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Section 1: 8-K (8-K, CHCO 1Q2018 EARNINGS)

Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
 
 
FORM 8-K
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
 
Date of Report (Date of Earliest Event Reported)
April 19, 2018

393094167_chcologoa22.jpg

CITY HOLDING COMPANY
(Exact Name of Registrant as Specified in its Charter)

Commission File Number: 0-11733

West Virginia
55-0619957
(State or Other Jurisdiction of
(I.R.S. Employer
Incorporation or Organization)
Identification No.)
 
25 Gatewater Road, Cross Lanes, WV 25313
(Address of Principal Executive Offices, Including Zip Code)
 
304-769-1100
(Registrant’s Telephone Number, Including Area Code)

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b))
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨





 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨






Section 2 - Financial Information

Item 2.02 Results of Operations and Financial Condition.

On April 19, 2018, City Holding Company (“the Company”) issued a news release, attached as Exhibit 99.1, announcing the Company’s earnings results for the first quarter ended March 31, 2018. Furnished as Exhibit 99.1 and incorporated herein by reference is the news release issued by the Company.

Section 9 - Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits

99.1News Release issued April 19, 2018

Signatures

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the Undersigned hereunto duly authorized.


 
City Holding Company
 
 
 
 
By: 
/s/ David L. Bumgarner
 
David L. Bumgarner
 
Chief Financial Officer

Date: April 19, 2018


(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1, PRESS RELEASE CHCO 1Q2018 EARNINGS)

Exhibit


NEWS RELEASE

For Immediate Release
April 19, 2018

For Further Information Contact:
Charles R. Hageboeck, Chief Executive Officer and President
(304) 769-1102

City Holding Company Announces First Quarter Results

Charleston, West Virginia - City Holding Company (“Company” or “City”) (NASDAQ:CHCO), a $4.2 billion bank holding company headquartered in Charleston, West Virginia, today announced quarterly net income of $17.6 million and diluted earnings of $1.13 per share for the quarter ended March 31, 2018.

Highlights of the Company’s first quarter performance and results include the following:

Return on assets and return on tangible equity of 1.69% and 16.7%, respectively.
Reported net interest income increased $2.2 million (7.2%) from the quarter ended March 31, 2017, while net interest income exclusive of accretion from fair value adjustments from acquisitions increased $2.1 million (6.9%) from the quarter ended March 31, 2017.
Repurchased 204,000 shares of common stock at a weighted average price of $68.50 per share.
Average total deposit balances grew $100.7 million, or 3.1%, from the quarter ended December 31, 2017 to the quarter ended March 31, 2018.

Net Interest Income

The Company’s net interest income increased from $32.4 million during the fourth quarter of 2017 to $32.6 million during the first quarter of 2018. During the first quarter of 2018, the Company’s tax equivalent net interest income increased $0.1 million, or 0.2%, from $32.7 million for the fourth quarter of 2017 to $32.8 million for the first quarter of 2018. Higher average loan balances ($23.7 million) increased net interest income by $0.3 million while higher loan yields (0.11%) increased net interest income by $0.1 million. These increases were partially offset by increased interest expense on interest bearing liabilities ($0.3 million). The Company’s reported net interest margin increased from 3.46% for the fourth quarter of 2017 to 3.51% for the first quarter of 2018. Excluding the favorable impact of the accretion from fair value adjustments, the net interest margin would have been 3.48% for the quarter ended March 31, 2018 and 3.39% for the quarter ended December 31, 2017.

Credit Quality

The Company’s ratio of nonperforming assets to total loans and other real estate owned improved from 0.45% at December 31, 2017 to 0.43% at March 31, 2018. Total nonperforming assets decreased from $14.1 million at December 31, 2017 to $13.6 million at March 31, 2018. Excluded from this ratio are purchased credit-impaired loans for which the Company estimated cash flows and estimated a credit mark. Such loans would be considered nonperforming loans if the loan’s performance deteriorates below the initial expectations. Total past due loans decreased from $11.0 million, or 0.35% of total loans outstanding, at December 31, 2017 to $8.3 million, or 0.26% of total loans outstanding, at March 31, 2018.






As a result of the Company’s quarterly analysis of the adequacy of the allowance for loan losses (“ALLL”), the Company recorded a provision for loan losses of $0.2 million in the first quarter of 2018, compared to $0.7 million for the comparable period in 2017 and $0.4 million for the fourth quarter of 2017. The provision for loan losses recorded in the first quarter of 2018 reflects changes in the quality of the portfolio and general improvement in the Company’s historical loss rates used to compute the allowance not specifically allocated to individual credits. Changes in the amount of the provision and related allowance are based on the Company’s detailed systematic methodology and are directionally consistent with changes in the composition and quality of the Company’s loan portfolio. The Company believes its methodology for determining the adequacy of its ALLL adequately provides for probable losses inherent in the loan portfolio and produces a provision and allowance for loan losses that is directionally consistent with changes in asset quality and loss experience.

Non-interest Income

Non-interest income was $14.5 million for the first quarter of 2018 as compared to $18.5 million for the first quarter of 2017. During the first quarter of 2017, the Company realized $4.3 million of investment gains that represented partial recoveries of impairment charges previously recognized on pooled trust preferred securities. Exclusive of this gain, non-interest income increased from $14.2 million for the first quarter of 2017 to $14.5 million for the first quarter of 2018. This increase was attributable to an increase of $0.2 million, or 4.7%, in bankcard revenues; an increase of $0.2 million, or 13.1%, in trust and wealth management fee income; an increase of $0.2 in other income; and $0.1 million, or 2.0%, in service charges. These increases were partially offset by a decrease of $0.4 million in bank owned life insurance revenues due to death benefit proceeds received in the first quarter of 2017.
  
Non-interest Expenses

Non-interest expenses increased $0.3 million (1.4% increase), from $24.6 million in the first quarter of 2017 to $24.9 million in the first quarter of 2018. This increase was primarily due to an increase in salaries and employee benefits of $0.2 million due largely to salary increases. During the first quarter of 2018, the Company completed a review of salaries for non-exempt personnel and, as a result, made adjustments to wages for approximately 50% of its employees late in the first quarter to make salaries more competitive in today’s employment environment. As a result of these adjustments, the expected impact on an annual basis is estimated at approximately $0.5 million.
 
Balance Sheet Trends

Loans increased $10.3 million (0.3%) from December 31, 2017 to $3.14 billion at March 31, 2018. Commercial real estate loans increased $18.7 million (1.5%) during the first quarter of 2018. This increase was partially offset by decreases in commercial and industrial loans ($3.9 million), residential real estate loans ($3.1 million) and home equity junior lien loans ($1.0 million).

Total average depository balances increased $100.7 million, or 3.1%, from the quarter ended December 31, 2017 to the quarter ended March 31, 2018. The Company experienced increases in interest-bearing deposits ($79.9 million), time deposits ($17.0 million) and savings deposits ($4.2 million).

Income Tax Expense

The Company’s effective income tax rate for the first quarter of 2018 was 20.0% compared to 40.2% for the year ended December 31, 2017, and 32.3% for the quarter ended March 31, 2017. On December 22, 2017, the President signed the Tax Cuts and Jobs Act (“TCJA”) into law. Among other things, the TCJA reduced





the corporate income tax rate from 35% to 21%, effective January 1, 2018. As a result of this decrease in the corporate income tax rate, the Company reassessed its deferred tax assets and liabilities, which resulted in a charge to earnings in the fourth quarter of 2017 of $7.1 million. Exclusive of this item, the Company’s tax rate from operations was 32.7% for the year ended December 31, 2017.

Capitalization and Liquidity

The Company’s loan to deposit ratio was 91.0% and the loan to asset ratio was 74.7% at March 31, 2018. The Company maintained investment securities totaling 15.0% of assets as of the same date. Further, the Company’s deposit mix is weighted heavily toward checking and saving accounts that fund 55.6% of assets at March 31, 2018. Time deposits fund 26.4% of assets at March 31, 2018, but very few of these deposits are in accounts that have balances of more than $250,000, reflecting the core retail orientation of the Company.

The Company is also strongly capitalized. The Company’s tangible equity ratio decreased from 10.5% at December 31, 2017 to 10.0% at March 31, 2018. At March 31, 2018, City National Bank’s Leverage Ratio was 8.81%, its Common Equity Tier I ratio was 12.59%, its Tier I Capital ratio was 12.59%, and its Total Risk-Based Capital ratio was 13.25%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.

On March 28, 2018, the Board approved a quarterly cash dividend of $0.46 per share payable April 30, 2018, to shareholders of record as of April 13, 2018. During the quarter ended March 31, 2018, the Company repurchased 204,000 common shares at a weighted average price of $68.50 per share as part of a one million share repurchase plan authorized by the Board of Directors in September 2014. As of March 31, 2018, the Company could repurchase approximately 198,000 shares under the current plan.

City Holding Company is the parent company of City National Bank of West Virginia. City National Bank operates 86 branches across West Virginia, Virginia, Kentucky and Ohio.

On October 16, 2017, the Company announced it will break ground in early 2018 on its new branch office located in Morgantown, West Virginia.

Forward-Looking Information

This news release contains certain forward-looking statements that are included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Such information involves risks and uncertainties that could result in the Company's actual results differing materially from those projected in the forward-looking statements. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include, but are not limited to, (1) the Company may incur additional loan loss provision due to negative credit quality trends in the future that may lead to a deterioration of asset quality; (2) the Company may incur increased charge-offs in the future; (3) the Company could have adverse legal actions of a material nature; (4) the Company may face competitive loss of customers; (5) the Company may be unable to manage its expense levels; (6) the Company may have difficulty retaining key employees; (7) 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; (8) changes in general economic conditions and increased competition could adversely affect the Company’s operating results; (9) changes in regulations and government policies affecting bank holding companies and their subsidiaries, including changes in monetary policies, could negatively impact the Company’s operating results; (10) the Company may experience difficulties growing loan and deposit balances; (11) deterioration in the financial condition of the U.S. banking system may impact the valuations of investments the Company has made in the securities of other financial institutions resulting in either actual losses or other than temporary impairments on such investments; (12) the effects of the Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and the regulations promulgated and to be





promulgated thereunder, which may subject the Company and its subsidiaries to a variety of new and more stringent legal and regulatory requirements which adversely affect their respective businesses; (13) the impact of new minimum capital thresholds established as a part of the implementation of Basel III; and (14) other risk factors relating to the banking industry or the Company as detailed from time to time in the Company’s reports filed with the Securities and Exchange Commission, including those risk factors included in the disclosures under the heading “ITEM 1A Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017.  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. Further, the Company is required to evaluate subsequent events through the filing of its March 31, 2018 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary March 31, 2018 results and will adjust the amounts if necessary.










CITY HOLDING COMPANY AND SUBSIDIARIES
Financial Highlights
(Unaudited)
 
Three Months Ended
 
March 31,
December 31,
September 30,
June 30,
March 31,
 
2018
2017
2017
2017
2017
 
 
 
 
 
 
Earnings
 
 
 
 
 
Net Interest Income (FTE)
$
32,834

$
32,760

$
32,384

$
31,632

$
30,804

Net Income available to common shareholders
17,616

9,669

13,932

14,688

16,026

 
 
 
 
 
 
Per Share Data
 
 
 
 
 
Earnings per share available to common shareholders:
 
 
 
 
 
   Basic
$
1.13

$
0.62

$
0.89

$
0.94

$
1.04

   Diluted
1.13

0.62

0.89

0.94

1.04

Weighted average number of shares:
 
 
 
 
 
   Basic
15,414

15,472

15,485

15,462

15,252

   Diluted
15,436

15,497

15,505

15,487

15,277

Period-end number of shares
15,439

15,618

15,618

15,617

15,586

Cash dividends declared
$
0.46

$
0.46

$
0.44

$
0.44

$
0.44

Book value per share (period-end)
31.86

32.17

32.03

31.54

30.9

Tangible book value per share (period-end)
26.78

27.14

26.99

26.49

25.83

Market data:
 
 
 
 
 
   High closing price
$
72.87

$
73.98

$
71.91

$
72.78

$
67.93

   Low closing price
65.03

65.5

59.94

61.34

60.86

   Period-end closing price
68.56

67.47

71.91

65.87

64.48

   Average daily volume
56

66

54

56

57

Treasury share activity:
 
 
 
 
 
      Treasury shares repurchased
204





      Average treasury share repurchase price
$
68.5

$

$

$

$

Common share issuance:
 
 
 
 
 
      Common shares issued (in thousands)




441

      Average common share issue price (a)
$

$

$

$

$
64.48

 
 
 
 
 
 
Key Ratios (percent)
 
 
 
 
 
Return on average assets
1.69
%
0.94
%
1.37
%
1.43
%
1.60
%
Return on average tangible equity
16.70
%
9.00
%
13.20
%
14.20
%
16.50
%
Yield on interest earning assets
4.05
%
3.95
%
3.92
%
3.90
%
3.88
%
Cost of interest bearing liabilities
0.69
%
0.64
%
0.61
%
0.56
%
0.54
%
Net Interest Margin
3.51
%
3.46
%
3.45
%
3.46
%
3.45
%
Non-interest income as a percent of total revenue
30.70
%
32.20
%
31.30
%
32.30
%
31.90
%
Efficiency Ratio (a)
52.60
%
47.70
%
51.80
%
52.00
%
53.80
%





Price/Earnings Ratio (b)
15.17

27.30

20.2

17.52

15.51

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital (period-end)
 
 
 
 
 
Average Shareholders' Equity to Average Assets
12.05
%
12.34
%
12.29
%
11.99
%
11.66
%
Tangible equity to tangible assets
10.03
%
10.45
%
10.49
%
10.40
%
9.95
%
Consolidated City Holding Company risk based capital ratios (c):
 
 
 
 
 
   CET I
15.08
%
15.10
%
15.08
%
14.88
%
14.61
%
   Tier I
15.64
%
15.66
%
15.65
%
15.45
%
15.18
%
   Total
16.31
%
16.34
%
16.40
%
16.17
%
15.91
%
   Leverage
10.90
%
11.00
%
11.05
%
10.79
%
10.83
%
City National Bank risk based capital ratios (c):
 
 
 
 
 
   CET I
12.59
%
11.93
%
12.74
%
12.27
%
11.74
%
   Tier I
12.59
%
11.93
%
12.74
%
12.27
%
11.74
%
   Total
13.25
%
12.61
%
13.44
%
12.96
%
12.44
%
   Leverage
8.81
%
8.43
%
9.04
%
8.62
%
8.40
%
 
 
 
 
 
 
Other
 
 
 
 
 
Branches
86

86

86

85

85

FTE
832

839

835

839

833

 
 
 
 
 
 
   Assets per FTE
$
5,048

$
4,925

$
4,910

$
4,836

$
4,951

   Deposits per FTE
4,143

3,952

3,900

3,907

4,073

 
 
 
 
 
 
(a) The common share issue price is presented net of commissions and excludes one-time offering costs.
(b) The price/earnings ratio is computed based on annualized quarterly earnings.
(c) March 31, 2018 risk-based capital ratios are estimated.






CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)
 
Three Months Ended
 
March 31,
December 31,
September 30,
June 30,
March 31,
 
2018
2017
2017
2017
2017
Interest Income
 
 
 
 
 
   Interest and fees on loans
$
32,918

$
32,529

$
32,004

$
31,115

$
30,104

   Interest on investment securities:
 
 
 
 
 
     Taxable
3,981

3,797

3,666

3,480

3,444

     Tax-exempt
703

692

665

686

663

   Interest on deposits in depository institutions
42

35

31

17

3

Total Interest Income
37,644

37,053

36,366

35,298

34,214

 
 
 
 
 
 
Interest Expense
 
 
 
 
 
   Interest on deposits
4,326

3,941

3,796

3,660

3,429

   Interest on short-term borrowings
460

522

349

187

157

   Interest on long-term debt
211

201

195

189

181

Total Interest Expense
4,997

4,664

4,340

4,036

3,767

Net Interest Income
32,647

32,389

32,026

31,262

30,447

   Provision for loan losses
181

422

1,393

510

681

Net Interest Income After Provision for Loan Losses
32,466

31,967

30,633

30,752

29,766

 
 
 
 
 
 
Non-Interest Income
 
 
 
 
 
   Gains on sale of investment securities

200



4,276

   Service charges
6,862

7,355

7,415

7,074

6,730

   Bankcard revenue
4,334

4,316

4,291

4,372

4,140

   Trust and investment management fee income
1,568

1,800

1,471

1,612

1,386

   Bank owned life insurance
821

1,241

774

968

1,229

   Other income
907

655

660

895

746

Total Non-Interest Income
14,492

15,567

14,611

14,921

18,507

 
 
 
 
 
 
Non-Interest Expense
 
 
 
 
 
   Salaries and employee benefits
13,151

11,755

12,490

12,690

12,948

   Occupancy related expense
2,404

2,195

2,426

2,462

2,473

   Equipment and software related expense
1,831

1,897

1,940

2,004

1,890

   FDIC insurance expense
315

318

328

328

375

   Advertising
787

711

689

781

733

   Bankcard expenses
1,076

960

1,051

970

943

   Postage, delivery, and statement mailings
578

518

517

504

555

   Office supplies
313

355

377

345

361






   Legal and professional fees
450

563

504

440

449

   Telecommunications
500

517

494

492

484

   Repossessed asset losses, net of expenses
370

145

107

147

336

   Other expenses
3,162

2,959

3,386

3,010

3,053

Total Non-Interest Expense
24,937

22,893

24,309

24,173

24,600

Income Before Income Taxes
22,021

24,641

20,935

21,500

23,673

   Income tax expense
4,405

14,972

7,003

6,812

7,647

Net Income Available to Common Shareholders
$
17,616

$
9,669

$
13,932

$
14,688

$
16,026

 
 
 
 
 
 
Distributed earnings allocated to common shareholders
$
7,023

$
7,106

$
6,797

$
6,797

$
6,782

Undistributed earnings allocated to common shareholders
10,398

2,454

6,981

7,733

9,067

Net earnings allocated to common shareholders
$
17,421

$
9,560

$
13,778

$
14,530

$
15,849

 
 
 
 
 
 
 
 
 
 
 
 
Average common shares outstanding
15,414

15,472

15,485

15,462

15,252

Shares for diluted earnings per share
15,436

15,497

15,505

15,487

15,277

 
 
 
 
 
 
Basic earnings per common share
$
1.13

$
0.62

$
0.89

$
0.94

$
1.04

Diluted earnings per common share
$
1.13

$
0.62

$
0.89

$
0.94

$
1.04







CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000s)
 
(Unaudited)
 
(Unaudited)
(Unaudited)
(Unaudited)
 
March 31,
December 31,
September 30,
June 30,
March 31,
 
2018
2017
2017
2017
2017
Assets
 
 
 
 
 
Cash and due from banks
$
97,495

$
54,450

$
54,281

$
54,577

$
164,887

Interest-bearing deposits in depository institutions
26,283

28,058

28,884

27,783

25,925

Cash and cash equivalents
123,778

82,508

83,165

82,360

190,812

 
 
 
 
 
 
Investment securities available-for-sale, at fair value
556,212

550,389

525,633

504,660

470,098

Investment securities held-to-maturity, at amortized cost
62,277

64,449

66,989

69,798

72,308

Other securities
11,581

14,147

15,988

16,039

10,240

Total investment securities
630,070

628,985

608,610

590,497

552,646

 
 
 
 
 
 
Gross loans
3,137,681

3,127,410

3,105,912

3,083,767

3,074,173

Allowance for loan losses
(18,381
)
(18,836
)
(19,554
)
(19,063
)
(19,209
)
Net loans
3,119,300

3,108,574

3,086,358

3,064,704

3,054,964

 
 
 
 
 
 
Bank owned life insurance
104,052

103,440

102,706

101,960

101,481

Premises and equipment, net
72,920

72,682

72,334

72,809

73,805

Accrued interest receivable
9,528

9,223

9,236

8,122

8,644

Net deferred tax assets
14,467

11,913

22,355

22,944

24,606

Intangible assets
78,468

78,595

78,730

78,865

79,000

Other assets
47,432

36,361

36,060

35,138

38,029

Total Assets
$
4,200,015

$
4,132,281

$
4,099,554

$
4,057,399

$
4,123,987

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Deposits:
 
 
 
 
 
   Noninterest-bearing
$
703,209

$
666,639

$
669,876

$
688,223

$
714,791

   Interest-bearing:
 
 
 
 
 
   Demand deposits
816,976

769,245

711,121

722,440

743,246

   Savings deposits
816,245

796,275

799,592

797,552

874,031

   Time deposits
1,110,532

1,083,475

1,075,945

1,069,932

1,060,690

Total deposits
3,446,962

3,315,634

3,256,534

3,278,147

3,392,758

Short-term borrowings
 
 
 
 
 
Federal Funds purchased

54,000

79,800

46,400


Customer repurchase agreements
195,375

198,219

201,664

177,904

186,686

Long-term debt
16,495

16,495

16,495

16,495

16,495

Other liabilities
49,306

45,426

44,746

45,946

46,402

Total Liabilities
3,708,138

3,629,774

3,599,239

3,564,892

3,642,341

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





Stockholders' Equity
 
 
 
 
 
Preferred stock





Common stock
47,619

47,619

47,619

47,619

47,619

Capital surplus
140,547

140,960

140,381

139,972

140,305

Retained earnings
457,650

444,481

441,001

433,944

426,126

Cost of common stock in treasury
(137,420
)
(124,909
)
(124,909
)
(124,943
)
(126,265
)
Accumulated other comprehensive loss:
 
 
 
 
 
   Unrealized gain on securities available-for-sale
(11,486
)
(611
)
883

575

(1,479
)
   Underfunded pension liability
(5,033
)
(5,033
)
(4,660
)
(4,660
)
(4,660
)
Total Accumulated Other Comprehensive Loss
(16,519
)
(5,644
)
(3,777
)
(4,085
)
(6,139
)
Total Stockholders' Equity
491,877

502,507

500,315

492,507

481,646

Total Liabilities and Stockholders' Equity
$
4,200,015

$
4,132,281

$
4,099,554

$
4,057,399

$
4,123,987

 
 
 
 
 
 
Regulatory Capital
 
 
 
 
 
Total CET 1 capital
$
430,044

$
430,154

$
426,057

$
418,449

$
409,533

Total tier 1 capital
446,044

446,154

442,057

434,449

425,533

Total risk-based capital
464,936

465,292

463,198

454,832

445,938

Total risk-weighted assets
2,851,330

2,842,453

2,824,751

2,812,443

2,807,347








CITY HOLDING COMPANY AND SUBSIDIARIES
Loan Portfolio
(Unaudited) ($ in 000s)
 
March 31,
December 31,
September 30,
June 30,
March 31,
 
2018
2017
2017
2017
2017
 
 
 
 
 
 
Residential real estate (1)
$
1,465,215

$
1,468,278

$
1,465,942

$
1,455,578

$
1,444,795

Home equity - junior liens
138,477

139,499

139,702

139,534

139,165

Commercial and industrial
204,592

208,484

204,722

197,429

205,011

Commercial real estate (2)
1,296,304

1,277,576

1,260,906

1,256,736

1,250,106

Consumer
29,570

29,162

30,323

30,860

32,043

DDA overdrafts
3,523

4,411

4,317

3,630

3,053

Gross Loans
$
3,137,681

$
3,127,410

$
3,105,912

$
3,083,767

$
3,074,173

 
 
 
 
 
 
Construction loans included in:
 
 
 
 
 
(1) - Residential real estate loans
$
26,610

$
25,270

$
19,849

$
12,056

$
9,777

(2) - Commercial real estate loans
30,857

28,871

24,318

20,204

18,499

 
 
 
 
 
 
 
 
 
 
 
 
Secondary Mortgage Loan Activity
 
 
 
 
 
Mortgage loans originated
$
2,606

$
2,593

$
4,474

$
5,433

$
3,951

Mortgage loans sold
2,874

2,975

4,732

5,465

6,118

Mortgage loans gain on loans sold
79

79

128

142

167







CITY HOLDING COMPANY AND SUBSIDIARIES
Asset Quality Information
(Unaudited) ($ in 000s)

 
Three Months Ended
 
March 31,
December 31,
March 31,
June 30,
March 31,
 
2018
2017
2017
2017
2017
Allowance for Loan Losses
 
 
 
 
 
Balance at beginning of period
$
18,836

$
19,554

$
19,063

$
19,209

$
19,730

 
 
 
 
 
 
Charge-offs:
 
 
 
 
 
Commercial and industrial
(339
)
(250
)
(40
)
(57
)
(53
)
Commercial real estate
(157
)
(156
)
(282
)
(102
)
(180
)
Residential real estate
(124
)
(342
)
(411
)
(258
)
(626
)
Home equity
(78
)
(147
)
(17
)
(118
)
(121
)
Consumer
(99
)
(13
)
(18
)
(23
)
(6
)
DDA overdrafts
(636
)
(725
)
(718
)
(635
)
(636
)
Total charge-offs
(1,433
)
(1,633
)
(1,486
)
(1,193
)
(1,622
)
 
 
 
 
 
 
Recoveries:
 
 
 
 
 
Commercial and industrial
2

1

2

53

2

Commercial real estate
223

20

60

21

11

Residential real estate
86

8

130

131

25

Home equity
20


45



Consumer
46

17

21

14

11

DDA overdrafts
420

447

326

319

371

Total recoveries
797

493

584

538

420

 
 
 
 
 
 
Net charge-offs
(636
)
(1,140
)
(903
)
(655
)
(1,202
)
Provision for (recovery of) acquired loans

122


58

(19
)
Provision for loan losses
181

300

1,393

451

700

Balance at end of period
$
18,381

$
18,836

$
19,554

$
19,063

$
19,209

 
 
 
 
 
 
Loans outstanding
$
3,137,681

$
3,127,410

$
3,105,912

$
3,083,767

$
3,074,173

Allowance as a percent of loans outstanding
0.59
%
0.6
%
0.63
%
0.62
%
0.62
%
Allowance as a percent of non-performing loans
189.9
%
178.4
%
182.8
%
177.6
%
167.7
%
 
 
 
 
 
 
Average loans outstanding
$
3,133,804

$
3,110,084

$
3,089,793

$
3,073,255

$
3,055,980

Net charge-offs (annualized) as a percent of average loans outstanding
0.08
%
0.15
%
0.12
%
0.09
%
0.16
%









CITY HOLDING COMPANY AND SUBSIDIARIES
Asset Quality Information, Continued
(Unaudited) ($ in 000s)
 
March 31,
December 31,
March 31,
June 30,
March 31,
 
2018
2017
2017
2017
2017
Nonaccrual Loans
 
 
 
 
 
Residential real estate
$
3,331

$
2,814

$
2,556

$
1,608

$
2,810

Home equity
135

168

92

153

114

Commercial and industrial
1,063

1,345

1,325

1,571

1,353

Commercial real estate
5,061

5,970

6,700

7,250

7,141

   Total nonaccrual loans
9,590

10,297

10,673

10,582

11,418

Accruing loans past due 90 days or more
91

262

22

150

35

   Total non-performing loans
9,681

10,559

10,695

10,732

11,453

Other real estate owned
3,912

3,585

3,995

4,204

4,405

   Total non-performing assets
$
13,593

$
14,144

$
14,690

$
14,936

$
15,858

 
 
 
 
 
 
Non-performing assets as a percent of loans and other real estate owned
0.43
%
0.45
%
0.47
%
0.48
%
0.52
%
 
 
 
 
 
 
Past Due Loans
 
 
 
 
 
Residential real estate
$
5,641

$
6,718

$
5,295

$
5,648

$
3,876

Home equity
616

851

873

628

301

Commercial and industrial
61

692

304

259

611

Commercial real estate
1,520

2,086

520

819

1,014

Consumer
21

42

26

70

38

DDA overdrafts
432

575

551

527

330

   Total past due loans
$
8,291

$
10,964

$
7,569

$
7,951

$
6,170

 
 
 
 
 
 
Total past due loans as a percent of loans outstanding
0.26
%
0.35
%
0.24
%
0.26
%
0.20
%
 
 
 
 
 
 
Troubled Debt Restructurings ("TDRs") (period-end)
 
 
 
 
 
Accruing:
 
 
 
 
 
   Residential real estate
$
20,786

$
21,005

$
20,741

$
20,647

$
20,294

   Home equity
3,015

3,047

2,947

3,146

3,104

   Commercial and industrial
125

135

31

35

38

   Commercial real estate
8,324

8,381

8,427

8,483

8,513

   Consumer





     Total accruing TDRs
$
32,250

$
32,568

$
32,146

$
32,311

$
31,949







Non-Accruing
 
 
 
 
 
   Residential real estate
$
256

$
84

47

$
154

$
100

   Home equity
40

50



30

   Commercial and industrial





   Commercial real estate





   Consumer





     Total non-accruing TDRs
$
296

$
134

$
47

$
154

$
130

 
 
 
 
 
 
Total TDRs
$
32,546

$
32,702

$
32,193

$
32,465

$
32,079

 
 
 
 
 
 







CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)

 
Three Months Ended
 
March 31, 2018
December 31, 2017
March 31, 2017
 
Average
 
Yield/
Average
 
Yield/
Average
 
Yield/
 
Balance
Interest
Rate
Balance
Interest
Rate
Balance
Interest
Rate
Assets:
 
 
 
 
 
 
 
 
 
Loan portfolio (1):
 
 
 
 
 
 
 
 
 
Residential real estate (2)
$
1,603,911

$
16,479

4.17
%
$
1,608,509

$
16,321

4.03
%
$
1,591,254

$
15,479

3.95
%
Commercial, financial, and agriculture (2)
1,496,817

15,608

4.23
%
1,468,701

15,360

4.15
%
1,429,075

13,584

3.85
%
Installment loans to individuals (2), (3)
33,076

504

6.18
%
32,874

588

7.10
%
35,650

595

6.77
%
Previously securitized loans (4)
 ***
327

 ***
 ***
260

 ***
 ***
447

 ***
Total loans
3,133,804

32,918

4.26
%
3,110,084

32,529

4.15
%
3,055,979

30,105

4.00
%
Securities:
 
 
 
 
 
 
 
 
 
Taxable
536,714

3,981

3.01
%
526,645

3,797

2.86
%
458,295

3,444

3.05
%
Tax-exempt (5)
91,722

890

3.94
%
91,886

1,064

4.59
%
84,784

1,019

4.87
%
Total securities
628,436

4,871

3.14
%
618,531

4,861

3.12
%
543,079

4,463

3.33
%
Deposits in depository institutions
29,648

42

0.57
%
31,060

35

0.45
%
16,826

3

0.07
%
Total interest-earning assets
3,791,888

37,831

4.05
%
3,759,675

37,425

3.95
%
3,615,884

34,571

3.88
%
Cash and due from banks
71,480

 
 
65,636

 
 
81,629

 
 
Premises and equipment, net
72,716

 
 
73,109

 
 
74,768

 
 
Other assets
245,721

 
 
247,688

 
 
253,378

 
 
Less: Allowance for loan losses
(19,420
)
 
 
(20,981
)
 
 
(20,150
)
 
 
       Total assets
$
4,162,385

 
 
$
4,125,127

 
 
$
4,005,509

 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
$
782,499

$
357

0.19
%
$
702,614

$
167

0.09
%
$
708,434

$
157

0.09
%
Savings deposits
801,504

341

0.17
%
797,311

313

0.16
%
831,639

324

0.16
%
Time deposits (2)
1,096,157

3,628

1.34
%
1,079,179

3,462

1.27
%
1,052,218

2,948

1.14
%
Short-term borrowings
236,605

460

0.79
%
296,139

522

0.70
%
195,626

157

0.33
%
Long-term debt
16,495

211

5.19
%
16,495

201

4.83
%
16,495

181

4.45
%
   Total interest-bearing liabilities
2,933,260

4,997

0.69
%
2,891,738

4,665

0.64
%
2,804,412

3,767

0.54
%
Noninterest-bearing demand deposits
681,150

 
 
681,554

 
 
690,243

 
 
Other liabilities
46,426

 
 
42,896

 
 
43,655

 
 
Stockholders' equity
501,549

 
 
508,938

 
 
467,199

 
 
Total liabilities and
 
 
 
 
 
 
 
 
 
stockholders' equity
$
4,162,385

 
 
$
4,125,126

 
 
$
4,005,509

 
 
Net interest income
 
$
32,834

 
 
$
32,760

 
 
$
30,804

 
Net yield on earning assets
 
 
3.51
%
 
 
3.46
%
 
 
3.45
%
 
 
 
 
 
 
 
 
 
 
(1) For purposes of this table, non-accruing loans have been included in average balances and loan fees, which are immaterial, have been included in interest income.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





(2) Included in the above table are the following amounts (in thousands) for the accretion of the fair value adjustments related to the acquisitions of Virginia Savings Bancorp ("Virginia Savings"), Community Financial Corporation ("Community") and American Founders Banks, Inc. ("AFB"):
Residential real estate
 
$
110

 
 
$
126

 
 
$
138

 
Commercial, financial, and agriculture
 
150

 
 
438

 
 
175

 
Installment loans to individuals
 
10

 
 
27

 
 
9

 
Time deposits
 

 
 

 
 
16

 
 
 
$
270

 
 
$
591

 
 
$
338

 
 
 
 
 
 
 
 
 
 
 
(3) Includes the Company’s consumer and DDA overdrafts loan categories.
(4) Effective January 1, 2012, the carrying value of the Company's previously securitized loans was reduced to $0.
(5) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 21% for the period ending March 31, 2018 and 35% for the periods ending December 31, 2017 and March 31, 2017.

CITY HOLDING COMPANY AND SUBSIDIARIES
Non-GAAP Reconciliations
(Unaudited) ($ in 000s)





 
Three Months Ended
 
March 31,
December 31,
September 30,
June 30,
March 31,
 
2018
2017
2017
2017
2017
Net Interest Income/Margin
 
 
 
 
 
Net interest income ("GAAP")
$
32,647

$
32,389

$
32,026

$
31,262

$
30,447

Taxable equivalent adjustment
187

371

358

370

357

Net interest income, fully taxable equivalent
$
32,834

$
32,760

$
32,384

$
31,632

$
30,804

 
 
 
 
 
 
Average interest earning assets
$
3,791,888

$
3,759,675

$
3,719,692

$
3,669,715

$
3,615,884

 
 
 
 
 
 
Net Interest Margin
3.51
 %
3.46
 %
3.45
 %
3.46
 %
3.45
 %
Accretion related to fair value adjustments
(0.03
)%
(0.06
)%
(0.04
)%
(0.04
)%
(0.04
)%
Net Interest Margin (excluding accretion)
3.48
 %
3.39
 %
3.42
 %
3.42
 %
3.42
 %
 
 
 
 
 
 
Tangible Equity Ratio (period end)
 
 
 
 
 
Equity to assets ("GAAP")
11.71
 %
12.16
 %
12.20
 %
12.14
 %
11.68
 %
Effect of goodwill and other intangibles, net
(1.68
)%
(1.70
)%
(1.72
)%
(1.74
)%
(1.72
)%
Tangible common equity to tangible assets
10.03
 %
10.45
 %
10.49
 %
10.40
 %
9.95
 %
 
 
 
 
 
 
Return on tangible equity ("GAAP")
16.66
 %
8.99
 %
13.17
 %
14.22
 %
16.52
 %
Impact of effective tax rate decrease on deferred taxes
 %
6.57
 %
 %
 %
 %
Return on tangible equity, excluding impact of effective tax rate decrease on deferred taxes
16.66
 %
15.56
 %
13.17
 %
14.22
 %
16.52
 %
 
 
 
 
 
 
Return on assets ("GAAP")
1.69
 %
0.94
 %
1.37
 %
1.43
 %
1.60
 %
Impact of effective tax rate decrease on deferred taxes
 %
0.68
 %
 %
 %
 %
Return on Assets, excluding impact of effective tax rate decrease on deferred taxes
1.69
 %
1.62
 %
1.37
 %
1.43
 %
1.60
 %
 
 
 
 
 
 
Effective Income Tax Rate
 
 
 
 
 
Effective tax rate ("GAAP")
20.0
 %
60.8
 %
33.5
 %
31.7
 %
32.3
 %
Impact of FIN 48 adjustments
 %
1.34
 %
 %
 %
 %
Impact of effective tax rate decrease on deferred taxes
 %
(28.69
)%
 %
 %
 %
Effective tax rate, excluding FIN 48 and impact of effective tax rate decrease on deferred taxes
20.0
 %
33.4
 %
33.5
 %
31.7
 %
32.3
 %



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