City Holding Company Announces First Quarter Results

CHARLESTON, W. Va.--()--City Holding Company (“Company” or “City”) (NASDAQ:CHCO), a $4.2 billion bank holding company headquartered in Charleston, West Virginia, today announced quarterly net income of $17.6 million and diluted earnings of $1.13 per share for the quarter ended March 31, 2018.

Highlights of the Company’s first quarter performance and results include the following:

  • Return on assets and return on tangible equity of 1.69% and 16.7%, respectively.
  • Reported net interest income increased $2.2 million (7.2%) from the quarter ended March 31, 2017, while net interest income exclusive of accretion from fair value adjustments from acquisitions increased $2.1 million (6.9%) from the quarter ended March 31, 2017.
  • Repurchased 204,000 shares of common stock at a weighted average price of $68.50 per share.
  • Average total deposit balances grew $100.7 million, or 3.1%, from the quarter ended December 31, 2017 to the quarter ended March 31, 2018.

Net Interest Income

The Company’s net interest income increased from $32.4 million during the fourth quarter of 2017 to $32.6 million during the first quarter of 2018. During the first quarter of 2018, the Company’s tax equivalent net interest income increased $0.1 million, or 0.2%, from $32.7 million for the fourth quarter of 2017 to $32.8 million for the first quarter of 2018. Higher average loan balances ($23.7 million) increased net interest income by $0.3 million while higher loan yields (0.11%) increased net interest income by $0.1 million. These increases were partially offset by increased interest expense on interest bearing liabilities ($0.3 million). The Company’s reported net interest margin increased from 3.46% for the fourth quarter of 2017 to 3.51% for the first quarter of 2018. Excluding the favorable impact of the accretion from fair value adjustments, the net interest margin would have been 3.48% for the quarter ended March 31, 2018 and 3.39% for the quarter ended December 31, 2017.

Credit Quality

The Company’s ratio of nonperforming assets to total loans and other real estate owned improved from 0.45% at December 31, 2017 to 0.43% at March 31, 2018. Total nonperforming assets decreased from $14.1 million at December 31, 2017 to $13.6 million at March 31, 2018. 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 initial expectations. Total past due loans decreased from $11.0 million, or 0.35% of total loans outstanding, at December 31, 2017 to $8.3 million, or 0.26% of total loans outstanding, at March 31, 2018.

As a result of the Company’s quarterly analysis of the adequacy of the allowance for loan losses (“ALLL”), the Company recorded a provision for loan losses of $0.2 million in the first quarter of 2018, compared to $0.7 million for the comparable period in 2017 and $0.4 million for the fourth quarter of 2017. The provision for loan losses recorded in the first quarter of 2018 reflects changes in the quality of the portfolio and general improvement in the Company’s historical loss rates used to compute the allowance not specifically allocated to individual credits. 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 $14.5 million for the first quarter of 2018 as compared to $18.5 million for the first quarter of 2017. During the first quarter of 2017, the Company realized $4.3 million of investment gains that represented partial recoveries of impairment charges previously recognized on pooled trust preferred securities. Exclusive of this gain, non-interest income increased from $14.2 million for the first quarter of 2017 to $14.5 million for the first quarter of 2018. This increase was attributable to an increase of $0.2 million, or 4.7%, in bankcard revenues; an increase of $0.2 million, or 13.1%, in trust and wealth management fee income; an increase of $0.2 in other income; and $0.1 million, or 2.0%, in service charges. These increases were partially offset by a decrease of $0.4 million in bank owned life insurance revenues due to death benefit proceeds received in the first quarter of 2017.

Non-interest Expenses

Non-interest expenses increased $0.3 million (1.4% increase), from $24.6 million in the first quarter of 2017 to $24.9 million in the first quarter of 2018. This increase was primarily due to an increase in salaries and employee benefits of $0.2 million due largely to salary increases. During the first quarter of 2018, the Company completed a review of salaries for non-exempt personnel and, as a result, made adjustments to wages for approximately 50% of its employees late in the first quarter to make salaries more competitive in today’s employment environment. As a result of these adjustments, the expected impact on an annual basis is estimated at approximately $0.5 million.

Balance Sheet Trends

Loans increased $10.3 million (0.3%) from December 31, 2017 to $3.14 billion at March 31, 2018. Commercial real estate loans increased $18.7 million (1.5%) during the first quarter of 2018. This increase was partially offset by decreases in commercial and industrial loans ($3.9 million), residential real estate loans ($3.1 million) and home equity junior lien loans ($1.0 million).

Total average depository balances increased $100.7 million, or 3.1%, from the quarter ended December 31, 2017 to the quarter ended March 31, 2018. The Company experienced increases in interest-bearing deposits ($79.9 million), time deposits ($17.0 million) and savings deposits ($4.2 million).

Income Tax Expense

The Company’s effective income tax rate for the first quarter of 2018 was 20.0% compared to 40.2% for the year ended December 31, 2017, and 32.3% for the quarter ended March 31, 2017. On December 22, 2017, the President signed the Tax Cuts and Jobs Act (“TCJA”) into law. Among other things, the TCJA reduced the corporate income tax rate from 35% to 21%, effective January 1, 2018. As a result of this decrease in the corporate income tax rate, the Company reassessed its deferred tax assets and liabilities, which resulted in a charge to earnings in the fourth quarter of 2017 of $7.1 million. Exclusive of this item, the Company’s tax rate from operations was 32.7% for the year ended December 31, 2017.

Capitalization and Liquidity

The Company’s loan to deposit ratio was 91.0% and the loan to asset ratio was 74.7% at March 31, 2018. The Company maintained investment securities totaling 15.0% of assets as of the same date. Further, the Company’s deposit mix is weighted heavily toward checking and saving accounts that fund 55.6% of assets at March 31, 2018. Time deposits fund 26.4% of assets at March 31, 2018, 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 decreased from 10.5% at December 31, 2017 to 10.0% at March 31, 2018. At March 31, 2018, City National Bank’s Leverage Ratio was 8.81%, its Common Equity Tier I ratio was 12.59%, its Tier I Capital ratio was 12.59%, and its Total Risk-Based Capital ratio was 13.25%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.

On March 28, 2018, the Board approved a quarterly cash dividend of $0.46 per share payable April 30, 2018, to shareholders of record as of April 13, 2018. During the quarter ended March 31, 2018, the Company repurchased 204,000 common shares at a weighted average price of $68.50 per share as part of a one million share repurchase plan authorized by the Board of Directors in September 2014. As of March 31, 2018, the Company could repurchase approximately 198,000 shares under the current plan.

City Holding Company is the parent company of City National Bank of West Virginia. City National Bank operates 86 branches across West Virginia, Virginia, Kentucky and Ohio.

On October 16, 2017, the Company announced it will break ground in early 2018 on its new branch office located in Morgantown, West Virginia.

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 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) 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; (12) 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; (13) the impact of new minimum capital thresholds established as a part of the implementation of Basel III; and (14) 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, 2017. 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, 2018 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary March 31, 2018 results and will adjust the amounts if necessary.

           
CITY HOLDING COMPANY AND SUBSIDIARIES
Financial Highlights
(Unaudited)
 
Three Months Ended
March 31, 2018   December 31, 2017   September 30, 2017   June 30, 2017   March 31, 2017
 
Earnings
Net Interest Income (FTE) $ 32,834 $ 32,760 $ 32,384 $ 31,632 $ 30,804
Net Income available to common shareholders 17,616 9,669 13,932 14,688 16,026
 
Per Share Data
Earnings per share available to common shareholders:
Basic $ 1.13 $ 0.62 $ 0.89 $ 0.94 $ 1.04
Diluted 1.13 0.62 0.89 0.94 1.04
Weighted average number of shares (in thousands):
Basic 15,414 15,472 15,485 15,462 15,252
Diluted 15,436 15,497 15,505 15,487 15,277
Period-end number of shares (in thousands) 15,439 15,618 15,618 15,617 15,586
Cash dividends declared $ 0.46 $ 0.46 $ 0.44 $ 0.44 $ 0.44
Book value per share (period-end) $ 31.86 $ 32.17 $ 32.03 $ 31.54 $ 30.90
Tangible book value per share (period-end) 26.78 27.14 26.99 26.49 25.83
Market data:
High closing price $ 72.87 $ 73.98 $ 71.91 $ 72.78 $ 67.93
Low closing price 65.03 65.50 59.94 61.34 60.86
Period-end closing price 68.56 67.47 71.91 65.87 64.48
Average daily volume (in thousands) 56 66 54 56 57
Treasury share activity:
Treasury shares repurchased (in thousands) 204 - - - -
Average treasury share repurchase price $ 68.50 $ - $ - $ - $ -
Common share issuance:
Common shares issued (in thousands) - - - - 441
Average common share issue price (a) $ - $ - $ - $ - $ 64.48
 
Key Ratios (percent)
Return on average assets 1.69 % 0.94 % 1.37 % 1.43 % 1.60 %
Return on average tangible equity 16.7 % 9.0 % 13.2 % 14.2 % 16.5 %
Yield on interest earning assets 4.05 % 3.95 % 3.92 % 3.90 % 3.88 %
Cost of interest bearing liabilities 0.69 % 0.64 % 0.61 % 0.56 % 0.54 %
Net Interest Margin 3.51 % 3.46 % 3.45 % 3.46 % 3.45 %
Non-interest income as a percent of total revenue 30.7 % 32.2 % 31.3 % 32.3 % 31.9 %
Efficiency Ratio 52.6 % 47.7 % 51.8 % 52.0 % 53.8 %
Price/Earnings Ratio (b) 15.17 27.30 20.20 17.52 15.51
 
Capital (period-end)
Average Shareholders' Equity to Average Assets 12.05 % 12.34 % 12.29 % 11.99 % 11.66 %
Tangible equity to tangible assets 10.03 % 10.45 % 10.49 % 10.40 % 9.95 %
Consolidated City Holding Company risk based capital ratios (c):
CET I 15.08 % 15.10 % 15.08 % 14.88 % 14.61 %
Tier I 15.64 % 15.66 % 15.65 % 15.45 % 15.18 %
Total 16.31 % 16.34 % 16.40 % 16.17 % 15.91 %
Leverage 10.90 % 11.00 % 11.05 % 10.79 % 10.83 %
City National Bank risk based capital ratios (c):
CET I 12.59 % 11.93 % 12.74 % 12.27 % 11.74 %
Tier I 12.59 % 11.93 % 12.74 % 12.27 % 11.74 %
Total 13.25 % 12.61 % 13.44 % 12.96 % 12.44 %
Leverage 8.81 % 8.43 % 9.04 % 8.62 % 8.40 %
 
Other
Branches 86 86 86 85 85
FTE 832 839 835 839 833
 
Assets per FTE (in thousands) $ 5,048 $ 4,925 $ 4,910 $ 4,836 $ 4,951
Deposits per FTE (in thousands) 4,143 3,952 3,900 3,907 4,073
 
 
(a) The common share issue price is presented net of commissions and excludes one-time offering costs.
(b) The price/earnings ratio is computed based on annualized quarterly earnings.
(c) March 31, 2018 risk-based capital ratios are estimated.
 
           
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)
 
Three Months Ended
March 31, 2018   December 31, 2017   September 30, 2017   June 30, 2017   March 31, 2017
 
Interest Income
Interest and fees on loans $ 32,918 $ 32,529 $ 32,004 $ 31,115 $ 30,104
Interest on investment securities:
Taxable 3,981 3,797 3,666 3,480 3,444
Tax-exempt 703 692 665 686 663
Interest on deposits in depository institutions   42     35     31     17     3
Total Interest Income 37,644 37,053 36,366 35,298 34,214
 
Interest Expense
Interest on deposits 4,326 3,941 3,796 3,660 3,429
Interest on short-term borrowings 460 522 349 187 157
Interest on long-term debt   211     201     195     189     181
Total Interest Expense   4,997     4,664     4,340     4,036     3,767
Net Interest Income 32,647 32,389 32,026 31,262 30,447
Provision for loan losses   181     422     1,393     510     681
Net Interest Income After Provision for Loan Losses 32,466 31,967 30,633 30,752 29,766
 
Non-Interest Income
Net gains on sale of investment securities - 200 - - 4,276
Service charges 6,862 7,355 7,415 7,074 6,730
Bankcard revenue 4,334 4,316 4,291 4,372 4,140
Trust and investment management fee income 1,568 1,800 1,471 1,612 1,386
Bank owned life insurance 821 1,241 774 968 1,229
Other income   907     655     660     895     746
Total Non-Interest Income 14,492 15,567 14,611 14,921 18,507
 
Non-Interest Expense
Salaries and employee benefits 13,151 11,755 12,490 12,690 12,948
Occupancy related expense 2,404 2,195 2,426 2,462 2,473
Equipment and software related expense 1,831 1,897 1,940 2,004 1,890
FDIC insurance expense 315 318 328 328 375
Advertising 787 711 689 781 733
Bankcard expenses 1,076 960 1,051 970 943
Postage, delivery, and statement mailings 578 518 517 504 555
Office supplies 313 355 377 345 361
Legal and professional fees 450 563 504 440 449
Telecommunications 500 517 494 492 484
Repossessed asset losses, net of expenses 370 145 107 147 336
Other expenses   3,162     2,959     3,386     3,010     3,053
Total Non-Interest Expense   24,937     22,893     24,309     24,173     24,600
Income Before Income Taxes 22,021 24,641 20,935 21,500 23,673
Income tax expense   4,405     14,972     7,003     6,812     7,647
Net Income Available to Common Shareholders $ 17,616   $ 9,669   $ 13,932   $ 14,688   $ 16,026
 
Distributed earnings allocated to common shareholders $ 7,023 $ 7,106 $ 6,797 $ 6,797 $ 6,782
Undistributed earnings allocated to common shareholders   10,398     2,454     6,981     7,733     9,067
Net earnings allocated to common shareholders $ 17,421   $ 9,560   $ 13,778   $ 14,530   $ 15,849
 
Average common shares outstanding 15,414 15,472 15,485 15,462 15,252
Shares for diluted earnings per share 15,436 15,497 15,505 15,487 15,277
 
Basic earnings per common share $ 1.13 $ 0.62 $ 0.89 $ 0.94 $ 1.04
Diluted earnings per common share $ 1.13 $ 0.62 $ 0.89 $ 0.94 $ 1.04
 
           
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000s)
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
March 31, 2018   December 31, 2017   September 30, 2017   June 30, 2017   March 31, 2017
 
Assets
Cash and due from banks $ 97,495 $ 54,450 $ 54,281 $ 54,577 $ 164,887
Interest-bearing deposits in depository institutions   26,283       28,058       28,884       27,783       25,925  
Cash and cash equivalents 123,778 82,508 83,165 82,360 190,812
 
Investment securities available-for-sale, at fair value 556,212 550,389 525,633 504,660 470,098
Investment securities held-to-maturity, at amortized cost 62,277 64,449 66,989 69,798 72,308
Other securities   11,581       14,147       15,988       16,039       10,240  
Total investment securities 630,070 628,985 608,610 590,497 552,646
 
Gross loans 3,137,681 3,127,410 3,105,912 3,083,767 3,074,173
Allowance for loan losses   (18,381 )     (18,836 )     (19,554 )     (19,063 )     (19,209 )
Net loans 3,119,300 3,108,574 3,086,358 3,064,704 3,054,964
 
Bank owned life insurance 104,052 103,440 102,706 101,960 101,481
Premises and equipment, net 72,920 72,682 72,334 72,809 73,805
Accrued interest receivable 9,528 9,223 9,236 8,122 8,644
Net deferred tax assets 14,467 11,913 22,355 22,944 24,606
Intangible assets 78,468 78,595 78,730 78,865 79,000
Other assets   47,432       36,361       36,060       35,138       38,029  
Total Assets $ 4,200,015     $ 4,132,281     $ 4,099,554     $ 4,057,399     $ 4,123,987  
 
Liabilities
Deposits:
Noninterest-bearing $ 703,209 $ 666,639 $ 669,876 $ 688,223 $ 714,791
Interest-bearing:
Demand deposits 816,976 769,245 711,121 722,440 743,246
Savings deposits 816,245 796,275 799,592 797,552 874,031
Time deposits   1,110,532       1,083,475       1,075,945       1,069,932       1,060,690  
Total deposits 3,446,962 3,315,634 3,256,534 3,278,147 3,392,758
Short-term borrowings
Federal Funds purchased - 54,000 79,800 46,400 -
Customer repurchase agreements 195,375 198,219 201,664 177,904 186,686
Long-term debt 16,495 16,495 16,495 16,495 16,495
Other liabilities   49,306       45,426       44,746       45,946       46,402  
Total Liabilities 3,708,138 3,629,774 3,599,239 3,564,892 3,642,341
 
Stockholders' Equity
Preferred stock - - - - -
Common stock 47,619 47,619 47,619 47,619 47,619
Capital surplus 140,547 140,960 140,381 139,972 140,305
Retained earnings 457,650 444,481 441,001 433,944 426,126
Cost of common stock in treasury (137,420 ) (124,909 ) (124,909 ) (124,943 ) (126,265 )
Accumulated other comprehensive loss:
Unrealized gain (loss) on securities available-for-sale (11,486 ) (611 ) 883 575 (1,479 )
Underfunded pension liability   (5,033 )     (5,033 )     (4,660 )     (4,660 )     (4,660 )
Total Accumulated Other Comprehensive Loss   (16,519 )     (5,644 )     (3,777 )     (4,085 )     (6,139 )
Total Stockholders' Equity   491,877       502,507       500,315       492,507       481,646  
Total Liabilities and Stockholders' Equity $ 4,200,015     $ 4,132,281     $ 4,099,554     $ 4,057,399     $ 4,123,987  
 
Regulatory Capital
Total CET 1 capital $ 430,044 $ 430,154 $ 426,057 $ 418,449 $ 409,533
Total tier 1 capital 446,044 446,154 442,057 434,449 425,533
Total risk-based capital 464,936 465,292 463,198 454,832 445,938
Total risk-weighted assets 2,851,330 2,842,453 2,824,751 2,812,443 2,807,347
 
           
CITY HOLDING COMPANY AND SUBSIDIARIES
Loan Portfolio
(Unaudited) ($ in 000s)
 
 
March 31, 2018   December 31, 2017   September 30, 2017   June 30, 2017   March 31, 2017
 
Residential real estate (1) $ 1,465,215 $ 1,468,278 $ 1,465,942 $ 1,455,578 $ 1,444,795
Home equity - junior liens 138,477 139,499 139,702 139,534 139,165
Commercial and industrial 204,592 208,484 204,722 197,429 205,011
Commercial real estate (2) 1,296,304 1,277,576 1,260,906 1,256,736 1,250,106
Consumer 29,570 29,162 30,323 30,860 32,043
DDA overdrafts   3,523     4,411     4,317     3,630     3,053
Gross Loans $ 3,137,681   $ 3,127,410   $ 3,105,912   $ 3,083,767   $ 3,074,173
 
Construction loans included in:
(1) - Residential real estate loans $ 26,610 $ 25,270 $ 19,849 $ 12,056 $ 9,777
(2) - Commercial real estate loans 30,857 28,871 24,318 20,204 18,499
 
 
Secondary Mortgage Loan Activity
Mortgage loans originated $ 2,606 $ 2,593 $ 4,474 $ 5,433 $ 3,951
Mortgage loans sold 2,874 2,975 4,732 5,465 6,118
Mortgage loans gain on loans sold 79 79 128 142 167
 
           
CITY HOLDING COMPANY AND SUBSIDIARIES
Asset Quality Information
(Unaudited) ($ in 000s)
 
Three Months Ended
March 31, 2018   December 31, 2017   September 30, 2017   June 30, 2017   March 31, 2017
Allowance for Loan Losses
Balance at beginning of period $ 18,836 $ 19,554 $ 19,063 $ 19,209 $ 19,730
 
Charge-offs:
Commercial and industrial (339 ) (250 ) (40 ) (57 ) (53 )
Commercial real estate (157 ) (156 ) (282 ) (102 ) (180 )
Residential real estate (124 ) (342 ) (411 ) (258 ) (626 )
Home equity (78 ) (147 ) (17 ) (118 ) (121 )
Consumer (99 ) (13 ) (18 ) (23 ) (6 )
DDA overdrafts   (636 )     (725 )     (718 )     (635 )     (636 )
Total charge-offs (1,433 ) (1,633 ) (1,486 ) (1,193 ) (1,622 )
 
Recoveries:
Commercial and industrial 2 1 2 53 2
Commercial real estate 223 20 60 21 11
Residential real estate 86 8 130 131 25
Home equity 20 - 45 - -
Consumer 46 17 21 14 11
DDA overdrafts   420       447       326       319       371  
Total recoveries 797 493 584 538 420
                 
Net charge-offs (636 ) (1,140 ) (903 ) (655 ) (1,202 )
Provision for (recovery of) acquired loans - 122 - 58 (19 )
Provision for loan losses   181       300       1,393       451       700  
Balance at end of period $ 18,381     $ 18,836     $ 19,554     $ 19,063     $ 19,209  
 
Loans outstanding $ 3,137,681 $ 3,127,410 $ 3,105,912 $ 3,083,767 $ 3,074,173
Allowance as a percent of loans outstanding 0.59 % 0.60 % 0.63 % 0.62 % 0.62 %
Allowance as a percent of non-performing loans 189.9 % 178.4 % 182.8 % 177.6 % 167.7 %
 
Average loans outstanding $ 3,133,804 $ 3,110,084 $ 3,089,793 $ 3,073,255 $ 3,055,980
Net charge-offs (annualized) as a percent of average loans outstanding 0.08 % 0.15 % 0.12 % 0.09 % 0.16 %
 
 
CITY HOLDING COMPANY AND SUBSIDIARIES
Asset Quality Information, continued
(Unaudited) ($ in 000s)
 
March 31, 2018   December 31, 2017   September 30, 2017   June 30, 2017   March 31, 2017
Nonaccrual Loans
Residential real estate $ 3,331 $ 2,814 $ 2,556 $ 1,608 $ 2,810
Home equity 135 168 92 153 114
Commercial and industrial 1,063 1,345 1,325 1,571 1,353
Commercial real estate 5,061 5,970 6,700 7,250 7,141
Consumer   -       -       -       -       -  
Total nonaccrual loans 9,590 10,297 10,673 10,582 11,418
Accruing loans past due 90 days or more   91       262       22       150       35  
Total non-performing loans 9,681 10,559 10,695 10,732 11,453
Other real estate owned   3,912       3,585       3,995       4,204       4,405  
Total non-performing assets $ 13,593     $ 14,144     $ 14,690     $ 14,936     $ 15,858  
 
Non-performing assets as a percent of loans and other real estate owned 0.43 % 0.45 % 0.47 % 0.48 % 0.52 %
 
Past Due Loans
Residential real estate $ 5,641 $ 6,718 $ 5,295 $ 5,648 $ 3,876
Home equity 616 851 873 628 301
Commercial and industrial 61 692 304 259 611
Commercial real estate 1,520 2,086 520 819 1,014
Consumer 21 42 26 70 38
DDA overdrafts   432       575       551       527       330  
Total past due loans $ 8,291     $ 10,964     $ 7,569     $ 7,951     $ 6,170  
 
Total past due loans as a percent of loans outstanding 0.26 % 0.35 % 0.24 % 0.26 % 0.20 %
 
Troubled Debt Restructurings ("TDRs")
Accruing:
Residential real estate $ 20,786 $ 21,005 $ 20,741 $ 20,647 $ 20,294
Home equity 3,015 3,047 2,947 3,146 3,104
Commercial and industrial 125 135 31 35 38
Commercial real estate 8,324 8,381 8,427 8,483 8,513
Consumer   -       -       -       -       -  
Total accruing TDRs $ 32,250     $ 32,568     $ 32,146     $ 32,311     $ 31,949  
 
Non-Accruing
Residential real estate $ 256 $ 84 $ 47 $ 154 $ 100
Home equity 40 50 - - 30
Commercial and industrial - - - - -
Commercial real estate - - - - -
Consumer   -       -       -       -       -  
Total non-accruing TDRs $ 296     $ 134     $ 47     $ 154     $ 130  
 
Total TDRs $ 32,546     $ 32,702     $ 32,193     $ 32,465     $ 32,079  
 
                   
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)
 
Three Months Ended
March 31, 2018 December 31, 2017 March 31, 2017
Average Yield/ Average Yield/ Average Yield/
Balance   Interest   Rate   Balance   Interest   Rate   Balance   Interest   Rate
 
Assets:
Loan portfolio (1):
Residential real estate (2) $ 1,603,911 $ 16,479 4.17 % $ 1,608,509 $ 16,321 4.03 % $ 1,591,254 $ 15,479 3.95 %
Commercial, financial, and agriculture (2) 1,496,817 15,608 4.23 % 1,468,701 15,360 4.15 % 1,429,075 13,584 3.85 %
Installment loans to individuals (2), (3) 33,076 504 6.18 % 32,874 588 7.10 % 35,650 595 6.77 %
Previously securitized loans (4) ***     327   ***   ***     260   ***   ***     447   ***
Total loans 3,133,804 32,918 4.26 % 3,110,084 32,529 4.15 % 3,055,979 30,105 4.00 %
Securities:
Taxable 536,714 3,981 3.01 % 526,645 3,797 2.86 % 458,295 3,444 3.05 %
Tax-exempt (5)   91,722       890   3.94 %     91,886       1,064   4.59 %     84,784       1,019   4.87 %
Total securities 628,436 4,871 3.14 % 618,531 4,861 3.12 % 543,079 4,463 3.33 %
Deposits in depository institutions   29,648       42   0.57 %     31,060       35   0.45 %     16,826       3   0.07 %
Total interest-earning assets 3,791,888 37,831 4.05 % 3,759,675 37,425 3.95 % 3,615,884 34,571 3.88 %
Cash and due from banks 71,480 65,636 81,629
Premises and equipment, net 72,716 73,109 74,768
Other assets 245,721 247,688 253,378
Less: Allowance for loan losses   (19,420 )             (20,981 )             (20,150 )        
Total assets $ 4,162,385             $ 4,125,127             $ 4,005,509          
 
Liabilities:
Interest-bearing demand deposits $ 782,499 $ 357 0.19 % $ 702,614 $ 167 0.09 % $ 708,434 $ 157 0.09 %
Savings deposits 801,504 341 0.17 % 797,311 313 0.16 % 831,639 324 0.16 %
Time deposits (2) 1,096,157 3,628 1.34 % 1,079,179 3,462 1.27 % 1,052,218 2,948 1.14 %
Short-term borrowings 236,605 460 0.79 % 296,139 522 0.70 % 195,626 157 0.33 %
Long-term debt   16,495       211   5.19 %     16,495       201   4.83 %     16,495       181   4.45 %
Total interest-bearing liabilities 2,933,260 4,997 0.69 % 2,891,738 4,665 0.64 % 2,804,412 3,767 0.54 %
Noninterest-bearing demand deposits 681,150 681,554 690,243
Other liabilities 46,426 42,896 43,655
Stockholders' equity   501,549               508,938               467,199          

Total liabilities and stockholders' equity

$ 4,162,385             $ 4,125,126             $ 4,005,509          
Net interest income     $ 32,834           $ 32,760           $ 30,804    
Net yield on earning assets         3.51 %           3.46 %           3.45 %
 

(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"), Community Financial Corporation ("Community") and American Founders Banks, Inc. ("AFB"):
 
Residential real estate $ 110 $ 126 $ 138
Commercial, financial, and agriculture 150 438 175
Installment loans to individuals 10 27 9
Time deposits   -   -   16
$ 270 $ 591 $ 338
 
(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% for the period ending March 31, 2018 and 35% for the periods ending December 31, 2017 and March 31, 2017.
 
           
CITY HOLDING COMPANY AND SUBSIDIARIES
Non-GAAP Reconciliations
(Unaudited) ($ in 000s, except per share data)
 
Three Months Ended
March 31, 2018   December 31, 2017   September 30, 2017   June 30, 2017   March 31, 2017
Net Interest Income/Margin
Net interest income ("GAAP") $ 32,647 $ 32,389 $ 32,026 $ 31,262 $ 30,447
Taxable equivalent adjustment   187       371       358       370       357  
Net interest income, fully taxable equivalent $ 32,834     $ 32,760     $ 32,384     $ 31,632     $ 30,804  
 
Average interest earning assets $ 3,791,888 $ 3,759,675 $ 3,719,692 $ 3,669,715 $ 3,615,884
 
Net Interest Margin 3.51 % 3.46 % 3.45 % 3.46 % 3.45 %
Accretion related to fair value adjustments   -0.03 %     -0.06 %     -0.04 %     -0.04 %     -0.04 %
Net Interest Margin (excluding accretion)   3.48 %     3.39 %     3.42 %     3.42 %     3.42 %
 
Tangible Equity Ratio (period end)
Equity to assets ("GAAP") 11.71 % 12.16 % 12.20 % 12.14 % 11.68 %
Effect of goodwill and other intangibles, net   -1.68 %     -1.70 %     -1.72 %     -1.74 %     -1.72 %
Tangible common equity to tangible assets   10.03 %     10.45 %     10.49 %     10.40 %     9.95 %
 
Return on tangible equity ("GAAP") 16.66 % 8.99 % 13.17 % 14.22 % 16.52 %
Impact of effective tax rate decrease on deferred taxes   0.00 %     6.57 %     0.00 %     0.00 %     0.00 %

Return on tangible equity, excluding Impact of effective tax rate decrease on deferred taxes

  16.66 %     15.56 %     13.17 %     14.22 %     16.52 %
 
Return on assets ("GAAP") 1.69 % 0.94 % 1.37 % 1.43 % 1.60 %
Impact of effective tax rate decrease on deferred taxes   0.00 %     0.68 %     0.00 %     0.00 %     0.00 %
Return on Assets, excluding Impact of effective tax rate decrease on deferred taxes   1.69 %     1.62 %     1.37 %     1.43 %     1.60 %
 
Effective Income Tax Rate
Effective tax rate ("GAAP") 20.0 % 60.8 % 33.5 % 31.7 % 32.3 %
Impact of FIN 48 adjustments 0.00 % 1.34 % 0.00 % 0.00 % 0.00 %
Impact of effective tax rate decrease on deferred taxes   0.00 %     -28.69 %     0.00 %     0.00 %     0.00 %
Effective tax rate, excluding FIN 48 and impact of effective tax rate decrease on deferred taxes   20.0 %     33.4 %     33.5 %     31.7 %     32.3 %
 

Contacts

City Holding Company
Charles R. Hageboeck, 304-769-1102
Chief Executive Officer and President

Contacts

City Holding Company
Charles R. Hageboeck, 304-769-1102
Chief Executive Officer and President