��City Holding Company Announces Third Quarter Results
City Holding Company Announces Third Quarter Results
Business Wire
Tuesday, October 22, 2019, 12:30:00 PM BST

CHARLESTON, W. Va--(BUSINESS WIRE)-- City Holding Company (“Company” or “City”) (NASDAQ:CHCO), a $5.0 billion bank holding company headquartered in Charleston, West Virginia, today announced quarterly of $22.4 million and diluted 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 , 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. , diluted 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 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 , 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 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 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 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 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 to differ materially from those projected in the forward-looking statements. Factors that could cause actual 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 and will adjust the amounts if necessary.

CITY HOLDING COMPANY AND SUBSIDIARIES

Financial Highlights
(Unaudited)
 

Three Months Ended

 

Nine Months Ended

September 30,
2019

June 30,
2019

March 31,
2019

December 31,
2018

September 30,
2018

 

September 30,
2019

September 30,
2018

 
Net Interest Income (fully taxable equivalent)

$

40,729

$

41,113

$

40,274

$

36,625

$

35,745

$

122,118

$

102,339

available to common shareholders

 

22,371

 

22,751

 

21,619

 

10,713

 

20,692

 

66,741

 

59,283

 
Per Share Data
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 (in thousands):
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 (in thousands)

 

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 (in thousands)

 

62

 

53

 

54

 

66

 

54

 

56

 

57

Treasury share activity:
Treasury shares repurchased (in thousands)

 

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%

 

17.5%

 

18.5%

Yield on interest 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

 

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/ 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 (period-end)
Branches

 

95

 

95

 

97

 

100

 

87

FTE

 

916

 

935

 

927

 

939

 

846

 
Assets per FTE (in thousands)

$

5,412

$

5,284

$

5,305

$

5,498

$

5,226

Deposits per FTE (in thousands)

 

4,399

 

4,312

 

4,361

 

4,462

 

4,070

 
(a) The price/ ratio is computed based on annualized quarterly .
(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 EndedNine Months Ended
September 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
September 30,
2019
September 30,
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 equity 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

 

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

 

Available to Common Shareholders

$

22,371

 

$

22,751

 

$

21,619

 

$

10,713

 

$

20,692

 

$

66,741

 

$

59,283

 

 
Distributed allocated to common shareholders

$

9,213

 

$

8,615

 

$

8,661

 

$

8,695

 

$

8,109

 

$

26,346

 

$

22,184

 

Undistributed allocated to common shareholders

 

12,966

 

 

13,939

 

 

12,772

 

 

1,928

 

 

12,382

 

 

39,828

 

 

36,522

 

Net 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 per share

 

16,289

 

 

16,386

 

 

16,429

 

 

15,618

 

 

15,358

 

 

16,368

 

 

15,380

 

 
Basic per common share

$

1.36

 

$

1.38

 

$

1.31

 

$

0.68

 

$

1.34

 

$

4.05

 

$

3.82

 

Diluted 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,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
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

 

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,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
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 EndedNine Months Ended
September 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
September 30,
2019
September 30,
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,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
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, 2019June 30, 2019September 30, 2018
Average Yield/Average Yield/Average Yield/
BalanceInterestRateBalanceInterestRateBalanceInterestRate
 
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- 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 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)

 

Nine 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- 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)

 

1,370,934

 

18,511

1.81%

 

1,120,459

 

12,083

1.44%

Short-term borrowings

 

208,004

 

2,729

1.75%

 

265,877

 

2,355

1.18%

Long-term debt

 

4,053

 

140

4.62%

 

16,495

 

680

5.51%

Total interest-bearing liabilities

 

3,432,409

 

27,637

1.08%

 

2,997,532

 

17,776

0.79%

Noninterest-bearing demand deposits

 

811,411

 

 

 

694,453

 

 

Other liabilities

 

54,356

 

 

47,498

 

Stockholders' equity

 

630,529

 

 

 

505,587

 

 

 

 

 

Total liabilities and stockholders' equity

$

4,928,705

 

 

$

4,245,070

 

 

Net interest income

 

$

122,118

 

 

$

102,339

 

Net yield on assets

 

 

3.64%

 

 

3.52%

 

(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

 

$

711

 

 

$

1,549

 

 

(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

 

$

165

 

 

$

350

 

Commercial, financial, and agriculture

 

1,968

 

545

Installment loans to individuals

 

 

1

 

 

 

17

 

Time deposits

 

527

 

-

 

 

$

2,661

 

 

$

912

 

 
(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
Non-GAAP Reconciliations
(Unaudited) ($ in 000s, except per share data)
 
Three Months EndedNine Months Ended
September 30,
2019
June 30,
2019
March 31,
2019
December 31,
2018
September 30,
2018
September 30,
2019
September 30,
2018
Net Interest Income/Margin
Net interest income ("GAAP")

$

40,537

$

40,911

$

40,066

$

36,431

$

35,558

$

121,516

$

101,778

Taxable equivalent adjustment

 

192

 

202

 

208

 

194

 

187

 

602

 

561

Net interest income, fully taxable equivalent

$

40,729

$

41,113

$

40,274

$

36,625

$

35,745

$

122,118

$

102,339

 
Average interest assets

$

4,503,502

$

4,513,503

$

4,466,495

$

4,089,984

$

4,005,067

$

4,486,786

$

3,892,510

 
Net Interest Margin

 

3.59%

 

3.65%

 

3.66%

 

3.55%

 

3.54%

 

3.64%

 

3.52%

Accretion related to fair value adjustments

 

-0.11%

 

-0.08%

 

-0.05%

 

-0.05%

 

-0.03%

 

-0.08%

 

-0.03%

Net Interest Margin (excluding accretion)

 

3.48%

 

3.57%

 

3.61%

 

3.50%

 

3.51%

 

3.56%

 

3.48%

 
Tangible Equity Ratio (period end)
Equity to assets ("GAAP")

 

13.10%

 

12.89%

 

12.59%

 

12.26%

 

11.58%

Effect of goodwill and other intangibles, net

 

-2.17%

 

-2.19%

 

-2.22%

 

-2.26%

 

-1.59%

Tangible common equity to tangible assets

 

10.93%

 

10.70%

 

10.37%

 

10.00%

 

9.99%

 
Return on tangible equity ("GAAP")

 

17.0%

 

17.9%

 

17.7%

 

9.6%

 

18.9%

 

17.5%

 

18.5%

Impact of merger related expenses

 

0.0%

 

0.3%

 

0.1%

 

9.2%

 

0.3%

 

0.2%

 

0.0%

Return on tangible equity, excluding merger related expenses

 

17.0%

 

18.2%

 

17.8%

 

18.8%

 

19.2%

 

17.7%

 

18.5%

 
Return on assets ("GAAP")

 

1.81%

 

1.84%

 

1.76%

 

0.96%

 

1.90%

 

1.81%

 

1.86%

Impact of merger related expenses

 

0.00%

 

0.04%

 

0.02%

 

0.92%

 

0.02%

 

0.02%

 

0.00%

Return on assets, excluding merger related expenses

 

1.81%

 

1.88%

 

1.78%

 

1.88%

 

1.92%

 

1.82%

 

1.86%

 
Effective Income Tax Rate
Effective tax rate ("GAAP")

 

21.7%

 

20.4%

 

21.2%

 

19.8%

 

21.3%

 

21.1%

 

20.6%

Impact of FIN 48 adjustments

 

0.00%

 

0.00%

 

0.00%

 

2.97%

 

0.00%

 

0.00%

 

0.00%

Effective tax rate, excluding FIN 48 adjustments

 

21.7%

 

20.4%

 

21.2%

 

22.8%

 

21.3%

 

21.1%

 

20.6%

 

 

Charles R. Hageboeck, Chief Executive Officer and President
(304) 769-1102

Source: City Holding Company

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