City Holding Company announces record annual earnings

City Holding Company, “the Company” (NASDAQ:CHCO), a $3.4 billion bank holding company headquartered in Charleston, this week announced net income of $48.7 million, or $3.06 per diluted share, for the year ended Dec. 31, 2013.
City Holding
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City’s net income increased $9.7 million from 2012 due primarily to the acquisitions of Virginia Savings Bank in the second quarter of 2012 and Community Financial Corporation (“Community Bank”) in the first quarter of 2013. For 2013, the Company achieved a return on assets of 1.44 percent, a return on tangible equity of 16.4 percent, a net interest margin of 4.33 percent, and an efficiency ratio of 55.5 percent. Despite $5.5 million of merger-related expenses, 2013’s financial performance outpaced 2012’s results.

For the fourth quarter of 2013 the Company reported net income of $13.7 million, or $0.86 per diluted share. The Company achieved a return on assets of 1.61 percent, a return on tangible equity of 17.7 percent, a net interest margin of 4.33 percent, and an efficiency ratio of 51.7 percent in the fourth quarter of 2013.

City’s CEO Charles Hageboeck stated, “2013 was a record year for City with reported earnings of $3.06 per diluted share despite merger-related expenses of $5.5 million ($0.23 per diluted share on an after tax basis). While the results from our acquisitions of Virginia Savings Bancorp and Community Bank have been in line with our expectations, the results of resolving problem loans associated with these acquisitions have exceeded our expectations. This has largely been due our credit and lending teams’ ability to effectively workout a number of problem loans. As a result of these efforts, our nonperforming loans, past due loans, and other asset quality measures continue to show improvement. Although our work is not yet complete in regards to acquired problem assets, particularly those related to Community Bank, we expect to have less efforts concentrated in these endeavors during 2014.”

“During 2013, our reported net interest margin increased from 3.96 percent in 2012 to 4.33 percent for 2013. Excluding the positive impact of accretion relating to our acquisitions, our net interest margin only dropped from 3.85 percent for 2012 to 3.83 percent for 2013 despite the loss of over $50 million of high yielding trust preferred securities and continued historically low interest rates. Excluding the acquisition of Community Bank, our loans grew $87.7 million, or 4.1 percent, from Dec. 31, 2012. This growth was fueled by an increase of $59.4 million (5.8 percent) in residential real estate loans and $42.9 million in commercial loans (4.6 percent).”

“I am also excited that in less than one year, the Company’s tangible capital rebounded after dropping to 8.6 percent following the Community Bank acquisition to 9.5 percent at Dec. 31, 2013. At City, we are excited about our future and are poised to take advantage of the opportunities ahead.”


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