City Holding Company Announces Second Quarter Results

City Holding Company Announces Second Quarter Results

CHARLESTON, W.Va.–(BUSINESS WIRE)–City Holding Company (“Company” or “City”) (NASDAQ:CHCO), a $6.2 billion bank holding company headquartered in Charleston, West Virginia, today announced quarterly net income of $22.7 million and diluted earnings of $1.51 per share for the quarter ended June 30, 2022. For the second quarter of 2022, the Company achieved a return on assets of 1.51% and a return on tangible equity of 18.1%.

Net Interest Income

The Company’s net interest income increased from $37.9 million during the first quarter of 2022 to $41.3 million during the second quarter of 2022. During the second quarter of 2022, the Company’s tax equivalent net interest income increased $3.4 million, or 8.8%, from $38.2 million for the first quarter of 2022 to $41.6 million for the second quarter of 2022. Higher yields from both loans (14 basis points) and investments (26 basis points) increased net interest income by $1.5 million and $1.1 million, respectively. In addition, the yield on deposits in depository institutions also increased by 53 basis points which increased net interest income by $0.6 million. The Company’s reported net interest margin increased from 2.82% for the first quarter of 2022 to 3.04% for the second quarter of 2022.

Credit Quality

The Company’s ratio of nonperforming assets to total loans and other real estate owned increased modestly from 0.18%, or $6.3 million, at March 31, 2022 to 0.19%, or $6.8 million, at June 30, 2022. Total past due loans decreased from $6.7 million, or 0.19% of total loans outstanding, at March 31, 2022 to $6.2 million, or 0.17% of total loans outstanding, at June 30, 2022.

As a result of the Company’s quarterly analysis of the adequacy of the allowance for credit losses (“ACL”), the Company did not record a provision for credit losses in the second quarter of 2022, compared to a recovery of credit losses of $2.0 million for the comparable period in 2021 and a recovery of credit losses of $0.8 million for the first quarter of 2022. The Company did not record a provision for credit losses in the second quarter of 2022 primarily because net charge-offs and revisions to qualitative factors were essentially offset by improved loss factors and loan upgrades.

Non-interest Income

Non-interest income was $17.9 million for the second quarter of 2022 as compared to $17.4 million for the second quarter of 2021. During the second quarter of 2022, the Company reported $0.6 million of unrealized fair value losses on the Company’s equity securities as compared to $0.4 million of unrealized fair value gains on the Company’s equity securities in the second quarter of 2021. As of June 30, 2022, the fair value of these equity securities was approximately $7.9 million. Exclusive of these gains and losses, non-interest income increased from $17.0 million for the second quarter of 2021 to $18.5 million for the second quarter of 2022. This increase was primarily due to increases in service charges ($1.2 million, or 19.9%) and other revenue ($0.3 million, or 32.1%).

Non-interest Expenses

Non-interest expenses increased $1.1 million (3.8%), from $29.6 million in the second quarter of 2021 to $30.7 million in the second quarter of 2022. This increase was largely due to increased salary and employee benefits of $0.9 million. As anticipated, salary increases (4.7%) from the quarter ended June 30, 2021, were higher than the Company has typically experienced.

Balance Sheet Trends

Loans increased $6.9 million from March 31, 2022 to June 30, 2022, to $3.57 billion. PPP loans decreased $0.5 million from March 31, 2022 to $0.1 million at June 30, 2022. Excluding outstanding PPP loans (included in the commercial and industrial loan category), total loans increased $7.3 million, or 0.2%, from March 31, 2022 to $3.57 billion at June 30, 2022. Residential real estate loans increased $62.1 million (3.9%); commercial and industrial loans, excluding PPP loans, increased $23.5 million (7.0%); consumer loans increased $4.8 million (12.1%); and home equity loans increased $4.3 million (3.5%). These increases were partially offset by a decrease in commercial real estate loans of $88.0 million (6.0%). Despite solid originations during the second quarter of 2022, loan payoffs were unusually high due to the sale of one of City’s largest customers. The Company has a robust pipeline of new commercial loans that have been approved and scheduled to close in the next several months, and although we anticipate normal payoffs as well, we expect that aggregate commercial loan balances will grow in the third quarter.

Total average depository balances increased $52.3 million, or 1.1%, from the quarter ended March 31, 2022 to the quarter ended June 30, 2022. Average savings deposit balances increased $45.7 million, average noninterest-bearing demand deposit balances increased $36.6 million, and average interest-bearing demand deposit balances increased $13.9 million. These increases were partially offset by a decrease in time deposit balances of $43.8 million. While average deposits increased modestly during the quarter ended June 30, 2022, point-to-point noninterest bearing deposits and customer repurchase agreements both increased significantly from March 31, 2022. At the end of June 2022, the Company received a large, short-term inflow of funds from a customer. These funds exited the Company’s balance sheet in early July. Exclusive of this deposit, total deposits and customer repurchase agreements (combined) would have decreased approximately $85 million from March 31, 2022.

Income Tax Expense

The Company’s effective income tax rate for the second quarter of 2022 was 20.3% compared to 20.8% for the year ended December 31, 2021, and 20.3% for the quarter ended June 30, 2021.

Capitalization and Liquidity

The Company’s loan to deposit ratio was 69.4% and the loan to asset ratio was 57.1% at June 30, 2022. The Company maintained investment securities totaling 24.4% of assets as of the same date. The Company’s deposit mix is weighted heavily toward checking and saving accounts, which fund 66.6% of assets at June 30, 2022. Time deposits fund 15.8% of assets at June 30, 2022, 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 with tangible equity of $476 million at June 30, 2022. Due primarily to unrealized security losses during the six months ended June 30, 2022, the Company’s tangible equity ratio decreased from 9.6% at December 31, 2021 to 7.8% at June 30, 2022. However, unrealized security losses are not incorporated into measures of regulatory capital. As a result, at June 30, 2022, City National Bank’s Leverage Ratio was 8.81%, its Common Equity Tier I ratio was 14.80%, its Tier I Capital ratio was 14.80%, and its Total Risk-Based Capital ratio was 15.21%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.

On May 25, 2022, the Board of Directors of the Company approved a quarterly cash dividend of $0.60 per share payable July 29, 2022, to shareholders of record as of July 15, 2022. On May 25, 2022, the Company announced that the Board of Directors authorized the Company to buy back up to 1,000,000 shares of its common stock (approximately 7% of outstanding shares) in open market transactions at prices that are accretive to the earnings per share of continuing shareholders. No time limit was placed on the duration of the share repurchase program. As part of this authorization, the Company terminated its previous repurchase program that was approved in March 2021. The Company had repurchased 826,330 shares under the 2021 program. During the quarter ended June 30, 2022, the Company repurchased 208,000 common shares at a weighted average price of $78.33 per share. As of June 30, 2022, the Company could repurchase 895,000 additional shares under the current program.

City Holding Company is the parent company of City National Bank of West Virginia. City National Bank operates 94 branches across West Virginia, Kentucky, Virginia, 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. Forward-looking statements express only management’s beliefs regarding future results or events and are subject to inherent uncertainty, risks, and changes in circumstances, many of which are outside of management’s control. Uncertainty, risks, changes in circumstances and other factors could cause the Company’s actual results to differ materially from those projected in the forward-looking statements. Factors that could cause actual results to differ from those discussed in such forward-looking statements include, but are not limited to those set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 under “ITEM 1A Risk Factors” and the following: (1) general economic conditions, especially in the communities and markets in which we conduct our business; (2) the uncertainties on the Company’s business, results of operations and financial condition, caused by the COVID-19 pandemic, which will depend on several factors, including the scope and duration of the pandemic, its continued influence on financial markets, the effectiveness of the Company’s work from home arrangements and staffing levels in operational facilities, the impact of market participants on which the Company relies and actions taken by governmental authorities and other third parties in response to the pandemic; (3) credit risk, including risk that negative credit quality trends may lead to a deterioration of asset quality, risk that our allowance for loan losses may not be sufficient to absorb actual losses in our loan portfolio, and risk from concentrations in our loan portfolio; (4) changes in the real estate market, including the value of collateral securing portions of our loan portfolio; (5) changes in the interest rate environment; (6) operational risk, including cybersecurity risk and risk of fraud, data processing system failures, and network breaches; (7) changes in technology and increased competition, including competition from non-bank financial institutions; (8) changes in consumer preferences, spending and borrowing habits, demand for our products and services, and customers’ performance and creditworthiness; (9) difficulty growing loan and deposit balances; (10) our ability to effectively execute our business plan, including with respect to future acquisitions; (11) changes in regulations, laws, taxes, government policies, monetary policies and accounting policies affecting bank holding companies and their subsidiaries; (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; (13) regulatory enforcement actions and adverse legal actions; (14) difficulty attracting and retaining key employees; (15) other economic, competitive, technological, operational, governmental, regulatory, and market factors affecting our operations. 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, 2022 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary June 30, 2022 results and will adjust the amounts if necessary.

 
CITY HOLDING COMPANY AND SUBSIDIARIES
Financial Highlights
(Unaudited)
 

Three Months Ended

 

 

Six Months Ended

June 30, 2022

 

March 31, 2022

 

December 31, 2021

 

September 30, 2021

 

June 30, 2021

 

 

June 30, 2022

 

June 30, 2021

 
Earnings
Net Interest Income (fully taxable equivalent)

$

41,611

 

$

38,239

 

$

40,956

 

$

39,822

 

$

38,257

 

$

79,850

 

$

76,128

 

Net Income available to common shareholders

 

22,683

 

 

21,342

 

 

23,386

 

 

22,732

 

 

22,148

 

 

44,025

 

 

41,962

 

 
Per Share Data
Earnings per share available to common shareholders:
Basic

$

1.51

 

$

1.41

 

$

1.54

 

$

1.47

 

$

1.41

 

$

2.92

 

$

2.66

 

Diluted

 

1.51

 

 

1.41

 

 

1.54

 

 

1.47

 

 

1.41

 

 

2.92

 

 

2.66

 

Weighted average number of shares (in thousands):
Basic

 

14,888

 

 

14,974

 

 

15,026

 

 

15,279

 

 

15,573

 

 

14,930

 

 

15,614

 

Diluted

 

14,909

 

 

15,002

 

 

15,056

 

 

15,302

 

 

15,594

 

 

14,954

 

 

15,640

 

Period-end number of shares (in thousands)

 

14,864

 

 

15,045

 

 

15,062

 

 

15,192

 

 

15,527

 

 

14,864

 

 

15,527

 

Cash dividends declared

$

0.60

 

$

0.60

 

$

0.60

 

$

0.58

 

$

0.58

 

$

1.20

 

$

1.16

 

Book value per share (period-end)

$

39.83

 

$

42.03

 

$

45.22

 

$

44.58

 

$

44.79

 

$

39.83

 

$

44.79

 

Tangible book value per share (period-end)

 

31.99

 

 

34.27

 

 

37.44

 

 

36.85

 

 

37.20

 

 

31.99

 

 

37.20

 

Market data:
High closing price

$

83.07

 

$

85.99

 

$

83.14

 

$

79.99

 

$

83.85

 

$

85.99

 

$

87.41

 

Low closing price

 

73.88

 

 

76.82

 

 

76.52

 

 

72.29

 

 

74.44

 

 

73.88

 

 

69.05

 

Period-end closing price

 

79.88

 

 

78.70

 

 

81.79

 

 

77.91

 

 

75.24

 

 

79.88

 

 

75.24

 

Average daily volume (in thousands)

 

87

 

 

59

 

 

52

 

 

53

 

 

61

 

 

73

 

 

62

 

Treasury share activity:
Treasury shares repurchased (in thousands)

 

208

 

 

38

 

 

131

 

 

337

 

 

217

 

 

246

 

 

292

 

Average treasury share repurchase price

$

78.33

 

$

78.09

 

$

78.93

 

$

75.65

 

$

78.75

 

$

78.29

 

$

78.22

 

 
Key Ratios (percent)
Return on average assets

 

1.51

%

 

1.42

%

 

1.56

%

 

1.53

%

 

1.49

%

 

1.47

%

 

1.44

%

Return on average tangible equity

 

18.1

%

 

15.3

%

 

16.7

%

 

15.7

%

 

15.2

%

 

16.6

%

 

14.3

%

Yield on interest earning assets

 

3.15

%

 

2.94

%

 

3.08

%

 

3.04

%

 

3.00

%

 

3.04

%

 

3.08

%

Cost of interest bearing liabilities

 

0.15

%

 

0.17

%

 

0.19

%

 

0.22

%

 

0.27

%

 

0.16

%

 

0.32

%

Net Interest Margin

 

3.04

%

 

2.82

%

 

2.94

%

 

2.89

%

 

2.81

%

 

2.93

%

 

2.86

%

Non-interest income as a percent of total revenue

 

30.9

%

 

32.4

%

 

30.2

%

 

31.1

%

 

31.0

%

 

30.8

%

 

30.9

%

Efficiency Ratio

 

50.5

%

 

51.7

%

 

48.3

%

 

50.0

%

 

52.8

%

 

51.1

%

 

53.5

%

Price/Earnings Ratio (a)

 

13.23

 

 

13.93

 

 

13.27

 

 

13.22

 

 

13.35

 

 

13.67

 

 

14.13

 

 
Capital (period-end)
Average Shareholders’ Equity to Average Assets

 

10.26

%

 

11.25

%

 

11.25

%

 

11.69

%

 

11.81

%

Tangible equity to tangible assets

 

7.76

%

 

8.75

%

 

9.58

%

 

9.59

%

 

9.98

%

Consolidated City Holding Company risk based capital ratios (b):
CET I

 

15.85

%

 

16.18

%

 

16.08

%

 

16.11

%

 

16.40

%

Tier I

 

15.85

%

 

16.18

%

 

16.08

%

 

16.11

%

 

16.40

%

Total

 

16.26

%

 

16.60

%

 

16.51

%

 

16.56

%

 

16.88

%

Leverage

 

9.42

%

 

9.58

%

 

9.44

%

 

9.46

%

 

9.70

%

City National Bank risk based capital ratios (b):
CET I

 

14.80

%

 

14.82

%

 

14.35

%

 

14.76

%

 

14.82

%

Tier I

 

14.80

%

 

14.82

%

 

14.35

%

 

14.76

%

 

14.82

%

Total

 

15.21

%

 

15.24

%

 

14.78

%

 

15.21

%

 

15.30

%

Leverage

 

8.81

%

 

8.80

%

 

8.45

%

 

8.73

%

 

8.80

%

 
Other (period-end)
Branches

 

94

 

 

94

 

 

94

 

 

94

 

 

94

 

FTE

 

915

 

 

897

 

 

905

 

 

921

 

 

912

 

 
Assets per FTE (in thousands)

$

6,825

 

$

6,703

 

$

6,637

 

$

6,463

 

$

6,477

 

Deposits per FTE (in thousands)

 

5,621

 

 

5,574

 

 

5,445

 

 

5,308

 

 

5,271

 

 
 
(a) The price/earnings ratio is computed based on annualized quarterly earnings.
(b) June 30, 2022 risk-based capital ratios are estimated.
 
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)
 

Three Months Ended

 

 

Six Months Ended

June 30, 2022

 

March 31, 2022

 

December 31, 2021

 

September 30, 2021

 

June 30, 2021

 

 

June 30, 2022

 

June 30, 2021

 
Interest Income
Interest and fees on loans

$

33,208

 

$

31,874

 

$

35,277

 

$

33,961

 

$

33,114

 

$

65,082

 

$

67,438

 

Interest on investment securities:
Taxable

 

7,547

 

 

6,223

 

 

5,753

 

 

6,144

 

 

5,932

 

 

13,770

 

 

11,174

 

Tax-exempt

 

1,205

 

 

1,216

 

 

1,226

 

 

1,257

 

 

1,291

 

 

2,421

 

 

2,544

 

Interest on deposits in depository institutions

 

782

 

 

238

 

 

217

 

 

196

 

 

162

 

 

1,020

 

 

280

 

Total Interest Income

 

42,742

 

 

39,551

 

 

42,473

 

 

41,558

 

 

40,499

 

 

82,293

 

 

81,436

 

 
Interest Expense
Interest on deposits

 

1,328

 

 

1,521

 

 

1,710

 

 

1,955

 

 

2,460

 

 

2,849

 

 

5,740

 

Interest on short-term borrowings

 

124

 

 

114

 

 

132

 

 

115

 

 

125

 

 

238

 

 

242

 

Total Interest Expense

 

1,452

 

 

1,635

 

 

1,842

 

 

2,070

 

 

2,585

 

 

3,087

 

 

5,982

 

Net Interest Income

 

41,290

 

 

37,916

 

 

40,631

 

 

39,488

 

 

37,914

 

 

79,206

 

 

75,454

 

(Recovery of) provision for credit losses

 

 

 

(756

)

 

 

 

(725

)

 

(2,000

)

 

(756

)

 

(2,440

)

Net Interest Income After (Recovery of) Provision for Credit Losses

 

41,290

 

 

38,672

 

 

40,631

 

 

40,213

 

 

39,914

 

 

79,962

 

 

77,894

 

 
Non-Interest Income
Net gains on sale of investment securities

 

 

 

 

 

 

 

 

 

29

 

 

 

 

312

 

Unrealized (losses) gains recognized on equity securities still held

 

(601

)

 

(723

)

 

52

 

 

93

 

 

410

 

 

(1,324

)

 

359

 

Service charges

 

7,067

 

 

6,725

 

 

7,057

 

 

6,706

 

 

5,895

 

 

13,792

 

 

11,776

 

Bankcard revenue

 

7,062

 

 

6,444

 

 

6,762

 

 

6,791

 

 

7,221

 

 

13,506

 

 

13,434

 

Trust and investment management fee income

 

2,100

 

 

2,197

 

 

2,198

 

 

2,172

 

 

2,012

 

 

4,297

 

 

4,045

 

Bank owned life insurance

 

978

 

 

2,014

 

 

748

 

 

747

 

 

940

 

 

2,992

 

 

2,400

 

Other income

 

1,243

 

 

791

 

 

799

 

 

1,438

 

 

941

 

 

2,034

 

 

1,752

 

Total Non-Interest Income

 

17,849

 

 

17,448

 

 

17,616

 

 

17,947

 

 

17,448

 

 

35,297

 

 

34,078

 

 
Non-Interest Expense
Salaries and employee benefits

 

16,413

 

 

15,577

 

 

15,299

 

 

15,321

 

 

15,559

 

 

31,990

 

 

31,230

 

Occupancy related expense

 

2,620

 

 

2,709

 

 

2,429

 

 

2,507

 

 

2,525

 

 

5,329

 

 

5,147

 

Equipment and software related expense

 

2,732

 

 

2,769

 

 

2,733

 

 

2,554

 

 

2,655

 

 

5,501

 

 

5,199

 

FDIC insurance expense

 

409

 

 

435

 

 

400

 

 

396

 

 

382

 

 

844

 

 

787

 

Advertising

 

951

 

 

798

 

 

582

 

 

804

 

 

824

 

 

1,749

 

 

1,705

 

Bankcard expenses

 

1,665

 

 

1,606

 

 

1,576

 

 

1,549

 

 

1,746

 

 

3,271

 

 

3,330

 

Postage, delivery, and statement mailings

 

551

 

 

636

 

 

590

 

 

573

 

 

568

 

 

1,187

 

 

1,160

 

Office supplies

 

427

 

 

410

 

 

378

 

 

406

 

 

371

 

 

837

 

 

763

 

Legal and professional fees

 

525

 

 

527

 

 

405

 

 

610

 

 

589

 

 

1,052

 

 

1,264

 

Telecommunications

 

754

 

 

584

 

 

702

 

 

790

 

 

676

 

 

1,338

 

 

1,366

 

Repossessed asset (gains) losses, net of expenses

 

(32

)

 

40

 

 

(29

)

 

(108

)

 

1

 

 

8

 

 

80

 

Other expenses

 

3,674

 

 

3,436

 

 

3,559

 

 

3,776

 

 

3,678

 

 

7,110

 

 

7,352

 

Total Non-Interest Expense

 

30,689

 

 

29,527

 

 

28,624

 

 

29,178

 

 

29,574

 

 

60,216

 

 

59,383

 

Income Before Income Taxes

 

28,450

 

 

26,593

 

 

29,623

 

 

28,982

 

 

27,788

 

 

55,043

 

 

52,589

 

Income tax expense

 

5,767

 

 

5,251

 

 

6,237

 

 

6,250

 

 

5,640

 

 

11,018

 

 

10,627

 

Net Income Available to Common Shareholders

$

22,683

 

$

21,342

 

$

23,386

 

$

22,732

 

$

22,148

 

$

44,025

 

$

41,962

 

 
Distributed earnings allocated to common shareholders

$

8,837

 

$

8,943

 

$

8,949

 

$

8,726

 

$

8,921

 

$

17,671

 

$

17,845

 

Undistributed earnings allocated to common shareholders

 

13,643

 

 

12,199

 

 

14,211

 

 

13,786

 

 

13,021

 

 

25,951

 

 

23,732

 

Net earnings allocated to common shareholders

$

22,480

 

$

21,142

 

$

23,160

 

$

22,512

 

$

21,942

 

$

43,622

 

$

41,577

 

 
Average common shares outstanding

 

14,888

 

 

14,974

 

 

15,026

 

 

15,279

 

 

15,573

 

 

14,930

 

 

15,614

 

Shares for diluted earnings per share

 

14,909

 

 

15,002

 

 

15,056

 

 

15,302

 

 

15,594

 

 

14,954

 

 

15,640

 

 
Basic earnings per common share

$

1.51

 

$

1.41

 

$

1.54

 

$

1.47

 

$

1.41

 

$

2.92

 

$

2.66

 

Diluted earnings per common share

$

1.51

 

$

1.41

 

$

1.54

 

$

1.47

 

$

1.41

 

$

2.92

 

$

2.66

 

 
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000s)
 
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021
 
Assets
Cash and due from banks

$

90,449

 

$

100,877

 

$

101,804

 

$

103,841

 

$

97,523

 

Interest-bearing deposits in depository institutions

 

606,530

 

 

497,171

 

 

532,827

 

 

535,708

 

 

512,367

 

Cash and cash equivalents

 

696,979

 

 

598,048

 

 

634,631

 

 

639,549

 

 

609,890

 

 
Investment securities available-for-sale, at fair value

 

1,497,227

 

 

1,409,513

 

 

1,408,165

 

 

1,372,077

 

 

1,339,436

 

Other securities

 

24,383

 

 

24,785

 

 

25,531

 

 

25,497

 

 

25,793

 

Total investment securities

 

1,521,610

 

 

1,434,298

 

 

1,433,696

 

 

1,397,574

 

 

1,365,229

 

 
Gross loans

 

3,566,758

 

 

3,559,905

 

 

3,543,814

 

 

3,521,925

 

 

3,529,416

 

Allowance for credit losses

 

(17,015

)

 

(17,280

)

 

(18,166

)

 

(18,751

)

 

(20,016

)

Net loans

 

3,549,743

 

 

3,542,625

 

 

3,525,648

 

 

3,503,174

 

 

3,509,400

 

 
Bank owned life insurance

 

120,528

 

 

120,522

 

 

120,978

 

 

120,238

 

 

119,491

 

Premises and equipment, net

 

72,388

 

 

73,067

 

 

74,071

 

 

75,156

 

 

76,263

 

Accrued interest receivable

 

16,342

 

 

16,101

 

 

15,627

 

 

16,224

 

 

15,967

 

Net deferred tax assets

 

30,802

 

 

18,001

 

 

63

 

 

90

 

 

 

Intangible assets

 

116,428

 

 

116,774

 

 

117,121

 

 

117,489

 

 

117,857

 

Other assets

 

118,375

 

 

92,331

 

 

81,860

 

 

82,419

 

 

89,958

 

Total Assets

$

6,243,195

 

$

6,011,767

 

$

6,003,695

 

$

5,951,913

 

$

5,904,055

 

 
Liabilities
Deposits:
Noninterest-bearing

$

1,531,660

 

$

1,357,266

 

$

1,373,125

 

$

1,311,464

 

$

1,279,932

 

Interest-bearing:
Demand deposits

 

1,189,056

 

 

1,191,492

 

 

1,135,848

 

 

1,139,033

 

 

1,070,004

 

Savings deposits

 

1,435,645

 

 

1,425,528

 

 

1,347,448

 

 

1,332,910

 

 

1,301,219

 

Time deposits

 

985,567

 

 

1,024,559

 

 

1,068,915

 

 

1,104,069

 

 

1,153,391

 

Total deposits

 

5,141,928

 

 

4,998,845

 

 

4,925,336

 

 

4,887,476

 

 

4,804,546

 

Short-term borrowings
Customer repurchase agreements

 

402,368

 

 

288,483

 

 

312,458

 

 

296,642

 

 

311,316

 

Net deferred tax liabilities

 

 

 

 

 

 

 

 

 

2,310

 

Other liabilities

 

106,906

 

 

92,009

 

 

84,796

 

 

90,499

 

 

90,407

 

Total Liabilities

 

5,651,202

 

 

5,379,337

 

 

5,322,590

 

 

5,274,617

 

 

5,208,579

 

 
Stockholders’ Equity
Preferred stock

 

 

 

 

 

 

 

 

 

 

Common stock

 

47,619

 

 

47,619

 

 

47,619

 

 

47,619

 

 

47,619

 

Capital surplus

 

169,557

 

 

170,206

 

 

170,942

 

 

170,300

 

 

169,674

 

Retained earnings

 

667,933

 

 

654,138

 

 

641,826

 

 

627,463

 

 

613,553

 

Cost of common stock in treasury

 

(209,133

)

 

(194,819

)

 

(193,542

)

 

(183,303

)

 

(157,936

)

Accumulated other comprehensive (loss) income:
Unrealized (loss) gain on securities available-for-sale

 

(80,498

)

 

(41,229

)

 

17,745

 

 

20,878

 

 

28,227

 

Underfunded pension liability

 

(3,485

)

 

(3,485

)

 

(3,485

)

 

(5,661

)

 

(5,661

)

Total Accumulated Other Comprehensive (Loss) Income

 

(83,983

)

 

(44,714

)

 

14,260

 

 

15,217

 

 

22,566

 

Total Stockholders’ Equity

 

591,993

 

 

632,430

 

 

681,105

 

 

677,296

 

 

695,476

 

Total Liabilities and Stockholders’ Equity

$

6,243,195

 

$

6,011,767

 

$

6,003,695

 

$

5,951,913

 

$

5,904,055

 

 
Regulatory Capital
Total CET 1 capital

$

564,158

 

$

565,048

 

$

555,532

 

$

550,426

 

$

561,317

 

Total tier 1 capital

 

564,158

 

 

565,048

 

 

555,532

 

 

550,426

 

 

561,317

 

Total risk-based capital

 

578,657

 

 

579,807

 

 

570,336

 

 

565,712

 

 

577,543

 

Total risk-weighted assets

 

3,558,249

 

 

3,492,920

 

 

3,453,893

 

 

3,417,020

 

 

3,421,764

 

 
CITY HOLDING COMPANY AND SUBSIDIARIES
Loan Portfolio
(Unaudited) ($ in 000s)
 

June 30, 2022

 

March 31, 2022

 

December 31, 2021

 

September 30, 2021

 

June 30, 2021

 
Commercial and industrial

$

360,481

$

337,384

$

346,184

$

353,046

$

358,583

 
1-4 Family

 

108,765

 

108,424

 

107,873

 

108,913

 

108,079

Hotels

 

337,910

 

314,902

 

311,315

 

297,341

 

290,119

Multi-family

 

203,856

 

209,359

 

215,677

 

215,307

 

212,715

Non Residential Non-Owner Occupied

 

551,240

 

637,092

 

639,818

 

664,365

 

653,264

Non Residential Owner Occupied

 

180,188

 

200,180

 

204,233

 

205,579

 

209,100

Commercial real estate (1)

 

1,381,959

 

1,469,957

 

1,478,916

 

1,491,505

 

1,473,277

 
Residential real estate (2)

 

1,651,005

 

1,588,860

 

1,548,965

 

1,506,572

 

1,521,102

Home equity

 

125,742

 

121,460

 

122,345

 

124,806

 

127,608

Consumer

 

44,580

 

39,778

 

40,901

 

43,296

 

45,184

DDA overdrafts

 

2,991

 

2,466

 

6,503

 

2,700

 

3,662

Gross Loans

$

3,566,758

$

3,559,905

$

3,543,814

$

3,521,925

$

3,529,416

 
Construction loans included in:
(1) – Commercial real estate loans

$

6,767

$

14,877

$

11,783

$

19,360

$

43,904

(2) – Residential real estate loans

 

18,751

 

16,253

 

17,252

 

19,059

 

20,838

 
CITY HOLDING COMPANY AND SUBSIDIARIES
Asset Quality Information
(Unaudited) ($ in 000s)
 
Three Months Ended Six Months Ended
June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 June 30, 2022 June 30, 2021
Allowance for Credit Losses
Balance at beginning of period

$

17,280

 

$

18,166

 

$

18,751

 

$

20,016

 

$

24,076

 

$

18,166

 

$

24,549

 

 
Charge-offs:
Commercial and industrial

 

 

 

(34

)

 

 

 

 

 

(211

)

 

(34

)

 

(245

)

Commercial real estate

 

(24

)

 

 

 

(276

)

 

(392

)

 

(1,718

)

 

(24

)

 

(1,719

)

Residential real estate

 

(56

)

 

(50

)

 

(68

)

 

(18

)

 

(86

)

 

(106

)

 

(179

)

Home equity

 

(19

)

 

 

 

(58

)

 

(47

)

 

(8

)

 

(19

)

 

(72

)

Consumer

 

(9

)

 

(23

)

 

(13

)

 

(3

)

 

(79

)

 

(32

)

 

(226

)

DDA overdrafts

 

(604

)

 

(631

)

 

(635

)

 

(633

)

 

(430

)

 

(1,235

)

 

(883

)

Total charge-offs

 

(712

)

 

(738

)

 

(1,050

)

 

(1,093

)

 

(2,532

)

 

(1,450

)

 

(3,324

)

 
Recoveries:
Commercial and industrial

 

32

 

 

59

 

 

31

 

 

69

 

 

25

 

 

91

 

 

71

 

Commercial real estate

 

25

 

 

53

 

 

27

 

 

18

 

 

15

 

 

78

 

 

179

 

Residential real estate

 

4

 

 

45

 

 

7

 

 

29

 

 

17

 

 

49

 

 

91

 

Home equity

 

3

 

 

17

 

 

6

 

 

58

 

 

3

 

 

20

 

 

26

 

Consumer

 

19

 

 

28

 

 

40

 

 

72

 

 

104

 

 

47

 

 

143

 

DDA overdrafts

 

364

 

 

406

 

 

354

 

 

307

 

 

308

 

 

770

 

 

721

 

Total recoveries

 

447

 

 

608

 

 

465

 

 

553

 

 

472

 

 

1,055

 

 

1,231

 

 
Net charge-offs

 

(265

)

 

(130

)

 

(585

)

 

(540

)

 

(2,060

)

 

(395

)

 

(2,093

)

(Recovery of) provision for credit losses

 

 

 

(756

)

 

 

 

(725

)

 

(2,000

)

 

(756

)

 

(2,440

)

Balance at end of period

$

17,015

 

$

17,280

 

$

18,166

 

$

18,751

 

$

20,016

 

$

17,015

 

$

20,016

 

 
Loans outstanding

$

3,566,758

 

$

3,559,905

 

$

3,543,814

 

$

3,521,925

 

$

3,529,416

 

Allowance as a percent of loans outstanding

 

0.48

%

 

0.49

%

 

0.51

%

 

0.53

%

 

0.57

%

Allowance as a percent of non-performing loans

 

292.6

%

 

331.3

%

 

290.1

%

 

243.1

%

 

199.3

%

 
Average loans outstanding

$

3,559,713

 

$

3,527,393

 

$

3,522,272

 

$

3,535,497

 

$

3,541,165

 

$

3,543,642

 

$

3,563,356

 

Net charge-offs (annualized) as a percent of average loans outstanding

 

0.03

%

 

0.01

%

 

0.07

%

 

0.06

%

 

0.23

%

 

0.02

%

 

0.12

%

 
CITY HOLDING COMPANY AND SUBSIDIARIES
Asset Quality Information, continued
(Unaudited) ($ in 000s)
 

June 30, 2022

 

March 31, 2022

 

December 31, 2021

 

September 30, 2021

 

June 30, 2021

Nonaccrual Loans
Residential real estate

$

1,561

 

$

1,786

 

$

2,809

 

$

3,634

 

$

2,482

 

Home equity

 

54

 

 

99

 

 

40

 

 

67

 

 

81

 

Commercial and industrial

 

1,360

 

 

1,069

 

 

996

 

 

531

 

 

820

 

Commercial real estate

 

2,783

 

 

2,241

 

 

2,373

 

 

3,355

 

 

6,383

 

Consumer

 

 

 

 

 

 

 

 

 

 

Total nonaccrual loans

 

5,758

 

 

5,195

 

 

6,218

 

 

7,587

 

 

9,766

 

Accruing loans past due 90 days or more

 

58

 

 

21

 

 

43

 

 

127

 

 

278

 

Total non-performing loans

 

5,816

 

 

5,216

 

 

6,261

 

 

7,714

 

 

10,044

 

Other real estate owned

 

946

 

 

1,099

 

 

1,319

 

 

1,335

 

 

1,309

 

Total non-performing assets

$

6,762

 

$

6,315

 

$

7,580

 

$

9,049

 

$

11,353

 

 
Non-performing assets as a percent of loans and other real estate owned

 

0.19

%

 

0.18

%

 

0.21

%

 

0.26

%

 

0.32

%

 
Past Due Loans
Residential real estate

$

5,298

 

$

4,976

 

$

5,321

 

$

5,258

 

$

5,453

 

Home equity

 

282

 

 

505

 

 

618

 

 

688

 

 

523

 

Commercial and industrial

 

130

 

 

56

 

 

336

 

 

455

 

 

721

 

Commercial real estate

 

46

 

 

744

 

 

22

 

 

441

 

 

498

 

Consumer

 

49

 

 

32

 

 

60

 

 

35

 

 

12

 

DDA overdrafts

 

430

 

 

392

 

 

489

 

 

390

 

 

417

 

Total past due loans

$

6,235

 

$

6,705

 

$

6,846

 

$

7,267

 

$

7,624

 

 
Total past due loans as a percent of loans outstanding

 

0.17

%

 

0.19

%

 

0.19

%

 

0.21

%

 

0.22

%

 
Troubled Debt Restructurings (“TDRs”)
Residential real estate

$

16,022

 

$

16,182

 

$

16,943

 

$

16,910

 

$

17,788

 

Home equity

 

1,649

 

 

1,694

 

 

1,784

 

 

1,822

 

 

1,920

 

Commercial and industrial

 

381

 

 

397

 

 

414

 

 

430

 

 

 

Commercial real estate

 

107

 

 

1,890

 

 

1,914

 

 

1,937

 

 

3,076

 

Consumer

 

80

 

 

194

 

 

225

 

 

221

 

 

203

 

Total TDRs

$

18,239

 

$

20,357

 

$

21,280

 

$

21,320

 

$

22,987

 

 
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)
 

Three Months Ended

June 30, 2022

 

March 31, 2022

 

June 30, 2021

Average

 

 

 

Yield/

 

Average

 

 

 

Yield/

 

Average

 

 

 

Yield/

Balance

 

Interest

 

Rate

 

Balance

 

Interest

 

Rate

 

Balance

 

Interest

 

Rate

 
Assets:
Loan portfolio (1):
Residential real estate (2)

$

1,730,617

 

$

16,063

3.72

%

$

1,667,683

 

$

15,596

3.79

%

$

1,652,165

$

16,135

3.92

%

Commercial, financial, and agriculture (2)

 

1,785,511

 

 

16,421

 

3.69

%

 

1,815,549

 

 

15,532

 

3.47

%

 

1,839,478

 

 

16,158

 

3.52

%

Installment loans to individuals (2), (3)

 

43,585

 

 

631

 

5.81

%

 

44,161

 

 

607

 

5.57

%

 

49,522

 

 

713

 

5.77

%

Previously securitized loans (4)

***

 

93

 

***

***

 

139

 

***

***

 

109

 

***

Total loans

 

3,559,713

 

 

33,208

 

3.74

%

 

3,527,393

 

 

31,874

 

3.66

%

 

3,541,165

 

 

33,115

 

3.75

%

Securities:
Taxable

 

1,269,049

 

 

7,548

 

2.39

%

 

1,207,333

 

 

6,223

 

2.09

%

 

1,046,008

 

 

5,932

 

2.27

%

Tax-exempt (5)

 

215,603

 

 

1,526

 

2.84

%

 

232,474

 

 

1,539

 

2.68

%

 

244,233

 

 

1,633

 

2.68

%

Total securities

 

1,484,652

 

 

9,074

 

2.45

%

 

1,439,807

 

 

7,762

 

2.19

%

 

1,290,241

 

 

7,565

 

2.35

%

Deposits in depository institutions

 

441,239

 

 

781

 

0.71

%

 

540,197

 

 

238

 

0.18

%

 

628,158

 

 

162

 

0.10

%

Total interest-earning assets

 

5,485,604

 

 

43,063

 

3.15

%

 

5,507,397

 

 

39,874

 

2.94

%

 

5,459,564

 

 

40,842

 

3.00

%

Cash and due from banks

 

102,532

 

 

101,806

 

 

92,243

 

Premises and equipment, net

 

72,887

 

 

73,827

 

 

76,660

 

Goodwill and intangible assets

 

116,645

 

 

116,994

 

 

118,088

 

Other assets

 

256,354

 

 

217,662

 

 

206,709

 

Less: Allowance for credit losses

 

(17,755

)

 

(18,454

)

 

(23,701

)

Total assets

$

6,016,267

 

$

5,999,232

 

$

5,929,563

 

 
Liabilities:
Interest-bearing demand deposits

$

1,156,200

 

$

148

 

0.05

%

$

1,142,278

 

$

130

 

0.05

%

$

1,069,896

 

$

122

 

0.05

%

Savings deposits

 

1,430,121

 

 

182

 

0.05

%

 

1,384,460

 

 

175

 

0.05

%

 

1,287,966

 

 

163

 

0.05

%

Time deposits (2)

 

1,004,356

 

 

999

 

0.40

%

 

1,048,185

 

 

1,216

 

0.47

%

 

1,181,953

 

 

2,175

 

0.74

%

Short-term borrowings

 

288,031

 

 

123

 

0.17

%

 

276,360

 

 

114

 

0.17

%

 

305,134

 

 

125

 

0.16

%

Total interest-bearing liabilities

 

3,878,708

 

 

1,452

 

0.15

%

 

3,851,283

 

 

1,635

 

0.17

%

 

3,844,949

 

 

2,585

 

0.27

%

Noninterest-bearing demand deposits

 

1,435,256

 

 

1,398,663

 

 

1,311,340

 

Other liabilities

 

85,075

 

 

74,084

 

 

72,940

 

Stockholders’ equity

 

617,228

 

 

675,202

 

 

700,334

 

Total liabilities and
stockholders’ equity

$

6,016,267

 

$

5,999,232

 

$

5,929,563

 

Net interest income

$

41,611

 

$

38,239

 

$

38,257

 

Net yield on earning assets

3.04

%

2.82

%

2.81

%

 
(1) For purposes of this table, non-accruing loans have been included in average balances and the following amounts (in thousands) of net loan fees have been included in interest income:
 
Loan fees, net (includes PPP fees)

$

3

 

$

298

 

$

488

 

 
(2) Included in the above table are the following amounts (in thousands) for the accretion of the fair value adjustments related to the Company’s acquisitions:
 
Residential real estate

$

77

 

$

90

 

$

211

 

Commercial, financial, and agriculture

 

118

 

 

286

 

 

365

 

Installment loans to individuals

 

15

 

 

19

 

 

23

 

Time deposits

 

21

 

 

21

 

 

48

 

$

231

 

$

416

 

$

647

 

 
(3) Includes the Company’s consumer and DDA overdrafts loan categories.
(4) Effective January 1, 2012, the carrying value of the Company’s previously securitized loans was reduced to $0.
(5) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 21%.
 
CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)
 
Six Months Ended
June 30, 2022 June 30, 2021
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
 
Assets:
Loan portfolio (1):
Residential real estate (2)

$

1,697,727

 

$

31,659

3.76

%

$

1,675,222

 

$

32,987

3.97

%

Commercial, financial, and agriculture (2)

 

1,801,999

 

 

31,952

 

3.58

%

 

1,837,947

 

 

32,701

 

3.59

%

Installment loans to individuals (2), (3)

 

43,916

 

 

1,238

 

5.68

%

 

50,187

 

 

1,426

 

5.73

%

Previously securitized loans (4) ***

 

233

 

*** ***

 

324

 

***
Total loans

 

3,543,642

 

 

65,082

 

3.70

%

 

3,563,356

 

 

67,438

 

3.82

%

Securities:
Taxable

 

1,238,361

 

 

13,770

 

2.24

%

 

995,871

 

 

11,174

 

2.26

%

Tax-exempt (5)

 

223,992

 

 

3,065

 

2.76

%

 

241,924

 

 

3,220

 

2.68

%

Total securities

 

1,462,353

 

 

16,835

 

2.32

%

 

1,237,795

 

 

14,394

 

2.35

%

Deposits in depository institutions

 

490,445

 

 

1,020

 

0.42

%

 

571,130

 

 

280

 

0.10

%

Total interest-earning assets

 

5,496,440

 

 

82,937

 

3.04

%

 

5,372,281

 

 

82,112

 

3.08

%

Cash and due from banks

 

102,171

 

 

85,998

 

Premises and equipment, net

 

73,354

 

 

76,748

 

Goodwill and intangible assets

 

116,818

 

 

118,270

 

Other assets

 

237,115

 

 

212,051

 

Less: Allowance for credit losses

 

(18,103

)

 

(24,302

)

Total assets

$

6,007,795

 

$

5,841,046

 

 
Liabilities:
Interest-bearing demand deposits

$

1,149,277

 

$

278

 

0.05

%

$

1,039,260

 

$

246

 

0.05

%

Savings deposits

 

1,407,416

 

 

357

 

0.05

%

 

1,254,752

 

 

346

 

0.06

%

Time deposits (2)

 

1,026,149

 

 

2,214

 

0.44

%

 

1,208,925

 

 

5,149

 

0.86

%

Short-term borrowings

 

282,228

 

 

238

 

0.17

%

 

297,990

 

 

243

 

0.16

%

Total interest-bearing liabilities

 

3,865,070

 

 

3,087

 

0.16

%

 

3,800,927

 

 

5,984

 

0.32

%

Noninterest-bearing demand deposits

 

1,417,060

 

 

1,254,938

 

Other liabilities

 

79,610

 

 

81,273

 

Stockholders’ equity

 

646,055

 

 

703,908

 

Total liabilities and
stockholders’ equity

$

6,007,795

 

$

5,841,046

 

Net interest income

$

79,850

 

$

76,128

 

Net yield on earning assets

2.93

%

2.86

%

 
(1) For purposes of this table, non-accruing loans have been included in average balances and the following amounts (in thousands) of net loan fees have been included in interest income:
 
Loan fees, net (includes PPP fees)

$

301

 

$

1,323

 

 
(2) Included in the above table are the following amounts (in thousands) for the accretion of the fair value adjustments related to the Company’s acquisitions:
 
Residential real estate

$

167

 

$

317

 

Commercial, financial, and agriculture

 

404

 

 

690

 

Installment loans to individuals

 

34

 

 

51

 

Time deposits

 

41

 

 

97

 

$

646

 

$

1,155

 

 
(3) Includes the Company’s consumer and DDA overdrafts loan categories.
(4) Effective January 1, 2012, the carrying value of the Company’s previously securitized loans was reduced to $0.
(5) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 21%.
 
CITY HOLDING COMPANY AND SUBSIDIARIES
Non-GAAP Reconciliations
(Unaudited) ($ in 000s, except per share data)
 

Three Months Ended

 

 

Six Months Ended

June 30, 2022

 

March 31, 2022

 

December 31, 2021

 

September 30, 2021

 

June 30, 2021

 

 

June 30, 2022

 

June 30, 2021

Net Interest Income/Margin
Net interest income (“GAAP”)

$

41,290

 

$

37,916

 

$

40,631

 

$

39,488

 

$

37,914

 

$

79,206

 

$

75,454

 

Taxable equivalent adjustment

 

321

 

 

323

 

 

325

 

 

334

 

 

343

 

 

644

 

 

674

 

Net interest income, fully taxable equivalent

$

41,611

 

$

38,239

 

$

40,956

 

$

39,822

 

$

38,257

 

$

79,850

 

$

76,128

 

 
Average interest earning assets

$

5,485,604

 

$

5,507,397

 

$

5,521,386

 

$

5,462,410

 

$

5,459,564

 

$

5,496,440

 

$

5,372,281

 

 
Net Interest Margin

 

3.04

%

 

2.82

%

 

2.94

%

 

2.89

%

 

2.81

%

 

2.93

%

 

2.86

%

Accretion related to fair value adjustments

 

-0.02

%

 

-0.03

%

 

-0.03

%

 

-0.04

%

 

-0.05

%

 

-0.02

%

 

-0.04

%

Net Interest Margin (excluding accretion)

 

3.02

%

 

2.79

%

 

2.91

%

 

2.85

%

 

2.76

%

 

2.91

%

 

2.81

%

 
Tangible Equity Ratio (period end)
Equity to assets (“GAAP”)

 

9.48

%

 

10.52

%

 

11.34

%

 

11.37

%

 

11.78

%

Effect of goodwill and other intangibles, net

 

-1.72

%

 

-1.77

%

 

-1.76

%

 

-1.78

%

 

-1.80

%

Tangible common equity to tangible assets

 

7.76

%

 

8.75

%

 

9.58

%

 

9.59

%

 

9.98

%

 

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