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Section 1: 8-K (8-K, CHCO 4Q2019 EARNINGS)

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false0000726854 0000726854 2020-01-29 2020-01-29


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)
January 29, 2020

402503968_chcologoa35.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, West Virginia 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))










Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $2.50 par value
CHCO
NASDAQ Global Select Market

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 January 29, 2020, City Holding Company (“the Company”) issued a news release, attached as Exhibit 99.1, announcing the Company’s earnings results for the fourth quarter ended December 31, 2019. Furnished as Exhibit 99.1 and incorporated herein by reference is the news release issued by the Company.

Section 5 - Corporate Governance and Management

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Craig G. Stilwell, Executive Vice President, Retail Banking, has informed City Holding Company ("Company") and City National Bank of West Virginia, the Company's wholly-owned subsidiary bank, that he intends to retire on or about December 31, 2020.

Section 9 - Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits

99.1News Release issued January 29, 2020

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: January 29, 2020


(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1, PRESS RELEASE CHCO 4Q2019 EARNINGS)

Exhibit











NEWS RELEASE

For Immediate Release
January 29, 2020

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

City Holding Company Announces Record Annual Earnings

Charleston, West Virginia - City Holding Company (“Company” or “City”) (NASDAQ:CHCO), a $5.0 billion bank holding company headquartered in Charleston, West Virginia, today announced net income of $89.4 million and diluted earnings of $5.42 per share for the year ended December 31, 2019.

Highlights of the Company’s performance and results for the year ended December 31, 2019 include the following:

Reported diluted earnings per share increased from $4.49 for 2018 to $5.42 for 2019. Excluding acquisition and integration expenses, diluted earnings per share would have been $5.16 for 2018 and $5.46 for 2019.
Return on assets and return on tangible equity of 1.80% and 17.3%, respectively. Excluding certain acquisition and integration expenses, return on assets and return on tangible equity would have been 1.82% and 17.4%, respectively.
Reported net interest income increased $23.2 million (16.8%) from the year ended December 31, 2018, while net interest income exclusive of accretion from fair value adjustments on recent acquisitions increased $21.0 million (15.3%) from the year ended December 31, 2018 due primarily to the acquisitions of Poage Bankshares, Inc. (“Poage”) and Farmers Deposit Bancorp, Inc. (“Farmers”).
Reported a recovery of loan loss provision of $1.3 million for the year ended December 31, 2019, primarily due to lower historical loss rates and recoveries from loans previously charged off.
During 2019, the Company repurchased 261,000 common shares at a weighted average price of $74.54 per share as part of a one million share repurchase plan authorized by the Board of Directors in February 2019. City also increased its quarterly dividend by 7.5% in the third quarter of 2019 to $0.57 per share. In spite of these capital uses, the Company was still able to increase its tangible equity ratio from 10.0% at December 31, 2018 to 11.0% at December 31, 2019.
For the second consecutive year, received the highest ranking in customer satisfaction in the north central region in J.D. Power’s 2019 U.S. Retail Banking Satisfaction Study.







Net Interest Income

The Company’s net interest income increased from $138.2 million for the year ended December 31, 2018 to $161.4 million for the year ended December 31, 2019. The Company’s tax equivalent net interest income increased $23.2 million, or 16.7%, from $139.0 million for the year ended December 31, 2018 to $162.2 million for the year ended December 31, 2019. The acquisitions of Poage and Farmers accounted for $18.3 million of this increase, while higher loan yields on residential real estate and commercial loans increased net interest income $5.7 million and $1.5 million, respectively, and higher average balances on commercial loans ($51.7 million) increased interest income by $2.3 million as compared to the year ended December 31, 2018. In addition, higher average investment balances ($98.1 million) increased investment income by $3.1 million and an increase in accretion from fair value adjustments increased interest income by $2.2 million during the year ended December 31, 2019. These increases were partially offset by increased interest expense on interest bearing liabilities ($8.5 million), primarily due to an increase in the cost of funds. The Company’s reported net interest margin increased from 3.54% for the year ended December 31, 2018 to 3.59% for the year ended December 31, 2019. Excluding the favorable impact of the accretion from the fair value adjustments, the net interest margin would have been 3.51% for the year ended December 31, 2019 and 3.50% for the year ended December 31, 2018.

The Company’s net interest income decreased from $40.5 million during the third quarter of 2019 to $39.8 million during the fourth quarter of 2019. During the fourth quarter of 2019, the Company’s tax equivalent net interest income decreased $0.7 million, or 1.7%, to $40.0 million from $40.7 million during the third quarter of 2019. Lower loan yields (17 basis points) decreased net interest income by $1.5 million and a decrease in accretion from fair value adjustments decreased net interest income by $0.3 million. These decreases were partially offset by higher average loan balances ($63.3 million) that increased interest income by $0.8 million and lower interest rates on deposit accounts which decreased interest expense by $0.5 million. This resulted in the Company’s reported net interest margin declining from 3.59% for the third quarter of 2019 to 3.46% for the fourth quarter of 2019. Excluding the favorable impact of the accretion from the fair value adjustments, the net interest margin would have been 3.38% for the quarter ended December 31, 2019 and 3.48% for the quarter ended September 30, 2019.

Credit Quality

The Company’s ratio of nonperforming assets to total loans and other real estate owned decreased from 0.54% at December 31, 2018 to 0.45% at December 31, 2019. Total nonperforming assets decreased from $19.4 million at December 31, 2018 to $16.4 million at December 31, 2019. Excluded from this ratio are purchased credit-impaired loans in 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 Company’s initial expectations. Total past due loans decreased from $13.1 million, or 0.37% of total loans outstanding, at December 31, 2018 to $11.4 million, or 0.32% of total loans outstanding, at December 31, 2019.

As a result of the Company’s quarterly analysis of the adequacy of the Allowance for Loan Losses (“ALLL”), the Company recorded a recovery of loan losses of $0.1 million in the fourth quarter of 2019 and $1.3 million for the year ended December 31, 2019, compared to a recovery of loan losses of $0.4 million and $2.3 million for the comparable periods in 2018. The recovery of loan loss provision during 2019 reflects a general improvement in the Company’s historical loss rates used to compute the allowance not specifically allocated to individual credits as charge offs have declined over the periods encompassed in the Company’s historical loss review. In addition, the Company recovered significant amounts on loans previously charged off, including a $0.5 million recovery from a loan that had previously been charged off





during 2014. Changes in the amount of the allowance and related provision 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.

The Company will adopt ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” effective January 1, 2020, which replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The new current expected credit losses model (“CECL”) will apply to the allowance for loan losses, available-for-sale and held-to-maturity debt securities, purchased financial assets with credit deterioration and certain off-balance sheet credit exposures. As a result of adopting ASU No. 2016-13, the Company expects the increase in its allowance on January 1, 2020, to be in the range of $2.3 million to $4.1 million. In addition, the adoption of ASU No. 2016-13 will require the Company to “gross up” its previously purchased credit impaired loans through the allowance at January 1, 2020. As a result, the Company expects an increase in its allowance and loan balances as of January 1, 2020, to be in the range of $2.2 million to $3.2 million. These estimates are subject to further refinements based on ongoing evaluations of our model, methodologies, internal controls, and judgments, as well as prevailing economic conditions and forecasts as of the adoption date.

Non-interest Income

Non-interest income was $68.5 million for 2019 as compared to $60.6 million for 2018. During 2019, the Company reported $0.9 million of unrealized fair value gains on the Company’s equity securities compared to $0.1 million of unrealized fair value losses on the Company’s equity securities during 2018. Exclusive of these unrealized fair value gains and losses, non-interest income increased from $60.7 million for the year ended December 31, 2018 to $67.5 million for the year ended December 31, 2019. This increase was primarily attributable to an increase of $2.7 million, or 14.8%, in bankcard revenues, and an increase of $1.8 million, or 6.1%, in service charges, with $1.4 million and $1.6 million, respectively, attributable to the late 2018 acquisitions of Poage and Farmers. Additionally, other income increased by $1.0 million (due largely to the $0.7 million gain from the sale of our Virginia Beach, VA branch to Select Bank & Trust Company during the second quarter of 2019), bank owned life insurance revenues increased $0.7 million due to higher death benefit proceeds received during 2019 compared to 2018, and trust and investment management fee income increased $0.6 million.

Non-interest income was $18.0 million during the quarter ended December 31, 2019 as compared to $14.7 million during the quarter ended December 31, 2018. During the fourth quarter of 2019, the Company reported $0.9 million of unrealized fair value gains on the Company’s equity securities compared to $1.2 million of unrealized fair value losses on the Company’s equity securities during the fourth quarter of 2018. Exclusive of these unrealized fair value gains and losses, non-interest income increased from $16.0 million for the fourth quarter of 2018 to $17.1 million for the fourth quarter of 2019. This increase was largely attributable to an increase of $0.3 million, or 7.0%, in bankcard revenues and an increase of $0.3 million, or 3.9%, in service charges, due to the late 2018 acquisitions of Poage and Farmers. In addition, trust and investment management fee income increased $0.3 million.
  








Non-interest Expenses

During 2019 and 2018, the Company recognized $0.8 million and $13.3 million, respectively, of acquisition and integration expenses associated with the completed acquisitions of Poage and Farmers. Excluding these expenses, non-interest expenses increased from $99.8 million for 2018 to $116.8 million for 2019. This increase was primarily due to an increase in salaries and employee benefits of $7.7 million that was largely attributable to the acquisitions of Poage and Farmers ($4.3 million), annual salary adjustments, and increased incentive compensation. Primarily due to the acquisitions of Poage and Farmers, other expenses increased $4.5 million, occupancy related expenses increased $1.3 million, equipment and software related expenses increased $1.2 million and bankcard expenses increased $1.1 million, from 2018 to 2019. Partially offsetting these increases was a decrease of $0.6 million in FDIC insurance expense. As the Deposit Insurance Fund (“DIF”) reserve ratio exceeded 1.38% at June 30, 2019, the Company received a Small Bank Assessment Credit for the full amount of its Federal Deposit Insurance Corporation (“FDIC”) assessment for the third and fourth quarters of 2019.

During the quarter ended December 31, 2018, the Company recognized $13.0 million of acquisition and integration expenses associated with the completed acquisitions of Poage and Farmers. Excluding these expenses, non-interest expenses increased $3.9 million from $25.1 million in the quarter ended December 31, 2018 to $29.0 million in the quarter ended December 31, 2019. This increase was primarily due to an increase in salaries and employee benefits of $1.9 million due to the acquisitions of Poage and Farmers ($0.8 million), annual salary adjustments ($0.5), and accruals for incentive compensation ($0.6 million). Due to the acquisitions of Poage and Farmers, other expenses increased $0.9 million, occupancy related expenses increased $0.3 million, equipment and software related expenses increased $0.3 million, and advertising expense increased $0.2 million from the fourth quarter of 2018 to the fourth quarter of 2019. Partially offsetting these increases was a decrease of $0.3 million in FDIC insurance expense.
 
Balance Sheet Trends

For the year ending December 31, 2019, period end loan balances increased $28.5 million (0.8%) to $3.62 billion. Commercial loans increased $26.5 million (1.5%) and residential real estate loans increased $5.1 million (0.3%) from December 31, 2018 to December 31, 2019.

Total average depository balances for the year ended December 31, 2019 increased $582.7 million, or 16.8%, as compared to the year ended December 31, 2018. This growth was largely attributable to deposits acquired from Poage and Farmers ($441.0 million). Exclusive of these contributions, the Company experienced increases in time deposits ($58.6 million), savings deposits ($47.3 million), noninterest bearing demand deposits ($28.8 million) and interest bearing demand deposits ($7.0 million).

Income Tax Expense

The Company’s effective income tax rate for the quarter and year ended December 31, 2019 was 21.8% and 21.3%, respectively, compared to 19.8% and 20.5% for the comparable periods in 2018.

Capitalization and Liquidity

The Company’s loan to deposit ratio was 88.7% and the loan to asset ratio was 72.0% at December 31, 2019. The Company maintained investment securities totaling 17.7% of assets as of the same date. The Company’s deposit mix is weighted toward checking and saving accounts that fund 54.0% of assets at December 31, 2019. Time deposits fund 27.2% of assets at December 31, 2019, but very few of these deposits are in accounts that have balances of more than $250,000.






The Company is strongly capitalized. The Company’s tangible equity ratio increased from 10.0% at December 31, 2018 to 11.0% at December 31, 2019. At December 31, 2019, City National Bank’s Leverage Ratio was 9.51%, its Common Equity Tier I ratio was 13.92%, its Tier I Capital ratio was 13.92%, and its Total Risk-Based Capital ratio was 14.28%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.

On December 18, 2019, the Board approved a quarterly cash dividend of $0.57 cents per share payable January 31, 2020, to shareholders of record as of January 15, 2020. During the year ended December 31, 2019, the Company repurchased 261,000 common shares at a weighted average price of $74.54 per share as part of a one million share repurchase plan authorized by the Board of Directors in February 2019. As of December 31, 2019, the Company could repurchase approximately 739,000 shares under the current plan.

On January 22, 2020, City announced that City National Bank had entered into an agreement to sell 86,605 shares of Visa Inc. Class B common stock at a pre-tax gain of approximately $17.8 million on January 17, 2020. The carrying value of the Visa Class B shares on City National Bank’s balance sheet was $0, as the Bank had no historical cost basis in the shares. This transaction settled in January 2020 and will be reported as a gain in the Company’s first quarter 2020 results.

City Holding Company is the parent company of City National Bank of West Virginia. City National Bank operates 95 branches across West Virginia, Kentucky, Virginia, and Ohio.

Forward-Looking Information

This news release contains certain forward-looking statements that are included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements express only management’s beliefs regarding future results or events and are subject to inherent uncertainty, risks, and changes in circumstances, many of which are outside of management’s control. Uncertainty, risks, changes in circumstances and other factors could cause the Company’s actual results to differ materially from those projected in the forward-looking statements. Factors that could cause actual results to differ from those discussed in such forward-looking statements include, but are not limited to those set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 under “ITEM 1A Risk Factors” and the following: (1) general economic conditions, especially in the communities and markets in which we conduct our business; (2) credit risk, including risk that negative credit quality trends may lead to a deterioration of asset quality, risk that our allowance for loan losses may not be sufficient to absorb actual losses in our loan portfolio, and risk from concentrations in our loan portfolio; (3) changes in the real estate market, including the value of collateral securing portions of our loan portfolio; (4) changes in the interest rate environment; (5) operational risk, including cybersecurity risk and risk of fraud, data processing system failures, and network breaches; (6) changes in technology and increased competition, including competition from non-bank financial institutions; (7) changes in consumer preferences, spending and borrowing habits, demand for our products and services, and customers’ performance and creditworthiness; (8) difficulty growing loan and deposit balances; (9) our ability to effectively execute our business plan, including with respect to future acquisitions; (10) changes in regulations, laws, taxes, government policies, monetary policies and accounting policies affecting bank holding companies and their subsidiaries; (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; (12) regulatory enforcement actions and adverse legal actions; (13) difficulty attracting and retaining key employees; and (14) other economic, competitive, technological, operational, governmental, regulatory, and market factors affecting our operations.  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 Form 10-K for the fiscal year ended December 31, 2019. The Company will continue to evaluate the impact of any subsequent events on the preliminary December 31, 2019 results and will adjust the amounts if necessary.
CITY HOLDING COMPANY AND SUBSIDIARIES
Financial Highlights
(Unaudited)
 
Three Months Ended
 
Twelve Months Ended
 
December 31,
September 30,
June 30,
March 31,
December 31,
 
December 31,
December 31,
 
2019
2019
2019
2019
2018
 
2019
2018
 
 
 
 
 
 
 
 
 
Earnings
 
 
 
 
 
 
 
 
Net Interest Income (FTE)
$
40,036

$
40,729

$
41,113

$
40,274

$
36,625

 
$
162,151

$
138,965

Net Income available to common shareholders
22,611

22,371

22,751

21,619

10,713

 
89,352

70,002

 
 
 
 
 
 
 
 
 
Per Share Data
 
 
 
 
 
 
 
 
Earnings per share available to common shareholders:
 
 
 
 
 
 
 
 
   Basic
$
1.38

$
1.36

$
1.38

$
1.31

$
0.68

 
$
5.43

$
4.50

   Diluted
1.38

1.36

1.38

1.30

0.68

 
5.42

4.49

Weighted average number of shares:
 
 
 
 
 
 
 
 
   Basic
16,207

16,271

16,368

16,411

15,603

 
16,314

15,421

   Diluted
16,230

16,289

16,386

16,429

15,618

 
16,333

15,439

Period-end number of shares
16,303

16,302

16,397

16,484

16,555

 
16,303

16,555

Cash dividends declared
$
0.57

$
0.57

$
0.53

$
0.53

$
0.53

 
$
2.20

$
1.98

Book value per share (period-end)
40.38

39.85

38.84

37.57

36.29

 
40.38

36.29

Tangible book value per share (period-end)
33.02

32.44

31.44

30.18

28.87

 
33.02

28.87

Market data:
 
 
 
 
 
 
 
 
   High closing price
$
82.72

$
78.30

$
82.56

$
80.21

$
77.94

 
$
82.72

$
82.79

   Low closing price
74.33

72.35

73.05

67.58

66.36

 
67.58

65.03

   Period-end closing price
81.95

76.25

76.26

76.19

67.59

 
81.95

67.59

   Average daily volume
54

62

53

54

66

 
56

59

Treasury share activity:
 
 
 
 
 
 
 
 
      Treasury shares repurchased

99

107

55

69

 
261

290

      Average treasury share repurchase price
$

$
74.17

$
74.81

$
74.69

$
72.89

 
$
74.54

$
69.78

 
 
 
 
 
 
 
 
 
Key Ratios (percent)
 
 
 
 
 
 
 
 
Return on average assets
1.80
%
1.81
%
1.84
%
1.76
%
0.96
%
 
1.80
%
1.63
%
Return on average tangible equity
16.8
%
17.0
%
17.9
%
17.7
%
9.6
%
 
17.3
%
16.2
%
Yield on interest earning assets
4.22
%
4.42
%
4.48
%
4.46
%
4.32
%
 
4.40
%
4.19
%
Cost of interest bearing liabilities
1.00
%
1.10
%
1.09
%
1.04
%
1.00
%
 
1.06
%
0.85
%
Net Interest Margin
3.46
%
3.59
%
3.65
%
3.66
%
3.55
%
 
3.59
%
3.54
%
Non-interest income as a percent of total revenue
31.2
%
29.2
%
30.3
%
28.3
%
28.8
%
 
29.8
%
30.5
%
Efficiency Ratio
50.0
%
48.2
%
50.5
%
51.2
%
47.6
%
 
50.0
%
50.0
%
Price/Earnings Ratio (a)
14.82

13.98

13.84

14.58

24.82

 
15.10

15.03

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





 
 
 
 
 
 
 
 
 
Capital (period-end)
 
 
 
 
 
 
 
 
Average Shareholders' Equity to Average Assets
13.12
%
13.12
%
12.76
%
12.49
%
12.05
%
 
 
 
Tangible equity to tangible assets
10.99
%
10.93
%
10.70
%
10.37
%
10.01
%
 
 
 
Consolidated City Holding Company risk based capital ratios (b):
 
 
 
 
 
 
 
 
   CET I
16.05
%
15.62
%
15.91
%
15.55
%
15.07
%
 
 
 
   Tier I
16.05
%
15.74
%
16.03
%
15.67
%
15.20
%
 
 
 
   Total
16.40
%
16.14
%
16.47
%
16.13
%
15.69
%
 
 
 
   Leverage
10.90
%
10.87
%
10.70
%
10.62
%
11.36
%
 
 
 
City National Bank risk based capital ratios (b):
 
 
 
 
 
 
 
 
   CET I
13.92
%
14.00
%
14.19
%
13.89
%
13.05
%
 
 
 
   Tier I
13.92
%
14.00
%
14.19
%
13.89
%
13.05
%
 
 
 
   Total
14.28
%
14.40
%
14.63
%
14.36
%
13.55
%
 
 
 
   Leverage
9.51
%
9.72
%
9.51
%
9.45
%
9.81
%
 
 
 
 
 
 
 
 
 
 
 
 
Other
 
 
 
 
 
 
 
 
Branches
95

95

95

97

100

 
 
 
FTE
918

916

935

927

939

 
 
 
 
 
 
 
 
 
 
 
 
   Assets per FTE
$
5,467

$
5,412

$
5,284

$
5,305

$
5,498

 
 
 
   Deposits per FTE
4,440

4,399

4,312

4,361

4,462

 
 
 
 
 
 
 
 
 
 
 
 
(a) The price/earnings ratio is computed based on annualized quarterly earnings.
(b) December 31, 2019 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
 
Twelve Months Ended
 
December 31,
September 30,
June 30,
March 31,
December 31,
 
December 31,
December 31,
 
2019
2019
2019
2019
2018
 
2019
2018
Interest Income
 
 
 
 
 
 
 
 
   Interest and fees on loans
$
41,615

$
42,944

$
43,174

$
42,279

$
37,973

 
$
170,012

$
142,055

   Interest on investment securities:
 
 
 
 
 
 
 
 
     Taxable
5,924

6,044

5,732

5,689

5,023

 
23,389

17,337

     Tax-exempt
711

722

755

779

729

 
2,967

2,843

   Interest on deposits in depository institutions
298

271

577

186

623

 
1,332

1,666

Total Interest Income
48,548

49,981

50,238

48,933

44,348

 
197,700

163,901

 
 
 
 
 
 
 
 
 
Interest Expense
 
 
 
 
 
 
 
 
   Interest on deposits
7,897

8,585

8,417

7,767

6,656

 
32,666

21,397

   Interest on short-term borrowings
762

814

863

1,052

1,061

 
3,491

3,415

   Interest on long-term debt
42

45

47

48

200

 
182

880

Total Interest Expense
8,701

9,444

9,327

8,867

7,917

 
36,339

25,692

Net Interest Income
39,847

40,537

40,911

40,066

36,431

 
161,361

138,209

(Recovery of) provision for loan losses
(75
)
274

(600
)
(849
)
(400
)
 
(1,250
)
(2,310
)
Net Interest Income After (Recovery of) Provision for Loan Losses
39,922

40,263

41,511

40,915

36,831

 
162,611

140,519

 
 
 
 
 
 
 
 
 
Non-Interest Income
 
 
 
 
 
 
 
 
Net (losses) gains on sale of investment securities

(40
)
21

88


 
69


Unrealized gains (losses) recognized on equity securities still held
914

(214
)
113

75

(1,246
)
 
888

(90
)
   Service charges
8,233

8,183

7,778

7,321

7,921

 
31,515

29,704

   Bankcard revenue
5,162

5,440

5,522

4,969

4,826

 
21,093

18,369

   Trust and investment management fee income
2,016

1,802

1,699

1,642

1,737

 
7,159

6,529

   Bank owned life insurance
856

762

1,132

1,016

734

 
3,766

3,090

   Other income
861

765

1,560

814

734

 
4,000

2,962

Total Non-Interest Income
18,042

16,698

17,825

15,925

14,706

 
68,490

60,564

 
 
 
 
 
 
 
 
 
Non-Interest Expense
 
 
 
 
 
 
 
 
   Salaries and employee benefits
15,918

15,210

15,767

15,243

14,017

 
62,138

54,475

   Occupancy related expense
2,540

2,725

2,598

2,732

2,250

 
10,595

9,323

   Equipment and software related expense
2,302

2,248

2,223

2,191

2,038

 
8,964

7,729

   FDIC insurance expense


347

291

308

 
638

1,251

   Advertising
694

861

920

869

530

 
3,344

2,974

   Bankcard expenses
1,285

1,554

1,534

1,182

1,229

 
5,555

4,503






   Postage, delivery, and statement mailings
588

659

545

624

527

 
2,416

2,157

   Office supplies
392

382

399

386

313

 
1,559

1,319

   Legal and professional fees
706

539

605

521

469

 
2,371

1,847

   Telecommunications
563

569

597

726

401

 
2,455

1,750

   Repossessed asset losses (gains), net of expenses
224

(59
)
253

216

207

 
634

845

   Merger related expenses


547

250

13,015

 
797

13,257

   Other expenses
3,822

3,709

4,437

4,180

2,874

 
16,148

11,636

Total Non-Interest Expense
29,034

28,397

30,772

29,411

38,178

 
117,614

113,066

Income Before Income Taxes
28,930

28,564

28,564

27,429

13,359

 
113,487

88,017

   Income tax expense
6,319

6,193

5,813

5,810

2,646

 
24,135

18,015

Net Income Available to Common Shareholders
$
22,611

$
22,371

$
22,751

$
21,619

$
10,713

 
$
89,352

$
70,002

 
 
 
 
 
 
 
 
 
Distributed earnings allocated to common shareholders
$
9,209

$
9,213

$
8,615

$
8,661

$
8,695

 
$
35,542

$
32,483

Undistributed earnings allocated to common shareholders
13,200

12,966

13,939

12,772

1,928

 
53,003

36,865

Net earnings allocated to common shareholders
$
22,409

$
22,179

$
22,554

$
21,433

$
10,623

 
$
88,545

$
69,348

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average common shares outstanding
16,207

16,271

16,368

16,411

15,603

 
16,314

15,421

Shares for diluted earnings per share
16,230

16,289

16,386

16,429

15,618

 
16,333

15,439

 
 
 
 
 
 
 
 
 
Basic earnings per common share
$
1.38

$
1.36

$
1.38

$
1.31

$
0.68

 
$
5.43

$
4.50

Diluted earnings per common share
$
1.38

$
1.36

$
1.38

$
1.30

$
0.68

 
$
5.42

$
4.49







CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000s)
 
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
 
 
December 31,
September 30,
June 30,
March 31,
December 31,
 
2019
2019
2019
2019
2018
Assets
 
 
 
 
 
Cash and due from banks
$
88,658

$
71,332

$
53,373

$
50,522

$
55,016

Interest-bearing deposits in depository institutions
51,486

44,862

115,346

93,328

67,975

Cash and cash equivalents
140,144

116,194

168,719

143,850

122,991

 
 
 
 
 
 
Investment securities available-for-sale, at fair value
810,106

798,930

796,237

755,081

723,254

Investment securities held-to-maturity, at amortized cost
49,036

51,211

53,362

55,326

60,827

Other securities
28,490

28,070

28,014

26,182

28,810

Total investment securities
887,632

878,211

877,613

836,589

812,891

 
 
 
 
 
 
Gross loans
3,616,099

3,582,571

3,519,367

3,559,322

3,587,608

Allowance for loan losses
(11,589
)
(13,186
)
(13,795
)
(14,646
)
(15,966
)
Net loans
3,604,510

3,569,385

3,505,572

3,544,676

3,571,642

 
 
 
 
 
 
Bank owned life insurance
115,261

114,616

113,855

114,256

113,544

Premises and equipment, net
76,965

76,929

78,263

78,747

78,383

Accrued interest receivable
11,569

12,929

12,719

13,657

12,424

Net deferred tax assets
7,261

6,432

8,835

12,734

17,338

Intangible assets
120,052

120,773

121,322

121,790

122,848

Other assets
55,765

62,248

53,569

51,309

46,951

Total Assets
$
5,019,159

$
4,957,717

$
4,940,467

$
4,917,608

$
4,899,012

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Deposits:
 
 
 
 
 
   Noninterest-bearing
$
805,087

$
795,548

$
798,056

$
793,633

$
789,119

   Interest-bearing:
 
 
 
 
 
   Demand deposits
896,465

898,704

891,742

879,279

899,568

   Savings deposits
1,009,771

980,539

974,847

988,182

934,218

   Time deposits
1,364,571

1,354,787

1,366,991

1,381,913

1,352,654

Total deposits
4,075,894

4,029,578

4,031,636

4,043,007

3,975,559

Short-term borrowings
 
 
 
 
 
Federal Funds purchased




40,000

Customer repurchase agreements
211,255

202,622

207,033

194,683

221,911

Long-term debt
4,056

4,055

4,054

4,053

4,053

Other liabilities
69,572

71,859

60,836

56,624

56,725

Total Liabilities
4,360,777

4,308,114

4,303,559

4,298,367

4,298,248

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





Stockholders' Equity
 
 
 
 
 
Preferred stock





Common stock
47,619

47,619

47,619

47,619

47,619

Capital surplus
170,309

169,794

169,374

170,215

169,555

Retained earnings
539,253

525,933

512,911

498,847

485,967

Cost of common stock in treasury
(105,038
)
(105,138
)
(98,084
)
(91,589
)
(87,895
)
Accumulated other comprehensive income (loss):
 
 
 
 
 
Unrealized gain (loss) on securities available-for-sale
12,110

17,266

10,959

20

(8,611
)
Underfunded pension liability
(5,871
)
(5,871
)
(5,871
)
(5,871
)
(5,871
)
Total Accumulated Other Comprehensive Income (Loss)
6,239

11,395

5,088

(5,851
)
(14,482
)
Total Stockholders' Equity
658,382

649,603

636,908

619,241

600,764

Total Liabilities and Stockholders' Equity
$
5,019,159

$
4,957,717

$
4,940,467

$
4,917,608

$
4,899,012

 
 
 
 
 
 
Regulatory Capital
 
 
 
 
 
Total CET 1 capital
$
532,829

$
518,175

$
511,344

$
504,148

$
492,526

Total tier 1 capital
532,829

522,175

515,344

508,148

496,526

Total risk-based capital
544,479

535,441

529,230

523,053

512,801

Total risk-weighted assets
3,319,998

3,318,386

3,214,153

3,241,989

3,267,357








CITY HOLDING COMPANY AND SUBSIDIARIES
Loan Portfolio
(Unaudited) ($ in 000s)
 
December 31,
September 30,
June 30,
March 31,
December 31,
 
2019
2019
2019
2019
2018
 
 
 
 
 
 
Residential real estate (1)
$
1,640,396

$
1,643,416

$
1,644,494

$
1,625,647

$
1,635,338

Home equity - junior liens
148,928

150,808

150,676

152,251

153,496

Commercial and industrial
308,015

296,927

288,803

289,327

286,314

Commercial real estate (2)
1,459,737

1,431,983

1,378,116

1,436,190

1,454,942

Consumer
54,263

54,799

53,356

52,483

51,190

DDA overdrafts
4,760

4,638

3,922

3,424

6,328

Gross Loans
$
3,616,099

$
3,582,571

$
3,519,367

$
3,559,322

$
3,587,608

 
 
 
 
 
 
Construction loans included in:
 
 
 
 
 
(1) - Residential real estate loans
$
29,033

$
24,955

$
23,673

$
22,635

$
21,834

(2) - Commercial real estate loans
64,049

55,267

43,432

56,282

37,869







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

 
Three Months Ended
 
Twelve Months Ended
 
December 31,
September 30,
June 30,
March 31,
December 31,
 
December 31,
December 31,
 
2019
2019
2019
2019
2018
 
2019
2018
Allowance for Loan Losses
 
 
 
 
 
 
 
 
Balance at beginning of period
$
13,186

$
13,795

$
14,646

$
15,966

$
16,311

 
$
15,966

$
18,836

 
 
 
 
 
 
 
 
 
Charge-offs:
 
 
 
 
 
 
 
 
Commercial and industrial
(193
)
(17
)
(51
)

(9
)
 
(261
)
(733
)
Commercial real estate
(964
)
(216
)
(133
)
(45
)
(20
)
 
(1,358
)
(369
)
Residential real estate
(226
)
(194
)
(230
)
(137
)
(218
)
 
(787
)
(682
)
Home equity
(134
)
(43
)
(71
)
(46
)

 
(294
)
(219
)
Consumer
(338
)
(279
)
(184
)
(376
)
(209
)
 
(1,177
)
(769
)
DDA overdrafts
(792
)
(772
)
(588
)
(625
)
(725
)
 
(2,777
)
(2,701
)
Total charge-offs
(2,647
)
(1,521
)
(1,257
)
(1,229
)
(1,181
)
 
(6,654
)
(5,473
)
 
 
 
 
 
 
 
 
 
Recoveries:
 
 
 
 
 
 
 
 
Commercial and industrial
581

43

5

135

528

 
764

2,153

Commercial real estate
10

7

575

32

194

 
624

732

Residential real estate
87

157

50

75

92

 
369

367

Home equity





 


Consumer
54

68

46

97

36

 
265

166

DDA overdrafts
393

363

330

419

386

 
1,505

1,495

Total recoveries
1,125

638

1,006

758

1,236

 
3,527

4,913

 
 
 
 
 
 
 
 
 
Net (charge-offs)/recoveries
(1,522
)
(883
)
(251
)
(471
)
55

 
(3,127
)
(560
)
(Recovery of) provision for loan losses
(75
)
274

(600
)
(849
)
(400
)
 
(1,250
)
(2,310
)
Balance at end of period
$
11,589

$
13,186

$
13,795

$
14,646

$
15,966

 
$
11,589

$
15,966

 
 
 
 
 
 
 
 
 
Loans outstanding
$
3,616,099

$
3,582,571

$
3,519,367

$
3,559,322

$
3,587,608

 
 
 
Allowance as a percent of loans outstanding
0.32
%
0.37
%
0.39
%
0.41
%
0.45
 %
 
 
 
Allowance as a percent of non-performing loans
98.6
%
84.3
%
115.3
%
119.9
%
107.8
 %
 
 
 
 
 
 
 
 
 
 
 
 
Average loans outstanding
$
3,607,864

$
3,544,548

$
3,539,077

$
3,576,984

$
3,252,939

 
$
3,567,143

$
3,168,827

Net charge-offs (recoveries) (annualized) as a percent of average loans outstanding
0.17
%
0.10
%
0.03
%
0.05
%
(0.01
)%
 
0.09
%
0.02
%









CITY HOLDING COMPANY AND SUBSIDIARIES
Asset Quality Information, Continued
(Unaudited) ($ in 000s)
 
December 31,
September 30,
June 30,
March 31,
December 31,
 
2019
2019
2019
2019
2018
Nonaccrual Loans
 
 
 
 
 
Residential real estate
$
3,393

$
2,570

$
2,354

$
3,263

$
4,275

Home equity
531

469

161

41

138

Commercial and industrial
1,182

2,059

2,149

1,526

1,676

Commercial real estate
6,384

10,099

7,204

7,282

8,461

Consumer



1

1

   Total nonaccrual loans
11,490

15,197

11,868

12,113

14,551

Accruing loans past due 90 days or more
267

452

94

106

257

   Total non-performing loans
11,757

15,649

11,962

12,219

14,808

Other real estate owned
4,670

2,326

2,581

3,186

4,608

   Total non-performing assets
$
16,427

$
17,975

$
14,543

$
15,405

$
19,416

 
 
 
 
 
 
Non-performing assets as a percent of loans and other real estate owned
0.45
%
0.50
%
0.41
%
0.43
%
0.54
%
 
 
 
 
 
 
Past Due Loans
 
 
 
 
 
Residential real estate
$
7,485

$
6,859

$
7,302

$
7,972

$
9,991

Home equity
956

796

322

720

1,275

Commercial and industrial
458

526

166

101

497

Commercial real estate
1,580

1,276

1,026

1,414

585

Consumer
187

124

172

264

295

DDA overdrafts
730

626

487

535

488

   Total past due loans
$
11,396

$
10,207

$
9,475

$
11,006

$
13,131

 
 
 
 
 
 
Total past due loans as a percent of loans outstanding
0.32
%
0.28
%
0.27
%
0.31
%
0.37
%
 
 
 
 
 
 
Troubled Debt Restructurings ("TDRs")
 
 
 
 
 
   Residential real estate
$
21,029

$
21,320

$
22,373

$
23,481

$
23,521

   Home equity
3,628

3,034

3,062

3,018

3,030

   Commercial and industrial

83

83

89

98

   Commercial real estate
4,973

8,100

8,044

8,164

8,205

   Consumer





     Total TDRs
$
29,630

$
32,537

$
33,562

$
34,752

$
34,854









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

 
Three Months Ended
 
December 31, 2019
September 30, 2019
December 31, 2018
 
Average
 
Yield/
Average
 
Yield/
Average
 
Yield/
 
Balance
Interest
Rate
Balance
Interest
Rate
Balance
Interest
Rate
Assets:
 
 
 
 
 
 
 
 
 
Loan portfolio (1):
 
 
 
 
 
 
 
 
 
Residential real estate (2)
$
1,792,186

$
20,135

4.46
%
$
1,794,068

$
20,564

4.55
%
$
1,683,388

$
18,681

4.40
%
Commercial, financial, and agriculture (2)
1,755,775

20,371

4.60
%
1,692,000

21,293

4.99
%
1,526,658

18,335

4.76
%
Installment loans to individuals (2), (3)
59,903

902

5.97
%
58,480

928

6.30
%
42,893

745

6.89
%
Previously securitized loans (4)
 ***
207

 ***
 ***
159

 ***
 ***
212

 ***
Total loans
3,607,864

41,615

4.58
%
3,544,548

42,944

4.81
%
3,252,939

37,973

4.63
%
Securities:
 
 
 
 
 
 
 
 
 
Taxable
790,317

5,925

2.97
%
790,207

6,044

3.03
%
602,966

5,023

3.31
%
Tax-exempt (5)
94,248

900

3.79
%
96,011

914

3.78
%
92,833

922

3.94
%
Total securities
884,565

6,825

3.06
%
886,218

6,958

3.11
%
695,799

5,945

3.39
%
Deposits in depository institutions
92,579

298

1.28
%
72,736

271

1.48
%
125,985

623

1.96
%
Total interest-earning assets
4,585,008

48,738

4.22
%
4,503,502

50,173

4.42
%
4,074,723

44,541

4.34
%
Cash and due from banks
66,351

 
 
67,106

 
 
69,628

 
 
Premises and equipment, net
76,998

 
 
78,091

 
 
74,430

 
 
Goodwill and intangible assets
120,508

 
 
121,124

 
 
93,090

 
 
Other assets
191,997

 
 
188,206

 
 
181,249

 
 
Less: Allowance for loan losses
(12,881
)
 
 
(13,786
)
 
 
(16,780
)
 
 
       Total assets
$
5,027,981

 
 
$
4,944,243

 
 
$
4,476,340

 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
$
872,639

$
694

0.32
%
$
881,476

$
954

0.43
%
$
822,087

$
787

0.38
%
Savings deposits
1,003,063

944

0.37
%
978,198

1,159

0.47
%
846,162

802

0.38
%
Time deposits (2)
1,362,277

6,260

1.82
%
1,360,409

6,472

1.89
%
1,208,415

5,067

1.66
%
Short-term borrowings
221,685

762

1.36
%
187,301

814

1.72
%
263,022

1,060

1.60
%
Long-term debt
4,055

42

4.11
%
4,054

45

4.40
%
14,743

200

5.38
%
   Total interest-bearing liabilities
3,463,719

8,702

1.00
%
3,411,438

9,444

1.10
%
3,154,429

7,916

1.00
%
Noninterest-bearing demand deposits
838,192

 
 
825,029

 
 
734,066

 
 
Other liabilities
66,232

 
 
58,857

 
 
48,553

 
 
Stockholders' equity
659,838

 
 
648,919

 
 
539,292

 
 
Total liabilities and
 
 
 
 
 
 
 
 
 
stockholders' equity
$
5,027,981

 
 
$
4,944,243

 
 
$
4,476,340

 
 
Net interest income
 
$
40,036

 
 
$
40,729

 
 
$
36,625

 
Net yield on earning assets
 
 
3.46
%
 
 
3.59
%
 
 
3.57
%
 
 
 
 
 
 
 
 
 
 
(1) For purposes of this table, non-accruing loans have been included in average balances and the following amounts (in thousands) of loan fees have been included in interest income:
 
 
 
 
 
 
 
 
 
 
Loan fees
 
$
152

 
 
$
96

 
 
$
278

 





 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(2) Included in the above table are the following amounts (in thousands) for the accretion of the fair value adjustments related to the Company's acquisitions:
Residential real estate
 
$
159

 
 
$
50

 
 
$
57

 
Commercial, financial, and agriculture
 
398

 
 
1,110

 
 
449

 
Installment loans to individuals
 
46

 
 
13

 
 
2

 
Time deposits
 
316

 
 
75

 
 

 
 
 
$
919

 
 
$
1,248

 
 
$
508

 
 
 
 
 
 
 
 
 
 
 
(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%.






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

 
Three Months Ended
 
December 31, 2019
December 31, 2018
 
Average
 
Yield/
Average
 
Yield/
 
Balance
Interest
Rate
Balance
Interest
Rate
Assets:
 
 
 
 
 
 
Loan portfolio (1):
 
 
 
 
 
 
Residential real estate (2)
$
1,791,636

$
81,603

4.55
%
$
1,629,950

$
69,765

4.28
%
Commercial, financial, and agriculture (2)
1,717,381

84,167

4.90
%
1,501,667

68,981

4.59
%
Installment loans to individuals (2), (3)
58,126

3,559

6.12
%
37,210

2,349

6.31
%
Previously securitized loans (4)
 ***
684

 ***
 ***
960

 ***
Total loans
3,567,143

170,013

4.77
%
3,168,827

142,055

4.48
%
Securities:
 
 
 
 
 
 
Taxable
761,358

23,389

3.07
%
559,125

17,337

3.10
%
Tax-exempt (5)
98,217

3,756

3.82
%
91,572

3,598

3.93
%
Total securities
859,575

27,145

3.16
%
650,697

20,935

3.22
%
Deposits in depository institutions
84,826

1,332

1.57
%
111,294

1,666

1.50
%
Total interest-earning assets
4,511,544

198,490

4.40
%
3,930,818

164,656

4.19
%
Cash and due from banks
65,664

 
 
59,029

 
 
Premises and equipment, net
78,103

 
 
73,196

 
 
Goodwill and intangible assets
121,460

 
 
82,117

 
 
Other assets
191,424

 
 
176,110

 
 
Less: Allowance for loan losses
(14,466
)
 
 
(17,906
)
 
 
       Total assets
$
4,953,729