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| 8-K - 8-K, CHCO 4Q2017 EARNINGS - CITY HOLDING CO | chco12-31x178xk.htm |
NEWS RELEASE
For Immediate Release
January 23, 2018
For Further Information Contact:
Charles R. Hageboeck, Chief Executive Officer and President
(304) 769-1102
City Holding Company Announces Annual Earnings
Charleston, West Virginia - City Holding Company (“Company” or “City”) (NASDAQ:CHCO), a $4.1 billion bank holding company headquartered in Charleston, West Virginia, today announced net income of $54.3 million and diluted earnings of $3.48 per share for the year ended December 31, 2017. The results for the year ended December 31, 2017 include a charge of $7.1 million, or $0.46 per diluted share, to revalue the Company’s net deferred tax assets as a result of the Tax Cuts and Jobs Act (“TCJA”), which was enacted on December 22, 2017.
Highlights of the Company’s performance and results for the year ended December 31, 2017 include the following:
• | Return on assets and return on tangible equity of 1.33% and 13.1%, respectively. Excluding the impact of the revaluation of the Company’s net deferred tax assets, return on assets and return on tangible equity would have been 1.50% and 14.8%, respectively. |
• | Reported net interest income increased $7.2 million (6.0%) from the year ended December 31, 2016, while net interest income exclusive of accretion from fair value adjustments on recent acquisitions increased $8.7 million (7.5%) from the year ended December 31, 2016. |
• | Realized $4.5 million of investment gains from the sales of pooled trust preferred securities during the year ended December 31, 2017. |
• | Total loan growth of $81.2 million (2.7%) from December 31, 2016 to December 31, 2017. |
• | During 2017, the Company sold 441,000 common shares at a weighted average price of $64.48 per share, net of broker fees, pursuant to an at-the-market common stock offering. |
• | Asset quality continues to remain strong with nonperforming assets declining from $18.7 million, or 0.61% of total loans and other real estate owned at December 31, 2016 to $14.1 million, or 0.45%, at December 31, 2017. |
Highlights of the Company’s fourth quarter performance include the following:
• | Return on assets and return on tangible equity of 0.94% and 9.0%, respectively. Excluding the impact of the revaluation of the Company’s net deferred tax assets, return on assets and return on tangible equity would have been 1.62% and 15.6%, respectively. |
• | Reported net interest income increased $0.4 million from the quarter ended September 30, 2017, while net interest income exclusive of accretion from fair value adjustments increased $0.1 million from the quarter ended September 30, 2017. |
• | Total loan growth of $21.5 million (2.8% annualized) from September 30, 2017 to December 31, 2017. |
Net Interest Income
The Company’s net interest income increased from $118.9 million for the year ended December 31, 2016 to $126.1 million for the year ended December 31, 2017. The Company’s tax equivalent net interest income increased $7.8 million, or 6.5%, from $119.8 million for the year ended December 31, 2016 to $127.6 million for the year ended December 31, 2017. This increase was due primarily to higher average balances on commercial loans ($132.0 million) which increased interest income by $5.1 million, and residential real estate loans ($33.5 million) which increased interest income by $1.3 million as compared to the year ended December 31, 2016. Increased interest yields on residential real estate loans also increased net interest income by $1.8 million compared to the year ended December 31, 2016. In addition, higher average investment balances ($86.9 million) increased investment income by $3.2 million. These increases were partially offset by increased interest expense on interest bearing deposits ($3.0 million), primarily due to an increase in the cost of funds, and lower accretion from fair value adjustments on recent acquisitions ($1.0 million). The Company’s reported net interest margin decreased from 3.50% for the year ended December 31, 2016 to 3.46% for the year ended December 31, 2017. Excluding the favorable impact of the accretion from the fair value adjustments, the net interest margin would have been 3.41% for the year ended December 31, 2016 and 3.40% for the year ended December 31, 2017.
The Company’s net interest income increased from $32.0 million during the third quarter of 2017 to $32.4 million during the fourth quarter of 2017. During the fourth quarter of 2017, the Company’s tax equivalent net interest income increased $0.4 million, or 1.2%, to $32.8 million from $32.4 million during the third quarter of 2017. Higher accretion from fair value adjustments from recent acquisitions increased net interest income $0.2 million from the quarter ended September 30, 2017. In addition, higher average loan balances ($20.3 million) and higher average investment balances ($20.1 million) increased net interest income by $0.2 million and $0.1 million, respectively. These increases were partially offset by increased interest expense of $0.2 million as a result of higher interest rates on interest bearing liabilities. The Company’s reported net interest margin increased modestly from 3.45% for the third quarter of 2017 to 3.46% for the fourth quarter of 2017. Excluding the favorable impact of the accretion from the fair value adjustments, the net interest margin would have been 3.39% for the quarter ended December 31, 2017 and 3.42% for the quarter ended September 30, 2017.
Credit Quality
The Company’s ratio of nonperforming assets to total loans and other real estate owned improved from 0.61% at December 31, 2016 to 0.45% at December 31, 2017. Total nonperforming assets decreased from $18.7 million at December 31, 2016 to $14.1 million at December 31, 2017. 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 increased from $8.6 million, or 0.28% of total loans outstanding, at December 31, 2016 to $11.0 million, or 0.35% of total loans outstanding, at December 31, 2017.
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 $0.4 million in the fourth quarter of 2017 and $3.0 million for the year ended December 31, 2017, compared to $1.3 million and $4.4 million for the comparable periods in 2016. The provision for loan losses recorded in 2017 reflects revisions to the regulatory rating of a shared national credit ("SNC") in which the Company is a participant, 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. SNCs are credit facilities greater than $20 million that are shared by three or more federally supervised financial institutions and are reviewed annually by regulatory authorities at the agent bank level. The SNC that the Company is a participant is for a local customer that outgrew the lending limit of the Company and involves three local
banks. The reserve recorded in 2017 of $1.1 million related to this SNC reflects the loss factors associated with the rating assigned to this SNC as a result of the current year review by the Office of the Comptroller of the Currency (“OCC”). The Company’s balance outstanding at December 31, 2017 associated with this SNC is $27.7 million, with an additional commitment of $6.2 million related to a line of credit to the borrower. As of December 31, 2017, the SNC is performing in accordance with terms and debt service coverage ratios are acceptable. Changes in the amount of the allowance and related provision 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 $63.6 million for 2017 as compared to $58.8 million for 2016. During 2017, the Company realized $4.5 million of investment gains compared to $3.5 million during 2016. These gains represented partial recoveries of impairment charges previously recognized on pools of trust preferred securities. Exclusive of these gains, non-interest income increased from $55.3 million for the year ended December 31, 2016 to $59.1 million for the year ended December 31, 2017. This increase was primarily attributable to an increase of $1.9 million, or 7.0%, in service charges; an increase of $0.9 million, or 26.6%, in bank owned life insurance revenues due to death benefit proceeds; an increase of $0.7 million, or 12.5%, in trust and investment management fee income; and an increase of $0.6 million, or 3.7%, in bankcard revenues.
Non-interest income was $15.6 million during the quarter ended December 31, 2017. During the fourth quarter of 2017, the Company realized $0.2 million of investment gains. These gains represented partial recoveries of impairment charges previously recognized on pools of trust preferred securities. Exclusive of this gain, non-interest income increased from $14.4 million for the fourth quarter of 2016 to $15.4 million for the fourth quarter of 2017. This increase was mainly due to an increase of $0.4 million, or 5.1%, in service charges; an increase of $0.3 million, or 30.4%, in bank owned life insurance revenues due to death benefit proceeds; an increase of $0.2 million, or 12.7%, in trust and investment management fee income; and an increase of $0.2 million, or 4.2%, in bankcard revenues from the fourth quarter of 2016.
Non-interest Expenses
Non-interest expenses remained stable from 2016 to 2017 at $96.1 million and $96.0 million, respectively. The Company experienced decreases in bankcard expenses of $0.5 million, depreciation expense of $0.4 million, and FDIC insurance expenses of $0.3 million. However, these decreases were essentially offset by increases in occupancy and equipment expenses of $0.3 million, advertising expenses of $0.3 million, salaries and employee benefits of $0.2 million, telecommunication expenses of $0.2 million and repossessed asset losses, net of expenses, of $0.2 million.
Non-interest expenses increased $0.4 million from $22.5 million in the quarter ended December 31, 2016 to $22.9 million in the quarter ended December 31, 2017. This increase was due to an increase in other expenses of $0.5 million, advertising expenses of $0.3 million, and FDIC insurance expense of $0.2 million. These increases were partially offset by a decrease in salaries and employee benefits of $0.3 million due primarily to lower health insurance expenses, depreciation expense of $0.1 million, and occupancy and equipment expenses of $0.1 million.
Balance Sheet Trends
For the year ending December 31, 2017, period end loan balances increased $81.2 million (2.7%) to $3.13 billion. Commercial loans increased $70.9 million (5.0%) and residential real estate loans increased $16.8 million (1.2%) from December 31, 2016 to December 31, 2017.
Total average depository balances increased $131.6 million, or 4.2%, from the year ended December 31, 2016 to the year ended December 31, 2017. The Company had increases in savings deposits ($60.2 million), time deposits ($38.0 million), interest bearing deposits ($20.0 million) and noninterest deposits ($13.3 million).
Income Tax Expense
The Company’s effective income tax rate for the quarter and year ended December 31, 2017 was 60.8% and 40.2%, respectively, compared to 30.2% and 32.5% for the comparable periods in 2016. On December 22, 2017, the President signed the 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. In addition, during the years ended December 31, 2017 and December 31, 2016, the Company reduced income tax expense by $0.3 million and $0.5 million, respectively, due to the recognition of previously unrecognized tax positions subsequent to the close of the statute of limitations for previous tax years. Exclusive of these items, the Company’s tax rate from operations was 33.4% and 32.7% for the quarter and year ended December 31, 2017, respectively, compared to 32.8% and 33.2% for the comparable periods in 2016.
The TCJA also revamps the tax code to expand Section 162(m) limits to other proxy officers, reduces the dividends received deduction (“DRD”) from 70% to 50%, eliminates the deduction of entertainment expenses and various other changes. The Company does not anticipate any of these changes will significantly impact its 2018 and subsequent years’ tax provisions. Overall, the Company anticipates that the effects of the TCJA will be favorable in 2018 due to a reduction in the corporation federal income tax rate from 35% to 21%.
Capitalization and Liquidity
The Company’s loan to deposit ratio was 94.3% and the loan to asset ratio was 75.7% at December 31, 2017. The Company maintained investment securities totaling 15.2% of assets as of the same date. The Company’s deposit mix is weighted toward checking and saving accounts that fund 54.0% of assets at December 31, 2017. Time deposits fund 26.2% of assets at December 31, 2017, with time deposits of more than $250,000 funding only 2.8% of assets, reflecting the core retail orientation of the Company.
The Company is also strongly capitalized. The Company’s tangible equity ratio increased from 9.3% at December 31, 2016 to 10.5% at December 31, 2017. In 2017, the Company sold 441,000 common shares at a weighted average price of $64.48 per share, net of broker fees, pursuant to an at-the-market common stock offering. At December 31, 2017, City National Bank’s Leverage Ratio was 8.43%, its Common Equity Tier I ratio was 11.93%, its Tier I Capital ratio was 11.93%, and its Total Risk-Based Capital ratio was 12.61%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.
On December 13, 2017, the Board approved a quarterly cash dividend of $0.46 cents per share payable January 31, 2018, to shareholders of record as of January 15, 2018. This increase represented a 4.5% increase from the $0.46 cents per share dividend paid in the third quarter of 2017.
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.
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) 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, 2016. 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 Form 10-K for the fiscal year ended December 31, 2017. The Company will continue to evaluate the impact of any subsequent events on the preliminary December 31, 2017 results and will adjust the amounts if necessary.
CITY HOLDING COMPANY AND SUBSIDIARIES
Financial Highlights
(Unaudited)
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | ||||||||||||||||
2017 | 2017 | 2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||
Earnings | ||||||||||||||||||||||
Net Interest Income (FTE) | $ | 32,760 | $ | 32,384 | $ | 31,632 | $ | 30,804 | $ | 30,638 | $ | 127,582 | $ | 119,817 | ||||||||
Net Income available to common shareholders | 9,669 | 13,932 | 14,688 | 16,026 | 14,656 | 54,310 | 52,128 | |||||||||||||||
Per Share Data | ||||||||||||||||||||||
Earnings per share available to common shareholders: | ||||||||||||||||||||||
Basic | $ | 0.62 | $ | 0.89 | $ | 0.94 | $ | 1.04 | $ | 0.97 | $ | 3.49 | $ | 3.46 | ||||||||
Diluted | 0.62 | 0.89 | 0.94 | 1.04 | 0.97 | 3.48 | 3.45 | |||||||||||||||
Weighted average number of shares: | ||||||||||||||||||||||
Basic | 15,472 | 15,485 | 15,462 | 15,252 | 14,894 | 15,412 | 14,900 | |||||||||||||||
Diluted | 15,497 | 15,505 | 15,487 | 15,277 | 14,914 | 15,436 | 14,913 | |||||||||||||||
Period-end number of shares | 15,618 | 15,618 | 15,617 | 15,586 | 15,128 | 15,618 | 15,128 | |||||||||||||||
Cash dividends declared | $ | 0.46 | $ | 0.44 | $ | 0.44 | $ | 0.44 | $ | 0.43 | $ | 1.78 | $ | 1.72 | ||||||||
Book value per share (period-end) | 32.17 | 32.03 | 31.54 | 30.90 | 29.25 | 32.17 | 29.25 | |||||||||||||||
Tangible book value per share (period-end) | 27.14 | 26.99 | 26.49 | 25.83 | 24.01 | 27.14 | 24.01 | |||||||||||||||
Market data: | ||||||||||||||||||||||
High closing price | $ | 73.98 | $ | 71.91 | $ | 72.78 | $ | 67.93 | $ | 68.29 | $ | 73.98 | $ | 68.29 | ||||||||
Low closing price | 65.5 | 59.94 | 61.34 | 60.86 | 48.49 | 59.94 | 40.82 | |||||||||||||||
Period-end closing price | 67.47 | 71.91 | 65.87 | 64.48 | 67.6 | 67.47 | 67.6 | |||||||||||||||
Average daily volume | 66 | 54 | 56 | 57 | 57 | 58 | 63 | |||||||||||||||
Treasury share activity: | ||||||||||||||||||||||
Treasury shares repurchased | — | — | — | — | — | — | 231 | |||||||||||||||
Average treasury share repurchase price | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 43.34 | ||||||||
Common share issuance: | ||||||||||||||||||||||
Common shares issued (in thousands) | — | — | — | 441 | 108 | 441 | 108 | |||||||||||||||
Average common share issue price (a) | $ | — | $ | — | $ | — | $ | 64.48 | $ | 66.21 | $ | 64.48 | $ | 66.21 | ||||||||
Key Ratios (percent) | ||||||||||||||||||||||
Return on average assets | 0.94 | % | 1.37 | % | 1.43 | % | 1.60 | % | 1.49 | % | 1.33 | % | 1.36 | % | ||||||||
Return on average tangible equity | 9.00 | % | 13.20 | % | 14.20 | % | 16.50 | % | 16.10 | % | 13.10 | % | 14.80 | % | ||||||||
Yield on interest earning assets | 3.95 | % | 3.92 | % | 3.90 | % | 3.88 | % | 3.81 | % | 3.91 | % | 3.88 | % | ||||||||
Cost of interest bearing liabilities | 0.64 | % | 0.61 | % | 0.56 | % | 0.54 | % | 0.50 | % | 0.59 | % | 0.49 | % | ||||||||
Net Interest Margin | 3.46 | % | 3.45 | % | 3.46 | % | 3.45 | % | 3.42 | % | 3.46 | % | 3.50 | % | ||||||||
Non-interest income as a percent of total revenue | 32.20 | % | 31.30 | % | 32.30 | % | 31.90 | % | 32.10 | % | 31.90 | % | 31.70 | % | ||||||||
Efficiency Ratio (b) | 47.70 | % | 51.80 | % | 52.00 | % | 53.80 | % | 48.90 | % | 51.50 | % | 54.80 | % | ||||||||
Price/Earnings Ratio (c) | 27.30 | 20.20 | 17.52 | 15.51 | 17.38 | 19.36 | 19.56 | |||||||||||||||
Capital (period-end) | ||||||||||||||||||||||
Average Shareholders' Equity to Average Assets | 12.34 | % | 12.29 | % | 11.99 | % | 11.66 | % | 11.25 | % | ||||||||||||
Tangible equity to tangible assets | 10.45 | % | 10.49 | % | 10.40 | % | 9.95 | % | 9.30 | % | ||||||||||||
Consolidated City Holding Company risk based capital ratios (c): | ||||||||||||||||||||||
CET I | 15.10 | % | 15.08 | % | 14.88 | % | 14.61 | % | 13.41 | % | ||||||||||||
Tier I | 15.66 | % | 15.65 | % | 15.45 | % | 15.18 | % | 13.98 | % | ||||||||||||
Total | 16.34 | % | 16.40 | % | 16.17 | % | 15.91 | % | 14.73 | % | ||||||||||||
Leverage | 11.00 | % | 11.05 | % | 10.79 | % | 10.83 | % | 10.08 | % | ||||||||||||
City National Bank risk based capital ratios (c): | ||||||||||||||||||||||
CET I | 11.93 | % | 12.74 | % | 12.27 | % | 11.74 | % | 11.23 | % | ||||||||||||
Tier I | 11.93 | % | 12.74 | % | 12.27 | % | 11.74 | % | 11.52 | % | ||||||||||||
Total | 12.61 | % | 13.44 | % | 12.96 | % | 12.44 | % | 12.24 | % | ||||||||||||
Leverage | 8.43 | % | 9.04 | % | 8.62 | % | 8.40 | % | 8.33 | % | ||||||||||||
Other | ||||||||||||||||||||||
Branches | 86 | 86 | 85 | 85 | 85 | |||||||||||||||||
FTE | 839 | 835 | 839 | 833 | 847 | |||||||||||||||||
Assets per FTE | $ | 4,925 | $ | 4,910 | $ | 4,836 | $ | 4,951 | $ | 4,704 | ||||||||||||
Deposits per FTE | 3,952 | 3,900 | 3,907 | 4,073 | 3,815 | |||||||||||||||||
(a) The common share issue price is presented net of commissions and excludes one-time offering costs of approximately $265,000. | ||||||||||||||||||||||
(b) The price/earnings ratio is computed based on annualized quarterly earnings. | ||||||||||||||||||||||
(c) December 31, 2017 risk-based capital ratios are estimated. | ||||||||||||||||||||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | ||||||||||||||||
2017 | 2017 | 2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||
Interest Income | ||||||||||||||||||||||
Interest and fees on loans | $ | 32,529 | $ | 32,004 | $ | 31,115 | $ | 30,104 | $ | 30,126 | $ | 125,752 | $ | 118,138 | ||||||||
Interest on investment securities: | ||||||||||||||||||||||
Taxable | 3,797 | 3,666 | 3,480 | 3,444 | 3,277 | 14,387 | 12,392 | |||||||||||||||
Tax-exempt | 692 | 665 | 686 | 663 | 481 | 2,706 | 1,622 | |||||||||||||||
Interest on deposits in depository institutions | 35 | 31 | 17 | 3 | — | 85 | — | |||||||||||||||
Total Interest Income | 37,053 | 36,366 | 35,298 | 34,214 | 33,884 | 142,930 | 132,152 | |||||||||||||||
Interest Expense | ||||||||||||||||||||||
Interest on deposits | 3,941 | 3,796 | 3,660 | 3,429 | 3,137 | 14,826 | 12,052 | |||||||||||||||
Interest on short-term borrowings | 522 | 349 | 187 | 157 | 188 | 1,214 | 472 | |||||||||||||||
Interest on long-term debt | 201 | 195 | 189 | 181 | 179 | 765 | 683 | |||||||||||||||
Total Interest Expense | 4,664 | 4,340 | 4,036 | 3,767 | 3,504 | 16,805 | 13,207 | |||||||||||||||
Net Interest Income | 32,389 | 32,026 | 31,262 | 30,447 | 30,380 | 126,125 | 118,945 | |||||||||||||||
Provision for loan losses | 422 | 1,393 | 510 | 681 | 1,301 | 3,006 | 4,395 | |||||||||||||||
Net Interest Income After Provision for Loan Losses | 31,967 | 30,633 | 30,752 | 29,766 | 29,079 | 123,119 | 114,550 | |||||||||||||||
Non-Interest Income | ||||||||||||||||||||||
Gains on sale of investment securities | 200 | — | — | 4,276 | — | 4,476 | 3,513 | |||||||||||||||
Service charges | 7,355 | 7,415 | 7,074 | 6,730 | 6,995 | 28,574 | 26,703 | |||||||||||||||
Bankcard revenue | 4,316 | 4,291 | 4,372 | 4,140 | 4,142 | 17,120 | 16,515 | |||||||||||||||
Trust and investment management fee income | 1,800 | 1,471 | 1,612 | 1,386 | 1,597 | 6,269 | 5,573 | |||||||||||||||
Bank owned life insurance | 1,241 | 774 | 968 | 1,229 | 952 | 4,212 | 3,326 | |||||||||||||||
Other income | 655 | 660 | 895 | 746 | 685 | 2,956 | 3,195 | |||||||||||||||
Total Non-Interest Income | 15,567 | 14,611 | 14,921 | 18,507 | 14,371 | 63,607 | 58,825 | |||||||||||||||
Non-Interest Expense | ||||||||||||||||||||||
Salaries and employee benefits | 12,158 | 12,876 | 12,945 | 13,078 | 12,427 | 51,057 | 50,883 | |||||||||||||||
Occupancy and equipment | 2,695 | 2,916 | 2,956 | 2,838 | 2,792 | 11,405 | 11,095 | |||||||||||||||
Depreciation | 1,397 | 1,450 | 1,510 | 1,525 | 1,516 | 5,884 | 6,235 | |||||||||||||||
FDIC insurance expense | 318 | 328 | 328 | 375 | 137 | 1,348 | 1,622 | |||||||||||||||
Advertising | 711 | 689 | 781 | 733 | 445 | 2,914 | 2,606 | |||||||||||||||
Bankcard expenses | 960 | 1,051 | 970 | 943 | 1,011 | 3,924 | 4,458 | |||||||||||||||
Postage, delivery, and statement mailings | 518 | 517 | 504 | 555 | 492 | 2,094 | 2,080 | |||||||||||||||
Office supplies | 355 | 377 | 345 | 361 | 320 | 1,437 | 1,364 | |||||||||||||||
Legal and professional fees | 563 | 504 | 440 | 449 | 515 | 1,956 | 1,882 | |||||||||||||||
Telecommunications | 517 | 494 | 492 | 484 | 494 | 1,988 | 1,813 | |||||||||||||||
Repossessed asset losses, net of expenses | 145 | 107 | 147 | 336 | 244 | 735 | 890 | |||||||||||||||
Other expenses | 2,556 | 3,000 | 2,755 | 2,923 | 2,063 | 11,239 | 11,236 | |||||||||||||||
Total Non-Interest Expense | 22,893 | 24,309 | 24,173 | 24,600 | 22,456 | 95,981 | 96,164 | |||||||||||||||
Income Before Income Taxes | 24,641 | 20,935 | 21,500 | 23,673 | 20,994 | 90,745 | 77,211 | |||||||||||||||
Income tax expense | 14,972 | 7,003 | 6,812 | 7,647 | 6,338 | 36,435 | 25,083 | |||||||||||||||
Net Income Available to Common Shareholders | $ | 9,669 | $ | 13,932 | $ | 14,688 | $ | 16,026 | $ | 14,656 | $ | 54,310 | $ | 52,128 | ||||||||
Distributed earnings allocated to common shareholders | $ | 7,106 | $ | 6,797 | $ | 6,797 | $ | 6,782 | $ | 6,428 | $ | 27,497 | $ | 25,710 | ||||||||
Undistributed earnings allocated to common shareholders | 2,454 | 6,981 | 7,733 | 9,067 | 8,051 | 26,222 | 25,795 | |||||||||||||||
Net earnings allocated to common shareholders | $ | 9,560 | $ | 13,778 | $ | 14,530 | $ | 15,849 | $ | 14,479 | $ | 53,719 | $ | 51,505 | ||||||||
Average common shares outstanding | 15,472 | 15,485 | 15,462 | 15,252 | 14,894 | 15,412 | 14,900 | |||||||||||||||
Shares for diluted earnings per share | 15,497 | 15,505 | 15,487 | 15,277 | 14,914 | 15,436 | 14,913 | |||||||||||||||
Basic earnings per common share | $ | 0.62 | $ | 0.89 | $ | 0.94 | $ | 1.04 | $ | 0.97 | $ | 3.49 | $ | 3.46 | ||||||||
Diluted earnings per common share | $ | 0.62 | $ | 0.89 | $ | 0.94 | $ | 1.04 | $ | 0.97 | $ | 3.48 | $ | 3.45 | ||||||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000s)
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||
2017 | 2017 | 2017 | 2017 | 2016 | |||||||||||
Assets | |||||||||||||||
Cash and due from banks | $ | 54,450 | $ | 54,281 | $ | 54,577 | $ | 164,887 | $ | 62,263 | |||||
Interest-bearing deposits in depository institutions | 28,058 | 28,884 | 27,783 | 25,925 | 25,876 | ||||||||||
Cash and cash equivalents | 82,508 | 83,165 | 82,360 | 190,812 | 88,139 | ||||||||||
Investment securities available-for-sale, at fair value | 550,389 | 525,633 | 504,660 | 470,098 | 450,083 | ||||||||||
Investment securities held-to-maturity, at amortized cost | 64,449 | 66,989 | 69,798 | 72,308 | 75,169 | ||||||||||
Other securities | 14,147 | 15,988 | 16,039 | 10,240 | 14,352 | ||||||||||
Total investment securities | 628,985 | 608,610 | 590,497 | 552,646 | 539,604 | ||||||||||
Gross loans | 3,127,410 | 3,105,912 | 3,083,767 | 3,074,173 | 3,046,226 | ||||||||||
Allowance for loan losses | (18,836 | ) | (19,554 | ) | (19,063 | ) | (19,209 | ) | (19,730 | ) | |||||
Net loans | 3,108,574 | 3,086,358 | 3,064,704 | 3,054,964 | 3,026,496 | ||||||||||
Bank owned life insurance | 103,440 | 102,706 | 101,960 | 101,481 | 100,732 | ||||||||||
Premises and equipment, net | 72,682 | 72,334 | 72,809 | 73,805 | 75,165 | ||||||||||
Accrued interest receivable | 9,223 | 9,236 | 8,122 | 8,644 | 8,408 | ||||||||||
Net deferred tax assets | 11,981 | 22,355 | 22,944 | 24,606 | 28,043 | ||||||||||
Intangible assets | 78,595 | 78,730 | 78,865 | 79,000 | 79,135 | ||||||||||
Other assets | 36,361 | 36,060 | 35,138 | 38,029 | 38,681 | ||||||||||
Total Assets | $ | 4,132,349 | $ | 4,099,554 | $ | 4,057,399 | $ | 4,123,987 | $ | 3,984,403 | |||||
Liabilities | |||||||||||||||
Deposits: | |||||||||||||||
Noninterest-bearing | $ | 666,639 | $ | 669,876 | $ | 688,223 | $ | 714,791 | $ | 672,286 | |||||
Interest-bearing: | |||||||||||||||
Demand deposits | 769,245 | 711,121 | 722,440 | 743,246 | 695,891 | ||||||||||
Savings deposits | 796,275 | 799,592 | 797,552 | 874,031 | 822,057 | ||||||||||
Time deposits | 1,083,475 | 1,075,945 | 1,069,932 | 1,060,690 | 1,041,419 | ||||||||||
Total deposits | 3,315,634 | 3,256,534 | 3,278,147 | 3,392,758 | 3,231,653 | ||||||||||
Short-term borrowings | |||||||||||||||
Federal Funds purchased | 54,000 | 79,800 | 46,400 | — | 64,100 | ||||||||||
Customer repurchase agreements | 198,219 | 201,664 | 177,904 | 186,686 | 184,205 | ||||||||||
Long-term debt | 16,495 | 16,495 | 16,495 | 16,495 | 16,495 | ||||||||||
Other liabilities | 45,610 | 44,746 | 45,946 | 46,402 | 45,512 | ||||||||||
Total Liabilities | 3,629,958 | 3,599,239 | 3,564,892 | 3,642,341 | 3,541,965 | ||||||||||
Stockholders' Equity | |||||||||||||||
Preferred stock | — | — | — | — | — | ||||||||||
Common stock | 47,619 | 47,619 | 47,619 | 47,619 | 46,518 | ||||||||||
Capital surplus | 140,960 | 140,381 | 139,972 | 140,305 | 112,873 | ||||||||||
Retained earnings | 443,482 | 441,001 | 433,944 | 426,126 | 417,017 | ||||||||||
Cost of common stock in treasury | (124,909 | ) | (124,909 | ) | (124,943 | ) | (126,265 | ) | (126,958 | ) | |||||
Accumulated other comprehensive loss: | |||||||||||||||
Unrealized gain on securities available-for-sale | (513 | ) | 883 | 575 | (1,479 | ) | (2,352 | ) | |||||||
Underfunded pension liability | (4,248 | ) | (4,660 | ) | (4,660 | ) | (4,660 | ) | (4,660 | ) | |||||
Total Accumulated Other Comprehensive Loss | (4,761 | ) | (3,777 | ) | (4,085 | ) | (6,139 | ) | (7,012 | ) | |||||
Total Stockholders' Equity | 502,391 | 500,315 | 492,507 | 481,646 | 442,438 | ||||||||||
Total Liabilities and Stockholders' Equity | $ | 4,132,349 | $ | 4,099,554 | $ | 4,057,399 | $ | 4,123,987 | $ | 3,984,403 | |||||
Regulatory Capital | |||||||||||||||
Total CET 1 capital | $ | 429,155 | $ | 426,057 | $ | 418,449 | $ | 409,533 | $ | 371,677 | |||||
Total tier 1 capital | 445,155 | 442,057 | 434,449 | 425,533 | 387,677 | ||||||||||
Total risk-based capital | 464,293 | 463,198 | 454,832 | 445,938 | 408,406 | ||||||||||
Total risk-weighted assets | 2,841,969 | 2,824,751 | 2,812,443 | 2,807,347 | 2,772,456 | ||||||||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Loan Portfolio
(Unaudited) ($ in 000s)
December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||
2017 | 2017 | 2017 | 2017 | 2016 | |||||||||||
Residential real estate (1) | $ | 1,468,278 | $ | 1,465,942 | $ | 1,455,578 | $ | 1,444,795 | $ | 1,451,462 | |||||
Home equity - junior liens | 139,499 | 139,702 | 139,534 | 139,165 | 141,965 | ||||||||||
Commercial and industrial | 208,484 | 204,722 | 197,429 | 205,011 | 185,667 | ||||||||||
Commercial real estate (2) | 1,277,576 | 1,260,906 | 1,256,736 | 1,250,106 | 1,229,516 | ||||||||||
Consumer | 29,162 | 30,323 | 30,860 | 32,043 | 32,545 | ||||||||||
DDA overdrafts | 4,411 | 4,317 | 3,630 | 3,053 | 5,071 | ||||||||||
Gross Loans | $ | 3,127,410 | $ | 3,105,912 | $ | 3,083,767 | $ | 3,074,173 | $ | 3,046,226 | |||||
Construction loans included in: | |||||||||||||||
(1) - Residential real estate loans | $ | 25,270 | $ | 19,849 | $ | 12,056 | $ | 9,777 | $ | 14,182 | |||||
(2) - Commercial real estate loans | 28,871 | 24,318 | 20,204 | 18,499 | 12,840 | ||||||||||
Secondary Mortgage Loan Activity | |||||||||||||||
Mortgage loans originated | $ | 2,593 | $ | 4,474 | $ | 5,433 | $ | 3,951 | $ | 6,444 | |||||
Mortgage loans sold | 2,975 | 4,732 | 5,465 | 6,118 | 4,936 | ||||||||||
Mortgage loans gain on loans sold | 79 | 128 | 142 | 167 | 107 | ||||||||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Asset Quality Information
(Unaudited) ($ in 000s)
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | ||||||||||||||||
2017 | 2017 | 2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||
Allowance for Loan Losses | ||||||||||||||||||||||
Balance at beginning of period | $ | 19,554 | $ | 19,063 | $ | 19,209 | $ | 19,730 | $ | 19,550 | $ | 19,730 | $ | 19,251 | ||||||||
Charge-offs: | ||||||||||||||||||||||
Commercial and industrial | (250 | ) | (40 | ) | (57 | ) | (53 | ) | — | (400 | ) | (148 | ) | |||||||||
Commercial real estate | (156 | ) | (282 | ) | (102 | ) | (180 | ) | (463 | ) | (720 | ) | (1,676 | ) | ||||||||
Residential real estate | (342 | ) | (411 | ) | (258 | ) | (626 | ) | (453 | ) | (1,637 | ) | (1,734 | ) | ||||||||
Home equity | (147 | ) | (17 | ) | (118 | ) | (121 | ) | (90 | ) | (403 | ) | (390 | ) | ||||||||
Consumer | (13 | ) | (18 | ) | (23 | ) | (6 | ) | (24 | ) | (60 | ) | (126 | ) | ||||||||
DDA overdrafts | (725 | ) | (718 | ) | (635 | ) | (636 | ) | (395 | ) | (2,714 | ) | (1,412 | ) | ||||||||
Total charge-offs | (1,633 | ) | (1,486 | ) | (1,193 | ) | (1,622 | ) | (1,425 | ) | (5,934 | ) | (5,486 | ) | ||||||||
Recoveries: | ||||||||||||||||||||||
Commercial and industrial | 1 | 2 | 53 | 2 | 1 | 58 | 14 | |||||||||||||||
Commercial real estate | 20 | 60 | 21 | 11 | 40 | 112 | 487 | |||||||||||||||
Residential real estate | 8 | 130 | 131 | 25 | 74 | 294 | 187 | |||||||||||||||
Home equity | — | 45 | — | — | — | 45 | — | |||||||||||||||
Consumer | 17 | 21 | 14 | 11 | 9 | 63 | 118 | |||||||||||||||
DDA overdrafts | 447 | 326 | 319 | 371 | 180 | 1,463 | 764 | |||||||||||||||
Total recoveries | 493 | 584 | 538 | 420 | 304 | 2,035 | 1,570 | |||||||||||||||
Net charge-offs | (1,140 | ) | (903 | ) | (655 | ) | (1,202 | ) | (1,121 | ) | (3,900 | ) | (3,916 | ) | ||||||||
Provision for (recovery of) acquired loans | 122 | — | 58 | (19 | ) | (1 | ) | 161 | 163 | |||||||||||||
Provision for loan losses | 300 | 1,393 | 451 | 700 | 1,302 | 2,845 | 4,232 | |||||||||||||||
Balance at end of period | $ | 18,836 | $ | 19,554 | $ | 19,063 | $ | 19,209 | $ | 19,730 | $ | 18,836 | $ | 19,730 | ||||||||
Loans outstanding | $ | 3,127,410 | $ | 3,105,912 | $ | 3,083,767 | $ | 3,074,173 | $ | 3,046,226 | ||||||||||||
Allowance as a percent of loans outstanding | 0.6 | % | 0.63 | % | 0.62 | % | 0.62 | % | 0.65 | % | ||||||||||||
Allowance as a percent of non-performing loans | 178.4 | % | 182.8 | % | 177.6 | % | 167.7 | % | 140.1 | % | ||||||||||||
Average loans outstanding | $ | 3,110,084 | $ | 3,089,793 | $ | 3,073,255 | $ | 3,055,979 | $ | 3,006,426 | $ | 3,082,448 | $ | 2,920,837 | ||||||||
Net charge-offs (annualized) as a percent of average loans outstanding | 0.15 | % | 0.12 | % | 0.09 | % | 0.16 | % | 0.15 | % | 0.13 | % | 0.13 | % | ||||||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Asset Quality Information, Continued
(Unaudited) ($ in 000s)
December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||
2017 | 2017 | 2017 | 2017 | 2016 | |||||||||||
Nonaccrual Loans | |||||||||||||||
Residential real estate | $ | 2,814 | $ | 2,556 | $ | 1,608 | $ | 2,810 | $ | 4,302 | |||||
Home equity | 168 | 92 | 153 | 114 | 100 | ||||||||||
Commercial and industrial | 1,345 | 1,325 | 1,571 | 1,353 | 1,958 | ||||||||||
Commercial real estate | 5,970 | 6,700 | 7,250 | 7,141 | 7,341 | ||||||||||
Consumer | — | — | — | — | — | ||||||||||
Total nonaccrual loans | 10,297 | 10,673 | 10,582 | 11,418 | 13,701 | ||||||||||
Accruing loans past due 90 days or more | 262 | 22 | 150 | 35 | 382 | ||||||||||
Total non-performing loans | 10,559 | 10,695 | 10,732 | 11,453 | 14,083 | ||||||||||
Other real estate owned | 3,585 | 3,995 | 4,204 | 4,405 | 4,588 | ||||||||||
Total non-performing assets | $ | 14,144 | $ | 14,690 | $ | 14,936 | $ | 15,858 | $ | 18,671 | |||||
Non-performing assets as a percent of loans and other real estate owned | 0.45 | % | 0.47 | % | 0.48 | % | 0.52 | % | 0.61 | % | |||||
Past Due Loans | |||||||||||||||
Residential real estate | $ | 6,718 | $ | 5,295 | $ | 5,648 | $ | 3,876 | $ | 6,074 | |||||
Home equity | 851 | 873 | 628 | 301 | 673 | ||||||||||
Commercial and industrial | 692 | 304 | 259 | 611 | 94 | ||||||||||
Commercial real estate | 2,086 | 520 | 819 | 1,014 | 1,115 | ||||||||||
Consumer | 42 | 26 | 70 | 38 | 39 | ||||||||||
DDA overdrafts | 575 | 551 | 527 | 330 | 599 | ||||||||||
Total past due loans | $ | 10,964 | $ | 7,569 | $ | 7,951 | $ | 6,170 | $ | 8,594 | |||||
Total past due loans as a percent of loans outstanding | 0.35 | % | 0.24 | % | 0.26 | % | 0.20 | % | 0.28 | % | |||||
Troubled Debt Restructurings ("TDRs") (period-end) | |||||||||||||||
Accruing: | |||||||||||||||
Residential real estate | $ | 21,005 | $ | 20,741 | $ | 20,647 | $ | 20,294 | $ | 20,643 | |||||
Home equity | 3,047 | 2,947 | 3,146 | 3,104 | 3,105 | ||||||||||
Commercial and industrial | 135 | 31 | 35 | 38 | 42 | ||||||||||
Commercial real estate | 8,381 | 8,427 | 8,483 | 8,513 | 5,525 | ||||||||||
Consumer | — | — | — | — | — | ||||||||||
Total accruing TDRs | $ | 32,568 | $ | 32,146 | $ | 32,311 | $ | 31,949 | $ | 29,315 | |||||
Non-Accruing | |||||||||||||||
Residential real estate | $ | 84 | $ | 47 | 154 | $ | 100 | $ | 172 | ||||||
Home equity | 50 | — | — | 30 | 30 | ||||||||||
Commercial and industrial | — | — | — | — | — | ||||||||||
Commercial real estate | — | — | — | — | — | ||||||||||
Consumer | — | — | — | — | — | ||||||||||
Total non-accruing TDRs | $ | 134 | $ | 47 | $ | 154 | $ | 130 | $ | 202 | |||||
Total TDRs | $ | 32,702 | $ | 32,193 | $ | 32,465 | $ | 32,079 | $ | 29,517 | |||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)
Three Months Ended | ||||||||||||||||||||||||
December 31, 2017 | September 30, 2017 | December 31, 2016 | ||||||||||||||||||||||
Average | Yield/ | Average | Yield/ | Average | Yield/ | |||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||
Assets: | ||||||||||||||||||||||||
Loan portfolio (1): | ||||||||||||||||||||||||
Residential real estate (2) | $ | 1,608,509 | $ | 16,321 | 4.03 | % | $ | 1,598,037 | $ | 16,117 | 4.00 | % | $ | 1,597,711 | $ | 15,469 | 3.85 | % | ||||||
Commercial, financial, and agriculture (2) | 1,468,701 | 15,269 | 4.12 | % | 1,457,821 | 14,903 | 4.06 | % | 1,372,197 | 13,518 | 3.92 | % | ||||||||||||
Installment loans to individuals (2), (3) | 32,874 | 679 | 8.19 | % | 33,935 | 630 | 7.37 | % | 36,518 | 696 | 7.59 | % | ||||||||||||
Previously securitized loans (4) | *** | 260 | *** | *** | 353 | *** | *** | 443 | *** | |||||||||||||||
Total loans | 3,110,084 | 32,529 | 4.15 | % | 3,089,793 | 32,003 | 4.11 | % | 3,006,426 | 30,126 | 3.99 | % | ||||||||||||
Securities: | ||||||||||||||||||||||||
Taxable | 526,645 | 3,797 | 2.86 | % | 507,106 | 3,666 | 2.87 | % | 479,272 | 3,277 | 2.72 | % | ||||||||||||
Tax-exempt (5) | 91,886 | 1,064 | 4.59 | % | 91,276 | 1,024 | 4.45 | % | 64,351 | 739 | 4.57 | % | ||||||||||||
Total securities | 618,531 | 4,861 | 3.12 | % | 598,382 | 4,690 | 3.11 | % | 543,623 | 4,016 | 2.94 | % | ||||||||||||
Deposits in depository institutions | 31,060 | 35 | 0.45 | % | 31,517 | 31 | 0.39 | % | 11,117 | — | — | |||||||||||||
Total interest-earning assets | 3,759,675 | 37,425 | 3.95 | % | 3,719,692 | 36,724 | 3.92 | % | 3,561,166 | 34,142 | 3.81 | % | ||||||||||||
Cash and due from banks | 65,636 | 62,723 | 68,514 | |||||||||||||||||||||
Premises and equipment, net | 73,109 | 72,756 | 75,744 | |||||||||||||||||||||
Other assets | 247,688 | 247,076 | 249,271 | |||||||||||||||||||||
Less: Allowance for loan losses | (20,981 | ) | (20,038 | ) | (20,024 | ) | ||||||||||||||||||
Total assets | $ | 4,125,127 | $ | 4,082,209 | $ | 3,934,671 | ||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||
Interest-bearing demand deposits | $ | 702,614 | $ | 167 | 0.09 | % | $ | 700,625 | $ | 159 | 0.09 | % | $ | 689,784 | $ | 157 | 0.09 | % | ||||||
Savings deposits | 797,311 | 313 | 0.16 | % | 821,949 | 321 | 0.15 | % | 793,362 | 276 | 0.14 | % | ||||||||||||
Time deposits (2) | 1,079,179 | 3,462 | 1.27 | % | 1,070,941 | 3,316 | 1.23 | % | 1,036,103 | 2,704 | 1.04 | % | ||||||||||||
Short-term borrowings | 296,139 | 522 | 0.70 | % | 230,030 | 349 | 0.60 | % | 233,192 | 188 | 0.32 | % | ||||||||||||
Long-term debt | 16,495 | 201 | 4.83 | % | 16,495 | 195 | 4.69 | % | 16,495 | 179 | 4.32 | % | ||||||||||||
Total interest-bearing liabilities | 2,891,738 | 4,665 | 0.64 | % | 2,840,040 | 4,340 | 0.61 | % | 2,768,936 | 3,504 | 0.50 | % | ||||||||||||
Noninterest-bearing demand deposits | 681,554 | 698,106 | 680,604 | |||||||||||||||||||||
Other liabilities | 42,899 | 42,202 | 42,354 | |||||||||||||||||||||
Stockholders' equity | 508,936 | 501,861 | 442,777 | |||||||||||||||||||||
Total liabilities and | ||||||||||||||||||||||||
stockholders' equity | $ | 4,125,127 | $ | 4,082,209 | $ | 3,934,671 | ||||||||||||||||||
Net interest income | $ | 32,760 | $ | 32,384 | $ | 30,638 | ||||||||||||||||||
Net yield on earning assets | 3.46 | % | 3.45 | % | 3.42 | % | ||||||||||||||||||
(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 | $ | 126 | $ | 122 | $ | 160 | ||||||||||||||||||
Commercial, financial, and agriculture | 438 | 235 | 145 | |||||||||||||||||||||
Installment loans to individuals | 27 | 3 | 13 | |||||||||||||||||||||
Time deposits | — | — | 148 | |||||||||||||||||||||
$ | 591 | $ | 360 | $ | 466 | |||||||||||||||||||
(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 $0. | ||||||||||||||||||||||||
(5) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 35%. | ||||||||||||||||||||||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)
Nine Months Ended | ||||||||||||||||
December 31, 2017 | December 31, 2016 | |||||||||||||||
Average | Yield/ | Average | Yield/ | |||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||
Assets: | ||||||||||||||||
Loan portfolio (1): | ||||||||||||||||
Residential real estate (2) | $ | 1,598,579 | $ | 63,649 | 3.98 | % | $ | 1,565,079 | $ | 60,736 | 3.88 | % | ||||
Commercial, financial, and agriculture (2) | 1,450,144 | 58,243 | 4.02 | % | 1,318,094 | 52,812 | 4.01 | % | ||||||||
Installment loans to individuals (2), (3) | 33,725 | 2,514 | 7.45 | % | 37,664 | 2,917 | 7.75 | % | ||||||||
Previously securitized loans (4) | *** | 1,346 | *** | *** | 1,673 | *** | ||||||||||
Total loans | 3,082,448 | 125,752 | 4.08 | % | 2,920,837 | 118,138 | 4.04 | % | ||||||||
Securities: | ||||||||||||||||
Taxable | 492,783 | 14,387 | 2.92 | % | 444,110 | 12,392 | 2.79 | % | ||||||||
Tax-exempt (5) | 89,341 | 4,163 | 4.66 | % | 51,096 | 2,494 | 4.88 | % | ||||||||
Total securities | 582,124 | 18,550 | 3.19 | % | 495,206 | 14,886 | 3.01 | % | ||||||||
Deposits in depository institutions | 27,142 | 85 | 0.31 | % | 10,115 | — | — | % | ||||||||
Total interest-earning assets | 3,691,714 | 144,387 | 3.91 | % | 3,426,158 | 133,024 | 3.88 | % | ||||||||
Cash and due from banks | 85,473 | 95,295 | ||||||||||||||
Premises and equipment, net | 73,540 | 76,056 | ||||||||||||||
Other assets | 249,193 | 257,525 | ||||||||||||||
Less: Allowance for loan losses | (20,246 | ) | (19,953 | ) | ||||||||||||
Total assets | $ | 4,079,674 | $ | 3,835,081 | ||||||||||||
Liabilities: | ||||||||||||||||
Interest-bearing demand deposits | $ | 705,412 | $ | 643 | 0.09 | % | $ | 685,399 | $ | 615 | 0.09 | % | ||||
Savings deposits | 832,512 | 1,311 | 0.16 | % | 772,296 | 975 | 0.13 | % | ||||||||
Time deposits (2) | 1,067,181 | 12,872 | 1.21 | % | 1,029,172 | 10,462 | 1.02 | % | ||||||||
Short-term borrowings | 230,529 | 1,214 | 0.53 | % | 176,065 | 472 | 0.27 | % | ||||||||
Long-term debt | 16,495 | 765 | 4.64 | % | 16,495 | 683 | 4.14 | % | ||||||||
Total interest-bearing liabilities | 2,852,129 | 16,805 | 0.59 | % | 2,679,427 | 13,207 | 0.49 | % | ||||||||
Noninterest-bearing demand deposits | 693,280 | 679,950 | ||||||||||||||
Other liabilities | 41,597 | 44,673 | ||||||||||||||
Stockholders' equity | 492,668 | 431,031 | ||||||||||||||
Total liabilities and | ||||||||||||||||
stockholders' equity | $ | 4,079,674 | $ | 3,835,081 | ||||||||||||
Net interest income | $ | 127,582 | $ | 119,817 | ||||||||||||
Net yield on earning assets | 3.46 | % | 3.50 | % | ||||||||||||
(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 | 530 | 698 | ||||||||||||||
Commercial, financial, and agriculture | 1,345 | 1,505 | ||||||||||||||
Installment loans to individuals | 44 | 112 | ||||||||||||||
Time deposits | 16 | 592 | ||||||||||||||
$ | 1,935 | $ | 2,907 | |||||||||||||
(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 $0. | ||||||||||||||||
(5) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 35%. | ||||||||||||||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Non-GAAP Reconciliations
(Unaudited) ($ in 000s)
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | ||||||||||||||||
2017 | 2017 | 2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||
Net Interest Income/Margin | ||||||||||||||||||||||
Net interest income ("GAAP") | $ | 32,389 | $ | 32,026 | $ | 31,262 | $ | 30,447 | $ | 30,380 | $ | 126,125 | $ | 118,945 | ||||||||
Taxable equivalent adjustment | 371 | 358 | 370 | 357 | 258 | 1,456 | 869 | |||||||||||||||
Net interest income, fully taxable equivalent | $ | 32,760 | $ | 32,384 | $ | 31,632 | $ | 30,804 | $ | 30,638 | $ | 127,581 | $ | 119,814 | ||||||||
Average interest earning assets | $ | 3,759,675 | $ | 3,719,692 | $ | 3,669,715 | $ | 3,615,884 | $ | 3,561,166 | $ | 3,691,714 | $ | 3,426,158 | ||||||||
Net Interest Margin | 3.46 | % | 3.45 | % | 3.46 | % | 3.45 | % | 3.42 | % | 3.46 | % | 3.5 | % | ||||||||
Net interest income ("GAAP") | $ | 32,389 | $ | 32,026 | $ | 31,262 | $ | 30,447 | $ | 30,380 | $ | 126,125 | $ | 118,945 | ||||||||
Taxable equivalent adjustment | 371 | 358 | 370 | 357 | 258 | 1,456 | 869 | |||||||||||||||
Accretion related to fair value adjustments | (591 | ) | (360 | ) | (646 | ) | (338 | ) | (466 | ) | (1,935 | ) | (2,907 | ) | ||||||||
Net interest income, fully taxable equivalent, excluding accretion | $ | 32,169 | $ | 32,024 | $ | 30,986 | $ | 30,466 | $ | 30,172 | $ | 125,646 | $ | 116,907 | ||||||||
Net Interest Margin (excluding accretion) | 3.39 | % | 3.42 | % | 3.42 | % | 3.42 | % | 3.37 | % | 3.40 | % | 3.41 | % | ||||||||
Tangible Equity Ratio (period end) | ||||||||||||||||||||||
Tangible common equity to tangible assets | 10.45 | % | 10.49 | % | 10.4 | % | 9.95 | % | 9.3 | % | ||||||||||||
Effect of goodwill and other intangibles, net | 1.7 | % | 1.72 | % | 1.74 | % | 1.72 | % | 1.8 | % | ||||||||||||
Equity to assets ("GAAP") | 12.16 | % | 12.2 | % | 12.14 | % | 11.68 | % | 11.1 | % | ||||||||||||
Return on tangible equity ("GAAP") | 10.45 | % | 13.17 | % | 14.22 | % | 16.52 | % | 16.13 | % | 13.13 | % | 14.83 | % | ||||||||
Impact of effective tax rate decrease on deferred taxes | 5.11 | % | — | % | — | % | — | % | — | % | 1.63 | % | — | % | ||||||||
Return on tangible equity, excluding Impact of effective tax rate decrease on deferred taxes | 15.56 | % | 13.17 | % | 14.22 | % | 16.52 | % | 16.13 | % | 14.75 | % | 14.83 | % | ||||||||
Return on assets ("GAAP") | 0.94 | % | 1.37 | % | 1.43 | % | 1.6 | % | 1.49 | % | 1.33 | % | 1.36 | % | ||||||||
Impact of effective tax rate decrease on deferred taxes | 0.68 | % | — | % | — | % | — | % | — | % | 0.17 | % | — | % | ||||||||
Return on Assets, excluding Impact of effective tax rate decrease on deferred taxes | 1.62 | % | 1.37 | % | 1.43 | % | 1.6 | % | 1.49 | % | 1.5 | % | 1.36 | % | ||||||||
Income tax expense ("GAAP") | $ | 14,972 | $ | 7,003 | $ | 6,812 | $ | 7,647 | $ | 6,338 | $ | 36.435 | $ | 25.083 | ||||||||
FIN 48 | 331 | — | — | — | 554 | 331 | 554 | |||||||||||||||
Impact of effective tax rate decrease on deferred taxes | (7,069 | ) | — | — | — | — | (7.069 | ) | — | |||||||||||||
Income tax expense, excluding FIN 48 | $ | 8,234 | $ | 7,003 | $ | 6,812 | $ | 7,647 | $ | 6,892 | $ | 29.697 | $ | 25.637 | ||||||||
Income before income taxes | $ | 24,641 | $ | 20,935 | $ | 21,500 | $ | 23,673 | $ | 20,994 | $ | 90,745 | $ | 77,211 | ||||||||
Effective tax rate, excluding FIN 48 | 60.8 | % | 33.5 | % | 31.7 | % | 32.3 | % | 30.2 | % | 40.2 | % | 32.5 | % | ||||||||
Effective tax rate ("GAAP") | 33.4 | % | 33.5 | % | 31.7 | % | 32.3 | % | 32.8 | % | 32.7 | % | 33.2 | % | ||||||||