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Net income for the first quarter of 2009 was $10.9 million compared to $13.0 million in the first quarter of 2008. For the first quarter of 2009, the Company achieved a return on assets of 1.70%, a return on tangible equity of 19.1%, a net interest margin of 4.46%, and an efficiency ratio of 47.7%. This compares with a return on assets of 2.09%, a return on equity of 21.6%, a net interest margin of 4.40%, and an efficiency ratio of 47.8% for the comparable period of 2008.
City's CEO Charles Hageboeck stated that, "Given the challenging environment facing our economy and the banking industry in particular, I believe that our shareholders will be very pleased with our first quarter results. Our asset quality remained stable with net charge-offs, non-performing assets, and past-due loans all improved in the first quarter of 2009 as compared to the 4th quarter of 2008. Importantly, the most significant asset quality problems that City has experienced continue to be non-owner occupied residential construction at the Greenbrier Resort in White Sulphur Springs, West Virginia. These properties accounted for approximately half of City's net charge-offs and provision expense in the first quarter of 2009.
"City's revenue growth was solid with net interest income up 3.5% as compared to the first quarter of 2008. Insurance revenues were up markedly, as were trust and investment management revenues -- both significant accomplishments in light of our economy. Branch service charges were down, clearly reflecting lower consumer spending that many retail-focused banks have experienced during the first quarter. Overall, non-interest income, after adjusting for security gains and losses and for a gain on the sale of stock in VISA in the first quarter of 2008, was up by 3.4% -- pretty good performance given the economy. Expenses remained well controlled in the first quarter -- rising 3.2% as compared to the first quarter of 2008 after adjusting for a pre-payment penalty associated with the early redemption of $16 million in trust preferred securities last year.
"We did experience further other-than-temporary impairments ("OTTI") in our portfolio of pooled trust preferred securities. Many of the banks that are in these pooled trust preferred securities are quite troubled, and City has recognized losses as we believe that our methodology is appropriately conservative. Aside from this OTTI, we believe our results were really quite good. More importantly, in this difficult environment, City has what many of our peers would like to have -- strong capital, strong liquidity, a solid core-deposit franchise, and an energetic team of leaders focused on driving the Company forward. Our ability to compete against banks that have neither the liquidity nor the capital amidst their significant asset quality problems, presents us the opportunity to grow our franchise meaningfully within our existing footprint in ways that weren't possible several years ago. Further, I believe that these opportunities will remain long-lived, as many of our competitors will struggle for years to replace lost capital, repay TARP proceeds, refinance other expensive sources of debt, and rebuild their capacity to pay dividends. While our competitors struggle to regain what they have lost, we will be focusing on moving forward."
Net Interest Income
The Company's tax equivalent net interest income increased $0.9 million, or 3.5%, from $24.1 million during the first quarter of 2008 to $25.0 million during the first quarter of 2009, as interest expense on deposits and other interest bearing liabilities decreased more quickly than interest income from loans and investments. The Company's reported net interest margin increased from 4.40% for the quarter ended March 31, 2008 to 4.46% for the quarter ended March 31, 2009.
During the third and fourth quarters of 2008, the Company sold $450 million of interest rate floors. The gain from sales of these interest rate floors of $16.7 million will be recognized over the remaining lives of the various hedged loans. During the first quarter of 2009, the Company recognized $2.9 million of interest income compared to $1.0 million of interest income recognized in the first quarter of 2008 from the interest rate floors.
Credit Quality
At March 31, 2009, the Allowance for Loan Losses ("ALLL") was $22.0 million or 1.23% of total loans outstanding and 107% of non-performing loans compared to $18.6 million or 1.09% of loans outstanding and 114% of non-performing loans at March 31, 2008, and $22.3 million or 1.23% of loans outstanding and 86% of non-performing loans at December 31, 2008.
As a result of the Company's quarterly analysis of the adequacy of the ALLL, the Company recorded a provision for loan losses of $1.7 million in the first quarter of 2009 compared to $1.9 million for the comparable period in 2008. The provision for loan losses recorded during the first quarter of 2009 reflects the difficulties of certain commercial borrowers of the Company during the quarter, the downgrade of their related credits, and management's assessment of the impact of these difficulties on the ultimate collectability of the loans. 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.
The Company's ratio of non-performing assets to total loans and other real estate owned improved from 1.64% at December 31, 2008 to 1.53% at March 31, 2009. Approximately 43% of the Company's non-performing loans at March 31, 2009, or approximately $9 million, were associated with a $13 million portfolio of loans to builders of speculative homes at the Greenbrier Resort in White Sulphur Springs, West Virginia. These loans are considered to be commercial loans due to the dollar amount of the borrowings, although the loans were used to purchase lots and to construct upper-scale single-family residences at the Greenbrier Resort. Construction loan terms were originally interest only for 12 months. All loans are collateralized by completed homes and eight residential lots. Through March 31, 2009, the Company has specifically reserved $4.0 million of the ALLL associated with this portfolio of speculative properties. During the second quarter of 2009, two of the completed residences and two residential lots were foreclosed and taken into the Company's Other Real Estate Owned. The loans associated with these properties were included in non-performing assets at March 31, 2009. The Greenbrier Resort has a long history and storied tradition as a top resort destination. However, the current economic scenario has been challenging for the Greenbrier, which lost $35 million in 2008 according to its owner, CSX Corporation. During March 2009, the Greenbrier filed for Chapter 11 bankruptcy reorganization and CSX Corporation announced that Marriott International was willing to buy the Greenbrier for up to $130 million, pending court approval and a new labor deal with Greenbrier workers. While this announcement sheds some light on the future of the Greenbrier, the Company has considered the uncertainty of the situation at the Greenbrier and believes that based on our analysis, the specific allowance allocated to the non-performing and substandard loans, after considering the value of the collateral securing such loans, is adequate to cover losses that may result from these loans as of March 31, 2009.
The Company's ratio of non-performing assets to total loans and other real estate owned is 138 basis points lower than that of our peer group (bank holding companies with total assets between $1 and $5 billion), which reported average non-performing assets as a percentage of loans and other real estate owned of 2.91% for the most recently reported quarter ended December 31, 2008. The Company's non-performing assets are disproportionately tied to two sub-sectors within the loan portfolio.
In addition to the 43% of the Company's non-performing loans associated with speculative builders at the Greenbrier, slightly more than 25% of the Company's non-performing assets are associated with real estate in what is known as the "Eastern Panhandle" of West Virginia -- the counties of Jefferson, Berkeley, and Morgan. These three counties are distant suburbs of the Washington D.C. MSA and have experienced explosive growth in the last 10 years. While this is a relatively small part of the Company's entire franchise, the downturn that has gripped the nation's mortgage and construction industry has had disproportionately more impact upon the Company's asset quality and provision in this region than in the remainder of the Company. Exclusive of loans to speculative builders at the Greenbrier or loans in the Eastern Panhandle, other loans throughout the Company account for only 32% of the Company's non-performing loans.
The Company had net charge-offs of $1.9 million for the first quarter of 2009. Net charge-offs on commercial and residential loans were $1.5 and $0.3 million, respectively, for the first quarter. Charge-offs for commercial loans were primarily related to three specific credits that had been appropriately considered in establishing the allowance for loans losses in prior periods. In addition, net charge-offs for depository accounts were $0.1 million for the first quarter of 2009. While charge-offs on depository accounts are appropriately taken against the ALLL, the revenue associated with depository accounts is reflected in service charges.
Impairment Losses
During the first quarter of 2009, the Company recorded $2.2 million of investment impairment losses. The charges deemed to be other than temporary were related to pooled bank trust preferreds with a remaining book value of $8.9 million at March 31, 2009. The impairment charges related to the pooled bank trust preferred securities were based on the Company's quarterly reviews of its investment securities for indications of losses considered to be other than temporary. Based on management's assessment of the securities the Company owns, the seniority position of the securities within the pools, the level of defaults and deferred payments within the pools, and a review of the financial strength of the banks within the respective pools, management concluded that impairment charges of $2.2 million on the pooled bank trust preferred securities were necessary for the quarter ended March 31, 2009.
Non-interest Income
Exclusive of investment losses and the gain from the Visa initial public offering, non-interest income increased $0.5 million to $14.5 million in the first quarter of 2009 as compared to $14.0 million in the first quarter of 2008. Insurance commissions revenues increased $0.9 million, or 86.2%, from $1.0 million during the first quarter of 2008 to $1.9 million during the first quarter of 2009 on the strength of contingency payments and new business. Partially offsetting this increase was a decrease of $0.8 million, or 7.4%, in service charges from depository accounts. This decrease is attributable to a general nationwide decline in consumer spending.
Non-interest Expenses
Excluding the loss on the early redemption of the trust preferred securities in the first quarter of 2008, non-interest expenses increased $0.1 million from $18.7 million in the first quarter of 2008 to $18.8 million in the first quarter of 2009. Occupancy and equipment increased $0.3 million, or 19.5%, from the first quarter of 2008 due to an upgrade of the Company's core processing system and increased occupancy expenses, while salaries and employee benefits increased $0.2 million, or 2.3%, from the first quarter of 2008. In addition, advertising expenses rose $0.2 million from the first quarter of 2008. Partially offsetting these increases was a decline in other expenses of $1.1 million due in part to increased special charitable contributions of approximately $0.5 million during the first quarter of 2008.
Balance Sheet Trends
As compared to December 31, 2008, loans have decreased $21.0 million (1.2%) at March 31, 2009 due to decreases in commercial loans of $15.0 million (2.0%) and residential real estate loans of $12.3 million (2.0%). These decreases were partially offset by an increase in home equity loans of $5.1 million (1.3%).
Total average depository balances increased $43.8 million, or 2.2%, from the quarter ended December 31, 2008 to the quarter ended March 31, 2009. This growth was primarily in time deposits and interest-bearing deposits, which have increased $25.9 million and $14.7 million, respectively.
Income Tax Expense
The Company's effective income tax rate for the first quarter of 2009 was 34.6% compared to 25.2% for the year ended December 31, 2008, and 33.0% for the quarter ended March 31, 2008. The effective rate is based upon the Company's expected tax rate for the year ending December 31, 2009. The increase in the effective income tax rate is largely attributable to revisions in the West Virginia state tax code that are effective for the 2009 calendar year.
Capitalization and Liquidity
One of the Company's strengths is that it is highly profitable while maintaining strong liquidity and capital. With respect to liquidity, the Company's loan to deposit ratio was 84.3% and the loan to asset ratio was 69.3% at March 31, 2009. The Company maintained investment securities totaling 18.9% of assets as of this date. Further, the Company's deposit mix is weighted heavily toward checking and saving accounts that fund 43.1% of assets at March 31, 2009. Time deposits fund 39.2% of assets at March 31, 2009, but very few of these deposits are in accounts that have balances of more than $150,000, reflecting the core retail orientation of the Company.
The Company is also strongly capitalized. With respect to regulatory capital, at March 31, 2009, the Company's Leverage Ratio is 9.37%, the Tier I Capital ratio is 12.32%, and the Total Risk-Based Capital ratio is 13.47%. These regulatory capital ratios are significantly above levels required to be considered "well capitalized," which is the highest possible regulatory designation.
On March 25, 2009, the Board approved a quarterly cash dividend to 34 cents per share payable April 30, 2009, to shareholders of record as of April 15, 2009. During the quarter ended March 31, 2009, the Company repurchased 49,363 common shares at a weighted average price of $25.16 as part of a one million share repurchase plan authorized by the Board of Directors in August 2007. The Company's tangible equity ratio was 8.9% at March 31, 2009 compared with a tangible equity ratio of 8.8% at December 31, 2008.
City Holding Company is the parent company of City National Bank of West Virginia. City National operates 69 branches across West Virginia, Eastern Kentucky and Southern 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 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 may experience increases in the default rates on previously securitized loans that would result in impairment losses or lower the yield on such loans; (4) the Company may not continue to benefit from strong recovery efforts on previously securitized loans resulting in improved yields on these assets; (5) the Company could have adverse legal actions of a material nature; (6) the Company may face competitive loss of customers; (7) the Company may be unable to manage its expense levels; (8) the Company may have difficulty retaining key employees; (9) 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; (10) changes in general economic conditions and increased competition could adversely affect the Company's operating results; (11) 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; (12) the Company may experience difficulties growing loan and deposit balances; (13) the current economic environment poses significant challenges for us and could adversely affect our financial condition and results of operations; (14) continued 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; and (15) the United States government's plan to purchase large amounts of illiquid, mortgage-backed and other securities from financial institutions may not be effective and/or it may not be available to us. 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.
CITY HOLDING COMPANY AND SUBSIDIARIES
Financial Highlights
(Unaudited)
Three Months
Ended March 31, Percent
2009 2008 Change
---------------------------
Earnings ($000s, except per share data):
Net Interest Income (FTE) $24,974 $24,134 3.48%
Net Income 10,924 13,038 (16.21)%
Earnings per Basic Share 0.69 0.81 (14.81)%
Earnings per Diluted Share 0.69 0.80 (13.75)%
Key Ratios (percent):
Return on Average Assets 1.70% 2.09% (18.76)%
Return on Average Tangible Equity 19.10% 21.55% (11.41)%
Net Interest Margin 4.46% 4.40% 1.36%
Efficiency Ratio 47.67% 47.84% (0.35)%
Average Shareholders' Equity to Average
Assets 11.12% 12.03% (7.50)%
Consolidated Risk Based Capital Ratios (a):
Tier I 12.32% 13.96% (11.75)%
Total 13.47% 14.97% (10.02)%
Tangible Equity to Tangible Assets 8.87% 10.00% (11.33)%
Common Stock Data:
Cash Dividends Declared per Share $0.34 $0.34 0.00%
Book Value per Share 17.69 18.92 (6.50)%
Tangible Book Value per Share 14.08 15.31 (8.03)%
Market Value per Share:
High 33.41 41.37 (19.24)%
Low 20.88 32.51 (35.77)%
End of Period 26.68 39.90 (33.13)%
Price/Earnings Ratio(b) 9.67 12.31 (21.50)%
(a) March 31, 2009 risk-based capital ratios are estimated
(b) March 31, 2009 price/earnings ratio computed based on annualized
first quarter 2009 earnings
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
-------------------------------------------------------------
2005 $13.20 $15.56 $15.99 $16.14 $27.57 $39.21
2006 16.17 16.17 16.99 17.46 34.53 41.87
2007 17.62 17.40 17.68 18.14 31.16 41.54
2008 18.92 18.72 17.61 17.58 29.08 42.88
2009 17.69 20.88 33.41
Earnings per Basic Share
Quarter Ended
March 31 June 30 September 30 December 31 Year-to-Date
-------------------------------------------------------
2005 $0.70 $0.72 $0.73 $0.72 $2.87
2006 0.71 0.78 0.78 0.74 3.00
2007 0.76 0.72 0.76 0.78 3.02
2008 0.81 0.83 (0.16) 0.26 1.74
2009 0.69 0.69
Earnings per Diluted Share
Quarter Ended
March 31 June 30 September 30 December 31 Year-to-Date
-------------------------------------------------------
2005 $0.69 $0.71 $0.72 $0.72 $2.84
2006 0.71 0.77 0.77 0.74 2.99
2007 0.76 0.72 0.76 0.78 3.01
2008 0.80 0.83 (0.16) 0.26 1.74
2009 0.69 0.69
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($in 000s, except per share data)
Three Months
Ended March 31,
2009 2008
---- ----
Interest Income
Interest and fees on loans $28,058 $30,992
Interest on investment securities:
Taxable 6,062 6,064
Tax-exempt 409 399
Interest on deposits in depository institutions 5 65
------ ------
Total Interest Income 34,534 37,520
Interest Expense
Interest on deposits 9,373 12,015
Interest on short-term borrowings 153 1,145
Interest on long-term debt 254 441
--- ---
Total Interest Expense 9,780 13,601
----- ------
Net Interest Income 24,754 23,919
Provision for loan losses 1,650 1,883
----- -----
Net Interest Income After Provision for Loan Losses 23,104 22,036
Non-Interest Income
Investment securities (losses) gains (2,075) 2
Service charges 10,435 11,274
Insurance commissions 1,933 1,038
Trust and investment management fee income 707 632
Bank owned life insurance 732 676
VISA IPO Gain - 3,289
Other income 701 407
--- ---
Total Non-Interest Income 12,433 17,318
Non-Interest Expense
Salaries and employee benefits 9,583 9,363
Occupancy and equipment 1,909 1,597
Depreciation 1,211 1,133
Professional fees 453 367
Postage, delivery, and statement mailings 718 654
Advertising 863 617
Telecommunications 420 418
Bankcard expenses 648 621
Insurance and regulatory 376 338
Office supplies 531 457
Repossessed asset losses, net of expenses 129 32
Loss on early extinguishment of debt - 1,208
Other expenses 1,993 3,094
----- -----
Total Non-Interest Expense 18,834 19,899
------ ------
Income Before Income Taxes 16,703 19,455
Income tax expense 5,779 6,417
----- -----
Net Income $10,924 $13,038
======= =======
Basic earnings per share $0.69 $0.81
Diluted earnings per share $0.69 $0.80
Average Common Shares Outstanding:
Basic 15,921 16,147
Diluted 15,933 16,205
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
(Unaudited) ($in 000s)
Three Months Ended
March 31, 2009 March 31, 2008
------------------------------
Balance at January 1 $280,429 $293,994
Net income 10,924 13,038
Other comprehensive income:
Change in unrealized (loss) gain on
securities available-for-sale (1,688) 1,748
Change in unrealized (loss) gain on
interest rate floors (1,786) 4,899
Cash dividends declared ($0.34/share) (5,410) (5,476)
Issuance of stock award shares, net 275 273
Exercise of 300 stock options 3 -
Exercise of 5,700 stock options - 76
Excess tax benefits on stock
compensation - 6
Purchase of 49,363 common shares of
treasury (1,242) -
Purchase of 104,960 common shares of
treasury - (3,717)
-------- --------
Balance at March 31 $281,505 $304,841
======== ========
CITY HOLDING COMPANY AND SUBSIDIARIES
Condensed Consolidated Quarterly Statements of Income
(Unaudited) ($in 000s, except per share data)
Quarter Ended
March 31 December 31 September 30 June 30 March 31
2009 2008 2008 2008 2008
------------------------------------------------------
Interest income $34,534 $36,663 $36,522 $36,968 $37,520
Taxable equivalent
adjustment 220 200 200 204 214
------------------------------------------------------
Interest income
(FTE) 34,754 36,863 36,722 37,172 37,734
Interest expense 9,780 10,582 10,241 11,494 13,601
------------------------------------------------------
Net interest income 24,974 26,281 26,481 25,678 24,133
Provision for
loan losses 1,650 5,340 2,350 850 1,883
------------------------------------------------------
Net interest income
after provision for
loan losses 23,324 20,941 24,131 24,828 22,250
Noninterest income 12,433 3,181 (12,758) 14,195 17,318
Noninterest expense 18,834 17,766 19,246 18,761 19,899
------------------------------------------------------
Income (Loss) before
income taxes 16,923 6,356 (7,873) 20,262 19,669
Income tax expense
(benefit) 5,779 1,907 (5,516) 6,679 6,417
Taxable equivalent
adjustment 220 200 200 204 214
------------------------------------------------------
Net income (loss) $10,924 $4,249 $(2,557) $13,379 $13,038
======================================================
-------------------------------------------------------------------------
Basic earnings
(loss) per share $0.69 $0.26 $(0.16) $0.83 $0.81
Diluted earnings
(loss) per share 0.69 0.26 (0.16) 0.83 0.80
Cash dividends
declared per
share 0.34 0.34 0.34 0.34 0.34
-------------------------------------------------------------------------
Average Common
Share (000s):
Outstanding 15,921 16,078 16,142 16,103 16,147
Diluted 15,933 16,100 16,195 16,167 16,205
Net Interest Margin 4.46% 4.73% 4.78% 4.65% 4.40%
-------------------------------------------------------------------------
CITY HOLDING COMPANY AND SUBSIDIARIES
Non-Interest Income and Non-Interest Expense
(Unaudited) ($in 000s)
Quarter Ended
March 31 December 31 September 30 June 30 March 31
2009 2008 2008 2008 2008
-----------------------------------------------------
Non-Interest Income:
Service charges $10,435 $11,459 $11,993 $11,269 $11,274
Insurance
commissions 1,933 981 1,025 1,168 1,038
Trust and
investment
management fee
income 707 518 640 449 632
Bank owned life
insurance 732 739 767 750 676
Other income 701 284 284 559 407
-----------------------------------------------------
Subtotal 14,508 13,981 14,709 14,195 14,027
Investment
securities
(losses) gains (2,075) (10,800) (27,467) - 2
VISA IPO Gain - - - - 3,289
-----------------------------------------------------
Total Non-Interest
Income $12,433 $3,181 $(12,758) $14,195 $17,318
=====================================================
Non-Interest Expense:
Salaries and
employee benefits $9,583 $8,845 $9,538 $9,517 $9,363
Occupancy and
equipment 1,909 1,773 1,800 1,701 1,597
Depreciation 1,211 1,193 1,110 1,087 1,133
Professional fees 453 451 435 427 367
Postage,
delivery, and
statement
mailings 718 641 636 618 654
Advertising 863 818 821 643 617
Telecommunications 420 562 496 440 418
Bankcard expenses 648 711 717 640 621
Insurance and
regulatory 376 363 354 333 338
Office supplies 531 533 527 504 457
Repossessed asset
losses, net of
expenses 129 87 314 91 32
Loss on early
extinguishment of
debt - - - - 1,208
Other expenses 1,993 1,789 2,498 2,760 3,094
-----------------------------------------------------
Total Non-Interest
Expense $18,834 $17,766 $19,246 $18,761 $19,899
=====================================================
--------------------------------------------------------------------------
Employees (Full
Time Equivalent) 830 827 812 817 821
Branch Locations 69 69 69 68 69
--------------------------------------------------------------------------
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($in 000s)
March 31 December 31
2009 2008
------------------------
(Unaudited)
Assets
Cash and due from banks $43,757 $55,511
Interest-bearing deposits in depository
institutions 4,736 4,118
------------------------
Cash and cash equivalents 48,493 59,629
Investment securities available-for-sale,
at fair value 459,014 424,214
Investment securities held-to-maturity,
at amortized cost 29,049 29,067
------------------------
Total investment securities 488,063 453,281
Gross loans 1,791,308 1,812,344
Allowance for loan losses (21,980) (22,254)
------------------------
Net loans 1,769,328 1,790,090
Bank owned life insurance 71,131 70,400
Premises and equipment 61,689 60,138
Accrued interest receivable 9,824 9,024
Net deferred tax assets 50,297 48,462
Intangible assets 57,362 57,479
Other assets 28,006 33,943
------------------------
Total Assets $2,584,193 $2,582,446
========================
Liabilities
Deposits:
Noninterest-bearing $313,863 $298,530
Interest-bearing:
Demand deposits 428,539 420,554
Savings deposits 371,462 354,956
Time deposits 1,011,736 967,090
------------------------
Total deposits 2,125,600 2,041,130
Short-term borrowings 124,613 194,463
Long-term debt 19,023 19,047
Other liabilities 33,452 47,377
------------------------
Total Liabilities 2,302,688 2,302,017
Stockholders' Equity
Preferred stock, par value $25 per share:
500,000 shares authorized; none issued - -
Common stock, par value $2.50 per share:
50,000,000 shares authorized; 18,499,282
shares issued at March 31, 2009 and
December 31, 2008 less 2,582,838 and
2,548,538 shares in treasury, respectively 46,249 46,249
Capital surplus 102,797 102,895
Retained earnings 236,127 230,613
Cost of common stock in treasury (89,595) (88,729)
Accumulated other comprehensive (loss):
Unrealized loss on securities
available-for-sale (17,317) (15,628)
Unrealized gain on derivative instruments 7,502 9,287
Underfunded pension liability (4,258) (4,258)
------------------------
Total Accumulated Other Comprehensive
(Loss) (14,073) (10,599)
------------------------
Total Stockholders' Equity 281,505 280,429
------------------------
Total Liabilities and Stockholders' Equity $2,584,193 $2,582,446
========================
CITY HOLDING COMPANY AND SUBSIDIARIES
Investment Portfolio
(Unaudited) ($in 000s)
Other Than
Temporary
Impairment Unrealized
Original Charges through Gains Carrying
Cost March 31, 2009 (Losses) Value
-------- -------------- ----------- --------
FNMA & FHLMC Preferred
Stock $22,679 $(21,089) $(944) $646
Mortgage Backed Securities 279,511 - 4,682 284,193
Municipal Bonds 43,929 - 10 43,939
Pooled Bank Trust
Preferreds 27,197 (18,337) (7,110) 1,750
Single Issuer Bank Trust
Preferreds, Subdebt of
Financial Institutions,
and Bank Holding Company
Preferred Stocks 110,737 (1,000) (21,724) 88,013
Money Markets and Mutual
Funds 51,040 - (19) 51,021
Federal Reserve Bank and
FHLB stock 13,035 - - 13,035
Community Bank Equity
Positions 8,904 - (3,438) 5,466
----- --- ------ -----
Total Investments $557,032 $(40,426) $(28,543) $488,063
======== ======== ======== ========
CITY HOLDING COMPANY AND SUBSIDIARIES
Loan Portfolio
(Unaudited) ($in 000s)
March 31 December 31 September 30 June 30 March 31
2009 2008 2008 2008 2008
-----------------------------------------------------------
Residential
real estate $599,692 $611,962 $620,951 $612,676 $605,579
Home equity 389,453 384,320 377,919 371,537 347,986
Commercial,
financial, and
agriculture 753,234 768,255 729,613 715,196 699,653
Installment
loans to
individuals 45,175 43,585 44,728 45,385 45,557
Previously
securitized
loans 3,754 4,222 4,520 5,253 6,025
-----------------------------------------------------------
Gross Loans $1,791,308 $1,812,344 $1,777,731 $1,750,047 $1,704,800
===========================================================
CITY HOLDING COMPANY AND SUBSIDIARIES
Previously Securitized Loans
(Unaudited) ($in millions)
Annualized Effective
December 31 Interest Annualized
Year Ended: Balance (a) Income (a) Yield (a)
----------- ---------- ---------
2008 $4.2 $5.6 108%
2009 3.6 4.0 120%
2010 3.1 3.3 120%
2011 2.7 2.9 120%
2012 2.3 2.5 120%
a - 2008 amounts are based on actual results. 2009 amounts are based
on actual results through March 31, 2009 and estimated amounts for
the remainder of the year. 2010, 2011, and 2012 amounts are based
on estimated amounts.
Note: The amounts reflected in the table above require management to
make significant assumptions based on estimated future default,
prepayment, and discount rates. Actual performance could be
significantly different from that assumed, which could result in
the actual results being materially different from the amounts
estimated above.
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($in 000s)
Three Months Ended March 31,
2009 2008
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
------------------------------------------------------
Assets:
Loan portfolio:
Residential
real estate $603,767 $8,781 5.90% $601,600 $9,886 6.61%
Home equity 386,653 6,143 6.44% 343,658 5,912 6.92%
Commercial,
financial, and
agriculture 756,201 10,875 5.83% 700,155 12,235 7.03%
Loans to
depository
institutions - - - 4,670 35 3.01%
Installment
loans to
individuals 47,566 1,118 9.53% 47,629 1,346 11.37%
Previously
securitized
loans 3,867 1,141 119.66% 6,421 1,578 98.84%
------------------------------------------------------
Total loans 1,798,054 28,058 6.33% 1,704,133 30,992 7.31%
Securities:
Taxable 430,734 6,062 5.71% 455,663 6,064 5.35%
Tax-exempt 37,558 629 6.79% 37,723 614 6.55%
------------------------------------------------------
Total securities 468,292 6,691 5.79% 493,386 6,678 5.44%
Deposits in
depository
institutions 4,826 5 0.42% 8,697 65 3.01%
------------------------------------------------------
Total
interest-
earning
assets 2,271,172 34,754 6.21% 2,206,216 37,735 6.88%
Cash and due from
banks 52,410 65,442
Bank premises and
equipment 60,813 54,709
Other assets 211,000 186,273
Less: Allowance
for loan losses (22,564) (17,837)
------------------------------------------------------
Total
assets $2,572,831 $2,494,803
======================================================
Liabilities:
Interest-bearing
demand deposits 416,695 463 0.45% 409,745 712 0.70%
Savings deposits 360,740 507 0.57% 360,587 1,104 1.23%
Time deposits 982,947 8,403 3.47% 933,502 10,199 4.39%
Short-term
borrowings 147,510 153 0.42% 127,793 1,145 3.60%
Long-term debt 19,032 254 5.41% 22,505 441 7.88%
------------------------------------------------------
Total interest-
bearing
liabilities 1,926,924 9,780 2.06% 1,854,132 13,601 2.95%
Noninterest-
bearing demand
deposits 324,333 311,885
Other liabilities 35,392 28,770
Stockholders'
equity 286,182 300,016
------------------------------------------------------
Total liabilities
and
stockholders'
equity $2,572,831 $2,494,803
======================================================
Net interest
income $24,974 $24,134
======================================================
Net yield on
earning
assets 4.46% 4.40%
======================================================
CITY HOLDING COMPANY AND SUBSIDIARIES
Analysis of Risk-Based Capital
(Unaudited) ($in 000s)
March 31 December 31 September 30 June 30 March 31
2009(a) 2008 2008 2008 2008
---------------------------------------------------------
Tier I Capital:
Stockholders'
equity $281,505 $280,429 $284,912 $302,056 $304,841
Goodwill and
other
intangibles (57,165) (57,479) (57,600) (57,893) (58,065)
Accumulated
other
comprehensive
loss
(income) 14,073 10,599 14,477 3,718 (7,280)
Qualifying
trust
preferred
stock 16,000 16,000 16,000 16,000 16,000
Unrealized
Loss on AFS
securities (4,401) (3,342) (761) (712) (275)
Excess
deferred tax
assets (15,796) (23,841) (15,470) - -
---------------------------------------------------------
Total tier I
capital $234,215 $222,366 $241,558 $263,169 $255,221
=========================================================
=========================================================================
Total Risk-Based
Capital:
Tier I
capital $234,215 $222,366 $241,558 $263,169 $255,221
Qualifying
allowance for
loan losses 21,980 22,254 18,879 17,959 18,567
---------------------------------------------------------
Total risk-
based capital $256,195 $244,620 $260,437 $281,128 $273,788
=========================================================
Net risk-
weighted
assets $1,901,377 $1,875,934 $1,842,684 $1,855,401 $1,828,559
=========================================================================
Ratios:
Average
stockholders'
equity to
average
assets 11.12% 11.53% 12.45% 12.46% 12.03%
Tangible
capital ratio 8.87% 8.83% 9.44% 10.02% 10.00%
Risk-based
capital ratios:
Tier I
capital 12.32% 11.85% 13.11% 14.18% 13.96%
Total risk-
based
capital 13.47% 13.04% 14.13% 15.15% 14.97%
Leverage
capital 9.37% 9.14% 9.97% 10.75% 10.47%
(a) March 31, 2009 risk-based capital ratios are estimated
=========================================================================
CITY HOLDING COMPANY AND SUBSIDIARIES
Intangibles
(Unaudited) ($in 000s)
As of and for the Quarter Ended
March 31 December 31 September 30 June 30 March 31
2009 2008 2008 2008 2008
---------------------------------------------------------
Intangibles,
net $57,362 $57,479 $57,600 $57,893 $58,065
Intangibles
amortization
expense 117 121 173 172 173
=========================================================================
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Loan Loss Experience
(Unaudited) ($in 000s)
Quarter Ended
March 31 December 31 September 30 June 30 March 31
2009 2008 2008 2008 2008
------------------------------------------------------
Balance at beginning
of period $22,254 $18,879 $17,959 $18,567 $17,581
Charge-offs:
Commercial,
financial, and
agricultural 1,479 1,073 563 1,022 406
Real estate-mortgage 394 603 523 190 274
Installment
loans to
individuals 69 29 62 77 75
Overdraft
deposit accounts 664 779 783 604 985
------------------------------------------------------
Total charge-offs 2,606 2,484 1,931 1,893 1,740
Recoveries:
Commercial,
financial, and
agricultural 29 14 (30) 41 13
Real estate-
mortgage 81 79 69 48 27
Installment
loans to
individuals 55 45 71 72 108
Overdraft
deposit
accounts 517 381 391 274 695
------------------------------------------------------
Total recoveries 682 519 501 435 843
------------------------------------------------------
Net charge-offs 1,924 1,965 1,430 1,458 897
Provision for
loan losses 1,650 5,340 2,350 850 1,883
------------------------------------------------------
Balance at end
of period $21,980 $22,254 $18,879 $17,959 $18,567
======================================================
Loans
outstanding $1,791,308 $1,812,344 $1,777,731 $1,750,047 $1,704,800
------------------------------------------------------
Average loans
outstanding 1,798,054 1,787,861 1,754,183 1,728,609 1,704,133
------------------------------------------------------
Allowance as a
percent of loans
outstanding 1.23% 1.23% 1.06% 1.03% 1.09%
------------------------------------------------------
Allowance as a
percent of non-
performing loans 107.44% 86.07% 135.92% 122.89% 113.55%
------------------------------------------------------
Net charge-offs
(annualized) as a
percent of average
loans outstanding 0.43% 0.44% 0.33% 0.34% 0.21%
------------------------------------------------------
Net charge-offs,
excluding overdraft
deposit accounts,
(annualized) as a
percent of average
loans outstanding 0.40% 0.35% 0.24% 0.26% 0.14%
------------------------------------------------------
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Non-Performing Assets
(Unaudited) ($in 000s)
March 31 December 31 September 30 June 30 March 31
2009 2008 2008 2008 2008
------------------------------------------------------
Nonaccrual loans $20,007 $25,224 $13,709 $14,018 $15,840
Accruing loans past
due 90 days or more 386 623 141 431 257
Previously
securitized loans
past due 90 days
or more 64 10 40 165 255
------------------------------------------------------
Total
non-performing
loans 20,457 25,857 13,890 14,614 16,352
Other real estate
owned, excluding
property associated
with previously
securitized loans 6,686 3,469 3,332 6,164 4,192
Other real estate
owned associated
with previously
securitized loans 374 400 417 321 148
------------------------------------------------------
Other real
estate owned 7,060 3,869 3,749 6,485 4,340
------------------------------------------------------
Total non-
performing
assets $27,517 $29,726 $17,639 $21,099 $20,692
======================================================
Non-performing assets
as a percent of
loans and other
real estate owned 1.53% 1.64% 0.99% 1.20% 1.21%
=========================================================================
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Total Past Due Loans
(Unaudited) ($in 000s)
March 31 December 31 September 30 June 30 March 31
2009 2008 2008 2008 2008
------------------------------------------------------
Residential real
estate $5,882 $6,179 $3,636 $5,487 $3,763
Home equity 1,454 1,243 1,400 1,316 1,344
Commercial,
financial, and
agriculture 2,044 1,679 1,741 1,166 806
Installment loans
to individuals 192 241 216 290 360
Previously
securitized loans 818 999 598 632 897
Overdraft deposit
accounts 410 592 491 485 568
------------------------------------------------------
Total past
due loans $10,800 $10,933 $8,082 $9,376 $7,738
======================================================
=========================================================================
SOURCE City Holding Company
http://www.cityholding.com
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