
COMPANY AND SUBSIDIARIES
Condensed Consolidated Quarterly Statements of Income
(Unaudited) ($ in 000s, except per share data)
Quarter Ended September 30 June 30
March 31 December 31 September 30
2015 2015
2015 2014
2014 Interest income
$ 30,768 $ 31,720 $ 32,364 $ 32,282 $ 32,438 Taxable equivalent
adjustment
147 144 142
164 152 Interest income
(FTE) 30,915 31,864 32,506 32,446 32,590 Interest expense
2,910 2,937 2,973
3,041 2,968 Net
interest income
28,005 28,927 29,533 29,405 29,622 Provision for loan losses
451 2,836 888
384 1,872 Net interest
income after provision for loan losses 27,554 26,091 28,645 29,021
27,750 Noninterest income 13,706 15,405 24,021 14,669 14,609
Noninterest expense 25,377 23,244
23,165 23,035
24,325 Income before income taxes 15,883
18,252 29,501 20,655 18,034 Income tax expense 5,129 6,125 11,367
5,961 6,010 Taxable equivalent adjustment 147
144 142 164
152 Net income $ 10,607 $ 11,983
$ 17,992 $ 14,530 $
11,872
Distributed earnings allocated to common shareholders $ 6,362 $
6,344 $ 6,315 $ 5,996 $ 6,073 Undistributed earnings allocated to
common shareholders 4,125 5,505
11,468 8,378
5,673 Net earnings allocated to common shareholders $
10,487 $ 11,849 $ 17,783
$ 14,374 $ 11,746 Average common shares
outstanding 15,178 15,104 15,067 15,096 15,363 Effect of
dilutive securities: Employee stock options and warrants 20
23 82
86 82 Shares for diluted
earnings per share 15,198 15,127
15,149 15,182
15,445 Basic earnings per common share $ 0.69
$ 0.78 $ 1.18 $ 0.95 $ 0.76 Diluted earnings per common share 0.69
0.78 1.17 0.95 0.76 Cash dividends declared per share 0.42
0.42 0.42 0.40 0.40
Net
Interest Margin 3.62 % 3.82 % 3.99 % 3.89 % 3.95 % Interest
Income from Accretion Related to Fair Value Adjustments Recorded as
a Result of Acquisition $ 1,056 $ 1,607 $ 2,450 $ 1,307 $ 1,836
Net Interest Margin (excluding accretion) 3.48 % 3.60 % 3.66
% 3.71 % 3.71 %
CITY HOLDING COMPANY AND SUBSIDIARIES
Non-Interest Income and Non-Interest
Expense (Unaudited) ($ in 000s) Quarter
Ended September 30 June 30 March 31
December 31 September 30 2015
2015 2015 2014
2014 Non-Interest Income: Service charges $
6,907 $ 6,589 $ 5,927 $ 6,750 $ 6,934 Bankcard revenue 3,895 4,002
4,074 3,744 3,796 Insurance commissions - - - 1,238 1,396 Trust and
investment management fee income 1,176 1,201 1,200 1,363 1,103 Bank
owned life insurance 929 783 764 778 771 Gain on sale of insurance
division - - 11,084 - - Other income 799 714 958
612 538
Subtotal 13,706 13,289 24,007 14,485
14,538 Gains on sale of investment securities - 2,116
14 184 71
Total Non-Interest Income $ 13,706
$ 15,405 $ 24,021 $ 14,669 $ 14,609
Non-Interest Expense: Salaries and employee benefits
$ 12,179 $ 12,193 $ 12,179 $ 12,489 $ 13,144 Occupancy and
equipment 2,575 2,529 2,590 2,449 2,531 Depreciation 1,522 1,516
1,511 1,534 1,542 FDIC insurance expense 456 445 450 448 432
Advertising 777 701 704 726 799 Bankcard expenses 785 829 870 948
877 Postage, delivery and statement mailings 523 507 561 549 557
Office supplies 384 347 346 360 405 Legal and professional fees 620
542 567 552 476 Telecommunications 418 463 475 522 510 Repossessed
asset gains, net of expenses 492 335 220 27 31 Merger related
expenses 175 108 - - - Other expenses 4,471 2,729
2,692 2,431 3,021
Total Non-Interest Expense $
25,377 $ 23,244 $ 23,165 $ 23,035 $
24,325
Employees (Full Time Equivalent)
828 844 845 889 908 Branch Locations 82 82 82 82 82
CITY HOLDING
COMPANY AND SUBSIDIARIES Consolidated Balance
Sheets ($ in 000s) September 30, 2015
December 31, 2014 (Unaudited) Assets
Cash and due from banks $ 109,627 $ 138,503 Interest-bearing
deposits in depository institutions 9,081
9,725
Cash and cash equivalents 118,708
148,228 Investment securities available-for-sale, at fair
value 300,865 254,043 Investment securities held-to-maturity, at
amortized cost 81,095 90,786 Other securities 9,926
9,857
Total investment securities
391,886 354,686 Gross loans 2,696,438 2,652,066 Allowance
for loan losses (20,941 ) (20,150 )
Net
loans 2,675,497 2,631,916 Bank owned life insurance
97,157 95,116 Premises and equipment, net 73,419 77,988 Accrued
interest receivable 7,690 6,826 Net deferred tax assets 33,342
36,766 Intangible assets 70,653 74,198 Other assets 36,266
35,909
Total Assets $ 3,504,618
$ 3,461,633
Liabilities
Deposits: Noninterest-bearing $ 542,177 $ 545,465 Interest-bearing:
Demand deposits 647,792 639,932 Savings deposits 693,184 660,727
Time deposits 982,349 1,026,663
Total deposits 2,865,502 2,872,787 Short-term borrowings
Customer repurchase agreements 147,036 134,931 Long-term debt
16,495 16,495 Other liabilities 56,818
46,567
Total Liabilities 3,085,851 3,070,780
Stockholders' Equity Preferred stock, par value $25 per
share: 500,000 shares authorized; none issued - - Common stock, par
value $2.50 per share: 50,000,000 shares authorized; 18,499,282
shares issued at September 30, 2015 and December 31, 2014 less
3,179,832 and 3,345,590 shares in treasury, respectively 46,249
46,249 Capital surplus 106,108 107,370 Retained earnings 383,551
362,211 Cost of common stock in treasury (113,581 ) (120,818 )
Accumulated other comprehensive loss: Unrealized gain on securities
available-for-sale 1,789 1,190 Underfunded pension liability
(5,349 ) (5,349 )
Total Accumulated Other
Comprehensive Loss (3,560 ) (4,159 )
Total Stockholders' Equity 418,767
390,853
Total Liabilities and Stockholders'
Equity $ 3,504,618 $ 3,461,633
CITY
HOLDING COMPANY AND SUBSIDIARIES
Investment Portfolio (Unaudited) ($ in 000s)
Original Cost
Credit-Related Net
Investment
Impairment Losses
through
September 30,
2015
Unrealized Gains
(Losses)
Carrying Value US Government Agencies $ 5 $ -
$ - $ 5 Mortgage Backed Securities 303,754 - 2,568 306,322
Municipal Bonds 42,254 - 448 42,702 Pooled Bank Trust Preferreds
18,381 (16,571 ) 35 1,845 Single Issuer Bank Trust Preferreds,
Subdebt of Financial Institutions, and Bank Holding Company
Preferred Stocks 27,541 (15 ) (1,072 ) 26,454 Money Markets and
Mutual Funds 1,525 - 4 1,529 Federal Reserve Bank and FHLB stock
9,926 - - 9,926 Community Bank Equity Positions 3,715
(1,584 ) 972 3,103
Total Investments $
407,101 $ (18,170 ) $ 2,955 $ 391,886
CITY HOLDING
COMPANY AND SUBSIDIARIES Loan
Portfolio (Unaudited) ($ in 000s)
September 30 June 30 March 31 December
31 September 30 2015
2015 2015 2014
2014 Residential real estate (1) $
1,358,083 $ 1,325,453 $ 1,303,258 $ 1,294,576 $ 1,274,062 Home
equity - junior liens 144,748 143,772 143,670 145,604 146,965
Commercial and industrial 124,495 142,065 132,127 140,548 139,220
Commercial real estate (2) 1,029,103 1,032,333 1,011,777 1,028,831
1,025,835 Consumer 36,751 37,555 38,436 39,705 41,042 DDA
overdrafts 3,258 3,279 3,203
2,802 3,618
Gross Loans $
2,696,438 $ 2,684,457 $ 2,632,471 $ 2,652,066
$ 2,630,742 Construction loans included in: (1) -
Residential real estate loans $ 14,765 $ 15,412 $ 17,459 $ 22,992 $
22,426 (2) - Commercial real estate loans $ 11,970 $ 4,043 $ 30,554
$ 28,652 $ 24,875
CITY HOLDING COMPANY AND SUBSIDIARIES
Acquisition Activity - Accretion
(Unaudited) ($ in 000s)
The following table presents the actual
and forecasted accretion related to the fair value adjustments on
net
interest income recorded as a result of
the Virginia Savings Bancorp ("Virginia Savings") and Community
Financial Corporation ("Community")
acquisitions.
Virginia Savings Community Loan
Certificates of Loan Certificates of Year
Ended: Accretion(a)
Deposit(a) Accretion(a)
Deposit(a) Total 1Q 2015 $ 123 $ 129 $
2,158 $ 40 $ 2,450 2Q 2015 189 129 1,249 40 1,607 3Q 2015 245 129
642 40 1,056 Remainder 2015 88 129 588 40 845 2016 247 497 1,358 48
2,150 2017 130 - 1,015 - 1,145 a - 1Q, 2Q & 3Q 2015
amounts are based on actual results. Remainder 2015, 2016 and 2017
amounts are based on estimated amounts.
Note: The amounts reflected in the table
above require management to make significant assumptions based on
estimated future default, prepayment, and discount rates. Actual
performance could be significantly different from that assumed,
which could result in the actual results being materially different
from the amounts estimated above.
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and
Rates (Unaudited) ($ in 000s) Three
Months Ended September 30, 2015 2014
Average Yield/ Average Yield/
Balance Interest Rate Balance
Interest Rate Assets: Loan portfolio
(1): Residential real estate (2) $ 1,482,445 $ 14,469 3.87% $
1,400,072 $ 14,077 3.99% Commercial, financial, and agriculture (2)
1,156,264 12,174 4.18% 1,155,269 13,733 4.72% Installment loans to
individuals (2), (3) 40,720 875 8.53% 44,801 995 8.81% Previously
securitized loans (4) *** 357 *** *** 487 *** Total
loans 2,679,429 27,875 4.13% 2,600,142 29,292 4.47% Securities:
Taxable 352,567 2,621 2.95% 335,760 2,864 3.38% Tax-exempt (5)
29,675 419 5.60% 28,199 434
6.11% Total securities 382,242 3,040 3.16% 363,959 3,298
3.60% Deposits in depository institutions 9,924 -
- 8,924 - -
Total interest-earning
assets 3,071,595 30,915 3.99% 2,973,025 32,590 4.35% Cash and
due from banks 156,575 107,550 Bank premises and equipment 74,543
79,865 Other assets 237,803 246,357 Less: Allowance for loan losses
(21,425) (20,893)
Total assets $ 3,519,091 $ 3,385,904
Liabilities: Interest-bearing demand deposits
644,375 122 0.08% 615,830 138 0.09% Savings deposits 691,600 165
0.09% 633,690 192 0.12% Time deposits (2) 989,149 2,399 0.96%
1,036,370 2,400 0.92% Short-term borrowings 135,274 69 0.20%
132,484 86 0.26% Long-term debt 16,495 155
3.73% 16,495 152 3.66%
Total
interest-bearing liabilities 2,476,893 2,910 0.47% 2,434,869
2,968 0.48% Noninterest-bearing demand deposits 594,821 522,083
Other liabilities 28,583 30,188 Stockholders' equity 418,794
398,764
Total liabilities
and stockholders' equity $ 3,519,091 $
3,385,904
Net interest income $ 28,005
$ 29,622
Net yield on earning assets
3.62% 3.95%
(1) For purposes of this table, non-accruing loans have been
included in average balances and loan fees, which are immaterial,
have been included in interest income. (2) Included in the above
table are the following amounts (in thousands) for the accretion of
the fair value adjustments related to the acquisitions of Virginia
Savings Bancorp ("Virginia Savings") and Community Financial
Corporation ("Community"): Three Months Ended
September 30, 2015 Three Months Ended September 30, 2014 Virginia
Savings Community Total Virginia Savings Community Total
Residential real estate $ 95 $ 162 $ 257 $ 103 $ 105 $ 208
Commercial, financial, and agriculture 130 446 576 169 1,110 1,279
Installment loans to individuals 20 34 54 43 119 162 Time deposits
129 40 169 135 52 187 $
374 $ 682 $ 1,056 $ 450 $ 1,386 $ 1,836 (3) Includes
the Company’s consumer and DDA overdrafts loan categories. (4)
Effective January 1, 2012, the carrying value of the Company's
previously securitized loans was reduced to $0. (5) Computed on a
fully federal tax-equivalent basis assuming a tax rate of
approximately 35%.
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance
Sheets, Yields, and Rates (Unaudited) ($ in 000s)
Nine Months Ended September 30, 2015
2014 Average Yield/ Average
Yield/ Balance Interest Rate
Balance Interest Rate Assets:
Loan portfolio (1): Residential real estate (2) $ 1,459,246 $
42,797 3.92% $ 1,373,854 $ 41,425 4.03% Commercial, financial, and
agriculture (2) 1,157,677 38,759 4.48% 1,158,198 41,308 4.77%
Installment loans to individuals (2), (3) 41,338 3,209 10.38%
46,209 3,284 9.50% Previously securitized loans (4) ***
1,310 *** *** 1,630 *** Total loans 2,658,262 86,075 4.33%
2,578,261 87,647 4.55% Securities: Taxable 340,585 7,974 3.13%
342,349 8,797 3.44% Tax-exempt (5) 29,222 1,235
5.65% 27,685 1,292 6.24% Total
securities 369,807 9,209 3.33% 370,034 10,089 3.65% Deposits in
depository institutions 9,790 - - 8,955
- -
Total interest-earning assets 3,037,859
95,284 4.19% 2,957,250 97,736 4.42% Cash and due from banks 202,423
127,229 Bank premises and equipment 76,273 81,038 Other assets
242,294 246,654 Less: Allowance for loan losses (20,960)
(21,194)
Total assets $
3,537,889 $ 3,390,977
Liabilities: Interest-bearing demand deposits 643,086 379
0.08% 612,720 479 0.10% Savings deposits 698,433 520 0.10% 628,996
597 0.13% Time deposits (2) 1,005,548 7,227 0.96% 1,052,625 7,144
0.91% Short-term borrowings 138,192 236 0.23% 128,230 246 0.26%
Long-term debt 16,495 458 3.71% 16,495
453 3.67%
Total interest-bearing liabilities
2,501,754 8,820 0.47% 2,439,066 8,919 0.49% Noninterest-bearing
demand deposits 584,046 522,341 Other liabilities 40,207 32,526
Stockholders' equity 411,882 397,044
Total liabilities and stockholders'
equity $ 3,537,889 $ 3,390,977
Net interest income $ 86,464 $ 88,817
Net yield on earning assets
3.81% 4.02%
(1) For purposes of this table,
non-accruing loans have been included in average balances and loan
fees, which are immaterial, have been included in interest
income.
(2) Included in the above table are the following amounts (in
thousands) for the accretion of the fair value adjustments related
to the acquisitions of Virginia Savings Bancorp ("Virginia
Savings") and Community Financial Corporation ("Community"):
Nine Months Ended September 30, 2015 Nine Months Ended
September 30, 2014 Virginia Savings Community Total Virginia
Savings Community Total Residential real estate $ 246 $ 451 $ 697 $
361 $ 363 $ 724 Commercial, financial, and agriculture 236 3,447
3,683 424 3,149 3,573 Installment loans to individuals 75 151 226
113 473 586 Time deposits 387 120 507
401 197 598 $ 944 $ 4,169 $ 5,113 $ 1,299 $ 4,182 $
5,481 (3) Includes the Company’s consumer and DDA
overdrafts loan categories. (4) Effective January 1, 2012, the
carrying value of the Company's previously securitized loans was
reduced to $0. (5) Computed on a fully federal tax-equivalent basis
assuming a tax rate of approximately 35%.
CITY HOLDING COMPANY
AND SUBSIDIARIES Analysis of Risk-Based Capital
(Unaudited) ($ in 000s) September 30 June
30 March 31 December 31 September 30
2015 (a)
2015 2015
2014 2014 Tier I Capital:
Stockholders' equity $ 418,767 $ 411,240 $ 405,075 $ 390,853 $
391,673 Goodwill and other intangibles (69,103 ) (69,153 ) (69,227
) (74,011 ) (74,247 ) Accumulated other comprehensive loss 3,560
4,892 3,253 4,159 2,921 Qualifying trust preferred stock 16,000
16,000 16,000 16,000 16,000 Excess deferred tax assets -
- (1,564 ) (3,838 )
(3,131 ) Total tier I capital $ 369,224 $ 362,979 $ 353,537 $
333,163 $ 333,216 Qualifying trust preferred stock (16,000 )
$ (16,000 ) $ (16,000 ) * * Total CET I capital $ 353,224 $
346,979 $ 337,537 * *
Total Risk-Based Capital: Tier I
capital $ 369,224 $ 362,979 $ 353,537 $ 333,163 $ 333,216
Qualifying allowance for loan losses 20,941 20,809 20,179 20,150
20,487 Unrealized gain on securities 447 600
704 560 630 Total
risk-based capital $ 390,612 $ 384,388 $ 374,420
$ 353,873 $ 354,333 Net risk-weighted
assets $ 2,449,191 $ 2,448,848 $ 2,404,331 $ 2,493,078 $ 2,493,938
Ratios: Average stockholders' equity to average assets 11.90
% 11.54 % 11.48 % 11.40 % 11.78 % Tangible capital ratio 10.14 %
9.89 % 9.60 % 9.35 % 9.58 % Risk-based capital ratios: CET 1
capital 14.42 % 14.17 % 14.04 % * * Tier I capital 15.08 % 14.82 %
14.70 % 13.36 % 13.36 % Total risk-based capital 15.95 % 15.70 %
15.57 % 14.19 % 14.21 % Leverage capital 10.71 % 10.38 % 10.23 %
9.89 % 10.07 % (a) September 30, 2015 risk-based
capital ratios are estimated. (*) Basel III CET 1 ratio
requirements are effective beginning January 1, 2015 and are not
required for prior periods.
CITY HOLDING COMPANY AND
SUBSIDIARIES Intangibles (Unaudited) ($ in 000s)
As of and for the Quarter Ended September 30
June 30 March 31 December 31 September
30 2015 2015
2015 2014 2014
Intangibles, net $ 70,653 $ 70,779 $ 70,964 $ 74,198
$ 74,434 Intangibles amortization expense 126 185 214 236 236
CITY HOLDING COMPANY AND SUBSIDIARIES Summary of
Loan Loss Experience (Unaudited) ($ in 000s)
Quarter Ended September 30 June 30 March
31 December 31 September 30 2015
2015 2015
2014 2014 Balance at
beginning of period $ 20,809 $ 20,179 $ 20,150 $ 20,487 $ 20,536
Charge-offs: Commercial and industrial 89 (1,898 )
(94 ) 7 (325 ) Commercial real estate (1 ) 61 (337 ) (260 ) (696 )
Residential real estate (229 ) (272 ) (257 ) (414 ) (605 ) Home
equity (128 ) (17 ) (91 ) (21 ) (142 ) Consumer (28 ) (69 ) (74 )
(17 ) (49 ) DDA overdrafts (414 ) (313 ) (311
) (363 ) (390 )
Total charge-offs (711 )
(2,508 ) (1,164 ) (1,068 ) (2,207 )
Recoveries:
Commercial and industrial 45 9 18 4 4 Commercial real estate 18 23
8 19 11 Residential real estate 66 54 10 96 28 Home equity - - - -
- Consumer 75 51 28 32 43 DDA overdrafts 188
165 241 196 200
Total recoveries 392 302 305 347 286
Net charge-offs (319 ) (2,206 ) (859 ) (721 )
(1,921 ) Provision for (recovery of) acquired loans (24 ) 299 246
148 (3 ) Provision for loan losses 475 2,537
642 236 1,875
Balance at end of period $ 20,941 $ 20,809 $
20,179 $ 20,150 $ 20,487 Loans
outstanding $ 2,696,438 $ 2,684,457 $ 2,632,471
$ 2,652,066 $ 2,630,742 Average loans
outstanding 2,679,429 2,658,484
2,636,400 2,639,106 2,600,142
Allowance as a percent of loans outstanding 0.78 %
0.78 % 0.77 % 0.76 % 0.78 % Allowance as a
percent of non-performing loans
95.81
% 130.98 % 121.81 % 128.10 % 112.61 %
Net charge-offs (annualized) as a percent of average loans
outstanding 0.05 % 0.33 % 0.13 % 0.11 %
0.30 %
Net charge-offs, excluding overdraft
deposit accounts, (annualized) as a
percent of average loans outstanding
0.01 % 0.31 % 0.12 % 0.08 % 0.27
%
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Non-Performing Assets
(Unaudited) ($ in 000s) September 30 June
30 March 31 December 31 September 30
2015
2015 2015
2014
2014 Nonaccrual loans $
21,407
$ 15,623 $ 16,182 $
15,307 $ 17,384 Accruing loans past due 90
days or more 449
264 384
423 809
Total non-performing loans
21,856
15,887 16,566 15,730 18,193
Other real estate owned
6,026 6,729
8,771 8,180
9,162
Total non-performing assets $
27,882
$ 22,616 $
25,337 $ 23,910 $
27,355 Non-performing assets as
a percent of loans and other real estate owned
1.03
% 0.84 % 0.96 % 0.90 % 1.04 %
CITY HOLDING COMPANY AND SUBSIDIARIES Summary of Troubled
Debt Restructurings (Unaudited) ($ in 000s)
September 30 June 30 March 31 December
31 September 30 2015
2015
2015 2014
2014
Residential real estate $ 18,154 $ 19,021 $ 19,067 $ 18,492 $
18,040 Home equity - junior liens 2,746 2,662 2,741 2,688 2,821
Commercial and industrial 62 66 70 73 77 Commercial real estate
1,921 1,872 1,894 2,263 2,270 Consumer -
- -
-
-
Total $ 22,883
$ 23,621 $ 23,772
$ 23,516 $
23,208
CITY HOLDING COMPANY AND SUBSIDIARIES Summary of
Total Past Due Loans (Unaudited) ($ in 000s)
Originated September 30 June 30 March
31 December 31 September 30
2015 2015
2015
2014 2014
Residential real estate $ 4,813 $ 4,107
$ 4,326 $ 5,164 $ 5,276 Home equity - junior liens 548 393 543 746
751 Commercial and industrial
4
600 113 310 188 Commercial real estate 1,183 536 299 479 938
Consumer 89 82 122 197 58 DDA overdrafts 330
327
215 318
592
Total past due loans
$
6,967
$ 6,045 $
5,618 $ 7,214 $
7,803
Acquired
September 30 June 30 March 31 December
31 September 30 2015
2015
2015 2014
2014
Residential real estate $ 709 $ 1,163 $ 1,792 $ 714 $ 500 Home
equity - junior liens 10 5 86 2 16 Commercial and industrial 351 14
490 143 96 Commercial real estate 2,439 2,179 2,018 2,372 2,972
Consumer 129 175 150 221 162 DDA overdrafts -
- -
-
-
Total past due loans $
3,638 $ 3,536 $
4,536 $ 3,452
$ 3,746
Total
September 30 June 30 March 31
December 31 September 30 2015
2015
2015
2014 2014
Residential real estate $
5,522
$ 5,270 $ 6,118 $ 5,878 $ 5,776 Home equity - junior liens 558 398
629 748 767 Commercial and industrial
355
614 603 453 284 Commercial real estate 3,622 2,715 2,317 2,851
3,910 Consumer 218 257 272 418 220 DDA overdrafts 330
327
215 318
592
Total past due
loans $
10,605
$ 9,581 $
10,154 $ 10,666 $
11,549 Total past due loans as a
percent of loans outstanding
0.39
% 0.36 % 0.39 % 0.40 % 0.44 %
CITY HOLDING COMPANY AND
SUBSIDIARIES
Summary of Purchased Credit Impaired Loans (Unaudited) ($
in 000s) Virginia Savings Acquisition
September 30 June 30 March 31 December
31 September 30 2015 2015
2015 2014 2014
Contractual required principal and interest 2,149 2,376 2,419 2,407
3,481 Carrying value 1,861 1,984 1,979 1,964 2,987
Community Acquisition September 30 June 30
March 31 December 31 September 30 2015
2015 2015 2014
2014 Contractual required principal and interest
17,834 18,546 20,189 23,277 24,147 Carrying value 13,400 13,958
14,627 15,365 15,518
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151022005279/en/
City Holding CompanyCharles R. Hageboeck, 304-769-1102President
and Chief Executive Officer
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