Exhibit 99
NEWS RELEASE
For Immediate Release
January 23, 2006
For Further Information Contact:
Charles R. Hageboeck, Chief Executive Officer and President
(304) 769-1102
City Holding Company Announces Record Earnings
Charleston, West Virginia – City Holding Company, “the Company” (NASDAQ:CHCO), a $2.5 billion bank holding company headquartered in Charleston, today announced net income for the fourth quarter of $13.1 million, or diluted earnings per share of $0.72 compared to $11.1 million, or $0.66 per diluted share in the fourth quarter of 2004, a 9.1% increase. For the fourth quarter of 2005, the Company achieved a return on assets of 2.10%, a return on equity of 17.66%, a net interest margin of 4.55%, and an efficiency ratio of 46.6%.
For the full year of 2005, the Company reported net income of $50.3 million, or diluted earnings per share of $2.84 compared to $46.3 million, or diluted earnings per share of $2.75 during 2004. The results for 2004 included income of $3.2 million net of associated expenses and taxes, or $0.19 per diluted share, recognized in connection with the settlement of a derivative action brought 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. Also, the Company recorded a provision for loan losses of $1.4 million in 2005 as compared to no provision for loan losses during 2004. Return on assets for the full year was 2.09%, return on equity was 18.98%, the net interest margin was 4.49%, and the efficiency ratio was 46.7%.
Charles R. “Skip” Hageboeck, Chief Executive Officer and President, commented, “I am proud of management and staff efforts that produced record earnings during 2005. The Company experienced success not only by maintaining extraordinary financial performance, but also by positioning the Company for growth in its core markets. This occurred despite the revenues associated with the legal settlement during 2004 and recording a provision for loan loss expense during the last two quarters in 2005 for the first time since the second quarter of 2002. City’s net interest income increased despite a substantial decline in balances of high yielding previously securitized loans, and our net margin improved 20 basis points from 2004’s net interest margin. Fee income grew by 12% after adjusting for the proceeds of the 2004 legal settlement. Expenses, as evidenced by the efficiency ratio, were managed tightly, and the bank’s asset quality improved. Additionally, we successfully integrated Classic Bancshares, Inc. (“Classic”) into the City franchise. This acquisition added total assets of $338 million, net loans of $254 million, and deposits of $252 million to the Company. Finally, we accomplished all of this while successfully transitioning to a new management team. Based on the success the Company enjoyed in 2005, I am confident we are positioned to continue our performance on behalf of our shareholders during 2006.”
Net Interest Income
The Company’s tax equivalent net interest income increased $4.0 million, or 18.2%, from $21.9 million during the fourth quarter of 2004 to $25.8 million during the fourth quarter of 2005. The increase was primarily attributable to the acquisition of Classic ($2.8 million) as well as increased net interest income as a result of a widening of the net interest margin and growth in the Company’s traditional loan portfolio. Exclusive of the Classic acquisition, net interest income increased $1.2 million, or 5.6%, from the fourth quarter of 2004 to the fourth quarter of 2005. This increase was due primarily to an increase of $74.5 million, or 5.8%, in the average balances of traditional loans outstanding and a 78 basis points increase in the yield on such loans. These increases were partially offset by increased interest expense. The net interest margin for the fourth quarter of 2005 of 4.55% represented a 30 basis point increase from the fourth quarter of 2004 net interest margin of 4.25% and represented a 4 basis point increase from the net interest margin of 4.51% for the linked quarter ended September 30, 2005.
For the full year, the Company’s tax equivalent net interest income increased $10.1 million, or 11.5%, from $88.0 million in 2004 to $98.1 million in 2005. The acquisition of Classic, along with an increased interest rate environment and growth in the Company’s traditional loan portfolio, were largely responsible for this increase. The Classic acquisition contributed $7.5 million of net interest income during 2005. Interest income from previously securitized loans and retained interests decreased between 2004 and 2005. The average balances of previously securitized loans and retained interests decreased from $83.4 million for the year ended December 31, 2004 to $42.9 million for the year ended December 31, 2005. This decrease was partially mitigated as the yield on previously securitized loans rose from 17.11% for the year ended December 31, 2004 to 26.60% for the year ended December 31, 2005 (see Previously Securitized Loans). The net result of the decreases in balances of 48.6% and the increased yield was a decrease in interest income from previously securitized loans and retained interests of $3.1 million from 2004 to 2005. Therefore, net interest income, exclusive of the Classic acquisition and interest income from previously securitized loans and retained interests, increased $5.7 million, or 6.5%. This increase was primarily attributable to increases in average balances of traditional loan products of $66.7 million, or 5.3%. The yield on these loans increased 49 basis points due to increases by the Federal Reserve in the Federal Funds rate and the Company’s positioning of its balance sheet to benefit from such rising rates. The increases in loan balances and loan yields more than offset the corresponding increase in rates paid on depository balances.
The net interest margin for the year ended December 31, 2005 of 4.49% represented a 20 basis point increase from the year ended December 31, 2004’s net interest margin of 4.29%. To offset the effects of decreasing balances of high yielding previously securitized loans, the Company positioned its balance sheet to benefit from rising interest rates. Since December 2004, the Federal Funds rate has increased 200 basis points from 2.25% to 4.25% in December 2005. To manage its interest rate risk, the Company has focused on the origination of variable rate products in its traditional lending areas of commercial real estate and residential real estate loans.
Credit Quality
At December 31, 2005, the Allowance for Loan Losses (“ALLL”) was $16.8 million or 1.04% of total loans outstanding and 402% 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 $17.8 million or 1.09% of loans outstanding and 487% of non-performing loans at September 30, 2005. As a result of the Company’s quarterly analysis of the adequacy of the ALLL, the Company recorded a provision for loan losses of $800,000 in the fourth quarter of 2005. During the past 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 been solid over the past three years as evidenced by the stability of its ratio of non-performing assets to total loans and other real estate owned which was 0.28% on December 31, 2005. As the Company’s asset quality has consistently improved, the required level of the ALLL has decreased. The provision for loan losses recorded during the third and fourth quarters of 2005 was the result of an increase in loss trends for overdraft deposit accounts and credit card loans, and growth in the outstanding balances of commercial real estate loans during the quarters. The Company has continued to experience growth in commercial real estate loans, with average balances increasing by $106 million from the fourth quarter of 2004 to fourth quarter of 2005. While these trends have required the Company to increase the provision from the third quarter to the fourth quarter, the amount of provision recorded was favorably impacted by continued improvement in the quality of the loan portfolio. Specifically, two problem credits for which the Company had previously allocated $800,000 in reserves were refinanced by other banks during the fourth quarter. As a result, the reserves allocated to these credits were no longer required, favorably impacting the provision required by $800,000 for the fourth quarter.
The Company had net charge-offs of $1.8 million for the fourth quarter of 2005, with depository accounts representing $0.7 million of this total. While charge-offs on depository accounts were appropriately taken against the ALLL, the revenue associated with depository accounts was reflected in service charges and has been steadily growing as the core base of checking accounts has grown. Net charge-offs on installment loans were $0.5 million for the quarter ended December 31, 2005, which equaled the net charge-offs for consumer loans for the first three quarters of 2005 combined. This increase was attributable to increased bankruptcy notices received in conjunction with new bankruptcy legislation that took effect in the fourth quarter and is consistent with banking trends nationally. Net charge-offs for commercial real estate loans were $0.5 million for the quarter ended December 31, 2005. This increase primarily relates to two credits that had been previously identified with appropriate amounts of reserve allocated for each credit.
The ALLL as a percentage of loans outstanding is 1.04% at December 31, 2005, compared to the average of the Company’s peer group of 1.25% for the most recently reported quarter. The Company’s strong asset quality is the primary reason for this difference. At December 31, 2005, non-performing assets as a percentage of loans and other real estate owned were 0.27%. Average non-performing assets as a percentage of loans and other real estate owned for the Company’s peer group for the most recently reported quarter was 0.67%. Another contributing
factor that has enabled the Company to maintain its allowance at lower levels than peers is the composition of the Company’s loan portfolio, which is weighted toward more residential mortgage loans and fewer non-real estate secured commercial loans than its peers. The Company believes its methodology for determining the adequacy of its ALLL adequately provides for probable losses inherent in the loan portfolio and produces a provision for loan losses that is directionally consistent with changes in asset quality and loss experience.
Non-interest Income
Net of investment securities gains, non-interest income increased $1.6 million, or 13.3%, to $13.4 million in the fourth quarter of 2005 as compared to $11.8 million in the fourth quarter of 2004. The largest source of non-interest income is service charges from depository accounts, which increased $1.8 million, or 21.3%, from $8.7 million during the fourth quarter of 2004 to $10.5 million during the fourth quarter of 2005. This increase was partially due to the Classic acquisition, which accounted for $0.8 million, as well as an increase in the utilization of services by the Company’s expanding customer base.
For the full year, net of investment securities gains and legal settlements, non-interest income increased $6.5 million, or 15.0%, from $43.4 million in 2004 to $49.9 million in 2005. Service charges increased 19.9% from $32.6 million in 2004 to $39.1 million in 2005. The acquisition of Classic accounted for $2.0 million of this increase, with the remainder of $4.5 million being attributable to increased services utilized by customers.
Non-interest Expenses
Non-interest expenses increased $1.2 million from $17.1 million in the fourth quarter of 2004 to $18.3 million in the fourth quarter of 2005. The Classic acquisition increased non-interest expenses by $1.4 million during the fourth quarter of 2005. Non-interest expenses for the fourth quarter of 2005 also included a loss on interest rate floors of approximately $1.4 million, with $0.9 million ($0.5 million after tax) relating to changes in market value in the second and third quarters that had previously been included in other comprehensive income. During the second, third, and fourth quarters of 2005, the Company entered into interest rate floor arrangements to protect the future income stream from certain variable rate loans should interest rates decline below certain specified levels. During the fourth quarter of 2005 management reviewed the Company’s hedging documentation and accounting treatment of the interest rate floors and determined that the changes in the market value of the floors should be charged to operations. Offsetting increased expenses associated with the Classic acquisition and hedge accounting, the Company experienced a decrease of $1.9 million in salary expense, related to an obligation to five executive officers for severance payments as provided under their respective employment agreements, which had been recorded in the fourth quarter of 2004. Excluding the impact of the Classic acquisition, hedge accounting, and executive severance obligations, non-interest expenses increased by $0.2 million in the fourth quarter of 2005 as compared to the fourth quarter of 2004.
For the full year, non-interest expenses increased $2.8 million, or 4.2%, from $66.3 million in 2004 to $69.1 million in 2005. Non-interest expenses increased $3.4 million due to the Classic
acquisition, and $1.4 million was related to the fair value adjustment associated with the interest rate floors. Compensation expense decreased $2.4 million primarily due to costs incurred in 2004 in regard to executive severance obligations as previously discussed. Exclusive of the Classic acquisition, hedge accounting, and executive severance obligations, non-interest expenses increased by $0.4 million between 2004 and 2005. Specifically, professional fees and litigation expense decreased $1.2 million from 2004 to 2005 due to costs incurred during 2004 associated with the derivative action previously discussed. Other expenses increased $1.0 million due to increased customer usage of electronic banking services and increased franchise taxes. Finally, advertising expenses increased $0.6 million from 2004 to 2005 due to an expanded territory resulting from the Classic acquisition and the Company’s focused efforts to attract and grow customer relationships.
Overall, the Company’s efficiency ratio improved from 48.5% for the year ended December 31, 2004 to 46.7% for the year ended December 31, 2005, reflecting ongoing strength in managing expenses while increasing revenues. The average efficiency ratio for the Company’s peer group for the most recently reported quarter was 57.4%.
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 notes that were subject to redemption under certain circumstances. When the notes were redeemed during 2003 and 2004, the Company became the beneficial owner of the mortgage loans and recorded the loans as “Previously Securitized Loans” within the loan portfolio. At December 31, 2005, the Company reported “Previously Securitized Loans” of $30.3 million compared to $58.4 million at December 31, 2004, a decrease of 48.2%. As a result of this decrease, interest income associated with previously securitized loans and retained interests decreased by $3.1 million to $11.4 million for the year ended December 31, 2005 compared to $14.5 million for the year ended December 31, 2004. This decrease in interest income was offset by targeted loan growth in the commercial real estate and residential real estate loan portfolios and by an increase in the net interest margin yield due to the Company’s positioning of its balance sheet to benefit from rising interest rates.
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 December 31, 2005, the contractual outstanding balances of the mortgages securitized were $48.1 million while the carrying value of these assets was $30.3 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 declines 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, 2006 | | $21 million |
| December 31, 2007 | | $15 million |
| December 31, 2008 | | $11 million |
| December 31, 2009 | | $8 million |
The yield on the previously securitized loans was 31.03% for the quarter ended December 31, 2005, compared to 30.14% for the quarter ended September 30, 2005, and 16.70% for the quarter ended December 31, 2004. For the year ended December 31, 2005, the yield on the previously securitized loans was 26.60% compared to 17.11% for the year ended December 31, 2004. The yield on the previously securitized loans has increased due to default rates being less than previously estimated and balances prepaying faster than previously estimated. In addition, the Company assumed the servicing of all of the pool balances during the second quarter of 2005. This also favorably impacted the yield realized on the previously securitized loans due to the elimination of the servicing fees previously being paid to the external servicing agent and increased internal collection efforts resulting in enhanced levels of recoveries on previously charged-off loans. All of these factors have increased the projected cash flows from the previously securitized loans and the Company now estimates that the yield on these loans will be in the range of 34% to 36% in the future.
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 83.6% and the loan to asset ratio was 64.4% at December 31, 2005. The Company maintained investment securities totaling 24.2% of assets as of this date. Further, the Company’s deposit mix is weighted heavily toward checking and saving accounts that fund 44.6% of assets at December 31, 2005. Time deposits fund 32.5% of assets at December 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.
The Company is also strongly capitalized. Capitalization (as measured by average equity to average assets) was 11.03% for the year ended December 31, 2005 as a result of the Company’s strong earnings. The Company’s tangible equity ratio was 9.5% at December 31, 2005 compared with a tangible equity ratio of 9.5% at December 31, 2004. Due to its continued strong earnings performance, the Company was able to maintain this ratio despite the completion of an acquisition during the second quarter of 2005 that was funded by cash of approximately 25% and the repurchase of 342,576 common shares of Company stock during 2005. With respect to regulatory capital, at December 31, 2005, the Company’s Leverage Ratio is 10.97%, the Tier I Capital ratio is 15.41%, and the Total Risk-Based Capital ratio is 16.38%. 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 December 21, 2005, the Board approved a quarterly cash dividend of 25 cents per share payable January 31, 2006 to shareholders of record as of January 15, 2006.
On December 21, 2005, the Company accelerated the vesting schedule with regard to 20,000 value-vested options previously granted pursuant to the Company’s 2003 Incentive Plan. Based upon approximately 86,000 unvested options outstanding at December 31, 2005, the Company anticipates it will incur $0.2 million of expense in connection with the adoption of SFAS No. 123R, “Share Based Payment”, which will be effective January 1, 2006, for the Company.
On January 11, 2006, the Company announced plans to improve its presence in downtown Charleston, WV, by leasing a new location and purchasing an adjacent drive-through facility it had previously leased. By moving its downtown office to a larger space at One Bridge Place, City will offer an upgraded and more accessible banking center that will also become a base for commercial lending, trust, and private banking services. The new downtown facility is expected to open in the first quarter of 2006.
City Holding Company is the parent company of City National Bank of West Virginia. City National operates 67 branches across West Virginia, Eastern Kentucky and Southern Ohio.
Forward-Looking Information
This news release contains certain forward-looking statements that are included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such information involves risks and uncertainties that could result in the Company’s actual results differing from those projected in the forward-looking statements. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include, but are not limited to, (1) the Company may incur additional loan loss provision due to negative credit quality trends in the future that may lead to a deterioration of asset quality; (2) the Company may incur increased charge-offs in the future; (3) the Company may experience increases in the default rates on previously securitized loans that would result in impairment losses or lower the yield on such loans; (4) the Company may continue to benefit from strong recovery efforts on previously securitized loans resulting in improved yields on these assets; (5) the Company could have adverse legal actions of a material nature; (6) the Company may face competitive loss of customers; (7) the Company may be unable to manage its expense levels; (8) the Company may have difficulty retaining key employees; (9) 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; (10) changes in general economic conditions and increased competition could adversely affect the Company’s operating results; (11) 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 (12) 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 2005
| | | December 31 2004
| | | Percent Change
| |
Earnings ($000s, except per share data): | | | | | | | | | | | |
Net Interest Income (FTE) | | $ | 25,844 | | | $ | 21,870 | | | 18.17 | % |
Net Income | | | 13,089 | | | | 11,087 | | | 18.06 | % |
Earnings per Basic Share | | | 0.72 | | | | 0.67 | | | 7.46 | % |
Earnings per Diluted Share | | | 0.72 | | | | 0.66 | | | 9.09 | % |
| | | |
Key Ratios (percent): | | | | | | | | | | | |
Return on Average Assets | | | 2.10 | % | | | 2.01 | % | | 4.22 | % |
Return on Average Equity | | | 17.66 | % | | | 20.50 | % | | (13.86 | )% |
Net Interest Margin | | | 4.55 | % | | | 4.25 | % | | 7.10 | % |
Efficiency Ratio | | | 46.57 | % | | | 51.03 | % | | (8.74 | )% |
Average Shareholders’ Equity to Average Assets | | | 11.87 | % | | | 9.81 | % | | 21.00 | % |
| | | |
Risk-Based Capital Ratios (a): | | | | | | | | | | | |
Tier I | | | 15.41 | % | | | 15.47 | % | | (0.39 | )% |
Total | | | 16.38 | % | | | 16.64 | % | | (1.56 | )% |
| | | |
Common Stock Data: | | | | | | | | | | | |
Cash Dividends Declared per Share | | $ | 0.25 | | | $ | 0.22 | | | 13.64 | % |
Book Value per Share | | | 16.14 | | | | 13.03 | | | 23.87 | % |
Market Value per Share: | | | | | | | | | | | |
High | | | 37.62 | | | | 37.58 | | | 0.11 | % |
Low | | | 32.68 | | | | 31.85 | | | 2.61 | % |
End of Period | | | 35.95 | | | | 36.24 | | | (0.80 | )% |
| | | |
Price/Earnings Ratio (b) | | | 12.48 | | | | 13.52 | | | (7.69 | )% |
| | | | | | | | | | | |
| | | Twelve Months Ended
| | | | |
| | | December 31 2005
| | | December 31 2004
| | | Percent Change
| |
Earnings ($000s, except per share data): | | | | | | | | | | | |
Net Interest Income (FTE) | | $ | 98,097 | | | $ | 87,985 | | | 11.49 | % |
Net Income | | | 50,288 | | | | 46,344 | | | 8.51 | % |
Earnings per Basic Share | | | 2.87 | | | | 2.79 | | | 2.87 | % |
Earnings per Diluted Share | | | 2.84 | | | | 2.75 | | | 3.27 | % |
| | | |
Key Ratios (percent): | | | | | | | | | | | |
Return on Average Assets | | | 2.09 | % | | | 2.10 | % | | (0.08 | )% |
Return on Average Equity | | | 18.98 | % | | | 22.43 | % | | (15.40 | )% |
Net Interest Margin | | | 4.49 | % | | | 4.29 | % | | 4.61 | % |
Efficiency Ratio | | | 46.66 | % | | | 48.49 | % | | (3.77 | )% |
Average Shareholders’ Equity to Average Assets | | | 11.03 | % | | | 9.34 | % | | 18.10 | % |
| | | |
Common Stock Data: | | | | | | | | | | | |
Cash Dividends Declared per Share | | $ | 1.00 | | | $ | 0.88 | | | 13.64 | % |
Market Value per Share: | | | | | | | | | | | |
High | | | 39.21 | | | | 37.58 | | | 4.34 | % |
Low | | | 27.57 | | | | 27.30 | | | 0.99 | % |
| (a) | December 31, 2005 risk-based capital ratios are estimated. |
| (b) | December 31, 2005 price/earnings ratio computed based on annualized fourth 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 | | | 15.56 | | | 15.99 | | | 16.14 | | | 27.57 | | | 39.21 |
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 | | | 1.92 | |
2003 | | | 0.56 | | | | 0.73 | | | | 0.69 | | | | 0.64 | | | 2.62 | |
2004 | | | 0.66 | | | | 0.80 | | | | 0.66 | | | | 0.67 | | | 2.79 | |
2005 | | | 0.70 | | | | 0.72 | | | | 0.73 | | | | 0.72 | | | 2.87 | |
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 | | | | 0.71 | | | | 0.72 | | | | 0.72 | | | 2.84 | |
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)
| | | | | | | | |
| | | Three Months Ended December 31,
| |
| | | 2005
| | | 2004
| |
Interest Income | | | | | | | | |
Interest and fees on loans | | $ | 28,918 | | | $ | 21,511 | |
Interest on investment securities: | | | | | | | | |
Taxable | | | 7,188 | | | | 7,779 | |
Tax-exempt | | | 497 | | | | 437 | |
Interest on deposits in depository institutions | | | 36 | | | | 16 | |
Interest on federal funds sold | | | — | | | | 3 | |
| | |
|
|
| |
|
|
|
Total Interest Income | | | 36,639 | | | | 29,746 | |
| | |
Interest Expense | | | | | | | | |
Interest on deposits | | | 8,569 | | | | 5,932 | |
Interest on short-term borrowings | | | 1,049 | | | | 424 | |
Interest on long-term debt | | | 1,446 | | | | 1,756 | |
| | |
|
|
| |
|
|
|
Total Interest Expense | | | 11,064 | | | | 8,112 | |
| | |
|
|
| |
|
|
|
Net Interest Income | | | 25,575 | | | | 21,634 | |
Provision for loan losses | | | 800 | | | | — | |
| | |
|
|
| |
|
|
|
Net Interest Income After Provision for Loan Losses | | | 24,775 | | | | 21,634 | |
| | |
Non-Interest Income | | | | | | | | |
Investment securities gains | | | 125 | | | | 32 | |
Service charges | | | 10,530 | | | | 8,678 | |
Insurance commissions | | | 620 | | | | 754 | |
Trust fee income | | | 504 | | | | 466 | |
Bank owned life insurance | | | 691 | | | | 1,184 | |
Mortgage banking income | | | 228 | | | | 70 | |
Other income | | | 839 | | | | 685 | |
| | |
|
|
| |
|
|
|
Total Non-Interest Income | | | 13,537 | | | | 11,869 | |
| | |
Non-Interest Expense | | | | | | | | |
Salaries and employee benefits | | | 8,416 | | | | 9,578 | |
Occupancy and equipment | | | 1,569 | | | | 1,560 | |
Depreciation | | | 1,062 | | | | 981 | |
Professional fees and litigation expense | | | 486 | | | | 571 | |
Postage, delivery, and statement mailings | | | 728 | | | | 589 | |
Advertising | | | 710 | | | | 600 | |
Telecommunications | | | 560 | | | | 403 | |
Insurance and regulatory | | | 380 | | | | 330 | |
Office supplies | | | 388 | | | | 210 | |
Repossessed asset (gains) losses, net of expenses | | | (28 | ) | | | (31 | ) |
Other expenses | | | 4,068 | | | | 2,340 | |
| | |
|
|
| |
|
|
|
Total Non-Interest Expense | | | 18,339 | | | | 17,131 | |
| | |
|
|
| |
|
|
|
Income Before Income Taxes | | | 19,973 | | | | 16,372 | |
Income tax expense | | | 6,884 | | | | 5,285 | |
| | |
|
|
| |
|
|
|
Net Income | | $ | 13,089 | | | $ | 11,087 | |
| | |
|
|
| |
|
|
|
Basic earnings per share | | $ | 0.72 | | | $ | 0.67 | |
Diluted earnings per share | | $ | 0.72 | | | $ | 0.66 | |
Average Common Shares Outstanding: | | | | | | | | |
Basic | | | 18,127 | | | | 16,572 | |
Diluted | | | 18,211 | | | | 16,810 | |
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)
| | | | | | | | |
| | | Twelve Months Ended December 31,
| |
| | | 2005
| | | 2004
| |
Interest Income | | | | | | | | |
Interest and fees on loans | | $ | 103,714 | | | $ | 86,099 | |
Interest on investment securities: | | | | | | | | |
Taxable | | | 29,804 | | | | 30,110 | |
Tax-exempt | | | 1,887 | | | | 1,809 | |
Interest on retained interests | | | — | | | | 808 | |
Interest on deposits in depository institutions | | | 109 | | | | 52 | |
Interest on federal funds sold | | | 4 | | | | 3 | |
| | |
|
|
| |
|
|
|
Total Interest Income | | | 135,518 | | | | 118,881 | |
| | |
Interest Expense | | | | | | | | |
Interest on deposits | | | 28,805 | | | | 23,207 | |
Interest on short-term borrowings | | | 3,369 | | | | 1,082 | |
Interest on long-term debt | | | 6,264 | | | | 7,582 | |
| | |
|
|
| |
|
|
|
Total Interest Expense | | | 38,438 | | | | 31,871 | |
| | |
|
|
| |
|
|
|
Net Interest Income | | | 97,080 | | | | 87,010 | |
Provision for loan losses | | | 1,400 | | | | — | |
| | |
|
|
| |
|
|
|
Net Interest Income After Provision for Loan Losses | | | 95,680 | | | | 87,010 | |
| | |
Non-Interest Income | | | | | | | | |
Investment securities gains | | | 151 | | | | 1,173 | |
Service charges | | | 39,091 | | | | 32,609 | |
Insurance commissions | | | 2,352 | | | | 2,733 | |
Trust fee income | | | 2,025 | | | | 2,026 | |
Bank owned life insurance | | | 2,779 | | | | 2,931 | |
Mortgage banking income | | | 643 | | | | 282 | |
Legal settlement | | | — | | | | 5,453 | |
Other income | | | 3,050 | | | | 2,829 | |
| | |
|
|
| |
|
|
|
Total Non-Interest Income | | | 50,091 | | | | 50,036 | |
| | |
Non-Interest Expense | | | | | | | | |
Salaries and employee benefits | | | 33,479 | | | | 34,245 | |
Occupancy and equipment | | | 6,295 | | | | 5,984 | |
Depreciation | | | 4,096 | | | | 3,932 | |
Professional fees and litigation expense | | | 2,021 | | | | 3,265 | |
Postage, delivery, and statement mailings | | | 2,666 | | | | 2,474 | |
Advertising | | | 2,941 | | | | 2,366 | |
Telecommunications | | | 2,248 | | | | 1,820 | |
Insurance and regulatory | | | 1,496 | | | | 1,323 | |
Office supplies | | | 1,193 | | | | 1,048 | |
Repossessed asset (gains) losses, net of expenses | | | (78 | ) | | | (77 | ) |
Loss on early extinguishment of debt | | | — | | | | 263 | |
Other expenses | | | 12,756 | | | | 9,690 | |
| | |
|
|
| |
|
|
|
Total Non-Interest Expense | | | 69,113 | | | | 66,333 | |
| | |
|
|
| |
|
|
|
Income Before Income Taxes | | | 76,658 | | | | 70,713 | |
Income tax expense | | | 26,370 | | | | 24,369 | |
| | |
|
|
| |
|
|
|
Net Income | | $ | 50,288 | | | $ | 46,344 | |
| | |
|
|
| |
|
|
|
Basic earnings per share | | $ | 2.87 | | | $ | 2.79 | |
Diluted earnings per share | | $ | 2.84 | | | $ | 2.75 | |
Average Common Shares Outstanding: | | | | | | | | |
Basic | | | 17,519 | | | | 16,632 | |
Diluted | | | 17,690 | | | | 16,882 | |
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited) ($ in 000s)
| | | | | | | | |
| | | Three Months Ended
| |
| | | December 31, 2005
| | | December 31, 2004
| |
Balance at September 1 | | $ | 290,432 | | | $ | 210,285 | |
| | |
Net income | | | 13,089 | | | | 11,087 | |
Other comprehensive income: | | | | | | | | |
Change in unrealized gain on securities available-for-sale | | | (3,701 | ) | | | (2,255 | ) |
Change in underfunded pension liability | | | (748 | ) | | | (35 | ) |
Reclassification of unrealized derivative losses | | | 543 | | | | — | |
Cash dividends declared ($0.25/share) | | | (4,522 | ) | | | — | |
Cash dividends declared ($0.22/share) | | | — | | | | (3,650 | ) |
Exercise of 104,966 stock options | | | 3,128 | | | | — | |
Exercise of 26,327 stock options | | | — | | | | 648 | |
Purchase of 171,000 common shares of treasury | | | (6,080 | ) | | | — | |
| | |
|
|
| |
|
|
|
Balance at December 31 | | $ | 292,141 | | | $ | 216,080 | |
| | |
|
|
| |
|
|
|
| | | | | | | | |
| | | Twelve Months Ended
| |
| | | December 31, 2005
| | | December 31, 2004
| |
Balance at January 1 | | $ | 216,080 | | | $ | 190,690 | |
| | |
Net income | | | 50,288 | | | | 46,344 | |
Other comprehensive income: | | | | | | | | |
Change in unrealized gain on securities available-for-sale | | | (6,120 | ) | | | (2,481 | ) |
Change in underfunded pension liability | | | (748 | ) | | | (35 | ) |
Cash dividends declared ($1.00/share) | | | (17,716 | ) | | | — | |
Cash dividends declared ($0.88/share) | | | — | | | | (14,629 | ) |
Issuance of 1,580,034 shares for acquisition of Classic Bancshares, net 108,173 owned and transferred to treasury | | | 54,339 | | | | — | |
Issuance of 18,800 stock award shares | | | 147 | | | | — | |
Exercise of 367,675 stock options | | | 7,783 | | | | — | |
Exercise of 140,730 stock options | | | — | | | | 2,048 | |
Purchase of 342,576 common shares for treasury | | | (11,912 | ) | | | — | |
Purchase of 197,040 common shares for treasury | | | — | | | | (5,857 | ) |
| | |
|
|
| |
|
|
|
Balance at December 31 | | $ | 292,141 | | | $ | 216,080 | |
| | |
|
|
| |
|
|
|
CITY HOLDING COMPANY AND SUBSIDIARIES
Condensed Consolidated Quarterly Statements of Income
(Unaudited) ($ in 000s, except per share data)
| | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended
| |
| | | Dec. 31 2005
| | | Sept. 30
2005
| | | June 30 2005
| | | March 31 2005
| | | Dec. 31 2004
| |
Interest income | | $ | 36,639 | | | $ | 35,910 | | | $ | 32,676 | | | $ | 30,293 | | | $ | 29,746 | |
Taxable equivalent adjustment | | | 269 | | | | 273 | | | | 241 | | | | 233 | | | | 236 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Interest income (FTE) | | | 36,908 | | | | 36,183 | | | | 32,917 | | | | 30,526 | | | | 29,982 | |
Interest expense | | | 11,064 | | | | 10,290 | | | | 9,054 | | | | 8,030 | | | | 8,112 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Net interest income | | | 25,844 | | | | 25,893 | | | | 23,863 | | | | 22,496 | | | | 21,870 | |
Provision for loan losses | | | 800 | | | | 600 | | | | — | | | | — | | | | — | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Net interest income after provision for loan losses | | | 25,044 | | | | 25,293 | | | | 23,863 | | | | 22,496 | | | | 21,870 | |
| | | | | |
Noninterest income | | | 13,537 | | | | 13,012 | | | | 12,098 | | | | 11,444 | | | | 11,869 | |
Noninterest expense | | | 18,339 | | | | 17,922 | | | | 16,839 | | | | 16,013 | | | | 17,131 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Income before income taxes | | | 20,242 | | | | 20,383 | | | | 19,122 | | | | 17,927 | | | | 16,608 | |
Income tax expense | | | 6,884 | | | | 6,938 | | | | 6,532 | | | | 6,016 | | | | 5,285 | |
Taxable equivalent adjustment | | | 269 | | | | 273 | | | | 241 | | | | 233 | | | | 236 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Net income | | $ | 13,089 | | | $ | 13,172 | | | $ | 12,349 | | | $ | 11,678 | | | $ | 11,087 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Basic earnings per share | | $ | 0.72 | | | $ | 0.73 | | | $ | 0.72 | | | $ | 0.70 | | | $ | 0.67 | |
Diluted earnings per share | | | 0.72 | | | | 0.72 | | | | 0.71 | | | | 0.69 | | | | 0.66 | |
Cash dividends declared per share | | | 0.25 | | | | 0.25 | | | | 0.25 | | | | 0.25 | | | | 0.22 | |
| | | | | |
Average Common Share (000s): | | | | | | | | | | | | | | | | | | | | |
Outstanding | | | 18,127 | | | | 18,052 | | | | 17,268 | | | | 16,605 | | | | 16,572 | |
Diluted | | | 18,211 | | | | 18,238 | | | | 17,477 | | | | 16,812 | | | | 16,810 | |
| | | | | |
Net Interest Margin | | | 4.55 | % | | | 4.51 | % | | | 4.42 | % | | | 4.40 | % | | | 4.25 | % |
CITY HOLDING COMPANY AND SUBSIDIARIES
Non-Interest Income and Non-Interest Expense
(Unaudited) ($ in 000s)
| | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended
| |
| | | Dec. 31 2005
| | | Sept. 30 2005
| | | June 30 2005
| | | March 31 2005
| | Dec. 31 2004
| |
Non-Interest Income: | | | | | | | | | | | | | | | | | | | |
Service charges | | $ | 10,530 | | | $ | 10,433 | | | $ | 9,685 | | | $ | 8,443 | | $ | 8,678 | |
Insurance commissions | | | 620 | | | | 595 | | | | 545 | | | | 592 | | | 754 | |
Trust fee income | | | 504 | | | | 468 | | | | 462 | | | | 591 | | | 466 | |
Bank owned life insurance | | | 691 | | | | 552 | | | | 545 | | | | 991 | | | 1,184 | |
Mortgage banking income | | | 228 | | | | 191 | | | | 106 | | | | 118 | | | 70 | |
Other income | | | 839 | | | | 768 | | | | 737 | | | | 706 | | | 685 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
| |
|
|
|
Subtotal | | | 13,412 | | | | 13,007 | | | | 12,080 | | | | 11,441 | | | 11,837 | |
Investment security gains | | | 125 | | | | 5 | | | | 18 | | | | 3 | | | 32 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
| |
|
|
|
Total Non-Interest Income | | $ | 13,537 | | | $ | 13,012 | | | $ | 12,098 | | | $ | 11,444 | | $ | 11,869 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
| |
|
|
|
Non-Interest Expense: | | | | | | | | | | | | | | | | | | | |
Salaries and employee benefits | | $ | 8,416 | | | $ | 8,739 | | | $ | 8,404 | | | $ | 7,920 | | $ | 9,578 | |
Occupancy and equipment | | | 1,569 | | | | 1,687 | | | | 1,564 | | | | 1,475 | | | 1,560 | |
Depreciation | | | 1,062 | | | | 1,096 | | | | 994 | | | | 944 | | | 981 | |
Professional fees and litigation expense | | | 486 | | | | 456 | | | | 514 | | | | 565 | | | 571 | |
Postage, delivery, and statement mailings | | | 728 | | | | 670 | | | | 615 | | | | 653 | | | 589 | |
Advertising | | | 710 | | | | 764 | | | | 762 | | | | 705 | | | 600 | |
Telecommunications | | | 560 | | | | 702 | | | | 513 | | | | 473 | | | 403 | |
Insurance and regulatory | | | 380 | | | | 385 | | | | 365 | | | | 366 | | | 330 | |
Office supplies | | | 388 | | | | 327 | | | | 275 | | | | 203 | | | 210 | |
Repossessed asset (gains) losses, net of expenses | | | (28 | ) | | | (35 | ) | | | (16 | ) | | | 1 | | | (31 | ) |
Other expenses | | | 4,068 | | | | 3,131 | | | | 2,849 | | | | 2,708 | | | 2,340 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
| |
|
|
|
Total Non-Interest Expense | | $ | 18,339 | | | $ | 17,922 | | | $ | 16,839 | | | $ | 16,013 | | $ | 17,131 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
| |
|
|
|
Employees (Full Time Equivalent) | | | 770 | | | | 768 | | | | 767 | | | | 689 | | | 691 | |
Branch Locations | | | 67 | | | | 67 | | | | 67 | | | | 56 | | | 56 | |
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000s)
| | | | | | | | |
| | | December 31 2005
| | | December 31 2004
| |
| | | (Unaudited) | | | | |
Assets | | | | | | | | |
Cash and due from banks | | $ | 81,822 | | | $ | 52,854 | |
Interest-bearing deposits in depository institutions | | | 4,451 | | | | 3,230 | |
| | |
|
|
| |
|
|
|
Cash and cash equivalents | | | 86,273 | | | | 56,084 | |
Investment securities available-for-sale, at fair value | | | 549,966 | | | | 620,034 | |
Investment securities held-to-maturity, at amortized cost | | | 55,397 | | | | 59,740 | |
| | |
|
|
| |
|
|
|
Total investment securities | | | 605,363 | | | | 679,774 | |
Loans: | | | | | | | | |
Residential real estate | | | 592,521 | | | | 469,458 | |
Home equity | | | 301,728 | | | | 308,173 | |
Commercial real estate | | | 499,748 | | | | 400,801 | |
Other commercial | | | 129,922 | | | | 71,311 | |
Installment | | | 40,000 | | | | 18,145 | |
Indirect | | | 3,580 | | | | 10,324 | |
Credit card | | | 15,072 | | | | 18,126 | |
Previously securitized loans | | | 30,256 | | | | 58,436 | |
| | |
|
|
| |
|
|
|
Gross Loans | | | 1,612,827 | | | | 1,354,774 | |
Allowance for loan losses | | | (16,790 | ) | | | (17,815 | ) |
| | |
|
|
| |
|
|
|
Net loans | | | 1,596,037 | | | | 1,336,959 | |
| | |
Bank owned life insurance | | | 52,969 | | | | 50,845 | |
Premises and equipment | | | 42,542 | | | | 34,607 | |
Accrued interest receivable | | | 13,134 | | | | 9,868 | |
Net deferred tax assets | | | 27,929 | | | | 27,025 | |
Intangible assets | | | 59,559 | | | | 6,255 | |
Other assets | | | 18,791 | | | | 11,813 | |
| | |
|
|
| |
|
|
|
Total Assets | | $ | 2,502,597 | | | $ | 2,213,230 | |
| | |
|
|
| |
|
|
|
Liabilities | | | | | | | | |
Deposits: | | | | | | | | |
Noninterest-bearing | | $ | 376,076 | | | $ | 319,425 | |
Interest-bearing: | | | | | | | | |
Demand deposits | | | 437,639 | | | | 411,127 | |
Savings deposits | | | 302,571 | | | | 281,466 | |
Time deposits | | | 812,134 | | | | 660,705 | |
| | |
|
|
| |
|
|
|
Total deposits | | | 1,928,420 | | | | 1,672,723 | |
Short-term borrowings | | | 152,255 | | | | 145,183 | |
Long-term debt | | | 98,425 | | | | 148,836 | |
Other liabilities | | | 31,356 | | | | 30,408 | |
| | |
|
|
| |
|
|
|
Total Liabilities | | | 2,210,456 | | | | 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; 18,499,282 and 16,919,248 shares issued at December 31, 2005 and December 31, 2004 less 395,465 and 331,191 shares in treasury, respectively | | | 46,249 | | | | 42,298 | |
Capital surplus | | | 104,435 | | | | 55,512 | |
Retained earnings | | | 160,747 | | | | 128,175 | |
Cost of common stock in treasury | | | (11,278 | ) | | | (8,761 | ) |
Accumulated other comprehensive (loss) income: | | | | | | | | |
Unrealized (loss) gain on securities available-for-sale | | | (4,839 | ) | | | 1,281 | |
Underfunded pension liability | | | (3,173 | ) | | | (2,425 | ) |
| | |
|
|
| |
|
|
|
Total Accumulated Other Comprehensive (Loss) Income | | | (8,012 | ) | | | (1,144 | ) |
| | |
|
|
| |
|
|
|
Total Stockholders’ Equity | | | 292,141 | | | | 216,080 | |
| | |
|
|
| |
|
|
|
Total Liabilities and Stockholders’ Equity | | $ | 2,502,597 | | | $ | 2,213,230 | |
| | |
|
|
| |
|
|
|
CITY HOLDING COMPANY AND SUBSIDIARIES
Loan Portfolio
(Unaudited) ($ in 000s)
| | | | | | | | | | | | | | | |
| | | Dec. 31 2005
| | Sept. 30
2005
| | June 30 2005
| | March 31
2005
| | Dec. 31 2004
|
Residential real estate | | $ | 592,521 | | $ | 596,184 | | $ | 596,893 | | $ | 463,869 | | $ | 469,458 |
Home equity | | | 301,728 | | | 306,448 | | | 307,354 | | | 302,262 | | | 308,173 |
Commercial real estate | | | 499,748 | | | 483,334 | | | 445,241 | | | 409,064 | | | 400,801 |
Other commercial | | | 129,922 | | | 138,011 | | | 138,923 | | | 66,485 | | | 71,311 |
Loans to depository institutions | | | — | | | — | | | — | | | 10,000 | | | — |
Installment | | | 40,000 | | | 42,844 | | | 48,668 | | | 16,065 | | | 18,145 |
Indirect | | | 3,580 | | | 4,658 | | | 6,048 | | | 7,960 | | | 10,324 |
Credit card | | | 15,072 | | | 15,632 | | | 16,188 | | | 16,954 | | | 18,126 |
Previously securitized loans | | | 30,256 | | | 35,599 | | | 41,670 | | | 50,588 | | | 58,436 |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
Gross Loans | | $ | 1,612,827 | | $ | 1,622,710 | | $ | 1,600,985 | | $ | 1,343,247 | | $ | 1,354,774 |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended December 31,
| |
| | | Average
Balance
| | | 2005 Interest
| | Yield/ Rate
| | | Average
Balance
| | | 2004 Interest
| | Yield/ Rate
| |
Assets: | | | | | | | | | | | | | | | | | | | | |
Loan portfolio: | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | $ | 595,309 | | | $ | 8,365 | | 5.57 | % | | $ | 468,362 | | | $ | 6,646 | | 5.65 | % |
Home equity | | | 303,977 | | | | 5,318 | | 6.94 | % | | | 307,712 | | | | 3,966 | | 5.13 | % |
Commercial real estate | | | 492,478 | | | | 8,502 | | 6.85 | % | | | 386,592 | | | | 5,641 | | 5.80 | % |
Other commercial | | | 133,863 | | | | 2,426 | | 7.19 | % | | | 68,816 | | | | 1,015 | | 5.87 | % |
Installment | | | 40,843 | | | | 1,138 | | 11.05 | % | | | 20,168 | | | | 604 | | 11.91 | % |
Indirect | | | 4,112 | | | | 118 | | 11.39 | % | | | 11,584 | | | | 321 | | 11.02 | % |
Credit card | | | 15,278 | | | | 482 | | 12.52 | % | | | 17,756 | | | | 534 | | 11.96 | % |
Previously securitized loans | | | 32,851 | | | | 2,569 | | 31.03 | % | | | 66,307 | | | | 2,784 | | 16.70 | % |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
Total loans | | | 1,618,711 | | | | 28,918 | | 7.09 | % | | | 1,347,297 | | | | 21,511 | | 6.35 | % |
Securities: | | | | | | | | | | | | | | | | | | | | |
Taxable | | | 580,845 | | | | 7,188 | | 4.91 | % | | | 656,511 | | | | 7,779 | | 4.71 | % |
Tax-exempt | | | 47,675 | | | | 766 | | 6.37 | % | | | 37,573 | | | | 673 | | 7.13 | % |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
Total securities | | | 628,520 | | | | 7,954 | | 5.02 | % | | | 694,084 | | | | 8,452 | | 4.84 | % |
Deposits in depository institutions | | | 5,188 | | | | 36 | | 2.75 | % | | | 4,753 | | | | 16 | | 1.34 | % |
Federal funds sold | | | — | | | | — | | — | | | | 766 | | | | 3 | | 1.56 | % |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
Total interest-earning assets | | | 2,252,419 | | | | 36,908 | | 6.50 | % | | | 2,046,900 | | | | 29,982 | | 5.83 | % |
Cash and due from banks | | | 52,828 | | | | | | | | | | 42,920 | | | | | | | |
Bank premises and equipment | | | 42,432 | | | | | | | | | | 34,859 | | | | | | | |
Other assets | | | 168,395 | | | | | | | | | | 99,641 | | | | | | | |
Less: Allowance for loan losses | | | (17,272 | ) | | | | | | | | | (18,332 | ) | | | | | | |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
Total assets | | $ | 2,498,802 | | | | | | | | | $ | 2,205,988 | | | | | | | |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
Liabilities: | | | | | | | | | | | | | | | | | | | | |
Interest-bearing demand deposits | | | 442,130 | | | | 1,207 | | 1.08 | % | | | 408,038 | | | | 675 | | 0.66 | % |
Savings deposits | | | 302,904 | | | | 684 | | 0.90 | % | | | 275,776 | | | | 361 | | 0.52 | % |
Time deposits | | | 809,433 | | | | 6,678 | | 3.27 | % | | | 661,131 | | | | 4,896 | | 2.95 | % |
Short-term borrowings | | | 159,185 | | | | 1,049 | | 2.61 | % | | | 131,202 | | | | 424 | | 1.29 | % |
Long-term debt | | | 114,590 | | | | 1,446 | | 5.01 | % | | | 174,923 | | | | 1,756 | | 3.99 | % |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
Total interest-bearing liabilities | | | 1,828,242 | | | | 11,064 | | 2.40 | % | | | 1,651,070 | | | | 8,112 | | 1.95 | % |
Noninterest-bearing demand deposits | | | 347,777 | | | | | | | | | | 315,759 | | | | | | | |
Other liabilities | | | 26,287 | | | | | | | | | | 22,829 | | | | | | | |
Stockholders’ equity | | | 296,496 | | | | | | | | | | 216,330 | | | | | | | |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
Total liabilities and stockholders’ equity | | $ | 2,498,802 | | | | | | | | | $ | 2,205,988 | | | | | | | |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
Net interest income | | | | | | $ | 25,844 | | | | | | | | | $ | 21,870 | | | |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
Net yield on earning assets | | | | | | | | | 4.55 | % | | | | | | | | | 4.25 | % |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)
| | | | | | | | | | | | | | | | | | | | |
| | | Twelve Months Ended December 31,
| |
| | | Average
Balance
| | | 2005 Interest
| | Yield/ Rate
| | | Average
Balance
| | | 2004 Interest
| | Yield/ Rate
| |
Assets: | | | | | | | | | | | | | | | | | | | | |
Loan portfolio: | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | $ | 545,280 | | | $ | 30,570 | | 5.61 | % | | $ | 454,890 | | | $ | 26,869 | | 5.91 | % |
Home equity | | | 305,525 | | | | 19,088 | | 6.25 | % | | | 298,703 | | | | 14,004 | | 4.69 | % |
Commercial real estate | | | 447,243 | | | | 28,756 | | 6.43 | % | | | 367,599 | | | | 20,684 | | 5.63 | % |
Other commercial | | | 109,950 | | | | 7,318 | | 6.66 | % | | | 72,825 | | | | 3,913 | | 5.37 | % |
Loans to depository institutions | | | 7,419 | | | | 213 | | 2.87 | % | | | 3,060 | | | | 35 | | 1.14 | % |
Installment | | | 33,327 | | | | 3,592 | | 10.78 | % | | | 25,343 | | | | 2,895 | | 11.42 | % |
Indirect | | | 6,347 | | | | 718 | | 11.31 | % | | | 16,599 | | | | 1,823 | | 10.98 | % |
Credit card | | | 16,417 | | | | 2,058 | | 12.54 | % | | | 18,002 | | | | 2,164 | | 12.02 | % |
Previously securitized loans | | | 42,859 | | | | 11,401 | | 26.60 | % | | | 80,151 | | | | 13,712 | | 17.11 | % |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
Total loans | | | 1,514,367 | | | | 103,714 | | 6.85 | % | | | 1,337,172 | | | | 86,099 | | 6.44 | % |
Securities: | | | | | | | | | | | | | | | | | | | | |
Taxable | | | 623,155 | | | | 29,804 | | 4.78 | % | | | 666,863 | | | | 30,110 | | 4.52 | % |
Tax-exempt | | | 43,767 | | | | 2,904 | | 6.64 | % | | | 38,169 | | | | 2,784 | | 7.29 | % |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
Total securities | | | 666,922 | | | | 32,708 | | 4.90 | % | | | 705,032 | | | | 32,894 | | 4.67 | % |
Retained interest in securitized loans | | | — | | | | — | | — | | | | 3,300 | | | | 808 | | 24.48 | % |
Deposits in depository institutions | | | 4,609 | | | | 109 | | 2.36 | % | | | 5,347 | | | | 52 | | 0.97 | % |
Federal funds sold | | | 105 | | | | 4 | | 3.81 | % | | | 193 | | | | 3 | | 1.55 | % |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
Total interest-earning assets | | | 2,186,003 | | | | 136,535 | | 6.25 | % | | | 2,051,044 | | | | 119,856 | | 5.84 | % |
Cash and due from banks | | | 48,562 | | | | | | | | | | 43,616 | | | | | | | |
Bank premises and equipment | | | 39,109 | | | | | | | | | | 34,804 | | | | | | | |
Other assets | | | 145,899 | | | | | | | | | | 102,179 | | | | | | | |
Less: Allowance for loan losses | | | (17,515 | ) | | | | | | | | | (19,790 | ) | | | | | | |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
Total assets | | $ | 2,402,058 | | | | | | | | | $ | 2,211,853 | | | | | | | |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
Liabilities: | | | | | | | | | | | | | | | | | | | | |
Interest-bearing demand deposits | | | 433,831 | | | | 3,866 | | 0.89 | % | | | 405,865 | | | | 2,599 | | 0.64 | % |
Savings deposits | | | 295,045 | | | | 2,070 | | 0.70 | % | | | 279,174 | | | | 1,456 | | 0.52 | % |
Time deposits | | | 743,725 | | | | 22,869 | | 3.07 | % | | | 662,068 | | | | 19,152 | | 2.89 | % |
Short-term borrowings | | | 157,264 | | | | 3,369 | | 2.14 | % | | | 120,849 | | | | 1,082 | | 0.90 | % |
Long-term debt | �� | | 137,340 | | | | 6,264 | | 4.56 | % | | | 201,218 | | | | 7,582 | | 3.77 | % |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
Total interest-bearing liabilities | | | 1,767,205 | | | | 38,438 | | 2.18 | % | | | 1,669,174 | | | | 31,871 | | 1.91 | % |
Noninterest-bearing demand deposits | | | 341,873 | | | | | | | | | | 312,036 | | | | | | | |
Other liabilities | | | 28,026 | | | | | | | | | | 24,072 | | | | | | | |
Stockholders’ equity | | | 264,954 | | | | | | | | | | 206,571 | | | | | | | |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
Total liabilities and stockholders’ equity | | $ | 2,402,058 | | | | | | | | | $ | 2,211,853 | | | | | | | |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
Net interest income | | | | | | $ | 98,097 | | | | | | | | | $ | 87,985 | | | |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
Net yield on earning assets | | | | | | | | | 4.49 | % | | | | | | | | | 4.29 | % |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
|
CITY HOLDING COMPANY AND SUBSIDIARIES
Analysis of Risk-Based Capital
(Unaudited) ($ in 000s)
| | | | | | | | | | | | | | | | | | | | |
| | | Dec. 31 2005 (a)
| | | Sept. 30 2005
| | | June 30 2005
| | | March 31 2005
| | | Dec. 31 2004
| |
Tier I Capital: | | | | | | | | | | | | | | | | | | | | |
Stockholders’ equity | | $ | 292,141 | | | $ | 290,432 | | | $ | 279,624 | | | $ | 219,302 | | | $ | 216,080 | |
Goodwill and other intangibles | | | (59,559 | ) | | | (59,742 | ) | | | (61,578 | ) | | | (6,204 | ) | | | (6,255 | ) |
Accumulated other comprehensive income | | | 8,012 | | | | 4,106 | | | | 3,334 | | | | 5,890 | | | | 1,144 | |
Qualifying trust preferred stock | | | 28,000 | | | | 28,000 | | | | 28,000 | | | | 28,000 | | | | 28,000 | |
Excess deferred tax assets | | | (1,071 | ) | | | — | | | | — | | | | (4,524 | ) | | | (3,129 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total tier I capital | | $ | 267,523 | | | $ | 262,796 | | | $ | 249,380 | | | $ | 242,464 | | | $ | 235,840 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total Risk-Based Capital: | | | | | | | | | | | | | | | | | | | | |
Tier I capital | | $ | 267,523 | | | $ | 262,796 | | | $ | 249,380 | | | $ | 242,464 | | | $ | 235,840 | |
Qualifying allowance for loan losses | | | 16,790 | | | | 17,768 | | | | 18,298 | | | | 16,325 | | | | 17,815 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total risk-based capital | | $ | 284,313 | | | $ | 280,564 | | | $ | 267,678 | | | $ | 258,789 | | | $ | 253,655 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Net risk-weighted assets | | $ | 1,735,538 | | | $ | 1,758,566 | | | $ | 1,734,653 | | | $ | 1,522,881 | | | $ | 1,524,581 | |
| | | | | |
Ratios: | | | | | | | | | | | | | | | | | | | | |
Average stockholders’ equity to average assets | | | 11.87 | % | | | 11.47 | % | | | 10.57 | % | | | 10.08 | % | | | 9.81 | % |
Tangible capital ratio | | | 9.52 | % | | | 9.32 | % | | | 8.91 | % | | | 9.52 | % | | | 9.51 | % |
Risk-based capital ratios: | | | | | | | | | | | | | | | | | | | | |
Tier I capital | | | 15.41 | % | | | 14.94 | % | | | 14.38 | % | | | 15.92 | % | | | 15.47 | % |
Total risk-based capital | | | 16.38 | % | | | 15.95 | % | | | 15.43 | % | | | 16.99 | % | | | 16.64 | % |
Leverage capital | | | 10.97 | % | | | 10.68 | % | | | 10.83 | % | | | 11.00 | % | | | 10.74 | % |
(a) December 31, 2005 risk-based capital ratios are estimated. | |
|
CITY HOLDING COMPANY AND SUBSIDIARIES Intangibles (Unaudited) ($ in 000s) | |
| |
| | | As of and for the Quarter Ended
| |
| | | Dec 31. 2005
| | | Sept. 30 2005
| | | June 30 2005
| | | March 31 2005
| | | Dec. 31 2004
| |
Intangibles, net | | $ | 59,559 | | | $ | 59,742 | | | $ | 61,578 | | | $ | 6,204 | | | $ | 6,255 | |
Intangibles amortization expense | | | 183 | | | | 183 | | | | 95 | | | | 51 | | | | 51 | |
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Loan Loss Experience
(Unaudited) ($ in 000s)
��
| | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended
| |
| | | Dec. 31 2005
| | | Sept. 30 2005
| | | June 30 2005
| | | March 31 2005
| | | Dec. 31 2004
| |
Balance at beginning of period | | $ | 17,768 | | | $ | 18,298 | | | $ | 16,325 | | | $ | 17,815 | | | $ | 18,537 | |
| | | | | |
Allowance acquired through acquisition | | | — | | | | — | | | | 3,265 | | | | — | | | | — | |
| | | | | |
Charge-offs: | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | | 188 | | | | 74 | | | | 97 | | | | 237 | | | | 166 | |
Home equity | | | 114 | | | | 134 | | | | 226 | | | | 421 | | | | 5 | |
Commercial real estate | | | 505 | | | | 52 | | | | 653 | | | | 393 | | | | 105 | |
Other commercial | | | 22 | | | | 2 | | | | 10 | | | | 36 | | | | 14 | |
Installment | | | 664 | | | | 476 | | | | 263 | | | | 308 | | | | 458 | |
Overdraft deposit accounts | | | 996 | | | | 1,012 | | | | 832 | | | | 744 | | | | 586 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total charge-offs | | | 2,489 | | | | 1,750 | | | | 2,081 | | | | 2,139 | | | | 1,334 | |
| | | | | |
Recoveries: | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | | 183 | | | | 46 | | | | 16 | | | | 37 | | | | 137 | |
Home equity | | | 5 | | | | 7 | | | | 9 | | | | — | | | | — | |
Commercial real estate | | | 13 | | | | 24 | | | | 311 | | | | 50 | | | | 10 | |
Other commercial | | | 17 | | | | 111 | | | | 34 | | | | 45 | | | | 80 | |
Installment | | | 163 | | | | 136 | | | | 175 | | | | 205 | | | | 147 | |
Overdraft deposit accounts | | | 330 | | | | 296 | | | | 244 | | | | 312 | | | | 238 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total recoveries | | | 711 | | | | 620 | | | | 789 | | | | 649 | | | | 612 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Net charge-offs | | | 1,778 | | | | 1,130 | | | | 1,292 | | | | 1,490 | | | | 722 | |
Provision for loan losses | | | 800 | | | | 600 | | | | — | | | | — | | | | — | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Balance at end of period | | $ | 16,790 | | | $ | 17,768 | | | $ | 18,298 | | | $ | 16,325 | | | $ | 17,815 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Loans outstanding | | $ | 1,612,827 | | | $ | 1,622,710 | | | $ | 1,600,985 | | | $ | 1,343,247 | | | $ | 1,354,774 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Average loans outstanding | | | 1,618,711 | | | | 1,612,344 | | | | 1,473,880 | | | | 1,348,489 | | | | 1,347,297 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Allowance as a percent of loans outstanding | | | 1.04 | % | | | 1.09 | % | | | 1.14 | % | | | 1.22 | % | | | 1.31 | % |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Allowance as a percent of non-performing loans | | | 402 | % | | | 487 | % | | | 464 | % | | | 490 | % | | | 487 | % |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Net charge-offs (annualized) as a percent of average loans outstanding | | | 0.44 | % | | | 0.28 | % | | | 0.35 | % | | | 0.44 | % | | | 0.21 | % |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Non-Performing Assets
(Unaudited) ($ in 000s)
| | | | | | | | | | | | | | | | | | | | |
| | | Dec. 31 2005
| | | Sept. 30 2005
| | | June 30 2005
| | | March 31 2005
| | | Dec. 31 2004
| |
Nonaccrual loans | | $ | 2,785 | | | $ | 2,468 | | | $ | 2,709 | | | $ | 2,641 | | | $ | 2,147 | |
Accruing loans past due 90 days or more | | | 1,124 | | | | 1,003 | | | | 936 | | | | 322 | | | | 677 | |
Previously securitized loans past due 90 days or more | | | 268 | | | | 174 | | | | 299 | | | | 372 | | | | 832 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total non-performing loans | | | 4,177 | | | | 3,645 | | | | 3,944 | | | | 3,335 | | | | 3,656 | |
Other real estate owned | | | 135 | | | | 117 | | | | 471 | | | | 463 | | | | 247 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total non-performing assets | | $ | 4,312 | | | $ | 3,762 | | | $ | 4,415 | | | $ | 3,798 | | | $ | 3,903 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Non-performing assets as a percent of loans and other real estate owned | | | 0.27 | % | | | 0.23 | % | | | 0.28 | % | | | 0.28 | % | | | 0.29 | % |
