City Holding (CHCO) 8-K City Holding Company Announces Third Quarter Results

NEWS RELEASE

For Immediate Release

October 21, 2021

For Further Information Contact:

Charles R. Hageboeck, Chief Executive Officer and President

(304) 769-1102

City Holding Company Announces Third Quarter Results

Charleston, West Virginia – City Holding Company (“Company” or “City”) (NASDAQ:CHCO), a $6.0 billion bank holding company headquartered in Charleston, West Virginia, today announced quarterly net income of $22.7 million and diluted earnings of $1.47 per share for the quarter ended September 30, 2021. For the third quarter of 2021, the Company achieved a return on assets of 1.53% and a return on tangible equity of 15.7%. For the nine months ended September 30, 2021, City reported net income of $64.7 million, or diluted earnings per share of $4.13.

Charles R. (“Skip”) Hageboeck, the President and Chief Executive Officer of City Holding Company, commented: “While our financial performance is not quite back to pre-COVID levels, City’s financial performance continued on an upward swing in the third quarter of 2021. Net interest income, largely on the strength of fee income related to Government sponsored Paycheck Protection Program (“PPP”) loans, increased $1.6 million from the quarter ended June 30, 2021 and noninterest income, exclusive of security items, was up $1.3 million from the quarter ended September 30, 2020.”

“Asset quality continues to be a hallmark for City with nonperforming assets dropping to below $10 million ($9.0 million or just 0.26% of total loans and other real estate owned). Past due loans and troubled debt restructurings also declined during the quarter ended September 30, 2021. Deferrals on commercial loans have also declined significantly during the quarter to just $15 million and are solely related to hotel and lodging customers.”

“While consumer related lending continues to be challenging with the current interest rate environment, commercial loans grew $36 million, or 2% (8.1% annualized), during the quarter ended September 30, 2021, exclusive of PPP balances. As of September 30, 2021, our PPP balances have declined to $26 million with less than $1 million remaining outstanding from PPP loans originated in 2020 and approximately 45% of loans originated in 2021 already forgiven.”

Net Interest Income

The Company’s net interest income increased from $37.9 million during the second quarter of 2021 to $39.5 million during the third quarter of 2021. The Company’s tax equivalent net interest income increased from $38.3 million for the second quarter of 2021 to $39.8 million for the third quarter of 2021. An increase in loan fees related to PPP loan forgiveness increased net interest income by $0.6 million. In addition, a modest increase in loan yields, due to interest recoveries on previously charged-off loans, increased net interest income by $0.6 million and lower rates paid on time deposits (16 basis points) increased net interest income by $0.4 million. The Company’s reported net interest margin increased from 2.81% for the second quarter of 2021 to 2.89% for the third quarter of 2021. Excluding the favorable impact of the accretion from fair value adjustments, the net interest margin would have been 2.86% for the quarter ended September 30, 2021 and 2.76% for the quarter ended June 30, 2021.

Credit Quality

The Company’s ratio of nonperforming assets to total loans and other real estate owned decreased from 0.32% at June 30, 2021 to 0.26% at September 30, 2021. Total nonperforming assets decreased from $11.4 million at June 30, 2021 to $9.0 million at September 30, 2021. Total past due loans decreased slightly from $7.6 million, or 0.22% of total loans outstanding, at June 30, 2021 to $7.3 million, or 0.21% of total loans outstanding, at September 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 $0.7 million in the third quarter of 2021, compared to a provision for credit losses of $1.0 million for the comparable period in 2020 and a recovery of credit losses of $2.0 million for the second quarter of 2021. Due to 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 $17.9 million for the third quarter of 2021 as compared to $17.0 million for the third quarter of 2020. During the third quarter of 2021, the Company reported $0.1 million of unrealized fair value gains on the Company’s equity securities compared to $0.5 million of unrealized fair value gains on the Company’s equity securities in the third quarter of 2020. Exclusive of these gains, non-interest income increased from $16.5 million for the third quarter of 2020 to $17.8 million for the third quarter of 2021. This increase was largely attributable to higher bankcard revenues ($0.7 million, or 12.0%) and service charges ($0.4 million, or 6.5%). In addition, trust and investment management fee income increased $0.3 million and other income increased $0.2 million from the quarter ended September 30, 2020. These increases were partially offset by a decrease in bank owned life insurance revenues due to lower death benefit proceeds ($0.3 million).

Non-interest Expenses

Non-interest expenses increased $0.5 million (1.6%), from $28.7 million in the third quarter of 2020 to $29.2 million in the third quarter of 2021. This increase was primarily due to an increase in advertising expenses of $0.3 million and telecommunication expenses of $0.2 million.

Balance Sheet Trends

Loans decreased $7.5 million from June 30, 2021 to September 30, 2021, to $3.52 billion. PPP loans decreased $23.5 million from $49.8 million at June 30, 2021 to $26.3 million at September 30, 2021. Excluding outstanding PPP loans (included in the commercial and industrial loan category), total loans

increased $16.0 million, (0.5%), from June 30, 2021 to $3.50 billion at September 30, 2021. Commercial real estate loans increased $18.2 million (1.2%) and commercial and industrial loans increased $18.0 million (5.8%) (excluding PPP loans). These increases were partially offset by decreases in residential real estate loans ($14.5 million or 1.0%); home equity loans ($2.8 million or 2.2%); and consumer loans ($1.9 million or 4.2%).

Total average depository balances increased $40.8 million, or 0.8%, from the quarter ended June 30, 2021 to the quarter ended September 30, 2021. Average noninterest-bearing demand deposit balances increased $45.4 million, average savings deposit balances increased $27.5 million, and average interest-bearing demand deposit balances increased $23.3 million. These increases were partially offset by a decrease in time deposit balances of $55.4 million.

Income Tax Expense

The Company’s effective income tax rate for the third quarter of 2021 was 21.6% compared to 19.5% for the year ended December 31, 2020, and 20.2% for the quarter ended September 30, 2020.

Capitalization and Liquidity

The Company’s loan to deposit ratio was 72.1% and the loan to asset ratio was 59.2% at September 30, 2021. The Company maintained investment securities totaling 23.5% of assets as of the same date. The Company’s deposit mix is weighted heavily toward checking and saving accounts, which fund 63.6% of assets at September 30, 2021. Time deposits fund 18.5% of assets at September 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 $560 million at September 30, 2021. Due primarily to the influx of deposits and share repurchases during the nine months ended September 30, 2021, the Company’s tangible equity ratio decreased from 10.3% at December 31, 2020 to 9.6% at September 30, 2021. At September 30, 2021, City National Bank’s Leverage Ratio was 8.73%, its Common Equity Tier I ratio was 14.61%, its Tier I Capital ratio was 14.61%, and its Total Risk-Based Capital ratio was 15.06%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.

On September 29, 2021, the Board of Directors of the Company approved a quarterly cash dividend of $0.58 per share payable October 29, 2021, to shareholders of record as of October 15, 2021. During the quarter ended September 30, 2021, the Company repurchased 337,000 common shares at a weighted average price of $75.65 as part of a one million share repurchase plan authorized by the Board of Directors in March 2021. As of September 30, 2021, the Company could repurchase approximately 446,000 additional shares under the plan.

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 credit 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 September 30, 2021 Form 10-Q.The Company will continue to evaluate the impact of any subsequent events on the preliminary September 30, 2021 results and will adjust the amounts if necessary.

CITY HOLDING COMPANY AND SUBSIDIARIES

Financial Highlights

(Unaudited)

	Three Months Ended															Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
	2021			2021			2021			2020			2020			2021			2020
Earnings
Net Interest Income (FTE)	$	39,822		$	38,257		$	37,871		$	38,514		$	38,278		$	115,950		$	117,168
Net Income available to common shareholders	22,732			22,148			19,814			22,222			20,126			64,694			67,374
Per Share Data
Earnings per share available to common shareholders:
Basic	$	1.47		$	1.41		$	1.25		$	1.40		$	1.25		$	4.13		$	4.15
Diluted	1.47			1.41			1.25			1.40			1.25			4.13			4.15
Weighted average number of shares (in thousands):
Basic	15,279			15,573			15,656			15,708			15,950			15,501			16,065
Diluted	15,302			15,594			15,687			15,733			15,970			15,526			16,084
Period-end number of shares (in thousands)	15,192			15,527			15,724			15,768			15,848			15,192			15,848
Cash dividends declared	$	0.58		$	0.58		$	0.58		$	0.58		$	0.57		$	1.74		$	1.71
Book value per share (period-end)	44.58			44.79			43.99			44.47			43.62			44.58			43.62
Tangible book value per share (period-end)	36.85			37.20			36.47			36.94			36.11			36.85			36.11
Market data:
High closing price	$	79.99		$	83.85		$	87.41		$	70.77		$	67.98		$	87.41		$	82.40
Low closing price	72.29			74.44			69.05			56.98			55.37			69.05			55.18
Period-end closing price	77.91			75.24			81.78			69.55			57.61			77.91			57.61
Average daily volume    (in thousands)	53			61			63			56			67			59			75
Treasury share activity:
Treasury shares repurchased       (in thousands)	337			217			75			81			231			629			492
Average treasury share repurchase price	$	75.65		$	78.75		$	76.71		$	60.32		$	59.49		$	76.85		$	64.23
Key Ratios (percent)
Return on average assets	1.53		%	1.49		%	1.38		%	1.59		%	1.46		%	1.47		%	1.68		%
Return on average tangible equity	15.7		%	15.2		%	13.5		%	15.3		%	13.8		%	14.8		%	15.6		%
Yield on interest earning assets	3.04		%	3.00		%	3.17		%	3.32		%	3.43		%	3.07		%	3.75		%
Cost of interest bearing liabilities	0.22		%	0.27		%	0.37		%	0.47		%	0.58		%	0.28		%	0.73		%
Net Interest Margin	2.89		%	2.81		%	2.91		%	2.99		%	3.02		%	2.87		%	3.22		%
Non-interest income as a percent of total revenue	31.1		%	31.0		%	30.4		%	30.7		%	30.3		%	31.0		%	35.8		%
Efficiency Ratio	50.0		%	52.8		%	54.3		%	51.0		%	51.6		%	52.3		%	51.5		%
Price/Earnings Ratio (a)	13.22			13.35			16.30			12.41			11.53			14.14			10.40

Capital (period-end)
Average Shareholders' Equity to Average Assets	11.69		%	11.81		%	12.30		%	12.46		%	12.71		%
Tangible equity to tangible assets	9.59		%	9.98		%	9.93		%	10.33		%	10.61		%
Consolidated City Holding Company risk based capital ratios (b):
CET I	15.95		%	16.40		%	16.76		%	16.18		%	15.93		%
Tier I	15.95		%	16.40		%	16.76		%	16.18		%	15.93		%
Total	16.39		%	16.88		%	17.33		%	16.75		%	16.50		%
Leverage	9.46		%	9.70		%	10.06		%	10.22		%	10.19		%
City National Bank risk based capital ratios (b):
CET I	14.61		%	14.82		%	14.75		%	14.10		%	14.46		%
Tier I	14.61		%	14.82		%	14.75		%	14.10		%	14.46		%
Total	15.06		%	15.30		%	15.33		%	14.68		%	15.04		%
Leverage	8.73		%	8.80		%	8.91		%	8.97		%	9.32		%
Other (period-end)
Branches	94			94			94			94			94
FTE	921			912			916			926			925
Assets per FTE (in thousands)	$	6,463		$	6,477		$	6,434		$	6,219		$	5,984
Deposits per FTE (in thousands)	5,308			5,271			5,236			5,024			4,799
(a) The price/earnings ratio is computed based on annualized quarterly earnings (excludes gain for sale of VISA shares, net of taxes).
(b) September 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										Nine Months Ended
	September 30,		June 30,		March 31,		December 31,		September 30,		September 30,		September 30,
	2021		2021		2021		2020		2020		2021		2020
Interest Income
Interest and fees on loans	$	33,961	$	33,114	$	34,324	$	35,685	$	35,761	$	101,399	$	114,813
Interest on investment securities:
Taxable	6,144		5,932		5,242		5,500		6,266		17,318		17,855
Tax-exempt	1,257		1,291		1,253		1,254		1,132		3,801		2,659
Interest on deposits in depository institutions	196		162		118		60		72		476		432
Total Interest Income	41,558		40,499		40,937		42,499		43,231		122,994		135,759
Interest Expense
Interest on deposits	1,955		2,460		3,280		4,198		5,123		7,695		18,324
Interest on short-term borrowings	115		125		117		120		131		357		873
Interest on long-term debt	—		—		—		—		—		—		100
Total Interest Expense	2,070		2,585		3,397		4,318		5,254		8,052		19,297
Net Interest Income	39,488		37,914		37,540		38,181		37,977		114,942		116,462
(Recovery of) provision for credit losses	(725)		(2,000)		(440)		474		1,026		(3,165)		10,248
Net Interest Income After (Recovery of) Provision for Credit Losses	40,213		39,914		37,980		37,707		36,951		118,107		106,214
Non-Interest Income
Net gains on sale of investment securities	—		29		283		6		—		312		56
Unrealized gains (losses) recognized on equity securities still held	93		410		(51)		835		461		452		(1,698)
Service charges	6,706		5,895		5,881		6,771		6,295		18,482		18,962
Bankcard revenue	6,791		7,221		6,213		5,991		6,065		20,225		17,068
Trust and investment management fee income	2,172		2,012		2,033		2,162		1,844		6,217		5,574
Bank owned life insurance	747		940		1,460		813		1,088		3,147		3,611
Sale of VISA shares	—		—		—		—		—		—		17,837
Other income	1,438		941		811		1,143		1,232		3,190		3,550
Total Non-Interest Income	17,947		17,448		16,630		17,721		16,985		52,025		64,960
Non-Interest Expense
Salaries and employee benefits	15,321		15,559		15,671		15,989		15,361		46,551		46,085
Occupancy related expense	2,507		2,525		2,622		2,447		2,428		7,654		7,318
Equipment and software related expense	2,554		2,655		2,544		2,660		2,607		7,753		7,540
FDIC insurance expense	396		382		405		363		355		1,183		522
Advertising	804		824		881		538		462		2,509		2,238

Bankcard expenses	1,549		1,746		1,584		1,443		1,517		4,879		4,450
Postage, delivery, and statement mailings	573		568		592		546		513		1,733		1,721
Office supplies	406		371		392		413		396		1,169		1,143
Legal and professional fees	610		589		675		438		548		1,874		1,738
Telecommunications	790		676		690		540		547		2,156		1,589
Repossessed asset (gains) losses, net of expenses	(108)		1		79		(68)		39		(28)		313
Other expenses	3,776		3,678		3,674		3,332		3,939		11,128		11,992
Total Non-Interest Expense	29,178		29,574		29,809		28,641		28,712		88,561		86,649
Income Before Income Taxes	28,982		27,788		24,801		26,787		25,224		81,571		84,525
Income tax expense	6,250		5,640		4,987		4,565		5,098		16,877		17,151
Net Income Available to Common Shareholders	$	22,732	$	22,148	$	19,814	$	22,222	$	20,126	$	64,694	$	67,374
Distributed earnings allocated to common shareholders	$	8,726	$	8,921	$	9,037	$	9,053	$	8,944	$	26,177	$	26,832
Undistributed earnings allocated to common shareholders	13,786		13,021		10,598		12,947		10,984		37,899		39,884
Net earnings allocated to common shareholders	$	22,512	$	21,942	$	19,635	$	22,000	$	19,928	$	64,076	$	66,716
Average common shares outstanding	15,279		15,573		15,656		15,708		15,950		15,501		16,065
Shares for diluted earnings per share	15,302		15,594		15,687		15,733		15,970		15,526		16,084
Basic earnings per common share	$	1.47	$	1.41	$	1.25	$	1.40	$	1.25	$	4.13	$	4.15
Diluted earnings per common share	$	1.47	$	1.41	$	1.25	$	1.40	$	1.25	$	4.13	$	4.15

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Balance Sheets

($ in 000s)

	(Unaudited)		(Unaudited)		(Unaudited)				(Unaudited)
	September 30,		June 30,		March 31,		December 31,		September 30,
	2021		2021		2021		2020		2020
Assets
Cash and due from banks	$	103,841	$	97,523	$	97,709	$	77,412	$	76,451
Interest-bearing deposits in depository institutions	535,708		512,367		659,090		451,247		176,267
Cash and cash equivalents	639,549		609,890		756,799		528,659		252,718
Investment securities available-for-sale, at fair value	1,373,073		1,340,681		1,185,245		1,178,789		1,157,399
Other securities	24,501		24,548		27,182		27,372		26,548
Total investment securities	1,397,574		1,365,229		1,212,427		1,206,161		1,183,947
Gross loans	3,521,925		3,529,416		3,546,723		3,622,119		3,663,966
Allowance for credit losses	(18,751)		(20,016)		(24,076)		(24,549)		(24,867)
Net loans	3,503,174		3,509,400		3,522,647		3,597,570		3,639,099
Bank owned life insurance	120,238		119,491		118,976		118,243		117,501
Premises and equipment, net	75,156		76,263		76,529		76,925		77,031
Accrued interest receivable	16,224		15,967		16,231		15,793		16,627
Net deferred tax assets	90		—		1,395		—		—
Intangible assets	117,489		117,857		118,224		118,592		119,004
Other assets	82,419		89,958		71,142		96,697		105,361
Total Assets	$	5,951,913	$	5,904,055	$	5,894,370	$	5,758,640	$	5,511,288
Liabilities
Deposits:
Noninterest-bearing	$	1,311,464	$	1,279,932	$	1,244,175	$	1,176,990	$	1,061,310
Interest-bearing:
Demand deposits	1,139,033		1,070,004		1,077,749		1,027,201		940,791
Savings deposits	1,332,910		1,301,219		1,265,038		1,188,003		1,117,684
Time deposits	1,104,069		1,153,391		1,209,873		1,260,022		1,300,291
Total deposits	4,887,476		4,804,546		4,796,835		4,652,216		4,420,076
Short-term borrowings
Customer repurchase agreements	296,642		311,316		316,003		295,956		279,866
Net deferred tax liabilities	—		2,310		—		3,202		1,601
Other liabilities	90,499		90,407		89,847		106,160		118,386
Total Liabilities	5,274,617		5,208,579		5,202,685		5,057,534		4,819,929

Stockholders' Equity
Preferred stock	—		—		—		—		—
Common stock	47,619		47,619		47,619		47,619		47,619
Capital surplus	170,300		169,674		170,526		171,304		170,526
Retained earnings	627,463		613,553		600,396		589,988		576,901
Cost of common stock in treasury	(183,303)		(157,936)		(142,484)		(139,038)		(134,177)
Accumulated other comprehensive income:
Unrealized gain on securities available-for-sale	20,878		28,227		21,289		36,894		36,760
Underfunded pension liability	(5,661)		(5,661)		(5,661)		(5,661)		(6,270)
Total Accumulated Other Comprehensive Income	15,217		22,566		15,628		31,233		30,490
Total Stockholders' Equity	677,296		695,476		691,685		701,106		691,359
Total Liabilities and Stockholders' Equity	$	5,951,913	$	5,904,055	$	5,894,370	$	5,758,640	$	5,511,288
Regulatory Capital
Total CET 1 capital	$	550,426	$	561,317	$	563,523	$	557,641	$	548,269
Total tier 1 capital	550,426		561,317		563,523		557,641		548,269
Total risk-based capital	565,712		577,543		582,816		577,292		568,153
Total risk-weighted assets	3,451,018		3,421,764		3,362,595		3,446,774		3,442,629

CITY HOLDING COMPANY AND SUBSIDIARIES

Loan Portfolio

(Unaudited) ($ in 000s)

	September 30,		June 30,		March 31,		December 31,		September 30,
	2021		2021		2021		2020		2020
Commercial and industrial	$	353,046	$	358,583	$	371,195	$	372,989	$	383,980
1-4 Family	108,913		108,079		108,131		109,812		114,071
Hotels	297,341		290,119		293,176		294,464		295,989
Multi-family	215,307		212,715		212,561		215,671		214,394
Non Residential Non-Owner Occupied	664,365		653,264		649,683		641,351		628,814
Non Residential Owner Occupied	205,579		209,100		199,130		213,484		211,433
Commercial real estate (1)	1,491,505		1,473,277		1,462,681		1,474,782		1,464,701
Residential real estate (2)	1,506,572		1,521,102		1,532,907		1,587,694		1,621,265
Home equity	124,806		127,608		130,009		136,469		140,135
Consumer	43,296		45,184		47,224		47,688		50,541
DDA Overdrafts	2,700		3,662		2,707		2,497		3,344
Gross Loans	$	3,521,925	$	3,529,416	$	3,546,723	$	3,622,119	$	3,663,966
Construction loans included in:
(1) - Commercial real estate loans	$	19,360	$	43,904	$	39,101	$	40,449	$	42,449
(2) - Residential real estate loans	19,059		20,838		22,129		27,078		28,947

CITY HOLDING COMPANY AND SUBSIDIARIES

Asset Quality Information

(Unaudited) ($ in 000s)

	Three Months Ended															Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
	2021			2021			2021			2020			2020			2021			2020
Allowance for Credit Losses
Balance at beginning of period	$	20,016		$	24,076		$	24,549		$	24,867		$	25,199		$	24,549		$	11,589
Charge-offs:
Commercial and industrial	—			(211)			(34)			(9)			(757)			(245)			(834)
Commercial real estate	(392)			(1,718)			(1)			(616)			(75)			(2,111)			(497)
Residential real estate	(18)			(86)			(93)			(139)			(252)			(197)			(1,111)
Home equity	(47)			(8)			(64)			(88)			(126)			(119)			(332)
Consumer	(3)			(79)			(147)			(27)			(74)			(229)			(165)
DDA overdrafts	(633)			(430)			(453)			(629)			(554)			(1,516)			(1,716)
Total charge-offs	(1,093)			(2,532)			(792)			(1,508)			(1,838)			(4,417)			(4,655)
Recoveries:
Commercial and industrial	69			25			46			74			3			140			17
Commercial real estate	18			15			164			150			44			197			375
Residential real estate	29			17			74			57			24			120			127
Home equity	58			3			23			47			33			84			89
Consumer	72			104			39			55			42			215			183
DDA overdrafts	307			308			413			333			334			1,028			1,134
Total recoveries	553			472			759			716			480			1,784			1,925
Net charge-offs	(540)			(2,060)			(33)			(792)			(1,358)			(2,633)			(2,730)
(Recovery of) provision for credit losses	(725)			(2,000)			(440)			474			1,026			(3,165)			10,248
Impact of adopting ASC 326	—			—			—			—			—			—			5,760
Balance at end of period	$	18,751		$	20,016		$	24,076		$	24,549		$	24,867		$	18,751		$	24,867
Loans outstanding	$	3,521,925		$	3,529,416		$	3,546,723		$	3,622,119		$	3,663,966
Allowance as a percent of loans outstanding	0.53		%	0.57		%	0.68		%	0.68		%	0.68		%
Allowance as a percent of non-performing loans	243.1		%	199.3		%	194.5		%	200.7		%	182.7		%
Average loans outstanding	$	3,535,497		$	3,541,165		$	3,585,790		$	3,635,673		$	3,661,569		$	3,553,966		$	3,643,603
Net charge-offs (annualized) as a percent of average loans outstanding	0.06		%	0.23		%	—		%	0.09		%	0.15		%	0.10		%	0.10		%

CITY HOLDING COMPANY AND SUBSIDIARIES

Asset Quality Information, Continued

(Unaudited) ($ in 000s)

	September 30,			June 30,			March 31,			December 31,			September 30,
	2021			2021			2021			2020			2020
Nonaccrual Loans
Residential real estate	$	3,634		$	2,482		$	3,004		$	2,968		$	3,983
Home equity	67			81			88			95			74
Commercial and industrial	531			820			1,200			768			728
Commercial real estate	3,355			6,383			7,792			8,401			8,479
Consumer	—			—			—			—			—
Total nonaccrual loans	7,587			9,766			12,084			12,232			13,264
Accruing loans past due 90 days or more	127			278			295			—			345
Total non-performing loans	7,714			10,044			12,379			12,232			13,609
Other real estate owned	1,335			1,309			1,625			1,650			2,080
Total non-performing assets	$	9,049		$	11,353		$	14,004		$	13,882		$	15,689
Non-performing assets as a percent of loans and other real estate owned	0.26		%	0.32		%	0.39		%	0.38		%	0.43		%
Past Due Loans
Residential real estate	$	5,258		$	5,453		$	4,092		$	5,993		$	5,153
Home equity	688			523			449			575			474
Commercial and industrial	455			721			1,358			1,241			691
Commercial real estate	441			498			508			625			602
Consumer	35			12			10			113			121
DDA overdrafts	390			417			212			341			379
Total past due loans	$	7,267		$	7,624		$	6,629		$	8,888		$	7,420
Total past due loans as a percent of loans outstanding	0.21		%	0.22		%	0.19		%	0.25		%	0.20		%
Troubled Debt Restructurings ("TDRs")
Residential real estate	$	16,910		$	17,788		$	18,572		$	19,226		$	20,398
Home equity	1,822			1,920			1,956			2,001			2,100
Commercial and industrial	430			—			—			—			—
Commercial real estate	1,937			3,076			4,615			4,638			4,894
Consumer	221			203			211			277			260
Total TDRs	$	21,320		$	22,987		$	25,354		$	26,142		$	27,652

CITY HOLDING COMPANY AND SUBSIDIARIES

Consolidated Average Balance Sheets, Yields, and Rates

(Unaudited) ($ in 000s)

	Three Months Ended
	September 30, 2021						June 30, 2021						September 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)	$	1,648,921	$	15,813	3.80	%	$	1,652,165	$	16,135	3.92	%	$	1,766,796	$	17,899	4.03	%
Commercial, financial, and agriculture (2)	1,836,604		17,344		3.75	%	1,839,478		16,158		3.52	%	1,839,939		16,910		3.66	%
Installment loans to individuals (2), (3)	49,972		714		5.67	%	49,522		713		5.77	%	54,834		804		5.83	%
Previously securitized loans (4)	***		91		***		***		109		***		***		148		***
Total loans	3,535,497		33,962		3.81	%	3,541,165		33,115		3.75	%	3,661,569		35,761		3.89	%
Securities:
Taxable	1,136,519		6,144		2.14	%	1,046,008		5,932		2.27	%	877,623		6,266		2.84	%
Tax-exempt (5)	245,551		1,590		2.57	%	244,233		1,633		2.68	%	204,178		1,433		2.79	%
Total securities	1,382,070		7,734		2.22	%	1,290,241		7,565		2.35	%	1,081,801		7,699		2.83	%
Deposits in depository institutions	544,843		196		0.14	%	628,158		162		0.10	%	304,498		72		0.09	%
Total interest-earning assets	5,462,410		41,892		3.04	%	5,459,564		40,842		3.00	%	5,047,868		43,532		3.43	%
Cash and due from banks	101,058						92,243						80,505
Premises and equipment, net	75,956						76,660						77,647
Goodwill and intangible assets	117,719						118,088						119,267
Other assets	220,420						206,709						229,667
Less: Allowance for credit losses	(20,407)						(23,701)						(25,311)
Total assets	$	5,957,156					$	5,929,563					$	5,529,643
Liabilities:
Interest-bearing demand deposits	$	1,093,243	$	127	0.05	%	$	1,069,896	$	122	0.05	%	$	931,152	$	187	0.08	%
Savings deposits	1,315,462		169		0.05	%	1,287,966		163		0.05	%	1,093,886		303		0.11	%
Time deposits (2)	1,126,553		1,659		0.58	%	1,181,953		2,175		0.74	%	1,322,423		4,633		1.39	%
Short-term borrowings	282,722		115		0.16	%	305,134		125		0.16	%	260,518		131		0.20	%
Total interest-bearing liabilities	3,817,980		2,070		0.22	%	3,844,949		2,585		0.27	%	3,607,979		5,254		0.58	%
Noninterest-bearing demand deposits	1,356,745						1,311,340						1,114,822
Other liabilities	86,263						72,940						104,084
Stockholders' equity	696,168						700,334						702,758
Total liabilities and
stockholders' equity	$	5,957,156					$	5,929,563					$	5,529,643
Net interest income			$	39,822					$	38,257					$	38,278
Net yield on earning assets					2.89	%					2.81	%					3.02	%
(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			$	1,120					$	488					$	156

(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	$	154	$	211	$	132
Commercial, financial, and agriculture	265		365		250
Installment loans to individuals	21		23		38
Time deposits	48		48		155
	$	488	$	647	$	575
(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)

	Nine Months Ended
	September 30, 2021						September 30, 2020
	Average				Yield/		Average				Yield/
	Balance		Interest		Rate		Balance		Interest		Rate
Assets:
Loan portfolio (1):
Residential real estate (2)	$	1,669,324	$	48,801	3.91	%	$	1,776,903	$	56,827	4.27	%
Commercial, financial, and agriculture (2)	1,833,744		50,044		3.65	%	1,810,165		55,051		4.06	%
Installment loans to individuals (2), (3)	50,898		2,140		5.62	%	56,535		2,519		5.95	%
Previously securitized loans (4)	***		414		***		***		415		***
Total loans	3,553,966		101,399		3.81	%	3,643,603		114,812		4.21	%
Securities:
Taxable	1,043,269		17,318		2.22	%	861,853		17,855		2.77	%
Tax-exempt (5)	243,146		4,811		2.65	%	140,075		3,366		3.21	%
Total securities	1,286,415		22,129		2.30	%	1,001,928		21,221		2.83	%
Deposits in depository institutions	562,272		474		0.11	%	214,912		432		0.27	%
Total interest-earning assets	5,402,653		124,002		3.07	%	4,860,443		136,465		3.75	%
Cash and due from banks	91,073						76,936
Premises and equipment, net	76,481						77,910
Goodwill and intangible assets	118,084						119,678
Other assets	214,872						218,695
Less: Allowance for loan losses	(22,989)						(21,984)
Total assets	$	5,880,174					$	5,331,678
Liabilities:
Interest-bearing demand deposits	$	1,057,452	$	373	0.05	%	$	898,440	$	833	0.12	%
Savings deposits	1,275,211		516		0.05	%	1,045,877		1,366		0.17	%
Time deposits (2)	1,181,166		6,806		0.77	%	1,347,013		16,125		1.60	%
Short-term borrowings	292,845		357		0.16	%	242,173		873		0.48	%
Long-term debt	—		—		—	%	1,109		100		12.04	%
Total interest-bearing liabilities	3,806,674		8,052		0.28	%	3,534,612		19,297		0.73	%
Noninterest-bearing demand deposits	1,289,247						1,004,144
Other liabilities	82,953						98,393
Stockholders' equity	701,300						694,529
Total liabilities and
stockholders' equity	$	5,880,174					$	5,331,678
Net interest income			$	115,950					$	117,168
Net yield on earning assets					2.87	%					3.22	%
(1) For purposes of this table, non-accruing loans have been included in average balances and the following amounts (in thousands) of loan fees have been included in interest income:
Loan fees			$	2,443					$	881

(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	$	472	$	477
Commercial, financial, and agriculture	956		2,141
Installment loans to individuals	72		114
Time deposits	145		466
	$	1,645	$	3,198
(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															Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
	2021			2021			2021			2020			2020			2021			2020
Net Interest Income/Margin
Net interest income ("GAAP")	$	39,488		$	37,914		$	37,540		$	38,181		$	37,977		$	114,942		$	116,462
Taxable equivalent adjustment	334			343			331			333			301			1,008			706
Net interest income, fully taxable equivalent	$	39,822		$	38,257		$	37,871		$	38,514		$	38,278		$	115,950		$	117,168
Average interest earning assets	$	5,462,410		$	5,459,564		$	5,284,025		$	5,125,874		$	5,047,868		$	5,402,653		$	4,860,443
Net Interest Margin	2.89		%	2.81		%	2.91		%	2.99		%	3.02		%	2.87		%	3.22		%
Accretion related to fair value adjustments	(0.04)		%	(0.05)		%	(0.04)		%	(0.05)		%	(0.05)		%	(0.04)		%	(0.09)		%
Net Interest Margin (excluding accretion)	2.85		%	2.76		%	2.87		%	2.94		%	2.97		%	2.83		%	3.13		%
Tangible Equity Ratio (period end)
Equity to assets ("GAAP")	11.37		%	11.78		%	11.74		%	12.18		%	12.54		%
Effect of goodwill and other intangibles, net	(1.78)		%	(1.80)		%	(1.81)		%	(1.85)		%	(1.93)		%
Tangible common equity to tangible assets	9.59		%	9.98		%	9.93		%	10.33		%	10.61		%
Return on Tangible Equity
Return on tangible equity ("GAAP")	15.7		%	15.2		%	13.5		%	15.3		%	13.8		%	14.8		%	15.6		%
Impact of sale of VISA shares	—		%	—		%	—		%	—		%	—		%	—		%	(3.1)		%
Return on tangible equity, excluding sale of VISA shares	15.7		%	15.2		%	13.5		%	15.3		%	13.8		%	14.8		%	12.5		%
Return on Assets
Return on assets ("GAAP")	1.53		%	1.49		%	1.38		%	1.59		%	1.46		%	1.47		%	1.68		%
Impact of sale of VISA shares	—		%	—		%	—		%	—		%	—		%	—		%	(0.33)		%
Return on assets, excluding merger sale of VISA shares	1.53		%	1.49		%	1.38		%	1.59		%	1.46		%	1.47		%	1.35		%