City Holding Company Announces Third Quarter Earnings
- Press Release
- Source: City Holding Company
- On 12:15 pm EDT, Friday October 23, 2009
CHARLESTON, W.Va., Oct. 23 /PRNewswire-FirstCall/ -- City Holding Company, "the Company" (Nasdaq: CHCO - News), a $2.6 billion bank holding company headquartered in Charleston, today announced net income per diluted share for the third quarter of $0.66 compared to a net loss of $(0.16) per diluted share in the third quarter of 2008. Net income for the third quarter of 2009 was $10.5 million compared to a loss of $2.6 million in the third quarter of 2008. For the third quarter of 2009, the Company achieved a return on assets of 1.60%, a return on tangible equity of 17.49%, a net interest margin of 4.09%, and an efficiency ratio of 48.8%. Net income for the first nine months of 2009 was $31.6 million compared to $23.9 million in the first nine months of 2008. For the first nine months of 2009, the Company achieved a return on assets of 1.62%, a return on tangible equity of 18.1%, a net interest margin of 4.22%, and an efficiency ratio of 49.8%.
Related Quotes
| Symbol | Price | Change |
|---|---|---|
| CHCO | 32.59 | -0.39 |
City's CEO Charles Hageboeck stated that, "Despite the continuing impact of the recession that the U.S. economy is experiencing, City's earnings have held up relatively well, and we believe that our shareholders will be pleased with our third quarter results during this challenging economic environment. Like many retail-deposit focused banking franchises, City's net interest income has been negatively impacted by historically low interest rates. However our asset quality improved during the third quarter of 2009 with net charge-offs, non-performing assets, and past due loans all declining as compared to the second quarter of 2009. City's franchise has benefited from lower unemployment rates within the markets it serves as compared to state and national averages. The unemployment rate for the markets served by City approximated 8.1% in July 2009 compared to 9.0% for the state of West Virginia and 9.4% for the United States. City's most significant asset quality problems continue to be non-owner occupied residential construction at the Greenbrier Resort in White Sulphur Springs, West Virginia and real estate in the Eastern Panhandle of West Virginia, a distant part of the Washington DC metropolitan area.
"We believe that City remains well positioned for the future with strong capital, strong liquidity, and a solid core-deposit franchise. In addition, we are well positioned to benefit from future interest rate increases with our asset sensitive balance sheet. City continues to be one of the most profitable, most liquid, and best capitalized publicly traded banks in the U.S. and we look forward to growing with and for our shareholders and customers. "
Net Interest Income
The Company's tax equivalent net interest income decreased $2.6 million, or 9.8%, from $26.5 million during the third quarter of 2008 to $23.9 million during the third quarter of 2009, as interest income from loans and investments decreased more quickly than interest expense on deposits and other interest bearing liabilities. The Company's reported net interest margin decreased from 4.78% for the quarter ended September 30, 2008 to 4.09% for the quarter ended September 30, 2009. Compared to the second quarter of 2009, the Company's tax equivalent net interest income increased $0.2 million. The Company's reported net interest margin decreased from 4.12% for the quarter ended June 30, 2009 to 4.09% for the quarter ended September 30, 2009.
During the third and fourth quarters of 2008, the Company sold $450 million of interest rate floors. The gain from sales of these interest rate floors of $16.7 million will be recognized over the remaining lives of the various hedged loans -- predominantly prime-based commercial and home equity loans. During the third quarter of 2009, the Company recognized $2.2 million of interest income compared to $2.7 million and $2.4 million of interest income recognized in the second quarter of 2009 and the third quarter of 2008, respectively, from the interest rate floors.
Credit Quality
Past due loans declined slightly from the second quarter of 2009 to $7.2 million or 0.40% of total loans outstanding. Past due commercial, financial, and agriculture loans declined $1.2 million from the second quarter of 2009 to $0.5 million or 0.07% of loans outstanding. Past due residential real estate loans declined $1.9 million from the second quarter of 2009 to $3.2 million or 0.54% of loans outstanding. Past due home equity loans declined $0.3 million to $1.7 million or 0.43% of loans outstanding.
The Company's ratio of non-performing assets to total loans and other real estate owned decreased from 1.76% at June 30, 2009 to 1.59% at September 30, 2009, and compares to 1.64% at December 31, 2008. The Company's ratio of non-performing assets to total loans and other real estate owned compares very favorably to peers. The Company's non-performing asset ratio of 1.59% at September 30, 2009 is only 34% of the 4.73% non-performing asset ratio reported by the Company's peer group (bank holding companies with total assets between $1 and $5 billion) as of the most recently reported quarter ended June 30, 2009.
The Company had net charge-offs of $3.0 million for the third quarter of 2009. Net charge-offs on commercial and residential loans were $2.1 and $0.5 million, respectively, for the third quarter. Charge-offs for commercial loans were primarily related to three specific credits that had been appropriately considered in establishing the allowance for loans losses in prior periods. In addition, net charge-offs for depository accounts were $0.4 million for the third quarter of 2009. While charge-offs on depository accounts are appropriately taken against the Allowance for Loan Losses ("ALLL"), the revenue associated with depository accounts is reflected in service charges.
At September 30, 2009, the ALLL was $19.7 million or 1.09% of total loans outstanding and 119% of non-performing loans compared to $18.9 million or 1.06% of loans outstanding and 136% of non-performing loans at September 30, 2008, and $22.3 million or 1.23% of loans outstanding and 86% of non-performing loans at December 31, 2008.
As a result of the Company's quarterly analysis of the adequacy of the ALLL, the Company recorded a provision for loan losses of $1.68 million in the third quarter of 2009 compared to $2.35 million for the comparable period in 2008. The provision for loan losses recorded during the third quarter of 2009 reflects commercial loan growth during the third quarter of 2009, the difficulties of certain commercial borrowers of the Company during the quarter, the downgrade of their related credits, and management's assessment of the impact of these difficulties on the ultimate collectability of the loans. 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.
Investment Securities
During the third quarter of 2009, the Company recorded $2.3 million of other than temporary impairment losses related to credit, which lowered the Company's reported net income by $1.4 million or $0.09 per diluted share. The charges deemed to be other than temporary were related to pooled bank trust preferreds with a remaining book value of $7.4 million at September 30, 2009 and community bank and bank holding company equity positions with a remaining book value of $8.5 million at September 30, 2009. The impairment charges of $1.4 million related to the pooled bank trust preferred securities were based on the Company's quarterly reviews of its investment securities for indications of losses considered to be other than temporary. Based on management's assessment of the securities the Company owns, the seniority position of the securities within the pools, the level of defaults and deferred payments within the pools, and a review of the financial strength of the banks within the respective pools, management concluded that impairment charges of $1.4 million on the pooled bank trust preferred securities were necessary for the quarter ended September 30, 2009. The impairment charges of $0.9 million related to community bank equity positions were due to poor financial performance and recent actions taken by the Federal Deposit Insurance Corporation and a state regulator against one of the community banks in whose parent holding company the Company has an equity position.
Non-interest Income
Exclusive of investment losses, non-interest income remained flat at $14.7 million for both the third quarter of 2009 and the third quarter of 2008. Insurance commission revenues increased $0.2 million on the strength of new business and other income increased $0.1 million from the third quarter of 2008. These increases were offset by a decrease of $0.3 million from service charges from depository accounts as compared to the third quarter of 2008. We believe that this decrease was primarily attributable to a general nationwide decline in consumer spending.
Non-interest Expenses
Non-interest expenses decreased $0.4 million from $19.2 million in the third quarter of 2008 to $18.8 million in the third quarter of 2009. Other expenses declined $0.4 million from the third quarter of 2008 primarily due to lower derivative amortization associated with the Company's sale of its interest rate floors in the third and fourth quarters of 2008. In addition, professional fees decreased $0.2 million from the third quarter of 2008 and repossessed asset losses (net of expenses) declined $0.2 million from the third quarter of 2008. Partially offsetting these decreases was an increase in occupancy and equipment expenses of $0.2 million from the third quarter of 2008. Although insurance and regulatory expense remained flat from the third quarter of 2008, this expense is expected to increase approximately $0.7 million in the fourth quarter of 2009 as the Company fully utilized its FDIC credits in the third quarter of 2009 and the assessment rates have risen during 2009.
Balance Sheet Trends
As compared to December 31, 2008, loans have decreased $15.0 million (0.8%) at September 30, 2009 due to decreases in residential real estate loans of $21.3 million (3.5%) and commercial loans of $6.1 million (0.8%). These decreases were partially offset by an increase in home equity loans of $12.3 million (3.2%).
Total average depository balances decreased $5.2 million, or 0.2%, from the quarter ended June 30, 2009 to the quarter ended September 30, 2009. Decreases in noninterest bearing demand deposits ($8.9 million) and time deposits ($4.0 million) were partially offset by increases in savings deposits ($5.4 million) and interest bearing demand deposits ($2.3 million).
Income Tax Expense
The effective rate is based upon the Company's expected tax rate for the year ending December 31, 2009, excluding impairment losses and the realization of previously unrecognized tax positions. Excluding the impact of other than temporary impairment losses and the realization of previously unrecognized tax positions during the third quarter, the Company's effective income tax rate for the third quarter of 2009 was 34.3% compared to 34.1% for the year ended December 31 2008, and 33.9% for the quarter ended September 30, 2008. During the quarter ended September 30, 2009, the Company realized $0.2 million of previously unrecognized tax positions compared to $1.1 million during the quarter ended September 30, 2008.
Capitalization and Liquidity
One of the Company's strengths is that it is highly profitable while maintaining strong liquidity and capital. With respect to liquidity, the Company's loan to deposit ratio was 84.5% and the loan to asset ratio was 69.2% at September 30, 2009. The Company maintained investment securities totaling 19.4% of assets as of this date. Further, the Company's deposit mix is weighted heavily toward checking and saving accounts that fund 42.8% of assets at September 30, 2009. Time deposits fund 39.1% of assets at September 30, 2009, but very few of these deposits are in accounts that have balances of more than $150,000, reflecting the core retail orientation of the Company.
The Company is also strongly capitalized. The Company's tangible equity ratio was 9.6% at September 30, 2009 compared with a tangible equity ratio of 8.8% at December 31, 2008. At September 30, 2009, City National Bank's Leverage Ratio is 8.24%, its Tier I Capital ratio is 11.09%, and its Total Risk-Based Capital ratio is 12.13%. These preliminary regulatory capital ratios are significantly above levels required to be considered "well capitalized," which is the highest possible regulatory designation.
On September 30, 2009, the Board approved a quarterly cash dividend to 34 cents per share payable October 31, 2009, to shareholders of record as of October 15, 2009. During the quarter ended September 30, 2009, the Company repurchased 56,323 common shares at a weighted average price of $32.00 as part of a one million share repurchase plan authorized by the Board of Directors in August 2007.
City Holding Company is the parent company of City National Bank of West Virginia. City National operates 68 branches across West Virginia, Eastern Kentucky and Southern 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. Such information involves risks and uncertainties that could result in the Company's actual results differing from those projected in the forward-looking statements. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include, but are not limited to, (1) the Company may incur additional loan loss provision due to negative credit quality trends in the future that may lead to a deterioration of asset quality; (2) the Company may incur increased charge-offs in the future; (3) the Company may experience increases in the default rates on previously securitized loans that would result in impairment losses or lower the yield on such loans; (4) the Company may not continue to benefit from strong recovery efforts on previously securitized loans resulting in improved yields on these assets; (5) the Company could have adverse legal actions of a material nature; (6) the Company may face competitive loss of customers; (7) the Company may be unable to manage its expense levels; (8) the Company may have difficulty retaining key employees; (9) changes in the interest rate environment may have results on the Company's operations materially different from those anticipated by the Company's market risk management functions; (10) changes in general economic conditions and increased competition could adversely affect the Company's operating results; (11) changes in other regulations and government policies affecting bank holding companies and their subsidiaries, including changes in monetary policies, could negatively impact the Company's operating results; (12) the Company may experience difficulties growing loan and deposit balances; (13) the current economic environment poses significant challenges for us and could adversely affect our financial condition and results of operations; (14) continued deterioration in the financial condition of the U.S. banking system may impact the valuations of investments the Company has made in the securities of other financial institutions resulting in either actual losses or other than temporary impairments on such investments; and (15) the United States government's plan to purchase large amounts of illiquid, mortgage-backed and other securities from financial institutions may not be effective and/or it may not be available to us. 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.
CITY HOLDING COMPANY AND SUBSIDIARIES
Financial Highlights
(Unaudited)
Three Months
Ended
September 30, Percent
2009 2008 Change
---- ---- ------
Earnings ($000s, except per share data):
Net Interest Income (FTE) $23,891 $26,484 (9.79)%
Net Income (Loss) 10,497 (2,557) (510.52)%
Earnings (Loss) per Basic Share 0.66 (0.16) (512.50)%
Earnings (Loss) per Diluted Share 0.66 (0.16) (512.50)%
Key Ratios (percent):
Return on Average Assets 1.60% (0.41)% (490.43)%
Return on Average Tangible Equity 17.49% (4.04)% (532.67)%
Net Interest Margin 4.09% 4.78% (14.37)%
Efficiency Ratio 48.77% 46.53% 4.80%
Average Shareholders' Equity to Average
Assets 11.33% 12.45% (9.01)%
Consolidated Risk Based Capital Ratios (a):
Tier I 13.02% 13.11% (0.69)%
Total 14.05% 14.13% (0.57)%
Tangible Equity to Tangible Assets 9.62% 9.44% 1.93%
Common Stock Data:
Cash Dividends Declared per Share $0.34 $0.34 0.00%
Book Value per Share 18.95 17.61 7.62%
Tangible Book Value per Share 15.36 14.05 9.32%
Market Value per Share:
High 34.34 47.28 (27.37)%
Low 28.65 35.74 (19.84)%
End of Period 31.17 42.25 (26.22)%
Nine Months
Ended September
30, Percent
2009 2008 Change
---- ---- ------
Earnings ($000s, except per share data):
Net Interest Income (FTE) $72,520 $76,295 (4.95)%
Net Income 31,567 23,860 32.30%
Earnings per Basic Share 1.99 1.48 34.46%
Earnings per Diluted Share 1.98 1.47 34.69%
Key Ratios (percent):
Return on Average Assets 1.62% 1.27% 27.00%
Return on Average Tangible Equity 18.05% 12.73% 41.82%
Net Interest Margin 4.22% 4.61% (8.46)%
Efficiency Ratio 49.83% 47.08% 5.84%
Average Shareholders' Equity to Average
Assets 11.15% 12.31% (9.43)%
Common Stock Data:
Cash Dividends Declared per Share $1.02 $1.02 0.00%
Market Value per Share:
High 34.34 47.28 (27.37)%
Low 20.88 32.51 (35.77)%
Price/Earnings Ratio (b) 11.75 21.41 (45.13)%
(a) September 30, 2009 risk-based capital ratios are estimated
(b) September 30, 2009 price/earnings ratio computed based on annualized
third quarter 2009 earnings
CITY HOLDING COMPANY AND SUBSIDIARIES
Financial Highlights
(Unaudited)
Book Value and Market Price Range per Share
Market Price
Book Value per Share Range per Share
March 31 June 30 September 30 December 31 Low High
-------- ------- ------------ ----------- --- ----
2005 $13.20 $15.56 $15.99 $16.14 $27.57 $39.21
2006 16.17 16.17 16.99 17.46 34.53 41.87
2007 17.62 17.40 17.68 18.14 31.16 41.54
2008 18.92 18.72 17.61 17.58 29.08 42.88
2009 17.69 18.24 18.95 28.65 34.34
Earnings per Basic Share
Quarter Ended
March 31 June 30 September 30 December 31 Year-to-Date
-------- ------- ------------ ----------- ------------
2005 $0.70 $0.72 $0.73 $0.72 $2.87
2006 0.71 0.78 0.78 0.74 3.00
2007 0.76 0.72 0.76 0.78 3.02
2008 0.81 0.83 (0.16) 0.26 1.74
2009 0.69 0.64 0.66 1.99
Earnings per Diluted
Quarter Ended
March 31 June 30 September 30 December 31 Year-to-Date
-------- ------- ------------ ----------- ------------
2005 $0.69 $0.71 $0.72 $0.72 $2.84
2006 0.71 0.77 0.77 0.74 2.99
2007 0.76 0.72 0.76 0.78 3.01
2008 0.80 0.83 (0.16) 0.26 1.74
2009 0.69 0.64 0.66 1.98
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)
Three Months
Ended September 30,
2009 2008
---- ----
Interest Income
Interest and fees on loans $26,392 $30,254
Interest on investment securities:
Taxable 5,820 5,850
Tax-exempt 437 371
Interest on deposits in depository institutions 2 47
--- ---
Total Interest Income 32,651 36,522
Interest Expense
Interest on deposits 8,673 9,446
Interest on short-term borrowings 131 478
Interest on long-term debt 191 317
--- ---
Total Interest Expense 8,995 10,241
----- ------
Net Interest Income 23,656 26,281
Provision for loan losses 1,675 2,350
----- -----
Net Interest Income After Provision for Loan
Losses 21,981 23,931
Non-Interest Income
Investment securities (losses) (2,320) (27,467)
Service charges 11,689 11,993
Insurance commissions 1,208 1,025
Trust and investment management fee income 590 640
Bank owned life insurance 794 767
Other income 379 284
--- ---
Total Non-Interest Income 12,340 (12,758)
Non-Interest Expense
Salaries and employee benefits 9,623 9,538
Occupancy and equipment 1,953 1,800
Depreciation 1,171 1,110
Professional fees 216 435
Postage, delivery, and statement mailings 611 636
Advertising 883 821
Telecommunications 476 496
Bankcard expenses 695 717
Insurance and regulatory 411 354
Office supplies 520 527
Repossessed asset losses, net of expenses 136 314
Other expenses 2,107 2,498
----- -----
Total Non-Interest Expense 18,802 19,246
------ ------
Income (Loss) Before Income Taxes 15,519 (8,073)
Income tax expense (benefit) 5,022 (5,516)
----- ------
Net Income (Loss) $10,497 $(2,557)
======= =======
Basic earnings (loss) per share $0.66 $(0.16)
Diluted earnings (loss) per share $0.66 $(0.16)
Average Common Shares Outstanding:
Basic 15,893 16,142
Diluted 15,952 16,195
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)
Nine Months
Ended September 30,
2009 2008
---- ----
Interest Income
Interest and fees on loans $81,396 $91,662
Interest on investment securities
Taxable 17,494 18,034
Tax-exempt 1,249 1,151
Interest on deposits in depository institutions 10 163
--- ---
Total Interest Income 100,149 111,010
Interest Expense
Interest on deposits 27,230 31,980
Interest on short-term borrowings 395 2,286
Interest on long-term debt 676 1,070
--- -----
Total Interest Expense 28,301 35,336
------ ------
Net Interest Income 71,848 75,674
Provision for loan losses 5,475 5,083
----- -----
Net Interest Income After Provision for Loan
Losses 66,373 70,591
Non-Interest Income
Investment securities losses (4,727) (27,465)
Service charges 33,385 34,536
Insurance commissions 4,466 3,231
Trust and investment management fee income 1,794 1,721
Bank owned life insurance 2,518 2,193
VISA IPO Gain - 3,289
Other income 1,624 1,250
----- -----
Total Non-Interest Income 39,060 18,755
Non-Interest Expense
Salaries and employee benefits 29,003 28,418
Occupancy and equipment 5,742 5,098
Depreciation 3,566 3,330
Professional fees 1,066 1,229
Postage, delivery, and statement mailings 2,027 1,908
Advertising 2,673 2,081
Telecommunications 1,410 1,354
Bankcard expenses 2,029 1,978
Insurance and regulatory 2,365 1,025
Office supplies 1,521 1,488
Repossessed asset losses, net of expenses 351 437
Loss on early extinguishment of debt - 1,208
Other expenses 6,219 8,352
----- -----
Total Non-Interest Expense 57,972 57,906
------ ------
Income Before Income Taxes 47,461 31,440
Income tax expense 15,894 7,580
------ -----
Net Income $31,567 $23,860
======= =======
Basic earnings per share $1.99 $1.48
Diluted earnings per share $1.98 $1.47
Average Common Shares Outstanding:
Basic 15,889 16,130
Diluted 15,944 16,189
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
(Unaudited) ($ in 000s)
Three Months Ended
September 30, 2009 September 30, 2008
------------------ ------------------
Balance at July 1 $291,182 $302,056
Net income (loss) 10,497 (2,557)
Other comprehensive income:
Change in unrealized gain (loss) on
securities available-for-sale 8,302 (13,682)
Change in unrealized (loss) gain on
interest rate floors (1,413) 2,923
Cash dividends declared ($0.34/share) (5,415) (5,492)
Issuance of stock award shares, net 80 70
Exercise of 750 stock options 22 -
Exercise of 48,179 stock options - 1,351
Excess tax benefits on stock
compensation - 243
Purchase of 56,323 common shares of
treasury (1,803) -
----- ---
Balance at September 30 $301,452 $284,912
======== ========
Nine Months Ended
September 30, 2009 September 30, 2008
------------------ ------------------
Balance at January 1 $280,429 $293,994
Net income 31,567 23,860
Other comprehensive income:
Change in unrealized gain (loss) on
securities available-for-sale 13,255 (18,848)
Change in unrealized (loss) gain on
interest rate floors (4,982) 3,738
Cash dividends declared ($1.02/share) (16,251) (16,457)
Issuance of stock award shares, net 454 410
Exercise of 1,050 stock options 25 -
Exercise of 66,254 stock options - 1,666
Excess tax benefits on stock
compensation - 266
Purchase of 105,686 common shares of
treasury (3,045) -
Purchase of 104,960 common shares of
treasury - (3,717)
--- ------
Balance at September 30 $301,452 $284,912
======== ========
CITY HOLDING COMPANY AND SUBSIDIARIES
Condensed Consolidated Quarterly Statements of Income
(Unaudited) ($ in 000s, except per share data)
Quarter Ended
September 30 June 30 March 31 December 31 September 30
2009 2009 2009 2008 2008
---- ---- ---- ---- ----
Interest income $32,651 $32,964 $34,534 $36,663 $36,522
Taxable equivalent
adjustment 236 219 220 200 200
--- --- --- --- ---
Interest income
(FTE) 32,887 33,183 34,754 36,863 36,722
Interest expense 8,995 9,526 9,780 10,582 10,241
----- ----- ----- ------ ------
Net interest income 23,892 23,657 24,974 26,281 26,481
Provision for loan
losses 1,675 2,150 1,650 5,340 2,350
----- ----- ----- ----- -----
Net interest income
after provision for
loan losses 22,217 21,507 23,324 20,941 24,131
Noninterest income 12,340 14,287 12,433 3,181 (12,758)
Noninterest expense 18,802 20,336 18,834 17,766 19,246
------ ------ ------ ------ ------
Income (Loss) before
income taxes 15,755 15,458 16,923 6,356 (7,873)
Income tax expense
(benefit) 5,022 5,093 5,779 1,907 (5,516)
Taxable equivalent
adjustment 236 219 220 200 200
------ ------ ------ ------ ------
Net income
(loss) $10,497 $10,146 $10,924 $4,249 $(2,557)
======= ======= ======= ====== =======
Basic earnings
(loss) per share $0.66 $0.64 $0.69 $0.26 $(0.16)
Diluted earnings
(loss) per share 0.66 0.64 0.69 0.26 (0.16)
Cash dividends
declared per share 0.34 0.34 0.34 0.34 0.34
Average Common Share (000s):
Outstanding 15,893 15,908 15,921 16,078 16,142
Diluted 15,952 15,949 15,933 16,100 16,195
Net Interest Margin 4.09% 4.12% 4.46% 4.73% 4.78%
CITY HOLDING COMPANY AND SUBSIDIARIES
Non-Interest Income and Non-Interest Expense
(Unaudited) ($ in 000s)
Quarter Ended
September 30 June 30 March 31 December 31 September 30
2009 2009 2009 2008 2008
---- ---- ---- ---- ----
Non-Interest Income:
Service charges $11,689 $11,261 $10,435 $11,459 $11,993
Insurance
commissions 1,208 1,325 1,933 981 1,025
Trust and
investment
management fee
income 590 497 707 518 640
Bank owned life
insurance 794 992 732 739 767
Other income 379 544 701 284 284
--- --- --- --- ---
Subtotal 14,660 14,619 14,508 13,981 14,709
Investment
securities
losses (2,320) (332) (2,075) (10,800) (27,467)
----- --- ----- ------ ------
Total Non-Interest
Income $12,340 $14,287 $12,433 $3,181 $(12,758)
======= ======= ======= ====== ========
Non-Interest Expense:
Salaries and
employee benefits $9,623 $9,797 $9,583 $8,845 $9,538
Occupancy and
equipment 1,953 1,880 1,909 1,773 1,800
Depreciation 1,171 1,184 1,211 1,193 1,110
Professional fees 216 397 453 451 435
Postage,
delivery, and
statement
mailings 611 698 718 641 636
Advertising 883 927 863 818 821
Telecommunications 476 514 420 562 496
Bankcard expenses 695 686 648 711 717
Insurance and
regulatory 411 1,578 376 363 354
Office supplies 520 470 531 533 527
Repossessed asset
losses, net of
expenses 136 86 129 87 314
Other expenses 2,107 2,119 1,993 1,789 2,498
----- ----- ----- ----- -----
Total Non-Interest
Expense $18,802 $20,336 $18,834 $17,766 $19,246
======= ======= ======= ======= =======
Employees (Full
Time Equivalent) 814 831 830 827 812
Branch Locations 68 69 69 69 69
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000s)
September 30 December 31
2009 2008
---- ----
(Unaudited)
Assets
Cash and due from banks $40,638 $55,511
Interest-bearing deposits in depository
institutions 4,372 4,118
----- -----
Cash and cash equivalents 45,010 59,629
Investment securities available-for-sale,
at fair value 473,785 424,214
Investment securities held-to-maturity,
at amortized cost 28,679 29,067
------ ------
Total investment securities 502,464 453,281
Gross loans 1,797,384 1,812,344
Allowance for loan losses (19,655) (22,254)
------- -------
Net loans 1,777,729 1,790,090
Bank owned life insurance 72,627 70,400
Premises and equipment 63,365 60,138
Accrued interest receivable 8,575 9,024
Net deferred tax assets 36,672 48,462
Intangible assets 57,127 57,479
Other assets 32,667 33,943
------ ------
Total Assets $2,596,236 $2,582,446
========== ==========
Liabilities
Deposits:
Noninterest-bearing $303,121 $298,530
Interest-bearing:
Demand deposits 432,179 420,554
Savings deposits 375,738 354,956
Time deposits 1,015,999 967,090
--------- -------
Total deposits 2,127,037 2,041,130
Short-term borrowings 130,000 194,463
Long-term debt 17,981 19,047
Other liabilities 19,766 47,377
------ ------
Total Liabilities 2,294,784 2,302,017
Stockholders' Equity
Preferred stock, par value $25 per share:
500,000 shares authorized; none issued - -
Common stock, par value $2.50 per share:
50,000,000 shares authorized; 18,499,282
shares issued at September 30, 2009 and
December 31, 2008 less 2,588,861 and
2,548,538 shares in treasury, respectively 46,249 46,249
Capital surplus 101,645 102,895
Retained earnings 245,929 230,613
Cost of common stock in treasury (90,045) (88,729)
Accumulated other comprehensive (loss):
Unrealized loss on securities available-
for-sale (2,373) (15,628)
Unrealized gain on derivative instruments 4,305 9,287
Underfunded pension liability (4,258) (4,258)
------ ------
Total Accumulated Other Comprehensive
(Loss) (2,326) (10,599)
------ -------
Total Stockholders' Equity 301,452 280,429
------- -------
Total Liabilities and Stockholders'
Equity $2,596,236 $2,582,446
========== ==========
CITY HOLDING COMPANY AND SUBSIDIARIES
Investment Portfolio
(Unaudited) ($ in 000s)
Other Than
Temporary
Impairment
Charges
through Unrealized
September 30, Gains
Original Cost 2009 (Losses) Carrying Value
------------- ----------- ---------- --------------
FNMA & FHLMC
Preferred Stock $22,408 $(21,089) $68 $1,387
Mortgage Backed
Securities 299,742 - 9,467 309,209
Municipal Bonds 48,117 - 492 48,609
Pooled Bank Trust
Preferreds 27,088 (19,731) (6,075) 1,282
Single Issuer Bank
Trust Preferreds,
Subdebt of Financial
Institutions, and
Bank Holding
Company Preferred
Stocks 110,767 (1,000) (5,299) 104,468
Money Markets
and Funds 18,593 - (1) 18,592
Federal Reserve
Bank and FHLB
stock 13,023 - - 13,023
Community Bank
Equity
Positions 9,362 (912) (2,556) 5,894
----- ---- ------ -----
Total
Investments
$549,100 $(42,732) $(3,904) $502,464
======== ======== ======= ========
CITY HOLDING COMPANY AND SUBSIDIARIES
Loan Portfolio
(Unaudited) ($ in 000s)
September 30 June 30 March 31 December 31 September 30
2009 2009 2009 2008 2008
---- ---- ---- ---- ----
Residential real
estate $590,653 $596,925 $599,692 $611,962 $620,951
Home equity 396,648 392,751 389,453 384,320 377,919
Commercial,
financial, and
agriculture 762,194 747,886 753,234 768,255 729,613
Installment loans
to individuals 45,309 45,550 45,175 43,585 44,728
Previously
securitized
loans 2,580 3,223 3,754 4,222 4,520
----- ----- ----- ----- -----
Gross Loans $1,797,384 $1,786,335 $1,791,308 $1,812,344 $1,777,731
========== ========== ========== ========== ==========
CITY HOLDING COMPANY AND SUBSIDIARIES
Previously Securitized Loans
(Unaudited) ($ in millions)
Annualized Effective
December 31 Interest Annualized
Year Ended: Balance (a) Income (a) Yield (a)
----------- ---------- ---------
2008 $4.2 $5.6 108%
2009 2.4 3.9 122%
2010 2.0 3.2 122%
2011 1.7 2.8 122%
2012 1.3 2.4 122%
(a) 2008 amounts are based on actual results. 2009 amounts are based on
actual results through September 30, 2009 and estimated amounts for
the remainder of the year. 2010, 2011, and 2012 amounts are based on
estimated amounts.
Note: The amounts reflected in the table above require management to
make significant assumptions based on estimated future default,
prepayment, and discount rates. Actual performance could be
significantly different from that assumed, which could result in
the actual results being materially different from the amounts
estimated above.
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)
Three Months Ended September 30,
2009 2008
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
------- -------- ---- ------- -------- ----
Assets:
Loan portfolio:
Residential
real estate $590,108 $8,170 5.49% $613,771 $9,393 6.09%
Home equity 394,069 5,972 6.01% 373,445 6,644 7.08%
Commercial,
financial, and
agriculture 765,689 10,334 5.35% 708,665 11,622 6.52%
Installment
loans to
individuals 50,935 975 7.59% 53,521 1,270 9.44%
Previously
securitized
loans 2,810 942 133.00% 4,781 1,325 110.25%
----- --- ------ ----- ----- ------
Total loans 1,803,611 26,393 5.81% 1,754,183 30,254 6.86%
Securities:
Taxable 463,703 5,820 4.98% 407,754 5,850 5.71%
Tax-exempt 43,682 672 6.10% 34,653 571 6.56%
------ --- ---- ------ --- ----
Total
securities 507,385 6,492 5.08% 442,407 6,421 5.77%
Deposits in
depository
institutions 5,753 2 0.14% 8,981 47 2.08%
Federal funds sold 489 - - - - -
----- ----- ---- ----- ------ ----
Total
interest-
earning
assets 2,317,238 32,887 5.63% 2,205,571 36,722 6.62%
Cash and due from
banks 50,496 54,572
Bank premises and
equipment 63,709 57,923
Other assets 212,925 195,217
Less:
Allowance for
loan losses (20,828) (18,158)
------- -------
Total
assets $2,623,540 $2,495,125
========== ==========
Liabilities:
Interest-bearing
demand deposits 431,676 418 0.38% 414,022 654 0.63%
Savings deposits 379,793 417 0.44% 362,550 862 0.95%
Time deposits 1,013,610 7,838 3.07% 887,884 7,929 3.55%
Short-term
borrowings 134,323 131 0.39% 142,290 477 1.33%
Long-term debt 17,988 192 4.23% 21,089 316 5.96%
------ --- ---- ------ --- ----
Total interest-
bearing
liabilities 1,977,390 8,996 1.80% 1,827,835 10,238 2.23%
Noninterest-
bearing demand
deposits 325,821 331,919
Other liabilities 23,065 24,677
Stockholders'
equity 297,264 310,694
------- -------
Total liabilities
and stockholders'
equity $2,623,540 $2,495,125
========== ==========
Net interest
income $23,891 $26,484
======= =======
Net yield on
earning
assets 4.09% 4.78%
==== ====
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)
Nine Months Ended September 30,
2009 2008
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
------- -------- ---- ------- -------- ----
Assets:
Loan portfolio:
Residential
real estate $597,282 $25,495 5.71% $604,798 $28,187 6.23%
Home equity 390,388 18,165 6.22% 359,101 19,520 7.26%
Commercial,
financial, and
agriculture 758,050 31,519 5.56% 705,819 35,563 6.73%
Loans to
depository
institutions - - - 1,551 35 3.01%
Installment
loans to
individuals 49,498 3,150 8.51% 52,277 4,014 10.26%
Previously
securitized
loans 3,364 3,067 121.90% 5,521 4,343 105.08%
----- ----- ------ ----- ----- ------
Total loans 1,798,582 81,396 6.05% 1,729,067 91,662 7.08%
Securities:
Taxable 453,713 17,494 5.16% 436,440 18,034 5.52%
Tax-exempt 39,829 1,921 6.45% 36,253 1,771 6.53%
------ ----- ---- ------ ----- ----
Total
securities 493,542 19,415 5.26% 472,693 19,805 5.60%
Deposits in
depository
institutions 5,271 10 0.25% 8,981 163 2.42%
Federal funds sold 165 - - - - -
----- ----- ----- ----- ----- -----
Total
interest-
earning
assets 2,297,560 100,821 5.87% 2,210,741 111,630 6.74%
Cash and due from
banks 51,553 58,293
Bank premises and
equipment 62,443 56,217
Other assets 213,285 191,625
Less:
Allowance for
loan losses (21,867) (18,240)
------- -------
Total
assets $2,602,974 $2,498,636
========== ==========
Liabilities:
Interest-bearing
demand deposits 425,972 1,327 0.42% 412,417 1,979 0.64%
Savings deposits 371,706 1,386 0.50% 361,465 2,796 1.03%
Time deposits 1,004,959 24,517 3.26% 910,187 27,204 3.99%
Short-term
borrowings 135,708 395 0.39% 136,644 2,286 2.23%
Long-term debt 18,669 676 4.84% 21,663 1,070 6.60%
------ --- ---- ------ ----- ----
Total interest-
bearing
liabilities 1,957,014 28,301 1.93% 1,842,376 35,335 2.56%
Noninterest-
bearing demand
deposits 328,302 322,344
Other liabilities 27,335 26,213
Stockholders'
equity 290,323 307,703
------- -------
Total liabilities
and stockholders'
equity $2,602,974 $2,498,636
========== ==========
Net interest
income $72,520 $76,295
======= =======
Net yield on
earning
assets 4.22% 4.61%
==== ====
CITY HOLDING COMPANY AND SUBSIDIARIES
Analysis of Risk-Based Capital
(Unaudited) ($ in 000s)
Sept. 30 June 30 March 31 Dec. 31 Sept. 30
2009 (a) 2009 2009 2008 2008
-------- ---- ---- ---- ----
Tier I Capital:
Stockholders'
equity $301,452 $291,182 $281,505 $280,429 $284,912
Goodwill and
other
intangibles (56,928) (57,046) (57,165) (57,479) (57,600)
Accumulated
other
comprehensive
loss 2,326 9,215 14,073 10,599 14,477
Qualifying
trust
preferred
stock 16,000 16,000 16,000 16,000 16,000
Unrealized
Loss on AFS
securities (2,557) (3,988) (4,401) (3,342) (761)
Excess
deferred tax
assets (10,113) (14,804) (15,796) (23,841) (15,470)
------- ------- ------- ------- -------
Total tier I
capital $250,180 $240,559 $234,215 $222,366 $241,558
======== ======== ======== ======== ========
Total Risk-Based
Capital:
Tier I
capital $250,180 $240,559 $234,215 $222,366 $241,558
Qualifying
allowance for
loan losses 19,655 20,975 21,980 22,254 18,879
------ ------ ------ ------ ------
Total risk-
based capital $269,835 $261,534 $256,195 $244,620 $260,437
======== ======== ======== ======== ========
Net risk-
Weighted
assets $1,920,900 $1,912,937 $1,901,377 $1,875,934 $1,842,684
Ratios:
Average
stockholders'
equity to
average
assets 11.33% 11.00% 11.12% 11.53% 12.45%
Tangible
capital ratio 9.62% 9.11% 8.87% 8.83% 9.44%
Risk-based
capital ratios:
Tier I capital 13.02% 12.58% 12.32% 11.85% 13.11%
Total risk-
based capital 14.05% 13.67% 13.47% 13.04% 14.13%
Leverage
capital 9.79% 9.47% 9.37% 9.14% 9.97%
(a) September 30, 2009 risk-based capital ratios are estimated
CITY HOLDING COMPANY AND SUBSIDIARIES
Intangibles
(Unaudited) ($ in 000s)
As of and for the Quarter Ended
September 30 June 30 March 31 December 31 September 30
2009 2009 2009 2008 2008
---- ---- ---- ---- ----
Intangibles,
net $57,127 $57,244 $57,362 $57,479 $57,600
Intangibles
amortization
expense 117 117 117 121 173
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Loan Loss Experience
(Unaudited) ($ in 000s)
Quarter Ended
September 30 June 30 March 31 December 31 September 30
2009 2009 2009 2008 2008
---- ---- ---- ---- ----
Balance at
beginning of
period $20,975 $21,980 $22,254 $18,879 $17,959
Charge-offs:
Commercial,
financial, and
agricultural 2,117 2,332 1,479 1,073 563
Real estate-
mortgage 567 507 394 603 523
Installment
loans to
individuals 36 73 69 29 62
Overdraft
deposit
accounts 795 690 664 779 783
--- --- --- --- ---
Total charge-
offs 3,515 3,602 2,606 2,484 1,931
Recoveries:
Commercial,
financial, and
agricultural 27 91 29 14 (30)
Real estate-
mortgage 19 (9) 81 79 69
Installment
loans to
individuals 95 35 55 45 71
Overdraft
deposit
accounts 379 330 517 381 391
--- --- --- --- ---
Total
recoveries 520 447 682 519 501
----- ----- ----- ----- -----
Net charge-
offs 2,995 3,155 1,924 1,965 1,430
Provision for
loan losses 1,675 2,150 1,650 5,340 2,350
----- ----- ----- ----- -----
Balance at end
of period $19,655 $20,975 $21,980 $22,254 $18,879
======= ======= ======= ======= =======
Loans
outstanding $1,797,384 $1,786,335 $1,791,308 $1,812,344 $1,777,731
---------- ---------- ---------- ---------- ----------
Average loans
outstanding 1,803,611 1,794,022 1,798,054 1,787,861 1,754,183
--------- --------- --------- --------- ---------
Allowance as a
percent of loans
outstanding 1.09% 1.17% 1.23% 1.23% 1.06%
---- ---- ---- ---- ----
Allowance as a
percent of non-
performing loans 118.88% 96.80% 107.44% 86.07% 135.92%
------ ----- ------ ----- ------
Net charge-offs
(annualized) as a
percent of
average loans
outstanding 0.66% 0.70% 0.43% 0.44% 0.33%
---- ---- ---- ---- ----
Net charge-offs,
excluding overdraft
deposit accounts,
(annualized) as a
percent of average
loans outstanding 0.57% 0.62% 0.40% 0.35% 0.24%
---- ---- ---- ---- ----
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Non-Performing Assets
(Unaudited) ($ in 000s)
September 30 June 30 March 31 December 31 September 30
2009 2009 2009 2008 2008
---- ---- ---- ---- ----
Nonaccrual loans $16,423 $20,956 $20,007 $25,224 $13,709
Accruing loans
past due 90
days or more 98 680 386 623 141
Previously
securitized
loans past due
90 days or more 12 32 64 10 40
------ ------ ----- ----- -----
Total non-
performing
loans 16,533 21,668 20,457 25,857 13,890
Other real
estate owned,
excluding property
associated with
previously
securitized
loans 12,323 9,840 6,686 3,469 3,332
Other real estate
owned associated
with previously
securitized
loans - 189 374 400 417
------ ------ ----- ----- -----
Other real
estate owned 12,323 10,029 7,060 3,869 3,749
------ ------ ----- ----- -----
Total non-
performing
assets $28,856 $31,697 $27,517 $29,726 $17,639
======= ======= ======= ======= =======
Non-performing assets
as a percent of loans
and other real
estate owned 1.59% 1.76% 1.53% 1.64% 0.99%
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Total Past Due Loans
(Unaudited) ($ in 000s)
September 30 June 30 March 31 December 31 September 30
2009 2009 2009 2008 2008
---- ---- ---- ---- ----
Residential
real estate $3,167 $5,029 $5,882 $6,179 $3,636
Home equity 1,718 2,019 1,454 1,243 1,400
Commercial,
financial, and
agriculture 545 1,754 2,044 1,679 1,741
Installment
loans to
individuals 185 118 192 241 216
Previously
securitized
loans 1,054 878 818 999 598
Overdraft
deposit
accounts 510 526 410 592 491
--- --- --- --- ---
Total past
due loans $7,179 $10,324 $10,800 $10,933 $8,082
====== ======= ======= ======= ======
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