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Share Name | Share Symbol | Market | Type |
---|---|---|---|
City Holding Company | NASDAQ:CHCO | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
2.86 | 2.50% | 117.47 | 117.03 | 117.48 | 117.48 | 114.3204 | 115.45 | 3,563 | 14:41:42 |
City Holding Company (“Company” or “City”) (NASDAQ:CHCO), a $3.6 billion bank holding company headquartered in Charleston, today announced record quarterly diluted earnings of $1.17 per share and record quarterly net income of $18.0 million. Effective January 1, 2015, the Company sold its insurance operations, “CityInsurance”, and recognized a one-time after tax gain of $5.8 million, or $0.37 per diluted share, in the first quarter of 2015.
Net Interest Income
The Company’s tax equivalent net interest income increased $0.1 million, or 0.4%, from $29.4 million during the fourth quarter of 2014 to $29.5 million during the first quarter of 2015. This increase is due to additional accretion from fair value adjustments related to the acquisitions of Virginia Savings Bank and Community Bank ($2.5 million for the quarter ended March 31, 2015 compared to $1.3 million for the quarter ended December 31, 2014). This increase was partially offset by a decrease in interest income from commercial loans of $0.6 million due to lower yields as a result of a continued competitive commercial lending environment. The Company’s reported net interest margin increased from 3.89% for the fourth quarter of 2014 to 3.99% for the first quarter of 2015. Excluding the favorable impact of the accretion from the fair value adjustments, the net interest margin would have been 3.66% for the quarter ended March 31, 2015 and 3.71% for the quarter ended December 31, 2014.
Credit Quality
The Company’s ratio of nonperforming assets to total loans and other real estate owned increased slightly from 0.90% at December 31, 2014 to 0.96% at March 31, 2015. Excluded from this ratio are purchased credit-impaired loans in which the Company estimated cash flows and estimated a credit mark. Such loans would be considered nonperforming loans if the loan’s performance deteriorates below the initial expectations. Total past due loans decreased modestly from $10.7 million, or 0.40% of total loans outstanding, at December 31, 2014 to $10.2 million, or 0.39% of total loans outstanding, at March 31, 2015. Acquired past due loans represent approximately 45% of total past due loans and have declined $11.9 million, or 72%, since March 31, 2013.
As a result of the Company’s quarterly analysis of the adequacy of the ALLL, the Company recorded a provision for loan losses of $0.9 million in the first quarter of 2015, compared to $1.4 for the comparable period in 2014 and $0.4 million for the fourth quarter of 2014. The provision for loan losses recorded in the first quarter of 2015 reflects 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. Additionally, the first quarter of 2015 includes $0.25 million of provision expense related to purchased credit impaired 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.
Non-interest Income
Effective January 1, 2015, the Company sold its insurance operations, CityInsurance, which resulted in a pre-tax gain of $11.1 million. Exclusive of this gain, non-interest income declined from $14.2 million for the first quarter of 2014 to $12.9 million for the first quarter of 2015. The primary reason for this decline was the sale of CityInsurance which had insurance commission revenues of $2.0 million in the first quarter of 2014. In addition, service charges decreased $0.2 million, or 3.8%, from the first quarter of 2014 to $5.9 million. These decreases were partially offset by increases in bankcard revenues of $0.4 million (10.6%), other income of $0.4 million, and trust and investment management fee income of $0.2 million (15.7%).
Non-interest Expenses
Non-interest expenses decreased $0.2 million, from $23.4 million in the first quarter of 2014 to $23.2 million in the first quarter of 2015. This drop was largely due to a decline in salaries and employee benefit expense of $1.0 million, or 7.3%, to $12.2 million. This decrease was due to a reduction in the Company’s salary expense as a result of the sale of CityInsurance. This decrease was partially offset by an increase in other expenses of $0.8 million to $2.7 million. During the first quarter of 2014, the Company’s non-income based taxes decreased due to the recognition of a previously unrecognized tax position due to the close of the statute of limitations for a previous tax year and was discrete to the first quarter of 2014.
Balance Sheet Trends
Loans decreased $19.6 million (0.7%) from December 31, 2014 to $2.63 billion at March 31, 2015. Commercial real estate loans decreased $17.2 million (1.7%), commercial and industrial (“C&I”) loans decreased $8.3 million (6.3%), home equity junior lien loans fell $1.9 million (1.3%), and consumer loans declined $1.3 million (3.2%). These decreases were partially offset by an increase in residential real estate loans of $8.7 million (0.7%).
Total average depository balances increased $74.7 million, or 2.6%, from the quarter ended December 31, 2014 to the quarter ended March 31, 2015. Increases in savings deposits ($51.8 million), interest-bearing deposits ($17.1 million), and noninterest-bearing demand deposits ($14.4 million) were partially offset by a decrease in time deposits ($8.5 million).
Income Tax Expense
The Company’s effective income tax rate for the first quarter of 2015 was 38.7% compared to 31.4% for the year ended December 31, 2014, and 29.6% for the quarter ended March 31, 2014. As noted previously, the Company sold CityInsurance in the first quarter of 2015. As a result of differences between the book and tax basis of the assets that were sold, the Company’s income tax expense increased by $1.1 million. During the first quarter of 2014, the Company reduced income tax expense by $0.8 million due to the recognition of previously unrecognized tax position resulting from the close of the statute of limitations for a previous tax year. Exclusive of the sale of CityInsurance in the first quarter of 2015 and the discrete item recognized in the first quarter of 2014, the Company’s tax rate from operations was 33.3% and 33.6%, for the quarters ended March 31, 2015 and March 31, 2014, respectively.
Capitalization and Liquidity
The Company’s loan to deposit ratio was 89.5% and the loan to asset ratio was 74.1% at March 31, 2015. The Company maintained investment securities totaling 10.4% of assets as of this date. Further, the Company’s deposit mix is weighted heavily toward checking and saving accounts that fund 54.3% of assets at March 31, 2015. Time deposits fund 28.5% of assets at March 31, 2015, but very few of these deposits are in accounts that have balances of more than $250,000, reflecting the core retail orientation of the Company.
The Company is also strongly capitalized. The Company’s tangible equity ratio increased from 9.4% at December 31, 2014 to 9.6% at March 31, 2015. At March 31, 2015, City National Bank’s Leverage Ratio is 9.07%, its Common Equity Tier I ratio is 11.87%, its Tier I Capital ratio is 13.04%, and its Total Risk-Based Capital ratio is 13.89%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.
On March 26, 2015, the Board approved a quarterly cash dividend of $0.42 cents per share payable April 30, 2015, to shareholders of record as of April 15, 2015.
City Holding Company is the parent company of City National Bank of West Virginia. City National operates 82 branches across West Virginia, Virginia, Kentucky 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. Such information involves risks and uncertainties that could result in the Company's actual results differing materially from those projected in the forward-looking statements. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include, but are not limited to, (1) the Company may incur additional loan loss provision due to negative credit quality trends in the future that may lead to a deterioration of asset quality; (2) the Company may incur increased charge-offs in the future; (3) the Company could have adverse legal actions of a material nature; (4) the Company may face competitive loss of customers; (5) the Company may be unable to manage its expense levels; (6) the Company may have difficulty retaining key employees; (7) changes in the interest rate environment may have results on the Company’s operations materially different from those anticipated by the Company’s market risk management functions; (8) changes in general economic conditions and increased competition could adversely affect the Company’s operating results; (9) changes in 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; (10) the Company may experience difficulties growing loan and deposit balances; (11) the current economic environment poses significant challenges for us and could adversely affect our financial condition and results of operations; (12) 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; (13) the effects of the Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and the regulations promulgated and to be promulgated thereunder, which may subject the Company and its subsidiaries to a variety of new and more stringent legal and regulatory requirements which adversely affect their respective businesses; (14) the impact of new minimum capital thresholds established as a part of the implementation of Basel III; and (15) other risk factors relating to the banking industry or the Company as detailed from time to time in the Company’s reports filed with the Securities and Exchange Commission, including those risk factors included in the disclosures under the heading “ITEM 1A Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014. Forward-looking statements made herein reflect management's expectations as of the date such statements are made. Such information is provided to assist stockholders and potential investors in understanding current and anticipated financial operations of the Company and is included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances that arise after the date such statements are made. Further, the Company is required to evaluate subsequent events through the filing of its March 31, 2015 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary March 31, 2015 results and will adjust the amounts if necessary.
CITY HOLDING COMPANY AND SUBSIDIARIES
Financial Highlights
(Unaudited)
Three Months Ended March 31, Percent 20152014
Change Earnings ($000s, except per share data): Net Interest Income (FTE) $ 29,533 $ 30,193 (2.19)% Net Income available to common shareholders 17,992 13,803 30.35% Earnings per Basic Share 1.18 0.87 35.04% Earnings per Diluted Share 1.17 0.86 35.72% Key Ratios (percent): Return on Average Assets 2.04% 1.63% 25.18% Return on Average Tangible Equity 21.58% 17.32% 24.60% Net Interest Margin 3.99% 4.15% (3.75)% Efficiency Ratio (a) 54.24% 52.28% 3.75% Average Shareholders' Equity to Average Assets 11.48% 11.64% (1.34)% Consolidated Risk Based Capital Ratios (b): CET I 14.04% * N/A Tier I 14.70% 13.58% 8.25% Total 15.57% 14.47% 7.60% Tangible Equity to Tangible Assets 9.60% 9.60% (0.01)% Common Stock Data: Cash Dividends Declared per Share $ 0.42 $ 0.40 5.00% Book Value per Share 26.63 25.05 6.30% Tangible Book Value per Share 21.96 20.28 8.28% Market Value per Share: High 48.09 46.69 3.00% Low 41.76 42.15 (0.93)% End of Period 47.03 44.86 4.84% Price/Earnings Ratio (c) 9.96 12.83 (22.36)%(a) The March 31, 2015 efficiency ratio calculation excludes the gain on sale of insurance division.
(b) March 31, 2015 risk-based capital ratios are estimated.
(c) March 31, 2015 price/earnings ratio computed based on annualized first quarter 2015 earnings.
(*) Basel III CET 1 ratio requirements are effective beginning January 1, 2015 and are not required for prior periods.
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 2011 20.39 20.58 20.86 21.05 26.06 37.22 2012 21.46 21.63 22.14 22.47 30.96 37.16 2013 23.36 23.52 24.03 24.61 36.07 49.21 2014 25.05 25.45 25.52 25.85 41.20 46.95 2015 26.63 41.76 48.09 Earnings per Basic Share Quarter Ended March 31 June 30 September 30 December 31 Year-to-Date 2011 0.62 0.65 0.77 0.65 2.68 2012 0.68 0.50 0.71 0.73 2.63 2013 0.51 0.83 0.89 0.84 3.07 2014 0.87 0.81 0.76 0.95 3.40 2015 1.18 1.18 Earnings per Diluted Share Quarter Ended March 31 June 30 September 30 December 31 Year-to-Date 2011 0.62 0.64 0.76 0.65 2.67 2012 0.67 0.50 0.71 0.73 2.61 2013 0.51 0.82 0.88 0.83 3.04 2014 0.86 0.80 0.76 0.95 3.38 2015 1.17 1.17CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)
Three Months Ended March 31, 2015 2014 Interest Income Interest and fees on loans $ 29,388 $ 29,734 Interest on investment securities: Taxable 2,712 3,003 Tax-exempt 264 281Total Interest Income
32,364 33,018 Interest Expense Interest on deposits 2,741 2,753 Interest on short-term borrowings 82 75 Interest on long-term debt 150 150 Total Interest Expense 2,973 2,978 Net Interest Income 29,391 30,040 Provision for loan losses 888 1,363 Net Interest Income After Provision for Loan Losses 28,503 28,677 Non-Interest Income Gains on sale of investment securities 14 83 Service charges 5,927 6,160 Bankcard revenue 4,074 3,685 Insurance commissions - 2,025 Trust and investment management fee income 1,200 1,037 Bank owned life insurance 764 756 Gain on sale of insurance division 11,084 - Other income 958 559 Total Non-Interest Income 24,021 14,305 Non-Interest Expense Salaries and employee benefits 12,179 13,139 Occupancy and equipment 2,590 2,615 Depreciation 1,511 1,478 FDIC insurance expense 450 410 Advertising 704 824 Bankcard expenses 818 806 Postage, delivery, and statement mailings 561 575 Office supplies 346 410 Legal and professional fees 567 409 Telecommunications 475 338 Repossessed asset losses, net of expenses 220 379 Other expenses 2,744 1,993 Total Non-Interest Expense 23,165 23,376 Income Before Income Taxes 29,359 19,606 Income tax expense 11,367 5,803 Net Income Available to Common Shareholders $ 17,992 $ 13,803 Distributed earnings allocated to common shareholders $ 6,315 $ 6,224 Undistributed earnings allocated to common shareholders 11,468 7,438 Net earnings allocated to common shareholders $ 17,783 $ 13,662 Average common shares outstanding 15,067 15,631 Effect of dilutive securities: Employee stock options and warrants 82 165 Shares for diluted earnings per share 15,149 15,796 Basic earnings per common share $ 1.18 $ 0.87 Diluted earnings per common share $ 1.17 $ 0.86 Dividends declared per common share $ 0.42 $ 0.40 Comprehensive Income $ 18,898 $ 14,579CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
(Unaudited) ($ in 000s)
Three Months Ended March 31, 2015 March 31, 2014 Balance at January 1 $ 390,853 $ 387,623 Net income 17,992 13,803 Other comprehensive income: Change in unrealized (loss) gainon securities available-for-sale 906 776 Cash dividends declared ($0.42/share) and ($0.40/share), respectively (6,389 ) (6,287 ) Issuance of stock award shares, net 740 572 Exercise of 28,500 stock options 973 - Exercise of 7,000 stock options - 199 Purchase of 68,145 common shares of treasury - (2,936 ) Balance at March 31 $ 405,075 $ 393,750CITY HOLDING COMPANY AND SUBSIDIARIES
Condensed Consolidated Quarterly Statements of Income
(Unaudited) ($ in 000s, except per share data)
Quarter Ended March 31 December 31 September 30 June 30 March 312015 2014 2014 2014 2014
Interest income $ 32,364 $ 32,282 $ 32,438 $ 31,828 $ 33,018 Taxable equivalent adjustment 142 164 152 151 153 Interest income (FTE) 32,506 32,446 32,590 31,979 33,171 Interest expense 2,973 3,041 2,968 2,973 2,978 Net interest income 29,533 29,405 29,622 29,006 30,193 Provision for loan losses 888 384 1,872 435 1,363 Net interest income after provision for loan losses 28,645 29,021 27,750 28,571 28,830 Noninterest income 24,021 14,669 14,609 15,139 14,305 Noninterest expense 23,165 23,035 24,325 24,305 23,376 Income before income taxes 29,501 20,655 18,034 19,405 19,759 Income tax expense 11,367 5,961 6,010 6,497 5,803 Taxable equivalent adjustment 142 164 152 151 153 Net income $ 17,992 $ 14,530 $ 11,872 $ 12,757 $ 13,803 Distributed earnings allocated to common shareholders $ 6,315 $ 5,996 $ 6,073 $ 6,178 $ 6,224 Undistributed earnings allocated to common shareholders 11,468 8,378 5,673 6,448 7,439 Net earnings allocated to common shareholders $ 17,783 $ 14,374 $ 11,746 $ 12,626 $ 13,663 Average common shares outstanding 15,067 15,096 15,363 15,556 15,631 Effect of dilutive securities: Employee stock options and warrants 82 86 82 150 165 Shares for diluted earnings per share 15,149 15,182 15,445 15,706 15,796 Basic earnings per common share $ 1.18 $ 0.95 $ 0.76 $ 0.81 $ 0.87 Diluted earnings per common share 1.17 0.95 0.76 0.80 0.86 Cash dividends declared per share 0.42 0.40 0.40 0.40 0.40 Net Interest Margin 3.99% 3.89% 3.95% 3.95% 4.15% Interest Income from Accretion Related to Fair Value Adjustments Recorded as a Result of Acquisition $ 2,450 $ 1,307 $ 1,836 $ 1,494 $ 2,151 Net Interest Margin (excluding accretion) 3.66% 3.71% 3.71% 3.75% 3.85%
CITY HOLDING COMPANY AND SUBSIDIARIES
Non-Interest Income and Non-Interest Expense
(Unaudited) ($ in 000s)
Quarter Ended March 31 December 31 September 30 June 30 March 31 2015 2014 2014 2014 2014 Non-Interest Income: Service charges $ 5,927 $ 6,750 $ 6,934 $ 6,739 $ 6,160 Bankcard revenue 4,074 3,744 3,796 3,838 3,685 Insurance commissions - 1,238 1,396 1,319 2,025 Trust and investment management fee income 1,200 1,363 1,103 1,111 1,037 Bank owned life insurance 764 778 771 765 756 Gain on sale of insurance division 11,084 - - - - Other income 958 612 538 549 559 Subtotal 24,007 14,485 14,538 14,321 14,222 Gain (loss) on sale of investment securities 14 184 71 818 83 Total Non-Interest Income $ 24,021 $ 14,669 $ 14,609 $ 15,139 $ 14,305 Non-Interest Expense: Salaries and employee benefits $ 12,179 $ 12,489 $ 13,144 $ 12,977 $ 13,139 Occupancy and equipment 2,590 2,449 2,531 2,395 2,615 Depreciation 1,511 1,534 1,542 1,533 1,478 FDIC insurance expense 450 448 432 357 410 Advertising 704 726 799 925 824 Bankcard expenses 818 891 843 833 806 Postage, delivery and statement mailings 561 549 557 530 575 Office supplies 346 360 405 420 410 Legal and professional fees 567 552 476 612 409 Telecommunications 475 522 510 506 338 Repossessed asset (gains) losses, net of expenses 220 27 31 142 379 Other expenses 2,744 2,488 3,055 3,075 1,993 Total Non-Interest Expense $ 23,165 $ 23,035 $ 24,325 $ 24,305 $ 23,376 Employees (Full Time Equivalent) 845 889 908 912 925 Branch Locations 82 82 82 82 82CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000s)
March 31, 2015 December 31, 2014 (Unaudited) Assets Cash and due from banks $ 235,004 $ 138,503 Interest-bearing deposits in depository institutions 10,106 9,725 Federal funds sold - - Cash and cash equivalents 245,110 148,228 Investment securities available-for-sale, at fair value 273,856 254,043 Investment securities held-to-maturity, at amortized cost 87,455 90,786 Other securities 9,857 9,857 Total investment securities 371,168 354,686 Gross loans 2,632,471 2,652,066 Allowance for loan losses (20,179 ) (20,150 ) Net loans 2,612,292 2,631,916 Bank owned life insurance 95,880 95,116 Premises and equipment, net 76,910 77,988 Accrued interest receivable 7,752 6,826 Net deferred tax assets 35,335 36,766 Intangible assets 70,964 74,198 Other assets 37,674 35,909 Total Assets $ 3,553,085 $ 3,461,633 Liabilities Deposits: Noninterest-bearing $ 551,596 $ 545,465 Interest-bearing: Demand deposits 654,832 639,932 Savings deposits 722,324 660,727 Time deposits 1,013,630 1,026,663 Total deposits 2,942,382 2,872,787 Short-term borrowings Customer repurchase agreements 132,588 134,931 Long-term debt 16,495 16,495 Other liabilities 56,545 46,567 Total Liabilities 3,148,010 3,070,780 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 March 31, 2015 and December 31, 2014 less 3,285,958 and 3,345,590 shares in treasury, respectively 46,249 46,249 Capital surplus 106,397 107,370 Retained earnings 373,812 362,211 Cost of common stock in treasury (118,130 ) (120,818 ) Accumulated other comprehensive loss: Unrealized gain on securities available-for-sale 2,096 1,190 Underfunded pension liability (5,349 ) (5,349 ) Total Accumulated Other Comprehensive Loss (3,253 ) (4,159 ) Total Stockholders' Equity 405,075 390,853 Total Liabilities and Stockholders' Equity $ 3,553,085 $ 3,461,633CITY HOLDING COMPANY AND SUBSIDIARIES
Investment Portfolio
(Unaudited) ($ in 000s)
Original CostCredit-RelatedNet InvestmentImpairmentLosses through March 31, 2015
Unrealized Gains(Losses)
Carrying Value US Government Agencies $ 1,713 $ - $ 2 $ 1,715 Mortgage Backed Securities 292,831 - 2,463 295,294 Municipal Bonds 38,147 - 767 38,914 Pooled Bank Trust Preferreds 20,664 (20,171 ) 1,167 1,660 Single Issuer Bank Trust Preferreds, Subdebt of Financial Institutions, and Bank Holding Company Preferred Stocks 22,040 (1,015 ) (2,350 ) 18,675 Money Markets and Mutual Funds 1,525 - 10 1,535 Federal Reserve Bank and FHLB stock 9,857 - - 9,857 Community Bank Equity Positions 3,715 (1,584 ) 1,387 3,518 Total Investments $ 390,492 $ (22,770 ) $ 3,446 $ 371,168CITY HOLDING COMPANY AND SUBSIDIARIES
Loan Portfolio
(Unaudited) ($ in 000s)
March 31 December 31 September 30 June 30 March 31 2015 2014 2014 2014 2014 Residential real estate (1) $ 1,303,258 $ 1,294,576 $ 1,274,062 $ 1,242,972 $ 1,212,232 Home equity - junior liens143,670 145,604 146,965 145,452 144,482 Commercial and industrial
124,342 132,641 130,462 131,627 126,569 Commercial real estate (2)
1,019,562 1,036,738 1,034,593 1,011,367 1,027,431 Consumer
38,436 39,705 41,042 42,858 42,320 DDA overdrafts
3,203 2,802 3,618 3,501 4,001 Gross Loans $ 2,632,471 $ 2,652,066 $ 2,630,742 $ 2,577,777 $ 2,557,035 Construction loans included in: (1) - Residential real estate loans $ 17,459 $ 22,992 $ 22,426 $ 20,078 $ 17,697 (2) - Commercial real estate loans $ 30,554 $ 28,652 $ 24,875 $ 24,608 $ 28,894
CITY HOLDING COMPANY AND SUBSIDIARIES
Acquisition Activity - Accretion
(Unaudited) ($ in 000s)
The following table presents the actual and forecasted accretion related to the fair value adjustments on net interest income recorded as a result of the Virginia Savings Bancorp ("Virginia Savings") and Community Financial Corporation ("Community") acquisitions. Virginia Savings Community Loan Certificates of Loan Certificates of Year Ended: Accretion(a) Deposit(a) Accretion(a) Deposit(a) Total 1Q 2015 $ 123 $ 129 $ 2,158 $ 40 $ 2,450 Remainder 2015 336 388 1,734 120 2,578 2016 276 497 1,480 48 2,301 2017 154 - 1,070 - 1,224 a - 1Q 2015 amounts are based on actual results. Remainder 2015, 2016 and 2017 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 March 31, 2015 2014 Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate Assets: Loan portfolio (1): Residential real estate (2) $ 1,436,720 $ 14,201 4.01 % $ 1,350,556 $ 13,746 4.13 % Commercial, financial, and agriculture (2) 1,149,798 13,586 4.79 % 1,167,606 14,236 4.94 % Installment loans to individuals (2), (3) 49,882 1,150 9.35 % 52,557 1,179 9.10 % Previously securitized loans (4) *** 451 *** *** 574 *** Total loans 2,636,400 29,388 4.52 % 2,570,719 29,735 4.69 % Securities: Taxable 327,185 2,712 3.36 % 345,982 3,003 3.52 % Tax-exempt (5) 28,477 406 5.78 % 27,506 433 6.38 %Total securities
355,662 3,118 3.56 % 373,488 3,436 3.73 % Deposits in depository institutions 8,968 - - 8,831 - - Federal funds sold - - - - - 0.00 % Total interest-earning assets 3,001,030 32,506 4.39 % 2,953,038 33,171 4.56 % Cash and due from banks 222,409 125,221 Bank premises and equipment 77,638 82,214 Other assets 244,686 246,091 Less: Allowance for loan losses (20,658 ) (21,221 ) Total assets $ 3,525,105 $ 3,385,343 Liabilities: Interest-bearing demand deposits 636,810 132 0.08 % 611,797 176 0.12 % Savings deposits 694,700 181 0.11 % 618,412 207 0.14 % Time deposits (2) 1,021,474 2,428 0.96 % 1,070,065 2,370 0.90 % Short-term borrowings 129,647 82 0.26 % 118,771 75 0.26 % Long-term debt 16,495 150 3.69 % 16,495 150 3.69 % Total interest-bearing liabilities 2,499,126 2,973 0.48 % 2,435,540 2,978 0.50 % Noninterest-bearing demand deposits 571,340 517,207 Other liabilities 49,996 38,705 Stockholders' equity 404,643 393,891 Total liabilities and stockholders' equity $ 3,525,105 $ 3,385,343 Net interest income $ 29,533 $ 30,193 Net yield on earning assets 3.99 % 4.15 % (1) For purposes of this table, non-accruing loans have been included in average balances and loan fees, which are immaterial, have been included in interest income. (2) Included in the above table are the following amounts (in thousands) for the accretion of the fair value adjustments related to the acquisitions of Virginia Savings Bancorp ("Virginia Savings") and Community Financial Corporation ("Community"): Three Months Ended March 31, 2015 Three Months Ended March 31, 2014 Virginia Savings Community Total Virginia Savings Community Total Residential real estate $ 64 $ 133 $ 197 $ 151 $ 115 $ 266 Commercial, financial, and agriculture 29 1,959 1,988 114 1,324 1,438 Installment loans to individuals 30 66 96 34 189 223 Time deposits 129 40 169 131 93 224 $ 252 $ 2,198 $ 2,450 $ 430 $ 1,721 $ 2,151 (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 $0. (5) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 35%.CITY HOLDING COMPANY AND SUBSIDIARIES
Analysis of Risk-Based Capital
(Unaudited) ($ in 000s)
March 31 December 31 September 30 June 30 March 31 2015 (a) 2014 2014 2014 2014 Tier I Capital: Stockholders' equity $ 405,075 $ 390,853 $ 391,673 $ 397,231 $ 393,750 Goodwill and other intangibles (69,227 ) (74,011 ) (74,247 ) (74,483 ) (74,719 ) Accumulated other comprehensive loss 3,253 4,159 2,921 2,509 4,214 Qualifying trust preferred stock 16,000 16,000 16,000 16,000 16,000 Excess deferred tax assets (1,564 ) (3,838 ) (3,131 ) (4,019 ) (6,508 ) Total tier I capital $ 353,537 $ 333,163 $ 333,216 $ 337,238 $ 332,737 Qualifying trust preferred stock(16,000 ) * * * * Total CET I capital $ 337,537 * * * * Total Risk-Based Capital: Tier I capital $ 353,537 $ 333,163 $ 333,216 $ 337,238 $ 332,737 Qualifying allowance for loan losses 20,179 20,150 20,487 20,536 21,044 Unrealized gain on securities 704 560 630 605 786 Total risk-based capital $ 374,420 $ 353,873 $ 354,333 $ 358,379 $ 354,567 Net risk-weighted assets $ 2,404,331 $ 2,493,078 $ 2,493,938 $ 2,464,081 $ 2,450,949 Ratios: Average stockholders' equity to average assets 11.48 % 11.40 % 11.78 % 11.71 % 11.64 % Tangible capital ratio 9.60 % 9.35 % 9.58 % 9.80 % 9.60 % Risk-based capital ratios: CET 1 capital 14.04 % * * * * Tier I capital 14.70 % 13.36 % 13.36 % 13.69 % 13.58 % Total risk-based capital 15.57 % 14.19 % 14.21 % 14.54 % 14.47 % Leverage capital 10.23 % 9.89 % 10.07 % 10.15 % 10.07 %
(a) March 31, 2015 risk-based capital ratios are estimated.
(*) Basel III CET 1 ratio requirements are effective beginning January 1, 2015 and are not required for prior periods.CITY HOLDING COMPANY AND SUBSIDIARIES
Intangibles
(Unaudited) ($ in 000s)
As of and for the Quarter Ended March 31 December 31 September 30 June 30 March 31 2015 2014 2014 2014 2014 Intangibles, net $ 70,964 $ 74,198 $ 74,434 $ 74,670 $ 74,906 Intangibles amortization expense 214 236 236 236 236CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Loan Loss Experience
(Unaudited) ($ in 000s)
Quarter Ended March 31 December 31 September 30 June 30 March 31 2015 2014 2014 2014 2014 Balance at beginning of period $ 20,150 $ 20,487 $ 20,536 $ 21,044 $ 20,575 Charge-offs: Commercial and industrial 94 (7 ) 325 1 4 Commercial real estate 337 260 696 587 382 Residential real estate 257 414 605 316 427 Home equity 91 21 142 38 108 Consumer 74 17 49 38 84 DDA overdrafts 311 363 390 321 341Total charge-offs
1,164 1,068 2,207 1,301 1,346 Recoveries: Commercial and industrial 18 4 4 18 63 Commercial real estate 8 19 11 53 30 Residential real estate 10 96 28 39 24 Home equity - - - - - Consumer 28 32 43 53 76 DDA overdrafts 241 196 200 195 259 Total recoveries 305 347 286 358 452 Net charge-offs 859 721 1,921 943 894 Provision for (recovery of) acquired loans 246 148 (3 ) 150 (12 ) Provision for loan losses 642 236 1,875 285 1,375 Balance at end of period $ 20,179 $ 20,150 $ 20,487 $ 20,536 $ 21,044 Loans outstanding $ 2,632,471 $ 2,652,066 $ 2,630,742 $ 2,577,777 $ 2,557,035 Average loans outstanding 2,636,400 2,639,106 2,600,142 2,563,601 2,570,719 Allowance as a percent of loans outstanding 0.77 % 0.76 % 0.78 % 0.80 % 0.82 % Allowance as a percent of non-performing loans 121.81 % 128.10 % 112.61 % 106.86 % 100.09 % Net charge-offs (annualized) as a percent of average loans outstanding 0.13 % 0.11 % 0.30 % 0.15 % 0.14 % Net charge-offs, excluding overdraft deposit accounts, (annualized) as a percent of average loans outstanding 0.12 % 0.08 % 0.27 % 0.13 % 0.13 %CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Non-Performing Assets
(Unaudited) ($ in 000s)
March 31 December 31 September 30 June 30 March 31 2015 2014 2014 2014 2014 Nonaccrual loans $ 16,182 $ 15,307 $ 17,384 $ 18,423 $ 20,593 Accruing loans past due 90 days or more 384 423 809 794 432 Total non-performing loans 16,566 15,730 18,193 19,217 21,025 Other real estate owned 8,771 8,180 9,162 9,129 9,538 Total non-performing assets $ 25,337 $ 23,910 $ 27,355 $ 28,346 $ 30,563 Non-performing assets as a percent of loans and other real estate owned 0.96% 0.90% 1.04% 1.10% 1.19%CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Total Past Due Loans
(Unaudited) ($ in 000s)
Originated March 31 December 31 September 30 June 30 March 31 2015 2014 2014 2014 2014 Residential real estate $ 4,326 $ 5,164 $ 5,276 $ 5,794 $ 4,118 Home equity - junior liens 543 746 751 926 638 Commercial and industrial 113 310 188 25 77 Commercial real estate 299 479 938 443 789 Consumer 122 197 58 80 63 DDA overdrafts 215 318 592 281 196 Total past due loans $ 5,618 $ 7,214 $ 7,803 $ 7,549 $ 5,881 Acquired March 31 December 31 September 30 June 30 March 31 2015 2014 2014 2014 2014 Residential real estate $ 1,792 $ 714 $ 500 $ 873 $ 813 Home equity - junior liens 86 2 16 3 21 Commercial and industrial 490 143 96 58 127 Commercial real estate 2,018 2,372 2,972 2,110 3,789 Consumer 150 221 162 374 397 DDA overdrafts - - - - - Total past due loans $ 4,536 $ 3,452 $ 3,746 $ 3,418 $ 5,147 Total March 31 December 31 September 30 June 30 March 31 2015 2014 2014 2014 2014 Residential real estate $ 6,118 $ 5,878 $ 5,776 $ 6,667 $ 4,931 Home equity - junior liens 629 748 767 929 659 Commercial and industrial 603 453 284 83 204 Commercial real estate 2,317 2,851 3,910 2,553 4,578 Consumer 272 418 220 454 460 DDA overdrafts 215 318 592 281 196 Total past due loans $ 10,154 $ 10,666 $ 11,549 $ 10,967 $ 11,028 Total past due loans as a percent of loans outstanding 0.39% 0.40% 0.44% 0.43% 0.43%
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Troubled Debt Restructurings
(Unaudited) ($ in 000s)
March 31 December 31 September 30 June 30 March 31 2015 2014 2014 2014 2014 Residential real estate $ 19,067 $ 18,492 $ 18,040 $ 19,212 $ 18,940 Home equity - junior liens 2,741 2,688 2,821 2,858 2,866 Commercial and industrial 70 73 77 86 84 Commercial real estate 1,894 2,263 2,270 2,281 1,854 Consumer - - - - - Total $ 23,772 $ 23,516 $ 23,208 $ 24,437 $ 23,744CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Purchased Credit Impaired Loans
(Unaudited) ($ in 000s)
Virginia Savings Acquisition March 31 December 31 September 30 June 30 March 31 2015 2014 2014 2014 2014 Contractual required principal and interest 2,419 2,407 3,481 3,735 3,821 Carrying value 1,979 1,964 2,987 3,098 3,102 Community Acquisition March 31 December 31 September 30 June 30 March 31 2015 2014 2014 2014 2014 Contractual required principal and interest 20,189 23,277 24,147 27,394 30,476 Carrying value 14,627 15,365 15,518 17,902 19,986
City Holding CompanyCharles R. Hageboeck, Chief Executive Officer and President304-769-1102
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