For Immediate Release
July 23, 2008
For Further Information Contact:
Charles R. Hageboeck, Chief Executive Officer and President
(304) 769-1102
City Holding Company Announces Record Quarterly Diluted Earnings Per Share
Charleston, West Virginia – City Holding Company, “the Company” (NASDAQ:CHCO), a $2.5 billion bank holding company headquartered in Charleston, today announced record net income per diluted share for the second quarter of $0.83 compared to $0.72 per diluted share in the second quarter of 2007, or a 15.3% increase. Net income for the second quarter of 2008 was $13.4 million, an increase of 8.6% from $12.3 million in the second quarter of 2007. For the second quarter of 2008, the Company achieved a return on assets of 2.14%, a return on tangible equity of 21.0%, a net interest margin of 4.65%, and an efficiency ratio of 46.9%. This compares with a return on assets of 1.94%, a return on equity of 19.9%, a net interest margin of 4.32%, and an efficiency ratio of 45.7% for the comparable period of 2007.
Net Interest Income
The Company’s tax equivalent net interest income increased $1.1 million, or 4.5%, from $24.6 million during the second quarter of 2007 to $25.7 million during the second quarter of 2008. This increase is primarily attributable to interest expense on deposits and other interest bearing liabilities decreasing more quickly than interest income from loans and investments as a result of rate declines in the Federal Funds rate during 2008. As a result of the Company’s positioning of its balance sheet, interest sensitive liabilities have repriced to lower levels at a faster rate than interest sensitive assets. Additionally, the Company’s interest rate floors with a total notional value of $500 million have diminished the impact of falling rates on the Company’s interest income from variable rate loans. The Company also benefited from an increase in its yield on taxable securities of nine basis points from the quarter ended June 30, 2007 and 16 basis points from the quarter ended March 31, 2008. This increase was a result of the Company’s additional investments in preferred stocks and trust preferred securities primarily of regional banks during 2008. Partially offsetting these increases from falling market rates was a decrease of $0.4 million in interest income from Previously Securitized Loans from the second quarter of 2007, as the balances of these loans have decreased 49.1%. The decrease in average balances was partially mitigated by an increase in the yield on these loans from 66.4% for the second quarter of 2007 to 110.2% for the second quarter of 2008. 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’s net interest margin was 4.65% in the second quarter of 2008 as compared to 4.32% in the second quarter of 2007.
Credit Quality
At June 30, 2008, the Allowance for Loan Losses (“ALLL”) was $18.0 million or 1.03% of total loans outstanding and 123% of non-performing loans, compared to $17.6 million or 1.00% of loans outstanding and 103% of non-performing loans at December 31, 2007, and $16.6 million or 0.96% of loans outstanding and 145% of non-performing loans at June 30, 2007.
As a result of the Company’s quarterly analysis of the adequacy of the ALLL, the Company recorded a provision for loan losses of $0.85 million in the second quarter of 2008 compared to $1.6 million for the comparable period in 2007 and $1.9 million in the first quarter of 2008. The provision for loan losses recorded during the second quarter of 2008 reflects the impact of improving loss experience on overdraft accounts. Changes in the amount of the provision and related allowance are based on the Company’s detailed systematic methodology and are directionally consistent with growth and changes in the composition and quality of the Company’s loan portfolio. The Company believes its methodology for determining the adequacy of its ALLL adequately provides for probable losses inherent in the loan portfolio and produces a provision and allowance for loan losses that is directionally consistent with changes in asset quality and loss experience.
The Company’s ratio of non-performing assets to total loans and other real estate owned improved slightly from 1.21% at March 31, 2008 to 1.20% at June 30, 2008. Based on our analysis, the Company believes that the allowance allocated to the substandard and nonperforming loans, after considering the value of the collateral securing such loans, is adequate to cover losses that may result from these loans. The Company’s ratio of non-performing assets to total loans and other real estate owned is 62 basis points lower than that of our 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 of 1.82% for the most recently reported quarter ended March 31, 2008.
The Company had net charge-offs of $1.5 million for the second quarter of 2008. Net charge-offs on commercial and residential loans were $1.0 and $0.1 million, respectively, while installment loans experienced no net charge-offs for the second quarter. Charge-offs for commercial loans were primarily related to two specific credits that had been appropriately considered in establishing the allowance for loan losses in prior periods. One of the previously mentioned commercial charge-offs resulted in an increase of $1.9 million in the Company’s other real estate owned due to the foreclosure on the collateral securing the loan (a residential development property). In addition, net charge-offs for depository accounts were $0.3 million for the 2nd quarter of 2008. While charge-offs on depository accounts are appropriately taken against the ALLL, the revenue associated with depository accounts is reflected in service charges.
Non-interest Income
Exclusive of investment gains, non-interest income increased $0.6 million to $14.2 million in the second quarter of 2008 as compared to $13.6 million in the second quarter of 2007. Insurance commission revenues increased $0.3 million from the second quarter of 2007 primarily on the strength of the Company’s increased worker’s compensation commissions. In addition, other income increased $0.2 million from the quarter ended June 30, 2007 as a result of income from an undesignated interest rate floor with a notional value of $100 million (which expired in May 2008). Bank owned life insurance revenues increased $0.2 million from the quarter ended June 30, 2007 as a result of the Company modifying this portfolio during 2008. These increases were partially offset by a modest decrease in service charges from depository accounts of $0.1 million, or 1.4%, from $11.4 million during the second quarter of 2007 to $11.3 million during the second quarter of 2008.
Non-interest Expenses
Non-interest expenses increased $1.3 million from $17.5 million in the second quarter of 2007 to $18.8 million in the second quarter of 2008. Salaries and employee benefits increased $0.6 million, or 6.8%, from the second quarter of 2007 due in part to additional staffing for new retail locations. Other expenses also include increased charitable contributions of approximately $0.5 million. As noted with our March 31, 2008 results, the Company has increased its charitable contributions in 2008 in recognition of the Company’s strong financial performance between 2002 and 2007.
Balance Sheet Trends
As compared to December 31, 2007, loans have decreased $17.0 million (1.0%) at June 30, 2008, due to decreases in loans to depository institutions of $60.0 million (100.0%), installment loans of $2.9 million (6.0%), and previously securitized loans of $1.6 million (23.8%). These decreases were partially offset by increases in home equity loans of $29.7 million (8.7%), residential real estate loans of $10.6 million (1.8%), and commercial loans of $7.2 million (1.0%).
Total average depository balances increased $28.0 million, or 1.4%, from the quarter ended December 31, 2007 to the quarter ended June 30, 2008. This increase was primarily in non-interest bearing demand deposits, savings deposits, and interest bearing demand deposits, which have increased $17.0 million, $14.3 million, and $8.9 million, respectively.
Income Tax Expense
The Company’s effective income tax rate for the second quarter of 2008 was 33.3% compared to 33.6% for the year ended December 31 2007, and 34.8% for the quarter ended June 30, 2007. The effective rate is based upon the Company’s expected tax rate for the year ending December 31, 2008.
Previously Securitized Loans
At June 30, 2008, the Company reported “Previously Securitized Loans” of $5.3 million compared to $6.9 million at December 31, 2007 and $10.3 million at June 30, 2007, respectively, representing a decrease of 23.8% and 49.1%, respectively. The yield on the previously securitized loans was 110.2% for the quarter ended June 30, 2008, compared to 93.2% for the quarter ended December 31, 2007, and 66.4% for the quarter ended June 30, 2007. 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.
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 87.1% and the loan to asset ratio was 70.1% at June 30, 2008. The Company maintained investment securities totaling 17.6% of assets as of this date. Further, the Company’s deposit mix is weighted heavily toward checking and saving accounts that fund 44.4% of assets at June 30, 2008. Time deposits fund 36.1% of assets at June 30, 2008, 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 June 30, 2008, the Company’s Leverage Ratio is 10.75%, the Tier I Capital ratio is 14.19%, and the Total Risk-Based Capital ratio is 15.16%. 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 June 30, 2008 compared with a tangible equity ratio of 9.7% at December 31, 2007.
City Holding Company is the parent company of City National Bank of West Virginia. City National operates 68 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.
| | | | | | | | | |
| Financial Highlights | | | | | | | | | |
| (Unaudited) | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | Three Months Ended June 30 | | | Percent | |
| | | 2008 | | | 2007 | | | Change | |
| | | | | | | | | | |
| Earnings ($000s, except per share data): | | | | | | | | | |
| Net Interest Income (FTE) | | $ | 25,677 | | | $ | 24,565 | | | | 4.53 | % |
| Net Income | | | 13,379 | | | | 12,322 | | | | 8.58 | % |
| Earnings per Basic Share | | | 0.83 | | | | 0.72 | | | | 15.28 | % |
| Earnings per Diluted Share | | | 0.83 | | | | 0.72 | | | | 15.28 | % |
| | | | | | | �� | | | | | | |
| | | | | | | | | | | | | |
| Key Ratios (percent): | | | | | | | | | | | | |
| Return on Average Assets | | | 2.14 | % | | | 1.94 | % | | | 9.84 | % |
| Return on Average Tangible Equity | | | 21.03 | % | | | 19.85 | % | | | 5.95 | % |
| Net Interest Margin | | | 4.65 | % | | | 4.32 | % | | | 7.78 | % |
| Efficiency Ratio | | | 46.86 | % | | | 45.68 | % | | | 2.59 | % |
| Average Shareholders' Equity to Average Assets | | | 12.46 | % | | | 12.11 | % | | | 2.95 | % |
| | | | | | | | | | | | | |
| Consolidated Risk Based Capital Ratios (a): | | | | | | | | | | | | |
| Tier I | | | 14.18 | % | | | 15.15 | % | | | (6.40 | )% |
| Total | | | 15.15 | % | | | 16.12 | % | | | (6.02 | )% |
| | | | | | | | | | | | | |
| Tangible Equity to Tangible Assets | | | 10.02 | % | | | 9.58 | % | | | 4.62 | % |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Common Stock Data: | | | | | | | | | | | | |
| Cash Dividends Declared per Share | | $ | 0.34 | | | $ | 0.31 | | | | 9.68 | % |
| Book Value per Share | | | 18.72 | | | | 17.40 | | | | 7.57 | % |
| Tangible Book Value per Share | | | 15.13 | | | | 13.95 | | | | 8.48 | % |
| Market Value per Share: | | | | | | | | | | | | |
| High | | | 44.15 | | | | 40.93 | | | | 7.87 | % |
| Low | | | 37.29 | | | | 37.67 | | | | (1.01 | )% |
| End of Period | | | 40.77 | | | | 38.33 | | | | 6.37 | % |
| | | | | | | | | | | | | |
| Price/Earnings Ratio (b) | | | 12.28 | | | | 13.31 | | | | (7.73 | )% |
| | | Six Months Ended June 30 | | | Percent | |
| | | 2008 | | | 2007 | | | Change | |
| | | | | | | | | | | | | |
| Earnings ($000s, except per share data): | | | | | | | | | | | | |
| Net Interest Income (FTE) | | $ | 49,814 | | | $ | 49,236 | | | | 1.17 | % |
| Net Income | | | 26,417 | | | | 25,553 | | | | 3.38 | % |
| Earnings per Basic Share | | | 1.64 | | | | 1.48 | | | | 10.81 | % |
| Earnings per Diluted Share | | | 1.63 | | | | 1.48 | | | | 10.14 | % |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Key Ratios (percent): | | | | | | | | | | | | |
| Return on Average Assets | | | 2.11 | % | | | 2.02 | % | | | 4.46 | % |
| Return on Average Tangible Equity | | | 21.28 | % | | | 20.50 | % | | | 3.81 | % |
| Net Interest Margin | | | 4.53 | % | | | 4.36 | % | | | 3.77 | % |
| Efficiency Ratio | | | 47.71 | % | | | 45.29 | % | | | 5.36 | % |
| Average Shareholders' Equity to Average Assets | | | 12.25 | % | | | 12.19 | % | | | 0.46 | % |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Common Stock Data: | | | | | | | | | | | | |
| Cash Dividends Declared per Share | | $ | 0.68 | | | $ | 0.62 | | | | 9.68 | % |
| Market Value per Share: | | | | | | | | | | | | |
| High | | | 44.15 | | | | 41.54 | | | | 6.28 | % |
| Low | | | 32.51 | | | | 37.67 | | | | (13.70 | )% |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| (a) June 30, 2008 risk-based capital ratios are estimated | | | | | | | | | |
| (b) June 30, 2008 price/earnings ratio computed based on annualized second quarter 2008 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 | |
| | | | | | | | | | | | | | | | | | | |
| 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 | |
| 2007 | | | 17.62 | | | | 17.40 | | | | 17.68 | | | | 18.14 | | | | 31.16 | | | | 41.54 | |
| 2008 | | | 18.92 | | | | 18.72 | | | | | | | | | | | | 37.29 | | | | 44.15 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Earnings per Basic Share | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended | | | | | |
| | | March 31 | | | June 30 | | | September 30 | | | December 31 | | | Year-to-Date | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| 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 | | | | | |
| 2007 | | | 0.76 | | | | 0.72 | | | | 0.76 | | | | 0.78 | | | | 3.02 | | | | | |
| 2008 | | | 0.81 | | | | 0.83 | | | | | | | | | | | | 1.64 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Earnings per Diluted Share | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended | | | | | |
| | | March 31 | | | June 30 | | | September 30 | | | December 31 | | | Year-to-Date | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| 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 | | | | | |
| 2007 | | | 0.76 | | | | 0.72 | | | | 0.76 | | | | 0.78 | | | | 3.01 | | | | | |
| 2008 | | | 0.80 | | | | 0.83 | | | | | | | | | | | | 1.63 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| Consolidated Statements of Income | | | | | | |
| (Unaudited) ($ in 000s, except per share data) | | | | | | |
| | | | | | | |
| | | Three Months Ended June 30, | |
| | | 2008 | | | 2007 | |
| | | | | | | |
| Interest Income | | | | | | |
| Interest and fees on loans | | $ | 30,416 | | | $ | 31,947 | |
| Interest on investment securities: | | | | | | | | |
| Taxable | | | 6,120 | | | | 6,752 | |
| Tax-exempt | | | 381 | | | | 427 | |
| Interest on deposits in depository institutions | | | 51 | | | | 113 | |
| Interest on federal funds sold | | | - | | | | 291 | |
| Total Interest Income | | | 36,968 | | | | 39,530 | |
| | | | | | | | | |
| Interest Expense | | | | | | | | |
| Interest on deposits | | | 10,519 | | | | 13,077 | |
| Interest on short-term borrowings | | | 663 | | | | 1,694 | |
| Interest on long-term debt | | | 312 | | | | 425 | |
| Total Interest Expense | | | 11,494 | | | | 15,196 | |
| Net Interest Income | | | 25,474 | | | | 24,334 | |
| Provision for loan losses | | | 850 | | | | 1,600 | |
| Net Interest Income After Provision for Loan Losses | | | 24,624 | | | | 22,734 | |
| | | | | | | | | |
| Non-Interest Income | | | | | | | | |
| Investment securities gains | | | - | | | | 45 | |
| Service charges | | | 11,269 | | | | 11,426 | |
| Insurance commissions | | | 1,168 | | | | 832 | |
| Trust and investment management fee income | | | 449 | | | | 437 | |
| Bank owned life insurance | | | 750 | | | | 585 | |
| Other income | | | 559 | | | | 364 | |
| Total Non-Interest Income | | | 14,195 | | | | 13,689 | |
| | | | | | | | | |
| Non-Interest Expense | | | | | | | | |
| Salaries and employee benefits | | | 9,517 | | | | 8,912 | |
| Occupancy and equipment | | | 1,701 | | | | 1,525 | |
| Depreciation | | | 1,087 | | | | 1,109 | |
| Professional fees | | | 427 | | | | 385 | |
| Postage, delivery, and statement mailings | | | 618 | | | | 569 | |
| Advertising | | | 643 | | | | 880 | |
| Telecommunications | | | 440 | | | | 460 | |
| Bankcard expenses | | | 640 | | | | 597 | |
| Insurance and regulatory | | | 333 | | | | 383 | |
| Office supplies | | | 504 | | | | 442 | |
| Repossessed asset losses, net of expenses | | | 91 | | | | 9 | |
| Other expenses | | | 2,760 | | | | 2,254 | |
| Total Non-Interest Expense | | | 18,761 | | | | 17,525 | |
| Income Before Income Taxes | | | 20,058 | | | | 18,898 | |
| Income tax expense | | | 6,679 | | | | 6,576 | |
| Net Income | | $ | 13,379 | | | $ | 12,322 | |
| | | | | | | | | |
| Basic earnings per share | | $ | 0.83 | | | $ | 0.72 | |
| Diluted earnings per share | | $ | 0.83 | | | $ | 0.72 | |
| Average Common Shares Outstanding: | | | | | | | | |
| Basic | | | 16,103 | | | | 17,100 | |
| Diluted | | | 16,167 | | | | 17,158 | |
| | | | | | |
| Consolidated Statements of Income | | | | | | |
| (Unaudited) ($ in 000s, except per share data) | | | | | | |
| | | | | | | |
| | | Six months ended June 30 | |
| | | 2008 | | | 2007 | |
| | | | | | | |
| Interest Income | | | | | | |
| Interest and fees on loans | | $ | 61,408 | | | $ | 63,411 | |
| Interest on investment securities: | | | | | | �� | | |
| Taxable | | | 12,184 | | | | 13,686 | |
| Tax-exempt | | | 780 | | | | 855 | |
| Interest on deposits in depository institutions | | | 116 | | | | 230 | |
| Interest on federal funds sold | | | - | | | | 547 | |
| Total Interest Income | | | 74,488 | | | | 78,729 | |
| | | | | | | | | |
| Interest Expense | | | | | | | | |
| Interest on deposits | | | 22,534 | | | | 25,788 | |
| Interest on short-term borrowings | | | 1,808 | | | | 3,207 | |
| Interest on long-term debt | | | 753 | | | | 957 | |
| Total Interest Expense | | | 25,095 | | | | 29,952 | |
| Net Interest Income | | | 49,393 | | | | 48,777 | |
| Provision for loan losses | | | 2,733 | | | | 2,500 | |
| Net Interest Income After Provision for Loan Losses | | | 46,660 | | | | 46,277 | |
| | | | | | | | | |
| Non-Interest Income | | | | | | | | |
| Investment securities gains | | | 2 | | | | 45 | |
| Service charges | | | 22,543 | | | | 21,489 | |
| Insurance commissions | | | 2,206 | | | | 1,844 | |
| Trust and investment management fee income | | | 1,081 | | | | 1,005 | |
| Bank owned life insurance | | | 1,426 | | | | 1,281 | |
| Gain on sale of credit card merchant agreements | | | - | | | | 1,500 | |
| VISA IPO Gain | | | 3,289 | | | | - | |
| Other income | | | 966 | | | | 877 | |
| Total Non-Interest Income | | | 31,513 | | | | 28,041 | |
| | | | | | | | | |
| Non-Interest Expense | | | | | | | | |
| Salaries and employee benefits | | | 18,880 | | | | 17,969 | |
| Occupancy and equipment | | | 3,298 | | | | 3,162 | |
| Depreciation | | | 2,220 | | | | 2,179 | |
| Professional fees | | | 794 | | | | 788 | |
| Postage, delivery, and statement mailings | | | 1,272 | | | | 1,346 | |
| Advertising | | | 1,260 | | | | 1,732 | |
| Telecommunications | | | 858 | | | | 915 | |
| Bankcard expenses | | | 1,261 | | | | 1,115 | |
| Insurance and regulatory | | | 671 | | | | 768 | |
| Office supplies | | | 961 | | | | 897 | |
| Repossessed asset (gains), net of expenses | | | 123 | | | | (5 | ) |
| Loss on early extinguishment of debt | | | 1,208 | | | | - | |
| Other expenses | | | 5,854 | | | | 4,256 | |
| Total Non-Interest Expense | | | 38,660 | | | | 35,122 | |
| Income Before Income Taxes | | | 39,513 | | | | 39,196 | |
| Income tax expense | | | 13,096 | | | | 13,643 | |
| Net Income | | $ | 26,417 | | | $ | 25,553 | |
| | | | | | | | | |
| Basic earnings per share | | $ | 1.64 | | | $ | 1.48 | |
| Diluted earnings per share | | $ | 1.63 | | | $ | 1.48 | |
| Average Common Shares Outstanding: | | | | | | | | |
| Basic | | | 16,124 | | | | 17,230 | |
| Diluted | | | 16,186 | | | | 17,292 | |
| | | | | | |
| Consolidated Statements of Changes in Stockholders' Equity | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | |
| | | | | | | |
| | | | | | | |
| | | Three Months Ended | |
| | | June 30, 2008 | | | June 30, 2007 | |
| | | | | | | |
| Balance at April 1 | | $ | 304,841 | | | $ | 303,354 | |
| | | | | | | | | |
| Net income | | | 13,379 | | | | 12,322 | |
| Other comprehensive income: | | | | | | | | |
| Change in unrealized (loss) on securities available-for-sale | | | (6,914 | ) | | | (2,841 | ) |
| Change in unrealized (loss) on interest rate floors | | | (4,084 | ) | | | (1,122 | ) |
| Cash dividends declared ($0.34/share) | | | (5,489 | ) | | | - | |
| Cash dividends declared ($0.31/share) | | | - | | | | (5,256 | ) |
| Issuance of stock award shares, net | | | 67 | | | | 54 | |
| Exercise of 12,375 stock options | | | 239 | | | | - | |
| Exercise of 2,000 stock options | | | - | | | | 72 | |
| Excess tax benefits on stock compensation | | | 17 | | | | 3 | |
| Purchase of 305,900 common shares of treasury | | | - | | | | (11,803 | ) |
| Balance at June 30 | | $ | 302,056 | | | $ | 294,783 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Six Months Ended | |
| | | June 30, 2008 | | | June 30, 2007 | |
| | | | | | | | | |
| Balance at January 1 | | $ | 293,994 | | | $ | 305,307 | |
| | | | | | | | | |
| Cumulative effect of adopting FIN 48 | | | - | | | | (125 | ) |
| Net income | | | 26,417 | | | | 25,553 | |
| Other comprehensive income: | | | | | | | | |
| Change in unrealized (loss) on securities available-for-sale | | | (5,166 | ) | | | (2,118 | ) |
| Change in unrealized gain (loss) on interest rate floors | | | 815 | | | | (1,000 | ) |
| Cash dividends declared ($0.68/share) | | | (10,965 | ) | | | - | |
| Cash dividends declared ($0.62/share) | | | - | | | | (10,598 | ) |
| Issuance of stock award shares, net | | | 340 | | | | 318 | |
| Exercise of 18,075 stock options | | | 315 | | | | - | |
| Exercise of 7,300 stock options | | | - | | | | 154 | |
| Excess tax benefits on stock compensation | | | 23 | | | | 3 | |
| Purchase of 104,960 common shares of treasury | | | (3,717 | ) | | | - | |
| Purchase of 580,200 common shares of treasury | | | - | | | | (22,711 | ) |
| Balance at June 30 | | $ | 302,056 | | | $ | 294,783 | |
| | | | | | | | | | |
| Condensed Consolidated Quarterly Statements of Income | | | | | | | |
| (Unaudited) ($ in 000s, except per share data) | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | Quarter Ended | |
| | | June 30 | | | March 31 | | | Dec. 31 | | | Sept. 30 | | | June 30 | |
| | | 2008 | | | 2008 | | | 2007 | | | 2007 | | | 2007 | |
| | | | | | | | | | | | | | | | |
| Interest income | | $ | 36,968 | | | $ | 37,520 | | | $ | 38,989 | | | $ | 39,597 | | | $ | 39,530 | |
| Taxable equivalent adjustment | | | 204 | | | | 214 | | | | 226 | | | | 224 | | | | 231 | |
| Interest income (FTE) | | | 37,172 | | | | 37,734 | | | | 39,215 | | | | 39,821 | | | | 39,761 | |
| Interest expense | | | 11,494 | | | | 13,601 | | | | 14,950 | | | | 15,374 | | | | 15,196 | |
| Net interest income | | | 25,678 | | | | 24,133 | | | | 24,265 | | | | 24,447 | | | | 24,565 | |
| Provision for loan losses | | | 850 | | | | 1,883 | | | | 1,650 | | | | 1,200 | | | | 1,600 | |
| Net interest income after provision | | | | | | | | | | | | | | | | | | | | |
| for loan losses | | | 24,828 | | | | 22,250 | | | | 22,615 | | | | 23,247 | | | | 22,965 | |
| | | | | | | | | | | | | | | | | | | | | |
| Noninterest income | | | 14,195 | | | | 17,318 | | | | 14,281 | | | | 13,814 | | | | 13,689 | |
| Noninterest expense | | | 18,761 | | | | 19,899 | | | | 17,861 | | | | 18,031 | | | | 17,525 | |
| Income before income taxes | | | 20,262 | | | | 19,669 | | | | 19,035 | | | | 19,030 | | | | 19,129 | |
| Income tax expense | | | 6,679 | | | | 6,417 | | | | 6,051 | | | | 6,092 | | | | 6,576 | |
| Taxable equivalent adjustment | | | 204 | | | | 214 | | | | 226 | | | | 224 | | | | 231 | |
| Net income | | $ | 13,379 | | | $ | 13,038 | | | $ | 12,758 | | | $ | 12,714 | | | $ | 12,322 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Basic earnings per share | | $ | 0.83 | | | $ | 0.81 | | | $ | 0.78 | | | $ | 0.76 | | | $ | 0.72 | |
| Diluted earnings per share | | | 0.83 | | | | 0.80 | | | | 0.78 | | | | 0.76 | | | | 0.72 | |
| Cash dividends declared per share | | | 0.34 | | | | 0.34 | | | | 0.31 | | | | 0.31 | | | | 0.31 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Average Common Share (000s): | | | | | | | | | | | | | | | | | | | | |
| Outstanding | | | 16,103 | | | | 16,147 | | | | 16,359 | | | | 16,714 | | | | 17,100 | |
| Diluted | | | 16,167 | | | | 16,205 | | | | 16,414 | | | | 16,767 | | | | 17,158 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net Interest Margin | | | 4.65 | % | | | 4.40 | % | | | 4.32 | % | | | 4.32 | % | | | 4.32 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Non-Interest Income and Non-Interest Expense | | | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | Quarter Ended | |
| | | June 30 | | | March 31 | | | Dec. 31 | | | Sept. 30 | | | June 30 | |
| | | 2008 | | | 2008 | | | 2007 | | | 2007 | | | 2007 | |
| | | | | | | | | | | | | | | | |
| Non-Interest Income: | | | | | | | | | | | | | | | |
| Service charges | | $ | 11,269 | | | $ | 11,274 | | | $ | 11,735 | | | $ | 11,192 | | | $ | 11,426 | |
| Insurance commissions | | | 1,168 | | | | 1,038 | | | | 1,119 | | | | 1,127 | | | | 832 | |
| Trust and investment management fee income | | | 449 | | | | 632 | | | | 514 | | | | 523 | | | | 437 | |
| Bank owned life insurance | | | 750 | | | | 676 | | | | 600 | | | | 596 | | | | 585 | |
| Other income | | | 559 | | | | 407 | | | | 312 | | | | 377 | | | | 364 | |
| Subtotal | | | 14,195 | | | | 14,027 | | | | 14,280 | | | | 13,815 | | | | 13,644 | |
| Investment securities gains (losses) | | | - | | | | 2 | | | | 1 | | | | (1 | ) | | | 45 | |
| VISA IPO Gain | | | - | | | | 3,289 | | | | - | | | | - | | | | - | |
| Total Non-Interest Income | | $ | 14,195 | | | $ | 17,318 | | | $ | 14,281 | | | $ | 13,814 | | | $ | 13,689 | |
| | | | | | | | | | | | | | | | | | | | | |
| Non-Interest Expense: | | | | | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | $ | 9,517 | | | $ | 9,363 | | | $ | 8,759 | | | $ | 9,307 | | | $ | 8,912 | |
| Occupancy and equipment | | | 1,701 | | | | 1,597 | | | | 1,604 | | | | 1,600 | | | | 1,525 | |
| Depreciation | | | 1,087 | | | | 1,133 | | | | 1,133 | | | | 1,160 | | | | 1,109 | |
| Professional fees | | | 427 | | | | 367 | | | | 424 | | | | 416 | | | | 385 | |
| Postage, delivery, and statement mailings | | | 618 | | | | 654 | | | | 601 | | | | 641 | | | | 569 | |
| Advertising | | | 643 | | | | 617 | | | | 590 | | | | 801 | | | | 880 | |
| Telecommunications | | | 440 | | | | 418 | | | | 456 | | | | 438 | | | | 460 | |
| Bankcard expenses | | | 640 | | | | 621 | | | | 617 | | | | 623 | | | | 597 | |
| Insurance and regulatory | | | 333 | | | | 338 | | | | 422 | | | | 364 | | | | 383 | |
| Office supplies | | | 504 | | | | 457 | | | | 469 | | | | 472 | | | | 442 | |
| Repossessed asset losses (gains), net of expenses | | | 91 | | | | 32 | | | | (105 | ) | | | (47 | ) | | | 9 | |
| Loss on early extinguishment of debt | | | - | | | | 1,208 | | | | - | | | | - | | | | - | |
| Other expenses | | | 2,760 | | | | 3,094 | | | | 2,891 | | | | 2,256 | | | | 2,254 | |
| Total Non-Interest Expense | | $ | 18,761 | | | $ | 19,899 | | | $ | 17,861 | | | $ | 18,031 | | | $ | 17,525 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Employees (Full Time Equivalent) | | | 817 | | | | 821 | | | | 811 | | | | 808 | | | | 807 | |
| Branch Locations | | | 68 | | | | 69 | | | | 69 | | | | 68 | | | | 68 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| Consolidated Balance Sheets | | | | | | |
| ($ in 000s) | | | | | | |
| | | June 30 | | | December 31 | |
| | | 2008 | | | 2007 | |
| | | (Unaudited) | | | | |
| Assets | | | | | | |
| Cash and due from banks | | $ | 59,270 | | | $ | 64,726 | |
| Interest-bearing deposits in depository institutions | | | 10,601 | | | | 9,792 | |
| Cash and cash equivalents | | | 69,871 | | | | 74,518 | |
| | | | | | | | | |
| Investment securities available-for-sale, at fair value | | | 406,130 | | | | 382,098 | |
| Investment securities held-to-maturity, at amortized cost | | | 33,646 | | | | 34,918 | |
| Total investment securities | | | 439,776 | | | | 417,016 | |
| | | | | | | | | |
| Gross loans | | | 1,750,047 | | | | 1,767,021 | |
| Allowance for loan losses | | | (17,959 | ) | | | (17,581 | ) |
| Net loans | | | 1,732,088 | | | | 1,749,440 | |
| | | | | | | | | |
| Bank owned life insurance | | | 68,894 | | | | 64,467 | |
| Premises and equipment | | | 56,492 | | | | 54,635 | |
| Accrued interest receivable | | | 9,923 | | | | 11,254 | |
| Net deferred tax assets | | | 23,001 | | | | 20,633 | |
| Intangible assets | | | 57,893 | | | | 58,238 | |
| Other assets | | | 36,898 | | | | 32,566 | |
| Total Assets | | $ | 2,494,836 | | | $ | 2,482,767 | |
| | | | | | | | | |
| Liabilities | | | | | | | | |
| Deposits: | | | | | | | | |
| Noninterest-bearing | | $ | 326,734 | | | $ | 314,231 | |
| Interest-bearing: | | | | | | | | |
| Demand deposits | | | 418,835 | | | | 397,510 | |
| Savings deposits | | | 362,828 | | | | 350,607 | |
| Time deposits | | | 899,910 | | | | 927,733 | |
| Total deposits | | | 2,008,307 | | | | 1,990,081 | |
| Short-term borrowings | | | 136,820 | | | | 161,916 | |
| Long-term debt | | | 21,384 | | | | 4,973 | |
| Other liabilities | | | 26,269 | | | | 31,803 | |
| Total Liabilities | | | 2,192,780 | | | | 2,188,773 | |
| | | | | | | | | |
| 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 June 30, 2008 and December 31, 2007 | | | | | | | | |
| less 2,365,367 and 2,292,357 shares in treasury, respectively | | | 46,249 | | | | 46,249 | |
| Capital surplus | | | 102,962 | | | | 103,390 | |
| Retained earnings | | | 239,838 | | | | 224,386 | |
| Cost of common stock in treasury | | | (83,275 | ) | | | (80,664 | ) |
| Accumulated other comprehensive income: | | | | | | | | |
| Unrealized loss on securities available-for-sale | | | (6,949 | ) | | | (1,783 | ) |
| Unrealized gain on derivative instruments | | | 5,205 | | | | 4,390 | |
| Underfunded pension liability | | | (1,974 | ) | | | (1,974 | ) |
| Total Accumulated Other Comprehensive Income | | | (3,718 | ) | | | 633 | |
| Total Stockholders' Equity | | | 302,056 | | | | 293,994 | |
| Total Liabilities and Stockholders' Equity | | $ | 2,494,836 | | | $ | 2,482,767 | |
| | | | | | | | | |
| | | | | | | | | | |
| Loan Portfolio | | | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | June 30 | | | March 31 | | | Dec 31 | | | Sept 30 | | | June 30 | |
| | | 2008 | | | 2008 | | | 2007 | | | 2007 | | | 2007 | |
| | | | | | | | | | | | | | | | |
| Residential real estate | | $ | 612,676 | | | $ | 605,579 | | | $ | 602,057 | | | $ | 600,094 | | | $ | 601,045 | |
| Home equity | | | 371,537 | | | | 347,986 | | | | 341,818 | | | | 338,161 | | | | 330,203 | |
| Commercial, financial, and agriculture | | | 715,196 | | | | 699,653 | | | | 707,987 | | | | 666,960 | | | | 681,388 | |
| Loans to depository institutions | | | - | | | | - | | | | 60,000 | | | | 60,000 | | | | 60,000 | |
| Installment loans to individuals | | | 45,385 | | | | 45,557 | | | | 48,267 | | | | 46,244 | | | | 47,397 | |
| Previously securitized loans | | | 5,253 | | | | 6,025 | | | | 6,892 | | | | 8,317 | | | | 10,321 | |
| Gross Loans | | $ | 1,750,047 | | | $ | 1,704,800 | | | $ | 1,767,021 | | | $ | 1,719,776 | | | $ | 1,730,354 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| 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) | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | 2007 | | | $ | 6.9 | | | $ | 7.3 | | | | 69 | % | | | | |
| | | 2008 | | | | 4.8 | | | | 5.6 | | | | 101 | % | | | | |
| | | 2009 | | | | 3.5 | | | | 4.1 | | | | 101 | % | | | | |
| | | 2010 | | | | 3.0 | | | | 3.2 | | | | 101 | % | | | | |
| | | 2011 | | | | 2.4 | | | | 2.7 | | | | 101 | % | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| a - 2007 amounts are based on actual results. 2008 amounts are based on actual results through June 30, 2008 and estimated amounts for the remainder of the year. 2009, 2010, and 2011 amounts are based on estimated amounts. | |
| | | | | | |
| | |
| Note: The amounts reflected in the table above require management to make significant assumptions based on estimated future default, prepayment and discount rates. Actual performance could be significantly different from that assumed, which could result in the actual results being materially different from the amounts estimated above. | |
| | | | | | | | | | |
| Consolidated Average Balance Sheets, Yields, and Rates | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended June 30, | |
| | | | | | 2008 | | | | | | | | | 2007 | | | | |
| | | Average | | | | | | Yield/ | | | Average | | | | | | Yield/ | |
| | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
| | | | | | | | | | | | | | | | | | | |
| Assets: | | | | | | | | | | | | | | | | | | |
| Loan portfolio: | | | | | | | | | | | | | | | | | | |
| Residential real estate | | $ | 598,924 | | | $ | 9,348 | | | | 6.28 | % | | $ | 596,246 | | | $ | 9,017 | | | | 6.07 | % |
| Home equity | | | 360,041 | | | | 6,493 | | | | 7.25 | % | | | 326,970 | | | | 6,302 | | | | 7.73 | % |
| Commercial, financial, and agriculture | | | 708,607 | | | | 11,707 | | | | 6.64 | % | | | 670,687 | | | | 12,655 | | | | 7.57 | % |
| Loans to depository institutions | | | - | | | | - | | | | - | | | | 59,670 | | | | 798 | | | | 5.36 | % |
| Installment loans to individuals | | | 55,667 | | | | 1,398 | | | | 10.10 | % | | | 46,206 | | | | 1,319 | | | | 11.45 | % |
| Previously securitized loans | | | 5,370 | | | | 1,471 | | | | 110.17 | % | | | 11,210 | | | | 1,856 | | | | 66.41 | % |
| Total loans | | | 1,728,609 | | | | 30,417 | | | | 7.08 | % | | | 1,710,989 | | | | 31,947 | | | | 7.49 | % |
| Securities: | | | | | | | | | | | | | | | | | | | | | | | | |
| Taxable | | | 446,625 | | | | 6,120 | | | | 5.51 | % | | | 499,861 | | | | 6,752 | | | | 5.42 | % |
| Tax-exempt | | | 35,994 | | | | 585 | | | | 6.54 | % | | | 40,160 | | | | 658 | | | | 6.57 | % |
| Total securities | | | 482,619 | | | | 6,705 | | | | 5.59 | % | | | 540,021 | | | | 7,410 | | | | 5.50 | % |
| Deposits in depository institutions | | | 9,266 | | | | 50 | | | | 2.17 | % | | | 10,227 | | | | 113 | | | | 4.43 | % |
| Federal funds sold | | | - | | | | - | | | | - | | | | 22,077 | | | | 291 | | | | 5.29 | % |
| Total interest-earning assets | | | 2,220,494 | | | | 37,172 | | | | 6.73 | % | | | 2,283,314 | | | | 39,761 | | | | 6.98 | % |
| Cash and due from banks | | | 54,906 | | | | | | | | | | | | 50,715 | | | | | | | | | |
| Bank premises and equipment | | | 56,002 | | | | | | | | | | | | 47,304 | | | | | | | | | |
| Other assets | | | 193,346 | | | | | | | | | | | | 169,860 | | | | | | | | | |
| Less: Allowance for loan losses | | | (18,726 | ) | | | | | | | | | | | (16,135 | ) | | | | | | | | |
| Total assets | | $ | 2,506,022 | | | | | | | | | | | $ | 2,535,058 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing demand deposits | | | 413,467 | | | | 613 | | | | 0.60 | % | | | 428,772 | | | | 1,310 | | | | 1.23 | % |
| Savings deposits | | | 361,244 | | | | 831 | | | | 0.93 | % | | | 344,204 | | | | 1,429 | | | | 1.67 | % |
| Time deposits | | | 909,421 | | | | 9,075 | | | | 4.01 | % | | | 922,978 | | | | 10,338 | | | | 4.49 | % |
| Short-term borrowings | | | 139,787 | | | | 663 | | | | 1.91 | % | | | 162,115 | | | | 1,694 | | | | 4.19 | % |
| Long-term debt | | | 21,401 | | | | 313 | | | | 5.88 | % | | | 21,915 | | | | 425 | | | | 7.78 | % |
| Total interest-bearing liabilities | | | 1,845,320 | | | | 11,495 | | | | 2.51 | % | | | 1,879,984 | | | | 15,196 | | | | 3.24 | % |
| Noninterest-bearing demand deposits | | | 323,123 | | | | | | | | | | | | 318,041 | | | | | | | | | |
| Other liabilities | | | 25,214 | | | | | | | | | | | | 30,109 | | | | | | | | | |
| Stockholders' equity | | | 312,365 | | | | | | | | | | | | 306,924 | | | | | | | | | |
| Total liabilities and | | | | | | | | | | | | | | | | | | | | | | | | |
| stockholders' equity | | $ | 2,506,022 | | | | | | | | | | | $ | 2,535,058 | | | | | | | | | |
| Net interest income | | | | | | $ | 25,677 | | | | | | | | | | | $ | 24,565 | | | | | |
| Net yield on earning assets | | | | | | | | | | | 4.65 | % | | | | | | | | | | | 4.32 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
| Consolidated Average Balance Sheets, Yields, and Rates | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended June 30, | |
| | | | | | 2008 | | | | | | | | | 2007 | | | | |
| | | Average | | | | | | Yield/ | | | Average | | | | | | Yield/ | |
| | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
| | | | | | | | | | | | | | | | | | | |
| Assets: | | | | | | | | | | | | | | | | | | |
| Loan portfolio: | | | | | | | | | | | | | | | | | | |
| Residential real estate | | $ | 600,262 | | | $ | 18,763 | | | | 6.29 | % | | $ | 595,381 | | | $ | 17,872 | | | | 6.05 | % |
| Home equity | | | 351,850 | | | | 12,876 | | | | 7.36 | % | | | 324,820 | | | | 12,544 | | | | 7.79 | % |
| Commercial, financial, and agriculture | | | 704,381 | | | | 23,941 | | | | 6.84 | % | | | 668,888 | | | | 25,343 | | | | 7.64 | % |
| Loans to depository institutions | | | 2,335 | | | | 35 | | | | 3.01 | % | | | 54,586 | | | | 1,452 | | | | 5.36 | % |
| Installment loans to individuals | | | 51,648 | | | | 2,743 | | | | 10.68 | % | | | 44,564 | | | | 2,588 | | | | 11.71 | % |
| Previously securitized loans | | | 5,895 | | | | 3,050 | | | | 104.05 | % | | | 12,784 | | | | 3,612 | | | | 56.98 | % |
| Total loans | | | 1,716,371 | | | | 61,408 | | | | 7.19 | % | | | 1,701,023 | | | | 63,411 | | | | 7.52 | % |
| Securities: | | | | | | | | | | | | | | | | | | | | | | | | |
| Taxable | | | 451,137 | | | | 12,184 | | | | 5.43 | % | | | 502,707 | | | | 13,686 | | | | 5.49 | % |
| Tax-exempt | | | 36,865 | | | | 1,200 | | | | 6.55 | % | | | 40,286 | | | | 1,315 | | | | 6.58 | % |
| Total securities | | | 488,002 | | | | 13,384 | | | | 5.52 | % | | | 542,993 | | | | 15,001 | | | | 5.57 | % |
| Deposits in depository institutions | | | 8,982 | | | | 116 | | | | 2.60 | % | | | 11,623 | | | | 230 | | | | 3.99 | % |
| Federal funds sold | | | - | | | | - | | | | - | | | | 20,812 | | | | 547 | | | | 5.30 | % |
| Total interest-earning assets | | | 2,213,355 | | | | 74,908 | | | | 6.81 | % | | | 2,276,451 | | | | 79,189 | | | | 7.01 | % |
| Cash and due from banks | | | 60,174 | | | | | | | | | | | | 50,424 | | | | | | | | | |
| Bank premises and equipment | | | 55,355 | | | | | | | | | | | | 46,142 | | | | | | | | | |
| Other assets | | | 189,810 | | | | | | | | | | | | 169,455 | | | | | | | | | |
| Less: Allowance for loan losses | | | (18,282 | ) | | | | | | | | | | | (15,887 | ) | | | | | | | | |
| Total assets | | $ | 2,500,412 | | | | | | | | | | | $ | 2,526,585 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing demand deposits | | | 411,606 | | | | 1,325 | | | | 0.65 | % | | | 429,483 | | | | 2,641 | | | | 1.24 | % |
| Savings deposits | | | 360,916 | | | | 1,934 | | | | 1.08 | % | | | 337,153 | | | | 2,736 | | | | 1.64 | % |
| Time deposits | | | 921,462 | | | | 19,274 | | | | 4.21 | % | | | 922,460 | | | | 20,412 | | | | 4.46 | % |
| Short-term borrowings | | | 133,790 | | | | 1,808 | | | | 2.72 | % | | | 154,328 | | | | 3,207 | | | | 4.19 | % |
| Long-term debt | | | 21,953 | | | | 753 | | | | 6.90 | % | | | 27,145 | | | | 957 | | | | 7.11 | % |
| Total interest-bearing liabilities | | | 1,849,727 | | | | 25,094 | | | | 2.73 | % | | | 1,870,569 | | | | 29,953 | | | | 3.23 | % |
| Noninterest-bearing demand deposits | | | 317,504 | | | | | | | | | | | | 317,382 | | | | | | | | | |
| Other liabilities | | | 26,991 | | | | | | | | | | | | 30,670 | | | | | | | | | |
| Stockholders' equity | | | 306,190 | | | | | | | | | | | | 307,964 | | | | | | | | | |
| Total liabilities and | | | | | | | | | | | | | | | | | | | | | | | | |
| stockholders' equity | | $ | 2,500,412 | | | | | | | | | | | $ | 2,526,585 | | | | | | | | | |
| Net interest income | | | | | | $ | 49,814 | | | | | | | | | | | $ | 49,236 | | | | | |
| Net yield on earning assets | | | | | | | | | | | 4.53 | % | | | | | | | | | | | 4.36 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Analysis of Risk-Based Capital | | | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | June 30 | | | March 31 | | | Dec 31 | | | Sept 30 | | | June 30 | |
| | | 2008 (a) | | | 2008 | | | 2007 | | | 2007 | | | 2007 | |
| | | | | | | | | | | | | | | | |
| Tier I Capital: | | | | | | | | | | | | | | | |
| Stockholders' equity | | $ | 302,056 | | | $ | 304,841 | | | $ | 293,994 | | | $ | 291,720 | | | $ | 294,783 | |
| Goodwill and other intangibles | | | (57,893 | ) | | | (58,065 | ) | | | (58,238 | ) | | | (58,328 | ) | | | (58,504 | ) |
| Accumulated other comprehensive loss (income) | | | 3,718 | | | | (7,280 | ) | | | (633 | ) | | | 4,396 | | | | 8,647 | |
| Qualifying trust preferred stock | | | 16,000 | | | | 16,000 | | | | 16,000 | | | | 16,000 | | | | 16,000 | |
| Unrealized Loss on AFS securities | | | (712 | ) | | | (275 | ) | | | (247 | ) | | | (94 | ) | | | (97 | ) |
| Excess deferred tax assets | | | - | | | | - | | | | - | | | | - | | | | (342 | ) |
| Total tier I capital | | $ | 263,169 | | | $ | 255,221 | | | $ | 250,876 | | | $ | 253,694 | | | $ | 260,486 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total Risk-Based Capital: | | | | | | | | | | | | | | | | | | | | |
| Tier I capital | | $ | 263,169 | | | $ | 255,221 | | | $ | 250,876 | | | $ | 253,694 | | | $ | 260,486 | |
| Qualifying allowance for loan losses | | | 17,959 | | | | 18,567 | | | | 17,581 | | | | 16,980 | | | | 16,616 | |
| Total risk-based capital | | $ | 281,128 | | | $ | 273,788 | | | $ | 268,457 | | | $ | 270,674 | | | $ | 277,102 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net risk-weighted assets | | $ | 1,855,401 | | | $ | 1,828,559 | | | $ | 1,776,158 | | | $ | 1,709,486 | | | $ | 1,719,540 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Ratios: | | | | | | | | | | | | | | | | | | | | |
| Average stockholders' equity to average assets | | | 12.46 | % | | | 12.03 | % | | | 11.84 | % | | | 11.82 | % | | | 12.11 | % |
| Tangible capital ratio | | | 10.02 | % | | | 10.00 | % | | | 9.72 | % | | | 9.59 | % | | | 9.58 | % |
| Risk-based capital ratios: | | | | | | | | | | | | | | | | | | | | |
| Tier I capital | | | 14.18 | % | | | 13.96 | % | | | 14.12 | % | | | 14.84 | % | | | 15.15 | % |
| Total risk-based capital | | | 15.15 | % | | | 14.97 | % | | | 15.11 | % | | | 15.83 | % | | | 16.12 | % |
| Leverage capital | | | 10.75 | % | | | 10.47 | % | | | 10.31 | % | | | 10.38 | % | | | 10.52 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| (a) June 30, 2008 risk-based capital ratios are estimated | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | | | | | | |
| Intangibles | | | | | | | | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | As of and for the Quarter Ended | |
| | | June 30 | | | March 31 | | | Dec 31 | | | Sept 31 | | | June 30 | |
| | | 2008 | | | 2008 | | | 2007 | | | 2007 | | | 2007 | |
| | | | | | | | | | | | | | | | | | | | | |
| Intangibles, net | | $ | 57,893 | | | $ | 58,065 | | | $ | 58,238 | | | $ | 58,328 | | | $ | 58,504 | |
| Intangibles amortization expense | | | 172 | | | | 173 | | | | 177 | | | | 176 | | | | 177 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Summary of Loan Loss Experience | | | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | Quarter Ended | |
| | | June 30 | | | March 31 | | | Dec 31 | | | Sept 30 | | | June 30 | |
| | | 2008 | | | 2008 | | | 2007 | | | 2007 | | | 2007 | |
| | | | | | | | | | | | | | | | |
| Balance at beginning of period | | $ | 18,567 | | | $ | 17,581 | | | $ | 16,980 | | | $ | 16,616 | | | $ | 16,083 | |
| | | | | | | | | | | | | | | | | | | | | |
| Charge-offs: | | | | | | | | | | | | | | | | | | | | |
| Commercial, financial, and agricultural | | | 1,022 | | | | 406 | | | | 359 | | | | - | | | | 120 | |
| Real estate-mortgage | | | 190 | | | | 274 | | | | 203 | | | | 240 | | | | 452 | |
| Installment loans to individuals | | | 77 | | | | 75 | | | | 108 | | | | 91 | | | | 60 | |
| Overdraft deposit accounts | | | 604 | | | | 985 | | | | 938 | | | | 1,035 | | | | 956 | |
| Total charge-offs | | | 1,893 | | | | 1,740 | | | | 1,608 | | | | 1,366 | | | | 1,588 | |
| | | | | | | | | | | | | | | | | | | | | |
| Recoveries: | | | | | | | | | | | | | | | | | | | | |
| Commercial, financial, and agricultural | | | 41 | | | | 13 | | | | 23 | | | | 19 | | | | 41 | |
| Real estate-mortgage | | | 48 | | | | 27 | | | | 35 | | | | 22 | | | | 15 | |
| Installment loans to individuals | | | 72 | | | | 108 | | | | 97 | | | | 89 | | | | 98 | |
| Overdraft deposit accounts | | | 274 | | | | 695 | | | | 404 | | | | 400 | | | | 367 | |
| Total recoveries | | | 435 | | | | 843 | | | | 559 | | | | 530 | | | | 521 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net charge-offs | | | 1,458 | | | | 897 | | | | 1,049 | | | | 836 | | | | 1,067 | |
| Provision for loan losses | | | 850 | | | | 1,883 | | | | 1,650 | | | | 1,200 | | | | 1,600 | |
| Balance at end of period | | $ | 17,959 | | | $ | 18,567 | | | $ | 17,581 | | | $ | 16,980 | | | $ | 16,616 | |
| | | | | | | | | | | | | | | | | | | | | |
| Loans outstanding | | $ | 1,750,047 | | | $ | 1,704,800 | | | $ | 1,767,021 | | | $ | 1,719,776 | | | $ | 1,730,354 | |
| Average loans outstanding | | | 1,728,609 | | | | 1,704,133 | | | | 1,739,166 | | | | 1,729,267 | | | | 1,710,989 | |
| Allowance as a percent of loans outstanding | | | 1.03 | % | | | 1.09 | % | | | 1.00 | % | | | 0.99 | % | | | 0.96 | % |
| Allowance as a percent of non-performing loans | | | 122.89 | % | | | 113.55 | % | | | 103.28 | % | | | 86.47 | % | | | 145.11 | % |
| Net charge-offs (annualized) as a | | | | | | | | | | | | | | | | | | | | |
| percent of average loans outstanding | | | 0.34 | % | | | 0.21 | % | | | 0.24 | % | | | 0.19 | % | | | 0.25 | % |
| Net charge-offs, excluding overdraft deposit accounts | | | | | | | | | | | | | | | | | | | | |
| (annualized) as a percent of average loans outstanding | | | 0.26 | % | | | 0.14 | % | | | 0.12 | % | | | 0.05 | % | | | 0.11 | % |
| | | | | | | | | | | | | | | |
| Summary of Non-Performing Assets | | | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | June 30 | | | March 31 | | | Dec 31 | | | Sept 30 | | | June 30 | |
| | | 2008 | | | 2008 | | | 2007 | | | 2007 | | | 2007 | |
| | | | | | | | | | | | | | | | |
| Nonaccrual loans | | $ | 14,018 | | | $ | 15,840 | | | $ | 16,437 | | | $ | 18,896 | | | $ | 11,194 | |
| Accruing loans past due 90 days or more | | | 431 | | | | 257 | | | | 314 | | | | 566 | | | | 212 | |
| Previously securitized loans past due 90 days or more | | | 165 | | | | 255 | | | | 76 | | | | 176 | | | | 45 | |
| Total non-performing loans | | | 14,614 | | | | 16,352 | | | | 16,827 | | | | 19,638 | | | | 11,451 | |
| Other real estate owned, excluding property associated | | | | | | | | | | | | | | | | | | | | |
| with previously securitized loans | | | 6,164 | | | | 4,192 | | | | 4,163 | | | | 1,091 | | | | 624 | |
| Other real estate owned associated with previously | | | | | | | | | | | | | | | | | | | | |
| securitized loans | | | 321 | | | | 148 | | | | - | | | | 405 | | | | 231 | |
| Other real estate owned | | | 6,485 | | | | 4,340 | | | | 4,163 | | | | 1,496 | | | | 855 | |
| Total non-performing assets | | $ | 21,099 | | | $ | 20,692 | | | $ | 20,990 | | | $ | 21,134 | | | $ | 12,306 | |
| | | | | | | | | | | | | | | | | | | | | |
| Non-performing assets as a percent of loans and | | | | | | | | | | | | | | | | | | | | |
| other real estate owned | | | 1.20 | % | | | 1.21 | % | | | 1.23 | % | | | 1.23 | % | | | 0.71 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | | | | | | |
| Summary of Total Past Due Loans | | | | | | | | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | June 30 | | | March 31 | | | Dec 31 | | | Sept 30 | | | June 30 | |
| | | 2008 | | | 2008 | | | 2007 | | | 2007 | | | 2007 | |
| | | | | | | | | | | | | | | | | | | | | |
| Residential real estate | | $ | 5,487 | | | $ | 3,763 | | | $ | 5,480 | | | $ | 4,500 | | | $ | 3,354 | |
| Home equity | | | 1,316 | | | | 1,344 | | | | 2,141 | | | | 1,075 | | | | 879 | |
| Commercial, financial, and agriculture | | | 1,166 | | | | 806 | | | | 1,506 | | | | 311 | | | | 2,248 | |
| Loans to depository institutions | | | - | | | | - | | | | - | | | | - | | | | - | |
| Installment loans to individuals | | | 290 | | | | 360 | | | | 385 | | | | 279 | | | | 370 | |
| Previously securitized loans | | | 632 | | | | 897 | | | | 1,099 | | | | 948 | | | | 799 | |
| Overdraft deposit accounts | | | 485 | | | | 568 | | | | 612 | | | | 575 | | | | 692 | |
| Total past due loans | | $ | 9,376 | | | $ | 7,738 | | | $ | 11,223 | | | $ | 7,688 | | | $ | 8,342 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
-20-
