EXHIBIT 99
NEWS RELEASE
- --------------------------------------------------------------------------------
For Immediate Release
April 15, 2003
For Further Information Contact:
Jerry Francis, Chairman, President & CEO
(304) 769-1101
City Holding Company Announces 45% increase
in Net Income
Charleston, West Virginia - City Holding Company, "the Company" (NASDAQ:CHCO;
NASDAQ:CHCOP), a $2 billion bank holding company headquartered in Charleston,
today announced net income for the first quarter of $9.4 million, or diluted
earnings per share of $0.55, compared to $6.4 million, or $0.38 per diluted
share, in the first quarter of 2002, representing a 45% increase. For the first
quarter of 2003, the Company achieved a return on assets of 1.89%, a return on
equity of 22.1%, a net interest margin of 4.71%, and an efficiency ratio of
53.4%, placing the Company among the most profitable banks for the quarter.
These results compare quite favorably to the first quarter of 2002, when the
return on assets was 1.22%, the return on equity was 17.05%, the net interest
margin was 4.52%, and the efficiency ratio was 63.9%. The first quarter of 2003
was characterized by solid loan growth in strategically targeted lines of
business, increases in deposit balances, strength in the net interest margin, no
required provision for loan losses, strong increases in non-interest income, and
lower operating expenses.
Balance Sheet Trends
Total loans at March 31, 2003 were $1.187 billion, down from $1.204 billion at
December 31, 2002. The decrease reflects the maturity of a $20 million
short-term loan to another banking institution during the first quarter of 2003
and declines in installment and indirect loans of $17.9 million following the
Company's previously announced exit from the indirect auto lending business and
its intention to significantly reduce extensions of installment credit not
secured by real estate.
The Company continued to have strong loan growth in real estate secured lending
during the first quarter of 2003. Consumer loan balances on first and second
mortgages grew by $13.3 million representing 8% compound annualized growth.
Commercial real estate and other commercial loans grew by $8.3 million
representing 9.3% compound annualized growth. As a result, the Company's loan
mix continued to shift toward real estate secured lending as strategically
planned. At March 31, 2003, 82.9% of the loan portfolio
was secured by real estate, reflecting the Company's conservative philosophy
with respect to lending.
Total deposits increased from $1.565 billion at December 31, 2002 to $1.589
billion at March 31, 2003, reflecting an increase of $24.8 million or 6.2%
compound annualized growth. Excluding time deposits, which were flat during the
quarter, checkable deposits and saving deposits increased by $24.4 million,
reflecting 10.7% compound annualized growth.
Net Interest Income
During the first quarter of 2003, the Company recorded net interest income of
$21.2 million as compared to $21.6 million during the first quarter of 2002. The
net interest margin for the first quarter of 2003 increased to 4.71% from 4.52%
in the first quarter of 2002. The decrease in net interest income can be
attributed to a decrease in average earning assets, which fell by $120 million,
or 6.2%, from $1.948 billion in the first quarter of 2002 to $1.828 billion in
the first quarter of 2003. The decrease in earning assets was driven by an $87.5
million reduction in installment and indirect auto loan balances which business
the Company exited in 2001. During this period, decreases in residential
mortgage loans of $109.9 million were mostly offset by increases of $106.3
million in home equity loan balances, and decreases in commercial and industrial
loans of $38.7 million were partly offset by increases in commercial real estate
mortgage loans of $28.9 million. Declining balances associated with the
strategic restructuring of lending at the Company were nearly complete by
September 30, 2002. Since that time, loan balances (net of short-term loans to
depository financial institutions used for managing liquidity) have been
relatively stable as growth in core lending areas has offset declines in
non-core lending areas.
It is noteworthy that the Company experienced an increase in its net interest
margin during the first quarter of 2003 to 4.71% from 4.68% in the fourth
quarter of 2002. The increase is attributable to the Company's investment in
retained interests. The net interest margin would have otherwise been stable.
Given the current level of interest rates, the industry is generally
experiencing compression in net interest margins. If rates continue to remain at
historically low levels, it is likely that the Company will also experience some
contraction of its net interest margin over forthcoming quarters.
Credit Quality
The Company continues to achieve its credit quality goals. During the first
quarter of 2003, the Company had gross charge-offs of $2.1 million which were
more than offset by $2.5 million in recoveries, resulting in net recoveries of
$0.4 million. The Company's recoveries reflect the high level of net charge-offs
experienced by the Company in prior periods and vigorous collection and recovery
efforts. In 2002, the Company had net charge-offs of $21.9 million following net
charge-offs of $22.1 million in 2001. Non-performing assets fell slightly from
$3.4 million at December 31, 2002 to $3.1 million at March 31, 2003 representing
just 0.26% of total loans and other real estate owned. Non-performing loans fell
slightly from $3.0 million at December 31, 2002 to $2.7 million at March 31,
2003.
The Company recorded no provision for loan losses in the first quarter of 2003.
At March 31, 2003, the ALLL was $28.9 million or 2.44% of total loans
outstanding and 1057% of non-performing loans. The Company believes that its
methodology for determining its ALLL adequately provides for probable losses
inherent in the loan portfolio at March 31. If the Company's loan loss
experience remains good in the future, the methodology used to establish the
ALLL could lead to low, zero, or negative provision expense in future periods.
Non-Interest Income
Non-interest income represented 29.8% of total revenues (net interest income
plus non-interest income) for the Company in the first quarter of 2003 - which
compares very favorably to other similarly sized banking companies which average
approximately 22% of total revenues derived from non-interest income.
Non-Interest Income in the first quarter of 2003 was $9.0 million compared to
$7.0 million in the first quarter of 2002. Significant sources of strength were
service charges, insurance commissions, and trust revenues. Service charges
increased from $4.629 million during the first quarter of 2002 to $6.081 million
during the first quarter of 2003, reflecting growth in new customers and
services provided to the Company's depository customers. Nevertheless, service
charges were down $0.7 million from the fourth quarter of 2002 (or $0.2 cents
per diluted share) reflecting the typical seasonal pattern for retail-focused
banks. Revenues from insurance commissions increased 50.9% from $0.505 million
in the first quarter of 2002 to $0.762 million in the first quarter of 2003.
Trust revenues are up 10.1% from $0.316 million in the first quarter of 2002 to
$0.348 million in the first quarter of 2003.
Non-Interest Expenses
Coupled with its success in enhancing non-interest income, the Company has also
demonstrated considerable success in managing expenses. This is evidenced by the
efficiency ratio (defined as non-interest expense as a percent of total
revenues), which fell from 63.9% in the first quarter of 2002 to 53.4% in the
first quarter of 2002. The Efficiency Ratio has continued to drop steadily from
87% in 2001 as the Company has restructured itself. Non-interest expenses fell
to $16.0 million in the first quarter of 2003 as compared to $18.2 million in
the first quarter of 2002, a reduction of 11.9%. Sustainable reductions have
been achieved in virtually all expense categories.
The largest expense category, compensation expenses, declined from $8.638
million in the first quarter of 2002 to $7.738 million in the first quarter of
2003, representing a reduction of 10.4%. This accompanied a 4.9% reduction in
full-time equivalent employees from 759 in the first quarter of 2002 to 722 in
the first quarter of 2003. Depreciation expense was 25.7% lower in the first
quarter of 2003 as compared to the first quarter of 2002, reflecting the
Company's focus on limiting capital expenditures to those that have proven
ability to improve customer service, lower expenses, or grow revenues.
Telecommunication expenses were down 41.2% reflecting renegotiated contracts
with the Company's primary telecommunication vendors and elimination of costs
associated with discontinued operations. Insurance and regulatory expenses
declined 38.3% as lower regulatory expenses and lower FDIC insurance expense
accompanied the Company's improved financial condition. Repossessed asset losses
and expenses were greatly improved as the Company recognized nonrecurring income
of $0.191 million on recoveries of properties held in OREO as compared to losses
of $0.347 in the first quarter of 2002.
Retained Interests in Securitized Loans
Between 1997 and 1999, the company originated and securitized $760 million in
125% loan to value junior-lien mortgages. The Company has a retained interest in
the final cash flows associated with these underlying mortgages after satisfying
priority claims. At February 28, 2003 (the most current date that information is
available), the outstanding principal balances of the mortgages securitized were
$209.6 million. The outstanding obligation to the purchasers of the priority
claims was $97.2 million with the Company having an interest in the remaining
$112.4 million in balances. The Company determines the value of the retained
interests using assumptions regarding default rates, prepayment rates, and an
appropriate discount rate for assets of similar characteristics. At March 31,
2003 the Company estimates the fair value of these assets to be $94.7 million,
compared to the book value of $82.3 million. The Company's assumption regarding
prepayments for these assets was changed on March 1, 2003 to reflect higher
levels of prepayment for these assets over their remaining lives as compared to
the assumptions previously used. The change in assumption added less than $0.1
million to net income for the quarter. The Bank is required to accrete the
difference between the fair value and the book value over the life of the
investment. Therefore, the retained interests accrued at the rate of 17.33%
during the first quarter of 2003. During the first quarter of 2003, the Company
accrued income of $3.5 million and received cash of $2.1 million.
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 74.7% and the loan to asset ratio was 59.8% at March 31, 2003.
The Company maintained investment securities totaling 28.1% of assets at March
31, 2003 including $55 million invested in money market mutual funds. Further,
The Company's deposit mix is weighted heavily toward checking and saving
accounts that fund 48.8% of assets at March 31, 2003. Time deposits fund 31.2%
of assets, but very few of these deposits are in accounts of more than $250,000,
reflecting the core retail orientation of the Company.
The Company is also strongly capitalized. Capitalization (as measured by average
equity to average assets) significantly increased from 7.13% at March 31, 2002
to 8.53% at March 31, 2003 as a result of the Company's strong earnings. With
respect to regulatory capital, at March 31, 2003, the Company's Leverage Ratio
is 8.75%, the Tier I Capital ratio is 10.24%, and the Total risk-based Capital
ratio is 13.68%. These regulatory capital ratios are significantly above levels
required to be considered "well capitalized", which is the highest possible
regulatory designation.
During March of 2003, the Board approved a 33% increase in the quarterly cash
dividend to 20 cents per share payable April 30, 2003 to shareholders of record
as of April 16, 2003, thereby restoring cash dividends to their highest historic
levels. The Board also
approved payment of current dividends on the Company's 9.15% Capital Securities
issued by the Company's wholly owned subsidiary, City Holding Capital Trust I,
payable on April 1, 2003 to shareholders of record March 15, 2003 and approved
payment of current dividends on the 9.125% Capital Securities issued by the
Company's wholly-owned subsidiary, City Holding Capital Trust II payable April
30, 2003 to shareholders of record as of April 15, 2003.
City Holding Company is the parent company of City National Bank of West
Virginia. In addition to the Bank, City National Bank operates CityInsurance
Professionals, an insurance agency offering a full range of insurance products
and services.
This news release contains certain forward-looking statements that are included
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such information involves risks and uncertainties that could
result in the Company's actual results differing from those projected in the
forward-looking statements. Important factors that could cause actual results to
differ materially from those discussed in such forward-looking statements
include, but are not limited to, (1) the Company may incur additional loan loss
provision due to negative credit quality trends in the future that may lead to a
deterioration of asset quality, or conversely, the Company may incur less, or
even negative, loan loss provision due to positive credit quality trends in the
future; (2) the Company may not continue to experience significant recoveries of
previously charged-off loans and the Company may incur increased charge-offs in
the future; (3) the Company may experience increases in the default rates on its
retained interests in securitized mortgages causing it to take impairment
charges to earnings; (4) the Company may not realize the expected cash payments
that it is presently accruing from its retained interests in securitized
mortgages; (5) the Company could have adverse legal actions of a material
nature; (6) the Company may face competitive loss of customers associated with
its efforts to increase fee-based revenues; (7) the Company may be unable to
maintain or improve upon current levels of expense associated with managing its
business; (8) rulings affecting, among other things, the Company's and its
banking subsidiaries' regulatory capital and required loan loss allocations may
change, resulting in the need for increased capital levels; (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; (12) the planned purchase of Trust I and
Trust II Capital Securities and the common stock may not occur or may not have
the effects anticipated; and (13) 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 March 31 Percent
2003 2002 Change
-------------------------------------------
Earnings ($000s, except per share data):
Net Interest Income (FTE) $21,522 $22,017 (2.25)%
Net Income 9,352 6,408 45.94%
Earnings per Basic Share 0.56 0.38 47.37%
Earnings per Diluted Share 0.55 0.38 44.74%
=========================================================================================================
Key Ratios (percent):
Return on Average Assets 1.89% 1.22% 54.92%
Return on Average Equity 22.13% 17.05% 29.79%
Net Interest Margin 4.71% 4.52% 4.20%
Efficiency Ratio 53.38% 63.91% (16.48)%
Average Shareholders' Equity to Average Assets 8.53% 7.13% 19.64%
Risk-Based Capital Ratios (a), (b):
Tier I 10.24% 8.92% 14.80%
Total 13.68% 12.73% 7.46%
==========================================================================================================
Common Stock Data:
Cash Dividends Declared per Share $ 0.20 $ - N/A
Book Value per Share 10.10 8.92 13.23%
Market Value per Share:
High 28.99 16.05 80.62%
Low 25.50 12.04 111.79%
End of Period 27.37 15.35 78.31%
Price/Earnings Ratio (c) 12.22 10.10 20.99%
(a) March 31, 2003 risk-based capital ratios are estimated.
(b) Effective September 30, 2002, the Company implemented new regulatory
capital requirements related to the Company's investment in retained
interests in securitized mortgages. The March 31, 2002 capital ratios
reported in the table above have been modified to reflect the impact of new
regulatory guidelines as if the new guidelines had been implemented in
March 2002.
(c) March 31, 2003 price/earnings ratio computed based on annualized first
quarter 2003 earnings.
CITY HOLDING COMPANY AND SUBSIDIARIES
Financial Highlights
(Unaudited)
====================================================================================================================================
Book Value and Market Price Range per Share
Market Price
Book Value per Share Range per Share
March 31 June 30 September 30 December 31 Low High
-------------------------------------------------------------------------------------------------------------
1998 (a) $17.18 $18.72 $18.56 $13.09 $30.00 $51.00
1999 13.07 12.85 12.80 11.77 12.50 32.75
2000 11.76 11.72 11.72 9.68 4.88 16.19
2001 8.82 8.70 8.37 8.67 5.13 14.64
2002 8.92 9.40 9.64 9.93 12.04 30.20
2003 10.10 - - - 25.50 28.99
====================================================================================================================================
Earnings per Basic Share
Quarter Ended
March 31 June 30 September 30 December 31 Year-to-Date
-------------------------------------------------------------------------------------------------------------
1998 (a) $ 0.48 $ 0.49 $ 0.56 $(0.89) $ 0.31
1999 0.31 0.42 0.14 (0.49) 0.37
2000 0.24 0.02 (0.05) (2.47) (2.27)
2001 (0.34) (1.19) (0.46) 0.45 (1.54)
2002 0.38 0.45 0.53 0.56 1.93
2003 0.56 - - - 0.56
====================================================================================================================================
Earnings per Diluted Share
Quarter Ended
March 31 June 30 September 30 December 31 Year-to-Date
-------------------------------------------------------------------------------------------------------------
1998 (a) $ 0.48 $ 0.49 $ 0.56 $(0.89) $ 0.31
1999 0.31 0.42 0.14 (0.49) 0.37
2000 0.24 0.02 (0.05) (2.47) (2.27)
2001 (0.34) (1.19) (0.46) 0.45 (1.54)
2002 0.38 0.45 0.52 0.55 1.90
2003 0.55 - - - 0.55
====================================================================================================================================
(a) Book value and per share amounts reported through September 30, 1998 are as
previously reported by City Holding Company and have not been restated to
include the operations of Horizon Bancorp, Inc.
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)
Three Months Ended March 31
2003 2002
------------------------------------
Interest Income
Interest and fees on loans $ 20,302 $ 25,573
Interest on investment securities:
Taxable 5,213 4,585
Tax-exempt 571 731
Interest on retained interests 3,523 2,806
Interest on federal funds sold 90 186
------------------------------------
Total Interest Income 29,699 33,881
Interest Expense
Interest on deposits 5,767 8,978
Interest on short-term borrowings 434 616
Interest on long-term debt 278 546
Interest on trust preferred securities 2,006 2,118
------------------------------------
Total Interest Expense 8,485 12,258
------------------------------------
Net Interest Income 21,214 21,623
Provision for loan losses - 900
------------------------------------
Net Interest Income After Provision for Loan Losses 21,214 20,723
Non-Interest Income
Investment securities gains 353 232
Service charges 6,081 4,629
Insurance commissions 762 505
Trust fee income 348 316
Mortgage banking income 168 186
Other income 1,273 1,146
------------------------------------
Total Non-Interest Income 8,985 7,014
Non-Interest Expense
Salaries and employee benefits 7,738 8,638
Occupancy and equipment 1,545 1,628
Depreciation 1,187 1,597
Professional fees and litigation expense 837 640
Postage, delivery, and statement mailings 780 834
Advertising 650 643
Telecommunications 405 689
Insurance and regulatory 325 527
Office supplies 435 337
Repossessed asset losses and expenses (191) 347
Other expenses 2,296 2,292
------------------------------------
Total Non-Interest Expense 16,007 18,172
------------------------------------
Income Before Income Taxes 14,192 9,565
Income Tax Expense 4,840 3,157
------------------------------------
Net Income $ 9,352 $ 6,408
====================================
Basic Earnings per Share $ 0.56 $ 0.38
Diluted Earnings per Share $ 0.55 $ 0.38
Average Common Shares Outstanding:
Basic 16,638 16,888
Diluted 16,955 17,016
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
(Unaudited) ($ in 000s)
Three Months Ended
March 31, 2003 March 31, 2002
-----------------------------------
Balance at January 1 $ 165,393 $ 146,349
Net income 9,352 6,408
Other comprehensive income:
Change in unrealized gain on securities available-for-sale (1,058) (2,050)
Cash dividends declared ($0.20/share) (3,327) -
Exercise of 79,082 stock options 775 -
Purchase of 118,300 common shares for treasury (3,258) -
-----------------------------------
Balance at March 31 $ 167,877 $ 150,707
===================================
========================================================================================================
CITY HOLDING COMPANY AND SUBSIDIARIES
Condensed Consolidated Quarterly Statements of Income
(Unaudited) ($ in 000s, except per share data)
Quarter Ended
March 31 Dec. 31 Sept. 30 June 30 March 31
2003 2002 2002 2002 2002
-----------------------------------------------------------------
Interest income $ 29,699 $ 30,616 $ 31,701 $ 32,767 $ 33,881
Taxable equivalent adjustment 308 341 351 368 394
-----------------------------------------------------------------
Interest income (FTE) 30,007 30,957 32,052 33,135 34,275
Interest expense 8,485 9,465 9,689 10,887 12,258
-----------------------------------------------------------------
Net interest income 21,522 21,492 22,363 22,248 22,017
Provision for loan losses - - - 900 900
-----------------------------------------------------------------
Net interest income after provision
for loan losses 21,522 21,492 22,363 21,348 21,117
Noninterest income 8,985 9,555 8,839 8,696 7,014
Noninterest expense 16,007 16,486 17,257 17,874 18,172
-----------------------------------------------------------------
Income before income taxes 14,500 14,561 13,945 12,170 9,959
Income tax expense 4,840 4,812 4,622 4,131 3,157
Taxable equivalent adjustment 308 341 351 368 394
-----------------------------------------------------------------
Net income $ 9,352 $ 9,408 $ 8,972 $ 7,671 $ 6,408
=================================================================
======================================================================================================
Basic earnings per share $ 0.56 $ 0.56 $ 0.53 $ 0.45 $ 0.38
Diluted earnings per share 0.55 0.55 0.52 0.45 0.38
Cash dividends declared per share 0.20 0.15 0.15 0.15 -
======================================================================================================
Average Common Share (000s):
Outstanding 16,638 16,652 16,804 16,892 16,888
Diluted 16,955 16,999 17,140 17,133 17,016
Net Interest Margin 4.71% 4.68% 4.83% 4.67% 4.52%
======================================================================================================
CITY HOLDING COMPANY AND SUBSIDIARIES
Non-Interest Income and Non-Interest Expense
(Unaudited) ($ in 000s)
Quarter Ended
March 31 Dec. 31 Sept. 30 June 30 March 31
2003 2002 2002 2002 2002
------------------------------------------------------------------
Non-Interest Income:
Service charges $ 6,081 $ 6,790 $ 6,313 $ 5,768 $ 4,629
Insurance commissions 762 411 436 532 505
Trust fee income 348 345 319 354 316
Mortgage banking income 168 233 248 189 186
Other income 1,273 1,110 1,200 1,615 1,146
------------------------------------------------------------------
Subtotal 8,632 8,889 8,516 8,458 6,782
Investment security gains 353 666 323 238 232
------------------------------------------------------------------
Total Non-Interest Income $ 8,985 $ 9,555 $ 8,839 $ 8,696 $ 7,014
==================================================================
Non-Interest Expense:
Salaries and employee benefits $ 7,738 $ 7,631 $ 7,651 $ 7,995 $ 8,638
Occupancy and equipment 1,545 1,679 1,710 1,638 1,628
Depreciation 1,187 1,288 1,367 1,497 1,597
Professional fees and litigation expense 837 702 782 733 640
Postage, delivery, and statement mailings 780 718 873 767 834
Advertising 650 646 580 699 643
Telecommunications 405 565 536 614 689
Insurance and regulatory 325 189 450 490 527
Office supplies 435 468 347 405 337
Repossessed asset losses and expenses (191) (3) 25 295 347
Other expenses 2,296 2,603 2,936 2,741 2,292
------------------------------------------------------------------
Total Non-Interest Expense $ 16,007 $ 16,486 $ 17,257 $ 17,874 $ 18,172
==================================================================
==============================================================================================================
Employees (Full Time Equivalent) 722 737 743 748 759
Branch Locations 55 55 55 55 55
==============================================================================================================
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000s)
March 31 December 31
2003 2002
------------------------------
(Unaudited)
Assets
Cash and due from banks $ 69,187 $ 109,318
Federal funds sold - 20,000
------------------------------
Cash and cash equivalents 69,187 129,318
Investment securities available-for-sale, at fair value 488,946 445,384
Investment securities held-to-maturity, at amortized cost 69,166 72,410
------------------------------
Total investment securities 558,112 517,794
Securities purchased under agreement to resell - 27,202
Loans:
Residential real estate 463,813 471,806
Home equity 232,048 210,753
Commercial real estate 288,724 273,904
Other commercial 88,824 95,323
Loans to depository institutions - 20,000
Installment 53,488 64,181
Indirect 41,475 48,709
Credit card 18,780 19,715
------------------------------
Gross Loans 1,187,152 1,204,391
Allowance for loan losses (28,910) (28,504)
------------------------------
Net loans 1,158,242 1,175,887
Retained interests 82,346 80,923
Premises and equipment 36,736 37,802
Accrued interest receivable 11,102 11,265
Net deferred tax assets 35,748 35,895
Other assets 33,418 31,825
------------------------------
Total Assets $ 1,984,891 $ 2,047,911
==============================
Liabilities
Deposits:
Noninterest-bearing $ 293,062 $ 281,290
Interest-bearing:
Demand deposits 383,335 377,165
Savings deposits 292,668 286,198
Time deposits 620,282 619,927
------------------------------
Total deposits 1,589,347 1,564,580
Federal funds purchased and securities sold under agreement to repurchase 84,330 146,937
Securities sold, not yet purchased - 26,284
Long-term debt 25,000 25,000
Corporation-obligated mandatorily redeemable capital securities of subsidiary
trusts holding solely subordinated debentures of City Holding Company 87,500 87,500
Other liabilities 30,837 32,217
------------------------------
Total Liabilities 1,817,014 1,882,518
Stockholders' Equity
Preferred stock, par value $25 per share: 500,000 shares authorized; none issued - -
Common stock, par value $2.50 per share: 50,000,000 shares authorized;
16,919,248 shares issued and outstanding at March 31, 2003 and December 31, 2002,
including 300,781 and 261,563 shares in treasury 42,298 42,298
Capital surplus 57,653 59,029
Retained earnings 72,101 66,076
Cost of common stock in treasury (7,533) (6,426)
Accumulated other comprehensive income:
Unrealized gain on securities available-for-sale 4,902 5,960
Underfunded pension liability (1,544) (1,544)
------------------------------
Total Accumulated Other Comprehensive Income 3,358 4,416
------------------------------
Total Stockholders' Equity 167,877 165,393
------------------------------
Total Liabilities and Stockholders' Equity $ 1,984,891 $ 2,047,911
==============================
CITY HOLDING COMPANY AND SUBSIDIARIES
Loan Portfolio
(Unaudited) ($ in 000s)
March 31 Dec. 31 Sept. 30 June 30 March 31
2003 2002 2002 2002 2002
----------------------------------------------------------------------------------
Residential real estate $ 463,813 $ 471,806 $ 486,566 $ 522,016 $ 573,757
Home equity 232,048 210,753 185,084 157,577 125,753
Commercial real estate 288,724 273,904 262,824 251,347 259,840
Other commercial 88,824 95,323 109,068 110,468 127,538
Loans to depository institutions - 20,000 35,000 - -
Installment 53,488 64,181 75,047 89,117 106,872
Indirect 41,475 48,709 56,425 65,634 75,619
Credit card 18,780 19,715 19,081 18,285 17,424
----------------------------------------------------------------------------------
Gross Loans $ 1,187,152 $ 1,204,391 $ 1,229,095 $ 1,214,444 $ 1,286,803
==================================================================================
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)
Three Months Ended March 31,
2003 2002
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
-------------------------------------------------------------------------
Assets:
Total loans $ 1,196,048 $ 20,302 6.79% $ 1,343,307 $ 25,573 7.61%
Loans held for sale - - - - - -
Securities:
Taxable 489,836 5,213 4.26% 426,535 4,585 4.30%
Tax-exempt 47,557 879 7.39% 58,527 1,125 7.69%
-------------------------------------------------------------------------
Total securities 537,393 6,092 4.53% 485,062 5,710 4.71%
Retained interest in securitized loans 81,293 3,523 17.33% 72,224 2,806 15.54%
Federal funds sold 13,725 90 2.62% 47,730 186 1.56%
-------------------------------------------------------------------------
Total interest-earning assets 1,828,459 30,007 6.56% 1,948,323 34,275 7.04%
Cash and due from banks 66,148 60,105
Bank premises and equipment 37,417 42,523
Other assets 78,887 104,784
Less: Allowance for loan losses (29,115) (47,453)
-------------------------------------------------------------------------
Total assets $ 1,981,796 $ 2,108,282
=========================================================================
Liabilities:
Interest-bearing demand deposits $ 376,488 $ 520 0.55% $ 383,421 $ 554 0.58%
Savings deposits 288,269 451 0.63% 296,336 895 1.21%
Time deposits 620,440 4,796 3.09% 732,138 7,529 4.11%
Short-term borrowings 107,664 434 1.61% 113,185 616 2.18%
Long-term debt 25,000 278 4.45% 37,148 546 5.88%
Trust preferred securities 87,500 2,006 9.17% 87,500 2,118 9.68%
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Total interest-bearing liabilities 1,505,361 8,485 2.25% 1,649,728 12,258 2.97%
Noninterest-bearings demand deposits 277,766 272,499
Other liabilities 29,630 35,739
Stockholders' equity 169,039 150,316
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Total liabilities and stockholders' equity $ 1,981,796 $ 2,108,282
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Net interest income $ 21,522 $ 22,017
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Net yield on earning assets 4.71% 4.52%
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CITY HOLDING COMPANY AND SUBSIDIARIES
Analysis of Risk-Based Capital
(Unaudited) ($ in 000s)
March 31 Dec. 31 Sept. 30 June 30 March 31
2003 (a) 2002 2002 2002 (b) 2002 (b)
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Tier I Capital:
Stockholders' equity $ 167,877 $ 165,393 $ 160,705 $ 158,828 $ 150,707
Goodwill and other intangibles (6,652) (6,730) (6,808) (6,885) (6,963)
Accumulated other comprehensive income (3,358) (4,416) (6,077) (4,638) (1,877)
Qualifying trust preferred stock 54,840 53,659 51,543 51,397 49,610
Excess retained interests (29,169) (28,946) (30,000) (27,255) (26,192)
Excess deferred tax assets (14,477) (15,104) (11,102) (14,766) (23,032)
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Total tier I capital $ 169,061 $ 163,856 $ 158,261 $ 156,681 $ 142,253
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Total Risk-Based Capital:
Tier I capital $ 169,061 $ 163,856 $ 158,261 $ 156,681 $ 142,253
Qualifying allowance for loan losses 24,146 24,068 23,477 22,910 22,909
Qualifying trust preferred stock 32,660 33,841 35,957 36,103 37,890
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Total risk-based capital $ 225,867 $ 221,765 $ 217,695 $ 215,694 $ 203,052
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Net risk-weighted assets $1,650,902 $ 1,660,489 $ 1,621,129 $ 1,567,809 $ 1,595,626
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Ratios:
Average stockholders' equity to average assets 8.53% 8.30% 8.05% 7.51% 7.13%
Risk-based capital ratios:
Tier I capital 10.24% 9.87% 9.76% 9.99% 8.92%
Total risk-based capital 13.68% 13.36% 13.43% 13.76% 12.73%
Leverage capital 8.75% 8.49% 8.08% 7.73% 6.93%
(a) March 31, 2003 risk-based capital ratios are estimated.
(b) Effective September 30, 2002, the Company implemented new regulatory capital requirements related to the Bank's investment in
retained interests in securitized mortgages. Each of the prior periods in the table above have been modified to reflect the
impact of the new regulatory guidelines as if the new guidelines had been implemented in March 2002.
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CITY HOLDING COMPANY AND SUBSIDIARIES
Intangibles
(Unaudited) ($ in 000s)
As of and for the Quarter Ended
March 31 Dec. 31 Sept. 30 June 30 March 31
2003 2002 2002 2002 2002
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Intangibles, net $ 6,652 $ 6,730 $ 6,808 $ 6,885 $ 6,963
Intangibles amortization expense 78 78 77 78 78
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CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Loan Loss Experience
(Unaudited) ($ in 000s)
Quarter Ended
March 31 Dec. 31 Sept. 30 June 30 March 31
2003 2002 2002 2002 2002
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Balance at beginning of period $ 28,504 $ 28,623 $ 28,023 $ 37,779 $ 48,635
Charge-offs:
Commercial 532 565 1,722 8,925 7,851
Real estate - mortgage 594 421 212 3,222 3,505
Installment 1,007 1,187 1,204 1,156 1,267
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Total charge-offs 2,133 2,173 3,138 13,303 12,623
Recoveries:
Commercial 929 490 2,703 2,129 349
Real estate - mortgage 1,178 1,140 525 92 92
Installment 432 424 510 426 426
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Total recoveries 2,539 2,054 3,738 2,647 867
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Net (recoveries) charge-offs (406) 119 (600) 10,656 11,756
Provision for loan losses - - - 900 900
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Balance at end of period $ 28,910 $ 28,504 $ 28,623 $ 28,023 $ 37,779
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Loans outstanding $ 1,187,152 $ 1,204,391 $ 1,229,095 $ 1,214,444 $ 1,286,803
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Average loans outstanding 1,196,048 1,215,757 1,213,295 1,253,098 1,343,307
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Allowance as a percent of loans outstanding 2.44% 2.37% 2.36% 2.31% 2.94%
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Allowance as a percent of non-performing loans 1057% 948% 1119% 1729% 243%
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Net (recoveries) charge-offs (annualized) as a
percent of average loans outstanding (0.14)% 0.04% (0.20)% 3.40% 3.50%
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CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Non-Performing Assets
(Unaudited) ($ in 000s)
March 31 Dec. 31 Sept. 30 June 30 March 31
2003 2002 2002 2002 2002
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Nonaccrual loans $ 2,148 $ 2,126 $ 1,511 $ 626 $ 14,542
Accruing loans past due 90 days or more 588 880 1,046 995 1,000
Restructured loans - - - - -
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Total non-performing loans 2,736 3,006 2,557 1,621 15,542
Other real estate owned 387 403 1,079 1,681 2,295
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Total non-performing assets $ 3,123 $ 3,409 $ 3,636 $ 3,302 $ 17,837
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Non-performing assets as a percent of loans and
other real estate owned 0.26% 0.28% 0.30% 0.27% 1.38%
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