NEWS RELEASE
For Immediate Release
July 26, 2016
For Further Information Contact:
Charles R. Hageboeck, Chief Executive Officer and President
(304) 769-1102
City Holding Company Announces Second Quarter Results
Charleston, West Virginia - City Holding Company (“Company” or “City”) (NASDAQ:CHCO), a $3.8 billion bank holding company headquartered in Charleston, today announced quarterly net income of $12.5 million and diluted earnings of $0.83 per share.
Highlights of the Company’s second quarter performance and results included the following:
| |
| • | Return on assets and return on tangible equity of 1.31% and 14.5%, respectively. |
| |
| • | Reported net interest income increased $0.9 million from the quarter ended June 30, 2015, while net interest income exclusive of accretion from fair value adjustments increased $1.5 million from the quarter ended June 30, 2015. |
| |
| • | Total net loan growth of $26.3 million from March 31, 2016 to June 30, 2016. |
| |
| • | Average total deposit balances grew $95.9 million from the quarter ended March 31, 2016 to the quarter ended June 30, 2016. |
| |
| • | Asset quality continues to remain strong with nonperforming assets declining to $21.3 million, or 0.73% of total loans and other real estate owned. Past due loans remained steady at just 0.30% of total loans outstanding. |
Charles R. (“Skip”) Hageboeck, the President and Chief Executive Officer of City Holding Company, commented: “Our results for the second quarter of 2016 once again continue to be very positive despite the headwinds of a sustained low interest environment and weak economic conditions. Our net interest margin improved modestly compared to the first quarter of 2016 and we continued to achieve steady loan growth. Credit quality continues to be a source of strength for City and our credit metrics remain very strong at June 30, 2016. City’s tangible capital grew 35 basis points during the second quarter of 2016 and is now above our reported tangible capital level at December 31, 2015 even though we increased our dividend to shareholders over 2% and have repurchased in excess of 230,000 shares of our common stock in 2016.”
“I would be remiss not to address the devastating and tragic flooding that occurred in parts of West Virginia in June. Sadly, the state sustained more than 20 deaths and substantial property damage was incurred. Areas served by City that were hardest hit were Greenbrier County West Virginia (and most particularly the community of White Sulphur Springs) and the Elkview/Clendenin communities within Kanawha County. Our personnel responded by organizing collection drives for flood victims and volunteering as part of flood relief teams. City has established special loan programs for flood victims and has donated to flood relief efforts. Further, upon review of our loan balances in those communities impacted, we estimate that we have approximately $40 million of loans outstanding, with 90% being residential real estate loans located out of floodplains. Within zip codes where the flooding occurred, we have approximately 900 loans - mostly residential mortgages - with an average balance of under $43,000.
It is still early in the recovery process, and while we did not recognize any losses related to the flooding in the second quarter of 2016, the exact extent of any future loan losses remains unknown. However, with the limited information currently available, we do not expect to incur significant loan losses associated with the recent flooding in West Virginia- but will need several additional months to ascertain what the impact to our loan portfolio might be. We will work closely with our customers to help ensure the best possible outcomes for all parties. Although it will take years to fully rebuild the personal and public infrastructure that was damaged or destroyed during this flood, all West Virginian’s are thankful for the quick and generous response to the devastation.”
Net Interest Income
The Company’s tax equivalent net interest income increased $0.6 million, or 7.6% on an annualized basis, from $29.3 million during the first quarter of 2016 to $29.9 million during the second quarter of 2016. Higher outstanding balances of commercial and residential real estate loans increased net interest income $0.4 million and increased accretion from fair value adjustments on recent acquisitions increased net interest income $0.2 million ($1.0 million for the quarter ended June 30, 2016 compared to $0.8 million for the quarter ended March 31, 2016). The Company’s reported net interest margin increased from 3.53% for the first quarter of 2016 to 3.56% for the second quarter of 2016. Excluding the favorable impact of the accretion from the fair value adjustments, the net interest margin would have been 3.44% for both the quarter ended June 30, 2016 and for the quarter ended March 31, 2016.
Credit Quality
The Company’s ratio of nonperforming assets to total loans and other real estate owned improved from 0.77% at March 31, 2016 to 0.73% at June 30, 2016. Total nonperforming assets decreased from $22.1 million at March 31, 2016 to $21.3 million at June 30, 2016. Excluded from this ratio are purchased credit-impaired loans in which the Company estimated cash flows and estimated a credit mark. Such loans would be considered nonperforming loans if the loan’s performance deteriorates below the initial expectations. Total past due loans improved modestly from $8.7 million, or 0.30% of total loans outstanding, at March 31, 2016 to $8.6 million, or 0.30% of total loans outstanding, at June 30, 2016.
As a result of the Company’s quarterly analysis of the adequacy of the Allowance for Loan Losses (“ALLL”), the Company recorded a provision for loan losses of $1.1 million in the second quarter of 2016, compared to $2.8 for the comparable period in 2015 and $0.5 million for the first quarter of 2016. The provision for loan losses recorded in the second quarter of 2016 reflects the growth in the loan portfolio, changes in the quality of the portfolio, and general improvement in the Company’s historical loss rates used to compute the allowance not specifically allocated to individual credits. 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
During the second quarter of 2016, the Company realized investment gains of $0.85 million compared to $2.1 million of realized investment gains during the second quarter of 2015. These gains represented partial recoveries of impairment charges previously recognized on pools of trust preferred securities. Exclusive of these gains, non-interest income increased from $13.3 million for the second quarter of 2015 to $13.7 million for the second quarter of 2016. This increase was mainly due to an increase in bankcard
revenues of $0.2 million, or 4.7%, from the second quarter of 2015 to $4.2 million and an increase in trust and investment management fee income of $0.2 million, or 14.2%, to $1.4 million.
Non-interest Expenses
Non-interest expenses increased $1.1 million, from $23.2 million in the second quarter of 2015 to $24.3 million in the second quarter of 2016. This increase was due to the acquisition of three Lexington Kentucky branches from AFB ($0.5 million) in November 2015, an increase in other expenses of $0.4 million, and an increase in salaries and employee benefits of $0.3 million. The increase in other expenses is primarily related to the fair value adjustment for a $5.0 million notional interest rate swap to protect against changes in long-term fixed interest rates related to commercial loans.
Balance Sheet Trends
Loans increased $40.9 million (1.4%) from December 31, 2015 to $2.90 billion at June 30, 2016. Residential real estate loans increased $34.0 million (2.4%) and commercial loans increased $13.9 million (1.1%), despite the unanticipated repayment of a $16.1 million loan late in the second quarter of 2016. This repayment is significant in that it was one of City’s largest individual loans. These increases were partially offset by decreases in home equity junior lien loans of ($4.1 million) and consumer loans ($2.3 million).
Total average depository balances increased $95.9 million, or 3.1%, from the quarter ended March 31, 2016 to the quarter ended June 30, 2016. The Company experienced increases in noninterest-bearing demand deposits ($77.0 million), time deposits ($10.9 million), and interest-bearing deposits ($8.6 million).
Income Tax Expense
The Company’s effective income tax rate for the second quarter of 2016 was 33.5% compared to 34.4% for the year ended December 31, 2015, and 33.8% for the quarter ended June 30, 2015. The effective rate is based upon the Company’s expected tax rate for the year ended December 31, 2016.
Capitalization and Liquidity
The Company’s loan to deposit ratio was 92.4% and the loan to asset ratio was 76.3% at June 30, 2016. The Company maintained investment securities totaling 13.2% of assets as of the same date. Further, the Company’s deposit mix is weighted heavily toward checking and saving accounts that fund 55.5% of assets at June 30, 2016. Time deposits fund 27.1% of assets at June 30, 2016, 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 increased from 9.3% at December 31, 2015 to 9.4% at June 30, 2016. At June 30, 2016, City National Bank’s Leverage Ratio is 8.18%, its Common Equity Tier I ratio is 11.01%, its Tier I Capital ratio is 11.62%, and its Total Risk-Based Capital ratio is 12.35%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.
On June 29, 2016, the Board approved a quarterly cash dividend of $0.43 cents per share payable July 29, 2016, to shareholders of record as of July 15, 2016.
City Holding Company is the parent company of City National Bank of West Virginia. City National Bank operates 85 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; (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; (14) the impact of new minimum capital thresholds established as a part of the implementation of Basel III; and (15) other risk factors relating to the banking industry or the Company as detailed from time to time in the Company’s reports filed with the Securities and Exchange Commission, including those risk factors included in the disclosures under the heading “ITEM 1A Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015. 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, 2016 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary June 30, 2016 results and will adjust the amounts if necessary.
CITY HOLDING COMPANY AND SUBSIDIARIES
Financial Highlights
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30, | March 31, | December 31, | September 31, | June 30, | | June 30, | June 30, |
| | 2016 | 2016 | 2015 | 2015 | 2015 | | 2016 | 2015 |
| | | | | | | | | |
| Earnings | | | | | | | | |
| Net Interest Income (FTE) | $ | 29,863 |
| $ | 29,312 |
| $ | 29,391 |
| $ | 28,005 |
| $ | 28,927 |
| | $ | 59,177 |
| $ | 58,459 |
|
| Net Income available to common shareholders | 12,541 |
| 11,702 |
| 13,515 |
| 10,607 |
| 11,983 |
| | 24,244 |
| 29,975 |
|
| | | | | | | | | |
| Per Share Data | | | | | | | | |
| Earnings per share available to common shareholders: | | | | | | | | |
| Basic | $ | 0.83 |
| $ | 0.78 |
| $ | 0.88 |
| $ | 0.69 |
| $ | 0.78 |
| | $ | 1.61 |
| $ | 1.97 |
|
| Diluted | 0.83 |
| 0.78 |
| 0.88 |
| 0.69 |
| 0.78 |
| | 1.61 |
| 1.96 |
|
| Weighted average number of shares: | | | | | | | | |
| Basic | 14,889,438 |
| 14,915,792 |
| 15,157,598 |
| 15,177,947 |
| 15,103,976 |
| | 14,903,177 |
| 15,078,968 |
|
| Diluted | 14,901,697 |
| 14,926,941 |
| 15,174,103 |
| 15,198,007 |
| 15,127,238 |
| | 14,914,882 |
| 15,156,272 |
|
| Period-end number of shares | 15,005,321 |
| 14,971,171 |
| 15,180,215 |
| 15,319,450 |
| 15,276,950 |
| | 15,005,321 |
| 15,276,950 |
|
| Cash dividends declared | $ | 0.43 |
| $ | 0.43 |
| $ | 0.42 |
| $ | 0.42 |
| $ | 0.42 |
| | $ | 0.86 |
| $ | 0.84 |
|
| Book value per share (period-end) | 28.6 |
| 27.93 |
| 27.62 |
| 27.34 |
| 26.92 |
| | 28.6 |
| 26.92 |
|
| Tangible book value per share (period-end) | 23.3 |
| 22.61 |
| 22.36 |
| 22.72 |
| 22.29 |
| | 23.3 |
| 22.29 |
|
| Market data: | | | | | | | | |
| High closing price | $ | 50.14 |
| $ | 47.78 |
| $ | 51.12 |
| $ | 51.73 |
| $ | 50.22 |
| | $ | 50.14 |
| $ | 50.22 |
|
| Low closing price | 43.06 |
| 40.82 |
| 43.85 |
| 45.56 |
| 45.00 |
| | 40.82 |
| 41.76 |
|
| Period-end closing price | 45.47 |
| 47.78 |
| 45.64 |
| 49.30 |
| 49.25 |
| | 45.47 |
| 49.25 |
|
| Average daily volume | 63,000 |
| 71,133 |
| 55,448 |
| 58,253 |
| 51,213 |
| | 67,000 |
| 50,000 |
|
| Treasury share activity: | | | | | | | | |
| Treasury shares repurchased | 2,000 |
| 229,132 |
| 150,385 |
| — |
| — |
| | 231,132 |
| — |
|
| Average treasury share repurchase price | $ | 46.65 |
| $ | 43.31 |
| $ | 46.91 |
| — |
| — |
| | 43.34 |
| — |
|
| | | | | | | | | |
| Key Ratios (percent) | | | | | | | | |
| Return on average assets | 1.31 | % | 1.25 | % | 1.48 | % | 1.21 | % | 1.34 | % | | 1.28 | % | 1.69 | % |
| Return on average tangible equity | 14.5 | % | 13.8 | % | 15.5 | % | 12.2 | % | 14 | % | | 14.1 | % | 17.8 | % |
| Yield on interest earning assets | 3.95 | % | 3.91 | % | 3.99 | % | 3.99 | % | 4.2 | % | | 3.93 | % | 4.3 | % |
| Cost of interest bearing liabilities | 0.49 | % | 0.48 | % | 0.46 | % | 0.47 | % | 0.47 | % | | 0.49 | % | 0.47 | % |
| Net Interest Margin | 3.56 | % | 3.53 | % | 3.62 | % | 3.62 | % | 3.82 | % | | 3.55 | % | 3.9 | % |
| Non-interest income as a percent of total revenue | 31.6 | % | 31.1 | % | 32.5 | % | 33.0 | % | 31.6 | % | | 31.4 | % | 39.1 | % |
| Efficiency Ratio (a) | 55.6 | % | 56.8 | % | 48.5 | % | 57.3 | % | 54.8 | % | | 56.2 | % | 54.5 | % |
| Price/Earnings Ratio (b) | 13.66 |
| 15.40 |
| 12.94 |
| 17.84 |
| 15.69 |
| | 14.15 |
| 12.53 |
|
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | |
| Capital (period-end) | | | | | | | | |
| Average Shareholders' Equity to Average Assets | 11.13 | % | 11.23 | % | 11.65 | % | 11.9 | % | 11.54 | % | | | |
| Tangible equity to tangible assets | 9.38 | % | 9.03 | % | 9.34 | % | 10.14 | % | 9.89 | % | | | |
| Consolidated risk based capital ratios (c): | | | | | | | | |
| CET I | 13.21 | % | 13.38 | % | 13.65 | % | 14.42 | % | 14.17 | % | | | |
| Tier I | 13.82 | % | 14 | % | 14.28 | % | 15.08 | % | 14.82 | % | | | |
| Total | 14.57 | % | 14.78 | % | 15.1 | % | 15.95 | % | 15.7 | % | | | |
| Leverage | 9.74 | % | 9.78 | % | 10.15 | % | 10.71 | % | 10.38 | % | | | |
| | | | | | | | | |
| Other | | | | | | | | |
| Branches | 85 |
| 85 |
| 85 |
| 82 |
| 82 |
| | | |
| FTE | 852 |
| 854 |
| 853 |
| 828 |
| 844 |
| | | |
| | | | | | | | | |
| Assets per FTE | $ | 4,468 |
| $ | 4,484 |
| $ | 4,354 |
| $ | 4,233 |
| $ | 4,162 |
| | | |
| Deposits per FTE | 3,688 |
| 3,732 |
| 3,615 |
| 3,461 |
| 3,439 |
| | | |
| | | | | | | | | |
| (a) The June 30, 2015 YTD efficiency ratio calculation excludes the gain on sale of insurance division. |
| (b) The price/earnings ratio is computed based on annualized quarterly earnings. |
| (c) June 30, 2016 risk-based capital ratios are estimated. |
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)
|
| | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30, | March 31, | December 31, | September 30, | June 30, | | June 30, | June 30, |
| | 2016 | 2016 | 2015 | 2015 | 2015 | | 2016 | 2015 |
| Interest Income | | | | | | | | |
| Interest and fees on loans | $ | 29,640 |
| $ | 28,927 |
| $ | 29,032 |
| $ | 27,875 |
| $ | 28,812 |
| | $ | 58,567 |
| $ | 58,200 |
|
| Interest on investment securities: | | | | | | | | |
| Taxable | 2,927 |
| 3,005 |
| 2,856 |
| 2,621 |
| 2,641 |
| | 5,933 |
| 5,353 |
|
| Tax-exempt | 365 |
| 357 |
| 334 |
| 272 |
| 267 |
| | 722 |
| 531 |
|
| Total Interest Income | 32,932 |
| 32,289 |
| 32,222 |
| 30,768 |
| 31,720 |
| | 65,222 |
| 64,084 |
|
| | | | | | | | | |
| Interest Expense | | | | | | | | |
| Interest on deposits | 3,011 |
| 2,898 |
| 2,760 |
| 2,686 |
| 2,699 |
| | 5,909 |
| 5,440 |
|
| Interest on short-term borrowings | 86 |
| 107 |
| 91 |
| 69 |
| 85 |
| | 193 |
| 167 |
|
| Interest on long-term debt | 167 |
| 164 |
| 159 |
| 155 |
| 153 |
| | 331 |
| 303 |
|
| Total Interest Expense | 3,264 |
| 3,169 |
| 3,010 |
| 2,910 |
| 2,937 |
| | 6,433 |
| 5,910 |
|
| Net Interest Income | 29,668 |
| 29,120 |
| 29,212 |
| 27,858 |
| 28,783 |
| | 58,789 |
| 58,174 |
|
| Provision for loan losses | 1,122 |
| 539 |
| 2,813 |
| 451 |
| 2,836 |
| | 1,661 |
| 3,724 |
|
| Net Interest Income After Provision for Loan Losses | 28,546 |
| 28,581 |
| 26,399 |
| 27,407 |
| 25,947 |
| | 57,128 |
| 54,450 |
|
| | | | | | | | | |
| Non-Interest Income | | | | | | | | |
| Gains on sale of investment securities | 845 |
| — |
| — |
| — |
| 2,116 |
| | 845 |
| 2,130 |
|
| Service charges | 6,564 |
| 6,303 |
| 6,893 |
| 6,907 |
| 6,589 |
| | 12,867 |
| 12,516 |
|
| Bankcard revenue | 4,190 |
| 3,967 |
| 3,923 |
| 3,895 |
| 4,002 |
| | 8,157 |
| 8,076 |
|
| Trust and investment management fee income | 1,371 |
| 1,276 |
| 1,547 |
| 1,176 |
| 1,201 |
| | 2,647 |
| 2,401 |
|
| Bank owned life insurance | 768 |
| 760 |
| 898 |
| 929 |
| 783 |
| | 1,528 |
| 1,547 |
|
| Gain on sale of insurance division | — |
| — |
| — |
| — |
| — |
| | — |
| 11,084 |
|
| Other income | 843 |
| 821 |
| 813 |
| 799 |
| 714 |
| | 1,664 |
| 1,672 |
|
| Total Non-Interest Income | 14,581 |
| 13,127 |
| 14,074 |
| 13,706 |
| 15,405 |
| | 27,708 |
| 39,426 |
|
| | | | | | | | | |
| Non-Interest Expense | | | | | | | | |
| Salaries and employee benefits | 12,790 |
| 12,673 |
| 11,296 |
| 12,179 |
| 12,193 |
| | 25,463 |
| 24,372 |
|
| Occupancy and equipment | 2,708 |
| 2,836 |
| 2,583 |
| 2,575 |
| 2,529 |
| | 5,544 |
| 5,119 |
|
| Depreciation | 1,567 |
| 1,567 |
| 1,539 |
| 1,522 |
| 1,516 |
| | 3,134 |
| 3,027 |
|
| FDIC insurance expense | 512 |
| 465 |
| 443 |
| 456 |
| 445 |
| | 977 |
| 895 |
|
| Advertising | 778 |
| 716 |
| 264 |
| 777 |
| 701 |
| | 1,494 |
| 1,405 |
|
| Bankcard expenses | 925 |
| 833 |
| 778 |
| 785 |
| 829 |
| | 1,758 |
| 1,615 |
|
| Postage, delivery, and statement mailings | 506 |
| 565 |
| 532 |
| 523 |
| 507 |
| | 1,071 |
| 1,068 |
|
| Office supplies | 366 |
| 353 |
| 273 |
| 384 |
| 347 |
| | 719 |
| 693 |
|
| Legal and professional fees | 528 |
| 471 |
| 662 |
| 620 |
| 542 |
| | 999 |
| 1,109 |
|
|
| | | | | | | | | | | | | | | | | | | | | | |
| Telecommunications | 431 |
| 428 |
| 409 |
| 418 |
| 463 |
| | 859 |
| 938 |
|
| Repossessed asset losses, net of expenses | 53 |
| 288 |
| 217 |
| 492 |
| 335 |
| | 341 |
| 555 |
|
| Merger related expenses | — |
| — |
| 315 |
| 175 |
| 108 |
| | — |
| 108 |
|
| Other expenses | 3,119 |
| 2,945 |
| 1,854 |
| 4,471 |
| 2,729 |
| | 6,064 |
| 5,505 |
|
| Total Non-Interest Expense | 24,283 |
| 24,140 |
| 21,165 |
| 25,377 |
| 23,244 |
| | 48,423 |
| 46,409 |
|
| Income Before Income Taxes | 18,844 |
| 17,568 |
| 19,308 |
| 15,736 |
| 18,108 |
| | 36,413 |
| 47,467 |
|
| Income tax expense | 6,303 |
| 5,866 |
| 5,793 |
| 5,129 |
| 6,125 |
| | 12,169 |
| 17,492 |
|
| Net Income Available to Common Shareholders | $ | 12,541 |
| $ | 11,702 |
| $ | 13,515 |
| $ | 10,607 |
| $ | 11,983 |
| | $ | 24,244 |
| $ | 29,975 |
|
| | | | | | | | | |
| Distributed earnings allocated to common shareholders | $ | 6,375 |
| $ | 6,365 |
| $ | 6,303 |
| $ | 6,362 |
| $ | 6,344 |
| | $ | 12,750 |
| $ | 12,688 |
|
| Undistributed earnings allocated to common shareholders | 6,016 |
| 5,206 |
| 7,059 |
| 4,125 |
| 5,505 |
| | 11,202 |
| 16,950 |
|
| Net earnings allocated to common shareholders | $ | 12,391 |
| $ | 11,571 |
| $ | 13,362 |
| $ | 10,487 |
| $ | 11,849 |
| | $ | 23,952 |
| $ | 29,638 |
|
| | | | | | | | | |
| | | | | | | | | |
| Average common shares outstanding | 14,889 |
| 14,916 |
| 15,158 |
| 15,178 |
| 15,104 |
| | 14,903 |
| 15,079 |
|
| Shares for diluted earnings per share | 14,902 |
| 14,927 |
| 15,175 |
| 15,198 |
| 15,127 |
| | 14,915 |
| 15,156 |
|
| | | | | | | | | |
| Basic earnings per common share | $ | 0.83 |
| $ | 0.78 |
| $ | 0.88 |
| $ | 0.69 |
| $ | 0.78 |
| | $ | 1.61 |
| $ | 1.97 |
|
| Diluted earnings per common share | $ | 0.83 |
| $ | 0.78 |
| $ | 0.88 |
| $ | 0.69 |
| $ | 0.78 |
| | $ | 1.61 |
| $ | 1.96 |
|
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000s)
|
| | | | | | | | | | | | | | | |
| | (Unaudited) | (Unaudited) | | (Unaudited) | (Unaudited) |
| | June 30, | March 31, | December 31, | September 30, | June 30, |
| | 2016 | 2016 | 2015 | 2015 | 2015 |
| Assets | | | | | |
| Cash and due from banks | $ | 69,933 |
| $ | 165,134 |
| $ | 58,829 |
| $ | 109,627 |
| $ | 142,335 |
|
| Interest-bearing deposits in depository institutions | 8,643 |
| 10,031 |
| 11,284 |
| 9,081 |
| 11,089 |
|
| Cash and cash equivalents | 78,576 |
| 175,165 |
| 70,113 |
| 118,708 |
| 153,424 |
|
| | | | | | |
| Investment securities available-for-sale, at fair value | 409,039 |
| 362,282 |
| 369,466 |
| 300,865 |
| 287,609 |
|
| Investment securities held-to-maturity, at amortized cost | 83,208 |
| 86,518 |
| 88,937 |
| 81,095 |
| 84,082 |
|
| Other securities | 10,203 |
| 9,960 |
| 12,915 |
| 9,926 |
| 9,926 |
|
| Total investment securities | 502,450 |
| 458,760 |
| 471,318 |
| 391,886 |
| 381,617 |
|
| | | | | | |
| Gross loans | 2,903,398 |
| 2,877,117 |
| 2,862,534 |
| 2,695,645 |
| 2,683,835 |
|
| Allowance for loan losses | (19,139 | ) | (19,315 | ) | (19,251 | ) | (20,148 | ) | (20,187 | ) |
| Net loans | 2,884,259 |
| 2,857,802 |
| 2,843,283 |
| 2,675,497 |
| 2,663,648 |
|
| | | | | | |
| Bank owned life insurance | 99,446 |
| 98,679 |
| 97,919 |
| 97,157 |
| 96,663 |
|
| Premises and equipment, net | 75,040 |
| 75,965 |
| 77,271 |
| 73,419 |
| 75,900 |
|
| Accrued interest receivable | 8,428 |
| 8,517 |
| 7,432 |
| 7,690 |
| 7,838 |
|
| Net deferred tax assets | 23,995 |
| 27,541 |
| 29,974 |
| 33,342 |
| 32,674 |
|
| Intangible assets | 79,433 |
| 79,581 |
| 79,792 |
| 70,653 |
| 70,779 |
|
| Other assets | 55,234 |
| 47,656 |
| 36,957 |
| 36,266 |
| 30,080 |
|
| Total Assets | $ | 3,806,861 |
| $ | 3,829,666 |
| $ | 3,714,059 |
| $ | 3,504,618 |
| $ | 3,512,623 |
|
| | | | | | |
| Liabilities | | | | | |
| Deposits: | | | | | |
| Noninterest-bearing | $ | 651,867 |
| $ | 666,523 |
| $ | 621,073 |
| $ | 542,177 |
| $ | 563,715 |
|
| Interest-bearing: | | | | | |
| Demand deposits | 701,248 |
| 711,366 |
| 679,735 |
| 647,792 |
| 646,198 |
|
| Savings deposits | 758,323 |
| 780,982 |
| 765,611 |
| 693,184 |
| 695,383 |
|
| Time deposits | 1,030,841 |
| 1,028,400 |
| 1,017,556 |
| 982,349 |
| 997,387 |
|
| Total deposits | 3,142,279 |
| 3,187,271 |
| 3,083,975 |
| 2,865,502 |
| 2,902,683 |
|
| Short-term borrowings | | | | | |
| Federal Funds purchased | — |
| — |
| 13,000 |
| — |
| — |
|
| Customer repurchase agreements | 153,674 |
| 156,714 |
| 141,869 |
| 147,036 |
| 153,171 |
|
| Long-term debt | 16,495 |
| 16,495 |
| 16,495 |
| 16,495 |
| 16,495 |
|
| Other liabilities | 65,324 |
| 51,068 |
| 39,448 |
| 56,818 |
| 29,034 |
|
| Total Liabilities | 3,377,772 |
| 3,411,548 |
| 3,294,787 |
| 3,085,851 |
| 3,101,383 |
|
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
|
| | | | | | | | | | | | | | | |
| 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 | 46,249 |
| 46,249 |
| 46,249 |
| 46,249 |
| 46,249 |
|
| Capital surplus | 106,378 |
| 106,137 |
| 106,269 |
| 106,108 |
| 105,891 |
|
| Retained earnings | 402,044 |
| 395,963 |
| 390,690 |
| 383,551 |
| 379,379 |
|
| Cost of common stock in treasury | (127,619 | ) | (129,142 | ) | (120,104 | ) | (113,581 | ) | (115,387 | ) |
| Accumulated other comprehensive loss: | | | | | |
| Unrealized gain on securities available-for-sale | 6,796 |
| 3,670 |
| 927 |
| 1,789 |
| 457 |
|
| Underfunded pension liability | (4,759 | ) | (4,759 | ) | (4,759 | ) | (5,349 | ) | (5,349 | ) |
| Total Accumulated Other Comprehensive Loss | 2,037 |
| (1,089 | ) | (3,832 | ) | (3,560 | ) | (4,892 | ) |
| Total Stockholders' Equity | 429,089 |
| 418,118 |
| 419,272 |
| 418,767 |
| 411,240 |
|
| Total Liabilities and Stockholders' Equity | $ | 3,806,861 |
| $ | 3,829,666 |
| $ | 3,714,059 |
| $ | 3,504,618 |
| $ | 3,512,623 |
|
| | | | | | |
| Regulatory Capital | | | | | |
| Total CET 1 capital | $ | 349,100 |
| $ | 341,165 |
| $ | 345,620 |
| $ | 353,224 |
| $ | 346,979 |
|
| Total tier 1 capital | 365,100 |
| 357,165 |
| 361,620 |
| 369,224 |
| 362,979 |
|
| Total risk-based capital | 384,855 |
| 377,003 |
| 382,180 |
| 390,612 |
| 384,388 |
|
| Total risk-weighted assets | 2,642,040 |
| 2,550,739 |
| 2,531,647 |
| 2,449,191 |
| 2,448,848 |
|
CITY HOLDING COMPANY AND SUBSIDIARIES
Loan Portfolio
(Unaudited) ($ in 000s)
|
| | | | | | | | | | | | | | | |
| | June 30, | March 31, | December 31, | September 30, | June 30, |
| | 2016 | 2016 | 2015 | 2015 | 2015 |
| | | | | | |
Residential real estate (1) | $ | 1,417,137 |
| $ | 1,395,670 |
| $ | 1,383,133 |
| $ | 1,358,083 |
| $ | 1,325,453 |
|
| Home equity - junior liens | 142,827 |
| 142,694 |
| 147,036 |
| 144,748 |
| 143,772 |
|
| Commercial and industrial | 171,362 |
| 165,549 |
| 165,340 |
| 123,948 |
| 141,518 |
|
Commercial real estate (2) | 1,135,493 |
| 1,135,625 |
| 1,127,581 |
| 1,028,857 |
| 1,032,258 |
|
| Consumer | 33,799 |
| 34,754 |
| 36,083 |
| 36,751 |
| 37,555 |
|
| DDA overdrafts | 2,780 |
| 2,825 |
| 3,361 |
| 3,258 |
| 3,279 |
|
| Gross Loans | $ | 2,903,398 |
| $ | 2,877,117 |
| $ | 2,862,534 |
| $ | 2,695,645 |
| $ | 2,683,835 |
|
| | | | | | |
| Construction loans included in: | | | | | |
| (1) - Residential real estate loans | $ | 12,344 |
| $ | 13,966 |
| $ | 13,135 |
| $ | 14,765 |
| $ | 15,412 |
|
| (2) - Commercial real estate loans | 2,237 |
| 15,172 |
| 12,599 |
| 11,970 |
| 4,043 |
|
| | | | | | |
| | | | | | |
| Secondary Mortgage Loan Activity | | | | | |
| Mortgage loans originated | $ | 3,103 |
| $ | 2,809 |
| $ | 3,855 |
| $ | 4,803 |
| $ | 3,900 |
|
| Mortgage loans sold | 3,183 |
| 3,073 |
| 4,135 |
| 4,206 |
| 4,006 |
|
| Mortgage loans gain on loans sold | 80 |
| 24 |
| 88 |
| 112 |
| 106 |
|
CITY HOLDING COMPANY AND SUBSIDIARIES
Asset Quality Information
(Unaudited) ($ in 000s)
|
| | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30, | March 31, | December 31, | September 30, | June 30, | | June 30, | June 30, |
| | 2016 | 2016 | 2015 | 2015 | 2015 | | 2016 | 2015 |
| Allowance for Loan Losses | | | | | | | | |
| Balance at beginning of period | $ | 19,315 |
| $ | 19,251 |
| $ | 20,148 |
| $ | 20,187 |
| $ | 20,103 |
| | $ | 19,251 |
| $ | 20,074 |
|
| | | | | | | | | |
| Charge-offs: | | | | | | | | |
| Commercial and industrial | (44 | ) | (1 | ) | (3,148 | ) | (82 | ) | (2,444 | ) | | (45 | ) | (2,538 | ) |
| Commercial real estate | (769 | ) | (302 | ) | (303 | ) | (1 | ) | 61 |
| | (1,071 | ) | (276 | ) |
| Residential real estate | (337 | ) | (405 | ) | (386 | ) | (229 | ) | (272 | ) | | (742 | ) | (529 | ) |
| Home equity | (69 | ) | (106 | ) | (76 | ) | (128 | ) | (17 | ) | | (175 | ) | (108 | ) |
| Consumer | (44 | ) | (38 | ) | (39 | ) | (28 | ) | (69 | ) | | (82 | ) | (143 | ) |
| DDA overdrafts | (321 | ) | (318 | ) | (376 | ) | (414 | ) | (313 | ) | | (639 | ) | (624 | ) |
| Total charge-offs | (1,584 | ) | (1,170 | ) | (4,328 | ) | (882 | ) | (3,054 | ) | | (2,754 | ) | (4,218 | ) |
| | | | | | | | | |
| Recoveries: | | | | | | | | |
| Commercial and industrial | 3 |
| 1 |
| 2 |
| 45 |
| 9 |
| | 4 |
| 27 |
|
| Commercial real estate | 20 |
| 384 |
| 317 |
| 18 |
| 23 |
| | 404 |
| 31 |
|
| Residential real estate | 51 |
| 39 |
| 69 |
| 66 |
| 54 |
| | 90 |
| 64 |
|
| Home equity | — |
| — |
| — |
| — |
| — |
| | — |
| — |
|
| Consumer | 52 |
| 29 |
| 32 |
| 76 |
| 51 |
| | 81 |
| 79 |
|
| DDA overdrafts | 160 |
| 242 |
| 198 |
| 187 |
| 165 |
| | 402 |
| 406 |
|
| Total recoveries | 286 |
| 695 |
| 618 |
| 392 |
| 302 |
| | 981 |
| 607 |
|
| | | | | | | | | |
| Net charge-offs | (1,298 | ) | (475 | ) | (3,710 | ) | (490 | ) | (2,752 | ) | | (1,773 | ) | (3,611 | ) |
| Provision for (recovery of) acquired loans | 128 |
| 40 |
| 32 |
| (24 | ) | 299 |
| | 168 |
| 545 |
|
| Provision for loan losses | 994 |
| 499 |
| 2,781 |
| 475 |
| 2,537 |
| | 1,493 |
| 3,179 |
|
| Balance at end of period | $ | 19,139 |
| $ | 19,315 |
| $ | 19,251 |
| $ | 20,148 |
| $ | 20,187 |
| | $ | 19,139 |
| $ | 20,187 |
|
| | | | | | | | | |
| Loans outstanding | $ | 2,903,398 |
| $ | 2,877,117 |
| $ | 2,862,534 |
| $ | 2,695,645 |
| $ | 2,683,835 |
| | | |
| Allowance as a percent of loans outstanding | 0.7 | % | 0.7 | % | 0.7 | % | 0.7 | % | 0.8 | % | | | |
| Allowance as a percent of non-performing loans | 124 | % | 120.4 | % | 110.4 | % | 92.2 | % | 127.1 | % | | | |
| | | | | | | | | |
| Average loans outstanding | $ | 2,891,292 |
| $ | 2,864,943 |
| $ | 2,789,354 |
| $ | 2,679,429 |
| $ | 2,658,484 |
| | $ | 2,878,119 |
| $ | 2,647,502 |
|
| Net charge-offs (annualized) as a percent of average loans outstanding | 0.18 | % | 0.07 | % | 0.53 | % | 0.07 | % | 0.41 | % | | 0.12 | % | 0.27 | % |
CITY HOLDING COMPANY AND SUBSIDIARIES
Asset Quality Information, Continued
(Unaudited) ($ in 000s)
|
| | | | | | | | | | | | | | | |
| | June 30, | March 31, | December 31, | September 30, | June 30, |
| | 2016 | 2016 | 2015 | 2015 | 2015 |
| Nonaccrual Loans | | | | | |
| Residential real estate | $ | 2,531 |
| $ | 2,977 |
| $ | 2,918 |
| $ | 3,012 |
| $ | 2,693 |
|
| Home equity | 165 |
| 152 |
| 136 |
| 159 |
| 141 |
|
| Commercial and industrial | 2,724 |
| 2,967 |
| 2,745 |
| 6,430 |
| 1,271 |
|
| Commercial real estate | 9,779 |
| 9,718 |
| 11,149 |
| 11,806 |
| 11,518 |
|
| Consumer | — |
| — |
| — |
| — |
| — |
|
| Total nonaccrual loans | 15,199 |
| 15,814 |
| 16,948 |
| 21,407 |
| 15,623 |
|
| Accruing loans past due 90 days or more | 241 |
| 225 |
| 495 |
| 449 |
| 264 |
|
| Total non-performing loans | 15,440 |
| 16,039 |
| 17,443 |
| 21,856 |
| 15,887 |
|
| Other real estate owned | 5,868 |
| 6,054 |
| 6,519 |
| 6,026 |
| 6,729 |
|
| Total non-performing assets | $ | 21,308 |
| $ | 22,093 |
| $ | 23,962 |
| $ | 27,882 |
| $ | 22,616 |
|
| | | | | | |
| Non-performing assets as a percent of loans and other real estate owned | 0.73 | % | 0.77 | % | 0.84 | % | 1.03 | % | 0.84 | % |
| | | | | | |
| Past Due Loans | | | | | |
| Residential real estate | $ | 5,490 |
| $ | 5,045 |
| $ | 6,610 |
| $ | 5,522 |
| $ | 5,270 |
|
| Home equity | 595 |
| 595 |
| 406 |
| 558 |
| 398 |
|
| Commercial and industrial | 304 |
| 343 |
| 159 |
| 355 |
| 614 |
|
| Commercial real estate | 1,746 |
| 2,138 |
| 1,480 |
| 3,622 |
| 2,715 |
|
| Consumer | 150 |
| 82 |
| 196 |
| 218 |
| 257 |
|
| DDA overdrafts | 290 |
| 514 |
| 313 |
| 330 |
| 327 |
|
| Total past due loans | $ | 8,575 |
| $ | 8,717 |
| $ | 9,164 |
| $ | 10,605 |
| $ | 9,581 |
|
| | | | | | |
| Total past due loans as a percent of loans outstanding | 0.30 | % | 0.30 | % | 0.32 | % | 0.39 | % | 0.36 | % |
| | | | | | |
| Troubled Debt Restructurings ("TDRs") (period-end) | | | | | |
| Accruing: | | | | | |
| Residential real estate | $ | 19,685 |
| $ | 18,306 |
| $ | 17,796 |
| $ | 18,154 |
| $ | 18,624 |
|
| Home equity | 2,873 |
| 2,878 |
| 2,659 |
| 2,730 |
| 2,647 |
|
| Commercial and industrial | 50 |
| 54 |
| 58 |
| 62 |
| 66 |
|
| Commercial real estate | 2,743 |
| 523 |
| 1,746 |
| 1,921 |
| 1,872 |
|
| Consumer | — |
| — |
| — |
| — |
| — |
|
| Total accruing TDRs | $ | 25,351 |
| $ | 21,761 |
| $ | 22,259 |
| $ | 22,867 |
| $ | 23,209 |
|
|
| | | | | | | | | | | | | | | |
| Non-Accruing | | | | | |
| Residential real estate | $ | 390 |
| $ | 36 |
| 191 |
| $ | — |
| $ | 397 |
|
| Home equity | 44 |
| — |
| 34 |
| 16 |
| 15 |
|
| Commercial and industrial | — |
| — |
| — |
| — |
| — |
|
| Commercial real estate | — |
| — |
| — |
| — |
| — |
|
| Consumer | — |
| — |
| — |
| — |
| — |
|
| Total non-accruing TDRs | $ | 434 |
| $ | 36 |
| $ | 225 |
| $ | 16 |
| $ | 412 |
|
| | | | | | |
| Total TDRs | $ | 25,785 |
| $ | 21,797 |
| $ | 22,484 |
| $ | 22,883 |
| $ | 23,621 |
|
| | | | | | |
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended |
| | June 30, 2016 | March 31, 2016 | June 30, 2015 |
| | Average | | Yield/ | Average | | Yield/ | Average | | Yield/ |
| | Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate |
| Assets: | | | | | | | | | |
Loan portfolio (1): | | | | | | | | | |
Residential real estate (2) | $ | 1,545,550 |
| $ | 15,038 |
| 3.91 | % | $ | 1,531,966 |
| $ | 14,918 |
| 3.92 | % | $ | 1,456,820 |
| $ | 14,291 |
| 3.93 | % |
Commercial, financial, and agriculture (2) | 1,306,931 |
| 13,310 |
| 4.1 | % | 1,294,345 |
| 12,919 |
| 4.01 | % | 1,160,219 |
| 12,993 |
| 4.49 | % |
Installment loans to individuals (2), (3) | 38,811 |
| 809 |
| 8.38 | % | 38,632 |
| 721 |
| 7.51 | % | 41,445 |
| 1,026 |
| 9.93 | % |
Previously securitized loans (4) | *** | 483 |
| *** | *** | 369 |
| *** | *** | 502 |
| *** |
| Total loans | 2,891,292 |
| 29,640 |
| 4.12 | % | 2,864,943 |
| 28,927 |
| 4.06 | % | 2,658,484 |
| 28,812 |
| 4.35 | % |
| Securities: | | | | | | | | | |
| Taxable | 425,450 |
| 2,927 |
| 2.77 | % | 421,289 |
| 3,005 |
| 2.87 | % | 341,723 |
| 2,641 |
| 3.1 | % |
Tax-exempt (5) | 43,637 |
| 561 |
| 5.17 | % | 41,898 |
| 549 |
| 5.27 | % | 29,501 |
| 411 |
| 5.59 | % |
| Total securities | 469,087 |
| 3,488 |
| 2.99 | % | 463,187 |
| 3,554 |
| 3.09 | % | 371,224 |
| 3,052 |
| 3.3 | % |
| Deposits in depository institutions | 9,186 |
| — |
| — |
| 10,529 |
| — |
| — |
| 10,468 |
| — |
| — |
|
| Total interest-earning assets | 3,369,565 |
| 33,128 |
| 3.95 | % | 3,338,659 |
| 32,481 |
| 3.91 | % | 3,040,176 |
| 31,864 |
| 4.2 | % |
| Cash and due from banks | 144,260 |
| | | 81,569 |
| | | 229,009 |
| | |
| Premises and equipment, net | 75,798 |
| | | 76,945 |
| | | 76,671 |
| | |
| Other assets | 261,271 |
| | | 256,329 |
| | | 244,661 |
| | |
| Less: Allowance for loan losses | (19,686 | ) | | | (20,591 | ) | | | (20,789 | ) | | |
| Total assets | $ | 3,831,208 |
| | | $ | 3,732,911 |
| | | $ | 3,569,728 |
| | |
| | | | | | | | | | |
| Liabilities: | | | | | | | | | |
| Interest-bearing demand deposits | $ | 686,403 |
| $ | 176 |
| 0.10 | % | $ | 677,849 |
| $ | 145 |
| 0.09 | % | $ | 647,991 |
| $ | 125 |
| 0.08 | % |
| Savings deposits | 766,708 |
| 238 |
| 0.12 | % | 767,262 |
| 228 |
| 0.12 | % | 709,034 |
| 174 |
| 0.10 | % |
Time deposits (2) | 1,030,346 |
| 2,598 |
| 1.01 | % | 1,019,416 |
| 2,525 |
| 1.00 | % | 1,006,376 |
| 2,400 |
| 0.96 | % |
| Short-term borrowings | 154,047 |
| 86 |
| 0.22 | % | 162,046 |
| 107 |
| 0.27 | % | 149,785 |
| 85 |
| 0.23 | % |
| Long-term debt | 16,495 |
| 167 |
| 4.07 | % | 16,495 |
| 164 |
| 4.00 | % | 16,495 |
| 153 |
| 3.72 | % |
| Total interest-bearing liabilities | 2,653,999 |
| 3,265 |
| 0.49 | % | 2,643,068 |
| 3,169 |
| 0.48 | % | 2,529,681 |
| 2,937 |
| 0.47 | % |
| Noninterest-bearing demand deposits | 707,501 |
| | | 630,524 |
| | | 585,720 |
| | |
| Other liabilities | 43,435 |
| | | 40,198 |
| | | 42,273 |
| | |
| Stockholders' equity | 426,273 |
| | | 419,121 |
| | | 412,054 |
| | |
| Total liabilities and | | | | | | | | | |
| stockholders' equity | $ | 3,831,208 |
| | | $ | 3,732,911 |
| | | $ | 3,569,728 |
| | |
| Net interest income | | $ | 29,863 |
| | | $ | 29,312 |
| | | $ | 28,927 |
| |
| Net yield on earning assets | | | 3.56 | % | | | 3.53 | % | | | 3.82 | % |
| | | | | | | | | | |
| (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"), Community Financial Corporation ("Community") and American Founders Banks, Inc. ("AFB"): |
| Residential real estate | | $ | 190 |
| | | $ | 181 |
| | | $ | 243 |
| |
| Commercial, financial, and agriculture | | 656 |
| | | 394 |
| | | 1,120 |
| |
| Installment loans to individuals | | 29 |
| | | 54 |
| | | 75 |
| |
| Time deposits | | 148 |
| | | 148 |
| | | 169 |
| |
| | | $ | 1,022 |
| | | $ | 777 |
| | | $ | 1,607 |
| |
| | | | | | | | | | |
| (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 $0. |
| (5) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 35%. |
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)
|
| | | | | | | | | | | | | | | | |
| | Six Months Ended |
| | June 30, 2016 | June 30, 2015 |
| | Average | | Yield/ | Average | | Yield/ |
| | Balance | Interest | Rate | Balance | Interest | Rate |
| Assets: | | | | | | |
Loan portfolio (1): | | | | | | |
Residential real estate (2) | $ | 1,538,095 |
| $ | 29,957 |
| 3.92 | % | $ | 1,450,386 |
| $ | 28,410 |
| 3.95 | % |
Commercial, financial, and agriculture (2) | 1,301,380 |
| 26,228 |
| 4.05 | % | 1,155,483 |
| 27,019 |
| 4.72 | % |
Installment loans to individuals (2), (3) | 38,644 |
| 1,530 |
| 7.96 | % | 41,633 |
| 1,816 |
| 8.80 | % |
Previously securitized loans (4) | *** | 852 |
| *** | *** | 954 |
| *** |
| Total loans | 2,878,119 |
| 58,567 |
| 4.09 | % | 2,647,502 |
| 58,199 |
| 4.43 | % |
| Securities: | | | | | | |
| Taxable | 423,369 |
| 5,933 |
| 2.82 | % | 334,494 |
| 5,353 |
| 3.23 | % |
Tax-exempt (5) | 42,768 |
| 1,110 |
| 5.22 | % | 28,992 |
| 816 |
| 5.68 | % |
| Total securities | 466,137 |
| 7,043 |
| 3.04 | % | 363,486 |
| 6,169 |
| 3.42 | % |
| Deposits in depository institutions | 9,858 |
| — |
| — | % | 9,722 |
| — |
| — | % |
| Total interest-earning assets | 3,354,114 |
| 65,610 |
| 3.93 | % | 3,020,710 |
| 64,368 |
| 4.3 | % |
| Cash and due from banks | 112,915 |
| | | 225,727 |
| | |
| Premises and equipment, net | 76,372 |
| | | 77,152 |
| | |
| Other assets | 258,800 |
| | | 244,578 |
| | |
| Less: Allowance for loan losses | (20,138 | ) | | | (20,724 | ) | | |
| Total assets | $ | 3,782,063 |
| | | $ | 3,547,443 |
| | |
| | | | | | | |
| Liabilities: | | | | | | |
| Interest-bearing demand deposits | $ | 682,126 |
| $ | 321 |
| 0.09 | % | $ | 642,431 |
| $ | 257 |
| 0.08 | % |
| Savings deposits | 766,985 |
| 465 |
| 0.12 | % | 701,907 |
| 355 |
| 0.1 | % |
Time deposits (2) | 1,024,881 |
| 5,123 |
| 1.01 | % | 1,013,883 |
| 4,828 |
| 0.96 | % |
| Short-term borrowings | 158,046 |
| 193 |
| 0.25 | % | 139,676 |
| 166 |
| 0.24 | % |
| Long-term debt | 16,495 |
| 331 |
| 4.04 | % | 16,495 |
| 303 |
| 3.7 | % |
| Total interest-bearing liabilities | 2,648,533 |
| 6,433 |
| 0.49 | % | 2,514,392 |
| 5,909 |
| 0.47 | % |
| Noninterest-bearing demand deposits | 669,013 |
| | | 578,570 |
| | |
| Other liabilities | 41,820 |
| | | 46,112 |
| | |
| Stockholders' equity | 422,697 |
| | | 408,369 |
| | |
| Total liabilities and | | | | | | |
| stockholders' equity | $ | 3,782,063 |
| | | $ | 3,547,443 |
| | |
| Net interest income | | $ | 59,177 |
| | | $ | 58,459 |
| |
| Net yield on earning assets | | | 3.55 | % | | | 3.90 | % |
| | | | | | | |
| (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"), Community Financial Corporation ("Community") and American Founders Banks, Inc. ("AFB"): |
| | | | | | | |
| Residential real estate | | 371 |
| | | 440 |
| |
| Commercial, financial, and agriculture | | 1,050 |
| | | 3,106 |
| |
| Installment loans to individuals | | 82 |
| | | 172 |
| |
| Time deposits | | 296 |
| | | 339 |
| |
| | | $ | 1,799 |
| | | $ | 4,057 |
| |
| | | | | | | |
| (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 $0. |
| (5) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 35%. |
| |
CITY HOLDING COMPANY AND SUBSIDIARIES
Acquisition Activity
(Unaudited) ($ in 000s) |
| | | | | | | | | | | | | | | | |
| | | Three Months Ended |
| | | June 30, | March 31, | December 31, | September 30, | June 30, |
| | | 2016 | 2016 | 2015 | 2015 | 2015 |
| | Purchased Credit Impaired Loans (Period End) | | | | | |
| | Virginia Savings Acquisition | | | | | |
| | Contractual required principal and interest | $ | 1,924 |
| $ | 1,942 |
| $ | 1,965 |
| $ | 2,149 |
| $ | 2,376 |
|
| | Carrying value | 1,714 |
| 1,715 |
| 1,707 |
| 1,861 |
| 1,984 |
|
| | | | | | | |
| | Community Acquisition | | | | | |
| | Contractual required principal and interest | $ | 14,042 |
| $ | 14,415 |
| $ | 16,362 |
| $ | 17,834 |
| $ | 18,546 |
|
| | Carrying value | 11,160 |
| 11,219 |
| 12,899 |
| 13,400 |
| 13,958 |
|
| | | | | | | |
| | Accretion | | | | | |
| | 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"), Community Financial Corporation ("Community") and American Founders Bank, Inc. ("AFB") acquisitions. |
| |
| | | | | | | |
| | Virginia Savings Acquistion | | | | | |
| | Loans | $ | 67 |
| $ | 104 |
| $ | 138 |
| $ | 245 |
| $ | 190 |
|
| | Certificates of deposit | 124 |
| 124 |
| 129 |
| 129 |
| 129 |
|
| | | $ | 191 |
| $ | 228 |
| $ | 267 |
| $ | 374 |
| $ | 319 |
|
| | | | | | | |
| | Community Acquisition | | | | | |
| | Loans | $ | 698 |
| $ | 408 |
| $ | 1,226 |
| $ | 642 |
| $ | 1,248 |
|
| | Certificates of deposit | 11 |
| 11 |
| 40 |
| 40 |
| 40 |
|
| | | $ | 709 |
| $ | 419 |
| $ | 1,266 |
| $ | 682 |
| $ | 1,288 |
|
| | | | | | | |
| | AFB Acquisition | | | | | |
| | Loans | $ | 109 |
| $ | 117 |
| $ | 28 |
| — |
| — |
|
| | Certificates of deposit | 13 |
| 13 |
| 11 |
| — |
| — |
|
| | | $ | 122 |
| $ | 130 |
| $ | 39 |
| — |
| — |
|
| | | | | | | |
| | All Acquisitions | | | | | |
| | Loans | $ | 874 |
| $ | 629 |
| $ | 1,392 |
| $ | 887 |
| $ | 1,438 |
|
| | Certificates of deposit | 148 |
| 148 |
| 180 |
| 169 |
| 169 |
|
| | | $ | 1,022 |
| $ | 777 |
| $ | 1,572 |
| $ | 1,056 |
| $ | 1,607 |
|
| | | | | | | |
| | Accretion Forecast | | | | | |
| | Remainder of 2016 | $ | 1,058 |
| | | | |
| | Year Ended December 31, 2017 | 1,316 |
| | | | |
| | Year Ended December 31, 2018 | 988 |
| | | | |
| | | | | | | |
| | Note: The amounts reflected 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
Non-GAAP Reconciliations
(Unaudited) ($ in 000s)
|
| | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30, | March 31, | December 31, | September 30, | June 30, | | June 30, | June 30, |
| | 2016 | 2016 | 2015 | 2015 | 2015 | | 2016 | 2015 |
| Net Interest Income/Margin | | | | | | | | |
| Net interest income, fully taxable equivalent | $ | 29,863 |
| $ | 29,312 |
| $ | 29,391 |
| $ | 28,005 |
| $ | 28,927 |
| | $ | 59,177 |
| $ | 58,459 |
|
| Taxable equivalent adjustment | (195 | ) | (192 | ) | (179 | ) | (147 | ) | (144 | ) | | (388 | ) | (285 | ) |
| Net interest income ("GAAP") | $ | 29,668 |
| $ | 29,120 |
| $ | 29,212 |
| $ | 27,858 |
| $ | 28,783 |
| | $ | 58,789 |
| $ | 58,174 |
|
| | | | | | | | | |
| Average interest earning assets | $ | 3,369,565 |
| $ | 3,338,659 |
| $ | 3,223,782 |
| $ | 3,071,595 |
| $ | 3,040,176 |
| | $ | 3,354,114 |
| $ | 3,020,710 |
|
| Net Interest Margin | 3.56 | % | 3.53 | % | 3.62 | % | 3.62 | % | 3.82 | % | | 3.55 | % | 3.9 | % |
| | | | | | | | | |
| Net interest income, fully taxable equivalent, excluding accretion | $ | 28,841 |
| $ | 28,535 |
| $ | 27,819 |
| $ | 26,949 |
| $ | 27,320 |
| | $ | 57,378 |
| $ | 54,402 |
|
| Taxable equivalent adjustment | (195 | ) | (192 | ) | (179 | ) | (147 | ) | (144 | ) | | (388 | ) | (285 | ) |
| Accretion related to fair value adjustments | 1,022 |
| 777 |
| 1,572 |
| 1,056 |
| 1,607 |
| | 1,799 |
| 4,057 |
|
| Net interest income ("GAAP") | $ | 29,668 |
| $ | 29,120 |
| $ | 29,212 |
| $ | 27,858 |
| $ | 28,783 |
| | $ | 58,789 |
| $ | 58,174 |
|
| | | | | | | | | |
| Average interest earning assets | $ | 3,369,565 |
| $ | 3,338,659 |
| $ | 3,223,782 |
| $ | 3,071,595 |
| $ | 3,040,176 |
| | $ | 3,354,114 |
| $ | 3,020,710 |
|
| Net Interest Margin (excluding accretion) | 3.44 | % | 3.44 | % | 3.42 | % | 3.48 | % | 3.60 | % | | 3.44 | % | 3.63 | % |
| | | | | | | | | |
| Tangible Equity Ratio (period end) | | | | | | | | |
| Tangible common equity to tangible assets | 9.38 | % | 9.03 | % | 9.34 | % | 10.14 | % | 9.89 | % | | | |
| Effect of goodwill and other intangibles, net | 1.89 | % | 1.89 | % | 1.95 | % | 1.81 | % | 1.82 | % | | | |
| Equity to assets ("GAAP") | 11.27 | % | 10.92 | % | 11.29 | % | 11.95 | % | 11.71 | % | | | |
