West Virginia | 55-0619957 |
(State or Other Jurisdiction of | (I.R.S. Employer |
Incorporation or Organization) | Identification No.) |
x | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b)) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR240.13e-4(c)) |
City Holding Company | |
By: | /s/ David L. Bumgarner |
David L. Bumgarner | |
Chief Financial Officer |
• | Return on assets and return on tangible equity of 1.90% and 18.9%, respectively. |
• | Reported net interest income increased $3.5 million, or 11.0%, from the quarter ended September 30, 2017, while net interest income exclusive of accretion from fair value adjustments increased $3.6 million, or 11.4%, from the quarter ended September 30, 2017. |
• | Primarily due to continued improvement in the Company’s historical loss rates, no provision for loan losses was recorded in the third quarter of 2018. |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | September 30, | September 30, | ||||||||||||||||
2018 | 2018 | 2018 | 2017 | 2017 | 2018 | 2017 | ||||||||||||||||
Earnings | ||||||||||||||||||||||
Net Interest Income (FTE) | $ | 35,745 | $ | 33,760 | $ | 32,834 | $ | 32,760 | $ | 32,384 | $ | 102,339 | $ | 94,822 | ||||||||
Net Income available to common shareholders | 20,692 | 20,979 | 17,616 | 9,669 | 13,932 | 59,283 | 44,646 | |||||||||||||||
Per Share Data | ||||||||||||||||||||||
Earnings per share available to common shareholders: | ||||||||||||||||||||||
Basic | $ | 1.34 | $ | 1.36 | $ | 1.13 | $ | 0.62 | $ | 0.89 | $ | 3.82 | $ | 2.87 | ||||||||
Diluted | 1.33 | 1.35 | 1.13 | 0.62 | 0.89 | 3.82 | 2.86 | |||||||||||||||
Weighted average number of shares: | ||||||||||||||||||||||
Basic | 15,340 | 15,326 | 15,414 | 15,472 | 15,485 | 15,360 | 15,391 | |||||||||||||||
Diluted | 15,358 | 15,345 | 15,436 | 15,497 | 15,505 | 15,380 | 15,415 | |||||||||||||||
Period-end number of shares | 15,449 | 15,452 | 15,439 | 15,618 | 15,618 | 15,449 | 15,618 | |||||||||||||||
Cash dividends declared | $ | 0.53 | $ | 0.46 | $ | 0.46 | $ | 0.46 | $ | 0.44 | $ | 1.45 | $ | 1.32 | ||||||||
Book value per share (period-end) | 33.14 | 32.60 | 31.86 | 32.17 | 32.03 | 33.14 | 32.03 | |||||||||||||||
Tangible book value per share (period-end) | 28.08 | 27.53 | 26.78 | 27.14 | 26.99 | 28.08 | 26.99 | |||||||||||||||
Market data: | ||||||||||||||||||||||
High closing price | $ | 82.79 | $ | 78.44 | $ | 72.87 | $ | 73.98 | $ | 71.91 | $ | 82.79 | $ | 72.78 | ||||||||
Low closing price | 75.54 | 67.95 | 65.03 | 65.5 | 59.94 | 65.03 | 59.94 | |||||||||||||||
Period-end closing price | 76.80 | 75.23 | 68.56 | 67.47 | 71.91 | 76.80 | 71.91 | |||||||||||||||
Average daily volume | 54 | 60 | 56 | 66 | 54 | 57 | 55 | |||||||||||||||
Treasury share activity: | ||||||||||||||||||||||
Treasury shares repurchased | 7 | 10 | 204 | — | — | 221 | — | |||||||||||||||
Average treasury share repurchase price | $ | 77.18 | $ | 69.26 | $ | 68.5 | $ | — | $ | — | $ | 68.81 | $ | — | ||||||||
Common share issuance: | ||||||||||||||||||||||
Common shares issued (in thousands) | — | — | — | — | — | — | 441 | |||||||||||||||
Average common share issue price (a) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 64.48 | ||||||||
Key Ratios (percent) | ||||||||||||||||||||||
Return on average assets | 1.90 | % | 2.00 | % | 1.69 | % | 0.94 | % | 1.37 | % | 1.86 | % | 1.46 | % | ||||||||
Return on average tangible equity | 18.90 | % | 19.90 | % | 16.70 | % | 9.00 | % | 13.20 | % | 18.50 | % | 14.60 | % | ||||||||
Yield on interest earning assets | 4.25 | % | 4.15 | % | 4.05 | % | 3.95 | % | 3.92 | % | 4.13 | % | 3.90 | % | ||||||||
Cost of interest bearing liabilities | 0.92 | % | 0.76 | % | 0.69 | % | 0.64 | % | 0.61 | % | 0.79 | % | 0.57 | % | ||||||||
Net Interest Margin | 3.54 | % | 3.52 | % | 3.51 | % | 3.46 | % | 3.45 | % | 3.52 | % | 3.46 | % | ||||||||
Non-interest income as a percent of total revenue | 30.70 | % | 31.70 | % | 30.70 | % | 32.20 | % | 31.30 | % | 31.10 | % | 31.80 | % | ||||||||
Efficiency Ratio (a) | 48.60 | % | 50.40 | % | 52.60 | % | 47.70 | % | 51.80 | % | 50.50 | % | 52.90 | % |
Price/Earnings Ratio (b) | 14.37 | 13.88 | 15.17 | 27.30 | 20.20 | 15.07 | 18.80 | |||||||||||||||
Capital (period-end) | ||||||||||||||||||||||
Average Shareholders' Equity to Average Assets | 11.81 | % | 11.88 | % | 12.05 | % | 12.34 | % | 12.29 | % | ||||||||||||
Tangible equity to tangible assets | 9.99 | % | 9.90 | % | 10.03 | % | 10.45 | % | 10.49 | % | ||||||||||||
Consolidated City Holding Company risk based capital ratios (c): | ||||||||||||||||||||||
CET I | 15.94 | % | 15.49 | % | 15.08 | % | 15.10 | % | 15.08 | % | ||||||||||||
Tier I | 16.49 | % | 16.05 | % | 15.64 | % | 15.66 | % | 15.65 | % | ||||||||||||
Total | 17.08 | % | 16.65 | % | 16.31 | % | 16.34 | % | 16.40 | % | ||||||||||||
Leverage | 11.01 | % | 11.13 | % | 10.90 | % | 11.00 | % | 11.05 | % | ||||||||||||
City National Bank risk based capital ratios (c): | ||||||||||||||||||||||
CET I | 14.00 | % | 13.26 | % | 12.59 | % | 11.93 | % | 12.74 | % | ||||||||||||
Tier I | 14.00 | % | 13.26 | % | 12.59 | % | 11.93 | % | 12.74 | % | ||||||||||||
Total | 14.59 | % | 13.87 | % | 13.25 | % | 12.61 | % | 13.44 | % | ||||||||||||
Leverage | 9.39 | % | 9.24 | % | 8.81 | % | 8.43 | % | 9.04 | % | ||||||||||||
Other | ||||||||||||||||||||||
Branches | 87 | 86 | 86 | 86 | 86 | |||||||||||||||||
FTE | 846 | 849 | 832 | 839 | 835 | |||||||||||||||||
Assets per FTE | $ | 5,226 | $ | 5,152 | $ | 5,048 | $ | 4,925 | $ | 4,910 | ||||||||||||
Deposits per FTE | 4,070 | 4,030 | 4,143 | 3,952 | 3,900 | |||||||||||||||||
(a) The common share issue price is presented net of commissions and excludes one-time offering costs. | ||||||||||||||||||||||
(b) The price/earnings ratio is computed based on annualized quarterly earnings. | ||||||||||||||||||||||
(c) September 30, 2018 risk-based capital ratios are estimated. |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | September 30, | September 30, | ||||||||||||||||
2018 | 2018 | 2018 | 2017 | 2017 | 2018 | 2017 | ||||||||||||||||
Interest Income | ||||||||||||||||||||||
Interest and fees on loans | $ | 36,872 | $ | 34,292 | $ | 32,918 | $ | 32,529 | $ | 32,004 | $ | 104,082 | $ | 93,223 | ||||||||
Interest on investment securities: | ||||||||||||||||||||||
Taxable | 4,216 | 4,117 | 3,981 | 3,797 | 3,666 | 12,314 | 10,591 | |||||||||||||||
Tax-exempt | 701 | 710 | 703 | 692 | 665 | 2,114 | 2,014 | |||||||||||||||
Interest on deposits in depository institutions | 940 | 61 | 42 | 35 | 31 | 1,043 | 51 | |||||||||||||||
Total Interest Income | 42,729 | 39,180 | 37,644 | 37,053 | 36,366 | 119,553 | 105,879 | |||||||||||||||
Interest Expense | ||||||||||||||||||||||
Interest on deposits | 5,497 | 4,918 | 4,326 | 3,941 | 3,796 | 14,741 | 10,885 | |||||||||||||||
Interest on short-term borrowings | 1,435 | 459 | 460 | 522 | 349 | 2,354 | 693 | |||||||||||||||
Interest on long-term debt | 239 | 230 | 211 | 201 | 195 | 680 | 565 | |||||||||||||||
Total Interest Expense | 7,171 | 5,607 | 4,997 | 4,664 | 4,340 | 17,775 | 12,143 | |||||||||||||||
Net Interest Income | 35,558 | 33,573 | 32,647 | 32,389 | 32,026 | 101,778 | 93,736 | |||||||||||||||
Provision for loan losses | (27 | ) | (2,064 | ) | 181 | 422 | 1,393 | (1,910 | ) | 2,584 | ||||||||||||
Net Interest Income After Provision for Loan Losses | 35,585 | 35,637 | 32,466 | 31,967 | 30,633 | 103,688 | 91,152 | |||||||||||||||
Non-Interest Income | ||||||||||||||||||||||
Gains on sale of investment securities | — | — | — | 200 | — | — | 4,276 | |||||||||||||||
Service charges | 7,598 | 7,323 | 6,862 | 7,355 | 7,415 | 21,783 | 21,219 | |||||||||||||||
Bankcard revenue | 4,677 | 4,532 | 4,334 | 4,316 | 4,291 | 13,543 | 12,804 | |||||||||||||||
Trust and investment management fee income | 1,579 | 1,645 | 1,568 | 1,800 | 1,471 | 4,792 | 4,469 | |||||||||||||||
Bank owned life insurance | 813 | 722 | 821 | 1,241 | 774 | 2,356 | 2,972 | |||||||||||||||
Other income | 1,086 | 1,389 | 907 | 655 | 660 | 3,382 | 2,303 | |||||||||||||||
Total Non-Interest Income | 15,753 | 15,611 | 14,492 | 15,567 | 14,611 | 45,856 | 48,043 | |||||||||||||||
Non-Interest Expense | ||||||||||||||||||||||
Salaries and employee benefits | 13,576 | 13,551 | 13,241 | 11,845 | 12,580 | 40,368 | 38,783 | |||||||||||||||
Occupancy related expense | 2,323 | 2,346 | 2,404 | 2,195 | 2,426 | 7,073 | 7,361 | |||||||||||||||
Equipment and software related expense | 1,965 | 1,895 | 1,831 | 1,897 | 1,940 | 5,691 | 5,835 | |||||||||||||||
FDIC insurance expense | 315 | 313 | 315 | 318 | 328 | 943 | 1,031 | |||||||||||||||
Advertising | 808 | 849 | 787 | 711 | 689 | 2,444 | 2,203 | |||||||||||||||
Bankcard expenses | 1,134 | 1,064 | 1,076 | 960 | 1,051 | 3,274 | 2,964 | |||||||||||||||
Postage, delivery, and statement mailings | 537 | 515 | 578 | 518 | 517 | 1,630 | 1,576 | |||||||||||||||
Office supplies | 364 | 329 | 313 | 355 | 377 | 1,006 | 1,082 |
Legal and professional fees | 453 | 475 | 450 | 563 | 504 | 1,378 | 1,393 | |||||||||||||||
Telecommunications | 408 | 441 | 500 | 517 | 494 | 1,349 | 1,470 | |||||||||||||||
Repossessed asset losses, net of expenses | 156 | 112 | 370 | 145 | 107 | 638 | 589 | |||||||||||||||
Other expenses | 3,001 | 3,021 | 3,072 | 2,869 | 3,296 | 9,098 | 8,799 | |||||||||||||||
Total Non-Interest Expense | 25,040 | 24,911 | 24,937 | 22,893 | 24,309 | 74,892 | 73,086 | |||||||||||||||
Income Before Income Taxes | 26,298 | 26,337 | 22,021 | 24,641 | 20,935 | 74,652 | 66,109 | |||||||||||||||
Income tax expense | 5,606 | 5,358 | 4,405 | 14,972 | 7,003 | 15,369 | 21,463 | |||||||||||||||
Net Income Available to Common Shareholders | $ | 20,692 | $ | 20,979 | $ | 17,616 | $ | 9,669 | $ | 13,932 | $ | 59,283 | $ | 44,646 | ||||||||
Distributed earnings allocated to common shareholders | $ | 8,109 | $ | 7,039 | $ | 7,023 | $ | 7,106 | $ | 6,797 | $ | 22,184 | $ | 20,391 | ||||||||
Undistributed earnings allocated to common shareholders | 12,382 | 13,729 | 10,398 | 2,454 | 6,981 | 36,522 | 23,767 | |||||||||||||||
Net earnings allocated to common shareholders | $ | 20,491 | $ | 20,768 | $ | 17,421 | $ | 9,560 | $ | 13,778 | $ | 58,706 | $ | 44,158 | ||||||||
Average common shares outstanding | 15,340 | 15,326 | 15,414 | 15,472 | 15,485 | 15,360 | 15,391 | |||||||||||||||
Shares for diluted earnings per share | 15,358 | 15,345 | 15,436 | 15,497 | 15,505 | 15,380 | 15,415 | |||||||||||||||
Basic earnings per common share | $ | 1.34 | $ | 1.36 | $ | 1.13 | $ | 0.62 | $ | 0.89 | $ | 3.82 | $ | 2.87 | ||||||||
Diluted earnings per common share | $ | 1.33 | $ | 1.35 | $ | 1.13 | $ | 0.62 | $ | 0.89 | $ | 3.82 | $ | 2.86 |
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||
2018 | 2018 | 2018 | 2017 | 2017 | |||||||||||
Assets | |||||||||||||||
Cash and due from banks | $ | 49,806 | $ | 43,466 | $ | 39,340 | $ | 54,450 | $ | 54,281 | |||||
Interest-bearing deposits in depository institutions | 256,104 | 222,058 | 84,438 | 28,058 | 28,884 | ||||||||||
Cash and cash equivalents | 305,910 | 265,524 | 123,778 | 82,508 | 83,165 | ||||||||||
Investment securities available-for-sale, at fair value | 563,003 | 552,603 | 545,628 | 550,389 | 525,633 | ||||||||||
Investment securities held-to-maturity, at amortized cost | 57,812 | 60,030 | 62,277 | 64,449 | 66,989 | ||||||||||
Other securities | 28,875 | 28,920 | 22,165 | 14,147 | 15,988 | ||||||||||
Total investment securities | 649,690 | 641,553 | 630,070 | 628,985 | 608,610 | ||||||||||
Gross loans | 3,146,697 | 3,155,468 | 3,137,681 | 3,127,410 | 3,105,912 | ||||||||||
Allowance for loan losses | (16,311 | ) | (16,876 | ) | (18,381 | ) | (18,836 | ) | (19,554 | ) | |||||
Net loans | 3,130,386 | 3,138,592 | 3,119,300 | 3,108,574 | 3,086,358 | ||||||||||
Bank owned life insurance | 105,372 | 104,773 | 104,052 | 103,440 | 102,706 | ||||||||||
Premises and equipment, net | 72,484 | 72,482 | 72,920 | 72,682 | 72,334 | ||||||||||
Accrued interest receivable | 11,449 | 9,348 | 9,528 | 9,223 | 9,236 | ||||||||||
Net deferred tax assets | 15,653 | 14,528 | 14,467 | 11,913 | 22,355 | ||||||||||
Intangible assets | 78,215 | 78,342 | 78,468 | 78,595 | 78,730 | ||||||||||
Other assets | 51,643 | 49,241 | 47,432 | 36,361 | 36,060 | ||||||||||
Total Assets | $ | 4,420,802 | $ | 4,374,383 | $ | 4,200,015 | $ | 4,132,281 | $ | 4,099,554 | |||||
Liabilities | |||||||||||||||
Deposits: | |||||||||||||||
Noninterest-bearing | $ | 672,042 | $ | 684,614 | $ | 703,209 | $ | 666,639 | $ | 669,876 | |||||
Interest-bearing: | |||||||||||||||
Demand deposits | 802,490 | 785,933 | 816,976 | 769,245 | 711,121 | ||||||||||
Savings deposits | 821,390 | 817,547 | 816,245 | 796,275 | 799,592 | ||||||||||
Time deposits | 1,147,709 | 1,133,684 | 1,110,532 | 1,083,475 | 1,075,945 | ||||||||||
Total deposits | 3,443,631 | 3,421,778 | 3,446,962 | 3,315,634 | 3,256,534 | ||||||||||
Short-term borrowings | |||||||||||||||
Federal Funds purchased | 170,000 | 181,375 | — | 54,000 | 79,800 | ||||||||||
Customer repurchase agreements | 220,124 | 196,635 | 195,375 | 198,219 | 201,664 | ||||||||||
Long-term debt | 16,495 | 16,495 | 16,495 | 16,495 | 16,495 | ||||||||||
Other liabilities | 58,526 | 54,346 | 49,306 | 45,426 | 44,746 | ||||||||||
Total Liabilities | 3,908,776 | 3,870,629 | 3,708,138 | 3,629,774 | 3,599,239 | ||||||||||
Stockholders' Equity | |||||||||||||||
Preferred stock | — | — | — | — | — | ||||||||||
Common stock | 47,619 | 47,619 | 47,619 | 47,619 | 47,619 | ||||||||||
Capital surplus | 140,450 | 140,091 | 140,547 | 140,960 | 140,381 | ||||||||||
Retained earnings | 484,017 | 471,515 | 457,650 | 444,481 | 441,001 | ||||||||||
Cost of common stock in treasury | (136,783 | ) | (136,520 | ) | (137,420 | ) | (124,909 | ) | (124,909 | ) | |||||
Accumulated other comprehensive loss: | |||||||||||||||
Unrealized gain on securities available-for-sale | (18,244 | ) | (13,918 | ) | (11,486 | ) | (611 | ) | 883 | ||||||
Underfunded pension liability | (5,033 | ) | (5,033 | ) | (5,033 | ) | (5,033 | ) | (4,660 | ) | |||||
Total Accumulated Other Comprehensive Loss | (23,277 | ) | (18,951 | ) | (16,519 | ) | (5,644 | ) | (3,777 | ) | |||||
Total Stockholders' Equity | 512,026 | 503,754 | 491,877 | 502,507 | 500,315 | ||||||||||
Total Liabilities and Stockholders' Equity | $ | 4,420,802 | $ | 4,374,383 | $ | 4,200,015 | $ | 4,132,281 | $ | 4,099,554 | |||||
Regulatory Capital | |||||||||||||||
Total CET 1 capital | $ | 457,580 | $ | 444,869 | $ | 430,044 | $ | 430,154 | $ | 426,057 | |||||
Total tier 1 capital | 473,580 | 460,869 | 446,044 | 446,154 | 442,057 | ||||||||||
Total risk-based capital | 490,307 | 478,255 | 464,936 | 465,292 | 463,198 | ||||||||||
Total risk-weighted assets | 2,871,241 | 2,871,561 | 2,851,330 | 2,842,453 | 2,824,751 |
September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||
2018 | 2018 | 2018 | 2017 | 2017 | |||||||||||
Residential real estate (1) | $ | 1,485,823 | $ | 1,472,916 | $ | 1,465,215 | $ | 1,468,278 | $ | 1,465,942 | |||||
Home equity - junior liens | 143,540 | 139,245 | 138,477 | 139,499 | 139,702 | ||||||||||
Commercial and industrial | 213,815 | 213,687 | 204,592 | 208,484 | 204,722 | ||||||||||
Commercial real estate (2) | 1,268,052 | 1,294,489 | 1,296,304 | 1,277,576 | 1,260,906 | ||||||||||
Consumer | 31,869 | 31,137 | 29,570 | 29,162 | 30,323 | ||||||||||
DDA overdrafts | 3,598 | 3,994 | 3,523 | 4,411 | 4,317 | ||||||||||
Gross Loans | $ | 3,146,697 | $ | 3,155,468 | $ | 3,137,681 | $ | 3,127,410 | $ | 3,105,912 | |||||
Construction loans included in: | |||||||||||||||
(1) - Residential real estate loans | $ | 17,628 | $ | 21,662 | $ | 26,610 | $ | 25,270 | $ | 19,849 | |||||
(2) - Commercial real estate loans | 24,110 | 28,567 | 30,857 | 28,871 | 24,318 | ||||||||||
Secondary Mortgage Loan Activity | |||||||||||||||
Mortgage loans originated | $ | 3,417 | $ | 3,263 | $ | 2,606 | $ | 2,593 | $ | 4,474 | |||||
Mortgage loans sold | 3,590 | 3,137 | 2,874 | 2,975 | 4,732 | ||||||||||
Mortgage loans gain on loans sold | 86 | 84 | 79 | 79 | 128 |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | September 30, | September 30, | ||||||||||||||||
2018 | 2018 | 2018 | 2017 | 2017 | 2018 | 2017 | ||||||||||||||||
Allowance for Loan Losses | ||||||||||||||||||||||
Balance at beginning of period | $ | 16,876 | $ | 18,381 | $ | 18,836 | $ | 19,554 | $ | 19,063 | $ | 18,836 | $ | 19,730 | ||||||||
Charge-offs: | ||||||||||||||||||||||
Commercial and industrial | — | (385 | ) | (339 | ) | (250 | ) | (40 | ) | (724 | ) | (150 | ) | |||||||||
Commercial real estate | (74 | ) | (118 | ) | (157 | ) | (156 | ) | (282 | ) | (349 | ) | (564 | ) | ||||||||
Residential real estate | (244 | ) | (96 | ) | (124 | ) | (342 | ) | (411 | ) | (464 | ) | (1,295 | ) | ||||||||
Home equity | (108 | ) | (33 | ) | (78 | ) | (147 | ) | (17 | ) | (219 | ) | (256 | ) | ||||||||
Consumer | (206 | ) | (255 | ) | (99 | ) | (13 | ) | (18 | ) | (560 | ) | (47 | ) | ||||||||
DDA overdrafts | (704 | ) | (636 | ) | (636 | ) | (725 | ) | (718 | ) | (1,976 | ) | (1,989 | ) | ||||||||
Total charge-offs | (1,336 | ) | (1,523 | ) | (1,433 | ) | (1,633 | ) | (1,486 | ) | (4,292 | ) | (4,301 | ) | ||||||||
Recoveries: | ||||||||||||||||||||||
Commercial and industrial | 147 | 1,476 | 2 | 1 | 2 | 1,625 | 57 | |||||||||||||||
Commercial real estate | 166 | 149 | 223 | 20 | 60 | 538 | 92 | |||||||||||||||
Residential real estate | 116 | 53 | 106 | 8 | 130 | 275 | 286 | |||||||||||||||
Home equity | — | — | — | — | 45 | — | 45 | |||||||||||||||
Consumer | 25 | 59 | 46 | 17 | 21 | 130 | 46 | |||||||||||||||
DDA overdrafts | 344 | 345 | 420 | 447 | 326 | 1,109 | 1,016 | |||||||||||||||
Total recoveries | 798 | 2,082 | 797 | 493 | 584 | 3,677 | 1,542 | |||||||||||||||
Net charge-offs | (538 | ) | 559 | (636 | ) | (1,140 | ) | (903 | ) | (615 | ) | (2,759 | ) | |||||||||
Provision for (recovery of) acquired loans | (27 | ) | (13 | ) | — | 122 | — | (40 | ) | 39 | ||||||||||||
Provision for loan losses | — | (2,051 | ) | 181 | 300 | 1,393 | (1,870 | ) | 2,544 | |||||||||||||
Balance at end of period | $ | 16,311 | $ | 16,876 | $ | 18,381 | $ | 18,836 | $ | 19,554 | $ | 16,311 | $ | 19,554 | ||||||||
Loans outstanding | $ | 3,146,697 | $ | 3,155,468 | $ | 3,137,681 | $ | 3,127,410 | $ | 3,105,912 | ||||||||||||
Allowance as a percent of loans outstanding | 0.52 | % | 0.53 | % | 0.59 | % | 0.60 | % | 0.63 | % | ||||||||||||
Allowance as a percent of non-performing loans | 142.1 | % | 127.6 | % | 189.9 | % | 178.4 | % | 182.8 | % | ||||||||||||
Average loans outstanding | $ | 3,149,320 | $ | 3,138,146 | $ | 3,133,804 | $ | 3,110,084 | $ | 3,089,793 | $ | 3,140,480 | $ | 3,073,132 | ||||||||
Net charge-offs (annualized) as a percent of average loans outstanding | 0.07 | % | (0.07 | )% | 0.08 | % | 0.15 | % | 0.12 | % | 0.03 | % | 0.12 | % |
September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||
2018 | 2018 | 2018 | 2017 | 2017 | |||||||||||
Nonaccrual Loans | |||||||||||||||
Residential real estate | $ | 3,029 | $ | 3,783 | $ | 3,331 | $ | 2,814 | $ | 2,556 | |||||
Home equity | — | 168 | 135 | 168 | 92 | ||||||||||
Commercial and industrial | 818 | 863 | 1,063 | 1,345 | 1,325 | ||||||||||
Commercial real estate | 7,599 | 7,707 | 5,061 | 5,970 | 6,700 | ||||||||||
Consumer | 1 | 557 | — | — | — | ||||||||||
Total nonaccrual loans | 11,447 | 13,078 | 9,590 | 10,297 | 10,673 | ||||||||||
Accruing loans past due 90 days or more | 35 | 145 | 91 | 262 | 22 | ||||||||||
Total non-performing loans | 11,482 | 13,223 | 9,681 | 10,559 | 10,695 | ||||||||||
Other real estate owned | 4,259 | 3,636 | 3,912 | 3,585 | 3,995 | ||||||||||
Total non-performing assets | $ | 15,741 | $ | 16,859 | $ | 13,593 | $ | 14,144 | $ | 14,690 | |||||
Non-performing assets as a percent of loans and other real estate owned | 0.50 | % | 0.53 | % | 0.43 | % | 0.45 | % | 0.47 | % | |||||
Past Due Loans | |||||||||||||||
Residential real estate | $ | 4,657 | $ | 5,998 | $ | 5,641 | $ | 6,718 | $ | 5,295 | |||||
Home equity | 468 | 583 | 616 | 851 | 873 | ||||||||||
Commercial and industrial | 187 | 624 | 61 | 692 | 304 | ||||||||||
Commercial real estate | 934 | 402 | 1,520 | 2,086 | 520 | ||||||||||
Consumer | 39 | 34 | 21 | 42 | 26 | ||||||||||
DDA overdrafts | 582 | 525 | 432 | 575 | 551 | ||||||||||
Total past due loans | $ | 6,867 | $ | 8,166 | $ | 8,291 | $ | 10,964 | $ | 7,569 | |||||
Total past due loans as a percent of loans outstanding | 0.22 | % | 0.26 | % | 0.26 | % | 0.35 | % | 0.24 | % | |||||
Troubled Debt Restructurings ("TDRs") (period-end) | |||||||||||||||
Accruing: | |||||||||||||||
Residential real estate | $ | 20,414 | $ | 20,424 | $ | 20,786 | $ | 21,005 | $ | 20,741 | |||||
Home equity | 2,941 | 3,156 | 3,015 | 3,047 | 2,947 | ||||||||||
Commercial and industrial | 108 | 119 | 125 | 135 | 31 | ||||||||||
Commercial real estate | 8,231 | 8,279 | 8,324 | 8,381 | 8,427 | ||||||||||
Consumer | — | — | — | — | — | ||||||||||
Total accruing TDRs | $ | 31,694 | $ | 31,978 | $ | 32,250 | $ | 32,568 | $ | 32,146 |
Non-Accruing | |||||||||||||||
Residential real estate | $ | 175 | $ | 307 | 256 | $ | 84 | $ | 47 | ||||||
Home equity | — | 40 | 40 | 50 | — | ||||||||||
Commercial and industrial | — | — | — | — | — | ||||||||||
Commercial real estate | — | — | — | — | — | ||||||||||
Consumer | — | — | — | — | — | ||||||||||
Total non-accruing TDRs | $ | 175 | $ | 347 | $ | 296 | $ | 134 | $ | 47 | |||||
Total TDRs | $ | 31,869 | $ | 32,325 | $ | 32,546 | $ | 32,702 | $ | 32,193 | |||||
Three Months Ended | ||||||||||||||||||||||||
September 30, 2018 | June 30, 2018 | September 30, 2017 | ||||||||||||||||||||||
Average | Yield/ | Average | Yield/ | Average | Yield/ | |||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||
Assets: | ||||||||||||||||||||||||
Loan portfolio (1): | ||||||||||||||||||||||||
Residential real estate (2) | $ | 1,618,829 | $ | 17,653 | 4.33 | % | $ | 1,602,103 | $ | 16,951 | 4.24 | % | $ | 1,598,037 | $ | 16,117 | 4.00 | % | ||||||
Commercial, financial, and agriculture (2) | 1,494,666 | 18,460 | 4.90 | % | 1,501,618 | 16,578 | 4.43 | % | 1,457,821 | 14,975 | 4.08 | % | ||||||||||||
Installment loans to individuals (2), (3) | 35,825 | 584 | 6.47 | % | 34,425 | 516 | 6.01 | % | 33,935 | 558 | 6.52 | % | ||||||||||||
Previously securitized loans (4) | *** | 175 | *** | *** | 246 | *** | *** | 353 | *** | |||||||||||||||
Total loans | 3,149,320 | 36,872 | 4.64 | % | 3,138,146 | 34,291 | 4.38 | % | 3,089,793 | 32,003 | 4.11 | % | ||||||||||||
Securities: | ||||||||||||||||||||||||
Taxable | 554,157 | 4,216 | 3.02 | % | 541,990 | 4,117 | 3.05 | % | 507,106 | 3,666 | 2.87 | % | ||||||||||||
Tax-exempt (5) | 90,596 | 888 | 3.89 | % | 91,135 | 898 | 3.95 | % | 91,276 | 1,024 | 4.45 | % | ||||||||||||
Total securities | 644,753 | 5,104 | 3.14 | % | 633,125 | 5,015 | 3.18 | % | 598,382 | 4,690 | 3.11 | % | ||||||||||||
Deposits in depository institutions | 210,994 | 940 | 1.77 | % | 29,164 | 61 | 0.84 | % | 31,517 | 31 | 0.39 | % | ||||||||||||
Total interest-earning assets | 4,005,067 | 42,916 | 4.25 | % | 3,800,435 | 39,367 | 4.15 | % | 3,719,692 | 36,724 | 3.92 | % | ||||||||||||
Cash and due from banks | 49,933 | 92,426 | 62,723 | |||||||||||||||||||||
Premises and equipment, net | 72,733 | 72,889 | 72,756 | |||||||||||||||||||||
Other assets | 256,834 | 255,719 | 247,076 | |||||||||||||||||||||
Less: Allowance for loan losses | (17,247 | ) | (18,215 | ) | (20,038 | ) | ||||||||||||||||||
Total assets | $ | 4,367,320 | $ | 4,203,254 | $ | 4,082,209 | ||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||
Interest-bearing demand deposits | $ | 778,639 | $ | 526 | 0.27 | % | $ | 787,554 | $ | 445 | 0.23 | % | $ | 700,625 | $ | 159 | 0.09 | % | ||||||
Savings deposits | 816,597 | 537 | 0.26 | % | 817,187 | 453 | 0.22 | % | 821,949 | 321 | 0.15 | % | ||||||||||||
Time deposits (2) | 1,141,461 | 4,434 | 1.54 | % | 1,123,261 | 4,020 | 1.44 | % | 1,070,941 | 3,316 | 1.23 | % | ||||||||||||
Short-term borrowings | 350,832 | 1,435 | 1.62 | % | 208,939 | 459 | 0.88 | % | 230,030 | 349 | 0.60 | % | ||||||||||||
Long-term debt | 16,495 | 239 | 5.75 | % | 16,495 | 230 | 5.59 | % | 16,495 | 195 | 4.69 | % | ||||||||||||
Total interest-bearing liabilities | 3,104,024 | 7,171 | 0.92 | % | 2,953,436 | 5,607 | 0.76 | % | 2,840,040 | 4,340 | 0.61 | % | ||||||||||||
Noninterest-bearing demand deposits | 697,485 | 704,546 | 698,106 | |||||||||||||||||||||
Other liabilities | 50,093 | 45,933 | 42,202 | |||||||||||||||||||||
Stockholders' equity | 515,718 | 499,339 | 501,861 | |||||||||||||||||||||
Total liabilities and | ||||||||||||||||||||||||
stockholders' equity | $ | 4,367,320 | $ | 4,203,254 | $ | 4,082,209 | ||||||||||||||||||
Net interest income | $ | 35,745 | $ | 33,760 | $ | 32,384 | ||||||||||||||||||
Net yield on earning assets | 3.54 | % | 3.56 | % | 3.45 | % | ||||||||||||||||||
(1) For purposes of this table, non-accruing loans have been included in average balances and the following amounts (in thousands) of loan fees have been included in interest income: | ||||||||||||||||||||||||
Loan fees | $ | 1,365 | $ | 152 | $ | 162 | ||||||||||||||||||
(2) Included in the above table are the following amounts (in thousands) for the accretion of the fair value adjustments related to the acquisitions of Virginia Savings Bancorp ("Virginia Savings"), Community Financial Corporation ("Community") and American Founders Banks, Inc. ("AFB"): | ||||||||||||||||||||||||
Residential real estate | $ | 110 | $ | 130 | $ | 122 | ||||||||||||||||||
Commercial, financial, and agriculture | 157 | 238 | 235 | |||||||||||||||||||||
Installment loans to individuals | 3 | 4 | 3 | |||||||||||||||||||||
$ | 270 | $ | 372 | $ | 360 | |||||||||||||||||||
(3) Includes the Company’s consumer and DDA overdrafts loan categories. | ||||||||||||||||||||||||
(4) Effective January 1, 2012, the carrying value of the Company's previously securitized loans was reduced to $0. | ||||||||||||||||||||||||
(5) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 21% for the periods ending September 30, 2018 & June 30, 2018 and 35% for the period ending September 30, 2017. |
Nine Months Ended | ||||||||||||||||
September 30, 2018 | September 30, 2017 | |||||||||||||||
Average | Yield/ | Average | Yield/ | |||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||
Assets: | ||||||||||||||||
Loan portfolio (1): | ||||||||||||||||
Residential real estate (2) | $ | 1,607,396 | $ | 51,083 | 4.25 | % | $ | 1,591,403 | $ | 47,329 | 3.98 | % | ||||
Commercial, financial, and agriculture (2) | 1,498,612 | 50,646 | 4.52 | % | 1,446,849 | 43,121 | 3.98 | % | ||||||||
Installment loans to individuals (2), (3) | 34,472 | 1,604 | 6.22 | % | 34,881 | 1,688 | 6.47 | % | ||||||||
Previously securitized loans (4) | *** | 748 | *** | *** | 1,086 | *** | ||||||||||
Total loans | 3,140,480 | 104,081 | 4.43 | % | 3,073,132 | 93,224 | 4.06 | % | ||||||||
Securities: | ||||||||||||||||
Taxable | 544,351 | 12,314 | 3.02 | % | 481,372 | 10,591 | 2.94 | % | ||||||||
Tax-exempt (5) | 91,147 | 2,677 | 3.93 | % | 88,484 | 3,099 | 4.68 | % | ||||||||
Total securities | 635,498 | 14,991 | 3.15 | % | 569,856 | 13,690 | 3.21 | % | ||||||||
Deposits in depository institutions | 116,532 | 1,043 | 1.2 | % | 25,822 | 51 | 0.26 | % | ||||||||
Total interest-earning assets | 3,892,510 | 120,115 | 4.13 | % | 3,668,811 | 106,965 | 3.9 | % | ||||||||
Cash and due from banks | 45,268 | 92,159 | ||||||||||||||
Premises and equipment, net | 72,780 | 73,686 | ||||||||||||||
Other assets | 252,798 | 249,700 | ||||||||||||||
Less: Allowance for loan losses | (18,286 | ) | (19,999 | ) | ||||||||||||
Total assets | $ | 4,245,070 | $ | 4,064,357 | ||||||||||||
Liabilities: | ||||||||||||||||
Interest-bearing demand deposits | $ | 782,883 | $ | 1,327 | 0.23 | % | $ | 706,355 | $ | 476 | 0.09 | % | ||||
Savings deposits | 811,818 | 1,331 | 0.22 | % | 844,375 | 998 | 0.16 | % | ||||||||
Time deposits (2) | 1,120,459 | 12,083 | 1.44 | % | 1,063,137 | 9,411 | 1.18 | % | ||||||||
Short-term borrowings | 265,877 | 2,355 | 1.18 | % | 208,419 | 693 | 0.44 | % | ||||||||
Long-term debt | 16,495 | 680 | 5.51 | % | 16,495 | 565 | 4.58 | % | ||||||||
Total interest-bearing liabilities | 2,997,532 | 17,776 | 0.79 | % | 2,838,781 | 12,143 | 0.57 | % | ||||||||
Noninterest-bearing demand deposits | 694,453 | 697,231 | ||||||||||||||
Other liabilities | 47,498 | 41,159 | ||||||||||||||
Stockholders' equity | 505,587 | 487,186 | ||||||||||||||
Total liabilities and | ||||||||||||||||
stockholders' equity | $ | 4,245,070 | $ | 4,064,357 | ||||||||||||
Net interest income | $ | 102,339 | $ | 94,822 | ||||||||||||
Net yield on earning assets | 3.52 | % | 3.46 | % | ||||||||||||
(1) For purposes of this table, non-accruing loans have been included in average balances and the following amounts (in thousands) of loan fees have been included in interest income: | ||||||||||||||||
Loan fees | $ | 1,635 | $ | 383 | ||||||||||||
(2) Included in the above table are the following amounts (in thousands) for the accretion of the fair value adjustments related to the acquisitions of Virginia Savings Bancorp ("Virginia Savings"), Community Financial Corporation ("Community") and American Founders Banks, Inc. ("AFB"): | ||||||||||||||||
Residential real estate | $ | 350 | $ | 404 | ||||||||||||
Commercial, financial, and agriculture | 545 | 907 | ||||||||||||||
Installment loans to individuals | 17 | 17 | ||||||||||||||
Time deposits | — | 16 | ||||||||||||||
$ | 912 | $ | 1,344 | |||||||||||||
(3) Includes the Company’s consumer and DDA overdrafts loan categories. | ||||||||||||||||
(4) Effective January 1, 2012, the carrying value of the Company's previously securitized loans was reduced to $0. | ||||||||||||||||
(5) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 21% for the nine months ended September 30, 2018 and 35% for the nine months ended September 30, 2017. | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | September 30, | September 30, | ||||||||||||||||
2018 | 2018 | 2018 | 2017 | 2017 | 2018 | 2017 | ||||||||||||||||
Net Interest Income/Margin | ||||||||||||||||||||||
Net interest income ("GAAP") | $ | 35,558 | $ | 33,573 | $ | 32,647 | $ | 32,389 | $ | 32,026 | $ | 101,778 | $ | 93,736 | ||||||||
Taxable equivalent adjustment | 187 | 187 | 187 | 371 | 358 | 561 | 1,086 | |||||||||||||||
Net interest income, fully taxable equivalent | $ | 35,745 | $ | 33,760 | $ | 32,834 | $ | 32,760 | $ | 32,384 | $ | 102,339 | $ | 94,822 | ||||||||
Average interest earning assets | $ | 4,005,067 | $ | 3,800,435 | $ | 3,791,888 | $ | 3,759,675 | $ | 3,719,692 | $ | 3,892,510 | $ | 3,668,811 | ||||||||
Net Interest Margin | 3.54 | % | 3.56 | % | 3.51 | % | 3.46 | % | 3.45 | % | 3.52 | % | 3.46 | % | ||||||||
Accretion related to fair value adjustments | (0.03 | )% | (0.04 | )% | (0.03 | )% | (0.06 | )% | (0.04 | )% | (0.03 | )% | (0.05 | )% | ||||||||
Net Interest Margin (excluding accretion) | 3.51 | % | 3.52 | % | 3.48 | % | 3.39 | % | 3.42 | % | 3.48 | % | 3.41 | % | ||||||||
Tangible Equity Ratio (period end) | ||||||||||||||||||||||
Equity to assets ("GAAP") | 11.58 | % | 11.52 | % | 11.71 | % | 12.16 | % | 12.2 | % | ||||||||||||
Effect of goodwill and other intangibles, net | (1.59 | )% | (1.61 | )% | (1.68 | )% | (1.7 | )% | (1.72 | )% | ||||||||||||
Tangible common equity to tangible assets | 9.99 | % | 9.9 | % | 10.03 | % | 10.45 | % | 10.49 | % | ||||||||||||
Return on tangible equity ("GAAP") | 18.92 | % | 19.94 | % | 16.66 | % | 8.99 | % | 13.17 | % | 18.5 | % | 14.58 | % | ||||||||
Impact of effective tax rate decrease on deferred taxes | — | % | — | % | — | % | 6.57 | % | — | % | — | % | — | % | ||||||||
Return on tangible equity, excluding impact of effective tax rate decrease on deferred taxes | 18.92 | % | 19.94 | % | 16.66 | % | 15.56 | % | 13.17 | % | 18.5 | % | 14.58 | % | ||||||||
Return on assets ("GAAP") | 1.90 | % | 2.00 | % | 1.69 | % | 0.94 | % | 1.37 | % | 1.86 | % | 1.46 | % | ||||||||
Impact of effective tax rate decrease on deferred taxes | — | % | — | % | — | % | 0.68 | % | — | % | — | % | — | % | ||||||||
Return on Assets, excluding impact of effective tax rate decrease on deferred taxes | 1.90 | % | 2.00 | % | 1.69 | % | 1.62 | % | 1.37 | % | 1.86 | % | 1.46 | % | ||||||||
Effective Income Tax Rate | ||||||||||||||||||||||
Effective tax rate ("GAAP") | 21.3 | % | 20.3 | % | 20.0 | % | 60.8 | % | 33.5 | % | 20.6 | % | 32.5 | % | ||||||||
Impact of FIN 48 adjustments | — | % | — | % | — | % | 1.34 | % | — | % | — | % | — | % | ||||||||
Impact of effective tax rate decrease on deferred taxes | — | % | — | % | — | % | (28.69 | )% | — | % | — | % | — | % | ||||||||
Effective tax rate, excluding FIN 48 and impact of effective tax rate decrease on deferred taxes | 21.3 | % | 20.3 | % | 20.0 | % | 33.4 | % | 33.5 | % | 20.6 | % | 32.5 | % |