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City Holding Company Announces Quarterly Results

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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 $19.8 million and diluted earnings of $1.25 per share for the quarter ended March 31, 2021.

Charles R. ("Skip") Hageboeck, the President and Chief Executive Officer of City Holding Company, commented: "Our country and the communities that we serve are emerging from the COVID-19 pandemic and it is encouraging to see economic activity returning to more "normal" conditions. However, the impacts of this crisis continued to impact our financial performance during the first quarter of 2021. Our reported net interest income dipped $0.7 million from the linked quarter ended December 31, 2020 and our net interest margin dropped 8 basis points to 2.91%. Deposit balances continue to grow primarily as a result of the third round of stimulus payments with average deposit balances increasing over $150 million from the quarter ended December 31, 2020. City continues to participate in the government-sponsored Paycheck Protection Program ("PPP") loans administered by the Small Business Administration ("SBA"). Thus far, City has assisted customers in obtaining almost $40 million in new PPP loans during the second round.

"A hallmark for City over the last several years has been our asset quality. Our asset quality remains very strong at March 31, 2021. Nonperforming assets, past due loans, and troubled debt restructurings remain at or below the levels reported at December 31, 2020. Deferred commercial loans remained relatively low at approximately 6% of total commercial balances at March 31, 2021. Hotel and lodging related loans comprise $105 million of the $115 million of these deferrals at March 31, 2021, and our hotel and lodging loan customers are experiencing increasing occupancy rates. Residential mortgage deferrals have dropped to approximately $3 million at March 31, 2021.

"Loan growth has been a particular challenge with interest rates at historic lows. Although our residential mortgage origination levels hit record highs in 2020, balances have decreased as some mortgages were refinanced into fixed rate loans not predominately offered by City. Those trends continued in the first quarter of 2021, but we believe that as mortgage rates and fees charged by agencies increase, our mortgage balances will increase. The decline in commercial loans primarily reflects a seasonal customer, as well as pricing pressure from some competitors. As the economy continues to improve, our view is that commercial loans will regain positive momentum."

Net Interest Income

The Company’s net interest income decreased from $38.2 million during the fourth quarter of 2020 to $37.5 million during the first quarter of 2021. The Company’s tax equivalent net interest income decreased $0.6 million, or 1.7%, from $38.5 million for the fourth quarter of 2020 to $37.9 million for the first quarter of 2021. Lower loan yields (2 basis points) and lower average loan balances ($50 million) decreased interest income by $0.7 million and $0.5 million, respectively, as compared to the quarter ended December 31, 2020. In addition, lower average investment balances ($30 million) decreased interest income by $0.2 million from the quarter ended December 31, 2020. These decreases were partially offset by lower rates paid on interest-bearing liabilities (primarily time deposits) that lowered interest expense by $0.9 million during the quarter ended March 31, 2021. The Company’s reported net interest margin decreased from 2.99% for the fourth quarter of 2020 to 2.91% for the first quarter of 2021.

Balance Sheet Trends

Loans decreased $75.4 million from December 31, 2020 to March 31, 2021, to $3.55 billion. Net of forgiveness received from the SBA of approximately $32 million of PPP loans from the first round, PPP loans increased $7.4 million as a result of 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 $82.8 million, (2.3%), from December 31, 2020 to $3.48 billion at March 31, 2021. Residential real estate loans decreased $54.8 million (3.5%); commercial real estate loans decreased $12.1 million (0.8%); commercial and industrial loans decreased $9.2 million (2.9%) (excluding PPP loans); and home equity loans decreased $6.5 million (4.7%).

Total average depository balances increased $152.5 million, or 3.4%, from the quarter ended December 31, 2020 to the quarter ended March 31, 2021. Average noninterest-bearing demand deposit balances increased $67.8 million, average savings deposit balances increased $72.5 million, and average interest-bearing demand deposit balances increased $54.7 million. These balances increased despite low average interest rates paid by the Company – 5 basis points for interest-bearing deposits and 6 basis points for savings deposits. 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). These increases were partially offset by lower average time deposit balances of $42.5 million.

Credit Quality

The Company’s ratio of nonperforming assets to total loans and other real estate owned increased modestly from 0.38% at December 31, 2020 to 0.39% at March 31, 2021. Total nonperforming assets increased slightly from $13.9 million at December 31, 2020 to $14.0 million at March 31, 2021. Total past due loans decreased from $8.9 million, or 0.25% of total loans outstanding, at December 31, 2020 to $6.6 million, or 0.19% of total loans outstanding, at March 31, 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 $0.4 million in the first quarter of 2021, compared to a provision for credit losses of $8.0 million for the comparable period in 2020 and a provision for credit losses of $0.5 million for the fourth quarter of 2020. The recovery of credit losses recorded in the first quarter of 2021 largely reflects the decline in loan balances ($83 million) from the quarter ended December 31, 2020 which resulted in the release of $0.5 million from the allowance for credit losses during the first quarter of 2021. As a result of an improvement in economic conditions in the Company’s footprint, net charge-offs for the quarter ended March 31, 2021 were negligible.

Non-interest Income

During the quarter ended March 31, 2020, the Company sold the entirety of its Visa Inc. Class B common shares (86,605) in a cash transaction which resulted in a pre-tax gain of $17.8 million, or $0.84 diluted per share on an after-tax basis. Additionally, the Company reported $0.1 million of unrealized fair value losses on the Company’s equity securities during the first quarter of 2021 compared to $2.4 million of unrealized fair value losses on the Company’s equity securities during the first quarter of 2020. The Company’s portfolio of equity securities consists primarily of holdings in First National Corporation ("FXNC") (a commercial banking company headquartered in Strasburg, VA) and Eagle Financial Services (a commercial banking company headquartered in Berryville, VA). In the first quarter of 2021, the Company sold shares of FXNC and realized a gain of $0.3 million. Exclusive of these items, non-interest income decreased from $17.9 million for the first quarter of 2020 to $16.4 million for the first quarter of 2021. This decrease was largely attributable to a decrease of $1.8 million, or 23.9%, in service charges. In addition, other income, primarily due to lower fees from loan interest rate swap originations, decreased $0.7 million. These decreases were partially offset by higher bankcard revenues ($1.1 million, or 21.5%) compared to the quarter ended March 31, 2020. Bankcard revenue of $6.2 million in the quarter ended March 31, 2021, represents the highest quarterly total in the Company’s history as spending by our customers increased significantly in the month of March.

Non-interest Expenses

Non-interest expenses increased $0.3 million, or 1.2%, from $29.5 million in the first quarter of 2020 to $29.8 million in the first quarter of 2021. FDIC insurance expense increased $0.4 million from the quarter ended March 31, 2020 due to credits utilized in the first quarter of 2020.

Income Tax Expense

The Company’s effective income tax rate for the first quarter of 2021 was 20.1% compared to 19.5% for the year ended December 31, 2020, and 20.2% for the quarter ended March 31, 2020.

Capitalization and Liquidity

The Company’s loan to deposit ratio was 73.9% and the loan to asset ratio was 60.2% at March 31, 2021. The Company maintained investment securities totaling 20.6% of assets as of the same date. The Company’s deposit mix is weighted heavily toward checking and saving accounts, which fund 60.9% of assets at March 31, 2021. Time deposits fund 20.5% of assets at March 31, 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 $573 million at March 31, 2021. Due primarily to the influx of deposits and unrealized security losses during the quarter ended March 31, 2021, the Company’s tangible equity ratio decreased modestly from 10.3% at December 31, 2020 to 9.9% at March 31, 2021. At March 31, 2021, City National Bank’s Leverage Ratio was 8.91%, its Common Equity Tier I ratio was 14.75%, its Tier I Capital ratio was 14.75%, and its Total Risk-Based Capital ratio was 15.33%. These regulatory capital ratios are significantly above levels required to be considered "well capitalized," which is the highest possible regulatory designation.

On March 31, 2021, the Board of Directors of the Company approved a quarterly cash dividend of $0.58 per share payable April 30, 2021, to shareholders of record as of April 15, 2021. On March 31, 2021, the Company announced that the Board of Directors authorized the Company to buy back up to 1,000,000 shares of its common stock (approximately 6% of outstanding shares) in open market transactions at prices that are accretive to the earnings per share of continuing shareholders. No time limit was placed on the duration of the share repurchase program. As part of this authorization, the Company terminated its previous repurchase program that was approved in February 2019. The Company had repurchased 908,701 shares under the 2019 program. During the quarter ended March 31, 2021, the Company repurchased 75,000 common shares at a weighted average price of $76.71 per share as part of a one million share repurchase plan authorized by the Board of Directors in February 2019. As of March 31, 2021, the Company could repurchase 1,000,000 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 March 31, 2021 Form 10-Q. The Company will continue to evaluate the impact of any subsequent events on the preliminary March 31, 2021 results and will adjust the amounts if necessary.

CITY HOLDING COMPANY AND SUBSIDIARIES

Financial Highlights

(Unaudited)

Three Months Ended

March 31, 2021

December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

Earnings

Net Interest Income (fully taxable equivalent)

$

37,871

$

38,514

$

38,278

$

38,287

$

40,603

Net Income available to common shareholders

19,814

22,222

20,126

18,251

29,000

Per Share Data

Earnings per share available to common shareholders:

Basic

$

1.25

$

1.40

$

1.25

$

1.12

$

1.79

Diluted

1.25

1.40

1.25

1.12

1.78

Weighted average number of shares (in thousands):

Basic

15,656

15,708

15,950

16,081

16,080

Diluted

15,687

15,733

15,970

16,097

16,101

Period-end number of shares (in thousands)

15,724

15,768

15,848

16,077

16,140

Cash dividends declared

$

0.58

$

0.58

$

0.57

$

0.57

$

0.57

Book value per share (period-end)

$

43.99

$

44.47

$

43.62

$

43.15

$

42.45

Tangible book value per share (period-end)

36.47

36.94

36.11

35.72

35.03

Market data:

High closing price

$

87.41

$

70.77

$

67.98

$

71.19

$

82.40

Low closing price

69.05

56.98

55.37

55.18

57.11

Period-end closing price

81.78

69.55

57.61

65.17

66.53

Average daily volume (in thousands)

63

56

67

89

69

Treasury share activity:

Treasury shares repurchased (in thousands)

75

81

231

79

182

Average treasury share repurchase price

$

76.71

$

60.32

$

59.49

$

61.75

$

71.31

Key Ratios (percent)

Return on average assets

1.38

%

1.59

%

1.46

%

1.35

%

2.29

%

Return on average tangible equity

13.5

%

15.3

%

13.8

%

12.6

%

20.6

%

Yield on interest earning assets

3.17

%

3.32

%

3.43

%

3.64

%

4.22

%

Cost of interest bearing liabilities

0.37

%

0.47

%

0.58

%

0.71

%

0.91

%

Net Interest Margin

2.91

%

2.99

%

3.02

%

3.13

%

3.54

%

Non-interest income as a percent of total revenue

30.4

%

30.7

%

30.3

%

27.4

%

30.6

%

Efficiency Ratio

54.3

%

51.0

%

51.6

%

53.3

%

49.7

%

Price/Earnings Ratio (a)

16.30

12.41

11.53

14.50

17.63

Capital (period-end)

Average Shareholders' Equity to Average Assets

12.30

%

12.46

%

12.71

%

12.91

%

13.50

%

Tangible equity to tangible assets

9.93

%

10.33

%

10.61

%

10.62

%

11.38

%

Consolidated City Holding Company risk based capital ratios (b):

CET I

16.76

%

16.18

%

15.93

%

16.10

%

16.02

%

Tier I

16.76

%

16.18

%

15.93

%

16.10

%

16.02

%

Total

17.33

%

16.75

%

16.50

%

16.69

%

16.46

%

Leverage

10.06

%

10.22

%

10.19

%

10.45

%

11.10

%

City National Bank risk based capital ratios (b):

CET I

14.75

%

14.10

%

14.46

%

14.55

%

14.32

%

Tier I

14.75

%

14.10

%

14.46

%

14.55

%

14.32

%

Total

15.33

%

14.68

%

15.04

%

15.15

%

14.82

%

Leverage

8.91

%

8.97

%

9.32

%

9.29

%

9.98

%

Other (period-end)

Branches

94

94

94

94

95

FTE

916

926

925

911

922

Assets per FTE (in thousands)

$

6,434

$

6,219

$

5,984

$

6,058

$

5,525

Deposits per FTE (in thousands)

5,236

5,024

4,799

4,834

4,400

(a)

The price/earnings ratio is computed based on annualized quarterly earnings (excludes gain for sale of VISA shares, net of taxes).

(b)

March 31, 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

March 31, 2021

December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

Interest Income

Interest and fees on loans

$

34,324

$

35,685

$

35,761

$

37,718

$

41,335

Interest on investment securities:

Taxable

5,242

5,500

6,266

5,718

5,871

Tax-exempt

1,253

1,254

1,132

821

707

Interest on deposits in depository institutions

118

60

72

55

304

Total Interest Income

40,937

42,499

43,231

44,312

48,217

Interest Expense

Interest on deposits

3,280

4,198

5,123

5,963

7,238

Interest on short-term borrowings

117

120

131

279

464

Interest on long-term debt

-

-

-

-

100

Total Interest Expense

3,397

4,318

5,254

6,242

7,802

Net Interest Income

37,540

38,181

37,977

38,070

40,415

(Recovery of) provision for credit losses

(440

)

474

1,026

1,250

7,972

Net Interest Income After (Recovery of) Provision for Credit Losses

37,980

37,707

36,951

36,820

32,443

Non-Interest Income

Net gains (losses) on sale of investment securities

283

6

-

(6

)

63

Unrealized (losses) gains recognized on equity securities still held

(51

)

835

461

242

(2,402

)

Service charges

5,881

6,771

6,295

4,945

7,723

Bankcard revenue

6,213

5,991

6,065

5,888

5,115

Trust and investment management fee income

2,033

2,162

1,844

1,931

1,799

Bank owned life insurance

1,460

813

1,088

848

1,676

Sale of VISA shares

-

-

-

-

17,837

Other income

...

811

1,143

1,232

783

1,536

Total Non-Interest Income

16,630

17,721

16,985

14,631

33,347

Non-Interest Expense

Salaries and employee benefits

15,671

15,989

15,361

14,873

15,851

Occupancy related expense

2,622

2,447

2,428

2,402

2,488

Equipment and software related expense

2,544

2,660

2,607

2,504

2,429

FDIC insurance expense

405

363

355

167

-

Advertising

881

538

462

933

843

Bankcard expenses

1,584

1,443

1,517

1,498

1,435

Postage, delivery, and statement mailings

592

546

513

592

616

Office supplies

392

413

396

353

394

Legal and professional fees

675

438

548

589

601

Telecommunications

690

540

547

531

511

Repossessed asset losses (gains), net of expenses

79

(68

)

39

76

198

Other expenses

3,674

3,332

3,939

3,950

4,102

Total Non-Interest Expense

29,809

28,641

28,712

28,468

29,468

Income Before Income Taxes

24,801

26,787

25,224

22,983

36,322

Income tax expense

4,987

4,565

5,098

4,732

7,322

Net Income Available to Common Shareholders

$

19,814

$

22,222

$

20,126

$

18,251

$

29,000

Distributed earnings allocated to common shareholders

$

9,037

$

9,053

$

8,944

$

9,073

$

9,117

Undistributed earnings allocated to common shareholders

10,598

12,947

10,984

8,998

19,620

Net earnings allocated to common shareholders

$

19,635

$

22,000

$

19,928

$

18,071

$

28,737

Average common shares outstanding

15,656

15,708

15,950

16,081

16,080

Shares for diluted earnings per share

15,687

15,733

15,970

16,097

16,101

Basic earnings per common share

$

1.25

$

1.40

$

1.25

$

1.12

$

1.79

Diluted earnings per common share

$

1.25

$

1.40

$

1.25

$

1.12

$

1.78

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Balance Sheets

($ in 000s)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

March 31, 2021

December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

Assets

Cash and due from banks

$

97,709

$

77,412

$

76,451

$

87,658

$

92,365

Interest-bearing deposits in depository institutions

659,090

451,247

176,267

285,596

18,271

Cash and cash equivalents

756,799

528,659

252,718

373,254

110,636

Investment securities available-for-sale, at fair value

1,185,245

1,178,789

1,157,399

1,055,185

934,113

Other securities

27,182

27,372

26,548

26,144

26,827

Total investment securities

1,212,427

1,206,161

1,183,947

1,081,329

960,940

Gross loans

3,546,723

3,622,119

3,663,966

3,665,596

3,613,050

Allowance for credit losses

(24,076

)

(24,549

)

(24,867

)

(25,199

)

(24,393

)

Net loans

3,522,647

3,597,570

3,639,099

3,640,397

3,588,657

Bank owned life insurance

118,976

118,243

117,501

116,746

116,000

Premises and equipment, net

76,529

76,925

77,031

77,991

78,948

Accrued interest receivable

16,231

15,793

16,627

14,200

12,570

Net deferred tax assets

1,395

-

-

-

2,159

Intangible assets

118,224

118,592

119,004

119,417

119,829

Other assets

71,142

96,697

105,361

105,438

98,710

Total Assets

$

5,894,370

$

5,758,640

$

5,511,288

$

5,528,772

$

5,088,449

Liabilities

Deposits:

Noninterest-bearing

$

1,244,175

$

1,176,990

$

1,061,310

$

1,079,469

$

857,501

Interest-bearing:

Demand deposits

1,077,749

1,027,201

940,791

921,761

837,966

Savings deposits

1,265,038

1,188,003

1,117,684

1,067,254

989,609

Time deposits

1,209,873

1,260,022

1,300,291

1,342,631

1,366,977

Total deposits

4,796,835

4,652,216

4,420,076

4,411,115

4,052,053

Short-term borrowings

Federal Funds purchased

-

-

-

-

9,900

Customer repurchase agreements

316,003

295,956

279,866

282,676

224,247

Net deferred tax liabilities

-

3,202

1,601

2,598

-

Other liabilities

89,847

106,160

118,386

138,633

117,021

Total Liabilities

5,202,685

5,057,534

4,819,929

4,835,022

4,403,221

Stockholders' Equity

Preferred stock

-

-

-

-

-

Common stock

47,619

47,619

47,619

47,619

47,619

Capital surplus

170,526

171,304

170,526

169,881

170,096

Retained earnings

600,396

589,988

576,901

565,804

556,718

Cost of common stock in treasury

(142,484

)

(139,038

)

(134,177

)

(120,583

)

(116,665

)

Accumulated other comprehensive income:

Unrealized gain on securities available-for-sale

21,289

36,894

36,760

37,299

33,730

Underfunded pension liability

(5,661

)

(5,661

)

(6,270

)

(6,270

)

(6,270

)

Total Accumulated Other Comprehensive Income

15,628

31,233

30,490

31,029

27,460

Total Stockholders' Equity

691,685

701,106

691,359

693,750

685,228

Total Liabilities and Stockholders' Equity

$

5,894,370

$

5,758,640

$

5,511,288

$

5,528,772

$

5,088,449

Regulatory Capital

Total CET 1 capital

$

563,523

$

557,641

$

548,269

$

548,972

$

547,040

Total tier 1 capital

563,523

557,641

548,269

548,972

547,040

Total risk-based capital

582,816

577,292

568,153

569,213

561,944

Total risk-weighted assets

3,362,595

3,446,774

3,442,629

3,410,589

3,412,591

CITY HOLDING COMPANY AND SUBSIDIARIES

Loan Portfolio

(Unaudited) ($ in 000s)

March 31, 2021

December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

Commercial and industrial

$

371,195

$

372,989

$

383,980

$

369,122

$

308,567

1-4 Family

108,131

109,812

114,071

123,814

120,852

Hotels

293,176

294,464

295,989

295,179

294,072

Multi-family

212,561

215,671

214,394

204,580

205,684

Non Residential Non-Owner Occupied

649,683

641,351

628,814

628,628

627,852

Non Residential Owner Occupied

199,130

213,484

211,433

215,472

222,489

Commercial real estate (1)

1,462,681

1,474,782

1,464,701

1,467,673

1,470,949

Residential real estate (2)

1,532,907

1,587,694

1,621,265

1,631,151

1,629,578

Home equity

130,009

136,469

140,135

142,672

146,034

Consumer

47,224

47,688

50,541

52,278

54,749

DDA overdrafts

2,707

2,497

3,344

2,700

3,173

Gross Loans

$

3,546,723

$

3,622,119

$

3,663,966

$

3,665,596

$

3,613,050

Construction loans included in:

(1) - Commercial real estate loans

39,101

40,449

42,449

42,092

44,453

(2) - Residential real estate loans

$

22,129

$

27,078

$

28,947

$

28,252

$

28,870

CITY HOLDING COMPANY AND SUBSIDIARIES

Asset Quality Information

(Unaudited) ($ in 000s)

Three Months Ended

March 31, 2021

December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

Allowance for Credit Losses

Balance at beginning of period

$

24,549

$

24,867

$

25,199

$

24,393

$

11,589

Charge-offs:

Commercial and industrial

(34

)

(9

)

(757

)

-

(77

)

Commercial real estate

(1

)

(616

)

(75

)

(39

)

(383

)

Residential real estate

(93

)

(139

)

(252

)

(376

)

(483

)

Home equity

(64

)

(88

)

(126

)

(161

)

(45

)

Consumer

(147

)

(27

)

(74

)

(36

)

(55

)

DDA overdrafts

(453

)

(629

)

(554

)

(459

)

(703

)

Total charge-offs

(792

)

(1,508

)

(1,838

)

(1,071

)

(1,746

)

Recoveries:

Commercial and industrial

46

74

3

5

9

Commercial real estate

164

150

44

128

203

Residential real estate

74

57

24

8

95

Home equity

23

47

33

9

47

Consumer

39

55

42

128

13

DDA overdrafts

413

333

334

349

451

Total recoveries

759

716

480

627

818

Net charge-offs

(33

)

(792

)

(1,358

)

(444

)

(928

)

(Recovery of) provision for credit losses

(440

)

474

1,026

1,250

7,972

Impact of Adopting ASC 326

-

-

-

-

5,760

Balance at end of period

$

24,076

$

24,549

$

24,867

$

25,199

$

24,393

Loans outstanding

$

3,546,723

$

3,622,119

$

3,663,966

$

3,665,596

$

3,613,050

Allowance as a percent of loans outstanding

0.68

%

0.68

%

0.68

%

0.69

%

0.68

%

Allowance as a percent of non-performing loans

194.5

%

200.7

%

182.7

%

185.1

%

202.2

%

Average loans outstanding

$

3,585,790

$

3,635,673

$

3,661,569

$

3,660,174

$

3,608,868

Net charge-offs (annualized) as a percent of average loans outstanding

0.00

%

0.09

%

0.15

%

0.05

%

0.10

%

CITY HOLDING COMPANY AND SUBSIDIARIES

Asset Quality Information, continued

(Unaudited) ($ in 000s)

March 31, 2021

December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

Nonaccrual Loans

Residential real estate

$

3,004

$

2,968

$

3,983

$

3,477

$

2,750

Home equity

88

95

74

265

249

Commercial and industrial

1,200

768

728

1,087

1,175

Commercial real estate

7,792

8,401

8,479

8,715

7,865

Consumer

-

-

-

-

1

Total nonaccrual loans

12,084

12,232

13,264

13,544

12,040

Accruing loans past due 90 days or more

295

-

345

68

26

Total non-performing loans

12,379

12,232

13,609

13,612

12,066

Other real estate owned

1,625

1,650

2,080

3,997

3,922

Total non-performing assets

$

14,004

$

13,882

$

15,689

$

17,609

$

15,988

Non-performing assets as a percent of loans and other real estate owned

0.39

%

0.38

%

0.43

%

0.48

%

0.44

%

Past Due Loans

Residential real estate

$

4,092

$

5,993

$

5,153

$

5,261

$

7,815

Home equity

449

575

474

393

430

Commercial and industrial

1,358

1,241

691

160

71

Commercial real estate

508

625

602

917

1,021

Consumer

10

113

121

67

177

DDA overdrafts

212

341

379

273

467

Total past due loans

$

6,629

$

8,888

$

7,420

$

7,071

$

9,981

Total past due loans as a percent of loans outstanding

0.19

%

0.25

%

0.20

%

0.19

%

0.28

%

Troubled Debt Restructurings ("TDRs")

Residential real estate

$

18,572

$

19,226

$

20,398

$

20,631

$

21,413

Home equity

1,956

2,001

2,100

2,138

2,294

Commercial and industrial

-

-

-

-

-

Commercial real estate

4,615

4,638

4,894

4,915

5,163

Consumer

211

277

260

185

184

Total TDRs

$

25,354

$

26,142

$

27,652

$

27,869

$

29,054

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Average Balance Sheets, Yields, and Rates

(Unaudited) ($ in 000s)

Three Months Ended

March 31, 2021

December 31, 2020

March 31, 2020

Average

Yield/

Average

Yield/

Average

Yield/

Balance

Interest

Rate

Balance

Interest

Rate

Balance

Interest

Rate

Assets:

Loan portfolio (1):

Residential real estate (2)

$

1,696,064

$

16,853

4.03

%

$

1,744,952

$

17,623

4.02

%

$

1,780,473

$

19,881

4.49

%

Commercial, financial, and agriculture (2)

1,838,928

16,542

3.65

%

1,837,044

17,077

3.70

%

1,770,178

20,476

4.65

%

Installment loans to individuals (2), (3)

50,798

713

5.69

%

53,677

800

5.93

%

58,217

863

5.96

%

Previously securitized loans (4)

***

215

***

***

184

***

***

115

***

Total loans

3,585,790

34,323

3.88

%

3,635,673

35,684

3.90

%

3,608,868

41,335

4.61

%

Securities:

Taxable

945,177

5,242

2.25

%

976,897

5,500

2.24

%

810,766

5,871

2.91

%

Tax-exempt (5)

239,589

1,585

2.68

%

238,198

1,587

2.65

%

94,591

895

3.81

%

Total securities

1,184,766

6,827

2.34

%

1,215,095

7,087

2.32

%

905,357

6,766

3.01

%

Deposits in depository institutions

513,469

118

0.09

%

275,106

60

0.09

%

102,932

304

1.19

%

Total interest-earning assets

5,284,025

41,268

3.17

%

5,125,874

42,831

3.32

%

4,617,157

48,405

4.22

%

Cash and due from banks

79,683

73,900

70,763

Premises and equipment, net

76,837

76,956

77,368

Goodwill and intangible assets

118,453

118,855

120,091

Other assets

217,453

231,309

195,875

Less: Allowance for credit losses

(24,909

)

(25,112

)

(15,905

)

Total assets

$

5,751,542

$

5,601,782

$

5,065,349

Liabilities:

Interest-bearing demand deposits

$

1,008,283

$

124

0.05

%

$

953,604

$

171

0.07

%

$

869,976

$

468

0.22

%

Savings deposits

1,221,169

183

0.06

%

1,148,717

225

0.08

%

1,005,829

700

0.28

%

Time deposits (2)

1,236,197

2,973

0.98

%

1,278,698

3,801

1.18

%

1,365,268

6,070

1.79

%

Short-term borrowings

290,766

117

0.16

%

287,059

120

0.17

%

209,010

464

0.89

%

Long-term debt

-

-

-

-

-

-

3,340

100

12.04

%

Total interest-bearing liabilities

3,756,415

3,397

0.37

%

3,668,078

4,317

0.47

%

3,453,423

7,802

0.91

%

Noninterest-bearing demand deposits

1,197,910

1,130,084

852,384

Other liabilities

89,695

105,445

75,922

Stockholders' equity

707,522

698,175

683,620

Total liabilities and

stockholders' equity

$

5,751,542

$

5,601,782

$

5,065,349

Net interest income

$

37,871

$

38,514

$

40,603

Net yield on earning assets

2.91

%

2.99

%

3.54

%

(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

$

835

$

962

$

116

(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

$

106

$

153

$

151

Commercial, financial, and agriculture

325

304

1,240

Installment loans to individuals

28

29

39

Time deposits

48

155

155

$

507

$

641

$

1,585

(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

March 31, 2021

December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

Net Interest Income/Margin

Net interest income ("GAAP")

$

37,540

$

38,181

$

37,977

$

38,070

$

40,415

Taxable equivalent adjustment

331

333

301

217

188

Net interest income, fully taxable equivalent

$

37,871

$

38,514

$

38,278

$

38,287

$

40,603

Average interest earning assets

$

5,284,025

$

5,125,874

$

5,047,868

$

4,914,242

$

4,617,157

Net Interest Margin

2.91

%

2.99

%

3.02

%

3.13

%

3.54

%

Accretion related to fair value adjustments

-0.04

%

-0.05

%

-0.05

%

-0.08

%

-0.14

%

Net Interest Margin (excluding accretion)

2.87

%

2.94

%

2.97

%

3.05

%

3.40

%

Tangible Equity Ratio (period end)

Equity to assets ("GAAP")

11.74

%

12.18

%

12.54

%

12.55

%

13.47

%

Effect of goodwill and other intangibles, net

-1.81

%

-1.85

%

-1.93

%

-1.93

%

-2.09

%

Tangible common equity to tangible assets

9.93

%

10.33

%

10.61

%

10.62

%

11.38

%

Return on Tangible Equity

Return on tangible equity ("GAAP")

13.5

%

15.3

%

13.8

%

12.6

%

20.6

%

Impact of sale of VISA shares

-

-

-

-

-9.7

%

Return on tangible equity, excluding sale of VISA shares

13.5

%

15.3

%

13.8

%

12.6

%

10.9

%

Return on Assets

Return on assets ("GAAP")

1.38

%

1.59

%

1.46

%

1.35

%

2.29

%

Impact of sale of VISA shares

-

-

-

-

-1.08

%

Return on assets, excluding sale of VISA shares

1.38

%

1.59

%

1.46

%

1.35

%

1.21

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20210421005928/en/

Contacts

Charles R. Hageboeck, Chief Executive Officer and President
(304) 769-1102