-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P6oRl8lXP1dHyssXqk3pzTcSg9NPgNd5xfkY8JZ5H5C/8r1MLFhs1IQPihxWwkiy uL/SNY5ax4w+0Wk+hokugw== 0000916641-00-000689.txt : 20000516 0000916641-00-000689.hdr.sgml : 20000516 ACCESSION NUMBER: 0000916641-00-000689 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CITY HOLDING CO CENTRAL INDEX KEY: 0000726854 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 550619957 STATE OF INCORPORATION: WV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-11733 FILM NUMBER: 632490 BUSINESS ADDRESS: STREET 1: 25 GATEWATER ROAD STREET 2: P O BOX 7520 CITY: CHARLESTON STATE: WV ZIP: 25313 BUSINESS PHONE: 3047691102 MAIL ADDRESS: STREET 1: 25 GATEWATER ROAD STREET 2: P O BOX 7520 CITY: CHARLESTON STATE: WV ZIP: 25313 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE PERIOD ENDED March 31, 2000 -------------- OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ to _____________. Commission File number 0-1173 CITY HOLDING COMPANY (Exact name of registrant as specified in its charter) West Virginia 55-0619957 ------------- ---------- (State or other jurisdiction of (IRS Employer Identification Number) incorporation or organization) 25 Gatewater Road Charleston, West Virginia, 25313 (Address of principal executive officers) (304) 769-1100 (Registrant's telephone number, including area code) Not applicable (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant has (1) filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such report(s), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by the court. Yes [_] No [_] APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. Common stock, $2.50 Par Value - 16,874,836 shares as of May 12, 2000. 1 FORWARD-LOOKING STATEMENTS All statements other than statements of historical fact included in this Form 10-Q Quarterly Report, including statements in Management's Discussion and Analysis of Financial Condition and Result of Operations are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act of 1934. Such information involves risks and uncertainties that could result in the Company's actual results differing from those projected in the forward-looking information. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include: (1) the sale of the specialty finance servicing and origination divisions, if completed, or the planned relocation of the origination operations may not have the long-term positive impact on the Company's operating results currently anticipated; (2) other plans initiated by the Company to improve its long-term profitability may not be completed timely or may not have the anticipated impact on the Company's operating results; (3) current earnings from the Company's subsidiaries may not be sufficient to fund the cash needs of the Parent Company, including the payment of stockholders' dividends; (4) as critical dates approach during 2000, the Company's technology systems may experience Year 2000-related disruptions; (5) regulatory rulings affecting, among other things, the Company's and its banking subsidiaries' regulatory capital may change, resulting in the need for increased capital levels with a resulting adverse effect on expected earnings and dividend capability; (6) changes in the interest rate environment may have results on the Company's operating results materially different from those anticipated by the Company's market risk management functions; (7) changes in general economic conditions and increased competition could adversely affect the Company's operating results; and (8) changes in other regulations and government policies affecting bank holding companies and their subsidiaries, including changes in monetary policies, could negatively impact the Company's operating results. 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 are 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. 2 Index City Holding Company and Subsidiaries Part I. Financial Information Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets - March 31, 2000 and December 31, 1999 Consolidated Statements of Income - Three months ended March 31, 2000 and 1999 Consolidated Statements of Changes in Stockholders' Equity - Three months ended March 31, 2000 and 1999 Consolidated Statements of Cash Flows - Three months ended March 31, 2000 and 1999 Notes to Consolidated Financial Statements - March 31, 2000 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures about Market Risk Part II. Other Information Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K Signature 3 PART I, ITEM 1 - FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS CITY HOLDING COMPANY AND SUBSIDIARIES (in thousands)
March 31 December 31 2000 1999 --------------------------------- (Unaudited) Assets Cash and due from banks $ 74,375 $ 120,122 Federal funds sold 3,944 1,990 --------------------------------- Cash and Cash Equivalents 78,319 122,112 Securities available for sale, at fair value 363,620 381,112 Loans: Gross loans 1,942,285 1,886,114 Allowance for loan losses (27,334) (27,113) --------------------------------- Net Loans 1,914,951 1,859,001 Loans held for sale 116,468 118,025 Retained interests 76,957 76,963 Premises and equipment 64,603 66,119 Accrued interest receivable 17,759 18,149 Other assets 159,694 151,009 --------------------------------- Total Assets $2,792,371 $2,792,490 ================================= Liabilities Deposits: Noninterest-bearing $ 232,309 $ 246,555 Interest-bearing 1,737,953 1,709,215 --------------------------------- Total Deposits 1,970,262 1,955,770 Short-term borrowings 366,838 386,719 Long-term debt 116,000 116,000 Corporation-obligated mandatorily redeemable capital securities of subsidiary trusts holding solely subordinated debentures of City Holding Company 87,500 87,500 Other liabilities 53,237 47,959 --------------------------------- Total Liabilities 2,593,837 2,593,948 Stockholders' Equity Preferred stock, par value $25 per share: authorized - 500,000 shares: none issued Common stock, par value $2.50 per share: 50,000,000 shares authorized; 16,879,815 shares issued and outstanding at March 31, 2000 and December 31, 1999, including 4,979 and 9,646 shares, respectively, in treasury 42,199 42,199 Capital surplus 59,081 59,164 Retained earnings 113,596 112,951 Cost of common stock in treasury (136) (285) Accumulated other comprehensive loss (16,206) (15,487) --------------------------------- Total Stockholders' Equity 198,534 198,542 --------------------------------- Total Liabilities and Stockholders' Equity $2,792,371 $2,792,490 =================================
See notes to consolidated financial statements. 4 CONSOLIDATED STATEMENTS OF INCOME (Unaudited) CITY HOLDING COMPANY AND SUBSIDIARIES (in thousands, except earnings per share data)
Three Months Ended March 31 2000 1999 ---------------------------- Interest Income Interest and fees on loans $43,750 $43,708 Interest on investment securities: Taxable 4,280 4,274 Tax-exempt 1,188 1,288 Other interest income 99 1,325 ---------------------------- Total Interest Income 49,317 50,595 Interest Expense Interest on deposits 18,021 18,597 Interest on short-term borrowings 4,667 1,958 Interest on long-term debt 1,589 1,643 Interest on trust preferred securities 2,004 1,998 ---------------------------- Total Interest Expense 26,281 24,196 ---------------------------- Net Interest Income 23,036 26,399 Provision for loan losses 2,085 2,414 ---------------------------- Net Interest Income After Provision for Loan Losses 20,951 23,985 Other Income Investment securities gains - 42 Service charges 2,404 2,185 Mortgage loan servicing fees 4,854 5,685 Net origination fees on junior-lien mortgages 902 193 Gain on sale of loans 1,028 725 Other income 4,460 5,589 ---------------------------- Total Other Income 13,648 14,419 Other Expenses Salaries and employee benefits 12,421 15,212 Occupancy, excluding depreciation 1,847 3,344 Depreciation 3,018 2,628 Advertising 1,611 1,120 Other expenses 9,877 8,315 ---------------------------- Total Other Expenses 28,774 30,619 ---------------------------- Income Before Income Taxes 5,825 7,785 Income taxes 1,806 2,540 ---------------------------- Net Income $ 4,019 $ 5,245 ============================ Basic earnings per common share $0.24 $0.31 ============================ Diluted earnings per common share $0.24 $0.31 ============================ Average common shares outstanding: Basic 16,875 16,820 ============================ Diluted 16,875 16,820 ============================
See notes to consolidated financial statements. 5 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY CITY HOLDING COMPANY AND SUBSIDIARIES THREE MONTHS ENDED MARCH 31, 2000 AND 1999 (in thousands)
Accumulated Other Total Common Capital Retained Treasury Comprehensive Stockholders' Stock Surplus Earnings Stock Loss Equity ----------------------------------------------------------------------------- Balances at December 31, 1999 $42,199 $59,164 $112,951 $(285) $(15,487) $198,542 Comprehensive income: Net income 4,019 4,019 Other comprehensive income, net of deferred income taxes of $404: Unrealized loss on securities (719) (719) ------------- Total comprehensive income 3,300 Cash dividends declared ($0.20/share) (3,374) (3,374) Issuance of contingently-issuable common stock (83) 149 66 ----------------------------------------------------------------------------- Balances at March 31, 2000 $42,199 $59,081 $113,596 $(136) $(16,206) $198,534 =============================================================================
Accumulated Other Total Common Capital Retained Treasury Comprehensive Stockholders' Stock Surplus Earnings Stock Loss Equity ----------------------------------------------------------------------------- Balances at December 31, 1998 $42,051 $58,365 $120,209 $(274) $ (292) $220,059 Comprehensive income: Net income 5,245 5,245 Other comprehensive income, net of deferred income taxes of $1,337: Unrealized loss on securities and retained interests of $1,981, net of reclassification adjustment for gains included in net income of $25 (2,006) (2,006) ------------ Total comprehensive income 3,239 Cash dividends declared ($0.20/share) (3,362) (3,362) Purchase of 11,999 shares of treasury stock (398) (398) Issuance of contingently issuable common stock (17) 132 115 ----------------------------------------------------------------------------- Balances at March 31, 1999 $42,051 $58,348 $122,092 $(540) $ (2,298) $219,653 =============================================================================
See notes to consolidated financial statements. 6 CONSOLIDATED STATEMENTS OF CASH FLOWS CITY HOLDING COMPANY AND SUBSIDIARIES (in thousands)
Three Months Ended March 31 2000 1999 ------------------------------- Operating Activities Net income $ 4,019 $ 5,245 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Net amortization 1,579 1,267 Provision for depreciation 3,018 2,628 Provision for possible loan losses 2,085 2,414 Loans originated for sale (96,080) (110,593) Purchases of loans held for sale (8,958) (60,225) Proceeds from loans sold 107,623 127,161 Realized gains on loans sold (1,028) (725) Decrease (increase) in retained interests 6 (90) Realized investment securities gains - (42) Decrease (increase) in accrued interest receivable 390 (3,018) Increase in other assets (9,662) (12,672) Increase in other liabilities 5,278 7,645 ------------------------------ Net Cash Provided by (Used in) Operating Activities 8,270 (41,005) Investing Activities Proceeds from maturities and calls of securities held to maturity - 27 Proceeds from sales of securities available for sale 22,034 5,607 Proceeds from maturities and calls of securities available for sale 9,800 26,020 Purchases of securities available for sale (15,597) (24,012) Net increase in loans (58,035) (34,204) Purchases of premises and equipment (1,502) (2,213) ------------------------------ Net Cash Used in Investing Activities (43,300) (28,775) Financing Activities Net decrease in noninterest-bearing deposits (14,246) (12,336) Net increase in interest-bearing deposits 28,738 28,374 Net (decrease) increase in short-term borrowings (19,881) 24,995 Proceeds from long-term debt - 8,000 Repayment of long-term debt - (117) Purchases of treasury stock - (398) Cash dividends paid (3,374) (3,362) ------------------------------ Net Cash (Used in) Provided by Financing Activities (8,763) 45,156 ------------------------------ Decrease in Cash and Cash Equivalents (43,793) (24,624) Cash and cash equivalents at beginning of period 122,112 119,777 ------------------------------ Cash and Cash Equivalents at End of Period $ 78,319 $ 95,153 ==============================
See notes to consolidated financial statements. 7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) March 31, 2000 NOTE A - BASIS OF PRESENTATION The accompanying consolidated financial statements, which are unaudited, include all the accounts of City Holding Company ("the Parent Company") and its wholly-owned subsidiaries (collectively, "the Company"). All material intercompany transactions have been eliminated. The consolidated financial statements include all adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations and financial condition for each of the periods presented. Such adjustments are of a normal recurring nature. The results of operations for the three months ended March 31, 2000, are not necessarily indicative of the results of operations that can be expected for the year ending December 31, 2000. The Company's accounting and reporting policies conform with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Such policies require management to make estimates and develop assumptions that affect the amounts reported in the consolidated financial statements and related footnotes. Actual results could differ from management's estimates. Certain amounts in the unaudited consolidated financial statements have been reclassified. Such reclassifications had no impact on net income or stockholders' equity in any period presented. For further information, refer to the consolidated financial statements and footnotes thereto included in the City Holding Company annual report on Form 10-K for the year ended December 31, 1999. NOTE B - SECURITIZATIONS AND RETAINED INTERESTS The Company did not transact a securitization during the first quarter of 1999 and terminated its securitization program subsequent to the May 1999 securitization. As of March 31, 2000 and 1999, the Company reported retained interests in its securitizations of approximately $76.96 million and $65.71 million, respectively. The value of the retained interests is determined using cash flow modeling techniques that incorporate key assumptions related to default, prepayment, and discount rates. To date, negative fair value adjustments approximating $21.57 million, pre-tax, have been recorded. Such fair value declines, deemed to be temporary, have been recorded through the Other Comprehensive Income section with Stockholders' Equity. Adjustments to the estimated fair value of retained interests are primarily the result 8 of the actual performance of the underlying collateral pools and changes in the expected future performance of those loans. Additionally, the actual performance of the underlying collateral loans has resulted in the delay in the expected timing of the receipt of future cash flows by the Company as a result of increased overcollateralization requirements. Key assumptions used in estimating the fair value of the Company's retained interests as of March 31, 2000 and 1999 were as follows: March 31 2000 1999 -------------------------------- Prepayment speed (CPR) 15-21% 17-21% Weighted average cumulative defaults 13.39% 10.00% Weighted average discount rate 14.00% 12.23% At March 31, 2000, the sensitivity of the current estimated fair value of retained interests to immediate ten percent and twenty percent changes in assumptions were as follows: Book value at March 31, 2000 $ 76,957 Prepayment curve: Impact on fair value of 10% increase in the prepayment curve 1,379 Impact on fair value of 20% increase in the prepayment curve 2,032 Default curve: Impact on fair value of 10% increase in the default curve (10,673) Impact on fair value of 20% increase in the default curve (17,997) Discount rate: Impact on fair value of 10% increase in the discount rate (5,431) Impact on fair value of 20% increase in the discount rate (10,603) These sensitivity analyses are hypothetical. As these figures indicate, any change in estimated fair value based on a ten percent variation in assumptions cannot be extrapolated because the relationship of the change in assumption to the change in fair value is not linear. Also, in this table, the effect of a variation in a particular assumption on the fair value of the retained interests is calculated independent from any change in another assumption; in reality, changes in one factor may result in changes in another, which may magnify or counteract the sensitivities. NOTE C - LONG TERM DEBT Long-term debt includes an obligation of the Parent Company consisting of a $16.00 million term loan with an unrelated party. At March 31, 2000, $16.00 million was outstanding. The loan agreement, 9 which matures on October 1, 2009, requires ten equal, annual principal payments of $1.60 million, with interest payments due quarterly. The loan has a variable rate (6.82625% at March 31, 2000). The loan agreement was amended effective May 1, 2000, to provide for revised terms and conditions. At March 31, 2000, the Company was in violation of a loan covenant under this agreement relating to required return on average assets ratios. Under the revised terms of the agreement, the Company is now in compliance with all loan covenants. Similar to the initial loan agreement, the amended agreement contains certain restrictive provisions applicable to the Parent Company and its lead bank, City National Bank of West Virginia. Such provisions include requirements for City Holding Company to maintain specified tangible capital, loan loss reserve coverage, and net worth levels. Additionally, City National must maintain its "well- capitalized" classification. The Company has pledged the common stock of City National, Del Amo Savings Bank and Frontier State Bank as collateral. The Company, through its banking subsidiaries, maintains long-term financing from the FHLB as follows: Amount Available Amount Outstanding Interest Rate Maturity Date - -------------------------------------------------------------------------------- (in thousands) $10,000 $ 10,000 5.60% July 2002 25,000 25,000 5.47 September 2002 25,000 25,000 5.45 October 2006 5,000 5,000 5.48 February 2008 10,000 10,000 4.86 October 2008 25,000 25,000 5.52 October 2009 -------------- $100,000 -------------- In addition to the financing discussed above, the Company's subsidiaries have $216.73 million of available borrowings from the Federal Home Loan Bank as of March 31, 2000. NOTE D - TRUST PREFERRED SECURITIES On October 27, 1998, City Holding Capital Trust II (Capital Trust II), a special-purpose statutory trust subsidiary of the Company sold in a public offering $57.5 million of 9.125% trust preferred capital securities (the Capital Securities II) and issued $1.8 million of common securities to the Company. Distributions on the Capital Securities II are payable quarterly and each Capital Security has a stated liquidation value of $25. To fund Capital Trust II, the Company sold to Capital Trust II $59.3 million in 9.125% Junior Subordinated Debentures (the Debentures II) with a stated maturity date of October 31, 2028. The sole assets of Capital Trust II are the Debentures II. Cash distributions on the Capital Securities 10 II in Capital Trust II are made to the extent interest on the Debentures II is received by Capital Trust II. The Company, through various agreements, has irrevocably and unconditionally guaranteed all of Capital Trust II's obligations under the Capital Securities II regarding payment of distributions and payment on liquidation or redemption of the Capital Securities II, but only to the extent of funds held by Capital Trust II. The Capital Securities II are subject to mandatory redemption (i) in whole, but not in part, at the Stated Maturity upon repayment of the Debentures II, (ii) prior to October 31, 2003, in whole, but not in part, contemporaneously with the optional redemption at any time by the Company of the Debentures II at any time within 90 days following an event of certain changes or amendments to regulatory requirements or federal income tax rules and (iii) in whole or in part, at any time on or after October 31, 2003, contemporaneously with the optional redemption by the Company of the Debentures II at a redemption price equal to the aggregate liquidation amount of the Capital Securities II, plus accumulated but unpaid distributions thereon. On March 31, 1998, City Holding Capital Trust (the Trust), a special- purpose statutory trust subsidiary of the Company, issued $30 million in 9.15% trust preferred capital securities (the Capital Securities) to certain qualified institutional investors and $928,000 of common securities (the Common Securities) to the Company. Distributions on the Capital Securities are payable semi-annually, and each Capital Security has a stated liquidation amount of $1,000. To fund the Trust, the Company sold to the Trust $30.9 million in 9.15% Junior Subordinated Debentures (the Debentures) with a stated maturity date of April 1, 2028. The sole assets of the Trust are the Debentures. Cash distributions on the Capital Securities are made to the extent interest on the Debentures is received by the Trust. The Company, through various agreements, has irrevocably and unconditionally guaranteed all of the Trust's obligations under the Capital Securities regarding payment of distributions and payment on liquidation or redemption of the Capital Securities, but only to the extent of funds held by the Trust. In the event of certain changes or amendments to regulatory requirements or federal income tax rules, the Capital Securities are redeemable in whole at par or, if greater, a make-whole amount. Otherwise, the Capital Securities are generally redeemable in whole or in part on or after April 1, 2008, at a declining redemption price ranging from 104.58% to 100% of the liquidation amount. On or after April 1, 2018, the Capital Securities may be redeemed at 100% of the liquidation amount. 11 The obligations outstanding under Capital Trust II and the Capital Trust are classified as "Corporation-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely junior subordinated debentures of City Holding Company" in the liabilities section of the consolidated balance sheets. Distributions on the Capital Securities and Capital Securities II are recorded in the consolidated statements of income as interest expense. The Company's interest payments on the Debentures and the Debentures II are fully tax deductible. NOTE E - COMMITMENTS AND CONTINGENT LIABILITIES In the normal course of business, certain financial products are offered by the Company to accommodate the financial needs of its customers. Loan commitments (lines of credit) represent the principal off-balance sheet financial product offered by the Company. At March 31, 2000, commitments outstanding to extend credit totaled approximately $275.34 million. To a much lesser extent, the Company offers standby letters of credit, which require payments to be made on behalf of customers when certain specified future events occur. Amounts outstanding pursuant to such standby letters of credit were $34.69 million as of March 31, 2000. Substantially all standby letters of credit have historically expired unfunded. Both of the above arrangements have credit risks essentially the same as that involved in extending loans to customers and are subject to the Company's standard credit policies. Collateral is obtained based on management's credit assessment of the customer. Management does not anticipate any material losses as a result of these commitments. NOTE F - NEW ACCOUNTING PRONOUNCEMENTS In June 1998, the FASB issued Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. The provisions of this statement require that derivative instruments be carried at fair value on the balance sheet and allows hedge accounting when specific criteria are met. The provisions of this statement become effective for quarterly and annual reporting beginning January 1, 2001. The impact of adopting the provisions of this statement on the Company's financial position or results of operations subsequent to the effective date is not currently estimable and will depend on the financial position of the Company and the nature and purpose of the derivative instruments in use by management at that time. 12 NOTE G - SEGMENT INFORMATION The Company operates three business segments: community banking, mortgage banking, and other financial services. These business segments are primarily identified by the products or services offered and the channels through which the product or service is offered. The community banking operations consists of various community banks that offer customers traditional banking products and services through various delivery channels. The mortgage banking operations include the origination, acquisition, servicing, and sale of mortgage loans. The other financial services business segment consists of nontraditional services offered to customers, such as investment advisory, insurance, and internet technology products. Another defined business segment of the Company is corporate support which includes the parent company and other support needs. To more effectively evaluate and manage the operating performance of each of the Company's business lines, effective April 1, 1999, internal warehouse funding was established for each division within the mortgage-banking and other financial services segments. Prior to April 1, 1999, the community-banking segment provided necessary funding to the divisions within the mortgage-banking and other financial services segments with no associated interest cost. Beginning April 1, 1999, any division that has obtained financing from the community-banking segment is charged a cost of funds, at market interest rates, on the amount of funds borrowed from the community-banking segment. Management has determined that the internal warehouse funding policy provides a "fully- costed" assessment of the operating performance of each division and that instituting such policy provides a more accurate analysis of the performance of each division and business segment. Financial information presented in the following tables has been presented reflecting the actual internal policy in place during each respective period. Selected segment information is included in the following table: 13
Other Community Mortgage Financial General (in thousands) Banking Banking Services Corporate Eliminations Consolidated ---------------------------------------------------------------------------- For the three months ended March 31, 2000 Net interest income (expense) $ 26,438 $ (2,844) $ (72) $ (486) $ - $ 23,036 Provision for loan losses 2,085 - - - - 2,085 -------------------------------------------------------------------------- Net interest income after provision for loan losses 24,353 (2,844) (72) (486) - 20,951 Other income 4,606 6,978 3,390 5 (1,331) 13,648 Other expenses 17,444 7,464 3,449 1,748 (1,331) 28,774 -------------------------------------------------------------------------- Income before income taxes 11,515 (3,330) (131) (2,229) - 5,825 Income tax expense (benefit) 3,907 (527) (39) (1,535) - 1,806 -------------------------------------------------------------------------- Net Income $ 7,608 $ (2,803) $ (92) $ (694) $ - $ 4,019 ========================================================================== Average assets $2,730,872 $176,514 $13,324 $12,959 $ (183,927) $2,749,742 ========================================================================== For the three months ended March 31, 1999 Net interest income (expense) $ 24,487 $ 2,240 $ 13 $ (341) $ - $ 26,399 Provision for loan losses 2,414 - - - - 2,414 -------------------------------------------------------------------------- Net interest income after provision for loan losses 22,073 2,240 13 (341) - 23,985 Other income 6,089 6,671 4,563 57 (2,961) 14,419 Other expenses 19,335 7,157 4,557 2,531 (2,961) 30,619 -------------------------------------------------------------------------- Income before income taxes 8,827 1,754 19 (2,815) - 7,785 Income tax expense (benefit) 2,905 697 6 (1,068) - 2,540 Net Income $ 5,922 $ 1,057 $ 13 $(1,747) $ - $ 5,245 ========================================================================== Average assets $2,312,983 $356,593 $15,972 $10,735 $ - $2,696,283 ==========================================================================
Internal warehouse funding between the community banking segment and the mortgage banking and other financial services segments is eliminated in the Consolidated Balance Sheets. Services provided to the banking segments by the direct mail, insurance, and internet service provider divisions are eliminated in the Consolidated Statements of Income. ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL SUMMARY Consolidated net income for the three months ended March 31, 2000 was $4.02 million or $0.24 per diluted common share, compared to $5.25 million or $0.31 per diluted common share for the three months ended March 31, 1999. Return on average assets (ROA) was 0.58% and return on average equity (ROE) was 8.08% for the three months ended March 31, 2000. ROA and ROE were 0.78% and 9.54%, respectively, for the same period in 1999. 14 As further discussed under the caption Net Interest Income, the $3.36 million, or 12.74%, decline in net interest income in the first quarter of 2000, compared to the first quarter of 1999, was the primary reason for the overall decline in net income, ROA, and ROE. Partially offsetting the decline in net interest income was a $329,000, or 13.63%, decline in the provision for loan losses (see Loan Portfolio) on a quarter-to-quarter basis, and a $1.85 million, or 6.03%, decline in Other Expenses (see Other Income and Expenses), from $30.62 million for the first three months of 1999 to $28.77 million for the first three months of 2000. NET INTEREST INCOME Primarily as a result of significant declines in interest income within the mortgage banking segment and higher overall funding costs, net interest income (tax equivalent basis) declined $3.42 million, or 12.61%, in the first quarter of 2000, compared to the first quarter of 1999. With the Company's reduced participation in the specialty finance sector, the average balance of loans held for sale declined 54.71% on a quarter-to-quarter basis, resulting in a reduction in interest income of $3.36 million. Additionally, management has suspended the accrual of interest income on the Company's retained interests due to the actual performance of the underlying collateral loans and revised forecasts associated with the expected timing of the receipt of cash flows by the Company. As a result, interest income derived from the retained interests declined from $1.24 million during the first three months of 1999 to $41,000 during the same period of 2000. Interest income recognized during 2000 represents interest earned, and cash received, resulting from funds invested during the interim period between the receipt of cash from borrowers and the subsequent payment of cash to noteholders. Although interest paid to depositors remained relatively unchanged from quarter-to-quarter, interest expense associated with short term borrowings increased $2.71 million, from $1.96 million during the first quarter of 1999 to $4.67 million during the same period of 2000. This increase was due to the combined effect of rising interest rates and higher volume of such borrowings. General economic conditions throughout the country have resulted in a series of interest rate increases over the last several months by the Federal Reserve. Such interest rate increases have adversely affected the Company's borrowing rates, as evidenced by the significant increase in the cost of short term borrowings. In addition to rate increases, the Company has experienced significant loan growth and sizeable declines in its deposit 15 balances since March 1999, resulting in an increased need for short-term funding. During 1999, the Company sold certain branch facilities , including approximately $121.48 million of deposits, as required by regulatory authorities for approval of the Company's merger of Horizon Bancorp. This change within the Company's balance sheet has resulted in an increase in the average balance of short-term funding from $181.11 million during the first three months of 1999 to $331.31 million during the same period of 2000. See Market Risk Management herein for a further discussion of the Company's liquidity position. AVERAGE BALANCE SHEETS and NET INTEREST INCOME (in thousands)
Three months ended March 31, 2000 1999 Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate ----------------------------------------------------------------------------------- Assets Loan portfolio (1): $1,905,127 $40,545 8.51% $1,726,645 $37,145 8.61% Loans held for sale 117,651 3,205 10.90 259,758 6,562 10.10 Securities: Taxable 268,792 4,280 6.37 286,238 4,274 5.97 Tax-exempt (2) 95,969 1,828 7.62 104,961 1,982 7.55 ----------------------------------------------------------------------------------- Total securities 364,761 6,108 6.70 391,199 6,256 6.40 Retained interest in securitized loans 76,959 41 0.21 66,240 1,244 7.51 Federal funds sold 3,636 58 6.38 8,349 81 3.88 ----------------------------------------------------------------------------------- Total interest-earning assets 2,468,134 49,957 8.10 2,452,191 51,288 8.37 Cash and due from banks 74,600 82,467 Bank premises and equipment 65,440 70,015 Other assets 168,710 109,435 Less: allowance for loan losses (27,142) (17,825) ----------------------------------------------------------------------------------- Total assets $2,749,742 $2,696,283 =================================================================================== Liabilities Demand deposits $ 420,121 $ 3,164 3.01% $ 346,249 $ 2,553 2.95% Savings deposits 329,361 2,756 3.35 391,541 2,550 2.61 Time deposits 967,654 12,101 5.00 1,031,357 13,494 5.23 Short-term borrowings 331,306 4,667 5.63 181,111 1,958 4.32 Long-term debt 116,000 1,589 5.48 104,845 1,643 6.27 Trust preferred securities 87,500 2,004 9.16 87,500 1,998 9.13 ----------------------------------------------------------------------------------- Total interest-bearing liabilities 2,251,942 26,281 4.67 2,142,603 24,196 4.52 Demand deposits 240,736 286,708 Other liabilities 58,161 47,126 Stockholders' equity 198,903 219,846 ----------------------------------------------------------------------------------- Total liabilities and stockholders' equity $2,749,742 $2,696,283 =================================================================================== Net interest income $23,676 $27,092 =================================================================================== Net yield on earning assets 3.84% 4.42% ====================================================================================
(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%. 16 RATE VOLUME ANALYSIS OF CHANGES IN INTEREST INCOME AND EXPENSE (in thousands)
Three months ended March 31, 2000 vs. 1999 Increase (Decrease) Due to Change In: Volume Rate Net -------------------------------------------- Interest-earning assets: Loan portfolio $ 6,228 $(2,888) $ 3,340 Loans held for sale (7,178) 3,881 (3,297) Securities: Taxable (1,084) 1,090 6 Tax-exempt (1) (265) 111 (154) -------------------------------------------- Total securities (1,349) 1,201 (148) Retained interest in securitized loans 1,209 (2,412) (1,203) Federal funds sold (206) 183 (23) -------------------------------------------- Total interest-earning assets $(1,296) $ (35) $(1,331) ============================================ Interest-bearing liabilities: Demand deposits $ 555 $ 56 $ 611 Savings deposits (2,006) 2,212 206 Time deposits (812) (581) (1,393) Short-term borrowings 1,984 725 2,709 Long-term debt 733 (787) (54) Trust preferred securities - 6 6 -------------------------------------------- Total interest-bearing liabilities $ 454 $ 1,631 $ 2,085 ============================================ Net Interest Income $(1,750) $(1,666) $(3,416) ============================================
(1) Fully federal taxable equivalent using a tax rate of 35%. The change in interest due to both rate and volume has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each. LOAN PORTFOLIO The composition of the Company's loan portfolio as of March 31, 2000, is presented in the following table: Commercial, financial and agricultural $ 642,689 Real estate-mortgage 933,133 Installment loans to individuals 366,463 -------------- Total loans $1,942,285 ============== Allowance And Provision for Loan Losses Management systematically monitors the loan portfolio and the adequacy of the allowance for loan losses on a monthly basis to provide for losses inherent in the portfolio. Through the Company's internal loan review department, management assesses the risk in each loan type based on historical trends, the general economic environment of its local markets, individual loan performance and other relevant factors. Individual credits are selected throughout the year for detail loan reviews, which are utilized by 17 management to assess the risk in the portfolio and the adequacy of the allowance. Due to the nature of commercial lending, evaluation of the adequacy of the allowance as it relates to these loan types is often based more upon specific credit review, with consideration given to historical charge-off percentages and general economic conditions. Conversely, due to the homogeneous nature of the real estate and installment portfolios, the portions of the allowance allocated to those portfolios are primarily based on prior charge-off history and general economic conditions, with less emphasis placed on specifically reviewing individual credits, unless circumstances suggest that specific reviews are necessary. In these categories, specific loan reviews would be conducted on higher balance and higher risk loans. In evaluating the adequacy of the allowance, management considers both quantitative and qualitative factors. Quantitative factors include actual repayment characteristics and loan performance, cash flow analyses, and estimated fair values of underlying collateral. Qualitative factors generally include overall trends within the portfolio, composition of the portfolio, changes in pricing or underwriting, seasoning of the portfolio, and general economic conditions. Reserves not specifically allocated to individual credits are generally determined by analyzing potential exposure and other qualitative factors that could negatively impact the adequacy of the allowance. Determination of such reserves is subjective in nature and requires management to periodically reassess the validity of its assumptions. Differences between net charge-offs and estimated losses are assessed such that management can timely modify its evaluation model to ensure that adequate provision has been made for risk in the total loan portfolio. At March 31, 2000, the allowance for loan losses was $27.33 million or 1.41% of total period-end loans compared to $27.11 million or 1.44% as of December 31, 1999. For further information regarding the Company's allowance for loan losses at December 31, 1999, refer to the consolidated financial statements and footnotes thereto included in the City Holding Company annual report on Form 10-K for the year ended December 31, 1999. As of March 31, 2000, management is of the opinion that the consolidated allowance for loan losses is adequate to provide for losses on existing loans within the portfolio. 18 The first quarter 2000 provision for loan losses of $2.09 million represents a decline of $329,000 or 13.63% from the $2.41 million provision for loan losses reported for the first quarter of 1999. This decline corresponds to a minimal decline in net charge-offs for the first quarter of 2000, as compared to the first three months of 1999, and a $2.42 million or 13.42% decline in non- performing loans from March 31, 1999 to March 31, 2000.
Three months ended Year ended March 31, December 31, Allowance for Loan Losses 2000 1999 ------------------------------------------- Balance at beginning of period $27,113 $ 17,610 Charge-offs: Commercial, financial and agricultural (143) (3,925) Real estate-mortgage (257) (1,142) Installment loans to individuals (2,130) (7,185) ------------------------------------------- Totals (2,530) (12,252) Recoveries: Commercial, financial and agricultural 135 81 Real estate-mortgage 77 301 Installment loans to individuals 454 1,349 ------------------------------------------- Totals 666 1,731 ------------------------------------------- Net charge-offs (1,864) (10,521) Provision for loan losses 2,085 19,286 Balance of acquired institution - 738 ------------------------------------------- Balance at end of period $27,334 $ 27,113 =========================================== As a Percent of Average Total Loans: Net charge-offs .39% .59% Provision for loan losses .44 1.08 As a Percent of Non-Performing Loans: Allowance for loan losses 175.13% 168.55% Summary of Non-performing Assets Non-accrual loans $12,313 $ 9,553 Accruing loans past due 90 days or more 2,600 5,830 Restructured loans 695 703 ----------------------------------------- Total non-performing loans 15,608 16,086 Other real estate owned 4,376 3,496 ----------------------------------------- Total non-performing assets $19,984 $19,582 =========================================
LOANS HELD FOR SALE Loans held for sale represent mortgage loans the Company has either purchased or originated with the intent to sell and includes traditional fixed- rate and junior lien mortgage loans. Certain traditional fixed- 19 rate mortgages are originated by the Company, with the intent to sell, servicing released, in the secondary market. This product line enables the Company to provide conventional, fixed-rate mortgage products to its customers, but minimize the interest-rate risk associated with fixed-rate loans. At March 31, 2000, conventional mortgage loans represented $34.94 million or 30.00% of the reported balance of loans held for sale. During 1999, the Company merged its correspondent lending division into its broker division and consolidated its separate loan origination platforms into one retail operation. These divisions, respectively, purchase and originate junior lien and similar mortgage loans for sale. Generally, these loans are used by the borrower to finance property improvements or to consolidate personal debt. With the restructuring of these divisions during 1999, the Company significantly reduced the volume of origination and acquisition of this loan product and terminated its loan securitization program. Through formal underwriting guidelines and quality control procedures, the Company has implemented policies and procedures to mitigate the risks associated with the junior lien mortgage product, including concentration risk, credit risk, and interest rate risk. Such policies and procedures addressed lending issues related to the creditworthiness of the borrower, credit scores, debt-to- income ratios, borrower credit histories, and other pertinent factors. Due to the nature of the junior lien mortgage loan, less emphasis is placed on the value of the underlying collateral, although property appraisals may be required for certain loans. During the first quarter of 2000, the Company originated $96.08 million and purchased $8.96 million in loans held for sale and sold $107.62 million during the same period. This compares to originations of $110.59 million, purchases of $60.23 million and sales of $127.16 million during the first quarter of 1999. LOAN SECURITIZATIONS From December 1997 through May 1999, the Company completed six securitizations of junior lien mortgage loans. Subsequent to the May 1999 securitization, the Company terminated its securitization program. The securitization program was initiated by the Company as a means to mitigate the risk of originating and acquiring this loan product and to continue the growth of the Company's loan servicing portfolio. Each of the securitized pools is serviced by the Company's mortgage loan servicing division. By 20 securitizing originated and purchased junior lien mortgage loans, the Company effectively removed these loans from its balance sheet by creating an investment security or securities, supported by the cash flows generated by these loans, and selling the resulting investment security or securities to independent third parties. As part of this process, the Company provided credit enhancement, in the form of overcollateralization, with respect to the investment security created. As a result, the Company maintains a certain level of credit, prepayment and interest rate risk related to these loans. The risk maintained by the Company, however, is less than that which would be maintained had the Company held these loans on its balance sheet until the loans matured. In return for this risk exposure, the Company expects to receive future income from each securitization that is determined as a function of the "excess spread" derived from the securitized loans. The "excess spread", generally, is calculated as the difference between (A) the interest at the stated rate paid by borrowers and (B) the sum of pass-through interest paid to third-party investors and various fees, including trustee, insurance, servicing, and other similar costs. The "excess spread" represents income to be recognized by the Company over the life of the securitized loan pool. As of March 31, 2000 and 1999, the Company reported retained interests in these securitized loan pools of approximately $76.96 million and $65.71 million, respectively, including accrued interest. Assumptions used to estimate the retained interest at March 31, 2000, include weighted average cumulative defaults approximating 13.39%, prepayment rates of 15-21% CPR, and a weighted- average discount rate of 14.00%. Management monitors the actual default and prepayment rates of each securitized pool on a monthly basis, in addition to the outstanding pool balance, to ensure the rates used to estimate the retained interest are still reasonable. Quarterly, management re-forecasts expected cash flows for each securitization, updating significant assumptions as necessary. To date, negative fair value adjustments approximating $21.57 million, pre-tax, have been recorded. Such fair value declines, deemed to be temporary, have been recorded through the Other Comprehensive Income section with Stockholders' Equity. Adjustments to the estimated fair value of the retained interests are the result of both actual performance of the underlying collateral pools and revised expected timing of the receipt of cash flows by the Company. Although a fair value reduction has been recorded, re-forecasted cash flows as of March 31, 21 2000 project undiscounted cash flows to be received by the Company are 2.16 times the total retained interest values, before fair value adjustments. LOAN SERVICING At March 31, 2000 and 1999, the Company maintained a servicing portfolio of $1.71 billion and $1.96 billion, respectively. Of the total servicing portfolio, $1.63 billion and $1.66 billion represented loans serviced for others at March 31, 2000 and 1999, respectively. Loans serviced for others are not included in the Consolidated Balance Sheets of the Company. The Company has recorded mortgage loan servicing rights of $9.09 million and $8.33 million at March 31, 2000 and 1999, respectively, associated with the right to service mortgage loans for others. Included in Other Assets in the Consolidated Balance Sheets, the recorded value of mortgage servicing rights is assessed quarterly to determine if the value of those rights has become impaired during the period. In doing so, management estimates the present value of future net cash flows to be derived from its servicing activities. Factors included in the impairment analysis include anticipated servicing income, costs associated with servicing the portfolio, discount rates, and loan prepayment and default rates. As of March 31, 2000, management has determined, based on this analysis, that the recorded value of its servicing rights is fairly stated and there is no impairment in that value. OTHER INCOME AND EXPENSES Total Other Income declined $771,000 or 5.35% from $14.42 million for the first three months of 1999 to $13.65 million for the first three months of 2000. The overall decline in Other Income is due to a number of factors, including the contraction of the Company's specialty finance operations with a corresponding negative impact to fee income derived from mortgage loan servicing operations. Although net origination fees realized from the origination of junior lien mortgage loans increased from period-to-period, during the first quarter of 1999, the Company deferred certain origination fees and associated costs. Such fees and costs were realized during the second quarter of 1999 upon the completion of the Company's May 1999 securitization transaction. Additionally, the sale of certain branch facilities and associated deposit relationships during 1999 resulted in a decline in Other Income reported during the first quarter of 2000. 22 Within Other Expenses, salaries and employee benefits declined $2.79 million or 18.35% from $15.21 million during the first quarter of 1999 to $12.42 million during the first quarter of 2000. The decline in compensation costs incurred by the Company corresponds to a 15.00% decline in the number of full- time equivalents (FTEs) employed by the Company during these time periods. As of March 31, 2000, the Company employed 1,503 FTEs compared to 1,768 FTEs employed at March 31, 1999. These declines reflect the impact of the Company's contraction of its specialty finance operations and the reorganization within its community banking segment. Occupancy expense declined $1.50 million or 44.77% from $3.34 million for the first quarter of 1999 to $1.85 million for the first quarter of 2000. This decline is primarily due to the reduced number of branch locations of City National resulting from the sale of certain branch facilities during 1999 and the contraction of the Company's specialty finance operations. Other expenses increased $1.56 million or 18.79% from $8.32 million for the first quarter of 1999 to $9.88 million for the first quarter of 2000, primarily attributable to a loan production office of City National opened at the beginning of the fourth quarter of 1999 in Reston, Virginia. MARKET RISK MANAGEMENT Market risk is the risk of loss due to adverse changes in current and future cash flows, fair values, earnings or capital due to adverse movements in interest rates and other market factors, including foreign exchange rates and commodity prices. Because the Company has no significant foreign exchange activities and holds no commodities, interest rate risk represents the primary risk factor affecting the Company's balance sheet. The Company seeks to reduce interest rate risk through asset and liability management, where the goal is to optimize the balance between earnings and interest rate risk. The Company's asset and liability management function is responsible for reviewing the interest rate sensitivity position of the Company and establishing policies to monitor and limit exposure to such risks. Liquidity management is a significant factor in monitoring and managing the Company's exposure to market risk. The Company manages its liquidity position to provide necessary funding for asset growth and to ensure that the funding needs of its customers can be satisfied promptly. Growth within the Company's loan portfolio coupled with declines in deposit balances since March 1999 has resulted in the Company's need for increased short-term funding. Increased reliance on short-term funding facilities has increased the Company's exposure to interest rate risk and has resulted in an overall increase in funding 23 costs. Such changes have had an adverse affect on the Company's net interest margin and overall profitability during the first quarter of 2000. In recent months, the Company has instituted procedures to slow loan growth and to attract new deposit balances in an effort to reduce its reliance on external funding sources. Additionally, during the first quarter of 2000, the Company issued an additional $30.00 million in brokered certificates of deposit through existing agreements maintained with three investment banking firms. As of March 31, 2000, the outstanding balance of brokered certificates of deposit approximated $52.67 million, compared to $28.04 million at December 31, 1999. As of March 31, 2000, the weighted average maturity of brokered certificates of deposit was less than one year and the weighted average interest rate to be paid by the Company approximated 6.18%. Through additional issues sold subsequent to March 31, 2000, the outstanding balance of brokered certificates of deposit has increased to $119.98 million as of April 30, 2000. The additional issues have similar terms as those previously disclosed. Effective May 1, 2000, the terms and conditions of the Parent Company's long term debt and line of credit borrowing facilities were amended. Included in these amendments, the Parent Company's borrowing capacity under its line of credit was reduced from $24.00 million to $15.00 million. As of March 31, 2000, $12.13 million was outstanding pursuant to the terms of the line of credit agreement, which matures on March 31, 2001. CAPITAL RESOURCES During the first quarter of 2000, the Company reported net income of $4.02 million and paid dividends to its shareholders of $3.38 million. Offsetting this increase in equity, the Company reported a $719,000 increase in Other Comprehensive Losses as a result of declines in the fair market value of the Company's available-for-sale securities portfolio. As a result, total equity capital was relatively unchanged during the first three months of 2000. Regulatory guidelines require the Company to maintain a minimum total capital to risk-adjusted assets ratio of 8 percent (Total capital ratio), with at least one-half of capital consisting of tangible common stockholders' equity (Tier I capital ratio) and a minimum Tier I leverage ratio of 4 percent (Leverage ratio). At March 31, 2000, the Company's total capital to risk- adjusted assets ratio was 10.97%, its Tier I capital ratio was 9.30%, and its leverage ratio was 8.91%. Similarly, the Company's banking subsidiaries are 24 also required to maintain minimum capital levels as set forth by various regulatory agencies. Under capital adequacy guidelines, the banking subsidiaries are required to maintain minimum total capital, Tier I capital, and leverage ratios of 8.00%, 4.00%, and 4.00%, respectively. To be classified as "well capitalized," the banking subsidiaries must maintain total capital, Tier I capital, and leverage ratios of 10.00%, 6.00%, and 5.00%, respectively. As of March 31, 2000, the Company's lead bank, City National, reported total capital, Tier I capital, and leverage ratios of 11.84%, 10.79%, and 9.96%, respectively. ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK The information called for by this item is provided under the caption "Market Risk Management" under Item 2--Management Discussion and Analysis of Financial Condition and Results of Operations. PART II - OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Changes in Securities None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6 Exhibits and Reports on Form 8-K Exhibit 11 - Computation of Earnings per Share Exhibit 27 - Financial Data Schedule for the three months ended March 31, 2000 Reports on Form 8-K None SIGNATURE Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CITY HOLDING COMPANY By: /s/ Michael D. Dean ---------------------------- Michael D. Dean Senior Vice President - Finance, Chief Accounting Officer and Duly Authorized Officer 25 EX-11 2 COMPUTATION OF EARNINGS PER SHARE EXHIBIT 11 - STATEMENT Re: COMPUTATION OF EARNINGS PER SHARE
Three months ended March 31, 2000 1999 ----------------------------------------------- (in thousands, except per share data) Basic: Net income $ 4,019 $ 5,245 Average shares outstanding 16,875 16,820 Basic EPS $ 0.24 $ 0.31 =============================================== Diluted: Net income $ 4,019 $ 5,245 Average shares outstanding 16,875 16,820 Effect of dilutive securities: Contingently issuable stock - 5 ----------------------------------------------- Totals 16,875 16,825 Diluted EPS $ 0.24 $ 0.31 ===============================================
26 EX-27 3 FINANCIAL DATA SCHEDULE
9 1,000 3-MOS DEC-31-2000 MAR-31-2000 74,375 0 3,944 0 363,620 0 0 1,942,285 27,334 2,792,371 1,970,262 366,838 53,237 203,500 0 0 42,199 156,335 2,792,371 43,750 5,468 99 49,317 18,021 26,281 23,036 2,085 0 28,774 5,825 0 0 0 4,019 0.24 0.24 3.84 12,313 2,600 695 0 27,113 2,530 1,864 27,334 27,334 0 0
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