Attached files
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| 8-K - FORM 8-K, CHCO 4Q2015 EARNINGS - CITY HOLDING CO | chco12-31x158xk.htm |
NEWS RELEASE
For Immediate Release
January 25, 2016
For Further Information Contact:
Charles R. Hageboeck, Chief Executive Officer and President
(304) 769-1102
City Holding Company Announces Record Annual Earnings
Charleston, West Virginia - City Holding Company, “the Company” (NASDAQ:CHCO), a $3.7 billion bank holding company headquartered in Charleston, today announced record net income of $54.1 million, or $3.53 per diluted share, for the year ended December 31, 2015. City’s net income increased $1.1 million from 2014 due primarily to the gain recognized from the sale of its insurance operations, “CityInsurance”, effective January 1, 2015. For 2015, the Company achieved a return on assets of 1.52%, a return on tangible equity of 15.8%, a net interest margin of 3.76%, and an efficiency ratio of 53.7%.
For the fourth quarter of 2015 the Company reported net income of $13.5 million, or $0.88 per diluted share. The Company achieved a return on assets of 1.48%, a return on tangible equity of 15.5%, a net interest margin of 3.62%, and an efficiency ratio of 48.6% in the fourth quarter of 2015.
Net Interest Income
The Company’s tax equivalent net interest income decreased $2.4 million, or 2.0%, from $118.2 million in 2014 to $115.8 million in 2015. This decrease is due primarily to a decrease of 25 basis points in the yield on interest-earning assets from 4.39% in 2014 to 4.14% in 2015. During 2015, the Company continued to originate a significant portion of its commercial loans based on WSJ Prime or LIBOR and has elected to maintain fixed rate investment security balances below 15% of total assets. The Company believes that these measures will position its balance sheet to benefit from an increasing rate environment. The Company’s reported net interest margin decreased from 3.98% for the year ended December 31, 2014 to 3.76% for the year ended December 31, 2015. Excluding the favorable impact of the accretion from fair value adjustments on recent acquisitions, the net interest margin would have been 3.54% for the year ended December 31, 2015 and 3.75% for the year ended December 31, 2014. The decrease was primarily caused by loan yields compressing from 4.27% for the year ended December 31, 2014 to 4.05% for the year ended December 31, 2015.
During the fourth quarter of 2015, the Company’s tax equivalent net interest income increased $1.4 million, or 4.9%, to $29.4 million from $28.0 million during the third quarter of 2015. This increase was largely due to City’s acquisition of three branches in Lexington, KY, from American Founders Bank, Inc. (“AFB”) in November 2015. In addition, strong originations of residential real estate loans and investment purchases also contributed to the increase. The Company’s reported net interest margin remained stable at 3.62% for both the third quarter of 2015 and the fourth quarter of 2015. Excluding the favorable impact of the accretion from the fair value adjustments ($1.6 million for the quarter ended December 31, 2015 and $1.1 million for the quarter ended September 30, 2015), the net interest margin would have been 3.42% for the quarter ended December 31, 2015 and 3.48% for the quarter ended September 30, 2015.
Credit Quality
The Company’s ratio of nonperforming assets to total loans and other real estate owned decreased from 0.90% at December 31, 2014 to 0.83% at December 31, 2015. Total non-performing assets increased modestly from $23.9 million at December 31, 2014 to $24.0 million at December 31, 2015. Excluded from these ratios and balances are purchased credit-impaired loans which continue to perform in accordance with the estimated expectations. Such loans would be considered nonperforming loans if any such loan’s performance deteriorates below the initial expectations. Total past due loans decreased from $10.7 million, or 0.40% of total loans outstanding, at December 31, 2014 to $9.2 million, or 0.32% of total loans outstanding, at December 31, 2015. Acquired past due loans represent approximately 18% of total past due loans and have declined $14.8 million, or 90%, since March 31, 2013.
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 $2.8 million in the fourth quarter of 2015 and $7.0 million for the year ended December 31, 2015 compared to $0.4 million and $4.1 million of the comparable periods in 2014. The provision for loan losses recorded in 2015 reflects the impact of several factors, including difficulties encountered by a certain commercial borrower of the Company engaged in the mining and energy sectors (per the North American Industry Classification System (NAICS)) which filed for bankruptcy during 2015, the modest growth in the loan portfolio, and changes in the quality of the portfolio. 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.
Non-interest Income
During 2015, the Company realized investment gains of $2.1 million from the call of trust preferred securities which represented a partial recovery of impairment charges previously recognized. In addition, the Company sold its insurance operations, CityInsurance, effective January 1, 2015, which resulted in a pre-tax gain of $11.1 million. Exclusive of these gains, non-interest income decreased $3.6 million to $54.0 million for the year ended December 31, 2015 as compared to $57.6 million for the year ended December 31, 2014. This decrease was primarily attributable to the sale of CityInsurance which had insurance commission revenues of $6.0 million in 2014. Additionally, service charges decreased $0.3 million, or 1.0%, from $26.6 million in 2014 to $26.3 million in 2015. These decreases were partially offset by an increase in other income of $1.0 million primarily due to mortgage banking activities, an increase of $0.8 million, or 5.5%, in bankcard revenues to $15.9 million, and an increase of $0.5 million, or 11.1%, in trust revenues to $5.1 million.
Exclusive of net investment securities gains, total non-interest income decreased $0.4 million from $14.5 million for the fourth quarter of 2014 to $14.1 million for the fourth quarter of 2015. This decrease was due to the sale of CityInsurance which had insurance commission revenues of $1.2 million in the fourth quarter of 2014. This decrease was partially offset by an increase in other income of $0.2 million, an increase of $0.2 million in trust revenues, and a $0.2 million increase in bankcard revenues.
Non-interest Expenses
During 2015, the Company recognized $0.6 million of acquisition and integration expenses associated with the completed acquisition of three branches from AFB. Excluding acquisition related expenses, noninterest expenses decreased $2.7 million from $95.0 million for the year ended December 31, 2014 to
$92.3 million for the year ended December 31, 2015. Salaries and employee benefits decreased $3.9 million from 2014 largely as a result of the sale of CityInsurance and an overall reduction of retail branch staff. Additionally, advertising expenses decreased $0.8 million from 2014. These decreases were partially offset by increases in other expenses of $1.3 million and repossessed asset losses of $0.7 million. Other expenses increased primarily as a result of the previously disclosed write down of the Company’s partnership investment in Mountaineer Capital LP of $1.45 million in 2015.
Exclusive of acquisition and integration related expenses of $0.3 million, total non-interest expenses decreased $2.2 million, from $23.0 million for the fourth quarter of 2014 to $20.8 million. This decrease was due to a decrease in salaries and employee benefits ($1.2 million) due primarily to the sale of CityInsurance and lower health insurance expenses, other expenses ($0.6 million), and advertising expenses ($0.5 million).
Balance Sheet Trends
Loans increased $211.3 million (8.0%) from December 31, 2014 to $2.86 billion at December 31, 2015 primarily due to the acquisition of three branches from AFB ($114.4 million). Excluding the acquisition of the three branches from AFB, loans increased $96.9 million (3.7%) from December 31, 2014 to $2.75 billion at December 31, 2015. Increases in residential real estate loans of $81.2 million (6.3%) and commercial real estate loans of $47.9 million (4.7%) were partially offset by decreases in commercial and industrial (“C&I”) loans ($23.8 million), home equity loans ($4.8 million), and consumer loans of ($4.2 million).
Total average depository balances increased $146.7 million, or 5.2%, from the quarter ended December 31, 2014 to the quarter ended December 31, 2015. This growth was partially attributable to deposits acquired from the three branches acquired from AFB ($74.8 million). Exclusive of this contribution, the Company had increases in savings deposits ($63.0 million), noninterest-bearing demand deposits ($37.6 million), and interest-bearing demand deposits ($23.2 million) which were partially offset by a decrease in time deposits ($51.9 million).
Income Tax Expense
The Company’s effective income tax rate for the year ended December 31, 2015 was 34.4% compared to 31.4% for the year ended December 31, 2014. During the years ended December 31, 2015 and December 31, 2014, the Company reduced income tax expense by $0.6 million and $1.8 million, respectively, due to the recognition of previously unrecognized tax positions. In addition, as previously noted, the Company sold CityInsurance in the first quarter of 2015. As a result of differences between the book and tax basis of the assets that were sold, the Company’s income tax expense increased by $1.1 million. Exclusive of these items, the Company’s tax rate from operations was 33.6% and 33.8% for the year ended December 31, 2015 and December 31, 2014, respectively.
The Company’s effective income tax rate for the quarter ended December 31, 2015 was 30.0% compared to 29.1% for the quarter ended December 31, 2014. During the quarters ended December 31, 2015, and December 31, 2014, the Company reduced income tax expense by $0.6 million and $1.0 million, respectively, due to the recognition of previously unrecognized tax positions resulting from the close of the statute of limitations for previous tax years. Exclusive of these items, the Company’s tax rate from operations was 33.6% and 33.8% for the quarters ended December 31, 2015 and December 31, 2014, respectively.
Capitalization and Liquidity
The Company’s loan to deposit ratio was 92.8% and the loan to asset ratio was 77.1% at December 31, 2015. The Company maintained investment securities totaling 12.7% of assets as of this date. Further, the Company’s deposit mix is weighted heavily toward checking and saving accounts that fund 55.7% of assets at December 31, 2015. Time deposits fund 27.4% of assets at December 31, 2015, but very few of these deposits are in accounts that have balances of more than $250,000, reflecting the core retail orientation of the Company.
The Company continues to be strongly capitalized. The Company’s tangible equity ratio was 9.3% at December 31, 2015 compared to 9.4% at December 31, 2014. At December 31, 2015, City National Bank’s Leverage Ratio is 8.14%, its Common Equity Tier I ratio is 10.53%, its Tier I Capital ratio is 11.48%, and its Total Risk-Based Capital ratio is 12.28%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory capital designation.
On December 16, 2015, the Board approved a quarterly cash dividend of $0.42 cents per share payable January 29, 2016, to shareholders of record as of January 15, 2016. During the year ended December 31, 2015, the Company repurchased 150,000 common shares at a weighted average price of $46.91 as part of a one million share repurchase plan authorized by the Board of Directors in September 2014. As of December 31, 2015, the Company could repurchase approximately 633,000 shares under the current plan.
As previously reported, effective December 31, 2015, Philip L. McLaughlin resigned as Chairman of the Board of Directors of City Holding Company. The Company’s Board elected C. Dallas Kayser to succeed Mr. McLaughlin as Chairman of the Board.
City Holding Company is the parent company of City National Bank of West Virginia. City National operates 85 branches across West Virginia, Virginia, Kentucky, and Ohio.
Forward-Looking Information
This news release contains certain forward-looking statements that are included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such information involves risks and uncertainties that could result in the Company's actual results differing materially from those projected in the forward-looking statements. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include, but are not limited to, (1) the Company may incur additional loan loss provision due to negative credit quality trends in the future that may lead to a deterioration of asset quality; (2) the Company may incur increased charge-offs in the future; (3) the Company could have adverse legal actions of a material nature; (4) the Company may face competitive loss of customers; (5) the Company may be unable to manage its expense levels; (6) the Company may have difficulty retaining key employees; (7) changes in the interest rate environment may have results on the Company’s operations materially different from those anticipated by the Company’s market risk management functions; (8) changes in general economic conditions and increased competition could adversely affect the Company’s operating results; (9) changes in other regulations and government policies affecting bank holding companies and their subsidiaries, including changes in monetary policies, could negatively impact the Company’s operating results; (10) the Company may experience difficulties growing loan and deposit balances; (11) the current economic environment poses significant challenges for us and could adversely affect our financial condition and results of operations; (12) deterioration in the financial condition of the U.S. banking system may impact the valuations of investments the Company has made in the securities of other financial institutions resulting in either actual losses or other than temporary impairments on such investments; (13) the effects of the Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and the regulations promulgated and to be promulgated thereunder, which may subject the Company and its subsidiaries to a variety of new and more stringent legal and regulatory requirements which adversely affect their respective businesses; (14) the impact of new minimum capital thresholds established as a part of the
implementation of Basel III; and (15) other risk factors relating to the banking industry or the Company as detailed from time to time in the Company’s reports filed with the Securities and Exchange Commission, including those risk factors included in the disclosures under the heading “ITEM 1A Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014. Forward-looking statements made herein reflect management's expectations as of the date such statements are made. Such information is provided to assist stockholders and potential investors in understanding current and anticipated financial operations of the Company and is included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances that arise after the date such statements are made. Further, the Company is required to evaluate subsequent events through the filing of its December 31, 2015 Form 10-K. The Company will continue to evaluate the impact of any subsequent events on the preliminary December 31, 2015 results and will adjust the amounts if necessary.
CITY HOLDING COMPANY AND SUBSIDIARIES
Financial Highlights
(Unaudited)
Three Months Ended December 31, | Percent | ||||||
2015 | 2014 | Change | |||||
Earnings ($000s, except per share data): | |||||||
Net Interest Income (FTE) | $ | 29,391 | $ | 29,405 | (0.05)% | ||
Net Income available to common shareholders | 13,515 | 14,530 | (6.99)% | ||||
Earnings per Basic Share | 0.88 | 0.95 | (7.42)% | ||||
Earnings per Diluted Share | 0.88 | 0.95 | (7.00)% | ||||
Key Ratios (percent): | |||||||
Return on Average Assets | 1.48 | % | 1.69 | % | (12.05)% | ||
Return on Average Tangible Equity | 15.49 | % | 18.26 | % | (15.14)% | ||
Net Interest Margin | 3.62 | % | 3.89 | % | (6.90)% | ||
Efficiency Ratio | 48.55 | % | 52.14 | % | (6.89)% | ||
Average Shareholders' Equity to Average Assets | 11.65 | % | 11.40 | % | 2.21% | ||
Consolidated Risk Based Capital Ratios (a): | |||||||
CET I | 13.65 | % | * | N/A | |||
Tier I | 14.28 | % | 13.36 | % | 6.89% | ||
Total | 15.10 | % | 14.19 | % | 6.41% | ||
Tangible Equity to Tangible Assets | 9.34 | % | 9.35 | % | (0.05)% | ||
Common Stock Data: | |||||||
Cash Dividends Declared per Share | $ | 0.42 | $ | 0.40 | 5.00% | ||
Book Value per Share | 27.61 | 25.79 | 7.06% | ||||
Tangible Book Value per Share | 22.36 | 20.90 | 6.99% | ||||
Market Value per Share: | |||||||
High | 51.12 | 46.95 | 8.88% | ||||
Low | 43.85 | 41.88 | 4.70% | ||||
End of Period | 45.64 | 46.53 | (1.91)% | ||||
Price/Earnings Ratio (b) | 12.94 | 12.22 | 5.95% | ||||
Twelve Months Ended December 31, | Percent | ||||||
2015 | 2014 | Change | |||||
Earnings ($000s, except per share data): | |||||||
Net Interest Income (FTE) | $ | 115,856 | $ | 118,221 | (2.00)% | ||
Net Income available to common shareholders | 54,097 | 52,962 | 2.14% | ||||
Earnings per Basic Share | 3.54 | 3.40 | 3.96% | ||||
Earnings per Diluted Share | 3.53 | 3.38 | 4.21% | ||||
Key Ratios (percent): | |||||||
Return on Average Assets | 1.52 | % | 1.56 | % | (2.44)% | ||
Return on Average Tangible Equity | 15.77 | % | 16.49 | % | (4.33)% | ||
Net Interest Margin | 3.76 | % | 3.98 | % | (5.69)% | ||
Efficiency Ratio (c) | 53.67 | % | 53.72 | % | (0.09)% | ||
Average Shareholders' Equity to Average Assets | 11.64 | % | 11.63 | % | 0.12% | ||
Common Stock Data: | |||||||
Cash Dividends Declared per Share | 1.68 | 1.60 | 5.00% | ||||
Market Value per Share: | |||||||
High | 51.73 | 46.95 | 10.18% | ||||
Low | 41.76 | 41.20 | 1.36% | ||||
Price/Earnings Ratio (b) | 12.91 | 13.68 | (5.65)% | ||||
(a) December 31, 2015 risk-based capital ratios are estimated. | |||||||
(b) December 31, 2015 price/earnings ratio computed based on annualized fourth quarter 2015 earnings. | |||||||
(c) The December 31, 2015 YTD efficiency ratio calculation excludes the gain on sale of insurance division. | |||||||
(*) Basel III CET 1 ratio requirements are effective beginning January 1, 2015 and are not required for prior periods. | |||||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Financial Highlights
(Unaudited)
Book Value and Market Price Range per Share | ||||||||||||||||||
Market Price | ||||||||||||||||||
Book Value per Share | Range per Share | |||||||||||||||||
March 31 | June 30 | September 30 | December 31 | Low | High | |||||||||||||
2011 | $ | 20.39 | $ | 20.58 | $ | 20.86 | $ | 21.05 | $ | 26.06 | $ | 37.22 | ||||||
2012 | 21.46 | 21.63 | 22.14 | 22.47 | 30.96 | 37.16 | ||||||||||||
2013 | 23.36 | 23.52 | 24.03 | 24.61 | 36.07 | 49.21 | ||||||||||||
2014 | 25.05 | 25.45 | 25.52 | 25.85 | 41.20 | 46.95 | ||||||||||||
2015 | 26.63 | 26.92 | 27.34 | 27.61 | 43.85 | 51.12 | ||||||||||||
Earnings per Basic Share | ||||||||||||||||||
Quarter Ended | ||||||||||||||||||
March 31 | June 30 | September 30 | December 31 | Year-to-Date | ||||||||||||||
2011 | $ | 0.62 | $ | 0.65 | $ | 0.77 | $ | 0.65 | $ | 2.68 | ||||||||
2012 | 0.68 | 0.50 | 0.71 | 0.73 | 2.63 | |||||||||||||
2013 | 0.51 | 0.83 | 0.89 | 0.84 | 3.07 | |||||||||||||
2014 | 0.87 | 0.81 | 0.76 | 0.95 | 3.40 | |||||||||||||
2015 | 1.18 | 0.78 | 0.69 | 0.88 | 3.54 | |||||||||||||
Earnings per Diluted Share | ||||||||||||||||||
Quarter Ended | ||||||||||||||||||
March 31 | June 30 | September 30 | December 31 | Year-to-Date | ||||||||||||||
2011 | $ | 0.62 | $ | 0.64 | $ | 0.76 | $ | 0.65 | $ | 2.67 | ||||||||
2012 | 0.67 | 0.50 | 0.71 | 0.73 | 2.61 | |||||||||||||
2013 | 0.51 | 0.82 | 0.88 | 0.83 | 3.04 | |||||||||||||
2014 | 0.86 | 0.80 | 0.76 | 0.95 | 3.38 | |||||||||||||
2015 | 1.17 | 0.78 | 0.69 | 0.88 | 3.53 | |||||||||||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)
Three Months Ended December 31, | |||||||
2015 | 2014 | ||||||
Interest Income | |||||||
Interest and fees on loans | $ | 29,032 | $ | 29,011 | |||
Interest on investment securities: | |||||||
Taxable | 2,856 | 2,969 | |||||
Tax-exempt | 334 | 302 | |||||
Total Interest Income | 32,222 | 32,282 | |||||
Interest Expense | |||||||
Interest on deposits | 2,760 | 2,792 | |||||
Interest on short-term borrowings | 91 | 96 | |||||
Interest on long-term debt | 159 | 153 | |||||
Total Interest Expense | 3,010 | 3,041 | |||||
Net Interest Income | 29,212 | 29,241 | |||||
Provision for loan losses | 2,813 | 384 | |||||
Net Interest Income After Provision for Loan Losses | 26,399 | 28,857 | |||||
Non-Interest Income | |||||||
Gains on sale of investment securities | — | 184 | |||||
Service charges | 6,893 | 6,750 | |||||
Bankcard revenue | 3,923 | 3,744 | |||||
Insurance commissions | — | 1,238 | |||||
Trust and investment management fee income | 1,547 | 1,363 | |||||
Bank owned life insurance | 898 | 778 | |||||
Gain on sale of insurance division | — | — | |||||
Other income | 813 | 612 | |||||
Total Non-Interest Income | 14,074 | 14,669 | |||||
Non-Interest Expense | |||||||
Salaries and employee benefits | 11,296 | 12,489 | |||||
Occupancy and equipment | 2,583 | 2,449 | |||||
Depreciation | 1,539 | 1,534 | |||||
FDIC insurance expense | 443 | 448 | |||||
Advertising | 264 | 726 | |||||
Bankcard expenses | 778 | 948 | |||||
Postage, delivery, and statement mailings | 532 | 549 | |||||
Office supplies | 273 | 360 | |||||
Legal and professional fees | 662 | 552 | |||||
Telecommunications | 409 | 522 | |||||
Repossessed asset losses, net of expenses | 217 | 27 | |||||
Merger related expenses | 315 | — | |||||
Other expenses | 1,854 | 2,431 | |||||
Total Non-Interest Expense | 21,165 | 23,035 | |||||
Income Before Income Taxes | 19,308 | 20,491 | |||||
Income tax expense | 5,793 | 5,961 | |||||
Net Income Available to Common Shareholders | $ | 13,515 | $ | 14,530 | |||
Distributed earnings allocated to common shareholders | $ | 6,303 | $ | 5,996 | |||
Undistributed earnings allocated to common shareholders | 7,059 | 8,378 | |||||
Net earnings allocated to common shareholders | $ | 13,362 | $ | 14,374 | |||
Average common shares outstanding | 15,158 | 15,096 | |||||
Effect of dilutive securities: | |||||||
Employee stock options and warrants | 17 | 86 | |||||
Shares for diluted earnings per share | 15,175 | 15,182 | |||||
Basic earnings per common share | $ | 0.88 | $ | 0.95 | |||
Diluted earnings per common share | $ | 0.88 | $ | 0.95 | |||
Dividends declared per common share | $ | 0.42 | $ | 0.40 | |||
Comprehensive Income | $ | 13,134 | $ | 13,292 | |||
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)
Twelve months ended December 31, | |||||||
2015 | 2014 | ||||||
Interest Income | |||||||
Interest and fees on loans | $ | 115,107 | $ | 116,658 | |||
Interest on investment securities: | |||||||
Taxable | 10,830 | 11,766 | |||||
Tax-exempt | 1,137 | 1,142 | |||||
Total Interest Income | 127,074 | 129,566 | |||||
Interest Expense | |||||||
Interest on deposits | 10,886 | 11,012 | |||||
Interest on short-term borrowings | 327 | 342 | |||||
Interest on long-term debt | 617 | 606 | |||||
Total Interest Expense | 11,830 | 11,960 | |||||
Net Interest Income | 115,244 | 117,606 | |||||
Provision for loan losses | 6,988 | 4,054 | |||||
Net Interest Income After Provision for Loan Losses | 108,256 | 113,552 | |||||
Non-Interest Income | |||||||
Gains on sale of investment securities | 2,130 | 1,156 | |||||
Service charges | 26,316 | 26,583 | |||||
Bankcard revenue | 15,894 | 15,063 | |||||
Insurance commissions | — | 5,978 | |||||
Trust and investment management fee income | 5,124 | 4,614 | |||||
Bank owned life insurance | 3,374 | 3,070 | |||||
Gain on sale of insurance division | 11,084 | — | |||||
Other income | 3,284 | 2,258 | |||||
Total Non-Interest Income | 67,206 | 58,722 | |||||
Non-Interest Expense | |||||||
Salaries and employee benefits | 47,847 | 51,749 | |||||
Occupancy and equipment | 10,277 | 9,990 | |||||
Depreciation | 6,088 | 6,087 | |||||
FDIC insurance expense | 1,794 | 1,647 | |||||
Advertising | 2,446 | 3,274 | |||||
Bankcard expenses | 3,262 | 3,555 | |||||
Postage, delivery, and statement mailings | 2,123 | 2,211 | |||||
Office supplies | 1,350 | 1,595 | |||||
Legal and professional fees | 2,391 | 2,049 | |||||
Telecommunications | 1,765 | 1,876 | |||||
Repossessed asset losses, net of expenses | 1,264 | 579 | |||||
Merger related expenses | 598 | — | |||||
Other expenses | 11,746 | 10,429 | |||||
Total Non-Interest Expense | 92,951 | 95,041 | |||||
Income Before Income Taxes | 82,511 | 77,233 | |||||
Income tax expense | 28,414 | 24,271 | |||||
Net Income Available to Common Shareholders | $ | 54,097 | $ | 52,962 | |||
Distributed earnings allocated to common shareholders | $ | 25,212 | $ | 23,984 | |||
Undistributed earnings allocated to common shareholders | 28,272 | 28,416 | |||||
Net earnings allocated to common shareholders | $ | 53,484 | $ | 52,400 | |||
Average common shares outstanding | 15,123 | 15,403 | |||||
Effect of dilutive securities: | |||||||
Employee stock options and warrants | 48 | 85 | |||||
Shares for diluted earnings per share | 15,171 | 15,488 | |||||
Basic earnings per common share | $ | 3.54 | $ | 3.40 | |||
Diluted earnings per common share | $ | 3.53 | $ | 3.38 | |||
Dividends declared per common share | $ | 1.68 | $ | 1.60 | |||
Comprehensive Income | $ | 54,315 | $ | 53,793 | |||
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholder's Equity
(Unaudited) ($ in 000s, except per share data)
Three Months Ended | ||||||
December 31, 2015 | December 31, 2014 | |||||
Balance at October 1 | $ | 418,767 | $ | 391,673 | ||
Net income | 13,515 | 14,530 | ||||
Other comprehensive income: | ||||||
Change in unrealized gain (loss) on securities available-for-sale | (862 | ) | 1,232 | |||
Change in underfunded pension liability | 481 | (2,470 | ) | |||
Cash dividends declared ($0.42/share) and ($0.40/share), respectively | (6,376 | ) | (6,040 | ) | ||
Issuance of stock award shares, net | 363 | 326 | ||||
Exercise of 9,750 stock options | 330 | — | ||||
Exercise of 1,000 stock options | — | 26 | ||||
Purchase of 150,385 common shares of treasury | (7,055 | ) | — | |||
Purchase of 193,943 common shares of treasury | — | (8,424 | ) | |||
Balance at December 31 | $ | 419,163 | $ | 390,853 | ||
Twelve Months Ended | ||||||
December 31, 2015 | December 31, 2014 | |||||
Balance at January 1 | $ | 390,853 | $ | 387,623 | ||
Net income | 54,097 | 52,962 | ||||
Other comprehensive income: | ||||||
Change in unrealized gain (loss) on securities available-for-sale | (263 | ) | 3,301 | |||
Change in underfunded pension liability | 481 | (2,470 | ) | |||
Cash dividends declared ($1.68/share) and ($1.60/share), respectively | (25,618 | ) | (24,721 | ) | ||
Issuance of stock award shares, net | 1,793 | 1,535 | ||||
Exercise of 81,500 stock options | 2,979 | — | ||||
Exercise of 20,000 stock options | — | 580 | ||||
Exercise of 61,796 warrants | 1,896 | — | ||||
Purchase of 150,385 common shares of treasury | (7,055 | ) | — | |||
Purchase of 650,799 common shares of treasury | — | (27,957 | ) | |||
Balance at December 31 | $ | 419,163 | $ | 390,853 | ||
CITY HOLDING COMPANY AND SUBSIDIARIES
Condensed Consolidated Quarterly Statements of Income
(Unaudited) ($ in 000s, except per share data)
Quarter Ended | |||||||||||||||
December 31 | September 30 | June 30 | March 31 | December 31 | |||||||||||
2015 | 2015 | 2015 | 2015 | 2014 | |||||||||||
Interest income | $ | 32,222 | $ | 30,768 | $ | 31,720 | $ | 32,364 | $ | 32,282 | |||||
Taxable equivalent adjustment | 179 | 147 | 144 | 142 | 164 | ||||||||||
Interest income (FTE) | 32,401 | 30,915 | 31,864 | 32,506 | 32,446 | ||||||||||
Interest expense | 3,010 | 2,910 | 2,937 | 2,973 | 3,041 | ||||||||||
Net interest income | 29,391 | 28,005 | 28,927 | 29,533 | 29,405 | ||||||||||
Provision for loan losses | 2,813 | 451 | 2,836 | 888 | 384 | ||||||||||
Net interest income after provision | |||||||||||||||
for loan losses | 26,578 | 27,554 | 26,091 | 28,645 | 29,021 | ||||||||||
Noninterest income | 14,074 | 13,706 | 15,405 | 24,021 | 14,669 | ||||||||||
Noninterest expense | 21,165 | 25,377 | 23,244 | 23,165 | 23,035 | ||||||||||
Income before income taxes | 19,487 | 15,883 | 18,252 | 29,501 | 20,655 | ||||||||||
Income tax expense | 5,793 | 5,129 | 6,125 | 11,367 | 5,961 | ||||||||||
Taxable equivalent adjustment | 179 | 147 | 144 | 142 | 164 | ||||||||||
Net income | $ | 13,515 | $ | 10,607 | $ | 11,983 | $ | 17,992 | $ | 14,530 | |||||
Allocated to common shareholders: | |||||||||||||||
Distributed earnings | $ | 6,303 | $ | 6,362 | $ | 6,344 | $ | 6,315 | $ | 5,996 | |||||
Undistributed earnings | 7,059 | 4,125 | 5,505 | 11,468 | 8,378 | ||||||||||
Net earnings allocated to common shareholders | $ | 13,362 | $ | 10,487 | $ | 11,849 | $ | 17,783 | $ | 14,374 | |||||
Average common shares outstanding | 15,158 | 15,178 | 15,104 | 15,067 | 15,096 | ||||||||||
Effect of dilutive securities: | |||||||||||||||
Employee stock options and warrants | 17 | 20 | 23 | 82 | 86 | ||||||||||
Shares for diluted earnings per share | 15,175 | 15,198 | 15,127 | 15,149 | 15,182 | ||||||||||
Basic earnings per common share | $ | 0.88 | $ | 0.69 | $ | 0.78 | $ | 1.18 | $ | 0.95 | |||||
Diluted earnings per common share | 0.88 | 0.69 | 0.78 | 1.17 | 0.95 | ||||||||||
Cash dividends declared per share | 0.42 | 0.42 | 0.42 | 0.42 | 0.40 | ||||||||||
Net Interest Margin | 3.62 | % | 3.62 | % | 3.82 | % | 3.99 | % | 3.89 | % | |||||
Interest Income from Accretion Related to Fair | |||||||||||||||
Value Adjustments Recorded as a | |||||||||||||||
Result of Acquisition: | $ | 1,572 | $ | 1,056 | $ | 1,607 | $ | 2,450 | $ | 1,307 | |||||
Net Interest Margin (excluding accretion) | 3.42 | % | 3.48 | % | 3.60 | % | 3.66 | % | 3.71 | % | |||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Non-Interest Income and Non-Interest Expense
(Unaudited) ($ in 000s)
Quarter Ended | |||||||||||||||
December 31 | September 30 | June 30 | March 31 | December 31 | |||||||||||
2015 | 2015 | 2015 | 2015 | 2014 | |||||||||||
Non-Interest Income: | |||||||||||||||
Service charges | $ | 6,893 | $ | 6,907 | $ | 6,589 | $ | 5,927 | $ | 6,750 | |||||
Bankcard revenue | 3,923 | 3,895 | 4,002 | 4,074 | 3,744 | ||||||||||
Insurance commissions | — | — | — | — | 1,238 | ||||||||||
Trust and investment management fee income | 1,547 | 1,176 | 1,201 | 1,200 | 1,363 | ||||||||||
Bank owned life insurance | 898 | 929 | 783 | 764 | 778 | ||||||||||
Gain on sale of insurance division | — | — | — | 11,084 | — | ||||||||||
Other income | 813 | 799 | 714 | 958 | 612 | ||||||||||
Subtotal | 14,074 | 13,706 | 13,289 | 24,007 | 14,485 | ||||||||||
Gain (loss) on sale of investment securities | — | — | 2,116 | 14 | 184 | ||||||||||
Total Non-Interest Income | $ | 14,074 | $ | 13,706 | $ | 15,405 | $ | 24,021 | $ | 14,669 | |||||
Non-Interest Expense: | |||||||||||||||
Salaries and employee benefits | $ | 11,296 | $ | 12,179 | $ | 12,193 | $ | 12,179 | $ | 12,489 | |||||
Occupancy and equipment | 2,583 | 2,575 | 2,529 | 2,590 | 2,449 | ||||||||||
Depreciation | 1,539 | 1,522 | 1,516 | 1,511 | 1,534 | ||||||||||
FDIC insurance expense | 443 | 456 | 445 | 450 | 448 | ||||||||||
Advertising | 264 | 777 | 701 | 704 | 726 | ||||||||||
Bankcard expenses | 778 | 785 | 829 | 870 | 948 | ||||||||||
Postage, delivery and statement mailings | 532 | 523 | 507 | 561 | 549 | ||||||||||
Office supplies | 273 | 384 | 347 | 346 | 360 | ||||||||||
Legal and professional fees | 662 | 620 | 542 | 567 | 552 | ||||||||||
Telecommunications | 409 | 418 | 463 | 475 | 522 | ||||||||||
Repossessed asset losses, net of expenses | 217 | 492 | 335 | 220 | 27 | ||||||||||
Merger related expenses | 315 | 175 | 108 | — | — | ||||||||||
Other expenses | 1,854 | 4,471 | 2,729 | 2,692 | 2,431 | ||||||||||
Total Non-Interest Expense | $ | 21,165 | $ | 25,377 | $ | 23,244 | $ | 23,165 | $ | 23,035 | |||||
Employees (Full Time Equivalent) | 853 | 828 | 844 | 845 | 889 | ||||||||||
Branch Locations | 85 | 82 | 82 | 82 | 82 | ||||||||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000s)
December 31, 2015 | December 31, 2014 | |||||
(Unaudited) | ||||||
Assets | ||||||
Cash and due from banks | $ | 58,829 | $ | 138,503 | ||
Interest-bearing deposits in depository institutions | 11,284 | 9,725 | ||||
Federal funds sold | — | — | ||||
Cash and cash equivalents | 70,113 | 148,228 | ||||
Investment securities available-for-sale, at fair value | 369,466 | 254,043 | ||||
Investment securities held-to-maturity, at amortized cost | 88,937 | 90,786 | ||||
Other securities | 12,915 | 9,857 | ||||
Total investment securities | 471,318 | 354,686 | ||||
Gross loans | 2,863,327 | 2,652,066 | ||||
Allowance for loan losses | (20,044 | ) | (20,150 | ) | ||
Net loans | 2,843,283 | 2,631,916 | ||||
Bank owned life insurance | 97,919 | 95,116 | ||||
Premises and equipment, net | 77,271 | 77,988 | ||||
Accrued interest receivable | 7,432 | 6,826 | ||||
Net deferred tax assets | 30,781 | 36,766 | ||||
Intangible assets | 79,792 | 74,198 | ||||
Other assets | 34,144 | 35,909 | ||||
Total Assets | $ | 3,712,053 | $ | 3,461,633 | ||
Liabilities | ||||||
Deposits: | ||||||
Noninterest-bearing | $ | 621,073 | $ | 545,465 | ||
Interest-bearing: | ||||||
Demand deposits | 679,735 | 639,932 | ||||
Savings deposits | 765,611 | 660,727 | ||||
Time deposits | 1,017,556 | 1,026,663 | ||||
Total deposits | 3,083,975 | 2,872,787 | ||||
Short-term borrowings | ||||||
Customer repurchase agreements | 141,869 | 134,931 | ||||
Long-term debt | 16,495 | 16,495 | ||||
Other liabilities | 37,551 | 46,567 | ||||
Total Liabilities | 3,292,890 | 3,070,780 | ||||
Stockholders' Equity | ||||||
Preferred stock, par value $25 per share: 500,000 shares authorized; none issued | — | — | ||||
Common stock, par value $2.50 per share: 50,000,000 shares authorized; | ||||||
18,499,282 shares issued at December 31, 2015 and December 31, 2014 | ||||||
less 3,319,067 and 3,345,590 shares in treasury, respectively | 46,249 | 46,249 | ||||
Capital surplus | 106,269 | 107,370 | ||||
Retained earnings | 390,690 | 362,211 | ||||
Cost of common stock in treasury | (120,104 | ) | (120,818 | ) | ||
Accumulated other comprehensive loss: | ||||||
Unrealized gain on securities available-for-sale | 927 | 1,190 | ||||
Underfunded pension liability | (4,868 | ) | (5,349 | ) | ||
Total Accumulated Other Comprehensive Loss | (3,941 | ) | (4,159 | ) | ||
Total Stockholders' Equity | 419,163 | 390,853 | ||||
Total Liabilities and Stockholders' Equity | $ | 3,712,053 | $ | 3,461,633 | ||
CITY HOLDING COMPANY AND SUBSIDIARIES
Investment Portfolio
(Unaudited) ($ in 000s)
Credit-Related | ||||||||||||
Net Investment | ||||||||||||
Impairment | ||||||||||||
Losses Through | Unrealized | |||||||||||
Original Cost | December 31, 2015 | Gains (Losses) | Carrying Value | |||||||||
US Government Agencies | $ | 5 | — | $ | — | $ | 5 | |||||
Mortgage Backed Securities | 374,092 | — | 273 | 374,365 | ||||||||
Municipal Bonds | 49,725 | — | 972 | 50,697 | ||||||||
Pooled Bank Trust Preferreds | 18,381 | (16,571 | ) | 35 | 1,845 | |||||||
Single Issuer Bank Trust Preferreds, | ||||||||||||
Subdebt of Financial Institutions, and | ||||||||||||
Bank Holding Company Preferred Stocks | 27,548 | (15 | ) | (827 | ) | 26,706 | ||||||
Money Markets and Mutual Funds | 1,525 | — | (13 | ) | 1,512 | |||||||
Federal Reserve Bank and FHLB stock | 12,915 | — | — | 12,915 | ||||||||
Community Bank Equity Positions | 3,715 | (1,584 | ) | 1,142 | 3,273 | |||||||
Total Investments | $ | 487,906 | $ | (18,170 | ) | $ | 1,582 | $ | 471,318 | |||
CITY HOLDING COMPANY AND SUBSIDIARIES
Loan Portfolio
(Unaudited) ($ in 000s)
December 31 | September 30 | June 30 | March 31 | December 31 | |||||||||||
2015 | 2015 | 2015 | 2015 | 2014 | |||||||||||
Residential real estate (1) | $ | 1,383,133 | $ | 1,358,083 | $ | 1,325,453 | $ | 1,303,258 | $ | 1,294,576 | |||||
Home equity - junior liens | 147,036 | 144,748 | 143,772 | 143,670 | 145,604 | ||||||||||
Commercial and industrial | 165,887 | 124,495 | 142,065 | 132,127 | 140,548 | ||||||||||
Commercial real estate (2) | 1,127,827 | 1,029,103 | 1,032,333 | 1,011,777 | 1,028,831 | ||||||||||
Consumer | 36,083 | 36,751 | 37,555 | 38,436 | 39,705 | ||||||||||
DDA overdrafts | 3,361 | 3,258 | 3,279 | 3,203 | 2,802 | ||||||||||
Gross Loans | $ | 2,863,327 | $ | 2,696,438 | $ | 2,684,457 | $ | 2,632,471 | $ | 2,652,066 | |||||
Construction loans included in: | |||||||||||||||
(1) - Residential real estate loans | $ | 13,135 | $ | 14,765 | $ | 15,412 | $ | 17,459 | $ | 22,992 | |||||
(2) - Commercial real estate loans | 12,599 | 11,970 | 4,043 | 30,554 | 28,652 | ||||||||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Acquisition Activity - Accretion
(Unaudited) ($ in 000s)
The following table presents the actual and forecasted accretion related to the fair value adjustments on net interest income recorded as a result of the Virginia Savings Bancorp ("Virginia Savings"), Community Financial Corporation ("Community") and American Founders Bank, Inc. ("AFB") acquisitions:
Virginia Savings | Community | AFB | |||||||||||||||||||
Loan | Certificates of | Loan | Certificates of | Loan | Certificates of | ||||||||||||||||
Year Ended: | Accretion (a) | Deposits (a) | Accretion (a) | Deposits (a) | Accretion (a) | Deposits (a) | Total | ||||||||||||||
1Q 2015 | $ | 123 | $ | 129 | $ | 2,158 | $ | 40 | $ | — | $ | — | $ | 2,450 | |||||||
2Q 2015 | 189 | 129 | 1,249 | 40 | — | — | 1,607 | ||||||||||||||
3Q 2015 | 245 | 129 | 642 | 40 | — | — | 1,056 | ||||||||||||||
4Q 2015 | 138 | 129 | 1,226 | 40 | 28 | 11 | 1,572 | ||||||||||||||
2016 | 299 | 497 | 1,183 | 43 | 286 | 52 | 2,360 | ||||||||||||||
2017 | 161 | — | 939 | 4 | 256 | 11 | 1,371 | ||||||||||||||
2018 | 99 | — | 712 | — | 234 | — | 1,045 | ||||||||||||||
a - 2015 amounts are based on actual results. 2016, 2017 and 2018 amounts are based on estimated amounts. | |||||||||||||||||||||
Note: The amounts reflected in the table above require management to make significant assumptions based on estimated future default, prepayment and discount rates. Actual performance could be significantly different from that assumed, which could result in the actual results being materially different from the amounts estimated above.
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)
Three Months Ended December 31, | ||||||||||||||||
2015 | 2014 | |||||||||||||||
Average | Yield/ | Average | Yield/ | |||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||
Assets: | ||||||||||||||||
Loan portfolio (1): | ||||||||||||||||
Residential real estate (2) | $ | 1,518,581 | $ | 14,763 | 3.86 | % | $ | 1,426,501 | $ | 14,107 | 3.92 | % | ||||
Commercial, financial, and agriculture (2) | 1,230,907 | 13,034 | 4.20 | % | 1,169,045 | 13,074 | 4.44 | % | ||||||||
Installment loans to individuals (2), (3) | 39,865 | 750 | 7.46 | % | 43,561 | 1,272 | 11.59 | % | ||||||||
Previously securitized loans (4) | *** | 485 | *** | *** | 558 | *** | ||||||||||
Total loans | 2,789,354 | 29,032 | 4.13 | % | 2,639,106 | 29,011 | 4.36 | % | ||||||||
Securities: | ||||||||||||||||
Taxable | 387,048 | 2,856 | 2.93 | % | 322,871 | 2,969 | 3.65 | % | ||||||||
Tax-exempt (5) | 37,818 | 513 | 5.38 | % | 30,775 | 466 | 6.01 | % | ||||||||
Total securities | 424,866 | 3,369 | 3.15 | % | 353,646 | 3,435 | 3.85 | % | ||||||||
Deposits in depository institutions | 9,562 | — | — | % | 9,948 | — | — | % | ||||||||
Total interest-earning assets | 3,223,782 | 32,401 | 3.99 | % | 3,002,700 | 32,446 | 4.29 | % | ||||||||
Cash and due from banks | 117,290 | 138,946 | ||||||||||||||
Bank premises and equipment | 75,729 | 78,740 | ||||||||||||||
Other assets | 248,693 | 246,507 | ||||||||||||||
Less: Allowance for loan losses | (21,101 | ) | (21,010 | ) | ||||||||||||
Total assets | $ | 3,644,393 | $ | 3,445,883 | ||||||||||||
Liabilities: | ||||||||||||||||
Interest-bearing demand deposits | $ | 650,523 | $ | 126 | 0.08 | % | $ | 619,736 | $ | 136 | 0.09 | % | ||||
Savings deposits | 732,129 | 192 | 0.10 | % | 642,938 | 187 | 0.12 | % | ||||||||
Time deposits (2) | 1,004,296 | 2,442 | 0.96 | % | 1,030,010 | 2,468 | 0.95 | % | ||||||||
Short-term borrowings | 165,996 | 91 | 0.22 | % | 150,205 | 98 | 0.26 | % | ||||||||
Long-term debt | 16,495 | 159 | 3.82 | % | 16,495 | 152 | 3.66 | % | ||||||||
Total interest-bearing liabilities | 2,569,439 | 3,010 | 0.46 | % | 2,459,384 | 3,041 | 0.49 | % | ||||||||
Noninterest-bearing demand deposits | 609,350 | 556,937 | ||||||||||||||
Other liabilities | 41,151 | 36,896 | ||||||||||||||
Stockholders' equity | 424,453 | 392,666 | ||||||||||||||
Total liabilities and shareholders' equity | $ | 3,644,393 | $ | 3,445,883 | ||||||||||||
Net interest income | $ | 29,391 | $ | 29,405 | ||||||||||||
Net yield on earning assets | 3.62 | % | 3.89 | % | ||||||||||||
(1) For purposes of this table, non-accruing loans have been included in average balances and loan fees, which are immaterial, have been included in interest income.
(2) Included in the above table are the following amounts (in thousands) for the accretion of the fair value adjustments related to the acquisitions of Virginia Savings Bancorp ("Virginia Savings") and Community Financial Corporation ("Community"):
Three Months Ended December 31, 2015 | ||||||||||||
Virginia | ||||||||||||
Savings | Community | AFB | Total | |||||||||
Residential real estate | $ | 78 | $ | 109 | $ | 9 | $ | 196 | ||||
Commercial, financial, and agriculture | 36 | 1,093 | 17 | 1,146 | ||||||||
Installment loans to individuals | 24 | 24 | 2 | 50 | ||||||||
Time deposits | 129 | 40 | 11 | 180 | ||||||||
$ | 267 | $ | 1,266 | $ | 39 | $ | 1,572 | |||||
Three Months Ended December 31, 2015 | |||||||||
Virginia | |||||||||
Savings | Community | Total | |||||||
Residential real estate | $ | 66 | $ | 94 | $ | 160 | |||
Commercial, financial, and agriculture | 80 | 751 | 831 | ||||||
Installment loans to individuals | 41 | 88 | 129 | ||||||
Time deposits | 135 | 52 | 187 | ||||||
$ | 322 | $ | 985 | $ | 1,307 | ||||
(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)
Twelve Months Ended December 31, | ||||||||||||||||
2015 | 2014 | |||||||||||||||
Average | Yield/ | Average | Yield/ | |||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||
Assets: | ||||||||||||||||
Loan portfolio (1): | ||||||||||||||||
Residential real estate (2) | $ | 1,474,631 | $ | 57,692 | 3.91 | % | $ | 1,384,677 | $ | 55,627 | 4.02 | % | ||||
Commercial, financial, and agriculture (2) | 1,175,707 | 51,660 | 4.39 | % | 1,163,449 | 54,288 | 4.67 | % | ||||||||
Installment loans to individuals (2), (3) | 40,966 | 3,959 | 9.66 | % | 45,470 | 4,556 | 10.02 | % | ||||||||
Previously securitized loans (4) | *** | 1,796 | *** | *** | 2,187 | *** | ||||||||||
Total loans | 2,691,304 | 115,107 | 4.28 | % | 2,593,597 | 116,658 | 4.50 | % | ||||||||
Securities: | ||||||||||||||||
Taxable | 352,296 | 10,830 | 3.07 | % | 337,440 | 11,766 | 3.49 | % | ||||||||
Tax-exempt (5) | 31,389 | 1,749 | 5.57 | % | 28,464 | 1,757 | 6.17 | % | ||||||||
Total securities | 383,685 | 12,579 | 3.28 | % | 365,904 | 13,523 | 3.70 | % | ||||||||
Deposits in depository institutions | 9,733 | — | — | % | 9,205 | — | — | % | ||||||||
Total interest-earning assets | 3,084,722 | 127,686 | 4.14 | % | 2,968,706 | 130,181 | 4.39 | % | ||||||||
Cash and due from banks | 180,965 | 130,183 | ||||||||||||||
Bank premises and equipment | 76,136 | 80,459 | ||||||||||||||
Other assets | 243,905 | 246,618 | ||||||||||||||
Less: Allowance for loan losses | (20,995 | ) | (21,148 | ) | ||||||||||||
Total assets | $ | 3,564,733 | $ | 3,404,818 | ||||||||||||
Liabilities: | ||||||||||||||||
Interest-bearing demand deposits | $ | 644,961 | $ | 505 | 0.08 | % | $ | 614,489 | $ | 615 | 0.10 | % | ||||
Savings deposits | 706,926 | 712 | 0.10 | % | 632,510 | 784 | 0.12 | % | ||||||||
Time deposits (2) | 1,005,232 | 9,669 | 0.96 | % | 1,046,925 | 9,613 | 0.92 | % | ||||||||
Short-term borrowings | 145,199 | 327 | 0.23 | % | 133,769 | 342 | 0.26 | % | ||||||||
Long-term debt | 16,495 | 617 | 3.74 | % | 16,495 | 606 | 3.67 | % | ||||||||
Total interest-bearing liabilities | 2,518,813 | 11,830 | 0.47 | % | 2,444,188 | 11,960 | 0.49 | % | ||||||||
Noninterest-bearing demand deposits | 590,424 | 531,061 | ||||||||||||||
Other liabilities | 40,445 | 33,629 | ||||||||||||||
Stockholders' equity | 415,051 | 395,940 | ||||||||||||||
Total liabilities and shareholders' equity | $ | 3,564,733 | $ | 3,404,818 | ||||||||||||
Net interest income | $ | 115,856 | $ | 118,221 | ||||||||||||
Net yield on earning assets | 3.76 | % | 3.98 | % | ||||||||||||
(1) For purposes of this table, non-accruing loans have been included in average balances and loan fees, which are immaterial, have been included in interest income.
(2) Included in the above table are the following amounts (in thousands) for the accretion of the fair value adjustments related to the acquisitions of Virginia Savings Bancorp ("Virginia Savings") and Community Financial Corporation ("Community"):
Twelve Months Ended December 31, 2015 | ||||||||||||
Virginia | ||||||||||||
Savings | Community | AFB | Total | |||||||||
Residential real estate | $ | 324 | $ | 560 | $ | 9 | $ | 893 | ||||
Commercial, financial, and agriculture | 273 | 4,540 | 17 | 4,830 | ||||||||
Installment loans to individuals | 98 | 175 | 2 | 275 | ||||||||
Time deposits | 516 | 160 | 11 | 687 | ||||||||
$ | 1,211 | $ | 5,435 | $ | 39 | $ | 6,685 | |||||
Twelve Months Ended December 31, 2015 | |||||||||
Virginia | |||||||||
Savings | Community | Total | |||||||
Residential real estate | $ | 427 | $ | 457 | $ | 884 | |||
Commercial, financial, and agriculture | 504 | 3,900 | 4,404 | ||||||
Installment loans to individuals | 154 | 561 | 715 | ||||||
Time deposits | 535 | 250 | 785 | ||||||
$ | 1,620 | $ | 5,168 | $ | 6,788 | ||||
(3) Includes the Company's consumer and DDA overdrafts loan categories.
(4) Effective January 1, 2012, the carrying value of the Company's previously securitized loans was reduced to $0.
(5) Computed on a fully Federal tax-equivalent basis, assuming a tax rate of approximately 35%.
CITY HOLDING COMPANY AND SUBSIDIARIES
Analysis of Risk-Based Capital
(Unaudited) ($ in 000s)
December 31 | September 30 | June 30 | March 31 | December 31 | |||||||||||
2015 (a) | 2015 | 2015 | 2015 | 2014 | |||||||||||
Tier I Capital: | |||||||||||||||
Stockholders' equity | $ | 419,163 | $ | 418,767 | $ | 411,240 | $ | 405,075 | $ | 390,853 | |||||
Goodwill and other intangibles | (77,484 | ) | (69,103 | ) | (69,153 | ) | (69,227 | ) | (74,011 | ) | |||||
Accumulated other comprehensive loss | 3,941 | 3,560 | 4,892 | 3,253 | 4,159 | ||||||||||
Qualifying trust preferred stock | 16,000 | 16,000 | 16,000 | 16,000 | 16,000 | ||||||||||
Excess deferred tax assets | — | — | — | (1,564 | ) | (3,838 | ) | ||||||||
Total tier I capital | $ | 361,620 | $ | 369,224 | $ | 362,979 | $ | 353,537 | $ | 333,163 | |||||
Qualifying trust preferred stock | $ | (16,000 | ) | $ | (16,000 | ) | $ | (16,000 | ) | $ | (16,000 | ) | * | ||
Total CET I capital | $ | 345,620 | $ | 353,224 | $ | 346,979 | $ | 337,537 | * | ||||||
Total Risk-Based Capital: | |||||||||||||||
Tier I capital | $ | 361,620 | $ | 369,224 | $ | 362,979 | $ | 353,537 | $ | 333,163 | |||||
Qualifying allowance for loan losses | 20,044 | 20,941 | 20,809 | 20,179 | 20,150 | ||||||||||
Unrealized gain on securities | 516 | 447 | 600 | 704 | 560 | ||||||||||
Total risk-based capital | $ | 382,180 | $ | 390,612 | $ | 384,388 | $ | 374,420 | $ | 353,873 | |||||
Net risk-weighted assets | $ | 2,531,647 | $ | 2,449,191 | $ | 2,448,848 | $ | 2,404,331 | $ | 2,493,078 | |||||
Ratios: | |||||||||||||||
Average stockholders' equity to average assets | 11.65 | % | 11.90 | % | 11.54 | % | 11.48 | % | 11.40 | % | |||||
Tangible capital ratio | 9.34 | % | 10.14 | % | 9.89 | % | 9.60 | % | 9.35 | % | |||||
Risk-based capital ratios: | |||||||||||||||
CET I capital | 13.65 | % | 14.42 | % | 14.17 | % | 14.04 | % | * | ||||||
Tier I capital | 14.28 | % | 15.08 | % | 14.82 | % | 14.7 | % | 13.36 | % | |||||
Total risk-based capital | 15.10 | % | 15.95 | % | 15.7 | % | 15.57 | % | 14.19 | % | |||||
Leverage capital | 10.15 | % | 10.71 | % | 10.38 | % | 10.23 | % | 9.89 | % | |||||
(a) December 31, 2015 risk-based capital ratios are estimated. | |||||||||||||||
(*) Basel III CET 1 ratio requirements are effective beginning January 1, 2015 and are not required prior periods. | |||||||||||||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Intangibles
(Unaudited) ($ in 000s)
As of and for the Quarter Ended | |||||||||||||||
December 31 | September 30 | June 30 | March 31 | December 31 | |||||||||||
2015 | 2015 | 2015 | 2015 | 2014 | |||||||||||
Intangibles, net | $ | 79,792 | $ | 70,653 | $ | 70,779 | $ | 70,964 | $ | 74,198 | |||||
Intangibles amortization expense | 151 | 126 | 185 | 214 | 236 | ||||||||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Loan Loss Experience
(Unaudited) ($ in 000s)
Quarter Ended | |||||||||||||||
December 31 | September 30 | June 30 | March 31 | December 31 | |||||||||||
2015 | 2015 | 2015 | 2015 | 2014 | |||||||||||
Balance at beginning of period | $ | 20,941 | $ | 20,809 | $ | 20,179 | $ | 20,150 | $ | 20,487 | |||||
Charge-offs: | |||||||||||||||
Commercial and industrial | (3,148 | ) | 89 | (1,898 | ) | (94 | ) | 7 | |||||||
Commercial real estate | (303 | ) | (1 | ) | 61 | (337 | ) | (260 | ) | ||||||
Residential real estate | (386 | ) | (229 | ) | (272 | ) | (257 | ) | (414 | ) | |||||
Home equity | (76 | ) | (128 | ) | (17 | ) | (91 | ) | (21 | ) | |||||
Consumer | (39 | ) | (28 | ) | (69 | ) | (74 | ) | (17 | ) | |||||
DDA overdrafts | (376 | ) | (414 | ) | (313 | ) | (311 | ) | (363 | ) | |||||
Total charge-offs | (4,328 | ) | (711 | ) | (2,508 | ) | (1,164 | ) | (1,068 | ) | |||||
Recoveries: | |||||||||||||||
Commercial and industrial | 2 | 45 | 9 | 18 | 4 | ||||||||||
Commercial real estate | 317 | 18 | 23 | 8 | 19 | ||||||||||
Residential real estate | 69 | 66 | 54 | 10 | 96 | ||||||||||
Home equity | — | — | — | — | — | ||||||||||
Consumer | 32 | 75 | 51 | 28 | 32 | ||||||||||
DDA overdrafts | 198 | 188 | 165 | 241 | 196 | ||||||||||
Total recoveries | 618 | 392 | 302 | 305 | 347 | ||||||||||
Net charge-offs | (3,710 | ) | (319 | ) | (2,206 | ) | (859 | ) | (721 | ) | |||||
Provision for (recovery of) acquired loans | 32 | (24 | ) | 299 | 246 | 148 | |||||||||
Provision for loan losses | 2,781 | 475 | 2,537 | 642 | 236 | ||||||||||
Balance at end of period | $ | 20,044 | $ | 20,941 | $ | 20,809 | $ | 20,179 | $ | 20,150 | |||||
Loans outstanding | $ | 2,863,327 | $ | 2,696,438 | $ | 2,684,457 | $ | 2,632,471 | $ | 2,652,066 | |||||
Average loans outstanding | 2,789,354 | 2,679,429 | 2,658,484 | 2,636,400 | 2,639,106 | ||||||||||
Allowance as a percent of loans outstanding | 0.70 | % | 0.78 | % | 0.78 | % | 0.77 | % | 0.76 | % | |||||
Allowance as a percent of non-performing loans | 114.91 | % | 95.81 | % | 130.98 | % | 121.81 | % | 128.10 | % | |||||
Net charge-offs (annualized) as a | |||||||||||||||
percent of average loans outstanding | 0.53 | % | 0.05 | % | 0.33 | % | 0.13 | % | 0.11 | % | |||||
Net charge-offs, excluding overdraft deposit | |||||||||||||||
accounts, (annualized) as a percent of average | |||||||||||||||
loans outstanding | 0.51 | % | 0.01 | % | 0.31 | % | 0.12 | % | 0.08 | % | |||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Non-Performing Assets
(Unaudited) ($ in 000s)
December 31 | September 30 | June 30 | March 31 | December 31 | |||||||||||
2015 | 2015 | 2015 | 2015 | 2014 | |||||||||||
Nonaccrual loans | $ | 16,949 | $ | 21,407 | $ | 15,623 | $ | 16,182 | $ | 15,307 | |||||
Accruing loans past due 90 days or more | 494 | 449 | 264 | 384 | 423 | ||||||||||
Total non-performing loans | 17,443 | 21,856 | 15,887 | 16,566 | 15,730 | ||||||||||
Other real estate owned | 6,519 | 6,026 | 6,729 | 8,771 | 8,180 | ||||||||||
Total non-performing assets | $ | 23,962 | $ | 27,882 | $ | 22,616 | $ | 25,337 | $ | 23,910 | |||||
Non-performing assets as a percent of loans | |||||||||||||||
and other real estate owned | 0.83 | % | 1.03 | % | 0.84 | % | 0.96 | % | 0.90 | % | |||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Troubled Debt Restructurings
(Unaudited) ($ in 000s)
December 31 | September 30 | June 30 | March 31 | December 31 | |||||||||||
2015 | 2015 | 2015 | 2015 | 2014 | |||||||||||
Residential real estate | $ | 17,987 | $ | 18,154 | $ | 19,021 | $ | 19,067 | $ | 18,492 | |||||
Home equity - junior liens | 2,693 | 2,746 | 2,662 | 2,741 | 2,688 | ||||||||||
Commercial and industrial | 58 | 62 | 66 | 70 | 73 | ||||||||||
Commercial real estate | 529 | 1,921 | 1,872 | 1,894 | 2,263 | ||||||||||
Consumer | — | — | — | — | — | ||||||||||
Total | $ | 21,267 | $ | 22,883 | $ | 23,621 | $ | 23,772 | $ | 23,516 | |||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Total Past Due Loans
(Unaudited) ($ in 000s)
Originated | |||||||||||||||
December 31 | September 30 | June 30 | March 31 | December 31 | |||||||||||
2015 | 2015 | 2015 | 2015 | 2014 | |||||||||||
Residential real estate | $ | 5,871 | $ | 4,813 | $ | 4,107 | $ | 4,326 | $ | 5,164 | |||||
Home equity - junior liens | 393 | 548 | 393 | 543 | 746 | ||||||||||
Commercial and industrial | 62 | 4 | 600 | 113 | 310 | ||||||||||
Commercial real estate | 779 | 1,183 | 536 | 299 | 479 | ||||||||||
Consumer | 106 | 89 | 82 | 122 | 197 | ||||||||||
DDA overdrafts | 313 | 330 | 327 | 215 | 318 | ||||||||||
Total past due loans | $ | 7,524 | $ | 6,967 | $ | 6,045 | $ | 5,618 | $ | 7,214 | |||||
Acquired | |||||||||||||||
December 31 | September 30 | June 30 | March 31 | December 31 | |||||||||||
2015 | 2015 | 2015 | 2015 | 2014 | |||||||||||
Residential real estate | $ | 739 | $ | 709 | $ | 1,163 | $ | 1,792 | $ | 714 | |||||
Home equity - junior liens | 13 | 10 | 5 | 86 | 2 | ||||||||||
Commercial and industrial | 97 | 351 | 14 | 490 | 143 | ||||||||||
Commercial real estate | 701 | 2,439 | 2,179 | 2,018 | 2,372 | ||||||||||
Consumer | 90 | 129 | 175 | 150 | 221 | ||||||||||
DDA overdrafts | — | — | — | — | — | ||||||||||
Total past due loans | $ | 1,640 | $ | 3,638 | $ | 3,536 | $ | 4,536 | $ | 3,452 | |||||
Total | |||||||||||||||
December 31 | September 30 | June 30 | March 31 | December 31 | |||||||||||
2015 | 2015 | 2015 | 2015 | 2014 | |||||||||||
Residential real estate | $ | 6,610 | $ | 5,522 | $ | 5,270 | $ | 6,118 | $ | 5,878 | |||||
Home equity - junior liens | 406 | 558 | 398 | 629 | 748 | ||||||||||
Commercial and industrial | 159 | 355 | 614 | 603 | 453 | ||||||||||
Commercial real estate | 1,480 | 3,622 | 2,715 | 2,317 | 2,851 | ||||||||||
Consumer | 196 | 218 | 257 | 272 | 418 | ||||||||||
DDA overdrafts | 313 | 330 | 327 | 215 | 318 | ||||||||||
Total past due loans | $ | 9,164 | $ | 10,605 | $ | 9,581 | $ | 10,154 | $ | 10,666 | |||||
Total past due loans as a percent of loans outstanding | 0.32 | % | 0.39 | % | 0.36 | % | 0.39 | % | 0.40 | % | |||||
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Purchased Credit Impaired Loans
(Unaudited) ($ in 000s)
Virginia Savings Acquisition | |||||||||||||||
December 31 | September 30 | June 30 | March 31 | December 31 | |||||||||||
2015 | 2015 | 2015 | 2015 | 2014 | |||||||||||
Contractual required principal and interest | $ | 1,965 | $ | 2,149 | $ | 2,376 | $ | 2,419 | $ | 2,407 | |||||
Carrying value | 1,707 | 1,861 | 1,984 | 1,979 | 1,964 | ||||||||||
Community Acquisition | |||||||||||||||
December 31 | September 30 | June 30 | March 31 | December 31 | |||||||||||
2015 | 2015 | 2015 | 2015 | 2014 | |||||||||||
Contractual required principal and interest | $ | 16,362 | $ | 17,834 | $ | 18,546 | $ | 20,189 | $ | 23,277 | |||||
Carrying value | 12,899 | 13,400 | 13,958 | 14,627 | 15,365 | ||||||||||