Exhibit 99
NEWS RELEASE
For Immediate Release
April 15, 2005
For Further Information Contact:
Charles R. Hageboeck, Chief Executive Officer and President
(304) 769-1102
City Holding Company Announces First Quarter Earnings
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 first quarter of $11.7 million, or diluted earnings per share of $0.69 compared to $11.0 million, or $0.65 per diluted share in the first quarter of 2004, a 6.2% increase. For the first quarter of 2005, the Company achieved a return on assets of 2.11%, a return on equity of 20.92%, a net interest margin of 4.40%, and an efficiency ratio of 47.4%, placing the Company among the most profitable banks for the quarter. At March 31, 2005 the book value of the Company’s common stock was $13.20 per share compared to a book value of $12.09 per share at March 31, 2004, representing a 9.2% increase.
The Company continues to demonstrate strong performance across all measures. Targeted loan balances grew significantly, with commercial real estate loans up 17.6% since March 31, 2004, residential real estate balances up 5.5% and home equity loan balances up 3.4% over the same period. Average non-interest and interest bearing demand deposits grew 4.2% from the quarter ended March 31, 2004 to the quarter ended March 31, 2005. Although the average balance of previously securitized loans and retained interests, which yielded 22.4% during the first quarter of 2005, decreased by $42.7 million, the Company was able to sustain the level of net interest income through loan and deposit growth and by positioning the balance sheet to benefit from rising interest rates. Between the first quarter of 2004 and the first quarter of 2005, service charges grew 14.4% and the Company experienced an increase in bank owned life insurance income. Expenses decreased 2.6%, primarily due to lower compensation expense and legal fees.
Balance Sheet Trends
As compared to March 31, 2004, loans have increased $9.5 million at March 31, 2005. Specifically, commercial real estate loan balances grew by $61.3 million and residential real estate loan balances increased by $24.2 million. Offsetting the targeted loan growth, were decreases in previously securitized loans of $42.4 million (see discussion below) and in loan portfolios that the Company has de-emphasized, including decreases in unsecured consumer loans of $12.3 million and decreases in indirect loans of $12.0 million. At March 31, 2005, the Company also had a $10 million short-term loan to Classic Bank. On December 29, 2004, the Company announced that it had entered into a definitive agreement to acquire Classic Bancshares and its principal subsidiary, Classic Bank. This transaction is expected to close on
May 20, 2005, pending approval by Classic’s shareholders. Total average depository balances increased $23.3 million, or 1.4%, from the quarter ended March 31, 2004 to the quarter ended March 31, 2005. This growth was primarily attributable to average non-interest and interest bearing demand deposits, which increased $29.8 million or 4.2%.
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. The Company had a retained interest in the residual cash flows associated with these underlying mortgages after satisfying priority claims. Principal amounts owed to investors in the securitizations were evidenced by securities that were subject to redemption under certain circumstances. Once the Notes were redeemed, the Company became the beneficial owner of the mortgage loans and recorded the loans as “Previously Securitized Loans” within the loan portfolio. The Company exercised its early redemption option with respect to four of the trusts during 2003 and the remaining two trusts during 2004. As a result, carrying balances for “Retained Interests” at March 31, 2004, became classified as “Previously Securitized Loans”. At March 31, 2005, the Company reported “Previously Securitized Loans” of $50.6 million compared to $93.0 million and $58.4 million at March 31, 2004 and December 31, 2004, respectively, representing a decrease of 45.6% and 13.4%, respectively.
Because the carrying value of the previously securitized loans incorporates discounts for expected prepayment and default rates, the carrying value of the loans is generally less than the contractual outstanding balance of the loans. As of March 31, 2005, the contractual outstanding balances of the mortgages securitized were $67.3 million while the carrying value of these assets was $50.6 million. The difference between the carrying value and the contractual outstanding balance of previously securitized loans is accreted into interest income over the life of the loans. An impairment charge on previously securitized loans would be provided through the Company’s provision and allowance for loan losses if the discounted present value of estimated future cash flows decline below the recorded value of previously securitized loans.
The Company estimates the net carrying value of previously securitized loan balances to decrease as shown below:
December 31, 2005 | $ | 37 million | |
December 31, 2006 | $ | 26 million | |
December 31, 2007 | $ | 19 million | |
December 31, 2008 | $ | 14 million |
During the first quarter of 2005, defaults on the previously securitized loans were at a lower rate than expected. Because the previously securitized loans have been experiencing lower default rates than previously assumed, the accretable yield has increased which has caused the yield on the previously securitized loans to increase. In addition, the Company has now assumed the servicing on approximately 55% of the total pool balances as of March 31, 2005 and will have assumed 100% of the servicing by April 30, 2005. This is also expected to have a favorable impact on the accretable yield realized on the previously securitized loans due to the elimination
of the servicing fees currently being paid to the external servicing agent. As a result, the yield is now estimated to be in the range of 19% and 23%, depending on defaults and prepayment rates experienced on these loans in the future.
Net Interest Income
During the first quarter of 2005, the Company recorded tax equivalent net interest income of $22.5 million as compared to $22.6 million during the first quarter of 2004. The flat level of net interest income can be primarily attributed to two factors. Decreasing balances of previously securitized loans and retained interests with high yields reduced the amount of interest income reported. Average balances of previously securitized loans and retained interests decreased from $97.6 million for the quarter ended March 31, 2004 to $54.9 million for the quarter ended March 31, 2005. As a result of the decrease in balances of $42.7 million that yielded 18.7% for the first quarter of 2004, interest income related to previously securitized loans and retained interests decreased $1.5 million. Offsetting the decreasing interest income from high yielding previously securitized loans and retained interests were increases in interest income from the Company’s traditional loan portfolio. Primarily as a result of increased average loan balances (excluding previously securitized loans) of $67.5 million from the quarter ended March 31, 2004 to the quarter ended March 31, 2005, interest income attributable to these loan products increased $1.2 million, or 6.7%, for the like period.
The net interest margin for the first quarter of 2005 of 4.40% approximated the first quarter of 2004 net interest margin of 4.42% and represented a 13 basis point increase from the net interest margin of 4.27% for the quarter ended December 31, 2004. In order to offset the decreasing balances of high yielding previously securitized loans and resultant lower levels of interest income from these assets, the Company positioned its balance sheet to benefit from rising interest rates. Since June 2004, the Federal funds rate has increased 175 basis points from 1.00% to 2.75% in March 2005. To manage its interest rate risk, the Company has focused on the origination of variable rate lending in its traditional lending areas of residential real estate, home equity and commercial real estate loan portfolios. Excluding the impact of previously securitized loans and retained interests, the Company’s net interest margin increased 20 basis points, or $1.4 million, from the quarter ended March 31, 2004 to the quarter ended March 31, 2005. Because of the Company’s strong core deposit base of checking accounts and savings accounts, management believes that the increasing interest rate environment will beneficially impact the Company’s net interest income.
Credit Quality
At March 31, 2005, the Allowance for Loan Losses (“ALLL”) was $16.3 million or 1.22% of total loans outstanding and 490% of non-performing loans compared to $17.8 million or 1.31% of loans outstanding and 487% of non-performing loans at December 31, 2004, and $20.2 million or 1.52% of loans outstanding and 432% of non-performing loans at March 31, 2004. The Company recorded no provision for loan losses in the first quarter of 2005 and has not recorded a provision for loan losses since the second quarter of 2002. During the last three years, management has implemented a number of strategic initiatives to strengthen the loan portfolio including tightening credit standards, changing the overall mix of the portfolio to
include a higher proportion of real estate secured loans, and identifying and charging-off or resolving problem loans. As a result of these initiatives, the quality of the Company’s loan portfolio has increased significantly as evidenced by the improvement in its ratio of non-performing assets to total loans and other real estate owned from 1.38% at March 31, 2002 to 0.28% at March 31, 2005. As the Company’s asset quality has improved, the ALLL has decreased. However, given the relatively stable credit profile achieved over the last several years, the Company expects that it may begin to record a provision for loan losses within the next three to nine months. Future provisions for loan losses will be dependent upon trends in loan balances including the composition of the loan portfolio, changes in loan quality and loss experience trends, and potential recoveries of previously charged-off loans. The Company believes that its methodology for determining its ALLL adequately provides for probable losses inherent in the loan portfolio at March 31, 2005.
During the first quarter of 2005, the Company had net charge-offs of $1.5 million. Net charge-offs relating to one non-performing relationship accounted for approximately $0.6 million, or 40%, of the total net charge-offs. The charge-off of this relationship, which had been originated prior to 2000, related to a commercial real estate loan and an associated home equity loan. The Company had previously specifically allocated $0.3 million for the commercial relationship. Information that became available in the first quarter of 2005 led to the charge-off and the revision to the prior estimate of loss for this non-performing credit.
Net charge-offs on depository accounts were $0.4 million, or 29% of total net charge-offs. While charge-offs on depository accounts are appropriately taken against the ALLL, the revenue associated with depository accounts is reflected in service charges, and has been steadily growing as the Company’s core base of checking accounts has grown.
Non-performing assets were $3.8 million at March 31, 2005, representing 0.28% of total loans and other real estate owned. This ratio has been very stable over the last two years, fluctuating between 0.26% at March 31, 2003, and 0.38% at September 30, 2003. Although net charge-offs increased during the first quarter of 2005, the allowance as a percentage of non- performing loans was 490% at March 31, 2005. This coverage percentage is consistent with the Company’s coverage percentage of non- performing loans for the four most recently ended quarters.
Non-interest Income
Net of investment securities gains, non-interest income increased $1.5 million, or 15.5%, to $11.4 million in the first quarter of 2005 as compared to $9.9 million in the first quarter of 2004. The largest source of non-interest income is service charges, which increased from $7.4 million during the first quarter of 2004 to $8.4 million during the first quarter of 2005. The Company also experienced significant increases in trust revenues that were up 21.4%, and additional revenue of $0.4 million from bank-owned life insurance from the settlement of an insured claim.
Non-interest Expenses
Non-interest expenses decreased from $16.4 million in the first quarter of 2004 to $16.0 million in the first quarter of 2005. Lower compensation expense was primarily due to decreased executive severance expense. In accordance with the employment agreements of the Company’s turnaround management team, $0.4 million was incurred for executive severances during the first quarter of 2004 compared with $0.2 million during the first quarter of 2005. The decrease in professional fees and litigation expenses was directly attributable to litigation expense of $0.3 million incurred during the first quarter of 2004 associated with the resolution of the Company’s derivative lawsuit.
Capitalization and Liquidity
One of the Company’s strengths is that it is highly profitable while maintaining strong liquidity and capital. With respect to liquidity, the Company’s loan to deposit ratio was 80.2% and the loan to asset ratio was 59.9% at March 31, 2005. The Company maintained investment securities totaling 32.2% of assets as of this date. Further, the Company’s deposit mix is weighted heavily toward checking and saving accounts that fund 45.4% of assets at March 31, 2005. Time deposits fund 29.2% of assets at March 31, 2005, but very few of these deposits are in accounts that have balances of more than $150,000, reflecting the core retail orientation of the Company. Equity represents 9.8% of total assets, leaving only 15.6% of the Company’s assets funded by short and long-term borrowings and other liabilities.
The Company is also strongly capitalized. Capitalization (as measured by average equity to average assets) was 10.08% at March 31, 2005 as a result of the Company’s strong earnings. The Company’s tangible equity ratio was 9.52% at March 31, 2005. With respect to regulatory capital, at March 31, 2004, the Company’s Leverage Ratio is 11.00%, the Tier I Capital ratio is 15.92%, and the Total Risk-Based Capital ratio is 16.99%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.
Other Events of Interest
On January 26, 2005, the Company announced that Charles “Skip” R. Hageboeck had been named President & CEO succeeding Gerald R. Francis. Mr. Francis continues as non-executive Chairman of the Board.
On February 23, 2005, the Company announced that Craig G. Stilwell had been named as Executive Vice President of Retail Banking and David L. Bumgarner had been named Chief Financial Officer for the Company.
On March 30, 2005, the Board approved a 14% increase in the quarterly cash dividend to 25 cents per share payable April 30, 2005 to shareholders of record as of April 15, 2005.
On April 5, 2005, the Company and Classic Bancshares announced that they have received all required regulatory approvals of their pending merger. Pending approval by Classic’s shareholders at their special shareholders meeting on May 16, 2005, the merger is expected to be completed on May 20, 2005. Classic’s wholly owned banking subsidiary, Classic Bank, is a $340 million commercial bank that operates a network of 10 full-service branches located in Boyd, Carter, Greenup and Johnson Counties in Kentucky and Lawrence County in Ohio. The merger of City and Classic solidifies City’s market share in the important Huntington/ Ashland MSA. City currently is the fourth largest banking institution in the MSA while Classic is the 11th largest. On a combined basis, City will become the largest banking franchise in this $3.5 billion market with deposits of $361 million, 14 branches and 23 ATMs.
Forward Looking Information
City Holding Company is the parent company of City National Bank of West Virginia.
This news release contains certain forward-looking statements that are included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such information involves risks and uncertainties that could result in the Company’s actual results differing from those projected in the forward-looking statements. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include, but are not limited to, (1) the Company may incur additional loan loss provision due to negative credit quality trends in the future that may lead to a deterioration of asset quality; (2) the Company may 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 previously securitized loans that would result in impairment losses, (4) the Company could have adverse legal actions of a material nature, (5) the Company may face competitive loss of customers, (6) the Company may be unable to manage its expense levels, (7) the Company may have difficulty retaining key employees, (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 | |||||||||||
| March 31 2005 | March 31 2004 | Percent Change | |||||||||
Earnings ($000s, except per share data): | |||||||||||
Net Interest Income (FTE) | $ | 22,496 | $ | 22,569 | (0.32 | )% | |||||
Net Income | 11,678 | 11,003 | 6.13 | % | |||||||
Earnings per Basic Share | 0.70 | 0.66 | 6.06 | % | |||||||
Earnings per Diluted Share | 0.69 | 0.65 | 6.15 | % | |||||||
Key Ratios (percent): | |||||||||||
Return on Average Assets | 2.11 | % | 1.99 | % | 5.99 | % | |||||
Return on Average Equity | 20.92 | % | 22.26 | % | (6.00 | )% | |||||
Net Interest Margin | 4.40 | % | 4.42 | % | (0.56 | )% | |||||
Efficiency Ratio | 47.36 | % | 50.84 | % | (6.85 | )% | |||||
Average Shareholders’ Equity to Average Assets | 10.08 | % | 8.96 | % | 12.51 | % | |||||
Risk-Based Capital Ratios (a): | |||||||||||
Tier I | 15.92 | % | 14.63 | % | 8.82 | % | |||||
Total | 16.99 | % | 15.89 | % | 6.92 | % | |||||
Common Stock Data: | |||||||||||
Cash Dividends Declared per Share | $ | 0.25 | $ | 0.22 | 13.64 | % | |||||
Book Value per Share | 13.20 | 12.09 | 9.17 | % | |||||||
Market Value per Share: | |||||||||||
High | 36.61 | 36.18 | 1.19 | % | |||||||
Low | 29.01 | 32.35 | (10.32 | )% | |||||||
End of Period | 29.54 | 34.59 | (14.60 | )% | |||||||
Price/Earnings Ratio (b) | 10.55 | 13.10 | (19.47 | )% | |||||||
| (a) | March 31, 2005 risk-based capital ratios are estimated. |
| (b) | March 31, 2005 price/earnings ratio computed based on annualized first quarter 2005 earnings. |
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 | |||||||||||||
2001 | $ | 8.82 | $ | 8.70 | $ | 8.37 | $ | 8.67 | $ | 5.13 | $ | 13.94 | ||||||
2002 | 8.92 | 9.40 | 9.64 | 9.93 | 12.04 | 30.20 | ||||||||||||
2003 | 10.10 | 10.74 | 11.03 | 11.46 | 25.50 | 37.15 | ||||||||||||
2004 | 12.09 | 11.89 | 12.70 | 13.03 | 27.30 | 37.58 | ||||||||||||
2005 | 13.20 | 29.01 | 36.61 | |||||||||||||||
Earnings per Basic Share
| Quarter Ended | |||||||||||||||||||
| March 31 | June 30 | September 30 | December 31 | Year-to-Date | |||||||||||||||
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 | ||||||||||||||
2004 | 0.66 | 0.80 | 0.66 | 0.67 | 2.79 | ||||||||||||||
2005 | 0.70 | 0.70 | |||||||||||||||||
Earnings per Diluted Share
| Quarter Ended | |||||||||||||||||||
| March 31 | June 30 | September 30 | December 31 | Year-to-Date | |||||||||||||||
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 | ||||||||||||||
2004 | 0.65 | 0.79 | 0.65 | 0.66 | 2.75 | ||||||||||||||
2005 | 0.69 | 0.69 | |||||||||||||||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)
| Three Months Ended March 31 | ||||||
| 2005 | 2004 | |||||
Interest Income | ||||||
Interest and fees on loans | $ | 22,190 | $ | 21,723 | ||
Interest on investment securities: | ||||||
Taxable | 7,646 | 7,224 | ||||
Tax-exempt | 435 | 477 | ||||
Interest on retained interests | — | 740 | ||||
Interest on deposits in depository institutions | 18 | 11 | ||||
Interest on federal funds sold | 4 | — | ||||
Total Interest Income | 30,293 | 30,175 | ||||
Interest Expense | ||||||
Interest on deposits | 5,868 | 5,692 | ||||
Interest on short-term borrowings | 577 | 166 | ||||
Interest on long-term debt | 1,585 | 2,005 | ||||
Total Interest Expense | 8,030 | 7,863 | ||||
Net Interest Income | 22,263 | 22,312 | ||||
Provision for loan losses | — | — | ||||
Net Interest Income After Provision for Loan Losses | 22,263 | 22,312 | ||||
Non-Interest Income | ||||||
Investment securities gains | 3 | 1,012 | ||||
Service charges | 8,443 | 7,381 | ||||
Insurance commissions | 592 | 660 | ||||
Trust fee income | 591 | 487 | ||||
Bank owned life insurance | 991 | 581 | ||||
Mortgage banking income | 118 | 69 | ||||
Other income | 706 | 730 | ||||
Total Non-Interest Income | 11,444 | 10,920 | ||||
Non-Interest Expense | ||||||
Salaries and employee benefits | 7,920 | 8,127 | ||||
Occupancy and equipment | 1,475 | 1,494 | ||||
Depreciation | 944 | 1,006 | ||||
Professional fees and litigation expense | 565 | 844 | ||||
Postage, delivery, and statement mailings | 653 | 685 | ||||
Advertising | 705 | 656 | ||||
Telecommunications | 473 | 466 | ||||
Insurance and regulatory | 366 | 331 | ||||
Office supplies | 203 | 312 | ||||
Repossessed asset losses and expenses | 1 | 57 | ||||
Other expenses | 2,708 | 2,455 | ||||
Total Non-Interest Expense | 16,013 | 16,433 | ||||
Income Before Income Taxes | 17,694 | 16,799 | ||||
Income Tax Expense | 6,016 | 5,796 | ||||
Net Income | $ | 11,678 | $ | 11,003 | ||
Basic Earnings per Share | $ | 0.70 | $ | 0.66 | ||
Diluted Earnings per Share | $ | 0.69 | $ | 0.65 | ||
Average Common Shares Outstanding: | ||||||
Basic | 16,605 | 16,681 | ||||
Diluted | 16,812 | 16,972 | ||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited) ($ in 000s)
| Three Months Ended | ||||||||
| March 31, 2005 | March 31, 2004 | |||||||
Balance at January 1 | $ | 216,080 | $ | 190,690 | ||||
Net income | 11,678 | 11,003 | ||||||
Other comprehensive income: | ||||||||
Change in unrealized gain on securities available-for-sale | (4,746 | ) | 3,371 | |||||
Change in underfunded pension liability | — | — | ||||||
Cash dividends declared ($0.25/share) | (4,154 | ) | — | |||||
Cash dividends declared ($0.22/share) | — | (3,678 | ) | |||||
Issuance of 4,800 stock award shares | 147 | ��� | ||||||
Exercise of 14,499 stock options | 297 | — | ||||||
Exercise of 74,478 stock options | — | 818 | ||||||
Balance at March 31 | $ | 219,302 | $ | 202,204 | ||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Condensed Consolidated Quarterly Statements of Income
(Unaudited) ($ in 000s, except per share data)
| Quarter Ended | ||||||||||||||||||||
| March 31 2005 | Dec. 31 2004 | Sept. 30 2004 | June 30 2004 | March 31 2004 | ||||||||||||||||
Interest income | $ | 30,293 | $ | 29,746 | $ | 29,667 | $ | 29,293 | $ | 30,175 | ||||||||||
Taxable equivalent adjustment | 233 | 236 | 236 | 246 | 257 | |||||||||||||||
Interest income (FTE) | 30,526 | 29,982 | 29,903 | 29,539 | 30,432 | |||||||||||||||
Interest expense | 8,030 | 8,112 | 8,035 | 7,860 | 7,863 | |||||||||||||||
Net interest income | 22,496 | 21,870 | 21,868 | 21,679 | 22,569 | |||||||||||||||
Provision for loan losses | — | — | — | — | — | |||||||||||||||
Net interest income after provision for loan losses | 22,496 | 21,870 | 21,868 | 21,679 | 22,569 | |||||||||||||||
Noninterest income | 11,444 | 11,869 | 10,856 | 16,389 | 10,920 | |||||||||||||||
Noninterest expense | 16,013 | 17,131 | 15,783 | 16,985 | 16,433 | |||||||||||||||
Income before income taxes | 17,927 | 16,608 | 16,941 | 21,083 | 17,056 | |||||||||||||||
Income tax expense | 6,016 | 5,285 | 5,749 | 7,539 | 5,796 | |||||||||||||||
Taxable equivalent adjustment | 233 | 236 | 236 | 246 | 257 | |||||||||||||||
Net income | $ | 11,678 | $ | 11,087 | $ | 10,956 | $ | 13,298 | $ | 11,003 | ||||||||||
Basic earnings per share | $ | 0.70 | $ | 0.67 | $ | 0.66 | $ | 0.80 | $ | 0.66 | ||||||||||
Diluted earnings per share | 0.69 | 0.66 | 0.65 | 0.79 | 0.65 | |||||||||||||||
Cash dividends declared per share | 0.25 | 0.22 | 0.22 | 0.22 | 0.22 | |||||||||||||||
Average Common Share (000s): | ||||||||||||||||||||
Outstanding | 16,605 | 16,572 | 16,584 | 16,694 | 16,681 | |||||||||||||||
Diluted | 16,812 | 16,810 | 16,812 | 16,935 | 16,972 | |||||||||||||||
Net Interest Margin | 4.40 | % | 4.27 | % | 4.27 | % | 4.20 | % | 4.42 | % | ||||||||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Non-Interest Income and Non-Interest Expense
(Unaudited) ($ in 000s)
| Quarter Ended | |||||||||||||||||
| March 31 2005 | Dec. 31 2004 | Sept. 30 2004 | June 30 2004 | March 31 2004 | |||||||||||||
Non-Interest Income: | |||||||||||||||||
Service charges | $ | 8,443 | $ | 8,678 | $ | 8,440 | $ | 8,110 | $ | 7,381 | |||||||
Insurance commissions | 592 | 754 | 600 | 718 | 660 | ||||||||||||
Trust fee income | 591 | 466 | 446 | 627 | 487 | ||||||||||||
Bank owned life insurance | 991 | 1,184 | 575 | 591 | 581 | ||||||||||||
Mortgage banking income | 118 | 70 | 72 | 71 | 69 | ||||||||||||
Net proceeds from litigation settlement | — | — | — | 5,453 | — | ||||||||||||
Other income | 706 | 685 | 719 | 695 | 730 | ||||||||||||
Subtotal | 11,441 | 11,837 | 10,852 | 16,265 | 9,908 | ||||||||||||
Investment security gains | 3 | 32 | 4 | 124 | 1,012 | ||||||||||||
Total Non-Interest Income | $ | 11,444 | $ | 11,869 | $ | 10,856 | $ | 16,389 | $ | 10,920 | |||||||
Non-Interest Expense: | |||||||||||||||||
Salaries and employee benefits | $ | 7,920 | $ | 9,578 | $ | 8,150 | $ | 8,390 | $ | 8,127 | |||||||
Occupancy and equipment | 1,475 | 1,560 | 1,472 | 1,459 | 1,494 | ||||||||||||
Depreciation | 944 | 981 | 972 | 974 | 1,006 | ||||||||||||
Professional fees and litigation expense | 565 | 571 | 668 | 1,181 | 844 | ||||||||||||
Postage, delivery, and statement mailings | 653 | 589 | 601 | 598 | 685 | ||||||||||||
Advertising | 705 | 600 | 459 | 651 | 656 | ||||||||||||
Telecommunications | 473 | 403 | 488 | 463 | 466 | ||||||||||||
Insurance and regulatory | 366 | 330 | 342 | 320 | 331 | ||||||||||||
Office supplies | 203 | 210 | 252 | 273 | 312 | ||||||||||||
Repossessed asset (gains) losses and expenses | 1 | (31 | ) | 5 | (108 | ) | 57 | ||||||||||
Loss on early exinguishment of debt | — | — | — | 263 | — | ||||||||||||
Other expenses | 2,708 | 2,340 | 2,374 | 2,521 | 2,455 | ||||||||||||
Total Non-Interest Expense | $ | 16,013 | $ | 17,131 | $ | 15,783 | $ | 16,985 | $ | 16,433 | |||||||
Employees (Full Time Equivalent) | 689 | 691 | 692 | 692 | 690 | ||||||||||||
Branch Locations | 56 | 56 | 56 | 54 | 54 | ||||||||||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000s)
| March 31 2005 | December 31 2004 | |||||||
| (Unaudited) | ||||||||
Assets | ||||||||
Cash and due from banks | $ | 45,582 | $ | 52,854 | ||||
Interest-bearing deposits in depository institutions | 3,804 | 3,230 | ||||||
Cash and cash equivalents | 49,386 | 56,084 | ||||||
Investment securities available-for-sale, at fair value | 662,519 | 620,034 | ||||||
Investment securities held-to-maturity, at amortized cost | 59,684 | 59,740 | ||||||
Total investment securities | 722,203 | 679,774 | ||||||
Loans: | ||||||||
Residential real estate | 463,869 | 469,458 | ||||||
Home equity | 302,262 | 308,173 | ||||||
Commercial real estate | 409,064 | 400,801 | ||||||
Other commercial | 66,485 | 71,311 | ||||||
Loans to depository institutions | 10,000 | — | ||||||
Installment | 16,065 | 18,145 | ||||||
Indirect | 7,960 | 10,324 | ||||||
Credit card | 16,954 | 18,126 | ||||||
Previously securitized loans | 50,588 | 58,436 | ||||||
Gross Loans | 1,343,247 | 1,354,774 | ||||||
Allowance for loan losses | (16,325 | ) | (17,815 | ) | ||||
Net loans | 1,326,922 | 1,336,959 | ||||||
Bank owned life insurance | 51,381 | 50,845 | ||||||
Premises and equipment | 33,898 | 34,607 | ||||||
Accrued interest receivable | 10,778 | 9,868 | ||||||
Net deferred tax assets | 29,223 | 27,025 | ||||||
Other assets | 20,492 | 18,068 | ||||||
Total Assets | $ | 2,244,283 | $ | 2,213,230 | ||||
Liabilities | ||||||||
Deposits: | ||||||||
Noninterest-bearing | $ | 326,605 | $ | 319,425 | ||||
Interest-bearing: | ||||||||
Demand deposits | 413,700 | 411,127 | ||||||
Savings deposits | 278,416 | 281,466 | ||||||
Time deposits | 656,421 | 660,705 | ||||||
Total deposits | 1,675,142 | 1,672,723 | ||||||
Short-term borrowings | 163,813 | 145,183 | ||||||
Long-term debt | 148,836 | 148,836 | ||||||
Other liabilities | 37,190 | 30,408 | ||||||
Total Liabilities | 2,024,981 | 1,997,150 | ||||||
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 March 31, 2005 and December 31, 2004, including 303,041 and 331,191 shares in treasury | 42,298 | 42,298 | ||||||
Capital surplus | 55,121 | 55,512 | ||||||
Retained earnings | 135,698 | 128,175 | ||||||
Cost of common stock in treasury | (7,925 | ) | (8,761 | ) | ||||
Accumulated other comprehensive (loss) income: | ||||||||
Unrealized (loss) gain on securities available-for-sale | (3,465 | ) | 1,281 | |||||
Underfunded pension liability | (2,425 | ) | (2,425 | ) | ||||
Total Accumulated Other Comprehensive (Loss) Income | (5,890 | ) | (1,144 | ) | ||||
Total Stockholders’ Equity | 219,302 | 216,080 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 2,244,283 | $ | 2,213,230 | ||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Loan Portfolio
(Unaudited) ($ in 000s)
| March 31 2005 | December 31 2004 | September 30 2004 | June 30 2004 | March 31 2004 | |||||||||||
Residential real estate | $ | 463,869 | $ | 469,458 | $ | 468,372 | $ | 459,759 | $ | 439,643 | |||||
Home equity | 302,262 | 308,173 | 304,934 | 301,231 | 292,192 | ||||||||||
Commercial real estate | 409,064 | 400,801 | 377,742 | 374,292 | 347,724 | ||||||||||
Other commercial | 66,485 | 71,311 | 70,745 | 73,139 | 74,743 | ||||||||||
Loans to depository institutions | 10,000 | — | — | — | 20,000 | ||||||||||
Installment | 16,065 | 18,145 | 20,221 | 24,722 | 28,351 | ||||||||||
Indirect | 7,960 | 10,324 | 13,020 | 16,140 | 20,006 | ||||||||||
Credit card | 16,954 | 18,126 | 17,893 | 17,961 | 18,119 | ||||||||||
Previously securitized loans | 50,588 | 58,436 | 70,970 | 83,385 | 92,954 | ||||||||||
Gross Loans | $ | 1,343,247 | $ | 1,354,774 | $ | 1,343,897 | $ | 1,350,629 | $ | 1,333,732 | |||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)
| Three Months Ended March 31, | ||||||||||||||||||||
| 2005 | 2004 | |||||||||||||||||||
| Average Balance | Interest | Yield/ Rate | Average Balance | Interest | Yield/ Rate | |||||||||||||||
Assets: | ||||||||||||||||||||
Loan portfolio: | ||||||||||||||||||||
Residential real estate | $ | 466,011 | $ | 6,520 | 5.60 | % | $ | 441,123 | $ | 6,852 | 6.21 | % | ||||||||
Home equity | 306,354 | 4,273 | 5.58 | % | 286,267 | 3,176 | 4.44 | % | ||||||||||||
Commercial real estate | 401,294 | 5,929 | 5.91 | % | 348,871 | 4,867 | 5.58 | % | ||||||||||||
Other commercial | 68,279 | 1,004 | 5.88 | % | 74,594 | 962 | 5.16 | % | ||||||||||||
Loans to depository institutions | 7,889 | 49 | 2.48 | % | 3,297 | 9 | 1.09 | % | ||||||||||||
Installment | 17,094 | 541 | 12.66 | % | 31,092 | 877 | 11.28 | % | ||||||||||||
Indirect | 9,097 | 248 | 10.90 | % | 22,393 | 612 | 10.93 | % | ||||||||||||
Credit card | 17,543 | 544 | 12.40 | % | 18,414 | 554 | 12.03 | % | ||||||||||||
Previously securitized loans | 54,928 | 3,082 | 22.44 | % | 84,843 | 3,814 | 17.98 | % | ||||||||||||
Total loans | 1,348,489 | 22,190 | 6.58 | % | 1,310,894 | 21,723 | 6.63 | % | ||||||||||||
Securities: | ||||||||||||||||||||
Taxable | 657,240 | 7,646 | 4.65 | % | 674,187 | 7,224 | 4.29 | % | ||||||||||||
Tax-exempt | 37,306 | 668 | 7.16 | % | 39,974 | 734 | 7.34 | % | ||||||||||||
Total securities | 694,546 | 8,314 | 4.79 | % | 714,161 | 7,958 | 4.46 | % | ||||||||||||
Retained interest in securitized loans | — | — | — | 12,724 | 740 | 23.26 | % | |||||||||||||
Deposits in depository institutions | 3,714 | 18 | 1.94 | % | 5,646 | 11 | 0.78 | % | ||||||||||||
Federal funds sold | 583 | 4 | 2.74 | % | — | — | — | |||||||||||||
Total interest-earning assets | 2,047,332 | 30,526 | 5.96 | % | 2,043,425 | 30,432 | 5.96 | % | ||||||||||||
Cash and due from banks | 43,866 | 44,710 | ||||||||||||||||||
Bank premises and equipment | 34,333 | 35,004 | ||||||||||||||||||
Other assets | 106,588 | 105,052 | ||||||||||||||||||
Less: Allowance for loan losses | (17,480 | ) | (21,222 | ) | ||||||||||||||||
Total assets | $ | 2,214,639 | $ | 2,206,969 | ||||||||||||||||
Liabilities: | ||||||||||||||||||||
Interest-bearing demand deposits | $ | 413,224 | $ | 716 | 0.69 | % | $ | 397,454 | $ | 604 | 0.61 | % | ||||||||
Savings deposits | 277,116 | 355 | 0.51 | % | 279,392 | 363 | 0.52 | % | ||||||||||||
Time deposits | 657,546 | 4,797 | 2.92 | % | 661,731 | 4,725 | 2.86 | % | ||||||||||||
Short-term borrowings | 144,069 | 577 | 1.60 | % | 117,214 | 166 | 0.57 | % | ||||||||||||
Long-term debt | 148,836 | 1,585 | 4.26 | % | 221,221 | 2,005 | 3.63 | % | ||||||||||||
Total interest-bearing liabilities | 1,640,791 | 8,030 | 1.96 | % | 1,677,012 | 7,863 | 1.88 | % | ||||||||||||
Noninterest-bearing demand deposits | 321,648 | 307,608 | ||||||||||||||||||
Other liabilities | 28,951 | 24,658 | ||||||||||||||||||
Stockholders’ equity | 223,249 | 197,691 | ||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 2,214,639 | $ | 2,206,969 | ||||||||||||||||
Net interest income | $ | 22,496 | $ | 22,569 | ||||||||||||||||
Net yield on earning assets | 4.40 | % | 4.42 | % | ||||||||||||||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Analysis of Risk-Based Capital
(Unaudited) ($ in 000s)
| March 31 2005(a) | Dec. 31 2004 | Sept. 30 2004 | June 30 2004 | March 31 2004 | ||||||||||||||||
Tier I Capital: | ||||||||||||||||||||
Stockholders’ equity | $ | 219,302 | $ | 216,080 | $ | 210,285 | $ | 197,569 | $ | 202,204 | ||||||||||
Goodwill and other intangibles | (6,204 | ) | (6,255 | ) | (6,306 | ) | (6,357 | ) | (6,408 | ) | ||||||||||
Accumulated other comprehensive income | 5,890 | 1,144 | (1,146 | ) | 6,454 | (4,742 | ) | |||||||||||||
Qualifying trust preferred stock | 28,000 | 28,000 | 28,000 | 28,000 | 30,000 | |||||||||||||||
Excess deferred tax assets | (4,524 | ) | (3,129 | ) | — | (6,922 | ) | (807 | ) | |||||||||||
Total tier I capital | $ | 242,464 | $ | 235,840 | $ | 230,833 | $ | 218,744 | $ | 220,247 | ||||||||||
Total Risk-Based Capital: | ||||||||||||||||||||
Tier I capital | $ | 242,464 | $ | 235,840 | $ | 230,833 | $ | 218,744 | $ | 220,247 | ||||||||||
Qualifying allowance for loan losses | 16,325 | 17,815 | 18,537 | 18,939 | 19,169 | |||||||||||||||
Total risk-based capital | $ | 258,789 | $ | 253,655 | $ | 249,370 | $ | 237,683 | $ | 239,416 | ||||||||||
Net risk-weighted assets | $ | 1,522,881 | $ | 1,524,581 | $ | 1,517,158 | $ | 1,514,261 | $ | 1,505,892 | ||||||||||
Ratios: | ||||||||||||||||||||
Average stockholders’ equity to average assets | 10.08 | % | 9.81 | % | 9.26 | % | 9.33 | % | 8.96 | % | ||||||||||
Tangible capital ratio | 9.52 | % | 9.51 | % | 9.24 | % | 8.71 | % | 8.85 | % | ||||||||||
Risk-based capital ratios: | ||||||||||||||||||||
Tier I capital | 15.92 | % | 15.47 | % | 15.21 | % | 14.43 | % | 14.63 | % | ||||||||||
Total risk-based capital | 16.99 | % | 16.64 | % | 16.44 | % | 15.68 | % | 15.89 | % | ||||||||||
Leverage capital | 11.00 | % | 10.74 | % | 10.47 | % | 9.89 | % | 10.01 | % | ||||||||||
(a) March 31, 2005 risk-based capital ratios are estimated. |
| |||||||||||||||||||
CITY HOLDING COMPANY AND SUBSIDIARIES Intangibles (Unaudited) ($ in 000s) |
| |||||||||||||||||||
| As of and for the Quarter Ended | ||||||||||||||||||||
| March 31 2005 | Dec. 31 2004 | Sept. 30 2004 | June 30 2004 | March 31 2004 | ||||||||||||||||
Intangibles, net | $ | 6,204 | $ | 6,255 | $ | 6,306 | $ | 6,357 | $ | 6,408 | ||||||||||
Intangibles amortization expense | 51 | 51 | 51 | 51 | 51 | |||||||||||||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Loan Loss Experience
(Unaudited) ($ in 000s)
| Quarter Ended | ||||||||||||||||||||
March 31 2005 | Dec. 31 2004 | Sept. 30 2004 | June 30 2004 | March 31 2004 | ||||||||||||||||
Balance at beginning of period | $ | 17,815 | $ | 18,537 | $ | 19,833 | $ | 20,289 | $ | 21,426 | ||||||||||
Charge-offs: | ||||||||||||||||||||
Residential real estate | 237 | 166 | 299 | 173 | 217 | |||||||||||||||
Home equity | 421 | 5 | 105 | 66 | 133 | |||||||||||||||
Commercial real estate | 393 | 105 | 1,134 | 44 | 342 | |||||||||||||||
Other commercial | 36 | 14 | 220 | 22 | 159 | |||||||||||||||
Installment | 308 | 458 | 568 | 457 | 588 | |||||||||||||||
Overdraft deposit accounts | 744 | 586 | 631 | 610 | 787 | |||||||||||||||
Total charge-offs | 2,139 | 1,334 | 2,957 | 1,372 | 2,226 | |||||||||||||||
Recoveries: | ||||||||||||||||||||
Residential real estate | 37 | 137 | 196 | 133 | 104 | |||||||||||||||
Home equity | — | — | 1 | — | 5 | |||||||||||||||
Commercial real estate | 50 | 10 | 922 | 201 | 311 | |||||||||||||||
Other commercial | 45 | 80 | 103 | 127 | 55 | |||||||||||||||
Installment | 205 | 147 | 183 | 202 | 260 | |||||||||||||||
Overdraft deposit accounts | 312 | 238 | 256 | 253 | 354 | |||||||||||||||
Total recoveries | 649 | 612 | 1,661 | 916 | 1,089 | |||||||||||||||
Net charge-offs | 1,490 | 722 | 1,296 | 456 | 1,137 | |||||||||||||||
Provision for loan losses | — | — | — | — | — | |||||||||||||||
Balance at end of period | $ | 16,325 | $ | 17,815 | $ | 18,537 | $ | 19,833 | $ | 20,289 | ||||||||||
Loans outstanding | $ | 1,343,247 | $ | 1,354,774 | $ | 1,343,897 | $ | 1,350,629 | $ | 1,333,732 | ||||||||||
Average loans outstanding | 1,348,489 | 1,347,297 | 1,348,265 | 1,342,001 | 1,310,894 | |||||||||||||||
Allowance as a percent of loans outstanding | 1.22 | % | 1.31 | % | 1.38 | % | 1.47 | % | 1.52 | % | ||||||||||
Allowance as a percent of non-performing loans | 490 | % | 487 | % | 515 | % | 493 | % | 432 | % | ||||||||||
Net charge-offs (annualized) as a percent of average loans outstanding | 0.44 | % | 0.21 | % | 0.38 | % | 0.14 | % | 0.35 | % | ||||||||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Non-Performing Assets
(Unaudited) ($ in 000s)
| March 31 2005 | Dec. 31 2004 | Sept. 30 2004 | June 30 2004 | March 31 2004 | ||||||||||||||||
Nonaccrual loans | $ | 2,641 | $ | 2,147 | $ | 1,924 | $ | 1,792 | $ | 2,268 | ||||||||||
Accruing loans past due 90 days or more | 322 | 677 | 800 | 689 | 1,039 | |||||||||||||||
Previously securitized loans past due 90 days or more | 372 | 832 | 876 | 1,544 | 1,388 | |||||||||||||||
Total non-performing loans | 3,335 | 3,656 | 3,600 | 4,025 | 4,695 | |||||||||||||||
Other real estate owned | 463 | 247 | 267 | 171 | 296 | |||||||||||||||
Total non-performing assets | $ | 3,798 | $ | 3,903 | $ | 3,867 | $ | 4,196 | $ | 4,991 | ||||||||||
Non-performing assets as a percent of loans and other real estate owned | 0.28 | % | 0.29 | % | 0.29 | % | 0.31 | % | 0.37 | % | ||||||||||
