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Section 1: 8-K (8-K, CHCO 3Q2019 EARNINGS)

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false0000726854 0000726854 2019-10-22 2019-10-22


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)
October 22, 2019

400547995_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 October 22, 2019, City Holding Company (“the Company”) issued a news release, attached as Exhibit 99.1, announcing the Company’s earnings results for the third quarter ended September 30, 2019. 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 October 22, 2019

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: October 22, 2019


(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1, PRESS RELEASE CHCO 3Q2019 EARNINGS)

Exhibit











NEWS RELEASE

For Immediate Release
October 22, 2019

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

City Holding Company Announces Third Quarter Results

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 quarterly net income of $22.4 million and diluted earnings of $1.36 per share for the quarter ended September 30, 2019. For the third quarter of 2019, the Company achieved a return on assets of 1.81% and a return on tangible equity of 17.0%.

Charles R. (“Skip”) Hageboeck, the President and Chief Executive Officer of City Holding Company, commented: “The third quarter of 2019 saw City once again deliver impressive earnings, along with strong loan growth. Loans grew over $63 million, or 7.2% annualized, from June 30, 2019 to September 30, 2019. Our commercial loan portfolio rebounded this quarter and grew $62 million with growth being generated throughout our footprint, including our core markets. Net income, diluted earnings per share and reported net interest income were all strong again in the third quarter of 2019 despite two 25 basis point interest rate decreases implemented by the Federal Open Market Committee in the third quarter of 2019. Excluding the impact of acquisitions, non-interest income during the third quarter remained strong with year over year upticks in bankcard revenues and service fees while expenses remained well managed. City’s tangible capital of 10.9% increased 23 basis points from the second quarter of 2019, even as we increased our dividend to shareholders 7.5% during the quarter to $2.28 annually and repurchased 99,000 shares of our common stock during the third quarter of 2019.”


Net Interest Income

The Company’s net interest income decreased modestly from $40.9 million during the second quarter of 2019 to $40.5 million during the third quarter of 2019, and the Company’s tax equivalent net interest income decreased $0.4 million, or 0.9%, from $41.1 million for the second quarter of 2019 to $40.7 million for the third quarter of 2019. Lower loan yields (13 basis points) decreased net interest income by $0.7 million but were partially offset by an increase in accretion from fair value adjustments ($0.3 million). As a result, the Company’s reported net interest margin declined to 3.59% for the third quarter of 2019 compared to 3.65% for the second quarter of 2019. Excluding the favorable impact of the





accretion from fair value adjustments, the net interest margin would have been 3.48% for the quarter ended September 30, 2019 and 3.57% for the quarter ended June 30, 2019.

Credit Quality

The Company’s ratio of nonperforming assets to total loans and other real estate owned increased from 0.41% at June 30, 2019 to 0.50% at September 30, 2019. Total nonperforming assets increased from $14.5 million at June 30, 2019 to $18.0 million at September 30, 2019 primarily as a result of a loan secured by a residence located at the Greenbrier Sporting Club being placed on nonaccrual status. 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 Company’s initial expectations. Total past due loans increased modestly from $9.5 million, or 0.27% of total loans outstanding, at June 30, 2019 to $10.2 million, or 0.28% of total loans outstanding, at September 30, 2019.

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 $0.3 million in the third quarter of 2019, compared to no provision for loan losses for the comparable period in 2018 and a recovery of loan loss provision of $0.6 million for the second quarter of 2019. The Company’s historical loss rate that is used to compute the allowance not specifically allocated to individual credits improved slightly during the quarter ended September 30, 2019, and reduced the Company’s ALLL, but was essentially offset by an increase in loan balances during the quarter. During the third quarter of 2019, the Company recorded a $0.3 million provision for loan loss expense related to a purchased credit impaired loan. 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 $16.7 million for the third quarter of 2019 as compared to $15.8 million for the third quarter of 2018. During the third quarter of 2019, the Company reported $0.2 million of unrealized fair value losses on the Company’s equity securities compared to $0.4 million of unrealized fair value gains on the Company’s equity securities in the third quarter of 2018. Exclusive of these unrealized fair value gains and losses, non-interest income increased from $15.4 million for the third quarter of 2018 to $17.0 million for the third quarter of 2019. This increase was largely attributable to an increase of $0.8 million, or 16.3%, in bankcard revenues and an increase of $0.6 million, or 7.7%, in service charges, with $0.4 million and $0.5 million, respectively, attributable to the late 2018 acquisitions of Poage Bankshares, Inc. (“Poage”) and Farmers Deposit Bancorp, Inc. (“Farmers Deposit”). In addition, trust and investment management fee income increased $0.2 million.
  
Non-interest Expenses

Non-interest expenses increased $3.4 million (13.4% increase), from $25.0 million in the third quarter of 2018 to $28.4 million in the third quarter of 2019. This increase was predominantly due to an increase in salaries and employee benefits of $1.6 million due to the acquisitions of Poage and Farmers Deposit ($1.2 million) and annual salary adjustments ($0.6 million), that were partially offset by lower health insurance expenses ($0.3 million). Primarily due to the acquisitions of Poage and Farmers Deposit, other expenses increased $1.0 million, bankcard expenses increased $0.4 million, occupancy related expenses increased





$0.4 million and equipment and software related expenses increased $0.3 million from the third quarter of 2018 to the third quarter of 2019. Partially offsetting these increases was a decrease of $0.3 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.

Balance Sheet Trends

During the quarter ended September 30, 2019, loans increased $63.2 million (1.8%) from the quarter ended June 30, 2019. Commercial real estate loans increased $53.9 million (3.9%) and commercial and industrial loans increased $8.1 million (2.8%). Loan balances of $3.58 billion at September 30, 2019 are down $5.0 million (0.1%) from December 31, 2018. For the nine months ended September 30, 2019, commercial real estate loans have declined $23.0 million (1.6%) and home equity loans have decreased $2.7 million (1.7%). These decreases have been partially offset by increases in commercial and industrial loans of $10.6 million (3.7%) and residential real estate loans of $8.1 million (0.5%).

Primarily due to the sale of the Company’s Virginia Beach branch on June 28, 2019, total average depository balances decreased $13.7 million, or 0.3%, from the quarter ended June 30, 2019 to the quarter ended September 30, 2019. This branch had total deposits of $25.7 million at the date of the sale, with approximately $15.0 million held in time deposits. During the third quarter of 2019, average time deposit balances decreased $23.6 million and average savings deposit balances decreased $1.9 million. These decreases were partially offset by increases in average interest-bearing demand deposit balances of $7.4 million and in average noninterest-bearing deposit balances of $4.3 million.

Income Tax Expense

The Company’s effective income tax rate for the third quarter of 2019 was 21.7% compared to 20.5% for the year ended December 31, 2018, and 21.3% for the quarter ended September 30, 2018.

Capitalization and Liquidity

The Company’s loan to deposit ratio was 88.9% and the loan to asset ratio was 72.3% at September 30, 2019. The Company maintained investment securities totaling 17.7% of assets as of the same date. Checking and saving accounts fund 54.0% of assets while time deposits fund 27.3% of assets at September 30, 2019. Time deposits are comprised mostly of accounts that have balances under $250,000, reflecting the core retail orientation of the Company.

The Company is strongly capitalized. The Company’s tangible equity ratio increased from 10.0% at December 31, 2018 to 10.9% at September 30, 2019. At September 30, 2019, City National Bank’s Leverage Ratio was 9.7%, its Common Equity Tier I ratio was 14.0%, its Tier I Capital ratio was 14.0%, and its Total Risk-Based Capital ratio was 14.4%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.

On September 25, 2019, the Board of Directors of the Company approved a quarterly cash dividend of $0.57 per share payable October 31, 2019, to shareholders of record as of October 15, 2019. This dividend increase represents a 7.5% increase from the $0.53 per share paid on July 31, 2019. During the quarter ended September 30, 2019, the Company repurchased 99,000 common shares at a weighted average price of $74.17 as part of a one million share repurchase plan authorized by the Board of Directors in February 2019. As of September 30, 2019, the Company could repurchase approximately 739,000 additional shares under the plan.






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 September 30, 2019 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary September 30, 2019 results and will adjust the amounts if necessary.








CITY HOLDING COMPANY AND SUBSIDIARIES
Financial Highlights
(Unaudited)
 
Three Months Ended
 
Nine Months Ended
 
September 30,
June 30,
March 31,
December 31,
September 30,
 
September 30,
September 30,
 
2019
2019
2019
2018
2018
 
2019
2018
 
 
 
 
 
 
 
 
 
Earnings
 
 
 
 
 
 
 
 
Net Interest Income (FTE)
$
40,729

$
41,113

$
40,274

$
36,625

$
35,745

 
$
122,118

$
102,339

Net Income available to common shareholders
22,371

22,751

21,619

10,713

20,692

 
66,741

59,283

 
 
 
 
 
 
 
 
 
Per Share Data
 
 
 
 
 
 
 
 
Earnings per share available to common shareholders:
 
 
 
 
 
 
 
 
   Basic
$
1.36

$
1.38

$
1.31

$
0.68

$
1.34

 
$
4.05

$
3.82

   Diluted
1.36

1.38

1.30

0.68

1.33

 
4.04

3.82

Weighted average number of shares:
 
 
 
 
 
 
 
 
   Basic
16,271

16,368

16,411

15,603

15,340

 
16,350

15,360

   Diluted
16,289

16,386

16,429

15,618

15,358

 
16,368

15,380

Period-end number of shares
16,302

16,397

16,484

16,555

15,449

 
16,302

15,449

Cash dividends declared
$
0.57

$
0.53

$
0.53

$
0.53

$
0.53

 
$
1.63

$
1.45

Book value per share (period-end)
39.85

38.84

37.57

36.29

33.14

 
39.85

33.14

Tangible book value per share (period-end)
32.44

31.44

30.18

28.87

28.08

 
32.44

28.08

Market data:
 
 
 
 
 
 
 
 
   High closing price
$
78.30

$
82.56

$
80.21

$
77.94

$
82.79

 
$
82.56

$
82.79

   Low closing price
72.35

73.05

67.58

66.36

75.54

 
67.58

65.03

   Period-end closing price
76.25

76.26

76.19

67.59

76.80

 
76.25

76.80

   Average daily volume
62

53

54

66

54

 
56

57

Treasury share activity:
 
 
 
 
 
 
 
 
      Treasury shares repurchased
99

107

55

69

7

 
261

221

      Average treasury share repurchase price
$
74.17

$
74.81

$
74.69

$
72.89

$
77.18

 
$
74.54

$
68.81

 
 
 
 
 
 
 
 
 
Key Ratios (percent)
 
 
 
 
 
 
 
 
Return on average assets
1.81
%
1.84
%
1.76
%
0.96
%
1.90
%
 
1.81
%
1.86
%
Return on average tangible equity
17.0
%
17.9
%
17.7
%
9.6
%
18.9
%
 
17.50
%
18.50
%
Yield on interest earning assets
4.42
%
4.48
%
4.46
%
4.32
%
4.25
%
 
4.46
%
4.13
%
Cost of interest bearing liabilities
1.10
%
1.09
%
1.04
%
1.00
%
0.92
%
 
1.08
%
0.79
%
Net Interest Margin
3.59
%
3.65
%
3.66
%
3.55
%
3.54
%
 
3.64
%
3.52
%
Non-interest income as a percent of total revenue
29.2
%
30.3
%
28.3
%
28.8
%
30.7
%
 
29.3
%
31.1
%
Efficiency Ratio
48.2
%
50.5
%
51.2
%
47.6
%
48.3
%
 
50.2
%
50.5
%
Price/Earnings Ratio (a)
13.98

13.84

14.58

24.82

14.37

 
14.13

15.07

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





 
 
 
 
 
 
 
 
 
Capital (period-end)
 
 
 
 
 
 
 
 
Average Shareholders' Equity to Average Assets
13.12
%
12.76
%
12.49
%
12.05
%
11.81
%
 
 
 
Tangible equity to tangible assets
10.93
%
10.70
%
10.37
%
10.01
%
9.99
%
 
 
 
Consolidated City Holding Company risk based capital ratios (b):
 
 
 
 
 
 
 
 
   CET I
15.62
%
15.91
%
15.55
%
15.07
%
15.94
%
 
 
 
   Tier I
15.74
%
16.03
%
15.67
%
15.20
%
16.49
%
 
 
 
   Total
16.14
%
16.47
%
16.13
%
15.69
%
17.08
%
 
 
 
   Leverage
10.87
%
10.70
%
10.62
%
11.36
%
11.01
%
 
 
 
City National Bank risk based capital ratios (b):
 
 
 
 
 
 
 
 
   CET I
14.00
%
14.19
%
13.89
%
13.05
%
14.00
%
 
 
 
   Tier I
14.00
%
14.19
%
13.89
%
13.05
%
14.00
%
 
 
 
   Total
14.40
%
14.63
%
14.36
%
13.55
%
14.59
%
 
 
 
   Leverage
9.72
%
9.51
%
9.45
%
9.81
%
9.39
%
 
 
 
 
 
 
 
 
 
 
 
 
Other
 
 
 
 
 
 
 
 
Branches
95

95

97

100

87

 
 
 
FTE
916

935

927

939

846

 
 
 
 
 
 
 
 
 
 
 
 
   Assets per FTE
$
5,412

$
5,284

$
5,305

$
5,498

$
5,226

 
 
 
   Deposits per FTE
4,399

4,312

4,361

4,462

4,070

 
 
 
 
 
 
 
 
 
 
 
 
(a) The price/earnings ratio is computed based on annualized quarterly earnings.
(b) September 30, 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
 
Nine Months Ended
 
September 30,
June 30,
March 31,
December 31,
September 30,
 
September 30,
September 30,
 
2019
2019
2019
2018
2018
 
2019
2018
Interest Income
 
 
 
 
 
 
 
 
   Interest and fees on loans
$
42,944

$
43,174

$
42,279

$
37,973

$
36,872

 
$
128,397

$
104,082

   Interest on investment securities:
 
 
 
 
 
 
 
 
     Taxable
6,044

5,732

5,689

5,023

4,216

 
17,465

12,314

     Tax-exempt
722

755

779

729

701

 
2,257

2,114

   Interest on deposits in depository institutions
271

577

186

623

940

 
1,034

1,043

Total Interest Income
49,981

50,238

48,933

44,348

42,729

 
149,153

119,553

 
 
 
 
 
 
 
 
 
Interest Expense
 
 
 
 
 
 
 
 
   Interest on deposits
8,585

8,417

7,767

6,656

5,497

 
24,768

14,741

   Interest on short-term borrowings
814

863

1,052

1,061

1,435

 
2,729

2,354

   Interest on long-term debt
45

47

48

200

239

 
140

680

Total Interest Expense
9,444

9,327

8,867

7,917

7,171

 
27,637

17,775

Net Interest Income
40,537

40,911

40,066

36,431

35,558

 
121,516

101,778

Provision for (recovery of) loan losses
274

(600
)
(849
)
(400
)
(27
)
 
(1,175
)
(1,910
)
Net Interest Income After Provision for (Recovery of) Loan Losses
40,263

41,511

40,915

36,831

35,585

 
122,691

103,688

 
 
 
 
 
 
 
 
 
Non-Interest Income
 
 
 
 
 
 
 
 
Net (losses) gains on sale of investment securities
(40
)
21

88



 
69


Unrealized (losses) gains recognized on securities still held
(214
)
113

75

(1,246
)
384

 
(27
)
1,155

   Service charges
8,183

7,778

7,321

7,921

7,598

 
23,281

21,783

   Bankcard revenue
5,440

5,522

4,969

4,826

4,677

 
15,931

13,543

   Trust and investment management fee income
1,802

1,699

1,642

1,737

1,579

 
5,144

4,792

   Bank owned life insurance
762

1,132

1,016

734

813

 
2,910

2,356

   Other income
765

1,560

814

734

702

 
3,139

2,227

Total Non-Interest Income
16,698

17,825

15,925

14,706

15,753

 
50,447

45,856

 
 
 
 
 
 
 
 
 
Non-Interest Expense
 
 
 
 
 
 
 
 
   Salaries and employee benefits
15,210

15,767

15,243

14,017

13,576

 
46,220

40,459

   Occupancy related expense
2,725

2,598

2,732

2,250

2,323

 
8,055

7,073

   Equipment and software related expense
2,248

2,223

2,191

2,038

1,965

 
6,662

5,691

   FDIC insurance expense

347

291

308

315

 
639

943

   Advertising
861

920

869

530

808

 
2,650

2,444

   Bankcard expenses
1,554

1,534

1,182

1,229

1,134

 
4,270

3,274






   Postage, delivery, and statement mailings
659

545

624

527

537

 
1,828

1,630

   Office supplies
382

399

386

313

364

 
1,167

1,006

   Legal and professional fees
539

605

521

469

453

 
1,665

1,378

   Telecommunications
569

597

726

401

408

 
1,892

1,349

   Repossessed asset (gains) losses, net of expenses
(59
)
253

216

207

156

 
410

638

   Merger related expenses

547

250

13,015

242

 
797

242

   Other expenses
3,709

4,437

4,180

2,874

2,759

 
12,326

8,765

Total Non-Interest Expense
28,397

30,772

29,411

38,178

25,040

 
88,581

74,892

Income Before Income Taxes
28,564

28,564

27,429

13,359

26,298

 
84,557

74,652

   Income tax expense
6,193

5,813

5,810

2,646

5,606

 
17,816

15,369

Net Income Available to Common Shareholders
$
22,371

$
22,751

$
21,619

$
10,713

$
20,692

 
$
66,741

$
59,283

 
 
 
 
 
 
 
 
 
Distributed earnings allocated to common shareholders
$
9,213

$
8,615

$
8,661

$
8,695

$
8,109

 
$
26,346

$
22,184

Undistributed earnings allocated to common shareholders
12,966

13,939

12,772

1,928

12,382

 
39,828

36,522

Net earnings allocated to common shareholders
$
22,179

$
22,554

$
21,433

$
10,623

$
20,491

 
$
66,174

$
58,706

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average common shares outstanding
16,271

16,368

16,411

15,603

15,340

 
16,350

15,360

Shares for diluted earnings per share
16,289

16,386

16,429

15,618

15,358

 
16,368

15,380

 
 
 
 
 
 
 
 
 
Basic earnings per common share
$
1.36

$
1.38

$
1.31

$
0.68

$
1.34

 
$
4.05

$
3.82

Diluted earnings per common share
$
1.36

$
1.38

$
1.30

$
0.68

$
1.33

 
$
4.04

$
3.82







CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000s)
 
(Unaudited)
(Unaudited)
(Unaudited)
 
(Unaudited)
 
September 30,
June 30,
March 31,
December 31,
September 30,
 
2019
2019
2019
2018
2018
Assets
 
 
 
 
 
Cash and due from banks
$
71,332

$
53,373

$
50,522

$
55,016

$
49,806

Interest-bearing deposits in depository institutions
44,862

115,346

93,328

67,975

256,104

Cash and cash equivalents
116,194

168,719

143,850

122,991

305,910

 
 
 
 
 
 
Investment securities available-for-sale, at fair value
798,930

796,237

755,081

723,254

563,003

Investment securities held-to-maturity, at amortized cost
51,211

53,362

55,326

60,827

57,812

Other securities
28,070

28,014

26,182

28,810

28,875

Total investment securities
878,211

877,613

836,589

812,891

649,690

 
 
 
 
 
 
Gross loans
3,582,571

3,519,367

3,559,322

3,587,608

3,146,697

Allowance for loan losses
(13,186
)
(13,795
)
(14,646
)
(15,966
)
(16,311
)
Net loans
3,569,385

3,505,572

3,544,676

3,571,642

3,130,386

 
 
 
 
 
 
Bank owned life insurance
114,616

113,855

114,256

113,544

105,372

Premises and equipment, net
76,929

78,263

78,747

78,383

72,484

Accrued interest receivable
12,929

12,719

13,657

12,424

11,449

Net deferred tax assets
6,432

8,835

12,734

17,338

15,653

Intangible assets
120,773

121,322

121,790

122,848

78,215

Other assets
62,248

53,569

51,309

46,951

51,643

Total Assets
$
4,957,717

$
4,940,467

$
4,917,608

$
4,899,012

$
4,420,802

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Deposits:
 
 
 
 
 
   Noninterest-bearing
$
795,548

$
798,056

$
793,633

$
789,119

$
672,042

   Interest-bearing:
 
 
 
 
 
   Demand deposits
898,704

891,742

879,279

899,568

802,490

   Savings deposits
980,539

974,847

988,182

934,218

821,390

   Time deposits
1,354,787

1,366,991

1,381,913

1,352,654

1,147,709

Total deposits
4,029,578

4,031,636

4,043,007

3,975,559

3,443,631

Short-term borrowings
 
 
 
 
 
Federal Funds purchased



40,000

170,000

Customer repurchase agreements
202,622

207,033

194,683

221,911

220,124

Long-term debt
4,055

4,054

4,053

4,053

16,495

Other liabilities
71,859

60,836

56,624

56,725

58,526

Total Liabilities
4,308,114

4,303,559

4,298,367

4,298,248

3,908,776

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





Stockholders' Equity
 
 
 
 
 
Preferred stock





Common stock
47,619

47,619

47,619

47,619

47,619

Capital surplus
169,794

169,374

170,215

169,555

140,450

Retained earnings
525,933

512,911

498,847

485,967

484,017

Cost of common stock in treasury
(105,138
)
(98,084
)
(91,589
)
(87,895
)
(136,783
)
Accumulated other comprehensive income (loss):
 
 
 
 
 
Unrealized gain (loss) on securities available-for-sale
17,266

10,959

20

(8,611
)
(18,244
)
Underfunded pension liability
(5,871
)
(5,871
)
(5,871
)
(5,871
)
(5,033
)
Total Accumulated Other Comprehensive Income (Loss)
11,395

5,088

(5,851
)
(14,482
)
(23,277
)
Total Stockholders' Equity
649,603

636,908

619,241

600,764

512,026

Total Liabilities and Stockholders' Equity
$
4,957,717

$
4,940,467

$
4,917,608

$
4,899,012

$
4,420,802

 
 
 
 
 
 
Regulatory Capital
 
 
 
 
 
Total CET 1 capital
$
518,175

$
511,344

$
504,148

$
492,526

$
457,580

Total tier 1 capital
522,175

515,344

508,148

496,526

473,580

Total risk-based capital
535,441

529,230

523,053

512,801

490,307

Total risk-weighted assets
3,318,386

3,214,153

3,241,989

3,267,357

2,871,241








CITY HOLDING COMPANY AND SUBSIDIARIES
Loan Portfolio
(Unaudited) ($ in 000s)
 
September 30,
June 30,
March 31,
December 31,
September 30,
 
2019
2019
2019
2018
2018
 
 
 
 
 
 
Residential real estate (1)
$
1,643,416

$
1,644,494

$
1,625,647

$
1,635,338

$
1,485,823

Home equity - junior liens
150,808

150,676

152,251

153,496

143,540

Commercial and industrial
296,927

288,803

289,327

286,314

213,815

Commercial real estate (2)
1,431,983

1,378,116

1,436,190

1,454,942

1,268,052

Consumer
54,799

53,356

52,483

51,190

31,869

DDA overdrafts
4,638

3,922

3,424

6,328

3,598

Gross Loans
$
3,582,571

$
3,519,367

$
3,559,322

$
3,587,608

$
3,146,697

 
 
 
 
 
 
Construction loans included in:
 
 
 
 
 
(1) - Residential real estate loans
$
24,955

$
23,673

$
22,635

$
21,834

$
17,628

(2) - Commercial real estate loans
55,267

43,432

56,282

37,869

24,110







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

 
Three Months Ended
 
Nine Months Ended
 
September 30,
June 30,
March 31,
December 31,
September 30,
 
September 30,
September 30,
 
2019
2019
2019
2018
2018
 
2019
2018
Allowance for Loan Losses
 
 
 
 
 
 
 
 
Balance at beginning of period
$
13,795

$
14,646

$
15,966

$
16,311

$
16,876

 
$
15,966

$
18,836

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

(9
)

 
(68
)
(724
)
Commercial real estate
(216
)
(133
)
(45
)
(20
)
(74
)
 
(394
)
(349
)
Residential real estate
(291
)
(303
)
(328
)
(218
)
(244
)
 
(922
)
(464
)
Home equity
(43
)
(71
)
(46
)

(108
)
 
(160
)
(219
)
Consumer
(182
)
(111
)
(185
)
(209
)
(206
)
 
(478
)
(560
)
DDA overdrafts
(772
)
(588
)
(625
)
(725
)
(704
)
 
(1,985
)
(1,976
)
Total charge-offs
(1,521
)
(1,257
)
(1,229
)
(1,181
)
(1,336
)
 
(4,007
)
(4,292
)
 
 
 
 
 
 
 
 
 
Recoveries:
 
 
 
 
 
 
 
 
Commercial and industrial
43

5

135

528

147

 
183

1,625

Commercial real estate
7

575

32

194

166

 
614

538

Residential real estate
157

50

75

92

116

 
282

275

Home equity





 


Consumer
68

46

97

36

25

 
211

130

DDA overdrafts
363

330

419

386

344

 
1,112

1,109

Total recoveries
638

1,006

758

1,236

798

 
2,402

3,677

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

(538
)
 
(1,605
)
(615
)
Provision for (recovery of) loan losses
274

(600
)
(849
)
(400
)
(27
)
 
(1,175
)
(1,910
)
Balance at end of period
$
13,186

$
13,795

$
14,646

$
15,966

$
16,311

 
$
13,186

$
16,311

 
 
 
 
 
 
 
 
 
Loans outstanding
$
3,582,571

$
3,519,367

$
3,559,322

$
3,587,608

$
3,146,697

 
 
 
Allowance as a percent of loans outstanding
0.37
%
0.39
%
0.41
%
0.45
 %
0.52
%
 
 
 
Allowance as a percent of non-performing loans
84.3
%
115.3
%
119.9
%
107.8
 %
142.1
%
 
 
 
 
 
 
 
 
 
 
 
 
Average loans outstanding
$
3,544,548

$
3,539,077

$
3,576,984

$
3,252,939

$
3,149,320

 
$
3,553,417

$
3,140,480

Net charge-offs (recoveries) (annualized) as a percent of average loans outstanding
0.10
%
0.03
%
0.05
%
(0.01
)%
0.07
%
 
0.06
%
0.03
%









CITY HOLDING COMPANY AND SUBSIDIARIES
Asset Quality Information, Continued
(Unaudited) ($ in 000s)
 
September 30,
June 30,
March 31,
December 31,
September 30,
 
2019
2019
2019
2018
2018
Nonaccrual Loans
 
 
 
 
 
Residential real estate
$
2,570

$
2,354

$
3,263

$
4,275

$
3,029

Home equity
469

161

41

138


Commercial and industrial
2,059

2,149

1,526

1,676

818

Commercial real estate
10,099

7,204

7,282

8,461

7,599

Consumer


1

1

1

   Total nonaccrual loans
15,197

11,868

12,113

14,551

11,447

Accruing loans past due 90 days or more
452

94

106

257

35

   Total non-performing loans
15,649

11,962

12,219

14,808

11,482

Other real estate owned
2,326

2,581

3,186

4,608

4,259

   Total non-performing assets
$
17,975

$
14,543

$
15,405

$
19,416

$
15,741

 
 
 
 
 
 
Non-performing assets as a percent of loans and other real estate owned
0.50
%
0.41
%
0.43
%
0.54
%
0.50
%
 
 
 
 
 
 
Past Due Loans
 
 
 
 
 
Residential real estate
$
6,859

$
7,302

$
7,972

$
9,991

$
4,657

Home equity
796

322

720

1,275

468

Commercial and industrial
526

166

101

497

187

Commercial real estate
1,276

1,026

1,414

585

934

Consumer
124

172

264

295

39

DDA overdrafts
626

487

535

488

582

   Total past due loans
$
10,207

$
9,475

$
11,006

$
13,131

$
6,867

 
 
 
 
 
 
Total past due loans as a percent of loans outstanding
0.28
%
0.27
%
0.31
%
0.37
%
0.22
%
 
 
 
 
 
 
Troubled Debt Restructurings ("TDRs")
 
 
 
 
 
   Residential real estate
$
21,320

$
22,373

$
23,481

$
23,521

$
20,589

   Home equity
3,034

3,062

3,018

3,030

2,941

   Commercial and industrial
83

83

89

98

108

   Commercial real estate
8,100

8,044

8,164

8,205

8,231

   Consumer





     Total TDRs
$
32,537

$
33,562

$
34,752

$
34,854

$
31,869









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

 
Three Months Ended
 
September 30, 2019
June 30, 2019
September 30, 2018
 
Average
 
Yield/
Average
 
Yield/
Average
 
Yield/
 
Balance
Interest
Rate
Balance
Interest
Rate
Balance
Interest
Rate
Assets:
 
 
 
 
 
 
 
 
 
Loan portfolio (1):
 
 
 
 
 
 
 
 
 
Residential real estate (2)
$
1,794,068

$
20,564

4.55
%
$
1,783,718

$
20,454

4.60
%
$
1,618,829

$
17,653

4.33
%
Commercial, financial, and agriculture (2)
1,692,000

21,293

4.99
%
1,698,186

21,658

5.12
%
1,494,666

18,460

4.90
%
Installment loans to individuals (2), (3)
58,480

928

6.30
%
57,173

889

6.24
%
35,825

584

6.47
%
Previously securitized loans (4)
 ***
159

 ***
 ***
174

 ***
 ***
175

 ***
Total loans
3,544,548

42,944

4.81
%
3,539,077

43,175

4.89
%
3,149,320

36,872

4.64
%
Securities:
 
 
 
 
 
 
 
 
 
Taxable
790,207

6,044

3.03
%
749,346

5,732

3.07
%
554,157

4,216

3.02
%
Tax-exempt (5)
96,011

914

3.78
%
100,348

956

3.82
%
90,596

888

3.89
%
Total securities
886,218

6,958

3.11
%
849,694

6,688

3.16
%
644,753

5,104

3.14
%
Deposits in depository institutions
72,736

271

1.48
%
124,732

577

1.86
%
210,994

940

1.77
%
Total interest-earning assets
4,503,502

50,173

4.42
%
4,513,503

50,440

4.48
%
4,005,067

42,916

4.25
%
Cash and due from banks
67,106

 
 
52,922

 
 
49,933

 
 
Premises and equipment, net
78,091

 
 
79,116

 
 
72,733

 
 
Goodwill and intangible assets
121,124

 
 
121,628

 
 
78,294

 
 
Other assets
188,206

 
 
189,618

 
 
178,540

 
 
Less: Allowance for loan losses
(13,786
)
 
 
(15,057
)
 
 
(17,247
)
 
 
       Total assets
$
4,944,243

 
 
$
4,941,730

 
 
$
4,367,320

 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
$
881,476

$
954

0.43
%
$
874,039

$
909

0.42
%
$
778,639

$
526

0.27
%
Savings deposits
978,198

1,159

0.47
%
980,089

1,236

0.51
%
816,597

537

0.26
%
Time deposits (2)
1,360,409

6,472

1.89
%
1,384,017

6,272

1.82
%
1,141,461

4,434

1.54
%
Short-term borrowings
187,301

814

1.72
%
199,648

863

1.73
%
350,832

1,435

1.62
%
Long-term debt
4,054

45

4.40
%
4,053

47

4.65
%
16,495

239

5.75
%
   Total interest-bearing liabilities
3,411,438

9,444

1.10
%
3,441,846

9,327

1.09
%
3,104,024

7,171

0.92
%
Noninterest-bearing demand deposits
825,029

 
 
820,689

 
 
697,485

 
 
Other liabilities
58,857

 
 
48,803

 
 
50,093

 
 
Stockholders' equity
648,919

 
 
630,392

 
 
515,718

 
 
Total liabilities and
 
 
 
 
 
 
 
 
 
stockholders' equity
$
4,944,243

 
 
$
4,941,730

 
 
$
4,367,320

 
 
Net interest income
 
$
40,729

 
 
$
41,113

 
 
$
35,745

 
Net yield on earning assets
 
 
3.59
%
 
 
3.65
%
 
 
3.54
%
 
 
 
 
 
 
 
 
 
 
(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
 
$
96

 
 
$
481

 
 
$
1,325

 





 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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
 
$
50

 
 
$
83

 
 
$
110

 
Commercial, financial, and agriculture
 
1,110

 
 
668

 
 
157

 
Installment loans to individuals
 
13

 
 
(6
)
 
 
3

 
Time deposits
 
75

 
 
196

 
 

 
 
 
$
1,248

 
 
$
941

 
 
$
270

 
 
 
 
 
 
 
 
 
 
 
(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
 
September 30, 2019
September 30, 2018
 
Average
 
Yield/
Average
 
Yield/
 
Balance
Interest
Rate
Balance
Interest
Rate
Assets:
 
 
 
 
 
 
Loan portfolio (1):
 
 
 
 
 
 
Residential real estate (2)
$
1,792,013

$
61,468

4.59
%
$
1,607,396

$
51,083

4.25
%
Commercial, financial, and agriculture (2)
1,704,141

63,796

5.01
%
1,498,612

50,646

4.52
%
Installment loans to individuals (2), (3)
57,263

2,656

6.20
%
34,472

1,604

6.22
%
Previously securitized loans (4)
 ***
477

 ***
 ***
748

 ***
Total loans
3,553,417

128,397

4.83
%
3,140,480

104,081

4.43
%
Securities:
 
 
 
 
 
 
Taxable
751,600

17,464

3.11
%
544,351

12,314

3.02
%
Tax-exempt (5)
99,555

2,856

3.84
%
91,147

2,677

3.93
%
Total securities
851,155

20,320

3.19
%
635,498

14,991

3.15
%
Deposits in depository institutions
82,214

1,038

1.69
%
116,532

1,043

1.20
%
Total interest-earning assets
4,486,786

149,755

4.46
%
3,892,510

120,115

4.13
%
Cash and due from banks
65,433

 
 
45,268

 
 
Premises and equipment, net
78,475

 
 
72,780

 
 
Goodwill and intangible assets
121,780

 
 
78,420

 
 
Other assets
191,231

 
 
174,378

 
 
Less: Allowance for loan losses
(15,000
)
 
 
(18,286
)
 
 
       Total assets
$
4,928,705

 
 
$
4,245,070

 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
Interest-bearing demand deposits
$
880,763

$
2,796

0.42
%
$
782,883

$
1,327

0.23
%
Savings deposits
968,655

3,461

0.48
%
811,818

1,331

0.22
%
Time deposits (2)