For Immediate Release
October 24, 2012
For Further Information Contact:
Charles R. Hageboeck, Chief Executive Officer and President
(304) 769-1102
City Holding Company Announces Third Quarter Results
Charleston, West Virginia – City Holding Company, “the Company” (NASDAQ:CHCO), a $2.9 billion bank holding company headquartered in Charleston, today announced third quarter net income per diluted share of $0.71 and net income of $10.6 million. For the third quarter of 2012, the Company achieved a return on assets of 1.47%, a return on tangible equity of 16.2%, a net interest margin of 3.95%, and an efficiency ratio of 56.4%.
City’s CEO Charles Hageboeck stated that, “In a difficult economic climate, City’s financial performance in the third quarter was solid. Our net interest margin was up; the company experienced loan and deposit growth, and asset quality remained strong and stable compared to peers. The third quarter marks the first full quarter since our acquisition of Virginia Savings Bank, which was completed on May 31, 2012. Additionally, City announced in August 2012 the execution of a definitive agreement to acquire Community Financial Corporation of Staunton, Virginia. The proposed merger is expected to close in the first quarter of 2013 subject to pending regulatory approvals, the approval of Community’s shareholders, and the completion of other customary closing conditions. This transaction will significantly expand City’s presence in Virginia and complements our recently completed acquisition of Virginia Savings Bancorp, Inc.”
“City’s results for the third quarter of 2012 are down slightly as compared to the third quarter of 2011 because we recorded no provision for loan losses during the quarter ended September 30, 2011. Net interest income increased $1.3 million from the third quarter of 2011 despite $38 million of higher yielding trust preferred securities being called during the third quarter of 2012. The resultant decrease in net interest income of approximately $0.6 million related to the trust preferred securities was more than offset from additional interest income associated with the acquisition of Virginia Savings Bancorp, Inc. Our net interest margin remained solid at 3.95% for the third quarter of 2012.”
“Loan balances increased $20 million (1.0%) from June 30, 2012 to September 30, 2012. Our asset quality metrics remain stable and strong. Non-performing assets were 1.53% of total loans and other real estate owned and past due loans were 0.45% of total loans at September 30, 2012.”
Net Interest Income
The Company’s tax equivalent net interest income increased $1.1 million, or 4.3%, from $24.0 million during the second quarter of 2012 to $25.1 million during the third quarter of 2012. This increase is primarily due to the acquisition of Virginia Savings Bancorp, Inc. that was partially offset by lower interest income due to approximately $38 million of higher yielding trust preferred securities being called during the third quarter of 2012. The Company’s reported net interest margin increased from 3.91% for the quarter ended June 30, 2012 to 3.95% for the quarter ended September 30, 2012. Excluding the favorable impact of acquisition accounting fair value adjustments ($0.95 million), the net interest margin for the third quarter of 2012 would have been 3.80%.
Credit Quality
As a result of the Company’s quarterly analysis of the adequacy of the ALLL, the Company recorded a provision for loan losses of $1.0 million in the third quarter of 2012, compared to no provision for the comparable period in 2011 and $1.7 million for the second quarter of 2012. During the third quarter of 2012, the Company received life insurance proceeds as the beneficiary of a life insurance policy carried by a commercial borrower that allowed the Company to reduce the ALLL by approximately $0.6 million for amounts previously included in the ALLL. In addition, charge-offs for commercial real estate loans were primarily related to a specific credit that had been appropriately considered in establishing the allowance for loan losses in prior periods. Changes in the amount of the provision and related allowance are based on the Company’s detailed systematic methodology and are directionally consistent with changes in the composition and quality of the Company’s loan portfolio. The Company believes its methodology for determining the adequacy of its ALLL adequately provides for probable losses inherent in the loan portfolio and produces a provision and allowance for loan losses that is directionally consistent with changes in asset quality and loss experience.
Investment Securities Gains/(Losses)
During the third quarter of 2012, the Company sold certain equity positions related to community banks and bank holding companies and realized a $0.4 million gain. The Company also recognized gains of $0.3 million associated with the calls of trust preferred securities during the quarter. These gains were partially offset by $0.3 million of credit-related net investment impairment losses recorded by the Company during the third quarter of 2012. The charges deemed to be other than temporary were related to pooled bank trust preferreds with a remaining carrying value of $3.5 million at September 30, 2012. The credit-related net impairment charges were based on the Company’s quarterly reviews of its investment securities for indications of losses considered to be other than temporary.
Non-interest Income
Exclusive of net investment gains, non-interest income increased $0.3 million to $13.6 million in the third quarter of 2012 as compared to $13.3 million in the third quarter of 2011. This increase was primarily the result of an increase in other income of $0.3 million due to increased mortgage related income and a $0.2 million increase in trust and investment management fee income for the quarter ended September 30, 2012. These increases were partially offset by a $0.2 million decrease in bank owned life insurance revenues.
Non-interest Expenses
Non-interest expenses increased $2.1 million from $19.7 million in the third quarter of 2011 to $21.8 million in the third quarter of 2012. Salaries and employee benefits increased $1.0 million primarily due to the acquisition of Virginia Savings Bancorp, Inc. ($0.4 million) and increased health insurance costs ($0.4 million). Repossessed asset losses increased $0.3 million due to declines in estimated fair values of two foreclosed properties located at the Greenbrier Resort in West Virginia. The Company continually reevaluates the estimated fair value of properties that it has repossessed by obtaining updated appraisals on at least an annual basis. In addition, other expenses increased $0.3 million, bankcard expenses increased $0.2 million, and merger related expenses increased $0.2 million.
Balance Sheet Trends
Loans have increased $112.1 million (5.7%) from December 31, 2011 to $2.09 billion at September 30, 2012, in part due to the Company’s acquisition of Virginia Savings Bancorp, Inc. ($72.0 million). Excluding the Virginia Savings Bancorp, Inc. acquisition, loans have increased $40.1 million (2.0%) from December 31, 2011 to $2.01 billion at September 30, 2012. Increases in residential real estate loans of $36.6 million (3.9%) and commercial real estate loans of $34.5 million (4.7%) were partially offset by a decline in commercial and industrial (“C&I”) loans of $28.4 million.
Total average depository balances increased $68.1 million, or 2.9%, from the quarter ended June 30, 2012 to the quarter ended September 30, 2012. This growth was primarily attributable to deposits acquired from Virginia Savings Bancorp, Inc. ($81.8 million). Exclusive of this contribution, the Company experienced decreases in interest-bearing deposits ($6.6 million), time deposits ($4.4 million), and noninterest-bearing deposits ($3.0 million).
Income Tax Expense
The Company’s effective income tax rate for the third quarter of 2012 was 34.3% compared to 33.6% for the year ended December 31, 2011, and 33.5% for the quarter ended September 30, 2011. The effective rate is based upon the Company’s expected tax rate for the year ending December 31, 2012.
Capitalization and Liquidity
The Company’s loan to deposit ratio was 87.6% and the loan to asset ratio was 71.9% at September 30, 2012. The Company maintained investment securities totaling 14.3% of assets as of this date. The Company’s deposit mix is weighted heavily toward checking and saving accounts that fund 50.1% of assets at September 30, 2012. Time deposits fund 32.0% of assets at September 30, 2012, but very few of these deposits are in accounts that have balances of more than $250,000, reflecting the core retail orientation of the Company.
At September 30, 2012 the Company was strongly capitalized. The Company’s tangible equity ratio was 9.29% at September 30, 2012 compared to 9.37% at December 31, 2011. At September 30, 2012, City National Bank’s Leverage Ratio was 9.02%, its Tier I Capital ratio was 12.03%, and its Total Risk-Based Capital ratio was 12.94%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.
On September 27, 2012, the Board approved a quarterly cash dividend of $0.35 cents per share payable October 31, 2012, to shareholders of record as of October 15, 2012. During the nine months ended September 30, 2012, the Company repurchased 237,535 common shares at a weighted average price of $33.32 as part of a one million share repurchase plan authorized by the Board of Directors in July 2011. At September 30, 2012, the Company could repurchase approximately 454,000 shares under the July 2011 authorization.
City Holding Company is the parent company of City National Bank of West Virginia. City National operates 73 branches across West Virginia, Kentucky, Virginia and Ohio.
On August 2, 2012 the Company announced that it had executed a definitive agreement to acquire Community Financial Corporation of Staunton, Virginia and its principal banking subsidiary, Community Bank. The proposed merger is expected to close in the first quarter of 2013; however it is subject to pending regulatory approvals, the approval of Community’s shareholders, and the completion of other customary closing conditions. This transaction will expand City’s presence in Virginia with an additional ten branches.
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 could have adverse legal actions of a material nature; (4) the Company may face competitive loss of customers; (5) the Company may be unable to manage its expense levels; (6) the Company may have difficulty retaining key employees; (7) changes in the interest rate environment may have results on the Company’s operations materially different from those anticipated by the Company’s market risk management functions; (8) changes in general economic conditions and increased competition could adversely affect the Company’s operating results; (9) changes in other regulations and government policies affecting bank holding companies and their subsidiaries, including changes in monetary policies, could negatively impact the Company’s operating results; (10) the Company may experience difficulties growing loan and deposit balances; (11) the current economic environment poses significant challenges for us and could adversely affect our financial condition and results of operations; (12) continued deterioration in the financial condition of the U.S. banking system may impact the valuations of investments the Company has made in the securities of other financial institutions resulting in either actual losses or other than temporary impairments on such investments; (13) the effects of the Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) recently adopted by the United States Congress and (14) the merger with Community Financial Corporation will not be consummated unless certain conditions are met. Forward-looking statements made herein reflect management’s expectations as of the date such statements are made. Forward-looking statements made herein reflect management's expectations as of the date such statements are made. Such information is provided to assist stockholders and potential investors in understanding current and anticipated financial operations of the Company and is included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances that arise after the date such statements are made. Further, the Company is required to evaluate subsequent events through the filing of its June 30, 2012 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary June 30, 2012 results and will adjust the amounts if necessary.
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | |
| Financial Highlights | | | | | | | | | |
| (Unaudited) | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | Three Months Ended September 30, | | | Percent | |
| | | 2012 | | | 2011 | | | Change | |
| | | | | | | | | | |
| Earnings ($000s, except per share data): | | | | | | | | | |
| Net Interest Income (FTE) | | $ | 25,060 | | | $ | 23,783 | | | | 5.37 | % |
| Net Income available to common shareholders | | | 10,607 | | | | 11,577 | | | | (8.38 | )% |
| Earnings per Basic Share | | | 0.71 | | | | 0.77 | | | | (6.88 | )% |
| Earnings per Diluted Share | | | 0.71 | | | | 0.76 | | | | (6.98 | )% |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Key Ratios (percent): | | | | | | | | | | | | |
| Return on Average Assets | | | 1.47 | % | | | 1.71 | % | | | (13.99 | )% |
| Return on Average Tangible Equity | | | 16.20 | % | | | 17.81 | % | | | (9.06 | )% |
| Net Interest Margin | | | 3.95 | % | | | 3.93 | % | | | 0.47 | % |
| Efficiency Ratio | | | 56.40 | % | | | 53.18 | % | | | 6.05 | % |
| Average Shareholders' Equity to Average Assets | | | 11.32 | % | | | 11.67 | % | | | (2.94 | )% |
| | | | | | | | | | | | | |
| Consolidated Risk Based Capital Ratios (a): | | | | | | | | | | | | |
| Tier I | | | 12.89 | % | | | 13.21 | % | | | (2.42 | )% |
| Total | | | 13.79 | % | | | 14.20 | % | | | (2.89 | )% |
| | | | | | | | | | | | | |
| Tangible Equity to Tangible Assets | | | 9.29 | % | | | 9.65 | % | | | (3.69 | )% |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Common Stock Data: | | | | | | | | | | | | |
| Cash Dividends Declared per Share | | $ | 0.35 | | | $ | 0.34 | | | | 2.94 | % |
| Book Value per Share | | | 22.14 | | | | 20.86 | | | | 6.16 | % |
| Tangible Book Value per Share | | | 17.75 | | | | 17.07 | | | | 3.99 | % |
| Market Value per Share: | | | | | | | | | | | | |
| High | | | 36.43 | | | | 33.96 | | | | 7.27 | % |
| Low | | | 32.37 | | | | 26.82 | | | | 20.69 | % |
| End of Period | | | 35.84 | | | | 26.99 | | | | 32.79 | % |
| | | | | | | | | | | | | |
| Price/Earnings Ratio (b) | | | 12.56 | | | | 8.81 | | | | 42.61 | % |
| | | | | | | | | | | | | |
| | | Nine Months Ended September 30, | | | Percent | |
| | | | 2012 | | | | 2011 | | | Change | |
| | | | | | | | | | | | | |
| Earnings ($000s, except per share data): | | | | | | | | | | | | |
| Net Interest Income (FTE) | | $ | 72,829 | | | $ | 69,606 | | | | 4.63 | % |
| Net Income available to common shareholders | | | 28,049 | | | | 31,024 | | | | (9.59 | )% |
| Earnings per Basic Share | | | 1.89 | | | | 2.03 | | | | (6.80 | )% |
| Earnings per Diluted Share | | | 1.88 | | | | 2.02 | | | | (6.85 | )% |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Key Ratios (percent): | | | | | | | | | | | | |
| Return on Average Assets | | | 1.33 | % | | | 1.53 | % | | | (13.12 | )% |
| Return on Average Tangible Equity | | | 14.26 | % | | | 15.90 | % | | | (10.31 | )% |
| Net Interest Margin | | | 3.95 | % | | | 3.89 | % | | | 1.55 | % |
| Efficiency Ratio | | | 58.59 | % | | | 57.42 | % | | | 2.04 | % |
| Average Shareholders' Equity to Average Assets | | | 11.45 | % | | | 11.72 | % | | | (2.33 | )% |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Common Stock Data: | | | | | | | | | | | | |
| Cash Dividends Declared per Share | | $ | 1.05 | | | $ | 1.02 | | | | 2.94 | % |
| Market Value per Share: | | | | | | | | | | | | |
| High | | | 37.16 | | | | 37.22 | | | | (0.16 | )% |
| Low | | | 30.96 | | | | 26.82 | | | | 15.44 | % |
| | | | | | | | | | | | | |
| Price/Earnings Ratio (b) | | | 14.20 | | | | 9.97 | | | | 42.48 | % |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| (a) September 30, 2012 risk-based capital ratios are estimated | | | | | | | | | |
| (b) September 30, 2012 price/earnings ratio computed based on annualized third quarter 2012 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 | |
| | | | | | | | | | | | | | | | | | | |
| 2008 | | $ | 18.92 | | | $ | 18.72 | | | $ | 17.61 | | | $ | 17.58 | | | $ | 29.08 | | | $ | 42.88 | |
| 2009 | | | 17.69 | | | | 18.24 | | | | 18.95 | | | | 19.37 | | | | 20.88 | | | | 34.34 | |
| 2010 | | | 19.71 | | | | 20.02 | | | | 20.31 | | | | 20.31 | | | | 26.87 | | | | 38.03 | |
| 2011 | | | 20.39 | | | | 20.58 | | | | 20.86 | | | | 21.05 | | | | 26.06 | | | | 37.22 | |
| 2012 | | | 21.46 | | | | 21.63 | | | | 22.14 | | | | | | | | 30.96 | | | | 37.16 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Earnings per Basic Share | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended | | | | | |
| | | March 31 | | | June 30 | | | September 30 | | | December 31 | | | Year-to-Date | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| 2008 | | $ | 0.81 | | | $ | 0.83 | | | $ | (0.16 | ) | | $ | 0.26 | | | $ | 1.74 | | | | | |
| 2009 | | | 0.69 | | | | 0.64 | | | | 0.66 | | | | 0.70 | | | | 2.69 | | | | | |
| 2010 | | | 0.59 | | | | 0.68 | | | | 0.58 | | | | 0.64 | | | | 2.48 | | | | | |
| 2011 | | | 0.62 | | | | 0.65 | | | | 0.77 | | | | 0.65 | | | | 2.68 | | | | | |
| 2012 | | | 0.68 | | | | 0.50 | | | | 0.71 | | | | | | | | 1.89 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Earnings per Diluted Share | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended | | | | | |
| | | March 31 | | | June 30 | | | September 30 | | | December 31 | | | Year-to-Date | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| 2008 | | $ | 0.80 | | | $ | 0.83 | | | $ | (0.16 | ) | | $ | 0.26 | | | $ | 1.74 | | | | | |
| 2009 | | | 0.69 | | | | 0.64 | | | | 0.66 | | | | 0.70 | | | | 2.68 | | | | | |
| 2010 | | | 0.58 | | | | 0.68 | | | | 0.58 | | | | 0.64 | | | | 2.47 | | | | | |
| 2011 | | | 0.62 | | | | 0.64 | | | | 0.76 | | | | 0.65 | | | | 2.67 | | | | | |
| 2012 | | | 0.67 | | | | 0.50 | | | | 0.71 | | | | | | | | 1.88 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | |
| Consolidated Statements of Income | | | | | | |
| (Unaudited) ($ in 000s, except per share data) | | | | | | |
| | | | | | | |
| | | Three Months Ended September 30, | |
| | | 2012 | | | 2011 | |
| | | | | | | |
| Interest Income | | | | | | |
| Interest and fees on loans | | $ | 24,633 | | | $ | 23,326 | |
| Interest on investment securities: | | | | | | | | |
| Taxable | | | 3,438 | | | | 4,639 | |
| Tax-exempt | | | 346 | | | | 392 | |
| Interest on federal funds sold | | | 15 | | | | 13 | |
| Total Interest Income | | | 28,432 | | | | 28,370 | |
| | | | | | | | | |
| Interest Expense | | | | | | | | |
| Interest on deposits | | | 3,312 | | | | 4,550 | |
| Interest on short-term borrowings | | | 79 | | | | 90 | |
| Interest on long-term debt | | | 166 | | | | 159 | |
| Total Interest Expense | | | 3,557 | | | | 4,799 | |
| Net Interest Income | | | 24,875 | | | | 23,571 | |
| Provision for loan losses | | | 975 | | | | - | |
| Net Interest Income After Provision for Loan Losses | | | 23,900 | | | | 23,571 | |
| | | | | | | | | |
| Non-Interest Income | | | | | | | | |
| Total investment securities impairment losses | | | (272 | ) | | | (1,849 | ) |
| Noncredit impairment losses recognized in other comprehensive income | | | - | | | | 1,494 | |
| Net investment securities impairment losses | | | (272 | ) | | | (355 | ) |
| Gains on sale of investment securities | | | 730 | | | | 627 | |
| Net investment securities gains | | | 458 | | | | 272 | |
| | | | | | | | | |
| Service charges | | | 9,861 | | | | 9,840 | |
| Insurance commissions | | | 1,439 | | | | 1,388 | |
| Trust and investment management fee income | | | 912 | | | | 699 | |
| Bank owned life insurance | | | 738 | | | | 952 | |
| Other income | | | 671 | | | | 380 | |
| Total Non-Interest Income | | | 14,079 | | | | 13,531 | |
| | | | | | | | | |
| Non-Interest Expense | | | | | | | | |
| Salaries and employee benefits | | | 11,295 | | | | 10,302 | |
| Occupancy and equipment | | | 2,126 | | | | 2,057 | |
| Depreciation | | | 1,175 | | | | 1,131 | |
| FDIC insurance expense | | | 405 | | | | 392 | |
| Advertising | | | 674 | | | | 546 | |
| Bankcard expenses | | | 720 | | | | 559 | |
| Postage, delivery, and statement mailings | | | 529 | | | | 551 | |
| Office supplies | | | 407 | | | | 492 | |
| Legal and professional fees | | | 611 | | | | 567 | |
| Telecommunications | | | 433 | | | | 371 | |
| Repossessed asset (gains)/losses, net of expenses | | | 429 | | | | 109 | |
| Merger related expenses | | | 157 | | | | - | |
| Other expenses | | | 2,885 | | | | 2,611 | |
| Total Non-Interest Expense | | | 21,846 | | | | 19,688 | |
| Income Before Income Taxes | | | 16,133 | | | | 17,414 | |
| Income tax expense | | | 5,526 | | | | 5,837 | |
| Net Income Available to Common Shareholders | | $ | 10,607 | | | $ | 11,577 | |
| | | | | | | | | |
| | | | | | | | | |
| Distributed earnings allocated to common shareholders | | $ | 5,150 | | | $ | 5,015 | |
| Undistributed earnings allocated to common shareholders | | | 5,373 | | | | 6,479 | |
| Net earnings allocated to common shareholders | | $ | 10,523 | | | $ | 11,494 | |
| | | | | | | | | |
| Average common shares outstanding | | | 14,751 | | | | 15,003 | |
| Effect of dilutive securities: | | | | | | | | |
| Employee stock options | | | 83 | | | | 68 | |
| Shares for diluted earnings per share | | | 14,834 | | | | 15,071 | |
| | | | | | | | | |
| Basic earnings per common share | | $ | 0.71 | | | $ | 0.77 | |
| Diluted earnings per common share | | $ | 0.71 | | | $ | 0.76 | |
| Dividends declared per common share | | $ | 0.35 | | | $ | 0.34 | |
| | | | | | | | | |
| Comprehensive Income | | $ | 12,719 | | | $ | 10,714 | |
| CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | |
| Consolidated Statements of Income | | | | | | |
| (Unaudited) ($ in 000s, except per share data) | | | | | | |
| | | | | | | |
| | | Nine months ended September 30, | |
| | | 2012 | | | 2011 | |
| | | | | | | |
| Interest Income | | | | | | |
| Interest and fees on loans | | $ | 70,843 | | | $ | 70,416 | |
| Interest on investment securities: | | | | | | | | |
| Taxable | | | 11,345 | | | | 13,694 | |
| Tax-exempt | | | 1,101 | | | | 1,299 | |
| Interest on federal funds sold | | | 38 | | | | 39 | |
| Total Interest Income | | | 83,327 | | | | 85,448 | |
| | | | | | | | | |
| Interest Expense | | | | | | | | |
| Interest on deposits | | | 10,363 | | | | 15,829 | |
| Interest on short-term borrowings | | | 229 | | | | 239 | |
| Interest on long-term debt | | | 499 | | | | 474 | |
| Total Interest Expense | | | 11,091 | | | | 16,542 | |
| Net Interest Income | | | 72,236 | | | | 68,906 | |
| Provision for loan losses | | | 4,600 | | | | 2,372 | |
| Net Interest Income After Provision for Loan Losses | | | 67,636 | | | | 66,534 | |
| | | | | | | | | |
| Non-Interest Income | | | | | | | | |
| Total investment securities impairment losses | | | (878 | ) | | | (1,849 | ) |
| Noncredit impairment losses recognized in other comprehensive income | | | 302 | | | | 1,494 | |
| Net investment securities impairment losses | | | (576 | ) | | | (355 | ) |
| Gains on sale of investment securities | | | 1,530 | | | | 3,756 | |
| Net investment securities gains | | | 954 | | | | 3,401 | |
| | | | | | | | | |
| Service charges | | | 28,601 | | | | 28,749 | |
| Insurance commissions | | | 4,782 | | | | 4,513 | |
| Trust and investment management fee income | | | 2,662 | | | | 2,181 | |
| Bank owned life insurance | | | 2,228 | | | | 2,455 | |
| Other income | | | 1,762 | | | | 1,434 | |
| Total Non-Interest Income | | | 40,989 | | | | 42,733 | |
| | | | | | | | | |
| Non-Interest Expense | | | | | | | | |
| Salaries and employee benefits | | | 32,207 | | | | 30,397 | |
| Occupancy and equipment | | | 6,038 | | | | 6,084 | |
| Depreciation | | | 3,371 | | | | 3,408 | |
| FDIC insurance expense | | | 1,184 | | | | 2,276 | |
| Advertising | | | 1,993 | | | | 1,854 | |
| Bankcard expenses | | | 2,035 | | | | 1,693 | |
| Postage, delivery, and statement mailings | | | 1,565 | | | | 1,615 | |
| Office supplies | | | 1,258 | | | | 1,483 | |
| Legal and professional fees | | | 1,349 | | | | 4,547 | |
| Telecommunications | | | 1,209 | | | | 1,217 | |
| Repossessed asset losses, net of expenses | | | 1,200 | | | | 300 | |
| Merger related expenses | | | 4,335 | | | | - | |
| Other expenses | | | 8,382 | | | | 7,585 | |
| Total Non-Interest Expense | | | 66,126 | | | | 62,459 | |
| Income Before Income Taxes | | | 42,499 | | | | 46,808 | |
| Income tax expense | | | 14,450 | | | | 15,784 | |
| Net Income Available to Common Shareholders | | $ | 28,049 | | | $ | 31,024 | |
| | | | | | | | | |
| | | | | | | | | |
| Distributed earnings allocated to common shareholders | | $ | 15,451 | | | $ | 15,045 | |
| | | | | | | | | |
| Undistributed earnings allocated to common shareholders | | | 12,375 | | | | 15,756 | |
| | | | | | | | | |
| Net earnings allocated to common shareholders | | $ | 27,826 | | | $ | 30,801 | |
| | | | | | | | | |
| Average common shares outstanding | | | 14,700 | | | | 15,165 | |
| | | | | | | | | |
| Effect of dilutive securities: | | | | | | | | |
| Employee stock options | | | 83 | | | | 77 | |
| | | | | | | | | |
| Shares for diluted earnings per share | | | 14,783 | | | | 15,242 | |
| | | | | | | | | |
| Basic earnings per common share | | $ | 1.89 | | | $ | 2.03 | |
| Diluted earnings per common share | | $ | 1.88 | | | $ | 2.02 | |
| Dividends declared per common share | | $ | 1.05 | | | $ | 1.02 | |
| | | | | | | | | |
| Comprehensive Income | | $ | 31,591 | | | $ | 30,820 | |
| CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | |
| Consolidated Statements of Changes in Stockholders' Equity | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | |
| | | | | | | |
| | | | | | | |
| | | Three Months Ended | |
| | | September 30, 2012 | | | September 30, 2011 | |
| | | | | | | |
| Balance at July 1 | | $ | 320,622 | | | $ | 310,379 | |
| | | | | | | | | |
| Net income | | | 10,607 | | | | 11,577 | |
| Other comprehensive income: | | | | | | | | |
| Change in unrealized (loss) gain on securities available-for-sale | | | 2,112 | | | | (863 | ) |
| Cash dividends declared ($0.35/share) and ($0.34/share), respectively | | | (5,196 | ) | | | (5,073 | ) |
| Issuance of stock award shares, net | | | 214 | | | | 201 | |
| Exercise of 2,000 stock options | | | 56 | | | | - | |
| Exercise of 1,100 stock options | | | - | | | | 15 | |
| Purchase of 227,977 common shares of treasury | | | - | | | | (6,344 | ) |
| Balance at September 30 | | $ | 328,415 | | | $ | 309,892 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Nine Months Ended | |
| | | September 30, 2012 | | | September 30, 2011 | |
| | | | | | | | | |
| Balance at January 1 | | $ | 311,134 | | | $ | 314,861 | |
| | | | | | | | | |
| Net income | | | 28,049 | | | | 31,024 | |
| Other comprehensive income: | | | | | | | | |
| Change in unrealized gain on securities available-for-sale | | | 3,542 | | | | 91 | |
| Change in unrealized (loss) on interest rate floors | | | - | | | | (295 | ) |
| Cash dividends declared ($1.05/share) and ($1.02/share), respectively | | | (15,532 | ) | | | (15,394 | ) |
| Issuance of stock award shares, net | | | 870 | | | | 867 | |
| Acquisition of Virginia Savings Bancorp | | | 7,723 | | | | - | |
| Exercise of 18,899 stock options | | | 544 | | | | - | |
| Exercise of 6,576 stock options | | | - | | | | 168 | |
| Purchase of 237,535 common shares of treasury | | | (7,915 | ) | | | - | |
| Purchase of 675,501 common shares of treasury | | | - | | | | (21,430 | ) |
| Balance at September 30 | | $ | 328,415 | | | $ | 309,892 | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | |
| Condensed Consolidated Quarterly Statements of Income | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s, except per share data) | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | Quarter Ended | |
| | | September 30 | | | June 30 | | | March 31 | | | December 31 | | | September 30 | |
| | | 2012 | | | 2012 | | | 2012 | | | 2011 | | | 2011 | |
| | | | | | | | | | | | | | | | |
| Interest income | | $ | 28,432 | | | $ | 27,466 | | | $ | 27,430 | | | $ | 27,441 | | | $ | 28,370 | |
| Taxable equivalent adjustment | | | 185 | | | | 198 | | | | 208 | | | | 215 | | | | 212 | |
| Interest income (FTE) | | | 28,617 | | | | 27,664 | | | | 27,638 | | | | 27,656 | | | | 28,582 | |
| Interest expense | | | 3,557 | | | | 3,625 | | | | 3,908 | | | | 4,216 | | | | 4,799 | |
| Net interest income | | | 25,060 | | | | 24,039 | | | | 23,730 | | | | 23,440 | | | | 23,783 | |
| Provision for loan losses | | | 975 | | | | 1,675 | | | | 1,950 | | | | 2,229 | | | | - | |
| Net interest income after provision | | | | | | | | | | | | | | | | | | | | |
| for loan losses | | | 24,085 | | | | 22,364 | | | | 21,780 | | | | 21,211 | | | | 23,783 | |
| | | | | | | | | | | | | | | | | | | | | |
| Noninterest income | | | 14,079 | | | | 13,790 | | | | 13,118 | | | | 12,128 | | | | 13,531 | |
| Noninterest expense | | | 21,846 | | | | 24,763 | | | | 19,515 | | | | 18,685 | | | | 19,688 | |
| Income before income taxes | | | 16,318 | | | | 11,391 | | | | 15,383 | | | | 14,654 | | | | 17,626 | |
| Income tax expense | | | 5,526 | | | | 3,780 | | | | 5,144 | | | | 4,787 | | | | 5,837 | |
| Taxable equivalent adjustment | | | 185 | | | | 198 | | | | 208 | | | | 215 | | | | 212 | |
| Net income available to common shareholders | | $ | 10,607 | | | $ | 7,413 | | | $ | 10,031 | | | $ | 9,652 | | | $ | 11,577 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Distributed earnings allocated to common shareholders | | $ | 5,150 | | | $ | 5,146 | | | $ | 5,118 | | | $ | 5,136 | | | $ | 5,015 | |
| Undistributed earnings allocated to common shareholders | | | 5,373 | | | | 2,208 | | | | 4,837 | | | | 4,446 | | | | 6,479 | |
| Net earnings allocated to common shareholders | | $ | 10,523 | | | $ | 7,354 | | | $ | 9,955 | | | $ | 9,582 | | | $ | 11,494 | |
| | | | | | | | | | | | | | | | | | | | | |
| Average common shares outstanding | | | 14,751 | | | | 14,680 | | | | 14,679 | | | | 14,743 | | | | 15,003 | |
| | | | | | | | | | | | | | | | | | | | | |
| Effect of dilutive securities: | | | | | | | | | | | | | | | | | | | | |
| Employee stock options | | | 83 | | | | 79 | | | | 80 | | | | 71 | | | | 68 | |
| | | | | | | | | | | | | | | | | | | | | |
| Shares for diluted earnings per share | | | 14,834 | | | | 14,759 | | | | 14,759 | | | | 14,814 | | | | 15,071 | |
| | | | | | | | | | | | | | | | | | | | | |
| Basic earnings per common share | | $ | 0.71 | | | $ | 0.50 | | | $ | 0.68 | | | $ | 0.65 | | | $ | 0.77 | |
| Diluted earnings per common share | | | 0.71 | | | | 0.50 | | | | 0.67 | | | | 0.65 | | | | 0.76 | |
| | | | | | | | | | | | | | | | | | | | | |
| Cash dividends declared per share | | | 0.35 | | | | 0.35 | | | | 0.35 | | | | 0.35 | | | | 0.34 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Net Interest Margin | | | 3.95 | % | | | 3.91 | % | | | 3.98 | % | | | 3.90 | % | | | 3.93 | % |
| | | | | | | | | | | | | | | | | | | | | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | |
| Non-Interest Income and Non-Interest Expense | | | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | Quarter Ended | |
| | | September 30 | | | June 30 | | | March 31 | | | December 31 | | | September 30 | |
| | | 2012 | | | 2012 | | | 2012 | | | 2011 | | | 2011 | |
| | | | | | | | | | | | | | | | |
| Non-Interest Income: | | | | | | | | | | | | | | | |
| Service charges | | $ | 9,861 | | | $ | 9,649 | | | $ | 9,090 | | | $ | 9,360 | | | $ | 9,840 | |
| Insurance commissions | | | 1,439 | | | | 1,347 | | | | 1,996 | | | | 1,433 | | | | 1,388 | |
| Trust and investment management fee income | | | 912 | | | | 942 | | | | 807 | | | | 925 | | | | 699 | |
| Bank owned life insurance | | | 738 | | | | 766 | | | | 723 | | | | 728 | | | | 952 | |
| Other income | | | 671 | | | | 558 | | | | 533 | | | | 599 | | | | 380 | |
| Subtotal | | | 13,621 | | | | 13,262 | | | | 13,149 | | | | 13,045 | | | | 13,259 | |
| Total investment securities impairment losses | | | (272 | ) | | | (606 | ) | | | - | | | | (918 | ) | | | (1,849 | ) |
| Noncredit impairment losses recognized in other | | | | | | | | | | | | | | | | | | | | |
| comprehensive income | | | - | | | | 302 | | | | - | | | | - | | | | 1,494 | |
| Net investment securities impairment losses | | | (272 | ) | | | (304 | ) | | | - | | | | (918 | ) | | | (355 | ) |
| Gain (loss) on sale of investment securities | | | 730 | | | | 832 | | | | (31 | ) | | | 1 | | | | 627 | |
| Total Non-Interest Income | | $ | 14,079 | | | $ | 13,790 | | | $ | 13,118 | | | $ | 12,128 | | | $ | 13,531 | |
| | | | | | | | | | | | | | | | | | | | | |
| Non-Interest Expense: | | | | | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | $ | 11,295 | | | $ | 10,668 | | | $ | 10,245 | | | $ | 10,320 | | | $ | 10,302 | |
| Occupancy and equipment | | | 2,126 | | | | 1,978 | | | | 1,935 | | | | 1,929 | | | | 2,057 | |
| Depreciation | | | 1,175 | | | | 1,109 | | | | 1,086 | | | | 1,100 | | | | 1,131 | |
| FDIC insurance expense | | | 405 | | | | 394 | | | | 385 | | | | 300 | | | | 392 | |
| Advertising | | | 674 | | | | 675 | | | | 644 | | | | 153 | | | | 546 | |
| Bankcard expenses | | | 720 | | | | 694 | | | | 620 | | | | 566 | | | | 559 | |
| Postage, delivery and statement mailings | | | 529 | | | | 488 | | | | 548 | | | | 484 | | | | 551 | |
| Office supplies | | | 407 | | | | 396 | | | | 455 | | | | 429 | | | | 492 | |
| Legal and professional fees | | | 611 | | | | 421 | | | | 317 | | | | 366 | | | | 567 | |
| Telecommunications | | | 433 | | | | 387 | | | | 389 | | | | 388 | | | | 371 | |
| Repossessed asset (gains) losses, net of expenses | | | 429 | | | | 650 | | | | 121 | | | | (27 | ) | | | 109 | |
| Merger related expenses | | | 157 | | | | 4,042 | | | | 135 | | | | - | | | | - | |
| Other expenses | | | 2,885 | | | | 2,861 | | | | 2,635 | | | | 2,677 | | | | 2,611 | |
| Total Non-Interest Expense | | $ | 21,846 | | | $ | 24,763 | | | $ | 19,515 | | | $ | 18,685 | | | $ | 19,688 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Employees (Full Time Equivalent) | | | 836 | | | | 831 | | | | 797 | | | | 795 | | | | 792 | |
| Branch Locations | | | 73 | | | | 73 | | | | 68 | | | | 68 | | | | 68 | |
| | | | | | | | | | | | | | | | | | | | | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | |
| Consolidated Balance Sheets | | | | | | |
| ($ in 000s) | | | | | | |
| | | September 30 | | | December 31 | |
| | | 2012 | | | 2011 | |
| | | (Unaudited) | | | | |
| Assets | | | | | | |
| Cash and due from banks | | $ | 72,309 | | | $ | 140,873 | |
| Interest-bearing deposits in depository institutions | | | 5,563 | | | | 5,526 | |
| Federal funds sold | | | 35,000 | | | | - | |
| Cash and cash equivalents | | | 112,872 | | | | 146,399 | |
| | | | | | | | | |
| Investment securities available-for-sale, at fair value | | | 389,686 | | | | 360,783 | |
| Investment securities held-to-maturity, at amortized cost | | | 13,444 | | | | 23,458 | |
| Other securities | | | 11,459 | | | | 11,934 | |
| Total investment securities | | | 414,589 | | | | 396,175 | |
| | | | | | | | | |
| Gross loans | | | 2,085,232 | | | | 1,973,103 | |
| Allowance for loan losses | | | (18,986 | ) | | | (19,409 | ) |
| Net loans | | | 2,066,246 | | | | 1,953,694 | |
| | | | | | | | | |
| Bank owned life insurance | | | 81,146 | | | | 78,961 | |
| Premises and equipment, net | | | 72,360 | | | | 64,612 | |
| Accrued interest receivable | | | 7,681 | | | | 7,093 | |
| Net deferred tax assets | | | 32,407 | | | | 32,219 | |
| Intangible assets | | | 65,103 | | | | 56,164 | |
| Other assets | | | 46,793 | | | | 41,792 | |
| Total Assets | | $ | 2,899,197 | | | $ | 2,777,109 | |
| | | | | | | | | |
| Liabilities | | | | | | | | |
| Deposits: | | | | | | | | |
| Noninterest-bearing | | $ | 407,634 | | | $ | 369,025 | |
| Interest-bearing: | | | | | | | | |
| Demand deposits | | | 549,752 | | | | 526,824 | |
| Savings deposits | | | 495,068 | | | | 439,823 | |
| Time deposits | | | 929,042 | | | | 885,596 | |
| Total deposits | | | 2,381,496 | | | | 2,221,268 | |
| Short-term borrowings | | | | | | | | |
| Federal Funds purchased | | | - | | | | 75,000 | |
| Customer repurchase agreements | | | 131,947 | | | | 114,050 | |
| Long-term debt | | | 16,495 | | | | 16,495 | |
| Other liabilities | | | 40,844 | | | | 39,162 | |
| Total Liabilities | | | 2,570,782 | | | | 2,465,975 | |
| | | | | | | | | |
| Stockholders' Equity | | | | | | | | |
| Preferred stock, par value $25 per share: 500,000 shares authorized; none issued | | | - | | | | - | |
| Common stock, par value $2.50 per share: 50,000,000 shares authorized; | | | | | | | | |
| 18,499,282 shares issued at September 30, 2012 and December 31, 2011 | | | | | | | | |
| less 3,665,999 and 3,717,993 shares in treasury, respectively | | | 46,249 | | | | 46,249 | |
| Capital surplus | | | 103,311 | | | | 103,335 | |
| Retained earnings | | | 303,567 | | | | 291,050 | |
| Cost of common stock in treasury | | | (124,347 | ) | | | (125,593 | ) |
| Accumulated other comprehensive loss: | | | | | | | | |
| Unrealized gain on securities available-for-sale | | | 4,367 | | | | 825 | |
| Underfunded pension liability | | | (4,732 | ) | | | (4,732 | ) |
| Total Accumulated Other Comprehensive Loss | | | (365 | ) | | | (3,907 | ) |
| Total Stockholders' Equity | | | 328,415 | | | | 311,134 | |
| Total Liabilities and Stockholders' Equity | | $ | 2,899,197 | | | $ | 2,777,109 | |
| CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | |
| Investment Portfolio | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Original Cost | | | Credit-Related Net Investment Impairment Losses through September 30, 2012 | | | Unrealized Gains (Losses) | | | Carrying Value | |
| | | | | | | | | | | | | |
| US Government Agencies | | $ | 4,309 | | | $ | - | | | $ | 105 | | | $ | 4,414 | |
| Mortgage Backed Securities | | | 289,260 | | | | - | | | | 8,693 | | | | 297,953 | |
| Municipal Bonds | | | 48,334 | | | | - | | | | 1,799 | | | | 50,133 | |
| Pooled Bank Trust Preferreds | | | 26,917 | | | | (20,171 | ) | | | (3,250 | ) | | | 3,496 | |
| Single Issuer Bank Trust Preferreds, | | | | | | | | | | | | | | | | |
| Subdebt of Financial Institutions, and | | | | | | | | | | | | | | | | |
| Bank Holding Company Preferred Stocks | | | 43,435 | | | | (1,015 | ) | | | (1,001 | ) | | | 41,419 | |
| Money Markets and Mutual Funds | | | 1,725 | | | | - | | | | 68 | | | | 1,793 | |
| Federal Reserve Bank and FHLB stock | | | 11,459 | | | | - | | | | - | | | | 11,459 | |
| Community Bank Equity Positions | | | 8,194 | | | | (4,813 | ) | | | 541 | | | | 3,922 | |
| Total Investments | | $ | 433,633 | | | $ | (25,999 | ) | | $ | 6,955 | | | $ | 414,589 | |
| CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | |
| Loan Portfolio | | | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | September 30 | | | June 30 | | | March 31 | | | December 31 | | | September 30 | |
| | | 2012 | | | 2012 | | | 2012 | | | 2011 | | | 2011 | |
| | | | | | | | | | | | | | | | |
Residential real estate (1) | | $ | 1,008,305 | | | $ | 997,016 | | | $ | 939,611 | | | $ | 929,788 | | | $ | 916,122 | |
| Home equity - junior liens | | | 143,058 | | | | 143,400 | | | | 139,764 | | | | 141,797 | | | | 142,028 | |
| Commercial and industrial | | | 105,027 | | | | 116,288 | | | | 108,707 | | | | 130,899 | | | | 119,377 | |
Commercial real estate (2) | | | 787,887 | | | | 768,176 | | | | 745,586 | | | | 732,146 | | | | 708,558 | |
| Consumer | | | 38,285 | | | | 37,383 | | | | 35,448 | | | | 35,845 | | | | 36,575 | |
| DDA overdrafts | | | 2,670 | | | | 3,326 | | | | 2,848 | | | | 2,628 | | | | 2,924 | |
| Previously securitized loans | | | - | | | | - | | | | - | | | | - | | | | 214 | |
| Gross Loans | | $ | 2,085,232 | | | $ | 2,065,589 | | | $ | 1,971,964 | | | $ | 1,973,103 | | | $ | 1,925,798 | |
| | | | | | | | | | | | | | | | | | | | | |
| Construction loans included in: | | | | | | | | | | | | | | | | | | | | |
(1) - Residential real estate loans | | $ | 12,787 | | | $ | 11,919 | | | $ | 11,613 | | | $ | 9,287 | | | $ | 7,456 | |
(2) - Commercial real estate loans | | $ | 17,072 | | | $ | 18,544 | | | $ | 20,661 | | | $ | 20,201 | | | $ | 23,915 | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | | |
| Consolidated Average Balance Sheets, Yields, and Rates | | | | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended September 30, | |
| | | | | | 2012 | | | | | | | | | 2011 | | | | |
| | | Average | | | | | | Yield/ | | | Average | | | | | | Yield/ | |
| | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
| | | | | | | | | | | | | | | | | | | |
| Assets: | | | | | | | | | | | | | | | | | | |
Loan portfolio (1): | | | | | | | | | | | | | | | | | | |
| Residential real estate | | $ | 1,140,910 | | | $ | 13,000 | | | | 4.53 | % | | $ | 1,046,155 | | | $ | 12,054 | | | | 4.57 | % |
| Commercial, financial, and agriculture | | | 880,243 | | | | 10,069 | | | | 4.55 | % | | | 825,353 | | | | 9,575 | | | | 4.60 | % |
Installment loans to individuals (2) | | | 49,111 | | | | 782 | | | | 6.33 | % | | | 45,461 | | | | 906 | | | | 7.91 | % |
Previously securitized loans (3) | | | *** | | | | 781 | | | | *** | | | | 277 | | | | 791 | | | | 1132.93 | % |
| Total loans | | | 2,070,264 | | | | 24,632 | | | | 4.73 | % | | | 1,917,246 | | | | 23,326 | | | | 4.83 | % |
| Securities: | | | | | | | | | | | | | | | | | | | | | | | | |
| Taxable | | | 372,877 | | | | 3,438 | | | | 3.67 | % | | | 399,468 | | | | 4,639 | | | | 4.61 | % |
Tax-exempt (4) | | | 36,761 | | | | 532 | | | | 5.76 | % | | | 42,249 | | | | 604 | | | | 5.67 | % |
| Total securities | | | 409,638 | | | | 3,970 | | | | 3.86 | % | | | 441,717 | | | | 5,243 | | | | 4.71 | % |
| Deposits in depository institutions | | | 7,063 | | | | - | | | | - | | | | 7,497 | | | | - | | | | - | |
| Federal funds sold | | | 35,487 | | | | 15 | | | | 0.17 | % | | | 32,204 | | | | 13 | | | | 0.16 | % |
| Total interest-earning assets | | | 2,522,452 | | | | 28,617 | | | | 4.51 | % | | | 2,398,664 | | | | 28,582 | | | | 4.73 | % |
| Cash and due from banks | | | 80,335 | | | | | | | | | | | | 61,387 | | | | | | | | | |
| Bank premises and equipment | | | 72,640 | | | | | | | | | | | | 64,900 | | | | | | | | | |
| Other assets | | | 232,793 | | | | | | | | | | | | 206,943 | | | | | | | | | |
| Less: Allowance for loan losses | | | (19,889 | ) | | | | | | | | | | | (20,496 | ) | | | | | | | | |
| Total assets | | $ | 2,888,331 | | | | | | | | | | | $ | 2,711,398 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing demand deposits | | | 539,189 | | | | 180 | | | | 0.13 | % | | | 496,866 | | | | 224 | | | | 0.18 | % |
| Savings deposits | | | 497,208 | | | | 204 | | | | 0.16 | % | | | 427,391 | | | | 260 | | | | 0.24 | % |
| Time deposits | | | 931,369 | | | | 2,928 | | | | 1.25 | % | | | 913,040 | | | | 4,066 | | | | 1.77 | % |
| Short-term borrowings | | | 122,955 | | | | 79 | | | | 0.26 | % | | | 132,487 | | | | 90 | | | | 0.27 | % |
| Long-term debt | | | 16,495 | | | | 166 | | | | 4.00 | % | | | 16,495 | | | | 159 | | | | 3.82 | % |
| Total interest-bearing liabilities | | | 2,107,216 | | | | 3,557 | | | | 0.67 | % | | | 1,986,279 | | | | 4,799 | | | | 0.96 | % |
| Noninterest-bearing demand deposits | | | 418,584 | | | | | | | | | | | | 383,736 | | | | | | | | | |
| Other liabilities | | | 35,461 | | | | | | | | | | | | 25,054 | | | | | | | | | |
| Stockholders' equity | | | 327,070 | | | | | | | | | | | | 316,329 | | | | | | | | | |
| Total liabilities and | | | | | | | | | | | | | | | | | | | | | | | | |
| stockholders' equity | | $ | 2,888,331 | | | | | | | | | | | $ | 2,711,398 | | | | | | | | | |
| Net interest income | | | | | | $ | 25,060 | | | | | | | | | | | $ | 23,783 | | | | | |
| Net yield on earning assets | | | | | | | | | | | 3.95 | % | | | | | | | | | | | 3.93 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
(1) For purposes of this table, non-accruing loans have been included in average balances and loan fees, which are immaterial, have been included in interest income. | |
| (2) Includes the Company’s consumer and DDA overdrafts loan categories. | |
| (3) Effective January 1, 2012, the carrying value of the Company's previously securitized loans was reduced to $0. | |
(4) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 35%. | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | | |
| Consolidated Average Balance Sheets, Yields, and Rates | | | | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | Nine Months Ended September 30, | |
| | | | | | 2012 | | | | | | | | | 2011 | | | | |
| | | Average | | | | | | Yield/ | | | Average | | | | | | Yield/ | |
| | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
| | | | | | | | | | | | | | | | | | | |
| Assets: | | | | | | | | | | | | | | | | | | |
Loan portfolio (1): | | | | | | | | | | | | | | | | | | |
Residential real estate (2) | | $ | 1,101,805 | | | $ | 36,731 | | | | 4.45 | % | | $ | 1,033,830 | | | $ | 36,905 | | | | 4.77 | % |
Commercial, financial, and agriculture (3) | | | 873,295 | | | | 29,395 | | | | 4.50 | % | | | 805,386 | | | | 28,492 | | | | 4.73 | % |
Installment loans to individuals (4) | | | 45,756 | | | | 2,303 | | | | 6.72 | % | | | 45,713 | | | | 2,570 | | | | 7.52 | % |
Previously securitized loans (5) | | | *** | | | | 2,414 | | | | *** | | | | 452 | | | | 2,449 | | | | 724.40 | % |
| Total loans | | | 2,020,856 | | | | 70,843 | | | | 4.68 | % | | | 1,885,381 | | | | 70,416 | | | | 4.99 | % |
| Securities: | | | | | | | | | | | | | | | | | | | | | | | | |
| Taxable | | | 367,800 | | | | 11,345 | | | | 4.12 | % | | | 422,777 | | | | 13,694 | | | | 4.33 | % |
Tax-exempt (6) | | | 39,176 | | | | 1,694 | | | | 5.78 | % | | | 47,077 | | | | 1,999 | | | | 5.68 | % |
| Total securities | | | 406,976 | | | | 13,039 | | | | 4.28 | % | | | 469,854 | | | | 15,693 | | | | 4.47 | % |
| Deposits in depository institutions | | | 7,200 | | | | - | | | | - | | | | 7,815 | | | | - | | | | - | |
| Federal funds sold | | | 29,712 | | | | 38 | | | | 0.17 | % | | | 31,348 | | | | 39 | | | | 0.17 | % |
| Total interest-earning assets | | | 2,464,744 | | | | 83,920 | | | | 4.55 | % | | | 2,394,398 | | | | 86,148 | | | | 4.81 | % |
| Cash and due from banks | | | 75,576 | | | | | | | | | | | | 56,923 | | | | | | | | | |
| Bank premises and equipment | | | 68,788 | | | | | | | | | | | | 64,560 | | | | | | | | | |
| Other assets | | | 221,661 | | | | | | | | | | | | 204,909 | | | | | | | | | |
| Less: Allowance for loan losses | | | (19,599 | ) | | | | | | | | | | | (19,290 | ) | | | | | | | | |
| Total assets | | $ | 2,811,170 | | | | | | | | | | | $ | 2,701,500 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing demand deposits | | | 532,231 | | | | 531 | | | | 0.13 | % | | | 490,691 | | | | 711 | | | | 0.19 | % |
| Savings deposits | | | 473,626 | | | | 576 | | | | 0.16 | % | | | 415,740 | | | | 790 | | | | 0.25 | % |
| Time deposits | | | 905,561 | | | | 9,256 | | | | 1.37 | % | | | 941,808 | | | | 14,328 | | | | 2.03 | % |
| Short-term borrowings | | | 119,454 | | | | 229 | | | | 0.26 | % | | | 121,350 | | | | 239 | | | | 0.26 | % |
| Long-term debt | | | 16,495 | | | | 499 | | | | 4.04 | % | | | 16,495 | | | | 474 | | | | 3.84 | % |
| Total interest-bearing liabilities | | | 2,047,367 | | | | 11,091 | | | | 0.72 | % | | | 1,986,084 | | | | 16,542 | | | | 1.11 | % |
| Noninterest-bearing demand deposits | | | 408,435 | | | | | | | | | | | | 377,460 | | | | | | | | | |
| Other liabilities | | | 33,612 | | | | | | | | | | | | 21,368 | | | | | | | | | |
| Stockholders' equity | | | 321,756 | | | | | | | | | | | | 316,588 | | | | | | | | | |
| Total liabilities and | | | | | | | | | | | | | | | | | | | | | | | | |
| stockholders' equity | | $ | 2,811,170 | | | | | | | | | | | $ | 2,701,500 | | | | | | | | | |
| Net interest income | | | | | | $ | 72,829 | | | | | | | | | | | $ | 69,606 | | | | | |
| Net yield on earning assets | | | | | | | | | | | 3.95 | % | | | | | | | | | | | 3.89 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
(1) For purposes of this table, non-accruing loans have been included in average balances and loan fees, which are immaterial, have been included in interest income. | |
| (2) Interest income includes $0 and $632 from interest rate floors for the nine months ended September 30, 2012 and September 30, 2011, respectively. | |
| (3) Includes the Company’s commercial and industrial and commercial real estate loan categories. Interest income includes $0 and $488 from interest rate floors for the nine months ended September 30, 2012 and September 30, 2011, respectively. | |
| (4) Includes the Company’s consumer and DDA overdrafts loan categories. | |
| (5) Effective January 1, 2012, the carrying value of the Company's previously securitized loans was reduced to $0. | |
(6) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 35%. | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | |
| Analysis of Risk-Based Capital | | | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | September 30 | | | June 30 | | | March 31 | | | December 31 | | | September 30 | |
| | | 2012 (a) | | | 2012 | | | 2012 | | | 2011 | | | 2011 | |
| | | | | | | | | | | | | | | | |
| Tier I Capital: | | | | | | | | | | | | | | | |
| Stockholders' equity | | $ | 328,415 | | | $ | 320,622 | | | $ | 316,046 | | | $ | 311,134 | | | $ | 309,892 | |
| Goodwill and other intangibles | | | (64,912 | ) | | | (64,971 | ) | | | (55,871 | ) | | | (55,969 | ) | | | (56,071 | ) |
| Accumulated other comprehensive loss | | | 365 | | | | 2,477 | | | | 1,737 | | | | 3,907 | | | | 2,701 | |
| Qualifying trust preferred stock | | | 16,000 | | | | 16,000 | | | | 16,000 | | | | 16,000 | | | | 16,000 | |
| Unrealized loss on AFS securities | | | - | | | | - | | | | - | | | | (448 | ) | | | (1,081 | ) |
| Excess deferred tax assets | | | (7,472 | ) | | | (7,847 | ) | | | (4,020 | ) | | | (5,897 | ) | | | (5,435 | ) |
| Total tier I capital | | $ | 272,397 | | | $ | 266,282 | | | $ | 273,892 | | | $ | 268,727 | | | $ | 266,007 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total Risk-Based Capital: | | | | | | | | | | | | | | | | | | | | |
| Tier I capital | | $ | 272,397 | | | $ | 266,282 | | | $ | 273,892 | | | $ | 268,727 | | | $ | 266,007 | |
| Qualifying allowance for loan losses | | | 18,986 | | | | 19,452 | | | | 18,628 | | | | 19,409 | | | | 19,848 | |
| Total risk-based capital | | $ | 291,383 | | | $ | 285,734 | | | $ | 292,520 | | | $ | 288,136 | | | $ | 285,855 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net risk-weighted assets | | $ | 2,112,581 | | | $ | 2,136,249 | | | $ | 2,050,520 | | | $ | 2,048,398 | | | $ | 2,013,294 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Ratios: | | | | | | | | | | | | | | | | | | | | |
| Average stockholders' equity to average assets | | | 11.32 | % | | | 11.47 | % | | | 11.55 | % | | | 11.65 | % | | | 11.67 | % |
| Tangible capital ratio | | | 9.29 | % | | | 9.03 | % | | | 9.54 | % | | | 9.37 | % | | | 9.65 | % |
| Risk-based capital ratios: | | | | | | | | | | | | | | | | | | | | |
| Tier I capital | | | 12.89 | % | | | 12.46 | % | | | 13.36 | % | | | 13.12 | % | | | 13.21 | % |
| Total risk-based capital | | | 13.79 | % | | | 13.38 | % | | | 14.27 | % | | | 14.07 | % | | | 14.20 | % |
| Leverage capital | | | 9.67 | % | | | 9.74 | % | | | 10.23 | % | | | 10.18 | % | | | 10.04 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| (a) September 30, 2012 risk-based capital ratios are estimated | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | | | | | | |
| Intangibles | | | | | | | | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | As of and for the Quarter Ended | |
| | | September 30 | | | June 30 | | | March 31 | | | December 31 | | | September 30 | |
| | | | 2012 | | | | 2012 | | | | 2012 | | | | 2011 | | | | 2011 | |
| | | | | | | | | | | | | | | | | | | | | |
| Intangibles, net | | $ | 65,103 | | | $ | 65,162 | | | $ | 56,066 | | | $ | 56,164 | | | $ | 56,266 | |
| Intangibles amortization expense | | | 135 | | | | 109 | | | | 98 | | | | 102 | | | | 102 | |
| | | | | | | | | | | | | | | | | | | | | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | |
| Summary of Loan Loss Experience | | | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | Quarter Ended | |
| | | September 30 | | | June 30 | | | March 31 | | | December 31 | | | September 30 | |
| | | 2012 | | | 2012 | | | 2012 | | | 2011 | | | 2011 | |
| | | | | | | | | | | | | | | | |
| Balance at beginning of period | | $ | 19,452 | | | $ | 18,628 | | | $ | 19,409 | | | $ | 19,848 | | | $ | 18,944 | |
| | | | | | | | | | | | | | | | | | | | | |
| Charge-offs: | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | | 9 | | | | 48 | | | | 69 | | | | 247 | | | | 200 | |
| Commercial real estate | | | 845 | | | | 26 | | | | 1,989 | | | | 1,650 | | | | 141 | |
| Residential real estate | | | 252 | | | | 296 | | | | 198 | | | | 176 | | | | 264 | |
| Home equity | | | 133 | | | | 347 | | | | 509 | | | | 475 | | | | 209 | |
| Consumer | | | 53 | | | | 36 | | | | 59 | | | | 31 | | | | 75 | |
| DDA overdrafts | | | 418 | | | | 375 | | | | 335 | | | | 394 | | | | 492 | |
| Total charge-offs | | | 1,710 | | | | 1,128 | | | | 3,159 | | | | 2,973 | | | | 1,381 | |
| | | | | | | | | | | | | | | | | | | | | |
| Recoveries: | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | | 10 | | | | - | | | | 3 | | | | 15 | | | | 2 | |
| Commercial real estate | | | 3 | | | | - | | | | 96 | | | | - | | | | 1,954 | |
| Residential real estate | | | 8 | | | | 3 | | | | 4 | | | | 10 | | | | 1 | |
| Home equity | | | 1 | | | | 10 | | | | 1 | | | | 1 | | | | 1 | |
| Consumer | | | 26 | | | | 35 | | | | 29 | | | | 29 | | | | 58 | |
| DDA overdrafts | | | 221 | | | | 229 | | | | 295 | | | | 250 | | | | 269 | |
| Total recoveries | | | 269 | | | | 277 | | | | 427 | | | | 305 | | | | 2,285 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net charge-offs | | | 1,441 | | | | 851 | | | | 2,731 | | | | 2,668 | | | | (904 | ) |
| Provision for loan losses | | | 975 | | | | 1,675 | | | | 1,950 | | | | 2,229 | | | | - | |
| Balance at end of period | | $ | 18,986 | | | $ | 19,452 | | | $ | 18,628 | | | $ | 19,409 | | | $ | 19,848 | |
| | | | | | | | | | | | | | | | | | | | | |
| Loans outstanding | | $ | 2,085,232 | | | $ | 2,065,589 | | | $ | 1,971,964 | | | $ | 1,973,103 | | | $ | 1,925,798 | |
| Average loans outstanding | | | 2,070,264 | | | | 2,019,281 | | | | 1,972,478 | | | | 1,940,950 | | | | 1,917,246 | |
| Allowance as a percent of loans outstanding | | | 0.91 | % | | | 0.94 | % | | | 0.94 | % | | | 0.98 | % | | | 1.03 | % |
| Allowance as a percent of non-performing loans | | | 82.61 | % | | | 88.92 | % | | | 88.78 | % | | | 87.76 | % | | | 87.27 | % |
| Net charge-offs (annualized) as a | | | | | | | | | | | | | | | | | | | | |
| percent of average loans outstanding | | | 0.28 | % | | | 0.17 | % | | | 0.55 | % | | | 0.55 | % | | | (0.19 | )% |
| Net charge-offs, excluding overdraft deposit | | | | | | | | | | | | | | | | | | | | |
accounts, (annualized) as a percent of average loans outstanding | | | 0.24 | % | | | 0.14 | % | | | 0.55 | % | | | 0.52 | % | | | (0.24 | )% |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | |
| Summary of Non-Performing Assets | | | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | September 30 | | | June 30 | | | March 31 | | | December 31 | | | September 30 | |
| | | 2012 | | | 2012 | | | 2012 | | | 2011 | | | 2011 | |
| | | | | | | | | | | | | | | | |
| Nonaccrual loans | | $ | 22,586 | | | $ | 21,726 | | | $ | 20,420 | | | $ | 21,951 | | | $ | 22,423 | |
Accruing loans past due 90 days or more(1) | | | 397 | | | | 149 | | | | 562 | | | | 166 | | | | 320 | |
| Total non-performing loans | | | 22,983 | | | | 21,875 | | | | 20,982 | | | | 22,117 | | | | 22,743 | |
| Other real estate owned | | | 9,017 | | | | 8,697 | | | | 8,250 | | | | 7,948 | | | | 8,273 | |
| Total non-performing assets | | $ | 32,000 | | | $ | 30,572 | | | $ | 29,232 | | | $ | 30,065 | | | $ | 31,016 | |
| | | | | | | | | | | | | | | | | | | | | |
| Non-performing assets as a percent of loans and | | | | | | | | | | | | | | | | | | | | |
| other real estate owned | | | 1.53 | % | | | 1.47 | % | | | 1.48 | % | | | 1.52 | % | | | 1.60 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | | | | | | |
| Summary of Total Past Due Loans | | | | | | | | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | September 30 | | | June 30 | | | March 31 | | | December 31 | | | September 30 | |
| | | | 2012 | | | | 2012 | | | | 2012 | | | | 2011 | | | | 2011 | |
| | | | | | | | | | | | | | | | | | | | | |
| Residential real estate | | $ | 4,909 | | | $ | 5,575 | | | $ | 4,108 | | | $ | 5,362 | | | $ | 4,569 | |
| Home equity | | | 2,643 | | | | 1,864 | | | | 1,560 | | | | 2,246 | | | | 2,425 | |
| Commercial and industrial | | | 25 | | | | 540 | | | | 63 | | | | 1,243 | | | | 37 | |
| Commercial real estate | | | 1,271 | | | | 3,145 | | | | 2,636 | | | | 3,415 | | | | 2,423 | |
| Consumer | | | 136 | | | | 90 | | | | 58 | | | | 138 | | | | 112 | |
| Previously securitized loans | | | - | | | | - | | | | - | | | | - | | | | 403 | |
| DDA overdrafts | | | 319 | | | | 364 | | | | 304 | | | | 909 | | | | 614 | |
| Total past due loans | | $ | 9,303 | | | $ | 11,578 | | | $ | 8,729 | | | $ | 13,313 | | | $ | 10,583 | |
| | | | | | | | | | | | | | | | | | | | | |
| Past due loans as a percent of loans outstanding | | | 0.45 | % | | | 0.56 | % | | | 0.44 | % | | | 0.67 | % | | | 0.55 | % |
| | | | | | | | | | | | | | | | | | | | | |
