West Virginia
|
55-0619957
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
25
Gatewater Road
|
|
Charleston,
West Virginia
|
25313
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Large
accelerated filer £
|
Accelerated
filer T
|
Non-accelerated
filer £
|
Smaller
reporting company £
|
Financial
Information
|
Pages
|
|
Item
1.
|
Financial
Statements (Unaudited).
|
4-18
|
Item
2.
|
19-36
|
|
Item
3.
|
36
|
|
Item
4.
|
36
|
|
Other
Information
|
||
Item
1.
|
37
|
|
Item
1A.
|
37
|
|
Item
2.
|
37
|
|
Item
3.
|
37
|
|
Item
4.
|
37
|
|
Item
5.
|
37
|
|
Item
6.
|
37
|
|
38
|
September 30
2008
|
December 31
2007
|
|||||||
(Unaudited)
|
(Note
A)
|
|||||||
Assets
|
||||||||
Cash
and due from banks
|
$ | 52,206 | $ | 64,726 | ||||
Interest-bearing
deposits in depository institutions
|
4,045 | 9,792 | ||||||
Cash
and Cash Equivalents
|
56,251 | 74,518 | ||||||
Investment
securities available for sale, at fair value
|
345,982 | 382,098 | ||||||
Investment
securities held-to-maturity, at amortized cost (approximate fair value at
September 30, 2008 and December 31, 2007 - $22,997 and $35,198,
respectively)
|
33,033 | 34,918 | ||||||
Total
Investment Securities
|
379,015 | 417,016 | ||||||
Gross
loans
|
1,777,731 | 1,767,021 | ||||||
Allowance
for loan losses
|
(18,879 | ) | (17,581 | ) | ||||
Net
Loans
|
1,758,852 | 1,749,440 | ||||||
Bank
owned life insurance
|
69,660 | 64,467 | ||||||
Premises
and equipment
|
59,574 | 54,635 | ||||||
Accrued
interest receivable
|
9,733 | 11,254 | ||||||
Net
deferred tax asset
|
41,173 | 20,633 | ||||||
Intangible
assets
|
57,600 | 58,238 | ||||||
Other
assets
|
33,707 | 32,566 | ||||||
Total
Assets
|
$ | 2,465,565 | $ | 2,482,767 | ||||
Liabilities
|
||||||||
Deposits:
|
||||||||
Noninterest-bearing
|
$ | 316,205 | $ | 314,231 | ||||
Interest-bearing:
|
||||||||
Demand
deposits
|
404,593 | 397,510 | ||||||
Savings
deposits
|
359,644 | 350,607 | ||||||
Time
deposits
|
912,184 | 927,733 | ||||||
Total
Deposits
|
1,992,626 | 1,990,081 | ||||||
Short-term
borrowings
|
140,726 | 161,916 | ||||||
Long-term
debt
|
21,075 | 4,973 | ||||||
Other
liabilities
|
26,226 | 31,803 | ||||||
Total
Liabilities
|
2,180,653 | 2,188,773 | ||||||
Shareholders’
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, 2008 and December 31, 2007, less 2,316,638
and 2,292,357 shares in treasury, respectively
|
46,249 | 46,249 | ||||||
Capital
surplus
|
102,831 | 103,390 | ||||||
Retained
earnings
|
231,789 | 224,386 | ||||||
Cost
of common stock in treasury
|
(81,480 | ) | (80,664 | ) | ||||
Accumulated
other comprehensive (loss) income:
|
||||||||
Unrealized
loss on securities available-for-sale
|
(20,631 | ) | (1,783 | ) | ||||
Unrealized
gain on derivative instruments
|
8,128 | 4,390 | ||||||
Underfunded
pension liability
|
(1,974 | ) | (1,974 | ) | ||||
Total
Accumulated Other Comprehensive (Loss) Income
|
(14,477 | ) | 633 | |||||
Total
Shareholders’ Equity
|
284,912 | 293,994 | ||||||
Total
Liabilities and Shareholders’ Equity
|
$ | 2,465,565 | $ | 2,482,767 |
Three
Months Ended September 30
|
Nine
Months Ended September 30
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Interest
Income
|
||||||||||||||||
Interest
and fees on loans
|
$ | 30,254 | $ | 32,721 | $ | 91,662 | $ | 96,131 | ||||||||
Interest
on investment securities:
|
||||||||||||||||
Taxable
|
5,850 | 6,024 | 18,034 | 19,709 | ||||||||||||
Tax-exempt
|
371 | 415 | 1,151 | 1,270 | ||||||||||||
Interest
on deposits in depository institutions
|
47 | 171 | 163 | 401 | ||||||||||||
Interest
on federal funds sold
|
- | 266 | - | 815 | ||||||||||||
Total
Interest Income
|
36,522 | 39,597 | 111,010 | 118,326 | ||||||||||||
Interest
Expense
|
||||||||||||||||
Interest
on deposits
|
9,446 | 13,190 | 31,980 | 38,978 | ||||||||||||
Interest
on short-term borrowings
|
478 | 1,758 | 2,286 | 4,965 | ||||||||||||
Interest
on long-term debt
|
317 | 426 | 1,070 | 1,383 | ||||||||||||
Total
Interest Expense
|
10,241 | 15,374 | 35,336 | 45,326 | ||||||||||||
Net
Interest Income
|
26,281 | 24,223 | 75,674 | 73,000 | ||||||||||||
Provision
for loan losses
|
2,350 | 1,200 | 5,083 | 3,700 | ||||||||||||
Net
Interest Income After Provision for Loan Losses
|
23,931 | 23,023 | 70,591 | 69,300 | ||||||||||||
Non-interest
Income
|
||||||||||||||||
Investment
securities (losses) gains
|
(27,467 | ) | (1 | ) | (27,465 | ) | 45 | |||||||||
Service
charges
|
11,993 | 11,192 | 34,536 | 32,681 | ||||||||||||
Insurance
commissions
|
1,025 | 1,127 | 3,231 | 2,971 | ||||||||||||
Trust
and investment management fee income
|
640 | 523 | 1,721 | 1,529 | ||||||||||||
Bank
owned life insurance
|
767 | 596 | 2,193 | 1,877 | ||||||||||||
Gain
on sale of retail credit card merchant agreements
|
- | - | - | 1,500 | ||||||||||||
VISA
IPO Gain
|
- | - | 3,289 | - | ||||||||||||
Other
income
|
284 | 377 | 1,250 | 1,252 | ||||||||||||
Total
Non-interest Income
|
(12,758 | ) | 13,814 | 18,755 | 41,855 | |||||||||||
Non-interest
Expense
|
||||||||||||||||
Salaries
and employee benefits
|
9,538 | 9,307 | 28,418 | 27,275 | ||||||||||||
Occupancy
and equipment
|
1,800 | 1,600 | 5,098 | 4,762 | ||||||||||||
Depreciation
|
1,110 | 1,160 | 3,330 | 3,339 | ||||||||||||
Professional
fees
|
435 | 416 | 1,229 | 1,204 | ||||||||||||
Postage,
delivery, and statement mailings
|
636 | 641 | 1,908 | 1,988 | ||||||||||||
Advertising
|
821 | 801 | 2,081 | 2,533 | ||||||||||||
Telecommunications
|
496 | 438 | 1,354 | 1,352 | ||||||||||||
Bankcard
expenses
|
717 | 623 | 1,978 | 1,737 | ||||||||||||
Insurance
and regulatory
|
354 | 364 | 1,025 | 1,132 | ||||||||||||
Office
supplies
|
527 | 472 | 1,488 | 1,369 | ||||||||||||
Repossessed
asset losses (gains), net of expenses
|
314 | (47 | ) | 437 | (52 | ) | ||||||||||
Loss
on early extinguishment of debt
|
- | - | 1,208 | - | ||||||||||||
Other
expenses
|
2,498 | 2,256 | 8,352 | 6,514 | ||||||||||||
Total
Non-interest Expense
|
19,246 | 18,031 | 57,906 | 53,153 | ||||||||||||
(Loss)
Income Before Income Taxes
|
(8,073 | ) | 18,806 | 31,440 | 58,002 | |||||||||||
Income
tax (benefit) expense
|
(5,516 | ) | 6,092 | 7,580 | 19,735 | |||||||||||
Net
(Loss) Income
|
(2,557 | ) | 12,714 | 23,860 | 38,267 | |||||||||||
Basic
(loss) earnings per common share
|
$ | (0.16 | ) | $ | 0.76 | $ | 1.48 | $ | 2.24 | |||||||
Diluted
(loss) earnings per common share
|
$ | (0.16 | ) | $ | 0.76 | $ | 1.47 | $ | 2.24 | |||||||
Dividends
declared per common share
|
$ | 0.34 | $ | 0.31 | $ | 1.02 | $ | 0.93 | ||||||||
Average
common shares outstanding:
|
||||||||||||||||
Basic
|
16,142 | 16,714 | 16,130 | 17,057 | ||||||||||||
Diluted
|
16,195 | 16,767 | 16,189 | 17,116 |
Common Stock
|
Capital Surplus
|
Retained Earnings
|
Treasury Stock
|
Accumulated Other Comprehensive
(Loss)
|
Total Shareholders’ Equity
|
|||||||||||||||||||
Balances
at December 31, 2006
|
$ | 46,249 | $ | 104,043 | $ | 194,213 | $ | (33,669 | ) | $ | (5,529 | ) | $ | 305,307 | ||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||
Cumulative
effect of adopting FIN 48
|
(125 | ) | (125 | ) | ||||||||||||||||||||
Net
income
|
38,267 | 38,267 | ||||||||||||||||||||||
Other
comprehensive gains, net of deferred income taxes of $755:
|
||||||||||||||||||||||||
Unrealized
gains on available-for-sale securities of $138, net of
taxes
|
83 | 83 | ||||||||||||||||||||||
Net
unrealized gain on interest rate floors of $1,750, net of
taxes
|
1,050 | 1,050 | ||||||||||||||||||||||
Total
comprehensive income
|
39,400 | |||||||||||||||||||||||
Cash
dividends declared ($0.93 per share)
|
(15,703 | ) | (15,703 | ) | ||||||||||||||||||||
Issuance
of stock awards, net
|
(430 | ) | 802 | 372 | ||||||||||||||||||||
Exercise
of 7,300 stock options
|
(141 | ) | 295 | 154 | ||||||||||||||||||||
Excess
tax benefit on stock-based compensation
|
3 | 3 | ||||||||||||||||||||||
Purchase
of 1,017,000 treasury shares
|
(37,688 | ) | (37,688 | ) | ||||||||||||||||||||
Balances
at September 30, 2007
|
$ | 46,249 | $ | 103,475 | $ | 216,652 | $ | (70,260 | ) | $ | (4,396 | ) | $ | 291,720 |
Common Stock
|
Capital Surplus
|
Retained Earnings
|
Treasury Stock
|
Accumulated Other Comprehensive Income
(Loss)
|
Total Shareholders’ Equity
|
|||||||||||||||||||
Balances
at December 31, 2007
|
$ | 46,249 | $ | 103,390 | $ | 224,386 | $ | (80,664 | ) | $ | 633 | $ | 293,994 | |||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||
Net
income
|
23,860 | 23,860 | ||||||||||||||||||||||
Other
comprehensive loss, net of deferred income taxes of
$10,073:
|
||||||||||||||||||||||||
Unrealized
losses on available-for-sale securities of $31,413, net of
taxes
|
(18,848 | ) | (18,848 | ) | ||||||||||||||||||||
Net
unrealized gain on interest rate floors of $6,230, net of
taxes
|
3,738 | 3,738 | ||||||||||||||||||||||
Total
comprehensive income
|
8,750 | |||||||||||||||||||||||
Cash
dividends declared ($1.02 per share)
|
(16,457 | ) | (16,457 | ) | ||||||||||||||||||||
Issuance
of stock awards, net
|
(81 | ) | 491 | 410 | ||||||||||||||||||||
Exercise
of 66,254 stock options
|
(744 | ) | 2,410 | 1,666 | ||||||||||||||||||||
Excess
tax benefit on stock-based compensation
|
266 | 266 | ||||||||||||||||||||||
Purchase
of 104,960 treasury shares
|
(3,717 | ) | (3,717 | ) | ||||||||||||||||||||
Balances
at September 30, 2008
|
$ | 46,249 | $ | 102,831 | $ | 231,789 | $ | (81,480 | ) | $ | (14,477 | ) | $ | 284,912 |
Nine
Months Ended September 30
|
||||||||
2008
|
2007
|
|||||||
Operating
Activities
|
||||||||
Net
income
|
$ | 23,860 | $ | 38,267 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Amortization
and accretion
|
(1,012 | ) | (1,754 | ) | ||||
Provision
for loan losses
|
5,083 | 3,700 | ||||||
Depreciation
of premises and equipment
|
3,330 | 3,339 | ||||||
Deferred
income tax benefit
|
(10,467 | ) | (472 | ) | ||||
Net
periodic employee benefit cost
|
36 | 177 | ||||||
Gain
on sale of credit card merchant agreements
|
- | (1,500 | ) | |||||
Loss
on early extinguishment of debt
|
1,208 | - | ||||||
Loss
on disposal of premises and equipment
|
125 | - | ||||||
Realized
investment securities losses (gains)
|
27,465 | (45 | ) | |||||
Proceeds
from bank-owned life insurance
|
- | 205 | ||||||
Increase
in value of bank-owned life insurance
|
(2,193 | ) | (1,878 | ) | ||||
Decrease
in accrued interest receivable
|
1,521 | 82 | ||||||
Increase
in other assets
|
(4,226 | ) | (1,658 | ) | ||||
Decrease
in other liabilities
|
(5,561 | ) | (2,980 | ) | ||||
Net
Cash Provided by Operating Activities
|
39,169 | 35,483 | ||||||
Investing
Activities
|
||||||||
Proceeds
from maturities and calls of securities held-to-maturity
|
1,467 | 11,458 | ||||||
Proceeds
from sale of money market and mutual fund securities
available-for-sale
|
781,757 | 753,770 | ||||||
Purchases
of money market and mutual fund securities
available-for-sale
|
(781,623 | ) | (775,703 | ) | ||||
Proceeds
from sales of securities available-for-sale
|
2,823 | 1,811 | ||||||
Proceeds
from maturities and calls of securities available-for-sale
|
45,619 | 70,218 | ||||||
Purchases
of securities available-for-sale
|
(71,470 | ) | (12,085 | ) | ||||
Net
increase in loans
|
(11,615 | ) | (41,388 | ) | ||||
Sales
of premises and equipment
|
340 | 15 | ||||||
Purchases
of premises and equipment
|
(8,734 | ) | (10,226 | ) | ||||
Proceeds
from sale of credit card merchant agreements
|
- | 1,650 | ||||||
Investment
in bank-owned life insurance
|
(3,000 | ) | - | |||||
Redemption
of VISA stock
|
2,334 | - | ||||||
Proceeds
from sale of derivative instrument
|
5,669 | - | ||||||
Net
Cash Used in Investing Activities
|
(36,433 | ) | (480 | ) | ||||
Financing
Activities
|
||||||||
Net
increase (decrease) in noninterest-bearing deposits
|
1,974 | (21,219 | ) | |||||
Net
increase in interest-bearing deposits
|
571 | 18,677 | ||||||
Net
(decrease) increase in short-term borrowings
|
(4,631 | ) | 3,184 | |||||
Proceeds
from long-term debt
|
16,495 | - | ||||||
Repayment
of long-term debt
|
(79 | ) | (135 | ) | ||||
Redemption
of trust preferred securities
|
(17,569 | ) | - | |||||
Purchases
of treasury stock
|
(3,717 | ) | (37,688 | ) | ||||
Proceeds
from exercise of stock options
|
1,666 | 154 | ||||||
Excess
tax benefits from stock-based compensation arrangements
|
266 | 3 | ||||||
Dividends
paid
|
(15,979 | ) | (15,484 | ) | ||||
Net
Cash Used in Financing Activities
|
(21,003 | ) | (52,508 | ) | ||||
Decrease
in Cash and Cash Equivalents
|
(18,267 | ) | (17,505 | ) | ||||
Cash
and cash equivalents at beginning of period
|
74,518 | 110,448 | ||||||
Cash
and Cash Equivalents at End of Period
|
$ | 56,251 | $ | 92,943 |
As
of and for the Nine
Months
Ended
September 30,
|
As
of and for
the
Year Ended
December 31,
|
|||||||||||
( in thousands)
|
2008
|
2007
|
2007
|
|||||||||
Previously
Securitized Loans:
|
||||||||||||
Total
principal amount of loans outstanding
|
$ | 19,812 | $ | 25,947 | $ | 24,062 | ||||||
Discount
|
(15,292 | ) | (17,630 | ) | (17,170 | ) | ||||||
Net
book value
|
$ | 4,520 | $ | 8,317 | $ | 6,892 | ||||||
Principal
amount of loans between 30 and 89 days past due
|
$ | 558 | $ | 865 | $ | 1,099 | ||||||
Principal
amount of loans 90 days and above past due
|
40 | 176 | 76 | |||||||||
Net
credit recoveries during the period
|
334 | 2,506 | 2,938 |
September 30, 2008
|
December 31, 2007
|
|||||||||||||||
(in thousands)
|
Notional Value
|
Estimated Fair Value
|
Notional Value
|
Estimated Fair Value
|
||||||||||||
Interest
rate floors on variable-rate loans
|
$ | 400,000 | $ | 11,171 | $ | 500,000 | $ | 11,362 | ||||||||
The
weighted-average strike rates for interest rate floors outstanding at
September 30, 2008 range from 6.00% to 7.75%.
|
( in thousands)
|
September 30, 2008
|
December 31, 2007
|
||||||
Security
repurchase agreements
|
$ | 128,958 | $ | 119,554 | ||||
Short-term
advances
|
11,768 | 25,526 | ||||||
Junior
subordinated debentures owed to City Holding Capital Trust
|
- | 16,836 | ||||||
Total
short-term borrowings
|
$ | 140,726 | $ | 161,916 |
(dollars in thousands)
|
Maturity
|
September 30, 2008
|
Weighted Average Interest
Rate
|
||||||
FHLB
Advances
|
2009
|
$ | 3,010 | 6.05 | % | ||||
FHLB
Advances
|
2010
|
1,000 | 5.98 | % | |||||
FHLB
Advances
|
2011
|
570 | 4.45 | % | |||||
Junior
subordinated debentures owed to City Holding Capital Trust
III
|
2038
(a)
|
16,495 | 6.31 | % | |||||
Total
long-term debt
|
$ | 21,075 |
2008
|
2007
|
|||||||||||||||
Options
|
Weighted-Average Exercise
Price
|
Options
|
Weighted-Average Exercise
Price
|
|||||||||||||
Outstanding
at January 1
|
305,909 | $ | 32.05 | 271,709 | $ | 30.51 | ||||||||||
Granted
|
11,500 | 40.88 | 47,500 | 39.34 | ||||||||||||
Exercised
|
(66,254 | ) | 25.15 | (7,300 | ) | 21.17 | ||||||||||
Forfeited
|
- | - | (3,000 | ) | 34.45 | |||||||||||
Outstanding
at September 30
|
251,155 | $ | 34.23 | 308,909 | $ | 32.05 |
Ranges of Exercise Prices
|
No. of Options Outstanding
|
Weighted-Average Exercise
Price
|
Weighted-Average Remaining Contractual Life
(Months)
|
Aggregate Intrinsic Value (in
thousands)
|
No. of Options Currently
Exercisable
|
Weighted-Average Exercise Price of Options
Currently Exercisable
|
Weighted-Average Remaining Contractual Life
(Months)
|
Aggregate Intrinsic Value of Options Currently
Exercisable (in thousands)
|
||||||||||||||||||||||||||
$ | 13.30 | 2,100 | $ | 13.30 | 40 | $ | 61 | 2,100 | $ | 13.30 | 40 | $ | 61 | |||||||||||||||||||||
$ | 28.00 - $33.90 | 150,555 | 31.70 | 70 | 1,588 | 112,180 | 31.66 | 68 | 1,188 | |||||||||||||||||||||||||
$ | 35.36 - $40.88 | 98,500 | 38.52 | 97 | 367 | 38,750 | 36.88 | 87 | 208 | |||||||||||||||||||||||||
251,155 | $ | 2,016 | 153,030 | $ | 1,457 |
2008
|
2007
|
|||||||
Risk-free
interest rate
|
3.14 | % | 4.38 | % | ||||
Expected
dividend yield
|
3.33 | % | 3.15 | % | ||||
Volatility
factor
|
52.89 | % | 39.06 | % | ||||
Expected
life of option
|
8.0
years
|
5.8
years
|
2008
|
2007
|
|||||||||||||||
Restricted Awards
|
Average Market Price at
Grant
|
Restricted Awards
|
Average Market Price at
Grant
|
|||||||||||||
Outstanding
at January 1
|
31,818 | 15,600 | ||||||||||||||
Granted
|
8,825 | $ | 39.00 | 17,150 | $ | 39.16 | ||||||||||
Forfeited/Vested
|
(4,300 | ) | (1,266 | ) | ||||||||||||
Outstanding
at September 30
|
36,343 | 31,484 |
Three months ended
September 30,
|
Nine months ended
September 30,
|
|||||||||||||||
(in thousands)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Components
of net periodic cost:
|
||||||||||||||||
Interest
cost
|
$ | 166 | $ | 164 | 498 | $ | 492 | |||||||||
Expected
return on plan assets
|
(217 | ) | (185 | ) | (651 | ) | (555 | ) | ||||||||
Net
amortization and deferral
|
63 | 80 | 189 | 240 | ||||||||||||
Net
Periodic Pension Cost
|
$ | 12 | $ | 59 | 36 | $ | 177 |
( in thousands)
|
September 30, 2008
|
December 31, 2007
|
||||||
Commitments
to extend credit:
|
||||||||
Home
equity lines
|
$ | 132,345 | $ | 135,255 | ||||
Commercial
real estate
|
41,252 | 47,529 | ||||||
Other
commitments
|
199,864 | 163,332 | ||||||
Standby
letters of credit
|
17,941 | 16,243 | ||||||
Commercial
letters of credit
|
290 | 215 |
Nine
months ended September 30,
|
||||||||
(in thousands)
|
2008
|
2007
|
||||||
Net
income
|
$ | 23,860 | $ | 38,267 | ||||
Unrealized
security (losses) gains arising during the period
|
(34,644 | ) | 138 | |||||
Reclassification
adjustment for losses included in income
|
3,231 | - | ||||||
(31,413 | ) | 138 | ||||||
Unrealized
gains on interest rate floors
|
6,230 | 1,750 | ||||||
Other
comprehensive (loss) income before income taxes
|
(25,183 | ) | 1,888 | |||||
Tax
effect
|
10,073 | (755 | ) | |||||
Total
comprehensive income
|
$ | 8,750 | $ | 39,400 |
Three
months ended September 30,
|
Nine
months ended September 30,
|
|||||||||||||||
(in thousands, except per share
data)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Net
(loss) income
|
$ | (2,557 | ) | $ | 12,714 | $ | 23,860 | $ | 38,267 | |||||||
Average
shares outstanding
|
16,142 | 16,714 | 16,130 | 17,057 | ||||||||||||
Effect
of dilutive securities:
|
||||||||||||||||
Employee
stock options
|
53 | 53 | 59 | 59 | ||||||||||||
Shares
for diluted (loss) earnings per share
|
16,195 | 16,767 | 16,189 | 17,116 | ||||||||||||
Basic
(loss) earnings per share
|
$ | (0.16 | ) | $ | 0.76 | $ | 1.48 | $ | 2.24 | |||||||
Diluted
(loss) earnings per share
|
$ | (0.16 | ) | $ | 0.76 | $ | 1.47 | $ | 2.24 |
(in thousands)
|
||||||||||||||||
September 30, 2008
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Assets:
|
||||||||||||||||
Investment
Securities Available for Sale
|
$ | 336,552 | $ | 8,850 | $ | 327,435 | $ | 267 | ||||||||
Derivatives
(Interest Rate Floors)
|
11,171 | - | 11,171 | - | ||||||||||||
Previously
Securitized Loans
|
4,520 | - | - | 4,520 |
(in thousands)
|
Previously Securitized
Loans
|
Investment Securities Available for
Sale
|
||||||
Beginning
balance, January 1, 2008
|
$ | 6,892 | $ | - | ||||
Principal
Receipts and Recoveries (net)
|
(2,372 | ) | - | |||||
Transfers
into Level 3
|
- | 267 | ||||||
Ending
Balance, September 30, 2008
|
$ | 4,520 | $ | 267 |
Nine
months ended September 30,
|
||||||||||||||||||||||||
2008
|
2007
|
|||||||||||||||||||||||
Average
Balance
|
Interest
|
Yield/
Rate
|
Average
Balance
|
Interest
|
Yield/
Rate
|
|||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Loan
portfolio (1):
|
||||||||||||||||||||||||
Residential
real estate
|
$ | 604,798 | $ | 28,187 | 6.23 | % | $ | 596,585 | $ | 27,144 | 6.08 | % | ||||||||||||
Home
equity
|
359,101 | 19,520 | 7.26 | 328,036 | 19,091 | 7.78 | ||||||||||||||||||
Commercial,
financial, and agriculture
|
705,819 | 35,563 | 6.73 | 672,331 | 38,119 | 7.58 | ||||||||||||||||||
Loans
to depository institutions
|
1,551 | 35 | 3.01 | 56,410 | 2,271 | 5.38 | ||||||||||||||||||
Installment
loans to individuals
|
52,277 | 4,014 | 10.26 | 45,596 | 3,967 | 11.63 | ||||||||||||||||||
Previously
securitized loans
|
5,521 | 4,343 | 105.08 | 11,583 | 5,539 | 63.94 | ||||||||||||||||||
Total
loans
|
1,729,067 | 91,662 | 7.08 | 1,710,541 | 96,131 | 7.51 | ||||||||||||||||||
Securities:
|
||||||||||||||||||||||||
Taxable
|
436,440 | 18,034 | 5.52 | 482,484 | 19,709 | 5.46 | ||||||||||||||||||
Tax-exempt
(2)
|
36,253 | 1,771 | 6.53 | 39,789 | 1,954 | 6.57 | ||||||||||||||||||
Total
securities
|
472,693 | 19,805 | 5.60 | 522,273 | 21,663 | 5.55 | ||||||||||||||||||
Deposits
in depository institutions
|
8,981 | 163 | 2.42 | 12,823 | 401 | 4.18 | ||||||||||||||||||
Federal
funds sold
|
- | - | - | 20,832 | 814 | 5.22 | ||||||||||||||||||
Total
interest-earning assets
|
2,210,741 | 111,630 | 6.74 | 2,266,469 | 119,009 | 7.02 | ||||||||||||||||||
Cash
and due from banks
|
58,293 | 50,668 | ||||||||||||||||||||||
Bank
premises and equipment
|
56,217 | 47,555 | ||||||||||||||||||||||
Other
assets
|
191,625 | 170,137 | ||||||||||||||||||||||
Less:
allowance for loan losses
|
(18,240 | ) | (16,114 | ) | ||||||||||||||||||||
Total
assets
|
$ | 2,498,636 | $ | 2,518,715 | ||||||||||||||||||||
Liabilities
|
||||||||||||||||||||||||
Interest-bearing
demand deposits
|
$ | 412,417 | $ | 1,979 | 0.64 | % | $ | 423,222 | $ | 3,777 | 1.19 | % | ||||||||||||
Savings
deposits
|
361,465 | 2,796 | 1.03 | 340,490 | 4,259 | 1.67 | ||||||||||||||||||
Time
deposits
|
910,187 | 27,204 | 3.99 | 922,958 | 30,942 | 4.48 | ||||||||||||||||||
Short-term
borrowings
|
136,644 | 2,286 | 2.23 | 158,250 | 4,965 | 4.19 | ||||||||||||||||||
Long-term
debt
|
21,663 | 1,070 | 6.60 | 25,368 | 1,383 | 7.29 | ||||||||||||||||||
Total
interest-bearing liabilities
|
1,842,376 | 35,335 | 2.56 | 1,870,288 | 45,326 | 3.24 | ||||||||||||||||||
Noninterest-bearing
demand deposits
|
322,344 | 314,744 | ||||||||||||||||||||||
Other
liabilities
|
26,213 | 29,803 | ||||||||||||||||||||||
Stockholders’
equity
|
307,703 | 303,880 | ||||||||||||||||||||||
Total
liabilities and stockholders’ equity
|
$ | 2,498,636 | $ | 2,518,715 | ||||||||||||||||||||
Net
interest income
|
$ | 76,295 | $ | 73,683 | ||||||||||||||||||||
Net
yield on earning assets
|
4.61 | % | 4.35 | % |
(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)
|
Computed
on a fully federal tax-equivalent basis assuming a tax rate of
approximately 35%.
|
Nine
months ended September 30, 2008 vs. 2007 Increase (Decrease) Due to
Change In:
|
||||||||||||
Volume
|
Rate
|
Net
|
||||||||||
Interest-earning
assets:
|
||||||||||||
Loan
portfolio
|
||||||||||||
Residential
real estate
|
$ | 373 | $ | 670 | $ | 1,043 | ||||||
Home
equity
|
1,811 | (1,382 | ) | 429 | ||||||||
Commercial,
financial, and agriculture
|
1,900 | (4,456 | ) | (2,556 | ) | |||||||
Loans
to depository institutions
|
(2,211 | ) | (25 | ) | (2,236 | ) | ||||||
Installment
loans to individuals
|
582 | (535 | ) | 47 | ||||||||
Previously
securitized loans
|
(2,902 | ) | 1,706 | (1,196 | ) | |||||||
Total
loans
|
(447 | ) | (4,022 | ) | (4,469 | ) | ||||||
Securities:
|
||||||||||||
Taxable
|
(1,881 | ) | 206 | (1,675 | ) | |||||||
Tax-exempt
(1)
|
(174 | ) | (9 | ) | (183 | ) | ||||||
Total
securities
|
(2,055 | ) | 197 | (1,858 | ) | |||||||
Deposits
in depository institutions
|
(120 | ) | (118 | ) | (238 | ) | ||||||
Federal
funds sold
|
(815 | ) | 1 | (814 | ) | |||||||
Total
interest-earning assets
|
$ | (3,437 | ) | $ | (3,942 | ) | $ | (7,379 | ) | |||
Interest-bearing
liabilities:
|
||||||||||||
Demand
deposits
|
$ | (97 | ) | $ | (1,701 | ) | $ | (1,798 | ) | |||
Savings
deposits
|
263 | (1,726 | ) | (1,463 | ) | |||||||
Time
deposits
|
(429 | ) | (3,309 | ) | (3,738 | ) | ||||||
Short-term
borrowings
|
(678 | ) | (2,001 | ) | (2,679 | ) | ||||||
Long-term
debt
|
(202 | ) | (111 | ) | (313 | ) | ||||||
Total
interest-bearing liabilities
|
$ | ( 1,143 | ) | $ | (8,848 | ) | $ | (9,991 | ) | |||
Net
Interest Income
|
$ | (2,294 | ) | $ | 4,906 | $ | 2,612 |
Three
months ended September 30,
|
||||||||||||||||||||||||
2008
|
2007
|
|||||||||||||||||||||||
Average
Balance
|
Interest
|
Yield/
Rate
|
Average
Balance
|
Interest
|
Yield/
Rate
|
|||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Loan
portfolio (3):
|
||||||||||||||||||||||||
Residential
real estate
|
$ | 613,771 | $ | 9,393 | 6.09 | % | $ | 598,954 | $ | 9,272 | 6.14 | % | ||||||||||||
Home
equity
|
373,445 | 6,644 | 7.08 | 334,363 | 6,547 | 7.77 | ||||||||||||||||||
Commercial,
financial, and agriculture
|
708,665 | 11,622 | 6.52 | 679,104 | 12,776 | 7.46 | ||||||||||||||||||
Loans
to depository institutions
|
- | - | - | 60,000 | 820 | 5.42 | ||||||||||||||||||
Installment
loans to individuals
|
53,521 | 1,270 | 9.44 | 47,626 | 1,379 | 11.49 | ||||||||||||||||||
Previously
securitized loans
|
4,781 | 1,325 | 110.25 | 9,220 | 1,927 | 82.92 | ||||||||||||||||||
Total
loans
|
1,754,183 | 30,254 | 6.86 | 1,729,267 | 32,721 | 7.51 | ||||||||||||||||||
Securities:
|
||||||||||||||||||||||||
Taxable
|
407,754 | 5,850 | 5.71 | 442,696 | 6,024 | 5.40 | ||||||||||||||||||
Tax-exempt
(4)
|
34,653 | 571 | 6.56 | 38,810 | 639 | 6.53 | ||||||||||||||||||
Total
securities
|
442,407 | 6,421 | 5.77 | 481,506 | 6,663 | 5.49 | ||||||||||||||||||
Deposits
in depository institutions
|
8,981 | 47 | 2.08 | 15,184 | 171 | 4.47 | ||||||||||||||||||
Federal
funds sold
|
- | - | - | 20,870 | 266 | 5.06 | ||||||||||||||||||
Total
interest-earning assets
|
2,205,571 | 36,722 | 6.62 | 2,246,827 | 39,821 | 7.03 | ||||||||||||||||||
Cash
and due from banks
|
54,572 | 51,149 | ||||||||||||||||||||||
Bank
premises and equipment
|
57,923 | 50,333 | ||||||||||||||||||||||
Other
assets
|
195,217 | 171,478 | ||||||||||||||||||||||
Less:
allowance for loan losses
|
(18,158 | ) | (16,563 | ) | ||||||||||||||||||||
Total
assets
|
$ | 2,495,125 | $ | 2,503,224 | ||||||||||||||||||||
Liabilities
|
||||||||||||||||||||||||
Interest-bearing
demand deposits
|
$ | 414,022 | $ | 654 | 0.63 | % | $ | 410,907 | $ | 1,136 | 1.10 | % | ||||||||||||
Savings
deposits
|
362,550 | 862 | 0.95 | 347,055 | 1,523 | 1.74 | ||||||||||||||||||
Time
deposits
|
887,884 | 7,929 | 3.55 | 923,937 | 10,530 | 4.52 | ||||||||||||||||||
Short-term
borrowings
|
142,290 | 477 | 1.33 | 165,965 | 1,758 | 4.20 | ||||||||||||||||||
Long-term
debt
|
21,089 | 316 | 5.96 | 21,871 | 426 | 7.73 | ||||||||||||||||||
Total
interest-bearing liabilities
|
1,827,835 | 10,238 | 2.23 | 1,869,735 | 15,373 | 3.26 | ||||||||||||||||||
Noninterest-bearing
demand deposits
|
331,919 | 309,553 | ||||||||||||||||||||||
Other
liabilities
|
24,677 | 28,092 | ||||||||||||||||||||||
Stockholders’
equity
|
310,694 | 295,844 | ||||||||||||||||||||||
Total
liabilities and stockholders’ equity
|
$ | 2,495,125 | $ | 2,503,224 | ||||||||||||||||||||
Net
interest income
|
$ | 26,484 | $ | 24,448 | ||||||||||||||||||||
Net
yield on earning assets
|
4.78 | % | 4.32 | % |
(3)
|
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.
|
(4)
|
Computed
on a fully federal tax-equivalent basis assuming a tax rate of
approximately 35%.
|
Three
months ended September 30, 2008 vs. 2007 Increase (Decrease) Due to
Change In:
|
||||||||||||
Volume
|
Rate
|
Net
|
||||||||||
Interest-earning
assets:
|
||||||||||||
Loan
portfolio
|
||||||||||||
Residential
real estate
|
$ | 226 | $ | (105 | ) | $ | 121 | |||||
Home
equity
|
756 | (659 | ) | 97 | ||||||||
Commercial,
financial, and agriculture
|
549 | (1,703 | ) | (1,154 | ) | |||||||
Loans
to depository institutions
|
(809 | ) | (11 | ) | (820 | ) | ||||||
Installment
loans to individuals
|
168 | (277 | ) | (109 | ) | |||||||
Previously
securitized loans
|
(915 | ) | 313 | (602 | ) | |||||||
Total
loans
|
(25 | ) | (2,442 | ) | (2,467 | ) | ||||||
Securities:
|
||||||||||||
Taxable
|
(467 | ) | 293 | (174 | ) | |||||||
Tax-exempt
(1)
|
(68 | ) | - | (68 | ) | |||||||
Total
securities
|
(535 | ) | 293 | (242 | ) | |||||||
Deposits
in depository institutions
|
(69 | ) | (55 | ) | (124 | ) | ||||||
Federal
funds sold
|
(262 | ) | (4 | ) | (266 | ) | ||||||
Total
interest-earning assets
|
$ | (891 | ) | $ | (2,208 | ) | $ | (3,099 | ) | |||
Interest-bearing
liabilities:
|
||||||||||||
Demand
deposits
|
$ | 8 | $ | (490 | ) | $ | (482 | ) | ||||
Savings
deposits
|
67 | (728 | ) | (661 | ) | |||||||
Time
deposits
|
(405 | ) | (2,196 | ) | (2,601 | ) | ||||||
Short-term
borrowings
|
(247 | ) | (1,034 | ) | (1,281 | ) | ||||||
Long-term
debt
|
(15 | ) | (95 | ) | (110 | ) | ||||||
Total
interest-bearing liabilities
|
$ | ( 592 | ) | $ | (4,543 | ) | $ | (5,135 | ) | |||
Net
Interest Income
|
$ | (299 | ) | $ | 2,335 | $ | 2,036 |
Nine
months ended September 30,
|
Year
ended December 31,
|
|||||||||||
(in thousands)
|
2008
|
2007
|
2007
|
|||||||||
Balance
at beginning of period
|
$ | 17,581 | $ | 15,405 | $ | 15,405 | ||||||
Charge-offs:
|
||||||||||||
Commercial,
financial, and agricultural
|
(1,991 | ) | (155 | ) | (514 | ) | ||||||
Real
estate-mortgage
|
(987 | ) | (803 | ) | (1,006 | ) | ||||||
Installment
loans to individuals
|
(214 | ) | (235 | ) | (343 | ) | ||||||
Overdraft
deposit accounts
|
(2,372 | ) | (2,851 | ) | (3,789 | ) | ||||||
Total
charge-offs
|
(5,564 | ) | (4,044 | ) | (5,652 | ) | ||||||
Recoveries:
|
||||||||||||
Commercial,
financial, and agricultural
|
24 | 208 | 231 | |||||||||
Real
estate-mortgage
|
144 | 52 | 87 | |||||||||
Installment
loans to individuals
|
251 | 319 | 416 | |||||||||
Overdraft
deposit accounts
|
1,360 | 1,340 | 1,744 | |||||||||
Total
recoveries
|
1,779 | 1,919 | 2,478 | |||||||||
Net
charge-offs
|
(3,785 | ) | (2,125 | ) | (3,174 | ) | ||||||
Provision
for loan losses
|
5,083 | 3,700 | 5,350 | |||||||||
Balance
at end of period
|
$ | 18,879 | $ | 16,980 | $ | 17,581 | ||||||
As
a Percent of Average Total Loans:
|
||||||||||||
Net
charge-offs (annualized)
|
(0.29 | )% | (0.17 | )% | (0.18 | )% | ||||||
Provision
for loan losses (annualized)
|
0.39 | % | 0.29 | % | 0.31 | % | ||||||
As
a Percent of Non-Performing Loans:
|
||||||||||||
Allowance
for loan losses
|
134.95 | % | 86.88 | % | 104.49 | % |
As
of September 30,
|
As
of December 31,
|
|||||||||||
(in thousands)
|
2008
|
2007
|
2007
|
|||||||||
Non-accrual
loans
|
$ | 13,709 | $ | 18,896 | $ | 16,437 | ||||||
Accruing
loans past due 90 days or more
|
141 | 566 | 314 | |||||||||
Previously
securitized loans past due 90 days or more
|
40 | 176 | 76 | |||||||||
Total
non-performing loans
|
13,890 | 19,638 | 16,827 | |||||||||
Other
real estate, excluding property associated with previously securitized
loans
|
3,332 | 1,091 | 4,163 | |||||||||
Other
real estate associated with previously securitized loans
|
417 | 405 | - | |||||||||
Total
other real estate owned
|
3,749 | 1,496 | 4,163 | |||||||||
Total
non-performing assets
|
$ | 17,639 | $ | 21,134 | $ | 20,990 |
As
of September 30,
|
As
of December 31,
|
|||||||||||
(in thousands)
|
2008
|
2007
|
2007
|
|||||||||
Commercial,
financial and agricultural
|
$ | 12,343 | $ | 10,417 | $ | 11,097 | ||||||
Real
estate-mortgage
|
4,098 | 3,793 | 3,605 | |||||||||
Installment
loans to individuals
|
207 | 354 | 347 | |||||||||
Overdraft
deposit accounts
|
2,231 | 2,416 | 2,532 | |||||||||
Allowance
for Loan Losses
|
$ | 18,879 | $ | 16,980 | $ | 17,581 |
Three months ended
September 30,
|
Nine months ended September 30,
|
|||||||||||||||
(in thousands)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Principal
receipts
|
$ | 1,390 | $ | 3,038 | $ | 4,584 | $ | 9,894 | ||||||||
Interest
income receipts
|
678 | 899 | 2,204 | 2,987 | ||||||||||||
Total
cash receipts
|
$ | 2,068 | $ | 3,937 | $ | 6,788 | $ | 12,881 |
As of:
|
Estimated Balance:
|
December
31, 2008
|
$5
million
|
December
31, 2009
|
4
million
|
December
31, 2010
|
3
million
|
December
31, 2011
|
2
million
|
Immediate Basis Point Change in Interest
Rates
|
Implied Federal Funds Rate Associated with Change
in Interest Rates
|
Estimated Increase (Decrease) in Net Income Over
12 Months
|
Estimated Increase (Decrease) in Economic Value of
Equity
|
||||||||||
September 30, 2008:
|
|||||||||||||
+300
|
4.50 | % | 0.2 | % | +6.1 | % | |||||||
+200
|
|
3.50 | 0.1 | +3.7 | |||||||||
+100
|
2.50 | - | +1.7 | ||||||||||
-100
|
0.50 | - | - | ||||||||||
December 31, 2007:
|
|||||||||||||
+300
|
6.50 | % | +6.2 | % | +14.4 | % | |||||||
+200
|
5.50 | +3.4 | +10.2 | ||||||||||
+100
|
4.50 | +0.9 | +6.1 | ||||||||||
-100
|
2.50 | +0.5 | +2.8 | ||||||||||
-200
|
1.50 | +1.0 | +3.2 | ||||||||||
* -
Due to rate decreases in the Fed Funds rate subsequent to September 30,
2008, the Company used a base rate of 1.50% for the September 30,
2008 calculation
|
Actual
|
||||||||||||||||
Minimum
|
Well-Capitalized
|
September 30,
2008
|
December 31,
2007
|
|||||||||||||
City
Holding:
|
||||||||||||||||
Total
|
8.0 | % | 10.0 | % | 14.1 | % | 15.1 | % | ||||||||
Tier
I Risk-based
|
4.0 | 6.0 | 13.1 | 14.1 | ||||||||||||
Tier
I Leverage
|
4.0 | 5.0 | 10.0 | 10.3 | ||||||||||||
City
National:
|
||||||||||||||||
Total
|
8.0 | % | 10.0 | % | 11.4 | % | 13.5 | % | ||||||||
Tier
I Risk-based
|
4.0 | 6.0 | 10.3 | 12.5 | ||||||||||||
Tier
I Leverage
|
4.0 | 5.0 | 7.9 | 9.1 |
Legal
Proceedings.
|
||
The
Company is engaged in various legal actions that it deems to be in the
ordinary course of business. The Company believes that it has adequately
provided for probable costs of current litigation. As these legal actions
are resolved, however, the Company could realize positive and/or negative
impact to its financial performance in the period in which these legal
actions are ultimately decided. There can be no assurance that current
actions will have immaterial results, either positive or negative, or that
no material actions may be presented in the future.
|
||
Item
1A.
|
Risk
Factors.
|
|
There
have been no material changes to the factors disclosed in Item 1A. Risk
Factors in our Annual Report on Form 10-K for the year ended December 31,
2007.
|
||
Item 2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds.
|
None.
|
Item 3.
|
Defaults
Upon Senior Securities.
|
None.
|
Item 4.
|
Submission
of Matters to a Vote of Security Holders.
|
None.
|
Other
Information.
|
None.
|
Item 6.
|
Exhibits.
|
|
(a)
Exhibits
|
||
Certification
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Charles R.
Hageboeck
|
||
Certification
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for David L.
Bumgarner
|
||
Certification
pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 for Charles R. Hageboeck
|
||
Certification
pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 for David L.
Bumgarner
|
City Holding Company
|
||
(Registrant)
|
||
/s/ Charles R. Hageboeck
|
||
Charles
R. Hageboeck
|
||
President
and Chief Executive Officer
|
||
(Principal
Executive Officer)
|
||
/s/ David L. Bumgarner
|
||
David
L. Bumgarner
|
||
Senior
Vice President, Chief Financial Officer and
|
||
Principal
Accounting Officer
|
||
(Principal
Financial
Officer)
|