For Immediate Release
April 29, 2014
For Further Information Contact:
Charles R. Hageboeck, Chief Executive Officer and President
(304) 769-1102
City Holding Company Announces First Quarter Results
Charleston, West Virginia – City Holding Company, “the Company” (NASDAQ:CHCO), a $3.4 billion bank holding company headquartered in Charleston, today announced first quarter net income per diluted share of $0.86 and net income of $13.8 million. For the first quarter of 2014, the Company achieved a return on assets of 1.63%, a return on tangible equity of 17.3%, a net interest margin of 4.15%, and an efficiency ratio of 52.3%.
City’s CEO Charles Hageboeck stated that, “Despite the challenges of lower accretion income, a water crisis in Charleston, West Virginia and surrounding areas, and an extremely harsh winter, City was able to deliver another quarter of impressive earnings. Our net income of $13.8 million and diluted earnings per share of $0.86 were above both the first quarter of 2013 (net income of $8.0 million and diluted earnings per share of $0.51) and the fourth quarter of 2013 (net income of $13.2 million and diluted earnings per share of $0.83).”
“Our net interest income declined $2.0 million from the fourth quarter of 2013 due to lower accretion from fair value adjustments related to our acquisitions of Virginia Savings Bancorp, Inc. (“Virginia Savings Bank”) and Community Financial Corporation (“Community Bank”). This decline is largely due to our credit and lending teams’ ability to favorably work out a significant number of larger problem loans during 2013. Excluding the impact of accretion income, our net interest margin increased from 3.81% for the fourth quarter of 2013 to 3.85% for the first quarter of 2014.”
“During the first quarter of 2014, City’s credit metrics continued to strengthen. The ratio of nonperforming loans to loans and other real estate owned declined to 1.19% and past due loans as a percentage of loans dropped to 0.43%. The drop in past due loans was primarily attributable to a decline in past due loans from acquisitions, which reflects the successes of our credit and lending teams in working out acquired problem loans.”
“City’s noninterest income was relatively flat compared to the first quarter of 2013. Our service charges were negatively impacted due to the harsh winter and a water crisis in Charleston, West Virginia that restricted business activity and consumer spending for an extended time period. Noninterest expenses, exclusive of merger related charges in the first quarter of 2013, were down due to lower non-income based taxes. In addition, our income tax rate for the first quarter of 2014 also declined. These declines are due to the recognition of a previously unrecognized tax position resulting from the expiration of the statute of limitations for a previous year. The combined favorable impact of these discrete items for the first quarter of 2014 was $0.10 per diluted share (net of taxes), and we expect that the Company’s effective tax rate for the year ending December 31, 2014 will be 31.2% (33.6% excluding the recognition of unrecognized discrete tax positions).”
“In March 2014, we announced an 8% increase in our quarterly dividend from 37 cents per share to 40 cents per share. This increase is based on the Company’s commitment of returning value to our shareholders, our current strong financial position, and our confidence in the Company being able to sustain this performance,” Hageboeck concluded.
Net Interest Income
The Company’s tax equivalent net interest income decreased $2.0 million, or 6.1%, from $32.2 million during the fourth quarter of 2013 to $30.2 million during the first quarter of 2014. This decrease is due to a decline in the accretion from fair value adjustments related to the acquisitions of Virginia Savings Bank and Community Bank ($2.2 million for the quarter ended March 31, 2014 compared to $3.9 million for the quarter ended December 31, 2013). The Company’s reported net interest margin decreased from 4.33% for the fourth quarter of 2013 to 4.15% for the first quarter of 2014. Excluding the favorable impact of the accretion from the fair value adjustments, the net interest margin would have been 3.85% for the quarter ended March 31, 2014 and 3.81% for the quarter ended December 31, 2013.
Credit Quality
The Company’s ratio of nonperforming assets to total loans and other real estate owned decreased slightly from 1.20% at December 31, 2013 to 1.19% at March 31, 2014. Excluded from this ratio are purchased credit-impaired loans in which the Company estimated cash flows and estimated a credit mark. These loans are considered performing loans provided that the loan is performing in accordance with the estimated expectations. Such loans would be considered nonperforming loans if the loan’s performance deteriorates below the initial expectations. Total past due loans decreased from $19.5 million, or 0.75% of total loans outstanding, at December 31, 2013 to $11.0 million, or 0.43% of total loans outstanding, at March 31, 2014. Acquired past due loans represent approximately 47% of total past due loans and have declined $11.3 million, or 68.7%, since March 31, 2013. The company’s TDR’s have decreased from $25.1 million at December 31, 2013 to $23.7 million at March 31, 2014, and more than 90% of these loans are current with interest and principal payments.
As a result of the Company’s quarterly analysis of the adequacy of the ALLL, the Company recorded a provision for loan losses of $1.4 million in the first quarter of 2014, compared to $1.7 for the comparable period in 2013 and $1.9 million for the fourth quarter of 2013. The provision for loan losses recorded in the first quarter of 2014 reflects difficulties of certain commercial borrowers of the Company during the quarter, the downgrade of their related credits and management’s assessment of the impact of these difficulties on the ultimate collectability of the loans. 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.
Non-interest Income
Non-interest income was steady at $14.3 million for both the first quarter of 2014 and the first quarter of 2013. Bankcard revenues increased $0.5 million, or 15.2%, due to increased usage by our customers from the first quarter of 2013, while insurance commissions were up $0.2 million, or 10.1%, on the strength of increased contingency payments. These increases were essentially offset by decreases in service charges of $0.4 million and other income of $0.3 million from the first quarter of 2013. We believe that service charges were down primarily as a result of a much harsher winter in the first quarter of 2014 and the water crisis experienced in Charleston, West Virginia and surrounding areas during January 2014. Other income declined during the first quarter of 2014 due largely to a decline in fixed rate mortgages lending activity.
Non-interest Expenses
During the first quarter of 2013, the Company completed its acquisition of Community Bank and recognized $5.5 million of acquisition and integration expenses. Excluding these expenses, non-interest expenses decreased $0.5 million, from $23.9 million in the first quarter of 2013 to $23.4 million in the first quarter of 2014. This decrease was largely attributable to a decline in other expenses of $1.3 million due to a decrease in non-income based taxes as a result of the recognition of previously unrecognized tax position resulting from the close of the statute of limitations for a previous tax year. As noted previously, this favorable difference was discrete to the first quarter of 2014. This decrease was partially offset by an increase in repossessed asset losses ($0.5 million) and salaries and employee benefits ($0.2 million).
Balance Sheet Trends
Loans have decreased $49.2 million (1.9%) from December 31, 2013 to $2.56 billion at March 31, 2014. Commercial real estate loans decreased $31.0 million (3.0%), commercial and industrial (“C&I”) loans decreased $20.4 million (12.4%), and consumer loans declined $4.1 million (8.8%). During the quarter ended March 31, 2014, a variety of factors led to the decline in commercial real estate and C&I loans – a $14 million participation loan was repurchased by the lead bank (a large community bank); a $9 million loan from an acquisition that was classified as substandard was repaid in full; a financially weak $9 million loan was refinanced by a smaller competitor that provided the borrower a cash out option; and various lines of credit experienced balance reductions. In regards to consumer loans, the Company strategically decided to reduce these loans due to the acquisition of an indirect portfolio of auto loans associated with Community Bank. These loans have higher loss percentages compared to the Company’s historical consumer portfolio.
Total average depository balances increased $8.6 million, or 0.3%, from the quarter ended December 31, 2013 to the quarter ended March 31, 2014. Increases in interest-bearing deposits ($14.6 million) and savings deposits ($10.9 million) were partially offset by a decrease in time deposits ($16.2 million).
Income Tax Expense
The Company’s effective income tax rate for the first quarter of 2014 was 29.6% compared to 34.4% for the year ended December 31, 2013, and 37.4% for the quarter ended March 31, 2013. During the first quarter of 2014, the Company reduced income tax expense by $0.8 million due to the recognition of previously unrecognized tax position resulting from the close of the statute of limitations for a previous tax year. Exclusive of this discrete item recognized in the first quarter of 2014, the Company’s tax rate from operations was 33.6%.
Capitalization and Liquidity
The Company’s loan to deposit ratio was 90.4% and the loan to asset ratio was 75.3% at March 31, 2014. The Company maintained investment securities totaling 11.1% of assets as of this date. Further, the Company’s deposit mix is weighted heavily toward checking and saving accounts that fund 52.0% of assets at March 31, 2014. Time deposits fund 31.3% of assets at March 31, 2014, but very few of these deposits are in accounts that have balances of more than $250,000, reflecting the core retail orientation of the Company.
The Company is also strongly capitalized. The Company’s tangible equity ratio was 9.6% at March 31, 2014 compared to 9.5% at December 31, 2013. At March 31, 2014, City National Bank’s Leverage Ratio is 9.09%, its Tier I Capital ratio is 12.28%, and its Total Risk-Based Capital ratio is 13.15%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.
On March 26, 2014, the Board approved a quarterly cash dividend of $0.40 cents per share payable April 30, 2014, to shareholders of record as of April 15, 2014. During the quarter ended March 31, 2014, the Company repurchased 68,000 common shares at a weighted average price of $43.08 as part of a one million share repurchase plan authorized by the Board of Directors in July 2011. At March 31, 2014, the Company could repurchase approximately 386,000 shares under the July 2011 authorization.
City Holding Company is the parent company of City National Bank of West Virginia. City National operates 82 branches across West Virginia, Virginia, Kentucky and 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 materially from those projected in the forward-looking statements. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include, but are not limited to, (1) the Company may incur additional loan loss provision due to negative credit quality trends in the future that may lead to a deterioration of asset quality; (2) the Company may incur increased charge-offs in the future; (3) the Company could have adverse legal actions of a material nature; (4) the Company may face competitive loss of customers; (5) the Company may be unable to manage its expense levels; (6) the Company may have difficulty retaining key employees; (7) changes in the interest rate environment may have results on the Company’s operations materially different from those anticipated by the Company’s market risk management functions; (8) changes in general economic conditions and increased competition could adversely affect the Company’s operating results; (9) changes in other regulations and government policies affecting bank holding companies and their subsidiaries, including changes in monetary policies, could negatively impact the Company’s operating results; (10) the Company may experience difficulties growing loan and deposit balances; (11) the current economic environment poses significant challenges for us and could adversely affect our financial condition and results of operations; (12) deterioration in the financial condition of the U.S. banking system may impact the valuations of investments the Company has made in the securities of other financial institutions resulting in either actual losses or other than temporary impairments on such investments; and (13) the effects of the Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and the regulations promulgated and to be promulgated thereunder, which may subject the Company and its subsidiaries to a variety of new and more stringent legal and regulatory requirements which adversely affect their respective businesses. 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 March 31, 2014 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary March 31, 2014 results and will adjust the amounts if necessary.
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | |
| Financial Highlights | | | | | | | | | |
| (Unaudited) | | | | | | | | | |
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| | | Three Months Ended March 31, | | | Percent | |
| | | 2014 | | | 2013 | | | Change | |
| | | | | | | | | | |
| Earnings ($000s, except per share data): | | | | | | | | | |
| Net Interest Income (FTE) | | $ | 30,193 | | | $ | 29,745 | | | | 1.51 | % |
| Net Income available to common shareholders | | | 13,803 | | | | 7,987 | | | | 72.82 | % |
| Earnings per Basic Share | | | 0.87 | | | | 0.51 | | | | 70.73 | % |
| Earnings per Diluted Share | | | 0.86 | | | | 0.51 | | | | 70.63 | % |
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| | | | | | | | | | | | | |
| Key Ratios (percent): | | | | | | | | | | | | |
| Return on Average Assets | | | 1.63 | % | | | 0.96 | % | | | 69.50 | % |
| Return on Average Tangible Equity | | | 17.32 | % | | | 11.26 | % | | | 53.78 | % |
| Net Interest Margin | | | 4.15 | % | | | 4.18 | % | | | (0.75 | )% |
| Efficiency Ratio | | | 52.28 | % | | | 66.52 | % | | | (21.40 | )% |
| Average Shareholders' Equity to Average Assets | | | 11.64 | % | | | 10.74 | % | | | 8.35 | % |
| | | | | | | | | | | | | |
| Consolidated Risk Based Capital Ratios (a): | | | | | | | | | | | | |
| Tier I | | | 13.58 | % | | | 11.90 | % | | | 14.12 | % |
| Total | | | 14.47 | % | | | 12.74 | % | | | 13.58 | % |
| | | | | | | | | | | | | |
| Tangible Equity to Tangible Assets | | | 9.60 | % | | | 8.65 | % | | | 10.90 | % |
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| Common Stock Data: | | | | | | | | | | | | |
| Cash Dividends Declared per Share | | $ | 0.40 | | | $ | 0.37 | | | | 8.11 | % |
| Book Value per Share | | | 25.05 | | | | 23.36 | | | | 7.22 | % |
| Tangible Book Value per Share | | | 20.28 | | | | 18.53 | | | | 9.49 | % |
| Market Value per Share: | | | | | | | | | | | | |
| High | | | 46.69 | | | | 40.05 | | | | 16.58 | % |
| Low | | | 42.15 | | | | 36.07 | | | | 16.86 | % |
| End of Period | | | 44.86 | | | | 39.79 | | | | 12.74 | % |
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| Price/Earnings Ratio (b) | | | 12.83 | | | | 19.43 | | | | (33.96 | )% |
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| (a) March 31, 2014 risk-based capital ratios are estimated | | | | | | | | | |
| (b) March 31, 2014 price/earnings ratio computed based on annualized first quarter 2014 earnings | | | | | |
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CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | |
| Financial Highlights | | | | | | | | | | | | | | | | |
| (Unaudited) | | | | | | | | | | | | | | | | | | |
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| Book Value and Market Price Range per Share | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | Market Price | |
| | | Book Value per Share | | | Range per Share | |
| | | March 31 | | | June 30 | | | September 30 | | | December 31 | | | Low | | | High | |
| | | | | | | | | | | | | | | | | | | |
| 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 | | | | 22.47 | | | | 30.96 | | | | 37.16 | |
| 2013 | | | 23.36 | | | | 23.52 | | | | 24.03 | | | | 24.61 | | | | 36.07 | | | | 49.21 | |
| 2014 | | | 25.05 | | | | | | | | | | | | | | | | 42.15 | | | | 46.69 | |
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| Earnings per Basic Share | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended | | | | | |
| | | March 31 | | | June 30 | | | September 30 | | | December 31 | | | Year-to-Date | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| 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 | | | | 0.73 | | | | 2.63 | | | | | |
| 2013 | | | 0.51 | | | | 0.83 | | | | 0.89 | | | | 0.84 | | | | 3.07 | | | | | |
| 2014 | | | 0.87 | | | | | | | | | | | | | | | | 0.87 | | | | | |
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| Earnings per Diluted Share | | | | | | | | | | | | | | | | | | | | | |
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| | | Quarter Ended | | | | | |
| | | March 31 | | | June 30 | | | September 30 | | | December 31 | | | Year-to-Date | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| 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 | | | | 0.73 | | | | 2.61 | | | | | |
| 2013 | | | 0.51 | | | | 0.82 | �� | | | 0.88 | | | | 0.83 | | | | 3.04 | | | | | |
| 2014 | | | 0.86 | | | | | | | | | | | | | | | | 0.86 | | | | | |
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| CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | |
| Consolidated Statements of Income | | | | | | |
| (Unaudited) ($ in 000s, except per share data) | | | | | | |
| | | | | | | |
| | | Three Months Ended March 31, | |
| | | 2014 | | | 2013 | |
| | | | | | | |
| Interest Income | | | | | | |
| Interest and fees on loans | | $ | 29,734 | | | $ | 29,939 | |
| Interest on investment securities: | | | | | | | | |
| Taxable | | | 3,003 | | | | 2,750 | |
| Tax-exempt | | | 281 | | | | 324 | |
| Interest on federal funds sold | | | - | | | | 13 | |
| Total Interest Income | | | 33,018 | | | | 33,026 | |
| | | | | | | | | |
| Interest Expense | | | | | | | | |
| Interest on deposits | | | 2,753 | | | | 3,227 | |
| Interest on short-term borrowings | | | 75 | | | | 71 | |
| Interest on long-term debt | | | 150 | | | | 157 | |
| Total Interest Expense | | | 2,978 | | | | 3,455 | |
| Net Interest Income | | | 30,040 | | | | 29,571 | |
| Provision for loan losses | | | 1,363 | | | | 1,738 | |
| Net Interest Income After Provision for Loan Losses | | | 28,677 | | | | 27,833 | |
| | | | | | | | | |
| Non-Interest Income | | | | | | | | |
| Gains on sale of investment securities | | | 83 | | | | 84 | |
| Service charges | | | 6,160 | | | | 6,535 | |
| Bankcard revenue | | | 3,685 | | | | 3,199 | |
| Insurance commissions | | | 2,025 | | | | 1,840 | |
| Trust and investment management fee income | | | 1,037 | | | | 990 | |
| Bank owned life insurance | | | 756 | | | | 812 | |
| Other income | | | 559 | | | | 866 | |
| Total Non-Interest Income | | | 14,305 | | | | 14,326 | |
| | | | | | | | | |
| Non-Interest Expense | | | | | | | | |
| Salaries and employee benefits | | | 13,139 | | | | 12,949 | |
| Occupancy and equipment | | | 2,615 | | | | 2,472 | |
| Depreciation | | | 1,478 | | | | 1,399 | |
| FDIC insurance expense | | | 410 | | | | 511 | |
| Advertising | | | 824 | | | | 735 | |
| Bankcard expenses | | | 806 | | | | 727 | |
| Postage, delivery, and statement mailings | | | 575 | | | | 605 | |
| Office supplies | | | 410 | | | | 441 | |
| Legal and professional fees | | | 409 | | | | 435 | |
| Telecommunications | | | 338 | | | | 445 | |
| Repossessed asset (gains)/losses, net of expenses | | | 379 | | | | (155 | ) |
| Merger related expenses | | | - | | | | 5,540 | |
| Other expenses | | | 1,993 | | | | 3,299 | |
| Total Non-Interest Expense | | | 23,376 | | | | 29,403 | |
| Income Before Income Taxes | | | 19,606 | | | | 12,756 | |
| Income tax expense | | | 5,803 | | | | 4,769 | |
| Net Income Available to Common Shareholders | | $ | 13,803 | | | $ | 7,987 | |
| | | | | | | | | |
| | | | | | | | | |
| Distributed earnings allocated to common shareholders | | $ | 6,224 | | | $ | 5,747 | |
| Undistributed earnings allocated to common shareholders | | | 7,439 | | | | 2,175 | |
| Net earnings allocated to common shareholders | | $ | 13,663 | | | $ | 7,922 | |
| | | | | | | | | |
| Average common shares outstanding | | | 15,631 | | | | 15,473 | |
| Effect of dilutive securities: | | | | | | | | |
| Employee stock options and warrants | | | 165 | | | | 154 | |
| Shares for diluted earnings per share | | | 15,796 | | | | 15,627 | |
| | | | | | | | | |
| Basic earnings per common share | | $ | 0.87 | | | $ | 0.51 | |
| Diluted earnings per common share | | $ | 0.86 | | | $ | 0.51 | |
| Dividends declared per common share | | $ | 0.40 | | | $ | 0.37 | |
| | | | | | | | | |
| Comprehensive Income | | $ | 14,579 | | | $ | 8,078 | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | |
| Consolidated Statements of Changes in Stockholders' Equity | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | |
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| | | | | | | |
| | | Three Months Ended | |
| | | March 31, 2014 | | | March 31, 2013 | |
| | | | | | | |
| Balance at January 1 | | $ | 387,623 | | | $ | 333,274 | |
| | | | | | | | | |
| Net income | | | 13,803 | | | | 7,987 | |
| Other comprehensive income: | | | | | | | | |
| Change in unrealized loss on securities available-for-sale | | | 776 | | | | 91 | |
| Cash dividends declared ($0.40/share) and ($0.37/share), respectively | | | (6,287 | ) | | | (6,064 | ) |
| Issuance of stock award shares, net | | | 572 | | | | 457 | |
| Acquisition of Community Financial Corporation | | | - | | | | 28,706 | |
| Exercise of 7,000 stock options | | | 199 | | | | - | |
| Exercise of 42,250 stock options | | | - | | | | 1,397 | |
| Purchase of 68,145 common shares of treasury | | | (2,936 | ) | | | - | |
| Balance at March 31 | | $ | 393,750 | | | $ | 365,848 | |
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| CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | |
| Condensed Consolidated Quarterly Statements of Income | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s, except per share data) | | | | | | | | | | | | | | | |
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| | | Quarter Ended | |
| | | March 31 | | | December 31 | | | September 30 | | | June 30 | | | March 31 | |
| | | 2014 | | | 2013 | | | 2013 | | | 2013 | | | 2013 | |
| | | | | | | | | | | | | | | | |
| Interest income | | $ | 33,018 | | | $ | 35,116 | | | $ | 35,674 | | | $ | 34,724 | | | $ | 33,026 | |
| Taxable equivalent adjustment | | | 153 | | | | 158 | | | | 161 | | | | 167 | | | | 174 | |
| Interest income (FTE) | | | 33,171 | | | | 35,274 | | | | 35,835 | | | | 34,891 | | | | 33,200 | |
| Interest expense | | | 2,978 | | | | 3,115 | | | | 3,304 | | | | 3,427 | | | | 3,455 | |
| Net interest income | | | 30,193 | | | | 32,159 | | | | 32,531 | | | | 31,464 | | | | 29,745 | |
| Provision for loan losses | | | 1,363 | | | | 1,945 | | | | 1,154 | | | | 2,011 | | | | 1,738 | |
| Net interest income after provision | | | | | | | | | | | | | | | | | | | | |
| for loan losses | | | 28,830 | | | | 30,214 | | | | 31,377 | | | | 29,453 | | | | 28,007 | |
| | | | | | | | | | | | | | | | | | | | | |
| Noninterest income | | | 14,305 | | | | 14,948 | | | | 14,480 | | | | 14,252 | | | | 14,326 | |
| Noninterest expense | | | 23,376 | | | | 24,881 | | | | 24,665 | | | | 23,959 | | | | 29,403 | |
| Income before income taxes | | | 19,759 | | | | 20,281 | | | | 21,192 | | | | 19,746 | | | | 12,930 | |
| Income tax expense | | | 5,803 | | | | 6,877 | | | | 7,056 | | | | 6,573 | | | | 4,769 | |
| Taxable equivalent adjustment | | | 153 | | | | 158 | | | | 161 | | | | 167 | | | | 174 | |
| Net income available to common shareholders | | $ | 13,803 | | | $ | 13,246 | | | $ | 13,975 | | | $ | 13,006 | | | $ | 7,987 | |
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| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Distributed earnings allocated to common shareholders | | $ | 6,224 | | | $ | 5,775 | | | $ | 5,767 | | | $ | 5,751 | | | $ | 5,747 | |
| Undistributed earnings allocated to common shareholders | | | 7,439 | | | | 7,352 | | | | 8,081 | | | | 7,139 | | | | 2,175 | |
| Net earnings allocated to common shareholders | | $ | 13,663 | | | $ | 13,127 | | | $ | 13,848 | | | $ | 12,890 | | | $ | 7,922 | |
| | | | | | | | | | | | | | | | | | | | | |
| Average common shares outstanding | | | 15,631 | | | | 15,636 | | | | 15,608 | | | | 15,582 | | | | 15,473 | |
| | | | | | | | | | | | | | | | | | | | | |
| Effect of dilutive securities: | | | | | | | | | | | | | | | | | | | | |
| Employee stock options and warrants | | | 165 | | | | 163 | | | | 182 | | | | 170 | | | | 154 | |
| | | | | | | | | | | | | | | | | | | | | |
| Shares for diluted earnings per share | | | 15,796 | | | | 15,799 | | | | 15,790 | | | | 15,752 | | | | 15,627 | |
| | | | | | | | | | | | | | | | | | | | | |
| Basic earnings per common share | | $ | 0.87 | | | $ | 0.84 | | | $ | 0.89 | | | $ | 0.83 | | | $ | 0.51 | |
| Diluted earnings per common share | | | 0.86 | | | | 0.83 | | | | 0.88 | | | | 0.82 | | | | 0.51 | |
| | | | | | | | | | | | | | | | | | | | | |
| Cash dividends declared per share | | | 0.40 | | | | 0.37 | | | | 0.37 | | | | 0.37 | | | | 0.37 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Net Interest Margin | | | 4.15 | % | | | 4.33 | % | | | 4.47 | % | | | 4.35 | % | | | 4.18 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Interest Income from Accretion Related to Fair Value Adjustments Recorded as a Result of Acquisition | | $ | 2,151 | | | $ | 3,899 | | | $ | 5,046 | | | $ | 3,517 | | | $ | 2,181 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net Interest Margin (excluding accretion) | | | 3.85 | % | | | 3.81 | % | | | 3.78 | % | | | 3.86 | % | | | 3.87 | % |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | |
| Non-Interest Income and Non-Interest Expense | | | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | Quarter Ended | |
| | | March 31 | | | December 31 | | | September 30 | | | June 30 | | | March 31 | |
| | | 2014 | | | 2013 | | | 2013 | | | 2013 | | | 2013 | |
| | | | | | | | | | | | | | | | |
| Non-Interest Income: | | | | | | | | | | | | | | | |
| Service charges | | $ | 6,160 | | | $ | 6,995 | | | $ | 7,169 | | | $ | 6,897 | | | $ | 6,535 | |
| Bankcard revenue | | | 3,685 | | | | 3,403 | | | | 3,468 | | | | 3,450 | | | | 3,199 | |
| Insurance commissions | | | 2,025 | | | | 1,269 | | | | 1,365 | | | | 1,358 | | | | 1,840 | |
| Trust and investment management fee income | | | 1,037 | | | | 1,093 | | | | 939 | | | | 964 | | | | 990 | |
| Bank owned life insurance | | | 756 | | | | 976 | | | | 805 | | | | 799 | | | | 812 | |
| Other income | | | 559 | | | | 541 | | | | 734 | | | | 775 | | | | 866 | |
| Subtotal | | | 14,222 | | | | 14,277 | | | | 14,480 | | | | 14,243 | | | | 14,242 | |
| Gain (loss) on sale of investment securities | | | 83 | | | | 671 | | | | - | | | | 9 | | | | 84 | |
| Total Non-Interest Income | | $ | 14,305 | | | $ | 14,948 | | | $ | 14,480 | | | $ | 14,252 | | | $ | 14,326 | |
| | | | | | | | | | | | | | | | | | | | | |
| Non-Interest Expense: | | | | | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | $ | 13,139 | | | $ | 12,910 | | | $ | 12,930 | | | $ | 12,640 | | | $ | 12,949 | |
| Occupancy and equipment | | | 2,615 | | | | 2,529 | | | | 2,409 | | | | 2,500 | | | | 2,472 | |
| Depreciation | | | 1,478 | | | | 1,468 | | | | 1,437 | | | | 1,453 | | | | 1,399 | |
| FDIC insurance expense | | | 410 | | | | 500 | | | | 500 | | | | 341 | | | | 511 | |
| Advertising | | | 824 | | | | 408 | | | | 712 | | | | 819 | | | | 735 | |
| Bankcard expenses | | | 806 | | | | 697 | | | | 680 | | | | 766 | | | | 727 | |
| Postage, delivery and statement mailings | | | 575 | | | | 521 | | | | 541 | | | | 552 | | | | 605 | |
| Office supplies | | | 410 | | | | 408 | | | | 416 | | | | 463 | | | | 441 | |
| Legal and professional fees | | | 409 | | | | 1,469 | | | | 591 | | | | 535 | | | | 435 | |
| Telecommunications | | | 338 | | | | 581 | | | | 721 | | | | 465 | | | | 445 | |
| Repossessed asset (gains) losses, net of expenses | | | 379 | | | | (72 | ) | | | 896 | | | | (23 | ) | | | (155 | ) |
| Merger related expenses | | | - | | | | 72 | | | | (150 | ) | | | 65 | | | | 5,540 | |
| Other expenses | | | 1,993 | | | | 3,390 | | | | 2,982 | | | | 3,383 | | | | 3,299 | |
| Total Non-Interest Expense | | $ | 23,376 | | | $ | 24,881 | | | $ | 24,665 | | | $ | 23,959 | | | $ | 29,403 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Employees (Full Time Equivalent) | | | 925 | | | | 923 | | | | 924 | | | | 931 | | | | 932 | |
| Branch Locations | | | 82 | | | | 83 | | | | 83 | | | | 83 | | | | 83 | |
| | | | | | | | | | | | | | | | | | | | | |
| CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | |
| Consolidated Balance Sheets | | | | | | |
| ($ in 000s) | | | | | | |
| | | March 31 | | | December 31 | |
| | | 2014 | | | 2013 | |
| | | (Unaudited) | | | | |
| Assets | | | | | | |
| Cash and due from banks | | $ | 137,518 | | | $ | 75,999 | |
| Interest-bearing deposits in depository institutions | | | 17,709 | | | | 9,877 | |
| Federal funds sold | | | - | | | | - | |
| Cash and cash equivalents | | | 155,227 | | | | 85,876 | |
| | | | | | | | | |
| Investment securities available-for-sale, at fair value | | | 349,940 | | | | 352,660 | |
| Investment securities held-to-maturity, at amortized cost | | | 14,344 | | | | 4,117 | |
| Other securities | | | 13,343 | | | | 13,343 | |
| Total investment securities | | | 377,627 | | | | 370,120 | |
| | | | | | | | | |
| Gross loans | | | 2,557,035 | | | | 2,606,197 | |
| Allowance for loan losses | | | (21,044 | ) | | | (20,575 | ) |
| Net loans | | | 2,535,991 | | | | 2,585,622 | |
| | | | | | | | | |
| Bank owned life insurance | | | 92,803 | | | | 92,047 | |
| Premises and equipment, net | | | 81,393 | | | | 82,548 | |
| Accrued interest receivable | | | 7,843 | | | | 6,866 | |
| Net deferred tax assets | | | 40,432 | | | | 42,165 | |
| Intangible assets | | | 74,906 | | | | 75,142 | |
| Other assets | | | 31,514 | | | | 27,852 | |
| Total Assets | | $ | 3,397,736 | | | $ | 3,368,238 | |
| | | | | | | | | |
| Liabilities | | | | | | | | |
| Deposits: | | | | | | | | |
| Noninterest-bearing | | $ | 510,406 | | | $ | 493,228 | |
| Interest-bearing: | | | | | | | | |
| Demand deposits | | | 622,085 | | | | 601,527 | |
| Savings deposits | | | 634,263 | | | | 612,772 | |
| Time deposits | | | 1,062,763 | | | | 1,077,606 | |
| Total deposits | | | 2,829,517 | | | | 2,785,133 | |
| Short-term borrowings | | | | | | | | |
| Customer repurchase agreements | | | 121,913 | | | | 137,798 | |
| Long-term debt | | | 16,495 | | | | 16,495 | |
| Other liabilities | | | 36,061 | | | | 41,189 | |
| Total Liabilities | | | 3,003,986 | | | | 2,980,615 | |
| | | | | | | | | |
| 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 March 31, 2014 and December 31, 2013 | | | | | | | | |
| less 2,779,586 and 2,748,922 shares in treasury, respectively | | | 46,249 | | | | 46,249 | |
| Capital surplus | | | 106,743 | | | | 107,596 | |
| Retained earnings | | | 341,486 | | | | 333,970 | |
| Cost of common stock in treasury | | | (96,514 | ) | | | (95,202 | ) |
| Accumulated other comprehensive loss: | | | | | | | | |
| Unrealized gain on securities available-for-sale | | | (1,334 | ) | | | (2,110 | ) |
| Underfunded pension liability | | | (2,880 | ) | | | (2,880 | ) |
| Total Accumulated Other Comprehensive Loss | | | (4,214 | ) | | | (4,990 | ) |
| Total Stockholders' Equity | | | 393,750 | | | | 387,623 | |
| Total Liabilities and Stockholders' Equity | | $ | 3,397,736 | | | $ | 3,368,238 | |
| CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | |
| Investment Portfolio | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Original Cost | | | Credit-Related Net Investment Impairment Losses through March 31, 2014 | | | Unrealized Gains (Losses) | | | Carrying Value | |
| | | | | | | | | | | | | |
| US Government Agencies | | $ | 2,174 | | | $ | - | | | $ | 38 | | | $ | 2,212 | |
| Mortgage Backed Securities | | | 295,764 | | | | - | | | | (1,919 | ) | | | 293,845 | |
| Municipal Bonds | | | 39,061 | | | | - | | | | 732 | | | | 39,793 | |
| Pooled Bank Trust Preferreds | | | 23,209 | | | | (20,171 | ) | | | (1,471 | ) | | | 1,567 | |
| Single Issuer Bank Trust Preferreds, | | | | | | | | | | | | | | | | |
| Subdebt of Financial Institutions, and | | | | | | | | | | | | | | | | |
| Bank Holding Company Preferred Stocks | | | 22,564 | | | | (1,015 | ) | | | (1,195 | ) | | | 20,354 | |
| Money Markets and Mutual Funds | | | 1,525 | | | | - | | | | (32 | ) | | | 1,493 | |
| Federal Reserve Bank and FHLB stock | | | 13,343 | | | | - | | | | - | | | | 13,343 | |
| Community Bank Equity Positions | | | 7,986 | | | | (4,698 | ) | | | 1,732 | | | | 5,020 | |
| Total Investments | | $ | 405,626 | | | $ | (25,884 | ) | | $ | (2,115 | ) | | $ | 377,627 | |
| | | | | | | | | | | | | | | | | |
| CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | | |
| Loan Portfolio | | | | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | March 31 | | | December 31 | | | September 30 | | | June 30 | | | March 31 | |
| | | | 2014 | | | 2013 | | | 2013 | | | 2013 | | | 2013 | |
| | | | | | | | | | | | | | | | | |
Residential real estate (1) | | | $ | 1,214,785 | | | $ | 1,207,150 | | | $ | 1,188,841 | | | $ | 1,170,123 | | | $ | 1,149,411 | |
| Home equity - junior liens | | | | 141,929 | | | | 143,390 | | | | 140,887 | | | | 138,367 | | | | 138,333 | |
| Commercial and industrial | | | | 144,108 | | | | 164,484 | | | | 151,185 | | | | 138,299 | | | | 149,677 | |
Commercial real estate (2) | | | | 1,009,892 | | | | 1,040,866 | | | | 1,022,278 | | | | 1,023,311 | | | | 1,001,453 | |
| Consumer | | | | 42,320 | | | | 46,402 | | | | 50,757 | | | | 54,242 | | | | 55,274 | |
| DDA overdrafts | | | | 4,001 | | | | 3,905 | | | | 4,508 | | | | 3,103 | | | | 2,876 | |
| Gross Loans | | | $ | 2,557,035 | | | $ | 2,606,197 | | | $ | 2,558,456 | | | $ | 2,527,445 | | | $ | 2,497,024 | |
| | | | | | | | | | | | | | | | | | | | | | |
| Construction loans included in: | | | | | | | | | | | | | | | | | | | | | |
(1) - Residential real estate loans | | | $ | 17,697 | | | $ | 17,337 | | | $ | 14,808 | | | $ | 15,889 | | | $ | 16,884 | |
(2) - Commercial real estate loans | | | $ | 28,894 | | | $ | 24,026 | | | $ | 17,391 | | | $ | 24,726 | | | $ | 26,163 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | | | | | | | |
| Acquisition Activity - Accretion | | | | | | | | | | | | | | | | | | | | | |
| (Unaudited) ($ in millions) | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
The following table presents the actual and forecasted accretion related to the fair value adjustments on net interest income recorded as a result of the Virginia Savings Bancorp ("Virginia Savings") and Community Financial Corporation ("Community") acquisitions. | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | Virginia Savings | | | Community | | | | | |
| | | | Loan | | | Certificates of | | | Loan | | | Certificates of | | | | | |
| Year Ended: | | | Accretion(a) | | | Deposit(a) | | | Accretion(a) | | | Deposit(a) | | | Total | |
| | | | | | | | | | | | | | | | | | | | | | |
| | 1Q 2014 | | | $ | 299 | | | $ | 131 | | | $ | 1,628 | | | $ | 93 | | | $ | 2,151 | |
| Remainder 2014 | | | | 642 | | | | 405 | | | | 2,633 | | | | 157 | | | | 3,837 | |
| | 2015 | | | | 545 | | | | 518 | | | | 2,765 | | | | 160 | | | | 3,988 | |
| | 2016 | | | | 308 | | | | 497 | | | | 1,265 | | | | 43 | | | | 2,113 | |
| | 1Q 2017 | | | | 50 | | | | - | | | | 285 | | | | 4 | | | | 339 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| a - 1Q 2014 amounts are based on actual results. Remainder 2014, 2015, 2016 and 1Q 2017 amounts are based on estimated amounts. | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Note: The amounts reflected in the table above require management to make significant assumptions based on | |
| estimated future default, prepayment, and discount rates. Actual performance could be significantly different from that | |
| assumed, which could result in the actual results being materially different from the amounts estimated above. | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | | |
| Consolidated Average Balance Sheets, Yields, and Rates | | | | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, | |
| | | | | | 2014 | | | | | | | | | 2013 | | | | |
| | | Average | | | | | | Yield/ | | | Average | | | | | | Yield/ | |
| | | Balance | | | Interest | | | Rate | | | Balance | | | Interest | | | Rate | |
| | | | | | | | | | | | | | | | | | | |
| Assets: | | | | | | | | | | | | | | | | | | |
Loan portfolio (1): | | | | | | | | | | | | | | | | | | |
Residential real estate (2) | | $ | 1,350,556 | | | $ | 13,746 | | | | 4.13 | % | | $ | 1,277,557 | | | $ | 13,720 | | | | 4.36 | % |
Commercial, financial, and agriculture (2) | | | 1,167,606 | | | | 14,236 | | | | 4.94 | % | | | 1,121,916 | | | | 14,191 | | | | 5.13 | % |
Installment loans to individuals (2), (3) | | | 52,557 | | | | 1,179 | | | | 9.10 | % | | | 65,863 | | | | 1,377 | | | | 8.48 | % |
Previously securitized loans (4) | | | *** | | | | 574 | | | | *** | | | | *** | | | | 651 | | | | *** | |
| Total loans | | | 2,570,719 | | | | 29,735 | | | | 4.69 | % | | | 2,465,336 | | | | 29,939 | | | | 4.93 | % |
| Securities: | | | | | | | | | | | | | | | | | | | | | | | | |
| Taxable | | | 345,414 | | | | 3,003 | | | | 3.53 | % | | | 350,128 | | | | 2,750 | | | | 3.19 | % |
Tax-exempt (5) | | | 28,074 | | | | 433 | | | | 6.26 | % | | | 32,991 | | | | 498 | | | | 6.12 | % |
| Total securities | | | 373,488 | | | | 3,436 | | | | 3.73 | % | | | 383,119 | | | | 3,248 | | | | 3.44 | % |
| Deposits in depository institutions | | | 8,831 | | | | - | | | | - | | | | 9,033 | | | | - | | | | - | |
| Federal funds sold | | | - | | | | - | | | | - | | | | 29,932 | | | | 13 | | | | 0.18 | % |
| Total interest-earning assets | | | 2,953,038 | | | | 33,171 | | | | 4.56 | % | | | 2,887,420 | | | | 33,200 | | | | 4.66 | % |
| Cash and due from banks | | | 125,221 | | | | | | | | | | | | 112,002 | | | | | | | | | |
| Bank premises and equipment | | | 82,214 | | | | | | | | | | | | 80,958 | | | | | | | | | |
| Other assets | | | 246,091 | | | | | | | | | | | | 259,335 | | | | | | | | | |
| Less: Allowance for loan losses | | | (21,221 | ) | | | | | | | | | | | (19,472 | ) | | | | | | | | |
| Total assets | | $ | 3,385,343 | | | | | | | | | | | $ | 3,320,243 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing demand deposits | | | 611,797 | | | | 176 | | | | 0.12 | % | | | 603,300 | | | | 178 | | | | 0.12 | % |
| Savings deposits | | | 618,412 | | | | 207 | | | | 0.14 | % | | | 584,048 | | | | 213 | | | | 0.15 | % |
Time deposits (2) | | | 1,070,065 | | | | 2,370 | | | | 0.90 | % | | | 1,106,982 | | | | 2,836 | | | | 1.04 | % |
| Short-term borrowings | | | 118,771 | | | | 75 | | | | 0.26 | % | | | 111,870 | | | | 71 | | | | 0.26 | % |
| Long-term debt | | | 16,495 | | | | 150 | | | | 3.69 | % | | | 16,495 | | | | 157 | | | | 3.86 | % |
| Total interest-bearing liabilities | | | 2,435,540 | | | | 2,978 | | | | 0.50 | % | | | 2,422,695 | | | | 3,455 | | | | 0.58 | % |
| Noninterest-bearing demand deposits | | | 517,207 | | | | | | | | | | | | 498,404 | | | | | | | | | |
| Other liabilities | | | 38,705 | | | | | | | | | | | | 42,615 | | | | | | | | | |
| Stockholders' equity | | | 393,891 | | | | | | | | | | | | 356,529 | | | | | | | | | |
| Total liabilities and | | | | | | | | | | | | | | | | | | | | | | | | |
| stockholders' equity | | $ | 3,385,343 | | | | | | | | | | | $ | 3,320,243 | | | | | | | | | |
| Net interest income | | | | | | $ | 30,193 | | | | | | | | | | | $ | 29,745 | | | | | |
| Net yield on earning assets | | | | | | | | | | | 4.15 | % | | | | | | | | | | | 4.18 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
(1) For purposes of this table, non-accruing loans have been included in average balances and loan fees, which are immaterial, have been included in interest income. | |
| (2) Included in the above table are the following amounts (in thousands) for the accretion of the fair value adjustments related to the acquisitions of Virginia Savings Bancorp ("Virginia Savings") and Community Financial Corporation ("Community"): | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, 2014 | | | Three Months Ended March 31, 2013 | |
| | | Virginia Savings | | | Community | | | Total | | | Virginia Savings | | | Community | | | Total | |
| Residential real estate | | | 151 | | | | 115 | | | | 266 | | | | 276 | | | | 188 | | | | 464 | |
| Commercial, financial, and agriculture | | | 114 | | | | 1,324 | | | | 1,438 | | | | 673 | | | | 610 | | | | 1,283 | |
| Installment loans to individuals | | | 34 | | | | 189 | | | | 223 | | | | 36 | | | | 60 | | | | 96 | |
| Time deposits | | | 131 | | | | 93 | | | | 224 | | | | 178 | | | | 160 | | | | 338 | |
| | | | 430 | | | | 1,721 | | | | 2,151 | | | | 1,163 | | | | 1,018 | | | | 2,181 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| (3) Includes the Company’s consumer and DDA overdrafts loan categories. | |
| (4) Effective January 1, 2012, the carrying value of the Company's previously securitized loans was reduced to $0. | |
(5) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 35%. | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | |
| Analysis of Risk-Based Capital | | | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | March 31 | | | December 31 | | | September 30 | | | June 30 | | | March 31 | |
| | | 2014 (a) | | | 2013 | | | 2013 | | | 2013 | | | 2013 | |
| | | | | | | | | | | | | | | | |
| Tier I Capital: | | | | | | | | | | | | | | | |
| Stockholders' equity | | $ | 393,750 | | | $ | 387,623 | | | $ | 378,042 | | | $ | 368,891 | | | $ | 365,848 | |
| Goodwill and other intangibles | | | (74,719 | ) | | | (74,955 | ) | | | (76,233 | ) | | | (74,455 | ) | | | (75,563 | ) |
| Accumulated other comprehensive loss | | | 4,214 | | | | 4,990 | | | | 6,173 | | | | 5,540 | | | | 1,332 | |
| Qualifying trust preferred stock | | | 16,000 | | | | 16,000 | | | | 16,000 | | | | 16,000 | | | | 16,000 | |
| Unrealized loss on AFS securities | | | - | | | | - | | | | (18 | ) | | | (11 | ) | | | - | |
| Excess deferred tax assets | | | (6,508 | ) | | | (8,800 | ) | | | (12,495 | ) | | | (13,572 | ) | | | (17,737 | ) |
| Total tier I capital | | $ | 332,737 | | | $ | 324,859 | | | $ | 311,470 | | | $ | 302,394 | | | $ | 289,880 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total Risk-Based Capital: | | | | | | | | | | | | | | | | | | | | |
| Tier I capital | | $ | 332,737 | | | $ | 324,859 | | | $ | 311,470 | | | $ | 302,394 | | | $ | 289,880 | |
| Qualifying allowance for loan losses | | | 21,044 | | | | 20,575 | | | | 20,606 | | | | 20,069 | | | | 19,721 | |
| Unrealized gain on securities | | | 786 | | | | 606 | | | | 722 | | | | 686 | | | | 696 | |
| Total risk-based capital | | $ | 354,567 | | | $ | 346,040 | | | $ | 332,798 | | | $ | 323,149 | | | $ | 310,297 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net risk-weighted assets | | $ | 2,450,949 | | | $ | 2,499,591 | | | $ | 2,460,895 | | | $ | 2,450,010 | | | $ | 2,436,022 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Ratios: | | | | | | | | | | | | | | | | | | | | |
| Average stockholders' equity to average assets | | | 11.64 | % | | | 11.35 | % | | | 11.14 | % | | | 10.94 | % | | | 10.74 | % |
| Tangible capital ratio | | | 9.60 | % | | | 9.49 | % | | | 9.08 | % | | | 8.90 | % | | | 8.65 | % |
| Risk-based capital ratios: | | | | | | | | | | | | | | | | | | | | |
| Tier I capital | | | 13.58 | % | | | 13.00 | % | | | 12.66 | % | | | 12.34 | % | | | 11.90 | % |
| Total risk-based capital | | | 14.47 | % | | | 13.84 | % | | | 13.52 | % | | | 13.19 | % | | | 12.74 | % |
| Leverage capital | | | 10.07 | % | | | 9.80 | % | | | 9.43 | % | | | 9.12 | % | | | 8.98 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| (a) March 31, 2014 risk-based capital ratios are estimated | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | | | | | | |
| Intangibles | | | | | | | | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | As of and for the Quarter Ended | |
| | | March 31 | | | December 31 | | | September 30 | | | June 30 | | | March 31 | |
| | | | 2014 | | | | 2013 | | | | 2013 | | | | 2013 | | | | 2013 | |
| | | | | | | | | | | | | | | | | | | | | |
| Intangibles, net | | $ | 74,906 | | | $ | 75,142 | | | $ | 76,420 | | | $ | 74,642 | | | $ | 75,750 | |
| Intangibles amortization expense | | | 236 | | | | 260 | | | | 260 | | | | 260 | | | | 260 | |
| | | | | | | | | | | | | | | | | | | | | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | |
| Summary of Loan Loss Experience | | | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | Quarter Ended | |
| | | March 31 | | | December 31 | | | September 30 | | | June 30 | | | March 31 | |
| | | 2014 | | | 2013 | | | 2013 | | | 2013 | | | 2013 | |
| | | | | | | | | | | | | | | | |
| Balance at beginning of period | | $ | 20,575 | | | $ | 20,606 | | | $ | 20,069 | | | $ | 19,721 | | | $ | 18,809 | |
| | | | | | | | | | | | | | | | | | | | | |
| Charge-offs: | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | | 4 | | | | 268 | | | | 380 | | | | 330 | | | | 62 | |
| Commercial real estate | | | 382 | | | | 1,384 | | | | 181 | | | | 419 | | | | 203 | |
| Residential real estate | | | 427 | | | | 583 | | | | 487 | | | | 520 | | | | 591 | |
| Home equity | | | 108 | | | | 17 | | | | 8 | | | | 154 | | | | 116 | |
| Consumer | | | 84 | | | | 128 | | | | 102 | | | | 221 | | | | 3 | |
| DDA overdrafts | | | 341 | | | | 381 | | | | 415 | | | | 348 | | | | 339 | |
| Total charge-offs | | | 1,346 | | | | 2,761 | | | | 1,573 | | | | 1,992 | | | | 1,314 | |
| | | | | | | | | | | | | | | | | | | | | |
| Recoveries: | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | | 63 | | | | 33 | | | | 30 | | | | 20 | | | | 1 | |
| Commercial real estate | | | 30 | | | | 116 | | | | 635 | | | | 16 | | | | 18 | |
| Residential real estate | | | 24 | | | | 97 | | | | 69 | | | | 20 | | | | 48 | |
| Home equity | | | - | | | | - | | | | - | | | | - | | | | - | |
| Consumer | | | 76 | | | | 85 | | | | 25 | | | | 70 | | | | 147 | |
| DDA overdrafts | | | 259 | | | | 454 | | | | 197 | | | | 203 | | | | 274 | |
| Total recoveries | | | 452 | | | | 785 | | | | 956 | | | | 329 | | | | 488 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net charge-offs | | | 894 | | | | 1,976 | | | | 617 | | | | 1,663 | | | | 826 | |
| Provision for loan losses | | | 1,375 | | | | 1,438 | | | | 1,241 | | | | 1,834 | | | | 1,738 | |
| Provision for (recovery of) acquired loans | | | (12 | ) | | | 507 | | | | (87 | ) | | | 177 | | | | - | |
| Balance at end of period | | $ | 21,044 | | | $ | 20,575 | | | $ | 20,606 | | | $ | 20,069 | | | $ | 19,721 | |
| | | | | | | | | | | | | | | | | | | | | |
| Loans outstanding | | $ | 2,557,035 | | | $ | 2,606,197 | | | $ | 2,558,456 | | | $ | 2,527,445 | | | $ | 2,497,023 | |
| Average loans outstanding | | | 2,570,719 | | | | 2,577,902 | | | | 2,536,542 | | | | 2,513,883 | �� | | | 2,465,336 | |
| Allowance as a percent of loans outstanding | | | 0.82 | % | | | 0.79 | % | | | 0.81 | % | | | 0.79 | % | | | 0.79 | % |
| Allowance as a percent of non-performing loans | | | 100.09 | % | | | 90.25 | % | | | 93.86 | % | | | 87.14 | % | | | 82.18 | % |
| Net charge-offs (annualized) as a | | | | | | | | | | | | | | | | | | | | |
| percent of average loans outstanding | | | 0.14 | % | | | 0.31 | % | | | 0.10 | % | | | 0.26 | % | | | 0.13 | % |
| Net charge-offs, excluding overdraft deposit | | | | | | | | | | | | | | | | | | | | |
| accounts, (annualized) as a percent of average loans outstanding | | | 0.13 | % | | | 0.32 | % | | | 0.06 | % | | | 0.24 | % | | | 0.12 | % |
| CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | |
| Summary of Non-Performing Assets | | | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | March 31 | | | December 31 | | | September 30 | | | June 30 | | | March 31 | |
| | | 2014 | | | 2013 | | | 2013 | | | 2013 | | | 2013 | |
| | | | | | | | | | | | | | | | |
| Nonaccrual loans | | $ | 20,593 | | | $ | 22,363 | | | $ | 21,535 | | | $ | 21,847 | | | $ | 23,198 | |
| Accruing loans past due 90 days or more | | | 432 | | | | 436 | | | | 418 | | | | 1,185 | | | | 799 | |
| Total non-performing loans | | | 21,025 | | | | 22,799 | | | | 21,953 | | | | 23,032 | | | | 23,997 | |
| Other real estate owned | | | 9,538 | | | | 8,470 | | | | 7,518 | | | | 10,837 | | | | 10,508 | |
| Total non-performing assets | | $ | 30,563 | | | $ | 31,269 | | | $ | 29,471 | | | $ | 33,869 | | | $ | 34,505 | |
| | | | | | | | | | | | | | | | | | | | | |
| Non-performing assets as a percent of loans and | | | | | | | | | | | | | | | | | | | | |
| other real estate owned | | | 1.19 | % | | | 1.20 | % | | | 1.15 | % | | | 1.33 | % | | | 1.38 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | | | | | | |
| Summary of Total Past Due Loans | | | | | | | | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | | | | | | |
| | | Originated | |
| | | March 31 | | | December 31 | | | September 30 | | | June 30 | | | March 31 | |
| | | | 2014 | | | | 2013 | | | | 2013 | | | | 2013 | | | | 2013 | |
| | | | | | | | | | | | | | | | | | | | | |
| Residential real estate | | $ | 4,118 | | | $ | 4,850 | | | $ | 5,414 | | | $ | 6,525 | | | $ | 5,889 | |
| Home equity - junior liens | | | 638 | | | | 921 | | | | 732 | | | | 655 | | | | 858 | |
| Commercial and industrial | | | 77 | | | | - | | | | 5 | | | | 234 | | | | 303 | |
| Commercial real estate | | | 789 | | | | 668 | | | | 612 | | | | 2,556 | | | | 1,503 | |
| Consumer | | | 63 | | | | 182 | | | | 96 | | | | 103 | | | | 83 | |
| DDA overdrafts | | | 196 | | | | 393 | | | | 280 | | | | 290 | | | | 337 | |
| Total past due loans | | $ | 5,881 | | | $ | 7,014 | | | $ | 7,139 | | | $ | 10,363 | | | $ | 8,973 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Acquired | |
| | | March 31 | | | December 31 | | | September 30 | | | June 30 | | | March 31 | |
| | | | 2014 | | | | 2013 | | | | 2013 | | | | 2013 | | | | 2013 | |
| | | | | | | | | | | | | | | | | | | | | |
| Residential real estate | | $ | 813 | | | $ | 1,014 | | | $ | 1,032 | | | $ | 951 | | | $ | 2,037 | |
| Home equity - junior liens | | | 21 | | | | - | | | | 23 | | | | - | | | | - | |
| Commercial and industrial | | | 127 | | | | 80 | | | | 2,166 | | | | 2,534 | | | | 7,783 | |
| Commercial real estate | | | 3,789 | | | | 10,689 | | | | 7,324 | | | | 8,019 | | | | 5,770 | |
| Consumer | | | 397 | | | | 695 | | | | 703 | | | | 693 | | | | 864 | |
| DDA overdrafts | | | - | | | | - | | | | - | | | | - | | | | - | |
| Total past due loans | | $ | 5,147 | | | $ | 12,478 | | | $ | 11,248 | | | $ | 12,197 | | | $ | 16,454 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Total | |
| | | March 31 | | | December 31 | | | September 30 | | | June 30 | | | March 31 | |
| | | | 2014 | | | | 2013 | | | | 2013 | | | | 2013 | | | | 2013 | |
| | | | | | | | | | | | | | | | | | | | | |
| Residential real estate | | $ | 4,931 | | | $ | 5,864 | | | $ | 6,446 | | | $ | 7,476 | | | $ | 7,926 | |
| Home equity - junior liens | | | 659 | | | | 921 | | | | 755 | | | | 655 | | | | 858 | |
| Commercial and industrial | | | 204 | | | | 80 | | | | 2,171 | | | | 2,768 | | | | 8,086 | |
| Commercial real estate | | | 4,578 | | | | 11,357 | | | | 7,936 | | | | 10,575 | | | | 7,273 | |
| Consumer | | | 460 | | | | 877 | | | | 799 | | | | 796 | | | | 947 | |
| DDA overdrafts | | | 196 | | | | 393 | | | | 280 | | | | 290 | | | | 337 | |
| Total past due loans | | $ | 11,028 | | | $ | 19,492 | | | $ | 18,387 | | | $ | 22,560 | | | $ | 25,427 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total past due loans as a percent of loans outstanding | | | 0.43 | % | | | 0.75 | % | | | 0.72 | % | | | 0.89 | % | | | 1.02 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | | | | | | |
| Summary of Troubled Debt Restructurings | | | | | | | | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | March 31 | | | December 31 | | | September 30 | | | June 30 | | | March 31 | |
| | | | 2014 | | | | 2013 | | | | 2013 | | | | 2013 | | | | 2013 | |
| | | | | | | | | | | | | | | | | | | | | |
| Residential real estate | | $ | 18,940 | | | $ | 20,345 | | | $ | 20,380 | | | $ | 21,480 | | | $ | 20,136 | |
| Home equity - junior liens | | | 2,866 | | | | 2,873 | | | | 2,772 | | | | 2,963 | | | | 3,025 | |
| Commercial and industrial | | | 84 | | | | 88 | | | | 91 | | | | 95 | | | | 101 | |
| Commercial real estate | | | 1,854 | | | | 1,783 | | | | 1,567 | | | | 1,791 | | | | 1,805 | |
| Consumer | | | - | | | | - | | | | - | | | | - | | | | 142 | |
| Total | | $ | 23,744 | | | $ | 25,089 | | | $ | 24,810 | | | $ | 26,329 | | | $ | 25,209 | |
CITY HOLDING COMPANY AND SUBSIDIARIES | | | | | | | | | | | | | | | |
| Summary of Purchased Credit Impaired Loans | | | | | | | | | | | | | | | |
| (Unaudited) ($ in 000s) | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | Virginia Savings Acquisition | |
| | | March 31 | | | December 31 | | | September 30 | | | June 30 | | | March 31 | |
| | | 2014 | | | 2013 | | | 2013 | | | 2013 | | | 2013 | |
| | | | | | | | | | | | | | | | |
| Contractual required principal and interest | | | 3,821 | | | | 3,932 | | | | 5,253 | | | | 7,330 | | | | 8,789 | |
| Carrying value | | | 3,102 | | | | 3,182 | | | | 4,248 | | | | 5,421 | | | | 5,886 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Community Acquisition | |
| | | March 31 | | | December 31 | | | September 30 | | | June 30 | | | March 31 | |
| | | | 2014 | | | | 2013 | | | | 2013 | | | | 2013 | | | | 2013 | |
| | | | | | | | | | | | | | | | | | | | | |
| Contractual required principal and interest | | | 30,476 | | | | 38,566 | | | | 40,896 | | | | 47,850 | | | | 53,415 | |
| Carrying value | | | 19,986 | | | | 26,330 | | | | 24,958 | | | | 27,845 | | | | 31,853 | |
| | | | | | | | | | | | | | | | | | | | | |
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