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City Holding Company Announces Third Quarter Results

Stocks in this article: CHCO

At September 30, 2012 the Company was strongly capitalized. The Company’s tangible equity ratio was 9.29% at September 30, 2012 compared to 9.37% at December 31, 2011. At September 30, 2012, City National Bank’s Leverage Ratio was 9.02%, its Tier I Capital ratio was 12.03%, and its Total Risk-Based Capital ratio was 12.94%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.

On September 27, 2012, the Board approved a quarterly cash dividend of $0.35 cents per share payable October 31, 2012, to shareholders of record as of October 15, 2012. During the nine months ended September 30, 2012, the Company repurchased 237,535 common shares at a weighted average price of $33.32 as part of a one million share repurchase plan authorized by the Board of Directors in July 2011. At September 30, 2012, the Company could repurchase approximately 454,000 shares under the July 2011 authorization.

City Holding Company is the parent company of City National Bank of West Virginia. City National operates 73 branches across West Virginia, Kentucky, Virginia and Ohio.

On August 2, 2012 the Company announced that it had executed a definitive agreement to acquire Community Financial Corporation of Staunton, Virginia and its principal banking subsidiary, Community Bank. The proposed merger is expected to close in the first quarter of 2013; however it is subject to pending regulatory approvals, the approval of Community’s shareholders, and the completion of other customary closing conditions. This transaction will expand City’s presence in Virginia with an additional ten branches.

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 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) 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; (13) the effects of the Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) recently adopted by the United States Congress and (14) the merger with Community Financial Corporation will not be consummated unless certain conditions are met. Forward-looking statements made herein reflect management’s expectations as of the date such statements are made. 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 June 30, 2012 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary June 30, 2012 results and will adjust the amounts if necessary.

 
CITY HOLDING COMPANY AND SUBSIDIARIES
Financial Highlights
(Unaudited)
 
         
Three Months Ended September 30, Percent
2012 2011   Change
 
Earnings ($000s, except per share data):
Net Interest Income (FTE) $ 25,060 $ 23,783 5.37 %
Net Income available to common shareholders 10,607 11,577 (8.38 )%
Earnings per Basic Share 0.71 0.77 (6.88 )%
Earnings per Diluted Share 0.71 0.76 (6.98 )%
       
 
Key Ratios (percent):
Return on Average Assets 1.47 % 1.71 % (13.99 )%
Return on Average Tangible Equity 16.20 % 17.81 % (9.06 )%
Net Interest Margin 3.95 % 3.93 % 0.47 %
Efficiency Ratio 56.40 % 53.18 % 6.05 %
Average Shareholders' Equity to Average Assets 11.32 % 11.67 % (2.94 )%
 
Consolidated Risk Based Capital Ratios (a):
Tier I 12.89 % 13.21 % (2.42 )%
Total 13.79 % 14.20 % (2.89 )%
 
Tangible Equity to Tangible Assets 9.29 % 9.65 % (3.69 )%
         
 
Common Stock Data:
Cash Dividends Declared per Share $ 0.35 $ 0.34 2.94 %
Book Value per Share 22.14 20.86 6.16 %
Tangible Book Value per Share 17.75 17.07 3.99 %
Market Value per Share:
High 36.43 33.96 7.27 %
Low 32.37 26.82 20.69 %
End of Period 35.84 26.99 32.79 %
 
Price/Earnings Ratio (b) 12.56 8.81 42.61 %
         
Nine Months Ended September 30, Percent
2012 2011   Change
 
Earnings ($000s, except per share data):
Net Interest Income (FTE) $ 72,829 $ 69,606 4.63 %
Net Income available to common shareholders 28,049 31,024 (9.59 )%
Earnings per Basic Share 1.89 2.03 (6.80 )%
Earnings per Diluted Share 1.88 2.02 (6.85 )%
       
 
Key Ratios (percent):
Return on Average Assets 1.33 % 1.53 % (13.12 )%
Return on Average Tangible Equity 14.26 % 15.90 % (10.31 )%
Net Interest Margin 3.95 % 3.89 % 1.55 %
Efficiency Ratio 58.59 % 57.42 % 2.04 %
Average Shareholders' Equity to Average Assets 11.45 % 11.72 % (2.33 )%
         
 
Common Stock Data:
Cash Dividends Declared per Share $ 1.05 $ 1.02 2.94 %
Market Value per Share:
High 37.16 37.22 (0.16 )%
Low 30.96 26.82 15.44 %
 
Price/Earnings Ratio (b) 14.20 9.97 42.48 %
 
 
(a) September 30, 2012 risk-based capital ratios are estimated
(b) September 30, 2012 price/earnings ratio computed based on annualized third quarter 2012 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

 

2008 $ 18.92 $ 18.72 $ 17.61 $ 17.58 $ 29.08 $ 42.88
2009 17.69 18.24 18.95 19.37 20.88 34.34
2010 19.71 20.02 20.31 20.31 26.87 38.03
2011 20.39 20.58 20.86 21.05 26.06 37.22
2012 21.46 21.63 22.14 30.96 37.16
                     
 
Earnings per Basic Share
 
Quarter Ended
March 31 June 30 September 30     December 31     Year-to-Date
 
2008 $ 0.81 $ 0.83 $ (0.16 ) $ 0.26 $ 1.74
2009 0.69 0.64 0.66 0.70 2.69
2010 0.59 0.68 0.58 0.64 2.48
2011 0.62 0.65 0.77 0.65 2.68
2012 0.68 0.50 0.71 1.89
                     
 
Earnings per Diluted Share
 
Quarter Ended
March 31 June 30 September 30     December 31     Year-to-Date
 
2008 $ 0.80 $ 0.83 $ (0.16 ) $ 0.26 $ 1.74
2009 0.69 0.64 0.66 0.70 2.68
2010 0.58 0.68 0.58 0.64 2.47
2011 0.62 0.64 0.76 0.65 2.67
2012   0.67   0.50   0.71               1.88  
             
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)
 
Three Months Ended September 30,
2012   2011
 
Interest Income
Interest and fees on loans $ 24,633 $ 23,326
Interest on investment securities:
Taxable 3,438 4,639
Tax-exempt 346 392
Interest on federal funds sold   15     13  
Total Interest Income 28,432 28,370
 

Interest Expense

Interest on deposits 3,312 4,550
Interest on short-term borrowings 79 90
Interest on long-term debt   166     159  
Total Interest Expense   3,557     4,799  
Net Interest Income 24,875 23,571
Provision for loan losses   975     -  
Net Interest Income After Provision for Loan Losses 23,900 23,571
 
Non-Interest Income
Total investment securities impairment losses (272 ) (1,849 )
Noncredit impairment losses recognized in other comprehensive income   -     1,494  
Net investment securities impairment losses (272 ) (355 )

Gains on sale of investment securities

  730     627  

Net investment securities gains

458 272
 
Service charges 9,861 9,840
Insurance commissions 1,439 1,388
Trust and investment management fee income 912 699
Bank owned life insurance 738 952
Other income   671     380  
Total Non-Interest Income 14,079 13,531
 
Non-Interest Expense
Salaries and employee benefits 11,295 10,302
Occupancy and equipment 2,126 2,057
Depreciation 1,175 1,131
FDIC insurance expense 405 392
Advertising 674 546
Bankcard expenses 720 559
Postage, delivery, and statement mailings 529 551
Office supplies 407 492
Legal and professional fees 611 567
Telecommunications 433 371
Repossessed asset (gains)/losses, net of expenses 429 109
Merger related expenses 157 -
Other expenses   2,885     2,611  
Total Non-Interest Expense   21,846     19,688  
Income Before Income Taxes 16,133 17,414
Income tax expense   5,526     5,837  
Net Income Available to Common Shareholders $ 10,607   $ 11,577  
 
 
Distributed earnings allocated to common shareholders $ 5,150 $ 5,015
Undistributed earnings allocated to common shareholders   5,373     6,479  
Net earnings allocated to common shareholders $ 10,523   $ 11,494  
 
Average common shares outstanding 14,751 15,003
Effect of dilutive securities:
Employee stock options   83     68  
Shares for diluted earnings per share   14,834     15,071  
 
Basic earnings per common share $ 0.71 $ 0.77
Diluted earnings per common share $ 0.71 $ 0.76
Dividends declared per common share $ 0.35 $ 0.34
 
Comprehensive Income $ 12,719 $ 10,714
 
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)
         
Nine months ended September 30,
2012   2011
 
Interest Income
Interest and fees on loans $ 70,843 $ 70,416
Interest on investment securities:
Taxable 11,345 13,694
Tax-exempt 1,101 1,299
Interest on federal funds sold   38     39  
Total Interest Income 83,327 85,448
 
Interest Expense
Interest on deposits 10,363 15,829
Interest on short-term borrowings 229 239
Interest on long-term debt   499     474  
Total Interest Expense   11,091     16,542  
Net Interest Income 72,236 68,906
Provision for loan losses   4,600     2,372  
Net Interest Income After Provision for Loan Losses 67,636 66,534
 
Non-Interest Income
Total investment securities impairment losses (878 ) (1,849 )
Noncredit impairment losses recognized in other comprehensive income   302     1,494  
Net investment securities impairment losses (576 ) (355 )
Gains on sale of investment securities   1,530     3,756  

Net investment securities gains

954 3,401
 
Service charges 28,601 28,749
Insurance commissions 4,782 4,513
Trust and investment management fee income 2,662 2,181
Bank owned life insurance 2,228 2,455
Other income   1,762     1,434  
Total Non-Interest Income 40,989 42,733
 
Non-Interest Expense
Salaries and employee benefits 32,207 30,397
Occupancy and equipment 6,038 6,084
Depreciation 3,371 3,408
FDIC insurance expense 1,184 2,276
Advertising 1,993 1,854
Bankcard expenses 2,035 1,693
Postage, delivery, and statement mailings 1,565 1,615
Office supplies 1,258 1,483
Legal and professional fees 1,349 4,547
Telecommunications 1,209 1,217
Repossessed asset losses, net of expenses 1,200 300
Merger related expenses 4,335 -
Other expenses   8,382     7,585  
Total Non-Interest Expense   66,126     62,459  
Income Before Income Taxes 42,499 46,808
Income tax expense   14,450     15,784  
Net Income Available to Common Shareholders $ 28,049   $ 31,024  
 
 
Distributed earnings allocated to common shareholders $ 15,451 $ 15,045
 
Undistributed earnings allocated to common shareholders   12,375     15,756  
 
Net earnings allocated to common shareholders $ 27,826   $ 30,801  
 
Average common shares outstanding 14,700 15,165
 
Effect of dilutive securities:
Employee stock options   83     77  
 
Shares for diluted earnings per share   14,783     15,242  
 
Basic earnings per common share $ 1.89 $ 2.03
Diluted earnings per common share $ 1.88 $ 2.02
Dividends declared per common share $ 1.05 $ 1.02
 
Comprehensive Income $ 31,591 $ 30,820
 
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
(Unaudited) ($ in 000s)
           
 
Three Months Ended
September 30, 2012     September 30, 2011
 
Balance at July 1 $ 320,622 $ 310,379
 
Net income 10,607 11,577
Other comprehensive income:
Change in unrealized (loss) gain on securities available-for-sale 2,112 (863 )
Cash dividends declared ($0.35/share) and ($0.34/share), respectively (5,196 ) (5,073 )
Issuance of stock award shares, net 214 201
Exercise of 2,000 stock options 56 -
Exercise of 1,100 stock options - 15
Purchase of 227,977 common shares of treasury   -         (6,344 )
Balance at September 30 $ 328,415       $ 309,892  
 
 
 
Nine Months Ended
September 30, 2012     September 30, 2011
 
Balance at January 1 $ 311,134 $ 314,861
 
Net income 28,049 31,024
Other comprehensive income:
Change in unrealized gain on securities available-for-sale 3,542 91
Change in unrealized (loss) on interest rate floors - (295 )

Cash dividends declared ($1.05/share) and ($1.02/share), respectively

(15,532 ) (15,394 )
Issuance of stock award shares, net 870 867

Acquisition of Virginia Savings Bancorp

7,723 -
Exercise of 18,899 stock options 544 -
Exercise of 6,576 stock options - 168
Purchase of 237,535 common shares of treasury (7,915 ) -
Purchase of 675,501 common shares of treasury   -         (21,430 )
Balance at September 30 $ 328,415       $ 309,892  
   
CITY HOLDING COMPANY AND SUBSIDIARIES
Condensed Consolidated Quarterly Statements of Income
(Unaudited) ($ in 000s, except per share data)
 

 

Quarter Ended

September 30 June 30 March 31 December 31 September 30
2012 2012 2012     2011 2011
 
Interest income

 

$ 28,432 $ 27,466 $ 27,430 $ 27,441 $ 28,370
Taxable equivalent adjustment

 

  185     198     208         215     212  
Interest income (FTE) 28,617 27,664 27,638 27,656 28,582
Interest expense

 

  3,557     3,625     3,908         4,216     4,799  
Net interest income

 

25,060 24,039 23,730 23,440 23,783
Provision for loan losses   975     1,675     1,950         2,229     -  
Net interest income after provision
for loan losses 24,085 22,364 21,780 21,211 23,783
 
Noninterest income 14,079 13,790 13,118 12,128 13,531
Noninterest expense   21,846     24,763     19,515         18,685     19,688  
Income before income taxes 16,318 11,391 15,383 14,654 17,626
Income tax expense 5,526 3,780 5,144 4,787 5,837
Taxable equivalent adjustment   185     198     208         215     212  
Net income available to common shareholders $ 10,607   $ 7,413   $ 10,031       $ 9,652   $ 11,577  
 
                 
 
Distributed earnings allocated to common shareholders $ 5,150 $ 5,146 $ 5,118 $ 5,136 $ 5,015
Undistributed earnings allocated to common shareholders   5,373     2,208     4,837         4,446     6,479  
Net earnings allocated to common shareholders $ 10,523   $ 7,354   $ 9,955       $ 9,582   $ 11,494  
 
Average common shares outstanding 14,751 14,680 14,679 14,743 15,003
 
Effect of dilutive securities:
Employee stock options   83     79     80         71     68  
 
Shares for diluted earnings per share   14,834     14,759     14,759         14,814     15,071  
 
Basic earnings per common share $ 0.71 $ 0.50 $ 0.68 $ 0.65 $ 0.77
Diluted earnings per common share 0.71 0.50 0.67 0.65 0.76
 
Cash dividends declared per share 0.35 0.35 0.35 0.35 0.34
                 
 
Net Interest Margin     3.95 %   3.91 %   3.98 %       3.90 %   3.93 %
       
CITY HOLDING COMPANY AND SUBSIDIARIES
Non-Interest Income and Non-Interest Expense
(Unaudited) ($ in 000s)
 
Quarter Ended
September 30 June 30 March 31 December 31 September 30
2012   2012   2012   2011   2011
 
Non-Interest Income:
Service charges $ 9,861 $ 9,649 $ 9,090 $ 9,360 $ 9,840
Insurance commissions 1,439 1,347 1,996 1,433 1,388
Trust and investment management fee income 912 942 807 925 699
Bank owned life insurance 738 766 723 728 952
Other income   671       558       533       599       380  
Subtotal 13,621 13,262 13,149 13,045 13,259
Total investment securities impairment losses (272 ) (606 ) - (918 ) (1,849 )
Noncredit impairment losses recognized in other
comprehensive income   -       302       -       -       1,494  
Net investment securities impairment losses (272 ) (304 ) - (918 ) (355 )
Gain (loss) on sale of investment securities   730       832       (31 )     1       627  
Total Non-Interest Income $ 14,079     $ 13,790     $ 13,118     $ 12,128     $ 13,531  
 
Non-Interest Expense:
Salaries and employee benefits $ 11,295 $ 10,668 $ 10,245 $ 10,320 $ 10,302
Occupancy and equipment 2,126 1,978 1,935 1,929 2,057
Depreciation 1,175 1,109 1,086 1,100 1,131
FDIC insurance expense 405 394 385 300 392
Advertising 674 675 644 153 546
Bankcard expenses 720 694 620 566 559
Postage, delivery and statement mailings 529 488 548 484 551
Office supplies 407 396 455 429 492
Legal and professional fees 611 421 317 366 567
Telecommunications 433 387 389 388 371
Repossessed asset (gains) losses, net of expenses 429 650 121 (27 ) 109
Merger related expenses 157 4,042 135 - -
Other expenses   2,885       2,861       2,635       2,677       2,611  
Total Non-Interest Expense $ 21,846     $ 24,763     $ 19,515     $ 18,685     $ 19,688  
 
 
                   
 
Employees (Full Time Equivalent) 836 831 797 795 792
Branch Locations 73 73 68 68 68
 
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000s)
September 30 December 31
2012   2011
(Unaudited)
Assets
Cash and due from banks $ 72,309 $ 140,873
Interest-bearing deposits in depository institutions 5,563 5,526
Federal funds sold   35,000       -  
Cash and cash equivalents 112,872 146,399
 
Investment securities available-for-sale, at fair value 389,686 360,783
Investment securities held-to-maturity, at amortized cost 13,444 23,458
Other securities   11,459       11,934  
Total investment securities 414,589 396,175
 
Gross loans 2,085,232 1,973,103
Allowance for loan losses   (18,986 )     (19,409 )
Net loans 2,066,246 1,953,694
 
Bank owned life insurance 81,146 78,961
Premises and equipment, net 72,360 64,612
Accrued interest receivable 7,681 7,093
Net deferred tax assets 32,407 32,219
Intangible assets 65,103 56,164
Other assets   46,793       41,792  
Total Assets $ 2,899,197     $ 2,777,109  
 
Liabilities
Deposits:
Noninterest-bearing $ 407,634 $ 369,025
Interest-bearing:
Demand deposits 549,752 526,824
Savings deposits 495,068 439,823
Time deposits   929,042       885,596  
Total deposits 2,381,496 2,221,268
Short-term borrowings
Federal Funds purchased - 75,000
Customer repurchase agreements 131,947 114,050
Long-term debt 16,495 16,495
Other liabilities   40,844       39,162  
Total Liabilities 2,570,782 2,465,975
 
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 September 30, 2012 and December 31, 2011

less 3,665,999 and 3,717,993 shares in treasury, respectively

46,249 46,249
Capital surplus 103,311 103,335
Retained earnings 303,567 291,050
Cost of common stock in treasury (124,347 ) (125,593 )
Accumulated other comprehensive loss:
Unrealized gain on securities available-for-sale 4,367 825
Underfunded pension liability   (4,732 )     (4,732 )
Total Accumulated Other Comprehensive Loss   (365 )     (3,907 )
Total Stockholders' Equity   328,415       311,134  
Total Liabilities and Stockholders' Equity $ 2,899,197     $ 2,777,109  
     
CITY HOLDING COMPANY AND SUBSIDIARIES
Investment Portfolio
(Unaudited) ($ in 000s)
 
Original Cost

Credit-Related

Net Investment

Impairment

Losses through

September 30,

2012

Unrealized Gains

(Losses)

Carrying Value
 
US Government Agencies $ 4,309 $ - $ 105 $ 4,414
Mortgage Backed Securities 289,260 - 8,693 297,953
Municipal Bonds 48,334 - 1,799 50,133
Pooled Bank Trust Preferreds 26,917 (20,171 ) (3,250 ) 3,496
Single Issuer Bank Trust Preferreds,
Subdebt of Financial Institutions, and
Bank Holding Company Preferred Stocks 43,435 (1,015 ) (1,001 ) 41,419
Money Markets and Mutual Funds 1,725 - 68 1,793
Federal Reserve Bank and FHLB stock 11,459 - - 11,459
Community Bank Equity Positions   8,194   (4,813 )   541     3,922
Total Investments $ 433,633 $ (25,999 ) $ 6,955   $ 414,589
       
CITY HOLDING COMPANY AND SUBSIDIARIES
Loan Portfolio
(Unaudited) ($ in 000s)
 
September 30 June 30 March 31 December 31 September 30
2012   2012   2012   2011   2011
 
Residential real estate (1) $ 1,008,305 $ 997,016 $ 939,611 $ 929,788 $ 916,122
Home equity - junior liens 143,058 143,400 139,764 141,797 142,028
Commercial and industrial 105,027 116,288 108,707 130,899 119,377
Commercial real estate (2) 787,887 768,176 745,586 732,146 708,558
Consumer 38,285 37,383 35,448 35,845 36,575
DDA overdrafts 2,670 3,326 2,848 2,628 2,924
Previously securitized loans -   -   -   -   214
Gross Loans $ 2,085,232   $ 2,065,589   $ 1,971,964   $ 1,973,103   $ 1,925,798
 
Construction loans included in:
(1) - Residential real estate loans $ 12,787 $ 11,919 $ 11,613 $ 9,287 $ 7,456
(2) - Commercial real estate loans $ 17,072 $ 18,544 $ 20,661 $ 20,201 $ 23,915
 
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)
 
Three Months Ended September 30,
2012 2011
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
 
Assets:
Loan portfolio (1):
Residential real estate $ 1,140,910 $ 13,000 4.53 % $ 1,046,155 $ 12,054 4.57 %
Commercial, financial, and agriculture 880,243 10,069 4.55 % 825,353 9,575 4.60 %
Installment loans to individuals (2) 49,111 782 6.33 % 45,461 906 7.91 %
Previously securitized loans (3)

    ***

  781 ***   277     791 1132.93 %
Total loans 2,070,264 24,632 4.73 % 1,917,246 23,326 4.83 %
Securities:
Taxable 372,877 3,438 3.67 % 399,468 4,639 4.61 %
Tax-exempt (4)   36,761     532 5.76 %   42,249     604 5.67 %
Total securities 409,638 3,970 3.86 % 441,717 5,243 4.71 %
Deposits in depository institutions 7,063 - - 7,497 - -
Federal funds sold   35,487     15 0.17 %   32,204     13 0.16 %
Total interest-earning assets 2,522,452 28,617 4.51 % 2,398,664 28,582 4.73 %
Cash and due from banks 80,335 61,387
Bank premises and equipment 72,640 64,900
Other assets 232,793 206,943
Less: Allowance for loan losses   (19,889 )       (20,496 )    
Total assets $ 2,888,331       $ 2,711,398      
 
Liabilities:
Interest-bearing demand deposits 539,189 180 0.13 % 496,866 224 0.18 %
Savings deposits 497,208 204 0.16 % 427,391 260 0.24 %
Time deposits 931,369 2,928 1.25 % 913,040 4,066 1.77 %
Short-term borrowings 122,955 79 0.26 % 132,487 90 0.27 %
Long-term debt   16,495     166 4.00 %   16,495     159 3.82 %
Total interest-bearing liabilities 2,107,216 3,557 0.67 % 1,986,279 4,799 0.96 %
Noninterest-bearing demand deposits 418,584 383,736
Other liabilities 35,461 25,054
Stockholders' equity   327,070         316,329      
Total liabilities and
stockholders' equity $ 2,888,331       $ 2,711,398      
Net interest income   $ 25,060     $ 23,783  
Net yield on earning assets     3.95 %     3.93 %
 
 
(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) Includes the Company’s consumer and DDA overdrafts loan categories.
(3) Effective January 1, 2012, the carrying value of the Company's previously securitized loans was reduced to $0.
(4) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 35%.
 
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)
 
Nine Months Ended September 30,
2012 2011
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
 
Assets:
Loan portfolio (1):
Residential real estate (2) $ 1,101,805 $ 36,731 4.45% $ 1,033,830 $ 36,905 4.77%
Commercial, financial, and agriculture (3) 873,295 29,395 4.50% 805,386 28,492 4.73%
Installment loans to individuals (4) 45,756 2,303 6.72% 45,713 2,570 7.52%
Previously securitized loans (5)

       ***

2,414 *** 452 2,449 724.40%
Total loans 2,020,856 70,843 4.68% 1,885,381 70,416 4.99%
Securities:
Taxable 367,800 11,345 4.12% 422,777 13,694 4.33%
Tax-exempt (6) 39,176 1,694 5.78% 47,077 1,999 5.68%
Total securities 406,976 13,039 4.28% 469,854 15,693 4.47%
Deposits in depository institutions 7,200 - - 7,815 - -
Federal funds sold 29,712 38 0.17% 31,348 39 0.17%
Total interest-earning assets 2,464,744 83,920 4.55% 2,394,398 86,148 4.81%
Cash and due from banks 75,576 56,923
Bank premises and equipment 68,788 64,560
Other assets 221,661 204,909
Less: Allowance for loan losses (19,599)     (19,290)    

Total assets

$ 2,811,170     $ 2,701,500    
 
Liabilities:
Interest-bearing demand deposits 532,231 531 0.13% 490,691 711 0.19%
Savings deposits 473,626 576 0.16% 415,740 790 0.25%
Time deposits 905,561 9,256 1.37% 941,808 14,328 2.03%
Short-term borrowings 119,454 229 0.26% 121,350 239 0.26%
Long-term debt 16,495 499 4.04% 16,495 474 3.84%
Total interest-bearing liabilities 2,047,367 11,091 0.72% 1,986,084 16,542 1.11%
Noninterest-bearing demand deposits 408,435 377,460
Other liabilities 33,612 21,368
Stockholders' equity 321,756     316,588    
Total liabilities and
stockholders' equity $ 2,811,170     $ 2,701,500    
Net interest income   $ 72,829     $ 69,606  
Net yield on earning assets     3.95%     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) Interest income includes $0 and $632 from interest rate floors for the nine months ended September 30, 2012 and September 30, 2011, respectively.

(3) Includes the Company’s commercial and industrial and commercial real estate loan categories. Interest income includes $0 and $488 from interest rate floors for the nine months ended September 30, 2012 and September 30, 2011, respectively.
(4) Includes the Company’s consumer and DDA overdrafts loan categories.
(5) Effective January 1, 2012, the carrying value of the Company's previously securitized loans was reduced to $0.
(6) 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)
 
September 30 June 30 March 31 December 31 September 30
2012 (a) 2012 2012 2011   2011
 
Tier I Capital:
Stockholders' equity $ 328,415 $ 320,622 $ 316,046 $ 311,134 $ 309,892
Goodwill and other intangibles (64,912 ) (64,971 ) (55,871 ) (55,969 ) (56,071 )

Accumulated other comprehensive loss

365 2,477 1,737 3,907 2,701
Qualifying trust preferred stock 16,000 16,000 16,000 16,000 16,000
Unrealized loss on AFS securities - - - (448 ) (1,081 )
Excess deferred tax assets   (7,472 )   (7,847 )   (4,020 )   (5,897 )     (5,435 )
Total tier I capital $ 272,397   $ 266,282   $ 273,892   $ 268,727     $ 266,007  
           
 
Total Risk-Based Capital:
Tier I capital $ 272,397 $ 266,282 $ 273,892 $ 268,727 $ 266,007
Qualifying allowance for loan losses   18,986     19,452     18,628     19,409     19,848  
Total risk-based capital $ 291,383   $ 285,734   $ 292,520   $ 288,136     $ 285,855  
 
Net risk-weighted assets $ 2,112,581 $ 2,136,249 $ 2,050,520 $ 2,048,398 $ 2,013,294
             
 
Ratios:
Average stockholders' equity to average assets 11.32 % 11.47 % 11.55 % 11.65 % 11.67 %
Tangible capital ratio 9.29 % 9.03 % 9.54 % 9.37 % 9.65 %
Risk-based capital ratios:
Tier I capital 12.89 % 12.46 % 13.36 % 13.12 % 13.21 %
Total risk-based capital 13.79 % 13.38 % 14.27 % 14.07 % 14.20 %
Leverage capital 9.67 % 9.74 % 10.23 % 10.18 % 10.04 %
 
 
(a) September 30, 2012 risk-based capital ratios are estimated
 
             
 
 
CITY HOLDING COMPANY AND SUBSIDIARIES
Intangibles
(Unaudited) ($ in 000s)
 
As of and for the Quarter Ended
September 30 June 30 March 31 December 31 September 30
2012 2012 2012 2011   2011
 
Intangibles, net $ 65,103 $ 65,162 $ 56,066 $ 56,164 $ 56,266
Intangibles amortization expense 135 109 98 102 102
 
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Loan Loss Experience
(Unaudited) ($ in 000s)
 
Quarter Ended
September 30 June 30 March 31 December 31 September 30
2012 2012 2012 2011 2011
 
Balance at beginning of period $ 19,452 $ 18,628 $ 19,409 $ 19,848 $ 18,944
 
Charge-offs:
Commercial and industrial 9 48 69 247 200
Commercial real estate 845 26 1,989 1,650 141
Residential real estate 252 296 198 176 264
Home equity 133 347 509 475 209
Consumer 53 36 59 31 75
DDA overdrafts   418     375     335     394     492  
Total charge-offs 1,710 1,128 3,159 2,973 1,381
 
Recoveries:
Commercial and industrial 10

-

 

3 15 2
Commercial real estate 3

-

96 - 1,954
Residential real estate 8 3 4 10 1
Home equity 1 10 1 1 1
Consumer 26 35 29 29 58
DDA overdrafts   221     229     295     250     269  
Total recoveries 269 277 427 305 2,285
         
Net charge-offs 1,441 851 2,731 2,668 (904 )
Provision for loan losses   975     1,675     1,950     2,229     -  
Balance at end of period $ 18,986   $ 19,452   $ 18,628   $ 19,409   $ 19,848  
 
Loans outstanding $ 2,085,232   $ 2,065,589   $ 1,971,964   $ 1,973,103   $ 1,925,798  
Average loans outstanding   2,070,264     2,019,281     1,972,478     1,940,950     1,917,246  
Allowance as a percent of loans outstanding   0.91 %   0.94 %   0.94 %   0.98 %   1.03 %
Allowance as a percent of non-performing loans   82.61 %   88.92 %   88.78 %   87.76 %   87.27 %
Net charge-offs (annualized) as a
percent of average loans outstanding   0.28 %   0.17 %   0.55 %   0.55 %   (0.19 )%
Net charge-offs, excluding overdraft deposit
accounts, (annualized) as a percent of average loans outstanding   0.24 %   0.14 %   0.55 %   0.52 %   (0.24 )%
       
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Non-Performing Assets
(Unaudited) ($ in 000s)
 
September 30 June 30 March 31 December 31 September 30
2012   2012   2012   2011   2011
 
Nonaccrual loans $ 22,586 $ 21,726 $ 20,420 $ 21,951 $ 22,423

Accruing loans past due 90 days or more

397   149   562   166   320
Total non-performing loans 22,983 21,875 20,982 22,117 22,743
Other real estate owned 9,017   8,697   8,250   7,948   8,273
Total non-performing assets $ 32,000   $ 30,572   $ 29,232   $ 30,065   $ 31,016
 
Non-performing assets as a percent of loans and
other real estate owned 1.53% 1.47% 1.48% 1.52% 1.60%
                   
 
 
CITY HOLDING COMPANY AND SUBSIDIARIES
Summary of Total Past Due Loans
(Unaudited) ($ in 000s)
 
September 30 June 30 March 31 December 31 September 30
2012   2012   2012   2011   2011
 
Residential real estate $ 4,909 $ 5,575 $ 4,108 $ 5,362 $ 4,569
Home equity 2,643 1,864 1,560 2,246 2,425
Commercial and industrial 25 540 63 1,243 37
Commercial real estate 1,271 3,145 2,636 3,415 2,423
Consumer 136 90 58 138 112
Previously securitized loans - - -

-

403
DDA overdrafts 319   364   304   909   614
Total past due loans $ 9,303   $ 11,578   $ 8,729   $ 13,313   $ 10,583
 
Past due loans as a percent of loans outstanding 0.45% 0.56% 0.44% 0.67% 0.55%




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