NEWS RELEASE
For Immediate Release
July 22, 2019
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 $4.9 billion bank holding company headquartered in Charleston, West Virginia, today announced quarterly net income of $22.8 million and diluted earnings of $1.38 per share for the quarter ended June 30, 2019. For the second quarter of 2019, the Company achieved a return on assets of 1.84% and a return on tangible equity of 17.9%. The Company reported that net interest income increased $7.3 million (21.9%) from the quarter ended June 30, 2018, while net interest income exclusive of accretion from fair value adjustments from acquisitions increased $6.8 million (20.4%) from the quarter ended June 30, 2018.
Charles R. (“Skip”) Hageboeck, the President and Chief Executive Officer of City Holding Company, commented: “City was able to deliver impressive earnings again in the second quarter of 2019. Net income, diluted earnings per share and reported net interest income were all above both the second quarter of 2018 and the first quarter of 2019. Our net interest margin remained steady from the first quarter of 2019 at 3.65%. City’s balance sheet continues to demonstrate strong credit quality at a time when we see some competitors easing underwriting standards in order to make loans of marginal quality. City’s tangible capital of 10.7% grew 33 basis points during the second quarter of 2019, well above our ratio of 9.9% at June 30, 2018, even as we increased our dividend to shareholders over 15% and have repurchased in excess of 235,000 shares of our common stock in the last twelve months. After adjusting for unusual events, non-interest income in the second quarter was strong, and expenses remained well controlled. However, loan balances are down since December 31, 2018, particularly in the commercial loan portfolio. Nevertheless, embedded in that reality is what I think represents some good news. Originations of new loans during the first half of 2019 were very comparable to that of 2018; but loan payoffs in the first half of 2019 have been dramatically above payoff rates in prior years. The increase in commercial loan payoffs can be attributed to several loans that were paid off upon the sale of the underlying commercial real estate collateral. Some of these loans were refinanced by quasi-government entities which provide financing at rates below what most banks can compete with. The good news is that, loan balances within our core markets were very stable with most payoffs being commercial real estate originated in our Columbus or Charlotte markets. Additionally, several loans totaling about $29 million went to competitors when the customers made unacceptable demands for less stringent terms or structure, despite their own weak financial performance and City chose not to acquiesce to their demands and avoided loans that don’t meet our credit standards. As is typical, there are likely to be additional loan payoffs during the
remainder of 2019. However, we currently also have a robust pipeline of new loans which have been approved and scheduled to close in the next several months. While some of these new loans are being originated in Columbus and Charlotte, happily a significant number of these loans are being originated in our core markets, and that is good news. Shareholders might appropriately worry that our core markets aren’t adequately robust, however, our commercial loan pipeline suggests that these core markets in fact remain stable. Looking to the future, we anticipate that commercial loan balances will grow in the third quarter, but by December 31, 2019 may or may not exceed commercial balances on the books as of December 31, 2018.”
Net Interest Income
The Company’s net interest income increased from $40.1 million during the first quarter of 2019 to $40.9 million during the second quarter of 2019. During the second quarter of 2019, the Company’s tax equivalent net interest income increased $0.8 million, or 2.1%, from $40.3 million for the first quarter of 2019 to $41.1 million for the second quarter of 2019. Higher loan yields (10 basis points) increased net interest income by $1.3 million but were partially offset by an increase in rates paid on deposits ($0.6 million). The Company’s reported net interest margin remained steady at 3.65% for the second quarter of 2019 compared to 3.66% for the first quarter of 2019. The reported net interest margin during the first quarter is often positively impacted by the shorter number of days in February which increased City’s net interest margin by 2 basis points in the first quarter of 2019. Excluding the favorable impact of the accretion from fair value adjustments, the net interest margin would have been 3.57% for the quarter ended June 30, 2019 and 3.61% for the quarter ended March 31, 2019.
Credit Quality
The Company’s ratio of nonperforming assets to total loans and other real estate owned improved from 0.43% at March 31, 2019 to 0.41% at June 30, 2019. Total nonperforming assets decreased from $15.4 million at March 31, 2019 to $14.5 million at June 30, 2019. Excluded from this ratio are purchased credit-impaired loans for 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 Company’s initial expectations. Total past due loans decreased from $11.0 million, or 0.31% of total loans outstanding, at March 31, 2019 to $9.5 million, or 0.27% of total loans outstanding, at June 30, 2019.
As a result of the Company’s quarterly analysis of the adequacy of the allowance for loan losses (“ALLL”), the Company recorded a recovery of loan loss provision of $0.6 million in the second quarter of 2019, compared to a recovery of loan loss provision of $2.1 million for the comparable period in 2018 and a recovery of loan loss provision of $0.8 million for the first quarter of 2019. During the periods encompassed in the Company’s historical loss review, charge offs have continued to decline and the Company has recovered significant amounts on loans previously charged off, including a $0.5 million recovery in the second quarter of 2019 from a loan that had previously been charged off during 2014. As a result, the Company’s historical loss rate that is used to compute the allowance not specifically allocated to individual credits has continued to improve and reduced the Company’s ALLL, which resulted in a recovery of loan loss provision in the second quarter of 2019. 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 $17.8 million for the second quarter of 2019 as compared to $15.6 million for the second quarter of 2018. During the second quarter of 2019, the Company reported $0.1 million of unrealized fair value gains on the Company’s equity securities compared to $0.5 million of unrealized fair value gains on the Company’s equity securities in the second quarter of 2018. Exclusive of these gains, non-interest income increased from $15.1 million for the second quarter of 2018 to $17.7 million for the second quarter of 2019. This increase was largely attributable to an increase of $1.0 million, or 21.8%, in bankcard revenues and an increase of $0.5 million, or 6.2%, in service charges, with $0.5 million and $0.4 million, respectively, attributable to the late 2018 acquisitions of Poage Bankshares, Inc. (“Poage”) and Farmers Deposit Bancorp, Inc. (“Farmers Deposit”). In addition, other income increased $0.7 million and bank owned life insurance revenues increased $0.4 million due to death benefit proceeds received in the second quarter of 2019. Other income increased due to the completion of the sale of our Virginia Beach, VA branch to Select Bancorp, Inc. on June 28, 2019. As a result of this transaction, the Company recognized a gain of $0.7 million and deposit balances outstanding fell by $25.7 million.
Non-interest Expenses
During the quarter ended June 30, 2019, the Company incurred an additional $0.5 million of acquisition and integration expenses associated with the acquisitions of Poage and Farmers Deposit. Excluding this expense, non-interest expenses increased $5.3 million (21.3% increase), from $24.9 million in the second quarter of 2018 to $30.2 million in the second quarter of 2019. This increase was primarily due to an increase in salaries and employee benefits of $2.2 million due primarily to the acquisitions of Poage and Farmers Deposit ($1.1 million), annual salary adjustments ($0.6 million), and a nonrecurring health insurance expense ($0.4 million). Other expenses increased $1.4 million due largely to the acquisitions of Poage and Farmers Deposit and a partial write-down of one of the Company’s branches during the second quarter of 2019 ($0.2 million). A portion of the branch’s excess space was donated to a local community charity organization. The Company expects to recover this write-down in approximately 3 years via lower operating costs. Primarily as a result of the acquisitions of Poage and Farmers Deposit, bankcard expenses increased $0.5 million, equipment and software related expenses increased $0.3 million and occupancy related expenses increased $0.3 million from the second quarter of 2018 to the second quarter of 2019.
Balance Sheet Trends
Loans have decreased $68.2 million (1.9%) from December 31, 2018 to $3.52 billion at June 30, 2019. Commercial real estate loans decreased $76.8 million (5.3%) and home equity loans decreased $2.8 million (1.8%). These decreases were partially offset by increases in residential real estate loans of $9.2 million (0.6%) and commercial and industrial loans of $2.5 million (0.9%).
As a result of the sale of the Company’s Virginia Beach branch on June 28, 2019, total deposits fell by $25.7 million. Despite the branch sale, total average depository balances increased $68.1 million, or 1.7%, from the quarter ended March 31, 2019 to the quarter ended June 30, 2019 - reflecting the growth of our large customer base and their depository balances. Average savings deposit balances increased $32.8 million, average noninterest-bearing demand deposit balances increased $32.6 million, and average time deposit balances increased $15.6 million. These increases were partially offset by a decrease in interest-bearing demand deposit balances of $12.8 million.
Income Tax Expense
The Company’s effective income tax rate for the second quarter of 2019 was 20.4% compared to 20.5% for the year ended December 31, 2018, and 20.3% for the quarter ended June 30, 2018.
Capitalization and Liquidity
The Company’s loan to deposit ratio was 87.3% and the loan to asset ratio was 71.2% at June 30, 2019. The Company maintained investment securities totaling 17.8% of assets as of the same date. The Company’s deposit mix is weighted heavily toward checking and saving accounts, which fund 53.9% of assets at June 30, 2019. Time deposits fund 27.7% of assets at June 30, 2019, 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 strongly capitalized. The Company’s tangible equity ratio increased from 10.0% at December 31, 2018 to 10.7% at June 30, 2019. At June 30, 2019, City National Bank’s Leverage Ratio was 9.51%, its Common Equity Tier I ratio was 14.19%, its Tier I Capital ratio was 14.19%, and its Total Risk-Based Capital ratio was 14.63%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.
On June 26, 2019, the Board of Directors of the Company approved a quarterly cash dividend of $0.53 per share payable July 31, 2019, to shareholders of record as of July 15, 2019. During the quarter ended June 30, 2019, the Company repurchased 107,000 common shares at a weighted average price of $74.81 as part of a one million share repurchase plan authorized by the Board of Directors in February 2019. As of June 30, 2019, the Company could repurchase approximately 838,000 additional shares under the plan.
City Holding Company is the parent company of City National Bank of West Virginia. City National Bank operates 95 branches across West Virginia, Kentucky, Virginia, 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. Forward-looking statements express only management’s beliefs regarding future results or events and are subject to inherent uncertainty, risks, and changes in circumstances, many of which are outside of management’s control. Uncertainty, risks, changes in circumstances and other factors could cause the Company’s actual results to differ materially from those projected in the forward-looking statements. Factors that could cause actual results to differ from those discussed in such forward-looking statements include, but are not limited to those set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 under “ITEM 1A Risk Factors” and the following: (1) general economic conditions, especially in the communities and markets in which we conduct our business; (2) credit risk, including risk that negative credit quality trends may lead to a deterioration of asset quality, risk that our allowance for loan losses may not be sufficient to absorb actual losses in our loan portfolio, and risk from concentrations in our loan portfolio; (3) changes in the real estate market, including the value of collateral securing portions of our loan portfolio; (4) changes in the interest rate environment; (5) operational risk, including cybersecurity risk and risk of fraud, data processing system failures, and network breaches; (6) changes in technology and increased competition, including competition from non-bank financial institutions; (7) changes in consumer preferences, spending and borrowing habits, demand for our products and services, and customers’ performance and creditworthiness; (8) difficulty growing loan and deposit balances; (9) our ability to effectively execute our business plan, including with respect to future acquisitions; (10) changes in regulations, laws, taxes, government policies, monetary policies and accounting policies affecting bank holding companies and their subsidiaries; (11) 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; (12) regulatory enforcement actions and adverse legal actions; (13)
difficulty attracting and retaining key employees; (14) the expected cost savings and any revenue synergies from the merger of City Holding Company, City National Bank of West Virginia, Poage Bankshares, Inc., Town Square Bank, Farmers Deposit Bancorp, Inc. and Farmers Deposit Bank may not be fully realized within the expected time frames; (15) the disruption from the merger of City Holding Company, City National Bank of West Virginia, Poage Bankshares, Inc., Town Square Bank, Farmers Deposit Bancorp, Inc. and Farmers Deposit Bank may make it more difficult to maintain relationships with clients, associates, or suppliers; and (16) other economic, competitive, technological, operational, governmental, regulatory, and market factors affecting our operations. 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, 2019 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary June 30, 2019 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 30, | June 30, | | June 30, | June 30, |
| | 2019 | 2019 | 2018 | 2018 | 2018 | | 2019 | 2018 |
| | | | | | | | | |
| Earnings | | | | | | | | |
| Net Interest Income (FTE) | $ | 41,113 |
| $ | 40,274 |
| $ | 36,625 |
| $ | 35,745 |
| $ | 33,760 |
| | $ | 81,387 |
| $ | 66,594 |
|
| Net Income available to common shareholders | 22,751 |
| 21,619 |
| 10,713 |
| 20,692 |
| 20,979 |
| | 44,370 |
| 38,590 |
|
| | | | | | | | | |
| Per Share Data | | | | | | | | |
| Earnings per share available to common shareholders: | | | | | | | | |
| Basic | $ | 1.38 |
| $ | 1.31 |
| $ | 0.68 |
| $ | 1.34 |
| $ | 1.36 |
| | $ | 2.68 |
| $ | 2.49 |
|
| Diluted | 1.38 |
| 1.30 |
| 0.68 |
| 1.33 |
| 1.35 |
| | 2.68 |
| 2.48 |
|
| Weighted average number of shares: | | | | | | | | |
| Basic | 16,368 |
| 16,411 |
| 15,603 |
| 15,340 |
| 15,326 |
| | 16,390 |
| 15,370 |
|
| Diluted | 16,386 |
| 16,429 |
| 15,618 |
| 15,358 |
| 15,345 |
| | 16,408 |
| 15,390 |
|
| Period-end number of shares | 16,397 |
| 16,484 |
| 16,555 |
| 15,449 |
| 15,452 |
| | 16,397 |
| 15,452 |
|
| Cash dividends declared | $ | 0.53 |
| $ | 0.53 |
| $ | 0.53 |
| $ | 0.53 |
| $ | 0.46 |
| | $ | 1.06 |
| $ | 0.92 |
|
| Book value per share (period-end) | 38.84 |
| 37.57 |
| 36.29 |
| 33.14 |
| 32.60 |
| | 38.84 |
| 32.60 |
|
| Tangible book value per share (period-end) | 31.44 |
| 30.18 |
| 28.87 |
| 28.08 |
| 27.53 |
| | 31.44 |
| 27.53 |
|
| Market data: | | | | | | | | |
| High closing price | $ | 82.56 |
| $ | 80.21 |
| $ | 77.94 |
| $ | 82.79 |
| $ | 78.44 |
| | $ | 82.56 |
| $ | 78.44 |
|
| Low closing price | 73.05 |
| 67.58 |
| 66.36 |
| 75.54 |
| 67.95 |
| | 67.58 |
| 65.03 |
|
| Period-end closing price | 76.26 |
| 76.19 |
| 67.59 |
| 76.8 |
| 75.23 |
| | 76.26 |
| 75.23 |
|
| Average daily volume | 53 |
| 54 |
| 66 |
| 54 |
| 60 |
| | 53 |
| 58 |
|
| Treasury share activity: | | | | | | | | |
| Treasury shares repurchased | 107 |
| 55 |
| 69 |
| 7 |
| 10 |
| | 162 |
| 214 |
|
| Average treasury share repurchase price | $ | 74.81 |
| $ | 74.69 |
| $ | 72.89 |
| $ | 77.18 |
| $ | 69.26 |
| | $ | 74.77 |
| $ | 68.54 |
|
| | | | | | | | | |
| Key Ratios (percent) | | | | | | | | |
| Return on average assets | 1.84 | % | 1.76 | % | 0.96 | % | 1.90 | % | 2.00 | % | | 1.80 | % | 1.85 | % |
| Return on average tangible equity | 17.9 | % | 17.7 | % | 9.6 | % | 18.9 | % | 19.9 | % | | 17.8 | % | 18.3 | % |
| Yield on interest earning assets | 4.48 | % | 4.46 | % | 4.32 | % | 4.25 | % | 4.15 | % | | 4.47 | % | 4.10 | % |
| Cost of interest bearing liabilities | 1.09 | % | 1.04 | % | 1.00 | % | 0.92 | % | 0.76 | % | | 1.07 | % | 0.73 | % |
| Net Interest Margin | 3.65 | % | 3.66 | % | 3.55 | % | 3.54 | % | 3.52 | % | | 3.66 | % | 3.54 | % |
| Non-interest income as a percent of total revenue | 30.3 | % | 28.3 | % | 28.8 | % | 30.7 | % | 31.7 | % | | 29.4 | % | 31.3 | % |
| Efficiency Ratio | 50.5 | % | 51.2 | % | 47.6 | % | 48.3 | % | 50.7 | % | | 51.0 | % | 51.5 | % |
| Price/Earnings Ratio (a) | 13.84 |
| 14.58 |
| 24.82 |
| 14.37 |
| 13.88 |
| | 14.21 |
| 15.13 |
|
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
| Capital (period-end) | | | | | | | | |
| Average Shareholders' Equity to Average Assets | 12.76 | % | 12.49 | % | 12.05 | % | 11.81 | % | 11.88 | % | | | |
| Tangible equity to tangible assets | 10.70 | % | 10.37 | % | 10.01 | % | 9.99 | % | 9.90 | % | | | |
| Consolidated City Holding Company risk based capital ratios (b): | | | | | | | | |
| CET I | 15.91 | % | 15.55 | % | 15.07 | % | 15.94 | % | 15.49 | % | | | |
| Tier I | 16.03 | % | 15.67 | % | 15.20 | % | 16.49 | % | 16.05 | % | | | |
| Total | 16.47 | % | 16.13 | % | 15.69 | % | 17.08 | % | 16.65 | % | | | |
| Leverage | 10.70 | % | 10.62 | % | 11.36 | % | 11.01 | % | 11.13 | % | | | |
| City National Bank risk based capital ratios (b): | | | | | | | | |
| CET I | 14.19 | % | 13.89 | % | 13.05 | % | 14.00 | % | 13.26 | % | | | |
| Tier I | 14.19 | % | 13.89 | % | 13.05 | % | 14.00 | % | 13.26 | % | | | |
| Total | 14.63 | % | 14.36 | % | 13.55 | % | 14.59 | % | 13.87 | % | | | |
| Leverage | 9.51 | % | 9.45 | % | 9.81 | % | 9.39 | % | 9.24 | % | | | |
| | | | | | | | | |
| Other | | | | | | | | |
| Branches | 95 |
| 97 |
| 100 |
| 87 |
| 86 |
| | | |
| FTE | 935 |
| 927 |
| 939 |
| 846 |
| 849 |
| | | |
| | | | | | | | | |
| Assets per FTE | $ | 5,284 |
| $ | 5,305 |
| $ | 5,498 |
| $ | 5,226 |
| $ | 5,152 |
| | | |
| Deposits per FTE | 4,312 |
| 4,361 |
| 4,462 |
| 4,070 |
| 4,030 |
| | | |
| | | | | | | | | |
| (a) The price/earnings ratio is computed based on annualized quarterly earnings. |
| (b) June 30, 2019 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, |
| | 2019 | 2019 | 2018 | 2018 | 2018 | | 2019 | 2018 |
| Interest Income | | | | | | | | |
| Interest and fees on loans | $ | 43,174 |
| $ | 42,279 |
| $ | 37,973 |
| $ | 36,872 |
| $ | 34,292 |
| | $ | 85,453 |
| $ | 67,210 |
|
| Interest on investment securities: | | | | | | | | |
| Taxable | 5,732 |
| 5,689 |
| 5,023 |
| 4,216 |
| 4,117 |
| | 11,421 |
| 8,098 |
|
| Tax-exempt | 755 |
| 779 |
| 729 |
| 701 |
| 710 |
| | 1,534 |
| 1,413 |
|
| Interest on deposits in depository institutions | 577 |
| 186 |
| 623 |
| 940 |
| 61 |
| | 763 |
| 103 |
|
| Total Interest Income | 50,238 |
| 48,933 |
| 44,348 |
| 42,729 |
| 39,180 |
| | 99,171 |
| 76,824 |
|
| | | | | | | | | |
| Interest Expense | | | | | | | | |
| Interest on deposits | 8,417 |
| 7,767 |
| 6,656 |
| 5,497 |
| 4,918 |
| | 16,184 |
| 9,244 |
|
| Interest on short-term borrowings | 863 |
| 1,052 |
| 1,061 |
| 1,435 |
| 459 |
| | 1,915 |
| 919 |
|
| Interest on long-term debt | 47 |
| 48 |
| 200 |
| 239 |
| 230 |
| | 95 |
| 441 |
|
| Total Interest Expense | 9,327 |
| 8,867 |
| 7,917 |
| 7,171 |
| 5,607 |
| | 18,194 |
| 10,604 |
|
| Net Interest Income | 40,911 |
| 40,066 |
| 36,431 |
| 35,558 |
| 33,573 |
| | 80,977 |
| 66,220 |
|
| (Recovery of) provision for loan losses | (600 | ) | (849 | ) | (400 | ) | (27 | ) | (2,064 | ) | | (1,449 | ) | (1,882 | ) |
| Net Interest Income After (Recovery of) Provision for Loan Losses | 41,511 |
| 40,915 |
| 36,831 |
| 35,585 |
| 35,637 |
| | 82,426 |
| 68,102 |
|
| | | | | | | | | |
| Non-Interest Income | | | | | | | | |
| Net gains on sale of investment securities | 21 |
| 88 |
| — |
| — |
| — |
| | 109 |
| — |
|
| Unrealized gains (losses) recognized on securities still held | 113 |
| 75 |
| (1,246 | ) | 384 |
| 492 |
| | 188 |
| 772 |
|
| Service charges | 7,778 |
| 7,321 |
| 7,921 |
| 7,598 |
| 7,323 |
| | 15,099 |
| 14,185 |
|
| Bankcard revenue | 5,522 |
| 4,969 |
| 4,826 |
| 4,677 |
| 4,532 |
| | 10,491 |
| 8,866 |
|
| Trust and investment management fee income | 1,699 |
| 1,642 |
| 1,737 |
| 1,579 |
| 1,645 |
| | 3,341 |
| 3,214 |
|
| Bank owned life insurance | 1,132 |
| 1,016 |
| 734 |
| 813 |
| 722 |
| | 2,148 |
| 1,543 |
|
| Other income | 1,560 |
| 814 |
| 734 |
| 702 |
| 897 |
| | 2,374 |
| 1,525 |
|
| Total Non-Interest Income | 17,825 |
| 15,925 |
| 14,706 |
| 15,753 |
| 15,611 |
| | 33,750 |
| 30,105 |
|
| | | | | | | | | |
| Non-Interest Expense | | | | | | | | |
| Salaries and employee benefits | 15,767 |
| 15,243 |
| 14,017 |
| 13,576 |
| 13,551 |
| | 31,010 |
| 26,882 |
|
| Occupancy related expense | 2,598 |
| 2,732 |
| 2,250 |
| 2,323 |
| 2,346 |
| | 5,330 |
| 4,750 |
|
| Equipment and software related expense | 2,223 |
| 2,191 |
| 2,038 |
| 1,965 |
| 1,895 |
| | 4,414 |
| 3,727 |
|
| FDIC insurance expense | 347 |
| 291 |
| 308 |
| 315 |
| 313 |
| | 638 |
| 627 |
|
| Advertising | 920 |
| 869 |
| 530 |
| 808 |
| 849 |
| | 1,789 |
| 1,636 |
|
| Bankcard expenses | 1,534 |
| 1,182 |
| 1,229 |
| 1,134 |
| 1,064 |
| | 2,716 |
| 2,139 |
|
|
| | | | | | | | | | | | | | | | | | | | | | |
| Postage, delivery, and statement mailings | 545 |
| 624 |
| 527 |
| 537 |
| 515 |
| | 1,169 |
| 1,093 |
|
| Office supplies | 399 |
| 386 |
| 313 |
| 364 |
| 329 |
| | 785 |
| 643 |
|
| Legal and professional fees | 605 |
| 521 |
| 469 |
| 453 |
| 475 |
| | 1,126 |
| 925 |
|
| Telecommunications | 597 |
| 726 |
| 401 |
| 408 |
| 441 |
| | 1,323 |
| 941 |
|
| Repossessed asset losses, net of expenses | 253 |
| 216 |
| 207 |
| 156 |
| 112 |
| | 469 |
| 482 |
|
| Merger related expenses | 547 |
| 250 |
| 13,015 |
| 242 |
| — |
| | 797 |
| — |
|
| Other expenses | 4,437 |
| 4,180 |
| 2,874 |
| 2,759 |
| 3,021 |
| | 8,617 |
| 6,009 |
|
| Total Non-Interest Expense | 30,772 |
| 29,411 |
| 38,178 |
| 25,040 |
| 24,911 |
| | 60,183 |
| 49,854 |
|
| Income Before Income Taxes | 28,564 |
| 27,429 |
| 13,359 |
| 26,298 |
| 26,337 |
| | 55,993 |
| 48,353 |
|
| Income tax expense | 5,813 |
| 5,810 |
| 2,646 |
| 5,606 |
| 5,358 |
| | 11,623 |
| 9,763 |
|
| Net Income Available to Common Shareholders | $ | 22,751 |
| $ | 21,619 |
| $ | 10,713 |
| $ | 20,692 |
| $ | 20,979 |
| | $ | 44,370 |
| $ | 38,590 |
|
| | | | | | | | | |
| Distributed earnings allocated to common shareholders | $ | 8,615 |
| $ | 8,661 |
| $ | 8,695 |
| $ | 8,109 |
| $ | 7,039 |
| | $ | 17,231 |
| $ | 14,077 |
|
| Undistributed earnings allocated to common shareholders | 13,939 |
| 12,772 |
| 1,928 |
| 12,382 |
| 13,729 |
| | 26,757 |
| 24,136 |
|
| Net earnings allocated to common shareholders | $ | 22,554 |
| $ | 21,433 |
| $ | 10,623 |
| $ | 20,491 |
| $ | 20,768 |
| | $ | 43,988 |
| $ | 38,213 |
|
| | | | | | | | | |
| | | | | | | | | |
| Average common shares outstanding | 16,368 |
| 16,411 |
| 15,603 |
| 15,340 |
| 15,326 |
| | 16,390 |
| 15,370 |
|
| Shares for diluted earnings per share | 16,386 |
| 16,429 |
| 15,618 |
| 15,358 |
| 15,345 |
| | 16,408 |
| 15,390 |
|
| | | | | | | | | |
| Basic earnings per common share | $ | 1.38 |
| $ | 1.31 |
| $ | 0.68 |
| $ | 1.34 |
| $ | 1.36 |
| | $ | 2.68 |
| $ | 2.49 |
|
| Diluted earnings per common share | $ | 1.38 |
| $ | 1.30 |
| $ | 0.68 |
| $ | 1.33 |
| $ | 1.35 |
| | $ | 2.68 |
| $ | 2.48 |
|
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000s)
|
| | | | | | | | | | | | | | | |
| | (Unaudited) | (Unaudited) | | (Unaudited) | (Unaudited) |
| | June 30, | March 31, | December 31, | September 30, | June 30, |
| | 2019 | 2019 | 2018 | 2018 | 2018 |
| Assets | | | | | |
| Cash and due from banks | $ | 53,373 |
| $ | 50,522 |
| $ | 55,016 |
| $ | 49,806 |
| $ | 43,466 |
|
| Interest-bearing deposits in depository institutions | 115,346 |
| 93,328 |
| 67,975 |
| 256,104 |
| 222,058 |
|
| Cash and cash equivalents | 168,719 |
| 143,850 |
| 122,991 |
| 305,910 |
| 265,524 |
|
| | | | | | |
| Investment securities available-for-sale, at fair value | 797,734 |
| 755,081 |
| 723,254 |
| 563,003 |
| 552,603 |
|
| Investment securities held-to-maturity, at amortized cost | 53,362 |
| 55,326 |
| 60,827 |
| 57,812 |
| 60,030 |
|
| Other securities | 26,517 |
| 26,182 |
| 28,810 |
| 28,875 |
| 28,920 |
|
| Total investment securities | 877,613 |
| 836,589 |
| 812,891 |
| 649,690 |
| 641,553 |
|
| | | | | | |
| Gross loans | 3,519,367 |
| 3,559,322 |
| 3,587,608 |
| 3,146,697 |
| 3,155,468 |
|
| Allowance for loan losses | (13,795 | ) | (14,646 | ) | (15,966 | ) | (16,311 | ) | (16,876 | ) |
| Net loans | 3,505,572 |
| 3,544,676 |
| 3,571,642 |
| 3,130,386 |
| 3,138,592 |
|
| | | | | | |
| Bank owned life insurance | 113,855 |
| 114,256 |
| 113,544 |
| 105,372 |
| 104,773 |
|
| Premises and equipment, net | 78,263 |
| 78,747 |
| 78,383 |
| 72,484 |
| 72,482 |
|
| Accrued interest receivable | 12,719 |
| 13,657 |
| 12,424 |
| 11,449 |
| 9,348 |
|
| Net deferred tax assets | 8,835 |
| 12,734 |
| 17,338 |
| 15,653 |
| 14,528 |
|
| Intangible assets | 121,322 |
| 121,790 |
| 122,848 |
| 78,215 |
| 78,342 |
|
| Other assets | 53,569 |
| 51,309 |
| 46,951 |
| 51,643 |
| 49,241 |
|
| Total Assets | $ | 4,940,467 |
| $ | 4,917,608 |
| $ | 4,899,012 |
| $ | 4,420,802 |
| $ | 4,374,383 |
|
| | | | | | |
| Liabilities | | | | | |
| Deposits: | | | | | |
| Noninterest-bearing | $ | 798,056 |
| $ | 793,633 |
| $ | 789,119 |
| $ | 672,042 |
| $ | 684,614 |
|
| Interest-bearing: | | | | | |
| Demand deposits | 891,742 |
| 879,279 |
| 899,568 |
| 802,490 |
| 785,933 |
|
| Savings deposits | 974,847 |
| 988,182 |
| 934,218 |
| 821,390 |
| 817,547 |
|
| Time deposits | 1,366,991 |
| 1,381,913 |
| 1,352,654 |
| 1,147,709 |
| 1,133,684 |
|
| Total deposits | 4,031,636 |
| 4,043,007 |
| 3,975,559 |
| 3,443,631 |
| 3,421,778 |
|
| Short-term borrowings | | | | | |
| Federal Funds purchased | — |
| — |
| 40,000 |
| 170,000 |
| 181,375 |
|
| Customer repurchase agreements | 207,033 |
| 194,683 |
| 221,911 |
| 220,124 |
| 196,635 |
|
| Long-term debt | 4,054 |
| 4,053 |
| 4,053 |
| 16,495 |
| 16,495 |
|
| Other liabilities | 60,836 |
| 56,624 |
| 56,725 |
| 58,526 |
| 54,346 |
|
| Total Liabilities | 4,303,559 |
| 4,298,367 |
| 4,298,248 |
| 3,908,776 |
| 3,870,629 |
|
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
|
| | | | | | | | | | | | | | | |
| Stockholders' Equity | | | | | |
| Preferred stock | — |
| — |
| — |
| — |
| — |
|
| Common stock | 47,619 |
| 47,619 |
| 47,619 |
| 47,619 |
| 47,619 |
|
| Capital surplus | 169,374 |
| 170,215 |
| 169,555 |
| 140,450 |
| 140,091 |
|
| Retained earnings | 512,911 |
| 498,847 |
| 485,967 |
| 484,017 |
| 471,515 |
|
| Cost of common stock in treasury | (98,084 | ) | (91,589 | ) | (87,895 | ) | (136,783 | ) | (136,520 | ) |
| Accumulated other comprehensive loss: | | | | | |
| Unrealized gain (loss) on securities available-for-sale | 10,959 |
| 20 |
| (8,611 | ) | (18,244 | ) | (13,918 | ) |
| Underfunded pension liability | (5,871 | ) | (5,871 | ) | (5,871 | ) | (5,033 | ) | (5,033 | ) |
| Total Accumulated Other Comprehensive Loss | 5,088 |
| (5,851 | ) | (14,482 | ) | (23,277 | ) | (18,951 | ) |
| Total Stockholders' Equity | 636,908 |
| 619,241 |
| 600,764 |
| 512,026 |
| 503,754 |
|
| Total Liabilities and Stockholders' Equity | $ | 4,940,467 |
| $ | 4,917,608 |
| $ | 4,899,012 |
| $ | 4,420,802 |
| $ | 4,374,383 |
|
| | | | | | |
| Regulatory Capital | | | | | |
| Total CET 1 capital | $ | 511,344 |
| $ | 504,148 |
| $ | 492,526 |
| $ | 457,580 |
| $ | 444,869 |
|
| Total tier 1 capital | 515,344 |
| 508,148 |
| 496,526 |
| 473,580 |
| 460,869 |
|
| Total risk-based capital | 529,230 |
| 523,053 |
| 512,801 |
| 490,307 |
| 478,255 |
|
| Total risk-weighted assets | 3,214,153 |
| 3,241,989 |
| 3,267,357 |
| 2,871,241 |
| 2,871,561 |
|
CITY HOLDING COMPANY AND SUBSIDIARIES
Loan Portfolio
(Unaudited) ($ in 000s)
|
| | | | | | | | | | | | | | | |
| | June 30, | March 31, | December 31, | September 30, | June 30, |
| | 2019 | 2019 | 2018 | 2018 | 2018 |
| | | | | | |
Residential real estate (1) | $ | 1,644,494 |
| $ | 1,625,647 |
| $ | 1,635,338 |
| $ | 1,485,823 |
| $ | 1,472,916 |
|
| Home equity - junior liens | 150,676 |
| 152,251 |
| 153,496 |
| 143,540 |
| 139,245 |
|
| Commercial and industrial | 288,803 |
| 289,327 |
| 286,314 |
| 213,815 |
| 213,687 |
|
Commercial real estate (2) | 1,378,116 |
| 1,436,190 |
| 1,454,942 |
| 1,268,052 |
| 1,294,489 |
|
| Consumer | 53,356 |
| 52,483 |
| 51,190 |
| 31,869 |
| 31,137 |
|
| DDA overdrafts | 3,922 |
| 3,424 |
| 6,328 |
| 3,598 |
| 3,994 |
|
| Gross Loans | $ | 3,519,367 |
| $ | 3,559,322 |
| $ | 3,587,608 |
| $ | 3,146,697 |
| $ | 3,155,468 |
|
| | | | | | |
| Construction loans included in: | | | | | |
| (1) - Residential real estate loans | $ | 23,673 |
| $ | 22,635 |
| $ | 21,834 |
| $ | 17,628 |
| $ | 21,662 |
|
| (2) - Commercial real estate loans | 43,432 |
| 56,282 |
| 37,869 |
| 24,110 |
| 28,567 |
|
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, |
| | 2019 | 2019 | 2018 | 2018 | 2018 | | 2019 | 2018 |
| Allowance for Loan Losses | | | | | | | | |
| Balance at beginning of period | $ | 14,646 |
| $ | 15,966 |
| $ | 16,311 |
| $ | 16,876 |
| $ | 18,381 |
| | $ | 15,966 |
| $ | 18,836 |
|
| | | | | | | | | |
| Charge-offs: | | | | | | | | |
| Commercial and industrial | (51 | ) | — |
| (9 | ) | — |
| (385 | ) | | (51 | ) | (724 | ) |
| Commercial real estate | (133 | ) | (45 | ) | (20 | ) | (74 | ) | (118 | ) | | (178 | ) | (275 | ) |
| Residential real estate | (303 | ) | (328 | ) | (218 | ) | (244 | ) | (96 | ) | | (631 | ) | (220 | ) |
| Home equity | (71 | ) | (46 | ) | — |
| (108 | ) | (33 | ) | | (117 | ) | (111 | ) |
| Consumer | (111 | ) | (185 | ) | (209 | ) | (206 | ) | (255 | ) | | (296 | ) | (354 | ) |
| DDA overdrafts | (588 | ) | (625 | ) | (725 | ) | (704 | ) | (636 | ) | | (1,213 | ) | (1,272 | ) |
| Total charge-offs | (1,257 | ) | (1,229 | ) | (1,181 | ) | (1,336 | ) | (1,523 | ) | | (2,486 | ) | (2,956 | ) |
| | | | | | | | | |
| Recoveries: | | | | | | | | |
| Commercial and industrial | 5 |
| 135 |
| 528 |
| 147 |
| 1,476 |
| | 140 |
| 1,478 |
|
| Commercial real estate | 575 |
| 32 |
| 194 |
| 166 |
| 149 |
| | 607 |
| 372 |
|
| Residential real estate | 50 |
| 75 |
| 92 |
| 116 |
| 53 |
| | 125 |
| 159 |
|
| Home equity | — |
| — |
| — |
| — |
| — |
| | — |
| — |
|
| Consumer | 46 |
| 97 |
| 36 |
| 25 |
| 59 |
| | 143 |
| 105 |
|
| DDA overdrafts | 330 |
| 419 |
| 386 |
| 344 |
| 345 |
| | 749 |
| 764 |
|
| Total recoveries | 1,006 |
| 758 |
| 1,236 |
| 798 |
| 2,082 |
| | 1,764 |
| 2,878 |
|
| | | | | | | | | |
| Net (charge-offs)/recoveries | (251 | ) | (471 | ) | 55 |
| (538 | ) | 559 |
| | (722 | ) | (78 | ) |
| (Recovery of) provision for loan losses | (600 | ) | (849 | ) | (400 | ) | (27 | ) | (2,064 | ) | | (1,449 | ) | (1,882 | ) |
| Balance at end of period | $ | 13,795 |
| $ | 14,646 |
| $ | 15,966 |
| $ | 16,311 |
| $ | 16,876 |
| | $ | 13,795 |
| $ | 16,876 |
|
| | | | | | | | | |
| Loans outstanding | $ | 3,519,367 |
| $ | 3,559,322 |
| $ | 3,587,608 |
| $ | 3,146,697 |
| $ | 3,155,468 |
| | | |
| Allowance as a percent of loans outstanding | 0.39 | % | 0.41 | % | 0.45 | % | 0.52 | % | 0.53 | % | | | |
| Allowance as a percent of non-performing loans | 115.3 | % | 119.9 | % | 107.8 | % | 142.1 | % | 127.6 | % | | | |
| | | | | | | | | |
| Average loans outstanding | $ | 3,539,077 |
| $ | 3,576,984 |
| $ | 3,252,939 |
| $ | 3,149,320 |
| $ | 3,138,146 |
| | $ | 3,557,927 |
| $ | 3,135,987 |
|
| Net (recoveries) charge-offs (annualized) as a percent of average loans outstanding | 0.03 | % | 0.05 | % | (0.01 | )% | 0.07 | % | (0.07 | )% | | 0.04 | % | — | % |
CITY HOLDING COMPANY AND SUBSIDIARIES
Asset Quality Information, Continued
(Unaudited) ($ in 000s)
|
| | | | | | | | | | | | | | | |
| | June 30, | March 31, | December 31, | September 30, | June 30, |
| | 2019 | 2019 | 2018 | 2018 | 2018 |
| Nonaccrual Loans | | | | | |
| Residential real estate | $ | 2,354 |
| $ | 3,263 |
| $ | 4,275 |
| $ | 3,029 |
| $ | 3,783 |
|
| Home equity | 161 |
| 41 |
| 138 |
| — |
| 168 |
|
| Commercial and industrial | 2,149 |
| 1,526 |
| 1,676 |
| 818 |
| 863 |
|
| Commercial real estate | 7,204 |
| 7,282 |
| 8,461 |
| 7,599 |
| 7,707 |
|
| Consumer | — |
| 1 |
| 1 |
| 1 |
| 557 |
|
| Total nonaccrual loans | 11,868 |
| 12,113 |
| 14,551 |
| 11,447 |
| 13,078 |
|
| Accruing loans past due 90 days or more | 94 |
| 106 |
| 257 |
| 35 |
| 145 |
|
| Total non-performing loans | 11,962 |
| 12,219 |
| 14,808 |
| 11,482 |
| 13,223 |
|
| Other real estate owned | 2,581 |
| 3,186 |
| 4,608 |
| 4,259 |
| 3,636 |
|
| Total non-performing assets | $ | 14,543 |
| $ | 15,405 |
| $ | 19,416 |
| $ | 15,741 |
| $ | 16,859 |
|
| | | | | | |
| Non-performing assets as a percent of loans and other real estate owned | 0.41 | % | 0.43 | % | 0.54 | % | 0.50 | % | 0.53 | % |
| | | | | | |
| Past Due Loans | | | | | |
| Residential real estate | $ | 7,302 |
| $ | 7,972 |
| $ | 9,991 |
| $ | 4,657 |
| $ | 5,998 |
|
| Home equity | 322 |
| 720 |
| 1,275 |
| 468 |
| 583 |
|
| Commercial and industrial | 166 |
| 101 |
| 497 |
| 187 |
| 624 |
|
| Commercial real estate | 1,026 |
| 1,414 |
| 585 |
| 934 |
| 402 |
|
| Consumer | 172 |
| 264 |
| 295 |
| 39 |
| 34 |
|
| DDA overdrafts | 487 |
| 535 |
| 488 |
| 582 |
| 525 |
|
| Total past due loans | $ | 9,475 |
| $ | 11,006 |
| $ | 13,131 |
| $ | 6,867 |
| $ | 8,166 |
|
| | | | | | |
| Total past due loans as a percent of loans outstanding | 0.27 | % | 0.31 | % | 0.37 | % | 0.22 | % | 0.26 | % |
| | | | | | |
| Troubled Debt Restructurings ("TDRs") (period-end) | | | | | |
| Accruing: | | | | | |
| Residential real estate | $ | 22,373 |
| $ | 23,481 |
| $ | 23,521 |
| $ | 20,589 |
| $ | 20,731 |
|
| Home equity | 3,062 |
| 3,018 |
| 3,030 |
| 2,941 |
| 3,196 |
|
| Commercial and industrial | 83 |
| 89 |
| 98 |
| 108 |
| 119 |
|
| Commercial real estate | 8,044 |
| 8,164 |
| 8,205 |
| 8,231 |
| 8,279 |
|
| Consumer | — |
| — |
| — |
| — |
| — |
|
| Total accruing TDRs | $ | 33,562 |
| $ | 34,752 |
| $ | 34,854 |
| $ | 31,869 |
| $ | 32,325 |
|
|
| | | | | | | | | | | | | | | |
| Non-Accruing | | | | | |
| Residential real estate | $ | 464 |
| $ | 658 |
| 175 |
| $ | 307 |
| $ | 256 |
|
| Home equity | 5 |
| 5 |
| — |
| 40 |
| 40 |
|
| Commercial and industrial | — |
| — |
| — |
| — |
| — |
|
| Commercial real estate | — |
| — |
| — |
| — |
| — |
|
| Consumer | — |
| — |
| — |
| — |
| — |
|
| Total non-accruing TDRs | $ | 469 |
| $ | 663 |
| $ | 175 |
| $ | 347 |
| $ | 296 |
|
| | | | | | |
| Total TDRs | $ | 34,752 |
| $ | 34,854 |
| $ | 31,869 |
| $ | 32,325 |
| $ | 32,546 |
|
| | | | | | |
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended |
| | June 30, 2019 | March 31, 2019 | June 30, 2018 |
| | Average | | Yield/ | Average | | Yield/ | Average | | Yield/ |
| | Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate |
| Assets: | | | | | | | | | |
Loan portfolio (1): | | | | | | | | | |
Residential real estate (2) | $ | 1,783,718 |
| $ | 20,454 |
| 4.60 | % | $ | 1,806,233 |
| $ | 20,451 |
| 4.59 | % | $ | 1,602,103 |
| $ | 16,951 |
| 4.24 | % |
Commercial, financial, and agriculture (2) | 1,698,186 |
| 21,658 |
| 5.12 | % | 1,715,524 |
| 20,845 |
| 4.93 | % | 1,501,618 |
| 16,578 |
| 4.43 | % |
Installment loans to individuals (2), (3) | 57,173 |
| 889 |
| 6.24 | % | 55,227 |
| 840 |
| 6.17 | % | 34,425 |
| 516 |
| 6.01 | % |
Previously securitized loans (4) | *** | 174 |
| *** | *** | 144 |
| *** | *** | 246 |
| *** |
| Total loans | 3,539,077 |
| 43,175 |
| 4.89 | % | 3,576,984 |
| 42,280 |
| 4.79 | % | 3,138,146 |
| 34,291 |
| 4.38 | % |
| Securities: | | | | | | | | | |
| Taxable | 749,346 |
| 5,732 |
| 3.07 | % | 714,413 |
| 5,689 |
| 3.23 | % | 541,990 |
| 4,117 |
| 3.05 | % |
Tax-exempt (5) | 100,348 |
| 956 |
| 3.82 | % | 102,375 |
| 986 |
| 3.91 | % | 91,135 |
| 898 |
| 3.95 | % |
| Total securities | 849,694 |
| 6,688 |
| 3.16 | % | 816,788 |
| 6,675 |
| 3.31 | % | 633,125 |
| 5,015 |
| 3.18 | % |
| Deposits in depository institutions | 124,732 |
| 577 |
| 1.86 | % | 72,723 |
| 186 |
| 1.04 | % | 29,164 |
| 61 |
| 0.84 | % |
| Total interest-earning assets | 4,513,503 |
| 50,440 |
| 4.48 | % | 4,466,495 |
| 49,141 |
| 4.46 | % | 3,800,435 |
| 39,367 |
| 4.15 | % |
| Cash and due from banks | 52,922 |
| | | 52,561 |
| | | 92,426 |
| | |
| Premises and equipment, net | 79,116 |
| | | 78,220 |
| | | 72,889 |
| | |
| Goodwill and intangible assets | 121,628 |
| | | 122,605 |
| | | 78,420 |
| | |
| Other assets | 189,618 |
| | | 195,954 |
| | | 177,299 |
| | |
| Less: Allowance for loan losses | (15,057 | ) | | | (16,182 | ) | | | (18,215 | ) | | |
| Total assets | $ | 4,941,730 |
| | | $ | 4,899,653 |
| | | $ | 4,203,254 |
| | |
| | | | | | | | | | |
| Liabilities: | | | | | | | | | |
| Interest-bearing demand deposits | $ | 874,039 |
| $ | 909 |
| 0.42 | % | $ | 886,833 |
| $ | 933 |
| 0.43 | % | $ | 787,554 |
| $ | 445 |
| 0.23 | % |
| Savings deposits | 980,089 |
| 1,236 |
| 0.51 | % | 947,337 |
| 1,066 |
| 0.46 | % | 817,187 |
| 453 |
| 0.22 | % |
Time deposits (2) | 1,384,017 |
| 6,272 |
| 1.82 | % | 1,368,465 |
| 5,768 |
| 1.71 | % | 1,123,261 |
| 4,020 |
| 1.44 | % |
| Short-term borrowings | 199,648 |
| 863 |
| 1.73 | % | 237,616 |
| 1,052 |
| 1.80 | % | 208,939 |
| 459 |
| 0.88 | % |
| Long-term debt | 4,053 |
| 47 |
| 4.65 | % | 4,053 |
| 48 |
| 4.80 | % | 16,495 |
| 230 |
| 5.59 | % |
| Total interest-bearing liabilities | 3,441,846 |
| 9,327 |
| 1.09 | % | 3,444,304 |
| 8,867 |
| 1.04 | % | 2,953,436 |
| 5,607 |
| 0.76 | % |
| Noninterest-bearing demand deposits | 820,689 |
| | | 788,109 |
| | | 704,546 |
| | |
| Other liabilities | 48,803 |
| | | 55,372 |
| | | 45,933 |
| | |
| Stockholders' equity | 630,392 |
| | | 611,868 |
| | | 499,339 |
| | |
| Total liabilities and | | | | | | | | | |
| stockholders' equity | $ | 4,941,730 |
| | | $ | 4,899,653 |
| | | $ | 4,203,254 |
| | |
| Net interest income | | $ | 41,113 |
| | | $ | 40,274 |
| | | $ | 33,760 |
| |
| Net yield on earning assets | | | 3.65 | % | | | 3.66 | % | | | 3.56 | % |
| | | | | | | | | | |
| (1) For purposes of this table, non-accruing loans have been included in average balances and the following amounts (in thousands) of loan fees have been included in interest income: |
| | | | | | | | | | |
| Loan fees | | $ | 481 |
| | | $ | 134 |
| | | $ | 102 |
| |
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| (2) Included in the above table are the following amounts (in thousands) for the accretion of the fair value adjustments related to the Company's acquisitions: |
| Residential real estate | | $ | 83 |
| | | $ | 32 |
| | | $ | 130 |
| |
| Commercial, financial, and agriculture | | 668 |
| | | 190 |
| | | 238 |
| |
| Installment loans to individuals | | (6 | ) | | | (6 | ) | | | 4 |
| |
| Time deposits | | 196 |
| | | 256 |
| | | — |
| |
| | | $ | 941 |
| | | $ | 472 |
| | | $ | 372 |
| |
| | | | | | | | | | |
| (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 $0. |
| (5) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 21%. |
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)
|
| | | | | | | | | | | | | | | | |
| | Six Months Ended June, |
| | June 30, 2019 | June 30, 2018 |
| | Average | | Yield/ | Average | | Yield/ |
| | Balance | Interest | Rate | Balance | Interest | Rate |
| Assets: | | | | | | |
Loan portfolio (1): | | | | | | |
Residential real estate (2) | $ | 1,791,263 |
| $ | 40,904 |
| 4.60 | % | $ | 1,601,554 |
| $ | 33,431 |
| 4.21 | % |
Commercial, financial, and agriculture (2) | 1,710,281 |
| 42,503 |
| 5.01 | % | 1,500,698 |
| 32,186 |
| 4.33 | % |
Installment loans to individuals (2), (3) | 56,383 |
| 1,728 |
| 6.18 | % | 33,735 |
| 1,020 |
| 6.10 | % |
Previously securitized loans (4) | *** | 317 |
| *** | *** | 573 |
| *** |
| Total loans | 3,557,927 |
| 85,452 |
| 4.84 | % | 3,135,987 |
| 67,210 |
| 4.32 | % |
| Securities: | | | | | | |
| Taxable | 731,976 |
| 11,420 |
| 3.15 | % | 539,366 |
| 8,098 |
| 3.03 | % |
Tax-exempt (5) | 101,356 |
| 1,942 |
| 3.86 | % | 91,427 |
| 1,789 |
| 3.95 | % |
| Total securities | 833,332 |
| 13,362 |
| 3.23 | % | 630,793 |
| 9,887 |
| 3.16 | % |
| Deposits in depository institutions | 98,871 |
| 767 |
| 1.56 | % | 29,405 |
| 102 |
| 0.70 | % |
| Total interest-earning assets | 4,490,130 |
| 99,581 |
| 4.47 | % | 3,796,186 |
| 77,199 |
| 4.10 | % |
| Cash and due from banks | 52,743 |
| | | 82,010 |
| | |
| Premises and equipment, net | 78,671 |
| | | 72,803 |
| | |
| Goodwill and intangible assets | 122,114 |
| | | 78,483 |
| | |
| Other assets | 192,768 |
| | | 172,265 |
| | |
| Less: Allowance for loan losses | (15,617 | ) | | | (18,814 | ) | | |
| Total assets | $ | 4,920,809 |
| | | $ | 4,182,933 |
| | |
| | | | | | | |
| Liabilities: | | | | | | |
| Interest-bearing demand deposits | $ | 880,401 |
| $ | 1,842 |
| 0.42 | % | $ | 785,041 |
| $ | 802 |
| 0.21 | % |
| Savings deposits | 963,804 |
| 2,302 |
| 0.48 | % | 809,389 |
| 794 |
| 0.20 | % |
Time deposits (2) | 1,376,284 |
| 12,040 |
| 1.76 | % | 1,109,784 |
| 7,649 |
| 1.39 | % |
| Short-term borrowings | 218,527 |
| 1,915 |
| 1.77 | % | 222,696 |
| 919 |
| 0.83 | % |
| Long-term debt | 4,053 |
| 95 |
| 4.73 | % | 16,495 |
| 441 |
| 5.39 | % |
| Total interest-bearing liabilities | 3,443,069 |
| 18,194 |
| 1.07 | % | 2,943,405 |
| 10,605 |
| 0.73 | % |
| Noninterest-bearing demand deposits | 804,489 |
| | | 692,912 |
| | |
| Other liabilities | 52,070 |
| | | 46,178 |
| | |
| Stockholders' equity | 621,181 |
| | | 500,438 |
| | |
| Total liabilities and | | | | | | |
| stockholders' equity | $ | 4,920,809 |
| | | $ | 4,182,933 |
| | |
| Net interest income | | $ | 81,387 |
| | | $ | 66,594 |
| |
| Net yield on earning assets | | | 3.66 | % | | | 3.54 | % |
| | | | | | | |
| (1) For purposes of this table, non-accruing loans have been included in average balances and the following amounts (in thousands) of loan fees have been included in interest income: |
| | | | | | | |
| Loan fees | | $ | 615 |
| | | $ | 225 |
| |
| | | | | | | |
|
| | | | | | | | | | | | | | | | |
| | | | | | | |
| (2) Included in the above table are the following amounts (in thousands) for the accretion of the fair value adjustments related to the Company's acquisitions: |
| | | | | | | |
| Residential real estate | | $ | 115 |
| | | $ | 240 |
| |
| Commercial, financial, and agriculture | | 858 |
| | | 388 |
| |
| Installment loans to individuals | | (12 | ) | | | 14 |
| |
| Time deposits | | 452 |
| | | — |
| |
| | | $ | 1,413 |
| | | $ | 642 |
| |
| | | | | | | |
| (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 $0. |
| (5) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 21%. |
| |
CITY HOLDING COMPANY AND SUBSIDIARIES
Non-GAAP Reconciliations
(Unaudited) ($ in 000s)
|
| | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30, | March 31, | December 31, | September 30, | June 30, | | June 30, | June 30, |
| | 2019 | 2019 | 2018 | 2018 | 2018 | | 2019 | 2018 |
| Net Interest Income/Margin | | | | | | | | |
| Net interest income ("GAAP") | $ | 40,911 |
| $ | 40,066 |
| $ | 36,431 |
| $ | 35,558 |
| $ | 33,573 |
| | $ | 80,977 |
| $ | 66,220 |
|
| Taxable equivalent adjustment | 202 |
| 208 |
| 194 |
| 187 |
| 187 |
| | 410 |
| 374 |
|
| Net interest income, fully taxable equivalent | $ | 41,113 |
| $ | 40,274 |
| $ | 36,625 |
| $ | 35,745 |
| $ | 33,760 |
| | $ | 81,387 |
| $ | 66,594 |
|
| | | | | | | | | |
| Average interest earning assets | $ | 4,513,503 |
| $ | 4,466,495 |
| $ | 4,089,984 |
| $ | 4,005,067 |
| $ | 3,800,435 |
| | $ | 4,490,130 |
| $ | 3,796,186 |
|
| | | | | | | | | |
| Net Interest Margin | 3.65 | % | 3.66 | % | 3.55 | % | 3.54 | % | 3.56 | % | | 3.66 | % | 3.54 | % |
| Accretion related to fair value adjustments | (0.08 | )% | (0.05 | )% | (0.05 | )% | (0.03 | )% | (0.04 | )% | | (0.06 | )% | (0.03 | )% |
| Net Interest Margin (excluding accretion) | 3.57 | % | 3.61 | % | 3.50 | % | 3.51 | % | 3.52 | % | | 3.59 | % | 3.50 | % |
| | | | | | | | | |
| Tangible Equity Ratio (period end) | | | | | | | | |
| Equity to assets ("GAAP") | 12.89 | % | 12.59 | % | 12.26 | % | 11.58 | % | 11.52 | % | | | |
| Effect of goodwill and other intangibles, net | (2.19 | )% | (2.22 | )% | (2.26 | )% | (1.59 | )% | (1.61 | )% | | | |
| Tangible common equity to tangible assets | 10.70 | % | 10.37 | % | 10.01 | % | 9.99 | % | 9.90 | % | | | |
| | | | | | | | | |
| Return on tangible equity ("GAAP") | 17.9 | % | 17.7 | % | 9.6 | % | 18.9 | % | 19.9 | % | | 17.8 | % | 18.3 | % |
| Impact of merger related expenses | 0.3 | % | 0.1 | % | 9.2 | % | 0.3 | % | — | % | | 0.2 | % | — | % |
| Return on tangible equity, excluding merger related expenses | 18.2 | % | 17.8 | % | 18.8 | % | 19.2 | % | 19.9 | % | | 18.0 | % | 18.3 | % |
| | | | | | | | | |
| Return on assets ("GAAP") | 1.84 | % | 1.76 | % | 0.96 | % | 1.90 | % | 2.00 | % | | 1.80 | % | 1.85 | % |
| Impact of merger related expenses | 0.04 | % | 0.02 | % | 0.92 | % | 0.02 | % | — | % | | 0.03 | % | — | % |
| Return on Assets, excluding merger related expenses | 1.88 | % | 1.78 | % | 1.88 | % | 1.92 | % | 2.00 | % | | 1.83 | % | 1.85 | % |
| | | | | | | | | |
| Effective Income Tax Rate | | | | | | | | |
| Effective tax rate ("GAAP") | 20.4 | % | 21.2 | % | 19.8 | % | 21.3 | % | 20.3 | % | | 20.8 | % | 20.2 | % |
| Impact of FIN 48 adjustments | — | % | — | % | 2.97 | % | — | % | — | % | | — | % | — | % |
| Effective tax rate, excluding FIN 48 adjustments | 20.4 | % | 21.2 | % | 22.8 | % | 21.3 | % | 20.3 | % | | 20.8 | % | 20.2 | % |
