Exhibit 99.1
NEWS RELEASE
For Immediate Release
January 22, 2007
For Further Information Contact:
Charles R. Hageboeck, Chief Executive Officer and President
(304) 769-1102
City Holding Company Announces Record 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 of $53.2 million, or diluted earnings per share of $2.99, for the year ended December 31, 2006 compared to $50.3 million, or diluted earnings per share of $2.84 during 2005. This represents an increase in diluted earnings per share of 5.3% despite an increase in the Company’s provision for loan losses from $1.4 million in 2005 (or 9 basis points of average loans outstanding) to $3.8 million in 2006 (or 23 basis points of average loans outstanding). Return on assets for the full year was 2.11%, return on equity was 17.9%, the net interest margin was 4.56%, and the efficiency ratio was 44.5%. This compares with a return on assets of 2.09%, a return on equity of 18.9%, net interest margin of 4.49%, and an efficiency ratio of 46.7% for 2005.
For the fourth quarter of 2006, the Company reported net income of $12.9 million, or $0.74 per diluted share compared to $13.1 million or $0.72 per diluted share in the fourth quarter of 2005. This represents a 2.8% increase in diluted earnings per share, even with a loss of $0.7 million in connection with the redemption of $6.0 million of the Company’s trust preferred securities in 2006. For the fourth quarter of 2006, the Company achieved a return on assets of 2.06%, a return on equity of 16.9%, a net interest margin of 4.43%, and an efficiency ratio of 46.4%. This compares with a return on assets of 2.10%, a return on equity of 17.7%, net interest margin of 4.55%, and an efficiency ratio of 46.6% for the comparable period of 2005.
Charles Hageboeck, Chief Executive Officer and President, stated, “In 2006, City Holding Company continued as one of the best performing banks in the industry based on profitability, the net interest margin, efficiency ratio and asset quality. Through the efforts of our management and staff, the Company is reporting record earnings for 2006 and increased return on assets to 2.11% from what was already the highest level of return on assets for banks between $1 and $10 billion during 2005. Diluted earnings per share were up 5.3% in 2006 as compared to 2005 despite headwinds from a higher provision for loan losses and from a decrease in interest income of $2 million associated with run-off of the legacy portfolio of previously securitized loans. As a result, we were very pleased with the underlying performance of the Company during 2006.
Beyond maintaining its enviable financial performance, the Company has embarked upon strategies to grow the franchise. The Company opened its first new free-standing branch in eight years in Charles Town, West Virginia, which is located in the Washington-Baltimore, DC-MD-VA-WV PMSA in October of 2006. We have broken ground on a new 7,500 square foot office in Martinsburg, WV that will serve as the headquarters for the bank’s presence in the eastern panhandle of West Virginia and have acquired additional parcels of land for future branch expansion in areas within our current foothold. As a result of changes in state law, the Company has hired a team of 6 insurance professionals as part of City Insurance to provide Worker’s Compensation Insurance to businesses throughout West Virginia - a move that is expected to lift insurance revenues by nearly 50% during 2007. The Company has also hired a team of insurance agents in Beckley, WV to drive significant expansion of the Company’s personal lines insurance business throughout the Company’s footprint.
During 2006, the Company sold its credit card portfolio (which resulted in a $3.6 million gain) to create shareholder value and leverage our ability to build strong customer relationships across all of our product lines. The Company continues to offer credit cards to its customers through its partnership with Elan Financial Services (Elan), one of the premier providers of processing services for financial institutions. Due to the credit card portfolio sale, interest and fee income decreased $1.0 million from 2005. To mitigate this decrease, the Company implemented a strategy in the third and fourth quarter to reposition the balance sheet by selling approximately $55 million of investment securities and replacing them with higher yielding investment securities. The Company also repurchased $9.5 million of its 9.15% trust preferred securities, which reduced total interest expense by $0.1 million during the third and fourth quarters.
Subsequent to changes the Company implemented in its underwriting standards beginning in 2001, the Company has demonstrated considerable consistency in its asset quality. Gross charge-offs at the Company are monitored by losses on depository accounts, losses on credit cards, losses on loans acquired in 2005 as part of the acquisition of Classic Bancshares, losses on loans that were underwritten prior to 2002, and losses on loans that have been underwritten since 2002. Loss rates on loans underwritten since 2002 demonstrate the significant turn-around achieved in asset quality, with gross charge-off rates that have averaged well below our gross charge-off rate for all loans over this time period. As time passes, the Company’s total gross charge-off experience increasingly reflects the solid underwriting standards that the Company utilizes in commercial and retail lending as loans written prior to 2002 become a smaller portion of our loan portfolio. At December 31, 2006, balances of loans written subsequent to 2002 comprise approximately 73% of total loan balances.
The Company also remains well positioned with respect to capital. With a tangible capital ratio in excess of 10%, the Company is positioned to use its capital to either significantly accelerate the past repurchase levels of our common stock or to use cash in an accretive acquisition. In summary, the Company performed well against all measures during 2006 and I am confident that we are positioned to continue to perform solidly in 2007 despite what is anticipated to be a challenging year for banks based on the current economic environment.”
Balance Sheet Trends
As compared to December 31, 2005, loans have increased $64.6 million (4.0%) at December 31, 2006 with increases in commercial loans of $69.0 million (11.0%), home equity loans of $20.0 million (6.6%) and residential real estate loans of $6.0 million (1.0%). These increases were partially offset by decreases in installment loans of $15.7 million, due primarily to the sale of the Company’s retail credit card portfolio, and previously securitized loans of $14.7 million (see Previously Securitized Loans).
Total average depository balances increased $79.6 million, or 4.2%, from the quarter ended December 31, 2005 to the quarter ended December 31, 2006. This growth was primarily in time deposits, which have increased $105.6 million from the quarter ended December 31, 2005.
Net Interest Income
For the full year, the Company’s tax equivalent net interest income increased $5.3 million, or 5.4%, from $98.1 million in 2005 to $103.4 million in 2006, despite a decrease of $2.0 million in interest income from previously securitized loans from 2005 and a decrease of $0.9 million in interest income from credit cards. The average balances of previously securitized loans decreased $20.6 million, or 48.0%, from $42.9 million for the year ended December 31, 2005 to $22.3 million for the year ended December 31, 2006. This decrease was partially mitigated as the yield on previously securitized loans rose from 26.6% for the year ended December 31, 2005 to 42.2% for the year ended December 31, 2006 (see Previously Securitized Loans). Exclusive of interest income from previously securitized loans and credit cards, interest income from all other loans increased $13.1 million from 2005 and the yield on these loans increased 81 basis points. The average balances of these loans increased $167 million during 2006 due to both internal growth and the acquisition of Classic during the second quarter of 2005. Interest income attributable to this growth totaled $10.3 million. These increases were partially offset by an increase of $15.3 million in interest expense. The average rate paid on deposits increased 75 basis points during 2006 and resulted in an increase in deposit interest expense of $11.0 million. Due to the Classic acquisition and internal growth, the Company experienced an increase of $153 million, or 10.4%, in average deposit balances that increased deposit interest expense by $4.3 million.
The net interest margin for the year ended December 31, 2006 of 4.56% represented a 7 basis point increase from the year ended December 31, 2005’s net interest margin of 4.49%. The Company positioned its balance sheet to benefit from rising interest rates by emphasizing variable rate loan products. As interest rates rose during 2005 and 2006, the Company’s interest rate risk management strategy offset the decreasing balances of previously securitized loans and resultant reduced levels of interest income from these assets. Excluding previously securitized loans, the sale of the Company’s credit card portfolio, and the impact of the Classic acquisition, the Company’s net interest margin increased 26 basis points and net interest income increased $6.3 million from 2005.
The Company’s tax equivalent net interest income decreased $0.5 million, or 2.0%, from $25.8 million during the fourth quarter of 2005 to $25.3 million during the fourth quarter of 2006. This decrease is attributable to two factors. First, during the third quarter of 2006, the Company sold its credit card portfolio. Average credit card loans outstanding were $15.3 million in the fourth quarter of 2005. The sale of these loans resulted in a decrease in interest income of $0.5 million. Secondly, the Company experienced a decrease of $0.6 million in interest income from previously securitized loans in the fourth quarter of 2006 as compared to the fourth quarter of 2005 as the average balance of these loans decreased 48.6%. The decrease in average balances was partially mitigated by an increase in the yield on these loans which rose from an average of 31.0% for the fourth quarter of 2005 to 46.6% for the fourth quarter of 2006 (see Previously Securitized Loans). An increase of $4.3 million in interest income from all other loans (commercial, residential, home equity, and consumer) was essentially offset by an increase of $4.0 million in interest expense on deposits.
The Company’s net interest margin was 4.43% in the fourth quarter of 2006 as compared to 4.55% in the fourth quarter of 2005. The decline in the net interest margin can be attributed to lower interest income from previously securitized loans and the sale of the credit card portfolio. Excluding these assets, the Company’s net interest margin decreased 2 basis points from 4.22% during the fourth quarter of 2005 to 4.20% for the fourth quarter of 2006 while net interest income increased $0.3 million from the quarter ended December 31, 2005.
Credit Quality
At December 31, 2006, the Allowance for Loan Losses (“ALLL”) was $15.4 million or 0.92% of total loans outstanding and 385% of non-performing loans compared to $16.8 million or 1.04% of loans outstanding and 402% of non-performing loans at December 31, 2005, and $15.6 million or 0.92% of loans outstanding and 408% of non-performing loans at September 30, 2006. While the Company’s ALLL as a percent of outstanding loans has decreased since December 31, 2005, this decrease can be directly attributed to the sale of the bank’s credit card portfolio in the third quarter of 2006. In fact, after consideration of the impact of the sale of the credit card portfolio, the ALLL (less the portion of the allowance allocated to credit cards) was 0.93% of total loans outstanding (net of credit card loans outstanding) and 355% of non-performing loans (net of non-performing credit card loans) at December 31, 2005.
As a result of the Company’s quarterly analysis of the adequacy of the ALLL, the Company recorded a provision for loan losses of $0.9 million in the fourth quarter of 2006 and $3.8 million for the year ended December 31, 2006 compared to $0.8 million and $1.4 million for the comparable periods in 2005. The provision for loan losses recorded during 2006 was the result of increases in allocations to commercial, commercial real estate, and home equity loans. While the Company has increased the provision from 2005, the amount of provision recorded was favorably impacted by continued improvement in the quality of the loan portfolio and the sale of the credit card portfolio. Changes in the amount of the provision and related allowance are based on the Company’s detailed methodology and are directionally consistent with growth and changes in the quality of the Company’s loan portfolio.
The Company had net charge-offs of $1.1 million for the fourth quarter of 2006, with depository accounts representing $0.4 million (or approximately 36%) 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 loans were $0.7 million for the fourth quarter, while residential loans experienced net recoveries of $0.1 million during the quarter. The increase in net commercial charge-offs was primarily related to four credits that had been previously identified with appropriate amounts of reserve allocated for each credit. The Company experienced net charge-offs related to loans (excluding overdrafts) of 0.11% in 2006; 0.22% in 2005; and 0.17% in 2004.
The Company’s ratio of non-performing assets to total loans and other real estate owned has steadily improved over the last four years, ranging from 0.34% in 2003 to 0.25% at December 31, 2006. This compares quite favorably relative to the Company’s peer group (bank holding companies with total assets between $1 and $5 billion), which reported average non-performing assets as a percentage of loans and other real estate owned for the most recently reported quarter ended September 30, 2006 of 0.70%. The composition of the Company’s loan portfolio, which is weighted more heavily toward residential mortgage loans and less towards non-real estate secured commercial loans than peers, has allowed it to maintain a lower allowance in comparison to peers. In addition, the sale of the Company’s credit card portfolio resulted in a reduction of the allowance by $1.4 million during 2006. As a result, the Company’s ALLL as a percentage of loans outstanding is 0.92% at December 31, 2006. 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
For the full year, net of investment securities (losses) gains and the gain from the sale of the Company’s credit card portfolio, non-interest income increased $2.7 million, or 5.4%, from $49.9 million in 2005 to $52.6 million in 2006. Service charges from depository accounts increased $3.5 million, or 8.9%, from $39.1 million in 2005 to $42.6 million in 2006. This increase is partially due to the acquisition of Classic Bancshares, Inc. during the second quarter of 2005. This increase was partially mitigated by a $0.4 million decrease in bank-owned life insurance revenues from the settlement of insured claims and a $0.4 million decrease in other income due primarily to lower credit card fee income as a result of the sale of the credit card portfolio.
Net of investment securities gains, non-interest income increased $0.1 million to $13.5 million in the fourth quarter of 2006 as compared to $13.4 million in the fourth quarter of 2005. The largest source of non-interest income is service charges from depository accounts, which increased $0.4 million, or 4.1%, from $10.5 million during the fourth quarter of 2005 to $10.9 million during the fourth quarter of 2006. This increase was essentially offset by a decrease in other income of $0.3 million due to lower credit card fee income due to the sale of the credit card portfolio on August 4, 2006 to Elan.
Non-interest Expenses
For the full year, non-interest expenses increased $2.2 million, or 3.1%, from $69.1 million in 2005 to $71.3 million in 2006. The increase was primarily a result of the Classic acquisition during the second quarter of 2005, which increased non-interest expenses by $1.8 million from 2005. In addition, the Company recognized $1.4 million of losses from the redemption of $12.0 million of its trust preferred securities during 2006. Other expenses decreased $1.3 million from 2005 due to a charge recorded in 2005 that was associated with interest rate floors utilized in the Company’s interest rate risk management process. Exclusive of these items, non-interest expenses increased by $0.3 million from 2005 due to increased advertising expenses incurred to facilitate the Company’s focused efforts to attract and grow new customer relationships.
The Company’s efficiency ratio improved from 46.7% for the year ended December 31, 2005 to 44.5% for the year ended December 31, 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 was 58.5%.
Non-interest expenses decreased $0.2 million from $18.3 million in the fourth quarter of 2005 to $18.1 million in the fourth quarter of 2006. The Company incurred a loss of $0.7 million during the fourth quarter of 2006 in connection with the redemption of $6.0 million of its trust preferred securities. The Company redeemed the trust preferred securities that have a stated interest rate of 9.15% in 2006 as a part of its strategy to reposition the balance sheet in response to the sale of its credit card portfolio. In addition, the Company experienced a decrease in health insurance costs of $0.4 million during fourth quarter of 2006, although such savings are not expected to be of a recurring nature. During the fourth quarter of 2005 the Company recorded a charge of $1.3 million associated with interest rate floors.
Previously Securitized Loans
At December 31, 2006, the Company reported “Previously Securitized Loans” of $15.6 million compared to $30.3 million at December 31, 2005, representing a decrease of 48.5%. The yield on the previously securitized loans was 46.6% for the quarter ended December 31, 2006, compared to 43.2% for the quarter ended September 30, 2006, and 31.0% for the quarter ended December 31, 2005. The yield on the previously securitized loans has increased due to improved cash flows as net default rates have been less than previously estimated. The default rates have decreased as a result of the Company’s assumption of the servicing of all of the pool balances during the second quarter of 2005. Subsequent to our assumption of the servicing of these loans, the Company has averaged net recoveries but does not believe that continued net recoveries can be sustained indefinitely. The Company now projects that the yield on these loans will be in the range of 47-49%.
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 84.5% and the loan to asset ratio was 66.9% at December 31, 2006. The Company maintained investment securities totaling 20.7% of assets as of this date. Further, the Company’s deposit mix is weighted heavily toward checking and saving accounts that fund 42.5% of assets at December 31, 2006. Time deposits fund 36.7% of assets at December 31, 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. With respect to regulatory capital, at December 31, 2006, the Company’s Leverage Ratio is 10.79%, the Tier I Capital ratio is 15.30%, and the Total Risk-Based Capital ratio is 16.19%. 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 10.0% at December 31, 2006 compared with a tangible equity ratio of 9.5% at December 31, 2005. During the year ended December 31, 2006, the Company repurchased 666,753 common shares at a weighted average price of $36.45 as part of a one million share repurchase plan authorized by the Board of Directors in June 2005. On December 21, 2006, the Company announced that the Board of Directors authorized the Company to buy back up to one million shares of its common shares (approximately 5% of outstanding shares) in open market transactions at prices that are accretive to the earnings per share of continuing shareholders. No time limit was placed on the duration of the share repurchase program. As part of this authorization, the Company rescinded the previous share repurchase program plan approved in June 2005. The Company had repurchased 837,853 shares under the June 2005 Stock Repurchase Plan. 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 outstanding shares decreased 666,753 shares during the year (exclusive of stock option exercises), providing the Company’s shareholders increased earnings capacity as shares repurchased improve earnings per share on the remaining shares outstanding. As of January 19, 2007, the Company has approximately 931,000 shares remaining for repurchase under the plan approved by the Board of Directors in December 2006. The repurchase of 666,753 shares during 2006 represents 3.7% 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) the Company may be unable to increase its insurance revenues as expected; (11) changes in general economic conditions and increased competition could adversely affect the Company’s operating results; (12) 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 (13) 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 | | | |
| | | Dec 31 | | Dec 31 | | Percent | |
| | | 2006 | | 2005 | | Change | |
| | | | | | | | |
| Earnings ($000s, except per share data): | | | | | | | |
| Net Interest Income (FTE) | | $ | 25,333 | | $ | 25,844 | | | (1.98 | )% |
| Net Income | | | 12,939 | | | 13,089 | | | (1.15 | )% |
| Earnings per Basic Share | | | 0.74 | | | 0.72 | | | 2.78 | % |
| Earnings per Diluted Share | | | 0.74 | | | 0.72 | | | 2.78 | % |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Key Ratios (percent): | | | | | | | | | | |
| Return on Average Assets | | | 2.06 | % | | 2.10 | % | | (1.91 | )% |
| Return on Average Equity | | | 16.93 | % | | 17.66 | % | | (4.11 | )% |
| Net Interest Margin | | | 4.43 | % | | 4.55 | % | | (2.65 | )% |
| Efficiency Ratio | | | 46.40 | % | | 46.57 | % | | (0.37 | )% |
| Average Shareholders' Equity to Average Assets | | | 12.14 | % | | 11.87 | % | | 2.25 | % |
| | | | | | | | | | | |
| Risk-Based Capital Ratios (a): | | | | | | | | | | |
| Tier I | | | 15.30 | % | | 15.41 | % | | (0.72 | )% |
| Total | | | 16.19 | % | | 16.38 | % | | (1.16 | )% |
| | | | | | | | | | | |
| Average Tangible Equity to Average Tangible Assets | | | 10.06 | % | | 9.52 | % | | 5.71 | % |
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| Common Stock Data: | | | | | | | | | | |
| Cash Dividends Declared per Share | | $ | 0.28 | | $ | 0.25 | | | 12.00 | % |
| Book Value per Share | | | 17.46 | | | 16.14 | | | 8.17 | % |
| Tangible Book Value per Share | | | 14.09 | | | 12.85 | | | 9.68 | % |
| Market Value per Share: | | | | | | | | | | |
| High | | | 41.87 | | | 37.62 | | | 11.30 | % |
| Low | | | 37.49 | | | 32.68 | | | 14.72 | % |
| End of Period | | | 40.89 | | | 35.95 | | | 13.74 | % |
| | | | | | | | | | | |
| Price/Earnings Ratio (b) | | | 13.81 | | | 12.48 | | | 10.67 | % |
| | | | Twelve Months Ended | | | | |
| | | | Dec 31 | | | Dec 31 | | | Percent | |
| | | | 2006 | | | 2005 | | | Change | |
| | | | | | | | | | | |
| Earnings ($000s, except per share data): | | | | | | | | | | |
| Net Interest Income (FTE) | | $ | 103,359 | | $ | 98,097 | | | 5.36 | % |
| Net Income | | | 53,187 | | | 50,288 | | | 5.76 | % |
| Earnings per Basic Share | | | 3.00 | | | 2.87 | | | 4.53 | % |
| Earnings per Diluted Share | | | 2.99 | | | 2.84 | | | 5.28 | % |
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| | | | | | | | | | | |
| Key Ratios (percent): | | | | | | | | | | |
| Return on Average Assets | | | 2.11 | % | | 2.09 | % | | 0.93 | % |
| Return on Average Equity | | | 17.91 | % | | 18.98 | % | | (5.64 | )% |
| Net Interest Margin | | | 4.56 | % | | 4.49 | % | | 1.55 | % |
| Efficiency Ratio | | | 44.49 | % | | 46.66 | % | | (4.65 | )% |
| Average Shareholders' Equity to Average Assets | | | 11.80 | % | | 11.03 | % | | 6.96 | % |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Common Stock Data: | | | | | | | | | | |
| Cash Dividends Declared per Share | | $ | 1.12 | | $ | 1.00 | | | 12.00 | % |
| Market Value per Share: | | | | | | | | | | |
| High | | | 41.87 | | | 39.21 | | | 6.78 | % |
| Low | | | 34.53 | | | 27.57 | | | 25.24 | % |
| | | | | | | | | | | |
| | | | | | | | | | | |
| (a) December 31, 2006 risk-based capital ratios are estimated. | | | | | | | | | | |
| (b) December 31, 2006 price/earnings ratio computed based on annualized fourth quarter 2006 earnings. | | | | | | | | | | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | |
Financial Highlights | | | | | | | | | |
(Unaudited) | | | | | | | | | |
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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 | | | 17.46 | | | 34.53 | | | 41.87 | |
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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 | | | 0.74 | | | 3.00 | | | | |
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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 | | | 0.74 | | | 2.99 | | | | |
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CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | |
Consolidated Statements of Income | | | | | |
(Unaudited) ($ in 000s, except per share data) | | | | | |
| | | | | | |
| | | Three Months Ended December 31, | |
| | | 2006 | | 2005 | |
| | | | | | |
Interest Income | | | | | |
| Interest and fees on loans | | $ | 32,157 | | $ | 28,918 | |
| Interest on investment securities: | | | | | | | |
| Taxable | | | 6,800 | | | 7,188 | |
| Tax-exempt | | | 423 | | | 497 | |
| Interest on deposits in depository institutions | | | 459 | | | 36 | |
| Interest on federal funds sold | | | 86 | | | - | |
Total Interest Income | | | 39,925 | | | 36,639 | |
| | | | | | | | |
Interest Expense | | | | | | | |
| Interest on deposits | | | 12,543 | | | 8,569 | |
| Interest on short-term borrowings | | | 1,304 | | | 1,049 | |
| Interest on long-term debt | | | 973 | | | 1,446 | |
Total Interest Expense | | | 14,820 | | | 11,064 | |
Net Interest Income | | | 25,105 | | | 25,575 | |
| Provision for loan losses | | | 901 | | | 800 | |
Net Interest Income After Provision for Loan Losses | | | 24,204 | | | 24,775 | |
| | | | | | | | |
Non-Interest Income | | | | | | | |
| Investment securities gains (losses) | | | 72 | | | 125 | |
| Service charges | | | 10,962 | | | 10,530 | |
| Insurance commissions | | | 675 | | | 620 | |
| Trust and investment management fee income | | | 498 | | | 504 | |
| Bank owned life insurance | | | 576 | | | 691 | |
| Other income | | | 803 | | | 1,067 | |
Total Non-Interest Income | | | 13,586 | | | 13,537 | |
| | | | | | | | |
Non-Interest Expense | | | | | | | |
| Salaries and employee benefits | | | 8,354 | | | 8,416 | |
| Occupancy and equipment | | | 1,655 | | | 1,569 | |
| Depreciation | | | 1,037 | | | 1,062 | |
| Professional fees and litigation expense | | | 415 | | | 486 | |
| Postage, delivery, and statement mailings | | | 735 | | | 728 | |
| Advertising | | | 876 | | | 710 | |
| Telecommunications | | | 549 | | | 560 | |
| Bankcard expenses | | | 478 | | | 540 | |
| Insurance and regulatory | | | 375 | | | 380 | |
| Office supplies | | | 408 | | | 388 | |
| Repossessed asset losses (gains), net of expenses | | | 6 | | | (28 | ) |
| Loss on early extinguishment of debt | | | 708 | | | - | |
| Other expenses | | | 2,503 | | | 3,528 | |
Total Non-Interest Expense | | | 18,099 | | | 18,339 | |
Income Before Income Taxes | | | 19,691 | | | 19,973 | |
| Income tax expense | | | 6,752 | | | 6,884 | |
Net Income | | $ | 12,939 | | $ | 13,089 | |
| | | | | | | | |
| Basic earnings per share | | $ | 0.74 | | $ | 0.72 | |
| Diluted earnings per share | | $ | 0.74 | | $ | 0.72 | |
Average Common Shares Outstanding: | | | | | | | |
| Basic | | | 17,535 | | | 18,127 | |
| Diluted | | | 17,601 | | | 18,211 | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | |
Consolidated Statements of Income | | | | | |
(Unaudited) ($ in 000s, except per share data) | | | | | |
| | | | | | |
| | | Twelve Months Ended December 31, | |
| | | 2006 | | 2005 | |
| | | | | | |
Interest Income | | | | | |
| Interest and fees on loans | | $ | 123,945 | | $ | 103,714 | |
| Interest on investment securities: | | | | | | | |
| Taxable | | | 28,418 | | | 29,804 | |
| Tax-exempt | | | 1,782 | | | 1,887 | |
| Interest on loans held for sale | | | 322 | | | - | |
| Interest on deposits in depository institutions | | | 1,477 | | | 109 | |
| Interest on federal funds sold | | | 179 | | | 4 | |
Total Interest Income | | | 156,123 | | | 135,518 | |
| | | | | | | | |
Interest Expense | | | | | | | |
| Interest on deposits | | | 44,046 | | | 28,805 | |
| Interest on short-term borrowings | | | 5,099 | | | 3,369 | |
| Interest on long-term debt | | | 4,579 | | | 6,264 | |
Total Interest Expense | | | 53,724 | | | 38,438 | |
Net Interest Income | | | 102,399 | | | 97,080 | |
| Provision for loan losses | | | 3,801 | | | 1,400 | |
Net Interest Income After Provision for Loan Losses | | | 98,598 | | | 95,680 | |
| | | | | | | | |
Non-Interest Income | | | | | | | |
| Investment securities (losses) gains | | | (1,995 | ) | | 151 | |
| Service charges | | | 42,559 | | | 39,091 | |
| Insurance commissions | | | 2,335 | | | 2,352 | |
| Trust and investment management fee income | | | 2,140 | | | 2,025 | |
| Bank owned life insurance | | | 2,352 | | | 2,779 | |
| Gain on sale of credit card portfolio | | | 3,563 | | | - | |
| Other income | | | 3,249 | | | 3,693 | |
Total Non-Interest Income | | | 54,203 | | | 50,091 | |
| | | | | | | | |
Non-Interest Expense | | | | | | | |
| Salaries and employee benefits | | | 34,484 | | | 33,479 | |
| Occupancy and equipment | | | 6,481 | | | 6,295 | |
| Depreciation | | | 4,219 | | | 4,096 | |
| Professional fees and litigation expense | | | 1,760 | | | 2,021 | |
| Postage, delivery, and statement mailings | | | 2,832 | | | 2,666 | |
| Advertising | | | 3,216 | | | 2,941 | |
| Telecommunications | | | 2,048 | | | 2,248 | |
| Bankcard expenses | | | 1,964 | | | 2,137 | |
| Insurance and regulatory | | | 1,528 | | | 1,496 | |
| Office supplies | | | 1,578 | | | 1,193 | |
| Repossessed asset (gains), net of expenses | | | (98 | ) | | (78 | ) |
| Loss on early extinguishment of debt | | | 1,368 | | | - | |
| Other expenses | | | 9,905 | | | 10,619 | |
Total Non-Interest Expense | | | 71,285 | | | 69,113 | |
Income Before Income Taxes | | | 81,516 | | | 76,658 | |
| Income tax expense | | | 28,329 | | | 26,370 | |
Net Income | | $ | 53,187 | | $ | 50,288 | |
| | | | | | | | |
| Basic earnings per share | | $ | 3.00 | | $ | 2.87 | |
| Diluted earnings per share | | $ | 2.99 | | $ | 2.84 | |
Average Common Shares Outstanding: | | | | | | | |
| Basic | | | 17,701 | | | 17,519 | |
| Diluted | | | 17,762 | | | 17,690 | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | |
Consolidated Statements of Changes in Stockholders' Equity | | | | | |
(Unaudited) ($ in 000s) | | | | | |
| | | | | | |
| | | Three Months Ended | |
| | | December 31, 2006 | | December 31, 2005 | |
| | | | | | |
Balance at October 1 | | $ | 298,327 | | $ | 290,432 | |
| | | | | | | | |
| Net income | | | 12,939 | | | 13,089 | |
| Other comprehensive income: | | | | | | | |
| Change in unrealized gain on securities available-for-sale | | | 1,913 | | | (3,701 | ) |
| Change in underfunded pension liability | | | 503 | | | (748 | ) |
| Change in unrealized gain on interest rate floors | | | (663 | ) | | - | |
| Reclassification of unrealized derivative losses | | | - | | | 543 | |
| Cash dividends declared ($0.28/share) | | | (4,896 | ) | | - | |
| Cash dividends declared ($0.25/share) | | | - | | | (4,522 | ) |
| Issuance of stock awards, net | | | 13 | | | - | |
| Exercise of 104,966 stock options | | | - | | | 3,128 | |
| Exercise of 6,488 stock options | | | 145 | | | - | |
| Excess tax benefits on stock compensation | | | 47 | | | - | |
| Purchase of 171,000 common shares of treasury | | | - | | | (6,080 | ) |
| Purchase of 76,700 common shares of treasury | | | (3,021 | ) | | - | |
Balance at December 31 | | $ | 305,307 | | $ | 292,141 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | Twelve Months Ended | |
| | | December 31, 2006 | | | December 31, 2005 | |
| | | | | | | | |
Balance at January 1 | | $ | 292,141 | | $ | 216,080 | |
| | | | | | | | |
| Net income | | | 53,187 | | | 50,288 | |
| Other comprehensive income: | | | | | | | |
| Change in unrealized gain on securities available-for-sale | | | 2,190 | | | (6,120 | ) |
| Change in unrealized gain on interest rate floors | | | (210 | ) | | - | |
| Change in underfunded pension liability | | | 503 | | | (748 | ) |
| Cash dividends declared ($1.12/share) | | | (19,721 | ) | | - | |
| Cash dividends declared ($1.00/share) | | | - | | | (17,716 | ) |
| 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 | | | 484 | | | 147 | |
| Exercise of 367,675 stock options | | | - | | | 7,783 | |
| Exercise of 46,423 stock options | | | 798 | | | - | |
| Excess tax benefits on stock compensation | | | 269 | | | - | |
| Purchase of 342,576 common shares of treasury | | | - | | | (11,912 | ) |
| Purchase of 666,753 common shares of treasury | | | (24,334 | ) | | - | |
Balance at December 31 | | $ | 305,307 | | $ | 292,141 | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | |
Condensed Consolidated Quarterly Statements of Income | | | | | | | | | | | |
(Unaudited) ($ in 000s, except per share data) | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | Quarter Ended | |
| | | Dec 31 | | Sept 30 | | June 30 | | March 31 | | Dec 31 | |
| | | 2006 | | 2006 | | 2006 | | 2006 | | 2005 | |
| | | | | | | | | | | | |
| Interest income | | $ | 39,925 | | $ | 39,747 | | $ | 39,010 | | $ | 37,441 | | $ | 36,639 | |
| Taxable equivalent adjustment | | | 228 | | | 236 | | | 246 | | | 252 | | | 269 | |
| Interest income (FTE) | | | 40,153 | | | 39,983 | | | 39,256 | | | 37,693 | | | 36,908 | |
| Interest expense | | | 14,820 | | | 14,233 | | | 13,085 | | | 11,588 | | | 11,064 | |
| Net interest income | | | 25,333 | | | 25,750 | | | 26,171 | | | 26,105 | | | 25,844 | |
| Provision for loan losses | | | 901 | | | 1,225 | | | 675 | | | 1,000 | | | 800 | |
| Net interest income after provision | | | | | | | | | | | | | | | | |
| for loan losses | | | 24,432 | | | 24,525 | | | 25,496 | | | 25,105 | | | 25,044 | |
| | | | | | | | | | | | | | | | | |
| Noninterest income | | | 13,586 | | | 14,766 | | | 13,463 | | | 12,389 | | | 13,537 | |
| Noninterest expense | | | 18,099 | | | 18,133 | | | 17,555 | | | 17,497 | | | 18,339 | |
| Income before income taxes | | | 19,919 | | | 21,158 | | | 21,404 | | | 19,997 | | | 20,242 | |
| Income tax expense | | | 6,752 | | | 7,302 | | | 7,397 | | | 6,879 | | | 6,884 | |
| Taxable equivalent adjustment | | | 228 | | | 236 | | | 246 | | | 252 | | | 269 | |
| Net income | | $ | 12,939 | | $ | 13,620 | | $ | 13,761 | | $ | 12,866 | | $ | 13,089 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Basic earnings per share | | $ | 0.74 | | $ | 0.78 | | $ | 0.78 | | $ | 0.71 | | $ | 0.72 | |
| Diluted earnings per share | | | 0.74 | | | 0.77 | | | 0.77 | | | 0.71 | | | 0.72 | |
| Cash dividends declared per share | | | 0.28 | | | 0.28 | | | 0.28 | | | 0.28 | | | 0.25 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Average Common Share (000s): | | | | | | | | | | | | | | | | |
| Outstanding | | | 17,535 | | | 17,557 | | | 17,719 | | | 18,006 | | | 18,127 | |
| Diluted | | | 17,601 | | | 17,619 | | | 17,772 | | | 18,067 | | | 18,211 | |
| | | | | | | | | | | | | | | | | |
| Net Interest Margin | | | 4.43 | % | | 4.51 | % | | 4.58 | % | | 4.71 | % | | 4.55 | % |
| | | | | | | | | | | | | | | | | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | |
Non-Interest Income and Non-Interest Expense | | | | | | | | | | | |
(Unaudited) ($ in 000s) | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | Quarter Ended | |
| | | Dec 31 | | Sept 30 | | June 30 | | March 31 | | Dec 31 | |
| | | 2006 | | 2006 | | 2006 | | 2006 | | 2005 | |
| | | | | | | | | | | | |
Non-Interest Income: | | | | | | | | | | | |
| Service charges | | $ | 10,962 | | $ | 10,833 | | $ | 10,903 | | $ | 9,862 | | $ | 10,530 | |
| Insurance commissions | | | 675 | | | 526 | | | 521 | | | 614 | | | 620 | |
| Trust and investment management fee income | | | 498 | | | 572 | | | 504 | | | 566 | | | 504 | |
| Bank owned life insurance | | | 576 | | | 561 | | | 678 | | | 537 | | | 691 | |
| Other income | | | 803 | | | 778 | | | 857 | | | 810 | | | 1,067 | |
Subtotal | | | 13,514 | | | 13,270 | | | 13,463 | | | 12,389 | | | 13,412 | |
| Investment security gains (losses) | | | 72 | | | (2,067 | ) | | - | | | - | | | 125 | |
| Gain on sale of credit card portfolio | | | - | | | 3,563 | | | - | | | - | | | - | |
Total Non-Interest Income | | $ | 13,586 | | $ | 14,766 | | $ | 13,463 | | $ | 12,389 | | $ | 13,537 | |
| | | | | | | | | | | | | | | | | |
Non-Interest Expense: | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | $ | 8,354 | | $ | 8,733 | | $ | 8,764 | | $ | 8,632 | | $ | 8,416 | |
| Occupancy and equipment | | | 1,655 | | | 1,602 | | | 1,624 | | | 1,599 | | | 1,569 | |
| Depreciation | | | 1,037 | | | 1,061 | | | 1,071 | | | 1,050 | | | 1,062 | |
| Professional fees and litigation expense | | | 415 | | | 379 | | | 571 | | | 395 | | | 486 | |
| Postage, delivery, and statement mailings | | | 735 | | | 765 | | | 689 | | | 644 | | | 728 | |
| Advertising | | | 876 | | | 810 | | | 755 | | | 774 | | | 710 | |
| Telecommunications | | | 549 | | | 498 | | | 525 | | | 476 | | | 560 | |
| Bankcard expenses | | | 478 | | | 485 | | | 458 | | | 543 | | | 540 | |
| Insurance and regulatory | | | 375 | | | 384 | | | 381 | | | 388 | | | 380 | |
| Office supplies | | | 408 | | | 417 | | | 372 | | | 383 | | | 388 | |
| Repossessed asset losses (gains), net of expenses | | | 6 | | | 20 | | | (129 | ) | | 4 | | | (28 | ) |
| Loss on early extinguishment of debt | | | 708 | | | 379 | | | - | | | 282 | | | - | |
| Other expenses | | | 2,503 | | | 2,600 | | | 2,474 | | | 2,327 | | | 3,528 | |
Total Non-Interest Expense | | $ | 18,099 | | $ | 18,133 | | $ | 17,555 | | $ | 17,497 | | $ | 18,339 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Employees (Full Time Equivalent) | | | 779 | | | 767 | | | 779 | | | 764 | | | 770 | |
| Branch Locations | | | 67 | | | 67 | | | 67 | | | 66 | | | 67 | |
| | | | | | | | | | | | | | | | | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | |
Consolidated Balance Sheets | | | | | |
($ in 000s) | | | | | |
| | | December 31 | | December 31 | |
| | | 2006 | | 2005 | |
| | | (Unaudited) | | | |
Assets | | | | | |
| Cash and due from banks | | $ | 58,014 | | $ | 81,822 | |
| Interest-bearing deposits in depository institutions | | | 27,434 | | | 4,451 | |
| Federal funds sold | | | 25,000 | | | - | |
Cash and cash equivalents | | | 110,448 | | | 86,273 | |
| | | | | | | | |
| Investment securities available-for-sale, at fair value | | | 472,398 | | | 549,966 | |
| Investment securities held-to-maturity, at amortized cost | | | 47,500 | | | 55,397 | |
Total investment securities | | | 519,898 | | | 605,363 | |
| | | | | | | | |
| Gross loans | | | 1,677,469 | | | 1,612,827 | |
| Allowance for loan losses | | | (15,405 | ) | | (16,790 | ) |
Net loans | | | 1,662,064 | | | 1,596,037 | |
| | | | | | | | |
| Bank owned life insurance | | | 55,195 | | | 52,969 | |
| Premises and equipment | | | 44,689 | | | 42,542 | |
| Accrued interest receivable | | | 12,337 | | | 13,134 | |
| Net deferred tax assets | | | 23,652 | | | 27,929 | |
| Intangible assets | | | 58,857 | | | 59,559 | |
| Other assets | | | 20,667 | | | 18,791 | |
Total Assets | | $ | 2,507,807 | | $ | 2,502,597 | |
| | | | | | | | |
Liabilities | | | | | | | |
| Deposits: | | | | | | | |
| Noninterest-bearing | | $ | 321,038 | | $ | 376,076 | |
| Interest-bearing: | | | | | | | |
| Demand deposits | | | 422,925 | | | 437,639 | |
| Savings deposits | | | 321,075 | | | 302,571 | |
| Time deposits | | | 920,179 | | | 812,134 | |
Total deposits | | | 1,985,217 | | | 1,928,420 | |
| Short-term borrowings | | | 136,570 | | | 152,255 | |
| Long-term debt | | | 48,069 | | | 98,425 | |
| Other liabilities | | | 32,644 | | | 31,356 | |
Total Liabilities | | | 2,202,500 | | | 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 December 31, 2006 and December 31, 2005 | | | | | | | |
| less 1,009,095 and 395,465 shares in treasury, respectively | | | 46,249 | | | 46,249 | |
| Capital surplus | | | 104,043 | | | 104,435 | |
| Retained earnings | | | 194,213 | | | 160,747 | |
| Cost of common stock in treasury | | | (33,669 | ) | | (11,278 | ) |
| Accumulated other comprehensive (loss) income: | | | | | | | |
| Unrealized loss on securities available-for-sale | | | (2,649 | ) | | (4,839 | ) |
| Unrealized loss on derivative instruments | | | (210 | ) | | - | |
| Underfunded pension liability | | | (2,670 | ) | | (3,173 | ) |
Total Accumulated Other Comprehensive (Loss) Income | | | (5,529 | ) | | (8,012 | ) |
Total Stockholders' Equity | | | 305,307 | | | 292,141 | |
Total Liabilities and Stockholders' Equity | | $ | 2,507,807 | | $ | 2,502,597 | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | |
Loan Portfolio | | | | | | | | | | | |
(Unaudited) ($ in 000s) | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | Dec 31 | | Sept 30 | | June 30 | | March 31 | | Dec 31 | |
| | | 2006 | | 2006 | | 2006 | | 2006 | | 2005 | |
| | | | | | | | | | | | |
| Residential real estate | | $ | 598,502 | | $ | 604,867 | | $ | 601,097 | | $ | 595,093 | | $ | 592,521 | |
| Home equity | | | 321,708 | | | 318,666 | | | 313,301 | | | 304,559 | | | 301,728 | |
| Commercial, financial, and agriculture | | | 698,719 | | | 713,933 | | | 668,581 | | | 643,269 | | | 629,670 | |
| Installment loans to individuals | | | 42,943 | | | 41,215 | | | 42,307 | | | 54,287 | | | 58,652 | |
| Previously securitized loans | | | 15,597 | | | 18,520 | | | 22,253 | | | 25,918 | | | 30,256 | |
Gross Loans | | $ | 1,677,469 | | $ | 1,697,201 | | $ | 1,647,539 | | $ | 1,623,126 | | $ | 1,612,827 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
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 | | | 15.6 | | | 9.4 | | | 42 | % | | | |
| | | | 2007 | | | 10.9 | | | 6.2 | | | 47 | % | | | |
| | | | 2008 | | | 8.5 | | | 4.6 | | | 47 | % | | | |
| | | | 2009 | | | 7.2 | | | 3.8 | | | 47 | % | | | |
| | | | | | | | | | | | | | | | | |
| (a) 2005 and 2006 amounts are based on actual results. 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 December 31, | |
| | | | | 2006 | | | | | | 2005 | | | |
| | | Average | | | | Yield/ | | Average | | | | Yield/ | |
| | | Balance | | Interest | | Rate | | Balance | | Interest | | Rate | |
| | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | |
| Loan portfolio: | | | | | | | | | | | | | |
| Residential real estate | | $ | 600,372 | | $ | 8,853 | | | 5.85 | % | $ | 595,309 | | $ | 8,365 | | | 5.57 | % |
| Home equity | | | 320,302 | | | 6,439 | | | 7.98 | % | | 303,977 | | | 5,318 | | | 6.94 | % |
| Commercial, financial, and agriculture | | | 710,467 | | | 13,584 | | | 7.59 | % | | 626,341 | | | 10,928 | | | 6.92 | % |
| Installment loans to individuals | | | 41,827 | | | 1,297 | | | 12.30 | % | | 60,233 | | | 1,739 | | | 11.45 | % |
| Previously securitized loans | | | 16,878 | | | 1,984 | | | 46.64 | % | | 32,851 | | | 2,569 | | | 31.03 | % |
| Total loans | | | 1,689,846 | | | 32,157 | | | 7.55 | % | | 1,618,711 | | | 28,919 | | | 7.09 | % |
| Securities: | | | | | | | | | | | | | | | | | | | |
| Taxable | | | 494,380 | | | 6,800 | | | 5.46 | % | | 580,845 | | | 7,187 | | | 4.91 | % |
| Tax-exempt | | | 40,006 | | | 650 | | | 6.45 | % | | 47,675 | | | 766 | | | 6.37 | % |
| Total securities | | | 534,386 | | | 7,450 | | | 5.53 | % | | 628,520 | | | 7,953 | | | 5.02 | % |
| Deposits in depository institutions | | | 37,827 | | | 459 | | | 4.81 | % | | 5,188 | | | 36 | | | 2.75 | % |
| Federal funds sold | | | 5,989 | | | 87 | | | 5.76 | % | | - | | | - | | | - | |
Total interest-earning assets | | | 2,268,048 | | | 40,153 | | | 7.02 | % | | 2,252,419 | | | 36,908 | | | 6.50 | % |
| Cash and due from banks | | | 49,068 | | | | | | | | | 52,828 | | | | | | | |
| Bank premises and equipment | | | 44,073 | | | | | | | | | 42,432 | | | | | | | |
| Other assets | | | 172,709 | | | | | | | | | 168,395 | | | | | | | |
| Less: Allowance for loan losses | | | (15,631 | ) | | | | | | | | (17,272 | ) | | | | | | |
Total assets | | $ | 2,518,267 | | | | | | | | $ | 2,498,802 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Liabilities: | | | | | | | | | | | | | | | | | | | |
| Interest-bearing demand deposits | | | 426,536 | | | 1,367 | | | 1.27 | % | | 442,130 | | | 1,207 | | | 1.08 | % |
| Savings deposits | | | 316,734 | | | 1,207 | | | 1.51 | % | | 302,904 | | | 684 | | | 0.90 | % |
| Time deposits | | | 915,041 | | | 9,969 | | | 4.32 | % | | 809,433 | | | 6,678 | | | 3.27 | % |
| Short-term borrowings | | | 125,448 | | | 1,304 | | | 4.12 | % | | 159,185 | | | 1,049 | | | 2.61 | % |
| Long-term debt | | | 74,200 | | | 973 | | | 5.20 | % | | 114,590 | | | 1,446 | | | 5.01 | % |
Total interest-bearing liabilities | | | 1,857,959 | | | 14,820 | | | 3.16 | % | | 1,828,242 | | | 11,064 | | | 2.40 | % |
| Noninterest-bearing demand deposits | | | 323,500 | | | | | | | | | 347,777 | | | | | | | |
| Other liabilities | | | 31,153 | | | | | | | | | 26,287 | | | | | | | |
| Stockholders' equity | | | 305,655 | | | | | | | | | 296,496 | | | | | | | |
Total liabilities and | | | | | | | | | | | | | | | | | | | |
stockholders' equity | | $ | 2,518,267 | | | | | | | | $ | 2,498,802 | | | | | | | |
Net interest income | | | | | $ | 25,333 | | | | | | | | $ | 25,844 | | | | |
Net yield on earning assets | | | | | | | | | 4.43 | % | | | | | | | | 4.55 | % |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | |
Consolidated Average Balance Sheets, Yields, and Rates | | | | | | | | | | | |
(Unaudited) ($ in 000s) | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | Twelve Months Ended December 31, | |
| | | | | 2006 | | | | | | 2005 | | | |
| | | Average | | | | Yield/ | | Average | | | | Yield/ | |
| | | Balance | | Interest | | Rate | | Balance | | Interest | | Rate | |
| | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | |
| Loan portfolio: | | | | | | | | | | | | | |
| Residential real estate | | $ | 598,017 | | $ | 34,483 | | | 5.77 | % | $ | 545,280 | | $ | 30,570 | | | 5.61 | % |
| Home equity | | | 311,854 | | | 24,384 | | | 7.82 | % | | 305,525 | | | 19,088 | | | 6.25 | % |
| Commercial, financial, and agriculture | | | 670,243 | | | 50,165 | | | 7.48 | % | | 564,612 | | | 36,287 | | | 6.43 | % |
| Installment loans to individuals | | | 47,477 | | | 5,507 | | | 11.60 | % | | 56,091 | | | 6,368 | | | 11.35 | % |
| Previously securitized loans | | | 22,273 | | | 9,406 | | | 42.23 | % | | 42,859 | | | 11,401 | | | 26.60 | % |
| Total loans | | | 1,649,864 | | | 123,945 | | | 7.51 | % | | 1,514,367 | | | 103,714 | | | 6.85 | % |
| Securities: | | | | | | | | | | | | | | | | | | | |
| Taxable | | | 539,634 | | | 28,418 | | | 5.27 | % | | 623,155 | | | 29,804 | | | 4.78 | % |
| Tax-exempt | | | 42,113 | | | 2,741 | | | 6.51 | % | | 43,767 | | | 2,904 | | | 6.64 | % |
| Total securities | | | 581,747 | | | 31,159 | | | 5.36 | % | | 666,922 | | | 32,708 | | | 4.90 | % |
| Loans held for sale | | | 2,496 | | | 322 | | | 12.90 | % | | - | | | - | | | - | |
| Deposits in depository institutions | | | 30,633 | | | 1,478 | | | 4.82 | % | | 4,609 | | | 109 | | | 2.36 | % |
| Federal funds sold | | | 3,433 | | | 179 | | | 5.21 | % | | 105 | | | 4 | | | 3.81 | % |
Total interest-earning assets | | | 2,268,173 | | | 157,083 | | | 6.93 | % | | 2,186,003 | | | 136,535 | | | 6.25 | % |
| Cash and due from banks | | | 50,571 | | | | | | | | | 48,562 | | | | | | | |
| Bank premises and equipment | | | 43,111 | | | | | | | | | 39,109 | | | | | | | |
| Other assets | | | 171,214 | | | | | | | | | 145,899 | | | | | | | |
| Less: Allowance for loan losses | | | (16,008 | ) | | | | | | | | (17,515 | ) | | | | | | |
Total assets | | $ | 2,517,061 | | | | | | | | $ | 2,402,058 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Liabilities: | | | | | | | | | | | | | | | | | | | |
| Interest-bearing demand deposits | | | 433,244 | | | 5,284 | | | 1.22 | % | | 433,831 | | | 3,866 | | | 0.89 | % |
| Savings deposits | | | 314,732 | | | 3,983 | | | 1.27 | % | | 295,045 | | | 2,070 | | | 0.70 | % |
| Time deposits | | | 877,592 | | | 34,779 | | | 3.96 | % | | 743,725 | | | 22,869 | | | 3.07 | % |
| Short-term borrowings | | | 143,705 | | | 5,099 | | | 3.55 | % | | 157,264 | | | 3,369 | | | 2.14 | % |
| Long-term debt | | | 85,893 | | | 4,579 | | | 5.33 | % | | 137,340 | | | 6,264 | | | 4.56 | % |
Total interest-bearing liabilities | | | 1,855,166 | | | 53,724 | | | 2.90 | % | | 1,767,205 | | | 38,438 | | | 2.18 | % |
| Noninterest-bearing demand deposits | | | 335,089 | | | | | | | | | 341,873 | | | | | | | |
| Other liabilities | | | 29,840 | | | | | | | | | 28,026 | | | | | | | |
| Stockholders' equity | | | 296,966 | | | | | | | | | 264,954 | | | | | | | |
Total liabilities and | | | | | | | | | | | | | | | | | | | |
stockholders' equity | | $ | 2,517,061 | | | | | | | | $ | 2,402,058 | | | | | | | |
Net interest income | | | | | $ | 103,359 | | | | | | | | $ | 98,097 | | | | |
Net yield on earning assets | | | | | | | | | 4.56 | % | | | | | | | | 4.49 | % |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | |
Analysis of Risk-Based Capital | | | | | | | | | | | |
(Unaudited) ($ in 000s) | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | Dec 31 | | Sept 30 | | June 30 | | March 31 | | Dec 31 | |
| | | 2006 (a) | | 2006 | | 2006 | | 2006 | | 2005 | |
| | | | | | | | | | | | |
| Tier I Capital: | | | | | | | | | | | |
| Stockholders' equity | | $ | 305,307 | | $ | 298,327 | | $ | 284,120 | | $ | 288,376 | | $ | 292,141 | |
| Goodwill and other intangibles | | | (58,857 | ) | | (59,038 | ) | | (59,219 | ) | | (59,378 | ) | | (59,559 | ) |
| Accumulated other comprehensive income | | | 2,859 | | | 4,109 | | | 9,762 | | | 6,265 | | | 8,012 | |
| Qualifying trust preferred stock | | | 16,000 | | | 22,000 | | | 25,500 | | | 25,500 | | | 28,000 | |
| Excess deferred tax assets | | | - | | | - | | | (4,079 | ) | | (2,254 | ) | | (1,071 | ) |
| Total tier I capital | | $ | 265,309 | | $ | 265,398 | | $ | 256,084 | | $ | 258,509 | | $ | 267,523 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Total Risk-Based Capital: | | | | | | | | | | | | | | | | |
| Tier I capital | | $ | 265,309 | | $ | 265,398 | | $ | 256,084 | | $ | 258,509 | | $ | 267,523 | |
| Qualifying allowance for loan losses | | | 15,405 | | | 15,557 | | | 15,268 | | | 16,818 | | | 16,790 | |
| Total risk-based capital | | $ | 280,714 | | $ | 280,955 | | $ | 271,352 | | $ | 275,327 | | $ | 284,313 | |
| | | | | | | | | | | | | | | | | |
| Net risk-weighted assets | | $ | 1,734,214 | | $ | 1,770,458 | | $ | 1,757,720 | | $ | 1,743,243 | | $ | 1,735,538 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Ratios: | | | | | | | | | | | | | | | | |
| Average stockholders' equity to average assets | | | 12.14 | % | | 11.67 | % | | 11.51 | % | | 11.87 | % | | 11.87 | % |
| Tangible capital ratio | | | 10.06 | % | | 9.69 | % | | 9.13 | % | | 9.24 | % | | 9.52 | % |
| Risk-based capital ratios: | | | | | | | | | | | | | | | | |
| Tier I capital | | | 15.30 | % | | 14.99 | % | | 14.58 | % | | 14.83 | % | | 15.41 | % |
| Total risk-based capital | | | 16.19 | % | | 15.87 | % | | 15.45 | % | | 15.80 | % | | 16.38 | % |
| Leverage capital | | | 10.79 | % | | 10.81 | % | | 10.34 | % | | 10.62 | % | | 10.97 | % |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| (a) December 31, 2006 risk-based capital ratios are estimated. | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | | |
Intangibles | | | | | | | | | | | | | | | | |
(Unaudited) ($ in 000s) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | As of and for the Quarter Ended | |
| | | | Dec 31 | | | Sept 30 | | | June 30 | | | March 31 | | | Dec 31 | |
| | | | 2006 | | | 2006 | | | 2006 | | | 2006 | | | 2005 | |
| | | | | | | | | | | | | | | | | |
| Intangibles, net | | $ | 58,857 | | $ | 59,038 | | $ | 59,219 | | $ | 59,378 | | $ | 59,559 | |
| Intangibles amortization expense | | | 181 | | | 181 | | | 181 | | | 181 | | | 183 | |
| | | | | | | | | | | | | | | | | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | |
Summary of Loan Loss Experience | | | | | | | | | | | |
(Unaudited) ($ in 000s) | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | Quarter Ended | |
| | | Dec 31 | | Sept 30 | | June 30 | | March 31 | | Dec 31 | |
| | | 2006 | | 2006 | | 2006 | | 2006 | | 2005 | |
| | | | | | | | | | | | |
| Balance at beginning of period | | $ | 15,557 | | $ | 15,268 | | $ | 16,818 | | $ | 16,790 | | $ | 17,768 | |
| | | | | | | | | | | | | | | | | |
| Reduction of allowance for loans held for sale | | | - | | | - | | | (1,368 | ) | | - | | | - | |
| | | | | | | | | | | | | | | | | |
Charge-offs: | | | | | | | | | | | | | | | | |
| Commercial, financial, and agricultural | | | 844 | | | 207 | | | 43 | | | 185 | | | 527 | |
| Real estate-mortgage | | | 230 | | | 177 | | | 232 | | | 296 | | | 302 | |
| Installment loans to individuals | | | 126 | | | 165 | | | 239 | | | 368 | | | 664 | |
| Overdraft deposit accounts | | | 892 | | | 1,018 | | | 955 | | | 958 | | | 996 | |
Total charge-offs | | | 2,092 | | | 1,567 | | | 1,469 | | | 1,807 | | | 2,489 | |
| | | | | | | | | | | | | | | | | |
Recoveries: | | | | | | | | | | | | | | | | |
| Commercial, financial, and agricultural | | | 101 | | | 44 | | | 33 | | | 32 | | | 30 | |
| Real estate-mortgage | | | 350 | | | 64 | | | 56 | | | 105 | | | 188 | |
| Installment loans to individuals | | | 118 | | | 131 | | | 151 | | | 198 | | | 163 | |
| Overdraft deposit accounts | | | 470 | | | 392 | | | 372 | | | 500 | | | 330 | |
Total recoveries | | | 1,039 | | | 631 | | | 612 | | | 835 | | | 711 | |
| | | | | | | | | | | | | | | | | |
Net charge-offs | | | 1,053 | | | 936 | | | 857 | | | 972 | | | 1,778 | |
| Provision for loan losses | | | 901 | | | 1,225 | | | 675 | | | 1,000 | | | 800 | |
Balance at end of period | | $ | 15,405 | | $ | 15,557 | | $ | 15,268 | | $ | 16,818 | | $ | 16,790 | |
| | | | | | | | | | | | | | | | | |
| Loans outstanding | | $ | 1,677,469 | | $ | 1,697,201 | | $ | 1,647,539 | | $ | 1,623,126 | | $ | 1,612,827 | |
| Average loans outstanding | | | 1,689,846 | | | 1,662,929 | | | 1,630,454 | | | 1,615,242 | | | 1,618,711 | |
| Allowance as a percent of loans outstanding | | | 0.92 | % | | 0.92 | % | | 0.93 | % | | 1.04 | % | | 1.04 | % |
| Allowance as a percent of non-performing loans | | | 384.93 | % | | 408.43 | % | | 408.02 | % | | 503.53 | % | | 401.96 | % |
| Net charge-offs (annualized) as a | | | | | | | | | | | | | | | | |
| percent of average loans outstanding | | | 0.25 | % | | 0.23 | % | | 0.21 | % | | 0.24 | % | | 0.44 | % |
| Net charge-offs, excluding overdraft deposit | | | | | | | | | | | | | | | | |
| accounts, (annualized) as a percent of average loans outstanding | | | 0.15 | % | | 0.07 | % | | 0.07 | % | | 0.13 | % | | 0.27 | % |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | |
Summary of Non-Performing Assets | | | | | | | | | | | |
(Unaudited) ($ in 000s) | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | Dec 31 | | Sept 30 | | June 30 | | March 31 | | Dec 31 | |
| | | 2006 | | 2006 | | 2006 | | 2006 | | 2005 | |
| | | | | | | | | | | | |
| Nonaccrual loans | | $ | 3,319 | | $ | 3,359 | | $ | 3,046 | | $ | 2,743 | | $ | 2,785 | |
| Accruing loans past due 90 days or more | | | 635 | | | 328 | | | 573 | | | 512 | | | 1,124 | |
| Previously securitized loans past due 90 days or more | | | 48 | | | 122 | | | 123 | | | 85 | | | 268 | |
Total non-performing loans | | | 4,002 | | | 3,809 | | | 3,742 | | | 3,340 | | | 4,177 | |
| Other real estate owned, excluding property associated | | | | | | | | | | | | | | | | |
| with previously securitized loans | | | 161 | | | 499 | | | 294 | | | 403 | | | 135 | |
| Other real estate owned associated with previously | | | | | | | | | | | | | | | | |
| securitized loans | | | 20 | | | 20 | | | 92 | | | 306 | | | - | |
| | | | 181 | | | 519 | | | 386 | | | 709 | | | 135 | |
Total non-performing assets | | $ | 4,183 | | $ | 4,328 | | $ | 4,128 | | $ | 4,049 | | $ | 4,312 | |
| | | | | | | | | | | | | | | | | |
| Non-performing assets as a percent of loans and | | | | | | | | | | | | | | | | |
| other real estate owned | | | 0.25 | % | | 0.25 | % | | 0.25 | % | | 0.25 | % | | 0.27 | % |
| | | | | | | | | | | | | | | | | |
-24-
