Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries City Holding Company Announces Second Quarter Results By: City Holding Company via Business Wire July 22, 2021 at 07:30 AM EDT 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, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 June 30, 2021 June 30, 2020 Earnings Net Interest Income (fully taxable equivalent) $ 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 $ 82.40 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 30,2021 March 31,2021 December 31,2020 September 30,2020 June 30,2020 June 30,2021 June 30,2020 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, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 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, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 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 30,2021 March 31,2021 December 31,2020 September 30,2020 June 30,2020 June 30,2021 June 30,2020 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 % 0.00 % 0.09 % 0.15 % 0.05 % 0.12 % 0.08 % CITY HOLDING COMPANY AND SUBSIDIARIES Asset Quality Information, continued (Unaudited) ($ in 000s) June 30,2021 March 31,2021 December 31,2020 September 30,2020 June 30,2020 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 credit 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 net loan fees have been included in interest income: Loan fees, net $ 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, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 June 30, 2021 June 30, 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 sale of VISA shares 1.49 % 1.38 % 1.59 % 1.46 % 1.35 % 1.44 % 1.29 % View source version on businesswire.com: https://www.businesswire.com/news/home/20210722005086/en/Contacts Charles R. Hageboeck, Chief Executive Officer and President (304) 769-1102 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
City Holding Company Announces Second Quarter Results By: City Holding Company via Business Wire July 22, 2021 at 07:30 AM EDT 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, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 June 30, 2021 June 30, 2020 Earnings Net Interest Income (fully taxable equivalent) $ 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 $ 82.40 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 30,2021 March 31,2021 December 31,2020 September 30,2020 June 30,2020 June 30,2021 June 30,2020 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, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 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, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 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 30,2021 March 31,2021 December 31,2020 September 30,2020 June 30,2020 June 30,2021 June 30,2020 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 % 0.00 % 0.09 % 0.15 % 0.05 % 0.12 % 0.08 % CITY HOLDING COMPANY AND SUBSIDIARIES Asset Quality Information, continued (Unaudited) ($ in 000s) June 30,2021 March 31,2021 December 31,2020 September 30,2020 June 30,2020 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 credit 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 net loan fees have been included in interest income: Loan fees, net $ 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, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 June 30, 2021 June 30, 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 sale of VISA shares 1.49 % 1.38 % 1.59 % 1.46 % 1.35 % 1.44 % 1.29 % View source version on businesswire.com: https://www.businesswire.com/news/home/20210722005086/en/Contacts Charles R. Hageboeck, Chief Executive Officer and President (304) 769-1102
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, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 June 30, 2021 June 30, 2020 Earnings Net Interest Income (fully taxable equivalent) $ 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 $ 82.40 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 30,2021 March 31,2021 December 31,2020 September 30,2020 June 30,2020 June 30,2021 June 30,2020 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, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 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, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 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 30,2021 March 31,2021 December 31,2020 September 30,2020 June 30,2020 June 30,2021 June 30,2020 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 % 0.00 % 0.09 % 0.15 % 0.05 % 0.12 % 0.08 % CITY HOLDING COMPANY AND SUBSIDIARIES Asset Quality Information, continued (Unaudited) ($ in 000s) June 30,2021 March 31,2021 December 31,2020 September 30,2020 June 30,2020 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 credit 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 net loan fees have been included in interest income: Loan fees, net $ 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, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 June 30, 2021 June 30, 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 sale of VISA shares 1.49 % 1.38 % 1.59 % 1.46 % 1.35 % 1.44 % 1.29 % View source version on businesswire.com: https://www.businesswire.com/news/home/20210722005086/en/