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City Holding Company Announces Quarterly Results

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 $24.3 million and diluted earnings of $1.63 per share for the quarter ended March 31, 2023. During the first quarter of 2023, the Company completed its acquisition of Citizens Commerce Bancshares, Inc. (“Citizens”) and its principal banking subsidiary, Citizens Commerce Bank of Versailles, Kentucky, on March 10, 2023. The results for the quarter ended March 31, 2023, include $2.0 million of credit loss expense associated with loans acquired from Citizens in its total provision for credit losses and $5.6 million of acquisition and integration expenses related to the acquisition. These expenses reduced diluted earnings per share on an after-tax-basis by $0.40.

Net Interest Income

The Company’s net interest income increased approximately $1.4 million, or 2.7%, from $52.0 million during the fourth quarter of 2022 to $53.5 million during the first quarter of 2023. The Company’s tax equivalent net interest income increased $1.4 million, or 2.6%, from $52.4 million for the fourth quarter of 2022 to $53.8 million for the first quarter of 2023. The acquisition of Citizens added $0.5 million of net interest income during the quarter ended March 31, 2023. Due to recent increases in the Federal Funds rate, net interest income increased by $3.0 million due to an increase in loan yields (net of loan fees and accretion) of 43 basis points and by $0.5 million due to an increase in investment yields of 21 basis points. In addition, loan fees increased $0.6 million and an increase of 99 basis points in the yield on deposits in depository institutions increased net interest income by $0.4 million from the quarter ended December 31, 2022. These increases were partially offset by an increase in the cost of interest bearing liabilities (38 basis points) which decreased net interest income by $3.5 million. The Company’s reported net interest margin increased from 3.89% for the fourth quarter of 2022 to 4.05% for the first quarter of 2023.

Credit Quality

The Company’s ratio of nonperforming assets to total loans and other real estate owned remained stable at 0.17%, or $6.3 million, at December 31, 2022 and 0.17%, or $6.5 million, at March 31, 2023. Total past due loans decreased from $9.2 million, or 0.25% of total loans outstanding, at December 31, 2022, to $5.9 million, or 0.15% of total loans outstanding at March 31, 2023.

As a result of the Company’s quarterly analysis of the adequacy of the allowance for credit losses, the Company recorded a provision for credit losses of $2.9 million in the first quarter of 2023, compared to a recovery of credit losses of $0.8 million for the comparable period in 2022, and a provision for credit losses of $0.5 million for the fourth quarter of 2022. In connection with the completion of our acquisition of Citizens during the quarter ended March 31, 2023, the Company recorded $2.0 million of credit loss expense associated with loans acquired from Citizens in its total provision for credit losses. In addition, the provision for credit losses included $0.9 million that was primarily related to the downgrade of two commercial loans.

Non-interest Income

Non-interest income was $18.7 million during the quarter ended March 31, 2023, as compared to $17.5 million during the quarter ended March 31, 2022. During the first quarter of 2023, the Company reported $0.8 million of realized gains from the sale of investment securities and $0.4 million of unrealized fair value gains on the Company’s equity securities compared to $0.7 million of unrealized fair value losses on the Company’s equity securities during the first quarter of 2022. The gain from the sale of securities in the first quarter of 2023 was primarily due to the sale of Citizens investment portfolio of approximately $41 million shortly after the acquisition date. These securities were marked to market in accordance with purchase accounting rules and due to a change in market conditions and an opportunity to increase the yield on the portfolio, the Company elected to liquidate those securities. The proceeds also enabled the Company an opportunity to enhance its liquidity position.

Exclusive of these items, non-interest income decreased $0.6 million, or 3.4%, from $18.2 million for the first quarter of 2022 to $17.5 million for the first quarter of 2023. This decrease was largely attributable to a decrease of $1.2 million in bank owned life insurance due to a decrease in death benefit proceeds and a decrease of $0.2 million, or 2.4%, in service charges. These decreases were partially offset by an increase in other income of $0.5 million. Citizens’ contribution to noninterest income for the quarter ended March 31, 2023, was less than $0.1 million.

Non-interest Expenses

Non-interest expenses increased $9.1 million, or 30.8%, from $29.5 million in the first quarter of 2022 to $38.6 million in the first quarter of 2023. During the quarter ended March 31, 2023, the Company recognized $5.6 million of acquisition and integration expenses associated with the completed acquisition of Citizens. Excluding these expenses, non-interest expenses increased $3.5 million from $29.5 million in the quarter ended March 31, 2022 to $33.0 million in the quarter ended March 31, 2023. This increase was largely due to an increase in salaries and employee benefits of $2.1 million due to higher salary adjustments, increased incentive compensation, and increased health insurance cost. In addition, other expenses increased $1.3 million and equipment and software-related expenses increased $0.3 million. The acquisition of Citizens increased noninterest expenses by approximately $0.2 million during the quarter ended March 31, 2023.

Balance Sheet Trends

Loans increased $248.4 million (6.8%) from December 31, 2022 to $3.89 billion at March 31, 2023, primarily due to the Company’s acquisition of Citizens ($254.7 million). Excluding the acquisition, total loans decreased $6.3 million (0.2%), from December 31, 2022 to $3.64 billion at March 31, 2023. Commercial real estate loans decreased $27.6 million during the quarter ended March 31, 2023. This decrease was partially offset by increases in consumer loans of $15.1 million (31.0%), home equity loans of $3.3 million (2.4%), and commercial and industrial loans of $2.3 million (0.6%).

Period-end deposit balances increased $266.9 million from December 31, 2022, to March 31, 2023, due to the Company’s acquisition of Citizens ($298.7 million). Total average depository balances increased $27.1 million, or 0.6%, from the quarter ended December 31, 2022 to the quarter ended March 31, 2023. This growth was primarily attributable to deposits acquired from Citizens ($73.0 million). Exclusive of these contributions, average depository balances declined $45.9 million, or 0.9%, from the quarter ended December 31, 2022. Average savings deposit balances decreased $53.2 million, average time deposit balances decreased $30.7 million, and average noninterest-bearing demand deposit balances decreased $21.5 million. These decreases were partially offset by an increase in average interest-bearing demand deposit balances of $59.5 million.

Income Tax Expense

The Company’s effective income tax rate for the first quarter of 2023 was 20.5% compared to 19.8% for the year ended December 31, 2022, and 19.7%, for the quarter ended March 31, 2022.

Capitalization and Liquidity

The Company’s loan to deposit ratio was 75.8% and the loan to asset ratio was 62.7% at March 31, 2023. The Company maintained investment securities totaling 23.8% of assets as of the same date. The Company’s deposit mix is weighted heavily toward checking and saving accounts, which fund 67.2% of assets at March 31, 2023. Time deposits fund 15.5% of assets at March 31, 2023, with only 10.9% of time deposits having balances of more than $250,000, reflecting the core retail orientation of the Company.

City Holding Company is the parent company of City National Bank of West Virginia (“City National”). City National has borrowing facilities with the Federal Reserve Board and the Federal Home Loan Bank that can be accessed as necessary to fund operations and to provide contingency funding. As of March 31, 2023, City National had the capacity to borrow an additional $1.6 billion from these existing borrowing facilities. In addition, $803.2 million of City National’s investment securities were unpledged at March 31, 2023.

The Company continues to be strongly capitalized with tangible equity of $487 million at March 31, 2023. The Company’s tangible equity ratio increased slightly from 8.0% at December 31, 2022 to 8.1% at March 31, 2023. At March 31, 2023, City National’s Leverage Ratio was 9.18%, its Common Equity Tier I ratio was 14.08%, its Tier I Capital ratio was 14.08%, and its Total Risk-Based Capital ratio was 14.63%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.

On March 29, 2023, the Board of Directors of the Company approved a quarterly cash dividend of $0.65 per share payable April 28, 2023, to shareholders of record as of April 14, 2023. During the quarter ended March 31, 2023, the Company repurchased 218,000 common shares at a weighted average price of $92.10 per share as part of a one million share repurchase plan authorized by the Board of Directors in May 2022. As of March 31, 2023, the Company could repurchase 599,000 additional shares under the current program. In connection with the acquisition of Citizens, the Company issued 667,000 shares of common stock on March 10, 2023.

City National operates 99 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, 2022 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) ongoing uncertainties on the Company’s business, results of operations and financial condition caused by the scope of the recovery of the COVID-19 pandemic; (3) credit risk, including risk that negative credit quality trends may lead to a deterioration of asset quality, risk that our allowance for credit 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; and (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 March 31, 2023 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary March 31, 2023 results and will adjust the amounts if necessary.

CITY HOLDING COMPANY AND SUBSIDIARIES

Financial Highlights
(Unaudited)
 
Three Months Ended
March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022
 
Earnings
Net Interest Income (fully taxable equivalent)

$

53,767

 

$

52,381

 

$

49,108

 

$

41,611

 

$

38,239

 

Net Income available to common shareholders

 

24,341

 

 

30,672

 

 

27,374

 

 

22,683

 

 

21,342

 

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

$

1.63

 

$

2.06

 

$

1.84

 

$

1.51

 

$

1.41

 

Diluted

 

1.63

 

 

2.05

 

 

1.83

 

 

1.51

 

 

1.41

 

Weighted average number of shares (in thousands):
Basic

 

14,818

 

 

14,756

 

 

14,776

 

 

14,888

 

 

14,974

 

Diluted

 

14,844

 

 

14,785

 

 

14,800

 

 

14,909

 

 

15,002

 

Period-end number of shares (in thousands)

 

15,260

 

 

14,788

 

 

14,856

 

 

14,864

 

 

15,045

 

Cash dividends declared

$

0.65

 

$

0.65

 

$

0.65

 

$

0.60

 

$

0.60

 

Book value per share (period-end)

$

42.66

 

$

39.08

 

$

36.91

 

$

39.83

 

$

42.03

 

Tangible book value per share (period-end)

 

31.91

 

 

31.25

 

 

29.09

 

 

31.99

 

 

34.27

 

Market data:
High closing price

$

100.27

 

$

101.94

 

$

90.24

 

$

83.07

 

$

85.99

 

Low closing price

 

89.17

 

 

89.32

 

 

78.40

 

 

73.88

 

 

76.82

 

Period-end closing price

 

90.88

 

 

93.09

 

 

88.69

 

 

79.88

 

 

78.70

 

Average daily volume (in thousands)

 

84

 

 

75

 

 

58

 

 

87

 

 

59

 

Treasury share activity:
Treasury shares repurchased (in thousands)

 

218

 

 

69

 

 

9

 

 

208

 

 

38

 

Average treasury share repurchase price

$

92.10

 

$

93.12

 

$

80.24

 

$

78.33

 

$

78.09

 

 
Key Ratios (percent)
Return on average assets

 

1.63

%

 

2.08

%

 

1.83

%

 

1.51

%

 

1.42

%

Return on average tangible equity

 

19.9

%

 

27.3

%

 

21.8

%

 

18.1

%

 

15.3

%

Yield on interest earning assets

 

4.66

%

 

4.23

%

 

3.72

%

 

3.15

%

 

2.94

%

Cost of interest bearing liabilities

 

0.86

%

 

0.48

%

 

0.21

%

 

0.15

%

 

0.17

%

Net Interest Margin

 

4.05

%

 

3.89

%

 

3.57

%

 

3.04

%

 

2.82

%

Non-interest income as a percent of total revenue

 

24.7

%

 

26.5

%

 

27.2

%

 

30.9

%

 

32.4

%

Efficiency Ratio

 

45.7

%

 

45.3

%

 

46.3

%

 

50.5

%

 

51.7

%

Price/Earnings Ratio (a)

 

13.95

 

 

11.30

 

 

12.08

 

 

13.23

 

 

13.93

 

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

 

10.31

%

 

9.57

%

 

10.32

%

 

10.26

%

 

11.25

%

Tangible equity to tangible assets

 

8.05

%

 

8.02

%

 

7.41

%

 

7.76

%

 

8.75

%

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

 

15.64

%

 

16.23

%

 

15.82

%

 

15.85

%

 

16.18

%

Tier I

 

15.64

%

 

16.23

%

 

15.82

%

 

15.85

%

 

16.18

%

Total

 

16.18

%

 

16.62

%

 

16.22

%

 

16.26

%

 

16.60

%

Leverage

 

10.20

%

 

10.01

%

 

9.74

%

 

9.42

%

 

9.58

%

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

 

14.08

%

 

13.88

%

 

14.68

%

 

14.80

%

 

14.82

%

Tier I

 

14.08

%

 

13.88

%

 

14.68

%

 

14.80

%

 

14.82

%

Total

 

14.63

%

 

14.28

%

 

15.07

%

 

15.21

%

 

15.24

%

Leverage

 

9.18

%

 

8.55

%

 

9.05

%

 

8.81

%

 

8.80

%

 
Other (period-end)
Branches

 

99

 

 

94

 

 

94

 

 

94

 

 

94

 

FTE

 

958

 

 

909

 

 

903

 

 

915

 

 

897

 

 
Assets per FTE (in thousands)

$

6,483

 

$

6,467

 

$

6,588

 

$

6,825

 

$

6,703

 

Deposits per FTE (in thousands)

 

5,362

 

 

5,357

 

 

5,492

 

 

5,621

 

 

5,574

 

 
 
(a) The price/earnings ratio is computed based on annualized quarterly earnings.
(b) March 31, 2023 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
March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022
 
Interest Income
Interest and fees on loans

$

47,004

$

42,963

 

$

38,493

 

$

33,208

 

$

31,874

 

Interest on investment securities:
Taxable

 

11,773

 

11,119

 

 

9,556

 

 

7,547

 

 

6,223

 

Tax-exempt

 

1,162

 

1,262

 

 

1,228

 

 

1,205

 

 

1,216

 

Interest on deposits in depository institutions

 

1,591

 

1,244

 

 

1,530

 

 

782

 

 

238

 

Total Interest Income

 

61,530

 

56,588

 

 

50,807

 

 

42,742

 

 

39,551

 

 
Interest Expense
Interest on deposits

 

5,690

 

3,010

 

 

1,585

 

 

1,328

 

 

1,521

 

Interest on short-term borrowings

 

2,381

 

1,533

 

 

440

 

 

124

 

 

114

 

Total Interest Expense

 

8,071

 

4,543

 

 

2,025

 

 

1,452

 

 

1,635

 

Net Interest Income

 

53,459

 

52,045

 

 

48,782

 

 

41,290

 

 

37,916

 

Provision for (Recovery of) credit losses

 

2,918

 

500

 

 

730

 

 

-

 

 

(756

)

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

 

50,541

 

51,545

 

 

48,052

 

 

41,290

 

 

38,672

 

 
Non-Interest Income
Net gains on sale of investment securities

 

773

 

4

 

 

-

 

 

-

 

 

-

 

Unrealized gains (losses) recognized on equity securities still held

 

361

 

(262

)

 

1

 

 

(601

)

 

(723

)

Service charges

 

6,563

 

7,056

 

 

7,487

 

 

7,067

 

 

6,725

 

Bankcard revenue

 

6,603

 

6,791

 

 

7,052

 

 

7,062

 

 

6,444

 

Trust and investment management fee income

 

2,252

 

2,343

 

 

2,158

 

 

2,100

 

 

2,197

 

Bank owned life insurance

 

804

 

1,813

 

 

754

 

 

978

 

 

2,014

 

Other income

 

1,326

 

791

 

 

792

 

 

1,243

 

 

791

 

Total Non-Interest Income

 

18,682

 

18,536

 

 

18,244

 

 

17,849

 

 

17,448

 

 
Non-Interest Expense
Salaries and employee benefits

 

17,673

 

17,148

 

 

17,398

 

 

16,413

 

 

15,577

 

Occupancy related expense

 

2,640

 

2,725

 

 

2,664

 

 

2,620

 

 

2,709

 

Equipment and software related expense

 

3,092

 

3,341

 

 

2,949

 

 

2,732

 

 

2,769

 

FDIC insurance expense

 

445

 

413

 

 

416

 

 

409

 

 

435

 

Advertising

 

760

 

802

 

 

854

 

 

951

 

 

798

 

Bankcard expenses

 

1,509

 

1,356

 

 

1,405

 

 

1,665

 

 

1,606

 

Postage, delivery, and statement mailings

 

647

 

597

 

 

578

 

 

551

 

 

636

 

Office supplies

 

420

 

441

 

 

466

 

 

427

 

 

410

 

Legal and professional fees

 

470

 

610

 

 

532

 

 

525

 

 

527

 

Telecommunications

 

606

 

627

 

 

651

 

 

754

 

 

584

 

Repossessed asset losses (gains), net of expenses

 

16

 

54

 

 

(3

)

 

(32

)

 

40

 

Merger related expenses

 

5,645

 

268

 

 

-

 

 

-

 

 

-

 

Other expenses

 

4,700

 

4,203

 

 

3,591

 

 

3,674

 

 

3,436

 

Total Non-Interest Expense

 

38,623

 

32,585

 

 

31,501

 

 

30,689

 

 

29,527

 

Income Before Income Taxes

 

30,600

 

37,496

 

 

34,795

 

 

28,450

 

 

26,593

 

Income tax expense

 

6,259

 

6,824

 

 

7,421

 

 

5,767

 

 

5,251

 

Net Income Available to Common Shareholders

$

24,341

$

30,672

 

$

27,374

 

$

22,683

 

$

21,342

 

 
Distributed earnings allocated to common shareholders

$

9,833

$

9,521

 

$

9,564

 

$

8,837

 

$

8,943

 

Undistributed earnings allocated to common shareholders

 

14,294

 

20,857

 

 

17,555

 

 

13,643

 

 

12,199

 

Net earnings allocated to common shareholders

$

24,127

$

30,378

 

$

27,119

 

$

22,480

 

$

21,142

 

 
Average common shares outstanding

 

14,818

 

14,756

 

 

14,776

 

 

14,888

 

 

14,974

 

Shares for diluted earnings per share

 

14,844

 

14,785

 

 

14,800

 

 

14,909

 

 

15,002

 

 
Basic earnings per common share

$

1.63

$

2.06

 

$

1.84

 

$

1.51

 

$

1.41

 

Diluted earnings per common share

$

1.63

$

2.05

 

$

1.83

 

$

1.51

 

$

1.41

 

CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000s)
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022
 
Assets
Cash and due from banks

$

69,804

 

$

68,333

 

$

65,051

 

$

90,449

 

$

100,877

 

Interest-bearing deposits in depository institutions

 

233,006

 

 

131,667

 

 

233,302

 

 

606,530

 

 

497,171

 

Cash and cash equivalents

 

302,810

 

 

200,000

 

 

298,353

 

 

696,979

 

 

598,048

 

 
Investment securities available-for-sale, at fair value

 

1,456,259

 

 

1,505,520

 

 

1,489,392

 

 

1,497,227

 

 

1,409,513

 

Other securities

 

24,728

 

 

23,807

 

 

24,372

 

 

24,383

 

 

24,785

 

Total investment securities

 

1,480,987

 

 

1,529,327

 

 

1,513,764

 

 

1,521,610

 

 

1,434,298

 

 
Gross loans

 

3,894,686

 

 

3,646,258

 

 

3,628,752

 

 

3,566,758

 

 

3,559,905

 

Allowance for credit losses

 

(22,724

)

 

(17,108

)

 

(17,011

)

 

(17,015

)

 

(17,280

)

Net loans

 

3,871,962

 

 

3,629,150

 

 

3,611,741

 

 

3,549,743

 

 

3,542,625

 

 
Bank owned life insurance

 

124,238

 

 

120,674

 

 

121,283

 

 

120,528

 

 

120,522

 

Premises and equipment, net

 

73,430

 

 

70,786

 

 

71,686

 

 

72,388

 

 

73,067

 

Accrued interest receivable

 

18,395

 

 

18,287

 

 

17,256

 

 

16,342

 

 

16,101

 

Net deferred tax assets

 

42,146

 

 

44,884

 

 

49,888

 

 

30,802

 

 

18,001

 

Goodwill and intangible assets

 

164,099

 

 

115,735

 

 

116,081

 

 

116,428

 

 

116,774

 

Other assets

 

132,715

 

 

149,263

 

 

147,716

 

 

118,375

 

 

92,331

 

Total Assets

$

6,210,782

 

$

5,878,106

 

$

5,947,768

 

$

6,243,195

 

$

6,011,767

 

 
Liabilities
Deposits:
Noninterest-bearing

$

1,420,990

 

$

1,351,415

 

$

1,429,281

 

$

1,531,660

 

$

1,357,266

 

Interest-bearing:
Demand deposits

 

1,356,017

 

 

1,233,482

 

 

1,160,970

 

 

1,189,056

 

 

1,191,492

 

Savings deposits

 

1,397,523

 

 

1,396,869

 

 

1,427,785

 

 

1,435,645

 

 

1,425,528

 

Time deposits

 

962,235

 

 

888,100

 

 

939,769

 

 

985,567

 

 

1,024,559

 

Total deposits

 

5,136,765

 

 

4,869,866

 

 

4,957,805

 

 

5,141,928

 

 

4,998,845

 

Short-term borrowings
Customer repurchase agreements

 

293,256

 

 

290,964

 

 

304,807

 

 

402,368

 

 

288,483

 

Other liabilities

 

129,711

 

 

139,424

 

 

136,868

 

 

106,906

 

 

92,009

 

Total Liabilities

 

5,559,732

 

 

5,300,254

 

 

5,399,480

 

 

5,651,202

 

 

5,379,337

 

 
Stockholders' Equity
Preferred stock

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Common stock

 

47,619

 

 

47,619

 

 

47,619

 

 

47,619

 

 

47,619

 

Capital surplus

 

177,529

 

 

170,980

 

 

170,138

 

 

169,557

 

 

170,206

 

Retained earnings

 

721,727

 

 

706,696

 

 

685,657

 

 

667,933

 

 

654,138

 

Cost of common stock in treasury

 

(179,436

)

 

(215,955

)

 

(209,644

)

 

(209,133

)

 

(194,819

)

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

 

(112,967

)

 

(128,066

)

 

(141,997

)

 

(80,498

)

 

(41,229

)

Underfunded pension liability

 

(3,422

)

 

(3,422

)

 

(3,485

)

 

(3,485

)

 

(3,485

)

Total Accumulated Other Comprehensive (Loss) Income

 

(116,389

)

 

(131,488

)

 

(145,482

)

 

(83,983

)

 

(44,714

)

Total Stockholders' Equity

 

651,050

 

 

577,852

 

 

548,288

 

 

591,993

 

 

632,430

 

Total Liabilities and Stockholders' Equity

$

6,210,782

 

$

5,878,106

 

$

5,947,768

 

$

6,243,195

 

$

6,011,767

 

 
Regulatory Capital
Total CET 1 capital

$

606,675

 

$

598,068

 

$

582,213

 

$

564,158

 

$

565,048

 

Total tier 1 capital

 

606,675

 

 

598,068

 

 

582,213

 

 

564,158

 

 

565,048

 

Total risk-based capital

 

627,718

 

 

612,654

 

 

596,708

 

 

578,657

 

 

579,807

 

Total risk-weighted assets

 

3,878,994

 

 

3,685,207

 

 

3,679,511

 

 

3,558,249

 

 

3,492,920

 

CITY HOLDING COMPANY AND SUBSIDIARIES
Loan Portfolio
(Unaudited) ($ in 000s)
 
 
March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022
 
Commercial and industrial

$

390,861

$

373,890

$

375,735

$

360,481

$

337,384

 
1-4 Family

 

119,017

 

116,192

 

109,710

 

108,765

 

108,424

Hotels

 

327,554

 

340,404

 

355,001

 

337,910

 

314,902

Multi-family

 

195,042

 

174,786

 

186,440

 

203,856

 

209,359

Non Residential Non-Owner Occupied

 

679,782

 

585,964

 

569,369

 

551,240

 

637,092

Non Residential Owner Occupied

 

223,096

 

174,961

 

177,673

 

180,188

 

200,180

Commercial real estate (1)

 

1,544,491

 

1,392,307

 

1,398,193

 

1,381,959

 

1,469,957

 
Residential real estate (2)

 

1,737,604

 

1,693,523

 

1,678,770

 

1,651,005

 

1,588,860

Home equity

 

151,341

 

134,317

 

130,837

 

125,742

 

121,460

Consumer

 

66,994

 

48,806

 

41,902

 

44,580

 

39,778

DDA overdrafts

 

3,395

 

3,415

 

3,315

 

2,991

 

2,466

Gross Loans

$

3,894,686

$

3,646,258

$

3,628,752

$

3,566,758

$

3,559,905

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

$

4,715

$

4,130

$

4,125

$

6,767

$

14,877

(2) - Residential real estate loans

 

25,224

 

21,122

 

19,333

 

18,751

 

16,253

CITY HOLDING COMPANY AND SUBSIDIARIES
Asset Quality Information
(Unaudited) ($ in 000s)
 
Three Months Ended
March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022
Allowance for Credit Losses
Balance at beginning of period

$

17,108

 

$

17,011

 

$

17,015

 

$

17,280

 

$

18,166

 

 
Charge-offs:
Commercial and industrial

 

-

 

 

(120

)

 

(408

)

 

-

 

 

(34

)

Commercial real estate

 

(3

)

 

(31

)

 

-

 

 

(24

)

 

-

 

Residential real estate

 

(32

)

 

(66

)

 

(93

)

 

(56

)

 

(50

)

Home equity

 

(67

)

 

(189

)

 

(71

)

 

(19

)

 

-

 

Consumer

 

(62

)

 

(15

)

 

(16

)

 

(9

)

 

(23

)

DDA overdrafts

 

(450

)

 

(670

)

 

(719

)

 

(604

)

 

(631

)

Total charge-offs

 

(614

)

 

(1,091

)

 

(1,307

)

 

(712

)

 

(738

)

 
Recoveries:
Commercial and industrial

 

83

 

 

94

 

 

149

 

 

32

 

 

59

 

Commercial real estate

 

158

 

 

120

 

 

9

 

 

25

 

 

53

 

Residential real estate

 

10

 

 

49

 

 

1

 

 

4

 

 

45

 

Home equity

 

4

 

 

34

 

 

2

 

 

3

 

 

17

 

Consumer

 

23

 

 

31

 

 

29

 

 

19

 

 

28

 

DDA overdrafts

 

398

 

 

360

 

 

383

 

 

364

 

 

406

 

Total recoveries

 

676

 

 

688

 

 

573

 

 

447

 

 

608

 

 
Net recoveries (charge-offs)

 

62

 

 

(403

)

 

(734

)

 

(265

)

 

(130

)

Provision for (recovery of) credit losses

 

2,918

 

 

500

 

 

730

 

 

-

 

 

(756

)

PCD Loan Reserves

 

2,811

 

 

-

 

 

-

 

 

-

 

 

-

 

Adoption of ASU 2022-02

 

(175

)

 

-

 

 

-

 

 

-

 

 

-

 

Balance at end of period

$

22,724

 

$

17,108

 

$

17,011

 

$

17,015

 

$

17,280

 

 
Loans outstanding

$

3,894,686

 

$

3,646,258

 

$

3,628,752

 

$

3,566,758

 

$

3,559,905

 

Allowance as a percent of loans outstanding

 

0.58

%

 

0.47

%

 

0.47

%

 

0.48

%

 

0.49

%

Allowance as a percent of non-performing loans

 

400.1

%

 

317.3

%

 

320.5

%

 

292.6

%

 

331.3

%

 
Average loans outstanding

$

3,700,194

 

$

3,648,996

 

$

3,596,523

 

$

3,559,713

 

$

3,527,393

 

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

 

-0.01

%

 

0.04

%

 

0.08

%

 

0.03

%

 

0.01

%

 
CITY HOLDING COMPANY AND SUBSIDIARIES
Asset Quality Information, continued
(Unaudited) ($ in 000s)
 
March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022
Nonaccrual Loans
Residential real estate

$

2,700

 

$

1,969

 

$

2,089

 

$

1,561

 

$

1,786

 

Home equity

 

35

 

 

55

 

 

140

 

 

54

 

 

99

 

Commercial and industrial

 

994

 

 

1,015

 

 

785

 

 

1,360

 

 

1,069

 

Commercial real estate

 

1,931

 

 

2,166

 

 

2,293

 

 

2,783

 

 

2,241

 

Consumer

 

19

 

 

-

 

 

-

 

 

-

 

 

-

 

Total nonaccrual loans

 

5,679

 

 

5,205

 

 

5,307

 

 

5,758

 

 

5,195

 

Accruing loans past due 90 days or more

 

-

 

 

187

 

 

-

 

 

58

 

 

21

 

Total non-performing loans

 

5,679

 

 

5,392

 

 

5,307

 

 

5,816

 

 

5,216

 

Other real estate owned

 

843

 

 

909

 

 

1,071

 

 

946

 

 

1,099

 

Total non-performing assets

$

6,522

 

$

6,301

 

$

6,378

 

$

6,762

 

$

6,315

 

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

 

0.17

%

 

0.17

%

 

0.18

%

 

0.19

%

 

0.18

%

 
Past Due Loans
Residential real estate

$

4,783

 

$

7,091

 

$

3,452

 

$

5,298

 

$

4,976

 

Home equity

 

551

 

 

650

 

 

521

 

 

282

 

 

505

 

Commercial and industrial

 

98

 

 

234

 

 

221

 

 

130

 

 

56

 

Commercial real estate

 

148

 

 

710

 

 

221

 

 

46

 

 

744

 

Consumer

 

3

 

 

100

 

 

27

 

 

49

 

 

32

 

DDA overdrafts

 

276

 

 

391

 

 

561

 

 

430

 

 

392

 

Total past due loans

$

5,859

 

$

9,176

 

$

5,003

 

$

6,235

 

$

6,705

 

 
Total past due loans as a percent of loans outstanding

 

0.15

%

 

0.25

%

 

0.14

%

 

0.17

%

 

0.19

%

CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)
 
Three Months Ended
March 31, 2023 December 31, 2022 March 31, 2022
Average Yield/ Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate Balance Interest Rate
 
Assets:
Loan portfolio (1):
Residential real estate (2)

$

1,840,828

 

$

20,007

4.41

%

$

1,824,327

 

$

18,973

 

4.11

%

$

1,667,683

 

$

15,735

3.83

%

Commercial, financial, and agriculture (2)

 

1,795,309

 

 

26,248

5.93

%

 

1,773,937

 

 

23,346

 

5.22

%

 

1,815,549

 

 

15,532

3.47

%

Installment loans to individuals (2), (3)

 

64,057

 

 

749

4.74

%

 

50,732

 

 

646

 

5.05

%

 

44,161

 

 

607

5.57

%

Total loans

 

3,700,194

 

 

47,004

5.15

%

 

3,648,996

 

 

42,965

 

4.67

%

 

3,527,393

 

 

31,874

3.66

%

Securities:
Taxable

 

1,322,060

 

 

11,773

3.61

%

 

1,315,453

 

 

11,118

 

3.35

%

 

1,207,333

 

 

6,223

2.09

%

Tax-exempt (4)

 

204,957

 

 

1,471

2.91

%

 

211,326

 

 

1,597

 

3.00

%

 

232,474

 

 

1,539

2.68

%

Total securities

 

1,527,017

 

 

13,244

3.52

%

 

1,526,779

 

 

12,715

 

3.30

%

 

1,439,807

 

 

7,762

2.19

%

Deposits in depository institutions

 

160,115

 

 

1,590

4.03

%

 

162,732

 

 

1,245

 

3.04

%

 

540,197

 

 

238

0.18

%

Total interest-earning assets

 

5,387,326

 

 

61,838

4.66

%

 

5,338,507

 

 

56,925

 

4.23

%

 

5,507,397

 

 

39,874

2.94

%

Cash and due from banks

 

67,891

 

 

69,223

 

 

101,806

 

Premises and equipment, net

 

71,422

 

 

71,482

 

 

73,827

 

Goodwill and intangible assets

 

124,546

 

 

115,952

 

 

116,994

 

Other assets

 

327,442

 

 

332,855

 

 

217,662

 

Less: Allowance for credit losses

 

(18,143

)

 

(17,332

)

 

(18,454

)

Total assets

$

5,960,484

 

$

5,910,687

 

$

5,999,232

 

 
Liabilities:
Interest-bearing demand deposits

$

1,234,981

 

$

1,741

0.57

%

$

1,150,327

 

$

684

 

0.24

%

$

1,142,278

 

$

130

0.05

%

Savings deposits

 

1,376,317

 

 

1,348

0.40

%

 

1,412,246

 

 

829

 

0.23

%

 

1,384,460

 

 

175

0.05

%

Time deposits (2)

 

902,583

 

 

2,601

1.17

%

 

916,845

 

 

1,497

 

0.65

%

 

1,048,185

 

 

1,216

0.47

%

Customer repurchase agreements

 

281,861

 

 

2,381

3.43

%

 

303,599

 

 

1,534

 

2.00

%

 

276,360

 

 

114

0.17

%

Total interest-bearing liabilities

 

3,795,742

 

 

8,071

0.86

%

 

3,783,017

 

 

4,544

 

0.48

%

 

3,851,283

 

 

1,635

0.17

%

Noninterest-bearing demand deposits

 

1,420,676

 

 

1,428,013

 

 

1,398,663

 

Other liabilities

 

129,411

 

 

134,075

 

 

74,084

 

Stockholders' equity

 

614,655

 

 

565,582

 

 

675,202

 

Total liabilities and
stockholders' equity

$

5,960,484

 

$

5,910,687

 

$

5,999,232

 

Net interest income

$

53,767

$

52,381

 

$

38,239

Net yield on earning assets

4.05

%

3.89

%

2.82

%

 
(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)

$

518

$

(41

)

$

298

 
(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

$

76

$

67

 

$

90

Commercial, financial, and agriculture

 

177

 

135

 

 

286

Installment loans to individuals

 

4

 

4

 

 

19

Time deposits

 

9

 

21

 

 

21

$

266

$

227

 

$

416

 
(3) Includes the Company’s consumer and DDA overdrafts loan categories.
(4) 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
March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022
Net Interest Income/Margin
Net interest income ("GAAP")

$

53,459

 

$

52,045

 

$

48,782

 

$

41,290

 

$

37,916

 

Taxable equivalent adjustment

 

308

 

 

336

 

 

326

 

 

321

 

 

323

 

Net interest income, fully taxable equivalent

$

53,767

 

$

52,381

 

$

49,108

 

$

41,611

 

$

38,239

 

 
Average interest earning assets

$

5,387,326

 

$

5,338,507

 

$

5,460,409

 

$

5,485,604

 

$

5,507,397

 

 
Net Interest Margin

 

4.05

%

 

3.89

%

 

3.57

%

 

3.04

%

 

2.82

%

Accretion related to fair value adjustments

 

-0.02

%

 

-0.02

%

 

-0.01

%

 

-0.02

%

 

-0.03

%

Net Interest Margin (excluding accretion)

 

4.03

%

 

3.87

%

 

3.56

%

 

3.02

%

 

2.79

%

 
Tangible Equity Ratio (period end)
Equity to assets ("GAAP")

 

10.48

%

 

9.83

%

 

9.22

%

 

9.48

%

 

10.52

%

Effect of goodwill and other intangibles, net

 

-2.43

%

 

-1.81

%

 

-1.81

%

 

-1.72

%

 

-1.77

%

Tangible common equity to tangible assets

 

8.05

%

 

8.02

%

 

7.41

%

 

7.76

%

 

8.75

%

 
Return on average tangible equity ("GAAP")

 

19.9

%

 

27.3

%

 

21.8

%

 

18.1

%

 

15.3

%

Impact of merger related expenses

 

3.6

%

 

-

 

 

-

 

 

-

 

 

-

 

Impact of merger related provision

 

1.3

%

 

-

 

 

-

 

 

-

 

 

-

 

Return on tangible equity, excluding merger related expenses and provision

 

24.8

%

 

27.3

%

 

21.8

%

 

18.1

%

 

15.3

%

 
Return on assets ("GAAP")

 

1.63

%

 

2.08

%

 

1.83

%

 

1.51

%

 

1.42

%

Impact of merger related expenses

 

0.31

%

 

-

 

 

-

 

 

-

 

 

-

 

Impact of merger related provision

 

0.10

%

 

-

 

 

-

 

 

-

 

 

-

 

Return on assets, excluding merger related expenses and provision

 

2.04

%

 

2.08

%

 

1.83

%

 

1.51

%

 

1.42

%

 
 
 
Commercial Loan Information (period end)
 
Commercial Sector Total % of Total Loans Average DSC Average LTV
 
Natural Gas Extraction

$

25,179

 

 

0.65

%

 

3.68

 

 

64

%

Natural Gas Distribution

 

23,711

 

 

0.61

%

 

2.61

 

 

N/A

 

Masonry Contractors

 

23,017

 

 

0.59

%

 

1.13

 

 

84

%

Sheet Metal Work Manufacturing

 

23,491

 

 

0.60

%

 

1.57

 

 

68

%

Beer & Ale Merchant Wholesalers

 

26,766

 

 

0.69

%

 

3.28

 

N/A

Gasoline Stations with Convenience Stores

 

53,556

 

 

1.38

%

 

4.19

 

 

65

%

Lessors of Residential Buildings & Dwellings

 

303,311

 

 

7.79

%

 

1.89

 

 

66

%

1-4 Family

 

114,768

 

 

2.95

%

 

2.97

 

 

68

%

Multi-Family

 

160,664

 

 

4.13

%

 

1.84

 

 

66

%

Lessors of Nonresidential Buildings

 

468,836

 

 

12.05

%

 

1.70

 

 

65

%

Office Buildings

 

44,926

 

 

1.15

%

 

1.64

 

 

64

%

Lessors of Mini-Warehouses & Self-Storage Units

 

44,510

 

 

1.15

%

 

1.62

 

 

62

%

Assisted Living Facilities

 

28,944

 

 

0.74

%

 

1.38

 

 

57

%

Hotels & Motels

 

335,086

 

 

8.61

%

 

1.43

 

 

52

%

 
Average Balance Median Balance
Commercial Loans

$

453

 

$

92

 

Commercial Real Estate Loans

 

498

 

 

119

 

 
 
CITY HOLDING COMPANY AND SUBSIDIARIES
Non-GAAP Reconciliations, continued
(Unaudited) ($ in 000s, except per share data)
 
 
Estimated Uninsured Deposits by Deposit Type
March 31, 2023 December 31, 2022
Noninterest-Bearing Demand Deposits

 

19

%

 

20

%

 
Interest-Bearing Deposits
Demand Deposits

 

8

%

 

10

%

Savings Deposits

 

11

%

 

14

%

Time Deposits

 

14

%

 

13

%

Total Deposits

 

13

%

 

14

%

 
Retail Deposits
Noninterest-Bearing

 

4

%

 

5

%

Interest-Bearing

 

11

%

 

11

%

Total Retail Deposits

 

9

%

 

10

%

 
Commercial Deposits
Noninterest-Bearing Deposits

 

31

%

 

32

%

Interest-Bearing Deposits

 

13

%

 

16

%

Total Commercial Deposits

 

23

%

 

26

%

 
 
The amounts listed above represent management's best estimate as of the respective period shown.
 
 
Average Deposits by Category March 31, 2023 December 31, 2022
Retail Deposits
Noninterest-Bearing

$

619,889

 

$

637,368

 

Interest-Bearing

 

3,125,132

 

 

3,012,999

 

Total Average Retail Deposits

$

3,745,021

 

$

3,650,367

 

 
Commercial Deposits
Noninterest-Bearing Deposits

$

800,787

 

$

790,645

 

Interest-Bearing Deposits

 

388,749

 

 

466,419

 

Total Average Commercial Deposits

$

1,189,536

 

$

1,257,064

 

 
 
CITY HOLDING COMPANY AND SUBSIDIARIES
Non-GAAP Reconciliations, continued
(Unaudited) ($ in 000s, except per share data)
 
Net Growth in DDA Accounts
Year New DDA Accounts Net Number of New Accounts Percentage
 

2023 YTD*

 

8,467

 

 

1,644

 

 

0.7

%

2022

 

28,442

 

 

4,544

 

 

1.9

%

2021

 

32,800

 

 

8,860

 

 

3.8

%

2020

 

30,360

 

 

6,740

 

 

3.0

%

2019

 

32,040

 

 

3,717

 

 

1.7

%

2018

 

30,400

 

 

4,310

 

 

2.2

%

2017

 

28,525

 

 

2,711

 

 

1.4

%

2016

 

28,650

 

 

2,820

 

 

1.5

%

 
 
* - 2023 YTD amounts exclude accounts added in connection with the acquisitions of Citizens Commerce Bancshares, Inc., Poage Bankshares, Inc. and Farmers Deposit Bancorp, Inc.

 

Contacts

David L. Bumgarner, Executive Vice President and Chief Financial Officer

(304) 769-1169

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