Exhibit 99.1
NEWS RELEASE
For Immediate Release
October 18, 2006
For Further Information Contact:
Charles R. Hageboeck, Chief Executive Officer and President
(304) 769-1102
City Holding Company Announces Increased Third Quarter Earnings
Charleston, West Virginia - City Holding Company, “the Company” (NASDAQ:CHCO), a $2.5 billion bank holding company headquartered in Charleston, today announced net income for the third quarter of $13.6 million, or diluted earnings per share of $0.77 compared to $13.2 million, or $0.72 per diluted share in the third quarter of 2005, a 6.9% increase. For the third quarter of 2006, the Company achieved a return on assets of 2.17%, a return on equity of 18.6%, a net interest margin of 4.51%, and an efficiency ratio of 42.4%. This compares with a return on assets of 2.09%, a return on equity of 18.2%, net interest margin of 4.51%, and an efficiency ratio of 45.9% for the comparable period of 2005.
The increase in net income included an increase in non-interest income of $1.8 million. During the third quarter of 2006, a gain of $3.6 million from the Company’s sale of its credit card portfolio was offset by $2.1 million of realized investment losses. This net income was further reduced by a $0.6 million increase in the provision for loan losses.
Charles Hageboeck, Chief Executive Officer and President, stated, “City Holding Company is one of the best performing banks in the industry based on profitability, the net interest margin, efficiency ratio and asset quality. The Company increased its’ earnings per share in the third quarter of 2006 as compared to the third quarter of 2005 despite the impact of a $0.6 million increase in the provision for loan losses in the third quarter of 2006 and a decrease of over $700,000 in interest income associated with previously securitized loans (whose balances decreased 47%). The sale of the credit card portfolio allowed the Company to immediately create shareholder value and continue to focus on our strategic businesses which leverage our ability to build strong customer relationships across all of our product lines. The realized securities losses reflect the implementation of a strategy to reposition the balance sheet by selling approximately $55 million of investment securities that were replaced with higher yielding investment securities in response to the decline in interest income as a result of the sale of the credit card portfolio. As compared to the prior year quarter ended September 30, 2005, profitability as measured by our return on assets was higher and our efficiency ratio was better. Loans and deposits both grew meaningfully in an economic environment that has been challenging for banks. Asset quality, as measured by non-performing assets,
remained stable and at favorable levels as compared to many of our peers and our level of net charge-offs was low. The bank is extremely well capitalized and highly liquid. In summary, the Company is performing well against all measures.”
For the nine months ended September 30, 2006, City’s net income grew 8.2% to $40.2 million compared to $37.2 million in the first nine months of 2005. Diluted earnings per share grew 6.6% to $2.26 per share for the nine months ended September 30, 2006 as compared to $2.12 per share for the nine months ended September 30, 2005.
Net Interest Income
The Company’s tax equivalent net interest income was essentially flat from the third quarter of 2005 to the third quarter of 2006 as increased yields on interest earning assets were more than offset by increases in the rates paid on interest-bearing liabilities. Compared to the third quarter of 2005, interest income decreased $1.4 million due to volume (primarily related to previously securitized loans) that was offset by an increase of $1.3 million due to rates increases.
Interest income on earning assets increased by $3.8 million, driven primarily by an increase in interest income on loans of $3.7 million despite a decrease of $0.7 million in interest income from previously securitized loans from the third quarter of 2005. The decrease in interest income from previously securitized loans was related to the continued decline in the average balance of these loans from $38.4 million for the quarter ended September 30, 2005, to $20.3 million for the quarter ended September 30, 2006. However, this reduction in average outstanding balances was partially mitigated as the yield on these loans rose from an average of 30.1% for the third quarter of 2005 to 43.2% for the third quarter of 2006 (see Previously Securitized Loans section for further discussion). The yield for the immediately preceding quarter was 41.9%. Interest income on all other loans (commercial, residential, home equity, and consumer) increased by $4.4 million as the average yield on these loans increased by 80 basis points and the average balance on outstanding loans increased by $68.7 million (excluding previously securitized loans). Additionally, interest income from loans was impacted by the sale of the Company’s credit card portfolio which reduced interest income by $0.4 million from the third quarter of 2005.
Offsetting the increase in interest income on earning assets was an increase in interest expense on deposits of $3.3 million due primarily to an 87 basis point increase in the rates paid on interest bearing deposits from the third quarter of 2005. In addition, increases in average outstanding deposit balances of $87 million, or 5.6%, drove up interest expense by $0.7 million. The increase in rates and balances was primarily associated with time deposits, which experienced an increase of 107 basis points while outstanding time deposit balances grew $105 million as compared to the third quarter of 2005.
The net interest margin was 4.51% for the quarters ended September 30, 2006 and 2005 and 4.58% during the quarter ended June 30, 2006. The decrease in the net interest margin between the second quarter of 2006 and the third quarter of 2006 can primarily be attributed to lower balances on previously securitized loans and the sale of the credit card portfolio during the third quarter.
Credit Quality
At September 30, 2006, the Allowance for Loan Losses (“ALLL”) was $15.6 million or 0.92% of total loans outstanding and 408% of non-performing loans compared to $17.8 million or 1.09% of loans outstanding and 487% of non-performing loans at September 30, 2005. The ratio of the allowance to loans outstanding and non-performing loans was improved by the sale of the Company’s credit card portfolio in the third quarter of 2006 impacted. As a result of the Company’s quarterly analysis of the adequacy of the ALLL, the Company recorded a provision for loan losses of $1.2 million in the third quarter of 2006 versus $0.6 million in the third quarter of 2005. The provision for loan losses also increased by $0.5 million from $0.7 million in the second quarter of 2006 primarily due to recent trends in the Company’s commercial portfolio and recent credit trends in the national housing market. Changes in the amount of the provision and related allowance are based upon City’s detailed methodology and are directionally consistent with changes in the quality of the Company’s loan portfolio.
The Company had net charge-offs of $0.9 million for the third quarter of 2006, with depository accounts representing $0.6 million of this total. While charge-offs on depository accounts are appropriately taken against the ALLL, the revenue associated with depository accounts is reflected in service charges and has been steadily growing as the core base of checking accounts has grown. Net charge-offs on commercial and real estate loans were $0.2 million and $0.1 million, respectively, while installment loans experienced no net charge-offs for the quarter ended September 30, 2006. Over the last 5 quarters, the Company has experienced annualized net charge-offs for commercial loans, commercial real estate loans, consumer loans, home equity loans, and residential mortgages of 0.08%; 0.07%; 0.13%; 0.28%; and 0.11%, respectively.
At September 30, 2006, non-performing assets as a percentage of loans and other real estate owned (OREO) were 0.25%. The ratio of non-performing assets as a percentage of loans and OREO over the last 5 quarters has ranged from 0.23% to 0.27%. Average non-performing assets as a percentage of loans and other real estate owned for the Company’s peer group (bank holding companies with total assets between $1 billion and $5 billion) for the most recently reported quarter ended June 30, 2006, were 0.67%. A factor that has enabled the Company to maintain its’ allowance at lower levels than peers is the composition of the Company’s loan portfolio, which is weighted more heavily toward residential mortgage loans and less toward non-real estate secured commercial loans than its’ peers. Additionally, the Company sold its credit card portfolio of approximately $11.5 million to Elan Financial Services (“Elan”), a wholly owned subsidiary of U.S. Bancorp, during the third quarter of 2006. As a result, the Company’s ALLL as a percentage of loans outstanding is 0.92% at September 30, 2006, compared to the average of the Company’s peer group of 1.20% for the most recently reported quarter. Excluding the amount attributable to the credit card portfolio, the ALLL was 0.96% at December 31, 2005. The Company believes its’ methodology for determining the adequacy of its’ ALLL adequately provides for probable losses inherent in the loan portfolio and produces a provision for loan losses that is directionally consistent with changes in asset quality and loss experience.
Non-interest Income
Net of investment securities losses and the gain from the sale of the Company’s retail credit card portfolio, non-interest income increased $0.3 million, or 2.0%, to $13.3 million in the third quarter of 2006 as compared to $13.0 million in the third quarter of 2005. The largest source of non-interest income is service charges from depository accounts, which increased $0.4 million, or 3.8%, from $10.4 million during the third quarter of 2005 to $10.8 million during the third quarter of 2006. This increase is due to an increase in the utilization of services by the Company’s expanding customer base. On a year-to-date basis, non-interest income increased $2.6 million, or 7.1%, exclusive of securities gains/losses and the gain from the retail credit card portfolio sale, primarily due to increases in service charges revenues.
Non-interest Expenses
Non-interest expenses increased $0.2 million, or 1.1%, from $17.9 million in the third quarter of 2005 to $18.1 million in the third quarter of 2006. During the quarter, the Company incurred a $0.4 million charge related to the redemption of $3.5 million of the Company’s trust preferred securities. For the nine months ended September 30, 2006, the increase in non-interest expenses of $2.4 million, is primarily attributable to increased compensation expenses and other miscellaneous non-interest expenses related to the Company’s acquisition of Classic Bancshares, Inc. during the second quarter of 2005 and $0.7 million charges associated with the redemption of $6.0 million of the Company’s trust preferred securities.
The Company’s efficiency ratio improved from 45.9% for the quarter ended September 30, 2005 to 42.4% for the quarter ended September 30, 2006, reflecting ongoing strength in managing expenses while increasing revenues. The average efficiency ratio for the Company’s peer group for the most recently reported quarter ended June 30, 2006, was 58.7%. For the nine months ended September 30, 2006, the efficiency ratio improved to 43.9% from 46.7% for the nine months ended September 30, 2005.
Balance Sheet Trends
As compared to December 31, 2005, loans have increased $84.4 million at September 30, 2006 with increases in commercial loans of $84.3 million, home equity loans of $16.9 million and residential real estate loans of $12.3 million. These increases were partially offset by decreases in previously securitized loans of $11.7 million (see discussion below) and installment loans of $17.4 million, due primarily to the sale of the Company’s retail credit card portfolio. While commercial loan growth has been strong for the first nine months of 2006, the Company expects declines during the fourth quarter due to the expected loss of its largest commercial relationship. Between 2002 and 2006 the Company’s outstanding balances with this customer increased from $4 million to over $30 million as the customer’s business has grown. Due to the growing demands of the customer’s business, and the Company’s legal lending limitations, the Company has determined that it can no longer satisfactorily meet all of the customer’s needs. It should be noted that the Company has no other customers with outstanding loan balances exceeding $15 million. The Company’s credit risk management system is designed to serve customers in our target market while maintaining asset quality
and protecting shareholder value.
Total average depository balances increased $68.8 million, or 14.4% on an annualized basis, from the quarter ended December 31, 2005 to the quarter ended September 30, 2006. This growth was primarily in time deposits, which have increased $88.3 million from the quarter ended December 31, 2005.
Previously Securitized Loans
At September 30, 2006, the Company reported “Previously Securitized Loans” of $18.5 million compared to $35.6 million and $30.3 million at September 30, 2005 and December 31, 2005, respectively, representing a decrease of 48.0% and 38.8%, respectively.
Because the carrying value of the previously securitized loans incorporates discounts for expected prepayment and default rates, the carrying value of the loans is generally less than the contractual outstanding balance of the loans. As of September 30, 2006, the contractual outstanding balances of the mortgages securitized were $36.3 million while the carrying value of these assets was $18.5 million. The difference between the carrying value and the contractual payments of the previously securitized loans is accreted into interest income over the life of the loans.
The yield on the previously securitized loans was 43.2% for the quarter ended September 30, 2006, compared to 41.9% for the quarter ended June 30, 2006, and 30.1% for the quarter ended September 30, 2005. The yield on the previously securitized loans has increased due to improved cash flows from net default rates being less than previously estimated. The lower net default rates resulted from the Company’s assumption of the servicing of all of the pool balances during the second quarter of 2005. This favorably impacted the yield on the previously securitized loans by eliminating the servicing fees previously being paid to the external servicing agent and increased internal collection efforts that have resulted in enhanced levels of recoveries on previously charged-off loans. Subsequent to our assumption of the servicing of these loans, the Company has averaged net recoveries of approximately $400,000 per month. The Company does not believe that continued net recoveries at this rate can be sustained indefinitely. As a result of these net recoveries, which are accreted into income over the remaining expected life of the loans, together with the improvements associated with lower servicing costs, the Company now projects that the yield on these loans will be in the range of 44-46%.
Capitalization and Liquidity
One of the Company’s strengths is that it is highly profitable while maintaining strong liquidity and capital. With respect to liquidity, the Company’s loan to deposit ratio was 85.7% and the loan to asset ratio was 67.1% at September 30, 2006. The Company maintained investment securities totaling 20.6% of assets as of this date. Further, the Company’s deposit mix is weighted heavily toward checking and saving accounts that fund 42.4% of assets at September 30, 2006. Time deposits fund 35.9% of assets at September 30, 2006, but very few of these deposits are in accounts that have balances of more than $150,000, reflecting the core retail orientation of the Company.
The Company is also strongly capitalized. Capitalization (as measured by average equity to average assets) was 11.7% for the quarter ended September 30, 2006 as a result of the Company’s strong earnings. With respect to regulatory capital, at September 30, 2006, the Company’s Leverage Ratio is 10.81%, the Tier I Capital ratio is 14.99%, and the Total Risk-Based Capital ratio is 15.87%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.
The Company’s tangible equity ratio was 9.7% at September 30, 2006 compared with a tangible equity ratio of 9.5% at December 31, 2005 and 9.3% at September 30, 2005. During the nine months ended September 30, 2006, the Company has repurchased 590,053 common shares at a weighted average price of $36.07 as part of a one million share repurchase plan authorized by the Board of Directors in June 2005. Due to the Company’s strong earnings, the Company was able to both repurchase these shares and increase its’ tangible equity ratio.
As a result of repurchases completed in 2006, the Company’s average outstanding shares decreased 367,000 shares during the year, providing the Company’s shareholders increased earnings capacity as shares repurchased improve earnings per share on the remaining shares outstanding. The Company has 204,847 shares remaining for repurchase under the plan approved by the Board of Directors in June 2005. The repurchase of 590,053 shares during 2006 represents 3.3% of total shares outstanding as of December 31, 2005.
City Holding Company is the parent company of City National Bank of West Virginia. City National operates 67 branches across West Virginia, Eastern Kentucky and Southern Ohio.
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 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 may experience increases in the default rates on previously securitized loans that would result in impairment losses or lower the yield on such loans; (4) the Company may continue to benefit from strong recovery efforts on previously securitized loans resulting in improved yields on these assets; (5) the Company could have adverse legal actions of a material nature; (6) the Company may face competitive loss of customers; (7) the Company may be unable to manage its’ expense levels; (8) the Company may have difficulty retaining key employees; (9) 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; (10) changes in general economic conditions and increased competition could adversely affect the Company’s operating results; (11) 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; and (12) the Company may experience difficulties growing loan and deposit balances. 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.
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | |
Financial Highlights | | | | | | | |
(Unaudited) | | | | | | | |
| | | | | | | | |
| | | Three Months Ended | | | |
| | | Sept 30 | | Sept 30 | | Percent | |
| | | 2006 | | 2005 | | Change | |
| Earnings ($000s, except per share data): | | | | | | | |
| Net Interest Income (FTE) | | $ | 25,750 | | $ | 25,893 | | | (0.55 | )% |
| Net Income | | | 13,620 | | | 13,172 | | | 3.40 | % |
| Earnings per Basic Share | | | 0.78 | | | 0.73 | | | 6.85 | % |
| Earnings per Diluted Share | | | 0.77 | | | 0.72 | | | 6.94 | % |
| Key Ratios (percent): | | | | | | | | | | |
| Return on Average Assets | | | 2.17 | % | | 2.09 | % | | 3.65 | % |
| Return on Average Equity | | | 18.56 | % | | 18.23 | % | | 1.82 | % |
| Net Interest Margin | | | 4.51 | % | | 4.51 | % | | (0.01 | )% |
| Efficiency Ratio | | | 42.39 | % | | 45.92 | % | | (7.69 | )% |
| Average Shareholders' Equity to Average Assets | | | 11.67 | % | | 11.47 | % | | 1.77 | % |
| | | | | | | | | | | |
| Risk-Based Capital Ratios (a): | | | | | | | | | | |
| Tier I | | | 14.99 | % | | 14.94 | % | | 0.34 | % |
| Total | | | 15.87 | % | | 15.95 | % | | (0.50 | )% |
| | | | | | | | | | | |
| Average Tangible Equity to Average Tangible Assets | | | 9.69 | % | | 9.42 | % | | 2.92 | % |
| Common Stock Data: | | | | | | | | | | |
| Cash Dividends Declared per Share | | $ | 0.28 | | $ | 0.25 | | | 12.00 | % |
| Book Value per Share | | | 16.99 | | | 15.98 | | | 6.28 | % |
| Tangible Book Value per Share | | | 13.63 | | | 12.70 | | | 7.32 | % |
| Market Value per Share: | | | | | | | | | | |
| High | | | 40.19 | | | 39.21 | | | 2.50 | % |
| Low | | | 35.42 | | | 34.69 | | | 2.10 | % |
| End of Period | | | 39.87 | | | 35.73 | | | 11.59 | % |
| | | | | | | | | | | |
| Price/Earnings Ratio (b) | | | 12.78 | | | 12.24 | | | 4.43 | % |
| | | | Nine Months Ended | | | | |
| | | Sept 30 | | | Sept 30 | | | Percent | |
| | | | 2006 | | | 2005 | | | Change | |
| Earnings ($000s, except per share data): | | | | | | | | | | |
| Net Interest Income (FTE) | | $ | 78,025 | | $ | 72,253 | | | 7.99 | % |
| Net Income | | | 40,247 | | | 37,199 | | | 8.19 | % |
| Earnings per Basic Share | | | 2.27 | | | 2.15 | | | 5.58 | % |
| Earnings per Diluted Share | | | 2.26 | | | 2.12 | | | 6.60 | % |
| Key Ratios (percent): | | | | | | | | | | |
| Return on Average Assets | | | 2.13 | % | | 2.09 | % | | 1.87 | % |
| Return on Average Equity | | | 18.25 | % | | 19.50 | % | | (6.42 | )% |
| Net Interest Margin | | | 4.60 | % | | 4.46 | % | | 3.01 | % |
| Efficiency Ratio | | | 43.88 | % | | 46.69 | % | | (6.03 | )% |
| Average Shareholders' Equity to Average Assets | | | 11.68 | % | | 10.73 | % | | 8.85 | % |
| Common Stock Data: | | | | | | | | | | |
| Cash Dividends Declared per Share | | $ | 0.84 | | $ | 0.75 | | | 12.00 | % |
| Market Value per Share: | | | | | | | | | | |
| High | | | 40.19 | | | 39.21 | | | 2.50 | % |
| Low | | | 34.53 | | | 27.57 | | | 25.24 | % |
| | | | | | | | | | | |
| (a) September 30, 2006 risk-based capital ratios are estimated. | | | | | | | | | | |
| (b) September 30, 2006 price/earnings ratio computed based on annualized third quarter 2006 earnings. | | | | | | | | | | |
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 | |
| | | | | | | | | | | | | | |
| 2002 | | $ | 8.92 | | $ | 9.40 | | $ | 9.64 | | $ | 9.93 | | $ | 12.04 | | $ | 30.20 | |
| 2003 | | | 10.10 | | | 10.74 | | | 11.03 | | | 11.46 | | | 25.50 | | | 37.15 | |
| 2004 | | | 12.09 | | | 11.89 | | | 12.70 | | | 13.03 | | | 27.30 | | | 37.58 | |
| 2005 | | | 13.20 | | | 15.56 | | | 15.99 | | | 16.14 | | | 27.57 | | | 39.21 | |
| 2006 | | | 16.17 | | | 16.17 | | | 16.99 | | | | | | 34.53 | | | 40.19 | |
Earnings per Basic Share | | | | | | | | | | | | | | | |
| | Quarter Ended | | | | | | | |
| | | | March 31 | | | June 30 | | | September 30 | | | December 31 | | | Year-to-Date | | | | |
| | | | | | | | | | | | | | | | | | | | |
| 2002 | | $ | 0.38 | | $ | 0.45 | | $ | 0.53 | | $ | 0.56 | | $ | 1.92 | | | | |
| 2003 | | | 0.56 | | | 0.73 | | | 0.69 | | | 0.64 | | | 2.62 | | | | |
| 2004 | | | 0.66 | | | 0.80 | | | 0.66 | | | 0.67 | | | 2.79 | | | | |
| 2005 | | | 0.70 | | | 0.72 | | | 0.73 | | | 0.72 | | | 2.87 | | | | |
| 2006 | | | 0.71 | | | 0.78 | | | 0.78 | | | | | | 2.27 | | | | |
Earnings per Diluted Share | | | | | | | | | | | | | | | | | | | |
| | | | Quarter Ended | | | | | | | |
| | | | March 31 | | | June 30 | | | September 30 | | | December 31 | | | Year-to-Date | | | | |
| | | | | | | | | | | | | | | | | | | | |
| 2002 | | $ | 0.38 | | $ | 0.45 | | $ | 0.52 | | $ | 0.55 | | $ | 1.90 | | | | |
| 2003 | | | 0.55 | | | 0.72 | | | 0.68 | | | 0.63 | | | 2.58 | | | | |
| 2004 | | | 0.65 | | | 0.79 | | | 0.65 | | | 0.66 | | | 2.75 | | | | |
| 2005 | | | 0.69 | | | 0.71 | | | 0.72 | | | 0.72 | | | 2.84 | | | | |
| 2006 | | | 0.71 | | | 0.77 | | | 0.77 | | | | | | 2.26 | | | | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | |
Consolidated Statements of Income | | | | | |
(Unaudited) ($ in 000s, except per share data) | | | | | |
| | | Three Months Ended September 30, | |
| | | 2006 | | 2005 | |
Interest Income | | | | | |
| Interest and fees on loans | | $ | 31,774 | | $ | 28,083 | |
| Interest on investment securities: | | | | | | | |
| Taxable | | | 6,870 | | | 7,288 | |
| Tax-exempt | | | 437 | | | 508 | |
| Interest on loans held for sale | | | 122 | | | - | |
| Interest on deposits in depository institutions | | | 452 | | | 31 | |
| Interest on federal funds sold | | | 92 | | | - | |
Total Interest Income | | | 39,747 | | | 35,910 | |
| | | | | | | | |
Interest Expense | | | | | | | |
| Interest on deposits | | | 11,782 | | | 7,763 | |
| Interest on short-term borrowings | | | 1,343 | | | 956 | |
| Interest on long-term debt | | | 1,108 | | | 1,571 | |
Total Interest Expense | | | 14,233 | | | 10,290 | |
Net Interest Income | | | 25,514 | | | 25,620 | |
| Provision for loan losses | | | 1,225 | | | 600 | |
Net Interest Income After Provision for Loan Losses | | | 24,289 | | | 25,020 | |
| | | | | | | | |
Non-Interest Income | | | | | | | |
| Investment securities (losses) gains | | | (2,067 | ) | | 5 | |
| Service charges | | | 10,833 | | | 10,433 | |
| Insurance commissions | | | 526 | | | 595 | |
| Trust and investment management fee income | | | 572 | | | 468 | |
| Bank owned life insurance | | | 561 | | | 552 | |
| Gain on sale of credit card portfolio | | | 3,563 | | | - | |
| Other income | | | 778 | | | 959 | |
Total Non-Interest Income | | | 14,766 | | | 13,012 | |
| | | | | | | | |
Non-Interest Expense | | | | | | | |
| Salaries and employee benefits | | | 8,733 | | | 8,739 | |
| Occupancy and equipment | | | 1,602 | | | 1,687 | |
| Depreciation | | | 1,061 | | | 1,096 | |
| Professional fees and litigation expense | | | 379 | | | 456 | |
| Postage, delivery, and statement mailings | | | 765 | | | 670 | |
| Advertising | | | 810 | | | 764 | |
| Telecommunications | | | 498 | | | 702 | |
| Bankcard expenses | | | 485 | | | 512 | |
| Insurance and regulatory | | | 384 | | | 385 | |
| Office supplies | | | 417 | | | 327 | |
| Repossessed asset losses (gains), net of expenses | | | 20 | | | (35 | ) |
| Loss on early extinguishment of debt | | | 379 | | | - | |
| Other expenses | | | 2,600 | | | 2,619 | |
Total Non-Interest Expense | | | 18,133 | | | 17,922 | |
Income Before Income Taxes | | | 20,922 | | | 20,110 | |
| Income tax expense | | | 7,302 | | | 6,938 | |
Net Income | | $ | 13,620 | | $ | 13,172 | |
| | | | | | | | |
| Basic earnings per share | | $ | 0.78 | | $ | 0.73 | |
| Diluted earnings per share | | $ | 0.77 | | $ | 0.72 | |
Average Common Shares Outstanding: | | | | | | | |
| Basic | | | 17,557 | | | 18,052 | |
| Diluted | | | 17,619 | | | 18,238 | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | |
Consolidated Statements of Income | | | | | |
(Unaudited) ($ in 000s, except per share data) | | Nine Months Ended September 30, | |
| | | 2006 | | 2005 | |
Interest Income | | | | | |
| Interest and fees on loans | | $ | 91,788 | | $ | 74,796 | |
| Interest on investment securities: | | | | | | | |
| Taxable | | | 21,618 | | | 22,616 | |
| Tax-exempt | | | 1,359 | | | 1,390 | |
| Interest on loans held for sale | | | 322 | | | - | |
| Interest on deposits in depository institutions | | | 1,018 | | | 73 | |
| Interest on federal funds sold | | | 92 | | | 4 | |
Total Interest Income | | | 116,197 | | | 98,879 | |
| | | | | | | | |
Interest Expense | | | | | | | |
| Interest on deposits | | | 31,503 | | | 20,236 | |
| Interest on short-term borrowings | | | 3,795 | | | 2,320 | |
| Interest on long-term debt | | | 3,607 | | | 4,818 | |
Total Interest Expense | | | 38,905 | | | 27,374 | |
Net Interest Income | | | 77,292 | | | 71,505 | |
| Provision for loan losses | | | 2,900 | | | 600 | |
Net Interest Income After Provision for Loan Losses | | | 74,392 | | | 70,905 | |
| | | | | | | | |
Non-Interest Income | | | | | | | |
| Investment securities (losses) gains | | | (2,067 | ) | | 26 | |
| Service charges | | | 31,597 | | | 28,561 | |
| Insurance commissions | | | 1,661 | | | 1,732 | |
| Trust and investment management fee income | | | 1,642 | | | 1,521 | |
| Bank owned life insurance | | | 1,776 | | | 2,088 | |
| Gain on sale of credit card portfolio | | | 3,563 | | | - | |
| Other income | | | 2,445 | | | 2,626 | |
Total Non-Interest Income | | | 40,617 | | | 36,554 | |
| | | | | | | | |
Non-Interest Expense | | | | | | | |
| Salaries and employee benefits | | | 26,129 | | | 25,063 | |
| Occupancy and equipment | | | 4,825 | | | 4,726 | |
| Depreciation | | | 3,182 | | | 3,034 | |
| Professional fees and litigation expense | | | 1,345 | | | 1,535 | |
| Postage, delivery, and statement mailings | | | 2,098 | | | 1,938 | |
| Advertising | | | 2,339 | | | 2,231 | |
| Telecommunications | | | 1,499 | | | 1,688 | |
| Bankcard expenses | | | 1,486 | | | 1,597 | |
| Insurance and regulatory | | | 1,153 | | | 1,116 | |
| Office supplies | | | 1,171 | | | 805 | |
| Repossessed asset (gains), net of expenses | | | (105 | ) | | (50 | ) |
| Loss on early extinguishment of debt | | | 661 | | | - | |
| Other expenses | | | 7,402 | | | 7,091 | |
Total Non-Interest Expense | | | 53,185 | | | 50,774 | |
Income Before Income Taxes | | | 61,824 | | | 56,685 | |
| Income tax expense | | | 21,577 | | | 19,486 | |
Net Income | | $ | 40,247 | | $ | 37,199 | |
| | | | | | | | |
| Basic earnings per share | | $ | 2.27 | | $ | 2.15 | |
| Diluted earnings per share | | $ | 2.26 | | $ | 2.12 | |
Average Common Shares Outstanding: | | | | | | | |
| Basic | | | 17,759 | | | 17,314 | |
| Diluted | | | 17,817 | | | 17,514 | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | |
Consolidated Statements of Changes in Stockholders' Equity | | | | | |
(Unaudited) ($ in 000s) | | | | | |
| | | Three Months Ended | |
| | | September 30, 2006 | | September 30, 2005 | |
| | | | | | |
Balance at July 1 | | $ | 284,120 | | $ | 279,624 | |
| | | | | | | | |
| Net income | | | 13,620 | | | 13,172 | |
| Other comprehensive income: | | | | | | | |
| Change in unrealized gain on securities available-for-sale | | | 4,188 | | | (333 | ) |
| Change in unrealized gain on interest rate floors | | | 1,465 | | | (439 | ) |
| Cash dividends declared ($0.28/share) | | | (4,916 | ) | | - | |
| Cash dividends declared ($0.25/share) | | | - | | | (4,543 | ) |
| Issuance of stock awards, net | | | 284 | | | - | |
| Exercise of 7,928 stock options | | | 228 | | | - | |
| Exercise of 224,341 stock options | | | - | | | 4,158 | |
| Excess tax benefits on stock compensation | | | 27 | | | - | |
| Purchase of 18,000 common shares of treasury | | | (689 | ) | | - | |
| Purchase of 34,100 common shares of treasury | | | - | | | (1,207 | ) |
Balance at September 30 | | $ | 298,327 | | $ | 290,432 | |
| | | | | | | | |
| | | | | | | | |
| | Nine Months Ended | |
| | | | September 30, 2006 | | | September 30, 2005 | |
| | | | | | | | |
Balance at January 1 | | $ | 292,141 | | $ | 216,080 | |
| | | | | | | | |
| Net income | | | 40,247 | | | 37,199 | |
| Other comprehensive income: | | | | | | | |
| Change in unrealized gain on securities available-for-sale | | | 277 | | | (2,419 | ) |
| Change in unrealized gain on interest rate floors | | | 453 | | | (543 | ) |
| Cash dividends declared ($0.84/share) | | | (14,823 | ) | | - | |
| Cash dividends declared ($0.75/share) | | | - | | | (13,194 | ) |
| Issuance of 1,580,034 shares for acquisition of Classic Bancshares, net | | | | | | | |
| 108,173 owned and transferred to treasury | | | - | | | 54,339 | |
| Issuance of stock awards, net | | | 471 | | | 147 | |
| Exercise of 39,935 stock options | | | 653 | | | - | |
| Exercise of 262,709 stock options | | | - | | | 4,655 | |
| Excess tax benefits on stock compensation | | | 222 | | | - | |
| Purchase of 590,053 common shares of treasury | | | (21,314 | ) | | - | |
| Purchase of 173,876 common shares of treasury | | | - | | | (5,832 | ) |
Balance at September 30 | | $ | 298,327 | | $ | 290,432 | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | |
Condensed Consolidated Quarterly Statements of Income | | | | | | | | | | | |
(Unaudited) ($ in 000s, except per share data) | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | Quarter Ended | |
| | | Sept 30 | | June 30 | | March 31 | | Dec 31 | | Sept 30 | |
| | | 2006 | | 2006 | | 2006 | | 2005 | | 2005 | |
| | | | | | | | | | | | |
| Interest income | | $ | 39,747 | | $ | 39,010 | | $ | 37,441 | | $ | 36,639 | | $ | 35,910 | |
| Taxable equivalent adjustment | | | 236 | | | 246 | | | 252 | | | 269 | | | 273 | |
| Interest income (FTE) | | | 39,983 | | | 39,256 | | | 37,693 | | | 36,908 | | | 36,183 | |
| Interest expense | | | 14,233 | | | 13,085 | | | 11,588 | | | 11,064 | | | 10,290 | |
| Net interest income | | | 25,750 | | | 26,171 | | | 26,105 | | | 25,844 | | | 25,893 | |
| Provision for loan losses | | | 1,225 | | | 675 | | | 1,000 | | | 800 | | | 600 | |
| Net interest income after provision | | | | | | | | | | | | | | | | |
| for loan losses | | | 24,525 | | | 25,496 | | | 25,105 | | | 25,044 | | | 25,293 | |
| | | | | | | | | | | | | | | | | |
| Noninterest income | | | 14,766 | | | 13,463 | | | 12,389 | | | 13,537 | | | 13,012 | |
| Noninterest expense | | | 18,133 | | | 17,555 | | | 17,497 | | | 18,339 | | | 17,922 | |
| Income before income taxes | | | 21,158 | | | 21,404 | | | 19,997 | | | 20,242 | | | 20,383 | |
| Income tax expense | | | 7,302 | | | 7,397 | | | 6,879 | | | 6,884 | | | 6,938 | |
| Taxable equivalent adjustment | | | 236 | | | 246 | | | 252 | | | 269 | | | 273 | |
| Net income | | $ | 13,620 | | $ | 13,761 | | $ | 12,866 | | $ | 13,089 | | $ | 13,172 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Basic earnings per share | | $ | 0.78 | | $ | 0.78 | | $ | 0.71 | | $ | 0.72 | | $ | 0.73 | |
| Diluted earnings per share | | | 0.77 | | | 0.77 | | | 0.71 | | | 0.72 | | | 0.72 | |
| Cash dividends declared per share | | | 0.28 | | | 0.28 | | | 0.28 | | | 0.25 | | | 0.25 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Average Common Share (000s): | | | | | | | | | | | | | | | | |
| Outstanding | | | 17,557 | | | 17,719 | | | 18,006 | | | 18,127 | | | 18,052 | |
| Diluted | | | 17,619 | | | 17,772 | | | 18,067 | | | 18,211 | | | 18,238 | |
| | | | | | | | | | | | | | | | | |
| Net Interest Margin | | | 4.51 | % | | 4.58 | % | | 4.71 | % | | 4.55 | % | | 4.51 | % |
| | | | | | | | | | | | | | | | | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | |
Non-Interest Income and Non-Interest Expense | | | | | | | | | | | |
(Unaudited) ($ in 000s) | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | Quarter Ended | |
| | | Sept 30 | | June 30 | | March 31 | | Dec 31 | | Sept 30 | |
| | | 2006 | | 2006 | | 2006 | | 2005 | | 2005 | |
| | | | | | | | | | | | |
Non-Interest Income: | | | | | | | | | | | |
| Service charges | | $ | 10,833 | | $ | 10,903 | | $ | 9,862 | | $ | 10,530 | | $ | 10,433 | |
| Insurance commissions | | | 526 | | | 521 | | | 614 | | | 620 | | | 595 | |
| Trust and investment management fee income | | | 572 | | | 504 | | | 566 | | | 504 | | | 468 | |
| Bank owned life insurance | | | 561 | | | 678 | | | 537 | | | 691 | | | 552 | |
| Other income | | | 778 | | | 857 | | | 810 | | | 1,067 | | | 959 | |
Subtotal | | | 13,270 | | | 13,463 | | | 12,389 | | | 13,412 | | | 13,007 | |
| Investment security (losses) gains | | | (2,067 | ) | | - | | | - | | | 125 | | | 5 | |
| Gain on sale of credit card portfolio | | | 3,563 | | | - | | | - | | | - | | | - | |
Total Non-Interest Income | | $ | 14,766 | | $ | 13,463 | | $ | 12,389 | | $ | 13,537 | | $ | 13,012 | |
| | | | | | | | | | | | | | | | | |
Non-Interest Expense: | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | $ | 8,733 | | $ | 8,764 | | $ | 8,632 | | $ | 8,416 | | $ | 8,739 | |
| Occupancy and equipment | | | 1,602 | | | 1,624 | | | 1,599 | | | 1,569 | | | 1,687 | |
| Depreciation | | | 1,061 | | | 1,071 | | | 1,050 | | | 1,062 | | | 1,096 | |
| Professional fees and litigation expense | | | 379 | | | 571 | | | 395 | | | 486 | | | 456 | |
| Postage, delivery, and statement mailings | | | 765 | | | 689 | | | 644 | | | 728 | | | 670 | |
| Advertising | | | 810 | | | 755 | | | 774 | | | 710 | | | 764 | |
| Telecommunications | | | 498 | | | 525 | | | 476 | | | 560 | | | 702 | |
| Bankcard expenses | | | 485 | | | 458 | | | 543 | | | 540 | | | 512 | |
| Insurance and regulatory | | | 384 | | | 381 | | | 388 | | | 380 | | | 385 | |
| Office supplies | | | 417 | | | 372 | | | 383 | | | 388 | | | 327 | |
| Repossessed asset losses (gains), net of expenses | | | 20 | | | (129 | ) | | 4 | | | (28 | ) | | (35 | ) |
| Loss on early extinguishment of debt | | | 379 | | | - | | | 282 | | | - | | | - | |
| Other expenses | | | 2,600 | | | 2,474 | | | 2,327 | | | 3,528 | | | 2,619 | |
Total Non-Interest Expense | | $ | 18,133 | | $ | 17,555 | | $ | 17,497 | | $ | 18,339 | | $ | 17,922 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Employees (Full Time Equivalent) | | | 767 | | | 779 | | | 764 | | | 770 | | | 768 | |
| Branch Locations | | | 67 | | | 67 | | | 66 | | | 67 | | | 67 | |
| | | | | | | | | | | | | | | | | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | |
Consolidated Balance Sheets | | | | | |
($ in 000s) | | | | | |
| | | September 30 | | December 31 | |
| | | 2006 | | 2005 | |
| | | (Unaudited) | | | |
Assets | | | | | |
| Cash and due from banks | | $ | 51,460 | | $ | 81,822 | |
| Interest-bearing deposits in depository institutions | | | 35,800 | | | 4,451 | |
| Federal funds sold | | | 15,000 | | | - | |
Cash and cash equivalents | | | 102,260 | | | 86,273 | |
| | | | | | | | |
| Investment securities available-for-sale, at fair value | | | 465,752 | | | 549,966 | |
| Investment securities held-to-maturity, at amortized cost | | | 53,791 | | | 55,397 | |
Total investment securities | | | 519,543 | | | 605,363 | |
| | | | | | | | |
| Gross loans | | | 1,697,201 | | | 1,612,827 | |
| Allowance for loan losses | | | (15,557 | ) | | (16,790 | ) |
Net loans | | | 1,681,644 | | | 1,596,037 | |
| | | | | | | | |
| Bank owned life insurance | | | 54,619 | | | 52,969 | |
| Premises and equipment | | | 43,545 | | | 42,542 | |
| Accrued interest receivable | | | 12,934 | | | 13,134 | |
| Net deferred tax assets | | | 26,308 | | | 27,929 | |
| Intangible assets | | | 59,038 | | | 59,559 | |
| Other assets | | | 27,665 | | | 18,791 | |
Total Assets | | $ | 2,527,556 | | $ | 2,502,597 | |
| | | | | | | | |
Liabilities | | | | | | | |
| Deposits: | | | | | | | |
| Noninterest-bearing | | $ | 335,887 | | $ | 376,076 | |
| Interest-bearing: | | | | | | | |
| Demand deposits | | | 420,613 | | | 437,639 | |
| Savings deposits | | | 316,300 | | | 302,571 | |
| Time deposits | | | 907,025 | | | 812,134 | |
Total deposits | | | 1,979,825 | | | 1,928,420 | |
| Short-term borrowings | | | 135,960 | | | 152,255 | |
| Long-term debt | | | 76,669 | | | 98,425 | |
| Other liabilities | | | 36,775 | | | 31,356 | |
Total Liabilities | | | 2,229,229 | | | 2,210,456 | |
| | | | | | | | |
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, 2006 and December 31, 2005 | | | | | | | |
| less 938,883 and 395,465 shares in treasury, respectively | | | 46,249 | | | 46,249 | |
| Capital surplus | | | 104,082 | | | 104,435 | |
| Retained earnings | | | 186,171 | | | 160,747 | |
| Cost of common stock in treasury | | | (30,893 | ) | | (11,278 | ) |
| Accumulated other comprehensive (loss) income: | | | | | | | |
| Unrealized loss on securities available-for-sale | | | (4,562 | ) | | (4,839 | ) |
| Unrealized gain on derivative instruments | | | 453 | | | - | |
| Underfunded pension liability | | | (3,173 | ) | | (3,173 | ) |
Total Accumulated Other Comprehensive (Loss) Income | | | (7,282 | ) | | (8,012 | ) |
Total Stockholders' Equity | | | 298,327 | | | 292,141 | |
Total Liabilities and Stockholders' Equity | | $ | 2,527,556 | | $ | 2,502,597 | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | |
Loan Portfolio | | | | | | | | | | | |
(Unaudited) ($ in 000s) | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | Sept 30 | | June 30 | | March 31 | | Dec 31 | | Sept 30 | |
| | | 2006 | | 2006 | | 2006 | | 2005 | | 2005 | |
| | | | | | | | | | | | |
| Residential real estate | | $ | 604,867 | | $ | 601,097 | | $ | 595,093 | | $ | 592,521 | | $ | 596,184 | |
| Home equity | | | 318,666 | | | 313,301 | | | 304,559 | | | 301,728 | | | 306,448 | |
| Commercial, financial, and agriculture | | | 713,933 | | | 668,581 | | | 643,269 | | | 629,670 | | | 621,345 | |
| Installment loans to individuals | | | 41,215 | | | 42,307 | | | 54,287 | | | 58,652 | | | 63,134 | |
| Previously securitized loans | | | 18,520 | | | 22,253 | | | 25,918 | | | 30,256 | | | 35,599 | |
Gross Loans | | $ | 1,697,201 | | $ | 1,647,539 | | $ | 1,623,126 | | $ | 1,612,827 | | $ | 1,622,710 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | | |
Previously Securitized Loans | | | | | | | | | | | | | | | | |
(Unaudited) ($ in millions) | | | | | | | | | | | | | | | | |
| | | | | | | | | Annualized | | | Effective | | | | |
| | | | | | December 31 | | | Interest | | | Annualized | | | | |
| | | Year Ended: | | | Balance (a) | | | Income (a) | | | Yield (a) | | | | |
| | | | | | | | | | | | | | | | | |
| | | | 2005 | | $ | 30.3 | | $ | 11.4 | | | 27 | % | | | |
| | | | 2006 | | | 16.8 | | | 9.4 | | | 42 | % | | | |
| | | | 2007 | | | 11.9 | | | 6.5 | | | 45 | % | | | |
| | | | 2008 | | | 9.1 | | | 4.8 | | | 45 | % | | | |
| | | | 2009 | | | 7.3 | | | 3.8 | | | 45 | % | | | |
| | | | | | | | | | | | | | | | | |
| (a) 2005 amounts are based on actual results. 2006 amounts are based on actual results through 9/30/06 and estimated amounts for the remainder of the year. 2007, 2008 and 2009 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 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, | |
| | | | | 2006 | | | | | | 2005 | | | |
| | | Average | | | | Yield/ | | Average | | | | Yield/ | |
| | | Balance | | Interest | | Rate | | Balance | | Interest | | Rate | |
Assets: | | | | | | | | | | | | | |
| Loan portfolio: | | | | | | | | | | | | | |
| Residential real estate | | $ | 601,686 | | $ | 8,766 | | | 5.78 | % | $ | 594,233 | | $ | 8,396 | | | 5.61 | % |
| Home equity | | | 315,341 | | | 6,389 | | | 8.04 | % | | 307,302 | | | 4,894 | | | 6.32 | % |
| Commercial, financial, and agriculture | | | 682,793 | | | 13,196 | | | 7.67 | % | | 607,033 | | | 10,118 | | | 6.61 | % |
| Installment loans to individuals | | | 42,848 | | | 1,219 | | | 11.29 | % | | 65,408 | | | 1,760 | | | 10.68 | % |
| Previously securitized loans | | | 20,261 | | | 2,205 | | | 43.18 | % | | 38,368 | | | 2,915 | | | 30.14 | % |
| Total loans | | | 1,662,929 | | | 31,775 | | | 7.58 | % | | 1,612,344 | | | 28,083 | | | 6.91 | % |
| Securities: | | | | | | | | | | | | | | | | | | | |
| Taxable | | | 512,083 | | | 6,870 | | | 5.32 | % | | 610,142 | | | 7,288 | | | 4.74 | % |
| Tax-exempt | | | 40,815 | | | 673 | | | 6.54 | % | | 48,709 | | | 781 | | | 6.36 | % |
| Total securities | | | 552,898 | | | 7,543 | | | 5.41 | % | | 658,851 | | | 8,069 | | | 4.86 | % |
| Loans held for sale | | | 4,353 | | | 121 | | | 11.03 | % | | - | | | - | | | - | |
| Deposits in depository institutions | | | 35,524 | | | 452 | | | 5.05 | % | | 4,460 | | | 31 | | | 2.76 | % |
| Federal funds sold | | | 7,631 | | | 92 | | | 4.78 | % | | - | | | - | | | - | |
Total interest-earning assets | | | 2,263,335 | | | 39,983 | | | 7.01 | % | | 2,275,655 | | | 36,183 | | | 6.31 | % |
| Cash and due from banks | | | 49,801 | | | | | | | | | 53,965 | | | | | | | |
| Bank premises and equipment | | | 43,205 | | | | | | | | | 41,451 | | | | | | | |
| Other assets | | | 173,762 | | | | | | | | | 167,399 | | | | | | | |
| Less: Allowance for loan losses | | | (15,425 | ) | | | | | | | | (17,818 | ) | | | | | | |
Total assets | | $ | 2,514,678 | | | | | | | | $ | 2,520,652 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Liabilities: | | | | | | | | | | | | | | | | | | | |
| Interest-bearing demand deposits | | | 423,762 | | | 1,329 | | | 1.24 | % | | 450,767 | | | 1,098 | | | 0.97 | % |
| Savings deposits | | | 317,038 | | | 1,118 | | | 1.40 | % | | 308,361 | | | 563 | | | 0.72 | % |
| Time deposits | | | 897,761 | | | 9,336 | | | 4.13 | % | | 792,336 | | | 6,102 | | | 3.06 | % |
| Short-term borrowings | | | 136,927 | | | 1,342 | | | 3.89 | % | | 167,357 | | | 956 | | | 2.27 | % |
| Long-term debt | | | 82,082 | | | 1,108 | | | 5.36 | % | | 131,649 | | | 1,571 | | | 4.73 | % |
Total interest-bearing liabilities | | | 1,857,570 | | | 14,233 | | | 3.04 | % | | 1,850,470 | | | 10,290 | | | 2.21 | % |
| Noninterest-bearing demand deposits | | | 332,494 | | | | | | | | | 352,342 | | | | | | | |
| Other liabilities | | | 31,077 | | | | | | | | | 28,790 | | | | | | | |
| Stockholders' equity | | | 293,537 | | | | | | | | | 289,050 | | | | | | | |
Total liabilities and | | | | | | | | | | | | | | | | | | | |
stockholders' equity | | $ | 2,514,678 | | | | | | | | $ | 2,520,652 | | | | | | | |
Net interest income | | | | | $ | 25,750 | | | | | | | | $ | 25,893 | | | | |
Net yield on earning assets | | | | | | | | | 4.51 | % | | | | | | | | 4.51 | % |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | |
Consolidated Average Balance Sheets, Yields, and Rates | | | | | | | | | |
(Unaudited) ($ in 000s) | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | Nine Months Ended September 30, | |
| | | | | 2006 | | | | | | 2005 | | | |
| | | Average | | | | Yield/ | | Average | | | | Yield/ | |
| | | Balance | | Interest | | Rate | | Balance | | Interest | | Rate | |
Assets: | | | | | | | | | | | | | |
| Loan portfolio: | | | | | | | | | | | | | |
| Residential real estate | | $ | 597,223 | | $ | 25,630 | | | 5.74 | % | $ | 528,420 | | $ | 22,205 | | | 5.62 | % |
| Home equity | | | 309,007 | | | 17,945 | | | 7.76 | % | | 306,047 | | | 13,770 | | | 6.02 | % |
| Commercial, financial, and agriculture | | | 656,688 | | | 36,581 | | | 7.45 | % | | 543,809 | | | 25,359 | | | 6.23 | % |
| Installment loans to individuals | | | 49,381 | | | 4,211 | | | 11.40 | % | | 54,695 | | | 4,630 | | | 11.32 | % |
| Previously securitized loans | | | 24,090 | | | 7,422 | | | 41.19 | % | | 46,232 | | | 8,832 | | | 25.54 | % |
| Total loans | | | 1,636,389 | | | 91,789 | | | 7.50 | % | | 1,479,203 | | | 74,796 | | | 6.76 | % |
| Securities: | | | | | | | | | | | | | | | | | | | |
| Taxable | | | 554,884 | | | 21,618 | | | 5.21 | % | | 637,413 | | | 22,616 | | | 4.74 | % |
| Tax-exempt | | | 42,823 | | | 2,091 | | | 6.53 | % | | 42,450 | | | 2,138 | | | 6.73 | % |
| Total securities | | | 597,707 | | | 23,709 | | | 5.30 | % | | 679,863 | | | 24,754 | | | 4.87 | % |
| Loans held for sale | | | 3,337 | | | 322 | | | 12.90 | % | | - | | | - | | | - | |
| Deposits in depository institutions | | | 28,208 | | | 1,018 | | | 4.83 | % | | 4,415 | | | 73 | | | 2.21 | % |
| Federal funds sold | | | 2,571 | | | 92 | | | 4.78 | % | | 141 | | | 4 | | | 3.79 | % |
Total interest-earning assets | | | 2,268,212 | | | 116,930 | | | 6.89 | % | | 2,163,622 | | | 99,627 | | | 6.16 | % |
| Cash and due from banks | | | 51,077 | | | | | | | | | 47,124 | | | | | | | |
| Bank premises and equipment | | | 42,787 | | | | | | | | | 37,989 | | | | | | | |
| Other assets | | | 170,710 | | | | | | | | | 138,319 | | | | | | | |
| Less: Allowance for loan losses | | | (16,135 | ) | | | | | | | | (17,597 | ) | | | | | | |
Total assets | | $ | 2,516,651 | | | | | | | | $ | 2,369,457 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Liabilities: | | | | | | | | | | | | | | | | | | | |
| Interest-bearing demand deposits | | | 435,505 | | | 3,917 | | | 1.20 | % | | 431,035 | | | 2,659 | | | 0.82 | % |
| Savings deposits | | | 314,057 | | | 2,776 | | | 1.18 | % | | 292,396 | | | 1,386 | | | 0.63 | % |
| Time deposits | | | 864,972 | | | 24,810 | | | 3.83 | % | | 721,582 | | | 16,191 | | | 3.00 | % |
| Short-term borrowings | | | 149,858 | | | 3,795 | | | 3.39 | % | | 156,617 | | | 2,320 | | | 1.98 | % |
| Long-term debt | | | 89,834 | | | 3,607 | | | 5.37 | % | | 145,006 | | | 4,818 | | | 4.44 | % |
Total interest-bearing liabilities | | | 1,854,226 | | | 38,905 | | | 2.81 | % | | 1,746,636 | | | 27,374 | | | 2.10 | % |
| Noninterest-bearing demand deposits | | | 338,994 | | | | | | | | | 339,884 | | | | | | | |
| Other liabilities | | | 29,393 | | | | | | | | | 28,612 | | | | | | | |
| Stockholders' equity | | | 294,038 | | | | | | | | | 254,325 | | | | | | | |
Total liabilities and | | | | | | | | | | | | | | | | | | | |
stockholders' equity | | $ | 2,516,651 | | | | | | | | $ | 2,369,457 | | | | | | | |
Net interest income | | | | | $ | 78,025 | | | | | | | | $ | 72,253 | | | | |
Net yield on earning assets | | | | | | | | | 4.60 | % | | | | | | | | 4.46 | % |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | |
Analysis of Risk-Based Capital | | | | | | | | | | | |
(Unaudited) ($ in 000s) | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | Sept 30 | | June 30 | | March 31 | | Dec 31 | | Sept 30 | |
| | | 2006 (a) | | 2006 | | 2006 | | 2005 | | 2005 | |
| Tier I Capital: | | | | | | | | | | | |
| Stockholders' equity | | $ | 298,327 | | $ | 284,120 | | $ | 288,376 | | $ | 292,141 | | $ | 290,432 | |
| Goodwill and other intangibles | | | (59,038 | ) | | (59,219 | ) | | (59,378 | ) | | (59,559 | ) | | (59,742 | ) |
| Accumulated other comprehensive income | | | 4,109 | | | 9,762 | | | 6,265 | | | 8,012 | | | 4,106 | |
| Qualifying trust preferred stock | | | 22,000 | | | 25,500 | | | 25,500 | | | 28,000 | | | 28,000 | |
| Excess deferred tax assets | | | - | | | (4,079 | ) | | (2,254 | ) | | (1,071 | ) | | - | |
| Total tier I capital | | $ | 265,398 | | $ | 256,084 | | $ | 258,509 | | $ | 267,523 | | $ | 262,796 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Total Risk-Based Capital: | | | | | | | | | | | | | | | | |
| Tier I capital | | $ | 265,398 | | $ | 256,084 | | $ | 261,809 | | $ | 267,523 | | $ | 262,796 | |
| Qualifying allowance for loan losses | | | 15,557 | | | 15,268 | | | 16,818 | | | 16,790 | | | 17,768 | |
| Total risk-based capital | | $ | 280,955 | | $ | 271,352 | | $ | 278,627 | | $ | 284,313 | | $ | 280,564 | |
| | | | | | | | | | | | | | | | | |
| Net risk-weighted assets | | $ | 1,770,458 | | $ | 1,757,720 | | $ | 1,743,243 | | $ | 1,735,538 | | $ | 1,758,566 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Ratios: | | | | | | | | | | | | | | | | |
| Average stockholders' equity to average assets | | | 11.67 | % | | 11.51 | % | | 11.87 | % | | 11.87 | % | | 11.47 | % |
| Tangible capital ratio | | | 9.69 | % | | 9.13 | % | | 9.24 | % | | 9.52 | % | | 9.32 | % |
| Risk-based capital ratios: | | | | | | | | | | | | | | | | |
| Tier I capital | | | 14.99 | % | | 14.58 | % | | 14.83 | % | | 15.41 | % | | 14.94 | % |
| Total risk-based capital | | | 15.87 | % | | 15.45 | % | | 15.80 | % | | 16.38 | % | | 15.95 | % |
| Leverage capital | | | 10.81 | % | | 10.34 | % | | 10.62 | % | | 10.97 | % | | 10.68 | % |
| | | | | | | | | | | | | | | | | |
| (a) September 30, 2006 risk-based capital ratios are estimated. | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | | |
Intangibles | | | | | | | | | | | | | | | | |
(Unaudited) ($ in 000s) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | As of and for the Quarter Ended |
| | | Sept 30 | | | June 30 | | | March 31 | | | Dec 31 | | | Sept 30 | |
| | | 2006 | | | 2006 | | | 2006 | | | 2005 | | | 2005 | |
| | | | | | | | | | | | | | | | | |
| Intangibles, net | | $ | 59,038 | | $ | 59,219 | | $ | 59,378 | | $ | 59,559 | | $ | 59,742 | |
| Intangibles amortization expense | | | 181 | | | 181 | | | 181 | | | 183 | | | 183 | |
| | | | | | | | | | | | | | | | | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | |
Summary of Loan Loss Experience | | | | | | | | | | | |
(Unaudited) ($ in 000s) | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | Quarter Ended | |
| | | Sept 30 | | June 30 | | Mar 31 | | Dec 31 | | Sept 30 | |
| | | 2006 | | 2006 | | 2006 | | 2005 | | 2005 | |
| | | | | | | | | | | | |
| Balance at beginning of period | | $ | 15,268 | | $ | 16,818 | | $ | 16,790 | | $ | 17,768 | | $ | 18,298 | |
| | | | | | | | | | | | | | | | | |
| Reduction of allowance for loans held for sale | | | - | | | (1,368 | ) | | - | | | - | | | - | |
| | | | | | | | | | | | | | | | | |
Charge-offs: | | | | | | | | | | | | | | | | |
| Commercial, financial, and agricultural | | | 207 | | | 43 | | | 185 | | | 527 | | | 54 | |
| Real estate-mortgage | | | 177 | | | 232 | | | 296 | | | 302 | | | 208 | |
| Installment loans to individuals | | | 165 | | | 239 | | | 368 | | | 664 | | | 476 | |
| Overdraft deposit accounts | | | 1,018 | | | 955 | | | 958 | | | 996 | | | 1,012 | |
Total charge-offs | | | 1,567 | | | 1,469 | | | 1,807 | | | 2,489 | | | 1,750 | |
| | | | | | | | | | | | | | | | | |
Recoveries: | | | | | | | | | | | | | | | | |
| Commercial, financial, and agricultural | | | 44 | | | 33 | | | 32 | | | 30 | | | 135 | |
| Real estate-mortgage | | | 64 | | | 56 | | | 105 | | | 188 | | | 53 | |
| Installment loans to individuals | | | 131 | | | 151 | | | 198 | | | 163 | | | 136 | |
| Overdraft deposit accounts | | | 392 | | | 372 | | | 500 | | | 330 | | | 296 | |
Total recoveries | | | 631 | | | 612 | | | 835 | | | 711 | | | 620 | |
| | | | | | | | | | | | | | | | | |
Net charge-offs | | | 936 | | | 857 | | | 972 | | | 1,778 | | | 1,130 | |
| Provision for loan losses | | | 1,225 | | | 675 | | | 1,000 | | | 800 | | | 600 | |
Balance at end of period | | $ | 15,557 | | $ | 15,268 | | $ | 16,818 | | $ | 16,790 | | $ | 17,768 | |
| | | | | | | | | | | | | | | | | |
| Loans outstanding | | $ | 1,697,201 | | $ | 1,647,539 | | $ | 1,623,126 | | $ | 1,612,827 | | $ | 1,622,710 | |
| Average loans outstanding | | | 1,662,929 | | | 1,630,454 | | | 1,615,242 | | | 1,618,711 | | | 1,612,344 | |
| Allowance as a percent of loans outstanding | | | 0.92 | % | | 0.93 | % | | 1.04 | % | | 1.04 | % | | 1.09 | % |
| Allowance as a percent of non-performing loans | | | 408.43 | % | | 408.02 | % | | 503.53 | % | | 401.96 | % | | 487.46 | % |
| Net charge-offs (annualized) as a | | | | | | | | | | | | | | | | |
| percent of average loans outstanding | | | 0.23 | % | | 0.21 | % | | 0.24 | % | | 0.44 | % | | 0.28 | % |
| Net charge-offs, excluding overdraft deposit | | | | | | | | | | | | | | | | |
| accounts, (annualized) as a percent of average loans outstanding | | | 0.07 | % | | 0.07 | % | | 0.13 | % | | 0.27 | % | | 0.10 | % |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | |
Summary of Non-Performing Assets | | | | | | | | | | | |
(Unaudited) ($ in 000s) | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | Sept 30 | | June 30 | | March 31 | | Dec 31 | | Sept 30 | |
| | | 2006 | | 2006 | | 2006 | | 2005 | | 2005 | |
| | | | | | | | | | | | |
| Nonaccrual loans | | $ | 3,359 | | $ | 3,046 | | $ | 2,743 | | $ | 2,785 | | $ | 2,468 | |
| Accruing loans past due 90 days or more | | | 328 | | | 573 | | | 512 | | | 1,124 | | | 1,003 | |
| Previously securitized loans past due 90 days or more | | | 122 | | | 123 | | | 85 | | | 268 | | | 174 | |
Total non-performing loans | | | 3,809 | | | 3,742 | | | 3,340 | | | 4,177 | | | 3,645 | |
| Other real estate owned, excluding property associated | | | | | | | | | | | | | | | | |
| with previously securitized loans | | | 499 | | | 294 | | | 403 | | | 135 | | | 117 | |
| Other real estate owned associated with previously | | | | | | | | | | | | | | | | |
| securitized loans | | | 20 | | | 92 | | | 306 | | | - | | | - | |
| | | | 519 | | | 386 | | | 709 | | | 135 | | | 117 | |
Total non-performing assets | | $ | 4,328 | | $ | 4,128 | | $ | 4,049 | | $ | 4,312 | | $ | 3,762 | |
| | | | | | | | | | | | | | | | | |
| Non-performing assets as a percent of loans and | | | | | | | | | | | | | | | | |
| other real estate owned | | | 0.25 | % | | 0.25 | % | | 0.25 | % | | 0.27 | % | | 0.23 | % |
| | | | | | | | | | | | | | | | | |
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