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City Holding Company Announces Record Quarterly Earnings

City Holding Company, “the Company” (NASDAQ:CHCO), a $3.4 billion bank holding company headquartered in Charleston, today announced third quarter net income per diluted share of $0.88 and net income of $14.0 million. Compared to the third quarter of 2012, earnings per share increased 23.6% while net income increased 31.8%. For the third quarter of 2013, the Company achieved a return on assets of 1.65%, a return on tangible equity of 18.5%, a net interest margin of 4.47%, and an efficiency ratio of 52.1%.

The Company’s earnings increased in the third quarter of 2013 primarily due to the acquisitions of Virginia Savings Bank in the second quarter of 2012 and the acquisition of Community Financial Corporation (”Community Bank”) in the first quarter of 2013. Net interest income increased $1.1 million from the second quarter of 2013 due to accelerated accretion income from acquired loans paying down and paying off more quickly than initially expected. Accretion income included $2.4 million related to certain credit impaired loans that paid off during the third quarter of 2013 unexpectedly. The Company’s net interest margin improved from 4.35% for the second quarter of 2013 to 4.47% for the third quarter of 2013 as a result of the additional accretion income.

City’s CEO Charles Hageboeck stated that “We continue to be very pleased with the results from our acquisitions of Virginia Savings Bank and Community Bank, especially with our success in resolving problem loans associated with these acquisitions. Primarily as a result of our efforts to effectively workout a number of these problem loans, our past due loans and other asset quality indicators continue to show improvement. While there is still work to be done in regards to credit-impaired loans, particularly those associated with Community Bank, we are pleased with our progress in resolving these acquired loans.”

“City’s net interest margin continues to be a source of strength, with a reported net interest margin of 4.47% for the third quarter of 2013. After adjustment for the positive benefits of accretion relating to our acquisitions, our net interest margin would have been 3.78% for the third quarter of 2013 compared to 3.80% for the third quarter of 2012. We are very pleased to report this increase in spite of the loss of over $50 million of high yielding trust preferred securities and the continuation of historic low interest rates. In addition, we anticipate solid commercial loan growth in the fourth quarter of 2013.”

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