Exhibit 99
NEWS RELEASE
For Immediate Release
January 20, 2004
For Further Information Contact:
Gerald R. Francis, CEO
(304) 769-1101
City Holding Company Announces 35% Increase in Annual Earnings
and Resolution of Litigation
Charleston, West Virginia – City Holding Company, “the Company” (NASDAQ:CHCO), a $2.2 billion bank holding company headquartered in Charleston, today announced net income for the fourth quarter 2003 of $10.7 million, or diluted earnings per share of $0.63, compared to $9.4 million, or $0.55 per diluted share, in the fourth quarter of 2002, representing a 13.4% increase in net income and a 14.6% increase in diluted earnings per share. During the fourth quarter of 2003, the Company reported a Return on Assets of 2.08%, a Return on Equity of 22.8%, Net Interest Margin of 4.74%, and an Efficiency Ratio of 56.2%. For the full year, the Company reported net income of $43.7 million, or diluted earnings per share of $2.58 compared with net income of $32.5 million, or $1.90 per diluted share during 2002, representing a 35% increase. For the full year, the Company’s Return on Assets was 2.18%, Return on Equity was 24.5%, Net Interest Margin was 4.65%, and the Efficiency Ratio was 52.1%, placing the Company among the most profitable banks in the United States.
The Company also announced that a tentative settlement has been reached in litigation brought on December 31, 2001 in a derivative action against certain current and former directors and former executive officers of City Holding Company and City National Bank seeking to recover alleged damages on behalf of City Holding Company and City National Bank. After approved by the Circuit Court for Kanawha County, and subject to shareholder notification and final determination of expenses and attorney fees, City expects to receive a settlement from its insurer that will contribute approximately $0.16 to $0.19 per share after-tax to earnings in 2004.
During the fourth quarter of 2003, the Company reduced its Allowance for Loan Losses by $1.0 million reflecting continued improvements achieved in the Company’s credit quality. This followed a negative provision for loan losses of $3.3 million during the second quarter of 2003 and a negative provision of $1.9 million in the third quarter of 2003. The Company also recorded a $2.2 million expense associated with redemption of $57.5 million in Trust Preferred Securities on November 7, 2003. This expense represented the issuance costs of the debt that had been amortized over the original thirty- year life of the securities. Additionally, during the fourth quarter of 2003, the Company benefited from a $0.5 million tax credit from the State of West Virginia.
Contributing to the Company’s 34.6% growth in net income during 2003 as compared to 2002, the Company experienced strong growth in targeted loan categories, 4.6% deposit growth, a comparatively high and stable net interest margin, more than 20% growth in non-interest income, and a decrease of more than a 6% in operating expenses. Also, the Company benefited from negative provision for loan losses of $6.2 million as a result of its strong credit quality and improving credit trends as compared to a provision for loan losses of $1.8 million during 2002. The Company also benefited from a $1.6 million legal settlement in the third quarter of 2003, and net recoveries on repossessed assets and associated expenses of $.7 million as compared to net expenses in this category of $0.7 million in 2002. In the fourth quarter of 2003, the Company recognized a $2.2 million expense associated with redemption of $57.5 million in Trust Preferred Securities.
“We are pleased by the Company’s consistent and strong financial performance,” stated Jerry Francis, Chairman, President and CEO of City Holding Company and its primary subsidiary City National Bank of West Virginia. “The Company continues to achieve top decile profitability among its peers, and we are optimistic about our future. The year 2003 was a great one for City on all fronts. The Company experienced over 16% growth in its commercial loan business at a time when other lenders are finding commercial loan growth difficult. Despite a difficult year for originating adjustable rate residential mortgages, the Company experienced nearly 7% growth in residential real estate secured lending due to extraordinary growth of 34% in home equity lending. Deposits were up 4.6% at the end of 2003. Despite our strong loan growth, the Company remains committed to maintaining high standards for loan credit quality, as demonstrated by our maintenance of non-performing assets of only .34% of all loans and OREO – placing us in the top quartile of our peers.”
“Non-interest income net of security gains grew by over 22%, led by more than a 20% growth in bank service charges, which was in turn led by growth in both retail and business checking accounts. Our Totally Free Checking product has been especially well received by the market. The management of our insurance division and our trust division turned in 30% and 18% growth respectively in revenues as well. In fact, the Company now derives nearly 32% of its total revenues from non-interest sources that places it again in the top quartile of peer banks. By year-end, the Company’s run rate for its efficiency ratio was under 50% as a consequence of both revenue growth and absolute decreases in operating expenses, placing City again in the top quartile of its peers. In summary, I am extremely proud of our people who have made 2003 yet another banner year for City characterized by strong growth in assets, deposits, and non interest income while maintaining extremely strong loan quality and continuing to improve efficiencies. Clearly City’s team of employees is one of the best in the industry.”
Net Interest Income
For the fourth quarter of 2003, the Company recorded tax-equivalent net interest income of $22.3 million as compared to $21.5 million in the fourth quarter of 2002, an increase of $0.8 million or 4.0%. The Company’s net interest margin was 4.74% in the fourth quarter of 2003 as compared to 4.68% during the fourth quarter of 2002. On November 7, 2003 the Company exercised its rights to early redemption of $57.5 million in 9.125% Trust Preferred Securities. This redemption had positive impact upon the Company’s net interest income for the fourth quarter. The Company also benefited in the fourth quarter of 2003 from a 2.8% increase in earning assets.
For the full year, the Company recorded tax-equivalent net interest income of $86.6 million as compared to $88.1 million during 2002. The decrease in net interest income can be partially attributed to a 3 basis point decline in the net interest margin from 4.68% on average in 2002 to 4.65% for 2003. This decline in the net interest margin resulted from declining interest rates during 2002 and 2003 which impacted the yield on earning assets more than the Company was able to reduce deposit rates. Further, the Company experienced contraction in average earning assets during the period, from an average of $1.885 billion in 2002 to average earning assets of $1.862 billion during 2003. This decline was caused by the Company’s continuing efforts to exit the indirect auto lending business and to significantly reduce unsecured consumer installment debt that was down $74.8 million on average between 2002 and 2003. However, while earning assets were loweron average during 2003, they steadily increased throughout the year.
Credit Quality
The Company maintained strong credit quality throughout 2003. The Company experienced net charge-offs of $1.0 million during the fourth quarter of 2003 and net charge-offs of $0.9 million for the full year, as compared to net charge-offs of $21.9 million during 2002.
At December 31, 2003, The Company’s non-performing assets were $4.4 million representing just 0.34% of total loans and other real estate outstanding. Non-performing assets remained relatively constant, and at a low level, throughout 2003.
As a result of continuing strength in the Company’s credit experience, the Company recorded a negative provision for loan losses in the fourth quarter of 2003 of $1.0 million and a negative provision for loan losses for the 2003 fiscal year of $6.2 million. The Company believes that its methodology for determining its Allowance for Loan Losses adequately provides for probable losses inherent in the loan portfolio at December 31, 2003 at which date the Allowance for Loan Losses was $21.4 million, or 529% of non-performing loans and 1.66% of total loans.
Non-Interest Income
Non-Interest Income net of security gains was $10.1 million in the fourth quarter of 2003 compared to $8.9 million in the fourth quarter of 2002, representing an increase of 13.4%. This increase was primarily attributable to a 14.3% increase in service charges associated with the bank’s strong retail deposit franchise, and secondarily attributable to 24.1% growth in insurance revenues, 9.8% growth in trust fees, and growth in revenues associated with bank-owned life insurance.
For the full year, non-interest income net of security gains or losses was $39.8 million in 2003 as compared to $32.6 million in 2002. This 22.1% increase can primarily be attributed to a 20.9% increase in service charges for the full year and secondarily to a 30.9% increase in insurance revenues, an 18.1% increase in trust fees, and an increase in bank-owned life insurance revenues. Settlement in favor of the bank of an outstanding legal issue during the third quarter also added $1.6 million in other non-interest income for the year.
During 2003, non-interest income represented 31.9% and 31.7% of total revenues for the fourth quarter and the full year, respectively, where total revenues are defined as net interest income plus non-interest income.
Non-Interest Expenses
Non-interest expenses were $18.0 million in the fourth quarter of 2003 as compared to $16.5 million in the fourth quarter of 2002. The primary reason for the increase was a $2.2 million write-off of the unamortized issuance costs associated with $57.5 million in Trust Preferred Securities that were redeemed on November 7, 2003. These costs, which were incurred in 1998 upon the issuance of the Trust Preferred Securities, had been amortized over the original 30-year life of the securities. After adjusting non-interest expense for the $2.2 million charge, Non-Interest expenses were down 4% against the fourth quarter of 2002.
For the full year, non-interest expenses dropped from $69.8 million for 2002 to $65.4 million in 2003, representing a 6.3% decrease reflecting the Company’s active focus on managing expenses to appropriate levels. The Efficiency Ratio (defined as non-interest expense as a percent of total revenues) was 58.7% in 2002 and declined to 52.1% during 2003. For the full year, the Company benefited from $.691 million in net recoveries on repossessed assets and other real estate owned during 2003 as compared to net expenses associated with these activities of $.664 million during 2002.
Balance Sheet Trends
Total assets at December 31, 2003 were $2.214 billion as compared to $2.048 billion at December 31, 2002. Total Loans at December 31, 2003 were $1.292 billion as compared to $1.204 billion on December 31, 2002, representing growth of 7.3%. Of that growth, $58.8 million is attributable to the conversion of assets held in the form of retained interests into assets held as “previously securitized loans” and discussed further below. Retail real-estate secured loans grew by $46.1 million or 6.7% while commercial loans (including commercial real-estate loans) grew by $58.2 million, or 15.8%. Offsetting this strong growth in targeted loan categories, were reductions in indirect auto loans and unsecured consumer installment loans of $54.5 million, or 48.3% between December 31, 2002 and December 31, 2003. Strategically, the Company has focused on improving the credit quality of its loan portfolio and maintaining the overall profitability of these loans. The Company’s philosophy is to make loans that are both profitable and have acceptable credit quality. The Company believes that its indirect auto loan and unsecured installment credit
portfolios have not traditionally satisfied these objectives, and discontinued this lending activity during 2001.
Total Investment Securities increased from $517.8 million at December 31, 2002 to $705.0 million at December 31, 2003. This increase took place primarily in the fourth quarter and was part of a strategy adopted by the Company to balance its net interest income under alternative interest rate scenarios. These assets were funded partially through the use of in-market retail CD’s and partially through fixed rate non-deposit borrowing. The Company continues to believe that it will positively benefit from rising interest rates, should those occur.
Total deposits were $1.637 billion at December 31, 2003 as compared to $1.565 billion at December 31, 2002, an increase of 4.6%. Approximately 50% of that increase has been in retail CD’s and the remainder in the form of interest bearing and non-interest bearing transaction accounts.
In total, interest-bearing non-deposit funding increased from $285.7 million on December 31, 2002 to $359.2 million on December 31, 2003. During the fourth quarter of 2003, the Company redeemed $57.5 million in trust preferred securities shown on the balance sheet at December 31, 2002 as Corporation-obligated mandatorily redeemable capital securities of subsidiary trusts holding solely subordinated debentures of the City Holding Company. The Company continues to have $30 million of these liabilities, which have been re-classified as long-term debt in accordance with newly issued accounting guidance, Financial Accounting Standards Board Interpretation Number 46. The decrease in funding using trust preferred securities was offset by increased borrowings from the Federal Home Loan Bank of Pittsburgh during the fourth quarter, which also supported the Company’s growth in earning assets.
Retained Interests in Securitized Loans and Previously Securitized Loans
Between 1997 and 1999, the company originated and securitized $760 million in 125% loan to value junior-lien underlying mortgages in six separate pools known as City Capital Home Loan Trust 1997-1, 98-1, 98-2, 98-3, 98-4 and 99-1. The Company has a retained interest in the final cash flows associated with these underlying mortgages after satisfying priority claims. Principal amounts owed to investors in the securitizations are evidenced by securities (i.e., “Notes”). The Notes are subject to redemption, in whole but not in part, at the option of the Company, as owner of the retained interests in the securitization transactions, on or after the date on which the related note balance has declined to 5% or less of the original Note balance. Once the Notes have been redeemed, the Company becomes the beneficial owner of the mortgage loans and records the loans as “Previously Securitized Loans” within the loan portfolio. During 2003, the Company exercised its early redemption option with respect to four of these Trusts. As a result, at December 31, 2003 the Company reported “Previously Securitized Loans” of $58.8 million and assets classified as “Retained Interests” of $34.3 million as compared to “Retained Interests” of $80.9 million at December 31, 2002. The Company has benefited as a result of redeeming these Notes that were paying interest at an average rate of 6.96%. Additionally, the Company’s regulatory capital ratios have been significantly enhanced by the reclassification of “Retained Interests” to “Previously Securitized Loans” as a result of regulations which penalize the ownership of “Retained Interests” for the purposes of calculating regulatory capital.
At November 30, 2003, the most current date that information is available, the outstanding principal balances of the mortgages securitized were approximately $62 million. The outstanding obligation to the purchasers of the priority claims on the two remaining Trusts was $16.2 million with the Company having a “Retained Interest” in the remaining $45.8 million in balances. The Company determines the value of the retained interests using assumptions regarding default rates, prepayment rates, and an appropriate discount rate for assets of similar characteristics. At December 31, 2003 the Company estimates the fair value of these assets to be $40.0 million, compared to the book value of $34.3 million. The Bank is required to accrete the difference between the fair value and the book value over the life of the investment. Therefore, the retained interests accrued at the rate of 19.9% during the fourth quarter of 2003. Similarly, the Company accrued interest on its Previously Securitized Loans at a 22.1% rate during the fourth quarter of 2003. While still including assumptions regarding expected prepayment and default rates, the yield earned on previously securitized loans, as opposed to the retained interest assets, benefited from the early
redemption of the related outstanding Notes that were paying interest at an average rate of 6.96% and the elimination of certain administrative fees. During 2003, the Company accrued income of $17.0 million and received cash of $22.5 million on the “Retained Interests” and the “Previously Securitized Loans”.
Forward Looking Information
During the first quarter of 2004, the Company expects to exercise its early redemption option on City Holding Capital Trust 1999-1. As a result, the Company anticipates that it will experience increased income associated with its ownership of “Retained Interests” and “Previously Securitized Loans” through the first quarter of 2004 and that its March 31, 2004 balance sheet will include Retained Interests of approximately $1.6 million and Previously Securitized Loan balances of $93.2 million. These balances will then decline as loans are paid off by the borrowers. At present, and based upon its assumptions about prepayment speeds, the Company believes that outstanding balances of these previously securitized loans as well as the remaining retained interests will be:
December 31, 2004 $73 million
December 31, 2005 $51 million
December 31, 2006 $38 million
December 31, 2007 $29 million
The Company’s current performance has also been positively affected by its success since 2002 in achieving low levels of non-performing assets and net charge-offs. The improved credit quality led the Company to recognize negative provision expense during 2003 of $6.2 million. The opportunity to continue to record a negative provision for loan losses is clearly not a recurring phenomenon and is in contrast to most of the Company’s competitors whose credit quality requires them to provide for loan losses on a quarterly basis. Likewise, the Company may be required to provide for loan losses in future periods.
Liquidity and Capitalization
On November 7, 2003 the Company redeemed $57.5 million in Trust Preferred Securities that were treated as regulatory capital by the Company’s primary regulators. Nevertheless, at December 31, 2003, ratios that measure the adequacy of the Company’s liquidity and capital remain very strong compared to the Company’s peers. With respect to liquidity, the Company’s loan to deposit ratio was 78.9% and the loan to asset ratio was 58.4%. The Company maintained investment securities totaling 31.8% of assets at December 31, 2003. Further, the Company’s deposit mix is weighted heavily toward checking and saving accounts that fund 44.3% of assets at December 31, 2003. Time deposits fund 29.6% of assets, but very few of these deposits are in accounts of more than $250 thousand reflecting the core retail orientation of the Company.
The Company is also strongly capitalized. Capitalization, as measured by average equity to average assets, significantly increased from 8.30% during the fourth quarter of 2002 to 9.12% during the fourth quarter of 2003 as a result of the Company’s strong earnings and despite the November 7, 2003 redemption of $57.5 million in Trust Preferred Securities that were considered a form of regulatory capital. With respect to regulatory capital, at December 31, 2003, the Company’s Leverage Ratio is 10.07%, the Tier I Capital ratio is 12.00%, and the Total risk-based Capital ratio is 13.25% – significantly above levels required to be considered “Well Capitalized”, which are 5%, 6%, and 10% respectively.
The Company has declared a fourth quarter dividend of $0.20 per common share payable on January 31, 2004, to shareholders of record on January 15, 2004, representing a 33% increase over the fourth quarter of 2002.
City Holding Company is the parent company of City National Bank of West Virginia. In addition to the Bank, City National Bank operates CityInsurance Professionals, an insurance agency offering a full range of insurance products and services.
This news release contains certain forward-looking statements that are included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such information involves risks and uncertainties that could result in the Company’s actual results differing from those projected in the forward-looking statements. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include, but are not limited to, (1) the Company may incur additional loan loss provision due to negative credit quality trends in the future that may lead to a deterioration of asset quality, or conversely, the Company may incur less, or even negative, loan loss provision due to positive credit quality trends in the future; (2) the Company may not continue to experience significant recoveries of previously charged-off loans and the Company may incur increased charge-offs in the future; (3) the Company may experience increases in the default rates on its retained interests in securitized mortgages or previously securitized loans causing the yields on these assets to decline; (4) the Company may not realize the expected cash payments that it is presently accruing from its retained interests in securitized mortgages or its previously securitized loans; (5) the Company could have adverse legal actions of a material nature; (6) the Company may face competitive loss of customers associated with its efforts to increase fee-based revenues; (7) the Company may be unable to manage its expense levels; (8) 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; (9) changes in general economic conditions and increased competition could adversely affect the Company’s operating results; (10) changes in other regulations and government policies affecting bank holding companies and their subsidiaries, including changes in monetary policies, could negatively impact the Company’s operating results; and (11) the Company may experience difficulties growing loan and deposit balances. Forward-looking statements made herein reflect management’s expectations as of the date such statements are made. Such information is provided to assist stockholders and potential investors in understanding current and anticipated financial operations of the Company and is included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances that arise after the date such statements are made.
CITY HOLDING COMPANY AND SUBSIDIARIES
Financial Highlights
(Unaudited)
| | | Three Months Ended
| | | | |
| | | December 31 2003
| | | December 31
2002
| | | Percent
Change
| |
Earnings ($000s, except per share data): | | | | | | | | | | | |
Net Interest Income (FTE) | | $ | 22,341 | | | $ | 21,492 | | | 3.95 | % |
Net Income | | | 10,672 | | | | 9,408 | | | 13.44 | % |
Earnings per Basic Share | | | 0.64 | | | | 0.56 | | | 14.29 | % |
Earnings per Diluted Share | | | 0.63 | | | | 0.55 | | | 14.55 | % |
Key Ratios (percent): | | | | | | | | | | | �� |
Return on Average Assets | | | 2.08 | % | | | 1.90 | % | | 9.47 | % |
Return on Average Equity | | | 22.79 | % | | | 22.88 | % | | (0.39 | )% |
Net Interest Margin | | | 4.74 | % | | | 4.68 | % | | 1.28 | % |
Efficiency Ratio | | | 56.22 | % | | | 54.88 | % | | 2.44 | % |
Average Shareholders’ Equity to Average Assets | | | 9.12 | % | | | 8.30 | % | | 9.88 | % |
Risk-Based Capital Ratios (a): | | | | | | | | | | | |
Tier I | | | 12.00 | % | | | 9.87 | % | | 21.61 | % |
Total | | | 13.25 | % | | | 13.36 | % | | (0.79 | )% |
Common Stock Data: | | | | | | | | | | | |
Cash Dividends Declared per Share | | $ | 0.20 | | | $ | 0.15 | | | 33.33 | % |
Book Value per Share | | | 11.51 | | | | 9.93 | | | 15.91 | % |
Market Value per Share: | | | | | | | | | | | |
High | | | 37.15 | | | | 30.20 | | | 23.01 | % |
Low | | | 31.50 | | | | 21.75 | | | 44.83 | % |
End of Period | | | 35.06 | | | | 28.26 | | | 24.06 | % |
Price/Earnings Ratio (b) | | | 13.70 | | | | 12.62 | | | 8.56 | % |
| (a) | December 31, 2003 risk-based capital ratios are estimated. |
| (b) | December 31, 2003 price/earnings ratio computed based on annualized fourth quarter 2003 earnings. |
| | | Twelve Months Ended
| | | | |
| | | December 31 2003
| | | December 31
2002
| | | Percent
Change
| |
| | | | | | | | | | | | |
Earnings ($000s, except per share data): | | | | | | | | | | | |
Net Interest Income (FTE) | | $ | 86,641 | | | $ | 88,120 | | | (1.68 | )% |
Net Income | | | 43,694 | | | | 32,459 | | | 34.61 | % |
Earnings per Basic Share | | | 2.63 | | | | 1.93 | | | 36.27 | % |
Earnings per Diluted Share | | | 2.58 | | | | 1.90 | | | 35.79 | % |
Key Ratios (percent): | | | | | | | | | | | |
Return on Average Assets | | | 2.18 | % | | | 1.59 | % | | 37.11 | % |
Return on Average Equity | | | 24.50 | % | | | 20.54 | % | | 19.28 | % |
Net Interest Margin | | | 4.65 | % | | | 4.68 | % | | (0.64 | )% |
Efficiency Ratio | | | 52.09 | % | | | 58.67 | % | | (11.22 | )% |
Average Shareholders’ Equity to Average Assets | | | 8.89 | % | | | 7.74 | % | | 14.86 | % |
Common Stock Data: | | | | | | | | | | | |
Cash Dividends Declared per Share | | $ | 0.80 | | | $ | 0.45 | | | 77.78 | % |
Market Value per Share: | | | | | | | | | | | |
High | | | 37.15 | | | | 30.20 | | | 23.01 | % |
Low | | | 25.50 | | | | 12.04 | | | 111.79 | % |
CITY HOLDING COMPANY AND SUBSIDIARIES
Financial Highlights
(Unaudited)
Book Value and Market Price Range per Share
| | | Book Value per Share
| | Market Price Range per Share
|
| | | March 31
| | June 30
| | September 30
| | December 31
| | Low
| | High
|
1998 (a) | | $ | 17.18 | | $ | 18.72 | | $ | 18.56 | | $ | 13.09 | | $ | 30.00 | | $ | 51.00 |
1999 | | | 13.07 | | | 12.85 | | | 12.80 | | | 11.77 | | | 12.50 | | | 32.75 |
2000 | | | 11.76 | | | 11.72 | | | 11.72 | | | 9.68 | | | 4.88 | | | 16.19 |
2001 | | | 8.82 | | | 8.70 | | | 8.37 | | | 8.67 | | | 5.13 | | | 14.64 |
2002 | | | 8.92 | | | 9.40 | | | 9.64 | | | 9.93 | | | 12.04 | | | 30.20 |
2003 | | | 10.10 | | | 10.74 | | | 11.03 | | | 11.51 | | | 25.50 | | | 37.15 |
Earnings per Basic Share
| | | Quarter Ended
| |
| | | March 31
| | | June 30
| | | September 30
| | | December 31
| | | Year-to-Date
| |
1998 (a) | | $ | 0.48 | | | $ | 0.49 | | | $ | 0.56 | | | $ | (0.89 | ) | | $ | 0.31 | |
1999 | | | 0.31 | | | | 0.42 | | | | 0.14 | | | | (0.49 | ) | | | 0.37 | |
2000 | | | 0.24 | | | | 0.02 | | | | (0.05 | ) | | | (2.47 | ) | | | (2.27 | ) |
2001 | | | (0.34 | ) | | | (1.19 | ) | | | (0.46 | ) | | | 0.45 | | | | (1.54 | ) |
2002 | | | 0.38 | | | | 0.45 | | | | 0.53 | | | | 0.56 | | | | 1.93 | |
2003 | | | 0.56 | | | | 0.73 | | | | 0.69 | | | | 0.64 | | | | 2.63 | |
Earnings per Diluted Share
| | | Quarter Ended
| |
| | | March 31
| | | June 30
| | | September 30
| | | December 31
| | | Year-to-Date
| |
1998 (a) | | $ | 0.48 | | | $ | 0.49 | | | $ | 0.56 | | | $ | (0.89 | ) | | $ | 0.31 | |
1999 | | | 0.31 | | | | 0.42 | | | | 0.14 | | | | (0.49 | ) | | | 0.37 | |
2000 | | | 0.24 | | | | 0.02 | | | | (0.05 | ) | | | (2.47 | ) | | | (2.27 | ) |
2001 | | | (0.34 | ) | | | (1.19 | ) | | | (0.46 | ) | | | 0.45 | | | | (1.54 | ) |
2002 | | | 0.38 | | | | 0.45 | | | | 0.52 | | | | 0.55 | | | | 1.90 | |
2003 | | | 0.55 | | | | 0.72 | | | | 0.68 | | | | 0.63 | | | | 2.58 | |
| (a) | Book value and per share amounts reported through September 30, 1998 are as previously reported by City Holding Company and have not been restated to include the operations of Horizon Bancorp, Inc. |
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)
| | | Three Months Ended
December 31
| |
| | | 2003
| | | 2002
| |
Interest Income | | | | | | | | |
Interest and fees on loans | | $ | 21,331 | | | $ | 21,573 | |
Interest on investment securities: | | | | | | | | |
Taxable | | | 5,760 | | | | 4,906 | |
Tax-exempt | | | 479 | | | | 635 | |
Interest on retained interests | | | 2,000 | | | | 3,390 | |
Interest on deposits in depository institutions | | | 11 | | | | — | |
Interest on federal funds sold | | | — | | | | 112 | |
| | |
|
|
| |
|
|
|
Total Interest Income | | | 29,581 | | | | 30,616 | |
Interest Expense | | | | | | | | |
Interest on deposits | | | 5,653 | | | | 6,161 | |
Interest on short-term borrowings | | | 133 | | | | 1,014 | |
Interest on long-term debt | | | 480 | | | | 284 | |
Interest on trust preferred securities | | | 1,231 | | | | 2,006 | |
| | |
|
|
| |
|
|
|
Total Interest Expense | | | 7,497 | | | | 9,465 | |
| | |
|
|
| |
|
|
|
Net Interest Income | | | 22,084 | | | | 21,151 | |
(Recovery of) provision for loan losses | | | (1,000 | ) | | | — | |
| | |
|
|
| |
|
|
|
Net Interest Income After Provision for Loan Losses | | | 23,084 | | | | 21,151 | |
Non-Interest Income | | | | | | | | |
Investment securities gains | | | 287 | | | | 666 | |
Service charges | | | 7,762 | | | | 6,790 | |
Insurance commissions | | | 510 | | | | 411 | |
Trust fee income | | | 379 | | | | 345 | |
Bank owned life insurance | | | 593 | | | | 158 | |
Mortgage banking income | | | 60 | | | | 233 | |
Other income | | | 776 | | | | 952 | |
| | |
|
|
| |
|
|
|
Total Non-Interest Income | | | 10,367 | | | | 9,555 | |
Non-Interest Expense | | | | | | | | |
Salaries and employee benefits | | | 7,916 | | | | 7,631 | |
Occupancy and equipment | | | 1,550 | | | | 1,679 | |
Depreciation | | | 1,056 | | | | 1,288 | |
Professional fees and litigation expense | | | 542 | | | | 702 | |
Postage, delivery, and statement mailings | | | 584 | | | | 718 | |
Advertising | | | 578 | | | | 646 | |
Telecommunications | | | 466 | | | | 565 | |
Insurance and regulatory | | | 297 | | | | 189 | |
Office supplies | | | 278 | | | | 468 | |
Repossessed asset losses (gains) and expenses | | | 19 | | | | (3 | ) |
Loss on early extinguishment of debt | | | 2,246 | | | | — | |
Other expenses | | | 2,501 | | | | 2,603 | |
| | |
|
|
| |
|
|
|
Total Non-Interest Expense | | | 18,033 | | | | 16,486 | |
| | |
|
|
| |
|
|
|
Income Before Income Taxes | | | 15,418 | | | | 14,220 | |
Income Tax Expense | | | 4,746 | | | | 4,812 | |
| | |
|
|
| |
|
|
|
Net Income | | $ | 10,672 | | | $ | 9,408 | |
| | |
|
|
| |
|
|
|
Basic Earnings per Share | | $ | 0.64 | | | $ | 0.56 | |
Diluted Earnings per Share | | $ | 0.63 | | | $ | 0.55 | |
Average Common Shares Outstanding: | | | | | | | | |
Basic | | | 16,641 | | | | 16,652 | |
Diluted | | | 16,961 | | | | 16,999 | |
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)
| | | Twelve Months Ended
December 31
|
| | | 2003
| | | 2002
|
Interest Income | | | | | | | |
Interest and fees on loans | | $ | 81,296 | | | $ | 93,380 |
Interest on investment securities: | | | | | | | |
Taxable | | | 21,267 | | | | 19,871 |
Tax-exempt | | | 2,112 | | | | 2,701 |
Interest on retained interests | | | 12,465 | | | | 12,427 |
Interest on deposits in depository institutions | | | 114 | | | | — |
Interest on federal funds sold | | | 36 | | | | 586 |
| | |
|
|
| |
|
|
Total Interest Income | | | 117,290 | | | | 128,965 |
Interest Expense | | | | | | | |
Interest on deposits | | | 22,537 | | | | 29,350 |
Interest on short-term borrowings | | | 792 | | | | 2,765 |
Interest on long-term debt | | | 1,207 | | | | 1,809 |
Interest on trust preferred securities | | | 7,249 | | | | 8,375 |
| | |
|
|
| |
|
|
Total Interest Expense | | | 31,785 | | | | 42,299 |
| | |
|
|
| |
|
|
Net Interest Income | | | 85,505 | | | | 86,666 |
(Recovery of) provision for loan losses | | | (6,200 | ) | | | 1,800 |
| | |
|
|
| |
|
|
Net Interest Income After Provision for Loan Losses | | | 91,705 | | | | 84,866 |
Non-Interest Income | | | | | | | |
Investment securities (losses) gains | | | (148 | ) | | | 1,459 |
Service charges | | | 28,422 | | | | 23,500 |
Insurance commissions | | | 2,467 | | | | 1,884 |
Trust fee income | | | 1,575 | | | | 1,334 |
Bank owned life insurance | | | 1,320 | | | | 628 |
Mortgage banking income | | | 517 | | | | 856 |
Other income | | | 5,510 | | | | 4,443 |
| | |
|
|
| |
|
|
Total Non-Interest Income | | | 39,663 | | | | 34,104 |
Non-Interest Expense | | | | | | | |
Salaries and employee benefits | | | 31,070 | | | | 31,915 |
Occupancy and equipment | | | 6,015 | | | | 6,655 |
Depreciation | | | 4,411 | | | | 5,749 |
Professional fees and litigation expense | | | 2,879 | | | | 2,857 |
Postage, delivery, and statement mailings | | | 2,646 | | | | 3,192 |
Advertising | | | 2,340 | | | | 2,568 |
Telecommunications | | | 1,874 | | | | 2,404 |
Insurance and regulatory | | | 1,266 | | | | 1,656 |
Office supplies | | | 1,428 | | | | 1,557 |
Repossessed asset (gains) losses and expenses | | | (691 | ) | | | 664 |
Loss on early extinguishment of debt | | | 2,388 | | | | — |
Other expenses | | | 9,797 | | | | 10,572 |
| | |
|
|
| |
|
|
Total Non-Interest Expense | | | 65,423 | | | | 69,789 |
| | |
|
|
| |
|
|
Income Before Income Taxes | | | 65,945 | | | | 49,181 |
Income Tax Expense | | | 22,251 | | | | 16,722 |
| | |
|
|
| |
|
|
Net Income | | $ | 43,694 | | | $ | 32,459 |
| | |
|
|
| |
|
|
Basic Earnings per Share | | $ | 2.63 | | | $ | 1.93 |
Diluted Earnings per Share | | $ | 2.58 | | | $ | 1.90 |
Average Common Shares Outstanding: | | | | | | | |
Basic | | | 16,634 | | | | 16,809 |
Diluted | | | 16,947 | | | | 17,072 |
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited) ($ in 000s)
| | | Three Months Ended
| |
| | | December 31, 2003
| | | December 31, 2002
| |
Balance at September 30 | | $ | 183,463 | | | $ | 160,705 | |
Net income | | | 10,672 | | | | 9,408 | |
Other comprehensive income: | | | | | | | | |
Change in unrealized gain on securities available-for-sale | | | 545 | | | | (117 | ) |
Change in underfunded pension liability | | | (847 | ) | | | (1,544 | ) |
Cash dividends declared ($0.15/share) | | | — | | | | (2,495 | ) |
Cash dividends declared ($0.20/share) | | | (3,328 | ) | | | — | |
Exercise of 19,137 stock options | | | — | | | | 436 | |
Exercise of 5,000 stock options | | | 185 | | | | — | |
Purchase of 38,600 common shares for treasury | | | — | | | | (1,000 | ) |
| | |
|
|
| |
|
|
|
Balance at December 31 | | $ | 190,690 | | | $ | 165,393 | |
| | |
|
|
| |
|
|
|
| | | Twelve Months Ended
| |
| | | December 31, 2003
| | | December 31, 2002
| |
Balance at December 31 | | $ | 165,393 | | | $ | 146,349 | |
Net income | | | 43,694 | | | | 32,459 | |
Other comprehensive income: | | | | | | | | |
Change in unrealized gain on securities available-for-sale | | | (2,198 | ) | | | 2,033 | |
Change in underfunded pension liability | | | (847 | ) | | | (1,544 | ) |
Cash dividends declared ($0.45/share) | | | — | | | | (7,535 | ) |
Cash dividends declared ($0.80/share) | | | (13,310 | ) | | | — | |
Exercise of 72,151 stock options | | | — | | | | 1,104 | |
Exercise of 104,982 stock options | | | 1,216 | | | | — | |
Purchase of 302,400 common shares for treasury | | | — | | | | (7,473 | ) |
Purchase of 118,300 common shares for treasury | | | (3,258 | ) | | | — | |
| | |
|
|
| |
|
|
|
Balance at December 31 | | $ | 190,690 | | | $ | 165,393 | |
| | |
|
|
| |
|
|
|
CITY HOLDING COMPANY AND SUBSIDIARIES
Condensed Consolidated Quarterly Statements of Income
(Unaudited) ($ in 000s, except per share data)
| | | Quarter Ended
| |
| | | Dec. 31
2003
| | | Sept. 30
2003
| | | June 30
2003
| | | March 31
2003
| | | Dec. 31
2002
| |
Interest income | | $ | 29,581 | | | $ | 28,341 | | | $ | 29,669 | | | $ | 29,699 | | | $ | 30,616 | |
Taxable equivalent adjustment | | | 257 | | | | 271 | | | | 300 | | | | 308 | | | | 341 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Interest income (FTE) | | | 29,838 | | | | 28,612 | | | | 29,969 | | | | 30,007 | | | | 30,957 | |
Interest expense | | | 7,497 | | | | 7,812 | | | | 7,991 | | | | 8,485 | | | | 9,465 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Net interest income | | | 22,341 | | | | 20,800 | | | | 21,978 | | | | 21,522 | | | | 21,492 | |
Provision for loan losses | | | (1,000 | ) | | | (1,900 | ) | | | (3,300 | ) | | | — | | | | — | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Net interest income after provision for loan losses | | | 23,341 | | | | 22,700 | | | | 25,278 | | | | 21,522 | | | | 21,492 | |
Noninterest income | | | 10,367 | | | | 10,639 | | | | 9,419 | | | | 8,985 | | | | 9,555 | |
Noninterest expense | | | 18,033 | | | | 15,405 | | | | 15,725 | | | | 16,007 | | | | 16,486 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Income before income taxes | | | 15,675 | | | | 17,934 | | | | 18,972 | | | | 14,500 | | | | 14,561 | |
Income tax expense | | | 4,746 | | | | 6,130 | | | | 6,535 | | | | 4,840 | | | | 4,812 | |
Taxable equivalent adjustment | | | 257 | | | | 271 | | | | 300 | | | | 308 | | | | 341 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Net income | | $ | 10,672 | | | $ | 11,533 | | | $ | 12,137 | | | $ | 9,352 | | | $ | 9,408 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Basic earnings per share | | $ | 0.64 | | | $ | 0.69 | | | $ | 0.73 | | | $ | 0.56 | | | $ | 0.56 | |
Diluted earnings per share | | | 0.63 | | | | 0.68 | | | | 0.72 | | | | 0.55 | | | | 0.55 | |
Cash dividends declared per share | | | 0.20 | | | | 0.20 | | | | 0.20 | | | | 0.20 | | | | 0.15 | |
Average Common Share (000s): | | | | | | | | | | | | | | | | | | | | |
Outstanding | | | 16,641 | | | | 16,636 | | | | 16,622 | | | | 16,638 | | | | 16,652 | |
Diluted | | | 16,961 | | | | 16,953 | | | | 16,918 | | | | 16,950 | | | | 16,999 | |
Net Interest Margin | | | 4.74 | % | | | 4.50 | % | | | 4.72 | % | | | 4.66 | % | | | 4.68 | % |
CITY HOLDING COMPANY AND SUBSIDIARIES
Non-Interest Income and Non-Interest Expense
(Unaudited) ($ in 000s)
| | | Quarter Ended
| |
| | | Dec. 31 2003
| | Sept. 30 2003
| | | June 30 2003
| | | March 31 2003
| | | Dec. 31 2002
| |
Non-Interest Income: | | | | | | | | | | | | | | | | | | | |
Service charges | | $ | 7,762 | | $ | 7,285 | | | $ | 7,041 | | | $ | 6,081 | | | $ | 6,790 | |
Insurance commissions | | | 510 | | | 604 | | | | 591 | | | | 762 | | | | 411 | |
Trust fee income | | | 379 | | | 493 | | | | 355 | | | | 348 | | | | 345 | |
Bank owned life insurance | | | 593 | | | 414 | | | | 156 | | | | 157 | | | | 158 | |
Mortgage banking income | | | 60 | | | 109 | | | | 180 | | | | 168 | | | | 233 | |
Other income | | | 776 | | | 2,544 | | | | 1,074 | | | | 1,116 | | | | 952 | |
| | |
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Subtotal | | | 10,080 | | | 11,449 | | | | 9,397 | | | | 8,632 | | | | 8,889 | |
Investment security gains (losses) | | | 287 | | | (810 | ) | | | 22 | | | | 353 | | | | 666 | |
| | |
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total Non-Interest Income | | $ | 10,367 | | $ | 10,639 | | | $ | 9,419 | | | $ | 8,985 | | | $ | 9,555 | |
| | |
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Non-Interest Expense: | | | | | | | | | | | | | | | | | | | |
Salaries and employee benefits | | $ | 7,916 | | $ | 7,787 | | | $ | 7,629 | | | $ | 7,738 | | | $ | 7,631 | |
Occupancy and equipment | | | 1,550 | | | 1,431 | | | | 1,489 | | | | 1,545 | | | | 1,679 | |
Depreciation | | | 1,056 | | | 1,055 | | | | 1,113 | | | | 1,187 | | | | 1,288 | |
Professional fees and litigation expense | | | 542 | | | 519 | | | | 981 | | | | 837 | | | | 702 | |
Postage, delivery, and statement mailings | | | 584 | | | 538 | | | | 744 | | | | 780 | | | | 718 | |
Advertising | | | 578 | | | 555 | | | | 557 | | | | 650 | | | | 646 | |
Telecommunications | | | 466 | | | 485 | | | | 518 | | | | 405 | | | | 565 | |
Insurance and regulatory | | | 297 | | | 318 | | | | 326 | | | | 325 | | | | 189 | |
Office supplies | | | 278 | | | 310 | | | | 405 | | | | 435 | | | | 468 | |
Repossessed asset losses (gains) and expenses | | | 19 | | | 28 | | | | (547 | ) | | | (191 | ) | | | (3 | ) |
Loss on early exinguishment of debt | | | 2,246 | | | — | | | | 142 | | | | — | | | | — | |
Other expenses | | | 2,501 | | | 2,379 | | | | 2,368 | | | | 2,296 | | | | 2,603 | |
| | |
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total Non-Interest Expense | | $ | 18,033 | | $ | 15,405 | | | $ | 15,725 | | | $ | 16,007 | | | $ | 16,486 | |
| | |
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Employees (Full Time Equivalent) | | | 701 | | | 709 | | | | 719 | | | | 722 | | | | 737 | |
Branch Locations | | | 53 | | | 54 | | | | 54 | | | | 54 | | | | 54 | |
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000s)
| | | December 31 2003
| | | December 31 2002
| |
| | | (Unaudited) | | | | |
Assets | | | | | | | | |
Cash and due from banks | | $ | 58,216 | | | $ | 64,003 | |
Interest-bearing deposits in depository institutions | | | 5,122 | | | | 45,315 | |
Federal funds sold | | | — | | | | 20,000 | |
| | |
|
|
| |
|
|
|
Cash and cash equivalents | | | 63,338 | | | | 129,318 | |
Investment securities available-for-sale, at fair value | | | 645,663 | | | | 445,384 | |
Investment securities held-to-maturity, at amortized cost | | | 59,298 | | | | 72,410 | |
| | |
|
|
| |
|
|
|
Total investment securities | | | 704,961 | | | | 517,794 | |
Securities purchased under agreement to resell | | | — | | | | 27,202 | |
Loans: | | | | | | | | |
Residential real estate | | | 446,134 | | | | 471,806 | |
Home equity | | | 282,481 | | | | 210,753 | |
Commercial real estate | | | 351,284 | | | | 273,904 | |
Other commercial | | | 76,167 | | | | 95,323 | |
Loans to depository institutions | | | — | | | | 20,000 | |
Installment | | | 33,651 | | | | 64,181 | |
Indirect | | | 24,707 | | | | 48,709 | |
Credit card | | | 18,979 | | | | 19,715 | |
Previously securitized loans | | | 58,788 | | | | — | |
| | |
|
|
| |
|
|
|
Gross Loans | | | 1,292,191 | | | | 1,204,391 | |
Allowance for loan losses | | | (21,426 | ) | | | (28,504 | ) |
| | |
|
|
| |
|
|
|
Net loans | | | 1,270,765 | | | | 1,175,887 | |
Retained interests | | | 34,320 | | | | 80,923 | |
Bank owned life insurance | | | 49,214 | | | | 12,894 | |
Premises and equipment | | | 35,338 | | | | 37,802 | |
Accrued interest receivable | | | 10,216 | | | | 11,265 | |
Net deferred tax assets | | | 29,339 | | | | 35,895 | |
Other assets | | | 16,939 | | | | 18,931 | |
| | |
|
|
| |
|
|
|
Total Assets | | $ | 2,214,430 | | | $ | 2,047,911 | |
| | |
|
|
| |
|
|
|
Liabilities | | | | | | | | |
Deposits: | | | | | | | | |
Noninterest-bearing | | $ | 309,706 | | | $ | 281,290 | |
Interest-bearing: | | | | | | | | |
Demand deposits | | | 393,443 | | | | 377,165 | |
Savings deposits | | | 278,117 | | | | 286,198 | |
Time deposits | | | 655,496 | | | | 619,927 | |
| | |
|
|
| |
|
|
|
Total deposits | | | 1,636,762 | | | | 1,564,580 | |
Federal funds purchased and securities sold under agreement to repurchase | | | 168,403 | | | | 146,937 | |
Securities sold, not yet purchased | | | — | | | | 26,284 | |
Long-term debt | | | 190,836 | | | | 25,000 | |
Corporation-obligated mandatorily redeemable capital securities of subsidiary trusts holding solely subordinated debentures of City Holding Company | | | — | | | | 87,500 | |
Other liabilities | | | 27,739 | | | | 32,217 | |
| | |
|
|
| |
|
|
|
Total Liabilities | | | 2,023,740 | | | | 1,882,518 | |
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; 16,919,248 shares issued and outstanding at December 31, 2003 and 2002, including 274,881 and 261,563 shares in treasury | | | 42,298 | | | | 42,298 | |
Capital surplus | | | 57,364 | | | | 59,029 | |
Retained earnings | | | 96,460 | | | | 66,076 | |
Cost of common stock in treasury | | | (6,803 | ) | | | (6,426 | ) |
Accumulated other comprehensive income: | | | | | | | | |
Unrealized gain on securities available-for-sale | | | 3,762 | | | | 5,960 | |
Underfunded pension liability | | | (2,391 | ) | | | (1,544 | ) |
| | |
|
|
| |
|
|
|
Total Accumulated Other Comprehensive Income | | | 1,371 | | | | 4,416 | |
| | |
|
|
| |
|
|
|
Total Stockholders’ Equity | | | 190,690 | | | | 165,393 | |
| | |
|
|
| |
|
|
|
Total Liabilities and Stockholders’ Equity | | $ | 2,214,430 | | | $ | 2,047,911 | |
| | |
|
|
| |
|
|
|
CITY HOLDING COMPANY AND SUBSIDIARIES
Loan Portfolio
(Unaudited) ($ in 000s)
| | | Dec. 31 2003
| | Sept. 30 2003
| | June 30 2003
| | March 31 2003
| | Dec. 31 2002
|
Residential real estate | | $ | 446,134 | | $ | 448,455 | | $ | 452,014 | | $ | 463,813 | | $ | 471,806 |
Home equity | | | 282,481 | | | 272,091 | | | 253,178 | | | 232,048 | | | 210,753 |
Commercial real estate | | | 351,284 | | | 317,549 | | | 301,321 | | | 288,724 | | | 273,904 |
Other commercial | | | 76,167 | | | 79,090 | | | 85,356 | | | 88,824 | | | 95,323 |
Loans to depository institutions | | | — | | | — | | | — | | | — | | | 20,000 |
Installment | | | 33,651 | | | 39,466 | | | 46,877 | | | 53,488 | | | 64,181 |
Indirect | | | 24,707 | | | 29,074 | | | 35,059 | | | 41,475 | | | 48,709 |
Credit card | | | 18,979 | | | 19,133 | | | 19,155 | | | 18,780 | | | 19,715 |
Previously securitized loans | | | 58,788 | | | 37,339 | | | 4,933 | | | — | | | — |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
Gross Loans | | $ | 1,292,191 | | $ | 1,242,197 | | $ | 1,197,893 | | $ | 1,187,152 | | $ | 1,204,391 |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)
| | | Three Months Ended December 31,
| |
| | | 2003
| | | 2002
| |
| | | Average
Balance
| | | Interest
| | Yield/ Rate
| | | Average
Balance
| | | Interest
| | Yield/ Rate
| |
Assets: | | | | | | | | | | | | | | | | | | | | |
Loan portfolio: | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | $ | 449,765 | | | $ | 7,127 | | 6.34 | % | | $ | 476,055 | | | $ | 8,673 | | 7.29 | % |
Home equity | | | 277,736 | | | | 3,006 | | 4.33 | % | | | 198,288 | | | | 2,558 | | 5.16 | % |
Commercial real estate | | | 329,013 | | | | 4,784 | | 5.82 | % | | | 266,616 | | | | 4,650 | | 6.98 | % |
Other commercial | | | 78,875 | | | | 1,057 | | 5.36 | % | | | 101,020 | | | | 1,730 | | 6.85 | % |
Loans to depository institutions | | | — | | | | — | | — | | | | 32,717 | | | | 149 | | 1.82 | % |
Installment | | | 36,475 | | | | 1,064 | | 11.67 | % | | | 69,558 | | | | 2,003 | | 11.52 | % |
Indirect | | | 26,785 | | | | 742 | | 11.08 | % | | | 52,395 | | | | 1,298 | | 9.91 | % |
Credit card | | | 18,791 | | | | 558 | | 11.88 | % | | | 19,108 | | | | 512 | | 10.72 | % |
Previously securitized loans | | | 54,141 | | | | 2,993 | | 22.11 | % | | | — | | | | — | | — | |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
Total loans | | | 1,271,581 | | | | 21,331 | | 6.71 | % | | | 1,215,757 | | | | 21,573 | | 7.10 | % |
Securities: | | | | | | | | | | | | | | | | | | | | |
Taxable | | | 531,308 | | | | 5,760 | | 4.34 | % | | | 459,271 | | | | 4,906 | | 4.27 | % |
Tax-exempt | | | 39,292 | | | | 736 | | 7.49 | % | | | 49,650 | | | | 976 | | 7.86 | % |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
Total securities | | | 570,600 | | | | 6,496 | | 4.55 | % | | | 508,921 | | | | 5,882 | | 4.62 | % |
Retained interest in securitized loans | | | 40,287 | | | | 2,000 | | 19.86 | % | | | 80,390 | | | | 3,390 | | 16.87 | % |
Deposits in depository institutions | | | 4,465 | | | | 11 | | 0.99 | % | | | — | | | | — | | — | |
Federal funds sold | | | — | | | | — | | — | | | | 30,800 | | | | 112 | | 1.45 | % |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
Total interest-earning assets | | | 1,886,933 | | | | 29,838 | | 6.33 | % | | | 1,835,868 | | | | 30,957 | | 6.74 | % |
Cash and due from banks | | | 47,190 | | | | | | | | | | 59,644 | | | | | | | |
Bank premises and equipment | | | 35,817 | | | | | | | | | | 38,523 | | | | | | | |
Other assets | | | 107,409 | | | | | | | | | | 76,224 | | | | | | | |
Less: Allowance for loan losses | | | (23,153 | ) | | | | | | | | | (29,045 | ) | | | | | | |
| | |
|
|
| | | | | | | |
|
|
| | | | | | |
Total assets | | $ | 2,054,196 | | | | | | | | | $ | 1,981,214 | | | | | | | |
| | |
|
|
| | | | | | | |
|
|
| | | | | | |
Liabilities: | | | | | | | | | | | | | | | | | | | | |
Interest-bearing demand deposits | | $ | 392,314 | | | $ | 583 | | 0.59 | % | | $ | 365,692 | | | $ | 504 | | 0.55 | % |
Savings deposits | | | 281,689 | | | | 375 | | 0.53 | % | | | 289,623 | | | | 490 | | 0.68 | % |
Time deposits | | | 647,554 | | | | 4,694 | | 2.90 | % | | | 629,725 | | | | 5,167 | | 3.28 | % |
Short-term borrowings | | | 104,427 | | | | 133 | | 0.51 | % | | | 120,909 | | | | 1,014 | | 3.35 | % |
Long-term debt | | | 61,902 | | | | 481 | | 3.11 | % | | | 25,000 | | | | 284 | | 4.54 | % |
Trust preferred securities | | | 53,580 | | | | 1,231 | | 9.19 | % | | | 87,500 | | | | 2,006 | | 9.17 | % |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
Total interest-bearing liabilities | | | 1,541,466 | | | | 7,497 | | 1.95 | % | | | 1,518,449 | | | | 9,465 | | 2.49 | % |
Noninterest-bearing demand deposits | | | 300,905 | | | | | | | | | | 272,485 | | | | | | | |
Other liabilities | | | 24,512 | | | | | | | | | | 25,784 | | | | | | | |
Stockholders’ equity | | | 187,313 | | | | | | | | | | 164,496 | | | | | | | |
| | |
|
|
| | | | | | | |
|
|
| | | | | | |
Total liabilities and stockholders’ equity | | $ | 2,054,196 | | | | | | | | | $ | 1,981,214 | | | | | | | |
| | |
|
|
| | | | | | | |
|
|
| | | | | | |
Net interest income | | | | | | $ | 22,341 | | | | | | | | | $ | 21,492 | | | |
| | | | | | |
|
| | | | | | | | |
|
| | | |
Net yield on earning assets | | | | | | | | | 4.74 | % | | | | | | | | | 4.68 | % |
| | | | | | | | | |
|
| | | | | | | | |
|
|
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)
| | | Twelve Months Ended December 31,
| |
| | | 2003
| | | 2002
| |
| | | Average
Balance
| | | Interest
| | Yield/
Rate
| | | Average Balance
| | | Interest
| | Yield/ Rate
| |
Assets: | | | | | | | | | | | | | | | | | | | | |
Loan portfolio: | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | $ | 455,971 | | | $ | 30,583 | | 6.71 | % | | $ | 533,544 | | | $ | 39,982 | | 7.49 | % |
Home equity | | | 251,135 | | | | 11,165 | | 4.45 | % | | | 156,639 | | | | 8,736 | | 5.58 | % |
Commercial real estate | | | 301,494 | | | | 18,448 | | 6.12 | % | | | 264,316 | | | | 19,907 | | 7.53 | % |
Other commercial | | | 84,738 | | | | 4,988 | | 5.89 | % | | | 116,445 | | | | 7,985 | | 6.86 | % |
Loans to depository institutions | | | 4,658 | | | | 78 | | 1.67 | % | | | 9,247 | | | | 167 | | 1.81 | % |
Installment | | | 47,121 | | | | 5,349 | | 11.35 | % | | | 91,317 | | | | 9,542 | | 10.45 | % |
Indirect | | | 35,449 | | | | 3,868 | | 10.91 | % | | | 66,039 | | | | 5,130 | | 7.77 | % |
Credit card | | | 18,925 | | | | 2,268 | | 11.98 | % | | | 18,343 | | | | 1,931 | | 10.53 | % |
Previously securitized loans | | | 20,426 | | | | 4,549 | | 22.27 | % | | | — | | | | — | | — | |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
Total loans | | | 1,219,917 | | | | 81,296 | | 6.66 | % | | | 1,255,890 | | | | 93,380 | | 7.44 | % |
Securities: | | | | | | | | | | | | | | | | | | | | |
Taxable | | | 517,728 | | | | 21,267 | | 4.11 | % | | | 462,142 | | | | 19,871 | | 4.30 | % |
Tax-exempt | | | 43,709 | | | | 3,248 | | 7.43 | % | | | 53,558 | | | | 4,155 | | 7.76 | % |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
Total securities | | | 561,437 | | | | 24,515 | | 4.37 | % | | | 515,700 | | | | 24,026 | | 4.66 | % |
Retained interest in securitized loans | | | 66,662 | | | | 12,465 | | 18.70 | % | | | 76,450 | | | | 12,427 | | 16.26 | % |
Deposits in depository institutions | | | 10,778 | | | | 114 | | 1.06 | % | | | — | | | | — | | — | |
Federal funds sold | | | 3,406 | | | | 36 | | 1.06 | % | | | 36,627 | | | | 586 | | 1.60 | % |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
Total interest-earning assets | | | 1,862,200 | | | | 118,426 | | 6.36 | % | | | 1,884,667 | | | | 130,419 | | 6.92 | % |
Cash and due from banks | | | 45,831 | | | | | | | | | | 59,415 | | | | | | | |
Bank premises and equipment | | | 36,289 | | | | | | | | | | 40,455 | | | | | | | |
Other assets | | | 89,549 | | | | | | | | | | 93,419 | | | | | | | |
Less: Allowance for loan losses | | | (26,877 | ) | | | | | | | | | (35,792 | ) | | | | | | |
| | |
|
|
| | | | | | | |
|
|
| | | | | | |
Total assets | | $ | 2,006,992 | | | | | | | | | $ | 2,042,164 | | | | | | | |
| | |
|
|
| | | | | | | |
|
|
| | | | | | |
Liabilities: | | | | | | | | | | | | | | | | | | | | |
Interest-bearing demand deposits | | $ | 385,882 | | | $ | 2,174 | | 0.56 | % | | $ | 371,847 | | | $ | 2,105 | | 0.57 | % |
Savings deposits | | | 287,823 | | | | 1,606 | | 0.56 | % | | | 299,958 | | | | 2,823 | | 0.94 | % |
Time deposits | | | 627,741 | | | | 18,756 | | 2.99 | % | | | 672,030 | | | | 24,422 | | 3.63 | % |
Short-term borrowings | | | 99,567 | | | | 792 | | 0.80 | % | | | 114,810 | | | | 2,765 | | 2.41 | % |
Long-term debt | | | 31,068 | | | | 1,208 | | 3.89 | % | | | 33,506 | | | | 1,809 | | 5.40 | % |
Trust preferred securities | | | 78,879 | | | | 7,249 | | 9.19 | % | | | 87,500 | | | | 8,022 | | 9.17 | % |
Trust preferred securities accrued interest | | | — | | | | — | | — | | | | 3,868 | | | | 353 | | 9.13 | % |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
Total interest-bearing liabilities | | | 1,510,960 | | | | 31,785 | | 2.10 | % | | | 1,583,519 | | | | 42,299 | | 2.67 | % |
Noninterest-bearing demand deposits | | | 292,075 | | | | | | | | | | 273,947 | | | | | | | |
Other liabilities | | | 25,585 | | | | | | | | | | 26,687 | | | | | | | |
Stockholders’ equity | | | 178,372 | | | | | | | | | | 158,011 | | | | | | | |
| | |
|
|
| | | | | | | |
|
|
| | | | | | |
Total liabilities and stockholders’ equity | | $ | 2,006,992 | | | | | | | | | $ | 2,042,164 | | | | | | | |
| | |
|
|
| | | | | | | |
|
|
| | | | | | |
Net interest income | | | | | | $ | 86,641 | | | | | | | | | $ | 88,120 | | | |
| | | | | | |
|
| | | | | | | | |
|
| | | |
Net yield on earning assets | | | | | | | | | 4.65 | % | | | | | | | | | 4.68 | % |
| | | | | | | | | |
|
| | | | | | | | |
|
|
CITY HOLDING COMPANY AND SUBSIDIARIES
Analysis of Risk-Based Capital
(Unaudited) ($ in 000s)
| | | Dec. 31 2003 (a)
| | | Sept. 30
2003
| | | June 30 2003
| | | March 31 2003
| | | Dec. 31 2002
| |
Tier I Capital: | | | | | | | | | | | | | | | | | | | | |
Stockholders’ equity | | $ | 191,537 | | | $ | 183,463 | | | $ | 178,571 | | | $ | 167,877 | | | $ | 165,393 | |
Goodwill and other intangibles | | | (6,459 | ) | | | (6,510 | ) | | | (6,574 | ) | | | (6,652 | ) | | | (6,730 | ) |
Accumulated other comprehensive income | | | (2,218 | ) | | | (1,673 | ) | | | (5,134 | ) | | | (3,357 | ) | | | (4,416 | ) |
Qualifying trust preferred stock | | | 30,000 | | | | 60,597 | | | | 57,812 | | | | 54,840 | | | | 53,659 | |
Excess retained interests | | | — | | | | — | | | | (23,809 | ) | | | (29,169 | ) | | | (28,946 | ) |
Excess deferred tax assets | | | (7,490 | ) | | | (7,731 | ) | | | (9,048 | ) | | | (14,477 | ) | | | (15,104 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total tier I capital | | $ | 205,370 | | | $ | 228,146 | | | $ | 191,818 | | | $ | 169,062 | | | $ | 163,856 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total Risk-Based Capital: | | | | | | | | | | | | | | | | | | | | |
Tier I capital | | $ | 205,370 | | | $ | 228,146 | | | $ | 191,818 | | | $ | 169,062 | | | $ | 163,856 | |
Qualifying allowance for loan losses | | | 21,426 | | | | 23,436 | | | | 24,759 | | | | 24,139 | | | | 24,068 | |
Qualifying trust preferred stock | | | — | | | | 26,903 | | | | 29,688 | | | | 32,660 | | | | 33,841 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total risk-based capital | | $ | 226,796 | | | $ | 278,485 | | | $ | 246,265 | | | $ | 225,861 | | | $ | 221,765 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Net risk-weighted assets | | $ | 1,711,852 | | | $ | 1,783,444 | | | $ | 1,654,924 | | | $ | 1,650,156 | | | $ | 1,660,489 | |
Ratios: | | | | | | | | | | | | | | | | | | | | |
Average stockholders’ equity to average assets | | | 9.12 | % | | | 9.23 | % | | | 8.65 | % | | | 8.53 | % | | | 8.30 | % |
Risk-based capital ratios: | | | | | | | | | | | | | | | | | | | | |
Tier I capital | | | 12.00 | % | | | 12.79 | % | | | 11.59 | % | | | 10.25 | % | | | 9.87 | % |
Total risk-based capital | | | 13.25 | % | | | 15.62 | % | | | 14.88 | % | | | 13.69 | % | | | 13.36 | % |
Leverage capital | | | 10.07 | % | | | 11.50 | % | | | 9.81 | % | | | 8.75 | % | | | 8.49 | % |
| (a) | December 31, 2003 risk-based capital ratios are estimated. |
CITY HOLDING COMPANY AND SUBSIDIARIES
Intangibles
(Unaudited) ($ in 000s)
| | | As of and for the Quarter Ended
|
| | | Dec. 31
2003
| | Sept. 30
2003
| | June 30
2003
| | March
31 2003
| | Dec. 31
2002
|
Intangibles, net | | $ | 6,459 | | $ | 6,510 | | $ | 6,574 | | $ | 6,652 | | $ | 6,730 |
Intangibles amortization expense | | | 51 | | | 64 | | | 78 | | | 78 | | | 78 |
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Loan Loss Experience
(Unaudited) ($ in 000s)
| | | Quarter Ended
| |
| | | Dec. 31 2003
| | | Sept. 30 2003
| | | June 30 2003
| | | March 31 2003
| | | Dec. 31 2002
| |
Balance at beginning of period | | $ | 23,436 | | | $ | 26,092 | | | $ | 28,910 | | | $ | 28,504 | | | $ | 28,623 | |
Charge-offs: | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 158 | | | | 497 | | | | 2 | | | | 532 | | | | 565 | |
Real estate—mortgage | | | 437 | | | | 316 | | | | 531 | | | | 594 | | | | 421 | |
Installment | | | 715 | | | | 678 | | | | 676 | | | | 1,007 | | | | 1,187 | |
Overdraft deposit accounts | | | 583 | | | | 596 | | | | 501 | | | | — | | | | — | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total charge-offs | | | 1,893 | | | | 2,087 | | | | 1,710 | | | | 2,133 | | | | 2,173 | |
Recoveries: | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 323 | | | | 683 | | | | 1,309 | | | | 929 | | | | 490 | |
Real estate—mortgage | | | 135 | | | | 191 | | | | 307 | | | | 1,178 | | | | 1,140 | |
Installment | | | 211 | | | | 249 | | | | 408 | | | | 432 | | | | 424 | |
Overdraft deposit accounts | | | 214 | | | | 208 | | | | 168 | | | | — | | | | — | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total recoveries | | | 883 | | | | 1,331 | | | | 2,192 | | | | 2,539 | | | | 2,054 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Net charge-offs (recoveries) | | | 1,010 | | | | 756 | | | | (482 | ) | | | (406 | ) | | | 119 | |
(Recovery of) provision for loan losses | | | (1,000 | ) | | | (1,900 | ) | | | (3,300 | ) | | | — | | | | — | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Balance at end of period | | $ | 21,426 | | | $ | 23,436 | | | $ | 26,092 | | | $ | 28,910 | | | $ | 28,504 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Loans outstanding | | $ | 1,292,191 | | | $ | 1,242,197 | | | $ | 1,197,893 | | | $ | 1,187,152 | | | $ | 1,204,391 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Average loans outstanding | | | 1,271,581 | | | | 1,222,012 | | | | 1,188,363 | | | | 1,196,048 | | | | 1,215,757 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Allowance as a percent of loans outstanding | | | 1.66 | % | | | 1.89 | % | | | 2.18 | % | | | 2.44 | % | | | 2.37 | % |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Allowance as a percent of non-performing loans | | | 529 | % | | | 551 | % | | | 701 | % | | | 1057 | % | | | 948 | % |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Net charge-offs (recoveries) (annualized) as a percent of average loans outstanding | | | 0.32 | % | | | 0.25 | % | | | (0.16 | )% | | | (0.14 | )% | | | 0.04 | % |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Non-Performing Assets
(Unaudited) ($ in 000s)
| | | Dec. 31 2003
| | | Sept. 30 2003
| | | June 30 2003
| | | March 31 2003
| | | Dec. 31 2002
| |
Nonaccrual loans | | $ | 2,140 | | | $ | 2,509 | | | $ | 1,919 | | | $ | 2,148 | | | $ | 2,126 | |
Accruing loans past due 90 days or more | | | 1,195 | | | | 1,229 | | | | 1,744 | | | | 588 | | | | 880 | |
Previously securitized loans past due 90 days or more | | | 717 | | | | 516 | | | | 61 | | | | — | | | | — | |
Restructured loans | | | — | | | | — | | | | — | | | | — | | | | — | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total non-performing loans | | | 4,052 | | | | 4,254 | | | | 3,724 | | | | 2,736 | | | | 3,006 | |
Other real estate owned | | | 312 | | | | 477 | | | | 623 | | | | 387 | | | | 403 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total non-performing assets | | $ | 4,364 | | | $ | 4,731 | | | $ | 4,347 | | | $ | 3,123 | | | $ | 3,409 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Non-performing assets as a percent of loans and other real estate owned | | | 0.34 | % | | | 0.38 | % | | | 0.36 | % | | | 0.26 | % | | | 0.28 | % |
