City Holding Company Announces Second Quarter Results

Rhea-AI Summary

City Holding Company (NASDAQ:CHCO) reported a quarterly net income of $22.1 million and diluted earnings of $1.41 per share for Q2 2021. The company achieved a return on assets of 1.49% and return on tangible equity of 15.2%. Notably, net interest income rose by $0.4 million from Q1 2021, while noninterest income surged 19.3% year-over-year. The company also released $2.0 million from its allowance for credit losses, reflecting improved economic conditions. A quarterly cash dividend of $0.58 per share was approved, payable on July 30, 2021.

Positive

• Net income increased to $22.1 million for Q2 2021.
• Return on assets improved to 1.49% and return on equity to 15.2%.
• Noninterest income grew by 19.3% compared to Q2 2020.
• Release of $2.0 million from allowance for credit losses.
• Quarterly cash dividend of $0.58 per share approved.

Negative

• Net interest margin decreased from 2.91% to 2.81% between Q1 and Q2 2021.
• Loan balances decreased by $17.3 million from Q1 2021, with significant declines in residential and consumer loans.

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	%

 

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FAQ

What is the net income of City Holding Company for Q2 2021?

City Holding Company reported a net income of $22.1 million for the second quarter of 2021.

What are the diluted earnings per share for CHCO in Q2 2021?

The diluted earnings per share for City Holding Company in Q2 2021 were $1.41.

How much did City Holding Company release from its allowance for credit losses in Q2 2021?

City Holding Company released $2.0 million from its allowance for credit losses in Q2 2021.

What is the approved cash dividend per share for City Holding Company in July 2021?

The approved cash dividend for City Holding Company is $0.58 per share, payable on July 30, 2021.

What was the return on assets for City Holding Company in Q2 2021?

The return on assets for City Holding Company in Q2 2021 was 1.49%.