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

City Holding Company Announces Second Quarter Results