Attached files
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| 8-K - 8-K, CHCO 1Q2018 EARNINGS - CITY HOLDING CO | chco03-31x188xk.htm |
NEWS RELEASE
For Immediate Release
April 19, 2018
For Further Information Contact:
Charles R. Hageboeck, Chief Executive Officer and President
(304) 769-1102
City Holding Company Announces First Quarter Results
Charleston, West Virginia - 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, | December 31, | September 30, | June 30, | March 31, | |||||||||||
2018 | 2017 | 2017 | 2017 | 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: | |||||||||||||||
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 | 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 | 30.9 | ||||||||||
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 | 65.5 | 59.94 | 61.34 | 60.86 | ||||||||||
Period-end closing price | 68.56 | 67.47 | 71.91 | 65.87 | 64.48 | ||||||||||
Average daily volume | 56 | 66 | 54 | 56 | 57 | ||||||||||
Treasury share activity: | |||||||||||||||
Treasury shares repurchased | 204 | — | — | — | — | ||||||||||
Average treasury share repurchase price | $ | 68.5 | $ | — | $ | — | $ | — | $ | — | |||||
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 | 16.70 | % | 9.00 | % | 13.20 | % | 14.20 | % | 16.50 | % | |||||
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 | 30.70 | % | 32.20 | % | 31.30 | % | 32.30 | % | 31.90 | % | |||||
Efficiency Ratio (a) | 52.60 | % | 47.70 | % | 51.80 | % | 52.00 | % | 53.80 | % | |||||
Price/Earnings Ratio (b) | 15.17 | 27.30 | 20.2 | 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 | $ | 5,048 | $ | 4,925 | $ | 4,910 | $ | 4,836 | $ | 4,951 | |||||
Deposits per FTE | 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, | December 31, | September 30, | June 30, | March 31, | |||||||||||
2018 | 2017 | 2017 | 2017 | 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 | |||||||||||||||
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, | December 31, | September 30, | June 30, | March 31, | |||||||||||
2018 | 2017 | 2017 | 2017 | 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 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, | December 31, | September 30, | June 30, | March 31, | |||||||||||
2018 | 2017 | 2017 | 2017 | 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, | December 31, | March 31, | June 30, | March 31, | |||||||||||
2018 | 2017 | 2017 | 2017 | 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 | % | 0.6 | % | 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, | December 31, | March 31, | June 30, | March 31, | |||||||||||
2018 | 2017 | 2017 | 2017 | 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 | ||||||||||
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") (period-end) | |||||||||||||||
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)
Three Months Ended | |||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||
2018 | 2017 | 2017 | 2017 | 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 | — | % | 6.57 | % | — | % | — | % | — | % | |||||
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 | — | % | 0.68 | % | — | % | — | % | — | % | |||||
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 | — | % | 1.34 | % | — | % | — | % | — | % | |||||
Impact of effective tax rate decrease on deferred taxes | — | % | (28.69 | )% | — | % | — | % | — | % | |||||
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 | % | |||||