Exhibit 99
NEWS RELEASE
For Immediate Release
January 23, 2002
For Further Information Contact:
Jerry Francis, President & CEO
(304) 769-1101
City Holding Company Announces Fourth Quarter Results and Earnings Turnaround
Charleston, West Virginia - City Holding Company, "the Company" (NASDAQ:CHCO), a
$2.1 billion bank holding company headquartered in Charleston, today announced
net income for the fourth quarter of 2001 of $7.6 million, or $0.45 per share,
compared with a net loss of $41.8 million, or a loss of $2.47 per share, in the
fourth quarter of 2000. These were the first positive earnings reported by the
Company since the second quarter of 2000.
During the fourth quarter of 2001, the Company completed the sale of its'
California banking affiliates. The Company received $23 million in proceeds from
the sale that were used to completely pay off the Company's debt with another
financial institution. As a result of the sale, the Company's total assets
decreased by $195 million, loan balances decreased by $149 million, and deposit
balances decreased by $175 million. The Company recorded a pre-tax gain on the
sale of $4.7 million. During 2001, the California banking franchises contributed
net interest income of $6.8 million and net income of $1.8 million. This
divestiture completed the Company's goal of returning to its core banking
franchise in West Virginia.
Excluding the book gain recorded on the sale of the California banks, after-tax
net income would have been $4.8 million, or $0.29 per share for the fourth
quarter. Also after excluding the gain, the return on assets during the fourth
quarter was 0.86%, the return on equity was 13.3%, and the efficiency ratio was
68.1%.
For the twelve months ended December 31, 2001, the Company recorded a loss of
$8.0 million, or $0.47 per share, excluding the effect of a change in
accounting. This compares to a reported loss of $38.4 million, or $2.27 per
share, during 2000. As previously announced, the Company recorded a $18.0
million after-tax charge on April 1, 2001, in conjunction with the adoption of
new accounting guidance (EITF 99-20) related to its retained interests in
securitized loans. As a result of the cumulative effect of the accounting
change, the Company had a net loss during 2001 of $26.0 million, or $1.54 per
share.
"The Company entered 2001 with significant challenges", stated Jerry Francis,
President and CEO of City Holding Company and its primary subsidiary City
National Bank of West Virginia (the "Bank"). "The bank's primary regulator, the
Office of the Comptroller of the Currency ("OCC") had entered into a formal
agreement with the Bank's Board in June of 2000 requiring the Board and
Management to take steps to address problems in the bank's loan portfolio and
other operating practices. There were concerns about the quality of the loan
portfolio, and the Company was burdened by unsuccessful ventures into various
non-core activities including two banking subsidiaries in California, an
Internet Service Provider ("ISP"), a printing and direct mail company, mortgage
origination units in California, Atlanta and Maryland, a collections company in
Dallas, and a mortgage servicing business. The Company's operating expenses were
significantly above peer levels; it had a portfolio of problem loans; and there
was insufficient revenue. The price of the Company's common shares at the end of
2000 had fallen to $5.75. The prospects for returning the Company to a stable
and profitable position were not clear."
"We ended 2001 a changed Company. The Board and Management take great pride in
the accomplishments that have been achieved across the Company through the
extraordinary efforts of all our officers and staff. With the Board's full
support, management and staff have taken dramatic action to address difficulties
arising out of previous business strategies and transactions that provide to be
unprofitable for the company. These difficulties included loan quality problems,
ventures beyond the traditional business focus of the Company, and associated
operational problems that arose within the Company. We have sold the bank's ISP,
the printing and direct mail company, and the Company's two banking subsidiaries
in California. We exited the mortgage servicing business, and continued the
process, begun in 2000, to cease originating mortgages outside the West Virginia
and contiguous markets. We have improved service charge revenue to a level
commensurate with our competitors and worked to identify opportunities to
operate more efficiently."
"As we begin a new year, we believe that City Holding Company has turned the
corner. We anticipate stronger and steadier performance during 2002. We continue
to have challenges in managing the bank's problem loans and in achieving high
levels of operating efficiency. But, we believe that the organization now has
the will, direction, and the resources to get the job done. We have evaluated
the risk inherent in the Bank's loan portfolio, and believe that we have
adequately provided for probable losses within our Allowance for Loan Losses. We
have identified strategies to bring our operating expenses into line with other
community banks of our size and structure. Our net interest income is strong and
non-interest income (primarily branch service charges, trust fees, and insurance
revenues) is at a high and sustainable level. The Provision for Loan Losses and
operating expenses remain higher than our peers, but are issues that we can, and
will, continue to address during 2002. Given the Company's financial performance
in the fourth quarter, and based upon our assumptions regarding such things as
loan quality and the default rate on the Company's retained interests in
securitized mortgages, the Company believes that it should be able to achieve
earnings per share of $1.25 to $1.50 during 2002."
"The year has been rewarding for holders of common shares of City Holding
Company. Common shares of City Holding Company closed the year at $12.04, after
hitting a high of $13.40 on December 26th. At a price of $12.04, this represents
110% appreciation in 2001 for our loyal shareholders. As a Board and management
team, we hope to continue to earn and reward the confidence that our
shareholders have placed in us. "
"We believe that West Virginia offers the Company significant opportunity to
operate a strong deposit-focused franchise, and we look forward to competing
aggressively to increase our market share in what we believe are key markets and
products. Unlike our other large market-share competitors, City National is
truly a community bank with its roots firmly embedded in West Virginia, and its
focus now appropriately re-directed to individuals and business within our
markets."
Credit Quality
During the fourth quarter of 2001, the Company recorded a $1.8 million Provision
for Loan Losses. For the year ended December 31, 2001, the Provision for Loan
Losses was $32.2 million. Net Charge-offs during the fourth quarter were $8.3
million, and $22.1 million for the year. The Allowance for Loan Losses ("ALLL")
increased from $40.6 million at December 31, 2000 to $48.6 million at December
31, 2001.
At December 31, 2001 the ALLL represented 3.50% of average loans outstanding
compared to an ALLL of 2.06% of average loans outstanding at December 31, 2000.
The ALLL to average loan ratio increased during the fourth quarter due to the
sale of the California subsidiaries, which had an ALLL of $2.1 million and loans
of $147.4 million. In fact, the ALLL to average loan ratio for City National
Bank remained flat during the fourth quarter. The Net Charge offs "NCO" to
average loans outstanding for the year 2001 were 1.26% as compared to .61% for
the full year 2000. Net Charge-offs during 2001 were $13.0 million in commercial
lending, $3.6 million in mortgage, and $5.5 million in consumer installment
lending. During the fourth quarter, the Bank sold four of its largest commercial
loans that were deemed to pose significant credit risk to the Company. These
loans had outstanding balances of $17.6 million, resulting in a charge-off of
$3.5 million. Of these loans, $2.4 million were non-accruing, and $15.4 million
were performing. Despite significant charge-offs, non-performing loans remain at
high levels. The Bank also elected to charge-off all loans managed as commercial
relationships (including some real-estate mortgage loans managed by commercial
lenders) with outstanding balances less than $60,000 that were more than 90 days
past due. This is consistent with the Bank's treatment of past due installment
loans. As a result, charge-offs during the fourth quarter were relatively high.
While the ALLL as a percent of average loans outstanding is high compared to
other banks, management believes that the ALLL correctly reflects the risk
inherent in the Bank's loan portfolio as demonstrated by the level of
charge-offs and the level of non-performing loans ("NPL's"). For December 31,
2001, the ratio of non-performing loans to total loans and Other Real Estate
Owned ("OREO") was 2.47% compared to 1.21% at December 31, 2000.
Managing problem loans will continue to be one of the Company's highest
priorities for 2002. To that end, Management has retained the services of a team
of commercial lenders with strong loan workout experience. Their efforts will be
devoted to reducing the Bank's levels of problem loans through remedial action
to restructure credits, loan sales, and other efforts to remove problem loans
from the Bank's balance sheet. The Company recognizes that the current weakness
in the U.S.economy poses a threat to the credit quality of bank's loan
portfolios, and that no assurance can be given that the ALLL is sufficient to
provide for unforeseen developments in the economy. However, management believes
that West Virginia's economy is less sensitive to the current recessionary
trends, and believes that the Bank's ALLL is sufficient given what is currently
known about the Bank's loan portfolio and customer base.
Net Interest Income
The Company recorded fully taxable net interest income of $24.6 million in the
fourth quarter of 2001, compared to $21.2 million in the fourth quarter of 2000,
an increase of $3.4 million or 16%. For the year ended December 31, 2001, fully
taxable net interest income was $92.9 million, compared to $91.6 million for
2000, an increase of $1.3 million.
Accruals on the Bank's retained interests in securitized loans accounted for
$2.6 million of the increase in the fourth quarter and $7.4 million of the
increase for the full year. In accordance with the adoption of new accounting
guidance (EITF 99-20) on April 1, 2001, the Bank reinstituted the accrual of
interest income on its retained interests using the effective yield method. As a
result, the Bank accrued interest at a rate of 10.40% and 15.12% for the twelve
and three month periods ending December 31, 2001, respectively.
Fully taxable net interest income increased $0.8 million in the fourth quarter
of 2001 compared to the fourth quarter of 2000 excluding the impact of the
accrual on the retained interests, and despite a decrease in the quarterly
average loan balances of 22%. This increase in net interest income despite
smaller balance sheet size can be attributed to lower interest rates in the
later part of 2001, which in turn, allowed management to tightly control rates
paid on certain depository accounts. Further, the decrease in loan balances
allowed management to eliminate reliance on brokered deposits and significantly
reduce outstanding CD balances that were added at high rates of interest during
2000. As a result of reduced funding costs and the accrual on the Bank's
retained interests in securitized loans, the Bank's net interest margin
increased substantially from 3.42% in the fourth quarter of 2000 to 4.67% in the
fourth quarter of 2001.
For the year ended December 31, 2001, fully taxable net interest income
decreased by $6.0 million excluding the impact for the accrual of income on the
retained interests. This decline in net interest income for 2001 can be
attributed to the decline in loan balances outstanding as loan balances were
down, on average, 11% during 2001.
The net interest margin increased from 3.66% during 2000 to 4.12% during 2001
due to the reasons noted above for the fourth quarter increase.
Balance Sheet Trends
Total assets at December 31, 2001 were $2.116 billion, compared with $2.672
billion at December 31, 2000. Net loan balances outstanding decreased from
$1.928 billion at December 31, 2000 to $1.342 billion at December 31, 2001, a
decrease of $586 million or 30%. $147 million of the decline in net loan
balances can be attributed to the sale of the California banking subsidiaries.
Between December 31, 2000 and December 31, 2001 residential real estate loans
were down $262 million or 29%, commercial real estate loans were down $68
million or 19%, other commercial loans were down $139 million or 49%,
installment loans were down $94 million or 43%, and indirect installment loans
were down $49 million or 36%. During this period, only home equity loans and
credit cards were up, $31 million or 47%, and $2 million respectively.
Allowing loan balances to decline has been part of the Company's strategic plan
for several reasons. First, credit quality has been less than acceptable in some
broad lending areas such as installment lending, indirect lending and commercial
lending. Secondly, the Company's exit from the mortgage banking business
impacted the Bank's ability to generate residential mortgage loans. Third, the
bank's liquidity position during 2000 was a primary concern for the OCC.
Liquidity has improved dramatically since 2000 due to decreases in loan balances
outstanding, which has in turn allowed the Bank to virtually eliminate its
reliance on brokered deposits and other borrowed funds.
Total deposits were $1.691 bllion at December 31, 2001 compared to $2.084
billion at December 31, 2000, a decline of $393 million or 19%. Of this amount,
$175 million can be directly attributed to the sale of the California banking
subsidiaries. The remaining decrease in deposit balances came from the
non-renewal of certificates of deposit that were at high rates of interest. The
run-off of these very high cost deposits was part of the plan that has improved
liquidity without significantly impacting net interest income. Checking and
Savings deposit balances were down at December 31, 2001 by $18 million or 2%
from December 31, 2000. However, the checking and savings deposit balances at
the California banks totaled $66 million at the time of the sale.
Retained Interests in Securitized Loans
Between 1997 and 1999, the company originated and securitized $760 million in
125% loan to value second mortgages in six separate pools. The Company retained
an interest in the final cash flows associated with the underlying mortgages in
these pools with the earliest cash flows associated with each pool being
attributed to the purchasers of the securitized loan pools.
At November 30, 2001, the outstanding principal balances of the mortgages
securitized was $378.4 million. The outstanding obligation to the purchasers of
the priority claims was $268.8 million. As a result, the Company has an interest
in $109.6 million in mortgage balances outstanding. However, to the extent that
defaults occur within these portfolios, the Company will receive less than the
full amount. 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 (which was established at
14%). At December 31, 2001 the Company estimates the fair value of these assets
to be $77.7 million, compared to the book value of $71.3 million.
On April 1, 2001, the Company recorded an $18.0 million after-tax charge, in
conjunction with the adoption of new accounting guidance (EITF 99-20) related to
its retained interests in these securitized loans. During the first quarter of
2001, the Company had increased its projected cumulative default assumptions due
to the economic forecasts released during the first quarter and the completion
of the Company's sale of the loan servicing responsibilities for its securitized
loans to an independent third part. As a result, the value of the retained
interests decreased and upon adopting EITF 99-20, the unrealized losses on the
retained interests was reflected as a cumulative effect adjustment due to a
change in accounting in the Company's Consolidated Statement of Income.
EITF 99-20 requires the bank to accrete the excess of the estimated future cash
flows over the retained interests' carrying value as interest income over the
life of the investment using the effective yield method. Therefore, the loans
were accruing at the rate of 15.12% during the fourth quarter, rather than the
14% accrual rate established at April 1, 2001.
It should be noted that no cash has been received by the Company for these
assets. Their value is accrued toward the expectation of when, and how much,
cash will be received in the future, once priority claims are satisfied. At
present the Company estimates that it will receive its first amount of cash on
one of the outstanding pools in March of 2003. Were the estimated value of the
retained interests to fall below the book value of the assets, the bank would be
required, under EITF 99-20, to immediately reduce the book value of the assets
to their estimated fair value. Given that these loans are geographically
dispersed throughout the United States, and given the economic recession
currently being experienced, there can be no assurances regarding when, or how
much, cash will eventually be received for these assets. However, at December
31, 2001, management believes that its assumptions were appropriate given the
information available regarding default rates and prepayment rates on the six
individual pools outstanding.
Non-Interest Income
Non-Interest Income in the fourth quarter of 2001 was $13.4 million, and
included a gain on the sale of the California banks of $4.7 million. This
compares to $5.7 million during the same period in 2000, which included
investment security losses of $5.0 million. Non-interest income for the year
ended December 31, 2001 was $42.9 million, compared to $41.0 million during 2000
despite the significant decline in non-interest income from the mortgage banking
business. Beginning in 2000, the Company began an exit of out-of-market mortgage
origination and servicing activities that drove much of the Company's
non-interest revenue. Overall, mortgage banking revenues were $17.7 million in
2000, but only $4.0 million in 2001.
Given the dramatic shift in the Company's business, it is difficult to compare
non-interest income between 2000 and 2001. However, it is much easier to focus
on changes in individual sources of non-interest income. With the decline in
mortgage banking revenue, non-interest revenue is driven primarily by service
charges associated with retail deposit accounts. Service charge revenue was up
significantly during the fourth quarter of 2001 to $5.8 million as compared to
$2.9 million for the same period in 2000, a 200% increase, and up to $17.9
million for the year ended December 31, 2001 compared to $10.8 million for the
year ended December 31, 2000, a 166% increase. During 2001, the Bank implemented
policy changes that resulted in substantially higher collection rates of service
charges and fees and initiated fee increases to match competitor pricing. Other
non-interest income includes trust and insurance revenues. During 2001, the Bank
recognized income on investment security gains and losses of $2.4 million. This
gain was primarily capital gains on an investment in a mutual fund oriented
toward producing capital gains to offset a capital loss carry-forward that the
Company has from a prior period.
Following the significant increases in service charges, in the fourth quarter of
2001, non-interest income, excluding the gain on the sale of the California
banks, represented 27% of total revenues, in line with peer bank averages. As
previously mentioned, increasing these revenues was a primary objective of
management during 2001.
Non-Interest Expenses
The non-core banking activities of the Company historically produced significant
non-interest income, but also entailed considerable non-interest expense.
Management spent a significant amount of time and energy to reduce these
expenses and bring the level of non-interest expense closer to peer average. As
a result, non-interest expense fell in the fourth quarter to $22.5 million from
the $68.3 million recorded in the fourth quarter of 2000. However, special
charges were recorded in the fourth quarter of 2000 related to the following:
$27.4 million to write-down the Company's Specialty Finance Loan Origination
division, the internet service provider, and the direct mail/printing division;
a $14 million write-down on the California banking subsidiaries; and a $5
million write down on an investment in two Small Business Investment
Corporations.
For the full year ended December 31, 2001, non-interest expenses fell to $114
million from $159 million for the year ended December 31, 2000, a 28% decrease.
For the fourth quarter of 2001, salaries & other employee benefits were down
$1.0 million or 9.4% from the fourth quarter of 2000. There were unusual
expenses associated with severances paid to employees of the California
subsidiaries during the fourth quarter ($0.6 million) and the cost of paying
certain employees to whom the Company had become obligated for unused vacation
time ($0.3 million). During the third quarter, the Company embarked upon a
project to establish "Best Practice" operating procedures and policies
throughout the Company, allowing the Company to staff at levels comparable to
similarly sized institutions. Excluding reductions in staffing achieved as a
result of exiting out-of-market and non-bank operations, this effort resulted in
the elimination of approximately 300 positions through attrition and a severance
program. The Bank took a $2.2 million charge for severance costs related to
approximately 160 employees severed in August and September. The elimination of
these positions was expected to produce savings of $7 million annually. These
expense reductions are reflected in the level of salary and benefit expense
incurred in the fourth quarter 2001.
For the fourth quarter of 2001, occupancy expense was down $0.4 million or 16%
from the fourth quarter of 2000. During 2001, the Bank consolidated its
operations in Charleston and exited several operational facilities and branch
bank locations.
For the fourth quarter of 2001, depreciation decreased $1.5 million or 45% from
the fourth quarter of 2000. Depreciation expense was down markedly due to
disposal of equipment no longer used in the Company's operations during 2001,
and the sale of the internet, direct mail and other subsidiaries.
For the fourth quarter of 2001, telecommunication expense was down $0.4 million
from the fourth quarter of 2000 due to the discontinuation of the Company's
activities in California and the extensive communication expenses that were
entailed in those operations.
For the fourth quarter of 2001 the Company incurred no advisory fees for loan
production office expenses as compared to $0.6 million incurred in the fourth
quarter of 2000. These expenses were eliminated as the bank refocused on the
core West Virginia banking market and exited the mortgage banking business.
For the fourth quarter of 2001, the Company incurred $1.5 million in
professional fees and litigation expense, similar to the amount incurred in the
fourth quarter of 2000. For the year, the Company incurred $9.2 million in
professional fees and litigation expenses compared to $4.9 million for 2000.
Professional fees and litigation expenses include accounting fees, legal fees,
actual and estimated legal settlements, and other consulting fees. As previously
disclosed, the Company accrued $3 million of litigation expense in the third
quarter to reflect developments that increased the probability of an unfavorable
outcome related to operations the Company has either sold or closed. The Company
also incurred significant expenses associated with assessing and implementing
necessary steps to improve the Company's operations throughout 2001.
For the fourth quarter of 2001, the Company incurred $0.5 million in loss on
disposal and impairment of fixed assets, as compared with $4.4 million during
the fourth quarter of 2000. For the year ended December 31, 2001, the Company
incurred a loss of $4.0 million on the disposal and impairment of fixed assets
as compared to $4.8 million during 2000. These fixed assets included facilities
written down to market value as well as equipment used in business lines that
the Company had chosen to exit.
For the fourth quarter of 2001, the Company incurred $0.3 million on repossessed
asset losses and expenses as compared to $1.2 million during the fourth quarter
of 2000. For the year ended December 31, 2001, these expenses totaled $2.6
million, flat against the prior year. These expenses are associated with either
the costs of managing, or losses on sale, of real estate, autos, and other
consumer collateral acquired through repossession. Management has made every
effort to correctly value assets at the time that they are repossessed with
losses being charged to the ALLL so there will not be significant losses on the
sale of real estate or other repossesses property in the future.
For the fourth quarter of 2001, the Company incurred insurance and regulatory
expense of $0.5 million, similar in the amount recorded in the fourth quarter of
2000. FDIC insurance costs account for approximately 50% of these expenses, and
are high due to the bank's formal agreement with the OCC. In the best case, the
Company does not expect that its FDIC insurance costs will reach normal levels
until 2003.
Other expenses were $3.8 million in the fourth quarter of 2001, as compared to
$6.4 million in the fourth quarter of 2000. For the full year of 2001, Other
expenses were $19.9 million as compared to $21.5 million in 2000. Examples of
Other Expenses include the costs of depository losses, expenses of originating
loans, travel and entertainment, amortization of intangibles, and data
processing expenses. Amortization of Goodwill during 2001 was $0.6 million.
Capitalization
At December 31, 2001 the Company's Tier I Capital ratio was 9.2%, the Total Risk
based Capital Ratio was 12.9%, and the Leverage Ratio was 6.9%. As such, capital
ratios of both the Company and its lead bank, City National Bank of West
Virginia ("City National"), remain above regulatory requirements to be
classified as "well capitalized."
Effective January 1, 2002 the Company is subject to new regulatory capital
requirements related to the bank's investment in retained interest in
securitized mortgages. Had the Company been required to comply with those
capital ratio's at December 31, 2001 both the Bank and the Company would have
continued to have been well capitalized. The Company estimates that it would
have had a Tier I Capital ratio of 7.6%, a Total Risk-based Capital Ratio of
11.4%, and a Leverage Ratio of 5.6%.
It is the policy of the Federal Reserve (which regulates the Company) that
dividends (common or preferred) should be funded by net income available to
common shareholders over the past year. It is the policy of the OCC (which
regulates the Bank) that approval by the Comptroller shall be required if
dividends are proposed which exceed the current year's net income plus the
retained net income of the prior two years. Given the Company's significant
losses in 2000 and 2001, OCC policy restricts dividends through at least the end
of 2002 without the approval of the Comptroller. The Company believes that if it
can demonstrate stable and sustainable net income during 2002, it can achieve
regulatory approval in order to pay preferred shareholders the accumulated
cumulative dividends at some time during 2002. . The Company has previously
announced that dividends on the Trust Preferred Securities will not be paid in
April.
Regulatory Environment
The Company's principal banking subsidiary, City National of West Virginia,
remains under a formal agreement with the Office of the Comptroller of the
Currency ("OCC"). The Company believes that the bank continues to make strong
progress is meeting and complying with the OCC's requirements which are now
principally focused on commercial lending policies and procedures. The most
significant impact of the formal agreement on the Company and its shareholders
are the higher costs associated with deposit insurance, the staff burden of
regulatory compliance, and limitations on capital management strategies such as
dividend payments.
For your information and assistance in analyzing the financial performance of
City Holding Company over the prior 4 quarters, we provide the following summary
of unusual pre-tax revenues or expenses previously disclosed in the financial
statements:
2000: Fourth Quarter
o $27.4 million to write-down the Company's Specialty Finance Loan
Origination division, the internet service provider, and the direct
mail/printing division.
o $14 million write-down on the California banking subsidiaries
o $ 5 million write down on an investment in two Small Business
Investment Corporations
2001: First Quarter
o $2.2 million fair value adjustment to the Company's retained
interest in securitized loans
o $1.9 million recognizing a contractual obligation to FNMA to
repurchase a loan servicing portfolio previously acquired and then
sold. (The Company has been able to partially offset this expense
with excess servicing fees paid to FNMA that have been taken into
income in subsequent quarters. However, given the company's exit
from the loan servicing business, there can be no assurance that the
Company will be able to continue to have income from this particular
source).
o $2.0 million to reflect the estimated market value of the direct
mail/marketing business.
o $1.3 million in severance costs for departing executive management.
o $0.5 million in miscellaneous unusual expenses
2001: Second Quarter
o $30 million pre-tax charge in conjunction with the required adoption
of new accounting guidance (EITF 99-20) related to its retained
interest in securitized loans.
o a $3.4 million recovery on the sale of the Company's Internet
service provider and direct mail divisions against the book value of
those assets, which had been previously written down to their
estimated fair values.
o a $1.6 million write-down on facilities that the Company will exit
o a $1.4 million write-off of software
2001: Third Quarter
o severance charges of $2.2 million
o legal reserve of $3 million
o a $1.3 million charge for the repurchase of loans sold or
securitized without credit recourse upon which the Company is
obliged to compensate the purchaser for deficiencies in
documentation previously warranted by the Company.
0 A $0.6 million write-down in Other Real Estate Owned to reflect
current market values in a weakening economy.
2001: Fourth Quarter
o Net Income included a book gain on the sale of two California
banking subsidiaries of $4.7 million.
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 forward-looking statements involve certain risk and
uncertainties, including a variety of factors that may cause the actual results
of the Company to differ materially from the anticipated results or other
expectations expressed in such forward-looking statements. Factors that might
cause such a difference include, but are not limited to: (1) the formal
agreement with the Comptroller of the Currency may have effects on the Company's
business that are not currently anticipated, including effects on operating
results; (2) competitive pressures may increase significantly; (3) general
economic or business conditions, either nationally or in the states or regions
in which the companies do business may be less favorable than expected,
resulting in, among other things, a deterioration in credit quality or a reduced
demand for credit; (4) legislative or regulatory changes may adversely affect
the businesses in which the companies are engaged; (5) changes may occur in the
securities markets; (6) the Allowance for Loan Losses may prove inadequate and
additional provision may be required in subsequent periods; (7) assumptions made
regarding the Company's retained interests in securitized mortgages may prove to
be inaccurate resulting in the need to take additional charges to write down
those assets; (8) the Company may incur expenses associated with risks of
unforeseen litigation.
CITY HOLDING COMPANY AND SUBSIDIARIES
Financial Highlights
(unaudited)
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Three Months Ended
December 31, December 31, Percent
2001 2000 Change
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Earnings ($000s except per share):
Net Interest Income (FTE) $24,600 $21,232 15.9%
Net Income 7,595 (41,766) N/A
Earnings per Share 0.45 (2.47) N/A
Earnings per Diluted Share 0.45 (2.47) N/A
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Key Ratios (percent):
Return on Average Assets 1.34% (6.12)% N/A
Return on Average Equity 20.93 (84.04) N/A
Net Interest Margin 4.67 3.42 36.5
Efficiency Ratio 60.88 218.07 (72.1)
Average Shareholders' Equity to Average Assets 6.42 7.28 (11.8)
Risk-Based Capital Ratios (a):
Tier I 9.22% 9.05% 1.9
Total 12.89% 11.61% 11.0
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Common Stock Data:
Cash Dividends Declared per Share - $0.08 (100.0)
Book Value per Share 8.67 9.68 (10.4)
Market Price per Share:
High 13.40 7.25 84.8
Low 9.25 4.88 89.5
End of Period 12.04 5.75 109.39
Price/Earnings Ratio (b) 6.69 N/A N/A
(a) December 31, 2001 risk based capital ratios are estimated.
(b) December 31, 2001 price/earnings ratio computed based on annualized fourth
quarter 2001 earnings.
- ---------------------------------------------------------- ------------------------------------ --------------
Twelve Months Ended
December 31, December 31, Percent
2001 2000 Change
------------------ ----------------- ------------
Earnings ($000s except per share):
Net Interest Income (FTE) $92,863 $91,637 1.3%
Net Income (26,000) (38,373) N/A
Earnings per Share (1.54) (2.27) N/A
Earnings per Diluted Share (1.54) (2.27) N/A
- ---------------------------------------------------------- ------------------ ----------------- --------------
Key Ratios (percent):
Return on Average Assets (1.07)% (1.38)% 22.5
Return on Average Equity (16.85) (19.22) 12.3
Net Interest Margin 4.12 3.66 12.6
Efficiency Ratio 86.98 117.46 (25.9)
Average Shareholders' Equity to Average Assets 6.34 7.19 (11.8)
- ---------------------------------------------------------- ------------------ ----------------- --------------
Common Stock Data:
Cash Dividends Declared per Share - $0.44 (100.0)
Market Price per Share:
High 13.40 16.19 (17.2)
Low 5.38 4.88 10.2
- ---------------------------------------------------------- ------------------ ----------------- --------------
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
-------------- --------------- -------------- --------------- -------------- ---------------
1996 (a) $14.63 $14.83 $13.83 $14.21 $19.77 $26.25
1997 (a) 13.90 14.41 16.18 16.56 25.75 43.25
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 5.38 13.40
- ------------------------------------------------ --------------- -------------- --------------- --------------
Earnings per Share
Quarter Ended Year - to -
March 31 June 30 September 30 December 31 Date
--------------- -------------- --------------- -------------- ---------------
1996 (a) $ 0.44 $ 0.46 $ 0.45 $ 0.46 $ 1.81
1997 (a) 0.47 0.52 0.57 0.47 2.03
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)
- ------------------------------------------------ --------------- -------------- --------------- --------------
Earnings per Diluted Share
Quarter Ended Year - to -
March 31 June 30 September 30 December 31 Date
--------------- -------------- --------------- -------------- ---------------
1996 (a) $ 0.44 $ 0.46 $ 0.45 $ 0.46 $ 1.81
1997 (a) 0.47 0.52 0.57 0.46 2.02
1998 (a) 0.48 0.48 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)
(a) Per share amounts reported in 1996, 1997, and 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 000's)
Three Months Ended December 31
2001 2000
---------------------------------
Interest Income
Interest and fees on loans $32,104 $43,992
Interest on investment securities:
Taxable 3,989 4,600
Tax-exempt 770 1,104
Interest on retained interests 2,628 48
Interest on federal funds sold 394 49
---------------------------------
Total Interest Income 39,885 49,793
Interest Expense
Interest on deposits 11,988 22,166
Interest on short-term borrowings 1,128 4,698
Interest on long-term debt 497 287
Interest on trust preferred securities 2,087 2,004
---------------------------------
Total Interest Expense 15,700 29,155
---------------------------------
Net Interest Income 24,185 20,638
Provision for loan losses 1,820 17,030
---------------------------------
Net Interest Income After Provision for Loan Losses 22,365 3,608
Non-Interest Income
Investment securities gains (losses) 565 (5,017)
Service charges 5,759 2,878
Mortgage loan servicing fees 88 2,668
Net origination fees on junior-lien mortgages - 120
Gain on sale of loans 160 904
Other income 6,837 4,125
---------------------------------
Total Non-Interest Income 13,409 5,678
Non-Interest Expense
Salaries and employee benefits 9,175 10,130
Occupancy and equipment 2,200 2,633
Depreciation 1,805 3,283
Advertising 528 508
Telecommunications 765 1,144
Office supplies 725 539
Postage and delivery 713 629
Loan production office advisory fees - 571
Professional fees and litigation expense 1,547 1,516
Loss on disposal and impairment of fixed assets 469 4,355
Repossessed asset losses and expenses 326 1,168
Insurance and regulatory 507 588
Retained interest impairment - -
Goodwill impairment - 34,832
Other expenses 3,784 6,431
---------------------------------
Total Non-Interest Expense 22,544 68,327
---------------------------------
Income (Loss) Before Income Taxes and Cumulative Effect of Accounting
Change 13,230 (59,041)
Income Tax Expense (Benefit) 5,635 (17,275)
---------------------------------
Income (Loss) Before Cumulative Effect of Accounting Change 7,595 (41,766)
Cumulative effect of accounting change, net of tax - -
---------------------------------
Net Income (Loss) $7,595 $ (41,766)
---------------------------------
Basic Income (Loss) per Share
Income (Loss) before cumulative effect of accounting change $ 0.45 $ (2.47)
Cumulative effect of accounting change - -
---------------------------------
Net Income (Loss) $ 0.45 $ (2.47)
---------------------------------
Diluted Income (Loss) per Share
Income (Loss) before cumulative effect of accounting change $ 0.45 $ (2.47)
Cumulative effect of accounting change - -
---------------------------------
Net Income (Loss) $ 0.45 $ (2.47)
---------------------------------
Average Common Shares Outstanding:
Basic 16,888 16,888
---------------------------------
Diluted 16,961 16,888
---------------------------------
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(unaudited) ($ in 000's)
Twelve Months Ended December 31
2001 2000
--------------------------------------
Interest Income
Interest and fees on loans $150,036 $180,513
Interest on investment securities:
Taxable 15,518 17,389
Tax-exempt 3,340 4,608
Interest on retained interests 7,430 185
Interest on federal funds sold 1,156 217
--------------------------------------
Total Interest Income 177,480 202,912
Interest Expense
Interest on deposits 67,543 82,756
Interest on short-term borrowings 8,604 18,996
Interest on long-term debt 2,147 3,987
Interest on trust preferred securities 8,121 8,017
--------------------------------------
Total Interest Expense 86,415 113,756
--------------------------------------
Net Interest Income 91,065 89,156
Provision for loan losses 32,178 25,480
--------------------------------------
Net Interest Income After Provision for Loan Losses 58,887 63,676
Non-Interest Income
Investment securities gains (losses) 2,382 (5,015)
Service charges 17,905 10,778
Mortgage loan servicing fees 383 16,962
Net origination fees on junior-lien mortgages 598 2,331
Gain (loss) on sale of loans 3,039 (1,596)
Other income 18,545 17,573
--------------------------------------
Total Non-Interest Income 42,852 41,033
Non-Interest Expense
Salaries and employee benefits 42,758 47,957
Occupancy and maintenance 9,377 11,363
Depreciation 8,777 12,291
Advertising 2,465 3,788
Telecommunications 4,054 5,133
Office supplies 2,234 1,764
Postage and delivery 2,563 2,006
Loan production office advisory fees 2,198 4,021
Professional fees and litigation expense 9,248 4,901
Loss on disposal and impairment of fixed assets 3,951 4,805
Repossessed asset losses and expenses 2,557 2,541
Insurance and regulatory 2,134 1,908
Retained interest impairment 2,182 -
Goodwill impairment - 34,832
Other expenses 19,907 21,502
--------------------------------------
Total Non-Interest Expense 114,405 158,812
--------------------------------------
Loss Before Income Taxes and Cumulative
Effect of Accounting Change (12,666) (54,103)
Income tax benefit (4,651) (15,730)
--------------------------------------
Loss Before Cumulative Effect of Accounting Change (8,015) (38,373)
Cumulative effect of accounting change, net of tax (17,985) -
--------------------------------------
Net Loss $(26,000) $ (38,373)
--------------------------------------
Basic Loss per Share
Loss before cumulative effect of accounting change $ (0.47) $(2.27)
Cumulative effect of accounting change (1.07) -
--------------------------------------
Net Loss $ (1.54) $(2.27)
--------------------------------------
Diluted Loss per Share
Loss before cumulative effect of accounting change $ (0.47) $(2.27)
Cumulative effect of accounting change (1.07) -
--------------------------------------
Net Loss Income $ (1.54) $(2.27)
--------------------------------------
Average Common Shares Outstanding:
Basic 16,888 16,882
--------------------------------------
Diluted 16,888 16,882
--------------------------------------
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
(unaudited) ($ in 000's)
- ------------------------------------------------------------------ ------------------------------------------
Three Months Ended
December 31, 2001 December 31, 2000
--------------------- --------------------
Balance at September 30 $141,363 $197,905
Net Income (Loss) 7,595 (41,766)
Other Comprehensive Income:
Change in Unrealized (Loss) Gain on Securities Available
for Sale (2,609) 3,713
Change in Unrealized Gains on Retained Interests in
Securitized Mortgages - 4,956
Cash Dividends Declared - (1,351)
--------------------- --------------------
Balance at December 31 $146,349 $163,457
--------------------- --------------------
- ------------------------------------------------------------------ ------------------------------------------
Twelve Months Ended
December 31, 2001 December 31, 2000
--------------------- --------------------
Balance at January 1 $163,457 $198,542
Net (Loss) (26,000) (38,373)
Other Comprehensive Income:
Change in Unrealized Gains on Securities Available for Sale 2,407 5,566
Change in Unrealized Gains on Retained Interests in
Securitized Mortgages 6,485 4,956
Cash Dividends Declared - (7,426)
Issuance of Contingently-issuable Shares of Common Stock - 192
--------------------- --------------------
Balance at December 31 $146,349 $163,457
--------------------- --------------------
- ------------------------------------------------------------------ --------------------- --------------------
CITY HOLDING COMPANY AND SUBSIDIARIES
Condensed Consolidated Quarterly Statements of Income
(unaudited) ($000's)
Quarter Ended
------------- -------------- -------------- ------------- -------------
Dec. 31 Sept. 30 June 30 March 31 Dec. 31
2001 2001 2001 2001 2000
------------- -------------- -------------- ------------- -------------
Interest Income $39,885 $ 44,198 $ 45,953 $ 47,444 $49,793
Taxable Equivalent Adjustment 415 432 460 491 594
------------- -------------- -------------- ------------- -------------
Interest Income (FTE) 40,300 44,630 46,413 47,935 50,387
Interest Expense 15,700 20,496 23,383 26,836 29,155
------------- -------------- -------------- ------------- -------------
Net Interest Income 24,600 24,134 23,030 21,099 21,232
Provision for Loan Losses 1,820 14,348 10,280 5,730 17,030
------------- -------------- -------------- ------------- -------------
Net Interest Income After Provision
for Loan Losses 22,780 9,786 12,750 15,369 4,202
Non-Interest Income (a) 13,409 8,209 12,520 8,714 363
Non-Interest Expense 22,544 30,574 28,410 32,877 63,012
------------- -------------- -------------- ------------- -------------
Income (Loss) Before Income Taxes 13,645 (12,579) (3,140) (8,794) (58,447)
Income Taxes 5,635 (5,216) (1,530) (3,540) (17,275)
Taxable Equivalent Adjustment 415 432 460 491 594
------------- -------------- -------------- ------------- -------------
Net Income (Loss) 7,595 (7,795) (2,070) (5,745) (41,766)
Cumulative Effect of Change in
Accounting Principle, Net - - (17,985) - -
------------- -------------- -------------- ------------- -------------
Net Income (Loss) $7,595 $(7,795) $(20,055) $(5,745) $(41,766)
------------- -------------- -------------- ------------- -------------
(a) Includes a gain of approximately $4.67 million recognized on the sale of Del
Amo Savings Bank and Frontier State Bank completed on November 30, 2001.
- ------------------------------------- ------------- -------------- -------------- ------------- -------------
Earnings per Share 0.45 (0.46) (1.19) (0.34) (2.47)
Diluted Earnings per Share 0.45 (0.46) (1.19) (0.34) (2.47)
Cash Dividends Declared per Share - - - - 0.08
- ------------------------------------- ------------- -------------- -------------- ------------- -------------
Average Common Shares (000's):
Outstanding 16,888 16,888 16,888 16,888 16,888
Diluted 16,961 16,888 16,888 16,888 16,888
------------- -------------- -------------- ------------- -------------
Net Interest Margin 4.67% 4.35% 4.05% 3.49% 3.42%
------------- -------------- -------------- ------------- -------------
- ------------------------------------- ------------- -------------- -------------- ------------- -------------
CITY HOLDING COMPANY AND SUBSIDIARIES
Non-Interest Income and Non-Interest Expense
(unaudited) ($ in 000's)
Quarter Ended
------------- ------------- ------------- ------------- -------------
Dec. 31 Sept. 30 June 30 March 31 Dec. 31
2001 2001 2001 2001 2000
------------- ------------- ------------- ------------- -------------
Non-Interest Income:
Service charges $ 5,759 $ 4,851 $ 4,361 $ 2,934 $ 2,878
Mortgage loan servicing fees 88 50 213 32 2,668
Net origination fees on
junior-lien mortgage loans - - 58 540 120
Gain (loss) on sale of loans 160 311 1,363 1,205 904
Other income 6,837 2,422 6,104 3,182 4,125
------------- ------------- ------------- ------------- -------------
Subtotal 12,844 7,634 12,099 7,893 10,695
Investment security gains (losses) 565 575 421 821 (5,017)
------------- ------------- ------------- ------------- -------------
Total Non-Interest Income $13,409 $ 8,209 $12,520 $ 8,714 $5,678
------------- ------------- ------------- ------------- -------------
Non-Interest Expense:
Salaries and employee benefits $ 9,175 $ 11,897 $ 10,235 $ 11,451 $ 10,130
Occupancy and maintenance 2,200 2,218 2,491 2,468 2,633
Depreciation 1,805 2,079 2,416 2,477 3,283
Advertising 528 568 772 597 508
Telecommunications 765 685 1,081 1,523 1,144
Office supplies 725 468 368 673 539
Postage and delivery 713 775 656 419 629
Loan production office advisory - 2 889 1,307 571
fees
Professional fees 1,547 5,249 1,162 1,290 1,516
Loss on disposal and impairment
of fixed assets 469 322 3,160 - 4,355
Repossessed asset losses and 326 1,312 486 433 1,168
expenses
Insurance and regulatory 507 581 503 543 588
Retained interest impairment - - - 2,182 -
Goodwill impairment - - - - 34,832
Other Expenses 3,784 4,418 4,191 7,514 6,431
------------- ------------- ------------- ------------- -------------
Total Non-Interest Expense $22,544 $30,574 $28,410 $32,877 $ 68,327
------------- ------------- ------------- ------------- -------------
Employees 840 905 1,252 1,284 1,352
Branch Locations 55 59 59 62 62
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000's)
December 31 December 31
2001 2000
------------------------------------------
(Unaudited)
Assets
Cash and due from banks $ 81,827 $ 87,990
Federal funds sold 88,500 2,638
------------------------------------------
Cash and Cash Equivalents 170,327 90,628
Securities available for sale, at fair value 383,552 385,462
Loans:
Residential real estate 631,103 892,734
Home equity 98,100 66,723
Commercial real estate 284,759 353,026
Other commercial 145,989 284,844
Installment 125,236 218,825
Indirect 86,474 135,589
Credit card 18,594 16,418
------------------------------------------
Gross Loans 1,390,255 1,968,159
Allowance for loan losses (48,635) (40,627)
------------------------------------------
Net Loans 1,341,620 1,927,532
Loans held for sale - 17,900
Retained interests 71,271 85,206
Premises and equipment 43,178 56,924
Accrued interest receivable 12,422 18,242
Other assets 93,925 89,606
------------------------------------------
Total Assets $2,116,295 $2,671,500
------------------------------------------
Liabilities
Deposits:
Noninterest-bearing $ 284,649 $ 271,358
Interest-bearing:
Demand deposits 392,258 394,615
Savings deposits 272,885 301,844
Time deposits 741,503 1,116,124
------------------------------------------
Total Deposits 1,691,295 2,083,941
Short-term borrowings 127,204 248,766
Long-term debt 29,328 34,832
Corporation-obligated mandatorily redeemable capital securities of
subsidiary trusts holding solely subordinated debentures of City 87,500 87,500
Holding Company
Other liabilities 34,619 53,004
------------------------------------------
Total Liabilities 1,969,946 2,508,043
Stockholders' Equity
Preferred stock, par value $25 per share: authorized - 500,000 shares:
none issued
Common stock, par value $2.50 per share: 50,000,000 shares authorized;
16,892,913 shares issued and outstanding at December 31, 2001 and
2000, including 4,979 in treasury 42,232 42,232
Capital surplus 59,174 59,174
Retained earnings 41,152 67,152
Cost of common stock in treasury (136) (136)
Accumulated other comprehensive income (loss) 3,927 (4,965)
------------------------------------------
Total Stockholders' Equity 146,349 163,457
------------------------------------------
Total Liabilities and Stockholders' Equity $2,116,295 $2,671,500
------------------------------------------
CITY HOLDING COMPANY AND SUBSIDIARIES
Loan Portfolio
(unaudited) ($ in 000s)
Dec. 31 Sept. 30 June 30 March 31 Dec. 31
2001 (a) 2001 2001 2001 2000
--------------- --------------- --------------- --------------- ---------------
Residential real estate $ 631,103 $ 767,018 $ 817,082 $ 866,194 $ 892,734
Home equity 98,100 71,350 66,728 66,440 66,723
Commercial real estate 284,759 334,503 343,425 344,877 353,026
Other commercial 145,989 221,822 257,344 272,229 284,844
Installment 125,236 153,220 176,223 196,943 218,825
Indirect 86,474 98,109 110,279 123,203 135,589
Credit Card 18,594 16,912 15,234 15,416 16,418
--------------- --------------- --------------- --------------- ---------------
Gross Loans $1,390,255 $1,662,934 $1,786,315 $1,885,302 $1,968,159
--------------- --------------- --------------- --------------- ---------------
(a) On November 30, 2001, the Company completed the sale of Del Amo Savings Bank
and Frontier State Bank, including approximately $149 million in outstanding
loan balances.
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(unaudited) ($ in 000's)
Three months ended December 31,
2001 2000
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
----------------------------------------------------------------
Assets
Loan portfolio (1) $1,552,323 $32,104 8.27% $1,997,658 $43,992 8.81%
Loans held for sale - - - 17,660
Securities:
Taxable 354,324 3,989 4.50 298,933 4,600 6.16
Tax-exempt (2) 61,405 1,185 7.72 89,480 1,698 7.59
----------------------------------------------------------------
Total securities 415,729 5,174 4.98 388,413 6,298 6.49
Retained interest in securitized loans 69,542 2,628 15.12 76,969 48 0.25
Federal funds sold 69,204 394 2.28 3,608 49 5.43
----------------------------------------------------------------
Total earning assets 2,106,798 $40,300 7.65% 2,484,308 $50,387 8.11%
Cash and due from banks 56,656 71,144
Bank premises and equipment 45,119 65,498
Other assets 107,460 137,753
Less: allowance for possible
loan losses (56,015) (26,958)
----------------------------------------------------------------
Total assets $2,260,018 $2,731,745
----------------------------------------------------------------
Liabilities
Demand deposits $ 413,932 $ 888 0.86% $ 402,172 $ 3,138 3.12%
Savings deposits 292,197 1,167 1.60 292,815 2,634 3.60
Time deposits 846,938 9,933 4.69 1,126,690 16,394 5.82
Short-term borrowings 135,288 1,128 3.34 293,061 4,698 6.41
Long-term debt 29,511 497 6.74 26,840 287 4.28
Trust preferred securities 90,900 2,087 9.18 87,500 2,004 9.16
----------------------------------------------------------------
Total interest-bearing
liabilities 1,808,766 15,700 3.47 2,229,078 29,155 5.23
Demand deposits 273,946 253,224
Other liabilities 32,175 50,656
Stockholders' equity 145,131 198,787
----------------------------------------------------------------
Total liabilities and
stockholders' equity $2,260,018 $2,731,745
----------------------------------------------------------------
Net interest income $24,600 $21,232
----------------------------------------------------------------
Net yield on earning assets 4.67% 3.42%
----------------------------------------------------------------
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(unaudited) ($ in 000's)
Twelve months ended December 31,
2001 2000
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
----------------------------------------------------------------
Assets
Loan portfolio (1) $1,758,834 $148,974 8.47% $1,969,785 $171,473 8.71%
Loans held for sale 12,942 1,062 8.21 82,228 9,040 10.99
Securities:
Taxable 303,746 15,518 5.11 278,584 17,389 6.24
Tax-exempt (2) 66,688 5,138 7.70 91,663 7,089 7.73
----------------------------------------------------------------
Total securities 370,434 20,656 5.58 370,247 24,278 6.61
Retained interest in securitized loans 71,459 7,430 10.40 76,958 185 0.24
Federal funds sold 39,935 1,156 2.89 3,755 217 5.78
----------------------------------------------------------------
Total earning assets 2,253,604 $179,278 7.96% 2,502,973 $205,393 8.21%
Cash and due from banks 60,441 73,282
Bank premises and equipment 51,785 64,003
Other assets 111,947 164,040
Less: allowance for possible
loan losses (45,428) (27,279)
----------------------------------------------------------------
Total assets $2,432,349 $2,777,019
----------------------------------------------------------------
Liabilities
Demand deposits $ 416,281 $ 9,161 2.20% $ 408,681 $ 12,514 3.06%
Savings deposits 291,072 7,300 2.51 312,940 10,792 3.45
Time deposits 962,671 51,082 5.31 1,083,228 59,450 5.49
Short-term borrowings 173,974 8,604 4.95 309,330 18,996 6.14
Long-term debt 31,854 2,147 6.74 69,508 3,987 5.74
Trust preferred securities 88,592 8,121 9.17 87,500 8,017 9.16
----------------------------------------------------------------
Total interest-bearing
liabilities 1,964,444 86,415 4.40 2,271,187 113,756 5.01
Demand deposits 274,220 248,979
Other liabilities 39,373 57,151
Stockholders' equity 154,312 199,702
----------------------------------------------------------------
Total liabilities and
stockholders' equity $2,432,349 $2,777,019
----------------------------------------------------------------
Net interest income $92,863 $91,637
----------------------------------------------------------------
Net yield on earning assets 4.12% 3.66%
----------------------------------------------------------------
CITY HOLDING COMPANY AND SUBSIDIARIES
Analysis of Risk-Based Capital
(unaudited) ($ in 000's)
Dec. 31 Sept. 30 June 30 March 31 Dec. 31
2001 (a) 2001 2001 2001 2000
------------- ------------- ------------- ------------- -------------
Tier I Capital:
Stockholders' Equity $146,349 $141,364 $146,874 $148,925 $163,457
Goodwill and Other Intangibles (7,041) (7,430) (7,683) (7,970) (8,243)
Unrealized Losses (Gains) (3,927) (6,536) (4,253) 13,752 4,965
Qualifying Trust Preferred Stock 47,474 44,938 47,536 54,220 56,135
Excess Deferred Tax Assets (29,003) (29,718) (35,445) (30,724) -
------------- ------------- ------------- ------------- -------------
Total Tier I Capital $153,852 $142,616 $147,029 $178,203 $216,314
------------- ------------- ------------- ------------- -------------
- ------------------------------------- ------------- ------------- ------------- ------------- -------------
Total Risk-Based Capital:
Tier I Capital $153,852 $142,616 $147,029 $178,203 $216,314
Qualifying Allowance for Loan
Losses 21,204 24,440 25,183 28,197 30,021
Qualifying Trust Preferred Stock 40,026 42,562 39,964 33,280 31,365
------------- ------------- ------------- ------------- -------------
Total Risk-Based Capital $215,082 $209,618 $212,176 $239,680 $277,700
------------- ------------- ------------- ------------- -------------
Net Risk-Weighted Assets $1,668,897 $1,922,434 $1,994,109 $2,248,329 $2,377,799
------------- ------------- ------------- ------------- -------------
- ------------------------------------- ------------- ------------- ------------- ------------- -------------
Ratios:
Average Stockholders' Equity to
Average Assets 6.42% 6.29% 6.10% 6.30% 7.28%
Risk-Based Ratios:
Tier I Capital 9.22% 7.43% 7.13% 7.91% 9.05%
Total Risk-Based Capital 12.89% 10.91% 10.33% 10.64% 11.61%
Leverage Capital 6.92% 6.08% 6.07% 6.93% 7.94%
------------- ------------- ------------- ------------- -------------
(a) December 31, 2001 risk-based capital ratios are estimated
- ------------------------------------- ------------- ------------- ------------- ------------- -------------
CITY HOLDING COMPANY AND SUBSIDIARIES
Intangibles
(unaudited) ($ in 000's)
As of and for the Quarter Ended
Dec. 31 Sept. 30 June 30 March 31 Dec. 31
2001 2001 2001 2001 2000
------------- ------------- ------------- ------------- -------------
Intangibles, net 7,041 7,430 7,683 7,970 8,243
Intangibles Amortization Expense 230 253 287 273 1,583
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Loan Loss Experience
(unaudited) ($ in 000's)
Quarter Ended
---------------------------------------------------------------------
Dec. 31 Sept. 30 June 30 March 31 Dec. 31
2001 2001 2001 2001 2000
------------- ------------- ------------- ------------- -------------
Balance at beginning of period $57,196 $45,748 $38,848 $40,627 $27,219
Charge-offs:
Commercial 5,870 1,823 1,833 5,621 2,195
Real estate - mortgage 1,989 472 886 797 268
Installment 1,582 2,094 1,584 1,789 2,103
------------- ------------- ------------- ------------- -------------
Total charge-offs 9,441 4,389 4,303 8,207 4,566
Recoveries:
Commercial 503 1,003 527 112 520
Real estate - mortgage 241 84 187 43
Installment 362 402 396 399 381
------------- ------------- ------------- ------------- -------------
Total recoveries 1,106 1,489 923 698 944
------------- ------------- ------------- ------------- -------------
Net charge-offs 8,335 2,900 3,380 7,509 3,622
Provision for loan losses 1,820 14,348 10,280 5,730 17,030
Balance of institutions sold (2,046) - - - -
------------- ------------- ------------- ------------- -------------
Balance at end of period $48,635 $57,196 $45,748 $38,848 $40,627
------------- ------------- ------------- ------------- -------------
Loans Outstanding 1,390,255 1,662,934 1,786,315 1,885,302 1,968,159
------------- ------------- ------------- ------------- -------------
Average Loans Outstanding 1,552,323 1,726,843 1,841,321 1,929,375 1,997,658
------------- ------------- ------------- ------------- -------------
Allowance as a Percent of Loans
Outstanding 3.50% 3.44% 2.56% 2.06% 2.06%
------------- ------------- ------------- ------------- -------------
Net Charge-offs (annualized) as a
Percent of Average Loans
Outstanding 2.15% 0.67% 0.73% 1.56% 0.73%
------------- ------------- ------------- ------------- -------------
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Non-Performing Assets
(unaudited) ($ in 000's)
Dec. 31 Sept. 30 June 30 March 31 Dec. 31
2001 2001 2001 2001 2000
------------- ------------- ------------- ------------- -------------
Nonaccrual Loans $23,777 $28,044 $29,787 $16,917 $16,676
Accruing Loans Past Due 90
Days or More 4,915 3,916 6,316 3,172 3,350
Restructured Loans 167 902 483 486 300
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Total Non-Performing Loans 31,558 32,862 36,586 20,575 20,326
Other Real Estate Owned 2,866 2,836 3,971 3,726 3,488
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Total Non-Performing Assets $34,424 $35,698 $40,557 $24,301 $23,814
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Non-Performing Assets as a Percent
of Loans and Other Real Estate 2.47% 2.14% 2.27% 1.29% 1.21%
Owned
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