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Published: 2021-07-22 00:00:00 ET

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EX-99.1 2 chco06-30x21exhibit991.htm EX-99.1 Document

NEWS RELEASE

For Immediate Release

July 22, 2021

For Further Information Contact:

Charles R. Hageboeck, Chief Executive Officer and President

(304) 769-1102

City Holding Company Announces Second Quarter Results

Charleston, West Virginia – City Holding Company (“Company” or “City”) (NASDAQ:CHCO), a $5.9 billion bank holding company headquartered in Charleston, West Virginia, today announced quarterly net income of $22.1 million and diluted earnings of $1.41 per share for the quarter ended June 30, 2021. For the second quarter of 2021, the Company achieved a return on assets of 1.49% and a return on tangible equity of 15.2%.

Charles R. (“Skip”) Hageboeck, the President and Chief Executive Officer of City, commented: “As the impacts of the COVID-19 pandemic continue to diminish and economic activity continues to rebound to customary levels, City’s financial performance also trended upward in the second quarter of 2021. Net interest income increased $0.4 million from the quarter ended March 31, 2021 and noninterest income improved significantly ($2.8 million or 19.3%) as compared to the quarter ended June 30, 2020. Net interest income improved as a portion of our excess liquidity was used to purchase investment securities and improve interest income and interest bearing deposits continue to migrate to lower rate or noninterest-bearing deposit options. Debit card usage by our customers continued to hit new highs in the second quarter of 2021 as we saw our bankcard revenues increase almost 23% compared to the quarter ended June 30, 2020.”

“As the economic outlook improved during the second quarter of 2021 and unemployment forecasts improved, City was able to release $2.0 million of its allowance for credit losses at June 30, 2021. Asset quality remains impeccable with nonperforming assets at historical low levels and both past dues and troubled debt restructurings are below December 31, 2020 levels. Loan deferrals have also declined to very low levels at June 30, 2021 with commercial loan deferrals at $92 million, or 5% of total commercial balances. Hotel and lodging customers comprise essentially all of these deferrals and based on current occupancy levels, we expect these deferrals to continue to decline. Residential mortgages deferrals are now less than 0.1% of total residential real estate balances at June 30, 2021.”

“While loan growth continues to be difficult, we were able to grow commercial loan balances, net of government-sponsored Paycheck Protection Program (“PPP”) loans administered by the Small Business Administration (“SBA”), approximately 2.5% on an annualized basis during the second quarter of 2021.

As of June 30, 2021, approximately $50 million of PPP loans were outstanding with 95% of the PPP loans originated in 2020 having been forgiven.”

Net Interest Income

The Company’s net interest income increased from $37.5 million during the first quarter of 2021 to $37.9 million during the second quarter of 2021. During the second quarter of 2021, the Company’s tax equivalent net interest income increased $0.4 million, or 1.0%, from $37.9 million for the first quarter of 2021 to $38.3 million for the second quarter of 2021. Lower rates paid on deposits (11 basis points) and lower time deposit balances ($54.2 million) increased net interest income by $0.7 million and $0.1 million, respectively. Additionally, primarily on the strength of higher balances ($105.5 million), investment securities contributed $0.7 million in additional net interest income as compared to the quarter ended March 31, 2021. These increases were partially offset by lower loan balances ($44.6 million) and decreased loan yields (11 basis points) that decreased net interest income by $0.6 million and $0.4 million, respectively. The Company’s reported net interest margin decreased from 2.91% for the first quarter of 2021 to 2.81% for the second quarter of 2021. Excluding the favorable impact of the accretion from fair value adjustments, the net interest margin would have been 2.76% for the quarter ended June 30, 2021 and 2.87% for the quarter ended March 31, 2021.

Credit Quality

The Company’s ratio of nonperforming assets to total loans and other real estate owned decreased from 0.39% at March 31, 2021 to 0.32% at June 30, 2021. Total nonperforming assets decreased from $14.0 million at March 31, 2021 to $11.4 million at June 30, 2021. Total past due loans increased from $6.6 million, or 0.19% of total loans outstanding, at March 31, 2021 to $7.6 million, or 0.22% of total loans outstanding, at June 30, 2021.

As a result of the Company’s quarterly analysis of the adequacy of the allowance for credit losses (“ACL”), the Company recorded a recovery of credit losses of $2.0 million in the second quarter of 2021, compared to a provision for credit losses of $1.3 million for the comparable period in 2020 and a recovery of credit losses of $0.4 million for the first quarter of 2021. The determination of the Company’s allowance for credit losses is largely dependent on expected unemployment ranges. Due to improvements in the outlook for unemployment ranges utilized by the Company and partial adjustments to other qualitative and other factors, the Company partially recovered a portion of the provision for credit losses incurred in the quarter ended March 31, 2020.

Non-interest Income

Non-interest income was $17.4 million for the second quarter of 2021 as compared to $14.6 million for the second quarter of 2020. During the second quarter of 2021, the Company reported $0.4 million of unrealized fair value gains on the Company’s equity securities compared to $0.2 million of unrealized fair value gains on the Company’s equity securities in the second quarter of 2020. Exclusive of these gains, non-interest income increased from $14.4 million for the second quarter of 2020 to $17.0 million for the second quarter of 2021. This increase was primarily due to higher bankcard revenue ($1.3 million, or 22.6%) and service charges ($1.0 million, or 19.2%). For the second consecutive quarter, bankcard revenues of $7.2 million for the quarter ended June 30, 2021 established a new quarterly high for the Company as customer spending via their debit cards continued to increase.

Non-interest Expenses

Non-interest expenses increased $1.1 million (3.9%), from $28.5 million in the second quarter of 2020 to $29.6 million in the second quarter of 2021. This increase was largely due to increased salary and

employee benefits of $0.7 million, bankcard expenses of $0.2 million, and FDIC insurance expense of $0.2 million. Salary and employee benefits increased due to an uptick in health insurance and customary salary increases. Bankcard expenses increased due to higher activity, while the increase in FDIC insurance expense reflects a credit utilized in the quarter ended June 30, 2020.

Balance Sheet Trends

Loans decreased $17.3 million from March 31, 2021 to June 30, 2021, to $3.53 billion. PPP loans decreased $13.3 million from March 31, 2021, as loans forgiven of $21 million were partially offset by the Company’s participation in the second round of the PPP lending. Excluding outstanding PPP loans (included in the commercial and industrial loan category), total loans decreased $4.3 million, (0.1%), from March 31, 2021 to $3.48 billion at June 30, 2021. Residential real estate loans decreased $11.8 million (0.8%); home equity loans decreased $2.4 million (1.8%); and consumer loans decreased $2.0 million (4.3%). These decreases were partially offset by increases in commercial real estate loans ($10.6 million or 0.7%) and commercial and industrial loans ($0.4 million or 0.1%) (excluding PPP loans).

Total average depository balances increased $187.6 million, or 4.0%, from the quarter ended March 31, 2021 to the quarter ended June 30, 2021. Average noninterest-bearing demand deposit balances increased $113.4 million, average savings deposit balances increased $66.8 million, and average interest-bearing demand deposit balances increased $61.6 million. We believe that these increases were largely attributable to the third round of Economic Impact Payments as part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 (approximately $180 million received late in the quarter ended March 31, 2021) and proceeds from PPP loans (approximately $50 million). These increases were partially offset by a decrease in time deposit balances of $54.2 million.

Income Tax Expense

The Company’s effective income tax rate for the second quarter of 2021 was 20.3% compared to 19.5% for the year ended December 31, 2020, and 20.6% for the quarter ended June 30, 2020.

Capitalization and Liquidity

The Company’s loan to deposit ratio was 73.5% and the loan to asset ratio was 59.8% at June 30, 2021. The Company maintained investment securities totaling 23.1% of assets as of the same date. The Company’s deposit mix is weighted heavily toward checking and saving accounts, which fund 61.8% of assets at June 30, 2021. Time deposits fund 19.5% of assets at June 30, 2021, but very few of these deposits are in accounts that have balances of more than $250,000, reflecting the core retail orientation of the Company.

The Company continues to be strongly capitalized with tangible equity of $578 million at June 30, 2021. Due primarily to the influx of deposits and unrealized security losses during the six months ended June 30, 2021, the Company’s tangible equity ratio decreased modestly from 10.3% at December 31, 2020 to 10.0% at June 30, 2021. At June 30, 2021, City National Bank’s Leverage Ratio was 8.80%, its Common Equity Tier I ratio was 14.82%, its Tier I Capital ratio was 14.82%, and its Total Risk-Based Capital ratio was 15.30%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.

On June 30, 2021, the Board of Directors of the Company approved a quarterly cash dividend of $0.58 per share payable July 30, 2021, to shareholders of record as of July 15, 2021. During the quarter ended June 30, 2021, the Company repurchased 217,000 common shares at a weighted average price of $78.75 per share as part of a one million share repurchase plan authorized by the Board of Directors in March 2021. As of June 30, 2021, the Company could repurchase 783,000 additional shares under the current program.

City Holding Company is the parent company of City National Bank of West Virginia. City National Bank operates 94 branches across West Virginia, Kentucky, Virginia, and Ohio.

Forward-Looking Information

• This news release contains certain forward-looking statements that are included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements express only management’s beliefs regarding future results or events and are subject to inherent uncertainty, risks, and changes in circumstances, many of which are outside of management’s control. Uncertainty, risks, changes in circumstances and other factors could cause the Company’s actual results to differ materially from those projected in the forward-looking statements. Factors that could cause actual results to differ from those discussed in such forward-looking statements include, but are not limited to those set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 under “ITEM 1A Risk Factors” and the following: (1) general economic conditions, especially in the communities and markets in which we conduct our business; (2) the uncertainties on the Company’s business, results of operations and financial condition, caused by the COVID-19 pandemic, which will depend on several factors, including the scope and duration of the pandemic, its continued influence on financial markets, the effectiveness of the Company’s work from home arrangements and staffing levels in operational facilities, the impact of market participants on which the Company relies and actions taken by governmental authorities and other third parties in response to the pandemic; (3) credit risk, including risk that negative credit quality trends may lead to a deterioration of asset quality, risk that our allowance for loan losses may not be sufficient to absorb actual losses in our loan portfolio, and risk from concentrations in our loan portfolio; (4) changes in the real estate market, including the value of collateral securing portions of our loan portfolio; (5) changes in the interest rate environment; (6) operational risk, including cybersecurity risk and risk of fraud, data processing system failures, and network breaches; (7) changes in technology and increased competition, including competition from non-bank financial institutions; (8) changes in consumer preferences, spending and borrowing habits, demand for our products and services, and customers’ performance and creditworthiness; (9) difficulty growing loan and deposit balances; (10) our ability to effectively execute our business plan, including with respect to future acquisitions; (11) changes in regulations, laws, taxes, government policies, monetary policies and accounting policies affecting bank holding companies and their subsidiaries; (12) deterioration in the financial condition of the U.S. banking system may impact the valuations of investments the Company has made in the securities of other financial institutions; (13) regulatory enforcement actions and adverse legal actions; (14) difficulty attracting and retaining key employees; (15) other economic, competitive, technological, operational, governmental, regulatory, and market factors affecting our operations. Forward-looking statements made herein reflect management's expectations as of the date such statements are made. Such information is provided to assist stockholders and potential investors in understanding current and anticipated financial operations of the Company and is included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances that arise after the date such statements are made. Further, the Company is required to evaluate subsequent events through the filing of its June 30, 2021 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary June 30, 2021 results and will adjust the amounts if necessary.

CITY HOLDING COMPANY AND SUBSIDIARIES

Financial Highlights

(Unaudited)


	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2021			2021			2020			2020			2020			2021			2020

Earnings
Net Interest Income (FTE)	$	38,257		$	37,871		$	38,514		$	38,278		$	38,287		$	76,128		$	78,892
Net Income available to common shareholders	22,148			19,814			22,222			20,126			18,251			41,962			47,249

Per Share Data
Earnings per share available to common shareholders:
Basic	$	1.41		$	1.25		$	1.40		$	1.25		$	1.12		$	2.66		$	2.90
Diluted	1.41			1.25			1.40			1.25			1.12			2.66			2.90
Weighted average number of shares (in thousands):
Basic	15,573			15,656			15,708			15,950			16,081			15,614			16,123
Diluted	15,594			15,687			15,733			15,970			16,097			15,640			16,142
Period-end number of shares (in thousands)	15,527			15,724			15,768			15,848			16,077			15,527			16,077
Cash dividends declared	$	0.58		$	0.58		$	0.58		$	0.57		$	0.57		$	1.16		$	1.14
Book value per share (period-end)	44.79			43.99			44.47			43.62			43.15			44.79			43.15
Tangible book value per share (period-end)	37.20			36.47			36.94			36.11			35.72			37.20			35.72
Market data:
High closing price	$	83.85		$	87.41		$	70.77		$	67.98		$	71.19		$	87.41		$	82.4
Low closing price	74.44			69.05			56.98			55.37			55.18			69.05			55.18
Period-end closing price	75.24			81.78			69.55			57.61			65.17			75.24			65.17
Average daily volume (in thousands)	61			63			56			67			89			62			79
Treasury share activity:
Treasury shares repurchased (in thousands)	217			75			81			231			79			292			261
Average treasury share repurchase price	$	78.75		$	76.71		$	60.32		$	59.49		$	61.75		$	78.22		$	68.41

Key Ratios (percent)
Return on average assets	1.49		%	1.38		%	1.59		%	1.46		%	1.35		%	1.44		%	1.81		%
Return on average tangible equity	15.2		%	13.5		%	15.3		%	13.8		%	12.6		%	14.3		%	16.6		%
Yield on interest earning assets	3.00		%	3.17		%	3.32		%	3.43		%	3.64		%	3.08		%	3.92		%
Cost of interest bearing liabilities	0.27		%	0.37		%	0.47		%	0.58		%	0.71		%	0.32		%	0.81		%
Net Interest Margin	2.81		%	2.91		%	2.99		%	3.02		%	3.13		%	2.86		%	3.33		%
Non-interest income as a percent of total revenue	31.0		%	30.4		%	30.7		%	30.3		%	27.4		%	30.9		%	37.9		%
Efficiency Ratio	52.8		%	54.3		%	51.0		%	51.6		%	53.3		%	53.5		%	51.4		%
Price/Earnings Ratio (a)	13.35			16.30			12.41			11.53			14.50			14.13			11.23



Capital (period-end)
Average Shareholders' Equity to Average Assets	11.81		%	12.30		%	12.46		%	12.71		%	12.91		%
Tangible equity to tangible assets	9.98		%	9.93		%	10.33		%	10.61		%	10.62		%
Consolidated City Holding Company risk based capital ratios (b):
CET I	16.40		%	16.76		%	16.18		%	15.93		%	16.10		%
Tier I	16.40		%	16.76		%	16.18		%	15.93		%	16.10		%
Total	16.88		%	17.33		%	16.75		%	16.50		%	16.69		%
Leverage	9.70		%	10.06		%	10.22		%	10.19		%	10.45		%
City National Bank risk based capital ratios (b):
CET I	14.82		%	14.75		%	14.10		%	14.46		%	14.55		%
Tier I	14.82		%	14.75		%	14.10		%	14.46		%	14.55		%
Total	15.30		%	15.33		%	14.68		%	15.04		%	15.15		%
Leverage	8.80		%	8.91		%	8.97		%	9.32		%	9.29		%

Other (period-end)
Branches	94			94			94			94			94
FTE	912			916			926			925			911

Assets per FTE (in thousands)	$	6,477		$	6,434		$	6,219		$	5,984		$	6,058
Deposits per FTE (in thousands)	5,271			5,236			5,024			4,799			4,834

(a) The price/earnings ratio is computed based on annualized quarterly earnings (excludes gain for sale of VISA shares, net of taxes).
(b) June 30, 2021 risk-based capital ratios are estimated.

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited) ($ in 000s, except per share data)


	Three Months Ended										Six Months Ended
	June 30,		March 31,		December 31,		September 30,		June 30,		June 30,		June 30,
	2021		2021		2020		2020		2020		2021		2020
Interest Income
Interest and fees on loans	$	33,114	$	34,324	$	35,685	$	35,761	$	37,718	$	67,438	$	79,053
Interest on investment securities:
Taxable	5,932		5,242		5,500		6,266		5,718		11,174		11,589
Tax-exempt	1,291		1,253		1,254		1,132		821		2,544		1,528
Interest on deposits in depository institutions	162		118		60		72		55		280		360
Total Interest Income	40,499		40,937		42,499		43,231		44,312		81,436		92,530

Interest Expense
Interest on deposits	2,460		3,280		4,198		5,123		5,963		5,740		13,201
Interest on short-term borrowings	125		117		120		131		279		242		743
Interest on long-term debt	—		—		—		—		—		—		100
Total Interest Expense	2,585		3,397		4,318		5,254		6,242		5,982		14,044
Net Interest Income	37,914		37,540		38,181		37,977		38,070		75,454		78,486
(Recovery of) provision for credit losses	(2,000)		(440)		474		1,026		1,250		(2,440)		9,222
Net Interest Income After (Recovery of) Provision for Credit Losses	39,914		37,980		37,707		36,951		36,820		77,894		69,264

Non-Interest Income
Net gains (losses) on sale of investment securities	29		283		6		—		(6)		312		56
Unrealized gains (losses) recognized on equity securities still held	410		(51)		835		461		242		359		(2,159)
Service charges	5,895		5,881		6,771		6,295		4,945		11,776		12,667
Bankcard revenue	7,221		6,213		5,991		6,065		5,888		13,434		11,003
Trust and investment management fee income	2,012		2,033		2,162		1,844		1,931		4,045		3,730
Bank owned life insurance	940		1,460		813		1,088		848		2,400		2,523
Sale of VISA shares	—		—		—		—		—		—		17,837
Other income	941		811		1,143		1,232		783		1,752		2,318
Total Non-Interest Income	17,448		16,630		17,721		16,985		14,631		34,078		47,975

Non-Interest Expense
Salaries and employee benefits	15,559		15,671		15,989		15,361		14,873		31,230		30,724
Occupancy related expense	2,525		2,622		2,447		2,428		2,402		5,147		4,890
Equipment and software related expense	2,655		2,544		2,660		2,607		2,504		5,199		4,933
FDIC insurance expense	382		405		363		355		167		787		167
Advertising	824		881		538		462		933		1,705		1,776


Bankcard expenses	1,746		1,584		1,443		1,517		1,498		3,330		2,933
Postage, delivery, and statement mailings	568		592		546		513		592		1,160		1,208
Office supplies	371		392		413		396		353		763		747
Legal and professional fees	589		675		438		548		589		1,264		1,190
Telecommunications	676		690		540		547		531		1,366		1,042
Repossessed asset losses (gains), net of expenses	1		79		(68)		39		76		80		274
Other expenses	3,678		3,674		3,332		3,939		3,950		7,352		8,052
Total Non-Interest Expense	29,574		29,809		28,641		28,712		28,468		59,383		57,936
Income Before Income Taxes	27,788		24,801		26,787		25,224		22,983		52,589		59,303
Income tax expense	5,640		4,987		4,565		5,098		4,732		10,627		12,054
Net Income Available to Common Shareholders	$	22,148	$	19,814	$	22,222	$	20,126	$	18,251	$	41,962	$	47,249

Distributed earnings allocated to common shareholders	$	8,921	$	9,037	$	9,053	$	8,944	$	9,073	$	17,845	$	18,147
Undistributed earnings allocated to common shareholders	13,021		10,598		12,947		10,984		8,998		23,732		28,639
Net earnings allocated to common shareholders	$	21,942	$	19,635	$	22,000	$	19,928	$	18,071	$	41,577	$	46,786


Average common shares outstanding	15,573		15,656		15,708		15,950		16,081		15,614		16,123
Shares for diluted earnings per share	15,594		15,687		15,733		15,970		16,097		15,640		16,142

Basic earnings per common share	$	1.41	$	1.25	$	1.40	$	1.25	$	1.12	$	2.66	$	2.90
Diluted earnings per common share	$	1.41	$	1.25	$	1.40	$	1.25	$	1.12	$	2.66	$	2.90

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Balance Sheets

($ in 000s)


	(Unaudited)		(Unaudited)				(Unaudited)		(Unaudited)
	June 30,		March 31,		December 31,		September 30,		June 30,
	2021		2021		2020		2020		2020
Assets
Cash and due from banks	$	97,523	$	97,709	$	77,412	$	76,451	$	87,658
Interest-bearing deposits in depository institutions	512,367		659,090		451,247		176,267		285,596
Cash and cash equivalents	609,890		756,799		528,659		252,718		373,254

Investment securities available-for-sale, at fair value	1,340,681		1,185,245		1,178,789		1,157,399		1,055,185
Other securities	24,548		27,182		27,372		26,548		26,144
Total investment securities	1,365,229		1,212,427		1,206,161		1,183,947		1,081,329

Gross loans	3,529,416		3,546,723		3,622,119		3,663,966		3,665,596
Allowance for credit losses	(20,016)		(24,076)		(24,549)		(24,867)		(25,199)
Net loans	3,509,400		3,522,647		3,597,570		3,639,099		3,640,397

Bank owned life insurance	119,491		118,976		118,243		117,501		116,746
Premises and equipment, net	76,263		76,529		76,925		77,031		77,991
Accrued interest receivable	15,967		16,231		15,793		16,627		14,200
Net deferred tax assets	—		1,395		—		—		—
Intangible assets	117,857		118,224		118,592		119,004		119,417
Other assets	89,958		71,142		96,697		105,361		105,438
Total Assets	$	5,904,055	$	5,894,370	$	5,758,640	$	5,511,288	$	5,528,772

Liabilities
Deposits:
Noninterest-bearing	$	1,279,932	$	1,244,175	$	1,176,990	$	1,061,310	$	1,079,469
Interest-bearing:
Demand deposits	1,070,004		1,077,749		1,027,201		940,791		921,761
Savings deposits	1,301,219		1,265,038		1,188,003		1,117,684		1,067,254
Time deposits	1,153,391		1,209,873		1,260,022		1,300,291		1,342,631
Total deposits	4,804,546		4,796,835		4,652,216		4,420,076		4,411,115
Short-term borrowings
Customer repurchase agreements	311,316		316,003		295,956		279,866		282,676
Net deferred tax liabilities	2,310		—		3,202		1,601		2,598
Other liabilities	90,407		89,847		106,160		118,386		138,633
Total Liabilities	5,208,579		5,202,685		5,057,534		4,819,929		4,835,022


Stockholders' Equity
Preferred stock	—		—		—		—		—
Common stock	47,619		47,619		47,619		47,619		47,619
Capital surplus	169,674		170,526		171,304		170,526		169,881
Retained earnings	613,553		600,396		589,988		576,901		565,804
Cost of common stock in treasury	(157,936)		(142,484)		(139,038)		(134,177)		(120,583)
Accumulated other comprehensive income:
Unrealized gain on securities available-for-sale	28,227		21,289		36,894		36,760		37,299
Underfunded pension liability	(5,661)		(5,661)		(5,661)		(6,270)		(6,270)
Total Accumulated Other Comprehensive Income	22,566		15,628		31,233		30,490		31,029
Total Stockholders' Equity	695,476		691,685		701,106		691,359		693,750
Total Liabilities and Stockholders' Equity	$	5,904,055	$	5,894,370	$	5,758,640	$	5,511,288	$	5,528,772

Regulatory Capital
Total CET 1 capital	$	561,317	$	563,523	$	557,641	$	548,269	$	548,972
Total tier 1 capital	561,317		563,523		557,641		548,269		548,972
Total risk-based capital	577,543		582,816		577,292		568,153		569,213
Total risk-weighted assets	3,421,764		3,362,595		3,446,774		3,442,629		3,410,589

CITY HOLDING COMPANY AND SUBSIDIARIES

Loan Portfolio

(Unaudited) ($ in 000s)


	June 30,		March 31,		December 31,		September 30,		June 30,
	2021		2021		2020		2020		2020

Commercial and industrial	$	358,583	$	371,195	$	372,989	$	383,980	$	369,122

1-4 Family	108,079		108,131		109,812		114,071		123,814
Hotels	290,119		293,176		294,464		295,989		295,179
Multi-family	212,715		212,561		215,671		214,394		204,580
Non Residential Non-Owner Occupied	653,264		649,683		641,351		628,814		628,628
Non Residential Owner Occupied	209,100		199,130		213,484		211,433		215,472
Commercial real estate (1)	1,473,277		1,462,681		1,474,782		1,464,701		1,467,673

Residential real estate (2)	1,521,102		1,532,907		1,587,694		1,621,265		1,631,151
Home equity	127,608		130,009		136,469		140,135		142,672
Consumer	45,184		47,224		47,688		50,541		52,278
DDA Overdrafts	3,662		2,707		2,497		3,344		2,700
Gross Loans	$	3,529,416	$	3,546,723	$	3,622,119	$	3,663,966	$	3,665,596

Construction loans included in:
(1) - Commercial real estate loans	$	43,904	$	39,101	$	40,449	$	42,449	$	42,092
(2) - Residential real estate loans	20,838		22,129		27,078		28,947		28,252

CITY HOLDING COMPANY AND SUBSIDIARIES

Asset Quality Information

(Unaudited) ($ in 000s)


	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2021			2021			2020			2020			2020			2021			2020
Allowance for Credit Losses
Balance at beginning of period	$	24,076		$	24,549		$	24,867		$	25,199		$	24,393		$	24,549		$	11,589

Charge-offs:
Commercial and industrial	(211)			(34)			(9)			(757)			—			(245)			(77)
Commercial real estate	(1,718)			(1)			(616)			(75)			(39)			(1,719)			(422)
Residential real estate	(86)			(93)			(139)			(252)			(376)			(179)			(859)
Home equity	(8)			(64)			(88)			(126)			(161)			(72)			(206)
Consumer	(79)			(147)			(27)			(74)			(36)			(226)			(91)
DDA overdrafts	(430)			(453)			(629)			(554)			(459)			(883)			(1,162)
Total charge-offs	(2,532)			(792)			(1,508)			(1,838)			(1,071)			(3,324)			(2,817)

Recoveries:
Commercial and industrial	25			46			74			3			5			71			14
Commercial real estate	15			164			150			44			128			179			331
Residential real estate	17			74			57			24			8			91			103
Home equity	3			23			47			33			9			26			56
Consumer	104			39			55			42			128			143			141
DDA overdrafts	308			413			333			334			349			721			800
Total recoveries	472			759			716			480			627			1,231			1,445

Net charge-offs	(2,060)			(33)			(792)			(1,358)			(444)			(2,093)			(1,372)
(Recovery of) provision for credit losses	(2,000)			(440)			474			1,026			1,250			(2,440)			9,222
Impact of adopting ASC 326	—			—			—			—			—			—			5,760
Balance at end of period	$	20,016		$	24,076		$	24,549		$	24,867		$	25,199		$	20,016		$	25,199

Loans outstanding	$	3,529,416		$	3,546,723		$	3,622,119		$	3,663,966		$	3,665,596
Allowance as a percent of loans outstanding	0.57		%	0.68		%	0.68		%	0.68		%	0.69		%
Allowance as a percent of non-performing loans	199.3		%	194.5		%	200.7		%	182.7		%	185.1		%

Average loans outstanding	$	3,541,165		$	3,585,790		$	3,635,673		$	3,661,569		$	3,660,174		$	3,563,356		$	3,634,522
Net charge-offs (annualized) as a percent of average loans outstanding	0.23		%	—		%	0.09		%	0.15		%	0.05		%	0.12		%	0.08		%

CITY HOLDING COMPANY AND SUBSIDIARIES

Asset Quality Information, Continued

(Unaudited) ($ in 000s)


	June 30,			March 31,			December 31,			September 30,			June 30,
	2021			2021			2020			2020			2020
Nonaccrual Loans
Residential real estate	$	2,482		$	3,004		$	2,968		$	3,983		$	3,477
Home equity	81			88			95			74			265
Commercial and industrial	820			1,200			768			728			1,087
Commercial real estate	6,383			7,792			8,401			8,479			8,715
Consumer	—			—			—			—			—
Total nonaccrual loans	9,766			12,084			12,232			13,264			13,544
Accruing loans past due 90 days or more	278			295			—			345			68
Total non-performing loans	10,044			12,379			12,232			13,609			13,612
Other real estate owned	1,309			1,625			1,650			2,080			3,997
Total non-performing assets	$	11,353		$	14,004		$	13,882		$	15,689		$	17,609

Non-performing assets as a percent of loans and other real estate owned	0.32		%	0.39		%	0.38		%	0.43		%	0.48		%

Past Due Loans
Residential real estate	$	5,453		$	4,092		$	5,993		$	5,153		$	5,261
Home equity	523			449			575			474			393
Commercial and industrial	721			1,358			1,241			691			160
Commercial real estate	498			508			625			602			917
Consumer	12			10			113			121			67
DDA overdrafts	417			212			341			379			273
Total past due loans	$	7,624		$	6,629		$	8,888		$	7,420		$	7,071

Total past due loans as a percent of loans outstanding	0.22		%	0.19		%	0.25		%	0.20		%	0.19		%

Troubled Debt Restructurings ("TDRs")
Residential real estate	$	17,788		$	18,572		$	19,226		$	20,398		$	20,631
Home equity	1,920			1,956			2,001			2,100			2,138
Commercial and industrial	—			—			—			—			—
Commercial real estate	3,076			4,615			4,638			4,894			4,915
Consumer	203			211			277			260			185
Total TDRs	$	22,987		$	25,354		$	26,142		$	27,652		$	27,869

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Average Balance Sheets, Yields, and Rates

(Unaudited) ($ in 000s)


	Three Months Ended
	June 30, 2021						March 31, 2021						June 30, 2020
	Average				Yield/		Average				Yield/		Average				Yield/
	Balance		Interest		Rate		Balance		Interest		Rate		Balance		Interest		Rate
Assets:
Loan portfolio (1):
Residential real estate (2)	$	1,652,165	$	16,135	3.92	%	$	1,696,064	$	16,853	4.03	%	$	1,785,631	$	19,048	4.29	%
Commercial, financial, and agriculture (2)	1,839,478		16,158		3.52	%	1,838,928		16,542		3.65	%	1,818,344		17,665		3.91	%
Installment loans to individuals (2), (3)	49,522		713		5.77	%	50,798		713		5.69	%	56,199		852		6.10	%
Previously securitized loans (4)	***		109		***		***		215		***		***		152		***
Total loans	3,541,165		33,115		3.75	%	3,585,790		34,323		3.88	%	3,660,174		37,717		4.14	%
Securities:
Taxable	1,046,008		5,932		2.27	%	945,177		5,242		2.25	%	896,997		5,718		2.56	%
Tax-exempt (5)	244,233		1,633		2.68	%	239,589		1,585		2.68	%	120,751		1,039		3.46	%
Total securities	1,290,241		7,565		2.35	%	1,184,766		6,827		2.34	%	1,017,748		6,757		2.67	%
Deposits in depository institutions	628,158		162		0.10	%	513,469		118		0.09	%	236,320		55		0.09	%
Total interest-earning assets	5,459,564		40,842		3.00	%	5,284,025		41,268		3.17	%	4,914,242		44,529		3.64	%
Cash and due from banks	92,243						79,683						79,501
Premises and equipment, net	76,660						76,837						78,717
Goodwill and intangible assets	118,088						118,453						119,681
Other assets	206,709						217,453						230,423
Less: Allowance for credit losses	(23,701)						(24,909)						(24,700)
Total assets	$	5,929,563					$	5,751,542					$	5,397,864

Liabilities:
Interest-bearing demand deposits	$	1,069,896	$	122	0.05	%	$	1,008,283	$	124	0.05	%	$	893,832	$	178	0.08	%
Savings deposits	1,287,966		163		0.05	%	1,221,169		183		0.06	%	1,037,387		363		0.14	%
Time deposits (2)	1,181,953		2,175		0.74	%	1,236,197		2,973		0.98	%	1,353,619		5,422		1.61	%
Short-term borrowings	305,134		125		0.16	%	290,766		117		0.16	%	256,790		279		0.44	%
Long-term debt	—		—		—	%	—		—		—	%	—		—		—	%
Total interest-bearing liabilities	3,844,949		2,585		0.27	%	3,756,415		3,397		0.37	%	3,541,628		6,242		0.71	%
Noninterest-bearing demand deposits	1,311,340						1,197,910						1,044,009
Other liabilities	72,940						89,695						115,110
Stockholders' equity	700,334						707,522						697,117
Total liabilities and
stockholders' equity	$	5,929,563					$	5,751,542					$	5,397,864
Net interest income			$	38,257					$	37,871					$	38,287
Net yield on earning assets					2.81	%					2.91	%					3.13	%

(1) For purposes of this table, non-accruing loans have been included in average balances and the following amounts (in thousands) of net loan fees have been included in interest income:

Loan fees, net			$	488					$	835					$	609



(2) Included in the above table are the following amounts (in thousands) for the accretion of the fair value adjustments related to the Company's acquisitions:
Residential real estate	$	211	$	106	$	194
Commercial, financial, and agriculture	365		325		651
Installment loans to individuals	23		28		37
Time deposits	48		48		155
	$	647	$	507	$	1,037

(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%.

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Average Balance Sheets, Yields, and Rates

(Unaudited) ($ in 000s)


	Six Months Ended
	June 30, 2021						June 30, 2020
	Average				Yield/		Average				Yield/
	Balance		Interest		Rate		Balance		Interest		Rate
Assets:
Loan portfolio (1):
Residential real estate (2)	$	1,675,222	$	32,987	3.97	%	$	1,785,795	$	38,930	4.38	%
Commercial, financial, and agriculture (2)	1,837,947		32,701		3.59	%	1,791,510		38,141		4.28	%
Installment loans to individuals (2), (3)	50,187		1,426		5.73	%	57,217		1,715		6.03	%
Previously securitized loans (4)	***		324		***		***		267		***
Total loans	3,563,356		67,438		3.82	%	3,634,522		79,053		4.37	%
Securities:
Taxable	995,871		11,174		2.26	%	853,882		11,589		2.73	%
Tax-exempt (5)	241,924		3,220		2.68	%	107,671		1,934		3.61	%
Total securities	1,237,795		14,394		2.35	%	961,553		13,523		2.83	%
Deposits in depository institutions	571,130		280		0.10	%	169,626		360		0.43	%
Total interest-earning assets	5,372,281		82,112		3.08	%	4,765,701		92,936		3.92	%
Cash and due from banks	85,998						75,132
Premises and equipment, net	76,748						78,042
Goodwill and intangible assets	118,270						119,886
Other assets	212,051						213,147
Less: Allowance for loan losses	(24,302)						(20,303)
Total assets	$	5,841,046					$	5,231,605

Liabilities:
Interest-bearing demand deposits	$	1,039,260	$	246	0.05	%	$	881,904	$	647	0.15	%
Savings deposits	1,254,752		346		0.06	%	1,021,608		1,063		0.21	%
Time deposits (2)	1,208,925		5,149		0.86	%	1,359,442		11,491		1.70	%
Short-term borrowings	297,990		243		0.16	%	232,900		743		0.64	%
Long-term debt	—		—		—	%	1,670		100		12.04	%
Total interest-bearing liabilities	3,800,927		5,984		0.32	%	3,497,524		14,044		0.81	%
Noninterest-bearing demand deposits	1,254,938						948,196
Other liabilities	81,273						95,516
Stockholders' equity	703,908						690,369
Total liabilities and
stockholders' equity	$	5,841,046					$	5,231,605
Net interest income			$	76,128					$	78,892
Net yield on earning assets					2.86	%					3.33	%

(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			$	1,323					$	725



(2) Included in the above table are the following amounts (in thousands) for the accretion of the fair value adjustments related to the Company's acquisitions:

Residential real estate	$	317	$	345
Commercial, financial, and agriculture	690		1,891
Installment loans to individuals	51		76
Time deposits	97		311
	$	1,155	$	2,623

(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%.

CITY HOLDING COMPANY AND SUBSIDIARIES

Non-GAAP Reconciliations

(Unaudited) ($ in 000s, except per share data)


	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2021			2021			2020			2020			2020			2021			2020
Net Interest Income/Margin
Net interest income ("GAAP")	$	37,914		$	37,540		$	38,181		$	37,977		$	38,070		$	75,454		$	78,486
Taxable equivalent adjustment	343			331			333			301			217			674			406
Net interest income, fully taxable equivalent	$	38,257		$	37,871		$	38,514		$	38,278		$	38,287		$	76,128		$	78,892

Average interest earning assets	$	5,459,564		$	5,284,025		$	5,125,874		$	5,047,868		$	4,914,242		$	5,372,281		$	4,765,701

Net Interest Margin	2.81		%	2.91		%	2.99		%	3.02		%	3.13		%	2.86		%	3.33		%
Accretion related to fair value adjustments	(0.05)		%	(0.04)		%	(0.05)		%	(0.05)		%	(0.08)		%	(0.04)		%	(0.11)		%
Net Interest Margin (excluding accretion)	2.76		%	2.87		%	2.94		%	2.97		%	3.05		%	2.81		%	3.22		%

Tangible Equity Ratio (period end)
Equity to assets ("GAAP")	11.78		%	11.74		%	12.18		%	12.54		%	12.55		%
Effect of goodwill and other intangibles, net	(1.80)		%	(1.81)		%	(1.85)		%	(1.93)		%	(1.93)		%
Tangible common equity to tangible assets	9.98		%	9.93		%	10.33		%	10.61		%	10.62		%

Return on Tangible Equity
Return on tangible equity ("GAAP")	15.2		%	13.5		%	15.3		%	13.8		%	12.6		%	14.3		%	16.6		%
Impact of sale of VISA shares	—		%	—		%	—		%	—		%	—		%	—		%	(4.8)		%
Return on tangible equity, excluding sale of VISA shares	15.2		%	13.5		%	15.3		%	13.8		%	12.6		%	14.3		%	11.8		%

Return on Assets
Return on assets ("GAAP")	1.49		%	1.38		%	1.59		%	1.46		%	1.35		%	1.44		%	1.81		%
Impact of sale of VISA shares	—		%	—		%	—		%	—		%	—		%	0.01		%	(0.52)		%
Return on assets, excluding merger sale of VISA shares	1.49		%	1.38		%	1.59		%	1.46		%	1.35		%	1.44		%	1.29		%